Exhibit 99.2
KB Financial Group Inc.
Separate Interim Financial Statements
September 30, 2020
(Unaudited)
(With Independent Auditors’ Review Report Thereon)
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Independent Auditors’ Review Report
Based on a report originally issued in Korean
The Board of Directors and Stockholders
KB Financial Group Inc.:
Reviewed financial statements
We have reviewed the accompanying condensed separate interim financial statements of KB Financial Group Inc. (the “Company”), which comprise the separate interim statement of financial position as of September 30, 2020, the separate interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2020, changes in equity and cash flows for the nine-month period ended September 30, 2020 and notes, comprising a summary of significant accounting policies and other explanatory information.
Management’s responsibility
Management is responsible for the preparation and fair presentation of these condensed separate interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No.1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of the condensed separate interim financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ review responsibility
Our responsibility is to issue a report on these condensed separate interim financial statements based on our review.
We conducted our review in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed separate interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.
Emphasis of matter
The following matter may be helpful to the readers in their understanding of the condensed separate interim financial statements. Our review conclusion is not affected by this matter.
As described in Note 29.2 to the condensed separate interim financial statements, the ongoing COVID-19 pandemic has increased the estimation uncertainty on the Company’s expected credit losses on certain portfolios and potential impairment on assets and may have negative impacts on the Company’s separate interim financial statements.
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Other matters
The procedures and practices utilized in the Republic of Korea to review such condensed separate interim financial statements may differ from those generally accepted and applied in other countries.
The accompanying separate interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2019, changes in equity and cash flows for the nine-month period ended September 30, 2019, were reviewed by other auditors whose report thereon, dated November 14, 2019, expressed that nothing came to their attention that caused them to believe that those interim financial statements are not prepared, in all material respects, in accordance with K-IFRS No. 1034 Interim Financial Reporting.
The separate statement of financial position of the Company as of December 31, 2019, and the related separate statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by other auditors in accordance with Korean Standards on Auditing and their report thereon, dated March 5, 2020, expressed an unqualified opinion. The accompanying separate statement of financial position of the Company as of December 31, 2019, presented for comparative purposes, is consistent, in all material respects, with the audited separate statement of financial position from which it has been derived.
| /s/ KPMG Samjong Accounting Corp. |
| Seoul, Korea |
| November 16, 2020 |
This report is effective as of November 16, 2020, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.
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KB Financial Group Inc.
Separate Interim Statements of Financial Position
September 30, 2020 and December 31, 2019
(In millions of Korean won)
| Notes | September 30, 2020 (Unaudited) | December 31, 2019 | ||||||||||
Assets | ||||||||||||
Cash and due from financial institutions | 4,5,6,28 | |||||||||||
Financial assets at fair value through profit or loss | 4,5,7 | 466,575 | 413,909 | |||||||||
Loans at amortized cost | 4,5,8 | 180,000 | 120,000 | |||||||||
Investments in subsidiaries | 9 | 26,522,170 | 24,162,116 | |||||||||
Property and equipment | 10 | 4,005 | 4,170 | |||||||||
Intangible assets | 11 | 12,021 | 11,092 | |||||||||
Deferred income tax assets | 12 | 2,609 | 7,526 | |||||||||
Other assets | 4,5,13 | 795,750 | 609,286 | |||||||||
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Total assets | ||||||||||||
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Liabilities | ||||||||||||
Debts | 4,5,14 | |||||||||||
Debentures | 4,5,15 | 6,316,734 | 5,543,446 | |||||||||
Net defined benefit liabilities | 16 | 2,040 | 437 | |||||||||
Current income tax liabilities | 648,398 | 417,414 | ||||||||||
Other liabilities | 4,5,17 | 166,675 | 203,440 | |||||||||
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Total liabilities | 7,473,847 | 6,164,737 | ||||||||||
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Equity | ||||||||||||
Share capital | 18 | 2,090,558 | 2,090,558 | |||||||||
Hybrid securities | 18 | 1,197,017 | 399,085 | |||||||||
Capital surplus | 18 | 14,754,747 | 14,742,814 | |||||||||
Accumulated other comprehensive income | 18 | (7,693 | ) | (7,664 | ) | |||||||
Retained earnings | 18 | 3,655,081 | 3,093,294 | |||||||||
Treasury shares | 18 | (1,136,188 | ) | (1,136,188 | ) | |||||||
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Total equity | 20,553,522 | 19,181,899 | ||||||||||
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Total liabilities and equity | ||||||||||||
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The above separate interim statements of financial position should be read in conjunction with the accompanying notes.
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KB Financial Group Inc.
Separate Interim Statements of Comprehensive Income
Three-Month and Nine-Month Periods Ended September 30, 2020 and 2019
(In millions of Korean won, except per share amounts)
| 2020 | 2019 | |||||||||||||||||
| Notes | (Unaudited) | (Unaudited) | ||||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||||
Interest income | ||||||||||||||||||
Interest expense | (34,275 | ) | (98,724 | ) | (30,483 | ) | (95,229 | ) | ||||||||||
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Net interest expense | 20 | (31,669 | ) | (92,040 | ) | (29,332 | ) | (88,757 | ) | |||||||||
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Fee and commission income | 168 | 546 | 214 | 564 | ||||||||||||||
Fee and commission expense | (2,916 | ) | (7,113 | ) | (1,418 | ) | (4,636 | ) | ||||||||||
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Net fee and commission expense | 21 | (2,748 | ) | (6,567 | ) | (1,204 | ) | (4,072 | ) | |||||||||
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Net gains on financial assets at fair value through profit or loss | 22 | 4,028 | 10,360 | 3,527 | 13,292 | |||||||||||||
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Net other operating income | 23 | 598,598 | 1,573,528 | — | 926,934 | |||||||||||||
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General and administrative expenses | 24 | (17,866 | ) | (49,332 | ) | (16,412 | ) | (47,354 | ) | |||||||||
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Operating profit (loss) before provision for credit losses | 550,343 | 1,435,949 | (43,421 | ) | 800,043 | |||||||||||||
Provision for credit losses | — | — | — | — | ||||||||||||||
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Operating profit (loss) | 550,343 | 1,435,949 | (43,421 | ) | 800,043 | |||||||||||||
Net non-operating income (expenses) | 25 | 264 | 426 | (403 | ) | (451 | ) | |||||||||||
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Profit (loss) before income tax | 550,607 | 1,436,375 | (43,824 | ) | 799,592 | |||||||||||||
Income tax expense (benefit) | 26 | 5,344 | (403 | ) | 619 | (847 | ) | |||||||||||
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Profit (loss) for the period | 555,951 | 1,435,972 | (43,205 | ) | 798,745 | |||||||||||||
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Items that will not be reclassified to profit or loss: | ||||||||||||||||||
Remeasurements of net defined benefit liabilities | 9 | (29 | ) | (20 | ) | (61 | ) | |||||||||||
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Other comprehensive income (loss) for the period, net of tax | 9 | (29 | ) | (20 | ) | (61 | ) | |||||||||||
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Total comprehensive income (loss) for the period | ||||||||||||||||||
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Earnings (loss) per share | 27 | |||||||||||||||||
Basic earnings (loss) per share | ||||||||||||||||||
Diluted earnings (loss) per share | 1,393 | 3,616 | (119 | ) | 2,017 | |||||||||||||
The above separate interim statements of comprehensive income should be read in conjunction with the accompanying notes.
4
KB Financial Group Inc.
Separate Interim Statements of Changes in Equity
Nine-Month Periods Ended September 30, 2020 and 2019
| (In millions of Korean won) | Share Capital | Hybrid Securities | Capital Surplus | Accumulated Other Comprehensive Income | Retained Earnings | Treasury Shares | Total Equity | |||||||||||||||||||||
Balance at January 1, 2019 | ||||||||||||||||||||||||||||
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Comprehensive income | ||||||||||||||||||||||||||||
Profit for the period | — | — | — | — | 798,745 | — | 798,745 | |||||||||||||||||||||
Remeasurements of net defined benefit liabilities | — | — | — | (61 | ) | — | — | (61 | ) | |||||||||||||||||||
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Total comprehensive income | — | — | — | (61 | ) | 798,745 | — | 798,684 | ||||||||||||||||||||
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Transactions with shareholders | ||||||||||||||||||||||||||||
Annual dividends | — | — | — | — | (759,736 | ) | — | (759,736 | ) | |||||||||||||||||||
Acquisition of treasury shares | — | — | — | — | — | (267,639 | ) | (267,639 | ) | |||||||||||||||||||
Issuance of hybrid securities | — | 399,085 | — | — | — | — | 399,085 | |||||||||||||||||||||
Dividends on hybrid securities | — | — | — | — | (3,257 | ) | — | (3,257 | ) | |||||||||||||||||||
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Total transactions with shareholders | — | 399,085 | — | — | (762,993 | ) | (267,639 | ) | (631,547 | ) | ||||||||||||||||||
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Balance at September 30, 2019 (Unaudited) | ||||||||||||||||||||||||||||
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Balance at January 1, 2020 | ||||||||||||||||||||||||||||
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Comprehensive income | ||||||||||||||||||||||||||||
Profit for the period | — | — | — | — | 1,435,972 | — | 1,435,972 | |||||||||||||||||||||
Remeasurements of net defined benefit liabilities | — | — | — | (29 | ) | — | — | (29 | ) | |||||||||||||||||||
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Total comprehensive income | — | — | — | (29 | ) | 1,435,972 | — | 1,435,943 | ||||||||||||||||||||
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Transactions with shareholders | ||||||||||||||||||||||||||||
Annual dividends | — | — | — | — | (861,092 | ) | — | (861,092 | ) | |||||||||||||||||||
Consideration for exchangeable rights | — | — | 11,933 | — | — | — | 11,933 | |||||||||||||||||||||
Issuance of hybrid securities | — | 797,932 | — | — | — | — | 797,932 | |||||||||||||||||||||
Dividends on hybrid securities | — | — | — | — | (13,093 | ) | — | (13,093 | ) | |||||||||||||||||||
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Total transactions with shareholders | — | 797,932 | 11,933 | — | (874,185 | ) | — | (64,320 | ) | |||||||||||||||||||
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Balance at September 30, 2020 (Unaudited) | ||||||||||||||||||||||||||||
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The above separate interim statements of changes in equity should be read in conjunction with the accompanying notes.
5
KB Financial Group Inc.
Separate Interim Statements of Cash Flows
Nine-Month Periods Ended September 30, 2020 and 2019
(In millions of Korean won)
| 2020 | 2019 | |||||||||||
| Notes | (Unaudited) | (Unaudited) | ||||||||||
Cash flows from operating activities | ||||||||||||
Profit for the period | ||||||||||||
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Adjustment for non-cash items | ||||||||||||
Depreciation and amortization | 2,921 | 3,737 | ||||||||||
Share-based payments | 1,243 | 2,052 | ||||||||||
Net interest expense | 2,358 | 2,890 | ||||||||||
Net losses (gains) on valuation on financial assets at fair value through profit or loss | 242 | (3,099 | ) | |||||||||
Gain on foreign currency translation | (117 | ) | — | |||||||||
Net other expenses | (3,804 | ) | 1,691 | |||||||||
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| 2,843 | 7,271 | |||||||||||
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Changes in operating assets and liabilities | ||||||||||||
Deferred income tax assets | 4,929 | 824 | ||||||||||
Other assets | (678 | ) | (716 | ) | ||||||||
Other liabilities | 9,006 | (3,336 | ) | |||||||||
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| 13,257 | (3,228 | ) | ||||||||||
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Net cash inflow from operating activities | 1,452,072 | 802,788 | ||||||||||
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Cash flows from investing activities | ||||||||||||
Acquisition of financial assets at fair value through | (4,212,551 | ) | (2,020,000 | ) | ||||||||
Disposal of financial assets at fair value through profit of loss | 4,159,644 | 1,997,807 | ||||||||||
Acquisition of investments in subsidiaries | (2,347,543 | ) | (100,000 | ) | ||||||||
Increase in loans at amortized cost | (60,000 | ) | (70,000 | ) | ||||||||
Acquisition of property and equipment | (709 | ) | (4,097 | ) | ||||||||
Disposal of property and equipment | — | 14 | ||||||||||
Acquisition of intangible assets | (903 | ) | (842 | ) | ||||||||
Disposal of intangible assets | — | 41 | ||||||||||
Net decrease(increase) in guarantee deposits paid | (12,678 | ) | (1,515 | ) | ||||||||
Other investing activities | (2,172 | ) | (175 | ) | ||||||||
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Net cash outflow from investing activities | (2,476,912 | ) | (198,767 | ) | ||||||||
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Cash flows from financing activities | ||||||||||||
Increase in debts | 340,000 | 418,705 | ||||||||||
Decrease in debts | — | (717,026 | ) | |||||||||
Increase in debentures | 1,477,211 | 818,087 | ||||||||||
Decrease in debentures | (690,000 | ) | (818,252 | ) | ||||||||
Dividends paid to shareholders | (861,092 | ) | (762,993 | ) | ||||||||
Principal elements of lease payments | (416 | ) | (412 | ) | ||||||||
Acquisition of treasury shares | — | (274,317 | ) | |||||||||
Issuance of hybrid securities | 797,932 | 399,085 | ||||||||||
Dividends paid on hybrid securities | (13,093 | ) | — | |||||||||
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Net cash inflow (outflow) from financing activities | 1,050,542 | (937,123 | ) | |||||||||
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Net increase (decrease) in cash and cash equivalents | 25,702 | (333,102 | ) | |||||||||
Cash and cash equivalents at the beginning of the period | 28 | 18,534 | 344,299 | |||||||||
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Cash and cash equivalents at the end of the period | 28 | |||||||||||
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The above separate interim statements of cash flows should be read in conjunction with the accompanying notes.
6
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
1. The Company
KB Financial Group Inc. (the “Company”), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfers with the former shareholders of Kookmin Bank, KB Investment & Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd. in order to provide management services and financing to associated companies. The headquarters are located at 26, Gukjegeumyung-ro-8-gil, Yeongdeungpo-gu, Seoul. The Company’s share capital as of September 30, 2020, isW 2,090,558 million. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Company established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Company acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Company included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015, and KB Insurance Co., Ltd. became one of the subsidiaries through a tender after in May 2017. Also, the Company included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary in October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed its name to KB Securities Co., Ltd. in January 2017. And, Prudential Life Insurance Company of Korea Ltd. was classified as a subsidiary in August 2020.
The Company has been listed on the Korea Exchange (“KRX”) since October 10, 2008, and on the New York Stock Exchange (“NYSE”) for its American Depositary Shares (“ADS”) since September 29, 2008. Number of shares authorized on its Articles of Incorporation is 1,000 million.
7
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
2. Basis of Preparation
2.1 Application of Korean IFRS
The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (“Hangeul”) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”). The accompanying separate financial statements have been translated into English from the Korean language financial statements.
The separate financial statements of the Company have been prepared in accordance with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (“IASB”) that have been adopted by the Republic of Korea.
The preparation of separate financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate financial statements are disclosed in Note 2.4.
The separate financial statements were prepared in accordance with Korean IFRS 1027, Separate Financial Statements.
The Company’s separate interim financial statements for the nine-month period ended September 30, 2020, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting and contain less information than is required in annual separate financial statements. Selected explanatory notes include descriptions of transactions or events that are significant in understanding change in financial position and financial performance of the Company since the end of the previous annual reporting period. These separate interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as of September 30, 2020.
8
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
2.1.1 New and amended standards and interpretations adopted by the Company
The Company has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2020.
| • | Amendments to Korean IFRS 1103 Business Combination – Definition of a Business |
To assess whether an acquired set of activities and assets is a business, the amendments requires an entity to consider an input that have the ability to contribute to the creation of outputs significantly and a substantive process and exclude economic benefits from lower costs. An entity can apply a concentration test, an optional test, where substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar assets, the assets acquired would not represent a business. The amendment does not have a significant impact on the financial statements. However, the amendment may have impact on the financial statements if business combination occurs in the future.
| • | Amendments to Korean IFRS 1001 Presentation of Financial Statements and Korean IFRS 1008 Accounting policies, changes in accounting estimates and errors – Definition of Material |
The amendments clarify the explanation of the definition of materiality. The feature of information users needs to be considered when the Company determines the information to be disclosed and the effects of immaterial information as well as omission or misstatement of material information when determining materiality. The amendment does not have a significant impact on the financial statements.
| • | The IFRS Interpretations Committee (IFRIC) Agenda Decision – Lease term |
On December 16, 2019, the IFRS Interpretations Committee announced an interpretation of the “lease term and useful life of leasehold improvements”. This interpretation deals with how to determine the lease term of a cancellable lease or a renewable lease and whether the useful life of non-removable leasehold improvements is limited by the relevant lease term. According to this interpretation, the Company should identify factors to consider the broader economic penalty, reflect identified factors to accounting policies, and calculate lease term based on accounting policy.
The Company is assessing the impact that the change in accounting policy of enforceable period will have on the Company’s financial statements, and the Company will apply the impact in the financial statements once the assessment is completed.
2.1.2 New standards and interpretations not yet adopted by the Company
The Company has not applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2020.
| • | Amendments to Korean IFRS 1116 Lease – Practical expedient for COVID-19-Related Rent Exemption, Concessions, Suspension |
As a practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying this Standard if the change were not a lease modification. These amendments should be applied for annual periods beginning on or after June 1, 2020, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the financial statements.
9
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
2.2 Measurement Basis
The separate financial statements have been prepared under the historical cost convention unless otherwise specified.
2.3 Functional and Presentation Currency
Items included in the separate financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (“the functional currency”). The separate financial statements are presented in Korean won, which is the Company’s functional and presentation currency.
2.4 Critical Accounting Estimates
The preparation of the separate financial statements requires the application of accounting policies, certain critical accounting estimates and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses). Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment at the reporting date are different from the actual environment.
Estimates and underlying assumptions are continually evaluated, and changes in accounting estimates are recognized in the period in which the estimates are changed and in any future periods affected.
Significant accounting estimates and assumptions applied in the preparation of these separate interim financial statements are the same as those applied to the separate financial statements for the year ended December 31, 2019, except for the estimates used to determine income tax expense.
3. Significant Accounting Policies
The significant accounting policies and calculation methods applied in the preparation of these separate financial statements have been consistently applied to all periods presented, except for the impact of changes due to adopting new and amended standards and interpretations.
3.1 Income Tax Expenses for the Interim Period
Income tax expense for the interim period is measured applying the expected average annual income tax rate applicable on expected total annual income.
10
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
4. Financial Risk Management
4.1 Summary
4.1.1 Overview of financial risk management policy
The financial risks that the Company is exposed to are credit risk, market risk, liquidity risk and others.
The note regarding financial risk management provides information about the risks that the Company is exposed to, including the objectives, policies, assessment and management process of risks. Additional quantitative information is disclosed throughout the separate financial statements.
The Company’s risk management system focuses on increasing transparency, developing the risk management environment, and the preemptive response to risk due to rapid changes in the financial environment to support the Company’s long-term strategy and business decisions efficiently. Credit risk, market risk and liquidity risk have been recognized as the Company’s key risks. These risks are measured and managed in Internal Capital or VaR (Value at Risk) using a statistical method.
4.1.2 Risk management organization
Risk Management Committee
The Risk Management Committee establishes risk management strategies in accordance with the directives of the Board of Directors and determines the Company’s target risk appetite. The committee approves significant risk matters and reviews the level of risks that the Company is exposed to and the appropriateness of the Company’s risk management operations as an ultimate decision-making authority.
Risk Management Council
The Risk Management Council is a consultative group which reviews and makes decisions on matters delegated by the Risk Management Committee, and discusses the detailed issues relating to the Company’s risk management.
Risk Management Division
The Risk Management Division is responsible for conducting detailed policies, procedures and working processes relating to the Company’s risk management.
4.2 Credit Risk
4.2.1 Overview of credit risk
Credit risk is the risk of possible losses in an asset portfolio in the event of counterparty’s default, breach of contract and deterioration in the credit quality of the counterparty. For risk management reporting purposes, the individual borrower’s default risk is considered.
4.2.2 Credit risk management
The Company measures expected losses on assets that are subject to credit risk management and uses it as a management indicator.
11
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
4.2.3 Maximum exposure to credit risk
The Company’s maximum exposures of financial instruments, excluding equity securities, to credit risk without consideration of collateral values as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Due from financial institutions | ||||||||
Loans at amortized cost | 180,000 | 120,000 | ||||||
Loans at fair value through profit or loss | 75,316 | 122,408 | ||||||
Other financial assets | 36,621 | 19,814 | ||||||
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4.2.4 Credit risk of loans
The Company maintains an allowance for loan losses associated with credit risk on loans to manage its credit risk.
The Company assesses expected credit losses and recognizes loss allowances of financial assets at amortized cost and financial asset at fair value through other comprehensive income. Financial assets at fair value through profit or loss are excluded. Expected credit losses are a probability-weighted estimate of possible credit losses occurred in a certain range by reflecting reasonable and supportable information that is reasonably available at the reporting date without undue cost or effort, including information about past events, current conditions and forecasts of future economic conditions. The Company measures the expected credit losses on loans classified as financial assets measured at amortized cost, by deducting allowances for credit losses. The expected credit losses of loans classified as financial assets at fair value through other comprehensive income are presented in other comprehensive income on the financial statements.
4.2.4.1 Credit risk exposure
Loans as of September 30, 2020 and December 31, 2019, are classified as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||||||
| 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 cost |
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Corporate |
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Grade 1 | ||||||||||||||||||||
Grade 2 | — | — | — | — | — | |||||||||||||||
Grade 3 | — | — | — | — | — | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | — | — | — | — | — | |||||||||||||||
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12
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
4.2.4.1 Credit risk exposure (cont’d)
(In millions of Korean won)
| December 31, 2019 | ||||||||||||||||||||
| 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 cost |
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Corporate |
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Grade 1 | ||||||||||||||||||||
Grade 2 | — | — | — | — | — | |||||||||||||||
Grade 3 | — | — | — | — | — | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | — | — | — | — | — | |||||||||||||||
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Credit quality of loans graded according to the probability of default as of September 30, 2020 and December 31, 2019, are as follows:
| Range of PD (%) (Probability of Default) | ||
Grade 1 | 0.0 ~ 1.0 | |
Grade 2 | 1.0 ~ 5.0 | |
Grade 3 | 5.0 ~ 15.0 | |
Grade 4 | 15.0 ~ 30.0 | |
Grade 5 | 30.0 ~ |
4.2.5 Credit risk of due from financial institutions
The credit quality of due from financial institutions as of September 30, 2020 and December 31, 2019, are classified as follows:
(In millions of Korean won)
| September 30, 2020 | ||||||||||||||||||||
| 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 | |||||||||||||||||||
Due from financial institutions at amortized cost |
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Grade 1 | ||||||||||||||||||||
Grade 2 | — | — | — | — | — | |||||||||||||||
Grade 3 | — | — | — | — | — | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | — | — | — | — | — | |||||||||||||||
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13
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
4.2.5 Credit risk of due from financial institutions (cont’d)
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||||||
| 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 | |||||||||||||||||||
Due from financial institutions at amortized cost |
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Grade 1 | ||||||||||||||||||||
Grade 2 | — | — | — | — | — | |||||||||||||||
Grade 3 | — | — | — | — | — | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | — | — | — | — | — | |||||||||||||||
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4.2.6 Credit risk concentration analysis
Details of the Company’s loans by country as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||
| Corporate loans1 | % | Allowances | Carrying amount | |||||||||||||
Korea | 100.00 | |||||||||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Corporate loans1 | % | Allowances | Carrying amount | |||||||||||||
Korea | 100.00 | |||||||||||||||
| 1 | The amounts include Loans at fair value through profit and loss and Loans at amortized cost. |
Details of the Company’s corporate loans by industry as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||
| Corporate loans1 | % | Allowances | Carrying amount | |||||||||||||
Financial institutions | 100.00 | |||||||||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Corporate loans1 | % | Allowances | Carrying amount | |||||||||||||
Financial institutions | 100.00 | |||||||||||||||
| 1 | The amounts include Loans at fair value through profit and loss and Loans at amortized cost. |
14
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
4.2.6 Credit risk concentration analysis (cont’d)
Details of the Company’s due from financial institutions by industry as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||
| Corporate loans | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions at amortized cost |
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Financial institutions | 100.00 | |||||||||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Corporate loans | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions at amortized cost |
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Financial institutions | 100.00 | |||||||||||||||
Details of the Company’s due from financial institutions by country as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||
| Corporate loans | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions at amortized cost |
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Korea | 100.00 | |||||||||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Corporate loans | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions at amortized cost |
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Korea | 100.00 | |||||||||||||||
4.3 Liquidity Risk
4.3.1 Overview of liquidity risk
Liquidity risk is a risk that the Company becomes insolvent due to uncertain liquidity caused by unexpected cash outflows, or a risk of borrowing high interest debts or disposal of liquid and other assets at a substantial discount. The Company manages its liquidity risk through analysis of the contractual maturity of all financial assets, liabilities and off-balance items by maturity groups: on demand, less than one month, between one month to three months, between three months to one year, between one year to five years and over five years.
Cash flows disclosed for the maturity analysis are undiscounted contractual principal and interest to be received (paid) and; thus, are not identical to the amount in the financial statements that are based on the present value of expected cash flows in some cases. The amount of interest to be received or paid on floating rate assets and liabilities is measured on the assumption that the current interest rate would be the same through the maturity.
15
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
4.3.2. Liquidity risk management
The liquidity risk is managed by liquidity management principles and related guidelines which are applied to the risk management policies and procedures that address all the possible risks that arise from the overall business of the Company.
4.3.3. Analysis of remaining contractual maturity of financial assets and liabilities
The remaining contractual maturity of financial assets and liabilities as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||||||||||||||
| On 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 | ||||||||||||||||||||||||||||
Financial assets at fair value through profit or loss2 | 75,316 | — | — | — | — | 391,259 | 466,575 | |||||||||||||||||||||
Loans at amortized cost | — | — | — | 183,902 | — | — | 183,902 | |||||||||||||||||||||
Other financial assets | 470 | 5,388 | 1,034 | 5,526 | 23,430 | — | 35,848 | |||||||||||||||||||||
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Financial liabilities | ||||||||||||||||||||||||||||
Debts | ||||||||||||||||||||||||||||
Debentures | — | 6,182 | 275,913 | 1,006,464 | 3,795,294 | 1,804,474 | 6,888,327 | |||||||||||||||||||||
Lease liabilities | — | 49 | 88 | 221 | 202 | — | 560 | |||||||||||||||||||||
Other financial liabilities | — | 5,629 | 12,555 | — | — | — | 18,184 | |||||||||||||||||||||
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16
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
4.3.3. Analysis of remaining contractual maturity of financial assets and liabilities (cont’d)
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||||||||||||||
| On 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 | ||||||||||||||||||||||||||||
Financial assets at fair value through profit or loss2 | 122,408 | — | — | — | — | 291,501 | 413,909 | |||||||||||||||||||||
Loans at amortized cost | — | — | 71,523 | 51,098 | — | — | 122,621 | |||||||||||||||||||||
Other financial assets | — | 925 | — | 15,660 | — | — | 16,585 | |||||||||||||||||||||
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Financial liabilities | ||||||||||||||||||||||||||||
Debentures | ||||||||||||||||||||||||||||
Lease liabilities | — | 44 | 85 | 249 | 215 | — | 593 | |||||||||||||||||||||
Other financial liabilities | — | 1,819 | — | — | — | — | 1,819 | |||||||||||||||||||||
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| 1 | The amount of |
| 2 | Hybrid securities included in financial assets at fair value through profit or loss are included in the ‘Over 5 years’ category since the point of disposal is uncertain. |
17
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
4.4 Market Risk
4.4.1 Concept
Market risk is the risk of possible losses which arise from changes in market factors; such as, interest rate, stock price, foreign exchange rate and other market factors that affect the fair value of future cash flows of financial instruments. The most significant risk of the Company is interest rate risk.
4.4.2 Interest rate risk
Definition of interest rate risk
Interest rate risk is the risk that may occur due to changes in interest rates; such as, the value (fair value) change risk in statement of financial position line items and cash flow change risk in interest income and expense arising from investing and financing activities.
Observation method and management indicator on interest rate risk
The main objective of interest rate risk management is to protect asset values against interest rate fluctuations. The Company manages the risk through measurement and management of Value at Risk for the interest rate.
5. Financial Assets and Financial Liabilities
5.1 Classification and Fair value of Financial Instruments
5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||
| Carrying amount | Fair value | |||||||
Financial assets | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Hybrid securities | ||||||||
Loans | 75,316 | 75,316 | ||||||
Financial assets at amortized cost | ||||||||
Due from financial institutions | 44,239 | 44,239 | ||||||
Loans | 180,000 | 180,000 | ||||||
Other financial assets | 36,621 | 36,621 | ||||||
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Financial liabilities | ||||||||
Financial liabilities at amortized cost | ||||||||
Debts | ||||||||
Debentures | 6,316,734 | 6,496,264 | ||||||
Other financial liabilities | 31,942 | 31,942 | ||||||
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18
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of September 30, 2020 and December 31, 2019, are as follows: (cont’d)
| (In millions of Korean won) | December 31, 2019 | |||||||
| Carrying amount | Fair value | |||||||
Financial assets | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Hybrid securities | ||||||||
Loans | 122,408 | 122,408 | ||||||
Financial assets at amortized cost | ||||||||
Due from financial institutions | 18,537 | 18,537 | ||||||
Loans | 120,000 | 120,000 | ||||||
Other financial assets | 19,814 | 19,814 | ||||||
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Financial liabilities | ||||||||
Financial liabilities at amortized cost | ||||||||
Debentures | ||||||||
Other financial liabilities | 14,940 | 14,940 | ||||||
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Fair value is the amount for which an asset could be exchanged, or a liability could be settled, between knowledgeable, willing parties in an arm’s length transaction. For each class of financial assets and financial liabilities, the Company discloses the fair value of that class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is quoted price in an active market.
19
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of September 30, 2020 and December 31, 2019, are as follows: (cont’d)
Methods of determining fair value of financial instruments are as follows:
Cash and due from 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, Imputed Market Value Model, Free Cash Flow to Equity Model, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method. | |
| Derivatives | For exchange traded derivatives, quoted price in an active market is used to determine fair value and for OTC derivatives, fair value is determined using valuation techniques. The Company uses internally developed valuation models that are widely used by market participants to determine fair values of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method and the Monte Carlo Simulation or valuation results from independent external professional valuation institution. | |
| Loans at amortized cost | DCF model is used to determine the fair value of loans. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at appropriate discount rate. | |
| Debts | DCF model is used to determine the fair value of debts, but in the case of short-term maturity, the carrying amount is used as the fair value. | |
| 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. | |
5.1.2 Fair value hierarchy
The Company believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the statements of financial position are appropriate. However, the fair values of the financial instruments recognized in the statements of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.
20
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
5.1.2 Fair value hierarchy (cont’d)
The Company classifies and discloses fair value of the financial instruments into the three-level hierarchy as follows:
| Level 1 | 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. | |
When the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. Assessing the significance of a particular input to the entire measurement requires judgment, taking into account factors specific to the asset or liability. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.
5.1.2.1 Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position
The fair value hierarchy of financial assets measured at fair value in the statement of financial position as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||
| Fair value hierarchy | Total | |||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Hybrid securities | ||||||||||||||||
Loans | — | 75,316 | — | 75,316 | ||||||||||||
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| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Fair value hierarchy | Total | |||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Hybrid securities | ||||||||||||||||
Loans | — | 122,408 | — | 122,408 | ||||||||||||
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21
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
5.1.2.1 Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position (cont’d)
Valuation techniques and inputs of financial assets and liabilities at fair value in the statements of financial position and classified as Level 2 as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||
| Fair value | Valuation techniques | Inputs | ||||||||||
Financial assets | ||||||||||||
Financial assets at fair value through profit or loss Loans | DCF model | | Interest, Discount rate, etc. | | ||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||
| Fair value | Valuation techniques | Inputs | ||||||||||
Financial assets | ||||||||||||
Financial assets at fair value through profit or loss Loans | DCF model | | Interest, Discount rate, etc. | | ||||||||
5.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed
The fair value hierarchy of financial assets and liabilities whose fair values are disclosed as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||
| Fair value hierarchy |
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| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets | ||||||||||||||||
Cash and due from financial institutions1 | ||||||||||||||||
Loans at amortized cost2 | — | — | 180,000 | 180,000 | ||||||||||||
Other financial assets3 | — | — | 36,621 | 36,621 | ||||||||||||
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Financial liabilities | ||||||||||||||||
Debts4 | ||||||||||||||||
Debentures | — | 6,496,264 | — | 6,496,264 | ||||||||||||
Other financial liabilities3 | — | — | 31,942 | 31,942 | ||||||||||||
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22
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
5.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed (cont’d)
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Fair value hierarchy | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets | ||||||||||||||||
Cash and due from financial institutions1 | ||||||||||||||||
Loans at amortized cost2 | — | — | 120,000 | 120,000 | ||||||||||||
Other financial assets3 | — | — | 19,814 | 19,814 | ||||||||||||
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Financial liabilities | ||||||||||||||||
Debentures | ||||||||||||||||
Other financial liabilities3 | — | — | 14,940 | 14,940 | ||||||||||||
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| 1 | Because due from financial institutions classified as level 2 are deposits on demand, carrying amounts are reasonable approximations of fair values. |
| 2 | Because loans at amortized cost classified as level 3 are loans with residual maturity of less than one year, carrying amounts are reasonable approximations of fair values. |
| 3 | For other financial assets and other financial liabilities classified as level 3, carrying amounts are reasonable approximations of fair values. |
| 4 | For borrowings classified as Level 2, the carrying amount was considered an approximation of fair value and the carrying amount was disclosed at fair value. |
Valuation techniques and inputs used in the fair value measurement
For financial assets and liabilities whose carrying amount is a reasonable approximation of fair value, we do not disclose valuation techniques and inputs.
Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 2 as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | Fair value | Valuation Techniques | Inputs | |||||||||||||
| September 30, 2020 | December 31, 2019 | |||||||||||||||
Financial liabilities | ||||||||||||||||
Debentures | DCF model | Discount rate | ||||||||||||||
5.2 Level 3 of the Fair Value Hierarchy Disclosure
5.2.1 Valuation policy and process for fair value measurement categorized as Level 3
The Company uses external, independent and qualified professional valuer’s valuation to determine the fair value of the Company’s assets at the end of every reporting period.
23
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
5.2.2 Changes in fair value (Level 3) measured using valuation technique based on assumption that is unobservable in the market
Details of changes in Level 3 of the fair value hierarchy for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | Financial assets at fair value through profit or loss | Financial assets at fair value through profit or loss | ||||||
| 2020 | 2019 | |||||||
Beginning balance | ||||||||
Total gains or losses | ||||||||
- Profit or loss for the period | (242 | ) | 3,099 | |||||
- Other comprehensive income | — | — | ||||||
Purchases | 100,000 | — | ||||||
Sales | — | — | ||||||
Issues | — | — | ||||||
Settlements | — | — | ||||||
Transfers into Level 3 | — | — | ||||||
Transfers out of Level 3 | — | — | ||||||
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Ending balance | ||||||||
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In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the period, and profit or loss from financial instruments held at the end of the reporting period in the statement of comprehensive income for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||||||||||||||||
| Losses from financial investments at fair value through profit or loss | Other operating income | Net interest income | Gains from financial investments at fair value through profit or loss | Other operating income | Net interest income | |||||||||||||||||||
Total gains or losses included in profit or loss for the period | ||||||||||||||||||||||||
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period | ||||||||||||||||||||||||
24
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
5.2.3 Sensitivity analysis of changes in unobservable inputs
5.2.3.1 Information about fair value measurements using unobservable inputs as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||
| Fair value | Valuation technique | Inputs | Unobservable inputs | Range of unobservable inputs (%) | Relationship of unobservable inputs to fair value | |||||||||
Financial assets | ||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||
Hybrid securities | Hull and White Model, Monte Carlo Simulation | Matrix YTM, Additional spread by grade, Risk spread of company, Valid credit rating, Disclosed information of securities, Interest rate estimation variability | Discount rate | 1.95 ~ 4.50 | The lower the discount rate, the higher the fair value | |||||||||
Volatility of interest rate | 0.48 | The higher the volatility, the higher the fair value fluctuation | ||||||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||
| Fair value | Valuation technique | Inputs | Unobservable inputs | Range of unobservable inputs (%) | Relationship of unobservable inputs to fair value | |||||||||
Financial assets | ||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||
Hybrid securities | Hull and White Model, Monte Carlo Simulation | Matrix YTM, Additional spread by grade, Risk spread of company, Valid credit rating, Disclosed information of securities, Interest rate estimation variability | Discount rate | 2.05 ~ 4.45 | The lower the discount rate, the higher the fair value | |||||||||
Volatility of interest rate | 0.50 | The higher the volatility, the higher the fair value fluctuation | ||||||||||||
25
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
5.2.3.2 Sensitivity analysis of changes in unobservable inputs
Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of financial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair value is affected by more than two input parameters, the amounts represent the most favorable or most unfavorable outcome. There are hybrid securities whose fair value changes are recognized in profit or loss.
The results of the sensitivity analysis from changes in inputs as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||
| Recognition in profit or loss | Other comprehensive income | |||||||||||||||
| Favorable changes | Unfavorable changes | Favorable changes | Unfavorable changes | |||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss Hybrid securities1 | ||||||||||||||||
| 1 | For equity securities, the changes in fair value are calculated by increasing or decreasing correlations between discount rate (1.95 ~ 4.50%) which are principal unobservable input parameters. And, the changes in fair value are calculated by increasing or decreasing the correlation coefficient between short-term and long-term interests or volatility of the interest rates, which are unobservable inputs, by 1%. |
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Recognition in profit or loss | Other comprehensive income | |||||||||||||||
| Favorable changes | Unfavorable changes | Favorable changes | Unfavorable changes | |||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss Hybrid securities1 | ||||||||||||||||
| 1 | For equity securities, the changes in fair value are calculated by increasing or decreasing correlations between discount rate (2.05 ~ 4.45%) which are principal unobservable input parameters. And, the changes in fair value are calculated by increasing or decreasing the correlation coefficient between short-term and long-term interests or volatility of the interest rates, which are unobservable inputs, by 1%. |
26
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
6. Due from Financial Institution
Details of due from financial institution as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | Financial Institution | Interest rate (%) (As of September 30, 2020) | September 30, 2020 | December 31, 2019 | ||||||||||||
Due from financial institution in Korean won | Due from banks | Kookmin Bank | 0.00 ~ 0.25 | |||||||||||||
Details of a maturity analysis of due from financial institution, excluding restricted cash, as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||||||||||
| Up to 3 months | 3~6 months | 6~12 months | 1~3 years | Over 3 years | Total | |||||||||||||||||||
Due from financial institution in Korean won | ||||||||||||||||||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||||||||||
| Up to 3 months | 3~6 months | 6~12 months | 1~3 years | Over 3 years | Total | |||||||||||||||||||
Due from financial institution in Korean won | ||||||||||||||||||||||||
Restricted cash from financial institution as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | Financial Institution | September 30, 2020 | December 31, 2019 | Reason for | ||||||||
Due from financial institution in Korean won | Kookmin Bank | Pledged as collateral for the overdraft establishment | ||||||||||
27
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
7. Financial Assets at Fair Value through Profit or Loss
Details of financial assets at fair value through profit or loss as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Financial assets at fair value through profit or loss | ||||||||
Hybrid securities | ||||||||
Loans | 75,316 | 122,408 | ||||||
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8. Loans at amortized cost
Details of loans at amortized cost as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Financial assets at fair value through profit or loss | ||||||||
Loans at amortized cost | ||||||||
Less: Allowances for loan losses | — | — | ||||||
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9. Investments in Subsidiaries
Details of subsidiaries as of September 30, 2020, are as follows:
Name of subsidiary | Industry | Location | ||
| Kookmin Bank | Banking and domestic, foreign exchange transaction | Korea | ||
| KB Securities Co., Ltd. | Financial investment | Korea | ||
| KB Insurance Co., Ltd. | Insurance | Korea | ||
| KB Kookmin Card Co., Ltd. | Credit card | Korea | ||
| Prudential Life Insurance Company of Korea Ltd. | Life insurance | Korea | ||
| KB Asset Management Co., Ltd. | Investment advisory and collective investment | Korea | ||
| KB Capital Co., Ltd. | Financial leasing | Korea | ||
| KB Life Insurance Co., Ltd. | Life insurance | Korea | ||
| KB Real Estate Trust Co., Ltd. | Real estate trust management | Korea | ||
| KB Savings Bank Co., Ltd. | Savings banking | Korea | ||
| KB Investment Co., Ltd. | Capital investment | Korea | ||
| KB Data System Co., Ltd. | System software, development and supply | Korea | ||
| KB Credit Information Co., Ltd. | Collection of receivables and credit investigation | Korea |
28
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
9. Investments in Subsidiaries (cont’d)
Investments in subsidiaries as of September 30, 2020 and December 31, 2019, are as follows:
(In millions of Korean won, except for shares and ownership %) | Number of Issued Shares | Ownership (%) | Carrying amount | |||||||||||||
| Name of subsidiary | As of September 30, 2020 | September 30, 2020 | December 31, 2019 | |||||||||||||
Kookmin Bank | 404,379,116 | 100.00 | ||||||||||||||
KB Securities Co., Ltd. | 298,620,424 | 100.00 | 3,342,391 | 3,342,391 | ||||||||||||
KB Insurance Co., Ltd. | 66,500,000 | 100.00 | 2,375,430 | 2,375,430 | ||||||||||||
KB Kookmin Card Co., Ltd. | 92,000,000 | 100.00 | 1,953,175 | 1,953,175 | ||||||||||||
Prudential Life Insurance Company of Korea Ltd.1 | 15,000,000 | 100.00 | 2,310,054 | — | ||||||||||||
KB Asset Management Co., Ltd. | 7,667,550 | 100.00 | 96,312 | 96,312 | ||||||||||||
KB Capital Co., Ltd.1 | 25,227,566 | 100.00 | 673,811 | 623,811 | ||||||||||||
KB Life Insurance Co., Ltd. | 91,200,000 | �� | 100.00 | 485,314 | 485,314 | |||||||||||
KB Real Estate Trust Co., Ltd. | 16,000,000 | 100.00 | 121,553 | 121,553 | ||||||||||||
KB Savings Bank Co., Ltd. | 8,001,912 | 100.00 | 157,544 | 157,544 | ||||||||||||
KB Investment Co., Ltd. | 22,525,328 | 100.00 | 154,910 | 154,910 | ||||||||||||
KB Data System Co., Ltd. | 800,000 | 100.00 | 6,334 | 6,334 | ||||||||||||
KB Credit Information Co., Ltd. | 1,252,400 | 100.00 | 23,621 | 23,621 | ||||||||||||
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| 1 | Carrying amount of investments in subsidiaries increased by |
Changes in accumulated impairment losses on investments in subsidiaries for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||||
| Beginning | Impairment | Others | Ending | |||||||||||
Accumulated impairment losses on investments in subsidiaries | ||||||||||||||
| (In millions of Korean won) | 2019 | |||||||||||||
| Beginning | Impairment | Others | Ending | |||||||||||
Accumulated impairment losses on investments in subsidiaries | ||||||||||||||
29
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
10. Property and Equipment
Details of property and equipment as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||
| Acquisition cost | Accumulated depreciation | Accumulated impairment losses | Carrying amount | |||||||||||||
Leasehold improvements | ||||||||||||||||
Equipment and others | 5,527 | (3,820 | ) | — | 1,707 | |||||||||||
Right-of-use property and equipment—Buildings | 1,656 | (777 | ) | — | 879 | |||||||||||
Right-of-use property and equipment -Vehicles | 1,084 | (762 | ) | — | 322 | |||||||||||
Right-of-use property and equipment -Others | 36 | (32 | ) | — | 4 | |||||||||||
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| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Acquisition cost | Accumulated depreciation | Accumulated impairment losses | Carrying amount | |||||||||||||
Leasehold improvements | ||||||||||||||||
Equipment and others | 4,818 | (2,946 | ) | — | 1,872 | |||||||||||
Right-of-use property and equipment—Buildings | 683 | (490 | ) | — | 193 | |||||||||||
Right-of-use property and equipment -Vehicles | 904 | (624 | ) | — | 280 | |||||||||||
Right-of-use property and equipment -Others | 36 | (21 | ) | — | 15 | |||||||||||
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30
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
11. Intangible Assets
Details of intangible assets as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||
| Acquisition cost | Accumulated amortization | Accumulated impairment losses | Carrying amount | |||||||||||||
Software | ||||||||||||||||
Membership rights | 9,765 | — | (963 | ) | 8,802 | |||||||||||
Other intangible assets | 6,005 | (4,436 | ) | — | 1,569 | |||||||||||
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| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Acquisition cost | Accumulated amortization | Accumulated impairment losses | Carrying amount | |||||||||||||
Software | ||||||||||||||||
Membership rights | 9,765 | — | (1,786 | ) | 7,979 | |||||||||||
Other intangible assets | 5,451 | (4,086 | ) | — | 1,365 | |||||||||||
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12. Deferred Income Tax Assets and Liabilities
Details of deferred income tax assets and liabilities as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||
| Assets | Liabilities | Net amounts | ||||||||||
Share-based payments | ||||||||||||
Membership rights | 265 | — | 265 | |||||||||
Defined benefit obligation | 2,960 | — | 2,960 | |||||||||
Plan assets | — | (2,960 | ) | (2,960 | ) | |||||||
Short-term employee benefits | 985 | — | 985 | |||||||||
Financial assets at fair value through profit or loss | 2,404 | — | 2,404 | |||||||||
Others | 695 | (4,540 | ) | (3,845 | ) | |||||||
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| 10,109 | (7,500 | ) | 2,609 | |||||||||
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Offsetting of deferred tax assets and liabilities | (7,500 | ) | 7,500 | — | ||||||||
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31
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
12. Deferred Income Tax Assets and Liabilities (cont’d)
| (In millions of Korean won) | December 31, 2019 | |||||||||||
| Assets | Liabilities | Net amounts | ||||||||||
Share-based payments | ||||||||||||
Membership rights | 491 | — | 491 | |||||||||
Defined benefit obligation | 2,888 | — | 2,888 | |||||||||
Plan assets | — | (2,888 | ) | (2,888 | ) | |||||||
Short-term employee benefits | 1,193 | — | 1,193 | |||||||||
Financial assets at fair value through profit or loss | 2,337 | — | 2,337 | |||||||||
Others | 449 | (204 | ) | 245 | ||||||||
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| 10,618 | (3,092 | ) | 7,526 | |||||||||
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Offsetting of deferred tax assets and liabilities | (3,092 | ) | 3,092 | — | ||||||||
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13. Other Assets
Details of other assets as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Other financial assets | ||||||||
Receivables | ||||||||
Accrued income | 3,450 | 3,654 | ||||||
Guarantee deposits | 28,172 | 16,160 | ||||||
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| 36,621 | 19,814 | |||||||
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Other non-financial assets | ||||||||
Receivables | 755,651 | 588,765 | ||||||
Prepaid expenses | 1,151 | 556 | ||||||
Advanced payments | 2,327 | 151 | ||||||
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| 759,129 | 589,472 | |||||||
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32
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
14. Debts
Debts as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Borrowings | ||||||||
Details of borrowings as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | Lender | Issued date | Maturity date | Annual interest rates (%) as of September 30, 2020 | September 30, 2020 | December 31, 2019 | ||||||||||||||||||
Borrowings in Korean won | Other borrowings | MERITZ Securities Co., Ltd. | | June 29, 2020 | | | Nov. 03, 2020 | | 1.06 | |||||||||||||||
Borrowings in Korean won | Other borrowings | MERITZ Securities Co., Ltd. | | July 29, 2020 | | | Nov. 03, 2020 | | 0.77 | 240,000 | — | |||||||||||||
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The maturities of debts as of September 30, 2020, are as follows:
| September 30, 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Up to 3 months | 3~6 months | 6~12 months | 1~3 years | Over 3 years | Total | ||||||||||||||||||
Borrowings in Korean won | ||||||||||||||||||||||||
33
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
15. Debentures
Details of debentures as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | ||||||||||||||||||||
| Issued date | Expiration date | Annual interest rates (%) as of September 30, 2020 | September 30, 2020 | December 31, 2019 | ||||||||||||||||
Unguaranteed debentures No. 3-3 | Aug. 13, 2013 | Aug. 13, 2020 | 3.65 | |||||||||||||||||
Unguaranteed debentures No. 5-2 | Mar. 19, 2014 | Mar. 19, 2021 | 3.50 | 50,000 | 50,000 | |||||||||||||||
Unguaranteed debentures No. 6 | Feb. 26, 2015 | Feb. 26, 2022 | 2.38 | 30,000 | 30,000 | |||||||||||||||
Unguaranteed debentures No. 8 | June 23, 2015 | June 23, 2020 | 2.34 | — | 100,000 | |||||||||||||||
Unguaranteed debentures No. 9 | June 23, 2015 | June 23, 2022 | 2.52 | 150,000 | 150,000 | |||||||||||||||
Unguaranteed debentures No. 10 | Sept. 17, 2015 | Sept. 17, 2020 | 2.16 | — | 20,000 | |||||||||||||||
Unguaranteed debentures No. 11 | Sept. 23, 2015 | Sept. 23, 2020 | 2.06 | — | 30,000 | |||||||||||||||
Unguaranteed debentures No. 12-2 | Nov. 27, 2015 | Nov. 27, 2020 | 2.26 | 110,000 | 110,000 | |||||||||||||||
Unguaranteed debentures No. 12-3 | Nov. 27, 2015 | Nov. 27, 2022 | 2.38 | 50,000 | 50,000 | |||||||||||||||
Unguaranteed debentures No. 14-1 | Dec. 09, 2015 | Dec. 09, 2020 | 2.27 | 140,000 | 140,000 | |||||||||||||||
Unguaranteed debentures No. 14-2 | Dec. 09, 2015 | Dec. 09, 2022 | 2.38 | 30,000 | 30,000 | |||||||||||||||
Unguaranteed debentures No. 15-2 | May 12, 2016 | May 12, 2021 | 1.72 | 220,000 | 220,000 | |||||||||||||||
Unguaranteed debentures No. 15-3 | May 12, 2016 | May 12, 2026 | 2.01 | 200,000 | 200,000 | |||||||||||||||
Unguaranteed debentures No. 16-2 | May 27, 2016 | May 27, 2021 | 1.78 | 60,000 | 60,000 | |||||||||||||||
Unguaranteed debentures No. 16-3 | May 27, 2016 | May 27, 2023 | 1.91 | 150,000 | 150,000 | |||||||||||||||
Unguaranteed debentures No. 17 | June 27, 2016 | June 27, 2021 | 1.51 | 50,000 | 50,000 | |||||||||||||||
Unguaranteed debentures No. 18-2 | July 25, 2016 | July 25, 2021 | 1.45 | 110,000 | 110,000 | |||||||||||||||
Unguaranteed debentures No. 18-3 | July 25, 2016 | July 25, 2026 | 1.69 | 80,000 | 80,000 | |||||||||||||||
Unguaranteed debentures No. 19-2 | Aug. 25, 2016 | Aug. 25, 2021 | 1.46 | 100,000 | 100,000 | |||||||||||||||
Unguaranteed debentures No. 19-3 | Aug. 25, 2016 | Aug. 25, 2026 | 1.69 | 120,000 | 120,000 | |||||||||||||||
Unguaranteed debentures No. 20-2 | Nov. 28, 2016 | Nov. 28, 2021 | 2.28 | 50,000 | 50,000 | |||||||||||||||
Unguaranteed debentures No. 21 | Jan. 25, 2017 | Jan. 23, 2020 | 1.82 | — | 100,000 | |||||||||||||||
Unguaranteed debentures No. 22-1 | Feb. 28, 2017 | Feb. 28, 2020 | 1.89 | — | 120,000 | |||||||||||||||
Unguaranteed debentures No. 22-2 | Feb. 28, 2017 | Feb. 28, 2022 | 2.11 | 110,000 | 110,000 | |||||||||||||||
Unguaranteed debentures No. 23 | Mar. 23, 2017 | Mar. 23, 2020 | 1.95 | — | 80,000 | |||||||||||||||
Unguaranteed debentures No. 24 | Apr. 06, 2017 | Apr. 06, 2020 | 1.97 | — | 70,000 | |||||||||||||||
Unguaranteed debentures No. 25-2 | May 24, 2017 | May 24, 2020 | 1.97 | — | 100,000 | |||||||||||||||
Unguaranteed debentures No. 25-3 | May 24, 2017 | May 24, 2022 | 2.23 | 270,000 | 270,000 | |||||||||||||||
Unguaranteed debentures No. 25-4 | May 24, 2017 | May 24, 2027 | 2.62 | 80,000 | 80,000 | |||||||||||||||
Unguaranteed debentures No. 26-1 | June 27, 2017 | June 27, 2022 | 2.18 | 50,000 | 50,000 | |||||||||||||||
Unguaranteed debentures No. 26-2 | June 27, 2017 | June 27, 2024 | 2.34 | 200,000 | 200,000 | |||||||||||||||
Unguaranteed debentures No. 27 | July 19, 2017 | July 19, 2024 | 2.41 | 100,000 | 100,000 | |||||||||||||||
Unguaranteed debentures No. 28-1 | Aug. 30, 2017 | Aug. 30, 2022 | 2.30 | 60,000 | 60,000 | |||||||||||||||
Unguaranteed debentures No. 28-2 | Aug. 30, 2017 | Aug. 30, 2024 | 2.43 | 30,000 | 30,000 | |||||||||||||||
Unguaranteed debentures No. 28-3 | Aug. 30, 2017 | Aug. 30, 2027 | 2.60 | 60,000 | 60,000 | |||||||||||||||
Unguaranteed debentures No. 29-1 | Sept. 19, 2017 | Sept. 19, 2022 | 2.29 | 150,000 | 150,000 | |||||||||||||||
Unguaranteed debentures No. 29-2 | Sept. 19, 2017 | Sept. 19, 2024 | 2.44 | 110,000 | 110,000 | |||||||||||||||
Unguaranteed debentures No. 30 | Jan. 25, 2018 | Jan. 25, 2021 | 2.45 | 80,000 | 80,000 | |||||||||||||||
Unguaranteed debentures No. 31-1 | Feb. 28, 2018 | Feb. 26, 2021 | 2.57 | 150,000 | 150,000 | |||||||||||||||
Unguaranteed debentures No. 31-2 | Feb. 28, 2018 | Feb. 28, 2023 | 2.81 | 50,000 | 50,000 | |||||||||||||||
Unguaranteed debentures No. 31-3 | Feb. 28, 2018 | Feb. 28, 2028 | 3.02 | 60,000 | 60,000 | |||||||||||||||
Unguaranteed debentures No. 32-1 | Apr. 06, 2018 | Apr. 06, 2021 | 2.50 | 60,000 | 60,000 | |||||||||||||||
Unguaranteed debentures No. 32-2 | Apr. 06, 2018 | Apr. 06, 2023 | 2.71 | 80,000 | 80,000 | |||||||||||||||
Unguaranteed debentures No. 32-3 | Apr. 06, 2018 | Apr. 06, 2028 | 2.86 | 20,000 | 20,000 | |||||||||||||||
Unguaranteed debentures No. 33-1 | June 12, 2018 | June 12, 2023 | 2.81 | 100,000 | 100,000 | |||||||||||||||
Unguaranteed debentures No. 33-2 | June 12, 2018 | June 12, 2028 | 2.92 | 30,000 | 30,000 | |||||||||||||||
Unguaranteed debentures No. 34-1 | July 25, 2018 | July 23, 2021 | 2.41 | 40,000 | 40,000 | |||||||||||||||
Unguaranteed debentures No. 34-2 | July 25, 2018 | July 25, 2023 | 2.65 | 70,000 | 70,000 | |||||||||||||||
Unguaranteed debentures No. 34-3 | July 25, 2018 | July 25, 2025 | 2.71 | 20,000 | 20,000 | |||||||||||||||
Unguaranteed debentures No. 34-4 | July 25, 2018 | July 25, 2028 | 2.76 | 20,000 | 20,000 | |||||||||||||||
Unguaranteed debentures No. 35 | Oct. 05, 2018 | Oct. 05, 2023 | 2.52 | 120,000 | 120,000 | |||||||||||||||
Unguaranteed debentures No. 36-1 | Feb. 22, 2019 | Feb. 22, 2022 | 2.03 | 120,000 | 120,000 | |||||||||||||||
Unguaranteed debentures No. 36-2 | Feb. 22, 2019 | Feb. 22, 2024 | 2.11 | 230,000 | 230,000 | |||||||||||||||
Unguaranteed debentures No. 36-3 | Feb. 22, 2019 | Feb. 22, 2029 | 2.22 | 60,000 | 60,000 | |||||||||||||||
Unguaranteed debentures No. 37-1 | Mar. 15, 2019 | Mar. 15, 2024 | 2.06 | 140,000 | 140,000 | |||||||||||||||
Unguaranteed debentures No. 37-2 | Mar. 15, 2019 | Mar. 15, 2029 | 2.16 | 70,000 | 70,000 | |||||||||||||||
Unguaranteed debentures No. 38-1 | June. 19, 2019 | June 19, 2026 | 1.73 | 80,000 | 80,000 | |||||||||||||||
Unguaranteed debentures No. 38-2 | June. 19, 2019 | June 19, 2029 | 1.77 | 120,000 | 120,000 | |||||||||||||||
Unguaranteed debentures No. 39-1 | Oct. 15, 2019 | Oct. 15, 2024 | 1.60 | 80,000 | 80,000 | |||||||||||||||
Unguaranteed debentures No. 39-2 | Oct. 15, 2019 | Oct. 15, 2029 | 1.67 | 40,000 | 40,000 | |||||||||||||||
Unguaranteed debentures No. 40-1 | Dec. 04, 2019 | Dec. 04, 2024 | 1.76 | 70,000 | 70,000 | |||||||||||||||
Unguaranteed debentures No. 40-2 | Dec. 04, 2019 | Dec. 04, 2029 | 1.87 | 30,000 | 30,000 | |||||||||||||||
Unguaranteed debentures No. 41-1 | Jan. 16, 2020 | Jan. 16, 2023 | 1.64 | 110,000 | — | |||||||||||||||
Unguaranteed debentures No. 41-2 | Jan. 16, 2020 | Jan. 16, 2025 | 1.74 | 100,000 | — | |||||||||||||||
Unguaranteed debentures No. 41-3 | Jan. 16, 2020 | Jan. 16, 2030 | 1.88 | 40,000 | — | |||||||||||||||
34
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
15. Debentures (cont’d)
| (In millions of Korean won) | ||||||||||||||||||||
| Issued date | Expiration date | Annual interest rates (%) as of September 30, 2020 | September 30, 2020 | December 31, 2019 | ||||||||||||||||
Subordinated debentures No. 1-1 | Feb. 18, 2020 | Feb. 18, 2030 | 2.21 | 370,000 | — | |||||||||||||||
Subordinated debentures No. 1-2 | Feb. 18, 2020 | Feb. 18, 2035 | 2.26 | 30,000 | — | |||||||||||||||
Unguaranteed debentures No. 42-1 | May 13, 2020 | May 13, 2025 | 1.59 | 130,000 | — | |||||||||||||||
Unguaranteed debentures No. 42-2 | May 13, 2020 | May 13, 2030 | 1.78 | 70,000 | — | |||||||||||||||
Unguaranteed debentures No. 43-1 | June 16, 2020 | June 16, 2023 | 1.18 | 50,000 | — | |||||||||||||||
Unguaranteed debentures No. 43-2 | June 16, 2020 | June 16, 2025 | 1.44 | 110,000 | — | |||||||||||||||
Unguaranteed debentures No. 43-3 | June 16, 2020 | June 16, 2030 | 1.63 | 50,000 | — | |||||||||||||||
Exchangeable bonds No. 11 | June 30, 2020 | June 30, 2025 | — | 240,000 | — | |||||||||||||||
Unguaranteed debentures No. 44-1 | Aug 11, 2020 | Aug 11, 2022 | 0.96 | 80,000 | — | |||||||||||||||
Unguaranteed debentures No. 44-2 | Aug 11, 2020 | Aug 11, 2023 | 1.07 | 50,000 | — | |||||||||||||||
Unguaranteed debentures No. 44-3 | Aug 11, 2020 | Aug 9, 2024 | 1.18 | 30,000 | — | |||||||||||||||
Unguaranteed debentures No. 44-4 | Aug 11, 2020 | Aug 11, 2027 | 1.39 | 20,000 | — | |||||||||||||||
|
|
|
| |||||||||||||||||
| 6,340,000 | 5,550,000 | |||||||||||||||||||
| Less: Bond Discounts | (7,499 | ) | (6,554 | ) | ||||||||||||||||
| Less: adjustment on exchange right | (15,767 | ) | — | |||||||||||||||||
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| |||||||||||||||||
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| |||||||||||||||||
1 Fair value of the liability component of exchangeable bonds is calculated by using market interest rates of bonds under the same conditions without the exchangeable rights. The residual amount, after deducting liability component from the issuance amount, represents the value of exchangeable rights and is recorded in equity. Shares to be exchanged are 5 million treasury shares of KB Financial Group Inc. with the exchange price ofW 48,000. Exercise period for exchangeable rights is from the 60th day from the Issued date to 10 days before the Expiration date.
The maturities of debentures as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | |||||||||||||||||||||||
| Up to 3 months | 3~6 months | 6~12 months | 1~3 years | Over 3 years | Total | |||||||||||||||||||
Debentures in Korean won | ||||||||||||||||||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||||||||||
| Up to 3 months | 3~6 months | 6~12 months | 1~3 years | Over 3 years | Total | |||||||||||||||||||
Debentures in Korean won | ||||||||||||||||||||||||
Changes in debentures based on face value for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||||||
| Beginning | Issue | Repayment | Ending | |||||||||||||
Debentures in Korean won | ||||||||||||||||
| (In millions of Korean won) | 2019 | |||||||||||||||
| Beginning | Issue | Repayment | Ending | |||||||||||||
Debentures in Korean won | ||||||||||||||||
35
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
16. Net Defined Benefit Liabilities
Defined benefit plan
The Company operates defined benefit plans which have the following characteristics:
| • | The Company has the obligation to pay the agreed benefits to all its current and former employees. |
| • | Actuarial risk (that benefits will cost more than expected) and investment risk fall, in substance, on the Company. |
The net defined benefit liability recognized in the statements of financial position is calculated in accordance with actuarial valuation methods using market data; such as, interest rates, future salary increase rate and mortality rate based on historical data. Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends.
Changes in the defined benefit obligation for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||
| Present value of defined benefit obligation | Fair value of plan assets | Net defined benefit liabilities | ||||||||||
Beginning | ||||||||||||
Current service cost | 1,559 | — | 1,559 | |||||||||
Interest cost (income) | 303 | (297 | ) | 6 | ||||||||
Remeasurements: | ||||||||||||
Return on plan assets (excluding amounts included in interest income) | — | 41 | 41 | |||||||||
Payments from plans (benefit payments) | (1,601 | ) | 1,601 | — | ||||||||
Payments from the Company | (3 | ) | — | (3 | ) | |||||||
Transfer in | 2,001 | (2,001 | ) | — | ||||||||
Transfer out | (1,706) | 1,706 | — | |||||||||
Ending | ||||||||||||
| (In millions of Korean won) | 2019 | |||||||||||
| Present value of defined benefit obligation | Fair value of plan assets | Net defined benefit liabilities | ||||||||||
Beginning | ||||||||||||
Current service cost | 1,666 | — | 1,666 | |||||||||
Interest cost (income) | 350 | (347 | ) | 3 | ||||||||
Remeasurements: | ||||||||||||
Return on plan assets (excluding amounts included in interest income) | — | 84 | 84 | |||||||||
Payments from plans (benefit payments) | (1,554 | ) | 1,554 | — | ||||||||
Transfer in | 1,255 | (1,255 | ) | — | ||||||||
Transfer out | (2,682 | ) | 2,682 | — | ||||||||
|
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| |||||||
Ending | ||||||||||||
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| |||||||
36
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
16. Net Defined Benefit Liabilities (cont’d)
Details of the net defined benefit liabilities as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Present value of defined benefit obligation | ||||||||
Fair value of plan assets | (18,825 | ) | (19,875 | ) | ||||
|
|
|
| |||||
Net defined benefit liabilities | ||||||||
|
|
|
| |||||
Details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Current service cost | ||||||||
Net interest expenses of net defined benefit liabilities | 6 | 3 | ||||||
|
|
|
| |||||
Post-employment benefits | ||||||||
|
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|
| |||||
17. Other Liabilities
Details of other liabilities as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Other financial liabilities | ||||||||
Payables | ||||||||
Accrued expenses | 26,134 | 13,218 | ||||||
Lease liability | 551 | 588 | ||||||
|
|
|
| |||||
| 31,942 | 14,940 | |||||||
|
|
|
| |||||
Other non-financial liabilities | ||||||||
Payables | 9,814 | 59,263 | ||||||
Accrued expenses | 114,106 | 128,824 | ||||||
Withholding taxes | 10,813 | 413 | ||||||
|
|
|
| |||||
| 134,733 | 188,500 | |||||||
|
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| |||||
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| |||||
37
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
18. Equity
18.1 Share Capital
Details of share capital and number of issued shares as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Type of share | Ordinary share | Ordinary share | ||||||
Number of authorized shares | 1,000,000,000 | 1,000,000,000 | ||||||
Par value per share (In Korean won) | ||||||||
Number of issued shares | 415,807,920 | 415,807,920 | ||||||
Share capital | ||||||||
Changes in shares outstanding for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In number of shares) | 2020 | 2019 | ||||||
Beginning | 389,634,335 | 395,551,297 | ||||||
Decrease | — | (5,916,962 | ) | |||||
|
|
|
| |||||
Ending | 389,634,335 | 389,634,335 | ||||||
|
|
|
| |||||
18.2 Hybrid securities
Details of hybrid securities classified as equity as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | Issuance date | Maturity | Interest rate (%) | September 30, 2020 | December 31, 2019 | |||||||||||
The 1-1st Hybrid securities | May 2, 2019 | Perpetual bond | 3.23 | |||||||||||||
The 1-2nd Hybrid securities | May 2, 2019 | Perpetual bond | 3.44 | 49,881 | 49,881 | |||||||||||
The 2-1st Hybrid securities | May 8, 2020 | Perpetual bond | 3.30 | 324,099 | — | |||||||||||
The 2-2nd Hybrid securities | May 8, 2020 | Perpetual bond | 3.43 | 74,812 | — | |||||||||||
The 3-1st Hybrid securities | July 14, 2020 | Perpetual bond | 3.17 | 369,099 | — | |||||||||||
The 3-2nd Hybrid securities | July 14, 2020 | Perpetual bond | 3.38 | 29,922 | — | |||||||||||
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| |||||||||||||
The above hybrid securities may be redeemed by the Company after 5 or 10 years from the issuance date.
38
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
18.3 Capital Surplus
Details of capital surplus as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Share premium | ||||||||
Other capital surplus | 1,465,893 | 1,465,893 | ||||||
Gain on sales of treasury share | 86,646 | 86,646 | ||||||
Consideration for exchange rights | 11,933 | — | ||||||
|
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| |||||
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| |||||
18.4 Accumulated Other Comprehensive Income
Details of accumulated other comprehensive income as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Remeasurements of net defined benefit liabilities | ||||||||
Changes in accumulated other comprehensive income for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||||||
| Beginning | Changes | Tax effect | Ending | |||||||||||||
Remeasurements of net defined benefit liabilities | ||||||||||||||||
| (In millions of Korean won) | 2019 | |||||||||||||||
| Beginning | Changes | Tax effect | Ending | |||||||||||||
Remeasurements of net defined benefit liabilities | ||||||||||||||||
18.5 Retained Earnings
Details of retained earnings as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Legal reserves | ||||||||
Voluntary reserves | 982,000 | 982,000 | ||||||
Regulatory reserve for credit losses | 4,175 | 4,458 | ||||||
Retained earnings before appropriation | 2,111,501 | 1,624,029 | ||||||
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With respect to the allocation of net profit earned in a fiscal term, the Company must set aside in its legal reserve an amount equal to at least 10% of its net income after tax as reported in the separate statement of comprehensive income each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its share capital in accordance with Article 53 of the Financial Holding Company Act. The reserve is not available for the payment of cash dividends, but may be transferred to share capital, or used to reduce accumulated deficit.
39
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
18.5.1 Regulatory reserve for credit losses
Measurement and disclosure of regulatory reserve for credit losses are required in accordance with Articles 26 through 28 of the Supervisory Regulations on Financial Holding Companies.
Details of the regulatory reserve for credit losses as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Beginning | ||||||||
Estimated amounts subject to provision (reversal) | 934 | (283 | ) | |||||
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| |||||
Ending | ||||||||
|
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| |||||
The adjustments to the regulatory reserve for credit losses for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Provision (reversal) of regulatory reserve for credit losses | ||||||||||||||||
Adjusted profit (loss) after provision (reversal) of regulatory reserve for credit losses1,2 | 554,436 | 1,421,945 | (46,055 | ) | 796,389 | |||||||||||
Adjusted basic earnings (losses) per share after provision of regulatory reserve for credit losses1 (In Korean won) | 1,423 | 3,649 | (118 | ) | 2,033 | |||||||||||
Adjusted diluted earnings (losses) per share after provision of regulatory reserve for credit losses1 (In Korean won) | ||||||||||||||||
| 1 | Adjusted profit after provision (reversal) of regulatory reserve for credit losses is not in accordance with Korean IFRS and calculated on the assumption that provision (reversal) of regulatory reserve for credit losses before income tax is adjusted to the profit for the period. |
| 2 | Amount after deducting dividends on hybrid securities. |
18.6 Treasury Shares
Changes in treasury shares outstanding for the nine-month periods ended September 30, 2020 and 2019, are as follows:
(In millions of Korean won and in number of shares)
| 2020 | ||||||||||||||||
| Beginning | Acquisition | Retirement | Ending | |||||||||||||
Number of treasury shares | 26,173,585 | — | — | 26,173,585 | ||||||||||||
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Carrying amount | ||||||||||||||||
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5,000,000 treasury shares are deposited at Korea Securities Depository for issuing exchangeable bonds.
40
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
18.6 Treasury Shares (cont’d)
(In millions of Korean won and in number of shares)
| 2019 | ||||||||||||||||
| Beginning | Acquisition | Retirement | Ending | |||||||||||||
Number of treasury shares | 22,560,240 | 5,916,962 | — | 28,477,202 | ||||||||||||
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Carrying amount | ||||||||||||||||
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19. Dividends
The dividends to the shareholders of the Company in respect of the year ended December 31, 2019, ofW 2,210 per share, amounting to total dividends ofW 861,092 million, were paid in April 2020. The dividends paid to the shareholders of the Company in 2019 wereW 759,736 million (W 1,920 per share).
20. Net Interest Expense
Details of interest income and interest expense for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Interest income | ||||||||||||||||
Due from financial institutions | ||||||||||||||||
Loans at amortized cost | 964 | 2,470 | 660 | 1,673 | ||||||||||||
Loans at fair value through profit or loss | 1,567 | 3,976 | 261 | 2,516 | ||||||||||||
Other | 59 | 185 | 83 | 241 | ||||||||||||
|
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|
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| |||||||||
| 2,606 | 6,684 | 1,151 | 6,472 | |||||||||||||
|
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| |||||||||
Interest expense | ||||||||||||||||
Debts | 586 | 589 | 1 | 2,489 | ||||||||||||
Debentures | 33,686 | 98,126 | 30,478 | 92,727 | ||||||||||||
Other | 3 | 9 | 4 | 13 | ||||||||||||
|
|
|
|
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|
|
| |||||||||
| 34,275 | 98,724 | 30,483 | 95,229 | |||||||||||||
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| |||||||||
Net interest expense | ||||||||||||||||
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| |||||||||
21. Net Fee and Commission Expense
Details of fee and commission income, and fee and commission expense for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Fee and commission income | ||||||||||||||||
Fees earned in Korean won | ||||||||||||||||
Fee and commission expense | ||||||||||||||||
Fees paid in Korean won | 2,794 | 6,875 | 1,261 | 4,400 | ||||||||||||
Fees paid in foreign currency | 122 | 238 | 157 | 236 | ||||||||||||
|
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| |||||||||
| 2,916 | 7,113 | 1,418 | 4,636 | |||||||||||||
|
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| |||||||||
Net fee and commission expense | ||||||||||||||||
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| |||||||||
41
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
22. Net Gains on Financial assets at Fair value through Profit or Loss
Net gains on financial assets at fair value through profit or loss consist of gains or losses related to financial instrument that includes dividend income and gains or losses arising from changes in the fair values, sales and redemptions. Details net gains on financial assets at fair value through profit or loss for the three-month and nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Gains related to financial instruments at fair value through profit or loss | ||||||||||||||||
Dividend income on financial assets designated at fair value through profit or loss | ||||||||||||||||
Gains on valuation on financial assets designated at fair value through profit or loss | 434 | 1,041 | 310 | 3,614 | ||||||||||||
|
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| |||||||||
| 4,091 | 11,643 | 3,719 | 13,807 | |||||||||||||
|
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| |||||||||
Losses related to financial instruments at fair value through profit or loss | ||||||||||||||||
Losses on valuation on financial assets designated at fair value through profit or loss | 63 | 1,283 | 192 | 515 | ||||||||||||
|
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| |||||||||
| 63 | 1,283 | 192 | 515 | |||||||||||||
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Net gains on financial instruments at fair value through profit or loss | ||||||||||||||||
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23. Net Other Operating Income
Details of other operating income and expenses for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Other operating income | ||||||||||||||||
Dividend income from subsidiaries | ||||||||||||||||
Gains on foreign currency transactions | 117 | 117 | — | — | ||||||||||||
|
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Net other operating income | ||||||||||||||||
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| |||||||||
42
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
24. General and Administrative Expenses
24.1 General and Administrative Expenses
Details of general and administrative expenses for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Employee benefits | ||||||||||||||||
Salaries and other short-term employee benefits—salaries | ||||||||||||||||
Salaries and other short-term employee benefits—others | 1,173 | 3,184 | 990 | 2,945 | ||||||||||||
Post-employment benefits—defined benefit plans | 522 | 1,565 | 557 | 1,669 | ||||||||||||
Share-based payments | 1,930 | 1,243 | 339 | 2,052 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 9,598 | 24,117 | 8,976 | 24,526 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Depreciation and amortization | 1,057 | 2,921 | 1,329 | 3,737 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other general and administrative expenses | ||||||||||||||||
Travel | (15 | ) | 36 | 180 | 816 | |||||||||||
Communications | 196 | 591 | 87 | 485 | ||||||||||||
Tax and dues | 49 | 329 | 40 | 331 | ||||||||||||
Publication | 85 | 209 | 46 | 193 | ||||||||||||
Rental expense | 227 | 647 | 209 | 617 | ||||||||||||
Vehicle | 37 | 92 | 36 | 97 | ||||||||||||
Service fees | 4,701 | 14,534 | 3,360 | 10,153 | ||||||||||||
Advertising | 15 | 440 | 67 | 464 | ||||||||||||
Training | 199 | 503 | 352 | 890 | ||||||||||||
Others | 1,717 | 4,913 | 1,730 | 5,045 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 7,211 | 22,294 | 6,107 | 19,091 | |||||||||||||
|
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|
|
|
|
|
| |||||||||
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| |||||||||
43
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
24.2 Share-based Payments
The Company entered into share-based payment plan for executives and employees of the Company and its subsidiaries.
Details of stock grants linked to long-term performance as of September 30, 2020, are as follows:
| (In number of shares) | Grant date | Number of granted shares1 | Vesting conditions2 | |||||||
KB Financial Group Inc. | ||||||||||
Series 19 | Nov. 21, 2017 | 46,890 | Service fulfillment, market performance3 35% and non-market performance5 65% | |||||||
Series 21 | Jan. 01, 2019 | 25,172 | Service fulfillment, market performance3 0~30% and non-market performance4 70~100% | |||||||
Series 22 | Apr. 01, 2019 | 3,226 | Service fulfillment, market performance3 30% and non-market performance4 70% | |||||||
Series 23 | May 27, 2019 | 1,436 | Service fulfillment, market performance3 30% and non-market performance4 70% | |||||||
Series 24 | Jul. 17, 2019 | 11,224 | Service fulfillment, market performance3 30% and non-market performance4 70% | |||||||
Series 25 | Jan. 01, 2020 | 80,568 | Service fulfillment, market performance3 0~30% and non-market performance4 70~100% | |||||||
Series 26 | Mar. 18, 2020 | 1,086 | Service fulfillment, market performance3 30% and non-market performance4 70% | |||||||
Series 27 | June 16, 2020 | 687 | Service fulfillment, market performance3 30% and non-market performance4 70% | |||||||
Deferred grant in 2015 | — | 7,674 | Satisfied | |||||||
Deferred grant in 2016 | — | 8,705 | Satisfied | |||||||
Deferred grant in 2017 | — | 30,001 | Satisfied | |||||||
Deferred grant in 2018 | — | 5,960 | Satisfied | |||||||
Deferred grant in 2019 | — | 26,437 | Satisfied | |||||||
|
| |||||||||
| 249,066 | ||||||||||
|
| |||||||||
| Kookmin Bank | ||||||||||
Series 75 | Jan. 1, 2019 | 154,997 | Service fulfillment, market performance 3 0~50%, and non-market performance4 50~100% | |||||||
Series 76 | Apr. 1, 2019 | 5,380 | Service fulfillment, market performance3 30~50%, and non-market performance4 50~70% | |||||||
Series 77 | May. 27, 2019 | 4,468 | Service fulfillment, market performance3 30~50%, and non-market performance4 50~70% | |||||||
Series 78 | Nov. 21, 2019 | 36,443 | Service fulfillment, market performance3 30%, and non-market performance6 70% | |||||||
Series 79 | Jan. 1, 2020 | 266,488 | Service fulfillment, market performance3 0~50%, and non-market performance4 50~100% | |||||||
Series 80 | Mar 1, 2020 | 7,711 | Service fulfillment, market performance3 30~50%, and non-market performance4 50~70% | |||||||
Deferred grant in 2015 | — | 2,759 | Satisfied | |||||||
Deferred grant in 2016 | — | 19,109 | Satisfied | |||||||
Deferred grant in 2017 | — | 58,380 | Satisfied | |||||||
Deferred grant in 2018 | — | 65,511 | Satisfied | |||||||
Deferred grant in 2019 | — | 98,194 | Satisfied | |||||||
|
| |||||||||
| 719,440 | ||||||||||
|
| |||||||||
44
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
24.2 Share-based Payments (cont’d)
| (In number of shares) | Grant date | Number of granted shares1 | Vesting conditions2 | |||||
| Other subsidiaries | ||||||||
Stock granted in 2010 | — | 106 | ||||||
Stock granted in 2011 | — | 146 | ||||||
Stock granted in 2012 | — | 420 | ||||||
Stock granted in 2013 | — | 622 | ||||||
Stock granted in 2014 | — | 1,028 | Services fulfillment, | |||||
Stock granted in 2015 | — | 3,323 | market performance3 10~50% | |||||
Stock granted in 2016 | — | 9,103 | and non-market performance4 50~90% | |||||
Stock granted in 2017 | — | 36,814 | ||||||
Stock granted in 2018 | — | 120,189 | ||||||
Stock granted in 2019 | — | 333,084 | ||||||
Stock granted in 2020 | — | 254,019 | ||||||
|
| |||||||
| 758,854 | ||||||||
|
| |||||||
| 1,727,360 | ||||||||
|
| |||||||
| 1 | Granted shares represent the total number of shares initially granted to directors and employees that have residual shares at the end of reporting period (Deferred grants are residual shares at the end of the reporting period). |
| 2 | Executives and employees were given the option of deferring payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement when the deferred grant has been confirmed. |
| 3 | Relative TSR (Total Shareholders Return): [(Fair value at the end of the contract—Fair value at the beginning of the contract) + (Total amount of dividend per share paid during the contract period)] / Fair value at the beginning of the contract) |
| 4 | Accomplishment of corporates’ and individuals’ performance results |
| 5 | EPS, Asset Quality, HCROI, Non-banking sector profit |
| 6 | EPS, Asset Quality |
The stock grant award program is an incentive plan that sets, on grant date, the maximum number of shares that can be awarded. Actual stock granted at the end of the vesting period is determined in accordance with achievement of pre-specified targets over the vesting period.
45
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
24.2 Share-based Payments (cont’d)
Details of stock grants linked to short-term performances as of September 30, 2020, are as follows:
| Estimated number of vested shares1 | Vesting Conditions | |||||
KB Financial Group Inc. | ||||||
Stock granted in 2015 | 7,524 | Satisfied | ||||
Stock granted in 2016 | 6,595 | Satisfied | ||||
Stock granted in 2017 | 7,385 | Satisfied | ||||
Stock granted in 2018 | 14,292 | Satisfied | ||||
Stock granted in 2019 | 28,030 | Satisfied | ||||
Stock granted in 2020 | 33,690 | Proportional to service period | ||||
Kookmin Bank | ||||||
Stock granted in 2015 | 9,887 | Satisfied | ||||
Stock granted in 2016 | 19,662 | Satisfied | ||||
Stock granted in 2017 | 30,003 | Satisfied | ||||
Stock granted in 2018 | 73,989 | Satisfied | ||||
Stock granted in 2019 | 125,530 | Satisfied | ||||
Stock granted in 2020 | 111,245 | Proportional to service period | ||||
Other subsidiaries | ||||||
Stock granted in 2015 | 12,190 | Satisfied | ||||
Stock granted in 2016 | 40,942 | Satisfied | ||||
Stock granted in 2017 | 149,272 | Satisfied | ||||
Stock granted in 2018 | 345,625 | Satisfied | ||||
Stock granted in 2019 | 551,667 | Satisfied | ||||
Stock granted in 2020 | 261,359 | Proportional to service period | ||||
|
| |||||
| 1,828,887 | ||||||
|
| |||||
| 1 | Executives and employees were given the option of deferring payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement when the deferred grant has been confirmed. |
Share-based payment arrangement for subsidiaries was transferred to the Company in 2010, and the related compensation cost paid to the executives and employees of subsidiaries is reimbursed by these companies. The accrued expenses representing share-based payments as of September 30, 2020 and December 31, 2019, areW 109,254 million andW 124,853 million, respectively, and the receivables to be reimbursed by the subsidiaries for the compensation costs areW 99,164 million andW 112,997 million, respectively. In addition, The compensation costs from share-based payments that amount toW 1,243 million andW 2,052 million were recognized for the nine-month period ended September 30, 2020 and 2019 respectively.
46
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
25. Non-operating Income (Expense)
Details of non-operating income and expenses for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Non-operating income | ||||||||||||||||
Reversal of impairment losses on intangible assets | ||||||||||||||||
Others | 506 | 609 | 27 | 621 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 881 | 1,432 | 27 | 621 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-operating expenses | ||||||||||||||||
Loss on disposal of property, plant and equipment | — | — | 14 | 14 | ||||||||||||
Impairment losses on intangible assets | — | — | — | 4 | ||||||||||||
Donation | 617 | 999 | 415 | 1,047 | ||||||||||||
Others | — | 7 | 1 | 7 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 617 | 1,006 | 430 | 1,072 | |||||||||||||
|
|
|
|
|
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|
| |||||||||
Non-operating income (expenses) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
26. Income Tax Benefit
Details of income tax benefit for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Tax payable | — | — | ||||||
Change in deferred tax assets and liabilities | ||||||||
Origination and reversal of temporary differences | ||||||||
Tax expense recognized directly in equity | ||||||||
Remeasurements of net defined benefit liabilities | 12 | 23 | ||||||
Consideration for exchangeable rights | (4,526 | ) | — | |||||
|
|
|
| |||||
| (4,514 | ) | 23 | ||||||
|
|
|
| |||||
Income tax expense | ||||||||
|
|
|
| |||||
47
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
27. Earnings (Losses) per Share
27.1 Basic Earnings (Losses) per Share
Calculations of basic earnings (losses) per share on the profit attributable to ordinary shares are as follows:
27.1.1 Weighted average number of ordinary shares outstanding
Details of weighted average number of ordinary shares outstanding for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In number of shares) | 2020 | 2019 | ||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Beginning (A) | 415,807,920 | 415,807,920 | 418,111,537 | 418,111,537 | ||||||||||||
Acquisition of treasury shares (B) | (26,173,585 | ) | (26,173,585 | ) | (28,477,202 | ) | (26,475,254 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Weighted average number of ordinary shares outstanding (C=A+B) | 389,634,335 | 389,634,335 | 389,634,335 | 391,636,283 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
27.1.2 Basic earnings (losses) per share
Details of basic earnings (losses) per share for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In Korean won and In number of shares) |
| |||||||||||||||
| 2020 | 2019 | |||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Profit (loss) for the period | ||||||||||||||||
Deduction: Dividends on hybrid securities | 6,580,625,000 | 13,093,125,000 | 3,256,250,000 | 3,256,250,000 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Profit (loss) attributable to the ordinary equity holders (A) | 549,371,119,329 | 1,422,879,194,024 | (46,461,161,365 | ) | 795,488,559,672 | |||||||||||
Weighted average number of ordinary shares outstanding (B) | 389,634,335 | 389,634,335 | 389,634,335 | 391,636,283 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Basic earnings (losses) per share (A / B) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
27.2 Diluted Earnings (Losses) per Share
Diluted earnings (losses) per share is calculated using the weighted average number of ordinary shares outstanding which is adjusted by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. The Company has categories of dilutive potential ordinary shares: Stock Grant and ordinary share exchange rights of exchangeable bonds.
A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market share price of the Company’s outstanding shares for the period) based on the monetary value of the subscription rights attached to the stock grants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of stock grants.
In addition, exchange bonds issued for the nine-month period ended September 30, 2020, were included in potential ordinary shares from the exercisable date of the exchange right, and interest expenses after tax for the period, were added to profit for the period attributable to dilutive potential ordinary shareholders.
48
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
27.2.1 Adjusted profit (loss) for diluted earnings (losses) per share
Adjusted profit (loss) for diluted earnings (losses) per share for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In Korean won) | ||||||||||||||||
| 2020 | 2019 | |||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Profit (loss) attributable to the ordinary equity holders1 | ||||||||||||||||
Adjustment | ||||||||||||||||
Exchangeable bonds Interest expense | 210,675,256 | 210,675,256 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Adjusted profit (loss) for diluted earnings (losses) per share | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | The amount is after deducting dividends on hybrid securities. |
27.2.2 Weighted average number of ordinary shares outstanding for diluted earnings per share
Adjusted weighted average number of ordinary shares outstanding to calculate diluted earnings per share for the three-month and the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In number of shares) | 2020 | 2019 | ||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Weighted average number of ordinary shares issued and outstanding | 389,634,335 | 389,634,335 | 389,634,335 | 391,636,283 | ||||||||||||
Adjustment | ||||||||||||||||
Stock grants | 3,114,369 | 3,297,357 | — | 2,801,308 | ||||||||||||
Exchangeable bonds | 1,793,478 | 602,190 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share | 394,542,182 | 393,533,882 | 389,634,335 | 394,437,591 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
49
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
27.2.3 Diluted earnings per share
Details of diluted earnings per share for the three-month and nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In Korean won and in number of shares) | ||||||||||||||||
| 2020 | 2019 | |||||||||||||||
| Three months | Nine months | Three months | Nine months | |||||||||||||
Adjusted profit (loss) for diluted earnings (losses) per share | ||||||||||||||||
Adjusted weighted average number of ordinary shares outstanding for diluted earnings (losses) per share | 394,542,182 | 393,533,882 | 389,634,335 | 394,437,591 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted earnings (losses) per share | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
28. Supplemental Cash Flow Information
Details of cash and cash equivalents as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||
Due from financial institutions | ||||||||
Restricted cash from financial institutions | (3 | ) | (3 | ) | ||||
|
|
|
| |||||
|
|
|
| |||||
Significant non-cash transactions for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Changes in receivables and payables from consolidated tax | ||||||||
Changes in receivables and payables relating to stock grants | (13,833 | ) | (6,229 | ) | ||||
Cash inflows and outflows due to interest and dividends for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | Activity | 2020 | 2019 | |||||||||
Prepaid income tax expense | Operating | |||||||||||
Interest received | Operating | 6,405 | 5,710 | |||||||||
Interest paid | Operating | 95,776 | 95,949 | |||||||||
Dividends received | Operating | 1,584,015 | 937,153 | |||||||||
Dividends paid | Financing | 874,185 | 762,993 | |||||||||
50
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
29. Contingent Liabilities and Commitments
29.1 Commitments
Commitments made with financial institutions as of September 30, 2020 and December 31, 2019, are as follows:
| September 30, 2020 | December 31, 2019 | |||||||||||||||
| Amount of commitment | Amounts borrowed | Amount of commitment | Amounts borrowed | |||||||||||||
KEB Hana Bank | ||||||||||||||||
29.2 Other Matters (including litigation)
a) The Company has no pending lawsuit as the defendant.
b) The ongoing COVID-19 pandemic has had a negative impact on the global economy, and has increased has increased uncertainty in estimation of the Company’s expected credit losses on certain portfolios and potential impairment on assets. The Company’s ability to generate revenue may be adversely affected by the factors including;
- uncertainties arising from significant increases in credit risks of borrowers affected by COVID-19 pandemic
- uncertainties arising from forward-looking macroeconomic information in estimating expected credit losses
- depreciation of Korean won against major currencies causing increase in the payment amount of principal and interests of debts denominated in foreign currencies; and
- a significant decline in fair value of the Company’s investments in companies affected by COVID-19 pandemic.
51
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
30. Related Party Transactions
According to Korean IFRS 1024, the Company includes subsidiaries and key management (including family members) in the scope of related parties. Additionally, the Company discloses balances (receivables and payables) and other amounts arising from the related party transactions in the notes to the separate financial statements. Refer to Note 9 for details on subsidiaries.
Key management includes the directors of the Company, their close family members, and the companies where the directors and/or their close family members have control or joint control.
Significant related party transactions for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | ||||||||||
Subsidiaries | 2020 | 2019 | ||||||||
Kookmin Bank | Interest income | |||||||||
| Fee and commission income | 629 | 583 | ||||||||
| Net other operating income1 | 1,330,407 | 667,226 | ||||||||
| General and administrative expenses | 6,057 | 5,032 | ||||||||
KB Securities Co., Ltd. | Net other operating income1 | 80,000 | 50,000 | |||||||
| Interest expense | 35 | — | ||||||||
| General and administrative expenses | 875 | 799 | ||||||||
KB Insurance Co., Ltd. | Fee and commission income | — | 3 | |||||||
| General and administrative expenses | 1,125 | 1,526 | ||||||||
KB Kookmin Card Co., Ltd. | Net other operating income1 | 100,004 | 200,008 | |||||||
| General and administrative expenses | 484 | 691 | ||||||||
| Net non-operating income | 4 | 5 | ||||||||
KB Asset Management Co., Ltd. | Net other operating income1 | 30,000 | — | |||||||
KB Capital Co., Ltd | Net gains on financial assets at fair value through profit or loss | 10,360 | 13,292 | |||||||
| Fee and commission income | — | 1 | ||||||||
| General and administrative expenses | 92 | 65 | ||||||||
KB Life Insurance Co., Ltd. | General and administrative expenses | 360 | 67 | |||||||
KB Real Estate Trust. Co., Ltd. | Net other operating income1 | 30,000 | 4,700 | |||||||
KB Savings Bank Co., Ltd. | Net other operating income1 | 3,000 | 5,000 | |||||||
KB Investment Co., Ltd. | Interest income | 2,469 | 1,673 | |||||||
KB Data Systems Co., Ltd. | General and administrative expenses | 838 | 1,512 | |||||||
| 1 | Net other operating income includes dividend income from subsidiaries. |
52
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
30. Related Party Transactions (cont’d)
Significant receivables and payables, and related allowance for loan losses arising from the related party transactions as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | ||||||||||
Subsidiaries | September 30, 2020 | December 31, 2019 | ||||||||
Kookmin Bank | Cash and due from financial institutions | |||||||||
| Other assets | 575,339 | 418,114 | ||||||||
| Other liabilities | 6,233 | 35 | ||||||||
| Property and equipment | 769 | 152 | ||||||||
KB Securities Co., Ltd. | Other assets | 45,719 | 52,068 | |||||||
| Other liabilities | 868 | — | ||||||||
KB Insurance Co., Ltd. | Other assets | 20,215 | 14,492 | |||||||
| Other liabilities | 665 | 47,580 | ||||||||
KB Kookmin Card Co., Ltd. | Other assets | 82,017 | 60,705 | |||||||
| Other liabilities | 1,138 | 1,394 | ||||||||
KB Asset Management Co., Ltd. | Other assets | 13,018 | 15,590 | |||||||
KB Capital Co., Ltd. | Financial assets at fair value through profit or loss | 391,259 | 291,501 | |||||||
| Other assets | 20,870 | 18,995 | ||||||||
| Other liabilities | 92 | — | ||||||||
KB Life Insurance Co., Ltd. | Other assets | 2,918 | 3,956 | |||||||
| Other liabilities | 6,527 | 8,636 | ||||||||
KB Real Estate Trust Co., Ltd. | Other assets | 16,778 | 13,979 | |||||||
KB Savings Bank Co., Ltd. | Other assets | 4,330 | 3,727 | |||||||
KB Investment Co., Ltd. | Loans at amortized cost | 180,000 | 120,000 | |||||||
| Other assets | 8,285 | 2,904 | ||||||||
| Other liabilities | — | 59 | ||||||||
KB Data Systems Co., Ltd. | Property and equipment | 16 | 438 | |||||||
| Intangible assets | 339 | 1,145 | ||||||||
| Other assets | 1,651 | 2,721 | ||||||||
| Other liabilities | 409 | 333 | ||||||||
KB Credit Information Co., Ltd. | Other assets | 820 | 849 | |||||||
| Other liabilities | — | 241 | ||||||||
53
KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
30. Related Party Transactions (cont’d)
Right-of-use assets and lease liability with related parties as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||||||||||
Subsidiary | Kookmin Bank | Right-of-use assets | ||||||||||||||
Unused commitments by a related party as of September 30, 2020 and December 31, 2019, are as follows:
| (In millions of Korean won) | September 30, 2020 | December 31, 2019 | ||||||||||||||
Subsidiary | KB Kookmin Card Co., Ltd. | Unused commitments of credit card | ||||||||||||||
Share transactions with related parties for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||||
Subsidiary | KB Capital Co., Ltd. | Paid-in capital increase of ordinary shares | ||||||||||
Subsidiary | KB Investment Co., Ltd. | Paid-in capital increase of ordinary shares | — | 50,000 | ||||||||
Subsidiary | Prudential Life Insurance Company of Korea Ltd. | Acquisition of shares | 2,310,054 | — | ||||||||
Loan transactions with related parties for the nine-month periods ended September 30, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||||||
| Beginning | Loans | Ending | ||||||||||||||
| Subsidiary | KB Investment Co., Ltd. | Loan | ||||||||||||||
| (In millions of Korean won) | 2019 | |||||||||||||||
| Beginning | Loans | Ending | ||||||||||||||
| Subsidiary | KB Investment Co., Ltd. | Loan | ||||||||||||||
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KB Financial Group Inc.
Notes to the Separate Interim Financial Statements
September 30, 2020 and 2019 (Unaudited), and December 31, 2019
30. Related Party Transactions (cont’d)
Compensation to key management for the nine-month periods ended September 30, 2020 and 2019, consists of:
| (In millions of Korean won) | 2020 | |||||||||||||||
| Short-term employee benefits | Post-employment benefits | Share-based payments | Total | |||||||||||||
Registered director (executive) | ||||||||||||||||
Registered director (non-executive) | 477 | — | — | 477 | ||||||||||||
Non-registered director | 3,267 | 107 | 1,110 | 4,484 | ||||||||||||
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| (In millions of Korean won) | 2019 | |||||||||||||||
| Short-term employee benefits | Post-employment benefits | Share-based payments | Total | |||||||||||||
Registered director (executive) | 1,230 | |||||||||||||||
Registered director (non-executive) | 422 | — | — | 422 | ||||||||||||
Non-registered director | 2,785 | 104 | 1,573 | 4,462 | ||||||||||||
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The Company paidW 65 million andW 225 million to KB Securities Co., Ltd., a subsidiary, for the underwriting and arrangement of debentures and hybrid securities for the nine-month periods ended September 30, 2020 and 2019, respectively.
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