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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 3rd Quarter 2020

11/17/2020 | 05:03am EST

KB Financial Group Inc.

lidated Interim Financial Statements

Separate Interim Financial Statements

September 30, 2020

(Unaudited)

(With Independent Auditors' Review Report Thereon)

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 September 30, 2020, the separate interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2020, changes in equity and cash flows for the nine-month period ended September 30, 2020 and notes, comprising a summary of significant accounting policies and other explanatory information.

Management's responsibility

Management is responsible for the preparation and fair presentation of these condensed separate interim financial statements in accordance with Korean International Financial Reporting Standards ("K-IFRS") No.1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of the condensed separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' review responsibility

Our responsibility is to issue a report on these condensed separate interim financial statements based on our review.

We conducted our review in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed separate interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

Emphasis of matter

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

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

Other matters

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

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

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

Seoul, Korea

November 16, 2020

This report is effective as of November 16, 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

September 30, 2020 and December 31, 2019

(In millions of Korean won)

Notes

September 30, 2020

(Unaudited)

December 31, 2019

Assets

Cash and due from financial institutions

4,5,6,28

44,239

18,537

Financial assets at fair value through profit or loss

4,5,7

466,575

413,909

Loans at amortized cost

4,5,8

180,000

120,000

Investments in subsidiaries

9

26,522,170

24,162,116

Property and equipment

10

4,005

4,170

Intangible assets

11

12,021

11,092

Deferred income tax assets

12

2,609

7,526

Other assets

4,5,13

795,750

609,286

Total assets

28,027,369

25,346,636

Liabilities

Debts

4,5,14

340,000

-

Debentures

4,5,15

6,316,734

5,543,446

Net defined benefit liabilities

16

2,040

437

Current income tax liabilities

648,398

417,414

Other liabilities

4,5,17

166,675

203,440

Total liabilities

7,473,847

6,164,737

Equity

Share capital

18

2,090,558

2,090,558

Hybrid securities

18

1,197,017

399,085

Capital surplus

18

14,754,747

14,742,814

Accumulated other comprehensive income

18

(7,693)

(7,664)

Retained earnings

18

3,655,081

3,093,294

Treasury shares

18

(1,136,188)

(1,136,188)

Total equity

20,553,522

19,181,899

Total liabilities and equity

28,027,369

25,346,636

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

3

KB Financial Group Inc.

Separate Interim Statements of Comprehensive Income

Three-Month and Nine-Month Periods Ended September 30, 2020 and 2019

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

2020

2019

Notes

(Unaudited)

(Unaudited)

Three months

Nine months

Three months

Nine months

Interest income

2,606

6,684

1,151

6,472

Interest expense

(34,275)

(98,724)

(30,483)

(95,229)

Net interest expense

20

(31,669)

(92,040)

(29,332)

(88,757)

Fee and commission income

168

546

214

564

Fee and commission expense

(2,916)

(7,113)

(1,418)

(4,636)

Net fee and commission expense

21

(2,748)

(6,567)

(1,204)

(4,072)

Net gains on financial assets at fair value

through profit or loss

22

4,028

10,360

3,527

13,292

Net other operating income

23

598,598

1,573,528

-

926,934

General and administrative expenses

24

(17,866)

(49,332)

(16,412)

(47,354)

Operating profit (loss) before

provision for credit losses

550,343

1,435,949

(43,421)

800,043

Provision for credit losses

-

-

-

-

Operating profit (loss)

550,343

1,435,949

(43,421)

800,043

Net non-operating income (expenses)

25

264

426

(403)

(451)

Profit (loss) before income tax

550,607

1,436,375

(43,824)

799,592

Income tax expense (benefit)

26

5,344

(403)

619

(847)

Profit (loss) for the period

555,951

1,435,972

(43,205)

798,745

Items that will not be reclassified to profit or loss:

Remeasurements of net defined benefit liabilities

9

(29)

(20)

(61)

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

9

(29)

(20)

(61)

Total comprehensive income (loss) for the period

555,960

1,435,943

(43,225)

798,684

Earnings (loss) per share

27

Basic earnings (loss) per share

1,410

3,652

(119)

2,031

Diluted earnings (loss) per share

1,393

3,616

(119)

2,017

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

Nine-Month Periods Ended September 30, 2020 and 2019

(In millions of Korean won)

Accumulated

Other

Share

Hybrid

Capital

Comprehensive

Retained

Treasury

Total

Capital

Securities

Surplus

Income

Earnings

Shares

Equity

Balance at January 1, 2019

2,090,558

-

14,742,814

(7,144)

3,213,556

(968,549)

19,071,235

Comprehensive income

Profit for the period

-

-

-

-

798,745

-

798,745

Remeasurements of net defined benefit liabilities

-

-

-

(61)

-

-

(61)

Total comprehensive income

-

-

-

(61)

798,745

-

798,684

Transactions with shareholders

Annual dividends

-

-

-

-

(759,736)

-

(759,736)

Acquisition of treasury shares

-

-

-

-

-

(267,639)

(267,639)

Issuance of hybrid securities

-

399,085

-

-

-

-

399,085

Dividends on hybrid securities

-

-

-

-

(3,257)

-

(3,257)

Total transactions with shareholders

-

399,085

-

-

(762,993)

(267,639)

(631,547)

Balance at September 30, 2019 (Unaudited)

2,090,558

399,085

14,742,814

(7,205)

3,249,308

(1,236,188)

19,238,372

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

-

-

-

-

1,435,972

-

1,435,972

Remeasurements of net defined benefit liabilities

-

-

-

(29)

-

-

(29)

Total comprehensive income

-

-

-

(29)

1,435,972

-

1,435,943

Transactions with shareholders

Annual dividends

-

-

-

-

(861,092)

-

(861,092)

Consideration for exchangeable rights

-

-

11,933

-

-

-

11,933

Issuance of hybrid securities

-

797,932

-

-

-

-

797,932

Dividends on hybrid securities

-

-

-

-

(13,093)

-

(13,093)

Total transactions with shareholders

-

797,932

11,933

-

(874,185)

-

(64,320)

Balance at September 30, 2020 (Unaudited)

2,090,558

1,197,017

14,754,747

(7,693)

3,655,081

(1,136,188)

20,553,522

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

Nine-Month Periods Ended September 30, 2020 and 2019

(In millions of Korean won)

2020

2019

Notes

(Unaudited)

(Unaudited)

Cash flows from operating activities

Profit for the period

1,435,972

798,745

Adjustment for non-cash items

Depreciation and amortization

2,921

3,737

Share-based payments

1,243

2,052

Net interest expense

2,358

2,890

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

value through profit or loss

242

(3,099)

Gain on foreign currency translation

(117)

-

Net other expenses

(3,804)

1,691

2,843

7,271

Changes in operating assets and liabilities

Deferred income tax assets

4,929

824

Other assets

(678)

(716)

Other liabilities

9,006

(3,336)

13,257

(3,228)

Net cash inflow from operating activities

1,452,072

802,788

Cash flows from investing activities

Acquisition of financial assets at fair value through

profit or loss

(4,212,551)

(2,020,000)

Disposal of financial assets at fair value through profit of loss

4,159,644

1,997,807

Acquisition of investments in subsidiaries

(2,347,543)

(100,000)

Increase in loans at amortized cost

(60,000)

(70,000)

Acquisition of property and equipment

(709)

(4,097)

Disposal of property and equipment

-

14

Acquisition of intangible assets

(903)

(842)

Disposal of intangible assets

-

41

Net decrease(increase) in guarantee deposits paid

(12,678)

(1,515)

Other investing activities

(2,172)

(175)

Net cash outflow from investing activities

(2,476,912)

(198,767)

Cash flows from financing activities

Increase in debts

340,000

418,705

Decrease in debts

-

(717,026)

Increase in debentures

1,477,211

818,087

Decrease in debentures

(690,000)

(818,252)

Dividends paid to shareholders

(861,092)

(762,993)

Principal elements of lease payments

(416)

(412)

Acquisition of treasury shares

-

(274,317)

Issuance of hybrid securities

797,932

399,085

Dividends paid on hybrid securities

(13,093)

-

Net cash inflow (outflow) from financing activities

1,050,542

(937,123)

Net increase (decrease) in cash and cash equivalents

25,702

(333,102)

Cash and cash equivalents at the beginning of the period

28

18,534

344,299

Cash and cash equivalents at the end of the period

28

44,236

11,197

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

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

1. The Company

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

  • Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd. in order to provide management services and financing to associated companies. The headquarters are located at 26, Gukjegeumyung-ro-8-gil,Yeongdeungpo-gu, Seoul. The Company's share capital as of September 30, 2020, is 2,090,558 million. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Company established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Company acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Company included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015, and KB Insurance Co., Ltd. became one of the subsidiaries through a tender after in May 2017. Also, the Company included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary in October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed its name to KB Securities Co., Ltd. in January 2017. And, Prudential Life Insurance Company of Korea Ltd. was classified as a subsidiary in August 2020.

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

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

2. Basis of Preparation

2.1 Application of Korean IFRS

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

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

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

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

The Company's separate interim financial statements for the nine-month period ended September 30, 2020, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting and contain less information than is required in annual separate financial statements. Selected explanatory notes include descriptions of transactions or events that are significant in understanding change in financial position and financial performance of the Company since the end of the previous annual reporting period. These separate interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as of September 30, 2020.

8

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

2.1.1 New and amended standards and interpretations adopted by the Company

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

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

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

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

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

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

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

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

2.1.2 New standards and interpretations not yet adopted by the Company

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

  • Amendments to Korean IFRS 1116 Lease - Practical expedient for COVID-19-Related Rent Exemption, Concessions, Suspension

As a practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying this Standard if the change were not a lease modification. These amendments should be applied for annual periods beginning on or after June 1, 2020, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the financial statements.

9

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

2.2 Measurement Basis

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

2.3 Functional and Presentation Currency

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

2.4 Critical Accounting Estimates

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

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

Significant accounting estimates and assumptions applied in the preparation of these separate interim financial statements are the same as those applied to the separate financial statements for the year ended December 31, 2019, except for the estimates used to determine income tax expense.

3. Significant Accounting Policies

The significant accounting policies and calculation methods applied in the preparation of these separate financial statements have been consistently applied to all periods presented, except for the impact of changes due to adopting new and amended standards and interpretations.

3.1 Income Tax Expenses for the Interim Period

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

10

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4. Financial Risk Management 4.1 Summary

4.1.1 Overview of financial risk management policy

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

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

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

4.1.2 Risk management organization

Risk Management Committee

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

Risk Management Council

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

Risk Management Division

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

4.2 Credit Risk

4.2.1 Overview of credit risk

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

4.2.2 Credit risk management

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

11

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.2.3 Maximum exposure to credit risk

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

September 30,

December 31,

(In millions of Korean won)

2020

2019

Due from financial institutions

44,239

18,537

Loans at amortized cost

180,000

120,000

Loans at fair value through profit or loss

75,316

122,408

Other financial assets

36,621

19,814

336,176

280,759

4.2.4 Credit risk of loans

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

The Company assesses expected credit losses and recognizes loss allowances of financial assets at amortized cost and financial asset at fair value through other comprehensive income. Financial assets at fair value through profit or loss are excluded. Expected credit losses are a probability-weighted estimate of possible credit losses occurred in a certain range by reflecting reasonable and supportable information that is reasonably available at the reporting date without undue cost or effort, including information about past events, current conditions and forecasts of future economic conditions. The Company measures the expected credit losses on loans classified as financial assets measured at amortized cost, by deducting allowances for credit losses. The expected credit losses of loans classified as financial assets at fair value through other comprehensive income are presented in other comprehensive income on the financial statements.

4.2.4.1 Credit risk exposure

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

(In millions of

September 30, 2020

Korean won)

The financial

The financial instruments

instruments

applying lifetime expected credit

Financial

applying

losses

instruments

12-month

not applying

expected

expected

Financial assets

credit losses

Non-impaired

Impaired

credit losses

Total

at amortized cost

Corporate

180,000

-

-

-

180,000

Grade 1

Grade 2

-

-

-

-

-

Grade 3

-

-

-

-

-

Grade 4

-

-

-

-

-

Grade 5

-

-

-

-

-

180,000

-

-

-

180,000

12

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.2.4.1 Credit risk exposure (cont'd)

(In millions of

December 31, 2019

Korean won)

The financial

The financial instruments

instruments

applying lifetime expected credit

Financial

applying

losses

instruments

12-month

not applying

expected

expected

Financial assets

credit losses

Non-impaired

Impaired

credit losses

Total

at amortized cost

Corporate

120,000

-

-

-

120,000

Grade 1

Grade 2

-

-

-

-

-

Grade 3

-

-

-

-

-

Grade 4

-

-

-

-

-

Grade 5

-

-

-

-

-

120,000

-

-

-

120,000

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

Range of PD (%)

Grade 1

(Probability of Default)

0.0

~ 1.0

Grade 2

1.0

~ 5.0

Grade 3

5.0 ~ 15.0

Grade 4

15.0

~ 30.0

Grade 5

30.0 ~

4.2.5 Credit risk of due from financial institutions

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

(In millions of

September 30, 2020

Korean won)

The financial instruments

Financial

The financial

instruments

applying lifetime expected

instruments applying

not applying

credit losses

12-month expected

expected

credit losses

Non-impaired

Impaired

credit losses

Total

Due from financial institutions at amortized cost

Grade 1

44,239

-

-

-

44,239

Grade 2

-

-

-

-

-

Grade 3

-

-

-

-

-

Grade 4

-

-

-

-

-

Grade 5

-

-

-

-

-

44,239

-

-

-

44,239

13

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

(In millions of

December 31, 2019

Korean won)

The financial instruments

Financial

The financial

instruments

applying lifetime expected credit

instruments applying

not applying

losses

12-month expected

expected credit

credit losses

Non-impaired

Impaired

losses

Total

Due from financial institutions at amortized cost

Grade 1

18,537

-

-

-

18,537

Grade 2

-

-

-

-

-

Grade 3

-

-

-

-

-

Grade 4

-

-

-

-

-

Grade 5

-

-

-

-

-

18,537

-

-

-

18,537

4.2.6 Credit risk concentration analysis

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

(In millions of

September 30, 2020

Korean won)

Corporate loans1

%

Allowances

Carrying amount

Korea

255,316

100.00

-

255,316

(In millions of

December 31, 2019

Korean won)

Corporate loans1

%

Allowances

Carrying amount

Korea

242,408

100.00

-

242,408

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

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

(In millions of

September 30, 2020

Korean won)

Corporate loans1

%

Allowances

Carrying amount

Financial

255,316

-

255,316

institutions

100.00

(In millions of

December 31, 2019

Korean won)

Corporate loans1

%

Allowances

Carrying amount

Financial

242,408

-

242,408

institutions

100.00

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

14

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.2.6 Credit risk concentration analysis (cont'd)

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

(In millions of

September 30, 2020

Korean won)

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Financial institutions

44,239

100.00

-

44,239

(In millions of

December 31, 2019

Korean won)

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Financial institutions

18,537

100.00

-

18,537

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

(In millions of

September 30, 2020

Korean won)

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Korea

44,239

100.00

-

44,239

(In millions of

December 31, 2019

Korean won)

Corporate loans

%

Allowances

Carrying amount

Due from financial institutions at amortized cost

Korea

18,537

100.00

-

18,537

4.3 Liquidity Risk

4.3.1 Overview of liquidity risk

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

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

15

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.3.2. Liquidity risk management

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

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

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

(In millions of Korean won)

September 30, 2020

On

Up to

1-3

3-12

1-5

Over 5

demand

1 month

months

months

years

years

Total

Financial assets

44,238

-

-

-

-

-

44,238

Cash and due from financial institutions1

Financial assets at fair value through profit or loss2

75,316

-

-

-

-

391,259

466,575

Loans at amortized cost

-

-

-

183,902

-

-

183,902

Other financial assets

470

5,388

1,034

5,526

23,430

-

35,848

120,024

5,388

1,034

189,428

23,430

391,259

730,563

Financial liabilities

-

-

340,000

-

-

-

340,000

Debts

Debentures

-

6,182

275,913

1,006,464

3,795,294

1,804,474

6,888,327

Lease liabilities

-

49

88

221

202

-

560

Other financial liabilities

-

5,629

12,555

-

-

-

18,184

-

11,860

628,556

1,006,685

3,795,496

1,804,474

7,247,071

16

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

(In millions of Korean won)

December 31, 2019

On

Up to

1-3

3-12

1-5

Over 5

demand

1 month

months

months

years

years

Total

Financial assets

18,619

-

-

-

-

-

18,619

Cash and due from financial institutions1

Financial assets at fair value through profit or loss2

122,408

-

-

-

-

291,501

413,909

Loans at amortized cost

-

-

71,523

51,098

-

-

122,621

Other financial assets

-

925

-

15,660

-

-

16,585

141,027

925

71,523

66,758

-

291,501

571,734

Financial liabilities

-

105,903

224,578

723,474

3,624,305

1,134,756

5,813,016

Debentures

Lease liabilities

-

44

85

249

215

-

593

Other financial liabilities

-

1,819

-

-

-

-

1,819

-

107,766

224,663

723,723

3,624,520

1,134,756

5,815,428

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

17

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.4 Market Risk

4.4.1 Concept

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

4.4.2 Interest rate risk

Definition of interest rate risk

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

Observation method and management indicator on interest rate risk

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

5. Financial Assets and Financial Liabilities

5.1 Classification and Fair value of Financial Instruments

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of September 30,

2020 and December 31, 2019, are as follows:

(In millions of Korean won)

September 30, 2020

Financial assets

Carrying amount

Fair value

Financial assets at fair value through profit or loss

391,259

391,259

Hybrid securities

Loans

75,316

75,316

Financial assets at amortized cost

Due from financial institutions

44,239

44,239

Loans

180,000

180,000

Other financial assets

36,621

36,621

727,435

727,435

Financial liabilities

Financial liabilities at amortized cost

340,000

340,000

Debts

Debentures

6,316,734

6,496,264

Other financial liabilities

31,942

31,942

6,688,676

6,868,206

18

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of September 30,

2020 and December 31, 2019, are as follows: (cont'd)

(In millions of Korean won)

December 31, 2019

Financial assets

Carrying amount

Fair value

Financial assets at fair value through profit or loss

291,501

291,501

Hybrid securities

Loans

122,408

122,408

Financial assets at amortized cost

Due from financial institutions

18,537

18,537

Loans

120,000

120,000

Other financial assets

19,814

19,814

572,260

572,260

Financial liabilities

Financial liabilities at amortized cost

5,543,446

5,631,217

Debentures

Other financial liabilities

14,940

14,940

5,558,386

5,646,157

Fair value is the amount for which an asset could be exchanged, or a liability could be settled, between knowledgeable, willing parties in an arm's length transaction. For each class of financial assets and financial liabilities, the Company discloses the fair value of that class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is quoted price in an active market.

19

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of September 30,

2020 and December 31, 2019, are as follows: (cont'd)

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

Cash and due from

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

financial institutions

payment due from financial institutions are a reasonable approximation of fair

values. These financial instruments do not have a fixed maturity and are

receivable on demand. Fair value of ordinary due from financial institutions is

Investment securities

measured using DCF model (Discounted Cash Flow Model).

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

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

external professional valuation institution where quoted prices are not available.

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

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

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

Derivatives

Value Method.

For exchange traded derivatives, quoted price in an active market is used to

determine fair value and for OTC derivatives, fair value is determined using

valuation techniques. The Company uses internally developed valuation models

that are widely used by market participants to determine fair values of plain vanilla

OTC derivatives including options, interest rate swaps, and currency swaps,

based on observable market parameters. However, some complex financial

instruments are valued using appropriate models developed from generally

accepted market valuation models including the Finite Difference Method and the

Monte Carlo Simulation or valuation results from independent external

professional valuation institution.

Loans at amortized cost DCF model is used to determine the fair value of loans. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted

Debts

by the expected prepayment rate, at appropriate discount rate.

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

Debentures

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

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

Other financial assets

institution, which are calculated using market inputs.

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

and liabilities

instruments are temporary accounts used for other various transactions and their

maturities are relatively short or not defined.

5.1.2 Fair value hierarchy

The Company believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the statements of financial position are appropriate. However, the fair values of the financial instruments recognized in the statements of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.

20

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.1.2 Fair value hierarchy (cont'd)

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

Level 1

Level 2 Level 3

The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

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

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

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

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

(In millions of Korean won)

September 30, 2020

Fair value hierarchy

Total

Financial assets

Level 1

Level 2

Level 3

Financial assets at fair value through

profit or loss

Hybrid securities

-

-

391,259

391,259

Loans

-

75,316

-

75,316

-

75,316

391,259

466,575

(In millions of Korean won)

December 31, 2019

Fair value hierarchy

Total

Financial assets

Level 1

Level 2

Level 3

Financial assets at fair value through

profit or loss

Hybrid securities

-

-

291,501

291,501

Loans

-

122,408

-

122,408

-

122,408

291,501

413,909

21

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

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

(In millions of Korean won)

September 30, 2020

Valuation

Financial assets

Fair value

techniques

Inputs

Financial assets at fair value through

profit or loss

Interest,

Loans

75,316

DCF model

Discount rate, etc.

(In millions of Korean won)

December 31, 2019

Valuation

Financial assets

Fair value

techniques

Inputs

Financial assets at fair value through

profit or loss

Interest,

Loans

122,408

DCF model

Discount rate, etc.

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

The fair value hierarchy of financial assets and liabilities whose fair values are disclosed as of September 30,

2020 and December 31, 2019, are as follows:

(In millions of Korean won)

September 30, 2020

Fair value hierarchy

Total

Financial assets

Level 1

Level 2

Level 3

Cash and due from financial

-

44,239

-

44,239

institutions1

Loans at amortized cost2

-

-

180,000

180,000

Other financial assets3

-

-

36,621

36,621

-

44,239

216,621

260,860

Financial liabilities

Debts4

-

340,000

-

340,000

Debentures

-

6,496,264

-

6,496,264

Other financial liabilities3

-

-

31,942

31,942

-

6,836,264

31,942

6,868,206

22

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

(In millions of Korean won)

Financial assets

Cash and due from financial institutions1

Loans at amortized cost2 Other financial assets3

Financial liabilities

Debentures

Other financial liabilities3

December 31, 2019

Fair value hierarchy

Total

Level 1

Level 2

Level 3

-

18,537

-

18,537

-

-

120,000

120,000

-

-

19,814

19,814

-

18,537

139,814

158,351

-

5,631,217

-

5,631,217

-

-

14,940

14,940

-

5,631,217

14,940

5,646,157

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

approximations of fair values.

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

Valuation techniques and inputs used in the fair value measurement

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

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

(In millions of Korean won)

Fair value

Valuation

September 30,

December 31,

Financial liabilities

2020

2019

Techniques

Inputs

6,496,264

5,631,217

DCF model

Discount rate

Debentures

5.2 Level 3 of the Fair Value Hierarchy Disclosure

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

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

23

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

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

Financial assets at fair

Financial assets at fair

value

value

(In millions of Korean won)

through profit or loss

through profit or loss

2020

2019

Beginning balance

291,501

289,179

Total gains or losses

(242)

3,099

- Profit or loss for the period

- Other comprehensive income

-

-

Purchases

100,000

-

Sales

-

-

Issues

-

-

Settlements

-

-

Transfers into Level 3

-

-

Transfers out of Level 3

-

-

Ending balance

391,259

292,278

In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the period, and profit or loss from financial instruments held at the end of the reporting period in the statement of comprehensive income for the nine-month periods ended September 30, 2020 and 2019, are as follows:

(In millions of

2020

2019

Korean won)

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

(242)

-

-

3,099

-

-

period

Total gains or

losses for the

period included in

profit or loss for

financial

instruments held at

the end of the

(242)

-

-

3,099

-

-

reporting period

24

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.2.3 Sensitivity analysis of changes in unobservable inputs

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

(In millions of Korean won)

September 30, 2020

Range of

Valuation

unobservable

Relationship of unobservable inputs

Financial assets

Fair value

technique

Inputs

Unobservable inputs

inputs (%)

to fair value

Financial assets at fair value through profit or loss

Matrix YTM,

Discount rate

1.95 ~ 4.50

The lower the discount rate,

Hybrid securities

391,259

Hull and White

Model,

Additional spread by grade,

the higher the fair value

Monte Carlo

Risk spread of company,

Volatility of interest rate

0.48

The higher the volatility,

Simulation

Valid credit rating,

the higher the fair value fluctuation

Disclosed information of securities,

Interest rate estimation variability

(In millions of Korean won)

December 31, 2019

Range of

Valuation

unobservable

Relationship of unobservable inputs

Financial assets

Fair value

technique

Inputs

Unobservable inputs

inputs (%)

to fair value

Financial assets at fair value through profit or loss

Matrix YTM,

Discount rate

2.05 ~ 4.45

The lower the discount rate,

Hybrid securities

291,501

Hull and White

Model,

Additional spread by grade,

the higher the fair value

Monte Carlo

Risk spread of company,

Volatility of interest rate

0.50

The higher the volatility,

Simulation

Valid credit rating,

the higher the fair value fluctuation

Disclosed information of securities,

Interest rate estimation variability

25

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.2.3.2 Sensitivity analysis of changes in unobservable inputs

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

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

(In millions of Korean won)

September 30, 2020

Recognition in profit or loss

Other comprehensive income

Favorable

Unfavorable

Favorable

Unfavorable

Financial assets

changes

changes

changes

changes

Financial assets at fair value

through profit or loss

Hybrid securities1

3,618

(3,499)

-

-

1 For equity securities, the changes in fair value are calculated by increasing or decreasing correlations between discount rate (1.95 ~ 4.50%) which are principal unobservable input parameters. And, the changes in fair value are calculated by increasing or decreasing the correlation coefficient between short-term and long-term interests or volatility of the interest rates, which are unobservable inputs, by 1%.

(In millions of Korean won)

December 31, 2019

Recognition in profit or loss

Other comprehensive income

Favorable

Unfavorable

Favorable

Unfavorable

Financial assets

changes

changes

changes

changes

Financial assets at fair value

through profit or loss

Hybrid securities1

3,215

(3,195)

-

-

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

26

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

6. Due from Financial Institution

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

(In millions of Korean won)

Interest rate (%)

Financial

(As of

September 30,

September 30,

December 31,

Due from financial

Institution

2020)

2020

2019

Due from

Kookmin Bank

0.00 ~ 0.25

44,239

18,537

institution in

banks

Korean won

Details of a maturity analysis of due from financial institution, excluding restricted cash, as of September 30,

2020 and December 31, 2019, are as follows:

(In millions of Korean

September 30, 2020

won)

Up to

3~6

6~12

Over

Due from financial

3 months

months

months

1~3 years

3 years

Total

institution in Korean

44,236

-

-

-

-

44,236

won

(In millions of Korean

December 31, 2019

won)

Up to

3~6

6~12

Over

Due from financial

3 months

months

months

1~3 years

3 years

Total

institution in Korean

18,534

-

-

-

-

18,534

won

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

(In millions of Korean

Financial

September 30,

December 31,

won)

Institution

2020

2019

Due from financial

3

3

institution in Korean

Kookmin Bank

won

Reason for restriction

Pledged as collateral for the overdraft establishment

27

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

7. Financial Assets at Fair Value through Profit or Loss

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

(In millions of Korean won)

September 30,

December 31,

2020

2019

Financial assets at fair value through profit or loss

391,259

291,501

Hybrid securities

Loans

75,316

122,408

466,575

413,909

8. Loans at amortized cost

Details of loans at amortized cost as of September 30, 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

9. Investments in Subsidiaries

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

September 30,

December 31,

2020

2019

180,000

120,000

-

-

180,000

120,000

Name of subsidiary

Industry

Location

Kookmin Bank

Banking and domestic, foreign exchange

Korea

transaction

KB Securities Co., Ltd.

Financial investment

Korea

KB Insurance Co., Ltd.

Insurance

Korea

KB Kookmin Card Co., Ltd.

Credit card

Korea

Prudential Life Insurance Company of

Life insurance

Korea

Korea Ltd.

KB Asset Management Co., Ltd.

Investment advisory and collective

Korea

investment

KB Capital Co., Ltd.

Financial leasing

Korea

KB Life Insurance Co., Ltd.

Life insurance

Korea

KB Real Estate Trust Co., Ltd.

Real estate trust management

Korea

KB Savings Bank Co., Ltd.

Savings banking

Korea

KB Investment Co., Ltd.

Capital investment

Korea

KB Data System Co., Ltd.

System software, development and supply

Korea

KB Credit Information Co., Ltd.

Collection of receivables and credit

Korea

investigation

28

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

9. Investments in Subsidiaries (cont'd)

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

(In millions of Korean won, except

Number of

for shares and ownership %)

Issued

Ownership

Shares

(%)

Carrying amount

September 30,

December 31,

Name of subsidiary

As of September 30, 2020

2020

2019

Kookmin Bank

404,379,116

100.00

14,821,721

14,821,721

KB Securities Co., Ltd.

298,620,424

100.00

3,342,391

3,342,391

KB Insurance Co., Ltd.

66,500,000

100.00

2,375,430

2,375,430

KB Kookmin Card Co., Ltd.

92,000,000

100.00

1,953,175

1,953,175

Prudential Life Insurance Company

15,000,000

100.00

2,310,054

-

of Korea Ltd.1

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

26,522,170

24,162,116

1 Carrying amount of investments in subsidiaries increased by 50 billion and 2.310 trillion due to the capital increase of KB Capital Co,. Ltd. and acquisition of Prudential Life Insurance Company of Korea Ltd., respectively for the nine-month period ended September 30, 2020.

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

(In millions of Korean won)

2020

Accumulated impairment losses

Beginning

Impairment

Others

Ending

(51,742)

-

-

(51,742)

on investments in subsidiaries

(In millions of Korean won)

2019

Accumulated impairment losses

Beginning

Impairment

Others

Ending

(51,742)

-

-

(51,742)

on investments in subsidiaries

29

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

10. Property and Equipment

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

(In millions of Korean won)

September 30, 2020

Accumulated

Acquisition

Accumulated

impairment

Carrying

cost

depreciation

losses

amount

Leasehold improvements

4,119

(3,026)

-

1,093

Equipment and others

5,527

(3,820)

-

1,707

Right-of-use property and

equipment-Buildings

1,656

(777)

-

879

Right-of-use property and

equipment -Vehicles

1,084

(762)

-

322

Right-of-use property and

equipment -Others

36

(32)

-

4

12,422

(8,417)

-

4,005

(In millions of Korean won)

December 31, 2019

Accumulated

Acquisition

Accumulated

impairment

Carrying

cost

depreciation

losses

amount

Leasehold improvements

4,119

(2,309)

-

1,810

Equipment and others

4,818

(2,946)

-

1,872

Right-of-use property and

equipment-Buildings

683

(490)

-

193

Right-of-use property and

equipment -Vehicles

904

(624)

-

280

Right-of-use property and

equipment -Others

36

(21)

-

15

10,560

(6,390)

-

4,170

30

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

11. Intangible Assets

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

(In millions of Korean won)

September 30, 2020

Accumulated

Accumulated

impairment

Carrying

Acquisition cost

amortization

losses

amount

Software

5,197

(3,547)

-

1,650

Membership rights

9,765

-

(963)

8,802

Other intangible assets

6,005

(4,436)

-

1,569

20,967

(7,983)

(963)

12,021

(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 September 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

September 30, 2020

Assets

Liabilities

Net amounts

Share-based payments

2,800

-

2,800

Membership rights

265

-

265

Defined benefit obligation

2,960

-

2,960

Plan assets

-

(2,960)

(2,960)

Short-term employee benefits

985

-

985

Financial assets at fair value through profit or loss

2,404

-

2,404

Others

695

(4,540)

(3,845)

10,109

(7,500)

2,609

Offsetting of deferred tax assets and liabilities

(7,500)

7,500

-

2,609

-

2,609

31

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

(In millions of Korean won)

December 31, 2019

Assets

Liabilities

Net amounts

Share-based payments

3,260

-

3,260

Membership rights

491

-

491

Defined benefit obligation

2,888

-

2,888

Plan assets

-

(2,888)

(2,888)

Short-term employee benefits

1,193

-

1,193

Financial assets at fair value through profit or loss

2,337

-

2,337

Others

449

(204)

245

10,618

(3,092)

7,526

Offsetting of deferred tax assets and liabilities

(3,092)

3,092

-

7,526

-

7,526

13. Other Assets

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

September 30,

December 31,

(In millions of Korean won)

2020

2019

Other financial assets

4,999

-

Receivables

Accrued income

3,450

3,654

Guarantee deposits

28,172

16,160

36,621

19,814

Other non-financial assets

Receivables

755,651

588,765

Prepaid expenses

1,151

556

Advanced payments

2,327

151

759,129

589,472

795,750

609,286

32

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

14. Debts

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

(In millions of Korean won)

September 30, 2020

December 31, 2019

Borrowings

340,000

-

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

(In millions of Korean won)

Annual interest rates

(%)

September 30,

December 31,

Maturity

as of September 30,

Lender

Issued date

date

2020

2020

2019

Borrowings in

Other

MERITZ Securities

June 29,

Nov. 03,

100,000

-

Korean won

borrowings

Co., Ltd.

2020

2020

1.06

Borrowings in

Other

MERITZ Securities

July 29,

Nov. 03,

Korean won

borrowings

Co., Ltd.

2020

2020

0.77

240,000

-

340,000

-

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

(In millions of

September 30, 2020

Korean won)

Up to

3~6

6~12

1~3

Over

Borrowings in

3 months

months

months

years

3 years

Total

340,000

-

-

-

-

340,000

Korean won

33

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

15. Debentures

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

(In millions of Korean won)

Annual interest rates (%)

September 30,

December 31,

Issued date

Expiration date

as of September 30, 2020

2020

2019

Unguaranteed debentures No. 3-3

Aug. 13, 2013

Aug. 13, 2020

3.65

-

70,000

Unguaranteed debentures No. 5-2

Mar. 19, 2014

Mar. 19, 2021

3.50

50,000

50,000

Unguaranteed debentures No. 6

Feb. 26, 2015

Feb. 26, 2022

2.38

30,000

30,000

Unguaranteed debentures No. 8

June 23, 2015

June 23, 2020

2.34

-

100,000

Unguaranteed debentures No. 9

June 23, 2015

June 23, 2022

2.52

150,000

150,000

Unguaranteed debentures No. 10

Sept. 17, 2015

Sept. 17, 2020

2.16

-

20,000

Unguaranteed debentures No. 11

Sept. 23, 2015

Sept. 23, 2020

2.06

-

30,000

Unguaranteed debentures No. 12-2

Nov. 27, 2015

Nov. 27, 2020

2.26

110,000

110,000

Unguaranteed debentures No. 12-3

Nov. 27, 2015

Nov. 27, 2022

2.38

50,000

50,000

Unguaranteed debentures No. 14-1

Dec. 09, 2015

Dec. 09, 2020

2.27

140,000

140,000

Unguaranteed debentures No. 14-2

Dec. 09, 2015

Dec. 09, 2022

2.38

30,000

30,000

Unguaranteed debentures No. 15-2

May 12, 2016

May 12, 2021

1.72

220,000

220,000

Unguaranteed debentures No. 15-3

May 12, 2016

May 12, 2026

2.01

200,000

200,000

Unguaranteed debentures No. 16-2

May 27, 2016

May 27, 2021

1.78

60,000

60,000

Unguaranteed debentures No. 16-3

May 27, 2016

May 27, 2023

1.91

150,000

150,000

Unguaranteed debentures No. 17

June 27, 2016

June 27, 2021

1.51

50,000

50,000

Unguaranteed debentures No. 18-2

July 25, 2016

July 25, 2021

1.45

110,000

110,000

Unguaranteed debentures No. 18-3

July 25, 2016

July 25, 2026

1.69

80,000

80,000

Unguaranteed debentures No. 19-2

Aug. 25, 2016

Aug. 25, 2021

1.46

100,000

100,000

Unguaranteed debentures No. 19-3

Aug. 25, 2016

Aug. 25, 2026

1.69

120,000

120,000

Unguaranteed debentures No. 20-2

Nov. 28, 2016

Nov. 28, 2021

2.28

50,000

50,000

Unguaranteed debentures No. 21

Jan. 25, 2017

Jan. 23, 2020

1.82

-

100,000

Unguaranteed debentures No. 22-1

Feb. 28, 2017

Feb. 28, 2020

1.89

-

120,000

Unguaranteed debentures No. 22-2

Feb. 28, 2017

Feb. 28, 2022

2.11

110,000

110,000

Unguaranteed debentures No. 23

Mar. 23, 2017

Mar. 23, 2020

1.95

-

80,000

Unguaranteed debentures No. 24

Apr. 06, 2017

Apr. 06, 2020

1.97

-

70,000

Unguaranteed debentures No. 25-2

May 24, 2017

May 24, 2020

1.97

-

100,000

Unguaranteed debentures No. 25-3

May 24, 2017

May 24, 2022

2.23

270,000

270,000

Unguaranteed debentures No. 25-4

May 24, 2017

May 24, 2027

2.62

80,000

80,000

Unguaranteed debentures No. 26-1

June 27, 2017

June 27, 2022

2.18

50,000

50,000

Unguaranteed debentures No. 26-2

June 27, 2017

June 27, 2024

2.34

200,000

200,000

Unguaranteed debentures No. 27

July 19, 2017

July 19, 2024

2.41

100,000

100,000

Unguaranteed debentures No. 28-1

Aug. 30, 2017

Aug. 30, 2022

2.30

60,000

60,000

Unguaranteed debentures No. 28-2

Aug. 30, 2017

Aug. 30, 2024

2.43

30,000

30,000

Unguaranteed debentures No. 28-3

Aug. 30, 2017

Aug. 30, 2027

2.60

60,000

60,000

Unguaranteed debentures No. 29-1

Sept. 19, 2017

Sept. 19, 2022

2.29

150,000

150,000

Unguaranteed debentures No. 29-2

Sept. 19, 2017

Sept. 19, 2024

2.44

110,000

110,000

Unguaranteed debentures No. 30

Jan. 25, 2018

Jan. 25, 2021

2.45

80,000

80,000

Unguaranteed debentures No. 31-1

Feb. 28, 2018

Feb. 26, 2021

2.57

150,000

150,000

Unguaranteed debentures No. 31-2

Feb. 28, 2018

Feb. 28, 2023

2.81

50,000

50,000

Unguaranteed debentures No. 31-3

Feb. 28, 2018

Feb. 28, 2028

3.02

60,000

60,000

Unguaranteed debentures No. 32-1

Apr. 06, 2018

Apr. 06, 2021

2.50

60,000

60,000

Unguaranteed debentures No. 32-2

Apr. 06, 2018

Apr. 06, 2023

2.71

80,000

80,000

Unguaranteed debentures No. 32-3

Apr. 06, 2018

Apr. 06, 2028

2.86

20,000

20,000

Unguaranteed debentures No. 33-1

June 12, 2018

June 12, 2023

2.81

100,000

100,000

Unguaranteed debentures No. 33-2

June 12, 2018

June 12, 2028

2.92

30,000

30,000

Unguaranteed debentures No. 34-1

July 25, 2018

July 23, 2021

2.41

40,000

40,000

Unguaranteed debentures No. 34-2

July 25, 2018

July 25, 2023

2.65

70,000

70,000

Unguaranteed debentures No. 34-3

July 25, 2018

July 25, 2025

2.71

20,000

20,000

Unguaranteed debentures No. 34-4

July 25, 2018

July 25, 2028

2.76

20,000

20,000

Unguaranteed debentures No. 35

Oct. 05, 2018

Oct. 05, 2023

2.52

120,000

120,000

Unguaranteed debentures No. 36-1

Feb. 22, 2019

Feb. 22, 2022

2.03

120,000

120,000

Unguaranteed debentures No. 36-2

Feb. 22, 2019

Feb. 22, 2024

2.11

230,000

230,000

Unguaranteed debentures No. 36-3

Feb. 22, 2019

Feb. 22, 2029

2.22

60,000

60,000

Unguaranteed debentures No. 37-1

Mar. 15, 2019

Mar. 15, 2024

2.06

140,000

140,000

Unguaranteed debentures No. 37-2

Mar. 15, 2019

Mar. 15, 2029

2.16

70,000

70,000

Unguaranteed debentures No. 38-1

June. 19, 2019

June 19, 2026

1.73

80,000

80,000

Unguaranteed debentures No. 38-2

June. 19, 2019

June 19, 2029

1.77

120,000

120,000

Unguaranteed debentures No. 39-1

Oct. 15, 2019

Oct. 15, 2024

1.60

80,000

80,000

Unguaranteed debentures No. 39-2

Oct. 15, 2019

Oct. 15, 2029

1.67

40,000

40,000

Unguaranteed debentures No. 40-1

Dec. 04, 2019

Dec. 04, 2024

1.76

70,000

70,000

Unguaranteed debentures No. 40-2

Dec. 04, 2019

Dec. 04, 2029

1.87

30,000

30,000

Unguaranteed debentures No. 41-1

Jan. 16, 2020

Jan. 16, 2023

1.64

110,000

-

Unguaranteed debentures No. 41-2

Jan. 16, 2020

Jan. 16, 2025

1.74

100,000

-

Unguaranteed debentures No. 41-3

Jan. 16, 2020

Jan. 16, 2030

1.88

40,000

-

34

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

15. Debentures (cont'd)

(In millions of Korean won)

Annual interest rates (%)

September 30,

December 31,

Subordinated debentures No. 1-1

Issued date

Expiration date

as of September 30, 2020

2020

2019

Feb. 18, 2020

Feb. 18, 2030

2.21

370,000

-

Subordinated debentures No. 1-2

Feb. 18, 2020

Feb. 18, 2035

2.26

30,000

-

Unguaranteed debentures No. 42-1

May 13, 2020

May 13, 2025

1.59

130,000

-

Unguaranteed debentures No. 42-2

May 13, 2020

May 13, 2030

1.78

70,000

-

Unguaranteed debentures No. 43-1

June 16, 2020

June 16, 2023

1.18

50,000

-

Unguaranteed debentures No. 43-2

June 16, 2020

June 16, 2025

1.44

110,000

-

Unguaranteed debentures No. 43-3

June 16, 2020

June 16, 2030

1.63

50,000

-

Exchangeable bonds No.11

June 30, 2020

June 30, 2025

-

240,000

-

Unguaranteed debentures No. 44-1

Aug 11, 2020

Aug 11, 2022

0.96

80,000

-

Unguaranteed debentures No. 44-2

Aug 11, 2020

Aug 11, 2023

1.07

50,000

-

Unguaranteed debentures No. 44-3

Aug 11, 2020

Aug 9, 2024

1.18

30,000

-

Unguaranteed debentures No. 44-4

Aug 11, 2020

Aug 11, 2027

1.39

20,000

-

6,340,000

5,550,000

Less: Bond Discounts

(7,499)

(6,554)

Less: adjustment on exchange right

(15,767)

-

6,316,734

5,543,446

1 Fair value of the liability component of exchangeable bonds is calculated by using market interest rates of bonds under the same conditions without the exchangeable rights. The residual amount, after deducting liability component from the issuance amount, represents the value of exchangeable rights and is recorded in equity. Shares to be exchanged are 5 million treasury shares of KB Financial Group Inc. with the exchange price of 48,000. Exercise period for exchangeable rights is from the 60th day from the Issued date to 10 days before the Expiration date.

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

(In millions of

September 30, 2020

Korean won)

Up to

3~6

6~12

1~3

Over

Debentures in

3 months

months

months

years

3 years

Total

250,000

280,000

640,000

1,810,000

3,360,000

6,340,000

Korean won

(In millions of

December 31, 2019

Korean won)

Up to

3~6

6~12

1~3

Over

Debentures in

3 months

months

months

years

3 years

Total

300,000

270,000

370,000

1,990,000

2,620,000

5,550,000

Korean won

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

(In millions of Korean won)

2020

Beginning

Issue

Repayment

Ending

Debentures in Korean won

5,550,000

1,480,000

(690,000)

6,340,000

(In millions of Korean won)

2019

Beginning

Issue

Repayment

Ending

Debentures in Korean won

5,380,000

820,000

(820,000)

5,380,000

35

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

16. Net Defined Benefit Liabilities

Defined benefit plan

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

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

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

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

(In millions of Korean won)

2020

Present value of

defined benefit

Fair value of plan

Net defined

obligation

assets

benefit liabilities

Beginning

20,312

(19,875)

437

Current service cost

1,559

-

1,559

Interest cost (income)

303

(297)

6

Remeasurements:

Return on plan assets (excluding amounts

41

41

included in interest income)

-

Payments from plans (benefit payments)

(1,601)

1,601

-

Payments from the Company

(3)

-

(3)

Transfer in

2,001

(2,001)

-

Transfer out

(1,706)

1,706

-

Ending

20,865

(18,825)

2,040

(In millions of Korean won)

2019

Present value of

defined benefit

Fair value of plan

Net defined

obligation

assets

benefit liabilities

Beginning

20,363

(20,180)

183

Current service cost

1,666

-

1,666

Interest cost (income)

350

(347)

3

Remeasurements:

Return on plan assets (excluding amounts

included in interest income)

-

84

84

Payments from plans (benefit payments)

(1,554)

1,554

-

Transfer in

1,255

(1,255)

-

Transfer out

(2,682)

2,682

-

Ending

19,398

(17,462)

1,936

36

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

16. Net Defined Benefit Liabilities (cont'd)

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

(In millions of Korean won)

September 30,

December 31,

2020

2019

Present value of defined benefit obligation

20,865

20,312

Fair value of plan assets

(18,825)

(19,875)

Net defined benefit liabilities

2,040

437

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

(In millions of Korean won)

2020

2019

Current service cost

1,559

1,666

Net interest expenses of net defined benefit liabilities

6

3

Post-employment benefits

1,565

1,669

17. Other Liabilities

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

(In millions of Korean won)

September 30,

December 31,

2020

2019

Other financial liabilities

5,257

1,134

Payables

Accrued expenses

26,134

13,218

Lease liability

551

588

31,942

14,940

Other non-financial liabilities

Payables

9,814

59,263

Accrued expenses

114,106

128,824

Withholding taxes

10,813

413

134,733

188,500

166,675

203,440

37

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

18. Equity

18.1 Share Capital

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

(In millions of Korean won)

September 30, 2020

December 31, 2019

Type of share

Ordinary share

Ordinary share

Number of authorized shares

1,000,000,000

1,000,000,000

Par value per share (In Korean won)

5,000

5,000

Number of issued shares

415,807,920

415,807,920

Share capital

2,090,558

2,090,558

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

(In number of shares)

2020

2019

Beginning

389,634,335

395,551,297

Decrease

-

(5,916,962)

Ending

389,634,335

389,634,335

18.2 Hybrid securities

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

Issuance

Interest rate

September 30,

December 31,

(In millions of Korean won)

date

Maturity

(%)

2020

2019

The 1-1st Hybrid securities

May 2, 2019

Perpetual

3.23

349,204

349,204

bond

The 1-2nd Hybrid securities

May 2, 2019

Perpetual

3.44

49,881

49,881

bond

The 2-1st Hybrid securities

May 8, 2020

Perpetual

3.30

324,099

-

bond

The 2-2nd Hybrid securities

May 8, 2020

Perpetual

3.43

74,812

-

bond

The 3-1st Hybrid securities

July 14, 2020

Perpetual

3.17

369,099

-

bond

The 3-2nd Hybrid securities

July 14, 2020

Perpetual

3.38

29,922

-

bond

1,197,017

399,085

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

38

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

18.3 Capital Surplus

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

(In millions of Korean won)

September 30, 2020

December 31, 2019

Share premium

13,190,275

13,190,275

Other capital surplus

1,465,893

1,465,893

Gain on sales of treasury share

86,646

86,646

Consideration for exchange rights

11,933

-

14,754,747

14,742,814

18.4 Accumulated Other Comprehensive Income

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

(In millions of Korean won)

September 30, 2020

December 31, 2019

Remeasurements of net defined benefit liabilities

(7,693)

(7,664)

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

(In millions of Korean won)

2020

Remeasurements of net

Beginning

Changes

Tax effect

Ending

(7,664)

(41)

12

(7,693)

defined benefit liabilities

(In millions of Korean won)

2019

Remeasurements of net

Beginning

Changes

Tax effect

Ending

(7,144)

(84)

23

(7,205)

defined benefit liabilities

18.5 Retained Earnings

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

(In millions of Korean won)

September 30,

December 31,

2020

2019

Legal reserves

557,405

482,807

Voluntary reserves

982,000

982,000

Regulatory reserve for credit losses

4,175

4,458

Retained earnings before appropriation

2,111,501

1,624,029

3,655,081

3,093,294

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

39

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

18.5.1 Regulatory reserve for credit losses

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

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

(In millions of Korean won)

September 30,

December 31,

2020

2019

Beginning

4,175

4,458

Estimated amounts subject to provision (reversal)

934

(283)

Ending

5,109

4,175

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

(In millions of Korean won)

2020

2019

Provision (reversal) of regulatory reserve for

Three months

Nine months

Three months

Nine months

(5,065)

934

(405)

(900)

credit losses

Adjusted profit (loss) after provision

(reversal) of regulatory reserve for credit

554,436

1,421,945

(46,055)

796,389

losses1,2

Adjusted basic earnings (losses) per share

after provision of regulatory reserve for

credit losses1 (In Korean won)

1,423

3,649

(118)

2,033

Adjusted diluted earnings (losses) per share

after provision of regulatory reserve for

1,406

3,614

(118)

2,019

credit losses1 (In Korean won)

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

18.6 Treasury Shares

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

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

2020

Number of treasury shares

Beginning

Acquisition

Retirement

Ending

26,173,585

-

-

26,173,585

Carrying amount

1,136,188

-

-

1,136,188

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

40

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

18.6 Treasury Shares (cont'd)

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

2019

Number of treasury shares

Beginning

Acquisition

Retirement

Ending

22,560,240

5,916,962

-

28,477,202

Carrying amount

968,549

267,639

-

1,236,188

19. Dividends

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

20. Net Interest Expense

Details of interest income and interest expense for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Interest income

Three months

Nine months

Three months

Nine months

16

53

147

2,042

Due from financial institutions

Loans at amortized cost

964

2,470

660

1,673

Loans at fair value through profit or loss

1,567

3,976

261

2,516

Other

59

185

83

241

2,606

6,684

1,151

6,472

Interest expense

Debts

586

589

1

2,489

Debentures

33,686

98,126

30,478

92,727

Other

3

9

4

13

34,275

98,724

30,483

95,229

Net interest expense

(31,669)

(92,040)

(29,332)

(88,757)

21. Net Fee and Commission Expense

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

(In millions of Korean won)

2020

2019

Fee and commission income

Three months

Nine months

Three months

Nine months

168

546

214

564

Fees earned in Korean won

Fee and commission expense

Fees paid in Korean won

2,794

6,875

1,261

4,400

Fees paid in foreign currency

122

238

157

236

2,916

7,113

1,418

4,636

Net fee and commission expense

(2,748)

(6,567)

(1,204)

(4,072)

41

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

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

(In millions of Korean won)

2020

2019

Gains related to financial instruments at

Three months

Nine months

Three months

Nine months

fair value through profit or loss

Dividend income on financial assets

designated at fair value through profit or

3,657

10,602

3,409

10,193

loss

Gains on valuation on financial assets

designated at fair value through profit or

loss

434

1,041

310

3,614

4,091

11,643

3,719

13,807

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

63

1,283

192

515

63

1,283

192

515

Net gains on financial instruments at

4,028

10,360

3,527

13,292

fair value through profit or loss

23. Net Other Operating Income

Details of other operating income and expenses for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Other operating income

Three months

Nine months

Three months

Nine months

598,481

1,573,411

926,934

Dividend income from subsidiaries

-

Gains on foreign currency transactions

117

117

-

-

Net other operating income

598,598

1,573,528

-

926,934

42

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

24. General and Administrative Expenses 24.1 General and Administrative Expenses

Details of general and administrative expenses for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Employee benefits

Three months

Nine months

Three months

Nine months

Salaries and other short-term employee

5,973

18,125

7,090

17,860

benefits - salaries

Salaries and other short-term employee

benefits - others

1,173

3,184

990

2,945

Post-employment benefits - defined

benefit plans

522

1,565

557

1,669

Share-based payments

1,930

1,243

339

2,052

9,598

24,117

8,976

24,526

Depreciation and amortization

1,057

2,921

1,329

3,737

Other general and administrative

expenses

Travel

(15)

36

180

816

Communications

196

591

87

485

Tax and dues

49

329

40

331

Publication

85

209

46

193

Rental expense

227

647

209

617

Vehicle

37

92

36

97

Service fees

4,701

14,534

3,360

10,153

Advertising

15

440

67

464

Training

199

503

352

890

Others

1,717

4,913

1,730

5,045

7,211

22,294

6,107

19,091

17,866

49,332

16,412

47,354

43

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

24.2 Share-based Payments

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

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

(In number of shares)

KB Financial Group Inc.

Grant date

Series 19

Nov. 21, 2017

Series 21

Jan. 01, 2019

Series 22

Apr. 01, 2019

Series 23

May 27, 2019

Series 24

Jul. 17, 2019

Series 25

Jan. 01, 2020

Series 26

Mar. 18, 2020

Series 27

June 16, 2020

Deferred grant in 2015

-

Deferred grant in 2016

-

Deferred grant in 2017

-

Deferred grant in 2018

-

Deferred grant in 2019

-

Kookmin Bank

Series 75

Jan. 1, 2019

Series 76

Apr. 1, 2019

Series 77

May. 27, 2019

Series 78

Nov. 21, 2019

Series 79

Jan. 1, 2020

Series 80

Mar 1, 2020

Deferred grant in 2015

-

Deferred grant in 2016

-

Deferred grant in 2017

-

Deferred grant in 2018

-

Deferred grant in 2019

-

Number of granted

Vesting conditions2

shares1

46,890

Service fulfillment, market performance3 35% and non-

market performance5 65%

25,172

Service fulfillment, market performance3 0~30% and

non-market performance4 70~100%

3,226

Service fulfillment, market performance3 30% and non-

market performance4 70%

1,436

Service fulfillment, market performance3 30% and non-

market performance4 70%

11,224

Service fulfillment, market performance3 30% and non-

market performance4 70%

80,568

Service fulfillment, market performance3 0~30% and

non-market performance4 70~100%

1,086

Service fulfillment, market performance3 30% and non-

market performance4 70%

687

Service fulfillment, market performance3 30% and non-

market performance4 70%

7,674

Satisfied

8,705

Satisfied

30,001

Satisfied

5,960

Satisfied

26,437

Satisfied

249,066

154,997

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

non-market performance4 50~100%

5,380

Service fulfillment, market performance3 30~50%, and

non-market performance4 50~70%

4,468

Service fulfillment, market performance3 30~50%, and

non-market performance4 50~70%

36,443

Service fulfillment, market performance3 30%, and

non-market performance6 70%

266,488

Service fulfillment, market performance3 0~50%, and

non-market performance4 50~100%

7,711

Service fulfillment, market performance3 30~50%, and

non-market performance4 50~70%

2,759

Satisfied

19,109

Satisfied

58,380

Satisfied

65,511

Satisfied

98,194

Satisfied

719,440

44

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

24.2 Share-based Payments (cont'd)

(In number of shares)

Grant date

Number of granted

Vesting conditions2

shares1

Other subsidiaries

Stock granted in 2010

-

106

Stock granted in 2011

-

146

Stock granted in 2012

-

420

Stock granted in 2013

-

622

Stock granted in 2014

-

1,028

Services fulfillment,

Stock granted in 2015

-

3,323

market performance3 10~50%

Stock granted in 2016

-

9,103

and non-market performance4 50~90%

Stock granted in 2017

-

36,814

Stock granted in 2018

-

120,189

Stock granted in 2019

-

333,084

Stock granted in 2020

-

254,019

758,854

1,727,360

  1. Granted shares represent the total number of shares initially granted to directors and employees that have residual shares at the end of reporting period (Deferred grants are residual shares at the end of the reporting period).
  2. Executives and employees were given the option of deferring payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement when the deferred grant has been confirmed.
  3. Relative TSR (Total Shareholders Return): [(Fair value at the end of the contract - Fair value at the beginning of the contract) + (Total amount of dividend per share paid during the contract period)] / Fair value at the beginning of the contract)
  4. Accomplishment of corporates' and individuals' performance results
  5. EPS, Asset Quality, HCROI, Non-banking sector profit
  6. EPS, Asset Quality

The stock grant award program is an incentive plan that sets, on grant date, the maximum number 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

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

24.2 Share-based Payments (cont'd)

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

Estimated number of vested

Vesting

KB Financial Group Inc.

shares1

Conditions

Stock granted in 2015

7,524

Satisfied

Stock granted in 2016

6,595

Satisfied

Stock granted in 2017

7,385

Satisfied

Stock granted in 2018

14,292

Satisfied

Stock granted in 2019

28,030

Satisfied

Stock granted in 2020

33,690

Proportional to service period

Kookmin Bank

Stock granted in 2015

9,887

Satisfied

Stock granted in 2016

19,662

Satisfied

Stock granted in 2017

30,003

Satisfied

Stock granted in 2018

73,989

Satisfied

Stock granted in 2019

125,530

Satisfied

Stock granted in 2020

111,245

Proportional to service period

Other subsidiaries

Stock granted in 2015

12,190

Satisfied

Stock granted in 2016

40,942

Satisfied

Stock granted in 2017

149,272

Satisfied

Stock granted in 2018

345,625

Satisfied

Stock granted in 2019

551,667

Satisfied

Stock granted in 2020

261,359

Proportional to service period

1,828,887

1 Executives and employees were given the option of deferring payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement when the deferred grant has been confirmed.

Share-based payment arrangement for subsidiaries was transferred to the Company in 2010, and the related compensation cost paid to the executives and employees of subsidiaries is reimbursed by these companies. The accrued expenses representing share-based payments as of September 30, 2020 and December 31, 2019, are 109,254 million and 124,853 million, respectively, and the receivables to be reimbursed by the subsidiaries for the compensation costs are 99,164 million and 112,997 million, respectively. In addition, The compensation costs from share-based payments that amount to 1,243 million and 2,052 million were recognized for the nine-month period ended September 30, 2020 and 2019 respectively.

46

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

25. Non-operating Income (Expense)

Details of non-operating income and expenses for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Three months

Nine months

Three months

Nine months

Non-operating income

Reversal of impairment losses on

375

823

-

-

intangible assets

Others

506

609

27

621

881

1,432

27

621

Non-operating expenses

Loss on disposal of property, plant and

equipment

-

-

14

14

Impairment losses on intangible assets

-

-

-

4

Donation

617

999

415

1,047

Others

-

7

1

7

617

1,006

430

1,072

Non-operating income (expenses)

264

426

(403)

(451)

26. Income Tax Benefit

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

(In millions of Korean won)

2020

2019

Tax payable

-

-

Change in deferred tax assets and liabilities

Origination and reversal of temporary differences

4,917

824

Tax expense recognized directly in equity

Remeasurements of net defined benefit liabilities

12

23

Consideration for exchangeable rights

(4,526)

-

(4,514)

23

Income tax expense

403

847

47

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

27. Earnings (Losses) per Share

27.1 Basic Earnings (Losses) per Share

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

27.1.1 Weighted average number of ordinary shares outstanding

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

(In number of shares)

2020

2019

Three months

Nine months

Three months

Nine months

Beginning (A)

415,807,920

415,807,920

418,111,537

418,111,537

Acquisition of treasury shares (B)

(26,173,585)

(26,173,585)

(28,477,202)

(26,475,254)

Weighted average number of ordinary

shares outstanding (C=A+B)

389,634,335

389,634,335

389,634,335

391,636,283

27.1.2 Basic earnings (losses) per share

Details of basic earnings (losses) per share for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:

(In Korean won and

2020

2019

In number of shares)

Profit (loss) for the period

Three months

Nine months

Three months

Nine months

555,951,744,329

1,435,972,319,024

(43,204,911,365)

798,744,809,672

Deduction: Dividends on hybrid

securities

6,580,625,000

13,093,125,000

3,256,250,000

3,256,250,000

Profit (loss) attributable to the

ordinary equity holders (A)

549,371,119,329

1,422,879,194,024

(46,461,161,365)

795,488,559,672

Weighted average number of

ordinary shares outstanding (B)

389,634,335

389,634,335

389,634,335

391,636,283

Basic earnings (losses) per share

(A / B)

1,410

3,652

(119)

2,031

27.2 Diluted Earnings (Losses) per Share

Diluted earnings (losses) per share is calculated using the weighted average number of ordinary shares outstanding which is adjusted by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. The Company has categories of dilutive potential ordinary shares: Stock Grant and ordinary share exchange rights of exchangeable bonds.

A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market share price of the Company's outstanding shares for the period) based on the monetary value of the subscription rights attached to the stock grants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of stock grants.

In addition, exchange bonds issued for the nine-month period ended September 30, 2020, were included in potential ordinary shares from the exercisable date of the exchange right, and interest expenses after tax for the period, were added to profit for the period attributable to dilutive potential ordinary shareholders.

48

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

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

(In Korean won)

Profit (loss) attributable to the ordinary equity holders1

Adjustment Exchangeable bonds Interest expense

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

2020

2019

Three months

Nine months

Three months

Nine months

  • 549,371,119,329 1,422,879,194,024 (46,461,161,365) 795,488,559,672

210,675,256

210,675,256

-

-

549,581,794,585

1,423,089,869,280

(46,461,161,365)

795,488,559,672

1 The amount is after deducting dividends on hybrid securities.

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

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

(In number of shares)

2020

2019

Weighted average

Three months

Nine months

Three months

Nine months

number of ordinary

shares issued and

outstanding

389,634,335

389,634,335

389,634,335

391,636,283

Adjustment

Stock grants

3,114,369

3,297,357

-

2,801,308

Exchangeable bonds

1,793,478

602,190

-

-

Adjusted weighted

average number of

ordinary shares

outstanding for diluted

earnings per share

394,542,182

393,533,882

389,634,335

394,437,591

49

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

27.2.3 Diluted earnings per share

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

(In Korean won and in

2020

2019

number of shares)

Adjusted profit (loss) for

Three months

Nine months

Three months

Nine months

diluted earnings (losses) per

549,581,794,585

1,423,089,869,280

(46,461,161,365)

795,488,559,672

share

Adjusted weighted average

number of ordinary shares

outstanding for diluted

earnings (losses) per share

394,542,182

393,533,882

389,634,335

394,437,591

Diluted earnings (losses) per

1,393

3,616

(119)

2,017

share

28. Supplemental Cash Flow Information

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

(In millions of Korean won)

September 30, 2020

December 31, 2019

Due from financial institutions

44,239

18,537

Restricted cash from financial institutions

(3)

(3)

44,236

18,534

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

(In millions of Korean won)

2020

2019

Changes in receivables and payables from

213,100

(270,303)

consolidated tax

Changes in receivables and payables relating to

stock grants

(13,833)

(6,229)

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

(In millions of Korean won)

Activity

2020

2019

Prepaid income tax expense

Operating

1,156

1,574

Interest received

Operating

6,405

5,710

Interest paid

Operating

95,776

95,949

Dividends received

Operating

1,584,015

937,153

Dividends paid

Financing

874,185

762,993

50

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

29. Contingent Liabilities and Commitments 29.1 Commitments

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

September 30, 2020

December 31, 2019

Amount of

Amounts

Amount of

Amounts

commitment

borrowed

commitment

borrowed

KEB Hana Bank

200,000

-

50,000

-

29.2 Other Matters (including litigation)

  1. The Company has no pending lawsuit as the defendant.
  2. The ongoing COVID-19 pandemic has had a negative impact on the global economy, and has increased has increased uncertainty in estimation of the Company's expected credit losses on certain portfolios and potential impairment on assets. The Company's ability to generate revenue may be adversely affected by the factors including;
  • uncertainties arising from significant increases in credit risks of borrowers affected by COVID-19 pandemic
  • uncertainties arising from forward-looking macroeconomic information in estimating expected credit losses
  • depreciation of Korean won against major currencies causing increase in the payment amount of principal and interests of debts denominated in foreign currencies; and
  • a significant decline in fair value of the Company's investments in companies affected by COVID-19 pandemic.

51

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

30. Related Party Transactions

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

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

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

(In millions of Korean won)

Subsidiaries

Interest income

2020

2019

Kookmin Bank

65

1,430

Fee and commission income

629

583

Net other operating income1

1,330,407

667,226

General and administrative expenses

6,057

5,032

KB Securities Co., Ltd.

Net other operating income1

80,000

50,000

Interest expense

35

-

General and administrative expenses

875

799

KB Insurance Co., Ltd.

Fee and commission income

-

3

General and administrative expenses

1,125

1,526

KB Kookmin Card Co., Ltd.

Net other operating income1

100,004

200,008

General and administrative expenses

484

691

Net non-operating income

4

5

KB Asset Management Co., Ltd.

Net other operating income1

30,000

-

KB Capital Co., Ltd

Net gains on financial assets at fair

value through profit or loss

10,360

13,292

Fee and commission income

-

1

General and administrative expenses

92

65

KB Life Insurance Co., Ltd.

General and administrative expenses

360

67

KB Real Estate Trust. Co., Ltd.

Net other operating income1

30,000

4,700

KB Savings Bank Co., Ltd.

Net other operating income1

3,000

5,000

KB Investment Co., Ltd.

Interest income

2,469

1,673

KB Data Systems Co., Ltd.

General and administrative expenses

838

1,512

1 Net other operating income includes dividend income from subsidiaries.

52

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

30. Related Party Transactions (cont'd)

Significant receivables and payables, and related allowance for loan losses arising from the related party transactions as of September 30, 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

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

KB Real Estate Trust Co., Ltd.

Other assets

KB Savings Bank Co., Ltd.

Other assets

KB Investment Co., Ltd.

Loans at amortized cost

Other assets

Other liabilities

KB Data Systems Co., Ltd.

Property and equipment

Intangible assets

Other assets

Other liabilities

KB Credit Information Co., Ltd.

Other assets

Other liabilities

September 30,

December 31,

2020

2019

44,239

18,537

575,339

418,114

6,233

35

769

152

45,719

52,068

868

-

20,215

14,492

665

47,580

82,017

60,705

1,138

1,394

13,018

15,590

391,259

291,501

20,870

18,995

92

-

2,918

3,956

6,527

8,636

16,778

13,979

4,330

3,727

180,000

120,000

8,285

2,904

-

59

16

438

339

1,145

1,651

2,721

409

333

820

849

-

241

53

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

30. Related Party Transactions (cont'd)

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

(In millions of Korean won)

September 30,

December 31,

Subsidiary

Kookmin Bank

Right-of-use assets

2020

2019

812

152

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

(In millions of Korean won)

September 30,

December 31,

KB Kookmin Card Co.,

Unused commitments

2020

2019

Subsidiary

2,358

2,255

Ltd.

of credit card

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

(In millions of Korean won)

Subsidiary

KB Capital Co., Ltd.

Subsidiary

KB Investment Co., Ltd.

Prudential Life

Subsidiary

Insurance Company of

Korea Ltd.

Paid-in capital increase

2020

2019

50,000

50,000

of ordinary shares

Paid-in capital increase

-

50,000

of ordinary shares

Acquisition of shares

2,310,054

-

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

(In millions of Korean won)

2020

Beginning

Loans

Ending

Subsidiary

KB Investment Co., Ltd.

Loan

120,000

60,000

180,000

(In millions of Korean won)

2019

Beginning

Loans

Ending

Subsidiary

KB Investment Co., Ltd.

Loan

50,000

70,000

120,000

54

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

30. Related Party Transactions (cont'd)

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

(In millions of Korean won)

2020

Short-term

employee

Post-employmentShare-based

Registered director

benefits

benefits

payments

Total

778

21

133

932

(executive)

Registered director

(non-executive)

477

-

-

477

Non-registered director

3,267

107

1,110

4,484

4,522

128

1,243

5,893

(In millions of Korean won)

2019

Short-term