UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2015
Commission File Number: 000-53445
KB Financial Group Inc.
(Translation of registrants name into English)
9-1, 2-ga, Namdaemoon-ro, Jung-gu, Seoul 100-703, Korea
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-N/A.
On March 12, 2015, KB Financial Group Inc. furnished a public notice regarding the convocation of its annual general meeting of shareholders for fiscal year 2014.
The agenda for the annual general meeting of shareholders to be held on March 27, 2015 and the detailed contents of such agenda are currently being distributed to shareholders of KB Financial Group Inc. for their reference as they exercise their voting rights.
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| Agenda: |
1) | Approval of financial statements and the proposed dividend payment for fiscal year 2014 |
2) | Approval of amendments to the Articles of Incorporation |
3) | Appointment of directors (one non-standing director and seven non-executive directors) |
4) | Appointment of members of the Audit Committee, who are non-executive directors |
5) | Approval of the aggregate remuneration limit for directors |
Agenda for Annual General Meeting of Shareholders for Fiscal Year 2014
Agendum 1. Approval of financial statements and the proposed dividend payment for fiscal year 2014
Please find the following Exhibits attached to this document:
Exhibit Index
99.1 | Separate Financial Statements for Fiscal Year 2014 |
99.2 | Consolidated Financial Statements for Fiscal Year 2014 |
For the proposed dividend payment amount for fiscal year 2014, please refer to Separate Statements of Appropriation of Retained Earnings for the years ended December 31, 2014 and 2013 included in Exhibit 99.1 attached hereto.
Agendum 2. Approval of Amendments to the Articles of Incorporation
The following table sets forth a summary of the proposed amendments to the Articles of Incorporation:
Before Amendment |
After Amendment |
Reasons for Amendment | ||
Article 1 ~ Article 20 (Omitted) |
Article 1 ~ Article 20 (Same as before) | | ||
<Article newly added> | Article 20-2 (Issuance of Write-down Contingent Convertible Bonds)
(1) The Company may issue bonds by a resolution of the Board of Directors, which are a different type of bonds from those under Article 469, Paragraph (2), Article 513 and Article 516-2 of the Korean Commercial Code and are exempted from the obligation to repay the bonds and pay interest thereon if an event predetermined in accordance with objective and reasonable standards at the time of the issuance of the bonds occurs (the Write-down Contingent Convertible Bonds).
(2) The Company may issue the Write-down Contingent Convertible Bonds in the preceding Paragraph to the extent the aggregate par value thereof does not exceed twenty trillion (20,000,000,000,000) Won by a resolution of the Board of Directors. |
To establish a basis in the Articles of Incorporation for the issuance of Write-down Contingent Convertible Bonds pursuant to the amendments to the Financial Investment Services and Capital Markets Act (the FSCMA)(Article 165-11 of the amended FSCMA). The proposed amendment will not pose a risk to the Companys shareholders in terms of dilution as these vehicles cannot be converted into equity. |
(3) The Company may issue the Write-down Contingent Convertible Bonds on the condition that if either one of the following conditions are satisfied, the obligations to repay the Write-down Contingent Convertible Bonds issued by the Company and to pay interest thereon shall be reduced or exempted (the Debt Restructuring):
1. The Company received a measure of managerial improvement order from the Financial Services Commission pursuant to the Act on the Structural Improvement of the Financial Industry; or
2. The Company is designated as a non- performing financial institution pursuant to the Act on the Structural Improvement of the Financial Industry.
(4) The Board of Directors of the Company may determine such terms and conditions to be amended following the Debt Restructuring, to the extent permitted under the relevant laws and regulations, at the time of the issuance of the Write-down Contingent Convertible Bonds. |
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Article 21 ~ Article 36 (Omitted) |
Article 21 ~ Article 36 (Same as before) | | ||
Article 37 (Qualification of Non-executive Directors)
(1) Any person falling within the scope of any of the following cannot become a non-executive director of this Company and such person shall, if found to fall within the scope of any of the following after becoming a non-executive director, lose his/her office as non-executive director:
1. Any person to whom any sub-paragraph of Article 40, Paragraph 4 of the Financial Holding Company Act applies. |
Article 37 (Qualifications of Non-executive Directors)
(1) Any person falling within the scope of any of the following cannot become a non-executive director of this Company and such person shall, if found to fall within the scope of any of the following after becoming a non-executive director, lose his/her office as non-executive director:
1. Any person to whom any sub-paragraph of Article 40, Paragraph 4 of the Financial Holding Company Act applies.; or |
2. Any person serving as a non-executive director, non-standing director or non-standing statutory auditor of any financial company that is not an affiliate of the Company |
2. Any person serving as a non-executive director of any other company that is not a Subsidiary, etc. of the Company. |
To reflect Article 16, Paragraph 2 of the Financial Corporate Governance Code. | ||
(2) This Company shall appoint as non-executive directors persons who are sufficiently well-informed or experienced in a related field of study, including finance, economics, management, law, accounting, journalism, etc. and who meet one of the following qualifications; provided, however, that this Paragraph is not applicable to a person who is appointed as non-executive director after being nominated as a candidate therefor pursuant to Article 542-8, Paragraph 5 of the Korean Commercial Code. |
(2) The Company shall appoint a non-executive director who has expertise and knowledge by considering the following; provided, however, that this Paragraph is not applicable to a person who is appointed as non-executive director after being nominated as a candidate therefor pursuant to Article 542-8, Paragraph (5) of the Korean Commercial Code. |
To reflect Article 16, Paragraph 1 of the Financial Corporate Governance Code. | ||
1. A professional manager or executive officer (a qualified person who is or used to be an executive officer or of the same or higher rank in a legal entity subject to external audit pursuant to the Act on External Audit of Stock Companies or any foreign laws equivalent thereto). |
1. Whether he or she is sufficiently well-informed or experienced in a related field, including finance, economics, management, accounting and law, as required for his or her performance of duty as a non-executive director; |
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2. A lawyer or certified public accountant with at least five (5) years of work experience in the relevant field. |
2. Whether he or she may fairly perform his or her duty for the benefit of the entire shareholders and financial consumers without being bound by certain interests; |
3. A person holding a masters or higher degree in finance, economics, management, law or accounting with at least five (5) years of experience at a university or a research institution as a researcher or an associate professor or in a higher position in the relevant field. |
3. Whether he or she has reasonable sense of morals and responsibility to perform his or her duty as a non-executive director; or |
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4. A person who has served in financial companies for at least ten (10) years. |
4. Whether he or she is able to dedicate sufficient time and effort to fully perform his or her duty as a non-executive director of a financial company. |
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5. A person who has served at a listed company (within the meaning of the Financial Investment Services and Capital Markets Act) in the areas of finance or accounting as an officer for at least five (5) years or as an officer or employee for at least ten (10) years. |
<Item Deleted> | |||
6. A person with at least five (5) years of work experience in finance or accounting matters or in overseeing such matters at a central government agency, local government agency, public agency as defined under the Act on the Management of Public Agencies, the Financial Supervisory Service, the Korea Exchange under the Financial Investment Services and Capital Markets Act or an agency related to the financial investment business (excluding organizations related to financial investment) under Article 9, Paragraph 17 of the Financial Investment Services and Capital Markets Act. |
<Item Deleted> |
7. A person with at least five (5) years of work experience in finance or accounting matters at an agency subject to inspection pursuant to Article 38 of the Act on the Establishment of Financial Services Commission (or a foreign equivalent thereto). |
<Item Deleted> |
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8. Any other person with sufficient expert knowledge or work experience, who is recognized by the Board of Directors or the Non-Executive Director Nominating Committee as falling within the scope of any of paragraphs 1 to 7 above. |
<Item Deleted> | |||
Article 38 ~ Article 42 (Omitted) | Article 38 ~ Article 42 (Same as before) | | ||
Article 43 (Composition and Convening of the Meeting of Board of Directors) | Article 43 (Composition and Convening of the Meeting of Board of Directors) | |||
(1)~(4) Omitted | (1)~(4) Same as before | |||
<Paragraph newly added> | (5) The Company shall organize the Board of Directors so that persons from various fields with appropriate experience and knowledge required for the performance of duties as directors of a financial company may be included therein, and shall put its effort so that the Board of Directors may not be comprised of directors with certain common backgrounds in their expertise nor be weighted towards certain occupations or some groups by representing the interest thereof, etc. |
To reflect Article 5, Paragraph 1 of the Financial Corporate Governance Code. |
(5) Matters to be resolved by the Board of Directors, and other matters regarding the operation of the Board of Directors shall be determined in accordance with the resolution of the Board of Directors. |
(6) Matters to be resolved by the Board of Directors, and other matters regarding the operation of the Board of Directors shall be determined in accordance with the resolution of the Board of Directors. |
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Article 44 ~ Article 46 (Omitted) | Article 44 ~ Article 46 (Same as before) | | ||
Article 47 (Committees) | Article 47 (Committees) | |||
(1) The Company may establish various committees including following committees within the Board of Directors as determined by the resolution of the Board of Directors for the purposes of smooth operation of the Board of Directors and effective management of the Company:
1. Board Steering Committee;
2. Management Strategy Committee;
3. Risk Management Committee;
4. Evaluation and Compensation Committee;
5. Non-executive Director Nominating Committee; and
6. Audit Committee Member Nominating Committee.
<Item newly added>
|
(1) The Company may establish various committees including following committees within the Board of Directors as determined by the resolution of the Board of Directors for the purposes of smooth operation of the Board of Directors and effective management of the Company:
<Item Deleted>
<Item Deleted>
1. Risk Management Committee;
2. Evaluation and Compensation Committee;
3. Non-executive Director Nominating Committee;
4. Audit Committee Member Nominating Committee; and
5. Corporate Governance Committee. |
To reflect Article 14 and Article 62 of the Financial Corporate Governance Code. | ||
(2)~(3) Omitted | (2)~(3) Same as before | |||
Article 48 (Omitted) | Article 48 (Same as before) | | ||
Article 49 (Consultants) | Article 49 (Group Management Control Committee, Etc.) |
<Paragraph newly Added> | (1) The Company shall establish the Group Management Control Committee in order to effectuate strategic managerial decision-making for the Company, its Subsidiaries, etc., and the matters regarding the operation of the Group Management Control Committee shall be determined by the Board of Directors. |
To reflect Article 69 of the Financial Corporate Governance Code. | ||
The Company may retain consultants, honorary directors, advisors, etc. by a resolution of the Board of Directors. | (2) The Company may retain consultants, honorary directors, advisors, etc. by a resolution of the Board of Directors. |
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Article 50 ~ Article 61 (Omitted) | Article 50 ~ Article 61 (Same as before) | |
Agendum 3. Appointment of directors
Nominee for Non-standing Director
Name (Date of Birth) |
Current Position |
Career |
Education |
Nominator |
Nationality |
Term of Office | ||||||
Hong Lee (New appointment) (4/7/1958) |
Senior Executive Vice President and Head of Sales Group, Kookmin Bank | Senior Executive Vice President, Corporate Banking Division, Kookmin Bank Executive Vice President, SOHO Business Supporting Division, Kookmin Bank Executive Vice President, HR Division, Kookmin Bank Head of South Regional Head Office, Kookmin Bank Head of Middle East Corporate Business Supporting Office, Kookmin Bank |
M.B.A., Helsinki School of Economics B.A. in Linguistics, Seoul National University |
Board of Directors | Republic of Korea | 2 years |
Nominees for Non-executive Directors(1) (2)
Name (Date of Birth) |
Current Position |
Career |
Education |
Nominator |
Nationality |
Term of Office | ||||||
Young Hwi Choi (New appointment) (10/28/1945) |
- | President & CEO, Shinhan Financial Group Co., Ltd. Deputy President, Shinhan Bank Deputy Director, Ministry of Finance Manager, The Bank of Korea |
B.A. in Economics, Sungkyunkwan University |
Non-executive Director Candidate Nominating Committee | Republic of Korea | 1 year |
Name (Date of Birth) |
Current Position |
Career |
Education |
Nominator |
Nationality |
Term of Office | ||||||
Woon Youl Choi (New appointment) (4/2/1950) |
Professor, Sogang University | Vice President, Sogang University Member, Korea Monetary Board President, Korea Money & Finance Association President, Korean Securities Association Commissioner, Korea Stock Exchange |
Ph.D. in Finance, University of Georgia M.B.A., University of Georgia B.A. in Business Administration, Seoul National University |
Non-executive Director Candidate Nominating Committee | Republic of Korea | 1 year | ||||||
Suk Ryul Yoo (New appointment) (4/21/1950) |
Advisor, Samsung Total Petrochemicals Co., Ltd. | Visiting Professor, Seoul National University Chairman, Credit Finance Association President & CEO, Samsung Total Petrochemicals Co., Ltd. President & CEO, Samsung Card Co., Ltd. President & CEO, Samsung Life Insurance Co., Ltd. President & CEO, Samsung Securities Co., Ltd. President & CEO, Samsung Capital Co., Ltd. |
M.S. in Industrial Engineering, Korea Advanced Institute of Science & Technology B.A. in Business Administration, Seoul National University |
Non-executive Director Candidate Nominating Committee | Republic of Korea | 1 year | ||||||
Michael Byungnam Lee (New appointment) (9/24/1954) |
President & CEO, LG Academy | Executive Vice President, Human Resources, LG Corp. Vice President, LG Academy Assistant Professor, Georgia State University Assistant Professor, California State University Project Analyst, Daewoo Industrial Co., Ltd. |
Ph.D. in Industrial Relations, University of Minnesota M.L.H.R. (Master of Labor and Human Resources), Ohio State University B.A. in Economics, Sogang University |
Non-executive Director Candidate Nominating Committee and shareholders proposal (3) | Republic of Korea | 1 year |
Name (Date of Birth) |
Current Position |
Career |
Education |
Nominator |
Nationality |
Term of Office | ||||||
Jae Ha Park (New appointment) (11/25/1957) |
Senior Research Fellow, Korea Institute of Finance | Deputy Dean, Asian Development Bank Institute Vice President, Korea Institute of Finance Vice Chairman, Korea Money and Finance Association Senior Counselor to the Minister, Ministry of Economy and Finance Outside Director, Shinhan Bank Outside Director, Daewoo Securities Outside Director, Jeonbuk Bank |
Ph.D. in Economics, Pennsylvania State University B.A. in Economics, Seoul National University |
Non-executive Director Candidate Nominating Committee | Republic of Korea | 1 year | ||||||
Eunice Kyonghee Kim (New appointment) (03/29/1959) |
Professor, Ewha Law School | Deputy CEO, Chief Compliance Officer, Hana Financial Group Inc. Managing Director & Chief Compliance Officer, Citibank Japan Inc. Executive Vice President & Chief Legal Officer, Citibank Korea Inc. Vice-Chairperson, International Association of Korean Lawyers Member, Financial Development Committee Member, Korea Prosecution Future Development Committee |
J.D., Yale Law School B.A., Chinese Studies & Administrative Science, Yale University |
Non-executive Director Candidate Nominating Committee | United States of America | 1 year | ||||||
Jongsoo Han (New appointment) (10/16/1960) |
Professor, Ewha Womans University | Member, Korea Accounting Deliberating Council, Financial Services Commission Vice President, Korea Accounting Association Member, Korea Accounting Standards Board |
Ph.D. in Accounting, Joseph M. Katz Graduate School of Business, University of Pittsburgh M.B.A., Yonsei University B.A. in Business Administration, Yonsei University |
Non-executive Director Candidate Nominating Committee | Republic of Korea | 1 year |
Note: (1) All of the above nominees were recommended by two outside consulting firms. Two nominees (Jae Ha Park and Eunice Kyonghee Kim) were recommended by both the outside consulting firms and our shareholders through our shareholder recommendation system which allows shareholders to recommend potential candidates for non-executive directors.
(2) Pursuant to Article 18 of the Financial Corporate Governance Code, details regarding the recommendation of non-executive director candidates have been posted on our website as well as the Korea Federation of Bankss website.
(3) Michael Byungnam Lee was nominated through a shareholder proposal pursuant to Article 42 of the Financial Holding Companies Act.
Agendum 4. Appointment of members of the Audit Committee, who are non-executive directors
Nominees for Members of the Audit Committee Who Are Non-executive Directors(1)
Name (Date of Birth) |
Current Position |
Career |
Education |
Nationality |
Term of | |||||
Young Hwi Choi (New appointment) (10/28/1945) |
- | President & CEO, Shinhan Financial Group Co., Ltd. Deputy President, Shinhan Bank Deputy Director, Ministry of Finance Manager, The Bank of Korea |
B.A. in Economics, Sungkyunkwan University |
Republic of Korea | 1 year | |||||
Woon Youl Choi (New appointment) (4/2/1950) |
Professor, Sogang University | Vice President, Sogang University Member, Korea Monetary Board President, Korea Money & Finance Association President, Korean Securities Association Commissioner, Korea Stock Exchange |
Ph.D. in Finance, University of Georgia M.B.A., University of Georgia B.A. in Business Administration, Seoul National University |
Republic of Korea | 1 year | |||||
Eunice Kyonghee Kim (New appointment) (03/29/1959) |
Professor, Ewha Law School | Deputy CEO, Chief Compliance Officer, Hana Financial Group Inc. Managing Director & Chief Compliance Officer, Citibank Japan Inc. Executive Vice President & Chief Legal Officer, Citibank Korea Inc. Vice-Chairperson, International Association of Korean Lawyers Member, Financial Development Committee Member, Korea Prosecution Future Development Committee |
J.D., Yale Law School B.A., Chinese Studies & Administrative Science, Yale University |
United States of America | 1 year | |||||
Jongsoo Han (New appointment) (10/16/1960) |
Professor, Ewha Womans University | Member, Korea Accounting Deliberating Council, Financial Services Commission Vice President, Korea Accounting Association Member, Korea Accounting Standards Board |
Ph.D. in Accounting, Joseph M. Katz Graduate School of Business, University of Pittsburgh M.B.A., Yonsei University B.A. in Business Administration, Yonsei University |
Republic of Korea | 1 year |
Note: (1) None of the nominees has (i) engaged in any transaction with KB Financial Group Inc. in the past three years or (ii) any relationship with the largest shareholder of KB Financial Group Inc.
Agendum 5. Approval of the aggregate remuneration limit for directors
For fiscal year 2013 |
For fiscal year 2014 | |||
No. of Directors (No. of Non-executive Directors) |
10 (9) |
9 (7) | ||
Aggregate Remuneration Limit | Won 2.5 billion will be proposed as the maximum amount of aggregate remuneration that may be disbursed to the directors of KB Financial Group Inc. for fiscal year 2014. The board of directors will approve and ratify the payment allocation. Additionally, 100,000 treasury shares (or the equivalent monetary value) will be proposed as the maximum aggregate amount of shares that may be disbursed from July 13, 2013 to July 12, 2016 to the directors of KB Financial Group Inc. as long-term incentives over the term of their office. The board of directors will approve and ratify the standard and method of allocation and disbursements thereof. | Won 2.5 billion will be proposed as the maximum amount of aggregate remuneration that may be disbursed to the directors of KB Financial Group Inc. for fiscal year 2015. The board of directors will approve and ratify the payment allocation. Additionally, 100,000 treasury shares (or the equivalent monetary value) will be proposed as the maximum aggregate amount of shares that may be disbursed from November 21, 2014 to November 20, 2017 to the directors of KB Financial Group Inc. as long-term incentives over the term of their office. The board of directors will approve and ratify the standard and method of allocation and disbursements thereof. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
KB Financial Group Inc. | ||||||
(Registrant) | ||||||
Date: March 12, 2015 |
By: /s/ Jong-Hee Yang | |||||
(Signature) | ||||||
Name: | Jong-Hee Yang | |||||
Title: | Deputy President |
Exhibit 99.1
KB Financial Group Inc.
Separate Statements of Financial Position
December 31, 2014 and 2013
(In millions of Korean won) | Notes | 2014 | 2013 | |||||||
Assets |
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Cash and due from financial institutions |
4,5,6,25 | ₩ | 30,739 | ₩ | 77,298 | |||||
Loans |
4,5,7 | 10,000 | 10,000 | |||||||
Investments in subsidiaries |
8 | 18,557,566 | 18,292,443 | |||||||
Property and equipment |
9 | 514 | 642 | |||||||
Intangible assets |
10 | 8,684 | 10,133 | |||||||
Deferred income tax assets |
11,23 | 4,089 | 4,203 | |||||||
Other assets |
4,5,12 | 598,929 | 269,823 | |||||||
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Total assets |
₩ | 19,210,521 | ₩ | 18,664,542 | ||||||
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Liabilities |
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Debentures |
4,5,13 | 628,837 | 349,157 | |||||||
Net defined benefit liabilities |
14 | 803 | 1,433 | |||||||
Current income tax liabilities |
23 | 222,639 | 209,928 | |||||||
Other liabilities |
4,5,15 | 71,568 | 55,602 | |||||||
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Total liabilities |
923,847 | 616,120 | ||||||||
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Equity |
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Share capital |
16 | 1,931,758 | 1,931,758 | |||||||
Capital surplus |
16 | 13,513,809 | 13,513,809 | |||||||
Accumulated other comprehensive loss |
16 | (4,238 | ) | (2,715 | ) | |||||
Retained earnings |
16 | 2,845,345 | 2,605,570 | |||||||
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Total equity |
18,286,674 | 18,048,422 | ||||||||
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Total liabilities and equity |
₩ | 19,210,521 | ₩ | 18,664,542 | ||||||
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The accompanying notes are an integral part of these separate financial statements.
1
KB Financial Group Inc.
Separate Statements of Comprehensive Income
Years Ended December 31, 2014 and 2013
(In millions of Korean won, except per share amounts) | Notes | 2014 | 2013 | |||||||
Interest income |
₩ | 2,391 | ₩ | 3,859 | ||||||
Interest expense |
(19,149 | ) | (5,227 | ) | ||||||
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Net interest income |
18 | (16,758 | ) | (1,368 | ) | |||||
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Fee and commission income |
| | ||||||||
Fee and commission expense |
(6,658 | ) | (6,270 | ) | ||||||
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Net fee and commission income |
19 | (6,658 | ) | (6,270 | ) | |||||
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Net other operating income |
20 | 493,782 | 245,044 | |||||||
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General and administrative expenses |
21 | (36,342 | ) | (40,657 | ) | |||||
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Operating profit before provision for credit losses |
434,024 | 196,749 | ||||||||
Provision for credit losses |
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Operating profit |
434,024 | 196,749 | ||||||||
Net non-operating income (expenses) |
22 | (473 | ) | (1,346 | ) | |||||
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Profit before income tax |
433,551 | 195,403 | ||||||||
Income tax benefit (expense) |
23 | (600 | ) | 423 | ||||||
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Profit for the year |
432,951 | 195,826 | ||||||||
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Remeasurements of net defined benefit liabilities |
(1,523 | ) | 65 | |||||||
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Items that will not be reclassified to profit or loss |
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Other comprehensive income (loss) for the year, net of tax |
(1,523 | ) | 65 | |||||||
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Total comprehensive income for the year |
₩ | 431,428 | ₩ | 195,891 | ||||||
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Earnings per share |
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Basic earnings per share |
24 | ₩ | 1,121 | ₩ | 507 | |||||
Diluted earnings per share |
24 | 1,116 | 505 |
The accompanying notes are an integral part of these separate financial statements.
2
KB Financial Group Inc.
Separate Statements of Changes in Equity
Years Ended December 31, 2014 and 2013
(In millions of Korean won) | Share Capital |
Capital Surplus |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total Equity | |||||||||||||||
Balance at January 1, 2013 |
₩ | 1,931,758 | ₩ | 13,513,809 | ₩ | (2,780 | ) | ₩ | 2,641,555 | ₩ | 18,084,342 | |||||||||
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Comprehensive income |
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Profit for the year |
| | | 195,826 | 195,826 | |||||||||||||||
Remeasurements of net defined benefit liabilities |
| | 65 | | 65 | |||||||||||||||
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Total comprehensive income |
| | 65 | 195,826 | 195,891 | |||||||||||||||
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Transactions with shareholders |
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Dividends |
| | | (231,811 | ) | (231,811 | ) | |||||||||||||
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Total transactions with shareholders |
| | | (231,811 | ) | (231,811 | ) | |||||||||||||
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Balance at December 31, 2013 |
₩ | 1,931,758 | ₩ | 13,513,809 | ₩ | (2,715 | ) | ₩ | 2,605,570 | ₩ | 18,048,422 | |||||||||
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Balance at January 1, 2014 |
₩ | 1,931,758 | ₩ | 13,513,809 | ₩ | (2,715 | ) | ₩ | 2,605,570 | ₩ | 18,048,422 | |||||||||
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Comprehensive income |
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Profit for the year |
| | | 432,951 | 432,951 | |||||||||||||||
Remeasurements of net defined benefit liabilities |
| | (1,523 | ) | | (1,523 | ) | |||||||||||||
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Total comprehensive income |
| | (1,523 | ) | 432,951 | 431,428 | ||||||||||||||
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Transactions with shareholders |
||||||||||||||||||||
Dividends |
| | | (193,176 | ) | (193,176 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total transactions with shareholders |
| | | (193,176 | ) | (193,176 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at December 31, 2014 |
₩ | 1,931,758 | ₩ | 13,513,809 | ₩ | (4,238 | ) | ₩ | 2,845,345 | ₩ | 18,286,674 | |||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these separate financial statements.
3
KB Financial Group Inc.
Separate Statements of Cash Flows
Years Ended December 31, 2014 and 2013
(In millions of Korean won) | Note | 2014 | 2013 | |||||||
Cash flows from operating activities |
||||||||||
Profit for the year |
₩ | 432,951 | ₩ | 195,826 | ||||||
|
|
|
|
|||||||
Adjustment for non-cash items |
||||||||||
Depreciation and amortization |
931 | 816 | ||||||||
Share-based payments |
801 | 950 | ||||||||
Net interest income |
(201 | ) | (564 | ) | ||||||
Impairment losses on investments in subsidiaries |
14,747 | 36,995 | ||||||||
Net other expense |
2,704 | 2,805 | ||||||||
|
|
|
|
|||||||
18,982 | 41,002 | |||||||||
|
|
|
|
|||||||
Changes in operating assets and Liabilities |
||||||||||
Deferred income tax assets |
114 | (403 | ) | |||||||
Other assets |
(299,688 | ) | 9 | |||||||
Other liabilities |
(5,962 | ) | (336 | ) | ||||||
|
|
|
|
|||||||
(305,536 | ) | (730 | ) | |||||||
|
|
|
|
|||||||
Net cash generated from operating activities |
146,397 | 236,098 | ||||||||
|
|
|
|
|||||||
Cash flows from investing activities |
||||||||||
Acquisition of investments in subsidiaries |
(279,870 | ) | (384,590 | ) | ||||||
Collection of loans |
| 15,000 | ||||||||
Acquisition of property and equipment |
(225 | ) | (627 | ) | ||||||
Acquisition of intangible assets |
(165 | ) | (2,656 | ) | ||||||
Disposal of intangible assets |
939 | 757 | ||||||||
Net decrease (increase) in guarantee deposits paid |
282 | (182 | ) | |||||||
Others |
(81 | ) | (2 | ) | ||||||
|
|
|
|
|||||||
Net cash used in investing activities |
(279,120 | ) | (372,300 | ) | ||||||
|
|
|
|
|||||||
Cash flows from financing activities |
||||||||||
Increase in debts |
| 315,000 | ||||||||
Decrease in debts |
| (315,000 | ) | |||||||
Increase in debentures |
279,340 | 349,077 | ||||||||
Distribution of dividends |
(193,176 | ) | (231,811 | ) | ||||||
|
|
|
|
|||||||
Net cash provided by financing activities |
86,164 | 117,266 | ||||||||
|
|
|
|
|||||||
Net decrease in cash and cash equivalents |
(46,559 | ) | (18,936 | ) | ||||||
Cash and cash equivalents at the beginning of the year |
25 | 77,295 | 96,231 | |||||||
|
|
|
|
|||||||
Cash and cash equivalents at the end of the year |
25 | ₩ | 30,736 | ₩ | 77,295 | |||||
|
|
|
|
The accompanying notes are an integral part of these separate financial statements.
4
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
1. The Company
KB Financial Group Inc. (the Company), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfers with the former shareholders of Kookmin Bank, KB Investment & Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd. in order to provide management services and financing to associated companies. The headquarters are located at 84, Namdaemunro, Jung-gu, Seoul. The Companys paid-in capital as of December 31, 2014, is ₩1,931,758 million. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Company established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013 and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In addition, the Company acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. in March 2014.
The Company is authorized to issue up to 1 billion shares. The Company has been listed on the Korea Exchange (KRX) since October 10, 2008, and on the New York Stock Exchange (NYSE) for its American Depositary Shares (ADS) since September 29, 2008. Number of shares authorized on its Articles of Incorporation is 1,000 million.
2. Basis of Preparation
2.1 Application of K-IFRS
The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with the International Financial Reporting Standards as adopted by the Republic of Korea (K-IFRS). The accompanying separate financial statements have been condensed, restructured and translated into English from the Korean language financial statements.
Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Companys financial position, financial performance or cash flows, is not presented in the accompanying separate financial statements.
Korean IFRS (K-IFRS) are the standards, amendments and related interpretations issued by the International Accounting Standards Board (IASB) that have been adopted by the Republic of Korea.
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the Companys accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate financial statements are disclosed in Note 2.4.
5
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The separate financial statements have been prepared in accordance with K-IFRS 1027, Separate Financial Statements.
The separate financial statements have been prepared in accordance with K-IFRS, which is effective as of December 31, 2014.
New standards, amendments and interpretations adopted by the Company for the financial year beginning on January 1, 2014, are as follows:
Amendment to K-IFRS 1032, Financial Instruments: Presentation
According to amendment to K-IFRS 1032, Financial Instruments: Presentation, it provides that the right to offset must not be contingent on a future event and must be legally enforceable in all of circumstances; and if an entity can settle amounts in a manner such that outcome is, in effect, equivalent to net settlement, the entity will meet the net settlement criterion. There is no material impact of the amendment on separate financial statements of the Company.
Amendment to K-IFRS 1039, Financial Instruments: Recognition and Measurement
Amendment to K-IFRS 1039, Financial Instruments: Recognition and Measurement, allows the continuation of hedge accounting for a derivative that has been designated as a hedging instrument in a circumstance in which that derivative is novated to a central counterparty (CCP) as a consequence of laws or regulations. There is no material impact of the amendment on separate financial statements of the Company.
Amendment to K-IFRS 1102, Share-based payment
K-IFRS 1102, Share-based payment, clarifies the definition of vesting conditions such as performance condition, service condition and others. This amendment is applied to share-based payment transactions for which the grant date is on or after July 1, 2014. The application of this amendment does not have a material impact on the separate financial statements of the Company.
Enactment of K-IFRS 2121, Levies
K-IFRS 2121, Levies, is applied to a liability to pay a levy imposed by a government in accordance with the legislation. The interpretation requires that the liability to pay a levy is recognized when the activity that triggers the payment of the levy occurs, as identified by the legislation (the obligating event). There is no material impact of the enactment on separate financial statements of the Company.
6
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
New standards, amendments and interpretations issued but not effective for the year beginning January 1, 2014, and not early adopted by the Company are as follows: Amendment to K-IFRS 1027, Separate Financial Statements
Amendment to K-IFRS 1027, Separate Financial Statements, requires that the accounting for investments in subsidiaries, jointly controlled entities and associates be accounted for under one of the following methods by each category: at cost, in accordance with K-IFRS 1039, or the equity method in K-IFRS 1028. This amendment is effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. The Company is assessing the impact of application of this amendment on its separate financial statements.
2.2 Measurement basis
The separate financial statements have been prepared under the historical cost convention unless otherwise specified.
2.3 Functional and presentation currency
Items included in the separate financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the functional currency). The separate financial statements are presented in Korean won, which is the Companys presentation currency.
2.4 Significant estimates
The preparation of the separate financial statements requires the application of accounting policies, certain critical accounting estimates and assumptions that may have a significant impact on assets(liabilities) and incomes(expenses). The managements estimate of outcome may differ from an actual outcome if the managements estimate and assumption based on its best judgment at the reporting date are different from an actual environment.
Estimates and assumptions are continually evaluated and any change in an accounting estimate is recognized prospectively by including it in profit or loss in the period of the change, if the change affects that period only. Alternatively if the change in accounting estimate affects both the period of change and future periods, that change is recognized in the profit or loss of all those periods.
Uncertainty in estimates and assumptions with significant risk that will result in material adjustment to the separate financial statements are as follows:
2.4.1 Deferred income taxes
The recognition of a deferred tax asset relies on an assessment of the probability and sufficiency of future taxable profits, future reversals of existing taxable temporary differences and ongoing tax planning strategies.
7
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
2.4.2 Net defined benefit liabilities
The present value of net defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions (Note 14).
3. Significant Accounting Policies
The significant accounting policies applied in the preparation of these separate financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated.
3.1 Cash and cash equivalents
Cash and cash equivalents include cash on hand, foreign currency, and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
3.2 Loans and receivables
Non-derivative financial assets which meet the following conditions are classified as loans and receivables:
| Those with fixed or determinable payments. |
| Those that are not quoted in an active market. |
| Those that the Company does not intend to sell immediately or in the near term. |
| Those that the Company, upon initial recognition, does not designate as available for sale or as at fair value through profit or loss. |
After initial recognition, these are subsequently measured at amortized cost using the effective interest method.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured and recognized in profit or loss as provision for credit losses.
Impairment loss on loans reduces the carrying amount of the asset through use of an allowances account, and when a loan becomes uncollectable, it is written off against the related allowances account. If, in a subsequent period, the amount of the impairment loss decreases and is objectively related to the subsequent event after recognition of impairment, the previously recognized impairment loss is reversed by adjusting an allowances account. The amount of the reversal is recognized in profit or loss.
3.3 Investments in subsidiaries
Investments in subsidiaries are accounted at cost method in accordance with K-IFRS 1027. The Company determines at each reporting date whether there is any objective evidence that the investments in the subsidiaries are impaired. If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the subsidiaries and its carrying value.
8
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
3.4 Property and equipment
Recognition and Measurement
All property and equipment that qualify for recognition as an asset is measured at its cost and subsequently carried at its cost less any accumulated depreciation and any accumulated impairment losses.
The cost of property and equipment includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent expenditures are capitalized only when they prolong the useful life or enhance values of the assets but the costs of the day-to-day servicing of the assets such as repair and maintenance costs are recognized in profit or loss as incurred. When part of an item of an asset has a useful life different from that of the entire asset, it is recognized as a separate asset.
Depreciation
Land is not depreciated, whereas other property and equipment are depreciated using the method that reflects the pattern in which the assets future economic benefits are expected to be consumed by the Company. The depreciable amount of an asset is determined after deducting its residual value.
Each part of an item of property and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.
The depreciation method and estimated useful lives of the assets are as follows:
Property and equipment | Depreciation method | Estimated useful lives | ||
Leasehold improvements | Declining-balance | 4 years | ||
Equipment and vehicles | Declining-balance | 4 years |
The residual value, the useful life and the depreciation method applied to an asset are reviewed at least at each financial year-end and, if expectations differ from previous estimates or if there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the changes are accounted for as a change in an accounting estimate.
9
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
3.5 Intangible assets
Intangible assets are measured initially at cost and subsequently carried at their cost less any accumulated amortization and any accumulated impairment losses.
Intangible assets, except for membership right, are amortized using the straight-line method with no residual value over their estimated useful economic life since the asset is available for use.
Intangible assets | Amortization method | Estimated useful lives | ||
Software | Straight-line | 4 years | ||
Others | Straight-line | 4 years |
The amortization period and the amortization method for intangible assets with a finite useful life are reviewed at least at each financial year end. Where an intangible asset is not being amortized because its useful life is considered to be indefinite, the Company carries out a review in each accounting period to confirm whether or not events and circumstances still support the assumption of an indefinite useful life. If they do not, the change from the indefinite to finite useful life is accounted for as a change in an accounting estimate.
3.6 Impairment of non-financial assets
The Company assesses at the end of each reporting period whether there is any indication that a non-financial asset except for (i) deferred income tax assets, (ii) assets arising from employee benefits and (iii) non-current assets (or group of assets to be sold) classified as held for sale, may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset.
The recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Company determines the recoverable amount of the cash-generating unit to which the asset belongs (the assets cash-generating unit). A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit that are discounted by a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.
If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss and recognized immediately in profit or loss.
10
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
3.7 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of provisions, and where the effect of the time value of money is material, the amount of provisions are the present value of the expenditures expected to be required to settle the obligation.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provisions are reversed.
3.8 Equity instrument issued by the company
An equity instrument is any contract or agreement that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are deducted, net of tax, from the equity.
3.9 Revenue recognition
Revenue shall be recognized when all the following conditions have been satisfied:
a) | The amount of revenue can be measured reliably. |
b) | It is probable that the economic benefits associated with the transaction will flow to the company. |
c) | Specific conditions are satisfied for activities. |
Interest income and expense
Interest income and expense are recognized using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability (or groups of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument or, where appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Company estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses.
11
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Interest on impaired financial assets is recognized using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
Fee and commission income
Fee and commission income is recognized on an accrual basis in accordance with the substance of transaction.
Dividend income
Dividend income is recognized when the shareholders right to receive payment is established.
3.10 Employee compensation and benefits
Post-employment benefit: Defined benefit plans
All post-employment benefit, other than defined contribution plans, is classified as defined benefit plans. The amount recognized as a defined benefit liability is the present value of the defined benefit obligation less the fair value of plan assets at the end of the reporting period.
The present value of the defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit method. The rate used to discount post-employment benefit obligations is determined by reference to market yields at the end of the reporting period on high quality corporate bonds. The currency and term of the corporate bonds are consistent with the currency and estimated term of the post-employment benefit obligations. Actuarial gains and losses including experience adjustments and the effects of changes in actuarial assumptions are recognized in other comprehensive income.
When the fair value of plan assets deducted from the total of the present value of the defined benefit obligation results in an asset, it is recognized to the extent of any cumulative unrecognized past service cost and the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.
Past service cost arises when the Company introduces a defined benefit plan that attributes to past service or changes the benefits payable for past service under an existing defined benefit plan. Such past service cost is recognized immediately in profit or loss.
Short-term employee benefits
Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within 12 months after the end of the period in which the employees render the related service. The undiscounted amount of short-term employee benefits expected to be paid in exchange for that service is recognized as a liability (accrued expense), after deducting any amount already paid.
12
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The expected cost of profit-sharing and bonus payments are recognized as liabilities when the Company has a present legal or constructive obligation to make such payments as a result of past events rendered by employees and a reliable estimate of the obligation can be made.
Share-based payment
The Company operates share-based payment arrangements granting awards to directors and employees of the Company. The Company has a choice of whether to settle the awards in cash or by issuing equity instruments for a share-based payment transaction at the date of settlement.
For a share-based payment transaction in which the terms of the arrangement provide the Company with the choice of whether to settle in cash or by issuing equity instruments, the Company determined that it has a present obligation to settle in cash because the Company has a past practice and a stated policy of settling in cash. Therefore, the Company accounts for the transaction in accordance with the requirements of cash-settled share-based payment transactions.
The Company measures the services acquired and the liability incurred at fair value. Until the liability is settled, the Company remeasures the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss for the year.
Termination benefits
Termination benefits are employee benefits provided in exchange for the termination of an employees employment as a result of either (a) the Company decision to terminate an employees employment before the normal retirement date; or (b) an employees decision to accept an offer of benefits in exchange for the termination of employment. The Company recognizes liabilities and expenses for termination benefits at the earlier of the following dates: when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring that is within the scope of K-IFRS 1037 and involves the payment of termination benefits. Termination benefits are measured by considering the number of employees expected to accept the offer in the case of a voluntary early retirement. Termination benefits which are not expressed to be settled wholly before 12 months after the end of the reporting period are discounted to present values.
3.11 Income tax expenses
Income tax expense (tax benefit) comprises current tax expense (current tax benefit) and deferred income tax expense (deferred income tax benefit). Current and deferred income tax are recognized as income or expense and included in profit or loss for the year, except to the extent that the tax arises from (a) a transaction or event which is recognized either in other comprehensive income or directly in equity and (b) a business combination.
13
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Current income tax
Current income tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period. A difference between the taxable profit and accounting profit may arise when income or expense is included in accounting profit in one period but is included in taxable profit in a different period. Differences may also arise if there is revenue that is exempt from taxation or expenses that is not deductible in determining taxable profit (tax loss). Current income tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The Company offsets current income tax assets and current income tax liabilities if, and only if, the Company (a) has a legally enforceable right to offset the recognized amounts and (b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred income tax
Deferred income tax is recognized, using the asset-liability method, on temporary differences arising between the tax based amount of assets and liabilities and their carrying amount in the financial statements. Deferred income tax liabilities are recognized for all taxable temporary differences and deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
The carrying amount of a deferred income tax asset is reviewed at the end of each reporting period. The Company reduces the carrying amount of a deferred income tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to be applied to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred income tax liabilities and deferred income tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
The Company offsets deferred income tax assets and deferred income tax liabilities when the Company has a legally enforceable right to offset current income tax assets against current income tax liabilities; and the deferred income tax assets and the deferred income tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity; or different taxable entities which intend either to settle current income tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred income tax liabilities or assets are expected to be settled or recovered.
14
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Uncertain tax positions
Uncertain tax positions arise from a claim for rectification brought by the Company, an appeal for a refund of tax levied by the tax authorities, or others due to different interpretation of tax laws or others. The Company recognizes its uncertain tax positions in the separate financial statements based on the guidance in K-IFRS 1012. The income tax asset is recognized if a tax refund is probable for taxes paid and levied by the tax authority. However, additional tax and additional dues on tax refund are recognized in accordance with K-IFRS 1037.
3.12 Earnings per share
The Company calculates basic earnings per share amounts and diluted earnings per share amounts for profit or loss attributable to ordinary equity holders and presents them in the statement of comprehensive income. Basic earnings per share is calculated by dividing profit or loss attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period. For the purpose of calculating diluted earnings per share, the Company adjusts profit or loss attributable to ordinary equity holders and the weighted average number of shares outstanding for the effects of all dilutive potential ordinary shares including convertible bond and share option.
3.13 Operating segments
The Company is composed of a single operating segment. Therefore, disclosures on segments are omitted in accordance with K-IFRS 1108, Operating Segments.
4. Financial Risk Management
4.1 Summary
4.1.1 Overview of Financial Risk Management Policy
The financial risks that the Company is exposed to are credit risk, market risk, liquidity risk and others.
15
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The note regarding financial risk management provides information about the risks that the Company is exposed to, including the objectives, policies and processes for managing the risks, and the methods used to measure the risks and capital adequacy. Additional quantitative information is disclosed throughout the separate financial statements.
The Companys risk management system focuses on increasing transparency, developing the risk management environment, and the preemptive response to risk due to rapid changes in the financial environment to support the Companys long-term strategy and business decisions efficiently. Credit risk, market risk and liquidity risk have been recognized as the Companys key risks. These risks are measured in Economic Capital or VaR (Value at Risk) and are managed using a statistical method.
4.1.2 Risk Management Organization
Risk Management Committee
The Risk Management Committee establishes risk management strategies in accordance with the directives of the Board of Directors and determines the Companys target risk appetite, approves significant risk matters and reviews the level of risks that the Company is exposed to and the appropriateness of the Companys risk management operations as an ultimate decision-making authority.
Risk Management Council
The Risk Management Council reviews and makes decisions on matters delegated by the Risk Management Committee and discusses the detailed issues relating to the Companys risk management.
Risk Management Department
The Risk Management Department is responsible for managing work processes, procedures and detailed policies.
4.2 Credit risk
4.2.1 Overview of Credit Risk
Credit risk is the risk of possible losses in an asset portfolio in the events of counterpartys default, breach of contract and deterioration in the credit quality of the counterparty. For risk management reporting purposes, the individual borrowers default risk is considered.
4.2.2 Credit Risk Management
The Company measures expected losses on assets that are subject to credit risk management and uses it as a management indicator.
16
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
4.2.3 Maximum Exposure to Credit Risk
The Companys maximum exposures of financial instruments to credit risk without consideration of collateral values as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Due from financial institutions |
₩ | 30,739 | ₩ | 77,298 | ||||
Loans |
10,000 | 10,000 | ||||||
Other financial assets |
319,973 | 20,435 | ||||||
|
|
|
|
|||||
₩ | 360,712 | ₩ | 107,733 | |||||
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|
|
4.2.4 Credit Risk of Loans
The Company maintains an allowance for loan losses associated with credit risk on loans to manage its credit risk.
The Company recognizes an impairment loss on loans carried at amortized cost when there is any objective indication of impairment. Under K-IFRS, an impairment loss is based on losses incurred at the end of the reporting period. Therefore, the Company does not recognize losses expected as a result of future events. The Company measures inherent incurred losses on loans and presents them in the financial statements through the use of an allowance account which is offset against the related loans.
Loans are classified as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||||||||
Corporate loans |
Percentage (%) |
Corporate loans |
Percentage (%) |
|||||||||||||
Loan before allowances |
||||||||||||||||
Neither past due nor impaired |
₩ | 10,000 | 100.00 | ₩ | 10,000 | 100.00 | ||||||||||
Past due but not impaired |
| | | | ||||||||||||
Impaired |
| | | | ||||||||||||
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|
|||||||||
10,000 | 100.00 | 10,000 | 100.00 | |||||||||||||
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Allowances |
| | | | ||||||||||||
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Carrying amount |
₩ | 10,000 | 100.00 | ₩ | 10,000 | 100.00 | ||||||||||
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|
Credit quality of loans that are neither past due nor impaired:
(In millions of Korean won) | 2014 | 2013 | ||||||
Grade 1 |
₩ | 10,000 | ₩ | 10,000 | ||||
Grade 2 |
| | ||||||
Grade 3 |
| | ||||||
Grade 4 |
| | ||||||
Grade 5 |
| | ||||||
|
|
|
|
|||||
₩ | 10,000 | ₩ | 10,000 | |||||
|
|
|
|
17
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Credit quality of loans is classified as follows, according to the probability of default:
Range of PD(%) (Probability of Default) | ||
Grade 1 |
0.0 ~ 1.0 | |
Grade 2 |
1.0 ~ 5.0 | |
Grade 3 |
5.0 ~ 15.0 | |
Grade 4 |
15.0 ~ 30.0 | |
Grade 5 |
30.0 ~ |
4.2.5 Credit Risk Concentration Analysis
The details of Companys loans by country, as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Corporate loans | % | Allowances | Carrying amount | |||||||||||||
Korea |
₩ | 10,000 | 100.00 | ₩ | | ₩ | 10,000 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 10,000 | 100.00 | ₩ | | ₩ | 10,000 | ||||||||||
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||
Corporate loans | % | Allowances | Carrying amount | |||||||||||||
Korea |
₩ | 10,000 | 100.00 | ₩ | | ₩ | 10,000 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 10,000 | 100.00 | ₩ | | ₩ | 10,000 | ||||||||||
|
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|
|
The details of the Companys corporate loans by industry as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Loans | % | Allowances | Carrying amount | |||||||||||||
Financial institutions |
₩ | 10,000 | 100.00 | ₩ | | ₩ | 10,000 | |||||||||
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|||||||||
₩ | 10,000 | 100.00 | ₩ | | ₩ | 10,000 | ||||||||||
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|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||
Loans | % | Allowances | Carrying amount | |||||||||||||
Financial institutions |
₩ | 10,000 | 100.00 | ₩ | | ₩ | 10,000 | |||||||||
|
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|
|
|
|
|
|
|||||||||
₩ | 10,000 | 100.00 | ₩ | | ₩ | 10,000 | ||||||||||
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|
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18
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
4.3 Liquidity risk
4.3.1 Overview of Liquidity Risk
Liquidity risk is the risk of insolvency or loss due to a disparity between the inflow and outflow of funds, unexpected outflow of funds, and obtaining funds at a high price or disposing of assets at an unfavorable price due to lack of available funds. The Company manages its liquidity risk through analysis of the contractual maturity of all financial assets and liabilities. The Company discloses them by maturity group: On demand, up to one month, between over one month and three months, between over three months and 12 months, between over one year and five years, and over five years.
Cash flows disclosed for the maturity analysis are undiscounted contractual principal and interest to be received (paid) and, thus, differs from the amount in the financial statements which are based on the present value of expected cash flows in some cases. The amount of interest to be received on assets or paid on liabilities calculated using a floating interest rate, is measured on the assumption that the current interest rate would be the same through maturity.
4.3.2. Liquidity Risk Management
The liquidity risk is managed by liquidity management principles and related guideline which are applied to the risk management policies and procedures that address all the possible risks that arise from the overall business of the Company.
4.3.3. Analysis of Remaining Contractual Maturity of Financial Assets and Liabilities
The remaining contractual maturity of financial assets and liabilities as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
On demand |
Less than 1 month |
1-3 months |
3-12 months |
1-5 years |
Over 5 years |
Total | ||||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions1 |
₩ | 30,771 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 30,771 | ||||||||||||||
Loans |
| 26 | 51 | 10,077 | | | 10,154 | |||||||||||||||||||||
Other financial assets |
| 28 | 300,012 | 20,258 | | | 320,298 | |||||||||||||||||||||
|
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|
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|
|
|
|||||||||||||||
₩ | 30,771 | ₩ | 54 | ₩ | 300,063 | ₩ | 30,335 | ₩ | | ₩ | | ₩ | 361,223 | |||||||||||||||
|
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|
|
|
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Debentures |
₩ | | ₩ | | ₩ | 5,175 | ₩ | 15,525 | ₩ | 557,408 | ₩ | 124,104 | ₩ | 702,212 | ||||||||||||||
Other financial liabilities |
| 1,119 | | | | | 1,119 | |||||||||||||||||||||
|
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|||||||||||||||
₩ | | ₩ | 1,119 | ₩ | 5,175 | ₩ | 15,525 | ₩ | 557,408 | ₩ | 124,104 | ₩ | 703,331 | |||||||||||||||
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19
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | ||||||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||
On demand |
Less than 1 month |
1-3 months |
3-12 months |
1-5 years |
Over 5 years |
Total | ||||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions1 |
₩ | 27,332 | ₩ | 50,340 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 77,672 | ||||||||||||||
Loans |
| 34 | 67 | 10,101 | | | 10,202 | |||||||||||||||||||||
Other financial assets |
| 35 | | 20,540 | | | 20,575 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 27,332 | ₩ | 50,409 | ₩ | 67 | ₩ | 30,641 | ₩ | | ₩ | | ₩ | 108,449 | |||||||||||||||
|
|
|
|
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|
|
|
|
|
|
|
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Debentures |
₩ | | ₩ | | ₩ | 2,941 | ₩ | 8,822 | ₩ | 315,330 | ₩ | 74,471 | ₩ | 401,564 | ||||||||||||||
Other financial liabilities |
| 840 | 1,579 | 1,156 | | | 3,575 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | | ₩ | 840 | ₩ | 4,520 | ₩ | 9,978 | ₩ | 315,330 | ₩ | 74,471 | ₩ | 405,139 | |||||||||||||||
|
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|
1 | The amount of ₩3 million, representing the restricted amount due from the financial institutions as of December 31, 2014 and 2013, is excluded. |
4.4 Market Risk
4.4.1 Concept
Market risk is the risk of possible losses which arise from changes in market factors, such as interest rate, stock price, foreign exchange rate and other market factors that affect the fair value or future cash flows of financial instruments. The most significant risks are interest rate risks.
4.4.2 Interest Rate Risk
Definition of interest rate risk
Interest rate risk is the risk that the fair value or future cash flows arising from interest income and interest cost will fluctuate because of changes in interest.
Observation method on interest rate risk
The main objective of interest rate risk management is to protect asset values against interest rate fluctuations. The Company manages the risk through interest rate gap analysis on interest rate maturities between interest-bearing assets and interest-bearing liabilities, and measurement and management of interest rate VaR.
20
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Disclosure of results from each observation method
i. Interest rate gap analysis
Interest rate gap analysis is based on interest rates repricing maturities of interest-bearing assets and interest-bearing liabilities. It measures expected changes in net interest income by calculating the difference in the amounts of interest-bearing assets and interest-bearing liabilities at each maturity. The Company conducts interest rate gap analysis on assets denominated in Korean won and foreign currency on a monthly basis. However, where there is no maturity of a particular instrument, then a maturity date is set according to liquidity risk management guideline.
The results of the interest rate gap analysis as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Less than 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets |
||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | 30,736 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 30,736 | ||||||||||||
Loans |
10,000 | | | | | 10,000 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
40,736 | | | | | 40,736 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Interest-bearing liabilities |
||||||||||||||||||||||||
Debentures |
| | | 300,000 | 330,000 | 630,000 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 40,736 | ₩ | | ₩ | | ₩ | (300,000 | ) | ₩ | (330,000 | ) | ₩ | (589,264 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
40,736 | 40,736 | 40,736 | (259,264 | ) | (589,264 | ) | |||||||||||||||||
Percentage (%) |
100.00 | 100.00 | 100.00 | (636.44 | ) | (1,446.53 | ) |
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Less than 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets |
||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | 77,295 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 77,295 | ||||||||||||
Loans |
10,000 | | | | | 10,000 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
87,295 | | | | | 87,295 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Interest-bearing liabilities |
||||||||||||||||||||||||
Debentures |
| | | 150,000 | 200,000 | 350,000 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 87,295 | ₩ | | ₩ | | ₩ | (150,000 | ) | ₩ | (200,000 | ) | ₩ | (262,705 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
87,295 | 87,295 | 87,295 | (62,705 | ) | (262,705 | ) | |||||||||||||||||
Percentage (%) |
100.00 | 100.00 | 100.00 | (71.83 | ) | (300.94 | ) |
21
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
ii. Interest Rate VaR
Interest rate VaR is the maximum possible loss due to interest rate risk at a 99.94% confidence level. The measurement results of risk as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Interest rate VaR |
₩ | 16,819 | ₩ | 15,011 |
4.5. Capital adequacy
The Company complies with the capital adequacy standard established by the Financial Services Commission. The capital adequacy standard is based on Basel III published by Basel Committee on Banking Supervision in Bank for International Settlements in June 2011, and was implemented in Korea in December 2013. The Group is required to maintain a minimum Common Equity Tier 1 ratio of at least 4.0%(3.5%), a minimum Tier 1 ratio of 5.5%(4.5%) and a minimum Total Regulatory Capital of 8.0%(8.0%) as of December 31,2014 and 2013.
The Groups equity capital is classified into three categories in accordance with the Supervisory Regulations and Detailed Supervisory Regulations on Financial Holding Companies:
| Common Equity Tier 1 Capital: Common equity Tier 1 Capital represents the issued capital that takes the first and proportionately greatest share of any losses and represents the most subordinated claim in liquidation of the Group, and not repaid outside of liquidation. It includes common shares issued, capital surplus, retained earnings, non-controlling interests of consolidated subsidiaries, accumulated other comprehensive income, other capital surplus and others. |
| Additional Tier 1 Capital: Additional Tier 1 Capital includes (i) perpetual instruments issued by the Group that meet the criteria for inclusion in Additional Tier 1 capital, and (ii) stock surplus resulting from the issue of instruments included in Additional Tier 1 capital and others. |
| Tier 2 Capital: Tier 2 Capital represents the capital that takes the proportionate share of losses in the liquidation of the Group. Tier 2 Capital includes a fund raised by issuing subordinated debentures maturing in not less than 5 years that meet the criteria for inclusion in Additional Tier 2 capital, and the allowance for loan losses which are accumulated for assets classified as normal or precautionary as a result of classification of asset soundness in accordance with Regulation on Supervision of Financial Holding Companies and others. |
Risk weighted asset means the inherent risks in the total assets held by the Group. The Group calculates risk weighted asset by each risk (credit risk, market risk, and operational risk) based on the Supervisory Regulations and Detailed Supervisory Regulations on Financial Holding Companies and uses it for BIS ratio calculation.
22
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The Group assesses and monitors its adequacy of capital by using the internal assessment and management policy of the capital adequacy. The assessment of the capital adequacy is conducted by comparing available capital (actual amount of available capital) and economic capital (amount of capital enough to cover all significant risks under target credit rate set by the Group). The Group monitors the soundness of finance and provides risk adjusted basis for performance review using the assessment of the capital adequacy.
Economic Capital is the amount of capital to prevent the inability of payment due to unexpected loss in the future. The Group measures, allocates and monitors economic capital by risk type and subsidiaries.
The Risk Management Council of the Group determines the Groups risk appetite and allocates economic capital by risk type and subsidiary. Each subsidiary efficiently operates its capital within a range of allocated economic capital. The Risk Management Department of the Group monitors the limit on economic capital and reports the results to management and the Risk Management Council. The Group maintains the adequacy of capital through proactive review and approval of the Risk Management Committee when the economic capital is expected to exceed the limits due to new business or business expansion. The Group and its subsidiaries complied with external capital adequacy requirements as of December 31, 2014 and 2013. The Group complied with the capital adequacy standard as of December 31, 2014 and 2013.
The details of the Groups capital adequacy ratios based on Basel III, as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Equity Capital: |
₩ | 28,347,675 | ₩ | 27,296,535 | ||||
Tier 1 Capital |
24,248,598 | 22,693,836 | ||||||
Common Equity Tier 1 Capital |
24,062,475 | 22,693,836 | ||||||
Additional Tier 1 Capital |
186,123 | | ||||||
Tier 2 Capital |
4,099,077 | 4,602,699 | ||||||
Risk-weighted assets: |
182,485,957 | 177,514,060 | ||||||
Equity Capital (%): |
15.53 | 15.38 | ||||||
Tier 1 Capital (%) |
13.29 | 12.78 | ||||||
Common Equity Tier 1 Capital (%) |
13.19 | 12.78 |
23
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
5. Financial Assets and Financial Liabilities
Financial assets and liabilities are measured at fair value or amortized cost.
The carrying amounts and fair value of financial assets and liabilities by category as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||
Carrying amount | Fair value | |||||||
Financial assets |
||||||||
Loans and receivables |
||||||||
Cash and due from financial institutions |
₩ | 30,739 | ₩ | 30,739 | ||||
Loans |
10,000 | 10,000 | ||||||
Other financial assets |
319,973 | 319,973 | ||||||
|
|
|
|
|||||
₩ | 360,712 | ₩ | 360,712 | |||||
|
|
|
|
|||||
Financial liabilities |
||||||||
Financial liabilities at amortized cost |
||||||||
Debentures |
₩ | 628,837 | ₩ | 552,520 | ||||
Other financial liabilities |
3,041 | 3,041 | ||||||
|
|
|
|
|||||
₩ | 631,878 | ₩ | 555,561 | |||||
|
|
|
|
(In millions of Korean won) | 2013 | |||||||
Carrying amount | Fair value | |||||||
Financial assets |
||||||||
Loans and receivables |
||||||||
Cash and due from financial institutions |
₩ | 77,298 | ₩ | 77,298 | ||||
Loans |
10,000 | 10,000 | ||||||
Other financial assets |
20,435 | 20,435 | ||||||
|
|
|
|
|||||
₩ | 107,733 | ₩ | 107,733 | |||||
|
|
|
|
|||||
Financial liabilities |
||||||||
Financial liabilities at amortized cost |
||||||||
Debentures |
₩ | 349,157 | ₩ | 298,080 | ||||
Other financial liabilities |
3,576 | 3,576 | ||||||
|
|
|
|
|||||
₩ | 352,733 | ₩ | 301,656 | |||||
|
|
|
|
Fair value is the amount for which an asset could be exchanged, or a liability could be settled, between knowledgeable, willing parties in an arms length transaction. For each class of financial assets and financial liabilities, the Company discloses the fair value of that class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is quoted price in an active market.
24
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Methods of determining fair value of financial instruments are as follows:
Cash and due from financial institutions |
The carrying amounts of cash and demand due from financial institutions and payment due from financial institutions are a reasonable approximation of fair values. These financial instruments do not have a fixed maturity and are receivable on demand. Fair value of ordinary due from financial institutions is measured using a DCF model. | |
Loans |
DCF model is used to determine the fair value of loans. Fair value is determined by discounting the expected cash flow, which are contractual cash flows adjusted by prepayment rate, at appropriate discount rate. | |
Debentures |
Fair value is determined by using the valuations of independent third-party pricing services, which are calculated using market inputs. | |
Other financial assets and liabilities |
The carrying amounts are reasonable approximation of fair values. These financial instruments are temporary accounts used for other various transactions and their maturities are relatively short or not defined. |
Fair value hierarchy
The Company believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the statements of financial position are appropriate. However, the fair values of the financial instruments recognized in the statements of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.
The Company classifies and discloses fair value of the financial instruments into the following three-level hierarchy:
Level 1: The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: The fair values are based on unobservable inputs for the asset or liability.
25
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety shall be determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.
Fair value hierarchy of financial assets and liabilities whose fair values are disclosed
The fair value hierarchy of financial assets and liabilities whose fair values are disclosed as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Fair value hierarchy | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions1 |
₩ | | ₩ | 30,739 | ₩ | | ₩ | 30,739 | ||||||||
Loans3 |
| | 10,000 | 10,000 | ||||||||||||
Other financial assets |
| | 319,973 | 319,973 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | | ₩ | 30,739 | ₩ | 329,973 | ₩ | 360,712 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Debentures |
₩ | | ₩ | 552,520 | ₩ | | ₩ | 552,520 | ||||||||
Other financial liabilities |
| | 3,041 | 3,041 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | | ₩ | 552,520 | ₩ | 3,041 | ₩ | 555,561 | |||||||||
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||
Fair value hierarchy | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions1,2 |
₩ | | ₩ | 27,298 | ₩ | 50,000 | ₩ | 77,298 | ||||||||
Loans3 |
| | 10,000 | 10,000 | ||||||||||||
Other financial assets |
| | 20,435 | 20,435 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | | ₩ | 27,298 | ₩ | 80,435 | ₩ | 107,733 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Debentures |
₩ | | ₩ | 298,080 | ₩ | | ₩ | 298,080 | ||||||||
Other financial liabilities |
| | 3,576 | 3,576 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | | ₩ | 298,080 | ₩ | 3,576 | ₩ | 301,656 | |||||||||
|
|
|
|
|
|
|
|
1 | Because due from financial institutions classified as level 2 are deposits on demand, we regarded the carrying amount as representative of fair value. |
2 | Because due from financial institutions classified as level 3 are deposits with residual maturities of less than three months as of the reporting date, we regarded the carrying amount as representative of fair value. |
3 | Because loans classified as level 3 are loans with interest rate reset period of less than three months, we regarded the carrying amount as representative of fair value. |
26
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
6. Due From Financial Institution
The details of due from financial institution as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | Financial Institution |
Interest rate (%) (Dec. 31, 2014) |
2014 | 2013 | ||||||||||||||
Due from financial institution in Korean won |
Due from banking institution | Kookmin Bank | 0.00 ~ 1.90 | ₩ | 30,739 | ₩ | 77,298 |
The maturities of due from financial institution, excluding restricted due from financial institution, as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Less than 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Due from financial institution in Korean won |
₩ | 30,736 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 30,736 |
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Less than 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Due from financial institution in Korean won |
₩ | 77,295 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 77,295 |
Restricted due from financial institution as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | Financial Institution |
2014 | 2013 | Reason for restriction | ||||||||||
Due from financial institution in Korean won |
Kookmin Bank | ₩ | 3 | ₩ | 3 | Pledged as collateral for the overdraft facility | ||||||||
|
|
|
|
|||||||||||
₩ | 3 | ₩ | 3 | |||||||||||
|
|
|
|
27
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
7. Loans
Loans as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Loans |
₩ | 10,000 | ₩ | 10,000 | ||||
Allowances for loan losses |
| | ||||||
|
|
|
|
|||||
Carrying amount |
₩ | 10,000 | ₩ | 10,000 | ||||
|
|
|
|
8. Subsidiaries
The details of subsidiaries as of December 31, 2014, are as follows:
Name of subsidiary | Number of Issued Shares |
Location | Industry | |||||
Kookmin Bank |
404,379,116 | Korea | Banking and domestic, foreign exchange transaction | |||||
KB Kookmin Card Co., Ltd. |
92,000,000 | Korea | Credit card | |||||
KB Investment & Securities Co., Ltd. |
31,588,314 | Korea | Financial investment | |||||
KB Life Insurance Co., Ltd. |
91,200,000 | Korea | Life insurance | |||||
KB Asset Management Co., Ltd. |
7,667,550 | Korea | Investment advisory and collective investment | |||||
KB Capital Co., Ltd. |
11,180,630 | Korea | Financial Leasing | |||||
KB Savings Bank Co., Ltd. |
8,001,912 | Korea | Savings Banking | |||||
KB Real Estate Trust Co., Ltd. |
16,000,000 | Korea | Real estate trust management | |||||
KB Investment Co., Ltd. |
8,951,797 | Korea | Investment in small company | |||||
KB Credit Information Co., Ltd. |
1,252,400 | Korea | Collection of receivables and credit investigation | |||||
KB Data System Co., Ltd. |
800,000 | Korea | Software advisory, development and supply |
Investments in subsidiaries as of December 31, 2014 and 2013, are as follows:
Name of subsidiary | Ownership(%) (Dec. 31, 2014) |
2014 | 2013 | |||||||||
Kookmin Bank |
100.00 | ₩ | 14,821,721 | ₩ | 14,821,721 | |||||||
KB Kookmin Card Co., Ltd. |
100.00 | 1,953,175 | 1,953,175 | |||||||||
KB Investment & Securities Co., Ltd. |
100.00 | 507,212 | 507,212 | |||||||||
KB Life Insurance Co., Ltd. |
100.00 | 485,314 | 485,314 | |||||||||
KB Asset Management Co., Ltd. |
100.00 | 96,312 | 96,312 | |||||||||
KB Capital Co., Ltd. 1 |
52.02 | 279,870 | | |||||||||
KB Savings Bank Co., Ltd. |
100.00 | 157,544 | 134,531 | |||||||||
KB Real Estate Trust Co., Ltd. |
100.00 | 121,553 | 121,553 | |||||||||
KB Investment Co., Ltd. |
100.00 | 104,910 | 104,910 | |||||||||
KB Credit Information Co., Ltd. |
100.00 | 23,621 | 23,621 | |||||||||
KB Data System Co., Ltd. |
100.00 | 6,334 | 6,334 | |||||||||
Yehansoul Savings Bank Co., Ltd.2 |
| | 37,760 | |||||||||
|
|
|
|
|||||||||
₩ | 18,557,566 | ₩ | 18,292,443 | |||||||||
|
|
|
|
1 | The Company acquired the 52.02% of total issued shares of Woori Financial Co., Ltd. for ₩279,870 million and changed the name from Woori Financial Co., Ltd. to KB Capital Co., Ltd. in 2014. |
2 | The Company acquired Yehansoul Savings Bank Co., Ltd. for ₩37,760 million in 2013. KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in 2014. |
28
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The changes in accumulated impairment losses on investments in subsidiaries for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Impairment | Others | Ending | |||||||||||||
Accumulated impairment losses on investments in subsidiaries1 |
₩ | (36,995 | ) | ₩ | (14,747 | ) | ₩ | | ₩ | (51,742 | ) | |||||
(In millions of Korean won) | 2013 | |||||||||||||||
Beginning | Impairment | Others | Ending | |||||||||||||
Accumulated impairment losses on investments in subsidiaries1 |
₩ | | ₩ | (36,995 | ) | ₩ | | ₩ | (36,995 | ) |
1 | Industry environment of savings banks has deteriorated continuously and performance fell short of expectations primarily due to a decline of benchmark interest rate. Considering the aforementioned recent downturns, the Company recognized the impairment losses on investments of KB Savings Bank Co., Ltd. |
29
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
9. Property and Equipment
The details of property and equipment as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost |
Accumulated depreciation |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Leasehold improvements |
₩ | 521 | ₩ | (417 | ) | ₩ | | ₩ | 104 | |||||||
Equipment and vehicles |
4,787 | (4,377 | ) | | 410 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,308 | ₩ | (4,794 | ) | ₩ | | ₩ | 514 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Acquisition cost |
Accumulated depreciation |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Leasehold improvements |
₩ | 424 | ₩ | (331 | ) | ₩ | | ₩ | 93 | |||||||
Equipment and vehicles |
4,660 | (4,111 | ) | | 549 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,084 | ₩ | (4,442 | ) | ₩ | | ₩ | 642 | ||||||||
|
|
|
|
|
|
|
|
The changes in property and equipment for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Acquisition | Depreciation | Ending | |||||||||||||
Leasehold improvements |
₩ | 93 | ₩ | 97 | ₩ | (86 | ) | ₩ | 104 | |||||||
Equipment and vehicles |
549 | 128 | (267 | ) | 410 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 642 | ₩ | 225 | ₩ | (353 | ) | ₩ | 514 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Beginning | Acquisition | Depreciation | Ending | |||||||||||||
Leasehold improvements |
₩ | 68 | ₩ | 78 | ₩ | (53 | ) | ₩ | 93 | |||||||
Equipment and vehicles |
283 | 549 | (283 | ) | 549 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 351 | ₩ | 627 | ₩ | (336 | ) | ₩ | 642 | ||||||||
|
|
|
|
|
|
|
|
30
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Property and equipment insured as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | Insurance company | |||||||||
Type of insurance | Asset insured | Insurance coverage | ||||||||||
General property insurance |
Leasehold improvements | ₩ | 521 | ₩ | 424 | Samsung Fire & Marine Insurance Co., Ltd. | ||||||
Equipment and vehicles |
4,787 | 4,660 | ||||||||||
|
|
|
|
|||||||||
₩ | 5,308 | ₩ | 5,084 | |||||||||
|
|
|
|
10. Intangible Assets
The details of intangible assets as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition Cost |
Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Software |
₩ | 2,571 | ₩ | (2,022 | ) | ₩ | | ₩ | 549 | |||||||
Membership rights |
9,497 | | (1,988 | ) | 7,509 | |||||||||||
Other intangible assets |
3,315 | (2,689 | ) | | 626 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 15,383 | ₩ | (4,711 | ) | ₩ | (1,988 | ) | ₩ | 8,684 | |||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Acquisition Cost |
Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Software |
₩ | 2,431 | ₩ | (1,802 | ) | ₩ | | ₩ | 629 | |||||||
Membership rights |
11,692 | | (3,172 | ) | 8,520 | |||||||||||
Other intangible assets |
3,315 | (2,331 | ) | | 984 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 17,438 | ₩ | (4,133 | ) | ₩ | (3,172 | ) | ₩ | 10,133 | |||||||
|
|
|
|
|
|
|
|
The changes in intangible assets for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Beginning | Acquisition | Disposal | Amortization | Impairment1 | Ending | |||||||||||||||||||
Software |
₩ | 629 | ₩ | 140 | ₩ | | ₩ | (220 | ) | ₩ | | ₩ | 549 | |||||||||||
Membership rights |
8,520 | 25 | (1,035 | ) | | (1 | ) | 7,509 | ||||||||||||||||
Other intangible assets |
984 | | | (358 | ) | | 626 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 10,133 | ₩ | 165 | ₩ | (1,035 | ) | ₩ | (578 | ) | ₩ | (1 | ) | ₩ | 8,684 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
31
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Beginning | Acquisition | Disposal | Amortization | Impairment1 | Ending | |||||||||||||||||||
Software |
₩ | 164 | ₩ | 617 | ₩ | | ₩ | (152 | ) | ₩ | | ₩ | 629 | |||||||||||
Membership rights |
8,425 | 1,260 | (863 | ) | | (302 | ) | 8,520 | ||||||||||||||||
Other intangible assets |
533 | 779 | | (328 | ) | | 984 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 9,122 | ₩ | 2,656 | ₩ | (863 | ) | ₩ | (480 | ) | ₩ | (302 | ) | ₩ | 10,133 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
1 | Membership rights with indefinite useful lives recognized impairment losses because their recoverable amount is lower than their carrying amount. |
The changes in accumulated impairment losses on intangible assets for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Impairment | Disposal | Ending | |||||||||||||
Accumulated impairment losses on intangible assets |
₩ | (3,172 | ) | ₩ | (1 | ) | ₩ | 1,185 | ₩ | (1,988 | ) | |||||
(In millions of Korean won) | 2013 | |||||||||||||||
Beginning | Impairment | Disposal | Ending | |||||||||||||
Accumulated impairment losses on intangible assets |
₩ | (3,289 | ) | ₩ | (302 | ) | ₩ | 419 | ₩ | (3,172 | ) |
11. Deferred income tax assets and liabilities
The details of deferred income tax assets and liabilities as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Assets | Liabilities | Net amount | ||||||||||
Share-based payments |
₩ | 2,211 | ₩ | | ₩ | 2,211 | ||||||
Membership rights |
481 | | 481 | |||||||||
Defined benefit obligation |
1549 | | 1,549 | |||||||||
Plan assets |
| (861 | ) | (861 | ) | |||||||
Short-term employee benefits |
285 | | 285 | |||||||||
Others |
424 | | 424 | |||||||||
|
|
|
|
|
|
|||||||
4,950 | (861 | ) | 4,089 | |||||||||
Offsetting of deferred tax assets and liabilities |
(861 | ) | 861 | | ||||||||
|
|
|
|
|
|
|||||||
₩ | 4,089 | ₩ | | ₩ | 4,089 | |||||||
|
|
|
|
|
|
32
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||
Assets | Liabilities | Net amount | ||||||||||
Share-based payments |
₩ | 2,352 | ₩ | | ₩ | 2,352 | ||||||
Membership rights |
742 | | 742 | |||||||||
Defined benefit obligation |
1,393 | 1,393 | ||||||||||
Plan assets |
| (1,111 | ) | (1,111 | ) | |||||||
Short-term employee benefits |
239 | | 239 | |||||||||
Others |
588 | | 588 | |||||||||
|
|
|
|
|
|
|||||||
5,314 | (1,111 | ) | 4,203 | |||||||||
Offsetting of deferred tax assets |
(1,111 | ) | 1,111 | | ||||||||
|
|
|
|
|
|
|||||||
₩ | 4,203 | ₩ | | ₩ | 4,203 | |||||||
|
|
|
|
|
|
Unrecognized deferred income tax assets
No deferred income tax assets have been recognized for the deductible temporary difference of ₩2,896,164 million, ₩66,162 million and ₩51,742 million associated with investments in subsidiaries, tax loss carryforwards and impairment losses on investments in subsidiaries, respectively, as of December 31, 2014, due to the uncertainty that all these will be realized in the future.
Unrecognized deferred income tax liabilities
No deferred income tax liabilities have been recognized for the taxable temporary difference of ₩2,395,805 million associated with investments in subsidiaries as of December 31, 2014, due to the following reasons:
| The Company is able to control the timing of the reversal of the temporary difference. |
| It is probable that the temporary difference will not reverse in the foreseeable future. |
33
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The changes in cumulative temporary differences for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Deductible temporary differences |
||||||||||||||||
Share-based payments |
₩ | 9,720 | ₩ | 584 | ₩ | | ₩ | 9,136 | ||||||||
Membership rights |
3,065 | 1,077 | 1 | 1,989 | ||||||||||||
Investments in subsidiaries |
2,896,164 | | | 2,896,164 | ||||||||||||
Defined benefit obligation |
5,757 | 3,164 | 3,808 | 6,401 | ||||||||||||
Short-term employee benefits |
986 | 986 | 1,179 | 1,179 | ||||||||||||
Tax loss carryforwards |
77,275 | 11,113 | | 66,162 | ||||||||||||
Impairment losses on investments in subsidiaries |
36,995 | | 14,747 | 51,742 | ||||||||||||
Others |
2,432 | 2,430 | 1,747 | 1,749 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
3,032,394 | ₩ | 19,354 | ₩ | 21,482 | 3,034,522 | |||||||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax assets: |
||||||||||||||||
Investments in subsidiaries |
2,896,164 | 2,896,164 | ||||||||||||||
Tax loss carryforwards |
77,275 | 66,162 | ||||||||||||||
Impairment losses on investments in subsidiaries |
36,995 | 51,742 | ||||||||||||||
|
|
|
|
|||||||||||||
21,960 | 20,454 | |||||||||||||||
|
|
|
|
|||||||||||||
Tax rate (%) |
24.2 | 24.2 | ||||||||||||||
|
|
|
|
|||||||||||||
Deferred income tax assets from deductible temporary differences |
₩ | 5,314 | ₩ | 4,950 | ||||||||||||
|
|
|
|
|||||||||||||
Taxable temporary differences |
||||||||||||||||
Investments in subsidiaries |
₩ | (2,395,805 | ) | ₩ | | ₩ | | ₩ | (2,395,805 | ) | ||||||
Plan assets |
(4,593 | ) | (3,165 | ) | (2,128 | ) | (3,556 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(2,400,398 | ) | ₩ | (3,165 | ) | ₩ | (2,128 | ) | (2,399,361 | ) | |||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax liabilities: |
||||||||||||||||
Investments in subsidiaries |
(2,395,805 | ) | (2,395,805 | ) | ||||||||||||
|
|
|
|
|||||||||||||
(4,593 | ) | (3,556 | ) | |||||||||||||
|
|
|
|
|||||||||||||
Tax rate (%) |
24.2 | 24.2 | ||||||||||||||
|
|
|
|
|||||||||||||
Deferred income tax liabilities from taxable temporary differences |
₩ | (1,111 | ) | ₩ | (861 | ) | ||||||||||
|
|
|
|
34
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Deductible temporary differences |
||||||||||||||||
Share-based payments |
₩ | 9,586 | ₩ | 816 | ₩ | 950 | ₩ | 9,720 | ||||||||
Membership rights |
3,289 | 526 | 302 | 3,065 | ||||||||||||
Investments in subsidiaries |
2,896,164 | | | 2,896,164 | ||||||||||||
Defined benefit obligation |
6,620 | 2,799 | 1,936 | 5,757 | ||||||||||||
Short-term employee benefits |
887 | 887 | 986 | 986 | ||||||||||||
Tax loss carryforwards |
77,275 | | | 77,275 | ||||||||||||
Impairment losses on investments in subsidiaries |
| | 36,995 | 36,995 | ||||||||||||
Others |
2,595 | 2,595 | 2,432 | 2,432 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
2,996,416 | ₩ | 7,623 | ₩ | 43,601 | 3,032,394 | |||||||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax assets: |
||||||||||||||||
Investments in subsidiaries |
2,896,164 | 2,896,164 | ||||||||||||||
Tax loss carryforwards |
77,275 | 77,275 | ||||||||||||||
Impairment losses on investments in subsidiaries |
| 36,995 | ||||||||||||||
|
|
|
|
|||||||||||||
₩ | 22,977 | ₩ | 21,960 | |||||||||||||
|
|
|
|
|||||||||||||
Tax rate (%) |
24.2 | 24.2 | ||||||||||||||
|
|
|
|
|||||||||||||
Deferred income tax assets from deductible temporary differences |
₩ | 5,560 | ₩ | 5,314 | ||||||||||||
|
|
|
|
|||||||||||||
Taxable temporary differences |
||||||||||||||||
Investments in subsidiaries |
₩ | (2,395,805 | ) | ₩ | | ₩ | | ₩ | (2,395,805 | ) | ||||||
Plan assets |
(5,236 | ) | (2,799 | ) | (2,156 | ) | (4,593 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(2,401,041 | ) | ₩ | (2,799 | ) | ₩ | (2,156 | ) | (2,400,398 | ) | |||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax liabilities: |
||||||||||||||||
Investments in subsidiaries |
(2,385,623 | ) | (2,395,805 | ) | ||||||||||||
|
|
|
|
|||||||||||||
(15,418 | ) | (4,593 | ) | |||||||||||||
|
|
|
|
|||||||||||||
Tax rate (%) |
24.2 | 24.2 | ||||||||||||||
|
|
|
|
|||||||||||||
Deferred income tax liabilities from taxable temporary differences |
₩ | (1,760 | ) | ₩ | (1,111 | ) | ||||||||||
|
|
|
|
35
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
12. Other Assets
The details of other assets as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Other financial assets |
||||||||
Other receivables |
₩ | 300,041 | ₩ | 35 | ||||
Accrued income |
37 | 285 | ||||||
Guarantee deposits |
19,895 | 20,115 | ||||||
|
|
|
|
|||||
319,973 | 20,435 | |||||||
|
|
|
|
|||||
Other assets |
||||||||
Other receivables |
278,190 | 248,599 | ||||||
Prepaid expenses |
681 | 785 | ||||||
Advance payments |
85 | 4 | ||||||
|
|
|
|
|||||
278,956 | 249,388 | |||||||
|
|
|
|
|||||
₩ | 598,929 | ₩ | 269,823 | |||||
|
|
|
|
13. Debentures
The details of debentures as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||||
Issued date | Expiration date |
Annual rates (%) (Dec. 31, 2014) |
2014 | 2013 | ||||||||||||||||
Unguaranteed debentures No. 3-1 |
2013.08.13 | 2016.08.13 | 3.14 | ₩ | 150,000 | ₩ | 150,000 | |||||||||||||
Unguaranteed debentures No. 3-2 |
2013.08.13 | 2018.08.13 | 3.46 | 130,000 | 130,000 | |||||||||||||||
Unguaranteed debentures No. 3-3 |
2013.08.13 | 2020.08.13 | 3.65 | 70,000 | 70,000 | |||||||||||||||
Unguaranteed debentures No. 4 |
2014.03.17 | 2017.03.17 | 3.02 | 150,000 | | |||||||||||||||
Unguaranteed debentures No. 5-1 |
2014.03.19 | 2019.03.19 | 3.31 | 80,000 | | |||||||||||||||
Unguaranteed debentures No. 5-2 |
2014.03.19 | 2021.03.19 | 3.50 | 50,000 | | |||||||||||||||
Bond Discounts | (1,163 | ) | (843 | ) | ||||||||||||||||
|
|
|
|
|||||||||||||||||
₩ | 628,837 | ₩ | 349,157 | |||||||||||||||||
|
|
|
|
36
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The maturities of debentures as of December 31, 2014 and 2013, are as follows:
2014 | ||||||||||||||||||||||||
(In millions of Korean won) | Less than 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | ||||||||||||||||||
Debentures in Korean won |
₩ | | ₩ | | ₩ | | ₩ | 300,000 | ₩ | 330,000 | ₩ | 630,000 |
2013 | ||||||||||||||||||||||||
(In millions of Korean won) | Less than 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | ||||||||||||||||||
Debentures in Korean won |
₩ | | ₩ | | ₩ | | ₩ | 150,000 | ₩ | 200,000 | ₩ | 350,000 |
The changes in debentures based on face value for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Issuance | Repayment | Ending | |||||||||||||
Debentures in Korean won |
₩ | 350,000 | ₩ | 280,000 | ₩ | | ₩ | 630,000 |
(In millions of Korean won) | 2013 | |||||||||||||||
Beginning | Issuance | Repayment | Ending | |||||||||||||
Debentures in Korean won |
₩ | | ₩ | 350,000 | ₩ | | ₩ | 350,000 |
14. Net defined benefit liabilities
Defined benefit plan
The Company operates a defined benefit plan which has the following characteristics:
| The Company has the obligation to pay the agreed benefits to all its current and former employees. |
| Actuarial risk (that benefits will cost more than expected) and investment risk fall, in substance, on the Company. |
The defined benefit obligation recognized in the statements of financial position is calculated by independent actuaries in accordance with actuarial valuation method.
The defined benefit obligation is calculated using the Projected Unit Credit method (the PUC). The data used in the PUC such as interest rates, future salary increase rate, mortality rate and consumer price index are based on observable market data and historical data which are updated annually.
Actuarial assumptions may differ from actual result due to change in the market, economic trend and mortality trend which may impact defined benefit obligation liabilities and future payments. Actuarial gains and losses arising from changes in actuarial assumptions are recognized in the period incurred through other comprehensive income(loss).
37
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The changes in the defined benefit obligation for the years ended December 31, 2014 and 2013, are as follows:
2014 | ||||||||||||
(In millions of Korean won) | Present value of defined benefit obligation |
Fair value of plan assets |
Net defined benefit liabilities |
|||||||||
Beginning |
₩ | 9,532 | ₩ | (8,099 | ) | ₩ | 1,433 | |||||
Current service cost |
1,523 | | 1,523 | |||||||||
Interest cost(income) |
380 | (323 | ) | 57 | ||||||||
Remeasurements |
||||||||||||
Actuarial gains and losses by changes in financial assumptions |
1,219 | | 1,219 | |||||||||
Actuarial gains and losses by experience adjustments |
687 | | 687 | |||||||||
Return on plan assets (excluding amounts included in interest income) |
| 103 | 103 | |||||||||
Contributions by the employer |
| (4,121 | ) | (4,121 | ) | |||||||
Payments from plans |
(987 | ) | 987 | | ||||||||
Payments from the Company |
(80 | ) | | (80 | ) | |||||||
Transfer in |
2,231 | (2,231 | ) | | ||||||||
Transfer out |
(1,388 | ) | 1,370 | (18 | ) | |||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 13,117 | ₩ | (12,314 | ) | ₩ | 803 | |||||
|
|
|
|
|
|
2013 | ||||||||||||
(In millions of Korean won) | Present value of defined benefit obligation |
Fair value of plan assets |
Net defined benefit liabilities |
|||||||||
Beginning |
₩ | 10,158 | ₩ | (8,774 | ) | ₩ | 1,384 | |||||
Current service cost |
1,724 | | 1,724 | |||||||||
Interest cost(income) |
358 | (309 | ) | 49 | ||||||||
Remeasurements |
||||||||||||
Actuarial gains and losses by changes in demographic assumptions |
12 | | 12 | |||||||||
Actuarial gains and losses by changes in financial assumptions |
(821 | ) | | (821 | ) | |||||||
Actuarial gains and losses by experience adjustments |
663 | | 663 | |||||||||
Return on plan assets (excluding amounts included in interest income) |
| 60 | 60 | |||||||||
Contributions by the employer |
| (1,800 | ) | (1,800 | ) | |||||||
Payments from plans |
(2,210 | ) | 2,210 | | ||||||||
Payments from the Company |
(74 | ) | | (74 | ) | |||||||
Transfer in |
1,118 | (882 | ) | 236 | ||||||||
Transfer out |
(1,396 | ) | 1,396 | | ||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 9,532 | ₩ | (8,099 | ) | ₩ | 1,433 | |||||
|
|
|
|
|
|
38
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The details of the net defined benefit liabilities as of December 31, 2014 and 2013, are as follows:
2014 | 2013 | |||||||
Present value of defined benefit obligation |
₩ | 13,117 | ₩ | 9,532 | ||||
Fair value of plan assets |
(12,314 | ) | (8,099 | ) | ||||
|
|
|
|
|||||
Net defined benefit liabilities |
₩ | 803 | ₩ | 1,433 | ||||
|
|
|
|
The details of post-employment benefits recognized in profit and loss as employee compensation and benefits for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Current service cost |
₩ | 1,523 | ₩ | 1,724 | ||||
Interest expenses of net defined benefit liabilities |
57 | 49 | ||||||
|
|
|
|
|||||
Post-employment benefits |
₩ | 1,580 | ₩ | 1,773 | ||||
|
|
|
|
Remeasurements of the net defined benefit liabilities recognized as other comprehensive income(loss) for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Remeasurements |
||||||||
Return on plan assets (excluding amounts included in interest income) |
₩ | (103 | ) | ₩ | (60 | ) | ||
Actuarial gains and losses |
(1,906 | ) | 146 | |||||
Income tax effects |
486 | (21 | ) | |||||
|
|
|
|
|||||
Remeasurements after income tax |
₩ | (1,523 | ) | ₩ | 65 | |||
|
|
|
|
39
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Plan assets as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Assets quoted in an active market |
Assets not quoted in an active market |
Total | ||||||||||
Cash and due from financial institutions |
₩ | | ₩ | 12,314 | ₩ | 12,314 |
(In millions of Korean won) | 2013 | |||||||||||
Assets quoted in an active market |
Assets not quoted in an active market |
Total | ||||||||||
Cash and due from financial institutions |
₩ | | ₩ | 8,099 | ₩ | 8,099 |
Key actuarial assumptions used as of December 31, 2014 and 2013, are as follows:
2014 | 2013 | |||
Discount rate (%) |
3.10 | 4.00 | ||
Future salary increase rate (%) |
1.83(2015), 4.55(2016~) |
2.50(2014), 4.55(2015~) | ||
Turnover (%) |
0.70 | 0.70 |
Mortality assumptions are based on the 7th experience-based mortality table (retirement pension) of Korea Insurance Development Institute of 2012.
The sensitivity of the defined benefit obligation to changes in the principal assumptions as of December 31, 2014, is as follows:
Effect on net defined benefit obligation | ||||||
Changes in principal assumption |
Increase in principal assumption |
Decrease in principal assumption | ||||
Discount rate (%) |
0.5%p. | 6.67% decrease | 7.27% increase | |||
Salary increase rate (%) |
0.5%p. | 7.39% increase | 6.83 decrease | |||
Turnover (%) |
0.5%p. | 0.86% decrease | 0.91% increase |
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations recognized on the statement of financial position.
40
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Expected maturity analysis of undiscounted pension benefits as of December 31, 2014, are as follows:
(In millions of Korean won) | Less than 1 year |
1 ~ 2 years |
2 ~ 5 years |
5 ~ 10 years |
Over 10 years |
Total | ||||||||||||||||||
Pension benefits |
₩ | 251 | ₩ | 124 | ₩ | 496 | ₩ | 5,704 | ₩ | 64,322 | ₩ | 70,897 |
The weighted average duration of the defined benefit obligation is 14.3 years.
Expected contribution to plan assets for periods after December 31, 2014, is estimated to be approximately ₩2,100 million.
15. Other liabilities
The details of other liabilities as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Other financial liabilities |
||||||||
Other payables |
₩ | 360 | ₩ | 306 | ||||
Accrued expenses |
2,681 | 3,270 | ||||||
|
|
|
|
|||||
3,041 | 3,576 | |||||||
|
|
|
|
|||||
Other non-financial liabilities |
||||||||
Other payables |
16,291 | 178 | ||||||
Accrued expenses |
51,978 | 51,580 | ||||||
Withholding taxes |
258 | 268 | ||||||
|
|
|
|
|||||
68,527 | 52,026 | |||||||
|
|
|
|
|||||
₩ | 71,568 | ₩ | 55,602 | |||||
|
|
|
|
16. Equity
16.1 Share capital
The details of share capital as of December 31, 2014 and 2013, are as follows:
2014 | 2013 | |||||||
Type | Ordinary share | Ordinary share | ||||||
Number of authorized shares |
1,000,000,000 | 1,000,000,000 | ||||||
Par value per share |
₩ | 5,000 | ₩ | 5,000 | ||||
Number of issued shares |
386,351,693 | 386,351,693 | ||||||
Share capital |
₩ | 1,931,758 million | ₩ | 1,931,758 million |
41
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The changes in shares outstanding for the years ended December 31, 2014 and 2013, are as follows:
(Number of issued shares) | 2014 | 2013 | ||||||
Beginning |
386,351,693 | 386,351,693 | ||||||
Increase |
| | ||||||
Decrease |
| | ||||||
Ending |
386,351,693 | 386,351,693 |
16.2 Capital Surplus
The details of capital surplus as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Share premium |
₩ | 12,226,597 | ₩ | 12,226,597 | ||||
Other capital surplus |
1,287,212 | 1,287,212 | ||||||
|
|
|
|
|||||
₩ | 13,513,809 | ₩ | 13,513,809 | |||||
|
|
|
|
16.3 Accumulated other comprehensive loss
The details of accumulated other comprehensive loss as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Remeasurements of net defined benefit liabilities |
₩ | (4,238 | ) | ₩ | (2,715 | ) | ||
|
|
|
|
|||||
₩ | (4,238 | ) | ₩ | (2,715 | ) | |||
|
|
|
|
The changes in accumulated other comprehensive loss for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Changes | Tax effect | Ending | |||||||||||||
Remeasurements of net defined benefit liabilities |
₩ | (2,715 | ) | ₩ | (2,009 | ) | ₩ | 486 | ₩ | (4,238 | ) | |||||
|
|
|
|
|
|
|
|
|||||||||
₩ | (2,715 | ) | ₩ | (2,009 | ) | ₩ | 486 | ₩ | (4,238 | ) | ||||||
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||
Beginning | Changes | Tax effect | Ending | |||||||||||||
Remeasurements of net defined benefit liabilities |
₩ | (2,780 | ) | ₩ | 86 | ₩ | (21 | ) | ₩ | (2,715 | ) | |||||
|
|
|
|
|
|
|
|
|||||||||
₩ | (2,780 | ) | ₩ | 86 | ₩ | (21 | ) | ₩ | (2,715 | ) | ||||||
|
|
|
|
|
|
|
|
42
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
16.4 Retained Earnings
The details of retained earnings as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Legal reserves |
₩ | 208,221 | ₩ | 188,638 | ||||
Voluntary reserves |
982,000 | 982,000 | ||||||
Regulatory reserve for credit losses |
1,295 | 1,575 | ||||||
Unappropriated retained earnings |
1,653,829 | 1,433,357 | ||||||
|
|
|
|
|||||
₩ | 2,845,345 | ₩ | 2,605,570 | |||||
|
|
|
|
With respect to the allocation of net profit earned in a fiscal term, the Company must set aside in its legal reserve an amount equal to at least 10% of its net income after tax as reported in the separate statement of comprehensive income each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its paid-in capital in accordance with Article 53 of the Financial Holding Company Act. The reserve is not available for the payment of cash dividends, but may be transferred to share capital, or used to reduce accumulated deficit.
Appropriation of retained earnings
(Expected Date of appropriation for 2014: March 27, 2015)
(Date of appropriation for 2013: March 28, 2014)
(In millions of Korean won) | 2014 | 2013 | ||||||
Unappropriated retained earnings |
||||||||
Balance at the beginning of year |
₩ | 1,220,878 | ₩ | 1,237,531 | ||||
Profit for the year |
432,951 | 195,826 | ||||||
|
|
|
|
|||||
1,653,829 | 1,433,357 | |||||||
|
|
|
|
|||||
Transfers such as discretionary reserves |
||||||||
Regulatory reserve for credit losses |
| 280 | ||||||
|
|
|
|
|||||
| 280 | |||||||
|
|
|
|
|||||
Appropriation of retained earnings |
||||||||
Legal reserve |
43,296 | 19,583 | ||||||
Regulatory reserve for credit losses |
1,647 | | ||||||
Cash dividends |
||||||||
(Dividends per common share: ₩780 (15.6%) in 2014) |
||||||||
(Dividends per common share: ₩500 (10.0%) in 2013) |
301,354 | 193,176 | ||||||
|
|
|
|
|||||
346,297 | 212,759 | |||||||
|
|
|
|
|||||
Unappropriated retained earnings to be carried over to subsequent year |
₩ | 1,307,532 | ₩ | 1,220,878 | ||||
|
|
|
|
43
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Regulatory Reserve for Credit Losses
Measurement and disclosure of regulatory reserve for credit losses are required in accordance with Articles 26 through 28 of the Supervisory Regulations on Financial Holding Companies.
The details of the regulatory reserve for credit losses as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Beginning |
₩ | 1,295 | ₩ | 1,575 | ||||
Amounts estimated to be appropriated |
1,647 | (280 | ) | |||||
|
|
|
|
|||||
Ending |
₩ | 2,942 | ₩ | 1,295 | ||||
|
|
|
|
The adjustments to the regulatory reserve for credit losses for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won, except per share amounts) | 2014 | |||
Provision of regulatory reserve for credit losses |
₩ | 1,647 | ||
Adjusted profit after provision of regulatory reserve for credit losses1 |
431,304 | |||
Adjusted basic earnings per share after provision of regulatory reserve for credit losses1 |
1,116 | |||
Adjusted diluted earnings per share after provision of regulatory reserve for credit losses1 |
1,112 | |||
(In millions of Korean won, except per share amounts) | 2013 | |||
Reversal of regulatory reserve for credit losses |
₩ | (280 | ) | |
Adjusted profit after reversal of regulatory reserve for credit losses1 |
196,106 | |||
Adjusted basic earnings per share after reversal of regulatory reserve for credit losses1 |
508 | |||
Adjusted diluted earnings per share after reversal of regulatory reserve for credit losses1 |
505 |
1 | Adjusted profit after provision(reversal) of regulatory reserve for credit losses is not in accordance with K-IFRS and calculated on the assumption that provision(reversal) of regulatory reserve for credit losses before income tax is adjusted to the profit for the period. |
17. Dividends
The dividends paid to the shareholders of the Company in 2014 and 2013 were ₩193,176 million (₩500per share) and 231,811 million (₩600 per share), respectively. The dividend to the shareholders in respect of the year ended December 31, 2014, of ₩780 per share, amounting to total dividends of ₩301,354 million, is to be proposed at the annual general meeting on March 27, 2015. The Companys separate financial statements as of December 31, 2014, do not reflect this dividend payable.
44
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
18. Net Interest Income
Interest income and interest expense for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Interest income |
||||||||
Due from financial institutions |
₩ | 1,478 | ₩ | 2,618 | ||||
Loans |
373 | 596 | ||||||
Others |
540 | 645 | ||||||
|
|
|
|
|||||
2,391 | 3,859 | |||||||
|
|
|
|
|||||
Interest expense |
||||||||
Debts |
| 627 | ||||||
Debentures |
19,149 | 4,600 | ||||||
|
|
|
|
|||||
19,149 | 5,227 | |||||||
|
|
|
|
|||||
Net interest income |
₩ | (16,758 | ) | ₩ | (1,368 | ) | ||
|
|
|
|
19. Net Fee and Commission Income
Fee and commission income and fee and commission expense for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Fee and commission income |
||||||||
Fees in Korean won |
₩ | | ₩ | | ||||
|
|
|
|
|||||
Fee and commission expense |
||||||||
Fees paid in Korean won |
6,548 | 6,189 | ||||||
Fees paid in foreign currency |
110 | 81 | ||||||
|
|
|
|
|||||
6,658 | 6,270 | |||||||
|
|
|
|
|||||
Net fee and commission income |
₩ | (6,658 | ) | ₩ | (6,270 | ) | ||
|
|
|
|
45
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
20. Net Other Operating Income
Other operating income and other operating expense for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Other operating income |
||||||||
Dividend income from subsidiaries |
₩ | 508,529 | ₩ | 282,039 | ||||
Other operating expense |
||||||||
Impairment losses on investments in subsidiaries |
14,747 | 36,995 | ||||||
|
|
|
|
|||||
Net other operating income |
₩ | 493,782 | ₩ | 245,044 | ||||
|
|
|
|
21. General and administrative expenses
The details of general and administrative expenses for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Employee Benefits |
||||||||
Salaries and other short-term employee benefits - Salaries |
₩ | 19,381 | ₩ | 20,733 | ||||
Salaries and other short-term employee benefits - Others |
3,429 | 2,685 | ||||||
Termination benefits |
| 445 | ||||||
Post employment benefits - defined benefit plans |
1,580 | 1,773 | ||||||
Share-based payments |
801 | 950 | ||||||
|
|
|
|
|||||
25,191 | 26,586 | |||||||
|
|
|
|
|||||
Depreciation and amortization |
931 | 816 | ||||||
|
|
|
|
|||||
Other general and administrative expenses |
||||||||
Travel |
56 | 299 | ||||||
Communications |
399 | 265 | ||||||
Tax and dues |
191 | 289 | ||||||
Publication |
170 | 195 | ||||||
Rental expense |
1,772 | 1,954 | ||||||
Vehicle |
219 | 197 | ||||||
Service fees |
1,972 | 3,207 | ||||||
Advertising |
641 | 623 | ||||||
Training |
142 | 232 | ||||||
Others |
4,658 | 5,994 | ||||||
|
|
|
|
|||||
10,220 | 13,255 | |||||||
|
|
|
|
|||||
₩ | 36,342 | ₩ | 40,657 | |||||
|
|
|
|
46
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Share-Based Payments
The details of share based payments of December 31, 2014, is as follows:
(In number of shares) Share grants |
Grant date | Number of granted |
Vesting conditions | |||||
(KB Financial Group Inc.) |
||||||||
Series 4 |
2010.07.13 | 180,707 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,3 | |||||
Series 8 |
2012.01.01 | 13,471 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,4 | |||||
Series 9 |
2013.07.17 | 82,699 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,4 | |||||
Series 10 |
2014.01.01 | 37,732 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,4 | |||||
Series 11 |
2013.07.13 | 69,892 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,3 | |||||
Deferred grant in 2010 |
| 6,583 | Satisfied | |||||
Deferred grant in 2011 |
| 1,435 | Satisfied | |||||
Deferred grant in 2012 |
| 7,975 | Satisfied | |||||
Deferred grant in 2013 |
| 2,617 | Satisfied | |||||
|
|
|||||||
403,111 | ||||||||
|
|
47
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
(Kookmin Bank) |
||||||||
Series 41 |
12.08.02 | 23,521 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,5 | |||||
Series 43 |
12.11.26 | 13,918 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,5 | |||||
Series 44 |
13.01.01 | 17,242 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,5 | |||||
Series 45 |
13.01.01 | 9,698 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,5 | |||||
Series 46 |
13.01.01 | 103,440 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,5 | |||||
Series 48 |
13.07.23 | 74,666 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 49 |
13.07.24 | 101,828 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 50 |
13.07.24 | 82,926 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 51 |
13.07.25 | 9,899 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 52 |
13.08.01 | 10,278 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 53 |
13.07.19 | 69,256 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,7 | |||||
Series 54 |
13.07.23 | 26,689 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,7 | |||||
Series 55 |
14.01.03 | 11,060 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,8 | |||||
Series 56 |
13.12.30 | 17,798 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 57 |
14.01.01 | 44,265 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 58 |
14.01.01 | 78,700 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 59 |
14.08.26 | 9,106 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Deferred grant in 2010 |
| 171 | Satisfied | |||||
Deferred grant in 2011 |
| 8,454 | Satisfied | |||||
Deferred grant in 2012 |
| 31,348 | Satisfied | |||||
Deferred grant in 2013 |
| 92,316 | Satisfied | |||||
|
|
|||||||
836,579 | ||||||||
|
|
48
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
(Other subsidiaries) |
||||||||
Share granted in 2010 |
3,485 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 9 | ||||||
Share granted in 2011 |
7,648 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 9 | ||||||
Share granted in 2012 |
63,976 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 9 | ||||||
Share granted in 2013 |
104,394 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 9 | ||||||
Share granted in 2014 |
82,759 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 9 | ||||||
|
|
|||||||
262,262 | ||||||||
|
|
|
||||||
1,501,952 | ||||||||
|
|
1 | Granted shares represent the total number of shares initially granted to directors and employees at the end of reporting period. |
2 | Certain portion of the granted shares is compensated over a maximum period of three years. |
3 | The 37.5%, 37.5% and 25% of the number of certain granted shares to be compensated are determined based on the accomplishment of targeted relative TSR, targeted EPS and qualitative indicators, respectively. The 30%, 30% and 40% of the number of other granted shares to be compensated are determined based on the accomplishment of the targeted Value-up Index, targeted financial results of the Company and its subsidiaries (Group) and targeted relative TSR, respectively. The 40%, 40% and 20% of the number of the remaining granted shares to be compensated are determined based on the accomplishment of the targeted relative TSR, the targeted EPS and qualitative indicators, respectively. |
4 | The 30%, 30% and 40% of the number of granted shares to be compensated are determined upon the accomplishment of the targeted Value-up Index, targeted financial results of the Company and its subsidiaries (Group) and the targeted relative TSR, respectively. However, 50% and 50% of certain granted shares will be compensated based on the accomplishment of the targeted Value-up Index and the accomplishment of targeted relative TSR. |
5 | The 40%, 30% and 30% of the number of granted shares to be compensated are determined based on the accomplishment of the targeted relative TSR, the targeted Value-up Index and the targeted financial results of the Bank, respectively. |
6 | The 30%, 30% and 40% of the number of granted shares to be compensated are determined upon the accomplishment of the targeted financial results of the Bank, the targeted relative TSR and the targeted Value-up Index, respectively. However, as for certain number of shares, half of the number of granted shares to be compensated is determined based on the accomplishment of the targeted relative TSR, while the other half is determined by the targeted Value-up Index. |
7 | The 30%, 45% and 25% of the number of granted shares to be compensated are determined based on the accomplishment of the targeted relative TSR, the ROA and the growth rate of total assets, respectively. |
49
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
8 | The number of granted shares to be compensated is not linked to performance, but fixed. |
9 | The 30%, 30% and 40% of the number of granted shares to be compensated are determined based on the accomplishment of the targeted Value-up Index, the respective subsidiaries performance and the targeted relative TSR, respectively. The 60% and 40% of the number of certain granted shares to be compensated is determined based on the accomplishment of the respective subsidiaries performance and the accomplishment of the targeted relative TSR, respectively. The 40%, 30% and 30% of the number of certain granted shares to be compensated is determined based on the accomplishment of the targeted Value-up Index, the respective subsidiaries performance and the targeted relative TSR, respectively. |
The share grant award program is an incentive plan that sets, on grant date, the maximum amount of shares that can be awarded. Actual shares granted at the end of the vesting period is determined in accordance with achievement of pre-specified targets over the vesting period.
50
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The details of share grants linked to short-term performance as of December 31, 2014, are as follows:
Grant date | Number of vested shares1 |
Vesting Conditions | ||||||
(KB Financial Group Inc.) |
||||||||
Share granted in 2010 |
2010.01.01 | 322 | Satisfied | |||||
Share granted in 2011 |
2011.01.01 | 7,295 | Satisfied | |||||
Share granted in 2012 |
2012.01.01 | 15,782 | Satisfied | |||||
Share granted in 2013 |
2013.01.01 | 16,560 | Satisfied | |||||
Share granted in 2014 |
2014.01.01 | 25,174 | Proportion to service period | |||||
(Kookmin Bank) |
||||||||
Share granted in 2010 |
2010.01.01 | 363 | Satisfied | |||||
Share granted in 2011 |
2011.01.01 | 46,845 | Satisfied | |||||
Share granted in 2012 |
2012.01.01 | 103,177 | Satisfied | |||||
Share granted in 2013 |
2013.01.01 | 102,343 | Satisfied | |||||
Share granted in 2014 |
2014.01.01 | 173,132 | Proportion to service period | |||||
(Other subsidiaries) |
||||||||
Share granted in 2013 |
9,823 | Satisfied | ||||||
Share granted in 2014 |
28,149 | Proportion to service period |
1 | The number of shares, which are exercisable, is determined by the results of performance. |
The share grants are settled over three years.
Share grants are measured at fair value using the Monte Carlo Simulation Model and assumptions used in determining the fair value as of December 31, 2014, are as follows:
(In Korean won) | Expected exercise period (Years) |
Risk free rate (%) |
Fair value (Market |
Fair value (Non-market | ||||
(KB Financial Group Inc.) Long-term achievements |
||||||||
Series 4 |
0.00~1.53 | 2.07 | | 35,315~36,425 | ||||
Series 4-1 |
0.00~1.53 | 2.07 | | 35,315~36,425 | ||||
Series 4-2 |
0.00~1.00 | 2.07 | | 36,389~40,662 | ||||
Series 8 |
0.00~2.00 | 2.07 | | 36,389~40,662 | ||||
Series 9 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||
Series 9-1 |
0.00~3.00 | 2.07 | 39,437 | 36,389~38,111 | ||||
Series 9-2 |
1.00~4.00 | 2.07 | 33,363 | 35,653~36,835 | ||||
Series 9-3 |
0.00~3.00 | 2.07 | 39,223 | 36,389~38,111 | ||||
Series 9-4 |
0.00~3.00 | 2.07 | 37,036 | 36,389~38,111 | ||||
Series 10 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||
Series 10-1 |
1.00~4.00 | 2.07 | 32,645 | 35,653~36,835 | ||||
Series 10-2 |
1.00~4.00 | 2.07 | 33,110 | 35,653~36,835 | ||||
Series 11 |
1.53~4.53 | 2.08 | 35,335 | 36,639~36,858 | ||||
Deferred grant in 2010 |
0.00~1.00 | 2.07 | | 36,389~38,111 | ||||
Deferred grant in 2011 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||
Deferred grant in 2012 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||
Deferred grant in 2013 |
0.00~2.00 | 2.07 | | 36,389~38,111 |
51
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
(Kookmin Bank) Long-term achievements |
||||||||
Series 41-1 |
0.00~3.00 | 2.07 | | 36,389~38,111 | ||||
Series 41-2 |
0.00~3.00 | 2.07 | | 36,389~38,111 | ||||
Series 43 |
0.00~3.00 | 2.07 | | 36,389~38,111 | ||||
Series 44 |
0.00~2.00 | 2.07 | | 36,389~40,662 | ||||
Series 45 |
0.00~3.00 | 2.07 | | 36,389~38,111 | ||||
Series 46 |
0.00~3.00 | 2.07 | | 36,389~38,111 | ||||
Series 48 |
0.56~4.00 | 2.07 | 35,029 | 36,389~36,835 | ||||
Series 48-1 |
0.00~3.00 | 2.07 | 36,734 | 36,389~38,111 | ||||
Series 48-2 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||
Series 49 |
0.56~4.00 | 2.07 | 34,972 | 36,389~36,835 | ||||
Series 49-1 |
0.65~4.00 | 2.07 | 34,906 | 36,389~36,835 | ||||
Series 49-2 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||
Series 50 |
0.56~4.00 | 2.07 | 34,972 | 36,389~36,835 | ||||
Series 50-1 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||
Series 51 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||
Series 52 |
0.58~4.00 | 2.07 | 34,977 | 36,389~36,835 | ||||
Series 53 |
0.00~2.68 | 2.07 | 38,284 | 36,317~40,991 | ||||
Series 54 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||
Series 55 |
2.01~5.01 | 2.08 | | 36,551~37,053 | ||||
Series 56 |
0.00~3.00 | 2.07 | 32,595 | 36,389~36,835 | ||||
Series 56-1 |
0.00~3.00 | 2.07 | 36,854 | 36,389~38,111 | ||||
Series 57 |
1.00~4.00 | 2.07 | 32,645 | 36,389~36,835 | ||||
Series 57-1 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||
Series 58 |
1.00~4.00 | 2.07 | 32,645 | 36,389~36,835 | ||||
Series 59 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||
Deferred grant in 2012 |
0.00~1.00 | 2.07 | | 36,389~38,111 | ||||
Deferred grant in 2013 |
0.00~2.00 | 2.07 | | 36,205~38,111 | ||||
(Other Subsidiaries) Long-term achievements |
||||||||
Year 2012 |
0.00~0.54 | 2.07 | 0~21,928 | 35,968~38,617 | ||||
Year 2013 |
0.00~1.75 | 2.07~2.08 | 0~33,505 | 35,115~40,662 | ||||
Year 2014 |
1.00~2.67 | 2.07~2.10 | 30,801~33,312 | 34,676~36,835 | ||||
(KB Financial Group Inc.) Short-term achievements |
||||||||
Year 2012 |
0.00~1.00 | 2.07 | | 36,389~40,662 | ||||
Year 2013 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||
Year 2014 |
1.00~3.00 | 2.07 | | 36,389~36,684 | ||||
(Kookmin Bank) Short-term achievements |
||||||||
Year 2012 |
0.00~1.00 | 2.07 | | 36,389~38,111 | ||||
Year 2013 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||
Year 2014 |
1.00~3.00 | 2.07 | | 36,389~38,111 | ||||
(Other Subsidiaries) Short-term achievements |
||||||||
Year 2013 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||
Year 2014 |
2.00~4.00 | 2.07 | | 36,498~36,835 |
Expected volatility is based on the historical volatility of the share price over the most recent period that is generally commensurate with the expected term of the grant. And the current stock price as of December 31, 2014, for the underlying asset price. Additionally, the average three-year historical dividend rate was used as the expected dividend rate.
52
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Share-based payment arrangement for the employees of subsidiaries was transferred to the Company from the subsidiaries in 2010 and the related compensation cost paid to the employees of subsidiaries is reimbursed from the subsidiaries. The accrued expenses representing share-based payments as of December 31, 2014 and 2013, are ₩48,734 million and ₩48,316 million, respectively, and the receivables to be reimbursed from the subsidiaries for the compensation costs are ₩39,598 million and ₩38,596 million, respectively. The compensation costs amounting to ₩801 million and ₩950 million were recognized as an expense for the years ended December 31, 2014 and 2013, respectively.
22. Net Non-operating Income(expense)
The details of non-operating income and expenses for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Non-operating income |
||||||||
Others |
₩ | 628 | ₩ | 561 | ||||
|
|
|
|
|||||
Non-operating expenses |
||||||||
Impairment losses on intangible assets |
1 | 302 | ||||||
Donation |
999 | 1,488 | ||||||
Others |
101 | 117 | ||||||
|
|
|
|
|||||
1,101 | 1,907 | |||||||
|
|
|
|
|||||
Net non-operating expense |
₩ | (473 | ) | ₩ | (1,346 | ) | ||
|
|
|
|
23. Income Tax Benefit(expense)
The details of income tax benefit(expense) for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Tax payable |
||||||||
Current tax expense |
₩ | | ₩ | | ||||
Change in deferred tax assets(liabilities) |
||||||||
Origination and reversal of temporary differences |
(114 | ) | 402 | |||||
Income tax recognized directly in equity |
||||||||
Remeasurements of net defined benefit liabilities |
(486 | ) | 21 | |||||
|
|
|
|
|||||
Tax benefit(expense) |
₩ | (600 | ) | ₩ | 423 | |||
|
|
|
|
53
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
The analysis of profit before tax and income tax benefit(expense) for the years ended December 31, 2014 and 2013, follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Profit before tax |
₩ | 433,551 | ₩ | 195,403 | ||||
|
|
|
|
|||||
Tax expense at the applicable tax rate1 |
104,457 | 46,826 | ||||||
Non-taxable income |
(118,358 | ) | (66,428 | ) | ||||
Non-deductible expense |
514 | 9,534 | ||||||
Consolidated tax effect |
12,787 | 9,645 | ||||||
|
|
|
|
|||||
Tax benefit(expense) |
₩ | (600 | ) | ₩ | 423 | |||
|
|
|
|
|||||
Average effective tax rate (Income tax benefit(expense) / Profit before tax) (%) |
0.14 | (0.22 | ) | |||||
|
|
|
|
1 | Applicable income tax rate for ₩200 million and below is 11%, for over ₩200 million to ₩20 billion is 22%, and for over ₩20 billion is 24.2%. |
The details of current tax assets (income tax refund receivable) and current tax liabilities (income tax payable), as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Income tax refund receivable prior to offsetting |
₩ | | ₩ | | ||||
Tax payable prior to offsetting |
| |||||||
Adjustment on consolidated tax payable |
222,639 | 209,928 | ||||||
|
|
|
|
|||||
Current tax payable |
₩ | 222,639 | ₩ | 209,928 | ||||
|
|
|
|
24. Earnings per Share
Calculations of basic earnings per share on the profit attributable to ordinary shares are as follows:
Weighted average number of ordinary shares outstanding:
2014 | ||||||||||||
(In number of shares) | Number of shares (a) |
Days outstanding (b) |
Total outstanding shares (a) x (b) |
|||||||||
Beginning (A) |
386,351,693 | 365 | 141,018,367,945 | |||||||||
Weighted average number of ordinary shares outstanding (B = A / 365) |
386,351,693 |
54
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
2013 | ||||||||||||
(In number of shares) | Number of shares (a) |
Days outstanding (b) |
Total outstanding shares (a) x (b) |
|||||||||
Beginning (A) |
386,351,693 | 365 | 141,018,367,945 | |||||||||
Weighted average number of ordinary shares outstanding (B = A / 365) |
386,351,693 |
Basic earnings per share
(in Korean won and in number of shares) | 2014 | |||
Profit attributable to ordinary shares1 (C) |
₩ | 432,950,644,908 | ||
Weighted average number of ordinary shares outstanding (D) |
386,351,693 | |||
Basic earnings per share (E = C / D) |
₩ | 1,121 |
(in Korean won and in number of shares) | 2013 | |||
Profit attributable to ordinary shares1 (C) |
₩ | 195,826,206,652 | ||
Weighted average number of ordinary shares outstanding (D) |
386,351,693 | |||
Basic earnings per share (E = C / D) |
₩ | 507 |
1 | Profit attributable to ordinary shares is the same as profit for the year in the statements of comprehensive income. |
Diluted earnings per share
Diluted earnings per share is calculated using the weighted average number of ordinary shares outstanding which is adjusted by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. The Companys dilutive potential ordinary shares include share grants.
A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market share price of the Companys outstanding shares for the period) based on the monetary value of the subscription rights attached to the share grants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of share grants.
Adjusted profit for diluted earnings per share:
(in Korean won) | 2014 | |||
Profit attributable to ordinary shares |
₩ | 432,950,644,908 | ||
Adjustment |
| |||
Adjusted profit for diluted earnings per share |
₩ | 432,950,644,908 |
55
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
(in Korean won) | 2013 | |||
Profit attributable to ordinary shares |
₩ | 195,826,206,652 | ||
Adjustment |
| |||
Adjusted profit for diluted earnings per share |
₩ | 195,826,206,652 |
Adjusted weighted average number of ordinary shares outstanding to calculate diluted earnings per share:
(in number of shares) | 2014 | |||
Weighted average number of ordinary shares outstanding |
386,351,693 | |||
Adjustment |
||||
Share grants |
1,589,706 | |||
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share |
387,941,399 |
(in number of shares) | 2013 | |||
Weighted average number of ordinary shares outstanding |
386,351,693 | |||
Adjustment |
||||
Share grants |
1,639,306 | |||
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share |
387,990,999 |
Diluted earnings per share:
(in Korean won and in number of shares) | 2014 | |||
Adjusted profit for diluted earnings per share |
₩ | 432,950,644,908 | ||
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share |
387,941,399 | |||
Diluted earnings per share |
₩ | 1,116 |
(in Korean won and in number of shares) | 2013 | |||
Adjusted profit for diluted earnings per share |
₩ | 195,826,206,652 | ||
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share |
387,990,999 | |||
Diluted earnings per share |
₩ | 505 |
56
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
25. Supplemental Cash Flow Information
Cash and cash equivalents as of December 31, 2014 and 2013, are as follows:
(in millions of Korean won) | 2014 | 2013 | ||||||
Due from financial institutions |
₩ | 30,739 | ₩ | 77,298 | ||||
Restricted due from financial institutions |
(3 | ) | (3 | ) | ||||
|
|
|
|
|||||
₩ | 30,736 | ₩ | 77,295 | |||||
|
|
|
|
Significant non-cash transactions for the years ended December 31, 2014 and 2013, are as follows:
(in millions of Korean won) | 2014 | 2013 | ||||||
Changes in receivables and payables from consolidated tax |
₩ | (28,589 | ) | ₩ | (51,393 | ) | ||
Changes in other receivables and other payables |
(1,003 | ) | (10,336 | ) |
Cash inflow and outflow due to interest and dividends for the years ended December 31, 2014 and 2013, are as follows:
(in millions of Korean won) | Activity | 2014 | 2013 | |||||||||
Interest received |
Operating | ₩ | 2,099 | ₩ | 3,293 | |||||||
Interest paid |
Operating | 18,466 | 3,568 | |||||||||
Dividends received |
Operating | 208,517 | 282,039 | |||||||||
Dividends paid |
Financing | 193,176 | 231,811 |
26. Contingent liabilities and Commitments
The commitments made with financial institutions as of December 31, 2014 and 2013, are as follows:
2014 | 2013 | |||||||||||||||||
(in millions of Korean won) | Amount of commitment |
Amounts borrowed |
Amount of commitment |
Amounts borrowed |
||||||||||||||
General loans |
Hana Bank |
₩ | 50,000 | ₩ | | ₩ | 50,000 | ₩ | | |||||||||
Woori Bank |
| | 130,000 | | ||||||||||||||
Korea Development Bank |
300,000 | | 300,000 | | ||||||||||||||
Discounting of bills |
Korea Exchange Bank |
100,000 | | 100,000 | | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
₩ | 450,000 | ₩ | | ₩ | 580,000 | ₩ | | |||||||||||
|
|
|
|
|
|
|
|
57
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Other Matters(including litigation)
a) The Company faces a lawsuit (as the defendant) involving damages of ₩51 million, which is still pending as of December 31, 2014.
b) During the year ended December 31, 2013, Kookmin Bank underwent a tax investigation for the fiscal years 2008 to 2012 by the Seoul Regional Tax Office. As a result, Kookmin Bank was fined a total of ₩124,357 million for income taxes (including local income taxes), paid ₩123,330 million, excluding local income taxes, and recognized local income taxes amounting to ₩1,027 million as other payables. Meanwhile, the Company and Kookmin Bank, a subsidiary of the Company, appealed to the tax tribunal over the ₩114,283 million in fines. The Companys claim for this appeal amounts to ₩89,284 million as of December 31, 2014.
c) The Company entered into a share purchase agreement in June 2014, to acquire 11,682,580 of LIG Insurance Co., Ltd.s common shares (representing 19.47% of outstanding shares) amounting to ₩685,000 million. The Financial Services Commission approved LIG Insurance Co., Ltd to be included as a subsidiary of the Company in December 2014.
27. Related Party Transactions
Significant related party transactions for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||
Subsidiaries |
Kookmin Bank | Interest income | ₩ | 2,006 | ||||
Net other operating income | 158,517 | |||||||
General and administrative expenses | 1,718 | |||||||
KB Kookmin Card Co., Ltd | Net other operating income | 300,102 | ||||||
General and administrative expenses | 162 | |||||||
Net non-operating income | 2 | |||||||
KB Investment & Securities Co., Ltd. | Fee and commission expense | 234 | ||||||
General and administrative expenses | 68 | |||||||
KB Life Insurance Co., Ltd. | General and administrative expenses | 109 | ||||||
KB Asset Management Co., Ltd | Net other operating income | 50,000 | ||||||
KB Capital Co., Ltd | General and administrative expenses | 72 | ||||||
KB Investment Co., Ltd. | Interest Income | 373 | ||||||
KB Data Systems Co., Ltd. | General and administrative expenses | 975 |
58
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||
Subsidiaries | Kookmin Bank | Interest income | ₩ | 3,251 | ||||
Net other operating income | 282,039 | |||||||
General and administrative expenses | 2,775 | |||||||
KB Kookmin Card Co., Ltd | General and administrative expenses | 122 | ||||||
Net non-operating income | 1 | |||||||
KB Investment & Securities Co., Ltd. |
Fee and commission expense | 365 | ||||||
General and administrative expenses | 174 | |||||||
KB Life Insurance Co., Ltd. | General and administrative expenses | 29 | ||||||
KB Asset Management Co., Ltd |
General and administrative expenses | 34 | ||||||
KB Savings Bank Co., Ltd | General and administrative expenses | 182 | ||||||
KB Real Estate Trust Co., Ltd |
Interest Income | 182 | ||||||
KB Investment Co., Ltd. | Interest Income | 414 | ||||||
KB Data Systems Co., Ltd. | General and administrative expenses | 858 |
59
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
Significant receivables and payables, and related allowance for loan losses arising from the related party transactions as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||
Subsidiaries |
Kookmin Bank | Cash and due from financial institutions | ₩ | 30,739 | ||||
Other assets | 224,755 | |||||||
Other liabilities | 465 | |||||||
KB Kookmin Card Co., Ltd | Other assets | 352,273 | ||||||
Other liabilities | 267 | |||||||
KB Investment & Securities Co., Ltd. | Other assets | 3,038 | ||||||
Other liabilities | 3,563 | |||||||
KB Life Insurance Co., Ltd. | Other assets Other liabilities |
|
826 11,967 |
| ||||
KB Asset Management Co., Ltd | Other assets | 9,617 | ||||||
KB Capital Co., Ltd | Other assets | 172 | ||||||
KB Savings Bank Co., Ltd | Other assets Other liabilities |
|
81 21 |
| ||||
KB Real Estate Trust Co., Ltd | Other assets | 6,120 |
KB Investment Co., Ltd. | Loans | 10,000 | ||||||
Other assets |
715 | |||||||
KB Credit Information Co., Ltd | Other assets | 238 | ||||||
Other liabilities | 68 | |||||||
KB Data Systems Co., Ltd. | Other assets | 216 | ||||||
Other liabilities | 97 | |||||||
(In millions of Korean won) | 2013 | |||||||
Subsidiaries |
Kookmin Bank | Cash and due from financial institutions | ₩ | 77,298 | ||||
Other assets | 180,329 | |||||||
Other liabilities | 2 | |||||||
KB Kookmin Card Co., Ltd | Other assets | 75,455 | ||||||
Other liabilities | 260 | |||||||
KB Investment & Securities Co., Ltd. | Other assets | 1,807 | ||||||
Other liabilities | 72 | |||||||
KB Life Insurance Co., Ltd. | Other assets | 469 | ||||||
KB Asset Management Co., Ltd | Other assets | 9,793 | ||||||
KB Savings Bank Co., Ltd | Other assets | 30 | ||||||
Other liabilities | 28 | |||||||
KB Real Estate Trust Co., Ltd | Other assets | 474 | ||||||
KB Investment Co., Ltd. | Loans | 10,000 | ||||||
Other assets | 217 | |||||||
KB Credit Information Co., Ltd | Other assets | 236 | ||||||
Other liabilities | 18 | |||||||
KB Data Systems Co., Ltd. | Other assets | 206 | ||||||
Other liabilities | 108 |
60
KB Financial Group Inc.
Notes to Separate Financial Statements
December 31, 2014 and 2013
According to K-IFRS 1024, the Company includes subsidiaries and key management (including family members) in the scope of related parties. Additionally, the Company discloses balances (receivables and payables) and other amounts arising from the related party transactions in the notes to the separate financial statements. Refer to Note 8 for details on subsidiaries.
Key management includes the directors of the Company, their close family members, and the companies where the directors and/or their close family members have control or joint control.
Unused commitments by related parties as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||||
Subsidiaries |
KB Kookmin Card Co., Ltd. | Commitments in Korean won | ₩ | 1,133 | ₩ | 940 |
Compensation to key management for the years ended December 31, 2014 and 2013, consists of:
2014 | ||||||||||||||||||||
(In millions of Korean won) | Short-term employee benefits |
Post- employment benefits |
Termination benefits |
Share- based payments |
Total | |||||||||||||||
Registered directors (executive) |
₩ | 175 | ₩ | 73 | ₩ | | ₩ | (1,177 | ) | ₩ | (929 | ) | ||||||||
Registered directors (non-executive) |
746 | | | (15 | ) | 731 | ||||||||||||||
Non-registered directors |
2,657 | 110 | | 1,993 | 4,760 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 3,578 | ₩ | 183 | ₩ | | ₩ | 801 | ₩ | 4,562 | |||||||||||
|
|
|
|
|
|
|
|
|
|
2013 | ||||||||||||||||||||
(In millions of Korean won) | Short-term employee benefits |
Post- employment benefits |
Termination benefits |
Share- based payments |
Total | |||||||||||||||
Registered directors (executive) |
₩ | 1,783 | ₩ | 41 | ₩ | | ₩ | (1,027 | ) | ₩ | 797 | |||||||||
Registered directors (non-executive) |
835 | | | 13 | 848 | |||||||||||||||
Non-registered directors |
2,981 | 41 | 445 | 1,964 | 5,431 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 5,599 | ₩ | 82 | ₩ | 445 | ₩ | 950 | ₩ | 7,076 | |||||||||||
|
|
|
|
|
|
|
|
|
|
28. Approval of Issuance of the Financial Statements
The issuance of the Companys financial statements as of and for the year ended December 31, 2014, was approved by the Board of Directors on February 5, 2015.
61
Exhibit 99.2
KB Financial Group Inc. and Subsidiaries
Consolidated Statements of Financial Position
December 31, 2014 and 2013, and January 1, 2013
(in millions of Korean won) | Notes | December 31, 2014 | December 31, 2013 | January 1, 2013 | ||||||||||
Assets |
||||||||||||||
Cash and due from financial institutions |
4,6,7,8,39 | ₩ | 15,423,847 | ₩ | 14,792,654 | ₩ | 10,592,605 | |||||||
Financial assets at fair value through profit or loss |
4,6,8,12 | 10,757,910 | 9,328,742 | 9,559,719 | ||||||||||
Derivative financial assets |
4,6,9 | 1,968,190 | 1,819,409 | 2,091,285 | ||||||||||
Loans |
4,6,8,10,11 | 231,449,653 | 219,001,356 | 213,644,791 | ||||||||||
Financial investments |
4,6,8,12 | 34,960,620 | 34,849,095 | 36,467,352 | ||||||||||
Investments in associates |
13 | 670,332 | 755,390 | 934,641 | ||||||||||
Property and equipment |
14 | 3,082,985 | 3,060,843 | 3,100,393 | ||||||||||
Investment property |
14 | 377,544 | 166,259 | 52,974 | ||||||||||
Intangible assets |
15 | 488,922 | 443,204 | 493,131 | ||||||||||
Current income tax assets |
18,33 | 306,313 | 346,910 | 332,970 | ||||||||||
Deferred income tax assets |
16,33 | 15,562 | 15,422 | 18,432 | ||||||||||
Assets held for sale |
17 | 70,357 | 37,718 | 35,412 | ||||||||||
Other assets |
4,6,18 | 8,783,473 | 7,550,596 | 8,745,799 | ||||||||||
|
|
|
|
|
|
|||||||||
Total assets |
₩ | 308,355,708 | ₩ | 292,167,598 | ₩ | 286,069,504 | ||||||||
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||
Financial liabilities at fair value through profit or loss |
4,6,19 | ₩ | 1,818,968 | ₩ | 1,115,202 | ₩ | 1,851,135 | |||||||
Derivative financial liabilities |
4,6,9 | 1,797,390 | 1,795,339 | 2,054,742 | ||||||||||
Deposits |
4,6,20 | 211,549,121 | 200,882,064 | 197,346,205 | ||||||||||
Debts |
4,6,21 | 15,864,500 | 14,101,331 | 15,965,458 | ||||||||||
Debentures |
4,6,22 | 29,200,706 | 27,039,534 | 24,270,212 | ||||||||||
Provisions |
23 | 614,347 | 678,073 | 669,729 | ||||||||||
Net defined benefit liabilities |
24 | 75,684 | 64,473 | 83,723 | ||||||||||
Current income tax liabilities |
33 | 231,907 | 211,263 | 264,666 | ||||||||||
Deferred income tax liabilities |
16,33 | 93,211 | 61,816 | 154,303 | ||||||||||
Other liabilities |
4,6,25 | 19,597,202 | 20,236,229 | 18,327,740 | ||||||||||
|
|
|
|
|
|
|||||||||
Total liabilities |
280,843,036 | 266,185,324 | 260,987,913 | |||||||||||
|
|
|
|
|
|
|||||||||
Equity |
||||||||||||||
Share capital |
26 | 1,931,758 | 1,931,758 | 1,931,758 | ||||||||||
Capital surplus |
26 | 15,854,510 | 15,854,605 | 15,840,300 | ||||||||||
Accumulated other comprehensive income |
26,35 | 461,679 | 336,312 | 295,142 | ||||||||||
Retained earnings |
26 | 9,067,145 | 7,859,599 | 6,819,869 | ||||||||||
|
|
|
|
|
|
|||||||||
Equity attributable to shareholders of the parent company |
27,315,092 | 25,982,274 | 24,887,069 | |||||||||||
Non-controlling interests |
197,580 | | 194,522 | |||||||||||
|
|
|
|
|
|
|||||||||
Total equity |
27,512,672 | 25,982,274 | 25,081,591 | |||||||||||
|
|
|
|
|
|
|||||||||
Total liabilities and equity |
₩ | 308,355,708 | ₩ | 292,167,598 | ₩ | 286,069,504 | ||||||||
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
1
KB Financial Group Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2014 and 2013
(In millions of Korean won, except per share amounts) | Notes | 2014 | 2013 | |||||||
Interest income |
₩ | 11,635,296 | ₩ | 12,356,930 | ||||||
Interest expense |
(5,219,521 | ) | (5,834,098 | ) | ||||||
|
|
|
|
|||||||
Net interest income |
5,27 | 6,415,775 | 6,522,832 | |||||||
|
|
|
|
|||||||
Fee and commission income |
2,666,185 | 2,657,365 | ||||||||
Fee and commission expense |
(1,283,456 | ) | (1,178,126 | ) | ||||||
|
|
|
|
|||||||
Net fee and commission income |
5,28 | 1,382,729 | 1,479,239 | |||||||
|
|
|
|
|||||||
Net gains (losses) on financial assets/liabilities at fair value through profit or loss |
5,29 | 439,198 | 756,822 | |||||||
|
|
|
|
|||||||
Net other operating income (expenses) |
5,30 | (1,040,909 | ) | (1,304,765 | ) | |||||
|
|
|
|
|||||||
General and administrative expenses |
5,14,15,24,31 | (4,009,694 | ) | (3,983,564 | ) | |||||
|
|
|
|
|||||||
Operating profit before provision for credit losses |
5 | 3,187,099 | 3,470,564 | |||||||
Provision for credit losses |
5,11,18,23 | (1,227,976 | ) | (1,443,572 | ) | |||||
|
|
|
|
|||||||
Net operating profit |
5 | 1,959,123 | 2,026,992 | |||||||
|
|
|
|
|||||||
Share of profit (loss) of associates |
5,13 | 13,428 | (199,392 | ) | ||||||
Net other non-operating income (expense) |
5,32 | (71,126 | ) | (12,309 | ) | |||||
|
|
|
|
|||||||
Net non-operating profit (loss) |
(57,698 | ) | (211,701 | ) | ||||||
|
|
|
|
|||||||
Profit before income tax |
5 | 1,901,425 | 1,815,291 | |||||||
Income tax expense |
5,33 | (486,314 | ) | (540,593 | ) | |||||
|
|
|
|
|||||||
Profit for the year |
5 | 1,415,111 | 1,274,698 | |||||||
|
|
|
|
|||||||
Remeasurements of net defined benefit liabilities |
24 | (99,594 | ) | 40,984 | ||||||
|
|
|
|
|||||||
Items that will not be reclassified to profit or loss |
(99,594 | ) | 40,984 | |||||||
|
|
|
|
|||||||
Exchange differences on translating foreign operations |
17,280 | (2,298 | ) | |||||||
Change in value of financial investments |
248,880 | (3,591 | ) | |||||||
Shares of other comprehensive income of associates |
(32,206 | ) | (9,811 | ) | ||||||
Cash flow hedges |
(10,497 | ) | 1,618 | |||||||
|
|
|
|
|||||||
Items that may be reclassified subsequently to profit or loss |
223,457 | (14,082 | ) | |||||||
|
|
|
|
|||||||
Other comprehensive income for the year, net of tax |
123,863 | 26,902 | ||||||||
|
|
|
|
|||||||
Total comprehensive income for the year |
₩ | 1,538,974 | ₩ | 1,301,600 | ||||||
|
|
|
|
|||||||
Profit attributable to: |
||||||||||
Shareholders of the parent company |
5 | ₩ | 1,400,722 | ₩ | 1,271,502 | |||||
Non-controlling interests |
5 | 14,389 | 3,196 | |||||||
|
|
|
|
|||||||
5 | ₩ | 1,415,111 | ₩ | 1,274,698 | ||||||
|
|
|
|
|||||||
Total comprehensive income for the year attributable to: |
||||||||||
Shareholders of the parent company |
₩ | 1,526,089 | ₩ | 1,312,672 | ||||||
Non-controlling interests |
12,885 | (11,072 | ) | |||||||
|
|
|
|
|||||||
₩ | 1,538,974 | ₩ | 1,301,600 | |||||||
|
|
|
|
|||||||
Earnings per share |
36 | |||||||||
Basic earnings per share |
₩ | 3,626 | ₩ | 3,291 | ||||||
Diluted earnings per share |
3,611 | 3,277 |
The accompanying notes are an integral part of these consolidated financial statements.
2
KB Financial Group Inc. and Subsidiaries
Consolidated Statements of Changes in Equity
Years Ended December 31, 2014 and 2013
Equity attributable to shareholders of the parent company | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
(in millions of Korean won) | Share | Capital | Comprehensive | Retained | Non-controlling | Total | ||||||||||||||||||
Capital | Surplus | Income | Earnings | Interests | Equity | |||||||||||||||||||
Balance at January 1, 2013 |
₩ | 1,931,758 | ₩ | 15,840,300 | ₩ | 295,142 | ₩ | 6,501,419 | ₩ | 194,522 | ₩ | 24,763,141 | ||||||||||||
Changes in accounting policy |
| | | 318,450 | | 318,450 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Restated balance |
1,931,758 | 15,840,300 | 295,142 | 6,819,869 | 194,522 | 25,081,591 | ||||||||||||||||||
Comprehensive income |
||||||||||||||||||||||||
Profit for the year |
| | | 1,271,502 | 3,196 | 1,274,698 | ||||||||||||||||||
Remeasurements of net defined benefit liabilities |
| | 40,984 | | | 40,984 | ||||||||||||||||||
Exchange differences on translating foreign operations |
| | (2,372 | ) | | 74 | (2,298 | ) | ||||||||||||||||
Change in value of financial investments |
| | 10,751 | | (14,342 | ) | (3,591 | ) | ||||||||||||||||
Shares of other comprehensive income of associates |
| | (9,811 | ) | | | (9,811 | ) | ||||||||||||||||
Cash flow hedges |
| | 1,618 | | | 1,618 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive income |
| | 41,170 | 1,271,502 | (11,072 | ) | 1,301,600 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Transactions with shareholders |
||||||||||||||||||||||||
Dividends paid to shareholders of the parent company |
| | | (231,811 | ) | | (231,811 | ) | ||||||||||||||||
Changes in interest in subsidiaries |
| 14,305 | | 39 | (183,450 | ) | (169,106 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total transactions with shareholders |
| 14,305 | | (231,772 | ) | (183,450 | ) | (400,917 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2013 |
₩ | 1,931,758 | ₩ | 15,854,605 | ₩ | 336,312 | ₩ | 7,859,599 | ₩ | | ₩ | 25,982,274 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at January 1, 2014 |
₩ | 1,931,758 | ₩ | 15,854,605 | ₩ | 336,312 | ₩ | 7,859,599 | ₩ | | ₩ | 25,982,274 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Comprehensive income |
||||||||||||||||||||||||
Profit for the year |
| | | 1,400,722 | 14,389 | 1,415,111 | ||||||||||||||||||
Remeasurements of net defined benefit liabilities |
| | (98,291 | ) | | (1,303 | ) | (99,594 | ) | |||||||||||||||
Exchange differences on translating foreign operations |
| | 17,280 | | | 17,280 | ||||||||||||||||||
Change in value of financial investments |
| | 248,843 | | 37 | 248,880 | ||||||||||||||||||
Shares of other comprehensive income of associates |
| | (32,206 | ) | | | (32,206 | ) | ||||||||||||||||
Cash flow hedges |
| | (10,259 | ) | | (238 | ) | (10,497 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive income |
| | 125,367 | 1,400,722 | 12,885 | 1,538,974 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Transactions with shareholders |
||||||||||||||||||||||||
Dividends paid to shareholders of the parent company |
| | | (193,176 | ) | | (193,176 | ) | ||||||||||||||||
Changes in interest in subsidiaries |
| (95 | ) | | | 184,695 | 184,600 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total transactions with shareholders |
| (95 | ) | | (193,176 | ) | 184,695 | (8,576 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2014 |
₩ | 1,931,758 | ₩ | 15,854,510 | ₩ | 461,679 | ₩ | 9,067,145 | ₩ | 197,580 | ₩ | 27,512,672 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
3
KB Financial Group Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31, 2014 and 2013
(in millions of Korean won) | Note | 2014 | 2013 | |||||||
Cash flows from operating activities |
||||||||||
Profit for the year |
₩ | 1,415,111 | ₩ | 1,274,698 | ||||||
|
|
|
|
|||||||
Adjustment for non-cash items |
||||||||||
Net loss(gain) on financial assets/liabilities at fair value through profit or loss |
(151,483 | ) | (110,425 | ) | ||||||
Net loss(gain) on derivative financial instruments for hedging purposes |
27,088 | 48,787 | ||||||||
Adjustment of fair value of derivative financial instruments |
(2,040 | ) | 699 | |||||||
Provision for credit loss |
1,227,976 | 1,443,572 | ||||||||
Net loss(gain) on financial investments |
109,461 | (1,191 | ) | |||||||
Share of loss(profit) of associates |
(13,428 | ) | 199,392 | |||||||
Depreciation and amortization expense |
261,197 | 286,858 | ||||||||
Other net losses on property and equipment/intangible assets |
41,115 | 39,777 | ||||||||
Share-based payments |
11,422 | 17,289 | ||||||||
Policy reserve appropriation |
666,155 | 761,877 | ||||||||
Post-employment benefits |
166,671 | 172,579 | ||||||||
Net interest expense |
360,500 | 314,866 | ||||||||
Loss(gains) on foreign currency translation |
116,035 | 17,082 | ||||||||
Net other expense(income) |
(17,076 | ) | (24,981 | ) | ||||||
|
|
|
|
|||||||
2,803,593 | 3,166,181 | |||||||||
|
|
|
|
|||||||
Changes in operating assets and liabilities |
||||||||||
Financial asset at fair value through profit or loss |
(1,364,780 | ) | 214,181 | |||||||
Derivative financial instruments |
104,333 | 116,660 | ||||||||
Loans |
(10,027,349 | ) | (7,335,434 | ) | ||||||
Current income tax assets |
40,597 | (13,940 | ) | |||||||
Deferred income tax assets |
(140 | ) | 1,349 | |||||||
Other assets |
427,501 | (5,075,338 | ) | |||||||
Financial liabilities at fair value through profit or loss |
704,389 | (773,558 | ) | |||||||
Deposits |
10,668,675 | 2,584,993 | ||||||||
Deferred income tax liabilities |
(27,242 | ) | (74,463 | ) | ||||||
Other liabilities |
(1,467,942 | ) | (430,856 | ) | ||||||
|
|
|
|
|||||||
(941,958 | ) | (10,786,406 | ) | |||||||
|
|
|
|
|||||||
Net cash generated from (used in) operating activities |
3,276,746 | (6,345,527 | ) | |||||||
|
|
|
|
|||||||
Cash flows from investing activities |
||||||||||
Disposal of financial investments |
19,632,047 | 25,655,149 | ||||||||
Acquisition of financial investments |
(19,463,101 | ) | (23,020,912 | ) | ||||||
Disposal in investments in associates |
81,321 | 20,554 | ||||||||
Acquisition of investments in associates |
(17,650 | ) | (23,340 | ) | ||||||
Disposal of property and equipment |
223 | 1,070 | ||||||||
Acquisition of property and equipment |
(202,007 | ) | (153,469 | ) | ||||||
Acquisition of investment property |
(211,995 | ) | (114,609 | ) | ||||||
Disposal of intangible assets |
4,590 | 5,072 | ||||||||
Acquisition of intangible assets |
(30,755 | ) | (68,091 | ) | ||||||
Business combination, net of cash acquired |
(266,899 | ) | 322,641 | |||||||
Others |
(1,210,071 | ) | 1,554,752 | |||||||
|
|
|
|
|||||||
Net cash provided by (used in) investing activities |
(1,684,297 | ) | 4,178,817 | |||||||
|
|
|
|
|||||||
Cash flows from financing activities |
||||||||||
Net cash flows from derivative financial instruments for hedging purposes |
(204,563 | ) | 10,977 | |||||||
Net increase(decrease) in debts |
1,129,837 | (1,990,258 | ) | |||||||
Increase in debentures |
43,135,390 | 10,758,948 | ||||||||
Decrease in debentures |
(43,816,790 | ) | (7,924,609 | ) | ||||||
Increase in other payables from trust accounts |
124,904 | 414,279 | ||||||||
Dividends paid to shareholders of the parent company |
(193,176 | ) | (231,811 | ) | ||||||
Changes in interest in subsidiaries |
(95 | ) | (168,293 | ) | ||||||
Others |
(930,573 | ) | 837,906 | |||||||
|
|
|
|
|||||||
Net cash provided by (used in) financing activities |
(755,066 | ) | 1,707,139 | |||||||
|
|
|
|
|||||||
Effect of exchange rate changes on cash and cash equivalents |
12,227 | 41,452 | ||||||||
|
|
|
|
|||||||
Net increase(decrease) in cash and cash equivalents |
849,610 | (418,119 | ) | |||||||
Cash and cash equivalents at the beginning of the year |
39 | 6,169,186 | 6,587,305 | |||||||
|
|
|
|
|||||||
Cash and cash equivalents at the end of the year |
39 | ₩ | 7,018,796 | ₩ | 6,169,186 | |||||
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
4
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
1. The Parent Company
KB Financial Group Inc. (the Parent Company) was incorporated on September 29, 2008, under the Financial Holding Companies Act of Korea. KB Financial Group Inc. and its subsidiaries (the Group) derive substantially all of their revenue and income from providing a broad range of banking and related financial services to consumers and corporations primarily in Korea and in selected international markets. The Parent Companys principal business includes ownership and management of subsidiaries and associated companies that are engaged in financial services or activities. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Group established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013 and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In addition, the Group acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. in March 2014.
The Parent Companys share capital as of December 31, 2014, is ₩1,931,758 million. The Parent Company is authorized to issue up to 1 billion shares. The Parent Company has been listed on the Korea Exchange (KRX) since October 10, 2008, and on the New York Stock Exchange (NYSE) for its American Depositary Shares (ADS) since September 29, 2008. Number of shares authorized on its Articles of Incorporation is 1,000 million.
2. Basis of Preparation
2.1 Application of K-IFRS
The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with the International Financial Reporting Standards as adopted by the Republic of Korea (K-IFRS). The accompanying consolidated financial statements have been condensed, restructured and translated into English from the Korean language financial statements.
Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Groups financial position, financial performance or cash flows, is not presented in the accompanying consolidated financial statements.
The consolidated financial statements of the Parent company and its subsidiaries (The Group) have been prepared in accordance with Korean-IFRS(K-IFRS). K-IFRS are the standards and related interpretations issued by the International Accounting Standards Board (IASB) that have been adopted by the Republic of Korea.
The preparation of consolidated financial statements requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the Groups accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 2.4.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The Group has applied the following accounting policy for the financial year beginning on January 1, 2014
Amendment to K-IFRS 1032, Financial Instruments: Presentation
According to Amendment to K-IFRS 1032, Financial Instruments: Presentation, provides that the right to offset must not be contingent on a future event and must be legally enforceable in all of circumstances; and if an entity can settle amounts in a manner such that outcome is, in effect, equivalent to net settlement, the entity will meet the net settlement criterion. The application of this amendment does not have a material impact on the consolidated financial statements.
Amendment to K-IFRS 1036, Impairment of Assets
Amendment to K-IFRS 1036, Impairment of Assets, removed certain disclosures of the recoverable amount of cash-generating units which had been included in this amendment by the issuance of K-IFRS 1113. The application of this amendment does not have a material impact on the consolidated financial statements.
Amendment to K-IFRS 1039, Financial Instruments: Recognition and Measurement
Amendment to K-IFRS 1039, Financial Instruments: Recognition and Measurement, allows the continuation of hedge accounting for a derivative that has been designated as a hedging instrument in a circumstance in which that derivative is novated to a central counterparty (CCP) as a consequence of laws or regulations. The application of this amendment does not have a material impact on the consolidated financial statements.
- Amendment to Korean IFRS 1102, Share-based payment
K-IFRS 1102, Share-based payment, clarifies the definition of vesting conditions such as performance condition, service condition and others. This amendment is applied to share-based payment transactions for which the grant date is on or after July 1, 2014. The application of this amendment does not have a material impact on the consolidated financial statements.
Enactment of K-IFRS 2121, Levies
K-IFRS 2121, Levies, is applied to a liability to pay a levy imposed by a government in accordance with the legislation. The interpretation requires that the liability to pay a levy is recognized when the activity that triggers the payment of the levy occurs, as identified by the legislation (the obligating event). The interpretation does not have a significant impact on the consolidated financial statements.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The group has applied the following policy for the financial year beginning on January 1, 2014.
Changes in accounting policy with respect to uncertain tax position
For the periods prior to the year ended December 31, 2014, pursuant to Korean IFRS 1037 if a uncertain tax position satisfied the criteria for provisions, the Group measured the best estimate of expenditures for the uncertain tax position. The amount in relation to the claim of rectification and litigation over the levied amount from taxation authority was recognized as contingent assets. However, the Group retrospectively applied the accounting policy in accordance with the Korean IFRS 1012, which allows recognition of the tax payment in 2014 as income tax assets when it is probable to receive a tax refund. The restated comparative consolidated financial statements reflect adjustments resulting from the retrospective application.
The effect of these changes in accounting policy to financial position as of December 31, 2014 and 2013, and January 1, 2013, and to comprehensive income for the years ended December 31, 2014 and 2013, are as follows:
Effect on Consolidated Statements of Financial Position
(In millions of Korean won) | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 1, 2013 | |||||||||
Increase in current income tax assets |
₩ | 306,313 | ₩ | 329,443 | ₩ | 318,450 | ||||||
Increase in retained earnings |
306,313 | 329,443 | 318,450 |
Effect on Consolidated Statements of Comprehensive Income
(In millions of Korean won) | 2014 | 2013 | ||||||
Decrease(increase) in income tax |
₩ | (23,130 | ) | ₩ | 10,993 | |||
(In Korean won) |
||||||||
Increase(decrease) in earnings per share |
(60 | ) | 28 | |||||
Increase(decrease) in diluted earnings per share |
(60 | ) | 28 |
The Group expects that new standards, amendments and interpretations issued but not effective for the annual period beginning on January 1, 2014, and not early adopted would not have a material impact on its consolidated financial statements.
2.2 Measurement Basis
The consolidated financial statements have been prepared under the historical cost convention unless otherwise specified.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
2.3 Functional and Presentation Currency
Items included in the financial statements of each entity of the Group are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Korean won, which is the Parent Companys functional and presentation currency. Refer to Notes 3.2.1 and 3.2.2.
2.4 Significant Estimates
The preparation of consolidated financial statements requires the application of accounting policies, certain critical accounting estimates and assumptions that may have a significant impact on the assets (liabilities) and income (expenses). Managements estimates of outcomes may differ from actual outcomes if managements estimates and assumptions based on managements best judgment at the reporting date are different from the actual environment.
Estimates and assumptions are continually evaluated and any change in an accounting estimate is recognized prospectively by including it in profit or loss in the period of the change, if the change affects that period only. Alternatively if the change in accounting estimate affects both the period of change and future periods, that change is recognized in the profit or loss of all those periods.
Uncertainty in estimates and assumptions with significant risk that may result in material adjustment to the consolidated financial statements are as follows:
2.4.1 Deferred income taxes
The recognition of a deferred tax asset relies on an assessment of the probability and sufficiency of future taxable profits, future reversals of existing taxable temporary differences and ongoing tax planning strategies.
2.4.2 Fair value of financial instruments
The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available is determined by using valuation techniques. Financial instruments, which are not actively traded in the market and those with less transparent market prices, will have less objective fair values and require broad judgment on liquidity, concentration, uncertainty in market factors and assumptions in price determination and other risks.
As described in the significant accounting policies in Note 3.3, Recognition and Measurement of Financial Instruments, diverse valuation techniques are used to determine the fair value of financial instruments, from generally accepted market valuation models to internally developed valuation models that incorporate various types of assumptions and variables.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
2.4.3 Provisions for credit losses (allowances for loan losses, provisions for acceptances and guarantees, and unused loan commitments)
The Group determines and recognizes allowances for losses on loans through impairment testing and recognizes provisions for guarantees, and unused loan commitments. The accuracy of provisions for credit losses is determined by the methodology and assumptions used for estimating expected cash flows of the borrower for individually assessed allowances of loans, collectively assessed allowances for groups of loans, guarantees and unused loan commitments.
2.4.4 Measurements of net defined benefit liabilities
The present value of net defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions (Note 24).
2.4.5 Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations (Note 15).
3. Significant Accounting Policies
The significant accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.
3.1 Consolidation
3.1.1 Subsidiaries
Subsidiaries are companies that are controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The existence and effects of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date when control is transferred to the Group and de-consolidated from the date when control is lost.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
If a subsidiary uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to make the subsidiarys accounting policies conform to those of the Group when the subsidiarys financial statements are used by the Group in preparing the consolidated financial statements.
Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests, if any. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions; that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.
The Group applies the acquisition method to account for business combinations. The consideration transferred is measured at the fair values of the assets transferred, and identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis in the event of liquidation, either at fair value or at the non-controlling interests proportionate share of the recognized amounts of acquirees identifiable net assets. Acquisition-related costs are expensed as incurred.
3.1.2 Associates
Associates are entities over which the Group has significant influence in the financial and operating policy decisions. If the Group holds 20% or more of the voting power of the investee, it is presumed that the Group has significant influence.
Under the equity method, investments in associates are initially recognized at cost and the carrying amount is increased or decreased to recognize the Groups share of the profit or loss of the investee and changes in the investees equity after the date of acquisition. The Groups share of the profit or loss of the investee is recognized in the Groups profit or loss. Distributions received from an investee reduce the carrying amount of the investment. Profit and losses resulting from upstream and downstream transactions between the Group and associates are eliminated to the extent of the Groups interest in associates.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
If associates use accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to make the associates accounting policies conform to those of the Group when the associates financial statements are used by the Group in applying equity method.
After the carrying amount of the investment is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee.
The Group determines at each reporting date whether there is any objective evidence that the investments in the associates are impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associates and its carrying value and recognizes the amount as share of profit or loss of associates in the statements of comprehensive income.
3.1.3 Structured entity
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. When the Group decides whether it has power to the structured entities in which the Group has interests, it considers factors such as the purpose, the form, the practical ability to direct the relevant activities of a structured entity, the nature of its relationship with a structured entity and the amount of exposure to variable returns.
3.1.4 Management of Funds
The Group provides management services for trust assets, collective investment and other funds. These trusts and funds are not consolidated in the Groups consolidated financial statements, except for trusts and funds over which the Group has control.
3.1.5 Intra-group transactions
All intra-group balances and transactions, and any unrealized gains arising on intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains except that they are only eliminated to the extent that there is no evidence of impairment.
3.2 Foreign Currency
3.2.1 Foreign currency transactions and balances
A foreign currency transaction is recorded, on initial recognition in the functional currency, by applying the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of each reporting period foreign currency monetary items are translated using the closing rate which is the spot exchange rate at the end of the reporting period. Non-monetary items that are measured at fair value in a foreign currency are translated using the spot exchange rates at the date when the fair value was determined and non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the spot exchange rate at the date of the transaction.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognized in profit or loss in the year in which they arise. When gains or losses on a non-monetary item are recognized in other comprehensive income, any exchange component of those gains or losses are also recognized in other comprehensive income. Conversely, when gains or losses on a non-monetary item are recognized in profit or loss, any exchange component of those gains or losses are also recognized in profit or loss.
3.2.2 Foreign Operations
The financial performance and financial position of all foreign operations, whose functional currencies differ from the Groups presentation currency, are translated into the Groups presentation currency using the following procedures:
Assets and liabilities for each statement of financial position presented are translated at the closing rate at the end of the reporting period. Income and expenses in the statement of comprehensive income presented are translated at average exchange rates for the period. All resulting exchange differences are recognized in other comprehensive income.
Any goodwill arising from the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising from the acquisition of that foreign operation are treated as assets and liabilities of the foreign operation. Thus they are expressed in the functional currency of the foreign operation and are translated into the presentation currency at the closing rate.
On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, are reclassified from equity to profit or loss (as a reclassification adjustment) when the gains or losses on disposal are recognized. On the partial disposal of a subsidiary that includes a foreign operation, the Group re-attributes the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income to the non-controlling interests in that foreign operation. In any other partial disposal of a foreign operation, the Group reclassifies to profit or loss only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.3 Recognition and Measurement of Financial Instruments
3.3.1 Initial recognition
The Group recognizes a financial asset or a financial liability in its statement of financial position when, the Group becomes a party to the contractual provisions of the instrument. A regular way purchase or sale of financial assets (a purchase or sale of a financial asset under a contract whose terms require delivery of the financial instruments within the time frame established generally by market regulation or practice) is recognized and derecognized using trade date accounting.
The Group classifies financial assets as financial assets at fair value through profit or loss, held-to-maturity financial assets, available-for-sale financial assets, or loans and receivables. The Group classifies financial liabilities as financial liabilities at fair value through profit or loss or other financial liabilities. The classification depends on the nature and holding purpose of the financial instrument at initial recognition in the financial statements.
At initial recognition, a financial asset or financial liability is measured at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of a financial instrument on initial recognition is normally the transaction price (that is, the fair value of the consideration given or received) in an arms length transaction.
3.3.2 Subsequent measurement
After initial recognition, financial instruments are measured at amortized cost or fair value based on classification at initial recognition.
Amortized cost
The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition and adjusted to reflect principal repayments, cumulative amortization using the effective interest method and any reduction (directly or through the use of an allowance account) for impairment or uncollectibility.
Fair value
Fair values, which the Group primarily uses for the measurement of financial instruments, are the published price quotations based on market prices or dealer price quotations of financial instruments traded in an active market where available. These are the best evidence of fair value. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, an entity in the same industry, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arms length basis.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
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 arms length market transactions between knowledgeable, willing parties, if available, referencing to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models.
The Group uses valuation models that are commonly used by market participants and customized for the Group to determine fair values of common over-the-counter (OTC) derivatives such as options, interest rate swaps and currency swaps which are based on the inputs observable in markets. For more complex instruments, the Group uses internally developed models, which are usually based on valuation methods and techniques generally recognized as standard within the industry, or a value measured by an independent external valuation institution as the fair values if all or some of the inputs to the valuation models are not market observable and therefore it is necessary to estimate fair value based on certain assumptions.
The Groups Fair Value Evaluation Committee, which consists of the risk management department, trading department and accounting department, reviews the appropriateness of internally developed valuation models, and approves the selection and changing of the external valuation institution and other considerations related to fair value measurement. The review results on the fair valuation models are reported to the Market Risk Management subcommittee by the Fair Value Evaluation Committee on a regular basis.
If the valuation technique does not reflect all factors which market participants would consider in setting a price, the fair value is adjusted to reflect those factors. These factors include counterparty credit risk, bid-ask spread, liquidity risk and others.
The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments. Periodically, the Group calibrates the valuation technique and tests it for validity using prices from observable current market transactions of the same instrument or based on other relevant observable market data.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.3.3 Derecognition
Derecognition is the removal of a previously recognized financial asset or financial liability from the statement of financial position. The Group derecognizes a financial asset or a financial liability when, and only when:
Derecognition of financial assets
Financial assets are derecognized when the contractual rights to the cash flows from the financial assets expire or the financial assets have been transferred and substantially all the risks and rewards of ownership of the financial assets are also transferred, or all the risks and rewards of ownership of the financial assets are neither substantially transferred nor retained and the Group has not retained control. If the Group neither transfers nor disposes of substantially all the risks and rewards of ownership of the financial assets, the Group continues to recognize the financial asset to the extent of its continuing involvement in the financial asset.
If the Group transfers the contractual rights to receive the cash flows of the financial asset, but retains substantially all the risks and rewards of ownership of the financial asset, the Group continues to recognize the transferred asset in its entirely and recognize a financial liability for the consideration received.
Derecognition of financial liabilities
Financial liabilities are derecognized from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expires.
3.3.4 Offsetting
Financial assets and liabilities are offset and the net amount reported in the consolidated statements of financial position where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.
3.4 Cash and cash equivalents
Cash and cash equivalents include cash on hand, foreign currency, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
3.5 Non-derivative financial assets
3.5.1 Financial assets at fair value through profit or loss
This category comprises two sub-categories: financial assets classified as held for trading, and financial assets designated by the Group as at fair value through profit or loss upon initial recognition.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
A non-derivative financial asset is classified as held for trading if either:
| It is acquired for the purpose of selling in the near term, or |
| It is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. |
The Group may designate certain financial assets, other than held for trading, upon initial recognition as at fair value through profit or loss when one of the following conditions is met:
| It eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an accounting mismatch) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. |
| A group of financial assets is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the Groups key management personnel. |
| A contract contains one or more embedded derivatives; the Group may designate the entire hybrid (combined) contract as a financial asset at fair value through profit or loss if allowed by K-IFRS 1039, Financial Instruments: Recognition and measurement. |
After initial recognition, a financial asset at fair value through profit or loss is measured at fair value and gains or losses arising from a change in the fair value are recognized in profit or loss. Interest income, dividend income, and gains or losses from sale and repayment from financial assets at fair value through profit or loss are recognized in the statement of comprehensive income as net gains on financial instruments at fair value through profit or loss.
3.5.2 Financial Investments
Available-for-sale and held-to-maturity financial assets are presented as financial investments.
Available-for-sale financial assets
Profit or loss of financial assets classified as available for sale, except for impairment loss and foreign exchange gains and losses resulting from changes in amortized cost of debt securities, is recognized as other comprehensive income, and cumulative profit or loss is reclassified from equity to current profit or loss at the derecognition of the financial asset, and it is recognized as part of other operating profit or loss in the statement of comprehensive income.
However, interest revenue measured using the effective interest method is recognized in current profit or loss, and dividends of financial assets classified as available-for-sale are recognized when the right to receive payment is established.
16
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Available-for-sale financial assets denominated in foreign currencies are translated at the closing rate. For available-for-sale debt securities denominated in foreign currency, exchange differences resulting from changes in amortized cost are recognized in profit or loss as part of other operating income and expenses. For available-for-sale equity securities denominated in foreign currency, the entire change in fair value including any exchange component is recognized in other comprehensive income.
Held-to-maturity financial assets
Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Groups management has the positive intention and ability to hold to maturity. Held-to-maturity financial assets are subsequently measured at amortized cost using the effective interest method after initial recognition and interest income is recognized using the effective interest method.
3.5.3 Loans and receivables
Non-derivative financial assets which meet the following conditions are classified as loans and receivables:
| Those with fixed or determinable payments. |
| Those that are not quoted in an active market. |
| Those that the Group does not intend to sell immediately or in the near term. |
| Those that the Group, upon initial recognition, does not designate as available-for-sale or as at fair value through profit or loss. |
After initial recognition, these are subsequently measured at amortized cost using the effective interest method.
If the financial asset is purchased under an agreement to resale the asset at a fixed price or at a price that provides a lenders return on the purchase price, the consideration paid is recognized as loans and receivables.
3.6 Impairment of financial assets
The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets except for financial assets at fair value through profit or loss is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred, if and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. However, losses expected as a result of future events, no matter how likely, are not recognized.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the holder of the asset about 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 lender, for economic or legal reasons relating to the borrowers financial difficulty, granting to the borrower a concession that the lender would not otherwise consider. |
| It becomes probable that the borrower will declare bankruptcy or undergo financial reorganization. |
| The disappearance of an active market for that financial asset because of financial difficulties. |
| Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio. |
In addition to the types of events in the preceding paragraphs, objective evidence of impairment for an investment in an equity instrument classified as an available-for-sale financial asset includes a significant or prolonged decline in the fair value below its cost. Accordingly, the Group considers the decline in the fair value of over 30% against the original cost as a significant decline and a six-month decline in the fair value below its cost for an equity instrument as a prolonged decline.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured and recognized in profit or loss as either provisions for credit loss or other operating income and expenses.
3.6.1 Loans and receivables
If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial assets original effective interest rate.
The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant (individual assessment of impairment), and individually or collectively for financial assets that are not individually significant. If the Group 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).
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Individual assessment of impairment
Individual assessment of impairment losses are 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 loans current carrying amount. This process normally encompasses managements best estimate, such as operating cash flow of the borrower and net realizable value of any collateral held.
Collective assessment of impairment
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.
Impairment loss on loans reduces the carrying amount of the asset through use of an allowance account, and when a loan becomes uncollectable, it is written off against the related allowance account. If, in a subsequent period, the amount of the impairment loss decreases and is objectively related to the subsequent event after recognition of impairment, the previously recognized impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized in profit or loss.
3.6.2 Available-for-sale financial assets
When a decline in the fair value of an available-for-sale financial asset has been recognized in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss (the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss) that had been recognized in other comprehensive income is reclassified from equity to profit or loss as part of other operating income and expenses. The impairment loss on available-for-sale financial assets is directly deducted from the carrying amount.
If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, a portion of the impairment loss is reversed up to but not exceeding the previously recorded impairment loss, with the amount of the reversal recognized in profit or loss as part of other operating income and expenses in the statement of comprehensive income. However, impairment losses recognized in profit or loss for an available-for-sale equity instrument classified as available for sale are not reversed through profit or loss.
19
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.6.3 Held-to-maturity financial assets
If there is objective evidence that an impairment loss on held-to-maturity financial assets carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. The amount of the loss is recognized in profit or loss as part of other operating income and expenses. The impairment loss on held-to-maturity financial assets is directly deducted from the carrying amount.
In the case of a financial asset classified as held to maturity, if, in a subsequent period, the amount of the impairment loss decreases and it is objectively related to an event occurring after the impairment is recognized, a portion of the previously recognized impairment loss is reversed up to but not exceeding the amortized cost at the date of recovery. The amount of reversal is recognized in profit or loss as part of other operating income and expenses in the statement of comprehensive income.
3.7 Derivative Financial Instruments
The Group enters into numerous derivative financial instrument contracts such as currency forwards, interest rate swaps, currency swaps and others for trading purposes or to manage its exposures to fluctuations in interest rates and currency exchange, amongst others. These derivative financial instruments are presented as derivative financial instruments within the financial statements irrespective of transaction purpose and subsequent measurement requirement.
The Group designates certain derivatives as hedging instruments to hedge the risk of changes in fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge) and the risk of changes in cash flow (cash flow hedge).
At the inception of the hedge there is formal designation and documentation of the hedging relationship and the Groups risk management objective and strategy for undertaking the hedge. That documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instruments effectiveness in offsetting the exposure to changes in the hedged items fair value attributable to the hedged risk.
3.7.1 Derivative financial instruments held for trading
All derivative financial instruments, except for derivatives that are designated and qualify for hedge accounting, are classified as financial instruments held for trading and are measured at fair value. Gains or losses arising from a change in fair value are recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.7.2 Fair value hedges
If derivatives qualify for a fair value hedge, the change in fair value of the hedging instrument and the change in fair value of the hedged item attributable to the hedged risk are recognized in profit or loss as part of other operating income and expenses. Fair value hedge accounting is discontinued prospectively if the hedging instrument expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation. Once fair value hedge accounting is discontinued, the adjustment to the carrying amount of a hedged item is fully amortized to profit or loss by the maturity of the financial instrument using the effective interest method.
3.7.3 Cash flow hedges
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized directly in other comprehensive income and the ineffective portion of the gain or loss on the hedging instrument is recognized in profit or loss. The associated gains or losses that were previously recognized in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment in the same period or periods during which the hedged forecast cash flows affects profit or loss. Cash flow hedge accounting is discontinued prospectively if the hedging instrument expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation. When the cash flow hedge accounting is discontinued, the cumulative gains or losses on the hedging instrument that have been recognized in other comprehensive income are reclassified to profit or loss over the year in which the forecast transaction occurs. If the forecast transaction is no longer expected to occur, the cumulative gains or losses that had been recognized in other comprehensive income are immediately reclassified to profit or loss.
3.7.4 Embedded derivatives
An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if the economic characteristics and risks of the embedded derivative are not closely related to those of the host contract and a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and the hybrid (combined) instrument is not measured at fair value with changes in fair value recognized in profit or loss. Gains or losses arising from a change in the fair value of an embedded derivative separated from the host contract are recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss.
3.7.5 Day one gain and loss
If the Group uses a valuation technique that incorporates data not obtained from observable markets for the fair value at initial recognition of the financial instrument, there may be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the difference is deferred and not recognized in profit or loss, and is amortized by using the straight-line method over the life of the financial instrument. If the fair value of the financial instrument is subsequently determined using observable market inputs, the remaining deferred amount is recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss or other operating income and expenses.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.8 Property and equipment
3.8.1 Recognition and Measurement
All property and equipment that qualify for recognition as an asset are measured at cost and subsequently carried at cost less any accumulated depreciation and any accumulated impairment losses.
The cost of property and equipment includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent expenditures are capitalized only when they prolong the useful life or enhance values of the assets but the costs of the day-to-day servicing of the assets such as repair and maintenance costs are recognized in profit or loss as incurred. When part of an item of an asset has a useful life different from that of the entire asset, it is recognized as a separate asset.
3.8.2 Depreciation
Land is not depreciated, whereas other property and equipment are depreciated using the method that reflects the pattern in which the assets future economic benefits are expected to be consumed by the Group. The depreciable amount of an asset is determined after deducting its residual value. As for leased assets, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life.
Each part of an item of property and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.
The depreciation method and estimated useful lives of the assets are as follows:
Property and equipment | Depreciation method | Estimated useful lives | ||
Buildings and structures |
Straight-line | 40 years | ||
Leasehold improvements |
Declining-balance | 4 years | ||
Equipment and vehicles |
Declining-balance | 4 years | ||
Finance leased assets |
Declining-balance | 8 months ~ 5 years and 8 months |
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The residual value, the useful life and the depreciation method applied to an asset are reviewed at least at each financial year end, if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.
3.9 Investment properties
3.9.1 Recognition and Measurement
Properties held to earn rentals or for capital appreciation or both are classified as investment properties. Investment properties are measured initially at their cost and subsequently the cost model is used.
3.9.2 Depreciation
Land is not depreciated, whereas other investment properties are depreciated using the method that reflects the pattern in which the assets future economic benefits are expected to be consumed by the Group. The depreciable amount of an asset is determined after deducting its residual value.
The depreciation method and estimated useful lives of the assets are as follows:
Property and equipment | Depreciation method | Estimated useful lives | ||
Buildings | Straight-line | 40 years |
The residual value, the useful life and the depreciation method applied to an asset are reviewed at least at each financial year end and, if expectations differ from previous estimates or if there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the changes are accounted for as a change in an accounting estimate.
3.10 Intangible assets
Intangible assets are measured initially at cost and subsequently carried at their cost less any accumulated amortization and any accumulated impairment losses.
Intangible assets, except for goodwill and membership rights, are amortized using the straight-line method with no residual value over their estimated useful economic life since the asset is available for use.
Intangible assets | Amortization method | Estimated useful lives | ||
Industrial property rights | Straight-line | 3~10 years | ||
Software | Straight-line | 3~5 years | ||
Finance leased assets | Straight-line | 8 months ~ 5 years and 8 months | ||
Others | Straight-line | 4~30 years |
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The amortization period and the amortization method for intangible assets with a finite useful life are reviewed at least at each financial year end. Where an intangible asset is not being amortized because its useful life is considered to be indefinite, the Group carries out a review in each accounting period to confirm whether or not events and circumstances still support the assumption of an indefinite useful life. If they do not, the change from the indefinite to finite useful life is accounted for as a change in an accounting estimate.
3.10.1 Goodwill
Recognition and measurement
Goodwill acquired from business combinations before January 1, 2010, is stated at its carrying amount which was recognized under the Groups previous accounting policy, prior to the transition to K-IFRS.
Goodwill acquired from business combinations is initially measured as the excess of the aggregate of the consideration transferred, fair value of non-controlling interest and the acquisition-date fair value of the acquirers previously held equity interest in the acquiree over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the business acquired, the difference is recognized in profit or loss.
For each business combination, the Group decides whether the non-controlling interest in the acquiree is initially measured at fair value or at the non-controlling interests proportionate share of the acquirees identifiable net assets at the acquisition date.
Acquisition-related costs incurred to effect a business combination are charged to expenses in the periods in which the costs are incurred and the services are received, except for the costs to issue debt or equity securities.
Additional acquisitions of non-controlling interest
Additional acquisitions of non-controlling interests are accounted for as equity transactions. Therefore, no additional goodwill is recognized.
Subsequent measurement
Goodwill is not amortized and is stated at cost less accumulated impairment losses. However, goodwill that forms part of the carrying amount of an investment in associates is not separately recognized and an impairment loss recognized is not allocated to any asset, including goodwill, which forms part of the carrying amount of the investment in the associates.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.10.2 Subsequent expenditure
Subsequent expenditure is capitalized only when it enhances values of the assets. Internally generated intangible assets, such as goodwill and trade name, are not recognized as assets but expensed as incurred.
3.11 Leases
3.11.1 Finance lease
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. At the commencement of the lease term, the Group recognizes finance leases as assets and liabilities in its statements of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Any initial direct costs of the lessee are added to the amount recognized as an asset.
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the periods in which they are incurred.
The depreciable amount of a leased asset is allocated to each accounting period during the period of expected use on a systematic basis consistent with the depreciation policy the Group adopts for depreciable assets that are owned. If there is reasonable certainty that the lessee will obtain ownership by the end of the lease term, the period of expected use is the useful life of the asset; otherwise, the asset is fully depreciated over the shorter of the lease term and its useful life.
3.11.2 Operating lease
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.
Leases in the financial statements of lessors
Lease income from operating leases are recognized in income on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred by lessors in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Leases in the financial statements of lessees
Lease payments under an operating lease (net of any incentives received from the lessor) are recognized as an expense on a straight-line basis over the lease term unless another systematic basis is more representative of the time pattern of the assets benefit.
3.12 Impairment of non-financial assets
The Group assesses at the end of each reporting period whether there is any indication that a non-financial asset, except for (i) deferred income tax assets, (ii) assets arising from employee benefits and (iii) non-current assets (or group of assets to be sold) classified as held for sale, may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. However, irrespective of whether there is any indication of impairment, the Group tests (i) goodwill acquired in a business combination, (ii) intangible assets with an indefinite useful life and (iii) intangible assets not yet available for use for impairment annually by comparing their carrying amount with their recoverable amount.
The recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the cash-generating unit to which the asset belongs (the assets cash-generating unit). A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit that are discounted by a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss and recognized immediately in profit or loss. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit.
An impairment loss recognized for goodwill is not reversed in a subsequent period. The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset, other than goodwill, may no longer exist or may have decreased, and an impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognized. The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss cannot exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
26
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.13 Non-current assets held for sale
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition and its sale must be highly probable. A non-current asset (or disposal group) classified as held for sale is measured at the lower of its carrying amount and fair value less costs to sell which is measured in accordance with the applicable K-IFRS, immediately before the initial classification of the asset (or disposal group) as held for sale.
A non-current asset while it is classified as held for sale or while it is part of a disposal group classified as held for sale is not depreciated (or amortized).
Impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. Gains are recognized for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss that has been recognized.
3.14 Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss are financial liabilities held for trading. After initial recognition, financial liabilities at fair value through profit or loss are measured at fair value and gains or losses arising from changes in the fair value, and gains or losses from sale and repayment of financial liabilities at fair value through profit or loss are recognized as net gains on financial instruments at fair value through profit or loss in the statement of comprehensive income.
3.15 Insurance Contracts
KB Life Insurance Co., Ltd., one of the subsidiaries of the Group, issues insurance contracts.
Insurance contracts are defined as a contract under which one party (the insurer) accepts significant insurance risk from another party by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder. A contract that qualifies as an insurance contract remains an insurance contract until all rights and obligations are extinguished or expire. Such a contract that does not contain significant insurance risk is classified as an investment contract and is within the scope of K-IFRS 1039, Financial Instruments: Recognition and measurement to the extent that it gives rise to a financial asset or financial liability, except if the investment contract contains a Discretionary Participation Features (DPF). If the contract has a DPF, the contract is subject to K-IFRS 1104, Insurance Contracts. The Group recognizes assets (liabilities) and gains (losses) relating to insurance contracts as other assets (liabilities) in the statements of financial position, and as other operating income (expenses) in the statements of comprehensive income, respectively.
27
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.15.1 Insurance premiums
The Group recognizes collected premiums as revenue when a due date of collection of premiums from insurance contracts comes and the collected premium which is unmatured at the end of the reporting period is recognized as unearned premium.
3.15.2 Insurance liabilities
The Group recognizes a liability for future claims, refunds, policyholders dividends and related expenses as follows:
Premium reserve
A premium reserve refers to an amount based on the net premium method for payment of future claims with respect to events covered by insurance policies which have not yet occurred as of the reporting date.
Reserve for outstanding claims
A reserve for outstanding claims refers to the amount not yet paid, out of an amount to be paid or expected to be paid with respect to the insured events which have arisen as of the end of each fiscal year.
Unearned premium reserve
Unearned premium refers to the portion of the premium that has been paid in advance for insurance that has not yet been provided. An unearned premium reserve refers to the amount maintained by the insurer to refund in the event of either party cancelling the contract.
Policyholders dividends reserve
Policyholders dividends reserve including an interest rate guarantee reserve, a mortality dividend reserve and an interest rate difference dividend reserve is recognized for the purpose of provisioning for policyholders dividends in the future in accordance with statutes or insurance terms and conditions.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.15.3 Liability adequacy test
The Group assesses at each reporting date whether its insurance liabilities are adequate, using current estimates of all future contractual cash flows and related cash flow such as claims handling cost, as well as cash flows resulting from embedded options and guarantees under its insurance contracts in accordance with K-IFRS 1104. If the assessment shows that the carrying amount of its insurance liabilities is inadequate in light of the estimated future cash flows, the entire deficiency is recognized in profit or loss and reserved as insurance liabilities. Future cash flows from long-term insurance are discounted at a future rate of return on operating assets, whereas future cash flows from general insurance are not discounted to present value. For liability adequacy tests of premium and unearned premium reserves, the Group considers all cash flow factors such as future insurance premium, deferred acquisition costs, operating expenses and operating premiums. In relation to the reserve for outstanding claims, the Group elects a model that best reflects the trend of paid claims among several statistical methods to perform the adequacy test.
3.15.4 Deferred acquisition costs
Acquisition cost is deferred in an amount actually spent for an insurance contract and equally amortized over the premium payment period or the period in which acquisition costs are charged for the relevant insurance contract. Acquisition costs are amortized over the shorter of seven years or premium payment period; if there is any unamortized acquisition costs remaining as of the date of surrender or lapse, such remainder shall be amortized in the period in which the contract is surrendered or lapsed.
3.16 Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of provisions, and where the effect of the time value of money is material, the amount of provisions are the present value of the expenditures expected to be required to settle the obligation.
Provisions on confirmed and unconfirmed acceptances and guarantees, unfunded commitments of credit cards and unused credit lines of consumer and corporate loans are recognized using a valuation model that applies the credit conversion factor, probability of default, and loss given default.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provisions are reversed.
If the Group has a contract that is onerous, the present obligation under the contract is recognized and measured as provisions. An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the minimum net cost to exit from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfill it.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.17 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer (the Group) to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the original or modified terms of a debt instrument.
Financial guarantee contracts are initially recognized at fair value. After initial recognition, financial guarantee contracts are measured at the higher of:
| The amount determined in accordance with K-IFRS 1037, Provisions, Contingent Liabilities and Contingent Assets and |
| The initial amount recognized, less, when appropriate, cumulative amortization recognized in accordance with K-IFRS 1018, Revenue |
3.18 Equity instruments issued by the Group
An equity instrument is any contract or agreement that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
3.18.1 Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are deducted, net of tax, from the equity.
3.18.2 Treasury shares
If entities of the Group reacquire the Parent Companys equity instruments, those instruments (treasury shares) are deducted from equity. No gains or losses are recognized in profit or loss on the purchase, sale, issue or cancellation of own equity instruments.
3.19 Revenue recognition
3.19.1 Interest income and expense
Interest income and expense are recognized using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability (or groups of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument or, where appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. In those rare cases when it is not possible to estimate reliably the cash flows or the expected life of a financial instrument (or group of financial instruments), the Group uses the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments).
Interest on impaired financial assets is recognized using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
3.19.2 Fee and commission income
The Group recognizes financial service fees in accordance with the accounting standard of the financial instrument related to the fees earned.
Fees that are an integral part of the effective interest of a financial instrument
Such fees are generally treated as adjustments of effective interest. Such fees may include compensation for activities such as evaluating the borrowers financial condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating the terms of the instrument, preparing and processing documents and closing the transaction and origination fees received on issuing financial liabilities measured at amortized cost. However, fees relating to the creation or acquisition of a financial instrument at fair value through profit or loss are recognized as revenue immediately.
Fees earned as services are provided
Such fees are recognized as revenue as the services are provided. The fees include fees charged for servicing a financial instrument and charged for managing investments.
Fees that are earned on the execution of a significant act
Such fees are recognized as revenue when the significant act has been completed.
Commission on the allotment of shares to a client is recognized as revenue when the shares have been allotted and placement fees for arranging a loan between a borrower and an investor is recognized as revenue when the loan has been arranged.
31
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
A syndication fee received by the Group that arranges a loan and retains no part of the loan package for itself (or retains a part at the same effective interest rate for comparable risk as other participants) is compensation for the service of syndication. Such a fee is recognized as revenue when the syndication has been completed.
3.19.3 Dividend income
Dividend income is recognized in profit or loss when the right to receive payment is established. Dividend income from financial assets at fair value through profit or loss and financial investment is recognized in profit or loss as part of net gains on financial assets at fair value through profit or loss and other operating income and expenses, respectively.
3.20 Employee compensation and benefits
3.20.1 Post-employment benefits:
Defined benefit plans
All post-employment benefits, other than defined contribution plans, are classified as defined benefit plans. The amount recognized as a defined benefit liability is the present value of the defined benefit obligation less the fair value of plan assets at the end of the reporting period.
The present value of the defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit method. The rate used to discount post-employment benefit obligations is determined by reference to market yields at the end of the reporting period on high quality corporate bonds. The currency and term of the corporate bonds are consistent with the currency and estimated term of the post-employment benefit obligations. Actuarial gains and losses including experience adjustments and the effects of changes in actuarial assumptions are recognized in other comprehensive income (loss).
When the total of the present value of the defined benefit obligation minus the fair value of plan assets results in an asset, it is recognized to the extent of the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.
Past service cost is the change in the present value of the defined benefit obligation, which arises when the Group introduces a defined benefit plan or changes the benefits of an existing defined benefit plan. Such past service cost is immediately recognized as an expense for the year.
Defined contribution plans
The contributions are recognized as employee benefit expense when they are due.
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KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.20.2 Short-term employee benefits
Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within 12 months after the end of the period in which the employees render the related service. The undiscounted amount of short-term employee benefits expected to be paid in exchange for that service is recognized as a liability (accrued expense), after deducting any amount already paid.
The expected cost of profit-sharing and bonus payments are recognized as liabilities when the Group has a present legal or constructive obligation to make such payments as a result of past events rendered by employees and a reliable estimate of the obligation can be made.
3.20.3 Share-based payment
The Group operates share-based payment arrangements granting awards to directors and employees of the Group. The Group has a choice of whether to settle the awards in cash or by issuing equity instruments of the parent company at the date of settlement.
For a share-based payment transaction in which the terms of the arrangement provide the Group with the choice of whether to settle in cash or by issuing equity instruments, the Group determined that it has a present obligation to settle in cash because the Group has a past practice and a stated policy of settling in cash. Therefore, the Group accounts for the transaction in accordance with the requirements of cash-settled share-based payment transactions.
The Group measures the services acquired and the liability incurred at fair value. Until the liability is settled, the Group remeasures the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss for the year.
3.20.4 Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. An entity shall recognize a liability and expense for termination benefits at the earlier of the following dates: when the entity can no longer withdraw the offer of those benefits and when the entity recognizes costs for a restructuring that is within the scope of K-IFRS 1037 and involves the payment of termination benefits. Termination benefits are measured by considering the number of employees expected to accept the offer in the case of a voluntary early retirement. Termination benefits over 12 months after the reporting period are discounted to present value.
33
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.21 Income tax expenses
Income tax expense (tax income) comprises current tax expense (current tax income) and deferred income tax expense (deferred income tax income). Current and deferred income tax are recognized as income or expense and included in profit or loss for the year, except to the extent that the tax arises from (a) a transaction or an event which is recognized, in the same or a different period outside profit or loss, either in other comprehensive income or directly in equity and (b) a business combination.
3.21.1 Current income tax
Current income tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period. A difference between the taxable profit and accounting profit may arise when income or expense is included in accounting profit in one period, but is included in taxable profit in a different period. Differences may also arise if there is revenue that is exempt from taxation, or expense that is not deductible in determining taxable profit (tax loss). Current income tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The Group offsets current income tax assets and current income tax liabilities if, and only if, the Group (a) has a legally enforceable right to offset the recognized amounts and (b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
3.21.2 Deferred income tax
Deferred income tax is recognized, using the asset-liability method, on temporary differences arising between the tax based amount of assets and liabilities and their carrying amount in the financial statements. Deferred income tax liabilities are recognized for all taxable temporary differences and deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liabilities for which the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
34
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The carrying amount of a deferred income tax asset is reviewed at the end of each reporting period. The Group reduces the carrying amount of a deferred income tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred income tax liabilities and deferred income tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
The Group offsets deferred income tax assets and deferred income tax liabilities when the Group has a legally enforceable right to offset current income tax assets against current income tax liabilities; and the deferred income tax assets and the deferred income tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity; or different taxable entities which intend either to settle current income tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred income tax liabilities or assets are expected to be settled or recovered.
3.21.3 Uncertain tax positions
Uncertain tax positions arise from a claim for rectification brought by the Group, an appeal for a refund of tax levied by the tax authorities, or others due to different interpretation of tax laws or others. The Group recognizes its uncertain tax positions in the consolidated financial statements based on the guidance in K-IFRS 1012. The income tax asset is recognized if a tax refund is probable for taxes paid and levied by the tax authority. However, additional tax and additional dues on tax refund are recognized in accordance with K-IFRS 1037.
3.22 Earnings per share
The Group calculates basic earnings per share amounts and diluted earnings per share amounts for profit or loss attributable to ordinary equity holders of the parent entity and presents them in the statement of comprehensive income. Basic earnings per share is calculated by dividing profit or loss attributable to ordinary equity holders of the Parent Company by the weighted average number of ordinary shares outstanding during the period. For the purpose of calculating diluted earnings per share, the Group adjusts profit or loss attributable to ordinary equity holders of the Parent Company and the weighted average number of shares outstanding for the effects of all dilutive potential ordinary shares including convertible bonds and share options.
35
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
3.23 Operating segments
Operating segments are components of the Group where separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
Segment information includes items which are directly attributable and reasonably allocated to the segment.
4. Financial risk management
4.1 Summary
4.1.1 Overview of Financial Risk Management Policy
The financial risks that the Group is exposed to are credit risk, market risk, liquidity risk, operational risk and others.
The note regarding financial risk management provides information about the risks that the Group is exposed to, including the objectives, policies and processes for managing the risks, the methods used to measure the risks, and capital adequacy. Additional quantitative information is disclosed throughout the consolidated financial statements.
The Groups risk management system focuses on increasing transparency, developing the risk management environment, preventing transmission of risk to other related subsidiaries, and the preemptive response to risk due to rapid changes in the financial environment to support the Groups long-term strategy and business decisions efficiently. Credit risk, market risk, liquidity risk, and operational risk have been recognized as the Groups key risks. These risks are measured in Economic Capital or VaR (Value at Risk) and are managed using a statistical method.
4.1.2 Risk Management Organization
Risk Management Committee
The Risk Management Committee establishes risk management strategies in accordance with the directives of the Board of Directors and determines the Groups target risk appetite, approves significant risk matters and reviews the level of risks that the Group is exposed to and the appropriateness of the Groups risk management operations as an ultimate decision-making authority.
36
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Risk Management Council
The Risk Management Council is a consultative group which reviews and makes decisions on matters delegated by the Risk Management Committee and discusses the detailed issues relating to the Groups risk management.
Risk Management Department
The Risk Management Department is responsible for monitoring and managing the Groups economic capital limit and managing specific policies, procedures and work processes relating to the Groups risk management.
4.2 Credit Risk
4.2.1 Overview of Credit Risk
Credit risk is the risk of possible losses in an asset portfolio in the event of a counterpartys default, breach of contract and deterioration in the credit quality of the counterparty. For risk management reporting purposes, the individual borrowers default risk, country risk, specific risks and other credit risk exposure components are considered as a whole.
4.2.2 Credit Risk Management
The Group measures expected losses and economic capital on assets that are subject to credit risk management whether on- or off-balance sheet and uses expected losses and economic capital as a management indicator. The Group manages credit risk by allocating credit risk economic capital limits.
In addition, the Group controls the credit concentration risk exposure by applying and managing total exposure limits to prevent an excessive risk concentration to each industry and borrower.
The Group has organized a credit risk management team that focuses on credit risk management in accordance with the Groups credit risk management policy. For Kookmin Bank, which is the main subsidiary, its loan analysis department which is independent from the sales department is responsible for loan policy, loan limit, loan review, credit evaluation, restructuring and subsequent events. Kookmin Banks risk management group is also responsible for planning risk management policy, applying limits of credit lines, measuring the credit risk economic capital, adjusting credit limits, reviewing credit and verifying credit evaluation models.
37
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
4.2.3 Maximum exposure to credit risk
The Groups maximum exposures of financial instruments, excluding equity securities, to credit risk without consideration of collateral values as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Financial assets |
||||||||
Due from financial institutions |
₩ | 12,878,430 | ₩ | 12,094,103 | ||||
Financial assets at fair value through profit or loss |
||||||||
Financial assets held for trading1 |
9,763,553 | 7,866,037 | ||||||
Financial assets designated at fair value through profit or loss |
442,960 | 210,805 | ||||||
Derivatives |
1,968,190 | 1,819,409 | ||||||
Loans2 |
231,449,653 | 219,001,356 | ||||||
Financial investments |
||||||||
Available-for-sale financial assets |
19,359,822 | 18,933,288 | ||||||
Held-to-maturity financial assets |
12,569,154 | 13,016,991 | ||||||
Other financial assets2 |
7,559,631 | 6,251,679 | ||||||
|
|
|
|
|||||
295,991,393 | 279,193,668 | |||||||
|
|
|
|
|||||
Off-balance sheet items |
||||||||
Acceptances and guarantees contracts |
9,045,824 | 9,804,692 | ||||||
Financial guarantee contracts |
4,459,645 | 3,097,372 | ||||||
Commitments |
96,316,581 | 95,422,032 | ||||||
|
|
|
|
|||||
109,822,050 | 108,324,096 | |||||||
|
|
|
|
|||||
₩ | 405,813,443 | ₩ | 387,517,764 | |||||
|
|
|
|
1 | The amounts of ₩51,345 million and ₩40,252 million as of December 31, 2014 and 2013, respectively, related to financial instruments indexed to the price of gold are included. |
2 | Loans and other financial assets are net of allowance. |
4.2.4 Credit risk of loans
The Group maintains an allowance for loan losses associated with credit risk on loans to manage its credit risk.
The Group recognizes an impairment loss on loans carried at amortized cost when there is any objective indication of impairment. Under K-IFRS, an impairment loss is based on losses incurred at the end of the reporting year. Therefore, the Group does not recognize losses expected as a result of future events. The Group measures inherent incurred losses on loans and presents them in the financial statements through the use of an allowance account which is offset against the related loans.
38
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Loans are classified as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||||||
Loans | Retail | Corporate | Credit card | Total | ||||||||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||
Neither past due nor impaired |
₩ | 116,956,042 | 98.04 | ₩ | 100,542,430 | 97.64 | ₩ | 11,155,710 | 95.90 | ₩ | 228,654,182 | 97.76 | ||||||||||||||||||||
Past due but not impaired |
1,576,365 | 1.32 | 331,780 | 0.32 | 276,875 | 2.38 | 2,185,020 | 0.93 | ||||||||||||||||||||||||
Impaired |
765,751 | 0.64 | 2,097,041 | 2.04 | 199,711 | 1.72 | 3,062,503 | 1.31 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
119,298,158 | 100.00 | 102,971,251 | 100.00 | 11,632,296 | 100.00 | 233,901,705 | 100.00 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Allowances1 |
(536,959 | ) | 0.45 | (1,525,152 | ) | 1.48 | (389,941 | ) | 3.35 | (2,452,052 | ) | 1.05 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Carrying amount |
₩ | 118,761,199 | ₩ | 101,446,099 | ₩ | 11,242,355 | ₩ | 231,449,653 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||||||
Loans | Retail | Corporate | Credit card | Total | ||||||||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||
Neither past due nor impaired |
₩ | 104,751,607 | 97.22 | ₩ | 98,939,364 | 96.68 | ₩ | 11,253,836 | 95.50 | ₩ | 214,944,807 | 96.88 | ||||||||||||||||||||
Past due but not impaired |
1,967,127 | 1.83 | 538,571 | 0.53 | 321,978 | 2.73 | 2,827,676 | 1.27 | ||||||||||||||||||||||||
Impaired |
1,024,480 | 0.95 | 2,856,933 | 2.79 | 208,644 | 1.77 | 4,090,057 | 1.85 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
107,743,214 | 100.00 | 102,334,868 | 100.00 | 11,784,458 | 100.00 | 221,862,540 | 100.00 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Allowances1 |
(580,510 | ) | 0.54 | (1,870,874 | ) | 1.83 | (409,800 | ) | 3.48 | (2,861,184 | ) | 1.29 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Carrying amount |
₩ | 107,162,704 | ₩ | 100,463,994 | ₩ | 11,374,658 | ₩ | 219,001,356 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
1 | Collectively assessed allowances for loans are included as they are not impaired individually. |
Credit quality of loans that are neither past due nor impaired are as follows:
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
Retail | Corporate | Credit card | Total | |||||||||||||
Grade 1 |
₩ | 99,314,075 | ₩ | 43,166,076 | ₩ | 5,705,083 | ₩ | 148,185,234 | ||||||||
Grade 2 |
12,557,654 | 43,913,621 | 3,788,572 | 60,259,847 | ||||||||||||
Grade 3 |
4,057,239 | 11,014,410 | 1,342,891 | 16,414,540 | ||||||||||||
Grade 4 |
775,407 | 1,984,073 | 163,279 | 2,922,759 | ||||||||||||
Grade 5 |
251,667 | 464,250 | 155,885 | 871,802 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 116,956,042 | ₩ | 100,542,430 | ₩ | 11,155,710 | ₩ | 228,654,182 | |||||||||
|
|
|
|
|
|
|
|
39
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | ||||||||||||||||
2013 | ||||||||||||||||
Retail | Corporate | Credit card | Total | |||||||||||||
Grade 1 |
₩ | 88,331,532 | ₩ | 40,950,125 | ₩ | 5,670,689 | ₩ | 134,952,346 | ||||||||
Grade 2 |
12,320,960 | 43,497,358 | 3,806,194 | 59,624,512 | ||||||||||||
Grade 3 |
3,195,119 | 11,993,854 | 1,438,491 | 16,627,464 | ||||||||||||
Grade 4 |
637,556 | 2,237,288 | 184,110 | 3,058,954 | ||||||||||||
Grade 5 |
266,440 | 260,739 | 154,352 | 681,531 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 104,751,607 | ₩ | 98,939,364 | ₩ | 11,253,836 | ₩ | 214,944,807 | |||||||||
|
|
|
|
|
|
|
|
Credit quality of loans graded according to internal credit ratings are as follows:
Range of PD (%) (Probability of Default) |
Retail | Corporate | ||||
Grade 1 |
0.0 ~ 1.0 | 1 ~ 5 grade | AAA ~ BBB+ | |||
Grade 2 |
1.0 ~ 5.0 | 6 ~ 8 grade | BBB ~ BB | |||
Grade 3 |
5.0 ~ 15.0 | 9 ~ 10 grade | BB- ~ B | |||
Grade 4 |
15.0 ~ 30.0 | 11 grade | B- ~ CCC | |||
Grade 5 |
30.0 ~ | 12 grade or under | CC or under |
Loans that are past due but not impaired are as follows:
(In millions of Korean won) | ||||||||||||||||||||
2014 | ||||||||||||||||||||
1 ~ 29 days | 30 ~ 59 days | 60 ~ 89 days | 90 days or more | Total | ||||||||||||||||
Retail |
₩ | 1,271,327 | ₩ | 211,857 | ₩ | 93,125 | ₩ | 56 | ₩ | 1,576,365 | ||||||||||
Corporate |
279,413 | 37,918 | 14,449 | | 331,780 | |||||||||||||||
Credit card |
201,652 | 41,428 | 32,839 | 956 | 276,875 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 1,752,392 | ₩ | 291,203 | ₩ | 140,413 | ₩ | 1,012 | ₩ | 2,185,020 | |||||||||||
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||
2013 | ||||||||||||||||||||
1 ~ 29 days | 30 ~ 59 days | 60 ~ 89 days | 90 days or more | Total | ||||||||||||||||
Retail |
₩ | 1,729,091 | ₩ | 169,341 | ₩ | 68,629 | ₩ | 66 | ₩ | 1,967,127 | ||||||||||
Corporate |
435,700 | 54,900 | 47,971 | | 538,571 | |||||||||||||||
Credit card |
234,003 | 51,416 | 36,259 | 300 | 321,978 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 2,398,794 | ₩ | 275,657 | ₩ | 152,859 | ₩ | 366 | ₩ | 2,827,676 | |||||||||||
|
|
|
|
|
|
|
|
|
|
40
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Impaired loans are as follows:
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
Retail | Corporate | Credit card | Total | |||||||||||||
Loans |
₩ | 765,751 | ₩ | 2,097,041 | ₩ | 199,711 | ₩ | 3,062,503 | ||||||||
Allowances |
||||||||||||||||
Individual assessment |
| (827,386 | ) | | (827,386 | ) | ||||||||||
Collective assessment |
(287,548 | ) | (212,625 | ) | (129,518 | ) | (629,691 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(287,548 | ) | (1,040,011 | ) | (129,518 | ) | (1,457,077 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 478,203 | ₩ | 1,057,030 | ₩ | 70,193 | ₩ | 1,605,426 | |||||||||
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||
2013 | ||||||||||||||||
Retail | Corporate | Credit card | Total | |||||||||||||
Loans |
₩ | 1,024,480 | ₩ | 2,856,933 | ₩ | 208,644 | ₩ | 4,090,057 | ||||||||
Allowances |
||||||||||||||||
Individual assessment |
(2 | ) | (1,126,249 | ) | | (1,126,251 | ) | |||||||||
Collective assessment |
(381,739 | ) | (229,058 | ) | (133,616 | ) | (744,413 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(381,741 | ) | (1,355,307 | ) | (133,616 | ) | (1,870,664 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 642,739 | ₩ | 1,501,626 | ₩ | 75,028 | ₩ | 2,219,393 | |||||||||
|
|
|
|
|
|
|
|
A quantification of the extent to which collateral and other credit enhancements mitigate credit risk as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||||
2014 | ||||||||||||||||||||
Impaired Loans | Non-impaired Loans | |||||||||||||||||||
Individual | Collective | Past due | Not past due | Total | ||||||||||||||||
Guarantees |
₩ | 19,654 | ₩ | 190,491 | ₩ | 359,532 | ₩ | 37,754,080 | ₩ | 38,323,757 | ||||||||||
Deposits and savings |
954 | 15,466 | 35,756 | 2,286,691 | 2,338,867 | |||||||||||||||
Property and equipment |
7,772 | 4,921 | 2,449 | 2,769,360 | 2,784,502 | |||||||||||||||
Real estate |
270,230 | 529,446 | 1,125,065 | 123,451,062 | 125,375,803 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 298,610 | ₩ | 740,324 | ₩ | 1,522,802 | ₩ | 166,261,193 | ₩ | 168,822,929 | |||||||||||
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||
2013 | ||||||||||||||||||||
Impaired Loans | Non-impaired Loans | |||||||||||||||||||
Individual | Collective | Past due | Not past due | Total | ||||||||||||||||
Guarantees |
₩ | 29,929 | ₩ | 226,721 | ₩ | 382,997 | ₩ | 32,102,952 | ₩ | 32,742,599 | ||||||||||
Deposits and savings |
5,099 | 27,060 | 56,066 | 2,324,625 | 2,412,850 | |||||||||||||||
Property and equipment |
11,843 | 1,959 | 1,281 | 1,676,443 | 1,691,526 | |||||||||||||||
Real estate |
425,748 | 537,904 | 1,506,854 | 114,659,274 | 117,129,780 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 472,619 | ₩ | 793,644 | ₩ | 1,947,198 | ₩ | 150,763,294 | ₩ | 153,976,755 | |||||||||||
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|
|
|
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|
|
|
|
41
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
4.2.5 Credit quality of securities
The financial assets at fair value through profit or loss and financial investments excluding equity securities that are exposed to credit risk are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Securities that are neither past due nor impaired |
₩ | 42,077,873 | ₩ | 39,977,309 | ||||
Impaired securities |
6,271 | 9,560 | ||||||
|
|
|
|
|||||
₩ | 42,084,144 | ₩ | 39,986,869 | |||||
|
|
|
|
The credit quality of securities (excluding equity securities) that are neither past due nor impaired as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||
Grade 1 | Grade 2 | Grade 3 | Grade 4 | Grade 5 | Total | |||||||||||||||||||
Financial assets held for trading |
₩ | 8,464,038 | ₩ | 1,248,170 | ₩ | | ₩ | | ₩ | | ₩ | 9,712,208 | ||||||||||||
Financial assets designated at fair value through profit or loss |
76,893 | 366,067 | | | | 442,960 | ||||||||||||||||||
Available-for-sale financial assets |
18,442,055 | 847,565 | 63,931 | | | 19,353,551 | ||||||||||||||||||
Held-to-maturity financial assets |
12,569,154 | | | | | 12,569,154 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 39,552,140 | ₩ | 2,461,802 | ₩ | 63,931 | ₩ | | ₩ | | ₩ | 42,077,873 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||
Grade 1 | Grade 2 | Grade 3 | Grade 4 | Grade 5 | Total | |||||||||||||||||||
Financial assets held for trading |
₩ | 6,634,168 | ₩ | 1,172,476 | ₩ | 19,141 | ₩ | | ₩ | | ₩ | 7,825,785 | ||||||||||||
Financial assets designated at fair value through profit or loss |
89,527 | 119,489 | | 1,789 | | 210,805 | ||||||||||||||||||
Available-for-sale financial assets |
18,078,177 | 785,216 | 60,335 | | | 18,923,728 | ||||||||||||||||||
Held-to-maturity financial assets |
13,016,991 | | | | | 13,016,991 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 37,818,863 | ₩ | 2,077,181 | ₩ | 79,476 | ₩ | 1,789 | ₩ | | ₩ | 39,977,309 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
42
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The credit qualities of securities (excluding equity securities) according to the credit ratings by external rating agencies are as follows:
Credit | Domestic |
Foreign | ||||||||||
quality | KAP | KIS | NICE | S&P | Fitch-IBCA | Moodys | ||||||
Grade 1 |
AA0 to AAA | AA0 to AAA | AA0 to AAA | A- to AAA | A- to AAA | A3 to Aaa | ||||||
Grade 2 |
A- to AA- | A- to AA- | A- to AA- | BBB- to BBB+ | BBB- to BBB+ | Baa3 to Baa1 | ||||||
Grade 3 |
BBB0 to BBB+ | BBB0 to BBB+ | BBB0 to BBB+ | BB to BB+ | BB to BB+ | Ba2 to Ba1 | ||||||
Grade 4 |
BB0 to BBB- | BB0 to BBB- | BB0 to BBB- | B+ to BB- | B+ to BB- | B1 to Ba3 | ||||||
Grade 5 |
BB- or under | BB- or under | BB- or under | B or under | B or under | B2 or under |
Debt securities credit qualities denominated in Korean won are based on the lowest credit rating by the three domestic credit rating agencies above, and those denominated in foreign currencies are based on the lowest credit rating by the three foreign credit rating agencies above.
4.2.6 Credit risk mitigation of derivative financial instruments
A quantification of the extent to which collateral and other credit enhancements mitigate credit risk of derivative financial instruments as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Deposits and savings, securities and others |
₩ | 329,482 | ₩ | 271,380 | ||||
|
|
|
|
|||||
₩ | 329,482 | ₩ | 271,380 | |||||
|
|
|
|
4.2.7 Credit risk concentration analysis
The details of the Groups loans by country as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
Retail | Corporate | Credit card | Total | % | Allowances | Carrying amount |
||||||||||||||||||||||
Korea |
₩ | 119,248,111 | ₩ | 100,878,627 | ₩ | 11,629,337 | ₩ | 231,756,075 | 99.08 | ₩ | (2,401,417 | ) | ₩ | 229,354,658 | ||||||||||||||
Europe |
9 | 184,307 | 428 | 184,744 | 0.08 | (390 | ) | 184,354 | ||||||||||||||||||||
China |
84 | 764,415 | 240 | 764,739 | 0.33 | (15,544 | ) | 749,195 | ||||||||||||||||||||
Japan |
2,581 | 271,914 | 263 | 274,758 | 0.12 | (31,394 | ) | 243,364 | ||||||||||||||||||||
U.S. |
| 698,294 | 834 | 699,128 | 0.30 | (631 | ) | 698,497 | ||||||||||||||||||||
Others |
47,373 | 173,694 | 1,194 | 222,261 | 0.09 | (2,676 | ) | 219,585 | ||||||||||||||||||||
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|||||||||||||||
₩ | 119,298,158 | ₩ | 102,971,251 | ₩ | 11,632,296 | ₩ | 233,901,705 | 100.00 | ₩ | (2,452,052 | ) | ₩ | 231,449,653 | |||||||||||||||
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43
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | ||||||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||
Retail | Corporate | Credit card | Total | % | Allowances | Carrying amount |
||||||||||||||||||||||
Korea |
₩ | 107,644,600 | ₩ | 100,533,577 | ₩ | 11,782,169 | ₩ | 219,960,346 | 99.14 | ₩ | (2,797,651 | ) | ₩ | 217,162,695 | ||||||||||||||
Europe |
9 | 98,752 | 406 | 99,167 | 0.04 | (288 | ) | 98,879 | ||||||||||||||||||||
China |
227 | 583,176 | 315 | 583,718 | 0.26 | (16,075 | ) | 567,643 | ||||||||||||||||||||
Japan |
5,708 | 475,242 | 350 | 481,300 | 0.22 | (44,248 | ) | 437,052 | ||||||||||||||||||||
U.S. |
| 448,868 | 578 | 449,446 | 0.20 | (654 | ) | 448,792 | ||||||||||||||||||||
Others |
92,670 | 195,253 | 640 | 288,563 | 0.14 | (2,268 | ) | 286,295 | ||||||||||||||||||||
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|||||||||||||||
₩ | 107,743,214 | ₩ | 102,334,868 | ₩ | 11,784,458 | ₩ | 221,862,540 | 100.00 | ₩ | (2,861,184 | ) | ₩ | 219,001,356 | |||||||||||||||
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The details of the Groups corporate loans by industry as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Financial institutions |
₩ | 9,117,333 | 8.85 | ₩ | (85,507 | ) | ₩ | 9,031,826 | ||||||||
Manufacturing |
32,694,233 | 31.75 | (524,868 | ) | 32,169,365 | |||||||||||
Service |
39,384,520 | 38.25 | (306,588 | ) | 39,077,932 | |||||||||||
Wholesale & Retail |
13,286,775 | 12.90 | (152,391 | ) | 13,134,384 | |||||||||||
Construction |
3,862,457 | 3.75 | (429,297 | ) | 3,433,160 | |||||||||||
Public sector |
755,150 | 0.73 | (6,740 | ) | 748,410 | |||||||||||
Others |
3,870,783 | 3.77 | (19,761 | ) | 3,851,022 | |||||||||||
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|||||||||
₩ | 102,971,251 | 100.00 | ₩ | (1,525,152 | ) | ₩ | 101,446,099 | |||||||||
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|
(In millions of Korean won) | 2013 | |||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Financial institutions |
₩ | 10,524,203 | 10.28 | ₩ | (87,471 | ) | ₩ | 10,436,732 | ||||||||
Manufacturing |
31,160,890 | 30.45 | (611,257 | ) | 30,549,633 | |||||||||||
Service |
38,375,826 | 37.50 | (448,114 | ) | 37,927,712 | |||||||||||
Wholesale & Retail |
13,873,681 | 13.56 | (194,840 | ) | 13,678,841 | |||||||||||
Construction |
4,427,615 | 4.33 | (502,223 | ) | 3,925,392 | |||||||||||
Public sector |
654,998 | 0.64 | (8,469 | ) | 646,529 | |||||||||||
Others |
3,317,655 | 3.24 | (18,500 | ) | 3,299,155 | |||||||||||
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|
|
|||||||||
₩ | 102,334,868 | 100.00 | ₩ | (1,870,874 | ) | ₩ | 100,463,994 | |||||||||
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44
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of the Groups retail and credit card loans by type as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Housing purpose |
₩ | 52,530,611 | 40.12 | ₩ | (30,966 | ) | ₩ | 52,499,645 | ||||||||
General purpose |
66,767,547 | 50.99 | (505,993 | ) | 66,261,554 | |||||||||||
Credit card |
11,632,296 | 8.89 | (389,941 | ) | 11,242,355 | |||||||||||
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|||||||||
₩ | 130,930,454 | 100.00 | ₩ | (926,900 | ) | ₩ | 130,003,554 | |||||||||
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|
|
(In millions of Korean won) | 2013 | |||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Housing purpose |
₩ | 46,485,300 | 38.89 | ₩ | (77,985 | ) | ₩ | 46,407,315 | ||||||||
General purpose |
61,257,914 | 51.25 | (502,525 | ) | 60,755,389 | |||||||||||
Credit card |
11,784,458 | 9.86 | (409,800 | ) | 11,374,658 | |||||||||||
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|
|
|
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|
|||||||||
₩ | 119,527,672 | 100.00 | ₩ | (990,310 | ) | ₩ | 118,537,362 | |||||||||
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|
|
|
|
|
The details of the Groups securities (excluding equity securities) and derivative financial instruments by industry as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Government and government funded institutions |
₩ | 4,003,061 | 41.22 | |||||
Banking and Insurance |
4,368,341 | 44.98 | ||||||
Others |
1,340,806 | 13.80 | ||||||
|
|
|
|
|||||
9,712,208 | 100.00 | |||||||
|
|
|
|
|||||
Financial assets designated at fair value through profit or loss |
||||||||
Banking and Insurance |
442,960 | 100.00 | ||||||
|
|
|
|
|||||
442,960 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Government and government funded institutions |
19,732 | 1.00 | ||||||
Banking and Insurance |
1,762,160 | 89.53 | ||||||
Others |
186,298 | 9.47 | ||||||
|
|
|
|
|||||
1,968,190 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Government and government funded institutions |
8,274,026 | 42.74 | ||||||
Banking and Insurance |
8,192,189 | 42.32 | ||||||
Others |
2,893,607 | 14.95 | ||||||
|
|
|
|
|||||
19,359,822 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Government and government funded institutions |
10,221,322 | 81.32 | ||||||
Banking and Insurance |
1,734,462 | 13.80 | ||||||
Others |
613,370 | 4.88 | ||||||
|
|
|
|
|||||
12,569,154 | 100.00 | |||||||
|
|
|
|
|||||
₩ | 44,052,334 | |||||||
|
|
45
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Government and government funded institutions |
₩ | 3,057,633 | 39.07 | |||||
Banking and Insurance |
3,776,119 | 48.25 | ||||||
Others |
992,033 | 12.68 | ||||||
|
|
|
|
|||||
7,825,785 | 100.00 | |||||||
|
|
|
|
|||||
Financial assets designated at fair value through profit or loss |
||||||||
Banking and Insurance |
210,805 | 100.00 | ||||||
|
|
|
|
|||||
210,805 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Government and government funded institutions |
18,248 | 1.00 | ||||||
Banking and Insurance |
1,606,285 | 88.29 | ||||||
Others |
194,876 | 10.71 | ||||||
|
|
|
|
|||||
1,819,409 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Government and government funded institutions |
9,966,361 | 52.64 | ||||||
Banking and Insurance |
6,986,895 | 36.90 | ||||||
Others |
1,980,032 | 10.46 | ||||||
|
|
|
|
|||||
18,933,288 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Government and government funded institutions |
10,923,807 | 83.92 | ||||||
Banking and Insurance |
1,259,282 | 9.67 | ||||||
Others |
833,902 | 6.41 | ||||||
|
|
|
|
|||||
13,016,991 | 100.00 | |||||||
|
|
|
|
|||||
₩ | 41,806,278 | |||||||
|
|
46
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of the Groups securities (excluding equity securities) and derivative financial instruments by country, as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Korea |
₩ | 9,653,123 | 99.39 | |||||
Others |
59,085 | 0.61 | ||||||
|
|
|
|
|||||
9,712,208 | 100.00 | |||||||
|
|
|
|
|||||
Financial assets designated at fair value through profit or loss |
||||||||
Korea |
442,960 | 100.00 | ||||||
|
|
|
|
|||||
442,960 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Korea |
791,704 | 40.22 | ||||||
United States |
274,608 | 13.95 | ||||||
Others |
901,878 | 45.83 | ||||||
|
|
|
|
|||||
1,968,190 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Korea |
19,307,222 | 99.73 | ||||||
United States |
4,948 | 0.03 | ||||||
Others |
47,652 | 0.24 | ||||||
|
|
|
|
|||||
19,359,822 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Korea |
12,569,154 | 100.00 | ||||||
|
|
|
|
|||||
12,569,154 | 100.00 | |||||||
|
|
|
|
|||||
₩ | 44,052,334 | |||||||
|
|
(In millions of Korean won) | 2013 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Korea |
₩ | 7,809,495 | 99.79 | |||||
India |
3,194 | 0.04 | ||||||
Others |
13,096 | 0.17 | ||||||
|
|
|
|
|||||
7,825,785 | 100.00 | |||||||
|
|
|
|
|||||
Financial assets designated at fair value through profit or loss |
||||||||
Korea |
205,512 | 97.49 | ||||||
Others |
5,293 | 2.51 | ||||||
|
|
|
|
|||||
210,805 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Korea |
617,804 | 33.96 | ||||||
United States |
284,795 | 15.65 | ||||||
Others |
916,810 | 50.39 | ||||||
|
|
|
|
|||||
1,819,409 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Korea |
18,908,743 | 99.87 | ||||||
Others |
24,545 | 0.13 | ||||||
|
|
|
|
|||||
18,933,288 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Korea |
13,016,991 | 100.00 | ||||||
|
|
|
|
|||||
13,016,991 | 100.00 | |||||||
|
|
|
|
|||||
₩ | 41,806,278 | |||||||
|
|
47
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The counterparties to the financial assets under due from financial institutions and financial instruments indexed to the price of gold within financial assets held for trading are in the banking and insurance industries and have high credit ratings.
4.3 Liquidity risk
4.3.1 Overview of liquidity risk
Liquidity risk is the risk of insolvency or loss due to a disparity between the inflow and outflow of funds, unexpected outflow of funds, and obtaining funds at a high price or disposing of securities at an unfavorable price due to lack of available funds. The Group manages its liquidity risk through analysis of the contractual maturity of interest-bearing assets and liabilities, assets and liabilities related to the other in and outflows, and off-balance sheet related to in and outflows of currency derivative instruments and others.
Cash flows disclosed for the maturity analysis are undiscounted contractual principal and interest to be received (paid) and, thus, differ from the amount in the financial statements which are based on the present value of expected cash flows in some cases. The amount of interest to be received or paid on floating rate assets and liabilities is measured on the assumption that the current interest rate would be the same through maturity.
4.3.2. Liquidity risk management and indicator
The liquidity risk is managed by ALM (Asset Liability Management) and related guidelines which are applied to the risk management policies and procedures that address all the possible risks that arise from the overall business of the Group.
For the purpose of liquidity management, the liquidity ratio and accumulated liquidity gap ratio on all transactions affecting the in and outflows of funds and transactions of off-balance items are measured, managed and reported to the Risk Planning Council and Risk Management Committee on a regular basis.
As the main subsidiary, Kookmin Bank regularly reports the liquidity gap ratio, liquidity ratio, maturity gap ratio and the results of the stress testing related to liquidity risk to the Asset-Liability Management Committee (ALCO) which establishes and monitors the liquidity risk management strategy.
48
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
4.3.3. Analysis of remaining contractual maturity of financial assets and liabilities
Cash flows disclosed below are undiscounted contractual principal and interest to be received (paid) and, thus, differ from the amount in the consolidated financial statements which are based on the present value of expected cash flows. The amount of interest to be received or paid on floating rate assets and liabilities is measured on the assumption that the current interest rate would be the same through maturity.
The remaining contractual maturity of financial assets and liabilities, excluding derivatives held for cash flow hedging, as of December 31, 2014 and 2013, are is follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
On demand |
Up to 1 month |
1-3 months |
3-12 months |
1-5 years |
Over 5 years |
Total | ||||||||||||||||||||||
Financial assets |
|
|||||||||||||||||||||||||||
Cash and due from financial institutions1 |
₩ | 6,397,552 | ₩ | 675,876 | ₩ | 544,520 | ₩ | 675,266 | ₩ | 57,441 | ₩ | | ₩ | 8,350,655 | ||||||||||||||
Financial assets held for trading2 |
10,121,570 | | | | | | 10,121,570 | |||||||||||||||||||||
Financial assets designated at fair value through profit or loss2 |
636,340 | | | | | | 636,340 | |||||||||||||||||||||
Derivatives held for trading2 |
1,858,637 | | | | | | 1,858,637 | |||||||||||||||||||||
Derivatives held for fair value hedging3 |
| 7,742 | (1,147 | ) | 20,804 | 77,968 | 118,804 | 224,171 | ||||||||||||||||||||
Loans |
95,437 | 21,432,048 | 24,040,500 | 79,199,603 | 60,798,143 | 88,936,816 | 274,502,547 | |||||||||||||||||||||
Available-for-sale financial assets4 |
2,849,188 | 501,929 | 1,688,594 | 5,008,162 | 12,201,794 | 1,365,437 | 23,615,104 | |||||||||||||||||||||
Held-to-maturity financial assets |
| 276,462 | 665,030 | 3,618,565 | 8,174,038 | 1,184,433 | 13,918,528 | |||||||||||||||||||||
Other financial assets |
159,698 | 5,341,800 | 22,324 | 1,330,773 | 8,163 | 8,931 | 6,871,689 | |||||||||||||||||||||
|
|
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|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 22,118,422 | ₩ | 28,235,857 | ₩ | 26,959,821 | ₩ | 89,853,173 | ₩ | 81,317,547 | ₩ | 91,614,421 | ₩ | 340,099,241 | |||||||||||||||
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49
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
On demand |
Up to 1 month |
1-3 months |
3-12 months |
1-5 years |
Over 5 years |
Total | ||||||||||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Financial liabilities held for trading2 |
₩ | 836,542 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 836,542 | ||||||||||||||
Financial liabilities designated at fair value through profit or loss2 |
982,426 | | | | | | 982,426 | |||||||||||||||||||||
Derivatives held for trading2 |
1,775,341 | | | | | | 1,775,341 | |||||||||||||||||||||
Derivatives held for fair value hedging3 |
| | 652 | 146 | 6,304 | (15,580 | ) | (8,478 | ) | |||||||||||||||||||
Deposits5 |
83,154,750 | 13,861,281 | 25,306,312 | 80,646,054 | 9,666,892 | 3,266,842 | 215,902,131 | |||||||||||||||||||||
Debts |
943,012 | 4,058,558 | 2,078,905 | 5,200,009 | 3,611,420 | 282,484 | 16,174,388 | |||||||||||||||||||||
Debentures |
159,620 | 1,112,986 | 1,812,861 | 6,894,122 | 16,971,344 | 4,339,194 | 31,290,127 | |||||||||||||||||||||
Other financial liabilities |
152,035 | 7,737,557 | 23,709 | 109,784 | 298,553 | 559,911 | 8,881,549 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 88,003,726 | ₩ | 26,770,382 | ₩ | 29,222,439 | ₩ | 92,850,115 | ₩ | 30,554,513 | ₩ | 8,432,851 | ₩ | 275,834,026 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Off- balance sheet items |
||||||||||||||||||||||||||||
Commitments6 |
₩ | 96,316,581 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 96,316,581 | ||||||||||||||
Financial guarantee contract7 |
4,459,645 | | | | | | 4,459,645 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 100,776,226 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 100,776,226 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | ||||||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||
On demand |
Up to 1 month |
1-3 months |
3-12 months |
1-5 years |
Over 5 years |
Total | ||||||||||||||||||||||
Financial assets |
|
|||||||||||||||||||||||||||
Cash and due from financial institutions1 |
₩ | 5,672,570 | ₩ | 501,100 | ₩ | 183,931 | ₩ | 586,696 | ₩ | 49,314 | ₩ | 160,826 | ₩ | 7,154,437 | ||||||||||||||
Financial assets held for trading2 |
8,967,006 | | | | | | 8,967,006 | |||||||||||||||||||||
Financial assets designated at fair value through profit or loss2 |
326,583 | | | | | 35,153 | 361,736 | |||||||||||||||||||||
Derivatives held for trading2 |
1,680,880 | | | | | | 1,680,880 | |||||||||||||||||||||
Derivatives held for fair value hedging3 |
| 10,944 | 1,617 | 16,036 | 124,794 | 123,782 | 277,173 | |||||||||||||||||||||
Loans |
112,484 | 22,354,010 | 23,245,138 | 77,032,831 | 57,284,561 | 82,239,530 | 262,268,554 | |||||||||||||||||||||
Available-for-sale financial assets4 |
2,496,486 | 571,796 | 1,542,912 | 4,891,859 | 12,313,615 | 1,977,317 | 23,793,985 | |||||||||||||||||||||
Held-to-maturity financial assets |
| 261,124 | 518,368 | 3,343,087 | 9,254,470 | 1,268,563 | 14,645,612 | |||||||||||||||||||||
Other financial assets |
27,788 | 4,262,763 | 22,473 | 1,526,228 | 6,554 | 2,382 | 5,848,188 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 19,283,797 | ₩ | 27,961,737 | ₩ | 25,514,439 | ₩ | 87,396,737 | ₩ | 79,033,308 | ₩ | 85,807,553 | ₩ | 324,997,571 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won)
2013 | ||||||||||||||||||||||||||||
On demand |
Up to 1 month |
1-3 months |
3-12 months |
1-5 years |
Over 5 years |
Total | ||||||||||||||||||||||
Financial liabilities |
|
|||||||||||||||||||||||||||
Financial liabilities held for trading2 |
₩ | 236,637 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 236,637 | ||||||||||||||
Financial liabilities designated at fair value through profit or loss2 |
878,565 | | | | | | 878,565 | |||||||||||||||||||||
Derivatives held for trading2 |
1,580,029 | | | | | | 1,580,029 | |||||||||||||||||||||
Derivatives held for fair value hedging3 |
| | 25,411 | 179,000 | 8,959 | | 213,370 | |||||||||||||||||||||
Deposits5 |
74,110,641 | 14,193,153 | 28,638,089 | 77,181,179 | 8,603,695 | 2,677,536 | 205,404,293 | |||||||||||||||||||||
Debts |
270,987 | 3,279,051 | 1,711,622 | 4,733,173 | 4,038,514 | 356,424 | 14,389,771 | |||||||||||||||||||||
Debentures |
17,917 | 1,237,666 | 2,039,452 | 9,489,594 | 13,576,339 | 4,722,857 | 31,083,825 | |||||||||||||||||||||
Other financial liabilities |
141,041 | 8,372,426 | 13,101 | 63,409 | 198,068 | 509,412 | 9,297,457 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 77,235,817 | ₩ | 27,082,296 | ₩ | 32,427,675 | ₩ | 91,646,355 | ₩ | 26,425,575 | ₩ | 8,266,229 | ₩ | 263,083,947 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Off- balance sheet items |
||||||||||||||||||||||||||||
Commitments6 |
₩ | 95,422,032 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 95,422,032 | ||||||||||||||
Financial guarantee contract7 |
3,097,372 | | | | | | 3,097,372 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 98,519,404 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 98,519,404 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | The amounts of ₩7,136,623 million and ₩7,671,914 million which are restricted amounts due from the financial institutions as of December 31, 2014 and 2013, respectively, are excluded. |
2 | Financial instruments held for trading, financial instruments designated at fair value through profit or loss and derivatives held for trading are not managed by contractual maturity because they are expected to be traded or redeemed before maturity. Therefore, the carrying amounts of those financial instruments are classified as On demand category. However, hybrid capital instruments classified as financial instruments designated at fair value through profit or loss are included in the Over 5 years category which they can be redeemed, owing to uncertain point of sale. |
3 | Cash flows of derivative instruments held for fair value hedging are shown at net amounts of cash inflows and outflows by remaining contractual maturity. |
52
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
4 | In the case of equity investments restricted for sale, they are shown in the period in which the restriction is expected to be expired. |
5 | Deposits that are contractually repayable on demand or on short notice are classified under the On demand category. |
6 | Commitments are included under the On demand category because payments can be required upon request. |
7 | The financial guarantee contracts are included under the On demand category as payments can be required upon request. |
The contractual cash flows of derivatives held for cash flow hedging as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won)
2014 | ||||||||||||||||||||||||
Up to 1 month |
1-3 months |
3-12 months |
1-5 years |
Over 5 years |
Total | |||||||||||||||||||
Net cash flow of net settlement derivatives |
₩ | (688 | ) | ₩ | (1,365 | ) | ₩ | (5,203 | ) | ₩ | (8,437 | ) | ₩ | | ₩ | (15,693 | ) | |||||||
Cash flow to be received of total settlement derivatives |
171 | 423 | 2,531 | 344,051 | | 347,176 | ||||||||||||||||||
Cash flow to be paid of total settlement derivatives |
(504 | ) | (1,062 | ) | (5,006 | ) | (343,149 | ) | | (349,721 | ) |
(In millions of Korean won)
2013 | ||||||||||||||||||||||||
Up to 1 month |
1-3 months |
3-12 months |
1-5 years |
Over 5 years |
Total | |||||||||||||||||||
Net cash flow of net settlement derivatives |
₩ | (449 | ) | ₩ | (1,127 | ) | ₩ | (3,815 | ) | ₩ | 1,212 | ₩ | | ₩ | (4,179 | ) | ||||||||
Cash flow to be received of total settlement derivatives |
169 | 370 | 317,714 | | | 318,253 | ||||||||||||||||||
Cash flow to be paid of total settlement derivatives |
(617 | ) | (1,153 | ) | (326,160 | ) | | | (327,930 | ) |
53
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
4.4 Market risk
4.4.1 Overview of market risk
Definition of market risk
Market risk is the risk of possible losses which arise from changes in market factors, such as interest rate, stock price, foreign exchange rate and other market factors that affect the fair value or future cash flows of financial instruments, such as securities and derivatives amongst others. The most significant risks associated with trading positions are interest rate risks and currency risks and other risks include stock price risks. In addition, the Group is exposed to interest rate risks and currency risks associated with non-trading positions. The Group classifies exposures to market risk into either trading or non-trading positions. The Group measures and manages market risk separately for each subsidiary in the Group.
Market risk management group
The Group sets economic capital limits for market risk and interest rate risk and monitors the risks to manage the risk of trading and non-trading positions. The Group maintains risk management systems and procedures, such as trading policies and procedures, and market risk management guidelines for trading positions, and interest rate risk management guidelines for non-trading positions in order to manage market risk efficiently. The procedures mentioned are implemented with approval from the Risk Management Committee and Risk Management Council.
As the main subsidiary, Kookmin Bank establishes market risk management policy, sets position limits, loss limits and VaR limits of each business group and approves newly developed derivative instruments, through its Risk Management Council. The Risk Management Council has delegated the responsibility for market risk management of individual business departments to the Market Risk Management Committee which is chaired by a Chief Risk Officer (CRO). The Market Risk Management Committee sets position limits, loss limits, VaR limits, sensitivity limits and scenario loss limits for each division, at the level of each individual business department.
The ALCO of Kookmin Bank determines the operational standards of interest and commission, the details of the establishment and prosecution of the Asset Liability Management (ALM) policies and enacts and amends relevant guidelines. The Risk Management Committee and Risk Management Council monitor the establishment and enforcement of ALM risk management policies and enact and amend ALM risk management guidelines. The interest rate risk limit is set based on the future assets/liabilities position and interest rate volatility estimation reflects the annual work plan. The Financial Planning Department and Risk Management Department measures and monitors the interest risk status and limits on a regular basis. The status and limits of interest rate risks, such as interest rate gap, duration gap and sensitivity, are reported to the ALCO and Risk Management Council on a monthly basis and to the Risk Management Committee on a quarterly basis. To ensure adequacy of interest rate and liquidity risk management, the Risk Management Department assigns the limits, monitors and reviews the risk management procedures and tasks conducted by the Financial Planning Department. Also, the Risk Management Department independently reports related information to management.
54
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
4.4.2 Trading Position
Definition of a trading position
Trading positions subject to market risk management are defined under the Trading Policy and Guideline, and the basic requirements are as follows:
| The trading position is not restricted for sale, is measured daily at fair value, and its significant inherent risks are able to be hedged in the market. |
| The criteria for classification as a trading position are clearly defined in the Trading Policy and Guideline, and separately managed by the trading department. |
| The trading position is operated in accordance with the documented trading strategy and managed through position limits. |
| The operating department or professional dealers have an authority to enforce a deal on the trading position within predetermined limits without pre-approval. |
| The trading position is reported periodically to management for the purpose of the Groups risk management. |
Observation method on market risk arising from trading positions
The Group calculates VaR to measure the market risk by using market risk management systems on the entire trading portfolio. Generally, the Group manages market risk on the trading portfolio. In addition, the Group controls and manages the risk of derivative trading based on the regulations and guidelines formulated by the Financial Supervisory Service.
VaR (Value at Risk)
i. VaR (Value at Risk)
The Group uses the value-at-risk methodology to measure the market risk of trading positions. The Group uses the 10-day VaR, which estimates the maximum amount of loss that could occur in ten days under an historical simulation model which is considered to be a full valuation method. The distributions of portfolios value changes are estimated based on the data over the previous 250 business days, and ten-day VaR is calculated by subtracting net present market value from the value measured at a 99% confident level of portfolios value distribution results. However, the KB Investment & Securities Co., Ltd. calculates ten-day VaR using the variance-covariance method and a 99% single tail confidence level based on historical data for the previous 250 business days calculated by the equal-weighted average method. It means the maximum amount of loss for the 10 days that could occur under normal distribution of financial changes.
55
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
VaR is a commonly used market risk measurement technique. However, the method has some shortcomings. VaR estimates possible losses over a certain period at a particular confidence level using past market movement data. Past market movements are, however, not necessarily a good indicator of future events, as there may be conditions and circumstances in the future that the model does not anticipate. As a result, the timing and magnitude of the actual losses may vary depending on the assumptions made at the time of the calculation. In addition, the time periods used for the model, generally one or ten days, are assumed to be a sufficient holding period before liquidating the relevant underlying positions. If these holding periods are not sufficient, or too long, the VaR results may understate or overstate the potential loss.
The Group uses an internal model (VaR) to measure general risk, and a standard method to measure each individual risk. Also, general and individual risks in some positions included in the consolidated financial statements in adoption of Korean IFRS, are measured using a standard method. Therefore, the market risk VaR may not reflect the market risk of each individual risk and some specific positions.
ii. Back-Testing
Back-testing is conducted on a daily basis to validate the adequacy of the market risk model. In back-testing, the Group compares both the actual and hypothetical profit and loss with the VaR calculations.
iii. Stress Testing
Stress testing is carried out to analyze the impact of abnormal market situations on the trading and available-for-sale portfolio. It reflects changes in interest rates, stock prices, foreign exchange rates, implied volatilities of derivatives and other risk factors that have significant influence on the value of the portfolio. The Group mainly uses an historical scenario tool and also uses a hypothetical scenario tool for the analysis of abnormal market situations. Stress testing is performed at least once every quarter.
VaR at a 99% confidence level of interest rate, stock price and foreign exchange rate risk for trading positions with a ten-day holding period by a subsidiary as of December 31, 2014 and 2013, are as follows:
Kookmin Bank
2014 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Interest rate risk |
₩ | 12,938 | ₩ | 7,657 | ₩ | 19,801 | ₩ | 10,148 | ||||||||
Stock price risk |
1,627 | 714 | 3,858 | 851 | ||||||||||||
Foreign exchange rate risk |
12,049 | 5,070 | 14,705 | 10,814 | ||||||||||||
Deduction of diversification effect |
(8,809 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 15,383 | ₩ | 10,089 | ₩ | 23,560 | ₩ | 13,004 | ||||||||
|
|
|
|
|
|
|
|
56
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
2013 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Interest rate risk |
₩ | 16,270 | ₩ | 7,428 | ₩ | 24,979 | ₩ | 16,967 | ||||||||
Stock price risk |
3,480 | 932 | 7,114 | 1,049 | ||||||||||||
Foreign exchange rate risk |
9,264 | 5,287 | 13,589 | 5,287 | ||||||||||||
Deduction of diversification effect |
(6,928 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 17,316 | ₩ | 10,868 | ₩ | 22,249 | ₩ | 16,375 | ||||||||
|
|
|
|
|
|
|
|
KB Investment & Securities Co., Ltd.
2014 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Interest rate risk |
₩ | 1,334 | ₩ | 294 | ₩ | 2,971 | ₩ | 1,874 | ||||||||
Stock price risk |
1,154 | 480 | 3,054 | 1,414 | ||||||||||||
Foreign exchange rate risk |
12 | 1 | 125 | 55 | ||||||||||||
Deduction of diversification effect |
(878 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 1,773 | ₩ | 753 | ₩ | 3,098 | ₩ | 2,465 | ||||||||
|
|
|
|
|
|
|
|
2013 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Interest rate risk |
₩ | 2,503 | ₩ | 160 | ₩ | 6,825 | ₩ | 1,825 | ||||||||
Stock price risk |
1,920 | 507 | 6,244 | 1,139 | ||||||||||||
Foreign exchange rate risk |
527 | 24 | 1,311 | 53 | ||||||||||||
Deduction of diversification effect |
(698 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 3,319 | ₩ | 589 | ₩ | 8,908 | ₩ | 2,318 | ||||||||
|
|
|
|
|
|
|
|
KB Life Insurance Co., Ltd.
2014 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Interest rate risk |
₩ | 121 | ₩ | 33 | ₩ | 374 | ₩ | 33 | ||||||||
Deduction of diversification effect |
| |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 121 | ₩ | 33 | ₩ | 374 | ₩ | 33 | ||||||||
|
|
|
|
|
|
|
|
2013 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Interest rate risk |
₩ | 279 | ₩ | 157 | ₩ | 441 | ₩ | 329 | ||||||||
Deduction of diversification effect |
| |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 279 | ₩ | 157 | ₩ | 441 | ₩ | 329 | ||||||||
|
|
|
|
|
|
|
|
57
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
KB Investment Co., Ltd.
2014 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Foreign exchange rate risk |
₩ | 30 | ₩ | 18 | ₩ | 37 | ₩ | 25 | ||||||||
Deduction of diversification effect |
| |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 30 | ₩ | 18 | ₩ | 37 | ₩ | 25 | ||||||||
|
|
|
|
|
|
|
|
2013 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Foreign exchange rate risk |
₩ | 40 | ₩ | 29 | ₩ | 53 | ₩ | 30 | ||||||||
Deduction of diversification effect |
| |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 40 | ₩ | 29 | ₩ | 53 | ₩ | 30 | ||||||||
|
|
|
|
|
|
|
|
Meanwhile, the required equity capital using the standardized method related to the positions which are not measured by VaR as of December 31, 2014 and 2013, is as follows:
Kookmin Bank
(In millions of Korean won) | 2014 | 2013 | ||||||
Interest rate risk |
₩ | 792 | ₩ | 921 | ||||
Stock price risk |
1,101 | 2 | ||||||
Foreign exchange rate risk |
9,387 | 9,214 | ||||||
|
|
|
|
|||||
₩ | 11,280 | ₩ | 10,137 | |||||
|
|
|
|
KB Investment & Securities Co., Ltd.
(In millions of Korean won) | 2014 | 2013 | ||||||
Interest rate risk |
₩ | 8,865 | ₩ | 5,081 | ||||
Stock price risk |
2,590 | 3,602 | ||||||
|
|
|
|
|||||
₩ | 11,455 | ₩ | 8,683 | |||||
|
|
|
|
KB Life Insurance Co., Ltd.
(In millions of Korean won) | 2014 | 2013 | ||||||
Stock price risk |
₩ | | ₩ | 106 |
KB Investment Co., Ltd.
(In millions of Korean won) | 2014 | 2013 | ||||||
Stock price risk |
₩ | 1,979 | ₩ | 1,424 |
58
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Details of risk factors
i. Interest rate risk
Trading position interest rate risk usually arises from debt securities in Korean won. The Groups trading strategy is to benefit from short-term movements in the prices of debt securities arising from changes in interest rates. The Group manages interest rate risk on trading positions using market value-based tools such as VaR and sensitivity analysis (Price Value of a Basis Point: PVBP).
ii. Stock price risk
Stock price risk only arises from trading securities denominated in Korean won as the Group does not have any trading exposure to shares denominated in foreign currencies. The trading securities portfolio in Korean won are composed of exchange-traded stocks and derivative instruments linked to stock with strict limits on diversification.
iii. Foreign exchange rate risk
Foreign exchange rate risk arises from holding assets and liabilities denominated in foreign currency. Net foreign currency exposure mostly occurs from the foreign assets and liabilities which are denominated in US dollars and Kazakhstan Tenge, and the remainder in Japanese Yen or Euro. The Group sets both loss limits and net foreign currency exposure limits and manages comprehensive net foreign exchange exposures which consider both trading and non-trading portfolios.
4.4.3 Non-trading position
Definition of non-trading position
The most critical market risk that arises in non-trading portfolios is interest rate risk. Interest rate risk occurs due to mismatches on maturities and interest rate change periods between interest sensitive assets and liabilities. The Group measures interest rate risk arising from assets and liabilities denominated in Korean won and foreign currencies including derivative financial instruments held for hedging. Most interest-bearing assets and interest-bearing liabilities are denominated in Korean won. Most foreign currency assets and liabilities are denominated in US Dollars and the remainder in Japanese Yen or Euro.
Observation method on market risk arising from non-trading position
The main objective of interest rate risk management is to generate stable net interest income and to protect asset values against interest rate fluctuations. The Group manages the risk through interest rate gap analysis on interest rate maturities between interest-bearing assets and interest-bearing liabilities and measuring interest rate VaR.
59
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Disclosure of results from each observation method
i. Interest rate gap analysis
Interest rate gap analysis is based on the interest rates repricing dates for interest-bearing assets and interest-bearing liabilities. It measures expected changes in net interest income by calculating the difference in the amounts of interest-bearing assets and interest-bearing liabilities in each maturity bucket. The Group conducts interest gap analysis on assets denominated in Korean won and foreign currencies on a monthly basis. However, where there is no contractual maturity for a particular instrument, then a maturity date is set according to internal liquidity risk management guidelines, determined by ALM.
The results of the interest rate gap analysis by subsidiary as of December 31, 2014 and 2013, are as follows:
Kookmin Bank
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 81,410,723 | ₩ | 58,363,078 | ₩ | 49,200,979 | ₩ | 25,841,692 | ₩ | 16,042,468 | ₩ | 230,858,940 | ||||||||||||
Interest-bearing liabilities in Korean won |
92,018,008 | 38,515,842 | 52,996,290 | 25,838,417 | 19,891,843 | 229,260,400 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | (10,607,285 | ) | ₩ | 19,847,236 | ₩ | (3,795,311 | ) | ₩ | 3,275 | ₩ | (3,849,375 | ) | ₩ | 1,598,540 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
(10,607,285 | ) | 9,239,951 | 5,444,640 | 5,447,915 | 1,598,540 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
(4.59 | ) | 4.00 | 2.36 | 2.36 | 0.69 | ||||||||||||||||||
Interest-bearing assets in foreign currencies |
₩ | 9,976,001 | ₩ | 2,287,466 | ₩ | 1,468,572 | ₩ | 1,506,339 | ₩ | 117,486 | ₩ | 15,355,864 | ||||||||||||
Interest-bearing liabilities in foreign currencies |
9,321,764 | 3,710,940 | 1,475,686 | 1,415,952 | 51,071 | 15,975,413 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 654,237 | ₩ | (1,423,474 | ) | ₩ | (7,114 | ) | ₩ | 90,387 | ₩ | 66,415 | ₩ | (619,549 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
654,237 | (769,237 | ) | (776,351 | ) | (685,964 | ) | (619,549 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
4.26 | (5.01 | ) | (5.06 | ) | (4.47 | ) | (4.03 | ) |
60
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 83,935,439 | ₩ | 54,589,446 | ₩ | 46,832,862 | ₩ | 21,608,336 | ₩ | 14,297,239 | ₩ | 221,263,322 | ||||||||||||
Interest-bearing liabilities in Korean won |
91,505,923 | 37,966,586 | 50,647,954 | 20,948,789 | 18,244,867 | 219,314,119 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | (7,570,484 | ) | ₩ | 16,622,860 | ₩ | (3,815,092 | ) | ₩ | 659,547 | ₩ | (3,947,628 | ) | ₩ | 1,949,203 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
(7,570,484 | ) | 9,052,376 | 5,237,284 | 5,896,831 | 1,949,203 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
(3.42 | ) | 4.09 | 2.37 | 2.67 | 0.88 | ||||||||||||||||||
Interest-bearing assets in foreign currencies |
₩ | 10,112,905 | ₩ | 1,888,724 | ₩ | 607,499 | ₩ | 396,714 | ₩ | 257,419 | ₩ | 13,263,261 | ||||||||||||
Interest-bearing liabilities in foreign currencies |
9,500,565 | 2,631,393 | 1,527,154 | 225,300 | 124,357 | 14,008,769 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 612,340 | ₩ | (742,669 | ) | ₩ | (919,655 | ) | ₩ | 171,414 | ₩ | 133,062 | ₩ | (745,508 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
612,340 | (130,329 | ) | (1,049,984 | ) | (878,570 | ) | (745,508 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
4.62 | (0.98 | ) | (7.92 | ) | (6.62 | ) | (5.62 | ) |
KB Kookmin Card Co., Ltd.
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 4,116,795 | ₩ | 1,293,247 | ₩ | 1,695,695 | ₩ | 4,852,525 | ₩ | 3,143,092 | ₩ | 15,101,354 | ||||||||||||
Interest-bearing liabilities in Korean won |
1,060,000 | 988,000 | 1,461,000 | 4,604,840 | 2,104,920 | 10,218,760 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 3,056,795 | ₩ | 305,247 | ₩ | 234,695 | ₩ | 247,685 | ₩ | 1,038,172 | ₩ | 4,882,594 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
3,056,795 | 3,362,042 | 3,596,737 | 3,844,422 | 4,882,594 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
20.24 | 22.26 | 23.82 | 25.46 | 32.33 |
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 3,951,261 | ₩ | 1,212,736 | ₩ | 1,600,360 | ₩ | 5,010,999 | ₩ | 3,108,753 | ₩ | 14,884,109 | ||||||||||||
Interest-bearing liabilities in Korean won |
940,000 | 782,765 | 1,868,825 | 4,704,000 | 2,190,000 | 10,485,590 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 3,011,261 | ₩ | 429,971 | ₩ | (268,465 | ) | ₩ | 306,999 | ₩ | 918,753 | ₩ | 4,398,519 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
3,011,261 | 3,441,232 | 3,172,767 | 3,479,766 | 4,398,519 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
20.23 | 23.12 | 21.32 | 23.38 | 29.55 |
61
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
KB Investment & Securities Co., Ltd.
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 490,113 | ₩ | 214,300 | ₩ | 212,351 | ₩ | 15,190 | ₩ | 19,211 | ₩ | 951,165 | ||||||||||||
Interest-bearing liabilities in Korean won |
1,365,885 | 125,000 | 36,997 | | | 1,527,882 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | (875,772 | ) | ₩ | 89,300 | ₩ | 175,354 | ₩ | 15,190 | ₩ | 19,211 | ₩ | (576,717 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
(875,772 | ) | (786,472 | ) | (611,118 | ) | (595,928 | ) | (576,717 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
(92.07 | ) | (82.69 | ) | (64.25 | ) | (62.65 | ) | (60.63 | ) | ||||||||||||||
Interest-bearing assets in foreign currencies |
₩ | 20,815 | ₩ | 10,419 | ₩ | 64,997 | ₩ | | ₩ | | ₩ | 96,231 | ||||||||||||
Interest-bearing liabilities in foreign currencies |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 20,815 | ₩ | 10,419 | ₩ | 64,997 | ₩ | | ₩ | | ₩ | 96,231 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
20,815 | 31,234 | 96,231 | 96,231 | 96,231 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
21.63 | 32.46 | 100.00 | 100.00 | 100.00 | |||||||||||||||||||
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 491,652 | ₩ | 14,000 | ₩ | 227,542 | ₩ | 169,990 | ₩ | 1,823 | ₩ | 905,007 | ||||||||||||
Interest-bearing liabilities in Korean won |
516,734 | 160,000 | 10,000 | 32,000 | | 718,734 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | (25,082 | ) | ₩ | (146,000 | ) | ₩ | 217,542 | ₩ | 137,990 | ₩ | 1,823 | ₩ | 186,273 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
(25,082 | ) | (171,082 | ) | 46,460 | 184,450 | 186,273 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
(2.77 | ) | (18.90 | ) | 5.13 | 20.38 | 20.58 | |||||||||||||||||
Interest-bearing assets in foreign currencies |
₩ | 66,576 | ₩ | 6,162 | ₩ | 56,558 | ₩ | | ₩ | | ₩ | 129,296 | ||||||||||||
Interest-bearing liabilities in foreign currencies |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 66,576 | ₩ | 6,162 | ₩ | 56,558 | ₩ | | ₩ | | ₩ | 129,296 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
66,576 | 72,738 | 129,296 | 129,296 | 129,296 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
51.49 | 56.26 | 100.00 | 100.00 | 100.00 |
62
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
KB Life Insurance Co., Ltd.
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 501,452 | ₩ | 317,004 | ₩ | 732,000 | ₩ | 1,883,395 | ₩ | 2,648,788 | ₩ | 6,082,639 | ||||||||||||
Interest-bearing liabilities in Korean won |
2,068 | 949 | 1,579,923 | 4,137,043 | 465,131 | 6,185,114 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 499,384 | ₩ | 316,055 | ₩ | (847,923 | ) | ₩ | (2,253,648 | ) | ₩ | 2,183,657 | ₩ | (102,475 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
499,384 | 815,439 | (32,484 | ) | (2,286,132 | ) | (102,475 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
8.21 | 13.41 | (0.53 | ) | (37.58 | ) | (1.68 | ) | ||||||||||||||||
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 249,863 | ₩ | 187,377 | ₩ | 630,846 | ₩ | 1,314,773 | ₩ | 2,502,573 | ₩ | 4,885,432 | ||||||||||||
Interest-bearing liabilities in Korean won |
27,836 | 72,309 | 4,862,687 | 36,488 | 528,861 | 5,528,181 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 222,027 | ₩ | 115,068 | ₩ | (4,231,841 | ) | ₩ | 1,278,285 | ₩ | 1,973,712 | ₩ | (642,749 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
222,027 | 337,095 | (3,894,746 | ) | (2,616,461 | ) | (642,749 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
4.54 | 6.90 | (79.72 | ) | (53.56 | ) | (13.16 | ) | ||||||||||||||||
KB Savings Bank Co., Ltd. | ||||||||||||||||||||||||
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 209,895 | ₩ | 109,368 | ₩ | 156,869 | ₩ | 53,424 | ₩ | 86,272 | ₩ | 615,828 | ||||||||||||
Interest-bearing liabilities in Korean won |
133,057 | 160,070 | 249,389 | 62,139 | 2,403 | 607,058 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 76,838 | ₩ | (50,702 | ) | ₩ | (92,520 | ) | ₩ | (8,715 | ) | ₩ | 83,869 | ₩ | 8,770 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
76,838 | 26,136 | (66,384 | ) | (75,099 | ) | 8,770 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
12.48 | 4.24 | (10.78 | ) | (12.19 | ) | 1.42 |
63
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 160,377 | ₩ | 64,008 | ₩ | 90,405 | ₩ | 71,477 | ₩ | 43,765 | ₩ | 430,032 | ||||||||||||
Interest-bearing liabilities in Korean won |
88,608 | 108,965 | 212,012 | 26,693 | 1,271 | 437,549 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 71,769 | ₩ | (44,957 | ) | ₩ | (121,607 | ) | ₩ | 44,784 | ₩ | 42,494 | ₩ | (7,517 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
71,769 | 26,812 | (94,795 | ) | (50,011 | ) | (7,517 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
16.69 | 6.23 | (22.04 | ) | (11.63 | ) | (1.75 | ) |
Yehansoul Savings Bank Co., Ltd.
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 109,603 | ₩ | 11,149 | ₩ | 1,881 | ₩ | 4,515 | ₩ | 23,659 | ₩ | 150,807 | ||||||||||||
Interest-bearing liabilities in Korean won |
60,126 | 48,336 | 42,739 | 6,008 | 111 | 157,320 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 49,477 | ₩ | (37,187 | ) | ₩ | (40,858 | ) | ₩ | (1,493 | ) | ₩ | 23,548 | ₩ | (6,513 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
49,477 | 12,290 | (28,568 | ) | (30,061 | ) | (6,513 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
32.81 | 8.15 | (18.94 | ) | (19.93 | ) | (4.32 | ) |
KB Capital Co., Ltd.
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Up to 3 months |
3~6 months |
6~12 months |
1~3 years |
Over 3 years |
Total | |||||||||||||||||||
Interest-bearing assets in Korean won |
₩ | 574,781 | ₩ | 423,694 | ₩ | 694,273 | ₩ | 1,768,434 | ₩ | 498,480 | ₩ | 3,959,662 | ||||||||||||
Interest-bearing liabilities in Korean won |
414,253 | 36,399 | 66,512 | 1,841,011 | 254,094 | 2,612,269 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gap |
₩ | 160,528 | ₩ | 387,295 | ₩ | 627,761 | ₩ | (72,577 | ) | ₩ | 244,386 | ₩ | 1,347,393 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated gap |
160,528 | 547,823 | 1,175,584 | 1,103,007 | 1,347,393 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Percentage (%) |
4.05 | 13.84 | 29.69 | 27.86 | 34.03 |
64
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
ii. Interest Rate VaR
Interest rate VaR is the maximum possible loss due to interest rate risk at a 99.94% confidence level. The measurement results of risk as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Kookmin Bank |
₩ | 112,500 | ₩ | 203,503 | ||||
KB Kookmin Card Co., Ltd. |
55,101 | 73,135 | ||||||
KB Investment & Securities Co., Ltd. |
3,489 | 7,503 | ||||||
KB Life Insurance Co., Ltd. |
103,424 | 168,542 | ||||||
KB Savings Bank Co., Ltd. |
4,649 | 3,870 | ||||||
Yehansoul Savings Bank Co., Ltd. |
| 1,604 | ||||||
KB Capital Co.,Ltd |
3,685 | |
4.4.4 Financial instruments in foreign currencies
Financial instruments in foreign currencies as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||||||
USD | JPY | EUR | GBP | CNY | Others | Total | ||||||||||||||||||||||
Financial Assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | 1,554,219 | ₩ | 148,923 | ₩ | 104,932 | ₩ | 10,875 | ₩ | 47,653 | ₩ | 180,518 | ₩ | 2,047,120 | ||||||||||||||
Financial assets held for trading |
43,753 | | 15,333 | | | | 59,086 | |||||||||||||||||||||
Financial assets designated at fair value through profit or loss |
11,000 | | | | | | 11,000 | |||||||||||||||||||||
Derivatives held for trading |
55,895 | 83 | 694 | | 37 | 6 | 56,715 | |||||||||||||||||||||
Derivatives held for hedging |
5,032 | | | | | | 5,032 | |||||||||||||||||||||
Loans |
10,753,455 | 900,972 | 402,656 | 6,612 | 3,492 | 115,633 | 12,182,820 | |||||||||||||||||||||
Available-for-sale financial assets |
798,353 | | | | | 1,914 | 800,267 | |||||||||||||||||||||
Other financial assets |
1,192,982 | 61,140 | 75,970 | 1,710 | 46,434 | 10,212 | 1,388,448 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 14,414,689 | ₩ | 1,111,118 | ₩ | 599,585 | ₩ | 19,197 | ₩ | 97,616 | ₩ | 308,283 | ₩ | 16,550,488 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Derivatives held for trading |
₩ | 86,046 | ₩ | | ₩ | 921 | ₩ | | ₩ | | ₩ | 47 | ₩ | 87,014 | ||||||||||||||
Derivatives held for hedging |
226 | | | | | | 226 | |||||||||||||||||||||
Deposits |
4,611,932 | 389,071 | 188,431 | 19,924 | 21,297 | 273,357 | 5,504,012 | |||||||||||||||||||||
Debts |
6,382,288 | 258,483 | 303,866 | 880 | 3,577 | 168,908 | 7,118,002 | |||||||||||||||||||||
Debentures |
3,094,159 | 73,606 | 26,730 | | | 22,671 | 3,217,166 | |||||||||||||||||||||
Other financial liabilities |
1,194,927 | 76,150 | 78,093 | 7,157 | 46,710 | 13,043 | 1,416,080 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 15,369,578 | ₩ | 797,310 | ₩ | 598,041 | ₩ | 27,961 | ₩ | 71,584 | ₩ | 478,026 | ₩ | 17,342,500 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Off-balance sheet items |
17,850,878 | 19,783 | 6,549 | 4,704 | 18,898 | 78,818 | 17,979,630 |
65
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||||||||||
USD | JPY | EUR | GBP | CNY | Others | Total | ||||||||||||||||||||||
Financial Assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | 1,324,563 | ₩ | 123,527 | ₩ | 87,765 | ₩ | 5,495 | ₩ | 130,290 | ₩ | 216,250 | ₩ | 1,887,890 | ||||||||||||||
Financial assets held for trading |
16,290 | | | | | | 16,290 | |||||||||||||||||||||
Financial assets designated at fair value through profit or loss |
5,293 | | | | | | 5,293 | |||||||||||||||||||||
Derivatives held for trading |
94,664 | | 946 | | | | 95,610 | |||||||||||||||||||||
Derivatives held for hedging |
16,094 | | | | | | 16,094 | |||||||||||||||||||||
Loans |
10,061,929 | 1,235,187 | 381,415 | 51,677 | 456 | 190,827 | 11,921,491 | |||||||||||||||||||||
Available-for-sale financial assets |
777,081 | 10,052 | | | | 3,747 | 790,880 | |||||||||||||||||||||
Other financial assets |
512,717 | 314,632 | 76,016 | 1,332 | | 91,405 | 996,102 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 12,808,631 | ₩ | 1,683,398 | ₩ | 546,142 | ₩ | 58,504 | ₩ | 130,746 | ₩ | 502,229 | ₩ | 15,729,650 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Financial liabilities designated at fair value through profit or loss |
₩ | 5,287 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 5,287 | ||||||||||||||
Derivatives held for trading |
127,308 | | 1,333 | | 15 | | 128,656 | |||||||||||||||||||||
Deposits |
3,914,192 | 515,595 | 150,713 | 15,816 | 10,905 | 280,863 | 4,888,084 | |||||||||||||||||||||
Debts |
5,830,466 | 574,307 | 318,748 | 4,382 | 100,464 | 174,898 | 7,003,265 | |||||||||||||||||||||
Debentures |
2,717,876 | 236,020 | 193,062 | | | 148,687 | 3,295,645 | |||||||||||||||||||||
Other financial liabilities |
1,475,826 | 59,820 | 150,815 | 51,678 | 913 | 42,241 | 1,781,293 | |||||||||||||||||||||
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₩ | 14,070,955 | ₩ | 1,385,742 | ₩ | 814,671 | ₩ | 71,876 | ₩ | 112,297 | ₩ | 646,689 | ₩ | 17,102,230 | |||||||||||||||
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Off-balance sheet items |
₩ | 16,574,161 | ₩ | 3,486 | ₩ | 4,878 | ₩ | 4,787 | ₩ | 9,958 | ₩ | 60,221 | ₩ | 16,657,491 |
4.5 Operational Risk
4.5.1 Concept
The Group defines operational risk broadly to include all financial and non-financial risks that may arise from operating activities and could cause a negative effect on capital.
4.5.2 Risk management
The purpose of operational risk management is not only to comply with supervisory and regulatory requirements but also to promote a risk management culture, strengthen internal controls, innovate processes and provide timely feedback to management and employees. In addition, Kookmin Bank established Business Continuity Plans (BCP) to ensure critical business functions can be maintained, or restored, in the event of material disruptions arising from internal or external events. It has constructed replacement facilities as well as has carried out exercise drills for head office and IT departments to test its BCPs.
66
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
4.6. Capital Adequacy
The Group complies with the capital adequacy standard established by the Financial Services Commission. The capital adequacy standard is based on Basel III published by Basel Committee on Banking Supervision in Bank of International Settlements in June 2011, and was implemented in Korea in December 2013. The Group is required to maintain a minimum Common Equity Tier 1 ratio of at least 4.0%(3.5%,2013), a minimum Tier 1 ratio of 5.5%(4.5%,2013) and a minimum Total Regulatory Capital of 8.0%(8.0%,2013) as of December 31, 2014.
The Groups equity capital is classified into three categories in accordance with the Supervisory Regulations and Detailed Supervisory Regulations on Financial Holding Companies:
- Common Equity Tier 1 Capital: Common equity Tier 1 Capital represents the issued capital that takes the first and proportionately greatest share of any losses and represents the most subordinated claim in liquidation of the Group, and not repaid outside of liquidation. It includes common shares issued, capital surplus, retained earnings, non-controlling interests of consolidated subsidiaries, accumulated other comprehensive income, other capital surplus and others.
- Additional Tier 1 Capital: Additional Tier 1 Capital includes (i) perpetual instruments issued by the Group that meet the criteria for inclusion in Additional Tier 1 capital, and (ii) stock surplus resulting from the issue of instruments included in Additional Tier 1 capital and others.
- Tier 2 Capital: Tier 2 Capital represents the capital that takes the proportionate share of losses in the liquidation of the Group. Tier 2 Capital includes a fund raised by issuing subordinated debentures maturing in not less than 5 years that meet the criteria for inclusion in Additional Tier 2 capital, and the allowance for loan losses which are accumulated for assets classified as normal or precautionary as a result of classification of asset soundness in accordance with Regulation on Supervision of Financial Holding Companies and others.
Risk weighted asset means the inherent risks in the total assets held by the Group. The Group calculates risk weighted asset by each risk (credit risk, market risk, and operational risk) based on the Supervisory Regulations and Detailed Supervisory Regulations on Financial Holding Companies and uses it for BIS ratio calculation.
The Group assesses and monitors its adequacy of capital by using the internal assessment and management policy of the capital adequacy. The assessment of the capital adequacy is conducted by comparing available capital (actual amount of available capital) and economic capital (amount of capital enough to cover all significant risks under target credit rate set by the Group). The Group monitors the soundness of finance and provides risk adjusted basis for performance review using the assessment of the capital adequacy.
67
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Economic Capital is the amount of capital to prevent the inability of payment due to unexpected loss in the future. The Group measures, allocates and monitors economic capital by risk type and subsidiaries.
The Risk Management Council of the Group determines the Groups risk appetite and allocates economic capital by risk type and subsidiary. Each subsidiary efficiently operates its capital within a range of allocated economic capital. The Risk Management Department of the Group monitors the limit on economic capital and reports the results to management and the Risk Management Council. The Group maintains the adequacy of capital through proactive review and approval of the Risk Management Committee when the economic capital is expected to exceed the limits due to new business or business expansion. The Group and its subsidiaries comply with external capital adequacy requirements as of December 31, 2014 and 2013.
The details of the Groups capital adequacy calculation in line with Basel III requirements as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Equity Capital: |
₩ | 28,347,675 | ₩ | 27,296,535 | ||||
Tier 1 Capital |
24,248,598 | 22,693,836 | ||||||
Common Equity Tier 1 Capital |
24,062,475 | 22,693,836 | ||||||
Additional Tier 1 Capital |
186,123 | | ||||||
Tier 2 Capital |
4,099,077 | 4,602,699 | ||||||
Risk-weighted assets: |
182,485,957 | 177,514,060 | ||||||
Equity Capital (%): |
15.53 | 15.38 | ||||||
Tier 1 Capital (%) |
13.29 | 12.78 | ||||||
Common Equity Tier 1 Capital (%) |
13.19 | 12.78 |
5. Segment Information
5.1 Overall Segment Information and Business Segments
The Group is organized into the following business segments. These business divisions are based on the nature of the products and services provided, the type or class of customer, and the Groups management organization.
68
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Banking business |
Corporate Banking |
The activities within this segment include providing credit, deposit products and other related financial services to large, small-and medium-sized enterprises and SOHOs. | ||
Retail Banking |
The activities within this segment include providing credit, deposit products and other related financial services to individuals and households. | |||
Other Banking services |
The activities within this segment include trading activities in securities and derivatives, funding and other supporting activities. | |||
Credit Card business |
The activities within this segment include credit sale, cash service, card loan and other supporting activities. | |||
Investment & Securities business |
The activities within this segment include investment banking and brokerage services and other supporting activities. | |||
Life Insurance business |
The activities within this segment include life insurance and other supporting activities. |
69
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Financial information by business segment for the year ended December 31, 2014, is as follows:
(In millions of Korean won)
Banking business | ||||||||||||||||||||||||||||||||||||||||
Corporate Banking |
Retail Banking |
Other Banking Services |
Sub-total | Credit Card |
Investment & Securities |
Life Insurance |
Others | Intra-group Adjustments |
Total | |||||||||||||||||||||||||||||||
Operating revenues from external customers |
₩ | 1,710,416 | ₩ | 2,211,969 | ₩ | 1,480,838 | ₩ | 5,403,223 | ₩ | 1,280,628 | ₩ | 141,355 | ₩ | 105,255 | ₩ | 266,332 | ₩ | | ₩ | 7,196,793 | ||||||||||||||||||||
Segment operating revenues (expenses) |
70,271 | (48,256 | ) | 211,993 | 234,008 | (223,878 | ) | 5,218 | (30,498 | ) | 166,503 | (151,353 | ) | | ||||||||||||||||||||||||||
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₩ | 1,780,687 | ₩ | 2,163,713 | ₩ | 1,692,831 | ₩ | 5,637,231 | ₩ | 1,056,750 | ₩ | 146,573 | ₩ | 74,757 | ₩ | 432,835 | ₩ | (151,353 | ) | ₩ | 7,196,793 | ||||||||||||||||||||
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Net interest income |
2,448,966 | 2,079,834 | 442,646 | 4,971,446 | 993,806 | 18,136 | 227,344 | 203,443 | 1,600 | 6,415,775 | ||||||||||||||||||||||||||||||
Interest income |
4,008,584 | 4,432,760 | 1,261,283 | 9,702,627 | 1,353,704 | 45,404 | 227,372 | 326,366 | (20,177 | ) | 11,635,296 | |||||||||||||||||||||||||||||
Interest expense |
(1,559,618 | ) | (2,352,926 | ) | (818,637 | ) | (4,731,181 | ) | (359,898 | ) | (27,268 | ) | (28 | ) | (122,923 | ) | 21,777 | (5,219,521 | ) | |||||||||||||||||||||
Net fee and commission income |
237,229 | 524,784 | 316,032 | 1,078,045 | 95,132 | 76,268 | 253 | 134,154 | (1,123 | ) | 1,382,729 | |||||||||||||||||||||||||||||
Fee and commission income |
277,196 | 597,072 | 397,070 | 1,271,338 | 1,408,749 | 82,531 | 253 | 157,924 | (254,610 | ) | 2,666,185 | |||||||||||||||||||||||||||||
Fee and commission expense |
(39,967 | ) | (72,288 | ) | (81,038 | ) | (193,293 | ) | (1,313,617 | ) | (6,263 | ) | | (23,770 | ) | 253,487 | (1,283,456 | ) | ||||||||||||||||||||||
Net gains (losses) on financial assets/ liabilities at fair value through profit or loss |
179 | (20,238 | ) | 376,350 | 356,291 | | 46,999 | 10,338 | 25,595 | (25 | ) | 439,198 | ||||||||||||||||||||||||||||
Net other operating income (loss) |
(905,687 | ) | (420,667 | ) | 557,803 | (768,551 | ) | (32,188 | ) | 5,170 | (163,178 | ) | 69,643 | (151,805 | ) | (1,040,909 | ) | |||||||||||||||||||||||
General and administrative expenses |
(711,029 | ) | (1,695,563 | ) | (966,266 | ) | (3,372,858 | ) | (340,606 | ) | (102,526 | ) | (59,994 | ) | (188,510 | ) | 54,800 | (4,009,694 | ) | |||||||||||||||||||||
Operating profit before provision for credit losses |
1,069,658 | 468,150 | 726,565 | 2,264,373 | 716,144 | 44,047 | 14,763 | 244,325 | (96,553 | ) | 3,187,099 | |||||||||||||||||||||||||||||
Provision (reversal) for credit losses |
(566,942 | ) | (304,116 | ) | (16,596 | ) | (887,654 | ) | (277,662 | ) | (4,422 | ) | (1,112 | ) | (57,350 | ) | 224 | (1,227,976 | ) | |||||||||||||||||||||
Net operating profit |
502,716 | 164,034 | 709,969 | 1,376,719 | 438,482 | 39,625 | 13,651 | 186,975 | (96,329 | ) | 1,959,123 | |||||||||||||||||||||||||||||
Share of profit of associates |
| | 17,555 | 17,555 | | 81 | | (13,778 | ) | 9,570 | 13,428 | |||||||||||||||||||||||||||||
Net other non-operating revenue (expense) |
1,242 | | (35,241 | ) | (33,999 | ) | (5,076 | ) | (1,025 | ) | (1,383 | ) | (24,877 | ) | (4,766 | ) | (71,126 | ) | ||||||||||||||||||||||
Segment profits before income tax |
503,958 | 164,034 | 692,283 | 1,360,275 | 433,406 | 38,681 | 12,268 | 148,320 | (91,525 | ) | 1,901,425 | |||||||||||||||||||||||||||||
Income tax expense |
(120,504 | ) | (53,967 | ) | (156,763 | ) | (331,234 | ) | (100,705 | ) | (13,057 | ) | (5,731 | ) | (33,602 | ) | (1,985 | ) | (486,314 | ) | ||||||||||||||||||||
Profit for the year |
383,454 | 110,067 | 535,520 | 1,029,041 | 332,701 | 25,624 | 6,537 | 114,718 | (93,510 | ) | 1,415,111 | |||||||||||||||||||||||||||||
Profit attributable to Shareholders of the parent company |
383,454 | 110,067 | 535,520 | 1,029,041 | 332,701 | 25,624 | 6,537 | 100,329 | (93,510 | ) | 1,400,722 | |||||||||||||||||||||||||||||
Profit attributable to Non-controlling interests |
| | | | | | | 14,389 | | 14,389 | ||||||||||||||||||||||||||||||
Total assets1 |
94,313,469 | 111,074,156 | 70,066,039 | 275,453,664 | 15,886,769 | 4,131,568 | 7,680,184 | 25,965,518 | (20,761,995 | ) | 308,355,708 | |||||||||||||||||||||||||||||
Total liabilities1 |
83,780,834 | 123,792,699 | 45,939,658 | 253,513,191 | 12,406,314 | 3,554,828 | 7,096,459 | 5,347,261 | (1,075,017 | ) | 280,843,036 |
70
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Financial information by business segment for the year ended December 31, 2013, is as follows:
(In millions of Korean won)
Banking business | ||||||||||||||||||||||||||||||||||||||||
Corporate Banking |
Retail Banking |
Other Banking Services |
Sub-total | Credit Card |
Investment & Securities |
Life Insurance |
Others | Intra-group Adjustments |
Total | |||||||||||||||||||||||||||||||
Operating revenues from external customers |
₩ | 1,731,770 | ₩ | 2,453,683 | ₩ | 1,486,647 | ₩ | 5,672,100 | ₩ | 1,420,937 | ₩ | 115,054 | ₩ | 102,226 | ₩ | 143,811 | ₩ | | ₩ | 7,454,128 | ||||||||||||||||||||
Segment operating revenues (expenses) |
4,945 | (91,800 | ) | 314,854 | 227,999 | (218,231 | ) | 5,180 | (38,327 | ) | 124,281 | (100,902 | ) | | ||||||||||||||||||||||||||
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₩ | 1,736,715 | ₩ | 2,361,883 | ₩ | 1,801,501 | ₩ | 5,900,099 | ₩ | 1,202,706 | ₩ | 120,234 | ₩ | 63,899 | ₩ | 268,092 | ₩ | (100,902 | ) | ₩ | 7,454,128 | ||||||||||||||||||||
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Net interest income |
2,550,728 | 2,012,661 | 596,851 | 5,160,240 | 1,057,046 | 23,985 | 200,422 | 80,694 | 445 | 6,522,832 | ||||||||||||||||||||||||||||||
Interest income |
4,390,623 | 4,785,526 | 1,419,231 | 10,595,380 | 1,435,952 | 40,567 | 200,422 | 106,336 | (21,727 | ) | 12,356,930 | |||||||||||||||||||||||||||||
Interest expense |
(1,839,895 | ) | (2,772,865 | ) | (822,380 | ) | (5,435,140 | ) | (378,906 | ) | (16,582 | ) | | (25,642 | ) | 22,172 | (5,834,098 | ) | ||||||||||||||||||||||
Net fee and commission income |
240,698 | 612,165 | 251,881 | 1,104,744 | 184,679 | 75,796 | 109 | 118,136 | (4,225 | ) | 1,479,239 | |||||||||||||||||||||||||||||
Fee and commission income |
282,403 | 674,250 | 324,997 | 1,281,650 | 1,406,239 | 84,168 | 109 | 137,796 | (252,597 | ) | 2,657,365 | |||||||||||||||||||||||||||||
Fee and commission expense |
(41,705 | ) | (62,085 | ) | (73,116 | ) | (176,906 | ) | (1,221,560 | ) | (8,372 | ) | | (19,660 | ) | 248,372 | (1,178,126 | ) | ||||||||||||||||||||||
Net gains (losses) on financial assets/ liabilities at fair value through profit or loss |
184 | (1,804 | ) | 692,121 | 690,501 | | 19,422 | 18,051 | 28,898 | (50 | ) | 756,822 | ||||||||||||||||||||||||||||
Net other operating income (loss) |
(1,054,895 | ) | (261,139 | ) | 260,648 | (1,055,386 | ) | (39,019 | ) | 1,031 | (154,683 | ) | 40,364 | (97,072 | ) | (1,304,765 | ) | |||||||||||||||||||||||
General and administrative expenses |
(821,503 | ) | (1,739,768 | ) | (835,517 | ) | (3,396,788 | ) | (354,392 | ) | (96,345 | ) | (50,692 | ) | (141,668 | ) | 56,321 | (3,983,564 | ) | |||||||||||||||||||||
Operating profit before provision for credit losses |
915,212 | 622,115 | 965,984 | 2,503,311 | 848,314 | 23,889 | 13,207 | 126,424 | (44,581 | ) | 3,470,564 | |||||||||||||||||||||||||||||
Provision (reversal) for credit losses |
(706,464 | ) | (358,150 | ) | (575 | ) | (1,065,189 | ) | (344,555 | ) | (5,425 | ) | (526 | ) | (28,235 | ) | 358 | (1,443,572 | ) | |||||||||||||||||||||
Net operating profit |
208,748 | 263,965 | 965,409 | 1,438,122 | 503,759 | 18,464 | 12,681 | 98,189 | (44,223 | ) | 2,026,992 | |||||||||||||||||||||||||||||
Share of profit of associates |
| | (202,880 | ) | (202,880 | ) | | 7 | | (38,134 | ) | 41,615 | (199,392 | ) | ||||||||||||||||||||||||||
Net other non-operating revenue (expense) |
1,662 | | (25,293 | ) | (23,631 | ) | (1,652 | ) | (1,728 | ) | (791 | ) | 31,256 | (15,763 | ) | (12,309 | ) | |||||||||||||||||||||||
Segment profits before income tax |
210,410 | 263,965 | 737,236 | 1,211,611 | 502,107 | 16,743 | 11,890 | 91,311 | (18,371 | ) | 1,815,291 | |||||||||||||||||||||||||||||
Income tax expense |
(53,195 | ) | (86,283 | ) | (241,421 | ) | (380,899 | ) | (117,696 | ) | (4,887 | ) | (2,792 | ) | (30,021 | ) | (4,298 | ) | (540,593 | ) | ||||||||||||||||||||
Profit for the year |
157,215 | 177,682 | 495,815 | 830,712 | 384,411 | 11,856 | 9,098 | 61,290 | (22,669 | ) | 1,274,698 | |||||||||||||||||||||||||||||
Profit attributable to Shareholders of the parent company |
157,215 | 177,682 | 495,731 | 830,628 | 384,411 | 11,856 | 6,231 | 61,290 | (22,914 | ) | 1,271,502 | |||||||||||||||||||||||||||||
Profit attributable to Non-controlling interests |
| | 84 | 84 | | | 2,867 | | 245 | 3,196 | ||||||||||||||||||||||||||||||
Total assets1 |
92,498,513 | 103,202,391 | 69,887,481 | 265,588,385 | 15,854,992 | 2,525,070 | 6,945,605 | 21,504,989 | (20,251,443 | ) | 292,167,598 | |||||||||||||||||||||||||||||
Total liabilities1 |
81,008,201 | 122,206,712 | 41,426,715 | 244,641,628 | 12,385,131 | 1,973,888 | 6,396,477 | 1,414,111 | (625,911 | ) | 266,185,324 |
1 | Amounts before intra-group transaction adjustment. |
71
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
5.2 Services and Geographical Segments
5.2.1 Services information
Operating revenues from external customers by services for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Banking service |
₩ | 5,403,223 | ₩ | 5,672,100 | ||||
Credit card service |
1,280,628 | 1,420,937 | ||||||
Investment & securities service |
141,355 | 115,054 | ||||||
Life insurance service |
105,255 | 102,226 | ||||||
Other service |
266,332 | 143,811 | ||||||
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₩ | 7,196,793 | ₩ | 7,454,128 | |||||
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5.2.2 Geographical information
Geographical operating revenues from external customers for the years ended December 31, 2014 and 2013, and major non-current assets as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||||||||
Revenues from external customers |
Major non-current |
Revenues from external customers |
Major non-current |
|||||||||||||
Domestic |
₩ | 7,093,068 | ₩ | 3,807,792 | ₩ | 7,399,906 | ₩ | 3,600,424 | ||||||||
United States |
11,655 | 256 | 12,730 | 21 | ||||||||||||
New Zealand |
6,684 | 193 | 8,581 | 20 | ||||||||||||
China |
46,892 | 7,518 | 32,190 | 10,488 | ||||||||||||
Japan |
19,842 | 1,391 | (17,182 | ) | 1,722 | |||||||||||
Argentina |
573 | | 6 | | ||||||||||||
Vietnam |
3,130 | 287 | 3,268 | 316 | ||||||||||||
Cambodia |
5,364 | 564 | 5,741 | 898 | ||||||||||||
United Kingdom |
9,585 | 108 | 8,888 | 9 | ||||||||||||
Intra-group adjustment |
| 131,342 | | 56,408 | ||||||||||||
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₩ | 7,196,793 | ₩ | 3,949,451 | ₩ | 7,454,128 | ₩ | 3,670,306 | |||||||||
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72
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
6. Financial Assets and Financial Liabilities
6.1 Classification and Fair value of financial instruments
Carrying amount and fair value of financial assets and liabilities as of December 31, 2014 and 2013, are as follows:
2014 | 2013 | |||||||||||||||
(In millions of Korean won) | Carrying amount |
Fair value | Carrying amount |
Fair value | ||||||||||||
Financial assets |
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Cash and due from financial institutions |
₩ | 15,423,847 | ₩ | 15,425,123 | ₩ | 14,792,654 | ₩ | 14,793,603 | ||||||||
Financial assets held for trading |
10,121,570 | 10,121,570 | 8,967,006 | 8,967,006 | ||||||||||||
Debt securities |
9,712,208 | 9,712,208 | 7,825,785 | 7,825,785 | ||||||||||||
Equity securities |
358,017 | 358,017 | 1,100,969 | 1,100,969 | ||||||||||||
Others |
51,345 | 51,345 | 40,252 | 40,252 | ||||||||||||
Financial assets designated at fair value through profit or loss |
636,340 | 636,340 | 361,736 | 361,736 | ||||||||||||
Equity securities |
134,172 | 134,172 | 115,778 | 115,778 | ||||||||||||
Derivative linked securities |
502,168 | 502,168 | 245,958 | 245,958 | ||||||||||||
Derivatives held for trading |
1,858,637 | 1,858,637 | 1,680,880 | 1,680,880 | ||||||||||||
Derivatives held for hedging |
109,553 | 109,553 | 138,529 | 138,529 | ||||||||||||
Loans |
231,449,653 | 232,084,413 | 219,001,356 | 219,319,406 | ||||||||||||
Available-for-sale financial assets |
22,391,466 | 22,391,466 | 21,832,104 | 21,832,104 | ||||||||||||
Debt securities |
19,359,822 | 19,359,822 | 18,933,288 | 18,933,288 | ||||||||||||
Equity securities |
3,031,644 | 3,031,644 | 2,898,816 | 2,898,816 | ||||||||||||
Held-to-maturity financial assets |
12,569,154 | 13,050,574 | 13,016,991 | 13,386,962 | ||||||||||||
Other financial assets |
7,559,631 | 7,559,631 | 6,251,679 | 6,251,679 | ||||||||||||
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|
|||||||||
₩ | 302,119,851 | ₩ | 303,237,307 | ₩ | 286,042,935 | ₩ | 286,731,905 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities held for trading |
₩ | 836,542 | ₩ | 836,542 | ₩ | 236,637 | ₩ | 236,637 | ||||||||
Financial liabilities designated at fair value through profit or loss |
982,426 | 982,426 | 878,565 | 878,565 | ||||||||||||
Derivatives held for trading |
1,775,341 | 1,775,341 | 1,580,029 | 1,580,029 | ||||||||||||
Derivatives held for hedging |
22,049 | 22,049 | 215,310 | 215,310 | ||||||||||||
Deposits |
211,549,121 | 211,946,808 | 200,882,064 | 201,128,271 | ||||||||||||
Debts |
15,864,500 | 15,944,770 | 14,101,331 | 14,098,569 | ||||||||||||
Debentures |
29,200,706 | 29,752,202 | 27,039,534 | 28,221,196 | ||||||||||||
Other financial liabilities |
11,918,820 | 11,918,865 | 13,262,914 | 13,262,946 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 272,149,505 | ₩ | 273,179,003 | ₩ | 258,196,384 | ₩ | 259,621,523 | |||||||||
|
|
|
|
|
|
|
|
73
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. For each class of financial assets and financial liabilities, the Group discloses the fair value of that class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is a quoted price in an active market.
Methods of determining fair value for financial instruments are as follows:
Cash and due from financial institutions |
The carrying amounts of cash and demand due from financial institutions and payment due from financial institutions are a reasonable approximation of fair values. These financial instruments do not have a fixed maturity and are receivable on demand. Fair value of ordinary due from financial institutions is measured using a DCF model. | |
Investment securities |
The fair value of financial instruments that are quoted in active markets is determined using the quoted prices. Fair value is determined through the use of independent third-party pricing services where quoted prices are not available. Pricing services use one or more of the following valuation techniques including Discounted Cash Flow (DCF) Model, Imputed Market Value Model, Free Cash Flow to Equity Model, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method. | |
Loans |
DCF model is used to determine the fair value of loans. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at appropriate discount rate. | |
Derivatives |
For exchange traded derivatives, quoted price in an active market is used to determine fair value and for OTC derivatives, fair value is determined using valuation techniques. The Group uses internally developed valuation models that are widely used by market participants to determine fair values of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method and the Monte Carlo Simulation or independent third-party valuation service. |
74
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Deposits |
Carrying amount of demand deposits is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of time deposits is determined using a DCF model. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate. | |
Debts |
Carrying amount of overdraft in foreign currency is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of other debts is determined using a DCF model discounting contractual future cash flows at an appropriate discount rate. | |
Debentures |
Fair value is determined by using the valuations of independent third-party pricing services, which are calculated using market inputs. | |
Other financial assets and liabilities |
The carrying amounts are reasonable approximation of fair values. These financial instruments are temporary accounts used for other various transactions and their maturities are relatively short or not defined. However, fair value of finance lease liabilities is measured using a DCF model. |
Fair value hierarchy
The Group believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the statements of financial position are appropriate. However, the fair values of the financial instruments recognized in the statements of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.
The Group classifies and discloses fair value of the financial instruments into the following three-level hierarchy:
Level 1: The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: The fair values are based on unobservable inputs for the asset or liability.
The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety shall be determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.
75
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Fair value hierarchy of financial assets and liabilities measured at fair value
The fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position as of December 31, 2014 and 2013, is as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Fair value hierarchy | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Financial assets held for trading |
||||||||||||||||
Debt securities |
₩ | 4,371,105 | ₩ | 5,341,103 | ₩ | | ₩ | 9,712,208 | ||||||||
Equity securities |
248,689 | 109,328 | | 358,017 | ||||||||||||
Others |
51,345 | | | 51,345 | ||||||||||||
Financial assets designated at fair value through profit or loss |
||||||||||||||||
Equity securities |
| 134,172 | | 134,172 | ||||||||||||
Derivative linked securities |
| | 502,168 | 502,168 | ||||||||||||
Derivatives held for trading |
348 | 1,793,894 | 64,395 | 1,858,637 | ||||||||||||
Derivatives held for hedging |
| 109,293 | 260 | 109,553 | ||||||||||||
Available-for-sale financial assets1 |
||||||||||||||||
Debt securities |
6,982,339 | 12,377,142 | 341 | 19,359,822 | ||||||||||||
Equity securities |
1,052,269 | 178,377 | 1,800,998 | 3,031,644 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 12,706,095 | ₩ | 20,043,309 | ₩ | 2,368,162 | ₩ | 35,117,566 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities held for trading |
₩ | 836,542 | ₩ | | ₩ | | ₩ | 836,542 | ||||||||
Financial liabilities designated at fair value through profit or loss |
| | 982,426 | 982,426 | ||||||||||||
Derivatives held for trading |
1,146 | 1,751,617 | 22,578 | 1,775,341 | ||||||||||||
Derivatives held for hedging |
| 19,768 | 2,281 | 22,049 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 837,688 | ₩ | 1,771,385 | ₩ | 1,007,285 | ₩ | 3,616,358 | |||||||||
|
|
|
|
|
|
|
|
76
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||
Fair value hierarchy | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Financial assets held for trading |
||||||||||||||||
Debt securities |
₩ | 3,160,592 | ₩ | 4,665,193 | ₩ | | ₩ | 7,825,785 | ||||||||
Equity securities |
327,260 | 773,709 | | 1,100,969 | ||||||||||||
Others |
40,252 | | | 40,252 | ||||||||||||
Financial assets designated at fair value through profit or loss |
||||||||||||||||
Equity securities |
| 115,778 | | 115,778 | ||||||||||||
Derivative linked securities |
| 12,030 | 233,928 | 245,958 | ||||||||||||
Derivatives held for trading |
744 | 1,630,940 | 49,196 | 1,680,880 | ||||||||||||
Derivatives held for hedging |
| 138,077 | 452 | 138,529 | ||||||||||||
Available-for-sale financial assets1 |
||||||||||||||||
Debt securities |
9,754,737 | 9,175,742 | 2,809 | 18,933,288 | ||||||||||||
Equity securities |
985,108 | 254,464 | 1,659,244 | 2,898,816 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 14,268,693 | ₩ | 16,765,933 | ₩ | 1,945,629 | ₩ | 32,980,255 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities held for trading |
₩ | 236,637 | ₩ | | ₩ | | ₩ | 236,637 | ||||||||
Financial liabilities designated at fair value through profit or loss |
| | 878,565 | 878,565 | ||||||||||||
Derivatives held for trading |
261 | 1,538,374 | 41,394 | 1,580,029 | ||||||||||||
Derivatives held for hedging |
| 206,468 | 8,842 | 215,310 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 236,898 | ₩ | 1,744,842 | ₩ | 928,801 | ₩ | 2,910,541 | |||||||||
|
|
|
|
|
|
|
|
1 | The amounts of equity securities carried at cost in Level 3 which do not have a quoted market price in an active market and cannot be measured reliably at fair value are ₩93,435 million and ₩117,750 million as of December 31, 2014 and 2013, respectively. These equity securities are carried at cost because it is practically difficult to quantify the intrinsic values of the equity securities issued by unlisted public and non-profit entities. In addition, probabilities and range of estimated cash flows of the unlisted equity securities which are issued by project financing companies cannot be reasonably assessed. Therefore, these equity securities are carried at cost. The Group has no plan to sell these instruments in the near future. |
77
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Valuation techniques and the inputs used in the fair value measurement classified as Level 2
Valuation techniques and inputs of financial assets and liabilities measured at fair value in the statement of financial position and classified as Level 2 as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||
Fair value | Valuation techniques |
Inputs | ||||||||||
2014 | 2013 | |||||||||||
Financial assets |
||||||||||||
Financial assets held for trading |
₩ | 5,450,431 | ₩ | 5,438,902 | ||||||||
Debt securities |
5,341,103 | 4,665,193 | DCF Model |
Discount rate | ||||||||
Equity securities |
109,328 | 773,709 | DCF Model, Net Asset Value |
Discount rate, Fair value of underlying asset | ||||||||
Financial assets designated at fair value through profit or loss |
134,172 | 127,808 | ||||||||||
Equity securities |
134,172 | 115,778 | DCF Model |
Discount rate | ||||||||
Derivative linked securities |
| 12,030 | Monte Carlo Simulation |
Price of the underlying asset, Interest rates, Volatility of the underlying asset, Correlation of the underlying assets | ||||||||
Derivatives held for trading |
1,793,894 | 1,630,940 | DCF Model, Closed Form, FDM |
Discount rate, Volatility, Foreign exchange rate, Stock price and others | ||||||||
Derivatives held for hedging |
109,293 | 138,077 | DCF Model, Closed Form, FDM |
Discount rate, Volatility, Foreign exchange rate and others | ||||||||
Available-for-sale financial assets |
12,555,519 | 9,430,206 | ||||||||||
Debt securities |
12,377,142 | 9,175,742 | DCF Model |
Discount rate | ||||||||
Equity securities |
178,377 | 254,464 | DCF Model, Net Asset Value |
Discount rate, Fair value of underlying asset | ||||||||
|
|
|
|
|||||||||
₩ | 20,043,309 | ₩ | 16,765,933 | |||||||||
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||
Derivatives held for trading |
₩ | 1,751,617 | ₩ | 1,538,374 | DCF Model, Closed Form, FDM |
Discount rate, Volatility, Foreign exchange rate, Stock price and others | ||||||
Derivatives held for hedging |
19,768 | 206,468 | DCF Model, Closed Form, FDM |
Discount rate, Volatility, Foreign exchange rate and others | ||||||||
|
|
|
|
|||||||||
₩ | 1,771,385 | ₩ | 1,744,842 | |||||||||
|
|
|
|
78
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Fair value hierarchy of financial assets and liabilities whose the fair values are disclosed
The fair value hierarchy of financial assets and liabilities which the fair value is disclosed as of December 31, 2014 and 2013, is as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Fair value hierarchy | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions1 |
₩ | 2,588,407 | ₩ | 10,879,916 | ₩ | 1,956,800 | ₩ | 15,425,123 | ||||||||
Loans |
| | 232,084,413 | 232,084,413 | ||||||||||||
Held-to-maturity financial assets |
2,639,552 | 10,411,022 | | 13,050,574 | ||||||||||||
Other financial assets2 |
| | 7,559,631 | 7,559,631 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,227,959 | ₩ | 21,290,938 | ₩ | 241,600,844 | ₩ | 268,119,741 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Deposits1 |
₩ | | ₩ | 82,709,205 | ₩ | 129,237,603 | ₩ | 211,946,808 | ||||||||
Debts1 |
| 48,984 | 15,895,786 | 15,944,770 | ||||||||||||
Debentures |
| 29,256,810 | 495,392 | 29,752,202 | ||||||||||||
Other financial liabilities3 |
| | 11,918,865 | 11,918,865 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | | ₩ | 112,014,999 | ₩ | 157,547,646 | ₩ | 269,562,645 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Fair value hierarchy | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions1 |
₩ | 2,698,018 | ₩ | 10,555,993 | ₩ | 1,539,592 | ₩ | 14,793,603 | ||||||||
Loans |
| | 219,319,406 | 219,319,406 | ||||||||||||
Held-to-maturity financial assets |
3,535,217 | 9,851,745 | | 13,386,962 | ||||||||||||
Other financial assets2 |
| | 6,251,679 | 6,251,679 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 6,233,235 | ₩ | 20,407,738 | ₩ | 227,110,677 | ₩ | 253,751,650 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Deposits1 |
₩ | | ₩ | 72,839,365 | ₩ | 128,288,906 | ₩ | 201,128,271 | ||||||||
Debts1 |
| 156,349 | 13,942,220 | 14,098,569 | ||||||||||||
Debentures |
| 27,752,493 | 468,703 | 28,221,196 | ||||||||||||
Other financial liabilities3 |
| | 13,262,946 | 13,262,946 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | | ₩ | 100,748,207 | ₩ | 155,962,775 | ₩ | 256,710,982 | |||||||||
|
|
|
|
|
|
|
|
1 | The amounts included in Level 2 are the carrying amounts which are reasonable approximation of the fair values. |
79
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
2 | The ₩7,559,631 million and ₩6,251,679 million of other financial assets included in Level 3 are the carrying amounts which are reasonable approximation of fair values as of December 31, 2014 and 2013. |
3 | The ₩11,905,579 million and ₩13,261,041 million of other financial liabilities included in Level 3 are the carrying amounts which are reasonable approximation of fair values as of December 31, 2014 and 2013. |
Valuation techniques and the inputs used in the fair value measurement
The valuation techniques and the inputs of financial assets and liabilities which are disclosed by the carrying amounts because it is a reasonable approximation of fair value are not subject to be disclosed.
The valuation techniques and the inputs of financial assets and liabilities whose the fair values are disclosed and classified as Level 2 as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||
Fair value | Valuation technique |
Inputs | ||||||||||||||
2014 | 2013 | |||||||||||||||
Financial assets |
||||||||||||||||
Held-to-maturity financial assets |
₩ | 10,411,022 | ₩ | 9,851,745 | DCF Model | Discount rate | ||||||||||
Financial liabilities |
||||||||||||||||
Debentures |
₩ | 29,256,810 | ₩ | 27,752,493 | DCF Model | Discount rate |
80
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The valuation techniques and the inputs of financial assets and liabilities whose the fair values are disclosed and classified as Level 3 as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||
Fair value | Valuation technique |
Inputs | Unobservable Inputs | |||||||||||
2014 | 2013 | |||||||||||||
Financial assets |
||||||||||||||
Cash and due from financial institutions |
₩ | 1,956,800 | ₩ | 1,539,592 | DCF Model | Credit spread, Other spread, Interest rate |
Credit spread, Other spread | |||||||
Loans |
232,084,413 | 219,319,406 | DCF Model | Credit spread, Other spread, Prepayment rate, Interest rate |
Credit spread, Other spread, Prepayment rate | |||||||||
|
|
|
|
|||||||||||
₩ | 234,041,213 | ₩ | 220,858,998 | |||||||||||
|
|
|
|
|||||||||||
Financial liabilities |
||||||||||||||
Deposits |
₩ | 129,237,603 | ₩ | 128,288,906 | DCF Model | Other spread, Prepayment rate, Interest rate |
Other spread, Prepayment rate | |||||||
Debts |
15,895,786 | 13,942,220 | DCF Model | Other spread, Interest rate |
Other spread | |||||||||
Debentures |
495,392 | 468,703 | DCF Model | Other spread, Implied default probability, Interest rate |
Other spread, Implied default probability | |||||||||
Other financial liabilities |
13,286 | 1,905 | DCF Model | Other spread, Interest rate |
Other spread | |||||||||
|
|
|
|
|||||||||||
₩ | 145,642,067 | ₩ | 142,701,734 | |||||||||||
|
|
|
|
6.2 Level 3 of the fair value hierarchy disclosure
6.2.1 Valuation policy and process of Level 3 Fair value
The Group uses external, independent and qualified independent third-party valuation service in addition to internal valuation models to determine the fair value of the Groups assets at the end of every reporting period.
Where a reclassification between the levels of the fair value hierarchy occurs for a financial asset or liability, the Groups policy is to recognize such transfers as having occurred at the beginning of the reporting period.
81
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
6.2.2 Changes in fair value (Level 3) measured using valuation technique based on unobservable in market
Changes in Level 3 of the fair value hierarchy for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||
Financial assets at fair value through profit or loss |
Financial investments |
Financial liabilities at fair value through profit or loss |
Net derivatives | |||||||||||||||||
Designate at fair value through profit or loss |
Available- for-sale |
Designate at fair value through profit or loss |
Derivatives held for trading |
Derivatives held for hedging |
||||||||||||||||
Beginning balance |
₩ | 233,928 | ₩ | 1,662,053 | ₩ | (878,565 | ) | ₩ | 7,802 | ₩ | (8,390 | ) | ||||||||
Total gains or losses |
||||||||||||||||||||
- Profit or loss |
11,350 | (131,057 | ) | (26,232 | ) | 27,124 | 6,579 | |||||||||||||
- Other comprehensive income |
| 141,422 | | | | |||||||||||||||
Purchases |
678,750 | 225,272 | | 7,130 | | |||||||||||||||
Sales |
(421,860 | ) | (116,194 | ) | | (3,771 | ) | | ||||||||||||
Issues |
| | (1,417,513 | ) | (4,829 | ) | | |||||||||||||
Settlements |
| | 1,339,884 | (14,290 | ) | (210 | ) | |||||||||||||
Transfers into Level 3 |
| 25,146 | | 22,651 | | |||||||||||||||
Transfers out of Level 3 |
| (12,137 | ) | | | | ||||||||||||||
business combination |
| 6,834 | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending balance |
₩ | 502,168 | ₩ | 1,801,339 | ₩ | (982,426 | ) | ₩ | 41,817 | ₩ | (2,021 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||||||
Financial assets at fair value through profit or loss |
Financial investments |
Financial liabilities at fair value through profit or loss |
Net derivatives | |||||||||||||||||
Designate at through profit |
Available-for- sale financial assets |
Designate at fair value through profit or loss |
Derivatives held for trading |
Derivatives held for hedging |
||||||||||||||||
Beginning balance |
₩ | 177,624 | ₩ | 1,478,339 | ₩ | (469,138 | ) | ₩ | (1,158 | ) | ₩ | (6,535 | ) | |||||||
Total gains or losses |
||||||||||||||||||||
- Profit or loss |
7,138 | (10,180 | ) | (31,379 | ) | (2,007 | ) | (1,229 | ) | |||||||||||
- Other comprehensive income |
| 41,204 | | | | |||||||||||||||
Purchases |
415,876 | 519,140 | | 96 | | |||||||||||||||
Sales |
(366,710 | ) | (85,191 | ) | | (2,058 | ) | | ||||||||||||
Issues |
| | (1,076,965 | ) | (4,080 | ) | | |||||||||||||
Settlements |
| | 698,917 | 17,009 | (626 | ) | ||||||||||||||
Transfers into Level 3 |
| 26,979 | | | | |||||||||||||||
Transfers out of Level 3 |
| (308,238 | ) | | | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending balance |
₩ | 233,928 | ₩ | 1,662,053 | ₩ | (878,565 | ) | ₩ | 7,802 | ₩ | (8,390 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
82
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the year, and total gains or losses for the year included in profit or loss for financial instruments held at the end of the reporting period in the statements of comprehensive income for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Net income from financial investments at fair value through profit or loss |
Other operating income |
Net Interest Income |
||||||||||
Total gains or losses included in profit or loss for the year |
₩ | 12,242 | ₩ | (124,559 | ) | ₩ | 81 | |||||
Total gains or losses for the year included in profit or loss for financial instruments held at the end of the reporting period |
35,573 | (119,657 | ) | 81 |
(In millions of Korean won) | 2013 | |||||||
Net income from financial investments at fair value through profit or loss |
Other operating income |
|||||||
Total gains or losses included in profit or loss for the year |
₩ | (26,248 | ) | ₩ | (11,409 | ) | ||
Total gains or losses for the year included in profit or loss for financial instruments held at the end of the reporting period |
(3,285 | ) | (23,948 | ) |
83
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
6.2.3 Sensitivity analysis of changes in unobservable inputs
Information about fair value measurements using unobservable inputs
(In millions of Korean won) | Dec 31, 2014 | |||||||||||||
Fair value | Valuation technique |
Inputs | Unobservable inputs | Range of unobservable inputs(%) |
Relationship of unobservable inputs to fair value | |||||||||
Financial assets |
||||||||||||||
Financial assets designated at fair value through profit or loss | ||||||||||||||
Derivative linked securities |
₩ | 502,168 | Monte Carlo Simulation, Closed Form, DCF Model, Black-Derman-Toy Model |
Price of the underlying asset, Interest rates, Dividend yield, Discount rate, Volatility of the underlying asset, Correlation between underlying asset, Probability of Default, Volatility of interest rate |
Volatility of the underlying asset |
2.82~48.96 | The higher the volatility, the higher the fair value fluctuation | |||||||
Correlation between underlying asset |
-7.75~59.13 | The higher the correlation between underlying asset, the higher the fair value fluctuation | ||||||||||||
Probability of Default |
0.17~4.42 | The higher the probability of default, the lower the fair value | ||||||||||||
Volatility of interest rate |
4.48 | The higher volatility of interest rate, the higher the fair value fluctuation | ||||||||||||
Derivatives held for trading | ||||||||||||||
Stock and index |
61,400 | DCF Model, Closed Form, FDM, Monte Carlo Simulation, Binomial trees, Black-Scholes Model |
Price of the underlying asset, Interest rates, Dividend yield, Discount rate, Volatility of the underlying asset, Correlation between underlying asset |
Volatility of the underlying asset |
4.80~45.82 | The higher the volatility, the higher the fair value fluctuation | ||||||||
Correlation between underlying asset |
-3.27~59.13 | The higher the correlation between underlying asset, the higher the fair value fluctuation |
84
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Currency |
2,995 | DCF Model, |
Interest rates, Foreign exchange rate, Loss given default |
Loss given default |
6.78~90.56 | The higher the loss given default, the lower the fair value | ||||||||
Derivatives held for hedging |
||||||||||||||
Interest rate |
260 | DCF Model, Closed Form, FDM, MonteCarlo Simulation |
Price of the underlying asset, Interest rates, Volatility of the underlying asset |
Volatility of the underlying asset |
3.91 | The higher the volatility, the higher the fair value fluctuation | ||||||||
Available-for-sale financial assets |
||||||||||||||
Debt securities |
341 | DCF Model |
Discount rate |
Discount rate |
9.21 | The lower the discount rate, the higher the fair value | ||||||||
Equity securities |
1,800,998 | DCF Model, Comparable Company Analysis, Adjusted discount rate method, Binomial trees, Discounted cash flows to equity, Net asset value method, Dividend discount model |
Growth rate, Discount rate, Volatility of interest rate, Volatilities of real estate selling price, Liquidation value, Recovery rate of receivables acquisition cost |
Growth rate |
0.00~3.00 | The higher the growth rate, the higher the fair value | ||||||||
Discount rate |
2.29~23.25 | The lower the discount rate, the higher the fair value | ||||||||||||
Volatility of interest rate |
16.25~21.45 | The higher the volatility, the higher the fair value fluctuation | ||||||||||||
Volatilities of real estate selling price |
1.10 | The higher the real estate selling price, the higher the fair value | ||||||||||||
Liquidation value |
0.00 | The higher the liquidation value, the higher the fair value | ||||||||||||
Recovery rate of receivables acquisition cost |
155.83 | The higher the recovery rate of receivables acquisition cost, the higher the fair value | ||||||||||||
|
|
|||||||||||||
₩ | 2,368,162 | |||||||||||||
|
|
85
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Financial liabilities |
||||||||||||||
Financial liabilities designated at fair value through profit or loss | ||||||||||||||
Derivative linked securities |
₩ | 982,426 | Closed Form, MonteCarlo Simulation |
Price of the underlying asset, Interest rates, Dividend yield, Volatility of the underlying asset, Correlation between underlying asset |
Volatility of the underlying asset |
3.42~48.89 | The higher the volatility, the higher the fair value fluctuation | |||||||
Correlation between underlying asset |
-7.75~59.13 | The higher the correlation between underlying asset, the higher the fair value fluctuation | ||||||||||||
Derivatives held for trading | ||||||||||||||
Stock and index |
22,578 | DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model |
Price of the underlying asset, Interest rates, Volatility of the underlying asset, Correlation between underlying asset, Dividend yield, Volatility of interest rate |
Volatility of the underlying asset |
11.15~41.79 | The higher the volatility, the higher the fair value fluctuation | ||||||||
Correlation between underlying asset |
-3.83~68.20 | The higher the correlation between underlying asset, the higher the fair value fluctuation | ||||||||||||
Volatility of interest rate |
16.25~21.45 | The higher the volatility, the higher the fair value fluctuation | ||||||||||||
Derivatives held for hedging |
||||||||||||||
Interest rate |
2,281 | DCF Model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, Interest rates, Volatility of the underlying asset |
Volatility of the underlying asset |
2.35~3.91 | The higher the volatility, the higher the fair value fluctuation | ||||||||
|
|
|||||||||||||
₩ | 1,007,285 | |||||||||||||
|
|
86
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Dec 31, 2013 | ||||||||||||||
Fair value | Valuation technique |
Inputs | Unobservable inputs |
Range of unobservable inputs(%) |
Relationship of unobservable inputs to fair value | |||||||||
Financial assets | ||||||||||||||
Financial assets designated at fair value through profit or loss | ||||||||||||||
Derivative linked securities |
₩ | 233,928 | Monte Carlo Simulation, Closed Form, Hull and White model |
Price of the underlying asset, Interest rates, Dividend yield, Volatility of the underlying asset, Correlation between underlying asset, Volatility of interest rate, Discount rate |
Volatility of the underlying asset |
10.99 ~ 40.28 | The higher the volatility, the higher the fair value fluctuation | |||||||
Correlation between underlying asset |
-3.28 ~ 57.89 | The higher the correlation between underlying asset, the higher the fair value fluctuation | ||||||||||||
Volatility of interest rate |
0.48 | The higher the volatility, the higher the fair value fluctuation | ||||||||||||
Discount rate |
2.54 ~ 5.32 | The lower the discount rate, the higher the fair value | ||||||||||||
Derivatives held for trading | ||||||||||||||
Stock and index |
42,706 | DCF Model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, Interest rates, Volatility of the underlying asset, Correlation between underlying asset, Dividend yield, Discount rate |
Volatility of the underlying asset |
7.10 ~ 45.64 | The higher the volatility, the higher the fair value fluctuation | ||||||||
Correlation between underlying asset |
11.43 ~ 79.26 | The higher the correlation between underlying asset, the higher the fair value fluctuation | ||||||||||||
Discount rate |
3.46 | The lower the discount rate, the higher the fair value | ||||||||||||
Currency |
6,490 | DCF Model |
Interest rates, Foreign exchange rate, Loss given default |
Loss given default |
88.24 ~ 94.12 | The higher the loss given default, the lower the fair value |
87
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Derivatives held for hedging | ||||||||||||||
Interest rate |
452 | DCF Model, Closed Form, FDM, Monte Carlo Simulation |
Interest rates, Correlation between underlying asset (Interest rates), Foreign exchange rate |
Correlation between underlying asset(Interest rates) |
0.03 | The higher the correlation between underlying asset, the higher the fair value fluctuation | ||||||||
Available-for-sale financial assets | ||||||||||||||
Debt securities |
2,809 | DCF Model |
Discount rate |
Discount rate |
8.85 | The lower the discount rate, the higher the fair value | ||||||||
Equity securities |
1,659,244 | DCF Model, Comparable company analysis, Adjusted discount rate method, Binomial trees, Hull and White model, Net asset value method, Dividend discount model, Discounted cash flows to equity, |
Growth rate, Discount rate, Volatility of interest rate, Volatilities of real estate selling price, Liquidation value, Net asset value, Stock price index of the comparative company |
Growth rate |
0.00 ~ 1.00 | The higher the growth rate, the higher the fair value | ||||||||
Discount rate |
2.86 ~ 58.69 | The lower the discount rate, the higher the fair value | ||||||||||||
Volatility of interest rate |
12.37 ~ 16.26 | The higher the volatility, the higher the fair value fluctuation | ||||||||||||
Volatilities of real estate selling price |
0.74 ~ 0.96 | The higher the real estate selling price, the higher the fair value | ||||||||||||
Liquidation value |
0.00 | The higher the liquidation value, the higher the fair value | ||||||||||||
|
|
|||||||||||||
₩ | 1,945,629 | |||||||||||||
|
|
88
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Financial liabilities | ||||||||||||||
Financial liabilities designated at fair value through profit or loss | ||||||||||||||
Derivative linked securities |
₩ | 878,565 | Closed Form, Monte Carlo Simulation |
Price of the underlying asset, Interest rates, Volatility of the underlying asset, Correlation between underlying asset, Dividend yield |
Volatility of the underlying asset |
10.99 ~ 44.71 | The higher the volatility, the higher the fair value fluctuation | |||||||
Correlation between underlying asset |
-3.28 ~ 58.28 | The higher the correlation between underlying asset, the higher the fair value fluctuation | ||||||||||||
Derivatives held for trading | ||||||||||||||
Stock and index |
41,394 | DCF Model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, Interest rates, Volatility of the underlying asset, Correlation between underlying asset, Dividend yield, Volatility of interest rate |
Volatility of the underlying asset |
10.99 ~ 45.64 | The higher the volatility, the higher the fair value fluctuation | ||||||||
Correlation between underlying asset |
16.20 ~ 79.26 | The higher the correlation between underlying asset, the higher the fair value fluctuation | ||||||||||||
Volatility of interest rate |
12.37 ~ 16.26 |
The higher the volatility, the higher the fair value fluctuation | ||||||||||||
Derivatives held for hedging | ||||||||||||||
Interest rate |
8,842 | DCF Model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, Interest rates, Volatility of the underlying asset |
Volatility of the underlying asset |
3.00~5.28 | The higher the volatility, the higher the fair value fluctuation | ||||||||
|
|
|||||||||||||
₩ | 928,801 | |||||||||||||
|
|
89
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Sensitivity analysis of changes in unobservable inputs
Sensitivity analysis of financial instruments is performed, to measure favorable and unfavorable changes in the fair value of financial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair value is affected by more than two input parameters, the amounts represent the most favorable or most unfavorable. Amongst Level 3 financial instruments subject to sensitivity analysis are equity-related derivatives, currency-related derivatives and interest rate-related derivatives whose fair value changes are recognized in profit and loss as well as debt securities and unlisted equity securities (including private equity funds) whose fair value changes are recognized in profit and loss or other comprehensive income and loss.
Sensitivity analyses by type of instrument as a result of varying input parameters are as follows:
(In millions of Korean won) | Dec. 31, 2014 | |||||||||||||||
Recognition in profit and loss |
Other comprehensive income |
|||||||||||||||
Favorable changes |
Unfavorable changes |
Favorable changes |
Unfavorable changes |
|||||||||||||
Financial assets |
||||||||||||||||
Financial assets designated at fair value through profit or loss |
||||||||||||||||
Derivative linked securities1 |
₩ | 6,006 | ₩ | (10,768 | ) | ₩ | | ₩ | | |||||||
Derivatives held for trading2 |
9,851 | (8,194 | ) | | | |||||||||||
Derivatives held for hedging2 |
17 | (15 | ) | | | |||||||||||
Available-for-sale financial assets |
||||||||||||||||
Debt securities3 |
| | 20 | (18 | ) | |||||||||||
Equity securities4 |
| | 388,278 | (147,164 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 15,874 | ₩ | (18,977 | ) | ₩ | 388,298 | ₩ | (147,182 | ) | |||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities designated at fair value through profit or loss1 |
₩ | 23,283 | ₩ | (15,248 | ) | ₩ | | ₩ | | |||||||
Derivatives held for trading2 |
4,211 | (6,812 | ) | | | |||||||||||
Derivatives held for hedging2 |
86 | (76 | ) | | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 27,580 | ₩ | (22,136 | ) | ₩ | | ₩ | | ||||||||
|
|
|
|
|
|
|
|
90
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | Dec. 31, 2013 | |||||||||||||||
Recognition in profit and loss |
Other comprehensive income |
|||||||||||||||
Favorable changes |
Unfavorable changes |
Favorable changes |
Unfavorable changes |
|||||||||||||
Financial assets |
||||||||||||||||
Financial assets designated at fair value through profit or loss |
||||||||||||||||
Derivative linked securities1 |
₩ | 6,188 | ₩ | (8,834 | ) | ₩ | | ₩ | | |||||||
Derivatives held for trading2 |
6,653 | (6,299 | ) | | | |||||||||||
Derivatives held for hedging2 |
| | | | ||||||||||||
Available-for-sale financial assets |
||||||||||||||||
Debt securities3 |
| | 61 | (58 | ) | |||||||||||
Equity securities4 |
| | 322,444 | (121,192 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 12,841 | ₩ | (15,133 | ) | ₩ | 322,505 | ₩ | (121,250 | ) | |||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities designated at fair value through profit or loss1 |
₩ | 15,467 | ₩ | (10,330 | ) | ₩ | | ₩ | | |||||||
Derivatives held for trading2 |
4,596 | (4,968 | ) | | | |||||||||||
Derivatives held for hedging2 |
345 | (333 | ) | | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 20,408 | ₩ | (15,631 | ) | ₩ | | ₩ | | ||||||||
|
|
|
|
|
|
|
|
1 | For financial assets designated at fair value through profit or loss, the changes in fair value are calculated by shifting principal unobservable input parameters such as stock price fluctuation range of underlying assets by +/- 10%. |
2 | For equity-related derivatives, the changes in fair value are calculated by shifting principal unobservable input parameters such as correlation between the stock price and volatility by +/- 10%. For currency-related derivatives, the changes in fair value are calculated by shifting principal unobservable input parameters such as loss given default by ± 1%. For interest rate-related derivatives, coefficient of correlation between long-term and short-term interest rates or the volatilities of the underlying assets are shifted by +/- 10% to calculate the fair value changes. |
3 | For debt securities, the changes in fair value are calculated by shifting principal unobservable input parameters such as discount rate by +/- 1%. |
4 | For equity securities, the changes in fair value are calculated by shifting principal unobservable input parameters such as correlation between growth rate (0~0.5%) and discount rate, liquidation value (-1~1%) and discount rate, or recovery rate of receivables acquisition cost (-1~1%). Sensitivity of fair values to unobservable parameters of private equity fund is practically impossible, but in the case of equity fund composed of real estates, the changes in fair value are calculated by shifting correlation between discount rate (-1~1%) and volatilities of real estate price (-1~1%) |
91
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
6.2.4 Day one gain or loss
If the Group uses a valuation technique that incorporates data not obtained from observable markets for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price and the difference is deferred and not recognized in profit or loss, and is amortized by using the straight-line method over the life of the financial instrument. If the fair value of the financial instruments is subsequently determined using observable market inputs, the remaining deferred amount is recognized in profit or loss.
The aggregate difference yet to be recognized in profit or loss at the beginning and end of the period and a reconciliation of changes in the balance of this difference, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Balance at the beginning of the year |
₩ | 4,190 | ₩ | 8,652 | ||||
New transactions |
(853 | ) | 3,449 | |||||
Amounts recognized in profit or loss during the year |
||||||||
Amortization |
(891 | ) | (3,484 | ) | ||||
Settlement |
(1,070 | ) | (4,427 | ) | ||||
|
|
|
|
|||||
Balance at the end of the year |
₩ | 1,376 | ₩ | 4,190 | ||||
|
|
|
|
6.3 Carrying amounts of financial instruments by category
Financial assets and liabilities are measured at fair value or amortized cost. Measurement policies for each class of financial assets and liabilities are disclosed in Note 3, Significant accounting policies.
92
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The carrying amounts of financial assets and liabilities by category as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||||||||||||||
Held for trading |
Designated at fair value through profit or loss |
Loans and receivables |
Available- for-sale assets |
Held-to- Maturity financial assets |
Derivatives held for hedging |
Total | ||||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | | ₩ | | ₩ | 15,423,847 | ₩ | | ₩ | | ₩ | | ₩ | 15,423,847 | ||||||||||||||
Financial assets at fair value through profit or loss |
10,121,570 | 636,340 | | | | | 10,757,910 | |||||||||||||||||||||
Derivatives |
1,858,637 | | | | | 109,553 | 1,968,190 | |||||||||||||||||||||
Loans |
| | 231,449,653 | | | | 231,449,653 | |||||||||||||||||||||
Financial investments |
| | | 22,391,466 | 12,569,154 | | 34,960,620 | |||||||||||||||||||||
Other financial assets |
| | 7,559,631 | | | | 7,559,631 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 11,980,207 | ₩ | 636,340 | ₩ | 254,433,131 | ₩ | 22,391,466 | ₩ | 12,569,154 | ₩ | 109,553 | ₩ | 302,119,851 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||
2014 | ||||||||||||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||||||
Held for trading |
Designated at fair value through profit or loss |
Financial amortized cost |
Derivatives held for hedging |
Total | ||||||||||||||||
Financial liabilities |
||||||||||||||||||||
Financial liabilities at fair value through profit or loss |
₩ | 836,542 | ₩ | 982,426 | ₩ | | ₩ | | ₩ | 1,818,968 | ||||||||||
Derivatives |
1,775,341 | | | 22,049 | 1,797,390 | |||||||||||||||
Deposits |
| | 211,549,121 | | 211,549,121 | |||||||||||||||
Debts |
| | 15,864,500 | | 15,864,500 | |||||||||||||||
Debentures |
| | 29,200,706 | | 29,200,706 | |||||||||||||||
Other financial liabilities |
| | 11,918,820 | | 11,918,820 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 2,611,883 | ₩ | 982,426 | ₩ | 268,533,147 | ₩ | 22,049 | ₩ | 272,149,505 | |||||||||||
|
|
|
|
|
|
|
|
|
|
93
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | ||||||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||||||||||||||
Held for trading |
Designated at fair value through profit or loss |
Loans and receivables |
Available- for-sale assets |
Held-to- Maturity financial assets |
Derivatives held for hedging |
Total | ||||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | | ₩ | | ₩ | 14,792,654 | ₩ | | ₩ | | ₩ | | ₩ | 14,792,654 | ||||||||||||||
Financial assets at fair value through profit or loss |
8,967,006 | 361,736 | | | | | 9,328,742 | |||||||||||||||||||||
Derivatives |
1,680,880 | | | | | 138,529 | 1,819,409 | |||||||||||||||||||||
Loans |
| | 219,001,356 | | | | 219,001,356 | |||||||||||||||||||||
Financial investments |
| | | 21,832,104 | 13,016,991 | | 34,849,095 | |||||||||||||||||||||
Other financial assets |
| | 6,251,679 | | | | 6,251,679 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 10,647,886 | ₩ | 361,736 | ₩ | 240,045,689 | ₩ | 21,832,104 | ₩ | 13,016,991 | ₩ | 138,529 | ₩ | 286,042,935 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||
2013 | ||||||||||||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||||||
Held for trading |
Designated at fair value through profit or loss |
Financial amortized cost |
Derivatives held for hedging |
Total | ||||||||||||||||
Financial liabilities |
||||||||||||||||||||
Financial liabilities at fair value through profit or loss |
₩ | 236,637 | ₩ | 878,565 | ₩ | | ₩ | | ₩ | 1,115,202 | ||||||||||
Derivatives |
1,580,029 | | | 215,310 | 1,795,339 | |||||||||||||||
Deposits |
| | 200,882,064 | | 200,882,064 | |||||||||||||||
Debts |
| | 14,101,331 | | 14,101,331 | |||||||||||||||
Debentures |
| | 27,039,534 | | 27,039,534 | |||||||||||||||
Other financial liabilities |
| | 13,262,914 | | 13,262,914 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 1,816,666 | ₩ | 878,565 | ₩ | 255,285,843 | ₩ | 215,310 | ₩ | 258,196,384 | |||||||||||
|
|
|
|
|
|
|
|
|
|
94
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
6.4 Transfer of financial assets
Transferred financial assets that are derecognized in their entirety
The Group transferred loans and other financial assets that are derecognized in their entirety to SPEs, while the maximum exposure to loss(carrying amount) from its continuing involvement in the derecognized financial assets as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 |
|||||||||||
Type of continuing involvement |
Classification of instruments |
Carrying amount of continuing involvement in statement of financial position |
Fair value of continuing involvement |
|||||||||
KR ABS Co., Ltd. |
Subordinate debt |
Available-for-sale financial assets |
₩ | 4,921 | ₩ | 4,921 | ||||||
KR ABS Second Co., Ltd. |
Subordinate debt |
Available-for-sale financial assets |
22,219 | 22,219 | ||||||||
EAK ABS Co., Ltd. |
Subordinate debt |
Available-for-sale financial assets |
11,211 | 11,211 | ||||||||
AP ABS First Co., Ltd. |
Senior debt |
Loans and receivables |
9,762 | 9,842 | ||||||||
Subordinate debt |
Available-for-sale financial assets |
17,346 | 17,346 | |||||||||
Discovery ABS First Co., Ltd. |
Senior debt |
Loans and receivables |
1,175 | 1,194 | ||||||||
Subordinate debt |
Available-for-sale financial assets |
22,591 | 22,591 | |||||||||
EAK ABS Second Co., Ltd. 1 |
Senior debt | Loans and receivables |
19,806 | 20,026 | ||||||||
Subordinate debt
|
Available-for-sale financial assets |
38,207 | 38,207 | |||||||||
FK1411 Co., Ltd. 2 |
Senior debt | Loans and receivables |
44,966 | 44,917 | ||||||||
Subordinate debt |
Available-for-sale financial assets |
47,600 | 47,600 | |||||||||
|
|
|
|
|||||||||
₩ | 239,804 | ₩ | 240,074 | |||||||||
|
|
|
|
1 | Recognized net loss from transferring loans to the SPEs amounts to ₩6,924 million. |
2 | Recognized net loss from transferring loans to the SPEs amounts to ₩27,365 million. |
3 | In addition to the above, there were gains on sale of loans attributable to true-up adjustments based on the transfer agreement with the National Happiness Fund (the Fund) amounting to ₩3,762 million. |
95
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||
Type of continuing involvement |
Classification of financial instruments |
Carrying amount of continuing involvement in statement of financial position |
Fair value of continuing involvement |
|||||||||
KR ABS Co., Ltd. |
Mezzanine/ subordinate debt |
Available- for-sale financial assets |
₩ | 11,434 | ₩ | 11,434 | ||||||
KR ABS Second Co., Ltd.1 |
Senior debt |
Loans and receivables |
26,065 | 26,227 | ||||||||
Subordinate debt |
Available- for-sale financial assets |
33,017 | 33,017 | |||||||||
EAK ABS Co., Ltd.2 |
Subordinate debt |
Available- for-sale financial assets |
35,020 | 35,020 | ||||||||
AP ABS First Co., Ltd.3 |
Senior debt |
Loans and receivables |
67,326 | 67,353 | ||||||||
Subordinate debt |
Available- for-sale financial assets |
16,669 | 16,669 | |||||||||
Discovery ABS First Co., Ltd.4 |
Senior debt | Loans and receivables |
23,494 | 23,547 | ||||||||
Subordinate debt |
Available- for-sale financial assets |
21,454 | 21,454 | |||||||||
|
|
|
|
|||||||||
₩ | 234,479 | ₩ | 234,721 | |||||||||
|
|
|
|
1 | Recognized net loss from transferring loans to the SPEs amounts to ₩24,589 million. |
2 | Recognized net loss from transferring loans to the SPEs amounts to ₩2,480 million. |
3 | Recognized net loss from transferring loans to the SPEs amounts to ₩18,556 million. |
4 | Recognized net loss from transferring loans to the SPEs amounts to ₩37,975 million. |
5 | In addition to the above, there were gains from the transfer of non-performing loans to the National Happiness Fund (the Fund) amounting to ₩57,826 million. According to the agreement with the Fund, where the recovered amounts exceed the consideration paid by the Fund for the non-performing loans, the excess amount is to be reimbursed to the Group. |
Transferred financial assets that are not derecognized in their entirety
96
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The Group securitized the loans and received the subordinated debts as part of consideration related to the securitization to provide credit enhancements to other senior debtors, and this transaction was recognized by the Group as collateralized debts. The liabilities and related securitized assets as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||
Liabilities arising from asset-backed securities | ||||||||||||||||||||
Carrying amount of assets (Underlying assets) |
Carrying amount of the associated liabilities (Senior debentures) |
Fair value of assets (Underlying assets) |
Fair value of the associated liabilities (Senior debentures) |
Net Position |
||||||||||||||||
KB Kookmin Card First Securitization Co., Ltd.1 |
₩ | 546,770 | ₩ | | ₩ | | ₩ | | ₩ | | ||||||||||
KB Kookmin Card Second Securitization Co., Ltd. 1 |
622,573 | 327,553 | | | | |||||||||||||||
Wise Mobile First Securitization Specialty 2 |
122,528 | 109,972 | | | | |||||||||||||||
Wise Mobile Second Securitization Specialty 2 |
158,396 | 144,958 | | | | |||||||||||||||
Wise Mobile Third Securitization Specialty 2 |
169,609 | 158,957 | | | | |||||||||||||||
Wise Mobile Fourth Securitization Specialty 2 |
99,952 | 94,959 | | | | |||||||||||||||
Wise Mobile Fifth Securitization Specialty 2 |
179,703 | 169,926 | | | | |||||||||||||||
Wise Mobile Sixth Securitization Specialty 2 |
204,095 | 194,896 | | | | |||||||||||||||
Wise Mobile Seventh Securitization Specialty 2 |
207,387 | 199,878 | | | | |||||||||||||||
Wise Mobile Eighth Securitization Specialty 2 |
202,745 | 194,862 | | | | |||||||||||||||
Wise Mobile Ninth Securitization Specialty 2 |
143,666 | 139,889 | | | | |||||||||||||||
Wise Mobile Tenth Securitization Specialty 2 |
193,959 | 189,827 | | | | |||||||||||||||
Wise Mobile Eleventh Securitization Specialty 2 |
182,281 | 179,781 | | | | |||||||||||||||
Wise Mobile Twelfth Securitization Specialty 2 |
191,329 | 189,719 | | | |
97
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||
Liabilities arising from asset-backed securities | ||||||||||||||||||||
Carrying amount of assets (Underlying assets) |
Carrying amount of the associated liabilities (Senior debentures) |
Fair value of assets (Underlying assets) |
Fair value of the associated liabilities (Senior debentures) |
Net Position |
||||||||||||||||
KB Mortgage Loan First Securitization Specialty Co., Ltd. |
₩ | 295,679 | ₩ | 193,062 | ₩ | 295,679 | ₩ | 192,972 | ₩ | 102,707 | ||||||||||
KAMCO Value Recreation Third Securitization Specialty Co., Ltd. |
8,291 | 1,958 | 8,291 | 1,958 | 6,333 | |||||||||||||||
KH First Co., Ltd. 3 |
99,763 | 100,900 | | | | |||||||||||||||
KB Kookmin Card First Securitization Co., Ltd. 1 |
568,916 | 315,845 | | | | |||||||||||||||
Wise Mobile First Securitization Specialty 2 |
339,222 | 329,785 | | | | |||||||||||||||
Wise Mobile Second Securitization Specialty 2 |
384,473 | 374,733 | | | | |||||||||||||||
Wise Mobile Third Securitization Specialty 2 |
350,822 | 343,736 | | | | |||||||||||||||
Wise Mobile Fourth Securitization Specialty 2 |
202,038 | 199,802 | | | | |||||||||||||||
Wise Mobile Fifth Securitization Specialty 2 |
344,047 | 339,631 | | | | |||||||||||||||
Wise Mobile Sixth Securitization Specialty 2 |
362,975 | 359,534 | | | | |||||||||||||||
Wise Mobile Seventh Securitization Specialty 2 |
351,905 | 349,486 | | | |
1 | They have the obligation to early redeem the asset-backed debentures upon occurrence of an event specified in the agreement as trust type asset securitization. To avoid such early redemption, they entrust supplementary card accounts, deposits and others. Accordingly, as asset-backed debenture holders recourse is not limited to the underlying assets, the fair value is not disclosed. |
2 | If the Special Purpose Companies(SPC) could not redeem the senior debentures by collection of underlying assets, the SPC should be redeem by borrowings from the credit facilities. Accordingly, as senior debenture holders recourse is not limited to the underlying assets, the fair value is not disclosed. |
3 | Pursuant to the Purchase Agreement of the liabilities, the fair value is not disclosed as the counterparty has both a right of recourse for the securitized assets and a right to request to purchase the liabilities. |
98
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Securities under repurchase agreements and loaned securities
The Group continues to recognize the financial assets related to repurchase agreements and securities lending transactions on the statements of financial position since those transactions are not qualified for derecognition even though the Group transfers the financial assets. A financial asset is sold under a reverse repurchase agreement to repurchase the same asset at a fixed price, or loaned under a securities lending agreement to be returned as the same asset. Thus, the Group retains substantially all the risks and rewards of ownership of the financial asset. The amounts of transferred assets and related liabilities as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||
Carrying amount of transferred assets |
Carrying amount of related liabilities |
|||||||
Reverse repurchase, securities lending and similar agreements |
₩ | 1,080,804 | ₩ | 1,019,071 | ||||
Loaned securities |
||||||||
Government bond |
162,408 | | ||||||
Stock |
2,378 | | ||||||
|
|
|
|
|||||
₩ | 1,245,590 | ₩ | 1,019,071 | |||||
|
|
|
|
(In millions of Korean won) | 2013 | |||||||
Carrying amount of transferred assets |
Carrying amount of related liabilities |
|||||||
Reverse repurchase, securities lending and similar agreements |
₩ | 649,309 | ₩ | 608,156 | ||||
Loaned securities |
||||||||
Government bond |
527,427 | | ||||||
Stock |
14,296 | | ||||||
|
|
|
|
|||||
₩ | 1,191,032 | ₩ | 608,156 | |||||
|
|
|
|
6.5 Offsetting financial assets and financial liabilities
The Group enters into International Derivatives Swaps and Dealers Association (ISDA) master netting agreements and other arrangements with the Groups derivative and spot exchange counterparties. Similar netting agreements are also entered into with the Groups reverse repurchase, securities and others. Pursuant to these agreements, in the event of default by one party, contracts are to be terminated and receivables and payables are to be offset. Further, as the law allows for the right to offset, domestic uncollected receivables balances and domestic accrued liabilities balances are shown in its net settlement balance in the statement of consolidated financial position.
99
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of financial assets subject to offsetting, enforceable master netting arrangements or similar agreements as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Gross amounts of recognized financial assets |
Gross amounts of | Non-offsetting amount | Net amount | |||||||||||||||||||||
recognized financial liabilities offset in the statement of financial position |
Net amounts of financial assets presented in the statement of financial position |
Financial instruments |
Cash collateral received |
|||||||||||||||||||||
Derivatives held for trading |
₩ | 1,806,087 | ₩ | | ₩ | 1,806,087 | ₩ | (1,477,495 | ) | ₩ | (1,635 | ) | ₩ | 326,957 | ||||||||||
Derivatives held for hedging |
109,553 | | 109,553 | (15,688 | ) | | 93,865 | |||||||||||||||||
Receivable spot exchange |
2,343,308 | | 2,343,308 | (2,342,116 | ) | | 1,192 | |||||||||||||||||
Reverse repurchase, securities borrowing and similar agreements1 |
3,529,900 | | 3,529,900 | (3,529,900 | ) | | | |||||||||||||||||
Other financial instruments |
18,680,680 | (16,483,341 | ) | 2,197,339 | | | 2,197,339 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 26,469,528 | ₩ | (16,483,341 | ) | ₩ | 9,986,187 | ₩ | (7,365,199 | ) | ₩ | (1,635 | ) | ₩ | 2,619,353 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Gross amounts of recognized financial assets |
Gross amounts of | Net amounts of | Non-offsetting amount | Net amount | ||||||||||||||||||||
recognized financial liabilities offset in the statement of financial position |
financial assets presented in the statement of financial position |
Financial instruments |
Cash collateral received |
|||||||||||||||||||||
Derivatives held for trading |
₩ | 1,593,909 | ₩ | | ₩ | 1,593,909 | ₩ | (1,190,301 | ) | ₩ | (1,850 | ) | ₩ | 401,758 | ||||||||||
Derivatives held for hedging |
138,028 | | 138,028 | (36,133 | ) | | 101,895 | |||||||||||||||||
Receivable spot exchange |
2,256,532 | | 2,256,532 | (2,255,085 | ) | | 1,447 | |||||||||||||||||
Reverse repurchase, securities borrowing and similar agreements 1 |
4,173,200 | | 4,173,200 | (4,173,200 | ) | | | |||||||||||||||||
Other financial instruments |
16,475,869 | (15,637,526 | ) | 838,343 | | | 838,343 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 24,637,538 | ₩ | (15,637,526 | ) | ₩ | 9,000,012 | ₩ | (7,654,719 | ) | ₩ | (1,850 | ) | ₩ | 1,343,443 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
1 | Includes a portion of the securities loaned. |
100
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of financial liabilities subject to offsetting, enforceable master netting arrangements or similar agreements as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Gross amounts of |
Gross amounts of | Net amounts of | Non-offsetting amount | Net amount | ||||||||||||||||||||
recognized financial assets offset in the statement of financial position |
financial liabilities presented in the statement of financial position |
Financial instruments |
Cash collateral received |
|||||||||||||||||||||
Derivatives held for trading |
₩ | 1,765,781 | | ₩ | 1,765,781 | ₩ | (1,323,749 | ) | ₩ | | ₩ | 442,032 | ||||||||||||
Derivatives held for hedging |
21,147 | | 21,147 | (3,013 | ) | | 18,134 | |||||||||||||||||
Payable spot exchange |
2,343,234 | | 2,343,234 | (2,342,116 | ) | | 1,118 | |||||||||||||||||
Reverse repurchase securities lending and similar agreements1,2 |
1,803,963 | | 1,803,963 | (1,803,963 | ) | | | |||||||||||||||||
Other financial instruments |
16,724,449 | (16,483,341 | ) | 241,108 | (122,797 | ) | | 118,311 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 22,658,574 | ₩ | (16,483,341 | ) | ₩ | 6,175,233 | ₩ | (5,595,638 | ) | | ₩ | 579,595 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Gross amounts of |
Gross amounts of | Net amounts of | Non-offsetting amount | Net amount | ||||||||||||||||||||
recognized financial assets offset in the statement of financial position |
financial liabilities presented in the statement of financial position |
Financial instruments |
Cash collateral received |
|||||||||||||||||||||
Derivatives held for trading |
₩ | 1,579,878 | ₩ | | ₩ | 1,579,878 | ₩ | (992,164 | ) | ₩ | | ₩ | 587,714 | |||||||||||
Derivatives held for hedging |
204,642 | | 204,642 | (16,320 | ) | | 188,322 | |||||||||||||||||
Payable spot exchange |
2,256,147 | | 2,256,147 | (2,255,085 | ) | | 1,062 | |||||||||||||||||
Reverse repurchase securities lending and similar agreements1,2 |
804,726 | | 804,726 | (804,726 | ) | | | |||||||||||||||||
Other financial instruments |
16,754,401 | (15,637,526 | ) | 1,116,875 | (946,800 | ) | | 170,075 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 21,599,794 | ₩ | (15,637,526 | ) | ₩ | 5,962,268 | ₩ | (5,015,095 | ) | ₩ | | ₩ | 947,173 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
1 | Includes repurchase agreements sold to customers. |
2 | Includes a portion of securities sold. |
101
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
7. Due from financial institutions
The details of due from financial institutions as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | Financial Institutions |
Interest rate(%) |
2014 | 2013 | ||||||||||
Due from financial institutions in Korean won |
Due from Bank of Korea |
Bank of Korea |
0.00~2.03 | ₩ | 6,283,230 | ₩ | 6,717,697 | |||||||
Due from banking institutions |
Hana Bank and others |
0.00~7.15 | 1,191,877 | 636,837 | ||||||||||
Due from others |
DaiShin Investment & Securities Co., Ltd. and others |
0.10~3.20 | 3,750,163 | 3,203,452 | ||||||||||
|
|
|
|
|||||||||||
11,225,270 | 10,557,986 | |||||||||||||
|
|
|
|
|||||||||||
Due from financial institutions in foreign currencies |
Due from banks in foreign currencies |
Bank of Korea and others |
| 899,080 | 855,388 | |||||||||
Time deposits in foreign currencies |
Bank of Communications and others |
0.11~6.70 | 708,926 | 657,408 | ||||||||||
Due from others |
Woori Investment & Securities Co., Ltd. and others |
| 45,154 | 23,321 | ||||||||||
|
|
|
|
|||||||||||
1,653,160 | 1,536,117 | |||||||||||||
|
|
|
|
|||||||||||
₩ | 12,878,430 | ₩ | 12,094,103 | |||||||||||
|
|
|
|
Due from financial institutions, classified by type of financial institution as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
In Korean won | In foreign currencies |
Total | ||||||||||
Bank of Korea |
₩ | 6,283,230 | ₩ | 225,393 | ₩ | 6,508,623 | ||||||
Other banking institutions |
1,191,877 | 1,399,586 | 2,591,463 | |||||||||
Other financial institutions |
3,750,163 | 28,181 | 3,778,344 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 11,225,270 | ₩ | 1,653,160 | ₩ | 12,878,430 | |||||||
|
|
|
|
|
|
102
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||
In Korean won | In foreign currencies |
Total | ||||||||||
Bank of Korea |
₩ | 6,717,697 | ₩ | 410,328 | ₩ | 7,128,025 | ||||||
Other banking institutions |
636,837 | 1,105,842 | 1,742,679 | |||||||||
Other financial institutions |
3,203,452 | 19,947 | 3,223,399 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 10,557,986 | ₩ | 1,536,117 | ₩ | 12,094,103 | |||||||
|
|
|
|
|
|
Restricted due from financial institutions as of December 31, 2014 and 2013, are as follows:
(in millions of Korean won) | Financial Institutions |
2014 | 2013 | Reason for restriction | ||||||||||
Due from financial institutions in Korean won |
Due from Bank of Korea |
Bank of Korea |
₩ | 6,283,230 | ₩ | 6,717,697 | Bank of Korea Act | |||||||
Due from Banking institution |
Hana Bank and others |
393,824 | 342,469 | Agreement for allocation of deposit | ||||||||||
Due from others |
The Korea Exchange and others |
137,327 | 102,460 | Market entry deposit and others | ||||||||||
|
|
|
|
|||||||||||
6,814,381 | 7,162,626 | |||||||||||||
|
|
|
|
|||||||||||
Due from financial institutions in foreign currencies |
Due from banks in foreign currencies |
Bank of Korea and others |
293,067 | 482,296 | Bank of Korea Act and others | |||||||||
Time deposit in foreign currencies |
Bank of communications and others |
16,488 | 10,553 | Bank Act of the State of New York | ||||||||||
Due from others |
Woori Investment & Securities Co., Ltd. and others |
8,158 | 10,428 | Derivatives margin account and others | ||||||||||
|
|
|
|
|||||||||||
317,713 | 503,277 | |||||||||||||
|
|
|
|
|||||||||||
₩ | 7,132,094 | ₩ | 7,665,903 | |||||||||||
|
|
|
|
103
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
8. Assets pledged as collateral
The details of assets pledged as collateral as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||
2014 | ||||||||||||
Assets pledged |
Pledgee | Carrying amount |
Collateralized amount |
Reason of pledge | ||||||||
Due from financial institutions |
Korea Federation of Savings Banks and others |
₩ | 166,344 | ₩ | 166,344 | Borrowings from Bank and others | ||||||
Financial assets held for trading |
Korea Securities Depository and others |
999,412 | 960,368 | Repurchase agreements and similar agreements | ||||||||
Korea Securities Depository and others |
959,858 | 869,279 | Securities lending transactions | |||||||||
Samsung Futures Inc. and others |
17,521 | 16,033 | Derivatives transactions | |||||||||
Others |
17,864 | 17,721 | Others | |||||||||
|
|
|
|
|||||||||
1,994,655 | 1,863,401 | |||||||||||
|
|
|
|
|||||||||
Available-for-sale financial assets |
Korea Securities Depository and others |
120,081 | 90,576 | Securities lending transactions | ||||||||
Samsung Futures Inc. and others |
24,856 | 22,634 | Derivatives transactions | |||||||||
Others |
39,100 | 37,132 | Others | |||||||||
|
|
|
|
|||||||||
184,037 | 150,342 | |||||||||||
|
|
|
|
|||||||||
Held-to-maturity financial assets |
Korea Securities Depository and others |
1,460,932 | 1,452,000 | Repurchase agreements and similar agreements | ||||||||
Bank of Korea |
993,853 | 990,000 | Borrowings from Bank of Korea | |||||||||
Bank of Korea |
1,440,821 | 1,416,800 | Settlement risk of Bank of Korea | |||||||||
Samsung Futures Inc. and others |
285,023 | 284,492 | Derivatives transactions | |||||||||
Others |
238,654 | 238,500 | Others | |||||||||
|
|
|
|
|||||||||
4,419,283 | 4,381,792 | |||||||||||
|
|
|
|
|||||||||
₩ | 6,764,319 | ₩ | 6,561,879 | |||||||||
|
|
|
|
104
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | ||||||||||||
2013 | ||||||||||||
Assets pledged |
Pledgee | Carrying amount |
Collateralized amount |
Reason of pledge | ||||||||
Due from financial institutions |
Korea Federation of Savings Banks and others |
₩ | 238,901 | ₩ | 238,901 | Borrowings from Bank and others | ||||||
Financial assets held for trading |
Korea Securities Depository and others |
336,154 | 329,391 | Repurchase agreements and similar agreements | ||||||||
Korea Securities Depository and others |
446,126 | 393,981 | Securities lending transactions | |||||||||
Samsung Futures Inc. and others |
15,570 | 14,589 | Derivatives transactions | |||||||||
|
|
|
|
|||||||||
797,850 | 737,961 | |||||||||||
|
|
|
|
|||||||||
Available-for-sale financial assets |
Korea Securities Depository and others |
45,771 | 45,145 | Securities lending transactions | ||||||||
Samsung Futures Inc. and others |
33,317 | 31,746 | Derivatives transactions | |||||||||
Others |
15,100 | 14,370 | Others | |||||||||
|
|
|
|
|||||||||
94,188 | 91,261 | |||||||||||
|
|
|
|
|||||||||
Held-to-maturity financial assets |
Korea Securities Depository and others |
3,577,052 | 3,572,000 | Repurchase agreements and similar agreements | ||||||||
Bank of Korea |
617,250 | 610,000 | Borrowings from Bank of Korea | |||||||||
Bank of Korea |
956,284 | 946,800 | Settlement risk of Bank of Korea | |||||||||
Samsung Futures Inc. and others |
325,616 | 325,521 | Derivatives transactions | |||||||||
Others |
258,615 | 258,500 | Others | |||||||||
|
|
|
|
|||||||||
5,734,817 | 5,712,821 | |||||||||||
|
|
|
|
|||||||||
Mortgage loans |
Others |
846,000 | 843,127 | Covered Bond | ||||||||
|
|
|
|
|||||||||
₩ | 7,711,756 | ₩ | 7,624,071 | |||||||||
|
|
|
|
105
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The fair value of collateral available to sell or repledge, and collateral sold or repledged, regardless of debtors default, as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||
2014 | ||||||||||||
Fair value of collateral held |
Fair value of collateral sold or repledged |
Total | ||||||||||
Securities |
₩ | 3,601,032 | ₩ | | ₩ | 3,601,032 | ||||||
|
|
|
|
|
|
|||||||
₩ | 3,601,032 | ₩ | | ₩ | 3,601,032 | |||||||
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||
2013 | ||||||||||||
Fair value of collateral held |
Fair value of collateral sold or repledged |
Total | ||||||||||
Securities |
₩ | 4,258,909 | ₩ | | ₩ | 4,258,909 | ||||||
|
|
|
|
|
|
|||||||
₩ | 4,258,909 | ₩ | | ₩ | 4,258,909 | |||||||
|
|
|
|
|
|
9. Derivative financial instruments and hedge accounting
The Groups derivative operations focus on addressing the needs of the Groups corporate clients to hedge their risk exposure and to hedge the Groups risk exposure that results from such client contracts. The Group also engages in derivative trading activities to hedge the interest rate and foreign currency risk exposures that arise from the Groups own assets and liabilities. In addition, the Group engages in proprietary trading of derivatives within the Groups regulated open position limits.
The Group provides and trades a range of derivatives products, including:
| Interest rate swaps, relating to interest rate risks in Korean won; |
| Cross-currency swaps, forwards and options relating to foreign exchange rate risks, |
| Stock price index options linked with the KOSPI index. |
In particular, the Group uses cross currency swaps, interest rate swaps and others to hedge the risk of changes in fair values and in cash flows due to changes in interest rates and foreign exchange rates of subordinated debts in Korean won, structured debts and financial debentures in foreign currencies.
106
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of derivative financial instruments for trading as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Notional amount | Assets | Liabilities | ||||||||||
Interest rate |
||||||||||||
Futures1 |
₩ | 678,798 | ₩ | | ₩ | | ||||||
Swaps |
101,610,724 | 924,189 | 957,504 | |||||||||
Options |
8,398,000 | 86,277 | 128,185 | |||||||||
|
|
|
|
|
|
|||||||
110,687,522 | 1,010,466 | 1,085,689 | ||||||||||
|
|
|
|
|
|
|||||||
Currency |
||||||||||||
Forwards |
21,363,840 | 340,339 | 217,357 | |||||||||
Futures1 |
632,430 | 46 | 289 | |||||||||
Swaps |
18,430,843 | 415,842 | 441,696 | |||||||||
Options |
616,977 | 6,057 | 6,078 | |||||||||
|
|
|
|
|
|
|||||||
41,044,090 | 762,284 | 665,420 | ||||||||||
|
|
|
|
|
|
|||||||
Stock and index |
||||||||||||
Forwards |
685,000 | | | |||||||||
Futures1 |
162,766 | 90 | 753 | |||||||||
Swaps |
431,709 | 30,091 | 6,222 | |||||||||
Options |
1,860,561 | 31,632 | 8,199 | |||||||||
|
|
|
|
|
|
|||||||
3,140,036 | 61,813 | 15,174 | ||||||||||
|
|
|
|
|
|
|||||||
Commodity |
||||||||||||
Futures1 |
765 | 7 | 9 | |||||||||
|
|
|
|
|
|
|||||||
765 | 7 | 9 | ||||||||||
|
|
|
|
|
|
|||||||
Other |
| 24,067 | 9,049 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 154,872,413 | ₩ | 1,858,637 | ₩ | 1,775,341 | |||||||
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||
Notional amount | Assets | Liabilities | ||||||||||
Interest rate |
||||||||||||
Futures1 |
₩ | 928,684 | ₩ | | ₩ | | ||||||
Swaps |
141,275,150 | 582,544 | 639,695 | |||||||||
Options |
8,285,091 | 45,063 | 85,906 | |||||||||
|
|
|
|
|
|
|||||||
150,488,925 | 627,607 | 725,601 | ||||||||||
|
|
|
|
|
|
|||||||
Currency |
||||||||||||
Forwards |
23,055,704 | 241,804 | 289,629 | |||||||||
Futures1 |
415,560 | 219 | 15 | |||||||||
Swaps |
17,414,405 | 693,116 | 503,663 | |||||||||
Options |
273,745 | 2,428 | 1,492 | |||||||||
|
|
|
|
|
|
|||||||
41,159,414 | 937,567 | 794,799 | ||||||||||
|
|
|
|
|
|
|||||||
Stock and index |
||||||||||||
Futures1 |
136,624 | | 95 | |||||||||
Swaps |
477,143 | 17,565 | 15,168 | |||||||||
Options |
1,982,455 | 30,006 | 35,118 | |||||||||
|
|
|
|
|
|
|||||||
2,596,222 | 47,571 | 50,381 | ||||||||||
|
|
|
|
|
|
|||||||
Commodity |
||||||||||||
Futures1 |
2,024 | 121 | | |||||||||
|
|
|
|
|
|
|||||||
2,024 | 121 | | ||||||||||
|
|
|
|
|
|
|||||||
Other |
60,000 | 68,014 | 9,248 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 194,306,585 | ₩ | 1,680,880 | ₩ | 1,580,029 | |||||||
|
|
|
|
|
|
1 | A gain or loss from daily mark-to-market futures is reflected in the margin accounts. |
107
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Fair value hedge
The details of derivatives designated as fair value hedging instruments as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Notional amount | Assets | Liabilities | ||||||||||
Interest rate |
||||||||||||
Swaps |
₩ | 2,179,779 | ₩ | 109,293 | ₩ | 1,144 | ||||||
Other |
140,000 | 260 | 2,281 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 2,319,779 | ₩ | 109,553 | ₩ | 3,425 | |||||||
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||
Notional amount | Assets | Liabilities | ||||||||||
Interest rate |
||||||||||||
Swaps |
₩ | 1,951,013 | ₩ | 137,445 | ₩ | | ||||||
Currency |
||||||||||||
Forwards |
42,048 | 502 | | |||||||||
Swaps |
1,055,300 | | 195,800 | |||||||||
Other |
140,000 | | 8,842 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 3,188,361 | ₩ | 137,947 | ₩ | 204,642 | |||||||
|
|
|
|
|
|
Gains and losses from fair value hedging instruments and hedged items attributable to the hedged risk for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Gains(losses) on hedging instruments |
₩ | (26,320 | ) | ₩ | (48,545 | ) | ||
Gains(losses) on the hedged item attributable to the hedged risk |
52,721 | 81,428 | ||||||
|
|
|
|
|||||
₩ | 26,401 | ₩ | 32,883 | |||||
|
|
|
|
108
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Cash flow hedge
The details of derivatives designated as cash flow hedging instruments as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Notional amount | Assets | Liabilities | ||||||||||
Interest rate |
||||||||||||
Swaps |
₩ | 1,033,000 | ₩ | | ₩ | 16,073 | ||||||
Currency |
||||||||||||
Swaps |
329,760 | | 2,551 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 1,362,760 | ₩ | | ₩ | 18,624 | |||||||
|
|
|
|
|
|
|||||||
(In millions of Korean won) | 2013 | |||||||||||
Notional amount | Assets | Liabilities | ||||||||||
Interest rate |
||||||||||||
Swaps |
₩ | 1,403,000 | ₩ | 582 | ₩ | 4,902 | ||||||
Currency |
||||||||||||
Swaps |
316,590 | | 5,766 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 1,719,590 | ₩ | 582 | ₩ | 10,668 | |||||||
|
|
|
|
|
|
Gains and losses from cash flow hedging instruments and hedged items attributable to the hedged risk for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Gains(losses) on hedging instruments |
₩ | (7,976 | ) | ₩ | (3,068 | ) | ||
Gains(losses) on the hedged item attributable to the hedged risk |
(7,452 | ) | (2,990 | ) | ||||
|
|
|
|
|||||
Ineffectiveness recognized in profit or loss |
₩ | (524 | ) | ₩ | (78 | ) | ||
|
|
|
|
Amounts recognized in other comprehensive income and reclassified from equity to profit or loss for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Amount recognized in other comprehensive income |
₩ | (7,452 | ) | ₩ | (2,990 | ) | ||
Amount reclassified from equity to profit or loss |
(5,426 | ) | 5,227 | |||||
Tax effect |
2,619 | (619 | ) | |||||
|
|
|
|
|||||
₩ | (10,259 | ) | ₩ | 1,618 | ||||
|
|
|
|
109
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
10. Loans
Loans as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Loans |
₩ | 233,300,563 | ₩ | 221,439,295 | ||||
Deferred loan origination fees and costs |
601,142 | 423,245 | ||||||
Less: Allowances for loan losses |
(2,452,052 | ) | (2,861,184 | ) | ||||
|
|
|
|
|||||
Carrying amount |
₩ | 231,449,653 | ₩ | 219,001,356 | ||||
|
|
|
|
Loans to banks as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Loans |
₩ | 6,208,391 | ₩ | 6,335,056 | ||||
Less: Allowances for loan losses |
| (25 | ) | |||||
|
|
|
|
|||||
Carrying amount |
₩ | 6,208,391 | ₩ | 6,335,031 | ||||
|
|
|
|
Loans to customers other than banks as of December 31, 2014 and 2013, consist of:
(In millions of Korean won) | 2014 | |||||||||||||||
Retail | Corporate | Credit card | Total | |||||||||||||
Loans in Korean won |
₩ | 114,712,199 | ₩ | 85,633,171 | ₩ | | ₩ | 200,345,370 | ||||||||
Loans in foreign currencies |
50,047 | 2,574,041 | | 2,624,088 | ||||||||||||
Domestic import usance bills |
| 3,693,951 | | 3,693,951 | ||||||||||||
offf-shore funding loans |
| 664,794 | | 664,794 | ||||||||||||
Call loans |
| 292,043 | | 292,043 | ||||||||||||
Bills bought in Korean won |
| 6,678 | | 6,678 | ||||||||||||
Bills bought in foreign currencies |
| 1,958,251 | | 1,958,251 | ||||||||||||
Guarantee payments under payment guarantee |
418 | 12,975 | | 13,393 | ||||||||||||
Credit card receivables in Korean won |
| | 11,629,215 | 11,629,215 | ||||||||||||
Credit card receivables in foreign currencies |
| | 3,081 | 3,081 | ||||||||||||
Reverse repurchase agreements |
| 1,082,200 | | 1,082,200 | ||||||||||||
Privately placed bonds |
| 743,348 | | 743,348 | ||||||||||||
Factored receivables |
2,741,789 | 50,435 | | 2,792,224 | ||||||||||||
Lease recievables |
808,866 | 50,973 | | 859,839 | ||||||||||||
Loans for installment credit |
984,839 | | | 984,839 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
119,298,158 | 96,762,860 | 11,632,296 | 227,693,314 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Proportion (%) |
52.39 | 42.50 | 5.11 | 100.00 | ||||||||||||
Allowances |
(536,959 | ) | (1,525,152 | ) | (389,941 | ) | (2,452,052 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 118,761,199 | ₩ | 95,237,708 | ₩ | 11,242,355 | ₩ | 225,241,262 | |||||||||
|
|
|
|
|
|
|
|
110
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||
Retail | Corporate | Credit card | Total | |||||||||||||
Loans in Korean won |
₩ | 104,920,187 | ₩ | 84,596,181 | ₩ | | ₩ | 189,516,368 | ||||||||
Loans in foreign currencies |
98,614 | 2,956,418 | | 3,055,032 | ||||||||||||
Domestic import usance bills |
| 2,978,478 | | 2,978,478 | ||||||||||||
Off-shore funding loans |
| 669,603 | | 669,603 | ||||||||||||
Call loans |
| 696,929 | | 696,929 | ||||||||||||
Bills bought in Korean won |
| 14,243 | | 14,243 | ||||||||||||
Bills bought in foreign currencies |
| 1,588,066 | | 1,588,066 | ||||||||||||
Guarantee payments under payment guarantee |
| 38,318 | | 38,318 | ||||||||||||
Credit card receivables in Korean won |
| | 11,782,005 | 11,782,005 | ||||||||||||
Credit card receivables in foreign currencies |
| | 2,453 | 2,453 | ||||||||||||
Reverse repurchase agreements |
| 1,683,200 | | 1,683,200 | ||||||||||||
Privately placed bonds |
| 731,706 | | 731,706 | ||||||||||||
Factored receivables |
2,724,413 | 46,670 | | 2,771,083 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
107,743,214 | 95,999,812 | 11,784,458 | 215,527,484 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Proportion (%) |
49.99 | 44.54 | 5.47 | 100.00 | ||||||||||||
Allowances |
(580,510 | ) | (1,870,849 | ) | (409,800 | ) | (2,861,159 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 107,162,704 | ₩ | 94,128,963 | ₩ | 11,374,658 | ₩ | 212,666,325 | |||||||||
|
|
|
|
|
|
|
|
The changes in deferred loan origination fees and costs for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Beginning | Increase | Decrease | Business Combination |
Others | Ending | |||||||||||||||||||
Deferred loan origination costs |
||||||||||||||||||||||||
Loans in Korean won |
₩ | 510,901 | ₩ | 402,415 | ₩ | 310,681 | ₩ | 24,656 | ₩ | | ₩ | 627,291 | ||||||||||||
Other origination costs |
377 | 40,693 | 63,486 | 79,907 | | 57,491 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
511,278 | 443,108 | 374,167 | 104,563 | | 684,782 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Deferred loan origination fees |
||||||||||||||||||||||||
Loans in Korean won |
80,363 | 51,216 | 71,495 | 2,272 | | 62,356 | ||||||||||||||||||
Other origination fees |
7,670 | 10,526 | 25,564 | 28,645 | 7 | 21,284 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
88,033 | 61,742 | 97,059 | 30,917 | 7 | 83,640 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 423,245 | ₩ | 381,366 | ₩ | 277,108 | ₩ | 73,646 | ₩ | (7 | ) | ₩ | 601,142 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
111
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||
Beginning | Increase | Decrease | Others | Ending | ||||||||||||||||
Deferred loan origination costs |
||||||||||||||||||||
Loans in Korean won |
₩ | 502,512 | ₩ | 330,202 | ₩ | 288,683 | ₩ | (33,130 | ) | ₩ | 510,901 | |||||||||
Other origination costs |
344 | 635 | 602 | | 377 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
502,856 | 330,837 | 289,285 | (33,130 | ) | 511,278 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Deferred loan origination fees |
||||||||||||||||||||
Loans in Korean won |
69,994 | 72,822 | 62,383 | (70 | ) | 80,363 | ||||||||||||||
Other origination fees |
6,526 | 3,872 | 2,709 | (19 | ) | 7,670 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
76,520 | 76,694 | 65,092 | (89 | ) | 88,033 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 426,336 | ₩ | 254,143 | ₩ | 224,193 | ₩ | (33,041 | ) | ₩ | 423,245 | ||||||||||
|
|
|
|
|
|
|
|
|
|
11. Allowances for Loan Losses
The changes in the allowances for loan losses for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Retail | Corporate | Credit card | Total | |||||||||||||
Beginning |
₩ | 580,510 | ₩ | 1,870,874 | ₩ | 409,800 | ₩ | 2,861,184 | ||||||||
Written-off |
(576,084 | ) | (1,087,897 | ) | (427,059 | ) | (2,091,040 | ) | ||||||||
Recoveries from written-off loans |
139,131 | 260,574 | 131,046 | 530,751 | ||||||||||||
Sale |
(6,736 | ) | (65,163 | ) | | (71,899 | ) | |||||||||
Provision1 |
341,783 | 589,913 | 279,413 | 1,211,109 | ||||||||||||
Business combination |
58,346 | 24,294 | | 82,640 | ||||||||||||
Other changes |
9 | (67,443 | ) | (3,259 | ) | (70,693 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Ending |
₩ | 536,959 | ₩ | 1,525,152 | ₩ | 389,941 | ₩ | 2,452,052 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Retail | Corporate | Credit card | Total | |||||||||||||
Beginning |
₩ | 687,851 | ₩ | 2,251,318 | ₩ | 329,490 | ₩ | 3,268,659 | ||||||||
Written-off |
(581,100 | ) | (1,146,767 | ) | (404,199 | ) | (2,132,066 | ) | ||||||||
Recoveries from written-off loans |
126,651 | 147,110 | 141,452 | 415,213 | ||||||||||||
Sale |
(8,483 | ) | (76,413 | ) | 435 | (84,461 | ) | |||||||||
Provision1 |
361,253 | 720,136 | 346,064 | 1,427,453 | ||||||||||||
Other changes |
(5,662 | ) | (24,510 | ) | (3,442 | ) | (33,614 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Ending |
₩ | 580,510 | ₩ | 1,870,874 | ₩ | 409,800 | ₩ | 2,861,184 | ||||||||
|
|
|
|
|
|
|
|
1 | Provision for credit losses in statements of comprehensive income also include provision (reversal) for unused commitments and guarantees (Note 23), reversal for financial guarantees contracts (Note 23), and provision for other financial assets (Note 18). |
112
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The amounts of written-off loans, over which the Group still has a right to claim against the borrowers and guarantors, are ₩16,682,972 million and ₩15,061,182 million as of December 31, 2014 and 2013, respectively.
The coverage ratio of allowances for loan losses as of December 31, 2014 and 2013, is as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Loans |
₩ | 233,901,705 | ₩ | 221,862,540 | ||||
Allowances for loan losses |
2,452,052 | 2,861,184 | ||||||
Ratio (%) |
1.05 | 1.29 |
12. Financial assets at fair value through profit or loss and Financial investments
The details of financial assets at fair value through profit or loss and financial investments as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Financial assets held for trading |
||||||||
Debt securities: |
||||||||
Government and public bonds |
₩ | 3,067,490 | ₩ | 2,085,450 | ||||
Financial bonds |
4,049,449 | 3,265,960 | ||||||
Corporate bonds |
1,826,682 | 1,759,993 | ||||||
Asset-backed securities |
318,893 | 510,159 | ||||||
Others |
449,694 | 204,223 | ||||||
Equity securities: |
||||||||
Stocks |
69,736 | 145,163 | ||||||
Beneficiary certificates |
288,281 | 955,806 | ||||||
Others |
51,345 | 40,252 | ||||||
|
|
|
|
|||||
10,121,570 | 8,967,006 | |||||||
|
|
|
|
|||||
Financial assets designated at fair value through profit or loss |
||||||||
Equity securities: |
||||||||
Beneficiary certificates |
134,172 | 115,778 | ||||||
Derivative linked securities |
502,168 | 245,958 | ||||||
|
|
|
|
|||||
636,340 | 361,736 | |||||||
|
|
|
|
|||||
Total financial assets at fair value through profit or loss |
₩ | 10,757,910 | ₩ | 9,328,742 | ||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Debt securities: |
||||||||
Government and public bonds |
₩ | 4,702,036 | ₩ | 6,925,617 | ||||
Financial bonds |
6,980,846 | 5,782,234 | ||||||
Corporate bonds |
6,119,889 | 4,997,788 | ||||||
Asset-backed securities |
1,211,343 | 1,208,241 | ||||||
Others |
345,708 | 19,408 | ||||||
Equity securities: |
||||||||
Stocks |
2,402,675 | 2,366,887 | ||||||
Equity investments and others |
74,596 | 97,937 | ||||||
Beneficiary certificates |
554,373 | 433,992 | ||||||
|
|
|
|
|||||
22,391,466 | 21,832,104 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Debts securities: |
||||||||
Government and public bonds |
3,556,913 | 4,357,623 | ||||||
Financial bonds |
1,262,187 | 892,509 | ||||||
Corporate bonds |
7,277,779 | 7,400,085 | ||||||
Asset-backed securities |
472,275 | 366,774 | ||||||
|
|
|
|
|||||
12,569,154 | 13,016,991 | |||||||
|
|
|
|
|||||
Total financial investments |
₩ | 34,960,620 | ₩ | 34,849,095 | ||||
|
|
|
|
113
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The impairment losses and the reversal of impairment losses in financial investments for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Impairment | Reversal | Net | ||||||||||
Available-for-sale financial assets |
₩ | 195,929 | ₩ | 260 | ₩ | 195,669 | ||||||
Held-to-maturity financial assets |
| | | |||||||||
|
|
|
|
|
|
|||||||
₩ | 195,929 | ₩ | 260 | ₩ | 195,669 | |||||||
|
|
|
|
|
|
|||||||
(In millions of Korean won) | 2013 | |||||||||||
Impairment | Reversal | Net | ||||||||||
Available-for-sale financial assets |
₩ | 163,464 | ₩ | | ₩ | 163,464 | ||||||
Held-to-maturity financial assets |
5 | | 5 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 163,469 | ₩ | | ₩ | 163,469 | |||||||
|
|
|
|
|
|
114
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
13. Investments in associates
Investments in associates as of December 31, 2014 and 2013, are as follows:
(in millions of Korean won) | 2014 | |||||||||||||||||||
Ownership (%) |
Acquisition cost |
Share of net asset |
Carrying amount |
Industry | Location | |||||||||||||||
Associates |
||||||||||||||||||||
Balhae Infrastructure Fund1 |
12.61 | ₩ | 122,623 | ₩ | 125,119 | ₩ | 125,119 | Investment finance |
Korea | |||||||||||
Korea Credit Bureau Co., Ltd.1 |
9.00 | 4,500 | 4,222 | 4,222 | Credit Information |
Korea | ||||||||||||||
UAMCO., Ltd.1 |
17.50 | 85,050 | 114,240 | 121,182 | Other finance |
Korea | ||||||||||||||
JSC Bank CenterCredit |
||||||||||||||||||||
Ordinary share2,3 |
29.56 |
|
954,104 |
|
|
36,763 |
|
|
29,279 |
|
Banking |
Kazakhstan | ||||||||
Preference share2 |
93.15 | |||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
50.00 | 31,635 | 26,176 | 23,559 | Investment finance |
Korea | ||||||||||||||
United PF 1st Recovery Private Equity Fund1 |
17.72 | 191,617 | 203,270 | 198,089 | Other finance |
Korea | ||||||||||||||
CH Engineering Co., Ltd. |
41.73 | | 178 | 20 | Specialty construction |
Korea | ||||||||||||||
Shinla Construction Co., Ltd. |
20.24 | | (504 | ) | | Specialty construction |
Korea | |||||||||||||
KB GwS Private Securities Investment Trust |
26.74 | 113,880 | 127,525 | 124,074 | Investment finance |
Korea | ||||||||||||||
Incheon Bridge Co., Ltd.1 |
14.99 | 24,677 | (1,716 | ) | | Operation of Highways and Related facilities |
Korea | |||||||||||||
KB Star office Private real estate Investment Trust No.1 |
21.05 | 20,000 | 20,402 | 19,989 | Investment finance |
Korea | ||||||||||||||
KoFC POSCO HANHWA KB shared growth Private Equity Fund |
25.00 | 26,250 | 23,204 | 22,329 | Investment finance |
Korea | ||||||||||||||
NPS KBIC Private Equity Fund No. 11 |
2.56 | 3,393 | | | Investment finance |
Korea | ||||||||||||||
KBIC Private Equity Fund No. 31 |
2.00 | 2,050 | 2,287 | 2,287 | Investment finance |
Korea | ||||||||||||||
KB-Glenwood Private Equity Fund 1 |
0.03 | 10 | 10 | 10 | Investment finance |
Korea | ||||||||||||||
Terra Co., Ltd. |
24.06 | | (99 | ) | | Manufacture of Hand-Operated Kitchen Appliances and Metal Ware |
Korea | |||||||||||||
KB No.3 Special Purpose Acquition Company1,4 |
0.19 | 20 | 39 | 39 | SPAC |
Korea | ||||||||||||||
KB No.4 Special Purpose Acquition Company1,5 |
0.19 | 30 | 38 | 38 | SPAC |
Korea | ||||||||||||||
KB No.5 Special Purpose Acquition Company1,6 |
0.19 | 10 | 19 | 19 | SPAC |
Korea | ||||||||||||||
KB No.6 Special Purpose Acquition Company1,7 |
0.25 | 40 | 77 | 77 | SPAC |
Korea | ||||||||||||||
|
|
|
|
|
|
|||||||||||||||
₩ | 1,579,889 | ₩ | 681,250 | ₩ | 670,332 | |||||||||||||||
|
|
|
|
|
|
115
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(in millions of Korean won) | 2013 | |||||||||||||||||||
Ownership (%) |
Acquisition cost |
Share of net asset |
Carrying amount |
Industry | Location | |||||||||||||||
Associates |
||||||||||||||||||||
Balhae Infrastructure Fund1 |
12.61 | ₩ | 121,817 | ₩ | 124,968 | ₩ | 124,968 | Investment finance |
Korea | |||||||||||
Korea Credit Bureau Co., Ltd.1 |
9.00 | 4,500 | 4,185 | 4,185 | Credit Information |
Korea | ||||||||||||||
UAMCO., Ltd.1 |
17.50 | 85,050 | 139,286 | 150,826 | Other finance |
Korea | ||||||||||||||
JSC Bank CenterCredit |
||||||||||||||||||||
Ordinary share2,3 |
29.56 | 954,104 | 51,989 | 68,110 | Banking |
Kazakhstan | ||||||||||||||
Preference share2 |
93.15 | |||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
50.00 | 47,580 | 46,496 | 45,393 | Investment finance |
Korea | ||||||||||||||
Semiland Co., Ltd. |
21.32 | 1,470 | 2,639 | 2,639 | Manufacture |
Korea | ||||||||||||||
United PF 1st Recovery Private Equity Fund1 |
17.72 | 191,617 | 203,618 | 197,941 | Other finance |
Korea | ||||||||||||||
CH Engineering Co., Ltd. |
41.73 | | 64 | | Specialty construction |
Korea | ||||||||||||||
Shinla Construction Co., Ltd. |
20.24 | | | | Specialty construction |
Korea | ||||||||||||||
Kores Co., Ltd.8 |
10.39 | 634 | 1,925 | 1,505 | Manufacture of automobile parts |
Korea | ||||||||||||||
KB GwS Private Securities Investment Trust |
26.74 | 113,880 | 126,556 | 123,085 | Investment finance |
Korea | ||||||||||||||
Incheon Bridge Co., Ltd.1 |
14.99 | 24,677 | (429 | ) | | Operation of Highways and Related facilities |
Korea | |||||||||||||
Ssangyong Engineering & Construction Co., Ltd.8 |
15.64 | 28,779 | 2,490 | | Office and Commercial Building Construction |
Korea | ||||||||||||||
KB Star office Private real estate Investment Trust No.1 |
21.05 | 20,000 | 20,347 | 19,934 | Investment finance |
Korea | ||||||||||||||
KoFC POSCO HANHWA KB shared growth Private Equity Fund |
25.00 | 14,025 | 11,620 | 10,329 | Investment finance |
Korea | ||||||||||||||
NPS KBIC Private Equity Fund No. 11 |
2.56 | 3,393 | 4,238 | 4,238 | Investment finance |
Korea | ||||||||||||||
KBIC Private Equity Fund No. 31 |
2.00 | 2,050 | 2,223 | 2,223 | Investment finance |
Korea | ||||||||||||||
KB-Glenwood Private Equity Fund 1 |
0.03 | 10 | 10 | 10 | Investment finance |
Korea | ||||||||||||||
Terra Co., Ltd. |
24.06 | | 20 | 4 | Manufacture of Hand-Operated Kitchen Appliances and Metal Ware |
Korea | ||||||||||||||
|
|
|
|
|
|
|||||||||||||||
₩ | 1,613,586 | ₩ | 742,245 | ₩ | 755,390 | |||||||||||||||
|
|
|
|
|
|
1 | As of December 31, 2014 and 2013, the Group is represented in the governing bodies of its associates. Therefore, the Group has significant influence over the decision-making process relating to their financial and business policies. |
116
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
2 | The Group determined that ordinary shares and convertible preference shares issued by JSC Bank CenterCredit are the same in economic substance except for the voting rights, and therefore, the equity method of accounting is applied on the basis of single ownership ratio of 41.93%, calculated based on ordinary and convertible preference shares held by the Group against the total outstanding ordinary and convertible preference shares issued by JSC Bank CenterCredit. |
3 | Fair value of ordinary shares of JSC Bank CenterCredit, reflecting the published market price, as of December 31, 2014 and 2013, are ₩42,945 million and ₩57,476 million. |
4 | The fair value of KB No.3 Special Purpose Acquisition Company, reflecting the quoted market price as of December 31, 2014, amounts to ₩40 milion. |
5 | The fair value of KB No.4 Special Purpose Acquisition Company, reflecting the quoted market price as of December 31, 2014, amounts to ₩40 milion. |
6 | The fair value of KB No.5 Special Purpose Acquisition Company, reflecting the quoted market price as of December 31, 2014, amounts to ₩20 milion. |
7 | The fair value of KB No.6 Special Purpose Acquisition Company, reflecting the quoted market price as of December 31, 2014, amounts to ₩84 milion. |
8 | Where the Group has acquired shares of entities through debt-for-equity swaps, the Group is represented in the creditor council. Therefore, the Group has significant influence over the decision-making process relating to their financial and business policies. |
117
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Summarized financial information on associates:
(In millions of Korean won) | 20141 | |||||||||||||||||||||||||||
Total assets |
Total liabilities |
Share capital |
Equity | Share of net asset amount |
Unrealized gains |
Consolidated carrying amount |
||||||||||||||||||||||
Associates |
||||||||||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 994,768 | ₩ | 2,158 | ₩ | 999,430 | ₩ | 992,610 | ₩ | 125,119 | ₩ | | ₩ | 125,119 | ||||||||||||||
Korea Credit Bureau Co., Ltd. |
54,717 | 7,806 | 10,000 | 46,911 | 4,222 | | 4,222 | |||||||||||||||||||||
UAMCO., Ltd. |
4,357,490 | 3,688,589 | 2,430 | 668,901 | 114,240 | 6,942 | 121,182 | |||||||||||||||||||||
JSC Bank CenterCredit |
6,278,391 | 6,156,255 | 546,794 | 122,136 | 36,763 | (7,484 | ) | 29,279 | ||||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
52,499 | 148 | 63,270 | 52,351 | 26,176 | (2,617 | ) | 23,559 | ||||||||||||||||||||
United PF 1st Recovery Private Equity Fund |
1,187,406 | 40,240 | 1,081,400 | 1,147,166 | 203,270 | (5,181 | ) | 198,089 | ||||||||||||||||||||
CH Engineering Co., Ltd.2 |
1,086 | 659 | 158 | 427 | 178 | (158 | ) | 20 | ||||||||||||||||||||
KB GwS Private Securities Investment Trust |
477,646 | 738 | 425,814 | 476,908 | 127,525 | (3,451 | ) | 124,074 | ||||||||||||||||||||
Incheon Bridge Co., Ltd. |
727,659 | 739,105 | 164,621 | (11,446 | ) | (1,716 | ) | 1,716 | | |||||||||||||||||||
KB Star office Private real estate Investment Trust No.1 |
218,250 | 121,341 | 95,000 | 96,909 | 20,402 | (413 | ) | 19,989 | ||||||||||||||||||||
KoFC POSCO HANHWA KB shared growth Private Equity Fund |
94,731 | 1,917 | 105,000 | 92,814 | 23,204 | (875 | ) | 22,329 | ||||||||||||||||||||
NPS KBIC Private Equity Fund No. 1 |
151 | 146 | | 5 | | | | |||||||||||||||||||||
KBIC Private Equity Fund No. 3 |
114,575 | 162 | 102,500 | 114,413 | 2,287 | | 2,287 | |||||||||||||||||||||
KB-Glenwood Private Equity Fund |
30,558 | 1,804 | 31,100 | 28,754 | 10 | | 10 | |||||||||||||||||||||
KB No.3 Special Purpose Acquition Company |
21,904 | 1,531 | 1,052 | 20,373 | 39 | | 39 | |||||||||||||||||||||
KB No.4 Special Purpose Acquition Company |
22,567 | 2,382 | 1,052 | 20,185 | 38 | | 38 | |||||||||||||||||||||
KB No.5 Special Purpose Acquition Company |
12,399 | 2,382 | 522 | 10,017 | 19 | | 19 | |||||||||||||||||||||
KB No.6 Special Purpose Acquition Company |
34,434 | 3,515 | 1,600 | 30,919 | 77 | | 77 | |||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
₩ | 681,853 | ₩ | (11,521 | ) | ₩ | 670,332 | ||||||||||||||||||||||
|
|
|
|
|
|
118
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2014 | |||||||||||||||||||
Operating income |
Profit (Loss) |
Other comprehensive income (loss) |
Total comprehensive income (loss) |
Dividends | ||||||||||||||||
Associates |
||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 53,100 | ₩ | 44,616 | ₩ | | ₩ | 44,616 | ₩ | 6,280 | ||||||||||
Korea Credit Bureau Co., Ltd. |
46,111 | 114 | | 114 | | |||||||||||||||
UAMCO., Ltd. |
548,990 | 57,438 | | 57,438 | 35,041 | |||||||||||||||
JSC Bank CenterCredit |
425,506 | (22,973 | ) | (26,987 | ) | (49,960 | ) | 2 | ||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
16,942 | 957 | (3,249 | ) | (2,292 | ) | 3,230 | |||||||||||||
United PF 1st Recovery Private Equity Fund |
105,369 | (1,962 | ) | | (1,962 | ) | | |||||||||||||
CH Engineering Co., Ltd.2 |
787 | 251 | | 251 | | |||||||||||||||
KB GwS Private Securities Investment Trust |
39,207 | 38,207 | | 38,207 | 9,229 | |||||||||||||||
Incheon Bridge Co., Ltd. |
83,578 | (8,185 | ) | | (8,185 | ) | | |||||||||||||
KB Star office Private real estate Investment Trust No.1 |
17,413 | 8,585 | | 8,585 | 1,752 | |||||||||||||||
KoFC POSCO HANHWA KB shared growth Private Equity Fund |
9,228 | 3,771 | (6,337 | ) | (2,566 | ) | | |||||||||||||
NPS KBIC Private Equity Fund No. 1 |
59,068 | 55,241 | (53,847 | ) | 1,394 | 4,274 | ||||||||||||||
KBIC Private Equity Fund No. 3 |
3,539 | 3,222 | | 3,222 | | |||||||||||||||
KB-Glenwood Private Equity Fund |
| (10 | ) | | (10 | ) | | |||||||||||||
KB No.3 Special Purpose Acquition Company |
| (392 | ) | | (392 | ) | | |||||||||||||
KB No.4 Special Purpose Acquition Company |
| (313 | ) | | (313 | ) | | |||||||||||||
KB No.5 Special Purpose Acquition Company |
| (193 | ) | | (193 | ) | | |||||||||||||
KB No.6 Special Purpose Acquition Company |
| (555 | ) | | (555 | ) | |
1 | The amounts included in the financial statements of the associates are adjusted to reflect adjustments made by the entity, such as fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies. |
2 | As the financial statements as of December 31, 2014, were not available, the Group applied the equity method by using the financial statements as of November 30, 2014, and adjusted for the effects of significant transactions or events that occurred between the date of those financial statements and the date of the consolidated financial statements. |
119
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 20131 | |||||||||||||||||||||||||||
Total assets |
Total liabilities |
Share capital |
Equity | Share of net asset amount |
Unrealized gains |
Consolidated carrying amount |
||||||||||||||||||||||
Associates |
||||||||||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 993,571 | ₩ | 2,157 | ₩ | 993,030 | ₩ | 991,414 | ₩ | 124,968 | ₩ | | ₩ | 124,968 | ||||||||||||||
Korea Credit Bureau Co., Ltd. |
63,043 | 16,542 | 10,000 | 46,501 | 4,185 | | 4,185 | |||||||||||||||||||||
UAMCO., Ltd. |
4,365,097 | 3,567,972 | 2,430 | 797,125 | 139,286 | 11,540 | 150,826 | |||||||||||||||||||||
JSC Bank CenterCredit |
7,083,662 | 6,903,416 | 546,794 | 180,246 | 51,989 | 16,121 | 68,110 | |||||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
93,367 | 375 | 95,160 | 92,992 | 46,496 | (1,103 | ) | 45,393 | ||||||||||||||||||||
Semiland Co., Ltd. |
20,753 | 14,608 | 1,970 | 6,145 | 2,639 | | 2,639 | |||||||||||||||||||||
United PF 1st Recovery Private Equity Fund |
1,159,220 | 10,092 | 1,081,400 | 1,149,128 | 203,618 | (5,677 | ) | 197,941 | ||||||||||||||||||||
CH Engineering Co., Ltd.2 |
917 | 763 | 158 | 154 | 64 | (64 | ) | | ||||||||||||||||||||
Kores Co., Ltd.3 |
92,937 | 80,914 | 11,099 | 12,023 | 1,925 | (420 | ) | 1,505 | ||||||||||||||||||||
Terra Co., Ltd.3 |
1,659 | 1,576 | 254 | 83 | 20 | (16 | ) | 4 | ||||||||||||||||||||
KB GwS Private Securities Investment Trust |
473,946 | 738 | 425,814 | 473,208 | 126,556 | (3,471 | ) | 123,085 | ||||||||||||||||||||
Incheon Bridge Co., Ltd. |
740,321 | 743,182 | 164,621 | (2,861 | ) | (429 | ) | 429 | | |||||||||||||||||||
Ssangyong Engineering & Construction Co., Ltd.3 |
1,359,658 | 1,343,734 | 73,045 | 15,924 | 2,490 | (2,490 | ) | | ||||||||||||||||||||
KB Star office Private real estate Investment Trust No.1 |
217,557 | 120,910 | 95,000 | 96,647 | 20,347 | (413 | ) | 19,934 | ||||||||||||||||||||
KoFC POSCO HANHWA KB shared growth Private Equity Fund |
48,192 | 1,712 | 56,100 | 46,480 | 11,620 | (1,291 | ) | 10,329 | ||||||||||||||||||||
NPS KBIC Private Equity Fund No. 1 |
174,469 | 8,911 | 132,541 | 165,558 | 4,238 | | 4,238 | |||||||||||||||||||||
KBIC Private Equity Fund No. 3 |
111,270 | 79 | 102,500 | 111,191 | 2,223 | | 2,223 | |||||||||||||||||||||
KB-Glenwood Private Equity Fund |
30,558 | 1,794 | 31,100 | 28,764 | 10 | | 10 | |||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
₩ | 742,245 | ₩ | 13,145 | ₩ | 755,390 | |||||||||||||||||||||||
|
|
|
|
|
|
120
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||
Operating income |
Profit (Loss) |
Other comprehensive income (loss) |
Total comprehensive income (loss) |
Dividends | ||||||||||||||||
Associates |
||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 57,754 | ₩ | 49,685 | ₩ | | ₩ | 49,685 | ₩ | 6,299 | ||||||||||
Korea Credit Bureau Co., Ltd. |
51,571 | 4,909 | | 4,909 | | |||||||||||||||
UAMCO., Ltd. |
708,035 | 105,085 | | 105,085 | | |||||||||||||||
JSC Bank CenterCredit |
532,768 | (497,885 | ) | (5,732 | ) | (503,617 | ) | 3 | ||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
3,368 | (2,454 | ) | 7,064 | 4,610 | | ||||||||||||||
Semiland Co., Ltd. |
11,513 | 649 | | 649 | 11 | |||||||||||||||
United PF 1st Recovery Private Equity Fund |
152,315 | 13,769 | | 13,769 | | |||||||||||||||
CH Engineering Co., Ltd.2 |
681 | (102 | ) | | (102 | ) | | |||||||||||||
Kores Co., Ltd.3 |
100,769 | 565 | 2,472 | 3,037 | | |||||||||||||||
Terra Co., Ltd.3 |
1,422 | 17 | | 17 | | |||||||||||||||
KB GwS Private Securities Investment Trust |
76,201 | 41,247 | | 41,247 | 8,894 | |||||||||||||||
Incheon Bridge Co., Ltd. |
77,311 | (13,533 | ) | | (13,533 | ) | | |||||||||||||
Ssangyong Engineering & Construction Co., Ltd.3 |
1,724,742 | (314,105 | ) | (8,615 | ) | (322,720 | ) | | ||||||||||||
KB Star office Private real estate Investment Trust No.1 |
16,672 | 8,490 | | 8,490 | 1,751 | |||||||||||||||
KoFC POSCO HANHWA KB shared growth Private Equity Fund |
1,685 | (8,803 | ) | 1,759 | (7,044 | ) | | |||||||||||||
NPS KBIC Private Equity Fund No. 1 |
10,206 | 9,301 | (2,113 | ) | 7,188 | 106 | ||||||||||||||
KBIC Private Equity Fund No. 3 |
3,702 | 3,385 | | 3,385 | | |||||||||||||||
KB-Glenwood Private Equity Fund |
| (627 | ) | | (627 | ) | |
1 | The amounts included in the financial statements of the associates are adjusted to reflect adjustments made by the entity, such as fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies. |
2 | As the financial statements as of December 31, 2013, were not available, the Group applied the equity method by using the financial statements as of November 30, 2013, and adjusted for the effects of significant transactions or events that occurred between the date of those financial statements and the date of the consolidated financial statements. |
3 | As the financial statements as of December 31, 2013 were not available, the Group applied the equity method by using the financial statements as of September 30, 2013, and adjusted for the effects of significant transactions or events that occurred between the date of those financial statements and the date of the consolidated financial statements. |
121
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
As Shinla Construction Co., Ltd. is capital deficient as of December 31, 2014, its reliable financial information was not available. Therefore, financial information of this associate is not included in the summarized financial information.
The changes in investments in associates for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||||||||||||||
Beginning | Acquisition | Disposal | Dividends | Gains (losses) |
Other comprehensive income |
Impairment | Others | Ending | ||||||||||||||||||||||||||||
Associates |
||||||||||||||||||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 124,968 | ₩ | 807 | ₩ | | ₩ | (6,280 | ) | ₩ | 5,624 | ₩ | | ₩ | | ₩ | | ₩ | 125,119 | |||||||||||||||||
Korea Credit Bureau Co., Ltd. |
4,185 | | | | 37 | | | | 4,222 | |||||||||||||||||||||||||||
UAMCO., Ltd. |
150,826 | | | (35,041 | ) | 5,397 | | | | 121,182 | ||||||||||||||||||||||||||
JSC Bank CenterCredit |
68,110 | | | (2 | ) | (6,278 | ) | (32,551 | ) | | | 29,279 | ||||||||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
45,393 | 50 | (15,995 | ) | (3,230 | ) | (5,877 | ) | 3,586 | (368 | ) | | 23,559 | |||||||||||||||||||||||
Semiland Co., Ltd. |
2,639 | | (1,638 | ) | (11 | ) | 104 | | | (1,094 | ) | | ||||||||||||||||||||||||
United PF 1st Recovery Private Equity Fund |
197,941 | | | | 148 | | | | 198,089 | |||||||||||||||||||||||||||
CH Engineering Co., Ltd. |
| | | | 20 | | | | 20 | |||||||||||||||||||||||||||
Kores Co., Ltd. |
1,505 | | | | | | | (1,505 | ) | | ||||||||||||||||||||||||||
KB GwS Private Securities Investment Trust |
123,085 | | | (9,229 | ) | 10,218 | | | | 124,074 | ||||||||||||||||||||||||||
KB Star office Private real estate Investment Trust No.1 |
19,934 | | | (1,752 | ) | 1,807 | | | | 19,989 | ||||||||||||||||||||||||||
KoFC POSCO HANHWA KB shared growth Private Equity Fund |
10,329 | 12,225 | | | 1,880 | (2,105 | ) | | | 22,329 | ||||||||||||||||||||||||||
NPS KBIC Private Equity Fund No. 1 |
4,238 | | | (4,274 | ) | 1,414 | (1,378 | ) | | | | |||||||||||||||||||||||||
KBIC Private Equity Fund No. 3 |
2,223 | | | | 64 | | | | 2,287 | |||||||||||||||||||||||||||
KB-Glenwood Private Equity Fund |
10 | | | | | | | | 10 | |||||||||||||||||||||||||||
Terra Co., Ltd. |
4 | | | | (4 | ) | | | | | ||||||||||||||||||||||||||
KB No.2 Special Purpose Acquition Company |
| 15 | | | | | | (15 | ) | | ||||||||||||||||||||||||||
KB No.3 Special Purpose Acquition Company |
| 20 | | | 19 | | | | 39 | |||||||||||||||||||||||||||
KB No.4 Special Purpose Acquition Company |
| 4,483 | (4,453 | ) | | 8 | | | | 38 | ||||||||||||||||||||||||||
KB No.5 Special Purpose Acquition Company |
| 10 | | | 9 | | | | 19 | |||||||||||||||||||||||||||
KB No.6 Special Purpose Acquition Company |
| 40 | | | 37 | | | | 77 | |||||||||||||||||||||||||||
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|||||||||||||||||||
₩ | 755,390 | ₩ | 17,650 | ₩ | (22,086 | ) | ₩ | (59,819 | ) | ₩ | 14,627 | ₩ | (32,448 | ) | ₩ | (368 | ) | ₩ | (2,614 | ) | ₩ | 670,332 | ||||||||||||||
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122
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||||||||||||||||||
Beginning | Acquisition | Disposal | Dividends | Gains (losses) |
Other comprehensive income |
Impairment | Others | Ending | ||||||||||||||||||||||||||||
Associates |
||||||||||||||||||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 125,004 | ₩ | | ₩ | | ₩ | (6,299 | ) | ₩ | 6,263 | ₩ | | ₩ | | ₩ | | ₩ | 124,968 | |||||||||||||||||
Korea Credit Bureau Co., Ltd. |
3,790 | | | | 395 | | | | 4,185 | |||||||||||||||||||||||||||
UAMCO., Ltd. |
139,760 | | | | 11,066 | | | | 150,826 | |||||||||||||||||||||||||||
JSC Bank CenterCredit |
281,889 | | | (3 | ) | (204,312 | ) | (9,464 | ) | | | 68,110 | ||||||||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
25,539 | 15,565 | (135 | ) | | 4,227 | 197 | | | 45,393 | ||||||||||||||||||||||||||
KB Global Star Game & Apps SPAC |
48 | | | | 1 | | | (49 | ) | | ||||||||||||||||||||||||||
Semiland Co., Ltd. |
2,513 | | | (11 | ) | 137 | | | | 2,639 | ||||||||||||||||||||||||||
Serit Platform Co., Ltd. |
1,517 | | (1,518 | ) | | 1 | | | | | ||||||||||||||||||||||||||
Sehwa Electronics Co., Ltd. |
2,955 | | (1,577 | ) | | (360 | ) | (71 | ) | | (947 | ) | | |||||||||||||||||||||||
Testian Co., Ltd. |
1,041 | | (260 | ) | | (587 | ) | | | (194 | ) | | ||||||||||||||||||||||||
United PF 1st Recovery Private Equity Fund |
195,425 | | | | 2,516 | | | | 197,941 | |||||||||||||||||||||||||||
Kores Co., Ltd. |
1,384 | | | | 91 | 450 | (420 | ) | | 1,505 | ||||||||||||||||||||||||||
KB GwS Private Securities Investment Trust |
120,939 | | | (8,894 | ) | 11,040 | | | | 123,085 | ||||||||||||||||||||||||||
Incheon Bridge Co., Ltd. |
1,630 | | | | (1,630 | ) | | | | | ||||||||||||||||||||||||||
Ssangyong Engineering & Construction Co., Ltd.1 |
| 28,779 | | | (8,200 | ) | (1,176 | ) | (19,403 | ) | | | ||||||||||||||||||||||||
KB Star office Private real estate Investment Trust No.1 |
19,898 | | | (1,751 | ) | 1,787 | | | | 19,934 | ||||||||||||||||||||||||||
KoFC POSCO HANHWA KB shared growth Private Equity Fund |
4,983 | 7,775 | | | (2,703 | ) | 274 | | | 10,329 | ||||||||||||||||||||||||||
NPS KBIC Private Equity Fund No. 1 |
4,160 | | | (106 | ) | 238 | (54 | ) | | | 4,238 | |||||||||||||||||||||||||
KBIC Private Equity Fund No. 3 |
2,156 | | | | 67 | | | | 2,223 | |||||||||||||||||||||||||||
KB-Glenwood Private Equity Fund |
10 | | | | | | | | 10 | |||||||||||||||||||||||||||
Terra Co., Ltd. |
| | | | 4 | | | | 4 | |||||||||||||||||||||||||||
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|||||||||||||||||||
₩ | 934,641 | ₩ | 52,119 | ₩ | (3,490 | ) | ₩ | (17,064 | ) | ₩ | (179,959 | ) | ₩ | (9,844 | ) | ₩ | (19,823 | ) | ₩ | (1,190 | ) | ₩ | 755,390 | |||||||||||||
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1 | Impairment recognized on reorganization proceedings filed on December 30, 2013. |
123
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Accumulated unrecognized share of losses in investments in associates due to discontinuation of applying the equity method as of December 31, 2014 and 2013, follows:
(In millions of Korean won) | 2014 | |||||||
Unrecognized loss | Unrecognized change in equity |
|||||||
Incheon Bridge Co., Ltd. |
₩ | 1,287 | ₩ | 1,716 | ||||
Shinla Construction Co., Ltd. |
34 | 134 | ||||||
Terra Co., Ltd. |
115 | 115 | ||||||
(In millions of Korean won) | 2013 | |||||||
Unrecognized loss | Unrecognized change in equity |
|||||||
Incheon Bridge Co., Ltd. |
₩ | 429 | ₩ | 429 | ||||
CH Engineering Co., Ltd. |
43 | 94 | ||||||
Shinla Construction Co., Ltd. |
41 | 101 |
14. Property and Equipment, and Investment Property
The details of property and equipment as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost |
Accumulated depreciation |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Land |
₩ | 1,970,010 | ₩ | | ₩ | | ₩ | 1,970,010 | ||||||||
Buildings |
1,231,645 | (373,306 | ) | (2,117 | ) | 856,222 | ||||||||||
Leasehold improvements |
602,438 | (549,942 | ) | | 52,496 | |||||||||||
Equipment and vehicles |
1,725,901 | (1,561,480 | ) | | 164,421 | |||||||||||
Construction in-progress |
7,946 | | | 7,946 | ||||||||||||
Financial lease assets |
32,965 | (1,075 | ) | | 31,890 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,570,905 | ₩ | (2,485,803 | ) | ₩ | (2,117 | ) | ₩ | 3,082,985 | |||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Acquisition cost |
Accumulated depreciation |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Land |
₩ | 1,991,831 | ₩ | | ₩ | | ₩ | 1,991,831 | ||||||||
Buildings |
1,219,806 | (353,140 | ) | (2,117 | ) | 864,549 | ||||||||||
Leasehold improvements |
567,231 | (511,207 | ) | | 56,024 | |||||||||||
Equipment and vehicles |
1,642,796 | (1,503,257 | ) | | 139,539 | |||||||||||
Financial lease assets |
66,641 | (57,741 | ) | | 8,900 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,488,305 | ₩ | (2,425,345 | ) | ₩ | (2,117 | ) | ₩ | 3,060,843 | |||||||
|
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|
124
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The changes in property and equipment for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||||||
Beginning | Acquisition | Transfers1 | Disposal | Depreciation2 | Business Combination |
Others | Ending | |||||||||||||||||||||||||
Land |
₩ | 1,991,831 | ₩ | 11,371 | ₩ | (37,017 | ) | ₩ | | ₩ | | ₩ | 3,850 | ₩ | (25 | ) | ₩ | 1,970,010 | ||||||||||||||
Buildings |
864,549 | 12,884 | 2,044 | | (29,335 | ) | 6,159 | (79 | ) | 856,222 | ||||||||||||||||||||||
Leasehold improvement |
56,024 | 3,854 | 30,420 | (605 | ) | (40,570 | ) | 791 | 2,582 | 52,496 | ||||||||||||||||||||||
Equipment and vehicles |
139,539 | 110,269 | 1,947 | (333 | ) | (90,200 | ) | 2,285 | 914 | 164,421 | ||||||||||||||||||||||
Construction in-progress |
| 63,629 | (55,683 | ) | | | | | 7,946 | |||||||||||||||||||||||
Financial lease assets |
8,900 | 40,873 | (1,947 | ) | | (15,936 | ) | | | 31,890 | ||||||||||||||||||||||
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|
|||||||||||||||||
₩ | 3,060,843 | ₩ | 242,880 | ₩ | (60,236 | ) | ₩ | (938 | ) | ₩ | (176,041 | ) | ₩ | 13,085 | ₩ | 3,392 | ₩ | 3,082,985 | ||||||||||||||
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|
|||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||||||
Beginning | Acquisition | Transfers1 | Disposal | Depreciation2 | Business Combination |
Others | Ending | |||||||||||||||||||||||||
Land |
₩ | 2,012,265 | ₩ | 1,405 | ₩ | (21,551 | ) | ₩ | (214 | ) | ₩ | | ₩ | | ₩ | (74 | ) | ₩ | 1,991,831 | |||||||||||||
Buildings |
879,878 | 3,234 | 11,056 | (281 | ) | (29,094 | ) | | (244 | ) | 864,549 | |||||||||||||||||||||
Leasehold improvement |
55,658 | 2,687 | 32,702 | (332 | ) | (46,057 | ) | 299 | 11,067 | 56,024 | ||||||||||||||||||||||
Equipment and vehicles |
141,932 | 94,875 | | (434 | ) | (97,119 | ) | 247 | 38 | 139,539 | ||||||||||||||||||||||
Construction in-progress |
893 | 51,268 | (52,161 | ) | | | | | | |||||||||||||||||||||||
Financial lease assets |
9,767 | 10,734 | | | (11,601 | ) | | | 8,900 | |||||||||||||||||||||||
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|||||||||||||||||
₩ | 3,100,393 | ₩ | 164,203 | ₩ | (29,954 | ) | ₩ | (1,261 | ) | ₩ | (183,871 | ) | ₩ | 546 | ₩ | 10,787 | ₩ | 3,060,843 | ||||||||||||||
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|
1 | Including transfers with investment property and assets held for sale. |
2 | Including depreciation cost ₩82 million and ₩71 million recorded in other operating expenses in the statements of comprehensive income for the years ended December 31, 2014 and 2013, respectively. |
125
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The changes in accumulated impairment losses of property and equipment for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||
2014 | ||||||||||||||||||
Beginning | Impairment | Reversal | Others | Ending | ||||||||||||||
₩ | (2,117 | ) | ₩ | | ₩ | | ₩ | | ₩ | (2,117 | ) | |||||||
(In millions of Korean won) | ||||||||||||||||||
2013 | ||||||||||||||||||
Beginning | Impairment | Reversal | Others | Ending | ||||||||||||||
₩ | (3,242 | ) | ₩ | | ₩ | | ₩ | 1,125 | ₩ | (2,117 | ) |
The details of investment property as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost | Accumulated depreciation |
Accumulated impairment losses |
Carrying amount | |||||||||||||
Land |
₩ | 229,437 | ₩ | | ₩ | (738 | ) | ₩ | 228,699 | |||||||
Buildings |
157,885 | (9,040 | ) | | 148,845 | |||||||||||
|
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|
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|
|
|
|||||||||
₩ | 387,322 | ₩ | (9,040 | ) | ₩ | (738 | ) | ₩ | 377,544 | |||||||
|
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|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||
Acquisition cost | Accumulated depreciation |
Carrying amount | ||||||||||
Land |
₩ | 94,708 | ₩ | | ₩ | 94,708 | ||||||
Buildings |
78,526 | (6,975 | ) | 71,551 | ||||||||
|
|
|
|
|
|
|||||||
₩ | 173,234 | ₩ | (6,975 | ) | ₩ | 166,259 | ||||||
|
|
|
|
|
|
The valuation technique and input variables that are used to measure the fair value of investment property as of December 31, 2014, are as follows:
(In millions of Korean won) | 2014 | |||||||
Fair value | Valuation technique |
Inputs | ||||||
Land and buildings |
₩ | 379,812 | Cost Approach Method | - Price per square meter - Replacement cost |
As of December 31, 2014 and 2013, fair values of the investment properties amount to ₩379,812 million and ₩189,534 million, respectively. The investment properties were measured by qualified independent appraisers with experience in valuing similar properties in the same area. In addition, per the fair value hierarchy on Note 6.1, the fair value hierarchy of all investment properties has been categorized and classified as Level 3.
Rental income from the above investment properties for the years ended December 31, 2014 and 2013, amounts to ₩7,107 million and ₩4,889 million, respectively.
126
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The changes in investment property for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Beginning | Acquisition | Transfers | Depreciation | Business combination |
Ending | |||||||||||||||||||
Land |
₩ | 94,708 | ₩ | 132,924 | ₩ | (262 | ) | ₩ | | ₩ | 1,329 | ₩ | 228,699 | |||||||||||
Buildings |
71,551 | 79,071 | 288 | (2,065 | ) | | 148,845 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 166,259 | ₩ | 211,995 | ₩ | 26 | ₩ | (2,065 | ) | ₩ | 1,329 | ₩ | 377,544 | ||||||||||||
|
|
|
|
|
|
|
|
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|
|
(In millions of Korean won) | 2013 | |||||||||||||||||||
Beginning | Acquisition | Transfers | Depreciation | Ending | ||||||||||||||||
Land |
₩ | 38,653 | ₩ | 56,055 | ₩ | | ₩ | | ₩ | 94,708 | ||||||||||
Buildings |
14,321 | 58,554 | 257 | (1,581 | ) | 71,551 | ||||||||||||||
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|
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|
|||||||||||
₩ | 52,974 | ₩ | 114,609 | ₩ | 257 | ₩ | (1,581 | ) | ₩ | 166,259 | ||||||||||
|
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|
Property and equipment insured as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | Insurance coverage | |||||||||||
Type | Assets insured | 2014 | 2013 | Insurance company | ||||||||
General property insurance |
Buildings1 |
₩ | 1,134,840 | ₩ | 1,027,420 | Samsung Fire & Marine Insurance Co., Ltd. and others | ||||||
Leasehold improvements |
142,163 | 121,188 | ||||||||||
Equipment and vehicles and others |
164,106 | 139,544 | ||||||||||
|
|
|
|
|||||||||
₩ | 1,441,109 | ₩ | 1,288,152 | |||||||||
|
|
|
|
1 | Buildings include office buildings, investment properties and assets held for sale. |
15. Intangible Assets
The details of intangible assets as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost |
Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Goodwill |
₩ | 331,707 | ₩ | | ₩ | (69,315 | ) | ₩ | 262,392 | |||||||
Other intangible assets |
900,951 | (649,723 | ) | (24,698 | ) | 226,530 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 1,232,658 | ₩ | (649,723 | ) | ₩ | (94,013 | ) | ₩ | 488,922 | |||||||
|
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|
127
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||
Acquisition cost |
Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Goodwill |
₩ | 252,098 | ₩ | | ₩ | (46,533 | ) | ₩ | 205,565 | |||||||
Other intangible assets |
851,406 | (590,550 | ) | (23,217 | ) | 237,639 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 1,103,504 | ₩ | (590,550 | ) | ₩ | (69,750 | ) | ₩ | 443,204 | |||||||
|
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|
|
|
|
|
|
The details of goodwill as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||||||||
Acquisition cost |
Carrying amount |
Acquisition cost |
Carrying amount |
|||||||||||||
Housing & Commercial Bank |
₩ | 65,288 | ₩ | 65,288 | ₩ | 65,288 | ₩ | 65,288 | ||||||||
KB Cambodia Bank |
1,202 | 1,202 | 1,202 | 1,202 | ||||||||||||
KB Investment Securities |
70,265 | 58,889 | 70,265 | 58,889 | ||||||||||||
KB Capital Co., Ltd. |
79,609 | 79,609 | | | ||||||||||||
KB Savings Bank Co., Ltd. |
115,343 | 57,404 | 108,000 | 72,843 | ||||||||||||
Yehansoul Savings Bank Co., Ltd. |
| | 7,343 | 7,343 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 331,707 | ₩ | 262,392 | ₩ | 252,098 | ₩ | 205,565 | |||||||||
|
|
|
|
|
|
|
|
The changes in accumulated impairment losses of goodwill for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||
2014 | ||||||||||||||
Beginning | Impairment | Others | Ending | |||||||||||
₩ | 46,533 | ₩ | 22,782 | ₩ | | ₩ | 69,315 |
(In millions of Korean won) | ||||||||||||||
2013 | ||||||||||||||
Beginning | Impairment | Others | Ending | |||||||||||
₩ | 35,157 | ₩ | 11,376 | ₩ | | ₩ | 46,533 |
128
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of allocating goodwill to cash-generating units and related information for impairment testing as of December 31, 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
Housing & Commercial Bank |
KB Savings Bank Co., Ltd. and Yehansoul |
|||||||||||||||||||||||||||
Retail Banking |
Corporate Banking |
KB Cambodia Bank |
KB Investment Securities |
KB Capital Co., Ltd. |
Savings Bank Co., Ltd. |
Total | ||||||||||||||||||||||
Carrying amounts |
₩ | 49,315 | ₩ | 15,973 | ₩ | 1,202 | ₩ | 58,889 | ₩ | 79,609 | ₩ | 57,404 | ₩ | 262,392 | ||||||||||||||
Recoverable amount exceeded carrying amount |
1,090,789 | 1,058,505 | 735 | 38,772 | 210,379 | | 2,399,180 | |||||||||||||||||||||
Discount rate (%) |
17.13 | 17.49 | 33.45 | 16.53 | 13.67 | 17.01 | ||||||||||||||||||||||
Permanent growth rate (%) |
2.00 | 2.00 | 2.00 | 2.00 | 2.00 | 2.00 |
Goodwill is allocated to cash-generating units, based on managements analysis, that are expected to benefit from the synergies of the combination for impairment testing, and cash-generating units consist of an operating segment or units which are not larger than an operating segment. The Group recognized the amount of ₩65,288 million related to goodwill acquired in the merger of Housing & Commercial Bank. Of those respective amounts, the amounts of ₩49,315 million and ₩15,973 million were allocated to the Retail Banking and Corporate Banking, respectively. Cash-generating units to which goodwill has been allocated is tested for impairment annually, and whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit.
The recoverable amount of a cash-generating unit is measured at the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell is the amount obtainable from the sale in an arms length transaction between knowledgeable, willing parties, less the costs of disposal. If it is difficult to measure the amount obtainable from the sale, the Group measures the fair value less costs to sell by reflecting the characteristics of the measured cash-generating unit. If it is not possible to obtain reliable information to measure the fair value less costs to sell, the Group uses the assets value in use as its recoverable amount. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. The projections of the future cash flows are based on the most recent financial budget approved by management and generally cover a period of five years. The future cash flows after projection period are estimated on the assumption that the future cash flows will increase 2.0% for every year. The key assumptions used for the estimation of the future cash flows are the market size and the Groups market share. The discount rate is a pre-tax rate that reflects assumptions regarding risk-free interest rate, market risk premium and the risks specific to the asset for which the future cash flow estimates have not been adjusted.
129
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of intangible assets, excluding goodwill, as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost |
Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Industrial property rights |
₩ | 1,470 | ₩ | (1,079 | ) | ₩ | | ₩ | 391 | |||||||
Software |
644,485 | (564,887 | ) | | 79,598 | |||||||||||
Other intangible assets |
213,927 | (83,190 | ) | (24,698 | ) | 106,039 | ||||||||||
Finance leases assets |
41,069 | (567 | ) | | 40,502 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 900,951 | ₩ | (649,723 | ) | ₩ | (24,698 | ) | ₩ | 226,530 | |||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Acquisition cost |
Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Industrial property rights |
₩ | 1,405 | ₩ | (936 | ) | ₩ | | ₩ | 469 | |||||||
Software |
614,124 | (500,327 | ) | | 113,797 | |||||||||||
Other intangible assets |
206,427 | (67,892 | ) | (23,217 | ) | 115,318 | ||||||||||
Finance leases assets |
29,450 | (21,395 | ) | | 8,055 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 851,406 | ₩ | (590,550 | ) | ₩ | (23,217 | ) | ₩ | 237,639 | |||||||
|
|
|
|
|
|
|
|
The changes in intangible assets, excluding goodwill, for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||||||||||
Beginning | Acquisition | Disposal | Transfer | Amortization1 | Business combination |
Others | Ending | |||||||||||||||||||||||||
Industrial property rights |
₩ | 469 | ₩ | 74 | ₩ | | ₩ | | ₩ | (151 | ) | ₩ | | ₩ | (1 | ) | ₩ | 391 | ||||||||||||||
Software |
113,797 | 24,516 | | 4,528 | (62,805 | ) | 364 | (802 | ) | 79,598 | ||||||||||||||||||||||
Other intangible assets2 |
115,318 | 6,165 | (4,455 | ) | | (11,805 | ) | 2,050 | (1,234 | ) | 106,039 | |||||||||||||||||||||
Finance leases assets |
8,055 | 45,305 | | (4,528 | ) | (8,330 | ) | | | 40,502 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
₩ | 237,639 | ₩ | 76,060 | ₩ | (4,455 | ) | ₩ | | ₩ | (83,091 | ) | ₩ | 2,414 | ₩ | (2,037 | ) | ₩ | 226,530 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||||||||||||||
Beginning | Acquisition | Disposal | Amortization1 | Business combination |
Others | Ending | ||||||||||||||||||||||
Industrial property rights |
₩ | 418 | ₩ | 190 | ₩ | | ₩ | (137 | ) | ₩ | | ₩ | (2 | ) | ₩ | 469 | ||||||||||||
Software |
168,032 | 33,649 | | (87,078 | ) | | (806 | ) | 113,797 | |||||||||||||||||||
Other intangible assets2 |
107,994 | 34,252 | (5,177 | ) | (9,122 | ) | 38 | (12,667 | ) | 115,318 | ||||||||||||||||||
Finance leases assets |
7,089 | 6,036 | | (5,070 | ) | | | 8,055 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 283,533 | ₩ | 74,127 | ₩ | (5,177 | ) | ₩ | (101,407 | ) | ₩ | 38 | ₩ | (13,475 | ) | ₩ | 237,639 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | Including ₩59 million and ₩31 million recorded in other operating expenses in the statements of comprehensive income for the years ended December 31, 2014 and 2013. |
2 | Membership rights of other intangible assets with indefinite useful lives recognized impairment losses because their recoverable amount is lower than their carrying amount. |
130
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The changes in accumulated impairment losses on intangible assets, excluding goodwill, for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||
Beginning | Impairment | Reversal | Disposal and others |
Ending | ||||||||||||||||
Accumulated impairment losses on intangible assets |
₩ | (23,217 | ) | ₩ | (1,888 | ) | ₩ | 411 | ₩ | (4 | ) | ₩ | (24,698 | ) | ||||||
(In millions of Korean won) | 2013 | |||||||||||||||||||
Beginning | Impairment | Reversal | Disposal and others |
Ending | ||||||||||||||||
Accumulated impairment losses on intangible assets |
₩ | (17,845 | ) | ₩ | (5,763 | ) | ₩ | 24 | ₩ | 367 | ₩ | (23,217 | ) |
16. Deferred income tax assets and liabilities
The details of deferred income tax assets and liabilities as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Assets | Liabilities | Net amount | ||||||||||
Other provisions |
₩ | 99,369 | ₩ | | ₩ | 99,369 | ||||||
Allowances for loan losses |
2,416 | (1,900 | ) | 516 | ||||||||
Impairment losses on property and equipment |
5,590 | (358 | ) | 5,232 | ||||||||
Interest on equity index-linked deposits |
183 | | 183 | |||||||||
Share-based payments |
8,134 | | 8,134 | |||||||||
Provisions for guarantees |
50,115 | | 50,115 | |||||||||
Losses (gains) from valuation on derivative financial instruments |
3,714 | (52,714 | ) | (49,000 | ) | |||||||
Present value discount |
8,078 | (10,694 | ) | (2,616 | ) | |||||||
Losses (gains) from fair value hedged item |
12,834 | | 12,834 | |||||||||
Accrued interest |
| (79,385 | ) | (79,385 | ) | |||||||
Deferred loan origination fees and costs |
9,265 | (132,815 | ) | (123,550 | ) | |||||||
Gains from revaluation |
| (274,947 | ) | (274,947 | ) | |||||||
Investments in subsidiaries and others |
12,635 | (74,504 | ) | (61,869 | ) | |||||||
Derivative linked securities |
336,025 | (338,587 | ) | (2,562 | ) | |||||||
Others |
703,497 | (363,600 | ) | 339,897 | ||||||||
|
|
|
|
|
|
|||||||
1,251,855 | (1,329,504 | ) | (77,649 | ) | ||||||||
Offsetting of deferred income tax assets and liabilities |
(1,236,293 | ) | 1,236,293 | | ||||||||
|
|
|
|
|
|
|||||||
₩ | 15,562 | ₩ | (93,211 | ) | ₩ | (77,649 | ) | |||||
|
|
|
|
|
|
131
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||
Assets | Liabilities | Net amount | ||||||||||
Other provisions |
₩ | 113,685 | ₩ | | ₩ | 113,685 | ||||||
Allowances for loan losses |
171 | (2,118 | ) | (1,947 | ) | |||||||
Impairment losses on property and equipment |
2,873 | | 2,873 | |||||||||
Interest on equity index-linked deposits |
340 | | 340 | |||||||||
Share-based payments |
8,512 | | 8,512 | |||||||||
Provisions for guarantees |
50,463 | | 50,463 | |||||||||
Losses (gains) from valuation on derivative financial instruments |
1,045 | (15,119 | ) | (14,074 | ) | |||||||
Present value discount |
2,554 | (6,812 | ) | (4,258 | ) | |||||||
Losses (gains) from fair value hedged item |
16,670 | (111 | ) | 16,559 | ||||||||
Accrued interest |
| (79,656 | ) | (79,656 | ) | |||||||
Deferred loan origination fees and costs |
13,263 | (97,532 | ) | (84,269 | ) | |||||||
Gains from revaluation |
| (276,057 | ) | (276,057 | ) | |||||||
Investments in subsidiaries and others |
74,324 | (63,407 | ) | 10,917 | ||||||||
Derivative linked securities |
265,477 | (264,024 | ) | 1,453 | ||||||||
Others |
546,499 | (337,434 | ) | 209,065 | ||||||||
|
|
|
|
|
|
|||||||
1,095,876 | (1,142,270 | ) | (46,394 | ) | ||||||||
Offsetting of deferred income tax assets and liabilities |
(1,080,454 | ) | 1,080,454 | | ||||||||
|
|
|
|
|
|
|||||||
₩ | 15,422 | ₩ | (61,816 | ) | ₩ | (46,394 | ) | |||||
|
|
|
|
|
|
Unrecognized deferred income tax assets
No deferred income tax assets have been recognized for the deductible temporary difference of ₩563,040 million associated with investments in subsidiaries and others as of December 31, 2014, because it is not probable that the temporary differences will be reversed in the foreseeable future.
No deferred income tax assets have been recognized for deductible temporary differences of ₩199 million, ₩80,204 million and ₩172,199 million associated with loss on other provisions, SPE repurchase and others, respectively, as of December 31, 2014, due to the uncertainty that these will be realized in the future.
132
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Unrecognized deferred income tax liabilities
No deferred income tax liabilities have been recognized for the taxable temporary difference of ₩27,367 million associated with investment in subsidiaries and associates as of December 31, 2014, due to the following reasons:
| The Group is able to control the timing of the reversal of the temporary difference. |
| It is probable that the temporary difference will not be reversed in the foreseeable future. |
No deferred income tax liabilities have been recognized as of December 31, 2014, for the taxable temporary difference of ₩65,288 million arising from the initial recognition of goodwill from the merger of Housing and Commercial Bank.
The changes in cumulative temporary differences for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Deductible temporary differences |
||||||||||||||||
Losses (gains) from fair value hedged item |
₩ | 68,884 | ₩ | 68,884 | ₩ | 53,033 | ₩ | 53,033 | ||||||||
Other provisions |
470,329 | 445,632 | 386,116 | 410,813 | ||||||||||||
Allowances for loan losses |
705 | 292 | 5,720 | 6,133 | ||||||||||||
Impairment losses on property and equipment |
11,873 | 11,873 | 22,363 | 22,363 | ||||||||||||
Deferred loan origination fees and costs |
54,616 | 54,772 | 37,529 | 37,373 | ||||||||||||
Interest on equity index-linked deposits |
1,407 | 1,325 | 676 | 758 | ||||||||||||
Share-based payments |
35,174 | 35,174 | 33,613 | 33,613 | ||||||||||||
Provisions for guarantees |
208,524 | 208,524 | 225,414 | 225,414 | ||||||||||||
Gains (losses) from valuation on derivative financial instruments |
4,319 | 4,319 | 15,171 | 15,171 | ||||||||||||
Present value discount |
10,555 | 10,555 | 11,762 | 11,762 | ||||||||||||
Loss on SPE repurchase |
80,204 | | | 80,204 | ||||||||||||
Investments in subsidiaries and others |
890,631 | 310,123 | 18,691 | 599,199 | ||||||||||||
Derivative linked securities |
1,097,012 | 1,097,012 | 1,388,534 | 1,388,534 | ||||||||||||
Others |
2,357,500 | 1,349,309 | 2,099,534 | 3,107,725 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
5,291,733 | ₩ | 3,597,794 | ₩ | 4,298,156 | 5,992,095 | |||||||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax assets: |
||||||||||||||||
Share-based payments |
| | ||||||||||||||
Other provisions |
250 | 199 | ||||||||||||||
Loss on SPE repurchase |
80,204 | 80,204 | ||||||||||||||
Investments in subsidiaries and others |
603,097 | 563,040 | ||||||||||||||
Others |
94,786 | 172,199 | ||||||||||||||
|
|
|
|
|||||||||||||
4,513,396 | 5,176,453 | |||||||||||||||
Tax rate (%) |
24.2 | 24.2 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax assets from deductible temporary differences |
₩ | 1,095,876 | ₩ | 1,251,855 | ||||||||||||
|
|
|
|
133
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Taxable temporary differences |
||||||||||||||||
Losses (gains) from fair value hedged item |
₩ | (502 | ) | ₩ | (502 | ) | ₩ | | ₩ | | ||||||
Accrued interest |
(336,776 | ) | (220,808 | ) | (213,071 | ) | (329,039 | ) | ||||||||
Allowances for loans losses |
(8,752 | ) | (902 | ) | | (7,850 | ) | |||||||||
Deferred loan origination fees and costs |
(403,026 | ) | (403,026 | ) | (548,978 | ) | (548,978 | ) | ||||||||
Gains (losses) from valuation on derivative financial instruments |
(62,577 | ) | (61,187 | ) | (216,436 | ) | (217,826 | ) | ||||||||
Present value discount |
(30,964 | ) | | (13,226 | ) | (44,190 | ) | |||||||||
Goodwill |
(65,288 | ) | | | (65,288 | ) | ||||||||||
Gains on revaluation |
(1,140,730 | ) | (4,587 | ) | | (1,136,143 | ) | |||||||||
Investments in subsidiaries and others |
(367,717 | ) | (60,223 | ) | (15,199 | ) | (322,693 | ) | ||||||||
Derivative linked securities |
(1,091,009 | ) | (1,091,009 | ) | (1,399,118 | ) | (1,399,118 | ) | ||||||||
Others |
(1,386,712 | ) | (562,646 | ) | (677,763 | ) | (1,501,829 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(4,894,053 | ) | ₩ | (2,404,890 | ) | ₩ | (3,083,791 | ) | (5,572,954 | ) | |||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax assets: |
||||||||||||||||
Goodwill |
(65,288 | ) | (65,288 | ) | ||||||||||||
Investments in subsidiaries and others |
(118,749 | ) | (27,367 | ) | ||||||||||||
|
|
|
|
|||||||||||||
(4,710,016 | ) | (5,480,299 | ) | |||||||||||||
Tax rate (%) |
24.2 | 24.2 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax assets from deductible temporary differences |
₩ | (1,142,270 | ) | ₩ | (1,329,504 | ) | ||||||||||
|
|
|
|
|||||||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Deductible temporary differences |
||||||||||||||||
Losses (gains) from fair value hedged item |
₩ | 127,281 | ₩ | 127,281 | ₩ | 68,884 | ₩ | 68,884 | ||||||||
Other provisions |
576,999 | 553,376 | 446,706 | 470,329 | ||||||||||||
Allowances for loan losses |
4,727 | 4,221 | 199 | 705 | ||||||||||||
Impairment losses on property and equipment |
8,723 | 8,723 | 11,873 | 11,873 | ||||||||||||
Deferred loan origination fees and costs |
36,136 | 35,720 | 54,200 | 54,616 | ||||||||||||
Interest on equity index-linked deposits |
2,985 | 2,985 | 1,407 | 1,407 | ||||||||||||
Share-based payments |
25,591 | 25,591 | 35,174 | 35,174 | ||||||||||||
Provisions for guarantees |
208,255 | 208,255 | 208,524 | 208,524 | ||||||||||||
Gains (losses) from valuation on derivative financial instruments |
6,581 | 6,581 | 4,319 | 4,319 | ||||||||||||
Present value discount |
9,655 | 9,658 | 10,558 | 10,555 | ||||||||||||
Loss on SPE repurchase |
80,204 | | | 80,204 | ||||||||||||
Investments in subsidiaries and others |
2,687,622 | 2,099,827 | 302,836 | 890,631 | ||||||||||||
Derivative linked securities |
667,942 | 667,942 | 1,097,012 | 1,097,012 | ||||||||||||
Others |
2,004,536 | 947,787 | 1,300,751 | 2,357,500 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
6,447,237 | ₩ | 4,697,947 | ₩ | 3,542,443 | 5,291,733 | |||||||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax assets: |
||||||||||||||||
Share-based payments |
10 | | ||||||||||||||
Other provisions |
817 | 250 | ||||||||||||||
Loss on SPE repurchase |
80,204 | 80,204 |
134
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Investments in subsidiaries and others |
2,492,775 | 603,097 | ||||||||||||||
Others |
87,342 | 94,786 | ||||||||||||||
|
|
|
|
|||||||||||||
3,786,089 | 4,513,396 | |||||||||||||||
Tax rate (%) |
24.2 | 24.2 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax assets from deductible temporary differences |
₩ | 919,214 | ₩ | 1,095,876 | ||||||||||||
|
|
|
|
|||||||||||||
Taxable temporary differences |
||||||||||||||||
Losses (gains) from fair value hedged item |
₩ | | ₩ | | ₩ | (502 | ) | ₩ | (502 | ) | ||||||
Accrued interest |
(339,126 | ) | (220,320 | ) | (217,970 | ) | (336,776 | ) | ||||||||
Allowances for loans losses |
(10,654 | ) | (1,902 | ) | | (8,752 | ) | |||||||||
Deferred loan origination fees and costs |
(389,017 | ) | (389,017 | ) | (403,026 | ) | (403,026 | ) | ||||||||
Gains (losses) from valuation on derivative financial instruments |
(163,225 | ) | (162,935 | ) | (62,287 | ) | (62,577 | ) | ||||||||
Present value discount |
(32,185 | ) | (1,221 | ) | | (30,964 | ) | |||||||||
Goodwill |
(65,288 | ) | | | (65,288 | ) | ||||||||||
Gains on revaluation |
(1,142,234 | ) | (1,504 | ) | | (1,140,730 | ) | |||||||||
Investments in subsidiaries and others |
(5,959,490 | ) | (5,644,900 | ) | (53,127 | ) | (367,717 | ) | ||||||||
Derivative linked securities |
(661,700 | ) | (661,700 | ) | (1,091,009 | ) | (1,091,009 | ) | ||||||||
Others |
(1,307,717 | ) | (581,961 | ) | (660,956 | ) | (1,386,712 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(10,070,636 | ) | ₩ | (7,665,460 | ) | ₩ | (2,488,877 | ) | (4,894,053 | ) | |||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax assets: |
||||||||||||||||
Goodwill |
(65,288 | ) | (65,288 | ) | ||||||||||||
Investments in subsidiaries and others |
(83,745 | ) | (118,749 | ) | ||||||||||||
|
|
|
|
|||||||||||||
(9,921,603 | ) | (4,710,016 | ) | |||||||||||||
Tax rate (%) |
24.2 | 24.2 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax assets from deductible temporary differences |
₩ | (1,055,085 | ) | ₩ | (1,142,270 | ) | ||||||||||
|
|
|
|
135
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
17. Assets held for sale
The details of assets held for sale as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost1 |
Accumulated impairment |
Carrying amount |
Fair value less costs to sell |
|||||||||||||
Land |
₩ | 47,418 | ₩ | (9,442 | ) | ₩ | 37,976 | ₩ | 40,530 | |||||||
Buildings |
57,005 | (24,624 | ) | 32,381 | 33,752 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 104,423 | ₩ | (34,066 | ) | ₩ | 70,357 | ₩ | 74,282 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Acquisition cost1 |
Accumulated impairment |
Carrying amount |
Fair value less costs to sell |
|||||||||||||
Land |
₩ | 21,380 | ₩ | (5,109 | ) | ₩ | 16,271 | ₩ | 16,271 | |||||||
Buildings |
39,777 | (18,330 | ) | 21,447 | 21,447 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 61,157 | ₩ | (23,439 | ) | ₩ | 37,718 | ₩ | 37,718 | ||||||||
|
|
|
|
|
|
|
|
1 | Acquisition cost of buildings held for sale is net of accumulated depreciation. |
The valuation technique and input variables that are used to measure the fair value of assets held for sale as of December 31, 2014, are as follows:
(In millions of Korean won) | ||||||||||||
2014 | ||||||||||||
Fair value | Valuation technique1 | Unobservable input2 |
Range of unobservable inputs (%) |
Relationship of to fair value | ||||||||
Land and buildings |
₩ | 57,982 | Market comparion approach model |
Adjustment index |
0.17~2.00 | Fair value increases as the adjustment index rises. | ||||||
Adjustment ratio |
-20.00~0.00 | Fair value decreases as the absolute value of adjustment index rises. | ||||||||||
16,323 | Market comparison approach model |
Unit price per area of exclusive possession, Time point adjustment, Individual factor and others |
Unit price per area of exclusive possession: About ₩4.9 million
Time point adjustment: 0.9987 Individual factor: 0.85 |
Fair value increases as the unit price per area of exclusive possess and others rise. | ||||||||
|
|
|||||||||||
₩ | 74,305 | |||||||||||
|
|
1 | The Group adjusted the appraisal value by the adjustment ratio in the event the public sale is unsuccessful. |
2 | Adjustment index is calculated using the real estate index or the producer price index, or land price volatility. |
136
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The fair values of assets held for sale were measured by qualified independent appraisers with experience in valuing similar properties in the same area. In addition, per the fair value hierarchy on Note 6.1, the fair value hierarchy of all investment properties has been categorized and classified as Level 3.
The changes in accumulated impairment losses of assets held for sale for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||
2014 | ||||||||||||||||||
Beginning | Provision | Reversal | Others | Ending | ||||||||||||||
₩ | (23,439 | ) | ₩ | (16,592 | ) | ₩ | | ₩ | 5,965 | ₩ | (34,066 | ) | ||||||
(In millions of Korean won) | ||||||||||||||||||
2013 | ||||||||||||||||||
Beginning | Provision | Reversal | Others | Ending | ||||||||||||||
₩ | (5,759 | ) | ₩ | (22,365 | ) | ₩ | | ₩ | 4,685 | ₩ | (23,439 | ) |
As of December 31, 2014, buildings and land classified as assets held for sale consist of 15 pieces of real estate of closed branches and KB Wellyan Private Equity Real Estate Fund No. 6 and 7, which were acquired from the litigation of KB Asset Management Co., Ltd. The management of the Group decided to sell the assets, and accordingly, the assets were classified as assets held for sale. As of December 31, 2014, three assets out of above assets held for sale are under negotiation for sale and the remaining assets are also being actively marketed.
137
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
18. Other Assets
The details of other assets as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Other financial assets |
||||||||
Other receivables |
₩ | 3,185,783 | ₩ | 3,494,745 | ||||
Accrued income |
1,166,555 | 1,018,907 | ||||||
Guarantee deposits |
1,339,572 | 1,395,359 | ||||||
Domestic exchange settlement debits |
2,096,804 | 735,807 | ||||||
Others |
119,733 | 188,540 | ||||||
Allowances for loan losses |
(347,918 | ) | (580,651 | ) | ||||
Present value discount |
(898 | ) | (1,028 | ) | ||||
|
|
|
|
|||||
7,559,631 | 6,251,679 | |||||||
|
|
|
|
|||||
Other non-financial assets |
||||||||
Other receivables |
1,469 | 663 | ||||||
Prepaid expenses1 |
327,633 | 379,854 | ||||||
Guarantee deposits |
4,081 | 3,941 | ||||||
Insurance assets |
127,493 | 157,154 | ||||||
Separate account assets |
689,701 | 696,909 | ||||||
Others |
96,759 | 76,798 | ||||||
Allowances on other asset |
(23,294 | ) | (16,402 | ) | ||||
|
|
|
|
|||||
1,223,842 | 1,298,917 | |||||||
|
|
|
|
|||||
₩ | 8,783,473 | ₩ | 7,550,596 | |||||
|
|
|
|
1 | Prepaid income tax expenses amounting to ₩17,467 million for KB Life Insurance Co., Ltd as of December 31,2013 were reclassified from other assets into deferred income tax assets. |
The changes in allowances for loan losses on other assets for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Other financial assets |
Other non- financial assets |
Total | ||||||||||
Beginning |
₩ | 580,651 | ₩ | 16,402 | ₩ | 597,053 | ||||||
Written-off |
(293,614 | ) | (2,436 | ) | (296,050 | ) | ||||||
Provision |
38,091 | 3,930 | 42,021 | |||||||||
Business combination |
1,085 | | 1,085 | |||||||||
Others |
21,705 | 5,398 | 27,103 | |||||||||
Ending |
₩ | 347,918 | ₩ | 23,294 | ₩ | 371,212 | ||||||
|
|
|
|
|
|
138
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||
Other financial assets |
Other non- financial assets |
Total | ||||||||||
Beginning |
₩ | 590,110 | ₩ | 7,988 | ₩ | 598,098 | ||||||
Written-off |
(37,382 | ) | (6,715 | ) | (44,097 | ) | ||||||
Provision |
29,229 | 15,129 | 44,358 | |||||||||
Others |
(1,306 | ) | | (1,306 | ) | |||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 580,651 | ₩ | 16,402 | ₩ | 597,053 | ||||||
|
|
|
|
|
|
19. Financial liabilities at fair value through profit or loss
The details of financial liabilities at fair value through profit or loss as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Financial liabilities held for trading |
||||||||
Securities sold |
₩ | 784,892 | ₩ | 196,570 | ||||
Other |
51,650 | 40,067 | ||||||
|
|
|
|
|||||
836,542 | 236,637 | |||||||
|
|
|
|
|||||
Financial liabilities designated at fair value through profit or loss |
||||||||
Derivative linked securities |
982,426 | 878,565 | ||||||
|
|
|
|
|||||
982,426 | 878,565 | |||||||
|
|
|
|
|||||
Total financial liabilities at fair value through profit or loss |
₩ | 1,818,968 | ₩ | 1,115,202 | ||||
|
|
|
|
The details of credit risk of financial liabilities designated at fair value through profit or loss as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Financial liabilities designated at fair value through profit or loss |
₩ | 982,426 | ₩ | 878,565 | ||||
Changes in fair value resulting from changes in the credit risk |
(4,848 | ) | (4,032 | ) | ||||
Accumulated changes in fair value resulting from changes in the credit risk |
(14,510 | ) | (9,662 | ) |
139
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
20. Deposits
The details of deposits as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Demand deposits |
||||||||
Demand deposits in Korean won |
||||||||
Checking deposits |
₩ | 183,748 | ₩ | 122,296 | ||||
Household checking deposits |
495,268 | 467,229 | ||||||
Special deposits |
3,018,524 | 2,706,609 | ||||||
Ordinary deposits |
28,049,893 | 24,533,701 | ||||||
Public fund deposits |
81,899 | 75,127 | ||||||
Treasury deposits |
5,012 | 5,148 | ||||||
General savings deposits |
30,195,868 | 28,077,274 | ||||||
Corporate savings deposits |
13,549,740 | 10,715,746 | ||||||
Nonresidents deposit in Korean won |
53,079 | 32,355 | ||||||
Nonresidents free deposit in Korean won |
16,761 | 15,001 | ||||||
Others |
186,055 | 163,262 | ||||||
|
|
|
|
|||||
75,835,847 | 66,913,748 | |||||||
|
|
|
|
|||||
Demand deposits in foreign currencies |
||||||||
Checking deposits |
114,531 | 251,072 | ||||||
Ordinary deposits |
2,808,835 | 2,461,685 | ||||||
Special deposits |
1,678 | 5,325 | ||||||
Others |
94,019 | 14,142 | ||||||
|
|
|
|
|||||
3,019,063 | 2,732,224 | |||||||
|
|
|
|
|||||
78,854,910 | 69,645,972 | |||||||
|
|
|
|
|||||
Time deposits |
||||||||
Time deposits in Korean won |
||||||||
Time deposits |
110,822,758 | 108,216,861 | ||||||
Installment savings deposits |
10,133,900 | 11,097,205 | ||||||
Good-sum formation savings |
846,172 | 425,090 | ||||||
Nonresidents deposit in Korean won |
137,578 | 186,966 | ||||||
Workers savings for housing |
1,488 | 1,543 | ||||||
Nonresidents free deposit in Korean won |
26,361 | 41,085 | ||||||
Long-term housing savings deposits |
1,429,659 | 2,061,129 | ||||||
Long-term savings for households |
163 | 190 | ||||||
Preferential savings deposits for workers |
143 | 245 | ||||||
Mutual installment deposits |
1,265,869 | 1,478,299 | ||||||
Mutual installment for housing |
755,764 | 853,392 | ||||||
Trust deposits |
3,207,318 | 3,093,949 | ||||||
Fair value adjustments on valuation of fair value hedged items (current period portion) |
(958 | ) | | |||||
|
|
|
|
|||||
128,626,215 | 127,455,954 | |||||||
|
|
|
|
|||||
Time deposits in foreign currencies |
||||||||
Time deposits |
2,456,599 | 2,082,865 | ||||||
Installment savings deposits |
3,053 | 4,035 | ||||||
Others |
25,297 | 68,960 | ||||||
|
|
|
|
|||||
2,484,949 | 2,155,860 | |||||||
131,111,164 | 129,611,814 | |||||||
|
|
|
|
|||||
Certificates of deposits |
1,583,047 | 1,624,278 | ||||||
|
|
|
|
|||||
Total deposits |
₩ | 211,549,121 | ₩ | 200,882,064 | ||||
|
|
|
|
140
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
21. Debts
The details of debts as of December 31, 2014 and 2013, consist of:
(In millions of Korean won) | 2014 | 2013 | ||||||
Borrowings |
₩ | 11,908,698 | ₩ | 10,767,737 | ||||
Bonds sold under repurchase agreements and others |
1,074,146 | 685,626 | ||||||
Call money |
2,881,656 | 2,647,968 | ||||||
|
|
|
|
|||||
₩ | 15,864,500 | ₩ | 14,101,331 | |||||
|
|
|
|
The details of borrowings as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | Lender | Annual interest rate (%) |
2014 | 2013 | ||||||||||
Borrowings in Korean won |
Borrowings from the Bank of Korea |
Bank of Korea |
0.50~1.00 | ₩ | 1,002,796 | ₩ | 557,998 | |||||||
Borrowings from the government |
KEMCO and others |
0.00~5.00 | 611,378 | 626,593 | ||||||||||
Borrowings from banking institutions |
Industrial Bank of Korea and others |
1.97~4.04 | 37,874 | 61,877 | ||||||||||
Borrowings from non-banking financial institutions |
The Korea Development Bank and others |
0.71~2.70 | 212,452 | 142,511 | ||||||||||
Other borrowings |
The Korea Finance Corporation and others |
0.00~7.50 | 3,980,812 | 3,527,292 | ||||||||||
|
|
|
|
|||||||||||
5,845,312 | 4,916,271 | |||||||||||||
|
|
|
|
|||||||||||
Borrowings in foreign currencies |
Due to banks |
Royal Bank of Canada and others |
| 3,313 | 158,180 | |||||||||
Borrowings from banking institutions |
Wells Fargo Securities. and others |
0.21~1.70 | 3,522,159 | 3,831,929 | ||||||||||
Other borrowings |
The Korea Finance Corporation |
0.61~1.36 | 34,460 | 3,166 | ||||||||||
Other borrowings |
JP Morgan Chase Bank N.A. and others |
| 2,503,454 | 1,858,191 | ||||||||||
|
|
|
|
|||||||||||
6,063,386 | 5,851,466 | |||||||||||||
|
|
|
|
|||||||||||
₩ | 11,908,698 | ₩ | 10,767,737 | |||||||||||
|
|
|
|
141
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of bonds sold under repurchase agreements and others as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||
Lenders | Annual rate (%) |
2014 | 2013 | |||||||||
Bonds sold under repurchase agreements |
Individuals, Groups and Corporations |
1.25~3.63 | ₩ | 1,019,071 | ₩ | 608,156 | ||||||
Bills sold |
Counter sale |
1.09~2.62 | 55,075 | 77,470 | ||||||||
|
|
|
|
|||||||||
₩ | 1,074,146 | ₩ | 685,626 | |||||||||
|
|
|
|
The details of call money as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||
Lenders | Annual rate (%) |
2014 | 2013 | |||||||||
Call money in Korean won |
Woori Bank and others |
1.83~2.15 | ₩ | 1,882,000 | ₩ | 1,649,400 | ||||||
Call money in foreign currencies |
Central bank Uzbekistan and others |
0.10~3.61 | 999,656 | 998,568 | ||||||||
|
|
|
|
|||||||||
₩ | 2,881,656 | ₩ | 2,647,968 | |||||||||
|
|
|
|
Call money and borrowings from financial institutions as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Bank of Korea | Other Banks | Others | Total | |||||||||||||
Call money |
₩ | | ₩ | 1,983,656 | ₩ | 898,000 | ₩ | 2,881,656 | ||||||||
Borrowings |
1,277,596 | 6,131,496 | 867,674 | 8,276,766 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 1,277,596 | ₩ | 8,115,152 | ₩ | 1,765,674 | ₩ | 11,158,422 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Bank of Korea | Other Banks | Others | Total | |||||||||||||
Call money |
₩ | 1,001 | ₩ | 1,970,567 | ₩ | 676,400 | ₩ | 2,647,968 | ||||||||
Borrowings |
557,998 | 5,901,018 | 630,733 | 7,089,749 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 558,999 | ₩ | 7,871,585 | ₩ | 1,307,133 | ₩ | 9,737,717 | |||||||||
|
|
|
|
|
|
|
|
142
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
22. Debentures
The details of debentures as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||
Annual Interest rate (%) |
2014 | 2013 | ||||||||||
Debentures in Korean won |
||||||||||||
Structured debentures |
0.40~8.62 | ₩ | 1,239,238 | ₩ | 1,499,238 | |||||||
Subordinated fixed rate debentures in Korean won |
3.08~8.00 | 4,761,124 | 8,648,474 | |||||||||
Fixed rate debentures in Korean won |
2.11~5.04 | 18,839,553 | 12,057,142 | |||||||||
Floating rate debentures in Korean won |
2.17~2.93 | 1,133,000 | 1,505,858 | |||||||||
|
|
|
|
|||||||||
25,972,915 | 23,710,712 | |||||||||||
|
|
|
|
|||||||||
Fair value adjustments on fair value hedged financial debentures in Korean won |
||||||||||||
Fair value adjustments on valuation of fair value hedged items (current period portion) |
5,733 | (31,577 | ) | |||||||||
Fair value adjustments on valuation of fair value hedged items (prior year portion) |
48,183 | 81,369 | ||||||||||
|
|
|
|
|||||||||
53,916 | 49,792 | |||||||||||
|
|
|
|
|||||||||
Discount or premium on debentures in Korean won |
||||||||||||
Discount on debentures |
(43,291 | ) | (16,615 | ) | ||||||||
|
|
|
|
|||||||||
25,983,540 | 23,743,889 | |||||||||||
|
|
|
|
|||||||||
Debentures in foreign currencies |
||||||||||||
Floating rate debentures |
0.38~1.48 | 1,648,175 | 1,143,360 | |||||||||
Fixed rate debentures |
0.60~3.63 | 1,578,980 | 2,335,059 | |||||||||
|
|
|
|
|||||||||
3,227,155 | 3,478,419 | |||||||||||
|
|
|
|
|||||||||
Fair value adjustments on fair value hedged debentures in foreign currencies |
||||||||||||
Fair value adjustments on valuation of fair value hedged items (current period portion) |
(10,309 | ) | (42,195 | ) | ||||||||
Fair value adjustments on valuation of fair value hedged items (prior year portion) |
10,384 | (130,011 | ) | |||||||||
|
|
|
|
|||||||||
75 | (172,206 | ) | ||||||||||
|
|
|
|
|||||||||
Discount or premium on debentures in foreign currencies |
||||||||||||
Discount on debentures |
(10,064 | ) | (10,568 | ) | ||||||||
|
|
|
|
|||||||||
3,217,166 | 3,295,645 | |||||||||||
|
|
|
|
|||||||||
₩ | 29,200,706 | ₩ | 27,039,534 | |||||||||
|
|
|
|
143
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The changes in debentures based on face value for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Beginning | Issues | Repayments | Business combination |
Others | Ending | |||||||||||||||||||
Debentures in Korean won |
|
|||||||||||||||||||||||
Structured debentures |
₩ | 1,499,238 | ₩ | 80,000 | ₩ | (340,000 | ) | ₩ | | ₩ | | ₩ | 1,239,238 | |||||||||||
Subordinated fixed rate debentures in Korean won |
8,648,474 | | (4,082,350 | ) | 195,000 | | 4,761,124 | |||||||||||||||||
Fixed rate debentures in Korean won |
12,057,142 | 40,912,000 | (36,674,589 | ) | 2,545,000 | | 18,839,553 | |||||||||||||||||
Floating rate debentures in Korean won |
1,505,858 | 353,200 | (726,058 | ) | | | 1,133,000 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
23,710,712 | 41,345,200 | (41,822,997 | ) | 2,740,000 | | 25,972,915 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Debentures in foreign currencies |
||||||||||||||||||||||||
Floating rate debentures |
1,143,360 | 1,084,303 | (641,957 | ) | | 62,469 | 1,648,175 | |||||||||||||||||
Fixed rate debentures |
2,335,059 | 803,503 | (1,633,588 | ) | | 74,006 | 1,578,980 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
3,478,419 | 1,887,806 | (2,275,545 | ) | | 136,475 | 3,227,155 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 27,189,131 | ₩ | 43,233,006 | ₩ | (44,098,542 | ) | ₩ | 2,740,000 | ₩ | 136,475 | ₩ | 29,200,070 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||||||
Beginning | Issues | Repayments | Others | Ending | ||||||||||||||||
Debentures in Korean won |
||||||||||||||||||||
Hybrid capital instrument |
₩ | 100,000 | ₩ | | ₩ | (100,000 | ) | ₩ | | ₩ | | |||||||||
Structured debentures |
1,699,238 | 100,000 | (300,000 | ) | | 1,499,238 | ||||||||||||||
Subordinated fixed rate debentures in Korean won |
7,921,510 | 1,000,000 | (248,286 | ) | (24,750 | ) | 8,648,474 | |||||||||||||
Fixed rate debentures in Korean won |
10,145,218 | 7,716,400 | (5,791,683 | ) | (12,793 | ) | 12,057,142 | |||||||||||||
Floating rate debentures in Korean won |
1,169,158 | 760,600 | (423,900 | ) | | 1,505,858 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
21,035,124 | 9,577,000 | (6,863,869 | ) | (37,543 | ) | 23,710,712 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Debentures in foreign currencies |
||||||||||||||||||||
Floating rate debentures |
759,783 | 537,850 | (176,050 | ) | 21,777 | 1,143,360 | ||||||||||||||
Fixed rate debentures |
2,553,814 | 657,465 | (772,364 | ) | (103,856 | ) | 2,335,059 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
3,313,597 | 1,195,315 | (948,414 | ) | (82,079 | ) | 3,478,419 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 24,348,721 | ₩ | 10,772,315 | ₩ | (7,812,283 | ) | ₩ | (119,622 | ) | ₩ | 27,189,131 | |||||||||
|
|
|
|
|
|
|
|
|
|
144
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
23. Provisions
The details of provisions as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Provisions for unused loan commitments |
₩ | 209,964 | ₩ | 226,110 | ||||
Provisions for acceptances and guarantees |
207,927 | 209,118 | ||||||
Provisions for financial guarantee contracts |
2,718 | 2,699 | ||||||
Provisions for asset retirement obligation |
73,442 | 76,608 | ||||||
Other |
120,296 | 163,538 | ||||||
|
|
|
|
|||||
₩ | 614,347 | ₩ | 678,073 | |||||
|
|
|
|
Provisions for unused loan commitments as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Commitments outstanding |
Provision | Ratio (%) | ||||||||||
Corporate loan commitments |
₩ | 42,977,471 | ₩ | 90,315 | 0.21 | |||||||
Retail loan commitments |
13,886,999 | 34,927 | 0.25 | |||||||||
Credit line on credit cards |
37,584,381 | 84,722 | 0.23 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 94,448,851 | ₩ | 209,964 | 0.22 | ||||||||
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||
Commitments outstanding |
Provision | Ratio (%) | ||||||||||
Corporate loan commitments |
₩ | 42,446,365 | ₩ | 101,455 | 0.24 | |||||||
Retail loan commitments |
13,976,426 | 38,385 | 0.27 | |||||||||
Credit line on credit cards |
37,112,333 | 86,270 | 0.23 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 93,535,124 | ₩ | 226,110 | 0.24 | ||||||||
|
|
|
|
|
|
Provisions for acceptances and guarantees as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Acceptances and guarantees |
Provision | Ratio (%) | ||||||||||
Confirmed acceptances and guarantees in Korean won |
₩ | 1,098,048 | ₩ | 37,507 | 3.42 | |||||||
Confirmed acceptances and guarantees in foreign currencies |
4,061,444 | 79,966 | 1.97 | |||||||||
Unconfirmed acceptances and guarantees |
3,886,332 | 90,454 | 2.33 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 9,045,824 | ₩ | 207,927 | 2.30 | ||||||||
|
|
|
|
|
|
145
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||
Acceptances and guarantees |
Provision | Ratio (%) | ||||||||||
Confirmed acceptances and guarantees in Korean won |
₩ | 1,231,569 | ₩ | 42,604 | 3.46 | |||||||
Confirmed acceptances and guarantees in foreign currencies |
4,532,036 | 96,077 | 2.12 | |||||||||
Unconfirmed acceptances and guarantees |
4,041,087 | 70,437 | 1.74 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 9,804,692 | ₩ | 209,118 | 2.13 | ||||||||
|
|
|
|
|
|
The changes in provisions for unused loan commitments, acceptances and guarantees for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Provisions for unused loan commitments |
Provisions for acceptances and guarantees |
Total | ||||||||||
Beginning |
₩ | 226,110 | ₩ | 209,118 | ₩ | 435,228 | ||||||
Effects of changes in foreign exchange rate |
548 | 3,358 | 3,906 | |||||||||
Provision(reversal) |
(16,694 | ) | (4,549 | ) | (21,243 | ) | ||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 209,964 | ₩ | 207,927 | ₩ | 417,891 | ||||||
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||
Provisions for unused loan commitments |
Provisions for acceptances and guarantees |
Total | ||||||||||
Beginning |
₩ | 236,026 | ₩ | 208,753 | ₩ | 444,779 | ||||||
Effects of changes in foreign exchange rate |
(164 | ) | (961 | ) | (1,125 | ) | ||||||
Provision(reversal) |
(9,752 | ) | 1,326 | (8,426 | ) | |||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 226,110 | ₩ | 209,118 | ₩ | 435,228 | ||||||
|
|
|
|
|
|
The changes in provisions for financial guarantee contracts for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Beginning |
₩ | 2,699 | ₩ | 7,383 | ||||
Provision(reversal) |
19 | (4,684 | ) | |||||
|
|
|
|
|||||
Ending |
₩ | 2,718 | ₩ | 2,699 | ||||
|
|
|
|
146
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The changes in provisions for asset retirement obligation for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Beginning |
₩ | 76,608 | ₩ | 65,226 | ||||
Provision |
5,231 | 3,334 | ||||||
Reversal |
(6,047 | ) | (226 | ) | ||||
Used |
(5,701 | ) | (2,475 | ) | ||||
Unwinding of discount |
2,936 | 2,203 | ||||||
Effects of changes in discount rate |
70 | 7,908 | ||||||
Business combination |
345 | 638 | ||||||
|
|
|
|
|||||
Ending |
₩ | 73,442 | ₩ | 76,608 | ||||
|
|
|
|
Provisions for asset retirement obligations are the present value of estimated costs to be incurred for the restoration of the leased properties. Actual expenses are expected to be incurred at the end of each lease contract. Three-year historical data of expired leases were used to estimate the average lease period. Also, the average restoration expense based on actual three-year historical data and the three-year historical average inflation rate were used to estimate the present value of estimated costs.
The details of other provisions as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Membership rewards program |
₩ | 11,274 | ₩ | 5,402 | ||||
Dormant accounts |
33,996 | 16,839 | ||||||
Litigations |
24,506 | 23,455 | ||||||
Others |
50,520 | 117,842 | ||||||
|
|
|
|
|||||
₩ | 120,296 | ₩ | 163,538 | |||||
|
|
|
|
The changes in other provisions for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||||
2014 | ||||||||||||||||||||
Membership rewards program |
Dormant accounts |
Litigations | Others | Total | ||||||||||||||||
Beginning |
₩ | 5,402 | ₩ | 16,839 | ₩ | 23,455 | ₩ | 117,842 | ₩ | 163,538 | ||||||||||
Increase |
21,442 | 49,040 | 2,965 | 3,352 | 76,799 | |||||||||||||||
Decrease |
(15,570 | ) | (31,883 | ) | (1,914 | ) | (70,947 | ) | (120,314 | ) | ||||||||||
Business combination |
| | | 273 | 273 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending |
₩ | 11,274 | ₩ | 33,996 | ₩ | 24,506 | ₩ | 50,520 | ₩ | 120,296 | ||||||||||
|
|
|
|
|
|
|
|
|
|
147
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | ||||||||||||||||||||
2013 | ||||||||||||||||||||
Membership rewards program |
Dormant accounts |
Litigations | Others | Total | ||||||||||||||||
Beginning |
₩ | 11,108 | ₩ | 16,028 | ₩ | 21,215 | ₩ | 103,990 | ₩ | 152,341 | ||||||||||
Increase |
13,473 | 10,596 | 4,800 | 18,026 | 46,895 | |||||||||||||||
Decrease |
(19,179 | ) | (9,785 | ) | (2,560 | ) | (4,174 | ) | (35,698 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending |
₩ | 5,402 | ₩ | 16,839 | ₩ | 23,455 | ₩ | 117,842 | ₩ | 163,538 | ||||||||||
|
|
|
|
|
|
|
|
|
|
24. Net Defined benefit liabilities
Defined benefit plan
The Group operates defined benefit plans which have the following characteristics:
| The Group has the obligation to pay the agreed benefits to all its current and former employees. |
| Actuarial risk (that benefits will cost more than expected) and investment risk fall, in substance, on the Group. |
The defined benefit liability recognized in the statements of financial position is calculated annually by independent actuaries in accordance with actuarial valuation methods.
The defined benefit obligation is calculated using the Projected Unit Credit method (the PUC). Data used in the PUC such as interest rates, future salary increase rate, mortality rate and consumer price index are based on observable market data and historical data which are updated annually.
Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends which may impact defined benefit liabilities and future payments. Actuarial gains and losses arising from changes in actuarial assumptions are recognized in the period incurred through other comprehensive income (loss).
148
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The changes in the net defined benefit liabilities for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Present value of defined benefit obligation |
Fair value of plan assets |
Net defined benefit liabilities |
||||||||||
Beginning |
₩ | 985,195 | ₩ | (920,722 | ) | ₩ | 64,473 | |||||
Current service cost |
163,997 | | 163,997 | |||||||||
Interest cost (income) |
39,208 | (36,545 | ) | 2,663 | ||||||||
Past service cost |
11 | | 11 | |||||||||
Remeasurements |
||||||||||||
Actuarial gains and losses by changes in demographic assumptions |
(36 | ) | | (36 | ) | |||||||
Actuarial gains and losses by changes in financial assumptions |
112,550 | | 112,550 | |||||||||
Actuarial gains and losses by experience adjustments |
6,303 | | 6,303 | |||||||||
Return on plan assets (excluding amounts included in interest income) |
| 12,576 | 12,576 | |||||||||
Contributions |
| (288,212 | ) | (288,212 | ) | |||||||
Payments from plans (settlement) |
(43,108 | ) | 43,054 | (54 | ) | |||||||
Payments from the Group |
(3,567 | ) | | (3,567 | ) | |||||||
Transfer in |
3,788 | (3,788 | ) | | ||||||||
Transfers out |
(3,788 | ) | 3,661 | (127 | ) | |||||||
Effect of exchange rate changes |
(27 | ) | | (27 | ) | |||||||
Business combination |
10,552 | (5,418 | ) | 5,134 | ||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 1,271,078 | ₩ | (1,195,394 | ) | ₩ | 75,684 | |||||
|
|
|
|
|
|
149
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||
Present value of defined benefit obligation |
Fair value of plan assets |
Net defined benefit liabilities |
||||||||||
Beginning |
₩ | 942,333 | ₩ | (858,610 | ) | ₩ | 83,723 | |||||
Current service cost |
172,857 | | 172,857 | |||||||||
Interest cost (income) |
33,282 | (30,321 | ) | 2,961 | ||||||||
Past service cost |
1,005 | | 1,005 | |||||||||
Gain or loss on settlement |
(4,244 | ) | | (4,244 | ) | |||||||
Remeasurements |
||||||||||||
Actuarial gains and losses by changes in demographic assumptions |
563 | | 563 | |||||||||
Actuarial gains and losses by changes in financial assumptions |
(62,793 | ) | | (62,793 | ) | |||||||
Actuarial gains and losses by experience adjustments |
7,066 | | 7,066 | |||||||||
Return on plan assets (excluding amounts included in interest income) |
| 1,096 | 1,096 | |||||||||
Contributions |
| (132,870 | ) | (132,870 | ) | |||||||
Payments from plans (settlement) |
(65,493 | ) | 65,212 | (281 | ) | |||||||
Payments from plans (benefit payments) |
(34,814 | ) | 34,772 | (42 | ) | |||||||
Payments from the Group |
(4,590 | ) | | (4,590 | ) | |||||||
Transfer in |
2,551 | (2,315 | ) | 236 | ||||||||
Transfers out |
(2,551 | ) | 2,314 | (237 | ) | |||||||
Effect of exchange rate changes |
(94 | ) | | (94 | ) | |||||||
Business combination |
117 | | 117 | |||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 985,195 | ₩ | (920,722 | ) | ₩ | 64,473 | |||||
|
|
|
|
|
|
The details of the net defined benefit liabilities as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Present value of defined benefit obligation |
₩ | 1,271,078 | ₩ | 985,195 | ||||
Fair value of plan assets |
(1,195,394 | ) | (920,722 | ) | ||||
|
|
|
|
|||||
Net Defined benefit liabilities |
₩ | 75,684 | ₩ | 64,473 | ||||
|
|
|
|
The details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Current service cost |
₩ | 163,997 | ₩ | 172,857 | ||||
Past service cost |
11 | 1,005 | ||||||
Gain or loss on settlement |
| (4,244 | ) | |||||
Net interest expenses of net defined benefit liabilities |
2,663 | 2,961 | ||||||
|
|
|
|
|||||
Post-employment benefits1 |
₩ | 166,671 | ₩ | 172,579 | ||||
|
|
|
|
1 | Post-employment benefits amounting to ₩971 million and ₩1,471 million for the years ended December 31, 2014 and 2013, respectively, are recognized as other operating expense in the statements of comprehensive income. |
150
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Remeasurements of the net defined benefit liabilities recognized as other comprehensive income for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Remeasurements |
||||||||
Return on plan assets (excluding amounts included in interest income) |
₩ | (12,576 | ) | ₩ | (1,096 | ) | ||
Actuarial gains and losses |
(118,817 | ) | 55,165 | |||||
Income tax effects |
31,799 | (13,085 | ) | |||||
|
|
|
|
|||||
Remeasurements after income tax |
₩ | (99,594 | ) | ₩ | 40,984 | |||
|
|
|
|
The details of fair value of plan assets as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Assets quoted in an active market |
Assets not quoted in an active market |
Total | ||||||||||
Cash and due from financial institutions |
₩ | | ₩ | 1,195,394 | ₩ | 1,195,394 | ||||||
|
|
|
|
|
|
|||||||
₩ | | ₩ | 1,195,394 | ₩ | 1,195,394 | |||||||
|
|
|
|
|
|
|||||||
(In millions of Korean won) | 2013 | |||||||||||
Assets quoted in an active market |
Assets not quoted in an active market |
Total | ||||||||||
Cash and due from financial institutions |
₩ | | ₩ | 915,584 | ₩ | 915,584 | ||||||
Repurchase agreements |
| 5,138 | 5,138 | |||||||||
|
|
|
|
|
|
|||||||
₩ | | ₩ | 920,722 | ₩ | 920,722 | |||||||
|
|
|
|
|
|
Key actuarial assumptions used as of December 31, 2014 and 2013, are as follows:
2014 | 2013 | |||
Discount rate (%) |
2.20 ~ 3.10 | 2.90 ~ 4.00 | ||
Salary increase rate (%) |
0.00 ~ 8.50 | 0.00 ~ 8.90 | ||
Turnover (%) |
0.00 ~ 32.00 | 0.00 ~ 32.00 |
Mortality assumptions are based on the 7th experience-based mortality table (retirement pension) of Korea Insurance Development Institute of 2012.
151
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions as of December 31, 2014, is as follows:
Effect on net defined benefit obligation | ||||||
Changes in principal assumption |
Increase in principal assumption |
Decrease in principal assumption | ||||
Discount rate (%) |
0.5 p. | 4.49 decrease | 4.77 increase | |||
Salary increase rate (%) |
0.5 p. | 4.39 increase | 4.27 decrease | |||
Turnover (%) |
0.5 p. | 0.53 decrease | 0.42 increase |
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations recognized on the statement of financial position.
Expected maturity analysis of undiscounted pension benefits as of December 31, 2014, is as follows:
(In millions of Korean won) | Up to 1 year |
1~2 years | 2~5 years | 5~10 years | Over 10 years |
Total | ||||||||||||||||||
Pension benefits |
₩ | 26,981 | ₩ | 87,525 | ₩ | 326,571 | ₩ | 902,146 | ₩ | 1,188,644 | ₩ | 2,531,867 |
The weighted average duration of the defined benefit obligation is 1.0 ~ 14.4 years.
Expected contribution to plan assets for periods after December 31, 2014, is estimated to be \195,236 million.
152
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
25. Other liabilities
The details of other liabilities as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Other financial liabilities |
||||||||
Other payables |
₩ | 4,712,587 | ₩ | 4,582,344 | ||||
Prepaid card and debit card |
19,578 | 18,527 | ||||||
Accrued expenses |
3,123,144 | 4,053,809 | ||||||
Financial guarantee liabilities |
13,237 | 11,797 | ||||||
Deposits for letter of guarantees and others |
351,041 | 108,786 | ||||||
Domestic exchange settlement credits |
128,739 | 998,928 | ||||||
Foreign exchanges settlement credits |
69,440 | 83,237 | ||||||
Borrowings from other business account |
40,383 | 7,911 | ||||||
Other payables from trust accounts |
2,548,577 | 2,423,675 | ||||||
Liability Incurred by agency relationship |
505,664 | 532,157 | ||||||
Account for agency businesses |
340,062 | 384,921 | ||||||
Dividend payables |
477 | 485 | ||||||
Other payables from factored receivables |
37,734 | 42,924 | ||||||
Others |
28,157 | 13,413 | ||||||
|
|
|
|
|||||
11,918,820 | 13,262,914 | |||||||
|
|
|
|
|||||
Other non-financial liabilities |
||||||||
Other payables |
72,370 | 44,982 | ||||||
Unearned revenue |
154,066 | 123,033 | ||||||
Accrued expenses |
208,226 | 191,513 | ||||||
Deferred revenue on credit card points |
115,658 | 117,659 | ||||||
Withholding taxes |
106,291 | 111,975 | ||||||
Insurance liabilities |
6,265,198 | 5,599,043 | ||||||
Separate account liabilities |
698,832 | 702,757 | ||||||
Others |
57,741 | 82,353 | ||||||
|
|
|
|
|||||
7,678,382 | 6,973,315 | |||||||
|
|
|
|
|||||
₩ | 19,597,202 | ₩ | 20,236,229 | |||||
|
|
|
|
26. Equity
26.1 Capital Stock
The details of outstanding shares of the Parent Company as of December 31, 2014 and 2013, are as follows:
Ordinary shares | ||||||||
2014 | 2013 | |||||||
Number of shares authorized |
1,000,000,000 | 1,000,000,000 | ||||||
Number of shares |
386,351,693 | 386,351,693 | ||||||
Par value per share |
₩ | 5,000 | ₩ | 5,000 | ||||
Share capital stock1 |
₩ | 1,931,758 | ₩ | 1,931,758 |
1 | In millions of Korean won. |
153
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
26.2 Capital surplus
The details of capital surplus as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Share premium |
₩ | 12,226,596 | ₩ | 12,226,596 | ||||
Loss on sale of treasury shares |
(568,544 | ) | (568,544 | ) | ||||
Other capital surplus |
4,196,458 | 4,196,553 | ||||||
|
|
|
|
|||||
₩ | 15,854,510 | ₩ | 15,854,605 | |||||
|
|
|
|
26.3 Accumulated other comprehensive income
The details of accumulated other comprehensive income as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Remeasurements of net defined benefit liabilities |
₩ | (110,814 | ) | ₩ | (12,523 | ) | ||
Exchange differences on translating foreign operations |
(12,153 | ) | (29,433 | ) | ||||
Change in value of available-for-sale financial assets |
680,900 | 430,976 | ||||||
Change in value of held-to-maturity financial assets |
3,823 | 4,904 | ||||||
Shares of other comprehensive income of associates |
(89,303 | ) | (57,097 | ) | ||||
Cash flow hedges |
(10,774 | ) | (515 | ) | ||||
|
|
|
|
|||||
₩ | 461,679 | ₩ | 336,312 | |||||
|
|
|
|
26.4 Retained earnings
The details of retained earnings as of December 31, 2014 and 2013, consist of:
(In millions of Korean won) | 2014 | 2013 | ||||||
Legal reserves1 |
₩ | 208,221 | ₩ | 188,638 | ||||
Voluntary reserves |
982,000 | 982,000 | ||||||
Unappropriated retained earnings |
7,876,924 | 6,359,518 | ||||||
|
|
|
|
|||||
₩ | 9,067,145 | ₩ | 7,530,156 | |||||
|
|
|
|
1 | With respect to the allocation of net profit earned in a fiscal term, the Parent Company must set aside in its legal reserve an amount equal to at least 10% of its net income after tax as reported in the separate statement of comprehensive income each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its share capital in accordance with Article 53 of the Financial Holding Company Act. The reserve is not available for the payment of cash dividends, but may be transferred to share capital, or used to reduce accumulated deficit. |
154
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Regulatory Reserve for Credit Losses
Measurement and Disclosure of Regulatory Reserve for Credit Losses are required in accordance with Articles 26 through 28 of Supervisory Regulations on Financial Holding Companies.
The details of the regulatory reserve for credit losses as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Regulatory reserve for credit losses attributable to: |
||||||||
Shareholders of the Parent Company |
₩ | 2,456,352 | ₩ | 2,279,905 | ||||
Non-controlling interests |
16,808 | | ||||||
|
|
|
|
|||||
₩ | 2,473,160 | ₩ | 2,279,905 | |||||
|
|
|
|
The adjustments to the regulatory reserve for credit losses as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won, except earnings per share) | 2014 | 2013 | ||||||
Provision(reversal) of regulatory reserve for credit losses1 |
₩ | 167,694 | ₩ | 133,755 | ||||
Adjusted profit after provision(reversal) of regulatory reserve for credit losses2 |
1,233,028 | 1,137,747 | ||||||
Adjusted basic earnings per share after provision (reversal) of regulatory reserve for credit losses2 |
3,191 | 2,945 | ||||||
Adjusted diluted earnings per share after provision (reversal) of regulatory reserve for credit losses2 |
3,178 | 2,932 |
1 | Excluding the ₩8,753 million increase in regulatory reserve for credit losses due to the business combination of KB Capital Co., Ltd. |
2 | Adjusted profit after provision(reversal) of regulatory reserve for credit losses is not in accordance with K-IFRS and calculated on the assumption that provision(reversal) of regulatory reserve for credit losses before income tax is adjusted to the profit. |
155
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
27. Net Interest Income
The details of interest income and interest expense for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Interest income |
||||||||
Due from financial institutions |
₩ | 190,302 | ₩ | 146,105 | ||||
Loans |
10,168,304 | 10,778,258 | ||||||
Financial investments |
||||||||
Available-for-sale financial assets |
571,755 | 694,218 | ||||||
Held-to-maturity financial assets |
548,361 | 574,586 | ||||||
Other |
156,574 | 163,763 | ||||||
|
|
|
|
|||||
11,635,296 | 12,356,930 | |||||||
|
|
|
|
|||||
Interest expenses |
||||||||
Deposits |
3,845,468 | 4,279,153 | ||||||
Debts |
265,773 | 289,652 | ||||||
Debentures |
1,032,111 | 1,190,446 | ||||||
Other |
76,169 | 74,847 | ||||||
|
|
|
|
|||||
5,219,521 | 5,834,098 | |||||||
|
|
|
|
|||||
Net interest income |
₩ | 6,415,775 | ₩ | 6,522,832 | ||||
|
|
|
|
Interest income recognized on impaired loans is ₩ 108,968 million (2013: ₩ 127,120 million) for the year ended December 31, 2014. Interest income recognized on impaired financial investments is ₩ 242 million (2013: ₩ 569 million) for the year ended December 31, 2014.
156
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
28. Net Fee and Commission income
The details of fee and commission income, and fee and commission expense for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Fee and commission income |
||||||||
Banking activity fees |
₩ | 167,452 | ₩ | 167,507 | ||||
Lending activity fees |
74,133 | 90,413 | ||||||
Credit card related fees and commissions |
1,106,601 | 1,126,944 | ||||||
Debit card related fees and commissions |
291,723 | 255,742 | ||||||
Agent activity fees |
158,022 | 207,036 | ||||||
Trust and other fiduciary fees |
230,839 | 160,521 | ||||||
Fund management related fees |
89,264 | 93,494 | ||||||
Guarantee fees |
29,811 | 34,173 | ||||||
Foreign currency related fees |
96,018 | 102,047 | ||||||
Commissions from transfer agent services |
148,583 | 177,793 | ||||||
Other business account commission on consignment |
25,311 | 29,799 | ||||||
Securities brokerage fees |
68,249 | 68,158 | ||||||
Lease fee |
16,050 | | ||||||
Other |
164,129 | 143,738 | ||||||
|
|
|
|
|||||
2,666,185 | 2,657,365 | |||||||
|
|
|
|
|||||
Fee and commission expense |
||||||||
Trading activity related fees1 |
7,938 | 9,358 | ||||||
Lending activity fees |
9,958 | 18,791 | ||||||
Credit card related fees and commissions |
979,913 | 934,114 | ||||||
Outsourcing related fees |
76,604 | 74,516 | ||||||
Foreign currency related fees |
12,812 | 12,561 | ||||||
Management fees of written-off loans |
9,853 | 4,065 | ||||||
Other |
186,378 | 124,721 | ||||||
|
|
|
|
|||||
1,283,456 | 1,178,126 | |||||||
|
|
|
|
|||||
Net fee and commission income |
₩ | 1,382,729 | ₩ | 1,479,239 | ||||
|
|
|
|
1 | The fees from financial assets/liabilities at fair value through profit or loss. |
157
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
29. Net gains or losses on financial assets/liabilities at fair value through profit or loss
29.1 Net gains or losses on financial instruments held for trading
Net gain or loss from financial instruments held for trading includes interest income, dividend income and gains or losses arising from changes in the fair values, sales and redemptions. The details for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Gains related to financial instruments held for trading |
||||||||
Financial assets held for trading |
||||||||
Debt securities |
₩ | 471,048 | ₩ | 340,601 | ||||
Equity securities |
68,024 | 109,698 | ||||||
|
|
|
|
|||||
539,072 | 450,299 | |||||||
|
|
|
|
|||||
Derivatives held for trading |
||||||||
Interest rate |
1,327,839 | 1,090,262 | ||||||
Currency |
1,919,287 | 2,524,173 | ||||||
Stock or stock index |
153,863 | 218,509 | ||||||
Commodity |
568 | 1,336 | ||||||
Other |
6,894 | 20,825 | ||||||
|
|
|
|
|||||
3,408,451 | 3,855,105 | |||||||
|
|
|
|
|||||
Financial liabilities held for trading |
35,645 | 95,382 | ||||||
|
|
|
|
|||||
Other financial instruments |
47 | 70 | ||||||
|
|
|
|
|||||
₩ | 3,983,215 | ₩ | 4,400,856 | |||||
|
|
|
|
|||||
Losses related to financial instruments held for trading |
||||||||
Financial assets held for trading |
||||||||
Debt securities |
₩ | 38,888 | ₩ | 118,362 | ||||
Equity securities |
85,808 | 81,733 | ||||||
|
|
|
|
|||||
124,696 | 200,095 | |||||||
|
|
|
|
|||||
Derivatives held for trading |
||||||||
Interest rate |
1,411,540 | 1,076,647 | ||||||
Currency |
1,796,605 | 2,007,454 | ||||||
Stock or stock index |
101,267 | 224,019 | ||||||
Commodity |
547 | 182 | ||||||
Other |
841 | 2,343 | ||||||
|
|
|
|
|||||
3,310,800 | 3,310,645 | |||||||
|
|
|
|
|||||
Financial liabilities held for trading |
97,621 | 110,114 | ||||||
|
|
|
|
|||||
Other financial instruments |
50 | 29 | ||||||
|
|
|
|
|||||
₩ | 3,533,167 | ₩ | 3,620,883 | |||||
|
|
|
|
|||||
Net gains or losses on financial instruments held for trading |
₩ | 450,048 | ₩ | 779,973 | ||||
|
|
|
|
158
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
29.2 Net gains or losses on financial instruments designated at fair value through profit or loss
Net gain or loss from financial instruments designated at fair value through profit or loss includes interest income, dividend income and gains or losses arising from changes in the fair values, sales and redemptions. The details for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Gains related to financial instruments designated at fair value through profit or loss |
||||||||
Financial assets designated at fair value through profit or loss |
₩ | 28,496 | ₩ | 23,760 | ||||
Financial liabilities designated at fair value through profit or loss |
34,468 | 20,846 | ||||||
|
|
|
|
|||||
62,964 | 44,606 | |||||||
|
|
|
|
|||||
Losses related to financial instruments designated at fair value through profit or loss |
||||||||
Financial assets designated at fair value through profit or loss |
22,521 | 14,754 | ||||||
Financial liabilities designated at fair value through profit or loss |
51,293 | 53,003 | ||||||
|
|
|
|
|||||
73,814 | 67,757 | |||||||
|
|
|
|
|||||
Net gains or losses on financial instruments designated at fair value through profit or loss |
₩ | (10,850 | ) | ₩ | (23,151 | ) | ||
|
|
|
|
30. Other operating income and expenses
The details of other operating income and expenses for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Other operating income |
||||||||
Revenue related to available-for-sale financial assets |
||||||||
Gains on redemption of available-for-sale financial assets |
| 867 | ||||||
Gains on sale of available-for-sale financial assets |
91,925 | 189,011 | ||||||
Reversal for Impairment on available-for-sale financial assets |
260 | | ||||||
|
|
|
|
|||||
92,185 | 189,878 | |||||||
|
|
|
|
|||||
Revenue related to available-for-sale held-to-maturity investments |
||||||||
Gains on sale of available-for- sale held-to-maturity investments |
1,668 | | ||||||
|
|
|
|
|||||
1,668 | | |||||||
|
|
|
|
|||||
Gains on foreign exchange transactions |
1,490,797 | 1,387,450 | ||||||
Income related to insurance |
1,215,031 | 1,233,773 | ||||||
Dividend income |
78,298 | 64,441 | ||||||
Others |
221,745 | 261,886 | ||||||
|
|
|
|
|||||
3,099,724 | 3,137,428 | |||||||
|
|
|
|
159
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Other operating expenses |
||||||||
Expense related to available-for-sale financial assets |
||||||||
Loss on redemption of available-for-sale financial assets |
7 | 65 | ||||||
Loss on sale of available-for-sale financial assets |
7,381 | 25,157 | ||||||
Impairment on available-for-sale financial assets |
195,929 | 163,464 | ||||||
|
|
|
|
|||||
203,317 | 188,686 | |||||||
|
|
|
|
|||||
Expense related to held-to-maturity financial assets |
||||||||
Impairment on held-to-maturity financial assets |
| 5 | ||||||
|
|
|
|
|||||
| 5 | |||||||
|
|
|
|
|||||
Loss on foreign exchanges transactions |
1,456,918 | 1,667,335 | ||||||
Expense related to insurance |
1,352,384 | 1,358,830 | ||||||
Others |
1,128,014 | 1,227,337 | ||||||
|
|
|
|
|||||
4,140,633 | 4,442,193 | |||||||
|
|
|
|
|||||
Net other operating income (expenses) |
₩ | (1,040,909 | ) | ₩ | (1,304,765 | ) | ||
|
|
|
|
31. General and administrative expenses
31.1 General and administrative expenses
The details of general and administrative expenses for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Employee Benefits |
||||||||
Salaries and short-term employee benefits - salaries |
₩ | 1,700,120 | ₩ | 1,641,326 | ||||
Salaries and short-term employee benefits - others |
706,309 | 677,107 | ||||||
Post-employment benefits - defined benefit plans |
165,700 | 171,108 | ||||||
Post-employment benefits - defined contribution plans |
8,821 | 7,094 | ||||||
Termination benefits |
1,124 | 19,714 | ||||||
Share-based payments |
11,422 | 17,289 | ||||||
|
|
|
|
|||||
2,593,496 | 2,533,638 | |||||||
|
|
|
|
|||||
Depreciation and amortization |
261,056 | 286,756 | ||||||
|
|
|
|
|||||
Other general and administrative expenses |
||||||||
Rental expense |
297,656 | 290,886 | ||||||
Tax and dues |
150,443 | 141,274 | ||||||
Communication |
38,661 | 55,549 | ||||||
Electricity and utilities |
27,988 | 26,315 | ||||||
Publication |
19,642 | 19,259 | ||||||
Repairs and maintenance |
16,892 | 14,615 | ||||||
Vehicle |
11,579 | 11,816 | ||||||
Travel |
5,489 | 5,722 | ||||||
Training |
17,362 | 19,498 | ||||||
Service fees |
106,403 | 104,210 | ||||||
Others |
463,027 | 474,026 | ||||||
|
|
|
|
|||||
1,155,142 | 1,163,170 | |||||||
|
|
|
|
|||||
₩ | 4,009,694 | ₩ | 3,983,564 | |||||
|
|
|
|
160
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
31.2 Share-based payments
31.2.1 Share options
The details of the share options as of December 31, 2014, are as follows:
(In number of shares) | ||||||||||||||
Grant date | Exercise period (Years) |
Granted shares1 |
Vesting conditions | |||||||||||
Series 22 |
2007.02.08 | 8 | 855,000 | Service period: 1, 3 years | ||||||||||
Series 23 |
2007.03.23 | 8 | 30,000 | Service period: 3 years | ||||||||||
|
|
|||||||||||||
885,000 | ||||||||||||||
|
|
1 | Granted shares represent the total number of shares initially granted to directors and employees whose options have not been exercised at the end of the reporting period. |
The changes in the number of granted share options and the weighted average exercise price for the years ended December 31, 2014 and 2013, are as follows:
(In Korean won, except shares) | ||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||
Number of granted shares | Number of exercisable |
Exercise price per |
Remaining contractual |
|||||||||||||||||||||
Beginning | Expired | Ending | shares | share | life(Years) | |||||||||||||||||||
Series 19 |
751,651 | 751,651 | | | | | ||||||||||||||||||
Series 20 |
25,613 | 25,613 | | | | | ||||||||||||||||||
Series 21 |
18,987 | 18,987 | | | | | ||||||||||||||||||
Series 22 |
657,498 | | 657,498 | 657,498 | 77,100 | 0.11 | ||||||||||||||||||
Series 23 |
15,246 | | 15,246 | 15,246 | 84,500 | 0.22 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
1,468,995 | 796,251 | 672,744 | 672,744 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Weighted average exercise price |
₩ | 77,235 | ₩ | 77,207 | ₩ | 77,268 | ₩ | 77,268 |
161
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In Korean won, except shares) | ||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||
Number of granted shares | Number of exercisable |
Exercise price per |
Remaining contractual |
|||||||||||||||||||||
Beginning | Expired | Ending | shares | share | life(Years) | |||||||||||||||||||
Series 15-1 |
125,362 | 125,362 | | | | | ||||||||||||||||||
Series 15-2 |
440,928 | 440,928 | | | | | ||||||||||||||||||
Series 17 |
29,441 | 29,441 | | | | | ||||||||||||||||||
Series 18 |
7,212 | 7,212 | | | | | ||||||||||||||||||
Series 19 |
751,651 | | 751,651 | 751,651 | 77,063 | 0.23 | ||||||||||||||||||
Series 20 |
25,613 | | 25,613 | 25,613 | 81,900 | 0.32 | ||||||||||||||||||
Series 21 |
18,987 | | 18,987 | 18,987 | 76,600 | 0.82 | ||||||||||||||||||
Series 22 |
657,498 | | 657,498 | 657,498 | 77,100 | 1.11 | ||||||||||||||||||
Series 23 |
15,246 | | 15,246 | 15,246 | 84,500 | 1.22 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
2,071,938 | 602,943 | 1,468,995 | 1,468,995 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Weighted average exercise price |
₩ | 68,909 | ₩ | 48,625 | ₩ | 77,235 | ₩ | 77,235 |
The fair value of each option granted is estimated using a Black-Scholes option pricing model based on the assumptions in the table below:
(In Korean won) | ||||||||||||||||||||||||||||
Share price |
Weighted average exercise price |
Expected volatility (%) |
Options (Years) |
Expected dividends |
Risk free interest rate (%) |
Fair value | ||||||||||||||||||||||
Series 22 (Directors) |
₩ | 38,200 | ₩ | 77,100 | 11.15 | 0.05 | ₩ | 32 | 2.07 | | ||||||||||||||||||
Series 22 (Employees) |
38,200 | 77,100 | 11.15 | 0.05 | 32 | 2.07 | | |||||||||||||||||||||
Series 23 (Non-executive directors) |
38,200 | 84,500 | 8.01 | 0.11 | 67 | 2.07 | |
The options expected life is separately estimated for employees and directors using actual historical behavior and projected future behavior to reflect the effects of expected early exercise. Expected volatility is based on the historical volatility of the share price over the most recent period that is generally commensurate with the expected term of the option. To reflect the changes in exercise price which is indexed to the sum of the major competitors total market capitalization, cross volatility is used in calculating the expected volatility.
162
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
31.2.2 Share Grants
The Group changed the scheme of share-based payment from share options to share grants in November 2007. The share grant award program is an incentive plan that sets, on grant date, the maximum amount of shares that can be awarded. Actual shares granted at the end of the vesting period is determined in accordance with achievement of pre-specified targets over the vesting period.
The details of the share grants as of December 31, 2014, are as follows:
(In number of shares) Share grants |
Grant date | Number of granted |
Vesting conditions | |||||||
(KB Financial Group Inc.) |
|
|||||||||
Series 4 |
2010.07.13 | 180,707 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,3 | |||||||
Series 8 |
2012.01.01 | 13,471 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,4 | |||||||
Series 9 |
2013.07.17 | 82,699 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,4 | |||||||
Series 10 |
2014.01.01 | 37,732 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,4 | |||||||
Series 11 |
2013.07.13 | 69,892 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,3 | |||||||
Deferred grant in 2010 |
| 6,583 | Satisfied | |||||||
Deferred grant in 2011 |
| 1,435 | Satisfied | |||||||
Deferred grant in 2012 |
| 7,975 | Satisfied | |||||||
Deferred grant in 2013 |
| 2,617 | Satisfied | |||||||
|
|
|||||||||
403,111 | ||||||||||
|
|
|||||||||
(Kookmin Bank) |
||||||||||
Series 41 |
2012.08.02 | 23,521 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,5 | |||||||
Series 43 |
2012.11.26 | 13,918 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,5 | |||||||
Series 44 |
2013.01.01 | 17,242 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,5 | |||||||
Series 45 |
2013.01.01 | 9,698 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,5 | |||||||
Series 46 |
2013.01.01 | 103,440 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,5 | |||||||
Series 48 |
2013.07.23 | 74,666 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 |
163
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Series 49 |
2013.07.24 | 101,828 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 50 |
2013.07.24 | 82,926 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 51 |
2013.07.25 | 9,899 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 52 |
2013.08.01 | 10,278 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 53 |
2013.07.19 | 69,256 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,7 | |||||
Series 54 |
2013.07.23 | 26,689 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,7 | |||||
Series 55 |
2014.01.03 | 11,060 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,8 | |||||
Series 56 |
2013.12.30 | 17,798 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 57 |
2014.01.01 | 44,265 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 58 |
2014.01.01 | 78,700 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Series 59 |
2014.08.26 | 9,106 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 2,6 | |||||
Deferred grant in 2010 |
| 171 | Satisfied | |||||
Deferred grant in 2011 |
| 8,454 | Satisfied | |||||
Deferred grant in 2012 |
| 31,348 | Satisfied | |||||
Deferred grant in 2013 |
| 92,316 | Satisfied | |||||
|
|
|||||||
836,579 | ||||||||
|
|
|||||||
(Other subsidiaries) |
||||||||
Share granted in 2010 |
3,485 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 9 | ||||||
Share granted in 2011 |
7,648 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 9 | ||||||
Share granted in 2012 |
63,976 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 9 |
164
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Share granted in 2013 |
104,394 | Services fulfillment, Achievements of targets on the basis of market and non-market performance9 | ||||||
Share granted in 2014 |
82,759 | Services fulfillment, Achievements of targets on the basis of market and non-market performance 9 | ||||||
|
|
|||||||
262,262 | ||||||||
|
|
|||||||
1,501,952 | ||||||||
|
|
1 | Granted shares represent the total number of shares initially granted to directors and employees at the end of reporting period. |
2 | Certain portion of the granted shares is compensated over a maximum period of three years. |
3 | The 37.5%, 37.5% and 25% of the number of certain granted shares to be compensated are determined based on the accomplishment of targeted relative TSR, targeted EPS and qualitative indicators, respectively. The 30%, 30% and 40% of the number of other granted shares to be compensated are determined based on the accomplishment of the targeted Value-up Index, targeted financial results of the Company and its subsidiaries (Group) and targeted relative TSR, respectively. The 40%, 40% and 20% of the number of the remaining granted shares to be compensated are determined based on the accomplishment of the targeted relative TSR, the targeted EPS and qualitative indicators, respectively. |
4 | The 30%, 30% and 40% of the number of granted shares to be compensated are determined upon the accomplishment of the targeted Value-up Index, targeted financial results of the Company and its subsidiaries (Group) and the targeted relative TSR, respectively. However, 50% and 50% of certain granted shares will be compensated based on the accomplishment of the targeted Value-up Index and the accomplishment of targeted relative TSR. |
5 | The 40%, 30% and 30% of the number of granted shares to be compensated are determined based on the accomplishment of the targeted relative TSR, the targeted Value-up Index and the targeted financial results of the Bank, respectively. |
6 | The 30%, 30% and 40% of the number of granted shares to be compensated are determined upon the accomplishment of the targeted financial results of the Bank, the targeted relative TSR and the targeted Value-up Index, respectively. However, as for certain number of shares, half of the number of granted shares to be compensated is determined based on the accomplishment of the targeted relative TSR, while the other half is determined by the targeted Value-up Index. |
165
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
7 | The 30%, 45% and 25% of the number of granted shares to be compensated are determined based on the accomplishment of the targeted relative TSR, the ROA and the growth rate of total assets, respectively. |
8 | The number of granted shares to be compensated is not linked to performance, but fixed. |
9 | The 30%, 30% and 40% of the number of granted shares to be compensated are determined based on the accomplishment of the targeted Value-up Index, the respective subsidiaries performance and the targeted relative TSR, respectively. The 60% and 40% of the number of certain granted shares to be compensated is determined based on the accomplishment of the respective subsidiaries performance and the accomplishment of the targeted relative TSR, respectively. The 40%, 30% and 30% of the number of certain granted shares to be compensated is determined based on the accomplishment of the targeted Value-up Index, the respective subsidiaries performance and the targeted relative TSR, respectively. |
The share grant award program is an incentive plan that sets, on grant date, the maximum amount of shares that can be awarded. Actual shares granted at the end of the vesting period is determined in accordance with achievement of pre-specified targets over the vesting period.
166
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of share grants linked to short-term performance as of December 31, 2014, are as follows:
Grant date | Number of vested shares1 |
Vesting Conditions | ||||||||
(KB Financial Group Inc.) |
||||||||||
Share granted in 2010 |
2010.01.01 | 322 | Satisfied | |||||||
Share granted in 2011 |
2011.01.01 | 7,295 | Satisfied | |||||||
Share granted in 2012 |
2012.01.01 | 15,782 | Satisfied | |||||||
Share granted in 2013 |
2013.01.01 | 16,560 | Satisfied | |||||||
Share granted in 2014 |
2014.01.01 | 25,174 | Proportion to service period | |||||||
(Kookmin Bank) |
||||||||||
Share granted in 2010 |
2010.01.01 | 363 | Satisfied | |||||||
Share granted in 2011 |
2011.01.01 | 46,845 | Satisfied | |||||||
Share granted in 2012 |
2012.01.01 | 103,177 | Satisfied | |||||||
Share granted in 2013 |
2013.01.01 | 102,343 | Satisfied | |||||||
Share granted in 2014 |
2014.01.01 | 173,132 | Proportion to service period | |||||||
(Other subsidiaries) |
||||||||||
Share granted in 2013 |
2013.01.01 | 9,823 | Satisfied | |||||||
Share granted in 2014 |
2014.01.01 | 28,149 | Proportion to service period |
1 | The number of shares, which are exercisable, is determined by the results of performance. |
The share grants are settled over three years.
Share grants are measured at fair value using the Monte Carlo Simulation Model and assumptions used in determining the fair value as of December 31, 2014, are as follows:
Expected exercise period (Years) |
Risk free rate (%) |
Fair value (Market |
Fair value (Non-market |
|||||||||||||
Linked to long term performance |
|
|||||||||||||||
(KB Financial Group Inc.) |
||||||||||||||||
Series 4 |
0.00~1.53 | 2.07 | | 35,315~36,425 | ||||||||||||
Series 4-1 |
0.00~1.53 | 2.07 | | 35,315~36,425 | ||||||||||||
Series 4-2 |
0.00~1.00 | 2.07 | | 36,389~40,662 | ||||||||||||
Series 8 |
0.00~2.00 | 2.07 | | 36,389~40,662 | ||||||||||||
Series 9 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||||||||||
Series 9-1 |
0.00~3.00 | 2.07 | 39,437 | 36,389~38,111 | ||||||||||||
Series 9-2 |
1.00~4.00 | 2.07 | 33,363 | 35,653~36,835 | ||||||||||||
Series 9-3 |
0.00~3.00 | 2.07 | 39,223 | 36,389~38,111 | ||||||||||||
Series 9-4 |
0.00~3.00 | 2.07 | 37,036 | 36,389~38,111 | ||||||||||||
Series 10 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||||||||||
Series 10-1 |
1.00~4.00 | 2.07 | 32,645 | 35,653~36,835 | ||||||||||||
Series 10-2 |
1.00~4.00 | 2.07 | 33,110 | 35,653~36,835 | ||||||||||||
Series 11 |
1.53~4.53 | 2.08 | 35,335 | 36,639~36,858 | ||||||||||||
Deferred grant in 2010 |
0.00~1.00 | 2.07 | | 36,389~38,111 |
167
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Deferred grant in 2011 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||||||||
Deferred grant in 2012 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||||||||
Deferred grant in 2013 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||||||||
(Kookmin Bank) |
||||||||||||||
Series 41-1 |
0.00~3.00 | 2.07 | | 36,389~38,111 | ||||||||||
Series 41-2 |
0.00~3.00 | 2.07 | | 36,389~38,111 | ||||||||||
Series 43 |
0.00~3.00 | 2.07 | | 36,389~38,111 | ||||||||||
Series 44 |
0.00~2.00 | 2.07 | | 36,389~40,662 | ||||||||||
Series 45 |
0.00~3.00 | 2.07 | | 36,389~38,111 | ||||||||||
Series 46 |
0.00~3.00 | 2.07 | | 36,389~38,111 | ||||||||||
Series 48 |
0.56~4.00 | 2.07 | 35,029 | 36,389~36,835 | ||||||||||
Series 48-1 |
0.00~3.00 | 2.07 | 36,734 | 36,389~38,111 | ||||||||||
Series 48-2 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||||||||
Series 49 |
0.56~4.00 | 2.07 | 34,972 | 36,389~36,835 | ||||||||||
Series 49-1 |
0.65~4.00 | 2.07 | 34,906 | 36,389~36,835 | ||||||||||
Series 49-2 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||||||||
Series 50 |
0.56~4.00 | 2.07 | 34,972 | 36,389~36,835 | ||||||||||
Series 50-1 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||||||||
Series 51 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||||||||
Series 52 |
0.58~4.00 | 2.07 | 34,977 | 36,389~36,835 | ||||||||||
Series 53 |
0.00~2.68 | 2.07 | 38,284 | 36,317~40,991 | ||||||||||
Series 54 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||||||||
Series 55 |
2.01~5.01 | 2.08 | | 36,551~37,053 | ||||||||||
Series 56 |
0.00~3.00 | 2.07 | 32,595 | 36,389~36,835 | ||||||||||
Series 56-1 |
0.00~3.00 | 2.07 | 36,854 | 36,389~38,111 | ||||||||||
Series 57 |
1.00~4.00 | 2.07 | 32,645 | 36,389~36,835 | ||||||||||
Series 57-1 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||||||||
Series 58 |
1.00~4.00 | 2.07 | 32,645 | 36,389~36,835 | ||||||||||
Series 59 |
0.00~3.00 | 2.07 | 38,617 | 36,389~38,111 | ||||||||||
Grant deferred in 2012 |
0.00~1.00 | 2.07 | | 36,389~38,111 | ||||||||||
Grant deferred in 2013 |
0.00~2.00 | 2.07 | | 36,205~38,111 | ||||||||||
(Other subsidiaries) |
||||||||||||||
Share granted in 2012 |
0.00~0.54 | 2.07 | 0~21,928 | 35,968~38,617 | ||||||||||
Share granted in 2013 |
0.00~1.75 | 2.07~2.08 | 0~33,505 | 35,115~40,662 | ||||||||||
Share granted in 2014 |
1.00~2.67 | 2.07~2.10 | 30,801~33,312 | 34,676~36,835 | ||||||||||
Linked to short-term performance |
||||||||||||||
(KB Financial Group Inc.) |
||||||||||||||
Share granted in 2012 |
0.00~1.00 | 2.07 | | 36,389~40,662 | ||||||||||
Share granted in 2013 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||||||||
Share granted in 2014 |
1.00~3.00 | 2.07 | | 36,389~36,684 | ||||||||||
(Kookmin Bank) |
||||||||||||||
Share granted in 2012 |
0.00~1.00 | 2.07 | | 36,389~38,111 | ||||||||||
Share granted in 2013 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||||||||
Share granted in 2014 |
1.00~3.00 | 2.07 | | 36,389~38,111 | ||||||||||
(Other subsidiaries) |
||||||||||||||
Share granted in 2013 |
0.00~2.00 | 2.07 | | 36,389~38,111 | ||||||||||
Share granted in 2014 |
2.00~4.00 | 2.07 | | 36,498~36,835 |
168
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Expected volatility is based on the historical volatility of the share price over the most recent period that is generally commensurate with the expected term of the grant. And the current stock price of December 31, 2014, was used for the underlying asset price. Additionally, the average three-year historical dividend rate was used as the expected dividend rate.
As of December 31, 2014 and 2013, the accrued expenses related to share-based payments including share options and share grants amounted to ₩48,734 million and ₩48,423 million, respectively, and the compensation costs from share options and share grants amounting to ₩11,422 million and ₩17,289 million were incurred during the years ended December 31, 2014 and 2013, respectively. There is no intrinsic value of the vested share options as of December 31, 2014 and 2013.
32. Other non-operating income and expenses
The details of other non-operating income and expenses for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Other non-operating income |
||||||||
Gains of disposal in property and equipment |
₩ | 491 | ₩ | 819 | ||||
Rent received |
10,035 | 8,615 | ||||||
Others |
62,041 | 101,848 | ||||||
|
|
|
|
|||||
72,567 | 111,282 | |||||||
|
|
|
|
|||||
Other non-operating expenses |
||||||||
Losses of disposal in property and equipment |
1,297 | 928 | ||||||
Donation |
52,330 | 59,760 | ||||||
Restoration cost |
2,242 | 909 | ||||||
Others |
87,824 | 61,994 | ||||||
|
|
|
|
|||||
143,693 | 123,591 | |||||||
|
|
|
|
|||||
Net other non-operating income (expense) |
₩ | (71,126 | ) | ₩ | (12,309 | ) | ||
|
|
|
|
169
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
33. Income tax expenses
Income tax expense for the years ended December 31, 2014 and 2013, consist of:
(In millions of Korean won) | 2014 | 2013 | ||||||
Tax payable |
||||||||
Current tax expense |
₩ | 512,536 | ₩ | 569,449 | ||||
Adjustments recognized in the period for current tax of prior years |
(11,721 | ) | 75,938 | |||||
Changes in deferred income tax assets (liabilities) |
31,255 | (89,477 | ) | |||||
Income tax recognized directly in equity |
||||||||
Remeasurements of net defined benefit liabilities |
31,386 | (13,085 | ) | |||||
Change in value of available-for-sale financial assets |
(79,473 | ) | 7,942 | |||||
Change in value of held-to-maturity financial assets |
198 | (1,787 | ) | |||||
Share of other comprehensive income of associates |
(6 | ) | 9 | |||||
Cash flow hedges |
2,619 | (618 | ) | |||||
Others |
(480 | ) | (7,778 | ) | ||||
|
|
|
|
|||||
Tax expense |
₩ | 486,314 | ₩ | 540,593 | ||||
|
|
|
|
An analysis of the net profit before income tax and income tax expense for the years ended December 31, 2014 and 2013, follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Net profit before income tax |
₩ | 1,901,425 | ₩ | 1,815,291 | ||||
|
|
|
|
|||||
Tax at the applicable tax rate1 |
459,683 | 438,838 | ||||||
Non-taxable income |
(11,171 | ) | (17,716 | ) | ||||
Non-deductible expense |
14,916 | 33,489 | ||||||
Tax credit and tax exemption |
(1,192 | ) | (1,417 | ) | ||||
Temporary difference for which no deferred tax is recognized |
24,682 | 47,138 | ||||||
Deferred tax relating to changes in recognition and measurement |
(1,593 | ) | 2,828 | |||||
Income tax refund for tax of prior years |
(6,654 | ) | 30,329 | |||||
Income tax expense of overseas branch |
6,202 | 4,796 | ||||||
Effects from change in tax rate |
1,642 | (871 | ) | |||||
Others |
(201 | ) | 3,179 | |||||
|
|
|
|
|||||
Tax expense |
₩ | 486,314 | ₩ | 540,593 | ||||
|
|
|
|
|||||
Average effective tax rate (Income tax expense / Profit before tax) (%) |
25.58 | 29.78 |
1 | Applicable income tax rate for ₩200 million and below is 11%, for ₩200 million to ₩20 billion is 22% and for over ₩20 billion is 24.2% as of December 31, 2014 and 2013. |
170
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of current tax assets (income tax refund receivables) and current tax liabilities (income tax payables), as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Tax payables (receivables) before offsetting |
Offsetting | Tax payables (receivables) after offsetting |
||||||||||
Income tax refund receivables1 |
₩ | (693,018 | ) | ₩ | 693,018 | ₩ | | |||||
Income tax payables |
924,925 | (693,018 | ) | 231,907 | ||||||||
(In millions of Korean won) | 2013 | |||||||||||
Tax payables (receivables) before offsetting |
Offsetting | Tax payables (receivables) after offsetting |
||||||||||
Income tax refund receivables1,2 |
₩ | (99,524 | ) | ₩ | 82,057 | ₩ | (17,467 | ) | ||||
Income tax payables |
293,320 | (82,057 | ) | 211,263 |
1 | Excludes current tax assets of ₩306,313 million (2013: ₩329,443 million) by uncertain tax position, which do not qualify for offsetting. |
2 | Prepaid income tax expenses amounting to ₩17,467 million for KB Life Insurance Co.,Ltd, which separately paid tax in 2013, were reclassified from other assets into current income tax assets. |
34. Dividends
The dividends paid to the shareholders of the Parent Company in 2014 and 2013 were ₩193,176 million (₩500 per share) and ₩231,811 million (₩600 per share), respectively. The dividends to the shareholders of the Parent Company in respect of the year ended December 31, 2014, of ₩780 per share, amounting to total dividends of ₩301,354 million, is to be proposed at the annual general shareholders meeting on March 27, 2015. The Groups consolidated financial statements as of December 31, 2014, do not reflect this dividend payable.
171
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
35. Accumulated other comprehensive income
The details of accumulated other comprehensive income for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||
Beginning | Changes except for reclassification |
Reclassification to profit or loss |
Tax effect | Ending | ||||||||||||||||
Remeasurements of net defined benefit liabilities |
₩ | (12,523 | ) | ₩ | (129,677 | ) | ₩ | | ₩ | 31,386 | ₩ | (110,814 | ) | |||||||
Exchange differences on translating foreign operations |
(29,433 | ) | 17,280 | | | (12,153 | ) | |||||||||||||
Change in value of available-for-sale financial assets |
430,976 | 403,828 | (74,431 | ) | (79,473 | ) | 680,900 | |||||||||||||
Change in value of held-to-maturity financial assets |
4,904 | (1,276 | ) | (3 | ) | 198 | 3,823 | |||||||||||||
Shares of other comprehensive income of associates |
(57,097 | ) | (32,448 | ) | 248 | (6 | ) | (89,303 | ) | |||||||||||
Cash flow hedges |
(515 | ) | (7,452 | ) | (5,426 | ) | 2,619 | (10,774 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 336,312 | ₩ | 250,255 | ₩ | (79,612 | ) | ₩ | (45,276 | ) | ₩ | 461,679 | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(In millions of Korean won) | 2013 | |||||||||||||||||||
Beginning | Changes except for reclassification |
Reclassification to profit or loss |
Tax effect | Ending | ||||||||||||||||
Remeasurements of net defined benefit liabilities |
₩ | (53,507 | ) | ₩ | 54,069 | ₩ | | ₩ | (13,085 | ) | ₩ | (12,523 | ) | |||||||
Exchange differences on translating foreign operations |
(27,061 | ) | (2,372 | ) | | | (29,433 | ) | ||||||||||||
Change in value of available-for-sale financial assets |
426,354 | 198,798 | (202,118 | ) | 7,942 | 430,976 | ||||||||||||||
Change in value of held-to-maturity financial assets |
(1,225 | ) | 1,005 | 6,911 | (1,787 | ) | 4,904 | |||||||||||||
Shares of other comprehensive income of associates |
(47,286 | ) | (9,765 | ) | (55 | ) | 9 | (57,097 | ) | |||||||||||
Cash flow hedges |
(2,133 | ) | (2,991 | ) | 5,227 | (618 | ) | (515 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 295,142 | ₩ | 238,744 | ₩ | (190,035 | ) | ₩ | (7,539 | ) | ₩ | 336,312 | |||||||||
|
|
|
|
|
|
|
|
|
|
172
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
36. Earnings per share
36.1 Basic earnings per share
Basic earnings per share is calculated by dividing profit and loss attributable to ordinary equity holders of the Parent Company by the weighted average number of ordinary shares outstanding, during the years ended December 31, 2014 and 2013.
Weighted average number of ordinary shares outstanding:
(In number of shares) | 2014 | |||||||||||
Number of shares (a) |
Days outstanding (b) |
Total outstanding shares [(a) x (b)] |
||||||||||
Beginning (A) |
386,351,693 | 365 | 141,018,367,945 | |||||||||
|
|
|||||||||||
Weighted average number of ordinary shares outstanding [(B) =(A)/365] |
386,351,693 | |||||||||||
(In number of shares) | 2013 | |||||||||||
Number of shares (a) |
Days outstanding (b) |
Total outstanding shares [(a) x (b)] |
||||||||||
Beginning (A) |
386,351,693 | 365 | 141,018,367,945 | |||||||||
|
|
|||||||||||
Weighted average number of ordinary shares outstanding [(B) =(A)/365] |
386,351,693 |
Basic earnings per share:
(in Korean won and in number of shares) | 2014 | |||
Profit attributable to ordinary shares (C) |
₩ | 1,400,722,065,239 | ||
Weighted average number of ordinary shares outstanding (D) |
386,351,693 | |||
Basic earnings per share [(E)=(C)/(D)] |
₩ | 3,626 | ||
(in Korean won and in number of shares) | 2013 | |||
Profit attributable to ordinary shares (C) |
₩ | 1,271,502,597,550 | ||
Weighted average number of ordinary shares outstanding (D) |
386,351,693 | |||
Basic earnings per share [(E)=(C)/(D)] |
₩ | 3,291 |
36.2 Diluted earnings per share
Diluted earnings per share is calculated using the weighted average number of ordinary shares outstanding which is adjusted by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. The Groups dilutive potential ordinary shares include share grants.
173
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market share price of the Groups outstanding shares for the period) based on the monetary value of the subscription rights attached to the share options. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of share grants.
Adjusted profit for diluted earnings per share:
(In Korean won) | 2014 | |||
Profit attributable to ordinary shares |
₩ | 1,400,722,065,239 | ||
Adjustment |
| |||
|
|
|||
Adjusted profit for diluted earnings per share |
₩ | 1,400,722,065,239 | ||
|
|
(In Korean won) | 2013 | |||
Profit attributable to ordinary shares |
₩ | 1,271,502,597,550 | ||
Adjustment |
| |||
|
|
|||
Adjusted profit for diluted earnings per share |
₩ | 1,271,502,597,550 | ||
|
|
Adjusted weighted average number of ordinary shares outstanding to calculate diluted earnings per share:
(in number of shares) | 2014 | 2013 | ||||||
Weighted average number of ordinary shares outstanding |
386,351,693 | 386,351,693 | ||||||
Adjustment |
||||||||
Share grants |
1,589,706 | 1,639,306 | ||||||
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share |
387,941,399 | 387,990,999 |
Diluted earnings per share:
(in Korean won and in number of shares) | 2014 | |||
Adjusted profit for diluted earnings per share |
₩ | 1,400,722,065,239 | ||
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share |
387,941,399 | |||
Diluted earnings per share |
₩ | 3,611 |
174
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(in Korean won and in number of shares) | 2013 | |||
Adjusted profit for diluted earnings per share |
₩ | 1,271,502,597,550 | ||
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share |
387,990,999 | |||
Diluted earnings per share |
₩ | 3,277 |
37. Insurance Contracts
37.1 Insurance liabilities
The details of insurance liabilities presented within other liabilities as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Individual insurance |
||||||||
Pure Endowment insurance |
₩ | 4,334,823 | ₩ | 3,861,364 | ||||
Death insurance |
112,858 | 85,123 | ||||||
Joint insurance |
1,800,468 | 1,634,590 | ||||||
Group insurance |
1,417 | 1,339 | ||||||
Other |
15,632 | 16,627 | ||||||
|
|
|
|
|||||
₩ | 6,265,198 | ₩ | 5,599,043 | |||||
|
|
|
|
The changes in insurance liabilities for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Individual insurance | Group insurance |
Others1 | Total | |||||||||||||||||||||
Pure Endowment insurance |
Death insurance |
Joint insurance |
||||||||||||||||||||||
Beginning |
₩ | 3,861,364 | ₩ | 85,123 | ₩ | 1,634,590 | ₩ | 1,339 | ₩ | 16,627 | ₩ | 5,599,043 | ||||||||||||
Provision(Reversal) |
473,459 | 27,735 | 165,878 | 78 | (995 | ) | 666,155 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Ending |
₩ | 4,334,823 | ₩ | 112,858 | ₩ | 1,800,468 | ₩ | 1,417 | ₩ | 15,632 | ₩ | 6,265,198 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Individual insurance | Group insurance |
Others1 | Total | |||||||||||||||||||||
Pure Endowment insurance |
Death insurance |
Joint insurance |
||||||||||||||||||||||
Beginning |
₩ | 3,281,701 | ₩ | 63,821 | ₩ | 1,470,755 | ₩ | 1,285 | ₩ | 19,604 | ₩ | 4,837,166 | ||||||||||||
Provision(Reversal) |
579,663 | 21,302 | 163,835 | 54 | (2,977 | ) | 761,877 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Ending |
₩ | 3,861,364 | ₩ | 85,123 | ₩ | 1,634,590 | ₩ | 1,339 | ₩ | 16,627 | ₩ | 5,599,043 | ||||||||||||
|
|
|
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|
|
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|
|
|
1 | Consists of policyholders profit dividend reserve, reserve for compensation for losses on dividend-paying insurance contracts and others. |
175
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
37.2 Insurance assets
The details of insurance assets presented within other assets as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Reinsurance assets |
₩ | 4,482 | ₩ | 5,245 | ||||
Deferred acquisition costs |
123,011 | 151,909 | ||||||
|
|
|
|
|||||
₩ | 127,493 | ₩ | 157,154 | |||||
|
|
|
|
The changes in reinsurance assets for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Beginning |
₩ | 5,245 | ₩ | 3,751 | ||||
Increase (decrease) |
(763 | ) | 1,494 | |||||
|
|
|
|
|||||
Ending |
₩ | 4,482 | ₩ | 5,245 | ||||
|
|
|
|
The changes in deferred acquisition costs for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Beginning |
₩ | 151,909 | ₩ | 151,925 | ||||
Increase |
52,386 | 102,702 | ||||||
Amortization |
(81,284 | ) | (102,718 | ) | ||||
|
|
|
|
|||||
Ending |
₩ | 123,011 | ₩ | 151,909 | ||||
|
|
|
|
37.3 Insurance premiums and reinsurance
The details of insurance premiums for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Pure endowment insurance |
Death insurance |
Joint insurance |
Group insurance |
Others | Total | |||||||||||||||||||
Insurance premiums earned |
₩ | 756,697 | ₩ | 55,035 | ₩ | 350,076 | ₩ | 5,271 | ₩ | 37,481 | ₩ | 1,204,560 | ||||||||||||
Reinsurance premiums paid |
(502 | ) | (2,674 | ) | (306 | ) | (2,366 | ) | (7,072 | ) | (12,920 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net premiums earned |
₩ | 756,195 | ₩ | 52,361 | ₩ | 349,770 | ₩ | 2,905 | ₩ | 30,409 | ₩ | 1,191,640 | ||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
176
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Pure endowment insurance |
Death insurance |
Joint insurance |
Group insurance |
Others | Total | |||||||||||||||||||
Insurance premiums earned |
₩ | 795,031 | ₩ | 41,389 | ₩ | 336,540 | ₩ | 5,019 | ₩ | 42,474 | ₩ | 1,220,453 | ||||||||||||
Reinsurance premiums paid |
(480 | ) | (3,854 | ) | (278 | ) | (2,177 | ) | (7,302 | ) | (14,091 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net premiums earned |
₩ | 794,551 | ₩ | 37,535 | ₩ | 336,262 | ₩ | 2,842 | ₩ | 35,172 | ₩ | 1,206,362 | ||||||||||||
|
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|
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|
|
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|
|
|
|
The details of reinsurance transactions for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Reinsurance expense |
Reinsurance revenue | |||||||||||||||
Reinsurance premium paid |
Reinsurance claims |
Reinsurance commission |
Total | |||||||||||||
Individual |
₩ | 3,482 | ₩ | 2,461 | ₩ | 555 | ₩ | 3,016 | ||||||||
Group |
2,366 | 2,652 | 47 | 2,699 | ||||||||||||
Others |
7,072 | 4,756 | | 4,756 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 12,920 | ₩ | 9,869 | ₩ | 602 | ₩ | 10,471 | |||||||||
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||
Reinsurance expense |
Reinsurance revenue | |||||||||||||||
Reinsurance premium paid |
Reinsurance claims |
Reinsurance commission |
Total | |||||||||||||
Individual |
₩ | 4,612 | ₩ | 3,850 | ₩ | 466 | ₩ | 4,316 | ||||||||
Group |
2,177 | 2,124 | 220 | 2,344 | ||||||||||||
Others |
7,302 | 6,660 | | 6,660 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 14,091 | ₩ | 12,634 | ₩ | 686 | ₩ | 13,320 | |||||||||
|
|
|
|
|
|
|
|
177
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Insurance expenses for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Pure endowment insurance |
Death insurance |
Joint insurance |
Group insurance |
Others | Total | |||||||||||||||||||
Insurance expense |
₩ | 6,078 | ₩ | 3,006 | ₩ | 10,837 | ₩ | 5,006 | ₩ | 4,757 | ₩ | 29,684 | ||||||||||||
Dividend expense |
417 | 21 | | | | 438 | ||||||||||||||||||
Refund expense |
346,740 | 7,588 | 201,029 | 238 | | 555,595 | ||||||||||||||||||
Provision(Reversal) |
473,459 | 27,735 | 165,878 | 78 | (995 | ) | 666,155 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
826,694 | 38,350 | 377,744 | 5,322 | 3,762 | 1,251,872 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Reinsurance claims |
(202 | ) | (2,205 | ) | (55 | ) | (2,651 | ) | (4,756 | ) | (9,869 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net insurance expense |
₩ | 826,492 | ₩ | 36,145 | ₩ | 377,689 | ₩ | 2,671 | ₩ | (994 | ) | ₩ | 1,242,003 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Pure endowment insurance |
Death insurance |
Joint insurance |
Group insurance |
Others | Total | |||||||||||||||||||
Insurance expense |
₩ | 6,557 | ₩ | 2,287 | ₩ | 1,085 | ₩ | 4,922 | ₩ | 5,645 | ₩ | 20,496 | ||||||||||||
Dividend expense |
295 | 13 | | | | 308 | ||||||||||||||||||
Refund expense |
259,710 | 5,257 | 185,286 | 351 | | 450,604 | ||||||||||||||||||
Provision |
579,663 | 21,302 | 163,835 | 54 | (2,977 | ) | 761,877 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
846,225 | 28,859 | 350,206 | 5,327 | 2,668 | 1,233,285 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Reinsurance claims |
(204 | ) | (3,592 | ) | (54 | ) | (2,124 | ) | (6,660 | ) | (12,634 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net insurance expense |
₩ | 846,021 | ₩ | 25,267 | ₩ | 350,152 | ₩ | 3,203 | ₩ | (3,992 | ) | ₩ | 1,220,651 | |||||||||||
|
|
|
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|
|
|
|
|
|
|
|
37.4 Insurance risk
Summary of insurance risk
Insurance risk is the risk of loss arising from the actual risk at the time of claims exceeding the estimated risk at the time of underwriting. Insurance risk is classified by insurance price risk and policy reserve risk.
Insurance price risk is the risk of loss arising from differences between premiums from policyholders and actual claims paid.
Policy reserve risk is the risk of loss arising from differences between policy reserves the Group holds and actual claims to be paid.
Concentration of insurance risk and reinsurance policy
The Group uses reinsurance with the intent to expand the ability of underwriting insurance contracts through mitigating the exposure to insurance risk, and generates synergy by joint development of products, management discipline and collecting information on foreign markets.
178
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The Group cedes reinsurance for mortality, illness and other risks arising from insurance contracts where the Group has little experience for a necessary period of time required to accumulate experience.
The Groups Reinsurance is ceded through the following process:
i. | In the decision-making process of launching a new product, the Group makes a decision on ceding reinsurance. Subsequently, a reinsurer is selected through bidding, agreements with the relevant departments and final approval by the executive management. |
ii. | The reinsurance department analyzes the object of reinsurance, the maximum limit of reinsurance and the loss ratio with the relevant departments. |
The characteristic and exposure of insurance price risk
The insurance risk of a life insurance company is measured by insurance price risk. As the life insurance coverage is in the form of a fixed payment, the fluctuation of policy reserve is small and the period from insured event to claims payment is not long. The policy reserve risk is managed by assessments of adequacy of the policy reserve.
The Group measures the exposure of insurance price risk as the shortfall of the risk premiums received compared to the claims paid on all insurance contracts for the last one year preceding the reporting date.
The maximum exposure of premium risk as of December 31, 2014 and 2013, follows:
(In millions of Korean won) | 2014 | |||||||
Before reinsurance mitigation |
After reinsurance mitigation |
|||||||
Mortality |
₩ | 10,736 | ₩ | 6,321 | ||||
Disability |
950 | 545 | ||||||
Hospitalization |
767 | 490 | ||||||
Operation and diagnosis |
1,516 | 998 | ||||||
Actual losses for medical expense |
279 | 89 | ||||||
Others |
232 | 189 | ||||||
|
|
|
|
|||||
₩ | 14,480 | ₩ | 8,632 | |||||
|
|
|
|
179
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||
Before reinsurance mitigation |
After reinsurance mitigation |
|||||||
Mortality |
₩ | 10,969 | ₩ | 5,430 | ||||
Disability |
660 | 370 | ||||||
Hospitalization |
861 | 600 | ||||||
Operation and diagnosis |
1,731 | 1,164 | ||||||
Actual losses for medical expense |
243 | 132 | ||||||
Others |
89 | 21 | ||||||
|
|
|
|
|||||
₩ | 14,553 | ₩ | 7,717 | |||||
|
|
|
|
Average ratios of claims paid per risk premium received on the basis of exposure before mitigation for the past three years as of December 31, 2014 and 2013, were 70% and 69%, respectively.
The exposure of market risk arising from embedded derivatives included in host insurance contracts as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||||||||
Policyholders reserve |
Guarantee reserve |
Policyholders reserve |
Guarantee reserve |
|||||||||||||
Variable annuity |
₩ | 535,749 | ₩ | 5,153 | ₩ | 540,797 | ₩ | 4,058 | ||||||||
Variable universal |
110,766 | 458 | 132,413 | 135 | ||||||||||||
Others |
26,573 | 118 | 1,443 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 673,088 | ₩ | 5,729 | ₩ | 674,653 | ₩ | 4,193 | |||||||||
|
|
|
|
|
|
|
|
Premium reserves and unearned premium reserves classified based on each residual maturity as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
Less than 3 years |
3-5 years |
5-10 years |
10-15 years |
15-20 years |
20 years or more |
Total | ||||||||||||||||||||||
Premium reserves |
₩ | 381,413 | ₩ | 548,410 | ₩ | 1,385,847 | ₩ | 352,039 | ₩ | 440,581 | ₩ | 3,076,824 | ₩ | 6,185,114 | ||||||||||||||
Unearned premium reserves |
690 | 1 | 2 | 1 | 1 | 3 | 698 |
180
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | ||||||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||
Less than 3 years |
3-5 years |
5-10 years |
10-15 years |
15-20 years |
20 years or more |
Total | ||||||||||||||||||||||
Premium reserves |
₩ | 259,324 | ₩ | 324,305 | ₩ | 1,570,009 | ₩ | 294,058 | ₩ | 426,287 | ₩ | 2,653,510 | ₩ | 5,527,493 | ||||||||||||||
Unearned premium reserves |
642 | 1 | 3 | | 2 | 3 | 651 |
38. Trust Accounts
Financial information of the trust accounts that Kookmin Bank manages as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||||||||
Total assets |
Operating revenues |
Total assets |
Operating revenues |
|||||||||||||
Consolidated |
₩ | 3,614,835 | ₩ | 150,598 | ₩ | 3,462,823 | ₩ | 138,479 | ||||||||
Unconsolidated |
28,062,557 | 1,230,286 | 22,541,883 | 1,073,136 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 31,677,392 | ₩ | 1,380,884 | ₩ | 26,004,706 | ₩ | 1,211,615 | |||||||||
|
|
|
|
|
|
|
|
1 | Financial information of the trust accounts has been prepared in accordance with the Statement of Korea Accounting Standard 5004, Trust Accounts, and enforcement regulations of Financial Investment Services under the Financial Investment Services and Capital Markets Act. |
Significant transactions between the Group and the trust accounts for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Revenues |
||||||||
Fees and commissions from trust accounts |
₩ | 230,839 | ₩ | 160,521 | ||||
Interest income from loans on trust accounts |
8,798 | 10,999 | ||||||
Commissions from early termination in trust accounts |
129 | 69 | ||||||
|
|
|
|
|||||
239,766 | 171,589 | |||||||
|
|
|
|
|||||
Expenses |
||||||||
Interest expenses due to trust accounts |
52,664 | 62,543 | ||||||
|
|
|
|
|||||
Receivables |
||||||||
Accrued trust fees |
43,493 | 42,795 | ||||||
Due from trust accounts |
92,678 | 165,709 | ||||||
|
|
|
|
|||||
136,171 | 208,504 | |||||||
|
|
|
|
|||||
Payables |
||||||||
Due to trust accounts |
2,548,578 | 2,423,675 | ||||||
Accrued interest on due to trust accounts |
5,790 | 4,576 | ||||||
|
|
|
|
|||||
₩ | 2,554,368 | ₩ | 2,428,251 | |||||
|
|
|
|
181
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
39. Supplemental Cash Flow Information
Cash and cash equivalents as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Cash |
₩ | 2,019,965 | ₩ | 1,963,977 | ||||
Checks with other banks |
525,452 | 734,574 | ||||||
Due from Bank of Korea |
6,508,623 | 7,128,025 | ||||||
Due from other financial institutions |
6,369,807 | 4,966,078 | ||||||
|
|
|
|
|||||
15,423,847 | 14,792,654 | |||||||
|
|
|
|
|||||
Restricted due from financial institutions |
(7,132,094 | ) | (7,665,903 | ) | ||||
Due from financial institutions with original maturities over three-months |
(1,272,957 | ) | (957,565 | ) | ||||
|
|
|
|
|||||
(8,405,051 | ) | (8,623,468 | ) | |||||
|
|
|
|
|||||
₩ | 7,018,796 | ₩ | 6,169,186 | |||||
|
|
|
|
Significant non-cash transactions for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Decrease in loans due to the write-offs |
₩ | 2,091,040 | ₩ | 2,132,066 | ||||
Changes in accumulated other comprehensive income due to valuation of financial investments |
248,880 | (3,591 | ) | |||||
Increase in investment in associates due to debt-for-equity swap with Ssangyong Engineering & Construction Co., Ltd. |
| 28,779 | ||||||
Increase in financial investments due to debt-for-equity swap with Hyundai Cement Wire Co., Ltd. |
25,178 | | ||||||
Increase in financial investments due to debt-for-equity swap with Taihan Electric Wire Co., Ltd. |
| 115,716 | ||||||
Decrease in Accumulated other comprehensive income from measurement of investment securities in associates |
(32,206 | ) | (9,811 | ) |
182
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Cash inflow and outflow from income tax, interests and dividends for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | Activity | 2014 | 2013 | |||||||||
Income tax paid(refund) |
Operating | ₩ | 205,130 | ₩ | 504,900 | |||||||
Interest received |
Operating | 12,250,845 | 12,749,214 | |||||||||
Interest paid |
Operating | 5,342,297 | 6,407,081 | |||||||||
Dividends received |
Operating | 124,021 | 98,579 | |||||||||
Dividends paid |
Financing | 193,176 | 231,811 |
40. Contingent liabilities and commitments
Acceptances and guarantees as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Confirmed acceptances and guarantees |
||||||||
Confirmed acceptances and guarantees in Korean won |
||||||||
Acceptances and guarantees for corporate purchasing card |
₩ | | ₩ | 17 | ||||
Acceptances and guarantees for KB purchasing loan |
428,815 | 448,906 | ||||||
Other acceptances and guarantees |
669,233 | 782,646 | ||||||
|
|
|
|
|||||
1,098,048 | 1,231,569 | |||||||
|
|
|
|
|||||
Confirmed acceptances and guarantees in foreign currency |
||||||||
Acceptances of letter of credit |
327,963 | 281,049 | ||||||
Letter of guarantees |
61,081 | 57,596 | ||||||
Bid bond |
43,362 | 24,212 | ||||||
Performance bond |
1,175,330 | 999,872 | ||||||
Refund guarantees |
1,494,023 | 2,263,202 | ||||||
Other acceptances and guarantees |
959,685 | 906,105 | ||||||
|
|
|
|
|||||
4,061,444 | 4,532,036 | |||||||
|
|
|
|
|||||
Financial guarantees |
||||||||
Guarantees for Debenture-Issuing |
51,200 | 20,200 | ||||||
Acceptances and guarantees for mortgage |
75,651 | 43,272 | ||||||
Overseas debt guarantees |
392,021 | 319,080 | ||||||
International financing guarantees in foreign currencies |
35,949 | 41,896 | ||||||
Other financial guarantees |
21,846 | | ||||||
|
|
|
|
|||||
576,667 | 424,448 | |||||||
|
|
|
|
|||||
5,736,159 | 6,188,053 | |||||||
|
|
|
|
|||||
Unconfirmed acceptances and guarantees |
||||||||
Guarantees of letter of credit |
2,825,919 | 3,265,906 | ||||||
Refund guarantees |
1,060,413 | 775,181 | ||||||
|
|
|
|
|||||
3,886,332 | 4,041,087 | |||||||
|
|
|
|
|||||
₩ | 9,622,491 | ₩ | 10,229,140 | |||||
|
|
|
|
183
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Acceptances and guarantees by counter party as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) |
|||||||||||||
Corporations |
₩ | 4,699,777 | ₩ | 2,936,635 | ₩ | 7,636,412 | 79.36 | |||||||||
Small companies |
857,004 | 562,655 | 1,419,659 | 14.75 | ||||||||||||
Public and others |
179,378 | 387,042 | 566,420 | 5.89 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,736,159 | ₩ | 3,886,332 | ₩ | 9,622,491 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) |
|||||||||||||
Corporations |
₩ | 4,998,062 | ₩ | 2,723,162 | ₩ | 7,721,224 | 75.48 | |||||||||
Small companies |
1,029,039 | 623,803 | 1,652,842 | 16.16 | ||||||||||||
Public and others |
160,952 | 694,122 | 855,074 | 8.36 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 6,188,053 | ₩ | 4,041,087 | ₩ | 10,229,140 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
Acceptances and guarantees by industry as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) |
|||||||||||||
Financial institutions |
₩ | 229,086 | ₩ | 3,573 | ₩ | 232,659 | 2.42 | |||||||||
Manufacturing |
3,179,368 | 2,410,472 | 5,589,840 | 58.09 | ||||||||||||
Service |
583,302 | 114,645 | 697,947 | 7.25 | ||||||||||||
Whole sale & Retail |
932,283 | 788,804 | 1,721,087 | 17.89 | ||||||||||||
Construction |
709,582 | 215,382 | 924,964 | 9.61 | ||||||||||||
Public sector |
72,964 | 336,484 | 409,448 | 4.26 | ||||||||||||
Others |
29,574 | 16,972 | 46,546 | 0.48 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,736,159 | ₩ | 3,886,332 | ₩ | 9,622,491 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2013 | |||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) |
|||||||||||||
Financial institutions |
₩ | 145,197 | ₩ | 3,924 | ₩ | 149,121 | 1.46 | |||||||||
Manufacturing |
3,867,870 | 2,270,254 | 6,138,124 | 60.01 | ||||||||||||
Service |
523,698 | 115,710 | 639,408 | 6.25 | ||||||||||||
Whole sale & Retail |
1,083,264 | 745,658 | 1,828,922 | 17.88 | ||||||||||||
Construction |
484,764 | 244,727 | 729,491 | 7.13 | ||||||||||||
Public sector |
72,583 | 635,326 | 707,909 | 6.92 | ||||||||||||
Others |
10,677 | 25,488 | 36,165 | 0.35 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 6,188,053 | ₩ | 4,041,087 | ₩ | 10,229,140 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
184
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Commitments as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Commitments |
||||||||
Corporate loan commitments |
₩ | 42,977,471 | ₩ | 42,446,365 | ||||
Retail loan commitments |
13,886,999 | 13,976,426 | ||||||
Credit line on credit cards |
37,584,381 | 37,112,333 | ||||||
Private placement commitments |
121,300 | 80,000 | ||||||
Purchase of other security investment |
1,746,430 | 1,806,908 | ||||||
|
|
|
|
|||||
96,316,581 | 95,422,032 | |||||||
|
|
|
|
|||||
Financial Guarantees |
||||||||
Credit line |
3,809,478 | 2,572,424 | ||||||
Purchase of security investment |
73,500 | 100,500 | ||||||
|
|
|
|
|||||
3,882,978 | 2,672,924 | |||||||
|
|
|
|
|||||
₩ | 100,199,559 | ₩ | 98,094,956 | |||||
|
|
|
|
Other Matters (including litigation)
a) The Group has filed 122 lawsuits (excluding minor lawsuits in relation to the collection or management of loans), involving aggregate claims of ₩834,440 million, and faces 374 lawsuits (as the defendant) (excluding minor lawsuits in relation to the collection or management of loans) involving aggregate damages of ₩523,099 million, which arose in the normal course of the business and are still pending as of December 31, 2014.
Meanwhile, certain customers of Kookmin Bank have filed lawsuits against Kookmin Bank in connection with fees paid for the registration of fixed collateral. The first and second trials are in progress as of December 31, 2014. The Court ruled in favor and partially in favor of Kookmin Bank in the first trial and ruled in favor of Kookmin Bank in the second and third trials. There is a low probability of potential losses related to the aforementioned lawsuits.
b) According to the shareholders agreement on September 25, 2009, between Kookmin Bank, the International Finance Corporation (IFC) and the remaining shareholders, Kookmin Bank granted a put option to IFC with the right to sell shares of JSC Bank Center Credit to itself or its designee. The exercise price is determined at its fair value by mutual agreement between Kookmin Bank and IFC. If the price is not agreed by the designated date, it is determined by the value measured by the selected independent external valuation institution. The put option may be exercised by IFC at any time from February 24, 2013, to February 24, 2017.
c) The face value of the securities which Kookmin Bank sold to general customers through tellers amounts to ₩26,487 million and ₩57,159 million as of December 31, 2014 and 2013, respectively.
185
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
d) Kookmin Bank underwent a tax investigation by the Seoul Regional Tax Office and in early 2007 was assessed additional corporate tax including local income tax of ₩482,755 million. Kookmin Bank paid this amount to the tax authorities. Subsequently, Kookmin Bank filed a claim for adjudication in August 2007 for repayment of the amount of ₩482,643 million. The case was closed with a favorable final judgment by the Supreme Court in January 2015.
e) For the year ended December 31, 2013, Kookmin Bank underwent a tax investigation for the fiscal years 2008 to 2012 by the Seoul Regional Tax Office. As a result, Kookmin Bank was fined a total of ₩124,357 million for income taxes (including local income taxes), until the year ended December 31, 2014, paid ₩123,330 million, excluding local income tax, and recognized local income taxes amounting to ₩1,027 million as non-trade payables. Meanwhile, the Group has appealed to the tax tribunal over the ₩114,283 million in fines as of December 31, 2014.
f) While setting up a fraud detection system, a computer contractor employed by the personal credit ratings firm Korea Credit Bureau caused a widespread data breach in June 2013, resulting in the theft of cardholders personal information. As a result of the leakage of customer personal information, the KB Kookmin Card received a notification from the Financial Services Commission that the KB Kookmin Card is subject to a temporary three-month operating suspension. In respect of the incident, the Group faces 101 legal claims filed as the defendant, with an aggregate claim of ₩52,421 million as of December 31, 2014. In addition, the Group may be subject to additional fines, penalties or judgments, reimbursement to affected clients. Meanwhile, the final outcome of the cases cannot be reasonably ascertained.
g) In relation to a tax credit for research and human resource development expenses, Kookmin Bank filed an administrative litigation (the aggregate amount in 2007 and 2008) and received a refund in the amount of ₩16,371 million from National Tax Service based on a recent Supreme Court precedent. However, the appeal to the tax tribunal (the aggregate amount in 2009 is ₩13,827 million) is currently pending as of December 31, 2014.
h) The Group entered into a purchase agreement to acquire 11,682,580 common shares of LIG Insurance Co., Ltd. (19.47% of outstanding shares with an expected price of ₩685,000 million) in June 2014. The Financial Services Commission approved LIG Insurance Co., Ltd. to be included as a subsidiary of the Group in December 2014.
186
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
41. Subsidiaries
The details of subsidiaries as of December 31, 2014, are as follows:
Investor | Investee | Ownership interests (%) |
Location | Date of financial information |
Industry | |||||||
KB Financial Group Inc. |
Kookmin Bank |
100.00 | Korea | Dec. 31 | Banking and domestic, foreign exchange transaction | |||||||
KB Kookmin Card Co., Ltd. |
100.00 | Korea | Dec. 31 | Credit card | ||||||||
KB Investment & Securities Co., Ltd. |
100.00 | Korea | Dec. 31 | Financial investment | ||||||||
KB Life Insurance Co., Ltd. |
100.00 | Korea | Dec. 31 | Life insurance | ||||||||
KB Asset Management Co., Ltd. |
100.00 | Korea | Dec. 31 | Security investment trust management and advisory | ||||||||
KB Capital Co., Ltd. |
52.02 | Korea | Dec. 31 | Financial Leasing | ||||||||
KB Savings Bank Co., Ltd. |
100.00 | Korea | Dec. 31 | Savings banking | ||||||||
KB Real Estate Trust Co., Ltd. |
100.00 | Korea | Dec. 31 | Real estate trust management | ||||||||
KB Investment Co., Ltd. |
100.00 | Korea | Dec. 31 | Capital Investment | ||||||||
KB Credit Information Co., Ltd. |
100.00 | Korea | Dec. 31 | Collection of receivables or credit investigation | ||||||||
KB Data System Co., Ltd. |
100.00 | Korea | Dec. 31 | Software advisory, development, and supply | ||||||||
Kookmin Bank |
Kookmin Bank Intl Ltd. (London) |
100.00 | United Kingdom | Dec. 31 | Banking and foreign exchange transaction | |||||||
Kookmin Bank Hong Kong Ltd. |
100.00 | Hong Kong | Dec. 31 | Banking and foreign exchange transaction | ||||||||
Kookmin Bank Cambodia PLC. |
100.00 | Cambodia | Dec. 31 | Banking and foreign exchange transaction | ||||||||
Kookmin Bank (China) Ltd. |
100.00 | China | Dec. 31 | Banking and foreign exchange transaction | ||||||||
Personal pension trust and 10 others 1 |
| Korea | Dec. 31 | Trust | ||||||||
KAMCO Value Recreation 3rd Securitization Specialty Co., Ltd. and 6 others 2 |
| Korea and others | Dec. 31 | Asset-backed securitization and others | ||||||||
Heungkuk Multi Private Securities H-19 and 37 others |
100.00 | Korea | Dec. 31 | Private equity fund | ||||||||
Kookmin Bank & KB Investment Co., Ltd. |
KB12-1 Venture Investment |
100.00 | Korea | Dec. 31 | Capital investment | |||||||
KB Start-up Creation Fund |
62.50 | Korea | Dec. 31 | Capital investment | ||||||||
KB Investment & Securities |
Ashley Investment First Co., Ltd. 2 |
| Korea | Dec. 31 | Asset-backed securitization and others | |||||||
Growth Investment First Co., Ltd. 2 |
| Korea | Dec. 31 | Asset-backed securitization and others |
187
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
KB Asset Management Co., Ltd. |
KB Wellyan Private Equity Real Estate Fund No. 6 |
95.67 | Korea | Dec. 31 | Capital investment | |||||||
KB Wellyan Private Equity Real Estate Fund No. 7 3 |
47.97 | Korea | Dec. 31 | Capital investment | ||||||||
Boyoung construction 4 |
| Korea | Dec. 31 | Construction | ||||||||
KB Investment Co., Ltd. |
09-5 KB Venture Fund 5 |
33.33 | Korea | Dec. 31 | Capital investment | |||||||
KoFC-KB Pioneer Champ No.2010-8 Investment Partnership |
50.00 | Korea | Dec. 31 | Capital investment | ||||||||
2011 KIF-KB IT Venture Fund 5 |
43.33 | Korea | Dec. 31 | Capital investment | ||||||||
KoFC-KB Young Pioneer 1st Fund 5 |
33.33 | Korea | Dec. 31 | Capital investment | ||||||||
KB Kookmin Card Co., Ltd |
KB Kookmin Card First Securitization Co., Ltd. 2 |
0.90 | Korea | Dec. 31 | Asset-backed securitization | |||||||
KB Kookmin Card Second Securitization Co., Ltd. 2 |
0.50 | Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile First Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile Second Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile third Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile fourth Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile fifth Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile sixth Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile seventh Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile eighth Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile ninth Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile tenth Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile eleventh Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile twelveth Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
KB Life Insurance Co., Ltd. |
KB Haeoreum Private Securities Investment Trust 1st and 7 others |
100.00 | Korea | Dec. 31 | Private equity fund |
188
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Kookmin Bank, KB Life Insurance Co., Ltd., KB Investment & Securities, KB Real Estate Trust Co., Ltd |
KB Wise Star Private Real Estate Feeder Fund 1st. |
100.00 | Korea | Dec. 31 | Investment trust | |||||||
Kookmin Bank |
Hanbando BTL Private Special Asset Fund 3 |
39.47 | Korea | Dec. 31 | Capital investment | |||||||
Kookmin Bank, KB Life Insurance Co., Ltd., KB |
KB Hope Sharing BTL Private Special Asset 3 |
40.00 | Korea | Dec. 31 | Capital investment | |||||||
Kookmin Bank |
KB Mezzanine Private Securities Fund 1st (Mixed) 3 |
46.51 | Korea | Dec. 31 | Capital investment | |||||||
Kookmin Bank, KB Life Insurance Co., Ltd., KB |
KB Mezzanine Private Securities Fund 2nd (Mixed) 3 |
40.74 | Korea | Dec. 31 | Capital investment | |||||||
Kookmin Bank |
K-star KTB ETF (Bond) 3 |
47.63 | Korea | Dec. 31 | Capital investment | |||||||
KB Wise Star Private Real Estate Feeder Fund 1st. |
KB Star Retail Private Master Real Estate 1 6 |
48.98 | Korea | Dec. 31 | Capital investment | |||||||
KB Wise Star Private Real Estate Feeder Fund 1st. |
KB Star Office Private Real Estate Investment Trust 2nd 6 |
44.44 | Korea | Dec. 31 | Capital investment |
1 | The Group controls the trust because it has power that determines the management performance over the trust and is exposed to variable returns to absorb losses through the guarantees of payment of principal or payment of principal and fixed rate of return. |
2 | The Group controls these investees because it is exposed to variable returns from its involvement with the investees and has ability to affect those returns through its power, even though it holds less than a majority of the voting rights of the investees. |
3 | Although the Group holds less than a majority of the investees voting rights, the Group controls the investee as it has power over relevant activities by managing the fund; has significant percentage of ownership that is over 40%; is significantly exposed to variable returns which is affected by the performance of the investees, and has ability to affect those performance through its power. |
4 | Boyoung Construction is included in the consolidation scope, since KB Wellyan Private Equity Real Estate Fund No. 7 is included in the consolidation scope. |
189
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
5 | Although the Group holds less than a majority of the investees voting rights, the Group controls the investee as it has power over relevant activities by taking the role of an operating manager and it is significantly exposed to variable returns which is affected by the performance of the investees, and has ability to affect those performance through its power. |
6 | KB Star Retail Private Master Real Estate 1 and KB Star Office Private Real Estate Investment Trust 2nd are included in the consolidation scope, since KB Wise Star Private Real Estate Feeder Fund 1st is included in the consolidation scope. |
The details of subsidiaries as of December 31, 2013, are as follows:
Investor | Investee | Ownership interests(%) |
Location | Date of financial information |
Industry | |||||||
KB Financial Group Inc. |
Kookmin Bank |
100.00 | Korea | Dec. 31 | Banking and domestic, foreign exchange transaction | |||||||
KB Kookmin Card Co., Ltd. |
100.00 | Korea | Dec. 31 | Credit card | ||||||||
KB Investment & Securities Co., Ltd. |
100.00 | Korea | Dec. 31 | Financial investment | ||||||||
KB Life Insurance Co., Ltd. |
100.00 | Korea | Dec. 31 | Life insurance | ||||||||
KB Asset Management Co., Ltd. |
100.00 | Korea | Dec. 31 | Security investment trust management and advisory | ||||||||
KB Real Estate Trust Co., Ltd. |
100.00 | Korea | Dec. 31 | Real estate trust management | ||||||||
KB Investment Co., Ltd. |
100.00 | Korea | Dec. 31 | Capital Investment | ||||||||
KB Credit Information Co., Ltd. |
100.00 | Korea | Dec. 31 | Collection of receivables or credit investigation | ||||||||
KB Data System Co., Ltd. |
100.00 | Korea | Dec. 31 | Software advisory, development, and supply | ||||||||
KB Savings Bank Co., Ltd. |
100.00 | Korea | Dec. 31 | Savings banking | ||||||||
Yehansoul Savings Bank Co., Ltd. |
100.00 | Korea | Dec. 31 | Savings banking | ||||||||
Kookmin Bank |
Kookmin Bank Intl Ltd.(London) |
100.00 | United Kingdom | Dec. 31 | Banking and foreign exchange transaction | |||||||
Kookmin Bank Hong Kong Ltd. |
100.00 | Hong Kong | Dec. 31 | Banking and foreign exchange transaction | ||||||||
Kookmin Bank Cambodia PLC. |
100.00 | Cambodia | Dec. 31 | Banking and foreign exchange transaction | ||||||||
Kookmin Bank (China) Ltd. |
100.00 | China | Dec. 31 | Banking and foreign exchange transaction | ||||||||
Personal pension trusts and 10 other trusts 1 |
| Korea | Dec. 31 | Trust |
190
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
KB Mortgage Loan First Securitization Specialty Co., Ltd. and 10 others 2 |
| Korea | Dec. 31 | Asset-backed securitization and others | ||||||||
KB Evergreen Private Securities 82 and 28 others |
100.00 | Korea | Dec. 31 | Private equity fund | ||||||||
Kookmin Bank, KB Investment Co., Ltd. |
KB06-1 Venture Investment |
75.00 | Korea | Dec. 31 | Capital investment | |||||||
KB08-1 Venture Investment |
100.00 | Korea | Dec. 31 | Capital investment | ||||||||
KB12-1 Venture Investment |
100.00 | Korea | Dec. 31 | Capital investment | ||||||||
KB Start-up Creation Fund |
100.00 | Korea | Dec. 31 | Capital investment | ||||||||
KB Asset Management Co., Ltd. |
KB Wellyan Private Equity Real Estate Fund No. 6 |
95.67 | Korea | Dec. 31 | Capital investment | |||||||
KB Wellyan Private Equity Real Estate Fund No. 7 3 |
47.97 | Korea | Dec. 31 | Capital investment | ||||||||
KB Wellyan Private Equity Real Estate Fund No. 6, 7 |
Boyoung construction 4 |
| Korea | Dec. 31 | Construction | |||||||
KB Investment Co., Ltd. |
NPS 07-5 KB Venture Fund 5 |
20.00 | Korea | Dec. 31 | Capital investment | |||||||
09-5 KB Venture Fund 5 |
33.33 | Korea | Dec. 31 | Capital investment | ||||||||
KoFC-KB Pioneer Champ No.2010-8 Investment Partnership |
50.00 | Korea | Dec. 31 | Capital investment | ||||||||
2011 KIF-KB IT Venture Fund 5 |
43.33 | Korea | Dec. 31 | Capital investment | ||||||||
KoFC-KB Young Pioneer 1st Fund 5 |
33.33 | Korea | Dec. 31 | Capital investment | ||||||||
KB Kookmin Card Co., Ltd |
KB Kookmin Card First Securitization Co., Ltd. 2 |
0.90 | Korea | Dec. 31 | Asset-backed securitization | |||||||
Wise Mobile First Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile Second Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile third Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile fourth Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile fifth Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
Wise Mobile sixth Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization |
191
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Wise Mobile seventh Securitization Specialty 2 |
| Korea | Dec. 31 | Asset-backed securitization | ||||||||
KB Life Insurance Co., Ltd. |
Dream Smart Turn Private Securities 3rd(Mixed) and 5 others |
100.00 | Korea | Dec. 31 | Private equity fund | |||||||
Kookmin Bank, KB Investment & Securities, KB life Insurance, KB Real Estate Trust Co., Ltd |
KB Wise Star Private Real Estate Feeder Fund 1st. |
100.00 | Korea | Dec. 31 | Investment trust | |||||||
Kookmin Bank |
Hanbando BTL Private Special Asset Fund 1st 3 |
39.74 | Korea | Dec. 31 | Capital investment | |||||||
Kookmin Bank, KB life Insurance |
KB Hope Sharing BTL Private Special Asset 3 |
40.00 | Korea | Dec. 31 | Capital investment | |||||||
Kookmin Bank |
KB Mezzanine Private Securities Fund 1st(Mixed)3 |
46.51 | Korea | Dec. 31 | Capital investment | |||||||
K Star KTB ETF(Bond) 3 |
48.20 | Korea | Dec. 31 | Capital investment | ||||||||
Global Logistics Infra Private Fund 1 and 2 3 |
40.00 | Korea | Dec. 31 | Capital investment | ||||||||
KB Wise Star Private Real Estate Feeder Fund 1st. |
KB Star Retail Real Estate Feeder Fund 1st.6 |
48.98 | Korea | Dec. 31 | Capital investment |
1 | The Group controls the trust because it has power that determines the management performance over the trust and is exposed to variable returns to absorb losses through the guarantees of payment of principal or payment of principal and fixed rate of return. |
2 | The Group controls these investees because it is exposed to variable returns from its involvement with the investees and has ability to affect those returns through its power, even though it holds less than a majority of the voting rights of the investees. |
3 | Although the Group holds less than a majority of the investees voting rights, the Group controls the investee as it has power over relevant activities by managing the fund; has significant percentage of ownership that is over 40%; is significantly exposed to variable returns which is affected by the performance of the investees, and has ability to affect those performance through its power. |
4 | Boyoung Construction is included in the consolidation scope, since KB Wellyan Private Equity Real Estate Fund No. 7 is included in the consolidation scope. |
5 | Although the Group holds less than a majority of the investees voting rights, the Group controls the investee as it has power over relevant activities by taking the role of an operating manager and it is significantly exposed to variable returns which is affected by the performance of the investees, and has ability to affect those performance through its power. |
192
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
6 | KB Star Retail Real Estate Feeder Fund 1st is included in the consolidation scope, since KB Wise Star Private Real Estate Feeder Fund 1st is included in the consolidation scope. |
7 | Although the Group holds less than a majority of the investees voting rights, the Group controls KB Private Real Estate Securities Fund1 (NPL) and Woori KA First Asset Securitization Specialty Co., Ltd. as it has power over relevant activities by taking the role of an operating manager; has significant percentage of ownership that is over 40%; is significantly exposed to variable returns which is affected by the performance of the investees; and has ability to affect those performance through its power. |
In accordance with the Korean IFRS 1110, KB Private Real Estate Securities Fund1 (NPL) and Woori KA First Asset Securitization Specialty Co., Ltd. were included in the consolidation scope. However, KB Private Real Estate Securities Fund1 (NPL) and Woori KA First Asset Securitization Specialty Co., Ltd. have been excluded from the consolidation scope due to the loss of control from changes in terms of the contract as of December 31, 2013.
The condensed financial information of major subsidiaries as of December 31, 2014 and 2013, and for the years ended December 31, 2014 and 2013, is as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Assets | Liabilities | Equity | Operating income (revenue) |
Profit attributable to Shareholders of the parent company |
Total comprehensive income for the year attributable to Shareholders of the parent company |
|||||||||||||||||||
Kookmin Bank 1 |
₩ | 275,453,664 | ₩ | 253,513,191 | ₩ | 21,940,473 | ₩ | 16,283,978 | ₩ | 1,029,041 | ₩ | 1,152,233 | ||||||||||||
KB Kookmin Card Co., Ltd. 1 |
15,886,769 | 12,406,314 | 3,480,455 | 2,864,957 | 332,701 | 310,606 | ||||||||||||||||||
KB Investment & Securities Co., Ltd. 1,2 |
4,131,568 | 3,554,828 | 576,740 | 578,345 | 25,624 | 25,558 | ||||||||||||||||||
KB Life Insurance Co., Ltd. 1 |
7,680,184 | 7,096,459 | 583,725 | 1,453,057 | 6,537 | 34,597 | ||||||||||||||||||
KB Asset Management Co., Ltd. 1 |
254,481 | 52,541 | 201,940 | 105,234 | 49,560 | 50,368 | ||||||||||||||||||
KB Capital Co., Ltd 2 |
4,023,965 | 3,612,150 | 411,815 | 250,042 | 29,990 | 26,859 | ||||||||||||||||||
KB Savings Bank Co., Ltd. |
772,676 | 619,882 | 152,794 | 56,712 | (15,079 | ) | (14,645 | ) | ||||||||||||||||
KB Real Estate Trust Co., Ltd. |
204,888 | 20,930 | 183,958 | 50,283 | 14,818 | 14,913 | ||||||||||||||||||
KB Investment Co., Ltd. 1 |
225,353 | 90,569 | 134,784 | 33,371 | 1,382 | 4,197 | ||||||||||||||||||
KB Credit Information Co., Ltd. |
28,805 | 7,955 | 20,850 | 38,796 | (1,605 | ) | (1,605 | ) | ||||||||||||||||
KB Data System Co., Ltd. |
31,397 | 16,874 | 14,523 | 59,129 | 367 | (350 | ) |
193
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||||||
Assets | Liabilities | Equity | Operating income (revenue) |
Profit attributable to Shareholders of the parent company |
Total comprehensive income for the year attributable to Shareholders of the parent company |
|||||||||||||||||||
Kookmin Bank1 |
₩ | 265,588,385 | ₩ | 244,641,628 | ₩ | 20,946,757 | ₩ | 17,461,406 | ₩ | 830,628 | ₩ | 894,093 | ||||||||||||
KB Kookmin Card Co., Ltd.1 |
15,854,992 | 12,385,131 | 3,469,861 | 2,990,037 | 384,411 | 390,228 | ||||||||||||||||||
KB Investment & Securities Co., Ltd.2 |
2,525,070 | 1,973,888 | 551,182 | 577,649 | 11,856 | 5,436 | ||||||||||||||||||
KB Life Insurance Co., Ltd.1 |
6,945,605 | 6,396,477 | 549,128 | 1,457,365 | 9,098 | (23,209 | ) | |||||||||||||||||
KB Asset Management Co., Ltd.1 |
237,907 | 36,335 | 201,572 | 103,401 | 74,685 | 74,560 | ||||||||||||||||||
KB Real Estate Trust Co., Ltd. |
182,657 | 13,612 | 169,045 | 46,524 | 2,110 | 2,835 | ||||||||||||||||||
KB Investment Co., Ltd.1 |
241,227 | 110,640 | 130,587 | 34,497 | 6,078 | 7,145 | ||||||||||||||||||
KB Credit Information Co., Ltd. |
30,142 | 7,687 | 22,455 | 43,627 | (336 | ) | (336 | ) | ||||||||||||||||
KB Data System Co., Ltd. |
21,753 | 6,880 | 14,873 | 50,440 | 19 | 115 | ||||||||||||||||||
KB Savings Bank Co., Ltd. |
584,025 | 449,087 | 134,938 | 47,865 | (301 | ) | (1,482 | ) | ||||||||||||||||
Yehansoul Savings Bank Co., Ltd. |
189,243 | 164,084 | 25,159 | 4,791 | (5,331 | ) | (5,259 | ) |
1 | Financial information is based on its consolidated financial statements. |
2 | The amount includes the fair value adjustments due to the merger. |
Nature of the risks associated with interests in consolidated structured entities
The terms of contractual arrangements require to provide financial support to a consolidated structured entity
| The Group has provided acceptances and guarantees obligation of ₩68,000 million to Ashley Investment First Co., Ltd. and Growth Investment First Co., Ltd., the Groups subsidiary, that had issued debentures. |
The Group provides capital commitment to KB Wise Star Private Real Estate Feeder Fund 1st. and nine other subsidiaries. The unexecuted amount of the investment agreement is ₩478,741 million. Based on the capital commitment, the Group is subject to increase its investment by the request from the asset management company or the additional agreement among investors.
| The Group provides the guarantees of payment of principal or principal and fixed rate of return in case the operating results of the trusts are less than the guaranteed principal or principal and fixed rate of return. |
194
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Changes in subsidiaries
KB Capital Co., Ltd., Ashley Investment First Co., Ltd., Growth Investment First Co., Ltd., KB Mezzanine Private Securities Fund 2nd, KB Star Office Private Real Estate Investment Trust No.2, KB Evergreen Private Securities 99(Bond) and 106 other private equity funds, KB Kookmin Card Second Securitization Co., Ltd. and Wise Mobile 8th ~12th Securitization were newly consolidated during the year ended December 31, 2014. KB Evergreen Private Securities 82(Bond) and 95 other private equity funds, Global Logistics Infra Private Fund 1st,2nd , KB Covered Bond 1st Trust, KH First Co., Ltd., KB Mortgage Loan First Securitization Specialty Co., Ltd., KB Covered Bond First Securitization Specialty Co., Ltd and KB07-5, KB06-1,KB08-1 Venture Partnership Fund have been excluded from consolidation due to their liquidation. Also, Yehansoul Savings Bank Co., Ltd. has been excluded from consolidation due to its merger with KB Savings Bank Co., Ltd.
Yehansoul Savings Bank Co., Ltd., KB Startup Investment, KB Evergreen Private Securities 63 and 46 other private equity funds, and Wise Mobile Second, Third, Fourth, Fifth, Sixth, Seventh Securitization and KB Star Retail Private Real Estate Feeder Fund First were newly consolidated during the year ended December 31, 2013. Yurie Select Private Securities Investment Trust 32 and 44 other private equity funds, KB K-Alpha private equity trust and New Star First Ltd. have been excluded from consolidation due to their liquidation. Also, KB Private Real Estate Securities Fund1 (NPL) and Woori KA First Asset Securitization Specialty Co., Ltd. have been excluded from consolidation due to the loss of control.
In accordance with the enactment of Korean IFRS 1110, the activities of KB-Glenwood Private Equity Fund, NPS KBIC Private Equity Fund No. 1 and KBIC Private Equity Fund No. 3 represent management and performance services and the terms of the contracts are the same as those in the ordinary service contracts between independent parties. These entities have been excluded from the consolidation scope since interests held are not material and therefore were considered as agents. In addition, Chungkang Co., Ltd. and Powernet Technologies Co., Ltd. have been excluded from the consolidation scope, since KB-Glenwood Private Equity Fund, the Parent Company, have been excluded from the consolidation scope.
195
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
For the year ended December 31, 2014, the following table summarizes the information relating to the Groups subsidiaries that have material non-controlling interests, before any intra-group eliminations, are as follows:
(In millions of Korean won) | 2014 | |||
Non-controlling interests percentage (%) |
47.98 | % | ||
Non-controlling interests |
||||
Assets of subsidiaries |
₩ | 4,023,965 | ||
Liabilities of subsidiaries |
3,612,150 | |||
Equity of subsidiaries |
411,815 | |||
Non-controlling interests |
197,580 | |||
Profit attributable to non-controlling interests |
||||
Operating profit of subsidiaries |
39,666 | |||
Profit of subsidiaries |
29,990 | |||
Profit attributable to non-controlling interests |
14,389 | |||
Cash flows of subsidiaries |
||||
Cash flows from operating activities |
71,813 | |||
Cash flows from investing activities |
(6,742 | ) | ||
Cash flows from financing activities |
(33,312 | ) | ||
|
|
|||
Net increase in cash and cash equivalents |
₩ | 31,759 | ||
|
|
42. Unconsolidated Structured Entity
As of December 31, 2014, the nature, purpose and activities of the unconsolidated structured entities and how the structured entities are financed, are as follows:
Nature | Purpose | Activities | Methods of Financing | |||
Asset-backed securitization |
Early cash generation through transfer of securitization assets
Fees earned as services to SPC, such as providing lines of credit and ABCP purchase commitments |
Fulfillment of Asset-backed securitization plan
Purchase and transfer of securitization assets Issuance and repayment of ABS and ABCP |
Issuance of ABS and ABCP based on securitization assets | |||
Project financing |
Granting PF loans to SOC and real estate
Granting loans to ships/aircrafts SPC |
Construction of SOC and real estate
Building ships/ construction and purchase of aircrafts |
Loan commitments through Credit Line, providing lines of credit and investment agreements | |||
Trust |
Management of financial trusts; -Development trust -Mortgage trust -Management trust -Disposal trust -Distribution and management trust -Other trusts |
Development, management, and disposal of trusted real estate assets
Payment of trust fees and allocation of trust profits. |
Distribution of trusted real estate assets and financing of trust company
Public auction of trusted real estate assets and financing of trust company | |||
Investment funds |
Investment in beneficiary certificates
Investment in PEF and partnerships |
Management of fund assets
Payment of fund fees and allocation of fund profits |
Sales of beneficiary certificate instruments
Investment of managing partners and limited partners |
196
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
As of December 31, 2014, the size of the unconsolidated structured entities and the risks associated with its interests in unconsolidated structured entities, are as follows:
(In millions of Korean won) | Asset-backed securitization |
Project Financing |
Trusts | Investment funds |
Others | Total | ||||||||||||||||||
Total assets of unconsolidated Structured Entity |
₩ | 13,013,795 | ₩ | 21,102,639 | ₩ | 1,986,277 | ₩ | 17,919,480 | ₩ | 6,484,363 | ₩ | 60,506,554 | ||||||||||||
Carrying amount on financial statements |
||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||
Loans |
223,771 | 2,965,239 | | 1,609 | 252,195 | 3,442,814 | ||||||||||||||||||
Financial investments |
716,462 | 93,505 | | 627,554 | 66,943 | 1,504,464 | ||||||||||||||||||
Investment in associates |
| | | 390,337 | | 390,337 | ||||||||||||||||||
Other assets |
47 | 27 | 92,678 | 8,324 | | 101,076 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 940,280 | ₩ | 3,058,771 | ₩ | 92,678 | ₩ | 1,027,824 | ₩ | 319,138 | ₩ | 5,438,691 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Liabilities |
||||||||||||||||||||||||
Deposits |
₩ | 300,015 | ₩ | 500,538 | ₩ | | ₩ | 6,067 | ₩ | 32,986 | ₩ | 839,606 | ||||||||||||
Other liabilities |
12 | | | | | 12 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 300,027 | ₩ | 500,538 | ₩ | | ₩ | 6,067 | ₩ | 32,986 | ₩ | 839,618 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Maximum exposure to loss1 |
₩ | 5,338,975 | ₩ | 5,403,409 | ₩ | 206,911 | ₩ | 3,203,351 | ₩ | 590,257 | ₩ | 14,742,903 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Methods of determining the maximum exposure to loss |
|
Providing lines of credit and purchase commitments |
|
|
Loan commitments /investment agreements / purchase commitments and acceptances and guarantees |
|
|
Dividends by results trust: Total amount of trust explosure |
|
|
Investments / loans and capital commitments |
|
|
Loan commitments |
|
197
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | Dec. 31, 2013 | |||||||||||||||||||||||
Asset-backed securitization |
Project Financing |
Trusts | Investment funds |
Others | Total | |||||||||||||||||||
Total assets of unconsolidated Structured Entity |
₩ | 12,631,056 | ₩ | 24,605,331 | ₩ | 2,261,415 | ₩ | 12,618,790 | ₩ | 3,502,834 | ₩ | 55,619,426 | ||||||||||||
Carrying amount on financial statements |
||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||
Loans |
382,478 | 3,155,621 | | | 291,599 | 3,829,698 | ||||||||||||||||||
Financial investments |
1,121,676 | 97,754 | | 525,680 | | 1,745,110 | ||||||||||||||||||
Investment in associates |
| | | 403,153 | | 403,153 | ||||||||||||||||||
Other assets |
| | 165,709 | 1,909 | | 167,618 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 1,504,154 | ₩ | 3,253,375 | ₩ | 165,709 | ₩ | 930,742 | ₩ | 291,599 | ₩ | 6,145,579 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Liabilities |
||||||||||||||||||||||||
Deposits |
₩ | 306,931 | ₩ | 487,818 | ₩ | | ₩ | 8,142 | ₩ | 5,473 | ₩ | 808,364 | ||||||||||||
Other liabilities |
| 14 | | 144 | | 158 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 306,931 | ₩ | 487,832 | ₩ | | ₩ | 8,286 | ₩ | 5,473 | ₩ | 808,522 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Maximum exposure to loss1 |
₩ | 4,672,378 | ₩ | 5,714,293 | ₩ | 294,043 | ₩ | 2,476,902 | ₩ | 386,000 | ₩ | 13,543,616 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Methods of determining the maximum exposure to loss |
|
Providing lines of credit and purchase commitments |
|
|
Investments / loans, loan commitments /investment agreements / purchase commitments and acceptances and guarantees |
|
|
Dividends by results trust: Total amount of trust explosure |
|
|
Investments / loans and capital commitments |
|
|
Loan commitments |
|
1 | Maximum exposure to loss includes the asset amounts, after deducting loss (provision for assets, impairment losses and others), recognized in the financial statements of the Group. |
198
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
43. Finance/Operating Lease
43.1 Finance lease
43.1.1 The Group as finance lessee
The future minimum lease payments arising as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | ||||||||
2014 | 2013 | |||||||
Net carrying amount of finance lease assets |
₩ | 72,392 | ₩ | 16,955 | ||||
|
|
|
|
|||||
Minimum lease payment |
||||||||
Within 1 year |
18,765 | 1,927 | ||||||
1-5 years |
5,472 | | ||||||
Over 5 years |
1,148 | | ||||||
|
|
|
|
|||||
25,385 | 1,927 | |||||||
|
|
|
|
|||||
Present value of minimum lease payment |
||||||||
Within 1 year |
18,367 | 1,873 | ||||||
1-5 years |
5,169 | | ||||||
Over 5 years |
996 | | ||||||
|
|
|
|
|||||
24,532 | 1,873 | |||||||
|
|
|
|
43.2.2 The Group as finance lessor
Total lease investment and the present value of minimum lease payments as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||||||||
Total lease investment |
Present value of minimum lease payment |
Total lease investment |
Present value of minimum lease payment |
|||||||||||||
Within 1 year |
₩ | 348,579 | ₩ | 294,643 | ₩ | | ₩ | | ||||||||
1-5 years |
577,998 | 525,590 | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 926,577 | ₩ | 820,233 | ₩ | | ₩ | | |||||||||
|
|
|
|
|
|
|
|
Unearned interest income of finance lease as of December 31, 2014 and 2013, is as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Total lease investment |
₩ | 926,577 | ₩ | | ||||
Net lease investment |
||||||||
Present value of minimum lease payment |
820,233 | | ||||||
|
|
|
|
|||||
Unearned interest income |
₩ | 106,344 | ₩ | | ||||
|
|
|
|
199
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
43.2 Operating lease
43.2.1 The Group as operating lessee
The future minimum lease payments arising from the non-cancellable lease contracts as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Minimum lease payment |
||||||||
Within 1 year |
₩ | 124,183 | ₩ | 121,446 | ||||
1-5 years |
103,595 | 108,962 | ||||||
Over 5 years |
34,439 | 67 | ||||||
|
|
|
|
|||||
₩ | 262,217 | ₩ | 230,475 | |||||
|
|
|
|
|||||
Minimum sublease payment |
₩ | (382 | ) | ₩ | (367 | ) |
The lease payment reflected in profit or loss for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Lease payment reflected in profit or loss |
||||||||
Minimum lease payment |
₩ | 218,635 | ₩ | 204,164 | ||||
Sublease payment |
(156 | ) | (118 | ) | ||||
|
|
|
|
|||||
₩ | 218,479 | ₩ | 204,046 | |||||
|
|
|
|
43.2.2 The Group as operating lessor
The future minimum lease receipts arising from the non-cancellable lease contracts as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||
Minimum lease receipts |
||||||||
Within 1 year |
₩ | 27,613 | ₩ | 8,327 | ||||
1-5 years |
52,621 | 22,280 | ||||||
|
|
|
|
|||||
₩ | 80,234 | ₩ | 30,607 | |||||
|
|
|
|
200
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
44. Related Party Transactions
Income and expenses arising from transactions with related parties for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||
Associates |
||||||||||
Balhae Infrastructure Fund |
Fee and commission income |
₩ | 7,851 | ₩ | 7,908 | |||||
Korea Credit Bureau Co., Ltd. |
Interest expense |
66 | 139 | |||||||
Fee and commission income |
3 | 3 | ||||||||
UAMCO., Ltd. |
Interest income |
| 31 | |||||||
Interest expense |
12 | | ||||||||
Fee and commission income |
14 | | ||||||||
Other operating expense |
| 7,626 | ||||||||
Incheon Bridge Co., Ltd. |
Interest income |
13,226 | 14,592 | |||||||
Interest expense |
543 | 909 | ||||||||
Reversal for credit loss |
| 2 | ||||||||
Provision for credit loss |
2 | | ||||||||
KB No.2 Special Purpose Acquisition Company 1 |
Interest income |
27 | | |||||||
Interest expense |
1 | | ||||||||
Fee and commission income |
518 | | ||||||||
Gains on financial assets/liabilities at fair value through profit or loss |
1,440 | | ||||||||
Other non-operating income |
20 | | ||||||||
KB No.3 Special Purpose Acquisition Company |
Interest income |
30 | | |||||||
Interest expense |
6 | | ||||||||
Fee and commission income |
350 | | ||||||||
Gains on financial assets/liabilities at fair value through profit or loss |
1,462 | | ||||||||
Provision for credit loss |
14 | | ||||||||
Other non-operating income |
10 | | ||||||||
KB No.4 Special Purpose Acquisition Company |
Interest income |
24 | | |||||||
Interest expense |
9 | | ||||||||
Fee and commission income |
350 | | ||||||||
Gains on financial assets/liabilities at fair value through profit or loss |
1,751 | | ||||||||
Provision for credit loss |
14 | | ||||||||
Other non-operating income |
11 | | ||||||||
KB No.5 Special Purpose Acquisition Company |
Interest income |
13 | | |||||||
Interest expense |
4 | | ||||||||
Fee and commission income |
175 | | ||||||||
Gains on financial assets/liabilities at fair value through profit or loss |
1,780 | | ||||||||
Provision for credit loss |
14 | | ||||||||
Other non-operating income |
5 | | ||||||||
KB No.6 Special Purpose Acquisition Company |
Interest income |
9 | | |||||||
Interest expense |
4 | | ||||||||
Fee and commission income |
525 | | ||||||||
Gains on financial assets/liabilities at fair value through profit or loss |
1,556 | | ||||||||
Other non-operating income |
39 | | ||||||||
United PF 1st Recovery Private Equity Fund1 |
Interest income |
| 91 | |||||||
Reversal for credit loss |
| 83 | ||||||||
KBIC Private Equity Fund No. 3 |
Interest expense |
38 | 91 | |||||||
Fee and commission income |
300 | 300 | ||||||||
NPS KBIC Private Equity Fund No. 1 |
Fee and commission income |
236 | 474 | |||||||
Provision for credit loss |
133 | | ||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
Fee and commission income |
778 | 1,014 | |||||||
Other operating expense |
534 | | ||||||||
KoFC POSCO HANHWA KB Shared Growth Private Equity Fund |
Fee and commission income |
634 | 569 |
201
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Other operating income |
3 | | ||||||||
Other operating expense |
395 | | ||||||||
KB GwS Private Securities Investment Trust |
Fee and commission income |
926 | 917 | |||||||
Other operating income |
2,006 | 1,934 | ||||||||
KB Star Office Private Real Estate Investment Trust No.1 |
Interest income |
562 | | |||||||
Interest expense |
50 | 75 | ||||||||
Fee and commission income |
435 | 435 | ||||||||
Semiland Co., Ltd. 1 |
Interest income |
8 | 14 | |||||||
Reversal for credit loss |
4 | | ||||||||
Other non-operating expense |
613 | | ||||||||
Kores Co., Ltd.1 |
Interest income |
| 386 | |||||||
Reversal for credit loss |
| 36 | ||||||||
PyungJeon Industries Co.,LTD.1 |
Reversal for credit loss |
| 1,055 | |||||||
Testian Co., Ltd.1 |
Interest income |
| 10 | |||||||
Sehwa Electronics Co., Ltd.1 |
Fee and commission expense |
| 7 | |||||||
Gains on financial assets/liabilities at fair value through profit or loss |
| 35 | ||||||||
Serit Platform Co., Ltd.1 |
Interest income |
| 58 | |||||||
Fee and commission income |
| 17 | ||||||||
Provision for credit loss |
| 74 | ||||||||
DS Plant Co., Ltd.1 |
Interest income |
| 211 | |||||||
Interest expense |
| 2 | ||||||||
Fee and commission income |
| 4 | ||||||||
Losses on financial assets/liabilities at fair value through profit or loss |
| 26 | ||||||||
Reversal for credit loss |
| 10 | ||||||||
DaiYang Metal Co., Ltd. 1 |
Interest income |
| 3 | |||||||
Ssangyong Engineering & Construction Co., Ltd. 1 |
Interest income |
| 2,007 | |||||||
Reversal for credit loss |
| 7,550 | ||||||||
Sunoo Co., Ltd. 1 |
Interest expense |
| 1 | |||||||
KB Global Star Game & Apps SPAC1 |
Interest income |
| 81 | |||||||
Interest expense |
| 10 | ||||||||
Gains on financial assets/liabilities at fair value through profit or loss |
1,215 | 1,210 | ||||||||
Losses on financial assets/liabilities at fair value through profit or loss |
691 | | ||||||||
Provision for credit loss |
| 4 | ||||||||
Other operating income |
| 7 | ||||||||
Other |
||||||||||
Retirement pension |
Fee and commission income |
448 | 386 | |||||||
Interest expense |
788 | 1,971 |
1 | Not considered to be the Groups related party as at December 31, 2014. |
202
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The details of receivables and payables, and related allowances for loans losses arising from the related party transactions as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||
Associates |
||||||||||
JSC Bank CenterCredit |
Cash and due from financial institutions |
₩ | 178 | ₩ | 353 | |||||
Balhae Infrastructure Fund |
Other assets |
2,002 | | |||||||
Korea Credit Bureau Co., Ltd. |
Loans and receivables (Gross amount) |
19 | | |||||||
Deposits |
24,715 | 20,200 | ||||||||
Other liabilities |
17 | 64 | ||||||||
UAMCO., Ltd. |
Loans and receivables (Gross amount) |
2 | | |||||||
Deposits |
1,654 | 5 | ||||||||
Provisions |
| 192 | ||||||||
Semiland Co., Ltd.1 |
Loans and receivables (Gross amount) |
| 19 | |||||||
Deposits |
| 1 | ||||||||
Provisions |
| 3 | ||||||||
Incheon Bridge Co., Ltd. |
Loans and receivables (Gross amount) |
247,885 | 249,362 | |||||||
Allowances for loan losses |
302 | 300 | ||||||||
Other assets |
1,144 | 1,343 | ||||||||
Deposits |
35,421 | 30,991 | ||||||||
Other liabilities |
249 | 240 | ||||||||
Terra Co., Ltd. |
Deposits |
1 | 1 | |||||||
KB No.3 Special Purpose Acquisition Company |
Derivative financial assets |
1,793 | | |||||||
Loans and receivables (Gross amount) |
1,465 | | ||||||||
Deposits |
832 | | ||||||||
Other liabilities |
6 | | ||||||||
KB No.4 Special Purpose Acquisition Company |
Derivative financial assets |
2,167 | | |||||||
Loans and receivables (Gross amount) |
1,876 | | ||||||||
Deposits |
2,500 | | ||||||||
Other liabilities |
1 | | ||||||||
KB No.5 Special Purpose Acquisition Company |
Derivative financial assets |
2,143 | | |||||||
Loans and receivables (Gross amount) |
1,816 | | ||||||||
Deposits |
2,389 | | ||||||||
Other liabilities |
1 | | ||||||||
KB No.6 Special Purpose Acquisition Company |
Derivative financial assets |
1,837 | | |||||||
Loans and receivables (Gross amount) |
1,438 | | ||||||||
Deposits |
4,406 | | ||||||||
Other liabilities |
3 | | ||||||||
United PF 1st Recovery Private Equity Fund |
Provisions |
| 82 | |||||||
KB-Glenwood Private Equity Fund |
Deposits |
| 1 | |||||||
KBIC Private Equity Fund No. 3 |
Other assets |
151 | 76 | |||||||
Deposits |
1,400 | 1,400 | ||||||||
Other liabilities |
24 | 25 | ||||||||
NPS KBIC Private Equity Fund No. 1 |
Other assets |
9 | 65 | |||||||
Other liabilities |
| 42 | ||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
Other assets |
139 | 266 | |||||||
Provisions |
534 | |
203
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
KoFC POSCO HANHWA KB |
Other assets |
634 | 569 | |||||||
Provisions |
128 | | ||||||||
KB GwS Private Securities Investment Trust |
Other assets |
673 | | |||||||
KB Star Office Private Real Estate Investment Trust No.1 |
Loans and receivables (Gross amount) |
10,000 | | |||||||
Other assets |
155 | | ||||||||
Deposits |
6,067 | 8,142 | ||||||||
Other liabilities |
| 31 | ||||||||
Kores Co., Ltd. 1 |
Loans and receivables (Gross amount) |
| 7,854 | |||||||
Allowances for loan losses |
| 3,836 | ||||||||
Other liabilities |
| 2 | ||||||||
Ssangyong Engineering & Construction Co., Ltd.1 |
Loans and receivables (Gross amount) |
| 47,104 | |||||||
Allowances for loan losses |
| 38,784 | ||||||||
Deposits |
| 61 | ||||||||
Other liabilities |
| 14 | ||||||||
Key management |
||||||||||
Loans and receivables (Gross amount) |
2,527 | 4,765 | ||||||||
Allowances for loan losses |
| 1 | ||||||||
Other assets |
3 | 6 | ||||||||
Deposits |
18,462 | 6,932 | ||||||||
Insurance contract liability |
1,292 | 770 | ||||||||
Other liabilities |
173 | 111 | ||||||||
Provisions |
| 2 | ||||||||
Other |
||||||||||
Retirement pension |
Other assets |
191 | 166 | |||||||
Deposits |
41,412 | 48,840 | ||||||||
Other liabilities |
246 | 908 |
1 | Not considered to be the Groups related party as at December 31, 2014. |
In accordance with Korean IFRS 1024, the Group includes parent, parents subsidiaries, associates, associates of parents subsidiaries, key management (including family members), and post-employment benefit plans of the Group and entities regarded as its related parties in the scope of its related parties. Additionally, the Group discloses balances (receivables and payables) and other amounts arising from the related party transactions in the notes to the consolidated financial statements. Refer to Note 13 for details on investments in associates.
Key management includes the directors of the parent company and the executive directors (vice-presidents and above) of Kookmin Bank and companies where the directors and /or their close family members have control or joint control.
204
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Significant loan transactions with related parties for the years ended December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 20141 | |||||||||||||||||||
Beginning | Loans | Repayments | Others | Ending | ||||||||||||||||
Associates |
||||||||||||||||||||
Incheon Bridge Co., Ltd. |
₩ | 249,362 | ₩ | 12,375 | ₩ | (13,852 | ) | ₩ | | ₩ | 247,885 | |||||||||
KB Star Office Private Real Estate Investment Trust No.1 |
| 10,000 | | | 10,000 | |||||||||||||||
KB No.2 Special Purpose Acquisition Company |
| 1,085 | (1,085 | ) | | | ||||||||||||||
KB No.3 Special Purpose Acquisition Company |
| 1,780 | | (315 | ) | 1,465 | ||||||||||||||
KB No.4 Special Purpose Acquisition Company |
| 2,280 | | (404 | ) | 1,876 | ||||||||||||||
KB No.5 Special Purpose Acquisition Company |
| 2,180 | | (364 | ) | 1,816 | ||||||||||||||
KB No.6 Special Purpose Acquisition Company |
| 1,710 | | (272 | ) | 1,438 | ||||||||||||||
Korea Credit Bureau Co., Ltd. |
| 19 | | | 19 | |||||||||||||||
UAMCO., Ltd. |
| 2 | | | 2 | |||||||||||||||
(In millions of Korean won) | 20131 | |||||||||||||||||||
Beginning | Loans | Repayments | Others | Ending | ||||||||||||||||
Associates |
||||||||||||||||||||
United PF 1st Recovery Private Equity Fund |
₩ | 2,805 | ₩ | 1,913 | ₩ | (4,718 | ) | ₩ | | ₩ | | |||||||||
UAMCO., Ltd. |
| 47,181 | (47,181 | ) | | | ||||||||||||||
Kores Co., Ltd. 2 |
7,854 | 900 | (900 | ) | | 7,854 | ||||||||||||||
Incheon Bridge Co., Ltd. |
263,080 | 8,777 | (22,495 | ) | | 249,362 | ||||||||||||||
Ssangyong Engineering & Construction Co., Ltd.2 |
46,275 | 36,843 | (36,014 | ) | | 47,104 | ||||||||||||||
Semiland Co., Ltd.2 |
| 86 | (67 | ) | | 19 |
1 | Transactions and balances arising from operating activities between related parties, such as payments, are excluded. |
2 | Not considered to be the Groups related party as at December 31, 2014. |
205
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
Unused commitments to related parties as of December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||
Balhae Infrastructure Fund |
Purchase of security investment |
₩ | 21,744 | ₩ | 21,744 | |||||
UAMCO., Ltd. |
Loan commitments in Korean won |
| 127,800 | |||||||
Purchase of security investment |
89,950 | 89,950 | ||||||||
United PF 1st Recovery Private Equity Fund |
Loan commitments in Korean won |
| 54,600 | |||||||
Purchase of security investment |
49,383 | 49,383 | ||||||||
KoFC KBIC Frontier Champ 2010-(PEF) |
Purchase of security investment |
2,150 | 2,200 | |||||||
KoFC POSCO HANHWA KB Shared Growth Private Equity Fund |
Purchase of security investment |
23,750 | 35,975 | |||||||
Incheon Bridge Co., Ltd. |
Loan commitments in Korean won |
33,163 | 42,088 | |||||||
KB GwS Private Securities Investment Trust and others |
Loan commitments |
372 | 757 | |||||||
Purchase of security investment |
1,119 | 1,119 |
Unused commitments received from related party entities as at December 31, 2014 and 2013, are as follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||
Associates |
||||||||||
Ssangyong Engineering & Construction Co., Ltd.1 |
Acceptances and Guarantees Outstanding in Won |
₩ | | ₩ | 293,500 |
1 | Deemed not to be related as of December 31, 2014; therefore, 2014 balances are not presented. |
Compensation to key management for the years ended December 31, 2014 and 2013, consists of:
(In millions of Korean won) | 2014 | |||||||||||||||
Short-term employee benefits |
Post- employment benefits |
Share-based payments |
Total | |||||||||||||
Registered directors (executive) |
₩ | 1,580 | ₩ | 136 | ₩ | (15 | ) | ₩ | 1,701 | |||||||
Registered directors (non-executive) |
1,203 | | (15 | ) | 1,188 | |||||||||||
Non-registered directors |
7,517 | 406 | 5,678 | 13,601 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 10,300 | ₩ | 542 | ₩ | 5,648 | ₩ | 16,490 | |||||||||
|
|
|
|
|
|
|
|
206
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
(In millions of Korean won) | 2013 | |||||||||||||||||||
Short-term employee benefits |
Post- employment benefits |
Termination benefits |
Share- based payments |
Total | ||||||||||||||||
Registered directors (executive) |
₩ | 3,270 | ₩ | 144 | ₩ | | ₩ | (578 | ) | ₩ | 2,836 | |||||||||
Registered directors (non-executive) |
1,199 | | | 13 | 1,212 | |||||||||||||||
Non-registered directors |
7,305 | 380 | 1,024 | 5,686 | 14,395 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 11,774 | ₩ | 524 | ₩ | 1,024 | ₩ | 5,121 | ₩ | 18,443 | |||||||||||
|
|
|
|
|
|
|
|
|
|
Collateral received from related party entities as of December 31, 2014 and 2013, follows:
(In millions of Korean won) | 2014 | 2013 | ||||||||
Associates |
||||||||||
Kores Co., Ltd.1 |
Row house |
₩ | | ₩ | 24 | |||||
Apartment |
| 24 | ||||||||
Factory/Forest land |
| 15,000 | ||||||||
Incheon Bridge Co., Ltd. |
Fund management account for Standby loan commitment |
65,000 | 65,000 | |||||||
KB Star office Private real estate Investment Trust No.1 |
Real estate |
13,000 | | |||||||
Key management |
Time deposits and others |
296 | 207 | |||||||
Real estate |
3,583 | 7,381 |
1 | Deemed not to be related as of December 31, 2014; therefore, 2014 balances are not presented. |
As of December 31, 2014, Incheon Bridge Co., Ltd, a related party, provides fund management account, civil engineering completed risk insurance, shares and management rights as unsubordinated collaterals in respect to collateralized amount of ₩816,400 million to a financial syndicate consisting of the Group and four other institutions, and as subordinated collateral in respect to collateralized amount of ₩201,100 million to subordinated debt holders consisting of the Group and two other institutions.
207
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
45. Business combination
The Group obtained control of Woori Financial Co., Ltd. from the Woori Financial Group Inc. for ₩279,870 million(11,180,630 shares, 52.02%) on March 20, 2014. Woori Financial Co., Ltd. operates rental of facilities, installment financial business, factoring business and others. Woori Financial Co., Ltd. has changed its name to KB Capital Co., Ltd.
The Group expects synergies from diversification of business portfolio through reinforcement of non-banking services, diversification of profit structure through expansion of customer range, vitalization of connected business between financial subsidiaries, reinforcement of retail banking business marketing, financing cheap money through the financial group and others.
The goodwill of business combination consists of expected synergies through business combination, the value of unrecognized assets and others.
The consideration transferred and the assets and liabilities arising from the M&A deal are as follows:
(In millions of Korean won) | Amounts | |||
Total consideration |
₩ | 279,870 | ||
|
|
|||
Recognized amounts of identifiable assets acquired and liabilities assumed |
||||
Cash and due from financial institutions |
17,572 | |||
Available-for-sale financial assets |
6,872 | |||
Loans |
3,888,468 | |||
Equipment / intangible assets |
16,828 | |||
Other assets |
59,055 | |||
|
|
|||
Total assets |
3,988,795 | |||
|
|
|||
Debts |
580,000 | |||
Debentures |
2,751,344 | |||
Other liabilities |
272,495 | |||
|
|
|||
Total liabilities |
3,603,839 | |||
|
|
|||
Total identifiable net assets |
₩ | 384,956 | ||
|
|
|||
Ratio of shareholding acquired (%) |
52.02 | |||
Relevant amount of shares |
₩ | 200,261 | ||
Goodwill |
79,609 | |||
Acquisition-related costs1 |
2,094 |
1 | Recorded as fee and commission expense in the statement of comprehensive income. |
208
KB Financial Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014 and 2013
The receivables including loans from the M&A deal at the acquisition date are as follows:
(In millions of Korean won) | Amounts | |||
Fair value |
||||
Due from financial institutions |
₩ | 4,601 | ||
Loans |
3,893,069 | |||
Others |
25,321 | |||
|
|
|||
₩ | 3,922,991 | |||
|
|
|||
Contractual cash flow |
||||
Due from financial institutions |
₩ | 4,601 | ||
Loans |
3,900,760 | |||
Others |
26,478 | |||
|
|
|||
₩ | 3,931,839 | |||
|
|
|||
Estimate of the contractual cash flows not expected to be collected |
||||
Loans |
₩ | 82,640 | ||
Others |
1,085 | |||
|
|
|||
₩ | 83,725 | |||
|
|
The Group measured non-controlling interests in KB Capital Co., Ltd.s net asset fair value as of the date of acquisition. As a result, non-controlling interest amounting to ₩184,695 million is recognized as of the date of acquisition.
Due to the business combination, the net operating income and profit for the period from March 20, 2014 to December 31, 2014, included in the consolidated statement of comprehensive income were ₩39,666 million and ₩29,990 million (profit attributable to shareholders of the parent company is ₩15,601 million), respectively.
Assuming the date of acquisition is the beginning of the reporting period, the income from operations and net profit for the period would have increased by ₩6,137 million and ₩4,649 million, respectively. In calculating the pro forma information, the operating results of the acquired companies for the period before acquisition have been adjusted to reflect the Groups accounting policies and the fair value adjustments made upon acquisition.
46. Approval of Issuance of the Financial Statements
The issuance of the Groups consolidated financial statements as of and for the year ended December 31, 2014, was approved by the Board of Directors on February 5, 2015.
209