KB Financial (KB) 6-K Current report (foreign)

Exhibit 99.1

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Financial Statements

September 30, 2018 and 2017

KB Financial Group Inc. and Subsidiaries

Index

September 30, 2018 and 2017

	Page(s)
Report on Review of Interim Financial statements		1~2
Consolidated Interim Financial Statements
Consolidated Interim Statements of Financial Position		3
Consolidated Interim Statements of Comprehensive Income		4
Consolidated Interim Statements of Changes in Equity		5
Consolidated Interim Statements of Cash Flows		6
Notes to the Consolidated Interim Financial Statements		7~187

Report on Review of Interim Financial Statements

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and Board of Directors of

KB Financial Group Inc.

Reviewed Financial Statements

We have reviewed the accompanying consolidated interim financial statements of KB Financial Group Inc. and its subsidiaries (collectively referred to as the “Group”). These financial statements consist of the consolidated interim statement of financial position of the Group as of September 30, 2018, and the related consolidated interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2018 and 2017, and consolidated interim statements of changes in equity and cash flows for the nine-month periods ended September 30, 2018 and 2017, and a summary of significant accounting policies and other explanatory notes, expressed in Korean won.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS) 1034Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

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

We conducted our review in accordance with quarterly and semi-annual review standards 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, 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 the accompanying consolidated interim financial statements are not presented fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting.

Other Matters

We have audited the consolidated statement of financial position of the Group as of December 31, 2017, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, in accordance with Korean Standards on Auditing. We expressed an unqualified opinion on those financial statements, not presented herein, in our audit report dated March 12, 2018. The statement of financial position as of December 31, 2017, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as of December 31, 2017.

Review standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries.

/s/ Samil PricewaterhouseCoopers

Seoul, Korea

November 14, 2018

This report is effective as of November 14, 2018, 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 consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

2

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Financial Position

September 30, 2018 (Unaudited) and December 31, 2017

(in millions of Korean won)	Notes		September 30, 2018			December 31, 2017
			(Unaudited)
Assets
Cash and due from financial institutions		4,6,7,37	W	18,349,698		W	19,817,825
Financial assets at fair value through profit or loss		4,6,11		51,020,841			—
Financial assets at fair value through profit or loss (under Korean IFRS 1039)		4,6,11		—			32,227,345
Derivative financial assets		4,6,8		2,206,870			3,310,166
Loans at amortized cost		4,6,9,10		316,430,970			290,122,838
Financial investments		4,6,11		59,193,078			66,608,243
Investments in associates and joint ventures		12		485,966			335,070
Property and equipment		13		4,155,629			4,201,697
Investment property		13		1,755,451			848,481
Intangible assets		14		2,782,013			2,943,060
Net defined benefit assets		23		—			894
Current income tax assets		32		15,682			6,324
Deferred income tax assets		15,32		739			3,991
Assets held for sale		16		16,503			155,506
Other assets		4,6,17		21,302,186			16,204,169
Total assets			W	477,715,626		W	436,785,609
Liabilities
Financial liabilities at fair value through profit or loss		4,6,18	W	16,033,010		W	—
Financial liabilities at fair value through profit or loss (under Korean IFRS 1039)		4,6,18		—			12,023,058
Derivative financial liabilities		4,6,8		2,605,969			3,142,765
Deposits		4,6,19		271,155,184			255,800,048
Debts		4,6,20		31,902,454			28,820,928
Debentures		4,6,21		51,549,915			44,992,724
Provisions		22		515,421			568,033
Net defined benefit liabilities		23		286,130			154,702
Current income tax liabilities		32		623,779			433,870
Deferred income tax liabilities		15,32		611,651			533,069
Insurance contract liabilities		36		33,154,402			31,801,275
Other liabilities		4,6,24		33,688,472			24,470,308
Total liabilities				442,126,387			402,740,780
Equity
Share capital		25		2,090,558			2,090,558
Capital surplus		25		17,121,970			17,122,228
Accumulated other comprehensive income		25,34		230,212			537,668
Retained earnings		25		17,074,126			15,044,204
Treasury shares		25		(936,194	)		(755,973	)
Equity attributable to shareholders of the Parent Company				35,580,672			34,038,685
Non-controlling interests				8,567			6,144
Total equity				35,589,239			34,044,829
Total liabilities and equity			W	477,715,626		W	436,785,609

¹  The consolidated interim statement of financial position as of September 30, 2018 is prepared in accordance with Korean IFRS 1109, and the comparatives as of December 31, 2017 has not been restated.

The accompanying notes are an integral part of these consolidated interim financial statements.

3

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Comprehensive Income

Three-Month and Nine-Month Periods Ended September 30, 2018 and 2017 (Unaudited)

(In millions of Korean won, except per share amounts)	Notes	2018 (Unaudited)						2017 (Unaudited)
		Three months			Nine months			Three months			Nine months
Interest income		W	3,515,063		W	10,073,077		W	3,081,977		W	8,772,564
Interest income from financial instruments at fair value through other comprehensive income and amortized cost			3,320,153			9,532,011			—			—
Interest income from financial instruments at fair value through profit or loss			194,910			541,066			—			—
Interest income from loans and receivables and investments			—			—			2,939,921			8,378,734
Interest income from financial instruments at fair value through profit or loss (under Korean IFRS 1039)			—			—			142,056			393,830
Interest expense			(1,263,764	)		(3,481,623	)		(918,471	)		(2,691,762	)
Net interest income	5,26		2,251,299			6,591,454			2,163,506			6,080,802
Fee and commission income			1,078,898			3,365,109			999,403			2,930,452
Fee and commission expense			(555,930	)		(1,617,432	)		(508,075	)		(1,408,276	)
Net fee and commission income	5,27		522,968			1,747,677			491,328			1,522,176
Insurance income			2,932,133			8,928,242			2,955,149			6,130,566
Insurance expense			(2,809,440	)		(8,484,530	)		(2,762,360	)		(5,730,619	)
Net Insurance income	5,36		122,693			443,712			192,789			399,947
Net gains on financial instruments at fair value through profit or loss before applying overlay approach			185,224			285,851			—			—
Net gains/(losses) on overlay adjustment			(3,047	)		113,044			—			—
Net gains on financial assets/liabilities at fair value through profit or loss	5,28		182,177			398,895			—			—
Net gains/(losses) on financial assets/liabilities at fair value through profit or loss (under Korean IFRS 1039)			—			—			(71,050	)		32,509
Net other operating expenses	5,29		(273,973	)		(800,358	)		(131,936	)		(590,520	)
General and administrative expenses	5,23,30		(1,330,540	)		(4,074,271	)		(1,307,043	)		(3,796,635	)
Operating profit before provision for credit losses	5		1,474,624			4,307,109			1,337,594			3,648,279
Provision for credit losses	5,7,10,11,17,22		(146,432	)		(427,761	)		(172,190	)		(479,888	)
Net operating income	5		1,328,192			3,879,348			1,165,404			3,168,391
Share of profit of associates and joint ventures	5,12		5,436			18,158			19,004			78,119
Net othernon-operating income (expense)	5,31		(4,754	)		77,892			15,115			165,282
Netnon-operating income			682			96,050			34,119			243,401
Profit before income tax	5		1,328,874			3,975,398			1,199,523			3,411,792
Income tax expense	5,32		(374,901	)		(1,106,239	)		(302,121	)		(622,052	)
Profit for the period	5		953,973			2,869,159			897,402			2,789,740
Items that will not be reclassified to profit or loss:
Remeasurements of net defined benefit liabilities	23		(3,780	)		(6,317	)		(2,835	)		(9,962	)
Share of other comprehensive income of associates and joint ventures			(1	)		(1	)		—			(131	)
Revaluation gains on equity instruments at fair value through other comprehensive income			39,073			40,432			—			—
Fair value changes on financial liabilities designated at fair value due to own credit risk			(4,518	)		(169	)		—			—
			30,774			33,945			(2,835	)		(10,093	)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations			(38,357	)		35,085			(1,249	)		(33,184	)
Net gains on financial instruments at fair value through other comprehensive income			30,141			53,627			—			—
Valuation gains/(losses) on financial investments			—			—			(32,869	)		196,580
Shares of other comprehensive income of associates			(927	)		(3,100	)		(1,145	)		101,724
Cash flow hedges			162			9,550			2,952			5,539
Gains/(losses) on hedges of a net investment in a foreign operation			8,020			(22,649	)		(4,304	)		423
Other comprehensive income arising from separate account			8,506			17,147			(6,611	)		(7,929	)
Net gains/(losses) on overlay adjustment	36		2,193			(81,807	)		—			—
			9,738			7,853			(43,226	)		263,153
Other comprehensive income for the period, net of tax			40,512			41,798			(46,061	)		253,060
Total comprehensive income for the period		W	994,485		W	2,910,957		W	851,341		W	3,042,800
Profit attributable to:
Shareholders of the Parent Company	5	W	953,769		W	2,868,752		W	897,504		W	2,757,686
Non-controlling interests	5		204			407			(102	)		32,054
	5	W	953,973		W	2,869,159		W	897,402		W	2,789,740
Total comprehensive income for the period attributable to:
Shareholders of the Parent Company		W	994,509		W	2,910,772		W	851,531		W	3,007,929
Non-controlling interests			(24	)		185			(190	)		34,871
		W	994,485		W	2,910,957		W	851,341		W	3,042,800
Earnings per share	35
Basic earnings per share		W	2,407		W	7,233		W	2,240		W	6,927
Diluted earnings per share			2,394			7,191			2,228			6,890

¹  The consolidated interim statement of comprehensive income for the three-month and nine-month period ended September 30, 2018 is prepared in accordance with Korean IFRS 1109, and the comparatives for the the three-month and nine-month period ended September 30, 2017 has not been restated.

The accompanying notes are an integral part of these consolidated interim financial statements.

4

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Changes in Equity

Nine-Month Periods Ended September 30, 2018 and 2017 (Unaudited)

	Equity attributable to shareholders of the Parent Company
(in millions of Korean won)	Share Capital		Capital Surplus			Accumulated Other Comprehensive Income			Comprehensive Income of Disposal group Held for sale			Retained Earnings			Treasury Shares			Non-controlling Interests			Total Equity
Balance at January 1, 2017	W	2,090,558	W	16,994,902		W	405,329		W	—		W	12,229,228		W	(721,973	)	W	263,359		W	31,261,403
Comprehensive income
Profit for the period		—		—			—			—			2,757,686			—			32,054			2,789,740
Remeasurements of net defined benefit liabilities		—		—			(9,882	)		—			—			—			(80	)		(9,962	)
Exchange differences on translating foreign operations		—		—			(33,312	)		—			—			—			128			(33,184	)
Change in value of financial investments		—		—			193,640			—			—			—			2,940			196,580
Shares of other comprehensive income of associates and joint ventures		—		—			101,593			—			—			—			—			101,593
Cash flow hedges		—		—			5,635			—			—			—			(96	)		5,539
Gain on hedges of a net investment in a foreign operation		—		— ��			423			—			—			—			—			423
Other comprehensive income arising from separate account		—		—			(7,854	)		—			—			—			(75	)		(7,929	)
Transfer to other accounts		—		—			(2,368	)		(1,124	)		3,492			—			—			—
Total comprehensive income (loss)		—		—			247,875			(1,124	)		2,761,178			—			34,871			3,042,800
Transactions with shareholders
Dividends paid to shareholders of the Parent Company		—		—			—			—			(497,969	)		—			(5,156	)		(503,125	)
Acquisition of treasury shares		—		—			—			—			—			(82,279	)		—			(82,279	)
Disposal of treasury shares		—		87,212			—			—			—			168,051			—			255,263
Changes in interest in subsidiaries		—		41,352			—			—			—			—			(288,954	)		(247,602	)
Others		—		(1,599	)		—			—			—			—			2,340			741
Total transactions with shareholders		—		126,965			—			—			(497,969	)		85,772			(291,770	)		(577,002	)
Balance at September 30, 2017 (Unaudited)	W	2,090,558	W	17,121,867		W	653,204		W	(1,124	)	W	14,492,437		W	(636,201	)	W	6,460		W	33,727,201
Balance at January 1, 2018	W	2,090,558	W	17,122,228		W	537,668		W	—		W	15,044,204		W	(755,973	)	W	6,144		W	34,044,829
The effect of changing of accounting policy		—		—			(349,476	)		—			(72,102	)		—			—			(421,578	)
Balance after reflecting the effect of accounting policy		2,090,558		17,122,228			188,192			—			14,972,102			(755,973	)		6,144			33,623,251
Comprehensive income
Profit for the period		—		—			—			—			2,868,752			—			407			2,869,159
Remeasurements of net defined benefit liabilities		—		—			(6,317	)		—			—			—			—			(6,317	)
Exchange differences on translating foreign operations		—		—			35,307			—			—			—			(222	)		35,085
Net gains on financial instruments at fair value through other comprehensive income		—		—			94,059			—			—			—			—			94,059
Shares of other comprehensive income of associates and joint ventures		—		—			(3,101	)		—			—			—			—			(3,101	)
Cash flow hedges		—		—			9,550			—			—			—			—			9,550
Losses on hedges of a net investment in a foreign operation		—		—			(22,649	)		—			—			—			—			(22,649	)
Other comprehensive income arising from separate account		—		—			17,147			—			—			—			—			17,147
Fair value changes on financial liabilities designated at fair value due to own credit risk		—		—			(169	)		—			—			—			—			(169	)
Net losses on overlay adjustment		—		—			(81,807	)		—			—			—			—			(81,807	)
Total comprehensive income		—		—			42,020			—			2,868,752			—			185			2,910,957
Transactions with shareholders
Dividends paid to shareholders of the Parent Company		—		—			—			—			(766,728	)		—			—			(766,728	)
Acquisition of treasury shares		—		—			—			—			—			(180,221	)		—			(180,221	)
Non-controlling interests changes in business combination		—		—			—			—			—			—			2,238			2,238
Others		—		(258	)		—			—			—			—			—			(258	)
Total transactions with shareholders		—		(258	)		—			—			(766,728	)		(180,221	)		2,238			(944,969	)
Balance at September 30, 2018 (Unaudited)	W	2,090,558	W	17,121,970		W	230,212		W	—		W	17,074,126		W	(936,194	)	W	8,567		W	35,589,239

¹  The consolidated interim statement of changes in equity for the nine-month period ended September 30, 2018 is prepared in accordance with Korean IFRS 1109, and the comparatives for the nine-month period ended September 30, 2017 has not been restated.

The accompanying notes are an integral part of these consolidated interim financial statements.

5

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Cash Flows

Nine-Month Periods Ended September 30, 2018 and 2017 (Unaudited)

(in millions of Korean won)	2018			2017
	(Unaudited)			(Unaudited)
Cash flows from operating activities
Profit for the period	W	2,869,159		W	2,789,740
Adjustment fornon-cash items
Net gain on financial assets/liabilities at fair value through profit or loss		(232,873	)		—
Net loss on financial assets/liabilities at fair value through profit or loss (under Korean IFRS 1039)		—			94,090
Net loss on derivative financial instruments for hedging purposes		201,077			101,385
Adjustment of fair value of derivative financial instruments		962			(683	)
Provision for credit loss		427,761			479,888
Net loss (gain) on financial investments		(80,005	)		60,722
Share of profit of associates and joint ventures		(18,158	)		(78,119	)
Depreciation and amortization expense		280,343			258,332
Depreciation and amortization expense on VOBA		162,874			121,717
Other net losses (gains) on property and equipment/intangible assets		(143,506	)		12,513
Share-based payments		13,775			48,074
Policy reserve appropriation		1,346,370			1,191,392
Post-employment benefits		162,706			174,863
Net interest expense		293,784			302,054
Gain on foreign currency translation		(159,870	)		(259,709	)
Gains on bargain purchase		—			(122,986	)
Net other expense		129,035			168,054
		2,384,275			2,551,587
Changes in operating assets and liabilities
Financial asset at fair value through profit or loss		(10,240,218	)		—
Financial asset at fair value through profit or loss (under Korean IFRS 1039)		—			(2,911,811	)
Derivative financial instruments		139,002			(53,741	)
Loans at amortized cost		(28,075,267	)		(16,884,957	)
Current income tax assets		(9,382	)		47,865
Deferred income tax assets		2,982			30,294
Other assets		(6,302,762	)		(7,092,979	)
Financial liabilities at fair value through profit or loss		4,054,298			—
Financial liabilities at fair value through profit or loss (under Korean IFRS 1039)		—			1,074,658
Deposits		15,130,815			13,645,523
Tax liabilities for current period		189,909			—
Deferred income tax liabilities		218,352			157,721
Other liabilities		9,775,112			(100,045	)
		(15,117,159	)		(12,087,472	)
Net cash outflow from operating activities		(9,863,725	)		(6,746,145	)
Cash flows from investing activities
Net cash flows from derivative financial instruments for hedging purposes		(35,550	)		—
Disposal of financial asset at fair value through profit or loss		6,826,968			—
Acquisition of financial asset at fair value through profit or loss		(4,557,791	)		—
Disposal of financial investments		44,867,272			29,715,736
Acquisition of financial investments		(46,603,570	)		(34,454,670	)
Disposal in investments in associates and joint ventures		27,385			133,874
Acquisition of investments in associates and joint ventures		(163,948	)		(42,369	)
Disposal of property and equipment		889			21,086
Acquisition of property and equipment		(251,400	)		(188,665	)
Disposal of investment property		142,044			2,871
Acquisition of investment property		(901,786	)		(256	)
Disposal of intangible assets		10,063			5,641
Acquisition of intangible assets		(86,250	)		(70,830	)
Net cash flows from the change in subsidiaries		255,192			(362,764	)
Others		198,563			181,517
Net cash outflow from investing activities		(271,919	)		(5,058,829	)
Cash flows from financing activities
Net cash flows from derivative financial instruments for hedging purposes		138,925			37,182
Net increase in debts		3,077,700			4,259,665
Increase in debentures		109,798,010			103,381,766
Decrease in debentures		(103,272,964	)		(95,472,496	)
Increase in other payables from trust accounts		(607,862	)		1,162,753
Dividends paid to shareholders of the Parent Company		(766,728	)		(497,968	)
Disposal of treasury shares		—			3,515
Acquisition of treasury shares		(199,023	)		(82,177	)
Dividends paid tonon-controlling interests		—			(5,156	)
Increase innon-controlling interests		—			(163,660	)
Others		(164,741	)		(22,781	)
Net cash inflow from financing activities		8,003,317			12,600,643
Effect of exchange rate changes on cash and cash equivalents		(26,963	)		(60,936	)
Net increase (decrease) in cash and cash equivalents		(2,159,290	)		734,733
Cash and cash equivalents at the beginning of the period		8,404,898			7,414,836
Cash and cash equivalents classified as disposal group held for sale		—			31,704
Cash and cash equivalents at the end of the period	W	6,245,608		W	8,181,273

¹  The consolidated interim statement of cash flows for the nine-month period ended September 30, 2018 is prepared in accordance with Korean IFRS 1109, and the comparatives for the nine-month period ended September 30, 2017 has not been restated.

The accompanying notes are an integral part of these consolidated interim financial statements.

6

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

1. The Parent Company

KB Financial Group Inc. (the “Parent Company”) was incorporated on September 29, 2008, under the Financial Holding Companies Act of Korea. KB Financial Group Inc. and its subsidiaries (collectively referred to as the “Group”) derive substantially all of their revenue and income from providing a broad range of banking and related financial services to consumers and corporations primarily in Korea and in selected international markets. The Parent Company’s principal business includes ownership and management of subsidiaries and associated companies that are engaged in financial services or activities. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Group established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Group acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Group included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015. Also, the Group included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary in October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed the name to KB Securities Co., Ltd. in January 2017. KB Insurance Co., Ltd. became one of the subsidiaries through a tender offer in May 2017.

The Parent Company’s share capital as of September 30, 2018, isW 2,090,558 million. The Parent Company has been listed on the Korea Exchange (“KRX”) since October 10, 2008, and on the New York Stock Exchange (“NYSE”) for its American Depositary Shares (“ADS”) since September 29, 2008. Number of shares authorized in its Articles of Incorporation is 1,000 million.

2. Basis of Preparation

2.1 Application of Korean IFRS

The Group 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 consolidated financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Group’s financial position, financial performance or cash flows, is not presented in the accompanying consolidated financial statements.

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

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2018. The adoption of these amendments did not have any significant impact on the current period or any prior period and is not likely to affect future periods, with the exception of the adoption of Korean IFRS 1109Financial Instruments discussed below.

• Amendments to Korean IFRS 1028Investments in Associates and Joint Ventures

Amendments to Korean IFRS 1028 clarifies that a venture capital organization or a mutual fund, and similar entities may elect, at initial recognition, to measure investments in an associate or joint venture at fair value through profit or loss separately for each associate or joint venture.

• Amendments to Korean IFRS 1040Transfers of Investment Property

Amendments to Korean IFRS 1040 clarifies that a transfer to, or from, investment property, including property under construction, can only be made if there has been a change in use that is supported by evidence. Paragraph 57 of the standard provides a list of such circumstances as examples.

• Amendments to Korean IFRS 1102Share-based Payment

Amendments to Korean IFRS 1102 clarifies accounting for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. Also, it clarifies that the measurement approach should treat the terms and conditions of a cash-settled award in the same way as for an equity-settled award.

• Enactment of Korean IFRS 2122Foreign Currency Transactions and Advance Consideration

According to the enacted interpretation, the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part thereof) is the date on which an entity initially recognizes thenon-monetary asset ornon-monetary liability arising from the prepayment or receipt of advance consideration. In case there are multiple payments or receipts in advance, the entity should determine a date of the transaction for each payment or receipt of advance consideration.

• Enactment of Korean IFRS 1109Financial Instruments

The Group adopted Korean IFRS 1109Financial Instruments with a date of initial application of January 1, 2018. As permitted by the transition requirements of Korean IFRS 1109, comparative periods have not been restated. The Group recognized the difference between the previous carrying amount and the carrying amount at the beginning of the annual reporting period that includes the date of initial application in the opening retained earnings (or other component of equity, as appropriate) of the annual reporting period that includes the date of initial application. Also, the Group applied “The Overlay Approach” under Korean IFRS 1104 at the initial application of Korean IFRS 1109. For details about impacts of the adoption of this Korean IFRS, see Note 43.

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

• Enactment of Korean IFRS 1115 Revenue from Contracts with Customers

The Group has adopted Korean IFRS 1115Revenue from Contracts with Customers. As permitted by the transition requirements of Korean IFRS 1115, comparative periods have not been restated. The Group does not expect the amendments to have a significant impact on the consolidated financial statements.

The Group has changed the accounting policy for their annual reporting period commencing January 1, 2018.

• Presentation of interest income arising from financial assets measured at fair value through profit or loss

The Group previously recognized interest income arising from financial assets at fair value through profit or loss as net gains (losses) on financial assets/liabilities at fair value through profit or loss in the consolidated statements of comprehensive income. From January 1, 2018, the Group changed the accounting policy, and corresponding interest income is presented as a portion of interest income in the consolidated statements of comprehensive income. The Group expects the change in accounting policy provides results in more relevant information.

The consolidated interim statement of comprehensive income for nine-month period ended September 30, 2017, has been restated by adjusting classification of interest income.

The Group does not expect the change in accounting policy to have an impact on the consolidated statements of financial position, and total comprehensive income. The results and impact of the change on the consolidated interim statement of comprehensive income for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(in millions of Korean won)	2018			2017
Increase in interest income	W	541,066		W	393,830
Decrease in net gains (losses) on financial assets/liabilities at fair value through profit or loss		(541,066	)		—
Decrease in net gains (losses) on financial assets/liabilities at fair value through profit or loss (under Korean IFRS 1039)		—			(393,830	)

Certain new accounting standards and interpretations that have been published that are not mandatory for annual reporting period commencing January 1, 2018 and have not been early adopted by the Group are set out below.

• Enactment of Korean IFRS 1116 Leases

Korean IFRS 1116Leases issued on May 22, 2017 is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted. This standard will replace Korean IFRS 1017Leases, Korean IFRS 2104Determining whether an Arrangement contains a Lease, Korean IFRS 2015Operating Leases-Incentives, and Korean IFRS 2027Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

At inception of a contract, the entity shall assess whether the contract is, or contains, a lease. Also, at the date of initial application, the entity shall assess whether the contract is, or contains, a lease in accordance with the standard. However, the entity will not need to reassess all contracts with applying the practical expedient because the entity elected to apply the practical expedient only to contracts entered before the date of initial application.

For a contract that is, or contains, a lease, the entity shall account for each lease component within the contract as a lease separately fromnon-lease components of the contract. A lease is required to recognize aright-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. The lessee may elect not to apply the requirements to short-term lease (a lease term of 12 months or less at the commencement date) and low value assets (e.g. underlying assets below $ 5,000). In addition, as a practical expedient, the lessee may elect, by class of underlying asset, not to separatenon-lease components from lease components, and instead account for each lease component and any associatednon-lease components as a single lease component.

The classification criteria between a financial lease and an operating lease for a lessor under Korean IFRS 1116 are similar to Korean IFRS 1017.

The Group is currently in progress of analyzing the potential impact on its consolidated financial statements resulting from the application of Korean IFRS 1116.

2.2 Measurement Basis

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

2.3 Functional and Presentation Currency

Items included in the financial statements of each entity of the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Korean won, which is the Parent Company’s functional and presentation currency (Notes 3.2.1 and 3.2.2).

2.4 Critical Accounting Estimates

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

Estimates and assumptions are continually evaluated and any change in an accounting estimate is recognized prospectively by including it in profit or loss in the period of the change, if the change affects that period only. Alternatively if the change in accounting estimate affects both the period of change and future periods, that change is recognized in the profit or loss of all those periods.

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Uncertainty in estimates and assumptions with significant risk that may result in material adjustment to the consolidated financial statements are as follows:

2.4.1 Income taxes

The Group is operating in numerous countries and the income generated from these operations is subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain. If certain portion of the taxable income is not used for investments, increase in wages, and others in accordance with the Tax System for Promotion of Investment and Collaborative Cooperation (Recirculation of Corporate Income), the Group is liable to pay additional income tax calculated based on the tax laws. The new tax system is effective for three years from 2018. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the new system. As the Group’s income tax is dependent on the investments, increase in wages, and others, there exists uncertainty with regard to measuring the final tax effects.

2.4.2 Fair value of financial instruments

The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available is determined by using valuation techniques. Financial instruments, which are not actively traded in the market and those with less transparent market prices, will have less objective fair values and require broad judgment on liquidity, concentration, uncertainty in market factors and assumptions in price determination and other risks.

As described in the significant accounting policies in Note 3.3, ‘Recognition and Measurement of Financial Instruments’, diverse valuation techniques are used to determine the fair value of financial instruments, from generally accepted market valuation models to internally developed valuation models that incorporate various types of assumptions and variables.

2.4.3 Provisions for credit losses (allowances for loan losses, provisions for acceptances and guarantees, and unused loan commitments)

The Group tests impairment and recognizes allowances for losses on financial assets classified at amortized cost, debt instruments measured at fair value through other comprehensive income and lease receivables through impairment testing and recognizes provisions for guarantees, and unused loan commitments. Accuracy of provisions for credit losses is dependent upon estimation of expected cash flows of the borrower for individually assessed allowances of loans, and upon assumptions and methodology used for collectively assessed allowances for groups of loans, guarantees and unused loan commitments.

2.4.4 Net defined benefit liability

The present value of net defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions (Note 23).

2.4.5 Impairment of goodwill

The recoverable amounts of cash-generating units have been determined based onvalue-in-use calculations to test whether goodwill has suffered any impairment (Note 14).

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3. Significant Accounting Policies

The significant accounting policies applied in the preparation of these consolidated financial statements are set out below. The items related to financial instruments on the consolidated financial statements were stated under Korean IFRS 1109 for the current nine-month period, and under Korean IFRS 1039 for the nine-month period ended September 30, 2017. The accounting policies on financial instruments were applied for current period, and comparatives are not restated retrospectively. Except for the changes related to financial instruments, these policies have been consistently applied to all periods presented.

3.1 Consolidation

3.1.1 Subsidiaries

Subsidiaries are companies that are controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The existence and effects of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date when control is transferred to the Group andde-consolidated from the date when control is lost.

If a subsidiary uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to make the subsidiary’s accounting policies conform to those of the Group when the subsidiary’s financial statements are used by the Group in preparing the consolidated financial statements.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Parent Company and to thenon-controlling interests, if any. Total comprehensive income is attributed to the owners of the Parent Company and to thenon-controlling interests even if this results in thenon-controlling interests having a negative balance.

Transactions withnon-controlling interests that do not result in loss of control are accounted for as equity transactions; that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals tonon-controlling interests are also recorded in equity.

When the Group ceases to have control, any retained interest in the entity isre-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. Amounts previously recognized in other comprehensive income are reclassified to profit or loss.

The Group applies the acquisition method to account for business combinations. The consideration transferred is measured at the fair values of the assets transferred, and identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at their fair values at the acquisition date. The Group recognizes anynon-controlling interest in the acquiree on anacquisition-by-acquisition basis in the event of liquidation, either at fair value or at thenon-controlling interest’s proportionate share of the recognized amounts of acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred.

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

In a business combination achieved in stages, the Group shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss or other comprehensive income, as appropriate. In prior reporting periods, the Group may have recognized changes in the value of its equity interest in the acquiree in other comprehensive income. If so, the amount that was recognized in other comprehensive income shall be reclassified as profit or loss, or retained earnings, on the same basis as would be required if the Group had disposed directly of the previously held equity interest.

The Group applies the book amount method to account for business combinations of entities under a common control. Identifiable assets acquired and liabilities assumed in a business combination are measured at their book amounts on the consolidated financial statements of the Group. In addition, the difference between the sum of consolidated book amounts of the assets and liabilities transferred and accumulated other comprehensive income; and the consideration paid is recognized as capital surplus.

3.1.2 Associates and joint ventures

Associates are entities over which the Group has significant influence in the financial and operating policy decisions. Generally, if the Group holds 20% to 50% of the voting power of the investee, it is presumed that the Group has significant influence, it is presumed that the Group has significant influence.

Joint ventures are investments in which the Group jointly controls over economic activities pursuant to contractual arrangement. Decisions on financial and operating policies require unanimous consent of the parties sharing control.

Under the equity method, investments in associates and joint ventures are initially recognized at cost and the carrying amount is increased or decreased to recognize the Group’s share of the profit or loss of the investee and changes in the investee’s equity after the date of acquisition. The Group’s share of the profit or loss of the investee is recognized in the Group’s profit or loss. Distributions received from an investee reduce the carrying amount of the investment. Profit and loss resulting from ‘upstream’ and ‘downstream’ transactions between the Group and associates are eliminated to the extent at the Group’s interest in associates. Unrealized losses are eliminated in the same way as unrealized gains except that they are only eliminated to the extent that there is no evidence of impairment.

If associates and joint ventures use accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to make the associate’s accounting policies conform to those of the Group when the associate’s financial statements are used by the Group in applying equity method.

After the carrying amount of the investment is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee.

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The Group determines at each reporting period whether there is any objective evidence that the investments in the associates and joint ventures are impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associates and its carrying value and recognizes the amount as‘non-operating income(expense)’ in the statements of comprehensive income.

3.1.3 Structured entity

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. When the Group decides whether it has power to the structured entities in which the Group has interests, it considers factors such as the purpose, the form, the practical ability to direct the relevant activities of a structured entity, the nature of its relationship with a structured entity and the amount of exposure to variable returns.

3.1.4 Trusts and funds

The Group provides management services for trust assets, collective investment and other funds. These trusts and funds are not consolidated in the Group’s consolidated financial statements, except for trusts and funds over which the Group has control.

3.1.5 Intra-group transactions

All intra-group balances and transactions, and any unrealized gains arising on intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains except that they are only eliminated to the extent that there is no evidence of impairment.

3.2 Foreign Currency

3.2.1 Foreign currency transactions

A foreign currency transaction is recorded, on initial recognition in the functional currency, by applying the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of each reporting period, foreign currency monetary items are translated using the closing rate which is the spot exchange rate at the end of the reporting period.Non-monetary items that are measured at fair value in a foreign currency are translated using the spot exchange rates at the date when the fair value was determined andnon-monetary items that are measured in terms of historical cost in a foreign currency are translated using the spot exchange rate at the date of the transaction.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous consolidated financial statements are recognized in profit or loss in the period in which they arise, except for exchange differences arising on net investments in a foreign operation and financial liability designated as a hedge of the net investment. When gains or losses on anon-monetary item are recognized in other comprehensive income, any exchange component of those gains or losses are also recognized in other comprehensive income. Conversely, when gains or losses on anon-monetary item are recognized in profit or loss, any exchange component of those gains or losses are also recognized in profit or loss.

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.2.2 Foreign operations

The financial performance and financial position of all foreign operations, whose functional currencies differ from the Group’s presentation currency, are translated into the Group’s presentation currency using the following procedures.

Assets and liabilities for each statement of financial position presented (including comparatives) are translated at the closing rate at the end of the reporting period, unless the functional currency of the foreign operation is in hyper-inflationary economy. Income and expenses in the statement of comprehensive income presented are translated using the exchange rate at the date of the transaction. All resulting exchange differences are recognized in other comprehensive income.

Any goodwill arising from the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising from the acquisition of that foreign operation are treated as assets and liabilities of the foreign operation. Thus, they are expressed in the functional currency of the foreign operation and are translated into the presentation currency at the closing rate.

On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss (as a reclassification adjustment) when the gains or losses on disposal are recognized. On the partial disposal of a subsidiary that includes a foreign operation, the Group redistributes the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income to thenon-controlling interests in that foreign operation. In any other partial disposal of a foreign operation, the Group reclassifies to profit or loss only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income.

3.2.3 Net investment in a foreign operation

If the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, then foreign currency difference arising on the item which in substance is considered to form part of the net investment in the foreign operation, are recognized in the other comprehensive income and shall be reclassified to profit or loss on disposal of the investment.

3.3 Recognition and Measurement of Financial Instruments

3.3.1 Initial recognition

The Group recognizes a financial asset or a financial liability in its statement of financial position when the Group becomes a party to the contractual provisions of the instrument. A regular way purchase or sale of financial assets (a purchase or sale of a financial asset under a contract whose terms require delivery of the financial instruments within the time frame established generally by market regulation or practice) is recognized and derecognized using trade date accounting.

The Group classifies financial assets as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, or financial assets at amortized cost. The Group classifies financial liabilities as financial liabilities at fair value through profit or loss, or other financial liabilities. The classification depends on the nature and holding purpose of the financial instrument at initial recognition in the consolidated financial statements.

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

At initial recognition, a financial asset or financial liability is measured at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

The fair value is defined as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. The fair value of a financial instrument on initial recognition is normally the transaction price (that is, the fair value of the consideration given or received) in an arm’s length transaction.

3.3.2 Subsequent measurement

After initial recognition, financial instruments are measured at amortized cost or fair value based on classification at initial recognition.

Amortized cost

The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured on initial recognition:

• minus the principal repayments

• plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount

• or any reduction (directly or through the use of an allowance account) due to impairment or uncollectibility

Fair value

Fair values, which the Group primarily uses for the measurement of financial instruments, are the published price quotations based on market prices or dealer price quotations of financial instruments traded in an active market where available. These are the best evidence of fair value. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, an entity in the same industry, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

If the market for a financial instrument is not active, fair value is determined either by using a valuation technique or independent third-party valuation service. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, referencing to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models.

The Group uses valuation models that are commonly used by market participants and customized for the Group to determine fair values of commonover-the-counter (OTC) derivatives such as options, interest rate swaps and currency swaps which are based on the inputs observable in markets. For more complex instruments, the Group uses internally developed models, which are usually based on valuation methods and techniques generally used within the industry, or a value measured by an independent external valuation institution as the fair values if all or some of the inputs to the valuation models are not market observable and therefore it is necessary to estimate fair value based on certain assumptions.

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The Group classifies and discloses fair value of financial instruments into the following three-level hierarchy:

Level 1 :	quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date
Level 2 :	inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 :	unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety shall be determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety.

If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

If the valuation technique does not reflect all factors which market participants would consider in setting a price, the fair value is adjusted to reflect those factors. Those factors include counterparty credit risk,bid-ask spread, liquidity risk and others.

The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with economic methodologies applied for pricing financial instruments. Periodically, the Group calibrates the valuation technique and tests its validity using prices of observable current market transactions of the same instrument or based on other relevant observable market data.

3.3.3 Derecognition

Derecognition is the removal of a previously recognized financial asset or financial liability from the statement of financial position. The Group derecognizes a financial asset or a financial liability when, and only when:

Derecognition of financial assets

Financial assets are derecognized when the contractual rights to the cash flows from the financial assets expire or the financial assets have been transferred and substantially all the risks and rewards of ownership of the financial assets are also transferred, or all the risks and rewards of ownership of the financial assets are neither substantially transferred nor retained and the Group has not retained control. If the Group neither transfers nor disposes of substantially all the risks and rewards of ownership of the financial assets, the Group continues to recognize the financial asset to the extent of its continuing involvement in the financial asset.

If the Group transfers the contractual rights to receive the cash flows of the financial asset, but retains substantially all the risks and rewards of ownership of the financial asset, the Group continues to recognize the transferred asset in its entirety and recognize a financial liability for the consideration received.

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The Group writes off financial assets in its entirety or to a portion thereof when the principal and interest on the principal amount outstanding are determined to be no longer recoverable. In general, the Group considerswrite-off if significant financial difficulties of the debtor, or delinquency in interest or principal payments is indicated. Thewrite-off decision is made in accordance with internal regulations and may require approval from external institution, if necessary. After thewrite-off, the Group can collect thewritten-off loans continuously according to the internal policy. Recovered amounts of financial assets previouslywritten-off are recognized at profit or loss.

Derecognition of financial liabilities

Financial liabilities are derecognized from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expires.

3.3.4 Offsetting

Financial assets and liabilities are offset and the net amount reported in the consolidated statements of financial position where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.

3.4 Cash and Due from Financial Institutions

Cash and due from financial institutions include cash on hand, foreign currency, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and due from financial institutions. Cash and due from financial institutions are measured at amortized cost.

3.5Non-derivative Financial Assets

3.5.1 Financial assets at fair value through profit or loss

Financial assets classified as held for trading, financial assets designated by the Group as at fair value through profit or loss upon initial recognition, and financial assets that are required to be mandatorily measured at fair value through profit or loss are classified as financial assets at fair value through profit or loss

The Group may designate certain financial assets upon initial recognition as at fair value through profit or loss when the designation eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as ‘an accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.

After initial recognition, a financial asset at fair value through profit or loss is measured at fair value and gains or losses arising from a change in the fair value are recognized in profit or loss. Interest income and dividend income from financial assets at fair value through profit or loss are also recognized in the statement of comprehensive income.

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KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.5.2 Financial assets at fair value through other comprehensive income

The Group classifies below financial assets as financial assets at fair value through other comprehensive income;

• debt instruments that are a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and consistent with representing solely payments of principal and interest on the principal amount outstanding or;

• equity instruments, not held for trading with the objective of generating a profit from short-term fluctuations in price or dealer’s margin, designated as financial assets at fair value through other comprehensive income

After initial recognition, a financial asset at fair value through other comprehensive income is measured at fair value. Gain and loss from changes in fair value, other than dividend income and interest income amortized using effective interest method and exchange differences arising on monetary items which are recognized directly in income as interest income or expense, are recognized as other comprehensive income in equity.

At disposal of financial assets at fair value through other comprehensive income, cumulative gain or loss is recognized as profit or loss for the reporting period. However, cumulative gain or loss of equity instrument designated as fair value through other comprehensive income are not recycled to profit or loss at disposal.

Financial assets at fair value through other comprehensive income denominated in foreign currencies are translated at the closing rate. Exchange differences resulting from changes in amortized cost are recognized in profit or loss, and other changes are recognized as equity.

3.5.3 Financial assets measured at amortized cost

A financial asset, which are held within the business model whose objective is to hold assets in order to collect contractual cash flows and consistent with representing solely payments of principal and interest on the principal amount outstanding, are classified as a financial asset at amortized cost.

Financial assets at amortized cost are subsequently measured at amortized cost using the effective interest method after initial recognition and interest income is recognized using the effective interest method.

3.6 Expected Credit Loss of Financial Assets (Debt Instruments)

The Group measures expected credit loss and recognizes loss allowance at the end of the reporting period for financial assets measured at amortized cost and fair value through other comprehensive income with the exception of financial asset measured at fair value through profit or loss.

Expected credit losses are a probability-weighted estimate of credit losses (i.e. the present value of all cash shortfalls) over the expected life of the financial instrument. The Group measures expected credit losses 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.

19

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The Group uses the following three measurement techniques in accordance with Korean IFRS:

• General approach: for financial assets andoff-balance-sheet unused credit line that are not applied below two approaches

• Simplified approach: for receivables, contract assets and lease receivables

• Credit-impaired approach: for purchased or originated credit-impaired financial assets

Different measurement approaches are applied depending on significant increase in credit risk. 12 month expected credit losses is recognized when credit risk has not significantly increased since initial recognition. A loss allowance at an amount equal to lifetime expected credit losses is recognized when credit risk has significantly increased since initial recognition. Lifetime is presumed to be a period to the contractual maturity date of a financial asset (the expected life of the financial asset).

One or more of the following items is deemed significant increase in credit risk. 30 days past due presumption is applicable for all consolidated subsidiaries, and other standards are selectively applied considering applicability of each subsidiary with its specific indicators. When the contractual cash flows of a financial asset are renegotiated or otherwise modified, the Group determines whether the credit risk has increased significantly since initial recognition using the following information.

• more than 30 days past due;

• decline in credit rating at period end by more than certain notches as compared to that at initial recognition;

• decline in ratings below certain level in the early warning system;

• debt restructuring (except for impaired financial assets); and

• credit delinquency information on Korea Federation of Banks, and etc.

Under simplified approach, the Group shall always measure the loss allowance at an amount equal to lifetime expected credit losses. Under credit-impaired approach, the Group entity shall only recognize the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for purchased or originated credit-impaired financial assets. In assessing credit impairment, the Group uses definition of default as in the new Basel Accord which rules calculation of Capital Adequacy Ratio.

The Group generally deems one or more of the following items credit-impaired:

• no less than 90 days past due;

• legal proceedings related to collection;

• a borrower that has received a warning from the Korea Federation of Banks;

• corporate borrowers that are rated C or D;

• refinancing; and

• debt restructuring.

20

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.6.1 Forward-looking information

The Group uses forward-looking information, when it determines whether the credit risk has increased significantly since initial recognition and measures expected credit losses.

The Group assumes the risk component has a certain correlation with the business cycle, and calculates the expected credit loss by reflecting the forward-looking information with macroeconomic variables such as interest rate, unemployment rate, KOSPI index, GDP and others on the measurement inputs.

Forward looking information used in calculation of expected credit loss is derived by KB Financial Group Research Institute after comprehensive consideration of a variety of factors including scenario in management planning, third party forecast, and others.

3.6.2 Measuring expected credit losses on financial assets at amortized cost

The amount of the loss on financial assets at amortized cost is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate.

The Group estimates expected future cash flows for financial assets that are individually significant (individual assessment of impairment).

For financial assets that are not individually significant, the Group collectively estimates expected credit loss by grouping loans with homogeneous credit risk profile (collective assessment of impairment).

Individual assessment of impairment

Individual assessment of impairment losses are calculated using management’s best estimate on present value of expected future cash flows. The Group uses all the available information including operating cash flow of the borrower and net realizable value of any collateral held.

Collective assessment of impairment

Collective assessment of loss allowance involves historical loss experience along with incorporation of forward-looking information. Such process incorporates factors such as type of collateral, product and borrowers, credit rating, size of portfolio and recovery period and applies probability of default on a group of assets and loss given default by type of recovery method. Also, the expected credit loss model involves certain assumption to determine input based on loss experience and forward-looking information. These models and assumptions are periodically reviewed to reduce gap between loss estimate and actual loss experience.

Lifetime expected credit loss as at the end of the reporting period is calculated by product of carrying amount net of expected repayment, PD for each period and LGD adjusted by change in carrying amount.

21

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.6.3 Measuring expected credit losses on financial assets at fair value through other comprehensive income

Measuring method of expected credit losses on financial assets at fair value through other comprehensive income is equal to the method of financial assets at amortized cost, except for changes in loss allowances that are recognized as other comprehensive income. Amounts recognized in other comprehensive income for sale or repayment of financial assets at fair value through other comprehensive income are reclassified to profit or loss.

3.7 Derivative Financial Instruments

The Group enters into numerous derivative financial instrument contracts such as currency forwards, interest rate swaps, currency swaps and others for trading purposes or to manage its exposures to fluctuations in interest rates and currency exchange, amongst others. These derivative financial instruments are presented as derivative financial instruments within the consolidated financial statements irrespective of transaction purpose and subsequent measurement requirement.

The Group designates certain derivatives as hedging instruments to hedge the risk of changes in fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge) and the risk of changes in cash flow (cash flow hedge). The Group designatesnon-derivatives as hedging instruments to hedge the risk of foreign exchange of a net investment in a foreign operation (hedge of net investment).

At the inception of the hedge, there is formal designation and documentation of the hedging relationship and the Group’s risk management objective and strategy for undertaking the hedge. This documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value attributable to the hedged risk.

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

3.7.1 Derivative financial instruments held for trading

All derivative financial instruments, except for derivatives that are designated and qualify for hedge accounting, are measured at fair value. Gains or losses arising from a change in fair value are recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss.

3.7.2 Fair value hedges

If derivatives qualify for a fair value hedge, the change in fair value of the hedging instrument and the change in fair value of the hedged item attributable to the hedged risk are recognized in profit or loss as part of other operating income and expenses. If hedged items are equity instruments and designated to present the change in fair value of the hedging instrument in OCI, recognized hedge ineffectiveness are presented in other comprehensive income. Fair value hedge accounting is discontinued prospectively if the hedging instrument expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation. Once fair value hedge accounting is discontinued, the adjustment to the carrying amount of a hedged item is fully amortized to profit or loss by the maturity of the financial instrument using the effective interest method.

22

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.7.3 Cash flow hedges

When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with a recognized asset or liability that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and presented in the hedging reserve within equity. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss.

The associated gains or losses that were previously recognized in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment in the same period or periods during which the hedged forecast cash flows affects profit or loss. Cash flow hedge accounting is discontinued prospectively if the hedging instrument expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation. When the cash flow hedge accounting is discontinued, the cumulative gains or losses on the hedging instrument that have been recognized in other comprehensive income are reclassified to profit or loss over the year in which the forecast transaction occurs. If the forecast transaction is no longer expected to occur, the cumulative gains or losses that had been recognized in other comprehensive income are immediately reclassified to profit or loss.

3.7.4 Hedge of net investment

If financial liabilities qualify for a net investment hedge, the effective portion of changes in fair value of hedging instrument is recognized in other comprehensive income and the ineffective portion is recognized in profit. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognized in other comprehensive income will be reclassified from other comprehensive income to profit or loss as a reclassification adjustment on the disposal or partial disposal of the foreign operation in accordance with Korean IFRS 1109Financial Instruments.

3.7.5 Embedded derivatives

If a hybrid contract contains a host that is not an asset an embedded derivative is separated from the host contract and accounted for as a derivative if, and only if the economic characteristics and risks of the embedded derivative are not closely related to those of the host contract and a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and the hybrid (combined) instrument is not measured at fair value with changes in fair value recognized in profit or loss. Gains or losses arising from a change in the fair value of an embedded derivative separated from the host contract are recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss.

3.7.6 Day one gain and loss

If the Group uses a valuation technique that incorporates data not obtained from observable markets for the fair value at initial recognition of the financial instrument, there may be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the difference is deferred and not recognized in profit or loss, and is amortized by using the straight-line method over the life of the financial instrument. If the fair value of the financial instrument is subsequently determined using observable market inputs, the remaining deferred amount is recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss or other operating income and expenses.

23

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.8 Property and Equipment

3.8.1 Recognition and measurement

All property and equipment that qualify for recognition as an asset are measured at cost and subsequently carried at cost less any accumulated depreciation and any accumulated impairment losses.

The cost of property and equipment includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Subsequent expenditures are capitalized only when they prolong the useful life or enhance values of the assets but the costs of theday-to-day servicing of the assets such as repair and maintenance costs are recognized in profit or loss as incurred. When part of an item of an asset has a useful life different from that of the entire asset, it is recognized as a separate asset.

3.8.2 Depreciation

Land is not depreciated, whereas other property and equipment are depreciated using the method that reflects the pattern in which the asset’s future economic benefits are expected to be consumed by the Group. The depreciable amount of an asset is determined after deducting its residual value. As for leased assets, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life.

Each part of an item of property and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The depreciation method and estimated useful lives of the assets are as follows:

Property and equipment	Depreciation method	Estimated useful life
Buildings and structures	Straight-line	40 years
Leasehold improvements	Declining-balance/ Straight-line	4 years
Equipment and vehicles	Declining-balance/ Straight-line	3 ~ 8 years
Finance leased assets	Declining-balance	8 months ~ 5 years and 8 months

The residual value, the useful life and the depreciation method applied to an asset are reviewed at least at each financial year end. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.

24

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.9 Investment Properties

3.9.1 Recognition and measurement

Properties held to earn rentals or for capital appreciation or both are classified as investment properties. Investment properties are measured initially at their cost and subsequently the cost model is used.

3.9.2 Depreciation

Land is not depreciated, whereas other investment properties are depreciated using the method that reflects the pattern in which the asset’s future economic benefits are expected to be consumed by the Group. The depreciable amount of an asset is determined after deducting its residual value.

The depreciation method and estimated useful lives of the assets are as follows:

Investment property	Depreciation method	Estimated useful life
Buildings	Straight-line	40 years

The residual value, the useful life and the depreciation method applied to an asset are reviewed at least at each financial year end. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.

3.10 Intangible Assets

Intangible assets are measured initially at cost and subsequently carried at their cost less any accumulated amortization and any accumulated impairment losses.

Intangible assets, except for goodwill and membership rights, are amortized using the straight-line method or double declining balance method with no residual value over their estimated useful economic life since the asset is available for use.

Intangible assets	Amortization method	Estimated useful life
Industrial property rights	Straight-line	3~10 years
Software	Straight-line	3~5 years
Finance leased assets	Straight-line	8 months ~ 5 years and 8 months
VOBA	Declining-Balance	60 years
Others	Straight-line	1~10 years

The amortization period and the amortization method for intangible assets with a finite useful life are reviewed at least at each financial year end. Where an intangible asset is not being amortized because its useful life is considered to be indefinite, the Group carries out a review in each accounting period to confirm whether or not events and circumstances still support the assumption of an indefinite useful life. If they do not, the change from the indefinite to finite useful life is accounted for as a change in an accounting estimate.

25

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.10.1 Value of business acquired (VOBA)

The Group recorded value of business acquired (VOBA) as intangible assets, which are the differences between the fair value of insurance liabilities and book value calculated based on the accounting policy of the acquired company. VOBA is an estimated present value of future cash flow of long-term insurance contracts at the acquisition date. VOBA is amortized for above estimated useful life using declining balance method, the depreciation is recognized as insurance expense.

3.10.2 Goodwill

Recognition and measurement

Goodwill acquired from business combinations before January 1, 2010, is stated at its carrying amount which was recognized under the Group’s previous accounting policy, prior to the transition to Korean IFRS.

Goodwill acquired from business combinations after January 1, 2010, is initially measured as the excess of the aggregate of the consideration transferred, fair value ofnon-controlling interest and the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the business acquired, the difference is recognized in profit or loss.

For each business combination, the Group decides whether thenon-controlling interest in the acquiree is initially measured at fair value or at thenon-controlling interest’s proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Acquisition-related costs incurred to effect a business combination are charged to expenses in the periods in which the costs are incurred and the services are received, except for the costs to issue debt or equity securities.

Additional acquisitions ofnon-controlling interest

Additional acquisitions ofnon-controlling interests are accounted for as equity transactions. Therefore, no additional goodwill is recognized.

Subsequent measurement

Goodwill is not amortized and is stated at cost less accumulated impairment losses. However, goodwill that forms part of the carrying amount of an investment in associates is not separately recognized and an impairment loss recognized is not allocated to any asset, including goodwill, which forms part of the carrying amount of the investment in the associates.

3.10.3 Subsequent expenditure

Subsequent expenditure is capitalized only when it enhances values of the assets. Internally generated intangible assets, such as goodwill and trade name, are not recognized as assets but expensed as incurred.

26

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.11 Leases

3.11.1 Finance lease

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. At the commencement of the lease term, the Group recognizes finance leases as assets and liabilities in its statements of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Any initial direct costs of the lessee are added to the amount recognized as an asset.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the periods in which they are incurred.

The depreciable amount of a leased asset is allocated to each accounting period during the period of expected use on a systematic basis consistent with the depreciation policy the Group adopts for depreciable assets that are owned. If there is reasonable certainty that the lessee will obtain ownership by the end of the lease term, the period of expected use is the useful life of the asset; otherwise, the asset is fully depreciated over the shorter of the lease term and its useful life.

3.11.2 Operating lease

A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Leases in the financial statements of lessors

Lease income from operating leases are recognized in income on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred by lessors in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income.

Leases in the financial statements of lessees

Lease payments under an operating lease (net of any incentives received from the lessor) are recognized as an expense on a straight-line basis over the lease term unless another systematic basis is more representative of the time pattern of the asset’s benefit.

3.12 Greenhouse Gas Emission Rights and Liabilities

The Group measured at zero the emission rights received free of charge from the government following the Enforcement of Allocation and Trading of Greenhouse Gas Emissions Allowances. Emission rights purchased are measured initially at cost and subsequently carried at their costs less any accumulated impairment losses. Emission liabilities are measured as the sum of the carrying amount of emission allowances held by the Group and best estimate of the expenditure required to settle the obligation for any excess emissions at the end of reporting period. The emission rights and liabilities are classified as ‘intangible assets’ and ‘provisions’, respectively, in the consolidated statement of financial position.

27

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The emission rights held for trading are measured at fair value and the changes in fair value are recognized in profit or loss. The changes in fair value and gain or loss on disposal are classified asnon-operating income and expenses.

3.13 Impairment ofNon-Financial Assets

The Group assesses at the end of each reporting period whether there is any indication that anon-financial asset, except for (i) deferred income tax assets, (ii) assets arising from employee benefits and(iii) non-current assets (or group of assets to be sold) classified as held for sale, may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. However, irrespective of whether there is any indication of impairment, the Group tests (i) goodwill acquired in a business combination, (ii) intangible assets with an indefinite useful life and (iii) intangible assets not yet available for use for impairment annually by comparing their carrying amount with their recoverable amount.

The recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the cash-generating unit to which the asset belongs (the asset’s cash-generating unit). A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit that are discounted by apre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss and recognized immediately in profit or loss. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit.

An impairment loss recognized for goodwill is not reversed in a subsequent period. The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset, other than goodwill, may no longer exist or may have decreased, and an impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss cannot exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

28

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.14Non-Current Assets Held for Sale

Anon-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition and its sale must be highly probable. Anon-current asset (or disposal group) classified as held for sale is measured at the lower of its carrying amount and fair value less costs to sell which is measured in accordance with the applicable Korean IFRS, immediately before the initial classification of the asset (or disposal group) as held for sale.

Anon-current asset while it is classified as held for sale or while it is part of a disposal group classified as held for sale is not depreciated (or amortized).

Impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. Gains are recognized for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss that has been recognized.

3.15 Financial Liabilities at Fair Value through Profit or Loss

The Group classifiesnon-derivative financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities in accordance with the substance of the contractual arrangement and the definitions of financial liabilities.

The Group recognizes financial liabilities in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the financial liability.

3.15.1 Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading or designated as such upon initial recognition. Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the acquisition are recognized in profit or loss as incurred.

In relation to securities lending or borrowing transactions, the Group records transaction using memo value when it borrows securities from Korea Securities Depository etc. The borrowed securities are treated as financial liabilities at fair value through profit and loss when the Group sells them. Changes in fair value at the end of the reporting period and difference between carrying amount at redemption and purchased amount are recognized as profit and loss.

In addition, for the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability, the Group present this change in other comprehensive income, and does not recycle this other comprehensive income to profit or loss, subsequently. When this treatment create or enlarge an accounting mismatch, the Group recognizes this change as profit or loss for the current period.

3.15.2 Other financial liabilities

Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as other financial liabilities. Other financial liabilities include Deposits, Debts, Debentures and others. At the date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the acquisition. Subsequent to initial recognition, other financial liabilities are measured at amortized cost using the effective interest method.

29

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

In case an asset is sold under repurchase agreement, the Group continues to recognize the asset with the amount sold being accounted for as borrowing.

The Group derecognizes a financial liability from the consolidated statement of financial position only when it is extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires).

3.16 Insurance Contracts

KB Life Insurance Co., Ltd., and KB Insurance Co., Ltd., the subsidiaries of the Group, issue insurance contracts.

Insurance contracts are defined as “a contract under which one party (the insurer) accepts significant insurance risk from another party by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder”. A contract that qualifies as an insurance contract remains an insurance contract until all rights and obligations are extinguished or expire. Such a contract that does not contain significant insurance risk is classified as an investment contract and is within the scope of Korean IFRS 1109,Financial Instruments to the extent that it gives rise to a financial asset or financial liability, except if the investment contract contains a Discretionary Participation Features (DPF). If the contract has a DPF, the contract is subject to Korean IFRS 1104,Insurance Contracts. The Group recognizes assets (liabilities) and gains (losses) relating to insurance contracts as other assets (liabilities) in the statements of financial position, and as other operating income (expenses) in the statements of comprehensive income, respectively.

3.16.1 Insurance premiums

The Group recognizes collected premiums as revenue on the due date of collection of premiums from insurance contracts and the collected premium which is unmatured at the end of the reporting period is recognized as unearned premium.

3.16.2 Insurance liabilities

The Group recognizes a liability for future claims, refunds, policyholders’ dividends and related expenses as follows:

Premium reserve

Premium reserve refers to an amount based on the net premium method for payment of future claims with respect to events covered by insurance policies which have not yet occurred as of the reporting period. It is calculated as the greater of the amount using standard interest rate and standard loss ratio defined by Financial Supervisory Services and the amount using the actual underlying data that have been used in premium calculation.

Reserve for outstanding claims

Reserve for outstanding claims refers to the amount not yet paid, out of an amount to be paid or expected to be paid with respect to the insured events which have arisen as of the end of each fiscal year.

30

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Unearned premium reserve

Unearned premium refers to the portion of the premium that has been paid in advance for insurance that has not yet been provided. An unearned premium reserve refers to the amount maintained by the insurer to refund in the event of either party cancelling the contract.

Policyholders’ dividends reserve

Policyholders’ dividends reserve including an interest rate guarantee reserve, a mortality dividend reserve and an interest rate difference dividend reserve is recognized for the purpose of provisioning for policyholders’ dividends in the future in accordance with statutes or insurance terms and conditions.

3.16.3 Liability adequacy test

The Group assesses at each reporting period whether its insurance liabilities are adequate, using current estimates of all future contractual cash flows and related cash flow such as claims handling cost, as well as cash flows resulting from embedded options and guarantees under its insurance contracts in accordance with Korean IFRS 1104. If the assessment shows that the carrying amount of its insurance liabilities is inadequate in light of the estimated future cash flows, the entire deficiency is recognized in profit or loss and reserved as insurance liabilities. Future cash flows from long-term insurance are discounted at a future rate of return on operating assets, whereas future cash flows from general insurance are not discounted to present value. For liability adequacy tests of premium and unearned premium reserves, the Group considers all cash flow factors such as future insurance premium, deferred acquisition costs, operating expenses and operating premiums. In relation to the reserve for outstanding claims, the Group elects a model that best reflects the trend of paid claims among several statistical methods to perform the adequacy test.

3.16.4 Deferred acquisition costs

Acquisition cost is deferred in an amount actually spent for an insurance contract and equally amortized over the premium payment period or the period in which acquisition costs are charged for the relevant insurance contract. Acquisition costs are amortized over the shorter of seven years or premium payment period; if there is any unamortized acquisition costs remaining as of the date of surrender or lapse, such remainder shall be amortized in the period in which the contract is surrendered or lapsed.

3.17 Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of provisions, and where the effect of the time value of money is material, the amount of provisions are the present value of the expenditures expected to be required to settle the obligation.

Provisions on confirmed and unconfirmed acceptances and guarantees, unfunded commitments of credit cards and unused credit lines of consumer and corporate loans are recognized using a valuation model that applies the credit conversion factor, probability of default, and loss given default.

31

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provisions are reversed.

If the Group has an onerous contract, the present obligation under the contract is recognized and measured as provisions. An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the minimum net cost to exit from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfill it.

3.18 Financial Guarantee Contracts

A financial guarantee contract requires the issuer (the Group) to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are initially recognized at fair value as other liabilities, and are amortized over the contractual term. After initial recognition, financial guarantee contracts are measured at the higher of:

• The amount determined in accordance with Korean IFRS 1109,Financial Instrumentsand

• The initial amount recognized, less, when appropriate, cumulative amortization recognized in accordance with Korean IFRS 1115,Revenue from Contracts with Customers.

3.19 Equity Instruments Issued by the Group

An equity instrument is any contract or agreement that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

3.19.1 Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or the exercise of stock option are deducted from the equity, net of any tax effects.

3.19.2 Hybrid bonds

The Group classifies issued financial instruments, or their component parts, as a financial liability or an equity instrument depending on the substance of the contractual arrangement of such financial instruments. Hybrid bonds are classified as equity instruments and presented in equity, if the Group has an unconditional right to avoid delivering cash or another financial asset to settle a contractual obligation are classified as equity instruments and presented in equity.

3.19.3 Treasury shares

If the Group acquires its own equity instruments, these are accounted for as treasury shares and are deducted directly from equity. No gains or losses are recognized in profit or loss on the purchase, sale, issue or cancellation of own equity instruments. If an entity within the Group acquires and retains treasury shares, the consideration paid or received is directly recognized in equity.

32

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.19.4 Hybrid financial instruments

A hybrid financial instrument is classified as a financial liability or an equity instrument depending on the substance of the contractual arrangement of such financial instrument. The liability component of the hybrid financial instrument is measured at fair value of the similar liability without conversion option at initial recognition and subsequently measured at amortized cost using effective interest rate method until it is extinguished by conversion or matured. Equity component is initially measured at fair value of hybrid financial instrument in entirety less fair value of liability component net of tax effect and it is not remeasured subsequently.

3.20 Revenue Recognition

The Group recognizes revenues in accordance with the following revenue recognition standard:

• Step 1: Identify the contract with a customer.

• Step 2: Identify the performance obligations in the contract.

• Step 3: Determine the transaction price.

• Step 4: Allocate the transaction price to the performance obligations in the contract.

• Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

3.20.1 Interest income and expense

Interest income of financial assets at amortized cost and financial assets at fair value through other comprehensive income, and expense are recognized in statements of comprehensive income using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability (or groups of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument or, where appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees and points paid (main components of effective interest rates only) or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. In those rare cases when it is not possible to estimate reliably the cash flows or the expected life of a financial instrument (or group of financial instruments), the Group uses the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments).

Interest on impaired financial assets is recognized using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

Interest earned arising from debt investments at fair value through profit or loss is also classified as interest income in statements of comprehensive income.

33

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.20.2 Fee and commission income

The Group recognizes financial service fees in accordance with the accounting standard of the financial instrument related to the fees earned.

Fees that are an integral part of the effective interest of a financial instrument

Such fees are generally treated as adjustments of effective interest. Such fees may include compensation for activities such as evaluating the borrower’s financial condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating the terms of the instrument, preparing and processing documents and closing the transaction and origination fees received on issuing financial liabilities measured at amortized cost. However, fees relating to the creation or acquisition of a financial instrument at fair value through profit or loss are recognized as revenue immediately.

Fees earned as services are provided

Such fees are recognized as revenue as the services are provided. Fees which can be earned through the certain periods, including account servicing fees, investment management fees, and etc. are recognized when the related services are provided.

Fees that are earned on the execution of a significant act

Such fees are recognized as revenue when the significant act has been completed.

Commission on the allotment of shares to a client is recognized as revenue when the shares have been allotted and placement fees for arranging a loan between a borrower and an investor is recognized as revenue when the loan has been arranged.

A syndication fee received by the Group that arranges a loan and retains no part of the loan package for itself (or retains a part at the same effective interest rate for comparable risk as other participants) is compensation for the service of syndication. Such a fee is recognized as revenue when the syndication has been completed.

3.20.3 Net gains/losses on financial instruments at fair value through profit or loss

Net gains/losses on financial instruments at fair value through profit or loss include profit or loss (changes in fair value, dividends, and gain/loss from foreign currency translation) from following financial instruments:

• Gain or loss from financial instruments at fair value through profit or loss

• Gain or loss from derivatives for trading, including derivatives for hedging that does not meet the condition of hedge accounting

3.20.4 Dividend income

Dividend income is recognized in profit or loss when the right to receive payment is established. Dividend income is recognized as relevant items on statements of profit or loss and other comprehensive income in accordance with the classification of equity instruments.

34

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.21 Employee Compensation and Benefits

3.21.1 Post-employment benefits:defined contribution plans

The contributions are recognized as employee benefit expense when they are due.

3.21.2 Post-employment benefits: defined benefit plans

All post-employment benefits, other than defined contribution plans, are classified as defined benefit plans. The amount recognized as a defined benefit liability is the present value of the defined benefit obligation less the fair value of plan assets at the end of the reporting period.

The present value of the defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit method. The rate used to discount post-employment benefit obligations is determined by reference to market yields at the end of the reporting period on high quality corporate bonds. The currency and term of the corporate bonds are consistent with the currency and estimated term of the post-employment benefit obligations. Actuarial gains and losses including experience adjustments and the effects of changes in actuarial assumptions are recognized in other comprehensive income.

When the total of the present value of the defined benefit obligation minus the fair value of plan assets results in an asset, it is recognized to the extent of the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

Past service cost is the change in the present value of the defined benefit obligation, which arises when the Group introduces a defined benefit plan or changes the benefits of an existing defined benefit plan. Such past service cost is immediately recognized as an expense for the reporting period.

3.21.3 Short-term employee benefits

Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within 12 months after the end of the period in which the employees render the related service. The undiscounted amount of short-term employee benefits expected to be paid in exchange for that service is recognized as a liability (accrued expense), after deducting any amount already paid.

The expected cost of profit-sharing and bonus payments are recognized as liabilities when the Group has a present legal or constructive obligation to make such payments as a result of past events rendered by employees and a reliable estimate of the obligation can be made.

3.21.4 Share-based payment

The Group has stock option and stock grant programs to directors and employees of the Group. When the options are exercised, the Group can either select to issue new shares or distribute treasury shares, or compensate the difference in fair value of shares and exercise price.

For a share-based payment transaction in which the terms of the arrangement provide the Group with the choice of whether to settle in cash or by issuing equity instruments, the Group determines that it has a present obligation to settle in cash because the Group has a past practice and a stated policy of settling in cash. Therefore, the Group accounts for the transaction in accordance with the requirements of cash-settled share-based payment transactions.

35

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The Group measures the services acquired and the liability incurred at fair value, and the fair value is recognized as expense and accrued expenses over the vesting period. Until the liability is settled, the Group remeasures the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss for the reporting period.

3.21.5 Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group shall recognize a liability and expense for termination benefits at the earlier of the following dates: when the Group can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring that is within the scope of Korean IFRS 1037 and involves the payment of termination benefits. Termination benefits are measured by considering the number of employees expected to accept the offer in the case of a voluntary early retirement. Termination benefits over 12 months after the reporting period are discounted to present value.

3.22 Income Tax Expenses

Income tax expense comprises current tax expense and deferred income tax expense. Current and deferred income tax are recognized as income or expense for the period, except to the extent that the tax arises from (a) a transaction or an event which is recognized, in the same or a different period outside profit or loss, either in other comprehensive income or directly in equity and (b) a business combination.

3.22.1 Current income tax

Current income tax is the amount of income taxes payable in respect of the taxable profit (loss) for a period. A difference between the taxable profit and accounting profit may arise when income or expense is included in accounting profit in one period, but is included in taxable profit in a different period. Differences may also arise if there is revenue that is exempt from taxation, or expense that is not deductible in determining taxable profit (loss). Current income tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The Group offsets current income tax assets and current income tax liabilities if, and only if, the Group (a) has a legally enforceable right to offset the recognized amounts and (b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

3.22.2 Deferred income tax

Deferred income tax is recognized, using the asset-liability method, on temporary differences arising between the tax based amount of assets and liabilities and their carrying amount in the financial statements. Deferred income tax liabilities are recognized for all taxable temporary differences and deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

36

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except for deferred income tax liabilities for which the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of a deferred income tax asset is reviewed at the end of each reporting period. The Group reduces the carrying amount of a deferred income tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred income tax liabilities and deferred income tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

The Group offsets deferred income tax assets and deferred income tax liabilities when the Group has a legally enforceable right to offset current income tax assets against current income tax liabilities; and the deferred income tax assets and the deferred income tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity; or different taxable entities which intend either to settle current income tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred income tax liabilities or assets are expected to be settled or recovered.

3.22.3 Uncertain tax positions

Uncertain tax positions arise from tax treatments applied by the Group which may be challenged by the tax authorities due to the complexity of the transaction or different interpretation of the tax laws, a claim for rectification brought by the Group, or an appeal for a refund claimed from the tax authorities related to additional assessments. The Group recognizes its uncertain tax positions in the consolidated financial statements based on the guidance in Korean IFRS 1012. The income tax asset is recognized if a tax refund is probable for taxes paid and levied by the tax authority. However, interest and penalties related to income tax are recognized in accordance with Korean IFRS 1037.

3.23 Earnings per Share

The Group calculates basic earnings per share amounts and diluted earnings per share amounts for profit or loss attributable to ordinary equity holders of the Parent Company and presents them in the statement of comprehensive income. Basic earnings per share is calculated by dividing profit or loss attributable to ordinary equity holders of the Parent Company by the weighted average number of ordinary shares outstanding during the period. For the purpose of calculating diluted earnings per share, the Group adjusts profit or loss attributable to ordinary equity holders of the Parent Company and the weighted average number of shares outstanding for the effects of all dilutive potential ordinary shares including convertible bonds and share options.

37

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

3.24 Operating Segments

Operating segments are components of the Group where separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

Segment information includes items which are directly attributable and reasonably allocated to the segment.

3.25 Overlay Approach

The Group applies the overlay approach in accordance with Korean IFRS 1104, and financial asset is eligible for designation for the overlay approach if, and only if, the following criteria are met:

• It is measured at fair value through profit or loss applying Korean IFRS 1109 but would not have been measured at fair value through profit or loss in its entirety applying Korean IFRS 1039.

• It is not held in respect of an activity that is unconnected with contracts within the scope of Korean IFRS 1104.

The Group reclassifies between profit or loss and other comprehensive income, and the amount reclassified is equal to the difference between:

• The amount reported in profit or loss for the designated financial assets applying Korean IFRS 1109.

• The amount that would have been reported in profit or loss for the designated financial assets if the insurer had applied Korean IFRS 1039.

The Group is permitted to apply this approach either at initial recognition or it may subsequently designate financial assets that newly meet criterion of not being held in respect of activity unconnected with insurance contract, they having previously not met that criterion.

The Group continues to apply the overlay approach to a designated financial asset until that financial asset is derecognized. However, the Groupde-designates a financial asset when the financial asset no longer meets the criterion. In this case, the Group reclassifies from accumulated other comprehensive income to profit or loss as a reclassification adjustment any balance relating to that financial asset.

At the beginning of any annual period, the Group may stop applying the overlay approach to all designated financial assets, and shall not subsequently apply the overlay approach, if it stops using this approach because it is no longer an insurer.

38

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

4. Financial Risk Management

4.1 Summary

4.1.1 Overview of financial risk management policy

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

The Group’s risk management system focuses on increasing transparency, developing the risk management environment, preventing transmission of risk to other related subsidiaries, and the preemptive response to risk due to rapid changes in the financial environment to support the Group’s long-term strategy and business decisions efficiently. Credit risk, market risk, liquidity risk, and operational risk have been recognized as the Group’s key risks. These risks are measured and managed in Economic 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 Group’s target risk appetite. The Committee approves significant risk matters and reviews the level of risks that the Group is exposed to and the appropriateness of the Group’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 Group’s risk management.

Risk Management Division

The Risk Management Division is responsible for monitoring and managing the Group’s economic capital limit and managing detailed policies, procedures and working processes relating to the Group’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 a 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, country risk, specific risks and other credit risk exposure components are considered as a whole.

4.2.2 Credit risk management

The Group measures expected losses and economic capital on assets that are subject to credit risk management whetheron- or off-balance sheet items and uses expected losses and economic capital as a management indicator. The Group manages credit risk by allocating credit risk economic capital limits.

39

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

In addition, the Group controls the credit concentration risk exposure by applying and managing total exposure limits to prevent an excessive risk concentration to each industry and borrower.

The Group has organized a credit risk management team that focuses on credit risk management in accordance with the Group’s credit risk management policy. Especially, the loan analysis department of Kookmin Bank, one of the subsidiaries, is responsible for loan policy, loan limit, loan review, credit management, restructuring and subsequent event management, independently of operating department. On the other hand, risk management group of Kookmin Bank is responsible for planning risk management policy, applying limits of credit lines, measuring the credit risk economic capital, adjusting credit limits, reviewing credit and verifying credit evaluation models.

4.2.3 Maximum exposure to credit risk

The Group’s maximum exposures of financial instruments, excluding equity securities, to credit risk without consideration of collateral values as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
Financial assets
Due from financial institutions at amortized cost2	W	15,515,475
Financial assets at fair value through profit or loss
Due from financial institutions		506,245
Securities1		34,296,069
Loans		844,899
Derivatives		2,206,870
Loans at amortized cost2		316,430,970
Financial investments
Securities measured at fair value through other comprehensive income		33,662,743
Securities measured at amortized cost2		23,074,564
Other financial assets2		13,957,209
		440,495,044
Off-balance sheet items
Acceptances and guarantees contracts		7,819,957
Financial guarantee contracts		3,665,581
Commitments		134,271,292
		145,756,830
	W	586,251,874

¹  Including financial instruments indexed to gold price amounting toW 74,571 million and excluding puttable instruments (investment fund classified as debt securities, etc.) amounting toW 13,816,191 million.

²  Due from financial institutions, loans and other financial assets are net of allowance.

40

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
Financial assets
Due from financial institutions	W	17,219,661
Financial assets at fair value through profit or loss
Financial assets held for trading1		25,242,193
Financial assets designated at fair value through profit or loss		1,982,224
Derivatives		3,310,166
Loans2		290,122,838
Financial investments
Available-for-sale financial assets		38,959,401
Held-to-maturity financial assets		18,491,980
Other financial assets2		10,195,015
		405,523,478
Off-balance sheet items
Acceptances and guarantees contracts		6,977,468
Financial guarantee contracts		3,683,875
Commitments		102,183,167
		112,844,510
	W	518,367,988

¹ Including financial instruments indexed to gold amounting toW 73,855 million.

²  Loans and other financial assets are net of allowance.

4.2.4 Credit risk of loans

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

The Group assesses expected credit loss on financial asset at amortized cost and financial asset at fair value through other comprehensive income other than financial asset at fair value through profit or loss and recognizes loss allowance. Expected credit losses are a probability-weighted estimate of possible credit losses within certain range by reflecting reasonable and supportable information that is reasonably available at the reporting date without undue cost or effort, including information about past events, current conditions and forecasts of future economic conditions. The Group assesses the expected credit losses for loans categorized in financial assets at amortized cost, and presents it with the name of account ‘allowance for loan losses’ netting from the related carrying amounts. For the expected credit losses for loans categorized in financial assets at fair value through other comprehensive income, the Group presents it at other comprehensive income.

41

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Loans as of September 30, 2018, are classified as follows:

(In millions of Korean won)	September 30, 2018
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Financial assets at amortized cost1
Corporate
Grade 1	W	77,069,543	W	2,149,063	W	502	W	—	W	79,219,108
Grade 2		55,434,803		4,331,859		11,049		—		59,777,711
Grade 3		3,076,985		1,796,114		9,236		—		4,882,335
Grade 4		507,495		1,041,438		88,883		—		1,637,816
Grade 5		397,326		348,592		1,073,608		—		1,819,526
		136,486,152		9,667,066		1,183,278		—		147,336,496
Retail
Grade 1		130,305,791		4,424,580		5,933		—		134,736,304
Grade 2		7,898,031		7,584,793		10,717		—		15,493,541
Grade 3		1,890,820		1,270,773		16,577		—		3,178,170
Grade 4		569,558		326,777		29,905		—		926,240
Grade 5		25,121		384,555		469,551		—		879,227
		140,689,321		13,991,478		532,683		—		155,213,482
Credit card
Grade 1		7,585,437		167,710		—		—		7,753,147
Grade 2		4,388,481		563,724		—		—		4,952,205
Grade 3		1,471,486		1,208,858		—		—		2,680,344
Grade 4		7,214		465,466		—		—		472,680
Grade 5		5		171,606		399,497		—		571,108
		13,452,623		2,577,364		399,497		—		16,429,484
	W	290,628,096	W	26,235,908	W	2,115,458	W	—	W	318,979,462

¹ Before netting of allowance.

Credit quality of loans graded according to internal credit ratings are as follows:

	Range of Probability of Default (%)	Retail	Corporate
Grade 1	0.0 ~ 1.0	1 ~ 5 grade	AAA ~ BBB+
Grade 2	1.0 ~ 5.0	6 ~ 8 grade	BBB ~ BB
Grade 3	5.0 ~ 15.0	9 ~ 10 grade	BB- ~ B
Grade 4	15.0 ~ 30.0	11 grade	B- ~ CCC
Grade 5	30.0 ~	12 grade or under	CC or under

42

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Loans as of December 31, 2017, are classified as follows:

(In millions of Korean won)	December 31, 2017
Loans	Retail					Corporate					Credit card					Total
	Amount			%		Amount			%		Amount			%		Amount			%
Neither past due nor impaired	W	144,705,621			98.93	W	129,130,466			98.76	W	14,496,109			95.34	W	288,332,196			98.67
Past due but not impaired		1,069,813			0.73		206,925			0.16		359,468			2.36		1,636,206			0.56
Impaired		495,546			0.34		1,419,851			1.08		349,270			2.30		2,264,667			0.77
		146,270,980			100.00		130,757,242			100.00		15,204,847			100.00		292,233,069			100.00
Less: Allowances1		(429,299	)		0.29		(1,231,666	)		0.94		(449,266	)		2.95		(2,110,231	)		0.72
Carrying amount	W	145,841,681				W	129,525,576				W	14,755,581				W	290,122,838

¹ Collectively assessed allowances for loans are included as they are not impaired individually.

Credit quality of loans that are neither past due nor impaired are as follows:

(In millions of Korean won)	December 31, 2017
	Retail		Corporate		Credit card		Total
Grade 1	W	124,133,056	W	67,575,021	W	8,095,629	W	199,803,706
Grade 2		16,790,644		53,842,610		4,920,767		75,554,021
Grade 3		2,701,697		5,703,159		1,379,409		9,784,265
Grade 4		851,446		1,390,131		71,207		2,312,784
Grade 5		228,778		619,545		29,097		877,420
	W	144,705,621	W	129,130,466	W	14,496,109	W	288,332,196

Loans that are past due but not impaired are as follows:

(In millions of Korean won)	December 31, 2017
	1 ~ 29 days		30 ~ 59 days		60 ~ 89 days		90 days or more		Total
Retail	W	890,759	W	117,057	W	59,632	W	2,365	W	1,069,813
Corporate		162,668		27,065		17,192		—		206,925
Credit card		302,871		35,774		20,823		—		359,468
	W	1,356,298	W	179,896	W	97,647	W	2,365	W	1,636,206

Impaired loans are as follows:

(In millions of Korean won)	December 31, 2017
	Retail			Corporate			Credit card			Total
Loans	W	495,546		W	1,419,851		W	349,270		W	2,264,667
Allowances under
Individual assessment		(788	)		(791,205	)		—			(791,993	)
Collective assessment		(178,337	)		(90,771	)		(212,729	)		(481,837	)
		(179,125	)		(881,976	)		(212,729	)		(1,273,830	)
	W	316,421		W	537,875		W	136,541		W	990,837

43

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The quantification of the extent to which collateral and other credit enhancements mitigate credit risk as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	The financial instruments applying 12- month expected		The financial instruments applying lifetime expected credit losses				Total
	credit losses		Non-impaired		Impaired
Guarantees	W	57,909,622	W	5,729,652	W	146,644	W	63,785,918
Deposits and savings		3,967,093		79,188		6,192		4,052,473
Property and equipment		8,386,575		542,570		43,016		8,972,161
Real estate		145,324,573		12,769,926		504,813		158,599,312
	W	215,587,863	W	19,121,336	W	700,665	W	235,409,864

(In millions of Korean won)	December 31, 2017
	Impaired Loans				Non-impaired Loans
	Individual		Collective		Past due		Not past due		Total
Guarantees	W	17,257	W	113,551	W	209,180	W	57,828,611	W	58,168,599
Deposits and savings		11,857		5,461		40,833		4,149,157		4,207,308
Property and equipment		2,676		30,455		53,647		9,720,857		9,807,635
Real estate		189,480		282,327		688,502		148,183,907		149,344,216
	W	221,270	W	431,794	W	992,162	W	219,882,532	W	221,527,758

4.2.5 Credit quality of securities

Financial assets at fair value through profit or loss and financial investments excluding equity securities and others that are exposed to credit risk as of September 30, 2018, are as follows:

(In millions of Korean won)	September 30, 2018
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non- impaired		Impaired
Securities measured at amortized cost1
Grade 1	W	23,033,633	W	—	W	—	W	—	W	23,033,633
Grade 2		38,874		—		—		—		38,874
Grade 3		3,863		—		—		—		3,863
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		23,076,370		—		—		—		23,076,370
Securities measured at fair value through other comprehensive income1
Grade 1		30,980,859		—		—		—		30,980,859
Grade 2		2,442,661		—		—		—		2,442,661
Grade 3		123,562		—		—		—		123,562
Grade 4		112,795		—		—		—		112,795
Grade 5		—		—		2,866		—		2,866
	W	33,659,877	W	—	W	2,866	W	—	W	33,662,743

¹ Before netting of allowance

44

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The credit qualities of securities, excluding equity securities and others according to the credit ratings by external rating agencies as of September 30, 2018, and December 31, 2017, are as follows:

Credit	Domestic				Foreign
quality	KIS	NICE P&I	KAP	FnPricing Inc.	S&P	Fitch-IBCA	Moody’s
Grade 1	AA0 to AAA	AA0 to AAA	AA0 to AAA	AA0 to AAA	A- to AAA	A- to AAA	A3 to Aaa
Grade 2	A- to AA-	A- to AA-	A- to AA-	A- to AA-	BBB- to BBB+	BBB- to BBB+	Baa3 to Baa1
Grade 3	BBB0 to BBB+	BBB0 to BBB+	BBB0 to BBB+	BBB0 to BBB+	BB to BB+	BB to BB+	Ba2 to Ba1
Grade 4	BB0 to BBB-	BB0 to BBB-	BB0 to BBB-	BB0 to BBB-	B+ to BB-	B+ to BB-	B1 to Ba3
Grade 5	BB- or under	BB- or under	BB- or under	BB- or under	B or under	B or under	B2 or under

Credit qualities of debt securities denominated in Korean won are based on the lowest credit rating by the domestic credit rating agencies above, and those denominated in foreign currencies are based on the lowest credit rating by the foreign credit rating agencies above.

Financial assets at fair value through profit or loss and financial investments excluding equity securities that are exposed to credit risk as of December 31, 2017 are as follows:

(In millions of Korean won)	December 31, 2017
Securities that are neither past due nor impaired	W	84,597,074
Impaired securities		4,869
	W	84,601,943

The credit quality of securities, excluding equity securities, that are neither past due nor impaired as of December 31, 2017, is as follows:

(In millions of Korean won)	December 31, 2017
	Grade 1		Grade 2		Grade 3		Grade 4		Grade 5		Total
Securities that are neither past due nor impaired
Financial assets held for trading	W	21,002,043	W	3,958,261	W	93,887	W	28,232	W	85,915	W	25,168,338
Financial assets designated at fair value through profit or loss		1,550,617		200,633		63,856		60,332		106,786		1,982,224
Available-for-sale financial assets		36,471,247		2,433,685		47,079		2,521		—		38,954,532
Held-to-maturity financial assets		18,466,624		21,113		4,243		—		—		18,491,980
	W	77,490,531	W	6,613,692	W	209,065	W	91,085	W	192,701	W	84,597,074

45

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

4.2.6 Credit risk of due from financial institutions

The credit quality of due from financial institions as of September 30, 2018, is classified as follows:

(In millions of Korean won)	September 30, 2018
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses
			Non- impaired		Impaired				Total
Due from financial institutions at amortized cost1
Grade 1	W	14,616,601	W	—	W	—	W	—	W	14,616,601
Grade 2		437,222		—		—		—		437,222
Grade 3		441,095		—		—		—		441,095
Grade 4		19,414		—		—		—		19,414
Grade 5		3,034		—		—		—		3,034
	W	15,517,366	W	—	W	—	W	—	W	15,517,366

¹ Before netting of allowance

The credit qualities of due from financial institutions according to the credit ratings by external rating agencies as of September 30, 2018 is same as the credit qualities of securities, excluding equity securities and others.

4.2.7 Credit risk concentration analysis

Details of the Group’s loans by jurisdiction as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Retail		Corporate		Credit card		Total		%		Allowances			Carrying amount
Korea	W	154,975,315	W	143,487,354	W	16,426,492	W	314,889,161		98.46	W	(2,512,556	)	W	312,376,605
Europe		—		488,898		339		489,237		0.15		(342	)		488,895
China		—		2,328,690		601		2,329,291		0.73		(21,234	)		2,308,057
Japan		162		292,362		292		292,816		0.09		(4,185	)		288,631
United States		—		1,075,760		940		1,076,700		0.34		(5,788	)		1,070,912
Others		238,005		508,331		820		747,156		0.23		(4,387	)		742,769
	W	155,213,482	W	148,181,395	W	16,429,484	W	319,824,361		100.00	W	(2,548,492	)	W	317,275,869

¹  The above is the Group’s loans at fair value through profit and loss or amortized cost.

(In millions of Korean won)	December 31, 2017
	Retail		Corporate		Credit card		Total		%		Allowances			Carrying amount
Korea	W	146,149,814	W	127,298,283	W	15,200,843	W	288,648,940		98.77	W	(2,063,919	)	W	286,585,021
Europe		—		192,980		310		193,290		0.07		(2,327	)		190,963
China		—		1,879,030		1,458		1,880,488		0.64		(31,017	)		1,849,471
Japan		539		127,009		339		127,887		0.04		(6,269	)		121,618
United States		—		866,867		1,001		867,868		0.30		(1,600	)		866,268
Others		120,627		393,073		896		514,596		0.18		(5,099	)		509,497
	W	146,270,980	W	130,757,242	W	15,204,847	W	292,233,069		100.00	W	(2,110,231	)	W	290,122,838

46

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of the Group’s corporate loans by industry as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Loans		%		Allowances			Carrying amount
Financial institutions	W	14,549,155		9.82	W	(44,149	)	W	14,505,006
Manufacturing		44,046,294		29.72		(450,844	)		43,595,450
Service		60,208,376		40.63		(262,842	)		59,945,534
Wholesale & Retail		16,734,091		11.29		(99,981	)		16,634,110
Construction		4,306,698		2.91		(271,280	)		4,035,418
Public sector		896,147		0.60		(3,911	)		892,236
Others		7,440,634		5.03		(92,682	)		7,347,952
	W	148,181,395		100.00	W	(1,225,689	)	W	146,955,706

(In millions of Korean won)	December 31, 2017
	Loans		%		Allowances			Carrying amount
Financial institutions	W	11,093,682		8.48	W	(47,531	)	W	11,046,151
Manufacturing		40,201,037		30.74		(449,439	)		39,751,598
Service		54,268,271		41.50		(288,521	)		53,979,750
Wholesale & Retail		15,061,632		11.52		(90,390	)		14,971,242
Construction		3,021,889		2.31		(269,535	)		2,752,354
Public sector		1,056,520		0.81		(15,341	)		1,041,179
Others		6,054,211		4.64		(70,909	)		5,983,302
	W	130,757,242		100.00	W	(1,231,666	)	W	129,525,576

Types of the Group’s retail and credit card loans as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Loans		%		Allowances			Carrying amount
Housing	W	68,349,108		39.82	W	(24,269	)	W	68,324,839
General		86,864,374		50.61		(604,305	)		86,260,069
Credit card		16,429,484		9.57		(694,229	)		15,735,255
	W	171,642,966		100.00	W	(1,322,803	)	W	170,320,163

(In millions of Korean won)	December 31, 2017
	Loans		%		Allowances			Carrying amount
Housing	W	64,140,941		39.72	W	(18,646	)	W	64,122,295
General		82,130,039		50.86		(410,653	)		81,719,386
Credit card		15,204,847		9.42		(449,266	)		14,755,581
	W	161,475,827		100.00	W	(878,565	)	W	160,597,262

47

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Credit risk concentration of due from financial institutions, securities, excluding equity securities and others, and derivative financial instruments

Details of the Group’s credit risk concentration of due from financial institutions, securities, excluding equity securities and others, and derivative financial instruments as of September 30, 2018, are as follows:

(In millions of Korean won)	September 30, 2018
	Amount		%		Allowances			Carrying amount
Due from financial institutions at amortized cost
Banking and insurance	W	15,401,447		99.25	W	(1,873	)	W	15,399,574
Others		115,919		0.75		(18	)		115,901
		15,517,366		100.00		(1,891	)		15,515,475
Due from financial institutions at fair value through profit or loss
Banking and insurance		506,245		100.00		—			506,245
		506,245		100.00		—			506,245
Securities measured at fair value through profit or loss1
Government and government funded institutions		13,761,869		40.21		—			13,761,869
Banking and insurance		14,259,101		41.67		—			14,259,101
Others		6,200,528		18.12		—			6,200,528
		34,221,498		100.00		—			34,221,498
Derivatives
Government and government funded institutions		39,556		1.79		—			39,556
Banking and insurance		2,047,954		92.80		—			2,047,954
Others		119,360		5.41		—			119,360
		2,206,870		100.00		—			2,206,870
Securities measured at fair value through other comprehensive income
Government and government funded institutions		10,999,965		32.68		—			10,999,965
Banking and insurance		17,911,069		53.21		—			17,911,069
Others		4,751,709		14.11		—			4,751,709
		33,662,743		100.00		—			33,662,743
Securities measured at amortized cost
Government and government funded institutions		10,454,955		45.31		(20	)		10,454,935
Banking and insurance		10,715,412		46.43		(1,488	)		10,713,924
Others		1,906,003		8.26		(298	)		1,905,705
		23,076,370		100.00		(1,806	)		23,074,564
	W	109,191,092			W	(3,697	)	W	109,187,395

¹  Excluding puttable instruments (investment fund classified as debt securities, etc.) amounting toW 13,816,191 million.

48

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of the Group’s credit risk of securities, excluding equity securities, and derivative financial instruments by industry as of December 31, 2017, are as follows:

(In millions of Korean won)	December 31, 2017
	Amount		%
Financial assets held for trading
Government and government funded institutions	W	8,345,463		33.16
Banking and insurance		11,486,321		45.64
Others		5,336,554		21.20
		25,168,338		100.00
Financial assets designated at fair value through profit or loss
Banking and insurance and others		1,982,224		100.00
		1,982,224		100.00
Derivative financial assets
Government and government funded institutions		12,099		0.37
Banking and insurance		3,098,350		93.60
Others		199,717		6.03
		3,310,166		100.00
Available-for-sale financial assets
Government and government funded institutions		9,498,819		24.38
Banking and insurance		23,314,336		59.84
Others		6,146,246		15.78
		38,959,401		100.00
Held-to-maturity financial assets
Government and government funded institutions		8,449,839		45.69
Banking and insurance		6,765,593		36.59
Others		3,276,548		17.72
		18,491,980		100.00
	W	87,912,109

49

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Credit risk concentrations of due from financial institutions, securities, excluding equity securities and others, and derivative financial instruments by country

Details of the Group’s credit risk concentration of due from financial institutions, securities, excluding equity securities and others, and derivative financial instruments by country, as of September 30, 2018, is as follows:

(In millions of Korean won)	September 30, 2018
	Amount		%		Allowances			Carrying amount
Due from financial institutions at amortized cost
Korea	W	12,162,538		78.38	W	(331	)	W	12,162,207
United States		478,189		3.08		(5	)		478,184
Others		2,876,639		18.54		(1,555	)		2,875,084
	W	15,517,366		100.00	W	(1,891	)	W	15,515,475
Due from financial institutions at fair value through profit or loss
Korea		506,245		100.00		—			506,245
		506,245		100.00		—			506,245
Securities measured at fair value through profit or loss1
Korea		30,937,303		90.40		—			30,937,303
United States		1,221,869		3.57		—			1,221,869
Others		2,062,326		6.03		—			2,062,326
		34,221,498		100.00		—			34,221,498
Derivatives
Korea		1,152,050		52.20		—			1,152,050
United States		293,723		13.31		—			293,723
France		247,502		11.22		—			247,502
Singapore		130,707		5.92		—			130,707
Japan		93,251		4.23					93,251
Others		289,637		13.12		—			289,637
		2,206,870		100.00		—			2,206,870
Securities measured at fair value through other comprehensive income
Korea		31,920,532		94.82		—			31,920,532
United States		844,089		2.51		—			844,089
Others		898,122		2.67		—			898,122
		33,662,743		100.00		—			33,662,743
Securities measured at amortized cost
Korea		20,642,012		89.45		(1,216	)		20,640,796
United States		1,238,379		5.37		(217	)		1,238,162
Others		1,195,979		5.18		(373	)		1,195,606
		23,076,370		100.00		(1,806	)		23,074,564
	W	109,191,092			W	(3,697	)	W	109,187,395

¹  Excluding puttable instruments (investment fund classified as debt securities, etc.) amounting toW 13,816,191 million.

50

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of the Group’s regional securities, excluding equity securities, and derivative financial instruments by country, as of December 31, 2017, are as follows:

(In millions of Korean won)	December 31, 2017
	Amount		%
Financial assets held for trading
Korea	W	23,462,909		93.22
United States		643,249		2.56
Others		1,062,180		4.22
		25,168,338		100.00
Financial assets designated at fair value through profit or loss
Korea		1,178,197		59.44
United States		120,000		6.05
Others		684,027		34.51
		1,982,224		100.00
Derivative financial assets
Korea		1,743,201		52.66
United States		325,909		9.85
Others		1,241,056		37.49
		3,310,166		100.00
Available-for-sale financial assets
Korea		36,705,979		94.22
United States		1,110,157		2.85
Others		1,143,265		2.93
		38,959,401		100.00
Held-to-maturity financial assets
Korea		16,243,987		87.84
United States		1,076,331		5.82
Others		1,171,662		6.34
	W	18,491,980		100.00
	W	87,912,109

Due from financial institutions, financial assets at fair value through profit or loss and derivatives that we linked to gold price are mostly relevant to financial and insurance industry with high credit ratings.

51

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

4.3 Liquidity Risk

4.3.1 Overview of liquidity risk

Liquidity risk is a risk that the Group 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 Group manages its liquidity risk through analysis of the contractual maturity of interest-bearing assets and liabilities, assets and liabilities related to the other financing, andoff-balance sheet items related to cash flow of currency derivative instruments and others.

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.

4.3.2. Liquidity risk management and indicator

The liquidity risk is managed by risk management policy and liquidity risk management 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 Group.

The Group computes and manages cumulative liquidity gap and liquidity rate subject to all transactions that affect cash flow in Korean won and foreign currencies andoff-balance sheet transactions in relation to the liquidity. The Group regularly reports to the Risk Planning Council and Risk Management Committee.

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

Cash flows disclosed below are undiscounted contractual principal and interest to be received (paid) and; thus, are not identical to the amount in the consolidated financial statements that are based on the present value of expected cash flows. 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.

52

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The remaining contractual maturity of financial assets and liabilities, excluding derivatives held for cash flow hedging, as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	On demand		Up to 1 month		1-3 months		3-12 months		1-5 years		Over 5 years		Total
Financial assets
Cash and due from financial institutions1	W	5,347,169	W	867,797	W	457,785	W	738,862	W	97,661	W	—	W	7,509,274
Financial assets at fair value through profit or loss		49,223,328		1,756,775		165,136		332,862		213,598		1,104,625		52,796,324
Derivatives held for trading2		2,084,614		—		—		—		—		—		2,084,614
Derivatives held for fair value hedging3		—		10,658		2,182		3,356		12,823		41,000		70,019
Loans at amortized cost		3,415,331		33,743,651		27,812,164		115,093,486		81,610,613		101,205,306		362,880,551
Financial investments
Financial assets measured at fair value through other comprehensive income		2,183,617		1,857,176		3,024,319		10,288,189		17,403,696		2,996,043		37,753,040
Securities measured at amortized cost		—		1,134,031		1,393,687		3,664,330		9,241,256		14,434,471		29,867,775
Other financial assets		96,285		11,150,253		129,596		1,413,911		53,108		34,246		12,877,399
	W	62,350,344	W	50,520,341	W	32,984,869	W	131,534,996	W	108,632,755	W	119,815,691	W	505,838,996

53

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	September 30, 2018
	On demand		Up to 1 month			1-3 months			3-12 months			1-5 years		Over 5 years		Total
Financial liabilities
Financial liabilities at fair value through profit or loss2	W	3,689,191	W	—		W	—		W	—		W	—	W	—	W	3,689,191
Financial liabilities designated at fair value through profit or loss2		12,343,819		—			—			—			—		—		12,343,819
Derivatives held for trading2,7		2,388,003		—			—			—			—		—		2,388,003
Derivatives held for fair value hedging3		—		(8,339	)		(5,611	)		(52,242	)		12,143		—		(54,049	)
Deposits4		126,336,476		13,493,749			30,320,906			91,319,587			11,343,509		2,645,690		275,459,917
Debts		6,027,541		10,540,654			2,790,658			6,838,811			4,887,928		1,224,738		32,310,330
Debentures		33,573		2,509,912			4,922,590			12,828,084			31,669,193		2,136,770		54,100,122
Other financial liabilities		29,554		23,762,362			190,598			234,015			455,360		139,974		24,811,863
	W	150,848,157	W	50,298,338		W	38,219,141		W	111,168,255		W	48,368,133	W	6,147,172	W	405,049,196
Off- balance sheet items
Commitments5	W	134,271,292	W	—		W	—		W	—		W	—	W	—	W	134,271,292
Financial guarantee contract6		3,665,581		—			—			—			—		—		3,665,581
	W	137,936,873	W	—		W	—		W	—		W	—	W	—	W	137,936,873

¹ The amounts ofW 10,983,818 million, which is restricted due from the financial institutions as of September 30, 2018, is excluded.

²  Financial assets/liabilities designated at fair value through profit or loss and derivatives held for trading are not managed by contractual maturity because they are expected to be traded or redeemed before maturity. Therefore, the carrying amounts of those financial instruments are classified as ‘on demand’ category.

³ Cash flows of derivative instruments held for hedging are shown at net cash flow by remaining contractual maturity.

⁴ Deposits that are contractually repayable on demand or on short notice are classified under the ‘on demand’ category.

⁵ Commitments are included under the ‘On demand’ category because payments will be made upon request.

⁶ The financial guarantee contracts are included under the ‘On demand’ category as payments will be made upon request.

⁷ The cash flows of the embedded derivatives (e.g. conversion options and others) which are separated from their host contracts are considered in the cash flows of the host contracts.

54

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
	On demand		Up to 1 month		1-3 months			3-12 months			1-5 years			Over 5 years		Total
Financial assets
Cash and due from financial institutions1	W	6,355,289	W	1,842,808	W	319,173		W	324,703		W	357,340		W	11,462	W	9,210,775
Financial assets held for trading2		30,177,293		—		—			—			—			—		30,177,293
Financial assets designated at fair value through profit or loss2		2,050,052		—		—			—			—			—		2,050,052
Derivatives held for trading2		2,980,462		—		—			—			—			—		2,980,462
Derivatives held for hedging3		559		48,093		29,693			42,163			(2,577	)		52,698		170,629
Loans		3,437,020		22,062,457		30,802,580			103,782,624			75,345,756			96,863,329		332,293,766
Available-for-sale financial assets		10,063,251		1,580,946		2,311,652			11,655,746			20,322,800			7,567,341		53,501,736
Held-to-maturity financial assets		—		658,856		493,420			3,217,345			6,890,530			13,247,255		24,507,406
Other financial assets		8,416		7,934,856		52,757			1,305,410			43,433			16,532		9,361,404
	W	55,072,342	W	34,128,016	W	34,009,275		W	120,327,991		W	102,957,282		W	117,758,617	W	464,253,523
Financial liabilities
Financial liabilities held for trading2	W	1,944,770	W	—	W	—		W	—		W	—		W	—	W	1,944,770
Financial liabilities designated at fair value through profit or loss2		10,078,288		—		—			—			—			—		10,078,288
Derivatives held for trading2		3,050,471		—		—			—			—			—		3,050,471
Derivatives held for hedging3		404		3,740		(4,715	)		(19,705	)		(7,143	)		244		(27,175	)
Deposits4		127,035,944		12,365,158		23,236,756			82,586,445			11,473,834			2,667,969		259,366,106
Debts		5,957,108		10,024,019		3,741,022			5,724,453			4,409,543			599,680		30,455,825
Debentures		40,655		1,015,298		3,020,683			9,644,135			29,611,835			3,245,342		46,577,948
Other financial liabilities		200,082		14,060,432		145,538			229,873			342,397			965,929		15,944,251
	W	148,307,722	W	37,468,647	W	30,139,284		W	98,165,201		W	45,830,466		W	7,479,164	W	367,390,484
Off- balance sheet items
Commitments5	W	102,183,167	W	—	W	—		W	—		W	—		W	—	W	102,183,167
Financial guarantee contract6		3,683,875		—		—			—			—			—		3,683,875
	W	105,867,042	W	—	W	—		W	—		W	—		W	—	W	105,867,042

¹ The amounts ofW 10,669,956 million, which are restricted due from the financial institutions as of December 31, 2017, is excluded.

²  Financial assets/liabilities held for trading, financial assets/liabilities designated at fair value through profit or loss and derivatives held for trading are not managed by contractual maturity because they are expected to be traded or redeemed before maturity. Therefore, the carrying amounts of those financial instruments are classified as ‘on demand’ category. However, the cash flows of the embedded derivatives (e.g. conversion options and others) which are separated from their host contracts in accordance with the requirement of Korean IFRS 1039, are considered in the cash flows of the host contracts.

³ Cash flows of derivative instruments held for hedging are shown at net cash flow by remaining contractual maturity.

⁴ Deposits that are contractually repayable on demand or on short notice are classified under the ‘on demand’ category.

⁵ Commitments are included under the ‘on demand’ category because payments will be made upon request.

⁶  The financial guarantee contracts are included under the ‘on demand’ category as payments will be made upon request.

55

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The contractual cash flows of derivatives held for cash flow hedging as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Up to 1 month			1-3 months			3-12 months			1-5 years			Over 5 years			Total
Net cash flow ofnet-settled derivatives	W	(184	)	W	(483	)	W	(831	)	W	5,672		W	46		W	4,220
Cash flow to be received of gross-settlement derivatives		19,470			94,582			501,543			2,057,885			55,141			2,728,621
Cash flow to be paid of gross-settlement derivatives		(20,455	)		(95,323	)		(509,138	)		(1,995,283	)		(57,493	)		(2,677,692	)
(In millions of Korean won)	December 31, 2017
	Up to 1 month			1-3 months			3-12 months			1-5 years			Over 5 years			Total
Net cash flow ofnet-settled derivatives	W	(224	)	W	(1,556	)	W	(3,044	)	W	(442	)	W	16		W	(5,250	)
Cash flow to be received of gross-settled derivatives		196,795			298,108			745,490			1,404,317			—			2,644,710
Cash flow to be paid of gross-settled derivatives		(188,698	)		(285,397	)		(698,054	)		(1,324,504	)		—			(2,496,653	)

4.4 Market Risk

4.4.1 Concept

Market risk represents possible losses which arise from changes in market factors including interest rate, stock price, foreign exchange rate and other market factors that affect the fair value or future cash flows of financial instruments including securities and derivatives amongst others. The most significant risk associated with trading positions interest rate risks, currency risks and also, stock price risks. In addition, the Group is exposed to interest rate risks associated withnon-trading positions. The Group classifies exposures to market risk into either trading ornon-trading positions. The Group measures and manages market risk separately for each subsidiary.

4.4.2 Risk management

The Group sets internal capital limits for market risk and interest rate risk and monitors the risks to manage the risk of trading andnon-trading positions. The Group maintains risk management systems and procedures including trading policies and procedures, and market risk management guidelines for trading positions, and interest rate risk management guidelines fornon-trading positions in order to manage market risk efficiently. The procedures mentioned are implemented with approval from the Risk Management Committee and Risk Management Council.

56

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Kookmin Bank, one of the subsidiaries, establishes market risk management policy, sets position limits, loss limits and VaR limits of each business group and approves newly developed instruments through its Risk Management Council. The Market Risk Management Committee, which is chaired by the Chief Risk Officer (CRO), is the decision maker and sets position limits, loss limits, VaR limits, sensitivity limits and scenario loss limits for each division, at the level of each individual business department.

The ALCO of Kookmin Bank determines the operational standards of interest and commission, the details of the establishment and prosecution of the Asset Liability Management (ALM) policies and enacts and amends relevant guidelines. The Risk Management Committee and Risk Management Council monitor the establishment and enforcement of ALM risk management policies, and enact and amend ALM risk management guidelines. The interest rate risk limit is set based on the future assets/liabilities position and interest rate volatility estimation reflects the annual work plan. The Financial Planning Department and Risk Management Department measures and monitors the interest risk status and limits on a regular basis. The status and limits of interest rate risks including interest gap, duration gap and interest rate VaR (Value at Risk), are reported to the ALCO and Risk Management Council on a monthly basis and to the Risk Management Committee on a quarterly basis. To ensure adequacy of interest rate and liquidity risk management, the Risk Management Department assigns the limits, monitors and reviews the risk management procedures and tasks conducted by the Financial Planning Department. Also, the Risk Management Department independently reports related information to the management.

4.5 Operational Risk

4.5.1 Concept

The Group defines operational risk broadly to include all financial andnon-financial risks that may arise from operating activities and could cause a negative effect on capital.

4.5.2 Risk management

The purpose of operational risk management is not only to comply with supervisory and regulatory requirements but also to promote a risk management culture, strengthen internal controls, innovate processes and provide timely feedback to management and employees. In addition, Kookmin Bank established Business Continuity Plans (BCP) to ensure critical business functions can be maintained, or restored, in the event of material disruptions arising from internal or external events. It has constructed replacement facilities as well as has carried out exercise drills for head office and IT departments to test its BCPs.

57

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

5. Segment Information

5.1 Overall Segment Information and Business Segments

The Group classifies reporting segments based on the nature of the products and services provided, the type of customer, and the Group’s management organization.

Banking Business	Corporate Banking	Loans, deposit products and other related financial services to large, small andmedium-sized enterprises and SOHOs.
	Retail Banking	Loans, deposit products and other related financial services to individuals and households.
	Other Banking Services	Trading activities in securities and derivatives, funding and other supporting activities.
Securities Business		Investment banking, brokerage services and other supporting activities.
Non-life Insurance Business		The activities within this segment include property insurance and other supporting activities.
Credit Card Business		The activities within this segment include credit sale, cash service, card loan and other supporting activities.
Life Insurance Business		Life insurance and other supporting activities.

58

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Financial information by business segment as of and for the nine-month period ended September 30, 2018, is as follows:

(In millions of Korean won)	Banking business
	Corporate Banking			Retail Banking			Other Banking Services			Sub-total			Securities			Non-life Insurance			Credit Card			Life Insurance				Others			Intra-group adjustment			Total
Operating revenues from external customers	W	1,705,381		W	2,265,414		W	1,009,430		W	4,980,225		W	842,994		W	989,043		W	1,133,316		W	87,205			W	348,597		W	—		W	8,381,380
Intra-segment operating revenues (expenses)		80,877			—			128,243			209,120			(13,436	)		(21,145	)		(162,951	)		(19,574	)			140,329			(132,343	)		—
	W	1,786,258		W	2,265,414		W	1,137,673		W	5,189,345		W	829,558		W	967,898		W	970,365		W	67,631			W	488,926		W	(132,343	)	W	8,381,380
Net interest income		2,030,937			2,179,953			301,331			4,512,221			396,632			457,576			866,409			139,779				218,140			697			6,591,454
Interest income		3,104,210			3,336,636			892,698			7,333,544			594,528			457,818			1,089,686			139,792				476,537			(18,828	)		10,073,077
Interest expense		(1,073,273	)		(1,156,683	)		(591,367	)		(2,821,323	)		(197,896	)		(242	)		(223,277	)		(13	)			(258,397	)		19,525			(3,481,623	)
Net fee and commission income (expense)		212,443			416,056			275,084			903,583			505,692			(107,272	)		171,278			(9,621	)			278,375			5,642			1,747,677
Fee and commission income		274,714			472,642			359,482			1,106,838			584,934			1,184			1,579,179			178				320,983			(228,187	)		3,365,109
Fee and commission expense		(62,271	)		(56,586	)		(84,398	)		(203,255	)		(79,242	)		(108,456	)		(1,407,901	)		(9,799	)			(42,608	)		233,829			(1,617,432	)
Net insurance income (expense)		—			—			—			—			—			534,557			13,994			(106,208	)			—			1,369			443,712
Insurance income		—			—			—			—			—			8,037,498			24,588			887,500				—			(21,344	)		8,928,242
Insurance expense		—			—			—			—			—			(7,502,941	)		(10,594	)		(993,708	)			—			22,713			(8,484,530	)
Net gains (losses) on financial instruments at fair value through profit or loss		23,010			—			296,471			319,481			(107,122	)		149,988			9,446			51,196				52,389			(76,483	)		398,895
Net other operating income (expense)		(480,132	)		(330,595	)		264,787			(545,940	)		34,356			(66,951	)		(90,762	)		(7,515	)			(59,978	)		(63,568	)		(800,358	)
General and administrative expenses		(723,612	)		(1,321,025	)		(448,010	)		(2,492,647	)		(542,614	)		(590,700	)		(294,351	)		(47,099	)			(212,555	)		105,695			(4,074,271	)
Operating profit before provision for credit losses		1,062,646			944,389			689,663			2,696,698			286,944			377,198			676,014			20,532				276,371			(26,648	)		4,307,109
Reversal (provision) for credit losses		127,657			(136,901	)		7,747			(1,497	)		(713	)		(11,476	)		(320,735	)		543				(94,082	)		199			(427,761	)
Net operating income		1,190,303			807,488			697,410			2,695,201			286,231			365,722			355,279			21,075				182,289			(26,449	)		3,879,348
Share of profit (loss) of associates and joint ventures		—			—			30,785			30,785			(58	)		(6	)		(650	)		—				305			(12,218	)		18,158
Net othernon-operating income (expense)		(181	)		—			106,463			106,282			9,173			5,587			(19,594	)		(969	)			639			(23,226	)		77,892
Segment profits before income tax		1,190,122			807,488			834,658			2,832,268			295,346			371,303			335,035			20,106				183,233			(61,893	)		3,975,398
Income tax expense		(325,439	)		(222,059	)		(205,519	)		(753,017	)		(84,184	)		(110,220	)		(89,516	)		(6,661	)			(66,554	)		3,913			(1,106,239	)
Profit for the reporting period		864,683			585,429			629,139			2,079,251			211,162			261,083			245,519			13,445				116,679			(57,980	)		2,869,159
Profit attributable to shareholders of the Parent Company		864,683			585,429			629,139			2,079,251			211,155			260,899			245,532			13,445				116,115			(57,645	)		2,868,752
Profit (loss) attributable tonon-controlling interests		—			—			—			—			7			184			(13	)		—				564			(335	)		407
Total assets1		131,108,200			137,103,573			89,601,173			357,812,946			44,632,577			33,843,050			20,340,925			9,141,085		��		39,548,145			(27,603,102	)		477,715,626
Total liabilities1		120,382,998			150,560,156			60,249,909			331,193,063			40,139,228			30,423,492			16,405,047			8,617,490				16,995,836			(1,647,769	)		442,126,387

¹  Assets and liabilities of the reporting segments are amounts before intra-segment transaction adjustment.

59

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Financial information by business segment for the nine-month period ended September 30, 2017, is as follows:

(In millions of Korean won)	Banking business
	Corporate Banking			Retail Banking			Other Banking Services			Sub-total			Securities			Non-life Insurance			Credit Card			Life Insurance			Others			Intra-group adjustment			Total
Operating revenues from external customers	W	1,540,637		W	1,975,075		W	1,018,774		W	4,534,486		W	776,699		W	776,147		W	983,395		W	108,223		W	265,964		W	—		W	7,444,914
Intra-segment operating revenues (expenses)		14,541			—			159,834			174,375			(1,480	)		(2,827	)		(158,140	)		(24,492	)		136,914			(124,350	)		—
	W	1,555,178		W	1,975,075		W	1,178,608		W	4,708,861		W	775,219		W	773,320		W	825,255		W	83,731		W	402,878		W		(124,350)	W	7,444,914
Net interest income		1,889,344			1,951,413			255,591			4,096,348			470,630			303,686			804,769			161,847			240,536			2,986			6,080,802
Interest income		2,637,264			2,902,057			711,778			6,251,099			621,477			303,771			994,913			161,868			448,657			(9,221	)		8,772,564
Interest expense		(747,920	)		(950,644	)		(456,187	)		(2,154,751	)		(150,847	)		(85	)		(190,144	)		(21	)		(208,121	)		12,207			(2,691,762	)
Net fee and commission income (expense)		175,031			435,904			299,057			909,992			395,179			(62,798	)		109,245			(2,696	)		181,665			(8,411	)		1,522,176
Fee and commission income		233,257			486,852			370,581			1,090,690			457,004			783			1,406,877			55			216,436			(241,393	)		2,930,452
Fee and commission expense		(58,226	)		(50,948	)		(71,524	)		(180,698	)		(61,825	)		(63,581	)		(1,297,632	)		(2,751	)		(34,771	)		232,982			(1,408,276	)
Net insurance income (expense)		—			—			—			—			—			472,604			16,108			(102,296	)		—			13,531			399,947
Insurance income		—			—			—			—			—			5,347,661			27,577			763,447			—			(8,119	)		6,130,566
Insurance expense		—			—			—			—			—			(4,875,057	)		(11,469	)		(865,743	)		—			21,650			(5,730,619	)
Net gains/(losses) on financial instruments at fair value through profit or loss		(307	)		—			(13,548	)		(13,855	)		17,812			14,154			—			5,939			3,383			5,076			32,509
Net other operating income (expense)		(508,890	)		(412,242	)		637,508			(283,624	)		(108,402	)		45,674			(104,867	)		20,937			(22,706	)		(137,532	)		(590,520	)
General and administrative expenses		(646,961	)		(1,269,055	)		(500,156	)		(2,416,172	)		(547,338	)		(395,360	)		(277,119	)		(53,355	)		(202,338	)		95,047			(3,796,635	)
Operating profit before provision for credit losses		908,217			706,020			678,452			2,292,689			227,881			377,960			548,136			30,376			200,540			(29,303	)		3,648,279
Provision (reversal) for credit losses		(84,560	)		(83,989	)		(504	)		(169,053	)		(22,327	)		(8,996	)		(239,374	)		(690	)		(39,486	)		38			(479,888	)
Net operating income		823,657			622,031			677,948			2,123,636			205,554			368,964			308,762			29,686			161,054			(29,265	)		3,168,391
Share of profit (loss) of associates		—			—			31,186			31,186			213			—			(306	)		—			5,521			41,505			78,119
Net othernon-operating income (expense)		1,954			—			37,126			39,080			11,160			8,710			(5,948	)		(145	)		7,128			105,297			165,282
Segment profits before income tax		825,611			622,031			746,260			2,193,902			216,927			377,674			302,508			29,541			173,703			117,537			3,411,792
Income tax expense		(200,203	)		(150,532	)		(1,904	)		(352,639	)		(56,870	)		(96,298	)		(68,625	)		(6,267	)		(53,303	)		11,950			(622,052	)
Profit for the reporting period		625,408			471,499			744,356			1,841,263			160,057			281,376			233,883			23,274			120,400			129,487			2,789,740
Profit attributable to shareholders of the Parent Company		625,408			471,499			744,356			1,841,263			160,057			281,277			233,883			23,274			120,746			97,186			2,757,686
Profit (loss) attributable tonon-controlling interests		—			—			—			—			—			99			—			—			(346	)		32,301			32,054
Total assets1		117,904,269			129,438,168			82,423,490			329,765,927			37,351,680			32,351,778			17,658,310			9,125,741			37,439,753			(26,907,580	)		436,785,609
Total liabilities1		102,224,405			147,870,309			54,347,779			304,442,493			32,936,024			29,128,747			13,616,481			8,586,328			15,137,421			(1,106,714	)		402,740,780

¹  Assets and liabilities of the reporting segments are amounts as of December 31, 2017 before intra-segment transaction adjustment.

60

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

5.2 Services and Geographical Segments

5.2.1 Services information

Operating revenues from external customers for each service for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)
	2018		2017
Banking service	W	4,980,225	W	4,534,486
Securities service		842,994		776,699
Non-life Insurance service		989,043		776,147
Credit card service		1,133,316		983,395
Life insurance service		87,205		108,223
Other service		348,597		265,964
	W	8,381,380	W	7,444,914

5.2.2 Geographical information

Geographical operating revenues from external customers for the nine-month periods ended September 30, 2018 and 2017, and majornon-current assets as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)
	2018		2017		September 30, 2018		December 31, 2017
	Revenues from external customers				Majornon-current assets
Domestic	W	8,240,029	W	7,367,087	W	8,032,985	W	7,472,597
United States		34,890		13,239		372,395		363,330
New Zealand		4,551		4,287		45		57
China		71,892		29,540		5,101		4,585
Cambodia		6,955		5,407		2,828		1,753
United Kingdom		6,274		8,477		597		319
Others		16,789		16,877		207,597		78,142
Intra-groupadjustment		—		—		71,545		72,455
	W	8,381,380	W	7,444,914	W	8,693,093	W	7,993,238

61

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

6. Financial Assets and Financial Liabilities

6.1 Classification and Fair Value of Financial Instruments

Carrying amount and fair value of financial assets and liabilities as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Carrying amount		Fair value
Financial assets
Cash and due from financial institutions	W	18,349,698	W	18,349,056
Financial assets at fair value through profit or loss		51,020,841		51,020,841
Due from financial institutions		506,245		506,245
Debt securities		48,037,689		48,037,689
Equity securities		1,557,437		1,557,437
Loans		844,899		844,899
Others		74,571		74,571
Derivatives held for trading		2,084,614		2,084,614
Derivatives held for hedging		122,256		122,256
Loans at amortized cost		316,430,970		316,948,939
Financial assets measured at fair value through other comprehensive income		36,118,514		36,118,514
Debt securities		33,662,743		33,662,743
Equity securities		2,455,771		2,455,771
Securities measured at amortized cost		23,074,564		23,071,584
Others		13,957,209		13,957,209
	W	461,158,666	W	461,673,013
Financial liabilities
Financial liabilities at fair value through profit or loss	W	3,689,191	W	3,689,191
Financial liabilities designated at fair value through profit or loss		12,343,819		12,343,819
Derivatives held for trading		2,388,015		2,388,015
Derivatives held for hedging		217,954		217,954
Deposits		271,155,184		271,782,906
Debts		31,902,454		31,926,849
Debentures		51,549,915		51,954,747
Other financial liabilities		27,717,813		27,721,247
	W	400,964,345	W	402,024,728

62

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
	Carrying amount		Fair value
Financial assets
Cash and due from financial institutions	W	19,817,825	W	19,805,138
Financial assets held for trading		30,177,293		30,177,293
Debt securities		25,168,338		25,168,338
Equity securities		4,935,100		4,935,100
Others		73,855		73,855
Financial assets designated at fair value through profit or loss		2,050,052		2,050,052
Debt securities		368,820		368,820
Equity securities		67,828		67,828
Derivative-linked securities		1,613,404		1,613,404
Derivatives held for trading		2,998,042		2,998,042
Derivatives held for hedging		312,124		312,124
Loans		290,122,838		289,807,038
Available-for-sale financial assets		48,116,263		48,116,263
Debt securities		38,959,401		38,959,401
Equity securities		9,156,862		9,156,862
Held-to-maturity financial assets		18,491,980		18,483,065
Other financial assets		10,195,015		10,195,015
	W	422,281,432	W	421,944,030
Financial liabilities
Financial liabilities held for trading	W	1,944,770	W	1,944,770
Financial liabilities designated at fair value through profit or loss		10,078,288		10,078,288
Derivatives held for trading		3,054,614		3,054,614
Derivatives held for hedging		88,151		88,151
Deposits		255,800,048		256,222,490
Debts		28,820,928		28,814,801
Debentures		44,992,724		44,400,325
Other financial liabilities		18,330,004		18,328,276
	W	363,109,527	W	362,931,715

The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. For each class of financial assets and financial liabilities, the Group 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 a quoted price in an active market.

63

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

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

Cash and due from financial institutions	The carrying amounts of cash and demand due from financial institutions and 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 measured using DCF model (Discounted Cash Flow Model).
Investment securities	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, Free Cash Flow to Equity Model, Comparable Company Analysis, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method.
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 by the expected prepayment rate, at appropriate discount rate.
Derivatives and Financial instruments at fair value through profit or loss	For exchange traded derivatives, quoted price in an active market is used to determine fair value and for OTC derivatives, fair value is determined using valuation techniques. The Group uses internally developed valuation models that are widely used by market participants to determine fair values of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method, the Monte Carlo Simulation, Black-Scholes Model, Hull and White Model, Closed Form and Tree Model or valuation results from independent external professional valuation institution.
Deposits	Carrying amount of demand deposits is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of time deposits is determined using a DCF model. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate.
Debts	Carrying amount of overdraft in foreign currency is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of other debts is determined using a DCF model discounting contractual future cash flows at an appropriate discount rate.
Debentures	Fair value is determined by using the valuations of external professional valuation institution, which are calculated using market inputs.
Other financial assets and liabilities	The carrying amounts are reasonable approximation of fair values. These financial instruments are temporary accounts used for other various transactions and their maturities are relatively short or not defined. However, fair value of finance lease liabilities is measured using a DCF model.

64

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Fair value hierarchy

The Group believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the 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.

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

Level 1: The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: The fair values are based on unobservable inputs for the asset or liability.

65

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety shall be determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

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 and liabilities measured at fair value in the statements of financial position as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at fair value through profit or loss
Due from financial institutions	W	—	W	457,010	W	49,235	W	506,245
Debt securities		11,938,112		29,240,084		6,859,493		48,037,689
Equity securities		1,056,197		138,787		362,453		1,557,437
Loans		—		674,547		170,352		844,899
Others		74,571		—		—		74,571
		13,068,880		30,510,428		7,441,533		51,020,841
Derivatives held for trading		63,743		1,894,902		125,969		2,084,614
Derivatives held for hedging		—		122,256		—		122,256
Financial assets measured at fair value through other comprehensive income
Debt securities		11,121,733		22,541,010		—		33,662,743
Equity securities		1,115,031		66,655		1,274,085		2,455,771
		12,236,764		22,607,665		1,274,085		36,118,514
	W	25,369,387	W	55,135,251	W	8,841,587	W	89,346,225
Financial liabilities
Financial liabilities at fair value through profit or loss	W	3,689,191	W	—	W	—	W	3,689,191
Financial liabilities designated at fair value through profit or loss		187		1,824,926		10,518,706		12,343,819
Derivatives held for trading		256,240		1,896,360		235,415		2,388,015
Derivatives held for hedging		—		217,954		—		217,954
	W	3,945,618	W	3,939,240	W	10,754,121	W	18,638,979

66

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets held for trading
Debt securities	W	7,814,921	W	17,353,417	W	—	W	25,168,338
Equity securities		2,340,497		2,594,603		—		4,935,100
Others		73,855		—		—		73,855
		10,229,273		19,948,020		—		30,177,293
Financial assets designated at fair value through profit or loss
Debt securities		—		66,969		301,851		368,820
Equity securities		—		—		67,828		67,828
Derivative-linked securities		—		668,739		944,665		1,613,404
		—		735,708		1,314,344		2,050,052
Derivatives held for trading		80,678		2,720,285		197,079		2,998,042
Derivatives held for hedging		—		311,349		775		312,124
Available-for-sale financial assets1
Debt securities		10,446,001		28,464,019		49,381		38,959,401
Equity securities		1,550,766		1,789,501		5,816,595		9,156,862
		11,996,767		30,253,520		5,865,976		48,116,263
	W	22,306,718	W	53,968,882	W	7,378,174	W	83,653,774
Financial liabilities
Financial liabilities held for trading	W	1,944,770	W	—	W	—	W	1,944,770
Financial liabilities designated at fair value through profit or loss		843		1,389,553		8,687,892		10,078,288
Derivatives held for trading		272,766		2,717,862		63,986		3,054,614
Derivatives held for hedging		—		88,081		70		88,151
	W	2,218,379	W	4,195,496	W	8,751,948	W	15,165,823

¹  The amounts of equity securities carried at cost in “Level 3”, which do not have a quoted market price in an active market and cannot be measured reliably at fair value, areW 116,629 as of December 31, 2017. These equity securities are carried at cost because it is practically difficult to quantify the intrinsic values of the equity securities issued by unlisted public andnon-profit entities. In addition, due to significant fluctuations in estimated cash flows arising from entities being in its initial stages, which further results in varying and unpredictable probabilities, unlisted equity securities issued by project financing cannot be reliably and reasonably assessed. Therefore, these equity securities are carried at cost. The Group has no plan to sell these instruments in the near future.

67

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Valuation techniques and the inputs used in the fair value measurement classified as Level 2

Financial assets and liabilities measured at fair value classified as Level 2 in the statements of financial position as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)
	September 30, 2018
	Fair value		Valuation techniques	Inputs
Financial assets
Financial assets at fair value through profit or loss
Due from financial institutions	W	457,010	One factor Hull-White Model, DCF Model	Discount rate, Volatility and others
Debt securities		29,240,084	DCF Model, Closed Form, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model, Net Asset Value and others	Projected cash flow, Fair value of underlying asset, Dividend yield, Interest rate, Underlying asset Index, Discount rate, Volatility and others
Equity securities		138,787	DCF Model	Interest rate, Discount rate and others
Loans		674,547	DCF Model	Interest rate, Discount rate and others
		30,510,428
Derivatives held for trading		1,894,902	DCF Model, FDM, Closed Form, Option Model, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and others	Underlying asset Index, Discount rate, Volatility, Foreign exchange rate, Stock price, Dividend rate and others
Derivatives held for hedging		122,256	DCF Model, Closed Form, FDM	Discount rate, Volatility, Foreign exchange rate and Others
Financial assets measured at fair value through other comprehensive income
Debt securities		22,541,010	DCF Model, Option model	Discount rate, Underlying asset Index, Volatility, Interest rate and others
Equity securities		66,655	DCF Model, Black-Scholes Model	Discount rate, Volatility, Price of Underlying asset and others
		22,607,665
	W	55,135,251
Financial liabilities
Financial liabilities designated at fair value through profit or loss		1,824,926	DCF Model, Closed Form, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and others	Price of Underlying asset, Discount rate, Dividend rate, Volatility
Derivatives held for trading		1,896,360	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model , Option Valuation Model and others	Discount rate, Price of Underlying asset , Volatility, Foreign exchange rate, Credit Spread, Stock price and others
Derivatives held for hedging		217,954	DCF Model, Closed Form, FDM	Discount rate, Volatility, Foreign exchange rate and others
	W	3,939,240

68

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)
	December 31, 2017
	Fair value		Valuation techniques	Inputs
Financial assets
Financial assets held for trading
Debt securities	W	17,353,417	DCF Model, option model	Underlying asset Index, Discount rate, Volatility
Equity securities		2,594,603	DCF Model, Net Asset Value, Option Model	Underlying asset Index, Volatility, Discount rate, Fair value of underlying asset
		19,948,020
Financial assets designated at fair value through profit or loss
Debt securities		66,969	DCF Model, Hull and White Model,	Discount rate, Volatility
Derivative-linked securities		668,739	DCF Model, Closed Form, Monte Carlo Simulation, Option Model	Underlying asset Index, Discount rate, Volatility
		735,708
Derivatives held for trading		2,720,285	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and Others	Underlying asset Index, Discount rate, Volatility, Foreign exchange rate, Stock price, Dividend rate and others
Derivatives held for hedging		311,349	DCF Model, Closed Form, FDM	Discount rate, Volatility, Foreign exchange rate and others
Available-for-sale financial assets
Debt securities		28,464,019	DCF Model, option model, Net Asset Value	Discount rate
Equity securities		1,789,501	DCF Model, Option Model, Net Asset Value	Discount rate, Fair value of underlying asset
		30,253,520
	W	53,968,882
Financial liabilities
Financial liabilities designated at fair value through profit or loss
Derivative-linked securities	W	1,389,553	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and others	Price of Underlying asset, Discount rate, Dividend rate, Volatility
		1,389,553
Derivatives held for trading		2,717,862	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model , Option Valuation Model and others	Discount rate, Price of Underlying asset , Volatility, Foreign exchange rate, Credit Spread, Stock price and others
Derivatives held for hedging		88,081	DCF Model, Closed Form, FDM	Discount rate, Volatility, Foreign exchange rate and others
	W	4,195,496

69

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

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, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
Financial assets
Cash and due from financial institutions1	W	2,992,712	W	13,650,989	W	1,705,355	W	18,349,056
Loans at amortized cost		—		524,703		316,424,236		316,948,939
Securities measured at amortized cost		7,083,051		15,988,533		—		23,071,584
Other financial assets2		—		—		13,957,209		13,957,209
	W	10,075,763	W	30,164,225	W	332,086,800	W	372,326,788
Financial liabilities
Deposits1	W	—	W	125,998,050	W	145,784,856	W	271,782,906
Debts3		—		956,136		30,970,713		31,926,849
Debentures		—		47,321,580		4,633,167		51,954,747
Other financial liabilities4		—		—		27,721,247		27,721,247
	W	—	W	174,275,766	W	209,109,983	W	383,385,749

¹ The amounts included in Level 2 are the carrying amounts which are reasonable approximations of the fair values.

² Other financial assets ofW 13,957,209 million included in Level 3 are the carrying amounts which are reasonable approximation of fair values as of September 30, 2018.

³ Debts ofW 128,137 million included in Level 2 is the carrying amounts which are reasonable approximation of fair values as of September 30, 2018.

⁴ Other financial liabilities ofW 27,162,406 million included in Level 3 is the carrying amounts which are reasonable approximations of fair values as of September 30, 2018.

(In millions of Korean won)	December 31, 2017
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
Financial assets
Cash and due from financial institutions1	W	2,754,086	W	15,281,705	W	1,769,347	W	19,805,138
Loans		—		569,625		289,237,413		289,807,038
Held-to-maturity financial assets		4,825,393		13,653,429		4,243		18,483,065
Other financial assets2		—		—		10,195,015		10,195,015
	W	7,579,479	W	29,504,759	W	301,206,018	W	338,290,256
Financial liabilities
Deposits1	W	—	W	125,154,284	W	131,068,206	W	256,222,490
Debts3		—		853,615		27,961,186		28,814,801
Debentures		—		41,058,076		3,342,249		44,400,325
Other financial liabilities4		—		—		18,328,276		18,328,276
	W	—	W	167,065,975	W	180,699,917	W	347,765,892

¹ The amounts included in Level 2 are the carrying amounts which are reasonable approximations of the fair values.

² Other financial assets ofW 10,195,015 million included in Level 3 are the carrying amounts which are reasonable approximation of fair values as of December 31, 2017.

³ Debts ofW 19,820 million included in Level 2 is the carrying amounts which are reasonable approximation of fair values as of December 31, 2017.

⁴ Other financial liabilities ofW 17,882,909 million included in Level 3 is the carrying amounts which are reasonable approximation of fair values as of December 31, 2017.

70

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Valuation techniques and the inputs used in the fair value measurement

Financial assets and liabilities whose carrying amount is a reasonable approximation of fair value are not subject to 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, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Fair value		Valuation technique		Inputs
Financial assets
Loans at amortized cost	W	524,703		DCF Model		Discount rate
Securities measured at amortized cost		15,988,533		DCF Model		Discount rate
Financial liabilities
Debts		827,999		DCF Model		Discount rate
Debentures		47,321,580		DCF Model		Discount rate
(In millions of Korean won)	December 31, 2017
	Fair value		Valuation technique		Inputs
Financial assets
Loans	W	569,625		DCF Model		Discount rate
Held-to-maturity financial assets		13,653,429		DCF Model		Discount rate
Financial liabilities
Debts		833,795		DCF Model		Discount rate
Debentures		41,058,076		DCF Model		Discount rate

Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 3 as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Fair value		Valuation technique		Inputs
Financial assets
Cash and due from financial institutions	W	1,705,355		DCF Model	Credit spread, Other spread, Interest rates
Loans at amortized cost		316,424,236		DCF Model	Credit spread, Other spread, Early termination ratio, Interest rates
	W	318,129,591
Financial liabilities
Deposits	W	145,784,856		DCF Model	Other spread, Interest rates, Early termination ratio
Debts		30,970,713		DCF Model	Other spread, Interest rates
Debentures		4,633,167		DCF Model	Other spread, Interest rates
Other financial liabilities		558,841		DCF Model	Other spread, Interest rates
	W	181,947,577

71

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)
	December 31, 2017
	Fair value		Valuation technique		Inputs
Financial assets
Cash and due from financial institutions	W	1,769,347		DCF Model	Credit spread, Other spread, Interest rates
Loans		289,237,413		DCF Model	Credit spread, Other spread, Early termination ratio, Interest rates
Held-to-maturity financial assets		4,243		DCF Model	Interest rates
	W	291,011,003
Financial liabilities
Deposits	W	131,068,206		DCF Model	Other spread, Early termination ratio, Interest rates
Debts		27,961,186		DCF Model	Other spread, Interest rates
Debentures		3,342,249		DCF Model	Other spread, Implied default probability, Interest rates
Other financial liabilities		445,367		DCF Model	Other spread, Interest rates
	W	162,817,008

72

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

6.2 Level 3 of the Fair Value Hierarchy Disclosure

6.2.1 Valuation policy and process for fair value measurement categorized within Level 3

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

Where a reclassification between the levels of the fair value hierarchy occurs for a financial asset or liability, the Group’s policy is to recognize such transfers as having occurred at the beginning of the reporting period.

73

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

6.2.2 Changes in fair value (Level 3) measured using valuation technique based on unobservable in market

Details of changes in Level 3 of the fair value hierarchy for nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Financial assets at fair value through profit or loss								Financial investments			Financial liabilities at fair value through profit or loss			Net derivative financial instruments
	Cash and due from financial institutions at fair value through profit or loss		Securities measured at fair value through profit or loss			Loans at fair value through profit or loss			Financial assets measured at fair value through other comprehensive income			Financial liabilities designated at fair value through profit or loss			Derivatives held for trading			Derivatives held for fair value hedging
Beginning2	W	48,243	W	6,106,699		W	133,309		W	1,181,575		W	(8,687,892	)	W	96,354		W	705
Total gains or losses
- Profit or loss		854		177,970			2,580			—			(208,325	)		(63,197	)		(116	)
- Other comprehensive income		138		28,690			—			79,424			(10,404	)		—			—
Purchases		—		2,311,997			94,600			73,566			—			8,272			—
Sales		—		(1,378,432	)		(60,137	)		(60,480	)		—			(86,335	)		—
Issues		—		—			—			—			(8,438,825	)		(65,711	)		—
Settlements		—		—			—			—			6,826,740			4,183			(589	)
Transfers into Level 31		—		(1,264	)		—			—			—			(3,012	)		—
Transfers out of Level 31		—		(23,714	)		—			—			—			—			—
Ending	W	49,235	W	7,221,946		W	170,352		W	1,274,085		W	(10,518,706	)	W	(109,446	)	W	—

¹  The changes in levels for the financial instruments occurred due to the change in the availability of observable market data.

²  Prepared in accordance with Korean IFRS 1109.

74

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	2017
	Financial assets at fair value through profit or loss			Financial investments			Financial liabilities at fair value through profit or loss			Net derivative financial instruments
	Designated at fair value through profit or loss			Available-for-sale financial assets			Designated at fair value through profit or loss			Derivatives held for trading			Derivatives held for hedging
Beginning	W	763,272		W	3,072,292		W	(7,797,139	)	W	(65,179	)	W	1,277
Total gains or losses
- Profit or loss		57,516			591			(817,943	)		426,032			579
- Other comprehensive income		—			29,685			—			—			—
Purchases		981,142			1,295,311			—			25,896			—
Sales		(872,422	)		(579,245	)		—			(186,933	)		—
Issues		—			—			(8,699,093	)		(55,517	)		—
Settlements		(189,021	)		—			7,824,407			2,084			(131	)
Transfers into Level 3		—			(922	)		—			—			—
Transfers out of Level 3		—			(45,051	)		—			(642	)		—
Business Combination		524,380			2,047,831			—			522			—
Ending	W	1,264,867		W	5,820,492		W	(9,489,768	)	W	146,263		W	1,725

In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the period, and total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period in the statements of comprehensive income for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Net income (loss) from financial investments at fair value through profit or loss			Other operating loss			Net interest income
Total gains or losses included in profit or loss for the period	W	(90,418	)	W	(244	)	W	428
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period		32,523			(129	)		428
(In millions of Korean won)	2017
	Net loss from financial investments at fair value through profit or loss			Other operating income (loss)			Net interest income
Total gains or losses included in profit or loss for the period	W	(334,395	)	W	1,170		W	—
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period		(188,471	)		(2,742	)		—

75

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

6.2.3 Sensitivity analysis of changes in unobservable inputs

Information about fair value measurements using unobservable inputs as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Fair value	Valuation technique	Unobservable inputs	Range of unobservable inputs(%)	Relationship of unobservable inputs to fair value
Financial assets
Financial assets at fair value through profit or loss
Cash and due from financial institutions	W     49,235	DCF Model, Option Model, Net Asset Value, Income approach, Market approach	Volatility of the underlying asset	10.34~24.81	The higher the volatility, the higher the fair value fluctuation
			Correlation	8.79~90.00	The higher the correlation, the higher the fair value fluctuation
			Recovery rate	40.00	The higher the recovery rate, the higher the fair value
			Discount rate	1.33~11.47	The lower the discount rate, the higher the fair value
			Growth rate	0.00~2.20	The higher the growth rate, the higher the fair value
Debt securities	6,859,493	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull-White Model, Black-Scholes Model, Option Model, Tree Model, Net Asset Value, Income approach, Market approach and others	Growth rate	0.00~2.20	The higher the growth rate, the higher the fair value
			Volatility of the underlying asset	0.11~39.94	The higher the volatility, the higher the fair value fluctuation
			Value of Real estate	-1.00~1.00	The higher the value of Real estate, the higher the fair value
			Discount rate	1.33~11.47	The lower the discount rate, the higher the fair value
			Recovery rate	40.00	The higher the recovery rate, the higher the fair value
			Correlation between underlying asset	8.79~90.00	The higher the correlation, the higher the fair value fluctuation
Equity securities	362,453	Income approach, Market approach, Asset value approach, DCF Model, Comparable Company Analysis, Adjusted discount rate method, Dividend Discount Model, Usage of past transactions, Tree Model and others	Growth rate	0.00~2.20	The higher the growth rate, the higher the fair value
			Discount rate	1.33~19.73	The lower the discount rate, the higher the fair value
			Liquidation value	-1.00~1.00	The higher the liquidation value, the higher the fair value
			Volatility	6.84~39.94	The higher the volatility, the higher the fair value fluctuation
			Correlation	8.79~90.00	The higher the correlation, the higher the fair value fluctuation

76

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

			Recovery rate	40.00	The higher the recovery rate, the higher the fair value
Loans	170,352	Tree Model	Stock price, Volatility of the stock price	12.55~46.83	The higher the volatility, the higher the fair value fluctuation
Derivatives held for trading Stock and index	83,163	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Tree Model	Volatility of the underlying asset	3.00~45.00	The higher the volatility, the higher the fair value fluctuation
			Correlation between underlying asset	23.82~68.29	The higher the correlation, the higher the fair value fluctuation
Currency, interest rate and others	42,806	DCF Model, Hull and White Model, Closed Form, Monte Carlo Simulation	Loss given default	100.00	The higher the loss given default, the lower the fair value
			Volatility	4.00~130.00	The higher the volatility, the higher the fair value fluctuation
			Correlation between underlying asset	-12.89~90.24	The higher the absolute value of correlation, the higher the fair value fluctuation
Financial assets measured at fair value through other comprehensive income Equity securities	1,274,085	Adjusted discount rate method, IMV Model, DCF Model, Comparable Company Analysis, Dividend discount model, Option Model, Net asset value method, Market approach, One Factor Hull-White Model and others	Growth rate	0.00~2.20	The higher the growth rate, the higher the fair value
			Discount rate	4.20~18.71	The lower the discount rate, the higher the fair value
			Volatility	21.46~22.77	The higher the volatility, the higher the fair value fluctuation
	W 8,841,587

77

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Financial liabilities
Financial liabilities designated at fair value through profit or loss
Derivative-linked securities	W 10,518,706	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black Scholes-Model	Volatility of the underlying asset	1.00~145.00	The higher the volatility, the higher the fair value fluctuation
			Correlation between underlying asset	-48.79~90.24	The higher the absolute value of correlation, the higher the fair value fluctuation
Derivatives held for trading
Stock and index	27,077	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Tree Model	Volatility	2.00~54.00	The higher the volatility, the higher the fair value fluctuation
			Correlation between underlying asset	3.49~68.29	The higher the correlation, the higher the fair value fluctuation
Others	208,338	Monte Carlo Simulation, Hull and White Model, DCF Model, Closed form formula	Volatility	1.00~145.00	The higher the volatility, the higher the fair value fluctuation
			Volatility of the stock price	20.08	The higher the volatility, the higher the fair value fluctuation
			Volatility of the interest rate	0.61	The higher the volatility, the higher the fair value fluctuation
			Discount rate	1.31~3.49	The lower the discount rate, the higher the fair value
			Correlation between underlying asset	-48.79~90.24	The higher the absolute value of correlation, the higher the fair value fluctuation
	W 10,754,121

78

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
	Fair value		Valuation technique	Unobservable inputs	Range of unobservable inputs(%)	Relationship of unobservable inputs to fair value
Financial assets
Financial assets designated at fair value through profit or loss
Debt securities	W	301,851	Tree Model, DCF Model, Hull and White Model	Volatility of the underlying asset	9.96 ~ 29.53	The higher the volatility, the higher the fair value fluctuation
Equity securities		67,828	Tree Model	Volatility of the underlying asset	11.45 ~ 24.01	The higher the volatility, the higher the fair value fluctuation
Derivative-linked securities		944,665	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model ,Black-Scholes Model, Option Model, Tree Model	Volatility of the underlying asset	10.00 ~ 30.07	The higher the volatility, the higher the fair value fluctuation
				Recovery rate	40.00	The higher the recovery rate, the higher the fair value
				Correlation between underlying assets	8.27 ~ 90.00	The higher the correlation, the higher the fair value fluctuation
Derivatives held for trading Stock and index		138,972	DCF Model, FDM, Closed Form, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Tree Model	Volatility of the underlying asset	1.00 ~ 39.00	The higher the volatility, the higher the fair value fluctuation
				Correlation between underlying assets	3.00 ~ 67.00	The higher the value of correlation, the higher the fair value fluctuation
Currency, Interest rate and others		58,107	DCF Model, Closed Form, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Tree Model, Option Model	Loss given default	0.56	The higher the loss given default, the lower the fair value
				Volatility of the interest rate	0.47	The higher the volatility, the higher the fair value fluctuation
				Volatility of the underlying asset	3.00 ~ 51.00	The higher the volatility, the higher the fair value fluctuation
				Correlation between underlying assets	-13.00 ~ 90.00	The higher the absolute value of correlation, the higher the fair value fluctuation
Derivatives held for hedging Interest rate		775	DCF Model, Closed Form, FDM, Monte Carlo Simulation	Volatility of the underlying asset	3.02	The higher the volatility, the higher the fair value fluctuation
Available-for-sale financial assets Debt securities		49,381	DCF Model, Option Model, Net asset value method, Market approach	Volatility	15.26 ~ 30.07	The higher the volatility, the higher the fair value fluctuation
				Correlation between underlying assets	48.82 ~ 82.16	The coefficient of correlation is different for each item
				Discount rate	2.57 ~ 11.08	The lower the discount rate, the higher the fair value
				Growth rate	0.00 ~ 2.20	The higher the growth rate, the higher the fair value
Equity securities		5,816,595	DCF Model, Comparable Company Analysis, Adjusted discount rate method, Dividend Discount Model, Net asset value method, Discounted cash flows to equity, Income approach, Market approach, One Factor Hull-White Model, Usage of past transactions, Cost methods, Asset value approach, Tree Model, Net asset value Valuation and others	Growth rate	-1.00 ~ 1.00	The higher the growth rate, the higher the fair value
				Discount rate	-1.00 ~ 52.68	The lower the discount rate, the higher the fair value
				Asset value	-1.00 ~ 1.00	The higher the asset value, the higher the fair value
				Correlation between underlying assets	48.82 ~ 82.16	The coefficient of correlation is different for each item
				Volatility	15.26 ~ 30.07	The higher the volatility, the higher the fair value fluctuation
	W	7,378,174

79

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Financial liabilities
Financial liabilities designated at fair value through profit or loss
Derivative-linked securities	W	8,687,892	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black Scholes-Model	Volatility of the underlying asset	1.00 ~ 52.00		The higher the volatility, the higher the fair value fluctuation
				Correlation between underlying assets	-13.42 ~ 90.24		The higher the absolute value of correlation, the higher the fair value fluctuation
Derivatives held for trading Stock and index		14,796	DCF Model, Closed Form, Monte Carlo Simulation, FDM	Volatility of the underlying asset	1.00 ~ 33.00		The higher the volatility, the higher the fair value fluctuation
				Correlation between underlying assets	7.00 ~ 67.00		The higher the correlation, the higher the fair value fluctuation
Others		49,190	DCF Model, Closed Form, Monte Carlo Simulation, Hull and White Model, Option Model	Volatility of the stock price	15.84		The higher the volatility, the higher the fair value fluctuation
				Volatility of the interest rate	0.47		The higher the volatility, the higher the fair value fluctuation
				Discount rate	2.57 ~ 2.69		The lower the discount rate, the higher the fair value
				Volatility of the underlying asset	1.00 ~ 49.00		The higher the volatility, the higher the fair value fluctuation
				Correlation between underlying assets	25.00 ~ 90.00		The higher the correlation, the higher the fair value fluctuation
Derivatives held for hedging Interest rate		70	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Tree Model	Volatility of the underlying asset	2.64		The higher the volatility, the higher the fair value fluctuation
	W	8,751,948				��

80

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

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 Level 3 financial instruments subject to sensitivity analysis are (i) equity-related derivatives, currency-related derivatives and interest rate related derivatives whose fair value changes are recognized in profit or loss, (ii) financial liabilities designated at fair value through profit or loss, and (iii) due from financial institutions, debt securities (including private equity funds), equity securities and loan receivables whose fair value changes are recognized in profit or loss or other comprehensive income. If overlay approach is applied in accordance with Korean IFRS 1104, changes in fair value of financial assets at fair value through profit or loss are recognized as other comprehensive income.

The results of the sensitivity analysis from changes in inputs are as follows:

(In millions of Korean won)	September 30, 2018
	Recognition in profit or loss					Other comprehensive income
	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Financial assets
Financial assets at fair value through profit or loss1
Due from financial institutions	W	4	W		(4)	W	50	W		(46)
Debt securities4		14,782		(14,317	)		3,219		(1,533	)
Equity securities3		13,324		(7,226	)		849		(695	)
Loans		42		(57	)		—		—
Derivatives held for trading2		43,427		(47,355	)		—		—
Financial assets measured at fair value through other comprehensive income
Equity securities3		—		—			135,490		(71,459	)
	W	71,579	W	(68,959	)	W	139,608	W	(73,733	)
Financial liabilities
Financial liabilities designated at fair value through profit or loss1	W	83,004	W	(77,012	)	W	—	W	—
Derivatives held for trading2		26,819		(25,980	)		—		—
	W	109,823	W	(102,992	)	W	—	W	—

¹  For financial instruments at fair value through profit or loss, the changes in fair value are calculated by shifting principal unobservable input parameters such as volatility of the underlying asset or correlation between underlying asset by ± 10%.

²  For Derivatives financial instruments, the changes in fair value are calculated by shifting principal unobservable input parameters; such as, price of underlying asset, volatility of stock price, interest rate by ± 10% and the loss given default ratio, discount rate by ± 1%

³  For equity securities, the changes in fair value are calculated by shifting principal unobservable input parameters; such as, correlation between growth rate (0~2.2%) and discount rate, or liquidation value(-1~1%) and discount rate.

⁴  Sensitivity of fair values to unobservable parameters of private equity fund is practically impossible, but in the case of equity fund composed of real estates, the changes in fair value are calculated by shifting correlation between discount rate(-1~1%) and volatilities of real estate price(-1~1%).

81

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
	Recognition in profit or loss					Other comprehensive income
	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Financial assets
Financial assets designated at fair value through profit or loss1
Debt securities	W	3,220	W	(2,563	)	W	—	W	—
Equity securities		654		(626	)		—		—
Derivative-linked securities		6,906		(6,820	)		—		—
Derivatives held for trading2		25,616		(28,488	)		—		—
Available-for-sale financial assets
Debt securities3		—		—			205		(51	)
Equity securities4		—		—			126,916		(71,396	)
	W	36,396	W	(38,497	)	W	127,121	W	(71,447	)
Financial liabilities
Financial liabilities designated at fair value through profit or loss1	W	40,020	W	(36,757	)	W	—	W	—
Derivatives held for trading2		11,091		(10,827	)		—		—
Derivatives held for hedging2		2		(2	)		—		—
	W	51,113	W	(47,586	)	W	—	W	—

¹  For financial assets designated at fair value through profit or loss, the changes in fair value are calculated by shifting principal unobservable input parameters such as volatility of the underlying asset or correlation between underlying asset by ± 10%.

²  For stock and index-related derivatives, the changes in fair value are calculated by shifting principal unobservable input parameters such as the correlation of rates of return on stocks and the volatility of the underlying asset by ± 10%. For currency-related derivatives, the changes in fair value are calculated by shifting the unobservable input parameters, such as the loss given default ratio by ± 1%. For interest rate-related derivatives, the correlation of the interest rates or the volatility of the underlying asset is shifted by ± 10% to calculate the fair value changes.

³ For debt securities,the changes in fair value are calculated by shifting principal unobservable input parameters; such as, discount rate by ± 1%.

⁴  For equity securities, the changes in fair value are calculated by shifting principal unobservable input parameters such as correlation between growth rate (0~0.5%) and discount rate, liquidation value(-1~1%) and discount rate, or recovery rate of receivables’ acquisition cost (-1~1%). Sensitivity of fair values to unobservable parameters of private equity fund is practically impossible, but in the case of equity fund composed of real estates, the changes in fair value are calculated by shifting correlation between discount rate(-1~1%) and volatilities of real estate price(-1~1%).

82

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

6.2.4 Day one gain or loss

If the Group uses a valuation technique that incorporates data not obtained from observable markets for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price, and the difference is deferred and not recognized in profit or loss, and is amortized by using the straight-line method over the life of the financial instrument. When the fair value of the financial instruments is subsequently determined using observable market inputs, the remaining deferred amount is recognized in profit or loss.

The aggregate difference yet to be recognized in profit or loss at the beginning and end of the period and a reconciliation of changes in the balance of this difference for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018			2017
Balance at the beginning of the period	W	22,814		W	39,033
New transactions and others		103,599			27,462
Changes during the period		(70,046	)		(54,675	)
Balance at the end of the period	W	56,367		W	11,820

6.3 Carrying Amounts of Financial Instruments by Category

Financial assets and liabilities are measured at fair value or amortized cost.

The carrying amounts of financial assets and liabilities by category as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)

	September 30, 2018
			Financial instruments measured at fair value through other comprehensive income
	Financial instruments at fair value through profit or loss		Financial assets mandatorily measured at fair value through other comprehensive income		Financial instruments designated at fair value through other comprehensive income		Financial instruments at amortized cost		Derivatives held for hedging		Total
Financial assets
Cash and due from financial institutions	W	—	W	—	W	—	W	18,349,698	W	—	W	18,349,698
Financial assets at fair value through profit or loss		51,020,841		—		—		—		—		51,020,841
Derivatives		2,084,614		—		—		—		122,256		2,206,870
Loans at amortized cost		—		—		—		316,430,970		—		316,430,970
Financial investments		—		33,662,743		2,455,771		23,074,564		—		59,193,078
Other financial assets		—		—		—		13,957,209		—		13,957,209
	W	53,105,455	W	33,662,743	W	2,455,771	W	371,812,441	W	122,256	W	461,158,666

83

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)

	September 30, 2018
	Financial instruments at fair value through profit or loss
	Financial instruments at fair value through profit or loss		Financial instruments designated at fair value through profit or loss		Financial instruments at amortized cost		Derivatives held for hedging		Total
Financial liabilities
Financial liabilities at fair value through profit or loss	W	3,689,191	W	12,343,819	W	—	W	—	W	16,033,010
Derivatives		2,388,015		—		—		217,954		2,605,969
Deposits		—		—		271,155,184		—		271,155,184
Debts		—		—		31,902,454		—		31,902,454
Debentures		—		—		51,549,915		—		51,549,915
Other financial liabilities		—		—		27,717,813		—		27,717,813
	W	6,077,206	W	12,343,819	W	382,325,366	W	217,954	W	400,964,345

(In millions of Korean won)	December 31, 2017
	Financial assets at fair value through profit or loss
	Held for trading		Designated at fair value through profit or loss		Loans and receivables		Available-for-sale financial assets		Held-to-Maturity financial assets		Derivatives held for hedging		Total
Financial assets
Cash and due from financial institutions	W	—	W	—	W	19,817,825	W	—	W	—	W	—	W	19,817,825
Financial assets at fair value through profit or loss		30,177,293		2,050,052		—		—		—		—		32,227,345
Derivatives		2,998,042		—		—		—		—		312,124		3,310,166
Loans		—		—		290,122,838		—		—		—		290,122,838
Financial investments		—		—		—		48,116,263		18,491,980		—		66,608,243
Other financial assets		—		—		10,195,015		—		—		—		10,195,015
	W	33,175,335	W	2,050,052	W	320,135,678	W	48,116,263	W	18,491,980	W	312,124	W	422,281,432

84

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
	Financial liabilities at fair value through profit or loss
	Held for trading		Designated at fair value through profit or loss		Financial liabilities at amortized cost		Derivatives held for hedging		Total
Financial liabilities
Financial liabilities at fair value through profit or loss	W	1,944,770	W	10,078,288	W	—	W	—	W	12,023,058
Derivatives		3,054,614		—		—		88,151		3,142,765
Deposits		—		—		255,800,048		—		255,800,048
Debts		—		—		28,820,928		—		28,820,928
Debentures		—		—		44,992,724		—		44,992,724
Other financial liabilities		—		—		18,330,004		—		18,330,004
	W	4,999,384	W	10,078,288	W	347,943,704	W	88,151	W	363,109,527

7. Due from Financial Institutions at Amortized Cost

Details of due from financial institutions as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)		Financial institutions	Interest rate(%)	September 30, 2018	December 31, 2017
Due from financial institutions in Korean won	Due from Bank of Korea	Bank of Korea	0.00 ~ 1.53	W 7,913,389	W 8,511,295
	Due from financial institutions	KEB Hana Bank and others	0.00 ~ 2.70	2,408,290	2,267,778
	Due from others	Korea Securities Finance Corportion and others	—	1,106,156	3,377,102
				11,427,835	14,156,175
Due from financial institutions in foreign currencies	Due from financial institutions in foreign currencies	Bank of Korea and others	0.00 ~ 0.61	1,863,903	1,670,935
	Time deposits in foreign currencies	CMB Beijing West Third Ring Branch and others	0.00 ~ 8.25	1,109,502	775,917
	Due from others	Societe Generale and others	—	1,116,126	616,634
				4,089,531	3,063,486
				W15,517,366	W17,219,661

Restricted cash from financial institutions as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)		Financial Institutions	September 30, 2018	December 31, 2017	Reason for restriction
Due from financial institutions in Korean won	Due from Bank of Korea	Bank of Korea	W 7,913,389	W 8,511,295	Bank of Korea Act
	Due from Banking institution	Standard Chartered Bank Korea Limited and others	536,930	572,132	Deposits related to securitization
	Due from others	Korea Securities Finance Corportion and others	957,167	371,398	Derivatives margin account and others
			9,407,486	9,454,825
Due from financial institutions in foreign currencies	Due from financial institutions in foreign currencies	Bank of Korea and others	536,958	619,130	Bank of Korea Act and others
	Time deposits in foreign currencies	China Construction Bank NY Branch and others	30,380	29,650	Bank Act of the State of New York
	Due from others	Societe Generale and others	989,165	509,484	Derivatives margin account and others
			1,556,503	1,158,264
			W 10,963,989	W 10,613,089

85

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Changes in the allowances for due from financial institutions losses

Changes in the allowances for due from financial institutions losses for the nine-month period ended September 30, 2018, are as follows:

(In millions of Korean won)	2018
	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired		Impaired
Beginning1	W	1,797		W	—	W	—
Transfer between stages		—			—		—
Transfer to12-month expected credit losses		—			—		—
Transfer to lifetime expected credit losses		—			—		—
Impairment		—			—		—
Disposal					—		—
Provision (reversal) for loan losses		98			—		—
Others (change of currency ratio, etc.)		(4	)		—		—
Ending	W	1,891		W	—	W	—

¹  Prepared in accordance with Korean IFRS 1109.

8. Derivative Financial Instruments and Hedge Accounting

The Group’s derivative operations focus on addressing the needs of the Group’s corporate clients to hedge their risk exposure and to hedge the Group’s risk exposure that results from such client contracts. The Group also engages in derivative trading activities to hedge the interest rate and foreign currency risk exposures that arise from the Group’s own assets and liabilities. In addition, the Group engages in proprietary trading of derivatives within the Group’s regulated open position limits.

The Group provides and trades a range of derivatives products, including:

• Interest rate swaps, relating to interest rate risks in Korean won

• Cross-currency swaps, forwards and options relating to foreign exchange rate risks,

• Stock price index options linked with the KOSPI index.

86

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

In particular, the Group applies fair value hedge accounting using cross currency swaps, interest rate swaps and others to hedge the risk of changes in fair values due to the changes in interest rates and foreign exchange rates of structured debts in Korean won, financial debentures in foreign currencies, structured deposits in Korean won, and structured deposits in foreign currencies. In addition, the Group applies net investment hedge accounting by designating financial debentures in foreign currencies as hedging instruments to hedge foreign exchange risks on net investments in foreign operations.

Details of derivative financial instruments held for trading as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Notional amount		Assets		Liabilities
Interest rate
Forwards	W	490,000	W	2,574	W	18,544
Futures1		6,918,607		1,833		442
Swaps		204,726,986		443,030		511,054
Options		15,445,210		127,230		236,615
		227,580,803		574,667		766,655
Currency
Forwards		72,939,013		750,494		640,492
Futures1		783,099		520		345
Swaps		34,558,911		475,014		461,207
Options		2,832,419		8,450		18,477
		111,113,442		1,234,478		1,120,521
Stock and index
Futures1		998,583		5,407		9,275
Swaps		7,577,895		107,284		165,958
Options		7,080,218		85,324		260,047
		15,656,696		198,015		435,280
Credit
Swaps		4,953,949		32,400		24,952
		4,953,949		32,400		24,952
Commodity
Futures1		5,721		41		67
Swaps		72,063		800		711
Options		—		—		—
		77,784		841		778
Other		2,383,762		44,213		39,829
	W	361,766,436	W	2,084,614	W	2,388,015

87

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
	Notional amount		Assets		Liabilities
Interest rate
Futures1	W	4,770,568	W	4,952	W	528
Swaps		190,186,189		434,316		399,674
Options		13,560,861		137,958		234,474
		208,517,618		577,226		634,676
Currency
Forwards		64,308,472		1,261,491		1,233,633
Futures1		622,711		52		1,163
Swaps		29,769,290		847,506		759,757
Options		695,617		4,099		6,994
		95,396,090		2,113,148		2,001,547
Stock and index
Futures1		1,013,846		3,599		1,132
Swaps		5,623,391		112,929		96,894
Options		6,408,019		116,215		274,544
		13,045,256		232,743		372,570
Credit
Swaps		5,799,606		42,000		36,963
		5,799,606		42,000		36,963
Commodity
Futures1		4,791		112		19
Swaps		67,008		4,221		118
Options		245		1		—
		72,044		4,334		137
Other		1,955,581		28,591		8,721
	W	324,786,195	W	2,998,042	W	3,054,614

¹  Gains or losses arising from dailymark-to-market futures are reflected in the margin accounts.

88

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The average of hedge ratio for each type of hedge accounting as of September 30, 2018, is as follows:

(In millions of Korean won)
	September 30, 2018
	1 year			2 years			3 years			4 years			5 years			More than 5 years			Total
Fair value hedge
The quantity of the hedging instrument		2,268,324			227,349			1,515,019			510,757			197,749			969,689			5,688,887
Average ratio of hedging		100.00	%		100.00	%		100.00	%		94.45	%		117.88	%		100.00	%		100.00	%
Cash flow hedge
The quantity of the hedging instrument		2,838,130			1,140,393			1,054,558			876,599			570,635			155,635			6,635,950
Average ratio of hedging		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%
Hedge of net investments in a foreign operations
The quantity of the hedging instrument		811,707			9,549			—			—			—			—			821,256
Average ratio of hedging		100.00	%		100.00	%		0.00	%		0.00	%		0.00	%		0.00	%		100.00	%

Fair Value Hedge

Details of hedged item in fair value hedge as of September 30, 2018, are as follows:

(In millions of Korean won)		September 30, 2018
		Carrying amount				Accumulated adjusted amount						Changes in the fair value
		Assets		Liabilities		Assets			Liabilities
Hedge accounting
Interest rate	Debt securities in KRW	W	462,475	W	—	W	(1,524	)	W	—		W	2,709
	Debt securities in foreign currencies		584,916		—		(20,659	)		—			(10,780	)
	Deposits in foreign currencies		—		763,074		—			(127,086	)		76,053
	Debts in KRW		—		346,698		—			16,698			246
	Debts in foreign currencies		—		1,073,407		—			(39,293	)		13,352
			1,047,391		2,183,179		(22,183	)		(149,681	)		81,580
Currency	Deposits in foreign currencies		2,422,547		—		(95,098	)		—			84,277
			2,422,547		—		(95,098	)		—			84,277
		W	3,469,938	W	2,183,179	W	(117,281	)	W	(149,681	)	W	165,857

89

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of derivative instruments designated as fair value hedge as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Notional amount		Assets		Liabilities		Changes in the fair value
Interest rate
Swaps	W	3,390,168	W	56,397	W	134,496	W	(81,367	)
Currency
Forwards		2,298,719		6,598		37,641		(94,935	)
	W	5,688,887	W	62,995	W	172,137	W	(176,302	)

(In millions of Korean won)	December 31, 2017
	Notional amount		Assets		Liabilities
Interest rate
Swaps	W	2,919,935	W	47,856	W	49,962
Currency
Forwards		2,818,527		108,144		872
Other		50,000		775		70
	W	5,788,462	W	156,775	W	50,904

The fair value ofnon-derivative financial instruments designated as hedging instruments is as follows:

(In millions of Korean won)	September 30, 2018		December 31, 2017
Deposits in foreign currencies	W	—	W	32,051

Details of hedge ineffectiveness recognized in profit or loss from derivatives for the nine-month period ended September 30, 2018, is as follows:

(In millions of Korean won)	2018
	Hedge ineffectiveness recognized in profit or loss
From hedge accounting
Interest rate	W	213
Currency rate		(10,658	)
	W	(10,445	)

Gains and losses from fair value hedging instruments and hedged items attributable to the hedged risk for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018			2017
Gains (losses) on hedging instruments	W	(184,619	)	W	55,253
Gains (losses) on the hedged items attributable to the hedged risk		171,647			(33,291	)
	W	(12,972	)	W	21,962

90

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Cash Flow Hedge

Details of hedged item in cash flow hedge as of September 30, 2018 are as follows:

(In millions of Korean won)	September 30, 2018
	Changes in fair value			Other comprehensive income for cash flow hedge
Hedge accounting
Interest rate	W	(13,207	)	W	19,206
Foreign currency change risk		17,993			5,231
	W	4,786		W	24,437

Details of derivative instruments designated as cash flow hedge as of September 30, 2018 and December 31, 2017, are as follows:

	September 30, 2018
	Notional amount		Assets		Liabilities		Changes in fair value
Interest rate
Swaps	W	4,297,147	W	29,179	W	5,284	W	12,640
Currency
Swaps		2,338,803		25,272		38,398		(16,627	)
	W	6,635,950	W	54,451	W	43,682	W	(3,987	)

(In millions of Korean won)	December 31, 2017
	Notional amount		Assets		Liabilities
Interest rate
Swaps	W	2,393,491	W	15,796	W	3,905
Currency
Swaps		2,396,957		117,597		33,342
	W	4,790,448	W	133,393	W	37,247

Gains and losses from cash flow hedging instruments and hedged items attributable to the hedged risk for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018			2017
Gains (losses) on hedging instruments	W	(3,987	)	W	53,446
Gains (losses) on effectiveness (amount recognized in other comprehensive income)		(4,882	)		53,154
Gains on ineffectiveness (amount recognized in profit or loss)		895			292

Amounts recognized in other comprehensive income and reclassified from equity to profit or loss for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018			2017
Amount recognized in other comprehensive income	W	(4,882	)	W	53,154
Amount reclassified from equity to profit or loss		20,463			(46,480	)
Tax effect		(6,031	)		(1,135	)
OCI after tax		9,550			5,539

91

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Hedge on Net Investments in Foreign Operations

Details of hedged item in hedge on foreign operation net investments hedge as of September 30, 2018, are as follows:

(In millions of Korean won)	September 30, 2018
	Changes in fair value		Other comprehensive income for hedge on net investment in a foreign operation
Hedge accounting
Currency(foreign currency change risk)	W	31,107	W	(28,607)

Details of financial instruments designated as hedging instrument in hedge on net investments in foreign operations as of September 30, 2018, is as follows:

	September 30, 2018
	Nominal amount		Assets		Liabilities		Changes in fair value
Currency
Forwards	W	821,256	W	4,810	W	2,135	W	(28,218	)
Financial debentures in foreign currencies		89,016		—		88,679		(2,889	)
	W	910,272	W	4,810	W	90,814	W	(31,107	)

Details of derivative instruments designated as hedging instrument in hedge on net investments in foreign operations as of December 31, 2017, is as follows:

(In millions of Korean won)	December 31, 2017
	Notional amount		Assets		Liabilities
Currency
Forwards	W	484,033	W	21,956	W	—

The fair value ofnon-derivative financial instruments designated as hedging instruments as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018		December 31, 2017
Financial debentures in foreign currencies	W	87,868	W	99,994

Gain or loss from hedging instruments in hedge of net investments in foreign operations and hedged items attributable to the hedged risk for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018			2017
Gains (losses) on hedging instruments	W	(31,241	)	W	558
Effective portion of gains (losses) on hedges of net investments in foreign operations (amount recognized in other comprehensive income)		(31,241	)		558
Ineffective portion of gains (losses) on hedges of net investments in foreign operations (amount recognized in profit or loss)		—			—

92

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The effective portion of gains (losses) on hedging instruments recognized in other comprehensive income for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018			2017
Amount recognized in other comprehensive income	W	(31,241	)	W	558
Tax effect		8,592			(135	)
Amount recognized in other comprehensive income, net of tax	W	(22,649	)	W	423

9. Loans at Amortized Cost

Details of loans as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018			December 31, 2017
Loans at amortized cost	W	318,229,983		W	291,513,253
Deferred loan origination fees and costs		749,479			719,816
Less: Allowances for loan losses		(2,548,492	)		(2,110,231	)
Carrying amount	W	316,430,970		W	290,122,838

Details of loans for other banks as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018			December 31, 2017
Loans at amortized cost	W	3,763,286		W	5,314,577
Less: Allowances for loan losses		(856	)		(77	)
Carrying amount	W	3,762,430		W	5,314,500

Details of loan types and customer types of loans to customers, other than banks, as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Retail			Corporate			Credit card			Total
Loans in Korean won	W	148,965,670		W	122,817,816		W	—		W	271,783,486
Loans in foreign currencies		174,943			4,514,788			—			4,689,731
Domestic import usance bills		—			2,887,865			—			2,887,865
Off-shore funding loans		—			827,899			—			827,899
Call loans		—			760,651			—			760,651
Bills bought in Korean won		—			2,910			—			2,910
Bills bought in foreign currencies		—			5,033,371			—			5,033,371
Guarantee payments under payment guarantee		47			5,096			—			5,143
Credit card receivables in Korean won		—			—			16,426,493			16,426,493
Credit card receivables in foreign currencies		—			—			2,991			2,991
Reverse repurchase agreements		—			5,666,800			—			5,666,800
Privately placed bonds		—			963,963			—			963,963
Factored receivables		3,453			6,238			—			9,691
Lease receivables		1,741,193			62,956			—			1,804,149
Loans for installment credit		4,328,176			22,857			—			4,351,033
		155,213,482			143,573,210			16,429,484			315,216,176
Proportion (%)		49.24			45.55			5.21			100.00
Less: Allowances		(628,574	)		(1,224,833	)		(694,229	)		(2,547,636	)
	W	154,584,908		W	142,348,377		W	15,735,255		W	312,668,540

93

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
	Retail			Corporate			Credit card			Total
Loans in Korean won	W	140,630,735		W	112,014,669		W	—		W	252,645,404
Loans in foreign currencies		121,166			3,078,907			—			3,200,073
Domestic import usance bills		—			2,128,868			—			2,128,868
Off-shore funding loans		—			730,817			—			730,817
Call loans		—			335,200			—			335,200
Bills bought in Korean won		—			4,168			—			4,168
Bills bought in foreign currencies		—			3,875,550			—			3,875,550
Guarantee payments under payment guarantee		105			6,373			—			6,478
Credit card receivables in Korean won		—			—			15,200,843			15,200,843
Credit card receivables in foreign currencies		—			—			4,004			4,004
Reverse repurchase agreements		—			1,197,700			—			1,197,700
Privately placed bonds		—			1,994,932			—			1,994,932
Factored receivables		51,401			1,419			—			52,820
Lease receivables		1,773,901			60,527			—			1,834,428
Loans for installment credit		3,693,672			13,535			—			3,707,207
		146,270,980			125,442,665			15,204,847			286,918,492
Proportion (%)		50.98			43.72			5.30			100.00
Less: Allowances		(429,299	)		(1,231,589	)		(449,266	)		(2,110,154	)
	W	145,841,681		W	124,211,076		W	14,755,581		W	284,808,338

94

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

10. Allowances for Loan Losses

Changes in the allowances for loan losses for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Retails									Corporates									Credit cards
	The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying 12-month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired			Impaired						Non-impaired			Impaired						Non-impaired			Impaired
Beginning2	W	249,226		W	196,387		W	186,766		W	208,354		W	275,722		W	865,065		W	154,076		W	260,162		W	213,181
Transfer between stages
Transfer to12-month expected credit losses		87,147			(86,598	)		(549	)		31,139			(29,456	)		(1,683	)		45,146			(44,061	)		(1,085	)
Transfer to lifetime expected credit losses(non-impaired)		(76,453	)		86,103			(9,650	)		(27,237	)		37,138			(9,901	)		(24,914	)		26,037			(1,123	)
Transfer to lifetime expected credit losses (impaired)		(1,423	)		(39,407	)		40,830			(2,330	)		(24,593	)		26,923			(1,907	)		(14,326	)		16,233
Write-offs		—			—			(284,793	)		—			—			(180,911	)		—			—			(338,750	)
Recover from write-offs		—			—			91,594			—			—			153,955			—			—			98,575
Disposal		(754	)		(1,358	)		(1,502	)		—			—			(8,105	)		—			—			—
Provision (reversal) for loan losses1		(28,346	)		55,405			164,890			(5,183	)		44,413			(128,854	)		(3,280	)		66,424			250,009
Business combination		172			—			—			22			—			—			—			—			—
Others (change of currency ratio, etc.)		453			162			272			(645	)		626			1,230			—			—			(6,168	)
Ending	W	230,022		W	210,694		W	187,858		W	204,120		W	303,850		W	717,719		W	169,121		W	294,236		W	230,872

¹  Provision for credit losses in statements of comprehensive income also include provision (reversal) for due from financial institutions (Note 7), and provision (reversal) for securities (Note 11), provision for unused commitments and guarantees (Note 22), provision (reversal) for financial guarantees contracts (Note 22), and provision (reversal) for other financial assets (Note 17).

²  Prepared in accordance with Korean IFRS 1109.

(In millions of Korean won)	2017
	Retail			Corporate			Credit card			Total
Beginning	W	481,289		W	1,382,172		W	414,295		W	2,277,756
Written-off		(181,234	)		(338,387	)		(291,192	)		(810,813	)
Recoveries fromwritten-off loans		43,150			169,710			99,866			312,726
Sale and repurchase		(29,443	)		(9,347	)		—			(38,790	)
Provision1		166,382			121,302			220,013			507,697
Business combination		9,679			50,227			—			59,906
Other changes		(65,249	)		(94,159	)		(6,963	)		(166,371	)
Ending	W	424,574		W	1,281,518		W	436,019		W	2,142,111

¹  Provision for credit losses in statements of comprehensive income also include provision (reversal) for due from financial institutions (Note 7), and provision (reversal) for securities (Note 11), provision for unused commitments and guarantees (Note 22), provision (reversal) for financial guarantees contracts (Note 22), and provision (reversal) for other financial assets (Note 17).

95

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The Group manages thewritten-off loans that its extinctive prescription did not occur, and that are not collected; the balance of those areW 12,062,774 million as of September 30, 2018.

11. Financial Assets at Fair Value through Profit or Loss and Financial Investments

Details of financial assets at fair value through profit or loss and financial investments as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
Financial assets at fair value through profit or loss
Debt securities:
Government and public bonds	W	9,003,188
Financial bonds		12,943,838
Corporate bonds		4,750,111
Asset-backed securities		59,623
Puttable instruments (investment funds, etc.)		13,816,191
Derivatives linked securities		3,448,703
Other debt securities		4,016,035
Equity securities:
Stocks and others		1,404,654
Equity investments		190
Other equity securities		152,593
Loans:
Private placed corporate bonds		738,232
Other loans		106,667
Due from financial institutions:
Other due from financial institutions		506,245
Others		74,571
		51,020,841
Financial Investments
Financial assets measured at fair value through other comprehensive income
Debt securities:
Government and public bonds		5,052,473
Financial bonds		17,135,323
Corporate bonds		10,591,167
Asset-backed securities		883,780
Equity securities:
Stocks		2,345,340
Equity investments		38,834
Other equity securities		71,597
		36,118,514
Financial assets at amortized cost
Debt securities:
Government and public bonds		5,071,858
Financial bonds		5,758,761
Corporate bonds		7,149,898
Asset-backed securities		5,095,853
Allowance		(1,806	)
		23,074,564
	W	59,193,078

96

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
Financial assets held for trading
Debt securities:
Government and public bonds	W	6,232,514
Financial bonds		11,324,330
Corporate bonds		5,133,226
Asset-backed securities		161,991
Others		2,316,277
Equity securities:
Stocks and others		1,009,190
Beneficiary certificates		3,925,910
Others		73,855
		30,177,293
Financial assets designated at fair value through profit or loss
Debt securities:
Corporate bonds		66,969
Equity securities:
Stocks and others		67,828
Derivative-linked securities		1,613,404
Privately placed bonds		301,851
		2,050,052
Total financial assets at fair value through profit or loss	W	32,227,345
Available-for-sale financial assets
Debt securities:
Government and public bonds	W	3,629,479
Financial bonds		20,946,100
Corporate bonds		10,570,501
Asset-backed securities		2,402,437
Others		1,410,884
Equity securities:
Stocks		3,077,748
Equity investments and others		459,808
Beneficiary certificates		5,619,306
		48,116,263
Held-to-maturity financial assets
Debts securities:
Government and public bonds		5,448,471
Financial bonds		2,474,841
Corporate bonds		6,218,723
Asset-backed securities		4,305,678
Others		44,267
		18,491,980
Total financial investments	W	66,608,243

97

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Dividend incomes from the equity securities measured at fair value through other comprehensive income for the nine-month period ended September 30, 2018, are as follows:

(In millions of Korean won)		2018
		From the financial asset derecognized		From the remaining financial asset
Equity securities at fair value through other comprehensive income
Stocks	Listed	W	—	W	19,015
	Non-listed		—		25,114
Equity investments			—		2,256
Other equity securities			1,564		1,873
		W	1,564	W	48,258

The derecognized equity securities, measured at fair value through other comprehensive income for the nine-month period ended September 30, 2018, is as follows:

(In millions of Korean won)		2018
		Disposal price		Accumulated OCI as of disposal date
Equity securities at fair value through other comprehensive income
Stocks	Listed	W	26,838	W	18,438
	Non-listed		480		480
Other equity securities			60,000		(1,258	)
		W	87,318	W	17,660

Provision, and reversal for the allowance of financial investments for the nine-month period ended September 30, 2018, are as follows:

(In millions of Korean won)	Impairment losses		Reversal of impairment		Total
Securities measured at fair value through other comprehensive income		2,562		1,612		950
Securities measured at amortized cost		313		212		101
	W	2,875	W	1,824	W	1,051

98

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The impairment losses and the reversal of impairment losses recognized in relation to financial investments for the nine-month period ended September 30, 2017, are as follows:

(In millions of Korean won)
	Impairment			Reversal		Net
Available-for-sale financial assets	W	(30,795	)	W	—	W	(30,795	)

Changes in the allowances for debt securities for the nine-month period ended September 30, 2018, are as follows:

(In millions of Korean won)	2018
	12-month expected credit losses			Lifetime expected credit losses
				Non-impaired			Impaired
Beginning1	W	4,937		W	482		W	720
Transfer between stages
Transfer to12-month expected credit losses		482			(482	)		—
Transfer to lifetime expected credit losses		—			—			—
Impairment		—			—			—
Disposal		(161	)		—			—
Provision (reversal) for loan losses		1,427			—			(376	)
Others (change of currency ratio, etc.)		67			—			—
Ending	W	6,752		W	—		W	344

¹  Prepared in accordance with Korean IFRS 1109.

99

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

12. Investments in Associates and Joint Ventures

Investments in associates and joint ventures as of September 30, 2018 and December 31, 2017, are as follows:

(in millions of Korean won)	September 30, 2018
	Ownership (%)		Acquisition cost		Share of net asset amount			Carrying amount		Industry	Location
Associates and joint ventures
KB Pre IPO Secondary Venture Fund 1st1		15.19	W	1,671	W	1,793		W	1,793	Investment finance		Korea
KB GwS Private Securities Investment Trust		26.74		113,880		135,037			131,586	Investment finance		Korea
KB-KDBC New Technology Business Fund8		66.66		10,000		9,702			9,702	Investment finance		Korea
KB Star office Private real estate Investment Trust No.1		21.05		20,000		20,517			20,104	Investment finance		Korea
PT Bank Bukopin TBK,15,16		22.00		113,074		142,806			113,074	Banking and foreign exchange transaction		Indonesia
Sun Surgery Center Inc.		28.00		2,682		2,682			2,682	Hospital		United States of America
Dae-A Leisure Co., Ltd.6		49.36		—		1,613			578	Earth works		Korea
Doosung Metal Co., Ltd 6		26.52		—		(16	)		—	Manufacture of metal products		Korea
RAND Bio Science Co., Ltd.		21.91		2,000		1,792			1,792	Research and experimental development on medical sciences and pharmacy		Korea
Balhae Infrastructure Company1		12.61		104,622		106,367			106,367	Investment finance		Korea
Bungaejangter Inc.13		24.68		3,484		3,484			3,484	Portals and other internet information media service activities		Korea
Aju Good Technology Venture Fund		38.46		15,268		15,418			15,418	Investment finance		Korea
Acts Co., Ltd.10		7.14		500		—			—	Manufacture of optical lens and elements		Korea
SY Auto Capital Co., Ltd.		49.00		9,800		30,791			10,015	Installment loan		Korea
Wise Asset Management Co., Ltd.7		33.00		—		—			—	Asset management		Korea
Incheon Bridge Co., Ltd.1		14.99		9,158		(16,601	)		—	Operation of highways and related facilities		Korea
Jungdong Steel Co., Ltd.6		42.88		—		(433	)		—	Wholesale of primary metal		Korea
Kendae Co., Ltd.6		41.01		—		(252	)		98	Screen printing		Korea
Daesang Techlon Co., Ltd.6		47.73		—		695			—	Manufacture of plastic wires, bars, pipes, tubes and hoses		Korea
Dongjo Co., Ltd.6		29.29		—		806			115	Wholesale of agricultural and forestry machinery and equipment		Korea
Dpaps Co., Ltd.6		38.62		—		14			—	Wholesale of paper products		Korea
Big Dipper Co., Ltd.		29.33		440		142			256	Big data consulting		Korea
Builton Co., Ltd.12		21.96		800		541			541	Software development and supply		Korea

100

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Shinla Construction Co., Ltd.6	20.24	—		(551	)	—	Specialty construction	Korea
Shinhwa Underwear Co., Ltd.6	26.24	—		(57	)	184	Manufacture of underwears and sleepwears	Korea
A-PRO Co., Ltd.1	12.61	1,500		1,500		1,500	Manufacture of electric power storage system	Korea
MJT&I Co., Ltd.6	22.89	—		(606	)	122	Wholesale of other goods	Korea
Jaeyang Industry Co., Ltd.6	20.86	—		(552	)	—	Manufacture of luggage and other protective cases	Korea
Jungdo Co., Ltd.6	25.53	—		1,492		—	Office, commercial and institutional building construction	Korea
Jinseung Tech Co., Ltd.6	30.04	—		(176	)	—	Manufacture of other general-purpose machinery n.e.c.	Korea
Terra Co., Ltd.6	24.06	—		2		—	Manufacture of hand-operated kitchen appliances and metal ware	Korea
Paycoms Co., Ltd.9	11.70	800		157		157	System software publishing	Korea
Food Factory Co., Ltd.11	22.22	1,000		1,000		1,000	Farm product distribution industry	Korea
Korea NM Tech Co., Ltd.6	22.41	—		552		—	Manufacture of motor vehicles, trailers and semitrailers	Korea
KB IGen Private Equity Fund No.11	0.03	(1	)	1		—	Investment finance	Korea
KB No.9 Special Purpose Acquisition Company1,	0.11	24		31		31	SPAC	Korea
KB No.10 Special Purpose Acquisition Company1,4	0.19	10		20		20	SPAC	Korea
KB No.11 Special Purpose Acquisition Company1,5	0.31	10		19		19	SPAC	Korea
KB Private Equity FundIII1	15.68	8,000		7,868		7,868	Investment finance	Korea
Korea Credit Bureau Co., Ltd.1	9.00	4,500		5,802		5,802	Credit information	Korea
KoFC KBIC Frontier Champ2010-5(PEF)	50.00	364		147		—	Investment finance	Korea
KoFC POSCO HANHWA KB shared growth Private Equity Fund No.2	25.00	12,970		14,667		14,668	Investment finance	Korea
Keystone-Hyundai Securities No. 1 Private Equity Fund1	5.64	1,842		1,506		1,507	Investment finance	Korea
POSCO-KB Shipbuilding Fund	31.25	5,000		4,573		4,573	Investment finance	Korea
GH Real Estate I LP	42.00	17,678		18,589		18,589	Asset management	Guernsey
KBTS Technology Venture Private Equity Fund8	56.00	10,212		9,942		9,942	Investment finance	Korea
KB-SJ Tourism Venture Fund1,8	18.52	1,500		1,417		1,417	Investment finance	Korea
UNION Media Commerce Fund	29.00	1,000		962		962	Investment finance	Korea
CHONG IL MACHINE & TOOLS CO.,LTD.,6	20.40	—		(107	)	—	Machinery and equipment wholesale	Korea

101

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

IMT TECHNOLOGY CO.,LTD. 6	25.29		—		18			—	Computer Peripherals Distribution	Korea
IWON ALLOY CO.,LTD. 6	23.20		—		394			—	Manufacture of smelting, refining and alloys	Korea
CARLIFE CO.,LTD. 6	24.39		—		(75	)		—	Publishing of magazines and periodicals (publishing industry)	Korea
COMPUTERLIFE CO.,LTD.,6	45.71		—		(329	)		—	Publishing of magazines and periodicals (publishing industry)	Korea
		W	473,788	W	525,104		W	485,966

102

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(in millions of Korean won)	December 31, 2017
	Ownership (%)		Acquisition cost		Share of net asset amount			Carrying amount		Industry	Location
Associates
KB Pre IPO Secondary Venture Fund 1st1		15.19	W	1,671	W	1,601		W	1,601	Investment finance		Korea
KB GwS Private Securities Investment Trust		26.74		113,880		134,891			131,420	Investment finance		Korea
KB-KDBC New Technology Business Fund8		66.66		5,000		4,972			4,972	Investment finance		Korea
KB Star office Private real estate Investment Trust No.1		21.05		20,000		20,122			19,709	Investment finance		Korea
Sun Surgery Center Inc.		28.00		2,682		2,682			2,682	Hospital		United States of America
Dae-A Leisure Co., Ltd.6		49.36		—		1,017			—	Earth works		Korea
Doosung Metal Co., Ltd.6		26.52		—		(20	)		—	Manufacture of metal products		Korea
RAND Bio Science Co., Ltd.		21.91		2,000		2,000			2,000	Research and experimental development on medical sciences and pharmacy		Korea
Balhae Infrastructure Company1		12.61		101,794		105,190			105,190	Investment finance		Korea
Bungaejangter Inc.13		24.68		3,484		3,484			3,484	Portals and other internet information media service activities		Korea
Aju Good Technology Venture Fund		38.46		8,230		7,856			8,230	Investment finance		Korea
Acts Co., Ltd.10		7.14		500		500			500	Manufacture of optical lens and elements		Korea
SY Auto Capital Co., Ltd.		49.00		9,800		14,099			8,070	Installment loan		Korea
Wise Asset Management Co., Ltd.7		33.00		—		—			—	Asset management		Korea
Incheon Bridge Co., Ltd.1		14.99		9,158		(16,202	)		—	Operation of highways and related facilities		Korea
Jungdong Steel Co., Ltd.6		42.88		—		(436	)		—	Wholesale of primary metal		Korea
Kendae Co., Ltd.6		41.01		—		(223	)		127	Screen printing		Korea
Daesang Techlon Co., Ltd.6		47.73		—		97			—	Manufacture of plastic wires, bars, pipes, tubes and hoses		Korea
Dongjo Co., Ltd.6		29.29		—		691			—	Wholesale of agricultural and forestry machinery and equipment		Korea
Dpaps Co., Ltd.6		38.62		—		155			—	Wholesale of paper products		Korea
Big Dipper Co., Ltd.		29.33		440		325			440	Big data consulting		Korea
Builton Co., Ltd. 12		20.58		800		800			800	Software development and supply		Korea
Shinla Construction Co., Ltd.6		20.24		—		(553	)		—	Specialty construction		Korea
Shinhwa Underwear Co., Ltd.6		26.24		—		(103	)		138	Manufacture of underwears and sleepwears		Korea
A-PRO Co., Ltd.1		12.61		1,500		1,500			1,500	Manufacture of electric power storage system		Korea
MJT&I Co., Ltd.6		22.89		—		(601	)		127	Wholesale of other goods		Korea
Inno Lending Co., Ltd.1		19.90		398		230			230	Credit rating model development		Korea
Jaeyang Industry Co., Ltd.6		20.86		—		(522	)		—	Manufacture of luggage and other protective cases		Korea
Jungdo Co., Ltd.6		25.53		—		1,664			—	Office, commercial and institutional building construction		Korea
Jinseung Tech Co., Ltd.6		30.04		—		(173	)		—	Manufacture of other general-purpose machinery n.e.c.		Korea

103

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Terra Co., Ltd.6	24.06		—		36		20	Manufacture of hand-operated kitchen appliances and metal ware	Korea
Paycoms Co., Ltd.6	12.35		800		800		800	System software publishing	Korea
Food Factory Co., Ltd.11	22.22		1,000		1,000		1,000	Farm product distribution industry	Korea
Korea NM Tech Co., Ltd.6	22.41		—		580		—	Manufacture of motor vehicles, trailers and semitrailers	Korea
KB IGen Private Equity Fund No.11	0.03		3		3		3	Investment finance	Korea
KB No.8 Special Purpose Acquisition Company2	0.10		10		20		20	SPAC	Korea
KB No.9 Special Purpose Acquisition Company1,3	0.11		24		31		31	SPAC	Korea
KB No.10 Special Purpose Acquisition Company1,4	0.19		10		20		20	SPAC	Korea
KB No.11 Special Purpose Acquisition Company1,5	0.31		10		19		19	SPAC	Korea
KB Private Equity Fund III1	15.68		8,000		7,899		7,899	Investment finance	Korea
Korea Credit Bureau Co., Ltd.1	9.00		4,500		5,056		5,056	Credit information	Korea
KoFC KBIC Frontier Champ2010-5(PEF)	50.00		6,485		7,506		7,120	Investment finance	Korea
KoFC POSCO HANHWA KB shared growth Private Equity Fund No.2	25.00		12,970		17,213		17,213	Investment finance	Korea
Keystone-Hyundai Securities No. 1 Private Equity Fund1	5.64		1,842		1,761		1,761	Investment finance	Korea
POSCO-KB Shipbuilding Fund	31.25		2,500		2,345		2,345	Investment finance	Korea
Hyundai-Tongyang Agrifood Private Equity Fund	25.47		82		543		543	Investment finance	Korea
		W	319,573	W	329,875	W	335,070

¹ As of September 30, 2018 and December 31, 2017, the Group is represented on the governing bodies of its associates. Therefore, the Group has a significant influence over the decision-making process relating to their financial and business policies.

² The market value of KB No.8 Special Purpose Acquisition Company, reflecting the quoted market price as of December 31, 2017, amounts toW 20 million.

³ The market value of KB No.9 Special Purpose Acquisition Company, reflecting the quoted market price as of December 31, 2017, amounts toW 31 million.

⁴ The market value of KB No.10 Special Purpose Acquisition Company, reflecting the quoted market price as of September 30, 2018 and December 31, 2017, amounts toW 20 million andW 20 million, respectively.

⁵ The market value of KB No.11 Special Purpose Acquisition Company, reflecting the quoted market price as of September 30, 2018 and December 31, 2017, amounts toW 21 million andW 20 million, respectively.

⁶ The investment in associates was reclassified fromavailable-for-sale financial assets due tore-instated voting rights from termination of rehabilitation procedures.

104

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

⁷ Carrying amount of the investment has been recognized as a loss from the date Hyundai Securities Co., Ltd. was included in the consolidation scope.

⁸  In order to direct relevant activities, it is necessary to obtain the consent of the twoco-operative members; the Group has applied the equity method as the Group cannot control the investee by itself.

⁹ The Ownership of Paycoms Co., Ltd. would be each 22.96% and 24.06% as of September 30, 2018 and December 31, 2017, considering the potential voting rights from convertible bond. .

¹⁰ The Ownership of Acts Co., Ltd. would be each 27.78% and 27.78% as of September 30, 2018 and December 31, 2017, considering the potential voting rights from convertible bond. .

¹¹ The Ownership of Food Factory Co., Ltd. would be each 30.00% and 30.00% as of September 30, 2018 and December 31, 2017, considering the potential voting rights from convertible bond. .

¹² The Ownership of Builton Co., Ltd. would be 26.86% as of September 30, 2018, considering the potential voting rights from convertible bond. .

¹³ The Ownership of Bungaejangter Inc. would be 22.69% as of December 31, 2017, considering the potential voting rights from convertible bond. .

¹⁴  In accordance with Korean IFRS 1028Investments in Associates and Joint Ventures, the equity method is exempted, and the Group has recognized the related as profit or loss in fair value, for JLK INSPECTION Inc., Rainist Co., Ltd., TESTIAN Inc., Spark Biopharma, Inc., RMGPBio-Pharma Investment Fund, L.P.,RMGPBio-Pharma Investment, L.P

¹⁵ Since PPA (Purchase Price Allocation) of PT Bank Bukopin TBK is under procedure after the acquisition date, the goodwill amount, and etc may change. The fair value of PT Bank Bukopin TBK common stock isW 68,450 million as of September 30, 2018.

¹⁶ The Group has entered into an agreement with PT Bosowa Corporindo, the major shareholder of PT Bank Bukopin TBK. Under the agreement, the Group has the right to receive the ‘Right of First Refusal’,‘Tag-along Right’, and in certain case the group also has a ‘Drag-along Right’ for two years after three years from the closing date of the transaction.

105

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Summarized financial information on major associates and joint ventures, adjustments to carrying amount of investment in associates and dividends received from the associates are as follows:

(In millions of Korean won)	September 30, 20181
	Total assets		Total liabilities		Share capital		Equity			Share of net asset amount			Unrealized gains (losses)			Consolidated carrying amount
Associates and joint ventures
KB Pre IPO Secondary Venture Fund 1st	W	11,827	W	27	W	11,000	W	11,800		W	1,793		W	—		W	1,793
KB GwS Private Securities Investment Trust		505,492		497		425,814		504,995			135,037			(3,451	)		131,586
KB-KDBC New Technology Business Investment Fund		15,003		450		15,000		14,553			9,702			—			9,702
KB Star office Private real estate Investment Trust No.1		218,786		121,329		95,000		97,457			20,517			(413	)		20,104
Sun Surgery Center Inc		10,368		446		9,428		9,922			2,682			—			2,682
RAND Bio Science Co., Ltd.		1,862		70		91		1,792			1,792			—			1,792
Balhae Infrastructure Company		845,642		1,798		829,995		843,844			106,367			—			106,367
Bungaejangter Inc.		4,956		2,156		58		2,800			3,484			—			3,484
Aju Good Technology Venture Fund		40,339		250		39,700		40,089			15,418			—			15,418
Acts Co., Ltd.		6,666		6,823		117		(157	)		—			—			—
SY Auto Capital Co., Ltd.		82,502		51,711		20,000		30,791			30,791			(20,776	)		10,015
Incheon Bridge Co., Ltd.		621,256		732,004		61,096		(110,748	)		(16,601	)		16,601			—
Big Dipper Co., Ltd.		565		82		1,500		483			142			114			256
Builton Co., Ltd.		1,532		1,280		325		252			541			—			541
A-PRO Co., Ltd.		27,618		22,069		1,550		5,549			1,500			—			1,500
Paycoms Co., Ltd.		2,017		1,516		810		501			157			—			157
Food Factory Co., Ltd.		3,988		3,256		450		732			1,000			—			1,000
KB IGen Private Equity Fund No. 1		148		8		170		140			1			(1	)		—
KB No.9 Special Purpose Acquisition Company		30,181		2,616		1,382		27,565			31			—			31
KB No.10 Special Purpose Acquisition Company		11,926		1,705		521		10,221			20			—			20
KB No.11 Special Purpose Acquisition Company		6,782		736		321		6,046			19			—			19
KB Private Equity Fund III		50,167		8		51,000		50,159			7,868			—			7,868
Korea Credit Bureau Co., Ltd.		86,617		22,155		10,000		64,462			5,802			—			5,802
KoFC KBIC Frontier Champ2010-5(PEF)		294		—		300		294			147			(147	)		—
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		59,590		919		51,880		58,671			14,667			1			14,668
Keystone-Hyundai Securities No. 1 Private Equity Fund		176,731		145,737		34,114		30,994			1,506			1			1,507
POSCO-KB Shipbuilding Fund		14,879		245		16,000		14,634			4,573			—			4,573
GH Real Estate I LP		44,462		200		42,093		44,262			18,589			—			18,589
KBTS Technology Venture Private Equity Fund		21,820		208		22,200		21,612			9,942			—			9,942
KB-SJ Tourism Venture Fund		7,820		169		8,100		7,651			1,417			—			1,417
UNION Media Commerce Fund		3,318		—		3,450		3,318			962			—			962

106

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	20181
	Operating income		Profit (loss)			Other comprehensive income (loss)			Total comprehensive income (loss)			Dividends
Associates and joint ventures
KB Pre IPO Secondary Venture Fund 1st	W	1,736	W	919		W	—		W	919		W	—
KB GwS Private Securities Investment Trust		31,877		31,145			—			31,145			8,161
KB-KDBC New Technology Business Investment Fund		47		(405	)		—			(405	)		—
KB Star office Private real estate Investment Trust No.1		10,421		4,465			—			4,465			545
Sun Surgery Center Inc.		510		55			445			500			—
RAND Bio Science Co., Ltd.		—		(1,126	)		—			(1,126	)		—
Balhae Infrastructure Company		46,326		40,888			—			40,888			6,804
Bungaejangter Inc.		3,203		645			—			645			—
Aju Good Technology Venture Fund		2,669		1,495			—			1,495			—
Acts Co., Ltd.		2,472		(628	)		—			(628	)		—
SY Auto Capital Co., Ltd.		12,533		2,235			(2	)		2,233			—
Incheon Bridge Co., Ltd.		67,904		(2,169	)		—			(2,169	)		—
Big Dipper Co., Ltd.		113		(627	)		—			(627	)		—
Builton Co., Ltd.		1,048		(339	)		—			(339	)		—
A-PRO Co., Ltd.		32,701		12,922			—			12,922			—
Paycoms Co., Ltd.		526		(199	)		—			(199	)		—
Food Factory Co., Ltd.		2,998		217			—			217			—
KB IGen Private Equity Fund No. 1		—		3,543			—			3,543			—
KB No.9 Special Purpose Acquisition Company		—		168			—			168			—
KB No.10 Special Purpose Acquisition Company		—		38			—			38			—
KB No.11 Special Purpose Acquisition Company		—		199			—			199			—
KB Private Equity Fund III		—		(198	)		—			(198	)		—
Korea Credit Bureau Co., Ltd.		55,849		8,354			—			8,354			112
KoFC KBIC Frontier Champ2010-5(PEF)		1,285		1,281			—			1,281			999
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		820		(12,045	)		—			(12,045	)		—
Keystone-Hyundai Securities No. 1 Private Equity Fund		8,447		(4,503	)		—			(4,503	)		—
POSCO-KB Shipbuilding Fund		120		(871	)		—			(871	)		—
GH Real Estate I LP		2,857		1,997			172			2,169			—
KBTS Technology Venture Private Equity Fund		—		(588	)		—			(588	)		—
KB-SJ Tourism Venture Fund		—		(449	)		—			(449	)		—
UNION Media Commerce Fund		—		(132	)		—			(132	)		—

107

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 20171
	Total assets		Total liabilities		Share capital		Equity			Share of net asset amount			Unrealized gains (losses)			Consolidated carrying amount
Associates and Joint ventures
KB Pre IPO Secondary Venture Fund 1st	W	10,908	W	30	W	11,000	W	10,878		W	1,601		W	—		W	1,601
KB GwS Private Securities Investment Trust		505,115		741		425,814		504,374			134,891			(3,471	)		131,420
KB-KDBC New Technology Business Investment Fund		7,503		45		7,500		7,458			4,972			—			4,972
KB Star office Private real estate Investment Trust No.1		216,041		120,462		95,000		95,579			20,122			(413	)		19,709
Sun Surgery Center Inc		9,579		—		43		9,579			2,682			—			2,682
RAND Bio Science Co., Ltd.		1,876		7		71		1,869			2,000			—			2,000
Balhae Infrastructure Company		836,309		1,800		807,567		834,509			105,190			—			105,190
Bungaejangter Inc.		5,592		3,450		43		2,142			3,484			—			3,484
Aju Good Technology Venture Fund		20,676		250		21,400		20,426			7,856			374			8,230
Acts Co., Ltd.		6,741		6,894		117		(153	)		500			—			500
SY Auto Capital Co., Ltd.		79,845		51,071		20,000		28,774			14,099			(6,029	)		8,070
Incheon Bridge Co., Ltd.		646,811		754,900		61,096		(108,089	)		(16,202	)		16,202			—
Big Dipper Co., Ltd.		1,138		30		1,500		1,108			325			115			440
Builton Co., Ltd.		1,418		808		321		610			800			—			800
A-PRO Co., Ltd.		8,692		5,681		43		3,011			1,500			—			1,500
Inno Lending Co.,Ltd.		1,184		28		2,000		1,156			230			—			230
Paycoms Co.,Ltd.		1,898		1,374		810		524			800			—			800
Food Factory Co., Ltd.		3,501		3,552		—		(51	)		1,000			—			1,000
KB IGen Private Equity Fund No. 1		7,666		9		11,230		7,657			3			—			3
KB No.8 Special Purpose Acquisition Company		22,920		2,369		1,031		20,551			20			—			20
KB No.9 Special Purpose Acquisition Company		29,963		2,566		1,382		27,397			31			—			31
KB No.10 Special Purpose Acquisition Company		11,858		1,675		521		10,183			20			—			20
KB No.11 Special Purpose Acquisition Company		6,730		717		321		6,013			19			—			19
KB Private Equity Fund III		50,357		—		51,000		50,357			7,899			—			7,899
Korea Credit Bureau Co., Ltd.		75,504		19,323		10,000		56,181			5,056			—			5,056
KoFC KBIC Frontier Champ2010-5(PEF)		15,017		3		12,970		15,014			7,506			(386	)		7,120
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		70,166		1,315		51,880		68,851			17,213			—			17,213
Keystone-Hyundai Securities No. 1 Private Equity Fund		170,155		133,034		34,114		37,121			1,761			—			1,761
POSCO-KB Shipbuilding Fund		7,752		247		8,000		7,505			2,345			—			2,345
Hyundai-Tongyang Agrifood Private Equity Fund		2,466		339		320		2,127			543			—			543

108

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	20171
	Operating income		Profit (loss)			Other comprehensive income		Total comprehensive income (loss)			Dividends
Associates
KB Pre IPO Secondary Venture Fund 1st	W	79	W		(213)	W	—	W		(213)	W	—
KB GwS Private Securities Investment Trust		26,252		25,500			—		25,500			7,350
KB Star office Private real estate Investment Trust No.1		9,702		3,980			—		3,980			699
RAND Bio Science Co., Ltd.		—		(405	)		—		(405	)		—
Balhae Infrastructure Company		98,067		91,372			—		91,372			12,842
Aju Good Technology Venture Fund		322		(751	)		—		(751	)		—
Acts Co.,Ltd.		1,862		(568	)		—		(568	)		—
SY Auto Capital Co., Ltd.		12,778		2,939			—		2,939			—
Incheon Bridge Co., Ltd.		69,709		(5,070	)		—		(5,070	)		—
Builton Co., Ltd.		740		(119	)		—		(119	)		—
Inno Lending Co.,Ltd		10		(543	)		—		(543	)		—
Korbi Co., Ltd.		—		(624	)		—		(624	)		—
QUICKET Co., Ltd.		2,312		(205	)		—		(205	)		—
Paycoms Co.,Ltd.		303		(170	)		—		(170	)		—
Food Factory Co., Ltd.		1,913		(676	)		—		(676	)		—
KB IGen Private Equity Fund No. 1		—		173			—		173			—
KB No.8 Special Purpose Acquisition Company		—		287			—		287			—
KB No.9 Special Purpose Acquisition Company		—		185			—		185			—
KB No.10 Special Purpose Acquisition Company		—		15			—		15			—
KB No.11 Special Purpose Acquisition Company		—		(256	)		—		(256	)		—
KB Private Equity Fund III		—		(646	)		—		(646	)		—
Korea Credit Bureau Co., Ltd.		49,223		4,432			—		4,432			149
KoFC KBIC Frontier Champ2010-5(PEF)		2,727		2,419			1,683		4,102			—
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		5,962		(861	)		993		132			—
Keystone-Hyundai Securities No. 1 Private Equity Fund		—		(642	)		—		(642	)		—
POSCO-KB Shipbuilding Restructuring Fund		11		(258	)		—		(258	)		—
Hyundai-Tongyang Agrifood Private Equity Fund		1,979		1,501			—		1,501			—

¹  The amounts included in the financial statements of the associates and joint ventures are adjusted to reflect adjustments made by the entity; such as, fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies.

109

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Changes in investments in associates and joint ventures for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Beginning1		Acquisition		Disposal			Dividends			Gains (losses) on equity-method accounting			Other compre- hensive income			Others			Ending
Associates and joint ventures
KB Pre IPO Secondary Venture Fund 1st	W	1,551	W	—	W	—		W	—		W	242		W	—		W	—		W	1,793
KB GwS Private Securities Investment Trust		131,420		—		—			(8,161	)		8,327			—			—			131,586
KB-KDBC New Technology Business Investment Fund		4,972		5,000		—			—			(270	)		—			—			9,702
KB Star office Private real estate Investment Trust No.1		19,709		—		—			(545	)		940			—			—			20,104
PT Bank Bukopin TBK		—		113,074		—			—			—			—			—			113,074
Sun Suregery Center Inc.		2,682		—		—			—			—			—			—			2,682
Dae-A Leisure Co., Ltd.		—		—		—			—			3,698			(3,120	)		—			578
RAND Bio Science Co., Ltd.		2,000		—		—			—			(208	)		—			—			1,792
Balhae Infrastructure Company		105,190		4,646		(1,818	)		(6,804	)		5,153			—			—			106,367
Bungaejangter Inc.		3,484		—		—			—			—			—			—			3,484
Aju Good Technology Venture Fund		8,230		7,038		—			—			150			—			—			15,418
Acts Co., Ltd. 2		500		—		—			—			—			—			(500	)		—
SY Auto Capital Co., Ltd.		8,070		—		—			—			1,946			(1	)		—			10,015
Kendae Co., Ltd.		127		—		—			—			(29	)		—			—			98
Dassang Techlon Co., Ltd.		—		—		—			—			(13	)		13			—			—
Dong Jo Co., Ltd.		—		—		—			—			115			—			—			115
Big Dipper Co., Ltd.		440		—		—			—			(184	)		—			—			256
Builton Co., Ltd.		800		—		—			—			(259	)		—			—			541
Shinhwa Underwear Co., Ltd.		138		—		—			—			46			—			—			184
A-PRO Co., Ltd.		1,500		—		—			—			—			—			—			1,500
MJT&I Co., Ltd.		127		—		—			—			(5	)		—			—			122
Inno Lending Co., Ltd.		230		—		(230	)		—			—			—			—			—
Terra Co., Ltd.		20		—		—			—			(20	)		—			—			—
Paycoms Co., Ltd.		800		—		—			—			(643	)		—			—			157
Food Factory Co., Ltd.		1,000		—		—			—			—			—			—			1,000

110

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

KB IGen Private Equity Fund No. 1		3		—		(4)			—			1			—			—			—
KB No.8 Special Purpose Acquisition Company		20		—		(20	)		—			—			—			—			—
KB No.9 Special Purpose Acquisition Company		31		—		—			—			—			—			—			31
KB No.10 Special Purpose Acquisition Company		20		—		—			—			—			—			—			20
KB No.11 Special Purpose Acquisition Company		19		—		—			—			1			(1	)		—			19
KB Private Equity FundIII		7,899		—		—			—			(31	)		—			—			7,868
Korea Credit Bureau Co., Ltd.		5,056		—		—			(112	)		858			—			—			5,802
KoFC KBIC Frontier Champ2010-5(PEF)		7,120		—		(6,121	)		(999	)		—			—			—			—
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		17,713		—		—			—			(1,806	)		(1,239	)		—			14,668
Keystone-Hyundai Securities No. 1 Private Equity Fund		1,761		—		—			—			(254	)		—			—			1,507
POSCO-KB Shipbuilding Fund		2,345		2,500		—			—			(272	)		—			—			4,573
Hyundai-Tongyang Agrifood Private Equity Fund		543		—		(78	)		(469	)		4			—			—			—
GH Real Estate I LP		—		17,678		—			—			839			72			—			18,589
KBTS Technology Venture Private Equity Fund		—		10,212		—			—			(270	)		—			—			9,942
KB-SJ Tourism Venture Fund		—		1,500		—			—			(83	)		—			—			1,417
CUBE Growth Fund No.2		—		1,300		(1,300	)		—			—			—			—			—
UNION Media Commerce Fund		—		1,000		—			—			(38	)		—			—			962
	W	335,520	W	163,948	W	(9,571	)	W	(17,090	)	W	17,935		W	(4,276	)	W	(500	)	W	485,966

¹  Prepared in accordance with Korean IFRS 1109

²  RecognizedW 500 million loss in relation to impaired capital.

³ Gain on disposal of investments in associates and joint ventures for the nine-month periods ended September 30, 2018 isW 723 million.

111

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	2017
	Beginning		Acquisition and others		Disposal and others			Dividends			Gains (losses) on equity-method accounting			Other compre- hensive income		Others		Ending
Associates
KB Pre IPO Secondary Venture Fund 1st	W	—	W	1,671	W	—		W	—		W	(213	)	W	—	W	—	W	1,458
KB GwS Private Securities Investment Trust		129,678		—		—			(7,350	)		6,822			—		—		129,150
KB Star office Private real estate Investment Trust No.1		19,807		—		—			(699	)		838			—		—		19,946
Kyobo 7 Special Purpose Acquisition Co., Ltd.		—		10		(10	)		—			—			—		—		—
RAND Bio Science Co., Ltd.		2,000		—		—			—			—			—		—		2,000
Balhae Infrastructure Company		133,200		807		(29,202	)		(12,842	)		11,516			—		—		103,479
IMM Investment 5th PRIVATE EQUITY FUND		9,999		25,200		(35,185	)		—			(14	)		—		—		—
Aju Good Technology Venture Fund		1,998		4,847		—			—			—			—		—		6,845
Acts Co.,Ltd.		—		500		—			—			—			—		—		500
SY Auto Capital Co., Ltd.		5,693		—		—			—			1,914			—		—		7,607
isMedia Co. Ltd		3,978		—		(5,409	)		—			1,431			—		—		—
Incheon Bridge Co., Ltd.		728		—		(728	)		—			—			—		—		—
KB Insurance Co., Ltd.1		1,392,194		—		(1,417,397	)		(15,884	)		38,873			2,214		—		—
Kendae Co., Ltd.		—		—		—			—			127			—		—		127
Builton Co., Ltd.		—		800		—			—			—			—		—		800
Shinhwa Underwear Co., Ltd.		103		—		—			—			35			—		—		138
MJT&I Co., Ltd.		232		—		—			—			(105	)		—		—		127
Inno Lending Co.,Ltd		378		—		—			—			(107	)		—		—		271
Korbi Co., Ltd.		—		750		—			—			—			—		—		750
QUICKET Co.,Ltd.		—		3,484		—			—			—			—		—		3,484
Terra Co., Ltd.		28		—		—			—			(8	)		—		—		20
Paycoms Co., Ltd.		—		800		—			—			—			—		—		800
Food Factory Co., Ltd.		—		1,000		—			—			—			—		—		1,000
KBIC Private Equity Fund No. 3		2,396		—		(2,763	)		—			367			—		—		—
KB IGen Private Equity Fund No. 1		10		—		(6	)		—			—			—		—		4

112

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

KB No.8 Special Purpose Acquisition Company		19		—		—			—			—			—			—		19
KB No.9 Special Purpose Acquisition Company		31		—		—			—			—			—			—		31
KB No.10 Special Purpose Acquisition Company		20		—		—			—			—			—			—		20
KB No.11 Special Purpose Acquisition Company2		13		—		—			—			(2	)		(4	)		11		18
KB Private Equity FundIII		8,000		—		—			—			(101	)		—			—		7,899
Korea Credit Bureau Co., Ltd.		4,853		—		—			(149	)		429			—			—		5,133
KoFC KBIC Frontier Champ2010-5(PEF)		24,719		—		(17,500	)		—			1,187			842			—		9,248
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		24,789		—		—			—			(250	)		249			—		24,788
Keystone-Hyundai Securities No. 1 Private Equity Fund		1,850		—		—			—			(36	)		(4	)		—		1,810
POSCO-KB Shipbuilding Restructuring Fund		—		2,500		—			—			(81	)		—			—		2,419
Hyundai-Tongyang Agrifood Private Equity Fund		3,957		—		—			—			383			—			—		4,340
	W	1,770,673	W	42,369	W	(1,508,200	)	W	(36,924	)	W	63,005		W	3,297		W	11	W	334,231

¹ KB Insurance Co., Ltd. is included as a subsidiary in 2017 2Q.

²  Other gain of KB No.11 Special Purpose Acquisition Company amounting toW11 million represents the changes in interests due to unequal share capital increase in the associate.

³ Gain on disposal of investments in associates for the nine-month periods ended September 30, 2017, amounts toW 15,114 million.

113

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

13. Property and Equipment, and Investment Properties

Details of property and equipment as of September 30, 2018 and December 31, 2017, are as follows:

	September 30, 2018
(In millions of Korean won)	Acquisition cost		Accumulated depreciation		Accumulated impairment losses			Carrying amount
Land	W	2,432,250	W	—	W	(1,018	)	W	2,431,232
Buildings		2,033,482		(715,350)		(5,859	)		1,312,273
Leasehold improvements		842,753		(732,219)		—			110,534
Equipment and vehicles		1,694,044		(1,466,384)		—			227,660
Construction in progress		59,980		—		—			59,980
Financial lease assets		43,669		(29,719)		—			13,950
	W	7,106,178	W	(2,943,672)	W	(6,877	)	W	4,155,629

	December 31, 2017
(In millions of Korean won)	Acquisition cost		Accumulated depreciation			Accumulated impairment losses			Carrying amount
Land	W	2,475,372	W	—		W	(1,018	)	W	2,474,354
Buildings		2,061,717		(684,705	)		(5,859	)		1,371,153
Leasehold improvements		783,446		(693,717	)		—			89,729
Equipment and vehicles		1,699,563		(1,456,358	)		—			243,205
Construction in progress		14,808		—			—			14,808
Financial lease assets		34,789		(26,341	)		—			8,448
	W	7,069,695	W	(2,861,121	)	W	(6,877	)	W	4,201,697

Details of investment property as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Acquisition cost		Accumulated depreciation			Accumulated impairment losses		Carrying amount
Land	W	728,636	W	—		W	—	W	728,636
Buildings		1,164,429		(137,614	)		—		1,026,815
	W	1,893,065	W	(137,614	)	W	—	W	1,755,451

(In millions of Korean won)	December 31, 2017
	Acquisition cost		Accumulated depreciation			Accumulated impairment losses			Carrying amount
Land	W	252,234	W	—		W	(738	)	W	251,496
Buildings		719,920		(122,935	)		—			596,985
	W	972,154	W	(122,935	)	W	(738	)	W	848,481

114

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

14. Intangible Assets

Details of intangible assets as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)			September 30, 2018
	Acquisition cost		Accumulated amortization			Accumulated impairment losses			Other			Carrying Amount
Goodwill	W	346,314	W	—		W	(70,517	)	W	(714	)	W	275,083
Other intangible assets		4,090,543		(1,541,106	)		(42,507	)		—			2,506,930
	W	4,436,857	W	(1,541,106	)	W	(113,024	)	W	(714	)	W	2,782,013

(In millions of Korean won)			December 31, 2017
	Acquisition cost		Accumulated amortization			Accumulated impairment losses			Other			Carrying Amount
Goodwill	W	344,799	W	—		W	(70,517	)	W	(832	)	W	273,450
Other intangible assets		4,012,563		(1,299,879	)		(43,074	)		—			2,669,610
	W	4,357,362	W	(1,299,879	)	W	(113,591	)	W	(832	)	W	2,943,060

Details of goodwill as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018				December 31, 2017
	Acquisition cost		Carrying amount		Acquisition cost		Carrying amount
Housing & Commercial Bank	W	65,288	W	65,288	W	65,288	W	65,288
KB Cambodia Bank		1,202		—		1,202		—
KB Securities Co., Ltd.1		70,265		58,889		70,265		58,889
KB Capital Co., Ltd.		79,609		79,609		79,609		79,609
KB Savings Bank Co., Ltd.		115,343		57,404		115,343		57,404
KB Securities Vietnam Joint Stock Company		13,092		12,390		13,092		12,260
KB Daehan Specialed Bank PLC.		1,515		1,503		—		—
	W	346,314	W	275,083	W	344,799	W	273,450

¹ The amount occurred from formerly known as KB Investment & Securities Co., Ltd.

115

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of intangible assets, excluding goodwill, as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Acquisition cost		Accumulated amortization			Accumulated impairment losses			Carrying amount
Industrial property rights	W	9,514	W	(2,952	)	W	(1,963	)	W	4,599
Software		1,131,370		(950,010	)		—			181,360
Other intangible assets		504,031		(218,134	)		(40,544	)		245,353
Value of Business Acquired (VOBA)		2,395,291		(342,066	)		—			2,053,225
Finance leases assets		50,337		(27,944	)		—			22,393
	W	4,090,543	W	(1,541,106	)	W	(42,507	)	W	2,506,930

(In millions of Korean won)	December 31, 2017
	Acquisition cost		Accumulated amortization			Accumulated impairment losses			Carrying amount
Industrial property rights	W	9,497	W	(2,399	)	W	—		W	7,098
Software		1,062,699		(885,133	)		—			177,566
Other intangible assets		501,874		(211,321	)		(43,074	)		247,479
Value of Business Acquired (VOBA)		2,395,291		(179,193	)		—			2,216,098
Finance leases assets		43,202		(21,833	)		—			21,369
	W	4,012,563	W	(1,299,879	)	W	(43,074	)	W	2,669,610

15. Deferred Income Tax Assets and Liabilities

Details of deferred income tax assets and liabilities as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Assets			Liabilities			Net amount
Other provisions	W	106,344		W	—		W	106,344
Allowances for loan losses		44,677			—			44,677
Impairment losses on property and equipment		3,846			(407	)		3,439
Interest on equity index-linked deposits		1			—			1
Share-based payments		17,753			—			17,753
Provisions for guarantees		21,260			—			21,260
Losses (gains) from valuation on derivative financial instruments		9,445			(24,223	)		(14,778	)
Present value discount		13,350			(13,915	)		(565	)
Losses (gains) from fair value hedged item		—			(41,162	)		(41,162	)
Accrued interest		—			(116,729	)		(116,729	)
Deferred loan origination fees and costs		1,026			(196,832	)		(195,806	)
Advanced depreciation provision		—			(1,703	)		(1,703	)
Gains from revaluation		648			(331,199	)		(330,551	)
Investments in subsidiaries and others		36,116			(78,920	)		(42,804	)
Gains on valuation of security investment		58,919			(116,223	)		(57,304	)
Defined benefit liabilities		437,355			—			437,355
Accrued expenses		162,940			—			162,940
Retirement insurance expense		15,599			(395,431	)		(379,832	)
Adjustments to the prepaid contributions		—			(20,932	)		(20,932	)
Derivative-linked securities		30,298			(14,059	)		16,239
Others		329,606			(548,360	)		(218,754	)
		1,289,183			(1,900,095	)		(610,912	)
Offsetting of deferred income tax assets and liabilities		(1,288,444	)		1,288,444			—
	W	739		W	(611,651	)	W	(610,912	)

116

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
	Assets			Liabilities			Net amount
Other provisions	W	115,518		W	—		W	115,518
Allowances for loan losses		1,142			—			1,142
Impairment losses on property and equipment		5,614			(407	)		5,207
Interest on equity index-linked deposits		43			—			43
Share-based payments		23,238			—			23,238
Provisions for guarantees		24,341			—			24,341
Losses (gains) from valuation on derivative financial instruments		6,258			(17,479	)		(11,221	)
Present value discount		25,332			(4,498	)		20,834
Losses (gains) from fair value hedged item		—			(15,698	)		(15,698	)
Accrued interest		243			(111,514	)		(111,271	)
Deferred loan origination fees and costs		332			(180,401	)		(180,069	)
Advanced depreciation provision		—			(1,703	)		(1,703	)
Gains from revaluation		648			(350,801	)		(350,153	)
Investments in subsidiaries and others		24,834			(103,268	)		(78,434	)
Gains on valuation of security investment		86,290			(225,158	)		(138,868	)
Defined benefit liabilities		436,706			—			436,706
Accrued expenses		194,399			—			194,399
Retirement insurance expense		—			(369,300	)		(369,300	)
Adjustments to the prepaid contributions		—			(16,236	)		(16,236	)
Derivative-linked securities		27,992			(5,679	)		22,313
Others		352,437			(452,303	)		(99,866	)
		1,325,367			(1,854,445	)		(529,078	)
Offsetting of deferred income tax assets and liabilities		(1,321,376	)		1,321,376			—
	W	3,991		W	(533,069	)	W	(529,078	)

117

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

16. Assets Held for Sale

Details of assets held for sale as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Acquisition cost1		Accumulated impairment			Carrying amount		Fair value less costs to sell
Land held for sale	W	14,460	W	(2,312	)	W	12,148	W	15,851
Buildings held for sale		8,070		(3,715	)		4,355		4,546
	W	22,530	W	(6,027	)	W	16,503	W	20,397
(In millions of Korean won)	December 31, 2017
	Acquisition cost1		Accumulated impairment			Carrying amount		Fair value less costs to sell
Land held for sale	W	133,445	W	(1,492	)	W	131,953	W	251,520
Buildings held for sale		34,862		(11,309	)		23,553		24,548
	W	168,307	W	(12,801	)	W	155,506	W	276,068

¹ Acquisition cost of buildings held for sale is net of accumulated depreciation.

17. Other Assets

Details of other assets as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018			December 31, 2017
Other financial assets
Other receivables	W	10,477,078		W	6,447,405
Accrued income		1,945,929			1,594,455
Guarantee deposits		1,182,965			1,211,841
Domestic exchange settlement debits		298,619			949,897
Others		158,086			101,909
Allowances		(99,198	)		(104,813	)
Present value discount		(6,270	)		(5,679	)
		13,957,209			10,195,015
Othernon-financial assets
Other receivables		7,878			3,640
Prepaid expenses		248,313			153,650
Guarantee deposits		4,571			4,904
Insurance assets		1,471,951			1,180,980
Separate account assets		4,474,016			4,119,203
Others		1,166,559			578,795
Allowances		(28,311	)		(32,018	)
		7,344,977			6,009,154
	W	21,302,186		W	16,204,169

118

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Changes in allowances on other assets for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Other financial assets			Other non-financial assets			Total
Beginning1	W	109,899		W	32,018		W	141,917
Written-off		(36,990	)		(1,741	)		(38,731	)
Provision		25,004			(1,966	)		23,038
Business combination		—			—			—
Others		1,285			—			1,285
Ending	W	99,198		W	28,311		W	127,509

¹  Prepared in accordance with Korean IFRS 1109.

(In millions of Korean won)	2017
	Other financial assets			Other non-financial assets			Total
Beginning	W	95,629		W	25,182		W	120,811
Written-off		(13,742	)		(129	)		(13,871	)
Provision		8,930			1,243			10,173
Business combination		21,293			—			21,293
Others		(6,880	)		7,395			515
Ending	W	105,230		W	33,691		W	138,921

18. Financial Liabilities at Fair Value through Profit or Loss

Details of financial liabilities at fair value through profit or loss, and financial liabilities designated at fair value through profit or loss as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
Financial liabilities at fair value through profit or loss
Securities sold	W	3,614,730
Other		74,461
	W	3,689,191
Financial liabilities designated at fair value through profit or loss
Derivative-linked securities		12,343,819
Total financial liabilities at fair value through profit or loss		16,033,010
(In millions of Korean won)	December 31, 2017
Financial liabilities held for trading
Securities sold	W	1,870,579
Other		74,191
		1,944,770
Financial liabilities designated at fair value through profit or loss
Derivative-linked securities		10,078,288
Total financial liabilities at fair value through profit or loss	W	12,023,058

119

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The difference between the carrying amount and contractual cash flow amount of financial liabilities designated at fair value through profit or loss as of September 30, 2018 is as follows:

(In millions of Korean won)	September 30, 2018
Contractual cash flow amount	W	12,143,703
Carrying amount		12,343,819
Difference	W	(200,116	)

19. Deposits

Details of deposits as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018			December 31, 2017
Demand deposits
Demand deposits in Korean won	W	114,624,777		W	113,676,999
Demand deposits in foreign currencies		6,612,611			6,911,782
		121,237,388			120,588,781
Time deposits
Time deposits in Korean won		141,533,048			127,562,153
Time deposits in foreign currencies		5,357,168			4,481,607
Fair value adjustments on valuation of fair value hedged items		(127,085	)		(51,033	)
		5,230,083			4,430,574
		146,763,131			131,992,727
Certificates of deposits		3,154,665			3,218,540
Total deposits	W	271,155,184		W	255,800,048

20. Debts

Details of debts as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018		December 31, 2017
Borrowings	W	19,321,732	W	16,846,072
Repurchase agreements and others		11,052,981		10,676,219
Call money		1,527,741		1,298,637
	W	31,902,454	W	28,820,928

120

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of borrowings as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)		Lender	Annual interest rate (%)		September 30, 2018		December 31, 2017
Borrowings in Korean won	Borrowings from the Bank of Korea	Bank of Korea		0.50 ~ 0.75	W	1,704,064	W	1,888,880
	Borrowings from the government	SEMAS and others		0.00 ~ 3.00		1,790,101		1,726,543
	Borrowings from banks	Shinhan Bank and others		2.20 ~ 3.45		100,100		36,806
	Borrowings fromnon-banking financial institutions	Korea Securities Finance Corportion and others		0.43 ~ 2.70		1,748,426		1,631,376
	Other borrowings	The Korea Development Bank and others		0.00 ~ 3.90		4,743,347		4,409,261
						10,086,038		9,692,866
Borrowings in foreign currencies	Due to banks	Bank of America N.A and Others		—		128,134		19,820
	Borrowings from banks	Central Bank of Uzbekistan and Others		0.00 ~ 8.15		7,259,728		5,470,569
	Borrowings from other financial institutions	The Export-Import Bank of Korea and others		2.80 ~ 3.54		19,330		76,134
	Other borrowings	Standard Chartered Bank and others		—		1,828,502		1,586,683
						9,235,694		7,153,206
					W	19,321,732	W	16,846,072

21. Debentures

Details of debentures as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	Annual Interest rate (%)		September 30, 2018			December 31, 2017
Debentures in Korean won
Structured debentures		1.81 ~ 5.86	W	965,240		W	869,294
Subordinated fixed rate debentures in Korean won		3.08 ~ 5.70		3,197,379			2,913,411
Fixed rate debentures in Korean won		1.38 ~ 3.79		41,395,645			36,823,365
Floating rate debentures in Korean won		1.69 ~ 1.75		1,763,000			728,000
				47,321,264			41,334,070
Fair value adjustments on fair value hedged financial debentures in Korean won				16,698			19,891
Less: Discount on debentures in Korean won				(30,960	)		(53,897	)
				47,307,002			41,300,064
Debentures in foreign currencies
Floating rate debentures		2.73 ~ 3.28		1,846,065			1,371,392
Fixed rate debentures		1.63 ~ 2.88		2,449,534			2,363,486
				4,295,599			3,734,878
Fair value adjustments on fair value hedged debentures in foreign currencies				(39,293	)		(25,941	)
Less: Discount on debentures in foreign currencies				(13,393	)		(16,277	)
				4,242,913			3,692,660
			W	51,549,915		W	44,992,724

121

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Changes in debentures based on face value for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Beginning		Issues		Repayments			Others			Ending
Debentures in Korean won
Structured debentures	W	869,294	W	2,400,257	W	(2,304,311	)	W	—		W	965,240
Subordinated fixed rate debentures in Korean won		2,913,411		300,000		(16,032	)		—			3,197,379
Fixed rate debentures in Korean won		36,823,365		105,270,400		(100,698,120	)		—			41,395,645
Floating rate debentures in Korean won		728,000		1,160,000		(125,000	)		—			1,763,000
		41,334,070		109,130,657		(103,143,463	)		—			47,321,264
Debentures in foreign currencies
Floating rate debentures		1,371,392		675,993		(271,110	)		69,790			1,846,065
Fixed rate debentures		2,363,486		—		—			86,048			2,449,534
		3,734,878		675,993		(271,110	)		155,838			4,295,599
	W	45,068,948	W	109,806,650	W	(103,414,573	)	W	155,838		W	51,616,863
(In millions of Korean won)	2017
	Beginning		Issues		Repayments			Others			Ending
Debentures in Korean won
Structured debentures	W	1,146,300	W	3,009,026	W	(3,214,096	)	W	—		W	941,230
Subordinated fixed rate debentures in Korean won		3,271,693		—		(356,569	)		—			2,915,124
Fixed rate debentures in Korean won		25,627,695		98,336,900		(89,493,930	)		—			34,470,665
Floating rate debentures in Korean won		1,108,000		310,000		(790,000	)		—			628,000
		31,153,688		101,655,926		(93,854,595	)		—			38,955,019
Debentures in foreign currencies
Floating rate debentures		1,063,480		1,068,581		(725,286	)		(42,202	)		1,364,573
Fixed rate debentures		2,803,720		682,150		(922,900	)		(128,656	)		2,434,314
		3,867,200		1,750,731		(1,648,186	)		(170,858	)		3,798,887
	W	35,020,888	W	103,406,657	W	(95,502,781	)	W	(170,858	)	W	42,753,906

122

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

22. Provisions

Details of provisions as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018		December 31, 2017
Provisions for unused loan commitments	W	206,510	W	178,202
Provisions for payment guarantees		77,869		88,809
Provisions for financial guarantee contracts		3,553		2,682
Provisions for restoration cost		98,103		95,194
Others		129,386		203,146
	W	515,421	W	568,033

Changes in provisions for unused loan commitments, payment guarantees for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Provisions for unused loan commitments									Provisions for payment guarantees
	12-month expected credit losses			Lifetime expected credit losses						12-month expected credit losses			Lifetime expected credit losses
				Non- impaired			Impaired						Non- impaired			Impaired
Beginning1	W	124,487		W	63,407		W	7,746		W	41,637		W	39,628		W	18,744
Transfer between stages
Transfer to12-month expected credit losses		22,762			(21,290	)		(1,472	)		502			(502	)		—
Transfer to lifetime expected credit losses(non-impaired)		(8,852	)		9,131			(279	)		(321	)		463			(142	)
Transfer to lifetime expected credit losses (impaired)		(407	)		(1,023	)		1,430			(6	)		(45	)		51
Provision (reversal) for loan losses		(10,943	)		20,622			886			(8,111	)		(11,138	)		(3,882	)
Others (change of exchange rate, etc.)		349			(44	)		—			513			290			188
Ending	W	127,396		W	70,803		W	8,311		W	34,214		W	28,696		W	14,959

¹  Prepared in accordance with Korean IFRS 1109

(In millions of Korean won)	2017
	Provisions for unused loan commitments			Provisions for payment guarantees			Total
Beginning	W	189,349		W	126,428		W	315,777
Effects of changes in foreign exchange rate		(654	)		(1,737	)		(2,391	)
Reversal		(3,025	)		(31,665	)		(34,690	)
Business combination		19			—			19
Ending	W	185,689		W	93,026		W	278,715

123

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Changes in provisions for financial guarantee contracts for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018			2017
Beginning1	W	4,857		W	4,333
Reversal		(1,304	)		(2,049	)
Ending	W	3,553		W	2,284

¹  Prepared in accordance with Korean IFRS 1109.

Changes in provisions for restoration cost for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018			2017
Beginning	W	95,194		W	84,854
Provision		5,870			3,400
Reversal		(1,798	)		(600	)
Used		(3,240	)		(6,142	)
Unwinding of discount		2,077			1,499
Business combination		—			862
Ending	W	98,103		W	83,873

Provisions for restoration cost are the present value of estimated costs to be incurred for the restoration of the leased properties. Actual expenses are expected to be incurred at the end of each lease contract. Three-year historical data of expired leases were used to estimate the average lease period. Also, the average restoration expense based on actual three-year historical data and the three-year historical average inflation rate were used to estimate the present value of estimated costs.

Changes in other provisions for nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Membership rewards program			Dormant accounts			Litigations			Greenhouse gas emission liabilities			Others1			Total
Beginning	W	15,112		W	5,050		W	23,763		W	177		W	159,044		W	203,146
Increase		35,779			2,193			2,887			40			15,231			56,130
Decrease		(37,946	)		(2,632	)		(2,266	)		(217	)		(86,829	)		(129,890	)
Ending	W	12,945		W	4,611		W	24,384		W	—		W	87,446		W	129,386

¹  As of September 30, 2018, the Group’s provision on incomplete sales on cardssurance areW 25,183 million.

124

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	2017
	Membership rewards program			Dormant accounts			Litigations			Greenhouse gas emission liabilities			Others			Total
Beginning	W	8,790		W	50,396		W	20,623		W	358		W	52,586		W	132,753
Increase		47,912			24,673			3,788			—			49,956			126,329
Decrease		(44,647	)		(27,193	)		(2,849	)		(165	)		(23,092	)		(97,946	)
Business combination		—			—			—			—			61,261			61,261
Ending	W	12,055		W	47,876		W	21,562		W	193		W	140,711		W	222,397

23. Net Defined Benefit Liabilities (assets)

Defined benefit plan

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

• The Group has the obligation to pay the agreed benefits to all its current and former employees.

• Actuarial risk (that benefits will cost more than expected) and investment risk fall, in substance, on the Group.

The defined benefit liability recognized in the statements of financial position is calculated by independent actuaries in accordance with actuarial valuation methods.

The net defined benefit obligation is calculated using the Projected Unit Credit method (the ‘PUC’). Data used in the PUC such as interest rates, future salary increase rate, mortality rate and consumer price index are based on observable market data and historical data which are updated annually.

Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends which may impact defined benefit liabilities and future payments. Actuarial gains and losses arising from changes in actuarial assumptions are recognized in the period incurred through other comprehensive income.

125

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Changes in the net defined benefit liabilities for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Present value of defined benefit obligation			Fair value of plan assets			Net defined benefit liabilities
Beginning	W	1,841,991		W	(1,688,183	)	W	153,808
Current service cost		156,206			—			156,206
Past service cost1		25,933			—			25,933
Interest cost (income)		38,637			(35,765	)		2,872
Remeasurements:
Actuarial gains and losses by changes in demographic assumptions		—			—			—
Actuarial gains and losses by changes in financial assumptions		(8,375	)		—			(8,375	)
Actuarial gains and losses by experience adjustments		(370	)		—			(370	)
Return on plan assets (excluding amounts included in interest income)		—			17,486			17,486
Contributions		—			(41,276	)		(41,276	)
Payments from plans (benefit payments)		(98,199	)		98,192			(7	)
Payments from the Group		(26,242	)		—			(26,242	)
Transfer in		8,195			(8,195	)		—
Transfer out		(8,195	)		8,195			—
Effect of exchange rate changes		9			—			9
Others		6,086			—			6,086
Ending	W	1,935,676		W	(1,649,546	)	W	286,130

¹ During the nine-month period ended September 30, 2018, other provisions (amounting toW 22,305 million as of December 31, 2017) was replaced into net defined benefit liabilities.

(In millions of Korean won)	2017
	Present value of defined benefit obligation			Fair value of plan assets			Net defined benefit liabilities
Beginning	W	1,576,003		W	(1,479,704	)	W	96,299
Current service cost		154,398			—			154,398
Past service cost		17,626			—			17,626
Interest cost (income)		29,736			(26,897	)		2,839
Remeasurements:
Return on plan assets (excluding amounts included in interest income)		—			12,635			12,635
Actuarial gains and losses by changes in financial assumptions		(85	)		—			(85	)
Actuarial gains and losses by experience adjustments		593			—			593
Contributions		—			(1,172	)		(1,172	)
Payments from plans (benefit payments)		(214,911	)		214,066			(845	)
Payments from the Group		(18,520	)		—			(18,520	)
Transfer in		8,119			(8,118	)		1
Transfer out		(8,446	)		8,406			(40	)
Effect of exchange rate changes		(92	)		—			(92	)
Effect of business combination		287,844			(181,757	)		106,087
Others		(4,810	)		3,925			(885	)
Ending	W	1,827,455		W	(1,458,616	)	W	368,839

126

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of the net defined benefit liabilities as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018			December 31, 2017
Present value of defined benefit obligation	W	1,935,676		W	1,841,991
Fair value of plan assets		(1,649,546	)		(1,688,183	)
Net defined benefit liabilities	W	286,130		W	153,808

Details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018		2017
Current service cost	W	156,206	W	154,398
Past service cost1		3,628		17,626
Net interest expenses of net defined benefit liabilities		2,872		2,839
Post-employment benefits2	W	162,706	W	174,863

¹ During the nine-month period ended September 30, 2018, other provisions (amounting toW 22,305 million as of December 31, 2017) was replaced into net defined benefit liabilities.

²  Including post-employment benefits amounting toW 1,427 million recognized as other operating expense and prepayment ofW 56 million recognized as other assets as of and for the nine-month period ended September 30, 2018, and post-employment benefits amounting toW 1,184 million recognized as other operating expense for the nine-month period ended September 30, 2017.

24. Other Liabilities

Details of other liabilities as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018		December 31, 2017
Other financial liabilities
Other payables	W	14,091,813	W	8,806,967
Prepaid card and debit card		26,189		21,767
Accrued expenses		2,979,826		2,654,345
Financial guarantee liabilities		40,057		34,114
Deposits for letter of guarantees and others		698,549		798,207
Domestic exchange settlement credits		3,816,577		48,133
Foreign exchanges settlement credits		328,601		124,728
Borrowings from other business accounts		9,284		5,408
Other payables from trust accounts		4,410,169		5,018,031
Liability incurred from agency relationships		381,173		518,955
Account for agency businesses		804,818		257,761
Dividend payables		474		474
Others		130,283		41,114
		27,717,813		18,330,004
Othernon-financial liabilities
Other payables		62,384		196,142
Unearned revenue		333,626		271,787
Accrued expenses		619,324		634,236
Deferred revenue on credit card points		192,812		176,840
Withholding taxes		92,625		179,903
Separate account liabilities		4,477,924		4,463,687
Others		191,964		217,709
		5,970,659		6,140,304
	W	33,688,472	W	24,470,308

127

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

25. Equity

25.1 Share Capital

Details of share capital and number of issued shares of the Parent Company as of September 30, 2018 and December 31, 2017, are as follows:

	September 30, 2018		December 31, 2017
Type of share	Ordinary share		Ordinary share
Number of authorized shares		1,000,000,000		1,000,000,000
Par value per share	W	5,000	W	5,000
Number of issued shares		418,111,537		418,111,537
Share capital1	W	2,090,558	W	2,090,558

¹  In millions of Korean won.

Changes in outstanding shares for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In number of shares)	2018			2017
Beginning		399,037,583			398,285,437
Increase		—			4,513,969
Decrease		(2,803,909	)		(1,795,952	)
Ending		396,233,674			401,003,454

25.2 Capital Surplus

Details of capital surplus as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018			December 31, 2017
Share premium	W	13,190,274		W	13,190,274
Loss on sales of treasury shares		(481,333	)		(481,332	)
Other capital surplus		4,413,029			4,413,286
	W	17,121,970		W	17,122,228

128

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

25.3 Accumulated Other Comprehensive Income

Details of accumulated other comprehensive income as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018			December 31, 2017
Remeasurements of net defined benefit liabilities	W	(102,702	)	W	(96,385	)
Exchange differences on translating foreign operations		(19,393	)		(56,589	)
Change in value ofavailable-for-sale financial assets		—			694,321
Change in value ofheld-to-maturity financial assets		—			(78	)
Financial assets measured at fair value through other comprehensive income		456,740			—
Shares of other comprehensive income of associates		(3,745	)		1,069
Cash flow hedges		24,437			14,980
Hedges of net investments in foreign operations		(28,607	)		(5,958	)
Other comprehensive income of separate account		3,455			(13,692	)
Profit or loss from credit risk of financial liabilities designated at fair value		(10,607	)		—
Net gain (loss) on overlay adjustment		(89,366	)		—
	W	230,212		W	537,668

25.4 Retained Earnings

Details of retained earnings as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018		December 31, 2017
Legal reserves1	W	390,216	W	334,873
Voluntary reserves		982,000		982,000
Unappropriated retained earnings		15,701,910		13,727,331
	W	17,074,126	W	15,044,204

¹ With respect to the allocation of net profit earned in a fiscal term, the Parent Company must set aside in its legal reserve an amount equal to at least 10% of its 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.

Regulatory reserve for credit losses

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

129

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of the regulatory reserve for credit losses as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018		December 31, 2017
Regulatory reserve for credit losses attributable to:
Shareholders of the Parent Company	W	3,078,216	W	3,148,332
Non-controlling interests		1,530		2,536
	W	3,079,746	W	3,150,868

The adjustments to the regulatory reserve for credit losses for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won, except earnings per share)	2018				2017
	Three months		Nine months		Three months		Nine months
Provision of regulatory reserve for credit losses1	W	90,424	W	302,814	W	108,737	W	404,338
Adjusted profit after provision of regulatory reserve for credit losses2		863,345		2,565,938		788,767		2,353,348
Adjusted basic earnings per share after provision of regulatory reserve for credit losses2		2,179		6,469		1,968		5,912
Adjusted diluted earnings per share after provision of regulatory reserve for credit losses2		2,167		6,432		1,958		5,879

¹  Adjusted profit after provision of regulatory reserve for credit losses is not in accordance with Korean IFRS, and calculated with the assumption that provision (reversal) of regulatory reserve for credit losses before income tax is adjusted to the profit.

²  Adjusted profit after provision of regulatory reserve for credit losses is not based on Korean IFRS; this is calculated reflecting provision (reversal) of the reserve before tax to the net profit to shareholders of the Parent Company.

25.5 Treasury Shares

Changes in treasury shares outstanding for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In number of shares and millions of Korean won)	2018
	Beginning		Acquisition			Disposal		Ending
Number of treasury shares1		19,073,954		2,803,909			—		21,877,863
Carrying amount1	W	(755,973)	W	(180,22	1)	W	—	W	(936,194	)

¹ In order to increase shareholder value, the Group entered into another treasury stock trust agreement ofW300,000 million with Samsung Securities Co., Ltd. in thefourth quarter of 2017.

(In number of shares and millions of Korean won)	2017
	Beginning		Acquisition		Disposal			Ending
Number of treasury shares1		19,826,100		1,795,952		(4,513,969	)		17,108,083
Carrying amount1	W	721,973	W	82,279	W	(168,051	)	W	636,201

¹ The trust agreement with Samsung Securities Co., Ltd. is terminated as the agreement was expired during the nine-month period ended September 30, 2017.

130

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

26. Net Interest Income

Details of interest income and interest expense for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Three months		Nine months
Interest income
Deposits at fair value through profit or loss	W	1,689	W	6,399
Securities measured at fair value through profit or loss		185,355		515,526
Loans measured at fair value through profit or loss		7,866		19,141
Securities measured at fair value through other comprehensive income		180,569		530,362
Deposits at amortized cost		27,140		80,088
Equity instruments at amortized cost		157,326		455,248
Loans at amortized cost		2,924,775		8,378,795
Other		30,343		87,518
		3,515,063		10,073,077
Interest expenses
Deposits		796,411		2,188,502
Debts		147,970		387,760
Debentures		295,994		834,905
Other		23,389		70,456
		1,263,764		3,481,623
Net interest income	W	2,251,299	W	6,591,454

(In millions of Korean won)	20171
	Three months		Nine months
Interest income
Due from financial institutions	W	35,067	W	90,647
Financial assets at fair value through profit or loss		142,056		393,830
Loans		2,572,293		7,380,591
Financial investments
Available-for-sale financial assets		183,116		483,339
Held-to-maturity financial assets		124,444		346,271
Other		25,001		77,886
		3,081,977		8,772,564
Interest expenses
Deposits		579,671		1,734,674
Debts		94,769		265,341
Debentures		224,681		635,376
Other		19,350		56,371
		918,471		2,691,762
Net interest income	W	2,163,506	W	6,080,802

¹  Regarding reclassification of interest income following the change in accounting policy, interest income for 2017 has been restated.

131

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

27. Net Fee and Commission Income

Details of fee and commission income, and fee and commission expense for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018				2017
	Three months		Nine months		Three months		Nine months
Fee and commission income
Banking activity fees	W	51,893	W	154,545	W	47,091	W	140,193
Lending activity fees		17,409		54,928		20,585		57,092
Credit card related fees and commissions		419,145		1,221,530		373,629		1,067,035
Debit card related fees and commissions		106,954		310,995		100,911		300,672
Agent activity fees		43,611		111,485		36,580		119,130
Trust and other fiduciary fees		67,588		300,199		86,732		248,578
Fund management related fees		33,432		98,009		34,431		101,600
Guarantee fees		11,410		31,049		10,685		37,322
Foreign currency related fees		29,002		92,121		27,612		80,444
Commissions from transfer agent services		34,202		134,350		51,337		141,626
Other business account commission on consignment		8,981		28,753		8,953		25,414
Commissions received on securities business		111,361		424,927		97,885		310,842
Lease fees		69,041		168,893		37,961		106,221
Other		74,869		233,325		65,011		194,283
		1,078,898		3,365,109		999,403		2,930,452
Fee and commission expense
Trading activity related fees1		7,281		24,332		7,526		20,918
Lending activity fees		6,076		16,368		5,233		17,792
Credit card related fees and commissions		419,068		1,207,360		391,669		1,075,414
Outsourcing related fees		42,466		118,761		33,562		89,931
Foreign currency related fees		9,777		31,466		6,922		19,367
Other		71,262		219,145		63,163		184,854
		555,930		1,617,432		508,075		1,408,276
Net fee and commission income	W	522,968	W	1,747,677	W	491,328	W	1,522,176

¹ The fees from financial assets/liabilities at fair value through profit or loss.

132

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

28. Net Gains or Losses on Financial Assets/Liabilities at Fair Value through Profit or Loss

28.1 Net Gains or Losses on Financial Instruments Held for Trading

Net gain or loss from financial instruments at fair value through profit or loss includes dividend income, gains or losses arising from changes in the fair values, sales and redemptions. Details of net gain or loss from financial instruments held for trading for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Three months			Nine months
Revenue from financial instruments at fair value through profit or loss
Financial assets at fair value through profit or loss
Debt securities	W	319,667		W	1,103,913
Equity securities		128,145			407,979
		447,812			1,511,892
Derivatives held for trading
Interest rate		518,713			1,376,072
Currency		303,336			3,016,852
Stock or stock index		338,315			1,081,190
Credit		13,184			35,403
Commodity		1,156			5,305
Other		24,792			79,091
		1,199,496			5,593,913
Financial liabilities at fair value through profit or loss		(9,164	)		63,001
Other financial instruments		10			12
	W	1,638,154		W	7,168,818
Expense from financial instruments at fair value through profit or loss
Financial assets at fair value through profit or loss
Debt securities	W	85,147		W	523,642
Equity securities		50,797			315,218
		135,944			838,860
Derivatives held for trading
Interest rate		630,860			1,545,502
Currency		242,362			2,823,933
Stock or stock index		204,724			1,037,992
Credit		13,664			34,335
Commodity		1,653			6,974
Other		7,094			69,712
		1,100,357			5,518,448
Financial liabilities at fair value through profit or loss		49,486			96,159
Other financial instruments		4			34
		1,285,790			6,453,501
Net gains or losses on financial instruments held for trading	W	352,363		W	715,317

133

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	20171
	Three months		Nine months
Gains related to financial instruments held for trading
Financial assets held for trading
Debt securities	W	44,426	W	142,590
Equity securities		117,508		396,976
		161,934		539,566
Derivatives held for trading
Interest rate		496,029		1,131,656
Currency		528,197		3,616,326
Stock or stock index		445,159		1,660,411
Credit		7,366		68,755
Commodity		6,513		10,907
Other		7,002		12,231
		1,490,266		6,500,286
Financial liabilities held for trading		18,234		29,106
Other financial instruments		—		22
	W	1,670,434	W	7,068,980
Losses related to financial instruments held for trading
Financial assets held for trading
Debt securities	W	89,688	W	201,048
Equity securities		120,600		262,796
		210,288		463,844
Derivatives held for trading
Interest rate		459,658		1,068,745
Currency		548,520		3,576,745
Stock or stock index		305,768		1,058,934
Credit		8,452		67,778
Commodity		1,962		5,719
Other		7,017		11,923
		1,331,377		5,789,844
Financial liabilities held for trading		11,734		55,594
Other financial instruments		79		117
		1,553,478		6,309,399
Net gains or losses on financial instruments held for trading	W	116,956	W	759,581

¹  Regarding reclassification of interest income after the change of accounting policy, gains related to financial instruments held for trading for 2017 has been restated.

134

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

28.2 Net Gains or Losses on Financial Instruments Designated at Fair Value through Profit or Loss

Net gain or loss from financial instruments designated at fair value through profit or loss includes dividend income and gains or losses arising from changes in the fair values, sales and redemptions. Details of net gain or loss from financial instruments designated at fair value through profit or loss for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Three months			Nine months
Revenue from financial instruments designated at fair value through profit or loss
Financial assets designated at fair value through profit or loss	W	—		W	—
Financial liabilities designated at fair value through profit or loss		103,799			415,920
		103,799			415,920
Expense from financial instruments designated at fair value through profit or loss
Financial assets designated at fair value through profit or loss		(250	)		4,655
Financial liabilities designated at fair value through profit or loss		274,235			727,687
		273,985			732,342
Net gains or losses on financial instruments designated at fair value through profit or loss	W	(170,186	)	W	(316,422	)
(In millions of Korean won)	20171
	Three months			Nine months
Gains related to financial instruments designated at fair value through profit or loss
Financial assets designated at fair value through profit or loss	W	24,721		W	97,761
Financial liabilities designated at fair value through profit or loss		88,033			288,751
		112,754			386,512
Losses related to financial instruments designated at fair value through profit or loss
Financial assets designated at fair value through profit or loss		6,746			36,284
Financial liabilities designated at fair value through profit or loss		294,014			1,077,300
		300,760			1,113,584
Net gains or losses on financial instruments designated at fair value through profit or loss	W	(188,006	)	W	(727,072	)

¹  Regarding reclassification of interest income after the change of accounting policy, gains related to financial instruments held for trading for 2017 has been restated.

135

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

29. Other Operating Income and Expenses

Details of other operating income and expenses for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Three months			Nine months
Other operating income
Profit on redemption of financial assets mandatorily measured at fair value through other comprehensive income
Gain on redemption of financial assets mandatorily measured at fair value through other comprehensive income	W	197		W	259
Gain on sale of financial assets mandatorily measured at fair value through other comprehensive income		50,620			84,828
		50,817			85,087
Financial assets at amortized cost
Gain on sale of financial assets at amortized cost		11,635			40,650
		11,635			40,650
Gain on foreign exchange transactions		263,842			1,101,451
Dividend income		4,587			74,001
Others		(844	)		287,052
		330,037			1,588,241
Other operating expenses
Expense on redemption of financial assets mandatorily measured at fair value through other comprehensive income
Losses on redemption of financial assets mandatorily measured at fair value through other comprehensive income		—			17
Losses on sale of financial assets mandatorily measured at fair value through other comprehensive income		1,907			10,747
		1,907			10,764
Financial assets at amortized cost
Loss on sale of financial assets at amortized cost		600			4,084
		600			4,084
Loss on foreign exchanges transactions		229,221			1,065,943
Others		372,282			1,307,808
		604,010			2,388,599
Net other operating expenses	W	(273,973	)	W	(800,358	)

136

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	2017
	Three months			Nine months
Other operating income
Revenue related toavailable-for-sale financial assets
Gain on redemption ofavailable-for-sale financial assets	W	834		W	877
Gain on sale ofavailable-for-sale financial assets		49,033			98,841
		49,867			99,718
Revenue related toheld-to-maturity financial assets
Gain on redemption ofheld-to-maturity financial assets		392			394
		392			394
Gain on foreign exchange transactions		502,577			1,468,393
Dividend income		68,186			197,700
Others		37,132			89,073
		658,154			1,855,278
Other operating expenses
Expense related toavailable-for-sale financial assets
Loss on redemption ofavailable-for-sale financial assets		101			744
Loss on sale ofavailable-for-sale financial assets		16,695			127,166
Impairment onavailable-for-sale financial assets		11,130			30,795
		27,926			158,705
Loss on foreign exchanges transactions		498,458			1,293,587
Others		263,706			993,506
		790,090			2,445,798
Net other operating expenses	W	(131,936	)	W	(590,520	)

137

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

30. General and Administrative Expenses

30.1 General and Administrative Expenses

Details of general and administrative expenses for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018				2017
	Three months		Nine months		Three months		Nine months
Employee Benefits
Salaries and short-term employee benefits - salaries	W	574,076	W	1,738,792	W	569,509	W	1,610,730
Salaries and short-term employee benefits - others		185,199		690,704		178,410		632,649
Post-employment benefits - defined benefit plans		52,539		161,223		72,318		173,679
Post-employment benefits - defined contribution plans		4,751		14,642		4,937		10,664
Termination benefits		300		5,369		148		(118	)
Share-based payments		11,959		13,775		11,732		48,074
		828,824		2,624,505		837,054		2,475,678
Depreciation and amortization		102,113		279,816		94,964		257,751
Other general and administrative expenses
Rental expense		92,848		264,937		78,455		234,184
Tax and dues		46,388		160,619		45,907		147,946
Communication		10,302		31,969		11,090		31,655
Electricity and utilities		8,382		23,224		10,460		24,349
Publication		3,598		11,712		4,592		12,472
Repairs and maintenance		5,917		16,363		5,206		15,077
Vehicle		3,260		9,022		3,089		8,360
Travel		4,612		13,940		4,953		12,143
Training		6,964		19,235		6,315		18,057
Service fees		57,465		153,136		47,244		130,547
Electronic data processing expenses		49,319		139,966		46,468		129,153
Advertising		49,155		145,025		52,357		131,115
Others		61,393		180,802		58,889		168,148
		399,603		1,169,950		375,025		1,063,206
	W	1,330,540	W	4,074,271	W	1,307,043	W	3,796,635

30.2 Share-based Payments

30.2.1 Stock grants

The Group changed the scheme of share-based payment from stock options to stock grants in November 2007. The stock grant award program is an incentive plan that sets, on grant date, the maximum amount of shares that can be awarded. Actual stock granted at the end of the vesting period is determined in accordance with achievement ofpre-specified targets over the vesting period.

138

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of stock grants linked to long-term performance as of September 30, 2018, are as follows:

(In number of shares)	Grant date	Number of granted shares1		Vesting conditions
KB Financial Group Inc.
Series 17	Jan. 01, 2017		16,579	Services fulfillment, Achievement of targets on the basis of market andnon-market performance2,5
Series 18	July. 17, 2017		7,444	Services fulfillment, Achievement of targets on the basis of market andnon-market performance2,5
Series 19	Nov. 21, 2017		46,890	Services fulfillment, Achievement of targets on the basis of market andnon-market performance2,6
Series 20	Jan. 01, 2018		35,330	Services fulfillment, Achievement of targets on the basis of market and non-market performance2,8
Deferred grant	2012		5,415	Satisfied in 2012
Deferred grant	2013		588	Satisfied in 2013
Deferred grant	2015		15,154	Satisfied in 2015
Deferred grant	2016		14,538	Satisfied in 2016
Deferred grant	2017		85,491	Satisfied in 2017
			227,429
Kookmin Bank
Series 69	Jan. 01, 2017		168,360	Services fulfillment3
Series 71	Aug. 26, 2017		4,372	Services fulfillment3
Series 72	Aug. 28, 2017		5,601	Services fulfillment3
Series 73	Nov. 21, 2017		27,786	Services fulfillment4
Series 74	Jan. 01, 2018		190,536	Services fulfillment3
Deferred grant	2015		33,050	Satisfied in 2015
Deferred grant	2016		110,967	Satisfied in 2016
Deferred grant	2017		150,212	Satisfied in 2017
			690,884
Other subsidiaries
Stock granted in 2010	—		366
Stock granted in 2011	—		601
Stock granted in 2012	—		2,048
Stock granted in 2013	—		3,097
Stock granted in 2014	—		4,628	Services fulfillment, Achievement of targets on the basis of market andnon-market performance7, 9
Stock granted in 2015	—		66,655
Stock granted in 2016	—		121,998
Stock granted in 2017	—		233,273
Stock granted in 2018	—		107,945
			540,611
			1,458,924

139

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

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 30%, 40% and 30% of the number of granted shares to be compensated are determined upon the accomplishment of the relative TSR, Performance Results, Evaluation of the bank president’s performance, respectively. 30% of the number of certain granted shares to be compensated is determined upon the accomplishment of relative TSR, while 70% is determined upon the accomplishment of Performance Results.

⁴ 30% and 70% of the number of granted shares to be compensated are determined upon the accomplishment of relative TSR and Evaluation of the bank’s president’s performance, respectively.

⁵ 40%, 30% and 30% of the number of granted shares to be compensated are determined upon the accomplishment of Performance Results, financial results of the Group and relative TSR , respectively. 50% of the number of certain granted shares to be compensated is determined upon the accomplishment of Performance Results, while 50% is determined upon the accomplishment of relative TSR.

⁶  35%, 35%, 20%, 5% and 5% of the number of granted shares to be compensated are determined upon the accomplishment of relative TSR, EPS, Asset Quality, HCROI and nonbanking segment profit, respectively.

⁷ 50%, 30% and 20% of the number of granted shares to be compensated are determined upon the accomplishment of Performance Results, subsidiaries’ performance and relative TSR, respectively. 80% of the number of certain granted shares to be compensated is determined upon the accomplishment of subsidiaries’ performance, while 20% is determined upon the accomplishment of relative TSR. 80% of the number of certain granted shares to be compensated is determined upon the accomplishment of Performance Results, while 20% is determined upon the accomplishment of relative TSR. 60%, 30% and 10% of the number of certain granted shares to be compensated are determined upon accomplishment of Performance Results, subsidiaries’ performance and relative TSR, respectively. 90% of the number of certain granted shares to be compensated is determined upon the accomplishment of subsidiaries’ performance, while 10% is determined upon the accomplishment of relative TSR. 90% of the number of certain granted shares to be compensated is determined upon the accomplishment of Performance Results, while 10% is determined upon the accomplishment of relative TSR.

⁸ 40%, 30% and 30% of the number of granted shares to be compensated are determined upon the accomplishment of Performance Results, financial results of the Group and relative TSR , respectively. 70% of the number of certain granted shares to be compensated is determined upon the accomplishment of Performance Results, while 30% is determined upon the accomplishment of relative TSR.

⁹ 30%, 30% and 40% of the number of granted shares to be compensated are determined upon the accomplishment of Performance Results, subsidiaries’ performance and relative TSR, respectively. 60% of the number of certain granted shares to be compensated is determined upon the accomplishment of subsidiaries’ performance, while 40% is determined upon the accomplishment of relative TSR. 40%, 30% and 30% of the number of certain granted shares to be compensated are determined upon accomplishment of Performance Results, subsidiaries’ performance and relative TSR, respectively. 50% of the number of certain granted shares to be compensated is determined upon the accomplishment of subsidiaries’ performance, while 50% is determined upon the accomplishment of relative TSR. 70% of the number of certain granted shares to be compensated is determined upon the accomplishment of subsidiaries’ performance, while 30% is determined upon the accomplishment of relative TSR.

140

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of stock grants linked to short-term performance as of September 30, 2018, are as follows:

	Grant date		Estimated number of vested shares1		Vesting conditions
KB Financial Group Inc.
Stock granted in 2010		Jan. 01, 2010		322	Satisfied
Stock granted in 2011		Jan. 01, 2011		1,728	Satisfied
Stock granted in 2012		Jan. 01, 2012		2,642	Satisfied
Stock granted in 2013		Jan. 01, 2013		448	Satisfied
Stock granted in 2015		Jan. 01, 2015		13,516	Satisfied
Stock granted in 2016		Jan. 01, 2016		16,526	Satisfied
Stock granted in 2017		Jan. 01, 2017		16,855	Satisfied
Stock granted in 2018		Jan. 01, 2018		11,458	Proportional to service period
Kookmin Bank
Stock granted in 2015		Jan. 01, 2015		56,379	Satisfied
Stock granted in 2016		Jan. 01, 2016		83,424	Satisfied
Stock granted in 2017		Jan. 01, 2017		80,331	Satisfied
Stock granted in 2018		Jan. 01, 2018		69,820	Proportional to service period
Other subsidiaries
Stock granted in 2015		—		68,444	Satisfied
Stock granted in 2016		—		154,997	Satisfied
Stock granted in 2017		—		335,810	Satisfied
Stock granted in 2018		—		172,303	Proportional to service period

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

As of September 30, 2018 and December 31, 2017, the accrued expenses related to share-based payments including share grants amounted toW 115,181 million andW 133,496 million, respectively, and the compensation costs from share grants amounting toW 13,775 million andW 48,074 million were incurred during the nine-month periods ended September 30, 2018 and 2017, respectively.

141

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Details of Mileage stock as of September 30, 2018, are as follows:

(in number of shares)	Grant date		Number of granted shares1		Expected exercise period (years)1		Remaining shares2
Stock granted in 2016		Jan. 23, 2016		33,829		0.00~0.31		14,543
		Apr. 29, 2016		60		0.00~0.58		36
		July 07, 2016		280		0.00~0.77		62
		July 18, 2016		767		0.00~0.80		—
		Aug. 03, 2016		107		0.00~0.84		38
		Aug. 17, 2016		51		0.00~0.88		30
		Aug. 30, 2016		256		0.00~0.92		170
		Sept. 06, 2016		206		0.00~0.93		120
		Oct. 07, 2016		105		0.00~1.02		77
		Nov. 01, 2016		118		0.00~1.09		24
		Dec. 07, 2016		211		0.00~1.19		109
		Dec. 08, 2016		43		0.00~1.19		32
		Dec. 15, 2016		12		0.00~1.21		12
		Dec. 20, 2016		309		0.00~1.22		226
		Dec. 28, 2016		76		0.00~1.24		40
		Dec. 30, 2016		210		0.00~1.25		84
Stock granted in 2017		Jan. 09, 2017		28,925		0.00~1.28		13,646
		Feb. 03, 2017		43		0.00~1.35		28
		Apr. 03, 2017		82		0.00~1.51		61
		May 22, 2017		20		0.00~1.64		20
		July 03, 2017		52		0.00~1.76		52
		Aug. 07, 2017		29		0.00~1.85		24
		Aug. 08, 2017		5		0.00~1.85		2
		Aug. 16, 2017		204		0.00~1.88		182
		Aug. 17, 2017		40		0.00~1.88		40
		Aug. 24, 2017		387		0.00~1.90		338
		Sep. 08, 2017		82		0.00~1.94		73
		Oct. 20, 2017		9		0.00~2.05		9
		Nov. 01, 2017		120		0.00~2.09		120
		Nov. 06, 2017		106		0.00~2.10		106
		Dec. 06, 2017		105		0.00~2.18		94
		Dec. 26, 2017		254		0.00~2.24		215
		Dec. 29, 2017		114		0.00~2.25		98
Stock granted in 2018		Jan. 10, 2018		19,197		0.00~2.28		18,663
		Feb. 12, 2018		9		0.00~2.37		9
		Apr. 02, 2018		115		0.00~2.50		115
		Apr. 30, 2018		86		0.00~2.58		86
		May 08, 2018		170		0.00~2.60		166
		June 01, 2018		140		0.00~2.67		140
		July 02, 2018		180		0.00~2.75		180
		Aug. 07, 2018		194		0.00~2.85		194
		Aug. 09, 2018		47		0.00~2.86		47
		Aug. 14, 2018		30		0.00~2.87		30
		Aug. 16, 2018		130		0.00~2.88		130
		Sep. 07, 2018		106		0.00~2.94		106
				87,621				50,577

¹ Mileage stock may be exercised after one year from the grant date for two years. When the mileage stock is exercised, the closing price of prior month is applied. However, in case of transfer or retirement during the vesting period, mileage stock may still be exercised at the closing price of prior month.

² The remaining shares are assessed based on the stock price as of September 30, 2018. These shares may be vested immediately at grant date.

142

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

As of September 30, 2018 and December 31, 2017, the accrued expenses for share-based payments in regards to mileage stock amounted toW 2,741 million andW 2,973 million, respectively, and the compensation costs amounting toW 1,282 million andW 1,299 million were incurred during the nine-month periods ended September 30, 2018 and 2017, respectively.

31. Net OtherNon-operating Income and Expenses

Details of othernon-operating income and expenses for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018					2017
	Three months			Nine months		Three months		Nine months
Othernon-operating income
Gain on disposal in property and equipment	W	205		W	33,154	W	4,838	W	5,088
Rent received		12,356			30,895		7,362		21,917
Profit on disposal ofnon-current assets for sale		—			118,765		5,233		6,962
Gains on bargain purchase		—			—		—		122,986
Others		8,103			30,168		28,736		88,152
		20,664			212,982		46,169		245,105
Othernon-operating expenses
Loss on disposal in property and equipment		662			5,433		230		968
Donation		8,889			86,540		15,209		31,227
Restoration cost		2,552			3,887		805		3,065
Managing expense for precautionary loan		765			2,393		1,312		2,493
Others		12,550			36,837		13,498		42,070
		25,418			135,090		31,054		79,823
Net othernon-operating income (expense)	W	(4,754	)	W	77,892	W	15,115	W	165,282

143

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

32. Income Tax Expense

Income tax expense for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018			2017
Tax payable
Current tax expense	W	922,089		W	458,520
Adjustments recognized in the period for current tax of prior years		(36,548	)		(16,479	)
		885,541			442,041
Changes in deferred income tax assets (liabilities)		237,024			250,517
Income tax recognized directly in equity
Remeasurements of net defined benefit liabilities		2,401			3,155
Exchange difference in foreign operation		(10,745	)		10,813
Change in value ofavailable-for-sale financial assets		—			(58,536	)
Change in value ofheld-to-maturity financial assets		—			542
OCI related with financial assets at fair value through profit or loss		(35,691	)		—
OCI related with investments in associates and joint ventures		1,175			20,807
Cash flow hedges		(6,031	)		(1,131	)
Hedges of a net investment in a foreign operation		8,592			(135	)
OCI related with assets held for sale		—			(21,498	)
OCI related with separate account assets		(6,504	)		2,508
Profit or loss related with credit risk change of financial liabilities designated at fair value through profit or loss		64			—
Net gains on overlay adjustment		30,413			—
		(16,326	)		(43,475	)
Others		—			(27,031	)
Tax expense	W	1,106,239		W	622,052

33. Dividends

The dividends to the shareholders of the Parent Company in respect of the year ended December 31, 2017, ofW 1,920 per share, amounting to total dividends ofW 766,728 million, were paid on April 2018. The dividends paid to the shareholders of the Parent Company in 2017 wereW 497,969 million (W 1,250 per share).

144

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

34. Accumulated Other Comprehensive Income

Details of changes in accumulated other comprehensive income for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Beginning1			Changes except for reclassification			Reclassification to profit or loss			Tax effect			Ending
Remeasurements of net defined benefit liabilities	W	(96,385	)	W	(8,718	)	W	—		W	2,401		W	(102,702	)
Exchange differences on translating foreign operations		(54,700	)		46,052			—			(10,745	)		(19,393	)
OCI related with financial assets at fair value through profit or loss		362,681			113,787			15,963			(35,691	)		456,740
OCI related with investments in associates and joint ventures		(644	)		(4,276	)		—			1,175			(3,745	)
Cash flow hedges		14,887			(4,882	)		20,463			(6,031	)		24,437
Hedges of a net investment in a foreign operation		(5,958	)		(31,241	)		—			8,592			(28,607	)
OCI related with separate account assets		(13,692	)		22,560			1,091			(6,504	)		3,455
Profit or loss related with credit risk change of Financial liabilities designated at fair value through profit or loss		(10,438	)		(233	)		—			64			(10,607	)
Net gains/(losses) on overlay adjustment		(7,559	)		(87,468	)		(24,752	)		30,413			(89,366	)
	W	188,192		W	45,581		W	12,765		W	(16,326	)	W	230,212

¹  Prepared in accordance with Korean IFRS 1109

(In millions of Korean won)	2017
	Beginning			Changes except for reclassification			Reclassification to profit or loss			Tax effect			Replaced by retained earnings			Replaced by assets held for sale			Replaced by disposal group held for sale			Ending
Remeasurements of net defined benefit liabilities	W	(121,055	)	W	(13,037	)	W	—		W	3,155		W	—		W	—		W	1,985		W	(128,952	)
Exchange differences on translating foreign operations		53,138			(44,125	)		—			10,813			—			—			—			19,826
Change in value ofavailable-for-sale financial assets		601,620			244,625			9,248			(58,536	)		—			—			(861	)		796,096
Change in value ofheld-to-maturity financial assets		6,447			(2,239	)		—			542			—			—			—			4,750
Shares of other comprehensive income of associates		(96,174	)		3,297			10,152			20,807			(3,492	)		67,337			—			1,927
Cash flow hedges		(6,075	)		53,246			(46,480	)		(1,131	)		—			—			—			(440	)
Hedges of a net investment in a foreign operation		(32,572	)		558			—			(135	)		—			—			—			(32,149	)
Comprehensive income of separate account		—			(97,002	)		86,640			2,508			—			—			—			(7,854	)
Comprehensive income of disposal group held for sale		—			—			—			—			—			—			(1,124	)		(1,124	)
Comprehensive income of assets held for sale		—			—			88,835			(21,498	)		—			(67,337	)		—			—
	W	405,329		W	145,323		W	148,395		W	(43,475	)	W	(3,492	)	W	—		W	—		W	652,080

145

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

35. Earnings per Share

35.1 Basic Earnings per Share

Basic earnings per share is calculated by dividing profit and loss attributable to ordinary equity holders of the Parent Company by the weighted average number of ordinary shares outstanding, excluding the treasury shares, during the three-month and nine-month periods ended September 30, 2018 and 2017.

Weighted average number of ordinary shares outstanding:

(In number of shares)	2018
	Three months			Nine months
Beginning (A)		418,111,537			418,111,537
Acquisition of treasury shares (B)		(21,877,863	)		(21,487,116	)
Weighted average number of ordinary shares outstanding (A - B)		396,233,674			396,624,421
(In number of shares)	2017
	Three months			Nine months
Beginning (A)		418,111,537			418,111,537
Acquisition of treasury shares (B)		(17,397,533	)		(21,415,585	)
Disposal of treasury shares (C)		—			1,398,124
Weighted average number of ordinary shares outstanding (A – B + C)		400,714,004			398,094,076

Basic earnings per share:

(In Korean won and in number of shares)	2018
	Three months		Nine months
Profit attributable to ordinary shares (D)	W	953,769,374,067	W	2,868,752,030,474
Weighted average number of ordinary shares outstanding (E)		396,233,674		396,624,421
Basic earnings per share (F = D / E)	W	2,407	W	7,233
(In Korean won and in number of shares)	2017
	Three months		Nine months
Profit attributable to ordinary shares (D)	W	897,504,116,436	W	2,757,685,920,231
Weighted average number of ordinary shares outstanding (E)		400,714,004		398,094,076
Basic earnings per share (F = D / E)	W	2,240	W	6,927

35.2 Diluted Earnings per Share

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

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

146

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Adjusted profit for diluted earnings per share for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(In Korean won)	2018
	Three months		Nine months
Profit attributable to ordinary shares	W	953,769,374,067	W	2,868,752,030,474
Adjustment		—		—
Adjusted profit for diluted earnings	W	953,769,374,067	W	2,868,752,030,474
(In Korean won)	2017
	Three months		Nine months
Profit attributable to ordinary shares	W	897,504,116,436	W	2,757,685,920,231
Adjustment		—		—
Adjusted profit for diluted earnings	W	897,504,116,436	W	2,757,685,920,231

Adjusted weighted average number of ordinary shares outstanding to calculate diluted earnings per share for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(In number of shares)	2018
	Three months		Nine months
Weighted average number of ordinary shares outstanding		396,233,674		396,624,421
Adjustment
Stock grants		2,130,765		2,304,578
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share		398,364,439		398,928,999
(In number of shares)	2017
	Three months		Nine months
Weighted average number of ordinary shares outstanding		400,714,004		398,094,076
Adjustment
Stock grants		2,054,206		2,175,864
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share		402,768,210		400,269,940

Diluted earnings per share for the three-month and nine-month periods ended September 30, 2018 and 2017, are as follows:

(in Korean won and in number of shares)	2018
	Three months		Nine months
Adjusted profit for diluted earnings per share	W	953,769,374,067	W	2,868,752,030,474
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share		398,364,439		398,928,999
Diluted earnings per share	W	2,394	W	7,191
(In Korean won and in number of shares)	2017
	Three months		Nine months
Adjusted profit for diluted earnings per share	W	897,504,116,436	W	2,757,685,920,231
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share		402,768,210		400,269,940
Diluted earnings per share	W	2,228	W	6,890

147

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

36. Insurance Contracts

36.1 Insurance Liabilities

Details of insurance liabilities presented within other liabilities as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018
	Non-life Insurance		Life insurance		Others		Total
Long-term insurance premium reserve	W	21,947,245	W	7,193,110	W	—	W	29,140,355
Reserve for outstanding claims		2,294,883		107,224		3,350		2,405,457
Unearned premium reserve		1,389,834		3,744		869		1,394,447
Reserve for participating policyholders’ dividends on long-term insurance		90,649		25,541		—		116,190
Unallocated Divisible Surplus to Future Policyholders		41,504		8,168		—		49,672
Reserve for compensation for losses on dividend-paying insurance contracts		25,731		6,366		—		32,097
Guarantee reserve		—		16,184		—		16,184
	W	25,789,846	W	7,360,337	W	4,219	W	33,154,402
(In millions of Korean won)	December 31, 2017
	Non-life Insurance		Life insurance		Others		Total
Long-term insurance premium reserve	W	20,697,290	W	7,278,112	W	—	W	27,975,402
Reserve for outstanding claims		2,148,923		78,423		3,670		2,231,016
Unearned premium reserve		1,392,211		1,511		1,075		1,394,797
Reserve for participating policyholders’ dividends on long-term insurance		94,005		29,150		—		123,155
Unallocated Divisible Surplus to Future Policyholders		24,304		6,264		—		30,568
Reserve for compensation for losses on dividend-paying insurance contracts		25,730		7,920		—		33,650
Guarantee reserve		—		12,687		—		12,687
	W	24,382,463	W	7,414,067	W	4,745	W	31,801,275

148

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

36.2 Insurance Income and Expense

Insurance income and expenses for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018			2017
Insurance Income
Premium income	W	8,029,106		W	5,603,237
Reinsurance income		514,011			356,138
Reversal of policy reserves		525			(10	)
Separate account income		303,520			76,887
Income of change in reinsurance assets		73,490			92,134
Other insurance income		7,590			2,180
		8,928,242			6,130,566
Insurance Expense
Insurance premiums expense		3,090,571			1,965,560
Dividend expense		7,085			4,203
Refund expense		2,152,183			1,539,978
Reinsurance expense		700,734			432,152
Provision of policy reserves		1,346,895			1,191,392
Separate account expenses		229,786			38,258
Insurance operating expenses		313,405			193,717
Deferred acquisition costs		450,411			225,702
Expenses of change in reinsurance assets		(601	)		(400	)
Claim survey expenses paid		28,142			16,124
Other insurance expenses		165,919			123,933
		8,484,530			5,730,619
Net insurance income	W	443,712		W	399,947

36.3 The Overlay Approach

The Group applied “The Overlay Approach” under Korean IFRS 1104 at the initial application of Korean IFRS 1109.

Details of financial assets applied “The Overlay Approach” as of September 30, 2018, are as follows:

(In millions of Korean won)	September 30, 2018
Financial assets designated at fair value through profit or loss
Cash and due from financial institutions	W	166,986
Debt securities		6,712,576
Equity securities		96,430
	W	6,975,992

Changes of net losses on overlay adjustment for the nine-month period ended September 30, 2018, are as follows:

(In millions of Korean won)	Net losses on overlay adjustment2
Beginning1	W	(7,559	)
Recognition due to acquisition		(63,862	)
Reclassification to profit or loss due to disposal		(17,945	)
Recognition of OCI from profit or loss due tore-designation		—
Recognition of profit or loss from OCI due tode-designation		—
Ending	W	(89,366	)

¹  Calculated based on Korean IFRS 1109

²  Amounts are net of tax

149

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

37. Supplemental Cash Flow Information

Cash and cash equivalents as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018			December 31, 2017
Cash	W	2,393,742		W	2,167,911
Checks with other banks		440,481			430,253
Due from Bank of Korea		8,450,347			8,981,665
Due from other financial institutions		7,065,128			8,237,996
		18,349,698			19,817,825
Due from financial institutions at fair value through profit or loss		506,245			—
		18,855,943			19,817,825
Restricted cash from financial institutions		(10,963,989	)		(10,613,089	)
Due from financial institutions with original maturities over three months		(1,646,346	)		(799,838	)
		(12,610,335	)		(11,412,927	)
	W	6,245,608		W	8,404,898

Cash inflows and outflows from income tax, interests and dividends for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	Activity		2018		2017
Income tax paid		Operating	W	589,559	W	640,616
Interest received		Operating		9,007,165		8,934,374
Interest paid		Operating		2,842,425		2,473,089
Dividends received		Operating		147,763		233,488
Dividends paid		Financing		766,728		497,968

38. Contingent Liabilities and Commitments

Details of payment guarantees as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018		December 31, 2017
Confirmed payment guarantees
Confirmed payment guarantees in Korean won
Payment guarantees for KB purchasing loan	W	247,881	W	252,817
Other payment guarantees		592,810		530,272
		840,691		783,089
Confirmed payment guarantees in foreign currency
Acceptances of letter of credit		204,026		147,987
Letter of guarantees		67,828		60,853
Bid bond		48,617		46,984
Performance bond		579,327		563,506
Refund guarantees		647,660		778,779
Other payment guarantees in foreign currency		2,606,829		1,960,769
		4,154,287		3,558,878
Financial guarantees
Payment guarantees for mortgage		50,498		57,446
Overseas debt guarantees		477,270		285,576
International financing guarantees in foreign currencies		78,198		46,953
Other financing payment guarantees		270,000		270,029
		875,966		660,004
		5,870,944		5,001,971
Unconfirmed acceptances and guarantees
Guarantees of letter of credit		2,242,387		2,250,542
Refund guarantees		582,592		384,959
		2,824,979		2,635,501
	W	8,695,923	W	7,637,472

150

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Commitments as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)	September 30, 2018		December 31, 2017
Commitments
Corporate loan commitments	W	34,394,141	W	32,857,616
Retail loan commitments		40,755,012		16,074,323
Credit line on credit cards		54,130,301		49,299,924
Purchase of other security investment and others		4,991,838		3,951,304
		134,271,292		102,183,167
Financial Guarantees
Credit line		2,365,915		2,669,071
Purchase of security investment		423,700		354,800
		2,789,615		3,023,871
	W	137,060,907	W	105,207,038

Other Matters (including litigation)

a) The Group has filed 87 lawsuits as a plaintiff (excluding minor lawsuits in relation to the collection or management of loans), involving aggregate claims ofW 524,413 million, and faces 291 lawsuits (as a defendant) (excluding minor lawsuits in relation to the collection or management of loans) involving aggregate damages ofW 229,933 million, which arose in the normal course of the business and are still pending as of September 30, 2018.

b) Kookmin Bank made a construction contract building the integrated company building, and the integrated central IT, amounting toW 150,051 million, andW 105,175 million, respectively; for the nine-month period ended September 30, 2018, the subsidiary has paidW 4,820 million andW 21,073 million for each the integrated company building and the integrated central IT.

c) The face value of the securities which Kookmin Bank sold to general customers through the bank tellers amounts toW 372 million andW 372 million as of September 30, 2018 and December 31, 2017, respectively.

151

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

d) While setting up a fraud detection system, a computer contractor employed by the personal credit ratings firm Korea Credit Bureau caused a widespread data breach in June 2013, resulting in the theft of cardholders’ personal information. As a result of the leakage of customer personal information, the KB Kookmin Card received a notification from the Financial Services Commission that the KB Kookmin Card is subject to a temporary three-month operating suspension as of February 16, 2014. In respect of the incident, the Group faces 121 and 120 legal claims filed as a defendant, with an aggregate claim ofW 8,891 million andW 10,291 million as of September 30, 2018 and December 31, 2017. A provision liability ofW 12,101 million andW 11,078 million has been recognized for these pending lawsuits. In addition, the additional lawsuits may be filed against the Group; however, the final outcome of the cases cannot be reasonably ascertained.

e) As of September 30, 2018, the Group is in the process of filing complaints regarding insurance contracts including reverse pension plans; the amount paid and the timing related with this filing cannot be predicted as of September 30, 2018.

152

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

39. Subsidiaries

Details of subsidiaries as of September 30, 2018, are as follows:

Investor	Investee	Ownership interests (%)		Location	Date of financial statements	Industry
KB Financial Group Inc.	Kookmin Bank		100	Korea	Sep. 30	Banking and foreign exchange transaction
	KB Securities Co., Ltd.		100	Korea	Sep. 30	Financial investment
	KB Insurance Co., Ltd.5		100	Korea	Sep. 30	Non-life insurance
	KB Kookmin Card Co., Ltd.		100	Korea	Sep. 30	Credit card and installment finance
	KB Life Insurance Co., Ltd.		100	Korea	Sep. 30	Life insurance
	KB Asset Management Co., Ltd.		100	Korea	Sep. 30	Collective investment and advisory
	KB Capital Co., Ltd.		100	Korea	Sep. 30	Financial Leasing
	KB Savings Bank Co., Ltd.		100	Korea	Sep. 30	Savings banking
	KB Real Estate Trust Co., Ltd.		100	Korea	Sep. 30	Real estate trust management
	KB Investment Co., Ltd.		100	Korea	Sep. 30	Capital investment
	KB Credit Information Co., Ltd.		100	Korea	Sep. 30	Collection of receivables or credit investigation
	KB Data System Co., Ltd.		100	Korea	Sep. 30	Software advisory, development, and supply
Kookmin Bank	Kookmin Bank Int’l Ltd.(London)6		100	United Kingdom	Sep. 30	Banking and foreign exchange transaction
	Kookmin Bank Hong Kong Ltd.7		100	China	Sep. 30	Banking and foreign exchange transaction
	Kookmin Bank Cambodia PLC.		100	Cambodia	Sep. 30	Banking and foreign exchange transaction
	Kookmin Bank China Ltd.		100	China	Sep. 30	Banking and foreign exchange transaction
	KB Microfinance Myanmer Co., Ltd.		100	Myanmer	Sep. 30	Other credit granting n.e.c.
	KBD Tower 1st L.L.C. and 32 others2		—	Korea	Sep. 30	Asset-backed securitization
	KB Multi-Asset Private Securities Fund (BondMixed-ETF)		99.27	Korea	Sep. 30	Investment trust
	KB Multi-Asset Private Securities FundS-1(Bond Mixed)		99.96	Korea	Sep. 30	Investment trust
	KB Multi-Asset Private Securities FundP-1(Bond Mixed)		99.96	Korea	Sep. 30	Investment trust
	KB Haeoreum private securities investment trust 70(Bond)3		49.87	Korea	Sep. 30	Capital investment
	Samsung KODEX 10YF-LKTB Inverse ETF(Bond-Derivatives)		71.57	Korea	Sep. 30	Capital investment

153

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Investor	Investee	Ownership interests (%)		Location	Date of financial statements	Industry
	KB Haeoreum private securities investment trust 83(Bond)		95.22	Korea	Sep. 30	Capital investment
	3YF-LKTB Inverse ETF(Bond-Derivatives)		99.41	Korea	Sep. 30	Capital investment
	Kiwoom Frontier Private placement fund 10[Bond]		99.9	Korea	Sep. 30	Capital investment
	Tong Yang Safe Plus Qualified Private TrustS-8(Bond)		99.97	Korea	Sep. 30	Capital investment
	Mirae Asset Triumph Global Privately placed Feeder Investment Trust 1		99.92	Korea	Sep. 30	Capital investment
	NH-AMUNDI GLOBAL PRIVATE SECURITIES INVESTMENT TRUST 1(BOND)]		83.31	Korea	Sep. 30	Capital investment
	Meritz Private Real Estate Fund9-2		99.98	Korea	Sep. 30	Capital investment
	AIP US RED PRIVATE REAL ESTATE TRUST NO.10		99.97	Korea	Sep. 30	Capital investment
KB Securities Co., Ltd.	KBFG Securities America Inc.		100	United States of America	Sep. 30	Investment advisory and securities dealing activities
	KB Securities Hong Kong Ltd.		100	China	Sep. 30	Investment advisory and securities dealing activities
	KB SECURITEIS VIETNAM JOINT STOCK COMPANY		99.4	Vietnam	Sep. 30	Investment advisory and securities dealing activities
	Able DF Co., Ltd and 50 others2		—	Korea	Sep. 30	Asset-backed securitization
	KB Vintage 16 Private Securities Investment Trust 1st 3		34.21	Korea	Sep. 30	Capital investment
	KB NA COMPASS ENERGY PRIVATE SPECIAL ASSET FUND3		29.7	Korea	Sep. 30	Capital investment
	Hyundai You First Private Real Estate Investment Trust No. 1		60	Korea	Sep. 30	Capital investment

154

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Investor	Investee	Ownership interests (%)		Location	Date of financial statements	Industry
	Hyundai Smart Index Alpha Securities Feeder Investment Trust No.1		98.82	Korea	Sep. 30	Capital investment
	Hyundai Trust Securities Investment Trust No.1		98.60	Korea	Sep. 30	Capital investment
	Hyundai Strong Korea Equity Trust No.1		99.36	Korea	Sep. 30	Capital investment
	Hyundai Kidzania Equity Feeder Trust No.1		79.21	Korea	Sep. 30	Capital investment
	Hyundai Value Plus Equity Feeder Trust No.1		99.68	Korea	Sep. 30	Capital investment
	Hyundai Strong-small Corporate Trust No.1		90.70	Korea	Sep. 30	Capital investment
	Hyundai You First Private Real Estate Investment Trust No. 153		35	Korea	Sep. 30	Capital investment
	Heungkuk Highclass Private Real Estate Trust No. 21		100	Korea	Sep. 30	Capital investment
	JB New Jersey Private Real Estate Investment Trust No. 1		98.15	Korea	Sep. 30	Capital investment
	Heungkuk Global Highclass Private Real Estate Trust No. 23		100	Korea	Sep. 30	Capital investment
	Hyundai Dynamic Mix Secruticies Feeder Investment Trust No.1		99.99	Korea	Sep. 30	Capital investment
	Hyundai Quant Long Short Securities Feeder Investment Trust No. 1		100.00	Korea	Sep. 30	Capital investment
	Hyudai China Index Plus Securities Investment Trust No.1		82.12	Korea	Sep. 30	Capital investment
	HyundaiKon-tiki Specialized Privately Placed Fund No.1		98.05	Korea	Sep. 30	Capital investment

155

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Investor	Investee	Ownership interests (%)	Location	Date of financial statements	Industry
	DGB Private real estate Investment Trust No.8	98.77	Korea	Sep. 30	Capital investment
	DAEDUCK PARC1 PRIVATE EQUITY FUND 1	97.09	Korea	Sep. 30	Capital investment
	Aquila Global Real Assets Fund No.1 LP	99.96	Cayman islands	Sep. 30	Capital investment
	Able Quant Asia Pacific Feeder Fund(T.E.) Limited	100.00	Cayman islands	Sep. 30	Capital investment
	Mangrove Feeder Fund	100	Cayman islands	Sep. 30	Capital investment
	LB Irealand Private Real Estate Investment Trust 8	99.85	Korea	Sep. 30	Capital investment
	KTB Aircraft Private Investment TrustNo.21-1	99.61	Korea	Sep. 30	Capital investment
	Pacific US Blackrock Private Placement Real Estate Fund No.15	99.50	Korea	Sep. 30	Capital investment
KB Insurance Co., Ltd.	KB Claims Survey & Adjusting	100	Korea	Sep. 30	Claim service
	KB Sonbo CNS	100	Korea	Sep. 30	Management service
	Leading Insurance Services, Inc.	100	United States of America	Sep. 30	Management service
	LIG Insurance (China) Co., Ltd.	100	China	Sep. 30	Non-life insurance
	PT. KB Insurance Indonesia	70	Indonesia	Sep. 30	Non-life insurance
	KB Golden Life Care Co., Ltd.	100	Korea	Sep. 30	Service
	KB AMP Infra Private Special Asset Fund 1(FoFs)3	41.67	Korea	Sep. 30	Capital investment
	KB Muni bond Private Securities Fund 1(USD)(bond) 3	33.33	Korea	Sep. 30	Capital investment
	KB CHILE SOLAR FUND	80	Korea	Sep. 30	Capital investment
	Meritz Private Specific Real Estate Fund1-2	87.21	Korea	Sep. 30	Capital investment
	KB Global Private Real Estate Debt Fund 1	50	Korea	Sep. 30	Capital investment

156

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Investor	Investee	Ownership interests (%)	Location	Date of financial statements	Industry
	Dongbu Private Fund 16th	89.52	Korea	Sep. 30	Financial investment
	Hana Landchip Real estate Private Fund 58th	99.99	Korea	Sep. 30	Financial investment
	Hyundai Aviation Private Fund 3rd	99.96	Korea	Sep. 30	Financial investment
	Hyundai Power Private Fund 3rd	99.95	Korea	Sep. 30	Financial investment
	Hyundai Power Professional Investment Type Private Investment Fund No.4	99.78	Korea	Sep. 30	Financial investment
	KB U.S. LongShort Private Securities Fund 1	99.44	Korea	Sep. 30	Financial investment
	Hyundai Infra Professional Investment Type Private Investment Trust No.5	99.80	Korea	Sep. 30	Financial investment
	KB SAUDI Private Special Asset Fund	80	Korea	Sep. 30	Financial investment
	Meritz Private Real Estate Fund 8	99.36	Korea	Sep. 30	Financial investment
	Hyundia Star Private Real Estate Investment Trust No. 14	99.98	Korea	Sep. 30	Financial investment
	Vogo debt strategy private real estate fund VII	98.84	Korea	Sep. 30	Financial investment
	KORAMCO Europe Debt Strategy Private Real-Estate Fund 2nd	99.80	Korea	Sep. 30	Capital investment
	KB Peru Transmission Facility Invesment Private Fund	99.01	Korea	Sep. 30	Capital investment
	KB Global Private Real Estate Debt Fund 2	98.36	Korea	Sep. 30	Capital investment
KB Kookmin Card Co., Ltd.	Wise Mobile 16th Securitization Co., Ltd. And 2 others2	0.5	Korea	Sep. 30	Asset-backed securitization and others
	KB Kookmin Card 2nd Securitization Co., Ltd. And 2 other2	0.5	Korea	Sep. 30	Asset-backed securitization and others

157

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Investor	Investee	Ownership interests (%)	Location	Date of financial statements	Industry
	Heungkuk Life Insurance Money Market Trust	100	Korea	Sep. 30	Trust asset management
	KB DAEHAN SPECIALIED BANK PLC.	90	Kambodia	Sep. 30	Banking
KB Life Insurance Co., Ltd.	KB Evergreen Private Securities Fund No. 59(Bond)	100	Korea	Sep. 30	Private fund
	KB Haeoreum Private Securities Investment Trust 1st(debt securities)	100	Korea	Sep. 30	Private fund
KB Asset Management Co., Ltd.	KB Star Office Private Real Estate Feeder fund3-2	88	Korea	Sep. 30	Financial investment
	KB Asset Management Singapore Pte, Ltd.	100	Singapore	Sep. 30	Collective investment
	KB Global Multiasset Income Securities Feeder Fund(Bond Mixed-FoFs)	95.37	Korea	Sep. 30	Capital investment
	KB Star Short Term Securities Feeder Fund(Bond)3	36.06	Korea	Sep. 30	Capital investment
	KB Onkookmin Life Income RIF 20 Feeder Fund(Fofs)	50.05	Korea	Sep. 30	Capital investment
	KB Onkookmin Life Income RIF 40 Feeder Fund(Fofs)3	49.25	Korea	Sep. 30	Capital investment
	KB Global Equity Solution Securities Feeder Fund(Equity-FoFs) 3	48.76	Korea	Sep. 30	Capital investment
	KB Active Investor Secruticies Investment Trust(Derivatives Mixed)	99.96	Korea	Sep. 30	Financial investment

158

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Investor	Investee	Ownership interests (%)	Location	Date of financial statements	Industry
KB Investment Co., Ltd.	KoFC-KB Pioneer ChampNo. 2010-8 Investment Partnership	50	Korea	Sep. 30	Capital investment
	2011KIF-KB IT Venture Fund4	43.33	Korea	Sep. 30	Capital investment
	KoFC-KB Young Pioneer 1st Fund4	33.33	Korea	Sep. 30	Capital investment
	KB NEW CONTENTS Venture Fund4	20	Korea	Sep. 30	Capital investment
	KB Young Pioneer 3.0 Venture Fund4	40	Korea	Sep. 30	Capital investment
	KB Pre IPO Secondary Venture Fund 24	21	Korea	Sep. 30	Capital investment
	KB Contents Panda iMBC Contents Venture Fund	20	Korea	Sep. 30	Capital investment
Heungkuk Global Highclass Private Real Estate Trust 23	HYUNDAI ABLE INVESTMENT REIT	99.90	United States of America	Sep. 30	Real Estate Activities
Hyundai Strong Korea Equity Trust No.1	Hyundai Strong Korea Equity Trust No.1[Master]	80.88	Korea	Sep. 30	Capital investment
Hyundai Trust Securities Feeder Investment TrustNo.1- Bond	Hyundai Trust Securities Master Investment Trust—Bond	96.57	Korea	Sep. 30	Capital investment
Hyundai Quant Long Short Securities Feeder Investment Trust	Hyundai Quant Long Short Securities Master Investment Trust	100.00	Korea	Sep. 30	Capital investment
Hyundai Smart Index Alpha Securities Feeder Inv Trust 1	Hyundai Smart Index Alpha Securities Master Investment Trust	99.88	Korea	Sep. 30	Capital investment
Hyundai Value Plus Securities Feeder Investment Trust 1 and others	Hyundai Value Plus Securities Master Investment Trust	100	Korea	Sep. 30	Capital investment
Hyundai Dynamic Mix Securities Feeder Investment Trust	Hyundai Dynamic Mix Securities Master Investment Trust	98.53	Korea	Sep. 30	Capital investment
KB Securities Co., Ltd., KB Insurance Co., Ltd., KB Asset Management Co., Ltd.	KB Star Office Private Real Estate Investment Trust4	51.96	Korea	Sep. 30	Capital investment
Kookmin Bank, KB Insurance Co., Ltd., KB life Insurance Co., Ltd.	KB Hope Sharing BTL Private Special Asset3	46	Korea	Sep. 30	Capital investment

159

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Investor	Investee	Ownership interests (%)	Location	Date of financial statements	Industry
Kookmin Bank, KB Insurance Co., Ltd., KB life Insurance Co., Ltd.	KB Senior Loan Private Fund3	37.39	Korea	Sep. 30	Capital investment
Kookmin Bank, KB Insurance Co., Ltd.	Hanbando BTL Private Special Asset Fund 1st3	46.36	Korea	Sep. 30	Capital investment
Kookmin Bank, KB Insurance Co., Ltd.	KB KBSTARMid-Long Term KTB Active ETF	72.29	Korea	Sep. 30	Capital investment
Kookmin Bank, KB Securities Co., Ltd., KB Asset Management Co., Ltd.	KB Everyone TDF 2035 Securities Investment Trust—Bond Balanced-Fund of Funds3	42.39	Korea	Sep. 30	Financial investment
Kookmin Bank, KB Securities Co., Ltd., KB Asset Management Co., Ltd.	KB Everyone TDF 2045 Securities Investment Trust—Bond Balanced-Fund of Funds	56.60	Korea	Sep. 30	Financial investment
Kookmin Bank, KB Insurance Co., Ltd., KB Securities Co., Ltd., KB Real Estate Trust Co., Ltd.	KB Wise Star Private Real Estate Feeder Fund 1st.	100	Korea	Sep. 30	Investment trust
Kookmin Bank, KB Investment Co., Ltd.	KB12-1 Venture Investment	100	Korea	Sep. 30	Capital investment
Kookmin Bank, KB Investment Co., Ltd.	KBStart-up Creation Fund	62.5	Korea	Sep. 30	Capital investment
Kookmin Bank, KB Investment Co., Ltd.	KB Intellectual Property Fund4	34	Korea	Sep. 30	Capital investment
Kookmin Bank, KB life Insurance Co., Ltd.	KB Mezzanine Private Securities Fund 2nd3	40.74	Korea	Sep. 30	Capital investment
Kookmin Bank, KB Insurance Co., Ltd., KB life Insurance, KB Investment Co., Ltd.	KB High-tech Company Investment Fund	100	Korea	Sep. 30	Capital investment
Kookmin Bank, KB Securities Co., Ltd., KB Asset Management Co., Ltd.	KB Everyone TDF 2020 Securities Investment Trust(Bond Mixed) Funds3	28.17	Korea	Sep. 30	Financial investment
Kookmin Bank, KB Securities Co., Ltd., KB Insurance Co., Ltd., KB life Insurance, KB Kookmin Card Co., Ltd., KB Capital Co., Ltd.	KB digital innovation&growth New Technology Business Investment Fund	100	Korea	Sep. 30	Investment trust

160

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Investor	Investee	Ownership interests (%)	Location	Date of financial statements	Industry
KB Insurance Co., Ltd., KB life Insurance Co., Ltd., KB Investment Co., Ltd.	KB-Solidus Global Healthcare Fund3	43.33	Korea	Sep. 30	Capital investment
KB Kookmin Card Co., Ltd., KB Capital Co., Ltd.	KB KOLAO LEASING CO., Ltd	80	Laos	Sep. 30	Auto installment finance
Mirae Asset Triumph Global Privately placed Feeder Investment Trust 1	Mirae Asset Triumph Global Privately placed Master Investment Trust 1	100	Korea	Sep. 30	Capital investment
Mangrove Feeder Fund	Mangrove Master Fund	100	Cayman islands	Sep. 30	Capital investment
LB Irealand Private Real Estate Investment Trust 8	BECKETT ACQUISITION LIMITED	100	Ireland	Sep. 30	Real Estate Activities
KB Securities Co., Ltd., KB Insurance Co., Ltd., KB Asset Management Co., Ltd.	KB Star Fund_KB Value Focus Korea Equity	100	Luxembourg	Sep. 30	Capital investment
KB Securities Co., Ltd., KB Investment Co., Ltd.	KB KONEX Market Vitalization Fund4	46.88	Korea	Sep. 30	Capital investment
KB Securities Co., Ltd., KB Investment Co., Ltd.	KB Neo Paradigm Agriculture Venture	50	Korea	Sep. 30	Capital investment
KB Securities Co., Ltd., KB Investment Co., Ltd.	KB New Paradigm Fisheries Venture Fund)4	33.33	Korea	Sep. 30	Capital investment
KB Wise Star Private Real Estate Feeder Fund 1st.	KB Star Office Private Real Estate Master Investment Trust 25	44.44	Korea	Sep. 30	Capital investment
KB Star Short Term SecuritiesFeeder Fund(Bond)	KB Star Short Term SecuritiesMaster Fund(Bond)	97.69	Korea	Sep. 30	Capital investment
KB Multi-Asset Private Securities Fund 1(BondMixed-ETF)	Global Diversified Multi-AssetSub-Trust Class IA	100	United Kingdom	Sep. 30	Investment trust
KB Multi-Asset Private Securities FundP-1(Bond Mixed)	KB Multi-Asset Private Securities Master FundP-1(Bond Mixed)	100	Korea	Sep. 30	Investment trust

161

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Investor	Investee	Ownership interests (%)	Location	Date of financial statements	Industry
KB Global Equity Solution Securities Feeder Fund(Equity-FoFs))	KB Global Equity Solution Securities Master Fund(Equity-FoFs)	100	Korea	Sep. 30	Capital investment
KB Global Multiasset Income Securities Feeder Fund(Bond Mixed-FoFs)	KB Global Equity Solution Securities Master Fund(Equity-FoFs)	74.52	Korea	Sep. 30	Capital investment
KB Wise Star Private Real Estate Feeder Fund 1st.	KB Star Office Private Real Estate Investment Trust 3	54.51	Korea	Sep. 30	Capital investment
KB Onkookmin Life Income RIF 40 Feeder Fund(Fofs)	KB Onkookmin Life Income RIF 40 Master Fund(Fofs)	96.88	Korea	Sep. 30	Capital investment
KB Onkookmin Life Income RIF 20Feeder Fund(Fofs)	KB Onkookmin Life Income RIF 20Master Fund(Fofs)	96.56	Korea	Sep. 30	Capital investment
JB New Jersey Private Real Estate Investment Trust No. 1	ABLE NJ DSM INVESTMENT REIT	99.18	United States of America	Sep. 30	Real Estate Activities
HYUNDAI ABLE INVESTMENT REIT	HYUNDAI ABLE PATRIOTS PARK, LLC	100	United States of America	Sep. 30	Real Estate Activities
Aquila Global Real Assets Fund No.1 LP	AGRAF Real Estate No.1, Senningerberg	100	Luxembourg	Sep. 30	Asset-backed securitization
AGRAF Real Estate No.1, Senningerberg	AGRAF Real Estate Holding No.1, Senningerberg	100	Luxembourg	Sep. 30	Asset-backed securitization
AGRAF Real Estate Holding No.1, Senningerberg	Vierte CasaLog GmbH & Co. KG and 2 others	94.9	Germany	Sep. 30	Real Estate Activities
AGRAF Real Estate Holding No.1, Senningerberg	HD 1 Grundstucksgesellschaft mbH & Co. KG	94.9	Germany	Sep. 30	Real Estate Activities
AGRAF Real Estate Holding No.1, Senningerberg	Sechste Casalog KG	94.9	Germany	Sep. 30	Real Estate Activities
Able Quant Asia Pacific Feeder Fund(T.E.) Limited	Able Quant Asia Pacific Master Fund Limited	100	Cayman islands	Sep. 30	Capital investment
ABLE NJ DSM INVESTMENT REIT	ABLE NJ DSM, LLC	100	United States of America	Sep. 30	Real Estate Activities
KBFG Securities America Inc.	Global Investment Opportunity Limited	100	Malaysia	Sep. 30	Financial investment and Real Estate Activities
Kookmin Bank	Personal pension trusts and 10 other trusts1	—	Korea	Sep. 30	Trust

162

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

¹ The Group controls the trust because it has power that determines the management performance over the trust and is exposed to variable returns to absorb losses through the guarantees of payment of principal, or payment of principal and fixed rate of return.

² Although the Group holds less than a majority of the investee’s voting rights, the Group controls these investees as it has power over relevant activities in case of default; is significantly exposed to variable returns by providing lines of credit or ABCP purchase commitments or due to acquisition of subordinated debt; and has ability to affect those returns through its power.

³ Although the Group holds less than a majority of the investee’s voting rights, the Group controls the investee as it has power over relevant activities by managing the fund; has significant percentage of ownership; is significantly exposed to variable returns which is affected by the performance of the investees; and has ability to affect the performance through its power.

⁴ Although the Group holds less than a majority of the investee’s voting rights, the Group controls the investee as it has power over relevant activities by taking the role of an operating manager and it is significantly exposed to variable returns which is affected by the performance of the investees, and has ability to affect the performance through its power.

⁵ Although the Group holds less than a majority of the investee’s voting rights, the Group participated directly in establishment of this entity and has power over relevant activities, and is significantly exposed to variable returns which is affected by the performance of the investee, and has ability to affect the performance through its power. Accordingly the Group has control over the investee.

⁶ The Group changed Kookmin Bank Int’l Ltd. (London) to Kookmin Bank London Branch on May 16, 2018, and this event is categorized as business combination of entities under common control. The assets and liabilities acquired under business combinations under common control are recognized at the carrying amounts in the consolidated financial statements of the ultimate parent. The transferred assets and liabilities due to this business combination areW 480,161 million andW 480,023 million, respectively.

⁷ The Group changed Kookmin Bank Hong Kong Ltd. to Kookmin Bank Hong Kong Branch on January 4, 2017, and this event is categorized as business combination of entities under common control. The assets and liabilities acquired under business combinations under common control are recognized at the carrying amounts in the consolidated financial statements of the ultimate parent. The transferred assets and liabilities due to this business combination areW 855,731 million andW 852,993 million, respectively. Kookmin Bank Hong Kong Ltd. is in the process of liquidation.

163

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The condensed financial information of major subsidiaries as of September 30, 2018 and December 31, 2017, and for the nine-month periods ended September 30, 2018 and 2017, is as follows:

(In millions of Korean won)

	September 30, 2018						2018
	Assets		Liabilities		Equity		Operating income		Profit (loss) for the period			Total comprehensive income (loss) for the period
Kookmin Bank1	W	357,812,946	W	331,193,063	W	26,619,883	W	13,283,870	W	2,079,251		W	2,151,868
KB Securities Co., Ltd.1,2		44,632,577		40,139,228		4,493,349		4,872,621		211,155			225,079
KB Insurance Co., Ltd.1,2		33,843,050		30,423,492		3,419,558		8,880,838		260,899			242,842
KB Kookmin Card Co., Ltd.1		20,340,925		16,405,047		3,935,878		2,795,320		245,532			238,872
KB Life Insurance Co., Ltd.1		9,141,085		8,617,490		523,595		1,019,196		13,445			(3,574	)
KB Asset Management Co., Ltd.1		237,060		98,445		138,615		98,182		32,543			32,804
KB Capital Co., Ltd.1,2		9,476,281		8,495,704		980,577		535,385		89,482			89,426
KB Savings Bank Co., Ltd.		1,294,698		1,093,711		200,987		62,594		10,007			9,743
KB Real Estate Trust Co., Ltd.		276,702		50,182		226,520		89,149		37,876			37,876
KB Investment Co., Ltd.1		466,607		323,521		143,086		53,613		3,839			3,839
KB Credit Information Co., Ltd.		26,375		11,517		14,858		25,886		(270	)		(282	)
KB Data System Co., Ltd.		39,394		23,375		16,019		91,588		1,413			1,315

164

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)

	December 31, 2017						2017
	Assets		Liabilities		Equity		Operating income		Profit (loss) for the period			Total comprehensive income (loss) for the period
Kookmin Bank1	W	329,765,927	W	304,442,493	W	25,323,434	W	13,171,881	W	1,841,263		W	2,088,281
KB Securities Co., Ltd.1,2		37,351,680		32,936,024		4,415,656		4,410,099		160,057			143,160
KB Insurance Co., Ltd.1,2		32,351,778		29,128,747		3,223,031		5,671,371		281,277			320,390
KB Kookmin Card Co., Ltd.1		17,658,310		13,616,481		4,041,829		2,471,522		233,883			242,528
KB Life Insurance Co., Ltd.1		9,125,741		8,586,328		539,413		991,511		23,274			3,247
KB Asset Management Co., Ltd.1		201,481		44,860		156,621		87,856		38,667			38,811
KB Capital Co., Ltd.1,2		8,743,672		7,803,920		939,752		435,600		104,358			103,757
KB Savings Bank Co., Ltd.		1,158,829		960,812		198,017		60,308		19,482			19,448
KB Real Estate Trust Co., Ltd.		246,685		47,355		199,330		53,194		24,686			24,760
KB Investment Co., Ltd.1		355,763		218,671		137,092		31,341		(4,556	)		(6,085	)
KB Credit Information Co., Ltd.		26,121		10,979		15,142		23,681		(1,996	)		(2,003	)
KB Data System Co., Ltd.		41,945		27,240		14,705		80,190		784			728

¹ Financial information is based on its consolidated financial statements.

² The amount includes the fair value adjustments due to the merger.

165

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Nature of the risks associated with interests in consolidated structured entities

The terms of contractual arrangements to provide financial support to a consolidated structured entity

• The Group has provided payment guarantees ofW2,767,232 million to KBD Tower 1st L.L.C. and other subsidiaries.

• The Group provides capital commitment to KB Wise Star Private Real Estate Feeder Fund 1st. and 10 other subsidiaries. The unexecuted amount of the investment agreement isW 165,562 million. Based on the capital commitment, the Group is subject to increase its investment upon the request of the asset management company or the additional agreement among investors.

• The Group provides the guarantees of payment of principal, or principal and fixed rate of return in case the operating results of the trusts are less than the guaranteed principal, or principal and fixed rate of return.

Changes in subsidiaries

The subsidiaries newly included in consolidation during the nine-month period ended September 30, 2018, are as follows:

Company	Description
Tong Yang Safe Plus Qualified Private TrustS-8(Bond) and 18 others	Holds over than a majority of the ownership interests
KBD Tower 1st L.L.C. and 26 others	Holds the power in the case of default and exposed to variable returns by providing lines of credit, ABCP purchase commitments or acquiring subordinated debt
KB Global Private Real Estate Debt Fund 1 and 16 others	Holds the power to determine the operation of the trust and exposed to variable returns by holding significant amount of ownership interests
KB Pre IPO Secondary Venture Fund 2nd and 3 other	The Group has a power over the investee as a general partner, is significantly exposed to variable returns due to significant percentage of ownership.

The subsidiaries excluded from consolidation during the nine-month period ended September 30, 2018, are as follows:

Company	Description
Able Vison 1st Co., Ltd and 13 others	Lost the right of variable returns due to the releasing debt
Wise Mobile 12th Securitization Co., Ltd. and 9 others	Settlement
LIME ORANGE PRIVATE EQUITY FUND 6 and 5 others	Disposal
KB Everyone TDF 2025 Securities Investment Trust—Bond Balanced-Fund of Funds and 4 others	Ownership decrease

166

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

40. Unconsolidated Structured Entity

The nature, purpose and activities of the unconsolidated structured entities and how the structured entities are financed, are as follows:

Nature	Purpose	Activity	Method of Financing
Asset-backed securitization	Early cash generation through transfer of securitization assets Fees earned as services to SPC, such as providing lines of credit and ABCP purchase commitments	Fulfillment of Asset-backed securitization plan Purchase and transfer of securitization assets Issuance and repayment of ABS and ABCP	Issuance of ABS and ABCP based on securitization assets
Project Financing	Granting PF loans to SOC and real estate Granting loans to ships/aircrafts SPC	Construction of SOC and real estate Building ships/ construction and purchase of aircrafts	Loan commitments through Credit Line, providing lines of credit and investment agreements
Trust	Management of financial trusts; •  Development trust •  Mortgage trust •  Management trust •  Disposal trust •  Distribution and management trust •  Other trusts	Development, management, and disposal of trusted real estate assets Payment of trust fees and allocation of trust profits.	Distribution of trusted real estate assets and financing of trust company Public auction of trusted real estate assets and financing of trust company
Investment funds	Investment in beneficiary certificates	Management of fund assets	Sales of beneficiary certificate instruments
	Investment in PEF and partnerships	Payment of fund fees and allocation of fund profits	Investment of managing partners and limited partners

Details of scale of unconsolidated structured entities and nature of the risks associated with the Group’s interests in unconsolidated structured entities as of September 30, 2018, and December 31, 2017, are as follows:

167

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	September 30, 2018
	Asset-backed securitization		Project financing		Trusts		Funds		Others		Total
Total assets of unconsolidated structured entity	W	119,843,772	W	31,098,486	W	761,755	W	122,131,345	W	12,160,391	W	285,995,749
Carrying amount on financial statements
Assets
Financial assets at fair value through profit or loss		3,280,525		85,566		—		7,840,011		17,024		11,223,126
Derivative financial assets		5,218		—		—		1,759		—		6,977
Loans at amortized cost		648,912		3,114,122		54,500		381,661		519,731		4,718,926
Financial investments		6,053,086		—		—		6,217		—		6,059,303
Investment in associates and joint ventures		—		—		—		238,128		—		238,128
Other assets		3,887		5,190		140,633		48,111		306		198,127
	W	9,991,628	W	3,204,878	W	195,133	W	8,515,887	W	537,061	W	22,444,587
Liabilities
Deposits	W	595,758	W	709,189	W	—	W	43,311	W	7,126	W	1,355,384
Derivative financial liabilities		1,984		—		—		4,935		—		6,919
Other liabilities		16,016		3,149		—		44		1,429		20,638
	W	613,758	W	712,338	W	—	W	48,290	W	8,555	W	1,382,941
Maximum exposure to loss1
Holding assets	W	9,991,628	W	3,204,878	W	195,133	W	8,515,887	W	537,061	W	22,444,587
Purchase and investment commitments		582,152		—		—		3,176,670		—		3,758,822
Unused credit		2,268,823		5,177		—		21,104		—		2,295,104
Payment guarantee and loan commitments		451,200		1,399,680		—		—		—		1,850,880
	W	13,293,803	W	4,609,735	W	195,133	W	11,713,661	W	537,061	W	30,349,393
Methods of determining the maximum exposure to loss		Providing lines of credit and purchase commitments		Loan commitments /investment agreements / purchase commitments and acceptances and guarantees		Dividends by results trust: Total amount of trust exposure		Investments / loans and capital commitments		Loan commitments

168

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

(In millions of Korean won)	December 31, 2017
	Asset-backed securitization		Project financing		Trusts		Funds		Others		Total
Total assets of unconsolidated structured entity	W	128,573,461	W	33,153,741	W	482,900	W	101,598,227	W	9,613,570	W	273,421,899
Carrying amount on financial statements Assets
Financial assets at fair value through profit or loss		2,277,080		73,157		—		547,258		—		2,897,495
Derivative financial assets		1,136		—		—		118		—		1,254
Loans		833,380		3,366,675		54,500		266,653		393,664		4,914,872
Financial investments		6,826,097		13,104		300		5,788,925		20,619		12,649,045
Investment in associates and joint ventures		—		—		—		202,816		—		202,816
Other assets		11,699		5,874		37,972		962		307		56,814
	W	9,949,392	W	3,458,810	W	92,772	W	6,806,732	W	414,590	W	20,722,296
Liabilities
Deposits	W	484,889	W	755,242	W	—	W	38,657	W	3,985	W	1,282,773
Derivative financial liabilities		1,487		—		—		2,792		—		4,279
Other liabilities		11,292		44		—		48		—		11,384
	W	497,668	W	755,286	W	—	W	41,497	W	3,985	W	1,298,436
Maximum exposure to loss1
Holding assets	W	9,949,392	W	3,458,810	W	92,772	W	6,806,732	W	414,590		20,722,296
Purchase and investment commitments		964,106		—		—		1,301,784		—		2,265,890
Unused credit		2,299,236		10,000		—		1,203,917		16,000		3,529,153
Payment guarantee and loan commitments		382,300		1,385,722		—		—		—		1,768,022
	W	13,595,034	W	4,854,532	W	92,772	W	9,312,433	W	430,590	W	28,285,361
Methods of determining the maximum exposure to loss		Providing lines of credit and purchase commitments		Loan commitments /investment agreements / purchase commitments and acceptances and guarantees		Dividends by results trust: Total amount of trust exposure		Investments / loans and capital commitments		Loan commitments

¹ Maximum exposure to loss includes the asset amounts, after deducting loss (provision for assets, impairment losses and others), recognized in the financial statements of the Group.

169

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

41. Related Party Transactions

Profit and loss arising from transactions with related parties for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)		2018		2017
Associates and joint ventures
KB Insurance Co., Ltd.1	Interest income	W	—	W	12
	Interest expense		—		202
	Fee and commission income		—		8,994
	Fee and commission expense		—		1,021
	Gains on financial assets/liabilities at fair value through profit or loss(under Korean IFRS 1039)		—		796
	Losses on financial assets/liabilities at fair value through profit or loss(under Korean IFRS 1039)		—		18,717
	Other operating income		—		16,743
	Other operating expense		—		633
	General and administrative expenses		—		5,601
	Provision for credit losses		—		12
	Othernon-operating income		—		51
Balhae Infrastructure Fund	Fee and commission income		4,983		5,493
Korea Credit Bureau Co., Ltd.	Interest expense		90		87
	Fee and commission income		906		1,043
	Fee and commission expense		1,118		2,282
	General and administrative expenses		—		1,614
	Provision for credit losses		—		1
KoFC KBIC Frontier Champ2010-5(PEF)	Fee and commission income		197		—
KB GwS Private Securities Investment Trust	Fee and commission income		636		636
Incheon Bridge Co., Ltd.	Interest income		6,939		23,096
	Interest expense		221		230
	Fee and commission income		3		—
	Fee and commission expense		1		—
	Insurance income		293		119
	Reversal for credit losses		7		42
Jaeyang Industry Co., Ltd.	Interest income		—		98
	Reversal for credit losses		—		6
KoFC POSCO HANHWA KB Shared Growth Private Equity Fund No. 2	Fee and commission income		165		292
Aju Good Technology Venture Fund	Interest expense		23		11

170

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

KB Star Office Private Real Estate Investment Trust No.1	Interest income	277	277
	Interest expense	69	44
	Fee and commission income	325	325
RAND Bio Science Co., Ltd.	Interest expense	3	14
Inno Lending Co., Ltd. 1	Fee and commission income	1	2
	Interest expense	—	1
KBIC Private Equity Fund No. 31	Fee and commission income	—	38
SY Auto Capital Co., Ltd.	Interest income	936	617
	Interest expense	—	20
	Fee and commission income	44	33
	Fee and commission expense	596	2,242
	Insurance income	26	21
	Other operating income	463	580
	Other operating expense	287	87
	Reversal for credit losses	—	32
	Provision for credit losses	10	—
	Othernon-operating income	—	29
Food Factory Co., Ltd.	Interest income	7	15
	Insurance income	4	1
	Fee and commission expense	1	—
	Gains on financial assets/liabilities at fair value through profit or loss	6	—
	Reversal for credit losses	1	—
	Provision for credit losses	—	45
KB Pre IPO Secondary Venture Fund 1st	Interest expense	22	—
	Fee and commission income	83	56
Builton Co., Ltd.	Interest income	3	—
	Insurance income	1	1
	Losses on financial assets/liabilities at fair value through profit or loss	1	—
KB Private Equity Fund III	Fee and commission income	400	137
Wise Asset Management Co., Ltd.	Interest expense	7	4
Acts Co., Ltd.	Interest income	—	184
	Insurance income	1	1
	Losses on financial assets/liabilities at fair value through profit or loss	1,959	—
	Losses on financial assets/liabilities at fair value through profit or loss (under Korean IFRS 1039)	—	202
	Provision for credit losses	—	71
	General and administrative expenses	—	113
	Othernon-operating expense	1,138	—
COBI Co., Ltd.1	Interest income	—	183

171

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

	Provision for credit losses	—	89
Dongjo Co., Ltd.	Reversal for credit losses	31	1
	Insurance income	1	—
A-PRO Co., Ltd.	Insurance income	3	—
POSCO-KB Shipbuilding Fund	Fee and commission income	368	135
	Interest expense	62	—
Dae-A Leisure Co., Ltd.	Interest expense	7	1
Paycoms Co., Ltd.	Interest income	7	38
	Insurance income	1	—
	Gains on financial assets/liabilities at fair value through profit or loss	70	—
	Provision for credit losses	—	35
Bungaejangter Inc.	Interest income	60	8
	Provision for credit losses	—	36
Faromancorporation Co.,Ltd.1	Reversal for credit losses	—	345
Big Dipper Co., Ltd.	Reversal for credit losses	2	—
KB-KDBC New Technology Business Investment Fund	Interest expense	28	—
	Fee and commission income	247	—
KBTS Technology Venture Private Equity Fund	Fee and commission income	223	—
KB-SJ Tourism Venture Fund	Fee and commission income	230	—
JLK INSPECTION Inc.	Interest income	6	—
TESTIAN Inc.	Interest income	4	—
	Gains on financial assets/liabilities at fair value through profit or loss	92	—
IWON ALLOY CO.,LTD.	Insurance income	1	—
RMGPBio-Pharma Investment Fund, L.P.	Othernon-operating income	2	—
KB No.8 Special Purpose Acquisition Company1	Interest income	—	56
	Interest expense	17	27
	Losses on financial assets/liabilities at fair value through profit or loss	2,330	—
	Losses on financial assets/liabilities at fair value through profit or loss (under Korean IFRS 1039)	—	95
	Provision for credit losses	—	6
KB No.9 Special Purpose Acquisition Company	Interest income	—	57
	Interest expense	31	27
	Losses on financial assets/liabilities at fair value through profit or loss	415	—
	Losses on financial assets/liabilities at fair value through profit or loss (under Korean IFRS 1039)	—	60
	Gains on financial assets/liabilities at fair value through profit or loss	146	—
	Provision for credit losses	—	6

172

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

KB No.10 Special Purpose Acquisition Company	Interest income	—	37
	Interest expense	22	17
	Losses on financial assets/liabilities at fair value through profit or loss (under Korean IFRS 1039)	—	35
	Gains on financial assets/liabilities at fair value through profit or loss	124	—
KB No.11 Special Purpose Acquisition Company	Interest income	—	17
	Fee and commission income	��	150
	Gains on financial assets/liabilities at fair value through profit or loss	90	—
	Gains on financial assets/liabilities at fair value through profit or loss(under Korean IFRS 1039)	—	825
Keystone-Hyundai Securities No. 1 Private Equity Fund	Fee and commission income	58	65
Doosung Metal Co., Ltd.	Insurance income	1	1
Other
Retirement pension	Fee and commission income	658	607
	Interest expense	1	2

¹ Excluded from the Group’s related party as of September 30, 2018.

Details of receivables and payables, and related allowances for loan losses arising from the related party transactions as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)

Associates and joint ventures		September 30, 2018		December 31, 2017
Balhae Infrastructure Fund	Other assets	W	1,669	W	1,669
Korea Credit Bureau Co., Ltd.	Loans at amortized cost (Gross amount)		24		22
	Deposits		10,350		25,513
	Provisions		—		1
	Other liabilities		19		469
KB GwS Private Securities Investment Trust	Other assets		427		641
Incheon Bridge Co., Ltd.	Financial assets at fair value through profit or loss		31,252		—
	Loans at amortized cost (Gross amount)		161,877		200,414
	Allowances for loan losses		13		288
	Other assets		665		710
	Deposits		46,184		48,795
	Provisions		11		3
	Insurance contract liabilities		186		189
	Other liabilities		42		29

173

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

KoFC POSCO HANHWA KB Shared Growth Private Equity Fund No. 2	Other assets	45	176
Terra Co., Ltd.	Deposits	—	10
Jungdo Co., Ltd.	Deposits	4	4
Dongjo Co., Ltd.	Loans at amortized cost (Gross amount)	—	116
	Allowances for loan losses	—	1
	Insurance contract liabilities	2	1
A-PRO Co., Ltd.	Insurance contract liabilities	4	—
	Deposits	6,000	—
Dae-A Leisure Co., Ltd.	Deposits	1,174	466
	Other liabilities	5	14
Aju Good Technology Venture Fund	Deposits	1,490	2,771
	Other liabilities	1	1
Jungdong Steel Co., Ltd.	Deposits	3	3
Doosung Metal Co., Ltd.	Deposits	2	—
	Insurance contract liabilities	—	1
KB Star Office Private Real Estate Investment Trust No.1	Loans at amortized cost (Gross amount)	10,000	10,000
	Allowances for loan losses	4	3
	Other assets	245	136
	Deposits	7,774	6,962
	Other liabilities	43	45
RAND Bio Science Co., Ltd.	Deposits	655	1,032
	Loans at amortized cost (Gross amount)	1	1
	Other liabilities	—	4
Inno Lending Co., Ltd. 1	Loans at amortized cost (Gross amount)	—	2
	Deposits	—	41
SY Auto Capital Co., Ltd.	Loans at amortized cost (Gross amount)	45,079	40,057
	Allowances for loan losses	10	—
	Other assets	87	51
	Deposits	8	6
	Provisions	15	29
	Insurance contract liabilities	13	8
	Other liabilities	52	349
Food Factory Co., Ltd.	Financial assets at fair value through profit or loss	507	—
	Loans at amortized cost (Gross amount)	200	679
	Allowances for loan losses	—	44
	Other assets	—	1
	Deposits	41	1
	Insurance contract liabilities	4	3

174

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

KB Pre IPO Secondary Venture Fund 1st	Other assets	28		28
	Deposits	2,143		—
	Other liabilities	1		—
Builton Co., Ltd.	Other assets	1		—
	Financial assets at fair value through profit or loss	399		—
	Loans at amortized cost (Gross amount)	—		1
	Deposits	43		26
	Insurance contract liabilities	1		1
Wise Asset Management Co., Ltd.	Deposits	309		340
	Other liabilities	1		1
Acts Co., Ltd.	Loans at amortized cost (Gross amount)	—		1,927
	Allowances for loan losses	—		161
	Intangible assets	530		1,275
	Deposits	3		4
	Insurance contract liabilities	—		1
	Other liabilities	530		—
POSCO-KB Shipbuilding Fund	Other assets	123		123
	Deposits	6,800		—
	Other liabilities	5		—
Bungaejanter. Inc.	Loans at amortized cost (Gross amount)	—		425
	Allowances for loan losses	—		36
Paycoms Co., Ltd.	Financial assets at fair value through profit or loss	977		—
	Loans at amortized cost (Gross amount)	—		1,066
	Allowances for loan losses	—		89
Daesang Techlon Co., Ltd.	Deposits	2		2
Big Dipper Co., Ltd.	Loans at amortized cost (Gross amount)	5		6
	Deposits	11		—
	Provisions	—		2
KB-KDBC New Technology Business Investment Fund	Deposits	3,581		7,500
	Other liabilities	1	��	4
A-PRO Co., Ltd.
JLK INSPECTION Inc.	Financial assets at fair value through profit or loss	800		—
TESTIAN Inc.	Other assets	1		—
	Financial assets at fair value through profit or loss	576		—
CARLIFE CO.,LTD.	Deposits	2		—
COMPUTERLIFE CO.,LTD.	Deposits	7		—
RMGPBio-Pharma Investment Fund, L.P.	Other liabilities	43		—
KB No.8 Special Purpose Acquisition Company1	Derivative financial assets	—		2,122
	Loans at amortized cost (Gross amount)	—		2,296
	Deposits	—		2,339
	Other liabilities	—		19

175

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

KB No. 9 Special Purpose Acquisition Company	Financial assets at fair value through profit or loss	2,481	—
	Derivative financial assets	1,938	2,241
	Loans at amortized cost (Gross amount)	—	2,356
	Deposits	2,302	2,309
	Other liabilities	30	38
KB No. 10 Special Purpose Acquisition Company	Financial assets at fair value through profit or loss	2,000	—
	Derivative financial assets	1,676	1,930
	Loans at amortized cost (Gross amount)	—	1,603
	Deposits	1,683	1,698
	Other liabilities	3	10
KB No. 11 Special Purpose Acquisition Company	Financial assets at fair value through profit or loss	729	—
	Derivative financial assets	915	846
	Loans at amortized cost (Gross amount)	—	697
Key management	Loans at amortized cost (Gross amount)	2,450	1,665
	Other assets	3	2
	Deposits	10,416	8,707
	Insurance contract liabilities	999	809
	Other liabilities	175	124
Other
Retirement pension	Other assets	550	348
	Other liabilities	5,857	4,286

¹  The amounts are not disclosed as the entity is excluded from the Group’s related party as of September 30, 2018.

According to Korean IFRS 1024, the Group includes associates, key management (including family members), and post-employment benefit plans of the Group and its related party companies in the scope of related parties. Additionally, the Group discloses balances (receivables and payables) and other amounts arising from the related party transactions in the notes to the consolidated interim financial statements. Refer to Note 12 for details on investments in associates and joint ventures.

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

176

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Significant lending transactions with related parties for nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Beginning		Increase		Decrease			Ending
Associates
Korea Credit Bureau Co., Ltd.	W	22	W	—	W	2		W	24
Incheon Bridge Co., Ltd.		200,414		31,252		(38,537	)		193,129
Dongjo Co., Ltd.		116		—		(116	)		—
KB Star Office Private Real Estate Investment Trust No. 1		10,000		—		—			10,000
RAND Bio Science Co., Ltd.		1		—		—			1
Inno Lending Co., Ltd. 1		2		—		(2	)		—
SY Auto Capital Co., Ltd.		40,057		44,753		(39,731	)		45,079
Food Factory Co., Ltd.		679		507		(479	)		707
Builton Co., Ltd.		1		399		(1	)		399
Acts Co., Ltd.		1,927		—		(1,927	)		—
Bungaejanter. Inc.		425		—		(425	)		—
Paycoms Co., Ltd.		1,066		977		(1,066	)		977
Big Dipper Co., Ltd.		6		—		(1	)		5
JLK INSPECTION Inc.		—		800		—			800
TESTIAN Inc.		—		576		—			576
KB No.8 Special Purpose Acquisition Company1		2,296		—		(2,296	)		—
KB No. 9 Special Purpose Acquisition Company		2,356		2,481		(2,356	)		2,481
KB No. 10 Special Purpose Acquisition Company		1,603		2,000		(1,603	)		2,000
KB No. 11 Special Purpose Acquisition Company		697		729		(697	)		729
(In millions of Korean won)	2017
	Beginning		Increase		Decrease			Ending
Associates
KB Insurance Co., Ltd.1	W	6,791	W	—	W	(6,791	)	W	—
Korea Credit Bureau Co., Ltd.		14		12		—			26
Incheon Bridge Co., Ltd.		209,105		202,511		(209,094	)		202,522
Jaeyang Industry Co., Ltd.		303		—		(303	)		—
KB Star Office Private Real Estate Investment Trust No. 1		10,000		—		—			10,000
RAND Bio Science Co., Ltd.		1		—		—			1
SY Auto Capital Co., Ltd.		30,049		19,996		(19,997	)		30,048
Food Factory Co., Ltd.		—		500		—			500
Builton Co., Ltd.		—		1		—			1
QUICKET Co., Ltd.		—		400		—			400
KB No.8 Special Purpose Acquisition Company1		2,490		—		—			2,490
KB No. 9 Special Purpose Acquisition Company		2,584		—		—			2,584
KB No. 10 Special Purpose Acquisition Company		1,495		295		—			1,790
KB No. 11 Special Purpose Acquisition Company		790		—		—			790

¹ Excluded from the Group’s related party as of September 30, 2018.

177

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Unused commitments to related parties as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)		September 30, 2018		December 31, 2017
Associates and joint ventures
Balhae Infrastructure Fund	Purchase of security investment	W	10,453	W	12,564
Korea Credit Bureau Co., Ltd.	Unused commitments of credit card		106		108
KoFC KBIC Frontier Champ2010-5(PEF)	Purchase of security investment		2,150		2,150
KB GwS Private Securities Investment Trust	Purchase of security investment		876		876
Aju Good Technology Venture Fund	Purchase of security investment		4,730		11,768
Incheon Bridge Co., Ltd.	Loan commitments in Korean won		20,000		20,000
	Unused commitments of credit card		98		86
KoFC POSCO HANHWA KB Shared Growth Private Equity Fund No. 2	Purchase of security investment		12,550		12,550
SY Auto Capital Co., Ltd.	Loan commitments in Korean won		10,000		10,000
	Unused commitments of credit card		71		92
KB No. 9 Special Purpose Acquisition Company	Unused commitments of credit card		1		1
KB No. 10 Special Purpose Acquisition Company	Unused commitments of credit card		5		5
RAND Bio Science Co., Ltd.	Unused commitments of credit card		24		24
Builton Co., Ltd.	Unused commitments of credit card		5		4
Food Factory Co., Ltd.	Unused commitments of credit card		11		11
Inno Lending Co., Ltd.	Unused commitments of credit card		—		13
Big Dipper Co., Ltd.	Unused commitments of credit card		95		94
KB-KDBC New Technology Business Investment Fund	Purchase of security investment		10,000		15,000
KBTS Technology Venture Private Equity Fund	Purchase of security investment		12,788		—
KB-SJ Tourism Venture Fund	Purchase of security investment		3,500		—
Key management	Loan commitments in Korean won		1,342		984

178

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Compensation to key management for the nine-month periods ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won)	2018
	Short-term employee benefits		Post- employment benefits		Share-based payments		Total
Registered directors (executive)	W	1,882	W	49	W	1,158	W	3,089
Registered directors(non-executive)		674		—		—		674
Non-registered directors		5,276		184		3,217		8,677
	W	7,832	W	233	W	4,375	W	12,440

(In millions of Korean won)	2017
	Short-term employee benefits		Post- employment benefits		Share-based payments		Total
Registered directors (executive)	W	1,476	W	57	W	1,738	W	3,271
Registered directors(non-executive)		617		—		—		617
Non-registered directors		6,327		267		9,811		16,405
	W	8,420	W	324	W	11,549	W	20,293

Collateral received from related parties as of September 30, 2018 and December 31, 2017, are as follows:

(In millions of Korean won)		September 30, 2018		December 31, 2017
Associates
KB Star Office Private Real Estate Investment Trust No. 1	Real estate	W	13,000	W	13,000
Key management	Time deposits and others		401		388
	Real estate		3,902		2,287

As of September 30, 2018, Incheon Bridge Co., Ltd., a related party, provides fund management account, insurance for civil engineering completion, and management rights as senior collateral amounting toW 611,000 million to a financial syndicate that consists of the Group and five other institutions, and as subordinated collateral amounting toW 384,800 million to subordinated debt holders that consist of the Group and two other institutions. Also, it provides certificate of credit guarantee amounting toW 400,000 million as collateral to a financial syndicate consisting of the Group and five other institutions.

42. Business Combination

On July 6, 2018, the Group obtained control over KB Daehan Specialized Bank (which was renamed from Tomato Specialized Bank in March 2018) in Cambodia by acquiring 90% share of interests.

179

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Regarding the business combination above, the amounts of the consideration transferred and the assets and liabilities acquired at the acquisition date are as follows:

(In millions of Korean won)

	September 30, 2018
Consideration
Cash and cash equivalents	W	21,654
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash and Due from financial institutions		11,995
Loans at amortized cost		8,484
Property and equipment		765
Intangible assets		17
Other assets		1,389
Total assets		22,650
Other liabilities		273
Total liabilities		273
Fair value of identifiable assets		22,377
Non-controlling interest		2,238
Goodwill		1,515

As a result of business combination goodwill has been recognized, and the Group has accounted for as an intangible asset in the consolidated financial statements.

180

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

43. Adoption of Korean IFRS 1109Financial Instruments

The Group has adopted Korean IFRS 1109Financial Instruments,which was issued on September 25, 2015, for the first time for their annual reporting period commencing January 1, 2018. Impact of the adoption of Korean IFRS 1109 on the Group’s consolidated financial statements is as follows:

The Group’s categories and carrying amounts of financial assets per Korean IFRS 1039 and 1109 as of the initial application date are as follows:

(In millions of Korean won)
Measurement categories		Carrying amounts
December 31, 2017 (Korean IFRS 1039)	January 1, 2018 (Korean IFRS 1109)	Korean IFRS 10391			Reclassification			Remeasurement			Korean IFRS 11091
Cash and due from financial institutions	Financial assets at amortized cost	W	19,817,825		W	(2,795,301	)	W		(1,797)	W	17,020,727
	Financial assets at fair value through profit or loss2		—			2,795,702			(12,881	)		2,782,821
			19,817,825			401			(14,678	)		19,803,548
Financial assets at fair value through profit or loss
Financial assets held for trading: debt securities	Financial assets at fair value through profit or loss		25,168,338
Financial assets held for trading: equity securities			4,935,100	��
Financial assets held for trading: others			73,855			—			—			32,227,345
Financial assets designated at fair value through profit or loss3			2,050,052
			32,227,345			—			—			32,227,345
Derivative financial instruments held for trading	Derivative financial instruments held for trading		2,998,042			(43,787	)		—			2,954,255
Derivative instruments designated for hedging	Derivative instruments designated for hedging		312,124			—			—			312,124
			3,310,166			(43,787	)		—			3,266,379
Loans	Financial assets at amortized cost		290,122,838			(608,156	)		(544,468	)		288,970,214
	Financial assets at fair value through profit or loss2		—			616,666			12,557			629,223
			290,122,838			8,510			(531,911	)		289,599,437

181

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

Financial investments
Available-for-sale financial assets: debt securities	Financial assets at fair value through other comprehensive income		38,959,401		(5,347,493	)		—			33,611,908
	Financial assets at fair value through profit or loss2		—		2,511,902			—			2,511,902
	Financial assets at amortized cost		—		2,835,591			4,118			2,839,709
Available-for-sale financial assets: equity securities	Financial assets measured at fair value through other comprehensive income		9,156,862		(6,789,392	)		275			2,367,745
	Financial assets at fair value through profit or loss2		—		6,800,720			(88	)		6,800,632
Held-to-maturity financial assets	Financial assets at amortized cost		18,491,980		(274,020	)		4,116			18,222,076
	Financial assets at fair value through profit or loss2		—		274,020			(4,359	)		269,661
			66,608,243		11,328			4,062			66,623,633
Other financial assets	Financial assets at amortized cost		10,195,015		(1,636	)		(5,070	)		10,188,309
		W	422,281,432	W	(25,184	)	W	(547,597	)	W	421,708,651

¹  Net of allowance.

²  In accordance with Korean IFRS 1104, the Group has designated the financial assets related with insurance contract (cash and due from financial institutions amounting toW 186,293 million, loans amounting toW 587 million,available-for-sale financial assets amounting toW 6,349,091 million, andheld-to-maturity investments amounting toW 57,386 million) to use overlay approach. Regarding the designated financial assets, the Group has reclassified the profit or loss amount that the Group would have applied Korean IFRS 1039, instead of Korean IFRS 1109.

³  Financial assets amounting toW 2,050,052 million under Korean IFRS 1039, which were classified as financial assets designated at fair value through profit or loss, have been reclassified to financial assets at fair value through profit or loss by applying Korean IFRS 1109 without designation of fair value option.

182

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The Group’s categories and carrying amounts of financial liability per Korean IFRS 1039 and 1109 as of the initial application date are as follows:

(In millions of Korean won)
Measurement categories		Carrying amounts
December 31, 2017 (Korean IFRS 1039)	January 1, 2018 (Korean IFRS 1109)	Korean IFRS 1039		Reclassification			Remeasurement		Korean IFRS 1109
Financial liabilities held for trading	Financial liabilities at fair value through profit or loss	W	1,944,770	W	—		W	—	W	1,944,770
Financial liabilities designated at fair value through profit or loss	Financial liabilities designated at fair value through profit or loss		10,078,288		—			—		10,078,288
Derivative financial instruments held for trading	Derivative financial instruments held for trading		3,054,614		(3,737	)		—		3,050,877
Derivative instruments designated as fair value hedge	Derivative instruments designated as fair value hedge		88,151		(404	)		—		87,747
Deposits	Financial liabilities at amortized cost		255,800,048		—			—		255,800,048
Debts	Financial liabilities at amortized cost		28,820,928		—			—		28,820,928
Debentures	Financial liabilities at amortized cost		44,992,724		—			—		44,992,724
Other financial liabilities	Financial liabilities at amortized cost		18,330,004		(21,043	)		2,899		18,311,860
		W	363,109,527	W	(25,184	)	W	2,899	W	363,087,242

183

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

The carrying amounts of the categories of financial assets per Korean IFRS 1109 as of the initial application date are as follows:

(In millions of Korean won)	January 1, 2018
	Financial assets at fair value through profit or loss		Financial assets at fair value through other comprehensive income		Financial assets at amortized cost1		Derivative instruments designated for hedging		Total
Cash and due from financial institutions	W	—	W	—	W	17,020,727	W	—	W	17,020,727
Financial assets at fair value through profit or loss		45,221,584		—		—		—		45,221,584
Derivative instruments designated for trading		2,954,255		—		—		—		2,954,255
Derivative instruments designated for hedging		—		—		—		312,124		312,124
Loans at amortized cost		—		—		288,970,214		—		288,970,214
Financial investments		—		35,979,653		21,061,785		—		57,041,438
Other financial assets		—		—		10,188,309		—		10,188,309
	W	48,175,839	W	35,979,653	W	337,241,035	W	312,124	W	421,708,651

¹  Net of allowance.

184

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

On January 1, 2018 (the date of the initial application of Korean IFRS 1109), there were no financial assets at fair value through profit or loss reclassified to financial assets at amortized cost or financial assets at fair value through other comprehensive income.

On January 1, 2018 (the date of the initial application of Korean IFRS 1109), the Group classified certain financial assets, other than financial assets at amortized cost as at January 1, 2018, to amortized cost as follows:

(In millions of Korean won)	Measurement categories before reclassification		Fair value		Recognizable valuation gain or loss if not reclassified
Currency stabilization bond		Available-for-sale	W	1,975,001	W	(248	)
Asset backed securities		Available-for-sale		860,590		(4,046	)
			W	2,835,591	W	(4,294	)

The reconciliation of the ending allowances/provision in accordance with Korean IFRS 1039 to the opening allowances in accordance with Korean IFRS 1109 is as follows:

(In millions of Korean won)

Measurement categories		Allowances/Provision
December 31, 2017 (Korean IFRS 1039)	January 1, 2018 (Korean IFRS 1109)	Korean IFRS 10391		Reclassification			Remeasurement		Korean IFRS 11091
Loans and receivables
Due from financial institutions	Financial assets at amortized cost	W	—	W	—		W	1,797	W	1,797
Loans	Financial assets at amortized cost		2,064,469		—			544,468		2,608,937
	Financial assets at fair value through profit or loss		45,763		(45,763	)		—		—
Other financial assets	Financial assets at amortized cost		104,813		—			5,086		109,899
Available-for-sale
Debt securities	Financial assets at fair value through other comprehensive income		—		—			4,433		4,433
	Financial assets at amortized cost		—		—			176		176
Held-to-maturity securities
Debt securities	Financial assets at amortized cost		—		—			1,530		1,530
			2,215,045		(45,763	)		557,490		2,726,772
Unused commitment and guarantee			267,011		—			28,637		295,648
Financial guarantee			2,682		—			2,175		4,857
		W	2,484,738	W	(45,763	)	W	588,302	W	3,027,277

185

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

On January 1, 2018 (the date of the initial application of Korean IFRS 1109), the impact on other comprehensive income due to financial liabilities designated at fair value through profit or loss is as follows:

(In millions of Korean won)	Impact of application
December 31, 2017 (before adoption of Korean IFRS 1109)	W	—
Valuation loss from own credit risk of financial liabilities designated at fair value through profit or loss		(14,397	)
Tax effect		3,959
January 1, 2018 (after adoption of Korean IFRS 1109)	W	(10,438	)

On January 1, 2018 (the date of the initial application of Korean IFRS 1109), the impact on other comprehensive income due to financial assets designated at fair value through other comprehensive income and others is as follows:

(In millions of Korean won)	Impact of application
December 31, 2017 (before adoption of Korean IFRS 1109)	W	537,668
Change of classification/subsequent measurement category: available for sale to financial assets at amortized cost		4,295
Change of classification/subsequent measurement category: available for sale to financial assets at fair value through profit or loss		145,670
Reclassification of valuation gain or loss of derivatives from equity securities at other comprehensive income		5,854
Recognition of expected credit losses on debt securities at other comprehensive income		4,433
Reversal of impairment on equity securities at other comprehensive income		(617,004	)
Changes in other comprehensive income of associates and joint ventures		(3,611	)
Application of overlay approach		(10,903	)
Adjustment of shares between contracting party		3,809
Others		391
Tax effect		128,028
January 1, 2018 (after adoption of Korean IFRS 1109)	W	198,630

186

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

September 30, 2018 and 2017 (Unaudited), and December 31, 2017

On January 1, 2018 (the date of the initial application of Korean IFRS 1109), the impact on retained earnings is as follows:

(In millions of Korean won)	Impact of application
December 31, 2017 (before adoption of Korean IFRS 1109)	W	15,044,204
Change of classification/subsequent measurement category: available for sale to financial assets at fair value through profit or loss		(145,670	)
Reclassification of valuation gain or loss of derivatives from equity securities at other comprehensive income		(5,854	)
Recognition of expected credit losses on debt securities at other comprehensive income		(4,433	)
Reversal of impairment loss on equity securities at other comprehensive income		617,004
Changes in gains or losses on equity method for investments in associates and joint ventures		4,061
Effect of adjustment in convertible private bond		12,558
Valuation of fair value of structured deposits and debts		(17,291	)
Application of expected credit losses on financial assets at amortized cost		(553,057	)
Effect of changes in provision for unused commitment, etc.		(30,812	)
Valuation loss from self-credit-risk of financial liabilities designated at fair value through profit or loss		14,397
Application of overlay approach		10,903
Others		2,889
Tax effect		23,203
January 1, 2018 (after adoption of Korean IFRS 1109)	W	14,972,102

187