Korea Development Bank 424B2 Prospectus for primary offering

Filed Pursuant to Rule 424(b)(2)
Registration No. 333-203739

PROSPECTUS SUPPLEMENT

(To Prospectus Dated June 21, 2016)

The Korea Development Bank

US$500,000,000 Floating Rate Notes due 2020

US$500,000,000 Floating Rate Notes due 2022

US$500,000,000 2.625% Notes due 2022

Our US$500,000,000 aggregate principal amount of floating rate notes due 2020 (the “2020 Notes”) will bear interest at a rate equal to Three-Month USD LIBOR (as defined herein) plus 0.45% per annum, and our US$500,000,000 aggregate principal amount of floating rate notes due 2022 (the “2022 Notes”, and together with the 2020 Notes, the “Floating Rate Notes”) will bear interest at a rate equal to Three-Month USD LIBOR (as defined herein) plus 0.705% per annum. Interest on the Floating Rate Notes is payable quarterly in arrears on February 27, May 27, August 27 and November 27 of each year. The first interest payment on the Floating Rate Notes will be made on May 27, 2017 in respect of the period from (and including) February 27, 2017 to (but excluding) May 27, 2017. The 2020 Notes will mature on February 27, 2020, and the 2022 Notes will mature on February 27, 2022.

Our US$500,000,000 aggregate principal amount of notes due 2022 (the “Fixed Rate Notes”) will bear interest at a rate of 2.625% per annum. Interest on the Fixed Rate Notes is payablesemi-annually in arrears on February 27 and August 27 of each year, beginning on August 27, 2017. The Fixed Rate Notes will mature on February 27, 2022.

All references to the “Notes” are to the 2020 Notes, the 2022 Notes and the Fixed Rate Notes, collectively.

The Notes will be issued in minimum denominations of US$200,000 principal amount and integral multiples of US$1,000 in excess thereof. The Notes will be represented by one or more global notes registered in the name of a nominee of The Depository Trust Company, as depositary.

The payment of interest and the repayment of principal on the Notes will not be guaranteed by the Government (as defined herein).

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	2020 Notes					2022 Notes					Fixed Rate Notes
	Per Note			Total		Per Note			Total		Per Note			Total
Public offering price		100.000	%	US$	500,000,000		100.000	%	US$	500,000,000		99.489	%	US$	497,445,000
Underwriting discount		0.300	%	US$	1,500,000		0.300	%	US$	1,500,000		0.300	%	US$	1,500,000
Proceeds to us (before deduction of expenses)		99.700	%	US$	498,500,000		99.700	%	US$	498,500,000		99.189	%	US$	495,945,000

In addition to the initial public offering price, you will have to pay for accrued interest, if any, from and including February 27, 2017.

Applications will be made to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for the listing and quotation of the Notes. The SGX-ST assumes no responsibility for the correctness of any statements made, opinions expressed or reports contained in this prospectus supplement and the accompanying prospectus. Approval in-principle from, admission to the Official List of, and the listing and quotation of any Notes on, the SGX-ST are not to be taken as an indication of the merits of the issuer or the Notes. Currently, there is no public market for the Notes.

We expect to make delivery of the Notes to investors through the book-entry facilities of The Depository Trust Company on or about February 27, 2017.

Joint Bookrunners and Lead Managers

ANZ Securities
	BofA Merrill Lynch
		Citigroup
			COMMERZBANK
				Crédit Agricole CIB
					Credit Suisse
						KDB Asia

Prospectus Supplement Dated February 21, 2017

You should rely only on the information contained in or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to provide you with different information. We are not making an offer to sell these securities in any state or jurisdiction where the offer or sale is not permitted.

TABLE OF CONTENTS

Prospectus Supplement

	Page
Summary of the Offering		S-5
Use of Proceeds		S-7
Recent Developments		S-8
Description of the Notes		S-137
Clearance and Settlement		S-141
Taxation		S-144
Underwriting		S-145
Legal Matters		S-151
Official Statements and Documents		S-151
General Information		S-151

Prospectus

	Page
Certain Defined Terms and Conventions		1
Use of Proceeds		2
The Korea Development Bank		3
Overview		3
Capitalization		7
Business		7
Selected Financial Statement Data		9
Operations		15
Sources of Funds		23
Debt		24
Overseas Operations		26
Property		26
Directors and Management; Employees		26
Tables and Supplementary Information		27
Financial Statements and the Auditors		32
The Republic of Korea		155
Land and History		155
Government and Politics		157
The Economy		160
Principal Sectors of the Economy		168
The Financial System		175
Monetary Policy		181
Balance of Payments and Foreign Trade		184
Government Finance		192
Debt		195
Tables and Supplementary Information		197

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	Page
Description of the Securities		200
Description of Debt Securities		200
Description of Warrants		207
Terms Applicable to Debt Securities and Warrants		207
Description of Guarantees to be Issued by Us		208
Description of Guarantees to be Issued by The Republic of Korea		209
Limitations on Issuance of Bearer Debt Securities and Bearer Warrants		210
Taxation		211
Korean Taxation		211
United States Tax Considerations		213
Plan of Distribution		221
Legal Matters		222
Authorized Representatives in the United States		222
Official Statements and Documents		222
Experts		222
Forward-Looking Statements		223
Further Information		225

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Certain Defined Terms

All references to “we” or “us” mean The Korea Development Bank. All references to “Korea” or the “Republic” contained in this prospectus supplement mean The Republic of Korea. All references to the “Government” mean the government of Korea. Terms used but not defined in this prospectus supplement shall have the same meanings given to them in the accompanying prospectus.

Our separate financial information as of and for the six months ended June 30, 2015 and 2016 included in this prospectus supplement has been prepared in accordance with International Financial Reporting Standards as adopted in Korea (“Korean IFRS” or “K-IFRS”). References in this prospectus supplement to “separate” financial statements and information are to financial statements and information prepared on a non-consolidated basis. Unless specified otherwise, our financial and other information included in this prospectus supplement is presented on a separate basis in accordance with Korean IFRS and does not include such information with respect to our subsidiaries.

In this prospectus supplement and the accompanying prospectus, where information has been provided in units of thousands, millions or billions, such amounts have been rounded up or down. Accordingly, actual numbers may differ from those contained herein due to rounding. Any discrepancy between the stated total amount and the actual sum of the itemized amounts listed in a table, is due to rounding.

Additional Information

The information in this prospectus supplement is in addition to the information contained in our prospectus dated June 21, 2016. The accompanying prospectus contains information regarding ourselves and Korea, as well as a description of some terms of the Notes. You can find further information regarding us, Korea, and the Notes in registration statement no.333-203739, as amended, relating to our debt securities, with or without warrants, and guarantees, which is on file with the U.S. Securities and Exchange Commission.

We are Responsible for the Accuracy of the Information in this Document

We are responsible for the accuracy of the information in this document and confirm that to the best of our knowledge we have included all facts that should be included not to mislead potential investors. TheSGX-ST assumes no responsibility for the correctness of any statements made, opinions expressed or reports contained in this prospectus supplement and the accompanying prospectus. Approval in-principle from, admission to the Official List of, and the listing and quotation of any Notes on, theSGX-ST are not to be taken as an indication of the merits of the issuer or the Notes.

Not an Offer if Prohibited by Law

The distribution of this prospectus supplement and the accompanying prospectus, and the offer of the Notes, may be legally restricted in some countries. If you wish to distribute this prospectus supplement or the accompanying prospectus, you should observe any restrictions. This prospectus supplement and the accompanying prospectus should not be considered an offer and should not be used to make an offer, in any state or country which prohibits the offering.

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The Notes may not be offered or sold in Korea, directly or indirectly, or to any resident of Korea, except as permitted by Korean law. For more information, see “Underwriting—Foreign Selling Restrictions.”

Information Presented Accurate as of Date of Document

This prospectus supplement and the accompanying prospectus are the only documents on which you should rely for information about the offering. We have authorized no one to provide you with different information. You should not assume that the information in this prospectus supplement or the accompanying prospectus is accurate as of any date other than the date on the front of each document.

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SUMMARY OF THE OFFERING

This summary highlights selected information from this prospectus supplement and the accompanying prospectus and may not contain all of the information that is important to you. To understand the terms of our Notes, you should carefully read this prospectus supplement and the accompanying prospectus.

The Notes

We are offering US$500,000,000 aggregate principal amount of floating rate notes due February 27, 2020 (the “2020 Notes”), US$500,000,000 aggregate principal amount of floating rate notes due February 27, 2022 (the “2022 Notes”, and together with the 2020 Notes, the “Floating Rate Notes”) and US$500,000,000 aggregate principal amount of 2.625% notes due February 27, 2022 (the “Fixed Rate Notes”). All references to the “Notes” are to the 2020 Notes, the 2022 Notes and the Fixed Rate Notes, collectively.

The Notes will be issued in minimum denominations of US$200,000 principal amount and integral multiples of US$1,000 in excess thereof. The Notes will be represented by one or more global securities registered in the name of a nominee of The Depository Trust Company (“DTC”), as depositary.

The payment of interest and the repayment of principal on the Notes will not be guaranteed by the Government.

We do not have any right to redeem the Notes prior to maturity.

Floating Rate Notes

The 2020 Notes will bear interest at a rate equal to Three-Month USD LIBOR plus 0.45% per annum, and the 2022 Notes will bear interest at a rate equal to Three-Month USD LIBOR plus 0.705% per annum, in each case payable quarterly in arrears on February 27, May 27, August 27 and November 27 of each year. The first interest payment on the Floating Rate Notes will be made on May 27, 2017, in respect of the period from (and including) February 27, 2017 to (but excluding) May 27, 2017. Interest on the Floating Rate Notes will accrue from February 27, 2017, and will be computed on the basis of the actual number of days in the applicable Interest Period divided by 360.

Fixed Rate Notes

The Fixed Rate Notes will bear interest at a rate of 2.625% per annum, payable semi-annually in arrears on February 27 and August 27, beginning on August 27, 2017. Interest on the Fixed Rate Notes will accrue from February 27, 2017 and will be computed based on a 360-day year consisting of twelve 30-day months.

See “Description of the Notes—Payment of Principal and Interest.”

Listing

Applications will be made to the SGX-ST for the listing and quotation of the Notes. Settlement of the Notes is not conditioned on obtaining the listing. The Notes will be traded in a minimum board lot size of S$200,000 (or its equivalent in foreign currencies) for so long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require. Accordingly, the Notes will be traded on the SGX-ST in a minimum board lot size of US$200,000.

Form and Settlement

We will issue each series of the Notes in the form of one or more fully registered global notes, registered in the name of a nominee of DTC, as depositary. Except as described in the accompanying prospectus under “Description of the Securities—Description of Debt Securities—Global Securities,” the global notes will not be exchangeable for Notes in definitive registered form, and will not be issued in definitive registered form. Financial institutions, acting as direct and indirect participants in DTC, will represent your beneficial interests in

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the global notes. These financial institutions will record the ownership and transfer of your beneficial interest through book-entry accounts. You may hold your beneficial interests in the Notes through Euroclear Bank S.A./N.V. (“Euroclear”) or Clearstream Banking,société anonyme(“Clearstream”) if you are a participant in such systems, or indirectly through organizations that are participants in such systems. Any secondary market trading of book-entry interests in the Notes will take place through DTC participants, including Euroclear and Clearstream. See “Clearance and Settlement—Transfers Within and Between DTC, Euroclear and Clearstream.”

Further Issues

We may from time to time, without the consent of the holders of the Notes, create and issue additional debt securities with the same terms and conditions as either series of the Notes in all respects so that such further issue shall be consolidated and form a single series with the relevant series of the Notes. We will not issue any such additional debt securities unless such additional securities have no more than ade minimis amount of original issue discount or such issuance would otherwise constitute a “qualified reopening” for U.S. federal income tax purposes.

Delivery of the Notes

We expect to make delivery of the Notes, against payment insame-day funds on or about February 27, 2017, which we expect will be the fourth business day following the date of this prospectus supplement, referred to as “T+4.” You should note that initial trading of the Notes may be affected by the T+4 settlement. See “Underwriting—Delivery of the Notes.”

Underwriting

KDB Asia Limited, one of the underwriters, is our affiliate and has agreed to offer and sell the Notes only outside the United States to non-U.S. persons. See “Underwriting—Relationship with the Underwriters.”

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USE OF PROCEEDS

The net proceeds from the issue of the Notes, after deducting the underwriting discount but not estimated expenses, will be US$1,492,945,000. We will use the net proceeds from the sale of the Notes for our general operations, including extending foreign currency loans and repayment of our maturing debt and other obligations.

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RECENT DEVELOPMENTS

This section provides information that supplements the information about our bank and the Republic included under the headings corresponding to the headings below in the accompanying prospectus dated June 21, 2016. Defined terms used in this section have the meanings given to them in the accompanying prospectus. If the information in this section differs from the information in the accompanying prospectus, you should rely on the information in this section.

THE KOREA DEVELOPMENT BANK

Unless specified otherwise, the information provided below is stated on a separate basis in accordance with Korean IFRS.

Overview

As of June 30, 2016, we hadW146,065.2 billion of loans outstanding (including loans for facility development, loans for working capital, inter-bank loans, private loans, off-shore loan receivables, loans borrowed from overseas financial institutions, bills bought in foreign currencies, advance payments on acceptances and guarantees and other loans without adjusting for allowance for possible loan losses, present value discounts and deferred loan fees), total assets ofW225,559.9 billion and total equity ofW24,948.5 billion, as compared toW140,968.3 billion of loans outstanding,W224,460.7 billion of total assets andW25,255.6 billion of total equity as of December 31, 2015. For the six months ended June 30, 2016, we recorded interest income ofW2,588.9 billion, interest expense ofW1,852.0 billion and net loss ofW289.6 billion, as compared toW2,811.0 billion of interest income,W2,028.0 billion of interest expense andW202.3 billion of net income for the six months ended June 30, 2015.

Capitalization

As of September 30, 2016, our authorized capital wasW30,000 billion and capitalization was as follows:

	September 30,  2016(1)
	(billions of won)
	(unaudited)
Long-term debt(2)(3):
Won currency borrowings		3,714.6
Foreign currency borrowings		5,961.5
Won currency industrial finance bonds		86,046.1
Foreign currency industrial finance bonds		23,638.2
Total long-term debt		119,360.3
Capital:
Issued capital		17,533.1
Capital surplus		2,500.0
Capital adjustment		—
Retained earnings(4)		4,298.5
Accumulated other comprehensive income		1,433.0
Total capital		25,764.6
Total capitalization		145,124.9

(1) Except as disclosed in this prospectus supplement, there has been no material change in our capitalization since September 30, 2016.

(2) We have translated borrowings in foreign currencies into Won at the rate ofW1,096.30 to US$1.00, which

was the market average exchange rate, as announced by the Seoul Money Brokerage Services Ltd., on September 30, 2016.

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(3) As of September 30, 2016, we had contingent liabilities totalingW9,046.9 billion under outstanding guarantees issued on behalf of our clients.

(4) Includes planned regulatory reserve for possible loan losses ofW1,370.8 billion as of September 30, 2016. Under Korean IFRS, if our provision for possible loan losses is deemed insufficient for regulatory purposes, we compensate for the difference by recording a regulatory reserve for possible loan losses, which will be deducted from retained earnings.

Business

Government Support and Supervision

The Government contributed to our capitalW50 billion in cash in July 2016,W247.7 billion in cash in September 2016 andW10 billion in cash in November 2016. As of December 31, 2016, ourpaid-in capital wasW17,543.1 billion compared toW17,235.4 billion as of December 31, 2015.

Selected Financial Statement Data

Recent Developments

As of September 30, 2016, we hadW142,573.4 billion of loans outstanding (including loans for facility development, loans for working capital, inter-bank loans, private loans,off-shore loan receivables, loans borrowed from overseas financial institutions, bills bought in foreign currencies, advance payments on acceptances and guarantees and other loans without adjusting for allowance for possible loan losses, present value discounts and deferred loan fees), total assets ofW218,198.2 billion and total equity ofW25,764.6 billion, as compared toW140,968.3 billion of loans outstanding,W224,460.7 billion of total assets andW25,255.6 billion of total equity as of December 31, 2015, on a separateK-IFRS basis. For the nine months ended September 30, 2016, we recorded interest income ofW3,810.5 billion, interest expense ofW2,762.9 billion and net loss ofW651.1 billion, as compared toW4,115.2 billion of interest income,W2,970.9 billion of interest expense andW21.1 billion of net income for the nine months ended September 30, 2015, on a separateK-IFRS basis.

The following tables present selected separate financial information for the nine months ended September 30, 2015 and 2016 and as of December 31, 2015 and September 30, 2016, which has been derived from our unaudited separate financial statements as of December 31, 2015 and September 30, 2016 and for the nine months ended September 30, 2015 and 2016 prepared in accordance with Korean IFRS.

SeparateK-IFRS Financial Statement Data

	Nine Months Ended September 30,
	2015		2016
	(billions of won) (unaudited)
Income Statement Data
Total Interest Income		4,115.2		3,810.5
Total Interest Expenses		2,970.9		2,762.9
Net Interest Income		1,144.3		1,047.6
Operating Income (Expenses)		801.9		(375.3	)
Net Income (Loss)		21.1		(651.1	)

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	As of December 31, 2015		As of September 30, 2016
	(billions of won) (unaudited)
Balance Sheet Data
Total Loans(1)		140,968.3		142,573.4
Total Borrowings(2)		182,852.1		175,601.3
Total Assets		224,460.7		218,198.2
Total Liabilities		199,205.1		192,433.6
Equity		25,255.6		25,764.6

(1) Gross amount, which includes loans for facility development, loans for working capital, inter-bank loans, private loans,off-shore loan receivables, loans borrowed from overseas financial institutions, bills bought in foreign currencies, advance payments on acceptances and guarantees and other loans without adjusting for allowance for loan losses, present value discounts and deferred loan fees.

(2) Total Borrowings include financial liabilities designated at fair value through profit or loss (“FVTPL”), due to customers, borrowings and debt issued.

Nine Months Ended September 30, 2016

For the nine months ended September 30, 2016, we had net loss ofW651.1 billion compared to net income ofW21.1 billion for the nine months ended September 30, 2015, on a separateK-IFRS basis.

Principal factors for the net loss ofW651.1 billion for the nine months ended September 30, 2016 compared to the net income ofW21.1 billion in the corresponding period of 2015 included:

• an increase in provision for loan losses toW2,169.3 billion in the nine months ended September 30, 2016 fromW838.5 billion in the corresponding period of 2015, primarily due to increased provisions for loan losses relating to exposure to Daewoo Shipbuilding & Marine Engineering (“DSME”) and STX Offshore & Shipbuilding Co., Ltd. following the downgrading of the classification of our exposure to (i) DSME to precautionary from normal and (ii) STX Offshore & Shipbuilding to expected loss from substandard, following our evaluation of such companies’ financial conditions (including significant increases in their liabilities) and operating results (including significant amounts of operating losses); and

• an increase in provision for acceptances and guarantees toW562.7 billion in the nine months ended September 30, 2016 fromW23.2 billion in the corresponding period of 2015, primarily due to an increase in guarantees as well as a decrease in guarantee quality (including the quality of guarantees extended to DSME and STX Offshore & Shipbuilding).

The above factors were partially offset by (i) an increase in dividend income toW1,117.9 billion in the nine months ended September 30, 2016 fromW516.7 billion in the corresponding period of 2015, primarily due to increased dividends from investments in associates (including Korea Electric Power Corporation) and (ii) an increase in net gain on disposal ofnon-current assets held for sale toW533.5 billion in the nine months ended September 30, 2016 fromW0 billion in the corresponding period of 2015, primarily due to gains from the sale of our equity interest in KDB Daewoo Securities and KDB Asset Management in April 2016.

Loans to Financially Troubled Companies

We have credit exposure (including loans, guarantees and equity investments) to a number of financially troubled Korean companies including DSME, STX Offshore & Shipbuilding, Dongbu Steel Co., Ltd. Hanjin Heavy Industries and Construction Co., Ltd., Hanjin Shipping Co., Ltd., Daehan Shipbuildng Co., Ltd. and STX Heavy Industries Co., Ltd. As of September 30, 2016, our credit extended to these companies totaledW16,096.7 billion, accounting for 7.4% of our total assets as of such date.

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As of September 30, 2016, our exposure (including loans classified as substandard or below and equity investment classified as estimated loss or below) to DSME increased toW7,870.1 billion fromW6,485.3 billion as of December 31, 2015, primarily due to the extension of new guarantees. As of September 30, 2016, our exposure to STX Offshore & Shipbuilding wasW3,325.2 billion, a decrease fromW4,876.5 billion as of December 31, 2015, primarily due to a decrease in guarantees. As of September 30, 2016, our exposure to Dongbu Steel decreased toW1,361.1 billion fromW1.407.7 billion as of December 31, 2015, primarily due to the redemption of certain existing loans. As of September 30, 2016, our exposure to Hanjin Heavy Industries and Construction decreased slightly toW1,197.8 billion fromW1,216.5 billion as of December 31, 2015, primarily due to the redemption of certain existing loans. As of September 30, 2016, our exposure to Hanjin Shipping decreased toW1,045.5 billion fromW1,117.0 billion as of December 31, 2015, primarily due to the redemption of certain existing loans. As of September 30, 2016, our exposure to Daehan Shipbuilding decreased toW824.7 billion fromW1,453.4 billion as of December 31, 2015, primarily due to a decrease in guarantees. As of September 30, 2016, our exposure to STX Heavy Industries decreased toW472.0 billion fromW538.3 billion as of December 31, 2015, primarily due to a decrease in guarantees.

As of September 30, 2016, we established provisions ofW655.2 billion for our exposure to DSME,W2,527.0 billion for STX Offshore & Shipbuilding,W138.0 billion for Dongbu Steel,W84.2 billion for Hanjin Heavy Industries and Construction,W529.7 billion for Hanjin Shipping,W44.8 billion for Daehan Shipbuidling andW250.8 billion for STX Heavy Industries.

STX Offshore & Shipbuilding filed for court receivership in May 2016 and executed debt for equity swaps with their creditors, including us, in December 2016 under a rehabilitation plan through which we increased our equity interest to 44.6% and became its largest shareholder. In August 2016, STX Heavy Industries filed for court receivership, and in January 2017, the Seoul Central District Court approved its rehabilitation plan, which includes debt for equity swaps. The remaining troubled companies (including STX Corporation and STX Engine) are in voluntaryout-of-court debt restructuring programs with their creditors.

In May 2016, Hanjin Shipping, Korea’s largest container operator, submitted itself to joint management with us, as its largest creditor, and other creditors in an effort to revive itself from financial difficulties. In August 2016, we and the other creditors rejected Hanjin Shipping’s last funding plan, and Hanjin Shipping entered into court receivership in September 2016 and was declared bankrupt in February 2017. In July 2016, Hyundai Merchant Marine executed a debt for equity swap with us and other creditors, as part of its continued restructuring led by us as its largest creditor, and affiliates of the Hyundai group reduced their shareholdings in Hyundai Merchant Marine, which resulted in us becoming the largest shareholder of Hyundai Merchant Marine with a 14% equity interest.

In October 2015, we announced that we, along with The Export-Import Bank of Korea, would extend additional financing of up toW4.2 trillion to DSME by the end of 2016 in the form of debt for equity swaps, extension of additional loans and provision of other forms of liquidity support. In this connection, in December 2015, we acquiredW382.9 billion of new equity shares of DSME, which increased our equity interest in DSME from 31.5% to 49.7%, and we became its largest shareholder. In December 2016, we increased our equity interest in DSME to 79.0% through an additional debt for equity swap.

In January 2016, the prosecutors’ office of Korea began investigating allegations of mismanagement and accounting irregularities at DSME, including our dealings with and oversight of DSME. Concurrent with the prosecutors’ investigation, in June 2016, the Board of Audit and Inspection, the audit agency of the Government, submitted to financial regulators its reports showing DSME had overstated its operating profit in 2013 and 2014 and criticized us, as the lead creditor bank and largest shareholder of DSME, for alleged mismanagement and loose oversight of DSME, which allegedly led to the failure to uncover the alleged accounting irregularities contributing to further losses at DSME. In December 2016, the prosecutors indicted our former chief executive officer, who had served from 2011 to 2013, for alleged malpractice, bribery and abuse of power. Although we believe our dealings regarding DSME were carried out in compliance with relevant guidelines and procedures,

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we cannot predict whether the outcome of the investigation by the prosecutors into DSME may be adverse to us. In addition, further investigations may be launched by other governmental authorities with respect to our dealings with DSME, including those by our other former officers. An adverse determination by the prosecutors or other governmental authorities may result in regulatory sanctions and/or financial penalties as well as reputational harm to us.

In the event that the financial condition of these companies or other large corporations to which we extended credits deteriorate in the future, we may be required to record additional provisions for credit losses, as well as charge-offs and valuation or impairment losses or losses on disposal, which may have a material adverse effect on our financial condition and results of operations.

For the nine months ended September 30, 2016, we soldnon-performing loans worthW747.5 billion to Cyrus Capital Partners, Eugene Asset Management and UAMCO Ltd.

Results of Operations

The following tables present selected separate financial information as of December 31, 2015 and June 30, 2016 and for the six months ended June 30, 2015 and 2016, which has been derived from our unaudited separate financial statements as of December 31, 2015 and June 30, 2016 and for the six months ended June 30, 2015 and 2016 prepared in accordance with Korean IFRS and included in this prospectus supplement.

Separate K-IFRS Financial Statement Data

	Six Months  Ended June 30,
	2015		2016
	(billions of won) (unaudited)
Income Statement Data
Total Interest Income		2,811.0		2,588.9
Total Interest Expenses		2,028.0		1,852.0
Net Interest Income		783.0		736.9
Operating Income (Expenses)		566.3		(842.6	)
Net Income (Loss)		202.3		(289.6	)

	As of December 31, 2015		As of June 30, 2016
	(billions of won) (unaudited)
Statements of Financial Position Data
Total Loans(1)		140,968.3		146,065.2
Total Borrowings(2)		182,852.1		181,106.2
Total Assets		224,460.7		225,559.9
Total Liabilities		199,205.1		200,611.4
Equity		25,255.6		24,948.5

(1) Gross amount, which includes loans for facility development, loans for working capital, inter-bank loans, private loans, off-shore loan receivables, loans borrowed from overseas financial institutions, bills bought in foreign currencies, advance payments on acceptances and guarantees and other loans without adjusting for allowance for loan losses, present value discounts and deferred loan fees.

(2) Total Borrowings include financial liabilities designated at fair value through profit or loss (“FVTPL”), due to customers, borrowings and debt issued.

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Six Months Ended June 30, 2016

For the six months ended June 30, 2016, we had net loss ofW289.6 billion compared to net income ofW202.3 billion for the six months ended June 30, 2015, on a separate basis.

Principal factors for the net loss ofW289.6 billion in the first half of 2016 compared to the net income ofW202.3 billion in the corresponding period of 2014 included:

• an increase in provision for loan losses toW2,093.3 billion in the six months ended June 30, 2016 fromW697.8 billion in the corresponding period of 2015, primarily due to increased provisions for loan losses relating to exposure to Daewoo Shipbuilding & Marine Engineering (“DSME”) and STX Offshore & Shipbuilding Co., Ltd. following the downgrading of the classification of our exposure to (i) DSME to precautionary from normal and (ii) STX Offshore & Shipbuilding to expected loss from substandard, following our evaluation of such companies’ financial conditions (including significant increases in their liabilities) and operating results (including significant amounts of operating losses); and

• an increase in provision for acceptances and guarantees toW630.7 billion in the six months ended June 30, 2016 fromW27.9 billion in the corresponding period of 2015, primarily due to an increase in guarantees as well as a decrease in guarantee quality (including the quality of guarantees extended to DSME and STX Offshore & Shipbuilding).

The above factors were partially offset by (i) an increase in dividend income toW1,017.6 billion in the six months ended June 30, 2016 fromW430.9 billion in the corresponding period of 2015, primarily due to increased dividends from investments in associates (including Korea Electric Power Corporation) and (ii) an increase in net gain on disposal of non-current assets held for sale toW533.5 billion in the six months ended June 30, 2016 fromW0 billion in the corresponding period of 2015, primarily due to gains from the sale of our equity interest in KDB Daewoo Securities and KDB Asset Management in April 2016.

Provisions for Possible Loan Losses and Loans in Arrears

As of June 30, 2016, we established provisions ofW5,533.6 billion for possible loan losses under Korean IFRS. The provisions for possible loan losses under Korean IFRS are recorded for those loans for which objective evidence of impairment exists as a result of one or more events that occurred after initial recognition and, if our provision for possible loan losses is deemed insufficient for regulatory purposes, we compensate for the difference by recording a regulatory reserve for possible loan losses, which will be deducted from retained earnings.

Certain of our customers have restructured loans with their creditor banks. As of June 30, 2016, we have provided loans ofW4,752.5 billion for companies under workout, court receivership, court mediation and other restructuring procedures. In addition, as of such date, we held equity securities of such companies in the amount ofW243.6 billion following debt-equity swaps. As of June 30, 2016, we had established provisions ofW3,269.6 billion for possible loan losses for such companies. We cannot assure you that actual results of the credit loss from the loans to these customers will not exceed the provisions reserved.

S-13

The following table provides information on our loan loss provisions.

		As of June 30, 2016(1)
		Loan Amount		Loan Loss Provisions
		(in billions of won, except percentages)
Loan Classification	Normal(2)	W	133,032.4	W	348.8
	Precautionary		5,953.1		808.4
	Substandard		2,452.4		976.4
	Doubtful		775.3		462.3
	Expected Loss		3,852.0		2,937.7
	Total	W	146,065.2	W	5,533.6

(1) These figures include loans for facility development, loans for working capital, inter-bank loans, private loans, off-shore loan receivables, loans borrowed from overseas financial institutions, bills bought in foreign currencies, advance payments on acceptances and guarantees and other loans.

(2) Includes loans guaranteed by the Government. Under Korean IFRS, we establish loan loss provisions for all loans including loans guaranteed by the Government.

As of June 30, 2016, our non-performing loans totaledW7,079.7 billion, representing 4.8% of our outstanding loans as of such date. Non-performing loans are defined as loans that are classified as substandard or below. On June 30, 2016, our legal reserve wasW3,578.8 billion, representing 2.5% of our outstanding loans as of such date.

Loans to Financially Troubled Companies

We have credit exposure (including loans, guarantees and equity investments) to a number of financially troubled Korean companies including DSME, STX Offshore & Shipbuilding Co., Ltd., Dongbu Steel Co., Ltd. Hanjin Heavy Industries and Construction Co., Ltd., Hanjin Shipping Co., Ltd., Daehan Shipbuildng Co., Ltd. and STX Heavy Industries Co., Ltd. As of June 30, 2016, our credit extended to these companies totaledW17,704.5 billion, accounting for 7.8% of our total assets as of such date.

As of June 30, 2016, our exposure (including loans classified as substandard or below and equity investment classified as estimated loss or below) to DSME increased toW7,736.0 billion fromW6,485.3 billion as of December 31, 2015, primarily due to the extension of new guarantees. As of June 30, 2016, our exposure to STX Offshore & Shipbuilding wasW3,557.4 billion, a decrease fromW4,876.5 billion as of December 31, 2015, primarily due to a decrease in guarantees. As of June 30, 2016, our exposure to Dongbu Steel decreased toW1,382.6 billion fromW1.407.7 billion as of December 31, 2015, primarily due to the redemption of certain existing loans. As of June 30, 2016, our exposure to Hanjin Heavy Industries and Construction decreased toW1,147.5 billion fromW1,216.5 billion as of December 31, 2015, primarily due to the redemption of certain existing loans. As of June 30, 2016, our exposure to Hanjin Shipping decreased toW1,075.1 billion fromW1,117.0 billion as of December 31, 2015, primarily due to the redemption of certain existing loans. As of June 30, 2016, our exposure to Daehan Shipbuilding decreased toW977.5 billion fromW1,453.4 billion as of December 31, 2015, primarily due to a decrease in guarantees. As of June 30, 2016, our exposure to STX Heavy Industries decreased toW534.8 billion fromW538.3 billion as of December 31, 2015, primarily due to a decrease in guarantees.

As of June 30, 2016, we established provisions ofW899.5 billion for our exposure to DSME,W2,683.3 billion for STX Offshore & Shipbuilding,W157.4 billion for Dongbu Steel,W128.8 billion for Hanjin Heavy Industries and Construction,W665.2 billion for Hanjin Shipping,W68.8 billion for Daehan Shipbuidling andW256.0 billion for STX Heavy Industries.

S-14

In the event that the financial condition of these companies or other large corporations to which we extended credits deteriorate in the future, we may be required to record additional provisions for credit losses, as well as charge-offs and valuation or impairment losses or losses on disposal, which may have a material adverse effect on our financial condition and results of operations.

For the six months ended June 30, 2016, we sold non-performing loans worthW636.8 billion to Cyrus Capital Partners and Eugene Asset Management.

Operations

Loan Operations

The following table sets out, by currency and category of loan, our total outstanding loans as of June 30, 2016:

Loans⁽¹⁾

	June 30, 2016
	(billions of won)
Equipment Capital Loans:
Domestic currency	W	51,339.6
Foreign currency(2)		8,907.0
Working Capital Loans:
Domestic currency(3)		50,126.2
Foreign currency(2)		6,324.9
Other Loans(4)		29,367.5
Total loans	W	146,065.2

(1) Includes loans extended to affiliates.

(2) Includes loans disbursed and repayable in Won, the amounts of which are based upon an equivalent amount of foreign currency. This type of loan totaledW10,420.8 billion as of June 30, 2016. See “The Korea Development Bank—Operations—Loan Operations—Loans by Categories—Local Currency Loans Denominated in Foreign Currencies” in the accompanying prospectus.

(3) Includes loans on households.

(4) Includes inter-bank loans, private loans,off-shore loan receivables, loans borrowed from overseas financial institutions, bills bought in foreign currencies, advance payments on acceptances and guarantees and other loans.

As of June 30, 2016, we hadW146,065.2 billion in outstanding loans, which represents a 3.6% increase fromW140,968.3 billion of outstanding loans as of December 31, 2015.

S-15

Maturities of Outstanding Loans

The following table categorizes our outstanding equipment capital and working capital loans by their remaining maturities:

Outstanding Equipment Capital and Working Capital Loans by Remaining Maturities⁽¹⁾

	June 30, 2016		As % of June 30, 2016 Total
	(billions of won, except percentages)
Loans with remaining maturities of one year or less	W	44,970.3		38.5	%
Loans with remaining maturities of more than one year		71,727.4		61.5
Total	W	116,697.7		100.0	%

(1) Includes loans extended to affiliates.

Loans by Industrial Sector

The following table sets out the total amount of our outstanding equipment capital and working capital loans, categorized by industry sector as of June 30, 2016:

Outstanding Equipment Capital and Working Capital Loans by Industry Sector⁽¹⁾

	June 30, 2016			As % of June 30, 2016 Total
	(billions of won, except percentages)
Manufacturing	W	57,613.8			49.4	%
Banking and Insurance		24,905.9			21.3
Transportation		6,876.8			5.9
Public Administration		861.3			0.7
Electric, Gas and Water Supply Industry		3,224.0			2.8
Others(2)		23,215.9			19.9
Total	W	116,697.7			100.0	%
Percentage increase from December 31, 2015		1.2	%

(1) Includes loans extended to affiliates.

(2) Includes wholesale and retail trade, real estate and leasing, and construction.

The manufacturing sector accounted for 49.4% of our outstanding equipment capital and working capital loans as of June 30, 2016. As of June 30, 2016, loans to transportation equipment manufacturing businesses and metal manufacturing businesses accounted for 21.0% and 13.1%, respectively, of our outstanding equipment capital and working capital loans to the manufacturing sector.

Industrial Bank of Korea was our single largest borrower as of June 30, 2016, accounting for 4.8% of our outstanding equipment capital and working capital loans. As of June 30, 2016, our five largest borrowers and 20 largest borrowers accounted for 12.8% and 26.6%, respectively, of our outstanding equipment capital and working capital loans.

S-16

The following table breaks down the equipment capital and working capital loans to our 20 largest borrowers outstanding as of June 30, 2016 by industry sector:

20 Largest Borrowers by Industry Sector

	As % of June 30, 2016 Total Outstanding Equipment Capital and Working Capital Loans
Banking and Insurance		48.1	%
Manufacturing		39.6
Publication, Broadcasting and Telecommunication		4.1
Transportation		3.5
Public Administration		1.9
Others .		2.8
Total		100.0	%

Loans by Categories

The following table sets out equipment capital and working capital loans by categories as of June 30, 2016:

	Equipment Capital Loans					Working Capital Loans
	June 30, 2016		%			June 30, 2016		%
	(billions of won, except percentages)
Industrial fund loans	W	43,749.9		72.6	%	W	36,296.3		64.3	%
On-lending loans		4,997.9		8.3			9,613.4		17.0
Foreign currency loans		6,059.8		10.1			1,183.8		2.1
Loan currency loans denominated in foreign currencies		97.4		0.2			93.6		0.2
Offshore loans in foreign currencies		1,087.7		1.8			3,584.6		6.4
Government fund loans		362.3		0.6			—		—
Overdraft		—		—			411.9		0.7
Others(1)		3,891.6		6.4			5,267.5		9.3
Total	W	60,246.6		100.0	%	W	56,451.1		100.0	%

(1) Includes loans on households, special purpose fund loans, loans throughon-lending, interbank loans, call loans and other loans.

Guarantee Operations

The following table shows our outstanding guarantees as of June 30, 2016:

	June 30, 2016
	(billions of won)
Acceptances	W	764.4
Guarantees on local borrowing		824.0
Guarantees on foreign borrowing		7,553.5
Letter of guarantee for importers		62.4
Total	W	9,204.3

S-17

Investments

Our equity investments, on a fair value basis, decreased toW33,404.0 billion as of June 30, 2016 fromW35,696.8 billion as of December 31, 2015.

As of June 30, 2016, the fair value basis of our equity investments subject to restriction under the KDB Act and our Articles of Incorporation amounted to approximately 28% of our equity investment ceiling. For a discussion of Korean accounting principles relating to our equity investments, see “The Korea Development Bank—Financial Statements and the Auditors” in the accompanying prospectus.

The following table sets out our equity investments by industry sector on a fair value basis as of June 30, 2016:

Equity Investments

	Fair Value as of June 30, 2016
	(billions of won)
Electric, Gas and Water Supply Industry	W	18,060.0
Construction		1,013.0
Banking and Insurance		9,082.9
Real Estate Business		2,647.2
Manufacturing		867.0
Transportation		1,067.7
Others		666.2
Total	W	33,404.0

As of June 30, 2016, we held total equity investments, on a fair value basis, ofW1,108.3 billion in three of our five largest borrowers andW2,844.7 billion in five of our 20 largest borrowers.

When possible, we use the prevailing market price of a security to determine the value of our interest. However, if no readily ascertainable market value exists for our holdings, we record these investments at the cost of acquisition. With respect to our equity interests in enterprises in which we hold more than 15% of interest, we value these investments annually, with certain exceptions, on a net asset value basis when the investee company releases its financial statements. As of June 30, 2016, the aggregate value of our equity investments accounted for approximately 107% of their aggregate cost basis.

Other Activities

As of June 30, 2016, we held in trust cash and other assets totalingW31,440.6 billion, and we generated in the first half of 2016 trust fee income equalingW79.6 billion.

Source of Funds

Borrowings from the Government

The following table sets out our Government borrowings as of June 30, 2016:

Type of Funds Borrowed	As of June 30, 2016
	(billions of won)
General purpose	W	364.4
Special purpose		7,613.8
Total	W	7,978.2

S-18

Domestic and International Capital Markets

The following table sets out the outstanding balance of our industrial finance bonds as of June 30, 2016:

Outstanding Balance	As of June 30, 2016
	(billions of won)
Denominated in Won	W	86,756.8
Denominated in other currencies		25,865.2
Total	W	112,622.0

As of June 30, 2016, the aggregate amount of our industrial finance bonds and guarantee obligations (including guarantee obligations relating to loans that had not been borrowed as of June 30, 2016) wasW128,693.7 billion, equal to 19.3% of our authorized amount under the KDB Act, which wasW665,549.9 billion.

Foreign Currency Borrowings

As of June 30, 2016, the outstanding amount of our foreign currency borrowings was US$11.8 billion.

Our long term and short term foreign currency borrowings increased toW12,883.9 billion as of June 30, 2016 fromW11,904.9 billion as of December 31, 2015.

Deposits

As of June 30, 2016, demand deposits held by us totaledW1,890.3 billion and time and savings deposits held by us totaledW34,988.1 billion.

Debt

Debt Repayment Schedule

The following table sets out our principal repayment schedule as of June 30, 2016:

Debt Principal Repayment Schedule

	Maturing on or before December 31,
Currency(1)(2)(3)	2016		2017		2018		2019		2020		Thereafter
	(billions of won)
Won	W	19,911.6	W	33,509.9	W	14,733.8	W	6,791.5	W	1,228.4	W	18,551.5
Foreign		11,257.2		8,688.8		7,735.7		2,462.2		2,406.4		7,826.8
Total Won Equivalent	W	31,168.8	W	42,198.7	W	22,469.5	W	9,253.7	W	3,634.8	W	26,378.3

(1) Excludes bonds sold under repurchase agreements and call money.

(2) Borrowings in foreign currencies have been translated into Won at the market average exchange rates on June 30, 2016, as announced by the Seoul Money Brokerage Services Ltd.

(3) We categorize debt with respect to which we have entered into currency swap agreements by our repayment currency under such agreements.

S-19

Financial Statements and the Auditors

Korea Development Bank

Interim Separate Statements of Financial Position

June 30, 2016 (Unaudited) and December 31, 2015

(In millions of won)	Notes		June 30, 2016		December 31, 2015
Assets
Cash and due from banks		4,44,45,48	W	3,612,237		4,878,778
Financial assets held for trading		5,44,45,48		2,042,512		1,780,734
Available-for-sale financial assets		6,37,44,45,48		38,345,618		41,291,619
Held-to-maturity financial assets		7,44,45,48		16,560		28,560
Loans		8,44,45,48		140,520,786		136,789,649
Derivative financial assets		9,44,45,46,48		6,518,253		5,757,756
Investments in subsidiaries and associates		10,47		24,668,595		25,167,835
Property and equipment, net		11,47		572,058		587,911
Investment property, net		12,47		81,799		75,921
Intangible assets, net		13,47		63,349		74,196
Deferred tax assets		35		34,984		33,798
Current tax assets				43,003		151,744
Other assets		14,44,45,48		9,040,170		6,003,096
Non-current assets held for sale		15		—		1,839,114
Total assets			W	225,559,924		224,460,711
Liabilities
Financial liabilities designated at fair value through profit or loss		16,44,45,48	W	1,899,233		1,622,618
Deposits		17,44,45,48		41,296,992		39,934,892
Borrowings		18,44,45,48		25,041,721		24,400,590
Debentures		19,44,45,48		112,868,284		116,894,020
Derivative financial liabilities		9,44,45,46,48		5,711,265		5,642,363
Defined benefit liabilities		20		73,497		53,360
Provisions		21		1,441,711		744,883
Deferred tax liabilities		35		1,331,454		1,549,234
Current tax liabilities				67		7,426
Other liabilities		22,44,45,48		10,947,167		8,355,699
Total liabilities				200,611,391		199,205,085
Equity
Issued capital		23		17,235,399		17,235,399
Capital surplus		23		2,501,439		2,501,439
Accumulated other comprehensive income		23		551,738		569,190
Retained earnings		23		4,659,957		4,949,598
(Regulatory reserve for loan losses ofW1,370,828 million as of June 30, 2016 and December 31, 2015)
(Non-accumulated reserve for loan losses ofW0 as of June 30, 2016 and December 31, 2015)
(Obligated amount of provision for regulatory reserve for loan losses ofW1,089,383 million andW0 as of June 30, 2016 and December 31, 2015, respectively)
(Planned regulatory reserve for loan losses ofW1,089,383 million andW0 as of June 30, 2016 and December 31, 2015, respectively)
Total equity				24,948,533		25,255,626
Total liabilities and equity			W	225,559,924		224,460,711

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

S-20

Korea Development Bank

Interim Separate Statements of Comprehensive Income (Loss)

Three-month andsix-month periods ended June 30, 2016 and 2015 (Unaudited)

			June 30, 2016						June 30, 2015
(In millions of won, except earnings per share information)	Notes		Three- month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Interest income		24	W	1,273,249			2,588,862			1,348,986			2,810,973
Interest expense		24		(903,969	)		(1,852,047	)		(969,894	)		(2,027,975	)
Net interest income		47		369,280			736,815			379,092			782,998
Net fees and commission income		25		105,386			202,843			150,277			259,729
Dividend income		26		66,452			1,017,623			102,995			430,871
Net gain (loss) on financial assets  held-for-trading		27		1,409			898			(11,295	)		(4,116	)
Net gain (loss) on financial liabilities designated at fair value through profit or loss		28		(20,858	)		(40,156	)		43,288			4,075
Net gain onavailable-for-sale financial assets		29		416,374			244,795			144,942			124,020
Net gain (loss) on derivatives		30		3,493			181,474			(56,408	)		(49,486	)
Net foreign currency transaction gain (loss)		31		(21,236	)		(201,056	)		42,097			144,969
Other operating loss, net		32		(497,029	)		(590,717	)		(143,095	)		(117,896	)
Non-interest income, net		47		53,991			815,704			272,801			792,166
Provision for loan losses		8,47		1,341,493			2,093,294			467,595			697,732
General and administrative expenses		33,47		154,460			301,810			171,698			311,088
Operating income (loss)		47		(1,072,682	)		(842,585	)		12,600			566,344
Impairment loss on investments in subsidiaries and associates		10		(163,738	)		(163,738	)		(301,441	)		(301,441	)
Othernon-operating income		34		534,416			535,208			341			3,311
Othernon-operating expense		34		(807	)		(2,446	)		(1,798	)		(2,572	)
Non-operating income (expense), net				369,871			369,024			(302,898	)		(300,702	)
Profit (loss) before income taxes				(702,811	)		(473,561	)		(290,298	)		265,642
Income tax expense (benefit)		35		(133,448	)		(183,920	)		(36,734	)		63,317
Profit (loss) for the period		23		(569,363	)		(289,641	)		(253,564	)		202,325
(Profit (loss) for the period adjusted for regulatory reserve for loan losses:(-)W1,490,913 million and(-)W1,379,024 million for the three-month andsix-month periods ended June 30, 2016, respectively;(-)W101,426 million andW80,930 million for the three-month andsix-month periods ended June 30, 2015, respectively)
Other comprehensive income (loss) for the period, net of tax		23
Items that are or may be reclassified subsequently to profit or loss:
Valuation loss onavailable-for-sale financial assets, net				(168,675	)		(13,352	)		(188,685	)		(35,482	)
Exchange differences on translation of foreign operations				9,816			652			7,296			6,884
Valuation gain (loss) on cash flow hedge				(2,371	)		(4,752	)		3,634			(7,667	)
				(161,230	)		(17,452	)		(177,755	)		(36,265	)
Total comprehensive income (loss) for the period			W	(730,593	)		(307,093	)		(431,319	)		166,060
Earnings (loss) per share
Basic and diluted earnings (loss) per share (in won)		36	W	(165	)		(84	)		(74	)		63

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

S-21

Korea Development Bank

Interim Separate Statements of Changes in Equity

Six-month periods ended June 30, 2016 and 2015 (Unaudited)

(In millions of won)	Issued capital		Capital surplus		Capital adjustment			Accumulated other comprehensive income			Retained earnings			Total equity
Balance at January 1, 2015	W	15,180,399		2,522,869		—			818,422			6,890,913			25,412,603
Profit for the period		—		—		—			—			202,325			202,325
Changes in valuation loss onavailable-for-sale financial assets		—		—		—			(35,482	)		—			(35,482	)
Changes in exchange differences on translation of foreign operations		—		—		—			6,884			—			6,884
Changes in valuation loss on cash flow hedge		—		—		—			(7,667	)		—			(7,667	)
Total comprehensive income for the period		—		—		—			(36,265	)		202,325			166,060
Paid in capital increase		2,000,000		—		(9,668	)		—			—			1,990,332
Dividends		—		—		—			—			(46,179	)		(46,179	)
Transaction with owners		2,000,000		—		(9,668	)		—			(46,179	)		1,944,153
Balance at June 30, 2015	W	17,180,399		2,522,869		(9,668	)		782,157			7,047,059			27,522,816
Balance at January 1, 2016	W	17,235,399		2,501,439		—			569,190			4,949,598			25,255,626
Loss for the period		—		—		—			—			(289,641	)		(289,641	)
Changes in valuation loss onavailable-for-sale financial assets		—		—		—			(13,352	)		—			(13,352	)
Changes in exchange differences on translation of foreign operations		—		—		—			652			—			652
Changes in valuation loss on cash flow hedge		—		—		—			(4,752	)		—			(4,752	)
Total comprehensive loss for the period		—		—		—			(17,452	)		(289,641	)		(307,093	)
Balance at June 30, 2016	W	17,235,399		2,501,439		—			551,738			4,659,957			24,948,533

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

S-22

Korea Development Bank

Interim Separate Statements of Cash Flows

Six-month periods ended June 30, 2016 and 2015 (Unaudited)

(In millions of won)	Notes		2016			2015
Cash flows from operating activities
Profit (loss) for the period			W	(289,641)			202,325
Adjustments for:
Income tax expense (benefit)		35		(183,920	)		63,317
Interest income		24		(2,588,862	)		(2,810,973	)
Interest expense		24		1,852,047			2,027,975
Dividend income		26		(1,017,623	)		(430,871	)
Loss on valuation of financial assets held for trading		27		706			3,595
Loss (gain) on valuation of financial liabilities designated at fair value through profit or loss		28		40,890			(3,821	)
Gain on disposal ofavailable-for-sale financial assets		29		(330,944	)		(174,138	)
Impairment loss onavailable-for-sale financial assets		29		86,149			50,118
Loss (gain) on valuation of derivatives		30		(599,903	)		145,807
Net loss (gain) on fair value hedged items		30		666,093			(130,229	)
Loss (gain) on foreign exchange translations		31		144,536			(124,937	)
Loss (gain) on disposal of investments in subsidiaries and associates		32		(443,073	)		19,582
Impairment loss on investments in subsidiaries and associates		10		163,738			301,441
Provision for loan losses		8		2,093,294			697,732
Increase of provision for payment guarantees		21,32		630,686			27,909
Increase of provision for unused commitments		21,32		118,230			4,737
Increase (reversal) of financial guarantee provision		21,32		(35,942	)		3,474
Increase (reversal) of provision for possible losses from lawsuits		21,32		(1,333	)		2,780
Increase of other provision		21,32		3,743			—
Defined benefit costs		20,33		20,217			16,729
Depreciation of property and equipment		11,33		16,693			16,352
Gain on disposal ofnon-current assets held for sale		34		(533,529	)		—
Loss (gain) on disposal of property and equipment		34		50			(35	)
Depreciation of investment property		12,34		870			744
Amortization of intangible assets		13,33		14,130			14,825
Other operating loss, net				119,516			1,392
Loss on redemption of debentures				42			413
				236,501			(276,082	)
Changes in operating assets and liabilities:
Due from banks				967,906			144,964
Financial assets held for trading				(196,499	)		(199,964	)
Loans				(2,041,001	)		(3,285,705	)
Derivative financial assets				(166,865	)		1,314,701
Other assets				(3,098,511	)		(1,896,512	)
Financial liabilities designated at fair value through profit or loss				235,725			389,187
Deposits				1,340,104			2,115,676
Derivative financial liabilities				68,902			(1,487,030	)
Defined benefit liabilities				(80	)		(10,383	)
Other liabilities				2,566,179			3,121,797
				(324,140	)		206,731
Income taxes received (paid)				71,907			(283,628	)
Interest received				2,467,657			2,700,633
Interest paid				(1,804,775	)		(1,994,322	)
Dividends received				1,005,694			430,871
Net cash provided by operating activities			W	1,363,203			986,528

(Continued)

S-23

Korea Development Bank

Interim Separate Statements of Cash Flows, Continued

Six-month periods ended June 30, 2016 and 2015 (Unaudited)

(In millions of won)	Notes		2016			2015
Cash flows from investing activities
Disposal ofavailable-for-sale financial assets		6	W	16,367,973			19,548,540
Acquisition ofavailable-for-sale financial assets		6		(13,157,451	)		(15,198,976	)
Redemption ofheld-to-maturity financial assets		7		11,929			16
Acquisition ofheld-to-maturity financial assets		7		—			(11,203	)
Disposal of property and equipment		11		951			86
Acquisition of property and equipment		11		(8,435	)		(62,242	)
Disposal of intangible assets		13		252			1
Acquisition of intangible assets		13		(3,541	)		(5,680	)
Disposal of investments in subsidiaries and associates				1,000,020			525,545
Acquisition of investments in subsidiaries and associates				(232,986	)		(550,691	)
Disposal ofnon-current assets held for sale				2,372,643			—
Net cash provided by investing activities				6,351,355			4,245,396
Cash flows from financing activities
Proceeds from borrowings				20,646,332			19,742,646
Repayment of borrowings				(20,055,572	)		(23,356,847	)
Proceeds from issuance of debentures				34,921,724			16,205,642
Repayment of debentures				(39,677,132	)		(20,166,612	)
Dividends paid				—			(46,179	)
Stock issuance costs				—			(9,668	)
Net cash used in financing activities				(4,164,648	)		(7,631,018	)
Effects from changes in foreign currency exchange rate for cash and cash equivalents held				(9,474	)		119,848
Net increase (decrease) in cash and cash equivalents				3,540,436			(2,279,246	)
Cash and cash equivalents at beginning of the period				6,020,879			9,019,914
Cash and cash equivalents at end of the period		42	W	9,561,315			6,740,668

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

S-24

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

1.Reporting Entity

Korea Development Bank (the “Bank”) was established on April 1, 1954, in accordance withthe Korea Development Bank Act to finance and manage major industrial projects.

The Bank is engaged in the banking industry underthe Korea Development Bank Act and other applicable statutes, and in the fiduciary in accordance withthe Financial Investment Services and Capital Markets Act.

Korea Finance Corporation (KoFC), the former ultimate parent company, and KDB Financial Group Inc. (KDBFG), the former immediate parent company, were established by spin-offs of divisions of the Bank as of October 28, 2009. KoFC and KDBFG were merged into the Bank, effective as of December 31, 2014. Issued capital isW17,235,399 million with 3,447,079,768 shares of issued and outstanding as of June 30, 2016 and 100% of the Bank’s shares are owned by the government of the Republic of Korea.

The Bank’s head office is located in 14,Eunhaeng-ro (Yeouido-dong),Yeongdeungpo-gu, Seoul and its service network as of June 30, 2016 is as follows:

	Domestic				Overseas
	Head Office		Branches		Branches		Subsidiaries		Representative offices		Total
KDB		1		81		9		5		8		104

2.Basis of Preparation

(1)Application of accounting standards

These interim financial statements have been prepared in accordance with the Korean International Financial Reporting Standards(“K-IFRS”) 1034Interim Financial Reportingand provide less information as compared with its annual financial statements. The interim financial statements have been prepared in accordance withK-IFRS effective as of June 30, 2016 and the significant accounting policies applied in the preparation of these interim financial statements have been consistently applied to all periods presented unless otherwise specified.

(2)Changes and disclosures of accounting policies

(i) New and amended standards adopted

The Bank newly applied the following amended and enacted standards for the annual period beginning on January 1, 2016. Application of these amendment and improvements would not have a material impact on its financial statements.

• Amendment toK-IFRS 1001 Presentation of Financial Statements

• K-IFRS 1027 Separate Financial Statements

• K-IFRS 1016 Property, plant and equipment, andK-IFRS 1038 Intangible assets: Amortization based on revenue

• K-IFRS 1110 Consolidated Financial Statements,K-IFRS 1028 Investments in Associates and Joint Arrangements, andK-IFRS 1112 Disclosure of Interests in Other Entities: Exception to consolidation for investment entities

• K-IFRS 1111 Joint Agreements

S-25

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

2.Basis of Preparation, Continued

The list above does not include some other amendments, but such amendments do not have a material impact on the Bank’s financial statements.

(ii) New standards and interpretations issued but not effective

The following new standards, interpretations and amendments to existing standards have been issued but not effective for annual periods beginning after January 1, 2016, and the Bank has not early adopted them.

K-IFRS 1109 Financial Instruments

K-IFRS 1109Financial Instrumentsreplaces the existing guidance inK-IFRS 1039Financial Instruments: Recognition and Measurement. The main requirements ofK-IFRS 1109 are that financial assets are classified and measured on the basis of the holder’s business model and the instrument’s contractual cash flow characteristic, that the impairments of financial assets are recognized using expected credit loss model, and that the scope of eligible hedged items and hedging instruments is extended in applying hedge accounting.K-IFRS 1109 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Bank is in the process of evaluating the impact of this standard on its separate financial statements.

K-IFRS 1115 Revenue from Contracts with Customers

K-IFRS 1115Revenue from Contracts with Customersreplaces the existing guidance inK-IFRS 1011

Construction Contracts,K-IFRS 1018Revenue,K-IFRS 2113Customer Loyalty Programmes,K-IFRS 2115Agreements for the Construction of Real Estate,K-IFRS 2118Transfers of Assets from CustomersandK-IFRS 2031Revenue—Barter Transactions Involving Advertising Services. The core principle ofK-IFRS 1115 is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and it introduces a five-step approach to revenue recognition and measurement in accordance with the core principle.K-IFRS 1115 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Bank is in the process of evaluating the impact of this standard on its separate financial statements.

(3) Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:

• Derivative financial instruments measured at fair value

• Financial instruments measured at fair value through profit or loss

• Available-for-sale financial instruments measured at fair value

• Fair value hedged financial instruments with changes in fair value, due to hedged risks, recognized in profit or loss

• Liabilities for defined benefit plans, which are recognized as net of the total present value of defined benefit obligations less the fair value of plan assets.

S-26

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

2.Basis of Preparation, Continued

(4) Functional and presentation currency

These financial statements are presented in Korean won (“W”), which is the Bank’s functional currency and the currency of the primary economic environment in which the Bank operates.

(5) Use of estimates and judgments

The preparation of the financial statements in conformity withK-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment at the reporting date are different from the actual environment.

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

The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

(i) Fair value of financial instruments

Financial instrumentsheld-for-trading, financial instruments designated at fair value through profit or loss,available-for-sale financial assets and derivative instruments are recognised and measured at fair value. If the market for a financial instrument is not active, fair value is determined either by using a valuation technique or independent third-party valuation service. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, referencing to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models.

Financial instruments, which are not actively traded in the market and those with less transparent market prices, will have less objective fair values and require broad judgment on liquidity, concentration, uncertainty in market factors and assumptions in price determination and other risks.

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.

(ii) Provisions for credit losses (allowances for loan losses, provisions for payment guarantee, and unused commitments)

The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant (individual assessment of impairment). Financial assets that are not individually significant assess objective evidence of impairment individually or collectively. If the Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment (collective assessment of impairment).

S-27

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

2.Basis of Preparation, Continued

Provisions for credit losses are measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate.

Individual assessment of impairment losses is calculated by discounting the expected future cash flows of a loan at its original effective interest rate and comparing the resultant present value with the loan’s current carrying amount. This process normally encompasses management’s best estimate, such as operating cash flow of the borrower and net realizable value of any collateral held.

A methodology based on historical loss experience is used to estimate inherent incurred loss on groups of assets for collective assessment of impairment. Such methodology incorporates factors such as type of collateral, product and borrowers, credit rating, loss emergence period, recovery period and applies probability of default on a group of assets and loss given default by type of recovery method. Also, consistent assumptions are applied to form a formula-based model in estimating inherent loss and to determine factors on the basis of historical loss experience and current condition. The methodology and assumptions used for collective assessment of impairment are reviewed regularly to reduce any differences between loss estimates and actual loss experience.

iii) Deferred taxes

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred income tax assets are recognized to the extent that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Actual income taxes in the future may not be identical to the recognized deferred tax assets and liabilities,

iv) Defined benefit liabilities

The Bank operates a defined benefit plan. Defined benefit liability is calculated by annual actuarial valuations as of the reporting date. In order to perform the actuarial valuations, assumptions for discount rates, future salary increases and others are required to be estimated. Defined benefit plans contain significant uncertainties in estimations due to its long-term nature.

3.Significant Accounting Policies

The significant accounting policies applied by the Bank in preparation of its separate financial statements are included below. The accounting policies set out below have been applied consistently to all periods presented in these separate financial statements.

(1) Investments in subsidiaries and associates

The accompanying financial statements are separate financial statements in accordance withK-IFRS 1027Separate Financial Statementsand investments in subsidiaries and associates are accounted for at cost, not by performance and net asset reported by the investee. Dividends received from subsidiaries and associates are recognized as income as of the time the right to receive the dividends is established.

S-28

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(2) Business combination of entities under common control

The assets and liabilities acquired under business combinations under common control are recognized at the carrying amounts recognized previously in the consolidated financial statements of the ultimate parent. The difference between consideration transferred and carrying amounts of net assets acquired is recognized as part of share premium.

(3) Operating segments

The Bank makes decisions regarding allocation of resources to segments and categorizes segments, based on internal reports reviewed periodically by the chief operating decision maker, to assess performance. Information on segments reported to the chief operating decision maker includes items directly attributable to segments as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise corporate assets (such as the Bank Headquarters), head office expenses, and income tax assets and liabilities. The Bank recognizes the CEO as the chief operating decision maker.

(4) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency of the Bank, at exchange rates of the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the reporting period.Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on translation are recognized in profit or loss, except for differences arising on the translation of available for sale equity instruments, a financial liability designated as a hedge of the net investment in a foreign operation, or in a qualifying cash flow hedge, which are recognized in other comprehensive income.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.

(ii) Foreign operations

If the presentation currency of the Bank is different from a foreign operation’s functional currency, the financial statements of the foreign operation are translated into the presentation currency using the following methods:

Unless the functional currency of foreign operations is in a state of hyperinflation, assets and liabilities of foreign operations are translated at the closing exchange rate at the end of the reporting period. Revenues and expenses on the statement of comprehensive income are translated at the exchange rates of the date of transaction. Foreign currency differences that arise from translation are recognized as other comprehensive income, and the disposal of a foreign operation isre-categorized as profit or loss as of the moment the disposal profit or loss is recognized.

S-29

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

Any goodwill arising on the acquisition of a foreign operation, and any adjustments in fair value to the carrying amounts of assets and liabilities due to such acquisition, are treated as assets and liabilities of the foreign operation. Therefore, such are expressed in the functional currency of the foreign operations and, alongside other assets and liabilities of the foreign operation, translated at the closing exchange rate.

In the case of the disposal of a foreign operation, cumulative amounts of exchange difference regarding the foreign operation, recognized separately from other comprehensive income, arere-categorized from assets to profit or loss as of the moment the disposal profit or loss is recognized.

(iii) Foreign exchange of net investment in foreign operations

Monetary items receivable from or payable to a foreign operation, with none or little possibility of being settled in the foreseeable future, are considered a part of the net investment in the foreign operation. Therefore, the exchange difference is recognized as comprehensive profit or loss in the financial statement, andre-categorized to profit or loss as of the disposal of the related net investment.

(5) Cash and cash equivalents

Cash and cash equivalents comprise balances with original maturities of three months or less from the date of acquisition that are subject to an insignificant risk of changes in their fair value, including cash on hand, deposits held at call with banks and other highly liquid short-term investments with original maturities of three months or less.

(6)Non-derivative financial assets

The Bank recognizes and measuresnon-derivative financial assets by the following four categories: financial assets at fair value through profit or loss,held-to-maturity financial assets, loans and receivables, andavailable-for-sale financial assets. Moreover, the Bank recognizes financial assets in the statement of financial position as of the time the Bank becomes a party to the contractual provisions of the instruments.

Non-derivative financial assets are measured at fair value upon initial recognition and, unless designated at fair value through profit or loss, transaction costs directly regarding acquisition and issuance of such assets are summed to the initial fair value.

(i) Financial assets at fair value through profit or loss

Any financial asset classified asheld-for-trading or designated at fair value through profit or loss at initial recognition is categorized under financial assets at fair value through profit or loss. Financial assets at fair value through profit or loss (“FVTPL”) are measured at fair value upon initial recognition, and changes therein are recognized as profit or loss. Furthermore, transaction costs regarding acquisition upon initial recognition are recognized as profit or loss as incurred.

(ii)Held-to-maturity financial assets

If anon-derivative financial asset has a fixed maturity with a fixed or determinable payment, and the Bank has positive intent and ability to hold such an asset, it is classified asheld-to-maturity financial assets. Subsequent to initial recognition,held-to-maturity financial assets are measured at amortized costs using the effective interest rate (“EIR”) method.

S-30

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(iii) Loans and receivables

Loans and receivables arenon-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest rate method. Furthermore, the effective interest rate method is applied to recognize interest incomes on financial investments, except short-term loans and receivables, in which case the impact of effective interest the method is immaterial.

(iv)Available-for-sale financial assets

Anynon-derivative financial asset, not classified as financial assets at fair value through profit or loss,held-to-maturity financial assets, or loans and receivables, is classified asavailable-for-sale financial assets. Subsequent to initial recognition, such assets are measured at fair value. However, equity instruments that do not have a quoted market price in an active market and cannot be reliably measured, and any derivatives that are linked to these instruments and need to be settled upon the delivery of such equity instruments are measured at cost. Accumulated other comprehensive income, reflected in equity as fair value changes, is recognized as profit or loss as of the time the relatedavailable-for-sale asset is disposed of or the impairment loss is recognized. Furthermore, dividends earned whilst holdingavailable-for-sale financial assets are recognized in the statement of comprehensive income upon the establishment of the right to receive the payment.

(v)De-recognition of financial assets

The Bankde-recognizes a financial asset when the rights to receive cash flow from an asset expire, or when it transfers the rights to receive cash flow and substantially all the risks and rewards from the ownership of a financial asset. In the case that the Bank has neither transferred nor retained substantially all the risks and rewards of an asset, the Bankde-recognizes any assets if it does not have control, and recognizes any assets to the extent of the Bank’s continuing involvement if it does have control. In the latter case, any associated liabilities are recognized by the Bank. In the case the Bank retains substantially all the risks and rewards from the ownership of an asset it does not have control of, the Bank continues to recognize the financial asset, and recognizes consideration received as financial liabilities.

(vi) Offsetting between financial assets and financial liabilities

Financial assets and liabilities areset-off only under the conditions that the Bank has legal rights toset-off the recognized amounts, and the intention to settle on a net basis or to realize assets and settle liabilities at the same time.

(7) Impairment of financial assets

The Bank assesses the possibility of objective evidence that may indicate any impairment of financial assets, except those designated at fair value through profit or loss, at each reporting date. A financial asset is defined as impaired if, as a result of one or more events after initial recognition, the estimated future cash flow of the asset has been affected. However, expected impairments from future events are not recognized, regardless of their likelihood.

Upon the finding of objective evidence to believe an asset is impaired, the impairment is measured and recognized in profit or loss as follows, according to the asset category:

S-31

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(i) Impairment of loans and receivables

The Bank assesses, at each reporting date, whether objective evidence that indicate impairment of loans and receivables exist. If objective evidence shows that believe impairment has occurred, the amount of the loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows, discounted using the initial effective interest rate (“EIR”). Furthermore, the carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the statement of comprehensive income.

All individually significant loans and advances are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and advances that are not individually significant are collectively assessed for impairment by grouping together loans and advances with similar risk characteristics.

In individual assessment, allowances on losses are computed using the discounted expected recoverable value, estimated by operating cash flows or collateral cash flow; in collective assessment, allowances on losses are computed using statistical methods based on obtainable historical loss experience.

The present value of estimated future cash flows is measured using the asset’s initial EIR. If the loan has a floating interest rate, the Bank uses the current EIR for the measurement. Future cash flows from collateral are estimated at net cash flow from disposal of collateral (deducting transaction cost).

For the purpose of a collective assessment of impairment, assets are analysed on the basis of the Bank’s internal credit rating system that considers credit risk characteristics such as asset type, industry, geographical location, collateral type,past-due status and other relevant factors.

Future cash flows of the assets collectively assessed are estimated on the basis of historical loss experience for loans with similar credit risk characteristics. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions on which the historical loss experience is based, and to remove the effects of conditions in the historical period that no longer exist. Estimates of changes in future cash flows reflect, and are directionally consistent with, changes in related observable data from year to year (such as changes in unemployment rates, property prices, commodity prices, payment status, or other factors that are indicative of incurred loss in the Bank and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.

(ii) Impairment ofavailable-for-sale financial assets

The Bank assesses, at each reporting date, whether objective evidence that indicate impairment ofavailable-for-sale assets exist. If such objective evidence exists, the amount of the loss is measured as the difference between the acquisition cost and the current fair value.

Anavailable-for-sale financial asset is considered to be impaired if there is a significant or prolonged decline in fair value of the asset below the acquisition cost. The Bank considers a 30% to be significant and a period of six months to be prolonged.

S-32

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in, the impairment loss is reversed through the statement of comprehensive income. Moreover, the impairment loss is directly reduced from the carrying amount of theavailable-for-sale financial asset.

(iii) Impairment ofheld-to-maturity financial assets

The Bank assesses individually, at each reporting date, whether there is objective evidence that aheld-to-maturity financial asset is impaired. If any such evidence exists, the amount of loss is measured as the difference between the carrying amount and the present value of estimated future cash flows, which is discounted using the initial EIR, and recognized in the statement of comprehensive income. If, in a subsequent period, the fair value of a financial asset held to maturity increases and the increase can be objectively related to an event occurring after the impairment was recognized, the impairment loss is reversed through the statement of comprehensive income. Moreover, the impairment loss is directly reduced from the carrying amount of theheld-to-maturity financial asset.

(iv) Loss events of financial assets

Objective evidence that a financial asset is impaired include the following loss events:

• Significant financial difficulty of the issuer or obligor

• A breach of contract, such as a default or delinquency in interest or principal payments

• The granting of a concession to the borrower, for economic or legal reasons, that the lender would not otherwise consider

• A state of high probability that the borrower will enter bankruptcy or other financial reorganization

• The disappearance of an active market for that financial asset due to financial difficulties

• The presence of observable data indicating a measurable decrease in the estimated future cash flows of a group of financial assets since the initial recognition of the group, although the decrease cannot yet be identified with the individual financial asset within the group

(8) Derivative financial instruments including hedge accounting

Derivative financial instruments are initially recognized at fair value upon agreement of the contract, andre-estimated at fair value subsequently. The recognition of profit or loss due to changes in fair value of derivative instruments is as stated below:

(i) Hedge accounting

Derivative financial instruments are accounted differently depending on whether or not hedge accounting is applied, and therefore, are classified into trading purpose derivatives and hedging purpose derivatives.

Upon the transaction of hedging purpose derivatives, two different types of hedge accounting are applied; a fair value hedge, and a cash flow hedge. A fair value hedge is a hedge of the exposure to changes in fair value of a recognized asset or liability or an unrecognized firm commitment, or an identified portion of such an asset,

S-33

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

liability or firm commitment, that is attributable to a particular risk and could affect profit or loss. A cash flow hedge is a hedge of the exposure to variability in cash flows that (i) is attributable to a particular risk associated with a recognized asset or liability (such as all or some future interest payments on variable rate debt) or a highly probable forecast transaction and (ii) could affect profit or loss. For trading purpose derivatives transaction, changes in the fair value of derivatives are recognized in net income.

At inception of the hedge relationship, the Bank formally documents the relationship between the hedged item and the hedging instrument, including the nature of the risk, the objective and strategy for undertaking the hedge, and the method that will be used to assess the effectiveness of the hedging relationship. Also, at the inception of the hedge relationship, a formal assessment is undertaken to ensure the hedging instrument is expected to be highly effective in offsetting the designated risk in the hedged item and actual result was so.

Fair value hedge

For designated and qualifying fair value hedges, the change in the fair value of a hedging derivative is recognized in profit or loss in the statement of comprehensive income. Meanwhile, the change in the fair value of the hedged item, attributable to the risk hedged, is recorded as part of the carrying value of the hedged item and is also recognized in profit or loss in the statement of comprehensive income. When the hedge no longer meets the criteria for hedge accounting, the hedge relationship is terminated. For hedged item recorded at amortized cost, the difference between the carrying value of the hedged item on termination and the face value is amortized over the remaining term of the original hedge using the EIR.

Cash flow hedge

For designated and qualifying cash flow hedges, the effective portion of gain or loss on the hedging instruments is initially recognized directly in equity. The ineffective portion of the gain or loss on the hedging instrument is recognized immediately in the statement of comprehensive income. When the hedged cash flow affects the profit or loss in statement of comprehensive income, the gain or loss on the hedging instrument is recorded in the corresponding income or expense line in profit or loss in the statement of comprehensive income. When a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the hedged forecasted transaction is ultimately recognized in the statement of comprehensive income. When a forecasted transaction is no longer expected to occur, the cumulative gain and loss that was reported in equity is immediately transferred to profit or loss in the statement of comprehensive income.

(ii) Embedded derivative instruments

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives. The Bank records embedded derivative instruments at fair value if their economic characteristics and risks are not clearly and closely related to those of the host contract. If the embedded derivative cannot be measured separately from the host contract, the Bank aggregately designates the host contract and embedded derivative as a financial instrument at fair value through profit or loss. Changes due to the fair value assessment of embedded derivative instruments are recognized in profit or loss.

S-34

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(iii) Other derivative financial instruments

Changes in the fair value of other derivative financial instrument, not designated as a hedging instrument, are recognized immediately in profit or loss.

(9) Fair value of financial instruments

The fair value of financial instruments that are traded in active markets is determined by referencing quoted market prices at each reporting date. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include discounted cash flow analysis or other valuation methods.

The Bank’s policies for measuring fair value of financial instruments at amortized costs are as follows:

• Cash and due from banks: Fair value of cash is considered equivalent to the carrying amount. In the case of due from banks on demand, which do not have a set maturity and can be realized instantly, the carrying amount is considered to be a close estimate of the fair value and is assumed so. In the case of other ordinary due from banks, the cash flow discount method is used to estimate the fair value.

• Loans: The fair value of loans is the expected future cash flows, reflecting premature redemption ratio, discounted by the market interest rate, adjusted by a spread sheet considering the probability of default. Exceptions to this method include loans with credit line facilities, loans with a maturity of three months or less left and impaired loans, which the Bank assumes the carrying amount as the fair value.

• Held-to-maturity financial assets: The fair value ofheld-to-maturity financial assets is computed by widely-accepted appraisal agencies upon request.

• Deposits: The fair value of deposits is computed using the discounted cash flow method. However, for deposits, whose cash flows cannot be estimated reasonably, the Bank assumes the carrying amount as the fair value.

• Borrowings: For borrowings in Korean won, the fair value is computed using the discounted cash flow method. For borrowings in foreign currency, the fair value is computed by widely-accepted appraisal agencies upon request.

• Debentures: The fair value of industrial financial debentures in Korean won, except structured debentures in Korean won, is computed using the discounted cash flow method. For structured industrial financial debentures in Korean won and industrial financial debentures in foreign currency, the fair value is computed by widely-accepted appraisal agencies upon request.

• Other financial assets and liabilities: The fair value of other financial assets and liabilities is computed using the discounted cash flow method. However, in cases cash flow cannot be estimated reasonably, the Bank assumes the carrying amount as the fair value.

(10) Day one profit or loss recognition

For financial instruments classified as level 3 on the fair value level hierarchy measured using assess variables not observable in the market, the difference between the fair value at initial recognition and the transaction price, which is equivalent to Day one profit or loss, is amortized by using the straight line method over time.

S-35

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(11) Property and equipment

The Bank’s property and equipment are recognized at the carrying amount at historical costs less accumulated depreciation and accumulated impairment in value. Historical costs include the expenditures directly related to the acquisition of assets.

Subsequent costs are recognized in the carrying amount of assets or, if appropriate, as separate assets if the probabilities future economic benefits associated with the assets will flow into the Bank and the costs can be measured reliably; the carrying amount of the replaced part is derecognized. Furthermore, any other repairs or maintenances are charged to profit or loss as incurred.

Land is not depreciated. Depreciation on other assets is calculated using the straight line method to the amount of residual value less acquisition cost over the following estimated useful lives:

Type	Useful lives (years)
Buildings		20 ~ 50
Structure		10 ~ 40
Leasehold improvements		4
Movable property		4

Property and equipment are impaired when the carrying amount exceeds the recoverable amount. The Bank assesses residual value and economic life of its assets at each reporting date and makes adjustments to useful lives when necessary. Any gain or loss arising from the disposal of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized innon-operating income (expense) in the statement of comprehensive income.

(12) Investment property

The Bank classifies property held for the purpose of rental income or benefits from capital appreciation as investment property. Investment property is measured initially at cost, including transaction costs. Subsequent to initial recognition, the cost model is applied. Subsequent to initial recognition, an item of investment property is carried at its cost less any accumulated depreciation and any accumulated impairment loss.

Investment properties are derecognized either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the statement of comprehensive income in the period ofde-recognition. Reclassification to other account is made if there is a change in use of corresponding investment property.

Depreciation of investment property is calculated using the straight line method over its estimated useful lives as follows:

Type	Useful lives (years)
Buildings		20 ~ 50
Structure		10 ~ 40

S-36

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(13) Intangible assets

An intangible asset is recognized only when its cost can be measured reliably, and the probabilities future economic benefits from the asset will flow into the Bank are high. Separately acquired intangible assets are recognized at the acquisition cost, and subsequently, the cost less accumulated depreciation and accumulated impairment is recognized as the carrying amount.

Intangible assets with finite lives are amortized over the four-year to30-year period of useful economic lives using the straight line method. At the end of each reporting period, the Bank reviews intangible assets for any evidence that indicate impairment, and upon the presence of such evidence, the Bank estimates the amount recoverable and recognizes the loss accordingly.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually. Furthermore, the Bank reviews such intangible assets to determine whether or not it is appropriate to consider these assets to have indefinite useful lives. If in the case the Bank concludes an asset is not qualified to be classified asnon-finite, prospective measures are taken to consider such an asset as finite.

(14) Impairment ofnon-financial assets

The Bank tests for any evidence of impairment in assets and reviews whether or not the impairment has taken place by estimating the recoverable amount, at the end of each reporting period. The recoverable amount is the higher of the fair value less cost and value in use of an asset.

Except for impairment losses in respect of goodwill which are never reversed, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceeds the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

(15)Non-current assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. In order to be classified as held for sale, the asset (or disposal group) must be available for immediate sale in its present condition and its sale must be highly probable. The assets or disposal group that are classified asnon-current assets held for sale are measured at the lower of their carrying amount and fair value less cost to sell.

The Bank recognizes an impairment loss for any initial or subsequent write-down of an asset (or disposal group) to fair value less costs to sell, and a gain for any subsequent increase in fair value less costs to sell, up to the cumulative impairment loss previously recognized in accordance withK-IFRS 1036Impairment of Assets.

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

S-37

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(16)Non-derivative financial liabilities

The Bank classifiesnon-derivative financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities, in accordance with the substance of the contractual arrangement and the definitions of financial liability. The Bank recognizes these financial liabilities in the statement of financial position when the Bank becomes a party to the contractual provisions of the financial liability.

(i) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss in the current year include financial liabilities held for trading and financial liabilities designated at FVTPL upon initial recognition. Financial liabilities and derivatives are classified as financial instruments held for trading if they are acquired for the purpose of repurchasing in the near future. Financial liabilities are classified as financial liabilities at FVTPL upon initial recognition, if the profit or loss from the liabilities indicates to be more purpose-appropriate to be recognized as profit or loss. Financial liabilities at FVTPL are designated at fair value in subsequent measurements, and any relatedun-realized profit or loss is recognized as profit or loss.

(ii) Financial liabilities measured at amortized cost

Financial liabilities measured at amortized cost are recognized at fair value less cost less transaction cost upon initial recognition, and subsequently at amortized costs. The difference between the proceeds (net of transaction cost) and the redemption value is recognized in the statement of comprehensive income over the periods of the liabilities using the EIR.

Fees paid on the establishment of a loan facility are recognized as transaction costs of the loan, if the probability that some or all of the facility will be drawn down is high. If, however, there is not enough evidence to conclude a draw-down of some or all of the facility will occur, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.

(iii)De-recognition of financial liabilities

A financial liability isde-recognized when the obligation under the liability is discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability. The difference between the carrying value of the original financial liability and the consideration paid is recognized in profit or loss.

(17) Employee benefits

(i) Short-term employee benefits

Short-term employee benefits are employee benefits that are due to be settled wholly before 12 months after the end of the 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.

S-38

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(ii) Retirement benefits: defined contribution plans

A defined contribution plan is a pension plan under which the Bank pays fixed contributions into a separate fund. A defined benefit plan defines the amount of pension benefit that an employee will receive on retirement and is usually dependent on one or more factors such as years of service and compensation.

The Bank is no longer responsible for any foreseeable future liability after a certain amount or percentage of money is set aside for defined contribution plans. If the pension plan allows for early retirement, payments are recognized as employee benefits. If the contribution already paid exceeds the contribution due for service before the end of the reporting period, the Bank recognizes that excess as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund.

(iii) Retirement benefits: defined benefit plans

The Bank’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and have terms to maturity similar to the terms of the related pension liability.

Remeasurements of the net defined benefit liabilities (assets), which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income.

(18) Provisions

Provisions are recognized when the Bank has a present legal or constructive obligation as a result of a past event, 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.

(19) Financial guarantees

Financial guarantee contracts are contracts that require the issuer (the Bank) 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 changed terms of a debt instrument. Financial guarantees are initially recognized in the financial statements at fair value on the date the guarantee was given, and amortized over the period of the guarantee. Subsequent to initial recognition, the Bank’s liabilities under such guarantees are measured at the higher of:

• The amount determined in accordance withK-IFRS 1037Provisions, Contingent Liabilities and Contingent Assetsand

• The initial amount less amortization of fees recognized in accordance withK-IFRS 1018Revenue

S-39

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(20) Securities under resale or repurchase agreements

Securities purchased under agreements to resell are recorded as other loans and receivables and the related interest from these securities is recorded as interest income; securities sold under agreements to repurchase are recorded as other borrowings, and the related interest from these securities is recorded as interest expense.

(21) Interest income and expense

Interest income and expense are recognized in profit or loss using the effective interest method. The effective interest method measures the amortized costs of financial instruments and allocates the interest income or expense during the related period.

Upon the calculation of the effective interest rate, the Bank estimates future cash flows by taking into consideration all contractual terms of the financial instrument, but not future credit loss. The calculation also reflects any fees or points paid or received, transaction costs and any related premiums or discounts. In the case that the cash flow and expected duration of a financial instrument cannot be estimated reliably, the effective interest rate is calculated by the contractual cash flow during the contract period.

Once an impairment loss has been recognized on a financial asset or a group of similar assets, subsequent interest income is recognized on the interest rate that was used to discount future cash flow for the purpose of measuring the impairment loss.

(22) Fees and commission income

Fees and commission income and expense are classified as follows according to related regulations:

(i) Fees and commission from financial instruments

Fees and commission income and expense that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective interest rate. It includes those related to evaluation of the borrowers’ financial status, guarantee, collateral, other agreements and related evaluation as well as business transaction, rewards for activities, such as document preparation and recording and setup fees incurred during issuance of financial liabilities. However, when financial instruments are classified as financial instruments at fair value through profit or loss, fees and commission are recognized as revenue upon initial recognition.

(ii) Fees and commission from services

Fees and commission income charged in exchange for services to be performed during a certain period of time such as asset management fees, consignment fees and assurance service fees are recognized as the related services are performed. When a loan commitment is not expected to result in the draw-down of a loan andK-IFRS 1039Financial Instrument: Recognition and Measurementis not applied for the commitment, the related loan commitment fees are recognized as revenue proportionally to time over the commitment period.

(iii) Fees and commission from significant transaction

Fees and commission from significant transactions, such as trading stocks and other securities, negotiation and mediation activities for third parties, for instance business transfer and takeover, are recognized when transactions are completed.

S-40

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(23) Dividend income

Dividend income is recognized upon the establishment of the Bank’s right to receive the payment.

(24) Income tax expense

Income tax expense comprises current and deferred income tax. Current income tax and deferred income tax are recognized in profit or loss except to the extent that the tax arises from a transaction or event, which is recognized in other comprehensive income or directly in equity, or a business combination.

The Bank recognizes deferred income tax liabilities for all taxable temporary differences associated with investments in subsidiaries, associates, except to the extent that the Bank 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 Bank recognizes deferred income tax assets for all deductible temporary differences arising from investments in associates, to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the reporting period when the assets are realized or the liabilities 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 assets and liabilities reflects the income tax effects 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 carrying amount of a deferred income tax asset is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilized.

Deferred income tax assets and liabilities areoff-set only if the Bank has a legally enforceable right tooff-set the related current income tax assets and liabilities, and the assets and liabilities relate to income tax levied by the same tax authority and are intended to be settled on a net basis.

Additional income taxes arising from dividend payments are recognized when expenses related to dividend payments are recognized.

(25) Accounting for trust accounts

The Bank, for the purpose of financial reporting, differentiates trust assets from identifiable assets according to theFinancial Investment Services and Capital Markets Act. Furthermore, the Bank receives trust fees from the application, management and disposal of trust assets, and appropriates such amounts for fees from trust accounts.

Meanwhile, in the case the fee from an unspecified principal and interests guaranteed money in trust does not meet the principal or interest amount, even after appropriating deficit with trust fees and special reserve, the Bank fills in the remaining deficit in the trust account and appropriates such amounts for losses on trust accounts.

S-41

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3.Significant Accounting Policies, Continued

(26) Regulatory reserve for loan losses

In the case that the total sum of allowance for possible loan loss does not meet the amount prescribed in Article 29(1) ofthe Regulations on Supervision of Banking Business, the Bank, according toK-IFRS, records the difference at the end of each reporting period, and records the equal amount as a reserve for loan loss.

In the case that the existing total sum of reserve for possible loan loss exceeds the amount needed to be set aside as of the closing date, the surplus is to be reversed. Furthermore, in the case that undisposed deficit exists, reserves for loan loss is saved from the time the undisposed deficit is disposed.

(27) Earnings per share

The Bank represents its diluted and basic earnings per common share in the separate comprehensive statement of income. Basic earnings per share (“EPS”) is calculated by dividing net profit attributable to shareholders of the Bank by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share is calculated by adjusting net profit attributable to common shareholders of the Bank, considering dilution effects from all potential common shares, and the weighted average number of common shares outstanding.

(28) Corrections of errors

Prior period errors shall be corrected by retrospective restatement in the first set of financial statements authorised for issue after their discovery except to the extent that it is impracticable to determine either the period-specific effects or the cumulative effect of the error.

4.Cash and Due from Banks

(1) Cash and due from banks as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016			December 31, 2015
Cash	W	69,162			72,512
Due from banks in Korean won:
Due from Bank of Korea		540,450			1,367,960
Other due from banks in Korean won		1,005			896
		541,455			1,368,856
Due from banks in foreigncurrencies/off-shores		3,001,732			3,437,522
Provisions		(112	)		(112	)
	W	3,612,237			4,878,778

(2) Restricted due from banks as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Reserve deposit	W	486,232		1,113,981
Others		168,882		142,058
	W	655,114		1,256,039

S-42

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

5.Financial Assets Held for Trading

(1) Financial assets held for trading as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Financial assets held for trading denominated in Korean won:
Equity securities:
Stocks and equity investments	W	3,755		7,288
Beneficiary certificates		1,445		—
		5,200		7,288
Debt securities:
Government and public bonds		1,397,262		1,120,203
Financial bonds		439,359		588,003
		1,836,621		1,708,206
		1,841,821		1,715,494
Financial assets held for trading denominated in foreigncurrencies/off-shores:
Equity securities		2,266		—
Debt securities		198,425		65,240
		200,691		65,240
	W	2,042,512		1,780,734

(2) Details of debt securities in financial assets held for trading as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Face value		Acquisition cost		Fair value (Carrying amounts)
Government and public bonds in Korean won	W	1,381,000		1,398,901		1,397,262
Financial bonds in Korean won		440,000		439,219		439,359
Debt securities in foreigncurrencies/off-shores		197,956		197,487		198,425
	W	2,018,956		2,035,607		2,035,046
	December 31, 2015
	Face value		Acquisition cost		Fair value (Carrying amounts)
Government and public bonds in Korean won	W	1,109,000		1,122,670		1,120,203
Financial bonds in Korean won		590,000		588,684		588,003
Debt securities in foreigncurrencies/off-shores		64,706		63,673		65,240
	W	1,763,706		1,775,027		1,773,446

S-43

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

6.Available-for-Sale Financial Assets

(1) Available-for-sale financial assets as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Available-for-sale financial assets denominated in Korean won:
Equity securities:
Stocks and equity investments	W	9,889,764		9,449,465
Beneficiary certificates		5,766,082		6,435,675
Others		246,808		172,400
		15,902,654		16,057,540
Debt securities:
Government and public bonds		2,015,024		1,749,734
Financial bonds		5,727,167		6,218,681
Corporate bonds		11,057,825		13,146,033
		18,800,016		21,114,448
		34,702,670		37,171,988
Available-for-sale financial assets denominated in foreigncurrencies/off-shores:
Equity securities		305,959		421,137
Debt securities		3,316,387		3,698,494
		3,622,346		4,119,631
Loanedavailable-for-sale financial assets:
Debt securities		20,602		—
	W	38,345,618		41,291,619

Equity securities with no quoted market prices in active markets and for which the fair value cannot be measured reliably are recorded at cost in the amount ofW7,085,825 million andW7,340,684 million as of June 30, 2016 and December 31, 2015, respectively.

(2) Changes inavailable-for-sale financial assets for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016			2015
Beginning balance	W	41,291,619			38,160,025
Acquisition		13,157,451			15,198,976
Disposal		(16,035,416	)		(19,359,962	)
Change due to amortization		(21,443	)		(9,970	)
Unrealized change in fair value recorded in equity		3,589			(46,809	)
Impairment loss		(86,169	)		(84,708	)
Reversal of impairment loss		20			34,590
Reclassification		11,541			(57,093	)
Foreign exchange differences		(3,296	)		69,819
Others(*1)		27,722			1,319,444
Ending balance	W	38,345,618			35,224,312

S-44

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

6.Available-for-Sale Financial Assets, Continued

(*1) For the period ended June 30, 2016, others represents the increase inavailable-for-sale equity securities acquired from TSM TECH Co., Ltd., Shin Kwang Industrial Co., Ltd. and ADM21 Co., Ltd. as a part of the rehabilitation plan based on the Debtor Rehabilitation and Bankruptcy Act, andavailable-for-sale equity securities acquired from Great New wave Coming Co., Ltd., Barun Electronics Co., Ltd. Phoenix Materials Co., Ltd. and others after exercising conversion rights of the convertible bonds. For the period ended June 30, 2015, others represents Korea Land & Housing Corporation’s equity securities amounting toW1,200,000 million contributed from the government,available-for-sale equity securities acquired from Nexolon Company Limited, Chinhung International Inc. as a result ofdebt-to-equity swap decision of the Creditor Financial Institutions Committee, based upon the Corporate Restructuring Promotion Act, andavailable-for-sale equity securities acquired from Seobu T&D Co., Ltd., SEEGENE Ind. after exercising conversion rights of the convertible bonds.

(3) Equity securities with disposal restrictions inavailable-for-sale financial assets as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
Company	Number of shares		Carrying amount		Restricted period
Kukje Machinery Co., Ltd.		3,492,000	W	10,504	Undecided
Kumho Tire Co., Inc.		21,339,320		203,791	Undecided
Taihan Electric Wire Co., Ltd.		15,516,000		34,446	Until October 19, 2016
Asiana Airlines Inc.		12,200,000		53,314	Undecided
Ajin P & P Co., Ltd.		516,270		5,376	Undecided
Young Gwang Stainless Co., Ltd.		413,000		496	Until December 31, 2016
Force Tec Co., Ltd.		1,428,571		1	Until December 31, 2017
Hanchang Paper Co., Ltd.		3,204,600		3,349	Until December 31, 2016
Samho International Co., Ltd.		183,000		2,846	Until December 31, 2016
Oriental Precision & Engineering Co., Ltd.		8,498,343		16,274	Until December 31, 2016
Jaeyoung Solutec Co., Ltd.		1,962,000		6,278	Until December 31, 2017
Chinhung International Inc.		13,113,200		26,226	Until December 31, 2016
KPM Tech Co., Ltd.		57,714		346	Until December 31, 2016
Cosmotech Co., Ltd.		11,768,000		2,789	Until December 31, 2016
Hyundai Cement Co., Ltd.(*1)		2,929,617		107,810	Until December 31, 2016
GMP Co., Ltd.(*2)		2,078,400		14,092	Until December 31, 2017
Osung LST Co., Ltd.(*3)		17,290,267		20,575	Until December 31, 2017
		115,990,302	W	508,513

(*1) The number of shares has increased after the decision ofdebt-to-equity swap for the period ended June 30, 2016.

(*2) The number of shares has decreased after the decision of capital reduction for the period ended June 30, 2016.

(*3) The equity securities are reclassified from investments in subsidiaries and associates toavailable-for-sale financial assets for the period ended June 30, 2016.

S-45

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

6.Available-for-Sale Financial Assets, Continued

	December 31, 2015
Company	Number of shares		Carrying amount		Restricted period
Kukje Machinery Co., Ltd.		3,492,000	W	10,134	Until December 31, 2016
Kumho Tire Co., Inc.		21,339,320		143,614	Undecided
Taihan Electric Wire Co., Ltd.		19,658,200		45,017	Until October 20, 2016
Jaeyoung Solutec Co., Ltd.		1,962,000		5,386	Until December 31, 2017
Hyundai Cement Co., Ltd.		1,433,800		15,752	Until December 31, 2016
Dongbu Corporation		869,141		8,013	Until March 4, 2016
Chinhung International Inc.		13,113,200		30,160	Until December 31, 2016
Samho International Co., Ltd.		183,000		2,846	Until December 31, 2016
Ajin P & P Co., Ltd.		516,270		5,412	Undecided
Young Gwang Stainless Co., Ltd.		413,000		510	Until December 31, 2016
Oriental Precision & Engineering Co., Ltd.(*1)		8,498,343		18,186	Until December 31, 2016
KPM Tech Co., Ltd.		57,714		338	Until December 31, 2015
Cosmotech Co., Ltd.		11,768,000		2,483	Until December 31, 2016
Force Tec Co., Ltd.		1,428,571		1	Until December 31, 2017
Hanchang Paper Co., Ltd.		3,204,600		4,246	Until December 31, 2016
GMP Co., Ltd.		10,392,000		3,377	Until December 31, 2017
		98,329,159	W	295,475

(*1) The number of shares has decreased after the decision of capital reduction for the year ended December 31, 2015.

(4) Details of debt securities inavailable-for-sale financial assets as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Face Value		Acquisition cost		Fair value (carrying amounts)
Government and public bonds in Korean won	W	1,953,151		2,013,951		2,015,024
Financial bonds in Korean won		5,788,719		5,731,255		5,727,167
Corporate bonds in Korean won		11,298,793		11,299,478		11,057,825
Debt securities denominated in foreign currencies /off shores		3,244,726		4,004,530		3,316,387
Loaned debt securities		20,000		20,430		20,602
	W	22,305,389		23,069,644		22,137,005
	December 31, 2015
	Face Value		Acquisition cost		Fair value (carrying amounts)
Government and public bonds in Korean won	W	1,702,644		1,752,594		1,749,734
Financial bonds in Korean won		6,278,719		6,223,001		6,218,681
Corporate bonds in Korean won		13,409,285		13,409,970		13,146,033
Debt securities denominated in foreign currencies /off shores		3,691,162		4,285,667		3,698,494
	W	25,081,810		25,671,232		24,812,942

S-46

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

7.Held-to-Maturity Financial Assets

(1) Held-to-maturity financial assets as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016				December 31, 2015
	Amortized cost		Fair value		Amortized cost		Fair value
Held-to-maturity financial assets in Korean won:
Government and public bonds	W	4,847		5,161		4,913		5,473
Held-to-maturity financial assets in foreign currencies:
Corporate bonds		11,713		11,713		23,647		23,647
	W	16,560		16,874		28,560		29,120

(2) Changes inheld-to-maturity financial assets for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016			2015
Beginning balance	W	28,560			17,238
Acquisition		—			11,203
Redemption		(11,929	)		(16	)
Change due to amortization		76			14
Foreign exchange differences		(147	)		396
Ending balance	W	16,560			28,835

S-47

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

8.Loans and Allowance for Loan Losses

(1) Loans and allowance for loan losses as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016					December 31, 2015
	Amortized cost			Fair value		Amortized cost			Fair value
Loans in Korean won:
Loans for working capital	W	47,023,678			44,581,195		3,079,869			3,130,913
Loans for facility development		51,564,831			51,935,177		45,497,491			44,341,539
Loans for households		2,877,301			2,951,942		51,803,021			52,030,618
Inter-bank loans		1,689,847			1,591,152		1,529,774			1,404,547
		103,155,657			101,059,466		101,910,155			100,907,617
Loans in foreign currencies:
Loans		15,240,372			15,723,967		14,984,481			15,715,987
Inter-bank loans		1,856,139			1,856,971		2,617,923			2,617,426
Loans borrowed from overseas financial institutions		226,142			235,199		206,279			212,231
Off-shore loans		9,931,033			10,210,675		9,154,474			9,541,787
		27,253,686			28,026,812		26,963,157			28,087,431
Other loans:
Bills bought in foreign currency		1,680,466			1,651,077		1,710,518			1,669,570
Advance payments on acceptances and guarantees		242,783			107,640		195,383			110,998
Privately placed corporate bonds		2,571,321			1,918,023		3,164,801			3,001,907
Others		11,161,291			10,823,595		7,024,315			6,955,957
		15,655,861			14,500,335		12,095,017			11,738,432
		146,065,204			143,586,613		140,968,329			140,733,480
Less:
Allowance for loan losses		(5,533,601	)				(4,159,300	)
Present value discount		(15,162	)				(23,361	)
Deferred loan origination costs and fees		4,345					3,981
	W	140,520,786					136,789,649

S-48

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

8.Loans and Allowance for Loan Losses, Continued

(2) Changes in allowance for loan losses for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	Loans in Korean won												Other loans
	Loans for working capital			Loans for facility development			Others			Loans in foreign currencies			Privately placed corporate bonds			Others			Total
Beginning balance	W	2,050,923			558,163			9,791			352,756			638,573			549,094			4,159,300
Provision for loan losses		1,139,215			251,113			22			331,774			260,563			110,607			2,093,294
Write-offs		(182,408	)		(25,430	)		(655	)		(1,791	)		(80,754	)		(60,956	)		(351,994	)
Recovery		8,619			4,761			—			5,458			—			35,131			53,969
Sale		(84,490	)		(135,069	)		—			(3,000	)		(13,742	)		(20,622	)		(256,923	)
Debt-to-equity swap		(1,690	)		—			—			—			(73,434	)		—			(75,124	)
Foreign exchange differences		—			—			—			(6,947	)		(158	)		(4,885	)		(11,990	)
Others		(37,772	)		15,270			—			(539	)		(10,348	)		(43,542	)		(76,931	)
Ending balance	W	2,892,397			668,808			9,158			677,711			720,700			564,827			5,533,601
	2015
	Loans in Korean won												Other loans
	Loans for working capital			Loans for facility development			Others			Loans in foreign currencies			Privately placed corporate bonds			Others			Total
Beginning balance	W	1,170,313			549,483			11,052			164,621			260,705			242,484			2,398,658
Provision for loan losses		378,311			157,457			2,041			59,270			55,914			44,739			697,732
Write-offs		(187,707	)		(144,849	)		(1,525	)		(39,839	)		—			(25,798	)		(399,718	)
Recovery		48			16,751			—			7,549			—			—			24,348
Sale		(74,732	)		(58,577	)		—			(11,794	)		(5,021	)		(3,473	)		(153,597	)
Debt-to-equity swap		(86,638	)		(5,640	)		—			—			(26,997	)		—			(119,275	)
Foreign exchange differences		—			—			—			3,937			240			4,623			8,800
Others		(37,984	)		(22,168	)		—			12,936			(10,889	)		(18,194	)		(76,299	)
Ending balance	W	1,161,611			492,457			11,568			196,680			273,952			244,381			2,380,649

S-49

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

8.Loans and Allowance for Loan Losses, Continued

(3) Losses related to loans for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Provision for loan losses	W	(1,341,493	)		(2,093,294	)		(467,595	)		(697,732	)
Losses on disposal of loan		(75,672	)		(74,453	)		(17,763	)		(17,746	)
	W	(1,417,165	)		(2,167,747	)		(485,358	)		(715,478	)

(4) Changes in net deferred loan origination costs and fees for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016			2015
Beginning balance	W	3,981			8,441
New deferrals		6,508			19,268
Amortization		(6,144	)		(16,568	)
Ending balance	W	4,345			11,141

9.Derivative Financial Instruments

The Bank’s derivative financial instruments consist of trading derivatives and hedging derivatives, depending on the nature of each transaction. The Bank enters into hedging derivative transactions mainly for the purpose of hedging risk related to changes in fair values of the underlying assets and liabilities and future cash flows.

The Bank enters into trading derivative transactions such as futures, forwards, swaps and options for arbitrage transactions by speculating on the future value of the underlying asset. Derivativesheld-for trading transactions include contracts with the Bank’s clients and its liquidation position.

For the purpose of hedging the exposure to the variability of fair values and cash flows of funds in Korean won by changes in interest rate, the Bank mainly uses interest swaps or currency swaps. The main counterparties are foreign financial institutions and local banks. In addition, to hedge the exposure to the variability of fair values of bonds in foreign currencies by changes in interest rate or foreign exchange rate, the Bank mainly uses interest swaps or currency swaps.

S-50

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

9.Derivative Financial Instruments, Continued

The notional amounts outstanding for derivative contracts and the carrying amounts of the derivative financial instruments as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Notional amounts				Carrying amounts
	Buy		Sell		Asset			Liability
Trading purpose derivative financial instruments:
Interest rate	W	280,332,604		284,653,609		2,749,402			2,534,987
Currency		76,667,039		74,121,215		2,568,975			2,586,634
Stock		126,847		640,924		429			3,150
Commodities		52,912		52,912		6,432			6,432
Embedded derivatives		173,172		243,900		29,174			—
Allowance and other adjustments		—		—		(59,305	)		(926	)
		357,352,574		359,712,560		5,295,107			5,130,277
Hedging purpose derivative financial instruments:
Interest rate(*1)		23,609,822		23,609,822		1,138,711			54,313
Currency		6,260,383		6,828,004		85,980			526,710
Allowance and other adjustments		—		—		(1,545	)		(35	)
		29,870,205		30,437,826		1,223,146			580,988
	W	387,222,779		390,150,386		6,518,253			5,711,265

(*1) The expected maximum period for which derivative contracts, applied the cash flow hedge accounting, are exposed to risk of cash flow fluctuation is until September 11, 2020.

	December 31, 2015
	Notional amounts				Carrying amounts
	Buy		Sell		Asset			Liability
Trading purpose derivative financial instruments:
Interest rate	W	307,735,406		311,769,470		2,221,817			2,030,304
Currency		71,810,294		68,482,619		2,741,654			2,634,783
Stock		79,991		258,762		324			1,315
Commodities		97,540		97,540		26,884			26,884
Embedded derivatives		252,592		—		34,461			—
Allowance and other adjustments		—		—		(43,634	)		(4,789	)
		379,975,823		380,608,391		4,981,506			4,688,497
Hedging purpose derivative financial instruments:
Interest rate		24,349,973		24,349,973		752,954			49,674
Currency		6,463,014		7,410,478		24,748			904,287
Allowance and other adjustments		—		—		(1,452	)		(95	)
		30,812,987		31,760,451		776,250			953,866
	W	410,788,810		412,368,842		5,757,756			5,642,363

S-51

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

10.Investments in Subsidiaries and Associates

(1) Investments in subsidiaries and associates as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Subsidiaries:
KDB Asia Ltd.	W	214,807		214,807
KDB Bank Europe Ltd.		151,952		151,952
KDB Ireland Ltd.		62,389		62,389
KDB Bank Uzbekistan Ltd		47,937		47,937
Banco KDB Do Brazil S.A		35,848		35,848
Daewoo Shipbuilding & Marine Engineering Co., Ltd.(*1)		575,223		689,452
KDB Capital Corporation		597,290		597,290
Korea BTL Fund I		211,545		217,052
Korea Railroad Fund I		172,695		175,573
Korea Education Fund		69,856		71,712
Multi Asset Electronic Power PEF(*2)		—		48,263
KDB Infrastructure Investment Asset Management Co., Ltd.		16,843		16,843
Korea Infrastructure Fund		12,701		13,399
Busan Hi Tech Industrial Complex Co., Ltd.		150		150
KDB Value PEF VI		1,736,377		1,706,220
KDB Consus Value PEF(*3)		400,001		406,295
KDB Sigma PEF II		86,250		86,250
KDB Value PEF VII		78,416		62,417
KoFC-KBIC Frontier Champ2010-5 PEF		20,525		21,425
KTB Korea-Australia Global Cooperation PEF		18,143		18,143
Components and Materials M&A PEF(*4)		7,994		7,994
KDB Turn Around PEF		2,651		2,651
KDB Venture M&A PEF		—		—
KDB Sigma PEF		—		—
KOFC-KIS Pioneer Champ2010-4 venture investment fund		3,335		7,185
KDBC IP Investment Fund 2		4,057		5,057
	W	4,526,985		4,666,304

S-52

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

10.Investments in Subsidiaries and Associates, Continued

	June 30, 2016		December 31, 2015
Associates:
Korea Electric Power Co., Ltd.	W	16,921,067		16,921,067
Korea Tourism Organization		337,286		337,286
Korea Infrastructure Fund II		218,814		203,602
Korea Aerospace Industries Co., Ltd.		193,620		273,830
GM Korea Company(*5)		68,115		68,115
Korea Appraisal Board		58,492		58,492
Korea Maritime Guarantee Co., Ltd.		49,856		49,856
STX Engine Co., Ltd.(*6)		47,889		47,889
Multi Asset Electronic Power PEF(*2)		47,590		—
Shinbundang Railroad Co., Ltd.(*7)		26,895		27,963
Troika Resources Investment PEF(*8)		23,337		23,337
Others(*9)		2,148,649		2,490,094
		20,141,610		20,501,531
	W	24,668,595		25,167,835

(*1) The Bank obtained control of Daewoo Shipbuilding & Marine Engineering Co., Ltd. due to the acquisition of 75,769,311 shares amounting toW382,635 million following thepaid-in capital increase by way of third-party allotment for the year ended December 31, 2015, and therefore, the company is included in the consolidation. Considering the company’s financial trouble due to the increase in construction costs resulting from the difficulty of process in construction of offshore plants as indications of impairment, the Bank recognizedW114,229 million andW745,350 million of impairment losses for the period ended June 30, 2016 and the year ended December 31, 2015, respectively.

(*2) The Bank lost control over Multi Asset Electronic Power PEF (ex. KDB Electronic Power PEF) due to sale of Multi Asset Global Investments Co., Ltd (ex. KDB Asset Management Co., Ltd.) and the investment in Multi Asset Electronic Power PEF isre-classified from subsidiary to associate.

(*3) Considering the decline in the value in use of the subsidiary, KDB Life Insurance Co., Ltd. (discount rate of 9.5%) due to reduced rates of return on investments, decline in persistency rate, and other changes in actuarial assumptions as indications of impairment, the Bank recognizedW1,530 million andW45,642 million as impairment losses for the period ended June 30, 2016 and the year ended December 31, 2015, respectively.

(*4) The Bank recognizedW21,358 million of impairment losses for the year ended December 31, 2015, considering the decline in net asset values due to the decrease in fair value of unlisted stocks held as indications of impairment.

(*5) The Bank recognizedW219,659 million as impairment losses considering the decrease in fair values of cash-generating units due to the decline in expected cash flows as indications of impairment for the year ended December 31, 2015.

(*6) The Bank acquired the additional 9,111,500 shares of the associate’s with voting rights afterdebt-to-equity swap decision of The Creditor Financial Institutions Committee on March 31, 2015.

(*7) Considering the encroachment of capital flow due to the delayed opening of railway, and uncollected deposit of operating income as indications of impairment, the Bank recognizedW1,068 million andW1,109 million as impairment losses for the period ended June 30, 2016 and the year ended December 31, 2015, respectively.

S-53

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

10.Investments in Subsidiaries and Associates, Continued

(*8) The Bank recognizedW78,438 million as impairment losses considering the decrease in fair values of assets held due to the decline in expected cash flows as indications of impairment for the year ended December 31, 2015.

(*9) The Bank recognizedW46,912 million as impairment losses for KoFC Mirae Asset Growth Champ2010-4 PEF and 9 other companies for the period ended June 30, 2016. The Bank recognizedW23,374 million as impairment losses for UNISON SAVER Private Equity Fund and 16 other companies for the year ended December 31, 2015.

(2) The market value of marketable investments in subsidiaries and associates as of June 30, 2016 and December 31, 2015 are as follows:

	Market value				Carrying amounts
	June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015
Daewoo Shipbuilding & Marine Engineering Co., Ltd.	W	575,223		689,452		575,223		689,452
Korea Electric Power Co., Ltd.		12,758,610		10,561,763		16,921,067		16,921,067
Korea Aerospace Industries Co., Ltd.		1,332,568		2,010,760		193,620		273,830
STX Engine Co., Ltd.(*1)		53,159		65,485		47,889		47,889
STX corporation(*1)		27,210		40,637		10,507		10,507
STX Heavy Industries Co., Ltd.(*1)		18,004		34,544		11,943		11,943
Dongbu Steel Co., Ltd.		158,738		28,100		14		5
Osung LST Co., Ltd.(*2)		—		13,746		—		8,472

(*1) The Bank has obtained significant influence due to The Creditor Financial Institutions Committee’sdebt-to-equity swap decision based upon the Corporate Restructuring Promotion Act.

(*2) The Bank lost significant influence over Osung LST Co., Ltd. due to sales of Mirae Asset Daewoo Co., Ltd. (ex. Daewoo Securities Co., Ltd.) and Multi Asset Global Investments Co., Ltd. (ex. KDB Asset Management Co., Ltd.) and the investment in Osung LST Co., Ltd. is reclassified from investments in subsidiaries and associates toavailable-for-sale financial assets for the period ended June 30, 2016.

S-54

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

10.Investments in Subsidiaries and Associates, Continued

(3) The key financial information of subsidiaries and associates invested and ownership ratios as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Country	Fiscal year end	Industry	Assets		Liabilities		Equity			Operating revenue		Net income (loss)			Total compre- hensive income (loss)			Owner- ship (%)
Subsidiaries:
KDB Asia Ltd.	Hong Kong	December	Finance	W	1,417,844		1,128,768		289,076			44,044		12,457			14,506			100.00
KDB Bank Europe Ltd.	Hungary	December	Finance		851,465		783,907		67,558			52,206		655			449			100.00
KDB Ireland Ltd.	Ireland	December	Finance		369,161		299,251		69,910			9,784		4,921			4,060			100.00
KDB Bank Uzbekistan Ltd.	Uzbekistan	December	Finance		1,009,354		903,047		106,307			22,978		10,721			3,271			86.34
Banco KDB Do Brazil S.A	Brazil	December	Finance		419,604		355,589		64,015			126,396		26,336			40,610			100.00
Daewoo Shipbuilding & Marine Engineering Co., Ltd.(*1)	Korea	December	Manufacturing		17,285,810		18,062,130		(776,320	)		6,920,118		(1,179,283	)		(1,204,863	)		49.74
KDB Capital Corporation	Korea	December	Finance		4,861,310		4,121,615		739,695			310,198		82,601			76,021			99.92
Korea BTL Fund I(*2)	Korea	December	Financial investment		513,467		348		513,119			10,998		10,218			10,218			41.67
Korea Railroad Fund I(*2)	Korea	December	Financial investment		350,009		11		349,998			7,400		6,954			6,954			50.00
Korea Education Fund(*2)	Korea	December	Financial investment		140,497		7		140,490			2,797		2,611			2,611			50.00
KDB Infrastructure Investment Asset Management Co., Ltd.	Korea	December	Asset management		26,215		3,985		22,230			10,494		5,602			5,600			84.16
Korea Infrastructure Fund	Korea	December	Financial investment		12,603		5		12,598			544		476			476			85.00
KDB Venture M&A PEF	Korea	December	Financial investment		120		7,911		(7,791	)		—		—			—			57.56
KDB Value PEF VI	Korea	December	Financial investment		11,928,634		8,720,759		3,207,875			5,702,952		(55,488	)		(95,099	)		99.84
KDB Consus Value PEF	Korea	December	Financial investment		16,495,611		15,577,995		917,616			2,170,843		69,610			161,741			58.08
KDB Sigma PEF	Korea	December	Financial investment		151		—		151			—		(19	)		(19	)		60.87
KDB Sigma PEF II	Korea	December	Financial investment		144,328		283		144,045			1		520			103			60.00
KDB Value PEF VII(*1)	Korea	December	Financial investment		225,032		71,602		153,430			3,058		4,772			4,491			50.00
KoFC-KBIC Frontier Champ2010-5 PEF(*1)	Korea	December	Financial investment		50,886		136		50,750			365		283			761			50.00
KTB Korea- Australia Global Cooperation PEF	Korea	December	Financial investment		16,754		1,645		15,109			—		(682	)		(2,660	)		95.00
Components and Materials M&A PEF	Korea	December	Financial investment		30,054		5,208		24,846			13,209		12,522			12,621			83.33
KDB Turn Around PEF	Korea	December	Financial investment		3,367		—		3,367			11		(285	)		(285	)		95.17

S-55

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

10.Investments in Subsidiaries and Associates, Continued

	June 30, 2016
	Country	Fiscal year end	Industry	Assets		Liabilities		Equity			Operating revenue		Net income (loss)			Total compre- hensive income (loss)			Owner- ship (%)
Associates:
Korea Electric Power Co., Ltd.	Korea	December	Electricity Generation	W	175,190,789		105,551,151		69,639,638			28,960,751		3,861,917			3,693,429			32.90
Korea Tourism Organization	Korea	December	Culture and Tourism administration		1,327,834		339,036		988,798			338,792		4,321			4,192			43.58
Korea Aerospace Industries Co., Ltd.	Korea	December	Manufacturing		2,810,438		1,533,511		1,276,927			1,511,944		143,717			144,065			19.02
Korea Infrastructure Fund II	Korea	December	Financial investment		807,287		138		807,149			26,846		23,569			23,569			26.67
GM Korea Company(*3) (*4)	Korea	December	Manufacturing		7,447,459		6,877,185		570,274			5,993,634		(316,869	)		(308,070	)		17.02
Korea Appraisal Board	Korea	December	Appraisal		232,226		36,178		196,048			62,819		4,200			4,200			30.60
Korea Maritime Guarantee Co., Ltd.	Korea	December	Finance		123,303		3,948		119,355			4,503		(2,592	)		(2,581	)		40.07
Multi Asset Electronic Power PEF	Korea	December	Financial investment		93,442		897		92,545			947		881			881			50.00
Shinbundang Railroad Co., Ltd.(*5)	Korea	December	Other		797,926		944,080		(146,154	)		42,141		(18,436	)		(18,436	)		10.98
Troika Resources Investment PEF	Korea	December	Financial investment		46,727		3,859		42,868			4,797		1,924			1,924			54.94

S-56

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

10.Investments in Subsidiaries and Associates, Continued

	December 31, 2015
	Country	Fiscal year end	Industry	Assets		Liabilities		Equity			Operating revenue		Net income (loss)			Total compre- hensive income (loss)			Owner- ship (%)
Subsidiaries:
KDB Asia Ltd.	Hong Kong	December	Finance	W	1,394,379		1,119,809		274,570			58,831		(2,687	)		6,146			100.00
KDB Ireland Ltd.	Ireland	December	Finance		391,559		325,708		65,851			19,865		(15,760	)		(11,983	)		100.00
KDB Bank Uzbekistan Ltd.	Uzbekistan	December	Finance		1,135,025		1,031,989		103,036			47,135		22,824			18,367			86.34
KDB Bank Europe Ltd.	Hungary	December	Finance		867,214		800,106		67,108			104,018		(21,977	)		(25,745	)		100.00
Banco KDB Do Brazil S.A	Brazil	December	Finance		271,279		247,874		23,405			250,146		416			(14,859	)		100.00
Mirae Asset Daewoo Co., Ltd.(*1)(*6)	Korea	December	Finance		34,841,940		30,456,640		4,385,300			5,076,963		298,847			292,826			43.00
KDB Capital Corporation	Korea	December	Finance		5,018,425		4,321,907		696,518			130,633		99,255			123,870			99.92
Multi Asset Global Investments Co., Ltd.(*6)	Korea	December	Finance		75,316		9,848		65,468			19,252		2,501			2,502			100.00
KDB Infrastructure Investment Asset Management Co., Ltd.	Korea	December	Asset management		27,941		4,990		22,951			17,714		7,870			7,937			84.16
Daewoo Shipbuilding & Marine Engineering Co., Ltd.(*1)	Korea	December	Manufacturing		19,055,817		18,619,340		436,477			15,007,090		(3,194,945	)		(2,807,695	)		49.74
Korea Infrastructure Fund	Korea	December	Financial investment		13,460		6		13,454			1,211		1,061			1,061			85.00
Multi Asset Electronic Power PEF(*2)	Korea	December	Financial investment		94,806		17		94,789			6,577		6,321			6,321			50.00
Korea Education Fund (*2)	Korea	December	Financial investment		144,410		8		144,402			6,318		5,931			5,931			50.00
Korea BTL Fund I(*2)	Korea	December	Financial investment		527,254		361		526,893			24,124		22,496			22,496			41.67
Korea Railroad Fund I(*2)	Korea	December	Financial investment		355,887		14		355,873			17,660		16,657			16,657			50.00
KDB Venture M&A PEF	Korea	December	Financial investment		119		7,910		(7,791	)		—		—			—			57.56
KDB Turn Around PEF	Korea	December	Financial investment		3,652		—		3,652			27		26			26			95.17
KDB Consus Value PEF	Korea	December	Financial investment		15,474,147		14,746,735		727,412			3,850,904		(139,023	)		(166,000	)		58.59
Components and Materials M&A PEF	Korea	December	Financial investment		17,485		5,259		12,226			13,750		(1,693	)		(14,806	)		83.33
KDB Value PEF VI	Korea	December	Financial investment		11,980,513		8,645,869		3,334,644			10,270,593		(77,713	)		(78,076	)		99.84
KDB Value PEF VII(*1)	Korea	December	Financial investment		194,806		71,867		122,939			546		(1,181	)		1,130			50.00
KDB Sigma PEF	Korea	December	Financial investment		170		—		170			63,687		50,815			50,815			60.87
KDB Sigma PEF II	Korea	December	Financial investment		144,228		286		143,942			5		241			192			60.00
KOFC-KBIC Frontier Champ2010-5 PEF(*1)	Korea	December	Financial investment		51,934		145		51,789			9,469		9,270			8,939			50.00
KTB Korea- Australia Global Cooperation PEF	Korea	December	Financial investment		18,761		992		17,769			—		(1,329	)		(1,329	)		95.00
Associates:
Korea Electric Power Co., Ltd.	Korea	December	Electricity Generation	W	175,257,359		107,314,884		67,942,475			58,957,722		13,289,127			13,308,132			32.90
Korea Aerospace Industries Co., Ltd.	Korea	December	Manufacturing		2,712,295		1,540,443		1,171,852			2,901,032		180,566			159,491			26.41
Korea Tourism Organization	Korea	December	Culture and Tourism administration		1,345,127		364,848		980,279			728,583		(12,637	)		(17,143	)		43.58
Korea Appraisal Board	Korea	December	Appraisal		233,369		36,506		196,863			137,330		12,435			9,036			30.60
Korea Maritime Guarantee Co., Ltd.	Korea	December	Finance		122,331		427		121,904			967		(2,263	)		(2,262	)		40.07
GM Korea Company(*3)	Korea	December	Manufacturing		7,683,488		6,790,687		892,801			12,565,528		(748,301	)		(710,502	)		17.02
Korea Infrastructure Fund II	Korea	December	Financial investment		780,028		6,158		773,870			50,521		42,551			42,551			26.67

S-57

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

10.Investments in Subsidiaries and Associates, Continued

	December 31, 2015
	Country	Fiscal year end	Industry	Assets		Liabilities		Equity			Operating revenue			Net income (loss)			Total compre- hensive income (loss)			Owner- ship (%)
Troika Resources Investment PEF	Korea	December	Financial investment		42,275		1,331		40,944			(138,597	)		(144,297	)		(144,297	)		54.94
Shinbundang Railroad Co., Ltd.(*5)	Korea	December	Other		782,160		909,878		(127,718	)		59,663			(61,006	)		(61,006	)		10.98

(*1) Although the controlling entity holds less than half of the other entity’s voting rights, the controlling entity exercised its power as an executive member, influenced the other entity’s profit, and is exposed to variable profit, and therefore, the other entity is included in the scope of consolidation.

(*2) The investees are financed by KDB and managed by Multi Asset Global Investments Co., Ltd. (ex. KDB Asset Management Co., Ltd.) or KDB Infrastructure Investments Asset Management Co., Ltd. They were included in the scope of consolidation even though the Bank holds less than half of the voting rights because the Bank has the exposure to variable returns, and the ability to use power over the investee to affect the amount of the investors returns through its power over the investee.

(*3) Although the Bank’s ownership of GM Korea Company is less than 20%, the equity method is applied as the Bank is considered to have significant influence over GM Korea Company by exercising rights to elect board of directors, etc.

(*4) The Bank used the financial statement as of March 31, 2016 in applying the equity method since the Bank was not able to obtain the financial statement as of June 30, 2016.

(*5) The ownership ratio of Shinbundang Railroad Co. Ltd. is above 20% upon the consideration of shares owned by the Bank’s subsidiaries. Therefore, the Bank exercises significant influence over the associate, Shinbundang Railroad.

(*6) Investments in Mirae Asset Daewoo Co., Ltd. (ex. Daewoo Securities Co., Ltd.) and Multi Asset Global Investments Co., Ltd. (ex. KDB Asset Management Co., Ltd.) arere-classified from investments in subsidiaries intonon-current assets held for sale for the year ended December 31, 2015.

S-58

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

11.Property and Equipment

Changes in property and equipment for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	January 1, 2016		Acquisition/ depreciation			Disposal			Reclassification			Foreign exchange differences			June 30, 2016
Acquisition cost:
Land	W	255,152		—			—			(5,916	)		38			249,274
Buildings and structures		377,154		1,261			(7	)		(801	)		99			377,706
Leasehold improvements		39,890		1,069			(1,443	)		24			(60	)		39,480
Vehicles		1,396		—			—			—			(4	)		1,392
Equipment		50,797		1,070			(824	)		—			(383	)		50,660
Construction in progress		51,371		3,809			—			(671	)		—			54,509
Others		129,313		1,226			(535	)		—			(34	)		129,970
		905,073		8,435			(2,809	)		(7,364	)		(344	)		902,991
Accumulated depreciation:
Buildings and structures(*1)		144,630		5,216			(6	)		(616	)		86			149,310
Leasehold improvements		26,951		2,648			(701	)		—			(134	)		28,764
Vehicles		1,146		50			—			—			(3	)		1,193
Equipment(*1)		39,764		1,856			(703	)		—			(408	)		40,509
Others		99,287		6,923			(398	)		—			(39	)		105,773
		311,778		16,693			(1,808	)		(616	)		(498	)		325,549
Accumulated impairment losses:
Land		3,023		—			—			—			—			3,023
Buildings and structures		2,361		—			—			—			—			2,361
		5,384		—			—			—			—			5,384
	W	587,911		(8,258	)		(1,001	)		(6,748	)		154			572,058

S-59

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

11.Property and Equipment, Continued

	2015
	January 1, 2015		Acquisition/ depreciation		Disposal			Reclassification			Foreign exchange differences			June 30, 2015
Acquisition cost:
Land	W	256,789		20		—			(457	)		(1	)		256,351
Buildings and structures		374,126		2,037		(17	)		(862	)		152			375,436
Leasehold improvements		30,286		5,635		—			124			24			36,069
Vehicles		1,294		321		(236	)		—			13			1,392
Equipment		46,368		1,979		(16	)		—			176			48,507
Construction in progress		124		50,700		—			(124	)		—			50,700
Others		112,102		1,550		(37	)		—			43			113,658
		821,089		62,242		(306	)		(1,319	)		407			882,113
Accumulated depreciation:
Buildings and structures(*1)		133,912		5,447		(15	)		(292	)		(1	)		139,051
Leasehold improvements		22,510		2,501		—			—			(51	)		24,960
Vehicles		889		398		(202	)		—			11			1,096
Equipment(*1)		35,977		1,932		(15	)		—			171			38,065
Others		86,603		6,074		(23	)		—			33			92,687
		279,891		16,352		(255	)		(292	)		163			295,859
Accumulated impairment losses:
Land		3,023		—		—			—			—			3,023
Buildings and structures		2,361		—		—			—			—			2,361
		5,384		—		—			—			—			5,384
	W	535,814		45,890		(51	)		(1,027	)		244			580,870

(*1) The amounts include government grants.

S-60

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

12.Investment Property

Changes in investment property for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	January 1, 2016		Acquisition/ depreciation			Reclassification		June 30, 2016
Acquisition cost:
Land	W	54,259		—			5,916		60,175
Buildings and structures		40,519		—			1,448		41,967
		94,778		—			7,364		102,142
Accumulated depreciation:
Buildings and structures		15,882		870			616		17,368
Accumulated impairment losses:
Land		1,197		—			—		1,197
Buildings and structures		1,778		—			—		1,778
		2,975		—			—		2,975
	W	75,921		(870	)		6,748		81,799
	2015
	January 1, 2015		Acquisition/ depreciation			Reclassification		June 30, 2015
Acquisition cost:
Land	W	52,590		—			457		53,047
Buildings and structures		38,813		—			862		39,675
		91,403		—			1,319		92,722
Accumulated depreciation:
Buildings and structures		13,789		744			292		14,825
Accumulated impairment losses:
Land		1,197		—			—		1,197
Buildings and structures		1,778		—			—		1,778
		2,975		—			—		2,975
	W	74,639		(744	)		1,027		74,922

The fair value of the Bank’s investment property, as determined on the basis of valuation by an independent appraiser, amounts toW88,587 million andW81,630 million as of June 30, 2016 and December 31, 2015, respectively. Additionally, fair value of investment in property is classified as level 3 according to the fair value hierarchy in Note 44.

S-61

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

13.Intangible Assets

Changes in intangible assets for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	January 1, 2016		Acquisition		Disposal			Amortization			Foreign exchange differences			June 30, 2016
Development expense	W	48,516		2,168		—			(9,879	)		(1	)		40,804
Equipment usage right		831		—		—			(30	)		(4	)		797
Other deposits provided		11,641		58		(250	)		—			—			11,449
Others		13,208		1,315		(2	)		(4,221	)		(1	)		10,299
	W	74,196		3,541		(252	)		(14,130	)		(6	)		63,349
	2015
	January 1, 2015		Acquisition		Disposal			Amortization			Foreign exchange differences			June 30, 2015
Development expense	W	61,119		4,480		—			(10,739	)		1			54,861
Equipment usage right		847		—		—			(29	)		15			833
Other deposits provided		11,655		—		(1	)		—			1			11,655
Others		17,223		1,200		—			(4,057	)		6			14,372
	W	90,844		5,680		(1	)		(14,825	)		23			81,721

14.Other Assets

Other assets as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016			December 31, 2015
Accounts receivable	W	7,593,763			4,785,719
Unsettled domestic exchange receivables		837,796			566,624
Accrued income		511,602			473,385
Guarantee deposits		166,712			166,128
Financial guarantee asset		30,948			34,870
Prepaid expenses		4,690			5,396
Advance payments		780			535
Others		88,219			46,541
		9,234,510			6,079,198
Allowance for credit losses		(190,900	)		(72,221	)
Present value discount		(3,440	)		(3,881	)
	W	9,040,170			6,003,096

The carrying amounts of financial assets included in other assets above amounted toW8,954,272 million andW5,956,547 million as of June 30, 2016 and December 31, 2015, respectively, and their fair value amounted toW8,964,606 million andW5,964,635 million as of June 30, 2016 and December 31, 2015, respectively.

S-62

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

15.Non-current Assets Held for Sale Held for Sale

(1) The Bank issued the public notice for the block sale of Mirae Asset Daewoo Co., Ltd. (ex. Daewoo Securities Co., Ltd.) and Multi Asset Global Investments Co., Ltd. (ex. KDB Asset Management Co., Ltd.), on October 8, 2015. The Bank entered into the stock purchase agreement contract with Mirae Asset Securities Co., Ltd. on March 18, 2016 and completed sale procedures on April 7, 2016.

(2) Non- current assets held for sale as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Non-current assets held for sale
Investment on subsidiaries	W	—		1,839,114

16.Financial Liabilities Designated at Fair Value Through Profit or Loss

(1) Financial liabilities designated at fair value through profit or loss as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Borrowings	W	—		3,180
Debentures		1,899,233		1,619,438
	W	1,899,233		1,622,618

Borrowings, designated at “Fair Value Through Profit or Loss” (FVTPL), consist of equity-index-linked securities. Through designating embedded derivatives and host contracts as FVTPL items, changes in fair value of complex financial products are recognized in profit or loss. Changes in fair value of structured debentures which hedge accounting are applied, are recognized in profit or loss, but structured debentures with no hedge accounting applied to, are measured at amortized costs. Therefore, such structured debentures, not applied to hedge accounting, have been designated at FVTPL in order to eliminate mismatch in measurements of accounting profit and loss.

(2) The difference between the carrying amount and contractual cash flow amount of financial liabilities designated at fair value through profit or loss as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Carrying amount	W	1,899,233		1,622,618
Contractual cash flow amounts		1,645,558		1,408,665
Difference	W	253,675		213,953

S-63

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

17.Deposits

Deposits as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016				December 31, 2015
	Amortized cost		Fair value		Amortized cost		Fair value
Deposits in Korean won:
Demand deposits	W	158,693		158,693		221,596		221,596
Time and savings deposits		33,532,720		33,612,502		34,227,299		34,264,950
Certificates of deposit		1,916,764		1,917,259		515,351		515,514
		35,608,177		35,688,454		34,964,246		35,002,060
Deposits in foreign currencies:
Demand deposits		1,534,483		1,534,483		955,224		955,224
Time and savings deposits		1,455,355		1,456,027		1,290,474		1,290,284
Certificates of deposit		2,501,836		2,521,613		2,606,035		2,610,366
		5,491,674		5,512,123		4,851,733		4,855,874
Off-shore deposits in foreign currencies:
Demand deposits		197,141		197,141		118,913		118,913
	W	41,296,992		41,397,718		39,934,892		39,976,847

18.Borrowings

(1) Borrowings as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Minimum interest rate (%)		Maximum interest rate  (%)		Amortized cost			Fair value
Borrowings in Korean won		—		3.65	W	7,978,151			7,968,496
Borrowings in foreign currencies		—		3.85		11,706,573			11,821,519
Off-shore borrowings in foreign currencies		0.19		4.32		1,177,287			1,183,251
Others		0.29		6.55		4,197,088			4,198,754
						25,059,099			25,172,020
Deferred borrowing costs						(2,818	)
Discount on borrowings						(14,560	)
					W	25,041,721

	December 31, 2015
	Minimum interest rate (%)		Maximum interest rate (%)		Amortized cost			Fair value
Borrowings in Korean won		—		5.00	W	7,856,046			7,814,201
Borrowings in foreign currencies		—		5.05		10,745,590			10,858,933
Off-shore borrowings in foreign currencies		0.19		4.27		1,159,260			1,162,494
Others		0.07		6.55		4,682,743			4,683,345
						24,443,639			24,518,973
Deferred borrowing costs						(3,489	)
Discount on borrowings						(39,560	)
					W	24,400,590

S-64

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

18.Borrowings, Continued

(2) Borrowings in Korean won before adjusting for gains and losses on deferred borrowing costs as of June 30, 2016 and December 31, 2015 are as follows:

Lender	Classification	Annual interest rate (%)	June 30, 2016		December 31, 2015
Ministry of Strategy and Finance	Borrowings from government fund(*1)	0.51 ~ 1.19	W364,421	��		405,230
Industrial Bank of Korea	Borrowings from industrial technology fund	0.60 ~ 1.00	2,940			3,819
Small & Medium Business Corp.	Borrowings from small and medium enterprise promotion fund	1.32 ~ 3.46	157,408			177,231
Ministry of Culture and Tourism	Borrowings from tourism promotion fund	0.05 ~ 2.50	2,020,895			1,855,349
Korea Energy Management Corporation	Borrowings from fund for rational use of energy	0.25 ~ 3.65	909,083			986,247
Local governments	Borrowings from local small and medium enterprise promotion fund	0.20 ~ 3.50	74,523			78,605
The Bank of Korea	Borrowings from Bank of Korea	0.50 ~ 0.75	4,178,964			4,069,430
Others	Borrowings from environment improvement support fund and others	0.00 ~ 3.35	269,917			280,135
			W7,978,151			7,856,046

(*1) Borrowings from government fund are subordinated borrowings.

S-65

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

18.Borrowings, Continued

(3) Borrowings andoff-shore borrowings in foreign currencies before adjusting for gains and losses on deferred borrowing costs as of June 30, 2016 and December 31, 2015 are as follows:

Lender	Classification	Annual interest rate (%)	June 30, 2016		December 31, 2015
Japan Bank for International Cooperation (“JBIC”)	Borrowings from JBIC	1.73 ~ 2.16	W	226,142		206,279
Mizuho and others	Bank loans from foreign funds	3M Libor+0.45 ~ 3M Libor+0.63		1,385,993		1,511,880
Ministry of Strategy and Finance	Exchange equalization fund borrowings in foreign currencies	3M Libor+0.22 ~ 3M Libor+0.74		2,812,177		2,550,122
Central Bank of the Republic Uzbekistan and others	Off-shore short term borrowings	0.19 ~ 0.93		638,863		686,481
		3M Telerate+0.40		34,941		35,160
				673,804		721,641
HSBC and others	Off-shore long term borrowings	3M Libor+0.30 ~ 3M Libor+0.62		406,018		341,601
JBIC	Off-shore borrowings from JBIC	1.79 ~ 4.32		97,465		62,538
		—		—		33,481
				97,465		96,019
Others	Short term borrowings in foreign currencies	0.00 ~ 3.85		5,356,610		4,426,210
	Long term borrowings in foreign currencies	0.09 ~ 1.48		1,925,651		2,051,098
			W	12,883,860		11,904,850

S-66

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

19.Debentures

Debentures as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Minimum interest rate (%)		Maximum interest rate (%)		Amortized cost			Fair value
Debentures in Korean won:
Debentures		1.32		7.29	W	86,546,565			86,756,775
Discount on debentures						(7,205	)
Valuation adjustment for fair value hedges						134,398
						86,673,758
Debentures in foreign currencies:
Debentures		3M USD Libor+0.27		3M USD Libor+2.50		15,926,479			15,899,994
Discount on debentures						(38,147	)
Premium on debentures						281
Valuation adjustment for fair value hedges						361,774
						16,250,387
Off-shore debentures:
Debentures		3M USD Libor+0.35		3M USD Libor+3.32		9,903,869			9,965,275
Discount on debentures						(22,917	)
Premium on debentures						851
Valuation adjustment for fair value hedges						62,336
						9,944,139
					W	112,868,284			112,622,044

S-67

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

19.Debentures, Continued

	December 31, 2015
	Minimum interest rate (%)		Maximum interest rate (%)		Amortized cost			Fair value
Debentures in Korean won:
Debentures		1.54		7.29	W	90,938,546			91,096,981
Discount on debentures						(15,236	)
Valuation adjustment for fair value hedges						91,306
						91,014,616
Debentures in foreign currencies:
Debentures		3M USD Libor+0.27		3M USD Libor+2.58		16,311,947			16,087,863
Discount on debentures						(33,587	)
Premium on debentures						4,859
Valuation adjustment for fair value hedges						(180,832	)
						16,102,387
Off-shore debentures:
Debentures		3M USD Libor+0.35		3M USD Libor+4.30		9,947,109			9,850,360
Discount on debentures						(23,891	)
Premium on debentures						4,145
Valuation adjustment for fair value hedges						(150,346	)
						9,777,017
					W	116,894,020			117,035,204

20.Defined Benefit Liabilities

The Bank implements a defined benefit retirement pension plan based on employee compensation benefits and service periods. The plan assets are in trusts with Kookmin Bank, Samsung Life Insurance Co., Ltd., etc.

(1) Details of defined benefit liabilities as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016			December 31, 2015
Present value of defined benefit liabilities	W	302,570			282,865
Fair value of plan assets		(229,073	)		(229,505	)
	W	73,497			53,360

S-68

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

20.Defined Benefit Liabilities, Continued

(2) Changes in defined benefit liabilities for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	Present value of defined benefit liabilities			Fair value of plan assets			Defined benefit liabilities
Beginning balance	W	282,865			(229,505	)		53,360
Current service costs		19,531			—			19,531
Interest expense (income)		3,896			(3,210	)		686
Benefits paid by the plan		(3,722	)		3,642			(80	)
Ending balance	W	302,570			(229,073	)		73,497
	2015
	Present value of defined benefit liabilities			Fair value of plan assets			Defined benefit liabilities
Beginning balance	W	211,148			(179,018	)		32,130
Current service costs		16,253			—			16,253
Interest expense (income)		3,379			(2,903	)		476
Benefits paid by the plan		(11,215	)		10,832			(383	)
Contribution		—			(10,000	)		(10,000	)
Ending balance	W	219,565			(181,089	)		38,476

(3) Fair value of plan assets for each type as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016				December 31, 2015
	Quoted  market prices		Unquoted market prices		Quoted market prices		Unquoted market Prices
Due from banks	W	—		229,073		—		229,505

(4) Defined benefit costs recognized in profit or loss for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

			June 30, 2016		June 30, 2015
	Three- month period ended		Six-month period ended		Three- month period ended		Six-month period ended
Current service costs	W	11,351		19,531		8,120		16,253
Interest expense (income), net		448		686		237		476
	W	11,799		20,217		8,357		16,729

S-69

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

20.Defined Benefit Liabilities, Continued

(5) The principal actuarial assumptions used as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Discount rate (%)		2.83		2.83
Future salary increasing rate (%)		6.77		6.77

(6) The present value sensitivity of defined benefit liabilities as changes in principal actuarial assumptions as of December 31, 2015 is as follows:

	Sensitivity
	1% increase in assumption	1% decrease in assumption
Discount rate	10.04% decrease	11.91% increase
Future salary increasing rate	11.32% increase	9.78% decrease

(7) The weighted-average expected time to maturity of defined benefit liabilities is 11.07 years as of December 31, 2015.

21.Provisions

(1) Changes in provisions for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	Provision for payment guarantees			Provision for unused commitments		Financial guarantee provision			Lawsuit provision			Other provision			Total
Beginning balance	W	532,470			69,958		118,313			18,066			6,076			744,883
Increase (reversal) of provision		630,686			118,230		(35,942	)		(1,333	)		3,743			715,384
Foreign exchange differences		(13,734	)		402		(180	)		—			—			(13,512	)
Others		—			—		—			—			(5,044	)		(5,044	)
Ending balance	W	1,149,422			188,590		82,191			16,733			4,775			1,441,711
	2015
	Provision for payment guarantees			Provision for unused commitments		Financial guarantee provision			Lawsuit provision			Other provision			Total
Beginning balance	W	276,365			20,341		22,069			9,043			6,076			333,894
Increase of provision		27,909			4,737		3,474			2,780			—			38,900
Foreign exchange differences		4,022			502		(147	)		—			—			4,377
Ending balance	W	308,296			25,580		25,396			11,823			6,076			377,171

(2) Provision for payment guarantees and financial guarantee provision

Confirmed acceptances and guarantees, unconfirmed acceptances and guarantees and bills endorsed are not recognized on the statement of financial position, but are disclosed asoff-statement of financial position items in the notes to the financial statements. The Bank provides a provision for suchoff-statement of financial position items, applying a Credit Conversion Factor (“CCF”) and provision rates, and records the provision as a reserve for possible losses on acceptances and guarantees.

S-70

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

21.Provisions, Continued

In the case of financial guarantee contracts, financial guarantee provision is measured at the higher of the amount calculated using method above and the amount initially recognised less the cumulative amount of income.

(3) Provision for unused commitments

The Bank records a provision for a certain portion of unused credit lines which is calculated using a CCF as provision for unused commitments applying provision rates.

(4) Provision for possible losses from lawsuits

As of June 30, 2016, the Bank is involved in 23 lawsuits as a plaintiff and 38 lawsuits as a defendant. The aggregate amounts of claims as a plaintiff and a defendant amounted toW229,343 million andW536,446 million, respectively. The Bank provided a provision against contingent loss from pending lawsuits as of June 30, 2016 and additional losses may be incurred depending on the final result of pending lawsuits.

Major lawsuits in progress as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Contents	Amounts		Status of lawsuit
Plaintiff:
Korea Land & Housing Corp.	Claim for debt absence	W	67,891	1st trial ruled in favor of the Bank; 2nd trial in progress
Korea Trade Insurance Corporation	Short-term export credit insurance		46,394	1st trial in progress
Legal administrator of Byucksan Engineering & Construction Co., Ltd.	Objection to final judgement on inspection of rehabilitation claims		20,000	1st, 2nd trials ruled against the Bank
Gyeonggi Urban Innovation Corp.	Claim for refund of investments		19,100	1st trial ruled partially in favor of the Bank; 2nd trial in progress
China Great Wall Asset Management Corp.	Objection to provisional seizure		18,159	1st trial ruled in favor of the Bank; 2nd trial in progress
KB Capital Co., Ltd.	Claim for damages		17,795	Supplementary participation
SH Corporation	Claim for damages		9,720	1st trial ruled against the Bank; 2nd trial in progress
Defendant:
Hanhwa Chemical Co., Ltd.	Performance guarantee		322,593	1st, 2nd trials ruled in favor of the Bank; pending appeals(*1)
Shinhan Bank and one	Claim for damages		58,474	1st trial in progress

S-71

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

21.Provisions, Continued

	June 30, 2016
	Contents	Amounts		Status of lawsuit
KAMCO 8th JV Securitization Specialty Co., Ltd.	Claim for refund of impairment sale payment		36,333	1st trial in progress
Gyeonggi Urban Innovation Corp.	Delivery of stocks and stock transfer, etc.		24,348	1st trial ruled against the Bank; 2st trial in progress

(*1) For the sale of the shares of Daewoo Shipbuilding & Marine Engineering Co., Ltd. that the Bank and Korea Asset Management Corp. (“KAMCO”) had held, the Bank, KAMCO and Hanhwa Chemical Co., Ltd. (“Hanhwa Chemical”), which was on behalf of the Hanhwa Consortium, entered into the memorandum of understanding on November 14, 2008, but the memorandum was revoked as reasons attributable to Hanhwa Chemical. Accordingly, the Bank and KAMCO tookW195 billion andW120 billion, respectively, provided by Hanhwa Chemical as the performance guarantee. Relating to the performance guarantee, Hanhwa Chemical brought a law suit but the first and the second trial ruled in favor of the Bank because the courts of the first and the second trial regarded the performance guarantee as a penalty for the breach of the memorandum. After the reporting date, on July 14, 2016, the Supreme Court judged unlike the first and the second trial that the performance guarantee was provided in order to compensate damages and the Bank’s taking all the performance guarantee was unfair, and remanded the case to the original court.

In accordance with the judgement of the Supreme Court, the Bank expects that the original court to which the case is remanded will partially reduce the amount taken by the Bank relating to the performance guarantee, but the Bank does not recognise a provision because a reliable estimate cannot be made of the amount of the reduction.

	December 31, 2015
	Contents	Amounts		Status of lawsuit
Plaintiff:
Gyeonggi Urban Innovation Corp.	Claim for refund of investments	W	19,100	1st trial ruled partially in favor of the Bank; 2nd trial in progress
SH Corporation	Claim for damages		9,720	1st trial ruled against the Bank; 2nd trial in progress
KB Capital Co., Ltd.	Claim for damages		17,795	Supplementary participation
Korea Trade Insurance Corporation	Short-term export credit insurance		46,394	1st trial in progress
Defendant:
Hanhwa Chemical Co., Ltd.	Performance guarantee		322,593	1st, 2nd trials ruled in favor of the Bank; Pending appeals
Shinhan Bank and one	Claim for damages		58,474	1st trial in progress

S-72

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

21.Provisions, Continued

	December 31, 2015
	Contents	Amounts		Status of lawsuit
KAMCO 8th JV Securitization Specialty Co., Ltd	Claim for refund of impairment sale payment		36,333	1st trial in progress
Gyeonggi Urban Innovation Corp.	Delivery of stocks and stock transfer, etc.		24,348	1st trial ruled against the Bank; 2nd trial in progress

(5) Other provision

The Bank recognised other provision as a reserve for other miscellaneous purpose.

22. Other Liabilities

Other liabilities as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016			December 31, 2015
Accounts payable	W	7,406,074			4,730,087
Accrued expense		1,648,387			1,668,308
Advance receipts		1,144			2,544
Unearned income		43,032			47,996
Deposits withholding tax		35,602			26,125
Guarantee money received		42,622			35,820
Foreign exchanges payable		53,457			31,005
Domestic exchanges payable		692,182			418,345
Borrowing from trust accounts		900,827			1,278,311
Financial guarantee liability		38,229			41,884
Suspense payable		14,184			32,926
Others		71,764			42,692
		10,947,504			8,356,043
Present value discount		(337	)		(344	)
	W	10,947,167			8,355,699

The carrying amount of financial liabilities included in other liabilities above amounted toW10,779,502 million andW8,194,931 million as of June 30, 2016 and December 31, 2015, respectively, and their fair value amounted toW10,779,595 million andW8,194,982 million as of June 30, 2016 and December 31, 2015, respectively.

23.Equity

(1) Issued capital

The Bank is authorized to issue up to 6,000 million shares of common stock and has 3,447,079,768 shares issued as of June 30, 2016 and December 31, 2015, and outstanding with a total par value ofW17,235,399 million as of June 30, 2016 and December 31, 2015.

S-73

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

23.Equity, Continued

(2) Capital surplus

Capital surplus as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Paid-in capital in excess of par value	W	66,571		66,571
Surplus from capital reduction(*1)		44,373		44,373
Other capital surplus(*2)		2,390,495		2,390,495
	W	2,501,439		2,501,439

(*1) The Bank reducedW5,178,600 million of its issued capital in 1998 and 2000 to offset its accumulated deficit amounting toW5,134,227 million. As the result of the capital reduction,W44,373 million of surplus exceeding accumulated deficit was recorded in capital surplus in equity.

(*2) The difference in the amount of shares issued and the carrying value of net asset acquired occurring from the merger of the Bank with KDB Financial Group Inc. and Korea Finance Corporation are recognized as other capital surplus.

(3) Accumulated other comprehensive income

(i) Accumulated other comprehensive income as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016			December 31, 2015
Valuation gain onavailable-for-sale financial assets:
Valuation gain onavailable-for-sale financial assets (before tax)	W	742,306			759,920
Income tax effect		(179,636	)		(183,898	)
		562,670			576,022
Exchange differences on translation of foreign operations:
Exchange differences on translation of foreign operations (before tax)		425			(437	)
Income tax effect		(103	)		107
		322			(330	)
Valuation loss on cash flow hedge:
Valuation loss on cash flow hedge (before tax)		(29,887	)		(23,616	)
Income tax effect		7,233			5,714
		(22,654	)		(17,902	)
Remeasurements of defined benefit liabilities:
Remeasurements of defined benefit liabilities (before tax)		15,040			15,040
Income tax effect		(3,640	)		(3,640	)
		11,400			11,400
	W	551,738			569,190

S-74

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

23.Equity, Continued

(ii) Changes in accumulated other comprehensive income for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	January 1, 2016			Increase (Decrease)			Tax Effect			June 30, 2016
Valuation gain onavailable-for-sale financial assets	W	576,022			(17,614	)		4,262			562,670
Exchange differences on translation of foreign operations		(330	)		862			(210	)		322
Valuation loss on cash flow hedge		(17,902	)		(6,271	)		1,519			(22,654	)
Remeasurements of defined benefit liabilities		11,400			—			—			11,400
	W	569,190			(23,023	)		5,571			551,738

	2015
	January 1, 2015			Increase (Decrease)			Tax Effect			June 30, 2015
Valuation gain onavailable-for-sale financial assets	W	815,600			(46,808	)		11,326			780,118
Exchange differences on translation of foreign operations		(28,365	)		9,082			(2,198	)		(21,481	)
Valuation loss on cash flow hedge		(13,866	)		(10,115	)		2,448			(21,533	)
Remeasurements of defined benefit liabilities		45,053			—			—			45,053
	W	818,422			(47,841	)		11,576			782,157

(4) Retained earnings

In accordance with theKorea Development Bank Act,the Bank is required to appropriate at least 40% of net income as a legal reserve. This reserve can be transferred topaid-in capital or offset an accumulated deficit.

In accordance with theKorea Development Bank Act, the Bank offsets an accumulated deficit with reserves. If the reserve is insufficient to offset the accumulated deficit, the Korean government is responsible for the deficit.

(i) Retained earnings as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016			December 31, 2015
Legal reserve	W	3,578,770			5,473,906
Voluntary reserve
Regulatory reserve for loan losses		1,370,828			1,370,828
Accumulated deficits		(289,641	)		(1,895,136	)
	W	4,659,957			4,949,598

S-75

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

23.Equity, Continued

(ii) Changes in legal reserve for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016			2015
Beginning balance	W	5,473,906			5,400,519
Transfer from unappropriated retained earnings		—			73,387
Coverage of deficits		(1,895,136	)		—
Ending balance	W	3,578,770			5,473,906

(iii) Changes in unappropriated retained earnings (accumulated deficits) for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016			2015
Beginning balance	W	(1,895,136	)		183,469
Profit (loss) for the period		(289,641	)		202,325
Transfer from (contribution to) legal reserve		1,895,136			(73,387	)
Contribution to regulatory reserve for loan losses		—			(63,903	)
Dividends		—			(46,179	)
Ending balance	W	(289,641	)		202,325

(5) Regulatory reserve for loan losses

The Bank is required to provide a regulatory reserve for loan losses in accordance withRegulations on Supervision of Banking Business 29(1) and (2). The details of regulatory reserve for loan losses are as follows:

(i) Regulatory reserve for loan losses as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Beginning balance	W	1,370,828		1,370,828
Planned regulatory reserve for loan losses		1,089,383		—
Ending balance	W	2,460,211		1,370,828

S-76

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

23.Equity, Continued

(ii) Obligated amount of provision for regulatory reserve for loan losses and profit (loss) after adjusting regulatory reserve for loan losses for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Profit (loss) for the period	W	(569,363	)		(289,641	)		(253,564	)		202,325
Obligated amount of reversal (provision) for regulatory reserve for loan losses		(921,550	)		(1,089,383	)		152,138			(121,395	)
Profit (loss) after adjusting regulatory reserve for loan losses	W	(1,490,913	)		(1,379,024	)		(101,426	)		80,930
Earnings (loss) per share after adjusting regulatory reserve for loan losses (in won)	W	(433	)		(400	)		(30	)		25

24.Net Interest Income

Net interest income for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three- month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Interest income:
Due from banks	W	8,424			16,976			9,874			19,787
Financial assets held for trading		12,206			25,671			11,961			25,667
Available-for-sale financial assets		152,306			316,920			155,806			345,494
Held-to-maturity financial assets		294			597			226			429
Loans		1,100,019			2,228,698			1,171,119			2,419,596
		1,273,249			2,588,862			1,348,986			2,810,973
Interest expense:
Financial liabilities designated at fair value through profit or loss		(18,487	)		(35,828	)		(17,255	)		(32,708	)
Deposits		(151,749	)		(312,566	)		(186,438	)		(387,972	)
Borrowings		(73,056	)		(145,092	)		(45,692	)		(118,473	)
Debentures		(660,677	)		(1,358,561	)		(720,509	)		(1,488,822	)
		(903,969	)		(1,852,047	)		(969,894	)		(2,027,975	)
	W	369,280			736,815			379,092			782,998

Interest received from impaired assets relating to loan receivables for the periods ended June 30, 2016 and 2015 wereW73,102 million andW78,671 million, respectively, and there was no interest received from impaired assets related to financial assets other than loans.

S-77

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

25.Net Fees and Commission Income

Net fees and commission income for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Fees and commission income:
Loan commissions	W	48,527			98,010			56,596			107,208
Underwriting and investment consulting commissions		35,732			79,545			55,368			87,726
Brokerage and agency commissions		1,817			3,849			3,704			8,431
Trust and retirement pension plan commissions		9,798			13,035			14,323			26,858
Fees on asset management		720			1,059			461			731
Other fees		18,575			28,466			27,361			44,660
		115,169			223,964			157,813			275,614
Fees and commission expenses:
Brokerage and agency fees		(2,305	)		(5,284	)		(2,987	)		(5,162	)
Other fees		(7,478	)		(15,837	)		(4,549	)		(10,723	)
		(9,783	)		(21,121	)		(7,536	)		(15,885	)
	W	105,386			202,843			150,277			259,729

26.Dividend Income

Dividend income for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016				June 30, 2015
	Three-month period ended		Six-month period ended		Three-month period ended		Six-month period ended
Financial assets held for trading	W	160		160		278		300
Available-for-sale financial assets		26,878		122,116		36,334		150,124
Investments in subsidiaries and associates		39,414		895,347		66,383		280,447
	W	66,452		1,017,623		102,995		430,871

S-78

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

27.Net Gain (Loss) on Financial Assets Held for Trading

Net gain (loss) related to financial assets held for trading for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Gains on financial assets held for trading:
Gains on sale	W	7,781			11,489			9,343			16,680
Gains on valuation		1,074			3,367			—			1,376
		8,855			14,856			9,343			18,056
Losses on financial assets held for trading:
Losses on sale		(6,557	)		(9,809	)		(11,224	)		(17,025	)
Losses on valuation		(845	)		(4,073	)		(9,323	)		(4,971	)
Purchase related expense		(44	)		(76	)		(91	)		(176	)
		(7,446	)		(13,958	)		(20,638	)		(22,172	)
	W	1,409			898			(11,295	)		(4,116	)

28.Net Gain (Loss) on Financial Liabilities Designated at Fair Value Through Profit or Loss

Net gain (loss) related to financial liabilities designated at fair value through profit or loss (“FVTPL”) for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Gains on financial liabilities designated at FVTPL:
Gains on redemption	W	671			1,104			320			321
Gains on valuation		2,233			4,766			43,035			11,447
		2,904			5,870			43,355			11,768
Losses on financial liabilities designated at FVTPL:
Losses on redemption		(226	)		(370	)		(67	)		(67	)
Losses on valuation		(23,536	)		(45,656	)		—			(7,626	)
		(23,762	)		(46,026	)		(67	)		(7,693	)
	W	(20,858	)		(40,156	)		43,288			4,075

S-79

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

29.Net Gain (Loss) onAvailable-for-Sale Financial Assets

Net gain (loss) onavailable-for-sale financial assets for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Gains onavailable-for-sale financial assets:
Gains on sale	W	282,747			347,216			149,298			195,564
Reversal of impairment losses		173,045			20			34,590			34,590
		455,792			347,236			183,888			230,154
Losses onavailable-for-sale financial assets:
Losses on sale		(11,160	)		(16,272	)		(2,666	)		(21,426	)
Impairment losses		(28,258	)		(86,169	)		(36,280	)		(84,708	)
		(39,418	)		(102,441	)		(38,946	)		(106,134	)
	W	416,374			244,795			144,942			124,020

S-80

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

30.Net Gain (Loss) on Derivatives

Net gain (loss) on derivatives for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Net gain on trading purpose derivatives:
Gains on trading purpose derivatives:
Interest rate	W	733,732			1,668,498			156,514			1,162,349
Currency		757,988			4,600,134			1,145,164			2,104,827
Stock		1,758			3,367			662			1,435
Commodities		14,625			34,851			33,247			49,760
Embedded derivatives		7,748			15,872			21,455			77,168
Gains on adjustment of derivatives		—			8,783			1,456			3,035
		1,515,851			6,331,505			1,358,498			3,398,574
Losses on trading purpose derivatives:
Interest rate		(698,850	)		(1,626,770	)		(194,232	)		(1,201,004	)
Currency		(651,375	)		(4,332,581	)		(1,052,248	)		(2,016,490	)
Stock		(1,236	)		(2,746	)		(242	)		(818	)
Commodities		(14,625	)		(34,844	)		(33,244	)		(49,567	)
Embedded derivatives		(4,290	)		(11,291	)		(5,200	)		(7,297	)
Losses on adjustment of derivatives		(41,420	)		(61,894	)		(11,938	)		(18,519	)
		(1,411,796	)		(6,070,126	)		(1,297,104	)		(3,293,695	)
		104,055			261,379			61,394			104,879
Net gain (loss) on hedging purpose derivatives:
Gains on hedging purpose derivatives:
Interest rate		156,501			459,978			—			42,893
Currency		31,562			462,733			129,760			201,461
Gains on adjustment of derivatives		127			474			292			972
		188,190			923,185			130,052			245,326
Losses on hedging purpose derivatives:
Interest rate		(22,846	)		(58,840	)		(139,420	)		(73,017	)
Currency		(65,252	)		(277,239	)		(81,808	)		(455,669	)
Losses on adjustment of derivatives		(418	)		(918	)		(559	)		(1,234	)
		(88,516	)		(336,997	)		(221,787	)		(529,920	)
		99,674			586,188			(91,735	)		(284,594	)
Net gain (loss) on fair value hedged items:
Gains on fair value hedged items:
Gains on valuation		46,700			120,939			—			266,061
Gains on redemption		2,406			6,147			49,556			67,591
		49,106			127,086			49,556			333,652
Losses on fair value hedged items:
Losses on valuation		(238,397	)		(752,119	)		(69,005	)		(189,224	)
Losses on redemption		(10,945	)		(41,060	)		(6,618	)		(14,199	)
		(249,342	)		(793,179	)		(75,623	)		(203,423	)
		(200,236	)		(666,093	)		(26,067	)		130,229
	W	3,493			181,474			(56,408	)		(49,486	)

S-81

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

30.Net Gain (Loss) on Derivatives, Continued

Related with cash flow hedge, the Bank recognizedW125 million of loss in the statement of comprehensive income as the ineffective portion for the period ended June 30, 2016. No gain or loss were recognized as the ineffective portion for the period ended June 30, 2015.

31.Net Foreign Currency Transaction Gain (Loss)

Net foreign currency transaction gain (loss) for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Net gain (loss) on foreign exchange transactions:
Gains on foreign exchange transactions	W	180,190			377,823			230,251			425,663
Losses on foreign exchange transactions		(214,943	)		(434,343	)		(210,384	)		(405,631	)
		(34,753	)		(56,520	)		19,867			20,032
Net gain (loss) on foreign exchange translations:
Gains on foreign exchange translations		70,127			629,936			424,302			1,281,155
Losses on foreign exchange translations		(56,610	)		(774,472	)		(402,072	)		(1,156,218	)
		13,517			(144,536	)		22,230			124,937
	W	(21,236	)		(201,056	)		42,097			144,969

S-82

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

32.Other Operating Income (Loss), net

Other operating income (loss) for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Other operating income:
Gains on sale of loans	W	79,360			83,737			71,369			71,386
Reversal of credit losses		—			—			36			36
Gains on disposal of investments in subsidiaries and associates		442,997			444,697			—			—
Reversal of provisions		15,222			37,437			—			1,036
Others		826			17,606			1,628			97,927
		538,405			583,477			73,033			170,385
Other operating loss:
Losses on sale of loans		(155,032	)		(158,190	)		(89,132	)		(89,132	)
Provision for credit losses		(94,412	)		(119,516	)		(635	)		(1,428	)
Losses on disposal of investments in subsidiaries and associates		(47	)		(1,624	)		(19,032	)		(19,582	)
Increase of provisions		(712,288	)		(752,821	)		(35,431	)		(36,462	)
Insurance expenses		(14,794	)		(29,490	)		(14,568	)		(29,232	)
Credit guarantee fund salary		(34,910	)		(69,084	)		(32,485	)		(63,897	)
Educational taxes		(13,657	)		(26,227	)		(16,417	)		(21,021	)
Foreign security contributions		(558	)		(2,112	)		(3,642	)		(14,134	)
Others		(9,736	)		(15,130	)		(4,786	)		(13,393	)
		(1,035,434	)		(1,174,194	)		(216,128	)		(288,281	)
	W	(497,029	)		(590,717	)		(143,095	)		(117,896	)

S-83

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

33.General and Administrative Expenses

General and administrative expenses for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016				June 30, 2015
	Three-month period ended		Six-month period ended		Three-month period ended		Six-month period ended
Payroll costs:
Short-term employee benefits	W	70,366		147,541		93,243		163,612
Defined benefit costs		11,799		20,217		8,357		16,729
Defined contribution costs		613		1,039		—		89
		82,778		168,797		101,600		180,430
Depreciation and amortization:
Depreciation of property and equipment		8,167		16,693		8,192		16,352
Amortization of intangible assets		6,825		14,130		7,309		14,825
		14,992		30,823		15,501		31,177
Other:
Employee welfare benefits		7,730		14,280		6,815		13,450
Rent expenses		7,525		14,318		6,870		12,971
Taxes and dues		4,003		8,499		4,780		9,401
Advertising expenses		4,796		7,441		4,415		7,577
Electronic data processing expenses		16,755		28,416		14,472		25,008
Fees and charges		6,068		11,358		7,216		12,610
Others		9,813		17,878		10,029		18,464
		56,690		102,190		54,597		99,481
	W	154,460		301,810		171,698		311,088

S-84

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

34. OtherNon-operating Income and Expense

Othernon-operating income and expense for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Othernon-operating income:
Gain on disposal ofnon-current assets held for sale	W	533,529			533,529			—			—
Gain on disposal of property and equipment		14			14			11			73
Rental income on investment property		270			427			151			369
Others		603			1,238			179			2,869
		534,416			535,208			341			3,311
Othernon-operating expenses:
Losses on disposal of property and equipment		(62	)		(64	)		—			(38	)
Depreciation of investment property		(438	)		(870	)		(374	)		(744	)
Donations		(236	)		(308	)		(176	)		(251	)
Others		(71	)		(1,204	)		(1,248	)		(1,539	)
		(807	)		(2,446	)		(1,798	)		(2,572	)
	W	533,609			532,762			(1,457	)		739

35.Income Tax Expense (Benefit)

(1) Income tax expenses (benefit) for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Current income tax(*1)	W	(51,865	)		29,475			(74,878	)		117,175
Changes in deferred income taxes on temporary differences		34,025			(51,886	)		71,740			(65,434	)
Changes in deferred income taxes on tax deficit and others		(167,080	)		(167,080	)		—			—
Deferred income tax recognized directly to equity		51,472			5,571			(33,596	)		11,576
Income tax expense (benefit)	W	(133,448	)		(183,920	)		(36,734	)		63,317

(*1) Includes changes such as those that arise from final tax returns.

S-85

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

35.Income Tax Expense (Benefit), Continued

(2) Profit (loss) before income taxes and income tax expense (benefit) for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016			2015
Profit (loss) before income taxes	W	(473,561	)		265,642
Income taxes calculated using enacted tax rates (24.2%)		(114,371	)		64,286
Adjustments:
Non-deductible losses and tax free gains		(80,324	)		(10,236	)
Non-recognition effect of deferred income taxes		(5,250	)		32,266
Net adjustments for prior year		15,372			(25,362	)
Others		653			2,363
		(69,549	)		(969	)
Income tax expense (benefit)	W	(183,920	)		63,317
Effective tax rate		38.84	%		23.84	%

(3) Changes in deferred income taxes recognized directly to equity for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	June 30, 2016			Deferred tax assets (liabilities)			December 31, 2015			Deferred tax assets (liabilities)			Changes in deferred  tax assets (liabilities)
Gains on valuation ofavailable-for-sale financial assets	W	562,670			(179,636	)		576,022			(183,898	)		4,262
Exchange differences on translation of foreign operations		322			(103	)		(330	)		107			(210	)
Losses on valuation of cash flow hedge		(22,654	)		7,233			(17,902	)		5,714			1,519
Remeasurements of defined benefit liabilities		11,400			(3,640	)		11,400			(3,640	)		—
	W	551,738			(176,146	)		569,190			(181,717	)		5,571
	2015
	June 30, 2015			Deferred tax assets (liabilities)			December 31, 2014			Deferred tax assets (liabilities)			Changes in deferred tax assets (liabilities)
Gains on valuation ofavailable-for-sale financial assets	W	780,118			(249,058	)		815,600			(260,384	)		11,326
Exchange differences on translation of foreign operations		(21,481	)		6,858			(28,365	)		9,056			(2,198	)
Losses on valuation of cash flow hedge		(21,533	)		6,875			(13,866	)		4,427			2,448
Remeasurements of defined benefit liabilities		45,053			(14,384	)		45,053			(14,384	)		—
	W	782,157			(249,709	)		818,422			(261,285	)		11,576

S-86

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

36.Earnings (Loss) per Share

(1) Basic earnings (loss) per share

The Bank’s basic earnings (loss) per share for the three-month andsix-month periods ended June 30, 2016 and 2015 are computed as follows:

(i) Basic earnings (loss) per share

	June 30, 2016					June 30, 2015
	Three-month period ended		Six-month period ended			Three-month period ended			Six-month period ended
Profit (loss) attributable to ordinary shareholders of the Bank (A) (in won)	W	(569,363,681,793)		(289,641,306,748	)		(253,564,133,506	)		202,325,337,009
Weighted-average number of ordinary shares outstanding (B)		3,447,079,768		3,447,079,768			3,431,684,164			3,234,974,796
Basic earnings (loss) per share (A/B) (in won)	W	(165)		(84	)		(74	)		63

(ii) Weighted-average number of ordinary shares outstanding

	2016
	Number of ordinary shares		Days		Cumulative shares
Three-month period ended:
Number of ordinary shares outstanding (A)		3,447,079,768		91		313,684,258,888
Weighted-average number of ordinary shares outstanding (A/91)						3,447,079,768
Six-month period ended:
Number of ordinary shares outstanding (A)		3,447,079,768		182		627,368,517,776
Weighted-average number of ordinary shares outstanding (A/182)						3,447,079,768

S-87

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

36.Earnings (Loss) per Share, Continued

	2015
	Number of ordinary shares		Days		Cumulative shares
Three-month period ended:
Number of ordinary shares outstanding (A)		3,036,079,768		91		276,283,258,888
Increasedpaid-in capital (B)		400,000,000		90		36,000,000,000
Cumulative shares (C=A+B)						312,283,258,888
Weighted-average number of ordinary shares outstanding (C/91)						3,431,684,164
Six-month period ended:
Number of ordinary shares outstanding (A)		3,036,079,768		181		549,530,438,008
Increasedpaid-in capital (B)		400,000,000		90		36,000,000,000
Cumulative shares (C=A+B)						585,530,438,008
Weighted-average number of ordinary shares outstanding (C/181)						3,234,974,796

(2) Diluted earnings (loss) per share

Diluted and basic earnings (loss) per share for the three-month andsix-month periods ended June 30, 2016 and 2015 are equal because there is no potential dilutive instrument.

37.Pledged Assets

Assets pledged by the Bank as collateral as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016				December 31, 2015
	Pledged assets		Related liabilities		Pledged assets		Related liabilities
Available-for-sale financial assets(*1)	W	9,853,108		6,202,416		9,462,635		6,119,412

(*1) Pledged as collateral related to bonds sold under repurchase agreements and borrowings.

S-88

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

38.Guarantees and Commitments

Guarantees and commitments as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Confirmed acceptances and guarantees:
Acceptances in foreign currency	W	763,951		773,938
Guarantees for bond issuance		1,702,229		1,707,829
Guarantees for loans		809,533		1,234,382
Acceptances for foreign loans		410		607
Letter of guarantee		62,394		32,661
Guarantees foron-lending debt		62,293		83,906
Others		5,803,455		6,130,706
		9,204,265		9,964,029
Unconfirmed acceptances and guarantees:
Letter of guarantee		2,144,538		2,048,160
Others		3,327,004		4,329,573
		5,471,542		6,377,733
Commitments:
Commitments on loans		5,106,091		5,164,417
Others		2,197,763		2,210,395
		7,303,854		7,374,812
	W	21,979,661		23,716,574

39.Day One Profit or Loss

Changes in deferred day one profit or loss for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016			2015
Beginning balance	W	2,507			(23	)
New deferrals		(869	)		1,458
Amortization		1,528			(792	)
Others (end of transaction, etc.)		(3,110	)		775
Ending balance	W	56			1,418

Deferred day one profit or loss arose from derivative financial instruments at level 3 on the fair value hierarchy.

S-89

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

40.Trust Accounts

(1) Trust accounts as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Accrued trust management fee	W	36,312		32,755
Deposits		113,908		421,762
Borrowings from trust accounts		802,779		1,160,613
Accrued interest on deposits		7,299		10,989

(2) Transactions with trust accounts for the three-month andsix-month periods ended June 30, 2016 and 2015 are as follows:

	June 30, 2016						June 30, 2015
	Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Trust management fee	W	9,324			11,887			13,881			25,668
Gains from trading of derivative instruments		—			—			719			1,409
Interest expenses on deposits		(1,328	)		(3,755	)		(9,906	)		(20,169	)
Interest expenses of borrowings from Trust accounts		(3,366	)		(7,743	)		(2,662	)		(5,139	)

(3) The carrying amounts of principals guaranteed money trust and principals and interest guaranteed money trust as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Principals guaranteed money trust	W	267,507		268,527
Principals and interest guaranteed money trust		227,008		222,734
	W	494,515		491,261
Principal of money trust	W	459,123		457,377
Income from trust deposits payable		35,392		33,884

S-90

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

41.Related Party Transactions

(1) The Bank’s related parties as of June 30, 2016 are as follows:

Classification	Corporate name
Subsidiaries	KDB Capital Corporation, Daewoo Shipbuilding & Marine Engineering Co., Ltd., KDB Infrastructure Investment Asset Management Co., Ltd., KDB Asia Ltd., KDB Ireland Ltd., KDB Bank Europe Ltd., Banco KDB Do Brazil S.A, KDB Bank Uzbekistan, Korea Infrastructure Fund and 4 others, KDB Value PEF VI, KDB Value PEF VII, KDB Sigma PEF, KDB Venture M&A PEF, KDB Consus Value PEF, KDB Turn Around PEF, Components and Materials M&A PEF and 3 others, KDBC IP Investment Fund 2, KoFC-KDBC Pioneer Champ2010-4 venture investment fund, Principals guaranteed trust accounts of KDB, Principals and interests guaranteed interest trust accounts of KDB, Ubest 3rd Securitization Specialty Co., Ltd and 5 others, KIAMCO Road Investment Private Fund Special Asset Trust 2 and 40 others
Associates	Korea Electric Power Co., Ltd., Korea Aerospace Industries Co., Ltd., Korea Tourism Organization, Korea Appraisal Board, Korea Maritime Guarantee Co., Ltd., GM Korea Company and 119 others, Korea Infrastructure Fund II, Troika Resources Investment PEF and 57 others, NPS06-02 Neoplux Corporate Restructuring Fund and 86 others
Others	Key management personnel

S-91

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

41.Related Party Transactions, Continued

(2) Significant balances with related parties as of June 30, 2016 and December 31, 2015 are as follows:

	Account	June 30, 2016			December  31, 2015
Subsidiaries:
KDB Capital Corporation	Loans	W	96,460			159,016
	Allowance for loan losses		(32	)		(47	)
	Derivative financial assets		3,678			6,939
	Other assets		13			19
	Deposits		17			4,709
	Derivative financial liabilities		781			—
	Other liabilities		4,556			538
KDB Infrastructure Investment Asset Management Co., Ltd.	Deposits		5,756			3,100
	Borrowings		4,800			—
KDB Ireland Ltd.	Loans		292,713			320,797
	Allowance for loan losses		(118	)		(116	)
	Derivative financial assets		5,259			3,774
	Other assets		286			329
	Derivative financial liabilities		5			116
KDB Bank Europe Ltd.	Cash and due from banks		390,835			474,007
	Loans		11,647			11,720
	Allowance for loan losses		(15	)		(13	)
	Derivative financial assets		1,068			907
	Other assets		554			1,093
	Derivative financial liabilities		4,278			5,649
Banco KDB Do Brazil S.A	Cash and due from banks		174,705			117,200
	Loans		116,470			117,200
	Allowance for loan losses		(148	)		(42	)
	Other assets		948			290
KDB Asia Ltd.	Cash and due from banks		186,352			192,625
	Loans		25,623			70,320
	Allowance for loan losses		(3	)		(8	)
	Derivative financial assets		366			1,001
	Other assets		316			366
	Deposits		2			12
	Derivative financial liabilities		38			25
KDB Value PEF VI	Securities		50,086			50,162
	Loans		1,366,554			1,367,598
	Allowance for loan losses		(1,285	)		(3,572	)
	Derivative financial assets		32,850			38,740
	Other assets		21,785			26,918
	Allowance of other assets		(18	)		(67	)
	Deposits		29,829			39,363
	Borrowings		5,762			5,762
	Derivative financial liabilities		39,139			41,555
	Other liabilities		26			144
	Other provisions		105			290

S-92

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

41.Related Party Transactions, Continued

	Account	June 30, 2016			December 31, 2015
Daewoo Shipbuilding & Marine Engineering Co., Ltd.	Securities	W	44,659			43,624
	Loans		3,593,917			2,523,830
	Allowance for loan losses		(479,756	)		(12,101	)
	Derivative financial assets		185,993			235,699
	Other assets		4,447			2,650
	Deposits		993,428			472,400
	Derivative financial liabilities		32,258			1,961
	Other liabilities		7,149			575
	Other provisions		424,302			28,856
Others	Securities		225,369			229,680
	Loans		236,805			208,405
	Allowance for loan losses		(2,768	)		(1,782	)
	Derivative financial assets		21,057			28,842
	Other assets		6,029			6,090
	Allowance of other assets		(3	)		(3	)
	Deposits		56,638			31,361
	Borrowings		58,805			—
	Derivative financial liabilities		12,130			1,617
	Other liabilities		3,124			2,978
	Other provisions		1,647			1,550
Associates:
Korea Electric Power Co., Ltd.	Securities		227,352			289,432
	Loans		87,751			79,865
	Allowances for loan losses		(39	)		(34	)
	Derivative financial assets		5,939			2,233
	Other assets		247			309
	Deposits		33,373			68,406
	Borrowings		6,275			—
	Derivative financial liabilities		8,961			8,856
	Other liabilities		16			233
Korea Aerospace Industries Co., Ltd.	Loans		103,980			99,392
	Allowances for loan losses		(203	)		(53	)
	Other assets		—			415
	Deposits		4,145			390
	Other liabilities		858			256
Others	Securities		4,813			4,813
	Loans		2,844,991			5,325,926
	Allowances for loan losses		(589,200	)		(2,152,018	)
	Derivative financial assets		5,393			112,135
	Other assets		557			286
	Deposits		771,742			817,722
	Derivative financial liabilities		1,702			3,906
	Other liabilities		94,835			269,196

S-93

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

41.Related Party Transactions, Continued

(3) Significant profit or loss with related parties for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	Account	2016			2015
Subsidiaries:
KDB Capital Corporation	Interest income	W	203			644
	Dividend income		31,062			30,317
	Reversal of allowance for loan losses		—			46
	Fees and commission income, other income		2,932			5,472
	Provision for loan losses		(2	)		—
	Other operating expenses		(4,327	)		(2,042	)
KDB Infrastructure Investments Asset Management Co., Ltd.	Dividend income		5,319			4,208
	Fees and commission income, other income		5			308
	Interest expenses		(12	)		(17	)
	Other operating expenses		—			(2	)
KDB Ireland Ltd.	Interest income		1,328			947
	Reversal of allowance for loan losses		90			14
	Fees and commission income, other income		1,317			181
	Provision for loan losses		(76	)		(7	)
	Other operating expenses		(768	)		(1,251	)
KDB Bank Europe Ltd.	Interest income		2,836			2,140
	Reversal of allowance for loan losses		—			45
	Fees and commission income, other income		170			2,850
	Provision for loan losses		(2	)		(43	)
	Other operating expenses		(1,688	)		(11,355	)
Banco KDB Do Brazil S.A	Interest income		1,341			200
	Reversal of allowance for loan losses		21			18
	Provision for loan losses		(32	)		—
	Other operating expenses		(116	)		(8	)
KDB Asia Ltd.	Interest income		1,181			628
	Reversal of allowance for loan losses		31			65
	Fees and commission income, other income		821			1,035
	Interest expenses		—			(1	)
	Provision for loan losses		(18	)		(64	)
	Other operating expenses		(599	)		(690	)

S-94

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

41.Related Party Transactions, Continued

	Account	2016			2015
KDB Value PEF VI	Interest income	W	24,502			28,294
	Fees and commission income, other income		20,920			22,319
	Interest expenses		—			(8	)
	Other operating expenses		(6,759	)		(20,352	)
Daewoo Shipbuilding & Marine Engineering Co., Ltd.(*1)	Interest income		43,498			26,813
	Dividend income		—			9,033
	Reversal of allowance for loan losses		3,581			—
	Fees and commission income, other income		30,844			62,424
	Interest expenses		(2,337	)		(267	)
	Provision for loan losses		(471,482	)		(1,759	)
	Other operating expenses		(467,689	)		(5,584	)
Others	Interest income		9,435			8,897
	Dividend income		32,936			75,307
	Reversal of allowance for loan losses		3,240			4,375
	Fees and commission income, other income		16,301			23,592
	Interest expenses		(92	)		(319	)
	Provision for loan losses		(2,095	)		(11,891	)
	Other operating expenses		(22,438	)		(2,339	)
Associates:
Korea Electric Power Co., Ltd.	Interest income		4,435			15,585
	Dividend income		654,829			96,080
	Fees and commission income, other income		8,597			1,956
	Interest expenses		(767	)		(1,380	)
	Provision for loan losses		(5	)		—
	Other operating expenses		(3,687	)		(1,711	)
Korea Aerospace Industries Co., Ltd.	Interest income		1,857			2,432
	Dividend income		10,298			6,436
	Fees and commission income, other income		421,394			1,722
	Interest expenses		(22	)		(11	)
	Provision for loan losses		(105	)		(24	)
	Other operating expenses		(625	)		(118	)
Others	Interest income		70,423			133,414
	Dividend income		134,884			80,308
	Fees and commission income, other income		55,956			108,421
	Interest expenses		(3,436	)		(3,552	)
	Provision for loan losses		(234,249	)		(211,572	)
	Other operating expenses		(69,461	)		(88,938	)
		W	303,698			391,221

S-95

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

41.Related Party Transactions, Continued

(*1) Daewoo Shipbuilding & Marine Engineering Co., Ltd. has been included in the Bank’s subsidiary for the period ended June 30, 2016 and in the Bank’s associate for the period ended June 30, 2015.

(4) Details of guarantees and commitments to the related parties as of June 30, 2016 and December 31, 2015 are as follows:

	Account	June 30, 2016		December 31, 2015
Subsidiaries:
KDB Value VI PEF	Confirmed acceptances and guarantees	W	196,232		1,000
	Unconfirmed acceptances and guarantees		—		67,156
Daewoo Shipbuilding & Marine Engineering Co., Ltd.	Confirmed acceptances and guarantees		1,656,744		1,066,762
	Unconfirmed acceptances and guarantees		2,011,149		2,473,623
Others	Loan commitments		444,700		520,000
Associates:
Korea Electric Power Co., Ltd.	Confirmed acceptances and guarantees		—		209,773
Korea Aerospace Industries Co., Ltd.	Confirmed acceptances and guarantees		511,209		540,169
	Unconfirmed acceptances and guarantees		102,202		102,843
Others	Confirmed acceptances and guarantees		283,136		1,134,625
	Unconfirmed acceptances and guarantees		113,151		867,998
	Loan commitments		244,581		250,111
		W	5,563,104		7,234,060

(5) Details of compensation to key management personnel for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016			2015
Short-term employee benefits	W	(402	)		(991	)
Post-employment benefits		( 3	)		(42	)
	W	(405	)		(1,033	)

S-96

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

41.Related Party Transactions, Continued

(6) Details of assets pledged as collaterals from the related parties as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Carrying amounts		Amounts collateralized		Security provider
Securities denominated in foreign currencies	W	79,530		77,569		KDB Ireland Ltd.
	December 31, 2015
	Carrying amounts		Amounts collateralized		Security provider
Securities denominated in foreign currencies	W	74,854		78,055		KDB Ireland Ltd.

42.Statements of Cash Flows

(1) Cash and cash equivalents in the statements of cash flows as of June 30, 2016 and 2015 are as follows:

	June 30, 2016			June 30, 2015
Cash and due from banks:
Cash and foreign currencies	W	69,162			100,392
Due from banks in Korean won		541,455			933,557
Due from banks in foreign currencies		3,001,732			3,609,710
		3,612,349			4,643,659
Less: Restricted due from banks, others		(1,929,648	)		(2,092,918	)
Add: Financial instruments reaching maturity within three months from date of acquisition
Financial assets held for trading:
Government and public bonds		176,832			452,781
Loans:
Call-loans		6,729,234			2,935,788
Inter-bank loans		972,548			801,358
		7,701,782			3,737,146
		7,878,614			4,189,927
Cash and cash equivalents	W	9,561,315			6,740,668

S-97

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

42.Statements of Cash Flows, Continued

(2) Significant transactions not involving cash flows for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016			2015
Decrease in loans due to write-offs	W	351,994			399,718
Increase inavailable-for-sale financial assets due todebt-to-equity swap		27,722			119,444
Increase ofavailable-for-sale financial assets due to the contribution from the government		—			1,200,000
Increase of investments in associates due to the contribution from the government		—			800,000
Decrease in accumulated other comprehensive income due to securities valuation		(17,614	)		(46,809	)
Deferred income tax effect due to securities valuation		4,262			11,326
Reclassification ofavailable-for-sale financial assets to investments in subsidiaries and associates		—			42,653
Reclassification of loans to investments in subsidiaries and associates		—			23,708
Reclassification of investments in subsidiaries and associates toavailable-for-sale financial assets		11,541			—
Transfer from investment property to property and equipment		—			175
Transfer from property and equipment to investment property		6,748			1,202

43.Transfers of Financial Instruments

Details of financial assets and liabilities related to repurchase agreements sold and loaned debt securities that do not qualify for derecognition as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016				December 31, 2015
Characteristics of transactions	Carrying amounts for transferred assets		Carrying amounts for related liabilities		Carrying amounts for transferred assets		Carrying amounts for related liabilities
Repurchase agreements sold	W	3,476,733		2,099,181		2,948,186		2,124,836
Loaned debt securities		20,602		—		—		—
	W	3,497,335		2,099,181		2,948,186		2,124,836

44.Fair Value of Financial Assets and Liabilities

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

• Level 1: Financial instruments measured at quoted prices from active markets are classified as level 1.

• Level 2: Financial instruments measured using valuation techniques where all significant inputs are observable market data are classified as level 2.

• Level 3: Financial instruments measured using valuation techniques where one or more significant inputs are not based on observable market data are classified as level 3.

S-98

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

44.Fair Value of Financial Assets and Liabilities, Continued

(1) Fair value hierarchy of financial instruments measured at fair value

(i) The fair value hierarchy of financial instruments measured at fair value as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Level 1		Level 2		Level 3		Total
Financial assets:
Financial assets held for trading	W	1,330,840		711,672		—		2,042,512
Available-for-sale financial assets		2,773,357		23,824,003		11,748,258		38,345,618
Derivative financial assets		61		6,482,112		36,080		6,518,253
	W	4,104,258		31,017,787		11,784,338		46,906,383
Financial liabilities:
Financial liabilities designated at FVTPL	W	—		1,899,233		—		1,899,233
Derivative financial liabilities		218		5,550,411		160,636		5,711,265
	W	218		7,449,644		160,636		7,610,498
	December 31, 2015
	Level 1		Level 2		Level 3		Total
Financial assets:
Financial assets held for trading	W	1,077,473		703,261		—		1,780,734
Available-for-sale financial assets		2,576,602		27,627,457		11,087,560		41,291,619
Derivative financial assets		37		5,683,843		73,876		5,757,756
	W	3,654,112		34,014,561		11,161,436		48,830,109
Financial liabilities:
Financial liabilities designated at FVTPL	W	—		1,619,439		3,179		1,622,618
Derivative financial liabilities		59		5,553,941		88,363		5,642,363
	W	59		7,173,380		91,542		7,264,981

S-99

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

44.Fair Value of Financial Assets and Liabilities, Continued

(ii) Changes in the fair value of level 3 financial instruments for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	Financial assets									Financial liabilities
	Available- for-sale financial assets			Derivative financial assets			Total			Financial liabilities designated at FVTPL			Derivative financial liabilities			Total
January 1, 2016	W	11,087,560			73,876			11,161,436			3,179			88,363			91,542
Profit or loss		(26,066	)		(26,700	)		(52,766	)		—			(72,071	)		(72,071	)
Other comprehensive loss		(87,361	)		—			(87,361	)		—			—			—
Acquisition / Issue		1,001,487			39,246			1,040,733			—			265,548			265,548
Sale / Settlement		(225,543	)		(14,542	)		(240,085	)		(3,179	)		(2,022	)		(5,201	)
Transfer in		—			—			—			—			—			—
Transfer out		(1,819	)		(35,800	)		(37,619	)		—			(119,182	)		(119,182	)
June 30, 2016	W	11,748,258			36,080			11,784,338			—			160,636			160,636

	2015
	Financial assets									Financial liabilities
	Available- for-sale financial assets			Derivative financial assets			Total			Financial liabilities designated at FVTPL			Derivative financial liabilities			Total
January 1, 2015	W	9,255,532			70,033			9,325,565			4,958			44,906			49,864
Profit or loss		(21,929	)		(160,469	)		(182,398	)		776			(139,433	)		(138,657	)
Other comprehensive income		14,449			—			14,449			—			—			—
Acquisition / Issue		1,631,947			214,393			1,846,340			—			160,466			160,466
Sale / Settlement		(254,246	)		(17,001	)		(271,247	)		(492	)		(1,458	)		(1,950	)
June 30, 2015	W	10,625,753			106,956			10,732,709			5,242			64,481			69,723

S-100

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

44.Fair Value of Financial Assets and Liabilities, Continued

(iii) Details of valuation technique and inputs used in the fair value measurement categorized within level 2 of the fair value hierarchy of financial instruments measured at fair value as of June 30, 2016 and December 31, 2015 are as follows:

	Valuation technique	Input
Financial assets held for trading:
Equity securities	Net asset value approach	Underlying asset price
Debt securities	Discounted cash flow method	Discount rate
Available-for-sale financial assets:
Equity securities	Net asset value approach	Underlying asset price
Debt securities	Discounted cash flow method	Discount rate
Derivatives financial assets:
Interest rate swaps	Discounted cash flow method, Black-Scholes model, Modified Black model, Formula model	Discount rate, exchange rate, volatility, commodity index, etc.
Currency forwards and swaps
Currency options
Commodities options
Financial liabilities designated at FVTPL:
Debentures	Discounted cash flow method	Discount rate

(iv) Details of valuation technique and quantitative information about unobservable inputs used in the fair value measurement categorized within level 3 of the fair value hierarchy of financial instruments measured at fair value as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Valuation technique	Unobservable input	Range (%)
Available-for-sale financial assets:
Equity securities	Discounted cash flow method, Relative value approach, Net asset value approach	Discount rate		1.49 ~ 18.50
		Growth rate		0.00
		Rate of increase in liquidation value		0.00
		Rate of increase in property disposal price		0.00
		Discount rate of rent cash flow		5.29 ~ 11.69
		Volatility		14.25 ~ 34.70
Derivatives financial assets:
Interest rate swaps	Discounted cash flow	Volatility		25.70 ~ 33.80
		Correlation coefficient		(-)0.58 ~ 0.96
Interest rate options	Modified Black model	Volatility		25.70 ~ 33.80
Stock index options	Black-Scholes model	Volatility		14.12 ~ 120.18
Equity options	Finite difference method	Volatility		14.12 ~ 120.18
		Correlation coefficient		(-)0.02 ~ 0.83

S-101

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

44.Fair Value of Financial Assets and Liabilities, Continued

	December 31, 2015
	Valuation technique	Unobservable input	Range (%)
Available-for-sale financial assets:
Equity securities	Discounted cash flow method, Risk-adjusted discount rate method, Relative value approach	Discount rate		2.93 ~ 28.00
		Growth rate		0.00
		Rate of increase in Liquidation value		0.00
		Rate of increase in property disposal price		1.80
		Discount rate of rent cash flow		8.01
		Volatility		8.20 ~ 22.19
Derivatives financial assets:
Interest rate swaps	Discounted cash flow	Volatility		19.69 ~ 26.33
		Correlation coefficient		0.02 ~ 0.97
Interest rate options	Modified Black model	Volatility		19.69 ~ 26.33
Stock index options	Black-Scholes model	Volatility		15.36 ~  87.44
Equity options	Finite difference method	Volatility		15.36 ~ 87.44
		Correlation coefficient		(-)0.02 ~ 0.70
Financial liabilities designated at FVTPL:
Borrowings	Finite difference method	Volatility		15.36 ~ 87.44
		Correlation coefficient		(-)0.02 ~ 0.70

(v) The sensitivity analysis on changes in unobservable inputs for financial instruments categorized within level 3 of the fair value hierarchy of financial instruments measured at fair value as of June 30, 2016 and December 31, 2015 is as follows:

	June 30, 2016
	Profit(loss) for the period					Other comprehensive income (loss)
	Favorable change		Unfavorable change			Favorable change		Unfavorable change
Available-for-sale financial assets(*1)	W	—		—			1,446,256		(360,488	)
Derivatives financial instruments(*2)		2,113		(9,387	)		—		—
	W	2,113		(9,387	)		1,446,256		(360,488	)

	December 31, 2015
	Profit(loss) for the period					Other comprehensive income (loss)
	Favorable change		Unfavorable change			Favorable change		Unfavorable change
Available-for-sale financial assets(*1)	W	—		—			1,178,299		(331,081	)
Derivatives financial instruments(*2)		4,479		(7,775	)		—		—
Financial liabilities designated at FVTPL(*2)		57		(71	)		—		—
	W	4,536		(7,846	)		1,178,299		(331,081	)

S-102

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

44.Fair Value of Financial Assets and Liabilities, Continued

(*1) Sensitivity amounts of equity securities are calculated by increasing and decreasing the correlations between the discount rates(-1~1%) and the growth rates (0~1%) or the rate of increase in liquidation value(-1~1%) which are significant unobservable inputs. Sensitivity amounts for beneficiary certificates are calculated by increasing and decreasing the correlations between the discount rate of rent cash flow(-1~1%) and the rate of increase in property disposal price(-1~1%), only when they consist of real properties. Other than that, it is difficult to measure the sensitivity amounts of beneficiary certificates for practical reasons.

(*2) Sensitivity amounts of derivatives financial instruments and financial liabilities designated at FVTPL are calculated by increasing and decreasing the correlation coefficient and volatility(-10~10%) which are significant unobservable inputs.

(2) Fair value hierarchy of financial instruments disclosed by fair value

(i) The fair value hierarchy of financial instruments disclosed by fair value as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks(*1)	W	1,682,701		1,929,536		—		3,612,237
Held-to-maturity financial assets		5,161		11,713		—		16,874
Loans(*1)		—		6,729,234		136,857,379		143,586,613
Other financial assets(*1)		—		7,900,688		1,063,918		8,964,606
	W	1,687,862		16,571,171		137,921,297		156,180,330
Financial liabilities:
Deposits(*1)	W	—		1,890,317		39,507,401		41,397,718
Borrowings(*1)		—		2,097,648		23,074,372		25,172,020
Debentures		—		112,622,044		—		112,622,044
Other financial liabilities(*1)		—		7,758,458		3,021,137		10,779,595
	W	—		124,368,467		65,602,910		189,971,377

S-103

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

44.Fair Value of Financial Assets and Liabilities, Continued

	December 31, 2015
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks(*1)	W	1,981,336		2,897,442		—		4,878,778
Held-to-maturity financial assets		5,473		23,647		—		29,120
Loans(*1)		—		2,676,162		138,057,318		140,733,480
Other financial assets(*1)		—		5,213,745		750,890		5,964,635
	W	1,986,809		10,810,996		138,808,208		151,606,013
Financial liabilities:
Deposits(*1)	W	—		1,295,733		38,681,114		39,976,847
Borrowings(*1)		—		2,557,451		21,961,522		24,518,973
Debentures		—		117,035,204		—		117,035,204
Other financial liabilities(*1)		—		5,066,290		3,128,692		8,194,982
	W	—		125,954,678		63,771,328		189,726,006

(*1) For financial instruments categorized as level 2, the carrying amount is considered a reasonable approximation of the fair value and is thus, disclosed by fair value.

(ii) Details of valuation technique and inputs used in the fair value measurement categorized within level 2 and 3 of the fair value hierarchy of financial instruments disclosed by fair value as of June 30, 2016 and December 31, 2015 are as follows:

	Valuation technique	Input
Level 2
Financial assets:
Held-to-maturity financial assets	Discounted cash flow method	Discount rate
Financial liabilities:
Debentures	Discounted cash flow method	Discount rate
Level 3
Financial assets:
Loans	Discounted cash flow method	Credit spread, Other spread, Prepayment rate
Other financial assets	Discounted cash flow method	Other spread
Financial liabilities:
Deposits	Discounted cash flow method	Other spread, Prepayment rate
Borrowings	Discounted cash flow method	Other spread
Other financial liabilities	Discounted cash flow method	Other spread

S-104

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

45.Categories of Financial Assets and Liabilities

Categories of financial assets and liabilities as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Cash and cash equivalents		Financial instruments held for trading		Financial instruments designated  at FVTPL		Available- for-sale financial instruments		Held-to- maturity financial instruments		Loans and receivables		Financial liabilities measured at amortized cost		Hedging purpose derivative instruments		Total
Financial assets:
Cash and due from banks	W	1,682,701		—		—		—		—		1,929,536		—		—		3,612,237
Financial assets held for trading		176,832		1,865,680		—		—		—		—		—		—		2,042,512
Available-for- sale financial assets		—		—		—		38,345,618		—		—		—		—		38,345,618
Held-to-maturity financial assets		—		—		—		—		16,560		—		—		—		16,560
Loans		7,701,782		—		—		—		—		132,819,004		—		—		140,520,786
Derivative financial assets		—		5,295,107		—		—		—		—		—		1,223,146		6,518,253
Other financial assets		—		—		—		—		—		8,954,272		—		—		8,954,272
	W	9,561,315		7,160,787		—		38,345,618		16,560		143,702,812		—		1,223,146		200,010,238
Financial liabilities:
Financial liabilities designated at FVTPL	W	—		—		1,899,233		—		—		—		—		—		1,899,233
Deposits		—		—		—		—		—		—		41,296,992		—		41,296,992
Borrowings		—		—		—		—		—		—		25,041,721		—		25,041,721
Debentures		—		—		—		—		—		—		112,868,284		—		112,868,284
Derivative financial liabilities		—		5,130,277		—		—		—		—		—		580,988		5,711,265
Other financial liabilities		—		—		—		—		—		—		10,779,502		—		10,779,502
	W	—		5,130,277		1,899,233		—		—		—		189,986,499		580,988		197,596,997

S-105

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

45.Categories of Financial Assets and Liabilities, Continued

	December 31, 2015
	Cash and cash equivalents		Financial instruments held for trading		Financial instruments designated at FVTPL		Available- for-sale financial instruments		Held-to- maturity financial instruments		Loans and receivables		Financial liabilities measured at amortized cost		Hedging purpose derivative instruments		Total
Financial assets:
Cash and due from banks	W	1,981,336		—		—		—		—		2,897,442		—		—		4,878,778
Financial assets held for trading		110,513		1,670,221		—		—		—		—		—		—		1,780,734
Available-for- sale financial assets		—		—		—		41,291,619		—		—		—		—		41,291,619
Held-to-maturity financial assets		—		—		—		—		28,560		—		—		—		28,560
Loans		3,929,030		—		—		—		—		132,860,619		—		—		136,789,649
Derivative financial assets		—		4,981,506		—		—		—		—		—		776,250		5,757,756
Other financial assets		—		—		—		—		—		5,956,547		—		—		5,956,547
	W	6,020,879		6,651,727		—		41,291,619		28,560		141,714,608		—		776,250		196,483,643
Financial liabilities:
Financial liabilities designated at FVTPL	W	—		—		1,622,618		—		—		—		—		—		1,622,618
Deposits		—		—		—		—		—		—		39,934,892		—		39,934,892
Borrowings		—		—		—		—		—		—		24,400,590		—		24,400,590
Debentures		—		—		—		—		—		—		116,894,020		—		116,894,020
Derivative financial liabilities		—		4,688,497		—		— ��		—		—		—		953,866		5,642,363
Other financial liabilities		—		—		—		—		—		—		8,194,931		—		8,194,931
	W	—		4,688,497		1,622,618		—		—		—		189,424,433		953,866		196,689,414

S-106

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

46.Offsetting of Financial Assets and Liabilities

Details of financial instruments subject to offsetting, enforceable master netting agreements or similar agreements as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Gross amounts of recognized financial asset		Gross amounts of recognized financial liabilities set off  in the statement of financial position		Net amounts of financial assets presented in the statement of financial position		Related amounts not set off in the statement of financial position				Net amounts
							Financial instruments		Cash collateral received
Derivative financial assets(*1)	W	6,518,253		—		6,518,253		4,380,418		—		2,137,835
Unsettled spot exchange receivables(*1)		7,062,892		—		7,062,892		7,016,849		—		46,043
Unsettled domestic exchange receivables		2,121,159		1,283,363		837,796		—		—		837,796
Security pledged as collateral for repurchase agreements sold		3,476,733		—		3,476,733		2,099,181		—		1,377,552
Repurchase agreements bought		415,729		—		415,729		415,729		—		—
Loaned debt securities		20,602		—		20,602		20,602		—		—
Receivables from securities transaction		328,396		—		328,396		328,396		—		—
	W	19,943,764		1,283,363		18,660,401		14,261,175		—		4,399,226

S-107

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

46.Offsetting of Financial Assets and Liabilities, Continued

	June 30, 2016
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial assets set off in the statement of financial position		Net amounts of financial liabilities presented in  the statement of financial position		Related amounts not set off in the statement of financial position				Net amounts
							Financial instruments		Cash collateral pledged
Derivative financial liabilities(*1)	W	5,711,265		—		5,711,265		4,222,833		—		1,488,432
Unsettled spot exchange payables(*1)		7,066,276		—		7,066,276		7,016,849		—		49,427
Unsettled domestic exchange payables		1,975,545		1,283,363		692,182		—		—		692,182
Repurchase agreements sold		2,099,181		—		2,099,181		2,099,181		—		—
Payables from securities transaction		269,087		—		269,087		269,087		—		—
	W	17,121,354		1,283,363		15,837,991		13,607,950		—		2,230,041

	December 31, 2015
	Gross amounts of recognized financial asset		Gross amounts of recognized financial liabilities set off in the statement of financial position		Net amounts of financial assets presented in the statement of financial position		Related amounts not set off in the statement of financial position				Net amounts
							Financial instruments		Cash collateral received
Derivative financial assets(*1)	W	5,757,756		—		5,757,756		3,469,468		—		2,288,288
Unsettled spot exchange receivables(*1)		4,647,121		—		4,647,121		4,480,782		—		166,339
Unsettled domestic exchange receivables		1,975,610		1,408,986		566,624		—		—		566,624
Security pledged as collateral for repurchase agreements sold		2,948,186		—		2,948,186		2,124,836		—		823,350
Repurchase agreements bought		434,854		—		434,854		434,854		—		—
Receivables from securities transaction		34,008		—		34,008		34,008		—		—
	W	15,797,535		1,408,986		14,388,549		10,543,948		—		3,844,601

S-108

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

46.Offsetting of Financial Assets and Liabilities, Continued

	December 31, 2015
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial assets set off in the statement of financial position		Net amounts of financial liabilities presented in the statement of financial position		Related amounts not set off in the statement of financial  position				Net amounts
							Financial instruments		Cash collateral pledged
Derivative financial liabilities(*1)	W	5,642,363		—		5,642,363		4,038,156		—		1,604,207
Unsettled spot exchange payables(*1)		4,647,945		—		4,647,945		4,480,782		—		167,163
Unsettled domestic exchange payables		1,827,331		1,408,986		418,345		—		—		418,345
Repurchase agreements sold		2,124,836		—		2,124,836		2,124,836		—		—
Payables from securities transaction		30,356		—		30,356		30,356		—		—
	W	14,272,831		1,408,986		12,863,845		10,674,130		—		2,189,715

(*1) For the derivatives covered by the ISDA derivative contracts, all contracts are settled and the net amount of derivative contracts is measured and paid based on the liquidation value if the counterparty files for bankruptcy or has any credit issues.

47.Operating Segments

(1) The Bank has four reportable segments, as described below, which are the Bank’s strategic business units. They are managed separately because each business requires different technology and marketing strategies. The following summary describes general information about each of the Bank’s reportable segments:

Business	General information
Corporate finance	Provides trade finance and loans to corporate customers
Investment finance	Provides consulting services to corporate such as capital finance, restructuring, etc.
Asset management	Provides asset management services to individual and corporate customers
Others	Any other segment not mentioned above

(2) Operating income (loss) from external customers and among operating segments for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	Corporate finance			Investment finance			Asset management		Others			Total
Operating income (loss) from external customers	W	148,339			(317,073	)		16,364		(690,215	)		(842,585	)
Operating income (loss) from intersegment sales		(87,930	)		(600,030	)		—		687,960			—
	W	60,409			(917,103	)		16,364		(2,255	)		(842,585	)

S-109

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

47.Operating Segments, Continued

	2015
	Corporate finance			Investment finance			Asset management		Others			Total
Operating income (loss) from external customers	W	372,886			(291,198	)		25,743		458,913			566,344
Operating income (loss) from intersegment sales		(9,823	)		257,114			—		(247,291	)		—
	W	363,063			(34,084	)		25,743		211,622			566,344

(3) Details of segment results for the Bank’s reportable segments for thesix-month periods ended June 30, 2016 and 2015 are as follows:

	2016
	Corporate finance			Investment finance			Asset management			Others			Total
Net interest income	W	797,845			(105,024	)		6,650			37,344			736,815
Non-interest income
Income related to securities(*1)		203,446			12,720			—			29,527			245,693
Othernon-interest income		156,660			1,415,162			14,095			(56,742	)		1,529,175
		360,106			1,427,882			14,095			(27,215	)		1,774,868
Provision for loan losses and others(*2)		(849,447	)		(2,194,878	)		—			(8,133	)		(3,052,458	)
General and administrative expenses		(248,095	)		(45,083	)		(4,381	)		(4,251	)		(301,810	)
Operating income	W	60,409			(917,103	)		16,364			(2,255	)		(842,585	)

	2015
	Corporate finance			Investment finance			Asset management			Others			Total
Net interest income	W	567,944			52,584			3,221			159,249			782,998
Non-interest income
Income related to securities(*1)		12,042			64,903			—			42,959			119,904
Othernon-interest income		419,507			281,971			27,383			17,185			746,046
		431,549			346,874			27,383			60,144			865,950
Provision for loan losses and others(*2)		(380,817	)		(390,269	)		—			(430	)		(771,516	)
General and administrative expenses		(255,613	)		(43,273	)		(4,861	)		(7,341	)		(311,088	)
Operating income	W	363,063			(34,084	)		25,743			211,622			566,344

(*1) Income related to securities is composed of net gain (loss) on financial assets held for trading andavailable-for-sale financial assets.

(*2) Provision for loan losses and others comprises provision for loan losses, provision for derivative credit risks, gains (losses) on sales of loans, and provision for other losses.

S-110

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

47.Operating Segments, Continued

(4) Geographical revenue information about the Bank’s operating segments for thesix-month periods ended June 30, 2016 and 2015 and the geographicalnon-current asset information as of June 30, 2016 and December 31, 2015 are as follows:

	Revenues(*1)				Non-current assets(*2)
	June 30, 2016		June 30, 2015		June 30, 2016		December 31, 2015
Domestic	W	11,104,812		8,507,617		25,381,086		25,901,145
Overseas		456,645		426,842		4,715		4,718
	W	11,561,457		8,934,459		25,385,801		25,905,863

(*1) Revenues consist of interest income, fees and commission income, income related to securities, foreign currency transaction gain, gain on derivatives, other operating income and provision for loan losses.

(*2) Non-current assets consist of investments in subsidiaries and associates, property and equipment, investment property and intangible assets.

48.Risk Management

(1)Introduction

(i) Objectives and principles

The Bank’s risk management aims to maintain financial soundness and effectively manage various risks pertinent to the nature of the Bank’s business. The Bank has set up and fulfilled policies to manage risks timely and effectively. Pursuant to the policies, the Bank’s risks shall be

• managed comprehensively and independently,

• recognized timely, evaluated exactly and managed effectively,

• maintained to the extent that the risks balance with profit,

• diversified appropriately to avoid concentration on specific segments,

• managed to prevent excessive exposure by the setting up and managing of tolerance limits and guidelines.

(ii) Risk management strategy and process

The Bank’s risk management business is separated into two different stages; the ‘metrification stage,’ in which risks are estimated and monitored, and the ‘integration stage,’ in which information gained during the risk management process is integrated and used in management strategies. Risk management is recognized as a key component of the Bank’s management, and seeks to change from its previously adaptive and limited role to more leading and comprehensive role.

Furthermore, the Bank focuses on consistent communication among different departments in order to establish a progressive consensus on risk management.

S-111

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

(iii) Risk management governance

Risk Management Committee

The Bank’s Risk Management Committee (the “Committee”) is composed of the President of the committee (an outside director), and seven other commissioners including the CEO of the Bank. The Committee functions to establish policies of risk management, evaluate the capital adequacy of the Bank, discuss material issues relating to risk management, and present preliminary decisions on such matters.

The CEO of the Bank and the head of Risk Management Segment

The CEO of the Bank, according to the policies of risk management, performs his or her role to manage and direct risk management in order to sustain efficiency and internal control. The head of the Risk Management Segment is responsible for supervising the overall administration of the Bank’s risk management business and providing risk-related information to members of the board of directors and the Bank’s management.

Risk Management Policy Committee and Risk Management Practice Committee

The Bank’s Risk Management Policy Committee is composed of the leaders of all business segments., and exercises its role to decide important matters relating to the Bank’s portfolio including allocating internal capital limits by segment and setting exposure limits by industry within the scope that Risk Management Committee regulated.

The Bank’s Risk Management Practice Committee is composed of the planning department’s leaders of main business segments. The Risk Management Practice Committee decides the guidelines of review and approval on retail loan and exercises its role to preliminarily review matters for main decision of the Risk Management Committee.

(iv) Performance of risk management committee

The Risk Management Committee performs comprehensive reviews of all the affairs related to risk management and deliberates the decisions of the board of directors. Forsix-month the period ended June 30, 2016, the key activities of the Risk Management Committee are as follows:

• Major decision

• The Objective of BIS ratio management and limit of internal capital for the year

• The emergency financing plan for the year

• Major reporting

• Resolutions from the Credit Committee on the quarterly basis

• Integrated crisis analysis on the semi-annually basis

• Allocation and management standards of internal capital limits

• The plan for the improvement of the credit rating system

S-112

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

• The plan of proceeding of the enterprise credit rating system

• The result of the simulation of the Business Continuity Plan

• The result of regular corporate credit ratings

• The improvement of management system on industrial exposure limits

• The result of verifications on the credit rating system and the probability of default

(v) Improvement of risk management system

For the continuous improvement of risk management, financial soundness and capital adequacy, the Bank performs the following:

• Continuous improvement of Basel

• Improvements in the internal capital adequacy assessment system, in line with the guidelines set by the Financial Supervisory Service (“FSS”) in 2008, to manage capital adequacy more effectively

• Improvements in the credit assessment system on Low Default Portfolio (“LDP”)

• Elaboration of risk measuring criteria including credit risk parameters and measurement logics

• Expansion of risk management infrastructure to the global IB level

• Establishment of the RAPM system in order to reflect risks to the Bank’s business and support decision-making upon management, and application of performance assessment at the branch level since 2010

• Enforcement of risk management related to irregular compound derivatives and validation of the derivative pricing model developed by the Bank’s Front Office

• Risk management of retail banking

• On-going planning of asset expansion in the retail banking risk management operations sector of the department of risk management since the introduction of retail loan business in 2010

• Establishment and application of assessment and approval standards by retail loan instruments, and expansion of retail banking risk management infrastructure such as accumulating databases in order to support analytic decision-making and develop a personal credit assessment model through the establishment of a “retail banking Data Mart”

S-113

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

(vi) Risk management reporting and measuring system

The Bank endeavours consistently to objectively and rationally measure and manage all significant risks considering the characteristics of operational areas, assets and risks. In relation to reporting and measurement, the Bank has developed application systems as follows:

Application system	Approach	Completion date	Major function
Corporate Credit Rating System	Logit Model	Jun. 2004 Mar. 2008 Mar. 2010 Mar. 2012	Calculate corporate credit rating Corporate credit rating system build-up based onK-IFRS
Credit Risk Measurement System	Credit Risk+ Credit Metrics	Jul. 2003 Nov. 2007	Summarize exposures, manage exposure limits and calculate Credit VaR
Market Risk Management System	Risk Watch	Jun. 2002	Summarize position, manage exposure limits and calculate Market VaR
Interest/Liquidity Risk Management System	OFSA Fermat	Feb. 2006 Mar. 2014	Calculate repricing gap, duration gap, VaR and EaR
Operational Risk Management System	Standardized Approach AMA	May. 2006 May. 2009	Manage process and calculate CSA, KRI and OPVaR Pre-operate the AMA
BIS Capital Ratio Calculation System	Fermat RaY	Sep. 2006 Dec. 2013	Calculate equity and credit risk- weighted assets

(vii) Response to Basel

The Korean authority implemented Basel II as of January 2008, and adopted the Standardized Approach and the Foundation Internal Ratings-Based Approach. The Advanced Approaches were adopted later in 2009.

In conformity with the implementation roadmap of Basel II, the Bank obtained the approval to use the Foundation Internal Ratings-Based Approach on credit risk from the FSS in July 2008 and has applied the approach since late June 2008. The Bank applies the Standardized Approach on market risks and operational risks.

To establish credibility and maintain financial soundness, the Bank plans to adopt the Advanced Approaches (Credit risk: Advanced Internal Ratings-Based Approach, Operational risk: Advanced Measurement Approach etc.) by continuously improving related systems and policies. Furthermore, the Bank completed the “Basel III standard risk management system” in preparation of the adoption of the Basel III regulations announced on December 1, 2013. Starting from 2013year-end, the BIS capital adequacy ratio was measured in accordance to the Basel III regulations.

S-114

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

(viii) Internal capital adequacy assessment process

Internal capital adequacy assessment process is defined as the process that the Bank aggregates significant risks, calculates its internal capital, compares the internal capital with the available capital and assesses its internal capital adequacy.

• Internal capital adequacy assessment

For the purpose of the internal capital adequacy assessment, the Bank calculates its aggregated internal capital and available capital by evaluating all significant risks and taking into account the quality and components of capital, and then assesses the internal capital adequacy by comparing the aggregated internal capital with the available capital.

• Goal setting of internal capital management

The Bank sets up and manages an internal capital limit on an annual basis, through the approval of the Risk Management Committee, in order to maintain internal capital adequacy by managing internal capital (integrated risks) within the extent of available capital.

The prior year’s internal capital, analysis of domestic and foreign environment changes in the current year, and the direction and size of operations are all reflected in the goal setting of internal capital management to calculate the integrated internal capital scale. Moreover, Bank for International Settlements(“BIS”) capital adequacy ratio and risk appetite are taken into consideration in the goal setting of internal capital management.

• Allocation of internal capital

The Bank’s entire internal capital is allocated to each segment and department, according to the extent of possible risk faced and size of operations, after the Risk Management Committee’s deliberation and the board of directors’ approval. The allocated internal capital is monitored regularly and managed using various management methods. The results of monitoring and managing the allocated internal capital are reported to the Risk Management Committee. In case of any material changes in the Bank’s business plan or risk operation strategy, the Bank adjusts the allocations elastically.

• Composition of internal capital

Internal capital comprises all the significant risks of the Bank and is composed of quantifiable andnon- quantifiable risks. Quantifiable risks are composed of credit risk, market risk, interest rate risk, operational risk and credit concentration risk, foreign currency settlement risk, and are risks measured quantitatively by applying reasonable methodology using objective data.Non-quantifiable risks are composed of strategy risk, reputation risk, residual risk on asset securitization and furthermore.Non-quantifiable risks are those risks that cannot be measured quantitatively because of lack of data or the absence of appropriate measuring methodologies.

(2) Credit Risk

(i) Concept

Credit risk can be defined as potential loss resulting from the refusal to perform obligations or default of counterparties. More generally, it is used to refer to the possibility of loss from engaged bonds that cannot be redeemed properly or from substitute payments.

S-115

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

(ii) Approach to credit risk management

Summary of credit risk management

The Bank regards credit risk as the most significant risk area in its business operations, and accordingly, closely monitors its credit risk exposure. The Bank manages both credit risks at portfolio level and at individual credit level. At portfolio level, the Bank reduces credit concentration and restructures the portfolio in such a way to maximize profitability considering the risk level. To avoid credit concentration on a particular sector, the Bank manages credit limits by client, group, and industry. The Bank also resets exposure management directives for each industry by conducting an industry credit evaluation twice a year.

At the individual credit level, the relationship manager (“RM”), the credit officer (“CO”) and the Credit Review Committee manage each borrower’s credit risk.

Post management and insolvent borrower management

The Bank monitors the borrower’s credit rating from the date of the loan to the date of the final collection of debt consistently, and inspects the borrower’s status regularly and frequently in order to prevent the generation of new bad debts and to stabilize the number of debt recoveries.

In addition, an early warning system is operated to spot borrowers that are highly likely to be insolvent. The early warning system provides financial information, financial transaction information, public information and market information of the borrower, and such information is used by the RM and the CO to monitor and manage changes in the borrower’s credit rating.

Under the early warning system, a borrower that is highly likely to be insolvent is classified as an early warning borrower or a precautionary borrower. The Bank sets up a specific and applicable stabilization plan for such a borrower considering the borrower’s characteristics. Furthermore,sub-standard borrowers are classified as insolvent borrowers, and are managed intensively by the Bank, which takes legal proceedings, disposals or corporate turnaround measures if necessary.

Classification of asset soundness and provision of allowance for loss

Classification of asset soundness is fulfilled by the analysis and assessment of credit risk. The classification is used in order to provision an appropriate allowance, prevent further occurrences of insolvent assets and promote the normalization of existing insolvent assets to enhance the stabilization of asset operations.

Based on the Financial Supervisory Regulations of the Republic of Korea, the Bank has established standards and guidelines on the classification of asset soundness, according to the Forward Looking Criteria (“FLC”), which reflects not only the borrower’s past records of repayment but also their future debt repayment capability.

In conformity with these standards, the Bank classifies the soundness of its assets as “normal”, “precautionary”, “substandard”, “doubtful”, or “estimated loss” and differentiates the coverage ratio by the level of classification.

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Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

Details of loans as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016			December 31, 2015
Neither past due nor impaired	W	137,303,798			134,014,882
Past due but not impaired		147,545			402,789
Impaired		8,613,861			6,550,658
		146,065,204			140,968,329
Allowance for loan losses		(5,533,601	)		(4,159,300	)
Present value discount		(15,162	)		(23,361	)
Deferred loan origination costs and fees		4,345			3,981
Net value	W	140,520,786			136,789,649
Ratio of allowance for loan losses to total loans		3.79	%		2.95	%

Loans that are neither past due nor impaired as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Loans in Korean won									Other loans
	Loans for working capital		Loans for facility development		Others		Loans in foreign currencies			Privately placed corporate bonds		Others		Total
AAA ~ B- (Normal)	W	40,165,071		49,736,364		4,556,353		24,868,957			1,636,455		11,645,181		132,608,381
CCC (Precautionary)		2,488,213		423,250		—		1,026,120			17,093		354,767		4,309,443
CC (Substandard)		33,665		5,394		—		329,687			8,220		9,008		385,974
C (Doubtful)		—		—		—		—			—		—		—
D (Estimated loss)		—		—		—		—	��		—		—		—
	W	42,686,949		50,165,008		4,556,353		26,224,764			1,661,768		12,008,956		137,303,798
	December 31, 2015
	Loans in Korean won									Other loans
	Loans for working capital		Loans for facility development		Others		Loans in foreign currencies			Privately placed corporate bonds		Others		Total
AAA ~ B- (Normal)	W	40,681,107		50,093,508		4,593,050		25,825,636			2,005,386		7,815,902		131,014,589
CCC (Precautionary)		891,341		363,949		—		199,182			266,716		123,429		1,844,617
CC (Substandard)		60,575		57,394		—		629,625			306,220		101,862		1,155,676
C (Doubtful)		—		—		—		—			—		—		—
D (Estimated loss)		—		—		—		—			—		—		—
	W	41,633,023		50,514,851		4,593,050		26,654,443			2,578,322		8,041,193		134,014,882

S-117

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

Loans that are past due but not impaired as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Loans in Korean won								Other loans
	Loans for working capital		Loans for facility development		Others		Loans in foreign currencies		Privately placed corporate bonds		Others		Total
Within 30 days	W	30,195		25,516		5,485		17,559		—		—		78,755
30 ~ 60 days		9,983		7,959		837		—		—		—		18,779
60 ~ 90 days		50,011		—		—		—		—		—		50,011
	W	90,189		33,475		6,322		17,559		—		—		147,545
	December 31, 2015
	Loans in Korean won								Other loans
	Loans for working capital		Loans for facility development		Others		Loans in foreign currencies		Privately placed corporate bonds		Others		Total
Within 30 days	W	102,076		80,252		10,805		172,469		2,000		9,273		376,875
30 ~ 60 days		6,478		11,920		1,019		—		—		212		19,629
60 ~ 90 days		65		6,220		—		—		—		—		6,285
	W	108,619		98,392		11,824		172,469		2,000		9,485		402,789

Impaired loans as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Loans in Korean won								Other loans
	Loans for working capital		Loans for facility development		Others		Loans in foreign currencies		Privately placed corporate bonds		Others		Total
Impaired loans:
Individual	W	4,107,751		1,281,192		—		925,383		905,482		962,702		8,182,510
Collective		138,789		85,156		4,473		85,980		4,071		112,882		431,351
	W	4,246,540		1,366,348		4,473		1,011,363		909,553		1,075,584		8,613,861
	December 31, 2015
	Loans in Korean won								Other loans
	Loans for working capital		Loans for facility development		Others		Loans in foreign currencies		Privately placed corporate bonds		Others		Total
Impaired loans:
Individual	W	3,658,942		1,164,279		—		50,476		578,674		854,150		6,306,521
Collective		96,906		25,499		4,770		85,769		5,804		25,389		244,137
	W	3,755,848		1,189,778		4,770		136,245		584,478		879,539		6,550,658

S-118

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

(iii) Measurement methodology of credit risk

Pursuant to Basel III, the Bank selects the measurement methodology of credit risk considering the complexity of measurement, measurement factors, estimating methods and others. Measurement approaches are divided into Standardized Approach and Internal Ratings-Based Approach.

Standardized Approach (“SA”)

In the case of the Standardized Approach, the risk weights are applied according to the credit rating assessed by External Credit Assessment Institution (“ECAI”). Risk weights in each credit rating are as follows:

Credit rating	Corporate			Country			Bank			Asset securitization
AAA ~ AA-		20.00	%		0.00	%		20.00	%	20.00%
A+ ~ A-		50.00	%		20.00	%		50.00	%	50.00%
BBB+ ~ BBB-		100.00	%		50.00	%		100.00	%	100.00%
BB+ ~ BB-		100.00	%		100.00	%		100.00	%	350.00%
B+ ~ B-		150.00	%		100.00	%		100.00	%	Deducted from Equity (1,250%)
Below B-		150.00	%		150.00	%		150.00	%	”
Unrated		100.00	%		100.00	%		100.00	%	”

The OECD, S&P, Moody’s and Fitch are designated as foreign ECAI and Korea Investors Service Co., Ltd., NICE Investors Services Co., Ltd. and the Korea Ratings Co., Ltd. are designated as domestic ECAI.

The Bank applies the credit rating based on the corresponding loan and same borrower’s unsecured senior loans. In the case the borrower’s risk weight is higher than the unrated exposure’s risk weight (100%), the higher weight is applied. In the case the borrower has more than one rating, the higher weight of the two lowest weights (second best criteria) is applied.

Internal Ratings-Based Approach (“IRB”)

To use the Internal Ratings-Based Approach, a bank must be approved by the FSS and should also meet the requirementpre-set by the FSS.

In relation to Basel II that has been adopted domestically as of January 2008, the Bank gained approval from the FSS to use the Foundation Internal Ratings-Based Approach in July 2008. The Bank has calculated credit risk-weighted assets using the approach since late June 2008.

Measurement method of credit risk-weighted asset

The Bank calculates credit risk-weighted assets of corporate exposures and asset securitization exposures using the Foundation Internal Ratings-Based Approach as of June 30, 2016.

The Standardized Approach is applied to country exposures, public institution exposures and bank exposures according to the interpretation of the FSS permanently, and applied to overseas subsidiary and the Bank’s branch pursuant to prior consultation with the FSS.

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Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

The Standard Approach is applied to special finance,non-residents,non-banking financial institutions currently, and will be replaced by the Internal Ratings-Based Approach in the future.

<Approved measurement method>

Measurement method		Exposure
Standardized Approach	Permanent SA	— Countries, public institutions and banks
	SA(*1)	— Overseas subsidiaries and branches, and other assets
Foundation InternalRatings-Based Approach		— Corporate, small and medium enterprises, asset securitization (at each credit level) and equity
Application of IRB by phase		— Special lending,non-residence,non-bank financial institutions

(*1) The Standardized Approach is applied, pursuant to prior consultation with the FSS, in the case the credit risk-weighted assets of a specific business segment are less than 15% of the entire credit risk-weighted assets.

The mitigated effect of credit risks reflects the related policies which consider eligible collateral and guarantees. The Bank calculates the credit risk-weighted assets using the capital adequacy ratio.

Upon the calculation of credit risk-weighted assets for derivatives, the Bank takes into consideration theset-off effects of transactions under legally enforceable rights toset-off to calculate exposures.

Exposure after credit risk mitigation by asset type as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Exposure		Credit risk mitigation			Exposure after credit risk mitigation
Government	W	17,116,587		—			17,116,587
Bank		20,619,091		—			20,619,091
Corporate		136,630,699		(535,085	)		136,095,614
Stock		31,418,192		—			31,418,192
Indirect investments		4,402,784		—			4,402,784
Asset securitization		5,382,332		—			5,382,332
Over-the-counter derivatives		10,933,008		(6,597,828	)		4,335,180
Retail assets		2,897,514		(6,334	)		2,891,180
Others		46,042,927		(1,098,839	)		44,944,088
	W	275,443,134		(8,238,086	)		267,205,048

S-120

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

	December 31, 2015
	Exposure		Credit risk mitigation			Exposure after credit risk mitigation
Government	W	17,272,360		—			17,272,360
Bank		17,462,101		—			17,462,101
Corporate		139,519,518		(434,529	)		139,084,989
Stock		29,508,512		—			29,508,512
Indirect investments		4,499,295		—			4,499,295
Asset securitization		4,848,090		—			4,848,090
Over-the-counter derivatives		9,983,539		(5,453,988	)		4,529,551
Retail assets		3,112,058		(12,911	)		3,099,147
Others		64,012,739		(1,432,694	)		62,580,045
	W	290,218,212		(7,334,122	)		282,884,090

Credit rating model

The results of credit rating are presented as grades through an assessment of the debt repayment capacity that the principal and interest of debt securities or loans are redeemed while complying with contractual redemption schedule.

Using the Bank’s internal credit rating model, the Bank classifies debtors’ credit rating into 10 grades (AAA~D). Plus sign (+) and minus sign (-) are attached to the grades (AA~B) to distinguish the difference between credits in the same grade. As a result, the Bank’s credit rating model uses 20 grades.

The Bank’s regular credit rating process is carried out once a year and in the case of the change of debtor’s credit condition, the credit rating is frequently adjusted as necessary to retain the adequacy of credit rating.

The results of credit rating are applied to various areas such as discrimination of loan processes, loan limit, loan interest rate, post loan management standard process, credit risk measurement, and allowance for loan losses assessment.

Credit process control structure

According to the Principle of Checks and Balances, the Bank has established the credit process control structure by which the credit rating system operates appropriately.

• Independent assessment of credit rating: The Bank’s business segment (RM) and credit rating assessment segment (CO) are independently operated.

• Independent control of credit rating system: The control of credit rating system including the development of credit rating model is independently implemented by the Bank’s Risk Management Department.

• Independent verification of credit rating system: Credit rating system is independently verified by the validation team of the Consulting Service Department.

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Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

• Internal audit of credit rating process: Credit rating process is audited by the Bank’s internal audit department.

• Role of the Board of Directors and the Bank’s management: Major issues relating to credit process are approved by the Board of Directors and are regularly monitored by the Bank’s top management.

The Bank reviews debt serviceability based on a credit analysis when handling loans. Depending on the results, credit loan preservation is adjusted as necessary using such methods as interest rate preservation due to credit risk.

The Bank evaluates the value of the collateral, performing ability and legal validity of the guarantee at the initial acquisition. The Bankre-evaluates the provided collateral and guarantees regularly for them to be reasonably preserved.

For guarantees, the Bank demands a corresponding written guarantee according to loan handling standards and the guarantor’s credit rating is independently calculated when in conformance with the credit rating endowment method.

(iv) Credit exposure

Geographical information of credit exposure as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Korea		UK			USA		Others		Total
Due from banks (excluding due from BOK)	W	2,030,437		66,507			241,235		664,558		3,002,737
Available-for-sale financial assets:
Bonds (excluding government bonds)		12,197,443		721,780			645,334		332,877		13,897,434
Held-to-maturity financial assets:
Bonds (excluding government bonds)		—		—			—		11,713		11,713
Loans		134,982,835		619,913			683,826		4,640,607		140,927,181
Derivative financial assets		1,210,111		1,055			—		13,509		1,224,675
Other assets		9,061,936		12,790			9,802		64,110		9,148,638
		159,482,762		1,422,045			1,580,197		5,727,374		168,212,378
Guarantees		14,266,996		—			231,612		177,199		14,675,807
Commitments		6,761,458		42,866	��		200,896		298,634		7,303,854
		21,028,454		42,866			432,508		475,833		21,979,661
	W	180,511,216		1,464,911			2,012,705		6,203,207		190,192,039

S-122

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

	December 31, 2015
	Korea		UK		USA		Others		Total
Due from banks (excluding due from BOK)	W	2,145,914		86,846		142,298		1,063,360		3,438,418
Available-for-sale financial assets:
Bonds (excluding government bonds)		14,541,790		763,321		637,429		421,890		16,364,430
Held-to-maturity financial assets:
Bonds (excluding government bonds)		—		—		—		23,648		23,648
Loans		131,001,756		427,836		535,783		4,395,855		136,361,230
Derivative financial assets		774,500		1,579		—		1,617		777,696
Other assets		5,818,154		40,249		7,046		167,223		6,032,672
		154,282,114		1,319,831		1,322,556		6,073,593		162,998,094
Guarantees		15,889,842		—		215,784		236,137		16,341,763
Commitments		6,773,318		24,584		225,105		351,804		7,374,811
		22,663,160		24,584		440,889		587,941		23,716,574
	W	176,945,274		1,344,415		1,763,445		6,661,534		186,714,668

Industry information of credit exposure as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Manufacturing		Service		Others		Total
Due from banks (excluding due from BOK)	W	—		2,639,514		363,223		3,002,737
Available-for-sale financial assets:
Bonds (excluding government bonds)		4,071,226		8,500,615		1,325,593		13,897,434
Held-to-maturity financial assets:
Bonds (excluding government bonds)		—		—		11,713		11,713
Loans		64,909,733		64,896,689		11,120,759		140,927,181
Derivative financial assets		—		1,224,675		—		1,224,675
Other assets		127,469		220,337		8,800,832		9,148,638
		69,108,428		77,481,830		21,622,120		168,212,378
Guarantees		12,181,615		1,756,925		737,267		14,675,807
Commitments		582,316		4,621,479		2,100,059		7,303,854
		12,763,931		6,378,404		2,837,326		21,979,661
	W	81,872,359		83,860,234		24,459,446		190,192,039

S-123

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

	December 31, 2015
	Manufacturing		Service		Others		Total
Due from banks (excluding due from BOK)	W	—		3,026,198		412,220		3,438,418
Available-for-sale financial assets:
Bonds (excluding government bonds)		4,704,758		9,772,231		1,887,441		16,364,430
Held-to-maturity financial assets:
Bonds (excluding government bonds)		—		—		23,648		23,648
Loans		63,963,030		61,074,745		11,323,455		136,361,230
Derivative financial assets		—		777,696		—		777,696
Other assets		130,011		213,606		5,689,055		6,032,672
		68,797,799		74,864,476		19,335,819		162,998,094
Guarantees		12,862,362		2,443,549		1,035,852		16,341,763
Commitments		614,740		4,685,958		2,074,113		7,374,811
		13,477,102		7,129,507		3,109,965		23,716,574
	W	82,274,901		81,993,983		22,445,784		186,714,668

Credit exposures of due from banks and debt securities by credit rating as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Due from banks		Available-for-sale financial assets		Held-to-maturity financial assets		Total
AAA ~ AA-	W	285,376		2,012,409		—		2,297,785
A+ ~ A-		1,567,580		3,630,376		—		5,197,956
BBB+ ~ BB-		984,781		6,506,354		—		7,491,135
Below BB-		—		206,243		—		206,243
Unrated		165,000		1,542,052		11,713		1,718,765
	W	3,002,737		13,897,434		11,713		16,911,884
	December 31, 2015
	Due from banks		Available-for-sale financial assets		Held-to-maturity financial assets		Total
AAA ~ AA-	W	213,378		2,396,325		—		2,609,703
A+ ~ A-		1,631,190		4,207,833		—		5,839,023
BBB+ ~ BB-		1,269,731		8,334,859		11,844		9,616,434
Below BB-		—		181,844		—		181,844
Unrated		324,119		1,243,569		11,804		1,579,492
	W	3,438,418		16,364,430		23,648		19,826,496

S-124

Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

(3) Capital management activities

(i) Capital adequacy

The FSS approved the Bank’s use of the Foundation Internal Ratings-Based Approach in July 2008. The Bank has been using the same approach when calculating credit risk-weighted assets since the end of June, 2008. The equity capital ratio and equity capital according to the standards of the Bank for International Settlements are calculated for the purpose of such disclosure. The equity capital ratio and equity capital are calculated on a consolidated basis. In conformity with the Banking Act, which is based on the implementation of Basel III on December 1, 2013, the regulatory capital is divided into the following two categories.

Tier 1 capital

— Common Equity Tier 1

Regulatory capital that represents the most subordinated claim in liquidation of the Bank, takes the first and proportionately greatest share of any losses as they occur, and which principal is never repaid outside of liquidation meets the criteria for classification as common equity, including capital stock, capital surplus, retained earnings, qualifyingnon-controlling interests in subsidiaries, and accumulated other comprehensive income as common equity Tier 1.

— Additional Tier 1 capital

Capital stock and capital surplus related to issuance of capital securities that are subordinated, havenon-cumulative and conditional dividends or interests, and have no maturity orstep-up conditions.

Tier 2 capital (Supplementary Tier 2 capital)

Regulatory capital that fulfills supplementary capital adequacy requirements, and includes subordinated debt with maturities over 5 years and allowance for loan losses in conformity with external regulatory standards and internal standards.

The BIS capital adequacy ratio and capital in accordance to Basel III standards as of June 30, 2016 and December 31, 2015 are as follows:

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Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

BIS capital adequacy ratio

	June 30, 2016			December 31, 2015
Equity capital based on BIS (A):
Tier 1 capital:
Common Equity Tier 1	W	27,009,809			27,573,549
Additional Tier 1 capital		9,045			1,553,158
		27,018,854			29,126,707
Tier 2 capital		5,009,383			4,611,071
	W	32,028,237			33,737,778
Risk-weighted assets (B):
Credit risk-weighted assets	W	210,066,432			225,215,979
Market risk-weighted assets		2,405,533			6,934,967
Operational risk-weighted assets		4,943,666			6,059,533
	W	217,415,631			238,210,479
BIS capital adequacy ratio (A/B):		14.73	%		14.16	%
Tier 1 capital ratio:		12.43	%		12.23	%
Common Equity Tier 1 ratio		12.42	%		11.58	%
Additional Tier 1 capital ratio		0.01	%		0.65	%
Tier 2 capital ratio		2.30	%		1.93	%
Equity capital based on BIS
	June 30, 2016			December 31, 2015
Tier 1 capital (A=C+D):
Common Equity Tier 1 (C)
Capital stock	W	17,235,399			17,235,399
Capital surplus		1,550,537			1,565,666
Retained earnings		7,274,529			7,832,331
Non-controlling interests		2,085			1,751
Accumulated other comprehensive income		1,048,366			908,954
Other capital adjustments		—			222,436
Common stock deductibles		(101,107	)		(192,988	)
		27,009,809			27,573,549
Additional Tier 1 capital (D)
Non-controlling interests		9,045			1,553,158
		27,018,854			29,126,707
Tier 2 capital (B):
Allowance for doubtful accounts, etc.		1,360,401			1,303,241
Qualified capital securities		2,100,000			1,400,000
Non-qualified capital securities		1,548,358			1,806,418
Non-controlling interests		624			101,412
		5,009,383			4,611,071
Equity capital (A+B)	W	32,028,237			33,737,778

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Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

(4) Market risk

(i) Concept

Market risk is defined as the possibility of potential loss on a trading position resulting from fluctuations in interest rates, foreign exchange rates and the price of stocks 1and derivatives. Trading position is exposed to risks, such as interest rate, stock price, and foreign exchange rate, etc.Non-trading position is mostly exposed to interest rates. Accordingly, the Bank classifies market risks into those exposed from trading position or those exposed fromnon-trading position.

(ii) Market risks of trading positions

Management method on market risks arising from trading positions

Trading position includes securities, foreign exchange position, and derivatives which are traded for short-term profits.

Market risk is managed using VaR limit and loss limit. VaR limit is calculated in the view of entire bank and the calculated VaR limit is distributed into each department and each type (stock price, interest rate, foreign exchange rate and option). The trading department regulates and operates terms of stop loss and investment limits.

Using the Standardized Approach and internal model of VaR, the Bank’s VaR is measured daily and the measured VaR is used for risk monitoring and limit management. In the estimation of VaR, the historical simulation and two other supplemental procedures are used: variance-covariance matrix and Monte Carlo simulation. Through the stress test and back test, the estimation of VaR is validated daily.

In estimating market risk, the Standardized Approach and the internal model are used. The Standardized Approach is used in order to calculate the required capital from market risk and the internal model is used in order to manage risks internally.

Since July 2007, the Bank has measuredone-day VaR through the historical simulation method using the time series data of past 250 days under a 99% confidence level. The calculated VaR is monitored on a daily basis.

In the implementation of the stress test, the Bank applies three scenarios based on the fluctuation of market index that occurred at the time of the historical events that resulted in the significant shock such as the IMF crisis and the 9/11 attacks. The stress test is implemented by the system daily in order to provide for crisis occurrences. Furthermore, the Bank is conducting a contingency plan for market risk management. The plan distinguishes the crisis condition into three stages—precautious stage, precrisis stage and crisis stage—through the measurement of the market volatility.

For the validation of the market risk measurement methodology, the Bank daily implements the back testing that compares the simulated loss, the actual loss and the previous day’s VaR. In addition, the Bank enforces the market risk management relating to irregular compound derivatives through the validation of the derivative pricing model developed by the Bank’s Front Office.

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Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

VaR of trading position

The Bank’s VaR of trading position as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Average			Max			Min			June 30, 2016
Interest rate	W	4,404			5,901			3,007			4,182
Stock price		392			979			70			251
Foreign exchange rate		1,186			9,342			349			9,342
Option		526			2,361			136			726
Diversification effect		(1,358	)		(9,349	)		(269	)		(5,267	)
	W	5,150			9,234			3,293			9,234
	December 31, 2015
	Average			Max			Min			December 31, 2015
Interest rate	W	3,582			5,000			1,799			4,533
Stock price		250			734			23			72
Foreign exchange rate		1,436			9,526			504			9,526
Commodity		5			1,349			—			—
Option		267			701			96			658
Diversification effect		(1,267	)		(7,615	)		(322	)		(5,094	)
	W	4,273			9,695			2,100			9,695

(iii) Market risks ofnon-trading positions

Management method on market risks arising fromnon-trading positions

The most critical market risk that arises innon-trading position is the interest rate risk. Interest rate risk is defined as the likely loss resulting from the unfavorable fluctuation of interest rate in the Bank’s financial condition and is measured by interest rate VaR and interest rate EaR.

Interest rate VaR is the maximum amount of decrease in net asset value resulting from the unfavorable fluctuation of interest rate. Interest rate EaR is the maximum amount of decrease in net interest income resulting from the unfavorable fluctuation of interest rate for a year.

The Bank’s interest rate VaR and interest rate EaR are measured through the simulation of conclusive interest rate scenario with the FERMAT and are reported on a monthly basis to the Risk Management Committee. The Management’s target of interest rate VaR and interest rate EaR are approved at the beginning of the year. Additionally, the interest rate VaR and interest rate EaR on consolidated basis are calculated using the Standardized Approach in order to retain the consistency in the methods used by the Bank and its subsidiaries.

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Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

VaR/EaR ofnon-trading positions

The Bank’s interest rate VaR and EaR ofnon-trading positions as of June 30, 2016 and December 31, 2015 are as follows:

June 30, 2016
Interest rate shock	Interest rate VaR	Interest rate EaR
2.00%	W1,085,849	22,985
December 31, 2015
Interest rate shock	Interest rate VaR	Interest rate EaR
2.00%	W1,035,670	98,171

(iv) Foreign currency risk

Outstanding balances by currency with significant exposure as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	KRW		USD		EUR			JPY			GBP			Others			Total
Financial assets:
Cash and due from banks	W	599,699		2,789,368		18,741			54,880			5,924			143,625			3,612,237
Financial assets held for trading		1,841,821		176,697		21,729			—			—			2,265			2,042,512
Available-for-sale financial assets		34,723,272		3,399,112		62,860			107,881			—			52,493			38,345,618
Held-to-maturity financial assets		4,847		11,713		—			—			—			—			16,560
Loans		102,448,864		35,401,531		873,817			1,606,111			27,236			163,227			140,520,786
Derivative financial assets		4,528,388		1,951,080		20,681			12,629			—			5,475			6,518,253
Other financial assets		5,214,458		3,178,054		102,738			10,643			1,744			446,635			8,954,272
		149,361,349		46,907,555		1,100,566			1,792,144			34,904			813,720			200,010,238
Financial liabilities:
Financial liabilities designated at FVTPL		1,899,233		—		—			—			—			—			1,899,233
Deposits		35,608,177		5,393,854		17,184			276,673			466			638			41,296,992
Borrowings		10,189,724		13,525,682		97,936			1,223,361			—			5,018			25,041,721
Debentures		86,486,089		18,628,759		1,637,640			1,045,960			435,005			4,634,831			112,868,284
Derivative financial liabilities		4,311,760		1,363,704		24,220			8,620			—			2,961			5,711,265
Other financial liabilities		6,459,169		3,649,638		112,164			43,876			5,407			509,248			10,779,502
		144,954,152		42,561,637		1,889,144			2,598,490			440,878			5,152,696			197,596,997
Net financial position	W	4,407,197		4,345,918		(788,578	)		(806,346	)		(405,974	)		(4,338,976	)		2,413,241

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Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

	December 31, 2015
	KRW		USD		EUR			JPY			GBP			Others			Total
Financial assets:
Cash and due from banks	W	1,431,484		3,342,169		6,063			39,247			4,584			55,231			4,878,778
Financial assets held for trading		1,715,494		65,240		—			—			—			—			1,780,734
Available-for-sale financial assets		37,171,988		3,834,664		50,879			141,244			—			92,844			41,291,619
Held-to-maturity financial assets		4,913		23,647		—			—			—			—			28,560
Loans		102,350,948		32,229,459		723,483			1,394,994			49,917			40,848			136,789,649
Derivative financial assets		4,770,240		952,730		20,308			7,984			—			6,494			5,757,756
Other financial assets		3,374,651		2,045,778		42,334			150,232			498			343,054			5,956,547
		150,819,718		42,493,687		843,067			1,733,701			54,999			538,471			196,483,643
Financial liabilities:
Financial liabilities designated at FVTPL		1,622,618		—		—			—			—			—			1,622,618
Deposits		34,964,246		4,687,905		17,988			262,546			165			2,042			39,934,892
Borrowings		10,642,305		12,455,795		125,977			1,174,504			—			2,009			24,400,590
Debentures		90,504,862		17,964,007		1,484,674			1,418,624			434,497			5,087,356			116,894,020
Derivative financial liabilities		4,880,612		728,307		24,184			6,807			—			2,453			5,642,363
Other financial liabilities		5,350,444		2,241,974		48,237			170,718			981			382,577			8,194,931
		147,965,087		38,077,988		1,701,060			3,033,199			435,643			5,476,437			196,689,414
Net financial position	W	2,854,631		4,415,699		(857,993	)		(1,299,498	)		(380,644	)		(4,937,966	)		(205,771	)

(5) Liquidity risk management

(i) Concept

Liquidity risk is defined as the possibility of potential loss due to a temporary shortage in funds caused by a maturity mismatch or an unexpected capital outlay. Liquidity risk soars when funding rates rise, assets are sold below a normal price, or a good investment opportunity is missed.

(ii) Approach to liquidity risk management

The Bank manages its liquidity risks as follows:

Allowable limit for liquidity risk

• The allowable limit for liquidity risk sets LCR, foreign currency liquidity ratio, and remaining maturity gap

• The management standards with regards to the allowable limit for liquidity risk should be set using separate and stringent set ratios in accordance with the FSS guidelines.

<Measurement Methodology>

• LCR: (High quality liquid assets / Total net cash outflows over the next 30 calendar days) X 100

• Foreign currency liquidity ratio: (Maturing liquidity asset in the interval / Maturing liquidity liability in the interval) X 100

• Remaining maturity gap: (Maturing liquidity asset in the interval – Maturing liquidity liability in the interval) / total assets X 100

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Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

Early warning indicator

In order to identify prematurely and cope with worsening liquidity risk trends, the Bank has set up 17 indexes such as the “Foreign Exchange Stabilization Bond CDS Premium,” and measures the trend monthly, weekly and daily as a means for establishing the allowable liquidity risk limit complementary measures.

Stress-Test analysis and contingency plan

The Bank evaluates the effects on the liquidity risk and identifies the inherent flaws. In the case where an unpredictable and significant liquidity crisis occurs, the Bank executes risk situation analysis quarterly based on crisis specific to the Bank, market risk and complex emergency, and reports to the Risk Management Committee for the purpose of the Bank’s solvency securitization.

(iii) Analysis on remaining contractual maturity of financial instruments

Remaining contractual maturity risks ofnon-derivative financial instruments including interest payment as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Within 1 month		1~3 months		3~12 months		1~5 years		Over 5 years		Total
Financial assets:
Cash and due from banks	W	2,331,401		198,633		524,128		541,959		31,496		3,627,617
Financial assets held for trading		2,042,512		—		—		—		—		2,042,512
Available-for-sale financial assets		312,877		1,380,317		12,484,611		11,519,853		14,228,482		39,926,140
Held-to-maturity financial assets		4		39		2,712		14,698		—		17,453
Loans		13,679,616		13,468,617		45,261,628		59,951,776		16,829,552		149,191,189
Other financial assets		7,905,178		—		—		—		1,051,632		8,956,810
	W	26,271,588		15,047,606		58,273,079		72,028,286		32,141,162		203,761,721
Financial liabilities:
Financial liabilities designated at FVTPL	W	144,498		73,513		963,880		183,202		1,253,157		2,618,250
Deposits		14,819,856		7,043,978		17,384,437		2,318,512		397,404		41,964,187
Borrowings		5,165,280		3,276,468		8,784,919		6,594,074		1,520,599		25,341,340
Debentures		3,030,083		8,272,101		35,815,830		53,603,523		20,743,491		121,465,028
Other financial liabilities		8,693,920		1,999,833		—		—		55,364		10,749,117
	W	31,853,637		20,665,893		62,949,066		62,699,311		23,970,015		202,137,922

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Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

	December 31, 2015
	Within 1 month		1~3 months		3~12 months		1~5 years		Over 5 years		Total
Financial assets:
Cash and due from banks	W	3,459,943		230,206		732,647		507,467		2,277		4,932,540
Financial assets held for trading		1,780,734		—		—		—		—		1,780,734
Available-for-sale financial assets		239,697		712,299		13,703,782		15,179,957		13,354,563		43,190,298
Held-to-maturity financial assets		16		1		14,034		15,965		—		30,016
Loans		10,437,948		13,100,914		44,932,063		62,009,960		17,527,508		148,008,393
Other financial assets		5,215,290		—		—		—		744,110		5,959,400
	W	21,133,628		14,043,420		59,382,526		77,713,349		31,628,458		203,901,381
Financial liabilities:
Financial liabilities designated at FVTPL	W	176,711		113,780		569,296		262,144		1,176,878		2,298,809
Deposits		15,026,497		6,154,963		16,720,835		2,455,149		297,536		40,654,980
Borrowings		5,502,490		2,516,252		8,946,213		6,493,828		1,498,915		24,957,698
Debentures		4,024,749		8,129,568		33,281,834		62,094,598		18,320,297		125,851,046
Other financial liabilities		6,377,327		1,766,910		—		—		53,880		8,198,117
	W	31,107,774		18,681,473		59,518,178		71,305,719		21,347,506		201,960,650

Remaining contractual maturity risks of derivative financial instruments as of June 30, 2016 and December 31, 2015 are as follows:

Net settlement of derivative financial instruments

		June 30, 2016
	Within 1 month			1~3 months			3~12 months			1~5 years		Over 5 years			Total
Trading purpose derivatives:
Currency	W	(334	)		(125	)		(1,029	)		—		—			(1,488	)
Interest rate		(13,207	)		(636	)		316,287			64,172		(263,596	)		103,020
Stock		103			4			—			—		—			107
Hedging purpose derivatives:
Interest rate		29,604			61,564			135,466			977,470		2,969,007			4,173,111
	W	16,166			60,807			450,724			1,041,642		2,705,411			4,274,750

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Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

	December 31, 2015
	Within 1 month			1~3 months		3~12 months			1~5 years		Over 5 years			Total
Trading purpose derivatives:
Currency	W	24			33		(265	)		—		—			(208	)
Interest rate		7,164			9,020		(44,239	)		38,523		(178,784	)		(168,316	)
Stock		(43	)		—		—			—		—			(43	)
Hedging purpose derivatives:
Interest rate		40,376			79,401		136,261			729,405		3,125,962			4,111,405
	W	47,521			88,454		91,757			767,928		2,947,178			3,942,838

Gross settlement of derivative financial instruments

	June 30, 2016
	Within 1 month		1~3 months		3~12 months		1~5 years		Over 5 years		Total
Trading purpose derivatives:
Currency
Inflow	W	31,140,246		21,353,459		63,233,563		36,330,265		2,778,827		154,836,360
Outflow		31,346,139		21,520,403		63,409,656		36,230,954		2,824,478		155,331,630
Hedging purpose derivatives:
Currency
Inflow		673,127		853,443		1,984,008		18,505,442		1,174,986		23,191,006
Outflow		673,422		901,374		2,014,612		18,769,845		1,163,431		23,522,684
Total inflow	W	31,813,373		22,206,902		65,217,571		54,835,707		3,953,813		178,027,366
Total outflow	W	32,019,561		22,421,777		65,424,268		55,000,799		3,987,909		178,854,314
	December 31, 2015
	Within 1 month		1~3 months		3~12 months		1~5 years		Over 5 years		Total
Trading purpose derivatives:
Currency
Inflow	W	41,535,565		23,312,883		50,986,102		36,310,645		1,749,220		153,894,415
Outflow		33,558,569		23,389,424		50,820,227		36,142,362		1,745,941		145,656,523
Hedging purpose derivatives:
Currency
Inflow		1,212,213		1,379,386		2,029,374		18,338,716		1,300,822		24,260,511
Outflow		1,278,455		1,520,341		2,039,557		18,873,947		1,290,673		25,002,973
Total inflow	W	42,747,778		24,692,269		53,015,476		54,649,361		3,050,042		178,154,926
Total outflow	W	34,837,024		24,909,765		52,859,784		55,016,309		3,036,614		170,659,496

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Korea Development Bank

Notes to the Interim Separate Financial Statements

June 30, 2016 and 2015 (Unaudited), and December 31, 2015

48.Risk Management, Continued

Remaining contractual maturity risks of guarantees and commitments as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016
	Within 1 month		1~3 months		3~12 months		1~5 years		Over 5 years		Total
Guarantees	W	1,393,471		1,617,578		5,093,348		6,494,828		76,582		14,675,807
Commitments		308,362		277		1,015,595		3,582,628		2,396,992		7,303,854
	W	1,701,833		1,617,855		6,108,943		10,077,456		2,473,574		21,979,661
	December 31, 2015
	Within 1 month		1~3 months		3~12 months		1~5 years		Over 5 years		Total
Guarantees	W	1,876,480		1,785,982		4,627,002		7,998,388		53,910		16,341,762
Commitments		395,574		197,210		818,646		3,612,148		2,351,234		7,374,812
	W	2,272,054		1,983,192		5,445,648		11,610,536		2,405,144		23,716,574

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THE REPUBLIC OF KOREA

Land and History

Political History

In November 2016, the prosecutor’s office indicted a confidant of President Park who had allegedly used her ties with the President to extort donations from Korean conglomerates for twonon-profit foundations over which she is purported to have substantial influence, and a number of current and former presidential aides on charges of, among others, abuse of power, coercion and leaking classified documents. On November 30, 2016, a special independent prosecutor was appointed to conduct an investigation of the extent of the President’s involvement. Mass weekend rallies have been held in Seoul and other cities for several weeks to protest against President Park. The rallies have remained peaceful and were marked by largecandle-lit protests.

On December 9, 2016, the National Assembly voted in favor of impeaching President Park for a number of alleged constitutional and criminal violations including violation of the Constitution and abuse of power by allowing her confidant to exert influence on state affairs and letting senior presidential aides help her extort from companies. President Park was suspended from power immediately, with the prime minister simultaneously taking over the role of acting President. If the Constitutional Court agrees on the constitutionality of the impeachment within 180 days, President Park’s impeachment would trigger a special presidential election within 60 days. Although the Government believes that the Korean economy is resilient enough to withstand any temporary negative impact of such political development, there is no assurance that it will not have a material adverse effect on the Korean economy and public finances.

Government and Politics

Relations with North Korea

In September 2016, North Korea announced that it had successfully tested a nuclear warhead that could be mounted on ballistic missiles. In response, the Government condemned the test, and in November 2016, the United Nations Security Council unanimously passed a resolution imposing additional sanctions on North Korea.

The Economy

Gross Domestic Product

Based on preliminary data, GDP growth in the first half of 2016 was 3.0% at chained 2010 year prices, as aggregate private and general government consumption expenditures increased by 3.0%, gross domestic fixed capital formation increased by 4.3% and exports of goods and services increased by 1.3%, each compared with the corresponding period of 2015. Based on preliminary data, GDP growth in the third quarter of 2016 was 2.7% at chained 2010 year prices, as aggregate private and general government consumption expenditures increased by 2.9%, gross domestic fixed capital formation increased by 5.4% and exports of goods and services increased by 2.9%, each compared with the corresponding period of 2015.

Prices, Wages and Employment

The inflation rate was 1.0% in the first quarter of 2016, 0.9% in the second quarter of 2016 and 0.8% in the third quarter of 2016. The unemployment rate was 4.3% in the first quarter of 2016, 3.8% in the second quarter of 2016 and 3.6% in the third quarter of 2016.

The Financial System

Securities Markets

The Korea Composite Stock Price Index was 1,970.4 on June 30, 2016, 2,016.2 on July 31, 2016, 2,034.7 on August 31, 2016, 2,043.6 on September 30, 2016, 2,008.2 on October 31, 2016, 1,983.5 on November 30, 2016, 2,026.5 on December 29, 2016, 2,067.6 on January 31, 2017 and 2,084.4 on February 20, 2017.

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Monetary Policy

Foreign Exchange

The market average exchange rate between the Won and the U.S. Dollar (in Won per one U.S. Dollar) as announced by the Seoul Money Brokerage Service Ltd. was Won 1,164.7 to US$1.00 on June 30, 2016, Won 1,125.7 to US$1.00 on July 31, 2016, Won 1,118.5 to US$1.00 on August 31, 2016, Won 1,096.3 to US$1.00 on September 30, 2016, Won 1,145.2 to US$1.00 on October 31, 2016, Won 1,168.5 to US$1.00 on November 30, 2016, Won 1,208.5 to US$1.00 on December 30, 2016, Won 1,157.8 to US$1.00 on January 31, 2017 and Won 1,151.0 to US$1.00 on February 20, 2017.

Balance of Payments and Foreign Trade

Balance of Payments

Based on preliminary data, the Republic recorded a current account surplus of approximately US$72.1 billion in the first nine months of 2016. The current account surplus in the first nine months of 2016 decreased from the current account surplus of US$79.5 billion in the corresponding period of 2015, primarily due to a decrease in surplus from the income account and an increase in deficit from the services account which more than offset an increase in surplus from the goods account.

Trade Balance

Based on preliminary data, the Republic recorded a trade surplus of US$72.1 billion in the first nine months of 2016. Exports decreased by 8.5% to US$363.1 billion in the first nine months of 2016 from US$396.7 billion in the corresponding period of 2015, primarily due to decreased exports of cars, information technology devices and flat panel displays. Imports decreased by 10.6% to US$295.3 billion in the first nine months of 2016 from US$330.2 billion in the corresponding period of 2015, primarily due to decreases in oil and gas prices, which led to a decrease in unit prices of major raw materials.

Foreign Currency Reserves

The amount of the Government’s foreign currency reserves was US$374.0 billion as of January 31, 2017.

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DESCRIPTION OF THE NOTES

The following is a description of some of the terms of the Notes we are offering. Since it is only a summary, we urge you to read the fiscal agency agreement described below and the forms of global note before deciding whether to invest in the Notes. We have filed a copy of these documents with the United States Securities and Exchange Commission as exhibits to the registration statement no.333-203739.

The general terms of our Notes are described in the accompanying prospectus. The description in this prospectus supplement further adds to that description or, to the extent inconsistent with that description, replaces it.

Governed by Fiscal Agency Agreement

We will issue the Notes under the fiscal agency agreement, dated as of February 15, 1991, as amended and supplemented from time to time, between us and The Bank of New York (now The Bank of New York Mellon), as fiscal agent. The fiscal agent will maintain a register for the Notes.

Payment of Principal and Interest

Floating Rate Notes

The 2020 Notes are initially limited to US$500,000,000 aggregate principal amount, and the 2022 Notes are initially limited to US$500,000,000 aggregate principal amount. The 2020 Notes will mature on February 27, 2020 (the “2020 Notes Maturity Date”), and the 2022 Notes will mature on February 27, 2022 (the “2022 Notes Maturity Date”, and together with the 2020 Notes Maturity Date, the “Floating Rate Notes Maturity Dates”). The 2020 Notes will bear interest at a rate equal to Three-Month USD LIBOR plus 0.45% per annum, and the 2022 Notes will bear interest at a rate equal to Three-Month USD LIBOR plus 0.705% per annum, in each case payable quarterly in arrears on February 27, May 27, August 27 and November 27 of each year (each a “Floating Rate Notes Interest Payment Date”), beginning on May 27, 2017. Interest on the Floating Rate Notes will accrue from February 27, 2017. If any Floating Rate Notes Interest Payment Date or any Floating Rate Notes Maturity Date falls on a day that is not a business day (as defined below), that Floating Rate Notes Interest Payment Date or that Floating Rate Notes Maturity Date will be adjusted in accordance with the Modified Following Business Day Convention. The term “Modified Following Business Day Convention” means that the relevant date shall be postponed to the first following day that is a business day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a business day. The term “business day” as used herein means a day other than a Saturday, a Sunday, or any other day on which banking institutions in The City of New York or Seoul are authorized or required by law or executive order to remain closed.

We will pay interest to the person who is registered as the owner of a Floating Rate Note at the close of business on the fifteenth day (whether or not a business day) preceding such Floating Rate Notes Interest Payment Date. Interest on the Floating Rate Notes will be computed on the basis of the actual number of days in the applicable Interest Period (as defined herein) divided by 360. We will make principal and interest payments on the Floating Rate Notes in immediately available funds in U.S. dollars.

The term “Three-Month USD LIBOR” means, with respect to any Interest Determination Date (as defined below):

(a) the rate for three-month deposits in United States dollars commencing on the second London Banking Day (as defined below) succeeding the Interest Determination Date, that appears on the Reuters Page LIBOR01 (as defined below) as of 11:00 a.m., London time, on the Interest Determination Date; or

(b) if no rate appears on the particular Interest Determination Date on the Reuters Page LIBOR01, the rate calculated by the Calculation Agent (as defined below) as the arithmetic mean of at least two offered quotations obtained by the Calculation Agent after requesting the principal London offices of each of four major reference banks in the London interbank market to provide the Calculation Agent with its offered quotation for deposits in United States dollars for the period of three months, commencing on the second London Banking Day (as defined below) succeeding the Interest Determination Date, to prime banks in the

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London interbank market at approximately 11:00 a.m., London time, on that Interest Determination Date and in a principal amount that is representative for a single transaction in United States dollars in that market at that time; or

(c) if fewer than two offered quotations referred to in clause (b) are provided as requested, the rate calculated by the Calculation Agent as the arithmetic mean of the rates quoted at approximately 11:00 a.m., New York time, on the particular Interest Determination Date by three major banks in The City of New York selected by the Calculation Agent for loans in United States dollars to leading European banks for a period of three months commencing on the second London Banking Day succeeding the Interest Determination Date, and in a principal amount that is representative for a single transaction in United States dollars in that market at that time; or

(d) if the banks so selected by the Calculation Agent are not quoting as mentioned in clause (c),Three-Month USD LIBOR in effect immediately prior to the particular Interest Determination Date.

“Reuters Page LIBOR01” means the display on Reuters (or any successor service) on such page (or any other page as may replace such page on such service) or such other service or services as may be nominated by the ICE Benchmark Administration Limited or any successor thereof as the information vendor for the purpose of displaying the London interbank rates of major banks for United States dollars.

“London Banking Day” means a day on which commercial banks are open for business, including dealings in United States dollars, in London, England.

“Interest Determination Date” for any Interest Period will be the second London Banking Day preceding the first day of such Interest Period.

“Interest Period” refers to the period from and including February 27, 2017 to but excluding the first Floating Rate Notes Interest Payment Date and each successive period from and including a Floating Rate Notes Interest Payment Date to but excluding the next Floating Rate Notes Interest Payment Date.

The Bank of New York Mellon will serve as the “Calculation Agent” for the Floating Rate Notes. In the absence of willful default, bad faith or manifest error, the Calculation Agent’s determination of Three-Month USD LIBOR and its calculation of the applicable interest rate for each Interest Period will be final and binding. The Calculation Agent will make available the interest rates for current and preceding Interest Periods by delivery of such notice through such medium as is available to participants in DTC, Euroclear and Clearstream, or any successor thereof, and in accordance with such applicable rules and procedures as long as the Floating Rate Notes are held in global form. In the event that the Floating Rate Notes are held in certificated form, the interest rates for current and preceding Interest Periods will be published in the manner described below under “—Notices”. We have the right to replace the Calculation Agent with the London office of another leading commercial bank or investment bank in New York or London. If the appointed office of the Calculation Agent is unable or unwilling to continue to act as the Calculation Agent or fails to determine the interest rate for any Interest Period, we have a duty to appoint the London office of such other leading commercial bank or investment bank in New York or London as may be approved in writing by the fiscal agent.

Fixed Rate Notes

The Fixed Rate Notes are initially limited to US$500,000,000 aggregate principal amount and will mature on February 27, 2022 (the “Fixed Rate Notes Maturity Date”). The Fixed Rate Notes will bear interest at the rate of 2.625% per annum, payable semi-annually in arrears on February 27 and August 27 of each year (each, a “Fixed Rate Notes Interest Payment Date”), beginning on August 27, 2017. Interest on the Fixed Rate Notes will accrue from February 27, 2017. If any Fixed Rate Notes Interest Payment Date or the Fixed Rate Notes Maturity Date shall be a day on which banking institutions in The City of New York or Seoul are authorized or obligated by law to close, then such payment will not be made on such date but will be made on the next succeeding day which is not a day on which banking institutions in The City of New York or Seoul are authorized or obligated

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by law to close, with the same force and effect as if made on the date for such payment, and no interest shall be payable in respect of any such delay. We will pay interest to the person who is registered as the owner of a Fixed Rate Note at the close of business on the fifteenth day (whether or not a business day) preceding such Fixed Rate Notes Interest Payment Date. Interest on the Fixed Rate Notes will be computed on the basis of a360-day year consisting of twelve30-day months. We will make principal and interest payments on the Fixed Rate Notes in immediately available funds in U.S. dollars.

The payment of interest and the repayment of principal on the Notes will not be guaranteed by the Government.

Denomination

The Notes will be issued in minimum denominations of US$200,000 principal amount and integral multiples of US$1,000 in excess thereof.

Redemption

We may not redeem the Notes prior to maturity. At maturity, we will redeem the Notes at par.

Form and Registration

We will issue each series of the Notes in the form of one or more fully registered global notes, registered in the name of a nominee of and deposited with the custodian for DTC. Except as described in the accompanying prospectus under “Description of the Securities—Description of Debt Securities—Global Securities,” the global notes will not be exchangeable for Notes in definitive registered form, and will not be issued in definitive registered form. Financial institutions, acting as direct and indirect participants in DTC, will represent your beneficial interests in the global notes. These financial institutions will record the ownership and transfer of your beneficial interest through book-entry accounts. You may hold your beneficial interests in the Notes through Euroclear or Clearstream if you are a participant in such systems, or indirectly through organizations that are participants in such systems. Any secondary market trading of book-entry interests in the Notes will take place through DTC participants, including Euroclear and Clearstream. See “Clearance and Settlement—Transfers Within and Between DTC, Euroclear and Clearstream.”

The fiscal agent will not charge you any fees for the Notes, other than reasonable fees for the replacement of lost, stolen, mutilated or destroyed Notes. However, you may incur fees for the maintenance and operation of the book-entry accounts with the clearing systems in which your beneficial interests are held.

For so long as the Notes are listed on theSGX-ST and the rules of theSGX-ST so require, in the event that the global notes are exchanged for Notes in definitive registered form, we will appoint and maintain a paying agent in Singapore, where the certificates representing the Notes may be presented or surrendered for payment or redemption (if required). In addition, in the event that the global notes are exchanged for Notes in definitive registered form, an announcement of such exchange will be made through theSGX-ST by or on behalf of the issuer. Such announcement will include all material information with respect to the delivery of the definitive Notes, including details of the paying agent in Singapore.

Further Issues

We may from time to time, without the consent of the holders of the Notes, create and issue additional debt securities with the same terms and conditions as either series of the Notes in all respects so that such further issue shall be consolidated and form a single series with the relevant series of the Notes. We will not issue any such additional debt securities unless such additional securities have no more than a de minimis amount of original issue discount or such issuance would otherwise constitute a “qualified reopening” for U.S. federal income tax purposes.

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Notices

All notices regarding the Notes will be published in London in the Financial Times and in New York in The Wall Street Journal (U.S. Edition). If we cannot, for any reason, publish notice in any of those newspapers, we will choose an appropriate alternate English language newspaper of general circulation, and notice in that newspaper will be considered valid notice. Notice will be considered made on the first date of its publication.

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CLEARANCE AND SETTLEMENT

We have obtained the information in this section from sources we believe to be reliable, including DTC, Euroclear and Clearstream. We accept responsibility only for accurately extracting information from such sources. DTC, Euroclear and Clearstream are under no obligation to perform or continue to perform the procedures described below, and they may modify or discontinue them at any time. Neither we nor the registrar will be responsible for DTC’s, Euroclear’s or Clearstream’s performance of their obligations under their rules and procedures. Nor will we or the registrar be responsible for the performance by direct or indirect participants of their obligations under their rules and procedures.

Introduction

The Depository Trust Company

DTC is:

• a limited-purpose trust company organized under the New York Banking Law;

• a “banking organization” under the New York Banking Law;

• a member of the Federal Reserve System;

• a “clearing corporation” under the New York Uniform Commercial Code; and

• a “clearing agency” registered under Section 17A of the Securities Exchange Act of 1934.

DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between its participants. It does this through electronic book-entry changes in the accounts of its direct participants, eliminating the need for physical movement of securities certificates.

Euroclear and Clearstream

Like DTC, Euroclear and Clearstream hold securities for their participants and facilitate the clearance and settlement of securities transactions between their participants through electronic book-entry changes in their accounts. Euroclear and Clearstream provide various services to their participants, including the safekeeping, administration, clearance and settlement and lending and borrowing of internationally traded securities. Participants in Euroclear and Clearstream are financial institutions such as underwriters, securities brokers and dealers, banks and trust companies. Some of the underwriters participating in this offering are participants in Euroclear or Clearstream. Other banks, brokers, dealers and trust companies have indirect access to Euroclear or Clearstream by clearing through or maintaining a custodial relationship with a Euroclear or Clearstream participant.

Ownership of the Notes through DTC, Euroclear and Clearstream

We will issue each series of the Notes in the form of one or more fully registered global notes, registered in the name of a nominee of DTC. Financial institutions, acting as direct and indirect participants in DTC, will represent your beneficial interests in the Notes. These financial institutions will record the ownership and transfer of your beneficial interests through book-entry accounts. You may also hold your beneficial interests in the Notes through Euroclear or Clearstream, if you are a participant in such systems, or indirectly through organizations that are participants in such systems. Euroclear and Clearstream will hold their participants’ beneficial interests in the global notes in their customers’ securities accounts with their depositaries. These depositaries of Euroclear and Clearstream in turn will hold such interests in their customers’ securities accounts with DTC.

We and the fiscal agent generally will treat the registered holder of the Notes, initially Cede & Co., as the absolute owner of the Notes for all purposes. Once we and the fiscal agent make payments to the registered

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holder, we and the fiscal agent will no longer be liable on the Notes for the amounts so paid. Accordingly, if you own a beneficial interest in the global notes, you must rely on the procedures of the institutions through which you hold your interests in the Notes, including DTC, Euroclear, Clearstream and their respective participants, to exercise any of the rights granted to holders of the Notes. Under existing industry practice, if you desire to take any action that Cede & Co., as the holder of the global notes, is entitled to take, then Cede & Co. would authorize the DTC participant through which you own your beneficial interest to take such action. The participant would then either authorize you to take the action or act for you on your instructions.

DTC may grant proxies or authorize its participants, or persons holding beneficial interests in the Notes through such participants, to exercise any rights of a holder or take any actions that a holder is entitled to take under the fiscal agency agreement or the Notes. Euroclear’s or Clearstream’s ability to take actions as holder under the Notes or the fiscal agency agreement will be limited by the ability of their respective depositaries to carry out such actions for them through DTC. Euroclear and Clearstream will take such actions only in accordance with their respective rules and procedures.

Transfers Within and Between DTC, Euroclear and Clearstream

Trading Between DTC Purchasers and Sellers

DTC participants will transfer interests in the Notes among themselves in the ordinary way according to DTC rules. Participants will pay for such transfers by wire transfer. The laws of some states require certain purchasers of securities to take physical delivery of the securities in definitive form. These laws may impair your ability to transfer beneficial interests in the global notes to such purchasers. DTC can act only on behalf of its direct participants, who in turn act on behalf of indirect participants and certain banks. Thus, your ability to pledge a beneficial interest in the global notes to persons that do not participate in the DTC system, and to take other actions, may be limited because you will not possess a physical certificate that represents your interest.

Trading Between Euroclear and/or Clearstream Participants

Participants in Euroclear and Clearstream will transfer interests in the Notes among themselves according to the rules and operating procedures of Euroclear and Clearstream.

Trading Between a DTC Seller and a Euroclear or Clearstream Purchaser

When the Notes are to be transferred from the account of a DTC participant to the account of a Euroclear or Clearstream participant, the purchaser must first send instructions to Euroclear or Clearstream through a participant at least one business day prior to the settlement date. Euroclear or Clearstream will then instruct its depositary to receive the Notes and make payment for them. On the settlement date, the depositary will make payment to the DTC participant’s account, and the Notes will be credited to the depositary’s account. After settlement has been completed, DTC will credit the Notes to Euroclear or Clearstream, Euroclear or Clearstream will credit the Notes, in accordance with its usual procedures, to the participant’s account, and the participant will then credit the purchaser’s account. These securities credits will appear the next day (European time) after the settlement date. The cash debit from the account of Euroclear or Clearstream will be back-valued to the value date, which will be the preceding day if settlement occurs in New York. If settlement is not completed on the intended value date (i.e., the trade fails), the cash debit will instead be valued at the actual settlement date.

Participants in Euroclear and Clearstream will need to make funds available to Euroclear or Clearstream to pay for the Notes by wire transfer on the value date. The most direct way of doing this is topre-position funds (i.e., have funds in place at Euroclear or Clearstream before the value date), either from cash on hand or existing lines of credit. Under this approach, however, participants may take on credit exposure to Euroclear and Clearstream until the Notes are credited to their accounts one day later.

As an alternative, if Euroclear or Clearstream has extended a line of credit to a participant, the participant may decide not topre-position funds, but to allow Euroclear or Clearstream to draw on the line of credit to

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finance settlement for the Notes. Under this procedure, Euroclear or Clearstream would charge the participant overdraft charges for one day, assuming that the overdraft would be cleared when the Notes were credited to the participant’s account. However, interest on the Notes would accrue from the value date. Therefore, in many cases the interest income on the Notes which the participant earns during thatone-day period will substantially reduce or offset the amount of the participant’s overdraft charges. Of course, this result will depend on the cost of funds (i.e., the interest rate that Euroclear or Clearstream charges) to each participant.

Since the settlement will occur during New York business hours, a DTC participant selling an interest in the Notes can use its usual procedures for transferring global securities to the depositories of Euroclear or Clearstream for the benefit of Euroclear or Clearstream participants. The DTC seller will receive the sale proceeds on the settlement date. Thus, to the DTC seller, a cross-market sale will settle no differently than a trade between two DTC participants.

Finally, day traders who use Euroclear or Clearstream and who purchase Notes from DTC participants for credit to Euroclear participants or Clearstream participants should note that these trades will automatically fail unless one of three steps is taken:

• borrowing through Euroclear or Clearstream for one day, until the purchase side of the day trade is reflected in the day trader’s Euroclear or Clearstream account, in accordance with the clearing system’s customary procedures;

• borrowing the Notes in the United States from DTC participants no later than one day prior to settlement, which would allow sufficient time for the Notes to be reflected in the Euroclear or Clearstream account in order to settle the sale side of the trade; or

• staggering the value dates for the buy and sell sides of the trade so that the value date for the purchase from the DTC participant is at least one day prior to the value date for the sale to the Euroclear or Clearstream participant.

Trading Between a Euroclear or Clearstream Seller and a DTC Purchaser

Due to time-zone differences in their favor, Euroclear and Clearstream participants can use their usual procedures to transfer Notes through their depositaries to a DTC participant. The seller must first send instructions to Euroclear or Clearstream through a participant at least one business day prior to the settlement date. Euroclear or Clearstream will then instruct its depositary to credit the Notes to the DTC participant’s account and receive payment. The payment will be credited in the account of the Euroclear or Clearstream participant on the following day, but the receipt of the cash proceeds will be back-valued to the value date, which will be the preceding day if settlement occurs in New York. If settlement is not completed on the intended value date (i.e., the trade fails), the receipt of the cash proceeds will instead be valued at the actual settlement date.

If the Euroclear or Clearstream participant selling the Notes has a line of credit with Euroclear or Clearstream and elects to be in debit for the Notes until it receives the sale proceeds in its account, then the back-valuation may substantially reduce or offset any overdraft charges that the participant incurs over that period.

Settlement in other currencies between DTC and Euroclear and Clearstream is possible usingfree-of-payment transfers to move the Notes, but funds movement will take place separately.

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TAXATION

Korean Taxation

For a discussion of certain Korean tax considerations that may be relevant to you if you invest in the Notes, see “Taxation—Korean Taxation” in the accompanying prospectus.

United States Tax Considerations

Stated interest on the Notes will be treated as qualified stated interest for U.S. federal income tax purposes. Under certain circumstances as described under “Taxation—Korean Taxation” in the accompanying prospectus, a U.S. holder may be subject to Korean withholding tax upon the sale or other disposition of Notes. A U.S. holder eligible for benefits of the Korea-U.S. tax treaty, which exempts capital gains from tax in Korea, would not be eligible to credit against its U.S. federal income tax liability any such Korean tax withheld. U.S. holders should consult their own tax advisers with respect to their eligibility for benefits under the Korea-U.S. tax treaty and, in the case of U.S. holders that are not eligible for treaty benefits, their ability to credit any Korean tax withheld upon sale of the Notes against their U.S. federal income tax liability. For a discussion of additional U.S. federal income tax considerations that may be relevant to you if you invest in the Notes and are a U.S. holder, see “Taxation—United States Tax Considerations” in the accompanying prospectus.

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UNDERWRITING

Relationship with the Underwriters

We and the underwriters named below (the “Underwriters”) have entered into a Terms Agreement dated February 21, 2017 (the “Terms Agreement”) with respect to the Notes relating to the Underwriting Agreement—Standard Terms (together with the Terms Agreement, the “Underwriting Agreement”) filed as an exhibit to the registration statement. Subject to the terms and conditions set forth in the Underwriting Agreement, we have agreed to sell to each of the Underwriters, severally and not jointly, and each of the Underwriters has, severally and not jointly, agreed to purchase, the following principal amount of the Notes set out opposite its name below:

Name of Underwriters	Principal Amount of the 2020 Notes		Principal Amount of the 2022 Notes		Principal Amount of the Fixed Rate Notes
ANZ Securities, Inc.	US$	71,428,000	US$	71,428,000	US$	71,428,000
Citigroup Global Markets Inc.		71,432,000		71,432,000		71,432,000
Commerz Markets LLC		71,428,000		71,428,000		71,428,000
Crédit Agricole Corporate and Investment Bank		71,428,000		71,428,000		71,428,000
Credit Suisse Securities (USA) LLC		71,428,000		71,428,000		71,428,000
KDB Asia Limited		71,428,000		71,428,000		71,428,000
Merrill Lynch, Pierce, Fenner & Smith                      Incorporated		71,428,000		71,428,000		71,428,000
	US$	500,000,000	US$	500,000,000	US$	500,000,000

KDB Asia Limited, one of the underwriters, is our affiliate and has agreed to offer and sell the Notes only outside the United States to non-U.S. persons.

Under the terms and conditions of the Underwriting Agreement, if the Underwriters take any series of the Notes, then the Underwriters are obligated to take and pay for all of the Notes of such series.

The Underwriters initially propose to offer the Notes directly to the public at the offering price described on the cover page of this prospectus supplement. After the initial offering of the Notes, the Underwriters may from time to time vary the offering price and other selling terms.

If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Underwriters or any affiliate of the Underwriters is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by that Underwriter or its affiliate on our behalf in such jurisdiction.

The Notes are a new class of securities with no established trading market. Applications will be made to the SGX-ST for the listing and quotation of the Notes. The Underwriters have advised us that they intend to make a market in the Notes. However, they are not obligated to do so and they may discontinue any market making activities with respect to the Notes at any time without notice. Accordingly, we cannot assure you as to the liquidity of any trading market for the Notes.

We have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments which the Underwriters may be required to make in respect of any such liabilities.

The amount of net proceeds from our 2020 Notes is US$498,500,000 after deducting underwriting discounts but not estimated expenses. Expenses associated with the 2020Notes offering are estimated to be US$70,000. The Underwriters have agreed to pay certain of our expenses incurred in connection with the offering of the 2020 Notes.

The amount of net proceeds from our 2022 Notes is US$498,500,000 after deducting underwriting discounts but not estimated expenses. Expenses associated with the 2022Notes offering are estimated to be US$70,000. The Underwriters have agreed to pay certain of our expenses incurred in connection with the offering of the 2022 Notes.

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The amount of net proceeds from our Fixed Rate Notes is US$495,945,000 after deducting underwriting discounts but not estimated expenses. Expenses associated with the Fixed Rate Notes offering are estimated to be US$70,000. The Underwriters have agreed to pay certain of our expenses incurred in connection with the offering of the Fixed Rate Notes.

The Underwriters and certain of their affiliates may have performed certain commercial banking, investment banking and advisory services for us and/or our affiliates from time to time for which they have received customary fees and expenses and may, from time to time, engage in transactions with and perform services for us and/or our affiliates in the ordinary course of their business.

The Underwriters or certain of their affiliates may purchase Notes and be allocated Notes for asset management and/or proprietary purposes but not with a view to distribution. The Underwriters or their respective affiliates may purchase Notes for its or their own account and enter into transactions, including credit derivatives, such as asset swaps, repackaging and credit default swaps relating to Notes and/or other securities of us or our subsidiaries or affiliates at the same time as the offer and sale of Notes or in secondary market transactions. Such transactions would be carried out as bilateral trades with selected counterparties and separately from any existing sale or resale of Notes to which this prospectus supplement relates (notwithstanding that such selected counterparties may also be purchasers of Notes).

Delivery of the Notes

We expect to make delivery of the Notes, against payment insame-day funds on or about February 27, 2017, which we expect will be the fourth business day following the date of this prospectus supplement. Under Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as amended, U.S. purchasers are generally required to settle trades in the secondary market in three business days, unless they and the other parties to any such trade expressly agree otherwise. Accordingly, if you wish to trade in the Notes on the date of this prospectus supplement, because the Notes will initially settle in T+4, you may be required to specify an alternate settlement cycle at the time of your trade to prevent a failed settlement. Purchasers in other countries should consult with their own advisors.

Foreign Selling Restrictions

Each Underwriter has agreed, severally and not jointly, to the following selling restrictions in connection with the offering with respect to the following jurisdictions:

Korea

Each Underwriter has severally represented and agreed that (i) it has not offered, sold or delivered and will not offer, sell or deliver, directly or indirectly, any Notes in Korea, or to, or for the account or benefit of, any resident of Korea, except as otherwise permitted by applicable Korean laws and regulations, and (ii) any securities dealer to whom the Underwriters may sell the Notes will agree that it will not offer any Notes, directly or indirectly, in Korea, or to any resident of Korea, except as permitted by applicable Korean laws and regulations, or to any other dealer who does not so represent and agree.

United Kingdom

Each Underwriter has severally represented and agreed that (i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act of 2000 (the “FSMA”)) received by it in connection with the issue or sale of any of the Notes in circumstances in which section 21(1) of the FSMA does not apply to us, and (ii) it has complied, and will comply with, all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes, from or otherwise involving the United Kingdom.

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Japan

Each Underwriter has severally represented and agreed that the Notes have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended); it has not offered or sold, and it will not offer or sell, directly or indirectly, any of the Notes in Japan or to, or for the account or benefit of, any resident of Japan or to, or for the account or benefit of, any resident for reoffering or resale, directly or indirectly, in Japan or to, or for the account or benefit of, any resident of Japan except (i) pursuant to an exemption from the registration requirements of, or otherwise in compliance with, the Financial Instruments and Exchange Law of Japan, and (ii) in compliance with the other relevant laws of Japan.

Hong Kong

Each Underwriter has severally represented and agreed that:

• it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes other than (i) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the “SFO”) and any rules made under the SFO; or (ii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) (the “Companies Ordinance”) or which do not constitute an offer to the public within the meaning of the Companies Ordinance; and

• it has not issued, or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, any advertisement, invitation or document relating to the Notes, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are or are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made thereunder.

Singapore

Each Underwriter has severally represented and agreed that neither the preliminary prospectus nor the prospectus has been, or will be, registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289 of Singapore)(the “SFA”). Accordingly, each Underwriter has severally represented, warranted and agreed that it has not offered or sold any Notes or caused the Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell any Notes or cause the Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, the preliminary prospectus or the prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or, (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

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securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:

(1) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(2) where no consideration is or will be given for the transfer;

(3) where the transfer is by operation of law;

(4) as specified in Section 276(7) of the SFA; or

(5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

Australia

No prospectus or other disclosure document (as defined in the Corporations Act 2001 of Australia) in relation to the offering of the Notes has been or will be lodged with or registered by Australian Securities and Investments Commission or the Australian Securities Exchange Limited. Each Underwriter has represented and agreed that it has not:

(a) made or invited, and will not make or invite, an offer of the Notes for issue or sale in Australia (including an offer or invitation which is received by a person in Australia); and

(b) distributed or published and will not distribute or publish any draft, preliminary or final form offering memorandum, advertisement or other offering material relating to the Notes in Australia,

unless:

(i) the minimum aggregate consideration payable by each offeree is at least AUD 500,000 (or its equivalent in an alternate currency) (disregarding money lent by the offeror or its associates) or the offer otherwise does not require disclosure to investors in accordance with Part 6D.2 and Part 7 of the Corporations Act 2001 of Australia; and

(ii) such action complies with all applicable laws, directives and regulations and does not require any document to be lodged with, or registered by, the Australian Securities and Investments Commission.

Each Underwriter has agreed that it will not sell the Notes in circumstances where employees of the Underwriter aware of, or involved in, the sale know, or have reasonable grounds to suspect, that the Notes, or an interest in or right in respect of the Notes, was being, or would later be, acquired either directly or indirectly by a resident of Australia, or a non-resident who is engaged in carrying on business in Australia at or through a permanent establishment of that non-resident in Australia (the expressions “resident of Australia”, “non-resident” and “permanent establishment” having the meanings given to them by the Australian Tax Act).

Canada

Prospective Canadian investors are advised that the information contained within the preliminary prospectus and prospectus has not been prepared with regard to matters that may be of particular concern to Canadian investors. Accordingly, prospective Canadian investors should consult with their own legal, financial and tax advisers concerning the information contained within the preliminary prospectus and prospectus and as to the suitability of an investment in the Notes in their particular circumstances.

Each Underwriter has severally represented and agreed that the Notes may only be offered or sold in the provinces of Alberta, British Columbia, Ontario and Québec or to or for the benefit of a resident of these provinces pursuant to an exemption from the requirement to file a prospectus in such province in which such

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offer or sale is made, and only by a dealer duly registered under the applicable securities laws of that province or by a dealer that is relying in that province on the “international dealer” exemption provided by section 8.18 of National Instrument 31-103Registration Requirements,Exemptions and Ongoing Registrant Obligations (NI 31-103). Furthermore, the Notes may only be offered or sold to or for the benefit of a resident of any such province provided that such resident is both an “accredited investor” as defined in National Instrument 45-106Prospectus Exemptions (NI 45-106) or subsection 73.3 (1) of theSecurities Act (Ontario) and a “permitted client” as defined in NI 31-103. By purchasing any Notes and accepting delivery of a purchase confirmation a purchaser is representing to the underwriters and the dealer from whom the purchase confirmation is received that it is an “accredited investor” and “permitted client” as defined above. The distribution of the Notes in Canada is being made on a private placement basis only and any resale of the Notes must be made in accordance with applicable Canadian securities laws, which will vary depending on the relevant jurisdiction, and which may require resales to be made in accordance with prospectus and registration requirements or exemptions from the prospectus and registration requirements.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this preliminary prospectus or prospectus (including any amendment hereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Under Canadian securities law, National Instrument 33-105Underwriting Conflicts (NI 33-105) provides disclosure requirements with respect to potential conflicts of interest between an issuer and underwriters, dealers or placement agents, as the case may be. To the extent any conflict of interest between us and any of the Underwriters (or any other placement agent acting in connection with this offering) may exist in respect of this offering, the applicable parties to this offering are relying on the exemption from these disclosure requirements provided to them by section 3A.3 of NI 33-105 (exemption based on U.S. disclosure).

We and the Underwriters hereby notify prospective Canadian purchasers that: (a) we may be required to provide personal information pertaining to the purchaser as required to be disclosed in Schedule I ofForm 45-106F1 under NI 45-106 (including its name, address, telephone number and the aggregate purchase price of any Notes purchased) (“personal information”), which Form 45-106F1 may be required to be filed by us under NI 45-106, (b) such personal information may be delivered to the Ontario Securities Commission (the “OSC”) in accordance with NI 45-106, (c) such personal information is collected indirectly by the OSC under the authority granted to it under the securities legislation of Ontario, (d) such personal information is collected for the purposes of the administration and enforcement of the securities legislation of Ontario, and (e) the public official in Ontario who can answer questions about the OSC’s indirect collection of such personal information is the Administrative Support Clerk at the OSC, Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario M5H 3S8, Telephone: (416) 593-3684. Prospective Canadian purchasers that purchase Notes in this offering will be deemed to have authorized the indirect collection of the personal information by the OSC, and to have acknowledged and consented to its name, address, telephone number and other specified information, including the aggregate purchase price paid by the purchaser, being disclosed to other Canadian securities regulatory authorities, and to have acknowledged that such information may become available to the public in accordance with requirements of applicable Canadian laws.

Upon receipt of this prospectus, each Canadian purchaser hereby confirms that it has expressly requested that all documents evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation or any notice) be drawn up in the English language only.Par la réception de ce prospectus, chaque acheteur canadien confirme par les présentes qu’il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d’achat ou tout avis) soient rédigés en anglais seulement.

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Price Stabilization and Short Position

In connection with this offering, Citigroup Global Markets Inc. (the “Stabilizing Manager”) or any person acting for it, on behalf of the Underwriters, may purchase and sell the Notes in the open market. These transactions may include over-allotment, covering transactions, penalty bids and stabilizing transactions. Over-allotment involves sales of the Notes in excess of the principal amount of Notes to be purchased by the Underwriters in this offering, which creates a short position for the Underwriters. Covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover short positions. A penalty bid occurs when a particular Underwriter repays to the Underwriters a portion of the underwriting discount received by it because the Underwriters or the Stabilizing Manager has repurchased Notes sold by or for the account of such Underwriter in stabilizing or short covering transactions. Stabilizing transactions consist of certain bids or purchases of Notes in the open market for the purpose of preventing or retarding a decline in the market price of the Notes while the offering is in progress. Any of these activities may have the effect of preventing or retarding a decline in the market price of the Notes. They may also cause the price of the Notes to be higher than the price that otherwise would exist in the open market in the absence of these transactions. The Stabilizing Manager may conduct these transactions in theover-the-counter market or otherwise. If the Stabilizing Manager commences any of these transactions, it may discontinue them at any time, and must discontinue them after a limited period.

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LEGAL MATTERS

The validity of the Notes is being passed upon for us by Cleary Gottlieb Steen & Hamilton LLP, New York, New York, and by Lee & Ko, Seoul, Korea. Certain legal matters will also be passed upon for the Underwriters by Davis Polk & Wardwell LLP, New York, New York. In giving their opinions, Cleary Gottlieb Steen & Hamilton LLP and Davis Polk & Wardwell LLP may rely as to matters of Korean law upon the opinions of Lee & Ko, and Lee & Ko may rely as to matters of New York law upon the opinions of Cleary Gottlieb Steen & Hamilton LLP.

OFFICIAL STATEMENTS AND DOCUMENTS

Our Chief Executive Officer and Chairman of the Board of Directors, in his official capacity, has supplied the information set forth in this prospectus supplement under “Recent Developments—The Korea Development Bank.” Such information is stated on his authority. The documents identified in the portion of this prospectus supplement captioned “Recent Developments—The Republic of Korea” as the sources of financial or statistical data are derived from official public documents of the Republic and of its agencies and instrumentalities.

GENERAL INFORMATION

We were established in 1954 as a government-owned financial institution pursuant to The Korea Development Bank Act, as amended. The address of our registered office is 14, Eunhaeng-ro,Yeongdeungpo-gu, Seoul 07242, The Republic of Korea.

Our Board of Directors can be reached at the address of our registered office: c/o 14, Eunhaeng-ro,Yeongdeungpo-gu, Seoul 07242, The Republic of Korea.

The issue of the Notes has been authorized by a resolution of our Board of Directors passed on December 29, 2016 and a decision of our Chief Executive Officer and Chairman of the Board of Directors dated February 10, 2017. On February 17, 2017, we filed our reports on the proposed issuance of the Notes with the Ministry of Strategy and Finance of Korea.

The registration statement with respect to us and the Notes has been filed with the U.S. Securities and Exchange Commission in Washington, D.C. under the Securities Act of 1933, as amended. Additional information concerning us and the Notes is contained in the registration statement and post-effective amendments to such registration statement, including their various exhibits, which may be inspected at the public reference facilities maintained by the Securities and Exchange Commission at Room 1580, 100 F Street N.E., Washington, D.C. 20549, United States.

The Notes have been accepted for clearance through DTC, Euroclear and Clearstream:

	ISIN		CUSIP		Common Code
2020 Notes		US500630CM82		500630 CM8		157232720
2022 Notes		US500630CN65		500630 CN6		157232061
Fixed Rate Notes		US500630CP14		500630 CP1		157232088

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HEAD OFFICE OF THE BANK

14, Eunhaeng-ro

Yeongdeungpo-gu, Seoul 07242

The Republic of Korea

FISCAL AGENT AND PRINCIPAL PAYING AGENT

The Bank of New York Mellon

101 Barclay Street, 21^st Floor West

New York, NY 10286

United States of America

LEGAL ADVISORS TO THE BANK

as to Korean law	as to U.S. law
Lee & Ko Seyang Building 39, Sajik-ro 8-gil, Jongno-gu Seoul 03170 The Republic of Korea	Cleary Gottlieb Steen & Hamilton LLP c/o 19th Floor, Ferrum Tower 19 Eulji-ro 5-gil, Jung-gu Seoul 04539 The Republic of Korea

LEGAL ADVISOR TO THE UNDERWRITERS

as to U.S. law

Davis Polk & Wardwell LLP

c/o 18th Floor

The Hong Kong Club Building

3A Chater Road

Hong Kong

AUDITOR OF THE BANK

KPMG Samjong Accounting Corp.

10^th Floor, Gangnam Finance Center

152, Teheran-ro

Gangnam-gu, Seoul 06236

The Republic of Korea

SINGAPORE LISTING AGENT

Shook Lin & Bok LLP

1 Robinson Road

#18-00 AIA Tower

Singapore 048542