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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 Quarter 2020

05/20/2020 | 05:44am EST

KB Financial Group Inc.

Separate Interim Financial Statements

March 31, 2020 and 2019

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 March 31, 2020, the separate interim statements of comprehensive income, changes in equity and cash flows for the three-month period ended March 31, 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.

As described in note 28.2 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 condensed separate interim financial statements. While the Company believes that the negative impact from the COVID-19 in Korea is expected to be mitigated to some extent by the Korean government's financial and economic stabilization packages along with timely and effective disease control, the impact on the Company's condensed separate interim financial statements cannot be reliably determined as of March 31, 2020. Our conclusion is not modified in respect of this matter.

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, changes in equity and cash flows for the three-month period ended March 31, 2019, were reviewed by other auditors whose report thereon, dated May 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.

KPMG Samjong Accounting Corp.

Seoul, Korea

May 15, 2020

This report is effective as of May 15, 2020, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

KB Financial Group Inc.

Separate Interim Statements of Financial Position

March 31, 2020 and December 31, 2019

(In millions of Korean won)

Notes

March 31, 2020

December 31, 2019

Assets

Cash and due from financial institutions

4,5,6,27

19,860

18,537

Financial assets at fair value through profit or loss

4,5,7

1,609,490

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

4,152

4,170

Intangible assets

11

11,077

11,092

Deferred income tax assets

12

5,846

7,526

Other assets

4,5,13

728,811

609,286

Total assets

26,741,352

25,346,636

Liabilities

Debentures

4,5,14

5,892,550

5,543,446

Net defined benefit liabilities

15

1,059

437

Current income tax liabilities

537,819

417,414

Other liabilities

4,5,16

1,062,822

203,440

Total liabilities

7,494,250

6,164,737

Equity

Share capital

17

2,090,558

2,090,558

Hybrid securities

17

399,085

399,085

Capital surplus

17

14,742,814

14,742,814

Accumulated other comprehensive income

17

(7,739)

(7,664)

Retained earnings

17

3,158,572

3,093,294

Treasury shares

17

(1,136,188)

(1,136,188)

Total equity

19,247,102

19,181,899

Total liabilities and equity

26,741,352

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 Periods Ended March 31, 2020 and 2019

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

Notes

2020

2019

Interest income

1,797

1,584

Interest expense

(32,098)

(31,626)

Net interest expense

19

(30,301)

(30,042)

Fee and commission income

147

136

Fee and commission expense

(1,256)

(858)

Net fee and commission expense

20

(1,109)

(722)

Net gains on financial assets at fair value

through profit or loss

21

2,959

4,797

Net other operating income

22

974,930

926,934

General and administrative expenses

23

(15,311)

(14,398)

Operating profit before provision for credit losses

931,168

886,569

Provision for credit losses

-

-

Operating profit

931,168

886,569

Net non-operating income (expenses)

24

167

(70)

Profit before income tax

931,335

886,499

Income tax expense

25

(1,709)

(1,822)

Profit for the period

929,626

884,677

Items that will not be reclassified to profit or loss:

Remeasurements of net defined benefit liabilities

(75)

(20)

Other comprehensive loss for the year, net of tax

(75)

(20)

Total comprehensive income for the period

929,551

884,657

Earnings per share (in Korean Won)

Basic earnings per share

26

2,378

2,244

Diluted earnings per share

26

2,359

2,229

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

Three-Month Periods Ended March 31, 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

-

-

-

-

884,677

-

884,677

Remeasurements of net defined benefit liabilities

-

-

-

(20)

-

-

(20)

Total comprehensive income

-

-

-

(20)

884,677

-

884,657

Transactions with shareholders

Annual dividends

-

-

-

-

(759,736)

-

(759,736)

Acquisition of treasury shares

-

-

-

-

-

(126,134)

(126,134)

Total transactions with shareholders

-

-

-

-

(759,736)

(126,134)

(885,870)

Balance at March 31, 2019

2,090,558

-

14,742,814

(7,164)

3,338,497

(1,094,683)

19,070,022

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

-

-

-

-

929,626

-

929,626

Remeasurements of net defined benefit liabilities

-

-

-

(75)

-

-

(75)

Total comprehensive income

-

-

-

(75)

929,626

-

929,551

Transactions with shareholders

Annual dividends

-

-

-

-

(861,092)

-

(861,092)

Dividends on hybrid securities

-

-

-

-

(3,256)

-

(3,256)

Total transactions with shareholders

-

-

-

-

(864,348)

-

(864,348)

Balance at March 31, 2020

2,090,558

399,085

14,742,814

(7,739)

3,158,572

(1,136,188)

19,247,102

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

Three-Month Periods Ended March 31, 2020 and 2019

(In millions of Korean won)

Notes

2020

2019

Cash flows from operating activities

Profit for the period

929,626

884,677

Adjustment for non-cash items

Depreciation and amortization

905

1,149

Share-based payments

(1,527)

(216)

Net interest expense

556

1,791

Net gains on valuation on financial assets at fair

value through profit or loss

454

(1,403)

Net other expenses

319

559

Changes in operating assets and liabilities

707

1,880

Deferred income tax assets

1,709

1,822

Other assets

658

(1,202)

Other liabilities

(1,889)

(8,684)

Net cash inflow from operating activities

478

(8,064)

930,811

878,493

Cash flows from investing activities

Acquisition of financial assets at fair value through

profit or loss

(1,574,930)

(760,000)

Disposal of financial assets at fair value through profit of loss

378,895

-

Acquisition of subsidiaries

(50,000)

(50,000)

Increase in loans at amortized cost

(30,000)

(70,000)

Acquisition of property and equipment

(484)

(3,748)

Acquisition of intangible assets

(50)

(28)

Net increase in guarantee deposits paid

-

(1,509)

Other investing activities

(116)

(86)

Net cash outflow from investing activities

(1,276,685)

(885,371)

Cash flows from financing activities

Decrease in debts

-

(298,321)

Increase in debentures

648,490

618,540

Decrease in debentures

(297,900)

(79,804)

Principal elements of lease payments

(137)

(122)

Acquisition of treasury shares

-

(128,679)

Dividends paid on hybrid securities

(3,256)

-

Net cash inflow from financing activities

347,197

111,614

Net increase in cash and cash equivalents

1,323

104,736

Cash and cash equivalents at the beginning of the period

27

18,534

344,299

Cash and cash equivalents at the end of the period

27

19,857

449,035

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

March 31, 2020 and 2019, 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 March 31, 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

March 31, 2020 and 2019, 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.

Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Company's financial position, financial performance or cash flows, is not presented in the accompanying separate interim 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 three-month period ended March 31, 2020, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reportingand 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 March 31, 2020.

8

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, 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 and amended standards and interpretations not yet adopted by the Company

There are no new accounting standards and interpretations that are effective but have not been adopted by the Company.

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.

9

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

2.4 Critical Accounting Estimates

The preparation of the consolidated financial statements requires the application of accounting policies, certain critical accounting estimates and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses). Management's estimates of outcomes may differ from actual outcomes if management's estimates and assumptions based on management's best judgment at the reporting date are different from the actual environment.

Estimates and underlying assumptions are continually evaluated, and changes in accounting estimates are recognized in the period in which the estimates are changed and in any future periods affected.

Significant accounting estimates and assumptions applied in the preparation of these 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.

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.

10

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

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.

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 March 31, 2020 and December 31, 2019, are as follows:

March 31,

December 31,

(In millions of Korean won)

2020

2019

Due from financial institutions

19,860

18,537

Loans at amortized cost

150,000

120,000

Loans at fair value through profit or loss

1,318,443

122,408

Other financial assets

21,798

19,814

1,510,101

280,759

11

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

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 March 31, 2020 and December 31, 2019, are classified as follows:

(In millions of Korean won)

March 31, 2020

The financial

The financial instruments

Financial

instruments

applying lifetime expected

Financial

applying

credit losses

instruments

instruments

12-month

applying

not applying

expected

credit loss

expected

credit losses

Non-impaired

Impaired

model

credit losses

Total

Financial assets at amortized cost

Corporate

150,000

-

-

-

-

150,000

Grade 1

Grade 2

-

-

-

-

-

-

Grade 3

-

-

-

-

-

-

Grade 4

-

-

-

-

-

-

Grade 5

-

-

-

-

-

-

150,000

-

-

-

-

150,000

(In millions of Korean won)

December 31, 2019

The financial

The financial instruments

Financial

instruments

applying lifetime expected

Financial

applying

credit losses

instruments

instruments

12-month

applying

not applying

expected

credit loss

expected

credit losses

Non-impaired

Impaired

model

credit losses

Total

Financial assets at amortized cost

Corporate

120,000

-

-

-

-

120,000

Grade 1

Grade 2

-

-

-

-

-

-

Grade 3

-

-

-

-

-

-

Grade 4

-

-

-

-

-

-

Grade 5

-

-

-

-

-

-

120,000

-

-

-

-

120,000

12

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

4.2.4.1 Credit risk exposure (cont'd)

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

(In millions of Korean won)

March 31, 2020

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

19,860

-

-

-

19,860

Grade 2

-

-

-

-

-

Grade 3

-

-

-

-

-

Grade 4

-

-

-

-

-

Grade 5

-

-

-

-

-

19,860

-

-

-

19,860

(In millions of Korean won)

December 31, 2019

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

13

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

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

The credit qualities of due from financial instructions according to the credit ratings by external rating agencies as of March 31, 2020 and December 31, 2019, are as follows:

Credit quality

Domestic

KIS

NICE P&I

KAP

FnPricing Inc.

Grade 1

AA0 to AAA

AA0 to AAA

AA0 to AAA

AA0 to AAA

Grade 2

A- to AA-

A- to AA-

A- to AA-

A- to AA-

Grade 3

BBB0 to BBB+

BBB0 to BBB+

BBB0 to BBB+

BBB0 to BBB+

Grade 4

BB0 to BBB-

BB0 to BBB-

BB0 to BBB-

BB0 to BBB-

Grade 5

BB- or under

BB- or under

BB- or under

BB- or under

4.2.6 Credit risk concentration analysis

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

(In millions of Korean won)

March 31, 2020

Corporate loans

%

Allowances

Carrying amount

Korea

1,468,443

100.00

-

1,468,443

(In millions of Korean won)

December 31, 2019

Corporate loans

%

Allowances

Carrying amount

Korea

242,408

100.00

-

242,408

  • 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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

March 31, 2020

Financial

Corporate loans

%

Allowances

Carrying amount

1,468,443

-

1,468,443

institutions

100.00

(In millions of Korean won)

December 31, 2019

Financial

Corporate loans

%

Allowances

Carrying amount

242,408

-

242,408

institutions

100.00

  • 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

March 31, 2020 and 2019, 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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

March 31, 2020

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Financial institutions

19,860

100.00

-

19,860

(In millions of Korean won)

December 31, 2019

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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

March 31, 2020

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Korea

19,860

100.00

-

19,860

(In millions of Korean won)

December 31, 2019

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Korea

18,537

100.00

-

18,537

15

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

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.

16

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, 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 March 31, 2020 and December 31, 2019,are as follows:

(In millions of Korean won)

March 31, 2020

On

Up to

1-3

3-12

1-5

Over 5

demand

1 month

months

months

years

years

Total

Financial assets

19,869

-

-

-

-

-

19,869

Cash and due from financial institutions1

Financial assets at fair value through profit or loss2

1,318,443

-

-

-

-

291,047

1,609,490

Loans at amortized cost

-

-

-

153,287

-

-

153,287

Other financial assets

-

4,296

352

16,329

-

-

20,977

1,338,312

4,296

352

169,616

-

291,047

1,803,623

Financial liabilities

-

76,527

225,834

739,583

3,733,713

1,690,434

6,466,091

Debentures

Lease liabilities

-

49

62

227

252

-

590

Other financial liabilities

-

865,099

-

4,502

-

-

869,601

-

941,675

225,896

744,312

3,733,965

1,690,434

7,336,282

17

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, 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

  • The amount of3 million and 3 million, respectively, which is restricted due from the financial institutions as of March 31, 2020 and December 31, 2019, is

excluded.

  • 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.

18

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, 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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

March 31, 2020

Financial assets

Carrying amount

Fair value

Financial assets at fair value through profit or loss

291,047

291,047

Hybrid securities

Loans

1,318,443

1,318,443

Financial assets at amortized cost

Due from financial institutions

19,860

19,860

Loans

150,000

150,000

Other financial assets

21,798

21,798

1,801,148

1,801,148

Financial liabilities

Financial liabilities at amortized cost

5,892,550

5,985,712

Debentures

Other financial liabilities

883,859

883,859

6,776,409

6,869,571

19

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of March 31, 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.

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

Cash and due fromThe carrying amounts of cash and demand due from financial institutions and

financial institutionspayment 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 measured using DCF model(Discounted Cash Flow Model).

Investment securitiesThe 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 Value Method.

DerivativesFor 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.

20

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

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

Loans at amortized costDCF 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 statement of financial position are appropriate. However, the fair values of the financial instruments recognized in the statement of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.

The 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.

21

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, 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

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

(In millions of Korean won)

March 31, 2020

Fair value hierarchy

Total

Financial assets

Level 1

Level 2

Level 3

Financial assets at fair value through

profit or loss

Hybrid securities

-

-

291,047

291,047

Loans

1,318,443

-

1,318,443

-

1,318,443

291,047

1,609,490

(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

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

(In millions of Korean won)

March 31, 2020

Valuation

Financial assets

Fair value

techniques

Inputs

Financial assets at fair value through

profit or loss

Interest,

Loans

1,318,443

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.

22

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

March 31, 2020

Fair value hierarchy

Total

Level 1

Level 2

Level 3

Financial assets

Cash and due from financial institutions1

Loans at amortized cost2Other financial assets3

Financial liabilities

Debentures

Other financial liabilities3

(In millions of Korean won)

-

19,860

-

19,860

-

-

150,000

150,000

-

-

21,798

21,798

-

19,860

171,798

191,658

-

5,985,712

-

5,985,712

-

-

883,859

883,859

-

5,985,712

883,859

6,869,571

December 31, 2019

Fair value hierarchy

Level 1

Level 2

Level 3

Total

Financial assets

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

  • Because due from financial institutions classified as level 2 are deposits on demand, carrying amounts are

reasonable approximations of fair values.

  • 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.

  • For other financial assets and other financial liabilities classified as level 3, carrying amounts are reasonable approximations of fair values.

23

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

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

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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

Fair value

Valuation

March 31,

December 31,

Financial liabilities

2020

2019

Techniques

Inputs

5,985,712

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.

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 three-month periods ended March 31, 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

1,403

- Profit or loss for the period

(454)

- Other comprehensive income

-

-

Purchases

-

-

Sales

-

-

Issues

-

-

Settlements

-

-

Transfers into Level 3

-

-

Transfers out of Level 3

-

-

Ending balance

291,047

290,582

24

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, 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 (cont'd)

In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the year, and profit or loss from financial instruments held at the end of the reporting period in the statement of comprehensive income for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

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

Total gains or

or loss

income

income

or loss

income

income

losses included in

profit or loss for the

(454)

-

-

1,403

-

-

year

Total gains or

losses for the year

included in profit or

loss for financial

instruments held at

the end of the

(454)

-

-

1,403

-

-

reporting period

25

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, 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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

March 31, 2020

Valuation

Financial assets

Fair value

technique

Inputs

Financial assets at fair value through profit or loss

Matrix YTM,

Hybrid securities

291,047

Hull and White

Model,

Additional spread by grade,

Monte Carlo

Risk spread of company,

Simulation

Valid credit rating,

Disclosed information of securities,

Interest rate estimation variability

Range of

unobservable

Relationship of unobservable inputs to

Unobservable inputs

inputs (%)

fair value

Discount rate

2.01 ~ 4.51

The lower the discount rate,

the higher the fair value

Volatility of interest rate

0.66

The higher the volatility,

the higher the fair value fluctuation

(In millions of Korean won)

December 31, 2019

Valuation

Financial assets

Fair value

technique

Inputs

Financial assets at fair value through profit or loss

Matrix YTM,

Hybrid securities

291,501

Hull and White

Model,

Additional spread by grade,

Monte Carlo

Risk spread of company,

Simulation

Valid credit rating,

Disclosed information of securities,

Interest rate estimation variability

Range of

unobservable

Relationship of unobservable inputs

Unobservable inputs

inputs (%)

to fair value

Discount rate

2.05 ~ 4.45

The lower the discount rate,

the higher the fair value

Volatility of interest rate

0.50

The higher the volatility,

the higher the fair value fluctuation

26

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, 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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

March 31, 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

2,625

(2,619)

-

-

  • For equity securities,the changes in fair value are calculated by increasing or decreasing correlations between discount rate (2.01 ~ 4.51%) 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)

-

-

  • 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 betweenshort-term and long-term interests or volatility of the interest rates, which are unobservable inputs, by 1%.

27

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

6. Due from Financial Institution

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

(In millions of Korean won)

Interest rate (%)

Financial

(As of

March 31,

December 31,

Due from financial

Institution

March 31, 2020)

2020

2019

Due from

Kookmin Bank

0.00 ~ 0.60

19,860

18,537

institution in

banks

Korean won

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

(In millions of Korean won)

March 31, 2020

Up to

3~6

6~12

Over

Due from financial

3 months

months

months

1~3 years

3 years

Total

institution in Korean

19,857

-

-

-

-

19,857

won

(In millions of Korean won)

December 31, 2019

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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

Financial

March 31,

December 31,

Due from financial

Institution

2020

2019

3

3

institution in Korean Kookmin Bank

won

Reason for restriction

Pledged as collateral for the overdraft establishment

28

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, 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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

March 31,

December 31,

2020

2019

Financial assets at fair value through profit or loss

291,047

291,501

Hybrid securities

Loans

1,318,443

122,408

1,609,490

413,909

8. Loans at Amortized Cost

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

(In millions of Korean won)

Financial assets at fair value through profit or loss

Loans at amortized cost

Less: Allowances for loan losses Carrying amount

March 31,

December 31,

2020

2019

150,000

120,000

-

-

150,000

120,000

9. Investments in Subsidiaries

Details of subsidiaries as of March 31, 2020, are as follows:

Name of subsidiary

Industry

Kookmin Bank

Banking and domestic, foreign

exchange transaction

KB Securities Co., Ltd.

Financial investment

KB Insurance Co., Ltd

Insurance

KB Kookmin Card Co., Ltd.

Credit card

KB Asset Management Co., Ltd.

Investment advisory and collective

investment

KB Capital Co., Ltd.

Financial leasing

KB Life Insurance Co., Ltd.

Life insurance

KB Real Estate Trust Co., Ltd.

Real estate trust management

KB Savings Bank Co., Ltd.

Savings banking

KB Investment Co., Ltd.

Capital investment

KB Data System Co., Ltd.

System, software, development

and supply

KB Credit Information Co., Ltd.

Collection of receivables and credit

investigation

Location

Korea

Korea

Korea

Korea

Korea

Korea

Korea

Korea

Korea

Korea

Korea

Korea

29

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

9. Investments in Subsidiaries (cont'd)

Investments in subsidiaries as of March 31, 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

March 31,

December 31,

Name of subsidiary

As of March 31, 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

  • Carrying amount of investments in KB Capital Co., Ltd. increased50,000 in million due to paid-in capital increase for the year ended December 31, 2019.

Changes in accumulated impairment losses on investments in subsidiaries for the three-month periods ended March 31, 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

30

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

10. Property and Equipment

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

(In millions of Korean won)

March 31, 2020

Accumulated

Acquisition

Accumulated

impairment

Carrying

cost

depreciation

losses

amount

Leasehold improvements

4,119

(2,548)

-

1,571

Equipment and others

5,302

(3,198)

-

2,104

Right-of-use property and

equipment-Buildings

693

(590)

-

103

Right-of-use property and

equipment -Vehicles

996

(633)

-

363

Right-of-use property and

equipment -Others

36

(25)

-

11

11,146

(6,994)

-

4,152

(In millions of Korean won)

December 31, 2019

Acquisition

Accumulated

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

31

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

11. Intangible Assets

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

(In millions of Korean won)

March 31, 2020

Accumulated

Accumulated

impairment

Carrying

Acquisition cost

amortization

losses

amount

Software

4,862

(3,241)

-

1,621

Membership rights

9,765

-

(1,606)

8,159

Other intangible assets

5,487

(4,190)

-

1,297

20,114

(7,431)

(1,606)

11,077

(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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

March 31, 2020

Assets

Liabilities

Net amounts

Share-based payments

2,013

-

2,013

Membership rights

442

-

442

Defined benefit obligation

2,717

-

2,717

Plan assets

-

(2,717)

(2,717)

Short-term employee benefits

783

-

783

Financial assets at fair value through profit or loss

2,462

-

2,462

Others

351

(205)

146

8,768

(2,922)

5,846

Offsetting of deferred tax assets and liabilities

(2,922)

2,922

-

5,846

-

5,846

32

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, 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 March 31, 2020 and December 31, 2019, are as follows:

March 31,

December 31,

(In millions of Korean won)

2020

2019

Other financial assets

3,606

-

Receivables

Accrued income

1,982

3,654

Guarantee deposits

16,210

16,160

Other non-financial assets

21,798

19,814

Receivables

705,783

588,765

Prepaid expenses

964

556

Advanced payments

266

151

707,013

589,472

728,811

609,286

33

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

14. Debentures

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

(In millions of Korean won)

Annual interest rates (%)

Issued date

Expiration date

as of March 31, 2020

March 31, 2020

December 31, 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

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

70,000

Unguaranteed debentures No. 25-2

May 24, 2017

May 24, 2020

1.97

100,000

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

March 31, 2020 and 2019, and December 31, 2019

14. Debentures (cont'd)

(In millions of Korean won)

Annual interest rates (%)

Issued date

Expiration date

as of March 31, 2020

March 31, 2020

December 31, 2019

Subordinated debentures No. 1-1

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

-

5,900,000

5,550,000

Less: Bond Discounts

(7,450)

(6,554)

5,892,550

5,543,446

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

(In millions of Korean won)

March 31, 2020

Up to

3~6

6~12

1~3

Over

Debentures in

3 months

months

months

years

3 years

Total

270,000

120,000

530,000

1,870,000

3,110,000

5,900,000

Korean won

(In millions of Korean won)

December 31, 2019

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 three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

Beginning

Issue

Repayment

Ending

Debentures in Korean won

5,550,000

650,000

(300,000)

5,900,000

(In millions of Korean won)

2019

Beginning

Issue

Repayment

Ending

Debentures in Korean won

5,380,000

620,000

(80,000)

5,920,000

15. 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.

35

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

15. Net Defined Benefit Liabilities (cont'd)

Changes in the defined benefit obligation for the three-month periods ended March 31, 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

520

-

520

Interest cost (income)

101

(100)

1

Remeasurements:

Return on plan assets (excluding amounts

included in interest income)

-

104

104

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

19,714

(18,655)

1,059

(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

555

-

555

Interest cost (income)

116

(116)

-

Remeasurements:

Return on plan assets (excluding amounts

included in interest income)

-

27

27

Payments from plans (benefit payments)

(1,554)

1,554

-

Transfer in

1,158

(1,158)

-

Transfer out

(2,574)

2,574

-

Ending

18,064

(17,299)

765

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

(In millions of Korean won)

March 31,

December 31,

2020

2019

Present value of defined benefit obligation

19,714

20,312

Fair value of plan assets

(18,655)

(19,875)

Net defined benefit liabilities

1,059

437

36

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

15. Net Defined Benefit Liabilities (cont'd)

Details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

Current service cost

520

Net interest expenses of net defined benefit liabilities

1

Post-employment benefits

521

16. Other Liabilities

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

2019

  • 555
    -
  • 555

(In millions of Korean won)

March 31,

December 31,

2020

2019

Other financial liabilities

3,666

1,134

Payables

Accrued expenses

18,523

13,218

Dividend payables

861,092

-

Lease liability

578

588

Other non-financial liabilities

883,859

14,940

91,813

59,263

Payables

Accrued expenses

85,888

128,824

Withholding taxes

1,262

413

178,963

188,500

1,062,822

203,440

37

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

17. Equity

17.1 Share Capital

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

(In millions of Korean won)

March 31, 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 three-month periods ended March 31, 2020 and 2019, are as follows:

(In number of shares)

2020

2019

Beginning

389,634,335

395,551,297

Increase

-

-

Decrease

-

(2,805,362)

Ending

389,634,335

392,745,935

17.2 Hybrid Securities

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

Issuance

Interest rate

March 31,

December 31,

(In millions of Korean won)

date

Maturity

(%)

2020

2019

The 1-1stHybrid securities

Perpetual

May 2, 2019

bond

3.23

349,204

349,204

Perpetual

The 1-2ndHybrid securities

May 2, 2019

bond

3.44

49,881

49,881

399,085

399,085

The above hybrid securities are early redeemable by the Company after 5 or 10 years from the issuance date.

17.3 Capital Surplus

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

(In millions of Korean won)

March 31, 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

14,742,814

14,742,814

38

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

17.4 Accumulated Other Comprehensive Income

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

(In millions of Korean won)

March 31, 2020

December 31, 2019

Remeasurements of net defined benefit liabilities

(7,739)

(7,664)

Changes in accumulated other comprehensive income for the three-month periods ended March 31, 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)

(104)

29

(7,739)

(In millions of Korean won)

2019

Remeasurements of net

Beginning

Changes

Tax effect

Ending

defined benefit liabilities

(7,144)

(27)

7

(7,164)

17.5 Retained Earnings

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

(In millions of Korean won)

March 31,

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

1,614,992

1,624,029

3,158,572

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 profit for the period 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

March 31, 2020 and 2019, and December 31, 2019

17.5.1 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 March 31, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

March 31,

December 31,

2020

2019

Beginning

4,175

4,458

Estimated amounts subject to provision (reversal)

6,725

(283)

Ending

10,900

4,175

The adjustments to the regulatory reserve for credit losses for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won, except per share)

2020

2019

Provision(reversal) of regulatory reserve for credit losses

6,725

503

Adjusted profit after provision (reversal) of regulatory reserve for

919,645

884,174

credit losses1,2

Adjusted basic earnings per share after provision of regulatory

2,360

2,243

reserve for credit losses1

Adjusted diluted earnings per share after provision of regulatory

2,342

2,228

reserve for credit losses1

  • 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.

  • Amount after deducting dividends on hybrid securities.

17.6 Treasury Shares

Changes in treasury shares outstanding for the three-month periods ended March 31, 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

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

2019

Number of treasury shares

Beginning

Acquisition

Retirement

Ending

22,560,240

2,805,362

-

25,365,602

Carrying amount

968,549

126,134

-

1,094,683

40

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

18. 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 declared at the annual general shareholder's meeting on March 20, 2020. The Company's financial statements as of March 31, 2020, reflect this dividend payable. The dividends paid to the shareholders of the Company in 2019 were 759,736 million (1,920 per share).

19. Net Interest Expense

Details of interest income and interest expense for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Interest income

13

1,064

Due from financial institutions

Loans at fair value through profit or loss

1,033

79

Loans at amortized cost

691

365

Other

60

76

Interest expense

1,797

1,584

Debts

-

1,194

Debentures

32,095

30,428

Other

3

4

Net interest expense

32,098

31,626

(30,301)

(30,042)

41

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

20. Net Fee and Commission Expense

Details of fee and commission income, and fee and commission expense for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Fee and commission income

147

136

Fees earned in Korean won

Fee and commission expense

Fees paid in Korean won

1,167

779

Fees paid in foreign currency

89

79

1,256

858

Net fee and commission expense

(1,109)

(722)

21. 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 periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Gains related to financial instruments at fair value through

profit or loss

Dividend income on financial assets designated at fair value

3,412

3,394

through profit or loss

Gains on valuation on financial assets designated at fair value

through profit or loss

397

1,550

3,809

4,944

Losses related to financial instruments at fair value

through profit or loss

Losses on valuation on financial assets designated at

fair value through profit or loss

850

147

850

147

Net gains on financial instruments at fair value through

2,959

4,797

profit or loss

22. Net Other Operating Income

Details of other operating income and expenses for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Other operating income

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

March 31, 2020 and 2019, and December 31, 2019

23. General and Administrative Expenses 23.1 General and Administrative Expenses

Details of general and administrative expenses for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Employee benefits

Salaries and other short-term employee benefits - salaries

6,060

4,941

Salaries and other short-term employee benefits - others

946

903

Post-employment benefits - defined benefit plans

522

555

Share-based payments

(1,527)

(216)

6,001

6,183

Depreciation and amortization

905

1,149

Other general and administrative expenses

Travel

51

196

Communications

259

169

Tax and dues

193

212

Publication

52

57

Rental expense

211

167

Vehicle

24

22

Service fees

5,190

3,874

Advertising

406

382

Training

260

305

Others

1,759

1,682

8,405

7,066

15,311

14,398

43

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

23.2 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 March 31, 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

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 performance335% and non-

market performance565%

25,172

Service fulfillment, market performance30~30% and

non-market performance470~100%

3,227

Service fulfillment, market performance330% and non-

market performance470%

1,392

Service fulfillment, market performance330% and non-

market performance470%

11,224

Service fulfillment, market performance330% and non-

market performance470%

81,796

Service fulfillment, market performance30~30% and

non-market performance470~100%

7,674

Satisfied

8,705

Satisfied

30,001

Satisfied

5,960

Satisfied

26,437

Satisfied

248,478

Service fulfillment, market performance 330~50%, and

153,661

non-market performance450~70%

Service fulfillment, market performance330%, and

5,380

non-market performance450~70%

5,569

Service fulfillment, market performance330~50%, and

non-market performance450~70%

Service fulfillment, market performance330~50%, and

36,443

non-market performance670%

Service fulfillment, market performance330~50%, and

278,433

non-market performance450~70%

Service fulfillment, market performance330~50%, and

7,702

non-market performance450~70%

2,759

Satisfied

19,109

Satisfied

58,380

Satisfied

65,587

Satisfied

98,194

Satisfied

731,217

44

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

23.2 Share-based Payments (cont'd)

(In number of shares)

Grant date

Number of granted

Vesting conditions2

Other subsidiaries and

shares1

associate

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

-

3,324

market performance310~50%

Stock granted in 2016

-

6,664

and non-market performance450~90%

Stock granted in 2017

-

36,575

Stock granted in 2018

-

120,189

Stock granted in 2019

-

332,888

Stock granted in 2020

-

253,361

755,395

1,735,090

  • 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).

  • 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.

  • 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)
  • Accomplishment of corporates' and individuals' performance results
    5EPS, Asset Quality, HCROI, Non-banking sector profit 6EPS, 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

March 31, 2020 and 2019, and December 31, 2019

23.2 Share-based Payments (cont'd)

Details of stock grants linked to short-term performances as of March 31, 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

12,320

Proportional to service period

Kookmin Bank

Stock granted in 2015

9,887

Satisfied

Stock granted in 2016

22,575

Satisfied

Stock granted in 2017

31,522

Satisfied

Stock granted in 2018

77,478

Satisfied

Stock granted in 2019

103,707

Satisfied

Stock granted in 2020

43,079

Proportional to service period

Other subsidiaries

Stock granted in 2015

12,190

Satisfied

Stock granted in 2016

40,942

Satisfied

Stock granted in 2017

150,139

Satisfied

Stock granted in 2018

345,807

Satisfied

Stock granted in 2019

551,667

Satisfied

Stock granted in 2020

72,558

Proportional to service period

1,537,697

  • 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 after the deferred grant has been confirmed.

Share-based payment arrangement for subsidiaries and associate was transferred to the Company in 2010, and the related compensation cost paid to the executives and employees of subsidiaries and associate is reimbursed by these companies. The accrued expenses representing share-based payments as of March 31, 2020 and December 31, 2019, are 82,919 million and 124,853 million, respectively, and the receivables to be reimbursed by the subsidiaries for the compensation costs are 75,599 million and 112,997 million, respectively. In addition, The compensation costs from share-based payments that amounts to 1,527 million and 216 million were recognized as an reversal for the three-month periods ended March 31, 2020 and 2019, respectively.

46

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

24. Net Non-operating Income (Expenses)

Details of non-operating income and expenses for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Non-operating income

180

-

Reversal of impairment losses on intangible assets

Others

44

3

Non-operating expenses

224

3

Donation

57

67

Others

-

6

57

73

Non-operating income (expenses)

167

(70)

25. Income Tax Expense

Details of income tax expense for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Tax payable

-

-

Change in deferred tax assets and liabilities

1,680

1,815

Origination and reversal of temporary differences

1,680

1,815

Tax expense recognized directly in equity

29

7

Remeasurements of net defined benefit liabilities

29

7

Income tax expense

1,709

1,822

47

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

26. Earnings per Share

26.1 Basic Earnings per Share

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

26.1.1 Weighted average number of ordinary shares outstanding

Details of weighted average number of ordinary shares outstanding for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In number of shares)

2020

2019

Beginning (A)

415,807,920

418,111,537

Acquisition of treasury shares (B)

(26,173,585)

(23,932,079)

Weighted average number of ordinary shares

394,179,458

outstanding (C=A+B)

389,634,335

26.1.2 Basic earnings per share

Details of basic earnings per share for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In Korean won and in number of shares)

2020

2019

Profit for the period

929,626,184,958

884,677,412,004

Deduction: Dividends on hybrid securities

3,256,250,000

-

Profit attributable to the ordinary equity holders (A)

926,369,934,958

884,677,412,004

Weighted average number of ordinary shares

389,634,335

394,179,458

outstanding (B)

Basic earnings per share (A / B)

2,378

2,244

26.2 Diluted Earnings per Share

Diluted earnings 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 year) 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

March 31, 2020 and 2019, and December 31, 2019

26.2.1 Adjusted profit for diluted earnings per share

Adjusted profit for diluted earnings per share for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In Korean won)

2020

2019

Profit attributable to the ordinary equity holders1

926,369,934,958

884,677,412,004

Adjustment

-

-

Adjusted profit for diluted earnings per share

926,369,934,958

884,677,412,004

  • The amount is after deducting dividends on hybrid securities.

26.2.2 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 periods ended March 31, 2020 and 2019, are as follows:

(In number of shares)

2020

2019

Weighted average number of ordinary shares

issued and outstanding

389,634,335

394,179,458

Adjustment

3,059,205

2,701,758

Stock grants

Adjusted weighted average number of ordinary

shares outstanding for diluted earnings per share

392,693,540

396,881,216

26.2.3 Diluted earnings per share

Details of diluted earnings per share for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In Korean won and in number of shares) Adjusted profit for diluted earnings per share Adjusted weighted average number of ordinary

shares outstanding for diluted earnings per share Diluted earnings per share

2020

2019

926,369,934,958

884,677,412,004

392,693,540

396,881,216

2,359

2,229

49

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

27. Supplemental Cash Flow Information

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

(In millions of Korean won)

March 31, 2020

December 31, 2019

Due from financial institutions

19,860

18,537

Restricted cash from financial institutions

(3)

(3)

19,857

18,534

Significant non-cash transactions for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Changes in receivables and payables from

(288,084)

46,682

consolidated tax

Changes in receivables and payables relating to

stock grants

(49,963)

(19,475)

Recognition of dividends payable by surplus of

appropriation

861,092

759,736

Other payables due to treasury shares trust

agreement, etc.

-

4,133

Cash inflows and outflows from interests and dividends for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

Activity

2020

2019

Prepaid income tax expense

Operating

525

525

Interest received

Operating

2,804

1,018

Interest paid

Operating

30,947

31,065

Dividends received

Operating

978,337

930,340

Dividends paid

Financing

3,256

-

28. Contingent Liabilities and Commitments 28.1 Commitments

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

(In millions of Korean won)

March 31, 2020

December 31, 2019

Amount of

Amounts

Amount of

Amounts

commitment

borrowed

commitment

borrowed

KEB Hana Bank

50,000

-

50,000

-

50

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

28.2 Other Matters (including litigation)

  1. The Company has no pending lawsuit as the defendant.
  2. The ongoingCOVID-19 pandemic has had a negative impact on the global economy, and has increased the estimation uncertainty on 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 byCOVID-19 pandemic
  • uncertainties arising fromforward-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 byCOVID-19 pandemic.

The negative impact from the COVID-19 pandemic in Korea, however, is expected to be fairly mitigated to some extent by Korean government's financial and economic stabilization packages along with timely and effective disease control. Although the Company is thoroughly monitoring the impact of COVID-19 pandemic, including whether forward-looking information is to be remeasured, the impact on the Company's separate financial statements cannot be reliably determined as at March 31, 2020.

51

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

29. Related Party Transactions

Significant related party transactions for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

Subsidiaries

Interest income

2020

2019

Kookmin Bank

13

614

Fee and commission income

209

136

Net other operating income

731,926

667,226

General and administrative expenses

2,356

2,003

KB Securities Co., Ltd.

Net other operating income

80,000

50,000

Interest expense

35

-

General and administrative expenses

200

333

KB Insurance Co., Ltd.

General and administrative expenses

318

365

KB Kookmin Card Co., Ltd.

Net other operating income

100,004

200,008

General and administrative expenses

210

234

Net non-operating income

2

2

KB Asset Management Co., Ltd.

Net other operating income

30,000

-

KB Capital Co., Ltd

Net gains on financial assets at fair

value through profit or loss

2,959

4,797

General and administrative expenses

42

15

KB Life Insurance Co., Ltd.

General and administrative expenses

92

24

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

691

365

KB Data Systems Co., Ltd.

General and administrative expenses

216

476

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

(In millions of Korean won)

Subsidiaries

Cash and due from financial institutions

Kookmin Bank

Other assets

Other liabilities

Property and equipment

Intangible assets

KB Securities Co., Ltd.

Other assets

Other liabilities

KB Insurance Co., Ltd.

Other assets

Other liabilities

KB Kookmin Card Co., Ltd.

Other assets

Other liabilities

KB Asset Management Co., Ltd.

Other assets

KB Capital Co., Ltd.

Financial assets at fair value through

profit or loss

Other assets

Other liabilities

KB Life Insurance Co., Ltd.

Other assets

Other liabilities

March 31,

December 31,

2020

2019

19,860

18,537

517,460

418,114

4,291

35

103

152

77

-

48,871

52,068

31,086

-

9,932

14,492

47,747

47,580

81,263

60,705

391

1,394

16,048

15,590

291,047

291,501

24,523

18,995

42

-

2,182

3,956

11,691

8,636

52

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

29. Related Party Transactions (cont'd)

(In millions of Korean won)

March 31,

December 31,

Subsidiaries

Other assets

2020

2019

KB Real Estate Trust Co., Ltd.

19,715

13,979

KB Savings Bank Co., Ltd.

Other assets

3,537

3,727

KB Investment Co., Ltd.

Loans at amortized cost

150,000

120,000

Other assets

2,579

2,904

Other liabilities

944

59

KB Data Systems Co., Ltd.

Property and equipment

22

438

Intangible assets

415

1,145

Other assets

2,148

2,721

Other liabilities

37

333

KB Credit Information Co., Ltd.

Other assets

511

849

Other liabilities

222

241

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 and associates, respectively.

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.

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

(In millions of Korean won)

March 31,

December 31,

Subsidiary

Kookmin Bank

Right-of-use assets

2020

2019

103

152

Lease liabilities

-

-

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

(In millions of Korean won)

March 31,

December 31,

Subsidiary

KB Kookmin Card Co.,

Unused commitments

2020

2019

2,621

2,255

Ltd.

of credit card

Share transactions with related parties for the three-month periods ended March 31, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Subsidiary

KB Capital Co., Ltd.

Paid-in capital increase

50,000

50,000

of ordinary shares

53

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

March 31, 2020 and 2019, and December 31, 2019

29. Related Party Transactions (cont'd)

Loan transactions with related parties for the three-month periods ended March 31, 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

Compensation to key management for the three-month periods ended March 31, 2020 and 2019, consists of:

(In millions of Korean won)

2020

Short-term

employee

Post-employmentShare-based

Registered director

benefits

benefits

payments

Total

378

28

(449)

(43)

(executive)

Registered director

(non-executive)

144

-

-

144

Non-registered director

943

142

(1,077)

8

1,465

170

(1,526)

109

(In millions of Korean won)

2019

Short-term

employee

Post-employmentShare-based

Registered director

benefits

benefits

payments

Total

242

6

(23)

225

(executive)

Registered director

(non-executive)

137

-

-

137

Non-registered director

584

35

(193)

426

963

41

(216)

788

54

Disclaimer

KB Financial Group Inc. published this content on 15 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 May 2020 09:43:06 UTC


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Financials
Sales 2020 12 310 B 11,2 B 11,2 B
Net income 2020 3 445 B 3,12 B 3,12 B
Net Debt 2020 - - -
P/E ratio 2020 5,24x
Yield 2020 4,77%
Capitalization 17 611 B 15 972 M 15 956 M
Capi. / Sales 2020 1 431x
Capi. / Sales 2021 1 384x
Nbr of Employees 25 428
Free-Float 92,5%
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KB Financial Group Inc. Technical Analysis Chart | A105560 | KR7105560007 | MarketScreener
Technical analysis trends KB FINANCIAL GROUP INC.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 25
Average target price 55 336,00 KRW
Last Close Price 45 200,00 KRW
Spread / Highest target 41,6%
Spread / Average Target 22,4%
Spread / Lowest Target -4,87%
EPS Revisions
Managers and Directors
NameTitle
Jong-Kyoo Yoon Chairman & Chief Executive Officer
Ki-Hwan Kim Chief Financial Officer & Senior Executive VP
Woo-Yeol Lee Chief Information Technology Officer
Woo Yeul Lee Chief Information Technology Officer
B Solomon Stuart Independent Director
Sector and Competitors