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 2016
Commission File Number: 000-53445
KB Financial Group Inc.
(Translation of registrants name into English)
84, 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 .
Audit Report of Kookmin Bank for Fiscal Year 2015
On March 10, 2016, Kookmin Bank, a wholly-owned subsidiary of KB Financial Group Inc., disclosed audit reports for fiscal year 2015 based on the International Financial Reporting Standards as adopted by the Republic of Korea (including the consolidated and separate financial statements of Kookmin Bank as of and for the years ended December 31, 2015 and 2014 and related notes) received from Samil PricewaterhouseCoopers, its independent auditor. The financial statements in such reports have not been approved by the shareholders of Kookmin Bank and remain subject to change.
KB Financial Group Inc. is furnishing the following documents as exhibits to this Form 6-K filing:
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 10, 2016 | By: /s/ Dong Cheol Lee | |||||
(Signature) | ||||||
Name: | Dong Cheol Lee | |||||
Title: | Senior Managing Director |
Kookmin Bank and Subsidiaries
Consolidated Financial Statements
December 31, 2015 and 2014
Index
December 31, 2015 and 2014
Page(s) | ||
1~2 | ||
Consolidated Financial Statements |
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3 | ||
4 | ||
5 | ||
6 | ||
7~162 |
(English Translation of a Report Originally Issued in the Korean)
To the Shareholder and Board of Directors of
Kookmin Bank
We have audited the accompanying consolidated financial statements of Kookmin Bank and its subsidiaries (collectively the Group), which comprise the consolidated statements of financial position as of December 31, 2015 and 2014 and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
Managements responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Korean Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
1
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2015 and 2014, and its financial performance and cash flows for the years then ended in accordance with Korean IFRS.
Other Matter
Auditing standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries.
Seoul, Korea
March 9, 2016
The report is effective as of March 9, 2016, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.
2
Kookmin Bank and Subsidiaries
Consolidated Statements of Financial Position
December 31, 2015 and 2014
(In millions of Korean won) | Notes | 2015 | 2014 | |||||||
Assets |
||||||||||
Cash and due from financial institutions |
4,6,7,36 | ₩ | 14,562,990 | ₩ | 13,973,510 | |||||
Financial assets at fair value through profit or loss |
4,6,8,12 | 6,487,617 | 7,520,471 | |||||||
Derivative financial assets |
4,6,9 | 2,186,010 | 1,910,217 | |||||||
Loans |
4,6,8,10,11 | 222,738,064 | 211,525,560 | |||||||
Financial investments |
4,6,8,12 | 32,911,986 | 29,258,527 | |||||||
Investments in associates |
13 | 670,139 | 667,332 | |||||||
Property and equipment |
14 | 2,909,372 | 2,888,194 | |||||||
Investment property |
14 | 413,179 | 409,266 | |||||||
Intangible assets |
15 | 181,599 | 206,895 | |||||||
Current income tax assets |
32 | 18,325 | 305,831 | |||||||
Deferred income tax assets |
16,32 | 8,321 | 5,314 | |||||||
Assets held for sale |
18 | 33,795 | 54,034 | |||||||
Other assets |
4,6,17 | 7,156,510 | 6,728,513 | |||||||
|
|
|
|
|||||||
Total assets |
₩ | 290,277,907 | ₩ | 275,453,664 | ||||||
|
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|
|
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Liabilities |
||||||||||
Financial liabilities at fair value through profit or loss |
4,6 | ₩ | 69,465 | ₩ | 51,650 | |||||
Derivative financial liabilities |
4,6,9 | 2,138,723 | 1,759,099 | |||||||
Deposits |
4,6,19 | 224,333,507 | 211,611,432 | |||||||
Debts |
4,6,20 | 14,291,815 | 14,297,460 | |||||||
Debentures |
4,6,21 | 15,949,134 | 15,250,464 | |||||||
Provisions |
22 | 450,398 | 483,375 | |||||||
Net defined benefit liabilities |
23 | 55,669 | 57,493 | |||||||
Current income tax liabilities |
32 | 7,121 | 7,585 | |||||||
Deferred income tax liabilities |
16,32 | 165,273 | 110,358 | |||||||
Other liabilities |
4,6,24,30 | 10,069,591 | 9,884,275 | |||||||
|
|
|
|
|||||||
Total liabilities |
267,530,696 | 253,513,191 | ||||||||
|
|
|
|
|||||||
Equity |
25 | |||||||||
Capital stock |
2,021,896 | 2,021,896 | ||||||||
Capital surplus |
5,219,704 | 5,219,704 | ||||||||
Accumulated other comprehensive income |
34 | 500,807 | 570,811 | |||||||
Retained earnings |
33 | 15,004,804 | 14,128,062 | |||||||
(Provision of regulatory reserve for credit losses |
||||||||||
December 31, 2015: ₩1,867,761 million |
||||||||||
December 31, 2014: ₩1,690,979 million) |
||||||||||
(Amounts estimated to be appropriated(reversed) |
||||||||||
December 31, 2015: ₩(32,646) million |
||||||||||
December 31, 2014: ₩176,782 million) |
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Equity attributable to shareholders of the parent company |
22,747,211 | 21,940,473 | ||||||||
Non-controlling interest equity |
| | ||||||||
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|
|
|||||||
Total equity |
22,747,211 | 21,940,473 | ||||||||
|
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|
|||||||
Total liabilities and equity |
₩ | 290,277,907 | ₩ | 275,453,664 | ||||||
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The accompanying notes are an integral part of these consolidated financial statements.
3
Kookmin Bank and Subsidiaries
Consolidated Statements of Comprehensive Income
Years ended December 31, 2015 and 2014
(In millions of Korean won) | Notes | 2015 | 2014 | |||||||
Interest income |
₩ | 8,388,382 | ₩ | 9,702,627 | ||||||
Interest expense |
(3,676,635 | ) | (4,731,181 | ) | ||||||
|
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|
|
|||||||
Net interest income |
26 | 4,711,747 | 4,971,446 | |||||||
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|
|||||||
Fee and commission income |
1,372,054 | 1,271,338 | ||||||||
Fee and commission expense |
(215,681 | ) | (193,293 | ) | ||||||
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|
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Net fee and commission income |
27 | 1,156,373 | 1,078,045 | |||||||
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Net gains on financial assets/liabilities at fair value through profit or loss |
28 | 287,028 | 356,291 | |||||||
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Net other operating expenses |
29 | (421,726 | ) | (768,551 | ) | |||||
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General and administrative expenses |
14,15,23,30 | (3,811,821 | ) | (3,372,858 | ) | |||||
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|
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Operating profit before provision for credit losses |
1,921,601 | 2,264,373 | ||||||||
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|
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Provision for credit losses |
11,17,22 | (741,620 | ) | (887,654 | ) | |||||
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|
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Operating profit |
1,179,981 | 1,376,719 | ||||||||
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|
|||||||
Share of profit of associates |
13 | 7,812 | 17,555 | |||||||
Net other non-operating income(expenses) |
31 | 193,436 | (33,999 | ) | ||||||
|
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|
|||||||
Net non-operating profit(loss) |
201,248 | (16,444 | ) | |||||||
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|
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Profit before income tax expense |
1,381,229 | 1,360,275 | ||||||||
Income tax expense |
32 | (273,991 | ) | (331,234 | ) | |||||
|
|
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|
|||||||
Profit for the year |
1,107,238 | 1,029,041 | ||||||||
|
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|
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(Adjusted profit after provision of regulatory reserve for credit losses |
25 | |||||||||
2015: ₩1,139,884 million |
||||||||||
2014: ₩852,259 million) |
||||||||||
Items that will not be reclassified to profit or loss: |
||||||||||
Remeasurements of net defined benefit liabilities |
(14,494 | ) | (83,603 | ) | ||||||
Items that may be reclassified subsequently to profit or loss: |
||||||||||
Currency translation adjustments |
45,142 | 17,281 | ||||||||
Valuation gains(losses) on financial investments |
(77,712 | ) | 222,309 | |||||||
Share of other comprehensive income(loss) of associates |
2,536 | (32,795 | ) | |||||||
Loss on hedging instruments of net investments in foreign operations |
(25,476 | ) | | |||||||
|
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|
|
|||||||
Other comprehensive income for the year, net of tax |
34 | (70,004 | ) | 123,192 | ||||||
|
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|
|
|||||||
Total comprehensive income for the year |
₩ | 1,037,234 | ₩ | 1,152,233 | ||||||
|
|
|
|
|||||||
Profit attributable to: |
||||||||||
Shareholders of the parent company |
1,107,238 | 1,029,041 | ||||||||
Non-controlling interests |
| | ||||||||
|
|
|
|
|||||||
₩ | 1,107,238 | ₩ | 1,029,041 | |||||||
|
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|
|
|||||||
Total comprehensive income for the year attributable to: |
||||||||||
Shareholders of the parent company |
1,037,234 | 1,152,233 | ||||||||
Non-controlling interests |
| | ||||||||
|
|
|
|
|||||||
₩ | 1,037,234 | ₩ | 1,152,233 | |||||||
|
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|
|
The accompanying notes are an integral part of these consolidated financial statements.
4
Kookmin Bank and Subsidiaries
Consolidated Statements of Changes in Equity
Years Ended December 31, 2015 and 2014
(In millions of Korean won) | Capital Stock |
Capital Surplus |
Accumulated Other Comprehensive Income (loss) |
Retained Earnings |
Non-controlling interests |
Total Equity |
||||||||||||||||||
Balance at January 1, 2014 |
₩ | 2,021,896 | ₩ | 5,219,704 | ₩ | 447,619 | ₩ | 13,257,538 | ₩ | | ₩ | 20,946,757 | ||||||||||||
|
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|
|||||||||||||
Comprehensive income for the year |
||||||||||||||||||||||||
Profit for the year |
| | | 1,029,041 | | 1,029,041 | ||||||||||||||||||
Remeasurements of net defined benefit liabilities |
| | (83,603 | ) | | | (83,603 | ) | ||||||||||||||||
Currency translation adjustments |
| | 17,281 | | | 17,281 | ||||||||||||||||||
Gains on valuation of financial investments |
| | 222,309 | | | 222,309 | ||||||||||||||||||
Losses on valuation of investments accounted for using the equity method |
| | (32,795 | ) | | | (32,795 | ) | ||||||||||||||||
|
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|
|||||||||||||
Total comprehensive income for the year |
| | 123,192 | 1,029,041 | | 1,152,233 | ||||||||||||||||||
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|
|||||||||||||
Transactions with shareholders |
||||||||||||||||||||||||
Dividends |
| | | (158,517 | ) | | (158,517 | ) | ||||||||||||||||
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Total transactions with shareholders |
| | | (158,517 | ) | | (158,517 | ) | ||||||||||||||||
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|
|||||||||||||
Balance at December 31, 2014 |
₩ | 2,021,896 | ₩ | 5,219,704 | ₩ | 570,811 | ₩ | 14,128,062 | ₩ | | ₩ | 21,940,473 | ||||||||||||
|
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|
|||||||||||||
Balance at January 1, 2015 |
₩ | 2,021,896 | ₩ | 5,219,704 | ₩ | 570,811 | ₩ | 14,128,062 | ₩ | | ₩ | 21,940,473 | ||||||||||||
|
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|
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Comprehensive income for the year |
||||||||||||||||||||||||
Profit for the year |
| | | 1,107,238 | | 1,107,238 | ||||||||||||||||||
Remeasurements of net defined benefit liabilities |
| | (14,494 | ) | | | (14,494 | ) | ||||||||||||||||
Currency translation adjustments |
| | 45,142 | | | 45,142 | ||||||||||||||||||
Losses on valuation of financial investments |
| | (77,712 | ) | | | (77,712 | ) | ||||||||||||||||
Gains on valuation of investments accounted for using the equity method |
| | 2,536 | | | 2,536 | ||||||||||||||||||
Losses on hedging instruments of net investments in foreign operations |
| | (25,476 | ) | | | (25,476 | ) | ||||||||||||||||
|
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Total comprehensive income for the year |
| | (70,004 | ) | 1,107,238 | | 1,037,234 | |||||||||||||||||
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Transactions with shareholders |
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Dividends |
| | | (230,496 | ) | | (230,496 | ) | ||||||||||||||||
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Total transactions with shareholders |
| | | (230,496 | ) | | (230,496 | ) | ||||||||||||||||
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Balance at December 31, 2015 |
₩ | 2,021,896 | ₩ | 5,219,704 | ₩ | 500,807 | ₩ | 15,004,804 | ₩ | | ₩ | 22,747,211 | ||||||||||||
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The accompanying notes are an integral part of these consolidated financial statements.
5
Kookmin Bank and Subsidiaries
Consolidated Statements of Cash Flows
Years ended December 31, 2015 and 2014
(In millions of Korean won) | Notes | 2015 | 2014 | |||||||
Cash flows from operating activities |
||||||||||
Profit for the year |
₩ | 1,107,238 | ₩ | 1,029,041 | ||||||
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|
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|
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Adjustment for non-cash items |
||||||||||
Net gains on financial assets/liabilities at fair value through profit or loss |
(24,656 | ) | (83,607 | ) | ||||||
Losses on derivative financial investments for hedging purposes |
39,381 | 28,269 | ||||||||
Adjustment of fair value of derivative financial instruments |
1,771 | (2,040 | ) | |||||||
Provision for credit losses |
741,620 | 887,654 | ||||||||
Net losses(gains) on financial investments |
(179,901 | ) | 126,592 | |||||||
Share of profit of associates |
(7,812 | ) | (17,555 | ) | ||||||
Depreciation and amortization expense |
204,467 | 211,599 | ||||||||
Other net losses on property and equipment/intangible assets |
7,225 | 15,460 | ||||||||
Share-based payment |
11,915 | 7,234 | ||||||||
Post-employment benefits |
164,173 | 148,163 | ||||||||
Net interest income |
430,411 | 279,695 | ||||||||
Losses on foreign currency translation |
250,568 | 116,042 | ||||||||
Other expense |
54,409 | 30,011 | ||||||||
|
|
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|
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1,693,571 | 1,747,517 | |||||||||
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|
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Changes in operating assets and liabilities |
||||||||||
Financial assets at fair value through profit or loss |
1,034,252 | (426,405 | ) | |||||||
Derivative financial instrument |
91,296 | 35,172 | ||||||||
Loans |
(12,192,923 | ) | (9,452,956 | ) | ||||||
Deferred income tax assets |
(2,553 | ) | (4,871 | ) | ||||||
Current income tax assets |
287,506 | 23,612 | ||||||||
Other assets |
(612,548 | ) | 123,395 | |||||||
Financial liabilities at fair value through profit or loss |
17,742 | 11,441 | ||||||||
Deposits |
12,605,816 | 10,645,363 | ||||||||
Deferred income tax liabilities |
83,471 | (67,016 | ) | |||||||
Other liabilities |
(779,103 | ) | (970,235 | ) | ||||||
|
|
|
|
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532,956 | (82,500 | ) | ||||||||
|
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|
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Net cash generated from operating activities |
3,333,765 | 2,694,058 | ||||||||
|
|
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|
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Cash flows from investing activities |
||||||||||
Disposal of financial investments |
19,594,218 | 18,538,678 | ||||||||
Acquisition of financial investments |
(23,176,836 | ) | (17,509,199 | ) | ||||||
Decrease in investments in associates |
36,318 | 74,047 | ||||||||
Acquisition of investments in associates |
(27,999 | ) | (16,216 | ) | ||||||
Disposal of property and equipment |
1,764 | 194 | ||||||||
Acquisition of property and equipment |
(172,590 | ) | (158,443 | ) | ||||||
Acquisition of investment property |
(4,290 | ) | (211,995 | ) | ||||||
Disposal of intangible assets |
3,525 | 2,577 | ||||||||
Acquisition of intangible assets |
(26,203 | ) | (18,078 | ) | ||||||
Others |
97,950 | (1,301,352 | ) | |||||||
|
|
|
|
|||||||
Net cash used in investing activities |
(3,674,143 | ) | (599,787 | ) | ||||||
|
|
|
|
|||||||
Cash flows from financing activities |
||||||||||
Net cash flows from derivative financial instrument for hedging purposes |
(29,326 | ) | (201,593 | ) | ||||||
Net increase (decrease) in debts |
(177,914 | ) | 674,205 | |||||||
Increase in debentures |
5,383,612 | 6,575,862 | ||||||||
Decrease in debentures |
(4,905,441 | ) | (7,673,573 | ) | ||||||
Payment of dividends |
(230,496 | ) | (158,517 | ) | ||||||
Net increase in other payables from trust accounts |
367,493 | 124,903 | ||||||||
Others |
4,338 | (948,359 | ) | |||||||
|
|
|
|
|||||||
Net cash provided by(used in) financing activities |
412,266 | (1,607,072 | ) | |||||||
|
|
|
|
|||||||
Exchange gains on cash and cash equivalents |
65,558 | 12,221 | ||||||||
|
|
|
|
|||||||
Net increase in cash and cash equivalents |
137,446 | 499,420 | ||||||||
Cash and cash equivalents at the beginning of the year |
36 | 6,332,060 | 5,832,640 | |||||||
|
|
|
|
|||||||
Cash and cash equivalents at the end of year |
36 | ₩ | 6,469,506 | ₩ | 6,332,060 | |||||
|
|
|
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The accompanying notes are an integral part of these consolidated financial statements.
6
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
1. | The Bank |
Kookmin Bank (the Bank) was incorporated in 1963 under the Citizens National Bank Act to provide banking services to the general public and to small and medium-sized enterprises. Pursuant to the Repeal Act of the Citizens National Bank Act, effective January 5, 1995, the Banks status changed to a financial institution which operates under the Banking Act and Commercial Act.
The Bank merged with Korea Long Term Credit Bank on December 31, 1998, and with its subsidiaries, Daegu, Busan, Jeonnam Kookmin Mutual Savings & Finance Co., Ltd., on August 22, 1999. Pursuant to the directive from the Financial Services Commission related to the Structural Improvement of the Financial Industry Act, the Bank acquired certain assets, including performing loans, and assumed most of the liabilities of Daedong Bank on June 29, 1998. Also, the Bank completed the merger with Housing and Commercial Bank (H&CB) on October 31, 2001, and merged with Kookmin Credit Card Co., Ltd., a majority-owned subsidiary, on September 30, 2003. Meanwhile, the Bank spun off its credit card business segment on February 28, 2011, and KB Kookmin Card Co., Ltd. became a subsidiary of KB Financial Group Inc.
The Bank listed its shares on the Stock Market Division of the Korea Exchange (KRX, formerly Korea Stock Exchange) in September 1994. As a result of the merger with H&CB, the shareholders of the former Kookmin Bank and H&CB received new common shares of the Bank which were relisted on the KRX on November 9, 2001. In addition, H&CB listed its American Depositary Shares (ADS) on the New York Stock Exchange (NYSE) on October 3, 2000, prior to the merger. Following the merger with H&CB, the Bank listed its ADS on the NYSE on November 1, 2001. The Bank became a wholly owned subsidiary of KB Financial Group Inc. through a comprehensive stock transfer on September 29, 2008. Subsequently, the Banks shares and its ADS, each listed on the KRX and the NYSE, were delisted on October 10, 2008 and September 26, 2008, respectively. As of December 31, 2015, the Banks paid-in capital is ₩2,021,896 million.
The Bank engages in the banking business in accordance with the Banking Act, trust business in accordance with the Financial Investment Services and Capital Markets Act, and other relevant businesses. As of December 31, 2015, the Bank operates 1,138 domestic branches and offices, and five overseas branches (excluding four subsidiaries and three offices).
7
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
2. | Basis of Preparation |
2.1 Application of Korean IFRS
The consolidated financial statements of the Bank and its subsidiaries (collectively the Group) have been prepared in accordance with Korean IFRS. These are the standards and related interpretations issued by the International Accounting Standards Board (IASB) that have been adopted by the Republic of Korea.
The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with Korean IFRS. The accompanying consolidated financial statements have been condensed, restructured and translated into English from the Korean language financial statements.
Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Groups financial position, financial performance or cash flows, is not presented in the accompanying consolidated financial statements.
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.
The Group newly applied the following new and amended standards and interpretations for the annual period beginning on January 1, 2015, and these applications do not have a material impact on the consolidated financial statements.
| Amendment to Korean IFRS 1019, Employment Benefits |
| Annual improvements to Korean IFRS 2010-2012 Cycle |
| Annual improvements to Korean IFRS 2011-2013 Cycle |
Amendments to standards issued but not effective for the financial year beginning January 1, 2015, and not early adopted are enumerated below. The Group expects that these standards and amendments would not have a material impact on its consolidated financial statements.
| Amendment to Korean IFRS 1001, Presentation of Financial Statements |
| Korean IFRS 1016, Property, plant and equipment, and Korean IFRS 1041, Agriculture and fishing: Productive plants |
| Korean IFRS 1016, Property, plant and equipment, and Korean IFRS 1038, Intangible assets: Amortization based on revenue |
| Korean IFRS 1110, Consolidated Financial Statements, and Korean IFRS 1028, Investments in Associates and Joint Arrangements |
| Korean IFRS 1111, Joint Arrangements |
| Annual Improvements to Korean IFRS 2012-2014 Cycle |
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Also, new standards and interpretations issued but not effective for the financial year beginning January 1, 2015, and not early adopted are as follows:
| Korean IFRS 1109, Financial Instruments |
This new standard issued in December 2015 regarding financial instruments replaces Korean IFRS 1039, Financial Instruments: Recognition and Measurement.
Korean IFRS 1109, Financial Instruments, requires financial assets to be classified and measured on the basis of the holders business model and the instruments contractual cash flow characteristics. The standard requires a financial instrument to be classified and measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss, and provides guidance on accounting for related gains and losses. The impairment model is changed into an expected credit loss model, and changes in those expected credit losses are recognized in profit or loss. This amendment has been partially reflected, which is consistent with the risk management of companies for hedge accounting. The new standard is effective for the financial year initially beginning on or after January 1, 2018, but early adoption is allowed. Early adoption of only the requirements related to financial liabilities designated at fair value through profit or loss is also permitted. The Group is in the process of evaluating the effects resulting from the adoption of the new standard.
| Korean IFRS 1115, Revenue from Contracts with Customers |
This new standard for the recognition of revenue issued in December 2015 will replace Korean IFRS1018, Revenue, Korean IFRS 1011, Construction Contracts, and related Interpretations. Korean IFRS 1115, Revenue from Contracts with Customers, will replace the risk-and-reward model under the current standards and is based on the principle that revenue is recognized when control of goods or services transfer to the customer by applying the five-step process. Key changes to current practices include guidance on separate recognition of distinct goods or services in any bundled arrangement, constraint on recognizing variable consideration, criteria on recognizing revenue over time, and increased disclosures. The new standard is effective for annual reporting beginning on or after January 1, 2018, but early application is permitted. The Group is in the process of evaluating the effects resulting from the adoption of the new Standard.
2.2 Measurement Basis
The consolidated financial statements have been prepared under the historical cost convention unless otherwise specified.
2.3 Functional and Presentation Currency
Items included in the financial statements of each of the Groups entities 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.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 incomes (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 Income taxes
The Group is operating in numerous countries and the income generated from these operations is subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain.
If certain portion of the taxable income is not used for investments, increase in wages, or dividends in accordance with the Tax System For Recirculation of Corporate Income, the Group is liable to pay additional income tax calculated based on the tax laws. The new tax system is effective for three years from 2015. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the new system. As the Groups income tax is dependent on the investments, increase in wages and dividends, there exists uncertainty with regard to measuring the final tax effects.
2.4.2 Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. Refer to Note 6 for details on valuation techniques and inputs used to determine the fair value of financial instruments.
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.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
2.4.4 Net defined benefit liability
The present value of net defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions (Note 23).
2.4.5 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 periods 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.
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.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
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 loss resulting from upstream and downstream transactions between the Group and associates are eliminated to the extent at the Groups interest in associates. Unrealized losses are eliminated in the same way as unrealized gains except that they are only eliminated to the extent that there is no evidence of impairment.
If associates 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 statement of comprehensive income.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
3.1.3 Structured entity
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. When the Group decides whether it has power to the structured entities in which the Group has interests, it considers factors such as the purpose, the form, the practical ability to direct the relevant activities of a structured entity, the nature of its relationship with a structured entity and the amount of exposure to variable returns.
3.1.4 Trusts and funds
The Group provides management services for trust assets, collective investment and other funds. These trusts and funds are not consolidated in the 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. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous consolidated financial statements are recognized in profit or loss in the period in which they arise, except for exchange differences arising on net investments in a foreign operation and financial liability designated as a hedge of the net investment. When gains or losses on 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.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Any goodwill arising from the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising from the acquisition of that foreign operation are treated as assets and liabilities of the foreign operation. Thus, they are expressed in the functional currency of the foreign operation and are translated into the presentation currency at the closing rate.
On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss (as a reclassification adjustment) when the gains or losses on disposal are recognized. On the partial disposal of a subsidiary that includes a foreign operation, the Group re-attributes the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income to the non-controlling interests in that foreign operation. In any other partial disposal of a foreign operation, the Group reclassifies to profit or loss only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income.
3.3 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, or other financial assets. The Group classifies financial liabilities as financial liabilities at fair value through profit or loss, or other financial liabilities. The classification depends on the nature and holding purpose of the financial instrument at initial recognition in the consolidated financial statements.
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.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
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 used within the industry, or a value measured by an independent external valuation institution as the fair values if all or some of the inputs to the valuation models are not market observable and therefore it is necessary to estimate fair value based on certain assumptions.
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. Those factors include counterparty credit risk, bid-ask spread, liquidity risk and others.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with economic methodologies applied for pricing financial instruments. Periodically, the Group calibrates the valuation technique and tests its validity using prices of observable current market transactions of the same instrument or based on other relevant observable market data.
3.3.3 Derecognition
Derecognition is the removal of a previously recognized financial asset or financial liability from the statement of financial position. The Group derecognizes a financial asset or a financial liability when, and only when:
Derecognition of financial assets
Financial assets are derecognized when the contractual rights to the cash flows from the financial assets expire or the financial assets have been transferred and substantially all the risks and rewards of ownership of the financial assets are also transferred, or all the risks and rewards of ownership of the financial assets are neither substantially transferred nor retained and the Group has not retained control. If the Group neither transfers nor disposes of substantially all the risks and rewards of ownership of the financial assets, the Group continues to recognize the financial asset to the extent of its continuing involvement in the financial asset.
If the Group transfers the contractual rights to receive the cash flows of the financial asset, but retains substantially all the risks and rewards of ownership of the financial asset, the Group continues to recognize the transferred asset in its 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
A financial asset and a financial liability are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
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.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
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 Korean IFRS 1039, Financial Instruments: Recognition and measurement. |
The Group did not separate an embedded derivative from its host contract of derivative linked securities but designated the entire hybrid contract as at fair value through profit of loss.
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.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
However, interest income 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.
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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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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. The Group considers the decline in the fair value of over 30% against the original cost as a significant decline. A decline is considered as prolonged if the period, in which the fair value of the financial asset has been below its original cost at initial recognition, is same as or more than six months.
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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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
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.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 extent of 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 consolidated financial statements irrespective of transaction purpose and subsequent measurement requirement.
The Group designates certain derivatives as hedging instruments to hedge the risk of changes in fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge). The Group designates non-derivatives as hedging instruments to hedge the risk of foreign exchange of a net investment in a foreign operation (hedge of net investment).
At the inception of the hedge, there is formal designation and documentation of the hedging relationship and the 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 measured at fair value. Gains or losses arising from a change in fair value are recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss.
3.7.2 Fair value hedges
If derivatives qualify for a fair value hedge, the change in fair value of the hedging instrument and the change in fair value of the hedged item attributable to the hedged risk are recognized in profit or loss as part of other operating income and expenses. 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.
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Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
3.7.3 Hedge of net investment
If financial liabilities qualify for a net investment hedge, the effective portion of changes in fair value of hedging instrument is recognized in other comprehensive income or loss and the ineffective portion is recognized in profit or loss. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognized in other comprehensive income will be reclassified from other comprehensive income or loss to profit or loss as a reclassification adjustment on the disposal or partial disposal of the foreign operation in accordance with Korean IFRS 1039, Financial Instruments: Recognition and Measurement.
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.
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.
22
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
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.
The depreciation methods 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 ~ 5.7 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.
3.9 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.
23
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 | 5~10 years | ||
Software | Straight-line | 4 years | ||
Others | Straight-line | 4~30 years |
The amortization period and the amortization method for intangible assets with a finite useful life are reviewed at least at each financial year end. Where an intangible asset is not being amortized, because its useful life is considered to be indefinite, the Group carries out a review in each accounting period to confirm whether or not events and circumstances still support the assumption of an indefinite useful life. If they do not, the change from the indefinite to finite useful life is accounted for as a change in an accounting estimate.
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 Korean IFRS.
Goodwill acquired from business combinations after January 1, 2010, is initially measured as the excess of the aggregate of the consideration transferred, fair value 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.
24
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
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.
25
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 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.
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 the 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.
3.12 Greenhouse Gas Emission Rights and Liabilities
The Group measured at zero the emission rights received free of charge from the government following the Enforcement of Allocation and Trading of Greenhouse Gas Emissions Allowances. Emission rights purchased are measured initially at cost and subsequently carried at their costs less any accumulated impairment losses. Emission liabilities are measured as the sum of the carrying amount of emission allowances held by the Group and best estimate of the expenditure required to settle the obligation for any excess emissions at the end of reporting period. The emission rights and liabilities are classified as intangible assets and provisions, respectively, in the consolidated statement of financial position.
The emission rights held for trading are measured at fair value and the changes in fair value are recognized in profit or loss. The changes in fair value and gain or loss on disposal are classified as non-operating income and expenses.
3.13 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.
26
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
3.14 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 being qualified as held for sale, the asset (or disposal group) must be available for immediate sale in its present condition and its sale must be highly probable. 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 Korean 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).
27
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. Gains are recognized for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss that has been recognized.
3.15 Financial Liabilities at Fair Value through Profit or Loss
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.
3.16 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.
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 according to the original or modified terms of a debt instrument.
28
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 Korean IFRS 1037, Provisions, Contingent Liabilities and Contingent Assets, and |
| The initial amount recognized, less, when appropriate, cumulative amortization recognized in accordance with Korean IFRS 1018, Revenue. |
3.18 Equity Instrument issued by the Group
An equity instrument is any contract or agreement that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are deducted, net of tax, from the equity.
3.19 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.
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.
29
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
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 net defined benefit liability is the present value of the defined benefit obligation less the fair value of plan assets at the end of the reporting period.
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).
30
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
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 KB Financial Group Inc., the ultimate 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 determines that it has a present obligation to settle in cash because the Group has a past practice and a stated policy of settling in cash. Therefore, the Group accounts for the transaction in accordance with the requirements of cash-settled share-based payment transactions.
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 period.
31
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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. The Group shall recognize a liability and expense for termination benefits at the earlier of the following dates: when the Group can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring that is within the scope of Korean IFRS 1037 and involves the payment of termination benefits. Termination benefits are measured by considering the number of employees expected to accept the offer in the case of a voluntary early retirement. Termination benefits over 12 months after the reporting period are discounted to present value.
3.21 Income Tax Expenses
Income tax expense comprises current tax expense and deferred income tax expense. Current and deferred income tax are recognized as income or expense for the period, except to the extent that the tax arises from a 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 a business combination.
3.21.1 Current income tax
Current income tax is the amount of income tax payable in respect of the taxable profit (loss) for a period. A difference between the taxable profit and accounting profit may arise when income or expense is included in accounting profit in one period, but is included in taxable profit in a different period. Differences may also arise if there is revenue that is exempt from taxation, or expense that is not deductible in determining taxable profit (loss). Current income tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The Group offsets current income tax assets and current income tax liabilities if, and only if, the Group (a) has a legally enforceable right to set off the recognized amounts and (b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
3.21.2 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 consolidated 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.
32
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
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.
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 tax treatments applied by the Group which may be challenged by the tax authorities due to the complexity of the transaction or different interpretation of the tax laws, a claim for rectification brought by the Group, or an appeal for a refund claimed from the tax authorities related to additional assessments. The Group recognizes its uncertain tax positions in the consolidated financial statements based on the guidance in Korean IFRS 1012. The Income tax asset is recognized if a tax refund is probable for taxes paid and levied by the tax authority. However, interest and penalties related to income tax are recognized in accordance with Korean IFRS 1037.
3.22 Transactions with the Trust Accounts
Under the Financial Investment Services and Capital Markets Act, the Group recognizes trust accounts (the trust accounts) as separate. The borrowings from trust accounts represent transfer of funds in trust accounts into banking accounts. Such borrowings from trust accounts are recorded as receivables from the banking accounts in the trust accounts and as borrowings from trust accounts in the banking accounts. The Group earns trust fees from the trust accounts for its management of trust assets and operations. The reserves for future profits and losses are set up in the trust accounts for profits and losses related to those trust funds with a guarantee of the principal or of the principal and a certain minimum rate of return in accordance with the relevant laws and regulations applicable to trust operations. The reserves are used to provide for the losses on such trust funds and, if the losses incurred are in excess of the reserves, the excess losses are compensation paid as a loss on trust management in other operating expenses and the trust accounts recognize the corresponding compensation as compensation from banking accounts.
33
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 Value at Risk (VaR) 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.
34
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 Subcommittee
The Risk Management Committee enforces decisions made by Risk Management Council, and makes practical decisions to implement risk management policies and procedures.
| Credit Risk Management Subcommittee |
The Credit Risk Management Subcommittee reviews the newly developed credit derivatives and exotic products, and the establishment and modification of calculation guideline and measurement methodology on credit exposure limits.
| Market Risk Management Subcommittee |
The Market Risk Management Subcommittee reviews and makes decisions on setting risk limits and approving the standard for investments in newly developed standard, exotic and hybrid products.
| Operational Risk Management Subcommittee |
The Operational Risk Management Subcommittee reviews the issues that have a significant effect on the Groups operational risk relating to establishment, amendment and abolition of major system, process and others.
Risk Management Group
The Risk Management Group is responsible for 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 items and uses expected losses and economic capital as a management indicator. The Group manages credit risk by allocating credit risk economic capital limits.
35
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 group that focuses on credit risk management in accordance with the Groups credit risk management policy. The Groups credit group, customer service group and SME/SOHO service group, which are independent from the sales department, are responsible for loan policy, loan limit, loan review, credit evaluation, restructuring and subsequent events. The credit 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.
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, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Financial assets |
||||||||
Due from financial institutions |
₩ | 12,092,294 | ₩ | 11,429,305 | ||||
Financial assets at fair value through profit or loss |
||||||||
Financial assets held for trading1 |
6,356,529 | 7,420,128 | ||||||
Financial assets designated at fair value through profit or loss |
70,198 | | ||||||
Derivatives |
2,186,010 | 1,910,217 | ||||||
Loans2 |
222,738,064 | 211,525,560 | ||||||
Financial investments |
||||||||
Available-for-sale financial assets |
18,293,533 | 16,415,900 | ||||||
Held-to-maturity financial assets |
11,748,794 | 10,124,136 | ||||||
Other financial assets |
6,887,727 | 6,529,032 | ||||||
|
|
|
|
|||||
280,373,149 | 265,354,278 | |||||||
|
|
|
|
|||||
Off-balance sheet items |
||||||||
Acceptances and guarantees contracts |
8,932,463 | 8,957,888 | ||||||
Financial guarantee contracts |
4,014,116 | 4,438,399 | ||||||
Commitments |
56,752,653 | 59,458,332 | ||||||
|
|
|
|
|||||
69,699,232 | 72,854,619 | |||||||
|
|
|
|
|||||
₩ | 350,072,381 | ₩ | 338,208,897 | |||||
|
|
|
|
1 | The amounts of ₩69,060 million and ₩51,345 million as of December 31, 2015 and 2014, respectively, related to financial instruments indexed to the price of gold are included. |
2 | Loans and other financial assets are presented net of allowance for loan losses. |
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.
36
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Loans are categorized as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||
Loans | Retail | Corporate | Total | |||||||||||||||||||||
Amount | % | Amount | % | Amount | % | |||||||||||||||||||
Neither past due nor impaired |
₩ | 114,339,823 | 98.60 | ₩ | 106,622,773 | 98.00 | ₩ | 220,962,596 | 98.31 | |||||||||||||||
Past due but not impaired |
1,095,774 | 0.94 | 283,238 | 0.26 | 1,379,012 | 0.61 | ||||||||||||||||||
Impaired |
530,988 | 0.46 | 1,891,347 | 1.74 | 2,422,335 | 1.08 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
115,966,585 | 100.00 | 108,797,358 | 100.00 | 224,763,943 | 100.00 | |||||||||||||||||||
Allowances |
(432,414 | ) | 0.37 | (1,593,465 | ) | 1.46 | (2,025,879 | ) | 0.90 | |||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Carrying amount |
₩ | 115,534,171 | ₩ | 107,203,893 | ₩ | 222,738,064 | ||||||||||||||||||
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||
Loans | Retail | Corporate | Total | |||||||||||||||||||||
Amount | % | Amount | % | Amount | % | |||||||||||||||||||
Neither past due nor impaired |
₩ | 110,154,228 | 98.14 | ₩ | 98,992,267 | 97.81 | ₩ | 209,146,495 | 97.98 | |||||||||||||||
Past due but not impaired |
1,437,183 | 1.28 | 328,393 | 0.32 | 1,765,576 | 0.83 | ||||||||||||||||||
Impaired |
652,092 | 0.58 | 1,888,994 | 1.87 | 2,541,086 | 1.19 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
112,243,503 | 100.00 | 101,209,654 | 100.00 | 213,453,157 | 100.00 | |||||||||||||||||||
Allowances |
(476,974 | ) | 0.42 | (1,450,623 | ) | 1.43 | (1,927,597 | ) | 0.90 | |||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Carrying amount |
₩ | 111,766,529 | ₩ | 99,759,031 | ₩ | 211,525,560 | ||||||||||||||||||
|
|
|
|
|
|
Credit quality of loans that are neither past due nor impaired is as follows:
(In millions of Korean won) | ||||||||||||
2015 | ||||||||||||
Retail | Corporate | Total | ||||||||||
Grade 1 |
₩ | 100,584,890 | ₩ | 48,340,172 | ₩ | 148,925,062 | ||||||
Grade 2 |
11,581,264 | 46,094,415 | 57,675,679 | |||||||||
Grade 3 |
1,422,572 | 9,978,535 | 11,401,107 | |||||||||
Grade 4 |
509,761 | 1,797,388 | 2,307,149 | |||||||||
Grade 5 |
241,336 | 412,263 | 653,599 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 114,339,823 | ₩ | 106,622,773 | ₩ | 220,962,596 | |||||||
|
|
|
|
|
|
37
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||
2014 | ||||||||||||
Retail | Corporate | Total | ||||||||||
Grade 1 |
₩ | 97,566,588 | ₩ | 42,053,952 | ₩ | 139,620,540 | ||||||
Grade 2 |
11,043,769 | 43,764,285 | 54,808,054 | |||||||||
Grade 3 |
872,739 | 10,949,734 | 11,822,473 | |||||||||
Grade 4 |
453,942 | 1,858,963 | 2,312,905 | |||||||||
Grade 5 |
217,190 | 365,333 | 582,523 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 110,154,228 | ₩ | 98,992,267 | ₩ | 209,146,495 | |||||||
|
|
|
|
|
|
Credit quality of loans graded according to internal credit ratings is as follows:
Retail | Corporate | |||
Grade 1 |
1 to 5 grade | AAA to BBB+ | ||
Grade 2 |
6 to 8 grade | BBB to BB | ||
Grade 3 |
9 to 10 grade | BB- to B | ||
Grade 4 |
11 grade | B- to CCC | ||
Grade 5 |
12 grade or under | CC or under |
Loans that are past due but not impaired are as follows:
(In millions of Korean won) | ||||||||||||||||
2015 | ||||||||||||||||
1 ~ 29 days | 30 ~ 59 days | 60 ~ 89 days | Total | |||||||||||||
Retail |
₩ | 935,766 | ₩ | 108,682 | ₩ | 51,326 | ₩ | 1,095,774 | ||||||||
Corporate |
214,332 | 55,832 | 13,074 | 283,238 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 1,150,098 | ₩ | 164,514 | ₩ | 64,400 | ₩ | 1,379,012 | |||||||||
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
1 ~ 29 days | 30 ~ 59 days | 60 ~ 89 days | Total | |||||||||||||
Retail |
₩ | 1,231,819 | ₩ | 138,947 | ₩ | 66,417 | ₩ | 1,437,183 | ||||||||
Corporate |
277,288 | 37,090 | 14,015 | 328,393 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 1,509,107 | ₩ | 176,037 | ₩ | 80,432 | ₩ | 1,765,576 | |||||||||
|
|
|
|
|
|
|
|
Impaired loans are as follows:
(In millions of Korean won) | ||||||||||||
2015 | ||||||||||||
Retail | Corporate | Total | ||||||||||
Loans |
₩ | 530,988 | ₩ | 1,891,347 | ₩ | 2,422,335 | ||||||
Allowances |
(208,921 | ) | (1,135,346 | ) | (1,344,267 | ) | ||||||
Individual |
| (955,250 | ) | (955,250 | ) | |||||||
Collective |
(208,921 | ) | (180,096 | ) | (389,017 | ) | ||||||
|
|
|
|
|
|
|||||||
₩ | 322,067 | ₩ | 756,001 | ₩ | 1,078,068 | |||||||
|
|
|
|
|
|
38
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||
2014 | ||||||||||||
Retail | Corporate | Total | ||||||||||
Loans |
₩ | 652,092 | ₩ | 1,888,994 | ₩ | 2,541,086 | ||||||
Allowances |
(257,641 | ) | (986,848 | ) | (1,244,489 | ) | ||||||
Individual |
| (780,376 | ) | (780,376 | ) | |||||||
Collective |
(257,641 | ) | (206,472 | ) | (464,113 | ) | ||||||
|
|
|
|
|
|
|||||||
₩ | 394,451 | ₩ | 902,146 | ₩ | 1,296,597 | |||||||
|
|
|
|
|
|
A quantification of the extent to which collateral and other credit enhancements mitigate credit risk as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | ||||||||||||||||||||
2015 | ||||||||||||||||||||
Impaired Loans | Non-impaired Loans | |||||||||||||||||||
Individual | Collective | Past due | Not past due | Total | ||||||||||||||||
Guarantee |
₩ | 26,150 | ₩ | 130,774 | ₩ | 248,709 | ₩ | 42,736,193 | ₩ | 43,141,826 | ||||||||||
Deposits and savings |
599 | 9,875 | 26,681 | 1,724,084 | 1,761,239 | |||||||||||||||
Property and equipment |
7,888 | 3,626 | 181 | 1,362,910 | 1,374,605 | |||||||||||||||
Real estate |
170,694 | 410,403 | 826,655 | 128,875,879 | 130,283,631 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 205,331 | ₩ | 554,678 | ₩ | 1,102,226 | ₩ | 174,699,066 | ₩ | 176,561,301 | |||||||||||
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||
2014 | ||||||||||||||||||||
Impaired Loans | Non-impaired Loans | |||||||||||||||||||
Individual | Collective | Past due | Not past due | Total | ||||||||||||||||
Guarantee |
₩ | 18,255 | ₩ | 143,431 | ₩ | 277,607 | ₩ | 34,969,421 | ₩ | 35,408,714 | ||||||||||
Deposits and savings |
948 | 15,466 | 35,568 | 1,781,548 | 1,833,530 | |||||||||||||||
Property and equipment |
7,604 | 4,806 | 1,943 | 1,151,842 | 1,166,195 | |||||||||||||||
Real estate |
177,623 | 507,705 | 1,124,130 | 123,011,312 | 124,820,770 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 204,430 | ₩ | 671,408 | ₩ | 1,439,248 | ₩ | 160,914,123 | ₩ | 163,229,209 | |||||||||||
|
|
|
|
|
|
|
|
|
|
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) | 2015 | 2014 | ||||||
Securities that are neither past due nor impaired |
₩ | 36,399,994 | ₩ | 33,908,029 | ||||
Impaired securities |
| 790 | ||||||
|
|
|
|
|||||
₩ | 36,399,994 | ₩ | 33,908,819 | |||||
|
|
|
|
39
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The credit quality of securities, excluding equity securities that are neither past due nor impaired, as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||
Grade 1 | Grade 2 | Grade 31 | Grade 4 | Grade 5 | Total | |||||||||||||||||||
Financial assets held for trading |
₩ | 4,901,368 | ₩ | 1,378,097 | ₩ | 8,004 | ₩ | | ₩ | | ₩ | 6,287,469 | ||||||||||||
Financial assets designated at fair value through profit or loss |
70,198 | | | | | 70,198 | ||||||||||||||||||
Available-for-sale financial assets |
17,885,148 | 342,987 | 65,398 | | | 18,293,533 | ||||||||||||||||||
Held-to-maturity financial assets |
11,748,794 | | | | | 11,748,794 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 34,605,508 | ₩ | 1,721,084 | ₩ | 73,402 | ₩ | | ₩ | | ₩ | 36,399,994 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||
Grade 1 | Grade 2 | Grade 31 | Grade 4 | Grade 5 | Total | |||||||||||||||||||
Financial assets held for trading |
₩ | 6,187,646 | ₩ | 1,181,137 | ₩ | | ₩ | | ₩ | | ₩ | 7,368,783 | ||||||||||||
Available-for-sale financial assets |
16,062,648 | 288,531 | 63,931 | | | 16,415,110 | ||||||||||||||||||
Held-to-maturity financial assets |
10,124,136 | | | | | 10,124,136 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 32,374,430 | ₩ | 1,469,668 | ₩ | 63,931 | ₩ | | ₩ | | ₩ | 33,908,029 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
1 | As there is no foreign credit rating, it is classified as Grade 3. |
The credit qualities of securities excluding equity securities according to the credit ratings by external rating agencies are as follows:
Credit quality | Domestic |
Foreign | ||||||||||
KAP | KIS | NICE P&I | 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 |
40
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 ratings 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 mitigates credit risk of derivative financial instruments as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Deposits and savings, securities and others |
₩ | 424,559 | ₩ | 329,482 |
4.2.7 Credit risk concentration analysis
The details of the Groups loans by country as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||
Retail | Corporate | Total | % | Allowances | Carrying amount |
|||||||||||||||||||
Korea |
₩ | 115,924,173 | ₩ | 106,429,100 | ₩ | 222,353,273 | 98.93 | ₩ | (1,983,058 | ) | ₩ | 220,370,215 | ||||||||||||
China |
30 | 905,693 | 905,723 | 0.40 | (17,674 | ) | 888,049 | |||||||||||||||||
Japan |
1,737 | 138,278 | 140,015 | 0.06 | (21,404 | ) | 118,611 | |||||||||||||||||
United States |
| 925,391 | 925,391 | 0.41 | (1,056 | ) | 924,335 | |||||||||||||||||
Europe |
1 | 180,429 | 180,430 | 0.08 | (513 | ) | 179,917 | |||||||||||||||||
Others |
40,644 | 218,467 | 259,111 | 0.12 | (2,174 | ) | 256,937 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
₩ | 115,966,585 | ₩ | 108,797,358 | ₩ | 224,763,943 | 100.00 | ₩ | (2,025,879 | ) | ₩ | 222,738,064 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||
Retail | Corporate | Total | % | Allowances | Carrying amount |
|||||||||||||||||||
Korea |
₩ | 112,193,456 | ₩ | 99,117,030 | ₩ | 211,310,486 | 99.00 | ₩ | (1,876,968 | ) | ₩ | 209,433,518 | ||||||||||||
China |
84 | 764,415 | 764,499 | 0.36 | (15,543 | ) | 748,956 | |||||||||||||||||
Japan |
2,581 | 271,914 | 274,495 | 0.13 | (31,393 | ) | 243,102 | |||||||||||||||||
United States |
| 698,294 | 698,294 | 0.33 | (629 | ) | 697,665 | |||||||||||||||||
Europe |
9 | 184,307 | 184,316 | 0.09 | (389 | ) | 183,927 | |||||||||||||||||
Others |
47,373 | 173,694 | 221,067 | 0.09 | (2,675 | ) | 218,392 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
₩ | 112,243,503 | ₩ | 101,209,654 | ₩ | 213,453,157 | 100.00 | ₩ | (1,927,597 | ) | ₩ | 211,525,560 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
41
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The details of the Groups corporate loans by industry as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||
2015 | ||||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Financial institutions |
₩ | 8,591,217 | 7.90 | ₩ | (12,016 | ) | ₩ | 8,579,201 | ||||||||
Manufacturing |
35,333,785 | 32.48 | (801,080 | ) | 34,532,705 | |||||||||||
Service |
43,890,888 | 40.34 | (338,056 | ) | 43,552,832 | |||||||||||
Wholesale and retail |
13,445,957 | 12.36 | (151,337 | ) | 13,294,620 | |||||||||||
Construction |
3,373,093 | 3.10 | (265,776 | ) | 3,107,317 | |||||||||||
Public |
783,767 | 0.72 | (5,221 | ) | 778,546 | |||||||||||
Others |
3,378,651 | 3.10 | (19,979 | ) | 3,358,672 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 108,797,358 | 100.00 | ₩ | (1,593,465 | ) | ₩ | 107,203,893 | |||||||||
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Financial institutions |
₩ | 8,988,881 | 8.88 | ₩ | (81,715 | ) | ₩ | 8,907,166 | ||||||||
Manufacturing |
32,644,110 | 32.25 | (520,898 | ) | 32,123,212 | |||||||||||
Service |
39,106,240 | 38.64 | (276,889 | ) | 38,829,351 | |||||||||||
Wholesale and retail |
13,150,375 | 12.99 | (150,237 | ) | 13,000,138 | |||||||||||
Construction |
3,688,014 | 3.64 | (396,672 | ) | 3,291,342 | |||||||||||
Public |
741,679 | 0.74 | (6,718 | ) | 734,961 | |||||||||||
Others |
2,890,355 | 2.86 | (17,494 | ) | 2,872,861 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 101,209,654 | 100.00 | ₩ | (1,450,623 | ) | ₩ | 99,759,031 | |||||||||
|
|
|
|
|
|
|
|
The details of the Groups retail loans by type as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Housing purpose |
₩ | 53,674,493 | 46.28 | ₩ | (23,345 | ) | ₩ | 53,651,148 | ||||||||
General purpose |
62,292,092 | 53.72 | (409,069 | ) | 61,883,023 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 115,966,585 | 100.00 | ₩ | (432,414 | ) | ₩ | 115,534,171 | |||||||||
|
|
|
|
|
|
|
|
(I(In millions of Korean won) | 2014 | |||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Housing purpose |
₩ | 52,456,336 | 46.73 | ₩ | (30,199 | ) | ₩ | 52,426,137 | ||||||||
General purpose |
59,787,167 | 53.27 | (446,775 | ) | 59,340,392 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 112,243,503 | 100.00 | ₩ | (476,974 | ) | ₩ | 111,766,529 | |||||||||
|
|
|
|
|
|
|
|
42
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The details of the Groups securities excluding equity securities and derivative financial instruments by industry as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Government and government funded institutions |
₩ | 1,953,030 | 31.06 | |||||
Finance and Insurance |
3,352,106 | 53.32 | ||||||
Others |
982,333 | 15.62 | ||||||
|
|
|
|
|||||
6,287,469 | 100.00 | |||||||
|
|
|
|
|||||
Financial assets designated at fair value through profit or loss |
||||||||
Finance and Insurance |
70,198 | 100.00 | ||||||
|
|
|
|
|||||
70,198 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Government and government funded institutions |
56,652 | 2.59 | ||||||
Finance and Insurance |
1,917,163 | 87.70 | ||||||
Others |
212,195 | 9.71 | ||||||
|
|
|
|
|||||
2,186,010 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Government and government funded institutions |
5,223,923 | 28.56 | ||||||
Finance and Insurance |
11,557,597 | 63.18 | ||||||
Others |
1,512,013 | 8.26 | ||||||
|
|
|
|
|||||
18,293,533 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Government and government funded institutions |
5,219,388 | 44.42 | ||||||
Finance and Insurance |
6,168,345 | 52.50 | ||||||
Others |
361,061 | 3.08 | ||||||
|
|
|
|
|||||
11,748,794 | 100.00 | |||||||
|
|
|
|
|||||
₩ | 38,586,004 | |||||||
|
|
43
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Government and government funded institutions |
₩ | 2,683,605 | 36.42 | |||||
Finance and Insurance |
3,863,046 | 52.42 | ||||||
Others |
822,132 | 11.16 | ||||||
|
|
|
|
|||||
7,368,783 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Government and government funded institutions |
19,732 | 1.03 | ||||||
Finance and Insurance |
1,755,495 | 91.90 | ||||||
Others |
134,990 | 7.07 | ||||||
|
|
|
|
|||||
1,910,217 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Government and government funded institutions |
7,204,867 | 43.89 | ||||||
Finance and Insurance |
7,458,222 | 45.43 | ||||||
Others |
1,752,811 | 10.68 | ||||||
|
|
|
|
|||||
16,415,900 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Government and government funded institutions |
8,072,831 | 79.74 | ||||||
Finance and Insurance |
1,519,324 | 15.01 | ||||||
Others |
531,981 | 5.25 | ||||||
|
|
|
|
|||||
10,124,136 | 100.00 | |||||||
|
|
|
|
|||||
₩ | 35,819,036 | |||||||
|
|
44
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The details of the Groups securities excluding equity securities and derivative financial instruments by country, as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Korea |
₩ | 6,255,711 | 99.49 | |||||
Others |
31,758 | 0.51 | ||||||
|
|
|
|
|||||
6,287,469 | 100.00 | |||||||
|
|
|
|
|||||
Financial assets designated at fair value through profit or loss |
||||||||
Korea |
70,198 | 100.00 | ||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Korea |
1,198,321 | 54.82 | ||||||
United States |
297,323 | 13.60 | ||||||
Others |
690,366 | 31.58 | ||||||
|
|
|
|
|||||
2,186,010 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Korea |
17,958,267 | 98.17 | ||||||
Others |
335,266 | 1.83 | ||||||
|
|
|
|
|||||
18,293,533 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Korea |
11,373,754 | 96.81 | ||||||
Others |
375,040 | 3.19 | ||||||
|
|
|||||||
11,748,794 | 100.00 | |||||||
|
|
|
|
|||||
₩ | 38,586,004 | |||||||
|
|
(In millions of Korean won) | 2014 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Korea |
₩ | 7,309,697 | 99.20 | |||||
Others |
59,086 | 0.80 | ||||||
|
|
|
|
|||||
7,368,783 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Korea |
736,644 | 38.56 | ||||||
United States |
273,807 | 14.33 | ||||||
Others |
899,766 | 47.11 | ||||||
|
|
|
|
|||||
1,910,217 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Korea |
16,363,300 | 99.68 | ||||||
Others |
52,600 | 0.32 | ||||||
|
|
|
|
|||||
16,415,900 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Korea |
10,124,136 | 100.00 | ||||||
|
|
|
|
|||||
₩ | 35,819,036 | |||||||
|
|
45
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 and derivatives are in the financial and insurance industries which 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 items related to the inflows and outflows of currency derivative instruments and others.
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 addresses all the possible risks that arise from the overall business of the Group.
The Group has to establish the liquidity risk management strategy including the objectives of liquidity risk management, management policies and internal control system, and obtain approval from Risk Management Committee. Risk Management Committee operates the Risk Management Council for the purpose of efficient risk management, monitors establishment and enforcement of policies based on risk management strategy.
For the purpose of liquidity management, the liquidity gap ratio, liquidity ratio, maturity gap ratio and the results of the stress testing related to liquidity risk on transactions affecting the inflows and outflows of funds and transactions of off-balance sheet items are measured, managed and reported to the Risk Management Committee and Risk Management Council on a regular basis.
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 amounts 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.
46
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The remaining contractual maturity of financial assets and liabilities as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||||||||||
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 |
₩ | 6,032,676 | ₩ | 246,719 | ₩ | 727,859 | ₩ | 662,142 | ₩ | | ₩ | | ₩ | 7,669,396 | ||||||||||||||
Financial assets held for trading2 |
6,417,419 | | | | | | 6,417,419 | |||||||||||||||||||||
Financial assets designated at fair value through profit or loss2 |
70,198 | | | | | | 70,198 | |||||||||||||||||||||
Derivatives held for trading2 |
2,093,446 | | | | | | 2,093,446 | |||||||||||||||||||||
Derivatives held for hedging3 |
| 5,391 | 18,885 | 13,558 | 38,972 | 111,268 | 188,074 | |||||||||||||||||||||
Loans |
| 14,899,299 | 21,090,406 | 77,358,018 | 59,071,999 | 87,354,815 | 259,774,537 | |||||||||||||||||||||
Available-for-sale financial assets4 |
2,710,980 | 838,524 | 1,623,536 | 4,619,917 | 10,889,821 | 1,326,841 | 22,009,619 | |||||||||||||||||||||
Held-to-maturity financial assets |
| 380,043 | 1,052,763 | 2,342,242 | 6,857,869 | 2,582,091 | 13,215,008 | |||||||||||||||||||||
Other financial assets |
| 5,365,209 | 1,438 | 1,160,950 | | | 6,527,597 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 17,324,719 | ₩ | 21,735,185 | ₩ | 24,514,887 | ₩ | 86,156,827 | ₩ | 76,858,661 | ₩ | 91,375,015 | ₩ | 317,965,294 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Financial liabilities held for trading |
₩ | 69,465 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 69,465 | ||||||||||||||
Derivatives held for trading2 |
2,116,752 | | | | | | 2,116,752 | |||||||||||||||||||||
Derivatives held for hedging3 |
| 1,981 | 945 | (10,279 | ) | (25,096 | ) | (35,050 | ) | (67,499 | ) | |||||||||||||||||
Deposits5 |
100,662,818 | 14,813,368 | 25,149,270 | 73,490,239 | 10,906,981 | 3,158,015 | 228,180,691 | |||||||||||||||||||||
Debts |
668 | 3,847,167 | 1,821,523 | 4,363,821 | 3,942,347 | 537,209 | 14,512,735 | |||||||||||||||||||||
Debentures |
68,852 | 401,430 | 768,923 | 5,164,794 | 8,065,069 | 2,761,403 | 17,230,471 | |||||||||||||||||||||
Other financial liabilities |
| 6,908,783 | 807 | 72,725 | 11,330 | 84,209 | 7,077,854 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 102,918,555 | ₩ | 25,972,729 | ₩ | 27,741,468 | ₩ | 83,081,300 | ₩ | 22,900,631 | ₩ | 6,505,786 | ₩ | 269,120,469 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Off-balance sheet items |
||||||||||||||||||||||||||||
Commitments6 |
₩ | 56,752,653 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 56,752,653 | ||||||||||||||
Financial guarantee contracts7 |
4,014,116 | | | | | | 4,014,116 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 60,766,769 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 60,766,769 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(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 |
₩ | 6,199,811 | ₩ | 115,410 | ₩ | 397,630 | ₩ | 398,069 | ₩ | | ₩ | | ₩ | 7,110,920 | ||||||||||||||
Financial assets held for trading2 |
7,520,471 | | | | | | 7,520,471 | |||||||||||||||||||||
Derivatives held for trading2 |
1,800,664 | | | | | | 1,800,664 | |||||||||||||||||||||
Derivatives held for hedging3 |
| 7,742 | (1,147 | ) | 20,804 | 77,968 | 118,803 | 224,170 | ||||||||||||||||||||
Loans |
| 15,031,604 | 20,823,904 | 73,586,107 | 55,823,249 | 87,750,770 | 253,015,634 | |||||||||||||||||||||
Available-for-sale financial assets4 |
2,647,102 | 435,221 | 1,537,962 | 4,386,464 | 10,272,973 | 767,319 | 20,047,041 | |||||||||||||||||||||
Held-to-maturity financial assets |
| 272,086 | 630,918 | 3,354,275 | 6,281,737 | 462,437 | 11,001,453 | |||||||||||||||||||||
Other financial assets |
| 4,791,711 | | 1,293,372 | | | 6,085,083 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 18,168,048 | ₩ | 20,653,774 | ₩ | 23,389,267 | ₩ | 83,039,091 | ₩ | 72,455,927 | ₩ | 89,099,329 | ₩ | 306,805,436 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Financial liabilities held for trading |
₩ | 51,650 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 51,650 | ||||||||||||||
Derivatives held for trading2 |
1,755,674 | | | | | | 1,755,674 | |||||||||||||||||||||
Derivatives held for hedging3 |
| | 652 | 146 | 6,304 | (15,581 | ) | (8,479 | ) | |||||||||||||||||||
Deposits5 |
83,199,560 | 13,960,805 | 25,460,933 | 80,474,828 | 9,602,204 | 3,266,903 | 215,965,233 | |||||||||||||||||||||
Debts |
813 | 3,958,587 | 1,814,096 | 4,840,755 | 3,646,259 | 281,796 | 14,542,306 | |||||||||||||||||||||
Debentures |
159,620 | 278,543 | 1,037,466 | 3,419,151 | 7,922,417 | 3,907,637 | 16,724,834 | |||||||||||||||||||||
Other financial liabilities |
| 6,200,724 | 895 | 67,886 | 12,182 | 86,576 | 6,368,263 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 85,167,317 | ₩ | 24,398,659 | ₩ | 28,314,042 | ₩ | 88,802,766 | ₩ | 21,189,366 | ₩ | 7,527,331 | ₩ | 255,399,481 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Off-balance sheet items |
||||||||||||||||||||||||||||
Commitments6 |
₩ | 59,458,332 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 59,458,332 | ||||||||||||||
Financial guarantee contracts7 |
4,438,399 | | | | | | 4,438,399 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 63,896,731 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 63,896,731 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | The amounts of ₩6,905,996 million and ₩6,879,144 million, which are restricted amount due from the financial institutions as of December 31, 2015 and 2014, respectively, are excluded. |
2 | Financial instruments held for trading, financial assets designated at fair value through profit or loss, and derivatives held for trading are not managed by contractual maturity because they are held for trading or redemption before maturity. Therefore, the carrying amounts are classified as the On demand category. However, the Bank has an obligation to purchase bonds at face value(with accrued interest) amounting to USD 300 million if an issuer does not exercise early redemption right at the end of the five-year period from the date of issuance(May 8, 2015) or if the issuer goes bankrupt within five years from the date of issuance. In addition, the Bank has an option to request the issuer to acquire these bonds either in cash or the issuers stocks at the issuers choice. These transactions are excluded from the table above. |
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. |
4 | Equity investments in financial assets classified as available-for-sale are generally included in the On demand category as most are available for sale at anytime. However, in the case of equity investments which are restricted for sale, these are classified in the maturity section to which the end of the restriction period applies. |
5 | Deposits that are contractually repayable on demand or on short notice are classified under the On demand category. |
6 | Unused lines of credit within commitments are included under the On demand category as payments can be required upon request. |
7 | Financial guarantee contracts are included under the On demand category as payments can be required upon request. |
48
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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, and incurred in securities, derivatives and 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 associated with non-trading positions. The Group classifies exposures to market risk into either trading or non-trading positions for managerial purpose.
4.4.2 Risk management
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, market risk management guidelines for trading positions and ALM 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.
The Group establishes market risk management policy, sets position limits, loss limits and VaR limits of each business group and approves newly developed products through its Risk Management Council. The Market Risk Management Subcommittee, which is chaired by the Chief Risk Officer (CRO), is the decision maker and sets position limits, loss limits, VaR limits, sensitivity limits and scenario loss limits for each division, at the level of each individual business department.
The ALCO determines the operational standards of interest and commission, the details of 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 measure and monitor 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 interest rate VaR, 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.
49
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
4.4.3 Trading Position
Definition of a trading position
Trading positions subject to market risk management are interest rate, stock price positions for short-term profit-taking and others. Also, they include all foreign exchange rate positions. The basic requirements of trading positions are defined under the Trading Policy and Guideline, are as follows:
| The trading position is not restricted for purchase and 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.
Value at Risk (VaR)
i. Value at Risk (VaR)
The Group uses the value-at-risk methodology to measure the market risk of trading positions.
The Group now uses the ten-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.
50
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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. When the internal model is not permitted for certain market risk, the Group uses the 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 VaR 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 options and other risk factors that have significant influence on the value of the portfolio. The Group uses historical scenarios and hypothetical scenarios for the analysis of abnormal market situations. Stress testing is performed at least once every quarter.
VaR at a 99%, excluding Stressed Value at Risks, confidence level of interest rate, stock price and foreign exchange rate risk for trading positions with a ten-day holding period as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Interest rate risk |
₩ | 18,403 | ₩ | 10,022 | ₩ | 27,134 | ₩ | 15,788 | ||||||||
Stock price risk |
1,711 | 866 | 3,880 | 2,040 | ||||||||||||
Foreign exchange rate risk |
12,429 | 8,322 | 21,935 | 21,935 | ||||||||||||
Deduction of diversification effect |
(16,577 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 23,930 | ₩ | 11,730 | ₩ | 33,885 | ₩ | 23,186 | ||||||||
|
|
|
|
|
|
|
|
51
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 | ||||||||
|
|
|
|
|
|
|
|
Meanwhile, the market risk of positions related to Kookmin Bank (China) Ltd. and 30-year government bonds, which previously were measured using a standard method, is included in the calculation of VaR according to the approval of internal model from Financial Supervisory Service. The required equity capital using the standard method related to the positions which are not measured by VaR as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Interest rate risk |
₩ | 34 | ₩ | 792 | ||||
Stock price risk |
118 | 1,101 | ||||||
Foreign exchange rate risk |
| 9,387 | ||||||
|
|
|
|
|||||
₩ | 152 | ₩ | 11,280 | |||||
|
|
|
|
Details of risk factors
i. Interest rate risk
Trading position interest rate risk usually arises from debt securities denominated 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 major trading portfolio 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 and foreign currency derivatives. Net foreign currency exposure mostly occurs from the foreign assets and liabilities which are denominated in US dollars and Chinese yuan. 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.
52
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
4.4.4 Non-trading position
i. Definition of non-trading position
Managed interest rate risk in non-trading position includes on- or off-balance sheet assets, liabilities and derivatives that are sensitive to interest rate, except trading position for market risk. The interest rate sensitive assets and liabilities are interest-bearing assets and liabilities that create interest income and expenses.
ii. Observation method on market risk arising from non-trading position
Interest rate risk occurs due to mismatches on maturities and interest rate reset periods between interest-bearing assets and liabilities. The Group manages the risk through measuring and managing interest rate VaR and EaR that are maximum expected decreases in net asset value (NPV) and net interest income (NII) for one year, respectively, arising from unfavorable changes in market interest rate.
iii. Interest Rate VaR
Interest rate VaR is the maximum possible loss due to interest rate risk under a normal distribution at a 99.94% confidence level. The measurement results of risk as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Interest Rate VaR |
₩ | 94,500 | ₩ | 112,500 |
4.4.5 Financial assets and liabilities in foreign currencies
Financial assets and liabilities in foreign currencies as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||||||||||||||
(In millions of Korean won) | USD | JPY | EUR | GBP | CNY | Others | Total | |||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | 2,008,023 | ₩ | 227,546 | ₩ | 114,154 | ₩ | 14,891 | ₩ | 91,694 | ₩ | 182,757 | ₩ | 2,639,065 | ||||||||||||||
Financial assets held for trading |
35,025 | | 2,616 | | | | 37,641 | |||||||||||||||||||||
Derivatives held for trading |
64,690 | | 354 | | | | 65,044 | |||||||||||||||||||||
Derivatives held for hedging |
8,610 | | | | | | 8,610 | |||||||||||||||||||||
Loans |
12,873,728 | 507,615 | 458,483 | 19,365 | 4,329 | 136,560 | 14,000,080 | |||||||||||||||||||||
Available-for-sale financial assets |
1,245,415 | 60,591 | | | | 871 | 1,306,877 | |||||||||||||||||||||
Held-to-maturity financial assets |
375,040 | | | | | | 375,040 | |||||||||||||||||||||
Other financial assets |
981,637 | 182,766 | 216,546 | 5,381 | 192,667 | 145,218 | 1,724,215 | |||||||||||||||||||||
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₩ | 17,592,168 | ₩ | 978,518 | ₩ | 792,153 | ₩ | 39,637 | ₩ | 288,690 | ₩ | 465,406 | ₩ | 20,156,572 | |||||||||||||||
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Financial liabilities |
||||||||||||||||||||||||||||
Derivatives held for trading |
₩ | 92,115 | ₩ | | ₩ | 458 | ₩ | | ₩ | | ₩ | | ₩ | 92,573 | ||||||||||||||
Derivatives held for hedging |
21,461 | | | | | | 21,461 | |||||||||||||||||||||
Deposits |
6,390,919 | 496,224 | 384,116 | 22,674 | 58,848 | 374,717 | 7,727,498 | |||||||||||||||||||||
Debts |
6,650,235 | 217,887 | 143,060 | 7,916 | 4,511 | 110,535 | 7,134,144 | |||||||||||||||||||||
Debentures |
3,519,615 | | 106,284 | | | 157,337 | 3,783,236 | |||||||||||||||||||||
Other financial liabilities |
1,702,027 | 98,431 | 160,867 | 10,454 | 185,652 | 26,639 | 2,184,070 | |||||||||||||||||||||
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₩ | 18,376,372 | ₩ | 812,542 | ₩ | 794,785 | ₩ | 41,044 | ₩ | 249,011 | ₩ | 669,228 | ₩ | 20,942,982 | |||||||||||||||
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Off-balance sheet items |
₩ | 14,900,814 | ₩ | 3,612 | ₩ | 1,281 | ₩ | | ₩ | 3,190 | ₩ | 81,206 | ₩ | 14,990,103 |
53
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
2014 | ||||||||||||||||||||||||||||
(In millions of Korean won) | USD | JPY | EUR | GBP | CNY | Others | Total | |||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | 1,517,144 | ₩ | 145,574 | ₩ | 104,880 | ₩ | 10,827 | ₩ | 47,653 | ₩ | 115,641 | ₩ | 1,941,719 | ||||||||||||||
Financial assets held for trading |
43,753 | | 15,333 | | | | 59,086 | |||||||||||||||||||||
Derivatives held for trading |
55,879 | | 694 | | | | 56,573 | |||||||||||||||||||||
Derivatives held for hedging |
5,032 | | | | | | 5,032 | |||||||||||||||||||||
Loans |
10,753,455 | 900,972 | 402,656 | 6,613 | 3,492 | 115,633 | 12,182,821 | |||||||||||||||||||||
Available-for-sale financial assets |
797,416 | | | | | 870 | 798,286 | |||||||||||||||||||||
Other financial assets |
1,189,303 | 61,140 | 75,970 | 1,710 | 46,434 | 8,908 | 1,383,465 | |||||||||||||||||||||
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₩ | 14,361,982 | ₩ | 1,107,686 | ₩ | 599,533 | ₩ | 19,150 | ₩ | 97,579 | ₩ | 241,052 | ₩ | 16,426,982 | |||||||||||||||
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|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Derivatives held for trading |
₩ | 85,042 | ₩ | | ₩ | 920 | ₩ | | ₩ | | ₩ | | 85,962 | |||||||||||||||
Derivatives held for hedging |
226 | | | | | | 226 | |||||||||||||||||||||
Deposits |
4,612,649 | 386,851 | 188,386 | 19,887 | 21,297 | 273,317 | 5,502,387 | |||||||||||||||||||||
Debts |
6,388,482 | 258,483 | 303,866 | 880 | 3,577 | 168,908 | 7,124,196 | |||||||||||||||||||||
Debentures |
2,766,605 | 73,606 | 26,731 | | | 22,672 | 2,889,614 | |||||||||||||||||||||
Other financial liabilities |
1,194,856 | 76,150 | 78,093 | 7,157 | 46,710 | 13,029 | 1,415,995 | |||||||||||||||||||||
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₩ | 15,047,860 | ₩ | 795,090 | ₩ | 597,996 | ₩ | 27,924 | ₩ | 71,584 | ₩ | 477,926 | ₩ | 17,018,380 | |||||||||||||||
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Off-balance sheet items |
₩ | 17,252,450 | ₩ | 3,511 | ₩ | 6,549 | ₩ | 4,704 | ₩ | 11,628 | ₩ | 72,747 | ₩ | 17,351,589 |
4.5 Operational Risk
4.5.1 Concept
The Group defines operational risk as risk of loss resulting from inadequate or failed internal processes, people, systems and external events. The operational risk includes financial and non-financial risks.
4.5.2 Risk management
The purpose of operational risk management is not only to comply with requirements of regulatory authorities but is also to establish an integrated system to cultivate enterprise culture that values importance of risk management, strengthen internal controls, improve processes and provide with timely feedback to management and employees so that eventually mitigate operational risk of the company. In addition, the Group established Business Continuity Planning (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 full scale test for head office and IT departments to test its BCPs.
54
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 revised by Basel Committee on Banking Supervision in Bank for International Settlements in June 2011, and was implemented in Korea in December 2013. The Group is required to maintain a minimum Common Equity Tier 1 ratio of at least 4.5% (2014: 4.0%), a minimum Tier 1 ratio of 6.0% (2014: 5.5%) and a minimum Total Regulatory Capital of 8.0% (2014: 8.0%) as of December 31, 2015.
The Groups equity capital is classified into three categories in accordance with Detailed Supervisory Regulations on Banking Business:
| Common Equity Tier 1 Capital: Common equity Tier 1 Capital 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 perpetual instruments issued by the Group that meet the criteria for inclusion in Additional Tier 1 capital, and 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 Tier 2 capital, and the allowance for loan losses which are accumulated for assets classified as normal or precautionary in accordance with Regulations on Supervision of Banking Business and others. |
Risk-weighted asset means the assets weighted according to the inherent risks in the total assets and the possible losses resulting from the errors of internal process and external events which the Group should cover. The Group calculates risk-weighted asset by each risk (credit risk, market risk, and operational risk) based on Detailed Regulations on Supervision of Banking Business and uses it for its capital ratio calculation.
In addition to the capital ratio, the Group assesses 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. The economic capital is calculated by adding the stress testing results and other required items to the total economic capitals which are calculated for each risk.
55
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The Risk Management Council of the Group determines the Groups risk appetite and allocates economic capital by risk type and business group. Each business group efficiently operates its capital within range of granted economic capital. The Risk Management Department of the Group monitors a management of 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, 2015 and 2014.
The details of the Groups capital adequacy calculation in line with Basel III requirements as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Equity capital |
₩ | 23,685,840 | ₩ | 23,421,797 | ||||
Tier I Capital |
20,331,853 | 19,620,849 | ||||||
Common Equity Tier 1 Capital |
20,331,853 | 19,620,849 | ||||||
Tier II Capital |
3,353,987 | 3,800,948 | ||||||
Risk-weighted assets: |
147,972,883 | 146,689,770 | ||||||
Credit risk1 |
133,389,054 | 132,453,117 | ||||||
Market risk2 |
4,189,408 | 3,445,138 | ||||||
Operational risk3 |
10,394,421 | 10,791,515 | ||||||
Equity Capital (%): |
16.01 | 15.97 | ||||||
Tier I Capital (%) |
13.74 | 13.38 | ||||||
Common Equity Tier 1 Capital (%) |
13.74 | 13.38 |
1 | Credit risk-weighted assets are measured using the Internal Rating-Based Approach and Standardized Approach. |
2 | Market risk-weighted assets are measured using the Internal Model-Based Approach and Standardized Approach. |
3 | Operational risk-weighted assets are measured using the Advanced Measurement Approach. |
56
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
5. | Segment Information |
5.1 Overall Segment Information and Business Segments
The Group is organized into Corporate Banking, Retail Banking and Other Activities. 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.
| Corporate banking: The activities within this segment include providing credit, deposit products and other related financial services to large, small-and medium-sized enterprises and SOHOs. |
| Retail banking: The activities within this segment include providing credit, deposit products and other related financial services to individuals and households. |
| Other activities: The activities within this segment include trading activities in securities and derivatives, funding and other supporting activities. |
Financial information by business segment as of and for the year ended December 31, 2015, is as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||
Corporate Banking |
Retail Banking |
Others | Intra-group Adjustment |
Total | ||||||||||||||||
Operating revenues from external customers |
₩ | 1,720,023 | ₩ | 2,115,837 | ₩ | 1,897,562 | ₩ | | ₩ | 5,733,422 | ||||||||||
Segment operating revenues(expenses) |
(630 | ) | | 11,059 | (10,429 | ) | | |||||||||||||
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|
|||||||||||
1,719,393 | 2,115,837 | 1,908,621 | (10,429 | ) | 5,733,422 | |||||||||||||||
Net interest income |
2,320,217 | 2,102,326 | 289,022 | 182 | 4,711,747 | |||||||||||||||
Interest income |
3,513,603 | 3,858,102 | 1,028,870 | (12,193 | ) | 8,388,382 | ||||||||||||||
Interest expense |
(1,193,386 | ) | (1,755,776 | ) | (739,848 | ) | 12,375 | (3,676,635 | ) | |||||||||||
Net fee and commission income |
232,708 | 569,832 | 370,767 | (16,934 | ) | 1,156,373 | ||||||||||||||
Fee and commission income |
296,498 | 671,184 | 421,946 | (17,574 | ) | 1,372,054 | ||||||||||||||
Fee and commission expense |
(63,790 | ) | (101,352 | ) | (51,179 | ) | 640 | (215,681 | ) | |||||||||||
Net gains(losses) on financial assets/ liabilities at fair value through profit or loss |
37 | | 286,991 | | 287,028 | |||||||||||||||
Net other operating income(expenses) |
(833,569 | ) | (556,321 | ) | 961,841 | 6,323 | (421,726 | ) | ||||||||||||
General and administrative expenses |
(847,029 | ) | (2,004,800 | ) | (960,183 | ) | 191 | (3,811,821 | ) | |||||||||||
Operating profit before provision for credit losses |
872,364 | 111,037 | 948,438 | (10,238 | ) | 1,921,601 | ||||||||||||||
Provision(reversal) for credit losses |
(715,926 | ) | (80,213 | ) | 54,428 | 91 | (741,620 | ) | ||||||||||||
Operating profit |
156,438 | 30,824 | 1,002,866 | (10,147 | ) | 1,179,981 | ||||||||||||||
Share of profit of associates |
| | 7,812 | | 7,812 | |||||||||||||||
Net other non-operating income |
1,317 | | 202,783 | (10,664 | ) | 193,436 | ||||||||||||||
Segment profit before income tax expense |
157,755 | 30,824 | 1,213,461 | (20,811 | ) | 1,381,229 | ||||||||||||||
Income tax expense |
(38,973 | ) | (7,460 | ) | (214,275 | ) | (13,283 | ) | (273,991 | ) | ||||||||||
Profit for the period |
118,782 | 23,364 | 999,186 | (34,094 | ) | 1,107,238 | ||||||||||||||
Profit attributable to shareholders of the parent company |
118,782 | 23,364 | 999,186 | (34,094 | ) | 1,107,238 | ||||||||||||||
Profit attributable to non-controlling interests |
| | | | | |||||||||||||||
Total assets1 |
103,042,327 | 114,849,508 | 75,393,978 | (3,007,906 | ) | 290,277,907 | ||||||||||||||
Total liabilities1 |
89,293,741 | 130,631,229 | 49,263,959 | (1,658,233 | ) | 267,530,696 |
1 | Amounts before intra-group transaction adjustment. |
57
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Financial information by business segment as of and for the year ended December 31, 2014, is as follows:
(In millions of Korean won) | 2014 | |||||||||||||||||||
Corporate Banking |
Retail Banking |
Others | Intra-group Adjustment |
Total | ||||||||||||||||
Operating revenues from external customers |
₩ | 1,742,308 | ₩ | 2,211,969 | ₩ | 1,682,954 | ₩ | | ₩ | 5,637,231 | ||||||||||
Segment operating revenues(expenses) |
38,379 | (48,256 | ) | 60,295 | (50,418 | ) | | |||||||||||||
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1,780,687 | 2,163,713 | 1,743,249 | (50,418 | ) | 5,637,231 | |||||||||||||||
Net interest income |
2,448,966 | 2,079,834 | 407,018 | 35,628 | 4,971,446 | |||||||||||||||
Interest income |
4,008,584 | 4,432,760 | 1,286,127 | (24,844 | ) | 9,702,627 | ||||||||||||||
Interest expense |
(1,559,618 | ) | (2,352,926 | ) | (879,109 | ) | 60,472 | (4,731,181 | ) | |||||||||||
Net fee and commission income |
237,229 | 524,784 | 333,768 | (17,736 | ) | 1,078,045 | ||||||||||||||
Fee and commission income |
277,196 | 597,072 | 416,316 | (19,246 | ) | 1,271,338 | ||||||||||||||
Fee and commission expense |
(39,967 | ) | (72,288 | ) | (82,548 | ) | 1,510 | (193,293 | ) | |||||||||||
Net gains(losses) on financial assets/ liabilities at fair value through profit or loss |
179 | (20,238 | ) | 376,282 | 68 | 356,291 | ||||||||||||||
Net other operating income(expenses) |
(905,687 | ) | (420,667 | ) | 626,181 | (68,378 | ) | (768,551 | ) | |||||||||||
General and administrative expenses |
(711,029 | ) | (1,695,563 | ) | (966,266 | ) | | (3,372,858 | ) | |||||||||||
Operating profit before provision for credit losses |
1,069,658 | 468,150 | 776,983 | (50,418 | ) | 2,264,373 | ||||||||||||||
Provision for credit losses |
(566,942 | ) | (304,116 | ) | (10,204 | ) | (6,392 | ) | (887,654 | ) | ||||||||||
Operating profit |
502,716 | 164,034 | 766,779 | (56,810 | ) | 1,376,719 | ||||||||||||||
Share of profit of associates |
| | 17,555 | | 17,555 | |||||||||||||||
Net other non-operating income |
1,242 | | 20,309 | (55,550 | ) | (33,999 | ) | |||||||||||||
Segment profit before income tax expense |
503,958 | 164,034 | 804,643 | (112,360 | ) | 1,360,275 | ||||||||||||||
Income tax expense |
(120,504 | ) | (53,967 | ) | (156,056 | ) | (707 | ) | (331,234 | ) | ||||||||||
Profit for the period |
383,454 | 110,067 | 648,587 | (113,067 | ) | 1,029,041 | ||||||||||||||
Profit attributable to shareholders of the parent company |
383,454 | 110,067 | 648,587 | (113,067 | ) | 1,029,041 | ||||||||||||||
Profit attributable to non-controlling interests |
| | | | | |||||||||||||||
Total assets1 |
94,313,469 | 111,074,156 | 74,917,627 | (4,851,588 | ) | 275,453,664 | ||||||||||||||
Total liabilities1 |
83,780,834 | 123,792,699 | 47,552,921 | (1,613,263 | ) | 253,513,191 |
1 | Amounts before intra-group transaction adjustment. |
58
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
5.2 Services and Geographical Segments
5.2.1 Services information
Operating revenues from external customers by services for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Corporate banking service |
₩ | 1,720,023 | ₩ | 1,742,308 | ||||
Retail banking service |
2,115,837 | 2,211,969 | ||||||
Other service |
1,897,562 | 1,682,954 | ||||||
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|
|||||
₩ | 5,733,422 | ₩ | 5,637,231 | |||||
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|
|
5.2.2 Geographical information
Operating revenues from external customers for the years ended December 31, 2015 and 2014, and major non-current assets as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||||||||
Revenues from external customers |
Major non-current assets |
Revenues from external customers |
Major non-current assets |
|||||||||||||
Domestic |
₩ | 5,657,170 | ₩ | 3,493,248 | ₩ | 5,533,506 | ₩ | 3,492,836 | ||||||||
United States |
11,847 | 276 | 11,655 | 256 | ||||||||||||
New Zealand |
5,143 | 209 | 6,684 | 193 | ||||||||||||
China |
30,590 | 6,949 | 46,892 | 7,518 | ||||||||||||
Japan |
10,709 | 1,547 | 19,842 | 1,391 | ||||||||||||
Argentina |
| | 573 | | ||||||||||||
Vietnam |
3,358 | 239 | 3,130 | 287 | ||||||||||||
Cambodia |
5,072 | 350 | 5,364 | 564 | ||||||||||||
United Kingdom |
9,533 | 130 | 9,585 | 108 | ||||||||||||
Intra-group adjustment |
| 1,202 | | 1,202 | ||||||||||||
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|
|
|
|
|
|
|
|||||||||
₩ | 5,733,422 | ₩ | 3,504,150 | ₩ | 5,637,231 | ₩ | 3,504,355 | |||||||||
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|
59
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
6. | Financial Assets and Financial Liabilities |
6.1 Classification and Fair Value
Carrying amount and fair values of financial assets and liabilities as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||||||||
Carrying amount |
Fair value | Carrying amount |
Fair value | |||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions |
₩ | 14,562,990 | ₩ | 14,562,700 | ₩ | 13,973,510 | ₩ | 13,973,773 | ||||||||
Financial assets held for trading |
6,417,419 | 6,417,419 | 7,520,471 | 7,520,471 | ||||||||||||
Debt securities |
6,287,469 | 6,287,469 | 7,368,783 | 7,368,783 | ||||||||||||
Equity securities |
60,890 | 60,890 | 100,343 | 100,343 | ||||||||||||
Others |
69,060 | 69,060 | 51,345 | 51,345 | ||||||||||||
Financial assets designated at fair value through profit or loss |
70,198 | 70,198 | | | ||||||||||||
Derivative linked securities |
70,198 | 70,198 | | | ||||||||||||
Derivatives held for trading |
2,093,458 | 2,093,458 | 1,800,664 | 1,800,664 | ||||||||||||
Derivatives held for hedging |
92,552 | 92,552 | 109,553 | 109,553 | ||||||||||||
Loans |
222,738,064 | 222,711,536 | 211,525,560 | 211,830,395 | ||||||||||||
Available-for-sale financial assets |
21,163,192 | 21,163,192 | 19,134,391 | 19,134,391 | ||||||||||||
Debt securities |
18,293,533 | 18,293,533 | 16,415,900 | 16,415,900 | ||||||||||||
Equity securities |
2,869,159 | 2,869,159 | 2,717,991 | 2,717,991 | ||||||||||||
Others |
500 | 500 | 500 | 500 | ||||||||||||
Held-to-maturity financial assets |
11,748,794 | 12,072,793 | 10,124,136 | 10,486,946 | ||||||||||||
Other financial assets |
6,887,727 | 6,887,727 | 6,529,032 | 6,529,032 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 285,774,394 | ₩ | 286,071,575 | ₩ | 270,717,317 | ₩ | 271,385,225 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities held for trading |
₩ | 69,465 | ₩ | 69,465 | ₩ | 51,650 | ₩ | 51,650 | ||||||||
Derivatives held for trading |
2,116,766 | 2,116,766 | 1,755,674 | 1,755,674 | ||||||||||||
Derivatives held for hedging |
21,957 | 21,957 | 3,425 | 3,425 | ||||||||||||
Deposits |
224,333,507 | 225,012,816 | 211,611,432 | 212,004,857 | ||||||||||||
Debts |
14,291,815 | 14,321,296 | 14,297,460 | 14,344,110 | ||||||||||||
Debentures |
15,949,134 | 16,436,457 | 15,250,464 | 15,693,318 | ||||||||||||
Other financial liabilities |
9,612,261 | 9,612,273 | 9,344,847 | 9,344,892 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 266,394,905 | ₩ | 267,591,030 | ₩ | 252,314,952 | ₩ | 253,197,926 | |||||||||
|
|
|
|
|
|
|
|
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 Group discloses the fair value of each class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is a quoted price in an active market.
60
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 reasonable approximation of fair values. These financial instruments do not have a fixed maturity and are receivable on demand. Fair value of ordinary due from financial institutions is measured using DCF model (Discounted Cash Flow Model). | |
Investment securities | The fair value of financial instruments that are quoted in active markets is determined using the quoted prices. Fair value is determined through the use of independent third-party pricing services where quoted prices are not available. Pricing services use one or more of the following valuation techniques including DCF Model, FCFE(Free Cash Flow to Equity Model), Comparable Company Analysis, 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 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. | |
Deposits | The carrying amount of demand deposits is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of time deposits is determined using a DCF model. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate. | |
Debts | The carrying amount of overdraft in foreign currency is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of other 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 other financial liabilities |
The carrying amounts are reasonable approximation of fair values. These financial instruments are temporary accounts used for other various transactions and their maturities are relatively short or not defined. However, fair value of finance lease liabilities is measured using a DCF model. |
61
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 the 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 except for quoted prices included within Level 1 are based on inputs 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.
62
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position
The fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position as of December 31, 2015 and 2014, is as follows:
2015 | ||||||||||||||||
(In millions of Korean won) | Fair value hierarchy | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Financial assets held for trading |
||||||||||||||||
Debt securities |
₩ | 2,075,176 | ₩ | 4,212,293 | ₩ | | ₩ | 6,287,469 | ||||||||
Equity securities |
32,584 | 28,306 | | 60,890 | ||||||||||||
Others |
69,060 | | | 69,060 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
2,176,820 | 4,240,599 | | 6,417,419 | |||||||||||||
Financial assets designated at fair value through profit or loss |
||||||||||||||||
Derivative linked securities |
| | 70,198 | 70,198 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
| | 70,198 | 70,198 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivatives held for trading |
| 2,092,861 | 597 | 2,093,458 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivatives held for hedging |
| 91,341 | 1,211 | 92,552 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Available-for-sale financial assets |
||||||||||||||||
Debt securities |
5,788,898 | 12,504,635 | | 18,293,533 | ||||||||||||
Equity securities1 |
818,227 | 497,393 | 1,553,539 | 2,869,159 | ||||||||||||
Others |
| 500 | | 500 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
6,607,125 | 13,002,528 | 1,553,539 | 21,163,192 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 8,783,945 | ₩ | 19,427,329 | ₩ | 1,625,545 | ₩ | 29,836,819 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities held for trading |
₩ | 69,465 | ₩ | | ₩ | | ₩ | 69,465 | ||||||||
Derivatives held for trading |
| 2,114,609 | 2,157 | 2,116,766 | ||||||||||||
Derivatives held for hedging |
| 21,460 | 497 | 21,957 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 69,465 | ₩ | 2,136,069 | ₩ | 2,654 | ₩ | 2,208,188 | |||||||||
|
|
|
|
|
|
|
|
63
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
2014 | ||||||||||||||||
(In millions of Korean won) | Fair value hierarchy | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Financial assets held for trading |
||||||||||||||||
Debt securities |
₩ | 3,190,784 | ₩ | 4,177,999 | ₩ | | ₩ | 7,368,783 | ||||||||
Equity securities |
68,963 | 31,380 | | 100,343 | ||||||||||||
Others |
51,345 | | | 51,345 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
3,311,092 | 4,209,379 | | 7,520,471 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivatives held for trading |
| 1,768,638 | 32,026 | 1,800,664 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivatives held for hedging |
| 109,293 | 260 | 109,553 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Available-for-sale financial assets |
||||||||||||||||
Debt securities |
6,707,878 | 9,708,022 | | 16,415,900 | ||||||||||||
Equity securities1 |
1,145,988 | 633 | 1,571,370 | 2,717,991 | ||||||||||||
Others |
| 500 | | 500 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
7,853,866 | 9,709,155 | 1,571,370 | 19,134,391 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 11,164,958 | ₩ | 15,796,465 | ₩ | 1,603,656 | ₩ | 28,565,079 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities held for trading |
₩ | 51,650 | ₩ | | ₩ | | ₩ | 51,650 | ||||||||
Derivatives held for trading |
| 1,747,645 | 8,029 | 1,755,674 | ||||||||||||
Derivatives held for hedging |
| 1,144 | 2,281 | 3,425 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 51,650 | ₩ | 1,748,789 | ₩ | 10,310 | ₩ | 1,810,749 | |||||||||
|
|
|
|
|
|
|
|
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 ₩24,571 million and ₩27,526 million as of December 31, 2015 and 2014, 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, due to significant fluctuations in estimated cash flows arising from entities being in its initial stages, which further results in varying and unpredictable probabilities, unlisted equity securities issued by project financing cannot be reliably and reasonably assessed. Therefore, these equity securities are carried at cost. The Group has no plan to dispose of the financial instruments in the near future. |
64
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Valuation techniques and the inputs used in the fair value measurement of financial assets and liabilities classified as Level 2
Valuation techniques and inputs of financial assets and liabilities measured at fair value in the statements of financial position and classified as Level 2 as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Fair value | Valuation techniques | Inputs | |||||||||
2015 | 2014 | |||||||||||
Financial assets |
||||||||||||
Financial assets held for trading |
||||||||||||
Debt securities |
₩ | 4,212,293 | ₩ | 4,177,999 | DCF model |
Discount rate | ||||||
Equity securities |
28,306 | 31,380 | DCF model |
Discount rate | ||||||||
|
|
|
|
|||||||||
4,240,599 | 4,209,379 | |||||||||||
|
|
|
|
|||||||||
Derivatives held for trading |
2,092,861 | 1,768,638 | DCF model, Closed Form, FDM |
Discount rate, volatility, foreign exchange rate, stock price and others | ||||||||
|
|
|
|
|||||||||
Derivatives held for hedging |
91,341 | 109,293 | DCF model, Closed Form, FDM |
Discount rate, volatility, foreign exchange rate and others | ||||||||
|
|
|
|
|||||||||
Available-for-sale financial assets |
||||||||||||
Debt securities |
12,504,635 | 9,708,022 | DCF model |
Discount rate | ||||||||
Equity securities |
497,393 | 633 | DCF model |
Discount rate | ||||||||
Others |
500 | 500 | DCF model |
Discount rate | ||||||||
|
|
|
|
|||||||||
13,002,528 | 9,709,155 | |||||||||||
|
|
|
|
|||||||||
₩ | 19,427,329 | ₩ | 15,796,465 | |||||||||
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||
Derivatives held for trading |
₩ | 2,114,609 | ₩ | 1,747,645 | DCF model, Closed Form, FDM |
Discount rate, volatility, foreign exchange rate, stock price and others | ||||||
Derivatives held for hedging |
21,460 | 1,144 | DCF model, Closed Form, FDM |
Discount rate, volatility, foreign exchange rate and others | ||||||||
|
|
|
|
|||||||||
₩ | 2,136,069 | ₩ | 1,748,789 | |||||||||
|
|
|
|
65
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Fair value hierarchy of financial assets and liabilities whose fair value is disclosed
The fair value hierarchy of financial assets and liabilities whose fair value is disclosed as of December 31, 2015 and 2014, is as follows:
2015 | ||||||||||||||||
(In millions of Korean won) | Fair value hierarchy | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions1 |
₩ | 2,470,696 | ₩ | 10,405,952 | ₩ | 1,686,052 | ₩ | 14,562,700 | ||||||||
Loans |
| | 222,711,536 | 222,711,536 | ||||||||||||
Held-to-maturity financial assets |
1,775,755 | 10,297,038 | | 12,072,793 | ||||||||||||
Other financial assets2 |
| | 6,887,727 | 6,887,727 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 4,246,451 | ₩ | 20,702,990 | ₩ | 231,285,315 | ₩ | 256,234,756 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Deposits1 |
₩ | | ₩ | 100,361,458 | ₩ | 124,651,358 | ₩ | 225,012,816 | ||||||||
Debts1 |
| 9,884 | 14,311,412 | 14,321,296 | ||||||||||||
Debentures |
| 16,436,457 | | 16,436,457 | ||||||||||||
Other financial liabilities3 |
| | 9,612,273 | 9,612,273 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | | ₩ | 116,807,799 | ₩ | 148,575,043 | ₩ | 265,382,842 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
2014 | ||||||||||||||||
(In millions of Korean won) | Fair value hierarchy | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions1 |
₩ | 2,544,205 | ₩ | 10,198,808 | ₩ | 1,230,760 | ₩ | 13,973,773 | ||||||||
Loans |
| | 211,830,395 | 211,830,395 | ||||||||||||
Held-to-maturity financial assets |
2,616,385 | 7,870,561 | | 10,486,946 | ||||||||||||
Other financial assets2 |
| | 6,529,032 | 6,529,032 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,160,590 | ₩ | 18,069,369 | ₩ | 219,590,187 | ₩ | 242,820,146 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Deposits1 |
₩ | | ₩ | 82,783,564 | ₩ | 129,221,293 | ₩ | 212,004,857 | ||||||||
Debts1 |
| 48,984 | 14,295,126 | 14,344,110 | ||||||||||||
Debentures |
| 15,693,318 | | 15,693,318 | ||||||||||||
Other financial liabilities3 |
| | 9,344,892 | 9,344,892 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | | ₩ | 98,525,866 | ₩ | 152,861,311 | ₩ | 251,387,177 | |||||||||
|
|
|
|
|
|
|
|
1 | The amounts included in Level 2 are the carrying amounts which are reasonable approximation of the fair values. |
2 | The amounts of other financial assets included in Level 3 are the carrying amounts which are reasonable approximation of the fair values as of December 31, 2015 and 2014. |
3 | The ₩9,610,088 million and ₩9,331,606 million of other financial liabilities included in Level 3 are the carrying amounts which are reasonable approximation of fair values as of December 31, 2015 and 2014, respectively. |
66
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Valuation techniques and inputs used in the fair value measurement
Valuation techniques and 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.
Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 2 as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Fair value | |||||||||||
2015 | 2014 | Valuation Techniques |
Inputs | |||||||||
Financial assets |
||||||||||||
Held-to-maturity financial assets |
₩ | 10,297,038 | ₩ | 7,870,561 | DCF model | Discount rate | ||||||
Financial liabilities |
||||||||||||
Debentures |
₩ | 16,436,457 | ₩ | 15,693,318 | DCF model | Discount rate |
Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 3 as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Fair value | |||||||||||||||
2015 | 2014 | Valuation techniques |
Inputs | Unobservable inputs | ||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions |
₩ | 1,686,052 | ₩ | 1,230,760 | DCF model | Credit spread, other spread, interest rate |
Credit spread, other spread | |||||||||
Loans |
222,711,536 | 211,830,395 | DCF model | Credit spread, other spread, prepayment rate, interest rate |
Credit spread, other spread, prepayment rate | |||||||||||
|
|
|
|
|||||||||||||
₩ | 224,397,588 | ₩ | 213,061,155 | |||||||||||||
|
|
|
|
|||||||||||||
Financial liabilities |
||||||||||||||||
Deposits |
₩ | 124,651,358 | ₩ | 129,221,293 | DCF model | Other spread, prepayment rate, interest rate |
Other spread, prepayment rate | |||||||||
Debts |
14,311,412 | 14,295,126 | DCF model | Other spread, interest rate |
Other spread | |||||||||||
Other financial liabilities |
2,185 | 13,286 | DCF model | Other spread, interest rate |
Other spread | |||||||||||
|
|
|
|
|||||||||||||
₩ | 138,964,955 | ₩ | 143,529,705 | |||||||||||||
|
|
|
|
67
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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.
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, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Financial assets at fair value through profit or loss |
Financial investments |
Net derivatives | ||||||||||||||
Available-for-sale financial assets |
Derivatives held for trading |
Derivatives held for hedging |
||||||||||||||
Equity securities | ||||||||||||||||
Beginning balance |
₩ | | ₩ | 1,571,370 | ₩ | 23,997 | ₩ | (2,021 | ) | |||||||
Total gains or losses |
||||||||||||||||
- Profit or loss |
(4,802 | ) | 204,429 | (1,447 | ) | 2,735 | ||||||||||
- Other comprehensive-income |
| (86,953 | ) | | | |||||||||||
Purchases |
75,000 | 415,633 | 277 | | ||||||||||||
Sales |
| (552,600 | ) | | | |||||||||||
Issues |
| | | | ||||||||||||
Settlements |
| | (24,387 | ) | | |||||||||||
Transfers into Level 31 |
| 24,850 | | | ||||||||||||
Transfers out of Level 31 |
| (23,190 | ) | | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Ending balance |
₩ | 70,198 | ₩ | 1,553,539 | ₩ | (1,560 | ) | ₩ | 714 | |||||||
|
|
|
|
|
|
|
|
68
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||
Financial investments |
Net derivatives | |||||||||||
Available-for-sale financial assets |
Derivatives held for trading |
Derivatives held for hedging |
||||||||||
Equity securities | ||||||||||||
Beginning balance |
₩ | 1,561,667 | ₩ | (4,654 | ) | ₩ | (8,390 | ) | ||||
Total gains or losses |
||||||||||||
- Profit or loss |
(112,649 | ) | (1,393 | ) | 6,579 | |||||||
- Other comprehensive-income |
118,579 | | | |||||||||
Purchases |
154,243 | | | |||||||||
Sales |
(170,591 | ) | | | ||||||||
Issues |
| | | |||||||||
Settlements |
| 7,393 | (210 | ) | ||||||||
Transfers into Level 31 |
24,736 | 22,651 | | |||||||||
Transfers out of Level 31 |
(4,615 | ) | | | ||||||||
|
|
|
|
|
|
|||||||
Ending balance |
₩ | 1,571,370 | ₩ | 23,997 | ₩ | (2,021 | ) | |||||
|
|
|
|
|
|
1 | Changes in levels for the financial instruments occurred due to the change in the availability of observable market data. |
In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the period, and total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period in the statements of comprehensive income for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||
Net losses from financial investments at fair value through profit or loss |
Other operating income (losses) |
|||||||
Total gains or losses included in profit or loss for the period |
₩ | (6,249 | ) | ₩ | 207,164 | |||
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period |
(3,035 | ) | (15,372 | ) | ||||
(In millions of Korean won) | 2014 | |||||||
Net income (losses) from financial investments at fair value through profit or loss |
Other operating losses |
|||||||
Total gains or losses included in profit or loss for the period |
₩ | (1,393 | ) | ₩ | (106,070 | ) | ||
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period |
7,533 | (112,164 | ) |
69
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
6.2.3 Sensitivity analysis of changes in unobservable inputs
Information about fair value measurements using unobservable inputs as of December 31, 2015, is as follows:
(In millions of Korean won) | ||||||||||||||||
Fair value | Valuation techniques |
Inputs | Unobservable inputs |
Range of (%) |
Relationship of fair value | |||||||||||
Financial assets |
||||||||||||||||
Financial assets designated at fair value through profit or loss |
||||||||||||||||
Derivative linked securities |
₩ | 70,198 | MonteCarlo Simulation |
Price of the underlying asset, interest rate, dividend yield, volatility of the underlying asset, correlation of the underlying assets |
Volatility of the underlying asset |
19.95 ~ 31.19 | Higher the volatility, higher the fair value fluctuation | |||||||||
Correlation of the underlying assets |
26.37 ~ 53.50 | Higher the correlation, higher the fair value fluctuation | ||||||||||||||
Derivatives held for trading |
||||||||||||||||
Stock and index |
321 | Binomial model |
Price of the underlying asset, interest rate, volatility of the underlying asset, dividend yield |
Volatility of the underlying asset |
17.10 | Higher the volatility, higher the fair value fluctuation | ||||||||||
Currency and interest |
264 | DCF model |
Interest rate, foreign exchange rate, loss given default |
Loss given default |
5.56 ~ 100.00 | Higher the loss rate, decrease the fair value | ||||||||||
Others |
12 | MonteCarlo Simulation |
Stock price, interest rate, volatility of the stock price, volatility of the interest rate |
Volatility of the stock price |
40.02 | Higher the volatility, higher the fair value fluctuation | ||||||||||
Derivatives held for hedging |
Volatility of the interest rate |
0.45 | Higher the volatility, higher the fair value fluctuation | |||||||||||||
Interest |
1,211 | DCF model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset |
Volatility of the underlying asset |
5.96 | Higher the volatility, higher the fair value fluctuation | ||||||||||
Available-for-sale financial assets |
||||||||||||||||
Equity securities |
1,553,539 | DCF Model, Comparable Company Analysis, Risk Adjusted Discount Rate Method |
Growth rate, discount rate, volatilities of real estate price, liquidation value , recovery rate of receivables acquisition cost |
Growth rate |
0.00 ~ 3.00 | Higher the growth rate, higher the fair value | ||||||||||
Discount rate |
1.72 ~ 20.65 | Lower the discount rate, higher the fair value | ||||||||||||||
Liquidation value |
0.00 | Higher the liquidation value, higher the fair value | ||||||||||||||
Recovery rate of receivables acquisition cost |
155.83 | Higher the recovery rate of receivables acquisition cost, higher the fair value | ||||||||||||||
|
|
|||||||||||||||
₩ | 1,625,545 | |||||||||||||||
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||
Derivatives held for trading |
||||||||||||||||
Stock and index |
₩ | 2,143 | DCF model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset, correlation of the underlying assets(Correlation of rates of return on stocks), dividend yield |
Volatility of the underlying asset |
31.00 ~ 33.80 | Higher the volatility, higher the fair value fluctuation | |||||||||
Correlation of rates of return on stocks |
11.96 | Higher the correlation, higher the fair value fluctuation | ||||||||||||||
Others |
14 | MonteCarlo Simulation |
Stock price, interest rate, volatility of the stock price, volatility of the interest rate |
Volatility of the stock price |
40.02 | Higher the volatility, higher the fair value fluctuation | ||||||||||
Volatility of the interest rate |
0.45 | Higher the volatility, higher the fair value fluctuation | ||||||||||||||
Derivatives held for hedging |
||||||||||||||||
Interest |
497 | DCF model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset |
Volatility of the underlying asset |
3.93 | Higher the volatility, higher the fair value fluctuation | ||||||||||
|
|
|||||||||||||||
₩ | 2,654 | |||||||||||||||
|
|
70
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Information about fair value measurements using unobservable inputs as of December 31, 2014, is as follows:
Fair value | Valuation techniques |
Inputs | Unobservable inputs |
Range of (%) |
Relationship of unobservable inputs to fair value | |||||||||
Financial assets |
||||||||||||||
Derivatives held for trading |
||||||||||||||
Stock and index |
₩ | 29,031 | DCF model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset, correlation of the underlying assets(Correlation of rates of return on stocks), dividend yield |
Volatility of the underlying asset |
24.20 ~ 45.82 | Higher the volatility, higher the fair value fluctuation | |||||||
Correlation of rates of return on stocks |
-3.27 ~ 52.23 | Higher the correlation, higher the fair value fluctuation | ||||||||||||
Currency and interest |
2,995 | DCF model |
Interest rate, foreign exchange rate, loss given default |
Loss given default |
6.78 ~ 90.56 | Higher the loss rate, decrease the fair value | ||||||||
Derivatives held for hedging |
||||||||||||||
Interest |
260 | DCF model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, Interest rate, volatility of the underlying asset |
Volatility of the underlying asset |
3.91 | Higher the volatility, higher the fair value fluctuation | ||||||||
Available-for-sale financial assets |
|
|||||||||||||
DCF Model, Comparable Company Analysis, Risk Adjusted Discount Rate Method |
Growth rate, discount rate, volatilities of real estate price, liquidation value , discount rate of cash flows from rent , recovery rate of receivables acquisition cost |
Growth rate |
0.00 ~ 3.00 | Higher the growth rate, higher the fair value | ||||||||||
Discount rate |
2.29 ~ 21.55 | Lower the discount rate, higher the fair value | ||||||||||||
Volatilities of real estate price |
1.10 | Higher real estate price, higher the fair value | ||||||||||||
Liquidation value |
0.00 | Higher the liquidation value, higher the fair value | ||||||||||||
Discount rate of cash flows from rent |
6.89 | Lower the discount rate of cash flows from rent, higher the fair value | ||||||||||||
Equity securities |
1,571,370 | Recovery rate of receivables acquisition cost |
155.83 | Higher the recovery rate of receivables acquisition cost, higher the fair value | ||||||||||
|
|
|||||||||||||
₩ | 1,603,656 | |||||||||||||
|
|
|||||||||||||
Financial liabilities |
||||||||||||||
Derivatives held for trading |
||||||||||||||
Stock and index |
₩ | 8,029 | DCF model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset, correlation of the underlying assets(rates of return on stocks), dividend yield |
Volatility of the underlying asset |
25.13 ~ 41.79 | Higher the volatility, higher the fair value fluctuation | |||||||
Correlation of rates of return on stocks |
-3.83 ~ 68.20 | Higher the correlation, higher the fair value fluctuation | ||||||||||||
Derivatives held for hedging |
||||||||||||||
Interest |
2,281 | DCF model, Closed Form, FDM, Monte Carlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset |
Volatility of the underlying asset |
2.35 ~ 3.91 | Higher the volatility, higher the fair value fluctuation | ||||||||
|
|
|||||||||||||
₩ | 10,310 | |||||||||||||
|
|
71
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 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 unfavorable. Amongst Level 3 financial instruments subject to sensitivity analysis, there are derivative linked securities, equity-related derivatives, currency-related derivatives, interest rate-related derivatives and other derivatives whose fair value changes are recognized in profit or loss as well as equity securities and private equity funds whose fair value changes are recognized in profit or loss or other comprehensive income and loss.
Sensitivity analyses by type of instrument as a result of varying input parameters are as follows:
2015 | ||||||||
(In millions of Korean won) | Recognition in profit or loss | |||||||
Favorable changes | Unfavorable changes | |||||||
Financial assets |
||||||||
Financial assets designated at fair value through profit or loss |
||||||||
Derivative linked securities1 |
₩ | 1,697 | ₩ | (1,507 | ) | |||
Derivatives held for trading2 |
337 | (10 | ) | |||||
Derivatives held for hedging2 |
81 | (71 | ) | |||||
Available-for-sale financial assets3 |
| | ||||||
|
|
|
|
|||||
₩ | 2,115 | ₩ | (1,588 | ) | ||||
|
|
|
|
|||||
Financial liabilities |
||||||||
Derivatives held for trading2 |
8 | (13 | ) | |||||
Derivatives held for hedging2 |
17 | (16 | ) | |||||
|
|
|
|
|||||
₩ | 25 | ₩ | (29 | ) | ||||
|
|
|
|
72
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
2015 | ||||||||
(In millions of Korean won) | Other comprehensive income or loss | |||||||
Favorable changes | Unfavorable changes | |||||||
Financial assets |
||||||||
Available-for-sale financial assets3 |
₩ | 143,678 | ₩ | (72,762 | ) | |||
|
|
|
|
|||||
2014 | ||||||||
(In millions of Korean won) | Recognition in profit or loss | |||||||
Favorable changes | Unfavorable changes | |||||||
Financial assets |
||||||||
Derivatives held for trading2 |
₩ | 310 | ₩ | (307 | ) | |||
Derivatives held for hedging2 |
17 | (15 | ) | |||||
Available-for-sale financial assets3 |
| | ||||||
|
|
|
|
|||||
₩ | 327 | ₩ | (322 | ) | ||||
|
|
|
|
|||||
Financial liabilities |
||||||||
Derivatives held for trading2 |
₩ | 535 | ₩ | (535 | ) | |||
Derivatives held for hedging2 |
86 | (76 | ) | |||||
|
|
|
|
|||||
₩ | 621 | ₩ | (611 | ) | ||||
|
|
|
|
|||||
2014 | ||||||||
(In millions of Korean won) | Other comprehensive income or loss | |||||||
Favorable changes | Unfavorable changes | |||||||
Financial assets |
||||||||
Available-for-sale financial assets3 |
₩ | 360,970 | ₩ | (136,378 | ) | |||
|
|
|
|
1 | For derivative linked securities, the changes in fair value are calculated by shifting principal unobservable input parameters such as the volatility of the underlying asset and the correlation of the underlying assets by ± 10%. |
2 | For stock and index-related derivatives, the changes in fair value are calculated by shifting principal unobservable input parameters such as the correlation of rates of return on stocks and the volatility of the underlying asset by ± 10%. For foreign currency derivatives, the changes in fair value are calculated by shifting the unobservable input parameters, such as the loss given default ratio by ± 1%. For interest rate-related derivatives, the changes in fair value are calculated by shifting the unobservable input parameters such as the correlation of the interest rates or the volatility of the underlying asset by ± 10%. |
3 | 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, or 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%). |
73
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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) | 2015 | 2014 | ||||||
Balance at the beginning of the period (A) |
₩ | 187 | ₩ | 1,330 | ||||
New transactions (B) |
| | ||||||
Amounts recognized in profit or loss during the period (C= a+b) |
(178 | ) | (1,143 | ) | ||||
a. Amortization |
(20 | ) | (73 | ) | ||||
b. Settlement |
(158 | ) | (1,070 | ) | ||||
|
|
|
|
|||||
Balance at the end of the period (A+B+C) |
₩ | 9 | ₩ | 187 | ||||
|
|
|
|
74
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
6.3 Carrying amounts of financial instruments by category
Financial assets and liabilities are measured at fair value or amortized cost. The carrying amounts of financial assets and liabilities by category as of December 31, 2015, are as follows:
(In millions of Korean won)
Financial assets at fair value through profit or loss |
Loans and receivables |
Available- for-sale financial assets |
Held-to- maturity financial assets |
Derivatives held for hedging |
Total | |||||||||||||||||||||||
Held for trading |
Financial assets designated at fair value through profit or loss |
|||||||||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | | ₩ | | ₩ | 14,562,990 | ₩ | | ₩ | | ₩ | | ₩ | 14,562,990 | ||||||||||||||
Financial assets at fair value through profit or loss |
6,417,419 | 70,198 | | | | | 6,487,617 | |||||||||||||||||||||
Derivatives |
2,093,458 | | | | | 92,552 | 2,186,010 | |||||||||||||||||||||
Loans |
| | 222,738,064 | | | | 222,738,064 | |||||||||||||||||||||
Financial investments |
| | | 21,163,192 | 11,748,794 | | 32,911,986 | |||||||||||||||||||||
Other financial assets |
| | 6,887,727 | | | | 6,887,727 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 8,510,877 | ₩ | 70,198 | ₩ | 244,188,781 | ₩ | 21,163,192 | ₩ | 11,748,794 | ₩ | 92,552 | ₩ | 285,774,394 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||
Financial liabilities at fair value through profit or loss |
Financial liability at amortized cost |
Derivatives held for hedging |
Total | |||||||||||||
Held for trading | ||||||||||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities at fair value through profit or loss |
₩ | 69,465 | ₩ | | ₩ | | ₩ | 69,465 | ||||||||
Derivatives |
2,116,766 | | 21,957 | 2,138,723 | ||||||||||||
Deposits |
| 224,333,507 | | 224,333,507 | ||||||||||||
Debts |
| 14,291,815 | | 14,291,815 | ||||||||||||
Debentures |
| 15,949,134 | | 15,949,134 | ||||||||||||
Other financial liabilities |
| 9,612,261 | | 9,612,261 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 2,186,231 | ₩ | 264,186,717 | ₩ | 21,957 | ₩ | 266,394,905 | |||||||||
|
|
|
|
|
|
|
|
75
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The carrying amounts of financial assets and liabilities by category as of December 31, 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
Financial assets at fair value through profit or loss |
Loans and receivables |
Available- for-sale financial assets |
Held-to- maturity financial assets |
Derivatives held for hedging |
Total | |||||||||||||||||||
Held for trading | ||||||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | | ₩ | 13,973,510 | ₩ | | ₩ | | ₩ | | ₩ | 13,973,510 | ||||||||||||
Financial assets at fair value through profit or loss |
7,520,471 | | | | | 7,520,471 | ||||||||||||||||||
Derivatives |
1,800,664 | | | | 109,553 | 1,910,217 | ||||||||||||||||||
Loans |
| 211,525,560 | | | | 211,525,560 | ||||||||||||||||||
Financial investments |
| | 19,134,391 | 10,124,136 | | 29,258,527 | ||||||||||||||||||
Other financial assets |
| 6,529,032 | | | | 6,529,032 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 9,321,135 | ₩ | 232,028,102 | ₩ | 19,134,391 | ₩ | 10,124,136 | ₩ | 109,553 | ₩ | 270,717,317 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||
Financial liabilities at fair value through profit or loss |
Financial liability at amortized cost |
Derivatives held for hedging |
Total | |||||||||||||
Held for trading | ||||||||||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities at fair value through profit or loss |
₩ | 51,650 | ₩ | | ₩ | | ₩ | 51,650 | ||||||||
Derivatives |
1,755,674 | | 3,425 | 1,759,099 | ||||||||||||
Deposits |
| 211,611,432 | | 211,611,432 | ||||||||||||
Debts |
| 14,297,460 | | 14,297,460 | ||||||||||||
Debentures |
| 15,250,464 | | 15,250,464 | ||||||||||||
Other financial liabilities |
| 9,344,847 | | 9,344,847 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 1,807,324 | ₩ | 250,504,203 | ₩ | 3,425 | ₩ | 252,314,952 | |||||||||
|
|
|
|
|
|
|
|
76
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
6.4 Transfer of financial assets
6.4.1 Transferred financial assets that are derecognized in their entirety
The Group transferred loans and other financial assets that are derecognized in their entirety to SPEs, while the maximum exposure to loss(carrying amount) from its continuing involvement in the derecognized financial assets as of December 31, 2015 and 2014, are as follows :
(In millions of Korean won) | 2015 |
|||||||||||
Type of continuing involvement |
Classification of financial instruments |
Carrying amount of continuing involvement in statement of financial position |
Fair value of continuing involvement in statement of financial position |
|||||||||
EAK ABS Ltd. |
Subordinated debt |
Available-for-sale financial assets |
₩ | 48 | ₩ | 48 | ||||||
AP 1st Securitization Specialty Co., Ltd. |
Subordinated debt |
Available-for-sale financial assets |
10,335 | 10,335 | ||||||||
Discovery 1st Securitization Specialty Co., Ltd. |
Subordinated debt |
Available-for-sale financial assets |
10,448 | 10,448 | ||||||||
EAK 2nd Securitization Specialty Co., Ltd. |
Subordinated debt |
Available-for-sale financial assets |
22,359 | 22,359 | ||||||||
FK 1411 ABS Ltd. |
Subordinated debt |
Available-for-sale financial assets |
41,810 | 41,810 | ||||||||
AP 3B ABS Ltd.1 |
Senior debt |
Loans and receivables |
11,496 | 11,548 | ||||||||
Subordinated debt |
Available-for-sale financial assets |
27,377 | 27,377 | |||||||||
|
|
|
|
|||||||||
₩ | 123,873 | ₩ | 123,925 | |||||||||
|
|
|
|
1 | Recognized net gain from transferring loans to the SPEs amounts to ₩10,639 million. |
2 | In addition to the above, the recovered portion in excess of the consideration paid attributable to adjustments based on the agreement with the National Happiness Fund for non-performing loans amounts to ₩4,281 million as of December 31, 2015. |
77
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 |
|||||||||||
Type of continuing involvement |
Classification of financial instruments |
Carrying amount of continuing involvement in statement of financial position |
Fair value of continuing involvement in statement of financial position |
|||||||||
KR ABS Ltd. |
Subordinated debt |
Available-for-sale financial assets |
₩ | 4,921 | ₩ | 4,921 | ||||||
KR 2nd Securitization Specialty Co., Ltd. |
Subordinated debt |
Available-for-sale financial assets |
22,219 | 22,219 | ||||||||
EAK ABS Ltd. |
Subordinated debt |
Available-for-sale financial assets |
11,211 | 11,211 | ||||||||
AP 1st Securitization Specialty Co., Ltd. |
Senior debt |
Loans and receivables |
9,762 | 9,842 | ||||||||
Subordinated debt |
Available-for-sale financial assets |
17,346 | 17,346 | |||||||||
Discovery 1st Securitization Specialty Co., Ltd. |
Senior debt |
Loans and receivables |
1,175 | 1,194 | ||||||||
Subordinated debt |
Available-for-sale financial assets |
22,591 | 22,591 | |||||||||
EAK 2nd Securitization Specialty Co., Ltd. 1 |
Senior debt |
Loans and receivables |
19,806 | 20,026 | ||||||||
Subordinated debt |
Available-for-sale financial assets |
38,207 | 38,207 | |||||||||
FK 1411 ABS Ltd. 2 |
Senior debt |
Loans and receivables |
44,966 | 44,917 | ||||||||
Subordinated debt |
Available-for-sale financial assets |
47,600 | 47,600 | |||||||||
|
|
|
|
|||||||||
₩ | 239,804 | ₩ | 240,074 | |||||||||
|
|
|
|
1 | Recognized net gain 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, the recovered portion in excess of the consideration paid attributable to adjustments based on the agreement with the National Happiness Fund for non-performing loans amounts to ₩3,145 million in 2014. |
78
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
6.4.2 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 substantially retains all the risks and rewards of ownership of the financial asset. The amounts of transferred assets and related liabilities as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||
Carrying amount of transferred asset |
Carrying amount of related liabilities |
|||||||
Securities under repurchase agreements |
₩ | 608,568 | ₩ | 568,486 | ||||
Loaned securities |
200,389 | | ||||||
Government and public bonds |
200,389 | | ||||||
|
|
|
|
|||||
₩ | 808,957 | ₩ | 568,486 | |||||
|
|
|
|
|||||
(In millions of Korean won) | 2014 | |||||||
Carrying amount of transferred asset |
Carrying amount of related liabilities |
|||||||
Securities under repurchase agreements |
₩ | 164,382 | ₩ | 148,869 | ||||
Loaned securities |
59,120 | | ||||||
Government and public bonds |
59,120 | | ||||||
|
|
|
|
|||||
₩ | 223,502 | ₩ | 148,869 | |||||
|
|
|
|
79
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
6.5 Offsetting financial assets and financial liabilities
The Group enters into International Swaps and Derivatives Association (ISDA) master netting agreements and other similar netting arrangements with the 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 financial position.
The details of financial assets subject to offsetting, enforceable master netting arrangements or similar agreements as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||||||
Gross amounts of recognized financial assets |
Gross amounts of recognized financial liabilities offset in the statement of financial position |
Net amounts of financial assets presented in the statement of financial position |
Related amounts not offset in the statement of financial position |
Net amount | ||||||||||||||||||||
Financial instruments |
Cash collateral received |
|||||||||||||||||||||||
Derivatives held for trading |
₩ | 2,093,125 | ₩ | | ₩ | 2,093,125 | ₩ | (1,594,838 | ) | ₩ | (22,220 | ) | ₩ | 476,067 | ||||||||||
Derivatives held for hedging |
92,552 | | 92,552 | (15,650 | ) | | 76,902 | |||||||||||||||||
Receivable spot exchange |
2,841,945 | | 2,841,945 | (2,840,480 | ) | | 1,465 | |||||||||||||||||
Reverse repurchase, securities borrowing and similar agreements |
2,028,200 | | 2,028,200 | (2,028,200 | ) | | | |||||||||||||||||
Other financial instruments |
20,125,762 | (17,987,341 | ) | 2,138,421 | | | 2,138,421 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 27,181,584 | ₩ | (17,987,341 | ) | ₩ | 9,194,243 | ₩ | (6,479,168 | ) | ₩ | (22,220 | ) | ₩ | 2,692,855 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Gross amounts of recognized financial assets |
Gross amounts of recognized financial liabilities offset in the statement of financial position |
Net amounts of financial assets presented in the statement of financial position |
Related amounts not offset in the statement of financial position |
Net amount | ||||||||||||||||||||
Financial instruments |
Cash collateral received |
|||||||||||||||||||||||
Derivatives held for trading |
₩ | 1,798,280 | ₩ | | ₩ | 1,798,280 | ₩ | (1,472,239 | ) | ₩ | (1,635 | ) | ₩ | 324,406 | ||||||||||
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 agreements |
3,529,900 | | 3,529,900 | (3,529,900 | ) | | | |||||||||||||||||
Other financial instruments |
18,249,521 | (16,161,647 | ) | 2,087,874 | | | 2,087,874 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 26,030,562 | ₩ | (16,161,647 | ) | ₩ | 9,868,915 | ₩ | (7,359,943 | ) | ₩ | (1,635 | ) | ₩ | 2,507,337 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
80
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The details of financial liabilities subject to offsetting, enforceable master netting arrangements or similar agreements as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||||||
Gross amounts of recognized financial liabilities |
Gross amounts of recognized financial assets offset in the statement of financial position |
Net amounts of financial liabilities presented in the statement of financial position |
Related amounts not offset in the statement of financial position |
Net amount | ||||||||||||||||||||
Financial instruments |
Cash collateral pledged |
|||||||||||||||||||||||
Derivatives held for trading |
₩ | 2,116,486 | ₩ | | ₩ | 2,116,486 | ₩ | (1,618,259 | ) | ₩ | (4,633 | ) | ₩ | 493,594 | ||||||||||
Derivatives held for hedging |
21,957 | | 21,957 | (14,417 | ) | | 7,540 | |||||||||||||||||
Payable spot exchange |
2,842,407 | | 2,842,407 | (2,840,480 | ) | | 1,927 | |||||||||||||||||
Repurchase, securities lending and similar agreements1 |
568,486 | | 568,486 | (568,486 | ) | | | |||||||||||||||||
Other financial instruments |
18,105,992 | (17,987,341 | ) | 118,651 | (118,651 | ) | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 23,655,328 | ₩ | (17,987,341 | ) | ₩ | 5,667,987 | ₩ | (5,160,293 | ) | ₩ | (4,633 | ) | ₩ | 503,061 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Gross amounts of recognized financial liabilities |
Gross amounts of recognized financial assets offset in the statement of financial position |
Net amounts of financial liabilities presented in the statement of financial position |
Related amounts not offset in the statement of financial position |
Net amount | ||||||||||||||||||||
Financial instruments |
Cash collateral pledged |
|||||||||||||||||||||||
Derivatives held for trading |
₩ | 1,755,221 | ₩ | | ₩ | 1,755,221 | ₩ | (1,316,268 | ) | ₩ | | ₩ | 438,953 | |||||||||||
Derivatives held for hedging |
3,425 | | 3,425 | (3,013 | ) | | 412 | |||||||||||||||||
Payable spot exchange |
2,343,234 | | 2,343,234 | (2,342,116 | ) | | 1,118 | |||||||||||||||||
Repurchase, securities lending and similar agreements1 |
148,870 | | 148,870 | (148,870 | ) | | | |||||||||||||||||
Other financial instruments |
16,284,444 | (16,161,647 | ) | 122,797 | (122,797 | ) | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 20,535,194 | ₩ | (16,161,647 | ) | ₩ | 4,373,547 | ₩ | (3,933,064 | ) | ₩ | | ₩ | 440,483 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
1 | Includes repurchase agreements sold to customers. |
81
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
7. Due from financial institutions
The details of due from financial institutions as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Financial Institutions | Interest rate(%) |
2015 | 2014 | ||||||||||
Due from financial institutions in Korean won |
Due from Bank of Korea |
Bank of Korea |
0.00 ~ 1.50 | ₩ | 6,376,961 | ₩ | 6,283,230 | |||||||
Due from banking institutions |
KEB Hana Bank and others |
0.00 ~ 2.60 | 705,670 | 585,028 | ||||||||||
Due from others |
KB Investment & Securities Co., Ltd. and others |
0.00 ~ 1.00 | 2,819,387 | 3,013,288 | ||||||||||
|
|
|
|
|||||||||||
9,902,018 | 9,881,546 | |||||||||||||
|
|
|
|
|||||||||||
Due from financial institutions in foreign currencies |
Due from banks in foreign currencies |
Bank of Korea and others |
| 1,211,342 | 898,437 | |||||||||
Time deposits in foreign currencies |
KEB Hana Bank and others |
0.00 ~ 4.79 | 941,986 | 613,153 | ||||||||||
Due from others |
Bank of Japan and others |
| 36,948 | 36,169 | ||||||||||
|
|
|
|
|||||||||||
2,190,276 | 1,547,759 | |||||||||||||
|
|
|
|
|||||||||||
₩ | 12,092,294 | ₩ | 11,429,305 | |||||||||||
|
|
|
|
Restricted due from financial institutions as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Financial Institutions | 2015 | 2014 | Reason for restriction | ||||||||||
Due from financial institutions in Korean won |
Due from Bank of Korea |
Bank of Korea |
₩ | 6,376,961 | ₩ | 6,283,230 | Bank of Korea Act | |||||||
Due from banking institutions |
KEB Hana Bank and others |
| 279,200 | Agreement for allocation of deposit | ||||||||||
Due from others |
Morgan Stanley Bank International Ltd and others |
5,119 | 1,668 | Derivatives margin account and others | ||||||||||
|
|
|
|
|||||||||||
6,382,080 | 6,564,098 | |||||||||||||
|
|
|
|
|||||||||||
Due from financial institutions in foreign currencies |
Due from banks in foreign currencies |
Bank of Korea and others |
501,379 | 293,067 | Bank of Korea Act and others | |||||||||
Time deposits in foreign currencies |
China Merchants Bank NY Branch |
17,580 | 16,488 | New York State Banking Law | ||||||||||
Due from others |
Samsung Futures Inc. and others |
4,868 | 4,022 | Derivatives margin account and others | ||||||||||
|
|
|
|
|||||||||||
523,827 | 313,577 | |||||||||||||
|
|
|
|
|||||||||||
₩ | 6,905,907 | ₩ | 6,877,675 | |||||||||||
|
|
|
|
82
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
8. Assets pledged as collateral
The details of assets pledged as collateral as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||
Assets pledged | Pledgee | 2015 | ||||||
Carrying amount | Reason for the pledge | |||||||
Financial assets held for trading |
Korea Securities Depository and others |
₩ | 53,680 | Repurchase agreements | ||||
KB Investment Co., Ltd. |
1,021 | Derivatives transactions | ||||||
|
|
|||||||
54,701 | ||||||||
|
|
|||||||
Available-for-sale financial assets |
Korea Securities Depository and others |
481,937 | Repurchase agreements | |||||
Bank of Korea |
594,020 | Borrowings from Bank of Korea | ||||||
Bank of Korea |
61,410 | Settlement risk of Bank of Korea | ||||||
Deutshe Bank AG. and others |
412,475 | Derivatives transactions | ||||||
Others |
5,604 | Others | ||||||
|
|
|||||||
1,555,446 | ||||||||
|
|
|||||||
Held-to-maturity financial assets |
Korea Securities Depository and others |
101,942 | Repurchase agreements | |||||
Bank of Korea |
820,872 | Borrowings from Bank of Korea | ||||||
Bank of Korea |
922,733 | Settlement risk of Bank of Korea | ||||||
Samsung Futures Inc. and others |
200,625 | Derivatives transactions | ||||||
Others |
174,984 | Others | ||||||
|
|
|||||||
2,221,156 | ||||||||
|
|
|||||||
Mortgage loans |
Others |
1,745,823 | Covered Bond | |||||
|
|
|||||||
₩ | 5,577,126 | |||||||
|
|
83
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||
Assets pledged | Pledgee | 2014 | ||||||
Carrying amount | Reason for the pledge | |||||||
Financial assets held for trading |
Korea Securities Depository and others |
₩ | 82,990 | Repurchase agreements | ||||
Samsung Futures Inc. and others |
9,861 | Derivatives transactions | ||||||
Others |
17,864 | Settlement of Korea Exchange and others | ||||||
|
|
|||||||
110,715 | ||||||||
|
|
|||||||
Available-for-sale financial assets |
Samsung Futures Inc. and others |
3,308 | Derivatives transactions | |||||
|
|
|||||||
Held-to-maturity financial assets |
Korea Securities Depository and others |
1,460,932 | Repurchase agreements | |||||
Bank of Korea |
993,853 | Borrowings from Bank of Korea | ||||||
Bank of Korea |
1,440,821 | Settlement risk of Bank of Korea | ||||||
Samsung Futures Inc. and others |
339,107 | Derivatives transactions | ||||||
Others |
254,980 | Others | ||||||
|
|
|||||||
4,489,693 | ||||||||
|
|
|||||||
₩ | 4,603,716 | |||||||
|
|
The fair value of collateral available to sell or repledge, and collateral sold or repledged, regardless of debtors default as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | |||||||
Fair value of collateral | Fair value of collateral sold or repledged |
|||||||
Securities |
₩ | 2,045,575 | ₩ | | ||||
(In millions of Korean won) | 2014 | |||||||
Fair value of collateral | Fair value of collateral sold or repledged |
|||||||
Securities |
₩ | 3,598,732 | ₩ | |
84
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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 applies fair value hedge accounting using cross currency swaps, interest rate swaps and others to hedge the risk of changes in fair values due to the changes in interest rates and foreign exchange rates of structured debentures in Korean won, debentures in foreign currencies, structured deposits in Korean won, and structured deposits in foreign currencies. In addition, the Group applies net investment hedge accounting by designating debentures in foreign currencies as hedging instruments to hedge foreign exchange risks on net investments in foreign operations.
The details of derivative financial instruments for trading as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||
(In millions of Korean won) | Notional amount | Assets | Liabilities | |||||||||
Interest rate |
||||||||||||
Futures1 |
₩ | 528,941 | ₩ | | ₩ | | ||||||
Swaps |
91,057,388 | 909,024 | 889,940 | |||||||||
Options |
5,874,500 | 73,724 | 133,087 | |||||||||
|
|
|
|
|
|
|||||||
97,460,829 | 982,748 | 1,023,027 | ||||||||||
|
|
|
|
|
|
|||||||
Currency |
||||||||||||
Forwards |
33,674,825 | 511,513 | 304,877 | |||||||||
Futures1 |
576,263 | | | |||||||||
Swaps |
25,303,179 | 596,668 | 782,912 | |||||||||
Options |
373,241 | 2,196 | 3,526 | |||||||||
|
|
|
|
|
|
|||||||
59,927,508 | 1,110,377 | 1,091,315 | ||||||||||
|
|
|
|
|
|
|||||||
Stock and index |
||||||||||||
Futures1 |
26,588 | | | |||||||||
Swaps |
| | | |||||||||
Options |
40,571 | 321 | 2,410 | |||||||||
|
|
|
|
|
|
|||||||
67,159 | 321 | 2,410 | ||||||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|||||||
Others |
703,200 | 12 | 14 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 158,158,696 | ₩ | 2,093,458 | ₩ | 2,116,766 | |||||||
|
|
|
|
|
|
85
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
2014 | ||||||||||||
(In millions of Korean won) | Notional amount | Assets | Liabilities | |||||||||
Interest rate |
||||||||||||
Futures1 |
₩ | 290,290 | ₩ | | ₩ | | ||||||
Swaps |
101,441,724 | 923,094 | 956,130 | |||||||||
Options |
8,398,000 | 86,277 | 128,185 | |||||||||
|
|
|
|
|
|
|||||||
110,130,014 | 1,009,371 | 1,084,315 | ||||||||||
|
|
|
|
|
|
|||||||
Currency |
||||||||||||
Forwards |
21,256,930 | 340,246 | 214,759 | |||||||||
Futures1 |
554,794 | | | |||||||||
Swaps |
18,430,843 | 415,842 | 441,696 | |||||||||
Options |
616,977 | 6,057 | 6,078 | |||||||||
|
|
|
|
|
|
|||||||
40,859,544 | 762,145 | 662,533 | ||||||||||
|
|
|
|
|
|
|||||||
Stock and index |
||||||||||||
Futures1 |
76,298 | | | |||||||||
Swaps |
45,135 | 26,648 | 1,166 | |||||||||
Options |
114,617 | 2,500 | 7,660 | |||||||||
|
|
|
|
|
|
|||||||
236,050 | 29,148 | 8,826 | ||||||||||
|
|
|
|
|
|
|||||||
₩ | 151,225,608 | ₩ | 1,800,664 | ₩ | 1,755,674 | |||||||
|
|
|
|
|
|
1 | A gain or loss from daily mark-to-market futures is reflected in the margin accounts. |
Fair value hedge
The details of derivatives designated as fair value hedging instruments as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||
(In millions of Korean won) | Notional amount | Assets | Liabilities | |||||||||
Interest rate |
||||||||||||
Swaps |
₩ | 3,108,538 | ₩ | 91,341 | ₩ | 21,460 | ||||||
Other |
140,000 | 1,211 | 497 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 3,248,538 | ₩ | 92,552 | ₩ | 21,957 | |||||||
|
|
|
|
|
|
2014 | ||||||||||||
(In millions of Korean won) | 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 | |||||||
|
|
|
|
|
|
86
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Gains and losses from fair value hedging instruments and hedged items attributable to the hedged risk for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Losses on hedging instruments |
₩ | (39,381 | ) | ₩ | (28,269 | ) | ||
Gains on the hedged item attributable to the hedged risk |
40,002 | 42,393 | ||||||
|
|
|
|
|||||
₩ | 621 | ₩ | 14,124 | |||||
|
|
|
|
Hedges of a net investment in a foreign operation
The Group applies hedge accounting by designating non-derivative financial instruments as hedging instruments to net investments in foreign operations for year ended December 31, 2015.
The effective portion of gain(loss) on hedging instruments recognized in other comprehensive income(loss) is as follows:
(In millions of Korean won) | 2015 | |||
Other comprehensive loss |
₩ | (33,610 | ) | |
Tax effect |
8,134 | |||
|
|
|||
Other comprehensive loss after tax |
₩ | (25,476 | ) | |
|
|
The fair value of non-derivative financial instruments designated as hedging instruments is as follows:
(In millions of Korean won) | 2015 | |||
Debentures in foreign currencies |
₩ | 582,205 |
87
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
10. | Loans |
Loans as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Loans |
₩ | 224,189,374 | ₩ | 212,907,660 | ||||
Deferred loan origination fees and costs |
574,569 | 545,497 | ||||||
Allowances |
(2,025,879 | ) | (1,927,597 | ) | ||||
|
|
|
|
|||||
Carrying amount |
₩ | 222,738,064 | ₩ | 211,525,560 | ||||
|
|
|
|
Loans to banks as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Loans |
₩ | 6,779,962 | ₩ | 6,208,391 | ||||
Allowances |
(39 | ) | | |||||
|
|
|
|
|||||
Carrying amount |
₩ | 6,779,923 | ₩ | 6,208,391 | ||||
|
|
|
|
Loans to customers other than banks as of December 31, 2015 and 2014, consist of:
(In millions of Korean won) | 2015 | |||||||||||
Retail | Corporate | Total | ||||||||||
Loans in Korean won |
₩ | 115,924,172 | ₩ | 91,272,391 | ₩ | 207,196,563 | ||||||
Loans in foreign currencies |
42,413 | 2,659,902 | 2,702,315 | |||||||||
Domestic import usance bills |
| 3,445,301 | 3,445,301 | |||||||||
Off-shore funding loans |
| 584,914 | 584,914 | |||||||||
Call loans |
| 198,045 | 198,045 | |||||||||
Bills bought in Korean won |
| 5,257 | 5,257 | |||||||||
Bills bought in foreign currencies |
| 2,812,217 | 2,812,217 | |||||||||
Guarantee payments under payment guarantee |
| 26,129 | 26,129 | |||||||||
Reverse repurchase agreements |
| 228,001 | 228,001 | |||||||||
Privately placed bonds |
| 785,239 | 785,239 | |||||||||
|
|
|
|
|
|
|||||||
115,966,585 | 102,017,396 | 217,983,981 | ||||||||||
Proportion (%) |
53.20 | 46.80 | 100.00 | |||||||||
|
|
|
|
|
|
|||||||
Allowances |
(432,414 | ) | (1,593,426 | ) | (2,025,840 | ) | ||||||
|
|
|
|
|
|
|||||||
₩ | 115,534,171 | ₩ | 100,423,970 | ₩ | 215,958,141 | |||||||
|
|
|
|
|
|
88
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||
Retail | Corporate | Total | ||||||||||
Loans in Korean won |
₩ | 112,193,456 | ₩ | 84,006,216 | ₩ | 196,199,672 | ||||||
Loans in foreign currencies |
50,047 | 2,574,041 | 2,624,088 | |||||||||
Domestic import usance bills |
| 3,693,951 | 3,693,951 | |||||||||
Off-shore funding loans |
| 664,794 | 664,794 | |||||||||
Call loans |
| 290,243 | 290,243 | |||||||||
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 |
| 12,975 | 12,975 | |||||||||
Reverse repurchase agreements |
| 1,079,900 | 1,079,900 | |||||||||
Privately placed bonds |
| 714,214 | 714,214 | |||||||||
|
|
|
|
|
|
|||||||
112,243,503 | 95,001,263 | 207,244,766 | ||||||||||
Proportion (%) |
54.16 | 45.84 | 100.00 | |||||||||
|
|
|
|
|
|
|||||||
Allowances |
(476,974 | ) | (1,450,623 | ) | (1,927,597 | ) | ||||||
|
|
|
|
|
|
|||||||
₩ | 111,766,529 | ₩ | 93,550,640 | ₩ | 205,317,169 | |||||||
|
|
|
|
|
|
89
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The changes in deferred loan origination fees and costs for the years ended December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Increase | Decrease | Other | Ending | |||||||||||||||
Deferred loan origination costs |
||||||||||||||||||||
Loans in Korean won |
₩ | 572,108 | ₩ | 422,396 | ₩ | 399,986 | ₩ | | ₩ | 594,518 | ||||||||||
Other origination costs |
598 | 491 | 619 | | 470 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
572,706 | 422,887 | 400,605 | | 594,988 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Deferred loan origination fees |
||||||||||||||||||||
Loans in Korean won |
21,993 | 3,091 | 9,112 | | 15,972 | |||||||||||||||
Other origination fees |
5,216 | 1,929 | 2,707 | 9 | 4,447 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
27,209 | 5,020 | 11,819 | 9 | 20,419 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 545,497 | ₩ | 417,867 | ₩ | 388,786 | ₩ | (9 | ) | ₩ | 574,569 | ||||||||||
|
|
|
|
|
|
|
|
|
|
2014 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Increase | Decrease | Other | Ending | |||||||||||||||
Deferred loan origination costs |
||||||||||||||||||||
Loans in Korean won |
₩ | 495,619 | ₩ | 355,270 | ₩ | 278,781 | ₩ | | ₩ | 572,108 | ||||||||||
Other origination costs |
378 | 1,100 | 880 | | 598 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
495,997 | 356,370 | 279,661 | | 572,706 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Deferred loan origination fees |
||||||||||||||||||||
Loans in Korean won |
25,064 | 4,579 | 7,650 | | 21,993 | |||||||||||||||
Other origination fees |
7,671 | 1,073 | 3,535 | 7 | 5,216 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
32,735 | 5,652 | 11,185 | 7 | 27,209 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 463,262 | ₩ | 350,718 | ₩ | 268,476 | ₩ | (7 | ) | ₩ | 545,497 | ||||||||||
|
|
|
|
|
|
|
|
|
|
90
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
11. | Allowances for Loan Losses |
The changes in the allowances for loan losses for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||
2015 | ||||||||||||
Retail | Corporate | Total | ||||||||||
Beginning |
₩ | 476,974 | ₩ | 1,450,623 | ₩ | 1,927,597 | ||||||
Written-off |
(295,642 | ) | (683,991 | ) | (979,633 | ) | ||||||
Recoveries from written-off loans |
177,075 | 156,531 | 333,606 | |||||||||
Sale |
(4,051 | ) | (45,619 | ) | (49,670 | ) | ||||||
Other changes |
(1,667 | ) | 101 | (1,566 | ) | |||||||
Provision1 |
79,725 | 715,820 | 795,545 | |||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 432,414 | ₩ | 1,593,465 | ₩ | 2,025,879 | ||||||
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||
2014 | ||||||||||||
Retail | Corporate | Total | ||||||||||
Beginning |
₩ | 572,286 | ₩ | 1,817,973 | ₩ | 2,390,259 | ||||||
Written-off |
(521,422 | ) | (1,068,490 | ) | (1,589,912 | ) | ||||||
Recoveries from written-off loans |
132,296 | 257,972 | 390,268 | |||||||||
Sale |
(6,726 | ) | (61,255 | ) | (67,981 | ) | ||||||
Other changes |
(6,555 | ) | (68,443 | ) | (74,998 | ) | ||||||
Provision1 |
307,095 | 572,866 | 879,961 | |||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 476,974 | ₩ | 1,450,623 | ₩ | 1,927,597 | ||||||
|
|
|
|
|
|
1 | Provision for credit losses in statements of comprehensive income also include provision(reversal) for unused commitments and guarantees (Note 22), provision(reversal) for financial guarantee contracts (Note 22), and provision for other financial assets (Note 17). |
91
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Financial assets held for trading |
||||||||
Debt securities |
||||||||
Government and public bonds |
₩ | 1,301,425 | ₩ | 2,035,150 | ||||
Financial bonds |
3,133,610 | 3,581,035 | ||||||
Corporate bonds |
1,438,302 | 1,204,083 | ||||||
Asset-backed securities |
218,496 | 282,011 | ||||||
Others |
195,636 | 266,504 | ||||||
Equity securities |
||||||||
Stocks |
31,397 | 60,122 | ||||||
Beneficiary certificates |
29,493 | 40,221 | ||||||
Others |
69,060 | 51,345 | ||||||
|
|
|
|
|||||
6,417,419 | 7,520,471 | |||||||
|
|
|
|
|||||
Financial assets designated at fair value through profit or loss |
||||||||
Derivative linked securities |
70,198 | | ||||||
|
|
|
|
|||||
Total financial assets at fair value through profit or loss |
₩ | 6,487,617 | ₩ | 7,520,471 | ||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Debt securities |
||||||||
Government and public bonds |
₩ | 3,202,350 | ₩ | 4,214,383 | ||||
Financial bonds |
6,376,869 | 6,259,941 | ||||||
Corporate bonds |
3,533,586 | 4,743,295 | ||||||
Asset-backed securities |
5,180,728 | 1,198,281 | ||||||
Equity securities |
||||||||
Stocks |
1,440,483 | 1,788,178 | ||||||
Equity investments |
41,314 | 45,578 | ||||||
Beneficiary certificates |
1,387,362 | 884,235 | ||||||
Others |
500 | 500 | ||||||
|
|
|
|
|||||
21,163,192 | 19,134,391 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Debts securities |
||||||||
Government and public bonds |
1,870,481 | 2,724,716 | ||||||
Financial bonds |
2,024,444 | 1,047,049 | ||||||
Corporate bonds |
3,709,968 | 5,880,095 | ||||||
Asset-backed securities |
4,143,901 | 472,276 | ||||||
|
|
|
|
|||||
11,748,794 | 10,124,136 | |||||||
|
|
|
|
|||||
Total financial investments |
₩ | 32,911,986 | ₩ | 29,258,527 | ||||
|
|
|
|
92
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The impairment losses and the reversal of impairment losses in financial investment for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||
2015 | ||||||||||||
Impairment | Reversal | Net | ||||||||||
Available-for-sale financial assets |
₩ | (216,027 | ) | ₩ | | ₩ | (216,027 | ) | ||||
|
|
|
|
|
|
|||||||
₩ | (216,027 | ) | ₩ | | ₩ | (216,027 | ) | |||||
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||
2014 | ||||||||||||
Impairment | Reversal | Net | ||||||||||
Available-for-sale financial assets |
₩ | (180,784 | ) | ₩ | | ₩ | (180,784 | ) | ||||
|
|
|
|
|
|
|||||||
₩ | (180,784 | ) | ₩ | | ₩ | (180,784 | ) | |||||
|
|
|
|
|
|
93
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
13. | Investments in associates |
Investments in associates as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||
Ownership (%) |
Acquisition cost |
Share of net amount |
Carrying amount |
Industry | Location | |||||||||||||||
Balhae Infrastructure Fund1 |
12.61 | ₩ | 125,462 | ₩ | 128,275 | ₩ | 128,275 | Investment finance |
Korea | |||||||||||
Korea Credit Bureau Co., Ltd.1 |
9.00 | 4,500 | 4,580 | 4,580 | Credit information |
Korea | ||||||||||||||
UAMCO., Ltd.1 |
17.50 | 85,050 | 125,822 | 129,707 | Other finance |
Korea | ||||||||||||||
JSC Bank CenterCredit |
||||||||||||||||||||
Ordinary shares 2 |
29.56 | 954,104 | (21,990 | ) | | Banking |
Kazakhstan | |||||||||||||
Preferred shares2 |
93.15 | |||||||||||||||||||
KB12-1 Venture Investment Partnership3 |
80.00 | 40,000 | 50,670 | 50,670 | Investment finance |
Korea | ||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
30.00 | 16,131 | 15,537 | 15,169 | Investment finance |
Korea | ||||||||||||||
United PF 1st Recovery Private Equity Fund1 |
17.73 | 172,441 | 187,596 | 183,117 | Other finance |
Korea | ||||||||||||||
Shinla Construction Co., Ltd. |
20.17 | | (516 | ) | | Specialty construction |
Korea | |||||||||||||
KB GwS Private Securities Investment Trust |
20.93 | 89,124 | 102,530 | 101,274 | Investment finance |
Korea | ||||||||||||||
Incheon Bridge Co., Ltd. 1 |
14.99 | 24,677 | (1,879 | ) | | Operation of highways and related facilities |
Korea | |||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
20.00 | 24,760 | 23,272 | 24,760 | Investment finance |
Korea | ||||||||||||||
Future Planning KB Start-up Creation Fund3 |
50.00 | 12,000 | 11,860 | 12,000 | Investment finance |
Korea | ||||||||||||||
Terra Corporation |
24.06 | | 37 | 21 | Manufacture of fabricated and processed metal products |
Korea | ||||||||||||||
MJT&I Corp.5 |
22.89 | | (580 | ) | 149 | Wholesale of other merchandise |
Korea | |||||||||||||
Jungdong Steel Co., Ltd.5 |
42.65 | | 86 | 33 | Wholesale of primary metal |
Korea | ||||||||||||||
Doosung Metal Co., Ltd5 |
26.49 | | (47 | ) | | Manufacture of metal door, windows, shutter and relevant products |
Korea | |||||||||||||
Myeongwon Tech Co., Ltd.5 |
25.62 | | (447 | ) | | Manufacture of other automotive parts |
Korea | |||||||||||||
Shinhwa Underwear Co., Ltd5 |
26.05 | | (184 | ) | 56 | Manufacture of underwear and sleepwear |
Korea | |||||||||||||
DPAPS Co.,Ltd.5 |
38.62 | | 339 | | Wholesale of paper |
Korea | ||||||||||||||
EJADE Co.,Ltd.5 |
25.67 | | 591 | | Wholesale of underwear |
Korea | ||||||||||||||
KB Star office private real estate Investment Trust No.1 |
21.05 | 20,000 | 20,328 | 20,328 | Investment finance |
Korea | ||||||||||||||
|
|
|
|
|
|
|||||||||||||||
₩ | 1,568,249 | ₩ | 645,880 | ₩ | 670,139 | |||||||||||||||
|
|
|
|
|
|
94
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||||||||||
Ownership (%) |
Acquisition cost |
Share of net amount |
Carrying amount |
Industry | Location | |||||||||||||||
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 shares 2 |
29.56 | 954,104 | 36,763 | 29,279 | Banking |
Kazakhstan | ||||||||||||||
Preferred shares2 |
93.15 | |||||||||||||||||||
KB12-1 Venture Investment Partnership3 |
80.00 | 28,800 | 29,119 | 29,119 | Investment finance |
Korea | ||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
30.00 | 18,981 | 15,705 | 16,675 | 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. 4 |
41.73 | | 178 | 20 | Architectural design and related service |
Korea | ||||||||||||||
Shinla Construction Co., Ltd. |
20.17 | | (502 | ) | | Specialty construction |
Korea | |||||||||||||
KB GwS Private Securities Investment Trust |
20.93 | 89,124 | 99,818 | 98,562 | Investment finance |
Korea | ||||||||||||||
Incheon Bridge Co., Ltd. 1 |
14.99 | 24,677 | (1,716 | ) | | Operation of highways and related facilities |
Korea | |||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
20.00 | 21,000 | 18,563 | 20,663 | Investment finance |
Korea | ||||||||||||||
Future Planning KB Start-up Creation Fund3 |
50.00 | 4,000 | 3,825 | 4,000 | Investment finance |
Korea | ||||||||||||||
Terra Corporation |
24.06 | | (99 | ) | | Manufacture of fabricated and processed metal products |
Korea | |||||||||||||
KB Star office private real estate Investment Trust No.1 |
21.05 | 20,000 | 20,402 | 20,402 | Investment finance |
Korea | ||||||||||||||
|
|
|
|
|
|
|||||||||||||||
₩ | 1,564,476 | ₩ | 668,907 | ₩ | 667,332 | |||||||||||||||
|
|
|
|
|
|
1 | As of December 31, 2015 and 2014, 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. |
2 | The Group determined that ordinary shares and convertible preferred 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 preferred shares held by the Group against the total outstanding ordinary and convertible preferred shares issued by JSC Bank CenterCredit. The fair value of ordinary shares of JSC Bank CenterCredit, reflecting the quoted market price as of December 31, 2015 and 2014, amounts to ₩21,863 million and ₩42,945 million, respectively. |
3 | As of December 31, 2015 and 2014, the Group is a partner in a limited partnership and does not have the right to control over these entities. |
4 | On June 23, 2015, the Group lost significant influence as the Seoul District Court approved the bankruptcy of CH Engineering Co., Ltd. |
5 | The investment in associates was reclassified from available-for-sale financial assets due to termination of rehabilitation procedures. |
95
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Summarized financial information on the main associates, the carrying amount of the Groups interest in the main associates and dividends received from the main associates are as follows:
(In millions of Korean won) | 20151 | |||||||||||||||||||||||||||
Total assets | Total liabilities |
Paid-in capital |
Equity | Share of net asset amount |
Unrealized gains and losses and others |
Carrying amount |
||||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 1,019,844 | ₩ | 2,198 | ₩ | 1,021,953 | ₩ | 1,017,646 | ₩ | 128,275 | ₩ | | ₩ | 128,275 | ||||||||||||||
Korea Credit Bureau Co., Ltd. |
63,960 | 13,076 | 10,000 | 50,884 | 4,580 | | 4,580 | |||||||||||||||||||||
UAMCO., Ltd. |
4,068,353 | 3,331,647 | 2,430 | 736,706 | 125,822 | 3,885 | 129,707 | |||||||||||||||||||||
JSC Bank CenterCredit |
4,672,327 | 4,710,972 | 546,794 | (38,645 | ) | (21,990 | ) | 21,990 | | |||||||||||||||||||
KB12-1 Venture Investment Partnership |
64,190 | 852 | 50,000 | 63,338 | 50,670 | | 50,670 | |||||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
51,934 | 145 | 53,770 | 51,789 | 15,537 | (368 | ) | 15,169 | ||||||||||||||||||||
United PF 1st Recovery Private Equity Fund |
1,088,325 | 30,390 | 973,258 | 1,057,935 | 187,596 | (4,479 | ) | 183,117 | ||||||||||||||||||||
KB GwS Private Securities Investment Trust |
490,606 | 741 | 425,814 | 489,865 | 102,530 | (1,256 | ) | 101,274 | ||||||||||||||||||||
Incheon Bridge Co., Ltd. |
696,390 | 708,926 | 164,621 | (12,536 | ) | (1,879 | ) | 1,879 | | |||||||||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
117,473 | 1,112 | 123,800 | 116,361 | 23,272 | 1,488 | 24,760 | |||||||||||||||||||||
Future Planning KB Start-up Creation Fund |
23,725 | 6 | 24,000 | 23,719 | 11,860 | 140 | 12,000 | |||||||||||||||||||||
KB Star office private real estate Investment Trust No.1 |
218,308 | 121,749 | 95,000 | 96,559 | 20,328 | | 20,328 |
(In millions of Korean won) | 20151 | |||||||||||||||||||
Operating revenues |
Profit (Loss) |
Other comprehensive income(loss) |
Comprehensive income(loss) |
Dividends | ||||||||||||||||
Balhae Infrastructure Fund |
₩ | 50,214 | ₩ | 41,594 | ₩ | | ₩ | 41,594 | ₩ | 4,926 | ||||||||||
Korea Credit Bureau Co., Ltd. |
53,184 | 2,005 | 1,098 | 3,103 | | |||||||||||||||
UAMCO., Ltd. |
452,759 | 68,078 | (276 | ) | 67,802 | | ||||||||||||||
JSC Bank CenterCredit |
320,307 | (159,985 | ) | 452 | (159,533 | ) | 1 | |||||||||||||
KB12-1 Venture Investment Partnership |
14,641 | 10,362 | 2,577 | 12,939 | | |||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
10,977 | 9,292 | (331 | ) | 8,961 | | ||||||||||||||
United PF 1st Recovery Private Equity Fund |
99,712 | 18,911 | | 18,911 | | |||||||||||||||
KB GwS Private Securities Investment Trust |
40,454 | 39,454 | | 39,454 | 5,545 | |||||||||||||||
Incheon Bridge Co., Ltd. |
87,230 | (803 | ) | | (803 | ) | | |||||||||||||
KoFC Posco Hanhwa KB shared growth Private EquityFund |
8,915 | (3,117 | ) | 7,978 | 4,861 | | ||||||||||||||
Future Planning KB Start-up Creation Fund |
1,379 | 69 | | 69 | | |||||||||||||||
KB Star office private real estate Investment Trust No.1 |
15,990 | 7,727 | | 7,727 | 1,620 |
96
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
1 | The amounts included in the financial information of the associates are adjusted to reflect adjustments made by the Group, such as fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies. |
(In millions of Korean won) | 20141 | |||||||||||||||||||||||||||
Total assets | Total liabilities | Paid-in capital | Equity | Share of net amount |
Unrealized gains and losses and others |
Carrying amount |
||||||||||||||||||||||
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 | ||||||||||||||||||||
KB12-1 Venture Investment Partnership |
36,978 | 580 | 36,000 | 36,398 | 29,119 | | 29,119 | |||||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
52,499 | 148 | 63,270 | 52,351 | 15,705 | 970 | 16,675 | |||||||||||||||||||||
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 | 99,818 | (1,256 | ) | 98,562 | ||||||||||||||||||||
Incheon Bridge Co., Ltd. |
727,659 | 739,105 | 164,621 | (11,446 | ) | (1,716 | ) | 1,716 | | |||||||||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
94,731 | 1,917 | 105,000 | 92,814 | 18,563 | 2,100 | 20,663 | |||||||||||||||||||||
Future Planning KB Start-up Creation Fund |
8,040 | 390 | 8,000 | 7,650 | 3,825 | 175 | 4,000 | |||||||||||||||||||||
KB Star office private real estate Investment Trust No.1 |
218,250 | 121,341 | 95,000 | 96,909 | 20,402 | | 20,402 |
97
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 20141 | |||||||||||||||||||
Operating revenues |
Profit (Loss) |
Other comprehensive income(loss) |
Comprehensive income(loss) |
Dividends | ||||||||||||||||
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 | ||||||||||||
KB06-1 Venture Investment Partnership |
570 | 558 | (32 | ) | 526 | | ||||||||||||||
KB08-1 Venture Investment Partnership |
4,368 | 3,008 | (455 | ) | 2,553 | 4,946 | ||||||||||||||
KB12-1 Venture Investment Partnership |
3,302 | 647 | 230 | 877 | | |||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
16,942 | 957 | (3,249 | ) | (2,292 | ) | 1,938 | |||||||||||||
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 | 7,222 | |||||||||||||||
Incheon Bridge Co., Ltd. |
83,578 | (8,185 | ) | | (8,185 | ) | | |||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
9,228 | 3,771 | (6,337 | ) | (2,566 | ) | | |||||||||||||
Future Planning KB Start-up Creation Fund |
123 | (330 | ) | | (330 | ) | 45 | |||||||||||||
KB Star office private real estate Investment Trust No.1 |
17,413 | 8,585 | | 8,585 | 1,752 |
1 | The amounts included in the financial information of the associates are adjusted to reflect adjustments made by the Group, such as fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies. |
2 | As the financial statements as of the end of December are not available, the Group applied the equity method by using the financial statements as of the end of November 2014 and adjusted for the effects of significant transactions or events that occur between the date of those financial statements and the date of the consolidated financial statements. |
98
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The changes in investments in associates for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||||||||||
Beginning | Acquisition and others |
Disposal and others |
Dividends | Gains (losses) |
Other comprehen- sive income (loss) |
Ending | ||||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 125,119 | ₩ | 2,839 | ₩ | | ₩ | (4,926 | ) | ₩ | 5,243 | ₩ | | ₩ | 128,275 | |||||||||||||
Korea Credit Bureau Co., Ltd. |
4,222 | | | | 259 | 99 | 4,580 | |||||||||||||||||||||
UAMCO., Ltd. |
121,182 | | | | 8,525 | | 129,707 | |||||||||||||||||||||
JSC Bank CenterCredit |
29,279 | | | (1 | ) | (29,278 | ) | | | |||||||||||||||||||
KB12-1 Venture Investment Partnership |
29,119 | 11,200 | | | 8,289 | 2,062 | 50,670 | |||||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
16,675 | | (2,850 | ) | | 336 | 1,008 | 15,169 | ||||||||||||||||||||
United PF 1st Recovery Private Equity Fund |
198,089 | | (19,028 | ) | | 4,056 | | 183,117 | ||||||||||||||||||||
KB GwS Private Securities Investment Trust |
98,562 | | | (5,545 | ) | 8,257 | | 101,274 | ||||||||||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
20,663 | 5,960 | (2,200 | ) | | 192 | 145 | 24,760 | ||||||||||||||||||||
Future Planning KB Start-up Creation Fund |
4,000 | 8,000 | | | | | 12,000 | |||||||||||||||||||||
CH Engineering Co., Ltd. |
20 | | | | (20 | ) | | | ||||||||||||||||||||
Terra Corporation |
| | | | 21 | | 21 | |||||||||||||||||||||
MJT&I Corp. |
| | | | 149 | | 149 | |||||||||||||||||||||
Jungdong Steel Co., Ltd. |
| | | | 33 | | 33 | |||||||||||||||||||||
Shinhwa Underwear Co., Ltd. |
| | | | 56 | | 56 | |||||||||||||||||||||
KB Star office private real estate Investment Trust No.1 |
20,402 | | | (1,620 | ) | 1,546 | | 20,328 | ||||||||||||||||||||
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|
|
|
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|
|
|||||||||||||||
₩ | 667,332 | ₩ | 27,999 | ₩ | (24,078 | ) | ₩ | (12,092 | ) | ₩ | 7,664 | ₩ | 3,314 | ₩ | 670,139 | |||||||||||||
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|
99
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||||||||||||||||||||||
Beginning | Acquisition and others |
Disposal and others |
Dividends | Gains (losses) |
Other (loss) |
Impairment | Ending | |||||||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 124,968 | ₩ | 806 | ₩ | | ₩ | (6,280 | ) | ₩ | 5,625 | ₩ | | ₩ | | ₩ | 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 | |||||||||||||||||||||
KB06-1 Venture Investment Partnership |
861 | | (1,124 | ) | | 279 | (16 | ) | | | ||||||||||||||||||||||
KB08-1 Venture Investment Partnership |
9,345 | | (6,100 | ) | (4,946 | ) | 2,005 | (304 | ) | | | |||||||||||||||||||||
KB12-1 Venture Investment Partnership |
23,200 | 5,600 | | | 326 | (7 | ) | | 29,119 | |||||||||||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
28,548 | 30 | (9,597 | ) | (1,938 | ) | | | (368 | ) | 16,675 | |||||||||||||||||||||
United PF 1st Recovery Private Equity Fund |
197,941 | | | | 148 | | | 198,089 | ||||||||||||||||||||||||
Kores Co., Ltd. |
1,505 | | (1,505 | ) | | | | | | |||||||||||||||||||||||
KB GwS Private Securities Investment Trust |
97,788 | | | (7,222 | ) | 7,996 | | | 98,562 | |||||||||||||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
10,329 | 9,780 | | | 798 | (244 | ) | | 20,663 | |||||||||||||||||||||||
Future Planning KB Start-up Creation Fund |
4,030 | | | (45 | ) | 15 | | | 4,000 | |||||||||||||||||||||||
CH Engineering Co., Ltd. |
| | | | 20 | | | 20 | ||||||||||||||||||||||||
Terra Corporation |
4 | | | | (4 | ) | | | | |||||||||||||||||||||||
KB Star office private real estate Investment Trust No.1 |
20,347 | | | (1,752 | ) | 1,807 | | | 20,402 | |||||||||||||||||||||||
|
|
|
|
|
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|
|
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|
|
|
|
|
|||||||||||||||||
₩ | 741,987 | ₩ | 16,216 | ₩ | (18,326 | ) | ₩ | (57,226 | ) | ₩ | 18,171 | ₩ | (33,122 | ) | ₩ | (368 | ) | ₩ | 667,332 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated unrecognized share of losses in investments in associates due to discontinuation of applying the equity method for the years ended December 31, 2015 and 2014, are as follows:
2015 | 2014 | |||||||||||||||
Unrecognized loss |
Accumulated unrecognized loss |
Unrecognized loss |
Accumulated unrecognized loss |
|||||||||||||
Incheon Bridge Co., Ltd. |
₩ | 163 | ₩ | 1,879 | ₩ | 1,287 | ₩ | 1,716 | ||||||||
Shinla Construction Co., Ltd. |
14 | 148 | 34 | 134 | ||||||||||||
Doosung Metal Co., Ltd |
49 | 49 | | | ||||||||||||
Myeongwon Tech Co., Ltd |
43 | 43 | | | ||||||||||||
Terra Corporation |
| | 115 | 115 | ||||||||||||
JSC Bank CenterCredit |
103,453 | 103,453 | | |
100
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
14. | Property and Equipment, and Investment Property |
The details of property and equipment as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||
(In millions of Korean won) | Acquisition cost |
Accumulated depreciation |
Accumulated impairment losses |
Carrying amount |
||||||||||||
Land |
₩ | 1,883,316 | ₩ | | ₩ | (1,018 | ) | ₩ | 1,882,298 | |||||||
Buildings |
1,198,045 | (376,214 | ) | (5,859 | ) | 815,972 | ||||||||||
Leasehold improvements |
599,703 | (551,338 | ) | | 48,365 | |||||||||||
Equipment and vehicles |
1,395,082 | (1,245,371 | ) | | 149,711 | |||||||||||
Construction in-progress |
443 | | | 443 | ||||||||||||
Finance lease assets |
21,785 | (9,202 | ) | | 12,583 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,098,374 | ₩ | (2,182,125 | ) | ₩ | (6,877 | ) | ₩ | 2,909,372 | |||||||
|
|
|
|
|
|
|
|
|||||||||
2014 | ||||||||||||||||
(In millions of Korean won) | Acquisition cost |
Accumulated depreciation |
Accumulated impairment losses |
Carrying amount |
||||||||||||
Land |
₩ | 1,884,029 | ₩ | | ₩ | | ₩ | 1,884,029 | ||||||||
Buildings |
1,153,465 | (345,704 | ) | (2,117 | ) | 805,644 | ||||||||||
Leasehold improvements |
576,099 | (528,629 | ) | | 47,470 | |||||||||||
Equipment and vehicles |
1,492,601 | (1,362,673 | ) | | 129,928 | |||||||||||
Construction in-progress |
606 | | | 606 | ||||||||||||
Finance lease assets |
21,245 | (728 | ) | | 20,517 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,128,045 | ₩ | (2,237,734 | ) | ₩ | (2,117 | ) | ₩ | 2,888,194 | |||||||
|
|
|
|
|
|
|
|
The changes in property and equipment for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||
Beginning | Acquisition | Transfers1 | Disposal | Depreciation | Others | Ending | ||||||||||||||||||||||
Land |
₩ | 1,884,029 | ₩ | 50 | ₩ | (1,496 | ) | ₩ | (297 | ) | ₩ | | ₩ | 12 | ₩ | 1,882,298 | ||||||||||||
Buildings |
805,644 | 568 | 39,221 | (898 | ) | (28,057 | ) | (506 | ) | 815,972 | ||||||||||||||||||
Leasehold improvements |
47,470 | 1,091 | 30,689 | (383 | ) | (34,290 | ) | 3,788 | 48,365 | |||||||||||||||||||
Equipment and vehicles |
129,928 | 106,525 | | (679 | ) | (86,133 | ) | 70 | 149,711 | |||||||||||||||||||
Construction in-progress |
606 | 67,362 | (67,526 | ) | | | 1 | 443 | ||||||||||||||||||||
Finance lease assets |
20,517 | 554 | | | (8,474 | ) | (14 | ) | 12,583 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 2,888,194 | ₩ | 176,150 | ₩ | 888 | ₩ | (2,257 | ) | ₩ | (156,954 | ) | ₩ | 3,351 | ₩ | 2,909,372 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
Beginning | Acquisition | Transfers1 | Disposal | Depreciation | Others | Ending | ||||||||||||||||||||||
Land |
₩ | 1,914,966 | ₩ | 4,786 | ₩ | (35,698 | ) | ₩ | | ₩ | | ₩ | (25 | ) | ₩ | 1,884,029 | ||||||||||||
Buildings |
820,405 | 10,226 | 2,186 | | (27,093 | ) | (80 | ) | 805,644 | |||||||||||||||||||
Leasehold improvements |
49,970 | 2 | 29,628 | (138 | ) | (35,248 | ) | 3,256 | 47,470 | |||||||||||||||||||
Equipment and vehicles |
109,184 | 88,570 | 1,946 | (313 | ) | (70,393 | ) | 934 | 129,928 | |||||||||||||||||||
Construction in-progress |
| 54,859 | (54,253 | ) | | | | 606 | ||||||||||||||||||||
Finance lease assets |
8,900 | 29,152 | (1,946 | ) | | (15,589 | ) | | 20,517 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 2,903,425 | ₩ | 187,595 | ₩ | (58,137 | ) | ₩ | (451 | ) | ₩ | (148,323 | ) | ₩ | 4,085 | ₩ | 2,888,194 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | Including transfers from investment property and assets held for sale. |
The changes in accumulated impairment losses of property and equipment for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||
2015 | ||||||||||||||||||
Beginning | Impairment | Reversal | Others | Ending | ||||||||||||||
₩ (2,117) | ₩ | (557 | ) | ₩ | | ₩ | (4,203 | ) | ₩ (6,877) | |||||||||
(In millions of Korean won) | ||||||||||||||||||
2014 | ||||||||||||||||||
Beginning | Impairment | Reversal | Others | Ending | ||||||||||||||
₩ (2,117) | ₩ | | ₩ | | ₩ | | ₩ (2,117) |
The details of investment property as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||
(In millions of Korean won) | Acquisition cost |
Accumulated depreciation |
Carrying amount |
|||||||||
Land |
₩ | 255,806 | ₩ | | ₩ | 255,806 | ||||||
Buildings |
173,131 | (15,758 | ) | 157,373 | ||||||||
|
|
|
|
|
|
|||||||
₩ | 428,937 | ₩ | (15,758 | ) | ₩ | 413,179 | ||||||
|
|
|
|
|
|
102
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
2014 | ||||||||||||
(In millions of Korean won) | Acquisition cost |
Accumulated depreciation |
Carrying amount |
|||||||||
Land |
₩ | 253,533 | ₩ | | ₩ | 253,533 | ||||||
Buildings |
167,931 | (12,198 | ) | 155,733 | ||||||||
|
|
|
|
|
|
|||||||
₩ | 421,464 | ₩ | (12,198 | ) | ₩ | 409,266 | ||||||
|
|
|
|
|
|
The valuation technique and input variables that are used to measure the fair value of investment property as of December 31, 2015, are as follows:
(In millions of Korean won) | 2015 | |||||||||
Fair Value | Valuation technique | Inputs | ||||||||
Land and Buildings |
₩ | 447,627 | Cost approach value | - Price per square meter - Replacement cost |
As of December 31, 2015 and 2014, fair values of the investment properties amount to ₩447,627 million and \ 409,647 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, 2015 and 2014, amounts to ₩22,252 million and ₩7,167 million, respectively.
The changes in investment property for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||
Beginning | Acquisitions | Transfers | Depreciation | Ending | ||||||||||||||||
Land |
₩ | 253,533 | ₩ | 21 | ₩ | 2,252 | ₩ | | ₩ | 255,806 | ||||||||||
Buildings |
155,733 | 4,269 | 1,040 | (3,669 | ) | 157,373 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 409,266 | ₩ | 4,290 | ₩ | 3,292 | ₩ | (3,669 | ) | ₩ | 413,179 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(In millions of Korean won) | 2014 | |||||||||||||||||||
Beginning | Acquisitions | Transfers | Depreciation | Ending | ||||||||||||||||
Land |
₩ | 122,190 | ₩ | 132,923 | ₩ | (1,580 | ) | ₩ | | ₩ | 253,533 | |||||||||
Buildings |
78,815 | 79,072 | 147 | (2,301 | ) | 155,733 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 201,005 | ₩ | 211,995 | ₩ | (1,433 | ) | ₩ | (2,301 | ) | ₩ | 409,266 | |||||||||
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|
|
|
|
|
|
|
|
103
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
15. | Intangible Assets |
The details of intangible assets as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Acquisition cost | Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Goodwill |
₩ | 66,490 | ₩ | | ₩ | | ₩ | 66,490 | ||||||||
Other intangible assets |
763,929 | (641,350 | ) | (7,470 | ) | 115,109 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 830,419 | ₩ | (641,350 | ) | ₩ | (7,470 | ) | ₩ | 181,599 | |||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost | Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Goodwill |
₩ | 66,490 | ₩ | | ₩ | | ₩ | 66,490 | ||||||||
Other intangible assets |
714,034 | (568,100 | ) | (5,529 | ) | 140,405 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 780,524 | ₩ | (568,100 | ) | ₩ | (5,529 | ) | ₩ | 206,895 | |||||||
|
|
|
|
|
|
|
|
The details of goodwill as of December 31, 2015 and 2014, are as follows:
2015 | 2014 | |||||||||||||||
(In millions of Korean won) | 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 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 66,490 | ₩ | 66,490 | ₩ | 66,490 | ₩ | 66,490 | |||||||||
|
|
|
|
|
|
|
|
There is no change in goodwill for the years ended December 31, 2015 and 2014.
The details of allocating goodwill to cash-generating units and related information for impairment testing as of December 31, 2015, are as follows:
(In millions of Korean won) | ||||||||||||||||
Housing & Commercial Bank | ||||||||||||||||
Retail Banking |
Corporate Banking |
KB Cambodia Bank |
Total | |||||||||||||
Carrying amounts |
₩ | 49,315 | ₩ | 15,973 | ₩ | 1,202 | ₩ | 66,490 | ||||||||
Recoverable amount exceeded carrying amount |
5,008,711 | 2,171,276 | 543 | 7,180,530 | ||||||||||||
Discount rate (%) |
15.30 | 15.60 | 30.90 | |||||||||||||
Permanent growth rate (%) |
2.00 | 2.00 | 2.00 |
104
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Goodwill is allocated to cash-generating units 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 this amount, 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 of the cash-generating unit, the Group measures the fair value less costs to sell by reflecting the characteristics of the measured cash-generating unit. If it is not possible to obtain the 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 by 2.0% for Retail Banking, Corporate Banking and KB Cambodia Bank 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.
The details of intangible assets, excluding goodwill, as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Acquisition cost | Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Industrial property rights |
₩ | 1,357 | ₩ | (1,142 | ) | ₩ | | ₩ | 215 | |||||||
Software |
610,503 | (565,519 | ) | | 44,984 | |||||||||||
Other intangible assets |
127,464 | (70,084 | ) | (7,470 | ) | 49,910 | ||||||||||
Finance leases assets |
24,605 | (4,605 | ) | | 20,000 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 763,929 | ₩ | (641,350 | ) | ₩ | (7,470 | ) | ₩ | 115,109 | |||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost | Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Industrial property rights |
₩ | 1,295 | ₩ | (1,006 | ) | ₩ | | ₩ | 289 | |||||||
Software |
560,121 | (505,998 | ) | | 54,123 | |||||||||||
Other intangible assets |
128,644 | (60,743 | ) | (5,529 | ) | 62,372 | ||||||||||
Finance leases assets |
23,974 | (353 | ) | | 23,621 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 714,034 | ₩ | (568,100 | ) | ₩ | (5,529 | ) | ₩ | 140,405 | |||||||
|
|
|
|
|
|
|
|
105
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The changes in intangible assets, excluding goodwill, for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||
Beginning | Acquisition | Transfer | Disposal | Amortization | Others | Ending | ||||||||||||||||||||||
Industrial property rights |
₩ | 289 | ₩ | 38 | ₩ | | ₩ | | ₩ | (120 | ) | ₩ | 8 | ₩ | 215 | |||||||||||||
Software |
54,123 | 21,026 | | | (30,201 | ) | 36 | 44,984 | ||||||||||||||||||||
Other intangible assets |
62,372 | 5,139 | | (3,384 | ) | (9,270 | ) | (4,947 | ) | 49,910 | ||||||||||||||||||
Finance leases assets |
23,621 | 647 | | | (4,253 | ) | (15 | ) | 20,000 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 140,405 | ₩ | 26,850 | ₩ | | ₩ | (3,384 | ) | ₩ | (43,844 | ) | ₩ | (4,918 | ) | ₩ | 115,109 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
Beginning | Acquisition | Transfer | Disposal | Amortization | Others | Ending | ||||||||||||||||||||||
Industrial property rights |
₩ | 364 | ₩ | 36 | ₩ | | ₩ | | ₩ | (117 | ) | ₩ | 6 | ₩ | 289 | |||||||||||||
Software |
78,518 | 16,370 | 4,528 | | (44,491 | ) | (802 | ) | 54,123 | |||||||||||||||||||
Other intangible assets |
71,156 | 1,673 | | (2,577 | ) | (8,252 | ) | 372 | 62,372 | |||||||||||||||||||
Finance leases assets |
8,056 | 28,208 | (4,528 | ) | | (8,115 | ) | | 23,621 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 158,094 | ₩ | 46,287 | ₩ | | ₩ | (2,577 | ) | ₩ | (60,975 | ) | ₩ | (424 | ) | ₩ | 140,405 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The changes in accumulated impairment losses on intangible assets for the years ended December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Impairment | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses on other intangible assets |
₩ | (5,529 | ) | ₩ | (5,531 | ) | ₩ | 6 | ₩ | 3,584 | ₩ | (7,470 | ) | |||||||
2014 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Impairment | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses on other intangible assets |
₩ | (5,492 | ) | ₩ | (128 | ) | ₩ | 321 | ₩ | (230 | ) | ₩ | (5,529 | ) |
106
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The changes in emissions rights for year ended December 31, 2015, are as follows:
(KAU, in millions of Korean won) | ||||||||||||||||||||||||||||||||
Applicable under 2015 |
Applicable under 2016 |
Applicable under 2017 |
Total | |||||||||||||||||||||||||||||
Quantity | Carrying amount |
Quantity | Carrying amount |
Quantity | Carrying amount |
Quantity | Carrying amount |
|||||||||||||||||||||||||
Beginning |
| ₩ | | | ₩ | | | ₩ | | | ₩ | | ||||||||||||||||||||
Free of charges |
116,799 | | 112,137 | | 109,140 | | 338,076 | | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending |
116,799 | ₩ | | 112,137 | ₩ | | 109,140 | ₩ | | 338,076 | ₩ | | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16. | Deferred income tax assets and liabilities |
The details of deferred income tax assets and liabilities as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||
(In millions of Korean won) | Assets | Liabilities | Net amount | |||||||||
Other provisions |
₩ | 68,633 | ₩ | | ₩ | 68,633 | ||||||
Impairment losses on property and equipment |
5,019 | | 5,019 | |||||||||
Interest on equity index-linked deposits |
69 | | 69 | |||||||||
Share-based payments |
8,168 | | 8,168 | |||||||||
Provisions for guarantees |
38,225 | | 38,225 | |||||||||
Gains on valuation of derivatives |
| (30,391 | ) | (30,391 | ) | |||||||
Present value discount |
| (25 | ) | (25 | ) | |||||||
Losses on fair value hedged |
2,876 | | 2,876 | |||||||||
Accrued interest |
| (43,414 | ) | (43,414 | ) | |||||||
Deferred loan origination fees and costs |
| (120,375 | ) | (120,375 | ) | |||||||
Gains on revaluation |
| (272,696 | ) | (272,696 | ) | |||||||
Investments in subsidiaries and associates |
5,614 | (82,542 | ) | (76,928 | ) | |||||||
Others |
540,128 | (276,241 | ) | 263,887 | ||||||||
|
|
|
|
|
|
|||||||
668,732 | (825,684 | ) | (156,952 | ) | ||||||||
Offsetting of deferred income tax assets and liabilities |
(660,411 | ) | 660,411 | | ||||||||
|
|
|
|
|
|
|||||||
Total |
₩ | 8,321 | ₩ | (165,273 | ) | ₩ | (156,952 | ) | ||||
|
|
|
|
|
|
107
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
2014 | ||||||||||||
(In millions of Korean won) | Assets | Liabilities | Net amount | |||||||||
Other provisions |
₩ | 65,033 | ₩ | | ₩ | 65,033 | ||||||
Impairment losses on property and equipment |
5,412 | | 5,412 | |||||||||
Interest on equity index-linked deposits |
183 | | 183 | |||||||||
Share-based payments |
7,806 | | 7,806 | |||||||||
Provisions for guarantees |
50,115 | | 50,115 | |||||||||
Gains on valuation of derivatives |
| (51,167 | ) | (51,167 | ) | |||||||
Present value discount |
| (34 | ) | (34 | ) | |||||||
Losses on fair value hedged |
12,834 | | 12,834 | |||||||||
Accrued interest |
| (48,019 | ) | (48,019 | ) | |||||||
Deferred loan origination fees and costs |
| (110,160 | ) | (110,160 | ) | |||||||
Gains on revaluation |
| (272,696 | ) | (272,696 | ) | |||||||
Investments in subsidiaries and associates |
6,336 | (71,565 | ) | (65,229 | ) | |||||||
Others |
562,200 | (261,322 | ) | 300,878 | ||||||||
|
|
|
|
|
|
|||||||
709,919 | (814,963 | ) | (105,044 | ) | ||||||||
Offsetting of deferred income tax assets and liabilities |
(704,605 | ) | 704,605 | | ||||||||
|
|
|
|
|
|
|||||||
Total |
₩ | 5,314 | ₩ | (110,358 | ) | ₩ | (105,044 | ) | ||||
|
|
|
|
|
|
Unrecognized deferred income tax liabilities
No deferred income tax liabilities have been recognized for the taxable temporary difference of ₩65,873 million associated with investments in subsidiaries and associates as of December 31, 2015, 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 for the taxable temporary difference of ₩65,288 million arising from the initial recognition of goodwill from the merger of Housing and Commercial Bank as of December 31, 2015.
Unrecognized deferred income tax assets
No deferred income tax assets have been recognized for the deductible temporary difference of ₩543,711 million associated with investments in subsidiaries and associates as of December 31, 2015, 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 ₩67 million, ₩80,204 million and ₩21,393 million associated with other provisions, loss on SPE repurchase and others, respectively, as of December 31, 2015, due to the uncertainty that these will be realized in the future.
108
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The changes in cumulative temporary differences for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Deductible temporary differences |
|
|||||||||||||||
Losses from fair value hedge |
₩ | 53,033 | ₩ | 53,033 | ₩ | 11,882 | ₩ | 11,882 | ||||||||
Other provisions |
268,931 | 268,931 | 283,672 | 283,672 | ||||||||||||
Impairment losses on property and equipment |
22,363 | 22,363 | 20,738 | 20,738 | ||||||||||||
Interest on equity index-linked deposits |
758 | 758 | 287 | 287 | ||||||||||||
Share-based payments |
32,256 | 32,256 | 33,754 | 33,754 | ||||||||||||
Provisions for guarantees |
207,087 | 207,087 | 157,954 | 157,954 | ||||||||||||
Loss on SPE repurchase |
80,204 | | | 80,204 | ||||||||||||
Investment in subsidiaries and associates |
579,173 | 12,264 | | 566,909 | ||||||||||||
Others |
2,341,471 | 1,504,231 | 1,416,105 | 2,253,345 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
3,585,276 | ₩ | 2,100,923 | ₩ | 1,924,392 | 3,408,745 | |||||||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax assets |
||||||||||||||||
Other provisions |
199 | 67 | ||||||||||||||
Loss on SPE repurchase |
80,204 | 80,204 | ||||||||||||||
Investment in subsidiaries and associates |
560,861 | 543,711 | ||||||||||||||
Others |
18,185 | 21,393 | ||||||||||||||
|
|
|
|
|||||||||||||
2,925,827 | 2,763,370 | |||||||||||||||
Tax rate (%) |
24.20 | 24.20 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax assets from deductible temporary differences |
₩ | 709,919 | ₩ | 668,732 | ||||||||||||
|
|
|
|
109
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2015 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Taxable temporary differences |
||||||||||||||||
Accrued interest |
₩ | (198,424 | ) | ₩ | (158,989 | ) | ₩ | (139,959 | ) | ₩ | (179,394 | ) | ||||
Deferred loan origination fees and costs |
(455,207 | ) | (455,207 | ) | (497,418 | ) | (497,418 | ) | ||||||||
Gains on valuation of derivatives |
(211,434 | ) | (211,434 | ) | (125,582 | ) | (125,582 | ) | ||||||||
Present value discount |
(140 | ) | (140 | ) | (104 | ) | (104 | ) | ||||||||
Goodwill from merger |
(65,288 | ) | | | (65,288 | ) | ||||||||||
Gains on revaluation |
(1,126,842 | ) | | | (1,126,842 | ) | ||||||||||
Investment in subsidiaries and associates |
(327,356 | ) | (20 | ) | (80,098 | ) | (407,434 | ) | ||||||||
Others |
(1,079,846 | ) | (221,023 | ) | (282,670 | ) | (1,141,493 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(3,464,537 | ) | ₩ | (1,046,813 | ) | ₩ | (1,125,831 | ) | (3,543,555 | ) | |||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax liabilities |
||||||||||||||||
Goodwill from merger |
(65,288 | ) | (65,288 | ) | ||||||||||||
Investments in subsidiaries and associates |
(39,024 | ) | (65,873 | ) | ||||||||||||
|
|
|
|
|||||||||||||
(3,360,225 | ) | (3,412,394) | ||||||||||||||
Tax rate (%) |
24.20 | 24.20 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax liabilities from deductible temporary differences |
₩ | (814,963 | ) | ₩ | (825,684 | ) | ||||||||||
|
|
|
|
110
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Deductible temporary differences |
|
|||||||||||||||
Losses from fair value hedge |
₩ | 68,884 | ₩ | 68,884 | ₩ | 53,033 | ₩ | 53,033 | ||||||||
Other provisions |
323,781 | 323,781 | 268,931 | 268,931 | ||||||||||||
Impairment losses on property and equipment |
11,873 | 11,873 | 22,363 | 22,363 | ||||||||||||
Interest on equity index-linked deposits |
1,407 | 1,325 | 676 | 758 | ||||||||||||
Share-based payments |
34,053 | 34,053 | 32,256 | 32,256 | ||||||||||||
Provisions for guarantees |
208,517 | 208,517 | 207,087 | 207,087 | ||||||||||||
Present value discount |
804 | 804 | | | ||||||||||||
Loss on SPE repurchase |
80,204 | | | 80,204 | ||||||||||||
Investment in subsidiaries and associates |
882,729 | 308,052 | 4,496 | 579,173 | ||||||||||||
Others |
1,737,460 | 1,017,320 | 1,621,331 | 2,341,471 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
3,349,712 | ₩ | 1,974,609 | ₩ | 2,210,173 | 3,585,276 | |||||||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax assets |
||||||||||||||||
Other provisions |
250 | 199 | ||||||||||||||
Loss on SPE repurchase |
80,204 | 80,204 | ||||||||||||||
Investment in subsidiaries and associates |
595,196 | 560,861 | ||||||||||||||
Others |
13,376 | 18,185 | ||||||||||||||
|
|
|
|
|||||||||||||
2,660,686 | 2,925,827 | |||||||||||||||
Tax rate (%) |
24.20 | 24.20 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax assets from deductible temporary differences |
₩ | 644,023 | ₩ | 709,919 | ||||||||||||
|
|
|
|
111
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Taxable temporary differences |
||||||||||||||||
Accrued interest |
₩ | (249,286 | ) | ₩ | (217,151 | ) | ₩ | (166,289 | ) | ₩ | (198,424 | ) | ||||
Deferred loan origination fees and costs |
(388,266 | ) | (388,266 | ) | (455,207 | ) | (455,207 | ) | ||||||||
Gains on valuation of derivatives |
(54,531 | ) | (54,531 | ) | (211,434 | ) | (211,434 | ) | ||||||||
Present value discount |
| | (140 | ) | (140 | ) | ||||||||||
Goodwill from merger |
(65,288 | ) | | | (65,288 | ) | ||||||||||
Gains on revaluation |
(1,131,429 | ) | (4,587 | ) | | (1,126,842 | ) | |||||||||
Investment in subsidiaries and associates |
(365,424 | ) | (57,931 | ) | (19,863 | ) | (327,356 | ) | ||||||||
Others |
(1,087,088 | ) | (376,397 | ) | (369,155 | ) | (1,079,846 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(3,341,312 | ) | ₩ | (1,098,863 | ) | ₩ | (1,222,088 | ) | (3,464,537 | ) | |||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax liabilities |
||||||||||||||||
Goodwill from merger |
(65,288 | ) | (65,288 | ) | ||||||||||||
Investments in subsidiaries and associates |
(118,748 | ) | (39,024 | ) | ||||||||||||
|
|
|
|
|||||||||||||
(3,157,276) | (3,360,225) | |||||||||||||||
Tax rate (%) |
24.20 | 24.20 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax liabilities from deductible temporary differences |
₩ | (763,944 | ) | ₩ | (814,963 | ) | ||||||||||
|
|
|
|
112
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
17. | Other Assets |
The details of other assets as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Other financial assets |
||||||||
Other receivables |
₩ | 3,165,861 | ₩ | 2,663,441 | ||||
Accrued income |
692,744 | 754,702 | ||||||
Guarantee deposits |
1,160,950 | 1,291,907 | ||||||
Domestic exchange settlement debits |
2,138,401 | 2,086,792 | ||||||
Others |
17,743 | 20,924 | ||||||
Allowances for loan losses |
(286,915 | ) | (288,245 | ) | ||||
Present value discount |
(1,057 | ) | (489 | ) | ||||
|
|
|
|
|||||
6,887,727 | 6,529,032 | |||||||
|
|
|
|
|||||
Other non-financial assets |
||||||||
Other receivables |
42,356 | 1,187 | ||||||
Prepaid expenses |
141,758 | 182,936 | ||||||
Guarantee deposits |
3,656 | 3,607 | ||||||
Others |
104,141 | 34,925 | ||||||
Allowances on other assets |
(23,128 | ) | (23,174 | ) | ||||
|
|
|
|
|||||
268,783 | 199,481 | |||||||
|
|
|
|
|||||
₩ | 7,156,510 | ₩ | 6,728,513 | |||||
|
|
|
|
The changes in allowances for loan losses on other assets for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Other financial assets |
Other non- financial assets |
Total | ||||||||||
Beginning |
₩ | 288,245 | ₩ | 23,174 | ₩ | 311,419 | ||||||
Provision(reversal) |
(883 | ) | 838 | (45 | ) | |||||||
Written-off |
(2,365 | ) | (884 | ) | (3,249 | ) | ||||||
Others |
1,918 | | 1,918 | |||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 286,915 | ₩ | 23,128 | ₩ | 310,043 | ||||||
|
|
|
|
|
|
|||||||
(In millions of Korean won) | 2014 | |||||||||||
Other financial assets |
Other non- financial assets |
Total | ||||||||||
Beginning |
₩ | 527,114 | ₩ | 16,146 | ₩ | 543,260 | ||||||
Provision(reversal) |
27,415 | 4,065 | 31,480 | |||||||||
Written-off |
(290,329 | ) | (2,435 | ) | (292,764 | ) | ||||||
Others |
24,045 | 5,398 | 29,443 | |||||||||
Ending |
₩ | 288,245 | ₩ | 23,174 | ₩ | 311,419 | ||||||
|
|
|
|
|
|
113
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
18. | Assets held for sale |
The details of assets held for sale as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Acquisition cost1 |
Accumulated impairment losses |
Carrying amount |
Fair value less costs to sell |
|||||||||||||
Land |
₩ | 35,996 | ₩ | (8,531 | ) | ₩ | 27,465 | ₩ | 28,658 | |||||||
Buildings |
11,660 | (5,330 | ) | 6,330 | 6,789 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 47,656 | ₩ | (13,861 | ) | ₩ | 33,795 | ₩ | 35,447 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost1 |
Accumulated impairment losses |
Carrying amount |
Fair value less costs to sell |
|||||||||||||
Land |
₩ | 47,418 | ₩ | (9,442 | ) | ₩ | 37,976 | ₩ | 40,530 | |||||||
Buildings |
26,862 | (10,804 | ) | 16,058 | 17,429 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 74,280 | ₩ | (20,246 | ) | ₩ | 54,034 | ₩ | 57,959 | ||||||||
|
|
|
|
|
|
|
|
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, 2015, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Fair value | Valuation |
Unobservable |
Range of inputs (%) |
Effect of unobservable | ||||||||
Land and buildings |
₩ | 35,986 | Market comparison approach model | Adjustment index | 0.10 ~ 1.16 | Fair value increases as the adjustment index rises | ||||||
Adjustment ratio | -20.00 ~ 0.00 | Fair value decreases as the absolute value of |
1 | The appraisal value is adjusted 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. |
114
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||
2015 |
||||||||||||||||
Beginning | Provision | Reversal | Others | Ending | ||||||||||||
₩ (20,246) |
₩ | (2,110) | ₩ | 399 | ₩ | 8,096 | ₩ | (13,861) | ||||||||
(In millions of Korean won) | ||||||||||||||||
2014 |
||||||||||||||||
Beginning | Provision | Reversal | Others | Ending | ||||||||||||
₩ (10,087) |
₩ | (15,943) | ₩ | | ₩ | 5,784 | ₩ | (20,246) |
As of December 31, 2015, assets held for sale consist of 10 real estates of closed offices, which the management of the Group was committed to sell, but not yet sold as of December 31, 2015. As of the report date, two out of the above assets held for sale are under a sale negotiation and the remaining eight assets are also being actively marketed.
19. | Deposits |
The details of deposits as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Demand deposits |
||||||||
Demand deposits in Korean won |
₩ | 91,959,685 | ₩ | 75,889,591 | ||||
Demand deposits in foreign currencies |
4,122,010 | 3,017,438 | ||||||
|
|
|
|
|||||
96,081,695 | 78,907,029 | |||||||
|
|
|
|
|||||
Time deposits |
||||||||
Time deposits in Korean won |
120,035,078 | 128,637,365 | ||||||
Fair value adjustments on fair value hedged time deposits in Korean won |
(201 | ) | (958 | ) | ||||
|
|
|
|
|||||
120,034,877 | 128,636,407 | |||||||
|
|
|
|
|||||
Time deposits in foreign currencies |
3,623,160 | 2,484,949 | ||||||
Fair value adjustments on fair value hedged time deposits in foreign currencies |
(17,672 | ) | | |||||
|
|
|
|
|||||
3,605,488 | 2,484,949 | |||||||
|
|
|
|
|||||
123,640,365 | 131,121,356 | |||||||
|
|
|
|
|||||
Certificates of deposits |
4,611,447 | 1,583,047 | ||||||
|
|
|
|
|||||
Total deposits |
₩ | 224,333,507 | ₩ | 211,611,432 | ||||
|
|
|
|
115
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
20. | Debts |
The details of debts as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Borrowings |
₩ | 11,684,566 | ₩ | 11,271,860 | ||||
Bonds sold under repurchase agreements and others |
596,343 | 203,944 | ||||||
Call money |
2,010,906 | 2,821,656 | ||||||
|
|
|
|
|||||
₩ | 14,291,815 | ₩ | 14,297,460 | |||||
|
|
|
|
The details of borrowings as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Lenders |
Annual interest rate (%) |
2015 | 2014 | ||||||||||
Borrowings in Korean won |
Borrowings from the Bank of Korea |
Bank of Korea |
0.50 ~ 0.75 | ₩ | 1,421,375 | ₩ | 1,002,796 | |||||||
Borrowings from the government |
KEMCO and others |
0.00 ~ 3.00 | 1,156,670 | 611,378 | ||||||||||
Borrowings from banking institutions |
Industrial Bank of Korea |
1.18 | 180 | 874 | ||||||||||
Borrowings from non-banking financial institutions |
Korea Development Bank |
0.20 ~ 2.70 | 284,369 | 187,452 | ||||||||||
Other borrowings |
Korea Gas Safety Corporation and others |
0.00 ~ 4.35 | 2,830,933 | 3,399,780 | ||||||||||
|
|
|
|
|||||||||||
5,693,527 | 5,202,280 | |||||||||||||
|
|
|
|
|||||||||||
Borrowings in foreign currencies |
Due to banks |
JPMorgan Chase Bank.NA and others |
| 9,884 | 3,313 | |||||||||
Borrowings from banking institutions |
Commerzbank and others |
0.08 ~ 1.30 | 3,530,561 | 3,522,159 | ||||||||||
Borrowings from other financial institutions |
Export Import Bank of Korea and others |
0.86 ~ 1.78 | 212,507 | 34,460 | ||||||||||
Other borrowings |
Standard Chartered Bank and others |
| 2,238,087 | 2,509,648 | ||||||||||
|
|
|
|
|||||||||||
5,991,039 | 6,069,580 | |||||||||||||
|
|
|
|
|||||||||||
₩ | 11,684,566 | ₩ | 11,271,860 | |||||||||||
|
|
|
|
116
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The details of bonds sold under repurchase agreements and others as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||
Lenders | Annual interest rate (%) |
2015 | 2014 | |||||||||
Bonds sold under repurchase agreements |
Individuals, groups, corporations |
1.46 ~ 3.84 | ₩ | 568,486 | ₩ | 148,869 | ||||||
Bills sold |
Individuals, corporations |
0.80 ~ 1.50 | 27,857 | 55,075 | ||||||||
|
|
|
|
|||||||||
₩ | 596,343 | ₩ | 203,944 | |||||||||
|
|
|
|
The details of call money as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||
Lenders | Annual interest rate (%) |
2015 | 2014 | |||||||||
Call money in Korean won |
KEB Hana Bank and others |
1.33 ~ 1.48 | ₩ | 926,400 | ₩ | 1,822,000 | ||||||
Call money in foreign currencies |
Central Bank of Uzbekistan and others |
0.24 ~ 5.00 | 1,084,506 | 999,656 | ||||||||
|
|
|
|
|||||||||
₩ | 2,010,906 | ₩ | 2,821,656 | |||||||||
|
|
|
|
117
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
21. | Debentures |
The details of debentures as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Annual interest rate |
2015 | 2014 | |||||||
Debentures in Korean won |
||||||||||
Structured debentures |
0.21 ~ 8.62 | ₩ | 909,788 | ₩ | 1,239,238 | |||||
Subordinated fixed rate debentures in Korean won |
3.08 ~ 7.51 | 4,471,829 | 4,566,124 | |||||||
Fixed rate debentures in Korean won |
1.68 ~ 4.09 | 6,750,523 | 6,390,553 | |||||||
Floating rate debentures in Korean won |
| | 150,000 | |||||||
|
|
|
|
|||||||
12,132,140 | 12,345,915 | |||||||||
Fair value adjustments on fair value hedged debentures in Korean won |
40,170 | 53,915 | ||||||||
Discount on debentures in Korean won |
(6,412 | ) | (38,980 | ) | ||||||
|
|
|
|
|||||||
12,165,898 | 12,360,850 | |||||||||
|
|
|
|
|||||||
Debentures in foreign currencies |
||||||||||
Floating rate debentures |
0.07 ~ 1.57 | 1,477,524 | 1,318,415 | |||||||
Fixed rate debentures |
0.98 ~ 3.63 | 2,325,537 | 1,578,980 | |||||||
|
|
|
|
|||||||
3,803,061 | 2,897,395 | |||||||||
Fair value adjustments on fair value hedged debentures in foreign currencies |
(10,415 | ) | 75 | |||||||
Discount on debentures in foreign currencies |
(9,410 | ) | (7,856 | ) | ||||||
|
|
|
|
|||||||
3,783,236 | 2,889,614 | |||||||||
|
|
|
|
|||||||
₩ | 15,949,134 | ₩ | 15,250,464 | |||||||
|
|
|
|
118
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The changes in debentures based on face value for the years ended December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Issues | Repayments | Others | Ending | |||||||||||||||
Debentures in Korean won |
||||||||||||||||||||
Structured debentures |
₩ | 1,239,238 | ₩ | 120,000 | ₩ | (449,450 | ) | ₩ | | ₩ | 909,788 | |||||||||
Subordinated fixed rate debentures |
4,566,124 | | (94,295 | ) | | 4,471,829 | ||||||||||||||
Fixed rate debentures |
6,390,553 | 4,080,000 | (3,720,030 | ) | | 6,750,523 | ||||||||||||||
Floating rate debentures |
150,000 | | (150,000 | ) | | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
12,345,915 | 4,200,000 | (4,413,775 | ) | | 12,132,140 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Debentures in foreign currencies |
||||||||||||||||||||
Floating rate debentures |
1,318,415 | 179,565 | (111,939 | ) | 91,483 | 1,477,524 | ||||||||||||||
Fixed rate debentures |
1,578,980 | 1,013,959 | (378,577 | ) | 111,175 | 2,325,537 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
2,897,395 | 1,193,524 | (490,516 | ) | 202,658 | 3,803,061 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 15,243,310 | ₩ | 5,393,524 | ₩ | (4,904,291 | ) | ₩ | 202,658 | ₩ | 15,935,201 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
2014 | ||||||||||||||||||||
((In millions of Korean won) | Beginning | Issues | Repayments | Others | Ending | |||||||||||||||
Debentures in Korean won |
||||||||||||||||||||
Structured debentures |
₩ | 1,499,238 | ₩ | 80,000 | ₩ | (340,000 | ) | ₩ | | ₩ | 1,239,238 | |||||||||
Subordinated fixed rate debentures |
8,648,474 | | (4,082,350 | ) | | 4,566,124 | ||||||||||||||
Fixed rate debentures |
2,941,142 | 4,670,000 | (1,220,589 | ) | | 6,390,553 | ||||||||||||||
Floating rate debentures |
102,858 | 353,200 | (306,058 | ) | | 150,000 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
13,191,712 | 5,103,200 | (5,948,997 | ) | | 12,345,915 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Debentures in foreign currencies |
||||||||||||||||||||
Floating rate debentures |
826,770 | 754,003 | (319,157 | ) | 56,799 | 1,318,415 | ||||||||||||||
Fixed rate debentures |
2,335,059 | 803,503 | (1,633,588 | ) | 74,006 | 1,578,980 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
3,161,829 | 1,557,506 | (1,952,745 | ) | 130,805 | 2,897,395 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 16,353,541 | ₩ | 6,660,706 | ₩ | (7,901,742 | ) | ₩ | 130,805 | ₩ | 15,243,310 | ||||||||||
|
|
|
|
|
|
|
|
|
|
119
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
22. | Provisions |
The details of provisions as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Provisions for unused loan commitments |
₩ | 126,282 | ₩ | 125,345 | ||||
Provisions for acceptances and guarantees |
158,454 | 207,927 | ||||||
Provisions for asset retirement obligation |
70,493 | 68,999 | ||||||
Others |
95,169 | 81,104 | ||||||
|
|
|
|
|||||
₩ | 450,398 | ₩ | 483,375 | |||||
|
|
|
|
The changes in provisions for unused loan commitments, acceptances and guarantees for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Provisions for unused loan |
Provisions for acceptances and guarantees |
Total | ||||||||||
Beginning |
₩ | 125,345 | ₩ | 207,927 | ₩ | 333,272 | ||||||
Effects of changes in foreign exchange rate |
789 | 4,808 | 5,597 | |||||||||
Provision(Reversal) |
148 | (54,281 | ) | (54,133 | ) | |||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 126,282 | ₩ | 158,454 | ₩ | 284,736 | ||||||
|
|
|
|
|
|
(In millions of Korean won) | 2014 | |||||||||||
Provisions for unused loan |
Provisions for acceptances and guarantees |
Total | ||||||||||
Beginning |
₩ | 139,997 | ₩ | 209,110 | ₩ | 349,107 | ||||||
Effects of changes in foreign exchange rate |
547 | 3,359 | 3,906 | |||||||||
Reversal |
(15,199 | ) | (4,542 | ) | (19,741 | ) | ||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 125,345 | ₩ | 207,927 | ₩ | 333,272 | ||||||
|
|
|
|
|
|
120
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The changes in provisions for asset retirement obligation for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Beginning |
₩ | 68,999 | ₩ | 67,995 | ||||
Provision |
1,941 | 2,722 | ||||||
Reversal |
(363 | ) | | |||||
Used |
(2,779 | ) | (4,324 | ) | ||||
Unwinding of discount |
1,941 | 2,561 | ||||||
Effects of changes in discount rate |
754 | 45 | ||||||
|
|
|
|
|||||
Ending |
₩ | 70,493 | ₩ | 68,999 | ||||
|
|
|
|
Provisions for asset retirement obligation are present value of estimated costs to be incurred for 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 year. 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.
121
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The changes in other provisions for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||
Membership rewards program |
Dormant accounts |
Litigations | Financial guarantee liabilities |
Greenhouse Emission liabilities1 |
Others | Total | ||||||||||||||||||||||
Beginning |
₩ | 76 | ₩ | 33,996 | ₩ | 2,622 | ₩ | 2,718 | ₩ | | ₩ | 41,692 | ₩ | 81,104 | ||||||||||||||
Provision |
159 | 27,056 | 9,226 | 1,091 | 69 | 37,860 | 75,461 | |||||||||||||||||||||
Used and Others |
(136 | ) | (19,961 | ) | (278 | ) | | | (41,021 | ) | (61,396 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending |
₩ | 99 | ₩ | 41,091 | ₩ | 11,570 | ₩ | 3,809 | ₩ | 69 | ₩ | 38,531 | ₩ | 95,169 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | As of December 31, 2015, the estimated greenhouse gas emission is 122,542 tons. |
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
Membership rewards program |
Dormant accounts |
Litigations | Financial guarantee liabilities |
Greenhouse Emission liabilities |
Others | Total | ||||||||||||||||||||||
Beginning |
₩ | 69 | ₩ | 16,838 | ₩ | 3,257 | ₩ | 2,699 | ₩ | | ₩ | 99,772 | ₩ | 122,635 | ||||||||||||||
Provision (Reversal) |
164 | 49,040 | (632 | ) | 19 | | (892 | ) | 47,699 | |||||||||||||||||||
Used and Others |
(157 | ) | (31,882 | ) | (3 | ) | | | (57,188 | ) | (89,230 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending |
₩ | 76 | ₩ | 33,996 | ₩ | 2,622 | ₩ | 2,718 | ₩ | | ₩ | 41,692 | ₩ | 81,104 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
23. | 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 net defined benefit liability recognized in the statements of financial position is calculated in accordance with actuarial valuation methods. Data such as discount rates, future salary increase rates, and mortality rates based on market data and historical data are used. Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends.
The changes in the net defined benefit liabilities for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Present value of defined benefit obligation |
Fair value of plan assets |
Net defined benefit liabilities |
||||||||||
Beginning |
₩ | 1,150,368 | ₩ | (1,092,875 | ) | ₩ | 57,493 | |||||
Current service cost |
162,459 | | 162,459 | |||||||||
Interest cost (income) |
34,147 | (32,433 | ) | 1,714 | ||||||||
Remeasurements: |
||||||||||||
-Actuarial gain arising from changes in demographic assumptions |
(1,879 | ) | | (1,879 | ) | |||||||
-Actuarial gain arising from changes in financial assumptions |
(508 | ) | | (508 | ) | |||||||
-Actuarial loss arising from experience adjustment |
10,631 | | 10,631 | |||||||||
-Return on plan assets (excluding amounts included in interest income) |
| 10,877 | 10,877 | |||||||||
Contributions |
| (180,000 | ) | (180,000 | ) | |||||||
Payments from plans (benefit payments) |
(88,266 | ) | 88,266 | | ||||||||
Payments from the Group |
(5,152 | ) | | (5,152 | ) | |||||||
Transfer in |
1,993 | (1,981 | ) | 12 | ||||||||
Transfer out |
(3,140 | ) | 3,140 | | ||||||||
Effects of changes in foreign exchange rate |
22 | | 22 | |||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 1,260,675 | ₩ | (1,205,006 | ) | ₩ | 55,669 | |||||
|
|
|
|
|
|
123
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||
Present value of defined benefit obligation |
Fair value of plan assets |
Net defined benefit liabilities |
||||||||||
Beginning |
₩ | 905,999 | ₩ | (854,474 | ) | ₩ | 51,525 | |||||
Current service cost |
146,118 | | 146,118 | |||||||||
Interest cost (income) |
35,833 | (33,788 | ) | 2,045 | ||||||||
Remeasurements: |
||||||||||||
-Actuarial gain arising from changes in financial assumptions |
95,786 | | 95,786 | |||||||||
-Actuarial loss arising from experience adjustment |
3,003 | | 3,003 | |||||||||
-Return on plan assets (excluding amounts included in interest income) |
| 11,505 | 11,505 | |||||||||
Contributions |
| (249,500 | ) | (249,500 | ) | |||||||
Payments from plans (benefit payments) |
(32,908 | ) | 32,908 | | ||||||||
Payments from the Group |
(2,961 | ) | | (2,961 | ) | |||||||
Transfer in |
1,352 | (1,352 | ) | | ||||||||
Transfer out |
(1,826 | ) | 1,826 | | ||||||||
Effects of changes in foreign exchange rate |
(28 | ) | | (28 | ) | |||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 1,150,368 | ₩ | (1,092,875 | ) | ₩ | 57,493 | |||||
|
|
|
|
|
|
The details of the net defined benefit liabilities as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Present value of defined benefit obligation |
₩ | 1,260,675 | ₩ | 1,150,368 | ||||
Fair value of plan assets |
(1,205,006 | ) | (1,092,875 | ) | ||||
|
|
|
|
|||||
Net defined benefit liabilities |
₩ | 55,669 | ₩ | 57,493 | ||||
|
|
|
|
The details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Current service cost |
₩ | 162,459 | ₩ | 146,118 | ||||
Interest expenses of net defined benefit liabilities |
1,714 | 2,045 | ||||||
|
|
|
|
|||||
Total |
₩ | 164,173 | ₩ | 148,163 | ||||
|
|
|
|
124
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Remeasurements of net defined benefit liabilities recognized as other comprehensive income for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Remeasurements: |
||||||||
- Actuarial loss arising from changes in demographic assumptions |
₩ | 1,879 | ₩ | | ||||
-Actuarial loss arising from changes in financial assumptions |
508 | (95,786 | ) | |||||
-Actuarial loss arising from experience adjustment |
(10,631 | ) | (3,003 | ) | ||||
-Return on plan assets (excluding amounts included in interest income) |
(10,877 | ) | (11,505 | ) | ||||
Income tax effects |
4,627 | 26,691 | ||||||
|
|
|
|
|||||
Remeasurements after income tax |
₩ | (14,494 | ) | ₩ | (83,603 | ) | ||
|
|
|
|
The details of fair value of plan assets as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Assets quoted in an active market |
Assets not quoted in an active market |
Total | ||||||||||
Time deposits |
₩ | | ₩ | 1,205,006 | ₩ | 1,205,006 | ||||||
|
|
|
|
|
|
|||||||
₩ | | ₩ | 1,205,006 | ₩ | 1,205,006 | |||||||
|
|
|
|
|
|
(In millions of Korean won) | 2014 | |||||||||||
Assets quoted in an active market |
Assets not quoted in an active market |
Total | ||||||||||
Time deposits |
₩ | | ₩ | 1,073,723 | ₩ | 1,073,723 | ||||||
Others |
| 19,152 | 19,152 | |||||||||
|
|
|
|
|
|
|||||||
₩ | | ₩ | 1,092,875 | ₩ | 1,092,875 | |||||||
|
|
|
|
|
|
Key actuarial assumptions used as of December 31, 2015 and 2014, are as follows:
Ratio (%) | ||||
2015 | 2014 | |||
Discount rate |
2.50 | 3.00 | ||
Salary increase rate |
2.40 ~ 4.00 | 1.83 ~ 4.55 | ||
Turnover |
1.00 | 0.70 |
Mortality assumptions are based on the 8th experience-based mortality table of Korea Insurance Development Institute of 2015.
125
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The sensitivity of the defined benefit obligation to changes in the principal assumptions as of December 31, 2015, is as follows:
Effect on defined benefit obligation | ||||||
Changes in principal assumption |
Increase in principal assumption |
Decrease in principal assumption | ||||
Discount rate |
0.5% p | 4.14% decrease | 4.43% increase | |||
Salary increase rate |
0.5% p | 4.06% increase | 3.84% decrease | |||
Turnover |
0.5% p | 0.37% decrease | 0.39% 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 significant actuarial assumptions is calculated using the projected unit credit method which is used to calculate the defined benefit obligation.
Expected maturity analysis of undiscounted pension benefits as of December 31, 2015, is as follows:
(In millions of Korean won) |
Less than 1 year |
Between 1 and 2 years |
Between 2 and 5 years |
Between 5 and 10 years |
Over 10 years |
Total | ||||||||||||||||||
Pension benefits |
₩ | 32,209 | ₩ | 79,700 | ₩ | 373,180 | ₩ | 825,913 | ₩ | 2,701,387 | ₩ | 4,012,389 |
The weighted average duration of the defined benefit obligations is 8.8 years.
Expected contributions to plan assets for the period after December 31, 2015, are estimated to be approximately ₩160,000 million.
126
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
24. | Other liabilities |
The details of other liabilities as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Other financial liabilities |
||||||||
Other payables |
₩ | 3,016,175 | ₩ | 2,570,369 | ||||
Prepaid card and debit cards |
2,107 | 1,760 | ||||||
Accrued expenses |
2,538,380 | 2,963,749 | ||||||
Financial guarantee liabilities |
12,355 | 12,956 | ||||||
Deposits for letter of guarantees and others |
211,388 | 142,571 | ||||||
Domestic exchange settlement credits |
118,599 | 118,550 | ||||||
Foreign exchanges settlement credits |
53,367 | 69,440 | ||||||
Borrowings from other business accounts |
47,707 | 40,383 | ||||||
Payables to trust accounts |
2,791,404 | 2,548,578 | ||||||
Liabilities incurred from agency relationship |
488,325 | 505,664 | ||||||
Account for agency businesses |
321,557 | 340,061 | ||||||
Others |
10,897 | 30,766 | ||||||
|
|
|
|
|||||
9,612,261 | 9,344,847 | |||||||
|
|
|
|
|||||
Other non-financial liabilities |
||||||||
Other payables |
68,449 | 223,625 | ||||||
Unearned revenue |
39,815 | 42,414 | ||||||
Accrued expenses |
176,643 | 142,385 | ||||||
Withholding taxes |
108,225 | 97,976 | ||||||
Others |
64,198 | 33,028 | ||||||
|
|
|
|
|||||
457,330 | 539,428 | |||||||
|
|
|
|
|||||
₩ | 10,069,591 | ₩ | 9,884,275 | |||||
|
|
|
|
127
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
25. | Equity |
25.1 Capital Stock
The details of outstanding shares of the Bank as of December 31, 2015 and 2014, are as follows:
Ordinary shares | ||||||||
2015 | 2014 | |||||||
Number of shares authorized |
1,000,000,000 | 1,000,000,000 | ||||||
Face value per share |
₩ | 5,000 | ₩ | 5,000 | ||||
Number of shares |
404,379,116 | 404,379,116 | ||||||
Capital stock1 |
₩ | 2,021,896 | ₩ | 2,021,896 |
1 | In millions of Korean won. |
25.2 Capital surplus
The details of capital surplus as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Paid-in capital in excess of face value |
₩ | 4,604,417 | ₩ | 4,604,417 | ||||
Gain on business combination |
397,669 | 397,669 | ||||||
Revaluation increment |
177,229 | 177,229 | ||||||
Other capital surplus |
40,389 | 40,389 | ||||||
|
|
|
|
|||||
₩ | 5,219,704 | ₩ | 5,219,704 | |||||
|
|
|
|
The gain on business combination is a gain from a bargain purchase related to the merger with Korea Long Term Credit Bank on December 31, 1998, in accordance with previous Korean GAAP.
128
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
25.3 Accumulated other comprehensive income
The details of accumulated other comprehensive income as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Remeasurements of net defined benefit liabilities |
₩ | (102,182 | ) | ₩ | (87,688 | ) | ||
Currency translation differences |
32,993 | (12,149 | ) | |||||
Gain on valuation of available-for-sale financial assets |
682,818 | 760,530 | ||||||
Losses on valuation of equity method investments |
(87,346 | ) | (89,882 | ) | ||||
Losses on hedges of a net investment in a foreign operation |
(25,476 | ) | | |||||
|
|
|
|
|||||
₩ | 500,807 | ₩ | 570,811 | |||||
|
|
|
|
25.4 Retained earnings
Retained earnings as of December 31, 2015 and 2014, consist of:
(In millions of Korean won) | 2015 | 2014 | ||||||
Legal reserves |
₩ | 2,033,463 | ₩ | 1,997,380 | ||||
Regulatory reserve for credit losses |
1,867,761 | 1,690,979 | ||||||
Voluntary reserves |
9,893,452 | 8,946,874 | ||||||
Retained earnings before appropriation |
1,210,128 | 1,492,829 | ||||||
|
|
|
|
|||||
₩ | 15,004,804 | ₩ | 14,128,062 | |||||
|
|
|
|
With respect to the allocation of net profit earned in a fiscal term, the Bank must set aside in its legal reserve an amount equal to at least 10% of its 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 40 of the Banking Act. The reserves can only be transferred to capital stock or be used to reduce deficit. With respect to the Banks branches overseas, a portion of the branchs net income is appropriated into legal reserves, in line with the financial legislation of the country where the overseas branch is located.
Regulatory Reserve for Credit Losses
Measurement and Disclosure of Regulatory Reserve for Credit Losses are required in accordance with Articles 29.1 through 29.2 of Regulation on Supervision of Banking Business.
129
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The details of the regulatory reserve for credit losses as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Beginning |
₩ | 1,867,761 | ₩ | 1,690,979 | ||||
Amounts estimated to be appropriated |
(32,646 | ) | 176,782 | |||||
|
|
|
|
|||||
Ending |
₩ | 1,835,115 | ₩ | 1,867,761 | ||||
|
|
|
|
The adjustments to the regulatory reserve for credit losses for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Provision (reversal) of regulatory reserve for credit losses |
₩ | (32,646 | ) | ₩ | 176,782 | |||
Adjusted profit after provision of regulatory reserve for credit losses1 |
1,139,884 | 852,259 |
1 | Adjusted profit after provision of regulatory reserve for credit losses is not accordance with Korean IFRS and calculated on the assumption that provision (reversal) of regulatory reserve for credit losses before income tax is adjusted to the profit. |
26. | Interest income and expense |
The details of interest income and expense for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Interest income |
||||||||
Due from financial institutions |
₩ | 112,024 | ₩ | 142,644 | ||||
Loans |
7,380,610 | 8,495,967 | ||||||
Financial investments |
||||||||
Available-for-sale financial assets |
386,427 | 469,173 | ||||||
Held-to-maturity financial assets |
392,658 | 452,652 | ||||||
Others |
116,663 | 142,191 | ||||||
|
|
|
|
|||||
8,388,382 | 9,702,627 | |||||||
|
|
|
|
|||||
Interest expenses |
||||||||
Deposits |
3,030,091 | 3,842,482 | ||||||
Debts |
167,785 | 228,146 | ||||||
Debentures |
418,979 | 594,341 | ||||||
Others |
59,780 | 66,212 | ||||||
|
|
|
|
|||||
3,676,635 | 4,731,181 | |||||||
|
|
|
|
|||||
Net interest income |
₩ | 4,711,747 | ₩ | 4,971,446 | ||||
|
|
|
|
Interest income recognized on impaired loans is ₩51,218 million (2014: ₩93,935 million) for the year ended December 31, 2015.
130
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
27. | Fee and commission income and expense |
The details of fee and commission income, and fee and commission expense for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Fee and commission income |
||||||||
Banking activity fees |
₩ | 173,442 | ₩ | 171,909 | ||||
Lending activity fees |
87,202 | 73,605 | ||||||
Agent activity fees |
406,123 | 372,323 | ||||||
Trust and other fiduciary fees |
241,246 | 203,426 | ||||||
Guarantee fees |
29,924 | 29,283 | ||||||
Credit card related fees |
1,420 | 1,612 | ||||||
Foreign currency related fees |
97,148 | 96,020 | ||||||
Security activity commissions |
160,211 | 145,718 | ||||||
Other business account commission on consignment |
30,525 | 25,311 | ||||||
Debit card related fees and commissions |
680 | 637 | ||||||
Others |
144,133 | 151,494 | ||||||
|
|
|
|
|||||
1,372,054 | 1,271,338 | |||||||
|
|
|
|
|||||
Fee and commission expense |
||||||||
Trading activity related fees1 |
10,531 | 8,872 | ||||||
Lending activity fees |
21,225 | 18,548 | ||||||
Credit card related fees |
1,096 | 1,149 | ||||||
Contributions to external institutions |
22,318 | 18,614 | ||||||
Outsourcing related fees |
62,475 | 55,508 | ||||||
Foreign currency related fees |
12,286 | 11,452 | ||||||
Management fees of written-off loans |
12,667 | 9,853 | ||||||
Others |
73,083 | 69,297 | ||||||
|
|
|
|
|||||
215,681 | 193,293 | |||||||
|
|
|
|
|||||
Net fee and commission income |
₩ | 1,156,373 | ₩ | 1,078,045 | ||||
|
|
|
|
1 | Fees from financial assets/liabilities at fair value through profit or loss. |
131
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
28. | Net gains or losses from financial assets/liabilities at fair value through profit or loss |
28.1 Net gains or losses from financial instruments held for trading
Net gains or losses from financial assets/liabilities at fair value through profit or loss are composed of gains or losses from financial instruments held for trading includes interest income, dividend income, gains or losses arising from changes in the fair values, sales and redemptions. The details for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Gains from financial instruments held for trading |
||||||||
Financial assets held for trading |
||||||||
Debt securities |
₩ | 224,641 | ₩ | 298,762 | ||||
Equity securities |
11,487 | 12,314 | ||||||
|
|
|
|
|||||
236,128 | 311,076 | |||||||
|
|
|
|
|||||
Derivatives held for trading |
||||||||
Interest rate |
976,180 | 1,313,083 | ||||||
Currency |
2,287,541 | 1,886,636 | ||||||
Stock or index |
13,727 | 44,775 | ||||||
Other |
803 | 801 | ||||||
|
|
|
|
|||||
3,278,251 | 3,245,295 | |||||||
|
|
|
|
|||||
Other financial instruments |
2,166 | 47 | ||||||
|
|
|
|
|||||
3,516,545 | 3,556,418 | |||||||
|
|
|
|
|||||
Losses from financial instruments held for trading |
||||||||
Financial assets held for trading |
||||||||
Debt securities |
34,713 | 19,553 | ||||||
Equity securities |
9,237 | 34,118 | ||||||
|
|
|
|
|||||
43,950 | 53,671 | |||||||
|
|
|
|
|||||
Derivatives held for trading |
||||||||
Interest rate |
988,989 | 1,361,647 | ||||||
Currency |
2,178,142 | 1,763,895 | ||||||
Stock or index |
12,877 | 20,346 | ||||||
Other |
241 | 401 | ||||||
|
|
|
|
|||||
3,180,249 | 3,146,289 | |||||||
|
|
|
|
|||||
Financial liabilities held for trading |
| 117 | ||||||
|
|
|
|
|||||
Other financial instruments |
2,213 | 50 | ||||||
|
|
|
|
|||||
3,226,412 | 3,200,127 | |||||||
|
|
|
|
|||||
Net gain or loss from financial instruments held for trading |
₩ | 290,133 | ₩ | 356,291 | ||||
|
|
|
|
132
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
28.2 Net gains or losses from financial instruments designated at fair value through profit or loss
Net gains or losses from financial instruments designated at fair value through profit or loss includes interest income, dividend income, gains or losses arising from changes in the fair values, sales and redemptions. The details for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Gains from financial assets designated at fair value through profit or loss |
||||||||
Derivative linked securities |
₩ | 1,697 | ₩ | | ||||
Losses from financial assets designated at fair value through profit or loss |
||||||||
Derivative linked securities |
4,802 | | ||||||
|
|
|
|
|||||
Net gain or loss from financial assets designated at fair value through profit or loss |
₩ | (3,105 | ) | ₩ | | |||
|
|
|
|
133
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
29. | Other operating income and expenses |
The details of other operating income and expenses for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Other operating income |
||||||||
Revenue related to available-for-sale financial assets |
||||||||
Gains on redemption of available-for-sale financial assets |
₩ | 313 | ₩ | | ||||
Gains on sale of available-for-sale financial assets |
397,757 | 54,769 | ||||||
|
|
|
|
|||||
398,070 | 54,769 | |||||||
|
|
|
|
|||||
Gain on sale of held-to-maturity financial assets |
| 1,668 | ||||||
Gains on foreign exchange transactions |
2,422,525 | 1,468,472 | ||||||
Dividend income |
84,538 | 75,627 | ||||||
Others |
183,365 | 153,059 | ||||||
|
|
|
|
|||||
3,088,498 | 1,753,595 | |||||||
|
|
|
|
|||||
Other operating expenses |
||||||||
Expense related to available-for-sale financial assets |
||||||||
Losses on redemption of available-for-sale financial assets |
| 6 | ||||||
Losses on sale of available-for-sale financial assets |
2,142 | 2,242 | ||||||
Impairment on available-for-sale financial assets |
216,027 | 180,784 | ||||||
|
|
|
|
|||||
218,169 | 183,032 | |||||||
|
|
|
|
|||||
Losses on foreign exchange transactions |
2,399,321 | 1,452,100 | ||||||
Others |
892,734 | 887,014 | ||||||
|
|
|
|
|||||
3,510,224 | 2,522,146 | |||||||
|
|
|
|
|||||
Net other operating expenses |
₩ | (421,726 | ) | ₩ | (768,551 | ) | ||
|
|
|
|
134
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
30. | General and administrative expenses |
30.1 General and administrative expenses
The details of general and administrative expenses for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Employee Benefits |
||||||||
Salaries and short-term employee benefits - salaries |
₩ | 1,442,575 | ₩ | 1,410,106 | ||||
Salaries and short-term employee benefits - welfare expense |
696,210 | 652,004 | ||||||
Post-employment benefits - defined benefit plans |
164,173 | 148,163 | ||||||
Post-employment benefits - defined contribution plans |
5,085 | 4,425 | ||||||
Termination benefits |
390,245 | 473 | ||||||
Share-based payments |
11,915 | 7,234 | ||||||
|
|
|
|
|||||
2,710,203 | 2,222,405 | |||||||
|
|
|
|
|||||
Depreciation and amortization |
204,467 | 211,599 | ||||||
|
|
|
|
|||||
Other general and administrative expenses |
||||||||
Rental expense |
237,800 | 262,834 | ||||||
Tax and dues |
97,721 | 100,725 | ||||||
Communication |
24,046 | 23,603 | ||||||
Electricity and utilities |
23,858 | 23,312 | ||||||
Publication |
13,816 | 14,681 | ||||||
Repairs and maintenance |
12,085 | 13,798 | ||||||
Vehicle |
7,833 | 9,155 | ||||||
Travel |
3,581 | 3,313 | ||||||
Training |
18,402 | 14,152 | ||||||
Service fees |
87,704 | 85,097 | ||||||
Others |
370,305 | 388,184 | ||||||
|
|
|
|
|||||
897,151 | 938,854 | |||||||
|
|
|
|
|||||
₩ | 3,811,821 | ₩ | 3,372,858 | |||||
|
|
|
|
135
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
30.2 Share-based payments
30.2.1 Share options
The changes in the number of granted share options and the weighted average exercise price for the years ended December 31, 2015 and 2014, are as follows:
(In Korean won, except shares) | ||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||
Number of granted shares | Number of | Exercise | Remaining | |||||||||||||||||||||
Beginning | Expired | Ending | exercisable shares |
price per share |
contractual life (Years) |
|||||||||||||||||||
Series 22 |
657,498 | 657,498 | | | ₩ | | | |||||||||||||||||
Series 23 |
15,246 | 15,246 | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
672,744 | 672,744 | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Weighted average exercise price |
₩ | 77,268 | ₩ | 77,268 | ₩ | | ₩ | | ₩ | | ||||||||||||||
(In Korean won, except shares) | ||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||
Number of granted shares | Number of | Exercise | Remaining | |||||||||||||||||||||
Beginning | Expired | Ending | exercisable shares |
price per share |
contractual 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 | ₩ | |
136
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
30.2.2 Share Grants
The Group changed the scheme of share-based payment from share option to share grants in November 2007. The share grant award program is an incentive plan that sets, on grant date, the maximum number of shares that can be awarded. Actual shares to be granted is determined in accordance with achievement of performance targets over the vesting period.
The details of the share grants as of December 31, 2015, are as follows:
(In number of shares) | ||||||||
Share grants |
Grant date | Number of granted shares1 |
Vesting conditions | |||||
Series 48 |
2013.07.23 | 14,470 | Service period : 2 years 2,3 | |||||
Series 49 |
2013.07.24 | 36,495 | Service period : 2 years 2,3 | |||||
Series 50 |
2013.07.24 | 9,214 | Service period : 2 years 2,3 | |||||
Series 52 |
2013.08.01 | 10,278 | Service period : 2 years 2,3 | |||||
Series 57 |
2014.01.01 | 8,853 | Service period : 2 years 2,3 | |||||
Series 58 |
2014.01.01 | 78,700 | Service period : 2 years 2,3 | |||||
Series 60 |
2015.01.01 | 349,984 | Service period : 2 years 2,3 | |||||
Series 61 |
2015.04.14 | 8,390 | Service period : 2 years 2,3 | |||||
Series 62 |
2015.01.12 | 15,965 | Service period : 2 years 2,3 | |||||
Series 63 |
2015.08.01 | 9,969 | Service period : 2 years 2,3 | |||||
Series 64 |
2015.07.24 | 35,069 | Service period : 2 years 2,3 | |||||
Series 65 |
2015.08.26 | 13,828 | Service period : 2 years 2,3 | |||||
Series 66 |
2014.11.21 | 28,392 | Service period : 3 years 2,4 | |||||
Deferred grant in 2010 |
| 50 | ||||||
Deferred grant in 2011 |
| 101 | ||||||
Deferred grant in 2012 |
| 13,082 | ||||||
Deferred grant in 2013 |
| 69,240 | ||||||
Deferred grant in 2014 |
| 124,149 | ||||||
Deferred grant in 2015 |
| 1,877 | ||||||
|
|
|||||||
828,106 | ||||||||
|
|
1 | Granted shares represent the total number of shares initially granted to directors and employees that have residual shares at the end of reporting period. However, deferred grants are residual shares at the end of reporting period. |
2 | Certain portion of the granted shares is compensated over a maximum period of three years. |
3 | In general, 40%, 30% and 30% of the number of shares to be granted are determined upon the accomplishment of the targeted performance results, the targeted relative TSR and the targeted financial results of the Bank, respectively. However, as for certain number of shares, half of the number of shares to be granted is determined based on the accomplishment of the targeted relative TSR, while the other half is determined by the targeted performance results. |
4 | 30%, 35% and 35% of the number of shares to be granted are determined upon the accomplishment of the targeted total assets growth rate, the targeted relative TSR and the targeted ROA, respectively. |
137
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The details of share grants linked to short-term performance as of December 31, 2015, are as follows:
Grant date | Number of vested shares 1 |
Vesting conditions | ||||||||
Granted shares for 2010 |
2010.01.01 | 363 | Vested | |||||||
Granted shares for 2011 |
2011.01.01 | 3,985 | Vested | |||||||
Granted shares for 2012 |
2012.01.01 | 54,609 | Vested | |||||||
Granted shares for 2013 |
2013.01.01 | 68,751 | Vested | |||||||
Granted shares for 2014 |
2014.01.01 | 164,953 | Vested | |||||||
Granted shares for 2015 |
2015.01.01 | 174,345 | 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, 2015, are as follows:
(In Korean won) | Expected exercise period (Years) |
Risk free rate (%) |
Fair value (Market performance condition) |
Fair value (Non-market performance condition) | ||||||||
Linked to long term performance |
|
|||||||||||
Series 48 |
0.00~3.00 | 1.63 | 36,497 | 33,145~34,180 | ||||||||
Series 49 |
0.00~3.00 | 1.63 | 36,382 | 33,145~34,180 | ||||||||
Series 49-1 |
0.00~3.00 | 1.63 | 36,583 | 33,145~34,180 | ||||||||
Series 50 |
0.00~3.00 | 1.63 | 36,382 | 33,145~34,180 | ||||||||
Series 52 |
0.00~3.00 | 1.63 | 36,321 | 33,145~34,180 | ||||||||
Series 57 |
0.00~3.00 | 1.63 | 34,407 | 33,145~34,180 | ||||||||
Series 58 |
0.00~3.00 | 1.63 | 34,407 | 33,145~34,180 | ||||||||
Series 60 |
1.00~4.00 | 1.63 | 31,695 | 33,145~33,213 | ||||||||
Series 61 |
1.28~5.01 | 1.63 | 31,695 | 33,110~33,213 | ||||||||
Series 62 |
1.00~4.00 | 1.63 | 31,695 | 33,145~33,213 | ||||||||
Series 63 |
1.58~5.01 | 1.64 | 31,695 | 33,110~33,213 | ||||||||
Series 64 |
1.56~5.01 | 1.64 | 31,695 | 33,110~33,213 | ||||||||
Series 65 |
1.65~5.01 | 1.64 | 31,695 | 33,110~33,213 | ||||||||
Series 66 |
1.89~4.89 | 1.64 | 33,689 | 33,157~33,292 | ||||||||
Grant deferred in 2012 |
0.00 | 1.72 | | 34,180 | ||||||||
Grant deferred in 2013 |
0.00~1.00 | 1.72 | | 33,153~34,180 | ||||||||
Grant deferred in 2014 |
0.00~2.00 | 1.72 | | 33,143~34,180 | ||||||||
Grant deferred in 2015 |
0.02~2.03 | 1.72 | | 33,179~33,877 | ||||||||
Linked to short-term performance |
|
|||||||||||
Share granted in 2012 |
0.00 | 1.72 | | 34,180 | ||||||||
Share granted in 2013 |
0.00~1.00 | 1.72 | | 33,153~39,944 | ||||||||
Share granted in 2014 |
0.00~2.03 | 1.72 | | 33,143~34,180 | ||||||||
Share granted in 2015 |
0.00~3.00 | 1.72 | | 33,145~34,180 |
138
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
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, 2015, was used for the underlying asset price. Also, the average three-year historical dividend rate was used as the expected dividend rate.
As of December 31, 2015 and 2014, the accrued expenses related to share-based payments, including share options and share grants, amounted to ₩33,754 million and ₩32,256 million, respectively, and the compensation costs from share options and share grants amounting to ₩11,915 million and ₩7,234 million were incurred during the years ended December 31, 2015 and 2014, respectively. There is no intrinsic value of the vested share options as of December 31, 2014.
31. | Non-operating income and expenses |
The details of non-operating income and expenses for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Non-operating income |
||||||||
Gains of disposal in property and equipment and assets held for sale |
₩ | 1,017 | ₩ | 1,454 | ||||
Rent received |
28,560 | 14,093 | ||||||
Others |
258,716 | 57,535 | ||||||
|
|
|
|
|||||
288,293 | 73,082 | |||||||
|
|
|
|
|||||
Non-operating expenses |
||||||||
Losses of disposal in property and equipment and assets held for sale |
927 | 1,163 | ||||||
Donation |
41,839 | 45,884 | ||||||
Restoration cost |
722 | 1,818 | ||||||
Others |
51,369 | 58,216 | ||||||
|
|
|
|
|||||
94,857 | 107,081 | |||||||
|
|
|
|
|||||
Net non-operating income(expenses) |
₩ | 193,436 | ₩ | (33,999 | ) | |||
|
|
|
|
139
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
32. | Income tax expense |
Income tax expense for the years ended December 31, 2015 and 2014, consists of:
(In millions of Korean won) | 2015 | 2014 | ||||||
Tax payable |
||||||||
Current tax expense |
₩ | 207,579 | ₩ | 415,966 | ||||
Adjustments recognized in the period for current tax of prior years |
(16,207 | ) | (13,855 | ) | ||||
|
|
|
|
|||||
191,372 | 402,111 | |||||||
|
|
|
|
|||||
Changes in deferred income tax assets (liabilities) |
51,908 | (14,876 | ) | |||||
Income tax expense of overseas branches |
3,827 | 6,202 | ||||||
Income tax recognized directly in equity |
||||||||
Changes in value of available-for-sale financial assets |
24,707 | (70,015 | ) | |||||
Changes in remeasurements of net defined benefit liabilities |
4,627 | 26,691 | ||||||
Losses on hedging investment of A net investment in a foreign operation |
8,134 | | ||||||
Others |
(778 | ) | 78 | |||||
|
|
|
|
|||||
36,690 | (43,246 | ) | ||||||
|
|
|
|
|||||
Consolidated tax effect |
(9,806 | ) | (18,957 | ) | ||||
|
|
|
|
|||||
Tax expense |
₩ | 273,991 | ₩ | 331,234 | ||||
|
|
|
|
An analysis of the net profit before income tax and income tax expense for the years ended December 31, 2015 and 2014, follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Profit before income tax |
₩ | 1,381,229 | ₩ | 1,360,275 | ||||
|
|
|
|
|||||
Tax at the applicable tax rate1 |
333,796 | 328,724 | ||||||
Non-taxable income |
(53,443 | ) | (6,091 | ) | ||||
Non-deductible expense |
13,713 | 10,665 | ||||||
Tax credit and tax exemption |
(397 | ) | (141 | ) | ||||
Temporary difference for which no deferred tax is recognized |
5,082 | 17,788 | ||||||
Tax supplementary pay(rebate) for tax of prior years |
(21,222 | ) | (9,375 | ) | ||||
Income tax expense of overseas branches |
3,827 | 6,202 | ||||||
Tax effect of investments in subsidiaries |
1,241 | 2,085 | ||||||
Income tax expense of overseas branch |
(671 | ) | 765 | |||||
Consolidated tax effect |
(9,806 | ) | (18,957 | ) | ||||
Others |
1,871 | (431 | ) | |||||
|
|
|
|
|||||
Tax expense |
₩ | 273,991 | ₩ | 331,234 | ||||
|
|
|
|
|||||
Tax expense / Profit before income tax (%) |
19.84 | 24.35 |
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%. |
140
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The details of current tax liabilities (income tax payables) and current tax assets (income tax refund receivables) before offsetting, as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Income tax refund receivables prior to offsetting1 |
₩ | (229,470 | ) | ₩ | (215,345 | ) | ||
Tax payables prior to offsetting2 |
210,024 | 414,239 | ||||||
|
|
|
|
|||||
Tax payables (receivable) after offsetting |
(19,446 | ) | 198,894 | |||||
Adjustment on consolidated tax payable and others3 |
(9,806 | ) | (18,956 | ) | ||||
Accounts payable4 |
36,373 | (172,353 | ) | |||||
|
|
|
|
|||||
Current tax payable |
₩ | 7,121 | ₩ | 7,585 | ||||
|
|
|
|
1 | Excludes current tax assets of ₩17,612 million (2014: ₩305,831 million) from uncertain tax position, which do not qualify for offsetting. |
2 | Includes income tax payable of ₩7,121 million (2014: ₩7,585 million) under current tax liabilities as of December 31, 2015, which are not to be offset against any income tax refund receivables, such as those of overseas branches. |
3 | Tax expense reduced due to the adoption of consolidated tax return was reclassified as tax benefit. |
4 | The amount of income tax payable by the Group is reclassified as accounts payable, not to the tax authority, but to KB Financial Group Inc. due to the adoption of consolidated tax return. |
33. | Dividends |
The dividend to the shareholders of the parent company in respect of the year ended December 31, 2015, of ₩941 per share, amounting to total dividends of ₩380,521 million, is to be proposed at the annual general shareholders meeting on March 24, 2016. The Groups consolidated financial statements as of December 31, 2015, do not reflect this dividend payable.
141
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
34. | Accumulated other comprehensive income |
The details of accumulated other comprehensive income for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||
Beginning | Changes except for reclassification |
Reclassification to profit or loss |
Tax effect | Ending | ||||||||||||||||
Remeasurements of net defined benefit liabilities |
₩ | (87,688 | ) | ₩ | (19,121 | ) | ₩ | | ₩ | 4,627 | ₩ | (102,182 | ) | |||||||
Currency translation differences |
(12,149 | ) | 45,142 | | | 32,993 | ||||||||||||||
Gains(losses) on valuation of available-for-sale financial assets |
760,530 | 214,106 | (316,525 | ) | 24,707 | 682,818 | ||||||||||||||
Gains(losses) on valuation of equity method investments |
(89,882 | ) | 3,314 | | (778 | ) | (87,346 | ) | ||||||||||||
Gains(losses) on hedges of a net investment in a foreign operation |
| (33,610 | ) | | 8,134 | (25,476 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 570,811 | ₩ | 209,831 | ₩ | (316,525 | ) | ₩ | 36,690 | ₩ | 500,807 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(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 |
₩ | (4,085 | ) | ₩ | (110,294 | ) | ₩ | | ₩ | 26,691 | ₩ | (87,688 | ) | |||||||
Currency translation differences |
(29,430 | ) | 17,281 | | | (12,149 | ) | |||||||||||||
Gains(losses) on valuation of available-for-sale financial assets |
538,218 | 360,397 | (68,070 | ) | (70,015 | ) | 760,530 | |||||||||||||
Gains(losses) on valuation of held-to-maturity financial assets |
3 | | (3 | ) | | | ||||||||||||||
Gains(losses) on valuation of equity method investments |
(57,087 | ) | (33,122 | ) | 249 | 78 | (89,882 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 447,619 | ₩ | 234,262 | ₩ | (67,824 | ) | ₩ | (43,246 | ) | ₩ | 570,811 | |||||||||
|
|
|
|
|
|
|
|
|
|
142
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
35. | Trust Accounts |
Financial information of the trust accounts the Group manages as of December 31, 2015 and 2014, and for the years ended December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||||||||
Total assets |
Operating revenues |
Total assets |
Operating revenues |
|||||||||||||
Consolidated |
₩ | 3,754,063 | ₩ | 125,392 | ₩ | 3,614,835 | ₩ | 150,598 | ||||||||
Unconsolidated |
34,216,814 | 1,334,526 | 28,062,557 | 1,230,286 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 37,970,877 | ₩ | 1,459,918 | ₩ | 31,677,392 | ₩ | 1,380,884 | |||||||||
|
|
|
|
|
|
|
|
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 receivables and payables related to the Groups trust accounts as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Assets |
||||||||
Accrued trust fees |
₩ | 27,796 | ₩ | 24,054 | ||||
|
|
|
|
|||||
Liabilities |
||||||||
Due to trust accounts |
₩ | 2,791,403 | ₩ | 2,548,578 | ||||
Accrued interest on due to trust accounts |
6,354 | 5,790 | ||||||
|
|
|
|
|||||
₩ | 2,797,757 | ₩ | 2,554,368 | |||||
|
|
|
|
Significant revenue and expenses related to the Groups trust for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Revenues |
||||||||
Fees and commissions from trust accounts |
₩ | 241,246 | ₩ | 203,426 | ||||
Commissions from early termination in trust accounts |
171 | 129 | ||||||
|
|
|
|
|||||
₩ | 241,417 | ₩ | 203,555 | |||||
|
|
|
|
|||||
Expenses |
||||||||
Interest expenses on due to trust accounts |
₩ | 48,293 | ₩ | 52,664 | ||||
|
|
|
|
143
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
36. | Supplemental Cash Flow Information |
Cash and cash equivalents as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Cash |
₩ | 2,073,741 | ₩ | 2,018,753 | ||||
Checks with other banks |
396,955 | 525,452 | ||||||
Due from Bank of Korea |
6,791,990 | 6,508,623 | ||||||
Due from other financial institutions |
5,300,304 | 4,920,682 | ||||||
|
|
|
|
|||||
14,562,990 | 13,973,510 | |||||||
|
|
|
|
|||||
Restricted due from financial institutions |
(6,905,907 | ) | (6,877,675 | ) | ||||
Due from financial institutions with original maturities over three months |
(1,187,577 | ) | (763,775 | ) | ||||
|
|
|
|
|||||
(8,093,484 | ) | (7,641,450 | ) | |||||
|
|
|
|
|||||
₩ | 6,469,506 | ₩ | 6,332,060 | |||||
|
|
|
|
Significant non-cash transactions for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Decrease in loans due to the write-offs |
₩ | 979,633 | ₩ | 1,589,912 | ||||
Changes in accumulated other comprehensive income due to valuation of financial investments |
(77,712 | ) | 222,309 | |||||
Changes in accumulated other comprehensive income due to investment in associates |
2,536 | (32,795 | ) | |||||
Changes in financial investments due to debt-for-equity swap with Taihan Electric Wire Co., Ltd. |
14,729 | | ||||||
Changes in financial investments due to debt-for-equity swap with Hyundai Cement Co., Ltd. |
| 25,178 |
Cash inflows and outflows from income tax, interest and dividends for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Activities | 2015 | 2014 | |||||||||
Income tax paid |
Operating | ₩ | 99,296 | ₩ | 303,291 | |||||||
Interest received |
Operating | 8,956,307 | 10,204,384 | |||||||||
Interest paid |
Operating | 4,063,499 | 4,834,915 | |||||||||
Dividends received |
Operating | 84,765 | 82,897 | |||||||||
Dividends paid |
Financing | 230,496 | 158,517 |
144
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
37. | Contingent liabilities and commitments |
Acceptances and guarantees as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Confirmed acceptances and guarantees |
||||||||
Confirmed acceptances and guarantees in Korean won |
||||||||
Acceptances and guarantees for KB purchasing loan |
₩ | 422,316 | ₩ | 428,815 | ||||
Others |
609,034 | 669,233 | ||||||
|
|
|
|
|||||
1,031,350 | 1,098,048 | |||||||
|
|
|
|
|||||
Confirmed acceptances and guarantees in foreign currencies |
||||||||
Acceptances of letter of credit |
250,647 | 327,963 | ||||||
Letter of guarantees |
51,500 | 61,081 | ||||||
Bid bond |
62,402 | 43,362 | ||||||
Performance bond |
1,006,304 | 1,087,394 | ||||||
Refund guarantees |
1,924,030 | 1,494,023 | ||||||
Others |
1,444,618 | 959,685 | ||||||
|
|
|
|
|||||
4,739,501 | 3,973,508 | |||||||
|
|
|
|
|||||
Financial guarantees |
||||||||
Acceptances and guarantee for issue of debentures |
51,200 | 51,200 | ||||||
Acceptances and guarantees for mortgage |
27,805 | 75,651 | ||||||
Overseas debt guarantees |
374,769 | 392,021 | ||||||
International financing guarantees in foreign currencies |
11,893 | 35,949 | ||||||
Others |
| 600 | ||||||
|
|
|
|
|||||
465,667 | 555,421 | |||||||
|
|
|
|
|||||
6,236,518 | 5,626,977 | |||||||
|
|
|
|
|||||
Unconfirmed acceptances and guarantees |
||||||||
Guarantees of letter of credit |
2,142,496 | 2,825,919 | ||||||
Refund guarantees |
1,019,116 | 1,060,413 | ||||||
|
|
|
|
|||||
3,161,612 | 3,886,332 | |||||||
|
|
|
|
|||||
₩ | 9,398,130 | ₩ | 9,513,309 | |||||
|
|
|
|
Acceptances and guarantees by counterparty as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||
2015 | ||||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) |
|||||||||||||
Large companies |
₩ | 5,238,851 | ₩ | 2,489,134 | ₩ | 7,727,985 | 82.23 | |||||||||
Small medium sized companies |
833,355 | 517,703 | 1,351,058 | 14.38 | ||||||||||||
Public and others |
164,312 | 154,775 | 319,087 | 3.39 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 6,236,518 | ₩ | 3,161,612 | ₩ | 9,398,130 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
145
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) |
|||||||||||||
Large companies |
₩ | 4,611,841 | ₩ | 2,936,635 | ₩ | 7,548,476 | 79.35 | |||||||||
Small medium sized companies |
857,004 | 562,655 | 1,419,659 | 14.92 | ||||||||||||
Public and others |
158,132 | 387,042 | 545,174 | 5.73 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,626,977 | ₩ | 3,886,332 | ₩ | 9,513,309 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
Acceptances and guarantees by industry as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||
2015 | ||||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) | |||||||||||||
Financial institutions |
₩ | 108,031 | ₩ | 3,664 | ₩ | 111,695 | 1.19 | |||||||||
Manufacturing |
3,559,955 | 1,934,904 | 5,494,859 | 58.47 | ||||||||||||
Service |
584,333 | 68,494 | 652,827 | 6.95 | ||||||||||||
Wholesale and retail |
1,285,101 | 796,109 | 2,081,210 | 22.14 | ||||||||||||
Construction |
606,099 | 200,976 | 807,075 | 8.59 | ||||||||||||
Public |
73,160 | 106,288 | 179,448 | 1.91 | ||||||||||||
Others |
19,839 | 51,177 | 71,016 | 0.75 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 6,236,518 | ₩ | 3,161,612 | ₩ | 9,398,130 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) | |||||||||||||
Financial institutions |
₩ | 125,350 | ₩ | 3,573 | ₩ | 128,923 | 1.36 | |||||||||
Manufacturing |
3,179,368 | 2,410,472 | 5,589,840 | 58.76 | ||||||||||||
Service |
583,302 | 114,645 | 697,947 | 7.34 | ||||||||||||
Wholesale and retail |
932,282 | 788,804 | 1,721,086 | 18.09 | ||||||||||||
Construction |
709,582 | 215,382 | 924,964 | 9.72 | ||||||||||||
Public |
72,964 | 336,484 | 409,448 | 4.30 | ||||||||||||
Others |
24,129 | 16,972 | 41,101 | 0.43 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,626,977 | ₩ | 3,886,332 | ₩ | 9,513,309 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
146
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Commitments as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||
2015 | 2014 | |||||||
Commitments |
||||||||
Corporate loan commitments |
₩ | 39,088,006 | ₩ | 42,975,974 | ||||
Retail loan commitments |
15,051,360 | 13,846,701 | ||||||
Other acceptance and guarantees in Korean won |
1,000,000 | 1,000,000 | ||||||
Other purchase of security investment |
1,613,287 | 1,635,657 | ||||||
|
|
|
|
|||||
56,752,653 | 59,458,332 | |||||||
|
|
|
|
|||||
Financial Guarantees |
||||||||
Credit line |
3,449,749 | 3,809,478 | ||||||
Purchase of security investment |
98,700 | 73,500 | ||||||
|
|
|
|
|||||
3,548,449 | 3,882,978 | |||||||
|
|
|
|
|||||
₩ | 60,301,102 | ₩ | 63,341,310 | |||||
|
|
|
|
Other Matters (including litigation)
a) The Bank has filed 59 lawsuits (excluding minor lawsuits in relation to the collection or management of loans), as the plaintiff, involving aggregate claims of ₩388,395 million, and faces 165 lawsuits as the defendant (excluding minor lawsuits in relation to the collection or management of loans) involving aggregate damages of ₩321,176 million, which arose in the normal course of the business and are still pending as of December 31, 2015.
b) According to shareholders agreement on September 25, 2009, among the Bank, the International Finance Corporation (IFC) and the remaining shareholders, the 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 the 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 values of the securities sold to general customers through tellers sale amount to ₩11,254 million and ₩26,487 million as of December 31, 2015 and 2014, respectively.
d) The Bank filed a claim for rectification of education tax paid for revenues regarding the credit card business before the spin-off. The claim was ruled in favor of the Bank by the Supreme Court in December 2012, and the refunded education tax amounting to ₩83,100 million was recognized as revenue.
Depending on the judgments of the court or the National Tax Service, the beneficiary of refunded education tax may be changed from the Bank to KB Kookmin Card Co., Ltd. However, the possibility of such event is considered relatively low.
147
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
e) During the year ended December 31, 2013, the Bank underwent a tax audit for the fiscal years 2008 to 2012 by the Seoul Regional Tax Office. As a result, the Bank was assessed a total of ₩124,357 million for underpaid income taxes (including local income taxes). Thereafter, the Bank paid ₩123,330 million, excluding local income tax amounting to ₩1,027 million recognized as non-trade payable as of December 31, 2015. Subsequently, the Bank has appealed to the tax tribunal for the amount of ₩114,283 million in connection with the above tax assessment. The appeal is pending as of December 31, 2015.
38. | Subsidiaries |
The details of subsidiaries as of December 31, 2015, are as follows:
Name of subsidiaries | Ownership (%) | Location | Industry | |||||
Kookmin Bank Intl Ltd.(London) |
100.00 | United Kingdom | Banking and foreign exchange transaction | |||||
Kookmin Bank Hong Kong Ltd. |
100.00 | Hong Kong | Banking and foreign exchange transaction | |||||
Kookmin Bank Cambodia PLC. |
100.00 | Cambodia | Banking and foreign exchange transaction | |||||
Kookmin Bank (China) Ltd. |
100.00 | China | Banking and foreign exchange transaction | |||||
Personal pension trust and 10 others 1 |
| Korea | Trust | |||||
Samho Kyungwon Co., Ltd. and 3 others 2 |
| Korea | Asset-backed securitization and others | |||||
KB Haeorum Private securities 26 and 6 others 3 |
100.00 | Korea | Private equity fund | |||||
KB Wise Star Private Real Estate Feeder Fund 1 3 |
86.00 | Korea | Investment Trust | |||||
KB Star Retail Private Real Estate Master Fund 1 2,4 |
42.12 | Korea | Investment Trust | |||||
KB Star Office Private Real Estate Master Fund 2 2,4 |
38.22 | Korea | Investment Trust |
1 | The Bank 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 Bank 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 | The Bank 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. |
4 | Ownerships are based on consolidated basis. |
148
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The condensed financial information of major subsidiaries as of December 31, 2015 and 2014, and for the years ended December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||
Assets | Liabilities | Equity | Operating revenue |
Profit (Loss) for the period |
||||||||||||||||
Kookmin Bank Intl Ltd.(London) |
₩ | 472,941 | ₩ | 388,623 | ₩ | 84,318 | ₩ | 10,756 | ₩ | 3,484 | ||||||||||
Kookmin Bank Hong Kong Ltd. |
684,994 | 529,847 | 155,147 | 14,529 | 5,127 | |||||||||||||||
Kookmin Bank Cambodia PLC. |
88,675 | 63,851 | 24,824 | 5,850 | 2,054 | |||||||||||||||
Kookmin Bank (China) Ltd. |
1,663,788 | 1,231,463 | 432,325 | 42,269 | (8,465 | ) | ||||||||||||||
Personal pension trust and 10 others |
3,803,511 | 3,704,365 | 99,146 | 129,956 | 3,664 |
(In millions of Korean won) | 2014 | |||||||||||||||||||
Assets | Liabilities | Equity | Operating revenue |
Profit(Loss) for the period |
||||||||||||||||
Kookmin Bank Intl Ltd.(London) |
₩ | 441,292 | ₩ | 365,483 | ₩ | 75,809 | ₩ | 11,069 | ₩ | 3,466 | ||||||||||
Kookmin Bank Hong Kong Ltd. |
639,509 | 498,960 | 140,549 | 16,495 | 8,616 | |||||||||||||||
Kookmin Bank Cambodia PLC. |
95,864 | 74,578 | 21,286 | 6,021 | 266 | |||||||||||||||
Kookmin Bank (China) Ltd. |
1,259,847 | 846,151 | 413,696 | 43,507 | 7,984 | |||||||||||||||
Personal pension trust and 10 others |
3,667,615 | 3,571,818 | 95,797 | 167,608 | (443 | ) |
Nature of the risks associated with interests in consolidated structured entities
Terms of contractual arrangements that provide financial support to a consolidated structured entity
| The Bank provides the capital commitment of ₩258,000 million to KB Wise Star Private Real Estate Feeder Fund 1st, of which ₩185,717 million has not been utilized. Based on the investment agreement, the Bank is subject to increase its investment upon the request of the asset management company or the additional agreement among investors. |
| The Bank provides the guarantees of payment of principal or principal and fixed rate of return, in case the operating results of the trusts are less than the guaranteed principal or principal and a fixed rate of return. |
149
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Changes in subsidiaries
The condonation of the debt of KAMCO Value Recreation 3rd Securitization Specialty Co., Ltd. was made and it was excluded from the consolidation during the year ended December 31, 2015. KB Mortgage Loan No. 1 Limited, KB Covered Bond First International Limited, Heungkuk Multi Private Securities H-19 and 30 other private securities were excluded from the consolidation due to their respective liquidation during the year ended December 31, 2015.
39. | Unconsolidated Structured Entity |
As of December 31, 2015, 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 collection securitization assets Issuance and repayment of ABS and ABCP |
Issuance of ABS and ABCP based on securitization assets | |||
Project Financing | Granting PF loans related to SOC and real property Granting loans to ships/aircrafts SPC |
Construction of SOC and real property Building ships/ Construction and purchase of aircrafts |
Loan commitments through Credit Line, providing lines of credit and investment agreements | |||
Investment funds | Investment in beneficiary certificates Investment in PEF and partnerships |
Management of fund assets Payment of fund fees and allocation of fund profits |
Sales of beneficiary certificate instruments Investment of general partners and limited partners |
150
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
As of December 31, 2015 and 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) | ||||||||||||||||||||
2015 | ||||||||||||||||||||
Asset-backed securitization |
Project Financing |
Investment funds |
Others | Total | ||||||||||||||||
Total assets of the unconsolidated structured entities |
₩ | 51,915,323 | ₩ | 22,279,763 | ₩ | 10,208,708 | ₩ | 5,969,463 | ₩ | 90,373,257 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amount on financial statements |
||||||||||||||||||||
Assets |
||||||||||||||||||||
Financial assets at fair value through profit or loss |
₩ | 218,496 | ₩ | | ₩ | | ₩ | | ₩ | 218,496 | ||||||||||
Derivative financial assets |
373 | | | | 373 | |||||||||||||||
Loans |
178,863 | 2,512,158 | | 373,760 | 3,064,781 | |||||||||||||||
Financial investments |
9,324,629 | 7,867 | 1,413,044 | 18,303 | 10,763,843 | |||||||||||||||
Investments in associates |
| | 407,319 | | 407,319 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 9,722,361 | ₩ | 2,520,025 | ₩ | 1,820,363 | ₩ | 392,063 | ₩ | 14,454,812 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Deposits |
₩ | 258,554 | ₩ | 728,059 | ₩ | 15,159 | ₩ | 19,743 | ₩ | 1,021,515 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 258,554 | ₩ | 728,059 | ₩ | 15,159 | ₩ | 19,743 | ₩ | 1,021,515 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Maximum exposure to loss1 |
₩ | 13,281,642 | ₩ | 3,768,352 | ₩ | 3,482,225 | ₩ | 421,864 | ₩ | 20,954,083 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Methods of determining the maximum exposure to loss |
|
Providing lines of credit and purchase commitments |
|
|
Loan commitments / capital commitments / purchase commitments and Acceptances and guarantees |
|
|
Capital commitments |
|
|
Loan commitments |
|
151
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||||||||||
2014 | ||||||||||||||||||||
Asset-backed securitization |
Project Financing |
Investment funds |
Others | Total | ||||||||||||||||
Total assets of the unconsolidated structured entities |
₩ | 9,953,552 | ₩ | 19,901,366 | ₩ | 6,072,832 | ₩ | 5,923,270 | ₩ | 41,851,020 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amount on financial statements |
||||||||||||||||||||
Assets |
||||||||||||||||||||
Loans |
₩ | 192,619 | ₩ | 2,315,744 | ₩ | | ₩ | 252,195 | ₩ | 2,760,558 | ||||||||||
Financial investments |
564,156 | 13,778 | 912,042 | 17,000 | 1,506,976 | |||||||||||||||
Investments in associates |
| | 387,510 | | 387,510 | |||||||||||||||
Other assets |
2 | | | | 2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 756,777 | ₩ | 2,329,522 | ₩ | 1,299,552 | ₩ | 269,195 | ₩ | 4,655,046 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Deposits |
₩ | 300,015 | ₩ | 500,538 | ₩ | 15,834 | ₩ | 32,986 | ₩ | 849,373 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 300,015 | ₩ | 500,538 | ₩ | 15,834 | ₩ | 32,986 | ₩ | 849,373 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Maximum exposure to loss1 |
₩ | 4,719,103 | ₩ | 4,581,520 | ₩ | 3,597,876 | ₩ | 491,313 | ₩ | 13,389,812 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Methods of determining the maximum exposure to loss |
|
Providing lines of credit and purchase commitments |
|
|
Loan commitments / capital commitments / purchase commitments and Acceptances and guarantees |
|
|
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 consolidated financial statements of the Group. |
152
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
40. | Finance and Operating Leases |
40.1 Finance lease
The future minimum lease payments as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Net carrying amount of finance lease assets |
₩ | 32,583 | ₩ | 44,138 | ||||
|
|
|
|
|||||
Minimum lease payments |
||||||||
Within 1 year |
₩ | 1,983 | ₩ | 11,902 | ||||
1-5 years |
226 | 1,637 | ||||||
|
|
|
|
|||||
₩ | 2,209 | ₩ | 13,539 | |||||
|
|
|
|
|||||
Present value of minimum lease payments |
||||||||
Within 1 year |
₩ | 1,950 | ₩ | 11,632 | ||||
1-5 years |
222 | 1,609 | ||||||
|
|
|
|
|||||
₩ | 2,172 | ₩ | 13,241 | |||||
|
|
|
|
40.2 Operating lease
40.2.1 The Group as operating lessee
The future minimum lease payments arising from the non-cancellable lease contracts as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Minimum lease payments |
||||||||
Within 1 year |
₩ | 107,696 | ₩ | 107,806 | ||||
1-5 years |
92,729 | 90,191 | ||||||
Over 5 years |
34,679 | 34,439 | ||||||
|
|
|
|
|||||
₩ | 235,104 | ₩ | 232,436 | |||||
|
|
|
|
|||||
Minimum sublease payments |
₩ | (1,340 | ) | ₩ | (703 | ) |
The lease payments reflected in profit or loss for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Lease payment reflected in profit or loss |
||||||||
Minimum lease payment |
₩ | 167,053 | ₩ | 191,285 | ||||
Sublease payment |
(721 | ) | (540 | ) | ||||
|
|
|
|
|||||
₩ | 166,332 | ₩ | 190,745 | |||||
|
|
|
|
153
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
40.2.2 The Group as operating lessor
The future minimum lease receipts arising from the non-cancellable lease contracts as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Minimum lease receipts |
||||||||
Within 1 year |
₩ | 9,212 | ₩ | 9,445 | ||||
1-5 years |
9,866 | 15,636 | ||||||
|
|
|
|
|||||
₩ | 19,078 | ₩ | 25,081 | |||||
|
|
|
|
41. Related Party Transactions
Profit and loss arising from transactions with related parties for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||
2015 | 2014 | |||||||||
Parent |
||||||||||
KB Financial Group Inc. |
Fee and commission income |
₩ | 719 | ₩ | 273 | |||||
Other non-operating income |
999 | 1,400 | ||||||||
Interest expense |
2,429 | 1,961 | ||||||||
Parents subsidiaries |
||||||||||
KB Investment Co., Ltd. |
Interest expense |
590 | 766 | |||||||
KB Data System Co., Ltd. |
Fee and commission income |
1 | 1 | |||||||
Other non-operating income |
47 | 49 | ||||||||
Interest expense |
267 | 345 | ||||||||
General and administrative expenses |
14,160 | 13,189 | ||||||||
KB Real Estate Trust Co., Ltd. |
Fee and commission income |
4 | 4 | |||||||
Other non-operating income |
41 | 43 | ||||||||
Interest expense |
904 | 533 | ||||||||
Fee and commission expense |
956 | 766 | ||||||||
KB Life Insurance Co., Ltd. |
Fee and commission income |
19,591 | 15,118 | |||||||
Other non-operating income |
56 | 119 | ||||||||
Interest expense |
1,151 | 229 | ||||||||
KB Credit Information Co., Ltd. |
Fee and commission income |
187 | 4 | |||||||
Other non-operating income |
324 | 409 | ||||||||
Interest expense |
197 | 313 | ||||||||
Fee and commission expense |
18,442 | 14,829 | ||||||||
KB Asset Management Co., Ltd. |
Fee and commission income |
607 | 472 | |||||||
Other non-operating income |
| 2 | ||||||||
Interest expense |
1,148 | 1,724 | ||||||||
Fee and commission expense |
835 | 786 |
154
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
KB Investment and Securities Co., Ltd. |
Interest income |
159 | 245 | |||||||
Fee and commission income |
3,694 | 3,353 | ||||||||
Other non-operating income |
928 | 664 | ||||||||
Reversal of credit losses |
11 | 1 | ||||||||
Interest expense |
2,282 | 3,712 | ||||||||
Fee and commission expense |
635 | 703 | ||||||||
Losses on financial assets/ liabilities at fair value through profit or loss |
| 2 | ||||||||
Other operating expense |
10 | | ||||||||
Provision for credit losses |
9 | 1 | ||||||||
KB Kookmin Card Co., Ltd. |
Interest income |
3,010 | 2,912 | |||||||
Fee and commission income |
245,202 | 222,644 | ||||||||
Reversal of credit losses |
416 | | ||||||||
Other non-operating income |
1,126 | 1,556 | ||||||||
Interest expense |
5,690 | 7,753 | ||||||||
Fee and commission expense |
141 | 338 | ||||||||
Provision for credit losses |
415 | | ||||||||
General and administrative expenses |
| 180 | ||||||||
KB Savings Bank Co., Ltd. |
Fee and commission income |
81 | 105 | |||||||
Other non-operating income |
15 | 7 | ||||||||
KB Capital Co., Ltd. |
Fee and commission income |
243 | 129 | |||||||
Gains on financial assets/liabilities at fair value through profit or loss |
| 6 | ||||||||
Other non-operating income |
89 | 49 | ||||||||
Interest expense |
2 | 1 | ||||||||
KB Mezzanine Private Securities Fund |
Fee and commission income |
203 | 758 | |||||||
Hanbando BTL Private Special Asset Fund |
Fee and commission income |
203 | 195 | |||||||
KB Senior Loan Private Fund |
Fee and commission income |
23 | | |||||||
Associates |
||||||||||
KB12-1 Venture Investment Partnership |
Interest expense |
107 | 134 | |||||||
Korea Credit Bureau Co., Ltd. |
Fee and commission income |
3 | 3 | |||||||
Interest expense |
73 | 66 | ||||||||
UAMCO., Ltd. |
Fee and commission income |
14 | 14 | |||||||
Interest expense |
8 | 12 | ||||||||
United PF 1st Recovery Private Equity Fund |
Interest income |
49 | | |||||||
Incheon Bridge Co., Ltd. |
Interest income |
12,843 | 13,226 | |||||||
Reversal of credit losses |
2 | | ||||||||
Provision for credit losses |
| 2 | ||||||||
Interest expense |
436 | 543 | ||||||||
Future Planning KB Start-up Creation Fund |
Interest expense |
| 19 | |||||||
KB Star Office Private Real Estate Investment Trust No.1 |
Interest expense |
92 | 50 |
155
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Associate of parent |
||||||||||
KB Insurance Co., Ltd. |
Interest income |
50 | | |||||||
Fee and commission income |
2,456 | | ||||||||
Gains on financial assets/liabilities at fair value through profit or loss |
2,761 | | ||||||||
Other non-operating income |
10 | | ||||||||
Interest expense |
164 | | ||||||||
Losses on financial assets/liabilities at fair value through profit or loss |
164 | | ||||||||
General and administrative expenses |
2,633 | | ||||||||
Associates of parents subsidiaries |
||||||||||
Semiland Co., Ltd. 1 |
Interest income |
| 8 | |||||||
Reversal of credit losses |
| 4 | ||||||||
KB IC 3rd Private Equity Fund |
Interest expense |
23 | 38 | |||||||
KB No.2 Special Purpose Acquisition Company 1 |
Interest expense |
| 1 | |||||||
KB No.3 Special Purpose Acquisition Company |
Interest expense |
5 | 6 | |||||||
KB No.4 Special Purpose Acquisition Company |
Interest expense |
25 | 9 | |||||||
KB No.5 Special Purpose Acquisition Company |
Interest expense |
44 | 4 | |||||||
KB No.6 Special Purpose Acquisition Company |
Interest expense |
66 | 4 | |||||||
KB No.7 Special Purpose Acquisition Company |
Interest expense |
38 | | |||||||
KB No.8 Special Purpose Acquisition Company |
Interest expense |
21 | | |||||||
KB No.9 Special Purpose Acquisition Company |
Interest expense |
7 | | |||||||
SAWNICS Inc. |
Interest expense |
1 | | |||||||
eClear International Co., Ltd. 1 |
Interest income |
18 | | |||||||
SY Auto Capital Co., Ltd. |
Interest expense |
24 | | |||||||
Other |
||||||||||
Retirement pension |
Fee and commission income |
611 | 448 | |||||||
Interest expense |
955 | 788 |
1 | Not considered to be the Groups related party as of December 31, 2015. |
The details of receivables and payables, and related allowances for loan losses arising from the related party transactions as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||
2015 | 2014 | |||||||||
Parent |
||||||||||
KB Financial Group Inc. |
Other assets |
₩ | 41,442 | ₩ | 465 | |||||
Deposits |
324,947 | 30,739 | ||||||||
Other liabilities |
54,619 | 224,763 | ||||||||
Parents subsidiaries |
||||||||||
KB Investment Co., Ltd. |
Deposits |
37,125 | 37,219 | |||||||
Other liabilities |
117 | 198 | ||||||||
KB Data System Co., Ltd. |
Other assets |
893 | 1,037 | |||||||
Deposits |
18,028 | 19,790 | ||||||||
Other liabilities |
1,242 | 1,214 |
156
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
KB Real Estate Trust Co., Ltd. |
Deposits |
24,025 | 96,087 | |||||||
Other liabilities |
405 | 651 | ||||||||
KB Life Insurance Co., Ltd. |
Other assets |
1,218 | 1,342 | |||||||
Deposits |
255 | 57 | ||||||||
Debts |
25,000 | 30,000 | ||||||||
Other liabilities |
103 | 41 | ||||||||
KB Credit Information Co., Ltd. |
Other assets |
183 | | |||||||
Deposits |
5,864 | 6,766 | ||||||||
Other liabilities |
6,226 | 6,193 | ||||||||
KB Asset Management Co., Ltd. |
Other assets |
169 | 127 | |||||||
Deposits |
74,062 | 69,453 | ||||||||
Other liabilities |
438 | 439 | ||||||||
KB Investment and Securities Co., Ltd. |
Cash and due from financial institutions |
282 | 945 | |||||||
Gross amounts of loans and receivables |
8,438 | 34,997 | ||||||||
Allowances |
3 | 15 | ||||||||
Other assets |
402 | 327 | ||||||||
Deposits |
117,257 | 105,449 | ||||||||
Other liabilities |
5,134 | 8,993 | ||||||||
Provisions |
13 | 4 | ||||||||
KB Kookmin Card Co., Ltd. |
Other assets |
26,891 | 27,382 | |||||||
Deposits |
385,060 | 454,205 | ||||||||
Other liabilities |
64,136 | 36,546 | ||||||||
Provisions |
415 | 416 | ||||||||
KB Savings Bank Co., Ltd. |
Other assets |
17 | 14 | |||||||
Other liabilities |
371 | | ||||||||
KB Capital Co., Ltd. |
Other assets |
11 | 5 | |||||||
Deposits |
741 | 534 | ||||||||
KB Mezzanine Private Securities Fund |
Other assets |
27 | 167 | |||||||
Hanbando BTL Private Special Asset Fund |
Other assets |
46 | 49 | |||||||
KB Senior Loan Private Fund |
Other assets |
11 | | |||||||
Associates |
||||||||||
KB12-1 Venture Investment Partnership |
Deposits |
5,753 | 9,767 | |||||||
Other liabilities |
4 | 10 | ||||||||
Korea Credit Bureau Co., Ltd. |
Deposits |
19,435 | 24,715 | |||||||
Other liabilities |
22 | 17 | ||||||||
UAMCO., Ltd |
Deposits |
815 | 1,654 | |||||||
Incheon Bridge Co., Ltd. |
Gross amounts of loans and receivables |
231,653 | 247,870 | |||||||
Allowances |
300 | 302 | ||||||||
Other assets |
970 | 1,144 | ||||||||
Deposits |
35,916 | 35,421 | ||||||||
Other liabilities |
153 | 249 | ||||||||
JSC Bank CenterCredit |
Cash and due from financial institutions |
1,225 | 178 | |||||||
Terra Corporation |
Deposits |
1 | 1 | |||||||
DPAPS Co., Ltd. |
Deposits |
3 | | |||||||
EJADE Co., Ltd. |
Deposits |
12 | | |||||||
Doosung Metal Co., Ltd |
Deposits |
1 | | |||||||
KB Star office Private real estate Investment Trust No.1 |
Deposits |
7,446 | 6,067 | |||||||
Other liabilities |
56 | |
157
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Associate of Parent |
||||||||||
KB Insurance Co., Ltd. |
Other assets |
6,503 | | |||||||
Derivative assets1 |
2,059 | | ||||||||
Deposits |
8,415 | | ||||||||
Provisions |
30 | | ||||||||
Other liabilities |
789 | | ||||||||
Derivative liabilities1 |
219 | | ||||||||
Associates of Parents subsidiaries |
||||||||||
KB IC 3rd Private Equity Fund |
Deposits |
850 | 1,400 | |||||||
Other liabilities |
9 | 24 | ||||||||
KB No.3 Special Purpose Acquisition Company2 |
Deposits |
| 832 | |||||||
Other liabilities |
| 6 | ||||||||
KB No.4 Special Purpose Acquisition Company2 |
Deposits |
| 2,500 | |||||||
Other liabilities |
| 1 | ||||||||
KB No.5 Special Purpose Acquisition Company |
Deposits |
2,323 | 2,389 | |||||||
Other liabilities |
39 | 1 | ||||||||
KB No.6 Special Purpose Acquisition Company |
Deposits |
4,195 | 4,406 | |||||||
Other liabilities |
68 | 3 | ||||||||
KB No.7 Special Purpose Acquisition Company |
Deposits |
2,336 | | |||||||
Other liabilities |
37 | | ||||||||
KB No.8 Special Purpose Acquisition Company |
Deposits |
2,373 | | |||||||
Other liabilities |
21 | | ||||||||
KB No.9 Special Purpose Acquisition Company |
Deposits |
2,973 | | |||||||
Other liabilities |
7 | | ||||||||
SAWNICS Inc. |
Deposits |
319 | | |||||||
SY Auto Capital Co., Ltd. |
Deposits |
1,845 | | |||||||
Key management | Gross amounts of loans and receivables |
2,280 | 2,325 | |||||||
Other assets |
3 | 3 | ||||||||
Deposits |
4,114 | 18,378 | ||||||||
Other liabilities |
29 | 171 | ||||||||
Others | ||||||||||
Retirement pension |
Other assets |
264 | 191 | |||||||
Deposits |
51,920 | 41,412 | ||||||||
Other liabilities |
37,969 | 246 |
1 | Notional amount related to derivative assets and liabilities is \ 56,798 million as of December 31, 2015. |
2 | Not considered to be the Groups related party as of December 31, 2015. |
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 the Bank and companies where the directors and /or their close family members have control or joint control.
158
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Significant loan transactions with related parties for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 20151 | |||||||||||||||||||
Beginning | Loans | Repayments | Others | Ending | ||||||||||||||||
Parents subsidiary |
||||||||||||||||||||
KB Kookmin Card Co., Ltd. |
₩ | | ₩ | 4,005 | ₩ | 4,005 | ₩ | | ₩ | | ||||||||||
KB Investment and Securities Co., Ltd. |
34,997 | 14,094 | 40,653 | | 8,438 | |||||||||||||||
Associate |
||||||||||||||||||||
Incheon Bridge Co., Ltd. |
247,870 | 8,000 | 24,217 | | 231,653 | |||||||||||||||
(In millions of Korean won) | 20141 | |||||||||||||||||||
Beginning | Loans | Repayments | Others | Ending | ||||||||||||||||
Parents subsidiary |
||||||||||||||||||||
KB Investment and Securities Co., Ltd. |
₩ | 32,995 | ₩ | 2,002 | ₩ | | ₩ | | ₩ | 34,997 | ||||||||||
Associate |
||||||||||||||||||||
Incheon Bridge Co., Ltd. |
249,362 | 12,360 | 13,852 | | 247,870 |
1 | Transactions and balances arising from operating activities between related parties, such as settlements, are excluded. |
The settlement transactions and deposits arising from operating activities with related parties are excluded and there are no other borrowing transactions.
Unused commitments provided to related parties as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||
Parents subsidiary |
||||||||||
KB Investment and Securities Co., Ltd. |
Loan commitment in won |
₩ | 39,062 | ₩ | 12,503 | |||||
KB Investment Co., Ltd. |
Commitments on purchase of security investment |
600 | | |||||||
Loss sharing agreements |
1,000 | | ||||||||
KB Kookmin Card Co., Ltd. |
Loan commitment in won |
520,000 | 520,000 | |||||||
Other commitments in won |
1,000,000 | 1,000,000 | ||||||||
KB Mezzanine Private Securities Fund |
Commitments on purchase of security investment |
18,359 | 18,359 | |||||||
KB Mezzanine Private Security Investment Trust No.2 |
Commitments on purchase of security investment |
51,048 | 70,312 | |||||||
Hanbando BTL Private Special Asset Fund |
Commitments on purchase of security investment |
15,931 | 15,931 | |||||||
KB Hope Sharing BTL Private Special Asset Fund |
Commitments on purchase of security investment |
48,045 | 48,045 | |||||||
KB Senior Loan Private Fund |
Commitments on purchase of security investment |
64,964 | |
159
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Associates |
||||||||||
Balhae Infrastructure Fund |
Commitments on purchase of security investment |
18,098 | 21,744 | |||||||
UAMCO., Ltd. |
Commitments on purchase of security investment |
89,950 | 89,950 | |||||||
KB12-1 Venture Investment Partnership |
Commitments on purchase of security investment |
| 11,200 | |||||||
KoFC POSCO HANHWA KB shared growth Private Equity Fund |
Commitments on purchase of security investment |
13,040 | 19,000 | |||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
Commitments on purchase of security investment |
1,290 | 1,290 | |||||||
United PF 1st Recovery Private Equity Fund |
Commitments on purchase of security investment |
49,383 | 49,383 | |||||||
KB GwS Private Equity Trust |
Commitments on purchase of security investment |
| 876 | |||||||
Incheon Bridge Co., Ltd. |
Loan commitment in Korean won |
38,963 | 33,163 | |||||||
Future Planning KB Start-up Creation Fund |
Commitments on purchase of security investment |
8,000 | 16,000 | |||||||
JSC Bank CenterCreidt |
Loan commitment in foreign currencies |
117,200 | | |||||||
Associate of Parent |
||||||||||
KB Insurance Co., Ltd. |
Loan commitment in Korean won |
20,000 | | |||||||
Key management |
Loan commitment in Korean won |
223 | 372 |
Unused commitments received from related parties as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||
Parents subsidiaries |
||||||||||
KB Investment Co., Ltd. |
Loss sharing agreements |
₩ | 8,539 | ₩ | 5,917 | |||||
KB Real Estate Trust Co., Ltd. |
Commitments on purchase of security investment |
4,319 | 4,319 | |||||||
KB Life Insurance Co., Ltd. |
Commitments on purchase of security investment |
21,595 | 21,595 | |||||||
KB Investment and Securities Co., Ltd. |
Commitments on purchase of security investment |
4,319 | 4,319 | |||||||
KB Kookmin Card Co., Ltd. |
Loan commitment in won |
80,316 | 79,164 |
160
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Compensation to key management for the years ended December 31, 2015 and 2014, consists of:
(In millions of Korean won) | 2015 | |||||||||||||||
Short-term employee benefits |
Post- employment benefits |
Share-based payments |
Total | |||||||||||||
Registered directors (executive) |
₩ | 987 | ₩ | 59 | ₩ | 632 | ₩ | 1,678 | ||||||||
Registered directors (non-executive) |
304 | | | 304 | ||||||||||||
Non-registered directors |
3,943 | 57 | 2,814 | 6,814 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,234 | ₩ | 116 | ₩ | 3,446 | ₩ | 8,796 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2014 | |||||||||||||||
Short-term employee |
Post- employment benefits |
Share-based payments |
Total | |||||||||||||
Registered directors (executive) |
₩ | 1,405 | ₩ | 63 | ₩ | 1,162 | ₩ | 2,630 | ||||||||
Registered directors (non-executive) |
457 | | | 457 | ||||||||||||
Non-registered directors |
4,860 | 296 | 3,685 | 8,841 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 6,722 | ₩ | 359 | ₩ | 4,847 | ₩ | 11,928 | |||||||||
|
|
|
|
|
|
|
|
Significant operating transactions occurring between the Group and related parties include the establishment of deposit accounts, issuance of general purpose loans, loans on business transactions and trade receivables, and overdraft credit accounts arising from net settlement agreement between the Bank and KB Kookmin Card Co., Ltd.
Collateral offered to related parties as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||||||||||||
Assets pledged | Carrying amount |
Collateralized amount |
Carrying amount |
Collateralized amount |
||||||||||||||||
Parents subsidiaries |
||||||||||||||||||||
KB Investment and Securities Co., Ltd. |
Securities | ₩ | 54,042 | ₩ | 54,000 | ₩ | 54,084 | ₩ | 54,000 | |||||||||||
KB Life Insurance Co., Ltd. |
Securities | 16,263 | 15,000 | 16,326 | 15,000 | |||||||||||||||
Associate of Parents subsidiaries |
Building / Land | 426,885 | 45,500 | 114,609 | 39,000 | |||||||||||||||
KB Insurance Co., Ltd |
Building / Land | 216,284 | 26,000 | | |
161
Kookmin Bank and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Collateral received from related parties as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||
Parents subsidiaries |
||||||||||
KB Investment and Securities Co., Ltd. |
Time deposits |
₩ | 52,000 | ₩ | 52,440 | |||||
KB Kookmin Card Co., Ltd. |
Time deposits |
22,000 | 22,000 | |||||||
Associate |
||||||||||
Incheon Bridge Co., Ltd. |
Fund management account for Standby loan commitment |
65,000 | 65,000 | |||||||
Key management |
Time deposits and others |
249 | 257 | |||||||
Real estate |
2,662 | 3,583 |
As of December 31, 2015, Incheon Bridge Co., Ltd, a related party, provides fund management account, civil engineering completed risk insurance, shares and management rights as unsubordinated collateral in respect to collateralized amount for ₩816,400 million to a financial syndicate consisting of the Bank and four other institutions, and as subordinated collateral in respect to collateralized amount for ₩201,100 million to subordinated debt holders consisting of the Bank and two other institutions.
The Bank and KB Kookmin Card Co., Ltd. are contingently liable for the payables of the Bank before the spin-off date.
42. | Approval of Issuance of the Financial Statements |
The issuance of the Groups consolidated financial statements as of and for the year ended December 31, 2015, was approved by the Board of Directors on February 3, 2016.
162
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Separate Financial Statements
December 31, 2015 and 2014
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
December 31, 2015 and 2014
Page(s) | ||
1~2 | ||
Separate Financial Statements |
||
3 | ||
4 | ||
5 | ||
6 | ||
7~159 | ||
Report of Independent Auditors Review of Internal Accounting Control System |
160~161 | |
Report on the Operations of the Internal Accounting Control System |
162 |
(English Translation of a Report Originally Issued in Korean)
To the Shareholder and Board of Directors of Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
We have audited the accompanying separate financial statements of Kookmin Bank (the Bank), which comprise the separate statements of financial position as of December 31, 2015 and 2014, and the separate statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
Managements responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Korean Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
1
Opinion
In our opinion, the separate financial statements present fairly, in all material respects, the financial position of the Bank as of December 31, 2015 and 2014, and its financial performance and cash flows for the years then ended in accordance with Korean IFRS.
Other Matter
Auditing standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries.
Seoul, Korea
March 9, 2016
The report is effective as of March 9, 2016, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying separate financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.
2
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Separate Statements of Financial Position
December 31, 2015 and 2014
(In millions of Korean won) | Notes | 2015 | 2014 | |||||||
Assets |
||||||||||
Cash and due from financial institutions |
4,6,7,36 | ₩ | 13,546,149 | ₩ | 13,272,423 | |||||
Financial assets at fair value through profit or loss |
4,6,8,12 | 2,366,189 | 2,020,078 | |||||||
Derivative financial assets |
4,6,9 | 2,185,951 | 1,910,216 | |||||||
Loans |
4,6,8,10,11 | 222,410,080 | 210,835,577 | |||||||
Financial investments |
4,6,8,12 | 33,442,365 | 31,687,542 | |||||||
Investments in associates and subsidiaries |
13,38 | 1,235,724 | 1,262,575 | |||||||
Property and equipment |
14 | 2,906,786 | 2,886,277 | |||||||
Investment property |
14 | 87,889 | 85,342 | |||||||
Intangible assets |
15 | 175,554 | 199,420 | |||||||
Current income tax assets |
32 | 18,307 | 305,831 | |||||||
Assets held for sale |
18 | 33,795 | 54,034 | |||||||
Other assets |
4,6,17 | 7,119,582 | 6,733,330 | |||||||
|
|
|
|
|||||||
Total assets |
₩ | 285,528,371 | ₩ | 271,252,645 | ||||||
|
|
|
|
|||||||
Liabilities |
||||||||||
Financial liabilities at fair value through profit or loss |
4,6 | ₩ | 69,465 | ₩ | 51,650 | |||||
Derivative financial liabilities |
4,6,9 | 2,138,717 | 1,759,065 | |||||||
Deposits |
4,6,19 | 220,239,666 | 207,785,044 | |||||||
Debts |
4,6,20 | 14,210,939 | 14,334,655 | |||||||
Debentures |
4,6,21 | 15,949,134 | 15,250,464 | |||||||
Provisions |
22 | 449,368 | 482,399 | |||||||
Net defined benefit liabilities |
23 | 55,638 | 57,463 | |||||||
Current income tax liabilities |
32 | 282 | 1,338 | |||||||
Deferred income tax liabilities |
16,32 | 121,897 | 73,020 | |||||||
Other liabilities |
4,6,24,30 | 9,712,849 | 9,612,109 | |||||||
|
|
|
|
|||||||
Total liabilities |
262,947,955 | 249,407,207 | ||||||||
|
|
|
|
|||||||
Equity |
25 | |||||||||
Capital stock |
2,021,896 | 2,021,896 | ||||||||
Capital surplus |
5,220,031 | 5,220,031 | ||||||||
Accumulated other comprehensive income |
34 | 576,218 | 666,400 | |||||||
Retained earnings |
33 | 14,762,271 | 13,937,111 | |||||||
(Provision of regulatory reserve for credit losses |
||||||||||
December 31, 2015: ₩1,852,396 million |
||||||||||
December 31, 2014: ₩1,667,733 million) |
||||||||||
(Amounts estimated to be appropriated(reversed) |
||||||||||
December 31, 2015: ₩(25,743) million |
||||||||||
December 31, 2014: ₩184,663 million) |
||||||||||
|
|
|
|
|||||||
Total equity |
22,580,416 | 21,845,438 | ||||||||
|
|
|
|
|||||||
Total liabilities and equity |
₩ | 285,528,371 | ₩ | 271,252,645 | ||||||
|
|
|
|
The accompanying notes are an integral part of these separate financial statements.
3
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Separate Statements of Comprehensive Income
Years ended December 31, 2015 and 2014
(In millions of Korean won) | Notes | 2015 | 2014 | |||||||
Interest income |
₩ | 8,329,583 | ₩ | 9,641,139 | ||||||
Interest expense |
(3,565,310 | ) | (4,580,686 | ) | ||||||
|
|
|
|
|||||||
Net interest income |
26 | 4,764,273 | 5,060,453 | |||||||
|
|
|
|
|||||||
Fee and commission income |
1,378,037 | 1,278,691 | ||||||||
Fee and commission expense |
(206,985 | ) | (187,677 | ) | ||||||
|
|
|
|
|||||||
Net fee and commission income |
27 | 1,171,052 | 1,091,014 | |||||||
|
|
|
|
|||||||
Net gains on financial assets/liabilities at fair value through profit or loss |
28 | 144,155 | 163,900 | |||||||
|
|
|
|
|||||||
Net other operating expenses |
29 | (399,886 | ) | (685,859 | ) | |||||
|
|
|
|
|||||||
General and administrative expenses |
14,15,23,30,39 | (3,775,995 | ) | (3,340,495 | ) | |||||
|
|
|
|
|||||||
Operating profit before provision for credit losses |
1,903,599 | 2,289,013 | ||||||||
|
|
|
|
|||||||
Provision for credit losses |
11,17,22 | (740,028 | ) | (883,770 | ) | |||||
|
|
|
|
|||||||
Operating profit |
1,163,571 | 1,405,243 | ||||||||
Net non-operating income(expenses) |
31 | 151,096 | (13,517 | ) | ||||||
|
|
|
|
|||||||
Profit before income tax expense |
1,314,667 | 1,391,726 | ||||||||
Income tax expense |
32 | (259,011 | ) | (325,799 | ) | |||||
|
|
|
|
|||||||
Profit for the year |
1,055,656 | 1,065,927 | ||||||||
|
|
|
|
|||||||
(Adjusted profit after provision of regulatory reserve for credit losses |
25 | |||||||||
2015: ₩1,081,399 million |
||||||||||
2014: ₩881,264 million) |
||||||||||
Items that will not be reclassified to profit or loss: |
||||||||||
Remeasurements of net defined benefit liabilities |
23 | (14,494 | ) | (83,603 | ) | |||||
Items that may be subsequently reclassified to profit or loss: |
||||||||||
Currency translation adjustments |
1,957 | (4,865 | ) | |||||||
Valuation gains(losses) on financial investments |
(77,645 | ) | 211,723 | |||||||
|
|
|
|
|||||||
Other comprehensive income for the year, net of tax |
34 | (90,182 | ) | 123,255 | ||||||
|
|
|
|
|||||||
Total comprehensive income for the year |
₩ | 965,474 | ₩ | 1,189,182 | ||||||
|
|
|
|
The accompanying notes are an integral part of these separate financial statements.
4
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Separate Statements of Changes in Equity
Years ended December 31, 2015 and 2014
Accumulated | ||||||||||||||||||||
Other | ||||||||||||||||||||
(In millions of Korean won) | Capital | Capital | Comprehensive | Retained | Total | |||||||||||||||
Stock | Surplus | Income (loss) | Earnings | Equity | ||||||||||||||||
Balance at January 1, 2014 |
₩ | 2,021,896 | ₩ | 5,220,031 | ₩ | 543,145 | ₩ | 13,029,701 | ₩ | 20,814,773 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Comprehensive income for the year |
||||||||||||||||||||
Profit for the year |
| | | 1,065,927 | 1,065,927 | |||||||||||||||
Remeasurements of net defined benefit liabilities |
| | (83,603 | ) | | (83,603 | ) | |||||||||||||
Currency translation adjustments |
| | (4,865 | ) | | (4,865 | ) | |||||||||||||
Gains on valuation of financial investments |
| | 211,723 | | 211,723 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income for the year |
| | 123,255 | 1,065,927 | 1,189,182 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Transactions with shareholders |
||||||||||||||||||||
Dividends |
| | | (158,517 | ) | (158,517 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total transactions with shareholders |
| | | (158,517 | ) | (158,517 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at December 31, 2014 |
₩ | 2,021,896 | ₩ | 5,220,031 | ₩ | 666,400 | ₩ | 13,937,111 | ₩ | 21,845,438 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at January 1, 2015 |
₩ | 2,021,896 | ₩ | 5,220,031 | ₩ | 666,400 | ₩ | 13,937,111 | ₩ | 21,845,438 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Comprehensive income for the year |
||||||||||||||||||||
Profit for the year |
| | | 1,055,656 | 1,055,656 | |||||||||||||||
Remeasurements of net defined benefit liabilities |
| | (14,494 | ) | | (14,494 | ) | |||||||||||||
Currency translation adjustments |
| | 1,957 | | 1,957 | |||||||||||||||
Losses on valuation of financial investments |
| | (77,645 | ) | | (77,645 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income for the year |
| | (90,182 | ) | 1,055,656 | 965,474 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Transactions with shareholders |
||||||||||||||||||||
Dividends |
| | | (230,496 | ) | (230,496 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total transactions with shareholders |
| | | (230,496 | ) | (230,496 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at December 31, 2015 |
₩ | 2,021,896 | ₩ | 5,220,031 | ₩ | 576,218 | ₩ | 14,762,271 | ₩ | 22,580,416 | ||||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these separate financial statements.
5
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Separate Statements of Cash Flows
Years ended December 31, 2015 and 2014
(in millions of Korean won) | Notes | 2015 | 2014 | |||||||
Cash flows from operating activities |
||||||||||
Profit for the year |
₩ | 1,055,656 | ₩ | 1,065,927 | ||||||
|
|
|
|
|||||||
Adjustment for non-cash items |
||||||||||
Net gains on financial assets/liabilities at fair value through profit or loss |
(24,802 | ) | (56,918 | ) | ||||||
Losses on derivative financial investments for hedging purposes |
39,381 | 28,269 | ||||||||
Adjustment of fair value of derivative financial instruments |
1,771 | (2,040 | ) | |||||||
Provision for credit loss |
740,028 | 883,770 | ||||||||
Net losses(gains) on financial investments |
(201,811 | ) | 53,920 | |||||||
Net losses on subsidiaries and associates |
30,624 | 27,131 | ||||||||
Depreciation and amortization expense |
198,079 | 205,820 | ||||||||
Other net losses on property and equipment/intangible assets |
7,557 | 17,578 | ||||||||
Share-based payment |
11,915 | 7,234 | ||||||||
Post-employment benefits |
164,175 | 148,161 | ||||||||
Net interest income |
430,696 | 279,463 | ||||||||
Losses on foreign currency translation |
244,780 | 94,309 | ||||||||
Other expense |
54,409 | 30,010 | ||||||||
|
|
|
|
|||||||
1,696,802 | 1,716,707 | |||||||||
|
|
|
|
|||||||
Changes in operating assets and liabilities |
||||||||||
Financial assets at fair value through profit or loss |
(344,482 | ) | (241,575 | ) | ||||||
Derivative financial instrument |
91,296 | 46,490 | ||||||||
Loans |
(12,635,077 | ) | (9,485,920 | ) | ||||||
Current income tax assets |
287,524 | 23,612 | ||||||||
Other assets |
(502,619 | ) | 1,447,796 | |||||||
Financial liabilities at fair value through profit or loss |
17,742 | 11,441 | ||||||||
Deposits |
12,399,535 | 8,953,397 | ||||||||
Deferred income tax liabilities |
78,293 | (80,928 | ) | |||||||
Other liabilities |
(759,204 | ) | (1,012,427 | ) | ||||||
|
|
|
|
|||||||
(1,366,992 | ) | (338,114 | ) | |||||||
|
|
|
|
|||||||
Net cash generated from operating activities |
1,385,466 | 2,444,520 | ||||||||
|
|
|
|
|||||||
Cash flows from investing activities |
||||||||||
Disposal of financial investments |
21,518,082 | 25,010,417 | ||||||||
Acquisition of financial investments |
(23,159,824 | ) | (24,178,101 | ) | ||||||
Decrease in investments in associates and subsidiaries |
24,226 | 16,746 | ||||||||
Acquisition of investments in associates and subsidiaries |
(27,999 | ) | (16,216 | ) | ||||||
Disposal of property and equipment |
1,754 | 194 | ||||||||
Acquisition of property and equipment |
(174,014 | ) | (158,169 | ) | ||||||
Disposal of intangible assets |
3,519 | 119 | ||||||||
Acquisition of intangible assets |
(25,844 | ) | (17,674 | ) | ||||||
Others |
97,075 | (1,301,408 | ) | |||||||
|
|
|
|
|||||||
Net cash used in investing activities |
(1,743,025 | ) | (644,092 | ) | ||||||
|
|
|
|
|||||||
Cash flows from financing activities |
||||||||||
Net cash flows from derivative financial instrument for hedging purposes |
(3,849 | ) | (201,593 | ) | ||||||
Net increase (decrease) in debts |
(265,356 | ) | 678,608 | |||||||
Increase in debentures |
5,383,612 | 6,372,662 | ||||||||
Decrease in debentures |
(4,905,441 | ) | (7,154,229 | ) | ||||||
Payment of dividends |
(230,496 | ) | (158,517 | ) | ||||||
Net increase in other payables from trust accounts |
173,332 | 113,257 | ||||||||
Others |
20,033 | (945,244 | ) | |||||||
|
|
|
|
|||||||
Net cash provided by(used in) financing activities |
171,835 | (1,295,056 | ) | |||||||
|
|
|
|
|||||||
Exchange gains on cash and cash equivalents |
40,096 | 16,589 | ||||||||
|
|
|
|
|||||||
Net increase (decrease) in cash and cash equivalents |
(145,628 | ) | 521,961 | |||||||
Cash and cash equivalents at the beginning of the year |
36 | 6,160,060 | 5,638,099 | |||||||
|
|
|
|
|||||||
Cash and cash equivalents at the end of the year |
36 | ₩ | 6,014,432 | ₩ | 6,160,060 | |||||
|
|
|
|
The accompanying notes are an integral part of these separate financial statements.
6
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
1. | The Bank |
Kookmin Bank (the Bank) was incorporated in 1963 under the Citizens National Bank Act to provide banking services to the general public and to small and medium-sized enterprises. Pursuant to the Repeal Act of the Citizens National Bank Act, effective January 5, 1995, the Banks status changed to a financial institution which operates under the Banking Act and Commercial Act.
The Bank merged with Korea Long Term Credit Bank on December 31, 1998, and with its subsidiaries, Daegu, Busan, Jeonnam Kookmin Mutual Savings & Finance Co., Ltd., on August 22, 1999. Pursuant to the directive from the Financial Services Commission related to the Structural Improvement of the Financial Industry Act, the Bank acquired certain assets, including performing loans, and assumed most of the liabilities of Daedong Bank on June 29, 1998. Also, the Bank completed the merger with Housing and Commercial Bank (H&CB) on October 31, 2001, and merged with Kookmin Credit Card Co., Ltd., a majority-owned subsidiary, on September 30, 2003. Meanwhile, the Bank spun off its credit card business segment on February 28, 2011, and KB Kookmin Card Co., Ltd. became a subsidiary of KB Financial Group Inc.
The Bank listed its shares on the Stock Market Division of the Korea Exchange (KRX, formerly Korea Stock Exchange) in September 1994. As a result of the merger with H&CB, the shareholders of the former Kookmin Bank and H&CB received new common shares of the Bank which were relisted on the KRX on November 9, 2001. In addition, H&CB listed its American Depositary Shares (ADS) on the New York Stock Exchange (NYSE) on October 3, 2000, prior to the merger. Following the merger with H&CB, the Bank listed its ADS on the NYSE on November 1, 2001. The Bank became a wholly owned subsidiary of KB Financial Group Inc. through a comprehensive stock transfer on September 29, 2008. Subsequently, the Banks shares and its ADS, each listed on the KRX and the NYSE, were delisted on October 10, 2008 and September 26, 2008, respectively. As of December 31, 2015, the Banks paid-in capital is ₩2,021,896 million.
The Bank engages in the banking business in accordance with the Banking Act, trust business in accordance with the Financial Investment Services and Capital Markets Act, and other relevant businesses. As of December 31, 2015, the Bank operates 1,138 domestic branches and offices, and five overseas branches (excluding four subsidiaries and three offices).
7
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
2. | Basis of Preparation |
2.1 Application of Korean IFRS
The separate financial statements of the Bank have been prepared in accordance with Korean IFRS. These are the standards and related interpretations issued by the International Accounting Standards Board (IASB) that have been adopted by the Republic of Korea.
The Bank maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with Korean IFRS. The accompanying consolidated financial statements have been condensed, restructured and translated into English from the Korean language financial statements.
Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Banks financial position, financial performance or cash flows, is not presented in the accompanying consolidated financial statements.
The preparation of the separate financial statements requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the Banks accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate financial statements are disclosed in Note 2.4.
The Bank has prepared separate financial statements in accordance with Korean IFRS 1027, Separate Financial Statements.
The Bank newly applied the following new and amended standards and interpretations for the annual periods beginning on January 1, 2015, and these applications do not have a material impact on the separate financial statements.
| Amendment to Korean IFRS 1019, Employment Benefits |
| Annual improvements to Korean IFRS 2010-2012 Cycle |
| Annual improvements to Korean IFRS 2011-2013 Cycle |
Amendments to standards issued but not effective for the financial year beginning January 1, 2015, and not early adopted are enumerated below. The Bank expects that these standards and amendments would not have a material impact on its separate financial statements.
| Amendment to Korean IFRS 1001, Presentation of Financial Statements |
| Korean IFRS 1016, Property, plant and equipment, and Korean IFRS 1041, Agriculture and fishing: Productive plants |
| Korean IFRS 1016, Property, plant and equipment, and Korean IFRS 1038, Intangible assets: Amortization based on revenue |
| Korean IFRS 1110, Consolidated Financial Statements, and Korean IFRS 1028, Investments in Associates and Joint Arrangements |
| Korean IFRS 1111, Joint Arrangement |
8
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
| Annual Improvements to Korean IFRS 2012-2014 Cycle |
Also, new standards and interpretations issued but not effective for the financial year beginning January 1, 2015, and not early adopted are as follows:
| Korean IFRS 1109, Financial Instruments |
This new standard issued in December 2015 regarding financial instruments replaces Korean IFRS 1039, Financial Instruments: Recognition and Measurement.
Korean IFRS 1109, Financial Instruments, requires financial assets to be classified and measured on the basis of the holders business model and the instruments contractual cash flow characteristics. The standard requires a financial instrument to be classified and measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss, and provides guidance on accounting for related gains and losses. The impairment model is changed into an expected credit loss model, and changes in those expected credit losses are recognized in profit or loss. This amendment has been partially reflected, which is consistent with the risk management of companies for hedge accounting. The new standard is effective for the financial year initially beginning on or after January 1, 2018, but early adoption is allowed. Early adoption of only the requirements related to financial liabilities designated at fair value through profit or loss is also permitted. The Bank is in the process of evaluating the effects resulting from the adoption of the new standard.
| Korean IFRS 1115, Revenue from Contracts with Customers |
The new standard for the recognition of revenue issued in December 2015 will replace Korean IFRS 1018, Revenue, Korean IFRS 1011, Construction Contracts, and related Interpretations. Korean IFRS 1115, Revenue from Contracts with Customers, will replace the risk-and-reward model under the current standards and is based on the principle that revenue is recognized when control of goods or services transfer to the customer by applying the five-step process. Key changes to current practices include guidance on separate recognition of distinct goods or services in any bundled arrangement, constraint on recognizing variable consideration, criteria on recognizing revenue over time, and increased disclosures. The new standard is effective for annual reporting beginning on or after January 1, 2018, but early application is permitted. The Bank is in the process of evaluating the effects resulting from the adoption of the new Standard.
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 financial statements of the Bank are measured using the currency of the primary economic environment in which the Bank operates (the functional currency). The separate financial statements are presented in Korean won, which is the Banks functional and presentation currency. Refer to Notes 3.2.1 and 3.2.2.
9
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
2.4 Significant Estimates
The preparation of separate financial statements requires the application of accounting policies, certain critical accounting estimates and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses). 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 separate financial statements are as follows:
2.4.1 Income taxes
The Bank is operating in numerous countries and the income generated from these operations is subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain.
If certain portion of the taxable income is not used for investments, increase in wages, or dividends in accordance with the Tax System For Recirculation of Corporate Income, the Bank is liable to pay additional income tax calculated based on the tax laws. The new tax system is effective for three years from 2015. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the new system. As the Banks income tax is dependent on the investments, increase in wages and dividends, there exists uncertainty with regard to measuring the final tax effects.
2.4.2 Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Bank uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. Refer to Note 6 for details on valuation techniques and inputs used to determine the fair value of financial instruments.
2.4.3 Provisions for credit losses (allowances for loan losses, provisions for acceptances and guarantees, and unused loan commitments)
The Bank 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.
10
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
2.4.4 Net defined benefit liability
The present value of net defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions (Note 23).
2.4.5 Estimated impairment of goodwill
The Bank 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 separate financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated.
3.1 Investments in Associates and Subsidiaries
Investments in associates and subsidiaries are accounted for at cost method in accordance with Korean IFRS 1027. Beneficiary certificates in private equity fund which is consolidated is classified as available-for-sale financial assets and accounted for at fair value method in accordance with Korean IFRS 1113.
The Bank determines at each reporting date whether there is any objective evidence that the investments in the associates and subsidiaries are impaired. If this is the case, the Bank calculates the amount of impairment as the difference between the recoverable amount of the associates and its carrying value and recognizes the amount as non-operating income and expense in the statements of comprehensive income.
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. 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 separate financial statements are recognized in profit or loss in the period 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.
11
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
3.2.2 Foreign operations
The financial performance and financial position of all foreign operations, whose functional currencies differ from the Banks presentation currency, are translated into the Banks 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, is reclassified from equity to profit or loss (as a reclassification adjustment) when the gains or losses on disposal are recognized.
3.3 Recognition and Measurement of Financial Instruments
3.3.1 Initial recognition
The Bank recognizes a financial asset or a financial liability in its statement of financial position when the Bank becomes 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 Bank 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 or other financial assets. The Bank 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 separate financial statements.
12
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 Bank 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.
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 Bank uses valuation models that are commonly used by market participants and customized for the Bank to determine fair values of common over-the-counter (OTC) derivatives such as options, interest rate swaps and currency swaps which are based on the inputs observable in markets. For more complex instruments, the Bank uses internally developed models, which are usually based on valuation methods and techniques generally used within the industry, or a value measured by an independent external valuation institution as the fair values if all or some of the inputs to the valuation models are not market observable and therefore it is necessary to estimate fair value based on certain assumptions.
13
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The Banks 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. Those factors include counterparty credit risk, bid-ask spread, liquidity risk and others.
The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with economic methodologies applied for pricing financial instruments. Periodically, the Bank calibrates the valuation technique and tests its validity using prices of observable current market transactions of the same instrument or based on other relevant observable market data.
3.3.3 Derecognition
Derecognition is the removal of a previously recognized financial asset or financial liability from the statement of financial position. The Bank 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 Bank has not retained control. If the Bank neither transfers nor disposes of substantially all the risks and rewards of ownership of the financial assets, the Bank continues to recognize the financial asset to the extent of its continuing involvement in the financial asset.
If the Bank transfers the contractual rights to receive the cash flows of the financial asset, but retains substantially all the risks and rewards of ownership of the financial asset, the Bank continues to recognize the transferred asset in its 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.
14
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
3.3.4 Offsetting
A financial asset and a financial liability are offset and the net amount presented in the statement of financial position when, and only when, the Bank currently has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
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 Bank as at fair value through profit or loss upon initial recognition.
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 Bank 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 Banks key management personnel. |
| A contract contains one or more embedded derivatives; the Bank may designate the entire hybrid (combined) contract as a financial asset at fair value through profit or loss if allowed by Korean 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.
15
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 income 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.
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 Banks 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 Bank does not intend to sell immediately or in the near term. |
| Those that the Bank, 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.
16
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 Bank 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.
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. The Bank considers the decline in the fair value of over 30% against the original cost as a significant decline. A decline is considered as prolonged if the period, in which the fair value of the financial asset has been below its original cost at initial recognition, is same as or more than six months.
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.
17
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The Bank 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 Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment (collective assessment of impairment).
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.
18
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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.
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 extent of 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 Bank enters into numerous derivative financial instrument contracts such as currency forwards, interest rate swaps, currency swaps and others for trading purposes or to manage its exposures to fluctuations in interest rates and currency exchange, amongst others. These derivative financial instruments are presented as derivative financial instruments within the separate financial statements irrespective of transaction purpose and subsequent measurement requirement.
The Bank designates certain derivatives as hedging instruments to hedge the risk of changes in fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge).
At the inception of the hedge, there is formal designation and documentation of the hedging relationship and the Banks 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.
19
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
3.7.1 Derivative financial instruments held for trading
All derivative financial instruments, except for derivatives that are designated and qualify for hedge accounting, are measured at fair value. Gains or losses arising from a change in fair value are recognized in profit or loss as part of net gains or losses on financial instruments at fair value through profit or loss.
3.7.2 Fair value hedges
If derivatives qualify for a fair value hedge, the change in fair value of the hedging instrument and the change in fair value of the hedged item attributable to the hedged risk are recognized in profit or loss as part of other operating income and expenses. 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 Bank 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 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.
3.7.4 Day one gain and loss
If the Bank 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.
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.
20
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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.
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 Bank. 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 Bank 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.
The depreciation methods 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 ~ 5.7 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.
3.9 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 Bank. The depreciable amount of an asset is determined after deducting its residual value.
21
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 | 5~10 years | ||
Software | Straight-line | 4 years | ||
Others | Straight-line | 4~30 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 Bank 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 Banks previous accounting policy, prior to the transition to Korean IFRS.
Goodwill acquired from business combinations after January 1, 2010, is initially measured as the excess of the aggregate of the consideration transferred, fair value 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.
22
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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.
Subsequent measurement
Goodwill is not amortized and is stated at cost less accumulated impairment losses. However, goodwill that forms part of the carrying amount of an investment in associates is not separately recognized and an impairment loss recognized is not allocated to any asset, including goodwill, which forms part of the carrying amount of the investment in the associates.
3.10.2 Subsequent expenditure
Subsequent expenditure is capitalized only when it enhances values of the assets. Internally generated intangible assets, such as goodwill and trade name, are not recognized as assets but expensed as incurred.
3.11 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 Bank 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 Bank 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.
23
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 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.
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 the 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.
3.12 Greenhouse Gas Emission Rights and Liabilities
The Bank measured at zero the emission rights received free of charge from the government following the Enforcement of Allocation and Trading of Greenhouse Gas Emissions Allowances. Emission rights purchased are measured initially at cost and subsequently carried at their costs less any accumulated impairment losses. Emission liabilities are measured as the sum of the carrying amount of emission allowances held by the Bank and best estimate of the expenditure required to settle the obligation for any excess emissions at the end of reporting period. The emission rights and liabilities are classified as intangible assets and provisions, respectively, in the separate statement of financial position.
The emission rights held for trading are measured at fair value and the changes in fair value are recognized in profit or loss. The changes in fair value and gain or loss on disposal are classified as non-operating income and expenses.
3.13 Impairment of Non-Financial Assets
The Bank assesses at the end of each reporting period whether there is any indication that a non-financial asset, except for (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 Bank estimates the recoverable amount of the asset. However, irrespective of whether there is any indication of impairment, the Bank 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.
24
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Bank determines the recoverable amount of the cash-generating unit to which the asset belongs (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 Bank assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset, other than goodwill, may no longer exist or may have decreased, and an impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the 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.
3.14 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 being qualified as held for sale, the asset (or disposal group) must be available for immediate sale in its present condition and its sale must be highly probable. 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 Korean 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.
25
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
3.15 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.
3.16 Provisions
Provisions are recognized when the Bank has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of provisions, and where the effect of the time value of money is material, the amount of provisions 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 Bank 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.
3.17 Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the Bank to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due according to 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 Korean IFRS 1037, Provisions, Contingent Liabilities and Contingent Assets, and |
| The initial amount recognized, less, when appropriate, cumulative amortization recognized in accordance with Korean IFRS 1018, Revenue. |
26
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
3.18 Equity Instrument issued by the Bank
An equity instrument is any contract or agreement that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are deducted, net of tax, from the equity.
3.19 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.
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 Bank 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 Bank 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 Bank 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.
27
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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.
A syndication fee received by the Bank 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 net defined benefit liability is the present value of the defined benefit obligation less the fair value of plan assets at the end of the reporting period.
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).
28
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 Bank 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.
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 Bank 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 Bank operates share-based payment arrangements granting awards to directors and employees of the Bank. The Bank has a choice of whether to settle the awards in cash or by issuing equity instruments of KB Financial Group Inc., the ultimate parent company, at the date of settlement.
For a share-based payment transaction in which the terms of the arrangement provide the Bank with the choice of whether to settle in cash or by issuing equity instruments, the Bank determines that it has a present obligation to settle in cash because the Bank has a past practice and a stated policy of settling in cash. Therefore, the Bank accounts for the transaction in accordance with the requirements of cash-settled share-based payment transactions.
The Bank measures the services acquired and the liability incurred at fair value. Until the liability is settled, the Bank remeasures the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss for the period.
29
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
3.20.4 Termination benefits
Termination benefits are payable when employment is terminated by the Bank 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 Korean IFRS 1037 and involves the payment of termination benefits. Termination benefits are measured by considering the number of employees expected to accept the offer in the case of a voluntary early retirement. Termination benefits over 12 months after the reporting period are discounted to present value.
3.21 Income Tax Expenses
Income tax expense comprises current tax expense and deferred income tax expense. Current and deferred income tax are recognized as income or expense for the period, except to the extent that the tax arises from (a) a transaction or an event which is recognized, in the same or a different period outside profit or loss, either in other comprehensive income or directly in equity and (b) a business combination.
3.21.1 Current income tax
Current income tax is the amount of income tax payable in respect of the taxable profit (loss) for a period. A difference between the taxable profit and accounting profit may arise when income or expense is included in accounting profit in one period, but is included in taxable profit in a different period. Differences may also arise if there is revenue that is exempt from taxation, or expense that is not deductible in determining taxable profit (loss). Current income tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The Bank offsets current income tax assets and current income tax liabilities if, and only if, the Bank has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
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 separate 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.
30
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The carrying amount of a deferred income tax asset is reviewed at the end of each reporting period. The Bank reduces the carrying amount of a deferred income tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilized.
The Bank offsets deferred income tax assets and deferred income tax liabilities when the Bank 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 tax treatments applied by the Bank which may be challenged by the tax authorities due to the complexity of the transaction or different interpretation of the tax laws, a claim for rectification brought by the Bank, or an appeal for a refund claimed from the tax authorities related to additional assessments. The Bank recognizes its uncertain tax positions in the separate financial statements based on the guidance in Korean IFRS 1012. Income tax asset is recognized if a tax refund is probable for taxes paid and levied by the tax authority. However, interest and penalties related to income tax are recognized in accordance with Korean IFRS 1037.
3.22 Transactions with the Trust Accounts
Under the Financial Investment Services and Capital Markets Act, the Bank recognizes trust accounts (the trust accounts) as separate. The borrowings from trust accounts represent transfer of funds in trust accounts into banking accounts. Such borrowings from trust accounts are recorded as receivables from the banking accounts in the trust accounts and as borrowings from trust accounts in the banking accounts. The Bank earns trust fees from the trust accounts for its management of trust assets and operations. The reserves for future profits and losses are set up in the trust accounts for profits and losses related to those trust funds with a guarantee of the principal or of the principal and a certain minimum rate of return in accordance with the relevant laws and regulations applicable to trust operations. The reserves are used to provide for the losses on such trust funds and, if the losses incurred are in excess of the reserves, the excess losses are compensation paid as a loss on trust management in other operating expenses and the trust accounts recognize the corresponding compensation as compensation from banking accounts.
3.23 Operating Segments
Operating segments are components of the Bank 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.
31
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 Bank 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 Bank 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 separate financial statements.
The Banks 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 Banks long-term strategy and business decisions efficiently. Credit risk, market risk, liquidity risk, and operational risk have been recognized as the Banks key risks. These risks are measured in Economic Capital or Value at Risk (VaR) 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 Banks target risk appetite, approves significant risk matters and reviews the level of risks that the Bank is exposed to and the appropriateness of the Banks risk management operations as an ultimate decision-making authority.
Risk Management Council
The Risk Management Council is a consultative group which reviews and makes decisions on matters delegated by the Risk Management Committee and discusses the detailed issues relating to the Banks risk management.
Risk Management Subcommittee
The Risk Management Committee enforces decisions made by Risk Management Council, and makes practical decisions to implement risk management policies and procedures.
32
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
| Credit Risk Management Subcommittee |
The Credit Risk Management Subcommittee reviews the newly developed credit derivatives and exotic products, and the establishment and modification of calculation guideline and measurement methodology on credit exposure limits.
| Market Risk Management Subcommittee |
The Market Risk Management Subcommittee reviews and makes decisions on setting risk limits and approving the standard for investments in newly developed standard, exotic and hybrid products.
| Operational Risk Management Subcommittee |
The Operational Risk Management Subcommittee reviews the issues that have a significant effect on the Banks operational risk relating to establishment, amendment and abolition of major system, process and others.
Risk Management Group
The Risk Management Group is responsible for managing specific policies, procedures and work processes relating to the Banks 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 Bank measures expected losses and economic capital on assets that are subject to credit risk management whether on- or off-balance sheet items and uses expected losses and economic capital as a management indicator. The Bank manages credit risk by allocating credit risk economic capital limits.
In addition, the Bank 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 Bank has organized a credit risk management group that focuses on credit risk management in accordance with the Banks credit risk management policy. The Banks credit group, customer service group and SME/SOHO service group, which are independent from the sales department, are responsible for loan policy, loan limit, loan review, credit evaluation, restructuring and subsequent events. The credit 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.
33
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
4.2.3 Maximum exposure to credit risk
The Banks maximum exposures of financial instruments, excluding equity securities, to credit risk without consideration of collateral values as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Financial assets |
||||||||
Due from financial institutions |
₩ | 11,080,443 | ₩ | 10,737,528 | ||||
Financial assets at fair value through profit or loss |
||||||||
Financial assets held for trading1 |
2,334,710 | 1,948,548 | ||||||
Derivatives |
2,185,951 | 1,910,216 | ||||||
Loans2 |
222,410,080 | 210,835,577 | ||||||
Financial investments |
||||||||
Available-for-sale financial assets |
18,164,970 | 16,289,564 | ||||||
Held-to-maturity financial assets |
11,748,794 | 10,124,136 | ||||||
Other financial assets2 |
6,855,956 | 6,497,551 | ||||||
|
|
|
|
|||||
274,780,904 | 258,343,120 | |||||||
|
|
|
|
|||||
Off-balance items |
||||||||
Acceptances and guarantees contracts |
9,070,506 | 8,980,040 | ||||||
Financial guarantee contracts |
4,143,876 | 4,438,399 | ||||||
Commitments |
56,931,426 | 59,887,975 | ||||||
|
|
|
|
|||||
70,145,808 | 73,306,414 | |||||||
|
|
|
|
|||||
₩ | 344,926,712 | ₩ | 331,649,534 | |||||
|
|
|
|
1 | The amounts of ₩69,060 million and ₩51,345 million as of December 31, 2015 and 2014, respectively, related to financial instruments indexed to the price of gold are included. |
2 | Loans and other financial assets are presented net of allowance for loan losses. |
4.2.4 Credit risk of loans
The Bank maintains an allowance for loan losses associated with credit risk on loans to manage its credit risk.
Loans are categorized as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||
Retail | Corporate | Total | ||||||||||||||||||||||
Loans | Amount | % | Amount | % | Amount | % | ||||||||||||||||||
Neither past due nor impaired |
₩ | 114,191,081 | 98.61 | ₩ | 106,446,835 | 98.01 | ₩ | 220,637,916 | 98.31 | |||||||||||||||
Past due but not impaired |
1,093,954 | 0.94 | 283,238 | 0.26 | 1,377,192 | 0.61 | ||||||||||||||||||
Impaired |
526,345 | 0.45 | 1,875,623 | 1.73 | 2,401,968 | 1.08 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
115,811,380 | 100.00 | 108,605,696 | 100.00 | 224,417,076 | 100.00 | |||||||||||||||||||
Allowances |
(431,967 | ) | 0.37 | (1,575,029 | ) | 1.45 | (2,006,996 | ) | 0.89 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Carrying amount |
₩ | 115,379,413 | ₩ | 107,030,667 | ₩ | 222,410,080 | ||||||||||||||||||
|
|
|
|
|
|
34
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||
Loans | Retail | Corporate | Total | |||||||||||||||||||||
Amount | % | Amount | % | Amount | % | |||||||||||||||||||
Neither past due nor impaired |
₩ | 109,997,500 | 98.14 | ₩ | 98,465,888 | 97.81 | ₩ | 208,463,388 | 97.99 | |||||||||||||||
Past due but not impaired |
1,434,622 | 1.28 | 328,184 | 0.33 | 1,762,806 | 0.83 | ||||||||||||||||||
Impaired |
647,944 | 0.58 | 1,872,158 | 1.86 | 2,520,102 | 1.18 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
112,080,066 | 100.00 | 100,666,230 | 100.00 | 212,746,296 | 100.00 | |||||||||||||||||||
Allowances |
(476,517 | ) | 0.43 | (1,434,202 | ) | 1.42 | (1,910,719 | ) | 0.90 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Carrying amount |
₩ | 111,603,549 | ₩ | 99,232,028 | ₩ | 210,835,577 | ||||||||||||||||||
|
|
|
|
|
|
Credit quality of loans that are neither past due nor impaired is as follows:
(In millions of Korean won) | ||||||||||||
2015 | ||||||||||||
Retail | Corporate | Total | ||||||||||
Grade 1 |
₩ | 100,443,451 | ₩ | 48,560,791 | ₩ | 149,004,242 | ||||||
Grade 2 |
11,581,264 | 45,892,288 | 57,473,552 | |||||||||
Grade 3 |
1,422,572 | 9,803,903 | 11,226,475 | |||||||||
Grade 4 |
502,457 | 1,777,648 | 2,280,105 | |||||||||
Grade 5 |
241,337 | 412,205 | 653,542 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 114,191,081 | ₩ | 106,446,835 | ₩ | 220,637,916 | |||||||
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||
2014 | ||||||||||||
Retail | Corporate | Total | ||||||||||
Grade 1 |
₩ | 97,417,507 | ₩ | 41,956,369 | ₩ | 139,373,876 | ||||||
Grade 2 |
11,043,769 | 43,486,825 | 54,530,594 | |||||||||
Grade 3 |
872,739 | 10,803,335 | 11,676,074 | |||||||||
Grade 4 |
446,296 | 1,854,097 | 2,300,393 | |||||||||
Grade 5 |
217,189 | 365,262 | 582,451 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 109,997,500 | ₩ | 98,465,888 | ₩ | 208,463,388 | |||||||
|
|
|
|
|
|
Credit quality of loans graded according to internal credit ratings is as follows:
Retail | Corporate | |||
Grade 1 |
1 to 5 grade | AAA to BBB+ | ||
Grade 2 |
6 to 8 grade | BBB to BB | ||
Grade 3 |
9 to 10 grade | BB- to B | ||
Grade 4 |
11 grade | B- to CCC | ||
Grade 5 |
12 grade or under | CC or under |
35
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Loans that are past due but not impaired are as follows:
(In millions of Korean won) | ||||||||||||||||
2015 | ||||||||||||||||
1 ~ 29 days | 30 ~ 59 days | 60 ~ 89 days | Total | |||||||||||||
Retail |
₩ | 934,027 | ₩ | 108,645 | ₩ | 51,282 | ₩ | 1,093,954 | ||||||||
Corporate |
214,332 | 55,832 | 13,074 | 283,238 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 1,148,359 | ₩ | 164,477 | ₩ | 64,356 | ₩ | 1,377,192 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
1 ~ 29 days | 30 ~ 59 days | 60 ~ 89 days | Total | |||||||||||||
Retail |
₩ | 1,230,241 | ₩ | 138,854 | ₩ | 65,527 | ₩ | 1,434,622 | ||||||||
Corporate |
277,289 | 36,881 | 14,014 | 328,184 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 1,507,530 | ₩ | 175,735 | ₩ | 79,541 | ₩ | 1,762,806 | |||||||||
|
|
|
|
|
|
|
|
Impaired loans are as follows:
(In millions of Korean won) | ||||||||||||
2015 | ||||||||||||
Retail | Corporate | Total | ||||||||||
Loans |
₩ | 526,345 | ₩ | 1,875,623 | ₩ | 2,401,968 | ||||||
Allowances |
(208,557 | ) | (1,119,808 | ) | (1,328,365 | ) | ||||||
Individual |
| (939,717 | ) | (939,717 | ) | |||||||
Collective |
(208,557 | ) | (180,091 | ) | (388,648 | ) | ||||||
|
|
|
|
|
|
|||||||
₩ | 317,788 | ₩ | 755,815 | ₩ | 1,073,603 | |||||||
|
|
|
|
|
|
|||||||
(In millions of Korean won) | ||||||||||||
2014 | ||||||||||||
Retail | Corporate | Total | ||||||||||
Loans |
₩ | 647,944 | ₩ | 1,872,158 | ₩ | 2,520,102 | ||||||
Allowances |
(257,267 | ) | (972,813 | ) | (1,230,080 | ) | ||||||
Individual |
| (766,767 | ) | (766,767 | ) | |||||||
Collective |
(257,267 | ) | (206,046 | ) | (463,313 | ) | ||||||
|
|
|
|
|
|
|||||||
₩ | 390,677 | ₩ | 899,345 | ₩ | 1,290,022 | |||||||
|
|
|
|
|
|
36
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
A quantification of the extent to which collateral and other credit enhancements mitigate credit risk as of December 31, 2015 and December 31, 2014, is as follows:
(In millions of Korean won) | ||||||||||||||||||||
2015 | ||||||||||||||||||||
Impaired Loans | Non-impaired Loans | |||||||||||||||||||
Individual | Collective | Past due | Not past due | Total | ||||||||||||||||
Guarantee |
₩ | 26,150 | ₩ | 130,774 | ₩ | 248,709 | ₩ | 42,470,128 | ₩ | 42,875,761 | ||||||||||
Deposits and savings |
| 9,875 | 24,884 | 1,572,259 | 1,607,018 | |||||||||||||||
Property and equipment |
7,888 | 3,626 | 181 | 1,280,866 | 1,292,561 | |||||||||||||||
Real estate |
170,659 | 406,196 | 826,632 | 128,798,193 | 130,201,680 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 204,697 | ₩ | 550,471 | ₩ | 1,100,406 | ₩ | 174,121,446 | ₩ | 175,977,020 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(In millions of Korean won) | ||||||||||||||||||||
2014 | ||||||||||||||||||||
Impaired Loans | Non-impaired Loans | |||||||||||||||||||
Individual | Collective | Past due | Not past due | Total | ||||||||||||||||
Guarantee |
₩ | 18,255 | ₩ | 143,431 | ₩ | 277,607 | ₩ | 34,727,108 | ₩ | 35,166,401 | ||||||||||
Deposits and savings |
500 | 15,466 | 34,067 | 1,633,056 | 1,683,089 | |||||||||||||||
Property and equipment |
7,604 | 4,806 | 1,943 | 1,050,718 | 1,065,071 | |||||||||||||||
Real estate |
174,444 | 504,059 | 1,122,865 | 122,935,249 | 124,736,617 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 200,803 | ₩ | 667,762 | ₩ | 1,436,482 | ₩ | 160,346,131 | ₩ | 162,651,178 | |||||||||||
|
|
|
|
|
|
|
|
|
|
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) | 2015 | 2014 | ||||||
Securities that are neither past due nor impaired |
₩ | 32,179,414 | ₩ | 28,310,113 | ||||
Impaired securities |
| 790 | ||||||
|
|
|
|
|||||
₩ | 32,179,414 | ₩ | 28,310,903 | |||||
|
|
|
|
The credit quality of securities, excluding equity securities that are neither past due nor impaired, as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||
Grade 1 | Grade 2 | Grade 3 | Grade 4 | Grade 5 | Total | |||||||||||||||||||
Financial assets held for trading |
₩ | 2,259,592 | ₩ | 6,058 | ₩ | | ₩ | | ₩ | | ₩ | 2,265,650 | ||||||||||||
Available-for-sale financial assets |
17,825,259 | 339,711 | | | | 18,164,970 | ||||||||||||||||||
Held-to-maturity financial assets |
11,748,794 | | | | | 11,748,794 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 31,833,645 | ₩ | 345,769 | ₩ | | ₩ | | ₩ | | ₩ | 32,179,414 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
37
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||
Grade 1 | Grade 2 | Grade 3 | Grade 4 | Grade 5 | Total | |||||||||||||||||||
Financial assets held for trading |
₩ | 1,879,849 | ₩ | 17,354 | ₩ | | ₩ | | ₩ | | ₩ | 1,897,203 | ||||||||||||
Available-for-sale financial assets |
16,000,243 | 288,531 | | | | 16,288,774 | ||||||||||||||||||
Held-to-maturity financial assets |
10,124,136 | | | | | 10,124,136 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 28,004,228 | ₩ | 305,885 | ₩ | | ₩ | | ₩ | | ₩ | 28,310,113 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The credit qualities of securities excluding equity securities, according to the credit ratings by external rating agencies are as follows:
Domestic | Foreign | |||||||||||
Credit quality | KAP | KIS | NICE P&I | 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 ratings 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 mitigates credit risk of derivative financial instruments as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Deposits and savings, securities and others |
₩ | 424,559 | ₩ | 329,482 |
38
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
4.2.7 Credit risk concentration analysis
The details of the Banks loans by country as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||
Retail | Corporate | Total | % | Allowances | Carrying amount |
|||||||||||||||||||
Korea |
₩ | 115,780,280 | ₩ | 107,364,603 | ₩ | 223,144,883 | 99.44 | ₩ | (1,983,038 | ) | ₩ | 221,161,845 | ||||||||||||
Japan |
1,737 | 138,278 | 140,015 | 0.06 | (21,404 | ) | 118,611 | |||||||||||||||||
United State |
| 925,391 | 925,391 | 0.41 | (1,056 | ) | 924,335 | |||||||||||||||||
Others |
29,363 | 177,424 | 206,787 | 0.09 | (1,498 | ) | 205,289 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
₩ | 115,811,380 | ₩ | 108,605,696 | ₩ | 224,417,076 | 100.00 | ₩ | (2,006,996 | ) | ₩ | 222,410,080 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||
Retail | Corporate | Total | % | Allowances | Carrying amount |
|||||||||||||||||||
Korea |
₩ | 112,042,305 | ₩ | 99,558,114 | ₩ | 211,600,419 | 99.46 | ₩ | (1,877,014 | ) | ₩ | 209,723,405 | ||||||||||||
Japan |
2,581 | 271,914 | 274,495 | 0.13 | (31,393 | ) | 243,102 | |||||||||||||||||
United State |
| 698,294 | 698,294 | 0.33 | (629 | ) | 697,665 | |||||||||||||||||
Others |
35,180 | 137,908 | 173,088 | 0.08 | (1,683 | ) | 171,405 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
₩ | 112,080,066 | ₩ | 100,666,230 | ₩ | 212,746,296 | 100.00 | ₩ | (1,910,719 | ) | ₩ | 210,835,577 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The details of the Banks corporate loans by industry as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||
2015 | ||||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Financial institutions |
₩ | 9,111,088 | 8.39 | ₩ | (11,860 | ) | ₩ | 9,099,228 | ||||||||
Manufacturing |
35,021,700 | 32.25 | (784,365 | ) | 34,237,335 | |||||||||||
Service |
43,625,104 | 40.17 | (337,162 | ) | 43,287,942 | |||||||||||
Wholesale & Retail |
13,407,672 | 12.35 | (151,224 | ) | 13,256,448 | |||||||||||
Construction |
3,349,278 | 3.08 | (265,605 | ) | 3,083,673 | |||||||||||
Public |
754,288 | 0.69 | (5,169 | ) | 749,119 | |||||||||||
Others |
3,336,566 | 3.07 | (19,644 | ) | 3,316,922 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 108,605,696 | 100.00 | ₩ | (1,575,029) | ₩ | 107,030,667 | ||||||||||
|
|
|
|
|
|
|
|
39
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Financial institutions |
₩ | 9,081,338 | 9.02 | ₩ | (81,516 | ) | ₩ | 8,999,822 | ||||||||
Manufacturing |
32,327,095 | 32.11 | (505,763 | ) | 31,821,332 | |||||||||||
Service |
38,907,329 | 38.65 | (276,529 | ) | 38,630,800 | |||||||||||
Wholesale & Retail |
13,109,375 | 13.02 | (150,094 | ) | 12,959,281 | |||||||||||
Construction |
3,662,712 | 3.64 | (396,189 | ) | 3,266,523 | |||||||||||
Public |
714,486 | 0.71 | (6,670 | ) | 707,816 | |||||||||||
Others |
2,863,895 | 2.85 | (17,441 | ) | 2,846,454 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 100,666,230 | 100.00 | ₩ | (1,434,202 | ) | ₩ | 99,232,028 | |||||||||
|
|
|
|
|
|
|
|
The details of the Banks retail loans by type as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Housing purpose |
₩ | 53,674,213 | 46.35 | ₩ | (23,344 | ) | ₩ | 53,650,869 | ||||||||
General purpose |
62,137,167 | 53.65 | (408,623 | ) | 61,728,544 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 115,811,380 | 100.00 | ₩ | (431,967 | ) | ₩ | 115,379,413 | |||||||||
|
|
|
|
|
|
|
|
(In millions of Korean won) | 2014 | |||||||||||||||
Loans | % | Allowances | Carrying amount |
|||||||||||||
Housing purpose |
₩ | 52,455,526 | 46.80 | ₩ | (30,197 | ) | ₩ | 52,425,329 | ||||||||
General purpose |
59,624,540 | 53.20 | (446,320 | ) | 59,178,220 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 112,080,066 | 100.00 | ₩ | (476,517 | ) | ₩ | 111,603,549 | |||||||||
|
|
|
|
|
|
|
|
40
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The details of the Banks securities excluding equity securities and derivative financial instruments by industry as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Government and government funded institutions |
₩ | 951,934 | 42.02 | |||||
Banking and Insurance |
1,310,274 | 57.83 | ||||||
Others |
3,442 | 0.15 | ||||||
|
|
|
|
|||||
2,265,650 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Government and government funded institutions |
56,652 | 2.59 | ||||||
Banking and Insurance |
1,917,104 | 87.70 | ||||||
Others |
212,195 | 9.71 | ||||||
|
|
|
|
|||||
2,185,951 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Government and government funded institutions |
5,223,923 | 28.76 | ||||||
Banking and Insurance |
11,532,344 | 63.48 | ||||||
Others |
1,408,703 | 7.76 | ||||||
|
|
|
|
|||||
18,164,970 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Government and government funded institutions |
5,219,388 | 44.42 | ||||||
Banking and Insurance |
6,168,345 | 52.50 | ||||||
Others |
361,061 | 3.08 | ||||||
|
|
|
|
|||||
11,748,794 | 100.00 | |||||||
|
|
|
|
|||||
₩ | 34,365,365 | |||||||
|
|
41
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Government and government funded institutions |
₩ | 1,172,888 | 61.82 | |||||
Banking and Insurance |
680,562 | 35.87 | ||||||
Others |
43,753 | 2.31 | ||||||
|
|
|
|
|||||
1,897,203 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Government and government funded institutions |
19,732 | 1.03 | ||||||
Banking and Insurance |
1,755,494 | 91.90 | ||||||
Others |
134,990 | 7.07 | ||||||
|
|
|
|
|||||
1,910,216 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Government and government funded institutions |
7,204,867 | 44.23 | ||||||
Banking and Insurance |
7,433,970 | 45.64 | ||||||
Others |
1,650,727 | 10.13 | ||||||
|
|
|
|
|||||
16,289,564 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Government and government funded institutions |
8,072,831 | 79.74 | ||||||
Banking and Insurance |
1,519,324 | 15.01 | ||||||
Others |
531,981 | 5.25 | ||||||
|
|
|
|
|||||
10,124,136 | 100.00 | |||||||
|
|
|
|
|||||
₩ | 30,221,119 | |||||||
|
|
42
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The details of the Banks securities excluding equity securities and derivative financial instruments by country, as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Korea |
₩ | 2,233,892 | 98.60 | |||||
Others |
31,758 | 1.40 | ||||||
|
|
|
|
|||||
2,265,650 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Korea |
1,198,262 | 54.82 | ||||||
United States |
297,323 | 13.60 | ||||||
Others |
690,366 | 31.58 | ||||||
|
|
|
|
|||||
2,185,951 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Korea |
17,854,957 | 98.29 | ||||||
Others |
310,013 | 1.71 | ||||||
|
|
|
|
|||||
18,164,970 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Korea |
11,373,754 | 96.81 | ||||||
Others |
375,040 | 3.19 | ||||||
|
|
|
|
|||||
11,748,794 | 100.00 | |||||||
|
|
|
|
|||||
₩ | 34,365,365 | |||||||
|
|
|||||||
(In millions of Korean won) | 2014 | |||||||
Amount | % | |||||||
Financial assets held for trading |
||||||||
Korea |
₩ | 1,838,118 | 96.89 | |||||
Others |
59,085 | 3.11 | ||||||
|
|
|
|
|||||
1,897,203 | 100.00 | |||||||
|
|
|
|
|||||
Derivative financial assets |
||||||||
Korea |
736,644 | 38.56 | ||||||
United States |
273,807 | 14.33 | ||||||
Others |
899,765 | 47.11 | ||||||
|
|
|
|
|||||
1,910,216 | 100.00 | |||||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Korea |
16,261,216 | 99.83 | ||||||
Others |
28,348 | 0.17 | ||||||
|
|
|
|
|||||
16,289,564 | 100.00 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Korea |
10,124,136 | 100.00 | ||||||
|
|
|
|
|||||
₩ | 30,221,119 | |||||||
|
|
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 and derivatives are in the banking and insurance industries which have high credit ratings.
43
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 Bank 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 items related to the inflows and outflows of currency derivative instruments and others.
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 addresses all the possible risks that arise from the overall business of the Bank.
The Bank has to establish the liquidity risk management strategy including the objectives of liquidity risk management, management policies and internal control system, and obtain approval from Risk Management Committee. Risk Management Committee operates the Risk Management Council for the purpose of efficient risk management, monitors establishment and enforcement of policies based on risk management strategy.
For the purpose of liquidity management, the liquidity gap ratio, liquidity ratio, maturity gap ratio and the results of the stress testing related to liquidity risk on transactions affecting the inflows and outflows of funds and transactions of off-balance sheet items are measured, managed and reported to the Risk Management Committee and Risk Management Council on a regular basis.
44
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 amounts in the separate 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 as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||||||||||
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 |
₩ | 5,938,350 | ₩ | 264 | ₩ | 377,416 | ₩ | 403,621 | ₩ | | ₩ | | ₩ | 6,719,651 | ||||||||||||||
Financial assets held for trading2 |
2,366,189 | | | | | | 2,366,189 | |||||||||||||||||||||
Derivatives held for trading2 |
2,093,387 | | | | | | 2,093,387 | |||||||||||||||||||||
Derivatives held for hedging3 |
| 5,391 | 18,885 | 13,558 | 38,972 | 111,268 | 188,074 | |||||||||||||||||||||
Loans |
| 14,785,693 | 21,136,556 | 77,337,956 | 58,865,097 | 87,267,435 | 259,392,737 | |||||||||||||||||||||
Available-for-sale financial assets4 |
3,369,923 | 834,850 | 1,614,007 | 4,557,609 | 10,834,030 | 1,326,841 | 22,537,260 | |||||||||||||||||||||
Held-to-maturity financial assets |
| 380,043 | 1,052,763 | 2,342,242 | 6,857,869 | 2,582,091 | 13,215,008 | |||||||||||||||||||||
Other financial assets |
| 5,344,198 | 1,438 | 1,159,067 | | | 6,504,703 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 13,767,849 | ₩ | 21,350,439 | ₩ | 24,201,065 | ₩ | 85,814,053 | ₩ | 76,595,968 | ₩ | 91,287,635 | ₩ | 313,017,009 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Financial liabilities held for trading |
₩ | 69,465 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 69,465 | ||||||||||||||
Derivatives held for trading2 |
2,116,746 | | | | | | 2,116,746 | |||||||||||||||||||||
Derivatives held for hedging3 |
| 1,981 | 945 | (10,279 | ) | (25,096 | ) | (35,050 | ) | (67,499 | ) | |||||||||||||||||
Deposits 5 |
100,456,920 | 14,193,828 | 24,920,702 | 72,968,606 | 9,938,123 | 1,599,544 | 224,077,723 | |||||||||||||||||||||
Debts |
668 | 4,202,549 | 1,745,931 | 4,176,109 | 3,733,690 | 537,209 | 14,396,156 | |||||||||||||||||||||
Debentures |
68,852 | 401,430 | 768,923 | 5,164,794 | 8,065,069 | 2,761,403 | 17,230,471 | |||||||||||||||||||||
Other financial liabilities |
| 7,007,546 | 807 | 72,725 | 226 | | 7,081,304 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 102,712,651 | ₩ | 25,807,334 | ₩ | 27,437,308 | ₩ | 82,371,955 | ₩ | 21,712,012 | ₩ | 4,863,106 | ₩ | 264,904,366 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Off-balance sheet items |
||||||||||||||||||||||||||||
Commitments6 |
₩ | 56,931,426 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 56,931,426 | ||||||||||||||
Financial guarantee contracts7 |
4,143,876 | | | | | | 4,143,876 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 61,075,302 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 61,075,302 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(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 |
₩ | 6,159,677 | ₩ | | ₩ | 303,635 | ₩ | 395 | ₩ | | ₩ | | ₩ | 6,463,707 | ||||||||||||||
Financial assets held for trading2 |
2,020,078 | | | | | | 2,020,078 | |||||||||||||||||||||
Derivatives held for trading2 |
1,800,663 | | | | | | 1,800,663 | |||||||||||||||||||||
Derivatives held for hedging3 |
| 7,742 | (1,147 | ) | 20,804 | 77,968 | 118,803 | 224,170 | ||||||||||||||||||||
Loans |
| 14,603,743 | 20,708,092 | 73,613,534 | 55,684,217 | 87,666,397 | 252,275,983 | |||||||||||||||||||||
Available-for-sale financial assets4 |
5,220,710 | 433,791 | 1,527,339 | 4,326,342 | 10,216,283 | 749,060 | 22,473,525 | |||||||||||||||||||||
Held-to-maturity financial assets |
| 272,086 | 630,918 | 3,354,275 | 6,281,737 | 462,437 | 11,001,453 | |||||||||||||||||||||
Other financial assets |
| 4,789,337 | | 1,291,886 | | | 6,081,223 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 15,201,128 | ₩ | 20,106,699 | ₩ | 23,168,837 | ₩ | 82,607,236 | ₩ | 72,260,205 | ₩ | 88,996,697 | ₩ | 302,340,802 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Financial liabilities held for trading |
₩ | 51,650 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 51,650 | ||||||||||||||
Derivatives held for trading2 |
1,755,640 | | | | | | 1,755,640 | |||||||||||||||||||||
Derivatives held for hedging3 |
| | 652 | 146 | 6,304 | (15,581 | ) | (8,479 | ) | |||||||||||||||||||
Deposits 5 |
83,035,498 | 13,303,895 | 25,307,583 | 80,049,206 | 8,724,644 | 1,708,035 | 212,128,861 | |||||||||||||||||||||
Debts |
813 | 4,405,772 | 1,741,800 | 4,403,021 | 3,465,290 | 556,596 | 14,573,292 | |||||||||||||||||||||
Debentures |
159,620 | 278,543 | 1,037,466 | 3,419,151 | 7,922,417 | 3,907,637 | 16,724,834 | |||||||||||||||||||||
Other financial liabilities |
| 6,381,294 | 895 | 67,886 | 1,637 | | 6,451,712 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 85,003,221 | ₩ | 24,369,504 | ₩ | 28,088,396 | ₩ | 87,939,410 | ₩ | 20,120,292 | ₩ | 6,156,687 | ₩ | 251,677,510 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Off-balance sheet items |
||||||||||||||||||||||||||||
Commitments6 |
₩ | 59,887,975 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 59,887,975 | ||||||||||||||
Financial guarantee contracts7 |
4,438,399 | | | | | | 4,438,399 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 64,326,374 | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | | ₩ | 64,326,374 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | The amounts of ₩6,831,806 million and ₩6,813,832 million, which are restricted amount due from the financial institutions as of December 31, 2015 and December 31, 2014, respectively, are excluded. |
2 | Financial instruments held for trading and derivatives held for trading are not managed by contractual maturity because they are held for trading or redemption before maturity. Therefore, the carrying amounts are classified as the On demand category. However, the Bank has an obligation to purchase bonds at face value(with accrued interest) amounting to USD 300 million if an issuer does not exercise early redemption right at the end of the five-year period from the date of issuance(May 8, 2015), or if the issuer goes bankrupt within five years from the date of issuance. In addition, the Bank has an option to request the issuer to acquire these bonds either in cash or the issuers stocks at the issuers choice. These transactions are excluded from the table above. |
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. |
46
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
4 | Equity investments in financial assets classified as available-for-sale are generally included in the On demand category as most are available for sale at anytime. However, in the case of equity investments which are restricted for sale, these are classified in the maturity section to which the end of the restriction period applies. |
5 | Deposits that are contractually repayable on demand or on short notice are classified under the On demand category. |
6 | Unused lines of credit within commitments are included under the On demand category as payments can be required upon request. |
7 | Financial guarantee contracts are included under the On demand category as payments can be required upon request. |
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, and incurred in securities, derivatives and other. 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 Bank is exposed to interest rate risks associated with non-trading positions. The Bank classifies exposures to market risk into either trading or non-trading positions for managerial purpose.
4.4.2 Risk management
The Bank 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 Bank maintains risk management systems and procedures, such as trading policies and procedures, market risk management guidelines for trading positions and ALM risk management guidelines for non-trading positions in order to manage market risk efficiently. The procedures mentioned are implemented with approval from the Risk Management Committee and Risk Management Council.
The Bank establishes market risk management policy, sets position limits, loss limits and VaR limits of each business group and approves newly developed products through its Risk Management Council. The Market Risk Management Subcommittee, which is chaired by the Chief Risk Officer (CRO), is the decision maker and sets position limits, loss limits, VaR limits, sensitivity limits and scenario loss limits for each division, at the level of each individual business department.
The ALCO determines the operational standards of interest and commission, the details of 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 measure and monitor 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 interest rate VaR, 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.
47
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
4.4.3 Trading Position
Definition of a trading position
Trading positions subject to market risk management are interest rate, stock price positions for short-term profit-taking and others. Also, they include all foreign exchange rate positions. The basic requirements of trading positions are defined under the Trading Policy and Guideline, are as follows:
| The trading position is not restricted for purchase and 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 Banks risk management. |
Observation method on market risk arising from trading positions
The Bank calculates VaR to measure the market risk by using market risk management systems on the entire trading portfolio. Generally, the Bank manages market risk on the trading portfolio. In addition, the Bank controls and manages the risk of derivative trading based on the regulations and guidelines formulated by the Financial Supervisory Service.
Value at Risk (VaR)
i. Value at Risk (VaR)
The Bank uses the value-at-risk methodology to measure the market risk of trading positions.
The Bank now uses the ten-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.
48
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 Bank uses an internal model (VaR) to measure general risk, and a standard method to measure each individual risk. When the internal model is not permitted for certain market risk, the Bank uses the 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 VaR model. In back- testing, the Bank 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 options and other risk factors that have significant influence on the value of the portfolio. The Bank uses historical scenarios and hypothetical scenarios for the analysis of abnormal market situations. Stress testing is performed at least once every quarter.
VaR at a 99%, excluding Stressed Value at Risks, confidence level of interest rate, stock price and foreign exchange rate risk for trading positions with a ten-day holding period as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Interest rate risk |
₩ | 16,902 | ₩ | 12,093 | ₩ | 20,534 | ₩ | 18,732 | ||||||||
Stock price risk |
336 | 27 | 4,413 | 32 | ||||||||||||
Foreign exchange rate risk |
12,429 | 8,322 | 21,935 | 21,935 | ||||||||||||
Deduction of diversification effect |
(26,965 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 8,918 | ₩ | 4,091 | ₩ | 14,170 | ₩ | 13,734 | ||||||||
|
|
|
|
|
|
|
|
49
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
2014 | ||||||||||||||||
(In millions of Korean won) | Average | Minimum | Maximum | Ending | ||||||||||||
Interest rate risk |
₩ | 9,054 | ₩ | 4,040 | ₩ | 16,197 | ₩ | 13,577 | ||||||||
Stock price risk |
801 | 152 | 2,487 | 220 | ||||||||||||
Foreign exchange rate risk |
12,049 | 5,070 | 14,705 | 10,814 | ||||||||||||
Deduction of diversification effect |
(13,924 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total VaR |
₩ | 12,439 | ₩ | 3,217 | ₩ | 15,152 | ₩ | 10,687 | ||||||||
|
|
|
|
|
|
|
|
Meanwhile, the market risk of positions related to 30-year government bonds, which previously were measured using a standard method, is included in the calculation of VaR according to the approval of internal model from Financial Supervisory Service. The required equity capital using the standard method related to the positions which are not measured by VaR as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Interest rate risk |
₩ | 34 | ₩ | 792 | ||||
Stock price risk |
118 | 1,101 | ||||||
|
|
|
|
|||||
₩ | 152 | ₩ | 1,893 | |||||
|
|
|
|
Details of risk factors
i. Interest rate risk
Trading position interest rate risk usually arises from debt securities denominated in Korean won. The Banks trading strategy is to benefit from short-term movements in the prices of debt securities arising from changes in interest rates. The Bank manages interest rate risk on major trading portfolios 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 Bank 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 and foreign currency derivatives. Net foreign currency exposure mostly occurs from the foreign assets and liabilities which are denominated in US dollars and China Yuan. The Bank 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.
50
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
4.4.4 Non-trading position
i. Definition of non-trading position
Managed interest rate risk in non-trading position includes on or off-balance sheet assets, liabilities and derivatives that are sensitive to interest rate, except trading position for market risk. The interest rate sensitive assets and liabilities are interest-bearing assets and liabilities that create interest income and expenses.
ii. Observation method on market risk arising from non-trading position
Interest rate risk occurs due to mismatches on maturities and interest rate reset periods between interest-bearing assets and liabilities. The Bank manages the risk through measuring and managing interest rate VaR and EaR that are maximum expected decreases in net asset value (NPV) and net interest income (NII) for one year, respectively, arising from unfavorable changes in market interest rate.
iii. Interest Rate VaR
Interest rate VaR is the maximum possible loss due to interest rate risk under a normal distribution at a 99.94% confidence level. The measurement results of risk as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Interest Rate VaR |
₩ | 99,993 | ₩ | 106,458 |
51
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
4.4.5 Financial assets and liabilities in foreign currencies
Financial assets and liabilities in foreign currencies as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||||||||||||||
(In millions of Korean won) | USD | JPY | EUR | GBP | CNY | Others | Total | |||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | 996,504 | ₩ | 227,546 | ₩ | 114,154 | ₩ | 14,891 | ₩ | 91,694 | ₩ | 182,757 | ₩ | 1,627,546 | ||||||||||||||
Financial assets held for trading |
35,025 | | 2,616 | | | | 37,641 | |||||||||||||||||||||
Derivatives held for trading |
64,631 | | 354 | | | | 64,985 | |||||||||||||||||||||
Derivatives held for hedging |
8,610 | | | | | | 8,610 | |||||||||||||||||||||
Loans |
12,704,105 | 507,615 | 458,483 | 19,365 | 4,329 | 136,560 | 13,830,457 | |||||||||||||||||||||
Available-for-sale financial assets |
1,116,821 | 60,591 | | | | 871 | 1,178,283 | |||||||||||||||||||||
Held-to-maturity financial assets |
375,040 | | | | | | 375,040 | |||||||||||||||||||||
Other financial assets |
979,429 | 182,766 | 216,546 | 5,381 | 192,667 | 145,218 | 1,722,007 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 16,280,165 | ₩ | 978,518 | ₩ | 792,153 | ₩ | 39,637 | ₩ | 288,690 | ₩ | 465,406 | ₩ | 18,844,569 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Derivatives held for trading |
₩ | 92,108 | ₩ | | ₩ | 458 | ₩ | | ₩ | | ₩ | | ₩ | 92,566 | ||||||||||||||
Derivatives held for hedging |
21,461 | | | | | | 21,461 | |||||||||||||||||||||
Deposits |
5,637,084 | 496,224 | 384,116 | 22,674 | 58,848 | 374,717 | 6,973,663 | |||||||||||||||||||||
Debts |
6,802,240 | 217,887 | 143,060 | 7,916 | 4,511 | 110,535 | 7,286,149 | |||||||||||||||||||||
Debentures |
3,519,615 | | 106,284 | | | 157,337 | 3,783,236 | |||||||||||||||||||||
Other financial liabilities |
1,685,956 | 98,431 | 160,867 | 10,454 | 185,652 | 26,639 | 2,167,999 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 17,758,464 | ₩ | 812,542 | ₩ | 794,785 | ₩ | 41,044 | ₩ | 249,011 | ₩ | 669,228 | ₩ | 20,325,074 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Off-balance sheet items |
₩ | 14,978,230 | ₩ | 3,612 | ₩ | 6,403 | ₩ | 4,861 | ₩ | 38,607 | ₩ | 81,206 | ₩ | 15,112,919 |
52
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
2014 | ||||||||||||||||||||||||||||
(In millions of Korean won) | USD | JPY | EUR | GBP | CNY | Others | Total | |||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | 823,297 | ₩ | 145,574 | ₩ | 104,880 | ₩ | 10,827 | ₩ | 47,653 | ₩ | 115,640 | ₩ | 1,247,871 | ||||||||||||||
Financial assets held for trading |
43,753 | | 15,333 | | | | 59,086 | |||||||||||||||||||||
Derivatives held for trading |
55,877 | | 694 | | | | 56,571 | |||||||||||||||||||||
Derivatives held for hedging |
5,032 | | | | | | 5,032 | |||||||||||||||||||||
Loans |
10,507,275 | 900,972 | 402,656 | 6,613 | 3,492 | 115,633 | 11,936,641 | |||||||||||||||||||||
Available-for-sale financial assets |
671,081 | | | | | 870 | 671,951 | |||||||||||||||||||||
Other financial assets |
1,187,598 | 61,140 | 75,970 | 1,710 | 46,434 | 8,908 | 1,381,760 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 13,293,913 | ₩ | 1,107,686 | ₩ | 599,533 | ₩ | 19,150 | ₩ | 97,579 | ₩ | 241,051 | ₩ | 15,358,912 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Financial liabilities |
||||||||||||||||||||||||||||
Derivatives held for trading |
₩ | 85,008 | ₩ | | ₩ | 920 | ₩ | | ₩ | | ₩ | | ₩ | 85,928 | ||||||||||||||
Derivatives held for hedging |
226 | | | | | | 226 | |||||||||||||||||||||
Deposits |
3,970,750 | 386,851 | 188,386 | 19,887 | 21,297 | 273,317 | 4,860,488 | |||||||||||||||||||||
Debts |
6,661,937 | 258,483 | 303,866 | 880 | 3,577 | 168,908 | 7,397,651 | |||||||||||||||||||||
Debentures |
2,766,605 | 73,606 | 26,731 | | | 22,672 | 2,889,614 | |||||||||||||||||||||
Other financial liabilities |
1,175,303 | 76,150 | 78,093 | 7,157 | 46,710 | 13,029 | 1,396,442 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 14,659,829 | ₩ | 795,090 | ₩ | 597,996 | ₩ | 27,924 | ₩ | 71,584 | ₩ | 477,926 | ₩ | 16,630,349 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Off-balance sheet items |
₩ | 17,690,842 | ₩ | 3,511 | ₩ | 6,549 | ₩ | 4,704 | ₩ | 11,628 | ₩ | 72,747 | ₩ | 17,789,981 |
4.5. Operational Risk
4.5.1 Concept
The Bank defines operational risk as risk of loss resulting from inadequate or failed internal processes, people, systems and external events. The operational risk includes financial and non-financial risks.
4.5.2 Risk management
The purpose of operational risk management is not only to comply with requirements of regulatory authorities but is also to establish an integrated system to cultivate enterprise culture that values importance of risk management, strengthen internal controls, improve processes and provide with timely feedback to management so that eventually mitigate operational risk of the company. In addition, the Bank established Business Continuity Planning (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 full scale test for head office and IT departments to test its BCPs.
53
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
4.6 Capital Adequacy
The Bank complies with the capital adequacy standard established by the Financial Services Commission. The capital adequacy standard is based on Basel III revised by Basel Committee on Banking Supervision in Bank for International Settlements in June 2011, and was implemented in Korea in December 2013. The Bank is required to maintain a minimum Common Equity Tier 1 ratio of at least 4.5% (December 31, 2014: 4.0%), a minimum Tier 1 ratio of 6.0% (December 31, 2014: 5.5%) and a minimum Total Regulatory Capital of 8.0% (December 31, 2014: 8.0%) as of December 31, 2015.
The Banks equity capital is classified into three categories in accordance with Detailed Supervisory Regulations on Banking Business:
| Common Equity Tier 1 Capital: Common equity Tier 1 Capital 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 Bank, 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 perpetual instruments issued by the Bank that meet the criteria for inclusion in Additional Tier 1 capital, and 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 Bank. 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 Tier 2 capital, and the allowance for loan losses which are accumulated for assets classified as normal or precautionary in accordance with Regulations on Supervision of Banking Business and others. |
Risk weighted asset means the assets weighted according to the inherent risks in the total assets and the possible losses resulting from the errors of internal process and external events which the Bank should cover. The Bank calculates risk weighted asset by each risk (credit risk, market risk, and operational risk) based on Detailed Regulations on Supervision of Banking Business and uses it for its capital ratio calculation.
In addition to the capital ratio, the Bank assesses 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 Bank). The Bank monitors the soundness of finance and provides risk adjusted basis for performance review using the assessment of the capital adequacy. The economic capital is calculated by adding the stress testing results and other required items to the total economic capitals which are calculated for each risk.
54
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The Risk Management Council of the Bank determines the Banks risk appetite and allocates economic capital by risk type and business group. Each business group efficiently operates its capital within range of granted economic capital. The Risk Management Department of the Bank monitors a management of the limit on economic capital and reports the results to management and the Risk Management Council. The Bank 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 Bank and its subsidiaries complied with external capital adequacy requirements as of December 31, 2015 and December 31, 2014.
The details of the Banks capital adequacy calculation in line with Basel III requirements as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Equity capital |
₩ | 23,685,840 | ₩ | 23,421,797 | ||||
Tier I Capital |
20,331,853 | 19,620,849 | ||||||
Common Equity Tier 1 Capital |
20,331,853 | 19,620,849 | ||||||
Tier II Capital |
3,353,987 | 3,800,948 | ||||||
Risk-weighted assets: |
147,972,883 | 146,689,770 | ||||||
Credit risk1 |
133,389,054 | 132,453,117 | ||||||
Market risk2 |
4,189,408 | 3,445,138 | ||||||
Operational risk3 |
10,394,421 | 10,791,515 | ||||||
Equity Capital (%): |
16.01 | 15.97 | ||||||
Tier I Capital (%) |
13.74 | 13.38 | ||||||
Common Equity Tier 1 Capital (%) |
13.74 | 13.38 |
1 | Credit risk weighted assets are measured using the Internal Rating-Based Approach and Standardized Approach. |
2 | Market risk weighted assets are measured using the Internal Model-Based Approach and Standardized Approach. |
3 | Operational risk weighted assets are measured using the Advanced Measurement Approach. |
55
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
5. Segment Information
5.1 Overall Segment Information and Business Segments
The Bank is organized into Corporate Banking, Retail Banking and Other Activities. These business divisions are based on the nature of the products and services provided, the type or class of customer, and the Banks management organization.
| Corporate banking : The activities within this segment include providing credit, deposit products and other related financial services to large, small-and medium-sized enterprises and SOHOs. |
| Retail banking : The activities within this segment include providing credit, deposit products and other related financial services to individuals and households. |
| Other activities : The activities within this segment include trading activities in securities and derivatives, funding and other supporting activities. |
Financial information by business segment as of and for the year ended December 31, 2015, is as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Corporate Banking |
Retail Banking | Others | Total | |||||||||||||
Operating revenues from external customers |
₩ | 1,681,146 | ₩ | 2,115,837 | ₩ | 1,882,611 | ₩ | 5,679,594 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net interest income |
2,285,709 | 2,102,326 | 376,238 | 4,764,273 | ||||||||||||
Interest income |
3,455,911 | 3,858,102 | 1,015,570 | 8,329,583 | ||||||||||||
Interest expense |
(1,170,202 | ) | (1,755,776 | ) | (639,332 | ) | (3,565,310 | ) | ||||||||
Net fee and commission income |
223,715 | 569,832 | 377,505 | 1,171,052 | ||||||||||||
Fee and commission income |
284,918 | 671,184 | 421,935 | 1,378,037 | ||||||||||||
Fee and commission expense |
(61,203 | ) | (101,352 | ) | (44,430 | ) | (206,985 | ) | ||||||||
Net gains on financial assets/ liabilities at fair value through profit or loss |
| | 144,155 | 144,155 | ||||||||||||
Net other operating income(expenses) |
(828,278 | ) | (556,321 | ) | 984,713 | (399,886 | ) | |||||||||
General and administrative expenses |
(814,033 | ) | (2,004,800 | ) | (957,162 | ) | (3,775,995 | ) | ||||||||
Operating profit before provision for credit losses |
867,113 | 111,037 | 925,449 | 1,903,599 | ||||||||||||
Provision(reversal) for credit losses |
(713,797 | ) | (80,213 | ) | 53,982 | (740,028 | ) | |||||||||
Operating profit |
153,316 | 30,824 | 979,431 | 1,163,571 | ||||||||||||
Net other non-operating income |
720 | | 150,376 | 151,096 | ||||||||||||
Segment profit before income tax expense |
154,036 | 30,824 | 1,129,807 | 1,314,667 | ||||||||||||
Income tax expense |
(37,277 | ) | (7,460 | ) | (214,274 | ) | (259,011 | ) | ||||||||
Profit for the period |
116,759 | 23,364 | 915,533 | 1,055,656 | ||||||||||||
Total assets1 |
100,131,929 | 114,849,508 | 70,546,934 | 285,528,371 | ||||||||||||
Total liabilities1 |
87,079,957 | 130,631,229 | 45,236,769 | 262,947,955 |
56
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Financial information by business segment as of and for the year ended December 31, 2014, is as follows:
(In millions of Korean won) | 2014 | |||||||||||||||
Corporate Banking |
Retail Banking |
Others | Total | |||||||||||||
Operating revenues from external customers |
₩ | 1,725,417 | ₩ | 2,222,716 | ₩ | 1,681,375 | ₩ | 5,629,508 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net interest income |
2,406,164 | 2,124,857 | 529,432 | 5,060,453 | ||||||||||||
Interest income |
3,948,045 | 4,429,113 | 1,263,981 | 9,641,139 | ||||||||||||
Interest expense |
(1,541,881 | ) | (2,304,256 | ) | (734,549 | ) | (4,580,686 | ) | ||||||||
Net fee and commission income |
227,480 | 525,879 | 337,655 | 1,091,014 | ||||||||||||
Fee and commission income |
265,393 | 597,072 | 416,226 | 1,278,691 | ||||||||||||
Fee and commission expense |
(37,913 | ) | (71,193 | ) | (78,571 | ) | (187,677 | ) | ||||||||
Net gains on financial assets/ liabilities at fair value through profit or loss |
| | 163,900 | 163,900 | ||||||||||||
Net other operating income(expenses) |
(908,227 | ) | (428,020 | ) | 650,388 | (685,859 | ) | |||||||||
General and administrative expenses |
(680,317 | ) | (1,695,563 | ) | (964,615 | ) | (3,340,495 | ) | ||||||||
Operating profit before provision for credit losses |
1,045,100 | 527,153 | 716,760 | 2,289,013 | ||||||||||||
Provision for credit losses |
(566,917 | ) | (304,147 | ) | (12,706 | ) | (883,770 | ) | ||||||||
Operating profit |
478,183 | 223,006 | 704,054 | 1,405,243 | ||||||||||||
Net other non-operating income(expenses) |
231 | | (13,748 | ) | (13,517 | ) | ||||||||||
Segment profit before income tax expense |
478,414 | 223,006 | 690,306 | 1,391,726 | ||||||||||||
Income tax expense |
(115,776 | ) | (53,967 | ) | (156,056 | ) | (325,799 | ) | ||||||||
Profit for the period |
362,638 | 169,039 | 534,250 | 1,065,927 | ||||||||||||
Total assets1 |
91,876,957 | 111,074,156 | 68,301,532 | 271,252,645 | ||||||||||||
Total liabilities1 |
81,989,878 | 123,792,699 | 43,624,630 | 249,407,207 |
1 | Amounts before intra-group transaction adjustment. |
5.2 Services and Geographical Segments
5.2.1 Services information
Operating revenues from external customers by services for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Corporate banking service |
₩ | 1,681,146 | ₩ | 1,725,417 | ||||
Retail banking service |
2,115,837 | 2,222,716 | ||||||
Other service |
1,882,611 | 1,681,375 | ||||||
|
|
|
|
|||||
₩ | 5,679,594 | ₩ | 5,629,508 | |||||
|
|
|
|
57
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
5.2.2 Geographical information
Operating revenues from external customers for the years ended December 31, 2015 and 2014, and major non-current assets as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||||||||
Revenues from external customers |
Major non-current |
Revenues from external customers |
Major non-current |
|||||||||||||
Domestic |
₩ | 5,648,537 | ₩ | 3,167,958 | ₩ | 5,587,624 | ₩ | 3,168,912 | ||||||||
United States |
11,847 | 276 | 11,655 | 256 | ||||||||||||
New Zealand |
5,143 | 209 | 6,684 | 193 | ||||||||||||
Japan |
10,709 | 1,547 | 19,842 | 1,391 | ||||||||||||
Argentina |
| | 573 | | ||||||||||||
Vietnam |
3,358 | 239 | 3,130 | 287 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,679,594 | ₩ | 3,170,229 | ₩ | 5,629,508 | ₩ | 3,171,039 | |||||||||
|
|
|
|
|
|
|
|
6. Financial Assets and Financial Liabilities
6.1 Classification and Fair Value
Carrying amount and fair values of financial assets and liabilities as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||||||||
Carrying amount |
Fair value | Carrying amount |
Fair value | |||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions |
₩ | 13,546,149 | ₩ | 13,546,151 | ₩ | 13,272,423 | ₩ | 13,272,421 | ||||||||
Financial assets held for trading |
2,366,189 | 2,366,189 | 2,020,078 | 2,020,078 | ||||||||||||
Debt securities |
2,265,650 | 2,265,650 | 1,897,203 | 1,897,203 | ||||||||||||
Equity securities |
31,479 | 31,479 | 71,530 | 71,530 | ||||||||||||
Others |
69,060 | 69,060 | 51,345 | 51,345 | ||||||||||||
Derivatives held for trading |
2,093,399 | 2,093,399 | 1,800,663 | 1,800,663 | ||||||||||||
Derivatives held for hedging |
92,552 | 92,552 | 109,553 | 109,553 | ||||||||||||
Loans |
222,410,080 | 222,383,248 | 210,835,577 | 211,140,092 | ||||||||||||
Available-for-sale financial assets |
21,693,571 | 21,693,571 | 21,563,406 | 21,563,406 | ||||||||||||
Debt securities |
18,164,970 | 18,164,970 | 16,289,564 | 16,289,564 | ||||||||||||
Equity securities |
3,528,101 | 3,528,101 | 5,273,342 | 5,273,342 | ||||||||||||
Others |
500 | 500 | 500 | 500 | ||||||||||||
Held-to-maturity financial assets |
11,748,794 | 12,072,793 | 10,124,136 | 10,486,946 | ||||||||||||
Other financial assets |
6,855,956 | 6,855,956 | 6,497,551 | 6,497,551 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 280,806,690 | ₩ | 281,103,859 | ₩ | 266,223,387 | ₩ | 266,890,710 | |||||||||
|
|
|
|
|
|
|
|
58
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Financial liabilities |
||||||||||||||||
Financial liabilities held for trading |
₩ | 69,465 | ₩ | 69,465 | ₩ | 51,650 | ₩ | 51,650 | ||||||||
Derivatives held for trading |
2,116,760 | 2,116,760 | 1,755,640 | 1,755,640 | ||||||||||||
Derivatives held for hedging |
21,957 | 21,957 | 3,425 | 3,425 | ||||||||||||
Deposits |
220,239,666 | 220,920,457 | 207,785,044 | 208,178,501 | ||||||||||||
Debts |
14,210,939 | 14,240,914 | 14,334,655 | 14,381,293 | ||||||||||||
Debentures |
15,949,134 | 16,436,457 | 15,250,464 | 15,693,318 | ||||||||||||
Other financial liabilities |
9,265,238 | 9,265,251 | 9,083,438 | 9,083,484 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 261,873,159 | ₩ | 263,071,261 | ₩ | 248,264,316 | ₩ | 249,147,311 | |||||||||
|
|
|
|
|
|
|
|
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 Bank discloses the fair value of each class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is a quoted price in an active market.
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 reasonable approximation of fair values. These financial instruments do not have a fixed maturity and are receivable on demand. Fair value of ordinary due from financial institutions is measured using DCF model (Discounted Cash Flow Model). | |
Investment securities | The fair value of financial instruments that are quoted in active markets is determined using the quoted prices. Fair value is determined through the use of independent third-party pricing services where quoted prices are not available. Pricing services use one or more of the following valuation techniques including DCF Model, FCFE (Free Cash Flow to Equity Model), Comparable Company Analysis, 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 Bank uses internally developed valuation models that are widely used by market participants to determine fair values of plain 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. |
59
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Deposits | The carrying amount of demand deposits is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of time deposits is determined using a DCF model. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate. | |
Debts | The carrying amount of overdraft in foreign currency is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of other 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 other financial liabilities | The carrying amounts are reasonable approximation of fair values. These financial instruments are temporary accounts used for other various transactions and their maturities are relatively short or not defined. However, fair value of finance lease liabilities is measured using a DCF model. |
Fair value hierarchy
The Bank believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the statements of financial position are appropriate. However, the fair values of the financial instruments recognized in the statements of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.
The Bank classifies and discloses the 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 except for quoted prices included within Level 1 are based on inputs 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.
60
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position
The fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position as of December 31, 2015 and 2014, is as follows:
2015 | ||||||||||||||||
(In millions of Korean won) | Fair value hierarchy | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Financial assets held for trading |
||||||||||||||||
Debt securities |
₩ | 1,502,069 | ₩ | 763,581 | ₩ | | ₩ | 2,265,650 | ||||||||
Equity securities |
3,173 | 28,306 | | 31,479 | ||||||||||||
Others |
69,060 | | | 69,060 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
1,574,302 | 791,887 | | 2,366,189 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivatives held for trading |
| 2,092,802 | 597 | 2,093,399 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivatives held for hedging |
| 91,341 | 1,211 | 92,552 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Available-for-sale financial assets |
||||||||||||||||
Debt securities |
5,788,898 | 12,376,072 | | 18,164,970 | ||||||||||||
Equity securities1 |
818,227 | 1,097,393 | 1,612,481 | 3,528,101 | ||||||||||||
Others |
| 500 | | 500 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
6,607,125 | 13,473,965 | 1,612,481 | 21,693,571 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 8,181,427 | ₩ | 16,449,995 | ₩ | 1,614,289 | ₩ | 26,245,711 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities held for trading |
₩ | 69,465 | ₩ | | ₩ | | ₩ | 69,465 | ||||||||
Derivatives held for trading |
| 2,114,603 | 2,157 | 2,116,760 | ||||||||||||
Derivatives held for hedging |
| 21,460 | 497 | 21,957 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 69,465 | ₩ | 2,136,063 | ₩ | 2,654 | ₩ | 2,208,182 | |||||||||
|
|
|
|
|
|
|
|
61
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
2014 | ||||||||||||||||
(In millions of Korean won) | Fair value hierarchy | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Financial assets held for trading |
||||||||||||||||
Debt securities |
₩ | 1,563,931 | ₩ | 333,272 | ₩ | | ₩ | 1,897,203 | ||||||||
Equity securities |
40,150 | 31,380 | | 71,530 | ||||||||||||
Others |
51,345 | | | 51,345 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
1,655,426 | 364,652 | | 2,020,078 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivatives held for trading |
| 1,768,637 | 32,026 | 1,800,663 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivatives held for hedging |
| 109,293 | 260 | 109,553 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Available-for-sale financial assets |
||||||||||||||||
Debt securities |
6,707,877 | 9,581,687 | | 16,289,564 | ||||||||||||
Equity securities1 |
1,145,988 | 2,500,634 | 1,626,720 | 5,273,342 | ||||||||||||
Others |
| 500 | | 500 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
7,853,865 | 12,082,821 | 1,626,720 | 21,563,406 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 9,509,291 | ₩ | 14,325,403 | ₩ | 1,659,006 | ₩ | 25,493,700 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities held for trading |
₩ | 51,650 | ₩ | | ₩ | | ₩ | 51,650 | ||||||||
Derivatives held for trading |
| 1,747,611 | 8,029 | 1,755,640 | ||||||||||||
Derivatives held for hedging |
| 1,144 | 2,281 | 3,425 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 51,650 | ₩ | 1,748,755 | ₩ | 10,310 | ₩ | 1,810,715 | |||||||||
|
|
|
|
|
|
|
|
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 ₩24,541 million and ₩27,526 million as of December 31, 2015 and 2014, 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, due to significant fluctuations in estimated cash flows arising from entities being in its initial stages, which further results in varying and unpredictable probabilities, unlisted equity securities issued by project financing cannot be reliably and reasonably assessed. Therefore, these equity securities are carried at cost. The Bank has no plan to dispose of the financial instruments in the near future. |
62
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Valuation techniques and the inputs used in the fair value measurement of financial assets and liabilities classified as Level 2
Valuation techniques and inputs of financial assets and liabilities measured at fair value in the statements of financial position and classified as Level 2 as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Fair value | Valuation techniques |
Inputs | |||||||||
2015 | 2014 | |||||||||||
Financial assets |
||||||||||||
Financial assets held for trading |
||||||||||||
Debt securities |
₩ | 763,581 | ₩ | 333,272 | DCF model |
Discount rate | ||||||
Equity securities |
28,306 | 31,380 | DCF model |
Discount rate | ||||||||
|
|
|
|
|||||||||
791,887 | 364,652 | |||||||||||
|
|
|
|
|||||||||
Derivatives held for trading |
2,092,802 | 1,768,637 | DCF model, Closed Form, FDM |
Discount rate, volatility, foreign exchange rate, stock price and others | ||||||||
|
|
|
|
|||||||||
Derivatives held for hedging |
91,341 | 109,293 | DCF model, Closed Form, FDM |
Discount rate, volatility, foreign exchange rate and others | ||||||||
|
|
|
|
|||||||||
Available-for-sale financial assets |
||||||||||||
Debt securities |
12,376,072 | 9,581,687 | DCF model |
Discount rate | ||||||||
Equity securities |
1,097,393 | 2,500,634 | DCF model |
Discount rate | ||||||||
Others |
500 | 500 | DCF model |
Discount rate | ||||||||
|
|
|
|
|||||||||
13,473,965 | 12,082,821 | |||||||||||
|
|
|
|
|||||||||
₩ | 16,449,995 | ₩ | 14,325,403 | |||||||||
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||
Derivatives held for trading |
₩ | 2,114,603 | ₩ | 1,747,611 | DCF model, Closed Form, FDM |
Discount rate, volatility, foreign exchange rate, stock price and others | ||||||
Derivatives held for hedging |
21,460 | 1,144 | DCF model, Closed Form, FDM |
Discount rate, volatility, foreign exchange rate and others | ||||||||
|
|
|
|
|||||||||
₩ | 2,136,063 | ₩ | 1,748,755 | |||||||||
|
|
|
|
63
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Fair value hierarchy of financial assets and liabilities whose fair value is disclosed
The fair value hierarchy of financial assets and liabilities whose fair value is disclosed as of December 31, 2015 and 2014, is as follows:
2015 | ||||||||||||||||
(In millions of Korean won) | Fair value hierarchy | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions1 |
₩ | 2,465,706 | ₩ | 10,244,365 | ₩ | 836,080 | ₩ | 13,546,151 | ||||||||
Loans |
| | 222,383,248 | 222,383,248 | ||||||||||||
Held-to-maturity financial assets |
1,775,755 | 10,297,038 | | 12,072,793 | ||||||||||||
Other financial assets2 |
| | 6,855,956 | 6,855,956 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 4,241,461 | ₩ | 20,541,403 | ₩ | 230,075,284 | ₩ | 254,858,148 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Deposits1 |
₩ | | ₩ | 96,813,522 | ₩ | 124,106,935 | ₩ | 220,920,457 | ||||||||
Debts1 |
| 9,884 | 14,231,030 | 14,240,914 | ||||||||||||
Debentures |
| 16,436,457 | | 16,436,457 | ||||||||||||
Other financial liabilities3 |
| | 9,265,251 | 9,265,251 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | | ₩ | 113,259,863 | ₩ | 147,603,216 | ₩ | 260,863,079 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
2014 | ||||||||||||||||
(In millions of Korean won) | Fair value hierarchy | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets |
||||||||||||||||
Cash and due from financial institutions1 |
₩ | 2,534,896 | ₩ | 10,105,032 | ₩ | 632,493 | ₩ | 13,272,421 | ||||||||
Loans |
| | 211,140,092 | 211,140,092 | ||||||||||||
Held-to-maturity financial assets |
2,616,385 | 7,870,561 | | 10,486,946 | ||||||||||||
Other financial assets2 |
| | 6,497,551 | 6,497,551 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,151,281 | ₩ | 17,975,593 | ₩ | 218,270,136 | ₩ | 241,397,010 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||||
Deposits1 |
₩ | | ₩ | 79,420,409 | ₩ | 128,758,092 | ₩ | 208,178,501 | ||||||||
Debts1 |
| 48,984 | 14,332,309 | 14,381,293 | ||||||||||||
Debentures |
| 15,693,318 | | 15,693,318 | ||||||||||||
Other financial liabilities3 |
| | 9,083,484 | 9,083,484 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | | ₩ | 95,162,711 | ₩ | 152,173,885 | ₩ | 247,336,596 | |||||||||
|
|
|
|
|
|
|
|
1 | The amounts included in Level 2 are the carrying amounts which are reasonable approximation of the fair values. |
2 | The amounts of other financial assets included in Level 3 are the carrying amounts which are reasonable approximation of the fair values as of December 31, 2015 and 2014. |
3 | The ₩9,263,066 million and ₩9,070,198 million of other financial liabilities included in Level 3 are the carrying amounts which are reasonable approximation of fair values as of December 31, 2015 and 2014, respectively. |
64
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Valuation techniques and inputs used in the fair value measurement
Valuation techniques and 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.
Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 2 as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Fair value | Valuation Techniques |
Inputs | |||||||||||||
2015 | 2014 | |||||||||||||||
Financial assets |
||||||||||||||||
Held-to-maturity financial assets |
₩ | 10,297,038 | ₩ | 7,870,561 | DCF model | Discount rate | ||||||||||
Financial liabilities |
||||||||||||||||
Debentures |
₩ | 16,436,457 | ₩ | 15,693,318 | DCF model | Discount rate |
Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 3 as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Fair value | Valuation techniques |
Inputs | Unobservable inputs | ||||||||||
2015 | 2014 | |||||||||||||
Financial assets |
||||||||||||||
Cash and due from financial institutions |
₩ | 836,080 | ₩ | 632,493 | DCF model |
Credit spread, other spread, interest rate |
Credit spread, other spread | |||||||
Loans |
222,383,248 | 211,140,092 | DCF model |
Credit spread, other spread, prepayment rate, interest rate |
Credit spread, other spread, prepayment rate | |||||||||
|
|
|
|
|||||||||||
₩ | 223,219,328 | ₩ | 211,772,585 | |||||||||||
|
|
|
|
|||||||||||
Financial liabilities |
||||||||||||||
Deposits |
₩ | 124,106,935 | ₩ | 128,758,092 | DCF model |
Other spread, prepayment rate, interest rate |
Other spread, prepayment rate | |||||||
Debts |
14,231,030 | 14,332,309 | DCF model |
Other spread, interest rate |
Other spread | |||||||||
Other financial liabilities |
2,185 | 13,286 | DCF model |
Other spread, interest rate |
Other spread | |||||||||
|
|
|
|
|||||||||||
₩ | 138,340,150 | ₩ | 143,103,687 | |||||||||||
|
|
|
|
65
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
6.2 Level 3 of the fair value hierarchy disclosure
6.2.1 Valuation policy and process of Level 3 fair value
The Bank uses external, independent and qualified independent third-party valuation service in addition to internal valuation models to determine the fair value of the group 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 Banks policy is to recognize such transfers as having occurred at the beginning of the reporting period.
6.2.2 Changes in fair value (Level 3) measured using valuation technique based on unobservable in market
Changes in Level 3 of the fair value hierarchy for the year ended December 31, 2015, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Financial investments | Net derivatives | |||||||||||
Available-for-sale financial assets |
Derivatives held for trading |
Derivatives held for hedging |
||||||||||
Equity securities | ||||||||||||
Beginning balance |
₩ | 1,626,720 | ₩ | 23,997 | ₩ | (2,021 | ) | |||||
Total gains or losses |
||||||||||||
- Profit or loss |
200,889 | (1,447 | ) | 2,735 | ||||||||
- Other comprehensive loss |
(87,120 | ) | | | ||||||||
Purchases |
415,603 | 277 | | |||||||||
Sales |
(545,271 | ) | | | ||||||||
Issues |
| | | |||||||||
Settlements |
| (24,387 | ) | | ||||||||
Transfers into Level 31 |
24,850 | | | |||||||||
Transfers out of Level 31 |
(23,190 | ) | | | ||||||||
|
|
|
|
|
|
|||||||
Ending balance |
₩ | 1,612,481 | ₩ | (1,560 | ) | ₩ | 714 | |||||
|
|
|
|
|
|
66
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Changes in Level 3 of the fair value hierarchy for the year ended December 31, 2014, are as follows:
(In millions of Korean won) | 2014 | |||||||||||
Financial investments | Net derivatives | |||||||||||
Available-for-sale financial assets |
Derivatives held for trading |
Derivatives held for hedging |
||||||||||
Equity securities | ||||||||||||
Beginning balance |
₩ | 1,563,565 | ₩ | (4,609 | ) | ₩ | (8,390 | ) | ||||
Total gains or losses |
||||||||||||
- Profit or loss |
(112,688 | ) | (1,393 | ) | 6,579 | |||||||
- Other comprehensive income |
116,321 | | | |||||||||
Purchases |
188,642 | | | |||||||||
Sales |
(149,241 | ) | | | ||||||||
Issues |
| | | |||||||||
Settlements |
| 7,348 | (210 | ) | ||||||||
Transfers into Level 31 |
24,736 | 22,651 | | |||||||||
Transfers out of Level 31 |
(4,615 | ) | | | ||||||||
|
|
|
|
|
|
|||||||
Ending balance |
₩ | 1,626,720 | ₩ | 23,997 | ₩ | (2,021 | ) | |||||
|
|
|
|
|
|
1 | Changes in levels for the financial instruments occurred due to the change in the availability of observable market data. |
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, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||
Net income(losses) from financial investments at fair value through profit or loss |
Other operating income (losses) |
|||||||
Total gains or losses included in profit or loss for the period |
₩ | (1,447 | ) | ₩ | 203,624 | |||
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period |
1,767 | (15,372 | ) | |||||
(In millions of Korean won) | 2014 | |||||||
Net income(losses) from financial investments at fair value through profit or loss |
Other operating losses |
|||||||
Total gains or losses included in profit or loss for the period |
₩ | (1,393 | ) | ₩ | (106,109 | ) | ||
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period |
7,533 | (112,164 | ) |
67
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
6.2.3 Sensitivity analysis of changes in unobservable inputs
Information about fair value measurements using unobservable inputs as of December 31, 2015, is as follows:
(In millions of Korean won) | ||||||||||||||
Fair value | Valuation techniques |
Inputs | Unobservable inputs |
Range of (%) |
Relationship of unobservable inputs to fair value | |||||||||
Financial assets |
||||||||||||||
Derivatives held for trading |
||||||||||||||
Stock and index |
₩ | 321 | Binomial model |
Price of the underlying asset, interest rate, volatility of the underlying asset, dividend yield |
Volatility of the underlying asset |
17.10 | Higher the volatility, higher the fair value fluctuation | |||||||
Currency and interest |
264 | DCF model |
Interest rate, foreign exchange rate, loss given default |
Loss given default |
5.56 ~ 100.00 | Higher the loss rate, decrease the fair value | ||||||||
Others |
12 | MonteCarlo Simulation |
Stock price, interest rate, volatility of the stock price, volatility of interest rate |
Volatility of the stock price |
40.02 | Higher the volatility, higher the fair value fluctuation | ||||||||
Volatility of interest rate |
0.45 | Higher the volatility, higher the fair value fluctuation | ||||||||||||
Derivatives held for hedging |
||||||||||||||
Interest |
1,211 | DCF model, Closed Form, FDM, MonteCarlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset |
Volatility of the underlying asset |
5.96 | Higher the volatility, higher the fair value fluctuation | ||||||||
Available-for-sale |
||||||||||||||
Equity securities |
1,612,481 | DCF Model, Comparable Company Analysis, Risk Adjusted Discount Rate Method |
Growth rate, discount rate, volatilities of real estate price, liquidation value, recovery rate of receivables acquisition cost |
Growth rate |
0.00 ~ 3.00 | Higher the growth rate, higher the fair value | ||||||||
Discount rate |
1.72 ~ 20.65 | Lower the discount rate, higher the fair value | ||||||||||||
Volatilities of real estate price |
0.70 | Higher real estate price, higher the fair value | ||||||||||||
Liquidation value |
0.00 | Higher the liquidation value, higher the fair value | ||||||||||||
Recovery rate of receivables acquisition cost |
155.83 | Higher the recovery rate of receivables acquisition cost, higher the fair value | ||||||||||||
|
|
|||||||||||||
₩ | 1,614,289 | |||||||||||||
|
|
|||||||||||||
Financial liabilities |
||||||||||||||
Derivatives held for trading |
||||||||||||||
Stock and index |
₩ | 2,143 | DCF model, Closed Form, FDM, MonteCarlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset, correlation of the underlying assets (Correlation of rates of return on stocks), dividend yield |
Volatility of the underlying asset |
31.00 ~ 33.80 | Higher the volatility, higher the fair value fluctuation | |||||||
Correlation of rates of return on stocks |
11.96 | Higher the correlation, higher the fair value fluctuation | ||||||||||||
Others |
14 | MonteCarlo Simulation |
Stock price, interest rate, volatility of the stock price, volatility of interest rate |
Volatility of the stock price |
40.02 | Higher the volatility, higher the fair value fluctuation | ||||||||
Volatility of interest rate |
0.45 | Higher the volatility, higher the fair value fluctuation | ||||||||||||
Derivatives held for hedging |
||||||||||||||
Interest |
497 | DCF model, Closed Form, FDM, MonteCarlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset |
Volatility of the underlying asset |
3.93 | Higher the volatility, higher the fair value fluctuation | ||||||||
|
|
|||||||||||||
₩ | 2,654 | |||||||||||||
|
|
68
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Information about fair value measurements using unobservable inputs as of December 31, 2014, is as follows:
Fair value | Valuation techniques |
Inputs | Unobservable inputs |
Range of (%) |
Relationship of unobservable inputs to fair value | |||||||||
Financial assets |
||||||||||||||
Derivatives held for trading |
||||||||||||||
Stock and index |
₩ | 29,031 | DCF model, Closed Form, FDM, MonteCarlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset, correlation of the underlying assets (Correlation of rates of return on stocks), dividend yield |
Volatility of the underlying asset |
24.20 ~ 45.82 | Higher the volatility, higher the fair value fluctuation | |||||||
Correlation of rates of return on stocks |
-3.27 ~ 52.23 | Higher the correlation, higher the fair value fluctuation | ||||||||||||
Currency and interest |
2,995 | DCF model |
Interest rate, foreign exchange rate, loss given default |
Loss given default |
6.78 ~ 90.56 | Higher the loss rate, decrease the fair value | ||||||||
Derivatives held for hedging |
||||||||||||||
Interest |
260 | DCF model, Closed Form, FDM, MonteCarlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset |
Volatility of the underlying asset |
3.91 | Higher the correlation, higher the fair value fluctuation | ||||||||
Available-for-sale |
||||||||||||||
Equity securities |
1,626,720 | DCF Model, Comparable Company Analysis, Risk Adjusted Discount Rate Method |
Growth rate, discount rate, volatilities of real estate price, liquidation value, discount rate of cash flows from rent, recovery rate of receivables acquisition cost |
Growth rate |
0.00 ~ 3.00 | Higher the growth rate, higher the fair value | ||||||||
Discount rate |
2.29 ~ 21.55 | Lower the discount rate, higher the fair value | ||||||||||||
Volatilities of real estate price |
0.42 ~ 1.10 | Higher real estate price, higher the fair value | ||||||||||||
Liquidation value |
0.00 | Higher the liquidation value, higher the fair value | ||||||||||||
Discount rate of cash flows from rent |
6.89 ~ 8.55 | Lower the discount rate of cash flows from rent, higher the fair value | ||||||||||||
Recovery rate of receivables acquisition cost |
155.83 | Higher the recovery rate of receivables acquisition cost, higher the fair value | ||||||||||||
|
|
|||||||||||||
₩ | 1,659,006 | |||||||||||||
|
|
|||||||||||||
Financial liabilities |
||||||||||||||
Derivatives held for trading |
||||||||||||||
Stock and index |
₩ | 8,029 | DCF model, Closed Form, FDM, MonteCarlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset, correlation of the underlying assets (Correlation of rates of return on stocks), dividend yield |
Volatility of the underlying asset |
25.13 ~ 41.79 | Higher the volatility, higher the fair value fluctuation | |||||||
Correlation of rates of return on stocks |
-3.83 ~ 68.20 | Higher the correlation, higher the fair value fluctuation | ||||||||||||
Derivatives held for hedging |
||||||||||||||
Interest |
2,281 | DCF model, Closed Form, FDM, MonteCarlo Simulation |
Price of the underlying asset, interest rate, volatility of the underlying asset |
Volatility of the underlying asset |
2.35 ~ 3.91 | Higher the volatility, higher the fair value fluctuation | ||||||||
|
|
|||||||||||||
₩ | 10,310 | |||||||||||||
|
|
69
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 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 unfavorable. Amongst Level 3 financial instruments subject to sensitivity analysis, there are equity-related derivatives, currency-related derivatives, interest rate-related derivatives and other derivatives whose fair value changes are recognized in profit or loss as well as equity securities and private equity funds whose fair value changes are recognized in profit or loss or other comprehensive income and loss.
Sensitivity analyses by type of instrument as a result of varying input parameters are as follows:
2015 | ||||||||
(In millions of Korean won) | Recognition in profit or loss | |||||||
Favorable changes | Unfavorable changes | |||||||
Financial assets |
||||||||
Derivatives held for trading1 |
₩ | 337 | ₩ | (10 | ) | |||
Derivatives held for hedging1 |
81 | (71 | ) | |||||
Available-for-sale financial assets2 |
| | ||||||
|
|
|
|
|||||
₩ | 418 | ₩ | (81 | ) | ||||
|
|
|
|
|||||
Financial liabilities |
||||||||
Derivatives held for trading1 |
₩ | 8 | ₩ | (13 | ) | |||
Derivatives held for hedging1 |
17 | (16 | ) | |||||
|
|
|
|
|||||
₩ | 25 | ₩ | (29 | ) | ||||
|
|
|
|
70
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
2015 | ||||||||
(In millions of Korean won) | Other comprehensive income or loss | |||||||
Favorable changes | Unfavorable changes | |||||||
Financial assets |
||||||||
Available-for-sale financial assets2 |
₩ | 146,452 | ₩ | (76,614 | ) | |||
|
|
|
|
|||||
2014 | ||||||||
(In millions of Korean won) | Recognition in profit or loss | |||||||
Favorable changes | Unfavorable changes | |||||||
Financial assets |
||||||||
Derivatives held for trading1 |
₩ | 310 | ₩ | (307 | ) | |||
Derivatives held for hedging1 |
17 | (15 | ) | |||||
Available-for-sale financial assets2 |
| | ||||||
|
|
|
|
|||||
₩ | 327 | ₩ | (322 | ) | ||||
|
|
|
|
|||||
Financial liabilities |
||||||||
Derivatives held for trading1 |
₩ | 535 | ₩ | (535 | ) | |||
Derivatives held for hedging1 |
86 | (76 | ) | |||||
|
|
|
|
|||||
₩ | 621 | ₩ | (611 | ) | ||||
|
|
|
|
|||||
2014 | ||||||||
(In millions of Korean won) | Other comprehensive income or loss | |||||||
Favorable changes | Unfavorable changes | |||||||
Financial assets |
||||||||
Available-for-sale financial assets2 |
₩ | 353,142 | ₩ | (134,804 | ) | |||
|
|
|
|
1 | For stock and index-related derivatives, the changes in fair value are calculated by shifting principal unobservable input parameters such as the correlation of rates of return on stocks and the volatility of the underlying asset by ± 10%. For foreign currency derivatives, the changes in fair value are calculated by shifting the unobservable input parameters, such as the loss given default ratio by ± 1%. For interest rate-related derivatives, the correlation of the interest rates or the volatility of the underlying asset by ± 10%. |
2 | 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, or 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%). |
6.2.4 Day one gain or loss
If the Bank uses a valuation technique that incorporates data not obtained from observable markets for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price and the difference is 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.
71
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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) | 2015 | 2014 | ||||||
Balance at the beginning of the period (A) |
₩ | 187 | ₩ | 1,330 | ||||
New transactions (B) |
| | ||||||
Amounts recognized in profit or loss during the period (C= a+b) |
(178 | ) | (1,143 | ) | ||||
a. Amortization |
(20 | ) | (73 | ) | ||||
b. Settlement |
(158 | ) | (1,070 | ) | ||||
|
|
|
|
|||||
Balance at the end of period (A+B+C) |
₩ | 9 | ₩ | 187 | ||||
|
|
|
|
6.3 Carrying amounts of financial instruments by category
Financial assets and liabilities are measured at fair value or amortized cost. The carrying amounts of financial assets and liabilities by category as of December 31, 2015, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
Financial assets at fair value through profit or loss |
Loans and receivables |
Available- for-sale financial assets |
Held-to- Maturity financial assets |
Derivatives held for hedging |
Total | |||||||||||||||||||
Held for trading | ||||||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | | ₩ | 13,546,149 | ₩ | | ₩ | | ₩ | | ₩ | 13,546,149 | ||||||||||||
Financial assets at fair value through profit or loss |
2,366,189 | | | | | 2,366,189 | ||||||||||||||||||
Derivatives |
2,093,399 | | | | 92,552 | 2,185,951 | ||||||||||||||||||
Loans |
| 222,410,080 | | | | 222,410,080 | ||||||||||||||||||
Financial investments |
| | 21,693,571 | 11,748,794 | | 33,442,365 | ||||||||||||||||||
Other financial assets |
| 6,855,956 | | | | 6,855,956 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 4,459,588 | ₩ | 242,812,185 | ₩ | 21,693,571 | ₩ | 11,748,794 | ₩ | 92,552 | ₩ | 280,806,690 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
72
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||||||
Financial liabilities at fair value through profit or loss |
Financial liability at amortized cost |
Derivatives held for hedging |
Total | |||||||||||||
Held for trading | ||||||||||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities at fair value through profit or loss |
₩ | 69,465 | ₩ | | ₩ | | ₩ | 69,465 | ||||||||
Derivatives |
2,116,760 | | 21,957 | 2,138,717 | ||||||||||||
Deposits |
| 220,239,666 | | 220,239,666 | ||||||||||||
Debts |
| 14,210,939 | | 14,210,939 | ||||||||||||
Debentures |
| 15,949,134 | | 15,949,134 | ||||||||||||
Other financial liabilities |
| 9,265,238 | | 9,265,238 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 2,186,225 | ₩ | 259,664,977 | ₩ | 21,957 | ₩ | 261,873,159 | |||||||||
|
|
|
|
|
|
|
|
The carrying amounts of financial assets and liabilities by category as of December 31, 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||
Financial assets at fair value through profit or loss |
Loans and receivables |
Available- for-sale financial assets |
Held-to- Maturity financial assets |
Derivatives held for hedging |
Total | |||||||||||||||||||
Held for trading | ||||||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||
Cash and due from financial institutions |
₩ | | ₩ | 13,272,423 | ₩ | | ₩ | | ₩ | | ₩ | 13,272,423 | ||||||||||||
Financial assets at fair value through profit or loss |
2,020,078 | | | | | 2,020,078 | ||||||||||||||||||
Derivatives |
1,800,663 | | | | 109,553 | 1,910,216 | ||||||||||||||||||
Loans |
| 210,835,577 | | | | 210,835,577 | ||||||||||||||||||
Financial investments |
| | 21,563,406 | 10,124,136 | | 31,687,542 | ||||||||||||||||||
Other financial assets |
| 6,497,551 | | | | 6,497,551 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 3,820,741 | ₩ | 230,605,551 | ₩ | 21,563,406 | ₩ | 10,124,136 | ₩ | 109,553 | ₩ | 266,223,387 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||
Financial liabilities at fair value through profit or loss |
Financial liability at amortized cost |
Derivatives held for hedging |
Total | |||||||||||||
Held for trading | ||||||||||||||||
Financial liabilities |
||||||||||||||||
Financial liabilities at fair value through profit or loss |
₩ | 51,650 | ₩ | | ₩ | | ₩ | 51,650 | ||||||||
Derivatives |
1,755,640 | | 3,425 | 1,759,065 | ||||||||||||
Deposits |
| 207,785,044 | | 207,785,044 | ||||||||||||
Debts |
| 14,334,655 | | 14,334,655 | ||||||||||||
Debentures |
| 15,250,464 | | 15,250,464 | ||||||||||||
Other financial liabilities |
| 9,083,438 | | 9,083,438 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 1,807,290 | ₩ | 246,453,601 | ₩ | 3,425 | ₩ | 248,264,316 | |||||||||
|
|
|
|
|
|
|
|
73
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
6.4 Transfer of financial assets
6.4.1 Transferred financial assets that are derecognized in their entirety
The Bank transferred loans and other financial assets that are derecognized in their entirety to SPEs, while the maximum exposure to loss (carrying amount) from its continuing involvement in the derecognized financial assets as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||
2015 |
||||||||||||
Type of continuing involvement |
Classification of financial instruments |
Carrying amount of continuing involvement in statement of financial position |
Fair value of continuing involvement in statement of financial position |
|||||||||
EAK ABS Ltd. |
Subordinated debt | Available-for-sale financial assets |
₩ | 48 | ₩ | 48 | ||||||
AP 1st Securitization Specialty Co., Ltd. |
Subordinated debt | Available-for-sale financial assets |
10,335 | 10,335 | ||||||||
Discovery 1st Securitization Specialty Co., Ltd. |
Subordinated debt | Available-for-sale financial assets |
10,448 | 10,448 | ||||||||
EAK 2nd Securitization Specialty Co., Ltd. |
Subordinated debt | Available-for-sale financial assets |
22,359 | 22,359 | ||||||||
FK 1411 ABS Ltd. |
Subordinated debt | Available-for-sale financial assets |
41,810 | 41,810 | ||||||||
AP 3B ABS Ltd.1 |
Senior debt | Loans and receivables |
11,496 | 11,548 | ||||||||
Subordinated debt | Available-for-sale financial assets |
27,377 | 27,377 | |||||||||
|
|
|
|
|||||||||
₩ | 123,873 | ₩ | 123,925 | |||||||||
|
|
|
|
1 | Recognized net gain from transferring loans to the SPEs amounts to ₩10,639 million. |
2 | In addition to the above, the recovered portion in excess of the consideration paid attributable to adjustments based on the agreement with the National Happiness Fund for non-performing loans amounts to ₩4,281 million as of December 31, 2015. |
74
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||
2014 |
||||||||||||
Type of continuing involvement |
Classification of financial instruments |
Carrying amount of continuing involvement in statement of financial position |
Fair value of continuing involvement in statement of financial position |
|||||||||
KR ABS Ltd. |
Subordinated debt | Available-for-sale financial assets |
₩ | 4,921 | ₩ | 4,921 | ||||||
KR 2nd Securitization Specialty Co., Ltd. |
Subordinated debt | Available-for-sale financial assets |
22,219 | 22,219 | ||||||||
EAK ABS Ltd. |
Subordinated debt | Available-for-sale financial assets |
11,211 | 11,211 | ||||||||
AP 1st Securitization Specialty Co., Ltd. |
Senior debt | Loans and receivables |
9,762 | 9,842 | ||||||||
Subordinated debt | Available-for-sale financial assets |
17,346 | 17,346 | |||||||||
Discovery 1st Securitization Specialty Co., Ltd. |
Senior debt | Loans and receivables |
1,175 | 1,194 | ||||||||
Subordinated debt | Available-for-sale financial assets |
22,591 | 22,591 | |||||||||
EAK 2nd Securitization Specialty Co., Ltd. 1 |
Senior debt | Loans and receivables |
19,806 | 20,026 | ||||||||
Subordinated debt | Available-for-sale financial assets |
38,207 | 38,207 | |||||||||
FK 1411 ABS Ltd. 2 |
Senior debt | Loans and receivables |
44,966 | 44,917 | ||||||||
Subordinated debt | Available-for-sale financial assets |
47,600 | 47,600 | |||||||||
|
|
|
|
|||||||||
₩ | 239,804 | ₩ | 240,074 | |||||||||
|
|
|
|
1 | Recognized net gain 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, the recovered portion in excess of the consideration paid attributable to adjustments based on the agreement with the National Happiness Fund for non-performing loans amounts to ₩3,145 million in 2014. |
75
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
6.4.2 Securities under repurchase agreements and loaned securities
The Bank 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 Bank 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 Bank substantially retains all the risks and rewards of ownership of the financial asset. The amounts of transferred assets and related liabilities as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||
Carrying amount of transferred assets |
Carrying amount of related liabilities |
|||||||
Securities under repurchase agreements |
₩ | 554,888 | ₩ | 518,086 | ||||
Loaned securities |
200,389 | | ||||||
Government and public bonds |
200,389 | | ||||||
|
|
|
|
|||||
₩ | 755,277 | ₩ | 518,086 | |||||
|
|
|
|
|||||
(In millions of Korean won) | 2014 | |||||||
Carrying amount of transferred assets |
Carrying amount of related liabilities |
|||||||
Securities under repurchase agreements |
₩ | 81,392 | ₩ | 69,469 | ||||
Loaned securities |
51,103 | | ||||||
Government and public bonds |
51,103 | | ||||||
|
|
|
|
|||||
₩ | 132,495 | ₩ | 69,469 | |||||
|
|
|
|
6.5 Offsetting financial assets and financial liabilities
The Bank enters into International Swaps and Derivatives Association (ISDA) master netting agreements and other similar netting arrangements with the Banks derivative and spot exchange counterparties. Similar netting agreements are also entered into with the Banks 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 financial position.
76
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The details of financial assets subject to offsetting, enforceable master netting arrangements or similar agreements as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||||||
Gross amounts financial |
Net amounts of financial |
Related amounts not offset in the statement of financial position |
Net amount | |||||||||||||||||||||
Gross amounts of recognized financial assets |
liabilities offset in the statement of position |
assets presented in the financial position |
Financial instruments |
Cash collateral received |
||||||||||||||||||||
Derivatives held for trading |
₩ | 2,093,066 | ₩ | | ₩ | 2,093,066 | ₩ | (1,594,838 | ) | ₩ | (22,220 | ) | ₩ | 476,008 | ||||||||||
Derivatives held for hedging |
92,552 | | 92,552 | (15,650 | ) | | 76,902 | |||||||||||||||||
Receivable spot exchange |
2,841,945 | | 2,841,945 | (2,840,480 | ) | | 1,465 | |||||||||||||||||
Reverse repurchase, securities borrowing and similar agreements |
2,016,900 | | 2,016,900 | (2,016,900 | ) | | | |||||||||||||||||
Other financial instruments |
20,125,762 | (17,987,341 | ) | 2,138,421 | | | 2,138,421 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 27,170,225 | ₩ | (17,987,341) | ₩ | 9,182,884 | ₩ | (6,467,868) | ₩ | (22,220) | ₩ | 2,692,796 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Gross amounts financial |
Net amounts of financial |
Related amounts not offset in the statement of financial position |
Net amount | |||||||||||||||||||||
Gross amounts of recognized financial assets |
liabilities offset in the statement of position |
assets presented in the financial position |
Financial instruments |
Cash collateral received |
||||||||||||||||||||
Derivatives held for trading |
₩ | 1,798,279 | ₩ | | ₩ | 1,798,279 | ₩ | (1,472,239 | ) | ₩ | (1,635 | ) | ₩ | 324,405 | ||||||||||
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 agreements |
3,275,500 | | 3,275,500 | (3,275,500 | ) | | | |||||||||||||||||
Other financial instruments |
18,249,521 | (16,161,647 | ) | 2,087,874 | | | 2,087,874 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 25,776,161 | ₩ | (16,161,647 | ) | ₩ | 9,614,514 | ₩ | (7,105,543 | ) | ₩ | (1,635 | ) | ₩ | 2,507,336 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
77
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The details of financial liabilities subject to offsetting, enforceable master netting arrangements or similar agreements as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||||||
Gross amounts financial |
Net amounts of financial |
Related amounts not offset in the statement of financial position |
Net amount | |||||||||||||||||||||
Gross amounts of recognized financial assets |
liabilities offset in the statement of position |
assets presented in the financial position |
Financial instruments |
Cash collateral pledged |
||||||||||||||||||||
Derivatives held for trading |
₩ | 2,116,480 | ₩ | | ₩ | 2,116,480 | ₩ | (1,618,253 | ) | ₩ | (4,633 | ) | ₩ | 493,594 | ||||||||||
Derivatives held for hedging |
21,957 | | 21,957 | (14,417 | ) | | 7,540 | |||||||||||||||||
Payable spot exchange |
2,842,407 | | 2,842,407 | (2,840,480 | ) | | 1,927 | |||||||||||||||||
Repurchase, securities lending and similar agreements1 |
518,086 | | 518,086 | (518,086 | ) | | | |||||||||||||||||
Other financial instruments |
18,105,992 | (17,987,341 | ) | 118,651 | (118,651 | ) | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 23,604,922 | ₩ | (17,987,341 | ) | ₩ | 5,617,581 | ₩ | (5,109,887 | ) | ₩ | (4,633 | ) | ₩ | 503,061 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(In millions of Korean won) | 2014 | |||||||||||||||||||||||
Gross amounts financial |
Net amounts of financial |
Related amounts not offset in the statement of financial position |
Net amount | |||||||||||||||||||||
Gross amounts of recognized financial assets |
liabilities offset in the statement of position |
assets presented in the financial position |
Financial instruments |
Cash collateral pledged |
||||||||||||||||||||
Derivatives held for trading |
₩ | 1,755,187 | ₩ | | ₩ | 1,755,187 | ₩ | (1,316,234 | ) | ₩ | | ₩ | 438,953 | |||||||||||
Derivatives held for hedging |
3,425 | | 3,425 | (3,013 | ) | | 412 | |||||||||||||||||
Payable spot exchange |
2,343,234 | | 2,343,234 | (2,342,116 | ) | | 1,118 | |||||||||||||||||
Repurchase, securities lending and similar agreements1 |
69,469 | | 69,469 | (69,469 | ) | | | |||||||||||||||||
Other financial instruments |
16,284,444 | (16,161,647 | ) | 122,797 | (122,797 | ) | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
₩ | 20,455,759 | ₩ | (16,161,647 | ) | ₩ | 4,294,112 | ₩ | (3,853,629) | ₩ | | ₩ | 440,483 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
1 | Includes repurchase agreements sold to customers. |
78
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
7. | Due from financial institutions |
The details of due from financial institutions as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Financial Institutions | Interest rate (%) |
2015 | 2014 | ||||||||||||
Due from financial institutions in Korean won |
Due from Bank of Korea |
Bank of Korea |
0.00~1.50 | ₩ | 6,376,961 | ₩ | 6,283,230 | |||||||||
Due from banking institutions |
KEB Hana Bank and others |
0.00~1.90 | 700,822 | 579,457 | ||||||||||||
Due from others |
KB Investment & Securities Co., Ltd. and others |
1.00 | 2,818,913 | 3,011,621 | ||||||||||||
|
|
|
|
|||||||||||||
9,896,696 | 9,874,308 | |||||||||||||||
|
|
|
|
|||||||||||||
Due from financial institutions in foreign currencies |
Due from banks in foreign currencies |
Bank of Korea and others |
| 1,053,137 | 810,181 | |||||||||||
Time deposits in foreign currencies |
KEB Hana Bank and others |
0.17~4.79 | 93,662 | 16,871 | ||||||||||||
Due from others |
Bank of Japan and others |
| 36,948 | 36,168 | ||||||||||||
|
|
|
|
|||||||||||||
1,183,747 | 863,220 | |||||||||||||||
|
|
|
|
|||||||||||||
₩ | 11,080,443 | ₩ | 10,737,528 | |||||||||||||
|
|
|
|
Restricted due from financial institutions as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Financial Institution | 2015 | 2014 | Reason for restriction | ||||||||||
Due from financial institutions in Korean won |
Due from Bank of Korea |
Bank of Korea |
₩ | 6,376,961 | ₩ | 6,283,230 | Bank of Korea Act | |||||||
Due from banking institutions |
|
| 279,200 | Agreement for allocation of deposit | ||||||||||
Due from others |
Morgan Stanley Bank International Ltd |
4,646 | | Derivatives margin account and others | ||||||||||
|
|
|
|
|||||||||||
6,381,607 | 6,562,430 | |||||||||||||
|
|
|
|
|||||||||||
Due from financial institutions in foreign currencies |
Due from banks in foreign currencies |
Bank of Korea and others |
427,662 | 229,423 | Bank of Korea Act and others | |||||||||
Time deposits in foreign currencies |
China Merchants Bank NY Branch |
17,580 | 16,488 | New York State Banking Law | ||||||||||
Due from others |
Samsung Futures Inc. and others |
4,868 | 4,022 | Derivatives margin account and others | ||||||||||
|
|
|
|
|||||||||||
450,110 | 249,933 | |||||||||||||
|
|
|
|
|||||||||||
₩ | 6,831,717 | ₩ | 6,812,363 | |||||||||||
|
|
|
|
79
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
8. Assets pledged as collateral
The details of assets pledged as collateral as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||
2015 | ||||||||
Assets pledged | Pledgee | Carrying amount | Reason for the pledge | |||||
Available-for-sale financial assets |
Korea Securities Depository and others |
₩ | 481,937 | Repurchase agreements | ||||
Bank of Korea |
594,020 | Borrowings from Bank of Korea | ||||||
Bank of Korea |
61,410 | Settlement risk of Bank of Korea | ||||||
Deutshe Bank AG. and others |
408,951 | Derivatives transaction | ||||||
Others |
5,604 | Others | ||||||
|
|
|||||||
1,551,922 | ||||||||
|
|
|||||||
Held-to-maturity financial assets |
Korea Securities Depository and others |
101,942 | Repurchase agreements | |||||
Bank of Korea |
820,872 | Borrowings from Bank of Korea | ||||||
Bank of Korea |
922,733 | Settlement risk of Bank of Korea | ||||||
Samsung Futures Inc. and others |
200,625 | Derivatives transitions | ||||||
Others |
174,984 | Others | ||||||
|
|
|||||||
2,221,156 | ||||||||
|
|
|||||||
Mortgage loans |
Others |
1,745,823 | Covered Bond | |||||
|
|
|||||||
₩ | 5,518,901 | |||||||
|
|
|||||||
(In millions of Korean won) | ||||||||
2014 | ||||||||
Assets pledged | Pledgee | Carrying amount | Reason for the pledge | |||||
Financial assets held for trading |
Others |
₩ | 9,847 | Settlement of Korea Exchange | ||||
Held-to-maturity financial assets |
Korea Securities Depository and others |
1,460,932 | Repurchase agreements | |||||
Bank of Korea |
993,853 | Borrowings from Bank of Korea | ||||||
Bank of Korea |
1,440,821 | Settlement risk of Bank of Korea | ||||||
Samsung Futures Inc. and others |
339,107 | Derivatives transaction | ||||||
Others |
254,980 | Others | ||||||
|
|
|||||||
4,489,693 | ||||||||
|
|
|||||||
₩ | 4,499,540 | |||||||
|
|
The fair value of collateral available to sell or repledge, and collateral sold or repledged, regardless of debtors default as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | |||||||
Fair value of collateral | Fair value of collateral sold or repledged |
|||||||
Securities |
₩ | 2,034,275 | ₩ | |
80
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||
Fair value of collateral | Fair value of collateral sold or repledged |
|||||||
Securities |
₩ |
3,344,318 |
|
₩ | |
9. | Derivative financial instruments and hedge accounting |
The Banks derivative operations focus on addressing the needs of the Banks corporate clients to hedge their risk exposure and to hedge the Banks risk exposure that results from such client contracts. The Bank also engages in derivative trading activities to hedge the interest rate and foreign currency risk exposures that arise from the Banks own assets and liabilities. In addition, the Bank engages in proprietary trading of derivatives within the Banks regulated open position limits.
The Bank 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 Bank applies fair value hedge accounting using cross currency swaps, interest rate swaps and others to hedge the risk of changes in fair values due to the changes in interest rates and foreign exchange rates of structured debentures in Korean won, debentures in foreign currencies, structured deposits in Korean won, and structured deposits in foreign currencies.
81
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The details of derivative financial instruments for trading as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Notional amount | Assets | Liabilities | ||||||||||
Interest rate |
||||||||||||
Futures1 |
₩ | 528,941 | ₩ | | ₩ | | ||||||
Swaps |
91,041,542 | 908,965 | 889,934 | |||||||||
Options |
5,874,500 | 73,724 | 133,087 | |||||||||
|
|
|
|
|
|
|||||||
97,444,983 | 982,689 | 1,023,021 | ||||||||||
|
|
|
|
|
|
|||||||
Currency |
||||||||||||
Forwards |
33,672,557 | 511,513 | 304,877 | |||||||||
Futures1 |
576,263 | | | |||||||||
Swaps |
25,303,179 | 596,668 | 782,912 | |||||||||
Options |
373,241 | 2,196 | 3,526 | |||||||||
|
|
|
|
|
|
|||||||
59,925,240 | 1,110,377 | 1,091,315 | ||||||||||
|
|
|
|
|
|
|||||||
Stock and index |
||||||||||||
Futures1 |
26,588 | | | |||||||||
Swaps |
| | | |||||||||
Options |
40,571 | 321 | 2,410 | |||||||||
|
|
|
|
|
|
|||||||
67,159 | 321 | 2,410 | ||||||||||
|
|
|
|
|
|
|||||||
Others |
703,200 | 12 | 14 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 158,140,582 | ₩ | 2,093,399 | ₩ | 2,116,760 | |||||||
|
|
|
|
|
|
|||||||
(In millions of Korean won) | 2014 | |||||||||||
Notional amount | Assets | Liabilities | ||||||||||
Interest rate |
||||||||||||
Futures1 |
₩ | 270,279 | ₩ | | ₩ | | ||||||
Swaps |
101,427,709 | 923,094 | 956,096 | |||||||||
Options |
8,398,000 | 86,277 | 128,185 | |||||||||
|
|
|
|
|
|
|||||||
110,095,988 | 1,009,371 | 1,084,281 | ||||||||||
|
|
|
|
|
|
|||||||
Currency |
||||||||||||
Forwards |
21,253,952 | 340,245 | 214,759 | |||||||||
Futures1 |
554,794 | | | |||||||||
Swaps |
18,430,843 | 415,842 | 441,696 | |||||||||
Options |
616,977 | 6,057 | 6,078 | |||||||||
|
|
|
|
|
|
|||||||
40,856,566 | 762,144 | 662,533 | ||||||||||
|
|
|
|
|
|
|||||||
Stock and index |
||||||||||||
Futures1 |
76,298 | | | |||||||||
Swaps |
45,135 | 26,648 | 1,166 | |||||||||
Options |
114,617 | 2,500 | 7,660 | |||||||||
|
|
|
|
|
|
|||||||
236,050 | 29,148 | 8,826 | ||||||||||
|
|
|
|
|
|
|||||||
₩ | 151,188,604 | ₩ | 1,800,663 | ₩ | 1,755,640 | |||||||
|
|
|
|
|
|
1 | A gain or loss from daily mark-to-market futures is reflected in the margin accounts. |
82
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Fair value hedge
The details of derivatives designated as fair value hedging instruments as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Notional amount | Assets | Liabilities | ||||||||||
Interest rate |
||||||||||||
Swaps |
₩ | 3,108,538 | ₩ | 91,341 | ₩ | 21,460 | ||||||
Other |
140,000 | 1,211 | 497 | |||||||||
|
|
|
|
|
|
|||||||
₩ | 3,248,538 | ₩ | 92,552 | ₩ | 21,957 | |||||||
|
|
|
|
|
|
(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 | |||||||
|
|
|
|
|
|
Gains and losses from fair value hedging instruments and hedged items attributable to the hedged risk for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Losses on hedging instruments |
₩ | (39,381 | ) | ₩ | (28,269 | ) | ||
Gains on the hedged item attributable to the hedged risk |
40,002 | 42,393 | ||||||
|
|
|
|
|||||
₩ | 621 | ₩ | 14,124 | |||||
|
|
|
|
83
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
10. | Loans |
Loans as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Loans |
₩ | 223,842,412 | ₩ | 212,200,594 | ||||
Deferred loan origination fees and costs |
574,664 | 545,702 | ||||||
Allowances |
(2,006,996 | ) | (1,910,719 | ) | ||||
|
|
|
|
|||||
Carrying amount |
₩ | 222,410,080 | ₩ | 210,835,577 | ||||
|
|
|
|
Loans to banks as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Loans |
₩ | 7,335,310 | ₩ | 6,677,146 | ||||
Allowances |
(39 | ) | (53 | ) | ||||
|
|
|
|
|||||
Carrying amount |
₩ | 7,335,271 | ₩ | 6,677,093 | ||||
|
|
|
|
Loans to customers other than banks as of December 31, 2015 and 2014, consist of:
(In millions of Korean won) | 2015 | |||||||||||
Retail | Corporate | Total | ||||||||||
Loans in Korean won |
₩ | 115,780,280 | ₩ | 91,272,182 | ₩ | 207,052,462 | ||||||
Loans in foreign currencies |
31,100 | 1,927,848 | 1,958,948 | |||||||||
Domestic import usance bills |
| 3,445,301 | 3,445,301 | |||||||||
Off-shore funding loans |
| 584,914 | 584,914 | |||||||||
Call loans |
| 195,000 | 195,000 | |||||||||
Bills bought in Korean won |
| 5,257 | 5,257 | |||||||||
Bills bought in foreign currencies |
| 2,811,817 | 2,811,817 | |||||||||
Guarantee payments under payment guarantee |
| 26,129 | 26,129 | |||||||||
Reverse repurchase agreements |
| 216,700 | 216,700 | |||||||||
Privately placed bonds |
| 785,238 | 785,238 | |||||||||
|
|
|
|
|
|
|||||||
115,811,380 | 101,270,386 | 217,081,766 | ||||||||||
Proportion (%) |
53.35 | 46.65 | 100 | |||||||||
|
|
|
|
|
|
|||||||
Allowances |
(431,967 | ) | (1,574,990 | ) | (2,006,957 | ) | ||||||
|
|
|
|
|
|
|||||||
₩ | 115,379,413 | ₩ | 99,695,396 | ₩ | 215,074,809 | |||||||
|
|
|
|
|
|
84
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||
Retail | Corporate | Total | ||||||||||
Loans in Korean won |
₩ | 112,042,305 | ₩ | 84,006,117 | ₩ | 196,048,422 | ||||||
Loans in foreign currencies |
37,761 | 1,896,126 | 1,933,887 | |||||||||
Domestic import usance bills |
| 3,693,951 | 3,693,951 | |||||||||
Off-shore funding loans |
| 664,794 | 664,794 | |||||||||
Call loans |
| 211,000 | 211,000 | |||||||||
Bills bought in Korean won |
| 6,678 | 6,678 | |||||||||
Bills bought in foreign currencies |
| 1,957,729 | 1,957,729 | |||||||||
Guarantee payments under payment guarantee |
| 12,975 | 12,975 | |||||||||
Reverse repurchase agreements |
| 825,500 | 825,500 | |||||||||
Privately placed bonds |
| 714,214 | 714,214 | |||||||||
|
|
|
|
|
|
|||||||
112,080,066 | 93,989,084 | 206,069,150 | ||||||||||
Proportion (%) |
54.39 | 45.61 | 100.00 | |||||||||
|
|
|
|
|
|
|||||||
Allowances |
(476,517 | ) | (1,434,149 | ) | (1,910,666 | ) | ||||||
|
|
|
|
|
|
|||||||
₩ | 111,603,549 | ₩ | 92,554,935 | ₩ | 204,158,484 | |||||||
|
|
|
|
|
|
The changes in deferred loan origination fees and costs for the years ended December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Increase | Decrease | Other | Ending | |||||||||||||||
Deferred loan origination costs |
||||||||||||||||||||
Loans in Korean won |
₩ | 572,108 | ₩ | 422,396 | ₩ | 399,986 | ₩ | | ₩ | 594,518 | ||||||||||
Other origination costs |
598 | 491 | 619 | | 470 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
572,706 | 422,887 | 400,605 | | 594,988 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Deferred loan origination fees |
||||||||||||||||||||
Loans in Korean won |
21,993 | 3,091 | 9,112 | | 15,972 | |||||||||||||||
Other origination fees |
5,011 | 1,929 | 2,588 | | 4,352 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
27,004 | 5,020 | 11,700 | | 20,324 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 545,702 | ₩ | 417,867 | ₩ | 388,905 | ₩ | | ₩ | 574,664 | |||||||||||
|
|
|
|
|
|
|
|
|
|
2014 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Increase | Decrease | Other | Ending | |||||||||||||||
Deferred loan origination costs |
||||||||||||||||||||
Loans in Korean won |
₩ | 495,619 | ₩ | 355,270 | ₩ | 278,781 | ₩ | | ₩ | 572,108 | ||||||||||
Other origination costs |
378 | 1,100 | 880 | | 598 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
495,997 | 356,370 | 279,661 | | 572,706 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Deferred loan origination fees |
||||||||||||||||||||
Loans in Korean won |
25,064 | 4,579 | 7,650 | | 21,993 | |||||||||||||||
Other origination fees |
7,032 | 1,074 | 3,095 | | 5,011 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
32,096 | 5,653 | 10,745 | | 27,004 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 463,901 | ₩ | 350,717 | ₩ | 268,916 | ₩ | | ₩ | 545,702 | |||||||||||
|
|
|
|
|
|
|
|
|
|
85
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
11. | Allowances for Loan Losses |
The changes in the allowances for loan losses for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Retail | Corporate | Total | ||||||||||
Beginning |
₩ | 476,517 | ₩ | 1,434,202 | ₩ | 1,910,719 | ||||||
Written-off |
(295,642 | ) | (683,463 | ) | (979,105 | ) | ||||||
Recoveries from written-off loans |
176,616 | 156,531 | 333,147 | |||||||||
Sale |
(4,051 | ) | (45,619 | ) | (49,670 | ) | ||||||
Other changes |
(1,324 | ) | (876 | ) | (2,200 | ) | ||||||
Provision1 |
79,851 | 714,254 | 794,105 | |||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 431,967 | ₩ | 1,575,029 | ₩ | 2,006,996 | ||||||
|
|
|
|
|
|
|||||||
(In millions of Korean won) | 2014 | |||||||||||
Retail | Corporate | Total | ||||||||||
Beginning |
₩ | 571,860 | ₩ | 1,800,698 | ₩ | 2,372,558 | ||||||
Written-off |
(520,369 | ) | (1,069,477 | ) | (1,589,846 | ) | ||||||
Recoveries from written-off loans |
130,034 | 264,134 | 394,168 | |||||||||
Sale |
(6,726 | ) | (61,255 | ) | (67,981 | ) | ||||||
Other changes |
(6,246 | ) | (68,523 | ) | (74,769 | ) | ||||||
Provision1 |
307,964 | 568,625 | 876,589 | |||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 476,517 | ₩ | 1,434,202 | ₩ | 1,910,719 | ||||||
|
|
|
|
|
|
1 | Provision for credit losses in statements of comprehensive income also include provision (reversal) for unused commitments and guarantees (Note 22), provision (reversal) for financial guarantee contracts (Note 22), and provision (reversal) for other financial assets (Note 17). |
86
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Financial assets held for trading |
||||||||
Debt securities |
||||||||
Government and public bonds |
₩ | 951,934 | ₩ | 1,152,888 | ||||
Financial bonds |
1,310,274 | 680,562 | ||||||
Corporate bonds |
3,442 | 63,753 | ||||||
Equity securities |
||||||||
Stocks |
1,986 | 31,309 | ||||||
Beneficiary certificates |
29,493 | 40,221 | ||||||
Others |
69,060 | 51,345 | ||||||
|
|
|
|
|||||
Total financial assets at fair value through profit or loss |
₩ | 2,366,189 | ₩ | 2,020,078 | ||||
|
|
|
|
|||||
Available-for-sale financial assets |
||||||||
Debt securities |
||||||||
Government and public bonds |
₩ | 3,202,350 | ₩ | 4,214,383 | ||||
Financial bonds |
6,351,616 | 6,235,689 | ||||||
Corporate bonds |
3,430,276 | 4,641,211 | ||||||
Asset-backed securities |
5,180,728 | 1,198,281 | ||||||
Equity securities |
||||||||
Stocks |
1,426,301 | 1,769,922 | ||||||
Equity investments |
41,314 | 45,578 | ||||||
Beneficiary certificates |
2,060,486 | 3,457,842 | ||||||
Others |
500 | 500 | ||||||
|
|
|
|
|||||
21,693,571 | 21,563,406 | |||||||
|
|
|
|
|||||
Held-to-maturity financial assets |
||||||||
Debts securities |
||||||||
Government and public bonds |
1,870,481 | 2,724,716 | ||||||
Financial bonds |
2,024,444 | 1,047,049 | ||||||
Corporate bonds |
3,709,968 | 5,880,095 | ||||||
Asset-backed securities |
4,143,901 | 472,276 | ||||||
|
|
|
|
|||||
11,748,794 | 10,124,136 | |||||||
|
|
|
|
|||||
Total financial investments |
₩ | 33,442,365 | ₩ | 31,687,542 | ||||
|
|
|
|
87
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The impairment losses and the reversal of impairment losses in financial investment for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||
2015 | ||||||||||||
Impairment | Reversal | Net | ||||||||||
Available-for-sale financial assets |
₩ | (216,027 | ) | ₩ | | ₩ | (216,027 | ) | ||||
|
|
|
|
|
|
|||||||
Held-to-maturity financial assets |
| | | |||||||||
|
|
|
|
|
|
|||||||
₩ (216,027) | ₩ | | ₩ | (216,027 | ) | |||||||
|
|
|
|
|
|
|||||||
(In millions of Korean won) | ||||||||||||
2014 | ||||||||||||
Impairment | Reversal | Net | ||||||||||
Available-for-sale financial assets |
₩ | (180,784 | ) | ₩ | | ₩ | (180,784 | ) | ||||
|
|
|
|
|
|
|||||||
Held-to-maturity financial assets |
| | | |||||||||
|
|
|
|
|
|
|||||||
₩ (180,784) | ₩ | | ₩ | (180,784 | ) | |||||||
|
|
|
|
|
|
13. | Investments in associates and subsidiaries |
Investments in associates and subsidiaries as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) (In thousands of US dollars) |
2015 | |||||||||||||||||||
Ownership (%) |
Acquisition cost |
Share of net asset amount |
Carrying amount |
Industry | Location | |||||||||||||||
Associates |
||||||||||||||||||||
Balhae Infrastructure Fund1 |
12.61 | ₩ | 125,462 | ₩ | 128,275 | ₩ | 129,123 | Investment finance | Korea | |||||||||||
Korea Credit Bureau Co., Ltd.1 |
9.00 | 4,500 | 4,580 | 2,769 | Credit information | Korea | ||||||||||||||
UAMCO., Ltd.1 |
17.50 | 85,050 | 125,822 | 84,792 | Other finance | Korea | ||||||||||||||
JSC Bank CenterCredit |
||||||||||||||||||||
Ordinary shares 2 |
29.56 | 954,104 | (21,990 | ) | 31,134 | Banking | Kazakhstan | |||||||||||||
Preferred shares 2 |
93.15 | |||||||||||||||||||
KB12-1 Venture Investment Partnership3 |
80.00 | 40,000 | 50,670 | 40,000 | Investment finance | Korea | ||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
30.00 | 16,131 | 15,537 | 13,825 | Investment finance | Korea | ||||||||||||||
United PF 1st Recovery Private Equity Fund1 |
17.73 | 172,441 | 187,596 | 172,441 | Other finance | Korea | ||||||||||||||
Shinla Construction Co., Ltd. |
20.17 | | (516 | ) | | Specialty construction | Korea | |||||||||||||
KB GwS Private Securities Investment Trust |
20.93 | 89,124 | 102,530 | 89,124 | Investment finance | Korea | ||||||||||||||
Incheon Bridge Co., Ltd. 1 |
14.99 | 24,677 | (1,879 | ) | 24,677 | Operation of highways and related facilities |
Korea | |||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
20.00 | 24,760 | 23,272 | 24,760 | Investment finance | Korea | ||||||||||||||
Future Planning KB Start-up Creation Fund3 |
50.00 | 12,000 | 11,860 | 12,000 | Investment finance | Korea |
88
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Terra Corporation |
24.06 | | 37 | | Manufacture of fabricated and processed metal products |
Korea | ||||||||||||||
MJT&I Corp. 6 |
22.89 | | (580 | ) | | Wholesale of other merchandise |
Korea | |||||||||||||
Jungdong Steel Co., Ltd. 6 |
42.65 | | 86 | | Wholesale of primary metal |
Korea | ||||||||||||||
Doosung Metal Co., Ltd6 |
26.49 | | (47 | ) | | Manufacture of metal door, windows, shutter and relevant products |
Korea | |||||||||||||
Myeongwon Tech Co., Ltd. 6 |
25.62 | | (447 | ) | | Manufacture of other automotive parts |
Korea | |||||||||||||
Shinhwa Underwear Co., Ltd6 |
26.05 | | (184 | ) | | Manufacture of underwear and sleepwear |
Korea | |||||||||||||
DPAPS Co., Ltd. 6 |
38.62 | | 339 | | Wholesale of paper |
Korea | ||||||||||||||
EJADE Co., Ltd. 6 |
25.67 | | 591 | | Wholesale of underwear |
Korea | ||||||||||||||
|
|
|
|
|
|
|||||||||||||||
₩ | 1,548,249 | ₩ | 625,552 | ₩ | 624,645 | |||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Kookmin Bank Intl Ltd. |
100.00 | USD | 30,392 | 84,318 | 67,396 | Banking | United Kingdom | |||||||||||||
Kookmin Bank Hong Kong Ltd. 4 |
100.00 | USD | 20,000 | 155,147 | 105,643 | Banking | Hong Kong | |||||||||||||
Kookmin Bank Cambodia PLC. 4 |
100.00 | USD | 17,846 | 24,824 | 19,885 | Banking | Cambodia | |||||||||||||
Kookmin Bank(China) Ltd. 4 |
100.00 | USD | 383,875 | 432,325 | 418,155 | Banking | China | |||||||||||||
|
|
|
|
|
|
|||||||||||||||
USD | 452,113 | 696,614 | 611,079 | |||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
₩ | 1,322,166 | ₩ | 1,235,724 | |||||||||||||||||
|
|
|
|
(In millions of Korean won) (In thousands of US dollars) |
2014 | |||||||||||||||||||
Ownership (%) |
Acquisition cost |
Share of net asset amount |
Carrying amount |
Industry | Location | |||||||||||||||
Associates |
||||||||||||||||||||
Balhae Infrastructure Fund1 |
12.61 | ₩ | 122,623 | ₩ | 125,119 | ₩ | 126,284 | Investment finance | Korea | |||||||||||
Korea Credit Bureau Co., Ltd.1 |
9.00 | 4,500 | 4,222 | 2,769 | Credit information | Korea | ||||||||||||||
UAMCO., Ltd.1 |
17.50 | 85,050 | 114,240 | 84,792 | Other finance | Korea | ||||||||||||||
JSC Bank CenterCredit |
||||||||||||||||||||
Ordinary shares 2 |
29.56 | 954,104 | 36,763 | 61,758 | Banking | Kazakhstan | ||||||||||||||
Preferred shares 2 |
93.15 | |||||||||||||||||||
KB12-1 Venture Investment Partnership3 |
80.00 | 28,800 | 29,119 | 28,800 | Investment finance | Korea | ||||||||||||||
KoFC KBIC Frontier Champ 2010-5(PEF) |
30.00 | 18,981 | 15,705 | 16,675 | Investment finance | Korea | ||||||||||||||
United PF 1st Recovery Private Equity Fund1 |
17.72 | 191,617 | 203,270 | 191,617 | Other finance | Korea |
89
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
CH Engineering Co., Ltd. 5 |
41.73 | | 178 | | Architectural design and related service |
Korea | ||||||||||||||
Shinla Construction Co., Ltd. |
20.17 | | (502 | ) | | Specialty construction |
Korea | |||||||||||||
KB GwS Private Securities Investment Trust |
20.93 | 89,124 | 99,818 | 89,124 | Investment finance | Korea | ||||||||||||||
Incheon Bridge Co., Ltd. 1 |
14.99 | 24,677 | (1,716 | ) | 24,677 | Operation of highways and related facilities |
Korea | |||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
20.00 | 21,000 | 18,563 | 21,000 | Investment finance | Korea | ||||||||||||||
Future Planning KB Start-up Creation Fund3 |
50.00 | 4,000 | 3,825 | 4,000 | Investment finance | Korea | ||||||||||||||
Terra Corporation |
24.06 | | (99 | ) | | Manufacture of fabricated and processed metal products |
Korea | |||||||||||||
|
|
|
|
|
|
|||||||||||||||
₩ | 1,544,476 | ₩ | 648,505 | ₩ | 651,496 | |||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Subsidiaries |
||||||||||||||||||||
Kookmin Bank Intl Ltd.(London)4 |
100.00 | USD | 30,392 | 75,809 | 67,396 | Banking | United Kingdom | |||||||||||||
Kookmin Bank Hong Kong Ltd. 4 |
100.00 | USD | 20,000 | 140,549 | 105,643 | Banking | Hong Kong | |||||||||||||
Kookmin Bank Cambodia PLC. 4 |
100.00 | USD | 17,846 | 21,286 | 19,885 | Banking | Cambodia | |||||||||||||
Kookmin Bank(China) Ltd. 4 |
100.00 | USD | 383,875 | 413,696 | 418,155 | Banking | China | |||||||||||||
|
|
|
|
|
|
|||||||||||||||
USD | 452,113 | 651,340 | 611,079 | |||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
₩ | 1,299,845 | ₩ | 1,262,575 | |||||||||||||||||
|
|
|
|
1 | As of December 31, 2015 and 2014, the Bank is represented in the governing bodies of its associates. Therefore, the Bank has significant influence over the decision-making process relating to their financial and business policies. |
2 | The Bank determined that ordinary shares and convertible preferred shares issued by JSC Bank CenterCredit are the same in economic substance except for voting rights, and therefore, ordinary shares and convertible preferred shares are not presented separately. The fair value of ordinary shares of JSC Bank CenterCredit, reflecting the quoted market price as of December 31, 2015 and 2014, amounts to ₩21,863 million and ₩42,945 million, respectively. |
3 | As of December 31, 2015 and 2014, the Bank is a partner in a limited partnership and does not have the right to control over these entities. |
4 | Acquisition costs of investments in subsidiaries are presented in US dollars. |
5 | On June 23, 2015, the Bank lost significant influence as the Seoul District Court approved the bankruptcy of CH Engineering Co., Ltd. |
6 | The investment in associates was reclassified from available-for-sale financial assets due to termination of rehabilitation procedures. |
90
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The changes in investments in associates and subsidiaries for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||
Beginning | Acquisition and others |
Disposal and others |
Impairment | Ending | ||||||||||||||||
Associates |
||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 126,284 | ₩ | 2,839 | ₩ | | ₩ | | ₩ | 129,123 | ||||||||||
Korea Credit Bureau Co., Ltd. |
2,769 | | | | 2,769 | |||||||||||||||
UAMCO., Ltd. |
84,792 | | | | 84,792 | |||||||||||||||
JSC Bank CenterCredit1 |
61,758 | | | (30,624 | ) | 31,134 | ||||||||||||||
KB12-1 Venture Investment Partnership |
28,800 | 11,200 | | | 40,000 | |||||||||||||||
KoFC KBIC Frontier Champ 2010-5 (PEF) |
16,675 | | (2,850 | ) | | 13,825 | ||||||||||||||
United PF 1st Recovery Private Equity Fund |
191,617 | | (19,176 | ) | | 172,441 | ||||||||||||||
KB GwS Private Securities Investment Trust |
89,124 | | | | 89,124 | |||||||||||||||
Incheon Bridge Co., Ltd. |
24,677 | | | | 24,677 | |||||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
21,000 | 5,960 | (2,200 | ) | | 24,760 | ||||||||||||||
Future Planning KB Start-up Creation Fund |
4,000 | 8,000 | | | 12,000 | |||||||||||||||
Subsidiaries |
||||||||||||||||||||
Kookmin Bank Intl Ltd.(London) |
67,396 | | | | 67,396 | |||||||||||||||
Kookmin Bank Hong Kong Ltd. |
105,643 | | | | 105,643 | |||||||||||||||
Kookmin Bank Cambodia PLC. |
19,885 | | | | 19,885 | |||||||||||||||
Kookmin Bank(China) Ltd. |
418,155 | | | | 418,155 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 1,262,575 | ₩ | 27,999 | ₩ | (24,226 | ) | ₩ | (30,624 | ) | ₩ | 1,235,724 | |||||||||
|
|
|
|
|
|
|
|
|
|
91
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||||||||||
Beginning | Acquisition and others |
Disposal and others |
Impairment | Ending | ||||||||||||||||
Associates |
||||||||||||||||||||
Balhae Infrastructure Fund |
₩ | 125,478 | ₩ | 806 | ₩ | | ₩ | | ₩ | 126,284 | ||||||||||
Korea Credit Bureau Co., Ltd. |
2,769 | | | | 2,769 | |||||||||||||||
UAMCO., Ltd. |
84,792 | | | | 84,792 | |||||||||||||||
JSC Bank CenterCredit1 |
86,787 | | | (25,029 | ) | 61,758 | ||||||||||||||
KB06-1 Venture Investment Partnership |
920 | | (920 | ) | | | ||||||||||||||
KB08-1 Venture Investment Partnership |
6,025 | | (6,025 | ) | | | ||||||||||||||
KB12-1 Venture Investment Partnership |
23,200 | 5,600 | | | 28,800 | |||||||||||||||
KoFC KBIC Frontier Champ 2010-5 (PEF) |
28,548 | 30 | (9,597 | ) | (2,306 | ) | 16,675 | |||||||||||||
United PF 1st Recovery Private Equity Fund |
191,617 | | | | 191,617 | |||||||||||||||
Kores Co., Ltd. |
634 | | (634 | ) | | | ||||||||||||||
KB GwS Private Securities Investment Trust |
89,124 | | | | 89,124 | |||||||||||||||
Incheon Bridge Co., Ltd. |
24,677 | | | | 24,677 | |||||||||||||||
KoFC Posco Hanhwa KB shared growth Private Equity Fund |
11,220 | 9,780 | | | 21,000 | |||||||||||||||
Future Planning KB Start-up Creation Fund |
4,000 | | | | 4,000 | |||||||||||||||
Subsidiaries |
||||||||||||||||||||
Kookmin Bank Intl Ltd.(London) |
67,396 | | | | 67,396 | |||||||||||||||
Kookmin Bank Hong Kong Ltd. |
105,643 | | | | 105,643 | |||||||||||||||
Kookmin Bank Cambodia PLC. |
19,885 | | | | 19,885 | |||||||||||||||
Kookmin Bank(China) Ltd. |
418,155 | | | | 418,155 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 1,290,870 | ₩ | 16,216 | ₩ | (17,176 | ) | ₩ | (27,335 | ) | ₩ | 1,262,575 | |||||||||
|
|
|
|
|
|
|
|
|
|
1 | Asset quality of Kazakhstan banks has been deteriorating due to extended depression of its domestic economy mainly driven by the financial crisis in Russia and decline in oil prices. The Bank recognized impairment loss in its investment in JSC Bank CenterCredit because the Bank determined that the recovery of JSC Bank CenterCredits financial soundness is delayed and assessed the economic condition in Kazakhstan as not to recover in the near future. |
92
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
14. | Property and Equipment, and Investment Property |
The details of property and equipment as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||
(In millions of Korean won) | Acquisition cost |
Accumulated depreciation |
Accumulated impairment losses |
Carrying amount |
||||||||||||
Land |
₩ | 1,883,316 | ₩ | | ₩ | (1,018 | ) | ₩ | 1,882,298 | |||||||
Buildings |
1,198,045 | (376,214 | ) | (5,859 | ) | 815,972 | ||||||||||
Leasehold improvements |
593,566 | (546,572 | ) | | 46,994 | |||||||||||
Equipment and vehicles |
1,386,452 | (1,237,956 | ) | | 148,496 | |||||||||||
Construction in-progress |
443 | | | 443 | ||||||||||||
Finance lease assets |
21,785 | (9,202 | ) | | 12,583 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,083,607 | ₩ | (2,169,944 | ) | ₩ | (6,877 | ) | ₩ | 2,906,786 | |||||||
|
|
|
|
|
|
|
|
|||||||||
2014 | ||||||||||||||||
(In millions of Korean won) | Acquisition cost |
Accumulated depreciation |
Accumulated impairment losses |
Carrying amount |
||||||||||||
Land |
₩ | 1,884,029 | ₩ | | ₩ | | ₩ | 1,884,029 | ||||||||
Buildings |
1,153,465 | (345,704 | ) | (2,117 | ) | 805,644 | ||||||||||
Leasehold improvements |
571,412 | (524,473 | ) | | 46,939 | |||||||||||
Equipment and vehicles |
1,484,056 | (1,355,514 | ) | | 128,542 | |||||||||||
Construction in-progress |
606 | | | 606 | ||||||||||||
Finance lease assets |
21,245 | (728 | ) | | 20,517 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,114,813 | ₩ | (2,226,419 | ) | ₩ | (2,117 | ) | ₩ | 2,886,277 | |||||||
|
|
|
|
|
|
|
|
The changes in property and equipment for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||
Beginning | Acquisition | Transfers1 | Disposal | Depreciation | Others | Ending | ||||||||||||||||||||||
Land |
₩ | 1,884,029 | ₩ | 50 | ₩ | (1,496 | ) | ₩ | (297 | ) | ₩ | | ₩ | 12 | ₩ | 1,882,298 | ||||||||||||
Buildings |
805,644 | 568 | 39,221 | (898 | ) | (28,057 | ) | (506 | ) | 815,972 | ||||||||||||||||||
Leasehold improvements |
46,939 | | 30,689 | (383 | ) | (33,925 | ) | 3,674 | 46,994 | |||||||||||||||||||
Equipment and vehicles |
128,542 | 106,034 | | (669 | ) | (85,420 | ) | 9 | 148,496 | |||||||||||||||||||
Construction-in-progress |
606 | 67,362 | (67,526 | ) | | | 1 | 443 | ||||||||||||||||||||
Finance lease assets |
20,517 | 554 | | | (8,474 | ) | (14 | ) | 12,583 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 2,886,277 | ₩ | 174,568 | ₩ | 888 | ₩ | (2,247 | ) | ₩ | (155,876 | ) | ₩ | 3,176 | ₩ | 2,906,786 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
Beginning | Acquisition | Transfers1 | Disposal | Depreciation | Others | Ending | ||||||||||||||||||||||
Land |
₩ | 1,914,966 | ₩ | 4,786 | ₩ | (35,698 | ) | ₩ | | ₩ | | ₩ | (25 | ) | ₩ | 1,884,029 | ||||||||||||
Buildings |
820,405 | 10,226 | 2,186 | | (27,093 | ) | (80 | ) | 805,644 | |||||||||||||||||||
Leasehold improvements |
48,791 | | 29,628 | (138 | ) | (34,578 | ) | 3,236 | 46,939 | |||||||||||||||||||
Equipment and vehicles |
107,641 | 88,298 | 1,946 | (291 | ) | (69,054 | ) | 2 | 128,542 | |||||||||||||||||||
Construction-in-progress |
| 54,859 | (54,253 | ) | | | | 606 | ||||||||||||||||||||
Finance lease assets |
8,900 | 29,152 | (1,946 | ) | | (15,589 | ) | | 20,517 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 2,900,703 | ₩ | 187,321 | ₩ | (58,137 | ) | ₩ | (429 | ) | ₩ | (146,314 | ) | ₩ | 3,133 | ₩ | 2,886,277 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | Including transfers from investment property and assets held for sale. |
The changes in accumulated impairment losses of property and equipment for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||
2015 | ||||||||||||||||
Beginning | Impairment | Reversal | Others | Ending | ||||||||||||
₩ (2,117) | ₩ | (557 | ) | ₩ | | ₩ | (4,203) | ₩ | (6,877) | |||||||
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
Beginning | Impairment | Reversal | Others | Ending | ||||||||||||
₩ (2,117) | ₩ | | ₩ | | ₩ | | ₩ | (2,117) |
The details of investment property as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||
(In millions of Korean won) | Acquisition cost | Accumulated depreciation |
Carrying amount |
|||||||||
Land |
₩ | 66,806 | ₩ | | ₩ | 66,806 | ||||||
Buildings |
31,237 | (10,154 | ) | 21,083 | ||||||||
|
|
|
|
|
|
|||||||
₩ | 98,043 | ₩ | (10,154 | ) | ₩ | 87,889 | ||||||
|
|
|
|
|
|
|||||||
2014 | ||||||||||||
(In millions of Korean won) | Acquisition cost | Accumulated depreciation |
Carrying amount |
|||||||||
Land |
₩ | 64,554 | ₩ | | ₩ | 64,554 | ||||||
Buildings |
30,305 | (9,517 | ) | 20,788 | ||||||||
|
|
|
|
|
|
|||||||
₩ | 94,859 | ₩ | (9,517 | ) | ₩ | 85,342 | ||||||
|
|
|
|
|
|
94
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The valuation technique and input variables that are used to measure the fair value of investment property as of December 31, 2015, are as follows:
(In millions of Korean won) | 2015 | |||||||||
Fair Value | Valuation technique | Inputs | ||||||||
Land and Buildings |
₩ | 91,775 | Cost approach value | - Price per square meter - Replacement cost |
As of December 31, 2015 and 2014, fair values of the investment properties amount to ₩91,775 million and ₩82,202 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, 2015 and 2014, amounts to ₩639 million and ₩680 million, respectively.
The changes in investment property for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Beginning | Transfers | Depreciation | Ending | |||||||||||||
Land |
₩ | 64,554 | ₩ | 2,252 | ₩ | | ₩ | 66,806 | ||||||||
Buildings |
20,788 | 1,040 | (745 | ) | 21,083 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 85,342 | ₩ | 3,292 | ₩ | (745 | ) | ₩ | 87,889 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Transfers | Depreciation | Ending | |||||||||||||
Land |
₩ | 66,134 | ₩ | (1,580 | ) | ₩ | | ₩ | 64,554 | |||||||
Buildings |
21,358 | 147 | (717 | ) | 20,788 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 87,492 | ₩ | (1,433 | ) | ₩ | (717 | ) | ₩ | 85,342 | |||||||
|
|
|
|
|
|
|
|
95
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
15. | Intangible Assets |
The details of intangible assets as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Acquisition cost | Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Goodwill |
₩ | 65,288 | ₩ | | ₩ | | ₩ | 65,288 | ||||||||
Other intangible assets |
750,344 | (632,608 | ) | (7,470 | ) | 110,266 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 815,632 | ₩ | (632,608 | ) | ₩ | (7,470 | ) | ₩ | 175,554 | |||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost | Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Goodwill |
₩ | 65,288 | ₩ | | ₩ | | ₩ | 65,288 | ||||||||
Other intangible assets |
702,409 | (562,748 | ) | (5,529 | ) | 134,132 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 767,697 | ₩ | (562,748 | ) | ₩ | (5,529 | ) | ₩ | 199,420 | |||||||
|
|
|
|
|
|
|
|
The goodwill arose from the merger of Housing & Commercial Bank (H&CB), and there is no change in goodwill for the years ended December 31, 2015 and 2014.
The details of allocating goodwill to cash-generating units and related information for impairment testing as of December 31, 2015, are as follows:
(In millions of Korean won) | ||||||||||||
Housing & Commercial Bank | ||||||||||||
Retail Banking |
Corporate Banking |
Total | ||||||||||
Carrying amounts |
₩ | 49,315 | ₩ | 15,973 | ₩ | 65,288 | ||||||
Recoverable amount exceeded carrying amount |
5,008,711 | 2,171,276 | 7,179,987 | |||||||||
Discount rate (%) |
15.30 | 15.60 | ||||||||||
Permanent growth rate (%) |
2.00 | 2.00 |
Goodwill is allocated to cash-generating units 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 Bank recognized the amount of ₩65,288 million related to goodwill acquired in the merger of Housing & Commercial Bank. Of this amount, the ₩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.
96
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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 of the cash-generating unit, the Bank measures the fair value less costs to sell by reflecting the characteristics of the measured cash-generating unit. If it is not possible to obtain the reliable information to measure the fair value less costs to sell, the Bank 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 by 2.0% for Retail Banking and Corporate Banking every year. The key assumptions used for the estimation of the future cash flows are the market size and the Banks 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.
The details of intangible assets, excluding goodwill, as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Acquisition cost | Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Industrial property rights |
₩ | 975 | ₩ | (850 | ) | ₩ | | ₩ | 125 | |||||||
Software |
607,971 | (563,652 | ) | | 44,319 | |||||||||||
Other intangible assets |
116,793 | (63,501 | ) | (7,470 | ) | 45,822 | ||||||||||
Finance leases assets |
24,605 | (4,605 | ) | | 20,000 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 750,344 | ₩ | (632,608 | ) | ₩ | (7,470 | ) | ₩ | 110,266 | |||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost | Accumulated amortization |
Accumulated impairment losses |
Carrying amount |
|||||||||||||
Industrial property rights |
₩ | 936 | ₩ | (805 | ) | ₩ | | ₩ | 131 | |||||||
Software |
558,895 | (505,206 | ) | | 53,689 | |||||||||||
Other intangible assets |
118,604 | (56,384 | ) | (5,529 | ) | 56,691 | ||||||||||
Finance leases assets |
23,974 | (353 | ) | | 23,621 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 702,409 | ₩ | (562,748 | ) | ₩ | (5,529 | ) | ₩ | 134,132 | |||||||
|
|
|
|
|
|
|
|
97
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The changes in intangible assets, excluding goodwill, for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||
Beginning | Acquisition | Transfer | Disposal | Amortization | Others | Ending | ||||||||||||||||||||||
Industrial property rights |
₩ | 131 | ₩ | 38 | ₩ | | ₩ | | ₩ | (44 | ) | ₩ | | ₩ | 125 | |||||||||||||
Software |
53,689 | 20,695 | | | (30,065 | ) | | 44,319 | ||||||||||||||||||||
Other intangible assets1 |
56,691 | 5,111 | | (3,384 | ) | (7,096 | ) | (5,500 | ) | 45,822 | ||||||||||||||||||
Finance leases assets |
23,621 | 647 | | | (4,253 | ) | (15 | ) | 20,000 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 134,132 | ₩ | 26,491 | | ₩ | (3,384 | ) | (41,458 | ) | ₩ | (5,515 | ) | ₩ | 110,266 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of Korean won) | ||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||
Beginning | Acquisition | Transfer | Disposal | Amortization | Others | Ending | ||||||||||||||||||||||
Industrial property rights |
₩ | 142 | ₩ | 36 | ₩ | | ₩ | | ₩ | (47 | ) | ₩ | | ₩ | 131 | |||||||||||||
Software |
77,592 | 16,001 | 4,528 | | (44,432 | ) | | 53,689 | ||||||||||||||||||||
Other intangible assets1 |
63,631 | 1,637 | | (2,577 | ) | (6,195 | ) | 195 | 56,691 | |||||||||||||||||||
Finance leases assets |
8,056 | 28,208 | (4,528 | ) | | (8,115 | ) | | 23,621 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
₩ | 149,421 | ₩ | 45,882 | ₩ | | ₩ | (2,577 | ) | ₩ | (58,789 | ) | ₩ | 195 | ₩ | 134,132 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | Impairment losses for membership rights of other intangible assets with indefinite useful lives was recognized when their recoverable amount is lower than their carrying amount and reversal of impairment losses was recognized when their recoverable amount is higher than their carrying amount. |
The changes in accumulated impairment losses on intangible assets for the years ended December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Impairment | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses on other intangible assets |
₩ (5,529) | ₩ (5,531) | ₩ | 6 | ₩ 3,584 | ₩ (7,470) | ||||||||||||||
2014 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Impairment | Reversal | Others | Ending | |||||||||||||||
Accumulated impairment losses on other intangible assets |
₩ (5,492) | ₩ (128) | ₩ | 321 | ₩ | (230) | ₩ (5,529) |
98
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The changes in emission rights for the year ended December 31, 2015, are as follows:
(KAU, In millions of Korean won) | ||||||||||||||||||||||||||||||||
Applicable under 2015 |
Applicable under 2016 |
Applicable under 2017 |
Total | |||||||||||||||||||||||||||||
Quantity | Carrying amount |
Quantity | Carrying amount |
Quantity | Carrying amount |
Quantity | Carrying amount |
|||||||||||||||||||||||||
Beginning |
| ₩ | | | ₩ | | | ₩ | | | ₩ | | ||||||||||||||||||||
Free of charges |
116,799 | | 112,137 | | 109,140 | | 338,076 | | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending |
116,799 | ₩ | | 112,137 | ₩ | | 109,140 | ₩ | | 338,076 | ₩ | | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16. | Deferred income tax assets and liabilities |
The details of deferred income tax assets and liabilities as of December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||
(In millions of Korean won) | Assets | Liabilities | Net amount | |||||||||
Other provisions |
₩ | 68,633 | ₩ | | ₩ | 68,633 | ||||||
Impairment losses on property and equipment |
5,019 | | 5,019 | |||||||||
Interest on equity index-linked deposits |
69 | | 69 | |||||||||
Share-based payments |
8,168 | | 8,168 | |||||||||
Provisions for guarantees |
38,225 | | 38,225 | |||||||||
Gains on valuation of derivatives |
| (30,391 | ) | (30,391 | ) | |||||||
Present value discount |
| (25 | ) | (25 | ) | |||||||
Losses from fair value hedged item |
2,876 | | 2,876 | |||||||||
Accrued interest |
| (43,414 | ) | (43,414 | ) | |||||||
Deferred loan origination fees and costs |
| (120,375) | (120,375) | |||||||||
Gains from revaluation |
| (272,696 | ) | (272,696 | ) | |||||||
Investments in subsidiaries and associates |
| (22,125 | ) | (22,125 | ) | |||||||
Others |
520,371 | (276,232 | ) | 244,139 | ||||||||
|
|
|
|
|
|
|||||||
643,361 | (765,258 | ) | (121,897 | ) | ||||||||
Offsetting of deferred income tax assets and liabilities |
(643,361 | ) | 643,361 | | ||||||||
|
|
|
|
|
|
|||||||
Total |
₩ | | ₩ | (121,897 | ) | ₩ | (121,897 | ) | ||||
|
|
|
|
|
|
99
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
2014 | ||||||||||||
(In millions of Korean won) | Assets | Liabilities | Net amount | |||||||||
Other provisions |
₩ | 65,033 | ₩ | | ₩ | 65,033 | ||||||
Impairment losses on property and equipment |
5,412 | | 5,412 | |||||||||
Interest on equity index-linked deposits |
183 | | 183 | |||||||||
Share-based payments |
7,806 | | 7,806 | |||||||||
Provisions for guarantees |
50,115 | | 50,115 | |||||||||
Gains from valuation on derivatives |
| (51,167 | ) | (51,167 | ) | |||||||
Present value discount |
| (34 | ) | (34 | ) | |||||||
Losses on fair value hedged |
12,834 | | 12,834 | |||||||||
Accrued interest |
| (48,019 | ) | (48,019 | ) | |||||||
Deferred loan origination fees and costs |
| (110,160) | (110,160) | |||||||||
Gains on revaluation |
| (272,696 | ) | (272,696 | ) | |||||||
Investments in subsidiaries and associates |
| (22,125 | ) | (22,125 | ) | |||||||
Others |
551,104 | (261,306 | ) | 289,798 | ||||||||
|
|
|
|
|
|
|||||||
692,487 | (765,507 | ) | (73,020 | ) | ||||||||
Offsetting of deferred income tax assets and liabilities |
(692,487 | ) | 692,487 | | ||||||||
|
|
|
|
|
|
|||||||
Total |
₩ | | ₩ | (73,020 | ) | ₩ | (73,020 | ) | ||||
|
|
|
|
|
|
Unrecognized deferred income tax liabilities
No deferred income tax liabilities have been recognized for the taxable temporary difference of ₩17,771 million associated with investments in subsidiaries and associates as of December 31, 2015, due to the following reasons:
| The Bank 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 for the taxable temporary difference of ₩65,288 million arising from the initial recognition of goodwill from the merger of Housing and Commercial Bank as of December 31, 2015.
Unrecognized deferred income tax assets
No deferred income tax assets have been recognized for the deductible temporary difference of ₩763,072 million associated with investments in associates and subsidiaries as of December 31, 2015, 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 ₩67 million, ₩80,204 million and ₩21,393 million associated with other provisions, loss on SPE repurchase and others, respectively, as of December 31, 2015, due to the uncertainty that these will be realized in the future.
100
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The changes in cumulative temporary differences for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Deductible temporary differences |
||||||||||||||||
Losses from fair value hedge |
₩ | 53,033 | ₩ | 53,033 | ₩ | 11,882 | ₩ | 11,882 | ||||||||
Other provisions |
268,931 | 268,931 | 283,672 | 283,672 | ||||||||||||
Impairment losses on property and equipment |
22,363 | 22,363 | 20,738 | 20,738 | ||||||||||||
Interest on equity index-linked deposits |
758 | 758 | 287 | 287 | ||||||||||||
Share-based payments |
32,256 | 32,256 | 33,754 | 33,754 | ||||||||||||
Provisions for guarantees |
207,087 | 207,087 | 157,954 | 157,954 | ||||||||||||
Loss on SPE repurchase |
80,204 | | | 80,204 | ||||||||||||
Investment in subsidiaries and associates |
732,446 | | 30,626 | 763,072 | ||||||||||||
Others |
2,295,475 | 1,493,988 | 1,370,199 | 2,171,686 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
3,692,553 | ₩ | 2,078,416 | ₩ | 1,909,112 | 3,523,249 | |||||||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax assets |
||||||||||||||||
Other provisions |
199 | 67 | ||||||||||||||
Loss on SPE repurchase |
80,204 | 80,204 | ||||||||||||||
Investment in subsidiaries and associates |
732,446 | 763,072 | ||||||||||||||
Others |
18,185 | 21,393 | ||||||||||||||
|
|
|
|
|||||||||||||
₩ | 2,861,519 | ₩ | 2,658,513 | |||||||||||||
|
|
|
|
|||||||||||||
Tax rate (%) |
24.20 | 24.20 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax assets from deductible temporary differences |
₩ | 692,487 | ₩ | 643,361 | ||||||||||||
|
|
|
|
101
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2015 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Taxable temporary differences |
||||||||||||||||
Accrued interest |
₩ | (198,424 | ) | ₩ | (158,989 | ) | ₩ | (139,959 | ) | ₩ | (179,394 | ) | ||||
Deferred loan origination fees and costs |
(455,207 | ) | (455,207 | ) | (497,418 | ) | (497,418 | ) | ||||||||
Gains on valuation of derivatives |
(211,434 | ) | (211,434 | ) | (125,582 | ) | (125,582 | ) | ||||||||
Present value discount |
(140 | ) | (140 | ) | (104 | ) | (104 | ) | ||||||||
Goodwill from merger |
(65,288 | ) | | | (65,288 | ) | ||||||||||
Gains on revaluation |
(1,126,842 | ) | | | (1,126,842 | ) | ||||||||||
Investment in subsidiaries and associates |
(109,195 | ) | | | (109,195 | ) | ||||||||||
Others |
(1,079,782 | ) | (220,995 | ) | (282,670 | ) | (1,141,457 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(3,246,312 | ) | ₩ | (1,046,765 | ) | ₩ | (1,045,733 | ) | (3,245,280 | ) | |||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax liabilities: |
||||||||||||||||
Goodwill from merger |
(65,288 | ) | (65,288 | ) | ||||||||||||
Investments in subsidiaries and associates |
(17,771 | ) | (17,771 | ) | ||||||||||||
|
|
|
|
|||||||||||||
₩ | (3,163,253 | ) | ₩ | (3,162,221 | ) | |||||||||||
|
|
|
|
|||||||||||||
Tax rate (%) |
24.20 | 24.20 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax liabilities from taxable temporary differences |
₩ | (765,507 | ) | ₩ | (765,258 | ) | ||||||||||
|
|
|
|
102
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Deductible temporary differences |
||||||||||||||||
Losses from fair value hedge |
₩ | 68,884 | ₩ | 68,884 | ₩ | 53,033 | ₩ | 53,033 | ||||||||
Other provisions |
323,781 | 323,781 | 268,931 | 268,931 | ||||||||||||
Impairment losses on property and equipment |
11,873 | 11,873 | 22,363 | 22,363 | ||||||||||||
Interest on equity index-linked deposits |
1,407 | 1,325 | 676 | 758 | ||||||||||||
Share-based payments |
34,053 | 34,053 | 32,256 | 32,256 | ||||||||||||
Provisions for guarantees |
208,517 | 208,517 | 207,087 | 207,087 | ||||||||||||
Present value discount |
804 | 804 | | | ||||||||||||
Loss on SPE repurchase |
80,204 | | | 80,204 | ||||||||||||
Investment in subsidiaries and associates |
707,417 | | 25,029 | 732,446 | ||||||||||||
Others |
1,721,795 | 1,004,013 | 1,577,693 | 2,295,475 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 3,158,735 | ₩ | 1,653,250 | ₩ | 2,187,068 | ₩ | 3,692,553 | |||||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax assets |
||||||||||||||||
Other provisions |
250 | 199 | ||||||||||||||
Loss on SPE repurchase |
80,204 | 80,204 | ||||||||||||||
Investment in subsidiaries and associates |
707,417 | 732,446 | ||||||||||||||
Others |
13,376 | 18,185 | ||||||||||||||
|
|
|
|
|||||||||||||
₩ | 2,357,488 | ₩ | 2,861,519 | |||||||||||||
|
|
|
|
|||||||||||||
Tax rate (%) |
24.20 | 24.20 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax assets from deductible temporary differences |
₩ | 570,512 | ₩ | 692,487 | ||||||||||||
|
|
|
|
103
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||||||
Beginning | Decrease | Increase | Ending | |||||||||||||
Taxable temporary differences |
||||||||||||||||
Accrued interest |
₩ | (249,286 | ) | ₩ | (217,151 | ) | ₩ | (166,289 | ) | ₩ | (198,424 | ) | ||||
Deferred loan origination fees and costs |
(388,266 | ) | (388,266 | ) | (455,207 | ) | (455,207 | ) | ||||||||
Gains on valuation of derivatives |
(54,531 | ) | (54,531 | ) | (211,434 | ) | (211,434 | ) | ||||||||
Present value discount |
| | (140 | ) | (140 | ) | ||||||||||
Goodwill from merger |
(65,288 | ) | | | (65,288 | ) | ||||||||||
Gains on revaluation |
(1,131,429 | ) | (4,587 | ) | | (1,126,842 | ) | |||||||||
Investment in subsidiaries and associates |
(110,103 | ) | (908 | ) | | (109,195 | ) | |||||||||
Others |
(798,469 | ) | (89,076 | ) | (370,389 | ) | (1,079,782 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(2,797,372 | ) | ₩ | (754,519 | ) | ₩ | (1,203,459 | ) | (3,246,312 | ) | |||||||
|
|
|
|
|||||||||||||
Unrecognized deferred income tax liabilities: |
||||||||||||||||
Goodwill from merger |
(65,288 | ) | (65,288 | ) | ||||||||||||
Investments in subsidiaries and associates |
(17,771 | ) | (17,771 | ) | ||||||||||||
|
|
|
|
|||||||||||||
₩ | (2,714,313 | ) | ₩ | (3,163,253 | ) | |||||||||||
|
|
|
|
|||||||||||||
Tax rate (%) |
24.20 | 24.20 | ||||||||||||||
|
|
|
|
|||||||||||||
Total deferred income tax liabilities from taxable temporary differences |
₩ | (656,864 | ) | ₩ | (765,507 | ) | ||||||||||
|
|
|
|
104
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
17. | Other assets |
The details of other assets as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Other financial assets |
||||||||
Other receivables |
₩ | 3,177,704 | ₩ | 2,671,575 | ||||
Accrued income |
650,968 | 716,532 | ||||||
Guarantee deposits |
1,159,067 | 1,290,422 | ||||||
Domestic exchange settlement debits |
2,138,401 | 2,086,792 | ||||||
Others |
17,587 | 20,924 | ||||||
Allowances for loan losses |
(286,714 | ) | (288,205 | ) | ||||
Present value discount |
(1,057 | ) | (489 | ) | ||||
|
|
|
|
|||||
6,855,956 | 6,497,551 | |||||||
|
|
|
|
|||||
Other non-financial assets |
||||||||
Other receivables |
42,291 | 844 | ||||||
Prepaid expenses |
136,870 | 170,677 | ||||||
Guarantee deposits |
3,627 | 3,579 | ||||||
Others |
103,966 | 83,853 | ||||||
Allowances on other assets |
(23,128 | ) | (23,174 | ) | ||||
|
|
|
|
|||||
263,626 | 235,779 | |||||||
|
|
|
|
|||||
₩ | 7,119,582 | ₩ | 6,733,330 | |||||
|
|
|
|
The changes in allowances for loan losses on other assets for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Other financial assets |
Other non- financial assets |
Total | ||||||||||
Beginning |
₩ | 288,205 | ₩ | 23,174 | ₩ | 311,379 | ||||||
Provision(reversal) |
(1,034 | ) | 838 | (196 | ) | |||||||
Written-off |
(2,375 | ) | (884 | ) | (3,259 | ) | ||||||
Others |
1,918 | | 1,918 | |||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 286,714 | ₩ | 23,128 | ₩ | 309,842 | ||||||
|
|
|
|
|
|
|||||||
(In millions of Korean won) | 2014 | |||||||||||
Other financial assets |
Other non- financial assets |
Total | ||||||||||
Beginning |
₩ | 533,699 | ₩ | 16,146 | ₩ | 549,845 | ||||||
Provision(reversal) |
27,393 | 4,065 | 31,458 | |||||||||
Written-off |
(296,932 | ) | (2,435 | ) | (299,367 | ) | ||||||
Others |
24,045 | 5,398 | 29,443 | |||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 288,205 | ₩ | 23,174 | ₩ | 311,379 | ||||||
|
|
|
|
|
|
105
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
18. | Assets held for sale |
Fair value measurement of assets held for sale
The details of assets held for sale as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||
Acquisition cost1 |
Accumulated impairment losses |
Carrying amount |
Fair value less costs to sell |
|||||||||||||
Land |
₩ | 35,996 | ₩ | (8,531 | ) | ₩ | 27,465 | ₩ | 28,658 | |||||||
Buildings |
11,660 | (5,330 | ) | 6,330 | 6,789 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 47,656 | ₩ | (13,861 | ) | ₩ | 33,795 | ₩ | 35,447 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | 2014 | |||||||||||||||
Acquisition cost1 |
Accumulated impairment losses |
Carrying amount |
Fair value less costs to sell |
|||||||||||||
Land |
₩ | 47,418 | ₩ | (9,442 | ) | ₩ | 37,976 | ₩ | 40,530 | |||||||
Buildings |
26,862 | (10,804 | ) | 16,058 | 17,429 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 74,280 | ₩ | (20,246 | ) | ₩ | 54,034 | ₩ | 57,959 | ||||||||
|
|
|
|
|
|
|
|
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, 2015, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Fair value | Valuation technique1 |
Unobservable inputs2 |
Range of unobservable inputs(%) |
Effect of unobservable inputs on fair value | ||||||||
Land and buildings |
₩ | 35,986 | Market comparison approach model |
Adjustment index |
0.10 ~ 1.16 | Fair value increases as the adjustment index rises | ||||||
Adjustment ratio |
-20.00 ~ 0.00 | Fair value decreases as the absolute value of adjustment ratio rises |
1 | The appraisal value is adjusted 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. |
106
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||
2015 | ||||||||||||||||||
Beginning | Provision | Reversal | Others | Ending | ||||||||||||||
₩ | (20,246) | ₩ | (2,110) | ₩ | 399 | ₩ | 8,096 | ₩ | (13,861) | |||||||||
(In millions of Korean won) | ||||||||||||||||||
2014 | ||||||||||||||||||
Beginning | Provision | Reversal | Others | Ending | ||||||||||||||
₩ | (10,087) | ₩ | (15,943) | ₩ | | ₩ | 5,784 | ₩ | (20,246) |
As of December 31, 2015, assets held for sale consist of 10 real estates of closed offices, which the management of the Bank was committed to sell, but not yet sold by December 31, 2015. As of the report date, two out of the above assets held for sale are under negotiation and the remaining eight assets are also being actively marketed.
107
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
19. | Deposits |
The details of deposits as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Demand deposits |
||||||||
Demand deposits in Korean won |
₩ | 91,962,003 | ₩ | 75,911,920 | ||||
Demand deposits in foreign currencies |
3,957,576 | 2,864,012 | ||||||
|
|
|
|
|||||
95,919,579 | 78,775,932 | |||||||
|
|
|
|
|||||
Time deposits |
||||||||
Time deposits in Korean won |
116,692,754 | 125,430,547 | ||||||
Fair value adjustments on fair value hedged time deposits in Korean won |
(201 | ) | (958 | ) | ||||
|
|
|
|
|||||
116,692,553 | 125,429,589 | |||||||
Time deposits in foreign currencies |
3,033,759 | 1,996,476 | ||||||
Fair value adjustments on fair value hedged time deposits in foreign currencies |
(17,672 | ) | | |||||
|
|
|
|
|||||
3,016,087 | 1,996,476 | |||||||
|
|
|
|
|||||
119,708,640 | 127,426,065 | |||||||
|
|
|
|
|||||
Certificates of deposits |
4,611,447 | 1,583,047 | ||||||
|
|
|
|
|||||
Total deposits |
₩ | 220,239,666 | ₩ | 207,785,044 | ||||
|
|
|
|
108
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
20. | Debts |
The details of debts as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Borrowings |
₩ | 11,814,654 | ₩ | 11,533,041 | ||||
Bonds sold under repurchase agreements and others |
545,943 | 124,544 | ||||||
Call money |
1,850,342 | 2,677,070 | ||||||
|
|
|
|
|||||
₩ | 14,210,939 | ₩ | 14,334,655 | |||||
|
|
|
|
The details of borrowings as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Lenders | Annual rate (%) |
2015 | 2014 | ||||||||||
Borrowings in Korean won |
Borrowings from the Bank of Korea |
Bank of Korea |
0.50 ~ 0.75 | ₩ | 1,421,375 | ₩ | 1,002,796 | |||||||
Borrowings from the government |
KEMCO and others |
0.00 ~ 3.00 | 1,156,670 | 611,378 | ||||||||||
Borrowings from banking institutions |
Industrial Bank of Korea |
1.18 | 180 | 874 | ||||||||||
Borrowings from non- banking financial institutions |
Korea Development Bank |
0.20 ~ 2.70 | 284,369 | 187,452 | ||||||||||
Other borrowings |
Korea Gas Safety Corporation and others |
0.00 ~ 4.35 | 2,648,453 | 3,242,919 | ||||||||||
|
|
|
|
|||||||||||
5,511,047 | 5,045,419 | |||||||||||||
|
|
|
|
|||||||||||
Borrowings in foreign currencies |
Due to banks |
JP Morgan Chase Bank N.A. and others |
| 9,884 | 48,984 | |||||||||
Borrowings from banking institutions |
Commerzbank and Others |
0.27 ~ 1.30 | 3,252,856 | 3,313,311 | ||||||||||
Borrowings from other financial institutions |
Export Import Bank of Korea and others |
0.86 ~ 1.78 | 212,507 | 34,460 | ||||||||||
Other borrowings |
Standard Chartered Bank and others |
| 2,828,360 | 3,090,867 | ||||||||||
|
|
|
|
|||||||||||
6,303,607 | 6,487,622 | |||||||||||||
|
|
|
|
|||||||||||
₩ | 11,814,654 | ₩ | 11,533,041 | |||||||||||
|
|
|
|
109
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The details of bonds sold under repurchase agreements and others as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||
Lenders | Annual interest rate (%) |
2015 | 2014 | |||||||||
Bonds sold under repurchase agreements |
Individuals, groups, corporations |
1.46 ~ 3.84 | ₩ | 518,086 | ₩ | 69,469 | ||||||
Bills sold |
Individuals, corporations |
0.80 ~ 1.50 | 27,857 | 55,075 | ||||||||
|
|
|
|
|||||||||
₩ | 545,943 | ₩ | 124,544 | |||||||||
|
|
|
|
The details of call money as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||
Lenders | Annual interest rate (%) |
2015 | 2014 | |||||||||
Call money in Korean won |
KEB Hana bank and others |
1.33 ~ 1.48 | ₩ | 926,400 | ₩ | 1,822,000 | ||||||
Call money in foreign currencies |
Central Bank of Uzbekistan and others |
0.24 ~ 5.00 | 923,942 | 855,070 | ||||||||
|
|
|
|
|||||||||
₩ | 1,850,342 | ₩ | 2,677,070 | |||||||||
|
|
|
|
110
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
21. | Debentures |
The details of debentures as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Annual interest rate |
2015 | 2014 | |||||||
Debentures in Korean won |
||||||||||
Structured debentures |
0.21 ~ 8.62 | ₩ | 909,788 | ₩ | 1,239,238 | |||||
Subordinated fixed rate debentures in Korean won |
3.08 ~ 7.51 | 4,471,829 | 4,566,124 | |||||||
Fixed rate debentures in Korean won |
1.68 ~ 4.09 | 6,750,523 | 6,390,553 | |||||||
Floating rate debentures in Korean won |
| | 150,000 | |||||||
|
|
|
|
|||||||
12,132,140 | 12,345,915 | |||||||||
Fair value adjustments on fair value hedged debentures in Korean won |
40,170 | 53,915 | ||||||||
Discount on debentures in Korean won |
(6,412 | ) | (38,980 | ) | ||||||
|
|
|
|
|||||||
12,165,898 | 12,360,850 | |||||||||
|
|
|
|
|||||||
Debentures in foreign currencies |
||||||||||
Floating rate debentures |
0.07 ~ 1.57 | 1,477,524 | 1,318,415 | |||||||
Fixed rate debentures |
0.98 ~ 3.63 | 2,325,537 | 1,578,980 | |||||||
|
|
|
|
|||||||
3,803,061 | 2,897,395 | |||||||||
Fair value adjustments on fair value hedged debentures in foreign currencies |
(10,415 | ) | 75 | |||||||
Discount on debentures in foreign currencies |
(9,410 | ) | (7,856 | ) | ||||||
|
|
|
|
|||||||
3,783,236 | 2,889,614 | |||||||||
|
|
|
|
|||||||
₩15,949,134 | ₩15,250,464 | |||||||||
|
|
|
|
The changes in debentures based on face value for the years ended December 31, 2015 and 2014, are as follows:
2015 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Issues | Repayments | Others | Ending | |||||||||||||||
Debentures in Korean won |
||||||||||||||||||||
Structured debentures |
₩ | 1,239,238 | ₩ | 120,000 | ₩ | (449,450 | ) | ₩ | | ₩ | 909,788 | |||||||||
Subordinated fixed rate debentures in Korean won |
4,566,124 | | (94,295 | ) | | 4,471,829 | ||||||||||||||
Fixed rate debentures |
6,390,553 | 4,080,000 | (3,720,030 | ) | | 6,750,523 | ||||||||||||||
Floating rate debentures |
150,000 | | (150,000 | ) | | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
12,345,915 | 4,200,000 | (4,413,775 | ) | | 12,132,140 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Debentures in foreign currencies |
||||||||||||||||||||
Floating rate debentures |
1,318,415 | 179,565 | (111,939 | ) | 91,483 | 1,477,524 | ||||||||||||||
Fixed rate debentures |
1,578,980 | 1,013,959 | (378,577 | ) | 111,175 | 2,325,537 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
2,897,395 | 1,193,524 | (490,516 | ) | 202,658 | 3,803,061 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 15,243,310 | ₩ | 5,393,524 | ₩ | (4,904,291 | ) | ₩ | 202,658 | ₩ | 15,935,201 | ||||||||||
|
|
|
|
|
|
|
|
|
|
111
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
2014 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Issues | Repayments | Others | Ending | |||||||||||||||
Debentures in Korean won |
||||||||||||||||||||
Structured debentures |
₩ | 1,499,238 | ₩ | 80,000 | ₩ | (340,000 | ) | ₩ | | ₩ | 1,239,238 | |||||||||
Subordinated fixed rate debentures |
8,648,474 | | (4,082,350 | ) | | 4,566,124 | ||||||||||||||
Fixed rate debentures |
2,941,142 | 4,670,000 | (1,220,589 | ) | | 6,390,553 | ||||||||||||||
Floating rate debentures |
| 150,000 | | | 150,000 | |||||||||||||||
|
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|
|
|
|
|||||||||||
13,088,854 | 4,900,000 | (5,642,939 | ) | | 12,345,915 | |||||||||||||||
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|||||||||||
Debentures in foreign currencies |
||||||||||||||||||||
Floating rate debentures |
633,708 | 754,003 | (105,872 | ) | 36,576 | 1,318,415 | ||||||||||||||
Fixed rate debentures |
2,335,059 | 803,503 | (1,633,588 | ) | 74,006 | 1,578,980 | ||||||||||||||
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|||||||||||
2,968,767 | 1,557,506 | (1,739,460 | ) | 110,582 | 2,897,395 | |||||||||||||||
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|||||||||||
₩ | 16,057,621 | ₩ | 6,457,506 | ₩ | (7,382,399 | ) | ₩ | 110,582 | ₩ | 15,243,310 | ||||||||||
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22. | Provisions |
The details of provisions as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Provisions for unused loan commitments |
₩ | 125,752 | ₩ | 125,209 | ||||
Provisions for acceptances and guarantees |
157,954 | 207,087 | ||||||
Provisions for asset retirement obligation |
70,493 | 68,999 | ||||||
Others |
95,169 | 81,104 | ||||||
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|
|||||
₩ | 449,368 | ₩ | 482,399 | |||||
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|
|
The changes in provisions for unused loan commitments, acceptances and guarantees for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Provisions for unused loan |
Provisions for acceptances and guarantees |
Total | ||||||||||
Beginning |
₩ | 125,209 | ₩ | 207,087 | ₩ | 332,296 | ||||||
Effects of changes in foreign exchange rate |
767 | 4,777 | 5,544 | |||||||||
Reversal |
(224 | ) | (53,910 | ) | (54,134 | ) | ||||||
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|||||||
Ending |
₩ | 125,752 | ₩ | 157,954 | ₩ | 283,706 | ||||||
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112
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||
Provisions for unused loan |
Provisions for acceptances and guarantees |
Total | ||||||||||
Beginning |
₩ | 140,145 | ₩ | 208,517 | ₩ | 348,662 | ||||||
Effects of changes in foreign exchange rate |
540 | 3,325 | 3,865 | |||||||||
Reversal |
(15,476 | ) | (4,755 | ) | (20,231 | ) | ||||||
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|
|||||||
Ending |
₩ | 125,209 | ₩ | 207,087 | ₩ | 332,296 | ||||||
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|
|
The changes in provisions for asset retirement obligation for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Beginning |
₩ | 68,999 | ₩ | 67,995 | ||||
Provision |
1,941 | 2,722 | ||||||
Reversal |
(363 | ) | | |||||
Used |
(2,779 | ) | (4,324 | ) | ||||
Unwinding of discount |
1,941 | 2,561 | ||||||
Effects of changes in discount rate |
754 | 45 | ||||||
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|
|
|
|||||
Ending |
₩ | 70,493 | ₩ | 68,999 | ||||
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|
Provisions for asset retirement obligation are present value of estimated costs to be incurred for 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 year. 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.
113
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The changes in other provisions for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||
Membership rewards program |
Dormant accounts |
Litigations | Financial guarantee liabilities |
Greenhouse Gas Emission liabilities1 |
Others | Total | ||||||||||||||||||||||
Beginning |
₩ | 76 | ₩ | 33,996 | ₩ | 2,622 | ₩ | 2,718 | ₩ | | ₩ | 41,692 | ₩ | 81,104 | ||||||||||||||
Provision (Reversal) |
159 | 27,056 | 9,226 | 1,091 | 69 | 37,860 | 75,461 | |||||||||||||||||||||
Used and Others |
(136 | ) | (19,961 | ) | (278 | ) | | | (41,021 | ) | (61,396 | ) | ||||||||||||||||
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|
|||||||||||||||
Ending |
₩ | 99 | ₩ | 41,091 | ₩ | 11,570 | ₩ | 3,809 | ₩ | 69 | ₩ | 38,531 | ₩ | 95,169 | ||||||||||||||
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1 | As of December 31, 2015, the estimated greenhouse gas emission is 122,542 tons. |
2014 | ||||||||||||||||||||||||||||
Membership rewards program |
Dormant accounts |
Litigations | Financial guarantee liabilities |
Greenhouse Gas Emission liabilities |
Others | Total | ||||||||||||||||||||||
Beginning |
₩ | 69 | ₩ | 16,838 | ₩ | 3,257 | ₩ | 2,699 | ₩ | | ₩ | 99,772 | ₩ | 122,635 | ||||||||||||||
Provision (Reversal) |
164 | 49,040 | (632 | ) | 19 | | (892 | ) | 47,699 | |||||||||||||||||||
Used and Others |
(157 | ) | (31,882 | ) | (3 | ) | | | (57,188 | ) | (89,230 | ) | ||||||||||||||||
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Ending |
₩ | 76 | ₩ | 33,996 | ₩ | 2,622 | ₩ | 2,718 | ₩ | | ₩ | 41,692 | ₩ | 81,104 | ||||||||||||||
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114
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
23. | Net defined benefit liabilities |
Defined benefit plan
The Bank operates defined benefit plans which have the following characteristics:
| The Bank has the obligation to pay the agreed benefits to all its current and former employees. |
| Actuarial risk (that benefits will cost more than expected) and investment risk fall, in substance, on the Bank. |
The net defined benefit liability recognized in the statements of financial position is calculated in accordance with actuarial valuation methods. Data such as discount rates, future salary increase rates, and mortality rates based on market data and historical data are used. Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends.
The changes in the net defined benefit liabilities for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Present value of defined benefit obligation |
Fair value of plan assets |
Net defined benefit liabilities |
||||||||||
Beginning |
₩ | 1,150,338 | ₩ | (1,092,875 | ) | ₩ | 57,463 | |||||
Current service cost |
162,461 | | 162,461 | |||||||||
Interest cost(income) |
34,147 | (32,433 | ) | 1,714 | ||||||||
Remeasurements : |
||||||||||||
-Actuarial gain arising from changes in demographic assumptions |
(1,879 | ) | | (1,879 | ) | |||||||
-Actuarial gain loss arising from changes in financial assumptions |
(508 | ) | | (508 | ) | |||||||
-Actuarial loss arising from experience adjustment |
10,631 | | 10,631 | |||||||||
-Return on plan assets (excluding amounts included in interest income) |
| 10,877 | 10,877 | |||||||||
Contributions |
| (180,000 | ) | (180,000 | ) | |||||||
Payments from plans (benefit payments) |
(88,266 | ) | 88,266 | | ||||||||
Payments from the Bank |
(5,152 | ) | | (5,152 | ) | |||||||
Transfer in |
1,993 | (1,981 | ) | 12 | ||||||||
Transfer out |
(3,140 | ) | 3,140 | | ||||||||
Effects of changes in foreign exchange rate |
19 | | 19 | |||||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 1,260,644 | ₩ | (1,205,006 | ) | ₩ | 55,638 | |||||
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|
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|
115
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||
Present value of defined benefit obligation |
Fair value of plan assets |
Net defined benefit liabilities |
||||||||||
Beginning |
₩ | 905,972 | ₩ | (854,474 | ) | ₩ | 51,498 | |||||
Current service cost |
146,116 | | 146,116 | |||||||||
Interest cost(income) |
35,833 | (33,788 | ) | 2,045 | ||||||||
Remeasurements : |
||||||||||||
-Actuarial loss arising from changes in financial assumptions |
95,786 | | 95,786 | |||||||||
-Actuarial loss arising from experience adjustment |
3,003 | | 3,003 | |||||||||
-Return on plan assets (excluding amounts included in interest income) |
| 11,505 | 11,505 | |||||||||
Contributions |
| (249,500 | ) | (249,500 | ) | |||||||
Payments from plans (benefit payments) |
(32,908 | ) | 32,908 | | ||||||||
Payments from the Bank |
(2,961 | ) | | (2,961 | ) | |||||||
Transfer in |
1,352 | (1,352 | ) | | ||||||||
Transfer out |
(1,826 | ) | 1,826 | | ||||||||
Effects of changes in foreign exchange rate |
(29 | ) | | (29 | ) | |||||||
|
|
|
|
|
|
|||||||
Ending |
₩ | 1,150,338 | ₩ | (1,092,875 | ) | ₩ | 57,463 | |||||
|
|
|
|
|
|
The details of the net defined benefit liabilities as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Present value of defined benefit obligation |
₩ | 1,260,644 | ₩ | 1,150,338 | ||||
Fair value of plan assets |
(1,205,006 | ) | (1,092,875 | ) | ||||
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|
|||||
Net defined benefit liabilities |
₩ | 55,638 | ₩ | 57,463 | ||||
|
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|
|
The details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Current service cost |
₩ | 162,461 | ₩ | 146,116 | ||||
Interest expenses of net defined benefit liabilities |
1,714 | 2,045 | ||||||
|
|
|
|
|||||
Total |
₩ | 164,175 | ₩ | 148,161 | ||||
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|
116
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Remeasurements of net defined benefit liabilities recognized as other comprehensive income for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) |
2015 | 2014 | ||||||
Remeasurements: |
||||||||
-Actuarial loss arising from changes in demographic assumptions |
₩ | 1,879 | ₩ | | ||||
-Actuarial loss(gain) arising from changes in financial assumptions |
508 | (95,786 | ) | |||||
-Actuarial gain arising from experience adjustment |
(10,631 | ) | (3,003 | ) | ||||
-Return on plan assets (excluding amounts included in interest income) |
(10,877 | ) | (11,505 | ) | ||||
Income tax effects |
4,627 | 26,691 | ||||||
|
|
|
|
|||||
Remeasurements after income tax |
₩ | (14,494 | ) | ₩ | (83,603 | ) | ||
|
|
|
|
The details of fair value of plan assets as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||
Assets quoted in an active market |
Assets not quoted in an active market |
Total | ||||||||||
Time deposits |
₩ | | ₩ | 1,205,006 | ₩ | 1,205,006 | ||||||
(In millions of Korean won) | 2014 | |||||||||||
Assets quoted in an active market |
Assets not quoted in an active market |
Total | ||||||||||
Time deposits |
₩ | | ₩ | 1,073,723 | ₩ | 1,073,723 | ||||||
Repurchase agreements |
| 19,152 | 19,152 | |||||||||
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|||||||
₩ | | ₩ | 1,092,875 | ₩ | 1,092,875 | |||||||
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|
|
Key actuarial assumptions used as of December 31, 2015 and 2014, are as follows:
Ratio (%) | ||||
2015 | 2014 | |||
Discount rate |
2.50 | 3.00 | ||
Salary increase rate |
2.40~4.00 | 1.83 ~ 4.55 | ||
Turnover |
1.00 | 0.70 |
Mortality assumptions are based on the 8th experience-based mortality table of Korea Insurance Development Institute of 2015.
117
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The sensitivity of the defined benefit obligation to changes in the principal assumptions as of December 31, 2015, is as follows:
Effect on defined benefit obligation | ||||||||||||
Changes in principal assumption |
Increase in principal |
Decrease in principal |
||||||||||
Discount rate |
0.5 | % p | 4.14% decrease | 4.43% increase | ||||||||
Salary increase rate |
0.5 | % p | 4.06% increase | 3.84% decrease | ||||||||
Turnover |
0.5 | % p | 0.37% decrease | 0.39% 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 significant actuarial assumptions is calculated using the projected unit credit method which is used to calculate the defined benefit obligation.
Expected maturity analysis of undiscounted pension benefits as of December 31, 2015, is as follows:
(In millions of Korean won) |
Less than 1 year |
Between 1 and 2 years |
Between 2 and 5 years |
Between 5 and 10 years |
Over 10 years |
Total | ||||||||||||||||||
Pension benefits |
₩ | 32,209 | ₩ | 79,700 | ₩ | 373,180 | ₩ | 825,913 | ₩ | 2,701,387 | ₩ | 4,012,389 |
The weighted average duration of the defined benefit obligations is 8.8 years.
Expected contributions to plan assets for the period after December 31, 2015, is estimated to be approximately ₩160,000 million.
118
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
24. | Other liabilities |
The details of other liabilities as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Other financial liabilities |
||||||||
Other payables |
₩ | 2,922,955 | ₩ | 2,469,768 | ||||
Prepaid card and debit cards |
2,107 | 1,760 | ||||||
Accrued expenses |
2,171,748 | 2,619,326 | ||||||
Financial guarantee liabilities |
12,355 | 12,956 | ||||||
Deposits for letter of guarantees and others |
199,551 | 132,026 | ||||||
Domestic exchange settlement credits |
118,599 | 118,550 | ||||||
Foreign exchanges settlement credits |
53,367 | 69,440 | ||||||
Borrowings from other business accounts |
47,707 | 40,383 | ||||||
Payables to trust accounts |
2,916,070 | 2,742,738 | ||||||
Liabilities incurred from agency relationship |
488,325 | 505,664 | ||||||
Account for agency businesses |
321,557 | 340,061 | ||||||
Others |
10,897 | 30,766 | ||||||
|
|
|
|
|||||
9,265,238 | 9,083,438 | |||||||
|
|
|
|
|||||
Other non-financial liabilities |
||||||||
Other payables |
68,449 | 223,625 | ||||||
Unearned revenue |
31,554 | 32,363 | ||||||
Accrued expenses |
176,643 | 142,385 | ||||||
Withholding taxes |
107,873 | 97,773 | ||||||
Others |
63,092 | 32,525 | ||||||
|
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|
|
|||||
447,611 | 528,671 | |||||||
|
|
|
|
|||||
₩ | 9,712,849 | ₩ | 9,612,109 | |||||
|
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119
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
25. | Equity |
25.1 Capital Stock
The details of outstanding shares of the Bank as of December 31, 2015 and 2014, are as follows:
Ordinary shares | ||||||||
2015 | 2014 | |||||||
Number of shares authorized |
1,000,000,000 | 1,000,000,000 | ||||||
Face value per share |
₩ | 5,000 | ₩ | 5,000 | ||||
Number of shares |
404,379,116 | 404,379,116 | ||||||
Capital stock1 |
₩ | 2,021,896 | ₩ | 2,021,896 |
1 | In millions of Korean won. |
25.2 Capital surplus
The details of capital surplus as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Paid-in capital in excess of face value |
₩ | 4,604,417 | ₩ | 4,604,417 | ||||
Gain on business combination |
397,669 | 397,669 | ||||||
Revaluation increment |
177,229 | 177,229 | ||||||
Other capital surplus |
40,716 | 40,716 | ||||||
|
|
|
|
|||||
₩ | 5,220,031 | ₩ | 5,220,031 | |||||
|
|
|
|
The gain on business combination is a gain from a bargain purchase from the merger with Korea Long Term Credit Bank on December 31, 1998, in accordance with previous Korean GAAP.
25.3 Accumulated other comprehensive income
The details of accumulated other comprehensive income as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Remeasurements of net defined benefit liabilities |
₩ | (102,182 | ) | ₩ | (87,688 | ) | ||
Currency translation differences |
1,929 | (28 | ) | |||||
Gain on valuation of available-for-sale financial assets |
676,471 | 754,116 | ||||||
|
|
|
|
|||||
₩ | 576,218 | ₩ | 666,400 | |||||
|
|
|
|
120
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
25.4 Retained earnings
Retained earnings as of December 31, 2015 and 2014, consist of:
(In millions of Korean won) | 2015 | 2014 | ||||||
Legal reserves |
₩ | 2,033,372 | ₩ | 1,997,289 | ||||
Regulatory reserve for credit losses |
1,852,396 | 1,667,733 | ||||||
Voluntary reserves |
9,820,838 | 8,876,629 | ||||||
Retained earnings before appropriation |
1,055,665 | 1,395,460 | ||||||
|
|
|
|
|||||
₩ | 14,762,271 | ₩ | 13,937,111 | |||||
|
|
|
|
With respect to the allocation of net profit earned in a fiscal term, the Bank must set aside in its legal reserve an amount equal to at least 10% of its 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 40 of the Banking Act. The reserves can only be transferred to capital stock or be used to reduce deficit. With respect to the Banks branches overseas, a portion of the branchs net income is appropriated into legal reserves, in line with the financial legislation of the country where the overseas branch is located.
121
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The appropriation of retained earnings for the years ended December 31, 2015 and 2014, (Dates of appropriation: March 24, 2016 and March 26, 2015 for the years ended December 31, 2015 and 2014, respectively) is follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||||||||
Retained earnings before appropriation |
||||||||||||||||
Unappropriated retained earnings carried forward from prior year |
₩ | 9 | ₩ | 329,533 | ||||||||||||
Net income |
1,055,656 | ₩ | 1,055,665 | 1,065,927 | ₩ | 1,395,460 | ||||||||||
|
|
|
|
|||||||||||||
Transfers such as voluntary reserves |
||||||||||||||||
Reserve for research and manpower development |
6,519 | 9,883 | ||||||||||||||
Revaluation of property and equipment |
124 | 3,808 | ||||||||||||||
Regulatory reserve for credit losses |
25,743 | 32,386 | | 13,691 | ||||||||||||
|
|
|
|
|||||||||||||
Appropriation |
||||||||||||||||
Legal reserve |
| 35,956 | ||||||||||||||
Voluntary reserves |
707,500 | 957,900 | ||||||||||||||
Regulatory reserve for credit losses |
| 184,663 | ||||||||||||||
Cash dividends (dividends per share(%) |
380,521 | 230,496 | ||||||||||||||
Other reserve |
7 | 1,088,028 | 127 | 1,409,142 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Unappropriated retained earnings carried forward to subsequent year |
₩ | 23 | ₩ | 9 | ||||||||||||
|
|
|
|
122
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Regulatory Reserve for Credit Losses
Measurement and Disclosure of Regulatory Reserve for Credit Losses are required in accordance with Article 29.1 through 29.2 of Regulation on supervision of Banking Business.
The details of the regulatory reserve for credit losses as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Beginning |
₩ | 1,852,396 | ₩ | 1,667,733 | ||||
Amounts estimated to be appropriated |
(25,743 | ) | 184,663 | |||||
|
|
|
|
|||||
Ending |
₩ | 1,826,653 | ₩ | 1,852,396 | ||||
|
|
|
|
The adjustments to the regulatory reserve for credit losses for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Provision(Reversal) of regulatory reserve for credit losses |
₩ | (25,743 | ) | ₩ | 184,663 | |||
Adjusted profit after provision(reversal) of regulatory reserve for credit losses1 |
₩ | 1,081,399 | ₩ | 881,264 |
1 | Adjusted profit after provision of regulatory reserve for credit losses is not accordance with Korean IFRS and calculated on the assumption that provision (reversal) of regulatory reserve for credit losses before income tax is adjusted to the profit. |
123
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
26. | Interest income and expense |
The details of interest income and expense for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Interest income |
||||||||
Due from financial institution |
₩ | 95,371 | ₩ | 122,807 | ||||
Loans |
7,340,230 | 8,447,542 | ||||||
Financial investments |
||||||||
Available-for-sale financial assets |
384,879 | 467,488 | ||||||
Held-to-maturity financial assets |
392,658 | 452,652 | ||||||
Others |
116,445 | 150,650 | ||||||
|
|
|
|
|||||
8,329,583 | 9,641,139 | |||||||
|
|
|
|
|||||
Interest expense |
||||||||
Deposits |
2,924,987 | 3,696,685 | ||||||
Debts |
157,892 | 222,275 | ||||||
Debentures |
418,979 | 592,230 | ||||||
Others |
63,452 | 69,496 | ||||||
3,565,310 | 4,580,686 | |||||||
|
|
|
|
|||||
Net interest income |
₩ | 4,764,273 | ₩ | 5,060,453 | ||||
|
|
|
|
Interest income recognized on impaired loans is ₩50,738 million (2014: ₩93,491 million) for the year ended December 31, 2015.
124
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
27. | Fee and Commission income and expense |
The details of fee and commission income, and fee and commission expense for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Fee and commission income |
||||||||
Banking activity fees |
₩ | 173,442 | ₩ | 171,909 | ||||
Lending activity fees |
87,202 | 73,605 | ||||||
Agent activity fees |
406,123 | 372,323 | ||||||
Trust and other fiduciary fees |
258,250 | 221,138 | ||||||
Guarantee fees |
30,300 | 29,549 | ||||||
Credit card related fees |
1,420 | 1,612 | ||||||
Foreign currency related fees |
85,676 | 85,962 | ||||||
Security activity commissions |
160,211 | 145,718 | ||||||
Other business account commission on consignment |
30,525 | 25,311 | ||||||
Debit card related fees and commissions |
680 | 637 | ||||||
Others |
144,208 | 150,927 | ||||||
|
|
|
|
|||||
1,378,037 | 1,278,691 | |||||||
|
|
|
|
|||||
Fee and commission expense |
||||||||
Trading activity related fees1 |
10,503 | 8,767 | ||||||
Lending activity fees |
21,225 | 18,548 | ||||||
Credit card related fees |
1,096 | 1,149 | ||||||
Contributions to external institutions |
22,318 | 18,614 | ||||||
Outsourcing related fees |
61,495 | 55,220 | ||||||
Foreign currency related fees |
10,735 | 10,316 | ||||||
Management fees of written-off loans |
12,584 | 9,785 | ||||||
Others |
67,029 | 65,278 | ||||||
|
|
|
|
|||||
206,985 | 187,677 | |||||||
|
|
|
|
|||||
Net fee and commission income |
₩ | 1,171,052 | ₩ | 1,091,014 | ||||
|
|
|
|
1 | The fees from financial assets/liabilities at fair value through profit or loss. |
125
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
28. | Net gains or losses from financial assets/liabilities at fair value through profit or loss |
Net gains or losses from financial assets/liabilities at fair value through profit or loss are composed of gains or losses from financial instruments held for trading includes interest income, dividend income, gains or losses arising from changes in the fair values, sales and redemptions.
The details for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Gains on financial instruments held for trading |
||||||||
Financial assets held for trading |
||||||||
Debt securities |
₩ | 65,334 | ₩ | 70,638 | ||||
Equity securities |
6,662 | 9,565 | ||||||
|
|
|
|
|||||
71,996 | 80,203 | |||||||
|
|
|
|
|||||
Derivatives held for trading |
||||||||
Interest rate |
973,530 | 1,307,262 | ||||||
Currency |
2,287,541 | 1,886,636 | ||||||
Stock or stock index |
13,727 | 44,775 | ||||||
Others |
803 | 801 | ||||||
|
|
|
|
|||||
3,275,601 | 3,239,474 | |||||||
|
|
|
|
|||||
Other financial instruments |
2,166 | 47 | ||||||
|
|
|
|
|||||
3,349,763 | 3,319,724 | |||||||
|
|
|
|
|||||
Losses on financial instruments held for trading |
||||||||
Financial assets held for trading |
||||||||
Debt securities |
19,914 | 5,852 | ||||||
Equity securities |
6,085 | 30,184 | ||||||
|
|
|
|
|||||
25,999 | 36,036 | |||||||
|
|
|
|
|||||
Derivatives held for trading |
||||||||
Interest rate |
986,138 | 1,355,289 | ||||||
Currency |
2,178,140 | 1,743,657 | ||||||
Stock or stock index |
12,877 | 20,346 | ||||||
Others |
241 | 446 | ||||||
|
|
|
|
|||||
3,177,396 | 3,119,738 | |||||||
|
|
|
|
|||||
Other financial instruments |
2,213 | 50 | ||||||
|
|
|
|
|||||
3,205,608 | 3,155,824 | |||||||
|
|
|
|
|||||
Net gains from financial instruments held for trading |
₩ | 144,155 | ₩ | 163,900 | ||||
|
|
|
|
126
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
29. | Other operating income and expenses |
The details of other operating income and expenses for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Other operating income |
||||||||
Revenue related to available-for-sale financial assets |
||||||||
Gains on redemption of available-for-sale financial assets |
₩ | 313 | ₩ | | ||||
Gains on sale of available-for-sale financial assets |
419,667 | 127,434 | ||||||
|
|
|
|
|||||
419,980 | 127,434 | |||||||
|
|
|
|
|||||
Gains on sale of held-to-maturity financial assets |
| 1,668 | ||||||
|
|
|
|
|||||
Gains on foreign exchange transactions |
2,418,550 | 1,458,061 | ||||||
Dividend income |
102,517 | 86,516 | ||||||
Others |
183,335 | 153,636 | ||||||
|
|
|
|
|||||
3,124,382 | 1,827,315 | |||||||
|
|
|
|
|||||
Other operating expenses |
||||||||
Expense related to available-for-sale financial assets |
||||||||
Losses on sale of available-for-sale financial assets |
2,142 | 2,242 | ||||||
Impairment losses on available-for-sale financial assets |
216,027 | 180,784 | ||||||
|
|
|
|
|||||
218,169 | 183,026 | |||||||
|
|
|
|
|||||
Losses on foreign exchanges transactions |
2,423,747 | 1,450,774 | ||||||
Others |
882,352 | 879,374 | ||||||
|
|
|
|
|||||
3,524,268 | 2,513,174 | |||||||
|
|
|
|
|||||
Net other operating expenses |
₩ | (399,886 | ) | ₩ | (685,859 | ) | ||
|
|
|
|
127
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
30. | General and administrative expenses |
30.1 General and administrative expenses
The details of general and administrative expenses for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Employee Benefits |
||||||||
Salaries and short-term employee benefits - salaries |
₩ | 1,431,440 | ₩ | 1,399,892 | ||||
Salaries and short-term employee benefits - welfare expense |
693,297 | 649,407 | ||||||
Post employment benefits - defined benefit plans |
164,175 | 148,161 | ||||||
Post employment benefits - defined contribution plans |
5,085 | 4,425 | ||||||
Termination benefits |
390,245 | 473 | ||||||
Share-based payments(reversal) |
11,915 | 7,234 | ||||||
|
|
|
|
|||||
2,696,157 | 2,209,592 | |||||||
|
|
|
|
|||||
Depreciation and amortization |
198,079 | 205,820 | ||||||
|
|
|
|
|||||
Other general and administrative expenses |
||||||||
Rental expense |
228,831 | 254,783 | ||||||
Tax and dues |
96,232 | 99,643 | ||||||
Communication |
23,841 | 23,438 | ||||||
Electricity and utilities |
23,693 | 23,158 | ||||||
Publication |
13,732 | 14,614 | ||||||
Repairs and maintenance |
11,991 | 13,718 | ||||||
Vehicle |
7,710 | 9,021 | ||||||
Travel |
3,143 | 3,018 | ||||||
Training |
18,348 | 14,131 | ||||||
Service fees |
87,219 | 84,723 | ||||||
Others |
367,019 | 384,836 | ||||||
|
|
|
|
|||||
881,759 | 925,083 | |||||||
|
|
|
|
|||||
₩ | 3,775,995 | ₩ | 3,340,495 | |||||
|
|
|
|
128
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
30.2 Share-based payments
30.2.1 Share options
The changes in the number of granted share options and the weighted average exercise price for the years ended December 31, 2015 and 2014, are as follows:
(In Korean won, except shares) | ||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||
Number of granted shares | Number of shares |
Exercise price per share |
Remaining contractual life(Years) |
|||||||||||||||||||||
Beginning | Expired | Ending | ||||||||||||||||||||||
Series 22 |
657,498 | 657,498 | | | | | ||||||||||||||||||
Series 23 |
15,246 | 15,246 | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
672,744 | 672,744 | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Weighted average exercise price |
₩ | 77,268 | ₩ | 77,268 | | |
(In Korean won, except shares) | ||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||
Number of granted shares | Number of shares |
Exercise price per share |
Remaining contractual life(Years) |
|||||||||||||||||||||
Beginning | Expired | Ending | ||||||||||||||||||||||
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 | 672,244 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Weighted average exercise price |
₩ | 77,235 | ₩ | 77,207 | ₩ | 77,268 | ₩ | 77,268 |
129
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
30.2.2 Share Grants
The Bank changed the scheme of share-based payment from share option to share grants in November 2007. The share grant award program is an incentive plan that sets, on grant date, the maximum number of shares that can be awarded. Actual shares to be granted is determined in accordance with achievement of performance targets over the vesting period.
The details of the share grants as of December 31, 2015, are as follows:
(In number of shares) | ||||||||
Share grants |
Grant date | Number of granted shares1 |
Vesting conditions | |||||
Series 48 |
2013.07.23 | 14,470 | Service period : 2 years 2,3 | |||||
Series 49 |
2013.07.24 | 36,495 | Service period : 2 years 2,3 | |||||
Series 50 |
2013.07.24 | 9,214 | Service period : 2 years 2,3 | |||||
Series 52 |
2013.08.01 | 10,278 | Service period : 2 years 2,3 | |||||
Series 57 |
2014.01.01 | 8,853 | Service period : 2 years 2,3 | |||||
Series 58 |
2014.01.01 | 78,700 | Service period : 2 years 2,3 | |||||
Series 60 |
2015.01.01 | 349,984 | Service period : 2 years 2,3 | |||||
Series 61 |
2015.04.14 | 8,390 | Service period : 2 years 2,3 | |||||
Series 62 |
2015.01.12 | 15,965 | Service period : 2 years 2,3 | |||||
Series 63 |
2015.08.01 | 9,969 | Service period : 2 years 2,3 | |||||
Series 64 |
2015.07.24 | 35,069 | Service period : 2 years 2,3 | |||||
Series 65 |
2015.08.26 | 13,828 | Service period : 2 years 2,3 | |||||
Series 66 |
2014.11.21 | 28,392 | Service period : 3 years 2,4 | |||||
Deferred grant in 2010 |
| 50 | ||||||
Deferred grant in 2011 |
| 101 | ||||||
Deferred grant in 2012 |
| 13,082 | ||||||
Deferred grant in 2013 |
| 69,240 | ||||||
Deferred grant in 2014 |
| 124,149 | ||||||
Deferred grant in 2015 |
| 1,877 | ||||||
|
|
|||||||
828,106 | ||||||||
|
|
1 | Granted shares represent the total number of shares initially granted to directors and employees that have residual shares at the end of reporting period. However, deferred grants are residual shares at the end of reporting period. |
2 | Certain portion of the granted shares is compensated over a maximum period of three years. |
3 | In general, 40%, 30% and 30% of the number of shares to be granted are determined upon the accomplishment of the targeted performance results, the targeted relative TSR and the targeted financial results of the Bank, respectively. However, as for certain number of shares, half of the number of shares to be granted is determined based on the accomplishment of the targeted relative TSR, while the other half is determined by the targeted performance results. |
4 | 30%, 35% and 35% of the number of shares to be granted are determined upon the accomplishment of the targeted total assets growth rate, the targeted relative TSR and the targeted ROA, respectively. |
130
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The details of share grants linked to short-term performance as of December 31, 2015, are as follows:
Grant date | Number of vested shares 1 |
Vesting conditions | ||||||
Granted shares for 2010 |
2010.01.01 | 363 | Vested | |||||
Granted shares for 2011 |
2011.01.01 | 3,985 | Vested | |||||
Granted shares for 2012 |
2012.01.01 | 54,609 | Vested | |||||
Granted shares for 2013 |
2013.01.01 | 68,751 | Vested | |||||
Granted shares for 2014 |
2014.01.01 | 164,953 | Vested | |||||
Granted shares for 2015 |
2015.01.01 | 174,345 | 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, 2015, are as follows:
(In Korean won) | Expected (Years) |
Risk free rate (%) |
Fair value (Market |
Fair value (Non-market | ||||||||
Linked to long term performance |
|
|||||||||||
Series 48 |
0.00 ~ 3.00 | 1.63 | 36,497 | 33,145~34,180 | ||||||||
Series 49 |
0.00 ~ 3.00 | 1.63 | 36,382 | 33,145~34,180 | ||||||||
Series 49-1 |
0.00 ~ 3.00 | 1.63 | 36,583 | 33,145~34,180 | ||||||||
Series 50 |
0.00 ~ 3.00 | 1.63 | 36,382 | 33,145~34,180 | ||||||||
Series 52 |
0.00 ~ 3.00 | 1.63 | 36,321 | 33,145~34,180 | ||||||||
Series 57 |
0.00 ~ 3.00 | 1.63 | 34,407 | 33,145~34,180 | ||||||||
Series 58 |
0.00 ~ 3.00 | 1.63 | 34,407 | 33,145~34,180 | ||||||||
Series 60 |
1.00 ~ 4.00 | 1.63 | 31,695 | 33,145~33,213 | ||||||||
Series 61 |
1.28 ~ 5.01 | 1.63 | 31,695 | 33,110~33,213 | ||||||||
Series 62 |
1.00 ~ 4.00 | 1.63 | 31,695 | 33,145~33,213 | ||||||||
Series 63 |
1.58 ~ 5.01 | 1.64 | 31,695 | 33,110~33,213 | ||||||||
Series 64 |
1.56 ~ 5.01 | 1.64 | 31,695 | 33,110~33,213 | ||||||||
Series 65 |
1.65 ~ 5.01 | 1.64 | 31,695 | 33,110~33,213 | ||||||||
Series 66 |
1.89 ~ 4.89 | 1.64 | 33,689 | 33,157~33,292 | ||||||||
Grant deferred in 2012 |
0.00 | 1.72 | | 34,180 | ||||||||
Grant deferred in 2013 |
0.00 ~ 1.00 | 1.72 | | 33,153~34,180 | ||||||||
Grant deferred in 2014 |
0.00 ~ 2.00 | 1.72 | | 33,143~34,180 | ||||||||
Grant deferred in 2015 |
0.02 ~ 2.03 | 1.72 | | 33,179~33,877 | ||||||||
Linked to short-term performance |
||||||||||||
Share granted in 2012 |
0.00 | 1.72 | | 34,180 | ||||||||
Share granted in 2013 |
0.00 ~ 1.00 | 1.72 | | 33,153~39,944 | ||||||||
Share granted in 2014 |
0.00 ~ 2.03 | 1.72 | | 33,143~34,180 | ||||||||
Share granted in 2015 |
0.00 ~ 3.00 | 1.72 | | 33,145~34,180 |
131
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
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, 2015, was used for the underlying asset price. Also, the average three-year historical dividend rate was used as the expected dividend rate.
As of December 31, 2015 and 2014, the accrued expenses related to share-based payments including share options and share grants, amounted to ₩33,754 million and ₩32,256 million, respectively, and the compensation costs from share options and share grants amounting to ₩11,915 million and ₩7,234 million were incurred during the years ended December 31, 2015 and 2014, respectively. There is no intrinsic value of the vested share options as of December 31, 2015 and 2014.
31. Non-operating income and expenses
The details of non-operating income and expenses for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Non-operating income |
||||||||
Gains of disposal in property and equipment and assets held for sale |
₩ | 1,017 | ₩ | 1,454 | ||||
Rent received |
6,947 | 7,605 | ||||||
Others |
268,195 | 111,261 | ||||||
|
|
|
|
|||||
276,159 | 120,320 | |||||||
|
|
|
|
|||||
Non-operating expenses |
||||||||
Losses of disposal in property and equipment and assets held for sale |
927 | 1,163 | ||||||
Donation |
41,839 | 45,884 | ||||||
Restoration cost |
722 | 1,818 | ||||||
Others |
81,575 | 84,972 | ||||||
|
|
|
|
|||||
125,063 | 133,837 | |||||||
|
|
|
|
|||||
Net non-operating income (expenses) |
₩ | 151,096 | ₩ | (13,517 | ) | |||
|
|
|
|
132
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
32. Income tax expense
Income tax expense for the years ended December 31, 2015 and 2014, consists of:
(In millions of Korean won) | 2015 | 2014 | ||||||
Tax payable |
||||||||
Current tax expense |
₩ | 202,904 | ₩ | 406,646 | ||||
Adjustments recognized in the period for current tax of prior years |
(16,207 | ) | (13,855 | ) | ||||
|
|
|
|
|||||
186,697 | 392,791 | |||||||
|
|
|
|
|||||
Changes in deferred income tax assets(liabilities) |
48,877 | (13,332 | ) | |||||
|
|
|
|
|||||
Income tax expense of overseas branches |
3,827 | 6,202 | ||||||
|
|
|
|
|||||
Income tax recognized directly in equity |
||||||||
Changes in value of available-for-sale financial assets |
24,789 | (67,596 | ) | |||||
Changes in remeasurements of net defined benefit liabilities |
4,627 | 26,691 | ||||||
|
|
|
|
|||||
29,416 | (40,905 | ) | ||||||
|
|
|
|
|||||
Consolidated tax effect |
(9,806 | ) | (18,957 | ) | ||||
|
|
|
|
|||||
Tax expense |
₩ | 259,011 | ₩ | 325,799 | ||||
|
|
|
|
An analysis of the net profit before income tax and income tax expense for the years ended December 31, 2015 and 2014, follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Profit before income tax |
₩ | 1,314,667 | ₩ | 1,391,726 | ||||
|
|
|
|
|||||
Tax at the applicable tax rate1 |
317,731 | 336,379 | ||||||
Non-taxable income |
(53,443 | ) | (6,091 | ) | ||||
Non-deductible expense |
13,713 | 10,665 | ||||||
Tax credit and tax exemption |
(397 | ) | (141 | ) | ||||
Temporary difference for which no deferred tax is recognized |
8,155 | 6,957 | ||||||
Tax supplementary pay (rebate) for tax of prior years |
(21,222 | ) | (9,375 | ) | ||||
Income tax expense of overseas branch |
3,827 | 6,202 | ||||||
Consolidated tax effect |
(9,806 | ) | (18,957 | ) | ||||
Others |
453 | 160 | ||||||
|
|
|
|
|||||
Tax expense |
259,011 | 325,799 | ||||||
|
|
|
|
|||||
Tax expense / Profit before income tax (%) |
19.70 | 23.41 |
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%. |
133
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The details of current tax liabilities (income tax payables) and current tax assets (income tax refund receivables) before offsetting, as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Income tax refund receivables prior to offsetting1 |
₩ | (229,470) | ₩ | (215,345 | ) | |||
Tax payables prior to offsetting2 |
203,185 | 407,984 | ||||||
|
|
|
|
|||||
Tax receivables(payables) after offsetting |
(26,285 | ) | 192,639 | |||||
Adjustment on consolidated tax payable and others3 |
(9,806 | ) | (18,956 | ) | ||||
Accounts payable4 |
36,373 | (172,345 | ) | |||||
|
|
|
|
|||||
Current tax payable |
₩ | 282 | ₩ | 1,338 | ||||
|
|
|
|
1 | Excludes current tax assets of ₩17,612 million (December 31, 2014: ₩305,831 million) from the uncertain tax position, which do not qualify for offsetting. |
2 | Includes income tax payable of ₩282 million (December 31, 2014: ₩1,338 million) under current tax liabilities as of December 31, 2015, which are not to be offset against any income tax refund receivables, such as those of overseas branches. |
3 | Tax expense reduced due to the adoption of consolidated tax return was reclassified as tax benefit. |
4 | The amount of income tax payable by the Bank is reclassified as accounts payable, not to the tax authority, but to KB Financial Group Inc. due to the adoption of consolidated tax return. |
33. Dividends
The dividend to the shareholders of the parent company in respect of the year ended December 31, 2015, of ₩941 per share, amounting to total dividends of ₩380,521 million, is to be proposed at the annual general shareholders meeting on March 24, 2016. The Banks financial statements as of December 31, 2015, do not reflect this dividend payable.
134
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
34. Accumulated other comprehensive income
The details of accumulated other comprehensive income for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | |||||||||||||||||||
Beginning | Changes except for reclassification |
Reclassification to profit or loss |
Tax effect | Ending | ||||||||||||||||
Remeasurements of net defined benefit liabilities |
₩ | (87,688 | ) | (19,121 | ) | ₩ | | ₩ | 4,627 | ₩ | (102,182 | ) | ||||||||
Currency translation differences |
(28 | ) | 1,957 | | | 1,929 | ||||||||||||||
Gains(losses) on valuation of available-for-sale financial assets |
754,116 | 211,489 | (313,923 | ) | 24,789 | 676,471 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 666,400 | ₩ | 194,325 | ₩ | (313,923 | ) | ₩ | 29,416 | ₩ | 576,218 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(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 |
₩ | (4,085 | ) | ₩ | (110,294 | ) | ₩ | | ₩ | 26,691 | ₩ | (87,688 | ) | |||||||
Currency translation differences |
4,837 | (4,865 | ) | | | (28 | ) | |||||||||||||
Gains (losses) on valuation of available-for-sale financial assets |
542,390 | 347,392 | (68,070 | ) | (67,596 | ) | 754,116 | |||||||||||||
Gains (losses) on valuation of held-to-maturity financial assets |
3 | | (3 | ) | | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
₩ | 543,145 | ₩ | 232,233 | ₩ | (68,073 | ) | ₩ | (40,905 | ) | ₩ | 666,400 | |||||||||
|
|
|
|
|
|
|
|
|
|
135
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
35. Trust Accounts
Financial information of the trust accounts the Bank manages as of December 31, 2015 and 2014, and for the years ended December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||||||||
Total assets |
Operating revenues |
Total assets |
Operating revenues |
|||||||||||||
Consolidated |
₩ | 3,754,063 | ₩ | 125,392 | ₩ | 3,614,835 | ₩ | 150,598 | ||||||||
Unconsolidated |
34,216,814 | 1,334,526 | 28,062,557 | 1,230,286 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 37,970,877 | ₩ | 1,459,918 | ₩ | 31,677,392 | ₩ | 1,380,884 | |||||||||
|
|
|
|
|
|
|
|
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 receivables and payables related to the Banks trust accounts as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Assets |
||||||||
Accrued trust fees |
₩ | 48,671 | ₩ | 51,302 | ||||
|
|
|
|
|||||
Liabilities |
||||||||
Due to trust accounts |
2,916,070 | 2,742,738 | ||||||
Accrued interest on due to trust accounts |
6,545 | 6,067 | ||||||
|
|
|
|
|||||
₩ | 2,922,615 | ₩ | 2,748,805 | |||||
|
|
|
|
Significant revenue and expenses related to the Banks trust for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Revenues |
||||||||
Fees and commissions from trust accounts |
₩ | 258,250 | ₩ | 221,138 | ||||
Commissions from early termination in trust accounts |
169 | 126 | ||||||
|
|
|
|
|||||
258,419 | 221,264 | |||||||
|
|
|
|
|||||
Expenses |
||||||||
Interest expenses on due to trust accounts |
₩ | 51,966 | ₩ | 58,014 |
136
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
As of December 31, 2015 and 2014, the carrying amounts of the trust accounts for which the Bank guarantees payment of principal or payment of principal and fixed rate of return are as follows:
(In millions of Korean won) | ||||||||||
2015 | 2014 | |||||||||
Trust accounts guaranteeing repayment of principal |
Old age pension |
₩ | 2,250 | ₩ | 2,448 | |||||
Personal pension |
1,823,802 | 1,804,995 | ||||||||
Pension |
1,758,222 | 1,624,336 | ||||||||
Retirement |
12,977 | 18,931 | ||||||||
New personal pension |
88,094 | 83,699 | ||||||||
New old age pension |
6,726 | 7,676 | ||||||||
Retail |
16,349 | 17,916 | ||||||||
Corporate |
1,574 | 1,838 | ||||||||
Installment |
22,900 | 25,484 | ||||||||
|
|
|
|
|||||||
3,732,894 | 3,587,323 | |||||||||
|
|
|
|
|||||||
Trust accounts guaranteeing repayment of principal and fixed rate of return |
Development money |
21,080 | 27,423 | |||||||
Unspecified monetary |
89 | 89 | ||||||||
|
|
|
|
|||||||
21,169 | 27,512 | |||||||||
|
|
|
|
|||||||
₩ | 3,754,063 | ₩ | 3,614,835 | |||||||
|
|
|
|
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. |
As of December 31, 2015 and 2014, there is no amount the Bank has to pay in relation to the management results of the trust accounts in accordance with the guarantees of payment of principal or payment of principal and fixed rate of return.
137
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
36. Supplemental Cash Flow Information
Cash and cash equivalents as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Cash |
₩ | 2,068,751 | ₩ | 2,009,443 | ||||
Checks with other banks |
396,955 | 525,452 | ||||||
Due from Bank of Korea |
6,791,990 | 6,508,623 | ||||||
Due from other financial institutions |
4,288,453 | 4,228,905 | ||||||
|
|
|
|
|||||
13,546,149 | 13,272,423 | |||||||
|
|
|
|
|||||
Restricted due from financial institutions |
(6,831,717 | ) | (6,812,363 | ) | ||||
Due from financial institutions with original maturities over three months |
(700,000 | ) | (300,000 | ) | ||||
|
|
|
|
|||||
(7,531,717 | ) | (7,112,363 | ) | |||||
|
|
|
|
|||||
₩ | 6,014,432 | ₩ | 6,160,060 | |||||
|
|
|
|
Significant non-cash transactions for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Decrease in loans due to the write-offs |
₩ | 979,105 | ₩ | 1,589,846 | ||||
Changes in accumulated other comprehensive income due to valuation of financial investments |
(77,645 | ) | 211,723 | |||||
Changes in financial investments due to debt-for-equity swap with Taihan Electric Wire Co., Ltd. |
14,729 | | ||||||
Changes in financial investments due to debt-for-equity swap with Hyundai Cement Co., Ltd. |
| 25,178 |
Cash inflows and outflows from income tax, interest and dividends for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | Activities | 2015 | 2014 | |||||||
Income tax paid |
Operating | ₩ | 96,867 | ₩ | 298,884 | |||||
Interest received |
Operating | 8,770,361 | 9,984,731 | |||||||
Interest paid |
Operating | 3,957,864 | 4,741,323 | |||||||
Dividends received |
Operating | 112,753 | 142,333 | |||||||
Dividends paid |
Financing | ₩ | 230,496 | ₩ | 158,517 |
138
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
37. Contingent liabilities and commitments
Acceptances and guarantees as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Confirmed acceptances and guarantees |
||||||||
Confirmed acceptances and guarantees in Korean won |
||||||||
Acceptances and guarantees for KB purchasing loan |
₩ | 422,316 | ₩ | 428,815 | ||||
Others |
609,034 | 669,233 | ||||||
|
|
|
|
|||||
1,031,350 | 1,098,048 | |||||||
|
|
|
|
|||||
Confirmed acceptances and guarantees in foreign currencies |
||||||||
Acceptances of letter of credit |
247,445 | 326,748 | ||||||
Letter of guarantees |
51,500 | 61,081 | ||||||
Bid bond |
62,402 | 43,362 | ||||||
Performance bond |
1,205,544 | 1,175,330 | ||||||
Refund guarantees |
1,924,030 | 1,494,023 | ||||||
Others |
1,395,153 | 901,861 | ||||||
|
|
|
|
|||||
4,886,074 | 4,002,405 | |||||||
|
|
|
|
|||||
Financial guarantees |
||||||||
Acceptances and guarantee for issue of debentures |
51,200 | 51,200 | ||||||
Acceptances and guarantees for mortgage |
27,805 | 75,651 | ||||||
Overseas debt guarantees |
504,530 | 392,021 | ||||||
International financing guarantees in foreign currencies |
11,893 | 35,949 | ||||||
Others |
| 600 | ||||||
|
|
|
|
|||||
595,428 | 555,421 | |||||||
|
|
|
|
|||||
6,512,852 | 5,655,874 | |||||||
|
|
|
|
|||||
Unconfirmed acceptances and guarantees |
||||||||
Guarantees of letter of credit |
2,133,966 | 2,819,174 | ||||||
Refund guarantees |
1,019,116 | 1,060,413 | ||||||
|
|
|
|
|||||
3,153,082 | 3,879,587 | |||||||
|
|
|
|
|||||
₩ | 9,665,934 | ₩ | 9,535,461 | |||||
|
|
|
|
139
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Acceptances and guarantees by counterparty as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||
2015 | ||||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) |
|||||||||||||
Large companies |
₩ | 5,516,431 | ₩ | 2,480,901 | ₩ | 7,997,332 | 82.74 | |||||||||
Small medium sized companies |
832,109 | 517,405 | 1,349,514 | 13.96 | ||||||||||||
Public and others |
164,312 | 154,776 | 319,088 | 3.30 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 6,512,852 | ₩ | 3,153,082 | ₩ | 9,665,934 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) |
|||||||||||||
Large companies |
₩ | 4,642,270 | ₩ | 2,933,062 | ₩ | 7,575,332 | 79.44 | |||||||||
Small medium sized companies |
855,472 | 559,483 | 1,414,955 | 14.84 | ||||||||||||
Public and others |
158,132 | 387,042 | 545,174 | 5.72 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,655,874 | ₩ | 3,879,587 | ₩ | 9,535,461 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
Acceptances and guarantees by industry as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||
2015 | ||||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) |
|||||||||||||
Financial institutions |
₩ | 307,271 | ₩ | 3,664 | ₩ | 310,935 | 3.22 | |||||||||
Manufacturing |
3,607,442 | 1,934,171 | 5,541,613 | 57.33 | ||||||||||||
Service |
589,113 | 65,588 | 654,701 | 6.77 | ||||||||||||
Wholesale and retail |
1,309,313 | 791,237 | 2,100,550 | 21.73 | ||||||||||||
Construction |
606,099 | 200,955 | 807,054 | 8.35 | ||||||||||||
Public |
73,160 | 106,288 | 179,448 | 1.86 | ||||||||||||
Others |
20,454 | 51,179 | 71,633 | 0.74 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 6,512,852 | ₩ | 3,153,082 | ₩ | 9,665,934 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
140
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | ||||||||||||||||
2014 | ||||||||||||||||
Confirmed guarantees |
Unconfirmed guarantees |
Total | Proportion (%) |
|||||||||||||
Financial institutions |
₩ | 212,434 | ₩ | 3,573 | ₩ | 216,007 | 2.27 | |||||||||
Manufacturing |
3,122,384 | 2,404,405 | 5,526,789 | 57.96 | ||||||||||||
Service |
583,010 | 114,645 | 697,655 | 7.32 | ||||||||||||
Wholesale and retail |
931,382 | 788,126 | 1,719,508 | 18.03 | ||||||||||||
Construction |
709,571 | 215,382 | 924,953 | 9.70 | ||||||||||||
Public |
72,964 | 336,484 | 409,448 | 4.29 | ||||||||||||
Others |
24,129 | 16,972 | 41,101 | 0.43 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,655,874 | ₩ | 3,879,587 | ₩ | 9,535,461 | 100.00 | ||||||||||
|
|
|
|
|
|
|
|
Commitments as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||
2015 | 2014 | |||||||
Commitments |
||||||||
Corporate loan commitments |
₩ | 39,050,589 | ₩ | 43,191,321 | ||||
Retail loan commitments |
15,051,360 | 13,846,701 | ||||||
Other acceptance and guarantees in Korean won |
1,000,000 | 1,000,000 | ||||||
Other acceptance and guarantees in foreign currencies |
30,472 | 28,579 | ||||||
Other purchase of security investment |
1,799,005 | 1,821,374 | ||||||
|
|
|
|
|||||
56,931,426 | 59,887,975 | |||||||
|
|
|
|
|||||
Financial Guarantees |
||||||||
Credit line |
3,449,748 | 3,809,478 | ||||||
Purchase of security investment |
98,700 | 73,500 | ||||||
|
|
|
|
|||||
3,548,448 | 3,882,978 | |||||||
|
|
|
|
|||||
₩ | 60,479,874 | ₩ | 63,770,953 | |||||
|
|
|
|
Other Matters (including litigation)
a) The Bank has filed 59 lawsuits (excluding minor lawsuits in relation to the collection or management of loans), as the plaintiff, involving aggregate claims of ₩388,395 million, and faces 165 lawsuits as the defendant (excluding minor lawsuits in relation to the collection or management of loans) involving aggregate damages of ₩321,176 million, which arose in the normal course of the business and are still pending as of December 31, 2015.
b) According to shareholders agreement on September 25, 2009, among the Bank, the International Finance Corporation (IFC) and the remaining shareholders, the 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 the 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.
141
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
c) The face values of the securities sold to general customers through tellers sale amount to ₩11,254 million and ₩26,487 million as of December 31, 2015 and 2014, respectively.
d) The Bank filed a claim for rectification of education tax paid for revenues regarding the credit card business before the spin-off. The claim was ruled in favor of the Bank by the Supreme Court in December 2012, and the refunded education tax amounting to ₩83,100 million was recognized as revenue.
Depending on the judgments of the court or the National Tax Service, the beneficiary of refunded education tax may be changed from the Bank to KB Kookmin Card Co., Ltd. However, the possibility of such event is considered relatively low.
e) During the year ended December 31, 2013, the Bank underwent a tax audit for the fiscal years 2008 to 2012 by the Seoul Regional Tax Office. As a result, the Bank was assessed a total of ₩124,357 million for underpaid income taxes (including local income taxes). Thereafter, the Bank paid ₩123,330 million, excluding local income tax amounting to ₩1,027 million recognized as non-trade payable as of December 31, 2015. Subsequently, the Bank has appealed to the tax tribunal for the amount of ₩114,283 million in connection with the above tax assessment. The appeal is pending as of December 31, 2015.
142
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
38. Subsidiaries
The details of subsidiaries as of December 31, 2015, are as follows:
Name of subsidiaries | Ownership (%) | Location | Industry | |||||
Kookmin Bank Intl Ltd.(London) |
100.00 | United Kingdom | Banking and foreign exchange transaction | |||||
Kookmin Bank Hong Kong Ltd. |
100.00 | Hong Kong | Banking and foreign exchange transaction | |||||
Kookmin Bank Cambodia PLC. |
100.00 | Cambodia | Banking and foreign exchange transaction | |||||
Kookmin Bank (China) Ltd. |
100.00 | China | Banking and foreign exchange transaction | |||||
Personal pension trust and 10 others1 |
| Korea | Trust | |||||
Samho Kyungwon Co., Ltd. and |
| Korea | Asset-backed securitization and others | |||||
KB Haeorum Private Securities 26 and 6 others3 |
100.00 | Korea | Private equity fund | |||||
KB Wise Star Private Real Estate Feeder Fund 1 3 |
86.00 | Korea | Investment Trust | |||||
KB Star Retail Private Real Estate Master Fund 1 2,4 |
42.12 | Korea | Investment Trust | |||||
KB Star Office Private Real Estate Master Fund 2 2,4 |
38.22 | Korea | Investment Trust |
1 | The Bank 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 Bank 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 | The Bank 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. |
4 | Ownerships are based on consolidated basis. |
143
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The condensed financial information of major subsidiaries as of December 31, 2015 and 2014, and for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||||||||||||
2015 | ||||||||||||||||||||
Assets | Liabilities | Equity | Operating revenue |
Profit (loss) for the period |
||||||||||||||||
Kookmin Bank Intl Ltd.(London) |
₩ | 472,941 | ₩ | 388,623 | ₩ | 84,318 | ₩ | 10,756 | ₩ | 3,484 | ||||||||||
Kookmin Bank Hong Kong Ltd. |
684,994 | 529,847 | 155,147 | 14,529 | 5,127 | |||||||||||||||
Kookmin Bank Cambodia PLC. |
88,675 | 63,851 | 24,824 | 5,850 | 2,054 | |||||||||||||||
Kookmin Bank (China) Ltd. |
1,663,788 | 1,231,463 | 432,325 | 42,269 | (8,465 | ) | ||||||||||||||
Personal pension trust and 10 others |
₩ | 3,803,511 | ₩ | 3,704,365 | ₩ | 99,146 | ₩ | 129,956 | ₩ | 3,664 | ||||||||||
(In millions of Korean won) | ||||||||||||||||||||
2014 | ||||||||||||||||||||
Assets | Liabilities | Equity | Operating revenue |
Profit (loss) for the period |
||||||||||||||||
Kookmin Bank Intl Ltd.(London) |
₩ | 441,292 | ₩ | 365,483 | ₩ | 75,809 | ₩ | 11,069 | ₩ | 3,466 | ||||||||||
Kookmin Bank Hong Kong Ltd. |
639,509 | 498,960 | 140,549 | 16,495 | 8,616 | |||||||||||||||
Kookmin Bank Cambodia PLC. |
95,864 | 74,578 | 21,286 | 6,021 | 266 | |||||||||||||||
Kookmin Bank (China) Ltd. |
1,259,847 | 846,151 | 413,696 | 43,507 | 7,984 | |||||||||||||||
Personal pension trust and 10 others |
₩ | 3,667,615 | ₩ | 3,571,818 | ₩ | 95,797 | ₩ | 167,608 | ₩ | (443 | ) |
Nature of the risks associated with interests in consolidated structured entities
Terms of contractual arrangements that provide financial support to a consolidated structured entity
| The Bank provides capital commitment of ₩258,000 million to KB Wise Star Private Real Estate Feeder Fund 1st, of which ₩185,717 million has not been utilized. Based on the investment agreement, the Bank is subject to increase its investment upon the request of the asset management company or the additional agreement among investors. |
| The Bank provides the guarantees of payment of principal or principal and fixed rate of return, in case the operating results of the trusts are less than the guaranteed principal or principal and a fixed rate of return. |
144
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Changes in subsidiaries
The condonation of the debt of KAMCO Value Recreation 3rd Securitization Specialty Co., Ltd. was made and it was excluded from the consolidation during the year ended December 31, 2015. KB Mortgage Loan No. 1 Limited, KB Covered Bond First International Limited, Heungkuk Multi Private Securities H-19 and 30 other private securities were excluded from the consolidation due to their respective liquidation during the year ended December 31, 2015.
39. Finance and Operating Leases
39.1 Finance lease
The future minimum lease payments as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Net Carrying amount of finance lease assets |
₩ | 32,583 | ₩ | 44,138 | ||||
|
|
|
|
|||||
Minimum lease payments |
||||||||
Within 1 year |
1,983 | 11,902 | ||||||
1-5 years |
226 | 1,637 | ||||||
|
|
|
|
|||||
2,209 | 13,539 | |||||||
|
|
|
|
|||||
Present value of minimum lease payments |
||||||||
Within 1 year |
1,950 | 11,632 | ||||||
1-5 years |
222 | 1,609 | ||||||
|
|
|
|
|||||
₩ | 2,172 | ₩ | 13,241 | |||||
|
|
|
|
39.2 Operating lease
39.2.1 The Bank as operating lessee
The future minimum lease payments arising from the non-cancellable lease contracts as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Minimum lease payments |
||||||||
Within 1 year |
₩ | 102,079 | ₩ | 102,741 | ||||
1-5 years |
85,381 | 86,973 | ||||||
Over 5 years |
33,791 | 33,612 | ||||||
|
|
|
|
|||||
221,251 | 223,326 | |||||||
|
|
|
|
|||||
Minimum sublease payments |
₩ | (1,340 | ) | ₩ | (703 | ) |
145
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The lease payments reflected in profit or loss for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Lease payments reflected in profit or loss |
||||||||
Minimum lease payments |
₩ | 159,342 | ₩ | 185,074 | ||||
Sublease payments |
(721 | ) | (540 | ) | ||||
|
|
|
|
|||||
₩ | 158,621 | ₩ | 184,534 | |||||
|
|
|
|
39.2.2 The Bank as operating lessor
The future minimum lease receipts arising from the non-cancellable lease contracts as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||
Minimum lease receipts |
||||||||
Within 1 year |
₩ | 2,829 | ₩ | 3,061 | ||||
1-5 years |
1,355 | 742 | ||||||
|
|
|
|
|||||
₩ | 4,184 | ₩ | 3,803 | |||||
|
|
|
|
40. Related Party Transactions
Profit and loss arising from transactions with related parties for the years ended December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||
2015 | 2014 | |||||||||
Parent |
||||||||||
KB Financial Group Inc. |
Fee and commission income |
₩ | 719 | ₩ | 273 | |||||
Other non-operating income |
999 | 1,400 | ||||||||
Interest expense |
2,429 | 1,961 | ||||||||
Subsidiaries |
||||||||||
Trust |
Fee and commission income |
16,922 | 17,590 | |||||||
Interest expense |
3,673 | 5,350 | ||||||||
Securitization specialty company |
Interest income |
| 12,582 | |||||||
Fee and commission income |
| 1,006 | ||||||||
Reversal of credit losses |
| 5,249 | ||||||||
Interest expense |
1 | 2 | ||||||||
Losses on financial assets/ liabilities at fair value through profit or loss |
| 266 |
146
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Private equity fund |
Interest income |
921 | | |||||||
Fee and commission income |
240 | 346 | ||||||||
Other operating income |
| 12 | ||||||||
Interest expense |
193 | 208 | ||||||||
KB Wise Star Private Real Estate Feeder Fund 1st |
Interest income |
1,123 | 1,350 | |||||||
Fee and commission income |
13 | 7 | ||||||||
Reversal of credit losses |
53 | | ||||||||
Interest expense |
9 | 13 | ||||||||
Kookmin Bank Intl Ltd. (London) |
Interest income |
1,931 | 2,043 | |||||||
Other non-operating income |
84 | | ||||||||
Kookmin Bank Hong Kong Ltd. |
Interest income |
763 | 852 | |||||||
Fee and commission income |
399 | | ||||||||
Gains on financial assets/ liabilities at fair value through profit or loss |
| 9 | ||||||||
Other operating income |
11 | | ||||||||
Other non-operating income |
82 | | ||||||||
Losses on financial assets/ liabilities at fair value through profit or loss |
| 2 | ||||||||
Other operating expense |
5 | | ||||||||
Provision for credit losses |
187 | | ||||||||
Kookmin Bank Cambodia PLC. |
Interest income |
131 | 132 | |||||||
Other non-operating income |
26 | | ||||||||
Kookmin Bank (China) Ltd. |
Interest income |
3,533 | 2,617 | |||||||
Fee and commission income |
| 302 | ||||||||
Reversal of credit losses |
43 | 286 | ||||||||
Provision for credit losses |
| 43 |
147
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Parents subsidiaries |
| |||||||||
KB Investment Co., Ltd. |
Interest expense |
590 | 766 | |||||||
KB Data System Co., Ltd. |
Fee and commission income |
1 | 1 | |||||||
Other non-operating income |
47 | 49 | ||||||||
Interest expense |
267 | 345 | ||||||||
General and administrative expenses |
14,160 | 13,189 | ||||||||
KB Real Estate Trust Co., Ltd. |
Fee and commission income |
4 | 4 | |||||||
Other non-operating income |
41 | 43 | ||||||||
Interest expense |
904 | 533 | ||||||||
Fee and commission expense |
956 | 766 | ||||||||
KB Life Insurance Co., Ltd. |
Fee and commission income |
19,591 | 15,118 | |||||||
Other non-operating income |
56 | 119 | ||||||||
Interest expense |
1 | 1 | ||||||||
KB Credit Information Co., Ltd. |
Fee and commission income |
187 | 4 | |||||||
Other non-operating income |
324 | 409 | ||||||||
Interest expense |
197 | 313 | ||||||||
Fee and commission expense |
18,379 | 14,807 | ||||||||
KB Asset Management Co., Ltd. |
Fee and commission income |
607 | 472 | |||||||
Other non-operating income |
| 2 | ||||||||
Interest expense |
1,148 | 1,724 | ||||||||
KB Investment and Securities Co., Ltd. |
Interest income |
159 | 245 | |||||||
Fee and commission income |
3,694 | 3,353 | ||||||||
Other non-operating income |
928 | 664 | ||||||||
Reversal of credit losses |
11 | 1 | ||||||||
Interest expense |
2,282 | 3,712 | ||||||||
Fee and commission expense |
321 | 307 | ||||||||
Losses on financial assets/ liabilities at fair value through profit or loss |
| 2 |
148
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Other operating expense |
10 | | ||||||||
Provision for credit losses |
9 | 1 | ||||||||
KB Kookmin Card Co., Ltd. |
Interest income |
3,010 | 2,912 | |||||||
Fee and commission income |
245,202 | 222,644 | ||||||||
Reversal of credit losses |
416 | | ||||||||
Other non-operating income |
1,126 | 1,556 | ||||||||
Interest expense |
5,690 | 7,753 | ||||||||
Fee and commission expense |
141 | 338 | ||||||||
Provision for credit losses |
415 | | ||||||||
General and administrative expenses |
| 180 | ||||||||
KB Savings Bank Co., Ltd. |
Fee and commission income |
81 | 105 | |||||||
Other non-operating income |
15 | 7 | ||||||||
KB Capital Co., Ltd. |
Fee and commission income |
243 | 129 | |||||||
Other non-operating income |
89 | 49 | ||||||||
Interest expense |
2 | 1 | ||||||||
KB Mezzanine Private Securities Fund |
Fee and commission income |
203 | 758 | |||||||
Hanbando BTL Private Special Asset Fund |
Fee and commission income |
203 | 195 | |||||||
KB Senior Loan Private Fund |
Fee and commission income |
23 | | |||||||
Associates |
||||||||||
KB12-1 Venture Investment Partnership |
Interest expense |
107 | 134 | |||||||
Future Planning KB Start-up Creation Fund |
Interest expense |
| 19 | |||||||
Korea Credit Bureau Co., Ltd. |
Fee and commission income |
3 | 3 | |||||||
Interest expense |
73 | 66 | ||||||||
UAMCO., Ltd. |
Fee and commission income |
14 | 14 | |||||||
Interest expense |
8 | 12 |
149
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
United PF 1st Recovery Private Equity Fund |
Interest expense |
49 | | |||||||
Incheon Bridge Co., Ltd. |
Interest income |
12,843 | 13,226 | |||||||
Reversal of credit losses |
2 | | ||||||||
Interest expense |
436 | 543 | ||||||||
Provision for credit losses |
| 2 | ||||||||
Associate of Subsidiary |
||||||||||
KB Star Office Private Real Estate Investment Trust No.1 |
Interest expense |
92 | 50 | |||||||
Associate of Parent |
||||||||||
KB Insurance Co., Ltd. |
Interest income |
50 | | |||||||
Fee and commission income |
2,456 | | ||||||||
Gains on financial assets/ liabilities at fair value through profit or loss |
2,761 | | ||||||||
Other non-operating income |
10 | | ||||||||
Interest expense |
16 | | ||||||||
Losses on financial assets/ liabilities at fair value through profit or loss |
164 | | ||||||||
General and administrative expense |
2,633 | | ||||||||
Associates of Parents subsidiaries |
||||||||||
Semiland Co., Ltd. 1 |
Interest income |
| 8 | |||||||
Reversal of credit losses |
| 4 | ||||||||
KB IC 3rd Private Equity Fund |
Interest expense |
23 | 38 | |||||||
KB No.2 Special Purpose Acquisition Company 1 |
Interest expense |
| 1 | |||||||
KB No.3 Special Purpose Acquisition Company1 |
Interest expense |
5 | 6 | |||||||
KB No.4 Special Purpose Acquisition Company1 |
Interest expense |
25 | 9 | |||||||
KB No.5 Special Purpose Acquisition Company |
Interest expense |
44 | 4 | |||||||
KB No.6 Special Purpose Acquisition Company |
Interest expense |
66 | 4 | |||||||
KB No.7 Special Purpose Acquisition Company |
Interest expense |
38 | |
150
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
KB No.8 Special Purpose Acquisition Company |
Interest expense |
21 | | |||||||
KB No.9 Special Purpose Acquisition Company |
Interest expense |
7 | | |||||||
SAWNICS Inc. |
Interest expense |
1 | | |||||||
eClear International Co., Ltd. 1 |
Interest income |
18 | | |||||||
SY Auto Capital Co., Ltd. |
Interest expense |
24 | | |||||||
Other |
||||||||||
Retirement pension |
Fee and commission income |
611 | 448 | |||||||
Interest expense |
955 | 788 |
1 | Not considered to be the Banks related party as at December 31, 2015. |
The details of receivables and payables, and related allowances for loan losses arising from the related party transactions as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | ||||||||||
2015 | 2014 | |||||||||
Parent |
| |||||||||
KB Financial Group Inc. |
Other assets |
₩ | 41,442 | ₩ | 465 | |||||
Deposits |
324,947 | 30,739 | ||||||||
Other liabilities |
54,619 | 224,763 | ||||||||
Subsidiaries |
||||||||||
Trust |
Other assets |
20,872 | 27,227 | |||||||
Other liabilities |
124,857 | 194,437 | ||||||||
Securitization specialty company |
Deposits |
1,316 | 1,338 | |||||||
Private equity fund |
Other assets |
11 | 56 | |||||||
Deposits |
1,001 | 20,991 | ||||||||
Other liabilities |
1 | 21 | ||||||||
KB Wise Star Private Real Estate Feeder Fund 1st |
Gross amounts of loans and receivables |
| 30,000 | |||||||
Allowances |
| 53 | ||||||||
Other assets |
4 | | ||||||||
Deposits |
| 537 | ||||||||
Other liabilities |
| 241 | ||||||||
Kookmin Bank Intl Ltd. (London) |
Cash and due from financial institutions |
6,324 | 3,477 | |||||||
Gross amounts of loans and receivables |
375,778 | 349,114 | ||||||||
Other assets |
3,219 | 3,851 | ||||||||
Debts |
196,365 | 221,575 | ||||||||
Other liabilities |
61 | 889 |
151
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Kookmin Bank Hong Kong Ltd. |
Cash and due from financial institutions |
15,745 | 759 | |||||||
Gross amounts of loans and receivables |
93,760 | 98,928 | ||||||||
Other assets |
3,509 | 2,980 | ||||||||
Debts |
193,428 | 266,206 | ||||||||
Provisions |
192 | | ||||||||
Other liabilities |
1,004 | 1 | ||||||||
Kookmin Bank Cambodia PLC. |
Gross amounts of loans and receivables |
11,720 | 10,992 | |||||||
Other assets |
2,333 | 84 | ||||||||
Deposits |
6,962 | 11,882 | ||||||||
Debts |
86 | | ||||||||
Other liabilities |
3 | | ||||||||
Kookmin Bank (China) Ltd. |
Cash and due from financial institutions |
2,696 | 344 | |||||||
Gross amounts of loans and receivables |
468,800 | 274,800 | ||||||||
Other assets |
6,240 | 5,235 | ||||||||
Debts |
200,395 | 145,301 | ||||||||
Provisions |
| 43 | ||||||||
Parents subsidiaries |
||||||||||
KB Investment Co., Ltd. |
Deposits |
37,125 | 37,219 | |||||||
Other liabilities |
117 | 198 | ||||||||
KB Data System Co., Ltd. |
Other assets |
893 | 1,037 | |||||||
Deposits |
18,028 | 19,790 | ||||||||
Other liabilities |
1,242 | 1,214 | ||||||||
KB Real Estate Trust Co., Ltd. |
Deposits |
24,025 | 96,087 | |||||||
Other liabilities |
405 | 651 | ||||||||
KB Life Insurance Co., Ltd. |
Other assets |
1,218 | 1,342 | |||||||
Deposits |
255 | 57 | ||||||||
Other liabilities |
103 | | ||||||||
KB Credit Information Co., Ltd. |
Other assets |
183 | | |||||||
Deposits |
5,864 | 6,766 | ||||||||
Other liabilities |
6,225 | 6,193 | ||||||||
KB Asset Management Co., Ltd. |
Other assets |
169 | 127 | |||||||
Deposits |
74,062 | 69,453 | ||||||||
Other liabilities |
297 | 310 |
152
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
KB Investment and Securities Co., Ltd. |
Gross amounts of loans and receivables |
8,438 | 34,997 | |||||||
Allowances |
3 | 15 | ||||||||
Other assets |
402 | 327 | ||||||||
Deposits |
117,257 | 105,449 | ||||||||
Other liabilities |
5,106 | 8,941 | ||||||||
Provisions |
13 | 4 | ||||||||
KB Kookmin Card Co., Ltd. |
Other assets |
26,891 | 27,382 | |||||||
Deposits |
385,060 | 454,205 | ||||||||
Other liabilities |
64,136 | 36,546 | ||||||||
Provisions |
415 | 416 | ||||||||
KB Savings Bank Co., Ltd. |
Other assets |
17 | 14 | |||||||
Other liabilities |
371 | | ||||||||
KB Capital Co., Ltd. |
Other assets |
11 | 5 | |||||||
Deposits |
741 | 534 | ||||||||
KB Mezzanine Private Securities Fund |
Other assets |
27 | 167 | |||||||
Hanbando BTL Private Special Asset Fund |
Other assets |
46 | 49 | |||||||
KB Senior Loan Private Fund |
Other assets |
11 | | |||||||
Associates |
||||||||||
KB12-1 Venture Investment Partnership |
Deposits |
5,753 | 9,767 | |||||||
Other liabilities |
4 | 10 | ||||||||
Korea Credit Bureau Co., Ltd. |
Deposits |
19,435 | 24,715 | |||||||
Other liabilities |
22 | 17 | ||||||||
UAMCO., Ltd. |
Deposits |
815 | 1,654 | |||||||
Incheon Bridge Co., Ltd. |
Gross amounts of loans and receivables |
231,653 | 247,870 | |||||||
Allowances |
300 | 302 | ||||||||
Other assets |
970 | 1,144 | ||||||||
Deposits |
35,916 | 35,421 | ||||||||
Other liabilities |
153 | 249 | ||||||||
JSC Bank CenterCredit |
Cash and due from financial institutions |
1,225 | 178 | |||||||
Terra Corporation |
Deposits |
1 | 1 | |||||||
DPAPS Co., Ltd. |
Deposits |
3 | | |||||||
EJADE Co., Ltd. |
Deposits |
12 | | |||||||
Doosung Metal Co., Ltd |
Deposits |
1 | | |||||||
Associate of Subsidiary |
||||||||||
KB Star Office Private Real Estate Investment Trust No.1 |
Deposits |
7,446 | 6,067 | |||||||
Other liabilities |
56 | | ||||||||
Associate of Parent |
||||||||||
KB Insurance Co., Ltd. |
Other assets |
6,503 | | |||||||
Derivative assets1 |
2,059 | | ||||||||
Deposits |
1,151 | | ||||||||
Provisions |
30 | | ||||||||
Other liabilities |
789 | | ||||||||
Derivative liabilities1 |
219 | | ||||||||
Associates of Parents subsidiaries |
||||||||||
KB IC 3rd Private Equity Fund |
Deposits |
850 | 1,400 | |||||||
Other liabilities |
9 | 24 |
153
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
KB No.3 Special Purpose Acquisition Company2 |
Deposits |
| 832 | |||||||
Other liabilities |
| 6 | ||||||||
KB No.4 Special Purpose Acquisition Company2 |
Deposits |
| 2,500 | |||||||
Other liabilities |
| 1 | ||||||||
KB No.5 Special Purpose Acquisition Company |
Deposits |
2,323 | 2,389 | |||||||
Other liabilities |
39 | 1 | ||||||||
KB No.6 Special Purpose Acquisition Company |
Deposits |
4,195 | 4,406 | |||||||
Other liabilities |
68 | 3 | ||||||||
KB No.7 Special Purpose Acquisition Company |
Deposits |
2,336 | | |||||||
Other liabilities |
37 | | ||||||||
KB No.8 Special Purpose Acquisition Company |
Deposits |
2,373 | | |||||||
Other liabilities |
21 | | ||||||||
KB No.9 Special Purpose Acquisition Company |
Deposits |
2,973 | | |||||||
Other liabilities |
7 | | ||||||||
SAWNICS Inc. |
Deposits |
319 | | |||||||
SY Auto Captial Co., Ltd. |
Deposits |
1,845 | | |||||||
Key management |
Gross amounts of loans and receivables |
2,280 | 2,325 | |||||||
Other assets |
3 | 3 | ||||||||
Deposits |
3,962 | 17,432 | ||||||||
Other liabilities |
29 | 120 | ||||||||
Other |
||||||||||
Retirement pension |
Other assets |
264 | 191 | |||||||
Deposits |
51,920 | 41,412 | ||||||||
Other liabilities |
37,969 | 246 |
1 | Notional amount related to derivative assets and liabilities is ₩56,798 million as of December 31, 2015. |
2 | Not considered to be Banks related party as of December 31, 2015. |
In accordance with Korean IFRS 1024, the Bank includes parent, subsidiaries, parents subsidiaries, associates, associates of parents subsidiaries, key management (including family members), and post-employment benefit plans of the Bank and entities regarded as its related parties in the scope of its related parties. Additionally, the Bank 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 13 for details on investments in associates and subsidiaries.
Key management includes the directors of the parent company and the executive directors (vice-presidents and above) of the Bank and companies where the directors and/or their close family members have control or joint control.
154
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
Significant loan transactions with related parties for the years ended December 31, 2015 and 2014, are as follows:
20151 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Loans | Repayments | Others | Ending | |||||||||||||||
Subsidiaries |
||||||||||||||||||||
KB Wise Star Private Real Estate Feeder Fund 1st |
₩ | 30,000 | ₩ | | ₩ | 30,000 | ₩ | | ₩ | | ||||||||||
Kookmin Bank Intl Ltd. (London) |
349,114 | 942,556 | 932,402 | 16,510 | 375,778 | |||||||||||||||
Kookmin Bank Hong Kong Ltd. |
98,928 | 130,100 | 141,413 | 6,145 | 93,760 | |||||||||||||||
Kookmin Bank Cambodia PLC. |
10,992 | 11,313 | 11,313 | 728 | 11,720 | |||||||||||||||
Kookmin Bank (China) Ltd. |
274,800 | 452,520 | 282,825 | 24,305 | 468,800 | |||||||||||||||
Parents subsidiary |
||||||||||||||||||||
KB Kookmin Card Co., Ltd. |
| 4,005 | 4,005 | | | |||||||||||||||
KB Investment and Securities Co., Ltd. |
34,997 | 14,094 | 40,653 | | 8,438 | |||||||||||||||
Associate |
||||||||||||||||||||
Incheon Bridge Co., Ltd. |
247,870 | 8,000 | 24,217 | | 231,653 | |||||||||||||||
20141 | ||||||||||||||||||||
(In millions of Korean won) | Beginning | Loans | Repayments | Others | Ending | |||||||||||||||
Subsidiaries |
||||||||||||||||||||
Securitization specialty company |
₩ | 104,430 | ₩ | | ₩ | 104,430 | ₩ | | ₩ | | ||||||||||
KB Wise Star Private Real Estate Feeder Fund 1st |
30,000 | | | | 30,000 | |||||||||||||||
Kookmin Bank Intl Ltd. (London) |
282,578 | 730,021 | 669,566 | 6,081 | 349,114 | |||||||||||||||
Kookmin Bank Hong Kong Ltd. |
97,427 | 126,324 | 128,774 | 3,951 | 98,928 | |||||||||||||||
Kookmin Bank Cambodia PLC. |
21,106 | 31,623 | 42,150 | 413 | 10,992 | |||||||||||||||
Kookmin Bank (China) Ltd. |
272,267 | 263,175 | 271,597 | 10,955 | 274,800 | |||||||||||||||
Parents subsidiary |
||||||||||||||||||||
KB Investment and Securities Co., Ltd. |
32,995 | 2,002 | | | 34,997 | |||||||||||||||
Associate |
||||||||||||||||||||
Incheon Bridge Co., Ltd. |
249,362 | 12,360 | 13,852 | | 247,870 |
1 | Transactions and balances arising from operating activities between related parties, such as settlements, are excluded. |
155
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
The settlement transactions and deposits arising from operating activities with related parties are excluded and there are no other borrowing transactions.
Payment guarantees and unused commitments to related parties as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||
Subsidiaries |
||||||||||
KB Wise Star Private Real Estate Feeder Fund 1st |
Commitments on purchase of security investment |
₩ | 185,717 | ₩ | 185,717 | |||||
Kookmin Bank Cambodia PLC. |
Other commitments in foreign currencies |
30,472 | 28,579 | |||||||
Kookmin Bank(China) Ltd. |
Loan commitment in foreign currencies |
| 97,477 | |||||||
Kookmin Bank Hong kong Ltd. |
Loan commitment in foreign currencies |
58,600 | 153,888 | |||||||
Other guarantee in foreign currencies |
199,240 | 87,936 | ||||||||
Parents subsidiary |
||||||||||
KB Investment and Securities Co., Ltd. |
Loan commitment in won |
39,062 | 12,503 | |||||||
KB Investment Co., Ltd. |
Commitments on purchase of security investment |
600 | | |||||||
Loss sharing agreements |
1,000 | | ||||||||
KB Kookmin Card Co., Ltd. |
Loan commitment in won |
520,000 | 520,000 | |||||||
Other commitments in won |
1,000,000 | 1,000,000 | ||||||||
KB Mezzanine Private Securities Fund |
Commitments on purchase of security investment |
18,359 | 18,359 | |||||||
KB Mezzanine Private Security Investment Trust No.2 |
Commitments on purchase of security investment |
51,048 | 70,312 | |||||||
Hanbando BTL Private Special Asset Fund |
Commitments on purchase of security investment |
15,931 | 15,931 | |||||||
KB Hope Sharing BTL Private Special Asset Fund |
Commitments on purchase of security investment |
48,045 | 48,045 | |||||||
KB Senior Loan Private Fund |
Commitments on purchase of security investment |
64,964 | | |||||||
Associates |
||||||||||
Balhae Infrastructure Fund |
Commitments on purchase of security investment |
18,098 | 21,744 | |||||||
UAMCO., Ltd. |
Commitments on purchase of security investment |
89,950 | 89,950 | |||||||
KB12-1 Venture Investment Partnership |
Commitments on purchase of security investment |
| 11,200 | |||||||
KoFC POSCO HANHWA KB shared growth Private Equity Fund |
Commitments on purchase of security investment |
13,040 | 19,000 |
156
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
KoFC KBIC Frontier Champ 2010-5 (PEF) |
Commitments on purchase of security investment |
1,290 | 1,290 | |||||||
United PF 1st Recovery Private Equity Fund |
Commitments on purchase of security investment |
49,383 | 49,383 | |||||||
KB GwS Private Equity Trust |
Commitments on purchase of security investment |
| 876 | |||||||
Incheon Bridge Co., Ltd. |
Loan commitment In Korean won |
38,963 | 33,163 | |||||||
Future Planning KB Start-up Creation Fund |
Commitments on purchase of security investment |
8,000 | 16,000 | |||||||
JSC Bank CenterCredit |
Loan commitment in foreign currencies |
117,200 | | |||||||
Associate of Parent |
||||||||||
KB Insurance Co., Ltd. |
Loan commitment in Korean won |
20,000 | | |||||||
Key management |
Loan commitment in Korean won |
223 | 372 |
Unused commitments received from related party entities as of December 31, 2015 and 2014, are as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||
Subsidiary |
||||||||||
Kookmin Bank Cambodia PLC. |
Other guarantee in foreign currencies |
₩ | | ₩ | 1,713 | |||||
Parents subsidiaries |
||||||||||
KB Investment Co., Ltd. |
Loss sharing agreements |
8,539 | 5,917 | |||||||
KB Kookmin Card Co., Ltd. |
Loan commitment in won |
80,316 | 79,164 |
Compensation to key management for the years ended December 31, 2015 and 2014, consists of:
(In millions of Korean won) | 2015 | |||||||||||||||
Short-term employee benefits |
Post- employment benefits |
Share-based payments |
Total | |||||||||||||
Registered directors (executive) |
₩ | 987 | ₩ | 59 | ₩ | 632 | ₩ | 1,678 | ||||||||
Registered directors (non-executive) |
304 | | | 304 | ||||||||||||
Non-registered directors |
3,943 | 57 | 2,814 | 6,814 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 5,234 | ₩ | 116 | ₩ | 3,446 | ₩ | 8,796 | |||||||||
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|
|
|
|
157
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
(In millions of Korean won) | 2014 | |||||||||||||||
Short-term employee benefits |
Post- employment benefits |
Share-based payments |
Total | |||||||||||||
Registered directors (executive) |
₩ | 1,405 | ₩ | 63 | ₩ | 1,162 | ₩ | 2,630 | ||||||||
Registered directors (non-executive) |
457 | | | 457 | ||||||||||||
Non-registered directors |
4,860 | 296 | 3,685 | 8,841 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
₩ | 6,722 | ₩ | 359 | ₩ | 4,847 | ₩ | 11,928 | |||||||||
|
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|
|
|
|
|
|
Significant operating transactions occurring between the Bank and related parties include the establishment of deposit accounts, issuance of general purpose loans, loans on business transactions and trade receivables, and providing foreign currency remittances and related services. Other significant transactions include the grant of credit due to acceptance of bankers usance that the Bank issues and overdraft credit accounts arising from net settlement agreement between the Bank and KB Kookmin Card Co., Ltd.
Collateral provided to related parties as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||||||||||
Assets pledged |
Carrying amount |
Collateralized amount |
Carrying amount |
Collateralized amount |
||||||||||||||
Parents subsidiaries |
||||||||||||||||||
KB Investment and Securities Co., Ltd. |
Securities | ₩ | 54,042 | ₩ | 54,000 | ₩ | 54,084 | ₩ | 54,000 | |||||||||
KB Life Insurance Co., Ltd. |
Securities | 16,263 | 15,000 | 16,326 | 15,000 |
Collateral received from related parties as of December 31, 2015 and 2014, is as follows:
(In millions of Korean won) | 2015 | 2014 | ||||||||
Subsidiaries |
||||||||||
Taejon Samho The First Co., Ltd. |
Beneficiary certificate of land development trust |
₩ | 130,000 | ₩ | 130,000 | |||||
KB Wise Star Private Real Estate Feeder Fund 1st |
Building / Land |
| 39,000 | |||||||
Parents subsidiaries |
||||||||||
KB Investment and Securities Co., Ltd. |
Time deposits |
52,000 | 52,440 | |||||||
KB Kookmin Card Co., Ltd. |
Time deposits |
22,000 | 22,000 | |||||||
Associate |
||||||||||
Incheon Bridge Co., Ltd. |
Fund management account for Standby loan commitment |
65,000 | 65,000 | |||||||
Key management |
Time deposits and others |
249 | 257 | |||||||
Real estate |
2,662 | 3,583 |
158
Kookmin Bank
(A wholly owned subsidiary of KB Financial Group Inc.)
Notes to Separate Financial Statements
December 31, 2015 and 2014
As of December 31, 2015, Incheon Bridge Co., Ltd, a related party, provides fund management account, civil engineering completed risk insurance, shares and management rights as unsubordinated collateral in respect to collateralized amount for ₩816,400 million to a financial syndicate consisting of the Bank and four other institutions, and as subordinated collateral in respect to collateralized amount for ₩201,100 million to subordinated debt holders consisting of the Bank and two other institutions.
The Bank and KB Kookmin Card Co., Ltd. are contingently liable for the payables of the Bank before the spin-off date.
41. Approval of Issuance of the Financial Statements
The issuance of the Banks separate financial statements as of and for the year ended December 31, 2015, was approved by the Board of Directors on February 3, 2016.
159
Report of Independent Auditors
Review of Internal Accounting Control System
To the President of
Kookmin Bank
We have reviewed the accompanying managements report on the operations of the Internal Accounting Control System (IACS) of Kookmin Bank (the Bank) as of December 31, 2015. The Banks management is responsible for designing and operating IACS and for its assessment of the effectiveness of IACS. Our responsibility is to review the managements report on the operations of the IACS and issue a report based on our review. The managements report on the operations of the IACS of the Bank states that based on the assessment on the operations of the IACS, the Banks IACS has been effectively designed and is operating as of December 31, 2015, in all material respects, in accordance with the IACS standards.
Our review was conducted in accordance with the IACS review standards established by the Korean Institute of Certified Public Accountants. Those standards require that we plan and perform, in all material respects, the review of managements report on the operations of the IACS to obtain a lower level of assurance than an audit. A review is to obtain an understanding of the Banks IACS and consists principally of inquiries of management and, when deemed necessary, a limited inspection of underlying documents, which is substantially less in scope than an audit.
The Banks IACS is a system to monitor and operate those policies and procedures designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the Republic of Korea. Because of its inherent limitations, IACS may not prevent or detect a material misstatement of the financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Based on our review, nothing has come to our attention that causes us to believe that managements report on the operations of the IACS, referred to above, is not presented fairly, in all material respects, in accordance with the IACS standards established by IACSOC.
160
Our review is based on the Banks IACS as of December 31, 2015, and we did not review managements assessment of its IACS subsequent to December 31, 2015. This report has been prepared pursuant to the Acts on External Audit for Stock Companies in Korea and may not be appropriate for other purposes or for other users.
Samil PricewaterhouseCoopers
March 9, 2016
161
Report on the Operations of the Internal Accounting Control System
To the Board of Directors and Auditor (Audit Committee) of
Kookmin Bank
I, as the Internal Accounting Control Officer (IACO) of Kookmin Bank (the Bank), assessed the status of the design and operations of the Banks internal accounting control system (IACS) for the year ended December 31, 2015.
The Banks management including IACO is responsible for designing and operating IACS. I, as the IACO, assessed whether the IACS has been effectively designed and is operating to prevent and detect any error or fraud which may cause any misstatement of the financial statements, for the purpose of establishing the reliability of financial reporting and the preparation of financial statements for external purposes. I, as the IACO, applied the IACS standard for the assessment of design and operations of the IACS.
Based on the assessment on the operations of the IACS, the Banks IACS has been effectively designed and is operating as of December 31, 2015, in all material respects, in accordance with the IACS standards.
February 17, 2016
Hong Lee, Internal Accounting Control Officer
Jong Kyoo Yoon, President and Chief Executive Officer
162