UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2021
Commission File Number: 000-53445
KB Financial Group Inc.
(Translation of registrant’s name into English)
26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul 07331, Korea
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Audit Report of Kookmin Bank for Fiscal Year 2020
On March 9, 2021, KB Financial Group Inc. disclosed audit reports of Kookmin Bank, its wholly-owned subsidiary, for fiscal year 2020 based on the International Financial Reporting Standards as adopted by the Republic of Korea (including the consolidated and separate financial statements of Kookmin Bank as of and for the years ended December 31, 2020 and 2019 and related notes) received from KPMG Samjong Accounting Corp., its independent auditor. The financial statements in such reports have not been approved by the shareholders of Kookmin Bank and remain subject to change.
KB Financial Group Inc. is furnishing the following documents as exhibits to this Form 6-K filing:
Exhibit 99.1: An English-language translation of the Consolidated Audit Report of Kookmin Bank for FY 2020.
Exhibit 99.2: An English-language translation of the Separate Audit Report of Kookmin Bank for FY 2020.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
KB Financial Group Inc. | ||||||
| (Registrant) | ||||||
| Date: March 9, 2021 | By: | /s/ Hwan-Ju Lee | ||||
| (Signature) | ||||||
| Name: Hwan-Ju Lee | ||||||
| Title: Senior Executive Vice President and Chief Finance Officer | ||||||
Based on a report originally issued in Korean
To the Shareholder and Board of Directors
Kookmin Bank
Opinion
We have audited the consolidated financial statements of Kookmin Bank and its subsidiaries (collectively the “Group”), which comprise the statement of financial position as of December 31, 2020, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2020, and its financial performance and its cash flows for the year then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).
Basis for Opinion
We conducted our audits in accordance with Korean Standards on Auditing (KSAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
As described in note 37.6 (b) to the consolidated financial statements, the ongoing COVID-19 pandemic has a negative impact on the global economy and increased uncertainty in estimation of the Group’s expected credit losses on certain portfolios and potential impairment on assets, which might adversely affect the Group’s ability to generate revenue. Our opinion is not modified in respect of this matter.
Other Matters
The consolidated financial statements of the Group for the year ended December 31, 2019 were audited by another auditor who expressed an unmodified opinion on those statements on March 5, 2020.
The procedures and practices utilized in the Republic of Korea to audit such consolidated financial statements may differ from those generally accepted and applied in other countries.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
1
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| • | Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| • | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. |
| • | Evaluate the appropriateness of accounting policies used in the preparation of the consolidated financial statements and the reasonableness of accounting estimates and related disclosures made by management. |
| • | Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
| • | Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
| • | Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
/s/ KPMG Samjong Accounting Corp.
Seoul, Korea
March 8, 2021
This report is effective as of March 8, 2021, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.
|
2
Consolidated Statements of Financial Position
December 31, 2020 and 2019
| (In millions of Korean won) | Notes | 2020 | 2019 | |||||||||
Assets | ||||||||||||
Cash and due from financial institutions | 4,6,7,36 | 19,972,269 | 14,481,309 | |||||||||
Financial assets at fair value through profit or loss | 4,6,8,12 | 16,042,357 | 13,866,303 | |||||||||
Derivative financial assets | 4,6,9 | 4,456,668 | 2,317,425 | |||||||||
Loans measured at amortized cost | 4,6,8,10,11 | 327,332,495 | 293,531,433 | |||||||||
Financial investments | 4,6,8,12 | 58,286,482 | 52,419,293 | |||||||||
Investments in associates | 13 | 441,325 | 564,711 | |||||||||
Property and equipment | 8,14 | 4,041,894 | 3,784,374 | |||||||||
Investment property | 14 | 318,101 | 475,968 | |||||||||
Intangible assets | 15 | 962,654 | 268,731 | |||||||||
Current income tax assets | 32 | 47,847 | 13,904 | |||||||||
Deferred income tax assets | 16,32 | 58,339 | 2,263 | |||||||||
Assets held for sale | 17 | 197,727 | 6,941 | |||||||||
Other assets | 4,6,18 | 6,285,956 | 5,692,383 | |||||||||
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| |||||||||
Total assets | 438,444,114 | 387,425,038 | ||||||||||
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| |||||||||
Liabilities | ||||||||||||
Financial liabilities at fair value through profit or loss | 4,6 | 141,277 | 80,235 | |||||||||
Derivative financial liabilities | 4,6,9 | 4,282,364 | 2,168,982 | |||||||||
Deposits | 4,6,19 | 330,352,491 | 300,917,482 | |||||||||
Borrowings | 4,6,20 | 26,870,831 | 19,141,262 | |||||||||
Debentures | 4,6,21 | 26,969,584 | 18,739,992 | |||||||||
Provisions | 22 | 388,014 | 311,140 | |||||||||
Net defined benefit liabilities | 23 | 165,402 | 179,110 | |||||||||
Current income tax liabilities | 32 | 37,481 | 8,338 | |||||||||
Deferred income tax liabilities | 16,32 | 346,850 | 248,652 | |||||||||
Other liabilities | 4,6,24,30 | 18,481,746 | 16,625,612 | |||||||||
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| |||||||||
Total liabilities | 408,036,040 | 358,420,805 | ||||||||||
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| |||||||||
Equity | ||||||||||||
Capital stock | 25 | 2,021,896 | 2,021,896 | |||||||||
Hybrid securities | 25 | 574,523 | 574,523 | |||||||||
Capital surplus | 25 | 4,808,482 | 5,219,704 | |||||||||
Accumulated other comprehensive income | 25,34 | 494,445 | 123,334 | |||||||||
Retained earnings | 25,33,34 | 22,243,552 | 21,064,776 | |||||||||
(Provision of regulatory reserve for credit losses | ||||||||||||
December 31, 2020 : | ||||||||||||
December 31, 2019 : | ||||||||||||
(Amounts estimated to be appropriated | ||||||||||||
December 31, 2020 : | ||||||||||||
December 31, 2019 : | ||||||||||||
|
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| |||||||||
Equity attributable to the shareholder of the Parent Company |
| 30,142,898 | 29,004,233 | |||||||||
Non-controlling interests |
| 265,176 | — | |||||||||
|
|
|
| |||||||||
Total equity | 30,408,074 | 29,004,233 | ||||||||||
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| |||||||||
Total liabilities and equity | 438,444,114 | 387,425,038 | ||||||||||
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| |||||||||
The above consolidated statements of financial position should be read in conjunction with the accompanying notes.
3
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2020 and 2019
| (In millions of Korean won) | Notes | 2020 | 2019 | |||||||||
Interest income | 10,456,165 | 10,779,948 | ||||||||||
Interest income from financial instruments at fair value through other comprehensive income and amortized cost | 10,265,173 | 10,568,018 | ||||||||||
Interest income from financial instruments at fair value through profit or loss | 190,992 | 211,930 | ||||||||||
Interest expense | (3,701,399 | ) | (4,416,161 | ) | ||||||||
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| |||||||||
Net interest income | 26 | 6,754,766 | 6,363,787 | |||||||||
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| |||||||||
Fee and commission income | 1,449,687 | 1,483,362 | ||||||||||
Fee and commission expense | (381,765 | ) | (350,066 | ) | ||||||||
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| |||||||||
Net fee and commission income | 27 | 1,067,922 | 1,133,296 | |||||||||
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| |||||||||
Net gains on financial instrument at fair value through profit or loss | 28 | 244,183 | 422,624 | |||||||||
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Net other operating expenses | 29 | (230,206 | ) | (600,639 | ) | |||||||
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| |||||||||
General and administrative expenses | 14,15,23,30,40 | (4,201,346 | ) | (3,887,419 | ) | |||||||
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| |||||||||
Operating profit before provision for credit losses | 3,635,319 | 3,431,649 | ||||||||||
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| |||||||||
Provision for credit losses | 7,11,12,18,22 | (484,182 | ) | (103,530 | ) | |||||||
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| |||||||||
Operating profit | 3,151,137 | 3,328,119 | ||||||||||
Share of profit (loss) of investments in associates | 13 | (48,158 | ) | 29,240 | ||||||||
Net other non-operating income (expenses) | 31 | 28,844 | (38,887 | ) | ||||||||
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| |||||||||
Net non-operating expenses | (19,314 | ) | (9,647 | ) | ||||||||
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| |||||||||
Profit before income tax expense | 3,131,823 | 3,318,472 | ||||||||||
Income tax expense | 32 | (812,304 | ) | (879,393 | ) | |||||||
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| |||||||||
Profit for the period | 2,319,519 | 2,439,079 | ||||||||||
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| |||||||||
(Adjusted profit after provision of regulatory reserve for credit losses | 25 | |||||||||||
2020 : | ||||||||||||
2019 : | ||||||||||||
Items that will not be reclassified to profit or loss: | ||||||||||||
Remeasurements of net defined benefit liabilities | 23 | (4,166 | ) | (40,369 | ) | |||||||
Net gains (losses) on equity instruments at fair value through other comprehensive income | 666,641 | (17,151 | ) | |||||||||
Items that may be reclassified subsequently to profit or loss: | ||||||||||||
Exchange differences on translating foreign operations | (154,972 | ) | 26,271 | |||||||||
Net gains on debt instruments at fair value through other comprehensive income | 30,750 | 34,275 | ||||||||||
Share of other comprehensive income (loss) of associates | (6,978 | ) | 7,546 | |||||||||
Gains (Losses) on hedging instruments of net investments in foreign operations | 9 | 61,329 | (6,267 | ) | ||||||||
Gains (Losses) on cash flow hedging instruments | 9 | (6,382 | ) | (15,230 | ) | |||||||
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Other comprehensive income(loss) for the period, net of tax | 34 | 586,222 | (10,925 | ) | ||||||||
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| |||||||||
Total comprehensive income for the period | 2,905,741 | 2,428,154 | ||||||||||
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| |||||||||
Profit attributable to: | ||||||||||||
Shareholder of the Parent Company | 2,298,195 | 2,439,079 | ||||||||||
Non-controlling interests | 21,324 | — | ||||||||||
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| |||||||||
| 2,319,519 | 2,439,079 | |||||||||||
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| |||||||||
Total comprehensive income for the period attributable to: | ||||||||||||
Shareholder of the Parent Company | 2,905,953 | 2,428,154 | ||||||||||
Non-controlling interests | (212 | ) | — | |||||||||
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| |||||||||
| 2,905,741 | 2,428,154 | |||||||||||
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The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.
4
Consolidated Statements of Changes in Equity
Years Ended December 31, 2020 and 2019
| Attributable to the shareholder of the Parent Company | ||||||||||||||||||||||||||||||||
| (In millions of Korean won) | Notes | Capital Stock | Hybrid Securities | Capital Surplus | Accumulated Other Comprehensive Income | Retained Earnings | Non-controlling Interests | Total Equity | ||||||||||||||||||||||||
Balance at January 1, 2019 | 2,021,896 | — | 5,218,788 | 115,784 | 19,311,398 | — | 26,667,866 | |||||||||||||||||||||||||
Comprehensive income for the period | ||||||||||||||||||||||||||||||||
Profit for the period | — | — | — | — | 2,439,079 | — | 2,439,079 | |||||||||||||||||||||||||
Remeasurements of net defined benefit liabilities | — | — | — | (40,369 | ) | — | — | (40,369 | ) | |||||||||||||||||||||||
Net losses on equity instruments at fair value through other comprehensive income | — | — | — | 1,324 | (18,475 | ) | — | (17,151 | ) | |||||||||||||||||||||||
Exchange differences on translating foreign operations | — | — | — | 26,271 | — | — | 26,271 | |||||||||||||||||||||||||
Net gains on debt instruments at fair value through other comprehensive income | — | — | — | 34,275 | — | — | 34,275 | |||||||||||||||||||||||||
Share of other comprehensive income of associates | — | — | — | 7,546 | — | — | 7,546 | |||||||||||||||||||||||||
Losses on hedging instruments of net investments in foreign operations | — | — | — | (6,267 | ) | — | — | (6,267 | ) | |||||||||||||||||||||||
Losses on cash flow hedging instruments | — | — | — | (15,230 | ) | — | — | (15,230 | ) | |||||||||||||||||||||||
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Total comprehensive income for the period | — | — | — | 7,550 | 2,420,604 | — | 2,428,154 | |||||||||||||||||||||||||
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Transactions with the shareholder | ||||||||||||||||||||||||||||||||
Annual dividends | — | — | — | — | (667,226 | ) | — | (667,226 | ) | |||||||||||||||||||||||
Issuance of hybrid securities | — | 574,523 | — | — | 574,523 | |||||||||||||||||||||||||||
Changes in ownership of subsidiaries | — | — | 916 | — | — | — | 916 | |||||||||||||||||||||||||
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Total transactions with the shareholder | — | 574,523 | 916 | — | (667,226 | ) | — | (91,787 | ) | |||||||||||||||||||||||
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Balance at December 31, 2019 | 2,021,896 | 574,523 | 5,219,704 | 123,334 | 21,064,776 | — | 29,004,233 | |||||||||||||||||||||||||
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Balance at January 1, 2020 | 2,021,896 | 574,523 | 5,219,704 | 123,334 | 21,064,776 | — | 29,004,233 | |||||||||||||||||||||||||
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Comprehensive income for the period | ||||||||||||||||||||||||||||||||
Profit for the period | — | — | — | — | 2,298,195 | 21,324 | 2,319,519 | |||||||||||||||||||||||||
Remeasurements of net defined benefit liabilities | — | — | — | (4,111 | ) | — | (55 | ) | (4,166 | ) | ||||||||||||||||||||||
Net gains on equity instruments at fair value through other comprehensive income | — | — | — | 429,994 | 236,647 | — | 666,641 | |||||||||||||||||||||||||
Exchange differences on translating foreign operations | — | — | — | (134,469 | ) | — | (20,503 | ) | (154,972 | ) | ||||||||||||||||||||||
Net gains on debt instruments at fair value through other comprehensive income | — | — | — | 31,728 | — | (978 | ) | 30,750 | ||||||||||||||||||||||||
Share of other comprehensive loss of associates | — | — | — | (6,978 | ) | — | — | (6,978 | ) | |||||||||||||||||||||||
Gains on hedging instruments of net investments in foreign operations | — | — | — | 61,329 | — | — | 61,329 | |||||||||||||||||||||||||
Losses on cash flow hedging instruments | — | — | — | (6,382 | ) | — | — | (6,382 | ) | |||||||||||||||||||||||
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Total comprehensive income for the period | — | — | — | 371,111 | 2,534,842 | (212 | ) | 2,905,741 | ||||||||||||||||||||||||
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Transactions with the shareholder | ||||||||||||||||||||||||||||||||
Annual dividends | — | — | — | — | (731,926 | ) | — | (731,926 | ) | |||||||||||||||||||||||
Interim dividends | — | — | — | — | (598,481 | ) | — | (598,481 | ) | |||||||||||||||||||||||
Issuance of hybrid securities | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Interest (dividends) on hybrid securities | — | — | — | — | (25,659 | ) | — | (25,659 | ) | |||||||||||||||||||||||
Others | 42 | — | — | (411,222 | ) | — | — | 265,388 | (145,834 | ) | ||||||||||||||||||||||
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Total transactions with the shareholder | — | — | (411,222 | ) | — | (1,356,066 | ) | 265,388 | (1,501,900 | ) | ||||||||||||||||||||||
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Balance at December 31, 2020 | 2,021,896 | 574,523 | 4,808,482 | 494,445 | 22,243,552 | 265,176 | 30,408,074 | |||||||||||||||||||||||||
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The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
5
Consolidated Statements of Cash Flows
Years Ended December 31, 2020 and 2019
| (In millions of Korean won) | Notes | 2020 | 2019 | |||||||
Cash flows from operating activities | ||||||||||
Profit for the period | 2,319,519 | 2,439,079 | ||||||||
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| |||||||
Adjustment for non-cash items | ||||||||||
Net gains on financial instruments at fair value through profit or loss | (217,768 | ) | (201,982 | ) | ||||||
Net losses (gains) on derivative financial instrument for hedging purposes | 8,168 | (110,405 | ) | |||||||
Adjustment of fair value of derivative financial instruments | (3,198 | ) | 282 | |||||||
Provision for credit losses | 484,257 | 103,170 | ||||||||
Net gains on financial investments | (179,941 | ) | (95,524 | ) | ||||||
Share of loss (profit) of associates | 48,157 | (29,240 | ) | |||||||
Depreciation and amortization expense | 569,721 | 509,346 | ||||||||
Other net losses (gains) on property and equipment/intangible assets | (77,011 | ) | 1,518 | |||||||
Share-based payment | 13,364 | 15,173 | ||||||||
Post-employment benefits | 159,393 | 157,946 | ||||||||
Net interest expense | 559,070 | 236,930 | ||||||||
Gains on foreign currency translation | (155,831 | ) | (100,131 | ) | ||||||
Other expense (income) | (14,318 | ) | 60,496 | |||||||
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| 1,194,063 | 547,579 | |||||||||
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Changes in operating assets and liabilities | ||||||||||
Financial assets at fair value through profit or loss | (1,405,459 | ) | (1,497,738 | ) | ||||||
Derivative financial instrument | 42,804 | (7,944 | ) | |||||||
Loans measured at amortized cost | (28,338,718 | ) | (16,595,592 | ) | ||||||
Current income tax assets | (24,211 | ) | (9,265 | ) | ||||||
Deferred income tax assets | (58,957 | ) | 1,110 | |||||||
Other assets | (3,478,528 | ) | (905,137 | ) | ||||||
Financial liabilities at fair value through profit or loss | 49,648 | (23,165 | ) | |||||||
Deposits | 23,689,107 | 28,107,474 | ||||||||
Deferred income tax liabilities | (174,090 | ) | 137,700 | |||||||
Other liabilities | (1,139,460 | ) | 1,176,035 | |||||||
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| (10,837,864 | ) | 10,383,478 | ||||||||
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Net cash inflow (outflow) from operating activities | (7,324,282 | ) | 13,370,136 | |||||||
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Cash flows from investing activities | ||||||||||
Net cash flows from derivative financial instrument for hedging purposes | 8,983 | 7,120 | ||||||||
Disposal of financial assets at fair value through profit or loss | 6,729,781 | 7,807,186 | ||||||||
Acquisition of financial assets at fair value through profit or loss | (7,477,327 | ) | (7,817,304 | ) | ||||||
Disposal of financial investments | 72,170,571 | 59,540,128 | ||||||||
Acquisition of financial investments | (76,954,130 | ) | (68,825,567 | ) | ||||||
Disposal of investments in associates | 187,181 | 30,354 | ||||||||
Acquisition of investments in associates | (200,023 | ) | (69,005 | ) | ||||||
Disposal of property and equipment | 1,913 | 60 | ||||||||
Acquisition of property and equipment | (340,477 | ) | (525,605 | ) | ||||||
Acquisition of investment property | (125 | ) | (230,584 | ) | ||||||
Disposal of investment property | 267,836 | — | ||||||||
Disposal of intangible assets | 4,260 | 7,126 | ||||||||
Acquisition of intangible assets | (77,960 | ) | (73,726 | ) | ||||||
Net cash flows from changes in subsidiaries | (388,621 | ) | 212,279 | |||||||
Others | 33,219 | (59,809 | ) | |||||||
|
|
|
| |||||||
Net cash outflow from investing activities | (6,034,919 | ) | (9,997,347 | ) | ||||||
|
|
|
| |||||||
Cash flows from financing activities | ||||||||||
Net cash flows from derivative financial instrument for hedging purposes | (16,182 | ) | (28,631 | ) | ||||||
Net increase in borrowings | 6,332,405 | 1,290,505 | ||||||||
Increase in debentures | 19,952,932 | 9,543,968 | ||||||||
Decrease in debentures | (11,653,980 | ) | (14,105,629 | ) | ||||||
Payment of dividends | (1,330,407 | ) | (667,226 | ) | ||||||
Net increase (decrease) in other payables to trust accounts | 2,326,495 | (68,647 | ) | |||||||
Issuance of hybrid securities | — | 574,523 | ||||||||
Others | (60,866 | ) | (66,498 | ) | ||||||
|
|
|
| |||||||
Net cash inflow (outflow) from financing activities | 15,550,397 | (3,527,635 | ) | |||||||
|
|
|
| |||||||
Effect of exchange rate changes on cash and cash equivalents | (266,209 | ) | 177,663 | |||||||
|
|
|
| |||||||
Net increase in cash and cash equivalents | 1,924,987 | 22,817 | ||||||||
Cash and cash equivalents at the beginning of the period | 36 | 4,879,312 | 4,856,495 | |||||||
|
|
|
| |||||||
Cash and cash equivalents at the end of the period | 36 | 6,804,299 | 4,879,312 | |||||||
|
|
|
| |||||||
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
6
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
1. The Bank
Kookmin Bank (the “Bank” or the “Parent Company”) was incorporated in 1963 under the Citizens National Bank Act to provide banking services to the general public and to small and medium-sized enterprises. Pursuant to the Repeal Act of the Citizens National Bank Act, effective January 5, 1995, the Bank’s status changed to a financial institution which operates under the Banking Act and Commercial Act.
The Bank merged with Korea Long Term Credit Bank on December 31, 1998, and with its subsidiaries, Daegu, Busan, Jeonnam Kookmin Mutual Savings & Finance Co., Ltd., on August 22, 1999. Pursuant to the directive from the Financial Services Commission related to the Structural Improvement of the Financial Industry Act, the Bank acquired certain assets, including performing loans, and assumed most of the liabilities of Daedong Bank on June 29, 1998. Also, the Bank completed the merger with Housing and Commercial Bank (“H&CB”) on October 31, 2001, and merged with Kookmin Credit Card Co., Ltd., a majority-owned subsidiary, on September 30, 2003. Meanwhile, the Bank spun off its credit card business segment on February 28, 2011, and KB Kookmin Card Co., Ltd. became a subsidiary of KB Financial Group Inc.
The Bank listed its shares on the Stock Market Division of the Korea Exchange (“KRX,”) in September 1994. As a result of the merger with H&CB, the shareholders of the former Kookmin Bank and H&CB received new common shares of the Bank which were relisted on the KRX on November 9, 2001. In addition, H&CB listed its American Depositary Shares (“ADS”) on the New York Stock Exchange (“NYSE”) on October 3, 2000, prior to the merger. Following the merger with H&CB, the Bank listed its ADS on the NYSE on November 1, 2001. The Bank became a wholly owned subsidiary of KB Financial Group Inc. through a comprehensive stock transfer on September 29, 2008. Subsequently, the Bank’s shares and its ADS, each listed on the KRX and the NYSE, were delisted on October 10, 2008 and September 26, 2008, respectively. As of December 31, 2020, the Bank’s paid-in capital isW 2,021,896 million.
The Bank engages in the banking business in accordance with the Banking Act, trust business in accordance with the Financial Investment Services and Capital Markets Act, mobile virtual network business in accordance with Special Act on Support for Financial Innovation, and other relevant businesses. As of December 31, 2020, the Bank operates its Seoul headquarters and 972 domestic branches, and eight overseas branches (excluding six subsidiaries and one office).
2. Basis of Preparation
2.1 Application of Korean IFRS
The Bank and its subsidiaries (collectively the “Group”) maintains its accounting records in Korean won and prepares statutory consolidated financial statements in the Korean language in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”). The accompanying consolidated financial statements have been translated into English from the Korean language consolidated financial statements.
The consolidated financial statements of the Group have been prepared in accordance with Korean IFRS. These are the standards and related interpretations issued by the International Accounting Standards Board (“IASB”) that have been adopted by the Republic of Korea.
The preparation of the consolidated financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 2.4.
7
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
2.1.1 The Group has applied the following amended standards for the first time for its annual reporting period commencing January 1, 2020.
| • | Amendments to Korean IFRS No.1001 Presentation of Financial Statements and Korean IFRS No.1008 Accounting policies, changes in accounting estimates and errors – Definition of Material |
The amendments clarify the definition of material. Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. These amendments do not have a significant impact on the consolidated financial statements.
| • | Amendments to Korean IFRS No.1103 Business Combination – Definition of a Business |
The amended definition of a business requires an acquisition to include an input and a substantive process that together significantly contribute to the ability to create outputs and the definition of output excludes the returns in the form of lower costs and other economic benefits. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, an entity may elect to apply an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. These amendments do not have a significant impact on the consolidated financial statements.
2.1.2 The Group has early adopted the following amended standards.
| • | Amendments to Korean IFRS No.1107 Financial Instruments: Disclosure, Korean IFRS No.1109 Financial Instruments – Interest Rate Benchmark Reform |
These amendments provide exceptions applying hedge accounting even though interest rate benchmark reform gives rise to uncertainties. In the hedging relationship, an entity shall assume that the interest rate benchmark on which the hedge cash flows are based is not altered as a result of interest rate benchmark reform when determining whether a forecast transaction is highly probable and prospectively assessing hedging effectiveness. For a hedge of a non-contractually specified benchmark component of interest rate risk, an entity shall apply the requirement that the risk component shall be separately identifiable only at the inception of the hedging relationship. The application of this exception is ceased either when the uncertainty arising from interest rate benchmark reform is no longer present with respect to the timing and the amount of the interest rate benchmark-based cash flows of the hedge item, or when the hedging relationship that the hedge item is part of is discontinued. The Group early adopted these amendments since 2019 as the amendments allow the early adoption.
The significant benchmark interest rate indicators for the hedge relationship are LIBOR and CD, and those affected by these amendments should be referred to Note 9.
8
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
2.1.3 The following amended standards have been published that are not mandatory for December 31, 2020 reporting periods and have not been early adopted by the Group.
| • | Amendments to Korean IFRS No.1116 Leases – 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, and the amounts recognized in profit or loss as a result of applying this exemption should be disclosed. The amendments should be applied for annual periods beginning on or after June 1, 2020, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
| • | Amendments to Korean IFRS No.1109 Financial Instruments, Korean IFRS No.1039 Financial Instruments: Recognition and Measurement, Korean IFRS No.1107 Financial Instruments: Disclosure, Korean IFRS No.1104 Insurance Contracts and Korean IFRS No.1116 Lease – Interest Rate Benchmark Reform |
In relation to interest rate benchmark reform, the amendments provide a practical expedient allowing entities to change the effective interest rate instead of changing the carrying amount and apply hedge accounting without discontinuance although the interest rate benchmark is replaced in hedging relationship. The amendments should be applied for annual periods beginning on or after January 1, 2021, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
| • | Amendments to Korean IFRS No.1103 Business Combination – Reference to the Conceptual Framework |
The amendments update a reference of definition of assets and liabilities to qualify for recognition in revised Conceptual Framework for Financial Reporting. However, the amendments add an exception for the recognition of liabilities and contingent liabilities within the scope of Korean IFRS No.1037 Provisions, Contingent Liabilities and Contingent Assets, and Korean IFRS No.2121 Levies. The amendments also confirm that contingent assets should not be recognized at the acquisition date. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
| • | Amendments to Korean IFRS No.1016 Property, Plant and Equipment - Proceeds before intended use |
The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. Instead, the entity will recognize the proceeds from selling such items, and the costs of producing those items, as profit or loss. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
| • | Amendments to Korean IFRS No.1037 Provisions, Contingent Liabilities and Contingent Assets - Onerous Contracts: Cost of Fulfilling a Contract |
The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
9
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| • | Annual improvements to Korean IFRS 2018-2020 |
Annual improvements of Korean IFRS 2018-2020 Cycle should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
| • | Korean IFRS No.1101 First time Adoption of Korean International Financial Reporting Standards – Subsidiaries that are first-time adopters |
| • | Korean IFRS No.1109 Financial Instruments – Fees related to the 10% test for derecognition of financial liabilities |
| • | Korean IFRS No.1116 Leases – Lease incentives |
| • | Korean IFRS No.1041 Agriculture – Measuring fair value |
| • | Amendments to Korean IFRS No.1001 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current |
The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise right to defer settlement of the liability or the management’s expectations thereof. Also, the settlement of liability includes the transfer of the entity’s own equity instruments; however, it would be excluded if an option to settle the liability by the transfer of the entity’s own equity instruments is recognized separately from the liability as an equity component of a compound financial instrument. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.
2.2 Measurement Basis
The consolidated financial statements have been prepared based on the historical cost accounting model unless otherwise specified.
2.3 Functional and Presentation Currency
Items included in the financial statements of each entity of the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated financial statements are presented in Korean won, which is the Parent Company’s functional and presentation currency.
2.4 Critical Accounting Estimates
The preparation of the consolidated financial statements requires the application of accounting policies, certain critical accounting estimates and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses). Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment at the reporting date are different from the actual environment.
Estimates and underlying assumptions are continually evaluated, and changes in accounting estimates are recognized in the period in which the estimates are changed and in any future periods affected.
Uncertainties in estimates and assumptions with significant risks that may result in material adjustments to the consolidated financial statements are as follows:
10
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
2.4.1 Income taxes
The Group is operating in numerous countries and the income generated from these operations is subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain.
If certain portion of the taxable income is not used for investments, wages, etc. in accordance with the Korean regulation called ‘Special Taxation for Facilitation of Investment and Mutually-beneficial Cooperation’, the Group is liable to pay additional income tax calculated based on the tax laws. Therefore, the effect of recirculation of corporate income should be reflected in current and deferred income tax. As the Group’s income tax is dependent on the actual investments, wages, etc. per each year, there are uncertainties with regard to measuring the final tax effects during the period when the tax law is applied.
2.4.2 Fair value of financial instruments
The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available is determined by using valuation techniques. Financial instruments, which are not actively traded in the market and those with less transparent market prices, will have less objective fair values and require broad judgment on liquidity, concentration, uncertainty in market factors and assumptions in fair value determination and other risks.
As described in the significant accounting policies in Note 3.3, ‘Recognition and Measurement of Financial Instruments’, diverse valuation techniques are used to determine the fair value of financial instruments, from generally accepted market valuation models to internally developed valuation models that incorporate various types of assumptions and variables
2.4.3 Allowances and provisions for credit losses
The Group recognizes and measures allowances for credit losses of debt instruments measured at amortized cost and debt instruments measured at fair value through other comprehensive income. Also, the Group recognizes and measures provisions for credit losses of acceptances and guarantees, and unused loan commitments. Accuracy of allowances and provisions for credit losses is dependent upon estimation of expected cash flows of the borrower for individually assessed loans, and upon assumptions and methodology used for collectively assessed groups of loans, acceptances and guarantees and unused loan commitments.
2.4.4 Net defined benefit liability
The present value of the net defined benefit liability is affected by changes in the various factors determined by the actuarial method.
2.4.5 Impairment of goodwill
The recoverable amounts of cash-generating units are determined based on value-in-use calculations to test whether impairment of goodwill has occurred.
11
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
2.4.6 Assessment of expected credit losses of financial instruments related to COVID-19
The proliferation of COVID-19 in 2020 negatively affected the global economy, despite of various forms of government support policy. Accordingly, the Group was provided with various economic forecasting scenarios from KB Research, assuming macroeconomic changes due to the level of COVID-19 pandemic. The Group reviewed the possibilities of each scenario comprehensively, updated the forward-looking information, and reflected its effect on expected credit losses through the statistical method. In order to reflect additional credit risk for financial assets whose industries are highly affected by COVID-19, the Group measured expected credit losses using a conservative scenario comparing to the forecasted forward-looking information and proactively responded to the credit risk to be increased in the future by expanding the scope of loans subject to lifetime expected credit losses (non-impaired) and expanding the scope of loans subject to individual assessment. The Group will continue to monitor the impact of COVID-19 on the expected credit losses by comprehensively considering the duration of the impact on the entire economy and the government’s policies.
12
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3. Significant Accounting Policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
3.1 Consolidation
3.1.1 Subsidiaries
Subsidiaries are companies that are controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Also, the existence and effects of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls the investee. Subsidiaries are fully consolidated from the date when control is transferred to the Group and de-consolidated from the date when control is lost.
If a subsidiary uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to that subsidiary’s financial statements in preparing the consolidated financial statements to ensure conformity with the Group’s accounting policies.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Parent Company and to the non-controlling interests, if any. Total comprehensive income is attributed to the owners of the Parent Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions (i.e. transactions with owners in their capacity as owners). The difference between fair value of any consideration paid and carrying amount of the subsidiary’s net assets attributable to the additional interests acquired, is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
When the Group loses control, any investment retained in the former subsidiary is recognized at its fair value at the date when control is lost, with the resulting difference recognized in profit or loss. This fair value will be the fair value on initial recognition of a financial asset in accordance with Korean IFRS No.9 or, when appropriate, the cost on initial recognition of an investment in an associate or joint venture. In addition, all amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted on the same basis as would be required if the Group had directly disposed of the related assets or liabilities. Therefore, amounts previously recognized in other comprehensive income are reclassified to profit or loss.
The Group accounts for each business combination by applying the acquisition method. The consideration transferred is measured at fair value, and identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are initially measured at acquisition-date fair values. For each business combination, the Group measures non-controlling interests in the acquiree that entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidation at either (a) fair value or (b) the proportionate share in the recognized amounts of the acquiree’s identifiable net assets. Acquisition-related costs are expensed in the periods in which the costs are incurred.
13
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
In a business combination achieved in stages, the Group shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss or other comprehensive income, as appropriate. In prior reporting periods, the Group may have recognized changes in the value of its equity interest in the acquiree in other comprehensive income. If so, the amount that was recognized in other comprehensive income shall be reclassified as profit or loss, or retained earnings, on the same basis as would be required if the Group had disposed directly of the previously held equity interest.
The Group applies the book amount method to account for business combinations of entities under a common control. Identifiable assets acquired and liabilities assumed in a business combination are measured at their book amounts on the consolidated financial statements of the Group. In addition, the difference between (a) the sum of consolidated net book amounts of the assets and liabilities transferred and accumulated other comprehensive income and (b) the consideration paid is recognized as capital surplus.
3.1.2 Associates
Associates are entities over which the Group has significant influence over the financial and operating policy decisions. Generally, if the Group holds 20% or more of the voting power of the investee, it is presumed that the Group has significant influence.
Investments in associates and joint ventures are initially recognized at cost and equity method is applied after initial recognition. The carrying amount is increased or decreased to recognize the Group’s share of the profit or loss of the investee and changes in the investee’s equity after the date of acquisition. Distributions received from an investee reduce the carrying amount of the investment. Unrealized gains and losses resulting from transactions between the Group and associates are eliminated to the extent of the Group’s share in associates. If unrealized losses are indication of an impairment loss that which should be recognized in the consolidated financial statements, those losses are recognized for the period.
If associates use accounting policies other than those of the Group for like transactions and events in similar circumstances, if necessary, adjustments shall be made to make the associates’ accounting policies conform to those of the Group when the associates’ financial statements are used by the Group in applying the equity method.
If the Group’s share of losses of associates equals or exceeds its interest in the associates (including long-term interests that, in substance, form part of the Group’s net investment in the associates), the Group discontinues recognizing its share of further losses. After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associates.
The Group determines at each reporting period whether there is any objective evidence that the investments in the associates are impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associates and its carrying value and recognizes the amount as non-operating income (expenses) in the consolidated statement of comprehensive income.
3.1.3 Structured entity
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. When the Group decides whether it has power over the structured entities in which the Group has interests, it considers factors such as the purpose, the form, the substantive ability to direct the relevant activities of a structured entity, the nature of its relationship with a structured entity and the amount of exposure to variable returns.
14
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.1.4 Funds management
The Group manages and operates trust assets, collective investment and other funds on behalf of investors. These trusts and funds are not consolidated, except for trusts and funds over which the Group has control.
3.1.5 Intragroup transactions
Intragroup balances, income, expenses and any unrealized gains and losses resulting from intragroup transactions are eliminated in full, in preparing the consolidated financial statements. If unrealized losses are indication of an impairment loss which should be recognized in the consolidated financial statements, those losses are recognized for the period.
3.2 Foreign Currency
3.2.1 Foreign currency transactions
A foreign currency transaction is recorded, at initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of each reporting period, foreign currency monetary items are translated using the closing rate which is the spot exchange rate at the end of the reporting period. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was measured and non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
Except for the exchange difference for the net investment in a foreign operation and the financial liability designated as a hedging instrument of net investment, exchange differences arising on the settlement of monetary items or on translating monetary items is recognized in profit or loss. When gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income, conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.
3.2.2 Foreign operations
The results and financial position of a foreign operation, whose functional currency differs from the Group’s presentation currency, are translated into the Group’s presentation currency based on the following procedures.
If the functional currency of a foreign operation is not the currency of a hyperinflationary economy, assets and liabilities for each statement of financial position presented (including comparatives) are translated at the closing rate at the end of the reporting period, income and expenses for each statement of comprehensive income presented (including comparatives) are translated using the average exchange rates for the period. All resulting exchange differences are recognized in other comprehensive income.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation are treated as assets and liabilities of the foreign operation. Thus, they are expressed in the functional currency of the foreign operation and are translated into the presentation currency at the closing rate.
15
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss (as a reclassification adjustment) when the gain or loss on disposal is recognized. On the partial disposal of a subsidiary that includes a foreign operation, the Group re-attributes the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income to the non-controlling interests in that foreign operation. In any other partial disposal of a foreign operation, the Group reclassifies to profit or loss only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income.
3.2.3 Translation of the net investment in a foreign operation
A monetary item that is receivable from or payable to a foreign operation, for which settlement is neither planned nor likely to occur in the foreseeable future is, in substance, a part of the Group’s net investment in that foreign operation, then foreign currency difference arising from that monetary item is recognized in the other comprehensive income and shall be reclassified to profit or loss on disposal of the net investment.
3.3 Recognition and Measurement of Financial Instruments
3.3.1 Initial recognition
The Group recognizes a financial asset or a financial liability in its consolidated statement of financial position when the Group becomes party to the contractual provisions of the instrument. A regular way purchase or sale of financial assets (a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned) is recognized and derecognized using trade date accounting.
For financial reporting purpose, the Group classifies (a) financial assets as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, or financial assets at amortized cost and (b) financial liabilities as financial liabilities at fair value through profit or loss, or other financial liabilities. These classifications are based on business model for managing financial instruments and the contractual cash flow characteristics of the financial instrument at initial recognition.
At initial recognition, a financial asset or financial liability is measured at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of a financial instrument on initial recognition is normally the transaction price (that is, the fair value of the consideration given or received) in an arm’s length transaction.
3.3.2 Subsequent measurement
After initial recognition, financial instruments are measured at amortized cost or fair value based on classification at initial recognition.
3.3.2.1 Amortized cost
The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.
16
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.3.2.2 Fair value
The Group uses quoted price in active market which is based on listed market price or dealer price quotations of financial instruments traded in active market as best estimate of fair value. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
If there is no active market for a financial instrument, fair value is determined either by using a valuation technique or independent third-party valuation service. Valuation techniques include using recent arm’s length market transactions between knowledgeable and willing parties, if available, referencing to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models.
The Group uses valuation models that are commonly used by market participants and customized for the Group to determine fair values of common over-the-counter (“OTC”) derivatives such as options, interest rate swaps and currency swaps which are based on the inputs observable in markets. For more complex instruments, the Group uses internally developed models, which are usually based on valuation methods and techniques generally used within the industry, or a value measured by an independent external valuation institution as the fair values if all or some of the inputs to the valuation models are not observable in market and therefore it is necessary to estimate fair value based on certain assumptions.
In addition, the fair value information recognized in the consolidated statement of financial position is classified into the following fair value hierarchy, reflecting the significance of the input variables used in the fair value measurement.
Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date
Level 2 : Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 : Unobservable inputs for the asset or liability
The 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. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety.
If a fair value measurement uses observable inputs that require significant adjustment using unobservable inputs, that measurement is a Level 3 measurement.
The Group’s Fair Value Evaluation Committee, which consists of the risk management department, trading department and accounting department, reviews the appropriateness of internally developed valuation models, and approves the selection and changing of the external valuation institution and other considerations related to fair value measurement. The review results on the fair valuation models are reported to the Market Risk Management Subcommittee on a regular basis.
If the valuation technique does not reflect all factors which market participants would consider in pricing the asset or liability, the fair value is adjusted to reflect those factors. Those factors include counterparty credit risk, bid-ask spread, liquidity risk and others.
17
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
The Group uses valuation technique which maximizes the use of market inputs and minimizes the use of entity-specific inputs. It incorporates all factors that market participants would consider in pricing the asset or liability and is consistent with economic methodologies applied for pricing financial instruments. Periodically, the Group calibrates the valuation technique and tests its validity using prices of observable current market transactions of the same instrument or based on other relevant observable market data.
3.3.3 Derecognition
Derecognition is the removal of a previously recognized financial asset or financial liability from the consolidated statement of financial position. The derecognition criteria for financial assets and financial liabilities are as follows:
3.3.3.1 Derecognition of financial assets
A financial asset is derecognized when the contractual rights to the cash flows from the financial assets expire or the Group transfers substantially all the risks and rewards of ownership of the financial asset, or the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset and the Group has not retained control. Therefore, if the Group does not transfer substantially all the risks and rewards of ownership of the financial asset, the Group continues to recognize the financial asset to the extent of its continuing involvement in the financial asset.
If the Group transfers the contractual rights to receive the cash flows of the financial asset but retains substantially all the risks and rewards of ownership of the financial asset, the Group continues to recognize the transferred asset in its entirety and recognize a financial liability for the consideration received.
The Group writes off a financial asset when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. In general, the Group considers write-off when it is determined that the debtor does not have sufficient funds or income to cover the principal and interest. The write-off decision is made in accordance with internal regulations. After the write-off, the Group can collect the written-off loans continuously according to the internal policy. Recovered amounts from financial assets previously written-off are recognized in profit or loss.
3.3.3.2 Derecognition of financial liabilities
A financial liability is derecognized from the consolidated statement of financial position when it is extinguished (i.e. the obligation specified in the contract is discharged, cancelled or expires).
3.3.4 Offsetting
A financial asset and a financial liability is offset and the net amount is presented in the consolidated statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on a future event and must be legally enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group and all of the counterparties.
18
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.4 Cash and Due from Financial Institutions
Cash and due from financial institutions include cash on hand, foreign currency, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and due from financial institutions. Cash and due from financial institutions are measured at amortized cost.
3.5 Non-derivative Financial Assets
3.5.1 Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss unless they are classified as financial assets at amortized cost or at fair value through other comprehensive income.
The Group may designate certain financial assets upon initial recognition as at fair value through profit or loss when the designation eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as ‘an accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.
After initial recognition, a financial asset at fair value through profit or loss is measured at fair value and gains or losses arising from a change in fair value are recognized in profit or loss. Interest income using the effective interest method and dividend income from financial asset at fair value through profit or loss are also recognized in profit or loss.
3.5.2 Financial assets at fair value through other comprehensive income
The Group classifies below financial assets as financial assets at fair value through other comprehensive income;
| • | Debt instruments that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and where the assets’ cash flows represent solely payments of principal and interest on the principal amount outstanding and; |
| • | Equity instruments that are not held for short-term trading but held for strategic investment, and designated as financial assets at fair value through other comprehensive income |
After initial recognition, a financial asset at fair value through other comprehensive income is measured at fair value. Gains or losses arising from a change in fair value, other than dividend income, interest income calculated using the effective interest method and exchange differences arising on monetary items which are recognized directly in profit or loss, are recognized as other comprehensive income in equity.
When the financial assets at fair value through other comprehensive income is disposed, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. However, cumulative gain or loss of equity instrument designated as fair value through other comprehensive income is reclassified to retained earnings not to profit or loss at disposal.
A financial asset at fair value through other comprehensive income denominated in foreign currency is translated at the closing rate. Exchange difference resulting from change in amortized cost is recognized in profit or loss, and other changes are recognized in equity.
19
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.5.3 Financial assets at amortized cost
A financial asset, which is held within the business model whose objective is achieved by collecting contractual cash flows, and where the assets’ cash flows represent solely payments of principal and interest on the principal amount outstanding, is classified as a financial asset at amortized cost. After initial recognition, a financial asset at amortized cost is measured at amortized cost using the effective interest method and interest income is calculated using the effective interest method.
3.6 Expected Credit Loss of Financial Assets (Debt Instruments)
The Group recognizes a loss allowance for expected credit losses at the end of the reporting period for financial assets at amortized cost and fair value through other comprehensive income except for financial asset at fair value through profit or loss.
Expected credit losses are estimated at present value of probability-weighted amount that is determined by evaluating a range of possible outcomes. The Group measures expected credit losses by reflecting all reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
The approaches of measuring expected credit losses in accordance with Korean IFRS are as follows:
| • | General approach: for financial assets and unused loan commitments not subject to the below approach |
| • | Credit-impaired approach: for financial assets that are credit-impaired at the time of acquisition |
Application of general approach is differentiated depending on whether credit risk has increased significantly after initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses, whereas if the credit risk on a financial instrument has increased significantly since initial recognition, the Group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses. Lifetime is presumed to be a period to the contractual maturity date of financial assets (the expected life of financial assets).
The Group assesses whether the credit risk has increased significantly using the following information, and if one or more of the following conditions are met, it is deemed as significant increase in credit risk. Information of more than 30 days overdue is applied to all subsidiaries, and other information is applied selectively considering specific indicators of each subsidiary or additionally considering specific indicators of each subsidiary. If the contractual cash flows on a financial asset have been renegotiated or modified, the Group assesses whether the credit risk has increased significantly using the same following information.
| • | More than 30 days past due |
| • | Decline in credit rating at period end by more than certain notches as compared to that at initial recognition |
| • | Subsequent managing ratings below certain level in the early warning system |
| • | Debt restructuring (except for impaired financial assets) and |
| • | Credit delinquency information of Korea Federation of Banks, etc. |
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Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
The Group generally considers the loan to be credit-impaired if one or more of the following conditions are met:
| • | 90 days or more past due |
| • | Legal proceedings related to collection |
| • | A borrower registered on the credit management list of Korea Federation of Banks |
| • | A corporate borrower with the credit rating C or D |
| • | Refinancing |
| • | Debt restructuring, etc. |
3.6.1 Forward-looking information
The Group uses forward-looking information, when it assesses whether the credit risk has increased significantly and measures the expected credit losses.
The Group assumes the risk components have a certain correlation with the economic cycle and uses statistical methodologies to estimate the relation between key macroeconomic variables and risk components for the expected credit losses. The Group has derived a correlation between the time series data of more than 11 years and the key macroeconomic variables and calculates the expected credit losses by reflecting the results of the correlation on the risk component.
The correlation between the major macroeconomic variables and the credit risk are as follows:
| Key macroeconomic variables | Correlation between the major macroeconomic variables and the credit risk | |||
Domestic GDP growth rate | (- | ) | ||
Composite stock index | (- | ) | ||
Construction investment change rate | (- | ) | ||
Rate of change in housing transaction price index | (- | ) | ||
Interest rate spread | (+ | ) | ||
Private consumption growth rate | (- | ) | ||
Forward-looking information used in calculation of expected credit losses is based on the macroeconomic forecasts utilized by the management of the Group for its business plan considering reliable external agency’s forecasts and others. The forward-looking information is generated by KB Research with comprehensive approach to capture the possibility of various economic forecast scenarios that are derived from the internal and external viewpoints of the macroeconomic situation. The Group determines the macroeconomic variables to be used in forecasting future condition of the economy, considering the direction of the forecast scenario and the significant relationship between macroeconomic variables and time series data. And there are some changes compared to the macroeconomic variables used in the previous year.
In order to reflect additional credit risk for financial assets whose industries are highly affected by COVID-19, the Bank measures expected credit losses using a conservative scenario comparing to the forecasted forward-looking information.
3.6.2 Measuring expected credit losses on financial assets at amortized cost
The expected credit losses of financial assets at amortized cost are measured as present value of the difference between the contractual cash flows that are due to the Group under the contract and the cash flows that the Group expects to receive. The Group estimates expected future cash flows for financial assets that are individually significant (individual assessment of impairment).
21
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
For financial assets that are not individually significant, the Group collectively estimates expected credit loss by grouping loans with homogeneous credit risk profile (collective assessment of impairment).
3.6.2.1 Individual assessment of impairment
Individual assessment of impairment losses is calculated using management’s best estimate on present value of expected future cash flows. The Group uses all the available information including financial condition of the borrower such as operating cash flow and net realizable value of any collateral held.
3.6.2.2 Collective assessment of impairment
Collective assessment of impairment losses is performed by using a methodology based on historical loss experience and reflecting forward-looking information. Such process incorporates factors such as type of collateral, product and borrowers, credit rating, size of portfolio and recovery period and applies Probability of Default (“PD”) on a group of assets and Loss Given Default (“LGD”) by type of recovery method. Also, the expected credit loss model involves certain assumptions to determine input based on loss experience and forward-looking information. These models and assumptions are periodically reviewed to reduce gap between loss estimate and actual loss experience.
The lifetime expected credit loss is measured by applying the PD to the carrying amount calculated by deducting the expected principal repayment amount from the carrying amount as of the reporting date and the LGD adjusted to reflect changes in the carrying amount.
3.6.3 Measuring expected credit losses on financial assets at fair value through other comprehensive income
The Group measures expected credit losses on financial assets at fair value through other comprehensive income in a manner that is consistent with the requirements that are applicable to financial assets measured at amortized cost. However, the loss allowance is recognized in other comprehensive income. Upon disposal or repayment of financial assets at fair value through other comprehensive income, the amount of the loss allowance is reclassified from other comprehensive income to profit or loss.
3.7 Derivative Financial Instruments
The Group enters into numerous derivative financial instrument contracts such as currency forwards, interest rate swaps, currency swaps and others for trading purposes or to manage its exposures to fluctuations in interest rates and currency exchange, amongst others. The Group’s derivative operations focus on addressing the needs of the Group’s corporate clients to hedge their risk exposure and to hedge the Group’s risk exposure that results from such client contracts. These derivative financial instruments are presented as derivative financial instruments in the consolidated financial statements irrespective of transaction purpose and subsequent measurement requirement.
The Group designates certain derivatives as hedging instruments to hedge the risk of changes in fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge) and the risk of changes in cash flow (cash flow hedge). The Group designates certain derivatives and non-derivatives as hedging instruments to hedge the risk of foreign exchange of the net investment in a foreign operation (hedge of net investment).
22
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
At the inception of the hedging relationship, there is formal designation and documentation of the hedging relationship and the Group’s risk management objective and strategy for undertaking the hedge. This documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged, the inception date of hedging relationship and how the Group will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk.
Derivatives are initially recognized at fair value. After initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.
3.7.1 Derivative financial instruments held for trading
All derivative financial instruments, except for derivatives that are designated and qualify for hedge accounting, are measured at fair value. Gains or losses arising from changes in fair value are recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss.
3.7.2 Derivative financial instruments for fair value hedges
If derivatives are designated and qualify for a fair value hedge, changes in fair value of the hedging instrument and changes in fair value of the hedged item attributable to the hedged risk are recognized in profit or loss as part of other operating income and expenses. If the hedged items are equity instruments for which the Group has elected to present changes in fair value in other comprehensive income, changes in fair value of the hedging instrument and changes in fair value of the hedged item attributable to the hedged risk are recognized in other comprehensive income.
Fair value hedge accounting is discontinued prospectively if the hedging instrument expires or is sold, terminated or exercised, or the hedging relationship ceases to meet the qualifying criteria. Once fair value hedge accounting is discontinued, the adjustment to the carrying amount of a hedged item is amortized to profit or loss by the maturity of the financial instrument using the effective interest method.
3.7.3 Derivative financial instruments for cash flow hedges
The effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income, limited to the cumulative change in fair value (present value) of the hedged item (the present value of the cumulative change in the hedged expected future cash flows) from inception of the hedge. The ineffective portion is recognized in profit or loss as other operating income or expense. The associated gains or losses that were previously recognized in other comprehensive income are reclassified from equity to profit or loss (other operating income or expense) as a reclassification adjustment in the same period or periods during which the hedged forecast cash flows affect profit or loss. Cash flow hedge accounting is discontinued prospectively if the hedging instrument expires or is sold, terminated or exercised, or the hedging relationship ceases to meet the qualifying criteria. When the cash flow hedge accounting is discontinued, the cumulative gains or losses on the hedging instrument that have been recognized in other comprehensive income are reclassified to profit or loss over the period in which the forecast transaction occurs. If the forecast transaction is no longer expected to occur, the cumulative gains or losses that have been recognized in other comprehensive income are immediately reclassified to profit or loss.
23
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.7.4 Derivative and non-derivative financial instruments designated for net investments hedges
If derivatives and non-derivatives are designated and qualify for the net investment hedge, the effective portion of changes in fair value of hedging instrument is recognized in other comprehensive income and the ineffective portion is recognized in profit or loss as other operating income and expense. The cumulative gain or loss on the hedging instrument relating to the effective portion of the hedge that has been accumulated in other comprehensive income will be reclassified from other comprehensive income to profit or loss as a reclassification adjustment on the disposal or partial disposal of the foreign operation.
3.7.5 Risk management strategy
Interest rate risk arises from changes in fair value resulting from changes in the discount rate of fixed rate financial instruments, and changes in cash flows resulting from changes in the nominal interest rate of floating rate financial instruments. Foreign currencies risk arises from the net investment in a foreign operation, whose functional currency differs from the Group’s functional currency.
While the Group hedges the interest rate risk in its entirety, the Group hedges the foreign currencies risk only the proportional part of the notional amount.
At inception of the hedge relationship, the Group reviews the hedge effectiveness; and periodically reviews the effectiveness in order to confirm that economic relationship between the hedged item and the hedging instrument exists. The requirement that an economic relationship exists means that the hedging instrument and the hedged item have values that generally move in the opposite direction due to the same risk, which is the hedged risk. The Group designates the exposure of hedged item opposite to the exposure of hedging instruments in order to meet economic relationship requirement.
The Group designates hedge relationship at one-on-one ratio between the nominal amount of hedging instrument and to the nominal amount of hedged item.
Ineffectiveness could arise because of differences in the underlying parameters (acquisition date, credit risk or liquidity and others) or other differences between the hedging instrument and the hedged item that the Group accepts in order to achieve a cost-effective hedging relationship.
The Group avoids the cash flow variability of its floating rate debt securities by using interest rate swaps. Both are linked to the same interest rate; however, the paid amount of the floating rate may be set on different dates. Even if the variability of interest rate related cash flows (as a risk factor) are designated as a hedged item, the difference in set-up dates creates a hedge ineffectiveness.
The Group avoids the variability of fair values of its fixed rate debt securities by using interest rate swaps. The calculating method of the number of the dates for paying fixed-rate interest amount can be different between hedging instruments and hedged items. Even if the variability of the fair value due to the benchmark interest rate (as a risk factor) are designated as a hedged item, the difference in calculating method of the number of the dates creates a hedge ineffectiveness.
24
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.7.6 Embedded derivatives
An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if, (a) the economic characteristics and risks of the embedded derivative are not closely related to those of the host contract, (b) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and (c) the hybrid contract contains a host that is not a financial asset and is not designated as at fair value through profit or loss. Gains or losses arising from a change in fair value of an embedded derivative separated from the host contract are recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss.
3.7.7 Day one gains or losses
If the Group uses a valuation technique that incorporates unobservable inputs for the fair value of the OTC derivatives at initial recognition, there may be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the difference is not recognized in profit or loss but deferred and amortized using the straight-line method over the life of the financial instrument. If the fair value is subsequently determined using observable inputs, the remaining deferred amount is recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss or other operating income and expenses.
3.8 Property and Equipment
3.8.1 Recognition and measurement
All property and equipment that qualify for recognition as an asset are measured at cost and subsequently carried at its cost less any accumulated depreciation and any accumulated impairment losses.
The cost of property and equipment includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent expenditures are capitalized only when they prolong the useful life or enhance values of the assets but the costs of the day-to-day servicing of the assets such as repair and maintenance costs are recognized in profit or loss as incurred. When part of an item of property and equipment has a useful life different from that of the entire asset, it is recognized as a separate asset.
3.8.2 Depreciation
Land is not depreciated, whereas other property and equipment are depreciated using the method that reflects the pattern in which the asset’s future economic benefits are expected to be consumed by the Group. The depreciable amount of an asset is determined after deducting its residual value.
Each part of an item of property and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.
The depreciation methods and estimated useful lives of property and equipment are as follows:
Property and equipment | Depreciation method | Estimated useful lives | ||
Buildings and structures | Straight-line | 20 ~ 40 years | ||
Leasehold improvements | Declining-balance | 4 years | ||
Equipment and vehicles | Declining-balance | 4 years |
25
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
The residual value, the useful life and the depreciation method applied to an asset are reviewed at each financial year-end and, if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.
3.9 Investment Properties
3.9.1 Recognition and measurement
Properties held to earn rentals or for capital appreciation or both are classified as investment properties. Investment properties are measured initially at their cost and subsequently the cost model is used.
3.9.2 Depreciation
Land is not depreciated, whereas other investment properties are depreciated using the method that reflects the pattern in which the asset’s future economic benefits are expected to be consumed by the Group. The depreciable amount of an asset is determined after deducting its residual value.
The depreciation method and estimated useful lives of investment properties are as follows:
Investment properties | Depreciation method | Estimated useful lives | ||
Buildings | Straight-line | 40 years |
The residual value, the useful life and the depreciation method applied to an asset are reviewed at each financial year-end and, if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.
3.10 Intangible Assets
Intangible assets are measured initially at cost and subsequently carried at their cost less any accumulated amortization and any accumulated impairment losses.
Intangible assets, except for goodwill and membership rights, are amortized using the straight-line method or the declining-balance method with no residual value over their estimated useful economic life since the asset is available for use.
Intangible assets | Amortization method | Estimated useful lives | ||
Industrial property rights | Straight-line | 5 years | ||
Software | Straight-line | 4 ~ 5 years | ||
Others | Straight-line / Declining-balance | 1 ~ 13 years |
The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Where an intangible asset is not being amortized because its useful life is indefinite, the Group carries out a review in each accounting period to confirm whether events and circumstances still support an indefinite useful life assessment. If they do not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate.
26
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.10.1 Goodwill
3.10.1.1 Recognition and measurement
Goodwill related to business combinations before January 1, 2010, is stated at its carrying amount, which was recognized under the Group’s previous accounting policy, prior to the transition to Korean IFRS.
Goodwill acquired from business combinations after January 1, 2010, is initially measured as the excess of cost of the business combination over the fair value of net identifiable assets acquired and liabilities assumed. If the fair value of net identifiable assets acquired and liabilities assumed exceeds cost of business combination, the difference is recognized in profit or loss.
For each business combination, the Group decides at the acquisition date whether the non-controlling interests in the acquiree is initially measured at fair value or at the non-controlling interests’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets.
Acquisition-related costs incurred to effect a business combination are charged to expenses in the periods in which the costs are incurred and the services are received, except for the costs to issue debt or equity securities.
3.10.1.2 Additional acquisitions of non-controlling interests
Additional acquisitions of non-controlling interests are accounted for as equity transactions. Therefore, no additional goodwill is recognized.
3.10.1.3 Subsequent measurement
Goodwill is not amortized and is stated at cost less accumulated impairment losses. However, goodwill that forms part of the carrying amount of an investment in associates is not separately recognized and an impairment loss recognized is not allocated to any asset, including goodwill, which forms part of the carrying amount of the investment in the associates.
3.10.2 Subsequent expenditure
Subsequent expenditure is capitalized only when it enhances values of the assets. Internally generated intangible assets, such as goodwill and trade name, are not recognized as assets but expensed as incurred.
3.11 Impairment of Non-financial Assets
The Group assesses at the end of each reporting period whether there is any indication that a non-financial asset, except for (a) deferred income tax assets, (b) assets arising from employee benefits and (c) non-current assets (or group of assets to be sold) classified as held for sale, may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. However, irrespective of whether there is any indication of impairment, the Group tests (a) goodwill acquired in a business combination, (b) intangible assets with an indefinite useful life and (c) intangible assets not yet available for use for impairment annually by comparing their carrying amount with their recoverable amount.
27
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
The recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the cash-generating unit to which the asset belongs. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit that are discounted by a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss and recognized immediately in profit or loss. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units that is expected to benefit from the synergies of the combination. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit.
An impairment loss recognized for goodwill is not reversed in a subsequent period. The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset, other than goodwill, may no longer exist or may have decreased, and an impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss cannot exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
3.12 Non-current Assets Held for Sale
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition and its sale must be highly probable. A non-current asset (or disposal group) classified as held for sale is measured at the lower of (a) its carrying amount measured in accordance with the applicable Korean IFRS, immediately before the initial classification of the asset (or disposal group) as held for sale and (b) fair value less costs to sell.
A non-current asset while it is classified as held for sale or while it is part of a disposal group classified as held for sale is not depreciated (or amortized).
Impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. Gain is recognized for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss that has been recognized.
3.13 Financial Liabilities
The Group classifies financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities in accordance with the substance of the contractual arrangement and the definitions of financial liabilities. The Group recognizes financial liabilities in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the financial liability.
28
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.13.1 Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading or designated as such at initial recognition. After initial recognition, financial liabilities at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss. At initial recognition, transaction costs that are directly attributable to the acquisition are recognized in profit or loss as incurred.
In relation to securities lending or borrowing transactions, when the Group borrows securities from the Korea Securities Depository and others, these transactions are managed as off-balance sheet items. The borrowed securities are treated as financial liabilities at fair value through profit or loss when they are sold. Changes in fair value at the end of the reporting period and difference between carrying amount at redemption and purchased amount are recognized as profit or loss.
3.13.2 Other financial liabilities
Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as other financial liabilities. Other financial liabilities include deposits, borrowings, debentures and others. At initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the acquisition. After initial recognition, other financial liabilities are measured at amortized cost, and its interest expense is recognized, using the effective interest method.
In case an asset is sold under repurchase agreement, the Group continues to recognize the asset with the amount sold being accounted for as borrowing. The Group derecognizes a financial liability from the consolidated statement of financial position only when it is extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires).
3.14 Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of provisions, and where the effect of the time value of money is material, the amount of provisions is the present value of the expenditures expected to be required to settle the obligation.
Provisions for confirmed and unconfirmed acceptances and guarantees, and unused credit lines of consumer and corporate loans are recognized using a valuation model that applies the credit conversion factor, probability of default, and loss given default.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provisions are reversed.
An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfill it. If the Group has a contract that is onerous, the present obligation under the contract is recognized and measured as provisions.
29
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.15 Financial Guarantee Contracts
A financial guarantee contract requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the original or modified terms of a debt instrument.
Financial guarantee contracts are initially recognized at fair value and classified as other liabilities and are amortized over the contractual term. After initial recognition, financial guarantee contracts are measured at the higher of:
| • | The amount determined in accordance with Korean IFRS No.1109 Financial Instruments and |
| • | The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with Korean IFRS No.1115 Revenue from Contracts with Customers. |
3.16 Equity Instrument Issued by the Group
An equity instrument is any contract or agreement that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
3.16.1 Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or the exercise of stock option are deducted from the equity, net of any tax effects.
3.16.2 Hybrid securities
The financial instruments can be classified as either financial liabilities or equity in accordance with the terms of the contract. The Group classifies hybrid securities as an equity if the Group has the unconditional right to avoid any contractual obligation to deliver financial assets such as cash in relation to the financial instruments. However, hybrid securities issued by subsidiaries are classified as non-controlling interests, dividends are recognized in the consolidated statement of comprehensive income as profit attributable to non-controlling interests.
3.16.3 Compound financial instruments
A compound financial instrument is classified as a financial liability or an equity instrument depending on the substance of the contractual arrangement of such financial instrument. The liability component of the compound financial instrument is measured at fair value of the similar liability without conversion option at initial recognition and subsequently measured at amortized cost using effective interest method until it is extinguished by conversion or matured. Equity component is initially measured at fair value of compound financial instrument in its entirety less fair value of liability component net of tax effect and it is not remeasured subsequently.
30
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.17 Revenue Recognition
The Group recognizes revenues in accordance with the following steps determined in accordance with Korean IFRS No.1115 Revenue from Contracts with Customers.
| • | Step 1: Identify the contract with a customer. |
| • | Step 2: Identify the performance obligations in the contract. |
| • | Step 3: Determine the transaction price. |
| • | Step 4: Allocate the transaction price to the performance obligations in the contract. |
| • | Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. |
3.17.1 Interest income and expense
Interest income and expense on debt securities at fair value through profit or loss (excluding beneficiary certificates, equity investments and other debt instruments), loans, financial instruments at amortized cost and debt securities at fair value through other comprehensive income, are recognized in the consolidated statement of comprehensive income using the effective interest method in accordance with Korean IFRS No.1109 Financial Instruments. The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability and allocating the interest income or interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument or, where appropriate, a shorter period, to the gross carrying amount of a financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Group estimates expected cash flows by considering all contractual terms of the financial instrument but does not consider expected credit losses. The calculation includes all fees and points paid (main components of effective interest rate only) or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. In those rare cases when it is not possible to estimate reliably the cash flows and the expected life of a financial instrument, the Group uses the contractual cash flows over the full contractual term of the financial instrument.
Interest income on impaired financial assets is recognized using the rate of interest used to discount the expected cash flows for the purpose of measuring the impairment loss. Interest income on debt securities at fair value through profit or loss is also classified as interest income in the consolidated statement of comprehensive income.
3.17.2 Fee and commission income
The Group recognizes financial service fees in accordance with the purpose of charging the fees and the accounting standards of the financial instrument related to the fees earned.
3.17.2.1 Fees that are an integral part of the effective interest of a financial instrument
Such fees are generally treated as adjustments of effective interest. Such fees may include compensation for activities such as evaluating the borrower’s financial condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating the terms of the instrument, preparing and processing documents and closing the transaction and origination fees received on issuing financial liabilities at amortized cost. However, fees relating to the creation or acquisition of a financial instrument at fair value through profit or loss are recognized as revenue immediately.
31
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.17.2.2 Fees related to performance obligations satisfied over time
The Group transfers control of a good or service over time, therefore, recognizes revenue related to performance obligations satisfied over the period of performance obligations. Fees which can be earned through the certain periods, including asset management fees, consignment business fees, etc. are recognized over the period of performance obligations.
3.17.2.3 Fees related to performance obligations satisfied at a point in time
Fees earned at a point in time are recognized as revenue when a customer obtains controls of a promised good or service and the Group satisfies a performance obligation.
Commission on negotiation or participation in negotiation for the third party such as trading stocks or other securities, arranging merger and acquisition of business, is recognized as revenue when the transaction has been completed.
A syndication arrangement fees recognized as revenue when the syndication has been completed, if the Group arranges a loan and retains no part of the loan package for itself (or retains a part at the same effective interest rate for comparable risk as other participants).
3.17.3 Net gains or losses on financial instruments at fair value through profit or loss
Net gains or losses on financial instruments at fair value through profit or loss (including changes in fair value, dividends, and gains or losses from foreign currency translation) include gains and losses from following financial instruments:
| • | Gains or losses relating to financial instruments at fair value through profit or loss (excluding interest income using the effective interest rate) |
| • | Gains or losses relating to derivatives for trading (including derivatives for hedging purpose but do not qualify for hedge accounting) |
3.17.4 Dividend income
Dividend income is recognized in profit or loss when the right to receive payment is established. Dividend income is recognized as net gains or losses on financial instruments at fair value through profit or loss or other operating income depending on the classification of equity securities.
3.18 Employee Compensation and Benefits
3.18.1 Post-employment benefits:
3.18.1.1 Defined contribution plans
When an employee has rendered service to the Group during a period, the Group recognizes the contribution payable to a defined contribution plan in exchange for that service as post-employment benefits for the period.
3.18.1.2 Defined benefit plans
All post-employment benefits, other than defined contribution plans, are classified as defined benefit plans. The amount recognized as a net defined benefit liability is the present value of the defined benefit obligation less the fair value of plan assets at the end of the reporting period.
32
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
The present value of the defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit method. The rate used to discount post-employment benefit obligations is determined by reference to market yields at the end of the reporting period on high quality corporate bonds. The currency and term of the corporate bonds are consistent with the currency and estimated term of the post-employment benefit obligations. Actuarial gains and losses resulted from changes in actuarial assumptions and experience adjustments are recognized in other comprehensive income.
When the total of the present value of the defined benefit obligation minus the fair value of plan assets results in an asset, it is recognized to the extent of the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.
Past service cost is the change in the present value of the defined benefit obligation for employee service in prior periods, resulting from the introduction or changes to a defined benefit plan. Such past service cost is immediately recognized as an expense for the period.
3.18.2 Short-term employee benefits
Short-term employee benefits are employee benefits that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service. When an employee has rendered service to the Group during an accounting period, the Group recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service as an expense for the period.
The expected cost of profit-sharing and bonus payments is recognized as liabilities when the Group has a present legal or constructive obligation to make payments as a result of past events, such as service rendered by employees, and a reliable estimate of the obligation can be made.
3.18.3 Share-based payment
The Group has provided its directors and employees with stock grants and mileage stocks programs. When stock grants are exercised, the Group can either select to distribute issued stock of KB Financial Group Inc., the Parent Company or compensate in cash based on the share price. When mileage stocks are exercised, the Group pays the amount equivalent to share price of KB Financial Group Inc. in cash.
For a share-based payment transaction in which the terms of the arrangement provide the Group with the choice of whether to settle in cash or by issuing equity instruments, the Group accounts for the transaction in accordance with the requirements applying to cash-settled share-based payment transactions because the Group determines that it has a present obligation to settle in cash because the Group has a past practice and a stated policy of settling in cash. Therefore, the Group measures the liability incurred as consideration for the service, at fair value and recognizes related expense and accrued expense over the vesting periods. For mileage stocks, the Group accounts for the transaction in accordance with the requirements applying to cash-settled share-based payment transactions, which are recognized as expense and accrued expenses at the time of vesting.
Until the liability is settled, the Group remeasures the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss as share-based payments.
33
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
3.18.4 Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or an employee’s decision to accept an offer of benefits in exchange for the termination of employment. The Group recognizes a liability and expense for termination benefits at the earlier of the following dates; when the Group can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring that is within the scope of Korean IFRS No.1037 and involves the payment of termination benefits. If the termination benefits are not expected to be settled wholly before twelve months after the end of the annual reporting period, then the termination benefits are discounted to present value.
3.19 Income Tax Expenses
Income tax expense comprises current tax expense and deferred income tax expense. Current and deferred income tax are recognized as income or expense and included in profit or loss for the period, except to the extent that the tax arises from (a) a transaction or event which is recognized, in the same or a different period, outside profit or loss, either in other comprehensive income or directly in equity and (b) a business combination.
3.19.1 Current income tax
Current income tax is the amount of income tax payable in respect of the taxable profit (loss) for the period. A difference between the taxable profit and accounting profit may arise when income or expense is included in accounting profit in one period but is included in taxable profit in a different period. Differences may also arise if there is revenue that is exempt from taxation, or expense that is not deductible in determining taxable profit (loss). Current income tax liabilities for the current and prior periods are measured using the tax rates that have been enacted or substantively enacted by the end of the reporting period.
The Group offsets current income tax assets and current income tax liabilities if, and only if, the Group (a) has a legally enforceable right to set off the recognized amounts and (b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
3.19.2 Deferred income tax
Deferred income tax is recognized, using the asset-liability method, on temporary differences arising between the tax-based amount of assets and liabilities and their carrying amount in the financial statements. Deferred income tax liabilities are recognized for all taxable temporary differences and deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax assets and liabilities are not recognized if they arise from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction, affects neither accounting nor taxable profit or loss.
The Group recognizes a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries and associates, except to the extent that the Group is able to control the timing of the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of a deferred income tax asset is reviewed at the end of each reporting period. The Group reduces the carrying amount of a deferred income tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilized.
34
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred income tax liabilities and deferred income tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
The Group offsets deferred income tax assets and deferred income tax liabilities if, and only if the Group has a legally enforceable right to set off current income tax assets against current income tax liabilities and the deferred income tax assets and the deferred income tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current income tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred income tax liabilities or assets are expected to be settled or recovered.
3.19.3 Uncertain tax positions
Uncertain tax positions arise from tax treatments applied by the Group which may be challenged by the tax authorities due to the complexity of the transaction or different interpretation of the tax laws, a claim for rectification brought by the Group, an appeal for a refund claimed from the tax authorities related to additional assessments or a tax investigation by the tax authorities. The Group recognizes its uncertain tax positions in the consolidated financial statements in accordance with Korean IFRS No.1012 and Interpretation of Korean IFRS No.2123. The income tax asset is recognized if a tax refund is probable for taxes paid and levied by the tax authority, and the amount to be paid as a result of the tax investigation and others is recognized as the current tax payable. However, additional dues on tax paid or refund are recognized in accordance with Korean IFRS No.1037 because those are, in substance, interest and penalty.
3.20 Transactions with the Trust Accounts
The Group accounts for trust assets separately from its own assets in accordance with the Financial Investment Services and Capital Markets Act. The borrowings from trust accounts represent transfer of funds in trust accounts into banking accounts. Such borrowings from trust accounts are recorded as receivables from the banking accounts in the trust accounts and as borrowings from trust accounts in the banking accounts. The Group earns trust fees from the trust accounts for its management of trust assets and operations. The reserves for future profits and losses are set up in the trust accounts for profits and losses related to those trust funds with a guarantee of the principal or of the principal and a certain minimum rate of return in accordance with the relevant laws and regulations applicable to trust operations. The reserves are used to provide for the losses on such trust funds and, if the losses incurred are in excess of the reserves, the excess losses are compensation paid as a loss on trust management in other operating expenses and the trust accounts recognize the corresponding compensation as compensation from banking accounts.
3.21 Lease
The Group as a lessor recognizes lease payments from operating leases as income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The respective leased assets are included in the consolidated statement of financial position based on their nature.
A lessee is required to recognize a right-of-use asset (lease assets) representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Assets and liabilities arising from a lease are initially measured at the present value.
35
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Lease liabilities include the net present value of the following lease payments:
| • | Fixed payments (including in-substance fixed payments), less any lease incentives receivable |
| • | Variable lease payment that are depend on an index or a rate |
| • | Amounts expected to be payable by the lessee under residual value guarantees |
| • | The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and |
| • | Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease |
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used, which is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
Right-of-use assets are measured at cost comprising the following:
| • | The amount of the initial measurement of the lease liability |
| • | Any lease payments made at or before the commencement date, less any lease incentives received |
| • | Any initial direct costs incurred by the lessee, and |
| • | An estimate of restoration costs |
However, the Group can elect not to apply the requirements of Korean IFRS No.1116 to short-term lease (lease that, at the commencement date, has a lease term of 12 months or less) and leases for which the underlying asset is of low value (for example, underlying leased asset under $ 5,000). The Group applies the exemption of the standard for one time lease of real estate (for training purpose) and leases of low-value assets (underlying assets less thanW 5 million and $ 5,000).
The right-of-use asset is depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
For sale and leaseback transactions, the Group applies the requirements of Korean IFRS No.1115 Revenue from Contracts with Customers, to determine whether the transfer of an asset is accounted for as a sale of that asset.
3.22 Operating Segments
The Group identifies its operating segments based on internal reports which are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance.
Segment information includes items which are directly attributable and reasonably allocated to the segment.
36
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4. Financial Risk Management
4.1 Summary
4.1.1 Overview of financial risk management policy
The financial risks that the Group is exposed to are credit risk, market risk, liquidity risk, operational risk and others.
This note regarding financial risk management provides information about the risks that the Group is exposed to and about its objectives, policies, risk assessment and management procedures, and capital management. Additional quantitative information is disclosed throughout the consolidated financial statements.
The Group’s risk management system focuses on efficiently supporting long-term strategy and management decisions of each business group through increased risk transparency, spread of risk management culture, prevention of risk transition between risk types, and preemptive response to rapidly changing financial environments. Credit risk, market risk, liquidity risk, and operational risk are recognized as the Group’s significant risks and measured and managed by quantifying them in the form of Internal Capital or Value at Risk (“VaR”) using statistical methods.
4.1.2 Risk management organization
4.1.2.1 Risk Management Committee
The Risk Management Committee, as the ultimate decision-making body, approves risk-related issues, such as establishing risk management strategies in accordance with the strategic direction determined by the Board of Directors, determining the affordable level of risk appetite, and reviewing the level of risk and the status of risk management activities.
4.1.2.2 Risk Management Council
The Risk Management Council deliberates on and resolve matters delegated by the Risk Management Committee and discusses the details of risk management of the Group.
4.1.2.3 Risk Management Subcommittees
The Risk Management Subcommittee implements decisions made by the Risk Management Council and makes practical decisions regarding the implementation of risk management policies and procedures.
| • | Credit Risk Management Subcommittee |
The Credit Risk Management Subcommittee conducts deliberation and resolution on new approval of non-standard and compound instruments with embedded credit risks, reviews credit risks for new products with credit risks, and establishment of exposure limits by industry.
| • | Market Risk Management Subcommittee |
The Market Risk Management Subcommittee conducts deliberation and resolution on market risk-related matters, such as setting limits on market risk and approving detailed investment standards for new standard, non-standard and compound products.
37
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| • | Operational Risk Management Subcommittee |
The Operational Risk Management Subcommittee reviews the issues that have a significant effect on the Group’s operational risk such as establishment, amendment and abolition of major system, process and others.
4.1.2.4 Risk Management Group
The Risk Management Group manages risk management detailed policies, procedures, and business processes.
4.2 Credit Risk
4.2.1 Overview of credit risk
Credit risk is the risk of loss from the portfolio of assets held due to the counterparty’s default, breach of contract and deterioration of credit quality. For risk management reporting purposes, the Group considers all factors of credit risk exposure, such as default risk of individual borrowers, country risk and risk of specific sectors. The Group defines default as the definition applied to the calculation of Capital Adequacy Ratio under the new Basel Accord (Basel III).
4.2.2 Credit risk management
The Group measures the expected loss and economic capital for the assets subject to credit risk management, including on-balance and off-balance assets, and uses them as management indicators. The Group allocates and manages credit risk internal capital limits.
In addition, to prevent excessive concentration of exposures by borrower and industry, the total exposure limit at the Group level is introduced, applied, and managed to control the credit concentration risk.
In order to establish a credit risk management system, the Group manages credit risk by forming a separate risk management organization. In particular, independent of the Sales Group, the Credit Group, Retail Customer Group and SME/SOHO Customer Group are in charge of loan policy, loan system, credit rating, credit analysis, follow-up management and corporate restructuring. The Risk Management Group is responsible for establishing policies on credit risk management, measuring and limiting internal capital of credit risk, setting credit limits, credit review, and verification of credit rating models.
38
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.2.3 Maximum exposure to credit risk
The Group’s maximum exposures of financial instruments other than equity securities, to credit risk without consideration of collateral values as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Financial assets | ||||||||
Due from financial institutions 1 | 17,085,898 | 11,786,957 | ||||||
Financial assets at fair value through profit or loss | ||||||||
Securities measured at fair value through profit or loss | 15,707,842 | 13,446,838 | ||||||
Loans measured at fair value through profit or loss | 38,756 | 188,133 | ||||||
Due from financial institutions measured at fair value through profit or loss | 89,965 | 79,805 | ||||||
Derivatives | 4,456,668 | 2,317,425 | ||||||
Loans measured at amortized cost 1 | 327,332,495 | 293,531,433 | ||||||
Financial investments | ||||||||
Securities measured at fair value through other comprehensive income | 39,960,675 | 36,116,988 | ||||||
Securities measured at amortized cost 1 | 15,588,413 | 13,964,339 | ||||||
Loans measured at fair value through other comprehensive income | 234,780 | 344,292 | ||||||
Other financial assets 1 | 5,986,686 | 5,464,704 | ||||||
|
|
|
| |||||
| 426,482,178 | 377,240,914 | |||||||
|
|
|
| |||||
Off-balance sheet items 2 | ||||||||
Acceptances and guarantees contracts | 8,560,896 | 8,327,494 | ||||||
Financial guarantee contracts | 4,354,919 | 3,305,051 | ||||||
Commitments | 91,738,296 | 87,866,225 | ||||||
|
|
|
| |||||
| 104,654,111 | 99,498,770 | |||||||
|
|
|
| |||||
| 531,136,289 | 476,739,684 | |||||||
|
|
|
| |||||
| 1 | After netting of allowance |
| 2 | For details of relevant provisions, see Note 22. |
4.2.4 Credit risk of loans
The Group maintains an allowance for loan losses associated with credit risk of loans to manage its credit risk.
The Group assesses expected credit losses and recognizes loss allowances of financial assets at amortized cost and financial assets at fair value through other comprehensive income (debt instruments). 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 Group measures the expected credit losses on loans classified as financial assets 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 in the consolidated financial statements.
39
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.2.4.1 Credit risk exposure
Credit qualities of loans as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| Non-impaired | Impaired | |||||||||||||||||||||||
Loans measured at amortized cost * |
| |||||||||||||||||||||||
Corporate |
| |||||||||||||||||||||||
Grade 1 | 85,802,797 | 4,470,806 | 6,545 | — | — | 90,280,148 | ||||||||||||||||||
Grade 2 | 58,494,076 | 6,777,700 | 1,119 | — | — | 65,272,895 | ||||||||||||||||||
Grade 3 | 2,228,426 | 2,436,658 | 3,042 | — | — | 4,668,126 | ||||||||||||||||||
Grade 4 | 487,038 | 1,003,942 | 7,878 | — | — | 1,498,858 | ||||||||||||||||||
Grade 5 | 17,941 | 384,014 | 2,101,014 | — | — | 2,502,969 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 147,030,278 | 15,073,120 | 2,119,598 | — | — | 164,222,996 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Retail |
| |||||||||||||||||||||||
Grade 1 | 151,410,177 | 3,439,344 | 5,987 | — | — | 154,855,508 | ||||||||||||||||||
Grade 2 | 3,947,198 | 3,913,432 | 6,160 | — | — | 7,866,790 | ||||||||||||||||||
Grade 3 | 230,361 | 1,157,224 | 6,971 | — | — | 1,394,556 | ||||||||||||||||||
Grade 4 | 19,077 | 124,562 | 3,269 | — | — | 146,908 | ||||||||||||||||||
Grade 5 | 25,369 | 400,181 | 546,039 | — | — | 971,589 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 155,632,182 | 9,034,743 | 568,426 | — | — | 165,235,351 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Credit card |
| |||||||||||||||||||||||
Grade 1 | — | — | — | — | — | — | ||||||||||||||||||
Grade 2 | 37,053 | — | — | — | — | 37,053 | ||||||||||||||||||
Grade 3 | 1,467 | — | — | — | — | 1,467 | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | 22,439 | — | — | 22,439 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 38,520 | — | 22,439 | — | — | 60,959 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 302,700,980 | 24,107,863 | 2,710,463 | — | — | 329,519,306 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Loans measured at fair value through other comprehensive income |
| |||||||||||||||||||||||
Corporate |
| |||||||||||||||||||||||
Grade 1 | 176,840 | — | — | — | — | 176,840 | ||||||||||||||||||
Grade 2 | 57,940 | — | — | — | — | 57,940 | ||||||||||||||||||
Grade 3 | — | — | — | — | — | — | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 234,780 | — | — | — | — | 234,780 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 234,780 | — | — | — | — | 234,780 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 302,935,760 | 24,107,863 | 2,710,463 | — | — | 329,754,086 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
40
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| Non-impaired | Impaired | |||||||||||||||||||||||
Loans measured at amortized cost * |
| |||||||||||||||||||||||
Corporate |
| |||||||||||||||||||||||
Grade 1 | 77,685,587 | 1,722,935 | 837 | — | — | 79,409,359 | ||||||||||||||||||
Grade 2 | 55,097,112 | 4,512,631 | 6,397 | — | — | 59,616,140 | ||||||||||||||||||
Grade 3 | 2,486,531 | 2,135,130 | 4,188 | — | — | 4,625,849 | ||||||||||||||||||
Grade 4 | 423,926 | 796,468 | 4,185 | — | — | 1,224,579 | ||||||||||||||||||
Grade 5 | 16,648 | 344,920 | 744,335 | — | — | 1,105,903 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 135,709,804 | 9,512,084 | 759,942 | — | — | 145,981,830 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Retail |
| |||||||||||||||||||||||
Grade 1 | 135,445,215 | 3,556,937 | 7,560 | — | — | 139,009,712 | ||||||||||||||||||
Grade 2 | 3,125,163 | 4,249,881 | 8,278 | — | — | 7,383,322 | ||||||||||||||||||
Grade 3 | 158,769 | 1,305,097 | 8,312 | — | — | 1,472,178 | ||||||||||||||||||
Grade 4 | 9,468 | 151,552 | 2,575 | — | — | 163,595 | ||||||||||||||||||
Grade 5 | 8,666 | 423,127 | 424,964 | — | — | 856,757 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 138,747,281 | 9,686,594 | 451,689 | — | — | 148,885,564 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 274,457,085 | 19,198,678 | 1,211,631 | — | — | 294,867,394 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Loans measured at fair value through other comprehensive income |
| |||||||||||||||||||||||
Corporate |
| |||||||||||||||||||||||
Grade 1 | 210,718 | — | — | — | — | 210,718 | ||||||||||||||||||
Grade 2 | 133,574 | — | — | — | — | 133,574 | ||||||||||||||||||
Grade 3 | — | — | — | — | — | — | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 344,292 | — | — | — | — | 344,292 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 344,292 | — | — | — | — | 344,292 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 274,801,377 | 19,198,678 | 1,211,631 | — | — | 295,211,686 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| * | Before netting of allowance |
Credit qualities of loans graded according to internal credit ratings as of December 31, 2020 and 2019, are as follows:
| Corporate | Retail | |||
Grade 1 | AAA ~ BBB+ | 1 ~ 5 grade | ||
Grade 2 | BBB ~ BB | 6 ~ 8 grade | ||
Grade 3 | BB- ~ B | 9 ~ 10 grade | ||
Grade 4 | B- ~ CCC | 11 grade | ||
Grade 5 | CC or under | 12 grade or under |
41
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.2.4.2 Credit risk mitigation by collateral
Quantification of the extent to which collateral and other credit enhancements mitigate credit risk of loans as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| Non-impaired | Impaired | |||||||||||||||||||||||
Guarantees | 78,510,868 | 5,708,138 | 184,422 | — | — | 84,403,428 | ||||||||||||||||||
Deposits and savings | 1,424,757 | 149,745 | 64,355 | — | — | 1,638,857 | ||||||||||||||||||
Property and equipment | 3,883,931 | 471,313 | 71,021 | — | — | 4,426,265 | ||||||||||||||||||
Real estate | 166,812,667 | 12,453,807 | 1,792,642 | — | — | 181,059,116 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 250,632,223 | 18,783,003 | 2,112,440 | — | — | 271,527,666 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| Non-impaired | Impaired | |||||||||||||||||||||||
Guarantees | 69,711,057 | 3,834,566 | 177,047 | — | — | 73,722,670 | ||||||||||||||||||
Deposits and savings | 1,376,045 | 118,204 | 6,156 | — | — | 1,500,405 | ||||||||||||||||||
Property and equipment | 3,169,212 | 314,236 | 1,123 | — | — | 3,484,571 | ||||||||||||||||||
Real estate | 152,887,321 | 10,508,403 | 382,471 | — | — | 163,778,195 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 227,143,635 | 14,775,409 | 566,797 | — | — | 242,485,841 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
42
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.2.5 Credit risk of securities
Credit qualities of securities other than equity securities that are exposed to credit risk as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| Non-impaired | Impaired | |||||||||||||||||||||||
Securities measured at amortized cost * |
| |||||||||||||||||||||||
Grade 1 | 15,076,443 | — | — | — | — | 15,076,443 | ||||||||||||||||||
Grade 2 | 468,773 | — | — | — | — | 468,773 | ||||||||||||||||||
Grade 3 | 38,454 | 7,061 | — | — | — | 45,515 | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 15,583,670 | 7,061 | — | — | — | 15,590,731 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Securities measured at fair value through other comprehensive income |
| |||||||||||||||||||||||
Grade 1 | 38,289,525 | — | — | — | — | 38,289,525 | ||||||||||||||||||
Grade 2 | 1,584,293 | — | — | — | — | 1,584,293 | ||||||||||||||||||
Grade 3 | 79,336 | — | — | — | — | 79,336 | ||||||||||||||||||
Grade 4 | 7,521 | — | — | — | — | 7,521 | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 39,960,675 | — | — | — | — | 39,960,675 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 55,544,345 | 7,061 | — | — | — | 55,551,406 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| Non-impaired | Impaired | |||||||||||||||||||||||
Securities measured at amortized cost * |
| |||||||||||||||||||||||
Grade 1 | 13,894,203 | — | — | — | — | 13,894,203 | ||||||||||||||||||
Grade 2 | 33,148 | — | — | — | — | 33,148 | ||||||||||||||||||
Grade 3 | 38,230 | — | — | — | — | 38,230 | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 13,965,581 | — | — | — | — | 13,965,581 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Securities measured at fair value through other comprehensive income |
| |||||||||||||||||||||||
Grade 1 | 34,841,376 | — | — | — | — | 34,841,376 | ||||||||||||||||||
Grade 2 | 1,273,007 | — | — | — | — | 1,273,007 | ||||||||||||||||||
Grade 3 | 2,606 | — | — | — | — | 2,606 | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 36,116,989 | — | — | — | — | 36,116,989 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 50,082,570 | — | — | — | — | 50,082,570 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| * | Before netting of allowance |
43
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Credit qualities of securities other than equity securities, according to the credit ratings by external rating agencies as of December 31, 2020 and 2019, are as follows:
Domestic | Foreign | |||||||||||
Credit quality | KIS | NICE P&I | FnPricing Inc. | S&P | Fitch-IBCA | Moody’s | ||||||
Grade 1 | AA0 to AAA | AA0 to AAA | AA0 to AAA | A- to AAA | A- to AAA | A3 to Aaa | ||||||
Grade 2 | A- to AA- | A- to AA- | A- to AA- | BBB-to BBB+ | BBB-to BBB+ | Baa3 to Baa1 | ||||||
Grade 3 | BBB0 to BBB+ | BBB0 to BBB+ | BBB0 to BBB+ | BB to BB+ | BB to BB+ | Ba2 to Ba1 | ||||||
Grade 4 | BB0 to BBB- | BB0 to BBB- | BB0 to BBB- | B+ to BB- | B+ to BB- | B1 to Ba3 | ||||||
Grade 5 | BB- or under | BB- or under | BB- or under | B or under | B or under | B2 or under | ||||||
Credit qualities of debt securities denominated in Korean won are based on the lowest credit rating by the domestic agencies above, and those denominated in foreign currencies are based on the lowest credit rating by the foreign agencies above.
4.2.6 Credit risk of due from financial institutions
Credit qualities of due from financial institutions as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Total | ||||||||||||||||
| Non-impaired | Impaired | |||||||||||||||||||
Due from financial institutions measured at amortized cost * |
| |||||||||||||||||||
Grade 1 | 15,802,294 | — | — | — | 15,802,294 | |||||||||||||||
Grade 2 | 334,207 | — | — | — | 334,207 | |||||||||||||||
Grade 3 | 445,732 | 13,099 | — | — | 458,831 | |||||||||||||||
Grade 4 | 479,143 | — | — | — | 479,143 | |||||||||||||||
Grade 5 | 13,520 | — | 282 | — | 13,802 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 17,074,896 | 13,099 | 282 | — | 17,088,277 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| December 31, 2019 | ||||||||||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Total | ||||||||||||||||
| Non-impaired | Impaired | |||||||||||||||||||
Due from financial institutions measured at amortized cost * |
| |||||||||||||||||||
Grade 1 | 10,936,300 | — | — | — | 10,936,300 | |||||||||||||||
Grade 2 | 149,927 | — | — | — | 149,927 | |||||||||||||||
Grade 3 | 677,249 | — | — | — | 677,249 | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | 13,990 | 13,179 | 360 | — | 27,529 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 11,777,466 | 13,179 | 360 | — | 11,791,005 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | Before netting of allowance |
The classification criteria of the credit qualities of due from financial institutions as of December 31, 2020 and 2019, is the same as the criteria for securities other than equity securities.
44
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.2.7 Credit risk mitigation of derivative financial instruments
Quantification of the extent to which collateral mitigates credit risk of derivative financial instruments as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Deposits and savings, securities and others | 1,264,017 | 496,294 | ||||||
4.2.8 Credit risk concentration analysis
4.2.8.1 Details of loans by country as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | Retail | Corporate * | Credit card | Total | % | Allowances | Carrying amount | |||||||||||||||||||||
Korea | 162,521,943 | 149,253,281 | — | 311,775,224 | 94.55 | (1,362,777 | ) | 310,412,447 | ||||||||||||||||||||
Japan | 94 | 960,604 | — | 960,698 | 0.29 | (1,258 | ) | 959,440 | ||||||||||||||||||||
United States | — | 1,690,540 | — | 1,690,540 | 0.51 | (19,011 | ) | 1,671,529 | ||||||||||||||||||||
China | — | 4,518,737 | — | 4,518,737 | 1.37 | (20,485 | ) | 4,498,252 | ||||||||||||||||||||
Cambodia | 1,302,850 | 2,272,777 | — | 3,575,627 | 1.08 | (84,713 | ) | 3,490,914 | ||||||||||||||||||||
Indonesia | 1,221,257 | 3,636,434 | 60,959 | 4,918,650 | 1.49 | (689,408 | ) | 4,229,242 | ||||||||||||||||||||
Others | 189,207 | 2,164,159 | — | 2,353,366 | 0.71 | (9,159 | ) | 2,344,207 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 165,235,351 | 164,496,532 | 60,959 | 329,792,842 | 100.00 | (2,186,811 | ) | 327,606,031 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Retail | Corporate * | Total | % | Allowances | Carrying amount | ||||||||||||||||||
Korea | 148,609,480 | 139,599,908 | 288,209,388 | 97.58 | (1,303,099 | ) | 286,906,289 | |||||||||||||||||
Japan | 101 | 629,717 | 629,818 | 0.21 | (547 | ) | 629,271 | |||||||||||||||||
United States | — | 1,838,883 | 1,838,883 | 0.62 | (5,421 | ) | 1,833,462 | |||||||||||||||||
China | — | 3,135,501 | 3,135,501 | 1.06 | (20,652 | ) | 3,114,849 | |||||||||||||||||
Others | 275,983 | 1,310,246 | 1,586,229 | 0.53 | (6,242 | ) | 1,579,987 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 148,885,564 | 146,514,255 | 295,399,819 | 100.00 | (1,335,961 | ) | 294,063,858 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| * | Expected credit losses of loans measured at fair value through other comprehensive income as of December 31, 2020 and 2019, are |
45
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.2.8.2 Details of corporate loans by industry as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Loans * | % | Allowances | Carrying amount | ||||||||||||
Financial institutions | 12,807,603 | 7.78 | (7,802 | ) | 12,799,801 | |||||||||||
Manufacturing | 45,229,743 | 27.49 | (467,605 | ) | 44,762,138 | |||||||||||
Service | 71,466,009 | 43.45 | (349,419 | ) | 71,116,590 | |||||||||||
Wholesale and retail | 22,414,994 | 13.63 | (234,360 | ) | 22,180,634 | |||||||||||
Construction | 3,609,505 | 2.19 | (164,845 | ) | 3,444,660 | |||||||||||
Public sector | 1,358,422 | 0.83 | (74,717 | ) | 1,283,705 | |||||||||||
Others | 7,610,256 | 4.63 | (266,134 | ) | 7,344,122 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 164,496,532 | 100.00 | (1,564,882 | ) | 162,931,650 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Loans * | % | Allowances | Carrying amount | ||||||||||||
Financial institutions | 13,564,347 | 9.26 | (5,091 | ) | 13,559,256 | |||||||||||
Manufacturing | 42,707,287 | 29.15 | (389,602 | ) | 42,317,685 | |||||||||||
Service | 62,713,574 | 42.80 | (178,869 | ) | 62,534,705 | |||||||||||
Wholesale and retail | 17,900,225 | 12.22 | (97,238 | ) | 17,802,987 | |||||||||||
Construction | 2,833,544 | 1.93 | (163,791 | ) | 2,669,753 | |||||||||||
Public sector | 1,170,823 | 0.80 | (2,005 | ) | 1,168,818 | |||||||||||
Others | 5,624,455 | 3.84 | (24,794 | ) | 5,599,661 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 146,514,255 | 100.00 | (861,390 | ) | 145,652,865 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Expected credit losses of loans measured at fair value through other comprehensive income as of December 31, 2020 and 2019, are |
4.2.8.3 Details of retail loans and credit card receivables as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Loans | % | Allowances | Carrying amount | ||||||||||||
Housing purpose | 86,848,079 | 52.54 | (59,059 | ) | 86,789,020 | |||||||||||
General purpose | 78,387,272 | 47.42 | (559,772 | ) | 77,827,500 | |||||||||||
Credit card | 60,959 | 0.04 | (3,098 | ) | 57,861 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 165,296,310 | 100 | (621,929 | ) | 164,674,381 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Loans | % | Allowances | Carrying amount | ||||||||||||
Housing purpose | 77,523,389 | 52.07 | (33,536 | ) | 77,489,853 | |||||||||||
General purpose | 71,362,175 | 47.93 | (441,035 | ) | 70,921,140 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 148,885,564 | 100.00 | (474,571 | ) | 148,410,993 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
46
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.2.8.4 Details of domestic mortgage loans as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Loans * | % | Allowances | Carrying amount | ||||||||||||
Group1 | 13,721,317 | 14.22 | (8,252 | ) | 13,713,065 | |||||||||||
Group2 | 26,749,535 | 27.74 | (6,001 | ) | 26,743,534 | |||||||||||
Group3 | 35,831,558 | 37.16 | (9,458 | ) | 35,822,100 | |||||||||||
Group4 | 19,706,942 | 20.44 | (13,319 | ) | 19,693,623 | |||||||||||
Group5 | 401,295 | 0.42 | (1,413 | ) | 399,882 | |||||||||||
Group6 | 15,962 | 0.02 | (147 | ) | 15,815 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 96,426,609 | 100.00 | (38,590 | ) | 96,388,019 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Loans * | % | Allowances | Carrying amount | ||||||||||||
Group1 | 9,410,202 | 9.99 | (4,634 | ) | 9,405,568 | |||||||||||
Group2 | 19,269,533 | 20.48 | (6,270 | ) | 19,263,263 | |||||||||||
Group3 | 33,500,810 | 35.61 | (7,304 | ) | 33,493,506 | |||||||||||
Group4 | 30,517,828 | 32.44 | (13,244 | ) | 30,504,584 | |||||||||||
Group5 | 1,364,155 | 1.45 | (2,389 | ) | 1,361,766 | |||||||||||
Group6 | 25,763 | 0.03 | (128 | ) | 25,635 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 94,088,291 | 100.00 | (33,969 | ) | 94,054,322 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Retail loans for general purpose with the real estate as collateral are included. |
| Ranges | ||
Group1 | LTV 0% to less than 20% | |
Group2 | LTV 20% to less than 40% | |
Group3 | LTV 40% to less than 60% | |
Group4 | LTV 60% to less than 80% | |
Group5 | LTV 80% to less than 100% | |
Group6 | LTV over 100% |
| * | LTV: Loan to Value ratio |
47
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.2.8.5 Details of credit risk of due from financial institutions, securities other than equity securities and derivative financial assets by industry as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Amount | % | Allowances | Carrying amount | ||||||||||||
Due from financial institutions measured at amortized cost |
| |||||||||||||||
Finance and Insurance | 17,088,277 | 100.00 | (2,379 | ) | 17,085,898 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 17,088,277 | 100.00 | (2,379 | ) | 17,085,898 | ||||||||||||
|
|
|
|
| �� |
|
| |||||||||
Securities measured at fair value through profit or loss |
| |||||||||||||||
Government and government funded institutions | 3,856,785 | 24.55 | — | 3,856,785 | ||||||||||||
Finance and Insurance 1 | 10,382,964 | 66.10 | — | 10,382,964 | ||||||||||||
Others | 1,468,093 | 9.35 | — | 1,468,093 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 15,707,842 | 100.00 | — | 15,707,842 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative financial assets |
| |||||||||||||||
Government and government funded institutions | 44,670 | 1.00 | — | 44,670 | ||||||||||||
Finance and Insurance 1 | 3,829,897 | 85.94 | — | 3,829,897 | ||||||||||||
Others | 582,101 | 13.06 | — | 582,101 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 4,456,668 | 100.00 | — | 4,456,668 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through other comprehensive income 2 |
| |||||||||||||||
Government and government funded institutions | 14,625,964 | 36.60 | — | 14,625,964 | ||||||||||||
Finance and Insurance | 21,175,736 | 52.99 | — | 21,175,736 | ||||||||||||
Others | 4,158,975 | 10.41 | — | 4,158,975 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 39,960,675 | 100.00 | — | 39,960,675 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at amortized cost |
| |||||||||||||||
Government and government funded institutions | 5,162,860 | 33.11 | — | 5,162,860 | ||||||||||||
Finance and Insurance | 10,378,899 | 66.57 | (2,300 | ) | 10,376,599 | |||||||||||
Others | 48,972 | 0.32 | (18 | ) | 48,954 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 15,590,731 | 100.00 | (2,318 | ) | 15,588,413 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 92,804,193 | (4,697 | ) | 92,799,496 | |||||||||||||
|
|
|
|
|
| |||||||||||
48
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Amount | % | Allowances | Carrying amount | ||||||||||||
Due from financial institutions measured at amortized cost |
| |||||||||||||||
Finance and Insurance | 11,791,005 | 100.00 | (4,048 | ) | 11,786,957 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 11,791,005 | 100.00 | (4,048 | ) | 11,786,957 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through profit or loss |
| |||||||||||||||
Government and government funded institutions | 2,810,692 | 20.90 | — | 2,810,692 | ||||||||||||
Finance and Insurance 1 | 9,033,080 | 67.18 | — | 9,033,080 | ||||||||||||
Others | 1,603,067 | 11.92 | — | 1,603,067 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 13,446,839 | 100.00 | — | 13,446,839 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative financial assets |
| |||||||||||||||
Government and government funded institutions | 7,330 | 0.32 | — | 7,330 | ||||||||||||
Finance and Insurance 1 | 2,146,545 | 92.62 | — | 2,146,545 | ||||||||||||
Others | 163,551 | 7.06 | — | 163,551 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,317,426 | 100.00 | — | 2,317,426 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through other comprehensive income 2 |
| |||||||||||||||
Government and government funded institutions | 13,852,627 | 38.35 | — | 13,852,627 | ||||||||||||
Finance and Insurance | 18,726,118 | 51.85 | — | 18,726,118 | ||||||||||||
Others | 3,538,244 | 9.80 | — | 3,538,244 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 36,116,989 | 100.00 | — | 36,116,989 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at amortized cost |
| |||||||||||||||
Government and government funded institutions | 2,317,794 | 16.60 | (15 | ) | 2,317,779 | |||||||||||
Finance and Insurance | 11,637,772 | 83.33 | (1,225 | ) | 11,636,547 | |||||||||||
Others | 10,015 | 0.07 | (2 | ) | 10,013 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 13,965,581 | 100.00 | (1,242 | ) | 13,964,339 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 77,637,840 | (5,290 | ) | 77,632,550 | |||||||||||||
|
|
|
|
|
| |||||||||||
| 1 | Collective investment securities are classified as finance and insurance. |
| 2 | Expected credit losses of securities measured at fair value through other comprehensive income as of December 31, 2020 and 2019, are |
49
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.2.8.6 Details of credit risk of due from financial institutions, securities other than equity securities and derivative financial assets by country as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||
| Amount | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions measured at amortized cost |
| |||||||||||||||
Korea | 12,131,470 | 70.99 | — | 12,131,470 | ||||||||||||
United States | 1,952,700 | 11.43 | (282 | ) | 1,952,418 | |||||||||||
Others | 3,004,107 | 17.58 | (2,097 | ) | 3,002,010 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 17,088,277 | 100.00 | (2,379 | ) | 17,085,898 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through profit or loss |
| |||||||||||||||
Korea | 13,886,018 | 88.40 | — | 13,886,018 | ||||||||||||
United States | 1,132,332 | 7.21 | — | 1,132,332 | ||||||||||||
Others | 689,492 | 4.39 | — | 689,492 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 15,707,842 | 100.00 | — | 15,707,842 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative financial assets |
| |||||||||||||||
Korea | 2,120,424 | 47.58 | — | 2,120,424 | ||||||||||||
United States | 612,878 | 13.75 | — | 612,878 | ||||||||||||
France | 399,942 | 8.97 | — | 399,942 | ||||||||||||
Others | 1,323,424 | 29.70 | — | 1,323,424 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 4,456,668 | 100.00 | — | 4,456,668 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through other comprehensive income * |
| |||||||||||||||
Korea | 37,158,763 | 92.99 | — | 37,158,763 | ||||||||||||
United States | 223,750 | 0.56 | — | 223,750 | ||||||||||||
Others | 2,578,162 | 6.45 | — | 2,578,162 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 39,960,675 | 100.00 | — | 39,960,675 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at amortized cost |
| |||||||||||||||
Korea | 14,757,644 | 94.66 | (2,015 | ) | 14,755,629 | |||||||||||
United States | 5,473 | 0.04 | (4 | ) | 5,469 | |||||||||||
United Kingdom | 272,511 | 1.75 | (103 | ) | 272,408 | |||||||||||
Others | 555,103 | 3.55 | (196 | ) | 554,907 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 15,590,731 | 100.00 | (2,318 | ) | 15,588,413 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 92,804,193 | (4,697 | ) | 92,799,496 | |||||||||||||
|
|
|
|
|
| |||||||||||
50
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Amount | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions measured at amortized cost |
| |||||||||||||||
Korea | 8,765,109 | 74.34 | — | 8,765,109 | ||||||||||||
United States | 1,244,220 | 10.55 | — | 1,244,220 | ||||||||||||
Others | 1,781,676 | 15.11 | (4,048 | ) | 1,777,628 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 11,791,005 | 100.00 | (4,048 | ) | 11,786,957 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through profit or loss |
| |||||||||||||||
Korea | 12,460,493 | 92.66 | — | 12,460,493 | ||||||||||||
United States | 626,596 | 4.66 | — | 626,596 | ||||||||||||
Others | 359,750 | 2.68 | — | 359,750 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 13,446,839 | 100.00 | — | 13,446,839 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative financial assets |
| |||||||||||||||
Korea | 938,971 | 40.52 | — | 938,971 | ||||||||||||
United States | 461,145 | 19.90 | — | 461,145 | ||||||||||||
France | 299,491 | 12.92 | — | 299,491 | ||||||||||||
Others | 617,819 | 26.66 | — | 617,819 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,317,426 | 100.00 | — | 2,317,426 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through other comprehensive income * |
| |||||||||||||||
Korea | 33,895,666 | 93.85 | — | 33,895,666 | ||||||||||||
United States | 423,145 | 1.17 | — | 423,145 | ||||||||||||
Others | 1,798,178 | 4.98 | — | 1,798,178 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 36,116,989 | 100.00 | — | 36,116,989 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at amortized cost |
| |||||||||||||||
Korea | 12,841,002 | 91.95 | (833 | ) | 12,840,169 | |||||||||||
United States | 165,745 | 1.19 | (34 | ) | 165,711 | |||||||||||
United Kingdom | 765,438 | 5.48 | (237 | ) | 765,201 | |||||||||||
Others | 193,396 | 1.38 | (138 | ) | 193,258 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 13,965,581 | 100.00 | (1,242 | ) | 13,964,339 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 77,637,840 | (5,290 | ) | 77,632,550 | |||||||||||||
|
|
|
|
|
| |||||||||||
| * | Expected credit loss of securities measured at fair value through other comprehensive income as of December 31, 2020 and 2019, are |
Due from financial institutions, financial assets at fair value through profit or loss that linked to gold price and derivatives are mostly related to finance and insurance industry with high credit ratings.
51
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.3 Liquidity risk
4.3.1 Overview of liquidity risk
Liquidity risk is a risk that the Group becomes insolvent due to the mismatch between the inflow and outflow of funds, unexpected cash outflows, or a risk of loss due to financing funds at a high interest rate or disposing of securities at an unfavorable price due to lack of available funds. The Group manages its liquidity risk through analysis of the contractual maturity of interest-bearing assets and liabilities, assets and liabilities related to the other inflows and outflows of funds, and off-balance sheet items related to the inflows and outflows of funds such as currency derivative instruments and others.
4.3.2 Liquidity risk management and indicator
The liquidity risk is managed by comprehensive risk management policies and Asset Liability Management (“ALM”) risk management guidelines set forth in these policies applied to all risk management policies and procedures that may arise throughout the overall business of the Group.
The Group establishes a liquidity risk management strategy, including objectives of liquidity risk management, management policies, and internal control systems, and obtains a resolution from the Risk Management Committee. The Risk Management Committee establishes the Risk Management Council for efficient risk management to supervise the establishment and implementation of policies according to risk management strategies.
The Group calculates and manages Liquidity Coverage Ratio (“LCR”), Net Stable Funding Ratio (“NSFR”), liquidity ratio, maturity mismatch ratio and liquidity stress testing result for all transactions and off-balance transactions, that affect the cashflows in Korean won and foreign currency funds raised and operated for the management of liquidity risks and periodically reports them to the Risk Management Council and the Risk Management Committee.
4.3.3 Analysis of remaining contractual maturity of financial assets and liabilities
The cash flows disclosed in the maturity analysis are undiscounted contractual amounts including principal and future interest receivables and payments; as such, the table below do not match with the amounts in the consolidated statement of financial position which are based on discounted cash flows. The future interest receipts and payments for floating-rate assets and liabilities are calculated on the assumption that the current interest rate is the same until maturity.
52
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.3.3.1 Remaining contractual maturity of financial assets and liabilities other than derivatives held for cash flow hedge as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 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 institutions 1 | 6,164,904 | 572,208 | 263,484 | 207,089 | — | — | 7,207,685 | |||||||||||||||||||||
Financial assets at fair value through profit or loss 2 | 16,003,078 | — | — | — | 24 | 87,445 | 16,090,547 | |||||||||||||||||||||
Derivatives held for trading 2 | 4,291,829 | — | — | — | — | — | 4,291,829 | |||||||||||||||||||||
Derivatives held for hedging 3 | — | 4,005 | 16,152 | 18,781 | 65,748 | 88,462 | 193,148 | |||||||||||||||||||||
Loans measured at amortized cost | — | 19,240,947 | 31,073,680 | 125,491,348 | 97,541,818 | 95,557,255 | 368,905,048 | |||||||||||||||||||||
Financial investments | 2,368,280 | 1,679,898 | 3,741,760 | 10,421,399 | 36,732,572 | 5,391,958 | 60,335,867 | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income 4 | 2,368,280 | 716,568 | 1,125,721 | 8,258,114 | 30,450,764 | 738,642 | 43,658,089 | |||||||||||||||||||||
Securities measured at amortized cost | — | 963,330 | 2,616,039 | 2,163,285 | 6,281,808 | 4,653,316 | 16,677,778 | |||||||||||||||||||||
Other financial assets | — | 4,276,790 | — | 931,385 | 466 | — | 5,208,641 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 28,828,091 | 25,773,848 | 35,095,076 | 137,070,002 | 134,340,628 | 101,125,120 | 462,232,765 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Financial liabilities |
| |||||||||||||||||||||||||||
Financial liabilities at fair value through profit or loss 2 | 141,277 | — | — | — | — | — | 141,277 | |||||||||||||||||||||
Derivatives held for trading 2 | 4,215,097 | — | — | — | — | — | 4,215,097 | |||||||||||||||||||||
Derivatives held for hedging 3 | — | 2,807 | 3,556 | 14,545 | 32,981 | 109 | 53,998 | |||||||||||||||||||||
Deposits 5 | 175,037,700 | 17,146,967 | 28,299,527 | 98,963,384 | 11,965,747 | 1,825,797 | 333,239,122 | |||||||||||||||||||||
Borrowings | 47,502 | 8,899,500 | 3,586,809 | 7,380,706 | 6,360,442 | 836,792 | 27,111,751 | |||||||||||||||||||||
Debentures | 17,783 | 1,184,565 | 4,136,912 | 7,550,002 | 11,299,725 | 4,038,300 | 28,227,287 | |||||||||||||||||||||
Lease liabilities | 205 | 16,362 | 29,955 | 111,734 | 214,008 | 27,970 | 400,234 | |||||||||||||||||||||
Other financial liabilities | — | 13,611,041 | 1,075 | 124,707 | 50,993 | 1,060 | 13,788,876 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 179,459,564 | 40,861,242 | 36,057,834 | 114,145,078 | 29,923,896 | 6,730,028 | 407,177,642 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Off-balance sheet items |
| |||||||||||||||||||||||||||
Commitments 6 | 91,738,296 | — | — | — | — | — | 91,738,296 | |||||||||||||||||||||
Acceptances and guarantees contracts | 8,560,896 | — | — | — | — | — | 8,560,896 | |||||||||||||||||||||
Financial guarantee contracts 7 | 4,354,919 | — | — | — | — | — | 4,354,919 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 104,654,111 | — | — | — | — | — | 104,654,111 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
53
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| (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 institutions 1 | 4,738,842 | 283,601 | 233,046 | 487,877 | — | — | 5,743,366 | |||||||||||||||||||||
Financial assets at fair value through profit or loss 2 | 13,677,669 | 251 | 17,846 | 134,012 | — | 87,445 | 13,917,223 | |||||||||||||||||||||
Derivatives held for trading 2 | 2,184,099 | — | — | — | — | — | 2,184,099 | |||||||||||||||||||||
Derivatives held for hedging 3 | — | 4,306 | 17,145 | 24,016 | 39,693 | 66,176 | 151,336 | |||||||||||||||||||||
Loans measured at amortized cost | — | 22,455,411 | 28,091,644 | 115,979,519 | 78,654,724 | 89,601,437 | 334,782,735 | |||||||||||||||||||||
Financial investments | 1,893,179 | 1,253,141 | 3,045,348 | 10,727,300 | 35,015,283 | 2,859,162 | 54,793,413 | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income 4 | 1,893,179 | 310,261 | 1,122,554 | 5,499,868 | 30,502,706 | 456,250 | 39,784,818 | |||||||||||||||||||||
Securities measured at amortized cost | — | 942,880 | 1,922,794 | 5,227,432 | 4,512,577 | 2,402,912 | 15,008,595 | |||||||||||||||||||||
Other financial assets | — | 3,672,079 | — | 996,994 | — | — | 4,669,073 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 22,493,789 | 27,668,789 | 31,405,029 | 128,349,718 | 113,709,700 | 92,614,220 | 416,241,245 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||
Financial liabilities at fair value through profit or loss 2 | 80,235 | — | — | — | — | — | 80,235 | |||||||||||||||||||||
Derivatives held for trading 2 | 2,132,771 | — | — | — | — | — | 2,132,771 | |||||||||||||||||||||
Derivatives held for hedging 3 | — | 5,973 | 696 | (4,529 | ) | 11,575 | 129 | 13,844 | ||||||||||||||||||||
Deposits 5 | 137,848,626 | 17,156,280 | 27,200,257 | 109,833,508 | 10,608,833 | 2,538,473 | 305,185,977 | |||||||||||||||||||||
Borrowings | 1,407 | 5,218,386 | 2,484,905 | 6,541,727 | 4,473,295 | 753,997 | 19,473,717 | |||||||||||||||||||||
Debentures | 22,285 | 1,014,596 | 1,870,767 | 5,668,559 | 9,593,393 | 1,633,467 | 19,803,067 | |||||||||||||||||||||
Lease liabilities | 520 | 14,196 | 27,962 | 101,976 | 198,415 | 13,885 | 356,954 | |||||||||||||||||||||
Other financial liabilities | — | 12,130,281 | 773 | 77,688 | 88,594 | — | 12,297,336 | |||||||||||||||||||||
|
|
|
|
|
|
|
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|
|
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| |||||||||||||||
| 140,085,844 | 35,539,712 | 31,585,360 | 122,218,929 | 24,974,105 | 4,939,951 | 359,343,901 | ||||||||||||||||||||||
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| |||||||||||||||
Off-balance sheet items | ||||||||||||||||||||||||||||
Commitments 6 | 87,866,225 | — | — | — | — | — | 87,866,225 | |||||||||||||||||||||
Acceptances and guarantees contracts | 8,327,494 | — | — | — | — | — | 8,327,494 | |||||||||||||||||||||
Financial guarantee contracts 7 | 3,305,051 | — | — | — | — | — | 3,305,051 | |||||||||||||||||||||
|
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|
|
|
|
|
|
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| |||||||||||||||
| 99,498,770 | — | — | — | — | — | 99,498,770 | ||||||||||||||||||||||
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| |||||||||||||||
| 1 | Restricted due from financial instruments amounting to |
| 2 | Financial liabilities at fair value through profit or loss, derivatives held for trading and financial assets at fair value through profit or loss (excluding loans) are not managed by contractual maturity because they are expected to be traded or redeemed before maturity. Therefore, the carrying amounts of those financial instruments are included in the ‘On demand’ category. |
| 3 | Cash flows of derivative instruments held for hedging are shown at net amounts of cash inflows and outflows by remaining contractual maturity. |
| 4 | Equity securities designated as financial assets at fair value through other comprehensive income are included in the ‘On demand’ category because most are available for sale at any time. However, equity securities restricted from sale, are included in the category corresponding to the date on which the restriction is lifted. |
| 5 | Deposits that are contractually repayable on demand or on short notice are included in the ‘On demand’ category. |
| 6 | Unused lines of credit within commitments are included in the ‘On demand’ category because payments can be requested at any time. |
| 7 | Cash flows under financial guarantee contracts are classified based on the earliest period that the contract can be executed. |
54
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.3.3.2 Contractual cash flows of derivatives held for cash flow hedge as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Up to 1 month | 1-3 months | 3-12 months | 1-5 years | Over 5 years | Total | ||||||||||||||||||
Cash flow to be received of net-settled derivatives | 69 | 91 | 350 | 30 | — | 540 | ||||||||||||||||||
Cash flow to be paid of net-settled derivatives | 124 | 3,673 | 7,406 | 4,043 | — | 15,246 | ||||||||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Up to 1 month | 1-3 months | 3-12 months | 1-5 years | Over 5 years | Total | ||||||||||||||||||
Cash flow to be received of net-settled derivatives | 38 | 357 | 1,015 | 564 | — | 1,974 | ||||||||||||||||||
Cash flow to be paid of net-settled derivatives | 191 | 1,340 | 2,001 | 342 | — | 3,874 | ||||||||||||||||||
4.4 Market Risk
4.4.1 Concept
Market risk refers to risks that can result in losses due to changes in market factors such as interest rates, stock prices, and exchange rates etc., which arise from securities and derivatives and others. The most significant risks associated with trading position are interest rate risk and currency risk, and additional risks include stock price risk. The non-trading position is also exposed to interest rate risk. The Group manages the market risks by dividing them into those arising from the trading position and those arising from the non-trading position.
4.4.2 Risk management
The Group sets and monitors internal capital limits for market and interest rate risk to manage the risks of trading and non-trading positions. In order to manage market risk efficiently, the Group maintains risk management systems and procedures such as trading policies and procedures, market risk management guidelines for trading positions, and ALM risk management guidelines for non-trading positions. The entire process is carried out through the approval of the Risk Management Council and the Risk Management Committee of the Group.
The Group’s Risk Management Council establishes and enforces overall market risk management policies for market risk management and decides to establish position limits, loss limits, VaR limits, and approves non-standard new products. In addition, the Market Risk Management Committee, chaired by Chief Risk Officer (“CRO”), is a practical decision-making body for market risk management and determines position limits, loss limits, VaR limits, sensitivity limits, and scenario loss limits for each department of business group.
The Asset-Liability Management Committee (“ALCO”) determines interest rate and commission operating standards and ALM operation policies and enacts and revises relevant guidelines. The Risk Management Council monitors the establishment and enforcement of ALM risk management policies and enacts and revises ALM risk management guidelines. Interest rate risk limits are set based on future asset and liability positions and expected interest rate volatility, which reflect annual business plans. The ALM Department and the Risk Management Department regularly measure and monitor interest rate risks and report the status and limit of interest rate risk including changes in Economic Value of Equity (“DEVE”), changes in Net Interest Income (“DNII”) and duration gap to the ALCO and the Risk Management Council on a monthly basis, and to the Risk Management Committee on a quarterly basis. To ensure the adequacy of interest rate and liquidity risk management, the Risk Management Department assigns the limits, monitors and reviews the procedures and tasks of ALM operations conducted by the ALM department, and reports to the management independently.
55
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
The Group is closely monitoring the outputs of various industry groups and markets that manage the transition to new interest rate, including announcements by Inter-Bank Offered Rate (“IBOR”) regulation authority. Regulation authority has made it clear that as of December 31, 2021, they will no longer persuade or force banks to submit IBORs. In response to these announcements, the Group established an IBOR transition program and plan consisting of major business areas such as finance, accounting, tax, legal, IT, and risk. The program is under the control of the CFO and reports matters to the board of directors and to a council with senior management members. The purpose of the program is to understand where exposure to IBOR occurs within the business and prepare and implement an action plan to facilitate the transition to alternative interest rate. The Group aims to complete the transition and alternative plan by the year-end of 2021. In addition, for CD interest rates, interest rates are being reformed by the relevant institutions that calculate, announce and manage the interest rates, and related institutions such as the Bank of Korea and the financial authorities. The Group continues its efforts as a market participant to actively express opinions so that the index interest rate reform can be carried out in the direction of minimizing the financial and non-financial impacts and operational risks on the Group and minimizing confusion among stakeholders.
4.4.3 Trading position
4.4.3.1 Definition of a trading position
The trading position, which is subject to market risk management, includes interest rates and stock positions held for short-term trading profit. The Group also includes and manages all foreign currency positions in our trading positions. The trading position subject to market risk management is the trading position defined in “Trading Policy and Guidelines” and the basic requirements for the trading position are as follows:
| • | The target position has no restrictions on the sale, and the daily fair value assessment should be made and the embedded significant risk can be hedged in the market. |
| • | The trading position classification criteria should be clearly defined in the Trading Policy and Guidelines, and the trading position should be managed by a separate trading department. |
| • | The target position must be operated according to the documented trading strategy and the position’s limit management must be carried out. |
| • | The specialized dealer or operating department shall have the authority to execute the transaction without prior approval from the Risk Management Department, etc. within the pre-determined limits of the target position. |
| • | Target positions should be periodically reported to management for risk management of the Group. |
4.4.3.2 Observation method of market risk arising from trading positions
The Group measures market risk by calculating VaR through the market risk management system for all trading positions. Generally, the Group manages market risks arising from trading positions at the portfolio level. In addition, the Group controls and manages the risk of derivative financial instrument transactions in accordance with the Financial Supervisory Service regulations and guidelines.
56
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.4.3.3 VaR
(a) VaR
The Group uses the risk-based valuation method (VaR) to measure the market risk of the trading position.
The Group uses the 10-day VaR, which represents the maximum amount of possible loss of 10 business days based on the historical simulation model of the full valuation method. The distribution of value changes in the portfolio is estimated based on data from the past 250 business days, and 10-day VaR is calculated by the difference between the value of the portfolio at a 99% confident level of distribution of value changes in the portfolio and the current market value.
VaR is a commonly used market risk measurement technique. However, this approach has some limitations. VaR estimates possible losses under certain confidence level based on historical market change data. However, since past market changes cannot reflect all future conditions and circumstances, the timing and magnitude of actual losses may vary depending on assumptions in the calculation process. If one day or ten days of the holding period which is generally used for normal period of liquidating the position, is not sufficient or too long, the VaR result may underestimate or overestimate the potential loss.
When the Group measures market risk for trading position, it uses an internal model (VaR) for general risk and a standard method for individual risks. Standard method is used if internal model is not authorized for certain market risk. Therefore, disclosed market risk VaR does not reflect the market risk for individual risks and for some positions.
(b) Back-Testing
To verify the appropriateness of the VaR model, back-testing is performed by comparing actual and hypothetical gains and losses with the VaR calculation results.
(c) Stress Testing
The Group carries out a stress testing of the trading and available-for-sale portfolio to reflect changes in individual risk factors such as interest rates, stock prices, exchange rates, and implied volatility of options that have a significant impact on portfolio value in a crisis. The Group carries out a stress testing through historical and hypothetical scenarios. This stress testing is carried out more than once a quarter.
VaR at a 99% confidence level of interest rate, stock price and foreign exchange rate risk for trading positions with a ten-day holding period, excluding Stressed VaR, for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||
| (In millions of Korean won) | Average | Minimum | Maximum | Dec. 31, 2020 | ||||||||||||
Interest rate risk | 59,147 | 9,588 | 105,983 | 50,795 | ||||||||||||
Stock price risk | 15,379 | 3,787 | 24,821 | 24,821 | ||||||||||||
Foreign exchange rate risk | 36,281 | 5,302 | 67,766 | 49,338 | ||||||||||||
Deduction of diversification effect | (7,320 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total VaR | 105,428 | 14,225 | 158,798 | 117,634 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
57
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||
| (In millions of Korean won) | Average | Minimum | Maximum | Dec. 31, 2019 | ||||||||||||
Interest rate risk | 11,190 | 1,725 | 20,467 | 16,628 | ||||||||||||
Stock price risk | 3,434 | 2,402 | 4,310 | 3,914 | ||||||||||||
Foreign exchange rate risk | 15,760 | 11,416 | 20,704 | 13,081 | ||||||||||||
Deduction of diversification effect | (13,246 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total VaR | 17,545 | 13,641 | 24,849 | 20,377 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
The required equity capital using the standard method related to the positions which are not measured by VaR as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Interest rate risk | 40,290 | 83,731 | ||||||
Stock price risk | 7,088 | 1,954 | ||||||
Foreign exchange rate risk | 23,938 | 1,850 | ||||||
|
|
|
| |||||
| 71,316 | 87,535 | |||||||
|
|
|
| |||||
4.4.3.4 Details of risk factors
(a) Interest rate risk
The interest rate risk for trading positions usually arises from debt securities denominated in Korean won. The Group’s trading strategy is to gain short-term trading gains from interest rate fluctuations. The Group manages interest rate risks associated with trading portfolios using VaR and sensitivity analysis (Price Value of a Basis Point: PVBP).
(b) Stock price risk
Stock price risk arises mainly from stock positions held by principal guaranteed trust and derivatives linked to stocks positions in the Capital Markets Department. This stock price risk is managed through VaR, sensitivity limits, etc.
(c) Foreign exchange rate risk
Foreign exchange rate risk arises from holding assets, liabilities and currency-related derivatives which are denominated in foreign currency. Most of the net foreign currency exposures occur in the US dollars and the Chinese Yuan. The Group also manages net foreign exchange exposures across trading and non-trading portfolios by setting a net foreign currency exposure limit at the same time setting a loss limit.
4.4.4 Non-trading position (Interest Rate Risk of Banking Book (“IRRBB”))
4.4.4.1 Definition of IRRBB
IRRBB is a change in equity and profit due to the changes in value of interest-sensitive assets, liabilities, etc., and is measured by DEVE and DNII.
58
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.4.4.2 Bank’s overall interest rate risk management and mitigation strategy
The Risk Management Committee approves policies, procedures and limits for managing interest rate risk, and the management department regularly reports on interest rate risk levels of DEVE, DNII and changes of market condition etc., as compared to the set limit. To measure the sensitivity of a bank’s economic value and earnings-based measure as interest rates change, the Bank calculates monthly interest rate gap and duration gap for assets and liabilities. In addition, the management department conducts an interest rate risk crisis analysis at least once a quarter assuming abnormal interest rate fluctuations and reports the results to the Risk Management Council. Independent internal and external audits regularly check the process of identifying, measuring and monitoring interest rate risks. The interest rate risk model adequacy test is carried out regularly at least once a year by verification department independent of the management department.
4.4.4.3 Main modeling assumption used for the Bank’s interest rate risk measurement system for internal management
The Bank separately calculates D EVE for internal management of interest rate risk, assuming a historical-simulation based on interest rate volatility in the past financial crisis (FY08-FY09), distribution of assets/liabilities portfolio, and 27 interest rate gaps considering management strategy.
4.4.4.4 The Bank’s interest rate risk hedging methodology and related accounting
The Bank hedges interest rate risk through back-to-back interest rate swap transactions, which are the same as interest payment cash flows. The Bank officially documents and manages the risk management strategy for hedge accounting, risk management objectives, hedging relationship, and assessment method for hedge effectiveness.
4.4.4.5 Main assumptions used for calculating DEVE, DNII
The Bank calculates interest rate risk, including all cash flow of interest-sensitive assets, liabilities, and off-balance items in the banking book. DEVE assumes a run-off balance sheet where the existing bank account positions are amortized and not replaced by new businesses. In addition, the contractual interest rate, including commercial margins and other interest rate components, is applied to generate cash flows. In case of discounting cash flow, DEVE is calculated by applying risk-free interest rates that do not include commercial margins and other interest components.
DNII assumes a constant balance sheet in which cash flows that mature or interest rates are revised during the target management period are replaced by new cash flows that have the same characteristics. The interest rate risk is calculated for the interest rate shock scenario by adding up only if the risk is a loss for each currency. The average interest rate revision maturity of demand deposits is determined by dividing them into retail transactional, retail non-transactional and wholesale based on customer and regular transactions and taking into account the core deposit rates and the upper average maturity limit for each category. The average interest rate revision maturity for demand deposits is 2.5 years for core deposits, 1 day for non-core deposits, and the longest interest rate revision maturity is five years. The prepayment rate of fixed-rate loan and early redemption rate of term deposit are estimated by dividing the amount of prepayment amount and early redemption amount during the previous month by the balance at the end of the previous month, respectively.
59
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.4.4.6 DEVE, DNII
The Bank calculates DEVE by applying six interest rate shocks and stress scenarios, and DNII by applying parallel shock up and down scenarios. The results as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | December 31, 2019 | |||||||||||||||
| (In millions of Korean won) | Changes in the Economic Value of Equity Capital (DEVE) | Changes in net interest income (DNII) | Changes in the Economic Value of Equity Capital (DEVE) | Changes in net interest income (DNII) | ||||||||||||
Scenario 1 (Parallel rise) | 544,087 | 415,339 | 483,207 | 152,013 | ||||||||||||
Scenario 2 (Parallel decline) | — | — | 31,718 | 9,717 | ||||||||||||
Scenario 3 (Short-term decline, long-term rise) | 245,337 | 257,756 | ||||||||||||||
Scenario 4 (Short-term rise, long-term decline) | 423,673 | 411,237 | ||||||||||||||
Scenario 5 (Short-term rise) | 466,220 | 378,380 | ||||||||||||||
Scenario 6 (Short-term decline) | 480,246 | 492,047 | ||||||||||||||
Maximum of 6 scenarios | 544,087 | 415,339 | 492,047 | 152,013 | ||||||||||||
Basic capital | 28,234,310 | — | 27,609,684 | — | ||||||||||||
60
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.4.5 Financial assets and liabilities denominated in foreign currencies
Details of financial instruments denominated in foreign currencies and translated into Korean won as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | USD | JPY | EUR | GBP | CNY | Others | Total | |||||||||||||||||||||
Financial assets | ||||||||||||||||||||||||||||
Cash and due from financial institutions | 3,765,956 | 528,056 | 211,266 | 57,386 | 815,865 | 819,591 | 6,198,120 | |||||||||||||||||||||
Financial assets at fair value through profit or loss | 1,494,702 | 449 | 198,613 | 627 | — | 87,780 | 1,782,171 | |||||||||||||||||||||
Derivatives held for trading | 190,110 | — | — | — | 4,344 | 203 | 194,657 | |||||||||||||||||||||
Derivatives held for hedging | 112,431 | — | — | — | — | — | 112,431 | |||||||||||||||||||||
Loans measured at amortized cost | 18,055,973 | 550,793 | 1,097,069 | 221,880 | 1,617,715 | 5,222,701 | 26,766,131 | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income | 4,353,660 | 5,271 | 9,438 | — | 342,804 | 203,469 | 4,914,642 | |||||||||||||||||||||
Financial assets at amortized cost | 317,662 | — | — | — | 108,594 | 408,590 | 834,846 | |||||||||||||||||||||
Other financial assets | 1,776,965 | 49,660 | 200,083 | 5,504 | 103,064 | 272,851 | 2,408,127 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 30,067,459 | 1,134,229 | 1,716,469 | 285,397 | 2,992,386 | 7,015,185 | 43,211,125 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||
Derivatives held for trading | 334,938 | 65 | 109 | — | 42,023 | 8,733 | 385,868 | |||||||||||||||||||||
Derivatives held for hedging | 66,305 | — | — | — | — | — | 66,305 | |||||||||||||||||||||
Deposits | 15,927,312 | 923,353 | 917,479 | 66,372 | 1,750,298 | 4,305,293 | 23,890,107 | |||||||||||||||||||||
Borrowings | 9,241,832 | 485,618 | 321,705 | 218,578 | 439 | 1,231,359 | 11,499,531 | |||||||||||||||||||||
Debentures | 4,798,724 | — | 666,873 | — | — | 308,675 | 5,774,272 | |||||||||||||||||||||
Other financial liabilities | 2,625,818 | 38,752 | 93,949 | 9,491 | 34,716 | 195,272 | 2,997,998 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 32,994,929 | 1,447,788 | 2,000,115 | 294,441 | 1,827,476 | 6,049,332 | 44,614,081 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Off-balance sheet items | 13,295,571 | 32,200 | 254,222 | 741 | 253,472 | 575,914 | 14,412,120 | |||||||||||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | USD | JPY | EUR | GBP | CNY | Others | Total | |||||||||||||||||||||
Financial assets | ||||||||||||||||||||||||||||
Cash and due from financial institutions | 1,914,554 | 254,502 | 145,066 | 33,239 | 1,148,375 | 490,021 | 3,985,757 | |||||||||||||||||||||
Financial assets at fair value through profit or loss | 1,700,956 | 3,387 | 165,330 | 3,373 | — | 23,355 | 1,896,401 | |||||||||||||||||||||
Derivatives held for trading | 98,786 | — | — | — | 6,786 | — | 105,572 | |||||||||||||||||||||
Derivatives held for hedging | 83,610 | — | — | — | — | — | 83,610 | |||||||||||||||||||||
Loans measured at amortized cost | 14,070,820 | 465,849 | 593,530 | 137,585 | 1,205,297 | 613,780 | 17,086,861 | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income | 3,953,899 | 21,267 | 5,192 | — | 282,390 | 37,977 | 4,300,725 | |||||||||||||||||||||
Financial assets at amortized cost | 1,026,325 | — | — | — | 97,844 | — | 1,124,169 | |||||||||||||||||||||
Other financial assets | 1,193,680 | 230,223 | 289,187 | 5,178 | 167,525 | 87,967 | 1,973,760 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 24,042,630 | 975,228 | 1,198,305 | 179,375 | 2,908,217 | 1,253,100 | 30,556,855 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||
Derivatives held for trading | 212,569 | 6 | 53 | — | 7,806 | — | 220,434 | |||||||||||||||||||||
Derivatives held for hedging | 35,538 | — | — | — | — | — | 35,538 | |||||||||||||||||||||
Deposits | 11,939,600 | 731,178 | 761,897 | 45,340 | 1,471,566 | 530,990 | 15,480,571 | |||||||||||||||||||||
Borrowings | 8,576,321 | 125,096 | 340,530 | 118,848 | 15,092 | 73,640 | 9,249,527 | |||||||||||||||||||||
Debentures | 4,083,040 | — | — | — | — | 101,967 | 4,185,007 | |||||||||||||||||||||
Other financial liabilities | 2,111,089 | 59,761 | 97,325 | 21,583 | 173,480 | 163,990 | 2,627,228 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 26,958,157 | 916,041 | 1,199,805 | 185,771 | 1,667,944 | 870,587 | 31,798,305 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Off-balance sheet items | 16,745,727 | 32,694 | 191,210 | — | 252,369 | 37,195 | 17,259,195 | |||||||||||||||||||||
61
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
4.5 Operational Risk
4.5.1 Concept
The Group defines operational risks broadly as all financial and non-financial risks from operating activities that negatively affect capital.
4.5.2 Risk management
The purpose of operational risk management is not only to comply with supervisory and regulatory requirements, but also to spread risk management culture, strengthen internal control, improve processes and provide timely feedback to management and all employees. The Group established a Business Continuity Planning (BCP) to carry out continuous work in emergency situations and established alternative facilities. The Group conducts simulation training for headquarters and IT departments to check the business continuity framework.
4.6 Capital Management
The Group complies with the capital adequacy standard established by the Financial Services Commission. This capital adequacy standard is based on Basel III revised by Basel Committee on Banking Supervision in Bank for International Settlements in June 2011 and was implemented in Korea in December 2013.
The Group is required to maintain a minimum Common Equity Tier 1 ratio of at least 4.5%, a minimum Tier 1 ratio of 6.0% and a minimum Total Regulatory Capital of 8.0% as of December 31, 2020. Capital Conservation Buffer of 2.5% and Capital Requirement of Domestic Systemically Important Bank (D-SIB) of 1.0% are additionally applied. Therefore, the Group is required to maintain a capital ratio including a minimum capital ratio and additional capital requirements (a Common Equity Tier 1 Ratio of 8.0% (December 31, 2019: 8.0%), a Tier 1 Ratio of 9.5% (December 31, 2019: 9.5%), and a Total Regulatory Capital Ratio of 11.5% (December 31, 2019: 11.5%)).
The Group’s equity capital is classified into three categories in accordance with Detailed Supervisory Regulations on Banking Business:
| • | Common Equity Tier 1 Capital: Common equity Tier 1 Capital is the first to take losses in the Group and is the last to be compensated in liquidation of the Group and not repaid except for liquidation. It includes capital, capital surplus, retained earnings, non-controlling interests of the consolidated subsidiaries, accumulated other comprehensive income and other capital surplus etc. |
| • | Additional Tier 1 Capital: Additional Tier 1 Capital includes capital, capital surplus, etc. related to the issuance of capital securities of a permanent nature that meets the conditional capital securities requirements. |
| • | Tier 2 Capital: Tier 2 Capital means capital that can compensate for losses of the Group upon liquidation, including (a) the amount of subordinated bonds with maturity of not less than 5 years that meet the conditional capital securities requirements, and (b) the allowance for credit losses accumulated on the loans which are classified as normal or precautionary in accordance with Regulation on Supervision of Financial Holding Companies and others. |
The risk-weighted assets are the magnitude of the amount of risk inherent in the total asset held by the Group. The Group calculates risk-weighted assets by each risk (credit risk, market risk, and operational risk) based on the Supervisory Regulations and Detailed Supervisory Regulations on Financial Holding Companies and uses them to calculate BIS ratio. The Group complied with external capital adequacy requirements as of December 31, 2020 and 2019.
62
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Apart from the BIS ratio, the Group evaluates and manages capital adequacy through internal policies. The valuation of capital adequacy compares the size of available capital (the amount of capital actually available) to the size of internal capital (the amount of capital required to cover all the significant risks faced by the Group under its target credit rating), which monitors financial soundness and provides a risk-adjusted performance measurement basis. The internal capital for capital adequacy assessment is calculated by adding the results of a stress test and other additional capital requirements to the internal capital calculated for each individual risk.
The Risk Management Committee of the Group determines the risk appetite of the Group, allocates internal capital by risk type and business group, and each business group operates capital efficiently within the range of the allocated internal capital. The Risk Management Department of the Group monitors internal capital limit management and reports it to the management and the Risk Management Committee. If the limit of internal capital is expected to be exceeded, the Group’s capital adequacy management is carried out through review and approval by the Risk Management Committee in advance.
Details of the Group’s capital adequacy calculation in accordance with Basel III requirements as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Equity Capital | 32,554,705 | 29,809,730 | ||||||
Tier I Capital | 28,234,310 | 27,609,684 | ||||||
Common Equity Tier 1 Capital | 27,659,787 | 27,035,161 | ||||||
Additional Tier 1 Capital | 574,523 | 574,523 | ||||||
Tier II Capital | 4,320,395 | 2,200,046 | ||||||
Risk-weighted assets: | 183,148,273 | 188,075,177 | ||||||
Credit risk 1 | 160,817,395 | 172,985,173 | ||||||
Market risk 2 | 11,372,840 | 5,150,641 | ||||||
Operational risk 3 | 10,958,038 | 9,939,363 | ||||||
Equity Capital (%): | 17.78 | 15.85 | ||||||
Tier I Capital (%) | 15.42 | 14.68 | ||||||
Common Equity Tier 1 Capital (%) | 15.10 | 14.37 | ||||||
| 1 | Credit risk weighted assets are measured using the Internal Rating-Based Approach and Standardized Approach. |
| 2 | Market risk weighted assets are measured using the Internal Model-Based Approach and Standardized Approach. |
| 3 | Operational risk weighted assets are measured using the Advanced Measurement Approach. |
63
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
5. Segment Information
5.1 Overall Segment Information and Business Segments
The Group is organized into Corporate Banking, Retail Banking and Other Activities. These segments are based on the nature of the products and services provided, the type or class of customer, and the Group’s management organization.
| • | Corporate banking: The activities within this segment include providing credit, deposit products and other related financial services to large, small and medium-sized enterprises and SOHOs and foreign subsidiaries-related works. |
| • | Retail banking: The activities within this segment include providing credit, deposit products and other related financial services to individuals and households. |
| • | Other activities: The activities within this segment include trading activities in securities and derivatives, funding, trust and other activities. |
Financial information by business segment for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Corporate banking | Retail banking | Others | Consolidation adjustment | Total | |||||||||||||||
Operating revenues from external customers | 2,930,827 | 2,918,826 | 1,987,012 | — | 7,836,665 | |||||||||||||||
Intersegment operating revenues (expenses) | 80,973 | — | 50,516 | (131,489 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 3,011,800 | 2,918,826 | 2,037,528 | (131,489 | ) | 7,836,665 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net interest income | 3,238,002 | 3,178,280 | 344,078 | (5,594 | ) | 6,754,766 | ||||||||||||||
Interest income | 4,899,943 | 4,519,579 | 1,062,698 | (26,055 | ) | 10,456,165 | ||||||||||||||
Interest expense | (1,661,941 | ) | (1,341,299 | ) | (718,620 | ) | 20,461 | (3,701,399 | ) | |||||||||||
Net fee and commission income | 363,459 | 406,603 | 323,135 | (25,275 | ) | 1,067,922 | ||||||||||||||
Fee and commission income | 480,190 | 529,178 | 468,101 | (27,782 | ) | 1,449,687 | ||||||||||||||
Fee and commission expense | (116,731 | ) | (122,575 | ) | (144,966 | ) | 2,507 | (381,765 | ) | |||||||||||
Net gains (losses) on financial instruments at fair value through profit or loss | (52,493 | ) | — | 408,464 | (111,788 | ) | 244,183 | |||||||||||||
Net other operating income (expense) | (537,168 | ) | (666,057 | ) | 961,851 | 11,168 | (230,206 | ) | ||||||||||||
General and administrative expenses | (1,555,090 | ) | (2,072,515 | ) | (574,073 | ) | 332 | (4,201,346 | ) | |||||||||||
Operating profit before provision for credit losses | 1,456,710 | 846,311 | 1,463,455 | (131,157 | ) | 3,635,319 | ||||||||||||||
Provision for credit losses | (204,302 | ) | (264,943 | ) | (15,267 | ) | 330 | (484,182 | ) | |||||||||||
Operating profit | 1,252,408 | 581,368 | 1,448,188 | (130,827 | ) | 3,151,137 | ||||||||||||||
Share of loss of associates | — | — | (48,158 | ) | — | (48,158 | ) | |||||||||||||
Net other non-operating income (expenses) | 5,490 | — | 82,731 | (59,377 | ) | 28,844 | ||||||||||||||
Segment profit before income tax expense | 1,257,898 | 581,368 | 1,482,761 | (190,204 | ) | 3,131,823 | ||||||||||||||
Income tax expense | (339,728 | ) | (159,876 | ) | (347,199 | ) | 34,499 | (812,304 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Profit for the year | 918,170 | 421,492 | 1,135,562 | (155,705 | ) | 2,319,519 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Profit attributable to the shareholder of the Parent Company | 917,955 | 421,492 | 1,135,562 | (176,814 | ) | 2,298,195 | ||||||||||||||
Profit attributable to non-controlling interests | 215 | — | — | 21,109 | 21,324 | |||||||||||||||
Total assets * | 164,323,181 | 161,330,053 | 119,529,291 | (6,738,411 | ) | 438,444,114 | ||||||||||||||
Total liabilities * | 167,236,387 | 176,571,944 | 66,577,810 | (2,350,101 | ) | 408,036,040 | ||||||||||||||
64
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Corporate banking | Retail banking | Others | Consolidation adjustment | Total | |||||||||||||||
Operating revenues from external customers | 2,557,438 | 2,979,503 | 1,782,127 | — | 7,319,068 | |||||||||||||||
Intersegment operating revenues (expenses) | 22,838 | — | 24,382 | (47,220 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2,580,276 | 2,979,503 | 1,806,509 | (47,220 | ) | 7,319,068 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net interest income | 2,844,881 | 3,148,061 | 370,603 | 242 | 6,363,787 | |||||||||||||||
Interest income | 4,642,555 | 4,872,937 | 1,302,085 | (37,629 | ) | 10,779,948 | ||||||||||||||
Interest expense | (1,797,674 | ) | (1,724,876 | ) | (931,482 | ) | 37,871 | (4,416,161 | ) | |||||||||||
Net fee and commission income | 349,393 | 471,869 | 329,432 | (17,398 | ) | 1,133,296 | ||||||||||||||
Fee and commission income | 459,879 | 577,845 | 473,637 | (27,999 | ) | 1,483,362 | ||||||||||||||
Fee and commission expense | (110,486 | ) | (105,976 | ) | (144,205 | ) | 10,601 | (350,066 | ) | |||||||||||
Net gains (losses) on financial instruments at fair value through profit or loss | (2,527 | ) | — | 474,420 | (49,269 | ) | 422,624 | |||||||||||||
Net other operating income (expenses) | (611,471 | ) | (640,427 | ) | 632,054 | 19,205 | (600,639 | ) | ||||||||||||
General and administrative expenses | (1,241,721 | ) | (1,982,375 | ) | (663,618 | ) | 295 | (3,887,419 | ) | |||||||||||
Operating profit before provision for credit losses | 1,338,555 | 997,128 | 1,142,891 | (46,925 | ) | 3,431,649 | ||||||||||||||
Reversal (provision) for credit losses | 125,919 | (235,995 | ) | 7,582 | (1,036 | ) | (103,530 | ) | ||||||||||||
Operating profit | 1,464,474 | 761,133 | 1,150,473 | (47,961 | ) | 3,328,119 | ||||||||||||||
Share of profit of associates | — | — | 29,240 | — | 29,240 | |||||||||||||||
Net other non-operating expenses | (263 | ) | — | (19,741 | ) | (18,883 | ) | (38,887 | ) | |||||||||||
Segment profit before income tax expense | 1,464,211 | 761,133 | 1,159,972 | (66,844 | ) | 3,318,472 | ||||||||||||||
Income tax expense | (404,425 | ) | (209,311 | ) | (265,190 | ) | (467 | ) | (879,393 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Profit for the year | 1,059,786 | 551,822 | 894,782 | (67,311 | ) | 2,439,079 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Profit attributable to the shareholder of the Parent Company | 1,059,786 | 551,822 | 894,782 | (67,311 | ) | 2,439,079 | ||||||||||||||
Profit attributable to non-controlling interests | — | — | — | — | — | |||||||||||||||
Total assets * | 139,496,394 | 147,468,173 | 104,297,056 | (3,836,585 | ) | 387,425,038 | ||||||||||||||
Total liabilities * | 142,063,121 | 161,834,984 | 56,127,857 | (1,605,157 | ) | 358,420,805 | ||||||||||||||
| * | Assets and liabilities of the reporting segments are amounts before intersegment transactions. |
65
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
5.2 Services and Geographical Segments
5.2.1 Services information
Operating revenues from external customers by services for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Corporate banking service | 2,930,827 | 2,557,438 | ||||||
Retail banking service | 2,918,826 | 2,979,503 | ||||||
Other service | 1,987,012 | 1,782,127 | ||||||
|
|
|
| |||||
| 7,836,665 | 7,319,068 | |||||||
|
|
|
| |||||
5.2.2 Geographical information
Geographical operating revenues from external customers for the years ended December 31, 2020 and 2019, and major non-current assets as of December 31, 2020 and 2019, are as follows:
| Revenues from external customers | Major non-current assets | |||||||||||||||
| (In millions of Korean won) | 2020 | 2019 | December 31, 2020 | December 31, 2019 | ||||||||||||
Domestic | 7,416,339 | 7,156,642 | 4,462,857 | 4,488,801 | ||||||||||||
United States | 3,071 | 13,971 | 8,206 | 9,452 | ||||||||||||
New Zealand | 3,554 | 6,946 | 2,385 | 3,516 | ||||||||||||
China | 67,064 | 92,475 | 12,230 | 12,946 | ||||||||||||
Japan | 7,933 | 6,692 | 2,607 | 3,480 | ||||||||||||
Myanmar | 6,646 | 4,002 | 4,309 | 1,570 | ||||||||||||
Vietnam | 38,983 | 10,449 | 2,167 | 1,938 | ||||||||||||
Cambodia | 238,045 | 14,764 | 28,709 | 3,944 | ||||||||||||
United Kingdom | 27,092 | 9,958 | 1,250 | 1,893 | ||||||||||||
Indonesia | 13,995 | — | 360,202 | — | ||||||||||||
India | 13,943 | 3,169 | 1,155 | 1,533 | ||||||||||||
Consolidation adjustments | — | — | 436,572 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 7,836,665 | 7,319,068 | 5,322,649 | 4,529,073 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
66
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6. Financial Assets and Financial Liabilities
6.1 Classification and Fair Value
6.1.1 Carrying amount and fair value of financial assets and liabilities by category as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||
| (In millions of Korean won) | Carrying amount | Fair value | ||||||
Financial assets | ||||||||
Cash and due from financial institutions | 19,972,269 | 19,974,488 | ||||||
Financial assets at fair value through profit or loss | 16,042,357 | 16,042,357 | ||||||
Debt securities | 15,707,842 | 15,707,842 | ||||||
Equity securities | 205,794 | 205,794 | ||||||
Loans | 38,756 | 38,756 | ||||||
Others | 89,965 | 89,965 | ||||||
Derivatives held for trading | 4,291,829 | 4,291,829 | ||||||
Derivatives held for hedging | 164,839 | 164,839 | ||||||
Loans measured at amortized cost | 327,332,495 | 328,145,460 | ||||||
Financial assets at fair value through other comprehensive income | 42,698,069 | 42,698,069 | ||||||
Debt securities | 39,960,675 | 39,960,675 | ||||||
Equity securities | 2,502,614 | 2,502,614 | ||||||
Loans | 234,780 | 234,780 | ||||||
Securities measured at amortized cost | 15,588,413 | 15,655,381 | ||||||
Other financial assets | 5,986,686 | 5,986,686 | ||||||
|
|
|
| |||||
| 432,076,957 | 432,959,109 | |||||||
|
|
|
| |||||
Financial liabilities | ||||||||
Financial liabilities at fair value through profit or loss | 141,277 | 141,277 | ||||||
Derivatives held for trading | 4,215,097 | 4,215,097 | ||||||
Derivatives held for hedging | 67,267 | 67,267 | ||||||
Deposits | 330,352,491 | 330,601,366 | ||||||
Borrowings | 26,870,831 | 26,878,476 | ||||||
Debentures | 26,969,584 | 27,131,418 | ||||||
Other financial liabilities | 16,976,326 | 16,976,326 | ||||||
|
|
|
| |||||
| 405,592,873 | 406,011,227 | |||||||
|
|
|
| |||||
67
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||
| (In millions of Korean won) | Carrying amount | Fair value | ||||||
Financial assets | ||||||||
Cash and due from financial institutions | 14,481,309 | 14,478,216 | ||||||
Financial assets at fair value through profit or loss | 13,866,303 | 13,866,303 | ||||||
Debt securities | 13,446,838 | 13,446,838 | ||||||
Equity securities | 151,527 | 151,527 | ||||||
Loans | 188,133 | 188,133 | ||||||
Others | 79,805 | 79,805 | ||||||
Derivatives held for trading | 2,184,099 | 2,184,099 | ||||||
Derivatives held for hedging | 133,326 | 133,326 | ||||||
Loans measured at amortized cost | 293,531,433 | 293,767,751 | ||||||
Financial assets at fair value through other comprehensive income | 38,454,954 | 38,454,954 | ||||||
Debt securities | 36,116,988 | 36,116,988 | ||||||
Equity securities | 1,993,674 | 1,993,674 | ||||||
Loans | 344,292 | 344,292 | ||||||
Securities measured at amortized cost | 13,964,339 | 14,056,395 | ||||||
Other financial assets | 5,464,704 | 5,464,704 | ||||||
|
|
|
| |||||
| 382,080,467 | 382,405,748 | |||||||
|
|
|
| |||||
Financial liabilities | ||||||||
Financial liabilities at fair value through profit or loss | 80,235 | 80,235 | ||||||
Derivatives held for trading | 2,132,770 | 2,132,770 | ||||||
Derivatives held for hedging | 36,212 | 36,212 | ||||||
Deposits | 300,917,482 | 301,409,018 | ||||||
Borrowings | 19,141,262 | 19,141,682 | ||||||
Debentures | 18,739,992 | 18,959,416 | ||||||
Other financial liabilities | 15,446,504 | 15,446,504 | ||||||
|
|
|
| |||||
| 356,494,457 | 357,205,837 | |||||||
|
|
|
| |||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Group discloses the fair value of each class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is a quoted price in an active market.
68
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
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 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). | |
Securities
Due from financial institutions and deposits indexed to gold price | Fair value of securities and due from financial institutions and deposits indexed to gold price that are quoted in active markets is determined using the quoted prices. If there is no quoted price, fair value is determined using external professional valuation institution. The institutions use one or more of the following valuation techniques including DCF Model, MonteCarlo Simulation, FCFE (Free Cash Flow to Equity Model), Comparable Company Analysis, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method, deemed suitable considering the characteristics of the financial instruments. | |
Loans | The fair value of loans is determined using DCF Model and independent external professional valuation institution. Fair value measured by DCF Model is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate. Fair value of the other loans is determined by external professional valuation institution using Tree Model. | |
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 Group uses internally developed valuation models that are widely used by market participants to determine fair values of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method (“FDM”), the MonteCarlo Simulation and the Tree model or valuation results from independent external professional valuation institution. For OTC derivatives, the credit risk of counterparty and the Group’s own credit risk are applied through Credit Valuation Adjustment (“CVA”). | |
Deposits | The carrying amount of demand deposits is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of time deposits is determined using a DCF model. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate. | |
Borrowings | The carrying amount of overdraft in foreign currency is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of other borrowings is determined using a DCF model discounting contractual future cash flows at an appropriate discount rate. | |
69
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| Debentures | Fair value is determined by using the valuation results (DCF Model) of external professional valuation institution, which are calculated using market inputs. | |
Other financial assets and other financial 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. | |
6.1.2 Fair value hierarchy
The Group believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the consolidated statement of financial position are appropriate. However, the fair values of the financial instruments recognized in the consolidated statement of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.
The Group classifies and discloses fair value of the financial instruments into the three-level hierarchy as follows:
Level 1: The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: The fair values are based on unobservable inputs for the asset or liability.
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. If an observable input requires an adjustment using an unobservable input and that adjustment results in a significantly higher or lower fair value measurement, the resulting measurement would be categorized within Level 3 of the fair value hierarchy.
70
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6.1.2.1 Fair value hierarchy of financial assets and liabilities at fair value in the consolidated statements of financial position
Fair value hierarchy of financial assets and liabilities at fair value in the consolidated statements of financial position as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| Fair value hierarchy | ||||||||||||||||
| (In millions of Korean won) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | 4,587,921 | 9,182,082 | 2,272,354 | 16,042,357 | ||||||||||||
Debt securities | 4,344,334 | 9,182,082 | 2,181,426 | 15,707,842 | ||||||||||||
Equity securities | 153,622 | — | 52,172 | 205,794 | ||||||||||||
Loans | — | — | 38,756 | 38,756 | ||||||||||||
Others | 89,965 | — | — | 89,965 | ||||||||||||
Derivatives held for trading | — | 4,291,785 | 44 | 4,291,829 | ||||||||||||
Derivatives held for hedging | — | 164,839 | — | 164,839 | ||||||||||||
Financial assets at fair value through other comprehensive income | 9,918,763 | 30,861,326 | 1,917,980 | 42,698,069 | ||||||||||||
Debt securities | 9,334,129 | 30,626,546 | — | 39,960,675 | ||||||||||||
Equity securities | 584,634 | — | 1,917,980 | 2,502,614 | ||||||||||||
Loans | — | 234,780 | — | 234,780 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 14,506,684 | 44,500,032 | 4,190,378 | 63,197,094 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | 141,277 | — | — | 141,277 | ||||||||||||
Derivatives held for trading | — | 4,214,990 | 107 | 4,215,097 | ||||||||||||
Derivatives held for hedging | — | 67,267 | — | 67,267 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 141,277 | 4,282,257 | 107 | 4,423,641 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
71
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||||||
| Fair value hierarchy | Total | |||||||||||||||
| (In millions of Korean won) | Level 1 | Level 2 | Level 3 | |||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | 3,147,511 | 8,633,172 | 2,085,620 | 13,866,303 | ||||||||||||
Debt securities | 2,960,226 | 8,633,172 | 1,853,440 | 13,446,838 | ||||||||||||
Equity securities | 107,480 | — | 44,047 | 151,527 | ||||||||||||
Loans | — | — | 188,133 | 188,133 | ||||||||||||
Others | 79,805 | — | — | 79,805 | ||||||||||||
Derivatives held for trading | — | 2,184,029 | 70 | 2,184,099 | ||||||||||||
Derivatives held for hedging | — | 133,326 | — | 133,326 | ||||||||||||
Financial assets at fair value through other comprehensive income | 13,849,323 | 23,564,384 | 1,041,247 | 38,454,954 | ||||||||||||
Debt securities | 12,896,896 | 23,220,092 | — | 36,116,988 | ||||||||||||
Equity securities | 952,427 | — | 1,041,247 | 1,993,674 | ||||||||||||
Loans | — | 344,292 | — | 344,292 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 16,996,834 | 34,514,911 | 3,126,937 | 54,638,682 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | 80,235 | — | — | 80,235 | ||||||||||||
Derivatives held for trading | — | 2,132,286 | 484 | 2,132,770 | ||||||||||||
Derivatives held for hedging | — | 36,212 | — | 36,212 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 80,235 | 2,168,498 | 484 | 2,249,217 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Valuation techniques and inputs of financial assets and liabilities classified as Level 2 and measured at fair value in the consolidated statements of financial position as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | |||||
Financial assets | ||||||||
Financial assets at fair value through profit or loss | 9,182,082 | |||||||
Debt securities | 9,182,082 | DCF Model, MonteCarlo Simulation, Net Asset Value | Discount rate, interest rate, prices of underlying assets (debt securities, stocks, etc.) | |||||
Derivatives held for trading | 4,291,785 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate, stock price and others | |||||
Derivatives held for hedging | 164,839 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate and others | |||||
Financial assets at fair value through other comprehensive income | 30,861,326 | |||||||
Debt securities | 30,626,546 | DCF Model | Discount rate | |||||
Loans | 234,780 | DCF Model | Discount rate | |||||
|
| |||||||
| 44,500,032 | ||||||||
|
| |||||||
Financial liabilities | ||||||||
Derivatives held for trading | 4,214,990 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate, stock price and others | |||||
Derivatives held for hedging | 67,267 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate and others | |||||
|
| |||||||
| 4,282,257 | ||||||||
|
| |||||||
72
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | |||||
Financial assets | ||||||||
Financial assets at fair value through profit or loss | 8,633,172 | |||||||
Debt securities | 8,633,172 | DCF Model, MonteCarlo Simulation, Net Asset Value | Discount rate, interest rate, prices of underlying assets (debt securities, stocks, etc.) | |||||
Derivatives held for trading | 2,184,029 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate, stock price and others | |||||
Derivatives held for hedging | 133,326 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate and others | |||||
Financial assets at fair value through other comprehensive income | 23,564,384 | |||||||
Debt securities | 23,220,092 | DCF Model | Discount rate | |||||
Loans | 344,292 | DCF Model | Discount rate | |||||
|
| |||||||
| 34,514,911 | ||||||||
|
| |||||||
Financial liabilities | ||||||||
Derivatives held for trading | 2,132,286 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate, stock price and others | |||||
Derivatives held for hedging | 36,212 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate and others | |||||
|
| |||||||
| 2,168,498 | ||||||||
|
| |||||||
73
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair value is disclosed
Fair value hierarchy of financial assets and liabilities whose fair value is disclosed as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| Fair value hierarchy | ||||||||||||||||
| (In millions of Korean won) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets | ||||||||||||||||
Cash and due from financial institutions 1 | 2,884,215 | 15,878,268 | 1,212,005 | 19,974,488 | ||||||||||||
Loans measured at amortized cost | — | — | 328,145,460 | 328,145,460 | ||||||||||||
Securities measured at amortized cost | 4,125,052 | 11,530,329 | — | 15,655,381 | ||||||||||||
Other financial assets 2 | — | — | 5,986,686 | 5,986,686 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 7,009,267 | 27,408,597 | 335,344,151 | 369,762,015 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Deposits 1 | — | 174,488,438 | 156,112,928 | 330,601,366 | ||||||||||||
Borrowings 1 | — | 295 | 26,878,181 | 26,878,476 | ||||||||||||
Debentures | — | 27,131,418 | — | 27,131,418 | ||||||||||||
Other financial liabilities 2 | — | — | 16,976,326 | 16,976,326 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| — | 201,620,151 | 199,967,435 | 401,587,586 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| Fair value hierarchy | ||||||||||||||||
| (In millions of Korean won) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets | ||||||||||||||||
Cash and due from financial institutions 1 | 2,694,352 | 10,695,432 | 1,088,432 | 14,478,216 | ||||||||||||
Loans measured at amortized cost | — | — | 293,767,751 | 293,767,751 | ||||||||||||
Securities measured at amortized cost | 4,372,712 | 9,683,683 | — | 14,056,395 | ||||||||||||
Other financial assets 2 | — | — | 5,464,704 | 5,464,704 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 7,067,064 | 20,379,115 | 300,320,887 | 327,767,066 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Deposits 1 | — | 138,097,349 | 163,311,669 | 301,409,018 | ||||||||||||
Borrowings 1 | — | 4,685 | 19,136,997 | 19,141,682 | ||||||||||||
Debentures | — | 18,959,416 | — | 18,959,416 | ||||||||||||
Other financial liabilities 2 | — | — | 15,446,504 | 15,446,504 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| — | 157,061,450 | 197,895,170 | 354,956,620 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | The amounts included in Level 2 are the carrying amounts which are reasonable approximation of the fair value. |
| 2 | Other financial assets and other financial liabilities included in Level 3 are the carrying amounts which are reasonable approximation of fair value. |
74
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
For financial assets and liabilities whose carrying amount is a reasonable approximation of fair value, valuation techniques and inputs are not disclosed.
Valuation techniques and inputs of financial assets and liabilities classified as Level 2, and whose fair value is disclosed as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | |||||||||
Financial assets | ||||||||||||
Securities measured at amortized cost | 11,530,329 | | DCF Model, MonteCarlo Simulation | | | Discount rate, interest rate | | |||||
Financial liabilities | ||||||||||||
Debentures | 27,131,418 | DCF Model | Discount rate | |||||||||
| December 31, 2019 | ||||||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | |||||||||
Financial assets | ||||||||||||
Securities measured at amortized cost | 9,683,683 | | DCF Model, MonteCarlo Simulation | | | Discount rate, interest rate | | |||||
Financial liabilities | ||||||||||||
Debentures | 18,959,416 | DCF Model | Discount rate | |||||||||
Valuation techniques and inputs of financial assets and liabilities classified as Level 3 and, whose fair value is disclosed and as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||
| (In millions of Korean won) | Fair value | Valuation | Inputs | Unobservable inputs | ||||||
Financial assets | ||||||||||
Cash and due from financial institutions | 1,212,005 | DCF Model | Credit spread, other spread, interest rate | Credit spread, other spread | ||||||
Loans measured at amortized cost | 328,145,460 | DCF Model | Credit spread, other spread, prepayment rate, interest rate | Credit spread, other spread, prepayment rate | ||||||
|
| |||||||||
| 329,357,465 | ||||||||||
|
| |||||||||
Financial liabilities | ||||||||||
Deposits | 156,112,928 | DCF Model | Other spread, prepayment rate, interest rate | Other spread, prepayment rate | ||||||
Borrowings | 26,878,181 | DCF Model | Other spread, interest rate | Other spread | ||||||
|
| |||||||||
| 182,991,109 | ||||||||||
|
| |||||||||
75
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||
| (In millions of Korean won) | Fair value | Valuation | Inputs | Unobservable inputs | ||||||
Financial assets | ||||||||||
Cash and due from financial institutions | 1,088,432 | DCF Model | Credit spread, other spread, interest rate | Credit spread, other spread | ||||||
Loans measured at amortized cost | 293,767,751 | DCF Model | Credit spread, other spread, prepayment rate, interest rate | Credit spread, other spread, prepayment rate | ||||||
|
| |||||||||
| 294,856,183 | ||||||||||
|
| |||||||||
Financial liabilities | ||||||||||
Deposits | 163,311,669 | DCF Model | Other spread, prepayment rate, Interest rate | Other spread, prepayment rate | ||||||
Borrowings | 19,136,997 | DCF Model | Other spread, interest rate | Other spread | ||||||
|
| |||||||||
| 182,448,666 | ||||||||||
|
| |||||||||
76
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6.2 Disclosure of Fair Value Hierarchy Level 3
6.2.1 Valuation policy and process of Level 3 fair value
The Group uses external, independent and qualified valuation service in addition to internal valuation models to determine the fair value of the Group’s assets at the end of every reporting period.
Where a reclassification between the levels of the fair value hierarchy occurs for a financial asset or liability, the Group’s policy is to recognize such transfers as having occurred at the beginning of the reporting period.
6.2.2 Changes in Fair Value (Level 3) Measured using Valuation Technique based on Unobservable Inputs in the Market
6.2.2.1 Changes in financial instruments classified as Level 3 of the fair value hierarchy for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| Financial assets at fair value through profit or loss | Financial investments | Net derivatives financial instruments | ||||||||||||||||||
| (In millions of Korean won) | Securities measured at fair value through profit or loss | Loans measured at fair value through profit or loss | Equity securities measured at fair value through other comprehensive income | Derivatives held for trading | Derivatives held for hedging | |||||||||||||||
Beginning | 1,897,487 | 188,133 | 1,041,246 | (416 | ) | — | ||||||||||||||
Total gains or losses |
| |||||||||||||||||||
- Profit or loss | 62,611 | 627 | — | 171 | — | |||||||||||||||
- Other comprehensive income | — | — | 784,051 | — | — | |||||||||||||||
Purchases | 703,320 | — | 92,699 | 3 | — | |||||||||||||||
Sales | (429,820 | ) | (150,004 | ) | (16 | ) | — | — | ||||||||||||
Transfers into Level 3 | — | — | — | 179 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ending | 2,233,598 | 38,756 | 1,917,980 | (63 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
77
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||
| Financial assets at fair value through profit or loss | Financial investments | Net derivatives financial instruments | ||||||||||||||||||
| (In millions of Korean won) | Securities measured at fair value through profit or loss | Loans measured at fair value through profit or loss | Equity securities measured at fair value through other comprehensive income | Derivatives held for trading | Derivatives held for hedging | |||||||||||||||
Beginning | 1,520,631 | 212,596 | 927,577 | (708 | ) | — | ||||||||||||||
Total gains or losses |
| |||||||||||||||||||
- Profit or loss | 35,553 | 10,412 | — | 3,233 | — | |||||||||||||||
- Other comprehensive income | — | — | 36,714 | — | — | |||||||||||||||
Purchases | 617,814 | 154,005 | 78,626 | — | — | |||||||||||||||
Sales | (276,511 | ) | (188,880 | ) | (1,671 | ) | — | — | ||||||||||||
Settlements | — | — | — | (2,941 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ending | 1,897,487 | 188,133 | 1,041,246 | (416 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
6.2.2.2 In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the year, and total gains or losses recognized in profit or loss from financial instruments held at the end of the reporting period for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | Net gains on financial instruments at fair value through profit or loss | Other operating expenses | Net interest income | |||||||||
Total gains (losses) recognized in profit or loss for the year | 79,025 | (15,616 | ) | — | ||||||||
Total gains (losses) recognized in profit or loss from financial instruments held at the end of the reporting year | 74,955 | (15,616 | ) | — | ||||||||
| 2019 | ||||||||||||
| (In millions of Korean won) | Net gains on financial instruments at fair value through profit or loss | Other operating income | Net interest income | |||||||||
Total gains recognized in profit or loss for the year | 47,801 | 1,375 | 22 | |||||||||
Total gains recognized in profit or loss from financial instruments held at the end of the reporting year | 39,472 | 1,319 | — | |||||||||
78
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6.2.3 Sensitivity analysis of changes in unobservable inputs
6.2.3.1 Information about fair value measurements using unobservable inputs as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | Unobservable inputs | Range of unobservable inputs (%) | Relationship of to fair value | ||||||||||
Financial assets | ||||||||||||||||
| Financial assets at fair value through profit or loss | ||||||||||||||||
Debt securities | 2,181,426 | MonteCarlo Simulation, Net Asset Value, DCF Model | Price of underlying asset, interest rate, dividend yield, volatilities and correlation of underlying asset, discount rate, liquidation value, volatility of the real estate price | Volatilities of the underlying asset | 5.47 ~ 26.70 | Higher the volatility, higher the fair value fluctuation | ||||||||||
| Correlation of underlying asset | 14.83 ~ 100.00 | Higher the correlation, higher the fair value fluctuation | ||||||||||||||
| Discount rate | 8.63 ~ 21.37 | Lower the discount rate, higher the fair value | ||||||||||||||
| Liquidation value | 0.00 | Higher the liquidation value, higher the fair value | ||||||||||||||
| Volatility of the real estate price | 0.00 | Higher the sale price, higher the fair value | ||||||||||||||
Equity securities | 52,172 | DCF Model, Comparable Company Analysis, Risk Adjusted Discount Rate Method | Growth rate, discount rate | Growth rate | 0.00 | Higher the growth rate, higher the fair value | ||||||||||
| Discount rate | 7.64 ~ 18.67 | Lower the discount rate, higher the fair value | ||||||||||||||
Loans | 38,756 | DCF Model | Discount rate | Discount rate | 7.86 | Lower the discount rate, higher the fair value | ||||||||||
Derivatives held for trading | ||||||||||||||||
Stock and index | 44 | Tree Model | Price of underlying asset, volatility of underlying asset | Volatility of the underlying asset | 22.11 ~ 26.24 | Higher the volatility, higher the fair value fluctuation | ||||||||||
Currency | — | DCF Model | Interest rate, foreign exchange rate, loss given default ratio | Loss given default ratio | 0.00 | Higher the loss given default ratio, lower the fair value | ||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Equity securities | 1,917,980 | DCF Model, Comparable Company Analysis, Risk Adjusted Discount Rate Method, Tree model | Growth rate, discount rate, stock price, volatility of the stock price | Growth rate | 0.00 | Higher the growth rate, higher the fair value | ||||||||||
| Discount rate | 9.90 ~ 19.67 | Lower the discount rate, higher the fair value | ||||||||||||||
| Volatility of the stock price | 22.11 ~ 24.16 | Higher the volatility, higher the fair value fluctuation | ||||||||||||||
|
| |||||||||||||||
| 4,190,378 | ||||||||||||||||
|
| |||||||||||||||
Financial liabilities | ||||||||||||||||
Derivatives held for trading | ||||||||||||||||
Others | 107 | DCF Model | Interest rate, discount rate | Discount rate | 1.15 ~ 1.29 | Higher the discount rate, lower the fair value | ||||||||||
|
| |||||||||||||||
| 107 | ||||||||||||||||
|
| |||||||||||||||
79
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Fair value | Valuation | Inputs | Unobservable | Range of unobservable inputs (%) | Relationship of | ||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Debt securities | 1,853,440 | MonteCarlo Simulation, Net Asset Value, DCF Model | Price of underlying asset, interest rate, dividend yield, volatilities and correlation of underlying asset, discount rate, liquidation value, volatility of the real estate price | Volatilities of the underlying asset | 16.80 ~ 30.55 | Higher the volatility, higher the fair value fluctuation | ||||||||||
| Correlation of underlying asset | 3.11 ~ 95.67 | Higher the correlation, higher the fair value fluctuation | ||||||||||||||
| Discount rate | 7.47 | Lower the discount rate, higher the fair value | ||||||||||||||
| Liquidation value | 0.00 | Higher the liquidation value, higher the fair value | ||||||||||||||
| Volatility of the real estate price | 0.00 | Higher the sale price, higher the fair value | ||||||||||||||
Equity securities | 44,047 | DCF Model, Comparable Company Analysis | Growth rate, discount rate | Growth rate | 0.00 | Higher the growth rate, higher the fair value | ||||||||||
| Discount rate | 5.89 ~ 16.15 | Lower the discount rate, higher the fair value | ||||||||||||||
Loans | 188,133 | Tree Model, DCF Model | Stock price, volatility of the stock price, discount rate | Volatility of the stock price | 12.91 ~ 48.28 | Higher the volatility, higher the fair value fluctuation | ||||||||||
| Discount rate | 10.81 | Lower the discount rate, higher the fair value | ||||||||||||||
Derivatives held for trading | ||||||||||||||||
Stock and index | 70 | Tree Model | Price of underlying asset, interest rate, volatility of underlying asset, dividend yield | Volatility of the underlying asset | 21.85 | Higher the volatility, higher the fair value fluctuation | ||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Equity securities | 1,041,247 | DCF Model, Comparable Company Analysis, Tree Model | Growth rate, discount rate, stock price, volatility of the stock price | Growth rate | 0.00 | Higher the growth rate, higher the fair value | ||||||||||
| Discount rate | 3.04 ~ 16.37 | Lower the discount rate, higher the fair value | ||||||||||||||
| Volatility of the stock price | 20.97 ~ 22.19 | Higher the volatility, higher the fair value fluctuation | ||||||||||||||
|
| |||||||||||||||
| 3,126,937 | ||||||||||||||||
|
| |||||||||||||||
Financial liabilities | ||||||||||||||||
Derivatives held for trading | ||||||||||||||||
Others | 484 | MonteCarlo Simulation, DCF Model | Stock price, interest rate, volatility of the stock price, volatility of the interest rate, discount rate | Volatility of the stock price | 16.28 | Higher the volatility, higher the fair value fluctuation | ||||||||||
| Volatility of the interest rate | 0.52 | Higher the volatility, higher the fair value fluctuation | ||||||||||||||
| Discount rate | 1.94 ~ 2.00 | Higher the discount rate, lower the fair value | ||||||||||||||
|
| |||||||||||||||
| 484 | ||||||||||||||||
|
| |||||||||||||||
80
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6.2.3.2 Sensitivity analysis of changes in unobservable inputs
Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in fair value of financial instruments which are affected by unobservable parameters, using a statistical technique. When the fair value is affected by more than one input parameter, the amounts represent the most favorable or most unfavorable outcome. Level 3 financial instruments subject to sensitivity analysis are debt securities, loans, equity-related derivatives, currency-related derivatives, interest rate-related derivatives and other derivatives whose fair value changes are recognized in profit or loss as well as equity securities whose fair value changes are recognized in profit or loss or other comprehensive income or loss.
Results of the sensitivity analysis of changes in inputs as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| Profit or loss | Other comprehensive Income (loss) | |||||||||||||||
| (In millions of Korean won) | Favorable changes | Unfavorable changes | Favorable changes | Unfavorable changes | ||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Debt securities 3, 5 | 8,051 | (6,604 | ) | — | — | |||||||||||
Equity securities 2, 5 | 8,112 | (4,545 | ) | — | — | |||||||||||
Loans 4 | 3,316 | (2,952 | ) | — | — | |||||||||||
Derivatives held for trading 1 | 8 | (8 | ) | — | — | |||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Equity securities 2, 5, 6 | — | — | 94,084 | (55,297 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 19,487 | (14,109 | ) | 94,084 | (55,297 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Derivatives held for trading 1 | 3 | (3 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 3 | (3 | ) | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
81
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||||||
| Profit or loss | Other comprehensive Income (loss) | |||||||||||||||
| (In millions of Korean won) | Favorable changes | Unfavorable changes | Favorable changes | Unfavorable changes | ||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Debt securities 3, 5 | 3,374 | (3,429 | ) | — | — | |||||||||||
Equity securities 2, 5 | 10,906 | (3,858 | ) | — | — | |||||||||||
Loans 4 | 6,362 | (4,344 | ) | — | — | |||||||||||
Derivatives held for trading 1 | 1 | (1 | ) | — | — | |||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Equity securities 2, 5, 6 | — | — | 188,090 | (94,201 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 20,643 | (11,632 | ) | 188,090 | (94,201 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Derivatives held for trading 1 | 17 | (17 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 17 | (17 | ) | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | For derivative financial instruments, changes in fair value are calculated by shifting principal unobservable input parameters; such as the price and the volatility of the underlying asset by ± 10%, and the loss given default ratio by ± 1% for some derivatives as of December 31, 2019. |
| 2 | For equity securities, changes in fair value are calculated by shifting principal unobservable input parameters such as discount rate (-1~1%) and growth rate (0~0.5%). |
| 3 | For beneficiary certificates, it is practically impossible to analyze sensitivity of changes in unobservable inputs. But only for beneficiary certificates whose underlying assets are real estates, changes in fair value are calculated by shifting volatility of real estate price (-1~1%). For equity investments, changes in fair value are calculated by shifting the liquidation value (-1~1%) and the discount rates (-1~1%). There was no significant correlation among major unobservable inputs. |
| 4 | For loans, changes in fair value are calculated by shifting principal unobservable input parameters such as stock prices, and volatility of stock prices (-10~10%) and discount rate (-1~1%). |
| 5 | The amounts of |
| 6 | For some equity securities, changes in fair value are calculated by shifting principal unobservable input parameters such as stock prices and volatilities of stock prices by ± 10%. |
82
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6.2.4 Day one gains or losses
If the Group uses a valuation technique that incorporates data not obtained from observable markets for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price and the difference is not recognized in profit or loss but deferred and amortized using the straight-line method over the life of the financial instrument. When the fair value of the financial instruments is subsequently determined using observable market inputs, the remaining deferred amount is recognized in profit or loss.
Changes in aggregate deferred differences for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Balance at the beginning of the year (A) | (1,778 | ) | (2,916 | ) | ||||
New transactions (B) | — | — | ||||||
Amounts recognized in profit or loss (C=a+b) | 1,141 | 1,138 | ||||||
a. Amortization | 1,141 | 1,138 | ||||||
b. Settlement | — | — | ||||||
|
|
|
| |||||
Balance at the end of the year (A+B+C) | (637 | ) | (1,778 | ) | ||||
|
|
|
| |||||
6.3 Carrying Amounts of Financial Instruments by Category
Financial assets and liabilities are measured at fair value or amortized cost. The carrying amounts of financial assets and liabilities by category as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Financial instruments at fair value through profit or loss | Financial instruments at fair value through other comprehensive income | Financial instruments designated at fair value through other comprehensive income | Financial instruments at amortized cost | Derivatives held for hedging | Total | ||||||||||||||||||
Financial assets | ||||||||||||||||||||||||
Cash and due from financial institutions | — | — | — | 19,972,269 | — | 19,972,269 | ||||||||||||||||||
Financial assets at fair value through profit or loss | 16,042,357 | — | — | — | — | 16,042,357 | ||||||||||||||||||
Derivatives | 4,291,829 | — | — | — | 164,839 | 4,456,668 | ||||||||||||||||||
Loans measured at amortized cost | — | — | — | 327,332,495 | — | 327,332,495 | ||||||||||||||||||
Financial investments | — | 40,195,455 | 2,502,614 | 15,588,413 | — | 58,286,482 | ||||||||||||||||||
Other financial assets | — | — | — | 5,986,686 | — | 5,986,686 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 20,334,186 | 40,195,455 | 2,502,614 | 368,879,863 | 164,839 | 432,076,957 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
83
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Financial instruments at fair value through profit or loss | Financial instruments at amortized cost | Derivatives held for hedging | Total | ||||||||||||
Financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | 141,277 | — | — | 141,277 | ||||||||||||
Derivatives | 4,215,097 | — | 67,267 | 4,282,364 | ||||||||||||
Deposits | — | 330,352,491 | — | 330,352,491 | ||||||||||||
Borrowings | — | 26,870,831 | — | 26,870,831 | ||||||||||||
Debentures | — | 26,969,584 | — | 26,969,584 | ||||||||||||
Other financial liabilities | — | 16,976,326 | — | 16,976,326 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 4,356,374 | 401,169,232 | 67,267 | 405,592,873 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Financial instruments at fair value through profit or loss | Financial instruments at fair value through other comprehensive income | Financial instruments designated at fair value through other comprehensive income | Financial instruments at amortized cost | Derivatives held for hedging | Total | ||||||||||||||||||
Financial assets | ||||||||||||||||||||||||
Cash and due from financial institutions | — | — | — | 14,481,309 | — | 14,481,309 | ||||||||||||||||||
Financial assets at fair value through profit or loss | 13,866,303 | — | — | — | — | 13,866,303 | ||||||||||||||||||
Derivatives | 2,184,099 | — | — | — | 133,326 | 2,317,425 | ||||||||||||||||||
Loans measured at amortized cost | — | — | — | 293,531,433 | — | 293,531,433 | ||||||||||||||||||
Financial investments | — | 36,461,280 | 1,993,674 | 13,964,339 | — | 52,419,293 | ||||||||||||||||||
Other financial assets | — | — | — | 5,464,704 | — | 5,464,704 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 16,050,402 | 36,461,280 | 1,993,674 | 327,441,785 | 133,326 | 382,080,467 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Financial instruments at fair value through profit or loss | Financial instruments at amortized cost | Derivatives held for hedging | Total | ||||||||||||
Financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | 80,235 | — | — | 80,235 | ||||||||||||
Derivatives | 2,132,771 | — | 36,211 | 2,168,982 | ||||||||||||
Deposits | — | 300,917,482 | — | 300,917,482 | ||||||||||||
Borrowings | — | 19,141,262 | — | 19,141,262 | ||||||||||||
Debentures | — | 18,739,992 | — | 18,739,992 | ||||||||||||
Other financial liabilities | — | 15,446,504 | — | 15,446,504 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,213,006 | 354,245,240 | 36,211 | 356,494,457 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
84
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6.4 Transfer of Financial Assets
6.4.1 Transferred financial assets that are derecognized in their entirety
The Group transferred loans and other financial assets that are derecognized in their entirety, to SPEs (special purpose entities), while the maximum exposure to loss (carrying amount) from its continuing involvement and fair value of its continuing involvement of the derecognized financial assets as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||
| (In millions of Korean won) | Type of continuing involvement | Classification | Carrying amount of continuing involvement | Fair value of continuing involvement | ||||||||||
Discovery 2nd Securitization Specialty Co., Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 5,190 | 5,190 | ||||||||||
FK 1411 ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 1,062 | 1,062 | ||||||||||
AP 3B ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 646 | 646 | ||||||||||
AP 4D ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 6,304 | 6,304 | ||||||||||
|
|
|
| |||||||||||
| 13,202 | 13,202 | |||||||||||||
|
|
|
| |||||||||||
| December 31, 2019 | ||||||||||||
| (In millions of Korean won) | Type of continuing involvement | Classification | Carrying amount of continuing involvement | Fair value of continuing involvement | ||||||||
Discovery 2nd Securitization Specialty Co., Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 5,596 | 5,596 | ||||||||
FK 1411 ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 5,428 | 5,428 | ||||||||
AP 3B ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 3,205 | 3,205 | ||||||||
AP 4D ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 6,175 | 6,175 | ||||||||
|
|
|
| |||||||||
| 20,404 | 20,404 | |||||||||||
|
|
|
| |||||||||
85
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6.4.2 Bonds sold under repurchase agreements and loaned securities
The Group continues to recognize the financial assets related to bonds sold under repurchase agreements and securities lending transactions in the consolidated statement of financial position since those transactions are not qualified for derecognition even though the Group transfers the financial assets. Bonds sold under repurchase agreements are sold on the condition that they will be repurchased at a fixed price and loaned securities will be returned at the expiration of the loan period. Thus, the Group retains substantially all the risks and rewards of ownership of the financial assets. The carrying amount of transferred assets and related liabilities as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||
| (In millions of Korean won) | Carrying amount of transferred assets | Carrying amount of related liabilities | ||||||
Bonds sold under repurchase agreements | 1,354,289 | 1,313,483 | ||||||
Loaned securities | 741,804 | — | ||||||
Government and public bonds | 741,804 | — | ||||||
|
|
|
| |||||
| 2,096,093 | 1,313,483 | |||||||
|
|
|
| |||||
| December 31, 2019 | ||||||||
| (In millions of Korean won) | Carrying amount of transferred assets * | Carrying amount of related liabilities | ||||||
Bonds sold under repurchase agreements | 871,929 | 825,710 | ||||||
Loaned securities | 788,790 | — | ||||||
Government and public bonds | 788,790 | — | ||||||
|
|
|
| |||||
| 1,660,719 | 825,710 | |||||||
|
|
|
| |||||
| * | Includes borrowed securities amounting to |
6.5 Offsetting Financial Assets and Financial Liabilities
The Group enters into International Swaps and Derivatives Association (“ISDA”) master netting agreements and other similar netting arrangements with the Group’s OTC derivative and spot exchange counterparties. Similar netting agreements are also entered into with the Group’s (a) sales or purchase of bonds under repurchase agreements and (b) securities lending and borrowing transactions, etc. Pursuant to these agreements, in the event of default by one party, contracts are to be terminated and receivables and payables are to be offset. Further, as the law allows for the right to offset, domestic exchange settlement debits and domestic exchange settlement credits are shown in its net settlement balance in the consolidated statement of financial position. Account receivables and account payables related to listed securities and derivatives or OTC derivatives settled by the central clearing house are included in the other financial instruments. As the Group has a legally enforceable right to set off the recognized amounts and intends to settle on a net basis, the net amounts of the other financial instrument balances are presented in the consolidated statement of financial position.
86
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6.5.1 Details of financial assets subject to offsetting, enforceable master netting arrangements or similar agreements as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Gross assets | Gross liabilities offset | Net amount in the statement of financial position | Non-offsetting amount | Net amount | |||||||||||||||||||
| Financial instruments | Cash collateral | |||||||||||||||||||||||
Derivatives held for trading | 4,173,489 | — | 4,173,489 | (3,175,203 | ) | (274 | ) | 1,162,851 | ||||||||||||||||
Derivatives held for hedging | 164,839 | — | 164,839 | |||||||||||||||||||||
Receivable spot exchange | 3,104,233 | — | 3,104,233 | (3,102,431 | ) | — | 1,802 | |||||||||||||||||
Bonds purchased under repurchase agreements | 2,808,380 | — | 2,808,380 | (2,808,380 | ) | — | — | |||||||||||||||||
Domestic exchange settlement debits | 37,442,464 | (36,726,449 | ) | 716,015 | — | — | 716,015 | |||||||||||||||||
Other financial instruments | 20,093 | (19,757 | ) | 336 | — | — | 336 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 47,713,498 | (36,746,206 | ) | 10,967,292 | (9,086,014 | ) | (274 | ) | 1,881,004 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| Gross assets | Gross liabilities offset | Net amount in the statement of financial position | Non-offsetting amount | Net amount | ||||||||||||||||||||
| (In millions of Korean won) | Financial instruments | Cash collateral | ||||||||||||||||||||||
Derivatives held for trading | 2,184,029 | — | 2,184,029 | (1,734,044 | ) | (1,210 | ) | 582,102 | ||||||||||||||||
Derivatives held for hedging | 133,327 | — | 133,327 | |||||||||||||||||||||
Receivable spot exchange | 3,003,910 | — | 3,003,910 | (3,002,566 | ) | — | 1,344 | |||||||||||||||||
Bonds purchased under repurchase agreements | 6,173,038 | — | 6,173,038 | (6,173,038 | ) | — | — | |||||||||||||||||
Domestic exchange settlement debits | 31,256,658 | (30,733,476 | ) | 523,182 | — | — | 523,182 | |||||||||||||||||
Other financial instruments | 14,827 | (6,347 | ) | 8,480 | — | — | 8,480 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 42,765,789 | (30,739,823 | ) | 12,025,966 | (10,909,648 | ) | (1,210 | ) | 1,115,108 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
87
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
6.5.2 Details of financial liabilities subject to offsetting, enforceable master netting arrangements or similar agreements as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| Gross liabilities | Gross assets offset | Net amount in the statement of financial position | Non-offsetting amount | Net amount | ||||||||||||||||||||
| (In millions of Korean won) | Financial instruments | Cash collateral | ||||||||||||||||||||||
Derivatives held for trading | 4,148,295 | — | 4,148,295 | (2,395,773 | ) | — | 1,819,789 | |||||||||||||||||
Derivatives held for hedging | 67,267 | — | 67,267 | |||||||||||||||||||||
Payable spot exchange | 3,103,095 | — | 3,103,095 | (3,102,431 | ) | — | 664 | |||||||||||||||||
Bonds sold under repurchase agreements * | 1,363,543 | — | 1,363,543 | (1,363,543 | ) | — | — | |||||||||||||||||
Domestic exchange settlement credits | 37,659,778 | (36,726,449 | ) | 933,329 | (933,329 | ) | — | — | ||||||||||||||||
Other financial instruments | 22,824 | (19,757 | ) | 3,067 | — | — | 3,067 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 46,364,802 | (36,746,206 | ) | 9,618,596 | (7,795,076 | ) | — | 1,823,520 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| Gross liabilities | Gross assets offset | Net amount in the statement of financial position | Non-offsetting amount | Net amount | ||||||||||||||||||||
| (In millions of Korean won) | Financial instruments | Cash collateral | ||||||||||||||||||||||
Derivatives held for trading | 2,132,286 | — | 2,132,286 | (1,566,026 | ) | — | 602,472 | |||||||||||||||||
Derivatives held for hedging | 36,212 | — | 36,212 | |||||||||||||||||||||
Payable spot exchange | 3,003,464 | — | 3,003,464 | (3,002,566 | ) | — | 898 | |||||||||||||||||
Bonds sold under repurchase agreements * | 825,710 | — | 825,710 | (825,710 | ) | — | — | |||||||||||||||||
Domestic exchange settlement credits | 32,806,739 | (30,733,476 | ) | 2,073,263 | (2,073,263 | ) | — | — | ||||||||||||||||
Other financial instruments | 6,535 | (6,347 | ) | 188 | — | — | 188 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 38,810,946 | (30,739,823 | ) | 8,071,123 | (7,467,565 | ) | — | 603,558 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| * | Includes bonds sold under repurchase agreements to customers. |
88
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
7. Due from Financial Institutions
7.1 Details of due from financial institutions as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Financial institutions | Interest | December 31, 2020 | December 31, 2019 | ||||||||||
Due from financial institutions in Korean won | Due from the Bank of Korea | The Bank of Korea | — | 11,242,803 | 8,117,840 | |||||||||
| Due from banking institutions | Hana Bank and others | 0.00 ~ 1.90 | 259,339 | 187,638 | ||||||||||
| Due from others | NH Investment & Securities Co., Ltd. and others | 0.00 ~ 1.63 | 14,050 | 9,608 | ||||||||||
|
|
|
| |||||||||||
| 11,516,192 | 8,315,086 | |||||||||||||
|
|
|
| |||||||||||
Due from financial institutions in foreign currencies | Due from banks in foreign currencies | Wells Fargo Bank N.A. and others | 0.00 ~ 3.50 | 4,161,788 | 2,346,580 | |||||||||
| Time deposits in foreign currencies | Bank of Shanghai, Beijing Branch and others | 0.00 ~ 7.05 | 630,156 | 920,240 | ||||||||||
| Due from others | Societe Generale (Paris) and others | 0.00 ~ 1.93 | 780,141 | 209,099 | ||||||||||
|
|
|
| |||||||||||
| 5,572,085 | 3,475,919 | |||||||||||||
|
|
|
| |||||||||||
| 17,088,277 | 11,791,005 | |||||||||||||
|
|
|
| |||||||||||
| * | Before netting of allowance |
7.2 Details of restricted due from financial institutions as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Financial institutions | December 31, 2020 | December 31, 2019 | Reasons of restriction | ||||||||||||||||
Due from financial institutions in | Due from the Bank of Korea | The Bank of Korea | 11,242,803 | 8,117,840 | Bank of Korea Act | |||||||||||||||
| Due from others | | NH Investment & Securities Co., Ltd. and others | | 14,049 | 9,609 | | Derivatives margin account | | ||||||||||||
|
|
|
| |||||||||||||||||
| 11,256,853 | 8,127,449 | |||||||||||||||||||
|
|
|
| |||||||||||||||||
Due from financial institutions in | | Due from banks in foreign currencies | | | People’s Bank of China and others | | 1,097,674 | 490,013 | | Cambodian law, etc. | | |||||||||
| | Time deposits in foreign currencies | | | Bank of Communication Co., Ltd. New York Branch | | 38,080 | 23,156 | | New York State Banking Law | | ||||||||||
| Due from others | | Societe Generale (Paris) and others | | 380,432 | 118,814 | | Derivatives margin account | | ||||||||||||
|
|
|
| |||||||||||||||||
| 1,516,186 | 631,983 | |||||||||||||||||||
|
|
|
| |||||||||||||||||
| 12,773,039 | 8,759,432 | |||||||||||||||||||
|
|
|
| |||||||||||||||||
89
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
7.3 Changes in allowances for credit losses of due from financial institutions for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | |||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||
Beginning | 2,502 | 1,186 | 360 | |||||||||
Transfer between stages | — | — | — | |||||||||
Reversal of credit losses | (598 | ) | (1,127 | ) | — | |||||||
Business combination | 138 | — | — | |||||||||
Others (exchange differences, etc.) | 21 | (25 | ) | (78 | ) | |||||||
|
|
|
|
|
| |||||||
Ending | 2,063 | 34 | 282 | |||||||||
|
|
|
|
|
| |||||||
| 2019 | ||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | |||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||
Beginning | 1,548 | — | — | |||||||||
Transfer between stages | — | — | — | |||||||||
Provision for credit losses | 924 | 1,210 | 360 | |||||||||
Others (exchange differences, etc.) | 30 | (24 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Ending | 2,502 | 1,186 | 360 | |||||||||
|
|
|
|
|
| |||||||
8. Assets Pledged as Collateral
8.1 Details of assets pledged as collateral as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||
| Assets pledged | Pledgee | Carrying amount | Reasons of pledge | |||||
Securities measured at fair value through profit or loss | The Korea Exchange and others | 210,171 | Repurchase agreements | |||||
| Korea Securities Finance Corporation | 52,842 | Securities borrowing transactions | ||||||
| Samsung Futures and others | 11,225 | Derivatives transactions | ||||||
|
| |||||||
| 274,238 | ||||||||
|
| |||||||
Securities measured at fair value through other comprehensive income | CITI Bank | 149,633 | Repurchase agreements | |||||
| The Bank of Korea | 2,837,453 | Borrowings from the Bank of Korea | ||||||
| 1,610,691 | Settlement risk of the Bank of Korea | |||||||
| JP Morgan Chase Bank and others | 156,300 | Derivatives transactions | ||||||
| Others | 4,036 | Others | ||||||
|
| |||||||
| 4,758,113 | ||||||||
|
| |||||||
Securities measured at amortized cost | Meritz Securities and others | 1,030,078 | Repurchase agreements | |||||
The Bank of Korea | 4,295,149 | Borrowings from the Bank of Korea | ||||||
| 3,677,922 | Settlement risk of the Bank of Korea | |||||||
KB Securities Co., Ltd. and others | 126,199 | Derivatives transactions | ||||||
KB Insurance Co., Ltd. and others | 151,796 | Others | ||||||
|
| |||||||
| 9,281,144 | ||||||||
|
| |||||||
Mortgage loans | Others | 10,699,720 | Covered bond | |||||
Building / Land | Hanwha Life Insurance Co., Ltd. and others | 228,995 | Others | |||||
|
| |||||||
| 25,242,210 | ||||||||
|
| |||||||
90
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | December 31, 2019 | |||||||
| Assets pledged | Pledgee | Carrying amount | Reasons of pledge | |||||
Securities at fair value through profit or loss | The Korea Exchange and others | 280,210 | Repurchase agreements | |||||
| Kyobo Securities and others | 11,145 | Derivatives transactions | ||||||
|
| |||||||
| 291,355 | ||||||||
|
| |||||||
Securities at fair value through other comprehensive income | The Bank of Korea | 1,212,021 | Borrowings from the Bank of Korea | |||||
| The Bank of Korea | 653,825 | Settlement risk of the Bank of Korea | ||||||
| DEUTSCHE BANK AG and others | 95,640 | Derivatives transactions | ||||||
|
| |||||||
| 1,961,486 | ||||||||
|
| |||||||
Securities at amortized cost | Meritz Securities and others | 581,268 | Repurchase agreements | |||||
| The Bank of Korea | 1,767,559 | Borrowings from the Bank of Korea | ||||||
| The Bank of Korea | 3,077,151 | Settlement risk of the Bank of Korea | ||||||
| KB Securities Co., Ltd. and others | 267,793 | Derivatives transactions | ||||||
| The Korea Exchange and others | 155,595 | Others | ||||||
|
| |||||||
| 5,849,366 | ||||||||
|
| |||||||
Mortgage loans | Others | 6,487,022 | Covered bond | |||||
Building / Land | Samsung Life Insurance Co., Ltd. and others | 207,333 | Others | |||||
|
| |||||||
| 14,796,562 | ||||||||
|
| |||||||
| * | In addition, the Group provided |
8.2 Fair value of collateral available to sell or repledge, and collateral sold or repledged, regardless of debtor’s default as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||
| (In millions of Korean won) | Fair value of collateral held | Fair value of collateral sold or repledged | ||||||
Securities | 2,969,616 | — | ||||||
| December 31, 2019 | ||||||||
| (In millions of Korean won) | Fair value of collateral held | Fair value of collateral sold or repledged | ||||||
Securities | 6,503,655 | — | ||||||
9. Derivative Financial Instruments and Hedge Accounting
The Group engages in derivative trading activities to hedge the interest rate and foreign currency risk exposures arising from the Group’s own assets and liabilities. In particular, the Group applies fair value hedge accounting to interest rate swaps that hedge the risk of changes in fair values due to the changes in interest rate of structured debentures in Korean won, debentures, structured deposits in foreign currencies and debt securities
91
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
at fair value through other comprehensive income. Also, the Group applies cash flow hedge accounting to interest rate swaps that hedge cash flow risk of debentures in foreign currencies and borrowings in foreign currencies. In addition, the Group applies net investment in foreign operations hedge accounting by designating debentures in foreign currencies and spot components of the currency forward as hedging instruments that hedge foreign exchange risks on net investments in foreign operations.
9.1 Details of derivative financial instruments held for trading as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||
| (In millions of Korean won) | Notional amount | Assets | Liabilities | |||||||||
Interest rate | ||||||||||||
Forwards | 90,000 | 3,355 | — | |||||||||
Futures 1 | 1,407,684 | — | — | |||||||||
Swaps 2 | 179,047,629 | 496,723 | 574,710 | |||||||||
Options | 13,779,000 | 246,707 | 297,442 | |||||||||
|
|
|
|
|
| |||||||
| 194,324,313 | 746,785 | 872,152 | ||||||||||
|
|
|
|
|
| |||||||
Currency | ||||||||||||
Forwards | 73,702,576 | 1,608,997 | 1,954,137 | |||||||||
Futures 1 | 27,381 | — | — | |||||||||
Swaps | 49,901,150 | 1,902,582 | 1,360,689 | |||||||||
Options | 2,377,775 | 33,421 | 28,012 | |||||||||
|
|
|
|
|
| |||||||
| 126,008,882 | 3,545,000 | 3,342,838 | ||||||||||
|
|
|
|
|
| |||||||
Stock and index | ||||||||||||
Futures 1 | 5,583 | — | — | |||||||||
Options | 664 | 44 | — | |||||||||
|
|
|
|
|
| |||||||
| 6,247 | 44 | — | ||||||||||
|
|
|
|
|
| |||||||
Others | 74,300 | — | 107 | |||||||||
|
|
|
|
|
| |||||||
| 320,413,742 | 4,291,829 | 4,215,097 | ||||||||||
|
|
|
|
|
| |||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||
| Notional amount | Assets | Liabilities | ||||||||||
Interest rate | ||||||||||||
Futures 1 | 837,568 | — | — | |||||||||
Swaps 2 | 148,405,496 | 416,866 | 485,464 | |||||||||
Options | 15,502,000 | 266,863 | 363,369 | |||||||||
|
|
|
|
|
| |||||||
| 164,745,064 | 683,729 | 848,833 | ||||||||||
|
|
|
|
|
| |||||||
Currency | ||||||||||||
Forwards | 79,191,968 | 885,424 | 670,066 | |||||||||
Swaps | 46,175,092 | 609,438 | 598,670 | |||||||||
Options | 2,789,562 | 5,438 | 14,346 | |||||||||
|
|
|
|
|
| |||||||
| 128,156,622 | 1,500,300 | 1,283,082 | ||||||||||
|
|
|
|
|
| |||||||
Stock and index | ||||||||||||
Futures 1 | 2,185 | — | — | |||||||||
Options | 22,014 | 70 | 371 | |||||||||
|
|
|
|
|
| |||||||
| 24,199 | 70 | 371 | ||||||||||
|
|
|
|
|
| |||||||
Others | 768,980 | — | 484 | |||||||||
|
|
|
|
|
| |||||||
| 293,694,865 | 2,184,099 | 2,132,770 | ||||||||||
|
|
|
|
|
| |||||||
| 1 | Gains or losses arising from daily mark-to-market futures are reflected in the margin accounts. |
| 2 | Notional amounts of |
92
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
9.2 Average price condition of future nominal cash flows by type of hedge accounting as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | 1 year | 2 years | 3 years | 4 years | 5 years | Over 5 years | Total | |||||||||||||||||||||
Fair value hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | 3,255,568 | 956,315 | 479,405 | 620,788 | 1,462,964 | 2,442,691 | 9,217,731 | |||||||||||||||||||||
Average price condition (%), (CD and Libor) | 0.76 | 0.80 | 1.00 | 1.07 | 1.21 | 1.14 | 0.97 | |||||||||||||||||||||
Cash flow hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | 1,718,480 | 489,600 | 54,400 | — | — | — | 2,262,480 | |||||||||||||||||||||
Average price condition (%), (CD and Libor) | 0.72 | 1.17 | 0.96 | — | — | — | 0.82 | |||||||||||||||||||||
Hedge of net investments in foreign operations | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | 165,050 | — | — | — | — | — | 165,050 | |||||||||||||||||||||
Average price condition (KRW/USD) | 1,124.25 | — | — | — | — | — | 1,124.25 | |||||||||||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | 1 year | 2 years | 3 years | 4 years | 5 years | Over 5 years | Total | |||||||||||||||||||||
Fair value hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | 757,201 | 1,548,353 | 830,440 | 309,882 | 466,053 | 1,414,570 | 5,326,499 | |||||||||||||||||||||
Average price condition (%), (CD and Libor) | 2.29 | 2.70 | 2.29 | 3.16 | 2.50 | 3.92 | 2.91 | |||||||||||||||||||||
Cash flow hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | 1,539,874 | 289,450 | 521,010 | — | — | — | 2,350,334 | |||||||||||||||||||||
Average price condition (%), (Libor) | 2.68 | 2.65 | 2.83 | — | — | — | 2.71 | |||||||||||||||||||||
Hedge of net investments in foreign operations | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | 190,342 | — | — | — | — | — | 190,342 | |||||||||||||||||||||
Average price condition (KRW/USD) | 1,175.97 | — | — | — | — | — | 1,175.97 | |||||||||||||||||||||
93
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
9.3 Fair Value Hedge
9.3.1 Details of fair value hedged items as of and for the years ended December 31, 2020 and 2019, are as follows:
| December 31, 2020 | 2020 | |||||||||||||||||||||
| Carrying amount | Accumulated amount of hedge adjustments | Changes in fair value | ||||||||||||||||||||
| (In millions of Korean won) | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||
Interest rate | Debt securities in Korean won | 1,001,957 | — | 5,888 | — | 402 | ||||||||||||||||
| Debt securities in foreign currencies | 2,712,980 | — | 62,922 | — | 42,382 | |||||||||||||||||
| Deposits in foreign currencies | — | 121,768 | — | 2,088 | (4,491 | ) | ||||||||||||||||
| Debentures in Korean won | — | 3,623,161 | — | (6,839 | ) | 27,909 | ||||||||||||||||
| Debentures in foreign currencies | — | 1,985,333 | — | 81,333 | (37,438 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 3,714,937 | 5,730,262 | 68,810 | 76,582 | 28,764 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2019 | 2019 | |||||||||||||||||||||
| Carrying amount | Accumulated amount of hedge adjustments | Changes in fair value | ||||||||||||||||||||
| (In millions of Korean won) | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||
Interest rate | Debt securities in Korean won | 549,526 | — | 5,485 | — | 5,502 | ||||||||||||||||
| Debt securities in foreign currencies | 1,670,838 | — | 19,243 | — | 25,540 | |||||||||||||||||
| Deposits in foreign currencies | — | 780,491 | — | (18,391 | ) | (62,439 | ) | |||||||||||||||
| Debentures in Korean won | — | 351,070 | — | 21,070 | (1,818 | ) | ||||||||||||||||
| Debentures in foreign currencies | — | 2,067,556 | — | 41,406 | (65,480 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2,220,364 | 3,199,117 | 24,728 | 44,085 | (98,695 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
9.3.2 Details of derivative instruments designated as fair value hedge as of and for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | 2020 | ||||||||||||||
| Notional amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Interest rate | ||||||||||||||||
Swaps | 9,217,731 | 158,914 | 51,841 | (23,023 | ) | |||||||||||
| December 31, 2019 | 2019 | |||||||||||||||
| (In millions of Korean won) | Notional amount | Assets | Liabilities | Changes in fair value | ||||||||||||
Interest rate | ||||||||||||||||
Swaps | 5,326,500 | 129,084 | 29,675 | 101,448 | ||||||||||||
94
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
9.3.3 Details of hedge ineffectiveness recognized in profit or loss from derivatives for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Hedge ineffectiveness recognized in profit or loss | |||||||
| 2000 | 2019 | |||||||
Interest rate | 5,742 | 2,754 | ||||||
9.3.4 Gains or losses from fair value hedging instruments and hedged items attributable to the hedged risk for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Gains (losses) on hedging instruments | (8,214 | ) | 108,442 | |||||
Gains (losses) on the hedged item attributable to the hedged risk | 13,811 | (105,788 | ) | |||||
|
|
|
| |||||
| 5,597 | 2,654 | |||||||
|
|
|
| |||||
9.4 Cash Flow Hedge
9.4.1 Details of cash flow hedged items as of and for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Cash flow hedge reserve | Changes in fair value | ||||||||||||||
| December 31, 2020 | December 31, 2019 | 2020 | 2019 | |||||||||||||
Interest rate risk | (10,073 | ) | (3,691 | ) | 10,701 | 18,365 | ||||||||||
9.4.2 Details of derivative instruments designated as cash flow hedge as of and for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | 2020 | ||||||||||||||
| Notional amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Interest rate | ||||||||||||||||
Swaps | 2,262,480 | 125 | 15,426 | (10,492 | ) | |||||||||||
| (In millions of Korean won) | December 31, 2019 | 2019 | ||||||||||||||
| Notional amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Interest rate | ||||||||||||||||
Swaps | 2,350,334 | 835 | 6,537 | (18,276 | ) | |||||||||||
95
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
9.4.3 Gains or losses from cash flow hedging instruments and hedged items attributable to the hedged risk for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Losses on hedging instruments | (10,492 | ) | (18,276 | ) | ||||
Effective portion of losses on cash flow hedging instruments (recognized in other comprehensive income) | (10,553 | ) | (18,108 | ) | ||||
|
|
|
| |||||
Ineffective portion of losses on cash flow hedging instruments (recognized in profit or loss) | 61 | (168 | ) | |||||
|
|
|
| |||||
9.4.4 Amounts recognized in other comprehensive income (loss) and reclassified from equity to profit or loss for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Other comprehensive loss | (10,553 | ) | (18,108 | ) | ||||
Reclassification to profit or loss | 1,750 | (2,899 | ) | |||||
Income tax effect | 2,421 | 5,777 | ||||||
|
|
|
| |||||
| (6,382) | (15,230) | |||||||
|
|
|
| |||||
9.4.5 As of December 31, 2020, the hedged items subject to cash flow hedge are exposed to the risk of changes in cash flows until August 11, 2023.
9.5 Hedge of Net investments in Foreign Operations
9.5.1 Details of net investments in foreign operations hedged items as of and for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Foreign currency translation reserve | Changes in fair value | ||||||||||||||
| December 31, 2020 | December 31, 2019 | 2020 | 2019 | |||||||||||||
Currency (foreign currency exchange risk) | 24,103 | (37,226 | ) | (84,600 | ) | 9,967 | ||||||||||
96
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
9.5.2 Details of financial instruments designated as hedge of net investments in foreign operations as of and for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | 2020 | ||||||||||||||
| Notional amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Currency forward contract | 165,050 | 5,800 | — | 10,237 | ||||||||||||
Debentures in foreign currencies | 842,112 | — | 842,112 | 74,363 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1,007,162 | 5,800 | 842,112 | 84,600 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (In millions of Korean won) | December 31, 2019 | 2019 | ||||||||||||||
| Notional amount | Assets | Liabilities | Changes in fair value | |||||||||||||
Currency forward contract | 190,342 | 3,407 | — | (6,887 | ) | |||||||||||
Debentures in foreign currencies | 97,255 | — | 97,255 | (3,080 | ) | |||||||||||
|
|
|
|
|
| |||||||||||
| 287,597 | 3,407 | 97,255 | (9,967 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
9.5.3 Fair value of non-derivative financial instruments designated as hedge of net investments in foreign operations as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Debentures in foreign currencies | 852,570 | 97,737 | ||||||
9.5.4 Gains or losses from fair value hedging instruments and hedged items attributable to the hedged risk for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Gains (losses) on hedging instruments | 84,600 | (9,967 | ) | |||||
Effective portion of gains (losses) on hedge of net investments in foreign operations (amount recognized in other comprehensive income) | 84,600 | (9,967 | ) | |||||
Ineffective portion of gains (losses) on hedge of net investments in foreign operations (amount recognized in profit or loss) | — | — | ||||||
9.5.5 Effective portion of gains or losses on hedging instruments recognized in other comprehensive income for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Other comprehensive income (loss) | 84,592 | (9,962 | ) | |||||
Reclassification to profit or loss | — | 1,317 | ||||||
Income tax effect | (23,263 | ) | 2,378 | |||||
|
|
|
| |||||
Other comprehensive income (loss) after tax | 61,329 | (6,267 | ) | |||||
|
|
|
| |||||
97
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
9.6 Interest Rate Benchmark Reform
The Group’s exposure to hedging relationships related to the interest rate benchmark reform as of December 31, 2020, is as follows. The USD LIBOR interest rate will be replaced by the Secured Overnight Financing Rate (“SOFR”) based on actual transactions starting in 2022 and the KRW CD rate is currently under consideration for improving the calculation methodology. In this hedging relationship, the Group assumed that the spread to be changed on a SOFR basis in 2022 would be similar to that included in the interest rate swap used as a hedging instrument, and no other changes were assumed.
| (In millions of Korean won and millions of US dollars) | December 31, 2020 | |||||||||||||||
| Interest rate benchmark | Currency | Carrying amount of non-derivative assets | Carrying amount of non-derivative liabilities | Notional amount of hedging instruments | ||||||||||||
CD#3M | KRW | 1,807,701 | 3,623,161 | 5,430,000 | ||||||||||||
USD#LIBOR#3M | USD | 2,227 | 3,276 | 5,355 | ||||||||||||
USD#LIBOR#6M | USD | 213 | 10 | 206 | ||||||||||||
98
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
10. Loans measured at amortized cost
10.1 Details of loans as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Loans | 328,978,696 | 294,303,453 | ||||||
Deferred loan origination fees and costs | 540,610 | 563,941 | ||||||
Less: Allowances for credit losses | (2,186,811 | ) | (1,335,961 | ) | ||||
|
|
|
| |||||
Carrying amount | 327,332,495 | 293,531,433 | ||||||
|
|
|
| |||||
10.2 Details of loans to banks as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Loans * | 5,577,728 | 4,041,247 | ||||||
Less: Allowances for credit losses | (683 | ) | (434 | ) | ||||
|
|
|
| |||||
Carrying amount | 5,577,045 | 4,040,813 | ||||||
|
|
|
| |||||
| * | Deferred loan origination fees and costs are included. |
10.3 Details of loan types and customer types of loans to customers other than banks as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 * | ||||||||||||||||
| (In millions of Korean won) | Retail | Corporate | Credit card | Total | ||||||||||||
Loans in Korean won | 162,521,943 | 133,263,466 | — | 295,785,409 | ||||||||||||
Loans in foreign currencies | 2,713,408 | 15,442,088 | — | 18,155,496 | ||||||||||||
Domestic import usance bills | — | 2,152,059 | — | 2,152,059 | ||||||||||||
Off-shore funding loans | — | 1,258,137 | — | 1,258,137 | ||||||||||||
Call loans | — | 1,582,251 | — | 1,582,251 | ||||||||||||
Bills bought in Korean won | — | 1,620 | — | 1,620 | ||||||||||||
Bills bought in foreign currencies | — | 1,739,262 | — | 1,739,262 | ||||||||||||
Guarantee payments under acceptances and guarantees | — | 8,011 | — | 8,011 | ||||||||||||
Credit card receivables in foreign currencies | — | — | 60,959 | 60,959 | ||||||||||||
Bonds purchased under repurchase agreements | — | 2,468,380 | — | 2,468,380 | ||||||||||||
Privately placed bonds | — | 729,994 | — | 729,994 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 165,235,351 | 158,645,268 | 60,959 | 323,941,578 | |||||||||||||
Proportion (%) | 51.01 | 48.97 | 0.02 | 100.00 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Less: Allowances for credit losses | (618,831 | ) | (1,564,199 | ) | (3,098 | ) | (2,186,128 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
| 164,616,520 | 157,081,069 | 57,861 | 321,755,450 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
99
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 * | ||||||||||||
| (In millions of Korean won) | Retail | Corporate | Total | |||||||||
Loans in Korean won | 148,609,480 | 121,449,552 | 270,059,032 | |||||||||
Loans in foreign currencies | 276,084 | 7,154,477 | 7,430,561 | |||||||||
Domestic import usance bills | — | 2,617,862 | 2,617,862 | |||||||||
Off-shore funding loans | — | 1,452,288 | 1,452,288 | |||||||||
Call loans | — | 610,000 | 610,000 | |||||||||
Bills bought in Korean won | — | 2,843 | 2,843 | |||||||||
Bills bought in foreign currencies | — | 2,158,877 | 2,158,877 | |||||||||
Guarantee payments under acceptances and guarantees | — | 3,312 | 3,312 | |||||||||
Bonds purchased under repurchase agreements | — | 5,937,258 | 5,937,258 | |||||||||
Privately placed bonds | — | 554,114 | 554,114 | |||||||||
|
|
|
|
|
| |||||||
| 148,885,564 | 141,940,583 | 290,826,147 | ||||||||||
Proportion (%) | 51.19 | 48.81 | 100.00 | |||||||||
|
|
|
|
|
| |||||||
Less: Allowances for credit losses | (474,571 | ) | (860,956 | ) | (1,335,527 | ) | ||||||
|
|
|
|
|
| |||||||
| 148,410,993 | 141,079,627 | 289,490,620 | ||||||||||
|
|
|
|
|
| |||||||
| * | Deferred loan origination fees and costs are included. |
10.4 Changes in deferred loan origination fees and costs for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Increase | Decrease | Business combination | Others | Ending | ||||||||||||||||||
Deferred loan origination costs | ||||||||||||||||||||||||
Loans in Korean won | 573,297 | 408,691 | (391,924 | ) | — | — | 590,064 | |||||||||||||||||
Others | 914 | 417 | (761 | ) | — | (1 | ) | 569 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 574,211 | 409,108 | (392,685 | ) | — | (1 | ) | 590,633 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Deferred loan origination fees | ||||||||||||||||||||||||
Loans in Korean won | 6,135 | 3,812 | (2,949 | ) | — | — | 6,998 | |||||||||||||||||
Loans in foreign currencies and others | 4,135 | 18,259 | (23,388 | ) | 48,117 | (4,098 | ) | 43,025 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 10,270 | 22,071 | (26,337 | ) | 48,117 | (4,098 | ) | 50,023 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 563,941 | 387,037 | (366,348 | ) | (48,117 | ) | 4,097 | 540,610 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Increase | Decrease | Others | Ending | |||||||||||||||
Deferred loan origination costs |
| |||||||||||||||||||
Loans in Korean won | 592,175 | 313,847 | (332,725 | ) | — | 573,297 | ||||||||||||||
Others | 486 | 826 | (398 | ) | — | 914 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 592,661 | 314,673 | (333,123 | ) | — | 574,211 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Deferred loan origination fees |
| |||||||||||||||||||
Loans in Korean won | 6,322 | 2,316 | (2,503 | ) | — | 6,135 | ||||||||||||||
Loans in foreign currencies and others | 4,342 | 2,499 | (2,707 | ) | 1 | 4,135 | ||||||||||||||
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| 10,664 | 4,815 | (5,210 | ) | 1 | 10,270 | |||||||||||||||
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| 581,997 | 309,858 | (327,913 | ) | (1 | ) | 563,941 | ||||||||||||||
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100
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
11. Allowances for Credit Losses
11.1 Changes in allowances for credit losses of loans for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Retail | Corporate | Credit card | ||||||||||||||||||||||||||||||||||||||||||||||
| (In millions of Korean Won) | 12-month expected credit losses | Lifetime expected credit losses | Applying credit impaired approach | 12-month expected credit losses | Lifetime expected credit losses | Applying credit impaired approach | 12-month expected credit losses | Lifetime expected credit losses | Applying credit impaired approach | |||||||||||||||||||||||||||||||||||||||
| Non-impaired | Impaired | Non-impaired | Impaired | Non-impaired | Impaired | |||||||||||||||||||||||||||||||||||||||||||
Beginning | 179,286 | 176,857 | 118,428 | — | 194,520 | 260,784 | 406,086 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 117,689 | (116,781 | ) | (908 | ) | — | 114,049 | (106,046 | ) | (8,003 | ) | — | 14 | — | (14 | ) | — | |||||||||||||||||||||||||||||||
Transfer to lifetime expected credit losses (non-impaired) | (85,474 | ) | 168,863 | (83,389 | ) | — | (55,506 | ) | 145,541 | (90,035 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Transfer to lifetime expected credit losses (impaired) | (1,513 | ) | (123,252 | ) | 124,765 | — | (3,254 | ) | (48,710 | ) | 51,964 | — | (6 | ) | — | 6 | — | |||||||||||||||||||||||||||||||
Write-offs | — | (5 | ) | (326,840 | ) | — | — | (1 | ) | (320,375 | ) | — | — | — | (1,746 | ) | — | |||||||||||||||||||||||||||||||
Sales | (1,540 | ) | (19 | ) | (1,106 | ) | — | (9 | ) | — | (21,005 | ) | — | — | — | — | — | |||||||||||||||||||||||||||||||
Provision (reversal) for credit losses 1, 2, 3 | 17,730 | 64,548 | 296,963 | — | (11,787 | ) | 114,375 | 175,556 | — | (23 | ) | — | 394 | — | ||||||||||||||||||||||||||||||||||
Business combination | 46,413 | 7,821 | 46,413 | — | 99,824 | 24,303 | 668,426 | — | 89 | — | 4,409 | — | ||||||||||||||||||||||||||||||||||||
Others (exchange differences, etc.) | (2,046 | ) | (367 | ) | (3,705 | ) | — | (4,702 | ) | (1,724 | ) | (19,389 | ) | — | — | — | (25 | ) | — | |||||||||||||||||||||||||||||
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Ending | 270,545 | 177,665 | 170,621 | — | 333,135 | 388,522 | 843,225 | — | 74 | — | 3,024 | — | ||||||||||||||||||||||||||||||||||||
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101
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||||||||||||||
| Retail | Corporate | |||||||||||||||||||||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | ||||||||||||||||||||||||||
| Non-impaired | Impaired | Non-impaired | Impaired | |||||||||||||||||||||||||||||
Beginning | 170,571 | 157,214 | 117,742 | — | 197,866 | 295,928 | 615,081 | — | ||||||||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 157,691 | (157,670 | ) | (21 | ) | — | 60,005 | (46,508 | ) | (13,497 | ) | — | ||||||||||||||||||||
Transfer to lifetime expected credit losses (non-impaired) | (140,407 | ) | 149,809 | (9,402 | ) | — | (53,662 | ) | 136,473 | (82,811 | ) | — | ||||||||||||||||||||
Transfer to lifetime expected credit losses (impaired) | (280 | ) | (45,410 | ) | 45,690 | — | (2,097 | ) | (36,462 | ) | 38,559 | — | ||||||||||||||||||||
Write-offs | (2 | ) | 24 | (322,075 | ) | — | — | 2 | (217,532 | ) | — | |||||||||||||||||||||
Sales | (467 | ) | (4 | ) | (766 | ) | — | — | — | (8,909 | ) | — | ||||||||||||||||||||
Provision (reversal) for credit losses 1, 2 | (7,875 | ) | 72,715 | 288,956 | — | (9,172 | ) | (91,087 | ) | 100,381 | — | |||||||||||||||||||||
Others (exchange differences, etc.) | 55 | 179 | (1,696 | ) | — | 1,580 | 2,438 | (25,186 | ) | — | ||||||||||||||||||||||
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Ending | 179,286 | 176,857 | 118,428 | — | 194,520 | 260,784 | 406,086 | — | ||||||||||||||||||||||||
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| 1 | Provision (reversal) for credit losses in the consolidated statements of comprehensive income also includes provision (reversal) for credit losses of unused commitments and guarantees (Note 22.2), provision (reversal) for credit losses of financial guarantee contracts (Note 22.4), provision (reversal) for credit losses of other financial assets (Note 18.2), provision (reversal) for credit losses of due from financial institutions (Note 7.3) and provision (reversal) for credit losses of debt securities (Note 12.5). |
| 2 | Includes |
| 3 | Includes additional provision of |
The Group manages the written-off loans that their legal extinctive prescriptions have not been completed; the balances of those loans areW 8,254,890 million andW 9,149,486 million as of December 31, 2020 and 2019, respectively.
102
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
11.2 Changes in gross carrying amount of loans for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | ||||||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||||||
Beginning | 274,457,085 | 19,198,678 | 1,211,631 | — | ||||||||||||
Transfer between stages | ||||||||||||||||
Transfer to 12-month expected credit losses | 25,096,700 | (24,979,358 | ) | (117,342 | ) | — | ||||||||||
Transfer to lifetime expected credit losses (non-impaired) | (31,612,866 | ) | 32,727,302 | (1,114,436 | ) | — | ||||||||||
Transfer to lifetime expected credit losses (impaired) | (399,136 | ) | (2,155,447 | ) | 2,554,583 | — | ||||||||||
Write-offs | — | (6 | ) | (648,961 | ) | — | ||||||||||
Sales | (4,323,388 | ) | (17,860 | ) | (198,254 | ) | — | |||||||||
Business combination | 6,105,441 | 546,313 | 1,696,366 | — | ||||||||||||
Net increase (decrease) (execution, repayment and others) | 33,377,864 | (1,212,730 | ) | (672,873 | ) | — | ||||||||||
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Ending | 302,701,700 | 24,106,892 | 2,710,714 | — | ||||||||||||
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| 2019 | ||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | ||||||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||||||
Beginning | 255,870,341 | 21,239,153 | 1,389,110 | — | ||||||||||||
Transfer between stages | ||||||||||||||||
Transfer to 12-month expected credit losses | 53,328,737 | (53,214,637 | ) | (114,100 | ) | — | ||||||||||
Transfer to lifetime expected credit losses (non-impaired) | (56,105,075 | ) | 56,629,820 | (524,745 | ) | — | ||||||||||
Transfer to lifetime expected credit losses (impaired) | (405,440 | ) | (1,632,279 | ) | 2,037,719 | — | ||||||||||
Write-offs | (2 | ) | 26 | (539,607 | ) | — | ||||||||||
Sales | (888,511 | ) | (12,223 | ) | (186,250 | ) | — | |||||||||
Net increase(decrease) (execution, repayment and others) | 22,657,035 | (3,811,182 | ) | (850,496 | ) | — | ||||||||||
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Ending | 274,457,085 | 19,198,678 | 1,211,631 | — | ||||||||||||
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103
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
12. Financial Assets at Fair Value through Profit or Loss and Financial Investments
12.1 Details of financial assets at fair value through profit or loss and financial investments as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Financial assets at fair value through profit or loss | ||||||||
Debt securities | ||||||||
Government and public bonds | 3,131,473 | 1,974,113 | ||||||
Financial bonds | 6,884,798 | 6,368,442 | ||||||
Corporate bonds | 1,716,852 | 1,772,550 | ||||||
Asset-backed securities | 210,686 | 100,101 | ||||||
Beneficiary certificates | 2,999,772 | 2,283,046 | ||||||
Investment funds | 303,157 | 209,260 | ||||||
Derivative-linked securities | 85,021 | 160,576 | ||||||
Other debt securities | 376,083 | 578,751 | ||||||
Equity securities | ||||||||
Stocks | 205,794 | 151,526 | ||||||
Loans | ||||||||
Privately placed bonds | — | 150,276 | ||||||
Other loans | 38,756 | 37,857 | ||||||
Others | ||||||||
Financial instruments indexed to the price of gold | 89,965 | 79,805 | ||||||
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| 16,042,357 | 13,866,303 | |||||||
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Financial investments |
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Financial assets at fair value through other comprehensive income |
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Debt securities | ||||||||
Government and public bonds | 5,952,887 | 8,172,111 | ||||||
Financial bonds | 19,622,246 | 18,110,228 | ||||||
Corporate bonds | 12,832,053 | 9,218,759 | ||||||
Asset-backed securities | 1,553,489 | 615,890 | ||||||
Equity securities | ||||||||
Stocks | 2,466,553 | 1,954,173 | ||||||
Equity investments | 36,061 | 39,501 | ||||||
Loans | ||||||||
Privately placed bonds | 234,780 | 344,292 | ||||||
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| 42,698,069 | 38,454,954 | |||||||
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Financial assets at amortized cost |
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Debt securities | ||||||||
Government and public bonds | 2,182,128 | 538,968 | ||||||
Financial bonds | 5,188,916 | 7,607,567 | ||||||
Corporate bonds | 2,592,834 | 1,753,941 | ||||||
Asset-backed securities | 5,596,461 | 4,065,105 | ||||||
Others | 30,392 | — | ||||||
Allowances for credit losses | (2,318 | ) | (1,242 | ) | ||||
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| 15,588,413 | 13,964,339 | |||||||
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| 58,286,482 | 52,419,293 | |||||||
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104
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
12.2 Dividend income from equity securities designated at fair value through other comprehensive income for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||
| (In millions of Korean won) | From the financial assets derecognized | From the remaining financial assets | ||||||||
Stocks | Listed | 7,000 | 11,843 | |||||||
Unlisted | — | 10,706 | ||||||||
Equity investments | — | 285 | ||||||||
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| |||||||
| 7,000 | 22,834 | |||||||||
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| |||||||
| 2019 | ||||||||||
| (In millions of Korean won) | From the financial assets derecognized | From the remaining financial assets | ||||||||
Stocks | Listed | — | 26,121 | |||||||
Unlisted | — | 17,025 | ||||||||
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| |||||||
| — | 43,146 | |||||||||
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12.3 Derecognized equity securities measured at fair value through other comprehensive income for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||
| (In millions of Korean won) | Disposal price * | Accumulated other comprehensive income as of disposal date | ||||||||
Stocks | Listed | 516,883 | 326,394 | |||||||
Unlisted | 13 | 13 | ||||||||
Equity investments | 3 | 3 | ||||||||
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| |||||||
| 516,899 | 326,410 | |||||||||
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| 2019 | ||||||||||
| (In millions of Korean won) | Disposal price * | Accumulated other comprehensive income as of disposal date | ||||||||
Stocks | Listed | 18,342 | (25,652 | ) | ||||||
Unlisted | 1,671 | 169 | ||||||||
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| |||||||
| 20,013 | (25,483 | ) | ||||||||
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| * | The stocks were disposed of according to the stock price increase and joint sale resolution. |
12.4 Provision (reversal) for credit losses of financial investments for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | Provision | Reversal | Total | |||||||||
Debt instruments measured at fair value through other comprehensive income | (3,137 | ) | 224 | (2,913 | ) | |||||||
Loans measured at fair value through other comprehensive income | (152 | ) | 316 | 164 | ||||||||
Securities measured at amortized cost | (1,713 | ) | 636 | (1,077 | ) | |||||||
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| (5,002 | ) | 1,176 | (3,826 | ) | ||||||||
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105
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | 2019 | |||||||||||
| Provision | Reversal | Total | ||||||||||
Debt instruments measured at fair value through other comprehensive income | (1,330 | ) | 365 | (965 | ) | |||||||
Loans measured at fair value through other comprehensive income | (170 | ) | 947 | 777 | ||||||||
Securities measured at amortized cost | (216 | ) | 271 | 55 | ||||||||
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| (1,716 | ) | 1,583 | (133 | ) | ||||||||
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12.5 Changes in allowances for credit losses of financial investments for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | |||||||||||
| Non-impaired | Impaired | |||||||||||
Beginning | 3,821 | — | — | |||||||||
Transfer between stages | ||||||||||||
Transfer to 12-month expected credit losses | — | — | — | |||||||||
Transfer to lifetime expected credit losses | — | — | — | |||||||||
Sales | (589 | ) | — | — | ||||||||
Provision for credit losses | 3,787 | 39 | — | |||||||||
Others (exchange differences, etc.) | (33 | ) | — | — | ||||||||
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Ending | 6,986 | 39 | — | |||||||||
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| |||||||
| 2019 | ||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | ||||||||||
| Non-impaired | Impaired | |||||||||||
Beginning | 3,758 | 193 | — | |||||||||
Transfer between stages | ||||||||||||
Transfer to 12-month expected credit losses | 189 | (189 | ) | — | ||||||||
Transfer to lifetime expected credit losses | (669 | ) | 669 | — | ||||||||
Sales | (329 | ) | — | — | ||||||||
Provision (reversal) for credit losses | 834 | (701 | ) | — | ||||||||
Others (exchange differences, etc.) | 38 | 28 | — | |||||||||
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Ending | 3,821 | — | — | |||||||||
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106
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
13. Investments in Associates
13.1 Investments in associates as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||||||||
| Ownership (%) | Acquisition cost | Share of net asset amount | Carrying amount | Industry | Location | |||||||||||||||||
Korea Credit Bureau Co., Ltd. 1 | 9.00 | 4,500 | 7,153 | 7,153 | Credit information | Korea | ||||||||||||||||
Balhae Infrastructure Company 1 | 12.61 | 106,107 | 106,625 | 106,625 | Investment finance | Korea | ||||||||||||||||
KB GwS Private Securities Investment Trust | 20.93 | 89,124 | 111,772 | 111,772 | Investment finance | Korea | ||||||||||||||||
Incheon Bridge Co., Ltd. 1 | 14.99 | 9,159 | (18,100 | ) | — | Operation of highways and related facilities | Korea | |||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 30.00 | 4,613 | 4,020 | 4,020 | Investment finance | Korea | ||||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 45.00 | 3,375 | 3,051 | 3,051 | Discovery of and investment in promising FinTech-business venture | Korea | ||||||||||||||||
Future Planning KB Start-up Creation Fund 2 | 50.00 | 6,700 | 12,324 | 12,324 | Investment finance | Korea | ||||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 20.00 | 7,792 | 7,876 | 7,876 | Investment finance | Korea | ||||||||||||||||
KB High-tech Company Investment Fund 2 | 50.00 | 4,800 | 19,962 | 19,962 | Investment finance | Korea | ||||||||||||||||
Aju Good Technology Venture Fund | 38.47 | 17,113 | 21,353 | 21,348 | Investment finance | Korea | ||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund 2 | 33.33 | 6,800 | 8,021 | 8,021 | Investment finance | Korea | ||||||||||||||||
KB-TS Technology Venture Private Equity Fund 2 | 30.00 | 8,880 | 9,445 | 9,445 | Investment finance | Korea | ||||||||||||||||
KB Intellectual Property Fund No.2 2 | 37.50 | 15,000 | 14,367 | 15,000 | Investment finance | Korea | ||||||||||||||||
KB Digital Innovation Investment Fund Limited Partnership 2 | 25.74 | 35,000 | 32,999 | 34,749 | Investment finance | Korea | ||||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund 2 | 21.28 | 13,400 | 13,756 | 13,756 | Investment finance | Korea | ||||||||||||||||
KB Global Platform Fund 2 | 22.73 | 28,500 | 25,507 | 28,007 | Investment finance | Korea | ||||||||||||||||
KB-UTC Inno-Tech Venture Fund 2 | 29.53 | 11,610 | 11,332 | 11,332 | Investment finance | Korea | ||||||||||||||||
WJ Private Equity Fund No.1 2 | 26.95 | 10,000 | 9,711 | 9,711 | Investment finance | Korea | ||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund No.2 2 | 28.57 | 2,500 | 2,493 | 2,493 | Investment finance | Korea | ||||||||||||||||
KB Smart Scale Up Fund 2 | 25.00 | 4,000 | 3,993 | 3,993 | Investment finance | Korea | ||||||||||||||||
All Together Korea Fund No.2 3 | 99.99 | 10,000 | 10,023 | 10,023 | Asset management | Korea | ||||||||||||||||
Shinla Construction Co., Ltd. 4 | 20.17 | — | (551 | ) | — | Specialty construction | Korea | |||||||||||||||
Terra Corporation 4 | 24.06 | — | 2 | — | Manufacture of fabricated and processed metal products | Korea | ||||||||||||||||
MJT&I Corp. 4 | 22.89 | — | (615 | ) | 113 | Wholesale of other merchandise | Korea | |||||||||||||||
Jungdong Steel Co., Ltd. 4 | 42.65 | — | (433 | ) | — | Wholesale of primary metal | Korea | |||||||||||||||
Doosung Metal Co., Ltd. 4 | 26.49 | — | (62 | ) | — | Manufacture of metal door, windows, shutter and relevant products | Korea | |||||||||||||||
107
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Shinhwa Underwear Co., Ltd.4 | 26.05 | — | (18 | ) | 222 | Manufacture of underwear and sleepwear | Korea | |||||||||||||||
DPAPS Co., Ltd.4 | 38.62 | — | (19 | ) | — | Wholesale of paper | Korea | |||||||||||||||
Jaeyang Industry Co., Ltd.4 | 20.86 | — | (552 | ) | — | Manufacture of luggage and other protective cases | Korea | |||||||||||||||
Kendae Co., Ltd.4 | 41.01 | — | (252 | ) | 98 | Screen printing | Korea | |||||||||||||||
Jinseung Tech Co., Ltd.4 | 30.04 | — | (194 | ) | — | Manufacture of other general-purpose machinery | Korea | |||||||||||||||
Dongjo Co., Ltd.4 | 29.29 | — | 709 | 18 | Wholesale of agricultural and forestry machinery and equipment | Korea | ||||||||||||||||
Korea NM Tech Co., Ltd.4 | 22.41 | — | 552 | — | Manufacture of motor vehicles, trailers and semitrailers | Korea | ||||||||||||||||
Jungdo Co., Ltd.4 | 25.34 | — | 1,342 | — | Office, commercial and institutional building construction | Korea | ||||||||||||||||
Dae-A Leisure Co., Ltd.4 | 49.36 | — | 1,184 | 149 | Earth works | Korea | ||||||||||||||||
Chongil Machine & Tools Co., Ltd.4 | 20.40 | — | (126 | ) | — | Wholesale machinery and equipment | Korea | |||||||||||||||
Imt Technology Co., Ltd.4 | 25.29 | — | 16 | — | Computer Peripherals Distribution | Korea | ||||||||||||||||
Iwon Alloy Co., Ltd.4 | 23.20 | — | 394 | — | Manufacture of smelting, refining and alloys | Korea | ||||||||||||||||
Carlife Co., Ltd.4 | 24.39 | — | (64 | ) | 11 | Publishing of magazines and periodicals (publishing industry) | Korea | |||||||||||||||
Computerlife Co., Ltd.4 | 25.41 | — | (132 | ) | 48 | Publishing of magazines and periodicals (publishing industry) | Korea | |||||||||||||||
SKYDIGITAL INC.4 | 20.40 | — | (248 | ) | — | Manufacture of multimedia and video devices | Korea | |||||||||||||||
Jo Yang Industrial Co., Ltd.4 | 22.77 | — | (21 | ) | — | Manufacture of special glass | Korea | |||||||||||||||
IL-KWANG ELECTRONIC MATERIALS CO., LTD.4 | 29.06 | — | (398 | ) | — | Manufacture of electronic parts | Korea | |||||||||||||||
SO-MYUNG RECYCLING CO., LTD.4 | 20.23 | — | 189 | 5 | Manufacture of nonferrous metal | Korea | ||||||||||||||||
IDTECK Co., Ltd.4 | 32.80 | — | (280 | ) | — | Other manufacturing of wireless telecommunications equipment | Korea | |||||||||||||||
PIP System Co., Ltd.4 | 20.72 | — | 27 | — | Print equipment | Korea | ||||||||||||||||
NEOMIO CORP.4 | 21.34 | — | (69 | ) | — | Wholesale of household packing | Korea | |||||||||||||||
GWANG MYUNG PAPER Co., Ltd.4 | 20.54 | — | 84 | — | Wholesale of luggage and other protective cases | Korea | ||||||||||||||||
D-Partner 4 | 20.94 | — | 447 | — | Backlight film | Korea | ||||||||||||||||
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|
|
|
|
| |||||||||||||||||
| 398,973 | 418,595 | 441,325 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
108
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||||||||||||
| (In millions of Korean won) | Ownership (%) | Acquisition cost | Share of net asset amount | Carrying amount | Industry | Location | ||||||||||||||||
Korea Credit Bureau Co., Ltd. 1 | 9.00 | 4,500 | 5,991 | 5,991 | Credit information | Korea | ||||||||||||||||
Balhae Infrastructure Company 1 | 12.61 | 105,213 | 101,390 | 101,390 | Investment finance | Korea | ||||||||||||||||
KB GwS Private Securities Investment Trust | 20.93 | 89,124 | 108,026 | 108,026 | Investment finance | Korea | ||||||||||||||||
Incheon Bridge Co., Ltd. 1 | 14.99 | 9,159 | (14,746 | ) | — | Operation of highways and related facilities | Korea | |||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 30.00 | 1,327 | 1,031 | 1,031 | Investment finance | Korea | ||||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 45.00 | 2,250 | 2,030 | 2,030 | Discovery of and investment in promising FinTech-business venture | Korea | ||||||||||||||||
KB12-1 Venture Investment Partnership 2 | 80.00 | 14,000 | 53,535 | 53,535 | Investment finance | Korea | ||||||||||||||||
Future Planning KB Start-up Creation Fund 2 | 50.00 | 9,900 | 15,021 | 15,021 | Investment finance | Korea | ||||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 20.00 | 10,376 | 10,892 | 10,892 | Investment finance | Korea | ||||||||||||||||
KB High-Tech Company Investment Fund 2 | 50.00 | 13,350 | 31,904 | 31,904 | Investment finance | Korea | ||||||||||||||||
Aju Good Technology Venture Fund | 38.46 | 19,998 | 23,016 | 23,016 | Investment finance | Korea | ||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund 2 | 33.33 | 10,000 | 9,494 | 9,494 | Investment finance | Korea | ||||||||||||||||
KB-TS Technology Venture Private Equity Fund 2 | 30.00 | 10,620 | 10,570 | 10,570 | Investment finance | Korea | ||||||||||||||||
KB Intellectual Property Fund No.2 2 | 37.50 | 9,000 | 8,514 | 8,514 | Investment finance | Korea | ||||||||||||||||
KB Digital Innovation Investment Fund Limited Partnership 2 | 25.74 | 32,200 | 31,371 | 31,371 | Investment finance | Korea | ||||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund 2 | 21.28 | 11,000 | 10,252 | 10,252 | Investment finance | Korea | ||||||||||||||||
KB Global Platform Fund 2 | 22.73 | 19,500 | 18,779 | 18,779 | Investment finance | Korea | ||||||||||||||||
KB-UTC Inno-Tech Venture Fund 2 | 29.53 | 300 | 278 | 278 | Investment finance | Korea | ||||||||||||||||
Shinla Construction Co., Ltd. 4 | 20.17 | — | (551 | ) | — | Specialty construction | Korea | |||||||||||||||
Terra Corporation 4 | 24.06 | — | 2 | — | Manufacture of fabricated and processed metal products | Korea | ||||||||||||||||
MJT&I Corp. 4 | 22.89 | — | (613 | ) | 116 | Wholesale of other merchandise | Korea | |||||||||||||||
Jungdong Steel Co., Ltd. 4 | 42.65 | — | (433 | ) | — | Wholesale of primary metal | Korea | |||||||||||||||
Doosung Metal Co., Ltd. 4 | 26.49 | — | (62 | ) | — | Manufacture of metal door, windows, shutter and relevant products | Korea | |||||||||||||||
Shinhwa Underwear Co., Ltd. 4 | 26.05 | — | 16 | 256 | Manufacture of underwear and sleepwear | Korea | ||||||||||||||||
DPAPS Co., Ltd. 4 | 38.62 | — | — | — | Wholesale of paper | Korea | ||||||||||||||||
Jaeyang Industry Co., Ltd. 4 | 20.86 | — | (552 | ) | — | Manufacture of luggage and other protective cases | Korea | |||||||||||||||
Kendae Co., Ltd. 4 | 41.01 | — | (252 | ) | 98 | Screen printing | Korea | |||||||||||||||
109
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Jinseung Tech Co., Ltd. 4 | 30.04 | — | (194 | ) | — | Manufacture of other general-purpose machinery | Korea | |||||||||||||||
Dongjo Co., Ltd. 4 | 29.29 | — | 806 | 115 | Wholesale of agricultural and forestry machinery and equipment | Korea | ||||||||||||||||
Korea NM Tech Co., Ltd. 4 | 22.41 | — | 552 | — | Manufacture of motor vehicles, trailers and semitrailers | Korea | ||||||||||||||||
Jungdo Co., Ltd. 4 | 25.34 | — | 1,492 | — | Office, commercial and institutional building construction | Korea | ||||||||||||||||
Dae-A Leisure Co., Ltd. 4 | 49.36 | — | 1,613 | 578 | Earth works | Korea | ||||||||||||||||
Chong Il Machine & Tools Co., Ltd. 4 | 20.40 | — | (126 | ) | — | Wholesale machinery and equipment | Korea | |||||||||||||||
Imt Technology Co., Ltd. 4 | 25.29 | — | 22 | 3 | Computer Peripherals Distribution | Korea | ||||||||||||||||
Iwon Alloy Co., Ltd. 4 | 23.20 | — | 394 | — | Manufacture of smelting, refining and alloys | Korea | ||||||||||||||||
Carlife Co., Ltd. 4 | 24.39 | — | (75 | ) | — | Publishing of magazines and periodicals (publishing industry) | Korea | |||||||||||||||
Computerlife Co., Ltd. 4 | 45.71 | — | (260 | ) | 69 | Publishing of magazines and periodicals (publishing industry) | Korea | |||||||||||||||
Skydigital INC. 4 | 20.40 | — | (248 | ) | — | Manufacture of multimedia and video devices | Korea | |||||||||||||||
Jo Yang Industrial Co., Ltd. 4 | 22.77 | — | 75 | — | Manufacture of special glass | Korea | ||||||||||||||||
IL-KWANG ELECTRONIC MATERIALS CO., LTD. 4 | 29.06 | — | (398 | ) | — | Manufacture of electronic parts | Korea | |||||||||||||||
SO-MYUNG RECYCLING CO., LTD. 4 | 20.23 | — | 184 | — | Manufacture of nonferrous metal | Korea | ||||||||||||||||
IDTECK Co., Ltd. 4 | 32.80 | — | (103 | ) | — | Other manufacturing of wireless telecommunications equipment | Korea | |||||||||||||||
Seyoon Development Company 4 | 26.95 | — | 2 | — | Civil engineering facility construction industry | Korea | ||||||||||||||||
PIP System Co., Ltd. 4 | 20.72 | — | 27 | — | Print equipment | Korea | ||||||||||||||||
PT Bank Bukopin TBK 5 | 22.00 | 116,422 | 115,321 | 121,382 | Banking and foreign exchange transaction | Indonesia | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
| 488,239 | 543,987 | 564,711 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
| 1 | As of December 31, 2020 and 2019, the Group can exercise significant influence on the decision-making processes of the associate’s financial and business policies through participation in governing bodies. |
| 2 | As of December 31, 2020 and 2019, the Group is a limited partner and cannot exercise control over the investees. |
| 3 | As of December 31, 2020, the Group participates in the Investment Management Committee but cannot exercise control. |
| 4 | The investment in associates was reclassified from financial assets at fair value through other comprehensive income due to termination of rehabilitation procedures. |
| 5 | The fair value of PT Bank Bukopin TBK’s common stock based on its quoted market price is |
110
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Although the Group holds more than 20% of ownership in many investment trusts including Hanbando BTL Private Special Asset Fund No.1, those investment trusts are not recognized as associates of the Group because the Group’s influence on those trust is limited according to the trust agreement. In addition, the Group holds more than 20% of its ownership in Orient shipyard Co., Ltd. and nine other companies, but those companies are not recognized as associates of the Group, because the Group’s influence on those companies is limited due to the status of those companies such as bankruptcy and rehabilitation.
13.2 Condensed financial information, adjustments to the carrying amount and dividend from major investments in associates as of December 31, 2020 and 2019, and for the years ended December 31, 2020 and 2019, are as follows:
| December 31, 2020 1 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | Total assets | Total liabilities | Paid-in capital | Equity | Share of net asset amount | Unrealized gains (losses) and others | Carrying amount | |||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | 117,077 | 37,599 | 10,000 | 79,478 | 7,153 | — | 7,153 | |||||||||||||||||||||
Balhae Infrastructure Company | 847,758 | 1,870 | 841,784 | 845,888 | 106,625 | — | 106,625 | |||||||||||||||||||||
KB GwS Private Securities Investment Trust | 534,764 | 741 | 425,814 | 534,023 | 111,772 | — | 111,772 | |||||||||||||||||||||
Incheon Bridge Co., Ltd. | 579,387 | 700,134 | 61,096 | (120,747 | ) | (18,100 | ) | 18,100 | — | |||||||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 13,896 | 497 | 15,376 | 13,399 | 4,020 | — | 4,020 | |||||||||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 6,782 | 1 | 7,500 | 6,781 | 3,051 | — | 3,051 | |||||||||||||||||||||
Future Planning KB Start-up Creation Fund | 27,224 | 2,576 | 13,400 | 24,648 | 12,324 | — | 12,324 | |||||||||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 42,585 | 3,205 | 38,960 | 39,380 | 7,876 | — | 7,876 | |||||||||||||||||||||
KB High-tech Company Investment Fund | 40,597 | 673 | 9,600 | 39,924 | 19,962 | — | 19,962 | |||||||||||||||||||||
Aju Good Technology Venture Fund | 57,776 | 2,265 | 44,500 | 55,511 | 21,353 | (5 | ) | 21,348 | ||||||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | 24,655 | 592 | 20,400 | 24,063 | 8,021 | — | 8,021 | |||||||||||||||||||||
KB-TS Technology Venture Private Equity Fund | 34,972 | 3,490 | 29,600 | 31,482 | 9,445 | — | 9,445 | |||||||||||||||||||||
KB Intellectual Property Fund No.2 | 38,926 | 614 | 40,000 | 38,312 | 14,367 | 633 | 15,000 | |||||||||||||||||||||
KB Digital Innovation Investment Fund Limited Partnership | 130,952 | 2,728 | 136,000 | 128,224 | 32,999 | 1,750 | 34,749 | |||||||||||||||||||||
111
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 64,968 | 313 | 62,980 | 64,655 | 13,756 | — | 13,756 | |||||||||||||||||||||
KB Global Platform Fund | 115,243 | 3,011 | 125,400 | 112,232 | 25,507 | 2,500 | 28,007 | |||||||||||||||||||||
KB-UTC Inno-Tech Venture Fund | 38,585 | 206 | 39,319 | 38,379 | 11,332 | — | 11,332 | |||||||||||||||||||||
WJ Private Equity Fund No.1 | 36,197 | 170 | 37,100 | 36,027 | 9,711 | — | 9,711 | |||||||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund No.2 | 8,724 | — | 8,750 | 8,724 | 2,493 | — | 2,493 | |||||||||||||||||||||
KB Smart Scale Up Fund | 16,000 | 29 | 16,000 | 15,971 | 3,993 | — | 3,993 | |||||||||||||||||||||
All Together Korea Fund No.2 | 10,025 | 1 | 10,001 | 10,024 | 10,023 | — | 10,023 |
112
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2020 1 | ||||||||||||||||||||
| (In millions of Korean won) | Operating revenue | Net profit (loss) | Other comprehensive income | Total comprehensive income (loss) | Dividends | |||||||||||||||
Korea Credit Bureau Co., Ltd. | 107,810 | 13,391 | — | 13,391 | 90 | |||||||||||||||
Balhae Infrastructure Company | 63,781 | 89,757 | — | 89,757 | 6,973 | |||||||||||||||
KB GwS Private Securities Investment Trust | 48,501 | 47,520 | — | 47,520 | 7,453 | |||||||||||||||
Incheon Bridge Co., Ltd. | 70,345 | (23,200 | ) | — | (23,200 | ) | — | |||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 1 | (991 | ) | �� | — | (991 | ) | — | ||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 4 | (250 | ) | 21 | (229 | ) | — | |||||||||||||
Future Planning KB Start-up Creation Fund | 4,765 | 1,006 | — | 1,006 | — | |||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 1,629 | 626 | — | 626 | — | |||||||||||||||
KB High-tech Company Investment Fund | 8,183 | 3,216 | — | 3,216 | 5,000 | |||||||||||||||
Aju Good Technology Venture Fund | 8,685 | 2,815 | — | 2,815 | — | |||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | 5,151 | 4,421 | — | 4,421 | — | |||||||||||||||
KB-TS Technology Venture Private Equity Fund | 5,342 | 4,051 | — | 4,051 | — | |||||||||||||||
KB Intellectual Property Fund No.2 | 970 | (392 | ) | — | (392 | ) | — | |||||||||||||
KB Digital Innovation Investment Fund Limited Partnership | 4,376 | (4,553 | ) | — | (4,553 | ) | — | |||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 5,257 | 3,013 | — | 3,013 | — | |||||||||||||||
KB Global Platform Fund | 57 | (9,995 | ) | — | (9,995 | ) | — | |||||||||||||
KB-UTC Inno-Tech Venture Fund | — | (866 | ) | — | (866 | ) | — | |||||||||||||
WJ Private Equity Fund No.1 | 2 | (1,073 | ) | — | (1,073 | ) | — | |||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund No.2 | 1 | (26 | ) | — | (26 | ) | — | |||||||||||||
KB Smart Scale Up Fund | 1 | (28 | ) | — | (28 | ) | — | |||||||||||||
All Together Korea Fund No.2 | 187 | 150 | — | 150 | — | |||||||||||||||
113
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 1 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | Total assets | Total liabilities | Paid-in capital | Equity | Share of net asset amount | Unrealized gains (losses) and others | Carrying amount | |||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | 96,855 | 30,289 | 10,000 | 66,566 | 5,991 | — | 5,991 | |||||||||||||||||||||
Balhae Infrastructure Company | 806,218 | 1,854 | 834,695 | 804,364 | 101,390 | — | 101,390 | |||||||||||||||||||||
KB GwS Private Securities Investment Trust | 522,865 | 741 | 425,814 | 522,124 | 108,026 | — | 108,026 | |||||||||||||||||||||
Incheon Bridge Co., Ltd. | 609,194 | 707,563 | 61,096 | (98,369 | ) | (14,746 | ) | 14,746 | — | |||||||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 3,686 | 249 | 9,640 | 3,437 | 1,031 | — | 1,031 | |||||||||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 4,510 | — | 5,000 | 4,510 | 2,030 | — | 2,030 | |||||||||||||||||||||
KB12-1 Venture Investment Partnership | 67,896 | 977 | 17,500 | 66,919 | 53,535 | — | 53,535 | |||||||||||||||||||||
Future Planning KB Start-up Creation Fund | 32,704 | 2,662 | 19,800 | 30,042 | 15,021 | — | 15,021 | |||||||||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 55,524 | 1,063 | 51,880 | 54,461 | 10,892 | — | 10,892 | |||||||||||||||||||||
KB High-Tech Company Investment Fund | 64,125 | 317 | 26,700 | 63,808 | 31,904 | — | 31,904 | |||||||||||||||||||||
Aju Good Technology Venture Fund | 60,675 | 828 | 52,000 | 59,847 | 23,016 | — | 23,016 | |||||||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | 29,086 | 603 | 30,000 | 28,483 | 9,494 | — | 9,494 | |||||||||||||||||||||
KB-TS Technology Venture Private Equity Fund | 36,445 | 1,212 | 35,400 | 35,233 | 10,570 | — | 10,570 | |||||||||||||||||||||
KB Intellectual Property Fund No.2 | 22,708 | 4 | 24,000 | 22,704 | 8,514 | — | 8,514 | |||||||||||||||||||||
KB Digital Innovation Investment Fund Limited Partnership | 122,153 | 255 | 125,120 | 121,898 | 31,371 | — | 31,371 | |||||||||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 48,369 | 185 | 51,700 | 48,184 | 10,252 | — | 10,252 | |||||||||||||||||||||
KB Global Platform Fund | 85,314 | 2,686 | 85,800 | 82,628 | 18,779 | — | 18,779 | |||||||||||||||||||||
KB-UTC Inno-Tech Venture Fund | 1,016 | 75 | 1,016 | 941 | 278 | — | 278 | |||||||||||||||||||||
PT Bank Bukopin TBK 2 | 8,148,013 | 7,623,829 | 106,536 | 524,184 | 115,321 | 6,061 | 121,382 | |||||||||||||||||||||
114
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2019 1 | ||||||||||||||||||||
| (In millions of Korean won) | Operating revenue | Net profit (loss) | Other comprehensive income | Total comprehensive income (loss) | Dividends | |||||||||||||||
Korea Credit Bureau Co., Ltd. | 91,200 | 1,480 | — | 1,480 | 135 | |||||||||||||||
Balhae Infrastructure Fund | 62,113 | (3,153 | ) | — | (3,153 | ) | 6,855 | |||||||||||||
KB GwS Private Securities Investment Trust | 42,503 | 41,524 | — | 41,524 | 7,276 | |||||||||||||||
Incheon Bridge Co., Ltd. | 107,178 | 9,127 | — | 9,127 | — | |||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 1 | (986 | ) | — | (986 | ) | — | |||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 8 | (388 | ) | — | (388 | ) | — | |||||||||||||
KB12-1 Venture Investment Partnership | 15,082 | 8,778 | — | 8,778 | — | |||||||||||||||
Future Planning KB Start-up Creation Fund | 5,831 | 2,704 | — | 2,704 | �� | — | ||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 4,077 | (3,911 | ) | — | (3,911 | ) | — | |||||||||||||
KB High-tech Company Investment Fund | 35,565 | 32,581 | — | 32,581 | — | |||||||||||||||
Aju Good Technology Venture Fund | 9,288 | 7,734 | — | 7,734 | — | |||||||||||||||
KB-KDBC New Technology Business Investment Fund | 371 | (638 | ) | — | (638 | ) | — | |||||||||||||
KB-TS Technology Venture Private Equity Fund | 1,643 | 632 | — | 632 | — | |||||||||||||||
KB Intellectual Property Fund No.2 | 70 | (1,141 | ) | — | (1,141 | ) | — | |||||||||||||
KB Digital Innovation Investment Fund Limited Partnership | 2,564 | (2,900 | ) | — | (2,900 | ) | — | |||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 138 | (3,355 | ) | — | (3,355 | ) | — | |||||||||||||
KB Global Platform Fund | 250 | (3,172 | ) | — | (3,172 | ) | — | |||||||||||||
KB-UTC Inno-Tech Venture Fund | — | (75 | ) | — | (75 | ) | — | |||||||||||||
PT Bank Bukopin TBK | 721,169 | (5,612 | ) | 45,780 | 40,168 | — | ||||||||||||||
| 1 | The condensed financial information of the associates is adjusted to reflect adjustments made by the Group, such as fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies. |
| 2 | The goodwill of PT Bank Bukopin TBK as of December 31, 2019, are |
115
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
13.3 Changes in carrying amount of investments in associates for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition and others | Disposal and others | Dividends | Gains (losses) on equity method accounting | Other comprehensive income | Ending | |||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | 5,991 | — | — | (90 | ) | 1,252 | — | 7,153 | ||||||||||||||||||||
Balhae Infrastructure Company | 101,390 | 894 | — | (6,973 | ) | 11,314 | — | 106,625 | ||||||||||||||||||||
KB GwS Private Securities Investment Trust | 108,026 | — | — | (7,453 | ) | 11,199 | — | 111,772 | ||||||||||||||||||||
Incheon Bridge Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 1,031 | 3,286 | — | — | (297 | ) | — | 4,020 | ||||||||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 2,030 | 1,125 | — | — | (113 | ) | 9 | 3,051 | ||||||||||||||||||||
KB12-1 Venture Investment Partnership | 53,535 | — | (16,024 | ) | (38,578 | ) | 1,067 | — | — | |||||||||||||||||||
Future Planning KB Start-up Creation Fund | 15,021 | — | (3,200 | ) | — | 503 | — | 12,324 | ||||||||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 10,892 | — | (2,584 | ) | — | (432 | ) | — | 7,876 | |||||||||||||||||||
KB High-tech Company Investment Fund | 31,904 | — | (8,550 | ) | (5,000 | ) | 1,608 | — | 19,962 | |||||||||||||||||||
Aju Good Technology Venture Fund | 23,016 | — | (2,885 | ) | — | 1,217 | — | 21,348 | ||||||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | 9,494 | — | (3,200 | ) | — | 1,727 | — | 8,021 | ||||||||||||||||||||
KB-TS Technology Venture Private Equity Fund | 10,570 | 1,200 | (2,940 | ) | — | 615 | — | 9,445 | ||||||||||||||||||||
KB Intellectual Property Fund No.2 | 8,514 | 6,000 | — | — | 486 | — | 15,000 | |||||||||||||||||||||
KB Digital Innovation Investment Fund Limited Partnership | 31,371 | 2,800 | — | — | 578 | — | 34,749 | |||||||||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 10,252 | 4,000 | (1,600 | ) | — | 1,104 | — | 13,756 | ||||||||||||||||||||
KB Global Platform Fund | 18,779 | 9,000 | — | — | 228 | — | 28,007 | |||||||||||||||||||||
KB-UTC Inno-Tech Venture Fund | 278 | 11,310 | — | — | (256 | ) | — | 11,332 | ||||||||||||||||||||
WJ Private Equity Fund No.1 | — | 10,000 | — | — | (289 | ) | — | 9,711 | ||||||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund No.2 | — | 2,500 | — | — | (7 | ) | — | 2,493 | ||||||||||||||||||||
KB Smart Scale Up Fund | — | 4,000 | — | — | (7 | ) | — | 3,993 | ||||||||||||||||||||
All Together Korea Fund No.2 | — | 100,000 | (90,000 | ) | — | 150 | (127 | ) | 10,023 | |||||||||||||||||||
Shinla Construction Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
Terra Corporation | — | — | — | — | — | — | — | |||||||||||||||||||||
MJT&I Corp. | 116 | — | — | — | (3 | ) | — | 113 | ||||||||||||||||||||
Jungdong Steel Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
116
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Doosung Metal Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
Shinhwa Underwear Co., Ltd. | 256 | — | — | — | (34 | ) | — | 222 | ||||||||||||||||||||
DPAPS Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
Jaeyang Industry Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
Kendae Co., Ltd. | 98 | — | — | — | — | — | 98 | |||||||||||||||||||||
Jinseung Tech Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
Dongjo Co., Ltd. | 115 | — | — | — | (97 | ) | — | 18 | ||||||||||||||||||||
Korea NM Tech Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
Jungdo Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
Dae-A Leisure Co., Ltd. | 578 | — | — | — | (731 | ) | 302 | 149 | ||||||||||||||||||||
Chongil Machine & Tools Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
Imt Technology Co., Ltd. | 3 | — | — | — | (3 | ) | — | — | ||||||||||||||||||||
Iwon Alloy Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
Carlife Co., Ltd. | — | — | — | — | 11 | — | 11 | |||||||||||||||||||||
Computerlife Co., Ltd. | 69 | — | (29 | ) | — | 8 | — | 48 | ||||||||||||||||||||
SKYDIGITAL INC. | — | — | — | — | — | — | — | |||||||||||||||||||||
Jo Yang Industrial Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
IL-KWANG ELECTRONIC MATERIALS CO., LTD. | — | — | — | — | — | — | — | |||||||||||||||||||||
SO-MYUNG RECYCLING CO., LTD. | — | — | — | — | (50 | ) | 55 | 5 | ||||||||||||||||||||
IDTECK Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
Seyoon Development Company | — | — | — | — | — | — | — | |||||||||||||||||||||
PIP System Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
NEOMIO CORP. | — | — | — | — | — | — | — | |||||||||||||||||||||
GWANG MYUNG PAPER Co., Ltd. | — | — | — | — | — | — | — | |||||||||||||||||||||
D-Partner | — | — | — | — | — | — | — | |||||||||||||||||||||
PT Bank Bukopin TBK * | 121,382 | 43,909 | (54,069 | ) | — | (107,258 | ) | (3,964 | ) | — | ||||||||||||||||||
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| 564,711 | 200,024 | (185,081 | ) | (58,094 | ) | (76,510 | ) | (3,725 | ) | 441,325 | ||||||||||||||||||
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| * | The investment was reclassified to subsidiaries from associates for the year ended December 31, 2020 due to additional share purchase. |
117
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition and others | Disposal and others | Dividends | Gains (losses) on equity method accounting | Other comprehensive income | Impairment loss | Ending | ||||||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | 5,941 | — | — | (135 | ) | 185 | — | — | 5,991 | |||||||||||||||||||||||
Balhae Infrastructure Company | 108,050 | 593 | — | (6,855 | ) | (398 | ) | — | — | 101,390 | ||||||||||||||||||||||
KB GwS Private Securities Investment Trust | 106,613 | — | — | (7,276 | ) | 8,689 | — | — | 108,026 | |||||||||||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | — | 1,327 | — | — | (296 | ) | — | — | 1,031 | |||||||||||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 1,079 | 1,125 | — | — | (174 | ) | — | — | 2,030 | |||||||||||||||||||||||
KB12-1 Venture Investment Partnership | 49,912 | — | (3,400 | ) | — | 7,023 | — | — | 53,535 | |||||||||||||||||||||||
Future Planning KB Start-up Creation Fund | 18,069 | — | (4,400 | ) | — | 1,352 | — | — | 15,021 | |||||||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5 (PEF) | 140 | — | (140 | ) | — | — | — | — | — | |||||||||||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 11,681 | — | — | — | (789 | ) | — | — | 10,892 | |||||||||||||||||||||||
KB High-Tech Company Investment Fund | 22,563 | — | (6,950 | ) | — | 16,291 | — | — | 31,904 | |||||||||||||||||||||||
Aju Good Technology Venture Fund | 18,134 | 1,960 | — | — | 2,922 | — | — | 23,016 | ||||||||||||||||||||||||
KB-KDBC New Technology Business Investment Fund | 7,297 | 2,500 | — | — | (303 | ) | — | — | 9,494 | |||||||||||||||||||||||
KB-TS Technology Venture Private Equity Fund | 7,381 | 4,200 | (1,200 | ) | — | 189 | — | — | 10,570 | |||||||||||||||||||||||
KB Intellectual Property Fund No.2 | 2,942 | 6,000 | — | — | (428 | ) | — | — | 8,514 | |||||||||||||||||||||||
KB Digital Innovation Investment Fund Limited Partnership | 7,617 | 24,500 | — | — | (746 | ) | — | — | 31,371 | |||||||||||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 3,966 | 7,000 | — | — | (714 | ) | — | — | 10,252 | |||||||||||||||||||||||
KB Global Platform Fund | — | 19,500 | — | — | (721 | ) | — | — | 18,779 | |||||||||||||||||||||||
KB-UTC Inno-Tech Venture Fund | — | 300 | — | — | (22 | ) | — | — | 278 | |||||||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | 20,252 | — | (20,252 | ) | — | — | — | — | — | |||||||||||||||||||||||
MJT&I Corp. | 122 | — | — | — | (6 | ) | — | — | 116 | |||||||||||||||||||||||
Shinhwa Underwear Co., Ltd. | 182 | — | — | — | 74 | — | — | 256 | ||||||||||||||||||||||||
Kendae Co., Ltd. | 98 | — | — | — | — | — | — | 98 | ||||||||||||||||||||||||
Dongjo Co., Ltd. | 115 | — | — | — | — | — | — | 115 | ||||||||||||||||||||||||
Dae-A Leisure Co., Ltd. | 578 | — | — | — | — | — | — | 578 | ||||||||||||||||||||||||
Imt Technology Co., Ltd. | — | — | — | — | 3 | — | — | 3 | ||||||||||||||||||||||||
Computerlife Co., Ltd | — | — | — | — | 69 | — | — | 69 | ||||||||||||||||||||||||
IL-KWANG ELECTRONIC MATERIALS CO., LTD. | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
SO-MYUNG RECYCLING CO., LTD. | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
IDTECK Co., Ltd. | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Seyoon Development Company | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
PIP System Co., Ltd. | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
PT Bank Bukopin TBK | 113,932 | — | — | — | (1,235 | ) | 10,408 | (1,723 | ) | 121,382 | ||||||||||||||||||||||
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| 506,664 | 69,005 | (36,342 | ) | (14,266 | ) | 30,965 | 10,408 | (1,723 | ) | 564,711 | ||||||||||||||||||||||
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118
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
13.4 Unrecognized share of losses in investments in associates due to discontinuation of applying the equity method for the years ended December 31, 2020 and 2019 and accumulated amount as of December 31, 2020 and 2019, are as follows:
| Unrecognized losses (gains) | Accumulated unrecognized losses | |||||||||||||||
| (In millions of Korean won) | 2020 | 2019 | December 31, 2020 | December 31, 2019 | ||||||||||||
Incheon Bridge Co., Ltd. | 3,354 | (1,944 | ) | 18,100 | 14,746 | |||||||||||
Shinla Construction Co., Ltd. | — | — | 183 | 183 | ||||||||||||
Terra Corporation | — | — | 14 | 14 | ||||||||||||
Jungdong Steel Co., Ltd. | — | — | 487 | 487 | ||||||||||||
Doosung Metal Co., Ltd. | — | 46 | 65 | 65 | ||||||||||||
DPAPS Co., Ltd. | 19 | 14 | 358 | 339 | ||||||||||||
Jinseung Tech Co., Ltd. | — | 18 | 21 | 21 | ||||||||||||
Korea NM Tech Co., Ltd. | — | — | 28 | 28 | ||||||||||||
Jungdo Co., Ltd. | 150 | — | 310 | 160 | ||||||||||||
Jaeyang Industry Co., Ltd. | — | — | 30 | 30 | ||||||||||||
Chongil Machine & Tools Co., Ltd. | — | 19 | 19 | 19 | ||||||||||||
Imt Technology Co., Ltd. | 3 | — | 3 | — | ||||||||||||
SKYDIGITAL INC. | — | 106 | 106 | 106 | ||||||||||||
Jo Yang Industrial Co., Ltd. | 96 | — | 96 | — | ||||||||||||
IDTECK Co., Ltd. | 216 | — | 216 | — | ||||||||||||
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| |||||||||
| 3,838 | (1,741 | ) | 20,036 | 16,198 | ||||||||||||
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119
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
14. Property and Equipment, and Investment Property
14.1 Property and Equipment
14.1.1 Details of property and equipment as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated depreciation | Accumulated impairment losses | Carrying amount | ||||||||||||
Land | 2,082,890 | — | (1,018 | ) | 2,081,872 | |||||||||||
Buildings | 1,784,421 | (529,020 | ) | (5,859 | ) | 1,249,542 | ||||||||||
Leasehold improvements | 830,140 | (760,926 | ) | — | 69,214 | |||||||||||
Equipment and vehicles | 1,363,077 | (1,172,235 | ) | — | 190,842 | |||||||||||
Construction in-progress | 34,275 | — | — | 34,275 | ||||||||||||
Right-of-use assets | 824,242 | (408,093 | ) | — | 416,149 | |||||||||||
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| |||||||||
| 6,919,045 | (2,870,274 | ) | (6,877 | ) | 4,041,894 | |||||||||||
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| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated depreciation | Accumulated impairment losses | Carrying amount | ||||||||||||
Land | 1,985,370 | — | (1,018 | ) | 1,984,352 | |||||||||||
Buildings | 1,478,343 | (476,154 | ) | (5,859 | ) | 996,330 | ||||||||||
Leasehold improvements | 788,586 | (697,387 | ) | — | 91,199 | |||||||||||
Equipment and vehicles | 1,262,759 | (1,001,033 | ) | — | 261,726 | |||||||||||
Construction in-progress | 85,953 | — | — | 85,953 | ||||||||||||
Right-of-use assets | 597,267 | (232,453 | ) | — | 364,814 | |||||||||||
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| |||||||||
| 6,198,278 | (2,407,027 | ) | (6,877 | ) | 3,784,374 | |||||||||||
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14.1.2 Changes in property and equipment for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Transfer 2 | Disposal | Depreciation | Business combination | Others | Ending | ||||||||||||||||||||||||
Land | 1,984,352 | 6,361 | (77,272 | ) | — | — | 171,526 | (3,095 | ) | 2,081,872 | ||||||||||||||||||||||
Buildings | 996,330 | 41,662 | 199,578 | (227 | ) | (38,224 | ) | 51,325 | (902 | ) | 1,249,542 | |||||||||||||||||||||
Leasehold improvements | 91,199 | 1,170 | 35,140 | (383 | ) | (60,362 | ) | 2,780 | (330 | ) | 69,214 | |||||||||||||||||||||
Equipment and vehicles | 261,726 | 71,083 | 3,147 | (1,833 | ) | (156,181 | ) | 13,600 | (700 | ) | 190,842 | |||||||||||||||||||||
Construction in-progress | 85,953 | 220,202 | (291,247 | ) | — | — | 19,999 | (632 | ) | 34,275 | ||||||||||||||||||||||
Right-of-use Assets 1 | 364,814 | 389,952 | — | (190,817 | ) | (215,206 | ) | 45,438 | 21,968 | 416,149 | ||||||||||||||||||||||
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| 3,784,374 | 730,430 | (130,654 | ) | (193,260 | ) | (469,973 | ) | 304,668 | 16,309 | 4,041,894 | ||||||||||||||||||||||
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120
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Transfer 2 | Disposal | Depreciation | Others | Ending | |||||||||||||||||||||
Land | 1,978,793 | 185 | 5,483 | (124 | ) | — | 15 | 1,984,352 | ||||||||||||||||||||
Buildings | 808,057 | 67 | 224,748 | (3,095 | ) | (33,481 | ) | 34 | 996,330 | |||||||||||||||||||
Leasehold improvements | 89,709 | 2,707 | 62,263 | — | (63,576 | ) | 96 | 91,199 | ||||||||||||||||||||
Equipment and vehicles | 153,859 | 229,793 | — | (234 | ) | (121,820 | ) | 128 | 261,726 | |||||||||||||||||||
Construction in-progress | 81,268 | 292,852 | (288,119 | ) | — | — | (48 | ) | 85,953 | |||||||||||||||||||
Right-of-use Assets 1 | 376,606 | 328,623 | — | (138,642 | ) | (218,565 | ) | 16,792 | 364,814 | |||||||||||||||||||
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| |||||||||||||||
| 3,488,292 | 854,227 | 4,375 | (142,095 | ) | (437,442 | ) | 17,017 | 3,784,374 | ||||||||||||||||||||
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| 1 | Effect of change in the lease term is reflected in acquisition and disposal based on gross amount. |
| 2 | Includes transfers with investment properties and assets held for sale. |
14.1.3 Changes in accumulated impairment losses of property and equipment for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Impairment | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses of property and equipment | (6,877 | ) | (12 | ) | — | 12 | (6,877 | ) | ||||||||||||
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Impairment | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses of property and equipment | (6,877 | ) | — | — | — | (6,877 | ) | |||||||||||||
14.2 Investment Properties
14.2.1 Details of investment properties as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated depreciation | Carrying amount | |||||||||
Land | 218,157 | — | 218,157 | |||||||||
Buildings | 107,982 | (8,038 | ) | 99,944 | ||||||||
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| |||||||
| 326,139 | (8,038 | ) | 318,101 | |||||||||
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| |||||||
| December 31, 2019 | ||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated depreciation | Carrying amount | |||||||||
Land | 328,587 | — | 328,587 | |||||||||
Buildings | 164,774 | (17,393 | ) | 147,381 | ||||||||
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| |||||||
| 493,361 | (17,393 | ) | 475,968 | |||||||||
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121
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
14.2.2 Valuation techniques and inputs that are used to measure the fair value of investment properties as of December 31, 2020, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||
| Fair value | Valuation techniques | Inputs | ||||||
Land and buildings | 114,800 | Cost approach method | - Price per square meter - Replacement cost | |||||
| 230,800 | Income approach | - Discount rate - Capitalization rate - Vacancy rate | ||||||
Fair value of the investment properties amounts toW 345,600 million andW 513,307 million as of December 31, 2020 and 2019, respectively. The investment properties were measured by qualified independent appraisers with experience in valuing similar properties in the same area. In addition, per fair value hierarchy in Note 6.1.2, fair value hierarchy of all investment properties has been classified as Level 3.
Rental income from the above investment properties for the years ended December 31, 2020 and 2019, amounts toW 24,640 million andW 15,663 million, respectively.
14.2.3 Changes in investment properties for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Transfer | Disposal | Depreciation | Ending | ||||||||||||||||||
Land | 328,587 | 125 | 22,390 | (132,945 | ) | — | 218,157 | |||||||||||||||||
Buildings | 147,381 | — | 29,034 | (72,794 | ) | (3,677 | ) | 99,944 | ||||||||||||||||
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| |||||||||||||
| 475,968 | 125 | 51,424 | (205,739 | ) | (3,677 | ) | 318,101 | |||||||||||||||||
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| 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Transfer | Disposal | Depreciation | Ending | ||||||||||||||||||
Land | 166,737 | 167,333 | (5,483 | ) | — | — | 328,587 | |||||||||||||||||
Buildings | 91,187 | 63,251 | (4,195 | ) | — | (2,862 | ) | 147,381 | ||||||||||||||||
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| 257,924 | 230,584 | (9,678 | ) | — | (2,862 | ) | 475,968 | |||||||||||||||||
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122
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
15. Intangible Assets
15.1 Details of intangible assets as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated amortization | Accumulated impairment losses | Others | Carrying amount | |||||||||||||||
Goodwill | 552,652 | — | (1,202 | ) | (49,590 | ) | 501,860 | |||||||||||||
Other intangible assets | 1,392,929 | (921,920 | ) | (10,215 | ) | — | 460,794 | |||||||||||||
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| |||||||||||
| 1,945,581 | (921,920 | ) | (11,417 | ) | (49,590 | ) | 962,654 | |||||||||||||
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| |||||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated amortization | Accumulated impairment losses | Carrying amount | ||||||||||||
Goodwill | 66,490 | — | (1,202 | ) | 65,288 | |||||||||||
Other intangible assets | 1,040,642 | (835,033 | ) | (2,166 | ) | 203,443 | ||||||||||
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| |||||||||
| 1,107,132 | (835,033 | ) | (3,368 | ) | 268,731 | |||||||||||
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15.2 Details of goodwill as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||||||||
| Acquisition cost | Carrying amount * | Acquisition cost | Carrying amount | |||||||||||||
PT Bank Bukopin TBK | 89,220 | 80,002 | — | — | ||||||||||||
PRASAC Microfinance Institution Plc. | 396,942 | 356,570 | — | — | ||||||||||||
Housing & Commercial Bank | 65,288 | 65,288 | 65,288 | 65,288 | ||||||||||||
KB Cambodia Bank | 1,202 | — | 1,202 | — | ||||||||||||
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| |||||||||
| 552,652 | 501,860 | 66,490 | 65,288 | |||||||||||||
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| |||||||||
| * | The amount includes the effects of exchange differences. |
15.3 The goodwill as of December 31, 2020, arose from the acquisitions of PRASAC Microfinance Institution Plc., PT Bank Bukopin TBK and merger of Housing & Commercial Bank. And the goodwill as of December 31, 2019, arose from the merger of Housing & Commercial Bank.
15.4 Changes in accumulated impairment losses of goodwill for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||
| (In millions of Korean won) | Beginning | Impairment | Others | Ending | ||||||||||||
Accumulated impairment losses of goodwill | (1,202 | ) | — | — | (1,202 | ) | ||||||||||
| 2019 | ||||||||||||||||
| (In millions of Korean won) | Beginning | Impairment | Others | Ending | ||||||||||||
Accumulated impairment losses of goodwill | (1,202 | ) | — | — | (1,202 | ) | ||||||||||
123
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
15.5 Details of goodwill allocation to cash-generating units and related information for impairment testing as of December 31, 2020 are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Retail banking | Corporate banking | PRASAC Microfinance Institution Plc. | Total | ||||||||||||
Carrying amounts * | 49,315 | 15,973 | 384,591 | 449,879 | ||||||||||||
Recoverable amount exceeding carrying amount | 1,595,304 | 955,540 | 111,425 | 2,662,269 | ||||||||||||
Discount rate (%) | 17.46 | 17.63 | 24.50 | |||||||||||||
Permanent growth rate (%) | 1.00 | 1.00 | 3.00 | |||||||||||||
| * | The carrying amount of goodwill at the time of the impairment test |
For impairment testing, goodwill is allocated to cash-generating units that are expected to benefit from the synergies of the business combination, and cash-generating units consist of an operating segment or units which are not larger than an operating segment. The Group recognized goodwill amounting toW 65,288 million from the merger of Housing & Commercial Bank, the amounts ofW 49,315 million andW 15,973 million were allocated to the retail banking and corporate banking, respectively. And the goodwill ofW 384,591 million arising from the acquisition of PRASAC Microfinance Institution Plc. was allocated to microfinance unit. The Group acquired a 67% stake in PT Bank Bukopin TBK with the acquisition date of September 2, 2020, and the goodwill recognized due to the business combination isW 80,002 million as of December 31, 2020. Cash-generating units to which goodwill has been allocated, is tested for impairment annually and whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit.
The recoverable amount of a cash-generating unit is measured at the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell is the amount obtainable from the sale in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal. If it is difficult to measure the amount obtainable from the sale of the cash-generating unit, the Group measures the fair value less costs to sell by reflecting the characteristics of the measured cash-generating unit. If it is not possible to obtain reliable information to measure the fair value less costs to sell, the Group uses the asset’s value in use as its recoverable amount. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. The projections of the future cash flows are based on the most recent financial budget approved by management and generally cover a period of five years. The future cash flows of retail banking and corporate banking after projection period are estimated on the assumption that the future cash flows will increase by 1.0% per year. The key assumptions used for the estimation of the future cash flows are estimated based on the market size and the Group’s market share.
The future cash flows PRASAC Microfinance Institution Plc. after five years are estimated on the assumption that the future cash flows will increase by 3.0% per year. The key assumptions used for the estimation of the future cash flows are the GDP growth rate of Cambodia, the market size and the recent growth rate of PRASAC Microfinance Institution Plc. The discount rate is a pre-tax rate that reflects assumptions regarding risk-free interest rate, market risk premium and the risks specific to the cash-generating unit.
124
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
15.6 Details of intangible assets other than goodwill as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated amortization | Accumulated impairment losses | Carrying Amount | ||||||||||||
Industrial property rights | 2,048 | (1,814 | ) | — | 234 | |||||||||||
Software | 1,117,984 | (804,558 | ) | — | 313,426 | |||||||||||
Other intangible assets | 237,770 | (85,038 | ) | (10,215 | ) | 142,517 | ||||||||||
Right-of-use assets | 35,127 | (30,510 | ) | — | 4,617 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1,392,929 | (921,920 | ) | (10,215 | ) | 460,794 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated amortization | Accumulated impairment losses | Carrying Amount | ||||||||||||
Industrial property rights | 2,020 | (1,727 | ) | — | 293 | |||||||||||
Software | 853,867 | (719,890 | ) | — | 133,977 | |||||||||||
Other intangible assets | 149,628 | (87,928 | ) | (2,166 | ) | 59,534 | ||||||||||
Right-of-use assets | 35,127 | (25,488 | ) | — | 9,639 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1,040,642 | (835,033 | ) | (2,166 | ) | 203,443 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
15.7 Changes in intangible assets other than goodwill for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Transfer | Disposal | Amortization | Business combination | Others | Ending | ||||||||||||||||||||||||
Industrial property rights | 293 | 50 | — | — | (109 | ) | — | — | 234 | |||||||||||||||||||||||
Software | 133,977 | 247,665 | 185 | (3,135 | ) | (70,733 | ) | 5,422 | 45 | 313,426 | ||||||||||||||||||||||
Other intangible assets | 59,534 | 18,892 | — | (1,125 | ) | (20,207 | ) | 95,484 | (10,061 | ) | 142,517 | |||||||||||||||||||||
Right-of-use assets | 9,639 | — | — | — | (5,022 | ) | — | — | 4,617 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 203,443 | 266,607 | 185 | (4,260 | ) | (96,071 | ) | 100,906 | (10,016 | ) | 460,794 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Disposal | Amortization | Others | Ending | ||||||||||||||||||
Industrial property rights | 250 | 149 | — | (106 | ) | — | 293 | |||||||||||||||||
Software | 95,769 | 88,896 | — | (50,949 | ) | 261 | 133,977 | |||||||||||||||||
Other intangible assets | 47,740 | 30,283 | (7,126 | ) | (11,469 | ) | 106 | 59,534 | ||||||||||||||||
Right-of-use assets | 15,161 | 996 | — | (6,518 | ) | — | 9,639 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 158,920 | 120,324 | (7,126 | ) | (69,042 | ) | 367 | 203,443 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
125
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
15.8 Changes in accumulated impairment losses of other intangible assets for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Impairment | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses of other intangible assets | (2,166 | ) | (8,145 | ) | 55 | 41 | (10,215 | ) | ||||||||||||
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Impairment | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses of other intangible assets | (5,106 | ) | (50 | ) | 112 | 2,878 | (2,166 | ) | ||||||||||||
16. Deferred Income Tax Assets and Liabilities
16.1 Details of deferred income tax assets and liabilities as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||
| (In millions of Korean won) | Assets | Liabilities | Net amount | |||||||||
Other provisions | 78,327 | — | 78,327 | |||||||||
Impairment losses of property and equipment | 2,241 | — | 2,241 | |||||||||
Share-based payments | 11,650 | — | 11,650 | |||||||||
Provisions for acceptances and guarantees | 17,047 | — | 17,047 | |||||||||
Gains or losses on valuation of derivatives | — | (92,328 | ) | (92,328 | ) | |||||||
Present value discount | — | (14 | ) | (14 | ) | |||||||
Gains or losses on fair value hedge | 21,060 | — | 21,060 | |||||||||
Accrued interest | — | (35,020 | ) | (35,020 | ) | |||||||
Deferred loan origination fees and costs | 6,674 | (140,265 | ) | (133,591 | ) | |||||||
Gains or losses on revaluation | — | (277,471 | ) | (277,471 | ) | |||||||
Investments in subsidiaries and others | 32,979 | (102,655 | ) | (69,676 | ) | |||||||
Gains or losses on valuation of security investment | — | (265,941 | ) | (265,941 | ) | |||||||
Defined benefit liabilities | 445,114 | — | 445,114 | |||||||||
Accrued expenses | 210,481 | — | 210,481 | |||||||||
Retirement insurance expense | — | (402,227 | ) | (402,227 | ) | |||||||
Adjustments to the prepaid contributions | — | (28,261 | ) | (28,261 | ) | |||||||
Others | 344,298 | (114,200 | ) | 230,098 | ||||||||
|
|
|
|
|
| |||||||
| 1,169,871 | (1,458,382 | ) | (288,511 | ) | ||||||||
Offsetting of deferred income tax assets and liabilities | (1,111,532 | ) | 1,111,532 | — | ||||||||
|
|
|
|
|
| |||||||
| 58,339 | (346,850 | ) | (288,511 | ) | ||||||||
|
|
|
|
|
| |||||||
126
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||
| (In millions of Korean won) | Assets | Liabilities | Net amount | |||||||||
Other provisions | 60,244 | — | 60,244 | |||||||||
Impairment losses of property and equipment | 2,656 | — | 2,656 | |||||||||
Share-based payments | 12,114 | — | 12,114 | |||||||||
Provisions for acceptances and guarantees | 20,959 | — | 20,959 | |||||||||
Gains or losses on valuation of derivatives | — | (59,827 | ) | (59,827 | ) | |||||||
Present value discount | — | (118 | ) | (118 | ) | |||||||
Gains or losses on fair value hedge | 12,123 | — | 12,123 | |||||||||
Accrued interest | — | (48,979 | ) | (48,979 | ) | |||||||
Deferred loan origination fees and costs | — | (136,178 | ) | (136,178 | ) | |||||||
Gains or losses on revaluation | — | (286,269 | ) | (286,269 | ) | |||||||
Investments in subsidiaries and others | 31,509 | (88,492 | ) | (56,983 | ) | |||||||
Gains or losses on valuation of security investment | — | (100,400 | ) | (100,400 | ) | |||||||
Defined benefit liabilities | 422,800 | — | 422,800 | |||||||||
Accrued expenses | 173,023 | — | 173,023 | |||||||||
Retirement insurance expense | — | (375,300 | ) | (375,300 | ) | |||||||
Adjustments to the prepaid contributions | — | (22,897 | ) | (22,897 | ) | |||||||
Others | 250,358 | (113,715 | ) | 136,643 | ||||||||
|
|
|
|
|
| |||||||
| 985,786 | (1,232,175 | ) | (246,389 | ) | ||||||||
Offsetting of deferred income tax assets and liabilities | (983,523 | ) | 983,523 | — | ||||||||
|
|
|
|
|
| |||||||
| 2,263 | (248,652 | ) | (246,389 | ) | ||||||||
|
|
|
|
|
| |||||||
16.2 Unrecognized Deferred Income Tax Assets
16.2.1 No deferred income tax assets have been recognized for the deductible temporary difference ofW 188,609 million andW 7,716 million associated with investments in subsidiaries and others as of December 31, 2020 and 2019, because it is not probable that the temporary differences will be reversed in the foreseeable future.
16.2.2 No deferred income tax assets have been recognized for deductible temporary differences ofW 23,826 million andW 19,388 million associated with others as of December 31, 2020 and 2019 due to the uncertainty that these will be realized in the future.
16.3 Unrecognized Deferred Income Tax Liabilities
16.3.1 No deferred income tax liabilities have been recognized for the taxable temporary difference ofW 221,773 million andW 33,487 million associated with investments in subsidiaries and others as of December 31, 2020 and 2019, due to the following reasons:
| • | The Group is able to control the timing of the reversal of the temporary difference. |
| • | It is probable that the temporary difference will not be reversed in the foreseeable future. |
16.3.2 No deferred income tax liabilities have been recognized as of December 31, 2020 and 2019 for the taxable temporary difference ofW 65,288 million arising from the initial recognition of goodwill from the merger of Housing and Commercial Bank in 2001.
127
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
16.4 Changes in cumulative temporary differences for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Business combination | Decrease | Increase | Ending | |||||||||||||||
Deductible temporary differences |
| |||||||||||||||||||
Gains or losses on fair value hedge | 44,085 | — | 44,085 | 76,583 | 76,583 | |||||||||||||||
Other provisions | 219,069 | 3,995 | 221,208 | 282,969 | 284,825 | |||||||||||||||
Impairment losses of property and equipment | 9,659 | — | 9,659 | 8,148 | 8,148 | |||||||||||||||
Deferred loan origination fees and costs | — | 35,863 | 13,169 | 1,576 | 24,270 | |||||||||||||||
Share-based payments | 44,049 | — | 44,049 | 42,361 | 42,361 | |||||||||||||||
Provisions for acceptances and guarantees | 76,214 | — | 76,214 | 61,984 | 61,984 | |||||||||||||||
Investment in subsidiaries and others | 122,292 | — | 24,965 | 211,207 | 308,534 | |||||||||||||||
Defined benefit liabilities | 1,537,455 | 15,620 | 120,513 | 186,035 | 1,618,597 | |||||||||||||||
Accrued expenses | 629,175 | — | 629,175 | 765,387 | 765,387 | |||||||||||||||
Others | 929,781 | 105,927 | 440,676 | 606,109 | 1,201,141 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 3,611,779 | 161,405 | 1,623,713 | 2,242,359 | 4,391,830 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Unrecognized deferred income tax assets | ||||||||||||||||||||
Investment in subsidiaries and others | 7,716 | 188,609 | ||||||||||||||||||
Others | 19,388 | 23,826 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
| 3,584,675 | 4,179,395 | |||||||||||||||||||
|
|
|
| |||||||||||||||||
Tax rate (%) | 27.50 | 27.50 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
| 985,786 | 1,149,334 | |||||||||||||||||||
Tax loss carryforwards and tax credit | — | 18,804 | — | 1,733 | 20,537 | |||||||||||||||
|
|
|
| |||||||||||||||||
Total deferred income tax assets | 985,786 | 1,169,871 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
Taxable temporary differences | ||||||||||||||||||||
Accrued interest | (178,107 | ) | — | (171,025 | ) | (120,263 | ) | (127,345 | ) | |||||||||||
Deferred loan origination fees and costs | (495,193 | ) | — | (495,193 | ) | (510,055 | ) | (510,055 | ) | |||||||||||
Gains or losses on valuation of derivatives | (217,552 | ) | — | (217,552 | ) | (335,740 | ) | (335,740 | ) | |||||||||||
Present value discount | (429 | ) | — | (429 | ) | (49 | ) | (49 | ) | |||||||||||
Goodwill from merger | (65,288 | ) | — | — | — | (65,288 | ) | |||||||||||||
Gains or losses on revaluation | (1,040,976 | ) | — | (31,992 | ) | — | (1,008,984 | ) | ||||||||||||
Investment in subsidiaries and others | (355,275 | ) | — | (39,160 | ) | (278,950 | ) | (595,065 | ) | |||||||||||
Gains or losses on valuation of security investment | (365,092 | ) | — | (365,092 | ) | (967,057 | ) | (967,057 | ) | |||||||||||
Retirement insurance expense | (1,364,727 | ) | — | (120,512 | ) | (218,428 | ) | (1,462,643 | ) | |||||||||||
Adjustments to the prepaid contributions | (83,262 | ) | — | (83,262 | ) | (102,768 | ) | (102,768 | ) | |||||||||||
Others | (413,510 | ) | (1,613 | ) | (344,050 | ) | (344,205 | ) | (415,278 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| (4,579,411 | ) | (1,613 | ) | (1,868,267 | ) | (2,877,515 | ) | (5,590,272 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Unrecognized deferred income tax liabilities | ||||||||||||||||||||
Goodwill from merger | (65,288 | ) | (65,288 | ) | ||||||||||||||||
Investments in subsidiaries and others | (33,487 | ) | (221,773 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||
| (4,480,636 | ) | (5,303,211 | ) | |||||||||||||||||
|
|
|
| |||||||||||||||||
Tax rate (%) | 27.50 | 27.50 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
Total deferred income tax liabilities | (1,232,175 | ) | (1,458,382 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||
128
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||
| (In millions of Korean won) | Beginning | Decrease | Increase | Ending | ||||||||||||
Deductible temporary differences |
| |||||||||||||||
Gains or losses on fair value hedge | — | — | 44,085 | 44,085 | ||||||||||||
Other provisions | 226,103 | 226,103 | 219,069 | 219,069 | ||||||||||||
Impairment losses of property and equipment | 15,027 | 15,027 | 9,659 | 9,659 | ||||||||||||
Share-based payments | 43,156 | 43,156 | 44,049 | 44,049 | ||||||||||||
Provisions for acceptances and guarantees | 73,809 | 73,809 | 76,214 | 76,214 | ||||||||||||
Investment in subsidiaries and others | 115,883 | 21,567 | 27,976 | 122,292 | ||||||||||||
Defined benefit liabilities | 1,409,700 | 112,517 | 240,272 | 1,537,455 | ||||||||||||
Accrued expenses | 735,712 | 735,712 | 629,175 | 629,175 | ||||||||||||
Others | 682,521 | 133,335 | 380,595 | 929,781 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 3,301,911 | 1,361,226 | 1,671,094 | 3,611,779 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Unrecognized deferred income tax assets | ||||||||||||||||
Accrued expenses | 363 | — | ||||||||||||||
Investment in subsidiaries and others | 8,938 | 7,716 | ||||||||||||||
Others | 15,030 | 19,388 | ||||||||||||||
|
|
|
| |||||||||||||
| 3,277,580 | 3,584,675 | |||||||||||||||
|
|
|
| |||||||||||||
Tax rate (%) | 27.50 | 27.50 | ||||||||||||||
|
|
|
| |||||||||||||
Total deferred income tax assets | 901,335 | 985,786 | ||||||||||||||
|
|
|
| |||||||||||||
Taxable temporary differences | ||||||||||||||||
Gains or losses on fair value hedge | (94,085 | ) | (94,085 | ) | — | — | ||||||||||
Accrued interest | (151,588 | ) | (102,728 | ) | (129,247 | ) | (178,107 | ) | ||||||||
Deferred loan origination fees and costs | (507,988 | ) | (507,988 | ) | (495,193 | ) | (495,193 | ) | ||||||||
Gains or losses on valuation of derivatives | (47,956 | ) | (47,956 | ) | (217,552 | ) | (217,552 | ) | ||||||||
Present value discount | (124 | ) | (124 | ) | (429 | ) | (429 | ) | ||||||||
Goodwill from merger | (65,288 | ) | — | — | (65,288 | ) | ||||||||||
Gains or losses on revaluation | (1,042,687 | ) | (1,711 | ) | — | (1,040,976 | ) | |||||||||
Investment in subsidiaries and others | (287,344 | ) | (1,572 | ) | (69,503 | ) | (355,275 | ) | ||||||||
Gains or losses on valuation of security investment | (194,124 | ) | (194,124 | ) | (365,092 | ) | (365,092 | ) | ||||||||
Retirement insurance expense | (1,247,911 | ) | (112,517 | ) | (229,333 | ) | (1,364,727 | ) | ||||||||
Adjustments to the prepaid contributions | (69,212 | ) | (69,212 | ) | (83,262 | ) | (83,262 | ) | ||||||||
Others | (105,098 | ) | (38,594 | ) | (347,006 | ) | (413,510 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
| (3,813,405 | ) | (1,170,611 | ) | (1,936,617 | ) | (4,579,411 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Unrecognized deferred income tax liabilities | ||||||||||||||||
Goodwill from merger | (65,288 | ) | (65,288 | ) | ||||||||||||
Investments in subsidiaries and others | (42,404 | ) | (33,487 | ) | ||||||||||||
|
|
|
| |||||||||||||
| (3,705,713 | ) | (4,480,636 | ) | |||||||||||||
|
|
|
| |||||||||||||
Tax rate (%) | 27.50 | 27.50 | ||||||||||||||
|
|
|
| |||||||||||||
Total deferred income tax liabilities | (1,019,071 | ) | (1,232,175 | ) | ||||||||||||
|
|
|
| |||||||||||||
129
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
17. Assets Held for Sale
17.1 Details of assets held for sale as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||
| Acquisition cost * | Accumulated impairment losses | Carrying amount | Fair value less costs to sell | |||||||||||||
Land held for sale | 80,740 | (16,169 | ) | 64,571 | 68,321 | |||||||||||
Buildings held for sale | 152,426 | (24,887 | ) | 127,539 | 134,247 | |||||||||||
Other assets held for sale | 10,676 | (5,059 | ) | 5,617 | 5,801 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 243,842 | (46,115 | ) | 197,727 | 208,369 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Acquisition cost * | Accumulated impairment losses | Carrying amount | Fair value less costs to sell | |||||||||||||
Land held for sale | 7,210 | (1,530 | ) | 5,680 | 6,467 | |||||||||||
Buildings held for sale | 2,513 | (1,252 | ) | 1,261 | 1,261 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 9,723 | (2,782 | ) | 6,941 | 7,728 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Acquisition cost of buildings held for sale is net of accumulated depreciation before classified as assets held for sale. |
17.2 Valuation techniques and inputs that are used to measure the fair value of assets held for sale as of December 31, 2020, are as follows:
| December 31, 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Fair value | Valuation techniques 1 | Unobservable inputs 2 | Estimated range of unobservable inputs (%) | Effect of unobservable inputs to fair value | |||||||||||||||
Land and buildings | 208,369 | | Market comparison approach model and others | | Adjustment index | 0.68 ~ 1.95 | | Fair value increases as the adjustment index rises | | |||||||||||
| 1 | The appraisal value is adjusted by the adjustment ratio in the event the public sale is unsuccessful. |
| 2 | Adjustment index is calculated by using the time factor correction or individual factors. |
Among assets held for sale, real estate was measured by independent appraisers with recent experience in evaluating similar properties in the area of the property to be assessed with professional qualifications. All of assets held for sale are classified as level 3 in accordance with fair value hierarchy in Note 6.1.2.
130
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
17.3 Changes in accumulated impairment losses of assets held for sale for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Provision | Reversal | Business combination | Others | Ending | ||||||||||||||||||
Accumulated impairment losses of assets held for sale | (2,782 | ) | (11,593 | ) | — | (45,433 | ) | 13,693 | (46,115 | ) | ||||||||||||||
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Provision | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses of assets held for sale | (8,150 | ) | (333 | ) | — | 5,701 | (2,782 | ) | ||||||||||||
17.4 As of December 31, 2020, assets held for sale consist of 4 real estates of closed offices and 1,087 foreclosure assets on loans of PT Bank Bukopin TBK, which were determined to sell by the management, but not yet sold as of December 31, 2020. Negotiation with buyers is in process for the one closed offices and the remaining 1,090 assets are also being actively marketed.
18. Other Assets
18.1 Details of other assets as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Other financial assets | ||||||||
Other receivables | 3,497,333 | 3,059,196 | ||||||
Accrued income | 852,353 | 867,534 | ||||||
Guarantee deposits | 930,748 | 995,678 | ||||||
Domestic exchange settlement debits | 716,015 | 523,182 | ||||||
Others | 10,330 | 32,329 | ||||||
Allowances for credit losses | (18,476 | ) | (11,461 | ) | ||||
Present value discount | (1,617 | ) | (1,754 | ) | ||||
|
|
|
| |||||
| 5,986,686 | 5,464,704 | |||||||
|
|
|
| |||||
Other non-financial assets | ||||||||
Other receivables | 192 | 86 | ||||||
Prepaid expenses | 199,227 | 120,873 | ||||||
Guarantee deposits | 3,165 | 3,047 | ||||||
Prepayments | 25,770 | 70,742 | ||||||
Others | 80,781 | 49,459 | ||||||
Allowances for credit losses | (9,865 | ) | (16,528 | ) | ||||
|
|
|
| |||||
| 299,270 | 227,679 | |||||||
|
|
|
| |||||
| 6,285,956 | 5,692,383 | |||||||
|
|
|
| |||||
131
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
18.2 Changes in allowances for credit losses of other assets for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||
| Other financial assets | Other non-financial assets | Total | ||||||||||
Beginning | 11,461 | 16,528 | 27,989 | |||||||||
Provision | 2,422 | 1,733 | 4,155 | |||||||||
Write-offs | (3,123 | ) | (8,458 | ) | (11,581 | ) | ||||||
Business combination | 5,241 | 59 | 5,300 | |||||||||
Others | 2,475 | 3 | 2,478 | |||||||||
|
|
|
|
|
| |||||||
Ending | 18,476 | 9,865 | 28,341 | |||||||||
|
|
|
|
|
| |||||||
| (In millions of Korean won) | 2019 | |||||||||||
| Other financial assets | Other non-financial assets | Total | ||||||||||
Beginning | 21,775 | 16,992 | 38,767 | |||||||||
Reversal | (7,758 | ) | (312 | ) | (8,070 | ) | ||||||
Write-offs | (3,367 | ) | (152 | ) | (3,519 | ) | ||||||
Others | 811 | — | 811 | |||||||||
|
|
|
|
|
| |||||||
Ending | 11,461 | 16,528 | 27,989 | |||||||||
|
|
|
|
|
| |||||||
19. Deposits
Details of deposits as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Demand deposits | ||||||||
Demand deposits in Korean won | 155,897,006 | 124,457,990 | ||||||
Demand deposits in foreign currencies | 12,011,549 | 7,937,663 | ||||||
|
|
|
| |||||
| 167,908,555 | 132,395,653 | |||||||
|
|
|
| |||||
Time deposits | ||||||||
Time deposits in Korean won | 148,096,454 | 156,738,952 | ||||||
Time deposits in foreign currencies | 11,876,470 | 7,561,299 | ||||||
Fair value adjustments on fair value hedged time deposits in foreign currencies | 2,088 | (18,391 | ) | |||||
|
|
|
| |||||
| 159,975,012 | 164,281,860 | |||||||
|
|
|
| |||||
Certificates of deposits | 2,468,924 | 4,239,969 | ||||||
|
|
|
| |||||
| 330,352,491 | 300,917,482 | |||||||
|
|
|
| |||||
132
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
20. Borrowings
20.1 Details of borrowings as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Borrowings | 24,662,850 | 18,043,380 | ||||||
Bonds sold under repurchase agreements and others | 1,318,049 | 830,095 | ||||||
Call money | 889,932 | 267,787 | ||||||
|
|
|
| |||||
| 26,870,831 | 19,141,262 | |||||||
|
|
|
| |||||
20.2 Details of borrowings as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Lenders | Annual interest rate (%) | December 31, 2020 | December 31, 2019 | ||||||||||||
Borrowings in Korean won | Borrowings from the Bank of Korea | The Bank of Korea | 0.25 | 6,463,267 | 2,649,851 | |||||||||||
Borrowings from the government | SEMAS and others | 0.00 ~ 2.70 | 2,675,568 | 1,658,810 | ||||||||||||
Borrowings from non-banking financial institutions | The Korea Development Bank | 0.20 ~ 1.45 | 446,502 | 408,042 | ||||||||||||
Other borrowings | Geumjeong Project Finance Investment Co., Ltd. and others | 0.00 ~ 4.90 | 4,854,745 | 4,344,937 | ||||||||||||
|
|
|
| |||||||||||||
| 14,440,082 | 9,061,640 | |||||||||||||||
|
|
|
| |||||||||||||
Borrowings in foreign currencies | Due to banks | Commonwealth Bank of Australia and others | — | 292 | 4,682 | |||||||||||
Borrowings from banks | Central Bank of Uzbekistan and others | 0.00~8.84 | 9,197,047 | 7,450,947 | ||||||||||||
Borrowings from other financial institutions | The Export-Import Bank of Korea and others | 0.70 ~ 1.47 | 23,827 | 7,081 | ||||||||||||
Other borrowings | Bank of New York Mellon and others | — | 1,001,602 | 1,519,030 | ||||||||||||
|
|
|
| |||||||||||||
| 10,222,768 | 8,981,740 | |||||||||||||||
|
|
|
| |||||||||||||
| 24,662,850 | 18,043,380 | |||||||||||||||
|
|
|
| |||||||||||||
20.3 Details of bonds sold under repurchase agreements and others as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Lenders | Annual interest rate (%) | December 31, 2020 | December 31, 2019 | ||||||||||
Bonds sold under repurchase agreements | Individuals, groups, corporations | 0.00~1.13 | 1,313,483 | 825,710 | ||||||||||
Bills sold | Counter sale | 0.10~0.35 | 4,566 | 4,385 | ||||||||||
|
|
|
| |||||||||||
| 1,318,049 | 830,095 | |||||||||||||
|
|
|
| |||||||||||
133
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
20.4 Details of call money as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Lenders | Annual interest rate (%) | December 31, 2020 | December 31, 2019 | ||||||||||
Call money in Korean won | Mitsui Sumitomo Bank Seoul | 0.48 | 220,000 | — | ||||||||||
Call money in foreign currencies | Bank Mandiri and others | 0.00 ~ 0.34 | 669,932 | 267,787 | ||||||||||
|
|
|
| |||||||||||
| 889,932 | 267,787 | |||||||||||||
|
|
|
| |||||||||||
21. Debentures
21.1 Details of debentures as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Annual interest rate (%) | December 31, 2020 | December 31, 2019 | |||||||||
Debentures in Korean won | ||||||||||||
Structured debentures | 5.65 ~ 5.86 | 31,960 | 33,310 | |||||||||
Subordinated fixed rate debentures | 2.02 ~ 4.35 | 4,464,407 | 3,416,590 | |||||||||
Fixed rate debentures | 0.00 ~ 2.44 | 14,823,854 | 10,787,614 | |||||||||
Floating rate debentures | 0.58 ~ 0.77 | 1,890,000 | 300,000 | |||||||||
|
|
|
| |||||||||
| 21,210,221 | 14,537,514 | |||||||||||
Fair value adjustments of fair value hedged debentures in Korean won | (6,839 | ) | 21,070 | |||||||||
Less: Discount on debentures in Korean won | (8,070 | ) | (3,588 | ) | ||||||||
|
|
|
| |||||||||
| 21,195,312 | 14,554,996 | |||||||||||
|
|
|
| |||||||||
Debentures in foreign currencies | ||||||||||||
Floating rate debentures | 0.58 ~ 1.51 | 1,353,472 | 1,301,367 | |||||||||
Fixed rate debentures | 0.05 ~ 10.47 | 4,359,842 | 2,857,545 | |||||||||
|
|
|
| |||||||||
| 5,713,314 | 4,158,912 | |||||||||||
Fair value adjustments of fair value hedged debentures in foreign currencies | 81,333 | 41,406 | ||||||||||
Less: Discount on debentures in foreign currencies | (20,375 | ) | (15,322 | ) | ||||||||
|
|
|
| |||||||||
| 5,774,272 | 4,184,996 | |||||||||||
|
|
|
| |||||||||
| 26,969,584 | 18,739,992 | |||||||||||
|
|
|
| |||||||||
134
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
21.2 Changes in debentures based on face value for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Issue | Repayment | Business combination | Others | Ending | ||||||||||||||||||
Debentures in Korean won | ||||||||||||||||||||||||
Structured debentures | 33,310 | — | (1,350 | ) | — | — | 31,960 | |||||||||||||||||
Subordinated fixed rate debentures | 3,416,590 | 1,750,000 | (702,183 | ) | — | — | 4,464,407 | |||||||||||||||||
Fixed rate debentures | 10,787,614 | 13,528,640 | (9,492,400 | ) | — | — | 14,823,854 | |||||||||||||||||
Floating rate debentures | 300,000 | 1,890,000 | (300,000 | ) | — | — | 1,890,000 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 14,537,514 | 17,168,640 | (10,495,933 | ) | — | — | 21,210,221 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Debentures in foreign currencies | ||||||||||||||||||||||||
Floating rate debentures | 1,301,367 | 493,753 | (371,742 | ) | — | (69,906 | ) | 1,353,472 | ||||||||||||||||
Fixed rate debentures | 2,857,545 | 2,313,792 | (786,305 | ) | 231,804 | (256,994 | ) | 4,359,842 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 4,158,912 | 2,807,545 | (1,158,047 | ) | 231,804 | (326,900 | ) | 5,713,314 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 18,696,426 | 19,976,185 | (11,653,980 | ) | 231,804 | (326,900 | ) | 26,923,535 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Issue | Repayment | Others | Ending | |||||||||||||||
Debentures in Korean won | ||||||||||||||||||||
Structured debentures | 34,320 | — | (1,010 | ) | — | 33,310 | ||||||||||||||
Subordinated fixed rate debentures | 3,422,729 | — | (6,139 | ) | — | 3,416,590 | ||||||||||||||
Fixed rate debentures | 15,024,545 | 8,597,400 | (12,834,331 | ) | — | 10,787,614 | ||||||||||||||
Floating rate debentures | 640,000 | 300,000 | (640,000 | ) | — | 300,000 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 19,121,594 | 8,897,400 | (13,481,480 | ) | — | 14,537,514 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Debentures in foreign currencies | ||||||||||||||||||||
Floating rate debentures | 1,344,628 | 60,780 | (33,199 | ) | (70,842 | ) | 1,301,367 | |||||||||||||
Fixed rate debentures | 2,725,699 | 595,490 | (590,950 | ) | 127,306 | 2,857,545 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 4,070,327 | 656,270 | (624,149 | ) | 56,464 | 4,158,912 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 23,191,921 | 9,553,670 | (14,105,629 | ) | 56,464 | 18,696,426 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
22. Provisions
22.1 Details of provisions as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Provisions for credit losses of loan commitments | 159,828 | 95,755 | ||||||
Provisions for credit losses of acceptances and guarantees | 62,356 | 76,256 | ||||||
Provisions for restoration costs | 131,674 | 106,269 | ||||||
Others | 34,156 | 32,860 | ||||||
|
|
|
| |||||
| 388,014 | 311,140 | |||||||
|
|
|
| |||||
135
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
22.2 Changes in provisions for credit losses of unused loan commitments, acceptances and guarantees for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||
| Provisions for credit losses of unused loan commitments | Provisions for credit losses of acceptances and guarantees | |||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | 12-month expected credit losses | Lifetime expected credit losses | |||||||||||||||||||||
| (In millions of Korean won) | Non- impaired | Impaired | Non- impaired | Impaired | ||||||||||||||||||||
Beginning | 61,085 | 34,670 | — | 23,881 | 35,588 | 16,787 | ||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 7,728 | (7,723 | ) | (5 | ) | 194 | (191 | ) | (3 | ) | ||||||||||||||
Transfer to lifetime expected credit losses | (7,186 | ) | 9,414 | (2,228 | ) | (486 | ) | 486 | — | |||||||||||||||
Impairment | (32 | ) | (2,937 | ) | 2,969 | (5 | ) | (461 | ) | 466 | ||||||||||||||
Provision (reversal) for credit losses * | 20,304 | 45,393 | (736 | ) | 9,583 | (20,390 | ) | (2,734 | ) | |||||||||||||||
Business combination | 330 | 2 | — | 618 | — | — | ||||||||||||||||||
Others (exchange differences, etc.) | (520 | ) | (700 | ) | — | (595 | ) | (194 | ) | (188 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending | 81,709 | 78,119 | — | 33,190 | 14,838 | 14,328 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2019 | ||||||||||||||||||||||||
| Provisions for credit losses of unused loan commitments | Provisions for credit losses of acceptances and guarantees | |||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | 12-month expected credit losses | Lifetime expected credit losses | |||||||||||||||||||||
| (In millions of Korean won) | Non- impaired | Impaired | Non- impaired | Impaired | ||||||||||||||||||||
Beginning | 74,987 | 28,895 | — | 26,291 | 29,625 | 17,981 | ||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 15,262 | (15,235 | ) | (27 | ) | 365 | (365 | ) | — | |||||||||||||||
Transfer to lifetime expected credit losses | (13,691 | ) | 13,749 | (58 | ) | (976 | ) | 1,705 | (729 | ) | ||||||||||||||
Impairment | (118 | ) | (800 | ) | 918 | (24 | ) | (280 | ) | 304 | ||||||||||||||
Provision (reversal) for credit losses | (15,676 | ) | 7,824 | (833 | ) | (1,971 | ) | 4,643 | (892 | ) | ||||||||||||||
Business combination | ||||||||||||||||||||||||
Others (exchange differences, etc.) | 321 | 237 | — | 196 | 260 | 123 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending | 61,085 | 34,670 | — | 23,881 | 35,588 | 16,787 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| * | Includes additional provision of |
136
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
22.3 Changes in provisions for restoration costs for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Beginning | 106,269 | 95,396 | ||||||
Provision | 8,434 | 3,584 | ||||||
Reversal | (1,153 | ) | (6,054 | ) | ||||
Used | (7,102 | ) | (3,658 | ) | ||||
Unwinding of discount | 2,111 | 1,981 | ||||||
Effect of changes in discount rate | 23,115 | 15,020 | ||||||
|
|
|
| |||||
Ending | 131,674 | 106,269 | ||||||
|
|
|
| |||||
Provisions for restoration costs are present value of estimated costs to be incurred for restoration of the leased properties. The expenditure of the restoration cost will be incurred at the end of each lease contract, and the lease period is used to reasonably estimate the time of expenditure. Also, the average restoration expense based on actual three-year historical data and three-year historical average inflation rate were used to estimate the present value of estimated costs.
22.4 Changes in other provisions for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Membership rewards program | Dormant accounts | Litigations | Financial guarantee liabilities | Others | Total | ||||||||||||||||||
Beginning | 53 | 3,578 | 10,662 | 5,411 | 13,156 | 32,860 | ||||||||||||||||||
Provision (reversal) | 55 | 2,579 | (3,002 | ) | 931 | 2,005 | 2,568 | |||||||||||||||||
Used and others | (73 | ) | (3,149 | ) | (55 | ) | 5 | (364 | ) | (3,636 | ) | |||||||||||||
Business combination | — | — | 2,364 | — | — | 2,364 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending | 35 | 3,008 | 9,969 | 6,347 | 14,797 | 34,156 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Membership rewards program | Dormant accounts | Litigations | Financial guarantee liabilities | Others | Total | ||||||||||||||||||
Beginning | 61 | 4,375 | 6,478 | 2,391 | 21,894 | 35,199 | ||||||||||||||||||
Provision | 61 | 2,296 | 8,160 | 3,020 | 710 | 14,247 | ||||||||||||||||||
Used and others | (69 | ) | (3,093 | ) | (3,976 | ) | — | (9,448 | ) | (16,586 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending | 53 | 3,578 | 10,662 | 5,411 | 13,156 | 32,860 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
137
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
23. Net Defined Benefit Liabilities
23.1 Defined Benefit Plan
The Group operates defined benefit plans which have the following characteristics:
| • | The Group has the obligation to pay the agreed benefits to all its current and former employees. |
| • | The Group assumes actuarial risk (that benefits will cost more than expected) and investment risk. |
The net defined benefit liability recognized in the consolidated statement of financial position is calculated in accordance with actuarial valuation methods. Data such as discount rates, future salary increase rates, and mortality rates based on market data and historical data are used. Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends.
23.2 Changes in net defined benefit liabilities for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | Present value of defined benefit obligation | Fair value of plan assets | Net defined benefit liabilities | |||||||||
Beginning | 1,669,963 | (1,490,853 | ) | 179,110 | ||||||||
Current service cost | 155,819 | — | 155,819 | |||||||||
Interest expense (income) | 32,956 | (29,382 | ) | 3,574 | ||||||||
Remeasurements: | ||||||||||||
Actuarial gains and losses by experience adjustments | 1,289 | — | 1,289 | |||||||||
Actuarial gains and losses by changes in demographic assumptions | — | — | — | |||||||||
Actuarial gains and losses by changes in financial assumptions | — | — | — | |||||||||
Return on plan assets (excluding amounts included in interest income) | — | 4,230 | 4,230 | |||||||||
Contributions by the Group | — | (187,900 | ) | (187,900 | ) | |||||||
Payments from plans (benefit payments) | (120,513 | ) | 120,513 | — | ||||||||
Payments from the Group | (6,209 | ) | — | (6,209 | ) | |||||||
Transfer in | 4,318 | (3,696 | ) | 622 | ||||||||
Transfer out | (3,720 | ) | 3,720 | — | ||||||||
Effects of changes in foreign exchange rate | (274 | ) | — | (274 | ) | |||||||
Business combination | 15,141 | — | 15,141 | |||||||||
|
|
|
|
|
| |||||||
Ending | 1,748,770 | (1,583,368 | ) | 165,402 | ||||||||
|
|
|
|
|
| |||||||
138
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||
| (In millions of Korean won) | Present value of defined benefit obligation | Fair value of plan assets | Net defined benefit liabilities | |||||||||
Beginning | 1,549,092 | (1,382,487 | ) | 166,605 | ||||||||
Current service cost | 151,846 | — | 151,846 | |||||||||
Past service cost | 2,276 | — | 2,276 | |||||||||
Interest expense (income) | 35,227 | (31,403 | ) | 3,824 | ||||||||
Remeasurements: | ||||||||||||
Actuarial gains or losses by experience adjustments | 10,219 | — | 10,219 | |||||||||
Actuarial gains or losses by changes in demographic assumptions | (5,128 | ) | — | (5,128 | ) | |||||||
Actuarial gains or losses by changes in financial assumptions | 42,426 | — | 42,426 | |||||||||
Return on plan assets (excluding amounts included in interest income) | — | 8,165 | 8,165 | |||||||||
Contributions by the Group | — | (196,100 | ) | (196,100 | ) | |||||||
Payments from plans (benefit payments) | (112,516 | ) | 112,516 | — | ||||||||
Payments from the Group | (5,323 | ) | — | (5,323 | ) | |||||||
Transfer in | 4,406 | (4,102 | ) | 304 | ||||||||
Transfer out | (2,558 | ) | 2,558 | — | ||||||||
Effects of changes in foreign exchange rate | (4 | ) | — | (4 | ) | |||||||
|
|
|
|
|
| |||||||
Ending | 1,669,963 | (1,490,853 | ) | 179,110 | ||||||||
|
|
|
|
|
| |||||||
23.3 Details of net defined benefit liabilities as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Present value of defined benefit obligation | 1,748,770 | 1,669,963 | ||||||
Fair value of plan assets | (1,583,368 | ) | (1,490,853 | ) | ||||
|
|
|
| |||||
Net defined benefit liabilities | 165,402 | 179,110 | ||||||
|
|
|
| |||||
23.4 Details of remeasurements of net defined benefit liabilities recognized as other comprehensive income (loss) for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Remeasurements: | ||||||||
Actuarial loss arising from experience adjustment | (1,289 | ) | (10,219 | ) | ||||
Actuarial gains arising from changes in demographic assumptions | — | 5,128 | ||||||
Actuarial losses arising from changes in financial assumptions | — | (42,426 | ) | |||||
Return on plan assets (excluding amounts included in interest income) | (4,230 | ) | (8,165 | ) | ||||
Income tax effects | 1,518 | 15,313 | ||||||
Effect of exchange difference | (165) | — | ||||||
|
|
|
| |||||
Remeasurements after income tax | (4,166 | ) | (40,369 | ) | ||||
|
|
|
| |||||
139
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
23.5 Details of fair value of plan assets as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||
| (In millions of Korean won) | Assets quoted in an active market | Assets not quoted in an active market | Total | |||||||||
Time deposits | — | 1,433,077 | 1,433,077 | |||||||||
Others | — | 150,291 | 150,291 | |||||||||
|
|
|
|
|
| |||||||
| — | 1,583,368 | 1,583,368 | ||||||||||
|
|
|
|
|
| |||||||
| December 31, 2019 | ||||||||||||
| (In millions of Korean won) | Assets quoted in an active market | Assets not quoted in an active market | Total | |||||||||
Time deposits | — | 1,490,590 | 1,490,590 | |||||||||
Others | — | 263 | 263 | |||||||||
|
|
|
|
|
| |||||||
| — | 1,490,853 | 1,490,853 | ||||||||||
|
|
|
|
|
| |||||||
23.6 Details of key actuarial assumptions used as of December 31, 2020 and 2019, are as follows:
| Ratio (%) | ||||||||
| December 31, 2020 | December 31, 2019 | |||||||
Discount rate | 2.00 | 2.00 | ||||||
Salary increase rate | 3.75 | 3.75 | ||||||
Turnover | 1.00 | 1.00 | ||||||
Mortality assumptions are based on the experience-based mortality table issued by Korea Insurance Development Institute in 2019.
23.7 Sensitivity analysis results of significant actuarial assumptions as of December 31, 2020, are as follows:
| Effect on defined benefit obligation | ||||||||||||
| Changes in principal assumptions | Increase in principal assumptions | Decrease in principal assumptions | ||||||||||
Discount rate | 0.5%p | 4.09% decrease | 4.39% increase | |||||||||
Salary increase rate | 0.5%p | 4.01% increase | 3.78% decrease | |||||||||
Turnover | 0.5%p | 0.46% decrease | 0.48% increase | |||||||||
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the same projected unit credit method used in calculating the defined benefit obligations recognized in the consolidated statement of financial position.
23.8 Expected maturity analysis of undiscounted pension benefits as of December 31, 2020, are as follows:
| (In millions of Korean won) | Up to 1 year | 1~2 years | 2~5 years | 5~10 years | Over 10 years | Total | ||||||||||||||||||
Pension benefits | 59,907 | 129,286 | 494,831 | 1,009,277 | 2,643,188 | 4,336,489 | ||||||||||||||||||
The weighted average duration of the defined benefit obligations is 8.65 and 8.88 years as of December 31,
140
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
2020 and December 31, 2019, respectively.
23.9 Expected contribution to plan assets for the next annual reporting period after December 31, 2020, is estimated to be approximatelyW 154,000 million.
24. Other Liabilities
Details of other liabilities as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Other financial liabilities | ||||||||
Other payables | 3,866,318 | 3,422,209 | ||||||
Prepaid card and debit cards payables | 1,079 | 2,038 | ||||||
Accrued expenses | 2,390,334 | 2,748,242 | ||||||
Financial guarantee liabilities | 45,817 | 41,008 | ||||||
Deposits for letter of guarantees and others | 456,536 | 286,946 | ||||||
Domestic exchange settlement credits | 933,330 | 2,073,263 | ||||||
Foreign exchanges settlement credits | 134,678 | 114,316 | ||||||
Borrowings from other business accounts | — | 256 | ||||||
Due to trust accounts | 7,542,955 | 5,216,460 | ||||||
Liabilities incurred from agency relationship | 765,844 | 771,609 | ||||||
Account for agency businesses | 400,507 | 407,475 | ||||||
Lease liabilities | 380,629 | 344,417 | ||||||
Others | 58,299 | 18,265 | ||||||
|
|
|
| |||||
| 16,976,326 | 15,446,504 | |||||||
|
|
|
| |||||
Other non-financial liabilities | ||||||||
Other payables | 858,865 | 557,775 | ||||||
Unearned revenue | 55,830 | 47,932 | ||||||
Accrued expenses | 414,683 | 389,976 | ||||||
Withholding taxes | 120,816 | 118,057 | ||||||
Others | 55,226 | 65,368 | ||||||
|
|
|
| |||||
| 1,505,420 | 1,179,108 | |||||||
|
|
|
| |||||
| 18,481,746 | 16,625,612 | |||||||
|
|
|
| |||||
25. Equity
25.1 Capital Stock
Details of capital stock of the Group as of December 31, 2020 and 2019, are as follows:
| Ordinary shares | ||||||||
| (In millions of Korean won and in number of shares) | December 31, 2020 | December 31, 2019 | ||||||
Number of authorized shares | 1,000,000,000 | 1,000,000,000 | ||||||
Par value per share (In Korean won) | 5,000 | 5,000 | ||||||
Number of issued shares | 404,379,116 | 404,379,116 | ||||||
Capital stock | 2,021,896 | 2,021,896 | ||||||
141
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
25.2 Hybrid Security
Details of hybrid security classified as equity as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Issuance date | Maturity | Interest rate (%) | December 31, 2020 | December 31, 2019 | |||||||||||||||
Amortized Conditional Capital Securities | July 2, 2019 | Permanent | 4.35 | 574,523 | 574,523 | |||||||||||||||
Above hybrid securities are early redeemable by the Group after 5 years from the issuance date and each interest payment date thereafter.
25.3 Capital Surplus
Details of capital surplus as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Paid-in capital in excess of par value | 4,604,417 | 4,604,417 | ||||||
Gain on business combination | 397,669 | 397,669 | ||||||
Revaluation reserve | 177,229 | 177,229 | ||||||
Other capital surplus | (370,833 | ) | 40,389 | |||||
|
|
|
| |||||
| 4,808,482 | 5,219,704 | |||||||
|
|
|
| |||||
25.4 Accumulated Other Comprehensive Income
Details of accumulated other comprehensive income as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Remeasurements of net defined benefit liabilities | (220,178 | ) | (216,067 | ) | ||||
Exchange differences on translating foreign operations | (118,526 | ) | 15,943 | |||||
Gains on debt securities measured at fair value through other comprehensive income | 88,478 | 56,750 | ||||||
Gains on equity securities measured at fair value through other comprehensive income | 733,332 | 303,338 | ||||||
Share of other comprehensive income (loss) of associates | (2,691 | ) | 4,287 | |||||
Losses on cash flow hedging instruments | (10,073) | (3,691) | ||||||
Gains (losses) on hedging instruments of net investments in foreign operations | 24,103 | (37,226 | ) | |||||
|
|
|
| |||||
| 494,445 | 123,334 | |||||||
|
|
|
| |||||
142
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
25.5 Retained Earnings
25.5.1 Details of retained earnings as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Legal reserves | 2,042,675 | 2,041,898 | ||||||
Regulatory reserve for credit losses | 2,441,875 | 2,291,019 | ||||||
Voluntary reserves | 15,809,196 | 14,257,527 | ||||||
Unappropriated retained earnings | 1,949,806 | 2,474,332 | ||||||
|
|
|
| |||||
| 22,243,552 | 21,064,776 | |||||||
|
|
|
| |||||
With respect to the allocation of net profit earned in a fiscal term, the Bank must set aside in its legal reserve an amount equal to at least 10% of its profit after tax as reported in the financial statements, each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its paid-in capital in accordance with Article 40 of the Banking Act. This reserve is not available for the payment of cash dividends, but may be transferred to share capital, or used to reduce deficit. The Bank is reserving other reserves (legal reserves) in accordance with local regulation in oversea.
25.5.2 Regulatory reserve for credit losses
Measurement and disclosure of regulatory reserve for credit losses are required in accordance with Articles 29.1 through 29.2 of Regulation on Supervision of Banking Business.
25.5.2.1 Details of regulatory reserve for credit losses as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Regulatory reserve for credit losses attributable to: | ||||||||
Shareholders of the Parent Company | 2,534,401 | 2,441,875 | ||||||
Non-controlling interests | 34,138 | — | ||||||
|
|
|
| |||||
| 2,568,539 | 2,441,875 | |||||||
|
|
|
| |||||
25.5.2.2 Regulatory reserve for credit losses estimated to be appropriated and adjusted profit after provision (reversal) of regulatory reserve for credit losses for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Regulatory reserve for credit losses estimated to be appropriated | 92,526 | 150,856 | ||||||
Adjusted profit after provision of regulatory reserve for credit losses * | 2,205,669 | 2,288,223 | ||||||
| * | Adjusted profit after provision (reversal) of regulatory reserve for credit losses is not based on Korean IFRS; this is calculated reflecting provision (reversal) of the reserve for credit losses before tax to the net profit attributable to shareholders of the Parent Company. |
143
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
26. Net Interest Income
Details of interest income, expense, and net interest income for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Interest income | ||||||||
Securities measured at fair value through profit or loss | 189,396 | 202,244 | ||||||
Loans measured at fair value through profit or loss | 1,596 | 9,686 | ||||||
Securities measured at fair value through other comprehensive income | 500,582 | 602,042 | ||||||
Loans measured at fair value through other comprehensive income | 6,161 | 13,670 | ||||||
Due from financial institutions measured at amortized cost | 36,880 | 64,653 | ||||||
Securities measured at amortized cost | 284,277 | 302,329 | ||||||
Loans measured at amortized cost | 9,246,075 | 9,451,056 | ||||||
Others | 191,198 | 134,268 | ||||||
|
|
|
| |||||
| 10,456,165 | 10,779,948 | |||||||
|
|
|
| |||||
Interest expense | ||||||||
Deposits | 2,885,914 | 3,452,860 | ||||||
Borrowings | 307,561 | 344,285 | ||||||
Debentures | 445,350 | 517,311 | ||||||
Others | 62,574 | 101,705 | ||||||
|
|
|
| |||||
| 3,701,399 | 4,416,161 | |||||||
|
|
|
| |||||
Net interest income | 6,754,766 | 6,363,787 | ||||||
|
|
|
| |||||
Interest income recognized on impaired loans isW 22,173 million andW 23,672 million for the years ended December 31, 2020 and 2019, respectively.
144
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
27. Net Fee and Commission Income
Details of fee and commission income, expense and net fee and commission income for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Fee and commission income | ||||||||
Banking activity fees | 196,196 | 221,600 | ||||||
Lending activity fees | 85,547 | 76,481 | ||||||
Credit card related fees | 1,083 | 920 | ||||||
Debit card related fees | 497 | 594 | ||||||
Agent activity fees | 320,912 | 321,452 | ||||||
Trust and other fiduciary fees | 233,595 | 308,084 | ||||||
Acceptances and guarantees fees | 46,904 | 39,170 | ||||||
Foreign currency related fees | 111,294 | 100,499 | ||||||
Security activity commissions | 153,481 | 128,891 | ||||||
Other business account commission on consignment | 40,461 | 36,813 | ||||||
Others | 259,717 | 248,858 | ||||||
|
|
|
| |||||
| 1,449,687 | 1,483,362 | |||||||
|
|
|
| |||||
Fee and commission expense | ||||||||
Trading activity related fees * | 12,939 | 12,898 | ||||||
Lending activity fees | 41,105 | 31,613 | ||||||
Credit card related fees | 28,108 | 29,303 | ||||||
Outsourcing related fees | 108,521 | 95,988 | ||||||
Foreign currency related fees | 21,198 | 24,140 | ||||||
Management fees of written-off loans | 15,597 | 15,181 | ||||||
Contributions to external institutions | 24,016 | 24,558 | ||||||
Others | 130,281 | 116,385 | ||||||
|
|
|
| |||||
| 381,765 | 350,066 | |||||||
|
|
|
| |||||
Net fee and commission income | 1,067,922 | 1,133,296 | ||||||
|
|
|
| |||||
| * | Fees from financial instruments at fair value through profit or loss. |
145
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
28. Net Gains or Losses on Financial Instruments at Fair Value through Profit or Loss
Net gains or losses on financial instruments at fair value through profit or loss include dividend income and gains or losses arising from changes in fair values, sales and redemptions.
Details of net gains or losses on financial instruments at fair value through profit or loss for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Gains on financial instruments at fair value through profit or loss | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Debt securities | 351,761 | 265,422 | ||||||
Equity securities | 63,524 | 27,946 | ||||||
|
|
|
| |||||
| 415,285 | 293,368 | |||||||
|
|
|
| |||||
Derivatives held for trading | ||||||||
Interest rate | 1,594,891 | 1,692,513 | ||||||
Currency | 7,625,271 | 4,995,524 | ||||||
Stock or stock index | 1,556 | 254 | ||||||
Others | 1,464 | 1,224 | ||||||
|
|
|
| |||||
| 9,223,182 | 6,689,515 | |||||||
|
|
|
| |||||
Financial liabilities at fair value through profit or loss | 291 | 394 | ||||||
Other financial instruments | 689 | 5,810 | ||||||
|
|
|
| |||||
| 9,639,447 | 6,989,087 | |||||||
|
|
|
| |||||
Losses on financial instruments at fair value through profit or loss | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Debt securities | 100,190 | 47,850 | ||||||
Equity securities | 23,524 | 3,637 | ||||||
|
|
|
| |||||
| 123,714 | 51,487 | |||||||
|
|
|
| |||||
Derivatives held for trading | ||||||||
Interest rate | 1,678,151 | 1,774,890 | ||||||
Currency | 7,589,724 | 4,732,495 | ||||||
Stock or stock index | 2,858 | 937 | ||||||
Others | 285 | 484 | ||||||
|
|
|
| |||||
| 9,271,018 | 6,508,806 | |||||||
|
|
|
| |||||
Financial liabilities at fair value through profit or loss | 416 | 466 | ||||||
Other financial instruments | 116 | 5,704 | ||||||
|
|
|
| |||||
| 9,395,264 | 6,566,463 | |||||||
|
|
|
| |||||
Net gains on financial instruments at fair value through profit or loss | 244,183 | 422,624 | ||||||
|
|
|
| |||||
146
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
29. Net Other Operating Income and Expenses
Details of other operating income and expenses for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Other operating income | ||||||||
Gains related to financial assets at fair value through other comprehensive income | ||||||||
Gains on redemption of the securities measured at fair value through other comprehensive income | 279 | 524 | ||||||
Gains on sale of the securities measured at fair value through other comprehensive income | 188,535 | 99,195 | ||||||
Gains related to financial assets at amortized cost | ||||||||
Gains on sale of loans measured at amortized cost | 93,643 | 19,346 | ||||||
Gains on foreign exchange transactions | 2,458,399 | 1,554,311 | ||||||
Dividend income | 29,834 | 43,146 | ||||||
Others | 203,829 | 198,049 | ||||||
|
|
|
| |||||
| 2,974,519 | 1,914,571 | |||||||
|
|
|
| |||||
Other operating expenses | ||||||||
Losses related to financial assets at fair value through other comprehensive income | ||||||||
Losses on redemption of the securities measured at fair value through other comprehensive income | 247 | — | ||||||
Losses on sale of the securities measured at fair value through other comprehensive income | 7,309 | 4,195 | ||||||
Losses related to financial assets at amortized cost | ||||||||
Losses on sale of loans measured at amortized cost | 10,278 | 15,015 | ||||||
Losses on foreign exchanges transactions | 2,094,443 | 1,515,382 | ||||||
Deposit insurance fee | 449,076 | 411,680 | ||||||
Credit guarantee fund fee | 242,216 | 213,911 | ||||||
Others | 401,156 | 355,027 | ||||||
|
|
|
| |||||
| 3,204,725 | 2,515,210 | |||||||
|
|
|
| |||||
Net other operating expenses | (230,206 | ) | (600,639 | ) | ||||
|
|
|
| |||||
147
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
30. General and Administrative Expenses
30.1 Details of general and administrative expenses for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Employee Benefits | ||||||||
Salaries and short-term employee benefits - salaries | 1,605,098 | 1,489,102 | ||||||
Salaries and short-term employee benefits - welfare expense | 658,347 | 638,184 | ||||||
Post-employment benefits - defined benefit plans | 159,393 | 157,946 | ||||||
Post-employment benefits - defined contribution plans | 9,807 | 7,220 | ||||||
Termination benefits | 302,118 | 213,749 | ||||||
Share-based payments | 13,364 | 15,173 | ||||||
|
|
|
| |||||
| 2,748,127 | 2,521,374 | |||||||
|
|
|
| |||||
Depreciation and amortization | 569,721 | 509,346 | ||||||
|
|
|
| |||||
Other general and administrative expenses | ||||||||
Rental expense | 66,070 | 62,277 | ||||||
Tax and dues | 134,033 | 126,975 | ||||||
Communication | 30,893 | 26,035 | ||||||
Electricity and utilities | 25,825 | 22,435 | ||||||
Publication | 7,848 | 8,977 | ||||||
Repairs and maintenance | 17,392 | 12,037 | ||||||
Vehicle | 9,791 | 6,878 | ||||||
Travel | 2,776 | 5,163 | ||||||
Training | 18,059 | 19,078 | ||||||
Service fees | 134,421 | 123,425 | ||||||
Supplies | 25,214 | 19,460 | ||||||
IT cost | 161,562 | 154,503 | ||||||
Others | 249,614 | 269,456 | ||||||
|
|
|
| |||||
| 883,498 | 856,699 | |||||||
|
|
|
| |||||
| 4,201,346 | 3,887,419 | |||||||
|
|
|
| |||||
148
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
30.2 Share-based Payments
30.2.1 Stock grants
The Group changed the scheme of share-based payments from stock options to stock grants in November 2007. The stock grants award program is an incentive plan that sets, on grant date, the maximum number of shares that can be awarded. Actual shares to be granted is determined in accordance with achievement of pre-set performance targets over the vesting period.
30.2.1.1 Details of stock grants linked to long-term performance as of December 31, 2020, are as follows:
| (In number of shares) | ||||||||||
Stock grants | Grant date | Number of granted shares 1 | Vesting conditions 2 | |||||||
Series 75 | 2019-01-01 | 154,996 | Services fulfillment, TSR 0~50%, Company and work performance 50~100% | |||||||
Series 76 | 2019-04-01 | 5,380 | Services fulfillment, TSR 30~50%, Company and work performance 50~70% | |||||||
Series 77 | 2019-05-27 | 4,468 | Services fulfillment, TSR 30~50%, Company and work performance 50~70% | |||||||
Series 78 | 2019-11-21 | 36,443 | Services fulfillment, TSR 30%, EPS and Asset Quality 70% | |||||||
Series 79 | 2020-01-01 | 241,609 | Services fulfillment, TSR 0~50%, Company and work performance 50~100% | |||||||
Series 80 | 2020-03-01 | 7,711 | Services fulfillment, TSR 30~50%, Company and work performance 50~70% | |||||||
Deferred grant in 2015 | — | 2,759 | ||||||||
Deferred grant in 2016 | — | 19,109 | ||||||||
Deferred grant in 2017 | — | 47,863 | ||||||||
Deferred grant in 2018 | — | 65,514 | ||||||||
Deferred grant in 2019 | — | 98,194 | ||||||||
|
| |||||||||
| 684,046 | ||||||||||
|
| |||||||||
| 1 | Granted shares represent the total number of shares initially granted to executives and employees who have residual shares as of December 31, 2020 (Deferred grants are residual shares vested as of December 31, 2020). |
| 2 | Executives and employees were given the option of deferred payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement after the deferred grant has been confirmed. |
149
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
30.2.1.2 Details of stock grants linked to short-term performance as of December 31, 2020, are as follows:
| (In number of shares) | ||||||||||
Stock grants * | Grant date | Estimated number of vested shares | Vesting conditions | |||||||
Stock granted in 2015 | 2015-01-01 | 9,887 | Vested | |||||||
Stock granted in 2016 | 2016-01-01 | 19,662 | Vested | |||||||
Stock granted in 2017 | 2017-01-01 | 30,003 | Vested | |||||||
Stock granted in 2018 | 2018-01-01 | 73,989 | Vested | |||||||
Stock granted in 2019 | 2019-01-01 | 125,530 | Vested | |||||||
Stock granted in 2020 | 2020-01-01 | 121,676 | Proportion to service period | |||||||
| * | Executives and employees were given the option of deferred payment of the granted shares (after the date of retirement), payment ratio and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement after the deferred grant has been confirmed. |
30.2.1.3 Stock grants are measured at fair value using the MonteCarlo Simulation Model and assumptions used in determining the fair value as of December 31, 2020, are as follows:
| (In Korean won) | Expected exercise period (years) | Risk-free rate (%) | Fair value (market performance condition) | Fair value (non-market performance condition) | ||||||||||||
Series 75 | 0.00~3.00 | 0.74 | % | 38,789~45,096 | 38,789~45,096 | |||||||||||
Series 76 | 0.25~4.00 | 0.74 | % | 37,324~41,899 | 37,324~41,899 | |||||||||||
Series 77 | 0.40~4.00 | 0.74 | % | 37,324~41,899 | 37,324~41,899 | |||||||||||
Series 78 | 0.89~4.00 | 0.74 | % | 36,370~40,828 | 37,324~41,899 | |||||||||||
Series 79 | 1.00~4.00 | 0.74 | % | 37,324~45,096 | 37,324~45,096 | |||||||||||
Series 80 | 1.16~5.00 | 0.74 | % | 35,895~40,299 | 35,895~40,299 | |||||||||||
Grant deferred in 2015 | 0.00~1.00 | 0.74 | % | — | 41,899~45,096 | |||||||||||
Grant deferred in 2016 | 0.00~3.00 | 0.74 | % | — | 38,789~45,096 | |||||||||||
Grant deferred in 2017 | 0.00~3.00 | 0.74 | % | — | 38,789~45,096 | |||||||||||
Grant deferred in 2018 | 0.00~3.00 | 0.74 | % | — | 38,789~45,096 | |||||||||||
Grant deferred in 2019 | 0.00~2.00 | 0.74 | % | — | 40,299~45,096 | |||||||||||
Stock granted in 2015 | 0.00~3.00 | 0.74 | % | — | 38,789~47,153 | |||||||||||
Stock granted in 2016 | 0.00~4.00 | 0.74 | % | — | 37,324~61,294 | |||||||||||
Stock granted in 2017 | 0.00~3.00 | 0.74 | % | — | 38,789~47,631 | |||||||||||
Stock granted in 2018 | 0.00~3.00 | 0.74 | % | — | 38,789~47,631 | |||||||||||
Stock granted in 2019 | 0.00~2.00 | 0.74 | % | — | 40,299~45,096 | |||||||||||
Stock granted in 2020 | 1.00~3.00 | 0.74 | % | — | 38,789~41,899 | |||||||||||
The Group used the volatility of the stock price over the previous year as the expected volatility, and used the arithmetic mean of the dividend rate of one year before, two years before, and three years before the base year as the dividend rate, and used one-year risk-free rate of Korea Treasury Bond in order to calculate fair value.
30.2.1.4 The accrued expenses for share-based payments related to stock grants areW 39,499 million andW 41,344 million as of December 31, 2020 and 2019, respectively, and the compensation costs from stock grants amounting toW 13,364 million andW 15,173 million were recognized for the years ended December 31, 2020 and 2019, respectively.
150
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
30.2.2 Mileage stock
30.2.2.1 Details of mileage stock as of December 31, 2020, are as follows:
| (In number of shares) | Grant date | Number of granted shares1 | Expected exercise period (years)2 | Remaining shares | ||||||||||||
Stock granted in 2018 | Jan. 10, 2018 | 19,197 | 0.00~0.02 | 13,522 | ||||||||||||
| Feb. 12, 2018 | 9 | 0.00~0.12 | 3 | |||||||||||||
| Apr. 02, 2018 | 115 | 0.00~0.25 | 82 | |||||||||||||
| Apr. 30, 2018 | 86 | 0.00~0.33 | 49 | |||||||||||||
| May 08, 2018 | 170 | 0.00~0.35 | 140 | |||||||||||||
| Jun. 01, 2018 | 140 | 0.00~0.41 | 106 | |||||||||||||
| Jul. 02, 2018 | 180 | 0.00~0.50 | 123 | |||||||||||||
| Aug. 07, 2018 | 194 | 0.00~0.60 | 149 | |||||||||||||
| Aug. 09, 2018 | 47 | 0.00~0.60 | 31 | |||||||||||||
| Aug. 14, 2018 | 30 | 0.00~0.62 | 26 | |||||||||||||
| Aug. 16, 2018 | 130 | 0.00~0.62 | 93 | |||||||||||||
| Sep. 07, 2018 | 106 | 0.00~0.68 | 77 | |||||||||||||
| Oct. 04, 2018 | 129 | 0.00~0.76 | 78 | |||||||||||||
| Nov. 01, 2018 | 258 | 0.00~0.83 | 200 | |||||||||||||
| Nov. 06, 2018 | 236 | 0.00~0.85 | 168 | |||||||||||||
| Dec. 03, 2018 | 132 | 0.00~0.92 | 127 | |||||||||||||
| Dec. 04, 2018 | 21 | 0.00~0.92 | 21 | |||||||||||||
| Dec. 07, 2018 | 91 | 0.00~0.93 | 78 | |||||||||||||
| Dec. 12, 2018 | 64 | 0.00~0.95 | 32 | |||||||||||||
| Dec. 18, 2018 | 271 | 0.00~0.96 | 237 | |||||||||||||
| Dec. 19, 2018 | 42 | 0.00~0.96 | 34 | |||||||||||||
| Dec. 31, 2018 | 127 | 0.00~1.00 | 106 | |||||||||||||
Stock granted in 2019 | Jan. 11, 2019 | 26,580 | 0.00~1.03 | 21,231 | ||||||||||||
| Feb. 01, 2019 | 12 | 0.00~1.08 | 8 | |||||||||||||
| Apr. 01, 2019 | 167 | 0.00~1.25 | 96 | |||||||||||||
| Apr. 18, 2019 | 105 | 0.00~1.29 | 81 | |||||||||||||
| Apr. 22, 2019 | 33 | 0.00~1.30 | 33 | |||||||||||||
| Jul. 01, 2019 | 109 | 0.00~1.50 | 87 | |||||||||||||
| Aug. 29, 2019 | 39 | 0.00~1.66 | 39 | |||||||||||||
| Sep. 02, 2019 | 50 | 0.00~1.67 | 50 | |||||||||||||
| Nov. 01, 2019 | 119 | 0.00~1.83 | 95 | |||||||||||||
| Nov. 08, 2019 | 14 | 0.00~1.85 | 14 | |||||||||||||
| Dec. 05, 2019 | 56 | 0.00~1.93 | 54 | |||||||||||||
| Dec. 06, 2019 | 84 | 0.00~1.93 | 84 | |||||||||||||
| Dec. 31, 2019 | 87 | 0.00~2.00 | 87 | |||||||||||||
Stock granted in 2020 | Jan. 18, 2020 | 28,645 | 0.00~2.05 | 27,672 | ||||||||||||
| May 12, 2020 | 46 | 0.00~2.36 | 46 | |||||||||||||
| Jun. 30, 2020 | 206 | 0.00~2.50 | 206 | |||||||||||||
| Aug. 26, 2020 | 40 | 0.00~2.65 | 40 | |||||||||||||
| Oct. 29, 2020 | 160 | 0.00~2.83 | 160 | |||||||||||||
| Nov. 6, 2020 | 45 | 0.00~2.85 | 45 | |||||||||||||
151
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| Nov. 30, 2020 | 35 | 0.00~2.92 | 35 | |||||||||||||
| Dec. 2, 2020 | 57 | 0.00~2.92 | 57 | |||||||||||||
| Dec. 4, 2020 | 154 | 0.00~2.93 | 154 | |||||||||||||
| Dec. 30, 2020 | 88 | 0.00~3.00 | 88 | |||||||||||||
|
|
|
| |||||||||||||
| 78,706 | 65,944 | |||||||||||||||
|
|
|
| |||||||||||||
| 1 | Mileage stock is exercisable for two years after one year from the grant date. When the mileage stock is exercised, the closing price of prior month is applied. However, in case of transfer or retirement during the vesting period, mileage stock is exercisable at the closing price of the last month prior to transfer or retirement. |
| 2 | The shares are assessed based on the stock price as of December 31, 2020. These shares are vested immediately at grant date. |
30.2.2.2 The accrued expenses for share-based payments related to mileage stock as of December 31, 2020 and 2019, areW 2,862 million andW 2,705 million, respectively. The compensation costs amounting toW 1,086 million andW 1,334 million were recognized as expenses for the years ended December 31, 2020 and 2019, respectively.
31. Non-Operating Income and Expenses
Details of non-operating income and expenses for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Non-operating income | ||||||||
Gains on disposal of property and equipment and assets held for sale | 97,905 | 3,343 | ||||||
Rental income | 36,463 | 24,640 | ||||||
Others | 25,133 | 57,634 | ||||||
|
|
|
| |||||
| 159,501 | 85,617 | |||||||
|
|
|
| |||||
Non-operating expenses | ||||||||
Losses on disposal of property and equipment and assets held for sale | 2,198 | 4,591 | ||||||
Donation | 88,987 | 84,211 | ||||||
Restoration costs | 2,413 | 3,017 | ||||||
Others | 37,059 | 32,685 | ||||||
|
|
|
| |||||
| 130,657 | 124,504 | |||||||
|
|
|
| |||||
Net non-operating income (expenses) | 28,844 | (38,887 | ) | |||||
|
|
|
| |||||
152
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
32. Income Tax Expense
32.1 Details of income tax expense for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Tax payable | ||||||||
Current tax expense | 1,034,430 | 793,937 | ||||||
Adjustments of tax of prior years recognized in current tax | (19,390 | ) | (24,034 | ) | ||||
|
|
|
| |||||
| 1,015,040 | 769,903 | |||||||
|
|
|
| |||||
Changes in deferred income tax assets and liabilities * | 93,480 | 128,653 | ||||||
Income tax expense of overseas branches | 15,795 | 8,615 | ||||||
Income tax recognized directly in equity | ||||||||
Net gains or losses on equity instruments at fair value through other comprehensive income | (163,101 | ) | (502 | ) | ||||
Net gains or losses on debt instruments at fair value through other comprehensive income | (13,227 | ) | (12,709 | ) | ||||
Exchange differences on translating foreign operations | 10,516 | (4,488 | ) | |||||
Remeasurements of net defined benefit liabilities | 1,518 | 15,313 | ||||||
Gains or losses on hedging instruments of net investments in foreign operations | (23,263 | ) | 2,378 | |||||
Gains or losses on cash flow hedging instruments | 2,421 | 5,777 | ||||||
Share of other comprehensive income or loss of associates | 2,647 | (2,862 | ) | |||||
|
|
|
| |||||
| (182,489 | ) | 2,907 | ||||||
|
|
|
| |||||
Reclassification from AOCI to retained earnings due to sale of equity securities measured at fair value through other comprehensive income | (89,763 | ) | 7,007 | |||||
Consolidated tax return effect | (39,238 | ) | (37,692 | ) | ||||
|
|
|
| |||||
Others | (521 | ) | — | |||||
|
|
|
| |||||
Income tax expense | 812,304 | 879,393 | ||||||
|
|
|
| |||||
| * | Effect of business combination is excluded. |
32.2 Analysis of the net profit before income tax and income tax expense for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Profit before income tax | 3,131,823 | 3,318,472 | ||||||
Tax at the applicable tax rate* | 850,890 | 902,218 | ||||||
Non-taxable income | (10,318 | ) | (4,035 | ) | ||||
Non-deductible expense | 6,960 | 12,174 | ||||||
Tax credit and tax exemption | (1,197 | ) | (381 | ) | ||||
Temporary difference for which no deferred tax is recognized | 21,066 | 1,253 | ||||||
Income tax refund for tax of prior years | (27,913 | ) | (9,938 | ) | ||||
Income tax expense of overseas branch | 15,795 | 8,615 | ||||||
Tax effect of investments in foreign subsidiaries | (1,804 | ) | 81 | |||||
Foreign subsidiary tax rate difference effect | (8,727 | ) | (774 | ) | ||||
Consolidated tax return effect | (39,238 | ) | (37,692 | ) | ||||
Others | 6,790 | 7,872 | ||||||
|
|
|
| |||||
Income tax expense | 812,304 | 879,393 | ||||||
|
|
|
| |||||
Income tax expense/Profit before income tax (%) | 25.94 | 26.50 | ||||||
153
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| * | Applicable income tax rate for |
32.3 Details of current tax liabilities (income tax payables) and current tax assets (income tax refund receivables) before offsetting as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Tax payables after offsetting 1, 2 | 604,763 | 405,894 | ||||||
Adjustment on consolidated tax payable and others 3 | (39,238 | ) | (37,692 | ) | ||||
Consolidated tax return accounts payables 4 | (528,044 | ) | (359,864 | ) | ||||
|
|
|
| |||||
Current tax payable | 37,481 | 8,338 | ||||||
|
|
|
| |||||
| 1 | Current tax assets of |
| 2 | Includes income tax payable of |
| 3 | Tax expense reduced due to the adoption of consolidated tax return was recognized as tax benefit. |
| 4 | The amount of income tax payable is reclassified as accounts payable, not to the tax authority, but to KB Financial Group Inc. due to the adoption of consolidated tax return. |
33. Dividends
The year-end dividend to the shareholder of the Bank for the year ended December 31, 2020, ofW 2,270 per share (total dividend:W 917,941 million), is to be proposed at the annual general shareholder’s meeting on March 25, 2021. The Group’s consolidated financial statements as of December 31, 2020, do not reflect this dividend payable. According to the resolution of the board of directors on August 27, 2020, the interim dividend per share ofW 1,480 (total dividend:W 598,481 million) was decided and paid in August 2020.
154
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
34. Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||||||||||||||
| Beginning | Changes (excluding reclassifica- tion) | Reclassification to profit or loss | Tax effect | Transfer to retained earnings | Ending | |||||||||||||||||||
Remeasurements of net defined benefit liabilities | (216,067 | ) | (5,629 | ) | — | 1,518 | — | (220,178 | ) | |||||||||||||||
Exchange differences on translating foreign operations | 15,943 | (144,985 | ) | — | 10,516 | — | (118,526 | ) | ||||||||||||||||
Gains on debt securities measured at fair value through other comprehensive income | 56,750 | 129,688 | (84,733 | ) | (13,227 | ) | — | 88,478 | ||||||||||||||||
Gains on equity securities measured at fair value through other comprehensive income | 303,338 | 919,505 | — | (163,101 | ) | (326,410 | ) | 733,332 | ||||||||||||||||
Share of other comprehensive income (loss) of associates | 4,287 | (3,725 | ) | (5,900 | ) | 2,647 | — | (2,691 | ) | |||||||||||||||
Losses on cash flow hedging instruments | (3,691 | ) | (10,553 | ) | 1,750 | 2,421 | — | (10,073 | ) | |||||||||||||||
Gains (losses) on hedging instruments of net investments in foreign operations | (37,226 | ) | 84,592 | — | (23,263 | ) | — | 24,103 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 123,334 | 968,893 | (88,883 | ) | (182,489 | ) | (326,410 | ) | 494,445 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (In millions of Korean won) | 2019 | |||||||||||||||||||||||
| Beginning | Changes (excluding reclassifica- tion) | Reclassification to profit or loss | Tax effect | Transfer to retained earnings | Ending | |||||||||||||||||||
Remeasurements of net defined benefit liabilities | (175,698 | ) | (55,682 | ) | — | 15,313 | — | (216,067 | ) | |||||||||||||||
Exchange differences on translating foreign operations | (10,328 | ) | 25,406 | 5,353 | (4,488 | ) | — | 15,943 | ||||||||||||||||
Gains on debt securities measured at fair value through other comprehensive income | 22,475 | 98,224 | (51,240 | ) | (12,709 | ) | — | 56,750 | ||||||||||||||||
Gains on equity securities measured at fair value through other comprehensive income | 302,014 | (23,657 | ) | — | (502 | ) | 25,483 | 303,338 | ||||||||||||||||
Share of other comprehensive income of associates | (3,259 | ) | 10,408 | — | (2,862 | ) | — | 4,287 | ||||||||||||||||
Gains (losses) on cash flow hedging instruments | 11,539 | (18,108 | ) | (2,899 | ) | 5,777 | — | (3,691 | ) | |||||||||||||||
Losses on hedging instruments of net investments in foreign operations | (30,959 | ) | (9,962 | ) | 1,317 | 2,378 | — | (37,226 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 115,784 | 26,629 | (47,469 | ) | 2,907 | 25,483 | 123,334 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
155
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
35. Trust Accounts
35.1 Financial information of the trust accounts the Group manages, as of December 31, 2020 and 2019, and for the years ended December 31, 2020 and 2019, are as follows:
| Total assets | Operating revenues | |||||||||||||||
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | 2020 | 2019 | ||||||||||||
Consolidated | 4,460,439 | 4,384,959 | 138,422 | 137,017 | ||||||||||||
Unconsolidated | 54,197,612 | 51,685,885 | 1,872,611 | 2,206,184 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 58,658,051 | 56,070,844 | 2,011,033 | 2,343,201 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Financial information of the trust accounts has been prepared in accordance with the Statement of Korea Accounting Standard No.5004, Trust Accounts, and enforcement regulations of the Financial Investment Services under the Financial Investment Services and Capital Markets Act. |
35.2 Significant receivables and payables related to the Group’s trust accounts as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Trust Segment | Assets | |||||||||
Accrued trust fees | 43,590 | 37,340 | ||||||||
Other accrued income | 21,898 | 23,976 | ||||||||
|
|
|
| |||||||
| 65,488 | 61,316 | |||||||||
|
|
|
| |||||||
| Liabilities | ||||||||||
Due to trust accounts | 2,428,780 | 1,268,401 | ||||||||
Accrued interest on due to trust accounts | 5,088 | 7,081 | ||||||||
Deposits | 284,971 | 278,975 | ||||||||
Accrued interest on deposits | 811 | 2,481 | ||||||||
|
|
|
| |||||||
| 2,719,650 | 1,556,938 | |||||||||
|
|
|
| |||||||
Custody Segment | Assets | |||||||||
Accrued trust fees | 6,453 | 6,387 | ||||||||
Liabilities | ||||||||||
Due to trust accounts | 5,114,175 | 3,948,059 | ||||||||
Accrued interest on due to trust accounts | 1,124 | 3,055 | ||||||||
|
|
|
| |||||||
| 5,115,299 | 3,951,114 | |||||||||
|
|
|
| |||||||
156
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
35.3 Significant revenues and expenses related to the Group’s trust accounts for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||
Trust Segment | Revenues | |||||||||
Fees and commissions from trust accounts | 200,718 | 276,985 | ||||||||
Management fees and commissions from retirement pension | 22,238 | 25,741 | ||||||||
Commissions from early termination in trust accounts | 45 | 119 | ||||||||
|
|
|
| |||||||
| 223,001 | 302,845 | |||||||||
|
|
|
| |||||||
| Expenses | ||||||||||
Interest expenses on due to trust accounts | 10,663 | 20,515 | ||||||||
Interest expenses on deposits | 4,013 | 12,926 | ||||||||
|
|
|
| |||||||
| 14,676 | 33,441 | |||||||||
|
|
|
| |||||||
Custody Segment | Revenues | |||||||||
Fees and commissions from trust accounts | 32,878 | 31,099 | ||||||||
| Expenses | ||||||||||
Interest expenses on due to trust accounts | 19,969 | 45,191 | ||||||||
157
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
36. Statement of Cash Flow
36.1 Cash and cash equivalents as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Cash | 2,558,591 | 2,310,852 | ||||||
Checks with other banks | 327,781 | 383,501 | ||||||
Due from the Bank of Korea | 11,649,551 | 8,336,097 | ||||||
Due from other financial institutions | 5,436,346 | 3,450,859 | ||||||
|
|
|
| |||||
| 19,972,269 | 14,481,309 | |||||||
|
|
|
| |||||
Restricted due from financial institutions | (12,773,039 | ) | (8,759,432 | ) | ||||
Due from financial institutions with original maturities over three months | (394,931 | ) | (842,565 | ) | ||||
|
|
|
| |||||
| (13,167,970 | ) | (9,601,997 | ) | |||||
|
|
|
| |||||
| 6,804,299 | 4,879,312 | |||||||
|
|
|
| |||||
36.2 Significant non-cash transactions for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Decrease in loans due to write-offs | 648,967 | 539,584 | ||||||
Changes in accumulated other comprehensive income from valuation of debt securities measured at fair value through other comprehensive income | 31,728 | 34,275 | ||||||
Changes in accumulated other comprehensive income from valuation of equity securities measured at fair value through other comprehensive income | 429,994 | (11,713 | ) | |||||
Changes in accumulated other comprehensive income from valuation of investments in associates | (6,978 | ) | 7,546 | |||||
Changes in financial investments due to debt-for-equity swap | 13,820 | 88,958 | ||||||
36.3 Cash inflows and outflows from income tax, interest and dividends for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Activities | 2020 | 2019 | |||||||||
Income tax paid | Operating | 836,703 | 961,615 | |||||||||
Interest received | Operating | 10,812,128 | 10,968,984 | |||||||||
Interest paid | Operating | 4,258,011 | 4,325,880 | |||||||||
Dividends received | Operating | 105,098 | 101,657 | |||||||||
Dividends paid | Financing | 1,330,407 | 667,226 | |||||||||
Interest (dividends) paid on hybrid securities | Financing | 25,658 | — | |||||||||
158
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
36.4 Changes in liabilities arising from financial activities for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||||||||||
| (In millions of Korean won) | Derivatives held for hedging * | Borrowings | Debentures | Due to trust accounts | Lease liabilities | Deposits for letter of guarantees | Other payables | Total | ||||||||||||||||||||||||
Beginning | (114,590 | ) | 19,141,262 | 18,739,992 | 5,216,460 | 344,417 | 286,946 | 61,284 | 43,675,771 | |||||||||||||||||||||||
Cash flow | (16,202 | ) | 6,332,405 | 8,298,952 | 2,326,495 | (163,382 | ) | 169,500 | (31,122 | ) | 16,916,646 | |||||||||||||||||||||
New lease and termination | — | — | — | — | 158,859 | — | — | 158,859 | ||||||||||||||||||||||||
Exchange differences | — | (479,481 | ) | (324,375 | ) | — | — | — | (45,273 | ) | (849,129 | ) | ||||||||||||||||||||
Changes in fair values | (36,017 | ) | — | 12,018 | — | — | — | — | (23,999 | ) | ||||||||||||||||||||||
Changes from business combination | — | 1,876,826 | 229,277 | — | 32,436 | — | 419,738 | 2,558,277 | ||||||||||||||||||||||||
Other changes from non-cash transactions | 23,969 | (181 | ) | 13,719 | — | 8,299 | 90 | 14,681 | 60,577 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Ending | (142,840 | ) | 26,870,831 | 26,969,583 | 7,542,955 | 380,629 | 456,536 | 419,308 | 62,497,002 | |||||||||||||||||||||||
|
|
|
|
|
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|
|
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|
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|
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| |||||||||||||||||
| 2019 | ||||||||||||||||||||||||||||||||
| (In millions of Korean won) | Derivatives held for hedging * | Borrowings | Debentures | Due to trust accounts | Lease liabilities | Deposits for letter of guarantees | Other payables | Total | ||||||||||||||||||||||||
Beginning | 14,643 | 17,496,056 | 23,163,585 | 5,285,107 | 340,522 | 156,364 | 104,184 | 46,560,461 | ||||||||||||||||||||||||
Cash flow | (28,631 | ) | 1,290,505 | (4,561,661 | ) | (68,647 | ) | (164,201 | ) | 130,566 | (32,864 | ) | (3,434,933 | ) | ||||||||||||||||||
New lease and termination | — | — | — | — | 160,451 | — | — | 160,451 | ||||||||||||||||||||||||
Exchange differences | — | 355,151 | 56,463 | — | — | — | — | 411,614 | ||||||||||||||||||||||||
Changes in fair values | (108,220 | ) | — | 67,297 | — | — | — | — | (40,923 | ) | ||||||||||||||||||||||
Changes from business combination | — | — | — | — | — | — | 93,277 | 93,277 | ||||||||||||||||||||||||
Other changes from non-cash transactions | 7,618 | (450 | ) | 14,308 | — | 7,645 | 16 | (103,313 | ) | (74,176 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Ending | (114,590 | ) | 19,141,262 | 18,739,992 | 5,216,460 | 344,417 | 286,946 | 61,284 | 43,675,771 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| * | Derivatives held for hedging purposes are the net amount after offsetting liabilities from assets. |
159
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
37. Contingent Liabilities and Commitments
37.1 Details of acceptances and guarantees as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Confirmed acceptances and guarantees | ||||||||
Confirmed acceptances and guarantees in Korean won | ||||||||
Acceptances and guarantees for KB purchasing loan | 144,457 | 161,314 | ||||||
Performance bond | 3,476 | 3,686 | ||||||
Refund guarantees | 27,811 | 28,021 | ||||||
Others | 1,017,561 | 715,116 | ||||||
|
|
|
| |||||
| 1,193,305 | 908,137 | |||||||
|
|
|
| |||||
Confirmed acceptances and guarantees in foreign currencies | ||||||||
Acceptances of letter of credit | 221,422 | 155,151 | ||||||
Letter of guarantees | 45,693 | 49,754 | ||||||
Bid bond | 72,037 | 37,765 | ||||||
Performance bond | 703,826 | 718,097 | ||||||
Refund guarantees | 801,445 | 1,022,646 | ||||||
Others | 3,084,067 | 2,935,939 | ||||||
|
|
|
| |||||
| 4,928,490 | 4,919,352 | |||||||
|
|
|
| |||||
Financial guarantees | ||||||||
Acceptances and guarantees for issuance of debenture | 10,040 | — | ||||||
Acceptances and guarantees for mortgage | 89,302 | 47,384 | ||||||
Overseas debt guarantees | 410,470 | 406,680 | ||||||
International financing guarantees in foreign currencies | 197,097 | 231,685 | ||||||
Other financial guarantees in Korean won | 50,950 | 230,000 | ||||||
|
|
|
| |||||
| 757,859 | 915,749 | |||||||
|
|
|
| |||||
| 6,879,654 | 6,743,238 | |||||||
|
|
|
| |||||
Unconfirmed acceptances and guarantees | ||||||||
Guarantees of letter of credit | 2,094,989 | 1,845,509 | ||||||
Refund guarantees | 344,112 | 654,496 | ||||||
|
|
|
| |||||
| 2,439,101 | 2,500,005 | |||||||
|
|
|
| |||||
| 9,318,755 | 9,243,243 | |||||||
|
|
|
| |||||
160
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
37.2 Credit quality of the acceptances and guarantees exposure as of December 31, 2020 and 2019, are as follows:
(In millions of Korean won) | December 31, 2020 | |||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Total | ||||||||||||||
| Non-impaired | Impaired | |||||||||||||||
Confirmed acceptances and guarantees * |
| |||||||||||||||
Grade 1 | 4,377,798 | 1,119 | — | 4,378,917 | ||||||||||||
Grade 2 | 2,281,423 | 47,438 | — | 2,328,861 | ||||||||||||
Grade 3 | 27,588 | 85,321 | — | 112,909 | ||||||||||||
Grade 4 | 14,925 | 33,440 | 501 | 48,866 | ||||||||||||
Grade 5 | — | 453 | 9,648 | 10,101 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,701,734 | 167,771 | 10,149 | 6,879,654 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Unconfirmed acceptances and guarantees * | ||||||||||||||||
Grade 1 | 1,422,528 | 771 | — | 1,423,299 | ||||||||||||
Grade 2 | 912,209 | 28,506 | — | 940,715 | ||||||||||||
Grade 3 | 11,399 | 23,069 | — | 34,468 | ||||||||||||
Grade 4 | 2,369 | 29,934 | — | 32,303 | ||||||||||||
Grade 5 | — | 589 | 7,727 | 8,316 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,348,505 | 82,869 | 7,727 | 2,439,101 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 9,050,239 | 250,640 | 17,876 | 9,318,755 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Total | ||||||||||||||
| Non-impaired | Impaired | |||||||||||||||
Confirmed acceptances and guarantees * |
| |||||||||||||||
Grade 1 | 4,220,046 | 696 | — | 4,220,742 | ||||||||||||
Grade 2 | 2,105,637 | 38,271 | — | 2,143,908 | ||||||||||||
Grade 3 | 93,074 | 81,317 | — | 174,391 | ||||||||||||
Grade 4 | 18,773 | 172,440 | — | 191,213 | ||||||||||||
Grade 5 | — | 2,873 | 10,111 | 12,984 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,437,530 | 295,597 | 10,111 | 6,743,238 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Unconfirmed acceptances and guarantees * | ||||||||||||||||
Grade 1 | 1,228,258 | 1,289 | — | 1,229,547 | ||||||||||||
Grade 2 | 1,121,159 | 32,413 | — | 1,153,572 | ||||||||||||
Grade 3 | 17,091 | 20,957 | — | 38,048 | ||||||||||||
Grade 4 | 4,236 | 62,964 | — | 67,200 | ||||||||||||
Grade 5 | — | 170 | 11,468 | 11,638 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,370,744 | 117,793 | 11,468 | 2,500,005 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 8,808,274 | 413,390 | 21,579 | 9,243,243 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Applied same criteria as the credit quality classification of loans. |
161
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
37.3 Acceptances and guarantees by counterparty as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||
| Confirmed guarantees | Unconfirmed guarantees | Total | Proportion (%) | |||||||||||||
Large companies | 5,549,971 | 1,770,235 | 7,320,206 | 78.55 | ||||||||||||
Small and medium-sized companies | 695,860 | 459,487 | 1,155,347 | 12.40 | ||||||||||||
Public sector and others | 633,823 | 209,379 | 843,202 | 9.05 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,879,654 | 2,439,101 | 9,318,755 | 100.00 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Confirmed guarantees | Unconfirmed guarantees | Total | Proportion (%) | |||||||||||||
Large companies | 5,962,004 | 1,904,346 | 7,866,350 | 85.10 | ||||||||||||
Small and medium-sized companies | 650,612 | 397,539 | 1,048,151 | 11.34 | ||||||||||||
Public sector and others | 130,622 | 198,120 | 328,742 | 3.56 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,743,238 | 2,500,005 | 9,243,243 | 100.00 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
37.4 Acceptances and guarantees by industry as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||
| Confirmed guarantees | Unconfirmed guarantees | Total | Proportion (%) | |||||||||||||
Financial institutions | 644,915 | 5,870 | 650,785 | 6.98 | ||||||||||||
Manufacturing | 2,992,319 | 1,285,530 | 4,277,849 | 45.91 | ||||||||||||
Service | 920,352 | 89,457 | 1,009,809 | 10.84 | ||||||||||||
Wholesale and retail | 1,086,772 | 891,619 | 1,978,391 | 21.23 | ||||||||||||
Construction | 411,601 | 14,488 | 426,089 | 4.57 | ||||||||||||
Public sector | 104,925 | 103,285 | 208,210 | 2.23 | ||||||||||||
Others | 718,770 | 48,852 | 767,622 | 8.24 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,879,654 | 2,439,101 | 9,318,755 | 100.00 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Confirmed guarantees | Unconfirmed guarantees | Total | Proportion (%) | |||||||||||||
Financial institutions | 260,974 | 23,999 | 284,973 | 3.08 | ||||||||||||
Manufacturing | 3,373,220 | 1,627,840 | 5,001,060 | 54.11 | ||||||||||||
Service | 1,187,516 | 88,158 | 1,275,674 | 13.80 | ||||||||||||
Wholesale and retail | 1,126,976 | 597,998 | 1,724,974 | 18.66 | ||||||||||||
Construction | 467,114 | 20,590 | 487,704 | 5.28 | ||||||||||||
Public sector | 107,481 | 81,895 | 189,376 | 2.05 | ||||||||||||
Others | 219,957 | 59,525 | 279,482 | 3.02 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,743,238 | 2,500,005 | 9,243,243 | 100.00 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
162
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
37.5 Details of commitments as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Commitments | ||||||||
Corporate loan commitments | 39,529,706 | 41,340,286 | ||||||
Retail loan commitments | 46,373,309 | 42,492,182 | ||||||
Other commitments in Korean won | 1,300,000 | 1,300,000 | ||||||
Purchase of other securities | 4,535,281 | 2,733,757 | ||||||
|
|
|
| |||||
| 91,738,296 | 87,866,225 | |||||||
|
|
|
| |||||
Financial Guarantees | ||||||||
Credit line | 2,913,260 | 1,797,802 | ||||||
Purchase of securities | 683,800 | 591,500 | ||||||
|
|
|
| |||||
| 3,597,060 | 2,389,302 | |||||||
|
|
|
| |||||
| 95,335,356 | 90,255,527 | |||||||
|
|
|
| |||||
37.6 Other Matters (including litigation)
a) The Group has 51 pending lawsuits as a plaintiff (excluding simple lawsuits related to the collection or management of loans), with an aggregate claims ofW 210,298 million, and details of pending lawsuits in which the Group is a defendant as of December 31, 2020, are as follows:
(in number of cases, in millions of Korean won)
Lawsuits | No. of cases | Amount | Description of the lawsuits | Status of the lawsuits | ||||||||
Request for a return of redemption amount | 1 | 48,068 | Kookmin Bank invested the assets entrusted by OO Asset Management and OO Investment Trust Management in the Fairfield Sentry Limited, and Fairfield Sentry Limited reinvested the assets in Bernard L. Madoff Investment Securities LLC managed by Bernard Madoff (Bernard L. Madoff Investment Securities LLC is in the liquidation process due to Ponzi scheme fraud-related losses). Bankruptcy trustee of Bernard L. Madoff Investment Securities LLC filed a lawsuit against Kookmin Bank seeking to return the amount of redemptions received by Kookmin Bank through Fairfield Sentry Limited. | Application for incineration by the defendant has been denied, and further proceedings are scheduled. [Related litigation is in progress at the New York Southern District Bankruptcy Court (10-03777) at the written complaint review stage] | ||||||||
Request for compensation for damages | 1 | 1,629,557 | The plaintiff filed a lawsuit for compensation for damages against Indonesian Financial Supervisory Authority (OJK) and Kookmin Bank as joint defendants, claiming that the capital increase and Kookmin Bank’s acquisition of PT Bank Bukopin TBK was illegal in violation of local laws and regulations in Indonesia. | It is difficult to accurately predict the result of the lawsuit as of now because the complaint has not been received, but it is judged that the possibility that the result of this lawsuit will have a significant impact on the financial position of Kookmin Bank is low. | ||||||||
Others | 126 | 161,605 | Others (excluding simple lawsuits related to the collection or management of loans) | |||||||||
|
|
|
| |||||||||
| 128 | 1,839,230 | |||||||||||
|
|
|
| |||||||||
163
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
b) The proliferation of COVID-19 has had a negative impact on the global economy, which has a greater impact than expected credit losses and potential impairment of assets in a particular portfolio, which can negatively affect the profit generation capability of the Group as follows:
| • | There is a possibility of uncertainty about the credit risk of a borrower that could be affected by COVID-19. |
| • | Uncertainty may arise about forward-looking macroeconomic information related to expected credit losses. |
| • | Korean won may depreciate against major foreign currencies. This may result in an increase in principal and interest payments on liabilities denominated in foreign currencies, and losses on foreign exchanges transactions. |
| • | A significant decrease in the fair value of the Group’s investment in an entity that could be affected by COVID-19 pandemic can occur. |
Meanwhile, the Group’s accounting policy related to COVID-19 is described in Note 2.4 Critical accounting estimates and the impact on expected credit losses is described in Note 11.1 Changes in allowances for credit losses of loans and Note 22.2 Changes in provisions for credit losses of unused loan commitments, acceptances and guarantees.
c) The Group has entered into an agreement with PT Bosowa Corporindo, a major shareholder of PT Bank Bukopin TBK. Under this agreement, the Group and PT Bosowa Corporindo have a right of first refusal and a tag-along right. In addition, the Group can exercise its drag-along right for two years from the time three years have elapsed since the acquisition date (July 27, 2018) in certain cases, such as violation of the agreement between shareholders.
d) The face values of the securities sold to general customers through tellers’ sale amount toW 372 million as of December 31, 2019.
164
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
38. Subsidiaries
38.1 Details of subsidiaries as of December 31, 2020, are as follows:
Investor | Investee | Ownership (%) | Location | Industry | ||||
Kookmin Bank | Kookmin Bank Cambodia Plc. | 100.00 | Cambodia | Banking and foreign exchange transaction | ||||
Kookmin Bank | Kookmin Bank (China) Ltd. | 100.00 | China | Banking and foreign exchange transaction | ||||
Kookmin Bank | KB Microfinance Myanmar Co., Ltd. | 100.00 | Myanmar | Microfinance services | ||||
Kookmin Bank | KB Bank Myanmar Co., Ltd. | 100.00 | Myanmar | Banking and foreign exchange transaction | ||||
Kookmin Bank | PRASAC Microfinance Institution Plc. | 70.00 | Cambodia | Microfinance services | ||||
Kookmin Bank | PT Bank Bukopin TBK | 67.00 | Indonesia | Banking and foreign exchange transaction | ||||
PT Bank Bukopin TBK | PT Bank Syariah Bukopin | 92.78 | Indonesia | Banking | ||||
PT Bank Bukopin TBK | PT Bukopin Finance | 97.04 | Indonesia | Installment financing | ||||
Kookmin Bank | Personal pension trust and 10 others1 | 0.00 | Korea | Trust | ||||
Kookmin Bank | Silver Investment 2nd Inc. and 48 others2 | 0.00 | Korea | Asset-backed securitization and others | ||||
Kookmin Bank | KB Wise Star Private Real Estate Feeder Fund No.12 | 86.00 | Korea | Investment trust | ||||
Kookmin Bank | KB Haeoreum Private Securities Investment Trust No.832 | 99.95 | Korea | Investment trust | ||||
Kookmin Bank | Kiwoom Frontier Private Placement Fund No.10 (Bond)2 | 99.92 | Korea | Investment trust | ||||
Kookmin Bank | Woori Safe Plus Qualified Private Trust S-8 (Bond)2 | 99.96 | Korea | Investment trust | ||||
Kookmin Bank | Mirae Asset Triumph Global Privately Placed Feeder Investment Trust No.12 | 99.92 | Korea | Investment trust | ||||
Mirae Asset Triumph Global Privately Placed Feeder Investment Trust No.1 | Mirae Asset Triumph Global Privately Placed Master Investment Trust No.1 | 100.00 | Korea | Investment trust | ||||
Mirae Asset Triumph Global Privately Placed Feeder Investment Trust No.1 | Mirae Asset Triumph Global Privately Placed Master Investment Trust No.2 | 100.00 | Korea | Investment trust | ||||
Kookmin Bank | NH-Amundi Global Private Securities Investment Trust No.1 (BOND)2 | 99.86 | Korea | Investment trust | ||||
Kookmin Bank | Meritz Private Real Estate Fund No.9-22 | 99.98 | Korea | Investment trust | ||||
Kookmin Bank | AIP US Red Private Real Estate Trust No.102 | 99.97 | Korea | Investment trust | ||||
Kookmin Bank | KB KBSTAR 3-Year Futures Inverse Securities ETF (Debt-Derivative)2 | 95.09 | Korea | Investment trust | ||||
Kookmin Bank | Samsung KODEX 10Y F-LKTB Inverse ETF2 | 98.77 | Korea | Investment trust |
165
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Kookmin Bank | KB Core Blind Private Estate Fund No.12 | 90.09 | Korea | Investment trust | ||||
KB Core Blind Private Estate Fund No.1 | KB Wise Star Private Real Estate Feeder Fund No.32 | 46.65 | Korea | Investment trust | ||||
Kookmin Bank | KB Global Private Real Estate Debt Fund No.3 (USD)2 | 99.50 | Korea | Investment trust | ||||
Kookmin Bank | UBS Hana Professional Investor Private Investment Trust No.1 (Bond)2 | 99.90 | Korea | Investment trust | ||||
Kookmin Bank | Mirae Asset Triumph Privately Placed Investment Trust No.72 | 98.50 | Korea | Investment trust | ||||
Kookmin Bank | Samsung Credit Value Plus Private Investment Trust (Bond)2 | 99.50 | Korea | Investment trust | ||||
Kookmin Bank | KB Emerging Markets Dept Private Securities Fund(USD)(Bond)2 | 99.83 | Korea | Investment trust | ||||
Kookmin Bank | Samsung SRA Private Real Estate Investment Trust No.28D2 | 99.50 | Korea | Investment trust | ||||
Kookmin Bank | KIM Basic Private Investment Trust No.102 (Bond)2 | 99.90 | Korea | Investment trust | ||||
Kookmin Bank | KB Korea Short Term Premium Private Securities No.16(USD)(Bond) | 85.71 | Korea | Investment trust |
| 1 | The Group controls the trust because it has power to determine the management performance of the trust and is exposed to variable returns that absorb losses through the guarantees of payment of principal, or payment of principal and fixed rate of return. |
| 2 | The Group controls these investees because it is significantly exposed to variable returns from the investees’ performance and has ability to affect those returns through its power. |
The Group holds more than a majority of the ownership interests of Koratevien Specialist Private Equity Fund No.1 and 2 other investment trusts but does not have the power over relevant activities in accordance with agreements with trust and other shareholders, therefore these entities are not consolidated.
166
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
38.2 The condensed financial information of major subsidiaries as of December 31, 2020 and 2019, and for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | 2020 | ||||||||||||||||||
| Assets | Liabilities | Equity | Operating revenue | Profit (loss) for the period | ||||||||||||||||
Kookmin Bank Int`l Ltd.(London)* | — | — | — | — | (4,587 | ) | ||||||||||||||
Kookmin Bank Cambodia Plc. | 385,974 | 287,936 | 98,038 | 21,841 | 5,499 | |||||||||||||||
Kookmin Bank (China) Ltd. | 3,323,048 | 2,874,258 | 448,790 | 167,781 | 13,967 | |||||||||||||||
KB Microfinance Myanmar Co., Ltd. | 36,112 | 13,004 | 23,108 | 7,351 | 388 | |||||||||||||||
PRASAC Microfinance Institution Plc. | 3,914,890 | 3,376,992 | 537,898 | 588,359 | 118,339 | |||||||||||||||
PT Bank Bukopin TBK | 5,841,168 | 5,530,648 | 310,520 | 106,358 | (43,402 | ) | ||||||||||||||
KB Bank Myanmar Co., Ltd. | 220,105 | 2,505 | 217,600 | — | — | |||||||||||||||
Personal pension trust and 10 others | 4,483,007 | 4,365,699 | 117,308 | 138,481 | 2,841 | |||||||||||||||
| * | Liquidated during the year ended December 31, 2020. |
| (In millions of Korean won) | December 31, 2019 | 2019 | ||||||||||||||||||
| Assets | Liabilities | Equity | Operating revenue | Profit (loss) for the period | ||||||||||||||||
Kookmin Bank Int’l Ltd. (London) | 37,404 | 887 | 36,517 | 558 | 293 | |||||||||||||||
Kookmin Bank Cambodia Plc. | 307,604 | 208,670 | 98,934 | 15,815 | 2,851 | |||||||||||||||
Kookmin Bank (China) Ltd. | 3,032,642 | 2,599,516 | 433,126 | 135,117 | 12,462 | |||||||||||||||
KB Microfinance Myanmar Co., Ltd. | 24,188 | 2,559 | 21,629 | 4,349 | (149 | ) | ||||||||||||||
Personal pension trust and 10 others | 4,413,755 | 4,299,288 | 114,467 | 141,162 | 3,515 | |||||||||||||||
38.3 The Characteristics of Risks Associated with Consolidated Structured Entities
The terms of contractual arrangements to provide financial support to consolidated structured entities are as follows:
38.3.1 The Bank provides the capital commitments ofW 172,000 million to KB Wise Star Private Real Estate Feeder Fund No.1, of whichW 817 million has not been executed, and ofW 54,389 million to Meritz Private Real Estate Fund No.9-2, of whichW 12,319 million has not been executed, and ofW 100,000 million to KB Core Blind Private Estate Fund No.1, of whichW 175 million has not been executed.
38.3.2 The Bank provides purchase commitment and credit line to structured entities that are subsidiaries. The purchase commitment guarantees that the Bank will purchase and pay any remaining commercial paper securities issued by structured entities. The credit line agreement requires the Bank to provide loans under certain conditions if there is a reason for suspension of issuance of commercial paper securities or if structured entities become insolvency due to other reasons.
| (In millions of Korean won) | December 31, 2020 | |||
Silver Investment 2nd Inc. | 50,000 | |||
KBM the 1st L.L.C. | 35,285 | |||
KLD the 1st L.L.C. | 21,700 | |||
LOG the 3rd L.L.C. | 24,300 | |||
167
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KBL Incheon 1st L.L.C. | 101,000 | |||
KB DTower 1st L.L.C. | 50,291 | |||
KB Display 1st L.L.C. | 100,440 | |||
KB Firstpark L.L.C. | 33,650 | |||
KB Alminium 1st L.L.C. | 50,254 | |||
KB INO 2nd L.L.C. | 30,152 | |||
KBH the 5th L.L.C. | 25,142 | |||
KB Happy 1st L.L.C. | 50,162 | |||
KL Industrial 2nd L.L.C. | 20,200 | |||
KB Socio the 1st L.L.C. | 30,229 | |||
KB Industry the 1st L.L.C. | 20,197 | |||
KBST the 1st L.L.C. | 30,104 | |||
KB Geumjeong Hill L.L.C. | 61,600 | |||
KBH the 4th L.L.C. | 24,200 | |||
Great Forest the 1st L.L.C. | 22,188 | |||
KBC the 3rd L.L.C. | 35,095 | |||
KB Future the 1st L.L.C. | 30,220 | |||
KBH the 6th L.L.C. | 50,078 | |||
Beomuh Landmark the 2nd L.L.C. | 58,496 | |||
KB Industry 2nd L.L.C. | 20,200 | |||
KB Firstville the 1st L.L.C. | 15,100 | |||
KB Handok the 1st L.L.C. | 30,079 | |||
KB Heracles the 1st L.L.C. | 25,162 | |||
SLT Gamsam Co., Ltd. | 16,900 | |||
K Plus the 1st L.L.C. | 200,226 | |||
KB Hwaseong the 1st L.L.C. | 21,100 | |||
KB Livv H 1st L.L.C. | 30,053 | |||
KB Beomcheon Land 1st L.L.C. | 28,400 | |||
KB Eagles 1st Co., Ltd. | 30,052 | |||
Livv H 1st L.L.C. | 50,118 | |||
KB Cheongla Hill Co., Ltd. | 60,143 | |||
KB Livv l 1st Co., Ltd. | 50,126 | |||
KB Manchon Harrington Co., Ltd. | 21,098 | |||
KB Penta Co., Ltd. | 17,689 | |||
KB Eagles 2nd Co., Ltd. | 50,121 | |||
KB Dongin Co., Ltd. | 20,056 | |||
KBH Steal Co., Ltd. | 150,159 | |||
Ryan Mobility 1st L.L.C. | 50,103 | |||
KB Great Bear 1st L.L.C. | 90,183 | |||
KB Chemical 1st Co., Ltd. | 50,107 | |||
KB Eugene 1st Co., Ltd. | 10,055 |
38.3.3 The Group provides the guarantees of payment of principal, or principal and fixed rate of return in case the operating results of the trusts are less than the guaranteed principal, or principal and fixed rate of return.
38.4 Changes in Subsidiaries
PRASAC Microfinance Institution Plc. and 28 other subsidiaries were newly included in the scope of consolidation, and Kookmin Bank Int’l Ltd. (London) and 9 other subsidiaries were excluded from the scope of consolidation for the year ended December 31, 2020.
168
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
38.5 Net Cash Flow from Changes in Subsidiaries
The net cash outflows arising from acquisition of subsidiaries and disposal of subsidiaries are amounting toW384,772 million andW3,849 million for the year ended December 31, 2020, respectively.
39. Unconsolidated Structured Entity
39.1 The nature, purpose and activities of the unconsolidated structured entities and how the structured entities are financed, are as follows:
Nature | Purpose | Activities | Methods of financing | |||
| Asset-backed securitization | Early cash generation through transfer of securitized assets Fees earned through services to SPC, such as providing lines of credit and ABCP purchase commitments | Fulfillment of asset-backed securitization plan Purchase and collection of securitized assets Issuance and repayment of ABS and ABCP | Issuance of ABS and ABCP based on securitized assets | |||
| Structured financing | Granting PF loans to SOC and real estate Granting loans to ships/aircrafts SPC Project financing to M&A and others | Construction of SOC and real estate Building ships, construction and purchase of aircrafts M&A | Loan commitments through credit line, providing credit line and investment agreements | |||
| Investment funds | Investment in beneficiary certificates Investment in PEF and partnerships | Management of fund assets Payment of fund fees and allocation of fund profits | Sales of beneficiary certificate instruments Investment from general partners and limited partners | |||
169
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
39.2 Details of scale of unconsolidated structured entities and nature of the risks associated with the Group’s interests in unconsolidated structured entities as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||
| Asset-backed securitization | Structured financing | Investment funds | Total | |||||||||||||
Total assets of unconsolidated structured entities | 83,411,026 | 36,339,952 | 79,115,376 | 198,866,354 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Carrying amount in the financial statements | ||||||||||||||||
Assets | ||||||||||||||||
Financial assets at fair value through profit or loss | 260,131 | 59,648 | 2,521,607 | 2,841,386 | ||||||||||||
Derivative financial assets | 1,579 | — | — | 1,579 | ||||||||||||
Loans measured at amortized cost | 105,096 | 2,727,511 | — | 2,832,607 | ||||||||||||
Financial investments | 7,180,970 | — | — | 7,180,970 | ||||||||||||
Investments in associates | — | — | 326,883 | 326,883 | ||||||||||||
Other assets | — | 545 | 2 | 547 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 7,547,776 | 2,787,704 | 2,848,492 | 13,183,972 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Deposits | 344,221 | 612,022 | 57,277 | 1,013,520 | ||||||||||||
Derivative financial liabilities | 1,307 | — | — | 1,307 | ||||||||||||
Other liabilities | 1,997 | 7,457 | 5 | 9,459 | ||||||||||||
| 347,525 | 619,479 | 57,282 | 1,024,286 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Maximum exposure | ||||||||||||||||
Assets held * | 7,547,776 | 2,787,704 | 2,848,492 | 13,183,972 | ||||||||||||
Purchase and investment commitments | — | — | 4,248,322 | 4,248,322 | ||||||||||||
Acceptances and guarantees and unused line of credit | 3,597,517 | 1,691,150 | — | 5,288,667 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 11,145,293 | 4,478,854 | 7,096,814 | 22,720,961 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Methods of determining the maximum exposure | | Providing lines of credit / Purchase commitments/ Acceptances and guarantees and loan commitments | | | Loan commitments / Investment commitments / Purchase commitments and acceptances and guarantees | | | Investment commitments | | |||||||
170
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Asset-backed Securitization | Structured financing | Investment funds | Total | ||||||||||||
Total assets of unconsolidated structured entities | 69,638,263 | 39,608,941 | 44,867,926 | 154,115,130 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Carrying amount in the financial statements | ||||||||||||||||
Assets | ||||||||||||||||
Financial assets at fair value through profit or loss | 228,848 | 21,778 | 2,153,921 | 2,404,547 | ||||||||||||
Derivative financial assets | 1,367 | — | — | 1,367 | ||||||||||||
Loans measured at amortized cost | 124,054 | 2,686,643 | — | 2,810,697 | ||||||||||||
Financial investments | 4,680,995 | — | — | 4,680,995 | ||||||||||||
Investments in associates | — | — | 334,713 | 334,713 | ||||||||||||
Other assets | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 5,035,264 | 2,708,421 | 2,488,634 | 10,232,319 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Deposits | 409,246 | 523,705 | 111,908 | 1,044,859 | ||||||||||||
Other liabilities | 1,072 | 654 | — | 1,726 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 410,318 | 524,359 | 111,908 | 1,046,585 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Maximum exposure | ||||||||||||||||
Assets held * | 5,035,264 | 2,708,421 | 2,488,634 | 10,232,319 | ||||||||||||
Purchase and investment commitments | — | — | 2,142,836 | 2,142,836 | ||||||||||||
Acceptances and guarantees and unused line of credit | 2,398,467 | 1,798,208 | — | 4,196,675 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 7,433,731 | 4,506,629 | 4,631,470 | 16,571,830 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Methods of determining the maximum exposure | | Providing lines of credit / Purchase commitments/ Acceptances and guarantees and loan commitments | | | Loan commitments / Investment commitments / Purchase commitments and acceptances and guarantees | | | Investment commitments | | |||||||
| * | Maximum exposure includes the asset amounts, after deducting loss (provision for credit losses, impairment losses and others), recognized in the consolidated financial statements of the Group. |
171
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
40. Lease
40.1 The Group as a Lessee
40.1.1 Amounts recognized in the consolidated statements of financial position related to lease as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Right-of-use property and equipment * | ||||||||
Real estate | 391,567 | 341,288 | ||||||
Vehicles | 9,747 | 8,207 | ||||||
Others | 14,835 | 15,319 | ||||||
|
|
|
| |||||
| 416,149 | 364,814 | |||||||
|
|
|
| |||||
Right-of-use intangible assets * | 4,617 | 9,639 | ||||||
|
|
|
| |||||
| 420,766 | 374,453 | |||||||
|
|
|
| |||||
Lease liabilities * | 380,629 | 344,417 | ||||||
| * | Included in property and equipment, intangible assets and other liabilities. |
40.1.2 Amounts recognized in the consolidated statements of comprehensive income related to lease for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Depreciation and amortization of right-of-use assets | ||||||||
Real estate | 196,479 | 197,909 | ||||||
Vehicles | 10,157 | 13,684 | ||||||
Others | 8,570 | 6,972 | ||||||
Intangible asset | 5,022 | 6,519 | ||||||
|
|
|
| |||||
| 220,228 | 225,084 | |||||||
|
|
|
| |||||
Interest expenses on the lease liabilities | 8,298 | 7,645 | ||||||
Expense relating to short-term lease | 3,077 | 1,996 | ||||||
Expense relating to leases of low-value assets that are not short-term lease | 2,325 | 1,034 | ||||||
Total cash outflow for lease for the years ended December 31, 2020 and 2019 wasW 165,287 million andW 167,442 million, respectively.
40.2 The Group as an Operating Lessor
The future minimum lease receipts arising from the non-cancellable lease contracts as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Up to 1 year | 20,057 | 23,796 | ||||||
1-5 years | 43,404 | 41,193 | ||||||
Over 5 years | 1,060 | 4,366 | ||||||
|
|
|
| |||||
| 64,521 | 69,355 | |||||||
|
|
|
| |||||
172
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
41. Related Party Transactions
According to Korean IFRS No.1024, the Group includes the Parent, the Parent’s subsidiaries, associates, associates of the Parent’s subsidiaries, key management (including family members), and post-employment benefit plans of the Group and its related party companies in the scope of related parties. The Group discloses balances (receivables and payables) and other amounts arising from transactions with related parties in the notes to the consolidated financial statements. Refer to Note 13 for details of investments in associates.
Key management includes the directors of the Bank and the executive directors (vice-presidents and above) of the Bank and companies where the directors and/or their close family members have control or joint control.
41.1 Profit or loss arising from transactions with related parties for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||
Parent | ||||||||||
KB Financial Group Inc. | Fee and commission income | 7,183 | 5,355 | |||||||
Other non-operating income | 1,057 | 932 | ||||||||
Interest expense | 410 | 1,574 | ||||||||
Fee and commission expense | — | 1 | ||||||||
Other operating expense | 190 | 69 | ||||||||
General and administrative expenses | 925 | 841 | ||||||||
Parent’s subsidiaries | ||||||||||
KB Securities Co., Ltd. | Interest income | 2,054 | 1,325 | |||||||
Fee and commission income | 19,298 | 14,298 | ||||||||
Gains on financial instruments at fair value through profit or loss | 43,739 | 39,373 | ||||||||
Reversal of credit losses | — | 6 | ||||||||
Other non-operating income | 10,188 | 8,849 | ||||||||
Interest expense | 2,874 | 6,307 | ||||||||
Fee and commission expense | 666 | 726 | ||||||||
Losses on financial instruments at fair value through profit or loss | 42,394 | 13,616 | ||||||||
Other operating expense | — | 134 | ||||||||
Provision for credit losses | 92 | — | ||||||||
KB Asset Management Co., Ltd. | Fee and commission income | 1,465 | 1,201 | |||||||
Other non-operating income | 1 | 4 | ||||||||
Interest expense | 59 | 90 | ||||||||
Fee and commission expense | 1,571 | 986 | ||||||||
Losses on financial instruments at fair value through profit or loss | 373 | — | ||||||||
Other operating expense | — | 15 | ||||||||
| General and administrative expenses | 500 | 500 | ||||||||
KB Real Estate Trust Co., Ltd. | Fee and commission income | 232 | 211 | |||||||
Other non-operating income | 38 | 45 | ||||||||
Interest expense | 207 | 328 | ||||||||
Fee and commission expense | 2,406 | 1,899 | ||||||||
KB Investment Co., Ltd. | Fee and commission income | 48 | 42 | |||||||
173
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Interest expense | 443 | 1,019 | ||||||||
KB Credit Information Co., Ltd. | Fee and commission income | 69 | 64 | |||||||
Other non-operating income | 216 | 232 | ||||||||
Interest expense | 104 | 134 | ||||||||
Fee and commission expense | 21,898 | 20,508 | ||||||||
KB Data System Co., Ltd. | Fee and commission income | 270 | 225 | |||||||
Other non-operating income | 149 | 92 | ||||||||
Interest expense | 242 | 309 | ||||||||
General and administrative expenses | 54,869 | 50,074 | ||||||||
KB Life Insurance Co., Ltd. | Fee and commission income | 16,534 | 14,075 | |||||||
Gains on financial instruments at fair value through profit or loss | 4,292 | 14,612 | ||||||||
Other non-operating income | 2,293 | 2,898 | ||||||||
Interest expense | 795 | 1,062 | ||||||||
Fee and commission expense | 1 | 8 | ||||||||
Losses on financial instruments at fair value through profit or loss | 2,975 | 2,853 | ||||||||
Other operating expense | — | 11 | ||||||||
Other non-operating expense | 2 | — | ||||||||
General and administrative expenses | 950 | 1,286 | ||||||||
KB Kookmin Card Co., Ltd. | Interest income | 4,441 | 4,054 | |||||||
Fee and commission income | 190,987 | 211,806 | ||||||||
Gains on financial instruments at fair value through profit or loss | 1,262 | 2,348 | ||||||||
Reversal of credit losses | — | 54 | ||||||||
Other non-operating income | 1,645 | 1,314 | ||||||||
Interest expense | 1,003 | 1,073 | ||||||||
Fee and commission expense | 1,255 | 1,732 | ||||||||
Losses on financial instruments at fair value through profit or loss | 143 | 38 | ||||||||
Provision for credit losses | 245 | — | ||||||||
General and administrative expenses | 391 | 153 | ||||||||
KB Savings Bank Co., Ltd. | Fee and commission income | 1,125 | 736 | |||||||
Other non-operating income | 77 | 50 | ||||||||
Interest expense | 11 | 6 | ||||||||
Fee and commission expense | — | 17 | ||||||||
KB Capital Co., Ltd. | Interest income | 1,951 | 2,907 | |||||||
Fee and commission income | 2,767 | 2,968 | ||||||||
Other non-operating income | 191 | 167 | ||||||||
Interest expense | 98 | 670 | ||||||||
Fee and commission expense | 43 | 44 | ||||||||
Provision for credit losses | 138 | 46 | ||||||||
KB Insurance Co., Ltd. | Interest income | 67 | 79 | |||||||
Fee and commission income | 24,467 | 23,458 | ||||||||
Gains on financial instruments at fair value through profit or loss | 33,319 | 74,576 | ||||||||
Other non-operating income | 1,287 | 361 | ||||||||
Interest expense | 1,676 | 1,806 |
174
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Fee and commission expense | 1,628 | 1 | ||||||||
Losses on financial instruments at fair value through profit or loss | 37,871 | 7,468 | ||||||||
Other operating expense | 1 | — | ||||||||
Provision for credit losses | 5 | 6 | ||||||||
General and administrative expenses | 10,283 | 15,576 | ||||||||
Prudential Life Insurance Company of Korea Ltd. | Fee and commission income | 20 | — | |||||||
Interest expense | 1,165 | — | ||||||||
Hanbando BTL Private Special Asset Fund | Fee and commission income | 132 | 149 | |||||||
KB Senior Loan Private Fund No.1 | Fee and commission income | 3 | 8 | |||||||
KB AMP Infra Private Special Asset Fund No.1(FoFs) | Fee and commission income | 11 | 11 | |||||||
KB Onkookmin 2025 TDF Fund (FoFs) * | Fee and commission income | — | 2 | |||||||
KB Onkookmin 2030 TDF Fund (FoFs) * | Fee and commission income | — | 2 | |||||||
KB Onkookmin 2045 TDF Fund (FoFs) * | Fee and commission income | — | 1 | |||||||
KB Muni bond Private Securities Fund No.1 (USD) | Fee and commission income | 12 | 11 | |||||||
KB Global Private Real Estate Debt Fund No.1 | Fee and commission income | 10 | 10 | |||||||
KB NA Compass Energy Private Special Asset Fund | Fee and commission income | 8 | 8 | |||||||
KB Star Office Private Real Estate Investment Trust No.3 | Interest income | — | 619 | |||||||
Interest expense | 55 | 110 | ||||||||
KB Star Office Private Real Estate Investment Trust No.4 | Interest income | 760 | 760 | |||||||
Fee and commission income | 36 | 19 | ||||||||
Interest expense | 18 | 33 | ||||||||
Provision for credit losses | 1 | — | ||||||||
KB Global Core Bond Securities Feeder Fund(Bond) | Fee and commission income | 87 | 23 | |||||||
Gains on financial instruments at fair value through profit or loss | — | 1,276 | ||||||||
Losses on financial instruments at fair value through profit or loss | — | 28 | ||||||||
KB Onkookmin Life Income 20 Feeder Fund (FoFs) C-F | Losses on financial instruments at fair value through profit or loss | 102 | — | |||||||
KB Onkookmin Life Income 40 Feeder Fund (FoFs) C-F | Losses on financial instruments at fair value through profit or loss | 190 | — | |||||||
KB AU Infigen Energy Private Special Asset Fund* | Fee and commission income | 3 | 4 | |||||||
KB AU Infigen Energy Private Special Asset Fund No.2* | Fee and commission income | 5 | 6 | |||||||
KB New Renewable Energy Private Special Asset Fund No.1 | Fee and commission income | 6 | — | |||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.1 | Fee and commission income | 3 | 1 | |||||||
Gains on financial instruments at fair value through profit or loss | 1,814 | 4 | ||||||||
Losses on financial instruments at fair value through profit or loss | 3,248 | 335 | ||||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.3 | Fee and commission income | 10 | 1 | |||||||
Gains on financial instruments at fair value through profit or loss | 2,699 | 209 |
175
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Losses on financial instruments at fair value through profit or loss | 8,044 | 14 | ||||||||
KB Europe Renewable Specialized Private Equity Private Asset Investment Trust No.2 | Fee and commission income | 2 | — | |||||||
KB Korea Short Term Premium Private Securities No.10(USD)(Bond) * | Fee and commission income | 6 | 1 | |||||||
KB Korea Short Term Premium Private Securities No.15(USD)(Bond) | Fee and commission income | 1 | — | |||||||
Gains on financial instruments at fair value through profit or loss | 1,452 | — | ||||||||
KB Korea Short Term Premium Private Securities No.17(USD)(Bond) | Fee and commission income | 2 | — | |||||||
Gains on financial instruments at fair value through profit or loss | 3,268 | — | ||||||||
KB BMO Senior Loan Private Special Asset Fund No.1(FOF) | Fee and commission income | 6 | — | |||||||
Losses on financial instruments at fair value through profit or loss | 4,329 | — | ||||||||
KB BMO Senior Loan Private Special Asset Fund No.2(FOF) | Fee and commission income | 5 | — | |||||||
KB Wise Star Private Real Estate Feeder Fund No.12 * | Interest income | 493 | — | |||||||
Fee and commission income | 1 | — | ||||||||
KB Korea Short Term Premium Private Securities No.4(USD)(Bond) * | Fee and commission income | — | 2 | |||||||
Losses on financial instruments at fair value through profit or loss | — | 2,931 | ||||||||
KB Korea Short Term Premium Private Securities No.5(USD)(Bond) * | Fee and commission income | — | 9 | |||||||
Gains on financial instruments at fair value through profit or loss | — | 1,347 | ||||||||
Losses on financial instruments at fair value through profit or loss | — | 12,104 | ||||||||
Associates | ||||||||||
Korea Credit Bureau Co., Ltd. | Fee and commission income | 4 | — | |||||||
Interest expense | 7 | 21 | ||||||||
Fee and commission expense | 1,954 | 1,601 | ||||||||
Other operating expense | 1 | — | ||||||||
Incheon Bridge Co., Ltd. | Interest income | 4,345 | 8,612 | |||||||
Fee and commission income | 23 | — | ||||||||
Gains on financial instruments at fair value through profit or loss | 899 | 4,975 | ||||||||
Reversal of credit losses | — | 5 | ||||||||
Interest expense | 334 | 483 | ||||||||
Fee and commission expense | 6 | 7 | ||||||||
Provision for credit losses | 471 | — | ||||||||
Dae-A Leisure Co., Ltd. | Interest expense | 7 | 8 | |||||||
Skydigital INC. | Fee and commission income | 4 | — | |||||||
KB12-1 Venture Investment Partnership * | Interest expense | 13 | 3 | |||||||
KB High-Tech Company Investment Fund | Interest expense | 16 | 26 | |||||||
Aju Good Technology Venture Fund | Interest expense | 18 | 22 | |||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | Interest expense | 23 | 58 |
176
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KB Digital Innovation & Growth New Technology Business Investment Fund | Interest expense | 4 | 8 | |||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Interest expense | 40 | 89 | |||||||
KB Global Platform Fund | Interest expense | 52 | 193 | |||||||
WJ Private Equity Fund No.1 | Fee and commission income | 5 | — | |||||||
Associate of Parent | ||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | Interest expense | 61 | 208 | |||||||
Associates of Parent’s subsidiaries | ||||||||||
SY Auto Capital Co., Ltd. | Interest income | 3 | 191 | |||||||
Fee and commission income | 4 | — | ||||||||
Reversal of credit losses | 17 | 13 | ||||||||
Interest expense | 2 | 1 | ||||||||
RAND Bio Science Co., Ltd. | Interest expense | 11 | 5 | |||||||
Wise Asset Management Co., Ltd. | Interest expense | — | 2 | |||||||
Food Factory Co., Ltd. | Interest income | 52 | 41 | |||||||
Interest expense | 12 | — | ||||||||
Fee and commission expense | 4 | 12 | ||||||||
Provision for credit losses | 8 | 1 | ||||||||
Acts Co., Ltd. | Interest income | 1 | 1 | |||||||
APRO Co., Ltd. * | Interest income | 7 | 19 | |||||||
Interest expense | 1 | 4 | ||||||||
Fee and commission expense | — | 17 | ||||||||
Provision for credit losses | 1 | — | ||||||||
Rainist Co., Ltd. | Fee and commission income | 36 | 39 | |||||||
Stratio, Inc. | Interest expense | — | 1 | |||||||
UPRISE, Inc. | Interest income | 2 | — | |||||||
Provision for credit losses | 1 | — | ||||||||
CellinCells Co., Ltd. | Interest expense | 4 | 19 | |||||||
COSES GT | Interest income | 6 | — | |||||||
Provision for credit losses | 4 | — | ||||||||
Bomapp Inc. | Interest expense | — | 1 | |||||||
KB No.9 Special Purpose Acquisition Company * | Interest expense | — | (23 | ) | ||||||
KB No.10 Special Purpose Acquisition Company * | Interest expense | — | 18 | |||||||
KB No.11 Special Purpose Acquisition Company * | Interest expense | — | 9 | |||||||
KB No.17 Special Purpose Acquisition Company | Interest expense | 25 | 28 | |||||||
KB No.18 Special Purpose Acquisition Company | Interest expense | 31 | 28 | |||||||
KB No.19 Special Purpose Acquisition Company | Interest expense | 13 | 8 | |||||||
KB No.20 Special Purpose Acquisition Company | Interest expense | 25 | 3 | |||||||
Fabric Time Co., Ltd. | Fee and commission income | 7 | — | |||||||
Interest expense | 47 | — | ||||||||
BNF Corporation Ltd. * | Interest income | 9 | - | |||||||
Fee and commission income | 2 | — |
177
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Provision for credit losses | 8 | 1 | ||||||||
S&E BIO | Interest expense | 1 | — | |||||||
Contents First | Interest expense | 14 | — | |||||||
December & Company Inc. | Interest expense | 1 | — | |||||||
GENINUS Inc. | Interest expense | 70 | — | |||||||
KB Pre IPO Secondary Venture Fund No.1 | Interest expense | 3 | 7 | |||||||
JLK Inspection Co., Ltd. * | Interest expense | — | 1 | |||||||
Spark Biopharma Inc. * | Interest expense | — | 59 | |||||||
NEXELON Inc. * | Interest expense | — | 2 | |||||||
Others | ||||||||||
Retirement pension | Fee and commission income | 1,077 | 939 | |||||||
Interest expense | 3 | 4 |
| * | Excluded from the Group’s related party as of December 31, 2020. |
178
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
41.2 Details of receivables and payables, and related allowances for credit losses arising from transactions with related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Parent | ||||||||||
KB Financial Group Inc. | Other assets | 120 | 35 | |||||||
| Deposits | 23,084 | 18,537 | ||||||||
| Other liabilities | 597,429 | 418,286 | ||||||||
Parent’s subsidiaries | ||||||||||
KB Securities Co., Ltd. | Cash and due from financial institutions | 2,763 | 1,387 | |||||||
| Derivative assets | 17,465 | 9,424 | ||||||||
| Loans measured at amortized cost (gross amount) | 97,803 | 65,289 | ||||||||
| Allowances for credit losses | 88 | 23 | ||||||||
| Other assets | 4,983 | 18,320 | ||||||||
| Derivative liabilities | 11,630 | 3,979 | ||||||||
| Deposits | 464,584 | 423,053 | ||||||||
| Provisions | 57 | 30 | ||||||||
| Other liabilities 2 | 27,906 | 23,330 | ||||||||
KB Asset Management Co., Ltd. | Other assets | 327 | 260 | |||||||
| Derivative liabilities | 373 | — | ||||||||
| Deposits | 6,915 | 6,929 | ||||||||
| Other liabilities 3 | 1,310 | 607 | ||||||||
KB Real Estate Trust Co., Ltd. | Other assets | 3 | 2 | |||||||
| Deposits | 71,261 | 49,708 | ||||||||
| Other liabilities 4 | 3,235 | 3,964 | ||||||||
KB Investment Co., Ltd. | Other assets | — | 41 | |||||||
| Deposits | 93,970 | 62,686 | ||||||||
| Other liabilities | 97 | 53 | ||||||||
KB Credit Information Co., Ltd. | Deposits | 5,340 | 4,047 | |||||||
| Other liabilities | 6,196 | 6,022 | ||||||||
KB Data System Co., Ltd. | Other assets | 390 | 886 | |||||||
| Deposits | 17,561 | 21,642 | ||||||||
| Other liabilities | 4,539 | 5,372 | ||||||||
KB Life Insurance Co., Ltd. | Derivative assets | 90 | — | |||||||
| Other assets | 1,436 | 3,804 | ||||||||
| Derivative liabilities | 2,682 | 1,532 | ||||||||
| Deposits | 2,085 | 571 | ||||||||
| Borrowings | — | 25,000 | ||||||||
| Other liabilities 5 | 19,797 | 22,771 | ||||||||
KB Kookmin Card Co., Ltd. | Derivative assets | 418 | 676 | |||||||
| Loans measured at amortized cost (gross amount) | 39,930 | 19,683 | ||||||||
| Allowances for credit losses | 30 | 8 | ||||||||
| Other assets | 14,473 | 30,938 | ||||||||
| Deposits | 92,490 | 74,800 | ||||||||
| Provisions | 459 | 238 | ||||||||
| Other liabilities | 57,810 | 59,277 | ||||||||
KB Savings Bank Co., Ltd. | Other assets | — | 144 | |||||||
179
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| Other liabilities | 1,088 | 389 | ||||||||
KB Capital Co., Ltd. | Loans measured at amortized cost (gross amount) | 54,400 | 64,489 | |||||||
| Allowances for credit losses | 277 | 269 | ||||||||
| Other assets | 324 | 1,804 | ||||||||
| Deposits | 190,331 | 126,878 | ||||||||
| Provisions | 143 | 12 | ||||||||
| Other liabilities | 2,521 | 1,337 | ||||||||
KB Insurance Co., Ltd. | Derivative assets | 4,832 | 15,612 | |||||||
| Other assets | 14,354 | 8,549 | ||||||||
| Derivative liabilities | 29,491 | 6,453 | ||||||||
| Deposits | 3,365 | 5,485 | ||||||||
| Borrowings | — | 20,000 | ||||||||
| Debentures | 29,994 | 29,991 | ||||||||
| Provisions | 11 | 6 | ||||||||
| Other liabilities 6 | 17,937 | 4,794 | ||||||||
Prudential Life Insurance Company of Korea Ltd. | Deposits | 303 | — | |||||||
| Debentures | 30,000 | — | ||||||||
| Other liabilities | 32,537 | — | ||||||||
Hanbando BTL Private Special Asset Fund | Other assets | 32 | 36 | |||||||
KB Senior Loan Private Fund No.1 | Other assets | 1 | 1 | |||||||
KB AMP Infra Private Special Asset Fund No.1(FoFs) | Other assets | 1 | 1 | |||||||
KB KBSTAR Mid-Long Term KTB Active ETF (Bond) 1 | Other assets | — | 500 | |||||||
KB Onkookmin 2030 TDF Fund (FoFs) 1 | Other assets | — | 1 | |||||||
KB Muni bond Private Securities Fund No.1 (USD) | Other assets | 2 | 2 | |||||||
KB Global Private Real Estate Debt Fund No.1 | Other assets | 3 | 2 | |||||||
KB NA Compass Energy Private Special Asset Fund | Other assets | 1 | 1 | |||||||
KB Star Office Private Real Estate Investment Trust No.3 | Deposits | 171 | 7,364 | |||||||
| Other liabilities | 6 | 58 | ||||||||
KB Star Office Private Real Estate Investment Trust No.4 | Loans measured at amortized cost (gross amount) | 20,000 | 20,000 | |||||||
| Allowances for credit losses | 2 | — | ||||||||
| Other assets | 9 | 13 | ||||||||
| Deposits | 532 | 1,983 | ||||||||
| Other liabilities | 1 | 16 | ||||||||
KB Global Core Bond Securities Feeder Fund(Bond) | Other assets | 7 | 2 | |||||||
KB Onkookmin Life Income 20 Feeder Fund (FoFs) C-F | Derivative liabilities | 39 | — | |||||||
KB Onkookmin Life Income 40 Feeder Fund (FoFs) C-F | Derivative liabilities | 44 | — | |||||||
KB AU Infigen Energy Private Special Asset Fund 1 | Other assets | — | 1 |
180
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KB AU Infigen Energy Private Special Asset Fund No.2 1 | Other assets | — | 1 | |||||||
KB New Renewable Energy Private Special Asset Fund No.1 | Other assets | 2 | — | |||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.1 | Other assets | 1 | 1 | |||||||
Derivative liabilities | 3,248 | 335 | ||||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.3 | Other assets | 2 | 1 | |||||||
Derivative liabilities | 8,044 | 6 | ||||||||
KB Europe Renewable Specialized Private Equity Private Asset Investment Trust No.2 | Other assets | 1 | — | |||||||
KB Korea Short Term Premium Private Securities No.10(USD)(Bond) 1 | Other assets | — | 1 | |||||||
KB Korea Short Term Premium Private Securities No.15(USD)(Bond) | Derivative assets | 1,452 | — | |||||||
Other assets | 1 | — | ||||||||
KB Korea Short Term Premium Private Securities No.17(USD)(Bond) | Derivative assets | 3,268 | — | |||||||
Other assets | 2 | — | ||||||||
KB BMO Senior Loan Private Special Asset Fund No.1(FOF) | Other assets | 2 | — | |||||||
| �� | Derivative liabilities | 4,327 | — | |||||||
KB BMO Senior Loan Private Special Asset Fund No.2(FOF) | Other assets | 2 | — | |||||||
Associates |
| |||||||||
Korea Credit Bureau Co., Ltd. | Deposits | 19,982 | 17,966 | |||||||
Other liabilities | 5 | — | ||||||||
Incheon Bridge Co., Ltd. | Financial assets at fair value through profit or loss | 38,756 | 37,857 | |||||||
Loans measured at amortized cost (gross amount) | 133,000 | 147,700 | ||||||||
Allowances for credit losses | 202 | 11 | ||||||||
Other assets | 545 | 520 | ||||||||
Deposits | 39,520 | 45,447 | ||||||||
Provisions | 286 | 6 | ||||||||
Other liabilities | 199 | 346 | ||||||||
Jungdo Co., Ltd. | Deposits | 4 | 4 | |||||||
Dae-A Leisure Co., Ltd. | Deposits | 636 | 753 | |||||||
Other liabilities | 21 | 14 | ||||||||
Computerlife Co., Ltd. | Deposits | — | 1 | |||||||
Skydigital INC. | Deposits | 15 | 25 | |||||||
Jo Yang Industrial Co., Ltd. | Deposits | 2 | 2 | |||||||
NEOMIO CORP. | Deposits | 535 | — | |||||||
KB12-1 Venture Investment Partnership 1 | Deposits | — | 440 | |||||||
KB High-Tech Company Investment Fund | Deposits | 12,695 | 11,755 | |||||||
Other liabilities | 1 | 2 | ||||||||
Aju Good Technology Venture Fund | Deposits | 3,093 | 5,456 | |||||||
Other liabilities | 1 | 2 | ||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | Deposits | 923 | 7,054 | |||||||
Other liabilities | — | 4 | ||||||||
181
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KB Digital Innovation & Growth New Technology Business Investment Fund | Deposits | 1,801 | 12 | |||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Deposits | 8,097 | 13,118 | |||||||
Other liabilities | 1 | 4 | ||||||||
KB Global Platform Fund | Deposits | 20,197 | 17,928 | |||||||
Other liabilities | 2 | 9 | ||||||||
WJ Private Equity Fund No.1 | Other assets | 2 | — | |||||||
Deposits | 349 | — | ||||||||
Associate of Parent |
| |||||||||
KB Star Office Private Real Estate Investment Trust No.1 | Deposits | 4,255 | 8,293 | |||||||
Other liabilities | 24 | 66 | ||||||||
Associates of Parent’s subsidiaries |
| |||||||||
SY Auto Capital Co., Ltd. | Loans measured at amortized cost (gross amount) | — | 1,900 | |||||||
Allowances for credit losses | — | 4 | ||||||||
Deposits | 6 | 8 | ||||||||
Provisions | — | 13 | ||||||||
Other liabilities | — | 2 | ||||||||
RAND Bio Science Co., Ltd. | Deposits | 693 | 4,452 | |||||||
Wise Asset Management Co., Ltd. | Deposits | — | 21 | |||||||
Food Factory Co., Ltd. | Loans measured at amortized cost (gross amount) | 3,193 | 1,987 | |||||||
Allowances for credit losses | 8 | 2 | ||||||||
Other assets | 3 | 1 | ||||||||
Deposits | 1,555 | 1,073 | ||||||||
Provisions | 2 | — | ||||||||
Other liabilities | 9 | 1 | ||||||||
Acts Co., Ltd. | Deposits | 18 | 1 | |||||||
Paycoms Co., Ltd. | Deposits | 1 | 1 | |||||||
Big Dipper Co., Ltd. | Deposits | 1 | 6 | |||||||
APRO Co., Ltd. 1 | Loans measured at amortized cost (gross amount) | — | 2,016 | |||||||
Deposits | — | 3,201 | ||||||||
Other liabilities | — | 1 | ||||||||
Hasys. | Deposits | 1 | — | |||||||
Stratio, Inc. | Deposits | 13 | 726 | |||||||
UPRISE, Inc. | Loans measured at amortized cost (gross amount) | 500 | — | |||||||
Allowances for credit losses | 1 | — | ||||||||
Deposits | 11 | — | ||||||||
CellinCells Co., Ltd. | Deposits | 260 | 1,545 | |||||||
Other liabilities | — | 1 | ||||||||
COSES GT | Loans measured at amortized cost (gross amount) | 500 | — | |||||||
Allowances for credit losses | 4 | — | ||||||||
Other assets | 1 | — | ||||||||
Deposits | 292 | — | ||||||||
KB No.17 Special Purpose Acquisition Company | Deposits | 1,711 | 1,742 | |||||||
Other liabilities | 23 | 27 | ||||||||
182
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KB No.18 Special Purpose Acquisition Company | Deposits | 2,101 | 2,140 | |||||||
Other liabilities | 19 | 28 | ||||||||
KB No.19 Special Purpose Acquisition Company | Deposits | 1,053 | 1,093 | |||||||
Other liabilities | 3 | 7 | ||||||||
KB No.20 Special Purpose Acquisition Company | Deposits | 1,716 | 1,984 | |||||||
Other liabilities | 1 | 3 | ||||||||
Fabric Time Co., Ltd. | Deposits | 3,947 | 395 | |||||||
Other liabilities | 40 | 2 | ||||||||
BNF Corporation Ltd. 1 | Loans measured at amortized cost (gross amount) | — | 1,400 | |||||||
Other assets | — | 2 | ||||||||
Deposits | — | 947 | ||||||||
Other liabilities | — | 6 | ||||||||
GOMI CORPORATION | Deposits | 37 | — | |||||||
S&E BIO | Deposits | 1,142 | — | |||||||
4N Inc. | Deposits | 76 | — | |||||||
Contents First | Deposits | 1,823 | — | |||||||
Other liabilities | 7 | — | ||||||||
December & Company Inc. | Deposits | 1 | — | |||||||
GENINUS Inc. | Deposits | 13,630 | — | |||||||
Other liabilities | 15 | — | ||||||||
KB IGen Private Equity Fund No.1 1 | Deposits | — | 147 | |||||||
KB Pre IPO Secondary Venture Fund No.1 | Deposits | 629 | 2,955 | |||||||
Other liabilities | — | 1 | ||||||||
Key management | Loans measured at amortized cost (gross amount) | 4,599 | 3,423 | |||||||
Allowances for credit losses | 2 | 1 | ||||||||
Other assets | 4 | 3 | ||||||||
Deposits | 11,023 | 10,104 | ||||||||
Other liabilities | 284 | 226 | ||||||||
Others | ||||||||||
Retirement pension | Other assets | 295 | 366 | |||||||
Other liabilities | 10,600 | 17,620 |
| 1 | Excluded from the Group’s related party as of December 31, 2020. |
| 2 | Non-controlling interests classified as liabilities include |
| 3 | Non-controlling interests classified as liabilities include |
| 4 | Non-controlling interests classified as liabilities include |
| 5 | Non-controlling interests classified as liabilities include |
| 6 | Non-controlling interests classified as liabilities include |
183
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
41.3 Right-of-use assets and lease liabilities with related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Parent’s subsidiaries | ||||||||||
KB Securities Co., Ltd. | Right-of-use assets | 30,567 | 13,863 | |||||||
| Lease liabilities | 36,118 | 16,658 | ||||||||
KB Kookmin Card Co., Ltd. | Right-of-use assets | 77 | 168 | |||||||
| Lease liabilities | 48 | 28 | ||||||||
KB Capital Co., Ltd. | Right-of-use assets | — | 9 | |||||||
| Lease liabilities | — | 23 | ||||||||
KB Insurance Co., Ltd. | Right-of-use assets | 2,848 | 5,693 | |||||||
| Lease liabilities | 3,152 | 5,751 | ||||||||
41.4 Notional amount of derivative assets and liabilities arising from transactions with related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Parent’s subsidiaries | ||||||||||
KB Securities Co., Ltd. | Notional amount of derivative financial instruments | 981,259 | 651,372 | |||||||
KB Asset Management Co., Ltd. | Notional amount of derivative financial instruments | 22,297 | — | |||||||
KB Life Insurance Co., Ltd. | Notional amount of derivative financial instruments | 54,892 | 104,058 | |||||||
KB Kookmin Card Co., Ltd. | Notional amount of derivative financial instruments | 30,000 | 44,472 | |||||||
KB Insurance Co., Ltd. | Notional amount of derivative financial instruments | 650,108 | 799,567 | |||||||
KB Onkookmin Life Income 20 Feeder Fund (FoFs) C-F | Notional amount of derivative financial instruments | 2,305 | — | |||||||
KB Onkookmin Life Income 40 Feeder Fund (FoFs) C-F | Notional amount of derivative financial instruments | 2,617 | — | |||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.1 | Notional amount of derivative financial instruments | 27,200 | 29,153 | |||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.3 | Notional amount of derivative financial instruments | 89,760 | 95,519 | |||||||
KB Korea Short Term Premium Private Securities No.15(USD)(Bond) | Notional amount of derivative financial instruments | 22,032 | — | |||||||
KB Korea Short Term Premium Private Securities No.17(USD)(Bond) | Notional amount of derivative financial instruments | 77,030 | — | |||||||
KB BMO Senior Loan Private Special Asset Fund No.1(FOF) | Notional amount of derivative financial instruments | 50,798 | — | |||||||
184
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
41.5 Significant lending transactions with related parties for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 1 | |||||||||||||||||||
| Beginning | Loans | Collections | Others | Ending | ||||||||||||||||
Parent’s subsidiaries | ||||||||||||||||||||
KB Securities Co., Ltd. | 65,289 | 1,164,587 | �� | 1,129,114 | (2,959 | ) | 97,803 | |||||||||||||
KB Kookmin Card Co., Ltd. | 19,683 | 181,249 | 160,164 | (838 | ) | 39,930 | ||||||||||||||
KB Capital Co., Ltd. | 64,489 | 62,423 | 69,139 | (3,373 | ) | 54,400 | ||||||||||||||
KB Star Office Private Real Estate Investment Trust No.4 | 20,000 | — | — | — | 20,000 | |||||||||||||||
KB Wise Star Private Real Estate Feeder Fund No.12 2 | — | 34,000 | — | (34,000 | ) | — | ||||||||||||||
Associates | ||||||||||||||||||||
Incheon Bridge Co., Ltd. | 185,557 | — | 14,700 | 899 | 171,756 | |||||||||||||||
Carlife Co., Ltd. | — | 22 | 22 | — | — | |||||||||||||||
Associates of Parent’s subsidiaries | ||||||||||||||||||||
SY Auto Capital Co., Ltd. | 1,900 | 11,250 | 13,150 | — | — | |||||||||||||||
Food Factory Co., Ltd. | 1,987 | 1,225 | 20 | 1 | 3,193 | |||||||||||||||
APRO Co., Ltd. 2 | 2,016 | 2,000 | — | (4,016 | ) | — | ||||||||||||||
BNF Corporation Ltd. 2 | 1,400 | 1,000 | — | (2,400 | ) | — | ||||||||||||||
Acts Co., Ltd. | — | 74 | 74 | — | — | |||||||||||||||
UPRISE, Inc. | — | 500 | — | — | 500 | |||||||||||||||
COSES GT | — | 500 | — | — | 500 | |||||||||||||||
Key management 3 | 3,423 | 3,276 | 3,422 | 1,322 | 4,599 | |||||||||||||||
| (In millions of Korean won) | 2019 1 | |||||||||||||||||||
| Beginning | Loans | Collections | Others | Ending | ||||||||||||||||
Parent’s subsidiaries | ||||||||||||||||||||
KB Securities Co., Ltd. | 25,617 | 892,470 | 853,096 | 298 | 65,289 | |||||||||||||||
KB Kookmin Card Co., Ltd. | 3,354 | 268,897 | 252,639 | 71 | 19,683 | |||||||||||||||
KB Capital Co., Ltd. | 54,787 | 7,624 | — | 2,078 | 64,489 | |||||||||||||||
KB Star Office Private Real Estate Investment Trust No.3 | 24,000 | — | 24,000 | — | — | |||||||||||||||
KB Star Office Private Real Estate Investment Trust No.4 | 20,000 | — | — | — | 20,000 | |||||||||||||||
Associates | ||||||||||||||||||||
Incheon Bridge Co., Ltd. | 191,082 | — | 10,500 | 4,975 | 185,557 | |||||||||||||||
Associates of Parent’s subsidiaries | ||||||||||||||||||||
SY Auto Capital Co., Ltd. | 8,300 | 27,998 | 34,398 | — | 1,900 | |||||||||||||||
Food Factory Co., Ltd. | 200 | 1,800 | 20 | 7 | 1,987 | |||||||||||||||
APRO Co., Ltd. 2 | — | 2,000 | — | 16 | 2,016 | |||||||||||||||
BNF Corporation Ltd. 2 | — | — | — | 1,400 | 1,400 | |||||||||||||||
Acts Co., Ltd. | — | 68 | 68 | — | — | |||||||||||||||
Key management 3 | 2,218 | 638 | 555 | 1,122 | 3,423 | |||||||||||||||
| 1 | Transactions between related parties, such as settlements arising from operating activities and daylight overdraft to be repaid on the day of handling, are excluded. |
| 2 | Excluded from the Group’s related party as of December 31, 2020. |
| 3 | Includes loan transactions that occurred before they became related parties. |
185
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
41.6 Significant borrowing transactions with related parties for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||||||||||||||
| Beginning | Borrowing | Repayment | Others 1 | Ending | ||||||||||||||||||||
Parent | ||||||||||||||||||||||||
KB Financial Group Inc. | Deposits | 18,537 | — | — | 4,547 | 23,084 | ||||||||||||||||||
Parent’s subsidiaries | ||||||||||||||||||||||||
KB Securities Co., Ltd. | Deposits | 423,053 | 75,000 | 97,720 | 64,251 | 464,584 | ||||||||||||||||||
KB Asset Management Co., Ltd. | Deposits | 6,929 | — | — | (14 | ) | 6,915 | |||||||||||||||||
KB Real Estate Trust Co., Ltd. | Deposits | 49,708 | — | — | 21,553 | 71,261 | ||||||||||||||||||
KB Investment Co., Ltd. | Deposits | 62,686 | 258,000 | 230,000 | 3,284 | 93,970 | ||||||||||||||||||
KB Credit Information Co., Ltd. | Deposits | 4,047 | 647 | 410 | 1,056 | 5,340 | ||||||||||||||||||
KB Data System Co., Ltd. | Deposits | 21,642 | 11,500 | 16,500 | 919 | 17,561 | ||||||||||||||||||
KB Life Insurance Co., Ltd. | Deposits | 571 | — | — | 1,514 | 2,085 | ||||||||||||||||||
| Borrowings | 25,000 | — | — | (25,000 | ) | — | ||||||||||||||||||
KB Kookmin Card Co., Ltd. | Deposits | 74,800 | 25,500 | 22,000 | 14,190 | 92,490 | ||||||||||||||||||
KB Capital Co., Ltd. | Deposits | 126,878 | — | — | 63,453 | 190,331 | ||||||||||||||||||
KB Insurance Co., Ltd. | Deposits | 5,485 | — | — | (2,120 | ) | 3,365 | |||||||||||||||||
| Borrowings | 20,000 | — | — | (20,000 | ) | — | ||||||||||||||||||
| Debentures | 29,991 | — | — | 3 | 29,994 | |||||||||||||||||||
Prudential Life Insurance Company of Korea Ltd. | Deposits | — | — | — | 303 | 303 | ||||||||||||||||||
| Debentures | — | — | — | 30,000 | 30,000 | |||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.3 | Deposits | 7,364 | — | 7,193 | — | 171 | ||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.4 | Deposits | 1,983 | — | 1,451 | — | 532 | ||||||||||||||||||
Associates | ||||||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | Deposits | 17,966 | 1,000 | — | 1,016 | 19,982 | ||||||||||||||||||
Incheon Bridge Co., Ltd. | Deposits | 45,447 | 20,000 | 21,260 | (4,667 | ) | 39,520 | |||||||||||||||||
Jungdo Co., Ltd. | Deposits | 4 | — | — | — | 4 | ||||||||||||||||||
Dae-A Leisure Co., Ltd. | Deposits | 753 | — | — | (117 | ) | 636 | |||||||||||||||||
Computerlife Co., Ltd. | Deposits | 1 | — | — | (1 | ) | — | |||||||||||||||||
Skydigital INC. | Deposits | 25 | — | — | (10 | ) | 15 | |||||||||||||||||
Jo Yang Industrial Co., Ltd. | Deposits | 2 | — | — | — | 2 | ||||||||||||||||||
KB12-1 Venture Investment Partnership 2 | Deposits | 440 | — | — | (440 | ) | — | |||||||||||||||||
KB High-Tech Company Investment Fund | Deposits | 11,755 | 8,000 | 8,000 | 940 | 12,695 | ||||||||||||||||||
Aju Good Technology Venture Fund | Deposits | 5,456 | 1,442 | — | (3,805 | ) | 3,093 | |||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | Deposits | 7,054 | 1,500 | 6,500 | (1,131 | ) | 923 | |||||||||||||||||
186
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KB Digital Innovation & Growth New Technology Business Investment Fund | Deposits | 12 | — | — | 1,789 | 1,801 | ||||||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Deposits | 13,118 | — | — | (5,021 | ) | 8,097 | |||||||||||||||||
KB Global Platform Fund | Deposits | 17,928 | — | — | 2,269 | 20,197 | ||||||||||||||||||
NEOMIO CORP. | Deposits | — | — | — | 535 | 535 | ||||||||||||||||||
WJ Private Equity Fund No.1 | Deposits | — | — | — | 349 | 349 | ||||||||||||||||||
Associate of Parent | ||||||||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | Deposits | 8,293 | 2,117 | 5,630 | (525 | ) | 4,255 | |||||||||||||||||
Associates of Parent’s subsidiaries | ||||||||||||||||||||||||
SY Auto Capital Co., Ltd. | Deposits | 8 | — | — | (2 | ) | 6 | |||||||||||||||||
KB No.17 Special Purpose Acquisition Company | Deposits | 1,742 | 1,525 | 1,500 | (56 | ) | 1,711 | |||||||||||||||||
KB No.18 Special Purpose Acquisition Company | Deposits | 2,140 | 2,063 | 2,100 | (2 | ) | 2,101 | |||||||||||||||||
KB No.19 Special Purpose Acquisition Company | Deposits | 1,093 | 1,000 | 1,000 | (40 | ) | 1,053 | |||||||||||||||||
KB No.20 Special Purpose Acquisition Company | Deposits | 1,984 | 1,522 | 1,500 | (290 | ) | 1,716 | |||||||||||||||||
RAND Bio Science Co., Ltd. | Deposits | 4,452 | 2,250 | 3,750 | (2,259 | ) | 693 | |||||||||||||||||
Wise Asset Management Co., Ltd. | Deposits | 21 | — | — | (21 | ) | — | |||||||||||||||||
Food Factory Co., Ltd. | Deposits | 1,073 | 1,503 | 1,003 | (18 | ) | 1,555 | |||||||||||||||||
Acts Co., Ltd. | Deposits | 1 | — | — | 17 | 18 | ||||||||||||||||||
Paycoms Co., Ltd. | Deposits | 1 | — | — | — | 1 | ||||||||||||||||||
Big Dipper Co., Ltd. | Deposits | 6 | — | — | (5 | ) | 1 | |||||||||||||||||
APRO Co., Ltd. 2 | Deposits | 3,201 | — | — | (3,201 | ) | — | |||||||||||||||||
Hasys. | Deposits | — | — | — | 1 | 1 | ||||||||||||||||||
Stratio, Inc. | Deposits | 726 | — | — | (713 | ) | 13 | |||||||||||||||||
UPRISE, Inc. | Deposits | — | — | — | 11 | 11 | ||||||||||||||||||
CellinCells Co., Ltd. | Deposits | 1,545 | — | — | (1,285 | ) | 260 | |||||||||||||||||
COSES GT | Deposits | — | — | — | 292 | 292 | ||||||||||||||||||
Fabric Time Co., Ltd. | Deposits | 395 | 7,002 | 3,801 | 351 | 3,947 | ||||||||||||||||||
BNF Corporation Ltd. 2 | Deposits | 947 | — | — | (947 | ) | — | |||||||||||||||||
GOMI CORPORATION | Deposits | — | — | — | 37 | 37 | ||||||||||||||||||
S&E BIO | Deposits | — | — | — | 1,142 | 1,142 | ||||||||||||||||||
KB IGen Private Equity Fund No.1 2 | Deposits | 147 | — | — | (147 | ) | — | |||||||||||||||||
KB Pre IPO Secondary Venture Fund No.1 | Deposits | 2,955 | — | — | (2,326 | ) | 629 | |||||||||||||||||
4N Inc. | Deposits | — | — | — | 76 | 76 | ||||||||||||||||||
Contents First | Deposits | — | 4,000 | 3,000 | 823 | 1,823 | ||||||||||||||||||
December & Company Inc. | Deposits | — | — | — | 1 | 1 | ||||||||||||||||||
GENINUS Inc. | Deposits | — | — | — | 13,630 | 13,630 | ||||||||||||||||||
Key management 3 | Deposits | 10,104 | 15,241 | 15,206 | 884 | 11,023 |
187
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | 2019 | |||||||||||||||||||||||
| Beginning | Borrowing | Repayment | Others 1 | Ending | ||||||||||||||||||||
Parent | ||||||||||||||||||||||||
KB Financial Group Inc. | Deposits | 69,621 | 310,000 | 370,000 | 8,916 | 18,537 | ||||||||||||||||||
Parent’s subsidiaries | ||||||||||||||||||||||||
KB Asset Management Co., Ltd. | Deposits | 3,284 | — | — | 3,645 | 6,929 | ||||||||||||||||||
KB Real Estate Trust Co., Ltd. | Deposits | 27,321 | — | — | 22,387 | 49,708 | ||||||||||||||||||
KB Investment Co., Ltd. | Deposits | 20,784 | 410,000 | 365,000 | (3,098 | ) | 62,686 | |||||||||||||||||
KB Credit Information Co., Ltd. | Deposits | 4,240 | 1,611 | 1,425 | (379 | ) | 4,047 | |||||||||||||||||
KB Data System Co., Ltd. | Deposits | 18,059 | 18,500 | 13,500 | (1,417 | ) | 21,642 | |||||||||||||||||
KB Life Insurance Co., Ltd. | Deposits | 1,576 | — | — | (1,005 | ) | 571 | |||||||||||||||||
| Borrowings | 25,000 | — | — | — | 25,000 | |||||||||||||||||||
KB Kookmin Card Co., Ltd. | Deposits | 84,089 | 22,000 | 22,000 | (9,289 | ) | 74,800 | |||||||||||||||||
KB Capital Co., Ltd. | Deposits | 64,283 | — | — | 62,595 | 126,878 | ||||||||||||||||||
KB Insurance Co., Ltd. | Deposits | 5,188 | — | 2,441 | 2,738 | 5,485 | ||||||||||||||||||
| Borrowings | 20,000 | — | — | — | 20,000 | |||||||||||||||||||
| Debenture | 30,002 | — | — | (11 | ) | 29,991 | ||||||||||||||||||
KB Securities Co., Ltd. | Deposits | 334,470 | 96,445 | 75,000 | 67,138 | 423,053 | ||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.3 | Deposits | 5,361 | 2,003 | — | — | 7,364 | ||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.4 | Deposits | 1,629 | 354 | — | — | 1,983 | ||||||||||||||||||
Associates | ||||||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | Deposits | 15,674 | — | 3,000 | 5,292 | 17,966 | ||||||||||||||||||
Incheon Bridge Co., Ltd. | Deposits | 43,666 | 25,260 | 5,260 | (18,219 | ) | 45,447 | |||||||||||||||||
Doosung Metal Co., Ltd. | Deposits | 3 | — | — | (3 | ) | — | |||||||||||||||||
Jungdo Co., Ltd. | Deposits | 4 | — | — | — | 4 | ||||||||||||||||||
Dae-A Leisure Co., Ltd. | Deposits | 1,229 | — | — | (476 | ) | 753 | |||||||||||||||||
Carlife Co., Ltd. | Deposits | 2 | — | — | (2 | ) | — | |||||||||||||||||
Computerlife Co., Ltd. | Deposits | 1 | — | — | — | 1 | ||||||||||||||||||
Skydigital INC. | Deposits | 16 | — | — | 9 | 25 | ||||||||||||||||||
Jo Yang Industrial Co., Ltd. | Deposits | — | — | — | 2 | 2 | ||||||||||||||||||
KB12-1 Venture Investment Partnership 2 | Deposits | 245 | — | — | 195 | 440 | ||||||||||||||||||
KB High-Tech Company Investment Fund | Deposits | 275 | 5,500 | 5,500 | 11,480 | 11,755 | ||||||||||||||||||
Aju Good Technology Venture Fund | Deposits | 6,439 | — | — | (983 | ) | 5,456 | |||||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | Deposits | 7,088 | 15,000 | 10,000 | (5,034 | ) | 7,054 | |||||||||||||||||
188
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KB Digital Innovation & Growth New Technology Business Investment Fund | Deposits | 618 | — | — | (606 | ) | 12 | |||||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Deposits | 18,813 | — | — | (5,695 | ) | 13,118 | |||||||||||||||||
KB Global Platform Fund | Deposits | — | — | — | 17,928 | 17,928 | ||||||||||||||||||
Associate of parent | ||||||||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | Deposits | 7,946 | 5,018 | 5,072 | 401 | 8,293 | ||||||||||||||||||
Associates of parent’s subsidiaries | ||||||||||||||||||||||||
SY Auto Capital Co., Ltd. | Deposits | 5 | — | — | 3 | 8 | ||||||||||||||||||
KB No.9 Special Purpose Acquisition Company 2 | Deposits | 2,275 | — | 2,266 | (9 | ) | — | |||||||||||||||||
KB No.10 Special Purpose Acquisition Company 2 | Deposits | 1,666 | — | 1,618 | (48 | ) | — | |||||||||||||||||
KB No.11 Special Purpose Acquisition Company 2 | Deposits | 658 | — | 530 | (128 | ) | — | |||||||||||||||||
KB No.17 Special Purpose Acquisition Company | Deposits | — | 1,500 | — | 242 | 1,742 | ||||||||||||||||||
KB No.18 Special Purpose Acquisition Company | Deposits | — | 2,200 | 100 | 40 | 2,140 | ||||||||||||||||||
KB No.19 Special Purpose Acquisition Company | Deposits | — | 1,000 | — | 93 | 1,093 | ||||||||||||||||||
KB No.20 Special Purpose Acquisition Company | Deposits | — | 1,500 | — | 484 | 1,984 | ||||||||||||||||||
RAND Bio Science Co., Ltd. | Deposits | 232 | 1,900 | — | 2,320 | 4,452 | ||||||||||||||||||
Wise Asset Management Co., Ltd. | Deposits | 696 | — | 682 | 7 | 21 | ||||||||||||||||||
Built On Co., Ltd. 2 | Deposits | 7 | — | — | (7 | ) | — | |||||||||||||||||
Food Factory Co., Ltd. | Deposits | 68 | — | — | 1,005 | 1,073 | ||||||||||||||||||
Acts Co., Ltd. | Deposits | 29 | — | — | (28 | ) | 1 | |||||||||||||||||
Paycoms Co., Ltd. | Deposits | 1 | — | — | — | 1 | ||||||||||||||||||
Big Dipper Co., Ltd. | Deposits | 182 | — | — | (176 | ) | 6 | |||||||||||||||||
Apro Co., Ltd. 2 | Deposits | 2,201 | — | — | 1,000 | 3,201 | ||||||||||||||||||
Rainist Co., Ltd. | 1 | — | — | (1 | ) | — | ||||||||||||||||||
Spark Biopharma Inc. 2 | Deposits | 2,630 | 17,000 | 9,000 | (10,630 | ) | — | |||||||||||||||||
Stratio, Inc. | Deposits | 516 | — | — | 210 | 726 | ||||||||||||||||||
NEXELON Co., Ltd. 2 | Deposits | — | — | 200 | 200 | — | ||||||||||||||||||
CellinCells Co., Ltd. | Deposits | — | — | — | 1,545 | 1,545 | ||||||||||||||||||
KB IGen Private Equity Fund No.1 2 | Deposits | 148 | — | — | (1 | ) | 147 | |||||||||||||||||
KB Pre IPO Secondary Venture Fund No.1 | Deposits | 1,115 | — | — | 1,840 | 2,955 | ||||||||||||||||||
Fabric Time Co., Ltd. | Deposits | — | — | — | 395 | 395 | ||||||||||||||||||
BNF Corporation Ltd. 2 | Deposits | — | — | — | 947 | 947 | ||||||||||||||||||
Key management 3 | Deposits | 9,771 | 8,724 | 8,232 | (159 | ) | 10,104 |
189
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 1 | Transactions between related parties, such as settlements arising from operating activities and deposits, are expressed in net amount. |
| 2 | Excluded from the Group’s related party as of December 31, 2020. |
| 3 | Includes borrowing transactions that occurred before they became related parties. |
41.7 Significant investment and withdrawal transactions with related parties for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||
| (In millions of Korean won) | Equity investments and others | Withdrawals and others | ||||||
Parent’s subsidiaries | ||||||||
Hanbando BTL Private Special Asset Fund | — | 24,039 | ||||||
Hope Sharing BTL Private Special Asset Fund | — | 1,655 | ||||||
KB Mezzanine Private Security Investment Trust No.2 * | — | 46,051 | ||||||
KB Intellectual Property Fund | — | 180 | ||||||
KB Senior Loan Private Fund No.1 | — | 1,080 | ||||||
KB KBSTAR Mid-Long Term KTB Active ETF (Bond) * | — | 20,402 | ||||||
KB Onkookmin 2030 TDF Fund (FoFs) * | — | 86 | ||||||
KB Star Office Private Real Estate Investment Trust No.3 | — | 3,579 | ||||||
KB Star Office Private Real Estate Investment Trust No.4 | — | 2,101 | ||||||
KB Korea Short Term Premium Private Securities No.10(USD)(Bond) * | — | 69,710 | ||||||
KB New Renewable Energy Private Special Asset Fund No.1 | 32,640 | 871 | ||||||
KB Mezzanine Private Securities Fund No.3 | 18,019 | 16,587 | ||||||
KB Wise Star Jongno Tower Real Estate Master Fund | — | 367 | ||||||
Koratevien Specialist Private Equity Fund No.1 | — | 1,015 | ||||||
KB Europe Renewable Specialized Private Equity Private Asset Investment Trust No.2 | 8,675 | — | ||||||
KB BMO Senior Loan Private Special Asset Fund No.2(FOF) | 29,015 | 566 | ||||||
KB Wise Star Private Real Estate Feeder Fund No.12 * | 20,000 | 800 | ||||||
KB Korea Short Term Premium Private Securities No.15(USD)(Bond) | 23,508 | — | ||||||
KB Korea Short Term Premium Private Securities No.17(USD)(Bond) | 68,082 | — | ||||||
KB Sinansan Line Private Special Asset Fund(SOC) | 27,857 | — | ||||||
Associates | ||||||||
Korea Credit Bureau Co., Ltd. | — | 90 | ||||||
Balhae Infrastructure Company | 894 | 6,973 | ||||||
KB GwS Private Securities Investment Trust | — | 7,453 | ||||||
KB12-1 Venture Investment Partnership * | — | 50,642 | ||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | — | 2,584 | ||||||
Future Planning KB Start-up Creation Fund | — | 3,200 | ||||||
KB High-Tech Company Investment Fund | — | 13,550 | ||||||
Aju Good Technology Venture Fund | — | 2,885 | ||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | — | 3,200 | ||||||
KB-TS Technology Venture Private Equity Fund | 1,200 | 2,940 | ||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 1,125 | — | ||||||
KB Intellectual Property Fund No.2 | 6,000 | — | ||||||
190
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KB Digital Innovation Investment Fund Limited Partnership | 2,800 | — | ||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 4,000 | 1,600 | ||||||
KB SPROTT Renewable Private Equity Fund No.1 | 3,286 | — | ||||||
KB Global Platform Fund | 9,000 | — | ||||||
KB-UTC Inno-Tech Venture Fund | 11,310 | — | ||||||
WJ Private Equity Fund No.1 | 10,000 | — | ||||||
All Together Korea Fund No.2 | 100,000 | 90,127 | ||||||
KB Pre-IPO New Technology Business Investment Fund No.2 | 2,500 | — | ||||||
KB Smart Scale Up Fund | 4,000 | — | ||||||
Associate of Parent | ||||||||
KB Star Office Private Real Estate Investment Trust No.1 | — | 1,273 | ||||||
Associate of Parent’s subsidiaries | ||||||||
KB-Stonebridge Secondary Private Equity Fund | 5,196 | — | ||||||
KB-NAU Special Situation Corporate Restructuring Private Equity Fund | 1,900 | — |
| 2019 | ||||||||
| (In millions of Korean won) | Equity investments and others | Withdrawals and others | ||||||
Parent’s subsidiaries | ||||||||
Hanbando BTL Private Special Asset Fund | — | 21,563 | ||||||
Hope Sharing BTL Private Special Asset Fund | — | 1,653 | ||||||
KB Intellectual Property Fund | — | 182 | ||||||
KB Senior Loan Private Fund No.1 | — | 13,458 | ||||||
KB Evergreen Private Securities Fund 98 (Bond) * | — | 52,302 | ||||||
KB KBSTAR Mid-Long Term KTB Active ETF (Bond) * | — | 500 | ||||||
KB Onkookmin 2025 TDF Fund (FoFs) * | 5,500 | — | ||||||
KB Onkookmin 2030 TDF Fund (FoFs) * | 5,500 | — | ||||||
KB Onkookmin 2035 TDF Fund (FoFs) * | — | 2,289 | ||||||
KB Onkookmin 2045 TDF Fund (FoFs) * | — | 2,184 | ||||||
KB Star Office Private Real Estate Investment Trust No.3 | — | 2,313 | ||||||
KB Star Office Private Real Estate Investment Trust No.4 | — | 1,713 | ||||||
KB Korea Short Term Premium Private Securities No.4(USD)(Bond) * | — | 48,050 | ||||||
KB Korea Short Term Premium Private Securities No.5(USD)(Bond) * | 92,776 | 211,053 | ||||||
KB Korea Short Term Premium Private Securities No.10(USD)(Bond) * | 70,176 | — | ||||||
KB Global Core Bond Securities Feeder Fund(Bond) | 30,000 | 22,220 | ||||||
KB Haeoreum Private Securities Investment Trust No.96 * | — | 50,656 | ||||||
KB New Renewable Energy Private Special Asset Fund No.1 | 858 | 4 | ||||||
KB Mezzanine Private Securities Fund No.3 | 22,000 | — | ||||||
KB Wise Star Jongno Tower Real Estate Master Fund | 65,000 | 1,836 | ||||||
Koratevien Specialist Private Equity Fund No.1 | 35,000 | — | ||||||
KB Europe Renewable Specialized Private Equity Private Asset Investment Trust No.2 | 3,767 | — | ||||||
KB Global Infra Private Special Asset Fund No.5 | 1 | — | ||||||
KB Global Infra Private Special Asset Fund No.6 | 1 | — | ||||||
Associates | ||||||||
Korea Credit Bureau Co., Ltd. | — | 135 | ||||||
Balhae Infrastructure Company | 592 | 6,855 | ||||||
KoFC KBIC Frontier Champ 2010-5 (PEF) * | — | 138 | ||||||
191
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KB GwS Private Securities Investment Trust | — | 7,276 | ||||||||||
KB12-1 Venture Investment Partnership * | — | 3,400 | ||||||||||
Future Planning KB Start-up Creation Fund | — | 4,400 | ||||||||||
KB High-Tech Company Investment Fund | — | 6,950 | ||||||||||
Aju Good Technology Venture Fund | 1,960 | — | ||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | 2,500 | — | ||||||||||
KB-TS Technology Venture Private Equity Fund | 4,200 | 1,200 | ||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 1,125 | — | ||||||||||
KB Intellectual Property Fund No.2 | 6,000 | — | ||||||||||
KB Digital Innovation Investment Fund Limited Partnership | 24,500 | — | ||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 7,000 | — | ||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 1,327 | — | ||||||||||
KB Global Platform Fund | 19,500 | — | ||||||||||
KB-UTC Inno-Tech Venture Fund | 300 | — | ||||||||||
Associate of Parent | ||||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | — | 1,275 | ||||||||||
Associate of Parent’s subsidiaries | ||||||||||||
KB-Stonebridge Secondary Private Equity Fund | 4,040 | 1,060 |
| * | Excluded from the Group’s related party as of December 31, 2020. |
192
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
41.8 Acceptances and guarantees and unused commitments provided to related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Parent’s subsidiaries | ||||||||||
KB Securities Co., Ltd. | Loan commitments in Korean won | 137,213 | 140,000 | |||||||
KB Investment Co., Ltd. | Loss sharing agreements | 1,000 | 1,000 | |||||||
KB Kookmin Card Co., Ltd. | Loan commitments in Korean won | 820,000 | 820,000 | |||||||
| Loan commitments in foreign currency | 3,264 | 3,473 | ||||||||
| Other commitments in Korean won | 1,300,000 | 1,300,000 | ||||||||
KB Capital Co., Ltd. | Other commitments in foreign currency | 11,968 | — | |||||||
KB Insurance Co., Ltd. | Loan commitments in Korean won | 20,000 | 20,000 | |||||||
KB Mezzanine Private Security Investment Trust No.2 * | Purchase of securities | — | 11,141 | |||||||
KB Mezzanine Private Securities Fund No.3 | Purchase of securities | 30,241 | 48,260 | |||||||
KB Senior Loan Private Fund No.1 | Purchase of securities | — | 3,770 | |||||||
KB New Renewable Energy Private Special Asset Fund No.1 | Purchase of securities | 6,502 | 39,142 | |||||||
KB Europe Renewable Specialized Private Equity Private Asset Investment Trust No.2 | Purchase of securities | 6,215 | 14,454 | |||||||
KB Global Infra Private Special Asset Fund No.5 | Purchase of securities | 24,999 | 24,999 | |||||||
KB Global Infra Private Special Asset Fund No.6 | Purchase of securities | 24,999 | 24,999 | |||||||
KB BMO Senior Loan Private Special Asset Fund No.2(FOF) | Purchase of securities | 6,435 | — | |||||||
KB Sinansan Line Private Special Asset Fund(SOC) | Purchase of securities | 280,143 | — | |||||||
Associates | ||||||||||
Balhae Infrastructure Company | Purchase of securities | 6,433 | 7,327 | |||||||
Incheon Bridge Co., Ltd. | Loan commitments in Korean won | 20,000 | 20,000 | |||||||
KB GwS Private Securities Investment Trust | Purchase of securities | — | 876 | |||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | Purchase of securities | — | 10,040 | |||||||
Aju Good Technology Venture Fund | Purchase of securities | — | 1,154 | |||||||
KB-TS Technology Venture Private Equity Fund | Purchase of securities | 1,980 | 3,180 | |||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | Purchase of securities | 1,125 | 2,250 | |||||||
KB Intellectual Property Fund No.2 | Purchase of securities | — | 6,000 | |||||||
KB Digital Innovation Investment Fund Limited Partnership | Purchase of securities | — | 2,800 | |||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Purchase of securities | 5,000 | 9,000 | |||||||
193
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
KB SPROTT Renewable Private Equity Fund No.1 | Purchase of securities | 14,887 | 18,173 | |||||||
KB Global Platform Fund | Purchase of securities | 21,500 | 30,500 | |||||||
KB-UTC Inno-Tech Venture Fund | Purchase of securities | 3,390 | 14,700 | |||||||
All Together Korea Fund No.2 | Purchase of securities | 990,000 | — | |||||||
KB Pre-IPO New Technology Business Investment Fund No.2 | Purchase of securities | 7,500 | — | |||||||
KB Smart Scale Up Fund | Purchase of securities | 46,000 | — | |||||||
Associates of Parent’s subsidiaries | ||||||||||
SY Auto Capital Co., Ltd. | Loan commitments in Korean won | — | 8,100 | |||||||
Food Factory Co., Ltd. | Loan commitments in Korean won | 388 | — | |||||||
BNF Corporation Ltd. * | Loan commitments in Korean won | — | 360 | |||||||
KB-Stonebridge Secondary Private Equity Fund | Purchase of securities | 10,764 | 15,960 | |||||||
KB-NAU Special Situation Corporate Restructuring Private Equity Fund | Purchase of securities | 8,100 | — | |||||||
Key management | Loan commitments in Korean won | 731 | 564 |
| * | Excluded from the Group’s related party as of December 31, 2020. |
41.9 Acceptances and guarantees and unused commitments provided from related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Parent’s subsidiaries | ||||||||||
KB Investment Co., Ltd. | Loss sharing agreements | 3,404 | 12,209 | |||||||
KB Real Estate Trust Co., Ltd. | Purchase of securities | 19 | 19 | |||||||
KB Securities Co., Ltd. | Purchase of securities | 19 | 19 | |||||||
KB Life Insurance Co., Ltd. | Purchase of securities | 104 | 3,438 | |||||||
KB Insurance Co., Ltd. | Purchase of securities | 9 | 3,343 | |||||||
KB Asset Management Co., Ltd. | Purchase of securities | 2 | 666 | |||||||
KB Kookmin Card Co., Ltd. | Loan commitment in Korean won | 89,768 | 86,400 | |||||||
41.10 Details of compensation to key management for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||||||
| Short-term employee benefits | Post- employment benefits | Share-based payments | Total | |||||||||||||
Registered directors (executive) | 1,804 | 76 | 1,532 | 3,412 | ||||||||||||
Registered directors (non-executive) | 432 | — | — | 432 | ||||||||||||
Non-registered directors | 6,286 | 297 | 3,719 | 10,302 | ||||||||||||
|
|
|
|
|
|
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| |||||||||
| 8,522 | 373 | 5,251 | 14,146 | |||||||||||||
|
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194
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | 2019 | |||||||||||||||
| Short-term employee benefits | Post- employment benefits | Share-based payments | Total | |||||||||||||
Registered directors (executive) | 1,833 | 49 | 1,594 | 3,476 | ||||||||||||
Registered directors (non-executive) | 402 | — | — | 402 | ||||||||||||
Non-registered directors | 5,767 | 213 | 4,235 | 10,215 | ||||||||||||
|
|
|
|
|
|
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| |||||||||
| 8,002 | 262 | 5,829 | 14,093 | |||||||||||||
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41.11 Major types of transactions between the Group and the related parties include deposit taking transactions, loan transactions such as general purpose loans, corporate purchase loans, B2B loans etc., settlements of funds arising from overseas remittance, providing credit line through the acceptance of letter of credit issued by the Bank, and overdraft accounts arising from net settlement agreement between the Bank and KB Kookmin Card Co., Ltd.
41.12 Details of collateral provided to related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||||||||||
Assets pledged * | Carrying amount | Collateralized amount | Carrying amount | Collateralized amount | ||||||||||||||
Parent’s subsidiaries | ||||||||||||||||||
KB Securities Co., Ltd. | Securities | 52,616 | 52,000 | 50,471 | 50,000 | |||||||||||||
KB Life Insurance Co., Ltd. | Securities | 25,896 | 25,000 | 25,977 | 25,000 | |||||||||||||
| Building/ Land | — | — | 207,333 | 32,500 | ||||||||||||||
KB Insurance Co., Ltd. | Securities | 49,982 | 50,000 | 49,990 | 50,000 | |||||||||||||
| Building/ Land | — | — | 207,333 | 26,000 | ||||||||||||||
| * | Collaterals related to lease contracts arising from operating activities between related parties are excluded. |
41.13 Details of collateral provided from related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Assets pledged as collateral 1 | December 31, 2020 | December 31, 2019 | |||||||
Parent’s subsidiaries | ||||||||||
KB Securities Co., Ltd. | Time deposits / Beneficiary right certificate | 167,000 | 167,000 | |||||||
| Securities | 26,981 | 27,948 | ||||||||
| Real estate 2 | 12,000 | 12,000 | ||||||||
KB Life Insurance Co., Ltd. | Securities | 10,000 | 10,000 | |||||||
KB Kookmin Card Co., Ltd. | Time deposits | 22,000 | 22,000 | |||||||
KB Insurance Co., Ltd. | Securities | 60,000 | 135,500 | |||||||
KB Credit Information Co., Ltd. | Time deposits and others | 1,848 | 1,611 | |||||||
KB Star Office Private Real Estate Investment Trust No.4 | Real estate | 24,000 | 24,000 | |||||||
Key management | Time deposits and others | 213 | 192 | |||||||
| Real estate | 4,056 | 2,922 | ||||||||
| 1 | Collaterals related to lease contracts arising from operating activities between related parties are excluded. |
| 2 | Related to KB Wise Star Jongno Tower Real Estate Master Fund, a subsidiary of KB Securities Co., Ltd. |
195
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
As of December 31, 2020, Incheon Bridge Co., Ltd., a related party, provides fund management account, civil engineering works insurance, and management and operations rights as senior collateral amounting toW 611,000 million to the project financing group that consists of the Bank and 5 other institutions, and as subordinated collateral amounting toW 384,800 million to subordinated debt holders that consist of the Bank and 2 other institutions. Also, it provides certificate of credit guarantee amounting toW 400,000 million as collateral to the project financing group that consists of the Bank and 5 other institutions.
41.14 The amounts of debt securities and others purchased through KB securities Co., Ltd. areW 14,312,409 million andW 12,778,602 million for the years ended December 31, 2020 and 2019, respectively, and the amounts of debt securities and others sold through KB securities Co., Ltd. areW 14,569,878 million andW 7,799,397 million for the years ended December 31, 2020 and 2019, respectively. In addition, KB Securities Co., Ltd. acquired through underwriting ofW 400,000 million andW 2,120,000 million of debentures issued by the Bank for the years ended December 31, 2020 and 2019, respectively.
41.15 The amounts of intangible assets and others purchased from KB Data System Co., Ltd. areW 21,547 million andW 37,004 million for the years ended December 31, 2020 and 2019, respectively.
41.16 The Bank has entered into CLS (Continuous Linked Settlement) service agreement with KB Securities Co., Ltd. and accordingly the Bank is able to provide intraday liquidity of USD 500 million on the condition of repayment on the day of payment.
41.17 The Bank and KB Kookmin Card Co., Ltd. are jointly and severally liable for the liabilities of the Bank before the spin-off date.
196
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
42. Business Combination
42.1 Acquisition of PRASAC Microfinance Institution Plc (PRASAC).
On April 10, 2020, the Group acquired a 161 million shares which is 70% of the total 230 million shares in PRASAC, a microfinance company in Cambodia, for US$ 603 million from existing shareholders. Therefore, PRASAC became a subsidiary of the Group.
The main purpose of the business combination is to improve competitiveness of global business by maximizing the operational synergy with foreign subsidiaries.
Details of consideration paid, assets acquired and liabilities assumed are as follows:
| (In millions of Korean won) | 2020 | |||
Consideration | ||||
Cash | 733,976 | |||
|
| |||
Total consideration transferred (A) | 733,976 | |||
|
| |||
Recognized amounts of identifiable assets acquired and liabilities assumed | ||||
Cash and due from financial institutions | 658,865 | |||
Loans measured at amortized cost | 3,194,211 | |||
Financial investments | 35 | |||
Property and equipment | 24,472 | |||
Intangible assets | 1,821 | |||
Current income tax assets | 873 | |||
Deferred income tax assets | 26,330 | |||
Other assets | 37,325 | |||
|
| |||
Total assets (B) | 3,943,932 | |||
|
| |||
Deposits | 2,222,944 | |||
Borrowings | 1,038,684 | |||
Debentures | 89,570 | |||
Current income tax liabilities | 9,238 | |||
Deferred income tax liabilities | 323 | |||
Other liabilities | 101,696 | |||
|
| |||
Total liabilities (C) | 3,462,455 | |||
|
| |||
Total identifiable net assets | 481,477 | |||
|
| |||
Non-controlling interests (D) 1 | 144,443 | |||
Goodwill (=A-B+C+D) 2 | 396,942 | |||
| 1 | Measured at the proportionate share (30%) of the fair value of PRASAC’s net assets as of the acquisition date. |
| 2 | As a result of the business combination, there was a goodwill and the Group recognized it as intangible assets in the consolidated statement of financial position. |
197
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
Details of loans acquired are as follows:
| (In millions of Korean won) | 2020 | |||
Acquiree’s carrying amount of loans | 3,294,798 | |||
Present value of contractual cash flows not expected to be paid | (100,587 | ) | ||
|
| |||
Fair value of loans | 3,194,211 | |||
|
| |||
The Group has signed an agreement with the existing shareholders of PRASAC. The existing shareholders have the right of put option to sell 30% of the remaining shares to the Group, and they are entitled to exercise their rights at the exercise price calculated on the basis of the adjusted book value of net asset as of 2021 year-end, within six months from the issue date of the audit report or the confirmation date of the adjusted value. If the put option is not exercised until its expiry, the Group has a right to exercise a call option during the six months following the expiry of such put option. All shareholders are restricted from selling shares or additional pledge before exercising the put option and call option. In addition, the Group has agreed to pay dividends to existing shareholders of PRASAC for 30% of the amount exceeding USD 370 million based on the adjusted carrying value of net asset and this payment can be added to the exercised price of put option in accordance with the shareholders’ agreement.
Amount of the recognized liabilities and deducted equity in relation to the above agreement with shareholders are as follows:
| (In millions of Korean won) | 2020 | |||
Agreement with shareholders (purchase of remaining shares and payment of dividends) | ||||
Other payables (present value of exercising price of options) | 308,236 | |||
Other payables (present value of expected dividends) | 102,986 | |||
|
| |||
| 411,222 | ||||
|
| |||
Attributable to ordinary equity holders of the Parent Company (capital surplus) | (411,222 | ) | ||
Operating income and net profit of PRASAC for the period after the acquisition date wereW 147,571 million andW 118,339 million, respectively, which are reflected in the consolidated statement of comprehensive income, and the amount attributed to net profit to shareholders of the Parent Company isW 82,837 million.
If PRASAC was consolidated from the beginning of the current period, its operating income and net profit to be reflected in the consolidated statement of comprehensive income would beW 183,735 million andW 147,383 million, respectively and the amount that would have been attributed to net profit to shareholders of the Parent Company isW 103,168 million.
198
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
42.2 Acquisition of PT Bank Bukopin TBK
At the Board of Directors meeting held on July 16, 2020, the Group has decided to acquire additional ordinary shares of PT Bank Bukopin TBK, the Group’s associate, which operates a banking business in Indonesia, through issuance of shares in the form of an allotment to shareholders (1st) and an allotment to the third party (2nd).
Accordingly, the Group acquired 2,967,600,372 ordinary shares for IDR 534,168,066,960 (W 43,909 million) from issuance of shares in the form of an allotment to shareholders (1st) on July 30, 2020, and 16,360,578,947 ordinary shares for IDR 3,108,509,999,930 (W 252,722 million) from issuance of shares in the form of an allotment to the third party (2nd) on September 2, 2020. The Group secured 67.00% of PT Bank Bukopin TBK through paid-in capital increase twice, and PT Bank Bukopin TBK became a subsidiary of the Group on September 2, 2020.
The main purpose of the business combination is to improve competitiveness of global business by maximizing the operational synergy with foreign subsidiaries.
Details of consideration paid, assets acquired and liabilities assumed are as follows:
| (In millions of Korean won) | 2020 | |||
Consideration | ||||
Fair value of existing shares at the time of exchange | 78,446 | |||
Cash (=16,360,578,947shares x 190 IDR) | 252,722 | |||
|
| |||
Total consideration transferred (A) | 331,168 | |||
|
| |||
Recognized amounts of identifiable assets acquired and liabilities assumed | ||||
Cash and due from financial institutions | 300,424 | |||
Financial assets at fair value through profit or loss | 3,960 | |||
Derivative assets | 130 | |||
Loans measured at amortized cost | 4,256,209 | |||
Financial investments | 469,625 | |||
Property and equipment | 280,197 | |||
Intangible assets | 99,085 | |||
Deferred income tax assets | 25,350 | |||
Assets held for sale | 183,642 | |||
Other assets | 272,775 | |||
|
| |||
Total assets (B) | 5,891,397 | |||
|
| |||
Deposits | 4,253,557 | |||
Borrowings | 838,142 | |||
Debentures | 141,806 | |||
Provisions | 3,522 | |||
Net defined benefit liabilities | 15,141 | |||
Other liabilities | 276,336 | |||
|
| |||
Total liabilities (C) | 5,528,504 | |||
|
| |||
Total identifiable net assets | 362,893 | |||
|
| |||
Non-controlling interests 1 | 120,945 | |||
Goodwill (=A-B+C+D) 2 | 89,220 | |||
| 1 | The sum of the existing non-controlling interests held by PT Bank Bukopin TBK and the proportionate share (33%) of the fair value of PT Bank Bukopin TBK’s net assets as of the acquisition date. |
199
Kookmin Bank and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2020 and 2019
| 2 | As a result of the business combination, there was a goodwill and the Group recognized it as intangible assets in the consolidated statement of financial position. |
Details of loans acquired are as follows:
| (In millions of Korean won) | 2020 | |||
Acquiree’s carrying amount of loans | 5,053,321 | |||
Present value of contractual cash flows not expected to be paid | (797,112 | ) | ||
|
| |||
Fair value of loans | 4,256,209 | |||
|
| |||
In 2020, the Group measured 33.90% shares of PT Bank Bukopin TBK, which the Group held before the business combination, at fair value, and recognizedW 30,277 million as gain on investment in associates in the consolidated statement of comprehensive income.
Operating loss and net loss of PT Bank Bukopin TBK for the period after the acquisition date wereW 61,051 million andW 43,402 million, respectively, which are reflected in the consolidated statement of comprehensive income, and the amount attributed to net loss to shareholders of the Parent Company isW 29,223 million.
If PT Bank Bukopin TBK was consolidated from the beginning of the current period, its operating loss and net loss to be reflected in the consolidated statement of comprehensive income would beW 190,584 million andW 146,227 million, respectively and the amount that would have been attributed to net loss to shareholders of the Parent Company isW 97,981 million.
Details of intangible assets recognized as a result of business combinations are as follows:
| (In millions of Korean won) | 2020 | |||
Core deposits 1 | 95,477 | |||
Others 2 | 3,608 | |||
|
| |||
| 99,085 | ||||
|
| |||
| 1 | It is an identifiable intangible asset and reflects the fair value of financing costs saved through stable relationships with saving customers. |
| 2 | Software and other intangible assets which were previously held by PT Bank Bukopin TBK. |
43. Approval of Issuance of the Consolidated Financial Statements
The issuance of the Group’s consolidated financial statements as of and for the year ended December 31, 2020, was approved by the Board of Directors on February 3, 2021.
200
Contents
| Page | ||||
| 1 | ||||
Separate Financial Statements | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
Independent Auditors’ Report on Internal Control over Financial Reporting | 189 | |||
Operating Status Report of the Internal Control over Financial Reporting | 191 | |||
Based on a report originally issued in Korean
To the Shareholder and Board of Directors
Kookmin Bank
Opinion
We have audited the separate financial statements of Kookmin Bank (“the Bank”), which comprise the statement of financial position as of December 31, 2020, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information..
In our opinion, the accompanying separate financial statements present fairly, in all material respects, the financial position of the Bank as of December 31, 2020, and its financial performance and its cash flows for the year then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).
Basis for Opinion
We conducted our audits in accordance with Korean Standards on Auditing (KSAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Separate Financial Statements section of our report. We are independent of the Bank in accordance with the ethical requirements that are relevant to our audit of the separate financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
As described in note 37.6 (d) to the separate financial statements, the ongoing COVID-19 pandemic has a negative impact on the global economy and increased uncertainty in estimation of the Bank’s expected credit losses on certain portfolios and potential impairment on assets, which might adversely affect the Bank’s ability to generate revenue. Our opinion is not modified in respect of this matter.
Other Matters
The separate financial statements of the Bank for the year ended December 31, 2019 were audited by another auditor who expressed an unmodified opinion on those statements on March 5, 2020.
The procedures and practices utilized in the Republic of Korea to audit such separate financial statements may differ from those generally accepted and applied in other countries.
Responsibilities of Management and Those Charged with Governance for the Separate Financial Statements
Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the separate financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Bank’s financial reporting process.
1
Auditors’ Responsibilities for the Audit of the Separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these separate financial statements.
As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| • | Identify and assess the risks of material misstatement of the separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| • | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. |
| • | Evaluate the appropriateness of accounting policies used in the preparation of the separate financial statements and the reasonableness of accounting estimates and related disclosures made by management. |
| • | Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Bank to cease to continue as a going concern. |
| • | Evaluate the overall presentation, structure and content of the separate financial statements, including the disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
/s/ KPMG Samjong Accounting Corp.
Seoul, Korea
March 8, 2021
This report is effective as of March 8, 2021, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying separate financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.
|
2
(A wholly owned subsidiary of KB Financial Group Inc.)
Separate Statements of Financial Position
December 31, 2020 and 2019
| (In millions of Korean won) | Notes | 2020 | 2019 | |||||||||
Assets |
| |||||||||||
Cash and due from financial institutions | 4,6,7,36 | 17,989,041 | 13,093,005 | |||||||||
Financial assets at fair value through profit or loss | 4,6,8,12 | 12,191,559 | 9,785,350 | |||||||||
Derivative financial assets | 4,6,9 | 4,581,835 | 2,319,687 | |||||||||
Loans measured at amortized cost | 4,6,8,10,11 | 317,673,667 | 291,425,606 | |||||||||
Financial investments | 4,6,8,12 | 57,371,162 | 52,039,028 | |||||||||
Investments in associates and subsidiaries | 13,38 | 2,198,091 | 1,050,407 | |||||||||
Property and equipment | 14 | 3,733,121 | 3,770,027 | |||||||||
Investment property | 14 | 89,106 | 38,400 | |||||||||
Intangible assets | 15 | 432,643 | 265,996 | |||||||||
Current income tax assets | 32 | 40,176 | 11,373 | |||||||||
Assets held for sale | 17 | 5,263 | 6,941 | |||||||||
Other assets | 4,6,18 | 5,820,570 | 5,680,023 | |||||||||
|
|
|
| |||||||||
Total assets | 422,126,234 | 379,485,843 | ||||||||||
|
|
|
| |||||||||
Liabilities | ||||||||||||
Financial liabilities at fair value through profit or loss | 4,6 | 141,277 | 80,235 | |||||||||
Derivative financial liabilities | 4,6,9 | 4,295,713 | 2,156,763 | |||||||||
Deposits | 4,6,19 | 319,082,424 | 295,690,896 | |||||||||
Borrowings | 4,6,20 | 25,099,647 | 18,706,328 | |||||||||
Debentures | 4,6,21 | 24,690,676 | 17,142,392 | |||||||||
Provisions | 22 | 384,133 | 310,666 | |||||||||
Net defined benefit liabilities | 23 | 150,735 | 179,046 | |||||||||
Current income tax liabilities | 32 | 3,962 | 6,814 | |||||||||
Deferred income tax liabilities | 16,32 | 322,721 | 200,412 | |||||||||
Other liabilities | 4,6,24,30 | 17,495,134 | 16,151,045 | |||||||||
|
|
|
| |||||||||
Total liabilities | 391,666,422 | 350,624,597 | ||||||||||
|
|
|
| |||||||||
Equity | ||||||||||||
Capital stock | 25 | 2,021,896 | 2,021,896 | |||||||||
Hybrid securities | 25 | 574,523 | 574,523 | |||||||||
Capital surplus | 25 | 5,220,031 | 5,220,031 | |||||||||
Accumulated other comprehensive income | 25,34 | 594,413 | 143,388 | |||||||||
Retained earnings | 25,33,34 | 22,048,949 | 20,901,408 | |||||||||
(Provision of regulatory reserve for credit losses | ||||||||||||
December 31, 2020 : | ||||||||||||
December 31, 2019 : | ||||||||||||
(Amounts estimated to be appropriated | ||||||||||||
December 31, 2020 : | ||||||||||||
December 31, 2019 : | ||||||||||||
|
|
|
| |||||||||
Total equity | 30,459,812 | 28,861,246 | ||||||||||
|
|
|
| |||||||||
Total liabilities and equity | 422,126,234 | 379,485,843 | ||||||||||
|
|
|
| |||||||||
The above separate statements of financial position should be read in conjunction with the accompanying notes.
3
(A wholly owned subsidiary of KB Financial Group Inc.)
Separate Statements of Comprehensive Income
December 31, 2020 and 2019
| (In millions of Korean won) | Notes | 2020 | 2019 | |||||||||
Interest income | 9,718,689 | 10,533,742 | ||||||||||
Interest income from financial instruments at fair value through other comprehensive income and amortized cost | 9,637,976 | 10,426,144 | ||||||||||
Interest income from financial instruments at fair value through profit or loss | 80,713 | 107,598 | ||||||||||
Interest expense | (3,279,833 | ) | (4,243,698 | ) | ||||||||
|
|
|
| |||||||||
Net interest income | 26 | 6,438,856 | 6,290,044 | |||||||||
|
|
|
| |||||||||
Fee and commission income | 1,455,607 | 1,505,343 | ||||||||||
Fee and commission expense | (350,357 | ) | (337,751 | ) | ||||||||
|
|
|
| |||||||||
Net fee and commission income | 27 | 1,105,250 | 1,167,592 | |||||||||
|
|
|
| |||||||||
Net gains on financial instruments at fair value through profit or loss | 28 | 335,681 | 421,140 | |||||||||
|
|
|
| |||||||||
Net other operating expense | 29 | (221,587 | ) | (594,574 | ) | |||||||
|
|
|
| |||||||||
General and administrative expenses | 14,15,23,30,39 | (4,027,767 | ) | (3,851,974 | ) | |||||||
|
|
|
| |||||||||
Operating profit before provision for credit losses | 3,630,433 | 3,432,228 | ||||||||||
|
|
|
| |||||||||
Provision for credit losses | 7,11,12,18,22 | (460,813 | ) | (102,970 | ) | |||||||
|
|
|
| |||||||||
Operating profit | 3,169,620 | 3,329,258 | ||||||||||
Net non-operating loss | 31 | (79,223 | ) | (34,636 | ) | |||||||
|
|
|
| |||||||||
Profit before income tax expense | 3,090,397 | 3,294,622 | ||||||||||
Income tax expense | 32 | (823,438 | ) | (872,929 | ) | |||||||
|
|
|
| |||||||||
Profit for the period | 2,266,959 | 2,421,693 | ||||||||||
|
|
|
| |||||||||
(Adjusted profit after provision of regulatory reserve for credit losses | 25 | |||||||||||
2020 : | ||||||||||||
2019 : | ||||||||||||
Items that will not be reclassified to profit or loss: | ||||||||||||
Remeasurements of net defined benefit liabilities | 23 | (4,001 | ) | (40,369 | ) | |||||||
Net gains (losses) on equity instruments at fair value through other comprehensive income | 666,641 | (17,151 | ) | |||||||||
Items that may be reclassified subsequently to profit or loss: | ||||||||||||
Exchange differences on translating foreign operations | (3,457 | ) | 781 | |||||||||
Net gains on debt instruments at fair value through other comprehensive income | 34,871 | 33,506 | ||||||||||
Losses on cash flow hedging instruments | 9 | (6,382 | ) | (15,230 | ) | |||||||
|
|
|
| |||||||||
Other comprehensive income for the period, net of tax | 34 | 687,672 | (38,463 | ) | ||||||||
|
|
|
| |||||||||
Total comprehensive income for the period | 2,954,631 | 2,383,230 | ||||||||||
|
|
|
| |||||||||
The above separate statements of comprehensive income should be read in conjunction with the accompanying notes.
4
(A wholly owned subsidiary of KB Financial Group Inc.)
Separate Statements of Changes in Equity
December 31, 2020 and 2019
| (In millions of Korean won) | Notes | Capital Stock | Hybrid Securities | Capital Surplus | Accumulated Other Comprehensive Income | Retained Earnings | Total Equity | |||||||||||||||||||||
Balance at January 1, 2019 | 2,021,896 | — | 5,220,031 | 163,376 | 19,165,416 | 26,570,719 | ||||||||||||||||||||||
Comprehensive income for the period | ||||||||||||||||||||||||||||
Profit for the period | — | — | — | — | 2,421,693 | 2,421,693 | ||||||||||||||||||||||
Remeasurements of net defined benefit liabilities | — | — | — | (40,369 | ) | — | (40,369 | ) | ||||||||||||||||||||
Net losses on equity instruments at fair value through other comprehensive income | — | — | — | 1,324 | (18,475 | ) | (17,151 | ) | ||||||||||||||||||||
Exchange differences on translating foreign operations | — | — | — | 781 | — | 781 | ||||||||||||||||||||||
Net gains on debt instruments at fair value through other comprehensive income | — | — | — | 33,506 | — | 33,506 | ||||||||||||||||||||||
Losses on cash flow hedging instruments | — | — | — | (15,230 | ) | — | (15,230 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total comprehensive income for the period | — | — | — | (19,988 | ) | 2,403,218 | 2,383,230 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Transactions with the shareholder | ||||||||||||||||||||||||||||
Annual dividends | — | — | — | — | (667,226 | ) | (667,226 | ) | ||||||||||||||||||||
Issuance of hybrid securities | — | 574,523 | — | — | — | 574,523 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total transactions with the shareholder | — | 574,523 | — | — | (667,226 | ) | (92,703 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at December 31, 2019 | 2,021,896 | 574,523 | 5,220,031 | 143,388 | 20,901,408 | 28,861,246 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at January 1, 2020 | 2,021,896 | 574,523 | 5,220,031 | 143,388 | 20,901,408 | 28,861,246 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Comprehensive income for the period | ||||||||||||||||||||||||||||
Profit for the period | — | — | — | — | 2,266,959 | 2,266,959 | ||||||||||||||||||||||
Remeasurements of net defined benefit liabilities | — | — | — | (4,001 | ) | — | (4,001 | ) | ||||||||||||||||||||
Net gains on equity instruments at fair value through other comprehensive income | — | — | — | 429,994 | 236,647 | 666,641 | ||||||||||||||||||||||
Exchange differences on translating foreign operations | — | — | — | (3,457 | ) | — | (3,457 | ) | ||||||||||||||||||||
Net gains on debt instruments at fair value through other comprehensive income | — | — | — | 34,871 | — | 34,871 | ||||||||||||||||||||||
Losses on cash flow hedging instruments | — | — | — | (6,382 | ) | — | (6,382 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total comprehensive income for the period | — | — | — | 451,025 | 2,503,606 | 2,954,631 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Transactions with the shareholder | ||||||||||||||||||||||||||||
Annual dividends | — | — | — | — | (731,926 | ) | (731,926 | ) | ||||||||||||||||||||
Interim dividends | — | — | — | — | (598,481 | ) | (598,481 | ) | ||||||||||||||||||||
Interest (dividends) on hybrid securities | — | — | — | — | (25,658 | ) | (25,658 | ) | ||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total transactions with the shareholder | — | — | — | — | (1,356,065 | ) | (1,356,065 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at December 31, 2020 | 2,021,896 | 574,523 | 5,220,031 | 594,413 | 22,048,949 | 30,459,812 | ||||||||||||||||||||||
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| |||||||||||||||||
The above separate statements of changes in equity should be read in conjunction with the accompanying notes.
5
(A wholly owned subsidiary of KB Financial Group Inc.)
Separate Statements of Cash Flows
December 31, 2020 and 2019
| (in millions of Korean won) | Notes | 2020 | 2019 | |||||||||
Cash flows from operating activities | ||||||||||||
Profit for the period | 2,266,959 | 2,421,693 | ||||||||||
|
|
|
| |||||||||
Adjustment for non-cash items | ||||||||||||
Net gains on financial instruments at fair value through profit or loss | (321,161 | ) | (192,418 | ) | ||||||||
Net losses (gains) on derivative financial investments for hedging purposes | 8,168 | (108,267 | ) | |||||||||
Adjustment of fair value of derivative financial instruments | (3,198 | ) | 282 | |||||||||
Provision for credit losses | 460,889 | 102,609 | ||||||||||
Net losses (gains) on financial investments | (179,941 | ) | (95,524 | ) | ||||||||
Net losses (gains) on associates and subsidiaries | 75,760 | (101 | ) | |||||||||
Depreciation and amortization expense | 541,435 | 498,480 | ||||||||||
Other net losses (gains) on property and equipment/intangible assets | (15,051 | ) | 1,503 | |||||||||
Share-based payment |
| 13,364 | 15,173 | |||||||||
Post-employment benefits | 159,385 | 157,946 | ||||||||||
Net interest expense | 567,597 | 237,405 | ||||||||||
Gains on foreign currency translation | (206,135 | ) | (93,555 | ) | ||||||||
Other expense (income) | (14,310 | ) | 62,874 | |||||||||
|
|
|
| |||||||||
| 1,086,802 | 586,407 | |||||||||||
|
|
|
| |||||||||
Changes in operating assets and liabilities | ||||||||||||
Financial assets at fair value through profit or loss | (762,469 | ) | (1,212,179 | ) | ||||||||
Derivative financial instrument |
| 15,185 | (18,856 | ) | ||||||||
Loans measured at amortized cost | (28,023,528 | ) | (16,499,522 | ) | ||||||||
Current income tax assets | (19,070 | ) | (8,741 | ) | ||||||||
Deffered income tax assets | (286 | ) | 164 | |||||||||
Other assets | (4,022,100 | ) | (873,028 | ) | ||||||||
Financial liabilities at fair value through profit or loss | 49,648 | (23,164 | ) | |||||||||
Deposits | 24,383,949 | 27,859,539 | ||||||||||
Deferred income tax liabilities |
| (139,844 | ) | 137,231 | ||||||||
Other liabilities | (1,393,369 | ) | 1,231,001 | |||||||||
|
|
|
| |||||||||
| (9,911,884 | ) | 10,592,445 | ||||||||||
|
|
|
| |||||||||
Net cash inflow (outflow) from operating activities | (6,558,123 | ) | 13,600,545 | |||||||||
|
|
|
| |||||||||
Cash flows from investing activities | ||||||||||||
Net cash flows from derivative financial instrument for hedging purposes | 1,147 | 9,589 | ||||||||||
Disposal of financial assets at fair value through profit or loss | 9,236,623 | 9,238,975 | ||||||||||
Acquisition of financial assets at fair value through profit or loss | (10,740,848 | ) | (9,007,163 | ) | ||||||||
Disposal of financial investments |
| 72,082,607 | 59,503,216 | |||||||||
Acquisition of financial investments | (76,798,447 | ) | (68,575,150 | ) | ||||||||
Disposal of investments in associates and subsidiaries | 168,000 | 16,088 | ||||||||||
Acquisition of investments in associates and subsidiaries | (1,391,444 | ) | (69,004 | ) | ||||||||
Disposal of property and equipment | 295 | 57 | ||||||||||
Acquisition of property and equipment | (330,500 | ) | (523,504 | ) | ||||||||
Disposal of intangible assets | 1,125 | 7,126 | ||||||||||
Acquisition of intangible assets | (75,967 | ) | (73,202 | ) | ||||||||
Others | 33,362 | (59,821 | ) | |||||||||
|
|
|
| |||||||||
Net cash outflow from investing activities | (7,814,047 | ) | (9,532,793 | ) | ||||||||
|
|
|
| |||||||||
Cash flows from financing activities | ||||||||||||
Net cash flows from derivative financial instrument for hedging purposes | (16,182 | ) | (28,631 | ) | ||||||||
Net increase in borrowings | 6,965,556 | 955,745 | ||||||||||
Increase in debentures |
| 14,453,023 | 4,766,568 | |||||||||
Decrease in debentures | (6,606,480 | ) | (9,561,329 | ) | ||||||||
Payment of dividends | (1,330,407 | ) | (667,226 | ) | ||||||||
Net increase (decrease) in other payables to trust accounts | 2,401,701 | (89,353 | ) | |||||||||
Issuance of hybrid securities | — | 574,523 | ||||||||||
Others | (28,779 | ) | (36,849 | ) | ||||||||
|
|
|
| |||||||||
Net cash inflow (outflow) from financing activities | 15,838,432 | (4,086,552 | ) | |||||||||
|
|
|
| |||||||||
Effect of exchange rate changes on cash and cash equivalents | (227,167 | ) | 155,856 | |||||||||
|
|
|
| |||||||||
Net increase in cash and cash equivalents | 1,239,095 | 137,056 | ||||||||||
Cash and cash equivalents at the beginning of the period | 36 | 4,545,632 | 4,408,576 | |||||||||
|
|
|
| |||||||||
Cash and cash equivalents at the end of the period | 36 | 5,784,727 | 4,545,632 | |||||||||
|
|
|
| |||||||||
The above separate statements of cash flows should be read in conjunction with the accompanying notes.
6
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
1. The Bank
Kookmin Bank (the “Bank”) was incorporated in 1963 under the Citizens National Bank Act to provide banking services to the general public and to small and medium-sized enterprises. Pursuant to the Repeal Act of the Citizens National Bank Act, effective January 5, 1995, the Bank’s status changed to a financial institution which operates under the Banking Act and Commercial Act.
The Bank merged with Korea Long Term Credit Bank on December 31, 1998, and with its subsidiaries, Daegu, Busan, Jeonnam Kookmin Mutual Savings & Finance Co., Ltd., on August 22, 1999. Pursuant to the directive from the Financial Services Commission related to the Structural Improvement of the Financial Industry Act, the Bank acquired certain assets, including performing loans, and assumed most of the liabilities of Daedong Bank on June 29, 1998. Also, the Bank completed the merger with Housing and Commercial Bank (“H&CB”) on October 31, 2001, and merged with Kookmin Credit Card Co., Ltd., a majority-owned subsidiary, on September 30, 2003. Meanwhile, the Bank spun off its credit card business segment on February 28, 2011, and KB Kookmin Card Co., Ltd. became a subsidiary of KB Financial Group Inc.
The Bank listed its shares on the Stock Market Division of the Korea Exchange (“KRX”) in September 1994. As a result of the merger with H&CB, the shareholders of the former Kookmin Bank and H&CB received new common shares of the Bank which were relisted on the KRX on November 9, 2001. In addition, H&CB listed its American Depositary Shares (“ADS”) on the New York Stock Exchange (“NYSE”) on October 3, 2000, prior to the merger. Following the merger with H&CB, the Bank listed its ADS on the NYSE on November 1, 2001. The Bank became a wholly owned subsidiary of KB Financial Group Inc. through a comprehensive stock transfer on September 29, 2008. Subsequently, the Bank’s shares and its ADS, each listed on the KRX and the NYSE, were delisted on October 10, 2008 and September 26, 2008, respectively. As of December 31, 2020, the Bank’s paid-in capital isW 2,021,896 million.
The Bank engages in the banking business in accordance with the Banking Act, trust business in accordance with the Financial Investment Services and Capital Markets Act, mobile virtual network business in accordance with Special Act on Support for Financial Innovation, and other relevant businesses. As of December 31, 2020, the Bank operates its Seoul headquarters and 972 domestic branches, and eight overseas branches (excluding six subsidiaries and one office).
2. Basis of Preparation
2.1 Application of Korean IFRS
The Bank maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language 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 separate financial statements.
The separate financial statements of the Bank have been prepared in accordance with Korean IFRS. These are the standards and related interpretations issued by the International Accounting Standards Board (“IASB”) that have been adopted by the Republic of Korea.
The preparation of the separate financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Bank’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.
7
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
The Bank has prepared the separate financial statements in accordance with Korean IFRS No.1027 Separate Financial Statements.
2.1.1 The Bank has applied the following amended standards for the first time for its annual reporting period commencing January 1, 2020.
| • | Amendments to Korean IFRS No.1001 Presentation of Financial Statements and Korean IFRS No.1008 Accounting policies, changes in accounting estimates and errors – Definition of Material |
The amendments clarify the definition of material. Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. These amendments do not have a significant impact on the financial statements.
| • | Amendments to Korean IFRS No.1103 Business Combination – Definition of a Business |
The amended definition of a business requires an acquisition to include an input and a substantive process that together significantly contribute to the ability to create outputs and the definition of output excludes the returns in the form of lower costs and other economic benefits. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, an entity may elect to apply an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. These amendments do not have a significant impact on the financial statements.
2.1.2 The Bank has early adopted the following amended standards.
| • | Amendments to Korean IFRS No.1107 Financial Instruments: Disclosure, Korean IFRS No.1109 Financial Instruments – Interest Rate Benchmark Reform |
These amendments provide exceptions applying hedge accounting even though interest rate benchmark reform gives rise to uncertainties. In the hedging relationship, an entity shall assume that the interest rate benchmark on which the hedge cash flows are based is not altered as a result of interest rate benchmark reform when determining whether a forecast transaction is highly probable and prospectively assessing hedging effectiveness. For a hedge of a non-contractually specified benchmark component of interest rate risk, an entity shall apply the requirement that the risk component shall be separately identifiable only at the inception of the hedging relationship. The application of this exception is ceased either when the uncertainty arising from interest rate benchmark reform is no longer present with respect to the timing and the amount of the interest rate benchmark-based cash flows of the hedge item, or when the hedging relationship that the hedge item is part of is discontinued. The Bank early adopted these amendments since 2019 as the amendments allow the early adoption.
The significant benchmark interest rate indicators for the hedge relationship are LIBOR and CD, and those affected by these amendments should be referred to Note 9.
8
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
2.1.3 The following amended standards have been published that are not mandatory for December 31, 2020 reporting periods and have not been early adopted by the Bank.
| • | Amendments to Korean IFRS No.1116 Leases – 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, and the amounts recognized in profit or loss as a result of applying this exemption should be disclosed. The amendments should be applied for annual periods beginning on or after June 1, 2020, and earlier application is permitted. The Bank does not expect that these amendments have a significant impact on the financial statements.
| • | Amendments to Korean IFRS No.1109 Financial Instruments, Korean IFRS No.1039 Financial Instruments: Recognition and Measurement, Korean IFRS No.1107 Financial Instruments: Disclosure, Korean IFRS No.1104 Insurance Contracts and Korean IFRS No.1116 Lease – Interest Rate Benchmark Reform |
In relation to interest rate benchmark reform, the amendments provide a practical expedient allowing entities to change the effective interest rate instead of changing the carrying amount and apply hedge accounting without discontinuance although the interest rate benchmark is replaced in hedging relationship. The amendments should be applied for annual periods beginning on or after January 1, 2021, and earlier application is permitted. The Bank does not expect that these amendments have a significant impact on the financial statements.
| • | Amendments to Korean IFRS No.1016 Property, Plant and Equipment – Proceeds before intended use |
The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. Instead, the entity will recognize the proceeds from selling such items, and the costs of producing those items, as profit or loss. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Bank does not expect that these amendments have a significant impact on the financial statements.
| • | Amendments to Korean IFRS No.1037 Provisions, Contingent Liabilities and Contingent Assets – Onerous Contracts: Cost of Fulfilling a Contract |
The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Bank does not expect that these amendments have a significant impact on the financial statements.
| • | Annual improvements to Korean IFRS 2018-2020 |
Annual improvements of Korean IFRS 2018-2020 Cycle should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Bank does not expect that these amendments have a significant impact on the financial statements.
| • | Korean IFRS No.1101 First time Adoption of Korean International Financial Reporting Standards – Subsidiaries that are first-time adopters |
| • | Korean IFRS No.1109 Financial Instruments – Fees related to the 10% test for derecognition of financial liabilities |
| • | Korean IFRS No.1116 Leases – Lease incentives |
| • | Korean IFRS No.1041 Agriculture – Measuring fair value |
9
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| • | Amendments to Korean IFRS No.1001 Presentation of Financial Statements – Classification of Liabilities as Current or Non-current |
The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise right to defer settlement of the liability or the management’s expectations thereof. Also, the settlement of liability includes the transfer of the entity’s own equity instruments; however, it would be excluded if an option to settle the liability by the transfer of the entity’s own equity instruments is recognized separately from the liability as an equity component of a compound financial instrument. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Bank does not expect that these amendments have a significant impact on the financial statements.
2.2 Measurement Basis
The separate financial statements have been prepared based on the historical cost accounting model unless otherwise specified.
2.3 Functional and Presentation Currency
Items included in the financial statements of the Bank are measured using the currency of the primary economic environment in which the Bank operates (“functional currency”). The separate financial statements are presented in Korean won, which is the Bank’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.
Uncertainties in estimates and assumptions with significant risks that may result in material adjustments to the separate financial statements are as follows:
2.4.1 Income taxes
The Bank is operating in numerous countries and the income generated from these operations is subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain.
If certain portion of the taxable income is not used for investments, wages, etc. in accordance with the Korean regulation called ‘Special Taxation for Facilitation of Investment and Mutually-beneficial Cooperation’, the Bank is liable to pay additional income tax calculated based on the tax laws. Therefore, the effect of recirculation of corporate income should be reflected in current and deferred income tax. As the Bank’s income tax is dependent on the actual investments, wages, etc. per each year, there are uncertainties with regard to measuring the final tax effects during the period when the tax law is applied.
10
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
2.4.2 Fair value of financial instruments
The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available is determined by using valuation techniques. Financial instruments, which are not actively traded in the market and those with less transparent market prices, will have less objective fair values and require broad judgment on liquidity, concentration, uncertainty in market factors and assumptions in fair value determination and other risks.
As described in the significant accounting policies in Note 3.3, ‘Recognition and Measurement of Financial Instruments’, diverse valuation techniques are used to determine the fair value of financial instruments, from generally accepted market valuation models to internally developed valuation models that incorporate various types of assumptions and variables.
2.4.3 Allowances and provisions for credit losses
The Bank recognizes and measures allowances for credit losses of debt instruments measured at amortized cost and debt instruments measured at fair value through other comprehensive income. Also, the Bank recognizes and measures provisions for credit losses of acceptances and guarantees, and unused loan commitments. Accuracy of allowances and provisions for credit losses is dependent upon estimation of expected cash flows of the borrower for individually assessed loans, and upon assumptions and methodology used for collectively assessed groups of loans, acceptances and guarantees and unused loan commitments.
2.4.4 Net defined benefit liability
The present value of the net defined benefit liability is affected by changes in the various factors determined by the actuarial method.
2.4.5 Impairment of goodwill
The recoverable amounts of cash-generating units are determined based on value-in-use calculations to test whether impairment of goodwill has occurred.
2.4.6 Assessment of expected credit losses of financial instruments related to COVID-19
The proliferation of COVID-19 in 2020 negatively affected the global economy, despite of various forms of government support policy. Accordingly, the Bank was provided with various economic forecasting scenarios from KB Research, assuming macroeconomic changes due to the level of COVID-19 pandemic. The Bank reviewed the possibilities of each scenario comprehensively, updated the forward-looking information, and reflected its effect on expected credit losses through the statistical method. In order to reflect additional credit risk for financial assets whose industries are highly affected by COVID-19, the Bank measured expected credit losses using a conservative scenario comparing to the forecasted forward-looking information and proactively responded to the credit risk to be increased in the future by expanding the scope of loans subject to lifetime expected credit losses (non-impaired) and expanding the scope of loans subject to individual assessment. The Bank will continue to monitor the impact of COVID-19 on the expected credit losses by comprehensively considering the duration of the impact on the entire economy and the government’s policies.
11
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
3. Significant Accounting Policies
The principal accounting policies applied in the preparation of these separate financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
3.1 Investments in Associates and Subsidiaries
Associates are entities over which the Bank has significant influence over the financial and operating policy decisions. Generally, if the Bank holds 20% or more of the voting power of the investee, it is presumed that the Bank has significant influence.
Subsidiaries are companies that are controlled by the Bank. The Bank controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The existence and effects of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Bank controls another entity. Subsidiaries are fully consolidated from the date when control is transferred to the Bank and de-consolidated from the date when control is lost.
Investments in associates and subsidiaries are accounted for at cost in accordance with Korean IFRS No.1027. However, beneficiary certificates in private equity fund which is consolidated is classified as financial assets at fair value through profit or loss in accordance with Korean IFRS No.1109 and measured at fair value in accordance with Korean IFRS No.1113.
The Bank determines at each reporting period whether there is any objective evidence that the investments in the associates and subsidiaries are impaired. If this is the case, the Bank calculates the amount of impairment as the difference between the recoverable amount of the associate or subsidiary and its carrying value and recognizes the amount as non-operating income (expense) in the statement of comprehensive income.
3.2 Foreign Currency
3.2.1 Foreign currency transactions
A foreign currency transaction is recorded, at initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of each reporting period, foreign currency monetary items are translated using the closing rate which is the spot exchange rate at the end of the reporting period. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was measured and non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
Except for the exchange difference for the net investment in a foreign operation and the financial liability designated as a hedging instrument of net investment, exchange differences arising on the settlement of monetary items or on translating monetary items is recognized in profit or loss. When gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income, conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.
3.2.2 Foreign operations
The results and financial position of a foreign operation, whose functional currency differs from the Bank’s presentation currency, are translated into the Bank’s presentation currency based on the following procedures.
12
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
If the functional currency of a foreign operation is not the currency of a hyperinflationary economy, assets and liabilities for each statement of financial position presented (including comparatives) are translated at the closing rate at the end of the reporting period, income and expenses for each statement of comprehensive income presented (including comparatives) are translated using the average exchange rates for the period. All resulting exchange differences are recognized in other comprehensive income.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation are treated as assets and liabilities of the foreign operation. Thus, they are expressed in the functional currency of the foreign operation and are translated into the presentation currency at the closing rate.
On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss (as a reclassification adjustment) when the gain or loss on disposal is recognized. On the partial disposal of a subsidiary that includes a foreign operation, the Bank re-attributes the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income to the non-controlling interests in that foreign operation. In any other partial disposal of a foreign operation, the Bank reclassifies to profit or loss only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income.
3.2.3 Translation of the net investment in a foreign operation
A monetary item that is receivable from or payable to a foreign operation, for which settlement is neither planned nor likely to occur in the foreseeable future is, in substance, a part of the Bank’s net investment in that foreign operation, then foreign currency difference arising from that monetary item is recognized in the other comprehensive income and shall be reclassified to profit or loss on disposal of the net investment.
3.3 Recognition and Measurement of Financial Instruments
3.3.1 Initial recognition
The Bank recognizes a financial asset or a financial liability in its statement of financial position when the Bank becomes party to the contractual provisions of the instrument. A regular way purchase or sale of financial assets (a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned) is recognized and derecognized using trade date accounting.
For financial reporting purpose, the Bank classifies (a) financial assets as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, or financial assets at amortized cost and (b) financial liabilities as financial liabilities at fair value through profit or loss, or other financial liabilities. These classifications are based on business model for managing financial instruments and the contractual cash flow characteristics of the financial instrument at initial recognition.
At initial recognition, a financial asset or financial liability is measured at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of a financial instrument on initial recognition is normally the transaction price (that is, the fair value of the consideration given or received) in an arm’s length transaction.
13
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
3.3.2 Subsequent measurement
After initial recognition, financial instruments are measured at amortized cost or fair value based on classification at initial recognition.
3.3.2.1 Amortized cost
The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.
3.3.2.2 Fair value
The Bank uses quoted price in active market which is based on listed market price or dealer price quotations of financial instruments traded in active market as best estimate of fair value. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
If there is no active market for a financial instrument, fair value is determined either by using a valuation technique or independent third-party valuation service. Valuation techniques include using recent arm’s length market transactions between knowledgeable and willing parties, if available, referencing to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models.
The Bank uses valuation models that are commonly used by market participants and customized for the Bank to determine fair values of common over-the-counter (“OTC”) derivatives such as options, interest rate swaps and currency swaps which are based on the inputs observable in markets. For more complex instruments, the Bank uses internally developed models, which are usually based on valuation methods and techniques generally used within the industry, or a value measured by an independent external valuation institution as the fair values if all or some of the inputs to the valuation models are not observable in market and therefore it is necessary to estimate fair value based on certain assumptions.
In addition, the fair value information recognized in the statement of financial position is classified into the following fair value hierarchy, reflecting the significance of the input variables used in the fair value measurement.
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Bank can access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
The 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. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety.
If a fair value measurement uses observable inputs that require significant adjustment using unobservable inputs, that measurement is a Level 3 measurement.
14
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
The Bank’s Fair Value Evaluation Committee, which consists of the risk management department, trading department and accounting department, reviews the appropriateness of internally developed valuation models, and approves the selection and changing of the external valuation institution and other considerations related to fair value measurement. The review results on the fair valuation models are reported to the Market Risk Management Subcommittee on a regular basis.
If the valuation technique does not reflect all factors which market participants would consider in pricing the asset or liability, the fair value is adjusted to reflect those factors. Those factors include counterparty credit risk, bid-ask spread, liquidity risk and others.
The Bank uses valuation technique which maximizes the use of market inputs and minimizes the use of entity-specific inputs. It incorporates all factors that market participants would consider in pricing the asset or liability and is consistent with economic methodologies applied for pricing financial instruments. Periodically, the Bank calibrates the valuation technique and tests its validity using prices of observable current market transactions of the same instrument or based on other relevant observable market data.
3.3.3 Derecognition
Derecognition is the removal of a previously recognized financial asset or financial liability from the statement of financial position. The derecognition criteria for financial assets and financial liabilities are as follows:
3.3.3.1 Derecognition of financial assets
A financial asset is derecognized when the contractual rights to the cash flows from the financial assets expire or the Bank transfers substantially all the risks and rewards of ownership of the financial asset, or the Bank neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset and the Bank has not retained control. Therefore, if the Bank does not transfer substantially all the risks and rewards of ownership of the financial asset, the Bank continues to recognize the financial asset to the extent of its continuing involvement in the financial asset.
If the Bank transfers the contractual rights to receive the cash flows of the financial asset but retains substantially all the risks and rewards of ownership of the financial asset, the Bank continues to recognize the transferred asset in its entirety and recognize a financial liability for the consideration received.
The Bank writes off a financial asset when the Bank has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. In general, the Bank considers write-off when it is determined that the debtor does not have sufficient funds or income to cover the principal and interest. The write-off decision is made in accordance with internal regulations. After the write-off, the Bank can collect the written-off loans continuously according to the internal policy. Recovered amounts from financial assets previously written-off are recognized in profit or loss.
3.3.3.2 Derecognition of financial liabilities
A financial liability is derecognized from the statement of financial position when it is extinguished (i.e. the obligation specified in the contract is discharged, cancelled or expires).
15
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
3.3.4 Offsetting
A financial asset and a financial liability is offset and the net amount is presented in the statement of financial position when, and only when, the Bank currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on a future event and must be legally enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Bank and all of the counterparties.
3.4 Cash and Due from Financial Institutions
Cash and due from financial institutions include cash on hand, foreign currency, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and due from financial institutions. Cash and due from financial institutions are measured at amortized cost.
3.5 Non-derivative Financial Assets
3.5.1 Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss unless they are classified as financial assets at amortized cost or at fair value through other comprehensive income.
The Bank may designate certain financial assets upon initial recognition as at fair value through profit or loss when the designation eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as ‘an accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.
After initial recognition, a financial asset at fair value through profit or loss is measured at fair value and gains or losses arising from a change in fair value are recognized in profit or loss. Interest income using the effective interest method and dividend income from financial asset at fair value through profit or loss are also recognized in profit or loss.
3.5.2 Financial assets at fair value through other comprehensive income
The Bank classifies below financial assets as financial assets at fair value through other comprehensive income;
| • | Debt instruments that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and where the assets’ cash flows represent solely payments of principal and interest on the principal amount outstanding and; |
| • | Equity instruments that are not held for short-term trading but held for strategic investment, and designated as financial assets at fair value through other comprehensive income |
After initial recognition, a financial asset at fair value through other comprehensive income is measured at fair value. Gains or losses arising from a change in fair value, other than dividend income, interest income calculated using the effective interest method and exchange differences arising on monetary items which are recognized directly in profit or loss, are recognized as other comprehensive income in equity.
16
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
When the financial assets at fair value through other comprehensive income is disposed, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. However, cumulative gain or loss of equity instrument designated as fair value through other comprehensive income is reclassified to retained earnings not to profit or loss at disposal.
A financial asset at fair value through other comprehensive income denominated in foreign currency is translated at the closing rate. Exchange difference resulting from change in amortized cost is recognized in profit or loss, and other changes are recognized in equity.
3.5.3 Financial assets at amortized cost
A financial asset, which is held within the business model whose objective is achieved by collecting contractual cash flows, and where the assets’ cash flows represent solely payments of principal and interest on the principal amount outstanding, is classified as a financial asset at amortized cost. After initial recognition, a financial asset at amortized cost is measured at amortized cost using the effective interest method and interest income is calculated using the effective interest method.
3.6 Expected Credit Loss of Financial Assets (Debt Instruments)
The Bank recognizes a loss allowance for expected credit losses at the end of the reporting period for financial assets at amortized cost and fair value through other comprehensive income except for financial asset at fair value through profit or loss.
Expected credit losses are estimated at present value of probability-weighted amount that is determined by evaluating a range of possible outcomes. The Bank measures expected credit losses by reflecting all reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
The approaches of measuring expected credit losses in accordance with Korean IFRS are as follows:
| • | General approach: for financial assets and unused loan commitments not subject to the below approach |
| • | Credit-impaired approach: for financial assets that are credit-impaired at the time of acquisition |
Application of general approach is differentiated depending on whether credit risk has increased significantly after initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Bank measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses, whereas if the credit risk on a financial instrument has increased significantly since initial recognition, the Bank measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses. Lifetime is presumed to be a period to the contractual maturity date of financial assets (the expected life of financial assets).
17
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
The Bank assesses whether the credit risk has increased significantly using the following information, and if one or more of the following conditions are met, it is deemed as significant increase in credit risk. If the contractual cash flows on a financial asset have been renegotiated or modified, the Bank assesses whether the credit risk has increased significantly using the same following information.
| • | More than 30 days past due |
| • | Decline in credit rating at period end by more than certain notches as compared to that at initial recognition |
| • | Subsequent managing ratings below certain level in the early warning system |
| • | Debt restructuring (except for impaired financial assets) and |
| • | Credit delinquency information of Korea Federation of Banks, etc. |
The Bank generally considers the loan to be credit-impaired if one or more of the following conditions are met:
| • | 90 days or more past due |
| • | Legal proceedings related to collection |
| • | A borrower registered on the credit management list of Korea Federation of Banks |
| • | A corporate borrower with the credit rating C or D |
| • | Refinancing |
| • | Debt restructuring, etc. |
3.6.1 Forward-looking information
The Bank uses forward-looking information, when it assesses whether the credit risk has increased significantly and measures the expected credit losses.
The Bank assumes the risk components have a certain correlation with the economic cycle and uses statistical methodologies to estimate the relation between key macroeconomic variables and risk components for the expected credit losses. The Bank has derived a correlation between the time series data of more than 11 years and the key macroeconomic variables and calculates the expected credit losses by reflecting the results of the correlation on the risk component.
The correlation between the major macroeconomic variables and the credit risk are as follows:
| Key macroeconomic variables | Correlation between the major macroeconomic variables and the credit risk | |||
Domestic GDP growth rate | (- | ) | ||
Composite stock index | (- | ) | ||
Construction investment change rate | (- | ) | ||
Rate of change in housing transaction price index | (- | ) | ||
Interest rate spread | (+ | ) | ||
Private consumption growth rate | (- | ) | ||
Forward-looking information used in calculation of expected credit losses is based on the macroeconomic forecasts utilized by the management of the Bank for its business plan considering reliable external agency’s forecasts and others. The forward-looking information is generated by KB Research with comprehensive approach to capture the possibility of various economic forecast scenarios that are derived from the internal and external viewpoints of the macroeconomic situation. The Bank determines the macroeconomic variables to be used in forecasting future condition of the economy, considering the direction of the forecast scenario and the significant relationship between macroeconomic variables and time series data. And there are some changes compared to the macroeconomic variables used in the previous year.
18
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
In order to reflect additional credit risk for financial assets whose industries are highly affected by COVID-19, the Bank measures expected credit losses using a conservative scenario comparing to the forecasted forward-looking information.
3.6.2 Measuring expected credit losses on financial assets at amortized cost
The expected credit losses of financial assets at amortized cost are measured as present value of the difference between the contractual cash flows that are due to the Bank under the contract and the cash flows that the Bank expects to receive. The Bank estimates expected future cash flows for financial assets that are individually significant (individual assessment of impairment).
For financial assets that are not individually significant, the Bank collectively estimates expected credit loss by grouping loans with homogeneous credit risk profile (collective assessment of impairment).
3.6.2.1 Individual assessment of impairment
Individual assessment of impairment losses is calculated using management’s best estimate on present value of expected future cash flows. The Bank uses all the available information including financial condition of the borrower such as operating cash flow and net realizable value of any collateral held.
3.6.2.2 Collective assessment of impairment
Collective assessment of impairment losses is performed by using a methodology based on historical loss experience and reflecting forward-looking information. Such process incorporates factors such as type of collateral, product and borrowers, credit rating, size of portfolio and recovery period and applies Probability of Default (“PD”) on a group of assets and Loss Given Default (“LGD”) by type of recovery method. Also, the expected credit loss model involves certain assumptions to determine input based on loss experience and forward-looking information. These models and assumptions are periodically reviewed to reduce gap between loss estimate and actual loss experience.
The lifetime expected credit loss is measured by applying the PD to the carrying amount calculated by deducting the expected principal repayment amount from the carrying amount as of the reporting date and the LGD adjusted to reflect changes in the carrying amount.
3.6.3 Measuring expected credit losses on financial assets at fair value through other comprehensive income
The Bank measures expected credit losses on financial assets at fair value through other comprehensive income in a manner that is consistent with the requirements that are applicable to financial assets measured at amortized cost. However, the loss allowance is recognized in other comprehensive income. Upon disposal or repayment of financial assets at fair value through other comprehensive income, the amount of the loss allowance is reclassified from other comprehensive income to profit or loss.
3.7 Derivative Financial Instruments
The Bank enters into numerous derivative financial instrument contracts such as currency forwards, interest rate swaps, currency swaps and others for trading purposes or to manage its exposures to fluctuations in interest rates and currency exchange, amongst others. The Bank’s derivative operations focus on addressing the needs of the Bank’s corporate clients to hedge their risk exposure and to hedge the Bank’s risk exposure that results from such client contracts. These derivative financial instruments are presented as derivative financial instruments in the financial statements irrespective of transaction purpose and subsequent measurement requirement.
19
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
The Bank designates certain derivatives as hedging instruments to hedge the risk of changes in fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge) and the risk of changes in cash flow (cash flow hedge).
At the inception of the hedging relationship, there is formal designation and documentation of the hedging relationship and the Bank’s risk management objective and strategy for undertaking the hedge. This documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged, the inception date of hedging relationship and how the Bank will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk.
Derivatives are initially recognized at fair value. After initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.
3.7.1 Derivative financial instruments held for trading
All derivative financial instruments, except for derivatives that are designated and qualify for hedge accounting, are measured at fair value. Gains or losses arising from changes in fair value are recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss.
3.7.2 Derivative financial instruments for fair value hedges
If derivatives are designated and qualify for a fair value hedge, changes in fair value of the hedging instrument and changes in fair value of the hedged item attributable to the hedged risk are recognized in profit or loss as part of other operating income and expenses. If the hedged items are equity instruments for which the Bank has elected to present changes in fair value in other comprehensive income, changes in fair value of the hedging instrument and changes in fair value of the hedged item attributable to the hedged risk are recognized in other comprehensive income.
Fair value hedge accounting is discontinued prospectively if the hedging instrument expires or is sold, terminated or exercised, or the hedging relationship ceases to meet the qualifying criteria. Once fair value hedge accounting is discontinued, the adjustment to the carrying amount of a hedged item is amortized to profit or loss by the maturity of the financial instrument using the effective interest method.
3.7.3 Derivative financial instruments for cash flow hedges
The effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income, limited to the cumulative change in fair value (present value) of the hedged item (the present value of the cumulative change in the hedged expected future cash flows) from inception of the hedge. The ineffective portion is recognized in profit or loss as other operating income or expense. The associated gains or losses that were previously recognized in other comprehensive income are reclassified from equity to profit or loss (other operating income or expense) as a reclassification adjustment in the same period or periods during which the hedged forecast cash flows affect profit or loss. Cash flow hedge accounting is discontinued prospectively if the hedging instrument expires or is sold, terminated or exercised, or the hedging relationship ceases to meet the qualifying criteria. When the cash flow hedge accounting is discontinued, the cumulative gains or losses on the hedging instrument that have been recognized in other comprehensive income are reclassified to profit or loss over the period in which the forecast transaction occurs. If the forecast transaction is no longer expected to occur, the cumulative gains or losses that have been recognized in other comprehensive income are immediately reclassified to profit or loss.
20
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
3.7.4 Risk management strategy
Interest rate risk arises from changes in fair value resulting from changes in the discount rate of fixed rate financial instruments, and changes in cash flows resulting from changes in the nominal interest rate of floating rate financial instruments.
The Bank hedges the interest rate risk in its entirety. At inception of the hedge relationship, the Bank reviews the hedge effectiveness; and periodically reviews the effectiveness in order to confirm that economic relationship between the hedged item and the hedging instrument exists. The requirement that an economic relationship exists means that the hedging instrument and the hedged item have values that generally move in the opposite direction due to the same risk, which is the hedged risk. The Bank designates the exposure of hedged item opposite to the exposure of hedging instruments in order to meet economic relationship requirement.
The Bank designates hedge relationship at one-on-one ratio between the nominal amount of hedging instrument and to the nominal amount of hedged item.
Ineffectiveness could arise because of differences in the underlying parameters (acquisition date, credit risk or liquidity and others) or other differences between the hedging instrument and the hedged item that the Bank accepts in order to achieve a cost-effective hedging relationship.
The Bank avoids the cash flow variability of its floating rate debt securities by using interest rate swaps. Both are linked to the same interest rate; however, the paid amount of the floating rate may be set on different dates. Even if the variability of interest rate related cash flows (as a risk factor) are designated as a hedged item, the difference in set-up dates creates a hedge ineffectiveness.
The Bank avoids the variability of fair values of its fixed rate debt securities by using interest rate swaps. The calculating method of the number of the dates for paying fixed-rate interest amount can be different between hedging instruments and hedged items. Even if the variability of the fair value due to the benchmark interest rate (as a risk factor) are designated as a hedged item, the difference in calculating method of the number of the dates creates a hedge ineffectiveness.
3.7.5 Embedded derivatives
An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if, (a) the economic characteristics and risks of the embedded derivative are not closely related to those of the host contract, (b) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and (c) the hybrid contract contains a host that is not a financial asset and is not designated as at fair value through profit or loss. Gains or losses arising from a change in fair value of an embedded derivative separated from the host contract are recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss.
3.7.6 Day one gains or losses
If the Bank uses a valuation technique that incorporates unobservable inputs for the fair value of the OTC derivatives at initial recognition, there may be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the difference is not recognized in profit or loss but deferred and amortized using the straight-line method over the life of the financial instrument. If the fair value is subsequently determined using observable inputs, the remaining deferred amount is recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss or other operating income and expenses.
21
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
3.8 Property and Equipment
3.8.1 Recognition and measurement
All property and equipment that qualify for recognition as an asset are measured at cost and subsequently carried at its cost less any accumulated depreciation and any accumulated impairment losses.
The cost of property and equipment includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent expenditures are capitalized only when they prolong the useful life or enhance values of the assets but the costs of the day-to-day servicing of the assets such as repair and maintenance costs are recognized in profit or loss as incurred. When part of an item of property and equipment has a useful life different from that of the entire asset, it is recognized as a separate asset.
3.8.2 Depreciation
Land is not depreciated, whereas other property and equipment are depreciated using the method that reflects the pattern in which the asset’s future economic benefits are expected to be consumed by the Bank. The depreciable amount of an asset is determined after deducting its residual value.
Each part of an item of property and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.
The depreciation methods and estimated useful lives of property and equipment are as follows:
Property and equipment | Depreciation method | Estimated useful lives | ||
Buildings and structures | Straight-line | 40 years | ||
Leasehold improvements | Declining-balance | 4 years | ||
Equipment and vehicles | Declining-balance | 4 years |
The residual value, the useful life and the depreciation method applied to an asset are reviewed at each financial year-end and, if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.
3.9 Investment Properties
3.9.1 Recognition and measurement
Properties held to earn rentals or for capital appreciation or both are classified as investment properties. Investment properties are measured initially at their cost and subsequently the cost model is used.
3.9.2 Depreciation
Land is not depreciated, whereas other investment properties are depreciated using the method that reflects the pattern in which the asset’s future economic benefits are expected to be consumed by the Bank. The depreciable amount of an asset is determined after deducting its residual value.
22
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
The depreciation method and estimated useful lives of investment properties are as follows:
Investment properties | Depreciation method | Estimated useful lives | ||
Buildings | Straight-line | 40 years |
The residual value, the useful life and the depreciation method applied to an asset are reviewed at each financial year-end and, if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.
3.10 Intangible Assets
Intangible assets are measured initially at cost and subsequently carried at their cost less any accumulated amortization and any accumulated impairment losses.
Intangible assets, except for goodwill and membership rights, are amortized using the straight-line method with no residual value over their estimated useful economic life since the asset is available for use.
Intangible assets | Amortization method | Estimated useful lives | ||
Industrial property rights | Straight-line | 5 years | ||
Software | Straight-line | 4~5 years | ||
Others | Straight-line | 1~13 years |
The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Where an intangible asset is not being amortized because its useful life is indefinite, the Bank carries out a review in each accounting period to confirm whether events and circumstances still support an indefinite useful life assessment. If they do not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate.
3.10.1 Goodwill
3.10.1.1 Recognition and measurement
Goodwill related to business combinations before January 1, 2010, is stated at its carrying amount, which was recognized under the Bank’s previous accounting policy, prior to the transition to Korean IFRS.
Goodwill acquired from business combinations after January 1, 2010, is initially measured as the excess of cost of the business combination over the fair value of net identifiable assets acquired and liabilities assumed. If the fair value of net identifiable assets acquired and liabilities assumed exceeds cost of business combination, the difference is recognized in profit or loss.
Acquisition-related costs incurred to effect a business combination are charged to expenses in the periods in which the costs are incurred and the services are received, except for the costs to issue debt or equity securities.
3.10.1.2 Subsequent measurement
Goodwill is not amortized and is stated at cost less accumulated impairment losses. However, goodwill that forms part of the carrying amount of an investment in associates is not separately recognized and an impairment loss recognized is not allocated to any asset, including goodwill, which forms part of the carrying amount of the investment in the associates.
23
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
3.10.2 Subsequent expenditure
Subsequent expenditure is capitalized only when it enhances values of the assets. Internally generated intangible assets, such as goodwill and trade name, are not recognized as assets but expensed as incurred.
3.11 Impairment of Non-financial Assets
The Bank assesses at the end of each reporting period whether there is any indication that a non-financial asset, except for (a) deferred income tax assets, (b) assets arising from employee benefits and (c) non-current assets (or group of assets to be sold) classified as held for sale, may be impaired. If any such indication exists, the Bank estimates the recoverable amount of the asset. However, irrespective of whether there is any indication of impairment, the Bank tests (a) goodwill acquired in a business combination, (b) intangible assets with an indefinite useful life and (c) intangible assets not yet available for use for impairment annually by comparing their carrying amount with their recoverable amount.
The recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Bank determines the recoverable amount of the cash-generating unit to which the asset belongs. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit that are discounted by a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss and recognized immediately in profit or loss. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units that is expected to benefit from the synergies of the combination. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit.
An impairment loss recognized for goodwill is not reversed in a subsequent period. The Bank assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset, other than goodwill, may no longer exist or may have decreased, and an impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss cannot exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
3.12 Non-current Assets Held for Sale
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition and its sale must be highly probable. A non-current asset (or disposal group) classified as held for sale is measured at the lower of (a) its carrying amount measured in accordance with the applicable Korean IFRS, immediately before the initial classification of the asset (or disposal group) as held for sale and (b) fair value less costs to sell.
A non-current asset while it is classified as held for sale or while it is part of a disposal group classified as held for sale is not depreciated (or amortized).
24
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. Gain is recognized for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss that has been recognized.
3.13 Financial Liabilities
The Bank classifies financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities in accordance with the substance of the contractual arrangement and the definitions of financial liabilities. The Bank recognizes financial liabilities in the statement of financial position when the Bank becomes a party to the contractual provisions of the financial liability.
3.13.1 Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading or designated as such at initial recognition. After initial recognition, financial liabilities at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss. At initial recognition, transaction costs that are directly attributable to the acquisition are recognized in profit or loss as incurred.
In relation to securities lending or borrowing transactions, when the Bank borrows securities from the Korea Securities Depository and others, these transactions are managed as off-balance sheet items. The borrowed securities are treated as financial liabilities at fair value through profit or loss when they are sold. Changes in fair value at the end of the reporting period and difference between carrying amount at redemption and purchased amount are recognized as profit or loss.
3.13.2 Other financial liabilities
Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as other financial liabilities. Other financial liabilities include deposits, borrowings, debentures and others. At initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the acquisition. After initial recognition, other financial liabilities are measured at amortized cost, and its interest expense is recognized, using the effective interest method.
In case an asset is sold under repurchase agreement, the Bank continues to recognize the asset with the amount sold being accounted for as borrowing. The Bank derecognizes a financial liability from the statement of financial position only when it is extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires).
3.14 Provisions
Provisions are recognized when the Bank has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of provisions, and where the effect of the time value of money is material, the amount of provisions is the present value of the expenditures expected to be required to settle the obligation.
Provisions for confirmed and unconfirmed acceptances and guarantees, and unused credit lines of consumer and corporate loans are recognized using a valuation model that applies the credit conversion factor, probability of default, and loss given default.
25
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provisions are reversed.
An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfill it. If the Bank has a contract that is onerous, the present obligation under the contract is recognized and measured as provisions.
3.15 Financial Guarantee Contracts
A financial guarantee contract requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the original or modified terms of a debt instrument.
Financial guarantee contracts are initially recognized at fair value and classified as other liabilities and are amortized over the contractual term. After initial recognition, financial guarantee contracts are measured at the higher of:
| • | The amount determined in accordance with Korean IFRS No.1109 Financial Instruments and |
| • | The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with Korean IFRS No.1115 Revenue from Contracts with Customers. |
3.16 Equity Instrument Issued by the Bank
An equity instrument is any contract or agreement that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
3.16.1 Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or the exercise of stock option are deducted from the equity, net of any tax effects.
3.16.2 Hybrid securities
The financial instruments can be classified as either financial liabilities or equity in accordance with the terms of the contract. The Bank classifies hybrid securities as an equity if the Bank has the unconditional right to avoid any contractual obligation to deliver financial assets such as cash in relation to the financial instruments. However, hybrid securities issued by subsidiaries are classified as non-controlling interests, dividends are recognized in the statement of comprehensive income as profit attributable to non-controlling interests.
3.16.3 Compound financial instruments
A compound financial instrument is classified as a financial liability or an equity instrument depending on the substance of the contractual arrangement of such financial instrument. The liability component of the compound financial instrument is measured at fair value of the similar liability without conversion option at initial recognition and subsequently measured at amortized cost using effective interest method until it is extinguished by conversion or matured. Equity component is initially measured at fair value of compound financial instrument in its entirety less fair value of liability component net of tax effect and it is not remeasured subsequently.
26
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
3.17 Revenue Recognition
The Bank recognizes revenues in accordance with the following steps determined in accordance with Korean IFRS No.1115 Revenue from Contracts with Customers.
| • | Step 1: Identify the contract with a customer. |
| • | Step 2: Identify the performance obligations in the contract. |
| • | Step 3: Determine the transaction price. |
| • | Step 4: Allocate the transaction price to the performance obligations in the contract. |
| • | Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. |
3.17.1 Interest income and expense
Interest income and expense on debt securities at fair value through profit or loss (excluding beneficiary certificates, equity investments and other debt instruments), loans, financial instruments at amortized cost and debt securities at fair value through other comprehensive income, are recognized in the statement of comprehensive income using the effective interest method in accordance with Korean IFRS No.1109 Financial Instruments. The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability and allocating the interest income or interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument or, where appropriate, a shorter period, to the gross carrying amount of a financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Bank estimates expected cash flows by considering all contractual terms of the financial instrument but does not consider expected credit losses. The calculation includes all fees and points paid (main components of effective interest rate only) or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. In those rare cases when it is not possible to estimate reliably the cash flows and the expected life of a financial instrument, the Bank uses the contractual cash flows over the full contractual term of the financial instrument.
Interest income on impaired financial assets is recognized using the rate of interest used to discount the expected cash flows for the purpose of measuring the impairment loss. Interest income on debt securities at fair value through profit or loss is also classified as interest income in the statement of comprehensive income.
3.17.2 Fee and commission income
The Bank recognizes financial service fees in accordance with the purpose of charging the fees and the accounting standards of the financial instrument related to the fees earned.
3.17.2.1 Fees that are an integral part of the effective interest of a financial instrument
Such fees are generally treated as adjustments of effective interest. Such fees may include compensation for activities such as evaluating the borrower’s financial condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating the terms of the instrument, preparing and processing documents and closing the transaction and origination fees received on issuing financial liabilities at amortized cost. However, fees relating to the creation or acquisition of a financial instrument at fair value through profit or loss are recognized as revenue immediately.
27
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
3.17.2.2 Fees related to performance obligations satisfied over time
The Bank transfers control of a good or service over time, therefore, recognizes revenue related to performance obligations satisfied over the period of performance obligations. Fees which can be earned through the certain periods, including asset management fees, consignment business fees, etc. are recognized over the period of performance obligations.
3.17.2.3 Fees related to performance obligations satisfied at a point in time
Fees earned at a point in time are recognized as revenue when a customer obtains controls of a promised good or service and the Bank satisfies a performance obligation.
Commission on negotiation or participation in negotiation for the third party such as trading stocks or other securities, arranging merger and acquisition of business, is recognized as revenue when the transaction has been completed.
A syndication arrangement fees recognized as revenue when the syndication has been completed, if the Bank arranges a loan and retains no part of the loan package for itself (or retains a part at the same effective interest rate for comparable risk as other participants).
3.17.3 Net gains or losses on financial instruments at fair value through profit or loss
Net gains or losses on financial instruments at fair value through profit or loss (including changes in fair value, dividends, and gains or losses from foreign currency translation) include gains and losses from following financial instruments:
| • | Gains or losses relating to financial instruments at fair value through profit or loss (excluding interest income using the effective interest rate) |
| • | Gains or losses relating to derivatives for trading (including derivatives for hedging purpose but do not qualify for hedge accounting) |
3.17.4 Dividend income
Dividend income is recognized in profit or loss when the right to receive payment is established. Dividend income is recognized as net gains or losses on financial instruments at fair value through profit or loss or other operating income depending on the classification of equity securities.
3.18 Employee Compensation and Benefits
3.18.1 Post-employment benefits:
3.18.1.1 Defined contribution plans
When an employee has rendered service to the Bank during a period, the Bank recognizes the contribution payable to a defined contribution plan in exchange for that service as post-employment benefits for the period.
3.18.1.2 Defined benefit plans
All post-employment benefits, other than defined contribution plans, are classified as defined benefit plans. The amount recognized as a net defined benefit liability is the present value of the defined benefit obligation less the fair value of plan assets at the end of the reporting period.
28
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
The present value of the defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit method. The rate used to discount post-employment benefit obligations is determined by reference to market yields at the end of the reporting period on high quality corporate bonds. The currency and term of the corporate bonds are consistent with the currency and estimated term of the post-employment benefit obligations. Actuarial gains and losses resulted from changes in actuarial assumptions and experience adjustments are recognized in other comprehensive income.
When the total of the present value of the defined benefit obligation minus the fair value of plan assets results in an asset, it is recognized to the extent of the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.
Past service cost is the change in the present value of the defined benefit obligation for employee service in prior periods, resulting from the introduction or changes to a defined benefit plan. Such past service cost is immediately recognized as an expense for the period.
3.18.2 Short-term employee benefits
Short-term employee benefits are employee benefits that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service. When an employee has rendered service to the Bank during an accounting period, the Bank recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service as an expense for the period.
The expected cost of profit-sharing and bonus payments is recognized as liabilities when the Bank has a present legal or constructive obligation to make payments as a result of past events, such as service rendered by employees, and a reliable estimate of the obligation can be made.
3.18.3 Share-based payment
The Bank has provided its directors and employees with stock grants and mileage stocks programs. When stock grants are exercised, the Bank can either select to distribute issued stock of KB Financial Group Inc., the Parent Company or compensate in cash based on the share price. When mileage stocks are exercised, the Bank pays the amount equivalent to share price of KB Financial Group Inc. in cash.
For a share-based payment transaction in which the terms of the arrangement provide the Bank with the choice of whether to settle in cash or by issuing equity instruments, the Bank accounts for the transaction in accordance with the requirements applying to cash-settled share-based payment transactions because the Bank determines that it has a present obligation to settle in cash because the Bank has a past practice and a stated policy of settling in cash. Therefore, the Bank measures the liability incurred as consideration for the service, at fair value and recognizes related expense and accrued expense over the vesting periods. For mileage stocks, the Bank accounts for the transaction in accordance with the requirements applying to cash-settled share-based payment transactions, which are recognized as expense and accrued expenses at the time of vesting.
Until the liability is settled, the Bank remeasures the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss as share-based payments.
29
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
3.18.4 Termination benefits
Termination benefits are payable when employment is terminated by the Bank before the normal retirement date, or an employee’s decision to accept an offer of benefits in exchange for the termination of employment. The Bank recognizes a liability and expense for termination benefits at the earlier of the following dates; when the Bank can no longer withdraw the offer of those benefits and when the Bank recognizes costs for a restructuring that is within the scope of Korean IFRS No.1037 and involves the payment of termination benefits. If the termination benefits are not expected to be settled wholly before twelve months after the end of the annual reporting period, then the termination benefits are discounted to present value.
3.19 Income Tax Expenses
Income tax expense comprises current tax expense and deferred income tax expense. Current and deferred income tax are recognized as income or expense and included in profit or loss for the period, except to the extent that the tax arises from (a) a transaction or event which is recognized, in the same or a different period, outside profit or loss, either in other comprehensive income or directly in equity and (b) a business combination.
3.19.1 Current income tax
Current income tax is the amount of income tax payable in respect of the taxable profit (loss) for the period. A difference between the taxable profit and accounting profit may arise when income or expense is included in accounting profit in one period but is included in taxable profit in a different period. Differences may also arise if there is revenue that is exempt from taxation, or expense that is not deductible in determining taxable profit (loss). Current income tax liabilities for the current and prior periods are measured using the tax rates that have been enacted or substantively enacted by the end of the reporting period.
The Bank offsets current income tax assets and current income tax liabilities if, and only if, the Bank (a) has a legally enforceable right to set off the recognized amounts and (b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
3.19.2 Deferred income tax
Deferred income tax is recognized, using the asset-liability method, on temporary differences arising between the tax-based amount of assets and liabilities and their carrying amount in the financial statements. Deferred income tax liabilities are recognized for all taxable temporary differences and deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax assets and liabilities are not recognized if they arise from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction, affects neither accounting nor taxable profit or loss.
The carrying amount of a deferred income tax asset is reviewed at the end of each reporting period. The Bank reduces the carrying amount of a deferred income tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilized.
30
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred income tax liabilities and deferred income tax assets reflects the tax consequences that would follow from the manner in which the Bank expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
The Bank offsets deferred income tax assets and deferred income tax liabilities if, and only if the Bank has a legally enforceable right to set off current income tax assets against current income tax liabilities and the deferred income tax assets and the deferred income tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current income tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred income tax liabilities or assets are expected to be settled or recovered.
3.19.3 Uncertain tax positions
Uncertain tax positions arise from tax treatments applied by the Bank which may be challenged by the tax authorities due to the complexity of the transaction or different interpretation of the tax laws, a claim for rectification brought by the Bank, an appeal for a refund claimed from the tax authorities related to additional assessments or a tax investigation by the tax authorities. The Bank recognizes its uncertain tax positions in the financial statements in accordance with Korean IFRS No.1012 and Interpretation of Korean IFRS No.2123. The income tax asset is recognized if a tax refund is probable for taxes paid and levied by the tax authority, and the amount to be paid as a result of the tax investigation and others is recognized as the current tax payable. However, additional dues on tax paid or refund are recognized in accordance with Korean IFRS No.1037 because those are, in substance, interest and penalty.
3.20 Transactions with the Trust Accounts
The Bank accounts for trust assets separately from its own assets in accordance with the Financial Investment Services and Capital Markets Act. The borrowings from trust accounts represent transfer of funds in trust accounts into banking accounts. Such borrowings from trust accounts are recorded as receivables from the banking accounts in the trust accounts and as borrowings from trust accounts in the banking accounts. The Bank earns trust fees from the trust accounts for its management of trust assets and operations. The reserves for future profits and losses are set up in the trust accounts for profits and losses related to those trust funds with a guarantee of the principal or of the principal and a certain minimum rate of return in accordance with the relevant laws and regulations applicable to trust operations. The reserves are used to provide for the losses on such trust funds and, if the losses incurred are in excess of the reserves, the excess losses are compensation paid as a loss on trust management in other operating expenses and the trust accounts recognize the corresponding compensation as compensation from banking accounts.
3.21 Lease
The Bank as a lessor recognizes lease payments from operating leases as income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature.
A lessee is required to recognize a right-of-use asset (lease assets) representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Assets and liabilities arising from a lease are initially measured at the present value.
31
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Lease liabilities include the net present value of the following lease payments:
| • | Fixed payments (including in-substance fixed payments), less any lease incentives receivable |
| • | Variable lease payment that are depend on an index or a rate |
| • | Amounts expected to be payable by the lessee under residual value guarantees |
| • | The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and |
| • | Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease |
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used, which is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
Right-of-use assets are measured at cost comprising the following:
| • | The amount of the initial measurement of the lease liability |
| • | Any lease payments made at or before the commencement date, less any lease incentives received |
| • | Any initial direct costs incurred by the lessee, and |
| • | An estimate of restoration costs |
However, the Bank can elect not to apply the requirements of Korean IFRS No.1116 to short-term lease (lease that, at the commencement date, has a lease term of 12 months or less) and leases for which the underlying asset is of low value (for example, underlying leased asset under $ 5,000). The Bank applies the exemption of the standard for one time lease of real estate (for training purpose) and leases of low-value assets (underlying assets less thanW 5 million and $ 5,000).
The right-of-use asset is depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
For sale and leaseback transactions, the Bank applies the requirements of Korean IFRS No.1115 Revenue from Contracts with Customers, to determine whether the transfer of an asset is accounted for as a sale of that asset.
3.22 Operating Segments
The Bank identifies its operating segments based on internal reports which are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Segment information includes items which are directly attributable and reasonably allocated to the segment.
32
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4. Financial Risk Management
4.1 Summary
4.1.1 Overview of financial risk management policy
The financial risks that the Bank is exposed to are credit risk, market risk, liquidity risk, operational risk and others.
This note regarding financial risk management provides information about the risks that the Bank is exposed to and about its objectives, policies, risk assessment and management procedures, and capital management. Additional quantitative information is disclosed throughout the separate financial statements.
The Bank’s risk management system focuses on efficiently supporting long-term strategy and management decisions of each business group through increased risk transparency, spread of risk management culture, prevention of risk transition between risk types, and preemptive response to rapidly changing financial environments. Credit risk, market risk, liquidity risk, and operational risk are recognized as the Bank’s significant risks and measured and managed by quantifying them in the form of Internal Capital or Value at Risk (“VaR”) using statistical methods.
4.1.2 Risk management organization
4.1.2.1 Risk Management Committee
The Risk Management Committee, as the ultimate decision-making body, approves risk-related issues, such as establishing risk management strategies in accordance with the strategic direction determined by the Board of Directors, determining the affordable level of risk appetite, and reviewing the level of risk and the status of risk management activities.
4.1.2.2 Risk Management Council
The Risk Management Council deliberates on and resolve matters delegated by the Risk Management Committee and discusses the details of risk management of the Bank.
4.1.2.3 Risk Management Subcommittees
The Risk Management Subcommittee implements decisions made by the Risk Management Council and makes practical decisions regarding the implementation of risk management policies and procedures.
| • | Credit Risk Management Subcommittee |
The Credit Risk Management Subcommittee conducts deliberation and resolution on new approval of non-standard and compound instruments with embedded credit risks, reviews credit risks for new products with credit risks, and establishment of exposure limits by industry.
| • | Market Risk Management Subcommittee |
The Market Risk Management Subcommittee conducts deliberation and resolution on market risk-related matters, such as setting limits on market risk and approving detailed investment standards for new standard, non-standard and compound products.
33
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| • | Operational Risk Management Subcommittee |
The Operational Risk Management Subcommittee reviews the issues that have a significant effect on the Bank’s operational risk such as establishment, amendment and abolition of major system, process and others.
4.1.2.4 Risk Management Group
The Risk Management Group manages risk management detailed policies, procedures, and business processes.
4.2 Credit Risk
4.2.1 Overview of credit risk
Credit risk is the risk of loss from the portfolio of assets held due to the counterparty’s default, breach of contract and deterioration of credit quality. For risk management reporting purposes, the Bank considers all factors of credit risk exposure, such as default risk of individual borrowers, country risk and risk of specific sectors. The Bank defines default as the definition applied to the calculation of Capital Adequacy Ratio under the new Basel Accord (Basel III).
4.2.2 Credit risk management
The Bank measures the expected loss and economic capital for the assets subject to credit risk management, including on-balance and off-balance assets, and uses them as management indicators. The Bank allocates and manages credit risk internal capital limits.
In addition, to prevent excessive concentration of exposures by borrower and industry, the total exposure limit at the Bank level is introduced, applied, and managed to control the credit concentration risk.
In order to establish a credit risk management system, the Bank manages credit risk by forming a separate risk management organization. In particular, independent of the Sales Group, the Credit Group, Retail Customer Group and SME/SOHO Customer Group are in charge of loan policy, loan system, credit rating, credit analysis, follow-up management and corporate restructuring. The Risk Management Group is responsible for establishing policies on credit risk management, measuring and limiting internal capital of credit risk, setting credit limits, credit review, and verification of credit rating models.
34
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.2.3 Maximum exposure to credit risk
The Bank’s maximum exposures of financial instruments other than equity securities, to credit risk without consideration of collateral values as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Financial assets | ||||||||
Due from financial institutions 1 | 15,329,525 | 10,403,284 | ||||||
Financial assets at fair value through profit or loss | ||||||||
Securities measured at fair value through profit or loss | 12,030,922 | 9,490,491 | ||||||
Loans measured at fair value through profit or loss | 38,756 | 188,133 | ||||||
Due from financial institutions measured at fair value through profit or loss | 89,965 | 79,805 | ||||||
Derivatives | 4,581,835 | 2,319,687 | ||||||
Loans measured at amortized cost 1 | 317,673,667 | 291,425,606 | ||||||
Financial investments | ||||||||
Securities measured at fair value through other comprehensive income | 39,562,919 | 35,834,598 | ||||||
Securities measured at amortized cost 1 | 15,070,908 | 13,866,494 | ||||||
Loans measured at fair value through other comprehensive income | 234,780 | 344,292 | ||||||
Other financial assets 1 | 5,630,598 | 5,466,052 | ||||||
|
|
|
| |||||
| 410,243,875 | 369,418,442 | |||||||
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|
| |||||
Off-balance sheet items 2 | ||||||||
Acceptances and guarantees contracts | 7,970,654 | 8,250,284 | ||||||
Financial guarantee contracts | 6,426,473 | 5,077,410 | ||||||
Commitments | 91,136,349 | 87,695,459 | ||||||
|
|
|
| |||||
| 105,533,476 | 101,023,153 | |||||||
|
|
|
| |||||
| 515,777,351 | 470,441,595 | |||||||
|
|
|
| |||||
| 1 | After netting of allowance |
| 2 | For details of relevant provisions, see Note 22. |
4.2.4 Credit risk of loans
The Bank maintains an allowance for loan losses associated with credit risk on loans to manage its credit risk.
The Bank assesses expected credit losses and recognizes loss allowances of financial assets at amortized cost and financial assets at fair value through other comprehensive income (debt instruments). 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 Bank measures the expected credit losses on loans classified as financial assets 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 in the financial statements.
35
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.2.4.1 Credit risk exposure
Credit qualities of loans as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||||||||||||||
Loans measured at amortized cost * |
| |||||||||||||||||||||||
Corporate |
| |||||||||||||||||||||||
Grade 1 | 82,666,981 | 4,425,852 | 6,545 | — | — | 87,099,378 | ||||||||||||||||||
Grade 2 | 56,606,671 | 6,368,962 | 1,119 | — | — | 62,976,752 | ||||||||||||||||||
Grade 3 | 1,913,008 | 2,429,967 | 3,042 | — | — | 4,346,017 | ||||||||||||||||||
Grade 4 | 459,704 | 800,184 | 6,417 | — | — | 1,266,305 | ||||||||||||||||||
Grade 5 | 17,941 | 335,265 | 537,694 | — | — | 890,900 | ||||||||||||||||||
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| |||||||||||||
| 141,664,305 | 14,360,230 | 554,817 | — | — | 156,579,352 | |||||||||||||||||||
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Retail |
| |||||||||||||||||||||||
Grade 1 | 150,151,135 | 3,437,198 | 5,932 | — | — | 153,594,265 | ||||||||||||||||||
Grade 2 | 2,859,022 | 3,835,200 | 4,751 | — | — | 6,698,973 | ||||||||||||||||||
Grade 3 | 191,695 | 1,141,748 | 6,971 | — | — | 1,340,414 | ||||||||||||||||||
Grade 4 | 9,831 | 124,422 | 3,269 | — | — | 137,522 | ||||||||||||||||||
Grade 5 | 10,524 | 331,055 | 370,462 | — | — | 712,041 | ||||||||||||||||||
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| |||||||||||||
| 153,222,207 | 8,869,623 | 391,385 | — | — | 162,483,215 | |||||||||||||||||||
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| |||||||||||||
| 294,886,512 | 23,229,853 | 946,202 | — | — | 319,062,567 | |||||||||||||||||||
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Loans measured at fair value through other comprehensive income |
| |||||||||||||||||||||||
Corporate |
| |||||||||||||||||||||||
Grade 1 | 176,840 | — | — | — | — | 176,840 | ||||||||||||||||||
Grade 2 | 57,940 | — | — | — | — | 57,940 | ||||||||||||||||||
Grade 3 | — | — | — | — | — | — | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
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| |||||||||||||
| 234,780 | — | — | — | — | 234,780 | |||||||||||||||||||
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| |||||||||||||
| 234,780 | — | — | — | — | 234,780 | |||||||||||||||||||
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| |||||||||||||
| 295,121,292 | 23,229,853 | 946,202 | — | — | 319,297,347 | |||||||||||||||||||
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36
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||||||||||||||
Loans measured at amortized cost * |
| |||||||||||||||||||||||
Corporate |
| |||||||||||||||||||||||
Grade 1 | 76,656,822 | 1,639,311 | 837 | — | — | 78,296,970 | ||||||||||||||||||
Grade 2 | 54,824,807 | 4,507,043 | 6,397 | — | — | 59,338,247 | ||||||||||||||||||
Grade 3 | 2,150,892 | 2,127,430 | 4,188 | — | — | 4,282,510 | ||||||||||||||||||
Grade 4 | 419,333 | 782,452 | 4,185 | — | — | 1,205,970 | ||||||||||||||||||
Grade 5 | 16,648 | 344,920 | 695,726 | — | — | 1,057,294 | ||||||||||||||||||
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| |||||||||||||
| 134,068,502 | 9,401,156 | 711,333 | — | — | 144,180,991 | |||||||||||||||||||
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Retail |
| |||||||||||||||||||||||
Grade 1 | 135,269,735 | 3,554,462 | 7,535 | — | — | 138,831,732 | ||||||||||||||||||
Grade 2 | 2,980,061 | 4,249,015 | 6,863 | — | — | 7,235,939 | ||||||||||||||||||
Grade 3 | 158,514 | 1,304,904 | 8,312 | — | — | 1,471,730 | ||||||||||||||||||
Grade 4 | 9,466 | 151,544 | 2,575 | — | — | 163,585 | ||||||||||||||||||
Grade 5 | 8,649 | 423,037 | 424,497 | — | — | 856,183 | ||||||||||||||||||
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|
|
| |||||||||||||
| 138,426,425 | 9,682,962 | 449,782 | — | — | 148,559,169 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 272,494,927 | 19,084,118 | 1,161,115 | — | — | 292,740,160 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Loans measured at fair value through other comprehensive income |
| |||||||||||||||||||||||
Corporate |
| |||||||||||||||||||||||
Grade 1 | 210,718 | — | — | — | — | 210,718 | ||||||||||||||||||
Grade 2 | 133,574 | — | — | — | — | 133,574 | ||||||||||||||||||
Grade 3 | — | — | — | — | — | — | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 344,292 | — | — | — | — | 344,292 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 344,292 | — | — | — | — | 344,292 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 272,839,219 | 19,084,118 | 1,161,115 | — | — | 293,084,452 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| * | Before netting of allowance |
Credit qualities of loans graded according to internal credit ratings as of December 31, 2020 and 2019, are as follows:
Corporate | Retail | |||
Grade 1 | AAA ~ BBB+ | 1 ~ 5 grade | ||
Grade 2 | BBB ~ BB | 6 ~ 8 grade | ||
Grade 3 | BB- ~ B | 9 ~ 10 grade | ||
Grade 4 | B- ~ CCC | 11 grade | ||
Grade 5 | CC or under | 12 grade or under |
37
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.2.4.2 Credit risk mitigation by collateral
Quantification of the extent to which collateral and other credit enhancements mitigate credit risk of loans as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||||||||||||||
Guarantees | 78,411,452 | 5,702,540 | 174,088 | — | — | 84,288,080 | ||||||||||||||||||
Deposits and savings | 1,273,813 | 119,472 | 5,566 | — | — | 1,398,851 | ||||||||||||||||||
Property and equipment | 3,408,723 | 358,699 | 1,224 | — | — | 3,768,646 | ||||||||||||||||||
Real estate | 160,112,067 | 11,314,263 | 297,321 | — | — | 171,723,651 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 243,206,055 | 17,494,974 | 478,199 | — | — | 261,179,228 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||||||||||||||
Guarantees | 69,618,120 | 3,834,566 | 177,047 | — | — | 73,629,733 | ||||||||||||||||||
Deposits and savings | 1,351,959 | 118,204 | 6,156 | — | — | 1,476,319 | ||||||||||||||||||
Property and equipment | 2,925,884 | 286,280 | 1,123 | — | — | 3,213,287 | ||||||||||||||||||
Real estate | 152,660,506 | 10,478,492 | 381,208 | — | — | 163,520,206 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 226,556,469 | 14,717,542 | 565,534 | — | — | 241,839,545 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
38
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.2.5 Credit risk of securities
Credit qualities of securities other than equity securities that are exposed to credit risk as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||||||||||||||
Securities measured at amortized cost * |
| |||||||||||||||||||||||
Grade 1 | 15,044,622 | — | — | — | — | 15,044,622 | ||||||||||||||||||
Grade 2 | 21,398 | — | — | — | — | 21,398 | ||||||||||||||||||
Grade 3 | — | 7,061 | — | — | — | 7,061 | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 15,066,020 | 7,061 | — | — | — | 15,073,081 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Securities measured at fair value through other comprehensive income |
| |||||||||||||||||||||||
Grade 1 | 38,012,295 | — | — | — | — | 38,012,295 | ||||||||||||||||||
Grade 2 | 1,463,767 | — | — | — | — | 1,463,767 | ||||||||||||||||||
Grade 3 | 79,336 | — | — | — | — | 79,336 | ||||||||||||||||||
Grade 4 | 7,521 | — | — | — | — | 7,521 | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 39,562,919 | — | — | — | — | 39,562,919 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 54,628,939 | 7,061 | — | — | — | 54,636,000 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Not applying expected credit losses | Total | ||||||||||||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||||||||||||||
Securities measured at amortized cost * |
| |||||||||||||||||||||||
Grade 1 | 13,867,628 | — | — | — | — | 13,867,628 | ||||||||||||||||||
Grade 2 | — | — | — | — | — | — | ||||||||||||||||||
Grade 3 | — | — | — | — | — | — | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 13,867,628 | — | — | — | — | 13,867,628 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Securities measured at fair value through other comprehensive income |
| |||||||||||||||||||||||
Grade 1 | 34,622,682 | — | — | — | — | 34,622,682 | ||||||||||||||||||
Grade 2 | 1,209,310 | — | — | — | — | 1,209,310 | ||||||||||||||||||
Grade 3 | 2,606 | — | — | — | — | 2,606 | ||||||||||||||||||
Grade 4 | — | — | — | — | — | — | ||||||||||||||||||
Grade 5 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 35,834,598 | — | — | — | — | 35,834,598 | |||||||||||||||||||
|
| �� |
|
|
|
|
|
|
|
|
|
| ||||||||||||
| 49,702,226 | — | — | — | — | 49,702,226 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| * | Before netting of allowance |
39
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Credit qualities of securities other than equity securities, according to the credit ratings by external rating agencies as of December 31, 2020 and 2019, are as follows:
| Credit | Domestic | Foreign | ||||||||||
quality | KIS | NICE P&I | FnPricing Inc. | S&P | Fitch-IBCA | Moody’s | ||||||
Grade 1 | AA0 to AAA | AA0 to AAA | AA0 to AAA | A-to AAA | A-to AAA | A3 to Aaa | ||||||
Grade 2 | A- to AA- | A- to AA- | A- to AA- | BBB-to BBB+ | BBB-to BBB+ | Baa3 to Baa1 | ||||||
Grade 3 | BBB0 to BBB+ | BBB0 to BBB+ | BBB0 to BBB+ | BB to BB+ | BB to BB+ | Ba2 to Ba1 | ||||||
Grade 4 | BB0 to BBB- | BB0 to BBB- | BB0 to BBB- | B+ to BB- | B+ to BB- | B1 to Ba3 | ||||||
Grade 5 | BB- or under | BB- or under | BB- or under | B or under | B or under | B2 or under | ||||||
Credit qualities of debt securities denominated in Korean won are based on the lowest credit rating by the domestic agencies above, and those denominated in foreign currencies are based on the lowest credit rating by the foreign agencies above.
4.2.6 Credit risk of due from financial institutions
Credit qualities of due from financial institutions as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Total | ||||||||||||||||
| Non-impaired | Impaired | |||||||||||||||||||
Due from financial institutions measured at amortized cost * |
| |||||||||||||||||||
Grade 1 | 15,074,959 | — | — | — | 15,074,959 | |||||||||||||||
Grade 2 | 18,166 | — | — | — | 18,166 | |||||||||||||||
Grade 3 | 5,773 | 13,099 | — | — | 18,872 | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | 217,600 | — | 282 | — | 217,882 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 15,316,498 | 13,099 | 282 | — | 15,329,879 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| December 31, 2019 | ||||||||||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | Total | ||||||||||||||||
| Non-impaired | Impaired | |||||||||||||||||||
Due from financial institutions measured at amortized cost * |
| |||||||||||||||||||
Grade 1 | 10,390,542 | — | — | — | 10,390,542 | |||||||||||||||
Grade 2 | 761 | — | — | — | 761 | |||||||||||||||
Grade 3 | — | — | — | — | — | |||||||||||||||
Grade 4 | — | — | — | — | — | |||||||||||||||
Grade 5 | — | 13,179 | 360 | — | 13,539 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 10,391,303 | 13,179 | 360 | — | 10,404,842 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| * | Before netting of allowance |
The classification criteria of the credit qualities of due from financial institutions as of December 31, 2020 and 2019, is the same as the criteria for securities other than equity securities.
40
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.2.7 Credit risk mitigation of derivative financial instruments
Quantification of the extent to which collateral mitigates credit risk of derivative financial instruments as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Deposits and savings, securities and others | 1,264,017 | 496,294 | ||||||
4.2.8 Credit risk concentration analysis
4.2.8.1 Details of loans by country as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Retail | Corporate * | Total | % | Allowances | Carrying amount | ||||||||||||||||||
Korea | 162,327,214 | 149,351,189 | 311,678,403 | 97.60 | (1,359,220 | ) | 310,319,183 | |||||||||||||||||
Japan | 94 | 960,604 | 960,698 | 0.30 | (1,258 | ) | 959,440 | |||||||||||||||||
United States | — | 1,615,499 | 1,615,499 | 0.51 | (8,234 | ) | 1,607,265 | |||||||||||||||||
China | — | 2,761,438 | 2,761,438 | 0.86 | (12,150 | ) | 2,749,288 | |||||||||||||||||
Others | 155,907 | 2,164,158 | 2,320,065 | 0.73 | (8,038 | ) | 2,312,027 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 162,483,215 | 156,852,888 | 319,336,103 | 100.00 | (1,388,900 | ) | 317,947,203 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Retail | Corporate * | Total | % | Allowances | Carrying amount | ||||||||||||||||||
Korea | 148,407,504 | 139,364,351 | 287,771,855 | 98.13 | (1,300,478 | ) | 286,471,377 | |||||||||||||||||
Japan | 101 | 629,716 | 629,817 | 0.21 | (547 | ) | 629,270 | |||||||||||||||||
United States | — | 1,770,232 | 1,770,232 | 0.60 | (5,187 | ) | 1,765,045 | |||||||||||||||||
China | — | 1,771,334 | 1,771,334 | 0.61 | (3,389 | ) | 1,767,945 | |||||||||||||||||
Others | 151,564 | 1,177,783 | 1,329,347 | 0.45 | (4,953 | ) | 1,324,394 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 148,559,169 | 144,713,416 | 293,272,585 | 100.00 | (1,314,554 | ) | 291,958,031 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| * | Expected credit losses of loans measured at fair value through other comprehensive income as of December 31, 2020 and 2019, are |
41
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.2.8.2 Details of corporate loans by industry as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Loans * | % | Allowances | Carrying amount | ||||||||||||
Financial institutions | 13,610,225 | 8.68 | (5,823 | ) | 13,604,402 | |||||||||||
Manufacturing | 43,242,177 | 27.57 | (419,628 | ) | 42,822,549 | |||||||||||
Service | 69,932,762 | 44.58 | (210,017 | ) | 69,722,745 | |||||||||||
Wholesale and retail | 20,547,779 | 13.10 | (107,586 | ) | 20,440,193 | |||||||||||
Construction | 2,573,742 | 1.64 | (87,732 | ) | 2,486,010 | |||||||||||
Public sector | 1,114,350 | 0.71 | (2,699 | ) | 1,111,651 | |||||||||||
Others | 5,831,853 | 3.72 | (33,673 | ) | 5,798,180 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 156,852,888 | 100.00 | (867,158 | ) | 155,985,730 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Loans * | % | Allowances | Carrying amount | ||||||||||||
Financial institutions | 14,085,470 | 9.73 | (3,931 | ) | 14,081,539 | |||||||||||
Manufacturing | 41,583,867 | 28.74 | (386,676 | ) | 41,197,191 | |||||||||||
Service | 62,473,729 | 43.17 | (164,574 | ) | 62,309,155 | |||||||||||
Wholesale and retail | 17,593,922 | 12.16 | (96,557 | ) | 17,497,365 | |||||||||||
Construction | 2,671,437 | 1.85 | (163,257 | ) | 2,508,180 | |||||||||||
Public sector | 1,162,185 | 0.80 | (1,994 | ) | 1,160,191 | |||||||||||
Others | 5,142,806 | 3.55 | (23,658 | ) | 5,119,148 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 144,713,416 | 100.00 | (840,647 | ) | 143,872,769 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Expected credit losses of loans measured at fair value through other comprehensive income as of December 31, 2020 and 2019, are |
4.2.8.3 Details of retail loans and as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Loans | % | Allowances | Carrying amount | ||||||||||||
Housing purpose | 86,277,661 | 53.10 | (42,096 | ) | 86,235,565 | |||||||||||
General purpose | 76,205,554 | 46.90 | (479,646 | ) | 75,725,908 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 162,483,215 | 100.00 | (521,742 | ) | 161,961,473 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Loans | % | Allowances | Carrying amount | ||||||||||||
Housing purpose | 77,523,390 | 52.18 | (33,536 | ) | 77,489,854 | |||||||||||
General purpose | 71,035,779 | 47.82 | (440,371 | ) | 70,595,408 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 148,559,169 | 100.00 | (473,907 | ) | 148,085,262 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
42
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.2.8.4 Details of domestic mortgage loans as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Loans * | % | Allowances | Carrying amount | ||||||||||||
Group1 | 13,721,317 | 14.23 | (8,252 | ) | 13,713,065 | |||||||||||
Group2 | 26,749,535 | 27.74 | (6,001 | ) | 26,743,534 | |||||||||||
Group3 | 35,831,558 | 37.15 | (9,458 | ) | 35,822,100 | |||||||||||
Group4 | 19,706,942 | 20.44 | (13,319 | ) | 19,693,623 | |||||||||||
Group5 | 401,295 | 0.42 | (1,413 | ) | 399,882 | |||||||||||
Group6 | 15,962 | 0.02 | (147 | ) | 15,815 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 96,426,609 | 100.00 | (38,590 | ) | 96,388,019 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Loans * | % | Allowances | Carrying amount | ||||||||||||
Group1 | 9,410,202 | 10.00 | (4,634 | ) | 9,405,568 | |||||||||||
Group2 | 19,269,533 | 20.48 | (6,270 | ) | 19,263,263 | |||||||||||
Group3 | 33,500,810 | 35.60 | (7,304 | ) | 33,493,506 | |||||||||||
Group4 | 30,517,828 | 32.44 | (13,244 | ) | 30,504,584 | |||||||||||
Group5 | 1,364,155 | 1.45 | (2,389 | ) | 1,361,766 | |||||||||||
Group6 | 25,763 | 0.03 | (128 | ) | 25,635 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 94,088,291 | 100.00 | (33,969 | ) | 94,054,322 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Retail loans for general purpose with the real estate as collateral are included. |
| Ranges | ||
Group1 | LTV 0% to less than 20% | |
Group2 | LTV 20% to less than 40% | |
Group3 | LTV 40% to less than 60% | |
Group4 | LTV 60% to less than 80% | |
Group5 | LTV 80% to less than 100% | |
Group6 | LTV over 100% |
| * | LTV: Loan to Value ratio |
43
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.2.8.5 Details of credit risk of due from financial institutions, securities other than equity securities and derivative financial assets by industry as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Amount | % | Allowances | Carrying amount | ||||||||||||
Due from financial institutions measured at amortized cost |
| |||||||||||||||
Finance and Insurance | 15,329,879 | 100.00 | (354 | ) | 15,329,525 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 15,329,879 | 100.00 | (354 | ) | 15,329,525 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through profit or loss |
| |||||||||||||||
Government and government funded institutions | 2,584,825 | 21.48 | — | 2,584,825 | ||||||||||||
Finance and Insurance 1 | 8,916,127 | 74.11 | — | 8,916,127 | ||||||||||||
Others | 529,970 | 4.41 | — | 529,970 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 12,030,922 | 100.00 | — | 12,030,922 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative financial assets |
| |||||||||||||||
Government and government funded institutions | 44,670 | 0.97 | — | 44,670 | ||||||||||||
Finance and Insurance 1 | 3,938,815 | 85.97 | — | 3,938,815 | ||||||||||||
Others | 598,350 | 13.06 | — | 598,350 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 4,581,835 | 100.00 | — | 4,581,835 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through other comprehensive income 2 |
| |||||||||||||||
Government and government funded institutions | 14,405,220 | 36.41 | — | 14,405,220 | ||||||||||||
Finance and Insurance | 21,157,517 | 53.48 | — | 21,157,517 | ||||||||||||
Others | 4,000,182 | 10.11 | — | 4,000,182 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 39,562,919 | 100.00 | — | 39,562,919 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at amortized cost |
| |||||||||||||||
Government and government funded institutions | 4,763,369 | 31.60 | — | 4,763,369 | ||||||||||||
Finance and Insurance | 10,267,728 | 68.12 | (2,155 | ) | 10,265,573 | |||||||||||
Others | 41,984 | 0.28 | (18 | ) | 41,966 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 15,073,081 | 100.00 | (2,173 | ) | 15,070,908 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 86,578,636 | (2,527 | ) | 86,576,109 | |||||||||||||
|
|
|
|
|
| |||||||||||
44
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Amount | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions measured at amortized cost |
| |||||||||||||||
Finance and Insurance | 10,404,842 | 100.00 | (1,558 | ) | 10,403,284 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 10,404,842 | 100.00 | (1,558 | ) | 10,403,284 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through profit or loss |
| |||||||||||||||
Government and government funded institutions | 1,622,121 | 17.10 | — | 1,622,121 | ||||||||||||
Finance and Insurance 1 | 7,381,118 | 77.77 | — | 7,381,118 | ||||||||||||
Others | 487,252 | 5.13 | — | 487,252 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 9,490,491 | 100.00 | — | 9,490,491 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative financial assets |
| |||||||||||||||
Government and government funded institutions | 7,330 | 0.32 | — | 7,330 | ||||||||||||
Finance and Insurance 1 | 2,135,780 | 92.07 | — | 2,135,780 | ||||||||||||
Others | 176,577 | 7.61 | — | 176,577 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,319,687 | 100.00 | — | 2,319,687 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through other comprehensive income 2 |
| |||||||||||||||
Government and government funded institutions | 13,737,679 | 38.33 | — | 13,737,679 | ||||||||||||
Finance and Insurance | 18,686,144 | 52.15 | — | 18,686,144 | ||||||||||||
Others | 3,410,775 | 9.52 | — | 3,410,775 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 35,834,598 | 100.00 | — | 35,834,598 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at amortized cost |
| |||||||||||||||
Government and government funded institutions | 2,282,894 | 16.46 | — | 2,282,894 | ||||||||||||
Finance and Insurance | 11,574,719 | 83.47 | (1,132 | ) | 11,573,587 | |||||||||||
Others | 10,015 | 0.07 | (2 | ) | 10,013 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 13,867,628 | 100.00 | (1,134 | ) | 13,866,494 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 71,917,246 | (2,692 | ) | 71,914,554 | |||||||||||||
|
|
|
|
|
| |||||||||||
| 1 | Collective investment securities are classified as finance and insurance. |
| 2 | Expected credit losses of securities measured at fair value through other comprehensive income as of December 31, 2020 and 2019, are |
45
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.2.8.6 Details of credit risk of due from financial institutions, securities other than equity securities and derivative financial assets by country as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||
| Amount | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions measured at amortized cost |
| |||||||||||||||
Korea | 11,859,614 | 77.36 | — | 11,859,614 | ||||||||||||
United States | 1,936,559 | 12.63 | (282 | ) | 1,936,277 | |||||||||||
Others | 1,533,706 | 10.01 | (72 | ) | 1,533,634 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 15,329,879 | 100.00 | (354 | ) | 15,329,525 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through profit or loss |
| |||||||||||||||
Korea | 10,271,952 | 85.38 | — | 10,271,952 | ||||||||||||
United States | 1,096,368 | 9.11 | — | 1,096,368 | ||||||||||||
Others | 662,602 | 5.51 | — | 662,602 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 12,030,922 | 100.00 | — | 12,030,922 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative financial assets |
| |||||||||||||||
Korea | 2,131,842 | 46.53 | — | 2,131,842 | ||||||||||||
United States | 612,878 | 13.38 | — | 612,878 | ||||||||||||
France | 399,942 | 8.73 | — | 399,942 | ||||||||||||
Others | 1,437,173 | 31.36 | — | 1,437,173 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 4,581,835 | 100.00 | — | 4,581,835 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through other comprehensive income * |
| |||||||||||||||
Korea | 37,158,763 | 93.92 | — | 37,158,763 | ||||||||||||
United States | 223,750 | 0.57 | — | 223,750 | ||||||||||||
Others | 2,180,406 | 5.51 | — | 2,180,406 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 39,562,919 | 100.00 | — | 39,562,919 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at amortized cost |
| |||||||||||||||
Korea | 14,757,644 | 97.91 | (2,015 | ) | 14,755,629 | |||||||||||
United States | 5,473 | 0.04 | (4 | ) | 5,469 | |||||||||||
United Kingdom | 272,511 | 1.81 | (103 | ) | 272,408 | |||||||||||
Others | 37,453 | 0.24 | (51 | ) | 37,402 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 15,073,081 | 100.00 | (2,173 | ) | 15,070,908 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 86,578,636 | (2,527 | ) | 86,576,109 | |||||||||||||
|
|
|
|
|
| |||||||||||
46
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Amount | % | Allowances | Carrying amount | |||||||||||||
Due from financial institutions measured at amortized cost |
| |||||||||||||||
Korea | 8,627,819 | 82.92 | — | 8,627,819 | ||||||||||||
United States | 1,212,057 | 11.65 | — | 1,212,057 | ||||||||||||
Others | 564,966 | 5.43 | (1,558 | ) | 563,408 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 10,404,842 | 100.00 | (1,558 | ) | 10,403,284 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through profit or loss |
| |||||||||||||||
Korea | 8,770,046 | 92.40 | — | 8,770,046 | ||||||||||||
United States | 394,341 | 4.16 | — | 394,341 | ||||||||||||
Others | 326,104 | 3.44 | — | 326,104 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 9,490,491 | 100.00 | — | 9,490,491 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative financial assets | ||||||||||||||||
Korea | 948,019 | 40.87 | — | 948,019 | ||||||||||||
United States | 461,145 | 19.88 | — | 461,145 | ||||||||||||
France | 299,491 | 12.91 | — | 299,491 | ||||||||||||
Others | 611,032 | 26.34 | — | 611,032 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,319,687 | 100.00 | — | 2,319,687 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at fair value through other comprehensive income * |
| |||||||||||||||
Korea | 33,895,665 | 94.59 | — | 33,895,665 | ||||||||||||
United States | 423,145 | 1.18 | — | 423,145 | ||||||||||||
Others | 1,515,788 | 4.23 | — | 1,515,788 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 35,834,598 | 100.00 | — | 35,834,598 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Securities measured at amortized cost |
| |||||||||||||||
Korea | 12,841,001 | 92.59 | (833 | ) | 12,840,168 | |||||||||||
United States | 165,745 | 1.20 | (34 | ) | 165,711 | |||||||||||
United Kingdom | 765,438 | 5.52 | (237 | ) | 765,201 | |||||||||||
Others | 95,444 | 0.69 | (30 | ) | 95,414 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 13,867,628 | 100.00 | (1,134 | ) | 13,866,494 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 71,917,246 | (2,692 | ) | 71,914,554 | |||||||||||||
|
|
|
|
|
| |||||||||||
| * | Expected credit loss of securities measured at fair value through other comprehensive income as of December 31, 2020 and 2019, are |
Due from financial institutions, financial assets at fair value through profit or loss that linked to gold price and derivatives are mostly related to finance and insurance industry with high credit ratings.
47
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.3 Liquidity risk
4.3.1 Overview of liquidity risk
Liquidity risk is a risk that the Bank becomes insolvent due to the mismatch between the inflow and outflow of funds, unexpected cash outflows, or a risk of loss due to financing funds at a high interest rate or disposing of securities at an unfavorable price due to lack of available funds. The Bank manages its liquidity risk through analysis of the contractual maturity of interest-bearing assets and liabilities, assets and liabilities related to the other inflows and outflows of funds, and off-balance sheet items related to the inflows and outflows of funds such as currency derivative instruments and others.
4.3.2 Liquidity risk management and indicator
The liquidity risk is managed by comprehensive risk management policies and Asset Liability Management (“ALM”) risk management guidelines set forth in these policies applied to all risk management policies and procedures that may arise throughout the overall business of the Bank.
The Bank establishes a liquidity risk management strategy, including objectives of liquidity risk management, management policies, and internal control systems, and obtains a resolution from the Risk Management Committee. The Risk Management Committee establishes the Risk Management Council for efficient risk management to supervise the establishment and implementation of policies according to risk management strategies.
The Bank calculates and manages Liquidity Coverage Ratio (“LCR”), Net Stable Funding Ratio (“NSFR”), liquidity ratio, maturity mismatch ratio and liquidity stress testing result for all transactions and off-balance transactions, that affect the cashflows in Korean won and foreign currency funds raised and operated for the management of liquidity risks and periodically reports them to the Risk Management Council and the Risk Management Committee.
4.3.3 Analysis of remaining contractual maturity of financial assets and liabilities
The cash flows disclosed in the maturity analysis are undiscounted contractual amounts including principal and future interest receivables and payments; as such, the table below do not match with the amounts in the consolidated statement of financial position which are based on discounted cash flows. The future interest receipts and payments for floating-rate assets and liabilities are calculated on the assumption that the current interest rate is the same until maturity.
48
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.3.3.1 Remaining contractual maturity of financial assets and liabilities other than derivatives held for cash flow hedge as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 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 institutions 1 | 5,827,179 | — | 20,279 | 42,142 | — | — | 5,889,600 | |||||||||||||||||||||
Financial assets at fair value through profit or loss 2 | 12,152,279 | — | — | — | 24 | 87,445 | 12,239,748 | |||||||||||||||||||||
Derivatives held for trading 2 | 4,422,796 | — | — | — | — | — | 4,422,796 | |||||||||||||||||||||
Derivatives held for hedging 3 | — | (576 | ) | 14,933 | 18,781 | 65,748 | 88,462 | 187,348 | ||||||||||||||||||||
Loans measured at amortized cost | — | 18,972,112 | 30,465,410 | 123,494,004 | 91,529,629 | 91,974,394 | 356,435,549 | |||||||||||||||||||||
Financial investments | 2,368,252 | 1,661,639 | 3,726,033 | 10,185,324 | 36,372,986 | 5,071,717 | 59,385,951 | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income 4 | 2,368,252 | 705,622 | 1,117,243 | 8,136,204 | 30,206,368 | 704,518 | 43,238,207 | |||||||||||||||||||||
Securities measured at amortized cost | — | 956,017 | 2,608,790 | 2,049,120 | 6,166,618 | 4,367,199 | 16,147,744 | |||||||||||||||||||||
Other financial assets | — | 3,964,786 | — | 930,027 | — | — | 4,894,813 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 24,770,506 | 24,597,961 | 34,226,655 | 134,670,278 | 127,968,387 | 97,222,018 | 443,455,805 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Financial liabilities |
| |||||||||||||||||||||||||||
Financial liabilities at fair value through profit or loss 2 | 141,277 | — | — | — | — | — | 141,277 | |||||||||||||||||||||
Derivatives held for trading 2 | 4,228,446 | — | — | — | — | — | 4,228,446 | |||||||||||||||||||||
Derivatives held for hedging 3 | — | 2,807 | 3,556 | 14,545 | 32,981 | 109 | 53,998 | |||||||||||||||||||||
Deposits 5 | 172,719,673 | 15,113,835 | 26,929,108 | 96,506,871 | 10,301,493 | 250,641 | 321,821,621 | |||||||||||||||||||||
Borrowings | 45,823 | 8,578,768 | 2,973,029 | 7,210,527 | 5,672,658 | 822,080 | 25,302,885 | |||||||||||||||||||||
Debentures | 17,783 | 744,155 | 2,585,312 | 7,528,801 | 10,987,115 | 4,038,300 | 25,901,466 | |||||||||||||||||||||
Lease liabilities | 205 | 15,004 | 27,244 | 100,988 | 186,877 | 23,474 | 353,792 | |||||||||||||||||||||
Other financial liabilities | — | 13,641,788 | 471 | 124,493 | — | — | 13,766,752 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 177,153,207 | 38,096,357 | 32,518,720 | 111,486,225 | 27,181,124 | 5,134,604 | 391,570,237 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Off-balance sheet items |
| |||||||||||||||||||||||||||
Commitments 6 | 91,136,349 | — | — | — | — | — | 91,136,349 | |||||||||||||||||||||
Acceptances and guarantees contracts | 7,970,654 | — | — | — | — | — | 7,970,654 | |||||||||||||||||||||
Financial guarantee contracts 7 | 6,426,473 | — | — | — | — | — | 6,426,473 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 105,533,476 | — | — | — | — | — | 105,533,476 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
49
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| (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 institutions 1 | 4,540,832 | 10,758 | 33,939 | 13,367 | — | — | 4,598,896 | |||||||||||||||||||||
Financial assets at fair value through profit or loss 2 | 9,596,717 | 251 | 17,846 | 134,012 | — | 87,445 | 9,836,271 | |||||||||||||||||||||
Derivatives held for trading 2 | 2,189,768 | — | — | — | — | — | 2,189,768 | |||||||||||||||||||||
Derivatives held for hedging 3 | — | 3,392 | 14,651 | 24,016 | 39,693 | 66,176 | 147,928 | |||||||||||||||||||||
Loans measured at amortized cost | — | 22,203,967 | 27,975,042 | 115,754,264 | 77,138,799 | 89,367,778 | 332,439,850 | |||||||||||||||||||||
Financial investments | 1,893,149 | 1,246,869 | 3,028,220 | 10,672,136 | 34,687,166 | 2,859,161 | 54,386,701 | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income 4 | 1,893,149 | 304,139 | 1,105,600 | 5,462,997 | 30,261,169 | 456,249 | 39,483,303 | |||||||||||||||||||||
Securities measured at amortized cost | — | 942,730 | 1,922,620 | 5,209,139 | 4,425,997 | 2,402,912 | 14,903,398 | |||||||||||||||||||||
Other financial assets | — | 3,676,268 | — | 995,736 | — | — | 4,672,004 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 18,220,466 | 27,141,505 | 31,069,698 | 127,593,531 | 111,865,658 | 92,380,560 | 408,271,418 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Financial liabilities |
| |||||||||||||||||||||||||||
Financial liabilities at fair value through profit or loss 2 | 80,235 | — | — | — | — | — | 80,235 | |||||||||||||||||||||
Derivatives held for trading 2 | 2,120,551 | — | — | — | — | — | 2,120,551 | |||||||||||||||||||||
Derivatives held for hedging 3 | — | 5,973 | 696 | (4,529 | ) | 11,575 | 129 | 13,844 | ||||||||||||||||||||
Deposits 5 | 137,324,138 | 16,309,989 | 26,965,970 | 108,935,764 | 9,307,839 | 1,097,750 | 299,941,450 | |||||||||||||||||||||
Borrowings | 627 | 4,960,681 | 2,547,372 | 6,529,849 | 4,186,714 | 753,997 | 18,979,240 | |||||||||||||||||||||
Debentures | 22,285 | 641,896 | 645,867 | 5,668,559 | 9,593,393 | 1,633,467 | 18,205,467 | |||||||||||||||||||||
Lease liabilities | 520 | 13,773 | 27,182 | 99,067 | 191,406 | 13,885 | 345,833 | |||||||||||||||||||||
Other financial liabilities | — | 12,163,017 | 473 | 77,688 | — | — | 12,241,178 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 139,548,356 | 34,095,329 | 30,187,560 | 121,306,398 | 23,290,927 | 3,499,228 | 351,927,798 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Off-balance sheet items |
| |||||||||||||||||||||||||||
Commitments 6 | 87,695,459 | — | — | — | — | — | 87,695,459 | |||||||||||||||||||||
Acceptances and guarantees contracts | 8,250,284 | — | — | — | — | — | 8,250,284 | |||||||||||||||||||||
Financial guarantee contracts 7 | 5,077,410 | — | — | — | — | — | 5,077,410 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 101,023,153 | — | — | — | — | — | 101,023,153 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 1 | Restricted due from financial instruments amounting to |
| 2 | Financial liabilities at fair value through profit or loss, derivatives held for trading and financial assets at fair value through profit or loss (excluding loans) are not managed by contractual maturity because they are expected to be traded or redeemed before maturity. Therefore, the carrying amounts of those financial instruments are included in the ‘On demand’ category. |
| 3 | Cash flows of derivative instruments held for hedging are shown at net amounts of cash inflows and outflows by remaining contractual maturity. |
| 4 | Equity securities designated as financial assets at fair value through other comprehensive income are included in the ‘On demand’ category because most are available for sale at any time. However, equity securities restricted from sale, are included in the category corresponding to the date on which the restriction is lifted. |
| 5 | Deposits that are contractually repayable on demand or on short notice are included in the ‘On demand’ category. |
| 6 | Unused lines of credit within commitments are included in the ‘On demand’ category because payments can be requested at any time. |
| 7 | Cash flows under financial guarantee contracts are classified based on the earliest period that the contract can be executed. |
50
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.3.3.2 Contractual cash flows of derivatives held for cash flow hedge as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Up to 1 month | 1-3 months | 3-12 months | 1-5 years | Over 5 years | Total | ||||||||||||||||||
Cash flow to be received of net-settled derivatives | 69 | 91 | 350 | 30 | — | 540 | ||||||||||||||||||
Cash flow to be paid of net-settled derivatives | 124 | 3,673 | 7,406 | 4,043 | — | 15,246 | ||||||||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Up to 1 month | 1-3 months | 3-12 months | 1-5 years | Over 5 years | Total | ||||||||||||||||||
Cash flow to be received of net-settled derivatives | 38 | 357 | 1,015 | 564 | — | 1,974 | ||||||||||||||||||
Cash flow to be paid of net-settled derivatives | 191 | 1,340 | 2,001 | 342 | — | 3,874 | ||||||||||||||||||
4.4 Market Risk
4.4.1 Concept
Market risk refers to risks that can result in losses due to changes in market factors such as interest rates, stock prices, and exchange rates etc., which arise from securities and derivatives and others. The most significant risks associated with trading position are interest rate risk and currency risk, and additional risks include stock price risk. The non-trading position is also exposed to interest rate risk. The Bank manages the market risks by dividing them into those arising from the trading position and those arising from the non-trading position.
4.4.2 Risk management
The Bank sets and monitors internal capital limits for market and interest rate risk to manage the risks of trading and non-trading positions. In order to manage market risk efficiently, the Bank maintains risk management systems and procedures such as trading policies and procedures, market risk management guidelines for trading positions, and ALM risk management guidelines for non-trading positions. The entire process is carried out through the approval of the Risk Management Council and the Risk Management Committee of the Bank.
The Bank’s Risk Management Council establishes and enforces overall market risk management policies for market risk management and decides to establish position limits, loss limits, VaR limits, and approves non-standard new products. In addition, the Market Risk Management Committee, chaired by Chief Risk Officer (“CRO”), is a practical decision-making body for market risk management and determines position limits, loss limits, VaR limits, sensitivity limits, and scenario loss limits for each department of business group.
51
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
The Asset-Liability Management Committee (“ALCO”) determines interest rate and commission operating standards and ALM operation policies and enacts and revises relevant guidelines. The Risk Management Council monitors the establishment and enforcement of ALM risk management policies and enacts and revises ALM risk management guidelines. Interest rate risk limits are set based on future asset and liability positions and expected interest rate volatility, which reflect annual business plans. The ALM Department and the Risk Management Department regularly measure and monitor interest rate risks and report the status and limit of interest rate risk including changes in Economic Value of Equity (“DEVE”), changes in Net Interest Income (“DNII”) and duration gap to the ALCO and the Risk Management Council on a monthly basis, and to the Risk Management Committee on a quarterly basis. To ensure the adequacy of interest rate and liquidity risk management, the Risk Management Department assigns the limits, monitors and reviews the procedures and tasks of ALM operations conducted by the ALM department, and reports to the management independently.
The Bank is closely monitoring the outputs of various industry groups and markets that manage the transition to new interest rate, including announcements by Inter-Bank Offered Rate (“IBOR”) regulation authority. Regulation authority has made it clear that as of December 31, 2021, they will no longer persuade or force banks to submit IBORs. In response to these announcements, the Bank established an IBOR transition program and plan consisting of major business areas such as finance, accounting, tax, legal, IT, and risk. The program is under the control of the CFO and reports matters to the board of directors and to a council with senior management members. The purpose of the program is to understand where exposure to IBOR occurs within the business and prepare and implement an action plan to facilitate the transition to alternative interest rate. The Bank aims to complete the transition and alternative plan by the year-end of 2021. In addition, for CD interest rates, interest rates are being reformed by the relevant institutions that calculate, announce and manage the interest rates, and related institutions such as the Bank of Korea and the financial authorities. The Bank continues its efforts as a market participant to actively express opinions so that the index interest rate reform can be carried out in the direction of minimizing the financial and non-financial impacts and operational risks on the Bank and minimizing confusion among stakeholders.
4.4.3 Trading position
4.4.3.1 Definition of a trading position
The trading position, which is subject to market risk management, includes interest rates and stock positions held for short-term trading profit. The Bank also includes and manages all foreign currency positions in our trading positions. The trading position subject to market risk management is the trading position defined in “Trading Policy and Guidelines” and the basic requirements for the trading position are as follows:
| • | The target position has no restrictions on the sale, and the daily fair value assessment should be made and the embedded significant risk can be hedged in the market. |
| • | The trading position classification criteria should be clearly defined in the Trading Policy and Guidelines, and the trading position should be managed by a separate trading department. |
| • | The target position must be operated according to the documented trading strategy and the position’s limit management must be carried out. |
| • | The specialized dealer or operating department shall have the authority to execute the transaction without prior approval from the Risk Management Department, etc. within the pre-determined limits of the target position. |
| • | Target positions should be periodically reported to management for risk management of the Bank. |
52
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.4.3.2 Observation method of market risk arising from trading positions
The Bank measures market risk by calculating VaR through the market risk management system for all trading positions. Generally, the Bank manages market risks arising from trading positions at the portfolio level. In addition, the Bank controls and manages the risk of derivative financial instrument transactions in accordance with the Financial Supervisory Service regulations and guidelines.
4.4.3.3 VaR
(a) VaR
The Bank uses the risk-based valuation method (VaR) to measure the market risk of the trading position.
The Bank uses the 10-day VaR, which represents the maximum amount of possible loss of 10 business days based on the historical simulation model of the full valuation method. The distribution of value changes in the portfolio is estimated based on data from the past 250 business days, and 10-day VaR is calculated by the difference between the value of the portfolio at a 99% confident level of distribution of value changes in the portfolio and the current market value.
VaR is a commonly used market risk measurement technique. However, this approach has some limitations. VaR estimates possible losses under certain confidence level based on historical market change data. However, since past market changes cannot reflect all future conditions and circumstances, the timing and magnitude of actual losses may vary depending on assumptions in the calculation process. If one day or ten days of the holding period which is generally used for normal period of liquidating the position, is not sufficient or too long, the VaR result may underestimate or overestimate the potential loss.
When the Bank measures market risk for trading position, it uses an internal model (VaR) for general risk and a standard method for individual risks. Standard method is used if internal model is not authorized for certain market risk. Therefore, disclosed market risk VaR does not reflect the market risk for individual risks and for some positions.
(b) Back-Testing
To verify the appropriateness of the VaR model, back-testing is performed by comparing actual and hypothetical gains and losses with the VaR calculation results.
(c) Stress Testing
The Bank carries out a stress testing of the trading and available-for-sale portfolio to reflect changes in individual risk factors such as interest rates, stock prices, exchange rates, and implied volatility of options that have a significant impact on portfolio value in a crisis. The Bank carries out a stress testing through historical and hypothetical scenarios. This stress testing is carried out more than once a quarter.
53
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
VaR at a 99% confidence level of interest rate, stock price and foreign exchange rate risk for trading positions with a ten-day holding period, excluding Stressed VaR, for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||
| (In millions of Korean won) | Average | Minimum | Maximum | Dec. 31, 2020 | ||||||||||||
Interest rate risk | 45,239 | 2,037 | 88,320 | 37,203 | ||||||||||||
Stock price risk | 93 | — | 298 | — | ||||||||||||
Foreign exchange rate risk | 52,143 | 12,935 | 87,099 | 61,687 | ||||||||||||
Deduction of diversification effect | 1,287 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total VaR | 98,381 | 13,608 | 143,043 | 100,177 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2019 | ||||||||||||||||
| (In millions of Korean won) | Average | Minimum | Maximum | Dec. 31, 2019 | ||||||||||||
Interest rate risk | 3,647 | 1,089 | 8,227 | 3,494 | ||||||||||||
Stock price risk | 189 | 48 | 259 | 202 | ||||||||||||
Foreign exchange rate risk | 21,746 | 9,634 | 28,170 | 20,346 | ||||||||||||
Deduction of diversification effect | (5,769 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total VaR | 20,747 | 11,498 | 26,492 | 18,273 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
The required equity capital using the standard method related to the positions which are not measured by VaR as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Interest rate risk | 27,641 | — | ||||||
Stock price risk | 14 | 2 | ||||||
|
|
|
| |||||
| 27,655 | 2 | |||||||
|
|
|
| |||||
4.4.3.4 Details of risk factors
(a) Interest rate risk
The interest rate risk for trading positions usually arises from debt securities denominated in Korean won. The Bank’s trading strategy is to gain short-term trading gains from interest rate fluctuations. The Bank manages interest rate risks associated with trading portfolios using VaR and sensitivity analysis (Price Value of a Basis Point: PVBP).
(b) Stock price risk
Stock price risk arises mainly from derivatives linked to stocks positions in the Capital Markets Department. This stock price risk is managed through VaR, sensitivity limits, etc.
(c) Foreign exchange rate risk
Foreign exchange rate risk arises from holding assets, liabilities and currency-related derivatives which are denominated in foreign currency. Most of the net foreign currency exposures occur in the US dollars and the Chinese Yuan. The Bank also manages net foreign exchange exposures across trading and non-trading portfolios by setting a net foreign currency exposure limit at the same time setting a loss limit.
54
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.4.4 Non-trading position (Interest Rate Risk of Banking Book (“IRRBB”))
4.4.4.1 Definition of IRRBB
IRRBB is a change in equity and profit due to the changes in value of interest-sensitive assets, liabilities, etc., and is measured by DEVE and DNII.
4.4.4.2 Bank’s overall interest rate risk management and mitigation strategy
The Risk Management Committee approves policies, procedures and limits for managing interest rate risk, and the management department regularly reports on interest rate risk levels of DEVE, DNII and changes of market condition etc., as compared to the set limit. To measure the sensitivity of a bank’s economic value and earnings-based measure as interest rates change, the Bank calculates monthly interest rate gap and duration gap for assets and liabilities. In addition, the management department conducts an interest rate risk crisis analysis at least once a quarter assuming abnormal interest rate fluctuations and reports the results to the Risk Management Council. Independent internal and external audits regularly check the process of identifying, measuring and monitoring interest rate risks. The interest rate risk model adequacy test is carried out regularly at least once a year by verification department independent of the management department.
4.4.4.3 Main modeling assumption used for the Bank’s interest rate risk measurement system for internal management
The Bank separately calculates D EVE for internal management of interest rate risk, assuming a historical-simulation based on interest rate volatility in the past financial crisis (FY08-FY09), distribution of assets/liabilities portfolio, and 27 interest rate gaps considering management strategy.
4.4.4.4 The Bank’s interest rate risk hedging methodology and related accounting
The Bank hedges interest rate risk through back-to-back interest rate swap transactions, which are the same as interest payment cash flows. The Bank officially documents and manages the risk management strategy for hedge accounting, risk management objectives, hedging relationship, and assessment method for hedge effectiveness.
55
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.4.4.5 Main assumptions used for calculating DEVE, DNII
The Bank calculates interest rate risk, including all cash flow of interest-sensitive assets, liabilities, and off-balance items in the banking book. DEVE assumes a run-off balance sheet where the existing bank account positions are amortized and not replaced by new businesses. In addition, the contractual interest rate, including commercial margins and other interest rate components, is applied to generate cash flows. In case of discounting cash flow, DEVE is calculated by applying risk-free interest rates that do not include commercial margins and other interest components.
DNII assumes a constant balance sheet in which cash flows that mature or interest rates are revised during the target management period are replaced by new cash flows that have the same characteristics. The interest rate risk is calculated for the interest rate shock scenario by adding up only if the risk is a loss for each currency. The average interest rate revision maturity of demand deposits is determined by dividing them into retail transactional, retail non-transactional and wholesale based on customer and regular transactions and taking into account the core deposit rates and the upper average maturity limit for each category. The average interest rate revision maturity for demand deposits is 2.5 years for core deposits, 1 day for non-core deposits, and the longest interest rate revision maturity is five years. The prepayment rate of fixed-rate loan and early redemption rate of term deposit are estimated by dividing the amount of prepayment amount and early redemption amount during the previous month by the balance at the end of the previous month, respectively.
4.4.4.6 DEVE, DNII
The Bank calculates DEVE by applying six interest rate shocks and stress scenarios, and DNII by applying parallel shock up and down scenarios. The results as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | December 31, 2019 | |||||||||||||||
| (In millions of Korean won) | Changes in the Economic Value of Equity Capital (DEVE) | Changes in net interest income (DNII) | Changes in the Economic Value of Equity Capital (DEVE) | Changes in net interest income (DNII) | ||||||||||||
Scenario 1 (Parallel rise) | 521,124 | 426,811 | 426,667 | 116,958 | ||||||||||||
Scenario 2 (Parallel decline) | 72,458 | 2,272 | 33,310 | 4,222 | ||||||||||||
Scenario 3 (Short-term decline, long-term rise) | 123,150 | 222,659 | ||||||||||||||
Scenario 4 (Short-term rise, long-term decline) | 429,344 | 416,300 | ||||||||||||||
Scenario 5 (Short-term rise) | 488,939 | 382,042 | ||||||||||||||
Scenario 6 (Short-term decline) | 523,177 | 498,690 | ||||||||||||||
Maximum of 6 scenarios | 523,177 | 426,811 | 498,690 | 116,958 | ||||||||||||
Basic capital | 29,136,133 | — | 27,860,004 | — | ||||||||||||
55
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.4.5 Financial assets and liabilities denominated in foreign currencies
Details of financial instruments denominated in foreign currencies and translated into Korean won as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | USD | JPY | EUR | GBP | CNY | Others | Total | |||||||||||||||||||||
Financial assets | ||||||||||||||||||||||||||||
Cash and due from financial institutions | 3,106,479 | 511,564 | 209,562 | 56,996 | 131,188 | 470,716 | 4,486,505 | |||||||||||||||||||||
Financial assets at fair value through profit or loss | 1,461,309 | — | 188,882 | — | — | 19,479 | 1,669,670 | |||||||||||||||||||||
Derivatives held for trading | 306,544 | — | — | — | — | — | 306,544 | |||||||||||||||||||||
Derivatives held for hedging | 106,631 | — | — | — | — | — | 106,631 | |||||||||||||||||||||
Loans measured at amortized cost | 16,544,961 | 550,793 | 1,096,898 | 221,880 | 12,433 | 772,425 | 19,199,390 | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income | 4,353,601 | 5,271 | 9,438 | — | — | 148,517 | 4,516,827 | |||||||||||||||||||||
Financial assets at amortized cost | 317,341 | — | — | — | — | — | 317,341 | |||||||||||||||||||||
Other financial assets | 1,536,764 | 49,122 | 200,083 | 5,504 | 89,253 | 141,059 | 2,021,785 | |||||||||||||||||||||
|
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|
|
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| |||||||||||||||
| 27,733,630 | 1,116,750 | 1,704,863 | 284,380 | 232,874 | 1,552,196 | 32,624,693 | ||||||||||||||||||||||
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Financial liabilities | ||||||||||||||||||||||||||||
Derivatives held for trading | 400,378 | 65 | 109 | — | — | — | 400,552 | |||||||||||||||||||||
Derivatives held for hedging | 66,305 | — | — | — | — | — | 66,305 | |||||||||||||||||||||
Deposits | 13,556,633 | 885,629 | 916,361 | 66,331 | 212,817 | 919,228 | 16,556,999 | |||||||||||||||||||||
Borrowings | 8,743,953 | 485,618 | 321,705 | 218,578 | 7,850 | 136,752 | 9,914,456 | |||||||||||||||||||||
Debentures | 4,691,943 | — | 666,873 | — | — | 120,388 | 5,479,204 | |||||||||||||||||||||
Other financial liabilities | 2,168,468 | 38,661 | 93,949 | 9,491 | 17,039 | 22,757 | 2,350,365 | |||||||||||||||||||||
|
|
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|
|
|
|
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|
| |||||||||||||||
| 29,627,680 | 1,409,973 | 1,998,997 | 294,400 | 237,706 | 1,199,125 | 34,767,881 | ||||||||||||||||||||||
|
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|
| |||||||||||||||
Off-balance sheet items | 13,360,888 | 32,200 | 254,222 | 741 | 121,760 | 118,713 | 13,888,524 | |||||||||||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | USD | JPY | EUR | GBP | CNY | Others | Total | |||||||||||||||||||||
Financial assets | ||||||||||||||||||||||||||||
Cash and due from financial institutions | 1,722,576 | 244,277 | 144,399 | 33,228 | 161,766 | 487,361 | 2,793,607 | |||||||||||||||||||||
Financial assets at fair value through profit or loss | 1,555,545 | — | 159,888 | 1,116 | — | 18,103 | 1,734,652 | |||||||||||||||||||||
Derivatives held for trading | 98,077 | — | — | — | — | — | 98,077 | |||||||||||||||||||||
Derivatives held for hedging | 80,202 | — | — | — | — | — | 80,202 | |||||||||||||||||||||
Loans measured at amortized cost | 14,896,881 | 463,897 | 593,074 | 137,585 | 50,989 | 558,678 | 16,701,104 | |||||||||||||||||||||
Financial assets at fair value through other comprehensive income | 3,953,870 | 21,267 | 5,192 | — | — | 37,977 | 4,018,306 | |||||||||||||||||||||
Financial assets at amortized cost | 1,026,325 | — | — | — | — | — | 1,026,325 | |||||||||||||||||||||
Other financial assets | 1,199,067 | 230,223 | 289,134 | 5,178 | 146,722 | 87,105 | 1,957,429 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 24,532,543 | 959,664 | 1,191,687 | 177,107 | 359,477 | 1,189,224 | 28,409,702 | ||||||||||||||||||||||
|
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| |||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||
Derivatives held for trading | 209,639 | 6 | 53 | — | — | — | 209,698 | |||||||||||||||||||||
Derivatives held for hedging | 35,538 | — | — | — | — | — | 35,538 | |||||||||||||||||||||
Deposits | 11,851,098 | 719,081 | 761,074 | 45,485 | 203,219 | 523,079 | 14,103,036 | |||||||||||||||||||||
Borrowings | 8,707,309 | 125,096 | 340,530 | 118,848 | 6,586 | 62,050 | 9,360,419 | |||||||||||||||||||||
Debentures | 4,083,040 | — | — | — | — | 101,967 | 4,185,007 | |||||||||||||||||||||
Other financial liabilities | 2,108,945 | 59,761 | 97,325 | 21,475 | 151,144 | 163,054 | 2,601,704 | |||||||||||||||||||||
|
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|
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|
| |||||||||||||||
| 26,995,569 | 903,944 | 1,198,982 | 185,808 | 360,949 | 850,150 | 30,495,402 | ||||||||||||||||||||||
|
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|
| |||||||||||||||
Off-balance sheet items | 16,773,630 | 32,694 | 191,210 | — | 153,451 | 37,195 | 17,188,180 | |||||||||||||||||||||
57
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
4.5 Operational Risk
4.5.1 Concept
The Bank defines operational risks broadly as all financial and non-financial risks from operating activities that negatively affect capital.
4.5.2 Risk management
The purpose of operational risk management is not only to comply with supervisory and regulatory requirements, but also to spread risk management culture, strengthen internal control, improve processes and provide timely feedback to management and all employees. The Bank established a Business Continuity Planning (BCP) to carry out continuous work in emergency situations and established alternative facilities. The Bank conducts simulation training for headquarters and IT departments to check the business continuity framework.
4.6 Capital Management
The Bank complies with the capital adequacy standard established by the Financial Services Commission. This capital adequacy standard is based on Basel III revised by Basel Committee on Banking Supervision in Bank for International Settlements in June 2011 and was implemented in Korea in December 2013.
The Bank is required to maintain a minimum Common Equity Tier 1 ratio of at least 4.5%, a minimum Tier 1 ratio of 6.0% and a minimum Total Regulatory Capital of 8.0% as of December 31, 2020. Capital Conservation Buffer of 2.5% and Capital Requirement of Domestic Systemically Important Bank (D-SIB) of 1.0% are additionally applied. Therefore, the Bank is required to maintain a capital ratio including a minimum capital ratio and additional capital requirements (a Common Equity Tier 1 Ratio of 8.0% (December 31, 2019: 8.0%), a Tier 1 Ratio of 9.5% (December 31, 2019: 9.5%), and a Total Regulatory Capital Ratio of 11.5% (December 31, 2019: 11.5%)).
The Bank’s equity capital is classified into three categories in accordance with Detailed Supervisory Regulations on Banking Business:
| • | Common Equity Tier 1 Capital: Common equity Tier 1 Capital is the first to take losses in the Bank and is the last to be compensated in liquidation of the Bank and not repaid except for liquidation. It includes capital, capital surplus, retained earnings, non-controlling interests of the consolidated subsidiaries, accumulated other comprehensive income and other capital surplus etc. |
| • | Additional Tier 1 Capital: Additional Tier 1 Capital includes capital, capital surplus, etc. related to the issuance of capital securities of a permanent nature that meets the conditional capital securities requirements. |
| • | Tier 2 Capital: Tier 2 Capital means capital that can compensate for losses of the Bank upon liquidation, including (a) the amount of subordinated bonds with maturity of not less than 5 years that meet the conditional capital securities requirements, and (b) the allowance for credit losses accumulated on the loans which are classified as normal or precautionary in accordance with Regulation on Supervision of Financial Holding Companies and others. |
The risk-weighted assets are the magnitude of the amount of risk inherent in the total asset held by the Bank. The Bank calculates risk-weighted assets by each risk (credit risk, market risk, and operational risk) based on the Supervisory Regulations and Detailed Supervisory Regulations on Financial Holding Companies and uses them to calculate BIS ratio. The Bank complied with external capital adequacy requirements as of December 31, 2020 and 2019.
58
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Apart from the BIS ratio, the Bank evaluates and manages capital adequacy through internal policies. The valuation of capital adequacy compares the size of available capital (the amount of capital actually available) to the size of internal capital (the amount of capital required to cover all the significant risks faced by the Bank under its target credit rating), which monitors financial soundness and provides a risk-adjusted performance measurement basis. The internal capital for capital adequacy assessment is calculated by adding the results of a stress test and other additional capital requirements to the internal capital calculated for each individual risk.
The Risk Management Committee of the Bank determines the risk appetite of the Bank, allocates internal capital by risk type and business group, and each business group operates capital efficiently within the range of the allocated internal capital. The Risk Management Department of the Bank monitors internal capital limit management and reports it to the management and the Risk Management Committee. If the limit of internal capital is expected to be exceeded, the Bank’s capital adequacy management is carried out through review and approval by the Risk Management Committee in advance.
Details of the Bank’s capital adequacy calculation in accordance with Basel III requirements as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Equity Capital | 32,554,705 | 29,809,730 | ||||||
Tier I Capital | 28,234,310 | 27,609,684 | ||||||
Common Equity Tier 1 Capital | 27,659,787 | 27,035,161 | ||||||
Additional Tier 1 Capital | 574,523 | 574,523 | ||||||
Tier II Capital | 4,320,395 | 2,200,046 | ||||||
Risk-weighted assets: | 183,148,273 | 188,075,177 | ||||||
Credit risk 1 | 160,817,395 | 172,985,173 | ||||||
Market risk 2 | 11,372,840 | 5,150,641 | ||||||
Operational risk 3 | 10,958,038 | 9,939,363 | ||||||
Equity Capital (%): | 17.78 | 15.85 | ||||||
Tier I Capital (%) | 15.42 | 14.68 | ||||||
Common Equity Tier 1 Capital (%) | 15.10 | 14.37 | ||||||
| 1 | Credit risk weighted assets are measured using the Internal Rating-Based Approach and Standardized Approach. |
| 2 | Market risk weighted assets are measured using the Internal Model-Based Approach and Standardized Approach. |
| 3 | Operational risk weighted assets are measured using the Advanced Measurement Approach. |
59
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
5. Segment Information
5.1 Overall Segment Information and Business Segments
The Bank is organized into Corporate Banking, Retail Banking and Other Activities. These segments are based on the nature of the products and services provided, the type or class of customer, and the Bank’s management organization.
| • | Corporate banking: The activities within this segment include providing credit, deposit products and other related financial services to large, small and medium-sized enterprises and SOHOs. |
| • | Retail banking: The activities within this segment include providing credit, deposit products and other related financial services to individuals and households. |
| • | Other activities: The activities within this segment include trading activities in securities and derivatives, funding, trust and other activities. |
Financial information by business segment for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||
| (In millions of Korean won) | Corporate banking | Retail banking | Others | Total | ||||||||||||
Operating revenues from external customers | 2,727,537 | 2,918,826 | 2,011,837 | 7,658,200 | ||||||||||||
Net interest income | 2,937,744 | 3,178,280 | 322,832 | 6,438,856 | ||||||||||||
Interest income | 4,260,464 | 4,519,579 | 938,646 | 9,718,689 | ||||||||||||
Interest expense | (1,322,720 | ) | (1,341,299 | ) | (615,814 | ) | (3,279,833 | ) | ||||||||
Net fee and commission income | 357,625 | 406,603 | 341,022 | 1,105,250 | ||||||||||||
Fee and commission income | 458,329 | 529,178 | 468,100 | 1,455,607 | ||||||||||||
Fee and commission expense | (100,704 | ) | (122,575 | ) | (127,078 | ) | (350,357 | ) | ||||||||
Net gains on financial instruments at fair value through profit or loss | 665 | — | 335,016 | 335,681 | ||||||||||||
Net other operating income (expense) | (568,497 | ) | (666,057 | ) | 1,012,967 | (221,587 | ) | |||||||||
General and administrative expenses | (1,384,703 | ) | (2,072,515 | ) | (570,549 | ) | (4,027,767 | ) | ||||||||
Operating profit before provision for credit losses | 1,342,834 | 846,311 | 1,441,288 | 3,630,433 | ||||||||||||
Provision for credit losses | (192,004 | ) | (264,943 | ) | (3,866 | ) | (460,813 | ) | ||||||||
Operating profit | 1,150,830 | 581,368 | 1,437,422 | 3,169,620 | ||||||||||||
Net non-operating expense | (418 | ) | — | (78,805 | ) | (79,223 | ) | |||||||||
Segment profit before income tax expense | 1,150,412 | 581,368 | 1,358,617 | 3,090,397 | ||||||||||||
Income tax expense | (316,363 | ) | (159,876 | ) | (347,199 | ) | (823,438 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Profit for the year | 834,049 | 421,492 | 1,011,418 | 2,266,959 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets * | 148,608,992 | 161,330,053 | 112,187,189 | 422,126,234 | ||||||||||||
Total liabilities * | 153,134,944 | 176,571,944 | 61,959,534 | 391,666,422 | ||||||||||||
60
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||
| (In millions of Korean won) | Corporate banking | Retail banking | Others | Total | ||||||||||||
Operating revenues from external customers | 2,531,458 | 2,979,503 | 1,773,241 | 7,284,202 | ||||||||||||
Net interest income | 2,783,464 | 3,148,061 | 358,519 | 6,290,044 | ||||||||||||
Interest income | 4,484,502 | 4,872,937 | 1,176,303 | 10,533,742 | ||||||||||||
Interest expense | (1,701,038 | ) | (1,724,876 | ) | (817,784 | ) | (4,243,698 | ) | ||||||||
Net fee and commission income | 356,060 | 471,869 | 339,663 | 1,167,592 | ||||||||||||
Fee and commission income | 453,863 | 577,845 | 473,635 | 1,505,343 | ||||||||||||
Fee and commission expense | (97,803 | ) | (105,976 | ) | (133,972 | ) | (337,751 | ) | ||||||||
Net gains on financial instruments at fair value through profit or loss | 207 | — | 420,933 | 421,140 | ||||||||||||
Net other operating income (expenses) | (608,273 | ) | (640,427 | ) | 654,126 | (594,574 | ) | |||||||||
General and administrative expenses | (1,208,541 | ) | (1,982,375 | ) | (661,058 | ) | (3,851,974 | ) | ||||||||
Operating profit before provision for credit losses | 1,322,917 | 997,128 | 1,112,183 | 3,432,228 | ||||||||||||
Reversal (provision) for credit losses | 125,785 | (235,995 | ) | 7,240 | (102,970 | ) | ||||||||||
Operating profit | 1,448,702 | 761,133 | 1,119,423 | 3,329,258 | ||||||||||||
Net non-operating income (expenses) | 128 | — | (34,764 | ) | (34,636 | ) | ||||||||||
Segment profit before income tax expense | 1,448,830 | 761,133 | 1,084,659 | 3,294,622 | ||||||||||||
Income tax expense | (398,428 | ) | (209,311 | ) | (265,190 | ) | (872,929 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Profit for the year | 1,050,402 | 551,822 | 819,469 | 2,421,693 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets * | 134,486,979 | 147,468,173 | 97,530,691 | 379,485,843 | ||||||||||||
Total liabilities * | 137,626,763 | 161,834,984 | 51,162,850 | 350,624,597 | ||||||||||||
| * | Assets and liabilities of the reporting segments are amounts before intersegment transactions. |
61
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
5.2 Services and Geographical Segments
5.2.1 Services information
Operating revenues from external customers by services for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Corporate banking service | 2,727,537 | 2,531,458 | ||||||
Retail banking service | 2,918,826 | 2,979,503 | ||||||
Other service | 2,011,837 | 1,773,241 | ||||||
|
|
|
| |||||
| 7,658,200 | 7,284,202 | |||||||
|
|
|
| |||||
5.2.2 Geographical information
Geographical operating revenues from external customers for the years ended December 31, 2020 and 2019, and major non-current assets as of December 31, 2020 and 2019, are as follows:
| Revenues from external customers | Major non-current assets | |||||||||||||||
| (In millions of Korean won) | 2020 | 2019 | December 31, 2020 | December 31, 2019 | ||||||||||||
Domestic | 7,549,401 | 7,211,160 | 4,233,861 | 4,051,234 | ||||||||||||
China | 8,752 | 22,391 | 3,239 | 1,377 | ||||||||||||
United States | 3,071 | 13,971 | 8,206 | 9,452 | ||||||||||||
New Zealand | 3,554 | 6,946 | 2,385 | 3,516 | ||||||||||||
Japan | 7,933 | 6,692 | 2,607 | 3,480 | ||||||||||||
United Kingdom | 32,563 | 9,424 | 1,250 | 1,893 | ||||||||||||
Vietnam | 38,983 | 10,449 | 2,167 | 1,938 | ||||||||||||
India | 13,943 | 3,169 | 1,155 | 1,533 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 7,658,200 | 7,284,202 | 4,254,870 | 4,074,423 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
62
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6. Financial Assets and Financial Liabilities
6.1 Classification and Fair Value
6.1.1 Carrying amount and fair value of financial assets and liabilities by category as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||
| (In millions of Korean won) | Carrying amount | Fair value | ||||||
Financial assets | ||||||||
Cash and due from financial institutions | 17,989,041 | 17,991,399 | ||||||
Financial assets at fair value through profit or loss | 12,191,559 | 12,191,559 | ||||||
Debt securities | 12,030,922 | 12,030,922 | ||||||
Equity securities | 31,916 | 31,916 | ||||||
Loans | 38,756 | 38,756 | ||||||
Others | 89,965 | 89,965 | ||||||
Derivatives held for trading | 4,422,796 | 4,422,796 | ||||||
Derivatives held for hedging | 159,039 | 159,039 | ||||||
Loans measured at amortized cost | 317,673,667 | 318,257,423 | ||||||
Financial assets at fair value through other comprehensive income | 42,300,254 | 42,300,254 | ||||||
Debt securities | 39,562,919 | 39,562,919 | ||||||
Equity securities | 2,502,555 | 2,502,555 | ||||||
Loans | 234,780 | 234,780 | ||||||
Securities measured at amortized cost | 15,070,908 | 15,137,731 | ||||||
Other financial assets | 5,630,598 | 5,630,598 | ||||||
|
|
|
| |||||
| 415,437,862 | 416,090,799 | |||||||
|
|
|
| |||||
Financial liabilities | ||||||||
Financial liabilities at fair value through profit or loss | 141,277 | 141,277 | ||||||
Derivatives held for trading | 4,228,446 | 4,228,446 | ||||||
Derivatives held for hedging | 67,267 | 67,267 | ||||||
Deposits | 319,082,424 | 319,332,081 | ||||||
Borrowings | 25,099,647 | 25,093,558 | ||||||
Debentures | 24,690,676 | 24,872,703 | ||||||
Other financial liabilities | 16,033,368 | 16,033,368 | ||||||
|
|
|
| |||||
| 389,343,105 | 389,768,700 | |||||||
|
|
|
| |||||
63
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||
| (In millions of Korean won) | Carrying amount | Fair value | ||||||
Financial assets | ||||||||
Cash and due from financial institutions | 13,093,005 | 13,092,922 | ||||||
Financial assets at fair value through profit or loss | 9,785,350 | 9,785,350 | ||||||
Debt securities | 9,490,491 | 9,490,491 | ||||||
Equity securities | 26,921 | 26,921 | ||||||
Loans | 188,133 | 188,133 | ||||||
Others | 79,805 | 79,805 | ||||||
Derivatives held for trading | 2,189,768 | 2,189,768 | ||||||
Derivatives held for hedging | 129,919 | 129,919 | ||||||
Loans measured at amortized cost | 291,425,606 | 291,686,008 | ||||||
Financial assets at fair value through other comprehensive income | 38,172,534 | 38,172,534 | ||||||
Debt securities | 35,834,598 | 35,834,598 | ||||||
Equity securities | 1,993,644 | 1,993,644 | ||||||
Loans | 344,292 | 344,292 | ||||||
Securities measured at amortized cost | 13,866,494 | 13,958,441 | ||||||
Other financial assets | 5,466,052 | 5,466,052 | ||||||
|
|
|
| |||||
| 374,128,728 | 374,480,994 | |||||||
|
|
|
| |||||
Financial liabilities | ||||||||
Financial liabilities at fair value through profit or loss | 80,235 | 80,235 | ||||||
Derivatives held for trading | 2,120,551 | 2,120,551 | ||||||
Derivatives held for hedging | 36,212 | 36,212 | ||||||
Deposits | 295,690,896 | 296,187,156 | ||||||
Borrowings | 18,706,328 | 18,705,850 | ||||||
Debentures | 17,142,392 | 17,361,816 | ||||||
Other financial liabilities | 14,990,170 | 14,990,170 | ||||||
|
|
|
| |||||
| 348,766,784 | 349,481,990 | |||||||
|
|
|
| |||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Bank discloses the fair value of each class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is a quoted price in an active market.
64
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Methods of determining fair value of financial instruments are as follows:
Cash and due from financial institutions | Carrying amounts of cash and demand due from financial institutions and payment due from financial institutions are 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). | |
Securities
Due from financial institutions and deposits indexed to gold price | Fair value of securities and due from financial institutions and deposits indexed to gold price that are quoted in active markets is determined using the quoted prices. If there is no quoted price, fair value is determined using external professional valuation institution. The institutions use one or more of the following valuation techniques including DCF Model, MonteCarlo Simulation, FCFE (Free Cash Flow to Equity Model), Comparable Company Analysis, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method, deemed suitable considering the characteristics of the financial instruments. | |
Loans | Fair value of loans is determined using DCF Model and independent external professional valuation institution. Fair value measured by DCF Model is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate. Fair value of the other loans is determined by external professional valuation institution using Tree Model. | |
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 Bank 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 (“FDM”), the MonteCarlo Simulation and the Tree model or valuation results from independent external professional valuation institution. For OTC derivatives, the credit risk of counterparty and the Bank’s own credit risk are applied through Credit Valuation Adjustment (“CVA”). | |
Deposits | Carrying amount of demand deposits is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of time deposits is determined using a DCF model. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate. | |
Borrowings | Carrying amount of overdraft in foreign currency is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of other borrowings is determined using a DCF model discounting contractual future cash flows at an appropriate discount rate. | |
65
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Debentures | Fair value is determined by using the valuation results (DCF Model) of external professional valuation institution, which are calculated using market inputs. | |
Other financial assets and other financial liabilities | 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. | |
6.1.2 Fair value hierarchy
The Bank believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the statements of financial position are appropriate. However, the fair values of the financial instruments recognized in the statements of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.
The Bank 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.
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. If an observable input requires an adjustment using an unobservable input and that adjustment results in a significantly higher or lower fair value measurement, the resulting measurement would be categorized within Level 3 of the fair value hierarchy.
66
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6.1.2.1 Fair value hierarchy of financial assets and liabilities at fair value in the statements of financial position
Fair value hierarchy of financial assets and liabilities at fair value in the statements of financial position as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| Fair value hierarchy | Total | |||||||||||||||
| (In millions of Korean won) | Level 1 | Level 2 | Level 3 | |||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | 3,510,745 | 6,576,896 | 2,103,918 | 12,191,559 | ||||||||||||
Debt securities | 3,420,780 | 6,576,896 | 2,033,246 | 12,030,922 | ||||||||||||
Equity securities | — | — | 31,916 | 31,916 | ||||||||||||
Loans | — | — | 38,756 | 38,756 | ||||||||||||
Others | 89,965 | — | — | 89,965 | ||||||||||||
Derivatives held for trading | — | 4,304,456 | 118,340 | 4,422,796 | ||||||||||||
Derivatives held for hedging | — | 159,039 | — | 159,039 | ||||||||||||
Financial assets at fair value through other comprehensive income | 9,698,020 | 30,684,313 | 1,917,921 | 42,300,254 | ||||||||||||
Debt securities | 9,113,386 | 30,449,533 | — | 39,562,919 | ||||||||||||
Equity securities | 584,634 | — | 1,917,921 | 2,502,555 | ||||||||||||
Loans | — | 234,780 | — | 234,780 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 13,208,765 | 41,724,704 | 4,140,179 | 59,073,648 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | 141,277 | — | — | 141,277 | ||||||||||||
Derivatives held for trading | — | 4,161,752 | 66,694 | 4,228,446 | ||||||||||||
Derivatives held for hedging | — | 67,267 | — | 67,267 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 141,277 | 4,229,019 | 66,694 | 4,436,990 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
67
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||||||
| Fair value hierarchy | Total | |||||||||||||||
| (In millions of Korean won) | Level 1 | Level 2 | Level 3 | |||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | 2,633,463 | 5,224,401 | 1,927,486 | 9,785,350 | ||||||||||||
Debt securities | 2,552,499 | 5,224,401 | 1,713,591 | 9,490,491 | ||||||||||||
Equity securities | 1,159 | — | 25,762 | 26,921 | ||||||||||||
Loans | — | — | 188,133 | 188,133 | ||||||||||||
Others | 79,805 | — | — | 79,805 | ||||||||||||
Derivatives held for trading | — | 2,189,698 | 70 | 2,189,768 | ||||||||||||
Derivatives held for hedging | — | 129,919 | — | 129,919 | ||||||||||||
Financial assets at fair value through other comprehensive income | 13,794,433 | 23,336,884 | 1,041,217 | 38,172,534 | ||||||||||||
Debt securities | 12,842,006 | 22,992,592 | — | 35,834,598 | ||||||||||||
Equity securities | 952,427 | — | 1,041,217 | 1,993,644 | ||||||||||||
Loans | — | 344,292 | — | 344,292 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 16,427,896 | 30,880,902 | 2,968,773 | 50,277,571 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | 80,235 | — | — | 80,235 | ||||||||||||
Derivatives held for trading | — | 2,120,551 | — | 2,120,551 | ||||||||||||
Derivatives held for hedging | — | 36,212 | — | 36,212 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 80,235 | 2,156,763 | — | 2,236,998 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Valuation techniques and inputs of financial assets and liabilities classified as Level 2 and measured at fair value in the statements of financial position as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | |||||
Financial assets | ||||||||
Financial assets at fair value through profit or loss | 6,576,896 | |||||||
Debt securities | 6,576,896 | DCF Model, MonteCarlo Simulation, Net Asset Value | Discount rate, interest rate, prices of underlying assets (debt securities, stocks, etc.) | |||||
Derivatives held for trading | 4,304,456 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate, stock price and others | |||||
Derivatives held for hedging | 159,039 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate and others | |||||
Financial assets at fair value through other comprehensive income | 30,684,313 | |||||||
Debt securities | 30,449,533 | DCF Model | Discount rate | |||||
Loans | 234,780 | DCF Model | Discount rate | |||||
|
| |||||||
| 41,724,704 | ||||||||
|
| |||||||
Financial liabilities | ||||||||
Derivatives held for trading | 4,161,752 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate, stock price and others | |||||
Derivatives held for hedging | 67,267 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate and others | |||||
|
| |||||||
| 4,229,019 | ||||||||
|
| |||||||
68
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | |||||
Financial assets | ||||||||
Financial assets at fair value through profit or loss | 5,224,401 | |||||||
Debt securities | 5,224,401 | DCF Model, MonteCarlo Simulation, Net Asset Value | Discount rate, interest rate, prices of underlying assets (debt securities, stocks, etc.) | |||||
Derivatives held for trading | 2,189,698 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate, stock price and others | |||||
Derivatives held for hedging | 129,919 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate and others | |||||
Financial assets at fair value through other comprehensive income | 23,336,884 | |||||||
Debt securities | 22,992,592 | DCF Model | Discount rate | |||||
Loans | 344,292 | DCF Model | Discount rate | |||||
|
| |||||||
| 30,880,902 | ||||||||
|
| |||||||
Financial liabilities | ||||||||
Derivatives held for trading | 2,120,551 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate, stock price and others | |||||
Derivatives held for hedging | 36,212 | DCF Model, Closed Form, FDM | Discount rate, volatility, foreign exchange rate and others | |||||
|
| |||||||
| 2,156,763 | ||||||||
|
| |||||||
69
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair value is disclosed
Fair value hierarchy of financial assets and liabilities whose fair value is disclosed as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| Fair value hierarchy | ||||||||||||||||
| (In millions of Korean won) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets | ||||||||||||||||
Cash and due from financial institutions 1 | 2,659,516 | 14,432,267 | 899,616 | 17,991,399 | ||||||||||||
Loans measured at amortized cost | — | — | 318,257,423 | 318,257,423 | ||||||||||||
Securities measured at amortized cost | 3,725,511 | 11,412,220 | — | 15,137,731 | ||||||||||||
Other financial assets 2 | — | — | 5,630,598 | 5,630,598 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,385,027 | 25,844,487 | 324,787,637 | 357,017,151 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Deposits 1 | — | 168,232,612 | 151,099,469 | 319,332,081 | ||||||||||||
Borrowings 1 | — | 295 | 25,093,263 | 25,093,558 | ||||||||||||
Debentures | — | 24,872,703 | — | 24,872,703 | ||||||||||||
Other financial liabilities 2 | — | — | 16,033,368 | 16,033,368 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| — | 193,105,610 | 192,226,100 | 385,331,710 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| Fair value hierarchy | ||||||||||||||||
| (In millions of Korean won) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets | ||||||||||||||||
Cash and due from financial institutions 1 | 2,689,721 | 10,150,932 | 252,269 | 13,092,922 | ||||||||||||
Loans measured at amortized cost | — | — | 291,686,008 | 291,686,008 | ||||||||||||
Securities measured at amortized cost | 4,372,712 | 9,585,729 | — | 13,958,441 | ||||||||||||
Other financial assets 2 | — | — | 5,466,052 | 5,466,052 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 7,062,433 | 19,736,661 | 297,404,329 | 324,203,423 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Deposits 1 | — | 133,685,536 | 162,501,620 | 296,187,156 | ||||||||||||
Borrowings 1 | — | 4,685 | 18,701,165 | 18,705,850 | ||||||||||||
Debentures | — | 17,361,816 | — | 17,361,816 | ||||||||||||
Other financial liabilities 2 | — | — | 14,990,170 | 14,990,170 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| — | 151,052,037 | 196,192,955 | 347,244,992 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | The amounts included in Level 2 are the carrying amounts which are reasonable approximation of the fair value. |
| 2 | Other financial assets and other financial liabilities included in Level 3 are the carrying amounts which are reasonable approximation of fair value. |
For financial assets and liabilities whose carrying amount is a reasonable approximation of fair value, valuation techniques and inputs are not disclosed.
70
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Valuation techniques and inputs of financial assets and liabilities classified as Level 2, and whose fair value is disclosed as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | |||||
Financial assets | ||||||||
Securities measured at amortized cost | 11,412,220 | DCF Model, MonteCarlo Simulation | Discount rate, interest rate | |||||
Financial liabilities | ||||||||
Debentures | 24,872,703 | DCF Model | Discount rate | |||||
| December 31, 2019 | ||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | |||||
Financial assets | ||||||||
Securities measured at amortized cost | 9,585,729 | DCF Model, MonteCarlo Simulation | Discount rate, interest rate | |||||
Financial liabilities | ||||||||
Debentures | 17,361,816 | DCF Model | Discount rate | |||||
Valuation techniques and inputs of financial assets and liabilities classified as Level 3 and, whose fair value is disclosed and as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | Unobservable inputs | ||||||||
Financial assets | ||||||||||||
Cash and due from financial institutions | 899,616 | DCF Model | Credit spread, other spread, interest rate | Credit spread, other spread | ||||||||
Loans measured at amortized cost | 318,257,423 | DCF Model | Credit spread, other spread, prepayment rate, interest rate | Credit spread, other spread, prepayment rate | ||||||||
|
| |||||||||||
| 319,157,039 | ||||||||||||
|
| |||||||||||
Financial liabilities | ||||||||||||
Deposits | 151,099,469 | DCF Model | Other spread, prepayment rate, interest rate | Other spread, prepayment rate | ||||||||
Borrowings | 25,093,263 | DCF Model | Other spread, interest rate | Other spread | ||||||||
|
| |||||||||||
| 176,192,732 | ||||||||||||
|
| |||||||||||
71
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | Unobservable inputs | ||||||||
Financial assets | ||||||||||||
Cash and due from financial institutions | 252,269 | DCF Model | Credit spread, other spread, interest rate | Credit spread, other spread | ||||||||
Loans measured at amortized cost | 291,686,008 | DCF Model | Credit spread, other spread, prepayment rate, interest rate | Credit spread, other spread, prepayment rate | ||||||||
|
| |||||||||||
| 291,938,277 | ||||||||||||
|
| |||||||||||
Financial liabilities | ||||||||||||
Deposits | 162,501,620 | DCF Model | Other spread, prepayment rate, Interest rate | Other spread, prepayment rate | ||||||||
Borrowings | 18,701,165 | DCF Model | Other spread, interest rate | Other spread | ||||||||
|
| |||||||||||
| 181,202,785 | ||||||||||||
|
| |||||||||||
72
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6.2 Disclosure of Fair Value Hierarchy Level 3
6.2.1 Valuation policy and process of Level 3 fair value
The Bank uses external, independent and qualified valuation service in addition to internal valuation models to determine the fair value of the Bank’s assets at the end of every reporting period.
Where a reclassification between the levels of the fair value hierarchy occurs for a financial asset or liability, the Bank’s policy is to recognize such transfers as having occurred at the beginning of the reporting period.
6.2.2 Changes in Fair Value (Level 3) Measured using Valuation Technique based on Unobservable Inputs in the Market
6.2.2.1 Changes in financial instruments classified as Level 3 of the fair value hierarchy for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| Financial assets at fair value through profit or loss | Financial investments | Net derivatives financial instruments | ||||||||||||||||||
| (In millions of Korean won) | Securities measured at fair value through profit or loss | Loans measured at fair value through profit or loss | Equity securities measured at fair value through other comprehensive income | Derivatives held for trading | Derivatives held for hedging | |||||||||||||||
Beginning | 1,739,353 | 188,133 | 1,041,217 | 70 | — | |||||||||||||||
Total gains or losses | ||||||||||||||||||||
- Profit or loss | 68,324 | 627 | — | 24,363 | — | |||||||||||||||
- Other comprehensive income | — | — | 784,055 | — | — | |||||||||||||||
Purchases | 571,860 | — | 92,665 | 27,035 | — | |||||||||||||||
Sales | (314,375 | ) | (150,004 | ) | (16 | ) | — | — | ||||||||||||
Transfers into Level 3 | — | — | — | 178 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ending | 2,065,162 | 38,756 | 1,917,921 | 51,646 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
73
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||
| Financial assets at fair value through profit or loss | Financial investments | Net derivatives financial instruments | ||||||||||||||||||
| (In millions of Korean won) | Securities measured at fair value through profit or loss | Loans measured at fair value through profit or loss | Equity securities measured at fair value through other comprehensive income | Derivatives held for trading | Derivatives held for hedging | |||||||||||||||
Beginning | 1,411,966 | 212,596 | 927,549 | 12 | — | |||||||||||||||
Total gains or losses | ||||||||||||||||||||
- Profit or loss | 30,687 | 10,412 | — | 2,998 | — | |||||||||||||||
- Other comprehensive income | — | — | 36,713 | — | — | |||||||||||||||
Purchases | 441,413 | 154,005 | 78,626 | — | — | |||||||||||||||
Sales | (144,713 | ) | (188,880 | ) | (1,671 | ) | — | — | ||||||||||||
Settlements | — | — | — | (2,940 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ending | 1,739,353 | 188,133 | 1,041,217 | 70 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
6.2.2.2 In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the year, and total gains or losses recognized in profit or loss from financial instruments held at the end of the reporting period for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | Net gains on financial instruments at fair value through profit or loss | Other operating expenses | Net interest income | |||||||||
Total gains (losses) recognized in profit or loss for the year | 117,340 | (24,026 | ) | — | ||||||||
Total gains (losses) recognized in profit or loss from financial instruments held at the end of the reporting year | 113,269 | (24,026 | ) | — | ||||||||
| 2019 | ||||||||||||
| (In millions of Korean won) | Net gains on financial instruments at fair value through profit or loss | Other operating income | Net interest income | |||||||||
Total gains recognized in profit or loss for the year | 40,840 | 3,235 | 22 | |||||||||
Total gains recognized in profit or loss from financial instruments held at the end of the reporting year | 32,511 | 3,178 | — | |||||||||
74
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6.2.3 Sensitivity analysis of changes in unobservable inputs
6.2.3.1 Information about fair value measurements using unobservable inputs as of December 31, 2020 and 2019, are as follows:
(In millions of Korean won) | December 31, 2020 | |||||||||||||||
| Fair value | Valuation techniques | Inputs | Unobservable inputs | Range of unobservable inputs (%) | Relationship of unobservable | |||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Debt securities | 2,033,246 | Net Asset Value, DCF Model | Volatilities of real estate disposal price, discount rate, liquidation value | Volatility of the real estate price | 0.00 | Higher the sale price, higher the fair value | ||||||||||
| Discount rate | 8.63 ~ 21.37 | Lower the discount rate, higher the fair value | ||||||||||||||
| Liquidation value | 0.00 | Higher the liquidation value, higher the fair value | ||||||||||||||
Equity securities | 31,916 | DCF Model, Comparable Company Analysis, Risk Adjusted Discount Rate Method | Growth rate, discount rate | Growth rate | 0.00 | Higher the growth rate, higher the fair value | ||||||||||
| Discount rate | 7.64 ~ 18.67 | Lower the discount rate, higher the fair value | ||||||||||||||
Loans | 38,756 | DCF Model | Discount rate | Discount rate | 7.86 | Lower the discount rate, higher the fair value | ||||||||||
Derivatives held for trading | ||||||||||||||||
Stock and index | 118,340 | Tree Model | Price of underlying asset, volatility of underlying asset | Volatility of the underlying asset | 22.11~ 54.50 | Higher the volatility, higher the fair value fluctuation | ||||||||||
Currency | — | DCF Model | Interest rate, foreign exchange rate, loss given default ratio | Loss given default ratio | 0.00 | Higher the loss given default ratio, lower the fair value | ||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Equity securities | 1,917,921 | DCF Model, Comparable Company Analysis, Tree model | Growth rate, discount rate, stock price, volatility of the stock price | Growth rate | 0.00 | Higher the growth rate, higher the fair value | ||||||||||
| Discount rate | 9.90 ~ 19.67 | Lower the discount rate, higher the fair value | ||||||||||||||
| Volatility of the stock price | 22.11 ~ 24.16 | Higher the volatility, higher the fair value fluctuation | ||||||||||||||
|
| |||||||||||||||
| 4,140,179 | ||||||||||||||||
|
| |||||||||||||||
Financial liabilities | ||||||||||||||||
Derivatives held for trading | ||||||||||||||||
Stock and index | 66,694 | Tree Model | Price of underlying asset, volatility of underlying asset | Volatility of underlying asset | 59.60 | Higher the volatility, higher the fair value fluctuation | ||||||||||
|
| |||||||||||||||
| 66,694 | ||||||||||||||||
|
| |||||||||||||||
75
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
(In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Fair value | Valuation techniques | Inputs | Unobservable inputs | Range of unobservable inputs (%) | Relationship of unobservable | |||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Debt securities | 1,713,591 | Net Asset Value, DCF Model | Volatilities of real estate disposal price, discount rate, liquidation value | Volatility of the real estate price | 0.00 | Higher the sale price, higher the fair value | ||||||||||
| Discount rate | 7.47 | Lower the discount rate, higher the fair value | ||||||||||||||
| Liquidation value | 0.00 | Higher the liquidation value, higher the fair value | ||||||||||||||
Equity securities | 25,762 | DCF Model, Comparable Company Analysis | Growth rate, discount rate | Growth rate | 0.00 | Higher the growth rate, higher the fair value | ||||||||||
| Discount rate | 5.89 ~ 16.15 | Lower the discount rate, higher the fair value | ||||||||||||||
Loans | 188,133 | Tree Model, DCF Model | Stock price, volatility of the stock price, discount rate | Volatility of the stock price | 12.91 ~ 48.28 | Higher the volatility, higher the fair value fluctuation | ||||||||||
| Discount rate | 10.81 | Lower the discount rate, higher the fair value | ||||||||||||||
Derivatives held for trading | ||||||||||||||||
Stock and index | 70 | Tree Model | Price of underlying asset, interest rate, volatility of underlying asset, dividend yield | Volatility of the underlying asset | 21.85 | Higher the volatility, higher the fair value fluctuation | ||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Equity securities | 1,041,217 | DCF Model, Comparable Company Analysis, Tree Model | Growth rate, discount rate, stock price, volatility of the stock price | Growth rate | 0.00 | Higher the growth rate, higher the fair value | ||||||||||
| Discount rate | 3.04 ~ 16.37 | Lower the discount rate, higher the fair value | ||||||||||||||
| Volatility of the stock price | 20.97 ~ 22.19 | Higher the volatility, higher the fair value fluctuation | ||||||||||||||
|
| |||||||||||||||
| 2,968,773 | ||||||||||||||||
|
| |||||||||||||||
Financial liabilities | ||||||||||||||||
Derivatives held for trading Others | — | MonteCarlo Simulation | Stock price, interest rate, volatility of the stock price, volatility of the interest rate | Volatility of the stock price | 16.28 | Higher the volatility, higher the fair value fluctuation | ||||||||||
| Volatility of the interest rate | 0.52 | Higher the volatility, higher the fair value fluctuation | ||||||||||||||
|
| |||||||||||||||
| — | ||||||||||||||||
|
| |||||||||||||||
76
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6.2.3.2 Sensitivity analysis of changes in unobservable inputs
Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in fair value of financial instruments which are affected by unobservable parameters, using a statistical technique. When the fair value is affected by more than one input parameter, the amounts represent the most favorable or most unfavorable outcome. Level 3 financial instruments subject to sensitivity analysis are debt securities, loans, equity-related derivatives, currency-related derivatives, interest rate-related derivatives and other derivatives whose fair value changes are recognized in profit or loss as well as equity securities whose fair value changes are recognized in profit or loss or other comprehensive income or loss.
Results of the sensitivity analysis of changes in inputs as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| Profit or loss | Other comprehensive Income (loss) | |||||||||||||||
| (In millions of Korean won) | Favorable changes | Unfavorable changes | Favorable changes | Unfavorable changes | ||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Debt securities 3, 5 | 2,067 | (2,061 | ) | — | — | |||||||||||
Equity securities 2, 5 | 5,334 | (2,910 | ) | — | — | |||||||||||
Loans 4 | 3,316 | (2,952 | ) | — | — | |||||||||||
Derivatives held for trading 1 | 30,657 | (29,521 | ) | — | — | |||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Equity securities 2, 5, 6 | — | — | 94,084 | (55,297 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 41,374 | (37,444 | ) | 94,084 | (55,297 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Derivatives held for trading 1 | 16,708 | (16,202 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 16,708 | (16,202 | ) | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
77
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Profit or loss | Other comprehensive Income (loss) | |||||||||||||||
| Favorable changes | Unfavorable changes | Favorable changes | Unfavorable changes | |||||||||||||
Financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | ||||||||||||||||
Debt securities 3, 5 | 3,204 | (3,192 | ) | — | — | |||||||||||
Equity securities 2, 5 | 6,353 | (1,611 | ) | — | — | |||||||||||
Loans 4 | 6,362 | (4,344 | ) | — | — | |||||||||||
Derivatives held for trading 1 | 1 | (1 | ) | — | — | |||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Equity securities 2, 5, 6 | — | — | 188,090 | (94,201 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 15,920 | (9,148 | ) | 188,090 | (94,201 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities | ||||||||||||||||
Derivatives held for trading 1 | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| — | — | — | — | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | For derivative financial instruments, changes in fair value are calculated by shifting principal unobservable input parameters; such as the price and the volatility of the underlying asset by ± 10%, and the loss given default ratio by ± 1% for some derivatives as of December 31, 2019. |
| 2 | For equity securities, changes in fair value are calculated by shifting principal unobservable input parameters such as discount rate (-1~1%) and growth rate (0~0.5%). |
| 3 | For beneficiary certificates, it is practically impossible to analyze sensitivity of changes in unobservable inputs. But only for beneficiary certificates whose underlying assets are real estates, changes in fair value are calculated by shifting volatility of real estate price (-1~1%). For equity investments, changes in fair value are calculated by shifting the liquidation value (-1~1%) and the discount rates (-1~1%). There was no significant correlation among major unobservable inputs. |
| 4 | For loans, changes in fair value are calculated by shifting principal unobservable input parameters such as stock prices, and volatility of stock prices (-10~10%) and discount rate (-1~1%). |
| 5 | The amounts of |
| 6 | For some equity securities, changes in fair value are calculated by shifting principal unobservable input parameters such as stock prices and volatilities of stock prices by ± 10%. |
6.2.4 Day one gains or losses
If the Bank uses a valuation technique that incorporates data not obtained from observable markets for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price and the difference is not recognized in profit or loss but deferred and amortized using the straight-line method over the life of the financial instrument. When the fair value of the financial instruments is subsequently determined using observable market inputs, the remaining deferred amount is recognized in profit or loss. The aggregate deferred differences are not existed, as of and for the years ended December 31, 2020 and 2019.
78
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6.3 Carrying Amounts of Financial Instruments by Category
Financial assets and liabilities are measured at fair value or amortized cost. The carrying amounts of financial assets and liabilities by category as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Financial instruments at fair value through profit or loss | Financial instruments at fair value through other comprehensive income | Financial instruments designated at fair value through other comprehensive income | Financial instruments at amortized cost | Derivatives held for hedging | Total | ||||||||||||||||||
Financial assets | ||||||||||||||||||||||||
Cash and due from financial institutions | — | — | — | 17,989,041 | — | 17,989,041 | ||||||||||||||||||
Financial assets at fair value through profit or loss | 12,191,559 | — | — | — | — | 12,191,559 | ||||||||||||||||||
Derivatives | 4,422,796 | — | — | — | 159,039 | 4,581,835 | ||||||||||||||||||
Loans measured at amortized cost | — | — | — | 317,673,667 | — | 317,673,667 | ||||||||||||||||||
Financial investments | — | 39,797,699 | 2,502,555 | 15,070,908 | — | 57,371,162 | ||||||||||||||||||
Other financial assets | — | — | — | 5,630,598 | — | 5,630,598 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 16,614,355 | 39,797,699 | 2,502,555 | 356,364,214 | 159,039 | 415,437,862 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Financial instruments at fair value through profit or loss | Financial instruments at amortized cost | Derivatives held for hedging | Total | ||||||||||||
Financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | 141,277 | — | — | 141,277 | ||||||||||||
Derivatives | 4,228,446 | — | 67,267 | 4,295,713 | ||||||||||||
Deposits | — | 319,082,424 | — | 319,082,424 | ||||||||||||
Borrowings | — | 25,099,647 | — | 25,099,647 | ||||||||||||
Debentures | — | 24,690,676 | — | 24,690,676 | ||||||||||||
Other financial liabilities | — | 16,033,368 | — | 16,033,368 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 4,369,723 | 384,906,115 | 67,267 | 389,343,105 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
79
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Financial instruments at fair value through profit or loss | Financial instruments at fair value through other comprehensive income | Financial instruments designated at fair value through other comprehensive income | Financial instruments at amortized cost | Derivatives held for hedging | Total | ||||||||||||||||||
Financial assets | ||||||||||||||||||||||||
Cash and due from financial institutions | — | — | — | 13,093,005 | — | 13,093,005 | ||||||||||||||||||
Financial assets at fair value through profit or loss | 9,785,350 | — | — | — | — | 9,785,350 | ||||||||||||||||||
Derivatives | 2,189,768 | — | — | — | 129,919 | 2,319,687 | ||||||||||||||||||
Loans measured at amortized cost | — | — | — | 291,425,606 | — | 291,425,606 | ||||||||||||||||||
Financial investments | — | 36,178,890 | �� | 1,993,644 | 13,866,494 | — | 52,039,028 | |||||||||||||||||
Other financial assets | — | — | — | 5,466,052 | — | 5,466,052 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 11,975,118 | 36,178,890 | 1,993,644 | 323,851,157 | 129,919 | 374,128,728 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Financial instruments at fair value through profit or loss | Financial instruments at amortized cost | Derivatives held for hedging | Total | ||||||||||||
Financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | 80,235 | — | — | 80,235 | ||||||||||||
Derivatives | 2,120,551 | — | 36,212 | 2,156,763 | ||||||||||||
Deposits | — | 295,690,896 | — | 295,690,896 | ||||||||||||
Borrowings | — | 18,706,328 | — | 18,706,328 | ||||||||||||
Debentures | — | 17,142,392 | — | 17,142,392 | ||||||||||||
Other financial liabilities | — | 14,990,170 | — | 14,990,170 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,200,786 | 346,529,786 | 36,212 | 348,766,784 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
80
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6.4 Transfer of Financial Assets
6.4.1 Transferred financial assets that are derecognized in their entirety
The Bank transferred loans and other financial assets that are derecognized in their entirety, to SPEs (special purpose entities), while the maximum exposure to loss (carrying amount) from its continuing involvement and fair value of its continuing involvement of the derecognized financial assets as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||
| (In millions of Korean won) | Type of continuing involvement | Classification of | Carrying amount of continuing involvement | Fair value of continuing involvement | ||||||||||
Discovery 2nd Securitization Specialty Co., Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 5,190 | 5,190 | ||||||||||
FK 1411 ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 1,062 | 1,062 | ||||||||||
AP 3B ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 646 | 646 | ||||||||||
AP 4D ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 6,304 | 6,304 | ||||||||||
|
|
|
| |||||||||||
| 13,202 | 13,202 | |||||||||||||
|
|
|
| |||||||||||
| December 31, 2019 | ||||||||||||||
| (In millions of Korean won) | Type of continuing involvement | Classification of financial instruments | Carrying amount of continuing involvement | Fair value of continuing involvement | ||||||||||
Discovery 2nd Securitization Specialty Co., Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 5,596 | 5,596 | ||||||||||
FK 1411 ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 5,428 | 5,428 | ||||||||||
AP 3B ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 3,205 | 3,205 | ||||||||||
AP 4D ABS Ltd. | Subordinated debt | Financial assets at fair value through profit or loss | 6,175 | 6,175 | ||||||||||
|
|
|
| |||||||||||
| 20,404 | 20,404 | |||||||||||||
|
|
|
| |||||||||||
81
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6.4.2 Bonds sold under repurchase agreements and loaned securities
The Bank continues to recognize the financial assets related to bonds sold under repurchase agreements and securities lending transactions in the statements of financial position since those transactions are not qualified for derecognition even though the Bank transfers the financial assets. Bonds sold under repurchase agreements are sold on the condition that they will be repurchased at a fixed price and loaned securities will be returned at the expiration of the loan period. Thus, the Bank retains substantially all the risks and rewards of ownership of the financial assets. The carrying amount of transferred assets and related liabilities as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||
| (In millions of Korean won) | Carrying amount of transferred assets | Carrying amount of related liabilities | ||||||
Bonds sold under repurchase agreements | 894,010 | 825,700 | ||||||
Loaned securities | 741,804 | — | ||||||
Government and public bonds | 741,804 | — | ||||||
|
|
|
| |||||
| 1,635,814 | 825,700 | |||||||
|
|
|
| |||||
| December 31, 2019 | ||||||||
| (In millions of Korean won) | Carrying amount of transferred assets | Carrying amount of related liabilities | ||||||
Bonds sold under repurchase agreements | 575,562 | 548,710 | ||||||
Loaned securities | 788,790 | — | ||||||
Government and public bonds | 788,790 | — | ||||||
|
|
|
| |||||
| 1,364,352 | 548,710 | |||||||
|
|
|
| |||||
82
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6.5 Offsetting Financial Assets and Financial Liabilities
The Bank enters into International Swaps and Derivatives Association (“ISDA”) master netting agreements and other similar netting arrangements with the Bank’s OTC derivative and spot exchange counterparties. Similar netting agreements are also entered into with the Bank’s (a) sales or purchase of bonds under repurchase agreements and (b) securities lending and borrowing transactions, etc. Pursuant to these agreements, in the event of default by one party, contracts are to be terminated and receivables and payables are to be offset. Further, as the law allows for the right to offset, domestic exchange settlement debits and domestic exchange settlement credits are shown in its net settlement balance in the statement of financial position. Account receivables and account payables related to listed securities and derivatives or OTC derivatives settled by the central clearing house are included in the other financial instruments. As the Bank has a legally enforceable right to set off the recognized amounts and intends to settle on a net basis, the net amounts of the other financial instrument balances are presented in the statement of financial position.
6.5.1 Details of financial assets subject to offsetting, enforceable master netting arrangements or similar agreements as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Gross assets | Gross liabilities offset | Net amount in the statement of financial position | Non-offsetting amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | Net amount | ||||||||||||||||||||||
Derivatives held for trading | 4,304,455 | — | 4,304,455 | (3,174,526 | ) | (275 | ) | 1,288,693 | ||||||||||||||||
Derivatives held for hedging | 159,039 | — | 159,039 | |||||||||||||||||||||
Receivable spot exchange | 3,104,233 | — | 3,104,233 | (3,102,431 | ) | — | 1,802 | |||||||||||||||||
Bonds purchased under repurchase agreements | 2,801,680 | — | 2,801,680 | (2,801,680 | ) | — | — | |||||||||||||||||
Domestic exchange settlement debits | 37,442,464 | (36,726,449 | ) | 716,015 | — | — | 716,015 | |||||||||||||||||
Other financial instruments | 20,093 | (19,757 | ) | 336 | — | — | 336 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 47,831,964 | (36,746,206 | ) | 11,085,758 | (9,078,637 | ) | (275 | ) | 2,006,846 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Gross assets | Gross liabilities offset | Net amount in the statement of financial position | Non-offsetting amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | Net amount | ||||||||||||||||||||||
Derivatives held for trading | 2,189,698 | — | 2,189,698 | (1,731,521 | ) | (1,211 | ) | 586,885 | ||||||||||||||||
Derivatives held for hedging | 129,919 | — | 129,919 | |||||||||||||||||||||
Receivable spot exchange | 3,003,910 | — | 3,003,910 | (3,002,566 | ) | — | 1,344 | |||||||||||||||||
Bonds purchased under repurchase agreements | 6,133,038 | — | 6,133,038 | (6,133,038 | ) | — | — | |||||||||||||||||
Domestic exchange settlement debits | 31,256,658 | (30,733,476 | ) | 523,182 | — | — | 523,182 | |||||||||||||||||
Other financial instruments | 14,827 | (6,347 | ) | 8,480 | — | — | 8,480 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 42,728,050 | (30,739,823 | ) | 11,988,227 | (10,867,125 | ) | (1,211 | ) | 1,119,891 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
83
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
6.5.2 Details of financial liabilities subject to offsetting, enforceable master netting arrangements or similar agreements as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Gross liabilities | Gross assets offset | Net amount in the statement of financial position | Non-offsetting amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | Net amount | ||||||||||||||||||||||
Derivatives held for trading | 4,161,752 | — | 4,161,752 | (2,395,096 | ) | — | 1,833,923 | |||||||||||||||||
Derivatives held for hedging | 67,267 | — | 67,267 | |||||||||||||||||||||
Payable spot exchange | 3,103,095 | — | 3,103,095 | (3,102,431 | ) | — | 664 | |||||||||||||||||
Bonds sold under repurchase agreements * | 875,761 | — | 875,761 | (875,761 | ) | — | — | |||||||||||||||||
Domestic exchange settlement credits | 37,659,778 | (36,726,449 | ) | 933,329 | (933,329 | ) | — | — | ||||||||||||||||
Other financial instruments | 22,824 | (19,757 | ) | 3,067 | — | — | 3,067 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 45,890,477 | (36,746,206 | ) | 9,144,271 | (7,306,617 | ) | — | 1,837,654 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Gross liabilities | Gross assets offset | Net amount in the statement of financial position | Non-offsetting amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | Net amount | ||||||||||||||||||||||
Derivatives held for trading | 2,120,551 | — | 2,120,551 | (1,563,503 | ) | — | 593,260 | |||||||||||||||||
Derivatives held for hedging | 36,212 | — | 36,212 | |||||||||||||||||||||
Payable spot exchange | 3,003,464 | — | 3,003,464 | (3,002,566 | ) | — | 898 | |||||||||||||||||
Bonds sold under repurchase agreements * | 548,710 | — | 548,710 | (548,710 | ) | — | — | |||||||||||||||||
Domestic exchange settlement credits | 32,806,739 | (30,733,476 | ) | 2,073,263 | (2,073,263 | ) | — | — | ||||||||||||||||
Other financial instruments | 6,535 | (6,347 | ) | 188 | — | — | 188 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 38,522,211 | (30,739,823 | ) | 7,782,388 | (7,188,042 | ) | — | 594,346 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| * | Includes bonds sold under repurchase agreements to customers. |
84
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
7. Due from Financial Institutions
7.1 Details of due from financial institutions as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Financial institutions | Interest rate (%) | December 31, 2020 | December 31, 2019 | ||||||||||||
Due from financial institutions in Korean won | Due from the Bank of Korea | The Bank of Korea | — | 11,242,803 | 8,117,840 | |||||||||||
Due from banking institutions | Hana Bank and others | — | 1,776 | 1,092 | ||||||||||||
|
|
|
| |||||||||||||
| 11,244,579 | 8,118,932 | |||||||||||||||
|
|
|
| |||||||||||||
Due from financial institutions in foreign currencies | Due from banks in foreign currencies | Wells Fargo Bank N.A. and others | — | 3,189,464 | 2,033,092 | |||||||||||
Time deposits in foreign currencies | Bank of Communication Co., Ltd. New York Branch and others | 0.43 ~ 7.05 | 97,388 | 79,836 | ||||||||||||
Due from others | Societe Generale (Paris) and others | 0.00 ~ 0.15 | 798,448 | 172,982 | ||||||||||||
|
|
|
| |||||||||||||
| 4,085,300 | 2,285,910 | |||||||||||||||
|
|
|
| |||||||||||||
| 15,329,879 | 10,404,842 | |||||||||||||||
|
|
|
| |||||||||||||
| * | Before netting of allowance |
7.2 Details of restricted due from financial institutions as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Financial institutions | December 31, 2020 | December 31, 2019 | Reasons of restriction | ||||||||||
Due from financial institutions in Korean won | Due from the Bank of Korea | The Bank of Korea | 11,242,803 | 8,117,840 | Bank of Korea Act | |||||||||
Due from financial institutions in foreign currencies | Due from banks in foreign currencies | The Bank of Korea and others | 446,652 | 243,304 | Bank of Korea Act and others | |||||||||
Time deposits in foreign currencies | Bank of Communication Co., Ltd. New York Branch | 38,080 | 23,156 | New York State Banking Law | ||||||||||
Due from others | Societe Generale (Paris) and others | 375,373 | 112,752 | Derivatives margin account | ||||||||||
|
|
|
| |||||||||||
| 860,105 | 379,212 | |||||||||||||
|
|
|
| |||||||||||
| 12,102,908 | 8,497,052 | |||||||||||||
|
|
|
| |||||||||||
85
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
7.3 Changes in allowances for credit losses of due from financial institutions for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | ||||||||||
| Non-impaired | Impaired | |||||||||||
Beginning | 12 | 1,186 | 360 | |||||||||
Transfer between stages | — | — | — | |||||||||
Provision (reversal) for credit losses | 29 | (1,128 | ) | — | ||||||||
Others (exchange differences, etc.) | (3 | ) | (24 | ) | (78 | ) | ||||||
|
|
|
|
|
| |||||||
Ending | 38 | 34 | 282 | |||||||||
|
|
|
|
|
| |||||||
| 2019 | ||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | ||||||||||
| Non-impaired | Impaired | |||||||||||
Beginning | 5 | — | — | |||||||||
Transfer between stages | — | — | — | |||||||||
Provision for credit losses | 7 | 1,210 | 360 | |||||||||
Others (exchange differences, etc.) | — | (24 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Ending | 12 | 1,186 | 360 | |||||||||
|
|
|
|
|
| |||||||
8. Assets Pledged as Collateral
8.1 Details of assets pledged as collateral as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||
| Assets pledged | Pledgee | Carrying amount | Reasons of pledge | |||||
Securities measured at fair value through profit or loss | The Korea Exchange and others | 166,185 | Repurchase agreements | |||||
Korea Securities Finance Corporation | 52,842 | Securities borrowing transactions | ||||||
|
| |||||||
| 219,027 | ||||||||
|
| |||||||
Securities measured at fair value through other comprehensive income | Citi Bank and others | 98,979 | Repurchase agreements | |||||
| The Bank of Korea | 2,837,453 | Borrowings from the Bank of Korea | ||||||
| 1,610,691 | Settlement risk of the Bank of Korea | |||||||
| JP Morgan Chase Bank and others | 156,300 | Derivatives transactions | ||||||
| Others | 4,036 | Others | ||||||
|
| |||||||
| 4,707,459 | ||||||||
|
| |||||||
Securities measured at amortized cost | Meritz Securities and others | 664,438 | Repurchase agreements | |||||
| The Bank of Korea | 4,295,149 | Borrowings from the Bank of Korea | ||||||
| 3,677,922 | Settlement risk of the Bank of Korea | |||||||
| KB Securities Co., Ltd. and others | 126,199 | Derivatives transactions | ||||||
| KB Insurance Co., Ltd. and others | 151,796 | Others | ||||||
|
| |||||||
| 8,915,504 | ||||||||
|
| |||||||
Mortgage loans | Others | 10,699,720 | Covered bond | |||||
|
| |||||||
| 24,541,710 | ||||||||
|
| |||||||
86
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | December 31, 2019 | |||||||
| Assets pledged | Pledgee | Carrying amount | Reasons of pledge | |||||
Securities at fair value through profit or loss | The Korea Exchange | 28,831 | Repurchase agreements | |||||
Securities at fair value through other comprehensive income | The Bank of Korea | 1,212,021 | Borrowings from the Bank of Korea | |||||
The Bank of Korea | 653,825 | Settlement risk of the Bank of Korea | ||||||
DEUTSCHE BANK AG and others | 95,640 | Derivatives transactions | ||||||
|
| |||||||
| 1,961,486 | ||||||||
|
| |||||||
Securities at amortized cost | Meritz Securities and others | 581,268 | Repurchase agreements | |||||
The Bank of Korea | 1,767,559 | Borrowings from the Bank of Korea | ||||||
The Bank of Korea | 3,077,151 | Settlement risk of the Bank of Korea | ||||||
KB Securities Co., Ltd. and others | 267,793 | Derivatives transactions | ||||||
The Korea Exchange and others | 155,595 | Others | ||||||
|
| |||||||
| 5,849,366 | ||||||||
|
| |||||||
Mortgage loans | Others | 6,487,022 | Covered bond | |||||
|
| |||||||
| 14,326,705 | ||||||||
|
| |||||||
8.2 Fair value of collateral available to sell or repledge, and collateral sold or repledged, regardless of debtor’s default as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||
| (In millions of Korean won) | Fair value of collateral held | Fair value of collateral sold or repledged | ||||||
Securities | 2,969,616 | — | ||||||
| December 31, 2019 | ||||||||
| (In millions of Korean won) | Fair value of collateral held | Fair value of collateral sold or repledged | ||||||
Securities | 6,463,650 | — | ||||||
9. Derivative Financial Instruments and Hedge Accounting
The Bank engages in derivative trading activities to hedge the interest rate and foreign currency risk exposures arising from the Bank’s own assets and liabilities. In particular, the Bank applies fair value hedge accounting to interest rate swaps that hedge the risk of changes in fair values due to the changes in interest rate of structured debentures in Korean won, debentures, structured deposits in foreign currencies and debt securities at fair value through other comprehensive income. Also, the Bank applies cash flow hedge accounting to interest rate swaps that hedge cash flow risk of debentures in foreign currencies and borrowings in foreign currencies.
87
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
9.1 Details of derivative financial instruments held for trading as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||
| (In millions of Korean won) | Notional amount | Assets | Liabilities | |||||||||
Interest rate | ||||||||||||
Forwards | 90,000 | 3,355 | — | |||||||||
Futures1 | 1,149,666 | — | — | |||||||||
Swaps2 | 180,520,565 | 514,968 | 572,905 | |||||||||
Options | 13,779,000 | 246,707 | 297,442 | |||||||||
|
|
|
|
|
| |||||||
| 195,539,231 | 765,030 | 870,347 | ||||||||||
|
|
|
|
|
| |||||||
Currency | ||||||||||||
Forwards | 71,961,500 | 1,603,423 | 1,902,704 | |||||||||
Futures1 | 21,760 | — | — | |||||||||
Swaps | 49,901,150 | 1,902,582 | 1,360,689 | |||||||||
Options | 2,377,775 | 33,421 | 28,012 | |||||||||
|
|
|
|
|
| |||||||
| 124,262,185 | 3,539,426 | 3,291,405 | ||||||||||
|
|
|
|
|
| |||||||
Stock and index | ||||||||||||
Futures1 | — | — | — | |||||||||
Options | 563,704 | 118,340 | 66,694 | |||||||||
|
|
|
|
|
| |||||||
| 563,704 | 118,340 | 66,694 | ||||||||||
|
|
|
|
|
| |||||||
Others | — | — | — | |||||||||
|
|
|
|
|
| |||||||
| 320,365,120 | 4,422,796 | 4,228,446 | ||||||||||
|
|
|
|
|
| |||||||
| December 31, 2019 | ||||||||||||
| (In millions of Korean won) | Notional amount | Assets | Liabilities | |||||||||
Interest rate | ||||||||||||
Futures1 | 673,266 | — | — | |||||||||
Swaps2 | 149,543,211 | 430,029 | 481,535 | |||||||||
Options | 15,502,000 | 266,863 | 363,369 | |||||||||
|
|
|
|
|
| |||||||
| 165,718,477 | 696,892 | 844,904 | ||||||||||
|
|
|
|
|
| |||||||
Currency | ||||||||||||
Forwards | 78,094,165 | 877,930 | 662,260 | |||||||||
Swaps | 46,175,092 | 609,438 | 598,670 | |||||||||
Options | 2,789,562 | 5,438 | 14,346 | |||||||||
|
|
|
|
|
| |||||||
| 127,058,819 | 1,492,806 | 1,275,276 | ||||||||||
|
|
|
|
|
| |||||||
Stock and index | ||||||||||||
Futures1 | 2,185 | — | — | |||||||||
Options | 22,014 | 70 | 371 | |||||||||
|
|
|
|
|
| |||||||
| 24,199 | 70 | 371 | ||||||||||
|
|
|
|
|
| |||||||
Others | 694,680 | — | — | |||||||||
|
|
|
|
|
| |||||||
| 293,496,175 | 2,189,768 | 2,120,551 | ||||||||||
|
|
|
|
|
| |||||||
| 1 | Gains or losses arising from daily mark-to-market futures are reflected in the margin accounts. |
| 2 | Notional amounts of |
88
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
9.2 Average price condition of future nominal cash flows by type of hedge accounting as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | 1 year | 2 years | 3 years | 4 years | 5 years | Over 5 years | Total | |||||||||||||||||||||
Fair value hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | 3,255,568 | 956,315 | 479,405 | 620,788 | 1,462,964 | 2,442,691 | 9,217,731 | |||||||||||||||||||||
Average price condition (%), (CD and Libor) | 0.76 | 0.80 | 1.00 | 1.07 | 1.21 | 1.14 | 0.97 | |||||||||||||||||||||
Cash flow hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | 1,718,480 | 489,600 | 54,400 | — | — | — | 2,262,480 | |||||||||||||||||||||
Average price condition (%), (CD and Libor) | 0.72 | 1.17 | 0.96 | — | — | — | 0.82 | |||||||||||||||||||||
| December 31, 2019 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | 1 year | 2 years | 3 years | 4 years | 5 years | Over 5 years | Total | |||||||||||||||||||||
Fair value hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | 757,201 | 1,548,353 | 830,440 | 309,882 | 466,053 | 1,414,570 | 5,326,499 | |||||||||||||||||||||
Average price condition (%), (CD and Libor) | 2.29 | 2.70 | 2.29 | 3.16 | 2.50 | 3.92 | 2.91 | |||||||||||||||||||||
Cash flow hedge | ||||||||||||||||||||||||||||
Nominal amount of the hedging instrument | 1,539,874 | 289,450 | 521,010 | — | — | — | 2,350,334 | |||||||||||||||||||||
Average price condition (%), (Libor) | 2.68 | 2.65 | 2.83 | — | — | — | 2.71 | |||||||||||||||||||||
89
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
9.3 Fair Value Hedge
9.3.1 Details of fair value hedged items as of and for the years ended December 31, 2020 and 2019, are as follows:
| December 31, 2020 | 2020 | |||||||||||||||||||
| Carrying amount | Accumulated amount of hedge adjustments | Changes in fair value | ||||||||||||||||||
| (In millions of Korean won) | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||
Interest rate | ||||||||||||||||||||
Debt securities in Korean won | 1,001,957 | — | 5,888 | — | 402 | |||||||||||||||
Debt securities in foreign currencies | 2,712,980 | — | 62,922 | — | 42,382 | |||||||||||||||
Deposits in foreign currencies | — | 121,768 | — | 2,088 | (4,491 | ) | ||||||||||||||
Debentures in Korean won | — | 3,623,161 | — | (6,839 | ) | 27,909 | ||||||||||||||
Debentures in foreign currencies | — | 1,985,333 | — | 81,333 | (37,438 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 3,714,937 | 5,730,262 | 68,810 | 76,582 | 28,764 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| December 31, 2019 | 2019 | |||||||||||||||||||
| Carrying amount | Accumulated amount of hedge adjustments | Changes in fair value | ||||||||||||||||||
| (In millions of Korean won) | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||
Interest rate | ||||||||||||||||||||
Debt securities in Korean won | 549,526 | — | 5,485 | — | 5,502 | |||||||||||||||
Debt securities in foreign currencies | 1,670,838 | — | 19,243 | — | 25,540 | |||||||||||||||
Deposits in foreign currencies | — | 780,491 | — | (18,391 | ) | (62,439 | ) | |||||||||||||
Debentures in Korean won | — | 351,070 | — | 21,070 | (1,818 | ) | ||||||||||||||
Debentures in foreign currencies | — | 2,067,556 | — | 41,406 | (65,480 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2,220,364 | 3,199,117 | 24,728 | 44,085 | (98,695 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
9.3.2 Details of derivative instruments designated as fair value hedge as of and for the years ended December 31, 2020 and 2019, are as follows:
| December 31, 2020 | 2020 | |||||||||||||||
| (In millions of Korean won) | Notional amount | Assets | Liabilities | Changes in fair value | ||||||||||||
Interest rate | ||||||||||||||||
Swaps | 9,217,731 | 158,914 | 51,841 | (23,023 | ) | |||||||||||
| December 31, 2019 | 2019 | |||||||||||||||
| (In millions of Korean won) | Notional amount | Assets | Liabilities | Changes in fair value | ||||||||||||
Interest rate | ||||||||||||||||
Swaps | 5,326,500 | 129,084 | 29,675 | 101,448 | ||||||||||||
90
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
9.3.3 Details of hedge ineffectiveness recognized in profit or loss from derivatives for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Hedge ineffectiveness recognized in profit or loss | |||||||
| Interest rate | 2020 | 2019 | ||||||
| 5,742 | 2,754 | |||||||
9.3.4 Gains or losses from fair value hedging instruments and hedged items attributable to the hedged risk for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Gains (losses) on hedging instruments | (8,214 | ) | 108,442 | |||||
Gains (losses) on the hedged item attributable to the hedged risk | 13,811 | (105,788 | ) | |||||
|
|
|
| |||||
| 5,597 | 2,654 | |||||||
|
|
|
| |||||
9.4 Cash Flow Hedge
9.4.1 Details of cash flow hedged items as of and for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Cash flow hedge reserve | Changes in fair value | ||||||||||||||
| December 31, 2020 | December 31, 2019 | 2020 | 2019 | |||||||||||||
Interest rate risk | (10,073) | (3,691) | 10,701 | 18,365 | ||||||||||||
9.4.2 Details of derivative instruments designated as cash flow hedge as of and for the years ended December 31, 2020 and 2019, are as follows:
| December 31, 2020 | 2020 | |||||||||||||||
| (In millions of Korean won) | Notional amount | Assets | Liabilities | Changes in fair value | ||||||||||||
Interest rate | ||||||||||||||||
Swaps | 2,262,480 | 125 | 15,426 | (10,492 | ) | |||||||||||
| December 31, 2019 | 2019 | |||||||||||||||
| (In millions of Korean won) | Notional amount | Assets | Liabilities | Changes in fair value | ||||||||||||
Interest rate | ||||||||||||||||
Swaps | 2,350,334 | 835 | 6,537 | (18,276 | ) | |||||||||||
91
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
9.4.3 Gains or losses from cash flow hedging instruments and hedged items attributable to the hedged risk for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Losses on hedging instruments | (10,492 | ) | (18,276 | ) | ||||
Effective portion of losses on cash flow hedging instruments (recognized in other comprehensive income) | (10,553 | ) | (18,108 | ) | ||||
|
|
|
| |||||
Ineffective portion of losses on cash flow hedging instruments (recognized in profit or loss) | 61 | (168 | ) | |||||
|
|
|
| |||||
9.4.4 Amounts recognized in other comprehensive income and reclassified from equity to profit or loss for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Other comprehensive loss | (10,553 | ) | (18,108 | ) | ||||
Reclassification to profit or loss | 1,750 | (2,899 | ) | |||||
Income tax effect | 2,421 | 5,777 | ||||||
|
|
|
| |||||
| (6,382 | ) | (15,230 | ) | |||||
|
|
|
| |||||
9.4.5 As of December 31, 2020, the hedged items subject to cash flow hedge are exposed to the risk of changes in cash flows until August 11, 2023.
9.5 Interest Rate Benchmark Reform
The Bank’s exposure to hedging relationships related to the interest rate benchmark reform as of December 31, 2020, is as follows. The USD LIBOR interest rate will be replaced by the Secured Overnight Financing Rate (“SOFR”) based on actual transactions starting in 2022 and the KRW CD rate is currently under consideration for improving the calculation methodology. In this hedging relationship, the Bank assumed that the spread to be changed on a SOFR basis in 2022 would be similar to that included in the interest rate swap used as a hedging instrument, and no other changes were assumed.
| (In millions of Korean won and millions of US dollars) | December 31, 2020 | |||||||||||||
Interest rate benchmark | Currency | Carrying amount of non-derivative assets | Carrying amount of non-derivative liabilities | Notional amount of hedging instruments | ||||||||||
CD#3M | KRW | 1,807,701 | 3,623,161 | 5,430,000 | ||||||||||
USD#LIBOR#3M | USD | 2,227 | 3,276 | 5,355 | ||||||||||
USD#LIBOR#6M | USD | 213 | 10 | 206 | ||||||||||
92
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
10. Loans measured at amortized cost
10.1 Details of loans as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Loans | 318,482,275 | 292,176,219 | ||||||
Deferred loan origination fees and costs | 580,292 | 563,941 | ||||||
Less: Allowances for credit losses | (1,388,900 | ) | (1,314,554 | ) | ||||
|
|
|
| |||||
Carrying amount | 317,673,667 | 291,425,606 | ||||||
|
|
|
| |||||
10.2 Details of loans to banks as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Loans * | 7,176,653 | 5,120,941 | ||||||
Less: Allowances for credit losses | (674 | ) | (387 | ) | ||||
|
|
|
| |||||
Carrying amount | 7,175,979 | 5,120,554 | ||||||
|
|
|
| |||||
| * | Deferred loan origination fees and costs are included. |
10.3 Details of loan types and customer types of loans to customers other than banks as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 * | ||||||||||||
| (In millions of Korean won) | Retail | Corporate | Total | |||||||||
Loans in Korean won | 162,327,214 | 131,357,679 | 293,684,893 | |||||||||
Loans in foreign currencies | 156,001 | 8,338,256 | 8,494,257 | |||||||||
Domestic import usance bills | — | 2,152,059 | 2,152,059 | |||||||||
Off-shore funding loans | — | 1,258,137 | 1,258,137 | |||||||||
Call loans | — | 1,370,000 | 1,370,000 | |||||||||
Bills bought in Korean won | — | 1,620 | 1,620 | |||||||||
Bills bought in foreign currencies | — | 1,725,263 | 1,725,263 | |||||||||
Guarantee payments under acceptances and guarantees | — | 8,011 | 8,011 | |||||||||
Bonds purchased under repurchase agreements | — | 2,461,680 | 2,461,680 | |||||||||
Privately placed bonds | — | 729,994 | 729,994 | |||||||||
|
|
|
|
|
| |||||||
| 162,483,215 | 149,402,699 | 311,885,914 | ||||||||||
Proportion (%) | 52.10 | 47.90 | 100.00 | |||||||||
|
|
|
|
|
| |||||||
Less: Allowances for credit losses | (521,742 | ) | (866,484 | ) | (1,388,226 | ) | ||||||
|
|
|
|
|
| |||||||
| 161,961,473 | 148,536,215 | 310,497,688 | ||||||||||
|
|
|
|
|
| |||||||
93
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| December 31, 2019 * | ||||||||||||
| (In millions of Korean won) | Retail | Corporate | Total | |||||||||
Loans in Korean won | 148,407,504 | 120,028,903 | 268,436,407 | |||||||||
Loans in foreign currencies | 151,665 | 5,812,391 | 5,964,056 | |||||||||
Domestic import usance bills | — | 2,617,862 | 2,617,862 | |||||||||
Off-shore funding loans | — | 1,452,288 | 1,452,288 | |||||||||
Call loans | — | 610,000 | 610,000 | |||||||||
Bills bought in Korean won | — | 2,843 | 2,843 | |||||||||
Bills bought in foreign currencies | — | 2,151,143 | 2,151,143 | |||||||||
Guarantee payments under acceptances and guarantees | — | 3,312 | 3,312 | |||||||||
Bonds purchased under repurchase agreements | — | 5,897,258 | 5,897,258 | |||||||||
Privately placed bonds | — | 484,050 | 484,050 | |||||||||
|
|
|
|
|
| |||||||
| 148,559,169 | 139,060,050 | 287,619,219 | ||||||||||
Proportion (%) | 51.65 | 48.35 | 100.00 | |||||||||
|
|
|
|
|
| |||||||
Less: Allowances for credit losses | (473,907 | ) | (840,260 | ) | (1,314,167 | ) | ||||||
|
|
|
|
|
| |||||||
| 148,085,262 | 138,219,790 | 286,305,052 | ||||||||||
|
|
|
|
|
| |||||||
| * | Deferred loan origination fees and costs are included. |
10.4 Changes in deferred loan origination fees and costs for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Increase | Decrease | Others | Ending | |||||||||||||||
Deferred loan origination costs | ||||||||||||||||||||
Loans in Korean won | 573,297 | 408,691 | (391,925 | ) | — | 590,063 | ||||||||||||||
Others | 914 | 417 | (761 | ) | (1 | ) | 569 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 574,211 | 409,108 | (392,686 | ) | (1 | ) | 590,632 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Deferred loan origination fees | ||||||||||||||||||||
Loans in Korean won | 6,135 | 3,812 | (2,949 | ) | — | 6,998 | ||||||||||||||
Loans in foreign currencies and others | 4,135 | 221 | (1,012 | ) | (2 | ) | 3,342 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 10,270 | 4,033 | (3,961 | ) | (2 | ) | 10,340 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 563,941 | 405,075 | (388,725 | ) | 1 | 580,292 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Increase | Decrease | Others | Ending | |||||||||||||||
Deferred loan origination costs | ||||||||||||||||||||
Loans in Korean won | 592,175 | 313,847 | (332,725 | ) | — | 573,297 | ||||||||||||||
Others | 486 | 826 | (398 | ) | — | 914 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 592,661 | 314,673 | (333,123 | ) | — | 574,211 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Deferred loan origination fees | ||||||||||||||||||||
Loans in Korean won | 6,322 | 2,316 | (2,503 | ) | — | 6,135 | ||||||||||||||
Loans in foreign currencies and others | 4,342 | 2,499 | (2,707 | ) | 1 | 4,135 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 10,664 | 4,815 | (5,210 | ) | 1 | 10,270 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 581,997 | 309,858 | (327,913 | ) | (1 | ) | 563,941 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
94
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
11. Allowances for Credit Losses
11.1 Changes in allowances for credit losses of loans for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||||||||||
| Retail | Corporate | |||||||||||||||||||||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | ||||||||||||||||||||||||||
| Non-impaired | Impaired | Non-impaired | Impaired | |||||||||||||||||||||||||||||
Beginning | 178,920 | 176,837 | 118,150 | — | 187,900 | 260,535 | 392,212 | — | ||||||||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 115,823 | (115,776 | ) | (47 | ) | — | 112,236 | (104,702 | ) | (7,534 | ) | — | ||||||||||||||||||||
Transfer to lifetime expected credit losses (non-impaired) | (84,062 | ) | 166,663 | (82,601 | ) | — | (51,121 | ) | 121,946 | (70,825 | ) | — | ||||||||||||||||||||
Transfer to lifetime expected credit losses (impaired) | (627 | ) | (120,528 | ) | 121,155 | — | (1,118 | ) | (42,696 | ) | 43,814 | — | ||||||||||||||||||||
Write-offs | — | (5 | ) | (326,783 | ) | — | — | (1 | ) | (201,214 | ) | — | ||||||||||||||||||||
Sales | (1,540 | ) | (19 | ) | (1,106 | ) | — | (9 | ) | — | (21,005 | ) | — | |||||||||||||||||||
Provision for credit losses 1, 2, 3 | 37,029 | 57,979 | 284,624 | — | 15,999 | 105,765 | 132,346 | — | ||||||||||||||||||||||||
Others (exchange differences, etc.) | 13 | 167 | (2,524 | ) | — | (1,616 | ) | (824 | ) | (2,930 | ) | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Ending | 245,556 | 165,318 | 110,868 | — | 262,271 | 340,023 | 264,864 | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
95
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||||||||||||||
| Retail | Corporate | |||||||||||||||||||||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | ||||||||||||||||||||||||||
| Non-impaired | Impaired | Non-impaired | Impaired | |||||||||||||||||||||||||||||
Beginning | 170,290 | 157,202 | 117,472 | — | 192,451 | 295,441 | 599,971 | — | ||||||||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 157,689 | (157,668 | ) | (21 | ) | — | 59,994 | (46,497 | ) | (13,497 | ) | — | ||||||||||||||||||||
Transfer to lifetime expected credit losses (non-impaired) | (140,401 | ) | 149,801 | (9,400 | ) | — | (53,618 | ) | 136,429 | (82,811 | ) | — | ||||||||||||||||||||
Transfer to lifetime expected credit losses (impaired) | (280 | ) | (45,396 | ) | 45,676 | — | (1,863 | ) | (36,696 | ) | 38,559 | — | ||||||||||||||||||||
Write-offs | (2 | ) | 24 | (322,075 | ) | — | — | 2 | (217,532 | ) | — | |||||||||||||||||||||
Sales | (467 | ) | (4 | ) | (766 | ) | — | — | — | (8,909 | ) | — | ||||||||||||||||||||
Provision (reversal) for credit losses 1, 2 | (7,963 | ) | 72,693 | 288,809 | — | (9,440 | ) | (90,944 | ) | 100,386 | — | |||||||||||||||||||||
Others (exchange differences, etc.) | 54 | 185 | (1,545 | ) | — | 376 | 2,800 | (23,955 | ) | — | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Ending | 178,920 | 176,837 | 118,150 | — | 187,900 | 260,535 | 392,212 | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 1 | Provision (reversal) for credit losses in statements of comprehensive income also includes provision (reversal) for credit losses of unused commitments and guarantees (Note 22.2), provision (reversal) for credit losses of financial guarantee contracts (Note 22.4), provision (reversal) for credit losses of other financial assets (Note 18.2), provision (reversal) for credit losses of due from financial institutions (Note 7.3) and provision (reversal) for credit losses of debt securities (Note 12.5). |
| 2 | Includes |
| 3 | Includes additional provision of |
The Bank manages the written-off loans that their legal extinctive prescriptions have not been completed; the balances of those loans areW 7,995,756 million andW 9,013,608 million as of December 31, 2020 and 2019, respectively.
96
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
11.2 Changes in gross carrying amount of loans for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | ||||||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||||||
Beginning | 272,494,927 | 19,084,118 | 1,161,115 | — | ||||||||||||
Transfer between stages | ||||||||||||||||
Transfer to 12-month expected credit losses | 25,023,109 | (24,942,860 | ) | (80,249 | ) | — | ||||||||||
Transfer to lifetime expected credit losses (non-impaired) | (31,242,270 | ) | 32,318,210 | (1,075,940 | ) | — | ||||||||||
Transfer to lifetime expected credit losses (impaired) | (285,332 | ) | (2,056,951 | ) | 2,342,283 | — | ||||||||||
Write-offs | — | (6 | ) | (527,997 | ) | — | ||||||||||
Sales | (4,323,388 | ) | (17,860 | ) | (198,253 | ) | — | |||||||||
Net increase (decrease) (execution, repayment and others) | 33,219,467 | (1,154,799 | ) | (674,757 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Ending | 294,886,513 | 23,229,852 | 946,202 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2019 | ||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Credit impaired approach | ||||||||||||||
| (In millions of Korean won) | Non-impaired | Impaired | ||||||||||||||
Beginning | 253,974,918 | 21,172,380 | 1,371,332 | — | ||||||||||||
Transfer between stages | — | |||||||||||||||
Transfer to 12-month expected credit losses | 53,327,892 | (53,213,792 | ) | (114,100 | ) | — | ||||||||||
Transfer to lifetime expected credit losses (non-impaired) | (56,075,512 | ) | 56,600,257 | (524,745 | ) | — | ||||||||||
Transfer to lifetime expected credit losses (impaired) | (371,783 | ) | (1,632,255 | ) | 2,004,038 | — | ||||||||||
Write-offs | (2 | ) | 26 | (539,607 | ) | — | ||||||||||
Sales | (888,511 | ) | (12,223 | ) | (186,250 | ) | — | |||||||||
Net increase (decrease) (execution, repayment and others) | 22,527,925 | (3,830,275 | ) | (849,553 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Ending | 272,494,927 | 19,084,118 | 1,161,115 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
97
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
12. Financial Assets at Fair Value through Profit or Loss and Financial Investments
12.1 Details of financial assets at fair value through profit or loss and financial investments as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Financial assets at fair value through profit or loss |
| |||||||
Debt securities | ||||||||
Government and public bonds | 2,535,614 | 1,495,513 | ||||||
Financial bonds | 3,633,211 | 3,736,943 | ||||||
Corporate bonds | 250,145 | 382,243 | ||||||
Beneficiary certificates | 5,105,217 | 3,543,286 | ||||||
Investment funds | 303,157 | 209,260 | ||||||
Other debt securities | 203,578 | 123,245 | ||||||
Equity securities | ||||||||
Stocks | 31,916 | 26,922 | ||||||
Loans | ||||||||
Privately placed bonds | — | 150,276 | ||||||
Other loans | 38,756 | 37,857 | ||||||
Others | ||||||||
Financial instruments indexed to the price of gold | 89,965 | 79,805 | ||||||
|
|
|
| |||||
| 12,191,559 | 9,785,350 | |||||||
|
|
|
| |||||
Financial investments |
| |||||||
Financial assets at fair value through other comprehensive income |
| |||||||
Debt securities | ||||||||
Government and public bonds | 5,732,143 | 8,117,221 | ||||||
Financial bonds | 19,604,028 | 18,070,253 | ||||||
Corporate bonds | 12,673,259 | 9,031,234 | ||||||
Asset-backed securities | 1,553,489 | 615,890 | ||||||
Equity securities | ||||||||
Stocks | 2,466,494 | 1,954,143 | ||||||
Equity investments | 36,061 | 39,501 | ||||||
Loans | ||||||||
Privately placed bonds | 234,780 | 344,292 | ||||||
|
|
|
| |||||
| 42,300,254 | 38,172,534 | |||||||
|
|
|
| |||||
Financial assets at amortized cost |
| |||||||
Debt securities | ||||||||
Government and public bonds | 2,182,128 | 538,968 | ||||||
Financial bonds | 4,671,266 | 7,509,614 | ||||||
Corporate bonds | 2,592,834 | 1,753,941 | ||||||
Asset-backed securities | 5,596,461 | 4,065,105 | ||||||
Others | 30,392 | — | ||||||
Allowances for credit losses | (2,173 | ) | (1,134 | ) | ||||
|
|
|
| |||||
| 15,070,908 | 13,866,494 | |||||||
|
|
|
| |||||
| 57,371,162 | 52,039,028 | |||||||
|
|
|
| |||||
98
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
12.2 Dividend income from equity securities designated at fair value through other comprehensive income for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | From the financial assets derecognized | From the remaining financial assets | ||||||||||
Stocks | Listed | 7,000 | 11,844 | |||||||||
| Unlisted | — | 10,637 | ||||||||||
Equity investments | — | 285 | ||||||||||
|
|
|
| |||||||||
| 7,000 | 22,766 | |||||||||||
|
|
|
| |||||||||
| 2019 | ||||||||||
| (In millions of Korean won) | From the financial assets derecognized | From the remaining financial assets | ||||||||
Stocks | Listed | — | 26,121 | |||||||
| Unlisted | — | 16,996 | ||||||||
|
|
|
| |||||||
| — | 43,117 | |||||||||
|
|
|
| |||||||
12.3 Derecognized equity securities measured at fair value through other comprehensive income for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | Disposal price * | Accumulated other comprehensiv income as of disposal date | ||||||||||
Stocks | Listed | 516,883 | 326,394 | |||||||||
| Unlisted | 13 | 13 | ||||||||||
Equity investments |
| 3 | 3 | |||||||||
|
|
|
| |||||||||
| 516,899 | 326,410 | |||||||||||
|
|
|
| |||||||||
| 2019 | ||||||||||||
| (In millions of Korean won) | Disposal price * | Accumulated other comprehensiv income as of disposal date | ||||||||||
Stocks | Listed | 18,342 | (25,652 | ) | ||||||||
| Unlisted | 1,671 | 169 | ||||||||||
|
|
|
| |||||||||
| 20,013 | (25,483 | ) | ||||||||||
|
|
|
| |||||||||
| * | The stocks were disposed of according to the stock price increase and joint sale resolution. |
12.4 Provision (reversal) for credit losses of financial investments for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | Provision | Reversal | Total | |||||||||
Debt instruments measured at fair value through other comprehensive income | (3,103 | ) | 200 | (2,903 | ) | |||||||
Loans measured at fair value through other comprehensive income | (152 | ) | 316 | 164 | ||||||||
Securities measured at amortized cost | (1,668 | ) | 629 | (1,039 | ) | |||||||
|
|
|
|
|
| |||||||
| (4,923 | ) | 1,145 | (3,778 | ) | ||||||||
|
|
|
|
|
| |||||||
99
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | 2019 | |||||||||||
| Provision | Reversal | Total | ||||||||||
Debt instruments measured at fair value through other comprehensive income | (1,279 | ) | 347 | (932 | ) | |||||||
Loans measured at fair value through other comprehensive income | (170 | ) | 947 | 777 | ||||||||
Securities measured at amortized cost | (145 | ) | 266 | 121 | ||||||||
|
|
|
|
|
| |||||||
| (1,594 | ) | 1,560 | (34 | ) | ||||||||
|
|
|
|
|
| |||||||
12.5 Changes in allowances for credit losses of financial investments for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | ||||||||||
| Non-impaired | Impaired | |||||||||||
Beginning | 3,632 | — | — | |||||||||
Transfer between stages | ||||||||||||
Transfer to 12-month expected credit losses | — | — | — | |||||||||
Transfer to lifetime expected credit losses | — | — | — | |||||||||
Sales | (589 | ) | — | — | ||||||||
Provision for credit losses | 3,739 | 39 | — | |||||||||
Others (exchange differences, etc.) | (67 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Ending | 6,715 | 39 | — | |||||||||
|
|
|
|
|
| |||||||
| 2019 | ||||||||||||
| (In millions of Korean won) | 12-month expected credit losses | Lifetime expected credit losses | ||||||||||
| Non-impaired | Impaired | |||||||||||
Beginning | 3,668 | 193 | — | |||||||||
Transfer between stages | — | |||||||||||
Transfer to 12-month expected credit losses | 189 | (189 | ) | — | ||||||||
Transfer to lifetime expected credit losses | (669 | ) | 669 | — | ||||||||
Sales | (329 | ) | — | — | ||||||||
Provision (reversal) for credit losses | 735 | (701 | ) | — | ||||||||
Others (exchange differences, etc.) | 38 | 28 | — | |||||||||
|
|
|
|
|
| |||||||
Ending | 3,632 | — | — | |||||||||
|
|
|
|
|
| |||||||
100
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
13. Investments in Associates and Subsidiaries
13.1 Investments in associates and subsidiaries as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||||||
(In millions of Korean won) (In thousands of US dollars) (In hundred millions of Indonesian rupiah) | Ownership (%) | Acquisition cost | Share of net asset amount | Carrying amount | Industry | Location | ||||||||||||||
Associates | ||||||||||||||||||||
Korea Credit Bureau Co., Ltd. 1 | 9.00 | 4,500 | 7,153 | 2,769 | Credit information | Korea | ||||||||||||||
Balhae Infrastructure Company 1 | 12.61 | 106,107 | 106,624 | 109,768 | Investment finance | Korea | ||||||||||||||
KB GwS Private Securities Investment Trust | 20.93 | 89,124 | 111,772 | 89,124 | Investment finance | Korea | ||||||||||||||
Incheon Bridge Co., Ltd. 1 | 14.99 | 9,159 | (18,100 | ) | 9,159 | Operation of highways and related facilities | Korea | |||||||||||||
KB SPROTT Renewable Private Equity Fund No. 1 | 30.00 | 4,613 | 4,020 | 4,613 | Investment finance | Korea | ||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 45.00 | 3,375 | 3,051 | 3,375 | Discovery of and investment in promising FinTech-business venture | Korea | ||||||||||||||
Future Planning KB Start-up Creation Fund 2 | 50.00 | 6,700 | 12,324 | 6,700 | Investment finance | Korea | ||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No. 2 | 20.00 | 7,792 | 7,876 | 7,792 | Investment finance | Korea | ||||||||||||||
KB High-tech Company Investment Fund 2 | 50.00 | 4,800 | 19,962 | 4,800 | Investment finance | Korea | ||||||||||||||
Aju Good Technology Venture Fund | 38.47 | 17,113 | 21,353 | 17,113 | Investment finance | Korea | ||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund 2 | 33.33 | 6,800 | 8,021 | 6,800 | Investment finance | Korea | ||||||||||||||
KB-TS Technology Venture Private Equity Fund 2 | 30.00 | 8,880 | 9,445 | 8,880 | Investment finance | Korea | ||||||||||||||
KB Intellectual Property Fund No. 2 2 | 37.50 | 15,000 | 14,367 | 15,000 | Investment finance | Korea | ||||||||||||||
KB Digital Innovation Investment Fund Limited Partnership 2 | 25.74 | 35,000 | 32,999 | 35,000 | Investment finance | Korea | ||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund 2 | 21.28 | 13,400 | 13,756 | 13,400 | Investment finance | Korea | ||||||||||||||
KB Global Platform Fund 2 | 22.73 | 28,500 | 25,507 | 28,500 | Investment finance | Korea | ||||||||||||||
KB-UTC Inno-Tech Venture Fund 2 | 29.53 | 11,610 | 11,332 | 11,610 | Investment finance | Korea | ||||||||||||||
WJ Private Equity Fund No. 1 2 | 26.95 | 10,000 | 9,711 | 10,000 | Investment finance | Korea | ||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund No. 2 2 | 28.57 | 2,500 | 2,493 | 2,500 | Investment finance | Korea | ||||||||||||||
KB Smart Scale Up Fund 2 | 25.00 | 4,000 | 3,993 | 4,000 | Investment finance | Korea | ||||||||||||||
All Together Korea Fund No. 2 3 | 99.99 | 10,000 | 10,023 | 10,000 | Asset management | Korea | ||||||||||||||
Shinla Construction Co., Ltd. 4 | 20.17 | — | (551 | ) | — | Specialty construction | Korea | |||||||||||||
Terra Corporation 4 | 24.06 | — | 2 | — | Manufacture of fabricated and processed metal products | Korea | ||||||||||||||
MJT&I Corp. 4 | 22.89 | — | (615 | ) | — | Wholesale of other merchandise | Korea | |||||||||||||
Jungdong Steel Co., Ltd. 4 | 42.65 | — | (433 | ) | — | Wholesale of primary metal | Korea | |||||||||||||
101
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Doosung Metal Co., Ltd. 4 | 26.49 | — | (62 | ) | — | Manufacture of metal door, windows, shutter and relevant products | Korea | |||||||||||||||
Shinhwa Underwear Co., Ltd. 4 | 26.05 | — | (18 | ) | — | Manufacture of underwear and sleepwear | Korea | |||||||||||||||
DPAPS Co., Ltd. 4 | 38.62 | — | (19 | ) | — | Wholesale of paper | Korea | |||||||||||||||
Jaeyang Industry Co., Ltd. 4 | 20.86 | — | (552 | ) | — | Manufacture of luggage and other protective cases | Korea | |||||||||||||||
Kendae Co., Ltd. 4 | 41.01 | — | (252 | ) | — | Screen printing | Korea | |||||||||||||||
Jinseung Tech Co., Ltd. 4 | 30.04 | — | (194 | ) | — | Manufacture of other general-purpose machinery | Korea | |||||||||||||||
Dongjo Co., Ltd. 4 | 29.29 | — | 709 | — | Wholesale of agricultural and forestry machinery and equipment | Korea | ||||||||||||||||
Korea NM Tech Co., Ltd. 4 | 22.41 | — | 552 | — | Manufacture of motor vehicles, trailers and semitrailers | Korea | ||||||||||||||||
Jungdo Co., Ltd. 4 | 25.34 | — | 1,342 | — | Office, commercial and institutional building construction | Korea | ||||||||||||||||
Dae-A Leisure Co., Ltd. 4 | 49.36 | — | 1,184 | — | Earth works | Korea | ||||||||||||||||
Chongil Machine & Tools Co., Ltd. 4 | 20.40 | — | (126 | ) | — | Wholesale machinery and equipment | Korea | |||||||||||||||
Imt Technology Co., Ltd. 4 | 25.29 | — | 16 | — | Computer Peripherals Distribution | Korea | ||||||||||||||||
Iwon Alloy Co., Ltd. 4 | 23.20 | — | 394 | — | Manufacture of smelting, refining and alloys | Korea | ||||||||||||||||
Carlife Co., Ltd. 4 | 24.39 | — | (64 | ) | — | Publishing of magazines and periodicals (publishing industry) | Korea | |||||||||||||||
Computerlife Co., Ltd. 4 | 25.41 | — | (132 | ) | — | Publishing of magazines and periodicals (publishing industry) | Korea | |||||||||||||||
SKYDIGITAL INC. 4 | 20.40 | — | (248 | ) | — | Manufacture of multimedia and video devices | Korea | |||||||||||||||
Jo Yang Industrial Co., Ltd. 4 | 22.77 | — | (21 | ) | — | Manufacture of special glass | Korea | |||||||||||||||
IL-KWANG ELECTRONIC MATERIALS CO., LTD. 4 | 29.06 | — | (398 | ) | — | Manufacture of electronic parts | Korea | |||||||||||||||
SO-MYUNG RECYCLING CO., LTD. 4 | 20.23 | — | 189 | — | Manufacture of nonferrous metal | Korea | ||||||||||||||||
IDTECK Co., Ltd. 4 | 32.80 | — | (280 | ) | — | Other manufacturing of wireless telecommunications equipment | Korea | |||||||||||||||
PIP System Co., Ltd. 4 | 20.72 | — | 27 | — | Print equipment | Korea | ||||||||||||||||
NEOMIO CORP. 4 | 21.34 | — | (69 | ) | — | Wholesale of household packing | Korea | |||||||||||||||
GWANG MYUNG PAPER Co., Ltd. 4 | 20.54 | — | 84 | — | Wholesale of luggage and other protective cases | Korea | ||||||||||||||||
D-Partner 4 | 20.94 | — | 447 | — | Backlight film | Korea | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| 398,973 | 418,594 | 400,903 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
102
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Subsidiaries | ||||||||||||||||||||||||||
Kookmin Bank Cambodia Plc. 5 | 100.00 | USD | 76,259 | 98,038 | 86,761 | Banking and foreign exchange transaction | Cambodia | |||||||||||||||||||
Kookmin Bank(China) Ltd. 5 | 100.00 | USD | 383,875 | 448,790 | 418,155 | Banking and foreign exchange transaction | China | |||||||||||||||||||
KB Microfinance Myanmar Co., Ltd. 5 | 100.00 | USD | 20,000 | 23,108 | 22,405 | Micro financing | Myanmar | |||||||||||||||||||
KB Bank Myanmar Co., | 100.00 | USD | 200,000 | 217,600 | 221,780 | Micro financing | Myanmar | |||||||||||||||||||
PRASAC Microfinance Institution Plc. 5 | 70.00 | USD | 581,290 | 376,529 | 709,971 | Micro financing | Cambodia | |||||||||||||||||||
PT Bank Bukopin TBK 5,6 | 67.00 | IDR | 51,468 | 206,713 | 338,116 | Banking and foreign exchange transaction | Indonesia | |||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
| 1,370,778 | 1,797,188 | |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
| 1,789,372 | 2,198,091 | |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
| December 31, 2019 | ||||||||||||||||||||
(In millions of Korean won) (In thousands of US dollars) | Ownership (%) | Acquisition cost | Share of net asset amount | Carrying amount | Industry | Location | ||||||||||||||
Associates | ||||||||||||||||||||
Korea Credit Bureau Co., Ltd. 1 | 9.00 | 4,500 | 5,991 | 2,769 | Credit information | Korea | ||||||||||||||
Balhae Infrastructure Company 1 | 12.61 | 105,213 | 101,390 | 108,875 | Investment finance | Korea | ||||||||||||||
KB GwS Private Securities Investment Trust | 20.93 | 89,124 | 108,026 | 89,124 | Investment finance | Korea | ||||||||||||||
Incheon Bridge Co., Ltd. 1 | 14.99 | 9,159 | (14,746 | ) | 9,159 | Operation of highways and related facilities | Korea | |||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 30.00 | 1,327 | 1,031 | 1,327 | Investment finance | Korea | ||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 45.00 | 2,250 | 2,030 | 2,250 | Discovery of and investment in promising FinTech-business venture | Korea | ||||||||||||||
KB12-1 Venture Investment Partnership 2 | 80.00 | 14,000 | 53,535 | 14,000 | Investment finance | Korea | ||||||||||||||
Future Planning KB Start-up Creation Fund 2 | 50.00 | 9,900 | 15,021 | 9,900 | Investment finance | Korea | ||||||||||||||
KoFC POSCO HANWHA KB Shared Growth No.2. Private Equity Fund | 20.00 | 10,376 | 10,892 | 10,376 | Investment finance | Korea | ||||||||||||||
KB High-tech Company Investment Fund 2 | 50.00 | 13,350 | 31,904 | 13,350 | Investment finance | Korea | ||||||||||||||
Aju Good Technology Venture Fund | 38.46 | 19,998 | 23,016 | 19,998 | Investment finance | Korea | ||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund 2 | 33.33 | 10,000 | 9,494 | 10,000 | Investment finance | Korea | ||||||||||||||
KB-TS Technology Venture Private Equity Fund 2 | 30.00 | 10,620 | 10,570 | 10,620 | Investment finance | Korea | ||||||||||||||
KB Intellectual Property Fund 2 2 | 37.50 | 9,000 | 8,514 | 9,000 | Investment finance | Korea | ||||||||||||||
KB Digital Innovation Investment Fund Limited partnership 2 | 25.74 | 32,200 | 31,371 | 32,200 | Investment finance | Korea | ||||||||||||||
KB-Brain KOSDAQ Scale-up Fund 2 | 21.28 | 11,000 | 10,252 | 11,000 | Investment finance | Korea | ||||||||||||||
KB Global Platform Fund 2 | 22.73 | 19,500 | 18,779 | 19,500 | Investment finance | Korea | ||||||||||||||
KB-UTC Inno-Tech Venture Fund 2 | 29.53 | 300 | 278 | 300 | Investment finance | Korea | ||||||||||||||
Shinla Construction Co., Ltd. 4 | 20.17 | — | (551 | ) | — | Specialty construction | Korea | |||||||||||||
Terra Corporation 4 | 24.06 | — | 2 | — | Manufacture of fabricated and processed metal products | Korea | ||||||||||||||
103
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
MJT&I Corp. 4 | 22.89 | — | (613 | ) | — | Wholesale of other merchandise | Korea | |||||||||||||
Jungdong Steel Co., Ltd. 4 | 42.65 | — | (433 | ) | — | Wholesale of primary metal | Korea | |||||||||||||
Doosung Metal Co., Ltd. 4 | 26.49 | — | (62 | ) | — | Manufacture of metal door, windows, shutter and relevant products | Korea | |||||||||||||
Shinhwa Underwear Co., Ltd. 4 | 26.05 | — | 16 | — | Manufacture of underwear and sleepwear | Korea | ||||||||||||||
DPAPS Co., Ltd. 4 | 38.62 | — | — | — | Wholesale of paper | Korea | ||||||||||||||
Jaeyang Industry Co., Ltd. 4 | 20.86 | — | (552 | ) | — | Manufacture of luggage and other protective cases | Korea | |||||||||||||
Kendae Co., Ltd. 4 | 41.01 | — | (252 | ) | — | Screen printing | Korea | |||||||||||||
Jinseung Tech Co., Ltd. 4 | 30.04 | — | (194 | ) | — | Manufacture of other general-purpose machinery | Korea | |||||||||||||
Dongjo Co., Ltd. 4 | 29.29 | — | 806 | — | Wholesale of agricultural and forestry machinery and equipment | Korea | ||||||||||||||
Korea NM Tech Co., Ltd. 4 | 22.41 | — | 552 | — | Manufacture of motor vehicles, trailers and semitrailers | Korea | ||||||||||||||
Jungdo Co., Ltd. 4 | 25.34 | — | 1,492 | — | Office, commercial and institutional building construction | Korea | ||||||||||||||
Dae-A Leisure Co., Ltd. 4 | 49.36 | — | 1,613 | — | Earth works | Korea | ||||||||||||||
Chong Il Machine & Tools Co., Ltd. 4 | 20.40 | — | (126 | ) | — | Wholesale machinery and equipment | Korea | |||||||||||||
Imt Technology Co., Ltd. 4 | 25.29 | — | 22 | — | Computer Peripherals Distribution | Korea | ||||||||||||||
Iwon Alloy Co., Ltd. 4 | 23.20 | — | 394 | — | Manufacture of smelting, refining and alloys | Korea | ||||||||||||||
Carlife Co., Ltd. 4 | 24.39 | — | (75 | ) | — | Publishing of magazines and periodicals (publishing industry) | Korea | |||||||||||||
Computerlife Co., Ltd. 4 | 45.71 | — | (260 | ) | — | Publishing of magazines and periodicals (publishing industry) | Korea | |||||||||||||
Skydigital INC. 4 | 20.40 | — | (248 | ) | — | Manufacture of multimedia and video devices | Korea | |||||||||||||
Jo Yang Industrial Co., Ltd. 4 | 22.77 | — | 75 | — | Manufacture of special glass | Korea | ||||||||||||||
IL-KWANG ELECTRONIC MATERIALS CO., LTD. 4 | 29.06 | — | (398 | ) | — | Manufacture of electronic parts | Korea | |||||||||||||
SO-MYUNG RECYCLING CO., LTD. 4 | 20.23 | — | 184 | — | Manufacture of nonferrous metal | Korea | ||||||||||||||
IDTECK Co., Ltd. 4 | 32.80 | — | (103 | ) | — | Other manufacturing of wireless telecommunications equipment | Korea | |||||||||||||
Seyoon Development Company 4 | 26.95 | — | 2 | — | Civil engineering facility construction industry | Korea | ||||||||||||||
PIP System CO., LTD. 4 | 20.72 | — | 27 | — | Print equipment | Korea | ||||||||||||||
PT Bank Bukopin TBK | 22.00 | 116,422 | 115,321 | 116,422 | Banking and foreign exchange transaction | Indonesia | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
| 488,239 | 543,987 | 490,170 | ||||||||||||||||||
|
|
|
|
|
|
104
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Subsidiaries | ||||||||||||||||||||||||
Kookmin Bank Int`l Ltd. (London) 5 | 100.00 | USD | 30,392 | 36,517 | 32,916 | Banking and foreign exchange transaction | United Kingdom | |||||||||||||||||
Kookmin Bank Cambodia Plc. 5 | 100.00 | USD | 76,259 | 98,934 | 86,761 | Banking and foreign exchange transaction | Cambodia | |||||||||||||||||
Kookmin Bank (China) Ltd. 5 | 100.00 | USD | 383,875 | 433,126 | 418,155 | Banking and foreign exchange transaction | China | |||||||||||||||||
KB Microfinance Myanmar Co., Ltd. 5 | 100.00 | USD | 20,000 | 21,629 | 22,405 | Microfinance services | Myanmar | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
| USD | 510,526 | 590,206 | 560,237 | |||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
| 1,134,193 | 1,050,407 | |||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
| 1 | As of December 31, 2020 and 2019, the Bank can exercise significant influence on the decision-making processes of the associate’s financial and business policies through participation in governing bodies. |
| 2 | As of December 31, 2020 and 2019, the Bank is a limited partner and cannot exercise control over the investees. |
| 3 | As of December 31, 2020, the Bank participates in the Investment Management Committee but cannot exercise control. |
| 4 | The investment in associates was reclassified from financial assets at fair value through other comprehensive income due to termination of rehabilitation procedures. |
| 5 | Acquisition costs of investments in foreign subsidiaries are presented in US dollars and IDR. |
| 6 | The investment in subsidiaries was reclassified from the associates for the year ended December 31, 2020 due to additional share purchase. |
Although the Bank holds more than 20% of ownership in many investment trusts including Hanbando BTL Private Special Asset Fund No.1, those investment trusts are not recognized as associates of the Bank because the Bank’s influence on those trust is limited according to the trust agreement. In addition, the Bank holds more than 20% of its ownership in Orient shipyard Co., Ltd. and nine other companies, but those companies are not recognized as associates of the Bank, because the Bank’s influence on those companies is limited due to the status of those companies such as bankruptcy and rehabilitation.
105
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
13.2 Changes in carrying amount of investments in associates and subsidiaries for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition and others | Disposal and others | Impairment | Ending | |||||||||||||||
Associates | ||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | 2,769 | — | — | — | 2,769 | |||||||||||||||
Balhae Infrastructure Company | 108,875 | 893 | — | — | 109,768 | |||||||||||||||
KB GwS Private Securities Investment Trust | 89,124 | — | — | — | 89,124 | |||||||||||||||
Incheon Bridge Co., Ltd. | 9,159 | — | — | — | 9,159 | |||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | 1,327 | 3,286 | — | — | 4,613 | |||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 2,250 | 1,125 | — | — | 3,375 | |||||||||||||||
KB12-1 Venture Investment Partnership | 14,000 | — | (14,000 | ) | — | — | ||||||||||||||
Future Planning KB Start-up Creation Fund | 9,900 | — | (3,200 | ) | — | 6,700 | ||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 10,376 | — | (2,584 | ) | — | 7,792 | ||||||||||||||
KB High-tech Company Investment Fund | 13,350 | — | (8,550 | ) | — | 4,800 | ||||||||||||||
Aju Good Technology Venture Fund | 19,998 | — | (2,885 | ) | — | 17,113 | ||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | 10,000 | — | (3,200 | ) | — | 6,800 | ||||||||||||||
KB-TS Technology Venture Private Equity Fund | 10,620 | 1,200 | (2,940 | ) | — | 8,880 | ||||||||||||||
KB Intellectual Property Fund No.2 | 9,000 | 6,000 | — | — | 15,000 | |||||||||||||||
KB Digital Innovation Investment Fund Limited Partnership | 32,200 | 2,800 | — | — | 35,000 | |||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 11,000 | 4,000 | (1,600 | ) | — | 13,400 | ||||||||||||||
KB Global Platform Fund | 19,500 | 9,000 | — | — | 28,500 | |||||||||||||||
KB-UTC Inno-Tech Venture Fund | 300 | 11,310 | — | — | 11,610 | |||||||||||||||
WJ Private Equity Fund No.1 | — | 10,000 | — | — | 10,000 | |||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund No.2 | — | 2,500 | — | — | 2,500 | |||||||||||||||
KB Smart Scale Up Fund | — | 4,000 | — | — | 4,000 | |||||||||||||||
All Together Korea Fund No.2 | — | 100,000 | (90,000 | ) | — | 10,000 | ||||||||||||||
PT Bank Bukopin TBK 1 | 116,422 | 43,909 | (78,447 | ) | (81,884 | ) | — | |||||||||||||
Subsidiaries | ||||||||||||||||||||
Kookmin Bank Int`l Ltd. (London) | 32,916 | — | (32,916 | ) | — | — | ||||||||||||||
Kookmin Bank Cambodia Plc. | 86,761 | — | — | — | 86,761 | |||||||||||||||
Kookmin Bank (China) Ltd. | 418,155 | — | — | — | 418,155 | |||||||||||||||
KB Microfinance Myanmar Co., Ltd. | 22,405 | — | — | — | 22,405 | |||||||||||||||
KB Bank Myanmar Co., Ltd. | — | 221,780 | — | — | 221,780 | |||||||||||||||
PRASAC Microfinance Institution Plc. | — | 709,971 | — | — | 709,971 | |||||||||||||||
PT Bank Bukopin TBK 1 | — | 338,116 | — | — | 338,116 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 1,050,407 | 1,469,890 | (240,322 | ) | (81,884 | ) | 2,198,091 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
106
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition and others | Disposal and others | Impairment | Ending | |||||||||||||||
Associates | ||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | 2,769 | — | — | — | 2,769 | |||||||||||||||
Balhae Infrastructure Company | 108,282 | 593 | — | — | 108,875 | |||||||||||||||
KB GwS Private Securities Investment Trust | 89,124 | — | — | — | 89,124 | |||||||||||||||
Incheon Bridge Co., Ltd. | 9,159 | — | — | — | 9,159 | |||||||||||||||
KB SPROTT Renewable Private Equity Fund No.1 | — | 1,327 | — | — | 1,327 | |||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 1,125 | 1,125 | — | — | 2,250 | |||||||||||||||
KB12-1 Venture Investment Partnership | 17,400 | — | (3,400 | ) | — | 14,000 | ||||||||||||||
Future Planning KB Start-up Creation Fund | 14,300 | — | (4,400 | ) | — | 9,900 | ||||||||||||||
KoFC KBIC Frontier Champ 2010-5 (PEF) | 36 | — | (36 | ) | — | — | ||||||||||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | 10,376 | — | — | — | 10,376 | |||||||||||||||
KB High-Tech Company Investment Fund | 20,300 | — | (6,950 | ) | — | 13,350 | ||||||||||||||
Aju Good Technology Venture Fund | 18,038 | 1,960 | — | — | 19,998 | |||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | 7,500 | 2,500 | — | — | 10,000 | |||||||||||||||
KB-TS Technology Venture Private Equity Fund | 7,620 | 4,200 | (1,200 | ) | — | 10,620 | ||||||||||||||
KB Intellectual Property Fund No.2 | 3,000 | 6,000 | — | — | 9,000 | |||||||||||||||
KB Digital Innovation Investment Fund Limited Partnership | 7,700 | 24,500 | — | — | 32,200 | |||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 4,000 | 7,000 | — | — | 11,000 | |||||||||||||||
KB Global Platform Fund | — | 19,500 | — | — | 19,500 | |||||||||||||||
KB-UTC Inno-Tech Venture Fund | — | 300 | — | — | 300 | |||||||||||||||
PT Bank Bukopin TBK 2 | 116,422 | — | — | — | 116,422 | |||||||||||||||
Subsidiaries | ||||||||||||||||||||
Kookmin Bank Int’l Ltd. (London) | 32,916 | — | — | — | 32,916 | |||||||||||||||
Kookmin Bank Cambodia Plc. | 86,761 | — | — | — | 86,761 | |||||||||||||||
Kookmin Bank (China) Ltd. | 418,155 | — | — | — | 418,155 | |||||||||||||||
KB Microfinance Myanmar Co., Ltd. | 22,405 | — | — | — | 22,405 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 997,388 | 69,005 | (15,986 | ) | — | 1,050,407 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 1 | The investment was reclassified to subsidiaries from associates for the year ended December 31, 2020 due to additional share purchase. |
| 2 | The goodwill of PT Bank Bukopin TBK as of December 31, 2019, are |
107
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
14. Property and Equipment, and Investment Properties
14.1 Property and Equipment
14.1.1 Details of property and equipment as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated depreciation | Accumulated impairment losses | Carrying amount | ||||||||||||
Land | 1,912,836 | — | (1,018 | ) | 1,911,818 | |||||||||||
Buildings | 1,704,023 | (498,292 | ) | (5,859 | ) | 1,199,872 | ||||||||||
Leasehold improvements | 817,272 | (751,693 | ) | — | 65,579 | |||||||||||
Equipment and vehicles | 1,280,573 | (1,105,568 | ) | — | 175,005 | |||||||||||
Construction in-progress | 14,224 | — | — | 14,224 | ||||||||||||
Right-of-use assets | 744,569 | (377,946 | ) | — | 366,623 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,473,497 | (2,733,499 | ) | (6,877 | ) | 3,733,121 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated depreciation | Accumulated impairment losses | Carrying amount | ||||||||||||
Land | 1,985,369 | — | (1,018 | ) | 1,984,351 | |||||||||||
Buildings | 1,478,343 | (476,154 | ) | (5,859 | ) | 996,330 | ||||||||||
Leasehold improvements | 782,903 | (692,545 | ) | — | 90,358 | |||||||||||
Equipment and vehicles | 1,250,978 | (992,067 | ) | — | 258,911 | |||||||||||
Construction in-progress | 85,803 | — | — | 85,803 | ||||||||||||
Right-of-use assets | 582,365 | (228,091 | ) | — | 354,274 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,165,761 | (2,388,857 | ) | (6,877 | ) | 3,770,027 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
14.1.2 Changes in property and equipment for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Transfer2 | Disposal | Depreciation | Others | Ending | |||||||||||||||||||||
Land | 1,984,351 | 6,361 | (78,892 | ) | — | — | (2 | ) | 1,911,818 | |||||||||||||||||||
Buildings | 996,330 | 40,915 | 199,444 | — | (36,814 | ) | (3 | ) | 1,199,872 | |||||||||||||||||||
Leasehold improvements | 90,358 | 84 | 35,060 | (164 | ) | (59,565 | ) | (194 | ) | 65,579 | ||||||||||||||||||
Equipment and vehicles | 258,911 | 67,234 | 1,232 | (478 | ) | (151,756 | ) | (138 | ) | 175,005 | ||||||||||||||||||
Construction in-progress | 85,803 | 215,905 | (287,314 | ) | — | — | (170 | ) | 14,224 | |||||||||||||||||||
Right-of-use assets 1 | 354,274 | 383,525 | — | (190,817 | ) | (203,909 | ) | 23,550 | 366,623 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 3,770,027 | 714,024 | (130,470 | ) | (191,459 | ) | (452,044 | ) | 23,043 | 3,733,121 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
108
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Transfer2 | Disposal | Depreciation | Others | Ending | |||||||||||||||||||||
Land | 1,978,793 | 184 | 5,483 | (124 | ) | — | 15 | 1,984,351 | ||||||||||||||||||||
Buildings | 808,058 | 67 | 224,747 | (3,095 | ) | (33,481 | ) | 34 | 996,330 | |||||||||||||||||||
Leasehold improvements | 88,501 | 2,343 | 62,263 | — | (62,792 | ) | 43 | 90,358 | ||||||||||||||||||||
Equipment and vehicles | 151,012 | 228,207 | — | (216 | ) | (120,104 | ) | 12 | 258,911 | |||||||||||||||||||
Construction in-progress | 81,268 | 292,702 | (288,119 | ) | — | — | (48 | ) | 85,803 | |||||||||||||||||||
Right-of-use assets 1 | 363,098 | 327,228 | — | (138,642 | ) | (213,191 | ) | 15,781 | 354,274 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 3,470,730 | 850,731 | 4,374 | (142,077 | ) | (429,568 | ) | 15,837 | 3,770,027 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 1 | Effect of change in the lease term is reflected in acquisition and disposal based on gross amount. |
| 2 | Includes transfers with investment properties and assets held for sale. |
14.1.3 Changes in accumulated impairment losses of property and equipment for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | ||||||||||||||||
| 2020 | ||||||||||||||||
| Beginning | Impairment | Reversal | Ending | |||||||||||||
Accumulated impairment losses of property and equipment | (6,877 | ) | — | — | (6,877 | ) | ||||||||||
| (In millions of Korean won) | ||||||||||||||||
| 2019 | ||||||||||||||||
| Beginning | Impairment | Reversal | Ending | |||||||||||||
Accumulated impairment losses of property and equipment | (6,877 | ) | — | — | (6,877 | ) | ||||||||||
14.2 Investment Properties
14.2.1 Details of investment properties as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated depreciation | Carrying amount | |||||||||
Land | 50,700 | — | 50,700 | |||||||||
Buildings | 44,731 | (6,325 | ) | 38,406 | ||||||||
|
|
|
|
|
| |||||||
| 95,431 | (6,325 | ) | 89,106 | |||||||||
|
|
|
|
|
| |||||||
| December 31, 2019 | ||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated depreciation | Carrying amount | |||||||||
Land | 28,309 | — | 28,309 | |||||||||
Buildings | 16,490 | (6,399 | ) | 10,091 | ||||||||
|
|
|
|
|
| |||||||
| 44,799 | (6,399 | ) | 38,400 | |||||||||
|
|
|
|
|
| |||||||
109
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
14.2.2 Valuation techniques and inputs that are used to measure the fair value of investment properties as of December 31, 2020, are as follows:
| December 31, 2020 | ||||||||||
| (In millions of Korean won) | Fair value | Valuation techniques | Inputs | |||||||
Land and buildings | 114,800 | Cost approach method | - Price per square meter - Replacement cost | |||||||
Fair value of the investment properties amounts toW 114,800 million andW 47,623 million as of December 31, 2020 and 2019, respectively. The investment properties were measured by qualified independent appraisers with experience in valuing similar properties in the same area. In addition, per fair value hierarchy in Note 6.1.2, fair value hierarchy of all investment properties has been classified as Level 3.
Rental income from the above investment properties for the years ended December 31, 2020 and 2019, amounts toW 1,588 million andW 580 million, respectively.
14.2.3 Changes in investment properties for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Transfer | Depreciation | Ending | |||||||||||||||
Land | 28,309 | — | 22,391 | — | 50,700 | |||||||||||||||
Buildings | 10,091 | — | 29,034 | (719 | ) | 38,406 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 38,400 | — | 51,425 | (719 | ) | 89,106 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Transfer | Depreciation | Ending | |||||||||||||||
Land | 33,793 | — | (5,484 | ) | — | 28,309 | ||||||||||||||
Buildings | 14,673 | — | (4,195 | ) | (387 | ) | 10,091 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 48,466 | — | (9,679 | ) | (387 | ) | 38,400 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
15. Intangible Assets
15.1 Details of intangible assets as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated amortization | Accumulated impairment losses | Carrying amount | ||||||||||||
Goodwill | 65,288 | — | — | 65,288 | ||||||||||||
Other intangible assets | 1,265,992 | (888,422 | ) | (10,215 | ) | 367,355 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1,331,280 | (888,422 | ) | (10,215 | ) | 432,643 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated amortization | Accumulated impairment losses | Carrying amount | ||||||||||||
Goodwill | 65,288 | — | — | 65,288 | ||||||||||||
Other intangible assets | 1,026,895 | (824,021 | ) | (2,166 | ) | 200,708 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1,092,183 | (824,021 | ) | (2,166 | ) | 265,996 | |||||||||||
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|
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|
|
| |||||||||
110
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
15.2 The goodwill as of December 31, 2020 and 2019, arose from the merger of Housing & Commercial Bank (“H&CB”).
15.3 Details of goodwill allocation to cash-generating units and related information for impairment testing as of December 31, 2020 are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||
| Retail banking | Corporate banking | Total | ||||||||||
Carrying amounts | 49,315 | 15,973 | 65,288 | |||||||||
Recoverable amount exceeding carrying amount | 1,595,304 | 955,540 | 2,550,844 | |||||||||
Discount rate (%) | 17.46 | 17.63 | ||||||||||
Permanent growth rate (%) | 1.00 | 1.00 | ||||||||||
For impairment testing, goodwill is allocated to cash-generating units that are expected to benefit from the synergies of the business combination, and cash-generating units consist of an operating segment or units which are not larger than an operating segment. The Bank recognized goodwill amounting toW 65,288 million from the merger of Housing & Commercial Bank, the amounts ofW 49,315 million andW 15,973 million were allocated to the retail banking and corporate banking, respectively. Cash-generating units to which goodwill has been allocated, is tested for impairment annually and whenever there is an indication that the unit may be impaired by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit.
The recoverable amount of a cash-generating unit is measured at the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell is the amount obtainable from the sale in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal. If it is difficult to measure the amount obtainable from the sale of the cash-generating unit, the Bank measures the fair value less costs to sell by reflecting the characteristics of the measured cash-generating unit. If it is not possible to obtain reliable information to measure the fair value less costs to sell, the Bank uses the asset’s value in use as its recoverable amount. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. The future cash flows of retail banking and corporate banking are estimated on the assumption that the future cash flows will increase by 1.0% per year. The key assumptions used for the estimation of the future cash flows are estimated based on the market size and the Bank’s market share. The discount rate is a pre-tax rate that reflects assumptions regarding risk-free interest rate, market risk premium and the risks specific to the cash-generating unit.
15.4 Details of intangible assets other than goodwill as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated Amortization | Accumulated impairment losses | Carrying Amount | ||||||||||||
Industrial property rights | 1,693 | (1,459 | ) | — | 234 | |||||||||||
Software | 1,095,131 | (785,734 | ) | — | 309,397 | |||||||||||
Other intangible assets | 134,041 | (70,719 | ) | (10,215 | ) | 53,107 | ||||||||||
Right-of-use assets | 35,127 | (30,510 | ) | — | 4,617 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1,265,992 | (888,422 | ) | (10,215 | ) | 367,355 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
111
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost | Accumulated Amortization | Accumulated impairment losses | Carrying Amount | ||||||||||||
Industrial property rights | 1,643 | (1,350 | ) | — | 293 | |||||||||||
Software | 850,384 | (717,401 | ) | — | 132,983 | |||||||||||
Other intangible assets | 139,741 | (79,782 | ) | (2,166 | ) | 57,793 | ||||||||||
Right-of-use assets | 35,127 | (25,488 | ) | — | 9,639 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1,026,895 | (824,021 | ) | (2,166 | ) | 200,708 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
15.5 Changes in intangible assets other than goodwill for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Disposal | Amortization | Others | Ending | ||||||||||||||||||
Industrial property rights | 293 | 50 | — | (109 | ) | — | 234 | |||||||||||||||||
Software | 132,983 | 245,922 | — | (69,506 | ) | (2 | ) | 309,397 | ||||||||||||||||
Other intangible assets | 57,793 | 18,642 | (1,125 | ) | (14,035 | ) | (8,168 | ) | 53,107 | |||||||||||||||
Right-of-use assets | 9,639 | — | — | (5,022 | ) | — | 4,617 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 200,708 | 264,614 | (1,125 | ) | (88,672 | ) | (8,170 | ) | 367,355 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Acquisition | Disposal | Amortization | Others | Ending | ||||||||||||||||||
Industrial property rights | 251 | 148 | — | (106 | ) | — | 293 | |||||||||||||||||
Software | 94,718 | 88,712 | — | (50,452 | ) | 5 | 132,983 | |||||||||||||||||
Other intangible assets | 46,337 | 29,945 | (7,125 | ) | (11,448 | ) | 84 | 57,793 | ||||||||||||||||
Right-of-use assets | 15,162 | 996 | — | (6,519 | ) | — | 9,639 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 156,468 | 119,801 | (7,125 | ) | (68,525 | ) | 89 | 200,708 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
15.6 Changes in accumulated impairment losses of other intangible assets for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Impairment | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses of other intangible assets | (2,166 | ) | (8,145 | ) | 55 | 41 | (10,215 | ) | ||||||||||||
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Impairment | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses of other intangible assets | (5,107) | (50) | 112 | 2,879 | (2,166 | ) | ||||||||||||||
112
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
16. Deferred Income Tax Assets and Liabilities
16.1 Details of deferred income tax assets and liabilities as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||
| (In millions of Korean won) | Assets | Liabilities | Net amount | |||||||||
Other provisions | 77,817 | — | 77,817 | |||||||||
Impairment losses of property and equipment | 2,241 | — | 2,241 | |||||||||
Share-based payments | 11,649 | — | 11,649 | |||||||||
Provisions for acceptances and guarantees | 17,046 | — | 17,046 | |||||||||
Gains or losses on valuation of derivatives | — | (99,762 | ) | (99,762 | ) | |||||||
Present value discount | — | (14 | ) | (14 | ) | |||||||
Gains or losses on fair value hedge | 21,060 | — | 21,060 | |||||||||
Accrued interest | — | (35,020 | ) | (35,020 | ) | |||||||
Deferred loan origination fees and costs | — | (140,265 | ) | (140,265 | ) | |||||||
Gains or losses on revaluation | — | (277,471 | ) | (277,471 | ) | |||||||
Investments in subsidiaries and others | 6,914 | — | 6,914 | |||||||||
Gains or losses on valuation of security investment | — | (265,941 | ) | (265,941 | ) | |||||||
Defined benefit liabilities | 441,594 | — | 441,594 | |||||||||
Accrued expenses | 210,481 | — | 210,481 | |||||||||
Retirement insurance expense | — | (402,227 | ) | (402,227 | ) | |||||||
Adjustments to the prepaid contributions | — | (28,260 | ) | (28,260 | ) | |||||||
Others | 246,026 | (108,589 | ) | 137,437 | ||||||||
|
|
|
|
|
| |||||||
| 1,034,828 | (1,357,549 | ) | (322,721 | ) | ||||||||
Offsetting of deferred income tax assets and liabilities | (1,034,828 | ) | 1,034,828 | — | ||||||||
|
|
|
|
|
| |||||||
| — | (322,721 | ) | (322,721 | ) | ||||||||
|
|
|
|
|
| |||||||
| December 31, 2019 | ||||||||||||
| (In millions of Korean won) | Assets | Liabilities | Net amount | |||||||||
Other provisions | 60,244 | — | 60,244 | |||||||||
Impairment losses of property and equipment | 2,656 | — | 2,656 | |||||||||
Share-based payments | 12,114 | — | 12,114 | |||||||||
Provisions for acceptances and guarantees | 20,959 | — | 20,959 | |||||||||
Gains or losses on valuation of derivatives | — | (59,827 | ) | (59,827 | ) | |||||||
Present value discount | — | (118 | ) | (118 | ) | |||||||
Gains or losses on fair value hedge | 12,123 | — | 12,123 | |||||||||
Accrued interest | — | (48,979 | ) | (48,979 | ) | |||||||
Deferred loan origination fees and costs | — | (136,178 | ) | (136,178 | ) | |||||||
Gains or losses on revaluation | — | (286,268 | ) | (286,268 | ) | |||||||
Investments in subsidiaries and others | 14,983 | — | 14,983 | |||||||||
Gains or losses on valuation of security investment | — | (100,400 | ) | (100,400 | ) | |||||||
Defined benefit liabilities | 422,800 | — | 422,800 | |||||||||
Accrued expenses | 173,023 | — | 173,023 | |||||||||
Retirement insurance expense | — | (375,300 | ) | (375,300 | ) | |||||||
Adjustments to the prepaid contributions | — | (22,897 | ) | (22,897 | ) | |||||||
Others | 221,933 | (111,280 | ) | 110,653 | ||||||||
|
|
|
|
|
| |||||||
| 940,835 | (1,141,247 | ) | (200,412 | ) | ||||||||
Offsetting of deferred income tax assets and liabilities | (940,835 | ) | 940,835 | — | ||||||||
|
|
|
|
|
| |||||||
| — | (200,412 | ) | (200,412 | ) | ||||||||
|
|
|
|
|
| |||||||
113
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
16.2 Unrecognized Deferred Income Tax Assets
16.2.1 No deferred income tax assets have been recognized for the deductible temporary difference ofW 114,839 million andW 5,923 million associated with investments in subsidiaries and others as of December 31, 2020 and 2019, because it is not probable that the temporary differences will be reversed in the foreseeable future.
16.2.2 No deferred income tax assets have been recognized for deductible temporary differences ofW 23,827 million andW 19,388 million associated with others as of December 31, 2020 and 2019, due to the uncertainty that these will be realized in the future.
16.3 Unrecognized Deferred Income Tax Liabilities
No deferred income tax liabilities have been recognized as of December 31, 2020 and 2019 for the taxable temporary difference ofW 65,288 million arising from the initial recognition of goodwill from the merger of Housing and Commercial Bank in 2001.
114
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
16.4 Changes in cumulative temporary differences for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||
| (In millions of Korean won) | Beginning | Decrease | Increase | Ending | ||||||||||||
Deductible temporary differences |
| |||||||||||||||
Gains or losses on fair value hedge | 44,085 | 44,085 | 76,583 | 76,583 | ||||||||||||
Other provisions | 219,069 | 219,069 | 282,969 | 282,969 | ||||||||||||
Impairment losses of property and equipment | 9,659 | 9,659 | 8,148 | 8,148 | ||||||||||||
Share-based payments | 44,049 | 44,049 | 42,361 | 42,361 | ||||||||||||
Provisions for acceptances and guarantees | 76,214 | 76,214 | 61,984 | 61,984 | ||||||||||||
Investment in subsidiaries and others | 60,407 | — | 79,574 | 139,981 | ||||||||||||
Defined benefit liabilities | 1,537,455 | 120,513 | 188,853 | 1,605,795 | ||||||||||||
Accrued expenses | 629,175 | 629,175 | 765,387 | 765,387 | ||||||||||||
Others | 826,416 | 343,139 | 435,191 | 918,468 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 3,446,529 | 1,485,903 | 1,941,050 | 3,901,676 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Unrecognized deferred income tax assets | ||||||||||||||||
Investment in subsidiaries and others | 5,923 | 114,839 | ||||||||||||||
Others | 19,388 | 23,827 | ||||||||||||||
|
|
|
| |||||||||||||
| 3,421,218 | 3,763,010 | |||||||||||||||
|
|
|
| |||||||||||||
Tax rate (%) | 27.50 | 27.50 | ||||||||||||||
|
|
|
| |||||||||||||
Total deferred income tax assets | 940,835 | 1,034,828 | ||||||||||||||
|
|
|
| |||||||||||||
Taxable temporary differences | ||||||||||||||||
Accrued interest | (178,107 | ) | (171,025 | ) | (120,263 | ) | (127,345 | ) | ||||||||
Deferred loan origination fees and costs | (495,193 | ) | (495,193 | ) | (510,055 | ) | (510,055 | ) | ||||||||
Gains or losses on valuation of derivatives | (217,552 | ) | (217,552 | ) | (362,772 | ) | (362,772 | ) | ||||||||
Present value discount | (429 | ) | (429 | ) | (49 | ) | (49 | ) | ||||||||
Goodwill from merger | (65,288 | ) | — | — | (65,288 | ) | ||||||||||
Gains or losses on revaluation | (1,040,975 | ) | (31,991 | ) | — | (1,008,984 | ) | |||||||||
Retirement insurance expense | (1,364,727 | ) | (120,513 | ) | (218,428 | ) | (1,462,642 | ) | ||||||||
Adjustments to the prepaid contributions | (83,262 | ) | (83,262 | ) | (102,768 | ) | (102,768 | ) | ||||||||
Gains or losses on valuation of security investment | (365,092 | ) | (365,092 | ) | (967,057 | ) | (967,057 | ) | ||||||||
Others | (404,653 | ) | (343,872 | ) | (334,087 | ) | (394,868 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
| (4,215,278 | ) | (1,828,929 | ) | (2,615,479 | ) | (5,001,828 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Unrecognized deferred income tax liabilities | ||||||||||||||||
Goodwill from merger | (65,288 | ) | (65,288 | ) | ||||||||||||
|
|
|
| |||||||||||||
| (4,149,990 | ) | (4,936,540 | ) | |||||||||||||
|
|
|
| |||||||||||||
Tax rate (%) | 27.50 | 27.50 | ||||||||||||||
|
|
|
| |||||||||||||
Total deferred income tax liabilities | (1,141,247 | ) | (1,357,549 | ) | ||||||||||||
|
|
|
| |||||||||||||
115
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||
| (In millions of Korean won) | Beginning | Decrease | Increase | Ending | ||||||||||||
Deductible temporary differences |
| |||||||||||||||
Gains or losses on fair value hedge | — | — | 44,085 | 44,085 | ||||||||||||
Other provisions | 226,103 | 226,103 | 219,069 | 219,069 | ||||||||||||
Impairment losses of property and equipment | 15,027 | 15,027 | 9,659 | 9,659 | ||||||||||||
Share-based payments | 43,156 | 43,156 | 44,049 | 44,049 | ||||||||||||
Provisions for acceptances and guarantees | 73,809 | 73,809 | 76,214 | 76,214 | ||||||||||||
Investment in subsidiaries and others | 53,261 | — | 7,146 | 60,407 | ||||||||||||
Defined benefit liabilities | 1,409,700 | 112,517 | 240,272 | 1,537,455 | ||||||||||||
Accrued expenses | 735,712 | 735,712 | 629,175 | 629,175 | ||||||||||||
Others | 610,370 | 128,960 | 345,006 | 826,416 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 3,167,138 | 1,335,284 | 1,614,675 | 3,446,529 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Unrecognized deferred income tax assets | ||||||||||||||||
Accrued expenses | 363 | — | ||||||||||||||
Investment in subsidiaries and others | 5,923 | 5,923 | ||||||||||||||
Others | 15,030 | 19,388 | ||||||||||||||
|
|
|
| |||||||||||||
| 3,145,822 | 3,421,218 | |||||||||||||||
|
|
|
| |||||||||||||
Tax rate (%) | 27.50 | 27.50 | ||||||||||||||
|
|
|
| |||||||||||||
Total deferred income tax assets | 865,101 | 940,835 | ||||||||||||||
|
|
|
| |||||||||||||
Taxable temporary differences | ||||||||||||||||
Gains or losses on fair value hedge | (94,085 | ) | (94,085 | ) | — | — | ||||||||||
Accrued interest | (151,589 | ) | (102,728 | ) | (129,246 | ) | (178,107 | ) | ||||||||
Deferred loan origination fees and costs | (507,988 | ) | (507,988 | ) | (495,193 | ) | (495,193 | ) | ||||||||
Gains or losses on valuation of derivatives | (47,956 | ) | (47,956 | ) | (217,552 | ) | (217,552 | ) | ||||||||
Present value discount | (124 | ) | (124 | ) | (429 | ) | (429 | ) | ||||||||
Goodwill from merger | (65,288 | ) | — | — | (65,288 | ) | ||||||||||
Gains or losses on revaluation | (1,042,687 | ) | (1,712 | ) | — | (1,040,975 | ) | |||||||||
Retirement insurance expense | (1,247,911 | ) | (112,517 | ) | (229,333 | ) | (1,364,727 | ) | ||||||||
Adjustments to the prepaid contributions | (69,212 | ) | (69,212 | ) | (83,262 | ) | (83,262 | ) | ||||||||
Gains or losses on valuation of security investment | (194,124 | ) | (194,124 | ) | (365,092 | ) | (365,092 | ) | ||||||||
Others | (74,026 | ) | (16,380 | ) | (347,007 | ) | (404,653 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
| (3,494,990 | ) | (1,146,826 | ) | (1,867,114 | ) | (4,215,278 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Unrecognized deferred income tax liabilities | ||||||||||||||||
Goodwill from merger | (65,288 | ) | (65,288 | ) | ||||||||||||
|
|
|
| |||||||||||||
| (3,429,702 | ) | (4,149,990 | ) | |||||||||||||
|
|
|
| |||||||||||||
Tax rate (%) | 27.5 | 27.5 | ||||||||||||||
|
|
|
| |||||||||||||
Total deferred income tax liabilities | (943,168 | ) | (1,141,247 | ) | ||||||||||||
|
|
|
| |||||||||||||
116
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
17. Assets Held for Sale
17.1 Details of assets held for sale as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost * | Accumulated impairment losses | Carrying amount | Fair value less costs to sell | ||||||||||||
Land held for sale | 3,213 | — | 3,213 | 4,082 | ||||||||||||
Buildings held for sale | 3,321 | (1,271 | ) | 2,050 | 2,939 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,534 | (1,271 | ) | 5,263 | 7,021 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Acquisition cost * | Accumulated impairment losses | Carrying amount | Fair value less costs to sell | ||||||||||||
Land held for sale | 7,210 | (1,530 | ) | 5,680 | 6,467 | |||||||||||
Buildings held for sale | 2,513 | (1,252 | ) | 1,261 | 1,261 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| 9,723 | (2,782 | ) | 6,941 | 7,728 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Acquisition cost of buildings held for sale is net of accumulated depreciation before classified as assets held for sale. |
17.2 Valuation techniques and inputs that are used to measure the fair value of assets held for sale as of December 31, 2020, are as follows:
| December 31, 2020 | ||||||||||
| (In millions of Korean won) | Fair value | Valuation | Unobservable | Estimated | Effect of | |||||
Land and buildings | 7,021 | Market comparison approach model and others | Adjustment index | 0.68 ~ 1.95 | Fair value increases as the adjustment index rises | |||||
| 1 | The appraisal value is adjusted by the adjustment ratio in the event the public sale is unsuccessful. |
| 2 | Adjustment index is calculated by using the time factor correction or individual factors. |
Among assets held for sale, real estate was measured by independent appraisers with recent experience in evaluating similar properties in the area of the property to be assessed with professional qualifications. All of assets held for sale are classified as level 3 in accordance with fair value hierarchy in Note 6.1.2.
117
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
17.3 Changes in accumulated impairment losses of assets held for sale for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Provision | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses of assets held for sale | (2,782 | ) | (11,593 | ) | — | 13,104 | (1,271 | ) | ||||||||||||
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Provision | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses of assets held for sale | (8,150 | ) | (333 | ) | — | 5,701 | (2,782 | ) | ||||||||||||
17.4 As of December 31, 2020, assets held for sale consist of 4 real estates of closed offices, which were determined to sell by the management, but not yet sold as of December 31, 2020. Negotiation with buyers is in process for the one assets and the remaining 3 assets are also being actively marketed.
118
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
18. Other Assets
18.1 Details of other assets as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Other financial assets | ||||||||
Other receivables | 3,164,901 | 3,057,390 | ||||||
Accrued income | 825,281 | 873,095 | ||||||
Guarantee deposits | 928,925 | 994,489 | ||||||
Domestic exchange settlement debits | 716,015 | 523,182 | ||||||
Others | 10,081 | 31,970 | ||||||
Allowances for credit losses | (11,570 | ) | (11,184 | ) | ||||
Present value discount | (3,035 | ) | (2,890 | ) | ||||
|
|
|
| |||||
| 5,630,598 | 5,466,052 | |||||||
|
|
|
| |||||
Other non-financial assets | ||||||||
Other receivables | 157 | 85 | ||||||
Prepaid expenses | 128,166 | 108,491 | ||||||
Guarantee deposits | 2,699 | 3,037 | ||||||
Prepayments | 25,771 | 70,742 | ||||||
Others | 42,983 | 48,141 | ||||||
Allowances for credit losses | (9,804 | ) | (16,525 | ) | ||||
|
|
|
| |||||
| 189,972 | 213,971 | |||||||
|
|
|
| |||||
| 5,820,570 | 5,680,023 | |||||||
|
|
|
| |||||
18.2 Changes in allowances for credit losses of other assets for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | Other financial assets | Other non- financial assets | Total | |||||||||
Beginning | 11,184 | 16,525 | 27,709 | |||||||||
Provision | 2,313 | 1,737 | 4,050 | |||||||||
Write-offs | (3,123 | ) | (8,458 | ) | (11,581 | ) | ||||||
Others | 1,196 | — | 1,196 | |||||||||
|
|
|
|
|
| |||||||
Ending | 11,570 | 9,804 | 21,374 | |||||||||
|
|
|
|
|
| |||||||
| 2019 | ||||||||||||
| (In millions of Korean won) | Other financial assets | Other non- financial assets | Total | |||||||||
Beginning | 21,417 | 16,992 | 38,409 | |||||||||
Provision (reversal) | (7,664 | ) | (315 | ) | (7,979 | ) | ||||||
Write-offs | (3,379 | ) | (152 | ) | (3,531 | ) | ||||||
Others | 810 | — | 810 | |||||||||
|
|
|
|
|
| |||||||
Ending | 11,184 | 16,525 | 27,709 | |||||||||
|
|
|
|
|
| |||||||
119
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
19. Deposits
Details of deposits as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Demand deposits | ||||||||
Demand deposits in Korean won | 155,899,144 | 124,467,157 | ||||||
Demand deposits in foreign currencies | 10,410,158 | 7,849,177 | ||||||
|
|
|
| |||||
| 166,309,302 | 132,316,334 | |||||||
|
|
|
| |||||
Time deposits | ||||||||
Time deposits in Korean won | 144,157,357 | 152,880,734 | ||||||
Time deposits in foreign currencies | 6,144,753 | 6,272,250 | ||||||
Fair value adjustments on fair value hedged time deposits in foreign currencies | 2,088 | (18,391 | ) | |||||
|
|
|
| |||||
| �� | 150,304,198 | 159,134,593 | ||||||
|
|
|
| |||||
Certificates of deposits | 2,468,924 | 4,239,969 | ||||||
|
|
|
| |||||
| 319,082,424 | 295,690,896 | |||||||
|
|
|
| |||||
20. Borrowings
20.1 Details of borrowings as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Borrowings | 23,499,996 | 17,900,031 | ||||||
Bonds sold under repurchase agreements and others | 830,266 | 553,095 | ||||||
Call money | 769,385 | 253,202 | ||||||
|
|
|
| |||||
| 25,099,647 | 18,706,328 | |||||||
|
|
|
| |||||
120
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
20.2 Details of borrowings as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Lenders | Annual interest rate (%) | December 31, 2020 | December 31, 2019 | ||||||||||||
Borrowings in Korean won | Borrowings from the Bank of Korea | The Bank of Korea | 0.25 | 6,463,267 | 2,649,851 | |||||||||||
Borrowings from the government | SEMAS and others | 0.00~2.70 | 2,675,568 | 1,658,810 | ||||||||||||
Borrowings from non-banking financial institutions | The Korea Development Bank | 0.20~1.45 | 446,502 | 408,042 | ||||||||||||
Other borrowings | The Korea Development Bank and others | 0.00~3.88 | 4,711,936 | 4,076,111 | ||||||||||||
|
|
|
| |||||||||||||
| 14,297,273 | 8,792,814 | |||||||||||||||
|
|
|
| |||||||||||||
Borrowings in foreign currencies | Due to banks | Commonwealth Bank of Australia and others | — | 295 | 4,685 | |||||||||||
Borrowings from banks | Central Bank of Uzbekistan and others | 0.00~2.08 | 8,106,444 | 7,437,041 | ||||||||||||
Borrowings from other financial institutions | The Export-Import Bank of Korea and others | 0.70~1.47 | 23,827 | 7,081 | ||||||||||||
Other borrowings | Bank of New York Mellon and others | — | 1,072,157 | 1,658,410 | ||||||||||||
|
|
|
| |||||||||||||
| 9,202,723 | 9,107,217 | |||||||||||||||
|
|
|
| |||||||||||||
| 23,499,996 | 17,900,031 | |||||||||||||||
|
|
|
| |||||||||||||
20.3 Details of bonds sold under repurchase agreements and others as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Lenders | Annual interest rate (%) | December 31, 2020 | December 31, 2019 | ||||||||||
Bonds sold under repurchase agreements | Individuals, groups, corporations | 0.38~1.13 | 825,700 | 548,710 | ||||||||||
Bills sold | Counter sale | 0.10~0.35 | 4,566 | 4,385 | ||||||||||
|
|
|
| |||||||||||
| 830,266 | 553,095 | |||||||||||||
|
|
|
| |||||||||||
20.4 Details of call money as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Lenders | Annual interest rate (%) | December 31, 2020 | December 31, 2019 | ||||||||||
Call money in Korean won | Mitsui Sumitomo Bank Seoul | 0.48 | 220,000 | — | ||||||||||
Call money in foreign currencies | Central Bank of Uzbekistan and others | 0.08~0.34 | 549,385 | 253,202 | ||||||||||
|
|
|
| |||||||||||
| 769,385 | 253,202 | |||||||||||||
|
|
|
| |||||||||||
121
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
21. Debentures
21.1 Details of debentures as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Annual interest rate (%) | December 31, 2020 | December 31, 2019 | |||||||||
Debentures in Korean won | ||||||||||||
Structured debentures | 5.65~5.86 | 31,960 | 33,310 | |||||||||
Subordinated fixed rate debentures | 2.02~4.35 | 4,464,407 | 3,416,590 | |||||||||
Fixed rate debentures | 0.76~2.44 | 12,840,014 | 9,190,014 | |||||||||
Floating rate debentures | 0.58~0.77 | 1,890,000 | 300,000 | |||||||||
|
|
|
| |||||||||
| 19,226,381 | 12,939,914 | |||||||||||
Fair value adjustments of fair value hedged debentures in Korean won | (6,839 | ) | 21,070 | |||||||||
Less: Discount on debentures in Korean won | (8,070 | ) | (3,588 | ) | ||||||||
|
|
|
| |||||||||
| 19,211,472 | 12,957,396 | |||||||||||
|
|
|
| |||||||||
Debentures in foreign currencies | ||||||||||||
Floating rate debentures | 0.58~1.51 | 1,353,472 | 1,301,367 | |||||||||
Fixed rate debentures | 0.05~4.50 | 4,064,394 | 2,857,545 | |||||||||
|
|
|
| |||||||||
| 5,417,866 | 4,158,912 | |||||||||||
Fair value adjustments of fair value hedged debentures in foreign currencies | 81,334 | 41,406 | ||||||||||
Less: Discount on debentures in foreign currencies | (19,996 | ) | (15,322 | ) | ||||||||
|
|
|
| |||||||||
| 5,479,204 | 4,184,996 | |||||||||||
|
|
|
| |||||||||
| 24,690,676 | 17,142,392 | |||||||||||
|
|
|
| |||||||||
21.2 Changes in debentures based on face value for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Issue | Repayment | Others | Ending | |||||||||||||||
Debentures in Korean won | ||||||||||||||||||||
Structured debentures | 33,310 | — | (1,350 | ) | — | 31,960 | ||||||||||||||
Subordinated fixed rate debentures | 3,416,590 | 1,750,000 | (702,183 | ) | — | 4,464,407 | ||||||||||||||
Fixed rate debentures | 9,190,014 | 8,110,000 | (4,460,000 | ) | — | 12,840,014 | ||||||||||||||
Floating rate debentures | 300,000 | 1,890,000 | (300,000 | ) | — | 1,890,000 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 12,939,914 | 11,750,000 | (5,463,533 | ) | — | 19,226,381 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Debentures in foreign currencies | ||||||||||||||||||||
Floating rate debentures | 1,301,367 | 493,753 | (371,742 | ) | (69,906 | ) | 1,353,472 | |||||||||||||
Fixed rate debentures | 2,857,545 | 2,232,523 | (771,205 | ) | (254,469 | ) | 4,064,394 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 4,158,912 | 2,726,276 | (1,142,947 | ) | (324,375 | ) | 5,417,866 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 17,098,826 | 14,476,276 | (6,606,480 | ) | (324,375 | ) | 24,644,247 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
122
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||
| (In millions of Korean won) | Beginning | Issue | Repayment | Others | Ending | |||||||||||||||
Debentures in Korean won | ||||||||||||||||||||
Structured debentures | 34,320 | — | (1,010 | ) | — | 33,310 | ||||||||||||||
Subordinated fixed rate debentures | 3,422,729 | — | (6,139 | ) | — | 3,416,590 | ||||||||||||||
Fixed rate debentures | 13,660,045 | 3,820,000 | (8,290,031 | ) | — | 9,190,014 | ||||||||||||||
Floating rate debentures | 640,000 | 300,000 | (640,000 | ) | — | 300,000 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 17,757,094 | 4,120,000 | (8,937,180 | ) | — | 12,939,914 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Debentures in foreign currencies | ||||||||||||||||||||
Floating rate debentures | 1,344,628 | 60,780 | (33,199 | ) | (70,842 | ) | 1,301,367 | |||||||||||||
Fixed rate debentures | 2,725,700 | 595,490 | (590,950 | ) | 127,305 | 2,857,545 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 4,070,328 | 656,270 | (624,149 | ) | 56,463 | 4,158,912 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 21,827,422 | 4,776,270 | (9,561,329 | ) | 56,463 | 17,098,826 | |||||||||||||||
|
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|
|
|
|
|
|
|
| |||||||||||
22. Provisions
22.1 Details of provisions as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Provisions for credit losses of loan commitments | 158,732 | 95,264 | ||||||
Provisions for credit losses of acceptances and guarantees | 61,984 | 76,214 | ||||||
Provisions for restoration costs | 131,674 | 106,269 | ||||||
Others | 31,743 | 32,919 | ||||||
|
|
|
| |||||
| 384,133 | 310,666 | |||||||
|
|
|
| |||||
22.2 Changes in provisions for credit losses of unused loan commitments, acceptances and guarantees for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||
| Provisions for credit losses of unused loan commitments | Provisions for credit losses of acceptances and guarantees | |||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | 12-month expected credit losses | Lifetime expected credit losses | |||||||||||||||||||||
| (In millions of Korean won) | Non- impaired | Impaired | Non- impaired | Impaired | ||||||||||||||||||||
Beginning | 60,626 | 34,638 | — | 23,839 | 35,588 | 16,787 | ||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 7,721 | (7,717 | ) | (4 | ) | 194 | (191 | ) | (3 | ) | ||||||||||||||
Transfer to lifetime expected credit losses | (7,179 | ) | 9,408 | (2,229 | ) | (486 | ) | 486 | — | |||||||||||||||
Impairment | (32 | ) | (2,937 | ) | 2,969 | (5 | ) | (461 | ) | 466 | ||||||||||||||
Provision (reversal) for credit losses * | 20,038 | 45,370 | (736 | ) | 9,879 | (20,391 | ) | (2,734 | ) | |||||||||||||||
Others (effects of changes in foreign exchange rate, etc.) | (506 | ) | (698 | ) | — | (603 | ) | (193 | ) | (188 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending | 80,668 | 78,064 | — | 32,818 | 14,838 | 14,328 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
123
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| 2019 | ||||||||||||||||||||||||
| Provisions for credit losses of unused loan commitments | Provisions for credit losses of acceptances and guarantees | |||||||||||||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | 12-month expected credit losses | Lifetime expected credit losses | |||||||||||||||||||||
| (In millions of Korean won) | Non- impaired | Impaired | Non- impaired | Impaired | ||||||||||||||||||||
Beginning | 74,088 | 28,887 | — | 26,203 | 29,625 | 17,981 | ||||||||||||||||||
Transfer between stages | ||||||||||||||||||||||||
Transfer to 12-month expected credit losses | 15,262 | (15,235 | ) | (27 | ) | 365 | (365 | ) | — | |||||||||||||||
Transfer to lifetime expected credit losses | (13,691 | ) | 13,749 | (58 | ) | (976 | ) | 1,705 | (729 | ) | ||||||||||||||
Impairment | (118 | ) | (800 | ) | 918 | (24 | ) | (280 | ) | 304 | ||||||||||||||
Provision (reversal) for credit losses | (15,235 | ) | 7,823 | (833 | ) | (1,922 | ) | 4,644 | (892 | ) | ||||||||||||||
Others (exchange differences, etc.) | 320 | 214 | — | 193 | 259 | 123 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending | 60,626 | 34,638 | — | 23,839 | 35,588 | 16,787 | ||||||||||||||||||
|
|
|
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|
|
|
|
|
| |||||||||||||
| * | Includes additional provision of |
22.3 Changes in provisions for restoration costs for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Beginning | 106,269 | 95,396 | ||||||
Provision | 8,434 | 3,584 | ||||||
Reversal | (1,153 | ) | (6,054 | ) | ||||
Used | (7,102 | ) | (3,658 | ) | ||||
Unwinding of discount | 2,111 | 1,981 | ||||||
Effect of changes in discount rate | 23,115 | 15,020 | ||||||
|
|
|
| |||||
Ending | 131,674 | 106,269 | ||||||
|
|
|
| |||||
Provisions for restoration costs are present value of estimated costs to be incurred for restoration of the leased properties. The expenditure of the restoration cost will be incurred at the end of each lease contract, and the lease period is used to reasonably estimate the time of expenditure. Also, the average restoration expense based on actual three-year historical data and three-year historical average inflation rate were used to estimate the present value of estimated costs.
124
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
22.4 Changes in other provisions for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Membership rewards program | Dormant accounts | Litigations | Financial guarantee liabilities | Others | Total | ||||||||||||||||||
Beginning | 53 | 3,578 | 10,662 | 5,470 | 13,156 | 32,919 | ||||||||||||||||||
Provision (reversal) | 55 | 2,579 | (3,002 | ) | 956 | 1,971 | 2,559 | |||||||||||||||||
Used and others | (73 | ) | (3,149 | ) | (13 | ) | — | (500 | ) | (3,735 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending | 35 | 3,008 | 7,647 | 6,426 | 14,627 | 31,743 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Membership rewards program | Dormant accounts | Litigations | Financial guarantee liabilities | Others | Total | ||||||||||||||||||
Beginning | 61 | 4,376 | 6,478 | 2,391 | 21,893 | 35,199 | ||||||||||||||||||
Provision | 61 | 2,296 | 8,160 | 3,079 | 710 | 14,306 | ||||||||||||||||||
Used and others | (69 | ) | (3,094 | ) | (3,976 | ) | — | (9,447 | ) | (16,586 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending | 53 | 3,578 | 10,662 | 5,470 | 13,156 | 32,919 | ||||||||||||||||||
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|
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|
| |||||||||||||
23. Net Defined Benefit Liabilities
23.1 Defined Benefit Plan
The Bank operates defined benefit plans which have the following characteristics:
| • | The Bank has the obligation to pay the agreed benefits to all its current and former employees. |
| • | The Bank assumes actuarial risk (that benefits will cost more than expected) and investment risk. |
The net defined benefit liability recognized in the statements of financial position is calculated in accordance with actuarial valuation methods. Data such as discount rates, future salary increase rates, and mortality rates based on market data and historical data are used. Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends.
125
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
23.2 Changes in net defined benefit liabilities for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||
| (In millions of Korean won) | Present value of defined benefit obligation | Fair value of plan assets | Net defined benefit liabilities | |||||||||
Beginning | 1,669,899 | (1,490,853 | ) | 179,046 | ||||||||
Current service cost | 155,811 | — | 155,811 | |||||||||
Interest expense (income) | 32,956 | (29,382 | ) | 3,574 | ||||||||
Remeasurements: | ||||||||||||
Actuarial gains and losses by experience adjustments | 1,289 | — | 1,289 | |||||||||
Actuarial gains and losses by changes in demographic assumptions | — | — | — | |||||||||
Actuarial gains and losses by changes in financial assumptions | — | — | — | |||||||||
Return on plan assets (excluding amounts included in interest income) | — | 4,230 | 4,230 | |||||||||
Contributions by the Bank | — | (187,900 | ) | (187,900 | ) | |||||||
Payments from plans (benefit payments) | (120,513 | ) | 120,513 | — | ||||||||
Payments from the Bank | (5,930 | ) | — | (5,930 | ) | |||||||
Transfer in | 4,318 | (3,696 | ) | 622 | ||||||||
Transfer out | (3,720 | ) | 3,720 | — | ||||||||
Effect of exchange differences | (7 | ) | — | (7 | ) | |||||||
|
|
|
|
|
| |||||||
Ending | 1,734,103 | (1,583,368 | ) | 150,735 | ||||||||
|
|
|
|
|
| |||||||
| 2019 | ||||||||||||
| (In millions of Korean won) | Present value of defined benefit obligation | Fair value of plan assets | Net defined benefit liabilities | |||||||||
Beginning | 1,549,012 | (1,382,487 | ) | 166,525 | ||||||||
Current service cost | 151,845 | — | 151,845 | |||||||||
Past service cost | 2,276 | — | 2,276 | |||||||||
Interest expense (income) | 35,227 | (31,403 | ) | 3,824 | ||||||||
Remeasurements: | ||||||||||||
Actuarial gains or losses by experience adjustments | 10,219 | — | 10,219 | |||||||||
Actuarial gains or losses by changes in demographic assumptions | (5,128 | ) | — | (5,128 | ) | |||||||
Actuarial gains or losses by changes in financial assumptions | 42,426 | — | 42,426 | |||||||||
Return on plan assets (excluding amounts included in interest income) | — | 8,165 | 8,165 | |||||||||
Contributions by the Bank | — | (196,100 | ) | (196,100 | ) | |||||||
Payments from plans (benefit payments) | (112,516 | ) | 112,516 | — | ||||||||
Payments from the Bank | (5,323 | ) | — | (5,323 | ) | |||||||
Transfer in | 4,406 | (4,102 | ) | 304 | ||||||||
Transfer out | (2,558 | ) | 2,558 | — | ||||||||
Effect of exchange differences | 13 | — | 13 | |||||||||
|
|
|
|
|
| |||||||
Ending | 1,669,899 | (1,490,853 | ) | 179,046 | ||||||||
|
|
|
|
|
| |||||||
126
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
23.3 Details of net defined benefit liabilities as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Present value of defined benefit obligation | 1,734,103 | 1,669,899 | ||||||
Fair value of plan assets | (1,583,368 | ) | (1,490,853 | ) | ||||
|
|
|
| |||||
Net defined benefit liabilities | 150,735 | 179,046 | ||||||
|
|
|
| |||||
23.4 Details of remeasurements of net defined benefit liabilities recognized as other comprehensive income (loss) for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Remeasurements: | ||||||||
Actuarial losses by experience adjustments | (1,289 | ) | (10,219 | ) | ||||
Actuarial gains arising from changes in demographic assumptions | — | 5,128 | ||||||
Actuarial losses arising from changes in financial assumptions | — | (42,426 | ) | |||||
Return on plan assets (excluding amounts included in interest income) | (4,230 | ) | (8,165 | ) | ||||
Income tax effects | 1,518 | 15,313 | ||||||
|
|
|
| |||||
Remeasurements after income tax | (4,001 | ) | (40,369 | ) | ||||
|
|
|
| |||||
23.5 Details of fair value of plan assets as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||
| Assets quoted in an active market | Assets not quoted in an active market | Total | ||||||||||
Time deposits | — | 1,433,077 | 1,433,077 | |||||||||
Others | — | 150,291 | 150,291 | |||||||||
|
|
|
|
|
| |||||||
| — | 1,583,368 | 1,583,368 | ||||||||||
|
|
| �� |
|
| |||||||
| December 31, 2019 | ||||||||||||
| (In millions of Korean won) | Assets quoted in an active market | Assets not quoted in an active market | Total | |||||||||
Time deposits | — | 1,490,590 | 1,490,590 | |||||||||
Others | — | 263 | 263 | |||||||||
|
|
|
|
|
| |||||||
| — | 1,490,853 | 1,490,853 | ||||||||||
|
|
|
|
|
| |||||||
23.6 Details of key actuarial assumptions used as of December 31, 2020 and 2019, are as follows:
| Ratio (%) | ||||||||
| December 31, 2020 | December 31, 2019 | |||||||
Discount rate | 2.00 | 2.00 | ||||||
Salary increase rate | 3.75 | 3.75 | ||||||
Turnover | 1.00 | 1.00 | ||||||
Mortality assumptions are based on the experience-based mortality table issued by Korea Insurance Development Institute in 2019.
127
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
23.7 Sensitivity analysis results of significant actuarial assumptions as of December 31, 2020, are as follows:
| Effect on defined benefit obligation | ||||||||||||
| Changes in principal assumptions | Increase in principal assumptions | Decrease in principal assumptions | ||||||||||
Discount rate | 0.5%p | 4.09% decrease | 4.39% increase | |||||||||
Salary increase rate | 0.5%p | 4.01% increase | 3.78% decrease | |||||||||
Turnover | 0.5%p | 0.46% decrease | 0.48% increase | |||||||||
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the same projected unit credit method used in calculating the defined benefit obligations recognized in the statement of financial position.
23.8 Expected maturity analysis of undiscounted pension benefits as of December 31, 2020, are as follows:
| (In millions of Korean won) | Up to 1 year | 1~2 years | 2~5 years | 5~10 years | Over 10 years | Total | ||||||||||||||||||
Pension benefits | 59,907 | 129,286 | 494,831 | 1,009,277 | 2,643,188 | 4,336,489 | ||||||||||||||||||
The weighted average duration of the defined benefit obligations is 8.65 and 8.88 years as of December 31, 2020 and December 31, 2019, respectively.
23.9 Expected contribution to plan assets for the next annual reporting period after December 31, 2020, is estimated to be approximatelyW 154,000 million.
128
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
24. Other Liabilities
Details of other liabilities as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Other financial liabilities | ||||||||
Other payables | 3,318,876 | 3,269,885 | ||||||
Prepaid card and debit cards payables | 1,079 | 2,038 | ||||||
Accrued expenses | 1,842,926 | 2,349,313 | ||||||
Financial guarantee liabilities | 81,159 | 66,123 | ||||||
Deposits for letter of guarantees and others | 438,885 | 269,745 | ||||||
Domestic exchange settlement credits | 933,330 | 2,073,263 | ||||||
Foreign exchanges settlement credits | 134,564 | 114,316 | ||||||
Borrowings from other business accounts | — | 256 | ||||||
Due to trust accounts | 7,715,547 | 5,313,845 | ||||||
Liabilities incurred from agency relationship | 765,844 | 771,609 | ||||||
Account for agency businesses | 400,507 | 407,475 | ||||||
Lease liabilities | 342,811 | 334,037 | ||||||
Others | 57,840 | 18,265 | ||||||
|
|
|
| |||||
| 16,033,368 | 14,990,170 | |||||||
|
|
|
| |||||
Other non-financial liabilities | ||||||||
Other payables | 858,865 | 557,775 | ||||||
Unearned revenue | 42,156 | 31,826 | ||||||
Accrued expenses | 414,684 | 389,977 | ||||||
Withholding taxes | 106,671 | 116,905 | ||||||
Others | 39,390 | 64,392 | ||||||
|
|
|
| |||||
| 1,461,766 | 1,160,875 | |||||||
|
|
|
| |||||
| 17,495,134 | 16,151,045 | |||||||
|
|
|
| |||||
25. Equity
25.1 Capital Stock
Details of capital stock of the Bank as of December 31, 2020 and 2019, are as follows:
| Ordinary shares | ||||||||
| (In millions of Korean won and in number of shares) | December 31, 2020 | December 31, 2019 | ||||||
Number of authorized shares | 1,000,000,000 | 1,000,000,000 | ||||||
Par value per share (In Korean won) | 5,000 | 5,000 | ||||||
Number of issued shares | 404,379,116 | 404,379,116 | ||||||
Capital stock | 2,021,896 | 2,021,896 | ||||||
129
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
25.2 Hybrid Security
Details of hybrid security classified as equity as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Issuance date | Maturity | Interest rate (%) | December 31, 2020 | December 31, 2019 | |||||||||||||||
Amortized Conditional Capital Securities | July 2, 2019 | Permanent | 4.35 | 574,523 | 574,523 | |||||||||||||||
Above hybrid securities are early redeemable by the Bank after 5 years from the issuance date and each interest payment date thereafter.
25.3 Capital Surplus
Details of capital surplus as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Paid-in capital in excess of par value | 4,604,417 | 4,604,417 | ||||||
Gain on business combination | 397,669 | 397,669 | ||||||
Revaluation reserve | 177,229 | 177,229 | ||||||
Other capital surplus | 40,716 | 40,716 | ||||||
|
|
|
| |||||
| 5,220,031 | 5,220,031 | |||||||
|
|
|
| |||||
25.4 Accumulated Other Comprehensive Income
Details of accumulated other comprehensive income as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Remeasurements of net defined benefit liabilities | (220,068 | ) | (216,067 | ) | ||||
Exchange differences on translating foreign operations | 1,197 | 4,654 | ||||||
Net gains on debt instruments measured at fair value through other comprehensive income | 90,025 | 55,154 | ||||||
Net gains on equity instruments measured at fair value through other comprehensive income | 733,332 | 303,338 | ||||||
Losses on cash flow hedging instruments | (10,073 | ) | (3,691 | ) | ||||
|
|
|
| |||||
| 594,413 | 143,388 | |||||||
|
|
|
| |||||
130
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
25.5 Retained Earnings
25.5.1 Details of retained earnings as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Legal reserves | 2,042,402 | 2,041,625 | ||||||
Regulatory reserve for credit losses | 2,404,324 | 2,270,125 | ||||||
Voluntary reserves | 15,722,666 | 14,173,349 | ||||||
Unappropriated retained earnings | 1,879,557 | 2,416,309 | ||||||
|
|
|
| |||||
| 22,048,949 | 20,901,408 | |||||||
|
|
|
| |||||
With respect to the allocation of net profit earned in a fiscal term, the Bank must set aside in its legal reserve an amount equal to at least 10% of its profit after tax as reported in the financial statements, each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its paid-in capital in accordance with Article 40 of the Banking Act. This reserve is not available for the payment of cash dividends, but may be transferred to share capital, or used to reduce deficit. The Bank is reserving other reserves (legal reserves) in accordance with local regulation in oversea.
25.5.2 Statement of disposition of retained earnings
(Expected date of appropriation for 2020: March 25, 2021)
(Date of appropriation for 2019: March 19, 2020)
| (In millions of Korean won) | 2020 | 2019 | ||||||
Unappropriated retained earnings | ||||||||
Balance at the beginning of the year | 90 | 13,091 | ||||||
Interim dividend | (598,481 | ) | — | |||||
Dividends on hybrid securities | (25,658 | ) | — | |||||
Reclassification from AOCI to retained earnings due to sale of equity securities measured at fair value through other comprehensive income | 236,647 | (18,475 | ) | |||||
Profit for the year | 2,266,959 | 2,421,693 | ||||||
|
|
|
| |||||
| 1,879,557 | 2,416,309 | |||||||
|
|
|
| |||||
Transfers such as discretionary reserves | ||||||||
Revaluation of property and equipment | 24,685 | 1,683 | ||||||
|
|
|
| |||||
| 24,685 | 1,683 | |||||||
|
|
|
| |||||
Appropriation of retained earnings | ||||||||
Voluntary reserve | 955,900 | 1,551,000 | ||||||
Regulatory reserve for credit losses | 29,717 | 134,199 | ||||||
Cash dividends | 917,941 | 731,926 | ||||||
(Dividends per common share: | ||||||||
(Dividends per common share: | ||||||||
Other reserve | 606 | 777 | ||||||
|
|
|
| |||||
| 1,904,164 | 2,417,902 | |||||||
|
|
|
| |||||
Unappropriated retained earnings to be carried forward | 78 | 90 | ||||||
|
|
|
| |||||
131
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
25.5.3 Regulatory reserve for credit losses
Measurement and disclosure of regulatory reserve for credit losses are required in accordance with Articles 29.1 through 29.2 of Regulation on Supervision of Banking Business.
25.5.3.1 Details of regulatory reserve for credit losses as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Amount before appropriation | 2,404,324 | 2,270,125 | ||||||
Amount estimated to be appropriated | 29,717 | 134,199 | ||||||
|
|
|
| |||||
| 2,434,041 | 2,404,324 | |||||||
|
|
|
| |||||
25.5.3.2 Regulatory reserve for credit losses estimated to be appropriated and adjusted profit after provision (reversal) of regulatory reserve for credit losses for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Regulatory reserve for credit losses estimated to be appropriated | 29,717 | 134,199 | ||||||
Adjusted profit after provision of regulatory reserve for credit losses * | 2,237,242 | 2,287,494 | ||||||
| * | Adjusted profit after provision (reversal) of regulatory reserve for credit losses is not based on Korean IFRS; this is calculated reflecting provision (reversal) of the reserve for credit losses before tax to the net profit. |
132
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
26. Net Interest Income
Details of interest income, expense, and net interest income for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Interest income | ||||||||
Securities measured at fair value through profit or loss | 79,117 | 97,912 | ||||||
Loans measured at fair value through profit or loss | 1,596 | 9,686 | ||||||
Securities measured at fair value through other comprehensive income | 489,649 | 593,977 | ||||||
Loans measured at fair value through other comprehensive income | 6,161 | 13,670 | ||||||
Due from financial institutions measured at amortized cost | 14,440 | 28,231 | ||||||
Securities measured at amortized cost | 273,451 | 299,188 | ||||||
Loans measured at amortized cost | 8,663,309 | 9,357,154 | ||||||
Others | 190,966 | 133,924 | ||||||
|
|
|
| |||||
| 9,718,689 | 10,533,742 | |||||||
|
|
|
| |||||
Interest expense | ||||||||
Deposits | 2,578,757 | 3,314,115 | ||||||
Borrowings | 234,939 | 334,022 | ||||||
Debentures | 408,319 | 491,537 | ||||||
Others | 57,818 | 104,024 | ||||||
|
|
|
| |||||
| 3,279,833 | 4,243,698 | |||||||
|
|
|
| |||||
Net interest income | 6,438,856 | 6,290,044 | ||||||
|
|
|
| |||||
Interest income recognized on impaired loans isW 21,752 million andW 22,993 million for the years ended December 31, 2020 and 2019, respectively.
133
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
27. Net Fee and Commission Income
Details of fee and commission income, expense and net fee and commission income for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Fee and commission income | ||||||||
Banking activity fees | 196,196 | 221,600 | ||||||
Lending activity fees | 85,547 | 76,481 | ||||||
Credit card related fees | 744 | 920 | ||||||
Debit card related fees | 497 | 594 | ||||||
Agent activity fees | 320,783 | 321,426 | ||||||
Trust and other fiduciary fees | 248,913 | 325,467 | ||||||
Acceptances and guarantees fees | 46,412 | 39,000 | ||||||
Foreign currency related fees | 90,604 | 94,678 | ||||||
Security activity commissions | 153,530 | 128,918 | ||||||
Other business account commission on consignment | 40,461 | 36,813 | ||||||
Others | 271,920 | 259,446 | ||||||
|
|
|
| |||||
| 1,455,607 | 1,505,343 | |||||||
|
|
|
| |||||
Fee and commission expense | ||||||||
Trading activity related fees * | 12,697 | 12,773 | ||||||
Lending activity fees | 41,105 | 31,613 | ||||||
Credit card related fees | 27,087 | 29,303 | ||||||
Outsourcing related fees | 98,459 | 95,952 | ||||||
Foreign currency related fees | 15,372 | 21,128 | ||||||
Management fees of written-off loans | 15,523 | 15,140 | ||||||
Contributions to external institutions | 24,016 | 24,558 | ||||||
Others | 116,098 | 107,284 | ||||||
|
|
|
| |||||
| 350,357 | 337,751 | |||||||
|
|
|
| |||||
Net fee and commission income | 1,105,250 | 1,167,592 | ||||||
|
|
|
| |||||
| * | Fees from financial instruments at fair value through profit or loss. |
134
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
28. Net Gains or Losses on Financial Instruments at Fair Value through Profit or Loss
Net gains or losses on financial instruments at fair value through profit or loss include dividend income and gains or losses arising from changes in fair values, sales and redemptions.
Details of net gains or losses on financial instruments at fair value through profit or loss for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Gains on financial instruments at fair value through profit or loss | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Debt securities | 373,030 | 250,939 | ||||||
Equity securities | 8,384 | 7,041 | ||||||
|
|
|
| |||||
| 381,414 | 257,980 | |||||||
|
|
|
| |||||
Derivatives held for trading | ||||||||
Interest rate | 1,548,363 | 1,674,203 | ||||||
Currency | 7,591,030 | 4,959,840 | ||||||
Stock or stock index | 24,861 | 241 | ||||||
Others | 964 | 938 | ||||||
|
|
|
| |||||
| 9,165,218 | 6,635,222 | |||||||
|
|
|
| |||||
Financial liabilities at fair value through profit or loss | 279 | 394 | ||||||
Other financial instruments | 689 | 5,810 | ||||||
|
|
|
| |||||
| 9,547,600 | 6,899,406 | |||||||
|
|
|
| |||||
Losses on financial instruments at fair value through profit or loss | ||||||||
Financial assets at fair value through profit or loss | ||||||||
Debt securities | 73,766 | 42,520 | ||||||
Equity securities | 1,098 | 1,274 | ||||||
|
|
|
| |||||
| 74,864 | 43,794 | |||||||
|
|
|
| |||||
Derivatives held for trading | ||||||||
Interest rate | 1,615,062 | 1,738,161 | ||||||
Currency | 7,520,881 | 4,689,543 | ||||||
Stock or stock index | 417 | 163 | ||||||
Others | 163 | 435 | ||||||
|
|
|
| |||||
| 9,136,523 | 6,428,302 | |||||||
|
|
|
| |||||
Financial liabilities at fair value through profit or loss | 416 | 466 | ||||||
Other financial instruments | 116 | 5,704 | ||||||
|
|
|
| |||||
| 9,211,919 | 6,478,266 | |||||||
|
|
|
| |||||
Net gains on financial instruments at fair value through profit or loss | 335,681 | 421,140 | ||||||
|
|
|
| |||||
135
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
29. Net Other Operating Income and Expenses
Details of other operating income and expenses for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Other operating income | ||||||||
Gains related to financial assets at fair value through other comprehensive income | ||||||||
Gains on redemption of the securities measured at fair value through other comprehensive income | 279 | 524 | ||||||
Gains on sale of the securities measured at fair value through other comprehensive income | 187,551 | 99,195 | ||||||
|
|
|
| |||||
Gains related to financial assets at amortized cost | ||||||||
Gains on sale of loans measured at amortized cost | 93,633 | 19,346 | ||||||
Gains on foreign exchange transactions | 2,239,135 | 1,533,125 | ||||||
Dividend income | 29,766 | 43,116 | ||||||
Others | 183,508 | 183,634 | ||||||
|
|
|
| |||||
| 2,733,872 | 1,878,940 | |||||||
|
|
|
| |||||
Other operating expenses | ||||||||
Losses related to financial assets at fair value through other comprehensive income | ||||||||
Losses on redemption of the securities measured at fair value through other comprehensive income | 248 | — | ||||||
Losses on sale of the securities measured at fair value through other comprehensive income | 7,309 | 4,195 | ||||||
|
|
|
| |||||
Losses related to financial assets at amortized cost | ||||||||
Losses on sale of loans measured at amortized cost | 10,278 | 15,015 | ||||||
Losses on foreign exchanges transactions | 1,900,996 | 1,486,762 | ||||||
Deposit insurance fee | 442,368 | 405,055 | ||||||
Credit guarantee fund fee | 242,213 | 213,908 | ||||||
Others | 352,047 | 348,579 | ||||||
|
|
|
| |||||
| 2,955,459 | 2,473,514 | |||||||
|
|
|
| |||||
Net other operating expenses | (221,587 | ) | (594,574 | ) | ||||
|
|
|
| |||||
136
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
30. General and Administrative Expenses
30.1 Details of general and administrative expenses for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Employee Benefits | ||||||||
Salaries and short-term employee benefits - salaries | 1,520,805 | 1,475,076 | ||||||
Salaries and short-term employee benefits - welfare expense | 652,569 | 635,145 | ||||||
Post-employment benefits - defined benefit plans | 159,385 | 157,946 | ||||||
Post-employment benefits - defined contribution plans | 9,807 | 7,220 | ||||||
Termination benefits | 302,118 | 213,749 | ||||||
Share-based payments | 13,364 | 15,173 | ||||||
|
|
|
| |||||
| 2,658,048 | 2,504,309 | |||||||
|
|
|
| |||||
Depreciation and amortization | 541,435 | 498,480 | ||||||
|
|
|
| |||||
Other general and administrative expenses | ||||||||
Rental expense | 62,775 | 61,686 | ||||||
Tax and dues | 129,091 | 125,588 | ||||||
Communication | 28,656 | 25,934 | ||||||
Electricity and utilities | 23,543 | 22,236 | ||||||
Publication | 7,567 | 8,858 | ||||||
Repairs and maintenance | 11,361 | 11,963 | ||||||
Vehicle | 5,696 | 6,625 | ||||||
Travel | 1,798 | 4,693 | ||||||
Training | 12,938 | 19,031 | ||||||
Service fees | 122,802 | 122,508 | ||||||
Supplies | 23,300 | 19,258 | ||||||
IT cost | 160,021 | 153,046 | ||||||
Others | 238,736 | 267,759 | ||||||
|
|
|
| |||||
| 828,284 | 849,185 | |||||||
|
|
|
| |||||
| 4,027,767 | 3,851,974 | |||||||
|
|
|
| |||||
137
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
30.2 Share-based Payments
30.2.1 Stock grants
The Bank changed the scheme of share-based payments from stock options to stock grants in November 2007. The stock grants award program is an incentive plan that sets, on grant date, the maximum number of shares that can be awarded. Actual shares to be granted is determined in accordance with achievement of pre-set performance targets over the vesting period.
30.2.1.1 Details of stock grants linked to long-term performance as of December 31, 2020, are as follows:
| (In number of shares) | ||||||||||
Stock grants | Grant date | Number of granted shares 1 | Vesting conditions 2 | |||||||
Series 75 | 2019-01-01 | 154,996 | Services fulfillment, TSR 0~50%, Company and work performance 50~100% | |||||||
Series 76 | 2019-04-01 | 5,380 | Services fulfillment, TSR 30~50%, Company and work performance 50~70% | |||||||
Series 77 | 2019-05-27 | 4,468 | Services fulfillment, TSR 30~50%, Company and work performance 50~70% | |||||||
Series 78 | 2019-11-21 | 36,443 | Services fulfillment, TSR 30%, EPS and Asset Quality 70% | |||||||
Series 79 | 2020-01-01 | 241,609 | Services fulfillment, TSR 0~50%, Company and work performance 50~100% | |||||||
Series 80 | 2020-03-01 | 7,711 | Services fulfillment, TSR 30~50%, Company and work performance 50~70% | |||||||
Deferred grant in 2015 | — | 2,759 | ||||||||
Deferred grant in 2016 | — | 19,109 | ||||||||
Deferred grant in 2017 | — | 47,863 | ||||||||
Deferred grant in 2018 | — | 65,514 | ||||||||
Deferred grant in 2019 | — | 98,194 | ||||||||
|
| |||||||||
| 684,046 | ||||||||||
|
| |||||||||
| 1 | Granted shares represent the total number of shares initially granted to executives and employees who have residual shares as of December 31, 2020 (Deferred grants are residual shares vested as of December 31, 2020). |
| 2 | Executives and employees were given the option of deferred payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement after the deferred grant has been confirmed. |
138
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
30.2.1.2 Details of stock grants linked to short-term performance as of December 31, 2020, are as follows:
| (In number of shares) | ||||||||||
Stock grants * | Grant date | Estimated number of vested shares | Vesting conditions | |||||||
Stock granted in 2015 | 2015-01-01 | 9,887 | Vested | |||||||
Stock granted in 2016 | 2016-01-01 | 19,662 | Vested | |||||||
Stock granted in 2017 | 2017-01-01 | 30,003 | Vested | |||||||
Stock granted in 2018 | 2018-01-01 | 73,989 | Vested | |||||||
Stock granted in 2019 | 2019-01-01 | 125,530 | Vested | |||||||
Stock granted in 2020 | 2020-01-01 | 121,676 | Proportion to service period | |||||||
| * | Executives and employees were given the option of deferred payment of the granted shares (after the date of retirement), payment ratio and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement after the deferred grant has been confirmed. |
30.2.1.3 Stock grants are measured at fair value using the MonteCarlo Simulation Model and assumptions used in determining the fair value as of December 31, 2020, are as follows:
| (In Korean won) | Expected exercise period (years) | Risk-free rate (%) | Fair value (market performance condition) | Fair value (non-market performance condition) | ||||||||||
Series 75 | 0.00~3.00 | 0.74% | 38,789~45,096 | 38,789~45,096 | ||||||||||
Series 76 | 0.25~4.00 | 0.74% | 37,324~41,899 | 37,324~41,899 | ||||||||||
Series 77 | 0.40~4.00 | 0.74% | 37,324~41,899 | 37,324~41,899 | ||||||||||
Series 78 | 0.89~4.00 | 0.74% | 36,370~40,828 | 37,324~41,899 | ||||||||||
Series 79 | 1.00~4.00 | 0.74% | 37,324~45,096 | 37,324~45,096 | ||||||||||
Series 80 | 1.16~5.00 | 0.74% | 35,895~40,299 | 35,895~40,299 | ||||||||||
Grant deferred in 2015 | 0.00~1.00 | 0.74% | — | 41,899~45,096 | ||||||||||
Grant deferred in 2016 | 0.00~3.00 | 0.74% | — | 38,789~45,096 | ||||||||||
Grant deferred in 2017 | 0.00~3.00 | 0.74% | — | 38,789~45,096 | ||||||||||
Grant deferred in 2018 | 0.00~3.00 | 0.74% | — | 38,789~45,096 | ||||||||||
Grant deferred in 2019 | 0.00~2.00 | 0.74% | — | 40,299~45,096 | ||||||||||
Stock granted in 2015 | 0.00~3.00 | 0.74% | — | 38,789~47,153 | ||||||||||
Stock granted in 2016 | 0.00~4.00 | 0.74% | — | 37,324~61,294 | ||||||||||
Stock granted in 2017 | 0.00~3.00 | 0.74% | — | 38,789~47,631 | ||||||||||
Stock granted in 2018 | 0.00~3.00 | 0.74% | — | 38,789~47,631 | ||||||||||
Stock granted in 2019 | 0.00~2.00 | 0.74% | — | 40,299~45,096 | ||||||||||
Stock granted in 2020 | 1.00~3.00 | 0.74% | — | 38,789~41,899 | ||||||||||
The Bank used the volatility of the stock price over the previous year as the expected volatility, and used the arithmetic mean of the dividend rate of one year before, two years before, and three years before the base year as the dividend rate, and used one-year risk-free rate of Korea Treasury Bond in order to calculate fair value.
30.2.1.4 The accrued expenses for share-based payments related to stock grants areW 39,499 million andW 41,344 million as of December 31, 2020 and 2019, respectively, and the compensation costs from stock grants amounting toW 13,364 million andW 15,173 million were recognized for the years ended December 31, 2020 and 2019, respectively.
139
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
30.2.2 Mileage stock
30.2.2.1 Details of mileage stock as of December 31, 2020, are as follows:
| (In number of shares) | Grant date | Number of granted shares 1 | Expected exercise period (years) 2 | Remaining shares | ||||||||||||
Stock granted in 2018 | ||||||||||||||||
| Jan. 10, 2018 | 19,197 | 0.00~0.02 | 13,522 | |||||||||||||
| Feb. 12, 2018 | 9 | 0.00~0.12 | 3 | |||||||||||||
| Apr. 02, 2018 | 115 | 0.00~0.25 | 82 | |||||||||||||
| Apr. 30, 2018 | 86 | 0.00~0.33 | 49 | |||||||||||||
| May 08, 2018 | 170 | 0.00~0.35 | 140 | |||||||||||||
| Jun. 01, 2018 | 140 | 0.00~0.41 | 106 | |||||||||||||
| Jul. 02, 2018 | 180 | 0.00~0.50 | 123 | |||||||||||||
| Aug. 07, 2018 | 194 | 0.00~0.60 | 149 | |||||||||||||
| Aug. 09, 2018 | 47 | 0.00~0.60 | 31 | |||||||||||||
| Aug. 14, 2018 | 30 | 0.00~0.62 | 26 | |||||||||||||
| Aug. 16, 2018 | 130 | 0.00~0.62 | 93 | |||||||||||||
| Sep. 07, 2018 | 106 | 0.00~0.68 | 77 | |||||||||||||
| Oct. 04, 2018 | 129 | 0.00~0.76 | 78 | |||||||||||||
| Nov. 01, 2018 | 258 | 0.00~0.83 | 200 | |||||||||||||
| Nov. 06, 2018 | 236 | 0.00~0.85 | 168 | |||||||||||||
| Dec. 03, 2018 | 132 | 0.00~0.92 | 127 | |||||||||||||
| Dec. 04, 2018 | 21 | 0.00~0.92 | 21 | |||||||||||||
| Dec. 07, 2018 | 91 | 0.00~0.93 | 78 | |||||||||||||
| Dec. 12, 2018 | 64 | 0.00~0.95 | 32 | |||||||||||||
| Dec. 18, 2018 | 271 | 0.00~0.96 | 237 | |||||||||||||
| Dec. 19, 2018 | 42 | 0.00~0.96 | 34 | |||||||||||||
| Dec. 31, 2018 | 127 | 0.00~1.00 | 106 | |||||||||||||
Stock granted in 2019 | ||||||||||||||||
| Jan. 11, 2019 | 26,580 | 0.00~1.03 | 21,231 | |||||||||||||
| Feb. 01, 2019 | 12 | 0.00~1.08 | 8 | |||||||||||||
| Apr. 01, 2019 | 167 | 0.00~1.25 | 96 | |||||||||||||
| Apr. 18, 2019 | 105 | 0.00~1.29 | 81 | |||||||||||||
| Apr. 22, 2019 | 33 | 0.00~1.30 | 33 | |||||||||||||
| Jul. 01, 2019 | 109 | 0.00~1.50 | 87 | |||||||||||||
| Aug. 29, 2019 | 39 | 0.00~1.66 | 39 | |||||||||||||
| Sep. 02, 2019 | 50 | 0.00~1.67 | 50 | |||||||||||||
| Nov. 01, 2019 | 119 | 0.00~1.83 | 95 | |||||||||||||
| Nov. 08, 2019 | 14 | 0.00~1.85 | 14 | |||||||||||||
| Dec. 05, 2019 | 56 | 0.00~1.93 | 54 | |||||||||||||
| Dec. 06, 2019 | 84 | 0.00~1.93 | 84 | |||||||||||||
| Dec. 31, 2019 | 87 | 0.00~2.00 | 87 | |||||||||||||
Stock granted in 2020 | ||||||||||||||||
| Jan. 18, 2020 | 28,645 | 0.00~2.05 | 27,672 | |||||||||||||
| May 12, 2020 | 46 | 0.00~2.36 | 46 | |||||||||||||
| Jun. 30, 2020 | 206 | 0.00~2.50 | 206 | |||||||||||||
| Aug. 26, 2020 | 40 | 0.00~2.65 | 40 | |||||||||||||
| Oct. 29, 2020 | 160 | 0.00~2.83 | 160 | |||||||||||||
| Nov. 6, 2020 | 45 | 0.00~2.85 | 45 | |||||||||||||
| Nov. 30, 2020 | 35 | 0.00~2.92 | 35 | |||||||||||||
| Dec. 2, 2020 | 57 | 0.00~2.92 | 57 | |||||||||||||
| Dec. 4, 2020 | 154 | 0.00~2.93 | 154 | |||||||||||||
| Dec. 30, 2020 | 88 | 0.00~3.00 | 88 | |||||||||||||
|
|
|
| |||||||||||||
| 78,706 | 65,944 | |||||||||||||||
|
|
|
| |||||||||||||
140
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| 1 | Mileage stock is exercisable for two years after one year from the grant date. When the mileage stock is exercised, the closing price of prior month is applied. However, in case of transfer or retirement during the vesting period, mileage stock is exercisable at the closing price of the last month prior to transfer or retirement. |
| 2 | The shares are assessed based on the stock price as of December 31, 2020. These shares are vested immediately at grant date. |
30.2.2.2 The accrued expenses for share-based payments related to mileage stock as of December 31, 2020 and 2019, areW 2,862 million andW 2,705 million, respectively. The compensation costs amounting toW 1,086 million andW 1,334 million were recognized as expenses for the years ended December 31, 2020 and 2019, respectively.
31. Non-Operating Income and Expenses
Details of non-operating income and expenses for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Non-operating income | ||||||||
Gains on disposal of property and equipment and assets held for sale | 35,785 | 3,340 | ||||||
Rental income | 13,411 | 9,557 | ||||||
Dividend income from subsidiaries and associates | 58,095 | 14,266 | ||||||
Others | 22,700 | 57,259 | ||||||
|
|
|
| |||||
| 129,991 | 84,422 | |||||||
|
|
|
| |||||
Non-operating expenses | ||||||||
Losses on disposal of property and equipment and assets held for sale | 2,069 | 4,572 | ||||||
Donation | 88,184 | 84,211 | ||||||
Restoration costs | 2,413 | 3,017 | ||||||
Others * | 116,548 | 27,258 | ||||||
|
|
|
| |||||
| 209,214 | 119,058 | |||||||
|
|
|
| |||||
Net non-operating expenses | (79,223 | ) | (34,636 | ) | ||||
|
|
|
| |||||
| * | Includes impairment loss on PT Bank Bukopin TBK amounting to |
141
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
32. Income Tax Expense
32.1 Details of income tax expense for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Tax payable | ||||||||
Current tax expense | 1,006,114 | 788,809 | ||||||
Adjustments of tax of prior years recognized in current tax | (19,390 | ) | (24,034 | ) | ||||
|
|
|
| |||||
| 986,724 | 764,775 | |||||||
|
|
|
| |||||
Changes in deferred income tax assets and liabilities | 122,309 | 122,345 | ||||||
Income tax expense of overseas branches | 15,795 | 8,615 | ||||||
Income tax recognized directly in equity | ||||||||
Net gains or losses on debt instruments at fair value through other comprehensive income | (13,227 | ) | (12,709 | ) | ||||
Remeasurements of net defined benefit liabilities | 1,518 | 15,313 | ||||||
Net gains or losses on equity instruments at fair value through other comprehensive income | (163,101 | ) | (502 | ) | ||||
Gains or losses on cash flow hedging instruments | 2,421 | 5,777 | ||||||
|
|
|
| |||||
| (172,389 | ) | 7,879 | ||||||
|
|
|
| |||||
Reclassification from AOCI to retained earnings due to sale of equity securities measured at fair value through other comprehensive income | (89,763 | ) | 7,007 | |||||
Consolidated tax return effect | (39,238 | ) | (37,692 | ) | ||||
|
|
|
| |||||
Income tax expense | 823,438 | 872,929 | ||||||
|
|
|
| |||||
32.2 Analysis of the net profit before income tax and income tax expense for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Profit before income tax | 3,090,397 | 3,294,622 | ||||||
Tax at the applicable tax rate * | 839,631 | 895,702 | ||||||
Non-taxable income | (9,537 | ) | (4,035 | ) | ||||
Non-deductible expense | 6,960 | 12,174 | ||||||
Tax credit and tax exemption | (1,197 | ) | (381 | ) | ||||
Temporary difference for which no deferred tax is recognized | 31,173 | 1,253 | ||||||
Income tax refund for tax of prior years | (27,913 | ) | (9,938 | ) | ||||
Income tax expense of overseas branch | 15,795 | 8,615 | ||||||
Consolidated tax return effect | (39,238 | ) | (37,692 | ) | ||||
Others | 7,764 | 7,231 | ||||||
|
|
|
| |||||
Income tax expense | 823,438 | 872,929 | ||||||
|
|
|
| |||||
Income tax expense/Profit before income tax (%) | 26.65 | 26.50 | ||||||
| * | Applicable income tax rate for |
142
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
32.3 Details of current tax liabilities (income tax payables) and current tax assets (income tax refund receivables) before offsetting as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Tax payables after offsetting 1, 2 | 571,244 | 404,370 | ||||||
Adjustment on consolidated tax payable and others 3 | (39,238 | ) | (37,692 | ) | ||||
Consolidated tax return accounts payables 4 | (528,044 | ) | (359,864 | ) | ||||
|
|
|
| |||||
Current tax payable | 3,962 | 6,814 | ||||||
|
|
|
| |||||
| 1 | Current tax assets of |
| 2 | Includes income tax payable of |
| 3 | Tax expense reduced due to the adoption of consolidated tax return was recognized as tax benefit. |
| 4 | The amount of income tax payable is reclassified as accounts payable, not to the tax authority, but to KB Financial Group Inc. due to the adoption of consolidated tax return. |
33. Dividends
The year-end dividend to the shareholder of the Bank for the year ended December 31, 2020, ofW 2,270 per share (total dividend:W 917,941 million), is to be proposed at the annual general shareholder’s meeting on March 25, 2021. The Bank’s financial statements as of December 31, 2020, do not reflect this dividend payable. According to the resolution of the board of directors on August 27, 2020, the interim dividend per share ofW 1,480 (total dividend:W 598,481 million) was decided and paid in August 2020.
143
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
34. Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Changes (excluding reclassification) | Reclassification to profit or loss | Tax effect | Transfer to retained earnings | Ending | ||||||||||||||||||
Remeasurements of net defined benefit liabilities | (216,067 | ) | (5,519 | ) | — | 1,518 | — | (220,068 | ) | |||||||||||||||
Exchange differences on translating foreign operations | 4,654 | (3,457 | ) | — | — | — | 1,197 | |||||||||||||||||
Net gains on debt instruments measured at fair value through other comprehensive income | 55,154 | 133,341 | (85,243 | ) | (13,227 | ) | — | 90,025 | ||||||||||||||||
Net gains on equity instruments measured at fair value through other comprehensive income | 303,338 | 919,505 | — | (163,101 | ) | (326,410 | ) | 733,332 | ||||||||||||||||
Losses on cash flow hedging instruments | (3,691 | ) | (10,553 | ) | 1,750 | 2,421 | — | (10,073 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 143,388 | 1,033,317 | (83,493 | ) | (172,389 | ) | (326,410 | ) | 594,413 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2019 | ||||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Changes (excluding reclassification) | Reclassification to profit or loss | Tax effect | Transfer to retained earnings | Ending | ||||||||||||||||||
Remeasurements of net defined benefit liabilities | (175,698 | ) | (55,682 | ) | — | 15,313 | — | (216,067 | ) | |||||||||||||||
Exchange differences on translating foreign operations | 3,873 | 781 | — | — | — | 4,654 | ||||||||||||||||||
Net gains on debt instruments measured at fair value through other comprehensive income | 21,648 | 97,455 | (51,240 | ) | (12,709 | ) | — | 55,154 | ||||||||||||||||
Net gains on equity instruments measured at fair value through other comprehensive income | 302,014 | (23,657 | ) | — | (502 | ) | 25,483 | 303,338 | ||||||||||||||||
Gains (losses) on cash flow hedging instruments | 11,539 | (18,108 | ) | (2,899 | ) | 5,777 | — | (3,691 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 163,376 | 789 | (54,139 | ) | 7,879 | 25,483 | 143,388 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
144
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
35. Trust Accounts
35.1 Financial information of the trust accounts the Bank manages, as of December 31, 2020 and 2019, and for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Total assets | Operating revenues | ||||||||||||||
| December 31, 2020 | December 31, 2019 | 2020 | 2019 | |||||||||||||
Consolidated | 4,460,439 | 4,384,959 | 138,422 | 137,017 | ||||||||||||
Unconsolidated | 54,197,612 | 51,685,885 | 1,872,611 | 2,206,184 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 58,658,051 | 56,070,844 | 2,011,033 | 2,343,201 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Financial information of the trust accounts has been prepared in accordance with the Statement of Korea Accounting Standard No.5004, Trust Accounts, and enforcement regulations of the Financial Investment Services under the Financial Investment Services and Capital Markets Act. |
35.2 Significant receivables and payables related to the Bank’s trust accounts as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Trust Segment | Assets | |||||||||
Accrued trust fees | 63,833 | 60,946 | ||||||||
Other accrued income | 21,898 | 23,976 | ||||||||
|
|
|
| |||||||
| 85,731 | 84,922 | |||||||||
|
|
|
| |||||||
| Liabilities | ||||||||||
Due to trust accounts | 2,593,972 | 1,365,786 | ||||||||
Accrued interest on due to trust accounts | 5,195 | 7,267 | ||||||||
Deposits | 284,971 | 278,975 | ||||||||
Accrued interest on deposits | 811 | 2,481 | ||||||||
|
|
|
| |||||||
| 2,884,949 | 1,654,509 | |||||||||
|
|
|
| |||||||
Custody Segment | Assets | |||||||||
Accrued trust fees | 6,465 | 6,387 | ||||||||
| Liabilities | ||||||||||
Due to trust accounts | 5,121,575 | 3,948,059 | ||||||||
Accrued interest on due to trust accounts | 1,124 | 3,055 | ||||||||
|
|
|
| |||||||
| 5,122,699 | 3,951,114 | |||||||||
|
|
|
| |||||||
145
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
35.3 Significant revenues and expenses related to the Bank’s trust accounts for the years ended December 31, 2020 and 2019, are as follows:
(In millions of Korean won) | 2020 | 2019 | ||||||||
Trust Segment | Revenues | |||||||||
Fees and commissions from trust accounts | 215,963 | 294,368 | ||||||||
Management fees and commissions from retirement pension | 22,238 | 25,741 | ||||||||
Commissions from early termination in trust accounts | 45 | 119 | ||||||||
|
|
|
| |||||||
| 238,246 | 320,228 | |||||||||
|
|
|
| |||||||
| Expenses | ||||||||||
Interest expenses on due to trust accounts | 11,697 | 23,119 | ||||||||
Interest expenses on deposits | 4,013 | 12,926 | ||||||||
|
|
|
| |||||||
| 15,710 | 36,045 | |||||||||
|
|
|
| |||||||
Custody Segment | Revenues | |||||||||
Fees and commissions from trust accounts | 32,950 | 31,099 | ||||||||
| Expenses | ||||||||||
Interest expenses on due to trust accounts | 19,987 | 45,191 | ||||||||
35.4 Details of carrying amounts of the trust accounts for which the Bank guarantees payment of principal or payment of principal and fixed rate of return as of December 31, 2020 and 2019, are as follows:
(In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Trust accounts guaranteeing repayment of principal | Old age pension | 1,623 | 1,724 | |||||||
Personal pension | 1,900,570 | 1,895,981 | ||||||||
Pension | 2,406,931 | 2,333,799 | ||||||||
Retirement | 8,711 | 9,180 | ||||||||
New personal pension | 90,016 | 91,535 | ||||||||
New old age pension | 3,934 | 4,222 | ||||||||
Retail | 11,345 | 12,133 | ||||||||
Corporate | 1,317 | 1,315 | ||||||||
Installment | 15,571 | 16,622 | ||||||||
|
|
|
| |||||||
| 4,440,018 | 4,366,511 | |||||||||
|
|
|
| |||||||
Trust accounts guaranteeing repayment of principal and fixed rate of return | Development money | 20,328 | 18,356 | |||||||
Unspecified monetary | 93 | 92 | ||||||||
|
|
|
| |||||||
| 20,421 | 18,448 | |||||||||
|
|
|
| |||||||
| 4,460,439 | 4,384,959 | |||||||||
|
|
|
| |||||||
| * | Financial information of the trust accounts has been prepared in accordance with the Statement of Korea Accounting Standard 5004, Trust Accounts, and enforcement regulations of the Financial Investment Services under the Financial Investment Services and Capital Markets Act. |
146
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
There is no amount the Bank has to pay in relation to the management results of the trust accounts in accordance with the guarantees of payment of principal or payment of principal and fixed rate of return as of December 31, 2010 and 2019.
36. Statement of Cash Flow
36.1 Details of cash and cash equivalents as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Cash | 2,331,735 | 2,306,220 | ||||||
Checks with other banks | 327,781 | 383,501 | ||||||
Due from the Bank of Korea | 11,649,551 | 8,336,097 | ||||||
Due from other financial institutions | 3,679,974 | 2,067,187 | ||||||
|
|
|
| |||||
| 17,989,041 | 13,093,005 | |||||||
|
|
|
| |||||
Restricted due from financial institutions | (12,102,908 | ) | (8,497,052 | ) | ||||
Due from financial institutions with original maturities over three months | (101,406 | ) | (50,321 | ) | ||||
|
|
|
| |||||
| (12,204,314 | ) | (8,547,373 | ) | |||||
|
|
|
| |||||
| 5,784,727 | 4,545,632 | |||||||
|
|
|
| |||||
36.2 Significant non-cash transactions for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Decrease in loans due to write-offs | 528,003 | 539,584 | ||||||
Changes in accumulated other comprehensive income from valuation of debt securities measured at fair value through other comprehensive income | 34,871 | 33,506 | ||||||
Changes in accumulated other comprehensive income from valuation of equity securities measured at fair value through other comprehensive income | 429,994 | (11,713) | ||||||
Changes in financial investments due to debt-for-equity swap | 13,820 | 88,958 | ||||||
36.3 Cash inflows and outflows from income tax, interest and dividends for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Activities | 2020 | 2019 | |||||||||
Income tax paid | Operating | 799,121 | 955,973 | |||||||||
Interest received | Operating | 10,069,018 | 10,734,648 | |||||||||
Interest paid | Operating | 3,754,830 | 4,182,876 | |||||||||
Dividends received | Operating | 173,045 | 117,052 | |||||||||
Dividends paid | Financing | 1,330,407 | 667,226 | |||||||||
Interest (dividends) paid on hybrid securities | Financing | 25,658 | — | |||||||||
147
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
36.4 Changes in liabilities arising from financial activities for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | Derivatives held for hedging * | Borrowings | Debentures | Due to trust account | Lease liabilities | Deposits for letter of guarantees | Total | |||||||||||||||||||||
Beginning | (114,590 | ) | 18,706,328 | 17,142,392 | 5,313,845 | 334,037 | 269,745 | 41,651,757 | ||||||||||||||||||||
Cash flow | (16,202 | ) | 6,965,556 | 7,846,543 | 2,401,701 | (160,515 | ) | 169,051 | 17,206,134 | |||||||||||||||||||
New lease and termination | — | — | — | — | 162,982 | — | 162,982 | |||||||||||||||||||||
Exchange differences | — | (572,056 | ) | (324,375 | ) | — | — | — | (896,431 | ) | ||||||||||||||||||
Changes in fair values | (36,017 | ) | — | 12,018 | — | — | — | (23,999 | ) | |||||||||||||||||||
Other changes from non-cash transactions | 23,969 | (181 | ) | 14,098 | — | 6,307 | 90 | 44,283 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Ending | (142,840 | ) | 25,099,647 | 24,690,676 | 7,715,546 | 342,811 | 438,886 | 58,144,726 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 2019 | ||||||||||||||||||||||||||||
| (In millions of Korean won) | Derivatives held for hedging * | Borrowings | Debentures | Due to trust account | Lease liabilities | Deposits for letter of guarantees | Total | |||||||||||||||||||||
Beginning | 14,643 | 17,411,985 | 21,799,084 | 5,403,198 | 327,102 | 148,031 | 45,104,043 | |||||||||||||||||||||
Cash flow | (28,631 | ) | 955,745 | (4,794,761 | ) | (89,353 | ) | (158,547 | ) | 121,698 | (3,993,849 | ) | ||||||||||||||||
New lease and termination | — | — | — | — | 158,122 | — | 158,122 | |||||||||||||||||||||
Exchange differences | — | 338,019 | 56,463 | — | — | — | 394,482 | |||||||||||||||||||||
Changes in fair values | (108,220 | ) | — | 67,297 | — | — | — | (40,923 | ) | |||||||||||||||||||
Other changes from non-cash transactions | 7,618 | 579 | 14,309 | — | 7,360 | 16 | 29,882 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Ending | (114,590 | ) | 18,706,328 | 17,142,392 | 5,313,845 | 334,037 | 269,745 | 41,651,757 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| * | Derivatives held for hedging purposes are the net amount after offsetting liabilities from assets. |
148
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
37. Contingent Liabilities and Commitments
37.1 Details of acceptances and guarantees as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Confirmed acceptances and guarantees | ||||||||
Confirmed acceptances and guarantees in Korean won | ||||||||
Acceptances and guarantees for KB purchasing loan | 144,457 | 161,314 | ||||||
Performance bond | 3,476 | 3,686 | ||||||
Refund guarantees | 27,811 | 28,021 | ||||||
Others | 1,017,561 | 715,116 | ||||||
|
|
|
| |||||
| 1,193,305 | 908,137 | |||||||
|
|
|
| |||||
Confirmed acceptances and guarantees in foreign currencies | ||||||||
Acceptances of letter of credit | 220,895 | 155,151 | ||||||
Letter of guarantees | 45,693 | 49,754 | ||||||
Bid bond | 72,037 | 37,765 | ||||||
Performance bond | 703,826 | 718,097 | ||||||
Refund guarantees | 801,445 | 1,022,646 | ||||||
Others | 2,523,690 | 2,878,210 | ||||||
|
|
|
| |||||
| 4,367,586 | 4,861,623 | |||||||
|
|
|
| |||||
Financial guarantees | ||||||||
Acceptances and guarantees for issuance of debenture | 10,040 | — | ||||||
Acceptances and guarantees for mortgage | 89,302 | 47,384 | ||||||
Overseas debt guarantees | 498,184 | 581,438 | ||||||
International financing guarantees in foreign currencies | 197,097 | 231,686 | ||||||
Other financial guarantees in Korean won | 50,950 | 230,000 | ||||||
|
|
|
| |||||
| 845,573 | 1,090,508 | |||||||
|
|
|
| |||||
| 6,406,464 | 6,860,268 | |||||||
|
|
|
| |||||
Unconfirmed acceptances and guarantees | ||||||||
Guarantees of letter of credit | 2,065,651 | 1,826,028 | ||||||
Refund guarantees | 344,112 | 654,496 | ||||||
|
|
|
| |||||
| 2,409,763 | 2,480,524 | |||||||
|
|
|
| |||||
| 8,816,227 | 9,340,792 | |||||||
|
|
|
| |||||
149
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
37.2 Credit quality of the acceptances and guarantees exposure as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | 12 -month expected credit losses | Lifetime expected credit losses | Total | |||||||||||||
| Non-impaired | Impaired | |||||||||||||||
Confirmed acceptances and guarantees * |
| |||||||||||||||
Grade 1 | 4,359,126 | — | — | 4,359,126 | ||||||||||||
Grade 2 | 1,839,446 | 47,438 | — | 1,886,884 | ||||||||||||
Grade 3 | 16,231 | 85,321 | — | 101,552 | ||||||||||||
Grade 4 | 14,860 | 33,440 | 501 | 48,801 | ||||||||||||
Grade 5 | — | 453 | 9,648 | 10,101 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,229,663 | 166,652 | 10,149 | 6,406,464 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Unconfirmed acceptances and guarantees * |
| |||||||||||||||
Grade 1 | 1,410,897 | 771 | — | 1,411,668 | ||||||||||||
Grade 2 | 894,502 | 28,506 | — | 923,008 | ||||||||||||
Grade 3 | 11,399 | 23,069 | — | 34,468 | ||||||||||||
Grade 4 | 2,369 | 29,934 | — | 32,303 | ||||||||||||
Grade 5 | — | 589 | 7,727 | 8,316 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,319,167 | 82,869 | 7,727 | 2,409,763 | |||||||||||||
| 8,548,830 | 249,521 | 17,876 | 8,816,227 | |||||||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | 12 -month expected credit losses | Lifetime expected credit losses | Total | |||||||||||||
| Non-impaired | Impaired | |||||||||||||||
Confirmed acceptances and guarantees * |
| |||||||||||||||
Grade 1 | 4,335,231 | 2,486 | — | 4,337,717 | ||||||||||||
Grade 2 | 2,109,085 | 38,271 | — | 2,147,356 | ||||||||||||
Grade 3 | 89,681 | 81,317 | — | 170,998 | ||||||||||||
Grade 4 | 18,773 | 172,440 | — | 191,213 | ||||||||||||
Grade 5 | — | 2,873 | 10,111 | 12,984 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,552,770 | 297,387 | 10,111 | 6,860,268 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Unconfirmed acceptances and guarantees * |
| |||||||||||||||
Grade 1 | 1,209,351 | 1,289 | — | 1,210,640 | ||||||||||||
Grade 2 | 1,121,159 | 32,413 | — | 1,153,572 | ||||||||||||
Grade 3 | 16,517 | 20,957 | — | 37,474 | ||||||||||||
Grade 4 | 4,236 | 62,964 | — | 67,200 | ||||||||||||
Grade 5 | — | 170 | 11,468 | 11,638 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,351,263 | 117,793 | 11,468 | 2,480,524 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 8,904,033 | 415,180 | 21,579 | 9,340,792 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| * | Applied same criteria as the credit quality classification of loans. |
150
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
37.3 Acceptances and guarantees by counterparty as of December 31, 2020 and 2019, are as follows:
| December 31, 2020 | ||||||||||||||||
| (In millions of Korean won) | Confirmed guarantees | Unconfirmed guarantees | Total | Proportion (%) | ||||||||||||
Large companies | 5,678,840 | 1,755,551 | 7,434,391 | 84.33 | ||||||||||||
Small and medium-sized companies | 601,666 | 458,210 | 1,059,876 | 12.02 | ||||||||||||
Public sector and others | 125,958 | 196,002 | 321,960 | 3.65 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,406,464 | 2,409,763 | 8,816,227 | 100.00 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2019 | ||||||||||||||||
| (In millions of Korean won) | Confirmed guarantees | Unconfirmed guarantees | Total | Proportion (%) | ||||||||||||
Large companies | 6,099,209 | 1,904,253 | 8,003,462 | 85.68 | ||||||||||||
Small and medium-sized companies | 630,438 | 397,539 | 1,027,977 | 11.01 | ||||||||||||
Public sector and others | 130,621 | 178,732 | 309,353 | 3.31 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,860,268 | 2,480,524 | 9,340,792 | 100.00 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
37.4 Acceptances and guarantees by industry as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | |||||||||||||||
| Confirmed guarantees | Unconfirmed guarantees | Total | Proportion (%) | |||||||||||||
Financial institutions | 784,950 | 2,817 | 787,767 | 8.94 | ||||||||||||
Manufacturing | 2,965,889 | 1,273,899 | 4,239,788 | 48.09 | ||||||||||||
Service | 919,233 | 89,457 | 1,008,690 | 11.44 | ||||||||||||
Wholesale and retail | 1,038,352 | 890,342 | 1,928,694 | 21.88 | ||||||||||||
Construction | 394,050 | 14,488 | 408,538 | 4.63 | ||||||||||||
Public sector | 101,040 | 103,285 | 204,325 | 2.32 | ||||||||||||
Others | 202,950 | 35,475 | 238,425 | 2.70 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,406,464 | 2,409,763 | 8,816,227 | 100.00 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (In millions of Korean won) | December 31, 2019 | |||||||||||||||
| Confirmed guarantees | Unconfirmed guarantees | Total | Proportion (%) | |||||||||||||
Financial institutions | 263,453 | 5,184 | 268,637 | 2.88 | ||||||||||||
Manufacturing | 3,482,521 | 1,627,173 | 5,109,694 | 54.70 | ||||||||||||
Service | 1,210,318 | 88,158 | 1,298,476 | 13.90 | ||||||||||||
Wholesale and retail | 1,104,793 | 597,998 | 1,702,791 | 18.23 | ||||||||||||
Construction | 471,745 | 20,590 | 492,335 | 5.27 | ||||||||||||
Public sector | 107,481 | 81,896 | 189,377 | 2.03 | ||||||||||||
Others | 219,957 | 59,525 | 279,482 | 2.99 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,860,268 | 2,480,524 | 9,340,792 | 100.00 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
151
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
37.5 Details of commitments as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Commitments | ||||||||
Corporate loan commitments | 39,188,554 | 41,077,604 | ||||||
Retail loan commitments | 46,099,203 | 42,492,181 | ||||||
Other commitments in Korean won | 1,300,000 | 1,300,000 | ||||||
Purchase of other securities | 4,548,592 | 2,825,674 | ||||||
|
|
|
| |||||
| 91,136,349 | 87,695,459 | |||||||
|
|
|
| |||||
Financial Guarantees | ||||||||
Credit line | 2,913,260 | 1,797,802 | ||||||
Purchase of securities | 2,667,640 | 2,189,100 | ||||||
|
|
|
| |||||
| 5,580,900 | 3,986,902 | |||||||
|
|
|
| |||||
| 96,717,249 | 91,682,361 | |||||||
|
|
|
| |||||
37.6 Other Matters (including litigation)
a) The Bank has 51 pending lawsuits as a plaintiff (excluding simple lawsuits related to the collection or management of loans), with an aggregate claims ofW 210,298 million, and details of pending lawsuits in which the Bank is a defendant as of December 31, 2020, are as follows:
(in number of cases, in millions of Korean won)
| Lawsuits | No. of | Amount | Description of the lawsuits | Status of the lawsuits | ||||
| Request for a return of redemption amount | 1 | 48,068 | Kookmin Bank invested the assets entrusted by OO Asset Management and OO Investment Trust Management in the Fairfield Sentry Limited, and Fairfield Sentry Limited reinvested the assets in Bernard L. Madoff Investment Securities LLC managed by Bernard Madoff (Bernard L. Madoff Investment Securities LLC is in the liquidation process due to Ponzi scheme fraud-related losses). Bankruptcy trustee of Bernard L. Madoff Investment Securities LLC filed a lawsuit against Kookmin Bank seeking to return the amount of redemptions received by Kookmin Bank through Fairfield Sentry Limited. | Application for incineration by the defendant has been denied, and further proceedings are scheduled. [Related litigation is in progress at the New York Southern District Bankruptcy Court (10-03777) at the written complaint review stage] | ||||
| Request for compensation for damages | 1 | 1,629,557 | The plaintiff filed a lawsuit for compensation for damages against Indonesian Financial Supervisory Authority (OJK) and Kookmin Bank as joint defendants, claiming that the capital increase and Kookmin Bank’s acquisition of PT Bank Bukopin TBK was illegal in violation of local laws and regulations in Indonesia. | It is difficult to accurately predict the result of the lawsuit as of now because the complaint has not been received, but it is judged that the possibility that the result of this lawsuit will have a significant impact on the financial position of Kookmin Bank is low. | ||||
| Others | 120 | 158,048 | Others (excluding simple lawsuits related to the collection or management of loans) | |||||
|
| |||||||
| 122 | 1,835,673 | |||||||
|
| |||||||
152
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
b) On April 10, 2020, the Bank acquired 70% shares of PRASAC Microfinance Institution Plc. (“PRASAC”), a specialized credit micro finance institution in Cambodia, for US$ 603 million from its existing shareholders.
The Bank has signed an agreement with the existing shareholders of PRASAC. The existing shareholders have the right of put option to sell 30% of the remaining shares to the Bank, and they are entitled to exercise their rights at the exercise price calculated on the basis of the adjusted book value of net asset as of 2021 year-end, within six months from the issue date of the audit report or the confirmation date of the adjusted value. If the put option is not exercised until its expiry, the Bank has a right to exercise a call option during the six months following the expiry of such put option. All shareholders are restricted from selling shares or additional pledge before exercising the put option and call option.
c) The Bank has entered into an agreement with PT Bosowa Corporindo, a major shareholder of PT Bank Bukopin TBK. Under this agreement, the Bank and PT Bosowa Corporindo have a right of first refusal and a tag-along right. In addition, the Bank can exercise its drag-along right for two years from the time three years have elapsed since the acquisition date (July 27, 2018) in certain cases, such as violation of the agreement between shareholders.
d) The proliferation of COVID-19 has had a negative impact on the global economy, which has a greater impact than expected credit losses and potential impairment of assets in a particular portfolio, which can negatively affect the profit generation capability of the Bank as follows;
| • | There is a possibility of uncertainty about the credit risk of a borrower that could be affected by COVID-19. |
| • | Uncertainty may arise about forward-looking macroeconomic information related to expected credit losses. |
| • | Korean won may depreciate against major foreign currencies. This may result in an increase in principal and interest payments on liabilities denominated in foreign currencies, and losses on foreign exchanges transactions. |
| • | A significant decrease in the fair value of the Bank’s investment in an entity that could be affected by COVID-19 pandemic can occur. |
Meanwhile, the Bank’s accounting policy related to COVID-19 is described in Note 2.4 Critical accounting estimates and the impact on expected credit losses is described in Note 11.1 Changes in allowances for credit losses of loans and Note 22.2 Changes in provisions for credit losses of unused loan commitments, acceptances and guarantees.
e) The face value of the securities sold to general customers through tellers’ sale amounts toW 372 million as of December 31, 2019.
153
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
38. Subsidiaries
38.1 Details of subsidiaries as of December 31, 2020, are as follows:
Investor | Investee | Ownership (%) | Location | Industry | ||||
Kookmin Bank | Kookmin Bank Cambodia Plc. | 100.00 | Cambodia | Banking and foreign exchange transaction | ||||
Kookmin Bank | Kookmin Bank (China) Ltd. | 100.00 | China | Banking and foreign exchange transaction | ||||
Kookmin Bank | KB Microfinance Myanmar Co., Ltd. | 100.00 | Myanmar | Microfinance services | ||||
Kookmin Bank | KB Bank Myanmar Co., Ltd. | 100.00 | Myanmar | Banking and foreign exchange transaction | ||||
Kookmin Bank | PRASAC Microfinance Institution Plc. | 70.00 | Cambodia | Microfinance services | ||||
Kookmin Bank | PT Bank Bukopin TBK | 67.00 | Indonesia | Banking and foreign exchange transaction | ||||
PT Bank Bukopin TBK | PT Bank Syariah Bukopin | 92.78 | Indonesia | Banking | ||||
PT Bank Bukopin TBK | PT Bukopin Finance | 97.04 | Indonesia | Installment financing | ||||
Kookmin Bank | Personal pension trust and 10 others 1 | 0.00 | Korea | Trust | ||||
Kookmin Bank | Silver Investment 2nd Inc. and 48 others 2 | 0.00 | Korea | Asset-backed securitization and others | ||||
Kookmin Bank | KB Wise Star Private Real Estate Feeder Fund No.1 2 | 86.00 | Korea | Investment trust | ||||
Kookmin Bank | KB Haeoreum Private Securities Investment Trust No.83 2 | 99.95 | Korea | Investment trust | ||||
Kookmin Bank | Kiwoom Frontier Private Placement Fund No.10 (Bond) 2 | 99.92 | Korea | Investment trust | ||||
Kookmin Bank | Woori Safe Plus Qualified Private Trust S-8 (Bond) 2 | 99.96 | Korea | Investment trust | ||||
Kookmin Bank | Mirae Asset Triumph Global Privately Placed Feeder Investment Trust No.1 2 | 99.92 | Korea | Investment trust | ||||
Mirae Asset Triumph Global Privately Placed Feeder Investment Trust No.1 | Mirae Asset Triumph Global Privately Placed Master Investment Trust No.1 | 100.00 | Korea | Investment trust | ||||
Mirae Asset Triumph Global Privately Placed Feeder Investment Trust No.1 | Mirae Asset Triumph Global Privately Placed Master Investment Trust No.2 | 100.00 | Korea | Investment trust | ||||
Kookmin Bank | NH-Amundi Global Private Securities Investment Trust No.1 (BOND) 2 | 99.86 | Korea | Investment trust | ||||
Kookmin Bank | Meritz Private Real Estate Fund No.9-2 2 | 99.98 | Korea | Investment trust | ||||
Kookmin Bank | AIP US Red Private Real Estate Trust No.10 2 | 99.97 | Korea | Investment trust | ||||
Kookmin Bank | KB KBSTAR 3-Year Futures Inverse Securities ETF (Debt-Derivative) 2 | 95.09 | Korea | Investment trust | ||||
Kookmin Bank | Samsung KODEX 10Y F-LKTB Inverse ETF 2 | 98.77 | Korea | Investment trust |
154
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Kookmin Bank | KB Core Blind Private Estate Fund No.1 2 | 90.09 | Korea | Investment trust | ||||
KB Core Blind Private Estate Fund No.1 | KB Wise Star Private Real Estate Feeder Fund No.3 2 | 46.65 | Korea | Investment trust | ||||
Kookmin Bank | KB Global Private Real Estate Debt Fund No.3 (USD) 2 | 99.50 | Korea | Investment trust | ||||
Kookmin Bank | UBS Hana Professional Investor Private Investment Trust No.1 (Bond) 2 | 99.90 | Korea | Investment trust | ||||
Kookmin Bank | Mirae Asset Triumph Privately Placed Investment Trust No.7 2 | 98.50 | Korea | Investment trust | ||||
Kookmin Bank | Samsung Credit Value Plus Private Investment Trust (Bond) 2 | 99.50 | Korea | Investment trust | ||||
Kookmin Bank | KB Emerging Markets Dept Private Securities Fund(USD)(Bond) 2 | 99.83 | Korea | Investment trust | ||||
Kookmin Bank | Samsung SRA Private Real Estate Investment Trust No.28D 2 | 99.50 | Korea | Investment trust | ||||
Kookmin Bank | KIM Basic Private Investment Trust No.102 (Bond) 2 | 99.90 | Korea | Investment trust | ||||
Kookmin Bank | KB Korea Short Term Premium Private Securities No.16(USD)(Bond) | 85.71 | Korea | Investment trust |
| 1 | The Bank controls the trust because it has power to determine the management performance of the trust and is exposed to variable returns that absorb losses through the guarantees of payment of principal, or payment of principal and fixed rate of return. |
| 2 | The Bank controls these investees because it is significantly exposed to variable returns from the investees’ performance and has ability to affect those returns through its power. |
The Bank holds more than a majority of the ownership interests of Koratevien Specialist Private Equity Fund No.1 and 1 another investment trust but does not have the power over relevant activities in accordance with agreements with trust and other shareholders, therefore these entities are not consolidated.
38.2 The condensed financial information of major subsidiaries as of December 31, 2020 and 2019, and for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | 2020 | ||||||||||||||||||
| Assets | Liabilities | Equity | Operating revenue | Profit (loss) for the period | ||||||||||||||||
Kookmin Bank Int’l Ltd. (London) * | — | — | — | — | (4,587 | ) | ||||||||||||||
Kookmin Bank Cambodia Plc. | 385,974 | 287,936 | 98,038 | 21,841 | 5,499 | |||||||||||||||
Kookmin Bank (China) Ltd. | 3,323,048 | 2,874,258 | 448,790 | 167,781 | 13,967 | |||||||||||||||
KB Microfinance Myanmar Co., Ltd. | 36,112 | 13,004 | 23,108 | 7,351 | 388 | |||||||||||||||
PRASAC Microfinance Institution Plc. | 3,914,890 | 3,376,992 | 537,898 | 588,359 | 118,339 | |||||||||||||||
PT Bank Bukopin TBK | 5,841,168 | 5,530,648 | 310,520 | 106,358 | (43,402 | ) | ||||||||||||||
KB Bank Myanmar Co., Ltd. | 220,105 | 2,505 | 217,600 | — | — | |||||||||||||||
Personal pension trust and 10 others | 4,483,007 | 4,365,699 | 117,308 | 138,481 | 2,841 | |||||||||||||||
| * | Liquidated during the year ended December 31, 2020. |
155
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | December 31, 2019 | 2019 | ||||||||||||||||||
| Assets | Liabilities | Equity | Operating revenue | Profit (loss) for the period | ||||||||||||||||
Kookmin Bank Int’l Ltd. (London) | 37,404 | 887 | 36,517 | 558 | 293 | |||||||||||||||
Kookmin Bank Cambodia Plc. | 307,604 | 208,670 | 98,934 | 15,815 | 2,851 | |||||||||||||||
Kookmin Bank (China) Ltd. | 3,032,642 | 2,599,516 | 433,126 | 135,117 | 12,462 | |||||||||||||||
KB Microfinance Myanmar Co., Ltd. | 24,188 | 2,559 | 21,629 | 4,349 | (149 | ) | ||||||||||||||
Personal pension trust and 10 others | 4,413,755 | 4,299,288 | 114,467 | 141,162 | 3,515 | |||||||||||||||
38.3 The Characteristics of Risks Associated with Consolidated Structured Entities
The terms of contractual arrangements to provide financial support to consolidated structured entities are as follows:
38.3.1 The Bank provides the capital commitments ofW 172,000 million to KB Wise Star Private Real Estate Feeder Fund No.1, of whichW 817 million has not been executed, and ofW 54,389 million to Meritz Private Real Estate Fund No.9-2, of whichW 12,319 million has not been executed, and ofW 100,000 million to KB Core Blind Private Estate Fund No.1, of whichW 175 million has not been executed.
38.3.2 The Bank provides purchase commitment and credit line to structured entities that are subsidiaries. The purchase commitment guarantees that the Bank will purchase and pay any remaining commercial paper securities issued by structured entities. The credit line agreement requires the Bank to provide loans under certain conditions if there is a reason for suspension of issuance of commercial paper securities or if structured entities become insolvency due to other reasons.
| (In millions of Korean won) | December 31, 2020 | |||
Silver Investment 2nd Inc. | 50,000 | |||
KBM the 1st L.L.C. | 35,285 | |||
KLD the 1st L.L.C. | 21,700 | |||
LOG the 3rd L.L.C. | 24,300 | |||
KBL Incheon 1st L.L.C. | 101,000 | |||
KB DTower 1st L.L.C. | 50,291 | |||
KB Display 1st L.L.C. | 100,440 | |||
KB Firstpark L.L.C. | 33,650 | |||
KB Alminium 1st L.L.C. | 50,254 | |||
KB INO 2nd L.L.C. | 30,152 | |||
KBH the 5th L.L.C. | 25,142 | |||
KB Happy 1st L.L.C. | 50,162 | |||
KL Industrial 2nd L.L.C. | 20,200 | |||
KB Socio the 1st L.L.C. | 30,229 | |||
KB Industry the 1st L.L.C. | 20,197 | |||
KBST the 1st L.L.C. | 30,104 | |||
KB Geumjeong Hill L.L.C. | 61,600 | |||
KBH the 4th L.L.C. | 24,200 | |||
Great Forest the 1st L.L.C. | 22,188 | |||
KBC the 3rd L.L.C. | 35,095 | |||
KB Future the 1st L.L.C. | 30,220 | |||
156
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
KBH the 6th L.L.C. | 50,078 | |||
Beomuh Landmark the 2nd L.L.C. | 58,496 | |||
KB Industry 2nd L.L.C. | 20,200 | |||
KB Firstville the 1st L.L.C. | 15,100 | |||
KB Handok the 1st L.L.C. | 30,079 | |||
KB Heracles the 1st L.L.C. | 25,162 | |||
SLT Gamsam Co., Ltd. | 16,900 | |||
K Plus the 1st L.L.C. | 200,226 | |||
KB Hwaseong the 1st L.L.C. | 21,100 | |||
KB Livv H 1st L.L.C. | 30,053 | |||
KB Beomcheon Land 1st L.L.C. | 28,400 | |||
KB Eagles 1st Co., Ltd. | 30,052 | |||
Livv H 1st L.L.C. | 50,118 | |||
KB Cheongla Hill Co., Ltd. | 60,143 | |||
KB Livv l 1st Co., Ltd. | 50,126 | |||
KB Manchon Harrington Co., Ltd. | 21,098 | |||
KB Penta Co., Ltd. | 17,689 | |||
KB Eagles 2nd Co., Ltd. | 50,121 | |||
KB Dongin Co., Ltd. | 20,056 | |||
KBH Steal Co., Ltd. | 150,159 | |||
Ryan Mobility 1st L.L.C. | 50,103 | |||
KB Great Bear 1st L.L.C. | 90,183 | |||
KB Chemical 1st Co., Ltd. | 50,107 | |||
KB Eugene 1st Co., Ltd. | 10,055 |
38.3.3 The Bank provides the guarantees of payment of principal, or principal and fixed rate of return in case the operating results of the trusts are less than the guaranteed principal, or principal and fixed rate of return.
38.4 Changes in Subsidiaries
PRASAC Microfinance Institution Plc. and 28 other subsidiaries were newly included in the scope of consolidation, and Kookmin Bank Int’l Ltd. (London) and 9 other subsidiaries were excluded from the scope of consolidation for the year ended December 31, 2020.
157
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
39. Lease
39.1 The Bank as a Lessee
39.1.1 Amounts recognized in statements of financial position related to lease as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Right-of-use property and equipment * | ||||||||
Real estate | 351,384 | 331,108 | ||||||
Vehicles | 6,448 | 7,847 | ||||||
Others | 8,791 | 15,319 | ||||||
|
|
|
| |||||
| 366,623 | 354,274 | |||||||
Right-of-use intangible assets * | 4,617 | 9,639 | ||||||
|
|
|
| |||||
| 371,240 | 363,913 | |||||||
|
|
|
| |||||
Lease liabilities * | 342,811 | 334,037 | ||||||
|
|
|
| |||||
| * | Included in property and equipment, intangible assets and other liabilities. |
39.1.2 Amounts recognized in the statements of comprehensive income related to lease for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||
Depreciation and amortization of right-of-use assets | ||||||||
Real estate | 185,925 | 192,816 | ||||||
Vehicles | 9,554 | 13,403 | ||||||
Others | 8,430 | 6,972 | ||||||
Intangible asset | 5,022 | 6,519 | ||||||
|
|
|
| |||||
| 208,931 | 219,710 | |||||||
|
|
|
| |||||
Interest expenses on the lease liabilities | 6,307 | 7,360 | ||||||
Expense relating to short-term lease | 2,472 | 1,996 | ||||||
Expense relating to leases of low-value assets that are not short-term lease | 1,372 | 1,034 | ||||||
Total cash outflow for lease for the years ended December 31, 2020 and 2019 wasW 162,439 million andW 161,756 million, respectively.
39.2 The Bank as an Operating Lessor
The future minimum lease receipts arising from the non-cancellable lease contracts as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||
Up to 1 year | 9,343 | 4,197 | ||||||
1-5 years | 17,940 | 2,083 | ||||||
|
|
|
| |||||
| 27,283 | 6,280 | |||||||
|
|
|
| |||||
158
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
40. Related Party Transactions
According to Korean IFRS No.1024, the Bank includes the Parent, the Parent’s subsidiaries, associates, associates of the Parent’s subsidiaries, key management (including family members), and post-employment benefit plans of the Bank and its related party companies in the scope of related parties. The Bank discloses balances (receivables and payables) and other amounts arising from the related party transactions in the notes to the financial statements. Refer to Note 13 for details on investments in associates.
Key management includes the directors of the Bank and the executive directors (vice-presidents and above) of the Bank and companies where the directors and/or their close family members have control or joint control.
40.1 Profit or loss arising from transactions with related parties for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | 2019 | ||||||||
Parent |
| |||||||||
KB Financial Group Inc. | Fee and commission income | 7,183 | 5,355 | |||||||
| Other non-operating income | 1,057 | 932 | ||||||||
| Interest expense | 410 | 1,574 | ||||||||
| Fee and commission expense | — | 1 | ||||||||
| Other operating expense | 190 | 69 | ||||||||
| General and administrative expenses | 925 | 841 | ||||||||
Subsidiaries |
| |||||||||
Kookmin Bank Cambodia Plc. | Interest income | 2,447 | 2,947 | |||||||
| Fee and commission income | 28 | 18 | ||||||||
| Other non-operating income | 201 | 180 | ||||||||
Kookmin Bank (China) Ltd. | Interest income | 19,776 | 31,773 | |||||||
| Fee and commission income | 230 | 235 | ||||||||
KB Microfinance Myanmar Co., Ltd. | Other non-operating income | 127 | 105 | |||||||
| Provision for credit losses | 33 | — | ||||||||
PRASAC Microfinance Institution Plc. | Interest income | 740 | — | |||||||
| Fee and commission income | 211 | — | ||||||||
| Provision for credit losses | 180 | — | ||||||||
PT Bank Bukopin TBK | Interest income | 345 | — | |||||||
| Provision for credit losses | 546 | — | ||||||||
Trust | Fee and commission income | 15,245 | 17,383 | |||||||
| Interest expense | 1,034 | 2,603 | ||||||||
KB Wise Star Private Real Estate Feeder Fund No.1 | Fee and commission income | 27 | 23 | |||||||
| Interest expense | 5 | 7 | ||||||||
Securitization SPE | Reversal of credit losses | — | 200 | |||||||
| Interest expense | 1 | 1 | ||||||||
159
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Structured entities | Interest income | 597 | 204 | |||||||||
| | Fee and commission income | | 11,775 | 10,242 | ||||||||
| | Gains on financial instruments at fair value through profit or loss | | 21,516 | 11,117 | ||||||||
| Reversal of credit losses | 14 | 3 | ||||||||||
| Interest expense | 165 | 165 | ||||||||||
| | Losses on financial instruments at fair value through profit or loss | | 2,841 | 694 | ||||||||
| Provision for credit losses | 40 | 63 | ||||||||||
KB Haeoreum Private Securities Investment Trust No.83(Bond) | Fee and commission income | 99 | 54 | |||||||||
Mirae Asset Triumph Global Privately Placed Feeder Investment Trust No.1 | Fee and commission income | 40 | 32 | |||||||||
NH-Amundi Global Private Securities Investment Trust No.1 (USD) (Bond) | Fee and commission income | 6 | 6 | |||||||||
KB Core Blind Private Estate Fund No.1 | Interest income | 290 | 18 | |||||||||
| Fee and commission income | 10 | 1 | ||||||||||
| Interest expense | 75 | 5 | ||||||||||
KB Global Private Real Estate Debt Fund No.3 (USD) | Fee and commission income | 2 | — | |||||||||
UBS Hana Professional Investor Private Investment Trust No.1 (Bond) | Fee and commission income | 23 | — | |||||||||
| Interest expense | 17 | — | ||||||||||
Mirae Asset Triumph Privately Placed Investment Trust No.7 | Fee and commission income | 46 | — | |||||||||
Samsung Credit Value Plus Private Investment Trust (Bond) | Fee and commission income | 22 | — | |||||||||
KB Emerging Markets Dept Private Securities Fund(USD)(Bond) | Fee and commission income | 9 | — | |||||||||
Samsung SRA Private Real Estate Investment Trust No.28D | Fee and commission income | 1 | — | |||||||||
KIM Basic Private Investment Trust No.102 (Bond) | Fee and commission income | 8 | — | |||||||||
KB Korea Short Term Premium Private Securities No.16(USD)(Bond) | | Gains on financial instruments at fair value through profit or loss |
| 835 | — | |||||||
KB Multi-Asset Private Securities Fund S-1 (Bond Mixed-FoFs) * | Fee and commission income | — | 2 | |||||||||
KB Multi-Asset Private Securities Fund P-1 (Bond Mixed-FoFs) * | Fee and commission income | — | 3 | |||||||||
| | Gains on financial instruments at fair value through profit or loss | | — | 491 | ||||||||
KB Leaders Private Placement Fund No.10 (Bond) * | Fee and commission income | — | 1 | |||||||||
Parent’s subsidiaries | ||||||||||||
KB Securities Co., Ltd. | Interest income | 2,054 | 1,325 | |||||||||
| Fee and commission income | 19,298 | 14,298 | ||||||||||
| | Gains on financial instruments at fair value through profit or loss | | 43,739 | 39,373 | ||||||||
| Reversal of credit losses | — | 6 | ||||||||||
| Other non-operating income | 4,226 | 3,658 | ||||||||||
| Interest expense | 2,874 | 6,163 | ||||||||||
| Fee and commission expense | 594 | 684 | ||||||||||
| | Losses on financial instruments at fair value through profit or loss | | 42,394 | 13,616 | ||||||||
| Other operating expense | — | 134 | ||||||||||
| Provision for credit losses | 92 | — |
160
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
KB Asset Management Co., Ltd. | Fee and commission income | 1,465 | 1,201 | |||||||
| Other non-operating income | 1 | 4 | ||||||||
| Interest expense | 59 | 90 | ||||||||
| Losses on financial instruments at fair value through profit or loss | 373 | — | ||||||||
| General and administrative expenses | 500 | 500 | ||||||||
KB Real Estate Trust Co., Ltd. | Fee and commission income | 232 | 211 | |||||||
| Other non-operating income | 38 | 45 | ||||||||
| Interest expense | 207 | 328 | ||||||||
| Fee and commission expense | 2,406 | 1,899 | ||||||||
KB Investment Co., Ltd. | Fee and commission income | 48 | 42 | |||||||
| Interest expense | 443 | 1,019 | ||||||||
KB Credit Information Co., Ltd. | Fee and commission income | 69 | 64 | |||||||
| Other non-operating income | 216 | 232 | ||||||||
| Interest expense | 104 | 134 | ||||||||
| Fee and commission expense | 21,872 | 20,485 | ||||||||
KB Data System Co., Ltd. | Fee and commission income | 270 | 225 | |||||||
| Other non-operating income | 149 | 92 | ||||||||
| Interest expense | 242 | 309 | ||||||||
| General and administrative expenses | 54,869 | 50,074 | ||||||||
KB Life Insurance Co., Ltd. | Fee and commission income | 16,534 | 14,075 | |||||||
| Gains on financial instruments at fair value through profit or loss | 4,292 | 14,612 | ||||||||
| Other non-operating income | 28 | 37 | ||||||||
| Interest expense | 8 | 9 | ||||||||
| Fee and commission expense | 1 | 8 | ||||||||
| Losses on financial instruments at fair value through profit or loss | 2,975 | 2,853 | ||||||||
| Other operating expense | — | 11 | ||||||||
| Other non-operating expense | 2 | — | ||||||||
| General and administrative expenses | 950 | 1,286 | ||||||||
KB Kookmin Card Co., Ltd. | Interest income | 4,354 | 3,910 | |||||||
| Fee and commission income | 190,910 | 211,806 | ||||||||
| Gains on financial instruments at fair value through profit or loss | 1,262 | 2,348 | ||||||||
| Reversal of credit losses | — | 53 | ||||||||
| Other non-operating income | 1,645 | 1,314 | ||||||||
| Interest expense | 1,003 | 1,073 | ||||||||
| Fee and commission expense | 1,255 | 1,732 | ||||||||
| Losses on financial instruments at fair value through profit or loss | 143 | 38 | ||||||||
| Provision for credit losses | 239 | — | ||||||||
| General and administrative expenses | 391 | 153 | ||||||||
KB Savings Bank Co., Ltd. | Fee and commission income | 1,125 | 736 | |||||||
| Other non-operating income | 77 | 50 | ||||||||
| Interest expense | 11 | 6 | ||||||||
| Fee and commission expense | — | 17 |
161
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
KB Capital Co., Ltd. | Interest income | 1,951 | 2,907 | |||||||
| Fee and commission income | 2,767 | 2,968 | ||||||||
| Other non-operating income | 191 | 167 | ||||||||
| Interest expense | 98 | 670 | ||||||||
| Fee and commission expense | 43 | 44 | ||||||||
| Provision for credit losses | 138 | 46 | ||||||||
KB Insurance Co., Ltd. | Interest income | 67 | 79 | |||||||
| Fee and commission income | 24,467 | 23,458 | ||||||||
| Gains on financial instruments at fair value through profit or loss | 33,319 | 74,576 | ||||||||
| Other non-operating income | 1,287 | 361 | ||||||||
| Interest expense | 1,062 | 1,123 | ||||||||
| Fee and commission expense | 1,628 | 1 | ||||||||
| Losses on financial instruments at fair value through profit or loss | 37,871 | 7,468 | ||||||||
| Other operating expense | 1 | — | ||||||||
| Provision for credit losses | 5 | 6 | ||||||||
| General and administrative expenses | 10,283 | 15,576 | ||||||||
Prudential Life Insurance Company of Korea Ltd. | Fee and commission income | 20 | — | |||||||
| Interest expense | 1,165 | — | ||||||||
Hanbando BTL Private Special Asset Fund | Fee and commission income | 132 | 149 | |||||||
KB Senior Loan Private Fund No.1 | Fee and commission income | 3 | 8 | |||||||
KB AMP Infra Private Special Asset Fund No.1(FoFs) | Fee and commission income | 11 | 11 | |||||||
KB Onkookmin 2025 TDF Fund (FoFs) * | Fee and commission income | — | 2 | |||||||
KB Onkookmin 2030 TDF Fund (FoFs) * | Fee and commission income | — | 2 | |||||||
KB Onkookmin 2045 TDF Fund (FoFs) * | Fee and commission income | — | 1 | |||||||
KB Muni bond Private Securities Fund No.1 (USD) | Fee and commission income | 12 | 11 | |||||||
KB Global Private Real Estate Debt Fund No.1 | Fee and commission income | 10 | 10 | |||||||
KB NA Compass Energy Private Special Asset Fund | Fee and commission income | 8 | 8 | |||||||
KB Star Office Private Real Estate Investment Trust No.3 | Interest income | — | 619 | |||||||
| Interest expense | 55 | 110 | ||||||||
KB Star Office Private Real Estate Investment Trust No.4 | Interest income | 760 | 760 | |||||||
| Fee and commission income | 36 | 19 | ||||||||
| Interest expense | 18 | 33 | ||||||||
| Provision for credit losses | 1 | — | ||||||||
KB Global Core Bond Securities Feeder Fund(Bond) | Fee and commission income | 87 | 23 | |||||||
| Gains on financial instruments at fair value through profit or loss | — | 1,276 | ||||||||
| Losses on financial instruments at fair value through profit or loss | — | 28 | ||||||||
KB Onkookmin Life Income 20 Feeder Fund (FoFs) C-F | Losses on financial instruments at fair value through profit or loss | 102 | — | |||||||
KB Onkookmin Life Income 40 Feeder Fund (FoFs) C-F | Losses on financial instruments at fair value through profit or loss | 190 | — | |||||||
KB AU Infigen Energy Private Special Asset Fund * | Fee and commission income | 3 | 4 |
162
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
KB AU Infigen Energy Private Special Asset Fund No.2 * | Fee and commission income | 5 | 6 | |||||||
KB New Renewable Energy Private Special Asset Fund No.1 | Fee and commission income | 6 | — | |||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.1 | Fee and commission income | 3 | 1 | |||||||
Gains on financial instruments at fair value through profit or loss | 1,814 | 4 | ||||||||
Losses on financial instruments at fair value through profit or loss | 3,248 | 335 | ||||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.3 | Fee and commission income | 10 | 1 | |||||||
Gains on financial instruments at fair value through profit or loss | 2,699 | 209 | ||||||||
Losses on financial instruments at fair value through profit or loss | 8,044 | 14 | ||||||||
KB Europe Renewable Specialized Private Equity Private Asset Investment Trust No.2 | Fee and commission income | 2 | — | |||||||
KB Korea Short Term Premium Private Securities No.10(USD)(Bond) * | Fee and commission income | 6 | 1 | |||||||
KB Korea Short Term Premium Private Securities No.15(USD)(Bond) | Fee and commission income | 1 | — | |||||||
Gains on financial instruments at fair value through profit or loss | 1,452 | — | ||||||||
KB Korea Short Term Premium Private Securities No.17(USD)(Bond) | Fee and commission income | 2 | — | |||||||
Gains on financial instruments at fair value through profit or loss | 3,268 | — | ||||||||
KB BMO Senior Loan Private Special Asset Fund No.1(FOF) | Fee and commission income | 6 | — | |||||||
Losses on financial instruments at fair value through profit or loss | 4,329 | — | ||||||||
KB BMO Senior Loan Private Special Asset Fund No.2(FOF) | Fee and commission income | 5 | — | |||||||
KB Wise Star Private Real Estate Feeder Fund No.12 * | Interest income | 493 | — | |||||||
Fee and commission income | 1 | — | ||||||||
KB Korea Short Term Premium Private Securities No.4(USD)(Bond) * | Fee and commission income | — | 2 | |||||||
Losses on financial instruments at fair value through profit or loss | — | 2,931 | ||||||||
KB Korea Short Term Premium Private Securities No.5(USD)(Bond) * | Fee and commission income | — | 9 | |||||||
Gains on financial instruments at fair value through profit or loss | — | 1,347 | ||||||||
Losses on financial instruments at fair value through profit or loss | — | 12,104 | ||||||||
Associates |
| |||||||||
Korea Credit Bureau Co., Ltd. | Fee and commission income | 4 | — | |||||||
Interest expense | 7 | 21 | ||||||||
Fee and commission expense | 1,954 | 1,601 | ||||||||
Other operating expense | 1 | — | ||||||||
163
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Incheon Bridge Co., Ltd. | Interest income | 4,345 | 8,612 | |||||||
Fee and commission income | 23 | — | ||||||||
Gains on financial instruments at fair value through profit or loss | 899 | 4,975 | ||||||||
Reversal of credit losses | — | 5 | ||||||||
Interest expense | 334 | 483 | ||||||||
Fee and commission expense | 6 | 7 | ||||||||
Provision for credit losses | 471 | — | ||||||||
Dae-A Leisure Co., Ltd. | Interest expense | 7 | 8 | |||||||
Skydigital INC. | Fee and commission income | 4 | — | |||||||
KB12-1 Venture Investment Partnership * | Interest expense | 13 | 3 | |||||||
KB High-Tech Company Investment Fund | Interest expense | 16 | 26 | |||||||
Aju Good Technology Venture Fund | Interest expense | 18 | 22 | |||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | Interest expense | 23 | 58 | |||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | Interest expense | 4 | 8 | |||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Interest expense | 40 | 89 | |||||||
KB Global Platform Fund | Interest expense | 52 | 193 | |||||||
WJ Private Equity Fund No.1 | Fee and commission income | 5 | — | |||||||
Associate of Parent |
| |||||||||
KB Star Office Private Real Estate Investment Trust No.1 | Interest expense | 61 | 208 | |||||||
Associates of Parent’s subsidiaries |
| |||||||||
SY Auto Capital Co., Ltd. | Interest income | 3 | 191 | |||||||
Fee and commission income | 4 | — | ||||||||
Reversal of credit losses | 17 | 13 | ||||||||
Interest expense | 2 | 1 | ||||||||
RAND Bio Science Co., Ltd. | Interest expense | 11 | 5 | |||||||
Wise Asset Management Co., Ltd. | Interest expense | — | 2 | |||||||
Food Factory Co., Ltd. | Interest income | 52 | 41 | |||||||
Interest expense | 12 | — | ||||||||
Fee and commission expense | 4 | 12 | ||||||||
Provision for credit losses | 8 | 1 | ||||||||
Acts Co., Ltd. | Interest income | 1 | 1 | |||||||
APRO Co., Ltd. * | Interest income | 7 | 19 | |||||||
Interest expense | 1 | 4 | ||||||||
Fee and commission expense | — | 17 | ||||||||
Provision for credit losses | 1 | — | ||||||||
Rainist Co., Ltd. | Fee and commission income | 36 | 39 | |||||||
Stratio, Inc. | Interest expense | — | 1 | |||||||
UPRISE, Inc. | Interest income | 2 | — | |||||||
Provision for credit losses | 1 | — | ||||||||
CellinCells Co., Ltd. | Interest expense | 4 | 19 | |||||||
COSES GT | Interest income | 6 | — | |||||||
Provision for credit losses | 4 | — | ||||||||
Bomapp Inc. | Interest expense | — | 1 | |||||||
KB No.9 Special Purpose Acquisition Company * | Interest expense | — | (23 | ) | ||||||
KB No.10 Special Purpose Acquisition Company * | Interest expense | — | 18 | |||||||
164
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
KB No.11 Special Purpose Acquisition Company * | Interest expense | — | 9 | |||||||
KB No.17 Special Purpose Acquisition Company | Interest expense | 25 | 28 | |||||||
KB No.18 Special Purpose Acquisition Company | Interest expense | 31 | 28 | |||||||
KB No.19 Special Purpose Acquisition Company | Interest expense | 13 | 8 | |||||||
KB No.20 Special Purpose Acquisition Company | Interest expense | 25 | 3 | |||||||
Fabric Time Co., Ltd. | Fee and commission income | 7 | — | |||||||
Interest expense | 47 | — | ||||||||
BNF Corporation Ltd. * | Interest income | 9 | — | |||||||
Fee and commission income | 2 | — | ||||||||
Provision for credit losses | 8 | 1 | ||||||||
S&E BIO | Interest expense | 1 | — | |||||||
Contents First | Interest expense | 14 | — | |||||||
December & Company Inc. | Interest expense | 1 | — | |||||||
GENINUS Inc. | Interest expense | 70 | — | |||||||
KB Pre IPO Secondary Venture Fund No.1 | Interest expense | 3 | 7 | |||||||
JLK Inspection Co., Ltd. * | Interest expense | — | 1 | |||||||
Spark Biopharma Inc. * | Interest expense | — | 59 | |||||||
NEXELON Inc. * | Interest expense | — | 2 | |||||||
Others |
| |||||||||
Retirement pension | Fee and commission income | 1,077 | 939 | |||||||
Interest expense | 3 | 4 | ||||||||
| * | Excluded from the Bank’s related party as of December 31, 2020. |
165
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
40.2 Details of receivables and payables, and related allowances for credit losses arising from the related party transactions as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Parent |
| |||||||||
KB Financial Group Inc. | Other assets | 120 | 35 | |||||||
Deposits | 23,084 | 18,537 | ||||||||
Other liabilities | 597,429 | 418,286 | ||||||||
Subsidiaries |
| |||||||||
Kookmin Bank Int`l Ltd. (London) * | Other assets | — | 601 | |||||||
Deposits | — | 37,387 | ||||||||
Kookmin Bank Cambodia Plc. | Cash and due from financial institutions | 820 | 1,990 | |||||||
Loans measured at amortized cost (gross amount) | 195,840 | 115,780 | ||||||||
Other assets | 277 | 1,266 | ||||||||
Deposits | 2,584 | 9,126 | ||||||||
Other liabilities | 111 | 88 | ||||||||
Kookmin Bank (China) Ltd. | Cash and due from financial institutions | 17,646 | 19,611 | |||||||
Loans measured at amortized cost (gross amount) | 1,153,280 | 1,169,378 | ||||||||
Other assets | 4,910 | 9,940 | ||||||||
Deposits | 2,278 | 758 | ||||||||
Borrowings | 70,557 | 139,382 | ||||||||
KB Microfinance Myanmar Co., Ltd. | Provisions | 33 | — | |||||||
Other liabilities | 17 | 14 | ||||||||
PRASAC Microfinance Institution Plc. | Loans measured at amortized cost (gross amount) | 136,000 | — | |||||||
Allowances for credit losses | 112 | — | ||||||||
Other assets | 739 | — | ||||||||
Provisions | 67 | — | ||||||||
Other liabilities | 1,437 | — | ||||||||
PT Bank Bukopin TBK | Cash and due from financial institutions | 217,600 | — | |||||||
Loans measured at amortized cost (gross amount) | 652,800 | — | ||||||||
Other assets | 165 | — | ||||||||
Provisions | 546 | — | ||||||||
KB Bank Myanmar Co., Ltd. | Other assets | 1,003 | — | |||||||
Trust | Other assets | 20,243 | 20,939 | |||||||
Other liabilities | 165,300 | 97,572 | ||||||||
KB Wise Star Private Real Estate Feeder Fund No.1 | Other assets | 6 | 7 | |||||||
Deposits | — | 422 | ||||||||
Other liabilities | — | 2 | ||||||||
Securitization SPE | Deposits | 1,043 | 1,095 | |||||||
166
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Structured entities | Derivative assets | 18,245 | 13,164 | |||||||
Loans measured at amortized cost (gross amount) | 3,929 | 3,682 | ||||||||
Allowances for credit losses | 6 | 6 | ||||||||
Other assets | 7 | 6 | ||||||||
Deposits | 1,096 | 32,124 | ||||||||
Provisions | 90 | 64 | ||||||||
Other liabilities | 3,633 | 2,758 | ||||||||
KB Haeoreum Private Securities Investment Trust No.83(Bond) | Other assets | 11 | 8 | |||||||
Mirae Asset Triumph Global Privately Placed Feeder Investment Trust No.1 | Other assets | 7 | 7 | |||||||
NH-Amundi Global Private Securities Investment Trust No.1 (USD) (Bond) | Other assets | 1 | 1 | |||||||
KB Core Blind Private Estate Fund No.1 | Loans measured at amortized cost (gross amount) | 10,000 | 10,000 | |||||||
Other assets | 19 | 19 | ||||||||
Deposits | — | 5,063 | ||||||||
Other liabilities | �� | 5 | ||||||||
UBS Hana Professional Investor Private Investment Trust No.1 (Bond) | Other assets | 2 | — | |||||||
Other liabilities | 3,332 | — | ||||||||
Mirae Asset Triumph Privately Placed Investment Trust No.7 | Other assets | 5 | — | |||||||
Other liabilities | 2,962 | — | ||||||||
Samsung Credit Value Plus Private Investment Trust (Bond) | Other assets | 2 | — | |||||||
Other liabilities | 1,083 | — | ||||||||
KB Emerging Markets Dept Private Securities Fund(USD)(Bond) | Other assets | 1 | — | |||||||
Samsung SRA Private Real Estate Investment Trust No.28D | Deposits | 11 | — | |||||||
KIM Basic Private Investment Trust No.102 (Bond) | Other assets | 3 | — | |||||||
Other liabilities | 23 | — | ||||||||
KB Korea Short Term Premium Private Securities No.16(USD)(Bond) | Derivative assets | 835 | — | |||||||
Parent’s subsidiaries |
| |||||||||
KB Securities Co., Ltd. | Derivative assets | 17,465 | 9,424 | |||||||
Loans measured at amortized cost (gross amount) | 97,803 | 65,289 | ||||||||
Allowances for credit losses | 88 | 23 | ||||||||
Other assets | 4,983 | 18,320 | ||||||||
Derivative liabilities | 11,630 | 3,979 | ||||||||
Deposits | 464,584 | 423,053 | ||||||||
Provisions | 57 | 30 | ||||||||
Other liabilities | 25,000 | 14,825 | ||||||||
KB Asset Management Co., Ltd. | Other assets | 327 | 260 | |||||||
Derivative liabilities | 373 | — | ||||||||
Deposits | 6,915 | 6,929 | ||||||||
Other liabilities | 6 | 6 | ||||||||
KB Real Estate Trust Co., Ltd. | Other assets | 3 | 2 | |||||||
Deposits | 71,261 | 49,708 | ||||||||
Other liabilities | 346 | 368 | ||||||||
KB Investment Co., Ltd. | Other assets | — | 41 | |||||||
Deposits | 93,970 | 62,686 | ||||||||
Other liabilities | 97 | 53 | ||||||||
KB Credit Information Co., Ltd. | Deposits | 5,340 | 4,047 | |||||||
Other liabilities | 6,196 | 6,022 | ||||||||
167
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Other assets | 390 | 886 | ||||||||
KB Data System Co., Ltd. | Deposits | 17,561 | 21,642 | |||||||
Other liabilities | 4,539 | 5,372 | ||||||||
KB Life Insurance Co., Ltd. | Derivative assets | 90 | — | |||||||
Other assets | 1,436 | 3,804 | ||||||||
Derivative liabilities | 2,682 | 1,532 | ||||||||
Deposits | 2,085 | 571 | ||||||||
Other liabilities | 386 | 506 | ||||||||
KB Kookmin Card Co., Ltd. | Derivative assets | 418 | 676 | |||||||
Loans measured at amortized cost (gross amount) | 36,992 | 16,209 | ||||||||
Allowances for credit losses | 28 | 6 | ||||||||
Other assets | 14,472 | 30,936 | ||||||||
Deposits | 91,586 | 65,518 | ||||||||
Provisions | 455 | 237 | ||||||||
Other liabilities | 57,810 | 59,277 | ||||||||
KB Savings Bank Co., Ltd. | Other assets | — | 144 | |||||||
Other liabilities | 1,088 | 389 | ||||||||
KB Capital Co., Ltd. | Loans measured at amortized cost (gross amount) | 54,400 | 64,489 | |||||||
Allowances for credit losses | 277 | 269 | ||||||||
Other assets | 324 | 1,804 | ||||||||
Deposits | 190,331 | 126,878 | ||||||||
Provisions | 143 | 12 | ||||||||
Other liabilities | 2,521 | 1,337 | ||||||||
KB Insurance Co., Ltd. | Derivative assets | 4,832 | 15,612 | |||||||
Other assets | 14,354 | 8,549 | ||||||||
Derivative liabilities | 29,491 | 6,453 | ||||||||
Deposits | 3,365 | 5,485 | ||||||||
Debentures | 29,994 | 29,991 | ||||||||
Provisions | 11 | 6 | ||||||||
Other liabilities | 12,968 | 3,168 | ||||||||
Prudential Life Insurance Company of Korea Ltd. | Deposits | 303 | — | |||||||
Debentures | 30,000 | — | ||||||||
Other liabilities | 32,537 | — | ||||||||
Hanbando BTL Private Special Asset Fund | Other assets | 32 | 36 | |||||||
KB Senior Loan Private Fund No.1 | Other assets | 1 | 1 | |||||||
KB AMP Infra Private Special Asset Fund No.1(FoFs) | Other assets | 1 | 1 | |||||||
KB KBSTAR Mid-Long Term KTB Active ETF (Bond) * | Other assets | — | 500 | |||||||
KB Onkookmin 2030 TDF Fund (FoFs) * | Other assets | — | 1 | |||||||
KB Muni bond Private Securities Fund No.1 (USD) | Other assets | 2 | 2 | |||||||
KB Global Private Real Estate Debt Fund No.1 | Other assets | 3 | 2 | |||||||
KB NA Compass Energy Private Special Asset Fund | Other assets | 1 | 1 | |||||||
KB Star Office Private Real Estate Investment Trust No.3 | Deposits | 171 | 7,364 | |||||||
Other liabilities | 6 | 58 |
168
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
KB Star Office Private Real Estate Investment Trust No.4 | Loans measured at amortized cost (gross amount) | 20,000 | 20,000 | |||||||
Allowances for credit losses | 2 | — | ||||||||
Other assets | 9 | 13 | ||||||||
Deposits | 532 | 1,983 | ||||||||
Other liabilities | 1 | 16 | ||||||||
KB Global Core Bond Securities Feeder Fund(Bond) | Other assets | 7 | 2 | |||||||
KB Onkookmin Life Income 20 Feeder Fund (FoFs) C-F | Derivative liabilities | 39 | — | |||||||
KB Onkookmin Life Income 40 Feeder Fund (FoFs) C-F | Derivative liabilities | 44 | — | |||||||
KB AU Infigen Energy Private Special Asset Fund * | Other assets | — | 1 | |||||||
KB AU Infigen Energy Private Special Asset Fund No.2 * | Other assets | — | 1 | |||||||
KB New Renewable Energy Private Special Asset Fund No.1 | Other assets | 2 | — | |||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.1 | Other assets | 1 | 1 | |||||||
Derivative liabilities | 3,248 | 335 | ||||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.3 | Other assets | 2 | 1 | |||||||
Derivative liabilities | 8,044 | 6 | ||||||||
KB Europe Renewable Specialized Private Equity Private Asset Investment Trust No.2 | Other assets | 1 | — | |||||||
KB Korea Short Term Premium Private Securities No.10(USD)(Bond) * | Other assets | — | 1 | |||||||
KB Korea Short Term Premium Private Securities No.15(USD)(Bond) | Derivative assets | 1,452 | — | |||||||
Other assets | 1 | — | ||||||||
KB Korea Short Term Premium Private Securities No.17(USD)(Bond) | Derivative assets | 3,268 | — | |||||||
Other assets | 2 | — | ||||||||
KB BMO Senior Loan Private Special Asset Fund No.1(FOF) | Other assets | 2 | — | |||||||
Derivative liabilities | 4,327 | — | ||||||||
KB BMO Senior Loan Private Special Asset Fund No.2(FOF) | Other assets | 2 | — | |||||||
Associates |
| |||||||||
Korea Credit Bureau Co., Ltd. | Deposits | 19,982 | 17,966 | |||||||
| Other liabilities | 5 | — | ||||||||
Incheon Bridge Co., Ltd. | Financial assets at fair value through profit or loss | 38,756 | 37,857 | |||||||
| Loans measured at amortized cost (gross amount) | 133,000 | 147,700 | ||||||||
| Allowances for credit losses | 202 | 11 | ||||||||
| Other assets | 545 | 520 | ||||||||
| Deposits | 39,520 | 45,447 | ||||||||
| Provisions | 286 | 6 | ||||||||
| Other liabilities | 199 | 346 | ||||||||
Jungdo Co., Ltd. | Deposits | 4 | 4 | |||||||
Dae-A Leisure Co., Ltd. | Deposits | 636 | 753 | |||||||
| Other liabilities | 21 | 14 | ||||||||
Computerlife Co., Ltd. | Deposits | — | 1 | |||||||
169
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Skydigital INC. | Deposits | 15 | 25 | |||||||
Jo Yang Industrial Co., Ltd. | Deposits | 2 | 2 | |||||||
NEOMIO CORP. | Deposits | 535 | — | |||||||
KB12-1 Venture Investment Partnership * | Deposits | — | 440 | |||||||
KB High-Tech Company Investment Fund | Deposits | 12,695 | 11,755 | |||||||
| Other liabilities | 1 | 2 | ||||||||
Aju Good Technology Venture Fund | Deposits | 3,093 | 5,456 | |||||||
| Other liabilities | 1 | 2 | ||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | Deposits | 923 | 7,054 | |||||||
| Other liabilities | — | 4 | ||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | Deposits | 1,801 | 12 | |||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Deposits | 8,097 | 13,118 | |||||||
| Other liabilities | 1 | 4 | ||||||||
KB Global Platform Fund | Deposits | 20,197 | 17,928 | |||||||
| Other liabilities | 2 | 9 | ||||||||
WJ Private Equity Fund No.1 | Other assets | 2 | — | |||||||
| Deposits | 349 | — | ||||||||
Associate of Parent |
| |||||||||
KB Star Office Private Real Estate Investment Trust No.1 | Deposits | 4,255 | 8,293 | |||||||
| Other liabilities | 24 | 66 | ||||||||
Associates of Parent’s subsidiaries | ||||||||||
SY Auto Capital Co., Ltd. | Loans measured at amortized cost (gross amount) | — | 1,900 | |||||||
| Allowances for credit losses | — | 4 | ||||||||
| Deposits | 6 | 8 | ||||||||
| Provisions | — | 13 | ||||||||
| Other liabilities | — | 2 | ||||||||
RAND Bio Science Co., Ltd. | Deposits | 693 | 4,452 | |||||||
Wise Asset Management Co., Ltd. | Deposits | — | 21 | |||||||
Food Factory Co., Ltd. | Loans measured at amortized cost (gross amount) | 3,193 | 1,987 | |||||||
| Allowances for credit losses | 8 | 2 | ||||||||
| Other assets | 3 | 1 | ||||||||
| Deposits | 1,555 | 1,073 | ||||||||
| Provisions | 2 | — | ||||||||
| Other liabilities | 9 | 1 | ||||||||
Acts Co., Ltd. | Deposits | 18 | 1 | |||||||
Paycoms Co., Ltd. | Deposits | 1 | 1 | |||||||
Big Dipper Co., Ltd. | Deposits | 1 | 6 | |||||||
APRO Co., Ltd. * | Loans measured at amortized cost (gross amount) | — | 2,016 | |||||||
| Deposits | — | 3,201 | ||||||||
| Other liabilities | — | 1 | ||||||||
Hasys. | Deposits | 1 | — | |||||||
Stratio, Inc. | Deposits | 13 | 726 | |||||||
UPRISE, Inc. | Loans measured at amortized cost (gross amount) | 500 | — | |||||||
| Allowances for credit losses | 1 | — | ||||||||
| Deposits | 11 | — | ||||||||
170
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
CellinCells Co., Ltd. | Deposits | 260 | 1,545 | |||||||
| Other liabilities | — | 1 | ||||||||
COSES GT | Loans measured at amortized cost (gross amount) | 500 | — | |||||||
| Allowances for credit losses | 4 | — | ||||||||
| Other assets | 1 | — | ||||||||
| Deposits | 292 | — | ||||||||
KB No.17 Special Purpose Acquisition Company | Deposits | 1,711 | 1,742 | |||||||
| Other liabilities | 23 | 27 | ||||||||
KB No.18 Special Purpose Acquisition Company | Deposits | 2,101 | 2,140 | |||||||
| Other liabilities | 19 | 28 | ||||||||
KB No.19 Special Purpose Acquisition Company | Deposits | 1,053 | 1,093 | |||||||
| Other liabilities | 3 | 7 | ||||||||
KB No.20 Special Purpose Acquisition Company | Deposits | 1,716 | 1,984 | |||||||
| Other liabilities | 1 | 3 | ||||||||
Fabric Time Co., Ltd. | Deposits | 3,947 | 395 | |||||||
| Other liabilities | 40 | 2 | ||||||||
BNF Corporation Ltd. * | Loans measured at amortized cost (gross amount) | — | 1,400 | |||||||
| Other assets | — | 2 | ||||||||
| Deposits | — | 947 | ||||||||
| Other liabilities | — | 6 | ||||||||
GOMI CORPORATION | Deposits | 37 | — | |||||||
S&E BIO | Deposits | 1,142 | — | |||||||
4N Inc. | Deposits | 76 | — | |||||||
Contents First | Deposits | 1,823 | — | |||||||
| Other liabilities | 7 | — | ||||||||
December & Company Inc. | Deposits | 1 | — | |||||||
GENINUS Inc. | Deposits | 13,630 | — | |||||||
| Other liabilities | 15 | — | ||||||||
KB IGen Private Equity Fund No.1 * | Deposits | — | 147 | |||||||
KB Pre IPO Secondary Venture Fund No.1 | Deposits | 629 | 2,955 | |||||||
| Other liabilities | �� | — | 1 | |||||||
Key management | Loans measured at amortized cost (gross amount) | 4,599 | 3,423 | |||||||
| Allowances for credit losses | 2 | 1 | ||||||||
| Other assets | 4 | 3 | ||||||||
| Deposits | 9,058 | 8,370 | ||||||||
| Other liabilities | 19 | 38 | ||||||||
Others |
| |||||||||
Retirement pension | Other assets | 295 | 366 | |||||||
| Other liabilities | 10,600 | 17,620 | ||||||||
| * | Excluded from the Bank’s related party as of December 31, 2020. |
171
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
40.3 Right-of-use assets and lease liabilities with related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Parent’s subsidiaries | ||||||||||
KB Securities Co., Ltd. | Right-of-use assets | 30,567 | 13,863 | |||||||
| Lease liabilities | 36,118 | 16,658 | ||||||||
KB Kookmin Card Co., Ltd. | Right-of-use assets | 77 | 168 | |||||||
| Lease liabilities | 48 | 28 | ||||||||
KB Capital Co., Ltd. | Right-of-use assets | — | 9 | |||||||
| Lease liabilities | — | 23 | ||||||||
KB Insurance Co., Ltd. | Right-of-use assets | 2,848 | 5,693 | |||||||
| Lease liabilities | 3,152 | 5,751 | ||||||||
40.4 Notional amount of derivative assets and liabilities arising from the related party transactions as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Subsidiaries |
| |||||||||
KH the 2nd L.L.C. * | Notional amount of derivative financial instruments | — | 40,000 | |||||||
Silver Investment 2nd Inc. | Notional amount of derivative financial instruments | 50,000 | 50,000 | |||||||
KBM the 1st L.L.C. | Notional amount of derivative financial instruments | 30,000 | 40,000 | |||||||
KH the 3rd L.L.C. * | Notional amount of derivative financial instruments | — | 30,000 | |||||||
KBH the 1st L.L.C. * | Notional amount of derivative financial instruments | — | 6,500 | |||||||
HLD the 3rd L.L.C. * | Notional amount of derivative financial instruments | — | 112,500 | |||||||
KBH the 3rd L.L.C. * | Notional amount of derivative financial instruments | — | 30,000 | |||||||
KBC the 2nd L.L.C. * | Notional amount of derivative financial instruments | — | 30,000 | |||||||
KLD the 1st L.L.C. | Notional amount of derivative financial instruments | 23,200 | 15,200 | |||||||
LOG the 3rd L.L.C. | Notional amount of derivative financial instruments | 24,300 | 24,300 | |||||||
KBL Incheon 1st L.L.C. | Notional amount of derivative financial instruments | 100,000 | 100,000 | |||||||
KB DTower 1st L.L.C. | Notional amount of derivative financial instruments | 100,000 | 50,000 | |||||||
KB Display 1st L.L.C. | Notional amount of derivative financial instruments | 100,000 | 100,000 | |||||||
KB Alminium 1st L.L.C. | Notional amount of derivative financial instruments | 50,000 | 50,000 | |||||||
KB INO 2nd L.L.C. | Notional amount of derivative financial instruments | 30,000 | 30,000 | |||||||
172
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
KBH the 5th L.L.C. | Notional amount of derivative financial instruments | 25,000 | 25,000 | |||||||
KB Happy 1st L.L.C. | Notional amount of derivative financial instruments | 50,000 | 50,000 | |||||||
KL Industrial 2nd L.L.C. | Notional amount of derivative financial instruments | 20,000 | 30,000 | |||||||
KB Socio the 1st L.L.C. | Notional amount of derivative financial instruments | 30,000 | 30,000 | |||||||
KB Industry the 1st L.L.C. | Notional amount of derivative financial instruments | 20,000 | 30,000 | |||||||
KBST the 1st L.L.C. | Notional amount of derivative financial instruments | 30,000 | 30,000 | |||||||
KB Geumjeong Hill L.L.C. | Notional amount of derivative financial instruments | 58,100 | 64,300 | |||||||
KBH the 4th L.L.C. | Notional amount of derivative financial instruments | 24,000 | 30,000 | |||||||
Great Forest the 1st L.L.C. | Notional amount of derivative financial instruments | 20,500 | 25,000 | |||||||
KBC the 3rd L.L.C. | Notional amount of derivative financial instruments | 35,000 | 35,000 | |||||||
KB Future the 1st L.L.C. | Notional amount of derivative financial instruments | 30,000 | 30,000 | |||||||
KBH the 6th L.L.C. | Notional amount of derivative financial instruments | 50,000 | 50,000 | |||||||
Beomuh Landmark the 2nd L.L.C. | Notional amount of derivative financial instruments | 86,100 | 59,000 | |||||||
KB Industry 2nd L.L.C. | Notional amount of derivative financial instruments | 20,000 | 30,000 | |||||||
KB Handok the 1st L.L.C. | Notional amount of derivative financial instruments | 30,000 | 30,000 | |||||||
KB Heracles the 1st L.L.C. | Notional amount of derivative financial instruments | 25,000 | 25,000 | |||||||
K Plus the 1st L.L.C. | Notional amount of derivative financial instruments | 200,000 | 200,000 | |||||||
KB Livv H 1st L.L.C. | Notional amount of derivative financial instruments | 30,000 | — | |||||||
Livv H 1st L.L.C. | Notional amount of derivative financial instruments | 50,000 | — | |||||||
KB Eagles 1st Co., Ltd. | Notional amount of derivative financial instruments | 30,000 | — | |||||||
KB Manchon Harrington Co., Ltd. | Notional amount of derivative financial instruments | 18,600 | — | |||||||
KB Livv l 1st Co., Ltd. | Notional amount of derivative financial instruments | 50,000 | — | |||||||
KB Cheongla Hill Co., Ltd. | Notional amount of derivative financial instruments | 60,000 | — | |||||||
KB Dongin Co., Ltd. | Notional amount of derivative financial instruments | 20,000 | — | |||||||
KB Eagles 2nd Co., Ltd. | Notional amount of derivative financial instruments | 50,000 | — |
173
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
KBH Steal Co., Ltd. | Notional amount of derivative financial instruments | 150,000 | — | |||||||
KB Great Bear 1st L.L.C. | Notional amount of derivative financial instruments | 90,000 | — | |||||||
Ryan Mobility 1st L.L.C. | Notional amount of derivative financial instruments | 50,000 | — | |||||||
KB Chemical 1st Co., Ltd. | Notional amount of derivative financial instruments | 50,000 | — | |||||||
KB Eugene 1st Co., Ltd. | Notional amount of derivative financial instruments | 10,000 | — | |||||||
KB Korea Short Term Premium Private Securities No.16(USD)(Bond) | Notional amount of derivative financial instruments | 21,760 | — | |||||||
Parent’s subsidiaries | ||||||||||
KB Securities Co., Ltd. | Notional amount of derivative financial instruments | 981,259 | 651,372 | |||||||
KB Asset Management Co., Ltd. | Notional amount of derivative financial instruments | 22,297 | — | |||||||
KB Life Insurance Co., Ltd. | Notional amount of derivative financial instruments | 54,892 | 104,058 | |||||||
KB Kookmin Card Co., Ltd. | Notional amount of derivative financial instruments | 30,000 | 44,472 | |||||||
KB Insurance Co., Ltd. | Notional amount of derivative financial instruments | 650,108 | 799,567 | |||||||
KB Onkookmin Life Income 20 Feeder Fund (FoFs) C-F | Notional amount of derivative financial instruments | 2,305 | — | |||||||
KB Onkookmin Life Income 40 Feeder Fund (FoFs) C-F | Notional amount of derivative financial instruments | 2,617 | — | |||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.1 | Notional amount of derivative financial instruments | 27,200 | 29,153 | |||||||
KB NA Loan Specialty Private Real Estate Investment Trust No.3 | Notional amount of derivative financial instruments | 89,760 | 95,519 | |||||||
KB Korea Short Term Premium Private Securities No.15(USD)(Bond) | Notional amount of derivative financial instruments | 22,032 | — | |||||||
KB Korea Short Term Premium Private Securities No.17(USD)(Bond) | Notional amount of derivative financial instruments | 77,030 | — | |||||||
KB BMO Senior Loan Private Special Asset Fund No.1(FOF) | Notional amount of derivative financial instruments | 50,798 | — |
| * | Excluded from the Bank’s related party as of December 31, 2020. |
174
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
40.5 Significant lending transactions with related parties for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 1 | |||||||||||||||||||
| Beginning | Loans | Collections | Others | Ending | ||||||||||||||||
Subsidiaries | ||||||||||||||||||||
Kookmin Bank Cambodia Plc. | 115,780 | 200,268 | 105,698 | (14,510 | ) | 195,840 | ||||||||||||||
Kookmin Bank (China) Ltd. | 1,169,378 | 1,396,787 | 1,342,218 | (70,667 | ) | 1,153,280 | ||||||||||||||
PRASAC Microfinance Institution Plc. | — | 136,000 | — | — | 136,000 | |||||||||||||||
PT Bank Bukopin TBK | — | 1,375,762 | 703,872 | (19,090 | ) | 652,800 | ||||||||||||||
Structured entities 2 | 3,682 | 204,017 | 203,706 | (64 | ) | 3,929 | ||||||||||||||
KB Core Blind Private Estate Fund No.1 | 10,000 | — | — | — | 10,000 | |||||||||||||||
Parent’s subsidiaries | ||||||||||||||||||||
KB Securities Co., Ltd. | 65,289 | 1,164,587 | 1,129,114 | (2,959 | ) | 97,803 | ||||||||||||||
KB Kookmin Card Co., Ltd. | 16,209 | 176,087 | 154,327 | (977 | ) | 36,992 | ||||||||||||||
KB Capital Co., Ltd. | 64,489 | 62,423 | 69,139 | (3,373 | ) | 54,400 | ||||||||||||||
KB Star Office Private Real Estate Investment Trust No.4 | 20,000 | — | — | — | 20,000 | |||||||||||||||
KB Wise Star Private Real Estate Feeder Fund No.12 4 | — | 34,000 | — | (34,000 | ) | — | ||||||||||||||
Associates | ||||||||||||||||||||
Incheon Bridge Co., Ltd. | 185,557 | — | 14,700 | 899 | 171,756 | |||||||||||||||
Carlife Co., Ltd. | — | 22 | 22 | — | — | |||||||||||||||
Associates of Parent’s subsidiaries | ||||||||||||||||||||
SY Auto Capital Co., Ltd. | 1,900 | 11,250 | 13,150 | — | — | |||||||||||||||
Food Factory Co., Ltd. | 1,987 | 1,225 | 20 | 1 | 3,193 | |||||||||||||||
APRO Co., Ltd. 4 | 2,016 | 2,000 | — | (4,016 | ) | — | ||||||||||||||
BNF Corporation Ltd. 4 | 1,400 | 1,000 | — | (2,400 | ) | — | ||||||||||||||
Acts Co., Ltd. | — | 74 | 74 | — | — | |||||||||||||||
UPRISE, Inc. | — | 500 | — | — | 500 | |||||||||||||||
COSES GT | — | 500 | — | — | 500 | |||||||||||||||
Key management 5 | 3,423 | 3,276 | 3,422 | 1,322 | 4,599 | |||||||||||||||
175
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | 2019 1 | |||||||||||||||||||
| Beginning | Loans | Collections | Others | Ending | ||||||||||||||||
Subsidiaries | ||||||||||||||||||||
Kookmin Bank Cambodia Plc. | 55,905 | 104,097 | 46,701 | 2,479 | 115,780 | |||||||||||||||
Kookmin Bank (China) Ltd. | 860,937 | 1,847,850 | 1,575,046 | 35,637 | 1,169,378 | |||||||||||||||
Structured entities 3 | 3,129 | 19,362 | 18,660 | (149 | ) | 3,682 | ||||||||||||||
KB Core Blind Private Estate Fund No.1 | — | 10,000 | — | — | 10,000 | |||||||||||||||
Parent’s subsidiaries | ||||||||||||||||||||
KB Securities Co., Ltd. | 25,617 | 892,470 | 853,096 | 298 | 65,289 | |||||||||||||||
KB Kookmin Card Co., Ltd. | — | 261,060 | 244,851 | — | 16,209 | |||||||||||||||
KB Capital Co., Ltd. | 54,787 | 7,624 | — | 2,078 | 64,489 | |||||||||||||||
KB Star Office Private Real Estate Investment Trust No.3 | 24,000 | — | 24,000 | — | — | |||||||||||||||
KB Star Office Private Real Estate Investment Trust No.4 | 20,000 | — | — | — | 20,000 | |||||||||||||||
Associates | ||||||||||||||||||||
Incheon Bridge Co., Ltd. | 191,082 | — | 10,500 | 4,975 | 185,557 | |||||||||||||||
Associates of Parent’s subsidiaries | ||||||||||||||||||||
SY Auto Capital Co., Ltd. | 8,300 | 27,998 | 34,398 | — | 1,900 | |||||||||||||||
Food Factory Co., Ltd. | 200 | 1,800 | 20 | 7 | 1,987 | |||||||||||||||
APRO Co., Ltd. 4 | — | 2,000 | — | 16 | 2,016 | |||||||||||||||
BNF Corporation Ltd. 4 | — | — | — | 1,400 | 1,400 | |||||||||||||||
Acts Co., Ltd. | — | 68 | 68 | — | — | |||||||||||||||
Key management 5 | 2,218 | 638 | 555 | 1,122 | 3,423 | |||||||||||||||
| 1 | Transactions between related parties, such as settlements arising from operating activities and daylight overdraft to be repaid on the day of handling, are excluded. |
| 2 | Includes details of KBH the 3rd L.L.C. and 6 others that are excluded from related parties for the year ended December 31, 2020. |
| 3 | Includes details of KL the 1st L.L.C. and 13 others that are excluded from related parties for the year ended December 31, 2019. |
| 4 | Excluded from the Bank’s related party as of December 31, 2020. |
| 5 | Includes details of loan transactions that occurred before they became related parties. |
176
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
40.6 Significant borrowing transactions with related parties for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||||||||||||||
| Beginning | Increase | Decrease | Others 1 | Ending | ||||||||||||||||||||
Parent | ||||||||||||||||||||||||
KB Financial Group Inc. | Deposits | 18,537 | — | — | 4,547 | 23,084 | ||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||
Kookmin Bank Int`l Ltd. (London) 2 | Deposits | 37,387 | — | — | (37,387 | ) | — | |||||||||||||||||
Kookmin Bank Cambodia Plc. | Deposits | 9,126 | — | — | (6,542 | ) | 2,584 | |||||||||||||||||
Kookmin Bank (China) Ltd. | Deposits | 758 | — | — | 1,520 | 2,278 | ||||||||||||||||||
| Borrowings | 139,382 | — | — | (68,825 | ) | 70,557 | ||||||||||||||||||
KB Wise Star Private Real Estate Feeder Fund No.1 | Deposits | 422 | — | 422 | — | — | ||||||||||||||||||
Securitization SPE | Deposits | 1,095 | — | — | (52 | ) | 1,043 | |||||||||||||||||
Structured entities | Deposits | 32,124 | — | 24,053 | (6,975 | ) | 1,096 | |||||||||||||||||
KB Core Blind Private Estate Fund No.1 | Deposits | 5,063 | — | 5,063 | — | — | ||||||||||||||||||
Samsung SRA Private Real Estate Investment Trust No.28D | Deposits | — | — | — | 11 | 11 | ||||||||||||||||||
Parent’s subsidiaries | ||||||||||||||||||||||||
KB Securities Co., Ltd. | Deposits | 423,053 | 75,000 | 97,720 | 64,251 | 464,584 | ||||||||||||||||||
KB Asset Management Co., Ltd. | Deposits | 6,929 | — | — | (14 | ) | 6,915 | |||||||||||||||||
KB Real Estate Trust Co., Ltd. | Deposits | 49,708 | — | — | 21,553 | 71,261 | ||||||||||||||||||
KB Investment Co., Ltd. | Deposits | 62,686 | 258,000 | 230,000 | 3,284 | 93,970 | ||||||||||||||||||
KB Credit Information Co., Ltd. | Deposits | 4,047 | 647 | 410 | 1,056 | 5,340 | ||||||||||||||||||
KB Data System Co., Ltd. | Deposits | 21,642 | 11,500 | 16,500 | 919 | 17,561 | ||||||||||||||||||
KB Life Insurance Co., Ltd. | Deposits | 571 | — | — | 1,514 | 2,085 | ||||||||||||||||||
KB Kookmin Card Co., Ltd. | Deposits | 65,518 | 25,500 | 22,000 | 22,568 | 91,586 | ||||||||||||||||||
KB Capital Co., Ltd. | Deposits | 126,878 | — | — | 63,453 | 190,331 | ||||||||||||||||||
KB Insurance Co., Ltd. | Deposits | 5,485 | — | — | (2,120 | ) | 3,365 | |||||||||||||||||
| Debentures | 29,991 | — | — | 3 | 29,994 | |||||||||||||||||||
Prudential Life Insurance Company of Korea Ltd. | Deposits | — | — | — | 303 | 303 | ||||||||||||||||||
| Debentures | — | — | — | 30,000 | 30,000 | |||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.3 | Deposits | 7,364 | — | 7,193 | — | 171 | ||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.4 | Deposits | 1,983 | — | 1,451 | — | 532 | ||||||||||||||||||
Associates | ||||||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | Deposits | 17,966 | 1,000 | — | 1,016 | 19,982 | ||||||||||||||||||
Incheon Bridge Co., Ltd. | Deposits | 45,447 | 20,000 | 21,260 | (4,667 | ) | 39,520 | |||||||||||||||||
Jungdo Co., Ltd. | Deposits | 4 | — | — | — | 4 | ||||||||||||||||||
177
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Dae-A Leisure Co., Ltd. | Deposits | 753 | — | — | (117 | ) | 636 | |||||||||||||||
Computerlife Co., Ltd. | Deposits | 1 | — | — | (1 | ) | — | |||||||||||||||
Skydigital INC. | Deposits | 25 | — | — | (10 | ) | 15 | |||||||||||||||
Jo Yang Industrial Co., Ltd. | Deposits | 2 | — | — | — | 2 | ||||||||||||||||
KB12-1 Venture Investment Partnership 2 | Deposits | 440 | — | — | (440 | ) | — | |||||||||||||||
KB High-Tech Company Investment Fund | Deposits | 11,755 | 8,000 | 8,000 | 940 | 12,695 | ||||||||||||||||
Aju Good Technology Venture Fund | Deposits | 5,456 | 1,442 | — | (3,805 | ) | 3,093 | |||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | Deposits | 7,054 | 1,500 | 6,500 | (1,131 | ) | 923 | |||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | Deposits | 12 | — | — | 1,789 | 1,801 | ||||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Deposits | 13,118 | — | — | (5,021 | ) | 8,097 | |||||||||||||||
KB Global Platform Fund | Deposits | 17,928 | — | — | 2,269 | 20,197 | ||||||||||||||||
NEOMIO CORP. | Deposits | — | — | — | 535 | 535 | ||||||||||||||||
WJ Private Equity Fund No.1 | Deposits | — | — | — | 349 | 349 | ||||||||||||||||
Associate of Parent | ||||||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | Deposits | 8,293 | 2,117 | 5,630 | (525 | ) | 4,255 | |||||||||||||||
Associates of Parent’s subsidiaries | ||||||||||||||||||||||
SY Auto Capital Co., Ltd. | Deposits | 8 | — | — | (2 | ) | 6 | |||||||||||||||
KB No.17 Special Purpose Acquisition Company | Deposits | 1,742 | 1,525 | 1,500 | (56 | ) | 1,711 | |||||||||||||||
KB No.18 Special Purpose Acquisition Company | Deposits | 2,140 | 2,063 | 2,100 | (2 | ) | 2,101 | |||||||||||||||
KB No.19 Special Purpose Acquisition Company | Deposits | 1,093 | 1,000 | 1,000 | (40 | ) | 1,053 | |||||||||||||||
KB No.20 Special Purpose Acquisition Company | Deposits | 1,984 | 1,522 | 1,500 | (290 | ) | 1,716 | |||||||||||||||
RAND Bio Science Co., Ltd. | Deposits | 4,452 | 2,250 | 3,750 | (2,259 | ) | 693 | |||||||||||||||
Wise Asset Management Co., Ltd. | Deposits | 21 | — | — | (21 | ) | — | |||||||||||||||
Food Factory Co., Ltd. | Deposits | 1,073 | 1,503 | 1,003 | (18 | ) | 1,555 | |||||||||||||||
Acts Co., Ltd. | Deposits | 1 | — | — | 17 | 18 | ||||||||||||||||
Paycoms Co., Ltd. | Deposits | 1 | — | — | — | 1 | ||||||||||||||||
Big Dipper Co., Ltd. | Deposits | 6 | — | — | (5 | ) | 1 | |||||||||||||||
APRO Co., Ltd. 2 | Deposits | 3,201 | — | — | (3,201 | ) | — | |||||||||||||||
Hasys. | Deposits | — | — | — | 1 | 1 | ||||||||||||||||
Stratio, Inc. | Deposits | 726 | — | — | (713 | ) | 13 |
178
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
UPRISE, Inc. | Deposits | — | — | — | 11 | 11 | ||||||||||||||||
CellinCells Co., Ltd. | Deposits | 1,545 | — | — | (1,285 | ) | 260 | |||||||||||||||
COSES GT | Deposits | — | — | — | 292 | 292 | ||||||||||||||||
Fabric Time Co., Ltd. | Deposits | 395 | 7,002 | 3,801 | 351 | 3,947 | ||||||||||||||||
BNF Corporation Ltd. 2 | Deposits | 947 | — | — | (947 | ) | — | |||||||||||||||
GOMI CORPORATION | Deposits | — | — | — | 37 | 37 | ||||||||||||||||
S&E BIO | Deposits | — | — | — | 1,142 | 1,142 | ||||||||||||||||
KB IGen Private Equity Fund No.1 2 | Deposits | 147 | — | — | (147 | ) | — | |||||||||||||||
KB Pre IPO Secondary Venture Fund No.1 | Deposits | 2,955 | — | — | (2,326 | ) | 629 | |||||||||||||||
4N Inc. | Deposits | — | — | — | 76 | 76 | ||||||||||||||||
Contents First | Deposits | — | 4,000 | 3,000 | 823 | 1,823 | ||||||||||||||||
December & Company Inc. | Deposits | — | — | — | 1 | 1 | ||||||||||||||||
GENINUS Inc. | Deposits | — | — | — | 13,630 | 13,630 | ||||||||||||||||
Key management 3 | Deposits | 8,370 | 15,241 | 15,206 | 653 | 9,058 |
| 2019 | ||||||||||||||||||||||
| (In millions of Korean won) | Beginning | Increase | Decrease | Others 1 | Ending | |||||||||||||||||
Parent | ||||||||||||||||||||||
KB Financial Group Inc. | Deposits | 69,621 | 310,000 | 370,000 | 8,916 | 18,537 | ||||||||||||||||
Subsidiaries | ||||||||||||||||||||||
Kookmin Bank Int`l Ltd. (London) 2 | Deposits | — | — | — | 37,387 | 37,387 | ||||||||||||||||
Kookmin Bank Cambodia Plc. | Deposits | 2,017 | — | — | 7,109 | 9,126 | ||||||||||||||||
Kookmin Bank (China) Ltd. | Deposits | 1,963 | — | — | (1,205 | ) | 758 | |||||||||||||||
| Borrowings | 248,398 | — | — | (109,016 | ) | 139,382 | ||||||||||||||||
Securitization SPE | Deposits | 1,310 | — | — | (215 | ) | 1,095 | |||||||||||||||
KB Wise Star Private Real Estate Feeder Fund No.1 | Deposits | 413 | 9 | — | — | 422 | ||||||||||||||||
Structured entities | Deposits | 31,866 | 24,053 | — | (23,795 | ) | 32,124 | |||||||||||||||
KB Core Blind Private Estate Fund No.1 | Deposits | — | 5,063 | — | — | 5,063 | ||||||||||||||||
Parent’s subsidiaries | ||||||||||||||||||||||
KB Asset Management Co., Ltd. | Deposits | 3,284 | — | — | 3,645 | 6,929 | ||||||||||||||||
KB Real Estate Trust Co., Ltd. | Deposits | 27,321 | — | — | 22,387 | 49,708 | ||||||||||||||||
KB Investment Co., Ltd. | Deposits | 20,784 | 410,000 | 365,000 | (3,098 | ) | 62,686 | |||||||||||||||
KB Credit Information Co., Ltd. | Deposits | 4,240 | 1,611 | 1,425 | (379 | ) | 4,047 | |||||||||||||||
KB Data System Co., Ltd. | Deposits | 18,059 | 18,500 | 13,500 | (1,417 | ) | 21,642 | |||||||||||||||
KB Life Insurance Co., Ltd. | Deposits | 1,576 | — | — | (1,005 | ) | 571 | |||||||||||||||
KB Kookmin Card Co., Ltd. | Deposits | 84,089 | 22,000 | 22,000 | (18,571 | ) | 65,518 | |||||||||||||||
KB Capital Co., Ltd. | Deposits | 64,283 | — | — | 62,595 | 126,878 | ||||||||||||||||
KB Insurance Co., Ltd. | Deposits | 2,745 | — | — | 2,740 | 5,485 | ||||||||||||||||
| Debentures | 30,002 | — | — | (11 | ) | 29,991 | ||||||||||||||||
KB Securities Co., Ltd. | Deposits | 334,470 | 96,445 | 75,000 | 67,138 | 423,053 | ||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.3 | Deposits | 5,361 | 2,003 | — | — | 7,364 | ||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.4 | Deposits | 1,629 | 354 | — | — | 1,983 | ||||||||||||||||
179
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Associates | ||||||||||||||||||||||
Korea Credit Bureau Co., Ltd. | Deposits | 15,674 | — | 3,000 | 5,292 | 17,966 | ||||||||||||||||
Incheon Bridge Co., Ltd. | Deposits | 43,666 | 25,260 | 5,260 | (18,219 | ) | 45,447 | |||||||||||||||
Doosung Metal Co., Ltd. | Deposits | 3 | — | — | (3 | ) | — | |||||||||||||||
Jungdo Co., Ltd. | Deposits | 4 | — | — | — | 4 | ||||||||||||||||
Dae-A Leisure Co., Ltd. | Deposits | 1,229 | — | — | (476 | ) | 753 | |||||||||||||||
Carlife Co., Ltd. | Deposits | 2 | — | — | (2 | ) | — | |||||||||||||||
Computerlife Co., Ltd. | Deposits | 1 | — | — | — | 1 | ||||||||||||||||
Skydigital INC. | Deposits | 16 | — | — | 9 | 25 | ||||||||||||||||
Jo Yang Industrial Co., Ltd. | Deposits | — | — | — | 2 | 2 | ||||||||||||||||
KB12-1 Venture Investment Partnership 2 | Deposits | 245 | — | — | 195 | 440 | ||||||||||||||||
KB High-tech Company Investment Fund | Deposits | 275 | 5,500 | 5,500 | 11,480 | 11,755 | ||||||||||||||||
Aju Good Technology Venture Fund | Deposits | 6,439 | — | — | (983 | ) | 5,456 | |||||||||||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | Deposits | 7,088 | 15,000 | 10,000 | (5,034 | ) | 7,054 | |||||||||||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | Deposits | 618 | — | — | (606 | ) | 12 | |||||||||||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Deposits | 18,813 | — | — | (5,695 | ) | 13,118 | |||||||||||||||
KB Global Platform Fund | Deposits | — | — | — | 17,928 | 17,928 | ||||||||||||||||
Associate of parent | ||||||||||||||||||||||
KB Star Office Private Real Estate Investment Trust No.1 | Deposits | 7,946 | 5,018 | 5,072 | 401 | 8,293 | ||||||||||||||||
Associates of parent’s subsidiaries | ||||||||||||||||||||||
SY Auto Capital Co., Ltd. | Deposits | 5 | — | — | 3 | 8 | ||||||||||||||||
KB No.9 Special Purpose Acquisition Company 2 | Deposits | 2,275 | — | 2,266 | (9 | ) | — | |||||||||||||||
KB No.10 Special Purpose Acquisition Company 2 | Deposits | 1,666 | — | 1,618 | (48 | ) | — | |||||||||||||||
KB No.11 Special Purpose Acquisition Company 2 | Deposits | 658 | — | 530 | (128 | ) | — | |||||||||||||||
KB No.17 Special Purpose Acquisition Company | Deposits | — | 1,500 | — | 242 | 1,742 | ||||||||||||||||
KB No.18 Special Purpose Acquisition Company | Deposits | — | 2,200 | 100 | 40 | 2,140 |
180
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
KB No.19 Special Purpose Acquisition Company | Deposits | — | 1,000 | — | 93 | 1,093 | ||||||||||||||||
KB No.20 Special Purpose Acquisition Company | Deposits | — | 1,500 | — | 484 | 1,984 | ||||||||||||||||
RAND Bio Science Co., Ltd. | Deposits | 232 | 1,900 | — | 2,320 | 4,452 | ||||||||||||||||
Wise Asset Management Co., Ltd. | Deposits | 696 | — | 682 | 7 | 21 | ||||||||||||||||
Built On Co., Ltd. 2 | Deposits | 7 | — | — | (7 | ) | — | |||||||||||||||
Food Factory Co., Ltd. | Deposits | 68 | — | — | 1,005 | 1,073 | ||||||||||||||||
Acts Co., Ltd. | Deposits | 29 | — | — | (28 | ) | 1 | |||||||||||||||
Paycoms Co., Ltd. | Deposits | 1 | — | — | — | 1 | ||||||||||||||||
Big Dipper Co., Ltd. | Deposits | 182 | — | — | (176 | ) | 6 | |||||||||||||||
APRO Co., Ltd. 2 | Deposits | 2,201 | — | — | 1,000 | 3,201 | ||||||||||||||||
Rainist Co., Ltd. | Deposits | 1 | — | — | (1 | ) | — | |||||||||||||||
Spark Biopharma Inc.2 | Deposits | 2,630 | 17,000 | 9,000 | (10,630 | ) | — | |||||||||||||||
Stratio, Inc. | Deposits | 516 | — | — | 210 | 726 | ||||||||||||||||
Nexelon Inc.2 | Deposits | — | — | 200 | 200 | — | ||||||||||||||||
CellinCells Co., Ltd. | Deposits | — | — | — | 1,545 | 1,545 | ||||||||||||||||
KB IGen Private Equity Fund No.1 2 | Deposits | 148 | — | — | (1 | ) | 147 | |||||||||||||||
KB Pre IPO Secondary Venture Fund No.1 | Deposits | 1,115 | — | — | 1,840 | 2,955 | ||||||||||||||||
Fabric Time Co., Ltd. | Deposits | — | — | — | 395 | 395 | ||||||||||||||||
BNF Corporation Ltd. 2 | Deposits | — | — | — | 947 | 947 | ||||||||||||||||
Key management 3 | Deposits | 8,119 | 8,724 | 8,232 | (241 | ) | 8,370 |
| 1 | Transactions between related parties, such as settlements arising from operating activities and deposits, are expressed in net amount. |
| 2 | Excluded from the Bank’s related party as of December 31, 2020. |
| 3 | Includes borrowing transactions that occurred before they became related parties. |
181
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
40.7 Significant investment and withdrawal transaction with related parties for the years ended December 31, 2020 and 2019, are as follows:
| 2020 | ||||||||
| (In millions of Korean won) | Equity investments and others | Withdrawals and others | ||||||
Subsidiaries | ||||||||
Kookmin Bank Int`l Ltd. (London) * | — | 49,071 | ||||||
KB Bank Myanmar Co., Ltd. | 221,780 | — | ||||||
PRASAC Microfinance Institution Plc. | 733,976 | — | ||||||
PT Bank Bukopin TBK | 296,630 | — | ||||||
KB Wise Star Private Real Estate Feeder Fund No.1 | — | 58,839 | ||||||
Samsung KODEX 10Y F-LKTB INV ETF | 518,208 | 510,308 | ||||||
KB Haeoreum Private Securities Investment Trust No.83(Bond) | 200,000 | 106,639 | ||||||
KB KBSTAR 3-Year Futures Inverse Securities ETF (Debt-Derivative) | 479,780 | 470,654 | ||||||
Kiwoom Frontier Private Placement Fund No.10 (Bond) | 200,000 | 105,233 | ||||||
Woori Safe Plus Qualified Private Trust S-8 (Bond) | 500,000 | 505,080 | ||||||
Mirae Asset Triumph Global Privately Placed Feeder Investment Trust No.1 | 50,000 | 59,029 | ||||||
Meritz Private Real Estate Fund No.9-2 | 11,311 | 2,129 | ||||||
KB Core Blind Private Estate Fund No.1 | 66,668 | 2,502 | ||||||
KB Global Private Real Estate Debt Fund No.3 (USD) | — | 614 | ||||||
UBS Hana Professional Investor Private Investment Trust No.1 (Bond) | 400,000 | 302,876 | ||||||
Mirae Asset Triumph Privately Placed Investment Trust No.7 | 400,000 | 302,626 | ||||||
Samsung Credit Value Plus Private Investment Trust (Bond) | 300,000 | 100,784 | ||||||
KB Emerging Markets Dept Private Securities Fund(USD)(Bond) | 120,633 | — | ||||||
Samsung SRA Private Real Estate Investment Trust No.28D | 23,970 | 179 | ||||||
KIM Basic Private Investment Trust No.102 (Bond) | 100,000 | — | ||||||
KB Korea Short Term Premium Private Securities No.16(USD)(Bond) | 33,828 | — | ||||||
Parent’s subsidiaries | ||||||||
Hanbando BTL Private Special Asset Fund | — | 24,039 | ||||||
Hope Sharing BTL Private Special Asset Fund | — | 1,655 | ||||||
KB Mezzanine Private Security Investment Trust No.2 * | — | 46,051 | ||||||
KB Intellectual Property Fund | — | 180 | ||||||
KB Senior Loan Private Fund No.1 | — | 1,080 | ||||||
KB KBSTAR Mid-Long Term KTB Active ETF (Bond) * | — | 20,402 | ||||||
KB Onkookmin 2030 TDF Fund (FoFs) * | — | 86 | ||||||
KB Star Office Private Real Estate Investment Trust No.4 | — | 2,101 | ||||||
KB Korea Short Term Premium Private Securities No.10(USD)(Bond) * | — | 69,710 | ||||||
KB New Renewable Energy Private Special Asset Fund No.1 | 32,640 | 871 | ||||||
KB Mezzanine Private Securities Fund No.3 | 18,019 | 16,587 | ||||||
Koratevien Specialist Private Equity Fund No.1 | — | 1,015 | ||||||
KB Europe Renewable Specialized Private Equity Private Asset Investment Trust No.2 | 8,675 | — | ||||||
KB BMO Senior Loan Private Special Asset Fund No.2(FOF) | 29,015 | 566 | ||||||
KB Korea Short Term Premium Private Securities No.15(USD)(Bond) | 23,508 | — | ||||||
KB Korea Short Term Premium Private Securities No.17(USD)(Bond) | 68,082 | — | ||||||
KB Sinansan Line Private Special Asset Fund(SOC) | 27,857 | — | ||||||
182
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Associates | ||||||||
Korea Credit Bureau Co., Ltd. | — | 90 | ||||||
Balhae Infrastructure Company | 894 | 6,973 | ||||||
KB GwS Private Securities Investment Trust | — | 7,453 | ||||||
KB12-1 Venture Investment Partnership * | — | 50,642 | ||||||
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | — | 2,584 | ||||||
Future Planning KB Start-up Creation Fund | — | 3,200 | ||||||
KB High-Tech Company Investment Fund | — | 13,550 | ||||||
Aju Good Technology Venture Fund | — | 2,885 | ||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | — | 3,200 | ||||||
KB-TS Technology Venture Private Equity Fund | 1,200 | 2,940 | ||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 1,125 | — | ||||||
KB Intellectual Property Fund No.2 | 6,000 | — | ||||||
KB Digital Innovation Investment Fund Limited Partnership | 2,800 | — | ||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 4,000 | 1,600 | ||||||
KB SPROTT Renewable Private Equity Fund No.1 | 3,286 | — | ||||||
KB Global Platform Fund | 9,000 | — | ||||||
KB-UTC Inno-Tech Venture Fund | 11,310 | — | ||||||
WJ Private Equity Fund No.1 | 10,000 | — | ||||||
All Together Korea Fund No.2 | 100,000 | 90,127 | ||||||
KB Pre-IPO New Technology Business Investment Fund No.2 | 2,500 | — | ||||||
KB Smart Scale Up Fund | 4,000 | — | ||||||
Associate of Parent’s subsidiaries | ||||||||
KB-Stonebridge Secondary Private Equity Fund | 5,196 | — | ||||||
KB-NAU Special Situation Corporate Restructuring Private Equity Fund | 1,900 | — |
| 2019 | ||||||||
| (In millions of Korean won) | Equity investments and others | Withdrawals and others | ||||||
Subsidiaries | ||||||||
KB Wise Star Private Real Estate Feeder Fund No.1 | 55,900 | 5,724 | ||||||
KB Multi-Asset Private Securities Fund S-1 (Bond Mixed-FoFs) * | — | 235,095 | ||||||
KB Multi-Asset Private Securities Fund P-1 (Bond Mixed-FoFs) * | — | 234,804 | ||||||
Samsung KODEX 10Y F-LKTB INV ETF | 399,624 | 327,414 | ||||||
KB Haeoreum Private Securities Investment Trust No.83(Bond) | 100,000 | — | ||||||
KB KBSTAR 3-Year Futures Inverse Securities ETF (Debt-Derivative) | 309,522 | 369,248 | ||||||
Kiwoom Frontier Private Placement Fund No.10 (Bond) | 100,000 | — | ||||||
Woori Safe Plus Qualified Private Trust S-8 (Bond) | 100,000 | 4,134 | ||||||
Mirae Asset Triumph Global Privately Placed Feeder Investment Trust No.1 | 40,000 | 40,000 | ||||||
NH-Amundi Global Private Securities Investment Trust No.1 (USD) (Bond) | — | 34,460 | ||||||
Meritz Private Real Estate Fund No.9-2 | 13,273 | 1,691 | ||||||
AIP US Red Private Real Estate Trust No.10 | — | 1,388 | ||||||
KB Leaders Private Placement Fund No.10 (Bond) * | 200,000 | 200,108 | ||||||
KB Core Blind Private Estate Fund No.1 | 33,158 | — | ||||||
KB Global Private Real Estate Debt Fund No.3 (USD) | 23,224 | — | ||||||
183
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Parent’s subsidiaries | ||||||||
Hanbando BTL Private Special Asset Fund | — | 21,563 | ||||||
Hope Sharing BTL Private Special Asset Fund | — | 1,653 | ||||||
KB Intellectual Property Fund | — | 182 | ||||||
KB Senior Loan Private Fund No.1 | — | 13,458 | ||||||
KB Evergreen Private Securities Fund 98 (Bond) * | — | 52,302 | ||||||
KB KBSTAR Mid-Long Term KTB Active ETF (Bond) * | — | 500 | ||||||
KB Onkookmin 2025 TDF Fund (FoFs) * | 5,500 | — | ||||||
KB Onkookmin 2030 TDF Fund (FoFs) * | 5,500 | — | ||||||
KB Onkookmin 2035 TDF Fund (FoFs) * | — | 2,289 | ||||||
KB Onkookmin 2045 TDF Fund (FoFs) * | — | 2,184 | ||||||
KB Star Office Private Real Estate Investment Trust No.4 | — | 1,713 | ||||||
KB Korea Short Term Premium Private Securities No.4(USD)(Bond) * | — | 48,050 | ||||||
KB Korea Short Term Premium Private Securities No.5(USD)(Bond) * | 92,776 | 211,053 | ||||||
KB Korea Short Term Premium Private Securities No.10(USD)(Bond) * | 70,176 | — | ||||||
KB Global Core Bond Securities Feeder Fund(Bond) | 30,000 | 22,220 | ||||||
KB Haeoreum Private Securities Investment Trust No.96 * | — | 50,656 | ||||||
KB New Renewable Energy Private Special Asset Fund No.1 | 858 | 4 | ||||||
KB Mezzanine Private Securities Fund No.3 | 22,000 | — | ||||||
Koratevien Specialist Private Equity Fund No.1 | 35,000 | — | ||||||
KB Europe Renewable Specialized Private Equity Private Asset Investment Trust No.2 | 3,767 | — | ||||||
KB Global Infra Private Special Asset Fund No.5 | 1 | — | ||||||
KB Global Infra Private Special Asset Fund No.6 | 1 | — | ||||||
Associates | ||||||||
Korea Credit Bureau Co., Ltd. | — | 135 | ||||||
Balhae Infrastructure Company | 592 | 6,855 | ||||||
KoFC KBIC Frontier Champ 2010-5 (PEF) * | — | 138 | ||||||
KB GwS Private Securities Investment Trust | — | 7,276 | ||||||
KB12-1 Venture Investment Partnership * | — | 3,400 | ||||||
Future Planning KB Start-up Creation Fund | — | 4,400 | ||||||
KB High-Tech Company Investment Fund | — | 6,950 | ||||||
Aju Good Technology Venture Fund | 1,960 | — | ||||||
KB-KDBC Pre-IPO New Technology Business Investment Fund | 2,500 | — | ||||||
KB-TS Technology Venture Private Equity Fund | 4,200 | 1,200 | ||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | 1,125 | — | ||||||
KB Intellectual Property Fund No.2 | 6,000 | — | ||||||
KB Digital Innovation Investment Fund Limited Partnership | 24,500 | — | ||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | 7,000 | — | ||||||
KB SPROTT Renewable Private Equity Fund No.1 | 1,327 | — | ||||||
KB Global Platform Fund | 19,500 | — | ||||||
KB-UTC Inno-Tech Venture Fund | 300 | — | ||||||
Associate of Parent’s subsidiaries | ||||||||
KB-Stonebridge Secondary Private Equity Fund | 4,040 | 1,060 |
| * | Excluded from the Bank’s related party as of December 31, 2020. |
184
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
40.8 Acceptances and guarantees and unused commitments provided to related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Subsidiaries | ||||||||||
KB Microfinance Myanmar Co., Ltd. | Other commitments in foreign currency | 13,056 | — | |||||||
PRASAC Microfinance Institution Plc. | Loan commitments in foreign currency | 108,800 | — | |||||||
PT Bank Bukopin TBK | Other commitments in foreign currency | 163,200 | — | |||||||
KB Wise Star Private Real Estate Feeder Fund No.1 | Purchase of securities | 817 | 817 | |||||||
Structured entities | Loan commitments in Korean won | 8,371 | 7,349 | |||||||
| Purchase of securities | 1,983,840 | 1,597,600 | ||||||||
Meritz Private Real Estate Fund No.9-2 | Purchase of securities | 12,319 | 24,258 | |||||||
KB Core Blind Private Estate Fund No.1 | Purchase of securities | 175 | 66,842 | |||||||
Parent’s subsidiaries | ||||||||||
KB Securities Co., Ltd. | Loan commitments in Korean won | 137,213 | 140,000 | |||||||
KB Investment Co., Ltd. | Loss sharing agreements | 1,000 | 1,000 | |||||||
KB Kookmin Card Co., Ltd. | Loan commitments in Korean won | 820,000 | 820,000 | |||||||
| Other commitments in Korean won | 1,300,000 | 1,300,000 | ||||||||
KB Capital Co., Ltd. | Other commitments in foreign currency | 11,968 | — | |||||||
KB Insurance Co., Ltd. | Loan commitments in Korean won | 20,000 | 20,000 | |||||||
KB Mezzanine Private Security Investment Trust No.2 * | Purchase of securities | — | 11,141 | |||||||
KB Mezzanine Private Securities Fund No.3 | Purchase of securities | 30,241 | 48,260 | |||||||
KB Senior Loan Private Fund No.1 | Purchase of securities | — | 3,770 | |||||||
KB New Renewable Energy Private Special Asset Fund No.1 | Purchase of securities | 6,502 | 39,142 | |||||||
KB Europe Renewable Specialized Private Equity Private Asset Investment Trust No.2 | Purchase of securities | 6,215 | 14,454 | |||||||
KB Global Infra Private Special Asset Fund No.5 | Purchase of securities | 24,999 | 24,999 | |||||||
KB Global Infra Private Special Asset Fund No.6 | Purchase of securities | 24,999 | 24,999 | |||||||
KB BMO Senior Loan Private Special Asset Fund No.2(FOF) | Purchase of securities | 6,435 | — | |||||||
KB Sinansan Line Private Special Asset Fund(SOC) | Purchase of securities | 280,143 | — | |||||||
Associates | ||||||||||
Balhae Infrastructure Company | Purchase of securities | 6,433 | 7,327 | |||||||
Incheon Bridge Co., Ltd. | Loan commitments in Korean won | 20,000 | 20,000 | |||||||
KB GwS Private Securities Investment Trust | Purchase of securities | — | 876 | |||||||
185
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
KoFC POSCO HANWHA KB Shared Growth Private Equity Fund No.2 | Purchase of securities | — | 10,040 | |||||||
Aju Good Technology Venture Fund | Purchase of securities | — | 1,154 | |||||||
KB-TS Technology Venture Private Equity Fund | Purchase of securities | 1,980 | 3,180 | |||||||
KB Digital Innovation & Growth New Technology Business Investment Fund | Purchase of securities | 1,125 | 2,250 | |||||||
KB Intellectual Property Fund No.2 | Purchase of securities | — | 6,000 | |||||||
KB Digital Innovation Investment Fund Limited Partnership | Purchase of securities | — | 2,800 | |||||||
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund | Purchase of securities | 5,000 | 9,000 | |||||||
KB SPROTT Renewable Private Equity Fund No.1 | Purchase of securities | 14,887 | 18,173 | |||||||
KB Global Platform Fund | Purchase of securities | 21,500 | 30,500 | |||||||
KB-UTC Inno-Tech Venture Fund | Purchase of securities | 3,390 | 14,700 | |||||||
All Together Korea Fund No.2 | Purchase of securities | 990,000 | — | |||||||
KB Pre-IPO New Technology Business Investment Fund No.2 | Purchase of securities | 7,500 | — | |||||||
KB Smart Scale Up Fund | Purchase of securities | 46,000 | — | |||||||
Associates of Parent’s subsidiaries | ||||||||||
SY Auto Capital Co., Ltd. | Loan commitments in Korean won | — | 8,100 | |||||||
Food Factory Co., Ltd. | Loan commitments in Korean won | 388 | — | |||||||
BNF Corporation Ltd. * | Loan commitments in Korean won | — | 360 | |||||||
KB-Stonebridge Secondary Private Equity Fund | Purchase of securities | 10,764 | 15,960 | |||||||
KB-NAU Special Situation Corporate Restructuring Private Equity Fund | Purchase of securities | 8,100 | — | |||||||
Key management | Loan commitments in Korean won | 731 | 564 |
| * | Excluded from the Bank’s related party as of December 31, 2020. |
40.9 Acceptances and guarantees and unused commitments provided from related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||
Parent’s subsidiaries | ||||||||||
KB Investment Co., Ltd. | Loss sharing agreements | 3,404 | 12,209 | |||||||
KB Kookmin Card Co., Ltd. | Loan commitment in Korean won | 89,768 | 86,400 | |||||||
40.10 Details of compensation to key management for the years ended December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | 2020 | |||||||||||||||
| Short-term employee benefits | Post- employment benefits | Share-based payments | Total | |||||||||||||
Registered directors (executive) | 1,804 | 76 | 1,532 | 3,412 | ||||||||||||
Registered directors (non-executive) | 432 | — | — | 432 | ||||||||||||
Non-registered directors | 6,286 | 297 | 3,719 | 10,302 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 8,522 | 373 | 5,251 | 14,146 | |||||||||||||
|
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186
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
| (In millions of Korean won) | 2019 | |||||||||||||||
| Short-term employee benefits | Post- employment benefits | Share-based payments | Total | |||||||||||||
Registered directors (executive) | 1,833 | 49 | 1,594 | 3,476 | ||||||||||||
Registered directors (non-executive) | 402 | — | — | 402 | ||||||||||||
Non-registered directors | 5,767 | 213 | 4,235 | 10,215 | ||||||||||||
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| 8,002 | 262 | 5,829 | 14,093 | |||||||||||||
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40.11 Major types of transactions between the Bank and the related parties include deposit taking transactions, loan transactions such as general purpose loans, corporate purchase loans, B2B loans etc., settlements of funds arising from overseas remittance, providing credit line through the acceptance of letter of credit issued by the Bank, and overdraft accounts arising from net settlement agreement between the Bank and KB Kookmin Card Co., Ltd.
40.12 Details of collateral provided to related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | December 31, 2020 | December 31, 2019 | ||||||||||||||||||
| Assets pledged * | Carrying amount | Collateralized amount | Carrying amount | Collateralized amount | ||||||||||||||||
Parent’s subsidiaries | ||||||||||||||||||||
KB Securities Co., Ltd. | Securities | 52,616 | 52,000 | 50,471 | 50,000 | |||||||||||||||
KB Life Insurance Co., Ltd. | Securities | 25,896 | 25,000 | 25,977 | 25,000 | |||||||||||||||
KB Insurance Co., Ltd. | Securities | 49,982 | 50,000 | 49,990 | 50,000 | |||||||||||||||
| * | Collaterals related to lease contracts arising from operating activities between related parties are excluded. |
40.13 Details of collateral provided from related parties as of December 31, 2020 and 2019, are as follows:
| (In millions of Korean won) | Assets pledged as collateral 1 | December 31, 2020 | December 31, 2019 | |||||||
Subsidiary | ||||||||||
Taejon Samho The First Co., Ltd. | Beneficiary certificate of land development trust | 130,000 | 130,000 | |||||||
KB Core Blind Private Estate Fund No.1 | Real estate | 12,000 | 12,000 | |||||||
Parent’s subsidiaries | ||||||||||
KB Securities Co., Ltd. | Time deposits / Beneficiary right certificate | 167,000 | 167,000 | |||||||
Securities | 26,981 | 27,948 | ||||||||
Real estate 2 | 12,000 | 12,000 | ||||||||
KB Life Insurance Co., Ltd. | Securities | 10,000 | 10,000 | |||||||
KB Kookmin Card Co., Ltd. | Time deposits | 22,000 | 22,000 | |||||||
KB Insurance Co., Ltd. | Securities | 60,000 | 135,500 | |||||||
KB Credit Information Co., Ltd. | Time deposits and others | 1,848 | 1,611 | |||||||
KB Star Office Private Real Estate Investment Trust No.4 | Real estate | 24,000 | 24,000 | |||||||
Key management | Time deposits and others | 213 | 192 | |||||||
Real estate | 4,056 | 2,922 | ||||||||
| 1 | Collaterals related to lease contracts arising from operating activities between related parties are excluded. |
| 2 | Related to KB Wise Star Jongno Tower Real Estate Master Fund, a subsidiary of KB Securities Co., Ltd. |
187
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
As of December 31, 2020, Incheon Bridge Co., Ltd., a related party, provides fund management account, civil engineering works insurance, and management and operations rights as senior collateral amounting toW 611,000 million to the project financing group that consists of the Bank and 5 other institutions, and as subordinated collateral amounting toW 384,800 million to subordinated debt holders that consist of the Bank and 2 other institutions. Also, it provides certificate of credit guarantee amounting toW 400,000 million as collateral to the project financing group that consists of the Bank and 5 other institutions.
40.14 The amounts of debt securities and others purchased through KB securities Co., Ltd. areW 14,312,409 million andW 12,778,602 million for the years ended December 31, 2020 and 2019, respectively, and the amounts of debt securities and others sold through KB securities Co., Ltd. areW 14,569,878 million andW 7,799,397 million for the years ended December 31, 2020 and 2019, respectively. In addition, KB Securities Co., Ltd. acquired through underwriting ofW 400,000 million andW 2,120,000 million of debentures issued by the Bank for the years ended December 31, 2020 and 2019, respectively.
40.15 The amounts of intangible assets and others purchased from KB Data System Co., Ltd. areW 21,547 million andW 37,004 million for the years ended December 31, 2020 and 2019, respectively.
40.16 The Bank has entered into CLS (Continuous Linked Settlement) service agreement with KB Securities Co., Ltd. and accordingly the Bank is able to provide intraday liquidity of USD 500 million on the condition of repayment on the day of payment.
40.17 The Bank and KB Kookmin Card Co., Ltd. are jointly and severally liable for the liabilities of the Bank before the spin-off date.
41. Approval of Issuance of the Financial Statements
The issuance of the Bank’s financial statements as of and for the year ended December 31, 2020, was approved by the Board of Directors on February 3, 2021.
188
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
Review Report on Internal Control over Financial Reporting
Based on a report originally issued in Korean
To the President of
Kookmin Bank
We have reviewed the accompanying Operating Status Report of the Internal Control over Financial Reporting (“ICFR”) of Kookmin Bank (the “Bank”) as of December 31, 2020. The Company’s management is responsible for designing and maintaining effective ICFR and for its assessment of the effectiveness of ICFR. Our responsibility is to review management’s assessment and issue a report based on our review. In the accompanying report of management’s assessment of ICFR, the Bank’s management stated: “Based on our assessment, we concluded that the Company’s ICFR is designed and operated effectively as of December 31, 2020, in all material respects, in accordance with the Conceptual Framework for Designing and Operating Internal Control over Financial Reporting”
We conducted our review in accordance with ICFR Review Standards, issued by the Korean Institute of Certified Public Accountants. Those Standards require that we plan and perform the review to obtain assurance of a level less than that of an audit as to whether the Operating Status Report of the Internal Control over Financial Reporting is free of material misstatement. Our review consists principally of obtaining an understanding of the Bank’s ICFR, inquiries of company personnel about the details of the report, and tracing to related documents we considered necessary in the circumstances. We have not performed an audit and, accordingly, we do not express an audit opinion.
A Bank’s ICFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Korean International Financial Reporting Standards. Because of its inherent limitations, however, ICFR may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Based on our review, nothing has come to our attention that the Operating Status Report of the Internal Control over Financial Reporting as of December 31, 2020 is not prepared in all material respects, in accordance with the Conceptual Framework for Designing and Operating Internal Control over Financial Reporting.
189
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
This report applies to the Bank’s ICFR in existence as of December 31, 2020. We did not review the Bank’s ICFR subsequent to December 31, 2020. This report has been prepared for Korean regulatory purposes, pursuant to the Act on External Audit of Stock Companies, Etc. and may not be appropriate for other purposes or for other users.
/s/ KPMG Samjong Accounting Corp.
March 8, 2021
Notice to Readers This report is annexed in relation to the audit of the financial statements as of December 31, 2020. |
190
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to the Separate Financial Statements
December 31, 2020 and 2019
the Internal Control over Financial Reporting
To the Shareholder, Board of Directors and Audit Committee of Kookmin Bank
We, as the Chief Executive Officer (“CEO”) and the Internal Accounting Manager of Kookmin Bank(“the Company”), assessed operating status of the Company’s Internal Control over Financial Reporting(“ICFR”) for the year ended December 31, 2020.
The Company’s management, including ourselves, is responsible for designing and operating ICFR.
We assessed whether the Company effectively designed and operated its ICFR to prevent and detect errors or frauds which may cause a misstatement in financial statements to ensure preparation and disclosure of reliable financial information.
We used the ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’ established by the Operating Committee of Internal Control over Financial Reporting in Korea (the “ICFR Committee”) as the criteria for design and operation of the Company’s ICFR. We also conducted an assessment of ICFR based on the ‘Management Guideline for Evaluating and Reporting Effectiveness of Internal Control over Financial Reporting’ established by the ICFR Committee.
Based on our assessment, we concluded that the Company’s ICFR is designed and operated effectively as of December 31, 2020, in all material respects, in accordance with the ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’.
We certify that this report does not contain any untrue statement of a fact, or omit to state a fact necessary to be presented herein. We also certify that this report does not contain or present any statements which might cause material misunderstandings of the readers, and we have reviewed and verified this report with sufficient care.
February 23, 2021
Yin Hur,
Chief Executive Officer
Mun Cheol Jeong
Internal Accounting Manager
191
