Table of Contents
Exhibit 99.1
KB Financial Group Inc. and Subsidiaries
Consolidated Interim Financial Statements
March 31, 2021 and 2020
(Unaudited)
(With Independent Auditors’ Review Report Thereon)
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Independent Auditors’ Review Report
Based on a report originally issued in Korean
The Board of Directors and Stockholders
KB Financial Group Inc.:
Reviewed financial statements
We have reviewed the accompanying condensed consolidated interim financial statements of KB Financial Group Inc. and its subsidiaries (collectively the “Group”), which comprise the consolidated interim statement of financial position as of March 31, 2021, the consolidated interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2021 and 2020 and notes, comprising a summary of significant accounting policies and other explanatory information.
Management’s responsibility
Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No.1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of the condensed consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ review responsibility
Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our review.
We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.
Emphasis of matters
The following matters may be helpful to the readers in their understanding of the condensed consolidated interim financial statements. Our review conclusion is not affected by these matters.
As described in note 32.3.i) to the condensed consolidated interim financial statements, the proliferation of COVID-19 has had a negative impact on the global economy, which may have a greater impact than expected credit losses and potential impairment of assets in a particular portfolio, and it could negatively affect the profit generation capability of the Group.
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Other matters
The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries.
The consolidated statement of financial position of the Group as of December 31, 2020, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by us in accordance with Korean Standards on Auditing and our report thereon, dated March 9, 2021, expressed an unqualified opinion. The accompanying consolidated statement of financial position of the Group as of December 31, 2020 presented for comparative purposes, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.
</s/>KPMG Samjong Accounting Corp.
Seoul, Korea
May 17, 2021
This report is effective as of May 17, 2021, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any. |
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KB Financial Group Inc. and Subsidiaries
Consolidated Interim Statements of Financial Position
March 31, 2021 and December 31, 2020
(in millions of Korean won) | Notes | March 31, 2021 (Unaudited) | December 31, 2020 | |||||||||
Assets | ||||||||||||
Cash and due from financial institutions | 4,6,7,31 | |||||||||||
Financial assets at fair value through profit or loss | 4,6,11 | 60,155,939 | 61,035,455 | |||||||||
Derivative financial assets | 4,6,8 | 3,733,367 | 5,545,385 | |||||||||
Loans measured at amortized cost | 4,6,9,10 | 383,242,460 | 377,166,984 | |||||||||
Financial investments | 4,6,11 | 95,929,750 | 98,695,426 | |||||||||
Investments in associates and joint ventures | 12 | 632,067 | 771,435 | |||||||||
Property and equipment | 5,389,287 | 5,433,554 | ||||||||||
Investment property | 2,543,538 | 2,533,539 | ||||||||||
Intangible assets | 3,308,889 | 3,351,133 | ||||||||||
Net defined benefit assets | 19 | 1,666 | 2,845 | |||||||||
Current income tax assets | 122,110 | 109,772 | ||||||||||
Deferred income tax assets | 13,26 | 80,378 | 65,058 | |||||||||
Assets held for sale | 203,230 | 197,727 | ||||||||||
Other assets | 4,6 | 35,447,691 | 30,155,037 | |||||||||
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Total assets | ||||||||||||
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Liabilities | ||||||||||||
Financial liabilities at fair value through profit or loss | 4,6,14 | |||||||||||
Derivative financial liabilities | 4,6,8 | 3,370,512 | 5,222,897 | |||||||||
Deposits | 4,6,15 | 339,270,753 | 338,580,220 | |||||||||
Borrowings | 4,6,16 | 50,444,543 | 49,827,156 | |||||||||
Debentures | 4,6,17 | 62,220,973 | 62,760,687 | |||||||||
Provisions | 18 | 707,284 | 714,903 | |||||||||
Net defined benefit liabilities | 19 | 292,806 | 248,226 | |||||||||
Current income tax liabilities | 879,084 | 764,981 | ||||||||||
Deferred income tax liabilities | 13,26 | 1,214,076 | 1,162,286 | |||||||||
Insurance liabilities | 30 | 55,434,122 | 54,415,296 | |||||||||
Other liabilities | 4,6 | 50,289,586 | 41,804,023 | |||||||||
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Total liabilities | 576,873,818 | 567,310,733 | ||||||||||
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Equity | ||||||||||||
Share capital | 20 | 2,090,558 | 2,090,558 | |||||||||
Hybrid securities | 20 | 2,294,647 | 1,695,988 | |||||||||
Capital surplus | 20 | 16,723,593 | 16,723,589 | |||||||||
Accumulated other comprehensive income | 20,28 | 294,466 | 612,337 | |||||||||
Retained earnings | 20 | 22,903,059 | 22,517,392 | |||||||||
Treasury shares | 20 | (1,136,188 | ) | (1,136,188 | ) | |||||||
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Equity attributable to shareholders of the Parent Company | 20 | 43,170,135 | 42,503,676 | |||||||||
Non-controlling interests | 895,235 | 857,783 | ||||||||||
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Total equity | 44,065,370 | 43,361,459 | ||||||||||
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Total liabilities and equity | ||||||||||||
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The above consolidated interim statements of financial position should be read in conjunction with the accompanying notes.
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KB Financial Group Inc. and Subsidiaries
Consolidated Interim Statements of Comprehensive Income
Three-Month Periods Ended March 31, 2021 and 2020
(in millions of Korean won, except per share amounts) | Notes | 2021 (Unaudited) | 2020 (Unaudited) | |||||||||
Interest income | ||||||||||||
Interest income from financial instruments at fair value through other comprehensive income and amortized cost | 3,481,238 | 3,439,974 | ||||||||||
Interest income from financial instruments at fair value through profit or loss | 143,699 | 180,002 | ||||||||||
Interest expense | (982,637 | ) | (1,270,775 | ) | ||||||||
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Net interest income | 5,21 | 2,642,300 | 2,349,201 | |||||||||
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Fee and commission income | 1,359,038 | 1,041,463 | ||||||||||
Fee and commission expense | (391,859 | ) | (371,331 | ) | ||||||||
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Net fee and commission income | 5,22 | 967,179 | 670,132 | |||||||||
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Insurance income | 4,255,602 | 3,270,563 | ||||||||||
Insurance expense | (4,081,388 | ) | (3,192,469 | ) | ||||||||
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Net insurance income | 5,30 | 174,214 | 78,094 | |||||||||
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Net gains (losses) on financial instruments at fair value through profit or loss before applying overlay approach | 213,714 | (98,539 | ) | |||||||||
Net gains (losses) on overlay adjustments | 11,246 | (39,973 | ) | |||||||||
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Net gains (losses) on financial instruments at fair value through profit or loss | 5,23 | 224,960 | (138,512 | ) | ||||||||
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Net other operating expenses | 5,24 | (365,365 | ) | (216,926 | ) | |||||||
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General and administrative expenses | 5,19,25 | (1,723,067 | ) | (1,459,197 | ) | |||||||
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Operating profit before provision for credit losses | 5 | 1,920,221 | 1,282,792 | |||||||||
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Provision for credit losses | 5,7,9,10,18 | (173,395 | ) | (243,673 | ) | |||||||
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Net operating income | 5 | 1,746,826 | 1,039,119 | |||||||||
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Share of profit (losses) of investments in associates and joint ventures | 5 | 59,710 | (3,037 | ) | ||||||||
Net other non-operating losses | 5 | (20,106 | ) | (16,686 | ) | |||||||
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Net non-operating income (expenses) | 39,604 | (19,723 | ) | |||||||||
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Profit before income tax expense | 5 | 1,786,430 | 1,019,396 | |||||||||
Income tax expense | 5,26 | (501,270 | ) | (280,459 | ) | |||||||
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Profit for the period | 5 | 1,285,160 | 738,937 | |||||||||
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(Continued)
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KB Financial Group Inc. and Subsidiaries
Consolidated Interim Statements of Comprehensive Income
Three-Month Periods Ended March 31, 2021 and 2020 (cont’d)
(in millions of Korean won, except per share amounts) | Notes | 2021 (Unaudited) | 2020 (Unaudited) | |||||||||
Items that will not be reclassified to profit or loss: | ||||||||||||
Remeasurements of net defined benefit liabilities | (4,029 | ) | (1,224 | ) | ||||||||
Share of other comprehensive income (loss) of associates and joint ventures | (2 | ) | 23 | |||||||||
Net gains (losses) on equity instruments at fair value through other comprehensive income | 46,272 | (211,961 | ) | |||||||||
Fair value changes on financial liabilities designated at fair value due to own credit risk | 3,286 | 19,829 | ||||||||||
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45,527 | (193,333 | ) | ||||||||||
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Items that may be reclassified subsequently to profit or loss: | ||||||||||||
Exchange differences on translating foreign operations | 101,160 | 81,322 | ||||||||||
Net losses on debt instruments at fair value through other comprehensive income | (583,821 | ) | (32,859 | ) | ||||||||
Shares of other comprehensive income (loss) of associates and joint ventures | 3 | (8,101 | ) | |||||||||
Gains (losses) on cash flow hedging instruments | 8 | 8,439 | (38,524 | ) | ||||||||
Losses on hedging instruments of net investments in foreign operations | 8 | (32,871 | ) | (12,160 | ) | |||||||
Other comprehensive loss arising from separate account | (19,142 | ) | (333 | ) | ||||||||
Net gains (losses) on overlay approach adjustment | 30 | (8,058 | ) | 29,056 | ||||||||
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(534,290 | ) | 18,401 | ||||||||||
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Other comprehensive loss for the period, net of tax | (488,763 | ) | (174,932 | ) | ||||||||
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Total comprehensive income for the period | ||||||||||||
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Profit attributable to: | 5 | |||||||||||
Shareholders of the Parent Company | ||||||||||||
Non-controlling interests | 15,145 | 9,483 | ||||||||||
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Total comprehensive income for the period attributable to: | ||||||||||||
Shareholders of the Parent Company | ||||||||||||
Non-controlling interests | 25,386 | 9,467 | ||||||||||
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Earnings per share (in Korean won) | 29 | |||||||||||
Basic earnings per share | ||||||||||||
Diluted earnings per share | 3,161 | 1,849 |
The above consolidated interim statements of comprehensive income should be read in conjunction with the accompanying notes.
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KB Financial Group Inc. and Subsidiaries
Consolidated Interim Statements of Changes in Equity
Three-Month Periods Ended March 31, 2021 and 2020
Equity attributable to shareholders of the Parent Company | ||||||||||||||||||||||||||||||||
(in millions of Korean won) | Share Capital | Hybrid Securities | Capital Surplus | Accumulated Other Comprehensive Income | Retained Earnings | Treasury Shares | Non-controlling Interests | Total Equity | ||||||||||||||||||||||||
Balance as of January 1, 2020 | ||||||||||||||||||||||||||||||||
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Comprehensive income for the period | ||||||||||||||||||||||||||||||||
Profit for the period | — | — | — | — | 729,454 | — | 9,483 | 738,937 | ||||||||||||||||||||||||
Remeasurements of net defined benefit liabilities | — | — | — | (1,224 | ) | — | — | — | (1,224 | ) | ||||||||||||||||||||||
Exchange differences on translating foreign operations | — | — | — | 81,339 | — | — | (17 | ) | 81,322 | |||||||||||||||||||||||
Net losses on financial instruments at fair value through other comprehensive income | — | — | — | (244,820 | ) | — | — | — | (244,820 | ) | ||||||||||||||||||||||
Share of other comprehensive loss of associates and joint ventures | — | — | — | (8,078 | ) | — | — | — | (8,078 | ) | ||||||||||||||||||||||
Losses on cash flow hedging instruments | — | — | — | (38,524 | ) | — | — | — | (38,524 | ) | ||||||||||||||||||||||
Losses on hedges of a net investments in foreign operation | — | — | — | (12,160 | ) | — | — | — | (12,160 | ) | ||||||||||||||||||||||
Other comprehensive loss arising from separate account | — | — | — | (333 | ) | — | — | — | (333 | ) | ||||||||||||||||||||||
Fair value changes on financial liabilities designated at fair value due to own credit risk | — | — | — | 19,829 | — | — | — | 19,829 | ||||||||||||||||||||||||
Net gains on overlay approach adjustments | — | — | — | 29,056 | — | — | — | 29,056 | ||||||||||||||||||||||||
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Total comprehensive income for the period | — | — | — | (174,915 | ) | 729,454 | — | 9,466 | 564,005 | |||||||||||||||||||||||
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Transactions with shareholders | ||||||||||||||||||||||||||||||||
Annual dividends paid to shareholders of the Parent Company | — | — | — | — | (861,092 | ) | — | — | (861,092 | ) | ||||||||||||||||||||||
Dividends on hybrid securities | — | — | — | — | (3,257 | ) | — | (9,129 | ) | (12,386 | ) | |||||||||||||||||||||
Others | — | — | 101 | — | — | — | (459 | ) | (358 | ) | ||||||||||||||||||||||
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Total transactions with shareholders | — | — | 101 | — | (864,349 | ) | — | (9,588 | ) | (873,836 | ) | |||||||||||||||||||||
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Balance as of March 31, 2020 (Unaudited) | ||||||||||||||||||||||||||||||||
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Balance as of January 1, 2021 | ||||||||||||||||||||||||||||||||
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Comprehensive income for the period | ||||||||||||||||||||||||||||||||
Profit for the period | — | — | — | — | 1,270,015 | — | 15,145 | 1,285,160 | ||||||||||||||||||||||||
Remeasurements of net defined benefit liabilities | — | — | — | (3,692 | ) | — | — | (337 | ) | (4,029 | ) | |||||||||||||||||||||
Exchange differences on translating foreign operations | — | — | — | 92,123 | — | — | 9,037 | 101,160 | ||||||||||||||||||||||||
Net losses on financial instruments at fair value through other comprehensive income | — | — | — | (357,957 | ) | (181,133 | ) | — | 1,541 | (537,549 | ) | |||||||||||||||||||||
Shares of other comprehensive income of associates and joint ventures | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||
Gains on cash flow hedging instruments | — | — | — | 8,439 | — | — | — | 8,439 | ||||||||||||||||||||||||
Losses on hedges of a net investments in foreign operation | — | — | — | (32,871 | ) | — | — | — | (32,871 | ) | ||||||||||||||||||||||
Other comprehensive losses arising from separate account | — | — | — | (19,142 | ) | — | — | — | (19,142 | ) | ||||||||||||||||||||||
Fair value changes on financial liabilities designated at fair value due to own credit risk | — | — | — | 3,286 | — | — | — | 3,286 | ||||||||||||||||||||||||
Net losses on overlay approach adjustments | — | — | — | (8,058 | ) | — | — | — | (8,058 | ) | ||||||||||||||||||||||
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Total comprehensive income for the period | — | — | — | (317,871 | ) | 1,088,882 | — | 25,386 | 796,397 | |||||||||||||||||||||||
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Transactions with shareholders | ||||||||||||||||||||||||||||||||
Annual dividends paid to shareholders of the Parent Company | — | — | — | — | (689,653 | ) | — | — | (689,653 | ) | ||||||||||||||||||||||
Issuance of hybrid securities | — | 598,659 | — | — | — | — | — | 598,659 | ||||||||||||||||||||||||
Dividends on hybrid securities | — | — | — | — | (13,562 | ) | — | (11,832 | ) | (25,394 | ) | |||||||||||||||||||||
Others | — | — | 4 | — | — | — | 23,898 | 23,902 | ||||||||||||||||||||||||
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Total transactions with shareholders | — | 598,659 | 4 | — | (703,215 | ) | — | 12,066 | (92,486 | ) | ||||||||||||||||||||||
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Balance as of March 31, 2021 (Unaudited) | ||||||||||||||||||||||||||||||||
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The above consolidated interim statements of changes in equity should be read in conjunction with the accompanying notes.
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KB Financial Group Inc. and Subsidiaries
Consolidated Interim Statements of Cash Flows
Three-Month Periods Ended March 31, 2021 and 2020
(in millions of Korean won) | Notes | 2021 (Unaudited) | 2020 (Unaudited) | |||||||||
Cash flows from operating activities | ||||||||||||
Profit for the period | ||||||||||||
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Adjustment for non-cash items | ||||||||||||
Net losses on financial assets/liabilities at fair value through profit or loss | 34,716 | 185,831 | ||||||||||
Net losses on derivative financial instruments for hedging purposes | 140,432 | 76,174 | ||||||||||
Adjustment of fair value of derivative financial instruments | — | 62 | ||||||||||
Provision for credit losses | 173,395 | 243,673 | ||||||||||
Net gain on financial investments | (35,562 | ) | (133,321 | ) | ||||||||
Share of profit of associates and joint ventures | (59,710 | ) | 3,037 | |||||||||
Depreciation and amortization expense | 213,427 | 211,700 | ||||||||||
Depreciation and amortization expense on VOBA | 40,685 | 44,896 | ||||||||||
Other net losses (gain) on property and equipment/intangible assets | 3,201 | (4,367 | ) | |||||||||
Share-based payments | 38,338 | (6,211 | ) | |||||||||
Policy reserve appropriation | 1,003,418 | 281,279 | ||||||||||
Post-employment benefits | 58,172 | 57,825 | ||||||||||
Net interest income (expense) | 65,546 | 186,031 | ||||||||||
Net losses on foreign currency translation | 7,837 | 24,422 | ||||||||||
Net other expense | 122,957 | 121,118 | ||||||||||
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1,806,852 | 1,292,149 | |||||||||||
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Changes in operating assets and liabilities | ||||||||||||
Financial asset at fair value through profit or loss | 1,019,676 | (749,030 | ) | |||||||||
Derivative financial instruments | (104,635 | ) | 224,258 | |||||||||
Loans at fair value through other comprehensive income | (48,336 | ) | (52,458 | ) | ||||||||
Loans measured at amortized cost | (5,591,559 | ) | (13,035,271 | ) | ||||||||
Current income tax assets | (12,082 | ) | 3,720 | |||||||||
Deferred income tax assets | (15,077 | ) | 988 | |||||||||
Other assets | (10,420,900 | ) | (4,691,009 | ) | ||||||||
Financial liabilities at fair value through profit or loss | 986,831 | (1,424,270 | ) | |||||||||
Deposits | (18,935 | ) | 12,039,676 | |||||||||
Current income tax liabilities | 113,028 | 133,662 | ||||||||||
Deferred income tax liabilities | 269,903 | 44,081 | ||||||||||
Other liabilities | 7,043,106 | 4,887,747 | ||||||||||
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(6,778,980 | ) | (2,617,906 | ) | |||||||||
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Net cash outflow from operating activities | (3,686,968 | ) | (586,820 | ) | ||||||||
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(Continued)
9
Table of Contents
KB Financial Group Inc. and Subsidiaries
Consolidated Interim Statements of Cash Flows
Three-Month Periods Ended March 31, 2021 and 2020 (cont’d)
(in millions of Korean won) | Notes | 2021 (Unaudited) | 2020 (Unaudited) | |||||||||
Cash flows from investing activities | ||||||||||||
Net cash flows from derivative financial instruments for hedging purposes | 5,658 | (46,115 | ) | |||||||||
Disposal of financial asset at fair value through profit or loss | 2,214,438 | 3,442,701 | ||||||||||
Acquisition of financial asset at fair value through profit or loss | (2,403,819 | ) | (4,789,257 | ) | ||||||||
Disposal of financial investments | 19,790,905 | 26,598,314 | ||||||||||
Acquisition of financial investments | (17,607,869 | ) | (28,277,137 | ) | ||||||||
Disposal in investments in associates and joint ventures | 230,128 | 18,836 | ||||||||||
Acquisition of investments in associates and joint ventures | (30,828 | ) | (18,608 | ) | ||||||||
Disposal of property and equipment | 14,896 | 230 | ||||||||||
Acquisition of property and equipment | (59,456 | ) | (81,746 | ) | ||||||||
Disposal of investment property | — | 4,857 | ||||||||||
Acquisition of investment property | — | (310 | ) | |||||||||
Disposal of intangible assets | 3,376 | 6,468 | ||||||||||
Acquisition of intangible assets | (30,998 | ) | (33,427 | ) | ||||||||
Net cash flows from the change in subsidiaries | 77,093 | (6,357 | ) | |||||||||
Others | (26,892 | ) | (15,094 | ) | ||||||||
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Net cash inflow (outflow) from investing activities | 2,176,632 | (3,196,645 | ) | |||||||||
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|
| |||||||||
Cash flows from financing activities | ||||||||||||
Net cash flows from derivative financial instruments for hedging purposes | (21,051 | ) | (13,297 | ) | ||||||||
Net increase in borrowings | 551,698 | 3,672,924 | ||||||||||
Increase in debentures | 13,546,169 | 25,945,744 | ||||||||||
Decrease in debentures | (14,376,695 | ) | (23,319,400 | ) | ||||||||
Decrease in other payables from trust accounts | 830,570 | 3,632 | ||||||||||
Dividends paid on hybrid securities | (13,562 | ) | (3,256 | ) | ||||||||
Issuance of hybrid securities | 598,659 | — | ||||||||||
Net increase in non-controlling interests | (11,832 | ) | (12,591 | ) | ||||||||
Redemption of principal elements of lease payments | (60,643 | ) | (58,188 | ) | ||||||||
Others | (124,091 | ) | 246,845 | |||||||||
|
|
|
| |||||||||
Net cash inflow from financing activities | 919,222 | 6,462,413 | ||||||||||
|
|
|
| |||||||||
Effect of exchange rate changes on cash and cash equivalents | 101,250 | 82,324 | ||||||||||
|
|
|
| |||||||||
Net increase (decrease) in cash and cash equivalents | (489,864 | ) | 2,761,272 | |||||||||
Cash and cash equivalents at the beginning of the period | 31 | 8,685,092 | 6,123,725 | |||||||||
|
|
|
| |||||||||
Cash and cash equivalents at the end of the period | 31 | |||||||||||
|
|
|
|
The above consolidated interim statements of cash flows should be read in conjunction with the accompanying notes.
10
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
1. The Parent Company
KB Financial Group Inc. (the “Parent Company”) was incorporated on September 29, 2008, under the Financial Holding Companies Act of Korea. KB Financial Group Inc. and its subsidiaries (the “Group”) derive substantially all of their revenue and income from providing a broad range of banking and related financial services to consumers and corporations primarily in Korea and in selected international markets. The Parent Company’s principal business includes ownership and management of subsidiaries and associated companies that are engaged in financial services or activities. The Parent Company’s headquarter is located at 26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd. and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Group established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Group acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Group included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015, and KB Insurance Co., Ltd. became one of the subsidiaries through a tender offer in May 2017. Also, the Group included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary in October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed its name to KB Securities Co., Ltd. in January 2017. In August 2020, the Group acquired Prudential Life Insurance Company of Korea Ltd., which was classified as a subsidiary.
The Parent Company’s share capital as of March 31, 2021, isW 2,090,558 million. The Parent Company has been listed on the Korea Exchange (“KRX”) since October 10, 2008, and on the New York Stock Exchange (“NYSE”) for its American Depositary Shares (“ADS”) since September 29, 2008. Number of shares authorized in its Articles of Incorporation is 1,000 million.
11
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
2. Basis of Preparation
2.1 Application of Korean IFRS
The Group maintains its accounting records in Korean won and prepares statutory consolidated financial statements in the Korean language in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”). The accompanying consolidated interim financial statements have been translated into English from the Korean language consolidated financial statements.
The consolidated financial statements of the Group have been prepared in accordance with Korean IFRS. These are the standards and related interpretations issued by the International Accounting Standards Board (“IASB”) that have been adopted by the Republic of Korea.
The preparation of the consolidated financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 2.4.
The Group’s consolidated interim financial statements for the three-month period ended March 31, 2021, have been prepared in accordance with Korean IFRS No.1034 Interim Financial Reporting and contain less information than is required in annual consolidated financial statements. Selected explanatory notes include descriptions of transactions or events that are significant in understanding change in financial position and financial performance of the Group since the end of the previous annual reporting period. These consolidated interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as of March 31, 2021.
2.1.1 The Group has applied the following amended standards for the first time for its annual reporting period commencing January 1, 2021.
• | Amendments to Korean IFRS No.1116 Leases – Practical expedient for COVID-19-Related Rent Exemption, Concessions, Suspension |
As a practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification, and the amounts recognized in profit or loss as a result of applying this exemption should be disclosed. These amendments do not have a significant impact on the consolidated financial statements.
• | Amendments to Korean IFRS No.1109 Financial Instruments, Korean IFRS No.1039 Financial Instruments: Recognition and Measurement, Korean IFRS No.1107 Financial Instruments: Disclosure, Korean IFRS No.1104 Insurance Contracts and Korean IFRS No.1116 Lease – Interest Rate Benchmark Reform |
In relation to interest rate benchmark reform, the amendments provide a practical expedient allowing entities to change the effective interest rate instead of changing the carrying amount and apply hedge accounting without discontinuance although the interest rate benchmark is replaced in hedging relationship. These amendments do not have a significant impact on the consolidated financial statements.
12
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
2.1.2 The following amended standards have been published that are not mandatory for December 31, 2021 reporting periods and have not been early adopted by the Group.
• | Amendment to Korean IFRS No.1116 - Covid-19-Related Rent Concessions etc. beyond June 30, 2021 |
The application of the practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification, is extended to lease payments originally due on or before 30 June 2022. A lessee shall apply the practical expedient consistently to eligible contracts with similar characteristics and in similar circumstances. The amendment should be applied for annual periods beginning on or after April 1, 2021, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
• | Amendments to Korean IFRS No.1103 Business Combination – Reference to the Conceptual Framework |
The amendments update a reference of definition of assets and liabilities to qualify for recognition in revised Conceptual Framework for Financial Reporting. However, the amendments add an exception for the recognition of liabilities and contingent liabilities within the scope of Korean IFRS No.1037 Provisions, Contingent Liabilities and Contingent Assets, and Korean IFRS No.2121 Levies. The amendments also confirm that contingent assets should not be recognized at the acquisition date. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
• | Amendments to Korean IFRS No.1016 Property, Plant and Equipment—Proceeds before intended use |
The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. Instead, the entity will recognize the proceeds from selling such items, and the costs of producing those items, as profit or loss. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
• | Amendments to Korean IFRS No.1037 Provisions, Contingent Liabilities and Contingent Assets—Onerous Contracts: Cost of Fulfilling a Contract |
The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
13
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
2.1.2 The following amended standards have been published that are not mandatory for December 31, 2021 reporting periods and have not been early adopted by the Group. (cont’d)
• | Annual improvements to Korean IFRS 2018-2020 |
Annual improvements of Korean IFRS 2018-2020 Cycle should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
• | Korean IFRS No.1101 First time Adoption of Korean International Financial Reporting Standards – Subsidiaries that are first-time adopters |
• | Korean IFRS No.1109 Financial Instruments – Fees related to the 10% test for derecognition of financial liabilities |
• | Korean IFRS No.1116 Leases – Lease incentives |
• | Korean IFRS No.1041 Agriculture – Measuring fair value |
• | Amendments to Korean IFRS No.1001 Presentation of Financial Statements—Classification of Liabilities as Current or Non-current |
The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise right to defer settlement of the liability or the management’s expectations thereof. Also, the settlement of liability includes the transfer of the entity’s own equity instruments; however, it would be excluded if an option to settle the liability by the transfer of the entity’s own equity instruments is recognized separately from the liability as an equity component of a compound financial instrument. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
14
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
2.2 Measurement Basis
The consolidated financial statements have been prepared based on the historical cost accounting model unless otherwise specified.
2.3 Functional and Presentation Currency
Items included in the financial statements of each entity of the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated financial statements are presented in Korean won, which is the Parent Company’s functional and presentation currency.
2.4 Critical Accounting Estimates
The preparation of the consolidated financial statements requires the application of accounting policies, certain critical accounting estimates and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses). Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment at the reporting date are different from the actual environment.
Estimates and underlying assumptions are continually evaluated, and changes in accounting estimates are recognized in the period in which the estimates are changed and in any future periods affected.
Significant accounting estimates and assumptions applied in the preparation of these condensed consolidated interim financial statements are the same as those applied to the consolidated financial statements for the year ended December 31, 2020, except for the estimates used to determine income tax expense.
3. Significant Accounting Policies
The significant accounting policies and calculation methods applied in the preparation of these consolidated interim financial statements are the same as those applied to the consolidated financial statements for the year ended December 31, 2020, except for the impact of changes due to adopting new and amended standards and interpretations described in Note 2.1 and below paragraph.
Income tax expense for the interim period is measured applying the expected average annual income tax rate for the expected total annual income.
15
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4. Financial Risk Management
4.1 Summary
4.1.1 Overview of financial risk management policy
The financial risks that the Group is exposed to are credit risk, market risk, liquidity risk, operational risk and others.
The Group’s risk management system focuses on efficiently supporting long-term strategy and management decisions through increased risk transparency, spread of risk management culture and preemptive response to rapidly changing financial environments. Credit risk, market risk, liquidity risk, and operational risk are recognized as the Group’s significant risks and measured and managed by quantifying them in the form of Internal Capital or Value at Risk (“VaR”) using statistical methods.
4.1.2 Risk management organization
4.1.2.1 Risk Management Committee
The Risk Management Committee, as the ultimate decision-making body, deals with risk-related issues, such as establishing risk management strategies in accordance with the strategic direction determined by the Board of Directors, determining the affordable level of risk appetite, reviewing the level of risk and the status of risk management activities, approving the application of risk management systems, methodologies, and major improvements, and establishing and approving risk management policies and procedures to timely recognize, measure, monitor, and control risks arising from various transactions by the Group.
4.1.2.2 Risk Management Council
The Risk Management Council is responsible for consulting on matters delegated by the Risk Management Committee and requests for review by the Management Executive Committee, consulting on details of each subsidiary’s risk management policies and procedures, monitoring the Group’s risk management status, and establishing and implementing necessary measures.
4.1.2.3 Risk Management Department
The Risk Management Department manages risk management policies, procedures, and business processes.
4.2 Credit Risk
4.2.1 Overview of credit risk
Credit risk is the risk of loss from the portfolio of assets held due to the counterparty’s default, breach of contract and deterioration of credit quality. For risk management reporting purposes, the Group considers all factors of credit risk exposure, such as default risk of individual borrowers, country risk and risk of specific sectors.
The Group defines default as the definition applied to the calculation of Capital Adequacy Ratio under the new Basel Accord (Basel III).
16
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.2.2 Credit risk management
The Group measures the expected loss and economic capital for the assets subject to credit risk management, including on-balance and off-balance assets, and uses them as management indicators. The Group allocates and manages credit risk economic capital limits.
In addition, to prevent excessive concentration of exposures by borrower and industry, the total exposure limit at the Group level is introduced, applied, and managed to control the credit concentration risk.
All of the Kookmin Bank’s loan customers (individuals and corporates) are assigned with credit rating and managed by a comprehensive internal credit evaluation system. For individuals, the credit rating takes into account the personal information, income and job information, asset information, and bank transaction information. For corporates, the credit rating is evaluated by analyzing and utilizing financial and non-financial information which measures current and future corporate value and ability to repay the debt. Also, the extent to which it has the ability to meet debt obligations is comprehensively considered.
The credit rating, once assigned, serves as the fundamental instrument in Kookmin Bank’s credit risk management, and is applied in a wide range of credit risk management processes, including credit approval, credit limit management, loan pricing and computation of allowance for credit loss. For corporates, Kookmin Bank conducts a regular credit evaluation at least once a year, and the review and supervision departments regularly validate the adequacy of credit ratings to manage credit risks.
KB Kookmin Card Co., Ltd.’s credit scoring system is divided into Application Scoring System (“ASS”) and Behavior Scoring System (“BSS”). For applications that meet the eligibility criteria for card issuance, the card will be issued only if the ASS credit rating is above the standard. KB Kookmin Card Co., Ltd.’s internal information, a credit bureau company’s external information and personal information on the application are used to calculate the ASS credit rating. The BSS, which is recalculated on a weekly basis, predicts the delinquency probability of cardholders, and utilizes it to monitor cardholders and portfolio risk.
In order to establish a credit risk management system, the Group manages credit risk by forming a separate risk management organization. In particular, independent of the Sales Group, the Credit Analysis Group of Kookmin Bank, a subsidiary, is in charge of loan policy, loan system, credit rating, credit analysis, follow-up management and corporate restructuring. The Risk Management Group of Kookmin Bank is responsible for establishing policies on credit risk management, measuring and limiting economic capital of credit risk, setting credit limits, credit review, and verification of credit rating models.
17
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.2.3 Maximum exposure to credit risk
The Group’s maximum exposures of financial instruments other than equity securities, to credit risk without consideration of collateral values as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Financial assets | ||||||||
Due from financial institutions measured at amortized cost * | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Due from financial institutions measured at fair value through profit or loss | 123,124 | 100,094 | ||||||
Securities measured at fair value through profit or loss | 57,558,818 | 58,415,100 | ||||||
Loans measured at fair value through profit or loss | 318,904 | 337,983 | ||||||
Financial instruments indexed to the price of gold | 98,387 | 89,965 | ||||||
Derivatives | 3,733,367 | 5,545,385 | ||||||
Loans measured at amortized cost * | 383,242,460 | 377,166,984 | ||||||
Financial investments | ||||||||
Securities measured at fair value through other comprehensive income | 56,292,151 | 58,456,889 | ||||||
Securities measured at amortized cost * | 36,622,005 | 36,870,229 | ||||||
Loans measured at fair value through other comprehensive income | 350,651 | 293,409 | ||||||
Other financial assets * | 18,806,233 | 14,167,689 | ||||||
|
|
|
| |||||
584,187,395 | 574,163,818 | |||||||
|
|
|
| |||||
Off-balance sheet items | ||||||||
Acceptances and guarantees contracts | 8,353,561 | 8,548,928 | ||||||
Financial guarantee contracts | 5,213,646 | 4,964,468 | ||||||
Commitments | 161,316,700 | 159,133,983 | ||||||
|
|
|
| |||||
174,883,907 | 172,647,379 | |||||||
|
|
|
| |||||
|
|
|
|
* | After netting of allowance. |
4.2.4 Credit risk of loans
The Group maintains allowances for loan losses associated with credit risk of loans to manage its credit risk.
The Group assesses expected credit losses and recognizes loss allowances of financial assets at amortized cost and financial assets at fair value through other comprehensive income. Financial assets at fair value through profit or loss are excluded. Expected credit losses are a probability-weighted estimate of possible credit losses occurred in a certain range by reflecting reasonable and supportable information that is reasonably available at the reporting date without undue cost or effort, including information about past events, current conditions and forecasts of future economic conditions. The Group measures the expected credit losses of loans classified as financial assets measured at amortized cost, by deducting allowances for credit losses. The expected credit losses of loans classified as financial assets at fair value through other comprehensive income are presented in other comprehensive income in the consolidated financial statements.
18
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.2.4.1 Credit risk exposure
Credit qualities of loans as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | Not applying expected credit losses | Total | |||||||||||||||||
Non-impaired | Impaired | |||||||||||||||||||
Loans measured at amortized cost * |
| |||||||||||||||||||
Corporate | ||||||||||||||||||||
Grade 1 | ||||||||||||||||||||
Grade 2 | 62,581,461 | 7,354,007 | 50,290 | — | 69,985,758 | |||||||||||||||
Grade 3 | 2,666,330 | 2,446,430 | 10,407 | — | 5,123,167 | |||||||||||||||
Grade 4 | 570,070 | 960,167 | 21,783 | — | 1,552,020 | |||||||||||||||
Grade 5 | 47,546 | 451,091 | 2,226,992 | — | 2,725,629 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
161,322,125 | 16,285,443 | 2,313,848 | — | 179,921,416 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Retail | ||||||||||||||||||||
Grade 1 | 164,475,039 | 3,956,968 | 9,754 | — | 168,441,761 | |||||||||||||||
Grade 2 | 8,781,970 | 4,307,224 | 38,373 | — | 13,127,567 | |||||||||||||||
Grade 3 | 2,491,617 | 1,323,751 | 13,246 | — | 3,828,614 | |||||||||||||||
Grade 4 | 220,675 | 400,768 | 9,044 | — | 630,487 | |||||||||||||||
Grade 5 | 25,610 | 586,498 | 689,254 | — | 1,301,362 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
175,994,911 | 10,575,209 | 759,671 | — | 187,329,791 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Credit card | ||||||||||||||||||||
Grade 1 | 8,793,944 | 208,499 | — | — | 9,002,443 | |||||||||||||||
Grade 2 | 6,207,351 | 611,171 | — | — | 6,818,522 | |||||||||||||||
Grade 3 | 1,434,465 | 1,194,015 | — | — | 2,628,480 | |||||||||||||||
Grade 4 | 4,978 | 235,496 | — | — | 240,474 | |||||||||||||||
Grade 5 | 1,785 | 97,652 | 503,400 | — | 602,837 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
16,442,523 | 2,346,833 | 503,400 | — | 19,292,756 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
353,759,559 | 29,207,485 | 3,576,919 | — | 386,543,963 | ||||||||||||||||
|
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|
|
|
|
|
|
| |||||||||||
Loans measured at fair value through other comprehensive income |
| |||||||||||||||||||
Corporate | ||||||||||||||||||||
Grade 1 | 215,321 | — | — | — | 215,321 | |||||||||||||||
Grade 2 | 135,330 | — | — | — | 135,330 | |||||||||||||||
Grade 3 | — | — | — | — | — | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | — | — | — | — | — | |||||||||||||||
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| |||||||||||
350,651 | — | — | — | 350,651 | ||||||||||||||||
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| |||||||||||
350,651 | — | — | — | 350,651 | ||||||||||||||||
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| |||||||||||
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|
19
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.2.4.1 Credit risk exposure (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | Not applying expected credit losses | Total | |||||||||||||||||
Non-impaired | Impaired | |||||||||||||||||||
Loans measured at amortized cost * |
| |||||||||||||||||||
Corporate | ||||||||||||||||||||
Grade 1 | ||||||||||||||||||||
Grade 2 | 61,701,031 | 7,060,916 | 7,817 | — | 68,769,764 | |||||||||||||||
Grade 3 | 2,702,369 | 2,507,455 | 3,055 | — | 5,212,879 | |||||||||||||||
Grade 4 | 611,743 | 1,085,704 | 8,562 | — | 1,706,009 | |||||||||||||||
Grade 5 | 18,792 | 394,935 | 2,162,732 | — | 2,576,459 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
158,067,246 | 15,695,811 | 2,189,208 | — | 175,952,265 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Retail | ||||||||||||||||||||
Grade 1 | 163,261,012 | 3,536,290 | 6,789 | — | 166,804,091 | |||||||||||||||
Grade 2 | 8,828,445 | 4,197,409 | 34,896 | — | 13,060,750 | |||||||||||||||
Grade 3 | 2,519,004 | 1,322,878 | 9,012 | — | 3,850,894 | |||||||||||||||
Grade 4 | 225,262 | 402,881 | 8,352 | — | 636,495 | |||||||||||||||
Grade 5 | 39,466 | 636,361 | 672,397 | — | 1,348,224 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
174,873,189 | 10,095,819 | 731,446 | — | 185,700,454 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Credit card | ||||||||||||||||||||
Grade 1 | 8,210,540 | 412,555 | — | — | 8,623,095 | |||||||||||||||
Grade 2 | 5,831,625 | 708,405 | — | — | 6,540,030 | |||||||||||||||
Grade 3 | 1,526,382 | 1,216,434 | — | — | 2,742,816 | |||||||||||||||
Grade 4 | 16,978 | 247,241 | — | — | 264,219 | |||||||||||||||
Grade 5 | 2,101 | 118,907 | 506,462 | — | 627,470 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
15,587,626 | 2,703,542 | 506,462 | — | 18,797,630 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
348,528,061 | 28,495,172 | 3,427,116 | — | 380,450,349 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Loans measured at fair value through other comprehensive income |
| |||||||||||||||||||
Corporate | ||||||||||||||||||||
Grade 1 | 235,469 | — | — | — | 235,469 | |||||||||||||||
Grade 2 | 57,940 | — | — | — | 57,940 | |||||||||||||||
Grade 3 | — | — | — | — | — | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | — | — | — | — | — | |||||||||||||||
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| |||||||||||
293,409 | — | — | — | 293,409 | ||||||||||||||||
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293,409 | — | — | — | 293,409 | ||||||||||||||||
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* | Before netting of allowance |
20
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.2.4.1 Credit risk exposure (cont’d)
Credit qualities of loans graded according to internal credit ratings as of March 31, 2021 and December 31, 2020, are as follows:
Range of Probability of Default (%) | Retail | Corporate | ||||
Grade 1 | 0.0 ~ 1.0 | 1 ~ 5 grade | AAA ~ BBB+ | |||
Grade 2 | 1.0 ~ 5.0 | 6 ~ 8 grade | BBB ~ BB | |||
Grade 3 | 5.0 ~ 15.0 | 9 ~ 10 grade | BB- ~ B | |||
Grade 4 | 15.0 ~ 30.0 | 11 grade | B- ~ CCC | |||
Grade 5 | 30.0 ~ | 12 grade or under | CC or under |
4.2.4.2 Quantification of the extent to which collateral and other credit enhancements mitigate credit risk of loans as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | Total | ||||||||||||||
Non-impaired | Impaired | |||||||||||||||
Guarantees | ||||||||||||||||
Deposits and savings | 5,265,175 | 131,316 | 68,553 | 5,465,044 | ||||||||||||
Property and equipment | 12,115,188 | 761,144 | 231,031 | 13,107,363 | ||||||||||||
Real estate | 169,612,676 | 13,254,046 | 1,816,897 | 184,683,619 | ||||||||||||
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(In millions of Korean won) | December 31, 2020 | |||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | Total | ||||||||||||||
Non-impaired | Impaired | |||||||||||||||
Guarantees | ||||||||||||||||
Deposits and savings | 5,210,681 | 149,745 | 67,047 | 5,427,473 | ||||||||||||
Property and equipment | 11,607,675 | 808,476 | 120,471 | 12,536,622 | ||||||||||||
Real estate | 170,171,707 | 12,836,286 | 1,836,865 | 184,844,858 | ||||||||||||
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21
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.2.5 Credit risk of securities
Credit qualities of securities other than equity securities that are exposed to credit risk as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | Not applying expected credit losses | Total | |||||||||||||||||
Non-impaired | Impaired | |||||||||||||||||||
Securities measured at amortized cost * |
| |||||||||||||||||||
Grade 1 | ||||||||||||||||||||
Grade 2 | 746,583 | — | — | — | 746,583 | |||||||||||||||
Grade 3 | 40,071 | 7,344 | — | — | 47,415 | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | — | — | — | — | — | |||||||||||||||
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36,617,700 | 7,344 | — | — | 36,625,044 | ||||||||||||||||
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Securities measured at fair value through other comprehensive income |
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Grade 1 | 52,335,646 | — | — | — | 52,335,646 | |||||||||||||||
Grade 2 | 3,903,990 | — | — | — | 3,903,990 | |||||||||||||||
Grade 3 | 37,017 | — | — | — | 37,017 | |||||||||||||||
Grade 4 | 15,498 | — | — | — | 15,498 | |||||||||||||||
Grade 5 | — | — | — | — | — | |||||||||||||||
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56,292,151 | — | — | — | 56,292,151 | ||||||||||||||||
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(In millions of Korean won) | December 31, 2020 | |||||||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | Not applying expected credit losses | Total | |||||||||||||||||
Non-impaired | Impaired | |||||||||||||||||||
Securities measured at amortized cost * |
| |||||||||||||||||||
Grade 1 | ||||||||||||||||||||
Grade 2 | 359,551 | — | — | — | 359,551 | |||||||||||||||
Grade 3 | 38,847 | 7,061 | — | — | 45,908 | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | — | — | — | — | — | |||||||||||||||
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36,866,117 | 7,061 | — | — | 36,873,178 | ||||||||||||||||
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Securities measured at fair value through other comprehensive income |
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Grade 1 | 54,576,777 | — | — | — | 54,576,777 | |||||||||||||||
Grade 2 | 3,746,200 | — | — | — | 3,746,200 | |||||||||||||||
Grade 3 | 126,391 | — | — | — | 126,391 | |||||||||||||||
Grade 4 | 7,521 | — | — | — | 7,521 | |||||||||||||||
Grade 5 | — | — | — | — | — | |||||||||||||||
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58,456,889 | — | — | — | 58,456,889 | ||||||||||||||||
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* | Before netting of allowance |
22
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.2.5 Credit risk of securities (cont’d)
Credit qualities of securities other than equity securities, according to the credit ratings by external rating agencies as of March 31, 2021 and December 31, 2020, are as follows:
Credit quality | Domestic | Foreign | ||||||||||||
KIS | NICE P&I | KAP | FnPricing Inc. | S&P | Fitch-IBCA | Moody’s | ||||||||
Grade 1 | AA0 to AAA | AA0 to AAA | AA0 to AAA | AA0 to AAA | A- to AAA | A- to AAA | A3 to Aaa | |||||||
Grade 2 | A- to AA- | A- to AA- | A- to AA- | A- to AA- | BBB- to BBB+ | BBB- to BBB+ | Baa3 to Baa1 | |||||||
Grade 3 | BBB0 to BBB+ | BBB0 to BBB+ | BBB0 to BBB+ | BBB0 to BBB+ | BB to BB+ | BB to BB+ | Ba2 to Ba1 | |||||||
Grade 4 | BB0 to BBB- | BB0 to BBB- | BB0 to BBB- | BB0 to BBB- | B+ to BB- | B+ to BB- | B1 to Ba3 | |||||||
Grade 5 | BB- or under | BB- or under | BB- or under | BB- or under | B or under | B or under | B2 or under |
Credit qualities of debt securities denominated in Korean won are based on the lowest credit rating by the domestic agencies above, and those denominated in foreign currencies are based on the lowest credit rating by the foreign agencies above.
4.2.6 Credit risk of due from financial institutions
Credit qualities of due from financial institutions as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | Not applying expected credit losses | Total | |||||||||||||||||
Non-impaired | Impaired | |||||||||||||||||||
Due from financial institutions measured at amortized cost * |
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Grade 1 | ||||||||||||||||||||
Grade 2 | 529,443 | — | — | — | 529,443 | |||||||||||||||
Grade 3 | 64,273 | 11,759 | — | — | 76,032 | |||||||||||||||
Grade 4 | 403,148 | — | — | — | 403,148 | |||||||||||||||
Grade 5 | 10,634 | — | — | — | 10,634 | |||||||||||||||
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(In millions of Korean won) | December 31, 2020 | |||||||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | Not applying expected credit losses | Total | |||||||||||||||||
Non-impaired | Impaired | |||||||||||||||||||
Due from financial institutions measured at amortized cost * |
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Grade 1 | ||||||||||||||||||||
Grade 2 | 334,371 | — | — | — | 334,371 | |||||||||||||||
Grade 3 | 445,732 | 13,099 | — | — | 458,831 | |||||||||||||||
Grade 4 | 479,142 | — | — | — | 479,142 | |||||||||||||||
Grade 5 | 13,520 | — | 283 | — | 13,803 | |||||||||||||||
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* | Before netting of allowance |
The classification criteria of the credit qualities of due from financial institutions as of March 31, 2021 and December 31, 2020, is the same as the criteria for securities other than equity securities.
23
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.2.7 Credit risk concentration analysis
4.2.7.1 Classifications of corporate loans by industry as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||
Loans | % | Allowances | Carrying amount | |||||||||||||
Financial institutions | 10.07 | |||||||||||||||
Manufacturing | 46,473,382 | 25.73 | (464,149 | ) | 46,009,233 | |||||||||||
Service | 76,723,481 | 42.48 | (403,876 | ) | 76,319,605 | |||||||||||
Wholesale & Retail | 23,409,043 | 12.97 | (243,176 | ) | 23,165,867 | |||||||||||
Construction | 4,661,598 | 2.59 | (190,768 | ) | 4,470,830 | |||||||||||
Public sector | 1,641,511 | 0.90 | (74,407 | ) | 1,567,104 | |||||||||||
Others | 9,488,285 | 5.26 | (298,667 | ) | 9,189,618 | |||||||||||
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(In millions of Korean won) | December 31, 2020 | |||||||||||||||
Loans | % | Allowances | Carrying amount | |||||||||||||
Financial institutions | 9.09 | |||||||||||||||
Manufacturing | 45,884,606 | 25.98 | (473,360 | ) | 45,411,246 | |||||||||||
Service | 76,001,877 | 43.04 | (385,093 | ) | 75,616,784 | |||||||||||
Wholesale & Retail | 23,129,457 | 13.10 | (241,021 | ) | 22,888,436 | |||||||||||
Construction | 4,397,814 | 2.49 | (190,819 | ) | 4,206,995 | |||||||||||
Public sector | 1,660,370 | 0.94 | (74,839 | ) | 1,585,531 | |||||||||||
Others | 9,465,289 | 5.36 | (285,660 | ) | 9,179,629 | |||||||||||
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4.2.7.2 Classifications of retail loans and credit card receivables as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||
Loans | % | Allowances | Carrying amount | |||||||||||||
Housing | 42.72 | |||||||||||||||
General | 99,060,633 | 47.94 | (860,712 | ) | 98,199,921 | |||||||||||
Credit card | 19,292,756 | 9.34 | (683,715 | ) | 18,609,041 | |||||||||||
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(In millions of Korean won) | December 31, 2020 | |||||||||||||||
Loans | % | Allowances | Carrying amount | |||||||||||||
Housing | 42.70 | |||||||||||||||
General | 98,388,401 | 48.11 | (848,933 | ) | 97,539,468 | |||||||||||
Credit card | 18,797,630 | 9.19 | (701,496 | ) | 18,096,134 | |||||||||||
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100.00 | ||||||||||||||||
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24
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.2.7.3 Classifications of due from financial institutions, securities other than equity securities and derivative financial assets by industry as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||
Amount | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions measured at amortized cost |
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Finance and insurance | 100.00 | |||||||||||||||
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27,043,996 | 100.00 | (2,701 | ) | 27,041,295 | ||||||||||||
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Due from financial institutions measured at fair value through profit or loss |
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Finance and insurance | 123,124 | 100.00 | — | 123,124 | ||||||||||||
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123,124 | 100.00 | — | 123,124 | |||||||||||||
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Securities measured at fair value through profit or loss |
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Government and government funded institutions | 15,507,544 | 26.95 | — | 15,507,544 | ||||||||||||
Finance and insurance | 34,551,635 | 60.03 | — | 34,551,635 | ||||||||||||
Others | 7,499,639 | 13.02 | — | 7,499,639 | ||||||||||||
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57,558,818 | 100.00 | — | 57,558,818 | |||||||||||||
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Derivative financial assets |
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Government and government funded institutions | 17,354 | 0.47 | — | 17,354 | ||||||||||||
Finance and insurance | 3,251,813 | 87.10 | — | 3,251,813 | ||||||||||||
Others | 464,200 | 12.43 | — | 464,200 | ||||||||||||
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3,733,367 | 100.00 | — | 3,733,367 | |||||||||||||
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Securities measured at fair value through other comprehensive income |
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Government and government funded institutions | 27,228,645 | 48.37 | — | 27,228,645 | ||||||||||||
Finance and insurance | 20,898,341 | 37.12 | — | 20,898,341 | ||||||||||||
Others | 8,165,165 | 14.51 | — | 8,165,165 | ||||||||||||
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56,292,151 | 100.00 | — | 56,292,151 | |||||||||||||
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Securities measured at amortized cost |
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Government and government funded institutions | 25,228,097 | 68.89 | (57 | ) | 25,228,040 | |||||||||||
Finance and insurance | 9,505,108 | 25.95 | (2,496 | ) | 9,502,612 | |||||||||||
Others | 1,891,839 | 5.16 | (486 | ) | 1,891,353 | |||||||||||
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36,625,044 | 100.00 | (3,039 | ) | 36,622,005 | ||||||||||||
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25
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.2.7.3 Classifications of due from financial institutions, securities other than equity securities and derivative financial assets by industry as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||||||
Amount | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions measured at amortized cost |
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Finance and insurance | 100.00 | |||||||||||||||
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22,723,354 | 100.00 | (3,263 | ) | 22,720,091 | ||||||||||||
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Due from financial institutions measured at fair value through profit or loss |
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Finance and insurance | 100,094 | 100.00 | — | 100,094 | ||||||||||||
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100,094 | 100.00 | — | 100,094 | |||||||||||||
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Securities measured at fair value through profit or loss |
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Government and government funded institutions | 16,902,284 | 28.94 | — | 16,902,284 | ||||||||||||
Finance and insurance | 34,244,398 | 58.62 | — | 34,244,398 | ||||||||||||
Others | 7,268,418 | 12.44 | — | 7,268,418 | ||||||||||||
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58,415,100 | 100.00 | — | 58,415,100 | |||||||||||||
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Derivative financial assets |
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Government and government funded institutions | 44,670 | 0.81 | — | 44,670 | ||||||||||||
Finance and insurance | 4,925,535 | 88.82 | — | 4,925,535 | ||||||||||||
Others | 575,180 | 10.37 | — | 575,180 | ||||||||||||
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5,545,385 | 100.00 | — | 5,545,385 | |||||||||||||
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Securities measured at fair value through other comprehensive income |
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Government and government funded institutions | 26,205,864 | 44.83 | — | 26,205,864 | ||||||||||||
Finance and insurance | 24,847,602 | 42.51 | — | 24,847,602 | ||||||||||||
Others | 7,403,423 | 12.66 | — | 7,403,423 | ||||||||||||
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58,456,889 | 100.00 | — | 58,456,889 | |||||||||||||
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Securities measured at amortized cost |
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Government and government funded institutions | 24,018,884 | 65.14 | (30 | ) | 24,018,854 | |||||||||||
Finance and insurance | 11,019,911 | 29.89 | (2,475 | ) | 11,017,436 | |||||||||||
Others | 1,834,383 | 4.97 | (445 | ) | 1,833,938 | |||||||||||
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36,873,178 | 100.00 | (2,950 | ) | 36,870,228 | ||||||||||||
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Due from financial institutions, financial assets at fair value through profit or loss that linked to gold price and derivatives are mostly related to finance and insurance industry with high credit ratings.
26
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.3 Liquidity Risk
4.3.1 Overview of liquidity risk
Liquidity risk is a risk that the Group becomes insolvent due to the mismatch between the inflow and outflow of funds, unexpected cash outflows, or a risk of loss due to financing funds at a high interest rate or disposing of securities at an unfavorable price due to lack of available funds. The Group manages its liquidity risk through analysis of the contractual maturity of interest-bearing assets and liabilities, assets and liabilities related to the other inflows and outflows of funds, and off-balance sheet items related to the inflows and outflows of funds such as currency derivative instruments and others.
4.3.2 Liquidity risk management and indicator
The liquidity risk is managed by risk management policies and liquidity risk management guidelines set forth in these policies applied to all risk management policies and procedures that may arise throughout the overall business of the Group.
The Group calculates and manages cumulative liquidity gaps and liquidity ratio for all transactions and off-balance transactions, that affect the cashflows in Korean won and foreign currency funds raised and operated for the management of liquidity risks and periodically reports them to the Risk Management Council and the Risk Management Committee.
4.3.3 Analysis of remaining contractual maturity of financial liabilities
The cash flows disclosed in the maturity analysis are undiscounted contractual amounts including principal and future interest payments; as such, the table below do not match with the amounts in the consolidated statements of financial position which are based on discounted cash flows. The future interest payments for floating-rate liabilities are calculated on the assumption that the current interest rate is the same until maturity.
27
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.3.3 Analysis of remaining contractual maturity of financial liabilities (cont’d)
Remaining contractual maturity of financial liabilities other than derivatives held for cash flow hedge and off-balance sheet items as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||||||||||||||
On demand | Up to 1 month | 1-3 months | 3-12 months | 1-5 years | Over 5 years | Total | ||||||||||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||
Financial liabilities at fair value through profit or loss 1 | ||||||||||||||||||||||||||||
Financial liabilities designated at fair value through profit or loss 1 | 8,417,988 | — | — | — | — | — | 8,417,988 | |||||||||||||||||||||
Derivatives held for trading 1 | 3,189,331 | — | — | — | — | — | 3,189,331 | |||||||||||||||||||||
Derivatives held for hedging 2 | — | 4,275 | 1,704 | 37,211 | 23,195 | 65 | 66,450 | |||||||||||||||||||||
Deposits 3 | 186,576,963 | 14,941,229 | 27,192,701 | 99,601,143 | 12,010,205 | 1,434,083 | 341,756,324 | |||||||||||||||||||||
Borrowings | 9,017,730 | 16,190,033 | 4,627,567 | 11,389,970 | 8,722,536 | 962,144 | 50,909,980 | |||||||||||||||||||||
Debentures | 16,068 | 2,806,950 | 5,738,444 | 14,110,822 | 35,573,501 | 6,955,759 | 65,201,544 | |||||||||||||||||||||
Lease liabilities | 153 | 21,655 | 40,823 | 143,557 | 296,683 | 96,514 | 599,385 | |||||||||||||||||||||
Other financial liabilities | 193,289 | 31,521,157 | 224,706 | 337,049 | 748,493 | 339,385 | 33,364,079 | |||||||||||||||||||||
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Off-balance sheet items | ||||||||||||||||||||||||||||
Commitments 4 | ||||||||||||||||||||||||||||
Acceptances and guarantees contracts | 8,353,561 | — | — | — | — | — | 8,353,561 | |||||||||||||||||||||
Financial guarantee contracts 5 | 5,213,646 | — | — | — | — | — | 5,213,646 | |||||||||||||||||||||
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Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.3.3 Analysis of remaining contractual maturity of financial liabilities (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||||||||||||||||||
On demand | Up to 1 month | 1-3 months | 3-12 months | 1-5 years | Over 5 years | Total | ||||||||||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||
Financial liabilities at fair value through profit or loss 1 | ||||||||||||||||||||||||||||
Financial liabilities designated at fair value through profit or loss 1 | 9,784,107 | — | — | — | — | — | 9,784,107 | |||||||||||||||||||||
Derivatives held for trading 1 | 5,014,072 | — | — | — | — | — | 5,014,072 | |||||||||||||||||||||
Derivatives held for hedging 2 | — | 3,123 | 4,120 | 62,147 | 35,198 | 109 | 104,697 | |||||||||||||||||||||
Deposits 3 | 182,111,594 | 17,207,360 | 28,485,765 | 99,879,946 | 12,133,364 | 1,664,509 | 341,482,538 | |||||||||||||||||||||
Borrowings | 9,333,894 | 17,730,230 | 4,923,897 | 9,617,100 | 7,616,809 | 938,374 | 50,160,304 | |||||||||||||||||||||
Debentures | 18,105 | 2,806,105 | 6,769,859 | 14,330,686 | 35,512,544 | 6,241,226 | 65,678,525 | |||||||||||||||||||||
Lease liabilities | 205 | 22,372 | 40,376 | 152,084 | 332,033 | 44,882 | 591,952 | |||||||||||||||||||||
Other financial liabilities | 217,866 | 24,153,880 | 208,745 | 329,291 | 748,593 | 215,447 | 25,873,822 | |||||||||||||||||||||
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Commitments 4 | ||||||||||||||||||||||||||||
Acceptances and guarantees contracts | 8,548,928 | — | — | — | — | — | 8,548,928 | |||||||||||||||||||||
Financial guarantee contracts 5 | 4,964,468 | — | — | — | — | — | 4,964,468 | |||||||||||||||||||||
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1 | Financial liabilities measured or designated at fair value through profit or loss and derivatives held for trading are not managed by contractual maturity because they are expected to be traded or redeemed before maturity. Therefore, the carrying amounts of those financial instruments are included in the ‘On demand’ category. |
2 | Cash flows of derivative instruments held for hedging are shown at net amounts of cash inflows and outflows by remaining contractual maturity. |
3 | Deposits that are contractually repayable on demand or on short notice are included in the ‘On demand’ category. |
4 | Commitments are included in the ‘On demand’ category because payments can be requested at any time. |
5 | Cash flows under financial guarantee contracts are classified based on the earliest period that the contract can be executed. |
29
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.4 Market Risk
4.4.1 Concept
Market risk refers to risks that can result in losses due to changes in market factors such as interest rates, stock prices, and exchange rates etc., which arise from securities and derivatives and others. The most significant risks associated with trading position are interest rate risk and currency risk, and additional risks include stock price risk. The non-trading position is also exposed to interest rate risk. The Group manages the market risks by dividing them into those arising from the trading position and those arising from the non-trading position. The above market risks are measured and managed by subsidiaries.
4.4.2 Risk management
The Group sets and monitors internal capital limits for market and interest rate risk to manage the risks of trading and non-trading positions. In order to manage market risk efficiently, the Group maintains risk management systems and procedures such as trading policies and procedures, market risk management guidelines for trading positions, and interest rate risk management guidelines for non-trading positions. The entire process is carried out through consultation with the Risk Management Council and approval of the Risk Management Committee of the Group.
In case of Kookmin Bank, a major subsidiary, the Risk Management Council establishes and enforces overall market risk management policies for market risk management and decides to establish position limits, loss limits, VaR limits, and approves non-standard new products. In addition, the Market Risk Management Committee, chaired by Chief Risk Officer (“CRO”), is a practical decision-making body for market risk management and determines position limits, loss limits, VaR limits, sensitivity limits, and scenario loss limits for each department of business group.
Kookmin Bank’s Asset-Liability Management Committee (“ALCO”) determines interest rate and commission operating standards and Asset Liability Management (“ALM”) operation policies and enacts and revises relevant guidelines. The Risk Management Committee and the Risk Management Council monitor the establishment and enforcement of ALM risk management policies and enact and revise ALM risk management guidelines. Interest rate risk limits are set based on future asset and liability positions and expected interest rate volatility, which reflect annual business plans. The ALM Department and the Risk Management Department regularly measure and monitor interest rate risks and report the status and limit of interest rate risk including changes in Economic Value of Equity (“△EVE”), changes in Net Interest Income (“△NII”), and duration gap to the ALCO and the Risk Management Council on a monthly basis, and to the Risk Management Committee on a quarterly basis. To ensure the adequacy of interest rate and liquidity risk management, the Risk Management Department assigns the limits, monitors and reviews the procedures and tasks of ALM operations conducted by the ALM department, and reports to the management independently.
30
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
4.4.2 Risk management (cont’d)
The Group is closely monitoring the outputs of various industry groups and markets that manage the transition to new interest rate, including announcements by Inter-Bank Offered Rate (“IBOR”) regulation authority. Regulation authority has made it clear that as of December 31, 2021, they will no longer persuade or force banks to submit IBORs. In response to these announcements, the Group established an IBOR transition program and plan consisting of major business areas such as finance, accounting, tax, legal, IT, and risk. The program is under the control of the CFO and reports matters to the board of directors and to a council with senior management members. The purpose of the program is to understand where exposure to IBOR occurs within the business and prepare and implement an action plan to facilitate the transition to alternative interest rate. The Group aims to complete the transition and alternative plan by the year-end of 2021. In addition, the regulators have selected the Korean government bond/monetary stabilization bond RP rate as the Risk-Free Rate (“RFR”), and Korea Securities Depository is planning to calculate and publish the RFR by 3rd quarter of 2021. In the long-term, the RFR would substitute the CD rate in an emergency (discontinued calculation, decreased reliability etc.). The Group continues its efforts as a market participant to actively express opinions so that the index interest rate reform can be carried out in the direction of minimizing the financial and non-financial impacts and operational risks on the Group and minimizing confusion among stakeholders.
4.5 Operational Risk
4.5.1 Concept
The Group defines operational risks broadly as all financial and non-financial risks from operating activities that negatively affect capital.
4.5.2 Risk management
The purpose of operational risk management is not only to comply with supervisory and regulatory requirements, but also to spread risk management culture, strengthen internal control, improve processes and provide timely feedback to management and all employees. Kookmin Bank, a subsidiary, established a Business Continuity Planning (BCP) to carry out continuous work in emergency situations and established alternative facilities. The Group conducts simulation training for headquarters and IT departments to check the business continuity framework.
31
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
5. Segment Information
5.1 Overall Segment Information and Business Segments
The Group classifies reporting segments based on the nature of the products and services provided, the type of customer, and the Group’s management organization.
Banking business | Corporate banking | Loans, deposit products and other related financial services to large, small and medium-sized enterprises and SOHOs | ||
Retail banking | Loans, deposit products and other related financial services to individuals and households | |||
Other banking services | Trading activities in securities and derivatives, funding and other supporting activities | |||
Securities business | Investment banking, brokerage services and other supporting activities | |||
Non-life insurance business | Non-life insurance and other supporting activities | |||
Credit card business | Credit sale, cash service, card loan and other supporting activities | |||
Life insurance business | Life insurance and other supporting activities |
32
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
5.1 Overall Segment Information and Business Segments (cont’d)
Financial information by business segment as of March 31, 2021 and December 31, 2020 and for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||||||||||||||||||||||||||||||||||
Banking business | Securities | Non-life insurance | Credit card | Life insurance | Others | Consolidation adjustment | Total | |||||||||||||||||||||||||||||||||||||
Corporate banking | Retail banking | Other banking services | Sub-total | |||||||||||||||||||||||||||||||||||||||||
Operating revenues from external customers | ||||||||||||||||||||||||||||||||||||||||||||
Intersegment operating revenues (expenses) | 31,727 | — | 49,825 | 81,552 | (15,044 | ) | (19,454 | ) | (34,302 | ) | 9,937 | (12,891 | ) | (9,798 | ) | — | ||||||||||||||||||||||||||||
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840,913 | 727,238 | 464,467 | 2,032,618 | 511,265 | 302,452 | 408,353 | 200,746 | 197,652 | (9,798 | ) | 3,643,288 | |||||||||||||||||||||||||||||||||
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Net interest income | 901,901 | 828,768 | 78,333 | 1,809,002 | 133,599 | 153,351 | 339,598 | 124,383 | 83,178 | (811 | ) | 2,642,300 | ||||||||||||||||||||||||||||||||
Interest income | 1,257,389 | 1,064,703 | 221,514 | 2,543,606 | 195,733 | 153,596 | 431,078 | 124,422 | 184,330 | (7,828 | ) | 3,624,937 | ||||||||||||||||||||||||||||||||
Interest expense | (355,488 | ) | (235,935 | ) | (143,181 | ) | (734,604 | ) | (62,134 | ) | (245 | ) | (91,480 | ) | (39 | ) | (101,152 | ) | 7,017 | (982,637 | ) | |||||||||||||||||||||||
Net fee and commission income (expenses) | 102,211 | 138,225 | 76,455 | 316,891 | 301,027 | (41,263 | ) | 149,611 | (5,563 | ) | 247,522 | (1,046 | ) | 967,179 | ||||||||||||||||||||||||||||||
Fee and commission income | 129,321 | 169,811 | 105,473 | 404,605 | 334,090 | 2,373 | 405,898 | 13 | 283,478 | (71,419 | ) | 1,359,038 | ||||||||||||||||||||||||||||||||
Fee and commission expense | (27,110 | ) | (31,586 | ) | (29,018 | ) | (87,714 | ) | (33,063 | ) | (43,636 | ) | (256,287 | ) | (5,576 | ) | (35,956 | ) | 70,373 | (391,859 | ) | |||||||||||||||||||||||
Net insurance income | — | — | — | — | — | 138,959 | 2,999 | 31,503 | — | 753 | 174,214 | |||||||||||||||||||||||||||||||||
Insurance income | — | — | — | — | — | 3,171,259 | 5,808 | 1,089,715 | — | (11,180 | ) | 4,255,602 | ||||||||||||||||||||||||||||||||
Insurance expenses | — | — | — | — | — | (3,032,300 | ) | (2,809 | ) | (1,058,212 | ) | — | 11,933 | (4,081,388 | ) | |||||||||||||||||||||||||||||
Net gains (losses) on financial instruments at fair value through profit or loss | 30,611 | — | 97,715 | 128,326 | 41,557 | 57,334 | (131 | ) | 63,511 | (32,586 | ) | (33,051 | ) | 224,960 | ||||||||||||||||||||||||||||||
Net other operating income (expenses) | (193,810 | ) | (239,755 | ) | 211,964 | (221,601 | ) | 35,082 | (5,929 | ) | (83,724 | ) | (13,088 | ) | (100,462 | ) | 24,357 | (365,365 | ) |
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Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
5.1 Overall Segment Information and Business Segments (cont’d)
(In millions of Korean won) | 2021 | |||||||||||||||||||||||||||||||||||||||||||
Banking business | Securities | Non-life insurance | Credit card | Life insurance | Others | Consolidation adjustment | Total | |||||||||||||||||||||||||||||||||||||
Corporate banking | Retail banking | Other banking services | Sub-total | |||||||||||||||||||||||||||||||||||||||||
General and administrative expenses | ||||||||||||||||||||||||||||||||||||||||||||
Operating profit before provision for credit losses | 446,178 | 210,080 | 351,720 | 1,007,978 | 288,561 | 93,314 | 265,939 | 152,562 | 98,859 | 13,008 | 1,920,221 | |||||||||||||||||||||||||||||||||
Reversal (provision) for credit losses | (29,254 | ) | (27,430 | ) | 89 | (56,595 | ) | (863 | ) | 150 | (78,936 | ) | (292 | ) | (36,547 | ) | (312 | ) | (173,395 | ) | ||||||||||||||||||||||||
Net operating income | 416,924 | 182,650 | 351,809 | 951,383 | 287,698 | 93,464 | 187,003 | 152,270 | 62,312 | 12,696 | 1,746,826 | |||||||||||||||||||||||||||||||||
Share of profit (loss) of associates and joint ventures | — | — | 37,202 | 37,202 | 4,029 | (12 | ) | 364 | — | (711 | ) | 18,838 | 59,710 | |||||||||||||||||||||||||||||||
Net other non-operating income (expenses) | (2,127 | ) | — | (15,193 | ) | (17,320 | ) | 3,099 | 884 | (1,491 | ) | 71 | (106 | ) | (5,243 | ) | (20,106 | ) | ||||||||||||||||||||||||||
Segment profit before income tax | 414,797 | 182,650 | 373,818 | 971,265 | 294,826 | 94,336 | 185,876 | 152,341 | 61,495 | 26,291 | 1,786,430 | |||||||||||||||||||||||||||||||||
Income tax expense | (108,128 | ) | (50,229 | ) | (122,341 | ) | (280,698 | ) | (73,755 | ) | (25,543 | ) | (43,525 | ) | (41,753 | ) | (39,124 | ) | 3,128 | (501,270 | ) | |||||||||||||||||||||||
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Profit for the period | ||||||||||||||||||||||||||||||||||||||||||||
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Profit attributable to shareholders of the Parent Company | 306,408 | 132,421 | 249,664 | 688,493 | 221,064 | 68,769 | 141,534 | 110,588 | 21,629 | 17,938 | 1,270,015 | |||||||||||||||||||||||||||||||||
Profit attributable to non-controlling interests | 261 | — | 1,813 | 2,074 | 7 | 24 | 817 | — | 742 | 11,481 | 15,145 | |||||||||||||||||||||||||||||||||
Total assets * | 166,535,142 | 162,364,151 | 118,923,187 | 447,822,480 | 56,757,451 | 39,264,138 | 25,106,710 | 35,667,645 | 49,946,360 | (33,625,596 | ) | 620,939,188 | ||||||||||||||||||||||||||||||||
Total liabilities * | 170,669,240 | 176,547,601 | 70,431,507 | 417,648,348 | 51,595,001 | 35,432,231 | 20,847,986 | 32,934,494 | 22,680,060 | (4,264,302 | ) | 576,873,818 |
* | Assets and liabilities of the reporting segments are amounts before intersegment transactions. |
34
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
5.1 Overall Segment Information and Business Segments (cont’d)
(In millions of Korean won) | 2020 | |||||||||||||||||||||||||||||||||||||||||||
Banking business | Securities | Non-life insurance | Credit card | Life insurance | Others | Consolidation adjustment | Total | |||||||||||||||||||||||||||||||||||||
Corporate banking | Retail banking | Other banking services | Sub-total | |||||||||||||||||||||||||||||||||||||||||
Operating revenues from external customers | ||||||||||||||||||||||||||||||||||||||||||||
Intersegment operating revenues (expenses) | 77,562 | — | 60,665 | 138,227 | (15,631 | ) | (30,923 | ) | (44,748 | ) | 108 | 49,556 | (96,589 | ) | — | |||||||||||||||||||||||||||||
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649,138 | 750,186 | 397,031 | 1,796,355 | 173,914 | 308,916 | 338,797 | 23,918 | 196,678 | (96,589 | ) | 2,741,989 | |||||||||||||||||||||||||||||||||
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Net interest income | 713,593 | 771,947 | 151,952 | 1,637,492 | 124,220 | 154,410 | 318,223 | 36,245 | 77,589 | 1,022 | 2,349,201 | |||||||||||||||||||||||||||||||||
Interest income | 1,135,876 | 1,169,734 | 325,788 | 2,631,398 | 216,889 | 154,751 | 409,105 | 36,278 | 178,164 | (6,609 | ) | 3,619,976 | ||||||||||||||||||||||||||||||||
Interest expense | (422,283 | ) | (397,787 | ) | (173,836 | ) | (993,906 | ) | (92,669 | ) | (341 | ) | (90,882 | ) | (33 | ) | (100,575 | ) | 7,631 | (1,270,775 | ) | |||||||||||||||||||||||
Net fee and commission income (expenses) | 92,972 | 124,570 | 68,292 | 285,834 | 174,324 | (40,706 | ) | 82,943 | (3,456 | ) | 171,526 | (333 | ) | 670,132 | ||||||||||||||||||||||||||||||
Fee and commission income | 116,784 | 150,095 | 103,022 | 369,901 | 207,248 | 2,377 | 346,416 | 37 | 191,859 | (76,375 | ) | 1,041,463 | ||||||||||||||||||||||||||||||||
Fee and commission expense | (23,812 | ) | (25,525 | ) | (34,730 | ) | (84,067 | ) | (32,924 | ) | (43,083 | ) | (263,473 | ) | (3,493 | ) | (20,333 | ) | 76,042 | (371,331 | ) | |||||||||||||||||||||||
Net insurance income (expenses) | — | — | — | — | — | 104,053 | 3,614 | (28,397 | ) | — | (1,176 | ) | 78,094 | |||||||||||||||||||||||||||||||
Insurance income | — | — | — | — | — | 3,019,671 | 6,880 | 253,128 | — | (9,116 | ) | 3,270,563 | ||||||||||||||||||||||||||||||||
Insurance expenses | — | — | — | — | — | (2,915,618 | ) | (3,266 | ) | (281,525 | ) | — | 7,940 | (3,192,469 | ) | |||||||||||||||||||||||||||||
Net gains (losses) on financial instruments at fair value through profit or loss | (104 | ) | — | 55,560 | 55,456 | (194,779 | ) | 52,714 | 4,047 | 14,367 | (7,187 | ) | (63,130 | ) | (138,512 | ) | ||||||||||||||||||||||||||||
Net other operating income (expenses) | (157,323 | ) | (146,331 | ) | 121,227 | (182,427 | ) | 70,149 | 38,445 | (70,030 | ) | 5,159 | (45,250 | ) | (32,972 | ) | (216,926 | ) |
35
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
5.1 Overall Segment Information and Business Segments (cont’d)
(In millions of Korean won) | 2020 | |||||||||||||||||||||||||||||||||||||||||||
Banking business | Securities | Non-life insurance | Credit card | Life insurance | Others | Consolidation adjustment | Total | |||||||||||||||||||||||||||||||||||||
Corporate banking | Retail banking | Other banking services | Sub-total | |||||||||||||||||||||||||||||||||||||||||
General and administrative expenses | ||||||||||||||||||||||||||||||||||||||||||||
Operating profit (loss) before provision for credit losses | 376,344 | 259,653 | 273,202 | 909,199 | (7,752 | ) | 97,023 | 227,112 | 6,535 | 115,641 | (64,966 | ) | 1,282,792 | |||||||||||||||||||||||||||||||
Reversal (provision) for credit losses | (5,377 | ) | (69,643 | ) | (1,575 | ) | (76,595 | ) | (20,874 | ) | 2,513 | (116,119 | ) | 1,078 | (33,898 | ) | 222 | (243,673 | ) | |||||||||||||||||||||||||
Net operating income (loss) | 370,967 | 190,010 | 271,627 | 832,604 | (28,626 | ) | 99,536 | 110,993 | 7,613 | 81,743 | (64,744 | ) | 1,039,119 | |||||||||||||||||||||||||||||||
Share of profit (loss) of associates and joint ventures | — | — | (9,699 | ) | (9,699 | ) | 325 | (12 | ) | 456 | — | (565 | ) | 6,458 | (3,037 | ) | ||||||||||||||||||||||||||||
Net other non-operating income (expenses) | (76 | ) | — | �� | (25,448 | ) | (25,524 | ) | 2,530 | 5,512 | (1,240 | ) | (147 | ) | 10,176 | (7,993 | ) | (16,686 | ) | |||||||||||||||||||||||||
Segment profit (loss) before income tax | 370,891 | 190,010 | 236,480 | 797,381 | (25,771 | ) | 105,036 | 110,209 | 7,466 | 91,354 | (66,279 | ) | 1,019,396 | |||||||||||||||||||||||||||||||
Income tax expense | (104,332 | ) | (52,253 | ) | (54,449 | ) | (211,034 | ) | 4,407 | (27,806 | ) | (28,111 | ) | (1,517 | ) | (23,665 | ) | 7,267 | (280,459 | ) | ||||||||||||||||||||||||
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Profit (loss) attributable to shareholders of the Parent Company | 266,559 | 137,757 | 182,031 | 586,347 | (21,370 | ) | 77,178 | 82,100 | 5,949 | 66,991 | (67,741 | ) | 729,454 | |||||||||||||||||||||||||||||||
Profit (loss) attributable to non-controlling interests | — | — | — | — | 6 | 52 | (2 | ) | — | 698 | 8,729 | 9,483 | ||||||||||||||||||||||||||||||||
Total assets * | 164,323,181 | 161,330,053 | 112,790,880 | 438,444,114 | 57,570,654 | 39,078,117 | 24,071,645 | 35,546,572 | 47,408,052 | (31,446,962 | ) | 610,672,192 | ||||||||||||||||||||||||||||||||
Total liabilities * | 167,236,387 | 176,571,944 | 64,227,709 | 408,036,040 | 52,516,488 | 35,086,458 | 19,789,959 | 32,524,518 | 21,598,232 | (2,240,962 | ) | 567,310,733 |
* | Assets and liabilities of the reporting segments are amounts before intersegment transactions and as of December 31, 2020. |
36
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
5.2 Services and Geographical Segments
5.2.1 Services information
Operating revenues from external customers by services for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Banking service | ||||||||
Securities service | 526,309 | 189,545 | ||||||
Non-life insurance service | 321,906 | 339,839 | ||||||
Credit card service | 442,655 | 383,545 | ||||||
Life insurance service | 190,809 | 23,810 | ||||||
Other service | 210,543 | 147,122 | ||||||
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5.2.2 Geographical information
Geographical operating revenues from external customers for the three-month periods ended March 31, 2021 and 2020, and major non-current assets as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | Revenues from external customers | Major non-current assets | ||||||||||||||
2021 | 2020 | March 31, 2021 | December 31, 2020 | |||||||||||||
Domestic | ||||||||||||||||
United States | 24,580 | 10,564 | 46,287 | 45,353 | ||||||||||||
New Zealand | 2,932 | 1,912 | 2,265 | 2,385 | ||||||||||||
China | 28,284 | 23,123 | 15,048 | 13,971 | ||||||||||||
Cambodia | 93,352 | 6,926 | 33,805 | 32,354 | ||||||||||||
United Kingdom | 4,616 | 3,694 | 86,004 | 81,879 | ||||||||||||
Others | 63,479 | 15,989 | 454,472 | 51,288 | ||||||||||||
Consolidation adjustments | — | — | 53,669 | 487,742 | ||||||||||||
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Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6. Financial Assets and Financial Liabilities
6.1 Classification and Fair Value of Financial Instruments
6.1.1 Carrying amount and fair value of financial assets and liabilities by category as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||
Carrying amount | Fair value | |||||||
Financial assets | ||||||||
Cash and due from financial institutions | ||||||||
Financial assets at fair value through profit or loss | 60,155,939 | 60,155,939 | ||||||
Due from financial institutions | 123,124 | 123,124 | ||||||
Debt securities | 57,558,818 | 57,558,818 | ||||||
Equity securities | 2,056,706 | 2,056,706 | ||||||
Loans | 318,904 | 318,904 | ||||||
Others | 98,387 | 98,387 | ||||||
Derivatives held for trading | 3,541,055 | 3,541,055 | ||||||
Derivatives held for hedging | 192,312 | 192,312 | ||||||
Loans measured at amortized cost | 383,242,460 | 385,082,481 | ||||||
Securities measured at amortized cost | 36,622,005 | 36,979,373 | ||||||
Financial assets at fair value through other comprehensive income | 59,307,745 | 59,307,745 | ||||||
Debt securities | 56,292,151 | 56,292,151 | ||||||
Equity securities | 2,664,943 | 2,664,943 | ||||||
Loans | 350,651 | 350,651 | ||||||
Other financial assets | 18,806,233 | 18,806,233 | ||||||
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Financial liabilities | ||||||||
Financial liabilities at fair value through profit or loss | ||||||||
Financial liabilities designated at fair value through profit or loss | 8,417,988 | 8,417,988 | ||||||
Derivatives held for trading | 3,189,331 | 3,189,331 | ||||||
Derivatives held for hedging | 181,181 | 181,181 | ||||||
Deposits | 339,270,753 | 339,591,761 | ||||||
Borrowings | 50,444,543 | 50,453,436 | ||||||
Debentures | 62,220,973 | 62,842,449 | ||||||
Other financial liabilities | 37,767,490 | 37,767,490 | ||||||
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Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.1 Carrying amount and fair value of financial assets and liabilities by category as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||
Carrying amount | Fair value | |||||||
Financial assets | ||||||||
Cash and due from financial institutions | ||||||||
Financial assets at fair value through profit or loss | 61,035,455 | 61,035,455 | ||||||
Due from financial institutions | 100,094 | 100,094 | ||||||
Debt securities | 58,415,100 | 58,415,100 | ||||||
Equity securities | 2,092,313 | 2,092,313 | ||||||
Loans | 337,983 | 337,983 | ||||||
Others | 89,965 | 89,965 | ||||||
Derivatives held for trading | 5,210,512 | 5,210,512 | ||||||
Derivatives held for hedging | 334,873 | 334,873 | ||||||
Loans measured at amortized cost | 377,166,984 | 378,791,808 | ||||||
Securities measured at amortized cost | 36,870,229 | 38,026,073 | ||||||
Financial assets at fair value through other comprehensive income | 61,825,197 | 61,825,197 | ||||||
Debt securities | 58,456,889 | 58,456,889 | ||||||
Equity securities | 3,074,899 | 3,074,899 | ||||||
Loans | 293,409 | 293,409 | ||||||
Other financial assets | 14,167,689 | 14,167,689 | ||||||
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Financial liabilities | ||||||||
Financial liabilities at fair value through profit or loss | ||||||||
Financial liabilities designated at fair value through profit or loss | 9,784,107 | 9,784,107 | ||||||
Derivatives held for trading | 5,014,072 | 5,014,072 | ||||||
Derivatives held for hedging | 208,825 | 208,825 | ||||||
Deposits | 338,580,220 | 338,833,784 | ||||||
Borrowings | 49,827,156 | 50,081,900 | ||||||
Debentures | 62,760,687 | 63,189,132 | ||||||
Other financial liabilities | 28,612,287 | 28,612,287 | ||||||
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Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Group discloses the fair value of each class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is a quoted price in an active market.
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Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.1 Carrying amount and fair value of financial assets and liabilities by category as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
Methods of determining fair value of financial instruments are as follows:
Cash and due from financial institutions | Carrying amounts of cash and demand due from financial institutions and payment due from financial institutions are reasonable approximation of fair values. These financial instruments do not have a fixed maturity and are receivable on demand. Fair value of ordinary due from financial institutions is measured using Discounted Cash Flow (“DCF”) Model. | |
Securities | Fair value of financial instruments that are quoted in active markets is determined using the quoted prices. If there is no quoted price, fair value is determined using external professional valuation institution. The institutions use one or more of the following valuation techniques including DCF Model, Free Cash Flow to Equity Model, Comparable Company Analysis, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method, deemed suitable considering the characteristics of the financial instruments. | |
Loans measured at amortized cost | DCF model is used to determine the fair value of loans. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate. | |
Derivatives and financial instruments at fair value through profit or loss | For exchange traded derivatives, quoted price in an active market is used to determine fair value and for OTC derivatives, fair value is determined using valuation techniques. The Group uses internally developed valuation models that are widely used by market participants to determine fair values of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method (“FDM”), the MonteCarlo Simulation, Black-Scholes Model, Hull and White Model, Closed Form and Tree Model or valuation results from independent external professional valuation institution. | |
Deposits | Carrying amount of demand deposits is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of time deposits is determined using a DCF model. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate. | |
Borrowings | Carrying amount of overdraft in foreign currency is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of other borrowings is determined using a DCF model discounting contractual future cash flows at an appropriate discount rate. | |
Debentures | Fair value is determined by using the valuation results of external professional valuation institution, which are calculated using market inputs. | |
Other financial assets and liabilities | Carrying amounts are reasonable approximation of fair values. These financial instruments are temporary accounts used for other various transactions and their maturities are relatively short or not defined. |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.2 Fair value hierarchy
The Group believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the consolidated statement of financial position are appropriate. However, the fair values of the financial instruments recognized in the consolidated statement of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.
The Group classifies and discloses fair value of the financial instruments into the three-level hierarchy as follows:
Level 1: | The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. |
Level 2: | The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. |
Level 3: | The fair values are based on unobservable inputs for the asset or liability. |
The fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. If an observable input requires an adjustment using an unobservable input and that adjustment results in a significantly higher or lower fair value measurement, the resulting measurement would be categorized within Level 3 of the fair value hierarchy.
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Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.2.1 Fair value hierarchy of financial assets and liabilities at fair value in the consolidated statements of financial position
Fair value hierarchy of financial assets and liabilities at fair value in the consolidated statements of financial position as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||
Fair value hierarchy | Total | |||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Due from financial institutions | — | 30,022 | 93,102 | 123,124 | ||||||||||||
Debt securities | 11,165,717 | 36,120,995 | 10,272,106 | 57,558,818 | ||||||||||||
Equity securities | 1,022,061 | 503,498 | 531,147 | 2,056,706 | ||||||||||||
Loans | — | 280,990 | 37,914 | 318,904 | ||||||||||||
Others | 98,387 | — | — | 98,387 | ||||||||||||
Derivatives held for trading | 105,185 | 3,081,779 | 354,091 | 3,541,055 | ||||||||||||
Derivatives held for hedging | — | 192,312 | — | 192,312 | ||||||||||||
Financial assets at fair value through other comprehensive income | 20,066,662 | 36,773,666 | 2,467,417 | 59,307,745 | ||||||||||||
Debt securities | 19,915,703 | 36,376,448 | — | 56,292,151 | ||||||||||||
Equity securities | 150,959 | 69,975 | 2,444,009 | 2,664,943 | ||||||||||||
Loans | — | 327,243 | 23,408 | 350,651 | ||||||||||||
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Financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | ||||||||||||||||
Financial liabilities designated at fair value through profit or loss | 1,284 | 925,936 | 7,490,768 | 8,417,988 | ||||||||||||
Derivatives held for trading | 159,032 | 2,876,783 | 153,516 | 3,189,331 | ||||||||||||
Derivatives held for hedging | — | 181,181 | — | 181,181 | ||||||||||||
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Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.2.1 Fair value hierarchy of financial assets and liabilities at fair value in the consolidated statements of financial position (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||||||
Fair value hierarchy | Total | |||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Due from financial institutions | — | 10,011 | 90,083 | 100,094 | ||||||||||||
Debt securities | 13,316,819 | 34,580,168 | 10,518,113 | 58,415,100 | ||||||||||||
Equity securities | 1,101,244 | 409,259 | 581,810 | 2,092,313 | ||||||||||||
Loans | — | 299,227 | 38,756 | 337,983 | ||||||||||||
Others | 89,965 | — | — | 89,965 | ||||||||||||
Derivatives held for trading | 90,459 | 4,678,185 | 441,868 | 5,210,512 | ||||||||||||
Derivatives held for hedging | — | 334,873 | — | 334,873 | ||||||||||||
Financial assets at fair value through other comprehensive income | 18,731,801 | 40,645,505 | 2,447,891 | 61,825,197 | ||||||||||||
Debt securities | 18,147,167 | 40,309,722 | — | 58,456,889 | ||||||||||||
Equity securities | 584,634 | 70,357 | 2,419,908 | 3,074,899 | ||||||||||||
Loans | — | 265,426 | 27,983 | 293,409 | ||||||||||||
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Financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | ||||||||||||||||
Financial liabilities designated at fair value through profit or loss | 1,040 | 581,636 | 9,201,431 | 9,784,107 | ||||||||||||
Derivatives held for trading | 204,470 | 4,668,155 | 141,447 | 5,014,072 | ||||||||||||
Derivatives held for hedging | — | 208,825 | — | 208,825 | ||||||||||||
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Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.2.1 Fair value hierarchy of financial assets and liabilities at fair value in the consolidated statements of financial position (cont’d)
Valuation techniques and inputs of financial assets and liabilities classified as Level 2 and measured at fair value in the consolidated statements of financial position as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||
Fair value | Valuation techniques | Inputs | ||||||
Financial assets | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Due from financial institutions | 30,022 | DCF Model | Projected cash flow, Discount rate | |||||
Debt securities | 36,120,995 | DCF Model, Closed Form, MonteCarlo Simulation, Black-Scholes Model, Hull and White Model, Net Asset Value Method and others | Projected cash flow, Fair value of underlying asset, Dividend yield, Price of underlying asset, Interest rate, Discount rate, Volatility, Correlation coefficient and others | |||||
Equity securities | 503,498 | DCF Model | Interest rate, Discount rate and others | |||||
Loans | 280,990 | DCF Model | Interest rate, Discount rate and others | |||||
Derivatives held for trading | 3,081,779 | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Black-Scholes Model, Hull and White Model and others | Discount rate, Underlying asset Index, Volatility, Interest rate, Stock price, Foreign exchange rate, Dividend yield and others | |||||
Derivatives held for hedging | 192,312 | DCF Model, Closed Form, FDM and others | Discount rate, Volatility, Foreign exchange rate and others | |||||
Financial assets at fair value through other comprehensive income | 36,773,666 | |||||||
Debt securities | 36,376,448 | DCF Model, Market value approach | Discount rate, Volatility and others | |||||
Equity securities | 69,975 | DCF Model | Interest rate, Discount rate and others | |||||
Loans | 327,243 | DCF Model | Discount rate, Volatility and others | |||||
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Financial liabilities | ||||||||
Financial liabilities designated at fair value through profit or loss | DCF Model, Closed Form, MonteCarlo Simulation, Black-Scholes Model, Hull and White Model, Binomial Model and others | Price of underlying asset, Interest rate, Dividend yield, Volatility, Discount rate and others | ||||||
Derivatives held for trading | 2,876,783 | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Black-Scholes Model, Hull and White Model and others | Discount rate, Price of underlying asset, Volatility, Interest rate, Stock price, Foreign exchange rate, Dividend yield and others | |||||
Derivatives held for hedging | 181,181 | DCF Model, Closed Form, FDM and others | Discount rate, Foreign exchange rate and others | |||||
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Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.2.1 Fair value hierarchy of financial assets and liabilities at fair value in the consolidated statements of financial position (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||
Fair value | Valuation techniques | Inputs | ||||||
Financial assets | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Due from financial institutions | 10,011 | DCF Model | Projected cash flow, Discount rate | |||||
Debt securities | 34,580,168 | DCF Model, Closed Form, MonteCarlo Simulation, Black-Scholes Model, Hull and White Model, Net Asset Value Method and others | Projected cash flow, Fair value of underlying asset, Dividend yield, Price of underlying asset, Interest rate, Discount rate, Volatility, Correlation coefficient and others | |||||
Equity securities | 409,259 | DCF Model | Interest rate, Discount rate and others | |||||
Loans | 299,227 | DCF Model | Interest rate, Discount rate and others | |||||
Derivatives held for trading | 4,678,185 | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Black-Scholes Model, Hull and White Model and others | Discount rate, Underlying asset Index, Volatility, Interest rate, Stock price, Foreign exchange rate, Dividend yield and others | |||||
Derivatives held for hedging | 334,873 | DCF Model, Closed Form, FDM and others | Discount rate, Volatility, Foreign exchange rate and others | |||||
Financial assets at fair value through other comprehensive income | 40,645,505 | |||||||
Debt securities | 40,309,722 | DCF Model, Market value approach | Discount rate, Volatility and others | |||||
Equity securities | 70,357 | DCF Model | Interest rate, Discount rate and others | |||||
Loans | 265,426 | DCF Model | Discount rate, Volatility and others | |||||
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Financial liabilities | ||||||||
Financial liabilities designated at fair value through profit or loss | DCF Model, Closed Form, MonteCarlo Simulation, Black-Scholes Model, Hull and White Model, Binomial Model and others | Price of underlying asset, Interest rate, Dividend yield, Volatility, Discount rate and others | ||||||
Derivatives held for trading | 4,668,155 | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Black-Scholes Model, Hull and White Model and others | Discount rate, Price of underlying asset, Volatility, Interest rate, Stock price, Foreign exchange rate, Dividend yield and others | |||||
Derivatives held for hedging | 208,825 | DCF Model, Closed Form, FDM and others | Discount rate, Foreign exchange rate and others | |||||
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45
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair value is disclosed
Fair value hierarchy of financial assets and liabilities whose fair value is disclosed as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||
Fair value hierarchy | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets | ||||||||||||||||
Cash and due from financial institutions 1 | ||||||||||||||||
Loans measured at amortized cost | — | 229,379 | 384,853,102 | 385,082,481 | ||||||||||||
Securities measured at amortized cost | 19,244,581 | 17,731,805 | 2,987 | 36,979,373 | ||||||||||||
Other financial assets 2 | — | — | 18,806,233 | 18,806,233 | ||||||||||||
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Financial liabilities | ||||||||||||||||
Deposits 1 | ||||||||||||||||
Borrowings 3 | — | 1,576,932 | 48,876,504 | 50,453,436 | ||||||||||||
Debentures | — | 57,603,642 | 5,238,807 | 62,842,449 | ||||||||||||
Other financial liabilities 2 | — | — | 37,767,490 | 37,767,490 | ||||||||||||
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(In millions of Korean won) | December 31, 2020 | |||||||||||||||
Fair value hierarchy | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets | ||||||||||||||||
Cash and due from financial institutions 1 | ||||||||||||||||
Loans measured at amortized cost | — | 271,241 | 378,520,567 | 378,791,808 | ||||||||||||
Securities measured at amortized cost | 19,438,941 | 18,584,264 | 2,868 | 38,026,073 | ||||||||||||
Other financial assets 2 | — | — | 14,167,689 | 14,167,689 | ||||||||||||
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Financial liabilities | ||||||||||||||||
Deposits 1 | ||||||||||||||||
Borrowings 3 | — | 1,149,734 | 48,932,166 | 50,081,900 | ||||||||||||
Debentures | — | 57,916,235 | 5,272,897 | 63,189,132 | ||||||||||||
Other financial liabilities 2 | — | — | 28,612,287 | 28,612,287 | ||||||||||||
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1 | The amounts included in Level 2 are the carrying amounts which are reasonable approximations of the fair value. |
2 | Other financial assets and other financial liabilities included in Level 3 are the carrying amounts which are reasonable approximation of fair value. |
3 | Borrowings of |
46
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair value is disclosed (cont’d)
For financial assets and liabilities whose carrying amount is a reasonable approximation of fair value, valuation techniques and inputs are not disclosed.
Valuation techniques and inputs of financial assets and liabilities classified as Level 2, and whose fair value is disclosed as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||
Fair value | Valuation techniques | Inputs | ||||||||
Financial assets | ||||||||||
Loans measured at amortized cost | DCF Model | Discount rate | ||||||||
Securities measured at amortized cost | 17,731,805 | | DCF Model, MonteCarlo | | Discount rate, Interest rate | |||||
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Financial liabilities | ||||||||||
Borrowings | DCF Model | Discount rate | ||||||||
Debentures | 57,603,642 | DCF Model | Discount rate | |||||||
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(In millions of Korean won) | December 31, 2020 | |||||||||
Fair value | Valuation techniques | Inputs | ||||||||
Financial assets | ||||||||||
Loans measured at amortized cost | DCF Model | Discount rate | ||||||||
Securities measured at amortized cost | 18,584,264 | | DCF Model, MonteCarlo | | Discount rate, Interest rate | |||||
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Financial liabilities | ||||||||||
Borrowings | DCF Model | Discount rate | ||||||||
Debentures | 57,916,235 | DCF Model | Discount rate | |||||||
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47
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair value is disclosed (cont’d)
Valuation techniques and inputs of financial assets and liabilities classified as Level 3 and, whose fair value is disclosed and as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||
Fair value | Valuation techniques | Inputs | ||||||||
Financial assets | ||||||||||
Cash and due from financial institutions | DCF Model | Credit spread, Other spread, Interest rate | ||||||||
Loans measured at amortized cost | 384,853,102 | DCF Model | Credit spread, Other spread, Prepayment rate, Interest rate | |||||||
Securities measured at amortized cost | 2,987 | DCF Model | Interest rate | |||||||
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Financial liabilities | ||||||||||
Deposits | DCF Model | Other spread, Prepayment rate, Interest rate | ||||||||
Borrowings | 48,876,504 | DCF Model | Other spread, Interest rate | |||||||
Debentures | 5,238,807 | DCF Model | Other spread, Interest rate | |||||||
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48
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair value is disclosed (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||
Fair value | Valuation techniques | Inputs | ||||||||
Financial assets | ||||||||||
Cash and due from financial institutions | DCF Model | Credit spread, Other spread, Interest rate | ||||||||
Loans measured at amortized cost | 378,520,567 | DCF Model | Credit spread, Other spread, Prepayment rate, Interest rate | |||||||
Securities measured at amortized cost | 2,868 | DCF Model | Interest rate | |||||||
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Financial liabilities | ||||||||||
Deposits | DCF Model | Other spread, Prepayment rate, Interest rate | ||||||||
Borrowings | 48,932,166 | DCF Model | Other spread, Interest rate | |||||||
Debentures | 5,272,897 | DCF Model | Other spread, Interest rate | |||||||
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6.2 Disclosure of Fair Value Hierarchy Level 3
6.2.1 Valuation policy and process of Level 3 fair value
The Group uses external, independent and qualified valuation service in addition to internal valuation models to determine the fair value of the Group’s assets at the end of every reporting period.
Where a reclassification between the levels of the fair value hierarchy occurs for a financial asset or liability, the Group’s policy is to recognize such transfers as having occurred at the beginning of the reporting period.
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.2 Changes in fair value (Level 3) measured using valuation technique based on unobservable inputs in the market
6.2.2.1 Changes in financial instruments classified as Level 3 of the fair value hierarchy for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||||||||||||||||||
Financial assets at fair value through profit or loss | Financial investments | Financial liabilities at fair value through profit or loss | Net derivatives financial instruments | |||||||||||||||||||||||||
Due from financial institutions measured at fair value through profit or loss | Securities measured at fair value through profit or loss | Loans measured at fair value through profit or loss | Equity securities measured at fair value through other comprehensive income | Loans measured at fair value through other comprehensive income | Financial liabilities designated at fair value through profit or loss | Derivatives held for trading | ||||||||||||||||||||||
Beginning | ||||||||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||
Profit or loss | 128 | (11,815 | ) | (842 | ) | — | — | (16,200 | ) | (46,348 | ) | |||||||||||||||||
Other comprehensive income (loss) | 2,891 | 16,833 | — | 8,194 | 25 | (10,795 | ) | — | ||||||||||||||||||||
Purchases | — | 573,893 | — | 18,551 | — | — | 82 | |||||||||||||||||||||
Sales | — | (853,326 | ) | — | (2,644 | ) | (4,600 | ) | — | (43,649 | ) | |||||||||||||||||
Issues | — | — | — | — | — | (2,363,475 | ) | (11,601 | ) | |||||||||||||||||||
Settlements | — | — | — | — | — | 4,101,133 | 1,670 | |||||||||||||||||||||
Transfers into Level 3 * | — | 55,134 | — | — | — | — | — | |||||||||||||||||||||
Transfers out of Level 3 * | — | (77,389 | ) | — | — | — | — | — | ||||||||||||||||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.2.1 Changes in financial instruments classified as Level 3 of the fair value hierarchy for the three-month periods ended March 31, 2021 and 2020, are as follows: (cont’d)
(In millions of Korean won) | 2020 | |||||||||||||||||||||||||||
Financial assets at fair value through profit or loss | Financial investments | Financial liabilities at fair value through profit or loss | Net derivatives financial instruments | |||||||||||||||||||||||||
Due from financial institutions measured at fair value through profit or loss | Securities measured at fair value through profit or loss | Loans measured at fair value through profit or loss | Equity securities measured at fair value through other comprehensive income | Loans measured at fair value through other comprehensive income | Financial liabilities designated at fair value through profit or loss | Derivatives held for trading | ||||||||||||||||||||||
Beginning | ||||||||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||
Profit or loss | (2,214 | ) | (369,097 | ) | 5,871 | — | — | 866,399 | (362,767 | ) | ||||||||||||||||||
Other comprehensive income (loss) | (14,094 | ) | 33,454 | — | 25,153 | — | 20,057 | — | ||||||||||||||||||||
Purchases | — | 1,165,318 | — | 60,129 | — | — | — | |||||||||||||||||||||
Sales | (67,844 | ) | (867,394 | ) | (28,999 | ) | — | — | — | (80,410 | ) | |||||||||||||||||
Issues | — | — | — | — | — | (2,670,369 | ) | (10,517 | ) | |||||||||||||||||||
Settlements | — | — | — | — | — | 3,315,111 | 71 | |||||||||||||||||||||
Transfers into Level 3 * | 135,227 | 42,412 | — | — | — | — | — | |||||||||||||||||||||
Transfers out of Level 3 * | — | (38,605 | ) | — | — | — | — | (13,830 | ) | |||||||||||||||||||
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* | Changes in levels for the financial instruments occurred due to the change in the availability of observable market data. |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.2.2 In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the period, and total gains or losses recognized in profit or loss from financial instruments held at the end of the reporting period for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||||||||||||||||||
Net losses on financial instruments at fair value through profit or loss | Other operating income | Net interest income | Net gains on financial instruments at fair value through profit or loss | Other operating income | Net interest income | |||||||||||||||||||
Total gains (losses) recognized in profit or loss for the period | ||||||||||||||||||||||||
Total gains (losses) recognized in profit or loss from financial instruments held at the end of the reporting period | (157,200 | ) | 36,426 | — | 378,935 | 5,087 | — |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.3 Sensitivity analysis of changes in unobservable inputs
6.2.3.1 Information about fair value measurements using unobservable inputs as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||
Fair value | Valuation techniques | Unobservable inputs | Range of | Relationship of unobservable inputs to fair value | ||||||||
Financial assets | ||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||
Due from financial institutions | MonteCarlo Simulation, Hull-White Model | Volatility of the underlying asset | 18.42 ~ 40.17 | The higher the volatility of the underlying asset, the higher the fair value fluctuation | ||||||||
Correlation coefficient | 1.33 | The higher the correlation coefficient, the higher the fair value fluctuation | ||||||||||
Debt securities | 10,272,106 | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Hull-White Model, Black-Scholes Model, Option Model, Binomial Model, Net Asset Value Method, Income approach, Market approach and others | Growth rate | 0.00 ~ 2.00 | The higher the growth rate, the higher the fair value | |||||||
Volatility | 8.00 ~ 97.50 | The higher the volatility, the higher the fair value fluctuation | ||||||||||
Discount rate | 0.00 ~ 14.69 | The lower the discount rate, the higher the fair value | ||||||||||
Recovery rate | 40.00 | The higher the recovery rate, the higher the fair value | ||||||||||
Correlation coefficient between underlying assets | -60.87 ~ 100.00 | The higher the correlation coefficient, the higher the fair value fluctuation | ||||||||||
Liquidation value | 0.00 | The higher the liquidation value, the higher the fair value | ||||||||||
Volatility of real estate price | 0.00 ~ 0.00 | The higher the price of real estate, the higher the fair value |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.3.1 Information about fair value measurements using unobservable inputs as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | March 31, 2021 | |||||||||||
Fair value | Valuation techniques | Unobservable inputs | Range of | Relationship of unobservable inputs to fair value | ||||||||
Equity securities | Income approach, Market approach, Asset value approach, DCF Model, Comparable Company Analysis, Risk adjusted discount rate method, Dividend Discount Model, Usage of past transactions, Binomial Model and others | Growth rate | 0.00 ~ 1.10 | The higher the growth rate, the higher the fair value | ||||||||
Discount rate | -0.01 ~ 19.24 | The lower the discount rate, the higher the fair value | ||||||||||
Liquidation value | -1.00 ~ 1.00 | The higher the liquidation value, the higher the fair value | ||||||||||
Loans | 37,914 | DCF Model | Discount rate | 8.11 | The lower the discount rate, the higher the fair value | |||||||
Derivatives held for trading Stock and index | 353,421 | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Hull and White Model, Black-Scholes Model, Binomial Model | Volatility of the underlying asset | 22.00 ~ 71.00 | The higher the volatility, the higher the fair value fluctuation | |||||||
Correlation coefficient between underlying assets | -60.87 ~ 90.97 | The higher the correlation coefficient, the higher the fair value fluctuation | ||||||||||
Currency and interest rate and others | 670 | DCF Model, Hull-White Model | Volatility | 4.00 ~ 54.00 | The higher the volatility, the higher the fair value fluctuation | |||||||
Correlation coefficient between underlying assets | -50.35 ~ 90.97 | The higher the correlation coefficient, the higher the fair value fluctuation | ||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||
Equity securities | 2,444,009 | Risk adjusted discount rate method, IMV Model, DCF Model, Comparable Company Analysis, Dividend discount model, Option Model, Net Asset Value Method, Market approach, One Factor Hull-White Model and others | Growth rate | 0.00 ~ 2.00 | The higher the growth rate, the higher the fair value | |||||||
Discount rate | 8.44 ~ 19.68 | The lower the discount rate, the higher the fair value | ||||||||||
Volatility | 26.31 ~ 34.56 | The higher the volatility, the higher the fair value fluctuation | ||||||||||
Loans | 23,408 | DCF Model | Discount rate | 2.24 ~ 4.24 | The lower the discount rate, the higher the fair value | |||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.3.1 Information about fair value measurements using unobservable inputs as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | March 31, 2021 | |||||||||||
Fair value | Valuation techniques | Unobservable inputs | Range of | Relationship of unobservable inputs to fair value | ||||||||
Financial liabilities |
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Financial liabilities designated at fair value through profit or loss | ||||||||||||
Derivative-linked securities | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Hull and White Model, Black-Scholes Model | Volatility of the underlying asset | 1.00 ~ 71.00 | The higher the volatility, the higher the fair value fluctuation | ||||||||
Correlation coefficient between underlying assets | -60.87 ~ 90.97 | The higher the absolute value of correlation coefficient, the higher the fair value fluctuation | ||||||||||
Derivatives held for trading | ||||||||||||
Stock and index | 27,213 | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Hull and White Model, Black-Scholes Model, Binomial Model | Volatility | 22.00 ~ 54.00 | The higher the volatility, the higher the fair value fluctuation | |||||||
Correlation coefficient between underlying assets | -60.87 ~ 89.12 | The higher the correlation coefficient, the higher the fair value fluctuation | ||||||||||
Others | 126,303 | MonteCarlo Simulation, Hull and White Model, DCF Model, Closed Form | Volatility | 4.00 ~ 54.00 | The higher the volatility, the higher the fair value fluctuation | |||||||
Discount rate | 1.04 ~ 1.13 | The higher the discount rate, the lower the fair value | ||||||||||
Correlation coefficient between underlying assets | -50.35 ~ 90.97 | The higher the absolute value of correlation coefficient, the higher the fair value fluctuation | ||||||||||
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Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.3.1 Information about fair value measurements using unobservable inputs as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||||
Fair value | Valuation techniques | Unobservable inputs | Range of unobservable inputs (%) | Relationship of unobservable inputs to fair | ||||||||||
Financial assets |
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Financial assets at fair value through profit or loss | ||||||||||||||
Due from financial institutions | MonteCarlo Simulation | Volatility of the underlying asset | 19.40 ~ 36.76 | The higher the volatility of the underlying asset, the higher the fair value fluctuation | ||||||||||
Correlation coefficient | 12.27 | The higher the correlation coefficient, the higher the fair value fluctuation | ||||||||||||
Debt securities | 10,518,113 | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Hull-White Model, Black-Scholes Model, Option Model, Binomial Model, Net Asset Value Method, Income approach, Market approach and others | Growth rate | 0.00 ~ 2.00 | The higher the growth rate, the higher the fair value | |||||||||
Volatility | 8.00 ~ 179.75 | The higher the volatility, the higher the fair value fluctuation | ||||||||||||
Discount rate | 0.00 ~ 21.37 | The lower the discount rate, the higher the fair value | ||||||||||||
Recovery rate | 40 | The higher the recovery rate, the higher the fair value | ||||||||||||
Correlation coefficient between underlying assets | -61.12 ~ 100.00 | The higher the correlation coefficient, the higher the fair value fluctuation | ||||||||||||
Liquidation value | 0.00 | The higher the liquidation value, the higher the fair value | ||||||||||||
Volatility of real estate price | 0.00 | The higher the price of real estate, the higher the fair value |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.3.1 Information about fair value measurements using unobservable inputs as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||
Fair value | Valuation techniques | Unobservable inputs | Range of unobservable inputs (%) | Relationship of unobservable inputs to fair | ||||||||
Equity securities | Income approach, Market approach, Asset value approach, DCF Model, Comparable Company Analysis, Risk adjusted discount rate method, Dividend Discount Model, Usage of past transactions, Binomial Model and others | Growth rate | 0.00 ~ 1.10 | The higher the growth rate, the higher the fair value | ||||||||
Discount rate | 0.60 ~ 18.67 | The lower the discount rate, the higher the fair value | ||||||||||
Liquidation value | �� | 0.00 | The higher the liquidation value, the higher the fair value | |||||||||
Loans | 38,756 | Binomial Model, DCF Model | Volatility of the stock price | 0.00 | The higher the volatility, the higher the fair value fluctuation | |||||||
Discount rate | 7.86 | The lower the discount rate, the higher the fair value | ||||||||||
Derivatives held for trading | ||||||||||||
Stock and index | 382,337 | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Hull and White Model, Black-Scholes Model, Binomial Model | Volatility of the underlying asset | 20.00 ~ 72.00 | The higher the volatility, the higher the fair value fluctuation | |||||||
Correlation coefficient between underlying assets | -61.12 ~ 89.01 | The higher the correlation coefficient, the higher the fair value fluctuation | ||||||||||
Currency and interest rate and others | 59,531 | DCF Model, Hull-White Model | Volatility | 0.00 ~ 68.00 | The higher the volatility, the higher the fair value fluctuation | |||||||
Correlation coefficient between underlying assets | -50.48 ~ 90.95 | The higher the correlation coefficient, the higher the fair value fluctuation | ||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||
Equity securities | 2,419,908 | Risk adjusted discount rate method, IMV Model, DCF Model, Comparable Company Analysis, Dividend discount model, Option Model, Net Asset Value Method, Market approach, One Factor Hull-White Model and others | Growth rate | 0.00 ~ 2.00 | The higher the growth rate, the higher the fair value | |||||||
Discount rate | 7.60 ~ 19.67 | The lower the discount rate, the higher the fair value | ||||||||||
Volatility | 22.11 ~ 24.16 | The higher the volatility, the higher the fair value fluctuation | ||||||||||
Loans | 27,983 | DCF Model | Discount rate | 2.21 ~ 4.21 | The lower the discount rate, the higher the fair value | |||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.3.1 Information about fair value measurements using unobservable inputs as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||||
Fair value | Valuation techniques | Unobservable inputs | Range of unobservable inputs (%) | Relationship of unobservable inputs to fair | ||||||||||
Financial liabilities |
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Financial liabilities designated at fair value through profit or loss Derivative-linked securities | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Hull and White Model, Black-Scholes Model | Volatility of the underlying asset | 1.00 ~ 72.00 | The higher the volatility, the higher the fair value fluctuation | ||||||||||
Correlation coefficient between underlying assets | -61.12 ~ 90.95 | The higher the absolute value of correlation coefficient, the higher the fair value fluctuation | ||||||||||||
Derivatives held for trading Stock and index | 60,291 | DCF Model, Closed Form, FDM, MonteCarlo Simulation, Hull and White Model, Black-Scholes Model, Binomial Model | Volatility | 20.00 ~ 68.00 | The higher the volatility, the higher the fair value fluctuation | |||||||||
Correlation coefficient between underlying assets | -61.12 ~ 90.95 | The higher the correlation coefficient, the higher the fair value fluctuation | ||||||||||||
Others | 81,156 | MonteCarlo Simulation, Hull and White Model, DCF Model, Closed Form | Volatility | 21.00 ~ 68.00 | The higher the volatility, the higher the fair value fluctuation | |||||||||
Discount rate | 1.15 ~ 1.29 | The higher the discount rate, the lower the fair value | ||||||||||||
Correlation coefficient between underlying assets | -50.48 ~ 90.95 | The higher the absolute value of correlation coefficient, the higher the fair value fluctuation | ||||||||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.3.2 Sensitivity analysis of changes in unobservable inputs
Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in fair value of financial instruments which are affected by unobservable parameters, using a statistical technique. When the fair value is affected by more than one input parameter, the amounts represent the most favorable or most unfavorable outcome. Level 3 financial instruments subject to sensitivity analysis are (a) equity-related derivatives, currency-related derivatives and interest rate related derivatives whose fair value changes are recognized in profit or loss, (b) financial liabilities designated at fair value through profit or loss, and (c) due from financial institutions, debt securities (including beneficiary certificates), equity securities and loan receivables whose fair value changes are recognized in profit or loss or other comprehensive income. If overlay approach is applied in accordance with Korean IFRS No.1104, changes in fair value of financial assets at fair value through profit or loss are recognized as other comprehensive income.
Results of the sensitivity analysis of changes in inputs as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||
Profit or loss | Other comprehensive income (loss) | |||||||||||||||
Favorable changes | Unfavorable changes | Favorable changes | Unfavorable changes | |||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss 1 | ||||||||||||||||
Due from financial institutions | ||||||||||||||||
Debt securities 4 | 26,103 | (24,746 | ) | 1,787 | (1,770 | ) | ||||||||||
Equity securities 3 | 23,790 | (14,561 | ) | 998 | (762 | ) | ||||||||||
Loans 5 | 3,173 | (2,831 | ) | — | — | |||||||||||
Derivatives held for trading 2 | 20,841 | (22,000 | ) | — | — | |||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Equity securities 3 | — | — | 180,292 | (100,271 | ) | |||||||||||
Loans 6 | — | — | 392 | (382 | ) | |||||||||||
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Financial liabilities designated at fair value through profit or loss 1 | ||||||||||||||||
Derivatives held for trading 2 | 8,411 | (7,579 | ) | — | — | |||||||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.3.2 Sensitivity analysis of changes in unobservable inputs (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||||||
Profit or loss | Other comprehensive income (loss) | |||||||||||||||
Favorable changes | Unfavorable changes | Favorable changes | Unfavorable changes | |||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss 1 | ||||||||||||||||
Due from financial institutions | ||||||||||||||||
Debt securities 4 | 35,790 | (12,826 | ) | 2,123 | (2,122 | ) | ||||||||||
Equity securities 3 | 16,125 | (8,275 | ) | 973 | (744 | ) | ||||||||||
Loans 5 | 3,316 | (2,952 | ) | — | — | |||||||||||
Derivatives held for trading 2 | 22,783 | (25,013 | ) | — | — | |||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Equity securities 3 | — | — | 120,652 | (73,434 | ) | |||||||||||
Loans 6 | — | — | 534 | (518 | ) | |||||||||||
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Financial liabilities designated at fair value through profit or loss 1 | ||||||||||||||||
Derivatives held for trading 2 | 7,255 | (7,139 | ) | — | — | |||||||||||
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1 | For financial instruments at fair value through profit or loss, changes in fair value are calculated by shifting principal unobservable input parameters such as volatility of the underlying asset or correlation coefficient between underlying asset by ± 10%. |
2 | For derivatives financial instruments, changes in fair value are calculated by shifting principal unobservable input parameters; such as, price of underlying asset, volatility of stock price, volatility of interest rate by ± 10% and the loss given default ratio, discount rate by ± 1%. |
3 | For equity securities, changes in fair value are calculated by shifting principal unobservable input parameters; such as, correlation between growth rate (0~1%) and discount rate (-1~1%) or between liquidation value (-1~1%) and discount rate (-1~1%). |
4 | For beneficiary certificates, it is practically impossible to analyze sensitivity of changes in unobservable inputs. But only for beneficiary certificates whose underlying assets are real estates, changes in fair value are calculated by shifting correlation between discount rate of rent cashflow (-1~1%) and volatility of real estate price (-1~1%). |
5 | For loans, changes in fair value are calculated by shifting principal unobservable input parameters such as stock price, volatility of stock price (-10~10%), discount rate (-1~1%). |
6 | For loans measured at fair value through other comprehensive income, changes in fair value are calculated by shifting principal unobservable input parameters such as discount rate, volatility of the underlying asset 1%, growth rate 10%. |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.2.4 Day one gains or losses
If the Group uses a valuation technique that incorporates data not obtained from observable markets for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price, and the difference is not recognized in profit or loss but deferred and amortized using the straight-line method over the life of the financial instrument. When the fair value of the financial instruments is subsequently determined using observable market inputs, the remaining deferred amount is recognized in profit or loss.
Changes in aggregate deferred differences for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Balance at the beginning of the period | ||||||||
New transactions | 42,576 | 75,369 | ||||||
Changes during the period | (52,592 | ) | (24,920 | ) | ||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.3 Carrying Amounts of Financial Instruments by Category
Financial assets and liabilities are measured at fair value or amortized cost. The carrying amounts of financial assets and liabilities by category as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
March 31, 2021 | ||||||||||||||||||||||||
Financial instruments at fair value through profit or loss | Financial instruments at fair value through other comprehensive income | Financial instruments designated at fair value through other comprehensive income | Financial instruments at amortized cost | Derivatives held for hedging | Total | |||||||||||||||||||
Financial assets | ||||||||||||||||||||||||
Cash and due from financial institutions | ||||||||||||||||||||||||
Financial assets at fair value through profit or loss | 60,155,939 | — | — | — | — | 60,155,939 | ||||||||||||||||||
Derivatives | 3,541,055 | — | — | — | 192,312 | 3,733,367 | ||||||||||||||||||
Loans measured at amortized cost | — | — | — | 383,242,460 | — | 383,242,460 | ||||||||||||||||||
Financial investments | — | 56,642,802 | 2,664,943 | 36,622,005 | — | 95,929,750 | ||||||||||||||||||
Other financial assets | — | — | — | 18,806,233 | — | 18,806,233 | ||||||||||||||||||
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(In millions of Korean won) | ||||||||||||||||||||
March 31, 2021 | ||||||||||||||||||||
Financial instruments at fair value through profit or loss | Financial instruments designated at fair value through profit or loss | Financial instruments at amortized cost | Derivatives held for hedging | Total | ||||||||||||||||
Financial liabilities | ||||||||||||||||||||
Financial liabilities at fair value through profit or loss | ||||||||||||||||||||
Derivatives | 3,189,331 | — | — | 181,181 | 3,370,512 | |||||||||||||||
Deposits | — | — | 339,270,753 | — | 339,270,753 | |||||||||||||||
Borrowings | — | — | 50,444,543 | — | 50,444,543 | |||||||||||||||
Debentures | — | — | 62,220,973 | — | 62,220,973 | |||||||||||||||
Other financial liabilities | — | — | 37,767,490 | — | 37,767,490 | |||||||||||||||
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62
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
6.3 Carrying Amounts of Financial Instruments by Category (cont’d)
(In millions of Korean won) | ||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||
Financial instruments at fair value through profit or loss | Financial instruments at fair value through other comprehensive income | Financial instruments designated at fair value through other comprehensive income | Financial instruments at amortized cost | Derivatives held for hedging | Total | |||||||||||||||||||
Financial assets | ||||||||||||||||||||||||
Cash and due from financial institutions | ||||||||||||||||||||||||
Financial assets at fair value through profit or loss | 61,035,455 | — | — | — | — | 61,035,455 | ||||||||||||||||||
Derivatives | 5,210,512 | — | — | — | 334,873 | 5,545,385 | ||||||||||||||||||
Loans measured at amortized cost | — | — | — | 377,166,984 | — | 377,166,984 | ||||||||||||||||||
Financial investments | — | 58,750,298 | 3,074,899 | 36,870,229 | — | 98,695,426 | ||||||||||||||||||
Other financial assets | — | — | — | 14,167,689 | — | 14,167,689 | ||||||||||||||||||
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(In millions of Korean won) | ||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||
Financial instruments at fair value through profit or loss | Financial instruments designated at fair value through profit or loss | Financial instruments at amortized cost | Derivatives held for hedging | Total | ||||||||||||||||
Financial liabilities | ||||||||||||||||||||
Financial liabilities at fair value through profit or loss | ||||||||||||||||||||
Derivatives | 5,014,072 | — | — | 208,825 | 5,222,897 | |||||||||||||||
Deposits | — | — | 338,580,220 | — | 338,580,220 | |||||||||||||||
Borrowings | — | — | 49,827,156 | — | 49,827,156 | |||||||||||||||
Debentures | — | — | 62,760,687 | — | 62,760,687 | |||||||||||||||
Other financial liabilities | — | — | 28,612,288 | — | 28,612,288 | |||||||||||||||
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63
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
7. Due from Financial Institutions Measured at Amortized Cost
7.1 Details of due from financial institutions as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | Financial institutions | Interest rate (%) | March 31, 2021 | December 31, 2020 | ||||||||||
Due from financial institutions in Korean won | Due from the Bank of Korea | The Bank of Korea | 0.00 | |||||||||||
Due from banking institutions | Hana Bank and others | 0.00 ~ 1.90 | 4,654,050 | 3,692,044 | ||||||||||
Due from others | NH Investment & Securities Co., Ltd. and others | 0.00 ~ 1.63 | 619,564 | 753,581 | ||||||||||
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21,280,011 | 15,688,428 | |||||||||||||
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Due from financial institutions in foreign currencies | Due from banking institutions in foreign currencies | The Bank of Korea and others | 0.00 ~ 3.00 | 3,497,776 | 4,215,918 | |||||||||
Time deposits in foreign currencies | Bank of China Guangdongsheng Branch and others | 0.00 ~ 7.75 | 647,913 | 739,637 | ||||||||||
Due from others | Societe Generale (Paris) and others | 0.00 ~7.70 | 1,618,296 | 2,079,371 | ||||||||||
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5,763,985 | 7,034,926 | |||||||||||||
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* | Before netting of allowance |
7.2 Details of restricted due from financial institutions as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | Financial institutions | March 31, 2021 | December 31, 2020 | Reasons of restriction | ||||||||
Due from financial institutions in Korean won | Due from the Bank of Korea | The Bank of Korea | Bank of Korea Act | |||||||||
Due from banking institutions | Shinhan Bank and others | 1,022,082 | 772,986 | Net settlement and others | ||||||||
Due from others | NH Investment & Securities Co., Ltd. and others | 456,843 | 545,457 | Derivatives margin account and others | ||||||||
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17,485,322 | 12,561,246 | |||||||||||
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Due from financial institutions in foreign currencies | Due from banking institutions in foreign currencies | Bank of Indonesia and others | 1,485,196 | 1,097,729 | Indonesian law and others | |||||||
Time deposits in foreign currencies | Bank of Communications Co., Ltd. New York Branch | 48,290 | 46,428 | Bank Act of the State of New York and others | ||||||||
Due from others | Societe Generale (Paris) and others | 1,315,716 | 1,597,960 | Derivatives margin account and others | ||||||||
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2,849,202 | 2,742,117 | |||||||||||
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* | Before netting of allowance |
64
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
7.3 Changes in allowances for credit losses of due from financial institutions for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||
12-month expected credit losses | Lifetime expected credit losses | |||||||||||
�� | Non-impaired | Impaired | ||||||||||
Beginning | ||||||||||||
Transfer between stages | ||||||||||||
Transfer to 12-month expected credit losses | — | — | — | |||||||||
Transfer to lifetime expected credit losses | — | — | — | |||||||||
Impairment | — | — | — | |||||||||
Disposal | — | — | — | |||||||||
Reversal of credit losses | (305 | ) | (5 | ) | (282 | ) | ||||||
Others | 29 | 1 | — | |||||||||
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Ending | ||||||||||||
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(In millions of Korean won) | 2020 | |||||||||||
12-month expected credit losses | Lifetime expected credit losses | |||||||||||
Non-impaired | Impaired | |||||||||||
Beginning | ||||||||||||
Transfer between stages | ||||||||||||
Transfer to 12-month expected credit losses | — | — | — | |||||||||
Transfer to lifetime expected credit losses | — | — | — | |||||||||
Impairment | — | — | — | |||||||||
Disposal | — | — | — | |||||||||
Provision (reversal) for credit losses | 928 | (221 | ) | — | ||||||||
Others | 45 | 6 | (64 | ) | ||||||||
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Ending | ||||||||||||
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8. Derivative Financial Instruments and Hedge Accounting
The Group’s derivative operations focus on addressing the needs of the Group’s corporate clients to hedge their risk exposure and hedging the Group’s risk exposure that results from such client contracts. The Group also engages in derivative trading activities to hedge the interest rate and foreign currency risk exposures that arise from the Group’s own assets and liabilities. In addition, the Group engages in proprietary trading of derivatives within the Group’s regulated open position limits.
The Group provides and trades a range of derivatives products, including:
• | Interest rate swaps, relating to interest rate risks in Korean won |
• | Cross-currency swaps, forwards and options relating to foreign exchange rate risks |
• | Stock price index options linked with the KOSPI index |
65
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
8. Derivative Financial Instruments and Hedge Accounting (cont’d)
In particular, the Group applies fair value hedge accounting using interest rate swaps, currency forwards and others to hedge the risk of changes in fair values due to the changes in interest rate and foreign exchange rates of structured debentures in Korean won, debentures in foreign currencies, structured deposits in foreign currencies and others. The Group applies cash flow hedge accounting using interest rate swaps, currency swaps and others to hedge the risk of changes in cash flows of floating rate debt securities in Korean won, borrowings in foreign currencies, group of loans measured at amortized cost and others. In addition, the Group applies net investment in foreign operations hedge accounting by designating debentures in foreign currencies and cross currency forwards as hedging instruments to hedge foreign exchange risks on net investments in foreign operations.
8.1 Details of derivative financial instruments held for trading as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won)
March 31, 2021 | December 31, 2020 | |||||||||||||||||||||||
Notional amount | Assets | Liabilities | Notional amount | Assets | Liabilities | |||||||||||||||||||
Interest rate | ||||||||||||||||||||||||
Forwards | ||||||||||||||||||||||||
Futures * | 6,462,398 | 6,173 | 1,046 | 4,540,235 | 43 | 1,834 | ||||||||||||||||||
Swaps | 303,797,021 | 474,930 | 561,672 | 300,105,350 | 631,917 | 682,401 | ||||||||||||||||||
Options | 14,329,000 | 206,725 | 224,635 | 14,779,000 | 248,437 | 302,134 | ||||||||||||||||||
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326,712,419 | 792,639 | 894,809 | 321,248,585 | 930,977 | 1,093,587 | |||||||||||||||||||
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Currency | ||||||||||||||||||||||||
Forwards | 93,848,651 | 1,141,930 | 1,083,120 | 78,255,991 | 1,712,560 | 1,986,239 | ||||||||||||||||||
Futures * | 359,490 | 1,803 | 33 | 376,281 | 158 | 695 | ||||||||||||||||||
Swaps | 53,261,224 | 994,038 | 773,258 | 49,756,478 | 1,897,636 | 1,349,919 | ||||||||||||||||||
Options | 2,639,273 | 13,560 | 12,987 | 2,377,775 | 33,421 | 28,012 | ||||||||||||||||||
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150,108,638 | 2,151,331 | 1,869,398 | 130,766,525 | 3,643,775 | 3,364,865 | |||||||||||||||||||
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Stock and index | ||||||||||||||||||||||||
Futures * | 976,628 | 26,799 | 1,447 | 1,027,347 | 20,061 | 2,246 | ||||||||||||||||||
Swaps | 4,421,738 | 392,212 | 39,175 | 5,434,057 | 423,297 | 123,242 | ||||||||||||||||||
Options | 8,289,030 | 130,151 | 213,070 | 6,482,510 | 135,805 | 275,282 | ||||||||||||||||||
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13,687,396 | 549,162 | 253,692 | 12,943,914 | 579,163 | 400,770 | |||||||||||||||||||
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Credit | ||||||||||||||||||||||||
Swaps | 3,123,736 | 20,909 | 8,022 | 3,015,782 | 19,395 | 9,700 | ||||||||||||||||||
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3,123,736 | 20,909 | 8,022 | 3,015,782 | 19,395 | 9,700 | |||||||||||||||||||
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Commodity | ||||||||||||||||||||||||
Futures * | 12,591 | 180 | 90 | 11,609 | 151 | 81 | ||||||||||||||||||
Swaps | 5,202 | 298 | 9 | 13,923 | 268 | 991 | ||||||||||||||||||
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17,793 | 478 | 99 | 25,532 | 419 | 1,072 | |||||||||||||||||||
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Others | 1,517,040 | 26,536 | 163,311 | 1,476,310 | 36,783 | 144,076 | ||||||||||||||||||
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* | Gains or losses arising from daily mark-to-market futures are reflected in the margin accounts. |
66
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
8.2 Average price condition of future nominal cash flows by type of hedge accounting as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||||||||||||||
1 year | 2 years | 3 years | 4 years | 5 years | Over 5 years | Total | ||||||||||||||||||||||
Fair value hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | ||||||||||||||||||||||||||||
Average price condition (%) | 0.77 | 0.82 | 1.13 | 1.10 | 1.10 | 1.30 | 1.04 | |||||||||||||||||||||
Average price condition (USD/KRW) | 1,152.50 | 1,143.03 | — | — | — | — | 1,152.05 | |||||||||||||||||||||
Average price condition (EUR/KRW) | 1,365.11 | — | 1,363.38 | — | — | — | 1,364.94 | |||||||||||||||||||||
Average price condition (AUD/KRW) | 850.65 | — | — | — | — | — | 850.65 | |||||||||||||||||||||
Average price condition (GBP/KRW) | 1,545.47 | — | — | — | — | — | 1,545.47 | |||||||||||||||||||||
Cash flow hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | ||||||||||||||||||||||||||||
Average price condition (%) | 0.80 | 1.50 | 2.42 | 2.00 | 1.63 | 1.67 | 1.33 | |||||||||||||||||||||
Average price condition (USD/KRW) | 1,122.24 | 1,162.01 | 1,178.20 | 1,148.33 | 1,138.26 | — | 1,152.80 | |||||||||||||||||||||
Average price condition (EUR/KRW) | 1,303.44 | 1,315.50 | — | — | 1,366.00 | — | 1,310.36 | |||||||||||||||||||||
Average price condition (AUD/KRW) | — | — | — | 851.50 | — | — | 851.50 | |||||||||||||||||||||
Average price condition (SGD/KRW) | 831.49 | — | 866.14 | — | — | — | 863.79 | |||||||||||||||||||||
Hedge of net investments in foreign operations | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | ||||||||||||||||||||||||||||
Average price condition (USD/KRW) | 1,093.07 | — | — | — | — | — | 1,093.07 | |||||||||||||||||||||
Average price condition (GBP/KRW) | — | 1,465.26 | — | — | — | — | 1,465.26 |
67
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
8.2 Average price condition of future nominal cash flows by type of hedge accounting as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||||||||||||||||||
1 year | 2 years | 3 years | 4 years | 5 years | Over 5 years | Total | ||||||||||||||||||||||
Fair value hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | ||||||||||||||||||||||||||||
Average price condition (%) | 0.76 | 0.81 | 1.00 | 1.07 | 1.21 | 1.14 | 0.97 | |||||||||||||||||||||
Average price condition (USD/KRW) | 1,160.33 | 1,115.45 | 1,151.50 | — | — | — | 1,157.28 | |||||||||||||||||||||
Average price condition (EUR/KRW) | 1,353.28 | — | 1,366.30 | — | — | — | 1,353.36 | |||||||||||||||||||||
Average price condition (AUD/KRW) | 835.43 | — | — | — | — | — | 835.43 | |||||||||||||||||||||
Average price condition (GBP/KRW) | 1,546.54 | — | — | — | — | — | 1,546.54 | |||||||||||||||||||||
Cash flow hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | ||||||||||||||||||||||||||||
Average price condition (%) | 0.83 | 1.66 | 2.48 | 2.00 | 1.63 | 1.67 | 1.36 | |||||||||||||||||||||
Average price condition (USD/KRW) | 1,113.33 | 1,160.46 | 1,181.36 | 1,128.30 | 1,142.05 | — | 1,152.37 | |||||||||||||||||||||
Average price condition (EUR/KRW) | 1,306.76 | 1,312.75 | 1,321.00 | — | 1,340.64 | — | 1,312.93 | |||||||||||||||||||||
Average price condition (AUD/KRW) | 837.00 | — | — | — | — | — | 837.00 | |||||||||||||||||||||
Average price condition (SGD/KRW) | 831.49 | — | 866.14 | — | — | — | 858.33 | |||||||||||||||||||||
Hedge of net investments in foreign operations | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | ||||||||||||||||||||||||||||
Average price condition (USD/KRW) | 1,111.45 | — | — | — | — | — | 1,111.45 | |||||||||||||||||||||
Average price condition (GBP/KRW) | — | 1,465.26 | — | — | — | — | 1,465.26 |
68
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
8.3 Fair Value Hedge
8.3.1 Details of fair value hedged items as of March 31, 2021 and December 31, 2020 and for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | 2021 | ||||||||||||||||||||
Carrying amount | Accumulated amount of hedge adjustments | Changes in fair value | ||||||||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||||||||
Hedge accounting Interest rate |
| |||||||||||||||||||||
Debt securities in Korean won | ||||||||||||||||||||||
Debt securities in foreign currencies | 3,017,469 | — | 25,712 | — | (39,201 | ) | ||||||||||||||||
Deposits in foreign currencies | — | 90,222 | — | (458 | ) | 2,361 | ||||||||||||||||
Debentures in Korean won | — | 3,919,048 | — | (60,952 | ) | 53,967 | ||||||||||||||||
Debentures in foreign currencies | — | 1,458,506 | — | 41,631 | 39,134 | |||||||||||||||||
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3,703,906 | 5,467,776 | 26,078 | (19,779 | ) | 53,448 | |||||||||||||||||
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Currency | ||||||||||||||||||||||
Debt securities in foreign currencies | 2,626,489 | — | 57,620 | — | 56,831 | |||||||||||||||||
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2,626,489 | — | 57,620 | — | 56,831 | ||||||||||||||||||
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(In millions of Korean won) | December 31, 2020 | 2020 | ||||||||||||||||||||
Carrying amount | Accumulated amount of hedge adjustments | Changes in fair value | ||||||||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||||||||
Hedge accounting Interest rate |
| |||||||||||||||||||||
Debt securities in Korean won | ||||||||||||||||||||||
Debt securities in foreign currencies | 2,712,980 | — | 62,922 | — | 61,978 | |||||||||||||||||
Deposits in foreign currencies | — | 121,768 | — | 2,088 | (21,009 | ) | ||||||||||||||||
Debentures in Korean won | — | 3,623,161 | — | (6,839 | ) | (6,184 | ) | |||||||||||||||
Debentures in foreign currencies | — | 1,985,333 | — | 81,333 | (69,511 | ) | ||||||||||||||||
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3,714,937 | 5,730,262 | 68,810 | 76,582 | (30,563 | ) | |||||||||||||||||
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| |||||||||||||
Currency | ||||||||||||||||||||||
Debt securities in foreign currencies | 2,669,410 | — | 310,745 | — | 115,342 | |||||||||||||||||
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2,669,410 | — | 310,745 | — | 115,342 | ||||||||||||||||||
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69
Table of Contents
KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
8.3.2 Details of derivative instruments designated as fair value hedge as of March 31, 2021 and December 31, 2020 and for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | 2021 | ||||||||||||||
Notional amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Interest rate | ||||||||||||||||
Swaps | ||||||||||||||||
Currency | ||||||||||||||||
Forwards | 2,073,412 | 44,664 | 15,111 | (81,428 | ) | |||||||||||
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(In millions of Korean won) | December 31, 2020 | 2020 | ||||||||||||||
Notional amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Interest rate |
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Swaps | ||||||||||||||||
Currency | ||||||||||||||||
Forwards | 2,172,192 | 128,038 | 2,616 | (108,472 | ) | |||||||||||
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8.3.3 Details of hedge ineffectiveness recognized in profit or loss from derivatives for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | Hedge ineffectiveness recognized in profit or loss | |||||||
2021 | 2020 | |||||||
Hedge accounting | ||||||||
Interest rate | ||||||||
Currency | (24,597 | ) | 6,870 | |||||
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8.3.4 Gains or losses from fair value hedging instruments and hedged items attributable to the hedged risk for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Losses on hedging instruments | ||||||||
Gains on the hedged items attributable to the hedged risk | 107,107 | 84,785 | ||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
8.4 Cash Flow Hedge
8.4.1 Details of cash flow hedged items as of March 31, 2021 and December 31, 2020 and for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | Cash flow hedge reserve | Changes in fair value | ||||||||||||||
March 31, 2021 | December 31, 2020 | 2021 | 2020 | |||||||||||||
Hedge accounting | ||||||||||||||||
Interest rate risk | ||||||||||||||||
Foreign currency change risk | (8,896 | ) | (6,158 | ) | 13,374 | 49,559 | ||||||||||
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8.4.2 Details of derivative instruments designated as cash flow hedge as of March 31, 2021 and December 31, 2020 and for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | 2021 | ||||||||||||||
Notional amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Interest rate | ||||||||||||||||
Swaps | ||||||||||||||||
Currency | ||||||||||||||||
Swaps | 2,716,635 | 19,066 | 84,144 | 16,480 | ||||||||||||
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Notional amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Interest rate |
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Swaps | ||||||||||||||||
Currency | ||||||||||||||||
Swaps | 2,857,435 | 40,835 | 116,124 | (47,159 | ) | |||||||||||
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8.4.3 Gains or losses from cash flow hedging instruments and hedged items attributable to the hedged risk for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
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Gains (losses) on hedging instruments | ||||||||
Effective portion of gains (losses) on cash flow hedging instruments (amount recognized in other comprehensive income) | 28,434 | (77,336 | ) | |||||
Ineffective portion of gains (losses) on cash flow hedging instruments (amount recognized in profit or loss) | 1,779 | (18 | ) |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
8.4.4 Amounts recognized in other comprehensive income (loss) and reclassified from equity to profit or loss for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Other comprehensive income (loss) | ||||||||
Reclassification to profit or loss | (14,609 | ) | 32,780 | |||||
Income tax effect | (5,386 | ) | 6,032 | |||||
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8.5 Hedge of Net Investments in Foreign Operations
8.5.1 Details of net investments in foreign operations hedged items as of March 31, 2021 and December 31, 2020 and for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | Foreign currency translation reserve | Changes in fair value | ||||||||||||||
March 31, 2021 | December 31, 2020 | 2021 | 2020 | |||||||||||||
Hedge accounting | ||||||||||||||||
Currency (foreign currency exchange risk) |
8.5.2 Details of financial instruments designated as hedge of net investments in foreign operations as of March 31, 2021 and December 31, 2020 and for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | 2021 | ||||||||||||||
Notional Amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Currency | ||||||||||||||||
Forwards | ||||||||||||||||
Debentures in foreign currencies | 877,329 | — | 877,329 | (35,217 | ) | |||||||||||
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(In millions of Korean won) | December 31, 2020 | 2020 | ||||||||||||||
Notional amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Currency | ||||||||||||||||
Forwards | ||||||||||||||||
Debentures in foreign currencies | 842,112 | — | 842,112 | (5,443 | ) | |||||||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
8.5.3 Fair value of non-derivative financial instruments designated as hedge of net investments in foreign operations as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Debentures in foreign currencies |
8.5.4 Gains or losses from hedging instruments in hedge of net investments in foreign operations and hedged items attributable to the hedged risk for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Losses on hedging instruments | ||||||||
Effective portion of losses on hedge of net investments in foreign operations (amount recognized in other comprehensive income) | (45,702 | ) | (18,915 | ) | ||||
Ineffective portion of losses on hedge of net investments in foreign operations (amount recognized in profit or loss) | — | — |
8.5.5 Effective portion of gains or losses on hedging instruments recognized in other comprehensive income for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Other comprehensive loss | ||||||||
Reclassification to profit or loss | — | — | ||||||
Income tax effect | 12,831 | 6,755 | ||||||
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8.6 Interest Rate Benchmark Reform
The USD LIBOR interest rate will be replaced by the Secured Overnight Financing Rate (“SOFR”) based on actual transactions starting from July 2023 for specific term rate (1M, 3M, 6M, 12M) and in the long-term, RFR would substitute the CD rate in an emergency. In this hedging relationship, within the corresponding hedging relationship of related interest rate benchmark (CD#3M, USD#LIBOR#3M, USD#LIBOR#6M), the Group assumed that the spread to be changed on a SOFR basis would be similar to that included in the interest rate swap used as a hedging instrument, and no other changes were assumed.
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
9. Loans Measured at Amortized Cost
9.1 Details of loans as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Loans measured at amortized cost | ||||||||
Deferred loan origination fees and costs | 700,717 | 716,327 | ||||||
Less: Allowances for credit losses | (3,301,503 | ) | (3,283,363 | ) | ||||
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9.2 Details of loans to banks as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Loans measured at amortized cost | ||||||||
Less: Allowances for credit losses | (662 | ) | (682 | ) | ||||
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9.3 Details of loan types and customer types of loans to customers other than banks as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||
Retail | Corporate | Credit card | Total | |||||||||||||
Loans in Korean won | ||||||||||||||||
Loans in foreign currencies | 3,656,890 | 17,048,792 | — | 20,705,682 | ||||||||||||
Domestic import usance bills | — | 2,438,915 | — | 2,438,915 | ||||||||||||
Off-shore funding loans | — | 1,207,844 | — | 1,207,844 | ||||||||||||
Call loans | — | 1,480,408 | — | 1,480,408 | ||||||||||||
Bills bought in Korean won | — | 1,763 | — | 1,763 | ||||||||||||
Bills bought in foreign currencies | — | 2,231,606 | — | 2,231,606 | ||||||||||||
Guarantee payments under acceptances and guarantees | 9 | 4,228 | — | 4,237 | ||||||||||||
Credit card receivables in Korean won | — | — | 19,230,584 | 19,230,584 | ||||||||||||
Credit card receivables in foreign currencies | — | — | 62,171 | 62,171 | ||||||||||||
Bonds purchased under repurchase agreements | — | 3,672,771 | — | 3,672,771 | ||||||||||||
Privately placed bonds | — | 849,097 | — | 849,097 | ||||||||||||
Factored receivables | 120 | — | — | 120 | ||||||||||||
Lease receivables | 1,032,310 | 318,506 | — | 1,350,816 | ||||||||||||
Loans for installment credit | 5,996,192 | 50,816 | — | 6,047,008 | ||||||||||||
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187,329,791 | 172,688,243 | 19,292,755 | 379,310,789 | |||||||||||||
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Proportion (%) | 49.39 | 45.53 | 5.08 | 100.00 | ||||||||||||
Less: Allowances for credit losses | (923,559 | ) | (1,693,567 | ) | (683,715 | ) | (3,300,841 | ) | ||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
9.3 Details of loan types and customer types of loans to customers other than banks as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||||||
Retail | Corporate | Credit card | Total | |||||||||||||
Loans in Korean won | ||||||||||||||||
Loans in foreign currencies | 3,092,630 | 16,159,722 | — | 19,252,352 | ||||||||||||
Domestic import usance bills | — | 2,152,059 | — | 2,152,059 | ||||||||||||
Off-shore funding loans | — | 1,203,737 | — | 1,203,737 | ||||||||||||
Call loans | — | 1,582,251 | — | 1,582,251 | ||||||||||||
Bills bought in Korean won | — | 1,620 | — | 1,620 | ||||||||||||
Bills bought in foreign currencies | — | 1,739,262 | — | 1,739,262 | ||||||||||||
Guarantee payments under acceptances and guarantees | 10 | 8,011 | — | 8,021 | ||||||||||||
Credit card receivables in Korean won | — | — | 18,734,560 | 18,734,560 | ||||||||||||
Credit card receivables in foreign currencies | — | — | 63,071 | 63,071 | ||||||||||||
Bonds purchased under repurchase agreements | — | 3,175,080 | — | 3,175,080 | ||||||||||||
Privately placed bonds | — | 1,154,162 | — | 1,154,162 | ||||||||||||
Factored receivables | 104 | 3 | — | 107 | ||||||||||||
Lease receivables | 1,105,001 | 335,582 | — | 1,440,583 | ||||||||||||
Loans for installment credit | 6,440,521 | 50,295 | — | 6,490,816 | ||||||||||||
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185,700,453 | 170,374,535 | 18,797,631 | 374,872,619 | |||||||||||||
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Proportion (%) | 49.54 | 45.45 | 5.01 | 100.00 | ||||||||||||
Less: Allowances for credit losses | (910,088 | ) | (1,671,098 | ) | (701,495 | ) | (3,282,681 | ) | ||||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
10. Allowances for Credit Losses
10.1 Changes in allowances for credit losses of loans measured at amortized cost for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||||||||||||||||||||||||||
Retail | Corporate | Credit card | ||||||||||||||||||||||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | 12-month expected credit losses | Lifetime expected credit losses | 12-month expected credit losses | Lifetime expected credit losses | |||||||||||||||||||||||||||||||
Non- impaired | Impaired | Non- impaired | Impaired | Non- impaired | Impaired | |||||||||||||||||||||||||||||||
Beginning | ||||||||||||||||||||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 48,175 | (43,167 | ) | (5,008 | ) | 38,169 | (22,160 | ) | (16,009 | ) | 28,886 | (28,187 | ) | (699 | ) | |||||||||||||||||||||
Transfer to lifetime expected credit losses | (28,694 | ) | 39,436 | (10,742 | ) | (20,202 | ) | 32,818 | (12,616 | ) | (19,067 | ) | 19,968 | (901 | ) | |||||||||||||||||||||
Impairment | (1,986 | ) | (41,857 | ) | 43,843 | (665 | ) | (20,813 | ) | 21,478 | (553 | ) | (47,416 | ) | 47,969 | |||||||||||||||||||||
Write-offs | — | 13 | (107,241 | ) | — | — | (43,233 | ) | — | — | (110,398 | ) | ||||||||||||||||||||||||
Sales | (143 | ) | (4 | ) | (19 | ) | 158 | — | — | — | — | — | ||||||||||||||||||||||||
Provision (reversal) for credit losses 1,2 | (15,241 | ) | 40,826 | 75,535 | 798 | (7,344 | ) | 60,214 | (8,595 | ) | 35,040 | 69,291 | ||||||||||||||||||||||||
Business combination | 8,315 | 2,223 | 7,194 | — | — | 1,653 | — | — | — | |||||||||||||||||||||||||||
Others (exchange differences, etc.) | 1,433 | 290 | 290 | 479 | 2,152 | 7,572 | 1 | — | (3,119 | ) | ||||||||||||||||||||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
10.1 Changes in allowances for credit losses of loans measured at amortized cost for the three-month periods ended March 31, 2021 and 2020, are as follows: (cont’d)
(In millions of Korean won) | 2020 | |||||||||||||||||||||||||||||||||||
Retail | Corporate | Credit card | ||||||||||||||||||||||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | 12-month expected credit losses | Lifetime expected credit losses | 12-month expected credit losses | Lifetime expected credit losses | |||||||||||||||||||||||||||||||
Non- impaired | Impaired | Non- impaired | Impaired | Non- impaired | Impaired | |||||||||||||||||||||||||||||||
Beginning | ||||||||||||||||||||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 41,858 | (41,290 | ) | (568 | ) | 22,585 | (22,351 | ) | (234 | ) | 35,516 | (35,189 | ) | (327 | ) | |||||||||||||||||||||
Transfer to lifetime expected credit losses | (28,771 | ) | 40,648 | (11,877 | ) | (11,902 | ) | 14,389 | (2,487 | ) | (24,284 | ) | 25,233 | (949 | ) | |||||||||||||||||||||
Impairment | (957 | ) | (38,619 | ) | 39,576 | (312 | ) | (13,245 | ) | 13,557 | (716 | ) | (56,642 | ) | 57,358 | |||||||||||||||||||||
Write-offs | — | — | (111,739 | ) | — | — | (40,316 | ) | — | — | (122,145 | ) | ||||||||||||||||||||||||
Sales | (222 | ) | (14 | ) | (9 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
Provision (reversal) for credit losses 1,2 | 2,265 | 46,178 | 91,454 | (5,684 | ) | (1,905 | ) | 32,459 | (8,751 | ) | 54,566 | 85,502 | ||||||||||||||||||||||||
Others (exchange differences, etc.) | 77 | 58 | (482 | ) | 3,645 | 2,279 | 2,532 | — | — | (3,057 | ) | |||||||||||||||||||||||||
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1 | Provision for credit losses in the consolidated statements of comprehensive income also include provision (reversal) for credit losses of due from financial institutions (Note 7.3), and provision (reversal) for credit losses of financial investments (Note 11.5), provision (reversal) for credit losses of unused commitments and guarantees (Note 18.2), provision (reversal) for credit losses of financial guarantees contracts (Note 18.3), and provision (reversal) for credit losses of other financial assets. |
2 | Includes |
3 | Includes additional provision of |
The Group manages the written-off loans that their legal extinctive prescriptions have not been completed, and that have not been collected; the balances of those loans areW 10,500,761 million andW 10,566,603 million as of March 31, 2021 and December 31, 2020, respectively.
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
10.2 Changes in gross carrying amount of loans for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||
12-month expected credit losses | Lifetime expected credit losses | |||||||||||
Non-impaired | Impaired | |||||||||||
Beginning | ||||||||||||
Transfer between stages | ||||||||||||
Transfer to 12-month expected credit losses | 7,427,190 | (7,317,415 | ) | (109,775 | ) | |||||||
Transfer to lifetime expected credit losses (non-impaired) | (10,410,237 | ) | 10,529,423 | (119,186 | ) | |||||||
Transfer to lifetime expected credit losses (impaired) | (151,476 | ) | (609,970 | ) | 761,446 | |||||||
Write-offs | — | 12 | (259,803 | ) | ||||||||
Sales | (1,663,061 | ) | (3,947 | ) | (382 | ) | ||||||
Business combination | 117,704 | 3,924 | 11,171 | |||||||||
Net increase (decrease) (execution, repayment and others) | 9,918,882 | (1,898,114 | ) | (132,770 | ) | |||||||
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(In millions of Korean won) | 2020 | |||||||||||
12-month expected credit losses | Lifetime expected credit losses | |||||||||||
Non-impaired | Impaired | |||||||||||
Beginning | ||||||||||||
Transfer between stages | ||||||||||||
Transfer to 12-month expected credit losses | 6,420,508 | (6,398,935 | ) | (21,573 | ) | |||||||
Transfer to lifetime expected credit losses (non-impaired) | (8,122,881 | ) | 8,241,173 | (118,292 | ) | |||||||
Transfer to lifetime expected credit losses (impaired) | (118,568 | ) | (564,365 | ) | 682,933 | |||||||
Write-offs | — | — | (274,200 | ) | ||||||||
Sales | (3,813,081 | ) | (12,475 | ) | 198 | |||||||
Net increase (decrease) (execution, repayment and others) | 17,565,162 | (1,525,458 | ) | (194,940 | ) | |||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
11. Financial Assets at Fair Value through Profit or Loss and Financial Investments
11.1 Details of financial assets at fair value through profit or loss and financial investments as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Financial assets at fair value through profit or loss | ||||||||
Debt securities: | ||||||||
Government and public bonds | ||||||||
Financial bonds | 17,764,574 | 17,897,348 | ||||||
Corporate bonds | 4,113,505 | 3,997,753 | ||||||
Asset-backed securities | 275,444 | 236,130 | ||||||
Beneficiary certificates | 14,359,374 | 14,200,802 | ||||||
Derivatives linked securities | 1,658,943 | 2,218,502 | ||||||
Other debt securities | 10,919,322 | 10,549,248 | ||||||
Equity securities: | ||||||||
Stocks | 1,543,224 | 1,632,619 | ||||||
Other equity securities | 513,482 | 459,694 | ||||||
Loans: | ||||||||
Privately placed bonds | 253,571 | 212,021 | ||||||
Other loans | 65,333 | 125,962 | ||||||
Due from financial institutions: | ||||||||
Other due from financial institutions | 123,124 | 100,094 | ||||||
Others | 98,387 | 89,965 | ||||||
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Financial Investments |
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Financial assets at fair value through other comprehensive income |
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Debt securities: | ||||||||
Government and public bonds | ||||||||
Financial bonds | 19,491,830 | 23,194,387 | ||||||
Corporate bonds | 18,113,174 | 18,721,327 | ||||||
Asset-backed securities | 1,444,672 | 1,795,840 | ||||||
Other debt securities | — | 9,995 | ||||||
Equity securities: | ||||||||
Stocks | 2,452,786 | 2,852,158 | ||||||
Equity investments | 27,796 | 37,602 | ||||||
Other equity securities | 184,361 | 185,139 | ||||||
Loans: | ||||||||
Privately placed bonds | 327,243 | 265,426 | ||||||
Other loans | 23,408 | 27,983 | ||||||
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Financial assets at amortized cost | ||||||||
Debt securities: | ||||||||
Government and public bonds | 18,352,700 | 17,193,289 | ||||||
Financial bonds | 4,109,651 | 5,678,949 | ||||||
Corporate bonds | 8,327,798 | 8,181,961 | ||||||
Asset-backed securities | 5,804,329 | 5,788,587 | ||||||
Other debt securities | 30,566 | 30,392 | ||||||
Less: Allowances for credit losses | (3,039 | ) | (2,949 | ) | ||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
11.2 Dividend income from equity securities designated at fair value through other comprehensive income for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||||||||||||||
From the financial assets derecognized | From the remaining financial assets | From the financial assets derecognized | From the remaining financial assets | |||||||||||||||||
Equity securities measured at fair value through other comprehensive income |
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Stocks | ||||||||||||||||||||
Listed | ||||||||||||||||||||
Unlisted | — | 19,100 | — | 20,060 | ||||||||||||||||
Equity investments |
| — | — | — | 261 | |||||||||||||||
Other equity securities |
| — | 1,692 | — | 968 | |||||||||||||||
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11.3 Derecognized equity securities measured at fair value through other comprehensive income for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||||||||||||||
Disposal price | Accumulated other comprehensive income as of disposal date | Disposal price | Accumulated other comprehensive income as of disposal date | |||||||||||||||||
Equity securities measured at fair value through other comprehensive income |
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Stocks | ||||||||||||||||||||
Listed | ||||||||||||||||||||
Unlisted | 6,900 | 6,282 | — | — | ||||||||||||||||
Equity investments |
| — | — | — | — | |||||||||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
11.4 Provision (reversal) for credit losses of financial investments for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||
Provision | Reversal | Total | ||||||||||
Securities measured at fair value through other comprehensive income | ||||||||||||
Loans measured at fair value through other comprehensive income | — | (8 | ) | (8 | ) | |||||||
Securities measured at amortized cost | 395 | (312 | ) | 83 | ||||||||
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(In millions of Korean won) | 2020 | |||||||||||
Provision | Reversal | Total | ||||||||||
Securities measured at fair value through other comprehensive income | ||||||||||||
Loans measured at fair value through other comprehensive income | 64 | (224 | ) | (160 | ) | |||||||
Securities measured at amortized cost | 545 | (229 | ) | 316 | ||||||||
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11.5 Changes in allowances for credit losses of financial investments for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||
12-month expected credit losses | Lifetime expected credit losses | |||||||||||
Non-impaired | Impaired | |||||||||||
Beginning | ||||||||||||
Transfer between stages | ||||||||||||
Transfer to 12-month expected credit losses | — | — | — | |||||||||
Transfer to lifetime expected credit losses | — | — | — | |||||||||
Sales | (554 | ) | (2 | ) | — | |||||||
Provision for credit losses | 1,040 | 2 | — | |||||||||
Others | 34 | 2 | — | |||||||||
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Ending | ||||||||||||
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(In millions of Korean won) | 2020 | |||||||||||
12-month expected credit losses | Lifetime expected credit losses | |||||||||||
Non-impaired | Impaired | |||||||||||
Beginning | ||||||||||||
Transfer between stages | ||||||||||||
Transfer to 12-month expected credit losses | (5 | ) | 5 | — | ||||||||
Transfer to lifetime expected credit losses | — | — | — | |||||||||
Sales | (298 | ) | — | — | ||||||||
Provision for credit losses | 1,113 | 27 | — | |||||||||
Others | 61 | (1 | ) | 73 | ||||||||
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Ending | ||||||||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
12. Investments in Associates and Joint Ventures
Investments in associates and joint ventures as of March 31, 2021 and December 31, 2020, are as follows:
(in millions of Korean won) | March 31, 2021 | |||||||||||||||||||
Ownership (%) | Acquisition cost | Share of net asset amount | Carrying amount | Industry | Location | |||||||||||||||
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KB Pre IPO Secondary Venture Fund No.1 1 | 15.19 | Investment finance | Korea | |||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund 2 | 66.66 | 13,601 | 16,431 | 16,431 | Investment finance | Korea | ||||||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | 21.05 | 20,000 | 23,165 | 23,165 | Investment finance | Korea | ||||||||||||||
Balhae Infrastructure Company 1 | 12.61 | 106,386 | 102,760 | 102,760 | Investment finance | Korea | ||||||||||||||
Aju Good Technology Venture Fund | 38.46 | 17,113 | 22,497 | 22,497 | Investment finance | Korea | ||||||||||||||
SY Auto Capital Co., Ltd. | 49.00 | 9,800 | 18,806 | 16,462 | Installment loan | Korea | ||||||||||||||
Incheon Bridge Co., Ltd. 1 | 14.99 | 9,158 | (18,026 | ) | — | Operation of highways and related facilities | Korea | |||||||||||||
Big Dipper Co., Ltd. | 25.14 | 440 | — | — | Research, consulting and big data | Korea | ||||||||||||||
Paycoms Co., Ltd. 3 | 11.70 | 800 | 91 | 250 | System software publishing | Korea | ||||||||||||||
Food Factory Co., Ltd. 4 | 22.22 | 1,000 | 577 | 1,263 | Farm product distribution industry | Korea | ||||||||||||||
KBSP Private Equity Fund No.4 1 | 14.95 | 6,100 | 5,920 | 5,920 | Investment finance | Korea | ||||||||||||||
Korea Credit Bureau Co., Ltd. 1 | 9.00 | 4,500 | 6,804 | 6,804 | Credit information | Korea | ||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 25.00 | 7,939 | 8,352 | 8,352 | Investment finance | Korea | ||||||||||||||
Keystone-Hyundai Securities No.1 Private Equity Fund 1 | 2.81 | 1,051 | 546 | 546 | Investment finance | Korea | ||||||||||||||
KB Social Impact Investment Fund | 30.00 | 4,500 | 4,352 | 4,352 | Investment finance | Korea | ||||||||||||||
KB-Solidus Global Healthcare Fund | 43.33 | 48,677 | 44,229 | 44,926 | Investment finance | Korea | ||||||||||||||
POSCO-KB Shipbuilding Fund | 31.25 | 6,625 | 9,108 | 9,108 | Investment finance | Korea | ||||||||||||||
KB-TS Technology Venture Private Equity Fund 2 | 56.00 | 15,680 | 19,304 | 19,304 | Investment finance | Korea | ||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund 2 | 42.55 | 26,050 | 26,791 | 26,041 | Investment finance | Korea | ||||||||||||||
KB-SJ Tourism Venture Fund 1 | 18.52 | 4,500 | 4,124 | 4,124 | Investment finance | Korea | ||||||||||||||
UNION Media Commerce Fund | 28.99 | 1,000 | 960 | 960 | Investment | Korea |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
12. Investments in Associates and Joint Ventures (cont’d)
(in millions of Korean won) | March 31, 2021 | |||||||||||||||||||
Ownership (%) | Acquisition cost | Share of net asset amount | Carrying amount | Industry | Location | |||||||||||||||
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KB-Stonebridge Secondary Private Equity Fund 1 | 14.56 | Investment finance | Korea | |||||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 37.69 | 5,795 | 4,958 | 4,958 | Investment finance | Korea | ||||||||||||||
KB-UTC Inno-Tech Venture Fund | 44.29 | 22,501 | 21,967 | 21,967 | Investment finance | Korea | ||||||||||||||
WJ Private Equity Fund No.1 | 26.95 | 10,000 | 9,666 | 9,666 | Investment finance | Korea | ||||||||||||||
All Together Korea Fund No.2 5 | 99.99 | 10,000 | 10,032 | 10,032 | Asset management | Korea | ||||||||||||||
KB-NAU Special Situation Corporate Restructuring Private Equity Fund 1 | 12.00 | 10,584 | 10,399 | 10,399 | Asset management | Korea | ||||||||||||||
JR GLOBAL REIT | 22.55 | 186,729 | 188,257 | 188,257 | Real estate management | Korea | ||||||||||||||
Project Vanilla Co., Ltd. | 49.00 | 2,450 | 1,926 | 1,926 | System software publishing | Korea | ||||||||||||||
December & Company Inc. 1 | 16.78 | 25,330 | 24,359 | 24,359 | System software publishing | Korea | ||||||||||||||
2020 KB Fintech Renaissance Fund 1 | 5.05 | 550 | 545 | 545 | Investment finance | Korea | ||||||||||||||
KB Material and Parts No.1 PEF 1 | 14.47 | 3,400 | 3,351 | 3,351 | Investment finance | Korea | ||||||||||||||
FineKB Private Equity Fund No.1 | 25.00 | — | (81 | ) | — | Investment finance | Korea | |||||||||||||
KB Bio Private Equity No.3 Ltd. 1 | 12.20 | 10,000 | 9,987 | 9,987 | Investment finance | Korea | ||||||||||||||
K The 15th REIT Co., Ltd. | 40.57 | 8,600 | 8,600 | 8,600 | Investment finance | Korea | ||||||||||||||
Others | 2,475 | 31 | 763 | |||||||||||||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
12. Investments in Associates and Joint Ventures (cont’d)
(in millions of Korean won) | December 31, 2020 | |||||||||||||||||||
Ownership (%) | Acquisition cost | Share of net asset amount | Carrying amount | Industry | Location | |||||||||||||||
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KB Pre IPO Secondary Venture Fund No.1 1 | 15.19 | Investment finance | Korea | |||||||||||||||||
KB GwS Private Securities Investment Trust | 26.74 | 113,880 | 142,799 | 141,359 | Investment finance | Korea | ||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund 2 | 66.66 | 13,601 | 16,042 | 16,042 | Investment finance | Korea | ||||||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | 21.05 | 20,000 | 20,413 | 20,066 | Investment finance | Korea | ||||||||||||||
Balhae Infrastructure Company 1 | 12.61 | 106,107 | 106,624 | 106,624 | Investment finance | Korea | ||||||||||||||
Aju Good Technology Venture Fund | 38.46 | 17,113 | 21,351 | 21,348 | Investment finance | Korea | ||||||||||||||
SY Auto Capital Co., Ltd. | 49.00 | 9,800 | 18,713 | 16,144 | Installment loan | Korea | ||||||||||||||
Incheon Bridge Co., Ltd. 1 | 14.99 | 9,158 | (18,100 | ) | — | Operation of highways and related facilities | Korea | |||||||||||||
Big Dipper Co., Ltd. | 25.14 | 440 | (5 | ) | — | Research, consulting and big data | Korea | |||||||||||||
Paycoms Co., Ltd. 3 | 11.70 | 800 | 72 | 198 | System software publishing | Korea | ||||||||||||||
Food Factory Co., Ltd. 4 | 22.22 | 1,000 | 632 | 1,281 | Farm product distribution industry | Korea | ||||||||||||||
KBSP Private Equity Fund No.4 1 | 14.95 | 6,100 | 5,950 | 5,950 | Investment finance | Korea | ||||||||||||||
KB Private Equity Fund No.3 1 | 15.69 | — | 94 | 94 | Investment finance | Korea | ||||||||||||||
Korea Credit Bureau Co., Ltd. 1 | 9.00 | 4,500 | 7,153 | 7,153 | Credit information | Korea | ||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 25.00 | 9,739 | 9,845 | 9,845 | Investment finance | Korea | ||||||||||||||
Keystone-Hyundai Securities No.1 Private Equity Fund 1 | 4.49 | 1,908 | 1,556 | 1,556 | Investment finance | Korea | ||||||||||||||
KB Social Impact Investment Fund | 30.00 | 3,000 | 2,874 | 2,874 | Investment finance | Korea | ||||||||||||||
KB-Solidus Global Healthcare Fund | 43.33 | 48,677 | 45,516 | 46,213 | Investment finance | Korea | ||||||||||||||
POSCO-KB Shipbuilding Fund | 31.25 | 10,375 | 12,895 | 12,895 | Investment finance | Korea | ||||||||||||||
KB-TS Technology Venture Private Equity Fund 2 | 56.00 | 16,576 | 17,630 | 17,630 | Investment finance | Korea | ||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund 2 | 42.55 | 26,050 | 27,513 | 26,763 | Investment finance | Korea | ||||||||||||||
KB-SJ Tourism Venture Fund 1 | 18.52 | 4,500 | 4,133 | 4,133 | Investment finance | Korea |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
12. Investments in Associates and Joint Ventures (cont’d)
(in millions of Korean won) | December 31, 2020 | |||||||||||||||||||||||
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Ownership (%) | Acquisition cost | Share of net asset amount | Carrying amount | Industry | Location | |||||||||||||||||||
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UNION Media Commerce Fund | 28.99 | Investment | Korea | |||||||||||||||||||||
KB-Stonebridge Secondary Private Equity Fund 1 | 14.56 | 14,308 | 16,636 | 16,636 | Investment finance | Korea | ||||||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 37.69 | 5,795 | 5,049 | 5,049 | Investment finance | Korea | ||||||||||||||||||
KB-UTC Inno-Tech Venture Fund | 44.29 | 17,416 | 16,999 | 16,999 | Investment finance | Korea | ||||||||||||||||||
WJ Private Equity Fund No.1 | 26.95 | 10,000 | 9,711 | 9,711 | Investment finance | Korea | ||||||||||||||||||
All Together Korea Fund No.2 5 | 99.99 | 10,000 | 10,023 | 10,023 | Asset management | Korea | ||||||||||||||||||
KB-NAU Special Situation Corporate Restructuring Private Equity Fund 1 | 12.00 | 5,700 | 5,611 | 5,611 | Asset management | Korea | ||||||||||||||||||
JR GLOBAL REIT | 26.07 | 215,854 | 215,854 | 215,854 | Real estate management | Korea | ||||||||||||||||||
Project Vanilla Co., Ltd. | 49.00 | 2,450 | 2,151 | 2,151 | System software publishing | Korea | ||||||||||||||||||
December & Company Inc. 1 | 17.63 | 24,849 | 24,402 | 24,402 | System software publishing | Korea | ||||||||||||||||||
2020 KB Fintech Renaissance Fund 1 | 5.05 | 550 | 547 | 547 | Investment finance | Korea | ||||||||||||||||||
KB Material and Parts No.1 PEF 1 | 14.47 | 3,400 | 3,371 | 3,371 | Investment finance | Korea | ||||||||||||||||||
FineKB Private Equity Fund No.1 | 25.00 | — | — | — | Investment finance | Korea | ||||||||||||||||||
Others | 2,475 | 1,004 | 674 | |||||||||||||||||||||
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1 | As of March 31, 2021 and December 31, 2020, the Group can exercise significant influence on the decision-making processes of the associate’s financial and business policies through participation in governing bodies. |
2 | In order to direct relevant activities, it is necessary to obtain the consent of the two co-operative members; the Group has applied the equity method as the Group cannot control the investee by itself. |
3 | The ownership of Paycoms Co., Ltd. would be 22.96% and 22.96% as of March 31, 2021 and December 31, 2020, respectively, considering the potential voting rights from convertible bond. |
4 | The ownership of Food Factory Co., Ltd. would be 30.00% and 30.00% as of March 31, 2021 and December 31, 2020, respectively, considering the potential voting rights from convertible bond. |
5 | As of March 31, 2021 and December 31, 2020, the Group participates in the Investment Management Committee but cannot exercise control. |
In accordance with Korean IFRS No.1028 Investments in Associates and Joint Ventures, the Group has applied exemption of equity method for 31 companies including Banksalad Co., Ltd., and recognized them as financial assets at fair value through profit or loss.
Although the Group holds more than 20% of ownership, the entities that the Group has a limited influence on due to the trust agreement on related activities, bankruptcy and rehabilitation procedures have been excluded from the investment in associates by limited influence.
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
13. Deferred Income Tax Assets and Liabilities
Details of deferred income tax assets and liabilities as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||
Assets | Liabilities | Net amount | ||||||||||
Other provisions | ||||||||||||
Allowances for credit losses | 37,166 | (3,158 | ) | 34,008 | ||||||||
Impairment losses of property and equipment | 6,642 | (1,877 | ) | 4,765 | ||||||||
Share-based payments | 17,581 | — | 17,581 | |||||||||
Provisions for acceptances and guarantees | 24,607 | — | 24,607 | |||||||||
Gains or losses on valuation of derivatives | 12,928 | (207,769 | ) | (194,841 | ) | |||||||
Present value discount | 13,626 | (2,783 | ) | 10,843 | ||||||||
Gains or losses on fair value hedge | — | (5,448 | ) | (5,448 | ) | |||||||
Accrued interest | — | (116,196 | ) | (116,196 | ) | |||||||
Deferred loan origination fees and costs | 7,764 | (225,332 | ) | (217,568 | ) | |||||||
Advanced depreciation provision | — | (1,703 | ) | (1,703 | ) | |||||||
Gains or losses on revaluation | 338 | (319,676 | ) | (319,338 | ) | |||||||
Investments in subsidiaries and others | 32,591 | (104,253 | ) | (71,662 | ) | |||||||
Gains or losses on valuation of security investment | 76,635 | (1,007,040 | ) | (930,405 | ) | |||||||
Defined benefit liabilities | 585,466 | — | 585,466 | |||||||||
Accrued expenses | 180,496 | — | 180,496 | |||||||||
Retirement insurance expense | — | (512,321 | ) | (512,321 | ) | |||||||
Adjustments to the prepaid contributions | — | (29,052 | ) | (29,052 | ) | |||||||
Derivative-linked securities | 46,727 | (17,013 | ) | 29,714 | ||||||||
Others | 999,344 | (783,170 | ) | 216,174 | ||||||||
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2,203,093 | (3,336,791 | ) | (1,133,698 | ) | ||||||||
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Offsetting of deferred income tax assets and liabilities | (2,122,715 | ) | 2,122,715 | — | ||||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
13. Deferred Income Tax Assets and Liabilities (cont’d)
(In millions of Korean won) | December 31, 2020 | |||||||||||
Assets | Liabilities | Net amount | ||||||||||
Other provisions | ||||||||||||
Allowances for credit losses | 26,496 | (3,356 | ) | 23,140 | ||||||||
Impairment losses of property and equipment | 3,992 | (1,889 | ) | 2,103 | ||||||||
Share-based payments | 17,718 | — | 17,718 | |||||||||
Provisions for acceptances and guarantees | 17,046 | — | 17,046 | |||||||||
Gains or losses on valuation of derivatives | 20,645 | (223,482 | ) | (202,837 | ) | |||||||
Present value discount | 17,058 | (3,041 | ) | 14,017 | ||||||||
Gains or losses on fair value hedge | 21,060 | — | 21,060 | |||||||||
Accrued interest | — | (125,835 | ) | (125,835 | ) | |||||||
Deferred loan origination fees and costs | 7,224 | (226,821 | ) | (219,597 | ) | |||||||
Advanced depreciation provision | — | (1,703 | ) | (1,703 | ) | |||||||
Gains or losses on revaluation | 338 | (319,698 | ) | (319,360 | ) | |||||||
Investments in subsidiaries and others | 38,164 | (111,589 | ) | (73,425 | ) | |||||||
Gains or losses on valuation of security investment | 73,857 | (1,232,689 | ) | (1,158,832 | ) | |||||||
Defined benefit liabilities | 606,146 | — | 606,146 | |||||||||
Accrued expenses | 334,900 | — | 334,900 | |||||||||
Retirement insurance expense | — | (541,317 | ) | (541,317 | ) | |||||||
Adjustments to the prepaid contributions | — | (28,261 | ) | (28,261 | ) | |||||||
Derivative-linked securities | 78,202 | (30,881 | ) | 47,321 | ||||||||
Others | 1,081,691 | (740,462 | ) | 341,229 | ||||||||
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2,493,796 | (3,591,024 | ) | (1,097,228 | ) | ||||||||
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Offsetting of deferred income tax assets and liabilities | (2,428,738 | ) | 2,428,738 | — | ||||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
14. Financial Liabilities at Fair Value through Profit or Loss
14.1 Details of financial liabilities at fair value through profit or loss, and financial liabilities designated at fair value through profit or loss as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Financial liabilities at fair value through profit or loss | ||||||||
Borrowed securities sold | ||||||||
Other | 99,416 | 91,216 | ||||||
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4,332,091 | 2,025,951 | |||||||
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Financial liabilities designated at fair value through profit or loss | ||||||||
Derivative-linked securities | 8,417,988 | 9,784,107 | ||||||
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8,417,988 | 9,784,107 | |||||||
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14.2 Difference between the carrying amount and contractual cash flow amount of financial liabilities designated at fair value through profit or loss as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Contractual cash flow amount | ||||||||
Carrying amount | 8,417,988 | 9,784,107 | ||||||
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Difference | ||||||||
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15. Deposits
Details of deposits as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Demand deposits | ||||||||
Demand deposits in Korean won | ||||||||
Demand deposits in foreign currencies | 13,155,243 | 14,473,832 | ||||||
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| |||||
179,272,114 | 176,629,560 | |||||||
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Time deposits | ||||||||
Time deposits in Korean won | 144,687,482 | 149,435,968 | ||||||
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| |||||
144,687,482 | 149,435,968 | |||||||
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| |||||
Time deposits in foreign currencies | 12,589,991 | 10,043,679 | ||||||
Fair value adjustments on fair value hedged time deposits in foreign currencies | (458 | ) | 2,089 | |||||
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12,589,533 | 10,045,768 | |||||||
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157,277,015 | 159,481,736 | |||||||
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Certificates of deposits | 2,721,624 | 2,468,924 | ||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
16. Borrowings
16.1 Details of borrowings as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
General borrowings | ||||||||
Bonds sold under repurchase agreements and others | 14,491,544 | 16,334,365 | ||||||
Call money | 756,126 | 1,179,932 | ||||||
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16.2 Details of general borrowings as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | Lenders | Annual | March 31, 2021 | December 31, 2020 | ||||||
Borrowings in Korean won | Borrowings from the Bank of Korea | The Bank of Korea | 0.25 | |||||||
Borrowings from the government | SEMAS and others | 0.00 ~ 2.70 | 2,640,994 | 2,675,568 | ||||||
Borrowings from banks | Shinhan Bank and others | 0.88 ~ 3.35 | 180,277 | 137,952 | ||||||
Borrowings from non-banking financial institutions | Korea Securities Finance Corporation and others | 0.20 ~ 4.74 | 2,053,894 | 2,203,702 | ||||||
Other borrowings | The Korea Development Bank and others | 0.00 ~ 5.20 | 10,987,268 | 9,717,382 | ||||||
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22,683,662 | 21,197,871 | |||||||||
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Borrowings in foreign currencies | Due to banks | Commonwealth Bank of Australia and others | — | 1,736 | 292 | |||||
Borrowings from banks | Central Bank of Uzbekistan and others | 0.00 ~ 8.84 | 10,802,441 | 9,839,110 | ||||||
Borrowings from other financial institutions | The Export-Import Bank of Korea and others | 0.70 ~ 1.47 | 23,078 | 23,827 | ||||||
Other borrowings | Bank of New York Mellon and others | 0.00 ~ 2.80 | 1,685,956 | 1,251,759 | ||||||
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12,513,211 | 11,114,988 | |||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
17. Debentures
Details of debentures as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | Annual interest rate (%) | March 31, 2021 | December 31, 2020 | |||||||||
Debentures in Korean won | ||||||||||||
Structured debentures | 5.65 ~ 5.86 | |||||||||||
Exchangeable bonds * | 0.00 | 240,000 | 240,000 | |||||||||
Subordinated fixed rate debentures | 2.02 ~ 4.35 | 5,334,287 | 4,834,407 | |||||||||
Fixed rate debentures | 0.00 ~ 3.50 | 46,184,836 | 47,229,619 | |||||||||
Floating rate debentures | 0.63 ~ 1.90 | 3,040,000 | 3,190,000 | |||||||||
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54,800,153 | 55,495,986 | |||||||||||
Fair value adjustments of fair value hedged debentures in Korean won | (60,952 | ) | (6,839 | ) | ||||||||
Less: Discount on debentures in Korean won | (32,774 | ) | (32,028 | ) | ||||||||
Less: Adjustment for exchangeable rights in Korean won | (14,159 | ) | (14,957 | ) | ||||||||
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54,692,268 | 55,442,162 | |||||||||||
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Debentures in foreign currencies | ||||||||||||
Floating rate debentures | 0.48 ~ 1.48 | 2,382,995 | 2,232,938 | |||||||||
Fixed rate debentures | 0.05 ~ 13.50 | 5,129,091 | 5,030,580 | |||||||||
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7,512,086 | 7,263,518 | |||||||||||
Fair value adjustments of fair value hedged debentures in foreign currencies | 41,631 | 81,333 | ||||||||||
Less: Discount on debentures in foreign currencies | (25,012 | ) | (26,326 | ) | ||||||||
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7,528,705 | 7,318,525 | |||||||||||
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* | Fair value of the liability component of exchangeable bonds is calculated by using market interest rates of bonds under the same conditions without the exchangeable rights. The residual amount after deducting the liability component from the issuance amount, represents the value of the exchangeable rights and is recorded in equity. Shares to be exchanged are 5 million treasury shares of KB Financial Group Inc. with the exchange price of |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
18. Provisions
18.1 Details of provisions as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Provisions for credit losses of unused loan commitments | ||||||||
Provisions for credit losses of acceptances and guarantees | 89,525 | 62,254 | ||||||
Provisions for credit losses of financial guarantee contracts | 6,870 | 6,348 | ||||||
Provisions for restoration costs | 151,555 | 151,696 | ||||||
Others | 170,921 | 195,852 | ||||||
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18.2 Changes in provisions for credit losses of unused loan commitments, acceptances and guarantees for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won)
2021 | ||||||||||||||||||||||||
Provisions for credit losses of unused loan commitments | Provisions for credit losses of acceptances and guarantees | |||||||||||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | 12-month expected credit losses | Lifetime expected credit losses | |||||||||||||||||||||
Non- impaired | Impaired | Non- impaired | Impaired | |||||||||||||||||||||
Beginning | ||||||||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 12,590 | (11,776 | ) | (814 | ) | 17 | (17 | ) | — | |||||||||||||||
Transfer to lifetime expected credit losses | (4,566 | ) | 4,677 | (111 | ) | (122 | ) | 122 | — | |||||||||||||||
Impairment | (71 | ) | (410 | ) | 481 | — | (46 | ) | 46 | |||||||||||||||
Provision (reversal) for credit losses | (11,119 | ) | (3,106 | ) | 1,630 | 6,506 | 15,964 | 3,715 | ||||||||||||||||
Business combination | 825 | — | — | — | — | — | ||||||||||||||||||
Others (exchange differences, etc.) | 537 | 893 | — | 721 | 261 | 104 | ||||||||||||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
18.2 Changes in provisions for credit losses of unused loan commitments, acceptances and guarantees for the three-month periods ended March 31, 2021 and 2020, are as follows: (cont’d)
(In millions of Korean won)
2020 | ||||||||||||||||||||||||
Provisions for credit losses of unused loan commitments | Provisions for credit losses of acceptances and guarantees | |||||||||||||||||||||||
12-month expected credit losses | Lifetime expected credit losses | 12-month expected credit losses | Lifetime expected credit losses | |||||||||||||||||||||
Non- impaired | Impaired | Non- impaired | Impaired | |||||||||||||||||||||
Beginning | ||||||||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 13,090 | (12,631 | ) | (459 | ) | 17 | (17 | ) | — | |||||||||||||||
Transfer to lifetime expected credit losses | (3,982 | ) | 4,177 | (195 | ) | (69 | ) | 69 | — | |||||||||||||||
Impairment | (78 | ) | (742 | ) | 820 | — | (446 | ) | 446 | |||||||||||||||
Provision (reversal) for credit losses | (8,044 | ) | 7,077 | 1,444 | (547 | ) | (1,872 | ) | 1,910 | |||||||||||||||
Others (exchange differences, etc.) | 574 | 587 | (1 | ) | 876 | 1,383 | 485 | |||||||||||||||||
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* | Includes additional provision of |
18.3 Changes in provisions for credit losses of financial guarantee contracts for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Beginning | ||||||||
Provision | 522 | 239 | ||||||
Others | — | — | ||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
18.4 Changes in provisions for restoration costs for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Beginning | ||||||||
Provision | 3,622 | 8,109 | ||||||
Reversal | (406 | ) | (2,768 | ) | ||||
Used | (3,761 | ) | (2,135 | ) | ||||
Unwinding of discount | 404 | 786 | ||||||
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Ending | ||||||||
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Provisions for restoration costs are the present value of estimated costs to be incurred for the restoration of the leased properties. The expenditure of the restoration cost will be incurred at the end of each lease contract, and the lease period is used to reasonably estimate the time of expenditure. Also, the average restoration expense based on actual three-year historical data and three-year historical average inflation rate were used to estimate the present value of estimated costs.
18.5 Changes in other provisions for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won)
2021 | ||||||||||||||||||||
Membership rewards program | Dormant accounts | Litigations | Others | Total | ||||||||||||||||
Beginning | ||||||||||||||||||||
Increase | 20,513 | 1,049 | 1,475 | 6,991 | 30,028 | |||||||||||||||
Decrease | (19,905 | ) | (1,024 | ) | (1,218 | ) | (32,841 | ) | (54,988 | ) | ||||||||||
Others | — | — | 27 | 2 | 29 | |||||||||||||||
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Ending | ||||||||||||||||||||
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(In millions of Korean won)
2020 | ||||||||||||||||||||
Membership rewards program | Dormant accounts | Litigations | Others | Total | ||||||||||||||||
Beginning | ||||||||||||||||||||
Increase | 18,284 | 657 | 595 | 7,318 | 26,854 | |||||||||||||||
Decrease | (16,020 | ) | (823 | ) | (3,563 | ) | (19,150 | ) | (39,556 | ) | ||||||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
19. Net Defined Benefit Liabilities
19.1 Defined Benefit Plan
The Group operates defined benefit plans which have the following characteristics:
• | The Group has the obligation to pay the agreed benefits to all its current and former employees. |
• | The Group assumes actuarial risk (that benefits will cost more than expected) and investment risk. |
The net defined benefit liability recognized in the consolidated statement of financial position is calculated by independent actuaries in accordance with actuarial valuation methods. The net defined benefit obligation is calculated using the Projected Unit Credit method (the ‘PUC’). Data used in the PUC such as interest rates, future salary increase rate, mortality rate and consumer price index are based on observable market data and historical data which are updated annually.
Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends which may impact defined benefit liabilities and future payments. Actuarial gains and losses arising from changes in actuarial assumptions are recognized in the period incurred through other comprehensive income.
19.2 Details of net defined benefit liabilities as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Present value of defined benefit obligation | ||||||||
Fair value of plan assets | (2,191,469 | ) | (2,302,953 | ) | ||||
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Net defined benefit liabilities * | ||||||||
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* | The net defined benefit liabilities of |
19.3 Details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Current service cost | ||||||||
Past service cost | 540 | — | ||||||
Net interest expenses on net defined benefit liabilities | 982 | 1,155 | ||||||
Gains on settlement | (2,807 | ) | — | |||||
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Post-employment benefits * | ||||||||
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* | Includes post-employment benefits amounting to |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
20. Equity
20.1 Share Capital
20.1.1 Details of share capital as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won and in number of shares) | March 31, 2021 | December 31, 2020 | ||||||
Type of share | Ordinary share | Ordinary share | ||||||
Number of authorized shares | 1,000,000,000 | 1,000,000,000 | ||||||
Par value per share (In Korean won) | ||||||||
Number of issued shares | 415,807,920 | 415,807,920 | ||||||
Share capital |
20.1.2 Changes in outstanding shares for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In number of shares) | 2021 | 2020 | ||||||
Beginning | 389,634,335 | 389,634,335 | ||||||
Increase | — | — | ||||||
Decrease | — | — | ||||||
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Ending | 389,634,335 | 389,634,335 | ||||||
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20.2 Hybrid Securities
Details of hybrid securities classified as equity as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won)
Issuance date | Maturity | Interest rate (%) | March 31, 2021 | December 31, 2020 | ||||||||||||||||
The 1-1st Hybrid securities | May 2, 2019 | Perpetual bond | 3.23 | |||||||||||||||||
The 1-2nd Hybrid securities | May 2, 2019 | Perpetual bond | 3.44 | 49,896 | 49,896 | |||||||||||||||
The 2-1st Hybrid securities | May 8, 2020 | Perpetual bond | 3.30 | 324,099 | 324,099 | |||||||||||||||
The 2-2nd Hybrid securities | May 8, 2020 | Perpetual bond | 3.43 | 74,812 | 74,812 | |||||||||||||||
The 3-1st Hybrid securities | Jul. 14, 2020 | Perpetual bond | 3.17 | 369,099 | 369,099 | |||||||||||||||
The 3-2nd Hybrid securities | Jul. 14, 2020 | Perpetual bond | 3.38 | 29,922 | 29,922 | |||||||||||||||
The 4-1st Hybrid securities | Oct. 20, 2020 | Perpetual bond | 3.00 | 433,996 | 433,996 | |||||||||||||||
The 4-2nd Hybrid securities | Oct. 20, 2020 | Perpetual bond | 3.28 | 64,855 | 64,855 | |||||||||||||||
The 5-1st Hybrid securities | Feb. 19, 2021 | Perpetual bond | 2.67 | 419,070 | — | |||||||||||||||
The 5-2nd Hybrid securities | Feb. 19, 2021 | Perpetual bond | 2.87 | 59,862 | — | |||||||||||||||
The 5-3rd Hybrid securities | Feb. 19, 2021 | Perpetual bond | 3.28 | 119,727 | — | |||||||||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
20.2 Hybrid Securities (cont’d)
The above hybrid securities are early redeemable by the Group after 5 or 7 or 10 years from the issuance date. On the other hand, hybrid securities ofW 574,580 million issued by Kookmin Bank are recognized as non-controlling interests and are early redeemable after 5 years from the issuance date and each interest payment date thereafter.
20.3 Capital Surplus
Details of capital surplus as of March 31, 2021 and December 31, 2020, are as follows
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Paid-in capital in excess of par value | ||||||||
Loss on sales of treasury shares | (481,332 | ) | (481,332 | ) | ||||
Other capital surplus | 4,002,718 | 4,002,714 | ||||||
Consideration for exchangeable rights | 11,933 | 11,933 | ||||||
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20.4 Accumulated Other Comprehensive Income
Details of accumulated other comprehensive income as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Remeasurements of net defined benefit liabilities | ||||||||
Exchange differences on translating foreign operations | (38,990 | ) | (131,113 | ) | ||||
Net gains on financial instruments at fair value through other comprehensive income | 359,273 | 717,230 | ||||||
Share of other comprehensive loss of associates and joint ventures | (3,528 | ) | (3,529 | ) | ||||
Losses on cash flow hedging instruments | (20,158 | ) | (28,597 | ) | ||||
Gains (losses) on hedging instruments of net investments in foreign operations | (10,594 | ) | 22,277 | |||||
Other comprehensive income (loss) arising from separate account | (10,444 | ) | 8,698 | |||||
Fair value changes on financial liabilities designated at fair value due to own credit risk | (8,221 | ) | (11,507 | ) | ||||
Net gains on overlay approach adjustment | 331,144 | 339,202 | ||||||
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
20.5 Retained Earnings
20.5.1 Details of retained earnings as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Legal reserves * | ||||||||
Voluntary reserves | 982,000 | 982,000 | ||||||
Unappropriated retained earnings | 21,225,712 | 20,977,987 | ||||||
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* | With respect to the allocation of net profit earned in a fiscal term, the Parent Company must set aside in its legal reserve an amount equal to at least 10% of its profit after tax as reported in the financial statements, each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its paid-in capital in accordance with Article 53 of the Financial Holding Company Act. This reserve is not available for the payment of cash dividends, but may be transferred to share capital, or used to reduce accumulated deficit. |
20.5.2 Regulatory reserve for credit losses
Measurement and disclosure of regulatory reserve for credit losses are required in accordance with Articles 26 through 28 of Supervisory Regulations on Financial Holding Companies.
20.5.2.1 Details of regulatory reserve for credit losses as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
Regulatory reserve for credit losses attributable to: | ||||||||
Shareholders of the Parent Company | ||||||||
Non-controlling interests | 41,014 | 37,682 | ||||||
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20.5.2.2 Regulatory reserve for credit losses estimated to be appropriated and adjusted profit after provision of regulatory reserve for credit losses for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won, except for earnings per share) | 2021 | 2020 | ||||||
Provision of regulatory reserve for credit losses | ||||||||
Adjusted profit after provision of regulatory reserve for credit losses 1,2 | 1,144,357 | 554,161 | ||||||
Adjusted basic earnings per share after provision of regulatory reserve for credit losses 1 | 2,937 | 1,422 | ||||||
Adjusted diluted earnings per share after provision of regulatory reserve for credit losses 1 | 2,879 | 1,411 |
1 | Adjusted profit after provision of regulatory reserve for credit losses is not based on Korean IFRS; this is calculated reflecting provision of the reserve for credit losses before tax to the net profit attributable to shareholders of the Parent Company. |
2 | After deducting dividends on hybrid securities. |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
20.6 Treasury Shares
Changes in treasury shares for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won and in number of shares)
2021 | ||||||||||||||||
Beginning | Acquisition | Disposal | Ending | |||||||||||||
Number of treasury shares * | 26,173,585 | — | — | 26,173,585 | ||||||||||||
Carrying amount |
* | 5,000,000 treasury shares are deposited at the Korea Securities Depository for issuing exchangeable bonds. |
(In millions of Korean won and in number of shares)
2020 | ||||||||||||||||
Beginning | Acquisition | Disposal | Ending | |||||||||||||
Number of treasury shares | 26,173,585 | — | — | 26,173,585 | ||||||||||||
Carrying amount |
21. Net Interest Income
Details of interest income, expense and net interest income for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Interest income | ||||||||
Due from financial institutions measured at fair value through profit or loss | ||||||||
Securities measured at fair value through profit or loss | 141,559 | 177,061 | ||||||
Loans measured at fair value through profit or loss | 2,079 | 2,704 | ||||||
Securities measured at fair value through other comprehensive income | 198,153 | 184,161 | ||||||
Loans measured at fair value through other comprehensive income | 893 | 2,723 | ||||||
Due from financial institutions measured at amortized cost | 17,082 | 35,301 | ||||||
Securities measured at amortized cost | 176,298 | 150,365 | ||||||
Loans measured at amortized cost | 3,031,843 | 2,997,536 | ||||||
Others | 56,969 | 69,888 | ||||||
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3,624,937 | 3,619,976 | |||||||
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Interest expenses | ||||||||
Deposits | 561,476 | 788,873 | ||||||
Borrowings | 119,263 | 153,527 | ||||||
Debentures | 283,316 | 300,354 | ||||||
Others | 18,582 | 28,021 | ||||||
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982,637 | 1,270,775 | |||||||
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Net interest income | ||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
22. Net Fee and Commission Income
Details of fee and commission income, expense and net fee and commission income for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
|
|
|
| |||||
Fee and commission income | ||||||||
Banking activity fees | ||||||||
Lending activity fees | 22,705 | 24,623 | ||||||
Credit card and debit card related fees | 374,498 | 320,346 | ||||||
Agent activity fees | 49,188 | 49,958 | ||||||
Trust and other fiduciary fees | 124,689 | 99,628 | ||||||
Fund management related fees | 42,786 | 36,895 | ||||||
Acceptances and guarantees fees | 12,368 | 13,056 | ||||||
Foreign currency related fees | 62,861 | 33,193 | ||||||
Securities agency fees | 49,036 | 40,396 | ||||||
Other business account commission on consignment | 12,943 | 12,243 | ||||||
Commissions received on securities business | 251,352 | 144,821 | ||||||
Lease fees | 209,448 | 135,693 | ||||||
Others | 102,240 | 80,753 | ||||||
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1,359,038 | 1,041,463 | |||||||
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Fee and commission expense | ||||||||
Trading activity related fees * | 11,976 | 9,330 | ||||||
Lending activity fees | 9,696 | 5,096 | ||||||
Credit card and debit card related fees | 191,787 | 207,894 | ||||||
Outsourcing related fees | 46,072 | 41,648 | ||||||
Foreign currency related fees | 11,387 | 13,456 | ||||||
Others | 120,941 | 93,907 | ||||||
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391,859 | 371,331 | |||||||
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Net fee and commission income | ||||||||
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* | Fees from financial instruments at fair value through profit or loss. |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
23. Net Gains or Losses on Financial Instruments at Fair Value through Profit or Loss
23.1 Net Gains or Losses on Financial Instruments at Fair Value through Profit or Loss
Net gains or losses on financial instruments at fair value through profit or loss include dividend income and gains or losses arising from changes in fair values, sales and redemptions. Details of net gains or losses on financial instruments at fair value through profit or loss for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Gains on financial instruments at fair value through profit or loss | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Debt securities | ||||||||
Equity securities | 197,950 | 119,745 | ||||||
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680,162 | 784,937 | |||||||
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Derivatives held for trading | ||||||||
Interest rate | 2,381,068 | 2,122,330 | ||||||
Currency | 2,980,558 | 3,780,314 | ||||||
Stock or stock index | 509,996 | 1,227,761 | ||||||
Credit | 10,009 | 13,231 | ||||||
Commodity | 8,207 | 7,065 | ||||||
Other | 68,206 | 147,560 | ||||||
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5,958,044 | 7,298,261 | |||||||
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Financial liabilities at fair value through profit or loss | 64,769 | 150,531 | ||||||
Other financial instruments | 42 | 390 | ||||||
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6,703,017 | 8,234,119 | |||||||
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| |||||
Losses on financial instruments at fair value through profit or loss | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Debt securities | 470,516 | 701,498 | ||||||
Equity securities | 90,971 | 191,679 | ||||||
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| |||||
561,487 | 893,177 | |||||||
|
|
|
| |||||
Derivatives held for trading | ||||||||
Interest rate | 2,303,245 | 2,223,919 | ||||||
Currency | 2,909,237 | 3,649,702 | ||||||
Stock or stock index | 477,752 | 2,172,317 | ||||||
Credit | 5,057 | 13,099 | ||||||
Commodity | 3,337 | 11,439 | ||||||
Other | 102,934 | 251,555 | ||||||
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| |||||
5,801,562 | 8,322,031 | |||||||
|
|
|
| |||||
Financial liabilities at fair value through profit or loss | 54,969 | 25,872 | ||||||
Other financial instruments | 39 | 18 | ||||||
|
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| |||||
6,418,057 | 9,241,098 | |||||||
|
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| |||||
Net gains (losses) on financial instruments at fair value through profit or loss | ||||||||
|
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|
|
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
23.2 Net Gains or Losses on Financial Instruments Designated at Fair Value through Profit or Loss
Net gains or losses on financial instruments designated at fair value through profit or loss include dividend income and gains or losses arising from changes in fair values, sales and redemptions. Details of net gains or losses on financial instruments designated at fair value through profit or loss for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Gains on financial instruments designated at fair value through profit or loss | ||||||||
Financial liabilities designated at fair value through profit or loss | ||||||||
|
|
|
| |||||
228,059 | 1,262,618 | |||||||
|
|
|
| |||||
Losses on financial instruments designated at fair value through profit or loss | ||||||||
Financial liabilities designated at fair value through profit or loss | 288,059 | 394,151 | ||||||
|
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| |||||
288,059 | 394,151 | |||||||
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| |||||
Net gains (losses) on financial instruments designated at fair value through profit or loss | ||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
24. Net Other Operating Income and Expenses
Details of other operating income and expenses for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Other operating income | ||||||||
Gains related to financial instruments at fair value through other comprehensive income | ||||||||
Gains on redemption of financial instruments at fair value through other comprehensive income | ||||||||
Gains on disposal of financial instruments at fair value through other comprehensive income | 51,454 | 136,464 | ||||||
|
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|
| |||||
51,456 | 136,574 | |||||||
|
|
|
| |||||
Gains related to financial assets at amortized cost | ||||||||
Gains on sale of loans measured at amortized cost | 43,878 | 52,298 | ||||||
Gains on disposal of securities measured at amortized cost | — | 229 | ||||||
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| |||||
43,878 | 52,527 | |||||||
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| |||||
Gains on foreign exchange transactions | 1,014,582 | 1,263,289 | ||||||
Dividend income | 27,898 | 34,605 | ||||||
Others | 275,948 | 357,403 | ||||||
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| |||||
1,413,762 | 1,844,398 | |||||||
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| |||||
Other operating expenses | ||||||||
Losses related to financial instruments at fair value through other comprehensive income | ||||||||
Losses on redemption of financial instruments at fair value through other comprehensive income | 17 | 3 | ||||||
Losses on disposal of financial instruments at fair value through other comprehensive income | 15,874 | 3,479 | ||||||
|
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| |||||
15,891 | 3,482 | |||||||
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|
|
| |||||
Losses related to financial assets at amortized cost | ||||||||
Losses on sale of loans measured at amortized cost | 1,458 | 809 | ||||||
Losses on disposal of securities measured at amortized cost | 3 | — | ||||||
|
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|
| |||||
1,461 | 809 | |||||||
|
|
|
| |||||
Losses on foreign exchanges transactions | 951,335 | 1,251,738 | ||||||
Others | 810,440 | 805,295 | ||||||
|
|
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| |||||
1,779,127 | 2,061,324 | |||||||
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| |||||
Net other operating expenses | ||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
25. General and Administrative Expenses
25.1 Details of general and administrative expenses for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Employee benefits | ||||||||
Salaries and short-term employee benefits—salaries | ||||||||
Salaries and short-term employee benefits—others | 274,705 | 201,339 | ||||||
Post-employment benefits—defined benefit plans | 58,172 | 57,825 | ||||||
Post-employment benefits—defined contribution plans | 8,039 | 7,928 | ||||||
Termination benefits | (1,448 | ) | 8,613 | |||||
Share-based payments | 38,338 | (6,211 | ) | |||||
|
|
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| |||||
1,113,939 | 878,496 | |||||||
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|
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| |||||
Depreciation and amortization | 213,427 | 211,700 | ||||||
|
|
|
| |||||
Other general and administrative expenses | ||||||||
Rental expense | 29,639 | 29,190 | ||||||
Tax and dues | 67,244 | 64,875 | ||||||
Communication | 14,997 | 12,232 | ||||||
Electricity and utilities | 9,053 | 7,786 | ||||||
Publication | 3,416 | 3,212 | ||||||
Repairs and maintenance | 11,293 | 5,279 | ||||||
Vehicle | 3,718 | 2,422 | ||||||
Travel | 3,061 | 3,553 | ||||||
Training | 10,939 | 6,135 | ||||||
Service fees | 55,681 | 52,876 | ||||||
Electronic data processing expenses | 74,005 | 70,804 | ||||||
Advertising | 32,359 | 40,458 | ||||||
Others | 80,296 | 70,179 | ||||||
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| |||||
395,701 | 369,001 | |||||||
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| |||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
25.2 Share-based Payments
25.2.1 Stock grants
The Group changed the scheme of share-based payments from stock options to stock grants in November 2007. The stock grants award program is an incentive plan that sets, on grant date, the maximum number of shares that can be awarded. Actual shares to be granted is determined in accordance with achievement of pre-set performance targets over the vesting period.
25.2.1.1 Details of stock grants linked to long-term performance as of March 31, 2021, are as follows:
(In number of shares) | Grant date | Number of granted shares 1 | Vesting conditions 2 | |||||
KB Financial Group Inc. | ||||||||
Series 22 | Apr. 01, 2019 | 3,278 | Service fulfillment, market performance 3 30% and non-market performance 4 70% | |||||
Series 23 | May 27, 2019 | 1,436 | Service fulfillment, market performance 3 30% and non-market performance 4 70% | |||||
Series 25 | Jan. 01, 2020 | 36,103 | Service fulfillment, market performance 3 0~30% and non-market performance 4 70~100% | |||||
Series 27 | Jun. 16, 2020 | 184 | Service fulfillment, market performance 3 30% and non-market performance 4 70% | |||||
Series 28 | Nov. 21, 2020 | 68,135 | Service fulfillment, market performance 3 35% and non-market performance 5 65% | |||||
Series 29 | Jan. 1, 2021 | 105,649 | Service fulfillment, market performance 3 0~30% and non-market performance 4 70~100% | |||||
Deferred grant in 2015 | — | 5,303 | Satisfied | |||||
Deferred grant in 2016 | — | 6,119 | Satisfied | |||||
Deferred grant in 2017 | — | 2,249 | Satisfied | |||||
Deferred grant in 2018 | — | 3,863 | Satisfied | |||||
Deferred grant in 2019 | — | 17,526 | Satisfied | |||||
Deferred grant in 2020 | — | 55,039 | Satisfied | |||||
|
| |||||||
304,884 | ||||||||
|
| |||||||
Kookmin Bank | ||||||||
Series 76 | Apr. 1, 2019 | 5,765 | Service fulfillment, market performance 3 30~50%, and non-market performance 4 50~70% | |||||
Series 77 | May. 27, 2019 | 4,396 | Service fulfillment, market performance 3 30~50%, and non-market performance 4 50~70% | |||||
Series 78 | Nov. 21, 2019 | 36,443 | Service fulfillment, market performance 3 30%, and non-market performance 6 70% | |||||
Series 79 | Jan. 1, 2020 | 223,517 | Service fulfillment, market performance 3 0~50%, and non-market performance 4 50~100% | |||||
Series 80 | Mar 1, 2020 | 7,943 | Service fulfillment, market performance 3 30~50%, and non-market performance 4 50~70% | |||||
Series 81 | Jan. 1, 2021 | 247,493 | Service fulfillment, market performance 3 30~50%, and non-market performance 4 30~100% | |||||
Series 82 | Mar 1, 2021 | 18,202 | Service fulfillment, market performance 3 30~50%, and non-market performance 4 30~100% | |||||
Deferred grant in 2015 | — | 760 | Satisfied | |||||
Deferred grant in 2016 | — | 12,671 | Satisfied | |||||
Deferred grant in 2017 | — | 9,763 | Satisfied | |||||
Deferred grant in 2018 | — | 33,916 | Satisfied | |||||
Deferred grant in 2019 | — | 65,475 | Satisfied | |||||
Deferred grant in 2020 | 80,634 | Satisfied | ||||||
|
| |||||||
746,978 | ||||||||
|
|
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
25.2.1.1 Details of stock grants linked to long-term performance as of March 31, 2021, are as follows: (cont’d)
(In number of shares) | Grant date | Number of granted shares 1 | Vesting conditions 2 | |||||
Other subsidiaries | ||||||||
Stock granted in 2010 | — | 106 | ||||||
Stock granted in 2011 | — | 146 | ||||||
Stock granted in 2012 | — | 420 | ||||||
Stock granted in 2013 | — | 544 | ||||||
Stock granted in 2014 | — | 1,028 | ||||||
Stock granted in 2015 | — | 2,602 | ||||||
Stock granted in 2016 | — | 5,713 | Services fulfillment, market performance 3 10~50% and non-market performance 4 50~100% | |||||
Stock granted in 2017 | — | 17,222 | ||||||
Stock granted in 2018 | — | 62,818 | ||||||
Stock granted in 2019 | — | 76,030 | ||||||
Stock granted in 2020 | — | 376,767 | ||||||
Stock granted in 2021 | 310,726 | |||||||
|
| |||||||
854,122 | ||||||||
|
| |||||||
1,905,984 | ||||||||
|
|
1 | Granted shares represent the total number of shares initially granted to executives and employees who have residual shares as of March 31, 2021 (Deferred grants are residual shares vested as of March 31, 2021). |
2 | Executives and employees were given the option of deferred payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement after the deferred grant has been confirmed. |
3 | Relative TSR (Total Shareholders Return): [(Fair value at the end of the contract - Fair value at the beginning of the contract) + (Total amount of dividend per share paid during the contract period)] / Fair value at the beginning of the contract |
4 | Companies’ and individuals’ performance results |
5 | EPS, Asset Quality, HCROI, Profit from non-banking segments |
6 | EPS, Asset Quality |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
25.2.1.2 Details of stock grants linked to short-term performance as of March 31, 2021, are as follows:
(In number of shares) | Estimated number of vested shares * | Vesting conditions | ||||||
|
|
|
| |||||
KB Financial Group Inc. | ||||||||
Stock granted in 2015 | 5,352 | Satisfied | ||||||
Stock granted in 2016 | 5,409 | Satisfied | ||||||
Stock granted in 2017 | 2,489 | Satisfied | ||||||
Stock granted in 2018 | 7,920 | Satisfied | ||||||
Stock granted in 2019 | 19,083 | Satisfied | ||||||
Stock granted in 2020 | 36,480 | Satisfied | ||||||
Stock granted in 2021 | 9,028 | Proportional to service period | ||||||
Kookmin Bank | ||||||||
Stock granted in 2015 | 5,019 | Satisfied | ||||||
Stock granted in 2016 | 12,867 | Satisfied | ||||||
Stock granted in 2017 | 5,512 | Satisfied | ||||||
Stock granted in 2018 | 41,481 | Satisfied | ||||||
Stock granted in 2019 | 93,912 | Satisfied | ||||||
Stock granted in 2020 | 109,906 | Satisfied | ||||||
Stock granted in 2021 | 29,305 | Proportional to service period | ||||||
Other subsidiaries | ||||||||
Stock granted in 2015 | 7,777 | Satisfied | ||||||
Stock granted in 2016 | 34,345 | Satisfied | ||||||
Stock granted in 2017 | 102,048 | Satisfied | ||||||
Stock granted in 2018 | 286,859 | Satisfied | ||||||
Stock granted in 2019 | 500,458 | Satisfied | ||||||
Stock granted in 2020 | 310,417 | Satisfied | ||||||
Stock granted in 2021 | 51,812 | Proportional to service period | ||||||
|
| |||||||
1,677,479 | ||||||||
|
|
* | Executives and employees were given the option of deferred payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement after the deferred grant has been confirmed. |
25.2.1.3 The accrued expenses for share-based payments related to stocks grants as of March 31, 2021 and December 31, 2020, areW 140,166 million andW 135,327 million, respectively, and the compensation costs from stock grants amounting toW 38,385 million were recognized andW 6,211 million were reversed for the three-month periods ended March 31, 2021 and 2020, respectively.
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
25.2.2 Mileage stock
25.2.2.1 Details of mileage stock as of March 31, 2021, are as follows:
(In number of shares) | Grant date | Number of granted shares 1 | Expected exercise period (years) 2 | Remaining shares | ||||||||||
Stock granted in 2018 | ||||||||||||||
Apr. 02, 2018 | 116 | 0.00 | 83 | |||||||||||
Apr. 30, 2018 | 87 | 0.00~0.08 | 50 | |||||||||||
May 08, 2018 | 170 | 0.00~0.10 | 124 | |||||||||||
Jun. 01, 2018 | 140 | 0.00~0.17 | 96 | |||||||||||
Jul. 02, 2018 | 180 | 0.00~0.25 | 99 | |||||||||||
Aug. 07, 2018 | 194 | 0.00~0.35 | 131 | |||||||||||
Aug. 09, 2018 | 47 | 0.00~0.36 | 22 | |||||||||||
Aug. 14, 2018 | 30 | 0.00~0.37 | 26 | |||||||||||
Aug. 16, 2018 | 130 | 0.00~0.38 | 89 | |||||||||||
Sep. 07, 2018 | 106 | 0.00~0.44 | 63 | |||||||||||
Oct. 04, 2018 | 129 | 0.00~0.51 | 69 | |||||||||||
Nov. 01, 2018 | 258 | 0.00~0.59 | 200 | |||||||||||
Nov. 06, 2018 | 236 | 0.00~0.60 | 164 | |||||||||||
Dec. 03, 2018 | 132 | 0.00~0.67 | 116 | |||||||||||
Dec. 04, 2018 | 21 | 0.00~0.68 | 21 | |||||||||||
Dec. 07, 2018 | 91 | 0.00~0.68 | 72 | |||||||||||
Dec. 12, 2018 | 64 | 0.00~0.70 | 32 | |||||||||||
Dec. 18, 2018 | 271 | 0.00~0.72 | 233 | |||||||||||
Dec. 19, 2018 | 42 | 0.00~0.72 | 30 | |||||||||||
Dec. 31, 2018 | 127 | 0.00~0.75 | 106 | |||||||||||
Stock granted in 2019 | ||||||||||||||
Jan. 11, 2019 | 26,580 | 0.00~0.78 | 19,414 | |||||||||||
Feb. 01, 2019 | 12 | 0.00~0.84 | 8 | |||||||||||
Apr. 01, 2019 | 167 | 0.00~1.00 | 96 | |||||||||||
Apr. 18, 2019 | 105 | 0.00~1.05 | 81 | |||||||||||
Apr. 22, 2019 | 33 | 0.00~1.06 | 33 | |||||||||||
Jul. 01, 2019 | 109 | 0.00~1.25 | 87 | |||||||||||
Aug. 29, 2019 | 39 | 0.00~1.41 | 35 | |||||||||||
Sep. 02, 2019 | 50 | 0.00~1.42 | 34 | |||||||||||
Nov. 01, 2019 | 119 | 0.00~1.59 | 95 | |||||||||||
Nov. 08, 2019 | 14 | 0.00~1.61 | 6 | |||||||||||
Dec. 05, 2019 | 56 | 0.00~1.68 | 54 | |||||||||||
Dec. 06, 2019 | 84 | 0.00~1.68 | 83 | |||||||||||
Dec. 31, 2019 | 87 | 0.00~1.75 | 65 | |||||||||||
Stock granted in 2020 | ||||||||||||||
Jan. 18, 2020 | 28,645 | 0.00~1.80 | 24,951 | |||||||||||
May 12, 2020 | 46 | 0.00~2.12 | 44 | |||||||||||
Jun. 30, 2020 | 206 | 0.00~2.25 | 206 | |||||||||||
Aug. 26, 2020 | 40 | 0.00~2.41 | 40 | |||||||||||
Oct. 29, 2020 | 160 | 0.00~2.58 | 160 | |||||||||||
Nov. 6, 2020 | 45 | 0.00~2.60 | 37 |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
25.2.2.1 Details of mileage stock as of March 31, 2021, are as follows: (cont’d)
(In number of shares) | Grant date | Number of granted shares 1 | Expected exercise period (years) 2 | Remaining shares | ||||||||||
Stock granted in 2020 | ||||||||||||||
Nov. 30, 2020 | 35 | 0.00~2.67 | 34 | |||||||||||
Dec. 2, 2020 | 57 | 0.00~2.67 | 55 | |||||||||||
Dec. 4, 2020 | 154 | 0.00~2.68 | 152 | |||||||||||
Dec. 30, 2020 | 88 | 0.00~2.75 | 86 | |||||||||||
Stock granted in 2021 | ||||||||||||||
Jan. 15, 2021 | 28,156 | 0.00~2.79 | 26,828 | |||||||||||
|
|
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| |||||||||||
87,658 | 74,510 | |||||||||||||
|
|
|
|
1 | Mileage stock is exercisable for two years after one year from the grant date. When the mileage stock is exercised, the closing price of prior month is applied. However, in case of transfer or retirement during the vesting period, mileage stock is exercisable at the closing price of the last month prior to transfer or retirement. |
2 | The shares are assessed based on the stock price as of March 31, 2021. These shares are vested immediately at grant date. |
25.2.2.2 The accrued expenses for share-based payments related to mileage stock as of March 31, 2021 and December 31, 2020, areW 4,187 million andW 2,862 million, respectively. The compensation costs amounting toW 2,161 million andW 460 million were recognized as expenses for the three-month periods ended March 31, 2021 and 2020, respectively.
25.2.3 Long-term share-based payments
The Group calculates the short-term performance bonus of directors of Prudential Life Insurance Company of Korea Ltd. based on the results of the current performance evaluation and will defer the bonus for three years and pay it in cash reflecting the stock price of KB Financial Group Inc. at that time.
25.2.3.1 Details of long-term share-based payments as of March 31, 2021, are as follows:
Grant date | Vested shares | Expected exercise period (years) | Vesting condition | |||||||||||||
Granted in 2020 | 2020 | 13,402 | 2.75 | Services fulfillment |
25.2.3.2 The accrued expenses for long-term share-based payments as of March 31, 2021 and December 31, 2020, areW 605 million andW 652 million, respectively. The compensation costs amounting toW 47 million were reversed for the three-month period ended March 31, 2021.
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
26. Income Tax Expense
Details of income tax expense for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
Income tax payable | ||||||||
Current income tax expense | ||||||||
Adjustments of income tax of prior years recognized in current tax | 21,605 | 8,723 | ||||||
|
|
|
| |||||
317,892 | 232,587 | |||||||
|
|
|
| |||||
Changes in deferred income tax assets (liabilities) | 36,470 | (41,027 | ) | |||||
|
|
|
| |||||
Income tax recognized directly in equity and others | ||||||||
Remeasurements of net defined benefit liabilities | 1,677 | 464 | ||||||
Exchange differences on translating foreign operations | (9,373 | ) | (8,792 | ) | ||||
Net gains or losses on financial instruments at fair value through other comprehensive income | 137,238 | 94,286 | ||||||
Shares of other comprehensive income or loss of associates and joint ventures | (221 | ) | 2,874 | |||||
Gains or losses on cash flow hedging instruments | (5,386 | ) | 6,032 | |||||
Gains or losses on hedging instruments of net investments in foreign operations | 12,831 | 6,755 | ||||||
Other comprehensive income or loss arising from separate account | 6,788 | 126 | ||||||
Fair value changes on financial liabilities designated at fair value due to own credit risk | (1,246 | ) | (7,527 | ) | ||||
Net gains or losses on overlay approach adjustment | 4,045 | (9,177 | ) | |||||
Others | — | 3,462 | ||||||
|
|
|
| |||||
146,353 | 88,503 | |||||||
|
|
|
| |||||
Others | 555 | 396 | ||||||
|
|
|
| |||||
Income tax expense | ||||||||
|
|
|
|
27. Dividends
The dividends to the shareholders of the Parent Company in respect of the year ended December 31, 2020, ofW 1,770 per share, amounting to total dividends ofW 689,653 million, were declared at the annual general shareholder’s meeting on March 26, 2021. The Group’s financial statements as of March 31, 2021, reflect this dividend payable. The dividends paid to the shareholders of the Parent Company in 2020 wereW 861,092 million (W 2,210 per share).
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
28. Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||
Beginning | Changes except for reclassifi- cation | Reclassification to profit or loss | Transfer to retained earnings | Tax effect | Ending | |||||||||||||||||||
Remeasurements of net defined benefit liabilities | ||||||||||||||||||||||||
Exchange differences on translating foreign operations | (131,113 | ) | 101,496 | — | — | (9,373 | ) | (38,990 | ) | |||||||||||||||
Net gains on financial instruments at fair value through other comprehensive income | 717,230 | (747,085 | ) | (4,431 | ) | 256,321 | 137,238 | 359,273 | ||||||||||||||||
Share of other comprehensive loss of associates and joint ventures | (3,529 | ) | 222 | — | — | (221 | ) | (3,528 | ) | |||||||||||||||
Losses on cash flow hedging instruments | (28,597 | ) | 28,434 | (14,609 | ) | — | (5,386 | ) | (20,158 | ) | ||||||||||||||
Gains (losses) on hedging instruments of net investments in foreign operations | 22,277 | (45,702 | ) | — | — | 12,831 | (10,594 | ) | ||||||||||||||||
Other comprehensive income (loss) arising from separate account | 8,698 | (3,202 | ) | (22,728 | ) | — | 6,788 | (10,444 | ) | |||||||||||||||
Fair value changes on financial liabilities designated at fair value due to own credit risk | (11,507 | ) | 4,532 | — | — | (1,246 | ) | (8,221 | ) | |||||||||||||||
Net gains on overlay approach adjustment | 339,202 | 18,253 | (30,356 | ) | — | 4,045 | 331,144 | |||||||||||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
28. Accumulated Other Comprehensive Income (Loss) (cont’d)
(In millions of Korean won) | 2020 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||
Beginning | Changes except for reclassifi- cation | Reclassification to profit or loss | Transfer to retained earnings | Tax effect | Ending | |||||||||||||||||||
Remeasurements of net defined benefit liabilities | ||||||||||||||||||||||||
Exchange differences on translating foreign operations | 31,793 | 90,131 | — | — | (8,792 | ) | 113,132 | |||||||||||||||||
Net gains on financial instruments at fair value through other comprehensive income | 487,331 | (235,568 | ) | (103,538 | ) | — | 94,286 | 242,511 | ||||||||||||||||
Share of other comprehensive income (loss) of associates and joint ventures | 3,318 | (10,952 | ) | — | — | 2,874 | (4,760 | ) | ||||||||||||||||
Losses on cash flow hedging instruments | (27,333 | ) | (77,336 | ) | 32,780 | — | 6,032 | (65,857 | ) | |||||||||||||||
Losses on hedging instruments of net investments in foreign operations | (41,992 | ) | (18,915 | ) | — | — | 6,755 | (54,152 | ) | |||||||||||||||
Other comprehensive income arising from separate account | 18,381 | 2,924 | (3,383 | ) | — | 126 | 18,048 | |||||||||||||||||
Fair value changes on financial liabilities designated at fair value due to own credit risk | (20,326 | ) | 27,356 | — | — | (7,527 | ) | (497 | ) | |||||||||||||||
Net gains on overlay approach adjustment | 187,077 | 6,640 | 31,593 | — | (9,177 | ) | 216,133 | |||||||||||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
29. Earnings per Share
29.1 Basic Earnings per Share
Basic earnings per share is calculated by dividing profit attributable to shareholders of the Parent Company by the weighted average number of ordinary shares outstanding.
29.1.1 Weighted average number of ordinary shares outstanding
Details of weighted average number of ordinary shares outstanding for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In number of shares) | 2021 | 2020 | ||||||
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Beginning (A) | 415,807,920 | 415,807,920 | ||||||
Acquisition of treasury shares (B) | (26,173,585 | ) | (26,173,585 | ) | ||||
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Weighted average number of ordinary shares outstanding (C=A+B) | 389,634,335 | 389,634,335 | ||||||
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29.1.2 Basic earnings per share
Details of basic earnings per share for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In Korean won and in number of shares) | 2021 | 2020 | ||||||
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Profit attributable to shareholders of the Parent Company | ||||||||
Deduction: Dividends on hybrid securities | 13,561,875,000 | 3,256,250,000 | ||||||
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Profit attributable to the ordinary equity holders of the Parent Company (A) | 1,256,453,327,039 | 726,197,365,231 | ||||||
Weighted average number of ordinary shares outstanding (B) | 389,634,335 | 389,634,335 | ||||||
Basic earnings per share (A/B) |
29.2 Diluted Earnings per Share
Diluted earnings per share is calculated through increasing the weighted average number of ordinary shares outstanding by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. The Group has categories of dilutive potential ordinary shares such as stock grants and ordinary share exchange rights of exchangeable bonds.
A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market share price for the period) based on the monetary value of stock grants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the settlement of stock grants.
Exchangeable bonds are included in potential ordinary shares from the exercisable date of the exchange right, and interest expenses after tax for the period were added to profit for diluted earnings per share.
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
29.2.1 Adjusted profit for diluted earnings per share
Adjusted profit for diluted earnings per share for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In Korean won) | 2021 | 2020 | ||||||
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Profit attributable to shareholders of the Parent Company | ||||||||
Deduction: Dividends on hybrid securities | 13,561,875,000 | 3,256,250,000 | ||||||
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Profit attributable to ordinary equity holders of the Parent Company | 1,256,453,327,039 | 726,197,365,231 | ||||||
Adjustments: Interest expense on exchangeable bonds | 578,758,406 | — | ||||||
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Adjusted profit for diluted earnings per share | ||||||||
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29.2.2 Weighted average number of ordinary shares outstanding for diluted earnings per share
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In number of shares) | 2021 | 2020 | ||||||
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Weighted average number of ordinary shares outstanding | 389,634,335 | 389,634,335 | ||||||
Adjustment: | ||||||||
Stock grants | 3,038,052 | 3,059,205 | ||||||
Exchangeable bonds | 5,000,000 | — | ||||||
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Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share | 397,672,387 | 392,693,540 | ||||||
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29.2.3 Diluted earnings per share
Details of diluted earnings per share for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In Korean won and in number of shares) | 2021 | 2020 | ||||||
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Adjusted profit for diluted earnings per share | ||||||||
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share | 397,672,387 | 392,693,540 | ||||||
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Diluted earnings per share | ||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
30. Insurance Contracts
30.1 Insurance Liabilities
Details of insurance liabilities by insurance types as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | |||||||||||||||
Non-life insurance | Life insurance | Others | Total | |||||||||||||
Premium reserve * | ||||||||||||||||
Reserve for outstanding claims | 2,974,440 | 261,390 | 2,419 | 3,238,249 | ||||||||||||
Unearned premium reserve | 1,972,984 | 11,373 | 584 | 1,984,941 | ||||||||||||
Reserve for dividend to policyholders | 127,668 | 39,555 | — | 167,223 | ||||||||||||
Reserve for distribution of earnings to policyholders | 57,292 | 5,898 | — | 63,190 | ||||||||||||
Reserve for loss compensation on participating insurance | 20,090 | 7,234 | — | 27,324 | ||||||||||||
Guarantee reserve | — | 896,825 | — | 896,825 | ||||||||||||
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(In millions of Korean won) | December 31, 2020 | |||||||||||||||
Non-life insurance | Life insurance | Others | Total | |||||||||||||
Premium reserve * | ||||||||||||||||
Reserve for outstanding claims | 2,885,006 | 252,883 | 2,426 | 3,140,315 | ||||||||||||
Unearned premium reserve | 1,859,367 | 9,450 | 896 | 1,869,713 | ||||||||||||
Reserve for dividend to policyholders | 129,660 | 41,024 | — | 170,684 | ||||||||||||
Reserve for distribution of earnings to policyholders | 51,292 | 5,009 | — | 56,301 | ||||||||||||
Reserve for loss compensation on participating insurance | 20,090 | 6,818 | — | 26,908 | ||||||||||||
Guarantee reserve | — | 895,890 | — | 895,890 | ||||||||||||
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* | Includes negative VOBA amounting to |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
30.2 Net Insurance Income
Details of insurance income and expenses for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
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Insurance Income | ||||||||
Premium income | ||||||||
Reinsurance income | 228,638 | 222,681 | ||||||
Reversal of policy reserves | 320 | 372 | ||||||
Separate account income | 84,055 | 50,357 | ||||||
Income from change in reinsurance assets | 42,631 | 42,724 | ||||||
Other insurance income | 5,599 | 3,657 | ||||||
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4,255,602 | 3,270,563 | |||||||
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Insurance Expenses | ||||||||
Insurance claims paid | 1,345,613 | 1,402,601 | ||||||
Dividend expenses | 3,767 | 3,056 | ||||||
Refunds of surrender value | 983,174 | 849,223 | ||||||
Reinsurance expenses | 292,976 | 286,867 | ||||||
Provision for policy reserves | 1,003,738 | 281,651 | ||||||
Separate account expenses | 30,275 | 29,886 | ||||||
Administration expenses | 157,438 | 104,000 | ||||||
Amortization of deferred acquisition costs | 204,319 | 172,200 | ||||||
Expenses from change in reinsurance assets | 22 | — | ||||||
Claim survey expenses paid | 17,075 | 14,789 | ||||||
Other insurance expenses | 42,991 | 48,196 | ||||||
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4,081,388 | 3,192,469 | |||||||
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Net insurance income | ||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
30.3 Application of the Overlay Approach
Upon initial application of Korean IFRS No.1109, the Group applied the overlay approach in accordance with Korean IFRS No.1104.
30.3.1 Details of financial assets with the overlay approach applied as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
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Financial assets at fair value through profit or loss | ||||||||
Due from financial institutions | ||||||||
Debt securities | 7,454,287 | 7,363,457 | ||||||
Equity securities | 206,002 | 305,337 | ||||||
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30.3.2 Changes in net gains (losses) on overlay adjustment for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||
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Beginning | ||||||||
Recognition of other comprehensive income due to acquisition and valuation | 13,954 | 6,151 | ||||||
Reclassification to profit or loss due to disposal | (22,012 | ) | 22,905 | |||||
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Ending | ||||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
31. Statement of Cash Flows
31.1 Details of cash and cash equivalents as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
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Cash | ||||||||
Checks with other banks | 357,106 | 327,781 | ||||||
Due from the Bank of Korea | 17,491,593 | 12,340,532 | ||||||
Due from other financial institutions | 9,549,702 | 10,379,559 | ||||||
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30,148,816 | 25,608,842 | |||||||
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Due from financial institutions measured at fair value through profit or loss | 123,124 | 100,094 | ||||||
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30,271,940 | 25,708,936 | |||||||
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Restricted due from financial institutions | (20,334,524 | ) | (15,303,363 | ) | ||||
Due from financial institutions with original maturities over three months | (1,742,188 | ) | (1,720,481 | ) | ||||
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(22,076,712 | ) | (17,023,844 | ) | |||||
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31.2 Cash inflows and outflows from income tax, interests and dividends for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | Activity | 2021 | 2020 | |||||||
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Income tax paid | Operating | |||||||||
Interest received | Operating | 3,701,855 | 3,711,800 | |||||||
Interest paid | Operating | 1,104,563 | 1,234,374 | |||||||
Dividends received | Operating | 62,957 | 18,184 | |||||||
Dividends paid | Financing | 13,562 | 3,256 |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
32. Contingent Liabilities and Commitments
32.1 Details of acceptances and guarantees as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
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Confirmed acceptances and guarantees | ||||||||
Confirmed acceptances and guarantees in Korean won | ||||||||
Acceptances and guarantees for KB purchasing loan | ||||||||
Others | 868,356 | 1,048,848 | ||||||
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1,031,322 | 1,193,305 | |||||||
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Confirmed acceptances and guarantees in foreign currencies | ||||||||
Acceptances of letter of credit | 235,092 | 221,422 | ||||||
Letter of guarantees | 59,205 | 45,693 | ||||||
Bid bond | 76,836 | 72,037 | ||||||
Performance bond | 842,324 | 703,826 | ||||||
Refund guarantees | 575,831 | 801,445 | ||||||
Others | 2,671,182 | 3,072,099 | ||||||
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4,460,470 | 4,916,522 | |||||||
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Financial guarantees | ||||||||
Acceptances and guarantees for issuance of debenture | 10,040 | 10,040 | ||||||
Acceptances and guarantees for mortgage | 49,251 | 89,302 | ||||||
Overseas debt guarantees | 366,991 | 410,470 | ||||||
International financing guarantees in foreign currencies | 172,389 | 197,097 | ||||||
Others | 50,951 | 50,950 | ||||||
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649,622 | 757,859 | |||||||
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6,141,414 | 6,867,686 | |||||||
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Unconfirmed acceptances and guarantees | ||||||||
Guarantees of letter of credit | 2,181,547 | 2,094,989 | ||||||
Refund guarantees | 680,222 | 344,112 | ||||||
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2,861,769 | 2,439,101 | |||||||
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32.2 Details of commitments as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||
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| |||||
Commitments | ||||||||
Corporate loan commitments | ||||||||
Retail loan commitments | 47,615,538 | 46,450,857 | ||||||
Credit line of credit cards | 66,772,819 | 65,325,863 | ||||||
Purchase of other securities | 6,744,850 | 7,104,163 | ||||||
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161,316,700 | 159,133,983 | |||||||
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Financial Guarantees | ||||||||
Credit line | 4,020,124 | 3,522,809 | ||||||
Purchase of securities | 543,900 | 683,800 | ||||||
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4,564,024 | 4,206,609 | |||||||
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
32.3 Other Matters (including litigation)
a) The Group has 117 pending lawsuits as a plaintiff (excluding simple lawsuits related to the collection or management of loans), with an aggregate claims ofW 536,866 million, and 281 pending lawsuits as a defendant (excluding simple lawsuits related to the collection or management of loans) with an aggregate claims ofW 1,990,887 million, which arose in the normal course of the business, as of March 31, 2021. Details of major pending lawsuits in which the Group is a defendant are as follows:
(in number of cases, in millions of Korean won)
Company | Lawsuits | No. of | Amount | Description of the lawsuits | Status of the lawsuits | |||||||
Kookmin Bank | Request for a return of redemption amount | 1 | Kookmin Bank invested the assets entrusted by OO Asset Management and OO Investment Trust Management in the Fairfield Sentry Limited, and Fairfield Sentry Limited reinvested the assets in Bernard L. Madoff Investment Securities LLC managed by Bernard Madoff (Bernard L. Madoff Investment Securities LLC is in the liquidation process due to Ponzi scheme fraud-related losses). Bankruptcy trustee of Bernard L. Madoff Investment Securities LLC filed a lawsuit against Kookmin Bank seeking to return the amount of redemptions received by Kookmin Bank through Fairfield Sentry Limited. | Application for incineration by the defendant has been denied, and further proceedings are scheduled. [Related litigation is in progress at the New York Southern District Bankruptcy Court (10-03777) at the written complaint review stage] | ||||||||
Kookmin Bank | Request for compensation for damages | 1 | 1,637,861 | The plaintiff filed a lawsuit for compensation for damages against Indonesian Financial Supervisory Authority (OJK) and Kookmin Bank as joint defendants, claiming that the capital increase and Kookmin Bank’s acquisition of PT Bank KB Bukopin Tbk was illegal in violation of local laws and regulations in Indonesia. | It is difficult to accurately predict the result of the lawsuit as of now, but it is judged that the possibility that the result of this lawsuit will have a significant impact on the financial position of the Group is low. | |||||||
KB Securities Co., Ltd. | Request for a return of transaction amount (Australian fund) | 1 | 100,000 | The plaintiffs OOOO Securities and OOOO Life Insurance filed lawsuits, claiming that the KB Securities Co., Ltd. provided false information on major matters in the product description while selling JB Australia NDIS Private Fund No.1 (on April 25, 2019, plaintiffs invested | First trial is in progress (second hearing for the first trial is scheduled on April 2, 2021). |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
32.3 Other Matters (including litigation) (cont’d)
b) On April 10, 2020, Kookmin Bank acquired 70% shares of PRASAC Microfinance Institution Plc. (“PRASAC”), a specialized credit micro finance institution in Cambodia, for US$ 603 million from its existing shareholders. Kookmin Bank has signed an agreement with the existing shareholders of PRASAC. The existing shareholders have the right of put option to sell 30% of the remaining shares to Kookmin Bank, and they are entitled to exercise their rights at the exercise price calculated on the basis of the adjusted book value of net asset as of 2021 year-end, within six months from the issue date of the audit report or the confirmation date of the adjusted value. If the put option is not exercised until its expiry, Kookmin Bank has a right to exercise a call option during the six months following the expiry of such put option. All shareholders are restricted from selling shares or additional pledge before exercising the put option and call option.
c) Kookmin Bank has entered into an agreement with PT Bosowa Corporindo, a major shareholder of PT Bank KB Bukopin Tbk. Under this agreement, Kookmin Bank and PT Bosowa Corporindo have a right of first refusal and a tag-along right. In addition, Kookmin Bank can exercise its drag-along right for two years from the time three years have elapsed since the acquisition date (July 27, 2018) in certain cases, such as violation of the agreement between shareholders.
d) In June 2013, KB Kookmin Card Co., Ltd. had an accident in which cardholders’ personal information was stolen (hereinafter referred to as “accident”) due to illegal activities by employees of personal credit information company in charge of development of the system upgrading to prevent fraudulent use of credit card. As a result, KB Kookmin Card Co., Ltd. was notified by the Financial Services Commission of the suspension of some new business for 3 months as of February 16, 2014. In respect of the incident, KB Kookmin Card Co., Ltd. faces 3 and 2 legal claims filed as a defendant, with an aggregate claim ofW 164 million andW 108 million as of March 31, 2021 and December 31, 2020. In addition, the Group takes out the personal information protection liability insurance as of March 31, 2021.
e) As of March 31, 2021, KB Capital Co., Ltd. is not able to dispose, transfer or collateralize the shares or rights of shares of KB KOLAO Leasing Co., LTD. (“joint-venture lease company”) to a third party without the written consent of both KB Kookmin Card Co., Ltd. and Kolao Holdings, for five years (the restriction period for the disposal of its equity) after February 8, 2017. However, KB Kookmin Card Co., Ltd. and KB Capital Co., Ltd. may transfer all or part of their shares in the joint-venture lease company to affiliates of KB Financial Group Inc., who agree to comply with all the terms and conditions of this agreement on the establishment and operation of the joint-venture lease company and agree to succeed their responsibility for the joint-venture lease company. Meanwhile, KB KOLAO Leasing Co., LTD. is selling LVMC Holdings (formerly Kolao Holdings) allied receivables that are more than three months overdue to Lanexang Leasing Co., Ltd. in accordance with an agreement.
f) As of March 31, 2021, KB Capital Co., Ltd. and PT Sunindo Primasura are required to hold the shares of PT Sunindo Kookmin Best Finance for five years after the completion date of the share purchase (May 18, 2020). If one party is going to sell all or part of the shares, provide them as collateral, trade or dispose of them, it should give the opportunity to exercise preemption to the other party by providing written proposal including transfer price, payment method and others. Meanwhile, the shareholders of PT Sunindo Kookmin Best Finance can receive dividends for up to 20% of net profit after taxes for each fiscal year starting from three years after the fiscal year in which profit available for dividend occurs.
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
32.3 Other Matters (including litigation) (cont’d)
g) KB Securities Co., Ltd., as a sales agency, soldW 326,500 million of private equity funds and trusts, which loans to corporations (borrower) that invest in apartment rental businesses for the disabled in Australia, to individuals and institutional investors. However, management of the fund is impossible due to the breach of contract by local borrower in Australia, therefore there is a possibility of losses of principal to these funds subscribers. In this regard, there are three lawsuits in which KB Securities Co., Ltd. is the defendant as of March 31, 2021. There is a possibility that additional lawsuits will be filed in the future, but the magnitude and final outcome of the lawsuit are unpredictable.
h) In relation to Lime Asset Management, KB Securities Co., Ltd. has a PIS (Portfolio Index Swap) contract, as of March 31, 2021, associated with ‘Lime Thetis Qualified Investor Private Investment Trust No.2’ and Lime Pluto FI Qualified Investor Private Investment Trust No.D-1’ whose redemption were suspended during the fourth quarter of 2019. The notional amount of the underlying assets of the PIS contract isW 263,900 million. Meanwhile, KB Securities Co., Ltd. soldW 68,100 million of feeder fund of aforementioned redemption-suspended funds. On October 20, 2020, Lime Asset Management’s license as a fund manager was revoked by the Financial Supervisory Service’s sanctions review committee, and most of its redemption-suspended funds and normal funds were transferred to Wellbridge Asset Management (the bridge management company). Recovery and distribution are in progress by the bridge management company. It is difficult to predict whether and when the aforementioned redemption-suspended funds will be redeemed, and there is a possibility that lawsuits may be filed in the future, but the impact on the consolidated financial statements cannot be predicted at this time.
i) The proliferation of COVID-19 has had a negative impact on the global economy, which may have a greater impact than expected credit losses and potential impairment of assets in a particular portfolio, and it could negatively affect the profit generation capability of the Group as follows:
• | There is a possibility of uncertainty about the credit risk of a borrower that could be affected by COVID-19. |
• | Uncertainty may arise about forward-looking macroeconomic information related to expected credit losses. |
• | Korean won may depreciate against major foreign currencies. This may result in an increase in principal and interest payments on liabilities denominated in foreign currencies, and losses on foreign exchanges transactions. |
• | A significant decrease in the fair value of the Group’s investment in an entity that could be affected by COVID-19 pandemic can occur. |
Meanwhile, the impact on expected credit losses related to COVID-19 is described in Note 10.1 Changes in allowances for credit losses of loans and Note 18.2 Changes in provisions for credit losses of unused loan commitments, acceptances and guarantees.
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
33. Subsidiaries
33.1 Details of major consolidated subsidiaries as of March 31, 2021, are as follows:
Investor | Investee | Ownership (%) | Location | Date of | Industry | |||||
KB Financial Group Inc. | Kookmin Bank | 100.00 | Korea | Mar. 31 | Banking and foreign exchange transaction | |||||
KB Securities Co., Ltd. | 100.00 | Korea | Mar. 31 | Financial investment | ||||||
KB Insurance Co., Ltd. | 100.00 | Korea | Mar. 31 | Non-life insurance | ||||||
KB Kookmin Card Co., Ltd. | 100.00 | Korea | Mar. 31 | Credit card and installment financing | ||||||
Prudential Life Insurance Company of Korea Ltd. | 100.00 | Korea | Mar. 31 | Life insurance | ||||||
KB Asset Management Co., Ltd. | 100.00 | Korea | Mar. 31 | Collective investment and advisory | ||||||
KB Capital Co., Ltd. | 100.00 | Korea | Mar. 31 | Financial Leasing | ||||||
KB Life Insurance Co., Ltd. | 100.00 | Korea | Mar. 31 | Life insurance | ||||||
KB Real Estate Trust Co., Ltd. | 100.00 | Korea | Mar. 31 | Real estate trust management | ||||||
KB Savings Bank Co., Ltd. | 100.00 | Korea | Mar. 31 | Savings banking | ||||||
KB Investment Co., Ltd. | 100.00 | Korea | Mar. 31 | Capital investment | ||||||
KB Data System Co., Ltd. | 100.00 | Korea | Mar. 31 | Software advisory, development, and supply | ||||||
KB Credit Information Co., Ltd. | 100.00 | Korea | Mar. 31 | Collection of receivables or credit investigation | ||||||
Kookmin Bank | Kookmin Bank Cambodia Plc. | 100.00 | Cambodia | Mar. 31 | Banking and foreign exchange transaction | |||||
Kookmin Bank (China) Ltd. | 100.00 | China | Mar. 31 | Banking and foreign exchange transaction | ||||||
KB Microfinance Myanmar Co., Ltd. | 100.00 | Myanmar | Mar. 31 | Microfinance services | ||||||
PRASAC Microfinance Institution Plc. | 70.00 | Cambodia | Mar. 31 | Microfinance services | ||||||
PT Bank KB Bukopin Tbk | 67.00 | Indonesia | Mar. 31 | Banking and foreign exchange transaction | ||||||
PT Bank Syariah Bukopin | 92.78 | Indonesia | Mar. 31 | Banking | ||||||
PT Bukopin Finance | 97.03 | Indonesia | Mar. 31 | Installment financing | ||||||
KB Bank Myanmar Co., Ltd. | 100.00 | Myanmar | Mar. 31 | Banking and foreign exchange transaction |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
33.1 Details of major consolidated subsidiaries as of March 31, 2021, are as follows: (cont’d)
Investor | Investee | Ownership | Location | Date of | Industry | |||||
KB Securities Co., Ltd. | KBFG Securities America Inc. | 100.00 | United States | Mar. 31 | Investment advisory and securities dealing activities | |||||
KB Securities Hong Kong Ltd. | 100.00 | China | Mar. 31 | Investment advisory and securities dealing activities | ||||||
KB Securities Vietnam Joint Stock Company | 99.70 | Vietnam | Mar. 31 | Investment advisory and securities dealing activities | ||||||
KB FINA Joint Stock Company | 100.00 | Vietnam | Mar. 31 | Investment advisory and securities dealing activities | ||||||
KB Insurance Co., Ltd. | Leading Insurance Services, Inc. | 100.00 | United States | Mar. 31 | Management service | |||||
LIG Insurance (China) Co., Ltd. | 100.00 | China | Mar. 31 | Non-life insurance | ||||||
PT. KB Insurance Indonesia | 70.00 | Indonesia | Mar. 31 | Non-life insurance | ||||||
KB Claims Survey & Adjusting | 100.00 | Korea | Mar. 31 | Claim service | ||||||
KB Sonbo CNS | 100.00 | Korea | Mar. 31 | Management service | ||||||
KB Golden Life Care Co., Ltd. | 100.00 | Korea | Mar. 31 | Service | ||||||
KB Kookmin Card Co., Ltd. | KB Daehan Specialized Bank Plc. | 95.71 | Cambodia | Mar. 31 | Auto Installment finance | |||||
PT. KB Finansia Multi Finance | 80.00 | Indonesia | Mar. 31 | Auto Installment finance | ||||||
KB J Capital Co., Ltd. | 49.99 | Thailand | Mar. 31 | Service | ||||||
KB Capital Co., Ltd. | PT Sunindo Kookmin Best Finance | 85.00 | Indonesia | Mar. 31 | Auto Installment finance | |||||
KB Kookmin Card Co., Ltd., KB Capital Co., Ltd. | KB KOLAO LEASING Co., Ltd. | 80.00 | Laos | Mar. 31 | Auto Installment finance | |||||
Kookmin Bank, KB Data System Co., Ltd. | PT KB DATA SYSTEMS INDONESIA | 100.00 | Indonesia | Mar. 31 | Service | |||||
KB Asset Management Co., Ltd. | KBAM Shanghai Advisory Services Co., Ltd. | 100.00 | China | Mar. 31 | General advisory |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
33.2 Details of consolidated structured entities as of March 31, 2021, are as follows:
Consolidated structured entities | Reasons for consolidation | |||
Trusts | Kookmin Bank (development trust) and 10 others | The Group controls the trust because it has power to determine management performance of the trust and is significantly exposed to variable returns that absorb losses through the guarantees of payment of principal, or payment of principal and fixed rate of return. | ||
Asset-backed securitization | MS Sejong 4th Co., Ltd. and 115 others | The Group controls these investees because it has power over relevant activities in the event of default, is significantly exposed to variable returns by providing lines of credit, ABCP purchase commitments or acquisition of subordinated debt and has ability to affect those returns through its power. | ||
Investment funds | KB Global Platform Fund and 149 others | Funds are consolidated if the Group, as a collective investor or operating manager (member), etc., can manage fund assets on behalf of other investors, or dismiss the collective investor and operating manager, and is substantially exposed to significant variable returns or has such rights. |
If the Group holds more than a majority of the ownership interests but does not have the power over relevant activities of structured entities in accordance with agreements with trust and other related parties, those structured entities are excluded from the consolidation.
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
33.3 Condensed financial information of major subsidiaries as of March 31, 2021 and December 31, 2020, and for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | 2021 | ||||||||||||||||||||||
Assets | Liabilities | Equity | Operating revenue | Profit (loss) attributable to shareholders of the Parent Company | Total compre- hensive income (loss) attributable to shareholders of the Parent Company | |||||||||||||||||||
Kookmin Bank 1 | ||||||||||||||||||||||||
KB Securities Co., Ltd. 1,2 | 56,757,451 | 51,595,001 | 5,162,450 | 2,964,308 | 221,064 | 238,264 | ||||||||||||||||||
KB Insurance Co., Ltd. 1,2 | 39,264,138 | 35,432,231 | 3,831,907 | 3,547,780 | 68,769 | (159,829 | ) | |||||||||||||||||
KB Kookmin Card Co., Ltd.1 | 25,106,711 | 20,847,985 | 4,258,726 | 870,167 | 141,534 | 147,819 | ||||||||||||||||||
Prudential Life Insurance Company of Korea Ltd. 2 | 24,969,022 | 22,762,855 | 2,206,167 | 524,348 | 112,061 | (133,760 | ) | |||||||||||||||||
KB Asset Management Co., Ltd. 1 | 312,167 | 124,242 | 187,925 | 68,665 | 19,884 | 19,846 | ||||||||||||||||||
KB Capital Co., Ltd. 1,2 | 12,901,302 | 11,422,324 | 1,478,978 | 387,129 | 53,932 | 50,993 | ||||||||||||||||||
KB Life Insurance Co., Ltd. | 10,698,623 | 10,171,639 | 526,984 | 820,627 | (1,473 | ) | (55,143 | ) | ||||||||||||||||
KB Real Estate Trust Co., Ltd. 1 | 438,236 | 116,646 | 321,590 | 46,799 | 27,067 | 27,067 | ||||||||||||||||||
KB Savings Bank Co., Ltd. | 2,084,249 | 1,852,341 | 231,908 | 33,280 | 6,423 | 6,305 | ||||||||||||||||||
KB Investment Co., Ltd. 1 | 836,451 | 612,402 | 224,049 | 20,878 | 3,903 | 3,904 | ||||||||||||||||||
KB Data System Co., Ltd. | 38,868 | 22,864 | 16,004 | 36,947 | (1,363 | ) | (1,459 | ) | ||||||||||||||||
KB Credit Information Co., Ltd. | 27,278 | 11,262 | 16,016 | 9,954 | 83 | 78 |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
33.3 Condensed financial information of major subsidiaries as of March 31, 2021 and December 31, 2020, and for the three-month periods ended March 31, 2021 and 2020, are as follows: (cont’d)
(In millions of Korean won) | December 31, 2020 | 2020 | ||||||||||||||||||||||
Assets | Liabilities | Equity | Operating revenue | Profit (loss) attributable to shareholders of the Parent Company | Total compre- hensive income (loss) attributable to shareholders of the Parent Company | |||||||||||||||||||
Kookmin Bank 1 | ||||||||||||||||||||||||
KB Securities Co., Ltd. 1,2 | 57,570,654 | 52,516,488 | 5,054,166 | 5,238,005 | (21,369 | ) | 15,154 | |||||||||||||||||
KB Insurance Co., Ltd. 1,2 | 39,078,117 | 35,086,458 | 3,991,659 | 3,561,845 | 77,177 | 116,253 | ||||||||||||||||||
KB Kookmin Card Co., Ltd.1 | 24,071,644 | 19,789,958 | 4,281,686 | 792,343 | 82,101 | 64,926 | ||||||||||||||||||
Prudential Life Insurance Company of Korea Ltd. 2 | 25,121,656 | 22,681,729 | 2,439,927 | — | — | — | ||||||||||||||||||
KB Asset Management Co., Ltd. 1 | 335,601 | 112,522 | 223,079 | 43,567 | 4,397 | 4,462 | ||||||||||||||||||
KB Capital Co., Ltd. 1,2 | 12,823,748 | 11,392,177 | 1,431,571 | 293,498 | 39,315 | 39,621 | ||||||||||||||||||
KB Life Insurance Co., Ltd. | 10,424,916 | 9,842,789 | 582,127 | 487,326 | 5,950 | (4,580 | ) | |||||||||||||||||
KB Real Estate Trust Co., Ltd. 1 | 437,619 | 108,096 | 329,523 | 38,125 | 21,019 | 21,019 | ||||||||||||||||||
KB Savings Bank Co., Ltd. | 1,883,720 | 1,658,116 | 225,604 | 22,961 | 3,423 | 3,289 | ||||||||||||||||||
KB Investment Co., Ltd. 1 | 848,693 | 618,552 | 230,141 | 20,259 | (5,267 | ) | (5,258 | ) | ||||||||||||||||
KB Data System Co., Ltd. | 40,347 | 23,024 | 17,323 | 37,966 | 1,073 | 1,071 | ||||||||||||||||||
KB Credit Information Co., Ltd. | 27,711 | 11,773 | 15,938 | 9,488 | 169 | 168 |
1 | Financial information is based on its consolidated financial statements. |
2 | Includes fair value adjustments arising from the acquisition. |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
33.4 The Characteristics of Risks Associated with Consolidated Structured Entities
The terms of contractual arrangements to provide financial support to consolidated structured entities are as follows:
33.4.1 The Group has provided payment guarantees ofW 3,845,346 million to K plus 1st L.L.C and other subsidiaries.
33.4.2 The Group provides capital commitment to 23 subsidiaries including KB Sinansan Line Private Special Asset Fund (SOC). The unexecuted amount of the capital commitment isW 968,368 million. Based on the capital commitment, the Group is subject to increase its investment upon the request of the asset management company or the additional agreement among investors.
33.4.3 The Group provides the guarantees of payment of principal, or principal and fixed rate of return in case the operating results of the trusts are less than the guaranteed principal, or principal and fixed rate of return.
33.5 Changes in Subsidiaries
33.5.1 Subsidiaries newly included in consolidation for the three-month period ended March 31, 2021, are as follows:
Company | Reasons of obtaining control | |
| ||
PT KB DATA SYSTEMS INDONESIA and 2 others | Holds more than a majority of the ownership interests | |
Able Guwall 1st Co., Ltd. and 12 others | Holds the power in the event of default and is exposed to significant variable returns by providing lines of credit, ABCP purchase commitments or acquisition of subordinated debt | |
KB Global Private Real Estate Debt Fund No.11 and 5 others | Holds the power to determine the operation of the funds and is exposed to variable returns by holding significant amount of ownership interests |
33.5.2 Subsidiaries excluded from consolidation for the three-month period ended March 31, 2021, are as follows:
Company | Reasons of losing control | |
| ||
Able Hana Co., Ltd. and 24 others | Termination of the commitments | |
KB SAUDI SEPCO II Private Special Asset Fund and 1 another | Liquidation | |
Aquila Global Real Assets Fund No.1 LP and 4 others | Disposal | |
KB Global ESG Securities Feeder Fund (Equity) and 1 another | Decrease in ownership interests to less than majority |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34. Related Party Transactions
According to Korean IFRS No.1024, the Group includes investments in associates, key management (including family members), and post-employment benefit plans of the Group and its related party companies in the scope of related parties. The Group discloses balances (receivables and payables) and other amounts arising from transactions with related parties in the notes to the consolidated financial statements. Refer to Note 12 for details of investments in associates and joint ventures.
34.1 Profit or loss arising from transactions with related parties for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||||
Associates and joint ventures | ||||||||||
Balhae Infrastructure Company | Fee and commission income | |||||||||
Korea Credit Bureau Co., Ltd. | Interest expense | 3 | — | |||||||
Fee and commission income | 221 | 1 | ||||||||
Insurance income | 1 | 1 | ||||||||
Fee and commission expense | 1,123 | 704 | ||||||||
Reversal of credit losses | 1 | — | ||||||||
Other operating expense | 1 | — | ||||||||
KB GwS Private Securities Investment Trust* | Fee and commission income | 146 | 212 | |||||||
Incheon Bridge Co., Ltd. | Interest income | 1,099 | 1,059 | |||||||
Interest expense | 38 | 100 | ||||||||
Fee and commission income | 4 | 7 | ||||||||
Fee and commission expense | 1 | 2 | ||||||||
Insurance income | 69 | 69 | ||||||||
Gains on financial instruments at fair value through profit or loss | — | 1,069 | ||||||||
Losses on financial instruments at fair value through profit or loss | 841 | — | ||||||||
Reversal of credit losses | 14 | — | ||||||||
Provision for credit losses | 3 | — | ||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | Fee and commission income | — | 12 | |||||||
Aju Good Technology Venture Fund | Interest expense | 4 | 7 | |||||||
KB Star Office Private Real Estate Investment Trust No.1 | Interest income | 91 | 92 | |||||||
Interest expense | 3 | 23 | ||||||||
Fee and commission income | 107 | 108 | ||||||||
RAND Bio Science Co., Ltd. | Interest expense | — | 7 | |||||||
SY Auto Capital Co., Ltd. | Interest income | 273 | 278 | |||||||
Fee and commission income | 21 | 6 | ||||||||
Fee and commission expense | 1 | 42 | ||||||||
Insurance income | 9 | 10 | ||||||||
Other operating income | 182 | 216 | ||||||||
Other operating expense | 34 | 37 | ||||||||
Reversal of credit losses | 11 | — |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.1 Profit or loss arising from transactions with related parties for the three-month periods ended March 31, 2021 and 2020, are as follows: (cont’d)
(In millions of Korean won) | 2021 | 2020 | ||||||||
Food Factory Co., Ltd. | Interest income | |||||||||
Interest expense | 1 | 3 | ||||||||
Insurance income | 2 | 1 | ||||||||
Reversal of credit losses | 7 | — | ||||||||
KB Pre IPO Secondary Venture Fund No.1 | Interest expense | — | 3 | |||||||
Fee and commission income | 28 | 28 | ||||||||
KB Private Equity Fund No.3* | Fee and commission income | — | 119 | |||||||
Acts Co., Ltd. | Interest income | — | 1 | |||||||
APRO Co., Ltd. * | Interest income | — | 7 | |||||||
Interest expense | — | 1 | ||||||||
Insurance income | — | 1 | ||||||||
Provision for credit losses | — | 1 | ||||||||
POSCO-KB Shipbuilding Fund | Fee and commission income | 70 | 123 | |||||||
Dae-A Leisure Co., Ltd. | Interest expense | 1 | 2 | |||||||
Paycoms Co., Ltd. | Interest income | 3 | 3 | |||||||
Big Dipper Co., Ltd. | Fee and commission expense | 257 | — | |||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | Interest expense | — | 15 | |||||||
Fee and commission income | 56 | 300 | ||||||||
KB-TS Technology Venture Private Equity Fund | Fee and commission income | — | 126 | |||||||
KB-SJ Tourism Venture Fund | Fee and commission income | 70 | 84 | |||||||
Banksalad Co., Ltd. | Fee and commission income | 9 | 9 | |||||||
Fee and commission expense | 20 | — | ||||||||
RMGP Bio-Pharma Investment Fund, L.P. | Fee and commission income | 10 | — | |||||||
Other non-operating income | — | 10 | ||||||||
KB-MDI Centauri Fund LP | Fee and commission income | 82 | — | |||||||
Contents First | Interest expense | (1 | ) | — | ||||||
December & Company Inc. | Insurance income | 27 | — | |||||||
GENINUS Inc. | Interest expense | 10 | — | |||||||
Wyatt Corp. | Insurance income | 15 | 14 | |||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Interest expense | 3 | 18 | |||||||
Fee and commission income | 169 | 367 | ||||||||
SKYDIGITAL INC. | Fee and commission income | 1 | 1 | |||||||
KB No.17 Special Purpose Acquisition Company | Gains on financial instruments at fair value through profit or loss | 42 | — | |||||||
Losses on financial instruments at fair value through profit or loss | — | 20 | ||||||||
Interest expense | 4 | 7 | ||||||||
KB No.18 Special Purpose Acquisition Company | Gains on financial instruments at fair value through profit or loss | 55 | 60 | |||||||
Interest expense | 7 | 10 | ||||||||
KB No.19 Special Purpose Acquisition Company | Gains on financial instruments at fair value through profit or loss | 59 | 8 | |||||||
Interest expense | 2 | 4 |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.1 Profit or loss arising from transactions with related parties for the three-month periods ended March 31, 2021 and 2020, are as follows: (cont’d)
(In millions of Korean won) | 2021 | 2020 | ||||||||
KB No.20 Special Purpose Acquisition Company | Fee and commission income | |||||||||
Gains on financial instruments at fair value through profit or loss | 57 | 1,579 | ||||||||
Interest expense | 3 | 7 | ||||||||
KB SPROTT Renewable Private Equity Fund No.1 | Fee and commission income | 120 | 244 | |||||||
KB-Stonebridge Secondary Private Equity Fund | Fee and commission income | 108 | 578 | |||||||
COSES GT | Interest income | 4 | — | |||||||
WJ Private Equity Fund No.1 | Fee and commission income | 2 | — | |||||||
UPRISE, Inc. | Interest income | 2 | — | |||||||
CellinCells Co., Ltd. | Interest expense | — | 3 | |||||||
Bomapp Inc. | Fee and commission expense | 4 | 1 | |||||||
Insurance income | — | 1 | ||||||||
KB Social Impact Investment Fund | Fee and commission income | 75 | 75 | |||||||
KB-UTC Inno-Tech Venture Fund | Fee and commission income | 127 | 164 | |||||||
KBSP Private Equity Fund No.4 | Fee and commission income | 96 | — | |||||||
KB-NAU Special Situation Corporate Restructuring Private Equity Fund | Fee and commission income | 352 | — | |||||||
2020 KB Fintech Renaissance Fund | Fee and commission income | 37 | — | |||||||
FineKB Private Equity Fund No.1 | Fee and commission income | 123 | — | |||||||
KB Bio Private Equity No.3 Ltd. | Fee and commission income | 69 | — | |||||||
K The 15th REIT Co., Ltd. | Fee and commission income | 500 | — | |||||||
KB-Solidus Global Healthcare Fund | Fee and commission income | 171 | 211 | |||||||
Fabric Time Co., Ltd. | Fee and commission income | 2 | 2 | |||||||
Interest expense | 8 | (1 | ) | |||||||
BNF Corporation Ltd. * | Interest income | — | 401 | |||||||
Fee and commission income | — | 2 | ||||||||
Provision for credit losses | — | 8 | ||||||||
Keystone-Hyundai Securities No.1 Private Equity Fund | Fee and commission income | 23 | 43 | |||||||
Other | ||||||||||
Retirement pension | Fee and commission income | 343 | 298 | |||||||
Interest expense | 1 | 2 |
* | Excluded from the Group’s related party as of March 31, 2021. |
Meanwhile, the Group purchased installment financial assets, etc. from SY Auto Capital Co., Ltd. amounting toW 223,063 million andW 277,856 million for the three-month periods ended March 31, 2021 and 2020, respectively.
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.2 Details of receivables and payables, and related allowances for credit losses arising from transactions with related parties as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||||
Associates and joint ventures | ||||||||||
Balhae Infrastructure Company | Other assets | |||||||||
Korea Credit Bureau Co., Ltd. | Loans measured at amortized cost (gross amount) | 101 | 36 | |||||||
Deposits | 4,751 | 19,982 | ||||||||
Insurance liabilities | — | 1 | ||||||||
Other liabilities | 120 | 623 | ||||||||
KB GwS Private Securities Investment Trust * | Other assets | — | 641 | |||||||
Incheon Bridge Co., Ltd. | Financial assets at fair value through profit or loss | 37,915 | 38,756 | |||||||
Loans measured at amortized cost (gross amount) | 128,281 | 133,002 | ||||||||
Allowances for credit losses | 189 | 202 | ||||||||
Other assets | 503 | 545 | ||||||||
Deposits | 28,783 | 39,520 | ||||||||
Provisions | 291 | 292 | ||||||||
Insurance liabilities | 40 | 109 | ||||||||
Other liabilities | 201 | 205 | ||||||||
Jungdo Co., Ltd. | Deposits | 4 | 4 | |||||||
Dongjo Co., Ltd. | Insurance liabilities | — | 1 | |||||||
Dae-A Leisure Co., Ltd. | Deposits | 555 | 636 | |||||||
Other liabilities | 22 | 21 | ||||||||
Aju Good Technology Venture Fund | Deposits | 4,923 | 3,093 | |||||||
Other liabilities | 5 | 1 | ||||||||
KB Star Office Private Real Estate Investment Trust No.1 | Loans measured at amortized cost (gross amount) | 10,000 | 10,000 | |||||||
Allowances for credit losses | 5 | 5 | ||||||||
Other assets | 243 | 137 | ||||||||
Deposits | 2,307 | 4,255 | ||||||||
Other liabilities | 3 | 24 | ||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Deposits | 9,829 | 8,097 | |||||||
Other liabilities | 1 | 1 | ||||||||
WJ Private Equity Fund No.1 | Other assets | 2 | 2 | |||||||
Deposits | 180 | 349 | ||||||||
KB Cape No.1 Private Equity Fund | Financial assets at fair value through profit or loss | 2,000 | 2,000 | |||||||
Other assets | 144 | 144 | ||||||||
RAND Bio Science Co., Ltd. | Deposits | 260 | 693 | |||||||
Loans measured at amortized cost (gross amount) | 2 | 1 |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.2 Details of receivables and payables, and related allowances for credit losses arising from transactions with related parties as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||||
SY Auto Capital Co., Ltd. | Loans measured at amortized cost (gross amount) | |||||||||
Allowances for credit losses | 46 | 57 | ||||||||
Other assets | 62 | 65 | ||||||||
Deposits | 5 | 6 | ||||||||
Insurance liabilities | 32 | 13 | ||||||||
Other liabilities | 27 | 76 | ||||||||
Food Factory Co., Ltd. | Financial assets at fair value through profit or loss | 662 | 662 | |||||||
Loans measured at amortized cost (gross amount) | 3,584 | 3,210 | ||||||||
Allowances for credit losses | 4 | 8 | ||||||||
Other assets | 2 | 3 | ||||||||
Deposits | 935 | 1,555 | ||||||||
Provisions | — | 2 | ||||||||
Insurance liabilities | 5 | 5 | ||||||||
Other liabilities | 2 | 9 | ||||||||
KB Pre IPO Secondary Venture Fund No.1 | Deposits | 598 | 629 | |||||||
Acts Co., Ltd. | Deposits | 49 | 18 | |||||||
Insurance liabilities | — | 1 | ||||||||
Other liabilities | 100 | 100 | ||||||||
POSCO-KB Shipbuilding Fund | Other assets | 70 | 264 | |||||||
Paycoms Co., Ltd. | Other assets | 1 | 1 | |||||||
Financial assets at fair value through profit or loss | 1,226 | 1,226 | ||||||||
Deposits | 1 | 1 | ||||||||
Big Dipper Co., Ltd. | Loans measured at amortized cost (gross amount) | 5 | 4 | |||||||
Deposits | 7 | 1 | ||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | Deposits | 331 | 923 | |||||||
Computerlife Co., Ltd. | Deposits | 1 | — | |||||||
RMGP Bio-Pharma Investment Fund, L.P. | Financial assets at fair value through profit or loss | 4,974 | 4,250 | |||||||
Other liabilities | 61 | 71 | ||||||||
RMGP Bio-Pharma Investment, L.P. | Financial assets at fair value through profit or loss | 10 | 9 | |||||||
Wyatt Corp. | Financial assets at fair value through profit or loss | 6,000 | 6,000 | |||||||
Deposits | 1 | 1 | ||||||||
Insurance liabilities | 24 | 39 |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.2 Details of receivables and payables, and related allowances for credit losses arising from transactions with related parties as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||||
SKYDIGITAL INC. | Deposits | |||||||||
Banksalad Co., Ltd. | Financial assets at fair value through profit or loss | 9,141 | 9,141 | |||||||
UPRISE, Inc. | Financial assets at fair value through profit or loss | 250 | 250 | |||||||
Loans measured at amortized cost (gross amount) | 500 | 500 | ||||||||
Allowances for credit losses | 1 | 1 | ||||||||
Deposits | 2 | 11 | ||||||||
Stratio, Inc. | Financial assets at fair value through profit or loss | 1,000 | 1,000 | |||||||
Deposits | — | 13 | ||||||||
Honest Fund, Inc. | Financial assets at fair value through profit or loss | 3,999 | 3,999 | |||||||
CellinCells Co., Ltd. | Financial assets at fair value through profit or loss | 2,000 | 2,000 | |||||||
Loans measured at amortized cost (gross amount) | 21 | 24 | ||||||||
Deposits | 58 | 260 | ||||||||
Provisions | 1 | — | ||||||||
Jo Yang Industrial Co., Ltd. | Deposits | — | 2 | |||||||
KB No.17 Special Purpose Acquisition Company | Financial assets at fair value through profit or loss | 2,730 | 2,687 | |||||||
Deposits | 1,709 | 1,711 | ||||||||
Other liabilities | 2 | 23 | ||||||||
KB No.18 Special Purpose Acquisition Company | Financial assets at fair value through profit or loss | 3,928 | 3,873 | |||||||
Deposits | 2,078 | 2,101 | ||||||||
Other liabilities | 26 | 19 | ||||||||
KB No.19 Special Purpose Acquisition Company | Financial assets at fair value through profit or loss | 2,114 | 2,055 | |||||||
Deposits | 1,034 | 1,053 | ||||||||
Other liabilities | 5 | 3 | ||||||||
KB No.20 Special Purpose Acquisition Company | Financial assets at fair value through profit or loss | 3,125 | 3,067 | |||||||
Deposits | 1,706 | 1,716 | ||||||||
Other liabilities | 5 | 1 | ||||||||
COSES GT | Financial assets at fair value through profit or loss | 4,930 | 4,930 | |||||||
Loans measured at amortized cost (gross amount) | 502 | 500 | ||||||||
Allowances for credit losses | 4 | 4 | ||||||||
Other assets | 1 | 1 |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.2 Details of receivables and payables, and related allowances for credit losses arising from transactions with related parties as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||||
Deposits | ||||||||||
Insurance liabilities | 1 | 1 | ||||||||
Other liabilities | 1 | — | ||||||||
Bomapp Inc. | Financial assets at fair value through profit or loss | 1,999 | 1,999 | |||||||
Insurance liabilities | — | 2 | ||||||||
Channel Corporation | Financial assets at fair value through profit or loss | 4,551 | 4,551 | |||||||
MitoImmune Therapeutics | Financial assets at fair value through profit or loss | 7,000 | 5,000 | |||||||
KB-Solidus Global Healthcare Fund | Other assets | 171 | 707 | |||||||
Bioprotect Ltd. | Financial assets at fair value through profit or loss | 3,264 | 3,264 | |||||||
GOMI CORPORATION | Financial assets at fair value through profit or loss | 500 | 500 | |||||||
Loans measured at amortized cost (gross amount) | 9 | 9 | ||||||||
Deposits | 92 | 37 | ||||||||
Copin Communications, Inc. | Financial assets at fair value through profit or loss | 1,500 | 1,500 | |||||||
Go2joy Co., Ltd. | Financial assets at fair value through profit or loss | 1,200 | 1,200 | |||||||
ClavisTherapeutics, Inc. | Financial assets at fair value through profit or loss | 2,000 | 2,000 | |||||||
S&E BIO | Financial assets at fair value through profit or loss | 2,000 | 2,000 | |||||||
Deposits | 869 | 1,142 | ||||||||
Bluepointpartners Inc. | Financial assets at fair value through profit or loss | 1,432 | 1,432 | |||||||
4N Inc. | Financial assets at fair value through profit or loss | 200 | 200 | |||||||
Deposits | 17 | 76 | ||||||||
Xenohelix Co., Ltd. | Financial assets at fair value through profit or loss | 2,100 | 2,100 | |||||||
Contents First | Financial assets at fair value through profit or loss | 7,277 | 6,146 | |||||||
Deposits | 16 | 1,823 | ||||||||
Other liabilities | — | 7 | ||||||||
KB-MDI Centauri Fund LP | Financial assets at fair value through profit or loss | 4,280 | 4,280 | |||||||
Other assets | 390 | 308 | ||||||||
OKXE Inc. | Financial assets at fair value through profit or loss | 800 | 800 |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.2 Details of receivables and payables, and related allowances for credit losses arising from transactions with related parties as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won) | March 31, 2021 | December 31, 2020 | ||||||||
GENINUS Inc. | Financial assets at fair value through profit or loss | |||||||||
Loans measured at amortized cost (gross amount) | 8 | — | ||||||||
Deposits | 6,478 | 13,630 | ||||||||
Other liabilities | 23 | 15 | ||||||||
FineKB Private Equity Fund No.1 | Other assets | 162 | 38 | |||||||
NEOMIO CORP. | Deposits | — | 535 | |||||||
DPAPS Co., Ltd. | Deposits | 3 | — | |||||||
December & Company Inc. | Deposits | 1 | 1 | |||||||
Insurance liabilities | 72 | — | ||||||||
K The 15th REIT Co., Ltd. | Insurance liabilities | 8 | — | |||||||
Checkmate Therapeutics Inc. | Financial assets at fair value through profit or loss | 2,200 | — | |||||||
Mantisco Co., Ltd. | Financial assets at fair value through profit or loss | 3,000 | — | |||||||
Deposits | 1,141 | — | ||||||||
IMBiologics Corp. | Financial assets at fair value through profit or loss | 2,000 | — | |||||||
Fabric Time Co., Ltd. | Financial assets at fair value through profit or loss | 3,345 | 3,345 | |||||||
Loans measured at amortized cost (gross amount) | 52 | 59 | ||||||||
Provisions | — | 1 | ||||||||
Deposits | 2,493 | 3,947 | ||||||||
Other liabilities | 8 | 40 | ||||||||
Key management | Loans measured at amortized cost (gross amount) | 3,630 | 5,153 | |||||||
Allowances for credit losses | 1 | 2 | ||||||||
Other assets | 4 | 5 | ||||||||
Deposits | 21,672 | 17,167 | ||||||||
Provisions | 2 | — | ||||||||
Insurance liabilities | 2,759 | 2,501 | ||||||||
Other liabilities | 371 | 371 | ||||||||
Other | ||||||||||
Retirement pension | Other assets | 473 | 295 | |||||||
Other liabilities | 26 | 10,600 |
* | Excluded from the Group’s related party as of March 31, 2021. |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.3 Significant lending transactions with related parties for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||||||
Beginning | Increase | Decrease | Ending | |||||||||||||
Associates and joint ventures | ||||||||||||||||
Korea Credit Bureau Co., Ltd. | ||||||||||||||||
Incheon Bridge Co., Ltd. | 171,758 | 6 | (5,568 | ) | 166,196 | |||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | 10,000 | — | — | 10,000 | ||||||||||||
KB Cape No.1 Private Equity Fund | 2,000 | — | — | 2,000 | ||||||||||||
RAND Bio Science Co., Ltd. | 1 | 2 | (1 | ) | 2 | |||||||||||
SY Auto Capital Co., Ltd. | 40,060 | 42 | (10,060 | ) | 30,042 | |||||||||||
Food Factory Co., Ltd. | 3,872 | 396 | (22 | ) | 4,246 | |||||||||||
Paycoms Co., Ltd. | 1,226 | — | — | 1,226 | ||||||||||||
Big Dipper Co., Ltd. | 4 | 5 | (4 | ) | 5 | |||||||||||
RMGP Bio-Pharma Investment Fund, L.P. | 4,250 | 724 | — | 4,974 | ||||||||||||
RMGP Bio-Pharma Investment, L.P. | 9 | 1 | — | 10 | ||||||||||||
Wyatt Corp. | 6,000 | — | — | 6,000 | ||||||||||||
Banksalad Co., Ltd. | 9,141 | — | — | 9,141 | ||||||||||||
UPRISE, Inc. | 750 | — | — | 750 | ||||||||||||
Stratio, Inc. | 1,000 | — | — | 1,000 | ||||||||||||
Honest Fund, Inc. | 3,999 | — | — | 3,999 | ||||||||||||
CellinCells Co., Ltd. | 2,024 | 21 | (24 | ) | 2,021 | |||||||||||
KB No.17 Special Purpose Acquisition Company | 2,687 | 43 | — | 2,730 | ||||||||||||
KB No.18 Special Purpose Acquisition Company | 3,873 | 55 | — | 3,928 | ||||||||||||
KB No.19 Special Purpose Acquisition Company | 2,055 | 59 | — | 2,114 | ||||||||||||
KB No.20 Special Purpose Acquisition Company | 3,067 | 58 | — | 3,125 | ||||||||||||
COSES GT | 5,430 | 2 | — | 5,432 | ||||||||||||
Bomapp Inc. | 1,999 | — | — | 1,999 | ||||||||||||
Channel Corporation | 4,551 | — | — | 4,551 | ||||||||||||
MitoImmune Therapeutics | 5,000 | 2,000 | — | 7,000 | ||||||||||||
Bioprotect Ltd. | 3,264 | — | — | 3,264 | ||||||||||||
GOMI CORPORATION | 509 | 9 | (9 | ) | 509 | |||||||||||
Copin Communications, Inc. | 1,500 | — | — | 1,500 | ||||||||||||
Go2joy Co., Ltd. | 1,200 | — | — | 1,200 | ||||||||||||
ClavisTherapeutics, Inc. | 2,000 | — | — | 2,000 | ||||||||||||
S&E BIO | 2,000 | — | — | 2,000 | ||||||||||||
Bluepointpartners Inc. | 1,432 | — | — | 1,432 | ||||||||||||
4N Inc. | 200 | — | — | 200 | ||||||||||||
Xenohelix Co., Ltd. | 2,100 | — | — | 2,100 | ||||||||||||
Contents First | 6,146 | 1,131 | — | 7,277 | ||||||||||||
KB-MDI Centauri Fund LP | 4,280 | — | — | 4,280 | ||||||||||||
Fabric Time Co., Ltd. | 3,404 | 52 | (59 | ) | 3,397 |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.3 Significant lending transactions with related parties for the three-month periods ended March 31, 2021 and 2020, are as follows: (cont’d)
(In millions of Korean won) | 2021 | |||||||||||||||
Beginning | Increase | Decrease | Ending | |||||||||||||
OKXE Inc. | ||||||||||||||||
GENINUS Inc. | 5,599 | 8 | — | 5,607 | ||||||||||||
Checkmate Therapeutics Inc. | — | 2,200 | — | 2,200 | ||||||||||||
Mantisco Co., Ltd. | — | 3,000 | — | 3,000 | ||||||||||||
IMBiologics Corp. | — | 2,000 | — | 2,000 | ||||||||||||
Key management | 5,153 | 268 | (1,791 | ) | 3,630 |
(In millions of Korean won) | 2020 | |||||||||||||||
Beginning | Increase | Decrease | Ending | |||||||||||||
Associates and joint ventures | ||||||||||||||||
Korea Credit Bureau Co., Ltd. | ||||||||||||||||
Incheon Bridge Co., Ltd. | 185,564 | 1,074 | (3,682 | ) | 182,956 | |||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | 10,000 | — | — | 10,000 | ||||||||||||
KB Cape No.1 Private Equity Fund | 2,000 | — | — | 2,000 | ||||||||||||
RAND Bio Science Co., Ltd. | 1 | 1 | (1 | ) | 1 | |||||||||||
SY Auto Capital Co., Ltd. | 41,990 | 6,698 | (7,140 | ) | 41,548 | |||||||||||
Food Factory Co., Ltd. | 2,582 | 8 | (12 | ) | 2,578 | |||||||||||
Acts Co., Ltd. | — | 74 | — | 74 | ||||||||||||
Paycoms Co., Ltd. | 1,157 | — | — | 1,157 | ||||||||||||
Big Dipper Co., Ltd. | 11 | 2 | (11 | ) | 2 | |||||||||||
APRO Co., Ltd. * | 2,019 | 2,000 | (4,019 | ) | — | |||||||||||
RMGP Bio-Pharma Investment Fund, L.P. | 3,419 | 255 | — | 3,674 | ||||||||||||
RMGP Bio-Pharma Investment, L.P. | 8 | — | — | 8 | ||||||||||||
Wyatt Corp. | 6,000 | — | — | 6,000 | ||||||||||||
Banksalad Co., Ltd. | 7,504 | — | — | 7,504 | ||||||||||||
UPRISE, Inc. | 250 | — | — | 250 | ||||||||||||
Stratio, Inc. | 1,000 | — | — | 1,000 | ||||||||||||
Honest Fund, Inc. | 3,999 | — | — | 3,999 | ||||||||||||
CellinCells Co., Ltd. | 2,004 | 5 | (4 | ) | 2,005 | |||||||||||
KB No.17 Special Purpose Acquisition Company | 2,683 | — | (19 | ) | 2,664 | |||||||||||
KB No.18 Special Purpose Acquisition Company | 3,786 | 62 | — | 3,848 | ||||||||||||
KB No.19 Special Purpose Acquisition Company | 2,043 | 9 | — | 2,052 | ||||||||||||
KB No.20 Special Purpose Acquisition Company | 1,499 | 1,579 | — | 3,078 | ||||||||||||
COSES GT | 2,930 | — | — | 2,930 | ||||||||||||
CWhy Inc. | 2,000 | — | — | 2,000 | ||||||||||||
Bomapp Inc. | 1,999 | — | — | 1,999 | ||||||||||||
ZOYI Corporation INC. | 2,000 | 2,551 | — | 4,551 | ||||||||||||
MitoImmune Therapeutics | 5,000 | — | — | 5,000 |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.3 Significant lending transactions with related parties for the three-month periods ended March 31, 2021 and 2020, are as follows: (cont’d)
(In millions of Korean won) | 2020 | |||||||||||||||
Beginning | Increase | Decrease | Ending | |||||||||||||
Fabric Time Co., Ltd. | ||||||||||||||||
Bioprotect Ltd. | — | 3,480 | — | 3,480 | ||||||||||||
GOMI CORPORATION | — | 500 | — | 500 | ||||||||||||
Copin Communications, Inc. | — | 1,000 | — | 1,000 | ||||||||||||
Go2joy Co., Ltd. | — | 1,200 | — | 1,200 | ||||||||||||
ClavisTherapeutics, Inc. | — | 2,000 | — | 2,000 | ||||||||||||
S&E BIO | — | 2,000 | — | 2,000 | ||||||||||||
BNF Corporation Ltd. * | 3,659 | 1,000 | (4,659 | ) | — | |||||||||||
Key management | 3,538 | 2,289 | (1,234 | ) | 4,593 |
* | Excluded from the Group’s related party as of March 31, 2021. |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.4 Significant borrowing transactions with related parties for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||||||||||
Beginning | Borrowing | Repayment | Others 1 | Ending | ||||||||||||||||
Associates and joint ventures | ||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | ||||||||||||||||||||
Incheon Bridge Co., Ltd. | 39,520 | — | (5,000 | ) | (5,737 | ) | 28,783 | |||||||||||||
DPAPS Co., Ltd. | — | — | — | 3 | 3 | |||||||||||||||
Jungdo Co., Ltd. | 4 | — | — | — | 4 | |||||||||||||||
Dae-A Leisure Co., Ltd. | 636 | — | — | (81 | ) | 555 | ||||||||||||||
Computerlife Co., Ltd. | — | — | — | 1 | 1 | |||||||||||||||
SKYDIGITAL INC. | 15 | — | — | 9 | 24 | |||||||||||||||
Jo Yang Industrial Co., Ltd. | 2 | — | — | (2 | ) | — | ||||||||||||||
Aju Good Technology Venture Fund | 3,093 | — | — | 1,830 | 4,923 | |||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | 923 | — | — | (592 | ) | 331 | ||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 8,097 | — | — | 1,732 | 9,829 | |||||||||||||||
NEOMIO CORP. | 535 | — | — | (535 | ) | — | ||||||||||||||
WJ Private Equity Fund No.1 | 349 | — | — | (169 | ) | 180 | ||||||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | 4,255 | — | (1,593 | ) | (355 | ) | 2,307 | |||||||||||||
SY Auto Capital Co., Ltd. | 6 | — | — | (1 | ) | 5 | ||||||||||||||
KB No.17 Special Purpose Acquisition Company | 1,711 | 1,546 | (1,525 | ) | (23 | ) | 1,709 | |||||||||||||
KB No.18 Special Purpose Acquisition Company | 2,101 | — | — | (23 | ) | 2,078 | ||||||||||||||
KB No.19 Special Purpose Acquisition Company | 1,053 | — | — | (19 | ) | 1,034 | ||||||||||||||
KB No.20 Special Purpose Acquisition Company | 1,716 | — | — | (10 | ) | 1,706 | ||||||||||||||
RAND Bio Science Co., Ltd. | 693 | — | (400 | ) | (33 | ) | 260 | |||||||||||||
Food Factory Co., Ltd. | 1,555 | 507 | (500 | ) | (627 | ) | 935 | |||||||||||||
Acts Co., Ltd. | 18 | — | — | 31 | 49 | |||||||||||||||
Paycoms Co., Ltd. | 1 | — | — | — | 1 | |||||||||||||||
Big Dipper Co., Ltd. | 1 | — | — | 6 | 7 | |||||||||||||||
Wyatt Corp. | 1 | — | — | — | 1 | |||||||||||||||
Stratio, Inc. | 13 | — | — | (13 | ) | — | ||||||||||||||
UPRISE, Inc. | 11 | — | — | (9 | ) | 2 | ||||||||||||||
CellinCells Co., Ltd. | 260 | — | — | (202 | ) | 58 | ||||||||||||||
COSES GT | 292 | — | — | 1,223 | 1,515 | |||||||||||||||
Fabric Time Co., Ltd. | 3,947 | — | (3,000 | ) | 1,546 | 2,493 | ||||||||||||||
GOMI CORPORATION | 37 | — | — | 55 | 92 | |||||||||||||||
S&E BIO | 1,142 | — | — | (273 | ) | 869 | ||||||||||||||
KB Pre IPO Secondary Venture Fund No.1 | 629 | — | — | (31 | ) | 598 | ||||||||||||||
4N Inc. | 76 | — | — | (59 | ) | 17 | ||||||||||||||
Contents First | 1,823 | — | (990 | ) | (817 | ) | 16 |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.4 Significant borrowing transactions with related parties for the three-month periods ended March 31, 2021 and 2020, are as follows: (cont’d)
(In millions of Korean won) | 2021 | |||||||||||||||||||
Beginning | Borrowing | Repayment | Others 1 | Ending | ||||||||||||||||
December & Company Inc. | ||||||||||||||||||||
GENINUS Inc. | 13,630 | — | — | (7,152 | ) | 6,478 | ||||||||||||||
Mantisco Co., Ltd. | — | — | — | 1,141 | 1,141 | |||||||||||||||
Key management | 17,167 | 5,196 | (4,223 | ) | 3,531 | 21,671 |
(In millions of Korean won) | 2020 | |||||||||||||||||||
Beginning | Borrowing | Repayment | Others 1 | Ending | ||||||||||||||||
Associates and joint ventures | ||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | ||||||||||||||||||||
Incheon Bridge Co., Ltd. | 45,447 | — | — | (6,334 | ) | 39,113 | ||||||||||||||
Jungdo Co., Ltd. | 4 | — | — | — | 4 | |||||||||||||||
Dae-A Leisure Co., Ltd. | 753 | — | — | (274 | ) | 479 | ||||||||||||||
Computerlife Co., Ltd. | 1 | — | — | (1 | ) | — | ||||||||||||||
SKYDIGITAL INC. | 25 | — | — | 129 | 154 | |||||||||||||||
Jo Yang Industrial Co., Ltd. | 2 | — | — | 1 | 3 | |||||||||||||||
Aju Good Technology Venture Fund | 5,456 | — | — | (96 | ) | 5,360 | ||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | 7,054 | 1,500 | (5,000 | ) | 1,423 | 4,977 | ||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 13,118 | — | — | (149 | ) | 12,969 | ||||||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | 8,293 | 2,118 | (2,099 | ) | (115 | ) | 8,197 | |||||||||||||
SY Auto Capital Co., Ltd. | 8 | — | — | (4 | ) | 4 | ||||||||||||||
KB No.17 Special Purpose Acquisition Company | 1,742 | 1,525 | (1,500 | ) | (17 | ) | 1,750 | |||||||||||||
KB No.18 Special Purpose Acquisition Company | 2,140 | — | — | (21 | ) | 2,119 | ||||||||||||||
KB No.19 Special Purpose Acquisition Company | 1,093 | — | — | (16 | ) | 1,077 | ||||||||||||||
KB No.20 Special Purpose Acquisition Company | 1,984 | — | — | (255 | ) | 1,729 | ||||||||||||||
RAND Bio Science Co., Ltd. | 4,452 | 300 | (600 | ) | (1,174 | ) | 2,978 | |||||||||||||
Wise Asset Management Co., Ltd. | 21 | — | — | (21 | ) | — | ||||||||||||||
Food Factory Co., Ltd. | 1,073 | 1,000 | — | (396 | ) | 1,677 | ||||||||||||||
Acts Co., Ltd. | 1 | — | — | �� | 3 | 4 | ||||||||||||||
Paycoms Co., Ltd. | 1 | — | — | — | 1 | |||||||||||||||
Big Dipper Co., Ltd. | 6 | — | — | 247 | 253 | |||||||||||||||
APRO Co., Ltd. 2 | 3,201 | — | — | (3,201 | ) | — | ||||||||||||||
Wyatt Corp. | — | — | — | 1 | 1 | |||||||||||||||
Stratio, Inc. | 726 | — | — | (420 | ) | 306 | ||||||||||||||
CellinCells Co., Ltd. | 1,545 | — | — | (434 | ) | 1,111 | ||||||||||||||
Fabric Time Co., Ltd. | 395 | 6,502 | (300 | ) | 421 | 7,018 | ||||||||||||||
BNF Corporation Ltd. 2 | 947 | — | — | (947 | ) | — |
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Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.4 Significant borrowing transactions with related parties for the three-month periods ended March 31, 2021 and 2020, are as follows: (cont’d)
(In millions of Korean won) | 2020 | |||||||||||||||||||
Beginning | Borrowing | Repayment | Others 1 | Ending | ||||||||||||||||
GOMI CORPORATION | ||||||||||||||||||||
S&E BIO | — | — | — | 1,902 | 1,902 | |||||||||||||||
KB IGen Private Equity Fund No.1 2 | 147 | — | — | — | 147 | |||||||||||||||
KB Pre IPO Secondary Venture Fund No.1 | 2,955 | — | — | (2,873 | ) | 82 | ||||||||||||||
Key management | 15,338 | 6,389 | (5,774 | ) | 1,061 | 17,014 |
1 | Transactions between related parties, such as settlements arising from operating activities and deposits, are expressed in net amount. |
2 | Excluded from the Group’s related party as of March 31, 2021. |
34.5 Significant investment and withdrawal transactions with related parties for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | 2020 | ||||||||||||||
Equity investments | Withdrawal and others | Equity investments | Withdrawal and others | |||||||||||||
Balhae Infrastructure Company | ||||||||||||||||
KB GwS Private Securities Investment Trust * | — | 188,836 | — | 4,060 | ||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | — | 1,800 | — | 2,600 | ||||||||||||
POSCO-KB Shipbuilding Fund | — | 3,750 | — | — | ||||||||||||
KB Pre IPO Secondary Venture Fund No.1 | — | — | — | 586 | ||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | — | — | — | 1,000 | ||||||||||||
KB-SJ Tourism Venture Fund | — | — | 1,000 | — | ||||||||||||
Korea Credit Bureau Co., Ltd. | — | 90 | — | 90 | ||||||||||||
KB-UTC Inno-Tech Venture Fund | 5,085 | — | 4,725 | — | ||||||||||||
KB-Solidus Global Healthcare Fund | — | — | 10,920 | 2,990 | ||||||||||||
KB-Stonebridge Secondary Private Equity Fund | — | — | 1,533 | — | ||||||||||||
KB-NAU Special Situation Corporate Restructuring Private Equity Fund | 4,884 | — | — | — | ||||||||||||
JR GLOBAL REIT | — | 29,125 | — | — | ||||||||||||
KB Bio Private Equity No.3 Ltd. | 10,000 | — | — | — | ||||||||||||
K The 15th REIT Co., Ltd. | 8,600 | — | — | — | ||||||||||||
KB Social Impact Investment Fund | 1,500 | — | — | — | ||||||||||||
KB-TS Technology Venture Private Equity Fund | — | 896 | — | — | ||||||||||||
Keystone-Hyundai Securities No.1 Private Equity Fund | — | 857 | — | — |
* | Excluded from the Group’s related party as of March 31, 2021. |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.6 Unused commitments provided to related parties as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won or in a US Dollar) | March 31, 2021 | December 31, 2020 | ||||||||
Associates and joint ventures |
| |||||||||
Balhae Infrastructure Company | Purchase of securities | |||||||||
Korea Credit Bureau Co., Ltd. | Unused lines of credit for credit card | 500 | 564 | |||||||
Incheon Bridge Co., Ltd. | Loan commitments in Korean won | 20,000 | 20,000 | |||||||
Unused lines of credit for credit card | 94 | 98 | ||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | Commitments on loss absorption priority | 14,980 | 14,980 | |||||||
SY Auto Capital Co., Ltd. | Unused lines of credit for credit card | 108 | 90 | |||||||
Food Factory Co., Ltd. | Loan commitments in Korean won | — | 388 | |||||||
Unused lines of credit for credit card | 82 | 73 | ||||||||
KB No.17 Special Purpose Acquisition Company | Unused lines of credit for credit card | 5 | 441 | |||||||
KB No.18 Special Purpose Acquisition Company | Unused lines of credit for credit card | 15 | 15 | |||||||
KB No.19 Special Purpose Acquisition Company | Unused lines of credit for credit card | 1 | — | |||||||
CellinCells Co., Ltd. | Unused lines of credit for credit card | 3 | — | |||||||
RAND Bio Science Co., Ltd. | Unused lines of credit for credit card | 23 | 24 | |||||||
Big Dipper Co., Ltd. | Unused lines of credit for credit card | 95 | 96 | |||||||
Fabric Time Co., Ltd. | Unused lines of credit for credit card | 448 | 7 | |||||||
GOMI CORPORATION | Unused lines of credit for credit card | 6 | — | |||||||
COSES GT | Unused lines of credit for credit card | 28 | — | |||||||
GENINUS Inc. | Unused lines of credit for credit card | 52 | — | |||||||
KB Pre IPO Secondary Venture Fund No.1 | Commitments on loss absorption priority | 1,671 | 1,671 | |||||||
KB-TS Technology Venture Private Equity Fund | Purchase of securities | 3,696 | 3,696 | |||||||
KB-SJ Tourism Venture Fund | Purchase of securities | 500 | 500 | |||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Purchase of securities | 10,000 | 10,000 | |||||||
KB SPROTT Renewable Private Equity Fund No.1 | Purchase of securities | 18,704 | 18,704 | |||||||
KB-Stonebridge Secondary Private Equity Fund | Purchase of securities | 18,837 | 18,837 | |||||||
KB Social Impact Investment Fund | Purchase of securities | — | 1,500 |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.6 Unused commitments provided to related parties as of March 31, 2021 and December 31, 2020, are as follows: (cont’d)
(In millions of Korean won or in a US Dollar) | March 31, 2021 | December 31, 2020 | ||||||||
KB-UTC Inno-Tech Venture Fund | Purchase of securities | |||||||||
KB-NAU Special Situation Corporate Restructuring Private Equity Fund | Purchase of securities | 19,416 | 24,300 | |||||||
All Together Korea Fund No.2 | Purchase of securities | 990,000 | 990,000 | |||||||
FineKB Private Equity Fund No.1 | Purchase of securities | 25,000 | 25,000 | |||||||
KB-Solidus Global Healthcare Fund | Purchase of securities | 2,120 | 2,120 | |||||||
RMGP Bio-Pharma Investment Fund, L.P. | Purchase of securities | USD | 7,136,494 | USD | 7,796,423 | |||||
RMGP Bio-Pharma Investment, L.P. | Purchase of securities | USD | 15,956 | USD | 17,132 | |||||
KB-MDI Centauri Fund LP | Purchase of securities | USD | 13,537,500 | USD | 13,537,500 | |||||
Key management | Loan commitments in Korean won | 2,020 | 1,760 |
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KB Financial Group Inc. and Subsidiaries
Notes to the Consolidated Interim Financial Statements
March 31, 2021 and 2020 (Unaudited), and December 31, 2020
34.7 Details of compensation to key management for the three-month periods ended March 31, 2021 and 2020, are as follows:
(In millions of Korean won) | 2021 | |||||||||||||||
Short-term employee benefits | Post-employment benefits | Share-based payments | Total | |||||||||||||
Registered directors (executive) | ||||||||||||||||
Registered directors (non-executive) | 259 | — | — | 259 | ||||||||||||
Non-registered directors | 3,028 | 130 | 5,335 | 8,493 | ||||||||||||
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(In millions of Korean won) | 2020 | |||||||||||||||
Short-term employee benefits | Post-employment benefits | Share-based payments | Total | |||||||||||||
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Registered directors (non-executive) | 257 | — | — | 257 | ||||||||||||
Non-registered directors | 2,559 | 216 | (922 | ) | 1,853 | |||||||||||
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34.8 Details of collateral provided from related parties as of March 31, 2021 and December 31, 2020, are as follows:
(In millions of Korean won) | Assets pledged as collateral | March 31, 2021 | December 31, 2020 | |||||||
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KB Star Office Private Real Estate Investment Trust No.1 | Real estate | |||||||||
Key management | Time deposits and others | 306 | 213 | |||||||
Real estate | 5,436 | 4,356 |
As of March 31, 2021, Incheon Bridge Co., Ltd., a related party, provides fund management account, civil engineering works insurance, and management and operations rights as senior collateral amounting toW 611,000 million to the project financing group that consists of the Group and 5 other institutions, and as subordinated collateral amounting toW 384,800 million to subordinated debt holders that consist of the Group and 2 other institutions. Also, it provides certificate of credit guarantee amounting toW 400,000 million as collateral to the project financing group that consists of the Group and 5 other institutions.
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