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MarketScreener Homepage  >  Equities  >  Korea Stock Exchange  >  KB Financial Group Inc.    A105560   KR7105560007

KB FINANCIAL GROUP INC.

(A105560)
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KB Financial : Separate Review Report 1st Half 2020

08/19/2020 | 04:52am EST

KB Financial Group Inc.

Separate Interim Financial Statements

June 30, 2020

Contents

Page

Independent Auditors' Review Report

1

Separate Interim Statements of Financial Position

3

Separate Interim Statements of Comprehensive Income

4

Separate Interim Statements of Changes in Equity

5

Separate Interim Statements of Cash Flows

6

Notes to the Separate Interim Financial Statements

7

152, Teheran-ro,Gangnam-gu, Seoul 06236

(Yeoksam-dong, Gangnam Finance Center 27th Floor)

Republic of Korea

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 separate interim financial statements of KB Financial Group Inc. (the "Company"), which comprise the separate interim statement of financial position as of June 30, 2020, the separate interim statements of comprehensive income for the three-month and six month periods ended June 30, 2020, changes in equity and cash flows for the six-month period ended June 30, 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 separate 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 separate 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 separate interim financial statements based on our review.

We conducted our review 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 review, nothing has come to our attention that causes us to believe that the accompanying condensed separate 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 matter

The following matter may be helpful to the readers in their understanding of the condensed separate interim financial statements. Our review conclusion is not affected by this matter.

As described in Note 29.2 to the condensed separate interim financial statements, the ongoing COVID-19 pandemic has increased the estimation uncertainty on the Company's expected credit losses on certain portfolios and potential impairment on assets and may have negative impacts on the Company's separate interim financial statements.

Other matters

The procedures and practices utilized in the Republic of Korea to review such condensed separate interim financial statements may differ from those generally accepted and applied in other countries.

The accompanying separate interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2019, changes in equity and cash flows for the six-month period ended June 30, 2019, were reviewed by other auditors whose report thereon, dated August 14, 2019, expressed that nothing came to their attention that caused them to believe that those interim financial statements are not prepared, in all material respects, in accordance with K-IFRS No. 1034 Interim Financial Reporting.

The separate statement of financial position of the Company as of December 31, 2019, and the related separate statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by other auditors in accordance with Korean Standards on Auditing and their report thereon, dated March 5, 2020, expressed an unqualified opinion. The accompanying separate statement of financial position of the Company as of December 31, 2019, presented for comparative purposes, is consistent, in all material respects, with the audited separate statement of financial position from which it has been derived.

Seoul, Korea

August 14, 2020

KB Financial Group Inc.

Separate Interim Statements of Financial Position

June 30, 2020 and December 31, 2019

(In millions of Korean won)

Notes

June 30, 2020

(Unaudited)

December 31, 2019

Assets

Cash and due from financial institutions

4,5,6,28

32,080

18,537

Financial assets at fair value through profit or loss

4,5,7

1,568,882

413,909

Loans at amortized cost

4,5,8

150,000

120,000

Investments in subsidiaries

9

24,212,116

24,162,116

Property and equipment

10

3,688

4,170

Intangible assets

11

11,212

11,092

Deferred income tax assets

12

1,794

7,526

Other assets

4,5,13

623,905

609,286

Total assets

26,603,677

25,346,636

Liabilities

Debts

4,5,14

100,000

-

Debentures

4,5,15

6,255,663

5,543,446

Net defined benefit liabilities

16

1,530

437

Current income tax liabilities

449,799

417,414

Other liabilities

4,5,17

187,038

203,440

Total liabilities

6,994,030

6,164,737

Equity

Share capital

18

2,090,558

2,090,558

Hybrid securities

18

797,996

399,085

Capital surplus

18

14,759,273

14,742,814

Accumulated other comprehensive income

18

(7,702)

(7,664)

Retained earnings

18

3,105,710

3,093,294

Treasury shares

18

(1,136,188)

(1,136,188)

Total equity

19,609,647

19,181,899

Total liabilities and equity

26,603,677

25,346,636

The above separate interim statements of financial position should be read in conjunction with the accompanying notes.

3

KB Financial Group Inc.

Separate Interim Statements of Comprehensive Income

Three-Month and Six-Month Periods Ended June 30, 2020 and 2019

(In millions of Korean won, except per share amounts)

Notes

2020

2019

(Unaudited)

(Unaudited)

Three months

Six months

Three months

Six months

Interest income

2,281

4,078

3,737

5,321

Interest expense

(32,351)

(64,449)

(33,120)

(64,746)

Net interest expense

20

(30,070)

(60,371)

(29,383)

(59,425)

Fee and commission income

231

378

214

350

Fee and commission expense

(2,941)

(4,197)

(2,360)

(3,218)

Net fee and commission expense

21

(2,710)

(3,819)

(2,146)

(2,868)

Net gains on financial assets at fair value

through profit or loss

22

3,373

6,332

4,968

9,765

Net other operating income

23

-

974,930

-

926,934

General and administrative expenses

24

(16,155)

(31,466)

(16,544)

(30,942)

Operating profit (loss) before

provision for credit losses

(45,562)

885,606

(43,105)

843,464

Provision for credit losses

-

-

-

-

Operating profit (loss)

(45,562)

885,606

(43,105)

843,464

Net non-operating income (expenses)

25

(5)

162

22

(48)

Profit (loss) before income tax

(45,567)

885,768

(43,083)

843,416

Income tax expense (benefit)

26

(4,038)

(5,747)

356

(1,466)

Profit (loss) for the period

(49,605)

880,021

(42,727)

841,950

Items that will not be reclassified to profit or loss:

Remeasurements of net defined benefit liabilities

37

(38)

(21)

(41)

Other comprehensive income (loss) for the period, net of tax

37

(38)

(21)

(41)

Total comprehensive income (loss) for the period

(49,568)

879,983

(42,748)

841,909

Earnings (loss) per share

27

Basic earnings (loss) per share

(136)

2,242

(109)

2,144

Diluted earnings (loss) per share

(135)

2,224

(109)

2,130

The above separate interim statements of comprehensive income should be read in conjunction with the accompanying notes.

4

KB Financial Group Inc.

Separate Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2020 and 2019

(In millions of Korean won)

Accumulated

Other

Share

Hybrid

Capital

Comprehensive

Retained

Treasury

Total

Capital

Securities

Surplus

Income

Earnings

Shares

Equity

Balance at January 1, 2019

2,090,558

-

14,742,814

(7,144)

3,213,556

(968,549)

19,071,235

Comprehensive income

Profit for the period

-

-

-

-

841,950

-

841,950

Remeasurements of net defined benefit liabilities

-

-

-

(41)

-

-

(41)

Total comprehensive income

-

-

-

(41)

841,950

-

841,909

Transactions with shareholders

Annual dividends

-

-

-

-

(759,736)

-

(759,736)

Acquisition of treasury shares

-

-

-

-

-

(267,639)

(267,639)

Issuance of hybrid securities

-

399,085

-

-

-

-

399,085

Dividends on hybrid securities

-

-

-

-

(2,142)

-

(2,142)

Total transactions with shareholders

-

399,085

-

-

(761,878)

(267,639)

(630,432)

Balance at June 30, 2019 (Unaudited)

2,090,558

399,085

14,742,814

(7,185)

3,293,628

(1,236,188)

19,282,712

Balance at January 1, 2020

2,090,558

399,085

14,742,814

(7,664)

3,093,294

(1,136,188)

19,181,899

Comprehensive income

Profit for the period

-

-

-

-

880,021

-

880,021

Remeasurements of net defined benefit liabilities

-

-

-

(38)

-

-

(38)

Total comprehensive income

-

-

-

(38)

880,021

-

879,983

Transactions with shareholders

Annual dividends

-

-

-

-

(861,092)

-

(861,092)

Consideration for exchaneable rights

-

-

16,459

-

-

-

16,459

Issuance of hybrid securities

-

398,911

-

-

-

-

398,911

Dividends on hybrid securities

-

-

-

-

(6,513)

-

(6,513)

Total transactions with shareholders

-

398,911

16,459

-

(867,605)

-

(452,235)

Balance at June 30, 2020 (Unaudited)

2,090,558

797,996

14,759,273

(7,702)

3,105,710

(1,136,188)

19,609,647

The above separate interim statements of changes in equity should be read in conjunction with the accompanying notes.

5

KB Financial Group Inc.

Separate Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2020 and 2019

(In millions of Korean won)

2020

2019

Notes

(Unaudited)

(Unaudited)

Cash flows from operating activities

Profit for the period

880,021

841,950

Adjustment for non-cash items

Depreciation and amortization

1,864

2,408

Share-based payments

(687)

1,713

Net interest expense

988

2,378

Net losses (gains) on valuation on financial assets at fair

value through profit or loss

612

(2,981)

Net other expenses

581

1,121

3,358

4,639

Changes in operating assets and liabilities

Deferred income tax assets

5,747

1,458

Other assets

475,285

(893)

Other liabilities

(472,046)

(7,980)

8,986

(7,415)

Net cash inflow from operating activities

892,365

839,174

Cash flows from investing activities

Acquisition of financial assets at fair value through

profit or loss

(2,694,561)

(2,010,000)

Disposal of financial assets at fair value through profit of loss

1,538,976

1,828,054

Acquisition of investments in subsidiaries

(50,000)

(100,000)

Increase in loans at amortized cost

(30,000)

(70,000)

Acquisition of property and equipment

(586)

(4,028)

Acquisition of intangible assets

(171)

(703)

Disposal of intangible assets

-

41

Net decrease(increase) in guarantee deposits paid

380

(1,515)

Other investing activities

(1,471)

(86)

Net cash outflow from investing activities

(1,237,433)

(358,237)

Cash flows from financing activities

Increase in debts

100,000

418,705

Decrease in debts

-

(717,026)

Increase in debentures

1,297,566

818,087

Decrease in debentures

(570,000)

(648,579)

Dividends paid to shareholders

(861,092)

(759,736)

Principal elements of lease payments

(261)

(273)

Acquisition of treasury shares

-

(269,219)

Issuance of hybrid securities

398,911

399,085

Dividends paid on hybrid securities

(6,513)

-

Net cash inflow (outflow) from financing activities

358,611

(758,956)

Net increase (decrease) in cash and cash equivalents

13,543

(278,019)

Cash and cash equivalents at the beginning of the period

28

18,534

344,299

Cash and cash equivalents at the end of the period

28

32,077

66,280

The above separate interim statements of cash flows should be read in conjunction with the accompanying notes.

6

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

1. The Company

KB Financial Group Inc. (the "Company"), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfers with the former shareholders of Kookmin Bank, KB Investment

  • Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd. in order to provide management services and financing to associated companies. The headquarters are located at 26, Gukjegeumyung-ro-8-gil,Yeongdeungpo-gu, Seoul. The Company's share capital as of June 30, 2020, is 2,090,558 million. 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 Company 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 Company acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Company included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015. Also, the Company included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary on October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed the name to KB Securities Co., Ltd. in January 2017. KB Insurance Co., Ltd. became one of the subsidiaries through a tender after in May 2017.

The 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 on its Articles of Incorporation is 1,000 million.

7

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

2. Basis of Preparation

2.1 Application of Korean IFRS

The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language ("Hangeul") in accordance with International Financial Reporting Standards as adopted by the Republic of Korea ("Korean IFRS"). The accompanying separate financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

The separate financial statements of the Company have been prepared in accordance with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board ("IASB") that have been adopted by the Republic of Korea.

The preparation of separate financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate financial statements are disclosed in Note 2.4.

The separate financial statements were prepared in accordance with Korean IFRS 1027, Separate Financial Statements.

The Company's separate interim financial statements for the six-month period ended June 30, 2020, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting and contain less information than is required in annual separate 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 Company since the end of the previous annual reporting period. These separate interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as of June 30, 2020.

8

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

2.1.1 New and amended standards and interpretations adopted by the Company

The Company has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2020.

- Amendments to Korean IFRS 1103 Business Combination - Definition of a Business

To assess whether an acquired set of activities and assets is a business, the amendments requires an entity to consider an input that have the ability to contribute to the creation of outputs significantly and a substantive process and exclude economic benefits from lower costs. An entity can apply a concentration test, an optional test, where substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar assets, the assets acquired would not represent a business. The amendment does not have a significant impact on the financial statements. However, the amendment may have impact on the financial statements if business combination occurs in the future.

  • Amendments to Korean IFRS 1001 Presentation of Financial Statements and Korean IFRS 1008 Accounting policies, changes in accounting estimates and errors - Definition of Material

The amendments clarify the explanation of the definition of materiality. The feature of information users needs to be considered when the Company determines the information to be disclosed and the effects of immaterial information as well as omission or misstatement of material information when determining materiality. The amendment does not have a significant impact on the financial statements.

- The IFRS Interpretations Committee (IFRIC) Agenda Decision - Lease term

On December 16, 2019, the IFRS Interpretations Committee announced an interpretation of the "lease term and useful life of leasehold improvements". This interpretation deals with how to determine the lease term of a cancellable lease or a renewable lease and whether the useful life of non-removable leasehold improvements is limited by the relevant lease term. According to this interpretation, the Company should identify factors to consider the broader economic penalty, reflect identified factors to accounting policies, and calculate lease term based on accounting policy.

The Company is assessing the impact that the change in accounting policy of enforceable period will have on the Company's financial statements, and the Company will apply the impact in the financial statements once the assessment is completed.

2.1.2 New standards and interpretations not yet adopted by the Company

The Company has not applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2020.

  • Amendments to Korean IFRS 1116 Lease - 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. A lessee that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying this Standard if the change were not a lease modification. These amendments should be applied for annual periods beginning on or after June 1, 2020, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the financial statements.

9

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

2.2 Measurement Basis

The separate financial statements have been prepared under the historical cost convention unless otherwise specified.

2.3 Functional and Presentation Currency

Items included in the separate financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates ("the functional currency"). The separate financial statements are presented in Korean won, which is the Company's functional and presentation currency.

2.4 Critical Accounting Estimates

The preparation of the separate 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 separate interim financial statements are the same as those applied to the separate financial statements for the year ended December 31, 2019, 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 separate financial statements have been consistently applied to all periods presented, except for the impact of changes due to adopting new and amended standards and interpretations.

3.1 Income Tax Expenses for the Interim Period

Income tax expense for the interim period is measured applying the expected average annual income tax rate applicable on expected total annual income.

10

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4. Financial Risk Management 4.1 Summary

4.1.1 Overview of financial risk management policy

The financial risks that the Company is exposed to are credit risk, market risk, liquidity risk and others.

The note regarding financial risk management provides information about the risks that the Company is exposed to, including the objectives, policies, assessment and management process of risks. Additional quantitative information is disclosed throughout the separate financial statements.

The Company's risk management system focuses on increasing transparency, developing the risk management environment, and the preemptive response to risk due to rapid changes in the financial environment to support the Company's long-term strategy and business decisions efficiently. Credit risk, market risk and liquidity risk have been recognized as the Company's key risks. These risks are measured and managed in Internal Capital or VaR (Value at Risk) using a statistical method.

4.1.2 Risk management organization

Risk Management Committee

The Risk Management Committee establishes risk management strategies in accordance with the directives of the Board of Directors and determines the Company's target risk appetite. The committee approves significant risk matters and reviews the level of risks that the Company is exposed to and the appropriateness of the Company's risk management operations as an ultimate decision-making authority.

Risk Management Council

The Risk Management Council is a consultative group which reviews and makes decisions on matters delegated by the Risk Management Committee, and discusses the detailed issues relating to the Company's risk management.

Risk Management Division

The Risk Management Division is responsible for conducting detailed policies, procedures and working processes relating to the Company's risk management.

4.2 Credit Risk

4.2.1 Overview of credit risk

Credit risk is the risk of possible losses in an asset portfolio in the event of counterparty's default, breach of contract and deterioration in the credit quality of the counterparty. For risk management reporting purposes, the individual borrower's default risk is considered.

4.2.2 Credit risk management

The Company measures expected losses on assets that are subject to credit risk management and uses it as a management indicator.

11

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.3 Maximum exposure to credit risk

The Company's maximum exposures of financial instruments to credit risk without consideration of collateral values as of June 30, 2020 and December 31, 2019, are as follows:

June 30,

December 31,

(In millions of Korean won)

2020

2019

Due from financial institutions

32,080

18,537

Loans at amortized cost

150,000

120,000

Loans at fair value through profit or loss

1,277,993

122,408

Other financial assets

24,540

19,814

1,484,613

280,759

4.2.4 Credit risk of loans

The Company maintains an allowance for loan losses associated with credit risk on loans to manage its credit risk.

The Company assesses expected credit loss on financial asset at amortized cost and financial asset at fair value through other comprehensive income other than financial asset at fair value through profit or loss and recognizes loss allowance. Expected credit losses are a probability-weighted estimate of possible credit losses within 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. For financial assets at amortized cost, the Company measures the expected credit losses and presents it in the financial statements netting the allowance from the related loans; for financial assets measured at fair value through other comprehensive income, the Company presents it in the statements using other comprehensive income.

4.2.4.1 Credit risk exposure

Loans as of June 30, 2020 and December 31, 2019, are classified as follows:

(In millions of

June 30, 2020

Korean won)

The financial

The financial instruments

instruments

applying lifetime expected credit

Financial

applying

losses

instruments

12-month

not applying

expected

expected

Financial assets

credit losses

Non-impaired

Impaired

credit losses

Total

at amortized cost

Corporate

150,000

-

-

-

150,000

Grade 1

Grade 2

-

-

-

-

-

Grade 3

-

-

-

-

-

Grade 4

-

-

-

-

-

Grade 5

-

-

-

-

-

150,000

-

-

-

150,000

12

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.4.1 Credit risk exposure (cont'd)

(In millions of

December 31, 2019

Korean won)

The financial

The financial instruments

instruments

applying lifetime expected credit

Financial

applying

losses

instruments

12-month

not applying

expected

expected

Financial assets

credit losses

Non-impaired

Impaired

credit losses

Total

at amortized cost

Corporate

120,000

-

-

-

120,000

Grade 1

Grade 2

-

-

-

-

-

Grade 3

-

-

-

-

-

Grade 4

-

-

-

-

-

Grade 5

-

-

-

-

-

120,000

-

-

-

120,000

Credit quality of loans graded according to the probability of default as of June 30, 2020 and December 31, 2019, are as follows:

Range of PD (%)

Grade 1

(Probability of Default)

0.0

~ 1.0

Grade 2

1.0

~ 5.0

Grade 3

5.0 ~ 15.0

Grade 4

15.0

~ 30.0

Grade 5

30.0 ~

4.2.5 Credit risk of due from financial institutions

The credit quality of due from financial institutions as of June 30, 2020 and December 31, 2019, are classified as follows:

(In millions of

June 30, 2020

Korean won)

The financial

Financial

instruments

The financial instruments applying

applying

instruments

lifetime expected credit losses

12-month

not applying

expected credit

expected credit

losses

Non-impaired

Impaired

losses

Total

Due from financial institutions at amortized cost

Grade 1

32,080

-

-

-

32,080

Grade 2

-

-

-

-

-

Grade 3

-

-

-

-

-

Grade 4

-

-

-

-

-

Grade 5

-

-

-

-

-

32,080

-

-

-

32,080

13

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.5 Credit risk of due from financial institutions (cont'd)

(In millions of

December 31, 2019

Korean won)

The financial

Financial

instruments

The financial instruments applying

applying

instruments

lifetime expected credit losses

12-month

not applying

expected credit

expected credit

losses

Non-impaired

Impaired

losses

Total

Due from financial institutions at amortized cost

Grade 1

18,537

-

-

-

18,537

Grade 2

-

-

-

-

-

Grade 3

-

-

-

-

-

Grade 4

-

-

-

-

-

Grade 5

-

-

-

-

-

18,537

-

-

-

18,537

4.2.6 Credit risk concentration analysis

Details of the Company's loans by country as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of

June 30, 2020

Korean won)

Corporate loans

%

Allowances

Carrying amount

Korea

1,427,993

100.00

-

1,427,993

(In millions of

December 31, 2019

Korean won)

Corporate loans

%

Allowances

Carrying amount

Korea

242,408

100.00

-

242,408

1 The amounts include Loans at fair value through profit and loss and Loans at amortized cost.

Details of the Company's corporate loans by industry as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of

June 30, 2020

Korean won)

Corporate loans

%

Allowances

Carrying amount

Financial

1,427,993

-

1,427,993

institutions

100.00

(In millions of

December 31, 2019

Korean won)

Corporate loans

%

Allowances

Carrying amount

Financial

242,408

-

242,408

institutions

100.00

1 The amounts include Loans at fair value through profit and loss and Loans at amortized cost.

14

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.6 Credit risk concentration analysis (cont'd)

Details of the Company's due from financial institutions by industry as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of

June 30, 2020

Korean won)

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Financial institutions

32,080

100.00

-

32,080

(In millions of

December 31, 2019

Korean won)

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Financial institutions

18,537

100.00

-

18,537

Details of the Company's due from financial institutions by country as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of

June 30, 2020

Korean won)

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Korea

32,080

100.00

-

32,080

(In millions of

December 31, 2019

Korean won)

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Korea

18,537

100.00

-

18,537

4.3 Liquidity Risk

4.3.1 Overview of liquidity risk

Liquidity risk is a risk that the Company becomes insolvent due to uncertain liquidity caused by unexpected cash outflows, or a risk of borrowing high interest debts or disposal of liquid and other assets at a substantial discount. The Company manages its liquidity risk through analysis of the contractual maturity of all financial assets, liabilities and off-balance items by maturity groups: on demand, less than one month, between one month to three months, between three months to one year, between one year to five years and over five years.

Cash flows disclosed for the maturity analysis are undiscounted contractual principal and interest to be received (paid) and; thus, are not identical to the amount in the financial statements that are based on the present value of expected cash flows in some cases. The amount of interest to be received or paid on floating rate assets and liabilities is measured on the assumption that the current interest rate would be the same through the maturity.

15

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.3.2. Liquidity risk management

The liquidity risk is managed by liquidity management principles and related guidelines which are applied to the risk management policies and procedures that address all the possible risks that arise from the overall business of the Company.

4.3.3. Analysis of remaining contractual maturity of financial assets and liabilities

The remaining contractual maturity of financial assets and liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

On

Up to

1-3

3-12

1-5

Over 5

demand

1 month

months

months

years

years

Total

Financial assets

32,080

-

-

-

-

-

32,080

Cash and due from financial institutions1

Financial assets at fair value through profit or loss2

1,277,993

-

-

-

-

290,889

1,568,882

Loans at amortized cost

-

51,098

-

102,189

-

-

153,287

Other financial assets

428

6,185

15,824

190

230

-

22,857

1,310,501

57,283

15,824

102,379

230

290,889

1,777,106

Financial liabilities

-

-

-

100,000

-

-

100,000

Debts

Debentures

-

6,182

146,331

1,010,097

3,879,145

1,812,581

6,854,336

Lease liabilities

-

46

88

279

191

-

604

Other financial liabilities

-

5,894

-

8,412

-

-

14,306

-

12,122

146,419

1,118,788

3,879,336

1,812,581

6,969,246

16

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.3.3. Analysis of remaining contractual maturity of financial assets and liabilities (cont'd)

(In millions of Korean won)

December 31, 2019

On

Up to

1-3

3-12

1-5

Over 5

demand

1 month

months

months

years

years

Total

Financial assets

18,619

-

-

-

-

-

18,619

Cash and due from financial institutions1

Financial assets at fair value through profit or loss2

122,408

-

-

-

-

291,501

413,909

Loans at amortized cost

-

-

71,523

51,098

-

-

122,621

Other financial assets

-

925

-

15,660

-

-

16,585

141,027

925

71,523

66,758

-

291,501

571,734

Financial liabilities

-

105,903

224,578

723,474

3,624,305

1,134,756

5,813,016

Debentures

Lease liabilities

-

44

85

249

215

-

593

Other financial liabilities

-

1,819

-

-

-

-

1,819

-

107,766

224,663

723,723

3,624,520

1,134,756

5,815,428

  1. The amount of 3 million and 3 million, respectively, which is restricted due from the financial institutions as of June 30, 2020 and December 31, 2019, is excluded.
  2. Hybrid securities included in financial assets at fair value through profit or loss are included in the 'Over 5 years' category since the point of disposal is uncertain.

17

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.4 Market Risk

4.4.1 Concept

Market risk is the risk of possible losses which arise from changes in market factors; such as, interest rate, stock price, foreign exchange rate and other market factors that affect the fair value of future cash flows of financial instruments. The most significant risk of the Company is interest rate risk.

4.4.2 Interest rate risk

Definition of interest rate risk

Interest rate risk is the risk that may occur due to changes in interest rates; such as, the value (fair value) change risk in statement of financial position line items and cash flow change risk in interest income and expense arising from investing and financing activities.

Observation method and management indicator on interest rate risk

The main objective of interest rate risk management is to protect asset values against interest rate fluctuations. The Company manages the risk through measurement and management of Value at Risk for the interest rate.

5. Financial Assets and Financial Liabilities

5.1 Classification and Fair value of Financial Instruments

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

Financial assets

Carrying amount

Fair value

Financial assets at fair value through profit or loss

290,889

290,889

Hybrid securities

Loans

1,277,993

1,277,993

Financial assets at amortized cost

Due from financial institutions

32,080

32,080

Loans

150,000

150,000

Other financial assets

24,540

24,540

1,775,502

1,775,502

Financial liabilities

Financial liabilities at amortized cost

100,000

100,000

Debts

Debentures

6,255,663

6,427,397

Other financial liabilities

28,215

28,215

6,383,878

6,555,612

18

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of June 30, 2020 and December 31, 2019, are as follows: (cont'd)

(In millions of Korean won)

December 31, 2019

Financial assets

Carrying amount

Fair value

Financial assets at fair value through profit or loss

291,501

291,501

Hybrid securities

Loans

122,408

122,408

Financial assets at amortized cost

Due from financial institutions

18,537

18,537

Loans

120,000

120,000

Other financial assets

19,814

19,814

572,260

572,260

Financial liabilities

Financial liabilities at amortized cost

5,543,446

5,631,217

Debentures

Other financial liabilities

14,940

14,940

5,558,386

5,646,157

Fair value is the amount for which an asset could be exchanged, or a liability could be settled, between knowledgeable, willing parties in an arm's length transaction. For each class of financial assets and financial liabilities, the Company discloses the fair value of that 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 quoted price in an active market.

19

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of June 30, 2020 and December 31, 2019, are as follows: (cont'd)

Methods of determining fair value of financial instruments are as follows:

Cash and due from

The carrying amounts of cash and demand due from financial institutions and

financial institutions

payment due from financial institutions are a 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

Investment securities

measured using DCF model (Discounted Cash Flow Model).

The fair value of financial instruments that are quoted in active markets is

determined using the quoted prices. Fair value is determined through the use of

external professional valuation institution where quoted prices are not available.

The institutions use one or more of the following valuation techniques including

DCF Model, Imputed Market Value Model, Free Cash Flow to Equity Model,

Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset

Derivatives

Value Method.

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 Company 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 and the

Monte Carlo Simulation or valuation results from independent external

professional valuation institution.

Loans 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

Debts

by the expected prepayment rate, at appropriate discount rate.

DCF model is used to determine the fair value of debts, but in the case of short-

Debentures

term maturity, the carrying amount is used as the fair value.

Fair value is determined by using the valuations of external professional valuation

Other financial assets

institution, which are calculated using market inputs.

The carrying amounts are reasonable approximation of fair values. These financial

and liabilities

instruments are temporary accounts used for other various transactions and their

maturities are relatively short or not defined.

5.1.2 Fair value hierarchy

The Company believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the statements of financial position are appropriate. However, the fair values of the financial instruments recognized in the statements 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.

20

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1.2 Fair value hierarchy (cont'd)

The Company classifies and discloses fair value of the financial instruments into the three-level hierarchy as follows:

Level 1

Level 2 Level 3

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.

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.

The fair values are based on unobservable inputs for the asset or liability.

When the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy, 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. Assessing the significance of a particular input to the entire measurement requires judgment, taking into account factors specific to the asset or liability. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

5.1.2.1 Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position

The fair value hierarchy of financial assets measured at fair value in the statement of financial position as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

Fair value hierarchy

Total

Financial assets

Level 1

Level 2

Level 3

Financial assets at fair value through

profit or loss

Hybrid securities

-

-

290,889

290,889

Loans

-

1,277,993

-

1,277,993

-

1,277,993

290,889

1,568,882

(In millions of Korean won)

December 31, 2019

Fair value hierarchy

Total

Financial assets

Level 1

Level 2

Level 3

Financial assets at fair value through

profit or loss

Hybrid securities

-

-

291,501

291,501

Loans

-

122,408

-

122,408

-

122,408

291,501

413,909

21

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1.2.1 Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position (cont'd)

Valuation techniques and inputs of financial assets and liabilities at fair value in the statements of financial position and classified as Level 2 as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

Valuation

Financial assets

Fair value

techniques

Inputs

Financial assets at fair value through

profit or loss

Interest,

Loans

1,277,993

DCF model

Discount rate, etc.

(In millions of Korean won)

December 31, 2019

Valuation

Financial assets

Fair value

techniques

Inputs

Financial assets at fair value through

profit or loss

Interest,

Loans

122,408

DCF model

Discount rate, etc.

5.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed

The fair value hierarchy of financial assets and liabilities whose fair values are disclosed as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

Financial assets

Cash and due from financial institutions1

Loans at amortized cost2 Other financial assets3

June 30,

2020

Fair value hierarchy

Total

Level 1

Level 2

Level 3

-

32,080

-

32,080

-

-

150,000

150,000

-

-

24,540

24,540

-

32,080

174,540

206,620

Financial liabilities

Debts4

-

100,000

-

100,000

Debentures

-

6,427,397

-

6,427,397

Other financial liabilities3

-

-

28,215

28,215

-

6,527,397

28,215

6,555,612

22

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed (cont'd)

(In millions of Korean won)

December 31, 2019

Fair value hierarchy

Total

Financial assets

Level 1

Level 2

Level 3

Cash and due from financial

-

18,537

-

18,537

institutions1

Loans at amortized cost2

-

-

120,000

120,000

Other financial assets3

-

-

19,814

19,814

-

18,537

139,814

158,351

Financial liabilities

Debentures

-

5,631,217

-

5,631,217

Other financial liabilities3

-

-

14,940

14,940

-

5,631,217

14,940

5,646,157

  1. Because due from financial institutions classified as level 2 are deposits on demand, carrying amounts are reasonable approximations of fair values.
  2. Because loans at amortized cost classified as level 3 are loans with residual maturity of less than one year, carrying amounts are reasonable approximations of fair values.
  3. For other financial assets and other financial liabilities classified as level 3, carrying amounts are reasonable approximations of fair values.

4For borrowings classified as Level 2, the carrying amount was considered an approximation of fair value and the carrying amount was disclosed at fair value.

Valuation techniques and inputs used in the fair value measurement

For financial assets and liabilities whose carrying amount is a reasonable approximation of fair value, we do not disclose valuation techniques and inputs.

Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 2 as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

Fair value

Valuation

June 30,

December 31,

Financial liabilities

2020

2019

Techniques

Inputs

6,427,397

5,631,217

DCF model

Discount rate

Debentures

5.2 Level 3 of the Fair Value Hierarchy Disclosure

5.2.1 Valuation policy and process for fair value measurement categorized as Level 3

The Company uses external, independent and qualified professional valuer's valuation to determine the fair value of the Company's assets at the end of every reporting period.

23

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.2.2 Changes in fair value (Level 3) measured using valuation technique based on assumption that is unobservable in the market

Details of changes in Level 3 of the fair value hierarchy for the six-month periods ended June 30, 2020 and 2019, are as follows:

Financial assets at fair

Financial assets at fair

value

value

(In millions of Korean won)

through profit or loss

through profit or loss

2020

2019

Beginning balance

291,501

289,179

Total gains or losses

(612)

2,980

- Profit or loss for the period

- Other comprehensive income

-

-

Purchases

-

-

Sales

-

-

Issues

-

-

Settlements

-

-

Transfers into Level 3

-

-

Transfers out of Level 3

-

-

Ending balance

290,889

292,159

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 profit or loss from financial instruments held at the end of the reporting period in the statement of comprehensive income for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

Total gains or losses included in profit or loss for the period

Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period

2020

2019

Losses from

Gains from

financial

financial

investments at

investments at

fair value

Other

fair value

Other

through profit

operating

Net interest

through profit

operating

Net interest

or loss

income

income

or loss

income

income

(612) -

- 2,980 -

-

(612) -

- 2,980 -

-

24

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.2.3 Sensitivity analysis of changes in unobservable inputs

5.2.3.1 Information about fair value measurements using unobservable inputs as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

Range of

Valuation

unobservable

Relationship of unobservable inputs

Financial assets

Fair value

technique

Inputs

Unobservable inputs

inputs (%)

to fair value

Financial assets at fair value through profit or loss

Matrix YTM,

Discount rate

1.99 ~ 4.50

The lower the discount rate,

Hybrid securities

290,889

Hull and White

Model,

Additional spread by grade,

the higher the fair value

Monte Carlo

Risk spread of company,

Volatility of interest rate

0.54

The higher the volatility,

Simulation

Valid credit rating,

the higher the fair value fluctuation

Disclosed information of securities,

Interest rate estimation variability

(In millions of Korean won)

December 31, 2019

Range of

Valuation

unobservable

Relationship of unobservable inputs

Financial assets

Fair value

technique

Inputs

Unobservable inputs

inputs (%)

to fair value

Financial assets at fair value through profit or loss

Matrix YTM,

Discount rate

2.05 ~ 4.45

The lower the discount rate,

Hybrid securities

291,501

Hull and White

Model,

Additional spread by grade,

the higher the fair value

Monte Carlo

Risk spread of company,

Volatility of interest rate

0.50

The higher the volatility,

Simulation

Valid credit rating,

the higher the fair value fluctuation

Disclosed information of securities,

Interest rate estimation variability

25

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.2.3.2 Sensitivity analysis of changes in unobservable inputs

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of financial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair value is affected by more than two input parameters, the amounts represent the most favorable or most unfavorable outcome. There are hybrid securities whose fair value changes are recognized in profit or loss.

The results of the sensitivity analysis from changes in inputs as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

Recognition in profit or loss

Other comprehensive income

Favorable

Unfavorable

Favorable

Unfavorable

Financial assets

changes

changes

changes

changes

Financial assets at fair value

through profit or loss

Hybrid securities1

2,042

(2,049)

-

-

1 For equity securities, the changes in fair value are calculated by increasing or decreasing correlations between discount rate (1.99 ~ 4.50%) which are principal unobservable input parameters. And, the changes in fair value are calculated by increasing or decreasing the correlation coefficient between short-term and long-term interests or volatility of the interest rates, which are unobservable inputs, by 1%.

(In millions of Korean won)

December 31, 2019

Recognition in profit or loss

Other comprehensive income

Favorable

Unfavorable

Favorable

Unfavorable

Financial assets

changes

changes

changes

changes

Financial assets at fair value

through profit or loss

Hybrid securities1

3,215

(3,195)

-

-

1 For equity securities, the changes in fair value are calculated by increasing or decreasing correlations between discount rate (2.05 ~ 4.45%) which are principal unobservable input parameters. And, the changes in fair value are calculated by increasing or decreasing the correlation coefficient between short-term and long-term interests or volatility of the interest rates, which are unobservable inputs, by 1%.

26

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6. Due from Financial Institution

Details of due from financial institution as June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

Financial

Interest rate (%)

(As of

June 30,

December 31,

Due from financial

Institution

June 30, 2020)

2020

2019

Due from

Kookmin Bank

0.00 ~ 0.25

32,080

18,537

institution in

banks

Korean won

Details of a maturity analysis of due from financial institution, excluding restricted cash, as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean

June 30, 2020

won)

Up to

3~6

6~12

Over

Due from financial

3 months

months

months

1~3 years

3 years

Total

institution in Korean

32,077

-

-

-

-

32,077

won

(In millions of Korean

December 31, 2019

won)

Up to

3~6

6~12

Over

Due from financial

3 months

months

months

1~3 years

3 years

Total

institution in Korean

18,534

-

-

-

-

18,534

won

Restricted cash from financial institution as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean

Financial

June 30,

December 31,

won)

Institution

2020

2019

Due from financial

3

3

institution in Korean

Kookmin Bank

won

Reason for restriction

Pledged as collateral for the overdraft establishment

27

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

7. Financial Assets at Fair Value through Profit or Loss

Details of financial assets at fair value through profit or loss as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30,

December 31,

2020

2019

Financial assets at fair value through profit or loss

290,889

291,501

Hybrid securities

Loans

1,277,993

122,408

1,568,882

413,909

8. Loans at amortized cost

Details of loans at amortized cost as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30,

December 31,

2020

2019

Financial assets at fair value through profit or loss

150,000

120,000

Loans at amortized cost

Less: Allowances for loan losses

-

-

Carrying amount

150,000

120,000

9. Investments in Subsidiaries

Details of subsidiaries as of June 30, 2020, are as follows:

Name of subsidiary

Industry

Location

Kookmin Bank

Banking and domestic, foreign exchange

Korea

transaction

KB Securities Co., Ltd.

Financial investment

Korea

KB Insurance Co., Ltd

Insurance

Korea

KB Kookmin Card Co., Ltd.

Credit card

Korea

KB Asset Management Co., Ltd.

Investment advisory and collective

Korea

investment

KB Capital Co., Ltd.

Financial leasing

Korea

KB Life Insurance Co., Ltd.

Life insurance

Korea

KB Real Estate Trust Co., Ltd.

Real estate trust management

Korea

KB Savings Bank Co., Ltd.

Savings banking

Korea

KB Investment Co., Ltd.

Capital investment

Korea

KB Data System Co., Ltd.

System software, development and supply

Korea

KB Credit Information Co., Ltd.

Collection of receivables and credit

Korea

investigation

28

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

9. Investments in Subsidiaries (cont'd)

Investments in subsidiaries as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won, except

Number of

for shares and ownership %)

Issued

Ownership

Shares

(%)

Carrying amount

June 30,

December 31,

Name of subsidiary

As of June 30, 2020

2020

2019

Kookmin Bank

404,379,116

100.00

14,821,721

14,821,721

KB Securities Co., Ltd.

298,620,424

100.00

3,342,391

3,342,391

KB Insurance Co., Ltd

66,500,000

100.00

2,375,430

2,375,430

KB Kookmin Card Co., Ltd.

92,000,000

100.00

1,953,175

1,953,175

KB Asset Management Co., Ltd.

7,667,550

100.00

96,312

96,312

KB Capital Co., Ltd.1

25,227,566

100.00

673,811

623,811

KB Life Insurance Co., Ltd.

91,200,000

100.00

485,314

485,314

KB Real Estate Trust Co., Ltd.

16,000,000

100.00

121,553

121,553

KB Savings Bank Co., Ltd.

8,001,912

100.00

157,544

157,544

KB Investment Co., Ltd.

22,525,328

100.00

154,910

154,910

KB Data System Co., Ltd.

800,000

100.00

6,334

6,334

KB Credit Information Co., Ltd.

1,252,400

100.00

23,621

23,621

24,212,116

24,162,116

1 Carrying amount of investments in KB Capital Co., Ltd. increased 50 billion due to paid-in capital increase for the six-month period ended June 30, 2020.

Changes in accumulated impairment losses on investments in subsidiaries for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

Accumulated impairment losses

Beginning

Impairment

Others

Ending

(51,742)

-

-

(51,742)

on investments in subsidiaries

(In millions of Korean won)

2019

Accumulated impairment losses

Beginning

Impairment

Others

Ending

(51,742)

-

-

(51,742)

on investments in subsidiaries

29

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

10. Property and Equipment

Details of property and equipment as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

Accumulated

Acquisition

Accumulated

impairment

Carrying

cost

depreciation

losses

amount

Leasehold improvements

4,119

(2,787)

-

1,332

Equipment and others

5,404

(3,498)

-

1,906

Right-of-use property and

equipment-Buildings

827

(679)

-

148

Right-of-use property and

equipment -Vehicles

998

(704)

-

294

Right-of-use property and

equipment -Others

36

(28)

-

8

11,384

(7,696)

-

3,688

(In millions of Korean won)

December 31, 2019

Accumulated

Acquisition

Accumulated

impairment

Carrying

cost

depreciation

losses

amount

Leasehold improvements

4,119

(2,309)

-

1,810

Equipment and others

4,818

(2,946)

-

1,872

Right-of-use property and

equipment-Buildings

683

(490)

-

193

Right-of-use property and

equipment -Vehicles

904

(624)

-

280

Right-of-use property and

equipment -Others

36

(21)

-

15

10,560

(6,390)

-

4,170

30

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

11. Intangible Assets

Details of intangible assets as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

Accumulated

Accumulated

impairment

Carrying

Acquisition cost

amortization

losses

amount

Software

4,978

(3,386)

-

1,592

Membership rights

9,765

-

(1,338)

8,427

Other intangible assets

5,493

(4,300)

-

1,193

20,236

(7,686)

(1,338)

11,212

(In millions of Korean won)

December 31, 2019

Accumulated

Accumulated

impairment

Carrying

Acquisition cost

amortization

losses

amount

Software

4,849

(3,101)

-

1,748

Membership rights

9,765

-

(1,786)

7,979

Other intangible assets

5,451

(4,086)

-

1,365

20,065

(7,187)

(1,786)

11,092

12. Deferred Income Tax Assets and Liabilities

Details of deferred income tax assets and liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

Assets

Liabilities

Net amounts

Share-based payments

2,269

-

2,269

Membership rights

368

-

368

Defined benefit obligation

2,887

-

2,887

Plan assets

-

(2,887)

(2,887)

Short-term employee benefits

862

-

862

Financial assets at fair value through profit or loss

2,506

-

2,506

Others

538

(4,749)

(4,211)

9,430

(7,636)

1,794

Offsetting of deferred tax assets and liabilities

(7,636)

7,636

-

1,794

-

1,794

31

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Deferred Income Tax Assets and Liabilities (cont'd)

(In millions of Korean won)

December 31, 2019

Assets

Liabilities

Net amounts

Share-based payments

3,260

-

3,260

Membership rights

491

-

491

Defined benefit obligation

2,888

-

2,888

Plan assets

-

(2,888)

(2,888)

Short-term employee benefits

1,193

-

1,193

Financial assets at fair value through profit or loss

2,337

-

2,337

Others

449

(204)

245

10,618

(3,092)

7,526

Offsetting of deferred tax assets and liabilities

(3,092)

3,092

-

7,526

-

7,526

13. Other Assets

Details of other assets as of June 30, 2020 and December 31, 2019, are as follows:

June 30,

December 31,

(In millions of Korean won)

2020

2019

Other financial assets

5,334

-

Receivables

Accrued income

3,320

3,654

Guarantee deposits

15,886

16,160

Other non-financial assets

24,540

19,814

Receivables

596,459

588,765

Prepaid expenses

1,275

556

Advanced payments

1,631

151

599,365

589,472

623,905

609,286

32

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

14. Debts

Debts as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

December 31, 2019

Borrowings

100,000

-

Details of borrowings as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

Annual interest rates

Maturity

(%)

Lender

Issued date

date

as of June 30, 2020

June 30, 2020

December 31, 2019

Borrowings in

Other

MERITZ Securities

June 29,

Nov. 03,

100,000

-

Korean won

borrowings

Co., Ltd.

2020

2020

1.06

The maturities of debts as of June 30, 2020, are as follows:

(In millions of

June 30, 2020

Korean won)

Up to

3~6

6~12

1~3

Over

Borrowings in

3 months

months

months

years

3 years

Total

-

100,000

-

-

-

100,000

Korean won

33

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

15. Debentures

Details of debentures as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

Annual interest rates (%)

December 31,

Issued date

Expiration date

as of June 30, 2020

June 30, 2020

2019

Unguaranteed debentures No. 3-3

Aug. 13, 2013

Aug. 13, 2020

3.65

70,000

70,000

Unguaranteed debentures No. 5-2

Mar. 19, 2014

Mar. 19, 2021

3.50

50,000

50,000

Unguaranteed debentures No. 6

Feb. 26, 2015

Feb. 26, 2022

2.38

30,000

30,000

Unguaranteed debentures No. 8

June 23, 2015

June 23, 2020

2.34

-

100,000

Unguaranteed debentures No. 9

June 23, 2015

June 23, 2022

2.52

150,000

150,000

Unguaranteed debentures No. 10

Sept. 17, 2015

Sept. 17, 2020

2.16

20,000

20,000

Unguaranteed debentures No. 11

Sept. 23, 2015

Sept. 23, 2020

2.06

30,000

30,000

Unguaranteed debentures No. 12-2

Nov. 27, 2015

Nov. 27, 2020

2.26

110,000

110,000

Unguaranteed debentures No. 12-3

Nov. 27, 2015

Nov. 27, 2022

2.38

50,000

50,000

Unguaranteed debentures No. 14-1

Dec. 09, 2015

Dec. 09, 2020

2.27

140,000

140,000

Unguaranteed debentures No. 14-2

Dec. 09, 2015

Dec. 09, 2022

2.38

30,000

30,000

Unguaranteed debentures No. 15-2

May 12, 2016

May 12, 2021

1.72

220,000

220,000

Unguaranteed debentures No. 15-3

May 12, 2016

May 12, 2026

2.01

200,000

200,000

Unguaranteed debentures No. 16-2

May 27, 2016

May 27, 2021

1.78

60,000

60,000

Unguaranteed debentures No. 16-3

May 27, 2016

May 27, 2023

1.91

150,000

150,000

Unguaranteed debentures No. 17

June 27, 2016

June 27, 2021

1.51

50,000

50,000

Unguaranteed debentures No. 18-2

July 25, 2016

July 25, 2021

1.45

110,000

110,000

Unguaranteed debentures No. 18-3

July 25, 2016

July 25, 2026

1.69

80,000

80,000

Unguaranteed debentures No. 19-2

Aug. 25, 2016

Aug. 25, 2021

1.46

100,000

100,000

Unguaranteed debentures No. 19-3

Aug. 25, 2016

Aug. 25, 2026

1.69

120,000

120,000

Unguaranteed debentures No. 20-2

Nov. 28, 2016

Nov. 28, 2021

2.28

50,000

50,000

Unguaranteed debentures No. 21

Jan. 25, 2017

Jan. 23, 2020

1.82

-

100,000

Unguaranteed debentures No. 22-1

Feb. 28, 2017

Feb. 28, 2020

1.89

-

120,000

Unguaranteed debentures No. 22-2

Feb. 28, 2017

Feb. 28, 2022

2.11

110,000

110,000

Unguaranteed debentures No. 23

Mar. 23, 2017

Mar. 23, 2020

1.95

-

80,000

Unguaranteed debentures No. 24

Apr. 06, 2017

Apr. 06, 2020

1.97

-

70,000

Unguaranteed debentures No. 25-2

May 24, 2017

May 24, 2020

1.97

-

100,000

Unguaranteed debentures No. 25-3

May 24, 2017

May 24, 2022

2.23

270,000

270,000

Unguaranteed debentures No. 25-4

May 24, 2017

May 24, 2027

2.62

80,000

80,000

Unguaranteed debentures No. 26-1

June 27, 2017

June 27, 2022

2.18

50,000

50,000

Unguaranteed debentures No. 26-2

June 27, 2017

June 27, 2024

2.34

200,000

200,000

Unguaranteed debentures No. 27

July 19, 2017

July 19, 2024

2.41

100,000

100,000

Unguaranteed debentures No. 28-1

Aug. 30, 2017

Aug. 30, 2022

2.30

60,000

60,000

Unguaranteed debentures No. 28-2

Aug. 30, 2017

Aug. 30, 2024

2.43

30,000

30,000

Unguaranteed debentures No. 28-3

Aug. 30, 2017

Aug. 30, 2027

2.60

60,000

60,000

Unguaranteed debentures No. 29-1

Sept. 19, 2017

Sept. 19, 2022

2.29

150,000

150,000

Unguaranteed debentures No. 29-2

Sept. 19, 2017

Sept. 19, 2024

2.44

110,000

110,000

Unguaranteed debentures No. 30

Jan. 25, 2018

Jan. 25, 2021

2.45

80,000

80,000

Unguaranteed debentures No. 31-1

Feb. 28, 2018

Feb. 26, 2021

2.57

150,000

150,000

Unguaranteed debentures No. 31-2

Feb. 28, 2018

Feb. 28, 2023

2.81

50,000

50,000

Unguaranteed debentures No. 31-3

Feb. 28, 2018

Feb. 28, 2028

3.02

60,000

60,000

Unguaranteed debentures No. 32-1

Apr. 06, 2018

Apr. 06, 2021

2.50

60,000

60,000

Unguaranteed debentures No. 32-2

Apr. 06, 2018

Apr. 06, 2023

2.71

80,000

80,000

Unguaranteed debentures No. 32-3

Apr. 06, 2018

Apr. 06, 2028

2.86

20,000

20,000

Unguaranteed debentures No. 33-1

June 12, 2018

June 12, 2023

2.81

100,000

100,000

Unguaranteed debentures No. 33-2

June 12, 2018

June 12, 2028

2.92

30,000

30,000

Unguaranteed debentures No. 34-1

July 25, 2018

July 23, 2021

2.41

40,000

40,000

Unguaranteed debentures No. 34-2

July 25, 2018

July 25, 2023

2.65

70,000

70,000

Unguaranteed debentures No. 34-3

July 25, 2018

July 25, 2025

2.71

20,000

20,000

Unguaranteed debentures No. 34-4

July 25, 2018

July 25, 2028

2.76

20,000

20,000

Unguaranteed debentures No. 35

Oct. 05, 2018

Oct. 05, 2023

2.52

120,000

120,000

Unguaranteed debentures No. 36-1

Feb. 22, 2019

Feb. 22, 2022

2.03

120,000

120,000

Unguaranteed debentures No. 36-2

Feb. 22, 2019

Feb. 22, 2024

2.11

230,000

230,000

Unguaranteed debentures No. 36-3

Feb. 22, 2019

Feb. 22, 2029

2.22

60,000

60,000

Unguaranteed debentures No. 37-1

Mar. 15, 2019

Mar. 15, 2024

2.06

140,000

140,000

Unguaranteed debentures No. 37-2

Mar. 15, 2019

Mar. 15, 2029

2.16

70,000

70,000

Unguaranteed debentures No. 38-1

June. 19, 2019

June 19, 2026

1.73

80,000

80,000

Unguaranteed debentures No. 38-2

June. 19, 2019

June 19, 2029

1.77

120,000

120,000

Unguaranteed debentures No. 39-1

Oct. 15, 2019

Oct. 15, 2024

1.60

80,000

80,000

Unguaranteed debentures No. 39-2

Oct. 15, 2019

Oct. 15, 2029

1.67

40,000

40,000

Unguaranteed debentures No. 40-1

Dec. 04, 2019

Dec. 04, 2024

1.76

70,000

70,000

Unguaranteed debentures No. 40-2

Dec. 04, 2019

Dec. 04, 2029

1.87

30,000

30,000

Unguaranteed debentures No. 41-1

Jan. 16, 2020

Jan. 16, 2023

1.64

110,000

-

Unguaranteed debentures No. 41-2

Jan. 16, 2020

Jan. 16, 2025

1.74

100,000

-

Unguaranteed debentures No. 41-3

Jan. 16, 2020

Jan. 16, 2030

1.88

40,000

-

34

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

15. Debentures (cont'd)

(In millions of Korean won)

Annual interest rates (%)

December 31,

Subordinated debentures No. 1-1

Issued date

Expiration date

as of June 30, 2020

June 30, 2020

2019

Feb. 18, 2020

Feb. 18, 2030

2.21

370,000

-

Subordinated debentures No. 1-2

Feb. 18, 2020

Feb. 18, 2035

2.26

30,000

-

Unguaranteed debentures No. 42-1

May 13, 2020

May 13, 2025

1.59

130,000

-

Unguaranteed debentures No. 42-2

May 13, 2020

May 13, 2030

1.78

70,000

-

Unguaranteed debentures No. 43-1

June 16, 2020

June 16, 2023

1.18

50,000

-

Unguaranteed debentures No. 43-2

June 16, 2020

June 16, 2025

1.44

110,000

-

Unguaranteed debentures No. 43-3

June 16, 2020

June 16, 2030

1.63

50,000

-

Exchangeable bonds No.11

June 30, 2020

June 30, 2025

0.00

240,000

-

6,280,000

5,550,000

Less: Bond Discounts

(7,751)

(6,554)

Less: adjustment on exchange right

(16,586)

-

6,255,663

5,543,446

1 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 liability component from the issuance amount, represents the value of 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 48,000. Exercise period for exchangeable rights is from the 60th day from the Issued date to 10 days before the Expiration date.

The maturities of debentures as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of

June 30, 2020

Korean won)

Up to

3~6

6~12

1~3

Over

Debentures in

3 months

months

months

years

3 years

Total

120,000

250,000

670,000

1,860,000

3,380,000

6,280,000

Korean won

(In millions of

December 31, 2019

Korean won)

Up to

3~6

6~12

1~3

Over

Debentures in

3 months

months

months

years

3 years

Total

300,000

270,000

370,000

1,990,000

2,620,000

5,550,000

Korean won

Changes in debentures based on face value for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

Beginning

Issue

Repayment

Ending

Debentures in Korean won

5,550,000

1,300,000

(570,000)

6,280,000

(In millions of Korean won)

2019

Beginning

Issue

Repayment

Ending

Debentures in Korean won

5,380,000

820,000

(650,000)

5,550,000

35

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

16. Net Defined Benefit Liabilities

Defined benefit plan

The Company operates defined benefit plans which have the following characteristics:

  • The Company has the obligation to pay the agreed benefits to all its current and former employees.
  • Actuarial risk (that benefits will cost more than expected) and investment risk fall, in substance, on the Company.

The net defined benefit liability recognized in the statements of financial position is calculated in accordance with actuarial valuation methods using market data; such as, interest rates, future salary increase rate and mortality rate based on historical data. Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends.

Changes in the defined benefit obligation for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

Present value of

defined benefit

Fair value of plan

Net defined

obligation

assets

benefit liabilities

Beginning

20,312

(19,875)

437

Current service cost

1,040

-

1,040

Interest cost (income)

202

(199)

3

Remeasurements:

-

Return on plan assets (excluding amounts

included in interest income)

-

53

53

Payments from plans (benefit payments)

(1,245)

1,245

-

Payments from the Company

(3)

-

(3)

Transfer in

1,735

(1,735)

-

Transfer out

(1,706)

1,706

-

Ending

20,335

(18,805)

1,530

(In millions of Korean won)

2019

Present value of

defined benefit

Fair value of plan

Net defined

obligation

assets

benefit liabilities

Beginning

20,363

(20,180)

183

Current service cost

1,110

-

1,110

Interest cost (income)

233

(231)

2

Remeasurements:

Return on plan assets (excluding amounts

included in interest income)

-

56

56

Payments from plans (benefit payments)

(1,554)

1,554

-

Transfer in

1,158

(1,158)

-

Transfer out

(2,574)

2,574

-

Ending

18,736

(17,385)

1,351

36

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

16. Net Defined Benefit Liabilities (cont'd)

Details of the net defined benefit liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30,

December 31,

2020

2019

Present value of defined benefit obligation

20,335

20,312

Fair value of plan assets

(18,805)

(19,875)

Net defined benefit liabilities

1,530

437

Details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

Current service cost

1,040

Net interest expenses of net defined benefit liabilities

3

Post-employment benefits

1,043

17. Other Liabilities

Details of other liabilities as of June 30, 2020 and December 31, 2019, are as follows:

2019

  • 1,110
    2
  • 1,112

(In millions of Korean won)

June 30,

December 31,

2020

2019

Other financial liabilities

5,410

1,134

Payables

Accrued expenses

22,213

13,218

Lease liability

592

588

28,215

14,940

Other non-financial liabilities

Payables

64,568

59,263

Accrued expenses

93,971

128,824

Withholding taxes

284

413

158,823

188,500

187,038

203,440

37

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

18. Equity

18.1 Share Capital

Details of share capital and number of issued shares as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

December 31, 2019

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)

5,000

5,000

Number of issued shares

415,807,920

415,807,920

Share capital

2,090,558

2,090,558

Changes in shares outstanding for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)

2020

2019

Beginning

389,634,335

395,551,297

Decrease

-

(5,916,962)

Ending

389,634,335

389,634,335

18.2 Hybrid securities

Details of hybrid securities classified as equity as of June 30, 2020 and December 31, 2019, are as follows:

Issuance

Interest rate

June 30,

December 31,

(In millions of Korean won)

date

Maturity

(%)

2020

2019

Perpetual

The 1-1st Hybrid securities

May 2, 2019

bond

3.23

349,204

349,204

Perpetual

The 1-2nd Hybrid securities

May 2, 2019

bond

3.44

49,881

49,881

The 2-1st Hybrid securities

Perpetual

May 8, 2020

bond

3.30

324,099

-

The 2-2nd Hybrid securities

Perpetual

May 8, 2020

bond

3.43

74,812

-

797,996

399,085

The above hybrid securities may be redeemed by the Company after 5 or 10 years from the issuance date.

18.3 Capital Surplus

Details of capital surplus as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

December 31, 2019

Share premium

13,190,275

13,190,275

Other capital surplus

1,465,893

1,465,893

Gain on sales of treasury share

86,646

86,646

Consideration for exchange rights

16,459

-

14,759,273

14,742,814

38

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

18.4 Accumulated Other Comprehensive Income

Details of accumulated other comprehensive income as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

December 31, 2019

Remeasurements of net defined benefit liabilities

(7,702)

(7,664)

Changes in accumulated other comprehensive income for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

Remeasurements of net

Beginning

Changes

Tax effect

Ending

defined benefit liabilities

(7,664)

(53)

15

(7,702)

(In millions of Korean won)

2019

Remeasurements of net

Beginning

Changes

Tax effect

Ending

defined benefit liabilities

(7,144)

(56)

15

(7,185)

18.5 Retained Earnings

Details of retained earnings as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30,

December 31,

2020

2019

Legal reserves

557,405

482,807

Voluntary reserves

982,000

982,000

Regulatory reserve for credit losses

4,175

4,458

Retained earnings before appropriation

1,562,130

1,624,029

3,105,710

3,093,294

With respect to the allocation of net profit earned in a fiscal term, the Company must set aside in its legal reserve an amount equal to at least 10% of its net income after tax as reported in the separate statement of comprehensive income each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its share capital in accordance with Article 53 of the Financial Holding Company Act. The reserve is not available for the payment of cash dividends, but may be transferred to share capital, or used to reduce accumulated deficit.

39

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

18.5.1 Regulatory reserve for credit losses

Measurement and disclosure of regulatory reserve for credit losses are required in accordance with Articles 26 through 28 of the Supervisory Regulations on Financial Holding Companies.

Details of the regulatory reserve for credit losses as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30,

December 31,

2020

2019

Beginning

4,175

4,458

Estimated amounts subject to provision (reversal)

5,999

(283)

Ending

10,174

4,175

The adjustments to the regulatory reserve for credit losses for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Provision (reversal) of regulatory reserve for

Three months

Six months

Three months

Six months

(726)

5,999

(998)

(495)

credit losses

Adjusted profit (loss) after provision

(reversal) of regulatory reserve for credit

(52,136)

867,509

(41,730)

842,444

losses1,2

Adjusted basic earnings (losses) per share

after provision of regulatory reserve for

credit losses1 (In Korean won)

(134)

2,226

(107)

2,146

Adjusted diluted earnings (losses) per share

after provision of regulatory reserve for

credit losses1 (In Korean won)

(133)

2,208

(107)

2,131

  1. Adjusted profit after provision (reversal) of regulatory reserve for credit losses is not in accordance with Korean IFRS and calculated on the assumption that provision (reversal) of regulatory reserve for credit losses before income tax is adjusted to the profit for the period.
  2. Amount after deducting dividends on hybrid securities.

18.6 Treasury Shares

Changes in treasury shares outstanding for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won and in number of shares)

2020

Number of treasury shares

Beginning

Acquisition

Retirement

Ending

26,173,585

-

-

26,173,585

Carrying amount

1,136,188

-

-

1,136,188

5,000,000 treasury shares are deposited at Korea Securities Depository for issuing exchangeable bonds.

40

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

18.6 Treasury Shares (cont'd)

(In millions of Korean won and in number of shares)

2019

Number of treasury shares

Beginning

Acquisition

Retirement

Ending

22,560,240

5,916,962

-

28,477,202

Carrying amount

(968,549)

(267,639)

-

(1,236,188)

19. Dividends

The dividends to the shareholders of the Company in respect of the year ended December 31, 2019, of 2,210 per share, amounting to total dividends of 861,092 million, were paid in April 2020. The dividends paid to the shareholders of the Company in 2019 were 759,736 million ( 1,920 per share).

20. Net Interest Expense

Details of interest income and interest expense for the three-month and the six-month periods ended June 30,

2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Interest income

Three months

Six months

Three months

Six months

24

37

831

1,895

Due from financial institutions

Loans at amortized cost

815

1,506

934

1,013

Loans at fair value through profit or loss

1,376

2,409

1,890

2,255

Other

66

126

82

158

Interest expense

2,281

4,078

3,737

5,321

Debts

3

3

1,294

2,488

Debentures

32,345

64,440

31,821

62,249

Other

3

6

5

9

Net interest expense

32,351

64,449

33,120

64,746

(30,070)

(60,371)

(29,383)

(59,425)

21. Net Fee and Commission Expense

Details of fee and commission income, and fee and commission expense for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Fee and commission income

Three months

Six months

Three months

Six months

231

378

214

350

Fees earned in Korean won

Fee and commission expense

2,360

3,139

Fees paid in Korean won

2,914

4,081

Fees paid in foreign currency

27

116

-

79

2,941

4,197

2,360

3,218

Net fee and commission expense

(2,710)

(3,819)

(2,146)

(2,868)

41

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

22. Net Gains on Financial assets at Fair value through Profit or Loss

Net gains on financial assets at fair value through profit or loss consist of gains or losses related to financial instrument that includes dividend income and gains or losses arising from changes in the fair values, sales and redemptions. Details net gains on financial assets at fair value through profit or loss for the three-month and six- month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Gains related to financial instruments at

Three months

Six months

Three months

Six months

fair value through profit or loss

Dividend income on financial assets

designated at fair value through profit or

3,533

6,945

3,390

6,784

loss

Gains on valuation on financial assets

designated at fair value through profit or

loss

210

607

1,754

3,304

Losses related to financial instruments

3,743

7,552

5,144

10,088

at fair value through profit or loss

Losses on valuation on financial assets

designated at fair value through profit or

loss

370

1,220

176

323

370

1,220

176

323

Net gains on financial instruments at

3,373

6,332

4,968

9,765

fair value through profit or loss

23. Net Other Operating Income

Details of other operating income and expenses for the three-month and the six-month periods ended June 30,

2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Other operating income

Three months

Six months

Three months

Six months

-

974,930

-

926,934

Dividend income from subsidiaries

Net other operating income

-

974,930

-

926,934

42

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

24. General and Administrative Expenses 24.1 General and Administrative Expenses

Details of general and administrative expenses for the three-month and the six-month periods ended June 30,

2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Employee benefits

Three months

Six months

Three months

Six months

Salaries and other short-term employee

6,092

12,152

5,829

10,770

benefits - salaries

Salaries and other short-term employee

benefits - others

1,065

2,011

1,052

1,955

Post-employment benefits - defined

benefit plans

521

1,043

557

1,112

Share-based payments

840

(687)

1,929

1,713

8,518

14,519

9,367

15,550

Depreciation and amortization

959

1,864

1,259

2,408

Other general and administrative

expenses

Travel

-

51

440

636

Communications

136

395

229

398

Tax and dues

87

280

79

291

Publication

72

124

91

148

Rental expense

209

420

241

408

Vehicle

31

55

39

61

Service fees

4,643

9,833

2,919

6,793

Advertising

19

425

15

397

Training

44

304

233

538

Others

1,437

3,196

1,632

3,314

6,678

15,083

5,918

12,984

16,155

31,466

16,544

30,942

43

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

24.2 Share-based Payments

The Company entered into share-based payment plan for executives and employees of the Company and its subsidiaries.

Details of stock grants linked to long-term performance as of June 30, 2020, are as follows:

(In number of shares)

KB Financial Group Inc.

Grant date

Series 19

Nov. 21, 2017

Series 21

Jan. 01, 2019

Series 22

Apr. 01, 2019

Series 23

May 27, 2019

Series 24

Jul. 17, 2019

Series 25

Jan. 01, 2020

Series 26

Mar. 18, 2020

Series 27

June 15, 2020

Deferred grant in 2015

-

Deferred grant in 2016

-

Deferred grant in 2017

-

Deferred grant in 2018

-

Deferred grant in 2019

-

Kookmin Bank

Series 75

Jan. 1, 2019

Series 76

Apr. 1, 2019

Series 77

May. 27, 2019

Series 78

Nov. 21, 2019

Series 79

Jan. 1, 2020

Series 80

Mar 1, 2020

Deferred grant in 2015

-

Deferred grant in 2016

-

Deferred grant in 2017

-

Deferred grant in 2018

-

Deferred grant in 2019

-

Number of granted

Vesting conditions2

shares1

46,890

Service fulfillment, market performance3 35% and non-

market performance5 65%

25,172

Service fulfillment, market performance3 0~30% and

non-market performance4 70~100%

3,226

Service fulfillment, market performance3 30% and non-

market performance4 70%

1,436

Service fulfillment, market performance3 30% and non-

market performance4 70%

11,224

Service fulfillment, market performance3 30% and non-

market performance4 70%

80,568

Service fulfillment, market performance3 0~30% and

non-market performance4 70~100%

1,086

Service fulfillment, market performance3 30% and non-

market performance4 70%

687

Service fulfillment, market performance3 30% and non-

market performance4 70%

7,674

Satisfied

8,705

Satisfied

30,001

Satisfied

5,960

Satisfied

26,437

Satisfied

249,066

154,997

Service fulfillment, market performance 3 0~50%, and

non-market performance4 50~100%

5,380

Service fulfillment, market performance3 30~50%, and

non-market performance4 50~70%

4,468

Service fulfillment, market performance3 30~50%, and

non-market performance4 50~70%

36,443

Service fulfillment, market performance3 30%, and

non-market performance6 70%

266,488

Service fulfillment, market performance3 0~50%, and

non-market performance4 50~100%

7,711

Service fulfillment, market performance3 30~50%, and

non-market performance4 50~70%

2,759

Satisfied

19,109

Satisfied

58,380

Satisfied

65,587

Satisfied

98,194

Satisfied

719,516

44

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

24.2 Share-based Payments (cont'd)

(In number of shares)

Grant date

Number of granted

Vesting conditions2

shares1

Other subsidiaries

Stock granted in 2010

-

106

Stock granted in 2011

-

146

Stock granted in 2012

-

420

Stock granted in 2013

-

622

Stock granted in 2014

-

1,100

Services fulfillment,

Stock granted in 2015

-

3,323

market performance3 10~50%

Stock granted in 2016

-

6,664

and non-market performance4 50~90%

Stock granted in 2017

-

32,717

Stock granted in 2018

-

120,189

Stock granted in 2019

-

334,543

Stock granted in 2020

-

240,498

740,328

1,708,910

1

  1. Granted shares represent the total number of shares initially granted to directors and employees that have residual shares at the end of reporting period (Deferred grants are residual shares at the end of the reporting period).
  2. Executives and employees were given the option of deferring 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 when 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. Accomplishment of corporates' and individuals' performance results
  5. EPS, Asset Quality, HCROI, Non-banking sector profit
  6. EPS, Asset Quality

The stock grant award program is an incentive plan that sets, on grant date, the maximum amount of shares that can be awarded. Actual stock granted at the end of the vesting period is determined in accordance with achievement of pre-specified targets over the vesting period.

45

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

24.2 Share-based Payments (cont'd)

Details of stock grants linked to short-term performances as of June 30, 2020, are as follows:

Estimated number of vested

Vesting

KB Financial Group Inc.

shares1

Conditions

Stock granted in 2015

7,524

Satisfied

Stock granted in 2016

6,595

Satisfied

Stock granted in 2017

7,385

Satisfied

Stock granted in 2018

14,292

Satisfied

Stock granted in 2019

28,030

Satisfied

Stock granted in 2020

24,985

Proportional to service period

Kookmin Bank

Stock granted in 2015

9,887

Satisfied

Stock granted in 2016

22,442

Satisfied

Stock granted in 2017

31,522

Satisfied

Stock granted in 2018

77,367

Satisfied

Stock granted in 2019

125,342

Satisfied

Stock granted in 2020

82,385

Proportional to service period

Other subsidiaries

Stock granted in 2015

12,190

Satisfied

Stock granted in 2016

40,942

Satisfied

Stock granted in 2017

149,272

Satisfied

Stock granted in 2018

345,625

Satisfied

Stock granted in 2019

551,667

Satisfied

Stock granted in 2020

193,525

Proportional to service period

1,730,977

1 Executives and employees were given the option of deferring 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 when the deferred grant has been confirmed.

Share-based payment arrangement for subsidiaries was transferred to the Company in 2010, and the related compensation cost paid to the executives and employees of subsidiaries is reimbursed by these companies. The accrued expenses representing share-based payments as of June 30, 2020 and December 31, 2019, are

  • 90,078 million and 124,853 million, respectively, and the receivables to be reimbursed by the subsidiaries for the compensation costs are 81,918 million and 112,997 million, respectively. In addition, The compensation costs from share-based payments that amount to 687 million were recognized as an reversal for the six-month period ended June 30, 2020 and 1,713 million were recognized for the six-month period ended June 30, 2019.

46

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

25. Non-operating Income (Expense)

Details of non-operating income and expenses for the three-month and the six-month periods ended June 30,

2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Three months

Six months

Three months

Six months

Non-operating income

Reversal of impairment losses on

268

448

-

-

intangible assets

Others

59

103

591

594

327

551

591

594

Non-operating expenses

Impairment losses on intangible assets

-

-

4

4

Donation

325

382

565

632

Others

7

7

-

6

332

389

569

642

Non-operating income (expenses)

(5)

162

22

(48)

26. Income Tax Benefit

Details of income tax benefit for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

Tax payable

Change in deferred tax assets and liabilities Origination and reversal of temporary differences

Tax expense recognized directly in equity Remeasurements of net defined benefit liabilities

Income tax expense

2020

2019

-

-

5,732

1,451

5,732

1,451

15

15

15

15

5,747

1,466

47

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

27. Earnings (Losses) per Share

27.1 Basic Earnings (Losses) per Share

Calculations of basic earnings (losses) per share on the profit attributable to ordinary shares are as follows:

27.1.1 Weighted average number of ordinary shares outstanding

Details of weighted average number of ordinary shares outstanding for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)

2020

2019

Three months

Six months

Three months

Six months

Beginning (A)

415,807,920

415,807,920

418,111,537

418,111,537

Acquisition of treasury shares (B)

(26,173,585)

(26,173,585)

(26,966,534)

(25,457,689)

Weighted average number of ordinary

shares outstanding (C=A+B)

389,634,335

389,634,335

391,145,003

392,653,848

27.1.2 Basic earnings (losses) per share

Details of basic earnings (losses) per share for the three-month and the six-month periods ended June 30,

2020 and 2019, are as follows:

(In Korean won and

2020

2019

In number of shares)

Three months

Six months

Three months

Six months

Profit (loss) for the period

(49,605,610,263)

880,020,574,695

(42,727,690,967)

841,949,721,037

Deduction: Dividends on hybrid

securities

3,256,250,000

6,512,500,000

-

-

Profit (loss) attributable to the

ordinary equity holders (A)

(52,861,860,263)

873,508,074,695

(42,727,690,967)

841,949,721,037

Weighted average number of

ordinary shares outstanding (B)

389,634,335

389,634,335

391,145,003

392,653,848

Basic earnings (losses) per share

(136)

2,242

(109)

2,144

(A / B)

27.2 Diluted Earnings (Losses) per Share

Diluted earnings (losses) per share is calculated using the weighted average number of ordinary shares outstanding which is adjusted by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. The Company's dilutive potential ordinary shares include stock grants.

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 of the Company's outstanding shares for the period) based on the monetary value of the subscription rights attached to the stock grants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of stock grants.

48

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

27.2.1 Adjusted profit (loss) for diluted earnings (losses) per share

Adjusted profit (loss) for diluted earnings (losses) per share for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In Korean won)

Profit (loss) attributable to the ordinary equity holders1

Adjustment

Adjusted profit (loss) for diluted earnings (losses) per share

2020

2019

Three months

Six months

Three months

Six months

(52,861,860,263)

873,508,074,695

(42,727,690,967)

841,949,721,037

-

-

-

-

(52,861,860,263)

873,508,074,695

(42,727,690,967)

841,949,721,037

1 The amount is after deducting dividends on hybrid securities.

27.2.2 Weighted average number of ordinary shares outstanding for diluted earnings per share

Adjusted weighted average number of ordinary shares outstanding to calculate diluted earnings per share for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)

2020

2019

Three months

Six months

Three months

Six months

Weighted average number of ordinary shares issued and

outstanding389,634,335 389,634,335 391,145,003 392,653,848 Adjustment

Stock grants

2,907,973

3,200,650

-

2,626,443

Adjusted weighted

average number of

ordinary shares

outstanding for diluted

395,280,291

earnings per share

392,542,308

392,834,985

391,145,003

49

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

27.2.3 Diluted earnings per share

Details of diluted earnings per share for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In Korean won and in

2020

2019

number of shares)

Adjusted profit (loss) for

Three months

Six months

Three months

Six months

diluted earnings (losses) per

(52,861,860,263)

873,508,074,695

(42,727,690,967)

841,949,721,037

share

Adjusted weighted average

number of ordinary shares

outstanding for diluted

earnings (losses) per share

392,542,308

392,834,985

391,145,003

395,280,291

Diluted earnings (losses) per

(135)

2,224

(109)

2,130

share

28. Supplemental Cash Flow Information

Details of cash and cash equivalents as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

December 31, 2019

Due from financial institutions

32,080

18,537

Restricted cash from financial institutions

(3)

(3)

32,077

18,534

Significant non-cash transactions for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Changes in receivables and payables from

71,235

(347,491)

consolidated tax

Changes in receivables and payables relating to

stock grants

(31,080)

(8,727)

Other payables due to treasury shares trust

agreement, etc.

-

5,099

Cash inflows and outflows due to interest and dividends for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

Activity

2020

2019

Prepaid income tax expense

Operating

1,079

1,049

Interest received

Operating

3,762

4,145

Interest paid

Operating

62,918

65,364

Dividends received

Operating

981,935

933,747

Dividends paid

Financing

867,604

759,736

50

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

29. Contingent Liabilities and Commitments 29.1 Commitments

Commitments made with financial institutions as of June 30, 2020 and December 31, 2019, are as follows:

June 30, 2020

December 31, 2019

Amount of

Amounts

Amount of

Amounts

commitment

borrowed

commitment

borrowed

KEB Hana Bank

200,000

-

50,000

-

29.2 Other Matters (including litigation)

  1. The Company has no pending lawsuit as the defendant.
  2. The ongoing COVID-19 pandemic has had a negative impact on the global economy, and has increased has increased uncertainty in estimation of the Company's expected credit losses on certain portfolios and potential impairment on assets. The Company's ability to generate revenue may be adversely affected by the factors including;
  • uncertainties arising from significant increases in credit risks of borrowers affected by COVID-19 pandemic
  • uncertainties arising from forward-looking macroeconomic information in estimating expected credit losses
  • depreciation of Korean won against major currencies causing increase in the payment amount of principal and interests of debts denominated in foreign currencies; and
  • a significant decline in fair value of the Company's investments in companies affected by COVID-19 pandemic.
  1. On April 10, 2020, the Company has entered into share purchase agreement to acquire 15,000,000 ordinary shares (100% of investments) of Prudential Life Insurance Company Korea Ltd. at ₩ 2,265 billion. The final acquisition amount is expected to be fixed at the acquisition amount above by reflecting the agreed interests (₩ 75 billion) until the Closing date of transactions and the Company's external outflows until the Closing date of transactions. The Closing date will be determined after the preapproval of the financial authorities.

51

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30. Related Party Transactions

According to Korean IFRS 1024, the Company includes subsidiaries and key management (including family members) in the scope of related parties. Additionally, the Company discloses balances (receivables and payables) and other amounts arising from the related party transactions in the notes to the separate financial statements. Refer to Note 9 for details on subsidiaries.

Key management includes the directors of the Company, their close family members, and the companies where the directors and/or their close family members have control or joint control.

Significant related party transactions for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

Subsidiaries

Interest income

2020

2019

Kookmin Bank

43

1,212

Fee and commission income

418

779

Net other operating income

731,926

667,226

General and administrative expenses

4,211

3,445

KB Securities Co., Ltd.

Net other operating income

80,000

50,000

General and administrative expenses

474

564

KB Insurance Co., Ltd.

Fee and commission income

-

3

General and administrative expenses

800

678

KB Kookmin Card Co., Ltd.

Net other operating income

100,004

200,008

General and administrative expenses

317

457

Net non-operating income

3

3

KB Asset Management Co., Ltd.

Net other operating income

30,000

-

KB Capital Co., Ltd

Net gains on financial assets at fair

6,333

9,765

value through profit or loss

General and administrative expenses

65

39

KB Life Insurance Co., Ltd.

General and administrative expenses

136

49

KB Real Estate Trust. Co., Ltd.

Net other operating income

30,000

4,700

KB Savings Bank Co., Ltd.

Net other operating income

3,000

5,000

KB Investment Co., Ltd.

Interest income

1,506

1,013

KB Data Systems Co., Ltd.

General and administrative expenses

560

949

1 Net other operating income includes dividend income from subsidiaries.

52

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30. Related Party Transactions (cont'd)

Significant receivables and payables, and related allowance for loan losses arising from the related party transactions as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30,

December 31,

Subsidiaries

Cash and due from financial institutions

2020

2019

Kookmin Bank

32,080

18,537

Other assets

463,679

418,114

Other liabilities

3,958

35

Property and equipment

47

152

KB Securities Co., Ltd.

Other assets

29,955

52,068

Other liabilities

50,897

-

KB Insurance Co., Ltd.

Other assets

10,680

14,492

Other liabilities

7,914

47,580

KB Kookmin Card Co., Ltd.

Other assets

65,772

60,705

Other liabilities

751

1,394

KB Asset Management Co., Ltd.

Other assets

9,783

15,590

KB Capital Co., Ltd.

Financial assets at fair value through

290,889

291,501

profit or loss

Other assets

16,119

18,995

Other liabilities

65

-

KB Life Insurance Co., Ltd.

Other assets

2,372

3,956

Other liabilities

5,787

8,636

KB Real Estate Trust Co., Ltd.

Other assets

15,015

13,979

KB Savings Bank Co., Ltd.

Other assets

3,064

3,727

KB Investment Co., Ltd.

Loans at amortized cost

150,000

120,000

Other assets

3,802

2,904

Other liabilities

-

59

KB Data Systems Co., Ltd.

Property and equipment

390

438

Intangible assets

1,984

1,145

Other assets

1,837

2,721

Other liabilities

445

333

KB Credit Information Co., Ltd.

Other assets

702

849

Other liabilities

-

241

53

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30. Related Party Transactions (cont'd)

Right-of-use assets and lease liability with related parties as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30,

December 31,

Subsidiary

Kookmin Bank

Right-of-use assets

2020

2019

47

152

Unused commitments by a related party as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30,

December 31,

KB Kookmin Card Co.,

Unused commitments

2020

2019

Subsidiary

2,577

2,255

Ltd.

of credit card

Share transactions with related parties for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

Paid-in capital increase

2020

2019

Subsidiary

KB Capital Co., Ltd.

50,000

50,000

of ordinary shares

Subsidiary

KB Investment Co., Ltd.

Paid-in capital increase

-

50,000

of ordinary shares

Loan transactions with related parties for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

Beginning

Loans

Ending

Subsidiary

KB Investment Co., Ltd.

Loan

120,000

30,000

150,000

(In millions of Korean won)

2019

Beginning

Loans

Ending

Subsidiary

KB Investment Co., Ltd.

Loan

50,000

70,000

120,000

54

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30. Related Party Transactions (cont'd)

Compensation to key management for the six-month periods ended June 30, 2020 and 2019, consists of:

(In millions of Korean won)

2020

Short-term

employee

Post-employmentShare-based

Registered director

benefits

benefits

payments

Total

578

14

(319)

273

(executive)

Registered director

(non-executive)

315

-

-

315

Non-registered director

2,174

71

(368)

1,877

3,067

85

(687)

2,465

(In millions of Korean won)

2019

Short-term

employee

Post-employmentShare-based

Registered director

benefits

benefits

payments

Total

487

13

413

913

(executive)

Registered director

(non-executive)

293

-

-

293

Non-registered director

1,797

70

1,300

3,167

2,577

83

1,713

4,373

The Company paid 35 million and 225 million to KB Securities Co., Ltd., a subsidiary, for the underwriting and arrangement of debentures and hybrid securities for the six-month periods ended June 30, 2020 and 2019, respectively.

55

Disclaimer

KB Financial Group Inc. published this content on 14 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 August 2020 08:51:17 UTC


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Sales 2020 12 316 B 11,1 B 11,1 B
Net income 2020 3 449 B 3,12 B 3,12 B
Net Debt 2020 - - -
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