6-K

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 August 2020

Commission File Number: 000-53445

KB Financial Group Inc.

(Translation of registrant’s name into English)

26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul 07331, Korea

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Index

2. Exhibit 99.1 KB Financial Group Review Report for the First Half of 2020 (Consolidated)

3. Exhibit 99.2 KB Financial Group Review Report for the First Half of 2020 (Separate)

2

TABLE OF CONTENTS

1.	Introduction to the Company	5
1.1.	Business Purpose	5
1.2.	History	5
1.3.	Overview of the Business Group	8
1.4.	Capital Structure	9
1.5.	Dividends	10
2.	Business	11
2.1.	Results of Operations	11
2.2.	Sources and Uses of Funds	12
2.3.	Other Information to Consider in Making an Investment Decision	14
3.	Financial Information	18
3.1.	Consolidated Financial Information	18
3.2.	Separate Financial Information	21
3.3.	Other Selected Financial Data	23
3.4.	Other Financial Information	26
4.	Independent Public Accountants	27
4.1.	Audit/ Review Services	27
4.2.	Public Company Accounting Oversight Board (“PCAOB”) Audit Services	27
4.3.	Change in Auditor	28
5.	Corporate Governance and Affiliated Companies	29
5.1.	Board of Directors & Committees under the Board	29
5.2.	Audit Committee	29
5.3.	Compensation to Directors	30
5.4.	Highest-Paid Individuals	31
5.5.	Affiliated Companies	33
6.	Directors, Senior Management and Employees	34
6.1.	Executive Directors	34
6.2.	Non-standing Directors	34
6.3.	Non-executive Directors	34
6.4.	Senior Management	35
6.5.	Employees	37
7.	Major Shareholders and Related Party Transactions	37
7.1.	Major Shareholders	37
7.2.	Changes in the Largest Shareholder	38
7.3.	Employee Stock Ownership Association	38
7.4.	Investments in Affiliated Companies	39
7.5.	Related Party Transactions	39

3

Summary of 2020 First Half Business Report

On August 14, 2020, KB Financial Group Inc. (“KB Financial Group”) filed its business report for the first half of 2020 (the “Business Report”) with the Financial Services Commission of Korea and the Korea Exchange. This is a summary of the Business Report translated into English.

Except where indicated otherwise, financial information contained in this summary have been prepared in accordance with the Korean equivalent of International Financial Reporting Standards (“K-IFRS”), which differ in certain important respects from generally accepted accounting principles in the United States.

All references to “KB Financial Group,” “we,” “us” or the “Company” are to KB Financial Group and, unless the context requires otherwise, its subsidiaries. In addition, all references to “Won” or “KRW” in this document are to the currency of the Republic of Korea.

4

1. Introduction to the Company

1.1. Business Purpose

KB Financial Group is a financial holding company that was established in September 2008. Its main business purpose is to hold shares in companies that are engaged in financial or related services, as well as govern and manage such companies. Its consolidated subsidiaries are primarily engaged in the banking business, as well as the credit card business, the financial investment business, the insurance business and other related businesses.

1.2. History

• September 26, 2008

Obtained final approval from the Financial Services Commission to establish a financial holding company

• September 29, 2008

Establishment of the Company through a comprehensive stock transfer and listing on the New York Stock Exchange

• October 10, 2008

Listing on the Korea Exchange

• October 20, 2008

The largest shareholder of the Company changed from the Korean National Pension Service to ING Bank N.V.

• October 31, 2008

The largest shareholder of the Company changed from ING Bank N.V. to the Korean National Pension Service

• May 4, 2009

Added Kookmin Bank Cambodia PLC. as a second-tier subsidiary

• June 22, 2009

Added KB Life Insurance Co., Ltd. (“KB Life Insurance”), formerly a second-tier subsidiary, as a first-tier subsidiary

• July 1, 2009

Changed the name of KB Venture Capital Co., Ltd. to KB Investment Co., Ltd. (“KB Investment”)

• January 22, 2010

The largest shareholder of the Company changed from the Korean National Pension Service to ING Bank N.V.

• March 2, 2011

Added KB Kookmin Card Co., Ltd. (“KB Kookmin Card”) as a first-tier subsidiary

• March 14, 2011

KB Futures Co., Ltd. was merged into KB Investment & Securities Co., Ltd. (“KB Investment & Securities”)

5

• July 8, 2011

The largest shareholder of the Company changed from ING Bank N.V. to the Korean National Pension Service

• January 13, 2012

Added KB Savings Bank Co., Ltd. (“KB Savings Bank”) as a first-tier subsidiary

• May 11, 2012

Added KoFC POSCO HANWHA KB Shared Growth No. 2. Private Equity Fund as a second-tier subsidiary

• July 2, 2012

Added KoFC Value-up Private Equity Fund as a second-tier subsidiary

• October 10, 2012

Added Kookmin Bank (China) Ltd. as a second-tier subsidiary

• June 20, 2013

Acquired the remaining shares of KB Life Insurance, which increased the Company’s shareholding to 100%

• September 2, 2013

Added Yehansoul Savings Bank as a first-tier subsidiary

• January 13, 2014

Yehansoul Savings Bank was merged into KB Savings Bank

• March 20, 2014

Added KB Capital Co., Ltd. (“KB Capital”) as a first-tier subsidiary

• June 24, 2015

Added KB Insurance Co., Ltd. (“KB Insurance”) as a non-consolidated first-tier subsidiary

• November 23, 2015

Acquired additional shares of KB Insurance, which increased the Company’s shareholding from 19.47% to 33.29%

• May 31, 2016

Added Hyundai Securities Co., Ltd. (“Hyundai Securities”) as a non-consolidated first-tier subsidiary

• June 21, 2016

Disposed of LIG Investment & Securities, Co., Ltd., a second-tier subsidiary

• June 28, 2016

Acquired treasury shares of Hyundai Securities, which increased the Company’s equity ownership in Hyundai Securities from 22.56% to 29.62%

• December 1, 2016

Added KB Golden Life Care Co., Ltd. as a second-tier subsidiary

• December 29, 2016

Established KB Private Equity Fund III as a second-tier subsidiary

• December 30, 2016

Purchased new shares of KB Insurance in a rights offering, which increased the Company’s shareholding in KB Insurance from 33.29% to 39.81%

6

• December 30, 2016

Merged KB Investment & Securities with and into Hyundai Securities, with Hyundai Securities as the surviving entity, then changed its name to KB Securities Co., Ltd. (“KB Securities”)

• February 8, 2017

Added KB KOLAO LEASING Co., Ltd. as a second-tier subsidiary

• March 8, 2017

Added KB Microfinance Myanmar Co., Ltd. as a second-tier subsidiary

• May 19, 2017

Acquired additional shares of KB Insurance in a tender offer, which increased the Company’s shareholding in KB Insurance from 39.81% to 94.30%

• May 19, 2017

Acquired additional shares of KB Capital in a tender offer, which increased the Company’s shareholding in KB Capital from 52.02% to 79.70%

• July 7, 2017

Converted KB Insurance and KB Capital into wholly-owned subsidiaries of the Company through comprehensive stock swaps

• September 29, 2017

Added KB Asset Management Singapore Pte. Ltd. as a second-tier subsidiary (changed from a second-tier subsidiary of KB Securities to a first-tier subsidiary of KB Asset Management Co., Ltd.)

• October 9, 2017

Added KB SECURITIES VIETNAM JOINT STOCK COMPANY (formerly Maritime Securities Incorporation) as a second-tier subsidiary

• October 16, 2017

Disposed of Hyundai Savings Bank, Co., Ltd., a second-tier subsidiary

• December 22, 2017

Disposed of Hyundai Asset Management, Co., Ltd., a second-tier subsidiary

• January 17, 2018

Added KB-TS Technology Venture Private Equity Fund as a second-tier subsidiary (equity interests of 16%, 30% and 10% held by KB Securities, Kookmin Bank and KB Capital, respectively)

• July 6, 2018

Added KB Daehan Specialized Bank PLC. as a second-tier subsidiary

• August 21, 2018

Added KBAM Shanghai Advisory Services Co., Ltd. as a second-tier subsidiary

• December 31, 2018

Added KB-Stonebridge Secondary Private Equity Fund as a second-tier subsidiary

• January 9, 2019

Added KB-SPROTT Renewable Private Equity Fund I as a second-tier subsidiary

• September 17, 2019

Added KB-SP Private Equity Fund IV as a second-tier subsidiary

7

• February 28, 2020

Added KB-NAU Special Situation Corporate Restructuring Private Equity Fund as a second-tier subsidiary

• April 9, 2020

Disposed of KB-IGen Private Equity Fund No.1, a second-tier subsidiary

• April 10, 2020

Added PRASAC Microfinance Institution PLC. as a second-tier subsidiary

• May 18, 2020

Added PT Sunindo Kookmin Best Finance as a second-tier subsidiary

1.3. Overview of the Business Group

		(As of June 30, 2020)
Type	Name of Company	Controlling Company	Remarks
Holding Company	KB Financial Group	—	Listed
1st Tier Subsidiaries	Kookmin Bank	KB Financial Group	Not listed
	KB Securities Co., Ltd.	KB Financial Group	Not listed
	KB Insurance Co., Ltd.	KB Financial Group	Not listed
	KB Kookmin Card Co., Ltd.	KB Financial Group	Not listed
	KB Asset Management Co., Ltd.	KB Financial Group	Not listed
	KB Capital Co., Ltd.	KB Financial Group	Not listed
	KB Life Insurance Co., Ltd.	KB Financial Group	Not listed
	KB Real Estate Trust Co., Ltd.	KB Financial Group	Not listed
	KB Savings Bank Co., Ltd.	KB Financial Group	Not listed
	KB Investment Co., Ltd.	KB Financial Group	Not listed
	KB Data Systems Co., Ltd.	KB Financial Group	Not listed
	KB Credit Information Co., Ltd.	KB Financial Group	Not listed
2nd Tier Subsidiaries	Kookmin Bank Cambodia PLC.	Kookmin Bank	Not listed (Overseas)
	Kookmin Bank (China) Ltd.	Kookmin Bank	Not listed (Overseas)
	KB Microfinance Myanmar Co., Ltd.	Kookmin Bank	Not listed (Overseas)
	PRASAC Microfinance Institution PLC.	Kookmin Bank	Not listed (Overseas)
	KBFG Securities America Inc.	KB Securities	Not listed (Overseas)
	KB Securities Hong Kong Ltd.	KB Securities	Not listed (Overseas)
	Keystone-Hyundai Securities No. 1 Private Equity Fund	KB Securities	Not listed
	KB Private Equity Fund III	KB Securities	Not listed
	KB SECURITIES VIETNAM JOINT STOCK COMPANY	KB Securities	Not listed (Overseas)
	KB-TS Technology Venture Private Equity Fund	KB Securities	Not listed
	KB-Stonebridge Secondary Private Equity Fund	KB Securities	Not listed
	KB-SPROTT Renewable Private Equity Fund I	KB Securities	Not listed

8

KB-SP Private Equity Fund IV	KB Securities	Not listed
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	KB Securities	Not listed
KB Claims Survey & Adjusting Co., Ltd.	KB Insurance	Not listed
KB Sonbo CNS	KB Insurance	Not listed
Leading Insurance Services, Inc.	KB Insurance	Not listed (Overseas)
LIG Insurance (China) Co., Ltd.	KB Insurance	Not listed (Overseas)
PT. KB Insurance Indonesia	KB Insurance	Not listed (Overseas)
KB Golden Life Care Co., Ltd.	KB Insurance	Not listed
KB Daehan Specialized Bank PLC.	KB Kookmin Card	Not listed (Overseas)
KB Asset Management Singapore Pte. Ltd.	KB Asset Management	Not listed (Overseas)
KBAM Shanghai Advisory Services Co., Ltd.	KB Asset Management	Not listed (Overseas)
KB KOLAO LEASING Co., Ltd.	KB Capital	Not listed (Overseas)
PT Sunindo Kookmin Best Finance	KB Capital	Not listed (Overseas)
KoFC POSCO HANWHA KB Shared Growth No. 2. Private Equity Fund	KB Investment	Not listed
KoFC Value-up Private Equity Fund	KB Investment	Not listed

1.4. Capital Structure

1.4.1. Common Shares

Changes in Capital

Not included in quarterly and half-year business reports.

Number of Shares

(As of June 30, 2020)	(Unit: shares)
	Type
	Common Shares		Preferred Shares		Total		Remarks
Shares Authorized for Issuance		1,000,000,000		—		1,000,000,000	As specified in the Articles of Incorporation
Total Shares Issued (A)		418,111,537		—		418,111,537	—
Decrease in Number of Shares (B)		2,303,617		—		2,303,617	—
1. Capital Reduction		—		—		—	—
2. Cancellation		2,303,617		—		2,303,617	Treasury Shares
3. Redemption		—		—		—	—
4. Other		—		—		—	—
Shares Issued as of June 30, 2020 (C=A-B)		415,807,920		—		415,807,920	—
Treasury Shares (D)		26,173,585		—		26,173,585	—
Shares Outstanding (C-D)		389,634,335		—		389,634,335	—

Note: The treasury shares above include five million treasury shares that are expected to be exchanged for the exchangeable bonds issued by the Company on June 30, 2020. Such treasury shares are currently deposited with Korea Securities Depositary and will be disposed upon the exercise of the exchange option of the exchangeable bonds. For more information, please refer to the Company’s report on Form 6-K furnished to the Securities and Exchange Commission on June 18, 2020.

9

1.4.2. Voting Rights

(As of June 30, 2020)				(Unit: shares)
Items		Number of Shares		Notes
Total number of issued shares	Common shares		415,807,920		—
	Preferred shares		—		—
Shares without voting rights	Common shares		26,173,585		Treasury shares
	Preferred shares		—		—
Shares for which voting rights cannot be exercised pursuant to the Articles of Incorporation	—		—		—
Shares for which voting rights are restricted under relevant laws and regulations	—		—		—
Shares with restored voting rights	—		—		—
Total shares for which voting rights may be exercised	Common shares		389,634,335		—
	Preferred shares		—		—

Note: The treasury shares above include five million treasury shares that are expected to be exchanged for the exchangeable bonds issued by the Company on June 30, 2020. Such treasury shares are currently deposited with Korea Securities Depositary and will be disposed upon the exercise of the exchange option of the exchangeable bonds. For more information, please refer to the Company’s report on Form 6-K furnished to the Securities and Exchange Commission on June 18, 2020.

1.5. Dividends

Not included in quarterly and half-year business reports.

10

2. Business

2.1. Results of Operations

	(Unit: in millions of Won)
	For the six months ended June 30, 2020			For the six months ended June 30, 2019			For the year ended December 31, 2019			For the year ended December 31, 2018
Net interest income		4,683,248			4,549,167			9,196,787			8,904,928
Interest income		7,221,747			7,340,389			14,639,187			13,734,569
Interest expense		(2,538,499	)		(2,791,222	)		(5,442,400	)		(4,829,641	)
Net fee and commission income		1,381,314			1,135,678			2,355,004			2,243,376
Fee and commission income		2,135,370			1,877,476			3,879,247			3,717,720
Fee and commission expense		(754,056	)		(741,798	)		(1,524,243	)		(1,474,344	)
Net insurance income		180,456			230,578			299,512			490,116
Insurance income		6,837,454			6,156,219			12,317,182			11,975,070
Insurance expense		(6,656,998	)		(5,925,641	)		(12,017,670	)		(11,484,954	)
Net gains(losses) on financial assets/liabilities at fair value through profit or loss		234,718			329,085			643,872			351,303
Net other operating expenses		(464,808	)		(480,511	)		(1,063,324	)		(1,130,036	)
General and administrative expenses		(3,045,606	)		(3,000,845	)		(6,271,017	)		(5,918,512	)
Operating profit before provision for credit losses		2,969,322			2,763,152			5,160,834			4,941,175
Provision for credit losses		(539,748	)		(293,745	)		(670,185	)		(673,694	)
Net operating profit		2,429,574			2,469,407			4,490,649			4,267,481

Note: The consolidated financial information for the six months ended June 30, 2020, the six months ended June 30, 2019 and the year ended December 31, 2019 is based on K-IFRS 1116. The corresponding financial information for the year ended December 31, 2018 has not been restated.

11

2.2. Sources and Uses of Funds

2.2.1. Sources of Funds

														(Unit: in millions of Won)
		For the six months ended June 30, 2020						For the year ended December 31, 2019						For the year ended December 31, 2018
		Average Balance		Interest Rate (%)		Ratio (%)		Average Balance		Interest Rate (%)		Ratio (%)		Average Balance		Interest Rate (%)		Ratio (%)
Won Currency	Deposits		279,371,900		1.21		52.24		255,533,447		1.44		52.09		238,468,014		1.39		52.82
	Certificate of deposit		3,852,968		1.57		0.72		4,780,665		1.95		0.97		3,044,609		1.91		0.67
	Borrowings		15,505,124		1.39		2.90		11,332,972		1.67		2.31		10,312,988		1.59		2.28
	Call money		1,416,959		0.86		0.26		891,357		1.55		0.18		1,437,887		1.53		0.32
	Debentures		49,686,807		2.20		9.29		47,127,572		2.33		9.61		44,072,110		2.29		9.76
	Others		18,197,887		1.28		3.41		15,203,562		1.88		3.11		16,665,395		1.60		3.69
Subtotal			368,031,645		1.35		68.82		334,869,575		1.60		68.27		314,001,003		1.54		69.54
Foreign Currency	Deposits		17,764,938		1.30		3.32		13,370,035		1.25		2.73		11,039,672		1.15		2.45
	Borrowings		11,643,156		1.93		2.18		9,668,310		2.19		1.97		8,249,765		2.02		1.83
	Call money		1,458,220		1.10		0.27		527,809		2.34		0.11		751,171		2.35		0.17
	Debentures		5,823,195		2.16		1.09		5,447,017		2.62		1.11		4,076,096		3.40		0.90
	Others		828,055		1.12		0.16		463,266		1.38		0.09		297,657		0.89		0.07
Subtotal			37,517,564		1.62		7.02		29,476,437		1.83		6.01		24,414,361		1.85		5.42
Others	Total shareholders’ equity		40,269,338		—		7.53		38,464,863		—		7.84		35,690,200		—		7.90
	Allowances		818,105		—		0.15		873,017		—		0.18		750,262		—		0.17
	Others		88,108,315		—		16.48		86,839,627		—		17.70		76,643,695		—		16.97
Subtotal			129,195,758		—		24.16		126,177,507		—		25.72		113,084,157		—		25.04
Total			534,744,967		—		100.00		490,523,519		—		100.00		451,499,521		—		100.00

Note: Based on K-IFRS (on a consolidated basis).

12

2.2.2. Uses of Funds

																		(Unit: in millions of Won)
		For the six months ended June 30, 2020								For the year ended December 31, 2019								For the year ended December 31, 2018
		Average Balance			Interest Rate (%)		Ratio (%)			Average Balance			Interest Rate (%)		Ratio (%)			Average Balance			Interest Rate (%)		Ratio (%)
Won Currency	Due from banks		4,977,493			1.30		0.93			5,939,242			1.51		1.21			4,817,024			1.43		1.07
	Securities		115,168,611			2.26		21.54			103,204,928			2.31		21.04			95,395,973			2.84		21.13
	Loans		307,759,972			3.11		57.55			287,653,938			3.45		58.64			269,569,916			3.43		59.71
	Guarantee payments under payment guarantee		15,526			0.97		—			8,803			0.98		—			8,206			1.87		—
	Call loan		901,051			0.88		0.17			640,485			1.69		0.13			632,317			1.48		0.14
	Private placement corporate bonds		1,210,683			4.06		0.23			1,319,460			3.61		0.27			1,452,396			3.44		0.32
	Credit cards		18,327,616			7.77		3.43			17,945,697			7.92		3.66			16,722,691			8.15		3.70
	Others		4,311,385			5.13		0.80			3,874,774			4.93		0.79			4,209,878			4.08		0.93
	Allowance		(2,365,412	)		—		(0.44	)		(2,406,757	)		—		(0.49	)		(2,434,872	)		—		(0.54	)
Subtotal			450,306,925			3.10		84.21			418,180,570			3.36		85.25			390,373,529			3.49		86.46
Foreign Currency	Due from banks		7,067,403			0.77		1.32			4,782,706			1.44		0.98			3,666,805			1.36		0.81
	Securities		15,118,897			4.47		2.83			13,323,102			4.35		2.72			12,704,025			2.47		2.81
	Loans		16,443,733			3.90		3.08			11,384,009			3.04		2.32			8,050,597			2.96		1.78
	Call loan		2,719,033			1.24		0.51			2,444,020			2.59		0.50			2,553,987			2.38		0.57
	Bills bought		1,766,430			1.93		0.33			2,944,008			2.66		0.60			4,113,332			1.93		0.91
	Allowance		(195,143	)		—		(0.04	)		(180,649	)		—		(0.04	)		(262,835	)		—		(0.06	)
	Others		1,023,839			—		0.19			660,572			—		0.13			153,277			—		0.03
Subtotal			43,944,192			3.31		8.22			35,357,768			3.28		7.21			30,979,188			2.41		6.85
Others	Cash		1,774,683			—		0.33			1,763,413			—		0.36			1,769,656			—		0.39
	Fixed assets held for business		7,890,010			—		1.48			7,398,134			—		1.51			5,639,374			—		1.25
	Others		30,829,157			—		5.76			27,823,634			—		5.67			22,737,774			—		5.05
Subtotal			40,493,850			—		7.57			36,985,181			—		7.54			30,146,804			—		6.69
Total			534,744,967			—		100.00			490,523,519			—		100.00			451,499,521			—		100.00

Note: Based on K-IFRS (on a consolidated basis).

13

2.3. Other Information to Consider in Making an Investment Decision

2.3.1. Capital Adequacy

KB Financial Group							(Unit: in billions of Won)
	As of June 30, 2020(1)			As of December 31, 2019			As of December 31, 2018
Total capital (A)		39,295			36,995			34,476
Risk-weighted assets (B)		278,116			255,549			236,099
BIS ratio (A/B)		14.13	%		14.48	%		14.60	%

Note: Calculated in accordance with Basel III.

(1) Preliminary figures

Kookmin Bank							(Unit: in billions of Won)
	As of June 30, 2020			As of December 31, 2019			As of December 31, 2018
Total capital (A)		31,032			29,810			27,694
Risk-weighted assets (B)		215,730			188,075			178,433
BIS ratio (A/B)		14.38	%		15.85	%		15.52	%

Note: Calculated in accordance with Basel III.

KB Securities							(Unit: in billions of Won)
	As of June 30, 2020			As of December 31, 2019			As of December 31, 2018
Net operating capital (A)		3,172			3,170			2,969
Total amount at risk (B)		1,747			1,561			1,251
Maintenance equity margin (C)		134			134			134
Net capital ratio (A-B)/(C)		1,062.14	%		1,198.74	%		1,278.45	%
Capital surplus (A-B)		1,426			1,609			1,718

KB Insurance							(Unit: in billions of Won)
	As of June 30, 2020			As of December 31, 2019			As of December 31, 2018
Available capital (A)		3,840			3,657			3,333
Required capital (B)		2,046			1,941			1,782
RBC ratio (A/B)		187.7	%		188.5	%		187.1	%

Note: RBC ratio: Risk-Based Capital ratio.

14

2.3.2. Overseas Credit Ratings

(As of June 30, 2020)
Rating Company	Moody’s		S&P
Type	Long-term	Short-term	Long-term	Short-term
Credit Rating	A1	P-1	A	A-1

2.3.3. Domestic Credit Ratings

Date of Rating	Type	Credit Rating	Rating Company (Rating Range)
1/24/2018	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
2/27/2018	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
4/5/2018	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
6/11/2018	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
6/25/2018	Commercial Paper	A1	Korea Ratings (A1 ~ D) / KIS Ratings (A1 ~ D) / NICE Investors Service (A1 ~ D)
7/24/2018	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
10/4/2018	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
2/21/2019	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
4/8/2019	Contingent Convertible Bonds	AA-	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
6/18/2019	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
6/26/2019	Commercial Paper	A1	Korea Ratings (A1 ~ D) / KIS Ratings (A1 ~ D) / NICE Investors Service (A1 ~ D)
10/14/2019	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
12/3/2019	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
1/15/2020	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
2/12/2020	Contingent Convertible Bonds	AA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
3/24/2020	Contingent Convertible Bonds	AA-	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
5/12/2020	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
6/12/2020	Debentures	AAA	Korea Ratings (AAA ~ D) / KIS Ratings (AAA ~ D) / NICE Investors Service (AAA ~ D)
6/26/2020	Commercial Paper	A1	Korea Ratings (A1 ~ D) / KIS Ratings (A1 ~ D) / NICE Investors Service (A1 ~ D)

15

2.3.4. Early Retirement Program

To enhance productivity by improving its labor structure, Kookmin Bank implemented a voluntary early retirement program following negotiations with its labor union.

Date of retirement	Number of retired persons
January 20, 2020	462

2.3.5. Acquisition of Shares of Bank Bukopin of Indonesia

Kookmin Bank entered into a share subscription agreement with Bank Bukopin of Indonesia on June 26, 2018 and acquired its new shares on July 27, 2018.

	(Unit: in millions of Won)
Ownership	Acquisition amount
22%	116,422(1)(2) (IDR 1,460,910,000,000)

(1) The acquisition amount in IDR is converted to Won at the exchange rate on July 27, 2018, the acquisition date.

(2) Includes consulting fees of Won 3,348 million paid in connection with the acquisition.

On July 16, 2020, the board of directors of Kookmin Bank resolved to acquire additional common shares of Bank Bukopin of Indonesia through a shareholder-allocated capital increase, followed by a third party-allocated capital increase. On July 30, 2020, Kookmin Bank acquired 2,967,600,372 common shares of Bank Bukopin through a shareholder-allocated capital increase for IDR 534,168,066,960 (Won 43,909 million), increasing its ownership to 33.9%.

2.3.6. Acquisition of Shares of PRASAC Microfinance Institution PLC. of Cambodia

On April 10, 2020, Kookmin Bank acquired 70% of the total number of shares of PRASAC Microfinance Institution PLC. (“PRASAC”), a provider of microfinance and deposit-taking services in Cambodia, for USD 603 million. Kookmin Bank entered into a shareholders’ agreement with PRASAC’s shareholders. A put option may be exercised by PRASAC’s current shareholders to sell the remaining 30% of PRASAC’s shares to Kookmin Bank. The exercise price of such put option will be determined based on the adjusted book value of PRASAC as of December 31, 2021 as reflected in the audit report of PRASAC’s financial statements as of and for the year ended December 31, 2021, and such put option may be exercised during the six months following the date of such audit report. If PRASAC’s shareholders do not exercise such put option, Kookmin Bank may exercise a call option to purchase the remaining 30% of PRASAC’s shares, and such call option may be exercised during the six months following the expiry of the put option held by PRASAC’s shareholders. The right to buy, sell, pledge or exercise any influence over the remaining 30% of PRASAC’s shares will be limited prior to the exercise of such put or call option.

16

	(Unit: in millions of Won)
Ownership	Acquisition amount
70%	733,976(1) (USD 603,400,000)

Note: (1) The acquisition amount in USD is converted to Won at the exchange rate on April 10, 2020, the acquisition date.

2.3.7. Acquisition of Shares of The Prudential Life Insurance Company of Korea, Ltd.

On April 10, 2020, KB Financial Group entered into a share purchase agreement to acquire all of the outstanding shares (15,000,000 common shares) of The Prudential Life Insurance Company of Korea, Ltd. at the base purchase price of Won 2,265 billion. The final purchase price will reflect the pre-negotiated amount of interest accrued upon the base purchase price up to the closing date in the amount of Won 75 billion as well as other adjustments as set out in the share purchase agreement. The closing date will be determined upon the progress of relevant events, including the receipt of approvals from the relevant regulatory authorities.

2.3.8. The Ongoing Outbreak of the Global Pandemic of COVID-19

The ongoing outbreak of the global pandemic of COVID-19 has resulted in significant global and domestic economic and financial disruptions in recent months. The economic outlook for Korea and its financial services sector in the remainder of 2020 and for the foreseeable future remains highly uncertain as a result of, among others, (i) uncertainty regarding the scope and duration of the COVID-19 outbreak and its lasting social, political and economic effects, and the fiscal and monetary policies being implemented by the Korean government and regulatory authorities to alleviate such effects, (ii) adverse conditions in the Korean and global economies and financial markets due to the COVID-19 pandemic and (iii) factors such as fluctuations in oil and commodity prices and interest and exchange rates, higher unemployment, lower consumer confidence and stock market volatility due to the impact of the COVID-19 pandemic.

17

3. Financial Information

3.1. Consolidated Financial Information

3.1.1. Consolidated Statements of Financial Position

					(Unit: in millions of Won)
	As of June 30, 2020		As of December 31, 2019		As of December 31, 2018
Cash and due from financial institutions		22,509,456		20,837,878		20,274,490
Financial assets at fair value through profit or loss		58,652,981		53,549,086		50,987,847
Derivative financial assets		3,952,910		3,190,673		2,025,962
Loans at amortized cost		367,862,483		339,684,059		319,201,603
Financial investments		74,810,309		71,782,606		61,665,094
Investments in associates and joint ventures		691,700		598,240		504,932
Property and equipment		5,005,926		5,067,377		4,272,127
Investment property		2,848,208		2,827,988		2,119,811
Intangible assets		3,053,762		2,737,813		2,755,783
Net defined benefit assets		—		946		—
Current income tax assets		22,324		19,095		10,004
Deferred income tax assets		27,498		3,597		4,158
Assets held for sale		49,142		23,151		16,952
Other assets		29,989,932		18,215,608		15,749,535
Total assets		569,476,631		518,538,117		479,588,298
Financial liabilities at fair value through profit or loss		13,366,437		15,368,153		15,326,859
Derivative financial liabilities		4,290,818		3,007,341		2,901,247
Deposits		327,743,474		305,592,771		276,770,449
Debts		46,917,615		37,818,860		33,004,834
Debentures		57,422,807		50,935,583		53,278,697
Provisions		595,057		527,929		525,859
Net defined benefit liabilities		347,518		253,989		262,213
Current income tax liabilities		482,107		432,431		698,634
Deferred income tax liabilities		820,912		777,793		492,534
Insurance contract liabilities		36,117,918		34,966,683		33,412,949
Other liabilities		41,067,869		29,737,259		27,200,996
Total liabilities		529,172,532		479,418,792		443,875,271
Equity attributable to shareholders of the parent company		39,564,724		38,533,918		35,703,916
Share capital		2,090,558		2,090,558		2,090,558

18

							(Unit: in millions of Won)
	As of June 30, 2020			As of December 31, 2019			As of December 31, 2018
Hybrid financial instrument		798,116			399,205			—
Capital surplus		16,728,115			17,122,777			17,121,660
Accumulated other comprehensive income		290,258			348,021			177,806
Retained earnings		20,793,865			19,709,545			17,282,441
Treasury shares		(1,136,188	)		(1,136,188	)		(968,549	)
Non-controlling interests		739,375			585,407			9,111
Total equity		40,304,099			39,119,325			35,713,027
Total liabilities and equity		569,476,631			518,538,117			479,588,298

Note: The consolidated financial information as of June 30, 2020 and December 31, 2019 is based on K-IFRS 1116. The corresponding financial information as of December 31, 2018 has not been restated.

19

3.1.2. Consolidated Statements of Comprehensive Income

				(Unit: in millions of Won, except per share amounts)
	For the six months ended June 30, 2020			For the six months ended June 30, 2019			For the year ended December 31, 2019			For the year ended December 31, 2018
Net interest income		4,683,248			4,549,167			9,196,787			8,904,928
Net fee and commission income		1,381,314			1,135,678			2,355,004			2,243,376
Net insurance income		180,456			230,578			299,512			490,116
Net gains on financial assets/liabilities at fair value through profit or loss		234,718			329,085			643,872			351,303
Net other operating expenses		(464,808	)		(480,511	)		(1,063,324	)		(1,130,036	)
General and administrative expenses		(3,045,606	)		(3,000,845	)		(6,271,017	)		(5,918,512	)
Operating profit before provision for credit losses		2,969,322			2,763,152			5,160,834			4,941,175
Provision for credit losses		(539,748	)		(293,745	)		(670,185	)		(673,694	)
Net operating income		2,429,574			2,469,407			4,490,649			4,267,481
Net non-operating income(loss)		(33,972	)		55,341			43,337			34,051
Profit before income tax		2,395,602			2,524,748			4,533,986			4,301,532
Income tax expense		(664,188	)		(687,351	)		(1,220,787	)		(1,239,586	)
Profit for the period		1,731,414			1,837,397			3,313,199			3,061,946
Other comprehensive income (loss) for the period, net of tax		179,881			280,576			152,023			(10,482	)
Total comprehensive income for the period		1,911,295			2,117,973			3,465,222			3,051,464
Profit attributable to:		1,731,414			1,837,397			3,313,199			3,061,946
Shareholders of the parent company		1,711,340			1,836,844			3,311,828			3,061,191
Non-controlling interests		20,074			553			1,371			755
Total comprehensive income for the period attributable to:		1,911,295			2,117,973			3,465,222			3,051,464
Shareholders of the parent company		1,894,163			2,117,052			3,463,567			3,050,805
Non-controlling interests		17,132			921			1,655			659
Earnings per share
Basic earnings per share (Won)		4,375			4,678			8,451			7,721
Diluted earnings per share (Won)		4,340			4,647			8,389			7,676

Note: The consolidated financial information for the six months ended June 30, 2020, the six months ended June 30, 2019 and the year ended December 31, 2019 is based on K-IFRS 1116. The corresponding financial information for the year ended December 31, 2018 has not been restated.

20

3.2. Separate Financial Information

3.2.1. Separate Statements of Financial Position

	(Unit: in millions of Won)
		As of June 30, 2020		As of December 31, 2019		As of December 31, 2018
Cash and due from financial institutions		32,080		18,537		344,302
Financial assets at fair value through profit or loss		1,568,882		413,909		289,179
Loans at amortized cost		150,000		120,000		50,000
Investments in subsidiaries		24,212,116		24,162,116		24,062,116
Property and equipment		3,688		4,170		2,185
Intangible assets		11,212		11,092		9,646
Deferred income tax assets		1,794		7,526		8,184
Other assets		623,905		609,286		857,462
Total assets		26,603,677		25,346,636		25,623,074
Debts		100,000		—		300,000
Debentures		6,255,663		5,543,446		5,373,266
Net defined benefit liabilities		1,530		437		183
Current income tax liabilities		449,799		417,414		691,909
Other liabilities		187,038		203,440		186,481
Total liabilities		6,994,030		6,164,737		6,551,839
Share capital		2,090,558		2,090,558		2,090,558
Hybrid financial instrument		797,996		399,085		—
Capital surplus		14,759,273		14,742,814		14,742,814
Accumulated other comprehensive loss		(7,702	)	(7,664	)	(7,144	)
Retained earnings		3,105,710		3,093,294		3,213,556
Treasury Shares		(1,136,188	)	(1,136,188	)	(968,549	)
Total equity		19,609,647		19,181,899		19,071,235
Total liabilities and equity		26,603,677		25,346,636		25,623,074

Note: The separate financial information as of June 30, 2020 and December 31, 2019 is based on K-IFRS 1116. The corresponding financial information as of December 31, 2018 has not been restated.

21

3.2.2. Separate Statements of Comprehensive Income

	(Unit: in millions of Won, except per share amounts)
	For the six months ended June 30, 2020			For the six months ended June 30, 2019			For the year ended December 31, 2019			For the year ended December 31, 2018
Net interest expense		(60,371	)		(59,425	)		(118,045	)		(115,835	)
Net fee and commission expense		(3,819	)		(2,868	)		(6,283	)		(5,208	)
Net gains on financial assets at fair value through profit or loss		6,332			9,765			15,947			18,319
Net other operating income		974,930			926,934			926,934			1,089,556
General and administrative expenses		(31,466	)		(30,942	)		(71,171	)		(57,845	)
Operating profit before provision for credit losses		885,606			843,464			747,382			928,987
Provision for credit losses		—			—			—			—
Operating profit		885,606			843,464			747,382			928,987
Net non-operating income(loss)		162			(48	)		(541	)		(259	)
Profit before income tax		885,768			843,416			746,841			928,728
Income tax expense		(5,747	)		(1,466	)		(854	)		(2,823	)
Profit for the period		880,021			841,950			745,987			925,905
Other comprehensive income (loss) for the period, net of tax		(38	)		(41	)		(520	)		(1,911	)
Total comprehensive income for the period		879,983			841,909			745,467			923,994
Earnings per share
Basic earnings per share (Won)		2,242			2,144			1,891			2,335
Diluted earnings per share (Won)		2,224			2,130			1,877			2,322

Note: The separate financial information for the six months ended June 30, 2020, the six months ended June 30, 2019 and the year ended December 31, 2019 is based on K-IFRS 1116. The corresponding financial information for the year ended December 31, 2018 has not been restated.

22

3.3. Other Selected Financial Data

3.3.1. Won-denominated Liquidity Ratio

	(Unit: in millions of Won)
	As of June 30, 2020			As of December 31, 2019			As of December 31, 2018
Current assets in Won (A)		1,369,451			142,683			30,150
Current liabilities in Won (B)		35,420			110,398			9,300
Liquidity ratio (A/B)		3,866.32	%		129.24	%		324.20	%

Note: 1) Based on K-IFRS (on a separate basis).

2) Calculated based on Won-denominated assets and liabilities due within one month.

3.3.2. Profitability Ratios

					(Unit: %)
	For the six months ended June 30, 2020		For the year ended December 31, 2019		For the year ended December 31, 2018
Net income as a percentage of average total assets (ROA)		0.64		0.66		0.66
Net income as a percentage of average shareholders’ equity (ROE)		8.88		8.93		8.82

Note: Based on K-IFRS (on a consolidated basis).

23

3.3.3. 20 Largest Exposures of Kookmin Bank by Borrower (As of June 30, 2020)

	(Unit: in billions of Won)
Company	Credit extended
Samsung Electronics Co., Ltd.		1,382
Hyundai Steel Co., Ltd.		1,026
LG Display Co., Ltd.		920
S-OIL Corporation		740
Hyundai Heavy Industries Co., Ltd.		666
LG Electronics Inc.		639
Hyundai Motor Company		618
Hyundai Capital Services, Inc.		598
Kia Motors Corporation		558
SK Energy Co., Ltd.		541
Hanwha Solutions Corporation		535
Samsung SDI Co., Ltd.		526
CJ Cheiljedang Corp.		492
Hotel Lotte Corporation		474
Samsung Heavy Industries Co., Ltd.		449
Lotte Shopping Co., Ltd.		447
LG Uplus Corp.		412
SK Holdings		390
Korea Securities Finance Corporation.		381
Tepco Parent, LLC		373
Total		12,167

24

3.3.4. 10 Largest Exposures of Kookmin Bank by Chaebol Group (As of June 30, 2020)

	(Unit: in billions of Won)
Group	Credit extended
Hyundai Motor		4,414
Samsung		3,699
SK		3,307
LG		2,732
Lotte		2,435
Hanwha		2,080
Hyundai Heavy Industries		1,784
CJ		1,101
POSCO		944
LS		893
Total		23,389

3.3.5. Kookmin Bank’s Loan Concentration by Industry (As of June 30, 2020)

	(Unit: in billions of Won, %)
Industry	Total Credit		Percentage of Total Credit
Manufacturing		47,996		31.3
Real estate		33,746		22.0
Retail and wholesale		22,217		14.5
Hotel, lodging and food services		9,763		6.4
Construction		3,383		2.2
Financial institutions		3,316		2.2
Others		32,856		21.4
Total		153,277		100.0

25

3.3.6. Top 20 Non-Performing Loans of Kookmin Bank (As of June 30, 2020)

		(Unit: in billions of Won)
Borrower	Industry	Total Credit		Allowance for Loan Losses
Borrower A	Shipbuilding		51.6		16.9
Borrower B	Construction		40.1		39.3
Borrower C	Shipping		23.8		23.3
Borrower D	Construction		21.1		20.7
Borrower E	Manufacturing		12.9		6.2
Borrower F	Retail and wholesale		12.5		0.0
Borrower G	Manufacturing		11.3		8.7
Borrower H	Manufacturing		10.5		1.1
Borrower I	Manufacturing		10.0		9.7
Borrower J	Shipbuilding		9.3		3.4
Borrower K	Manufacturing		9.0		4.5
Borrower L	Manufacturing		6.7		3.4
Borrower M	Shipping		6.4		5.3
Borrower N	Real estate and leasing		5.8		5.7
Borrower O	Health and social services		5.7		0.3
Borrower P	Manufacturing		5.2		1.5
Borrower Q	Manufacturing		5.0		2.8
Borrower R	Construction		4.9		4.0
Borrower S	Manufacturing		4.9		3.7
Borrower T	Manufacturing		4.8		1.7
Total			261.5		162.2

3.4. Other Financial Information

See Exhibits 99.1 and 99.2 attached hereto for our consolidated and separate financial statements and relevant notes, which have been prepared in accordance with K-IFRS and reviewed by our independent auditors as stated in their review reports. The review reports will also be available on our website at www.kbfg.com.

26

4. Independent Public Accountants

4.1. Audit / Review Services

				(Unit: in millions of Won)
Period	Auditor	Activity	Agreed Per Contract(1)		Actual(2)
			Compensation(3)	Estimated Hours	Compensation(3)	Accrued Hours
January 1 to June 30, 2020	KPMG Samjong Accounting Corp.	Quarterly, half-year and annual review & audit, review of internal accounting management system (including audit of internal control over financial reporting)	1,246	11,570	623	5,171
January 1 to December 31, 2019	Samil PricewaterhouseCoopers	Quarterly, half-year and annual review & audit, review of internal accounting management system (including audit of internal control over financial reporting)	1,081	11,234	1,081	10,832
January 1 to December 31, 2018	Samil PricewaterhouseCoopers	Quarterly, half-year and annual review & audit, review of internal accounting management system (including audit of internal control over financial reporting)	949	11,034	949	9,820

Note: (1) Total compensation and estimated hours established at the time of the execution of the audit and review services contract.

(2) Actual compensation paid and hours accrued from January 1 of each applicable year to the date of the audit or review report issued during such year.

(3) Excluding value-added taxes.

4.2. Public Company Accounting Oversight Board (“PCAOB”) Audit Services

	(Unit: in millions of Won)
Period	Auditor	Activity	Service Period	Compensation(1)
January 1 to June 30, 2020	KPMG Samjong Accounting Corp.	PCAOB audit of consolidated financial statements and internal control over financial reporting	May 1, 2020 to April 30, 2021	662
January 1 to December 31, 2019	Samil PricewaterhouseCoopers	PCAOB audit of consolidated financial statements and internal control over financial reporting	May 1, 2019 to April 30, 2020	573
January 1 to December 31, 2018	Samil PricewaterhouseCoopers	PCAOB audit of consolidated financial statements and internal control over financial reporting	May 1, 2018 to April 30, 2019	571

Note: (1) Total compensation established at the time of the execution of the audit and review services contract, excluding value-added taxes.

27

4.3. Change in Auditor

Pursuant to the Act on External Audit of Stock Companies and the related regulations thereunder, the Securities and Futures Commission of the Financial Services Commission designated KPMG Samjong Accounting Corp. as the new external auditor for the Company for the fiscal years ending December 31, 2020, 2021 and 2022. As such, for the fiscal year ending December 31, 2020, the external auditor for the Company and its subsidiaries has been changed from Samil PricewaterhouseCoopers to KPMG Samjong Accounting Corp.

28

5. Corporate Governance and Affiliated Companies

5.1. Board of Directors & Committees under the Board

As of June 30, 2020, our board of directors consisted of nine directors, comprising one executive director, one non-standing director and seven non-executive directors. The following committees currently serve under our board of directors:

• Audit Committee;

• Risk Management Committee;

• Evaluation & Compensation Committee;

• Non-Executive Director Nominating Committee;

• Audit Committee Member Nominating Committee (ad hoc committee) ;

• CEO Nominating Committee;

• Subsidiaries’ CEO Director Nominating Committee; and

• ESG Committee

For the list of our directors, see 6. Directors, Senior Management and Employees — 6.1. Executive Directors, — 6.2. Non-standing Directors and — 6.3. Non-executive Directors below.

5.2. Audit Committee

The Audit Committee oversees our financial reporting and approves the appointment of our independent auditors and internal compliance officers. The committee also reviews our financial information, auditor’s examinations, key financial statement issues, the plans and evaluation of internal controls and the administration of our financial affairs by the board of directors. In connection with the general meetings of shareholders, the committee examines the agenda for, and financial statements and other reports to be submitted by, the board of directors to each general meeting of shareholders. The committee holds regular meetings every quarter and on an as-needed basis.

The following table shows a list of audit committee requirements under Articles 415 and 542 of the Commercial Act and how we fulfill each requirement as of June 30, 2020.

The Commercial Act Requirements	KB Financial Group
The Audit Committee must consist of three or more directors.	We have four Audit Committee members.
At least two-thirds of the Audit Committee members must be non-executive directors.	All four Audit Committee members, including the chairman of the committee, are non-executive directors.
The chairman of the Audit Committee must be a non-executive director.
At least one Audit Committee member must be an accounting or financial expert.	Three Audit Committee members (Kyung Ho Kim, Myung Hee Choi and Gyutaeg Oh) are accounting or financial experts.

29

5.3. Compensation to Directors

5.3.1. Total Amount of Compensation Approved at the Annual General Meeting of Shareholders

(Unit: in millions of Won)
	Total number of persons(1)		Total compensation approved at shareholders’ meeting(2)		Notes
Registered Directors (Non-executive directors)		9 (7)		3,000		—

Note: (1) Represents the total number of applicable persons as of June 30, 2020.

(2) Represents the aggregate amount for all directors (including non-executive directors). Excludes compensation in the form of long-term performance-based stock grants.

5.3.2. Total Amount of Compensation Paid

(As of June 30, 2020)	(Unit: in millions of Won)
Total number of persons(1)	Total payment(2)(3)		Average payment per person(4)		Notes
9		872		96		—

Note: (1) Represents the total number of applicable persons as of June 30, 2020.

(2) Represents the total amount paid (rounded to the nearest million) for the six months ended June 30, 2020.

(3) Payment subject to the Company’s internal policies on compensation to directors.

(4) Represents (i) the total amount paid (rounded to the nearest million) for the six months ended June 30, 2020, divided by (ii) the number of applicable persons for the applicable reporting period.

5.3.3. Compensation Breakdown

(As of June 30, 2020)					(Unit: in millions of Won)
	Total number of persons(1)		Total payment(2)(3)		Average payment per person(4)		Notes
Registered Directors (excluding non-executive directors and Audit Committee members)		2		578		289		—
Non-executive Directors (excluding Audit Committee members)		3		123		40		—
Audit Committee members		4		170		42		—
Internal Auditor		—		—		—		—

30

Note: (1) Represents the total number of applicable persons as of June 30, 2020.

(2) Represents the total amount paid (rounded to the nearest million) for the six months ended June 30, 2020.

(3) Payment subject to the Company’s internal policies on compensation to directors.

(4) Represents (i) the total amount paid (rounded to the nearest million) for the six months ended June 30, 2020, divided by (ii) the number of applicable persons for the applicable reporting period.

5.4. Highest-Paid Individuals

5.4.1 Compensation exceeding Won 500 million – Individual basis

(As of June 30, 2020)			(Unit: in millions of Won)
Name	Position	Total Amount	Deferred Compensation(1)
Jong Kyoo Yoon	Chairman & CEO	578	•  Deferred short-term performance-based payment remaining under, and pursuant to, a performance evaluation in 2018, the amount of which corresponds to 3,766 shares. •  Deferred short-term performance-based payment remaining under, and pursuant to, a performance evaluation in 2019, the amount of which corresponds to 5,611 shares. •  Deferred long-term performance-based payment remaining under, and pursuant to, a performance evaluation over a three-year period from November 21, 2014 to November 20, 2017, the amount of which corresponds to 12,018 shares. •  Long-term performance-based payment pursuant to a performance evaluation over a three-year period from November 21, 2017 to November 20, 2020, the amount of which corresponds to a maximum of 46,890 shares (15,630 shares per year).

Note: (1) The actual compensation amount will be finalized based on the market value of the Company’s shares at the time of payment.

31

5.4.2 Calculation criteria and method of compensation

(Unit: in millions of Won)

Name	Compensation Type	Classification	Total Compensation (in millions of Won)	Calculation Criteria and Method
Jong Kyoo Yoon	Earned income	Salary	400	A monthly salary was paid in even installments each month in accordance with the amount of annual salary determined by a resolution of the Evaluation & Compensation Committee within the limit of the total amount of compensation approved at the shareholders’ meeting. (This amount includes allowances for business expenses of Won 175 million.)
		Bonus	178	The bonus paid in 2020 was Won 178 million, all of which was paid in lump sum as short-term performance-based compensation pursuant to a performance evaluation for 2019 (based on the resolution of the Evaluation & Compensation Committee). The short-term performance evaluation index for 2019 comprised financial results (e.g., ROE, total operating income, RAROC, CIR, real NPL ratio, Tier 1 ratio, net increase in the number of cross-selling customers among subsidiaries) and non-financial results (e.g., strengthening the overall position of the Company as a leading financial group by improving core business areas, innovating and advancing the Company’s business infrastructure for implementing the “One-Firm KB” policy). The amount of the short-term performance-based payment is determined by the Evaluation & Compensation Committee based on the aggregate score of the index items above and is within the range of 0%-100% of the base salary. With respect to financial results, the Company’s net profit for 2019 increased 8.2% YoY to Won 3.3 trillion. The Company also saw growth in loans based on prime assets (a 4.5% growth YoY from Won 257 trillion in 2018 to Won 269 trillion in 2019) and an improvement in asset quality (a decrease in real NPL ratio from 1.01% in 2018 to 0.90% in 2019) through enhanced risk management capabilities. In addition, achievements in improving the Company’s business portfolio, reflected in the growth of non-interest income (a 14.3% growth YoY from Won 2.0 trillion in 2018 to Won 2.2 trillion in 2019) and an increase in the portion of net fee and commission income from non-banking businesses (50.1% in 2018 to 52.0% in 2019), were considered, among others, to be major achievements reflected in the performance evaluation. With respect to non-financial results, the major achievements considered included reinforcement of the Company’s position as a leader in the financial industry by increasing market dominance through strengthening of core business areas, strengthening the competitiveness of key businesses such as CIB, WM and capital markets operations and securing future growth engines through global expansion, as well as advancement of the “One-Firm KB” policy by improving business infrastructure through the implementation of the “Smart Work” culture, fostering a collaborative office culture, and enhancing human resources operations, risk management and compliance activities.
		Stock options	—	Not applicable
		Other earned income	—	Not applicable
	Retirement income		—	Not applicable
	Other income		—	Not applicable

32

5.5. Affiliated Companies

5.5.1. List of Affiliated Companies

Affiliated companies of KB Financial Group that are first-tier subsidiaries and KB Financial Group’s ownership of such companies as of June 30, 2020 are as follows.

1) Kookmin Bank (100.00%)

2) KB Securities Co., Ltd. (100.00%)

3) KB Insurance Co., Ltd. (100.00%)

4) KB Kookmin Card Co., Ltd. (100.00%)

5) KB Asset Management Co., Ltd. (100.00%)

6) KB Capital Co., Ltd. (100.00%)

7) KB Life Insurance Co., Ltd. (100.00%)

8) KB Real Estate Trust Co., Ltd. (100.00%)

9) KB Savings Bank Co., Ltd. (100.00%)

10) KB Investment Co., Ltd. (100.00%)

11) KB Data Systems Co., Ltd. (100.00%)

12) KB Credit Information Co., Ltd. (100.00%)

33

6. Directors, Senior Management and Employees

6.1. Executive Directors

As of June 30, 2020, we had one executive director. The name, position and the end of the term of our executive director and the number of shares of our common stock he owned as of June 30, 2020 are set forth below.

Name	Date of Birth		Position		Common Shares Owned		End of Term
Jong Kyoo Yoon		October 1955		Chairman & Chief Executive Officer		21,000		November 20, 2020

6.2. Non-standing Directors

As of June 30, 2020, we had one non-standing director. The name, position and the end of the term of our non-standing director and the number of shares of our common stock he owned as of June 30, 2020 are set forth below.

Name	Date of Birth		Position		Common Shares Owned		End of Term
Yin Hur		December 1961		Non-standing Director		13,500		November 20, 2020

6.3. Non-executive Directors

As of June 30, 2020, we had seven non-executive directors. The name, position and the end of the term of our non-executive directors and the number of shares of our common stock they respectively owned as of June 30, 2020 were as follows.

Name	Date of Birth	Position	Common Shares Owned		End of Term
Suk Ho Sonu	September 1951	Non-executive Director		1,300	March 19, 2021
Stuart B. Solomon	July 1949	Non-executive Director		—	March 19, 2021
Myung Hee Choi	February 1952	Non-executive Director		—	March 19, 2021
Kouwhan Jeong	September 1953	Non-executive Director		—	March 19, 2021
Kyung Ho Kim	December 1954	Non-executive Director		—	March 26, 2021
Seon-joo Kwon	November 1956	Non-executive Director		—	March 19, 2022
Gyutaeg Oh	February 1959	Non-executive Director		—	March 19, 2022

As of June 30, 2020, the following non-executive director also served as a director at another company.

Name	Company		Position		Appointment Date
Kouwhan Jeong		Nambujeil Law and Notary Office Inc.		Co-president Attorney at Law		May 2016

34

6.4. Senior Management

Members of our senior management as of June 30, 2020 are as follows. The number of common shares owned is as of June 30, 2020.

Name	Date of Birth	Position	Common Shares Owned		End of Term
Chang Kwon Lee	November 1965	Senior Executive Vice President, Chief Strategy Officer and Head of Global Business Unit		2,010	December 31, 2020
Ki-Hwan Kim	March 1963	Senior Executive Vice President and Chief Finance Officer		2,621	December 31, 2020
Nam Jong Seo	June 1963	Senior Executive Vice President and Chief Risk Management Officer		119	December 31, 2021
Pil Kyu Im	March 1964	Senior Executive Vice President and Chief Human Resources Officer		1,005	December 31, 2020
Kyung Yup Cho	September 1961	Senior Executive Vice President; KB Research		1,500	December 31, 2020
Young Hyuk Jo	April 1963	Senior Executive Vice President; Audit Department		1,961	December 31, 2020
Nam Hoon Cho	June 1968	Senior Managing Director and Chief Global Strategy Officer		1,000	December 31, 2020
Chan Il Park	March 1963	Managing Director and Chief Compliance Officer		1,289	December 31, 2020
Seok Mun Choi	August 1968	Managing Director and Head of Office of Board of Directors		735	December 31, 2021
Soon Bum Kwon	October 1966	Managing Director		1,500	December 31, 2020
Jeong Rim Park	November 1963	Head of Capital Market Business Unit		3,150	December 31, 2020
Sung Hyun Kim	August 1963	Head of Corporate and Investment Banking Business Unit		15,468	December 31, 2020
Jong Hee Yang	June 1961	Head of Insurance Business Unit		914	December 31, 2020
Dong Cheol Lee	October 1961	Head of Retail Customer Business Unit		3,325	December 31, 2020
Young Gil Kim	January 1963	Head of Wealth Management Business Unit		182	December 31, 2020
Woon Tae Kim	May 1963	Head of Small and Medium Enterprise Business Unit		1,260	December 31, 2020
Mun-Cheol Jeong	August 1968	Chief Public Relation Officer		597	December 31, 2020
Dong Whan Han	January 1965	Chief Digital Innovation Officer		1,100	December 31, 2020
Woo Yeul Lee	November 1964	Chief Information Technology Officer		1,337	December 31, 2020
Jin Soo Yoon	February 1964	Chief Data Officer		100	March 31, 2021
Sang-Hyeon Woo	February 1964	Senior Managing Director; Corporate and Investment Banking Business Unit		348	December 31, 2020
Jeong Ha	January 1967	Senior Managing Director; Capital Market Business Unit		—	December 31, 2020
Chai Hyun Sung	September 1965	Senior Executive Vice President; Retail Customer Business Unit		6,914	December 31, 2020
Yun Sang Song	July 1964	Senior Managing Director; Insurance Business Unit		—	December 31, 2020
Jae Young Choi	June 1967	Head of Pension Business Division		—	May 26, 2021
Jin Gyu Maeng	January 1966	Head of Office of Planning and Coordination		760	December 31, 2020

35

As of June 30, 2020, the following management also served as senior management at our subsidiaries.

Name	Subsidiary	Position	Appointment Date
Yin Hur	Kookmin Bank	President and Chief Executive Officer	November 2017
Jeong Rim Park	KB Securities	Chief Executive Officer	January 2019
Sung Hyun Kim	KB Securities	Chief Executive Officer	January 2019
Jong Hee Yang	KB Insurance	Chief Executive Officer	March 2016
Dong Cheol Lee	KB Kookmin Card	Chief Executive Officer	January 2018
Young Gil Kim	Kookmin Bank	Senior Executive Vice President; Wealth Management Group	January 2020
	KB Securities	Deputy President; Wealth Management Division	January 2019
Woon Tae Kim	Kookmin Bank	Senior Managing Director; Small and Medium Enterprise Group	January 2020
Mun-Cheol Jeong	Kookmin Bank	Managing Director; Brand·ESG Group	January 2020
Dong Whan Han	Kookmin Bank	Senior Executive Vice President; Digital Finance Group	January 2020
Woo Yeul Lee	Kookmin Bank	Senior Executive Vice President; Information Technology Group	January 2020
Jin Soo Yoon	Kookmin Bank	Senior Managing Director; Data Strategy Group	April 2019
	KB Kookmin Card	Senior Managing Director; Data Strategic Division	April 2019
Sang-Hyeon Woo	Kookmin Bank	Senior Managing Director; Corporate Investment Banking Customer Group	January 2020
	KB Securities	Deputy President; Investment Banking Division	January 2020
Jeong Ha	Kookmin Bank	Senior Managing Director; Capital Markets Group	January 2020
Chai Hyun Sung	Kookmin Bank	Senior Executive Vice President; Retail Customer Group	January 2020
Yun Sang Song	KB Life Insurance	Senior Managing Director; Strategy & Finance Planning Division	January 2020
Jae Young Choi	Kookmin Bank	Head of Pension Business Division	May 2019
	KB Securities	Managing Director; Pension Business Division	January 2020
	KB Insurance	Managing Director; Pension Business Division	January 2020
Jin Gyu Maeng	Kookmin Bank	General Manager; Planning and Coordination Office	January 2019
Ki-Hwan Kim	KB Insurance	Non-standing Director	February 2018
	KB Kookmin Card	Non-standing Director	February 2018
Chang Kwon Lee	KB Securities	Non-standing Director	February 2018

36

6.5. Employees

The following table shows information regarding our employees and compensation paid to them as of June 30, 2020.

					(Unit: in millions of Won)
Number of Employees(A)(1)	Average Tenure of Employees(2)	Total Amount of Annual Salaries(B)			Average Annual Salary per Person(B/A)
161	3 years and 10 months (14 years and 8 months)		14,027	(3)		87	(3)

Note: (1) Includes executive officers.

(2) The duration in parentheses includes tenure at our subsidiaries.

(3) Includes retroactive payments of wage increases and bonuses from 2019. The average annual salary per person excluding such amounts is Won 76 million.

The following table shows information regarding our executive officers and compensation paid to them as of June 30, 2020.

	(Unit: in millions of Won)
Number of Executive Officers(A)(1)	Total Amount of Annual Salaries(B)		Average Annual Salary per Person(B/A)
10		2,707		271

Note: (1) Excludes 16 executive officers who serve primarily as executive officers at our subsidiaries.

7. Major Shareholders and Related Party Transactions

7.1. Major Shareholders

The following table presents information regarding holders of 5% or more of our total issued shares as of June 30, 2020.

	(Unit: shares, %)
Name	Number of Shares of Common Stock(1)		Percentage of Total Issued Shares(2)
Korean National Pension Service(3)		41,462,588		9.97
JP Morgan Chase Bank, N.A.(4)		26,622,633		6.40

Note: (1) Based on our shareholder registry as of December 31, 2019 unless specified otherwise.

(2) Based on 415,807,920 shares of our common stock issued as of December 31, 2019

(3) Based on disclosure made by the Korean National Pension Service in a statement of acquisition filing on February 7, 2020.

(4) Depositary under the Company’s ADR program. The voting rights are held by ADR holders.

37

7.2. Changes in the Largest Shareholder

(As of June 30, 2020)						(Unit: shares, %)
Name of Largest Shareholder	Date of Change in Largest Shareholder/ Date of Change in Number of Shares Owned		Number of Shares of Common Stock(1)			Percentage of Total Issued Shares(2)
Korean National Pension Service		December 31, 2015		35,534,667			9.20
Korean National Pension Service		August 12, 2016		36,826,207			9.53
Korean National Pension Service		December 31, 2016		41,190,896			9.85
Korean National Pension Service		April 24, 2017		40,950,453			9.79
Korean National Pension Service		October 16, 2017		40,479,793			9.68
Korean National Pension Service		December 31, 2017		40,204,583			9.62
Korean National Pension Service		December 31, 2018		39,704,733			9.50
Korean National Pension Service		December 31, 2019		41,468,003			9.97
Korean National Pension Service		February 1, 2020		41,462,588	(3)		9.97

Note: (1) Based on our shareholder registry as of the end of each applicable year unless specified otherwise.

(2) Total number of shares of common stock issued as of the following dates:

Prior to October 19, 2016: 386,351,693

From October 19, 2016 to December 12, 2019: 418,111,537

After December 12, 2019: 415,807,920

(3) Based on disclosure made by the Korean National Pension Service in a statement of acquisition filing on February 7, 2020.

7.3. Employee Stock Ownership Association

(As of June 30, 2020)	(Unit: shares)
Company Name	Number of Shares of Common Stock Owned
KB Financial Group Inc.		35,908
Kookmin Bank		4,502,524
KB Securities Co., Ltd.		20,534
KB Insurance Co., Ltd.		212,897
KB Kookmin Card Co., Ltd.		225,100
KB Asset Management Co., Ltd.		7,375
KB Capital Co., Ltd.		23,138
KB Life Insurance Co., Ltd.		22,841
KB Real Estate Trust Co., Ltd.		12,796
KB Savings Bank Co., Ltd.		4,102
KB Investment Co., Ltd.		1,188
KB Data Systems Co., Ltd.		11,933
KB Credit Information Co., Ltd.		8,675
Total		5,089,011

38

7.4. Investments in Affiliated Companies

(As of June 30, 2020)								(Units: shares, %, millions of Won)
Company Name	Ending Balance						Total assets as of the latest fiscal year(1)		Net income(loss) for the latest fiscal year(1)
	Number of shares owned		Ownership		Book value
Kookmin Bank		404,379,116		100		14,821,721		387,425,038		2,439,079
KB Securities Co., Ltd.		298,620,424		100		3,342,391		47,816,512		257,893
KB Insurance Co., Ltd.		66,500,000		100		2,375,430		36,552,368		234,327
KB Kookmin Card Co., Ltd.		92,000,000		100		1,953,175		22,990,115		316,546
KB Asset Management Co., Ltd.		7,667,550		100		96,312		310,018		48,899
KB Capital Co., Ltd.		25,227,566		100		673,811		11,190,568		117,028
KB Life Insurance Co., Ltd.		91,200,000		100		485,314		9,801,904		15,963
KB Real Estate Trust Co., Ltd.		16,000,000		100		121,553		377,938		61,713
KB Savings Bank Co., Ltd.		8,001,912		100		157,544		1,361,031		16,301
KB Investment Co., Ltd.		22,525,328		100		154,910		756,972		11,311
KB Data Systems Co., Ltd.		800,000		100		6,334		41,690		4,664
KB Credit Information Co., Ltd.		1,252,400		100		23,621		27,834		(256	)
Total		—		—		24,212,116		—		—

Note: (1) Based on K-IFRS (on a consolidated basis).

7.5. Related Party Transactions

7.5.1. Purchase of capital securities issued by KB Capital Co., Ltd.

(Unit: in billions of Won)

Issuer	Relationship	Type	Issue Amount		Issue Date	Interest Rate		Maturity Date	Use of Proceeds
KB Capital Co., Ltd.	Subsidiary	No. 299 Private Placement of Capital Securities in Won		50	March 27, 2015		6.548%(1)	March 27, 2045 (may be extended)	Working capital

(1) The increase in interest rate is due to the non-exercise of the option to redeem.

39

(Unit: in billions of Won)

Issuer

Relationship

Type

Issue Amount

Issue Date

Interest Rate

Maturity Date

Use of Proceeds

KB Capital Co., Ltd.

Subsidiary

No. 320 Private Placement of Capital Securities in Won

50

September 24, 2015

4.606

%

September 24, 2045 (may be extended)

Working capital

(Unit: in billions of Won

)

Issuer

Relationship

Type

Issue Amount

Issue Date

Interest Rate

Maturity Date

Use of Proceeds

KB Capital Co., Ltd.

Subsidiary

No. 343 Private Placement of Capital Securities in Won

50

March 29, 2016

4.396

%

March 29, 2046 (may be extended)

Working capital

(Unit: in billions of Won

)

Issuer

Relationship

Type

Issue Amount

Issue Date

Interest Rate

Maturity Date

Use of Proceeds

KB Capital Co., Ltd.

Subsidiary

No. 352 Private Placement of Capital Securities in Won

50

June 28, 2016

4.064

%

June 28, 2046 (may be extended)

Working capital

(Unit: in billions of Won

)

Issuer

Relationship

Type

Issue Amount

Issue Date

Interest Rate

Maturity Date

Use of Proceeds

KB Capital Co., Ltd.

Subsidiary

No. 367 Private Placement of Capital Securities in Won

50

November 28, 2016

4.744%

November 28, 2046 (may be extended)

Working capital

(Unit: in billions of Won

)

Issuer

Relationship

Type

Issue Amount

Issue Date

Interest Rate

Maturity Date

Use of Proceeds

KB Capital Co., Ltd.

Subsidiary

No. 378 Private Placement of Capital Securities in Won

50

April 27, 2017

4.431%

April 27, 2047 (may be extended)

Working capital

40

7.5.2. Prepayments and Loans to Subsidiaries

(Unit: in billions of Won)

Name			Relationship	Account	Loan Amount		Current Balance		Credit Offering Date	Interest Rate	Maturity Date
KB Investment Co., Ltd.			Subsidiary	Loans(1)		10		10	July 14, 2017	2.141%(2)	July 12, 2021
Note:	(1)	Unsecured credit loans.
	(2)	Changed from 2.195% to 2.141% upon extension of the loans on July 13, 2020.
(Unit: in billions of Won)
Name			Relationship	Account	Loan Amount		Current Balance		Credit Offering Date	Interest Rate	Maturity Date
KB Investment Co., Ltd.			Subsidiary	Loans(1)		40		40	July 13, 2018	2.141%(2)	July 12, 2021
Note:	(1)	Unsecured credit loans.
	(2)	Changed from 2.195% to 2.141% upon extension of the loans on July 13, 2020.
(Unit: in billions of Won)
Name			Relationship	Account	Loan Amount		Current Balance		Credit Offering Date	Interest Rate	Maturity Date
KB Investment Co., Ltd.			Subsidiary	Loans(1)		70		70	March 8, 2019	2.189%(2)	March 8, 2021
Note:	(1)	Unsecured credit loans.
	(2)	Changed from 2.176% to 2.189% upon extension of the loans on March 9, 2020.
(Unit: in billions of Won)
Name			Relationship	Account	Loan Amount		Current Balance		Credit Offering Date	Interest Rate	Maturity Date
KB Investment Co., Ltd.			Subsidiary	Loans(1)		30		30	March 9, 2020	2.189%	March 8, 2021
Note:	(1)	Unsecured credit loans.
(Unit: in billions of Won)
Name			Relationship	Account	Loan Amount		Current Balance		Credit Offering Date	Interest Rate	Maturity Date
KB Investment Co., Ltd.			Subsidiary	Loans(1)		30		30	July 13, 2020	2.141%	July 12, 2021
Note:	(1)	Unsecured credit loans.

41

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: August 14, 2020	By: /s/ Ki-Hwan Kim
	(Signature)
	Name:	Ki-Hwan Kim
	Title:	Deputy President and Chief Finance Officer

42

EX-99.1

Exhibit 99.1

KB Financial Group Inc.

Consolidated Interim Financial Statements

June 30, 2020

(Unaudited)

(With Independent Auditors’ Review Report Thereon)

Contents

	Page
Independent Auditors’ Review Report		1
Consolidated Interim Statements of Financial Position		3
Consolidated Interim Statements of Comprehensive Income		4
Consolidated Interim Statements of Changes in Equity		6
Consolidated Interim Statements of Cash Flows		7
Notes to the Consolidated Interim Financial Statements		9

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Stockholders

KB Financial Group Inc.:

Reviewed financial statements

We have reviewed the accompanying condensed consolidated interim financial statements of KB Financial Group Inc. and its subsidiaries (collectively the “Group”), which comprise the consolidated interim statement of financial position as of June 30, 2020, the consolidated interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2020, changes in equity and cash flows for the six-month period ended June 30, 2020 and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No.1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of the condensed consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ review responsibility

Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our review.

We conducted our review in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

Emphasis of matters

The following matters may be helpful to the readers in their understanding of the condensed consolidated interim financial statements. Our review conclusion is not affected by these matters.

(1) Uncertainty due to COVID-19 pandemic

As described in Note 38. (3) to the condensed consolidated interim financial statements, the ongoing COVID-19 pandemic has increased the estimation uncertainty on the Group’s expected credit losses on certain portfolios and potential impairment on assets and may have negative impacts on the Group’s consolidated financial statements. In preparation of the condensed consolidated interim financial statements as of and for the six-month period ended June 30, 2020, the Group has recognized additional provisions for expected credit losses by updating the forward-looking information used to estimate expected credit losses and expanding the factors considered in determining whether there was a significant increase in credit risk.

1

(2) Uncertainty related to provisional amounts recognized in connection with a business combination

As described in Note 42 to the condensed consolidated interim financial statements, in connection with the acquisition of PRASAC Microfinance Institution PLC. in April 2020, the Group is in the process of obtaining new information about the facts and circumstances that existed as of the acquisition date and has not completed the accounting for the business combination as of June 30, 2020. During the measurement period permitted by K-IFRS No. 1103 “Business Combinations”, if these facts and circumstances affect the measurement, the Group shall retrospectively adjust the provisional amounts recognized as of the acquisition date reported in the condensed consolidated interim financial statements.

Other matters

The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries.

The accompanying consolidated interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2019, changes in equity and cash flows for the six-month period ended June 30, 2019, were reviewed by other auditors whose report thereon, dated August 14, 2019, expressed that nothing came to their attention that caused them to believe that those interim financial statements are not prepared, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

The consolidated statement of financial position of the Group as of December 31, 2019, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by other auditors in accordance with Korean Standards on Auditing and their report thereon, dated March 5, 2020, expressed an unqualified opinion. The accompanying consolidated statement of financial position of the Group as of December 31, 2019, presented for comparative purposes, is consistent, in all material respects, with the audited consolidated statement of financial position from which it has been derived.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

August 14, 2020

This report is effective as of August 14, 2020, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

2

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Financial Position

June 30, 2020 and December 31, 2019

(in millions of Korean won)	Notes		June 30, 2020 (Unaudited)			December 31, 2019
Assets
Cash and due from financial institutions		4,6,7,37	W	22,509,456		W	20,837,878
Financial assets at fair value through profit or loss		4,6,11		58,652,981			53,549,086
Derivative financial assets		4,6,8		3,952,910			3,190,673
Loans at amortized cost		4,6,9,10		367,862,483			339,684,059
Financial investments		4,6,11		74,810,309			71,782,606
Investments in associates and joint ventures		12		691,700			598,240
Property and equipment		13		5,005,926			5,067,377
Investment property		13		2,848,208			2,827,988
Intangible assets		14		3,053,762			2,737,813
Net defined benefit assets		23		—			946
Current income tax assets				22,324			19,095
Deferred income tax assets		15,32		27,498			3,597
Assets held for sale		16		49,142			23,151
Other assets		4,6,17		29,989,932			18,215,608
Total assets			W	569,476,631		W	518,538,117
Liabilities
Financial liabilities at fair value through profit or loss		4,6,18	W	13,366,437		W	15,368,153
Derivative financial liabilities		4,6,8		4,290,818			3,007,341
Deposits		4,6,19		327,743,474			305,592,771
Debts		4,6,20		46,917,615			37,818,860
Debentures		4,6,21		57,422,807			50,935,583
Provisions		22		595,057			527,929
Net defined benefit liabilities		23		347,518			253,989
Current income tax liabilities				482,107			432,431
Deferred income tax liabilities		15,32		820,912			777,793
Insurance contract liabilities		36		36,117,918			34,966,683
Other liabilities		4,6,24		41,067,869			29,737,259
Total liabilities				529,172,532			479,418,792
Equity
Share capital		25		2,090,558			2,090,558
Hybrid securities		25		798,116			399,205
Capital surplus		25		16,728,115			17,122,777
Accumulated other comprehensive income		25,34		290,258			348,021
Retained earnings		25		20,793,865			19,709,545
Treasury shares		25		(1,136,188	)		(1,136,188	)
Equity attributable to shareholders of the Parent Company		25		39,564,724			38,533,918
Non-controlling interests				739,375			585,407
Total equity				40,304,099			39,119,325
Total liabilities and equity			W	569,476,631		W	518,538,117

The above consolidated interim statements of financial position should be read in conjunction with the accompanying notes.

3

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Comprehensive Income

Three-Month and Six-Month Periods Ended June 30, 2020 and 2019

(in millions of Korean won, except per share amounts)	Notes	2020 (Unaudited)						2019 (Unaudited)
		Three months			Six months			Three months			Six months
Interest income		W	3,601,771		W	7,221,747		W	3,693,946		W	7,340,389
Interest income from financial instruments at fair value through other comprehensive income and amortized cost			3,432,900			6,872,874			3,509,863			6,973,537
Interest income from financial instruments at fair value through profit or loss			168,871			348,873			184,083			366,852
Interest expense			(1,267,724	)		(2,538,499	)		(1,396,845	)		(2,791,222	)
Net interest income	5,26		2,334,047			4,683,248			2,297,101			4,549,167
Fee and commission income			1,093,907			2,135,370			965,765			1,877,476
Fee and commission expense			(382,725	)		(754,056	)		(380,734	)		(741,798	)
Net fee and commission income	5,27		711,182			1,381,314			585,031			1,135,678
Insurance income			3,566,891			6,837,454			3,028,408			6,156,219
Insurance expense			(3,464,529	)		(6,656,998	)		(2,906,613	)		(5,925,641	)
Net insurance income	5,36		102,362			180,456			121,795			230,578
Net gains on financial instruments at fair value through profit or loss before applying overlay approach			394,254			295,715			251,667			524,263
Net losses on overlay approach adjustments			(21,024	)		(60,997	)		(122,254	)		(195,178	)
Net gains on financial assets/liabilities at fair value through profit or loss	5,28		373,230			234,718			129,413			329,085
Net other operating expenses	5,29		(247,882	)		(464,808	)		(234,183	)		(480,511	)
General and administrative expenses	5,23,30		(1,586,409	)		(3,045,606	)		(1,486,967	)		(3,000,845	)
Operating profit before provision for credit losses	5		1,686,530			2,969,322			1,412,190			2,763,152
Provision for credit losses	5,7,10,11,17,22		(296,075	)		(539,748	)		(102,032	)		(293,745	)
Net operating income	5		1,390,455			2,429,574			1,310,158			2,469,407
Share of profit (losses) of investments in associates and joint ventures	5,12		(9,798	)		(12,835	)		578			4,782
Net other non-operating income (losses)	5,31		(4,451	)		(21,137	)		48,069			50,559
Net non-operating income (expenses)			(14,249	)		(33,972	)		48,647			55,341
Profit before income tax	5		1,376,206			2,395,602			1,358,805			2,524,748
Income tax expense	5,32		(383,729	)		(664,188	)		(367,338	)		(687,351	)
Profit for the period	5		992,477			1,731,414			991,467			1,837,397

(Continued)     4

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Comprehensive Income

Three-Month and Six-Month Periods Ended June 30, 2020 and 2019 (cont’d)

(in millions of Korean won, except per share amounts)	Notes	2020 (Unaudited)						2019 (Unaudited)
		Three months			Six months			Three months			Six months
Items that will not be reclassified to profit or loss:
Remeasurements of net defined benefit liabilities	23	W	(925	)	W	(2,149	)	W	(1,703	)	W	(4,738	)
Share of other comprehensive income of associates and joint ventures			—			23			—			—
Revaluation gains (losses) on equity instruments at fair value through other comprehensive income			218,452			6,491			(63,683	)		(32,490	)
Fair value changes on financial liabilities designated at fair value due to own credit risk			10,138			29,967			(9,940	)		(21,930	)
			227,665			34,332			(75,326	)		(59,158	)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations			(38,142	)		43,180			21,627			55,306
Net gains on debt instruments at fair value through other comprehensive income			121,775			88,916			94,299			151,531
Shares of other comprehensive income of investments in associates and joint ventures			11,364			3,263			2,697			5,935
Cash flow hedges			(662	)		(39,186	)		(19,654	)		(38,358	)
Gains (losses) on hedges of a net investment in a foreign operation			13,453			1,293			(4,679	)		(8,026	)
Other comprehensive income arising from separate account			4,241			3,908			16,048			32,070
Net gains on overlay approach adjustment	36		15,119			44,175			89,497			141,276
			127,148			145,549			199,835			339,734
Other comprehensive income for the period, net of tax			354,813			179,881			124,509			280,576
Total comprehensive income for the period		W	1,347,290		W	1,911,295		W	1,115,976		W	2,117,973
Profit attributable to:	5
Shareholders of the Parent Company	5	W	981,886		W	1,711,340		W	991,192		W	1,836,844
Non-controlling interests	5		10,591			20,074			275			553
		W	992,477		W	1,731,414		W	991,467		W	1,837,397
Total comprehensive income for the period attributable to:
Shareholders of the Parent Company		W	1,339,625		W	1,894,163		W	1,115,518		W	2,117,052
Non-controlling interests			7,665			17,132			458			921
		W	1,347,290		W	1,911,295		W	1,115,976		W	2,117,973
Earnings per share (in Korean won)	35
Basic earnings per share		W	2,512		W	4,375		W	2,534		W	4,678
Diluted earnings per share			2,493			4,340			2,518			4,647

The above consolidated interim statements of comprehensive income should be read in conjunction with the accompanying notes.

5

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2020 and 2019

(in millions of Korean won)	Equity attributable to shareholders of the Parent Company
	Share Capital		Hybrid Securities		Capital Surplus			Accumulated Other Comprehensive Income			Retained Earnings			Treasury Shares			Non-controlling Interests			Total Equity
Balance at January 1, 2019	W	2,090,558	W	—	W	17,121,660		W	177,806		W	17,282,441		W	(968,549	)	W	9,111		W	35,713,027
Comprehensive income
Profit for the period		—		—		—			—			1,836,844			—			553			1,837,397
Remeasurements of net defined benefit liabilities		—		—		—			(4,738	)		—			—			—			(4,738	)
Exchange differences on translating foreign operations		—		—		—			54,938			—			—			368			55,306
Net gains (losses) on financial instruments at fair value through other comprehensive income		—		—		—			137,450			(18,409	)		—			—			119,041
Shares of other comprehensive income of investments in associates and joint ventures		—		—		—			5,935			—			—			—			5,935
Cash flow hedges		—		—		—			(38,358	)		—			—			—			(38,358	)
Losses on hedges of a net investment in a foreign operation		—		—		—			(8,026	)		—			—			—			(8,026	)
Other comprehensive income arising from separate account		—		—		—			32,070			—			—			—			32,070
Fair value changes on financial liabilities designated at fair value due to own credit risk		—		—		—			(21,930	)		—			—			—			(21,930	)
Net gains on overlay approach adjustments		—		—		—			141,276			—			—			—			141,276
Total comprehensive income for the period		—		—		—			298,617			1,818,435			—			921			2,117,973
Transactions with shareholders
Annual dividends paid to shareholders of the Parent Company		—		—		—			—			(759,736	)		—			—			(759,736	)
Issuance of hybrid securities		—		399,085		—			—			—			—			—			399,085
Dividends on hybrid securities		—		—		—			—			(2,141	)		—			—			(2,141	)
Acquisition of treasury shares		—		—		—			—			—			(267,639	)		—			(267,639	)
Others		—		—		1,678			—			—			—			63			1,741
Total transactions with shareholders		—		399,085		1,678			—			(761,877	)		(267,639	)		63			(628,690	)
Balance at June 30, 2019 (Unaudited)	W	2,090,558	W	399,085	W	17,123,338		W	476,423		W	18,338,999		W	(1,236,188	)	W	10,095		W	37,202,310
Balance at January 1, 2020	W	2,090,558	W	399,205	W	17,122,777		W	348,021		W	19,709,545		W	(1,136,188	)	W	585,407		W	39,119,325
Comprehensive income
Profit for the period		—		—		—			—			1,711,340			—			20,074			1,731,414
Remeasurements of net defined benefit liabilities		—		—		—			(2,150	)		—			—			1			(2,149	)
Exchange differences on translating foreign operations		—		—		—			46,122			—			—			(2,942	)		43,180
Net gains (losses) on financial instruments at fair value through other comprehensive income		—		—		—			(145,178	)		240,585			—			—			95,407
Shares of other comprehensive income of investments in associates and joint ventures		—		—		—			3,286			—			—			—			3,286
Cash flow hedges		—		—		—			(39,186	)		—			—			—			(39,186	)
Gains on hedges of a net investment in a foreign operation		—		—		—			1,293			—			—			—			1,293
Other comprehensive income arising from separate account		—		—		—			3,908			—			—			—			3,908
Fair value changes on financial liabilities designated at fair value due to own credit risk		—		—		—			29,967			—			—			—			29,967
Net gains on overlay approach adjustments		—		—		—			44,175			—			—			—			44,175
Total comprehensive income for the period		—		—		—			(57,763	)		1,951,925			—			17,133			1,911,295
Transactions with shareholders
Annual dividends paid to shareholders of the Parent Company		—		—		—			—			(861,092	)		—			—			(861,092	)
Issuance of hybrid securities		—		398,911		—			—			—			—			—			398,911
Dividends on hybrid securities		—		—		—			—			(6,513	)		—			(9,129	)		(15,642	)
Non-controlling interests changes in business combination		—		—		—			—			—			—			144,443			144,443
Others		—		—		(394,662	)		—			—			—			1,521			(393,141	)
Total transactions with shareholders		—		398,911		(394,662	)		—			(867,605	)		—			136,835			(726,521	)
Balance at June 30, 2020 (Unaudited)	W	2,090,558	W	798,116	W	16,728,115		W	290,258		W	20,793,865		W	(1,136,188	)	W	739,375		W	40,304,099

The above consolidated interim statements of changes in equity should be read in conjunction with the accompanying notes.

6

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2020 and 2019

(in millions of Korean won)	Notes	2020 (Unaudited)			2019 (Unaudited)
Cash flows from operating activities
Profit for the period		W	1,731,414		W	1,837,397
Adjustment for non-cash items
Net losses (gain) on financial assets/liabilities at fair value through profit or loss			(165,613	)		(104,778	)
Net gain on derivative financial instruments for hedging purposes			67,652			(10,785	)
Adjustment of fair value of derivative financial instruments			(3,198	)		(737	)
Provision for credit loss			539,748			293,745
Net gain on financial investments			(231,757	)		(96,935	)
Share of loss (profit) of associates and joint ventures			12,835			(4,782	)
Depreciation and amortization expense			416,290			363,094
Depreciation and amortization expense on VOBA			88,909			98,808
Other net gain on property and equipment/intangible assets			(7,439	)		(25,503	)
Share-based payments			1,396			13,327
Policy reserve appropriation			1,143,101			803,320
Post-employment benefits			115,454			114,629
Net interest income			265,695			186,885
Net losses (gain) on foreign currency translation			19,006			5,709
Net other expense			247,388			199,028
			2,509,467			1,835,025
Changes in operating assets and liabilities
Financial assets at fair value through profit or loss			(2,168,493	)		3,569,710
Derivative financial instruments			205,771			(282,903	)
Loans at fair value through other comprehensive income			33,980			8,806
Loans at amortized cost			(26,320,188	)		(5,720,150	)
Current income tax assets			310			(9,306	)
Deferred income tax assets			(21,291	)		174
Other assets			(11,876,155	)		(11,506,425	)
Financial liabilities at fair value through profit or loss			(1,567,136	)		1,474,193
Deposits			21,617,830			11,270,604
Current income tax liabilities			49,190			(372,386	)
Deferred income tax liabilities			(21,914	)		249,145
Other liabilities			6,180,046			6,976,272
			(13,888,050	)		5,657,734
Net cash inflow (outflow) from operating activities			(9,647,169	)		9,330,156

(Continued)     7

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2020 and 2019 (cont’d)

(in millions of Korean won)	Notes		2020 (Unaudited)			2019 (Unaudited)
Cash flows from investing activities
Net cash flows from derivative financial instruments for hedging purposes			W	(116,025	)	W	(107,293	)
Disposal of financial assets at fair value through profit or loss				7,182,125			6,186,775
Acquisition of financial assets at fair value through profit or loss				(8,581,519	)		(6,598,127	)
Disposal of financial investments				49,832,928			42,122,954
Acquisition of financial investments				(52,213,936	)		(44,335,453	)
Disposal in investments in associates and joint ventures				21,728			9,670
Acquisition of investments in associates and joint ventures				(142,464	)		(19,028	)
Disposal of property and equipment				1,095			19,756
Acquisition of property and equipment				(165,489	)		(226,683	)
Disposal of investment property				13,200			69,053
Acquisition of investment property				(53,073	)		(486,236	)
Disposal of intangible assets				9,142			851
Acquisition of intangible assets				(86,796	)		(98,666	)
Net cash flows from the change in subsidiaries				(71,159	)		(134,968	)
Others				54,747			58,011
Net cash outflow from investing activities				(4,315,496	)		(3,539,384	)
Cash flows from financing activities
Net cash flows from derivative financial instruments for hedging purposes				(28,592	)		(14,483	)
Net increase (decrease) in debts				8,752,422			(3,299,433	)
Increase in debentures				59,153,157			47,270,138
Decrease in debentures				(53,014,333	)		(49,945,328	)
Increase (decrease) in other payables from trust accounts				1,366,258			(98,727	)
Dividends paid				(861,092	)		(759,736	)
Acquisition of treasury shares				—			(269,219	)
Issuance of hybrid securities				398,911			399,085
Dividends paid on hybrid securities				(19,104	)		—
Redemption of principal elements of lease payments				(119,132	)		(116,569	)
Others				(19,915	)		58,882
Net cash inflow (outflow) from financing activities				15,608,580			(6,775,390	)
Effect of exchange rate changes on cash and cash equivalents				(20,233	)		95,553
Net increase (decrease) in cash and cash equivalents				1,625,682			(889,065	)
Cash and cash equivalents at the beginning of the period		37		6,123,725			6,642,816
Cash and cash equivalents at the end of the period		37	W	7,749,407		W	5,753,751

The above consolidated interim statements of cash flows should be read in conjunction with the accompanying notes.

8

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

1. The Parent Company

KB Financial Group Inc. (the “Parent Company”) was incorporated on September 29, 2008, under the Financial Holding Companies Act of Korea. KB Financial Group Inc. and its subsidiaries (the “Group”) derive substantially all of their revenue and income from providing a broad range of banking and related financial services to consumers and corporations primarily in Korea and in selected international markets. The Parent Company’s principal business includes ownership and management of subsidiaries and associated companies that are engaged in financial services or activities. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Group established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Group acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Group included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015. Also, the Group included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary in October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed the name to KB Securities Co., Ltd. in January 2017. KB Insurance Co., Ltd. became one of the subsidiaries through a tender offer in May 2017.

The Parent Company’s share capital as of June 30, 2020, is W 2,090,558 million. The Parent Company has been listed on the Korea Exchange (“KRX”) since October 10, 2008, and on the New York Stock Exchange (“NYSE”) for its American Depositary Shares (“ADS”) since September 29, 2008. Number of shares authorized in its Articles of Incorporation is 1,000 million.

9

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

2. Basis of Preparation

2.1 Application of Korean IFRS

The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (“Hangeul”) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”). The accompanying consolidated interim financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

The consolidated financial statements of the Group have been prepared in accordance with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (“IASB”) that have been adopted by the Republic of Korea.

The preparation of consolidated financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 2.4.

The Group’s consolidated interim financial statements for the six-month period ended June 30, 2020, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting and contain less information than is required in annual consolidated financial statements. Selected explanatory notes include descriptions of transactions or events that are significant in understanding change in financial position and financial performance of the Group since the end of the previous annual reporting period. These consolidated interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as of June 30, 2020.

2.1.1 New and amended standards and interpretations adopted by the Group

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2020.

• Amendments to Korean IFRS 1103 Business Combination – Definition of a Business

To assess whether an acquired set of activities and assets is a business, the amendments requires an entity to consider whether an input has the ability to contribute to the creation of outputs significantly and whether a process is substantive, and to exclude economic benefits from lower costs. An entity can apply a concentration test, an optional test, where substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar assets, the assets acquired would not represent a business. The amendment does not have a significant impact on the financial statements. However, the amendment may have impact on the financial statements if business combination occurs in the future.

10

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

2.1.1 New and amended standards and interpretations adopted by the Group (cont’d)

• Amendments to Korean IFRS 1001 Presentation of Financial Statements and Korean IFRS 1008 Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Materiality

The amendments clarify the explanation of the definition of materiality. The feature of information users needs to be considered when the Group determines the information to be disclosed and the effects of immaterial information as well as omission or misstatement of material information when determining materiality. The amendment does not have a significant impact on the financial statements.

• The IFRS Interpretations Committee (IFRIC) Agenda Decision – Lease term

On December 16, 2019, the IFRS Interpretations Committee announced an interpretation of the “lease term and useful life of leasehold improvements”. This interpretation deals with how to determine the lease term of a cancellable lease or a renewable lease and whether the useful life of non-removable leasehold improvements is limited by the relevant lease term. According to this interpretation, the Group should identify factors to consider the broader economic penalty, reflect identified factors to accounting policies, and calculate lease term based on accounting policy.

The Group is assessing the impact that the change in accounting policy of enforceable period will have on the Group’s financial statements, and the Group will apply the impact in the financial statements once the assessment is completed.

2.1.2 New and amended standards and interpretations early adopted by the Group

• Amendments to Korean IFRS 1109 Financial Instruments, 1107 Financial Instruments: Disclosure – Interest Rate Benchmark Reform

These amendments provide exceptions applying hedge accounting even though interest rate benchmark reform gives rise to uncertainties. In the hedging relationship, an entity shall assume that the interest rate benchmark on which the hedge cash flows are based is not altered as a result of interest rate benchmark reform when determining whether a forecast transaction is highly probable and prospectively assessing hedging effectiveness. For a hedge of a non-contractually specified benchmark component of interest rate risk, an entity shall apply the requirement that the risk component shall be separately identifiable only at the inception of the hedging relationship. The application of this exception is ceased either when the uncertainty arising from interest rate benchmark reform is no longer present with respect to the timing and the amount of the interest rate benchmark-based cash flows of the hedge item, or when the hedging relationship that the hedge item is part of is discontinued. The Group early adopted the amendments since 2019 as the amendments allow the early adoption.

The significant benchmark interest rate indicators for the hedge relationship are LIBOR, CD; the hedge accounting in Note 8 directly affected by these amendments.

11

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

2.1.3 New and amended standards and interpretations not yet adopted by the Group

The following new accounting standards and interpretations that have been published that are not mandatory for June 30, 2020 reporting periods and have not been early adopted by the Group.

• Amendments to Korean IFRS 1116 Leases – Practical expedient for COVID-19-Related Rent Exemption, Concessions, Suspension

As a practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying this Standard if the change were not a lease modification. These amendments should be applied for annual periods beginning on or after June 1, 2020, and earlier application of permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

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 entity of the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Korean won, which is the Parent Company’s functional and presentation currency.

2.4 Critical Accounting Estimates

The preparation of the consolidated financial statements requires the application of accounting policies, certain critical accounting estimates and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses). Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment at the reporting date are different from the actual environment.

Estimates and underlying assumptions are continually evaluated, and changes in accounting estimates are recognized in the period in which the estimates are changed and in any future periods affected.

Significant accounting estimates and assumptions applied in the preparation of these condensed consolidated interim financial statements are the same as those applied to the consolidated financial statements for the year ended December 31, 2019, except for the estimates used to determine income tax expense.

12

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

3. Significant Accounting Policies

The significant accounting policies and calculation methods applied in the preparation of these consolidated financial statements have been consistently applied to all periods presented, except for the impact of changes due to adopting new and amended standards and interpretations.

3.1 Income Tax Expenses for the Interim Period

Income tax expense for the interim period is measured applying the expected average annual income tax rate for the expected total annual income.

3.2 Assessment of expected credit losses on financial instruments related to COVID-19

The spread of COVID-19 in 2020 has a negative impact on the global economy despite of the Korean government’s financial and economic stabilization packages. Compared to the macroeconomic forecast at the end of 2019, there was a significant change in forward-looking information affecting the expected credit losses during the six-month period ended June 30, 2020. Accordingly, the Group was provided with several economic forecast scenarios assuming changes in macroeconomic conditions based on the level of COVID-19 pandemic from KB Research Institute. The Group comprehensively reviewed the possibility of occurrence for each scenario and recalculated the forward-looking information, and reflected its effect on the expected credit losses by using statistical evaluation method. Also, the Group proactively managed the credit risk to be increased in the future by extending the range of the subject applying lifetime expected credit losses for loans which are highly affected by COVID-19. The Group will continue to monitor the impact of COVID-19 on the expected credit losses, taking into consideration the duration of the impact on the economy as a whole and the government policy.

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 Group’s 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 Group’s long-term strategy and business decisions efficiently. Credit risk, market risk, liquidity risk, and operational risk have been recognized as the Group’s key risks. These risks are measured and managed in Economic Capital or VaR (Value at Risk) using a statistical method.

4.1.2 Risk management organization

Risk Management Committee

The Risk Management Committee establishes risk management strategies in accordance with the directives of the Board of Directors and determines the Group’s target risk appetite. The Committee approves significant risk matters and reviews the level of risks that the Group is exposed to and the appropriateness of the Group’s risk management operations as an ultimate decision-making authority.

13

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.1.2 Risk management organization (cont’d)

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 Group’s risk management.

Risk Management Division

The Risk Management Division is responsible for monitoring and managing the Group’s economic capital limit and managing detailed policies, procedures and working processes relating to the Group’s risk management.

4.2 Credit Risk

4.2.1 Overview of credit risk

Credit risk is the risk of possible losses in an asset portfolio in the event of a counterparty’s default, breach of contract and deterioration in the credit quality of the counterparty. For risk management reporting purposes, the individual borrower’s default risk, country risk, specific risks and other credit risk exposure components are considered as a whole.

The Group uses definition of default as defined and applied in the calculation of Capital Adequacy Ratio (Basel III) in accordance with the new Basel Accord.

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.

In addition, the Group controls the credit concentration risk exposure by applying and managing total exposure limits to prevent an excessive risk concentration to each industry and borrower.

The Group has organized a credit risk management team that focuses on credit risk management in accordance with the Group’s credit risk management policy. Especially, the loan analysis department of Kookmin Bank, one of the subsidiaries, is responsible for loan policy, loan limit, loan review, credit management, restructuring and subsequent event management, independently of operating department. On the other hand, risk management group of Kookmin Bank is 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.

14

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.3 Maximum exposure to credit risk

The Group’s maximum exposures of financial instruments, excluding equity securities, to credit risk without consideration of collateral values as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Financial assets
Due from financial institutions at amortized cost1	W	19,610,100	W	18,142,960
Financial assets at fair value through profit or loss
Due from financial institutions		135,780		216,367
Securities		55,275,753		50,721,526
Loans		1,453,065		427,545
Financial instruments indexed to the price of gold		78,444		79,805
Derivatives		3,952,910		3,190,673
Loans at amortized cost1		367,862,483		339,684,059
Financial investments
Securities measured at fair value through other comprehensive income		45,640,856		43,556,848
Securities at amortized cost1		26,727,492		25,346,555
Loans measured at fair value through other comprehensive income		350,969		375,098
Other financial assets1		20,291,563		9,147,059
		541,379,415		490,888,495
Off-balance sheet items
Acceptances and guarantees contracts		7,961,873		8,327,494
Financial guarantee contracts		4,625,260		3,847,390
Commitments		162,568,689		151,797,615
		175,155,822		163,972,499
	W	716,535,237	W	654,860,994

¹  Due from financial institutions, loans and securities measured at amortized cost and other financial assets are net of allowance.

4.2.4 Credit risk of loans

The Group maintains an allowance for credit losses associated with credit risk on loans to manage its credit risk.

The Group assesses expected credit loss on financial asset at amortized cost and financial asset at fair value through other comprehensive income other than financial asset at fair value through profit or loss and recognizes loss allowance. Expected credit losses are a probability-weighted estimate of possible credit losses within certain range by reflecting reasonable and supportable information that is reasonably available at the reporting date without undue cost or effort, including information about past events, current conditions and forecasts of future economic conditions. The Group assesses the expected credit losses for loans categorized in financial assets at amortized cost, and presents it with the name of account ‘allowance for credit losses’ netting from the related carrying amounts. For the expected credit losses for loans categorized in financial assets at fair value through other comprehensive income, the Group presents it in other comprehensive income.

15

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.4 Credit risk of loans (cont’d)

Loans as of June 30, 2020 and December 31, 2019, are classified as follows:

(In millions of Korean won)	June 30, 2020
	The financial instruments applying 12- month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Loans at amortized cost1
Corporate
Grade 1	W	97,514,479	W	3,950,622	W	5,222	W	—	W	101,470,323
Grade 2		62,697,095		6,135,382		19,168		—		68,851,645
Grade 3		2,696,361		2,298,440		2,872		—		4,997,673
Grade 4		562,805		858,073		21,274		—		1,442,152
Grade 5		26,075		436,688		713,109		—		1,175,872
		163,496,815		13,679,205		761,645		—		177,937,665
Retail
Grade 1		152,870,419		3,216,652		10,365		—		156,097,436
Grade 2		9,143,754		4,075,681		36,840		—		13,256,275
Grade 3		2,300,763		1,332,635		13,677		—		3,647,075
Grade 4		185,305		410,531		13,314		—		609,150
Grade 5		11,485		577,695		544,197		—		1,133,377
		164,511,726		9,613,194		618,393		—		174,743,313
Credit card
Grade 1		7,782,894		90,937		—		—		7,873,831
Grade 2		5,388,635		626,317		—		—		6,014,952
Grade 3		1,848,891		1,238,088		—		—		3,086,979
Grade 4		7,482		136,715		—		—		144,197
Grade 5		3,125		103,153		501,364		—		607,642
		15,031,027		2,195,210		501,364		—		17,727,601
		343,039,568		25,487,609		1,881,402		—		370,408,579
Loans at fair value through other comprehensive income
Corporate
Grade 1		240,254		—		—		—		240,254
Grade 2		110,715		—		—		—		110,715
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		350,969		—		—		—		350,969
		350,969		—		—		—		350,969
	W	343,390,537	W	25,487,609	W	1,881,402	W	—	W	370,759,548

¹ Before netting of allowance

16

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.4 Credit risk of loans (cont’d)

(In millions of Korean won)	December 31, 2019
	The financial instruments applying 12- month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Loans at amortized cost1
Corporate
Grade 1	W	83,839,707	W	2,621,898	W	1,000	W	—	W	86,462,605
Grade 2		58,057,809		4,683,445		7,052		—		62,748,306
Grade 3		2,650,199		2,187,662		4,194		—		4,842,055
Grade 4		518,108		900,386		4,605		—		1,423,099
Grade 5		16,648		355,893		805,938		—		1,178,479
		145,082,471		10,749,284		822,789		—		156,654,544
Retail
Grade 1		146,265,744		3,611,001		8,155		—		149,884,900
Grade 2		7,081,846		4,433,832		29,304		—		11,544,982
Grade 3		2,080,690		1,541,647		11,366		—		3,633,703
Grade 4		185,081		387,811		9,722		—		582,614
Grade 5		10,180		587,448		545,295		—		1,142,923
		155,623,541		10,561,739		603,842		—		166,789,122
Credit card
Grade 1		8,390,177		96,052		—		—		8,486,229
Grade 2		5,695,069		719,065		—		—		6,414,134
Grade 3		1,558,999		1,161,396		—		—		2,720,395
Grade 4		26,404		390,941		—		—		417,345
Grade 5		350		135,630		474,327		—		610,307
		15,670,999		2,503,084		474,327		—		18,648,410
		316,377,011		23,814,107		1,900,958		—		342,092,076
Loans at fair value through other comprehensive income
Corporate
Grade 1		241,524		—		—		—		241,524
Grade 2		133,574		—		—		—		133,574
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		375,098		—		—		—		375,098
		375,098		—		—		—		375,098
	W	316,752,109	W	23,814,107	W	1,900,958	W	—	W	342,467,174

¹ Before netting of allowance

17

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.4 Credit risk of loans (cont’d)

Credit quality of loans graded according to internal credit ratings are as follows:

	Range of Probability of Default (%)	Retail	Corporate
Grade 1	0.0 ~ 1.0	1 ~ 5 grade	AAA ~ BBB+
Grade 2	1.0 ~ 5.0	6 ~ 8 grade	BBB ~ BB
Grade 3	5.0 ~ 15.0	9 ~ 10 grade	BB- ~ B
Grade 4	15.0 ~ 30.0	11 grade	B- ~ CCC
Grade 5	30.0 ~	12 grade or under	CC or under

The quantification of the extent to which collateral and other credit enhancements mitigate credit risk as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				Total
			Non-impaired		Impaired
Guarantees	W	76,590,941	W	4,972,080	W	181,545	W	81,744,566
Deposits and savings		4,277,032		111,721		9,050		4,397,803
Property and equipment		11,120,314		665,869		50,825		11,837,008
Real estate		164,134,705		11,051,794		434,345		175,620,844
	W	256,122,992	W	16,801,464	W	675,765	W	273,600,221

(In millions of Korean won)	December 31, 2019
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				Total
			Non-impaired		Impaired
Guarantees	W	70,183,658	W	3,839,736	W	179,825	W	74,203,219
Deposits and savings		4,478,032		118,221		8,034		4,604,287
Property and equipment		10,014,552		582,109		55,410		10,652,071
Real estate		155,769,901		10,839,595		417,815		167,027,311
	W	240,446,143	W	15,379,661	W	661,084	W	256,486,888

18

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.5 Credit quality of securities

Financial investments excluding equity securities that are exposed to credit risk as of June 30, 2020 and December 31, 2019 are as follows:

(In millions of Korean won)	June 30, 2020
	The financial instruments applying 12- month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Securities at amortized cost1
Grade 1	W	26,597,288	W	—	W	—	W	—	W	26,597,288
Grade 2		84,792		—		—		—		84,792
Grade 3		39,602		7,820		—		—		47,422
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		26,721,682		7,820		—		—		26,729,502
Securities measured at fair value through other comprehensive income
Grade 1		42,110,670		—		—		—		42,110,670
Grade 2		3,507,561		—		—		—		3,507,561
Grade 3		11,200		8,784		—		—		19,984
Grade 4		2,641		—		—		—		2,641
Grade 5		—		—		—		—		—
		45,632,072		8,784		—		—		45,640,856
	W	72,353,754	W	16,604	W	—	W	—	W	72,370,358

¹ Before netting of allowance

19

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.5 Credit quality of securities (cont’d)

(In millions of Korean won)	December 31, 2019
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Securities at amortized cost1
Grade 1	W	25,147,636	W	—	W	—	W	—	W	25,147,636
Grade 2		157,881		—		—		—		157,881
Grade 3		42,710		—		—		—		42,710
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		25,348,227		—		—		—		25,348,227
Securities measured at fair value through other comprehensive income
Grade 1		40,206,856		—		—		—		40,206,856
Grade 2		3,337,327		—		—		—		3,337,327
Grade 3		12,665		—		—		—		12,665
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
		43,556,848		—		—		—		43,556,848
	W	68,905,075	W	—	W	—	W	—	W	68,905,075

¹ Before netting of allowance

The credit qualities of securities, excluding equity securities according to the credit ratings by external rating agencies as of June 30, 2020 and December 31, 2019, are as follows:

Credit quality	Domestic				Foreign
	KIS	NICE P&I	KAP	FnPricing Inc.	S&P	Fitch-IBCA	Moody’s
Grade 1	AA0 to AAA	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-	A- to AA-	BBB- to BBB+	BBB- to BBB+	Baa3 to Baa1
Grade 3	BBB0 to BBB+	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-	BB0 to BBB-	B+ to BB-	B+ to BB-	B1 to Ba3
Grade 5	BB- or under	BB- or under	BB- or under	BB- or under	B or under	B or under	B2 or under

Credit qualities of debt securities denominated in Korean won are based on the lowest credit rating by the domestic credit rating agencies, and those denominated in foreign currencies are based on the lowest credit rating by the foreign credit rating agencies.

20

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.6 Credit risk of due from financial institutions

The credit quality of due from financial institutions as of June 30, 2020 and December 31, 2019, is classified as follows:

(In millions of Korean won)	June 30, 2020
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Due from financial institutions at amortized cost1
Grade 1	W	18,124,524	W	—	W	—	W	—	W	18,124,524
Grade 2		120,074		—		—		—		120,074
Grade 3		453,342		—		—		—		453,342
Grade 4		652,243		—		—		—		652,243
Grade 5		262,286		1,591		330		—		264,207
	W	19,612,469	W	1,591	W	330	W	—	W	19,614,390

¹ Before netting of allowance

(In millions of Korean won)	December 31, 2019
	The financial instruments applying 12- month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Due from financial institutions at amortized cost1
Grade 1	W	17,292,966	W	—	W	—	W	—	W	17,292,966
Grade 2		149,927		—		—		—		149,927
Grade 3		677,249		—		—		—		677,249
Grade 4		—		—		—		—		—
Grade 5		13,991		13,179		360		—		27,530
	W	18,134,133	W	13,179	W	360	W	—	W	18,147,672

¹ Before netting of allowance

The credit qualities of due from financial institutions according to the credit ratings by external rating agencies as of June 30, 2020 and December 31, 2019 is same as the credit qualities of securities, excluding equity securities.

21

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.7 Credit risk concentration analysis

Details of the Group’s loans by jurisdiction as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Retail		Corporate		Credit card		Total		%		Allowances			Carrying amount
Korea	W	173,061,570	W	166,219,827	W	17,724,951	W	357,006,348		95.91	W	(2,391,695	)	W	354,614,653
Europe		—		2,024,015		—		2,024,015		0.54		(8,718	)		2,015,297
China		—		4,757,138		1,182		4,758,320		1.28		(23,709	)		4,734,611
Japan		103		875,106		16		875,225		0.24		(786	)		874,439
United States		—		2,627,880		—		2,627,880		0.71		(17,199	)		2,610,681
Cambodia		1,297,175		2,171,427		—		3,468,602		0.93		(95,135	)		3,373,467
Others		384,465		1,066,306		1,452		1,452,223		0.39		(8,854	)		1,443,369
	W	174,743,313	W	179,741,699	W	17,727,601	W	372,212,613		100.00	W	(2,546,096	)	W	369,666,517

(In millions of Korean won)	December 31, 2019
	Retail		Corporate		Credit card		Total		%		Allowances			Carrying amount
Korea	W	166,310,457	W	149,149,657	W	18,642,111	W	334,102,225		97.44	W	(2,363,332	)	W	331,738,893
Europe		—		1,118,429		—		1,118,429		0.33		(4,181	)		1,114,248
China		—		3,135,501		358		3,135,859		0.91		(20,654	)		3,115,205
Japan		101		647,956		81		648,138		0.19		(576	)		647,562
United States		—		2,333,269		—		2,333,269		0.68		(9,205	)		2,324,064
Others		478,564		1,072,375		5,860		1,556,799		0.45		(10,069	)		1,546,730
	W	166,789,122	W	157,457,187	W	18,648,410	W	342,894,719		100.00	W	(2,408,017	)	W	340,486,702

The above is the Group’s loans at fair value through profit and loss, other comprehensive income or amortized cost.

22

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.7 Credit risk concentration analysis (cont’d)

Details of the Group’s corporate loans by industry as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Loans		%		Allowances			Carrying amount
Financial institutions	W	23,008,281		12.80	W	(18,610	)	W	22,989,671
Manufacturing		46,629,591		25.94		(394,385	)		46,235,206
Service		71,986,923		40.05		(225,353	)		71,761,570
Wholesale & Retail		21,692,081		12.07		(120,664	)		21,571,417
Construction		3,918,864		2.18		(128,411	)		3,790,453
Public sector		1,251,048		0.70		(2,420	)		1,248,628
Others		11,254,911		6.26		(100,253	)		11,154,658
	W	179,741,699		100.00	W	(990,096	)	W	178,751,603

(In millions of Korean won)	December 31, 2019
	Loans		%		Allowances			Carrying amount
Financial institutions	W	16,405,404		10.42	W	(14,819	)	W	16,390,585
Manufacturing		43,265,607		27.48		(394,428	)		42,871,179
Service		65,277,701		41.46		(195,205	)		65,082,496
Wholesale & Retail		18,593,540		11.81		(99,051	)		18,494,489
Construction		3,679,798		2.34		(194,737	)		3,485,061
Public sector		1,250,909		0.79		(2,084	)		1,248,825
Others		8,984,228		5.70		(56,662	)		8,927,566
	W	157,457,187		100.00	W	(956,986	)	W	156,500,201

Types of the Group’s retail and credit card loans as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Loans		%		Allowances			Carrying amount
Housing	W	83,374,415		43.32	W	(55,906	)	W	83,318,509
General		91,368,898		47.47		(765,327	)		90,603,571
Credit card		17,727,601		9.21		(734,767	)		16,992,834
	W	192,470,914		100.00	W	(1,556,000	)	W	190,914,914

(In millions of Korean won)	December 31, 2019
	Loans		%		Allowances			Carrying amount
Housing	W	78,102,637		42.12	W	(34,395	)	W	78,068,242
General		88,686,485		47.83		(676,927	)		88,009,558
Credit card		18,648,410		10.05		(739,709	)		17,908,701
	W	185,437,532		100.00	W	(1,451,031	)	W	183,986,501

23

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.7 Credit risk concentration analysis (cont’d)

Details of the Group’s credit risk concentration of due from financial institutions, securities, excluding equity securities, and derivative financial instruments as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Amount		%		Allowances			Carrying amount
Due from financial institutions at amortized cost
Banking and insurance	W	19,614,390		100.00	W	(4,290	)	W	19,610,100
		19,614,390		100.00		(4,290	)		19,610,100
Due from financial institutions at fair value through profit or loss
Banking and insurance		135,780		100.00		—			135,780
		135,780		100.00		—			135,780
Securities measured at fair value through profit or loss
Government and government funded institutions		16,485,177		29.83		—			16,485,177
Banking and insurance		31,957,494		57.81		—			31,957,494
Others		6,833,082		12.36		—			6,833,082
		55,275,753		100.00		—			55,275,753
Derivatives
Government and government funded institutions		25,747		0.65		—			25,747
Banking and insurance		3,706,201		93.76		—			3,706,201
Others		220,962		5.59		—			220,962
		3,952,910		100.00		—			3,952,910
Securities measured at fair value through other comprehensive income
Government and government funded institutions		16,128,984		35.34		—			16,128,984
Banking and insurance		23,616,866		51.75		—			23,616,866
Others		5,895,006		12.91		—			5,895,006
		45,640,856		100.00		—			45,640,856
Securities at amortized cost
Government and government funded institutions		11,873,576		44.43		(17	)		11,873,559
Banking and insurance		12,875,443		48.17		(1,688	)		12,873,755
Others		1,980,483		7.40		(305	)		1,980,178
		26,729,502		100.00		(2,010	)		26,727,492
	W	151,349,191			W	(6,300	)	W	151,342,891

24

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.7 Credit risk concentration analysis (cont’d)

(In millions of Korean won)	December 31, 2019
	Amount		%		Allowances			Carrying amount
Due from financial institutions at amortized cost
Banking and insurance	W	18,147,672		100.00	W	(4,712	)	W	18,142,960
		18,147,672		100.00		(4,712	)		18,142,960
Due from financial institutions at fair value through profit or loss
Banking and insurance		216,367		100.00		—			216,367
		216,367		100.00		—			216,367
Securities measured at fair value through profit or loss
Government and government funded institutions		11,937,703		23.53		—			11,937,703
Banking and insurance		32,475,354		64.03		—			32,475,354
Others		6,308,469		12.44		—			6,308,469
		50,721,526		100.00		—			50,721,526
Derivatives
Government and government funded institutions		7,330		0.23		—			7,330
Banking and insurance		3,003,371		94.13		—			3,003,371
Others		179,972		5.64		—			179,972
		3,190,673		100.00		—			3,190,673
Securities measured at fair value through other comprehensive income
Government and government funded institutions		16,744,232		38.44		—			16,744,232
Banking and insurance		21,439,272		49.22		—			21,439,272
Others		5,373,344		12.34		—			5,373,344
		43,556,848		100.00		—			43,556,848
Securities at amortized cost
Government and government funded institutions		11,115,435		43.86		(37	)		11,115,398
Banking and insurance		12,279,883		48.44		(1,349	)		12,278,534
Others		1,952,909		7.70		(286	)		1,952,623
		25,348,227		100.00		(1,672	)		25,346,555
	W	141,181,313			W	(6,384	)	W	141,174,929

25

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.7 Credit risk concentration analysis (cont’d)

Details of the Group’s credit risk concentration of due from financial institutions, securities, excluding equity securities, and derivative financial instruments by country, as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Amount		%		Allowances			Carrying amount
Due from financial institutions at amortized cost
Korea	W	13,381,974		68.23	W	(386	)	W	13,381,588
United States		1,412,942		7.20		(2	)		1,412,940
Others		4,819,474		24.57		(3,902	)		4,815,572
		19,614,390		100.00		(4,290	)		19,610,100
Due from financial institutions at fair value through profit or loss
Korea		135,780		100.00		—			135,780
		135,780		100.00		—			135,780
Securities measured at fair value through profit or loss
Korea		50,729,590		91.78		—			50,729,590
United States		2,321,724		4.20		—			2,321,724
Others		2,224,439		4.02		—			2,224,439
		55,275,753		100.00		—			55,275,753
Derivatives
Korea		1,781,546		45.07		—			1,781,546
United States		817,239		20.67		—			817,239
France		395,116		10.00		—			395,116
Others		959,009		24.26		—			959,009
		3,952,910		100.00		—			3,952,910
Securities measured at fair value through other comprehensive income
Korea		42,749,212		93.66		—			42,749,212
United States		486,074		1.06		—			486,074
Others		2,405,570		5.28		—			2,405,570
		45,640,856		100.00		—			45,640,856
Securities at amortized cost
Korea		24,382,723		91.23		(1,410	)		24,381,313
United States		1,260,049		4.71		(232	)		1,259,817
Others		1,086,730		4.06		(368	)		1,086,362
		26,729,502		100.00		(2,010	)		26,727,492
	W	151,349,191			W	(6,300	)	W	151,342,891

26

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.7 Credit risk concentration analysis (cont’d)

(In millions of Korean won)	December 31, 2019
	Amount		%		Allowances			Carrying amount
Due from financial institutions at amortized cost
Korea	W	13,864,687		76.40	W	(555	)	W	13,864,132
United States		1,318,582		7.27		(1	)		1,318,581
Others		2,964,403		16.33		(4,156	)		2,960,247
		18,147,672		100.00		(4,712	)		18,142,960
Due from financial institutions at fair value through profit or loss
Korea		216,367		100.00		—			216,367
		216,367		100.00		—			216,367
Securities measured at fair value through profit or loss
Korea		46,413,061		91.51		—			46,413,061
United States		1,939,330		3.82		—			1,939,330
Others		2,369,135		4.67		—			2,369,135
		50,721,526		100.00		—			50,721,526
Derivatives
Korea		1,440,349		45.14		—			1,440,349
United States		529,956		16.61		—			529,956
France		358,951		11.25		—			358,951
Others		861,417		27.00		—			861,417
		3,190,673		100.00		—			3,190,673
Securities measured at fair value through other comprehensive income
Korea		40,948,853		94.01		—			40,948,853
United States		687,243		1.58		—			687,243
Others		1,920,752		4.41		—			1,920,752
		43,556,848		100.00		—			43,556,848
Securities at amortized cost
Korea		22,591,541		89.12		(1,034	)		22,590,507
United States		1,312,941		5.18		(217	)		1,312,724
Others		1,443,745		5.70		(421	)		1,443,324
		25,348,227		100.00		(1,672	)		25,346,555
	W	141,181,313			W	(6,384	)	W	141,174,929

Due from financial institutions, the financial instruments at fair value through profit or loss that are linked to gold price and derivatives are mostly relevant to financial and insurance industry with high credit ratings.

27

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.3 Liquidity Risk

4.3.1 Overview of liquidity risk

Liquidity risk is a risk that the Group becomes insolvent due to uncertain liquidity caused by unexpected cash outflows, or a risk of borrowing high interest debts or disposal of liquid and other assets at a substantial discount. The Group manages its liquidity risk through analysis of the contractual maturity of interest-bearing assets and liabilities, assets and liabilities related to the other financing, and off-balance sheet items related to cash flow of currency derivative instruments and others.

Cash flows disclosed for the maturity analysis are undiscounted contractual principal and interest to be received (paid) and; thus, are not identical to the amount in the financial statements that are based on the present value of expected cash flows in some cases. The amount of interest to be received or paid on floating rate assets and liabilities is measured on the assumption that the current interest rate would be the same through the maturity.

4.3.2 Liquidity risk management and indicator

The liquidity risk is managed by risk management policy and liquidity risk management guidelines which are applied to the risk management policies and procedures that address all the possible risks that arise from the overall business of the Group.

The Group computes and manages cumulative liquidity gap and liquidity rate subject to all transactions that affect cash flow in Korean won and foreign currencies and off-balance sheet transactions in relation to the liquidity. The Group regularly reports to the Risk Planning Council and Risk Management Committee.

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, are not identical to the amount in the consolidated financial statements that 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 the maturity.

28

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.3.3 Analysis of remaining contractual maturity of financial assets and liabilities (cont’d)

The remaining contractual maturity of financial assets and liabilities, excluding derivatives held for cash flow hedging, as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	On demand		Up to 1 month			1-3 months		3-12 months		1-5 years		Over 5 years		Total
Financial assets
Cash and due from financial institutions1	W	6,214,135	W	1,727,590		W	317,046	W	949,450	W	22,215	W	—	W	9,230,436
Financial assets at fair value through profit or loss		57,686,378		376,738			125,051		114,669		162,914		784,940		59,250,690
Derivatives held for trading2		3,697,541		—			—		—		—		—		3,697,541
Derivatives held for hedging3		219		(1,595	)		44,003		27,470		67,403		92,981		230,481
Loans at amortized cost		2,970,557		36,341,300			36,780,540		127,721,105		110,944,099		98,574,140		413,331,741
Financial investments4
Financial assets measured at fair value through other comprehensive income		1,622,120		1,052,161			1,617,423		8,767,674		30,976,375		6,610,099		50,645,852
Securities at amortized cost		—		1,554,149			1,871,833		5,378,857		8,680,974		15,560,076		33,045,889
Other financial assets		43,339		17,738,136			127,730		1,320,306		52,718		47,231		19,329,460
	W	72,234,289	W	58,788,479		W	40,883,626	W	144,279,531	W	150,906,698	W	121,669,467	W	588,762,090

29

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.3.3 Analysis of remaining contractual maturity of financial assets and liabilities (cont’d)

(In millions of Korean won)	June 30, 2020
	On demand		Up to 1 month		1-3 months		3-12 months		1-5 years		Over 5 years		Total
Financial liabilities
Financial liabilities at fair value through profit or loss2	W	2,129,604	W	—	W	—	W	—	W	—	W	—	W	2,129,604
Financial liabilities designated at fair value through profit or loss2		11,236,833		—		—		—		—		—		11,236,833
Derivatives held for trading2		4,002,410		—		—		—		—		—		4,002,410
Derivatives held for hedging3		—		6,860		14,485		38,348		49,367		398		109,458
Deposits5		160,378,685		18,804,746		33,270,387		105,072,511		11,868,114		2,004,267		331,398,710
Debts		8,188,409		14,021,260		5,041,051		11,786,510		6,916,517		1,234,896		47,188,643
Debentures		20,305		3,332,165		5,584,422		13,787,651		32,477,913		4,961,387		60,163,843
Lease liabilities		29		15,338		34,847		145,512		334,117		67,553		597,396
Other financial liabilities		169,077		28,756,831		197,071		389,002		1,078,619		139,565		30,730,165
	W	186,125,352	W	64,937,200	W	44,142,263	W	131,219,534	W	52,724,647	W	8,408,066	W	487,557,062
Off- balance sheet items
Commitments6		162,568,689		—		—		—		—		—		162,568,689
Acceptances and guarantees contracts		7,961,873		—		—		—		—		—		7,961,873
Financial guarantee contract7		4,625,260		—		—		—		—		—		4,625,260
	W	175,155,822	W	—	W	—	W	—	W	—	W	—	W	175,155,822

¹ The amount of W13,350,446 million, which is restricted due from the financial institutions as of June 30, 2020, is excluded.

²  Financial liabilities measured or designated at fair value through profit or loss and derivatives held for trading are not managed by contractual maturity because they are expected to be traded or redeemed before maturity. Therefore, the carrying amounts of those financial instruments are classified as ‘on demand’ category.

³ Cash flows of derivative instruments held for hedging are shown at net cash flow by remaining contractual maturity.

30

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.3.3 Analysis of remaining contractual maturity of financial assets and liabilities (cont’d)

⁴ The equity securities designated as financial assets measured at fair value through other comprehensive income are included under the ‘on demand’ category as they can be disposed without difficulty. However, the equity securities restricted from disposal are included on the category that the releasing date of restriction is belonged to.

⁵ Deposits that are contractually repayable on demand or on short notice are classified under the ‘on demand’ category.

⁶ Commitments are included under the ‘on demand’ category because payments will be made upon request.

⁷ The financial guarantee contracts are included under the ‘on demand’ category as payments will be made upon request.

(In millions of Korean won)	December 31, 2019
	On demand		Up to 1 month		1-3 months		3-12 months		1-5 years		Over 5 years		Total
Financial assets
Cash and due from financial institutions1	W	5,323,332	W	1,038,805	W	286,091	W	822,123	W	18,628	W	—	W	7,488,979
Financial assets at fair value through profit or loss		52,488,545		446,069		273,144		187,821		236,130		1,011,289		54,642,998
Derivatives held for trading2		3,008,598		—		—		—		—		—		3,008,598
Derivatives held for hedging3		—		4,892		20,216		37,441		41,401		66,176		170,126
Loans at amortized cost		2,908,095		33,042,040		32,668,128		125,125,270		94,802,566		96,757,198		385,303,297
Financial investments4
Financial assets measured at fair value through other comprehensive income		2,101,605		526,465		1,403,884		6,761,533		33,604,010		4,506,581		48,904,078
Securities at amortized cost		—		1,002,164		2,080,834		5,700,500		7,366,945		15,888,344		32,038,787
Other financial assets		71,528		6,578,005		179,790		1,373,850		40,243		35,927		8,279,343
	W	65,901,703	W	42,638,440	W	36,912,087	W	140,008,538	W	136,109,923	W	118,265,515	W	539,836,206

31

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.3.3 Analysis of remaining contractual maturity of financial assets and liabilities (cont’d)

(In millions of Korean won)	December 31, 2019
	On demand		Up to 1 month		1-3 months		3-12 months		1-5 years		Over 5 years		Total
Financial liabilities
Financial liabilities at fair value through profit or loss2	W	2,663,327	W	—	W	—	W	—	W	—	W	—	W	2,663,327
Financial liabilities designated at fair value through profit or loss2		12,704,826		—		—		—		—		—		12,704,826
Derivatives held for trading2		2,842,950		—		—		—		—		—		2,842,950
Derivatives held for hedging3		—		14,764		15,588		1,652		20,044		129		52,177
Deposits5		141,821,986		17,180,492		27,300,542		110,410,809		10,804,440		2,354,504		309,872,773
Debts		7,074,508		12,341,516		3,057,980		8,994,817		4,950,294		1,763,234		38,182,349
Debentures		22,285		2,652,730		3,812,476		11,062,873		32,477,672		3,515,716		53,543,752
Lease liabilities		256		19,304		35,730		137,419		318,781		66,032		577,522
Other financial liabilities		114,320		17,663,385		187,976		212,059		693,921		119,637		18,991,298
	W	167,244,458	W	49,872,191	W	34,410,292	W	130,819,629	W	49,265,152	W	7,819,252	W	439,430,974
Off-balance sheet items
Commitments6		151,797,615		—		—		—		—		—		151,797,615
Acceptances and guarantees contracts		8,327,494												8,327,494
Financial guarantee contract7		3,847,390		—		—		—		—		—		3,847,390
	W	163,972,499	W	—	W	—	W	—	W	—	W	—	W	163,972,499

¹ The amounts of W 13,394,627 million, which is restricted due from the financial institutions as of December 31, 2019, is excluded.

²  Financial liabilities measured or designated at fair value through profit or loss and derivatives held for trading are not managed by contractual maturity because they are expected to be traded or redeemed before maturity. Therefore, the carrying amounts of those financial instruments are classified as ‘on demand’ category.

³ Cash flows of derivative instruments held for hedging are shown at net cash flow by remaining contractual maturity.

32

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.3.3 Analysis of remaining contractual maturity of financial assets and liabilities (cont’d)

⁴ The equity securities designated as financial assets measured at fair value through other comprehensive income are included under the ‘on demand’ category as they can be disposed without difficulty. However, the equity securities restricted from disposal are included on the category that the releasing date of restriction is belonged to.

⁵ Deposits that are contractually repayable on demand or on short notice are classified under the ‘on demand’ category.

⁶ Commitments are included under the ‘on demand’ category because payments will be made upon request.

⁷ The financial guarantee contracts are included under the ‘on demand’ category as payments will be made upon request.

The contractual cash flows of derivatives held for cash flow hedging as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Up to 1 month			1-3 months			3-12 months			1-5 years			Over 5 years			Total
Net cash flow of net-settled derivatives	W	(824	)	W	(8,778	)	W	(20,203	)	W	(29,823	)	W	(178	)	W	(59,806	)
Cash flow to be received of gross-settled derivatives		85,954			25,279			856,566			1,501,571			—			2,469,370
Cash flow to be paid of gross-settled derivatives		(87,356	)		(29,165	)		(891,272	)		(1,576,075	)		—			(2,583,868	)

(In millions of Korean won)	December 31, 2019
	Up to 1 month			1-3 months			3-12 months			1-5 years			Over 5 years		Total
Net cash flow of net-settled derivatives	W	(639	)	W	(1,831	)	W	(5,021	)	W	(10,602	)	W	1,084	W	(17,009	)
Cash flow to be received of gross-settled derivatives		14,119			200,170			657,909			1,888,772			—		2,760,970
Cash flow to be paid of gross-settled derivatives		(18,171	)		(199,141	)		(671,375	)		(1,955,650	)		—		(2,844,337	)

33

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.4 Market Risk

4.4.1 Concept

Market risk represents possible losses which arise from changes in market factors including interest rate, stock price, foreign exchange rate and other market factors that affect the fair value or future cash flows of financial instruments including securities and derivatives amongst others. The most significant risks associated with trading positions are interest rate risks, currency risks and also, 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. The Group measures and manages market risk separately for each subsidiary.

4.4.2 Risk management

The Group sets internal 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 including trading policies and procedures, and market risk management guidelines for trading positions, and interest rate risk management guidelines for non-trading positions in order to manage market risk efficiently. The procedures mentioned are implemented with approval from the Risk Management Committee and Risk Management Council.

Kookmin Bank, one of the subsidiaries, establishes market risk management policy, sets position limits, loss limits and VaR limits of each business group and approves newly developed instruments through its Risk Management Council. The Market Risk Management Committee, 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 Asset-Liability Committee(ALCO) of Kookmin Bank determines the operational standards of interest and commission, the details of the establishment and prosecution of the Asset Liability Management (ALM) policies and enacts and amends relevant guidelines. The Risk Management Committee and Risk Management Council monitor the establishment and enforcement of ALM risk management policies, and enact and amend ALM risk management guidelines. The interest rate risk limit is set based on the future assets/liabilities position and interest rate volatility estimation reflects the annual work plan. The Finance and 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 including interest gap, duration gap and interest rate VaR (Value at Risk), 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 Finance and Planning Department. Also, the Risk Management Department independently reports related information to the management.

34

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.5 Operational Risk

4.5.1 Concept

The Group defines operational risk broadly to include all financial and non-financial risks that may arise from operating activities and could cause a negative effect on capital.

4.5.2 Risk management

The purpose of operational risk management is not only to comply with supervisory and regulatory requirements but also to promote a risk management culture, strengthen internal controls, innovate processes and provide timely feedback to management and employees. In addition, Kookmin Bank established Business Continuity Plans (BCP) to ensure critical business functions can be maintained, or restored, in the event of material disruptions arising from internal or external events. It has constructed replacement facilities as well as has carried out exercise drills for head office and IT departments to test its BCPs.

5. Segment Information

5.1 Overall Segment Information and Business Segments

The Group classifies reporting segments based on the nature of the products and services provided, the type of customer, and the Group’s management organization.

Banking Business	Corporate Banking	Loans, deposit products and other related financial services to large, small and medium-sized enterprises and SOHOs.
	Retail Banking	Loans, deposit products and other related financial services to individuals and households.
	Other Banking Services	Trading activities in securities and derivatives, funding and other supporting activities.
Securities Business		Investment banking, brokerage services and other supporting activities.
Non-life Insurance Business		The activities within this segment include property insurance and other supporting activities.
Credit Card Business		The activities within this segment include credit sale, cash service, card loan and other supporting activities.
Life Insurance Business		Life insurance and other supporting activities.

35

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1 Overall Segment Information and Business Segments (cont’d)

Financial information by business segment for the six-month period ended June 30, 2020, is as follows:

(In millions of Korean won)	2020
	Banking business
	Corporate Banking			Retail Banking			Other Banking Services			Sub-total			Securities			Non-life Insurance			Credit Card			Life Insurance			Others			Intra-group adjustment			Total
Operating revenues from external customers	W	1,208,905		W	1,502,820		W	911,472		W	3,623,197		W	624,783		W	618,349		W	772,651		W	52,932		W	323,016		W	—		W	6,014,928
Intra-segment operating revenues (expenses)		104,606			(276	)		100,052			204,382			(14,159	)		(23,091	)		(92,691	)		(4,714	)		77,014			(146,741	)		—
	W	1,313,511		W	1,502,544		W	1,011,524		W	3,827,579		W	610,624		W	595,258		W	679,960		W	48,218		W	400,030		W	(146,741	)	W	6,014,928
Net interest income	W	1,443,854		W	1,633,400		W	198,458		W	3,275,712		W	244,439		W	306,691		W	624,444		W	72,178		W	158,869		W	915		W	4,683,248
Interest income		2,256,078			2,448,698			565,376			5,270,152			418,634			307,284			803,965			72,242			361,695			(12,225	)		7,221,747
Interest expense		(812,224	)		(815,298	)		(366,918	)		(1,994,440	)		(174,195	)		(593	)		(179,521	)		(64	)		(202,826	)		13,140			(2,538,499	)
Net fee and commission income (expenses)		180,232			214,481			148,336			543,049			399,239			(84,864	)		179,471			(7,410	)		355,253			(3,424	)		1,381,314
Fee and commission income		232,221			266,136			220,195			718,552			459,625			4,250			716,172			71			400,275			(163,575	)		2,135,370
Fee and commission expense		(51,989	)		(51,655	)		(71,859	)		(175,503	)		(60,386	)		(89,114	)		(536,701	)		(7,481	)		(45,022	)		160,151			(754,056	)
Net insurance income (expenses)		—			—			—			—			—			239,445			6,931			(65,564	)		—			(356	)		180,456
Insurance income		—			—			—			—			—			6,075,357			12,952			762,714			—			(13,569	)		6,837,454
Insurance expenses		—			—			—			—			—			(5,835,912	)		(6,021	)		(828,278	)		—			13,213			(6,656,998	)
Net gains (losses) on financial instruments at fair value through profit or loss		(9,130	)		—			207,706			198,576			(66,356	)		114,247			4,305			38,643			35,816			(90,513	)		234,718
Net other operating income (expense)		(301,445	)		(345,337	)		457,024			(189,758	)		33,302			19,739			(135,191	)		10,371			(149,908	)		(53,363	)		(464,808	)

36

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1 Overall Segment Information and Business Segments (cont’d)

(In millions of Korean won)	2020
	Banking business												Securities			Non-life Insurance			Credit Card			Life Insurance			Others			Intra-group adjustment			Total
	Corporate Banking			Retail Banking			Other Banking Services			Sub-total
General and administrative expenses	W	(657,979	)	W	(959,258	)	W	(258,044	)	W	(1,875,281	)	W	(382,731	)	W	(408,328	)	W	(228,696	)	W	(33,678	)	W	(173,227	)	W	56,335		W	(3,045,606	)
Operating profit before provision for credit losses		655,532			543,286			753,480			1,952,298			227,893			186,930			451,264			14,540			226,803			(90,406	)		2,969,322
Provision (reversal) for credit losses		(48,533	)		(158,437	)		(8,997	)		(215,967	)		(23,795	)		3,458			(227,996	)		993			(76,528	)		87			(539,748	)
Net operating income		606,999			384,849			744,483			1,736,331			204,098			190,388			223,268			15,533			150,275			(90,319	)		2,429,574
Share of profit (loss) of associates and joint ventures		—			—			(14,514	)		(14,514	)		1,070			(22	)		674			—			876			(919	)		(12,835	)
Net other non-operating income (expense)		173			184			(11,612	)		(11,255	)		(21,765	)		7,765			(2,464	)		(55	)		20,418			(13,781	)		(21,137	)
Segment profits before income tax		607,172			385,033			718,357			1,710,562			183,403			198,131			221,478			15,478			171,569			(105,019	)		2,395,602
Income tax expense		(170,645	)		(102,746	)		(179,893	)		(453,284	)		(54,556	)		(54,293	)		(57,656	)		(3,694	)		(55,760	)		15,055			(664,188	)
Profit for the period		436,527			282,287			538,464			1,257,278			128,847			143,838			163,822			11,784			115,809			(89,964	)		1,731,414
Profit attributable to shareholders of the Parent Company		436,527			282,287			527,940			1,246,754			128,836			143,955			163,784			11,784			114,669			(98,442	)		1,711,340
Profit (loss) attributable to non-controlling interests		—			—			10,524			10,524			11			(117	)		38			—			1,140			8,478			20,074
Total assets1		153,941,916			157,563,755			113,804,565			425,310,236			56,606,560			37,677,077			23,858,804			9,998,780			44,749,458			(28,724,284	)		569,476,631
Total liabilities1		156,163,536			172,539,863			67,283,813			395,987,212			51,802,355			33,620,095			19,760,541			9,361,900			20,681,842			(2,041,413	)		529,172,532

¹  Assets and liabilities of the reporting segments are amounts before intra-segment transaction adjustment.

37

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1 Overall Segment Information and Business Segments (cont’d)

Financial information by business segment for the six-month period ended June 30, 2019, is as follows:

(In millions of Korean won)	2019
	Banking business
	Corporate Banking			Retail Banking			Other Banking Services			Sub-total			Securities			Non-life Insurance			Credit Card			Life Insurance			Others			Intra-group adjustment			Total
Operating revenues from external customers	W	1,151,486		W	1,551,491		W	723,965		W	3,426,942		W	594,923		W	683,409		W	719,848		W	71,401		W	267,474		W	—		W	5,763,997
Intra-segment operating revenues (expenses)		131,462			—			82,955			214,417			(28,025	)		(47,211	)		(109,510	)		(15,333	)		87,095			(101,433	)		—
	W	1,282,948		W	1,551,491		W	806,920		W	3,641,359		W	566,898		W	636,198		W	610,338		W	56,068		W	354,569		W	(101,433	)	W	5,763,997
Net interest income	W	1,410,222		W	1,582,951		W	146,512		W	3,139,685		W	266,882		W	308,554		W	603,774		W	84,511		W	145,388		W	373		W	4,549,167
Interest income		2,318,643			2,465,625			637,314			5,421,582			424,182			309,313			776,420			84,484			340,714			(16,306	)		7,340,389
Interest expense		(908,421	)		(882,674	)		(490,802	)		(2,281,897	)		(157,300	)		(759	)		(172,646	)		27			(195,326	)		16,679			(2,791,222	)
Net fee and commission income (expenses)		173,309			253,524			151,030			577,863			283,524			(76,730	)		104,851			(8,531	)		253,403			1,298			1,135,678
Fee and commission income		221,852			298,842			216,281			736,975			331,943			3,610			673,462			70			288,882			(157,466	)		1,877,476
Fee and commission expense		(48,543	)		(45,318	)		(65,251	)		(159,112	)		(48,419	)		(80,340	)		(568,611	)		(8,601	)		(35,479	)		158,764			(741,798	)
Net insurance income (expenses)		—			—			—			—			—			279,744			8,012			(53,222	)		—			(3,956	)		230,578
Insurance income		—			—			—			—			—			5,684,091			15,197			470,494			—			(13,563	)		6,156,219
Insurance expenses		—			—			—			—			—			(5,404,347	)		(7,185	)		(523,716	)		—			9,607			(5,925,641	)
Net gains (losses) on financial instruments at fair value through profit or loss		(3,339	)		—			245,729			242,390			(53,585	)		140,096			239			33,595			57,419			(91,069	)		329,085
Net other operating income (expense)		(297,244	)		(284,984	)		263,649			(318,579	)		70,077			(15,466	)		(106,538	)		(285	)		(101,641	)		(8,079	)		(480,511	)

38

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1 Overall Segment Information and Business Segments (cont’d)

(In millions of Korean won)	2019
	Banking business
	Corporate Banking			Retail Banking			Other Banking Services			Sub-total			Securities			Non-life Insurance			Credit Card			Life Insurance			Others			Intra-group adjustment			Total
General and administrative expenses	W	(581,315	)	W	(937,799	)	W	(340,657	)	W	(1,859,771	)	W	(363,314	)	W	(420,008	)	W	(204,378	)	W	(33,372	)	W	(166,034	)	W	46,032		W	(3,000,845	)
Operating profit before provision for credit losses		701,633			613,692			466,263			1,781,588			203,584			216,190			405,960			22,696			188,535			(55,401	)		2,763,152
Provision (reversal) for credit losses		85,457			(105,055	)		(4,575	)		(24,173	)		(5,077	)		3,044			(209,061	)		2,198			(60,703	)		27			(293,745	)
Net operating income		787,090			508,637			461,688			1,757,415			198,507			219,234			196,899			24,894			127,832			(55,374	)		2,469,407
Share of profit (loss) of associates and joint ventures		—			—			4,422			4,422			622			(4	)		408			1			1,963			(2,630	)		4,782
Net other non-operating income (expense)		(65	)		—			3,982			3,917			33,638			9,777			(1,257	)		(145	)		18,796			(14,167	)		50,559
Segment profits before income tax		787,025			508,637			470,092			1,765,754			232,767			229,007			196,050			24,750			148,591			(72,171	)		2,524,748
Income tax expense		(217,210	)		(139,876	)		(103,559	)		(460,645	)		(63,870	)		(62,628	)		(49,950	)		(8,226	)		(48,266	)		6,234			(687,351	)
Profit for the period		569,815			368,761			366,533			1,305,109			168,897			166,379			146,100			16,524			100,325			(65,937	)		1,837,397
Profit attributable to shareholders of the Parent Company		569,815			368,761			366,533			1,305,109			168,890			166,153			146,099			16,524			99,544			(65,475	)		1,836,844
Profit attributable to non-controlling interests		—			—			—			—			7			226			1			—			781			(462	)		553
Total assets1		139,496,393			147,468,173			100,460,472			387,425,038			47,816,512			36,552,368			22,990,115			9,801,904			42,140,936			(28,188,756	)		518,538,117
Total liabilities1		142,063,122			161,834,984			54,522,699			358,420,805			43,131,858			32,689,460			18,925,195			9,186,567			18,675,585			(1,610,678	)		479,418,792

¹  Assets and liabilities of the reporting segments are amounts before intra-segment transaction adjustment as of December 31, 2019.

39

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.2 Services and Geographical Segments

5.2.1 Services information

Operating revenues from external customers for each service for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020		2019
Banking service	W	3,623,197	W	3,426,942
Securities service		624,783		594,923
Non-life Insurance service		618,349		683,409
Credit card service		772,651		719,848
Life insurance service		52,932		71,401
Other service		323,016		267,474
	W	6,014,928	W	5,763,997

5.2.2 Geographical information

Geographical operating revenues from external customers for the six-month periods ended June 30, 2020 and 2019, and major non-current assets as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	2020				2019
	Revenues from external customers		Major non-current assets		Revenues from external customers		Major non-current assets1
Domestic	W	5,814,654	W	9,772,875	W	5,637,176	W	9,515,220
United States		26,268		389,570		25,035		386,724
New Zealand		3,692		2,973		3,270		3,516
China		58,514		17,617		50,314		15,119
Cambodia		79,036		33,667		10,311		7,162
United Kingdom		779		82,801		4,773		85,634
Others		31,985		543,923		33,118		551,039
Intra-group adjustment		—		64,470		—		68,764
	W	6,014,928	W	10,907,896	W	5,763,997	W	10,633,178

¹ Major non-current assets are amounts as of December 31, 2019.

40

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6. Financial Assets and Financial Liabilities

6.1 Classification and Fair Value of Financial Instruments

6.1.1 Carrying amount and fair value of financial assets and liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Carrying amount		Fair value
Financial assets
Cash and due from financial institutions	W	22,509,456	W	22,508,902
Financial assets at fair value through profit or loss		58,652,981		58,652,981
Due from financial institutions		135,780		135,780
Debt securities		55,275,753		55,275,753
Equity securities		1,709,939		1,709,939
Loans		1,453,065		1,453,065
Others		78,444		78,444
Derivatives held for trading		3,697,541		3,697,541
Derivatives held for hedging		255,369		255,369
Loans at amortized cost		367,862,483		369,414,184
Securities at amortized cost		26,727,492		28,343,467
Financial assets measured at fair value through other comprehensive income		48,082,817		48,082,817
Debt securities		45,640,856		45,640,856
Equity securities		2,090,992		2,090,992
Loans		350,969		350,969
Other financial assets		20,291,563		20,291,563
	W	548,079,702	W	551,246,824
Financial liabilities
Financial liabilities at fair value through profit or loss	W	2,129,604	W	2,129,604
Financial liabilities designated at fair value through profit or loss		11,236,833		11,236,833
Derivatives held for trading		4,002,410		4,002,410
Derivatives held for hedging		288,408		288,408
Deposits		327,743,474		328,214,857
Debts		46,917,615		46,958,481
Debentures		57,422,807		58,175,126
Other financial liabilities		34,534,709		34,534,709
	W	484,275,860	W	485,540,428

41

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.1 Carrying amount and fair value of financial assets and liabilities as of June 30, 2020 and December 31, 2019, are as follows: (cont’d)

(In millions of Korean won)	December 31, 2019
	Carrying amount		Fair value
Financial assets
Cash and due from financial institutions	W	20,837,878	W	20,835,235
Financial assets at fair value through profit or loss		53,549,086		53,549,086
Due from financial institutions		216,367		216,367
Debt securities		50,721,526		50,721,526
Equity securities		2,103,843		2,103,843
Loans		427,545		427,545
Others		79,805		79,805
Derivatives held for trading		3,008,598		3,008,598
Derivatives held for hedging		182,075		182,075
Loans at amortized cost		339,684,059		340,836,884
Securities at amortized cost		25,346,555		26,570,494
Financial assets measured at fair value through other comprehensive income		46,436,051		46,436,051
Debt securities		43,556,848		43,556,848
Equity securities		2,504,105		2,504,105
Loans		375,098		375,098
Other financial assets		9,147,059		9,147,059
	W	498,191,361	W	500,565,482
Financial liabilities
Financial liabilities at fair value through profit or loss	W	2,663,327	W	2,663,327
Financial liabilities designated at fair value through profit or loss		12,704,826		12,704,826
Derivatives held for trading		2,842,950		2,842,950
Derivatives held for hedging		164,391		164,391
Deposits		305,592,771		306,048,291
Debts		37,818,860		37,808,944
Debentures		50,935,583		51,558,748
Other financial liabilities		22,629,587		22,629,587
	W	435,352,295	W	436,421,064

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants. For each class of financial assets and financial liabilities, the Group discloses the fair value of that class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is a quoted price in an active market.

42

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.1 Carrying amount and fair value of financial assets and liabilities as of June 30, 2020 and December 31, 2019, are as follows: (cont’d)

Methods of determining fair value for financial instruments are as follows:

Cash and due from financial institutions	The carrying amounts of cash and demand due from financial institutions and payment due from financial institutions are a reasonable approximation of fair values. These financial instruments do not have a fixed maturity and are receivable on demand. Fair value of ordinary due from financial institutions is measured using DCF model (Discounted Cash Flow Model).
Investment securities	The fair value of financial instruments that are quoted in active markets is determined using the quoted prices. Fair value is determined through the use of external professional valuation institution where quoted prices are not available. The institutions use one or more of the following valuation techniques including DCF Model, Free Cash Flow to Equity Model, Comparable Company Analysis, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method.
Loans at amortized cost	DCF model is used to determine the fair value of loans. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at appropriate discount rate.
Derivatives and Financial instruments at fair value through profit or loss	For exchange traded derivatives, quoted price in an active market is used to determine fair value and for OTC derivatives, fair value is determined using valuation techniques. The Group uses internally developed valuation models that are widely used by market participants to determine fair values of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method, the Monte Carlo Simulation, Black-Scholes Model, Hull and White Model, Closed Form and Tree Model or valuation results from independent external professional valuation institution.
Deposits	Carrying amount of demand deposits is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of time deposits is determined using a DCF model. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate.
Debts	Carrying amount of overdraft in foreign currency is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of other debts is determined using a DCF model discounting contractual future cash flows at an appropriate discount rate.
Debentures	Fair value is determined by using the valuations of external professional valuation institution, which are calculated using market inputs.
Other financial assets and liabilities	The carrying amounts are reasonable approximation of fair values. These financial instruments are temporary accounts used for other various transactions and their maturities are relatively short or not defined.

43

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.2 Fair value hierarchy

The Group believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the statement of financial position are appropriate. However, the fair values of the financial instruments recognized in the statement of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.

The Group classifies and discloses fair value of the financial instruments into the three-level hierarchy as follows:

Level 1:	The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2:	The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3:	The fair values are based on unobservable inputs for the asset or liability.

When the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. Assessing the significance of a particular input to the entire measurement requires judgment, taking into account factors specific to the asset or liability. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

44

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.2 Fair value hierarchy (cont’d)

6.1.2.1 Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position

The fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at fair value through profit or loss	W	12,728,285	W	34,580,285	W	11,344,411	W	58,652,981
Due from financial institutions		—		48,157		87,623		135,780
Debt securities		12,058,719		32,659,488		10,557,546		55,275,753
Equity securities		591,122		461,321		657,496		1,709,939
Loans		—		1,411,319		41,746		1,453,065
Others		78,444		—		—		78,444
Derivatives held for trading		132,620		3,034,725		530,196		3,697,541
Derivatives held for hedging		—		255,369		—		255,369
Financial assets measured at fair value through other comprehensive income		12,322,474		34,145,950		1,614,393		48,082,817
Debt securities		11,941,399		33,699,457		—		45,640,856
Equity securities		381,075		129,597		1,580,320		2,090,992
Loans		—		316,896		34,073		350,969
	W	25,183,379	W	72,016,329	W	13,489,000	W	110,688,708
Financial liabilities
Financial liabilities at fair value through profit or loss	W	2,129,604	W	—	W	—	W	2,129,604
Financial liabilities designated at fair value through profit or loss		3,209		765,949		10,467,675		11,236,833
Derivatives held for trading		496,018		3,135,244		371,148		4,002,410
Derivatives held for hedging		—		288,408		—		288,408
	W	2,628,831	W	4,189,601	W	10,838,823	W	17,657,255

45

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.2.1 Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position (cont’d)

(In millions of Korean won)	December 31, 2019
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at fair value through profit or loss	W	11,177,716	W	31,476,070	W	10,895,300	W	53,549,086
Due from financial institutions		—		165,242		51,125		216,367
Debt securities		9,853,733		30,735,027		10,132,766		50,721,526
Equity securities		1,244,178		336,389		523,276		2,103,843
Loans		—		239,412		188,133		427,545
Others		79,805		—		—		79,805
Derivatives held for trading		72,983		2,398,831		536,784		3,008,598
Derivatives held for hedging		—		182,075		—		182,075
Financial assets measured at fair value through other comprehensive income		15,188,993		29,764,660		1,482,398		46,436,051
Debt securities		14,236,566		29,320,282		—		43,556,848
Equity securities		952,427		69,280		1,482,398		2,504,105
Loans		—		375,098		—		375,098
	W	26,439,692	W	63,821,636	W	12,914,482	W	103,175,810
Financial liabilities
Financial liabilities at fair value through profit or loss	W	2,663,327	W	—	W	—	W	2,663,327
Financial liabilities designated at fair value through profit or loss		492		1,482,302		11,222,032		12,704,826
Derivatives held for trading		157,634		2,458,498		226,818		2,842,950
Derivatives held for hedging		—		164,391		—		164,391
	W	2,821,453	W	4,105,191	W	11,448,850	W	18,375,494

46

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.2.1 Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position (cont’d)

Valuation techniques and the inputs used in the fair value measurement classified as Level 2

Financial assets and liabilities measured at fair value classified as Level 2 in the statements of financial position as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Fair value		Valuation techniques	Inputs
Financial assets
Financial assets at fair value through profit or loss	W	34,580,285
Due from financial institutions		48,157	DCF Model	Discount rate, Volatility and others
Debt securities		32,659,488	DCF Model, Closed Form, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model, Net Asset Value Method and others	Projected cash flow, Fair value of underlying asset, Dividend yield, Price of underlying asset, Interest rate, Discount rate, Volatility, Correlation coefficient and others
Equity securities		461,321	DCF Model	Interest rate, Discount rate and others
Loans		1,411,319	DCF Model	Interest rate, Discount rate and others
Derivatives held for trading		3,034,725	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and others	Discount rate, Underlying asset Index, Volatility, Correlation coefficient, Interest rate, Stock price, Foreign exchange rate, Dividend yield, Probability of default (PD), Credit spread and others
Derivatives held for hedging		255,369	DCF Model, Closed Form, FDM and others	Discount rate, Volatility, Foreign exchange rate and others
Financial assets measured at fair value through other comprehensive income		34,145,950
Debt securities		33,699,457	DCF Model, Market value approach	Discount rate, Underlying asset Index, Volatility and others
Equity securities		129,597	DCF Model, Black-Scholes Model	Discount rate, Underlying asset Index, Volatility and others
Loans		316,896	DCF Model	Discount rate, Underlying asset Index, Volatility and others
	W	72,016,329
Financial liabilities
Financial liabilities designated at fair value through profit or loss	W	765,949	DCF Model, Closed Form, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model, Binomial Model and others	Price of underlying asset, Interest rate, Dividend yield, Volatility, Discount rate and others
Derivatives held for trading		3,135,244	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and others	Interest rate, Price of underlying asset, Foreign exchange rate, Credit spread, Discount rate, Volatility and others
Derivatives held for hedging		288,408	DCF Model, Closed Form, FDM and others	Discount rate, Volatility, Foreign exchange rate and others
	W	4,189,601

47

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.2.1 Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position (cont’d)

(In millions of Korean won)	December 31, 2019
	Fair value		Valuation techniques	Inputs
Financial assets
Financial assets at fair value through profit or loss	W	31,476,070
Due from financial institutions		165,242	DCF Model, One factor Hull-White Model	Discount rate, Volatility and others
Debt securities		30,735,027	DCF Model, Closed Form, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model, Net Asset Value Method and others	Projected cash flow, Fair value of underlying asset, Dividend yield, Price of underlying asset, Interest rate, Discount rate, Volatility, Correlation coefficient and others
Equity securities		336,389	DCF Model	Interest rate, Discount rate and others
Loans		239,412	DCF Model	Interest rate, Discount rate and others
Derivatives held for trading		2,398,831	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and others	Discount rate, Underlying asset Index, Volatility, Correlation coefficient, Interest rate, Stock price, Foreign exchange rate, Dividend yield, Probability of default (PD), Credit spread and others
Derivatives held for hedging		182,075	DCF Model, Closed Form, FDM and others	Discount rate, Volatility, Foreign exchange rate and others
Financial assets measured at fair value through other comprehensive income		29,764,660
Debt securities		29,320,282	DCF Model, Market value approach	Discount rate, Underlying asset Index, Volatility and others
Equity securities		69,280	DCF Model, Black-Scholes Model	Discount rate, Underlying asset Index, Volatility and others
Loans		375,098	DCF Model	Discount rate, Underlying asset Index, Volatility and others
	W	63,821,636
Financial liabilities
Financial liabilities designated at fair value through profit or loss	W	1,482,302	DCF Model, Closed Form, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and others	Price of underlying asset, Interest rate, Dividend yield, Volatility, Discount rate and others
Derivatives held for trading		2,458,498	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and others	Discount rate, Underlying asset Index, Volatility, Correlation coefficient, Interest rate, Stock price, Foreign exchange rate, Dividend yield, Probability of default (PD), Credit spread and others
Derivatives held for hedging		164,391	DCF Model, Closed Form, FDM and others	Discount rate, Volatility, Foreign exchange rate and others
	W	4,105,191

48

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed

The fair value hierarchy of financial assets and liabilities whose fair values are disclosed as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Fair value hierarchy						Total
	Level 1		Level 2		Level 3
Financial assets
Cash and due from financial institutions1	W	3,932,797	W	16,125,319	W	2,450,786	W	22,508,902
Loans at amortized cost		—		345,578		369,068,606		369,414,184
Securities at amortized cost		8,999,906		19,340,433		3,128		28,343,467
Other financial assets2		—		—		20,291,563		20,291,563
	W	12,932,703	W	35,811,330	W	391,814,083	W	440,558,116
Financial liabilities
Deposits1	W	—	W	160,072,701	W	168,142,156	W	328,214,857
Debts3		—		1,496,317		45,462,164		46,958,481
Debentures		—		52,946,884		5,228,242		58,175,126
Other financial liabilities2		—		—		34,534,709		34,534,709
	W	—	W	214,515,902	W	253,367,271	W	467,883,173

¹ The amounts included in Level 2 are the carrying amounts which are reasonable approximations of the fair values.

² Other financial assets and other financial liabilities included in Level 3 are the carrying amounts which are reasonable approximation of fair values as of June 30, 2020.

³ Debts of W 301 million included in Level 2 is the carrying amounts which are reasonable approximation of fair values as of June 30, 2020.

49

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed (cont’d)

(In millions of Korean won)	December 31, 2019
	Fair value hierarchy						Total
	Level 1		Level 2		Level 3
Financial assets
Cash and due from financial institutions1	W	3,015,104	W	13,812,640	W	4,007,491	W	20,835,235
Loans at amortized cost		—		372,988		340,463,896		340,836,884
Securities at amortized cost		9,587,770		16,979,656		3,068		26,570,494
Other financial assets2		—		—		9,147,059		9,147,059
	W	12,602,874	W	31,165,284	W	353,621,514	W	397,389,672
Financial liabilities
Deposits1	W	—	W	142,021,800	W	164,026,491	W	306,048,291
Debts3		—		1,469,263		36,339,681		37,808,944
Debentures		—		46,969,992		4,588,756		51,558,748
Other financial liabilities2		—		—		22,629,587		22,629,587
	W	—	W	190,461,055	W	227,584,515	W	418,045,570

¹ The amounts included in Level 2 are the carrying amounts which are reasonable approximations of the fair values.

² Other financial assets and other financial liabilities included in Level 3 are the carrying amounts which are reasonable approximation of fair values as of December 31, 2019.

³ Debts of W 4,685 million included in Level 2 is the carrying amounts which are reasonable approximation of fair values as of December 31, 2019.

50

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed (cont’d)

Valuation techniques and the inputs used in the fair value measurement

Financial assets and liabilities whose carrying amount is a reasonable approximation of fair value are not subject to disclose valuation techniques and inputs.

Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 2 as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Fair value		Valuation technique	Inputs
Financial assets
Loans at amortized cost	W	345,578	DCF Model	Discount rate
Securities at amortized cost		19,340,433	DCF Model, Monte Carlo Simulation	Discount rate, Interest rate
Financial liabilities
Debts		1,496,016	DCF Model	Discount rate
Debentures		52,946,884	DCF Model	Discount rate

(In millions of Korean won)	December 31, 2019
	Fair value		Valuation technique		Inputs
Financial assets
Loans at amortized cost	W	372,988		DCF Model		Discount rate
Securities at amortized cost		16,979,656		DCF Model, Monte Carlo Simulation		Discount rate, Interest rate
Financial liabilities
Debts		1,464,578		DCF Model		Discount rate
Debentures		46,969,992		DCF Model		Discount rate

51

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed (cont’d)

Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 3 as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Fair value		Valuation technique		Inputs
Financial assets
Cash and due from financial institutions	W	2,450,786		DCF Model		Credit spread, Other spread, Interest rates
Loans at amortized cost		369,068,606		DCF Model		Credit spread, Other spread, Early termination ratio, Interest rates
Securities at amortized cost		3,128		DCF Model		Interest rates
	W	371,522,520
Financial liabilities
Deposits	W	168,142,156		DCF Model		Other spread, Interest rates, Early termination ratio
Debts		45,462,164		DCF Model		Other spread, Interest rates
Debentures		5,228,242		DCF Model		Other spread, Interest rates
	W	218,832,562

52

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed (cont’d)

(In millions of Korean won)	December 31, 2019
	Fair value		Valuation technique	Inputs
Financial assets
Cash and due from financial institutions	W	4,007,491	DCF Model	Credit spread, Other spread, Interest rates
Loans at amortized cost		340,463,896	DCF Model	Credit spread, Other spread, Early termination ratio, Interest rates
Securities at amortized cost		3,068	DCF Model	Interest rates
	W	344,474,455
Financial liabilities
Deposits	W	164,026,491	DCF Model	Other spread, Interest rates, Early termination ratio
Debts		36,339,681	DCF Model	Other spread, Interest rates
Debentures		4,588,756	DCF Model	Other spread, Interest rates
	W	204,954,928

6.2 Level 3 of the Fair Value Hierarchy Disclosure

6.2.1 Valuation policy and process for fair value measurement categorized within Level 3

The Group uses external, independent and qualified third-party valuation service in addition to internal valuation models to determine the fair value of the Group’s assets at the end of every reporting period.

Where a reclassification between the levels of the fair value hierarchy occurs for a financial asset or liability, the Group’s policy is to recognize such transfers as having occurred at the beginning of the reporting period.

53

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.2 Changes in fair value (Level 3) measured using valuation technique based on unobservable in market

Details of changes in Level 3 of the fair value hierarchy for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Financial assets at fair value through profit or loss									Financial investments					Financial liabilities at fair value through profit or loss			Net derivatives financial instruments
	Cash and due from financial institutions at fair value through profit or loss			Securities measured at fair value through profit or loss			Loans at fair value through profit or loss			Equity securities at fair value through other comprehensive income		Loans measured at fair value through other comprehensive income			Financial liabilities designated at fair value through profit or loss			Derivatives held for trading			Derivatives held for fair value hedging
Beginning	W	51,125		W	10,656,042		W	188,133		W	1,482,398	W	—		W	(11,222,032	)	W	309,966		W	—
Total gains or losses
- Profit or loss		(2,098	)		(322,341	)		1,618			—		—			126,649			28,180			—
- Other comprehensive income		(10,075	)		16,487			—			66,601		(227	)		16,408			146			—
Purchases		135,227			2,275,056			—			21,112		40,000			—			1,345			—
Sales		(86,556	)		(1,347,197	)		(148,005	)		—		(5,700	)		—			(148,875	)		—
Issues		—			—			—			—		—			(4,402,573	)		(17,962	)		—
Settlements		—			—			—			—		—			5,013,873			78			—
Transfers into Level 31		—			(13,922	)		—			10,209		—			—			—			—
Transfers out of Level 31		—			(49,083	)		—			—		—			—			(13,830	)		—
Ending	W	87,623		W	11,215,042		W	41,746		W	1,580,320	W	34,073		W	(10,467,675	)	W	159,048		W	—

¹  The changes in levels for the financial instruments occurred due to the change in the availability of observable market data.

54

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.2 Changes in fair value (Level 3) measured using valuation technique based on unobservable in market (cont’d)

(In millions of Korean won)	2019
	Financial assets at fair value through profit or loss								Financial investments			Financial liabilities at fair value through profit or loss			Net derivatives financial instruments
	Cash and due from financial institutions at fair value through profit or loss		Securities measured at fair value through profit or loss			Loans at fair value through profit or loss			Financial assets measured at fair value through other comprehensive income			Financial liabilities designated at fair value through profit or loss			Derivatives held for trading			Derivatives held for fair value hedging
Beginning	W	48,743	W	7,464,860		W	213,203		W	1,332,718		W	(10,873,383	)	W	(300,131	)	W	—
Total gains or losses
- Profit or loss		1,183		107,980			5,860			—			(1,040,285	)		551,575			—
- Other comprehensive income (loss)		1,334		63,113			—			52,664			(35,826	)		—			—
Purchases		—		1,797,516			154,005			140			—			—			—
Sales		—		(738,102	)		(62,200	)		(795	)		—			(117,438	)		—
Issues		—		—			—			—			(6,766,734	)		(36,832	)		—
Settlements		—		—			—			—			6,136,646			(1,933	)		—
Transfers into Level 31		—		181			—			—			—			—			—
Transfers out of Level 31		—		(83,730	)		—			—			—			—			—
Ending	W	51,260	W	8,611,818		W	310,868		W	1,384,727		W	(12,579,582	)	W	95,241		W	—

¹  The changes in levels for the financial instruments occurred due to the change in the availability of observable market data.

55

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.2 Changes in fair value (Level 3) measured using valuation technique based on unobservable in market (cont’d)

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 included in profit or loss for financial instruments held at the end of the reporting period in the statements of comprehensive income for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020							2019
	Net income (loss) from financial investments at fair value through profit or loss			Other operating income		Net interest income		Net loss from financial investments at fair value through profit or loss			Other operating income		Net interest income
Total gains or losses included in profit or loss for the period	W	(203,109	)	W	35,117	W	—	W	(376,123	)	W	2,414	W	22
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period		105,296			30,562		—		(174,330	)		1,922		(54	)

56

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.3 Sensitivity analysis of changes in unobservable inputs

6.2.3.1 Information about fair value measurements using unobservable inputs as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Fair value		Valuation technique	Unobservable inputs	Range of unobservable inputs (%)	Relationship of unobservable inputs to fair value
Financial assets
Financial assets at fair value through profit or loss
Cash and due from financial institutions		W87,623	Monte Carlo Simulation	Volatility of the underlying asset	18.68 ~ 34.70	The higher the volatility, the higher the fair value fluctuation
				Correlation coefficient	8.31	The higher the correlation coefficient, the higher the fair value fluctuation
Debt securities		10,557,546	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull-White Model, Black-Scholes Model, Binomial Model, Net Asset Value Method, Income approach, Market approach and others	Growth rate	0.00 ~ 2.00	The higher the growth rate, the higher the fair value
				Volatility	8.00 ~ 182.01	The higher the volatility, the higher the fair value fluctuation
				Discount rate	0.00 ~ 21.99	The lower the discount rate, the higher the fair value
				Recovery rate	40.00	The higher the recovery rate, the higher the fair value
				Correlation coefficient between underlying asset	-14.29 ~ 92.86	The higher the correlation coefficient, the higher the fair value fluctuation
				Liquidation value	0.00	The higher the liquidation value, the higher the fair value
				Fluctuation rate of real estate sale price	-1.00 ~ 1.00	The higher the price of real estate, the higher the fair value

57

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.3.1 Information about fair value measurements using unobservable inputs as of June 30, 2020 and December 31, 2019, are as follows: (cont’d)

(In millions of Korean won)	June 30, 2020
	Fair value		Valuation technique	Unobservable inputs	Range of unobservable inputs (%)	Relationship of unobservable inputs to fair value
Equity securities	W	657,496	Income approach, Market approach, Asset value approach, DCF Model, Comparable Company Analysis, Adjusted discount rate method, Dividend Discount Model, Usage of past transactions, Binomial Model and others	Growth rate	0.00 ~ 1.10	The higher the growth rate, the higher the fair value
				Discount rate	1.22 ~ 19.16	The lower the discount rate, the higher the fair value
				Liquidation value	-1.00 ~ 1.00	The higher the liquidation value, the higher the fair value
Loans		41,746	Binomial Model, DCF Model	Volatility of the stock price	0.00 ~ 0.00	The higher the volatility, the higher the fair value fluctuation
				Discount rate	7.62	The lower the discount rate, the higher the fair value
Derivatives held for trading Stock and index		419,700	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Binomial Model	Volatility of the underlying asset	20.00 ~ 140.00	The higher the volatility, the higher the fair value fluctuation
				Correlation coefficient between underlying asset	11.50 ~ 92.86	The higher the correlation coefficient, the higher the fair value fluctuation
Others		110,496	DCF Model, Hull-White Model	Volatility	8.00 ~ 140.00	The higher the volatility, the higher the fair value fluctuation
Financial assets measured at fair value through other comprehensive income
Equity securities		1,580,320	Adjusted discount rate method, IMV Model, DCF Model, Comparable Company Analysis, Dividend discount model, Option Model, Net Asset Value Method, Market approach, One Factor Hull-White Model and others	Growth rate	0.00 ~ 2.00	The higher the growth rate, the higher the fair value
				Discount rate	7.20 ~ 17.92	The lower the discount rate, the higher the fair value
				Volatility	32.91 ~ 37.88	The higher the volatility, the higher the fair value fluctuation
Loans		34,073	DCF Model	Discount rate	1.69 ~ 3.69	The lower the discount rate, the higher the fair value
	W	13,489,000

58

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.3.1 Information about fair value measurements using unobservable inputs as of June 30, 2020 and December 31, 2019, are as follows: (cont’d)

(In millions of Korean won)	June 30, 2020
	Fair value		Valuation technique	Unobservable inputs	Range of unobservable inputs (%)	Relationship of unobservable inputs to fair value
Financial liabilities
Financial liabilities designated at fair value through profit or loss
Derivative-linked securities	W	10,467,675	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model	Volatility of the underlying asset	1.00 ~ 140.00	The higher the volatility, the higher the fair value fluctuation
				Correlation coefficient between underlying asset	-49.98 ~ 92.86	The higher the absolute value of correlation coefficient, the higher the fair value fluctuation
Derivatives held for trading
Stock and index		232,744	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Binomial Model	Volatility	20.00 ~ 140.00	The higher the volatility, the higher the fair value fluctuation
				Correlation coefficient between underlying asset	8.68 ~ 92.86	The higher the correlation coefficient, the higher the fair value fluctuation
Others		138,404	Monte Carlo Simulation, Hull and White Model, DCF Model, Closed Form	Volatility	8.00 ~ 140.00	The higher the volatility, the higher the fair value fluctuation
				Discount rate	1.55 ~ 1.66	The higher the discount rate, the higher the fair value
				Correlation coefficient between underlying asset	18.66 ~ 90.16	The higher the absolute value of correlation coefficient, the higher the fair value fluctuation
	W	10,838,823

59

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.3.1 Information about fair value measurements using unobservable inputs as of June 30, 2020 and December 31, 2019, are as follows: (cont’d)

(In millions of Korean won)	December 31, 2019
	Fair value		Valuation technique	Unobservable inputs	Range of unobservable inputs(%)	Relationship of unobservable inputs to fair value
Financial assets
Financial assets at fair value through profit or loss
Cash and due from financial institutions	W	51,125	Monte Carlo Simulation	Volatility of the underlying asset	11.43~34.39	The higher the volatility, the higher the fair value fluctuation
				Correlation coefficient	-4.84	The higher the correlation coefficient, the higher the fair value fluctuation
Debt securities		10,132,766	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull-White Model, Black-Scholes Model, Binomial Model, Net Asset Value, Income approach, Market approach and others	Growth rate	-1.00~1.00	The higher the growth rate, the higher the fair value
				Volatility	1.00~48.00	The higher the volatility, the higher the fair value fluctuation
				Discount rate	0.75~17.37	The lower the discount rate, the higher the fair value
				Recovery rate	40.00	The higher the recovery rate, the higher the fair value
				Correlation coefficient between underlying asset	3.11~95.67	The higher the correlation coefficient, the higher the fair value fluctuation
				Liquidation value	0.00	The higher the liquidation value, the higher the fair value
				Volatility of real estate price	-1.00~1.00	The higher the price of real estate, the higher the fair value
Equity securities		523,276	Income approach, Market approach, Asset value approach, DCF Model, Comparable Company Analysis, Adjusted discount rate method, Dividend Discount Model, Usage of past transactions, Binomial Model and others	Growth rate	0.00~2.20	The higher the growth rate, the higher the fair value
				Discount rate	2.00~22.00	The lower the discount rate, the higher the fair value
				Liquidation value	-1.00~1.00	The higher the liquidation value, the higher the fair value
				Volatility	11.90	The higher the volatility, the higher the fair value fluctuation
Loans		188,133	Binomial Model, DCF Model	Volatility of the stock price	12.91~48.28	The higher the volatility, the higher the fair value fluctuation
				Discount rate	10.81	The lower the discount rate, the higher the fair value

60

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.3.1 Information about fair value measurements using unobservable inputs as of June 30, 2020 and December 31, 2019, are as follows: (cont’d)

(In millions of Korean won)	December 31, 2019
	Fair value		Valuation technique	Unobservable inputs	Range of unobservable inputs (%)	Relationship of unobservable inputs to fair value
Derivatives held for trading Stock and index	W	416,486	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Binomial Model	Volatility of the underlying asset	9.75~52.00	The higher the volatility, the higher the fair value fluctuation
				Correlation coefficient between underlying asset	4.00~77.00	The higher the correlation coefficient, the higher the fair value fluctuation
Others		120,298	DCF Model, Hull-White Model	Volatility	2.00~58.00	The higher the volatility, the higher the fair value fluctuation
				Correlation coefficient between underlying asset	-49.00~90.00	The higher the absolute value of correlation coefficient, the higher the fair value fluctuation
Financial assets measured at fair value through other comprehensive income
Equity securities		1,482,398	Adjusted discount rate method, IMV Model, DCF Model, Comparable Company Analysis, Dividend discount model, Net Asset value method, Market approach, One Factor Hull-White Model and others	Growth rate	0.00~2.20	The higher the growth rate, the higher the fair value
				Discount rate	3.04~16.37	The lower the discount rate, the higher the fair value
				Volatility	20.97~34.87	The higher the volatility, the higher the fair value fluctuation
	W	12,914,482

61

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.3.1 Information about fair value measurements using unobservable inputs as of June 30, 2020 and December 31, 2019, are as follows: (cont’d)

(In millions of Korean won)	December 31, 2019
	Fair value		Valuation technique	Unobservable inputs	Range of unobservable inputs (%)	Relationship of unobservable inputs to fair value
Financial liabilities
Financial liabilities designated at fair value through profit or loss
Derivative-linked securities	W	11,222,032	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model	Volatility of the underlying asset	1.00~58.00	The higher the volatility, the higher the fair value fluctuation
				Correlation coefficient between underlying asset	-49.00~90.00	The higher the absolute value of correlation coefficient, the higher the fair value fluctuation
Derivatives held for trading
Stock and index		54,341	DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Binomial Model	Volatility	12.00~52.00	The higher the volatility, the higher the fair value fluctuation
				Correlation coefficient between underlying asset	9.00~77.00	The higher the correlation coefficient, the higher the fair value fluctuation
Others		172,477	Monte Carlo Simulation, Hull and White Model, DCF Model, Closed Form	Volatility	2.00~58.00	The higher the volatility, the higher the fair value fluctuation
				Volatility of the stock price	16.28	The higher the volatility, the higher the fair value fluctuation
				Volatility of the interest rate	0.52	The higher the volatility, the higher the fair value fluctuation
				Discount rate	1.94~2.00	The higher the discount rate, the lower the fair value
				Correlation coefficient between underlying asset	19.00~90.00	The higher the absolute value of correlation coefficient, the higher the fair value fluctuation
	W	11,448,850

62

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.3.2 Sensitivity analysis of changes in unobservable inputs

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of financial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair value is affected by more than two input parameters, the amounts represent the most favorable or most unfavorable Level 3 financial instruments subject to sensitivity analysis are (i) equity-related derivatives, currency-related derivatives and interest rate related derivatives whose fair value changes are recognized in profit or loss, (ii) financial liabilities designated at fair value through profit or loss, and (iii) due from financial institutions, debt securities (including beneficiary certificates), equity securities and loan receivables whose fair value changes are recognized in profit or loss or other comprehensive income. If overlay approach is applied in accordance with Korean IFRS 1104, changes in fair value of financial assets at fair value through profit or loss are recognized as other comprehensive income.

The results of the sensitivity analysis from changes in inputs are as follows:

(In millions of Korean won)	June 30, 2020
	Recognition in profit or loss					Other comprehensive income
	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Financial assets
Financial assets at fair value through profit or loss 1
Due from financial institutions	W	21	W	(46	)	W	—	W	—
Debt securities 4		34,087		(34,761	)		—		—
Equity securities 3		22,076		(11,119	)		—		—
Loans5		3,493		(3,099	)		—		—
Derivatives held for trading 2		25,858		(25,872	)		—		—
Financial assets measured at fair value through other comprehensive income
Equity securities 3		—		—			138,057		(74,500	)
Loans 6		—		—			818		(792	)
	W	85,535	W	(74,897	)	W	138,875	W	(75,292	)
Financial liabilities
Financial liabilities designated at fair value through profit or loss 1	W	126,061	W	(132,403	)	W	—	W	—
Derivatives held for trading 2		67,782		(66,054	)		—		—
	W	193,843	W	(198,457	)	W	—	W	—

63

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.2.3.2 Sensitivity analysis of changes in unobservable inputs (cont’d)

(In millions of Korean won)	December 31, 2019
	Recognition in profit or loss					Other comprehensive income
	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Financial assets
Financial assets at fair value through profit or loss 1
Due from financial institutions	W	3	W	(3	)	W	2	W	(2	)
Debt securities 4		30,771		(27,062	)		2,341		(2,276	)
Equity securities 3		24,456		(10,251	)		1,110		(824	)
Loans5		6,362		(4,344	)		—		—
Derivatives held for trading 2		25,830		(29,317	)		—		—
Financial assets measured at fair value through other comprehensive income
Equity securities 3		—		—			214,268		(110,687	)
	W	87,422	W	(70,977	)	W	217,721	W	(113,789	)
Financial liabilities
Financial liabilities designated at fair value through profit or loss 1	W	49,730	W	(44,136	)	W	—	W	—
Derivatives held for trading 2		14,638		(13,572	)		—		—
	W	64,368	W	(57,708	)	W	—	W	—

¹  For financial instruments at fair value through profit or loss, the changes in fair value are calculated by shifting principal unobservable input parameters such as volatility of the underlying asset or correlation between underlying asset by ± 10%.

²  For derivatives financial instruments, the changes in fair value are calculated by shifting principal unobservable input parameters; such as, price of underlying asset, volatility of stock price, interest rate by ± 10% and the loss given default ratio, discount rate by ± 1%

³  For equity securities, the changes in fair value are calculated by shifting principal unobservable input parameters; such as, correlation between growth rate (0~1%) and discount rate (-1~1%) or between liquidation value(-1~1%) and discount rate (-1~1%).

⁴  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%).

⁵ For loans, the changes in fair value are calculated by shifting principal unobservable input parameters such as stock price, volatility of stock price(-10~10%), discount rate(-1~1%).

⁶ For loans measured at fair value through other comprehensive income, the changes in fair value are calculated by shifting principal unobservable input parameters such as discount rate, volatility of the underlying asset 1%, growth rate 10%.

64

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

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. When the fair value of the financial instruments is subsequently determined using observable market inputs, the remaining deferred amount is recognized in profit or loss.

The aggregate 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 for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020			2019
Balance at the beginning of the period	W	45,767		W	62,155
New transactions and others		108,468			88,238
Changes during the period		(20,528	)		(85,699	)
Balance at the end of the period	W	133,707		W	64,694

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 June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	2020
	Financial instruments at fair value through profit or loss		Financial assets measured at fair value through other comprehensive income		Financial instruments designated at fair value through other comprehensive income		Financial instruments at amortized cost		Derivatives held for hedging		Total
Financial assets
Cash and due from financial institutions	W	—	W	—	W	—	W	22,509,456	W	—	W	22,509,456
Financial assets at fair value through profit or loss		58,652,981		—		—		—		—		58,652,981
Derivatives		3,697,541		—		—		—		255,369		3,952,910
Loans at amortized cost		—		—		—		367,862,483		—		367,862,483
Financial investments		—		45,991,825		2,090,992		26,727,492		—		74,810,309
Other financial assets		—		—		—		20,291,563		—		20,291,563
	W	62,350,522	W	45,991,825	W	2,090,992	W	437,390,994	W	255,369	W	548,079,702

65

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6.3 Carrying Amounts of Financial Instruments by Category (cont’d)

(In millions of Korean won)	2020
	Financial instruments at fair value through profit or loss		Financial instruments designated at fair value through profit or loss		Financial instruments at amortized cost		Derivatives held for hedging		Total
Financial liabilities
Financial liabilities at fair value through profit or loss	W	2,129,604	W	11,236,833	W	—	W	—	W	13,366,437
Derivatives		4,002,410		—		—		288,408		4,290,818
Deposits		—		—		327,743,474		—		327,743,474
Debts		—		—		46,917,615		—		46,917,615
Debentures		—		—		57,422,807		—		57,422,807
Other financial liabilities		—		—		34,534,709		—		34,534,709
	W	6,132,014	W	11,236,833	W	466,618,605	W	288,408	W	484,275,860

(In millions of Korean won)	2019
	Financial instruments at fair value through profit or loss		Financial assets measured at fair value through other comprehensive income		Financial instruments designated at fair value through other comprehensive income		Financial instruments at amortized cost		Derivatives held for hedging		Total
Financial assets
Cash and due from financial institutions	W	—	W	—	W	—	W	20,837,878	W	—	W	20,837,878
Financial assets at fair value through profit or loss		53,549,086		—		—		—		—		53,549,086
Derivatives		3,008,598		—		—		—		182,075		3,190,673
Loans at amortized cost		—		—		—		339,684,059		—		339,684,059
Financial investments		—		43,931,946		2,504,105		25,346,555		—		71,782,606
Other financial assets		—		—		—		9,147,059		—		9,147,059
	W	56,557,684	W	43,931,946	W	2,504,105	W	395,015,551	W	182,075	W	498,191,361

(In millions of Korean won)	2019
	Financial instruments at fair value through profit or loss		Financial instruments designated at fair value through profit or loss		Financial instruments at amortized cost		Derivatives held for hedging		Total
Financial liabilities
Financial liabilities at fair value through profit or loss	W	2,663,327	W	12,704,826	W	—	W	—	W	15,368,153
Derivatives		2,842,950		—		—		164,391		3,007,341
Deposits		—		—		305,592,771		—		305,592,771
Debts		—		—		37,818,860		—		37,818,860
Debentures		—		—		50,935,583		—		50,935,583
Other financial liabilities		—		—		22,629,587		—		22,629,587
	W	5,506,277	W	12,704,826	W	416,976,801	W	164,391	W	435,352,295

66

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

7. Due from Financial Institutions at Amortized Cost

Details of due from financial institutions as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)		Financial institutions	Interest rate (%)		June 30, 2020		December 31, 2019
Due from financial institutions in Korean won	Due from Bank of Korea	Bank of Korea		0.00 ~ 0.53	W	9,279,614	W	8,117,840
	Due from banking institutions	Daegu Bank and others		0.00 ~ 2.50		2,939,750		4,641,714
	Due from others	NH Investment & Securities CO.,LTD and others		0.00 ~ 0.49		817,998		654,981
						13,037,362		13,414,535
Due from financial institutions in foreign currencies	Due from banking institutions in foreign currencies	WELLS Fargo Bank, N.A. and others		0.00 ~ 0.48		2,971,756		2,351,929
	Time deposits in foreign currencies	China citic bank Beijing beiyuan sub-bra and others		0.00 ~ 7.75		794,647		1,053,776
	Due from others	Sumitomo mitsui banking corporation and others		0.00 ~ 8.00		2,810,625		1,327,432
						6,577,028		4,733,137
					W	19,614,390	W	18,147,672

¹  Before netting of allowance

Restricted cash from financial institutions as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)		Financial Institutions	June 30, 2020		December 31, 2019		Reason for restriction
Due from financial institutions in Korean won	Due from Bank of Korea	Bank of Korea	W	9,279,614	W	8,117,840	Bank of Korea Act
	Due from banking institutions	NH Investment Securities and others		804,445		3,027,963	Net settlement and others
	Due from others	Korea Securities Finance Corporation and others		642,495		555,294	Derivatives margin account and others
				10,726,554		11,701,097
Due from financial institutions in foreign currencies	Due from banking institutions in foreign currencies	Bank of Korea and others		447,869		490,071	Bank of Korea Act and others
	Time deposits in foreign currencies	ICBC NEW YORK and others		44,504		31,443	Bank Act of the State of New York and others
	Due from others	Morganstanley Bank International and others		2,123,141		1,150,355	Derivatives margin account and others
				2,615,514		1,671,869
			W	13,342,068	W	13,372,966

¹  Before netting of allowance

67

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

7. Due from Financial Institutions at Amortized Cost (cont’d)

Changes in the allowances for due from financial institutions

Changes in the allowances for due from financial institutions for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	The financial instruments applying 12- month  expected credit losses		The financial instruments applying lifetime expected credit losses
			Non-impaired			Impaired
Beginning	W	3,164	W	1,188		W	360
Transfer between stages
Transfer to 12-month expected credit losses		—		—			—
Transfer to lifetime expected credit losses		—		—			—
Impairment		—		—			—
Disposal		—		—			—
Provision (reversal of) for credit losses		391		(848	)		—
Business combination		26		—			—
Others (change of currency ratio, etc.)		26		13			(30	)
Ending	W	3,607	W	353		W	330

(In millions of Korean won)	2019
	The financial instruments applying 12- month  expected credit losses		The financial instruments applying lifetime expected credit losses
			Non-impaired		Impaired
Beginning	W	2,019	W	—	W	—
Transfer between stages		—		—		—
Transfer to 12-month expected credit losses		—		—		—
Transfer to lifetime expected credit losses		—		—		—
Impairment		—		—		—
Disposal		—		—		—
Provision for credit losses		95		—		—
Others (change of currency ratio, etc.)		50		—		—
Ending	W	2,164	W	—	W	—

68

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

8. Derivative Financial Instruments and Hedge Accounting

The Group’s derivative operations focus on addressing the needs of the Group’s corporate clients to hedge their risk exposure and to hedge the Group’s risk exposure that results from such client contracts. The Group also engages in derivative trading activities to hedge the interest rate and foreign currency risk exposures that arise from the Group’s own assets and liabilities. In addition, the Group engages in proprietary trading of derivatives within the Group’s 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 interest rate swaps, currency forwards and others to hedge the risk of changes in fair values due to the changes in interest rates and foreign exchange rates of structured debts in Korean won, financial debentures in foreign currencies, and structured deposits in foreign currencies. The Group applies cash flow hedge accounting using interest rate swaps, currency swaps and others to hedge the risk of changes in cash flows of loans at amortized cost and debt instruments in Korean won, financial borrowings in foreign currencies with floating interest rates. In addition, the Group applies net investment hedge accounting by designating financial debentures in foreign currencies and cross currency forwards as hedging instruments to hedge foreign exchange risks on net investments in foreign operations.

69

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

8. Derivative Financial Instruments and Hedge Accounting (cont’d)

Details of derivative financial instruments held for trading as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

	June 30, 2020						December 31, 2019
	Notional amount		Assets		Liabilities		Notional amount		Assets		Liabilities
Interest rate
Forwards	W	570,000	W	—	W	90,744	W	570,000	W	206	W	84,126
Futures1		5,940,802		306		3,125		2,951,770		698		235
Swaps		296,907,832		836,648		867,722		270,091,778		512,145		557,511
Options		17,408,000		409,302		522,199		17,521,156		267,697		379,262
		320,826,634		1,246,256		1,483,790		291,134,704		780,746		1,021,134
Currency
Forwards		82,433,049		1,016,205		696,794		87,373,417		942,632		750,380
Futures1		326,430		1,237		91		107,793		—		349
Swaps		49,205,403		728,732		859,434		46,501,399		606,464		610,275
Options		3,327,468		9,879		21,478		2,789,562		5,438		14,346
		135,292,350		1,756,053		1,577,797		136,772,171		1,554,534		1,375,350
Stock and index
Futures1		1,769,532		3,786		15,755		1,646,785		22,451		20,704
Swaps		5,864,101		484,759		246,682		6,773,467		448,803		86,100
Options		4,254,414		139,787		475,960		5,559,865		99,013		176,141
		11,888,047		628,332		738,397		13,980,117		570,267		282,945
Credit
Swaps		3,750,925		13,643		9,717		4,433,960		19,178		13,659
		3,750,925		13,643		9,717		4,433,960		19,178		13,659
Commodity
Futures1		11,322		99		51		3,281		68		3
Swaps		28,641		929		2,745		105,658		2,948		474
		39,963		1,028		2,796		108,939		3,016		477
Other		1,883,701		52,229		189,913		3,160,013		80,857		149,385
	W	473,681,620	W	3,697,541	W	4,002,410	W	449,589,904	W	3,008,598	W	2,842,950

¹  Gains or losses arising from daily mark-to-market futures are reflected in the margin accounts.

70

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

8. Derivative Financial Instruments and Hedge Accounting (cont’d)

Average price or rate of the nominal cash flow for each type of hedge accounting as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

	June 30, 2020
	1 year		2 years		3 years		4 years		5 years		More than 5 years		Total
Fair value hedge
The nominal of the hedging instrument	W	4,051,243	W	1,700,508	W	714,396	W	608,955	W	1,361,128	W	2,077,818	W	10,514,048
Average rate (%)		1.92		2.43		2.21		2.89		1.75		2.38		2.18
Average price (USD/KRW)		1,174.11		1,134.51		1,151.50		—		—		—		1,168.56
Average price (EUR/KRW)		1,329.26		1,350.01		—		—		—		—		1,330.93
Average price (AUD/KRW)		832.42		—		—		—		—		—		832.42
Cash flow hedge
The nominal of the hedging instrument	W	2,476,290	W	1,776,367	W	895,886	W	338,063	W	151,513	W	150,000	W	5,788,119
Average rate (%)		2.09		2.56		2.82		2.62		1.65		1.64		2.30
Average price (USD/KRW)		1,109.40		1,161.91		1,163.62		1,105.51		1,205.20		—		1,144.18
Average price (EUR/KRW)		1,305.21		1,302.82		1,318.75		—		1,366.00		—		1,308.21
Average price (AUD/KRW)		837.00		—		—		—		—		—		837.00
Average price (SGD/KRW)		829.19		—		—		—		—		—		829.19
Hedge of net investments in foreign operations
The nominal of the hedging instrument	W	255,029	W	26,593	W	—	W	—	W	—	W	—	W	281,622
Average price (USD/KRW)		1,189.77		—		—		—		—		—		1,189.77
Average price (GBP/KRW)		—		1,465.26		—		—		—		—		1,465.26

71

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

8. Derivative Financial Instruments and Hedge Accounting (cont’d)

(In millions of Korean won)

	December 31, 2019
	1 year		2 years		3 years		4 years		5 years		More than 5 years		Total
Fair value hedge
The nominal of the hedging instrument	W	2,649,272	W	1,807,950	W	897,562	W	309,882	W	466,053	W	1,414,570	W	7,545,289
Average rate (%)		2.29		2.70		2.29		3.16		2.50		3.92		2.91
Average price (USD/KRW)		1,149.90		1,138.82		1,094.35		—		—		—		1,146.84
Average price (EUR/KRW)		1,319.66		1,346.38		—		—		—		—		1,327.68
Average price (AUD/KRW)		803.71		—		—		—		—		—		803.71
Cash flow hedge
The nominal of the hedging instrument	W	2,450,918	W	1,199,124	W	1,764,991	W	529,202	W	120,000	W	150,000	W	6,214,235
Average rate (%)		2.64		2.56		2.66		2.79		2.00		1.67		2.59
Average price (USD/KRW)		1,129.58		1,111.66		1,153.15		1,095.73		—		—		1,132.99
Average price (EUR/KRW)		1,305.22		1,306.76		1,312.75		—		—		—		1,306.91
Average price (AUD/KRW)		—		837.00		—		—		—		—		837.00
Average price (SGD/KRW)		815.80		831.49		—		—		—		—		823.54
Hedge of net investments in foreign operations
The nominal of the hedging instrument	W	248,233	W	—	W	27,336	W	—	W	—	W	—	W	275,569
Average price (USD/KRW)		1,151.49		—		—		—		—		—		1,151.49
Average price (GBP/KRW)		—		—		1,465.26		—		—		—		1,465.26

72

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

8. Derivative Financial Instruments and Hedge Accounting (cont’d)

Fair Value Hedge

Details of hedged items designated as fair value hedge as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)		June 30, 2020
		Carrying amount				Accumulated adjusted amount				Changes in the fair value
		Assets		Liabilities		Assets		Liabilities
Hedge accounting
Interest rate	Debt securities in KRW	W	775,914	W	—	W	12,172	W	—	W	6,686
	Debt securities in foreign currencies		2,495,293		—		87,630		—		70,654
	Deposits in foreign currencies		—		425,247		—		5,002		(18,263	)
	Debts in KRW		—		2,460,221		—		30,221		(9,151	)
	Debts in foreign currencies		—		2,816,541		—		114,966		(73,560	)
			3,271,207		5,702,009		99,802		150,189		(23,634	)
Currency	Debt securities in foreign currencies		1,929,919		—		66,464		—		97,837
			1,929,919		—		66,464		—		97,837
		W	5,201,126	W	5,702,009	W	166,266	W	150,189	W	74,203

(In millions of Korean won)		December 31, 2019
		Carrying amount				Accumulated adjusted amount					Changes in the fair value1
		Assets		Liabilities		Assets		Liabilities
Hedge accounting
Interest rate	Debt securities in KRW	W	549,526	W	—	W	5,485	W	—		W	4,160
	Debt securities in foreign currencies		1,670,838		—		19,243		—			26,187
	Deposits in foreign currencies		—		780,491		—		(18,391	)		(59,141	)
	Debts in KRW		—		351,070		—		21,070			(2,876	)
	Debts in foreign currencies		—		2,067,556		—		41,406			(59,054	)
			2,220,364		3,199,117		24,728		44,085			(90,724	)
Currency	Debt securities in foreign currencies		2,339,239		—		24,181		—			69,170
			2,339,239		—		24,181		—			69,170
		W	4,559,603	W	3,199,117	W	48,909	W	44,085		W	(21,554	)

¹ Fair value changes in the six-month period ended June 30, 2019

73

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

8. Derivative Financial Instruments and Hedge Accounting (cont’d)

Details of derivative instruments designated as fair value hedge as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
	June 30, 2020
	National amount		Assets		Liabilities		Changes in the fair value1
Interest rate
Swaps	W	8,684,964	W	225,288	W	70,138	W	24,889
Currency
Forwards		1,829,084		5,085		44,678		(88,458	)
	W	10,514,048	W	230,373	W	114,816	W	(63,569	)

(In millions of Korean won)
	December 31, 2019
	National amount		Assets		Liabilities		Changes in the fair value1
Interest rate
Swaps	W	5,326,500	W	129,085	W	29,676	W	97,718
Currency
Forwards		2,218,789		22,503		27,862		(67,389	)
	W	7,545,289	W	151,588	W	57,538	W	30,329

¹ Fair value changes in the six-month period ended June 30, 2019

Details of hedge ineffectiveness recognized in profit or loss from derivatives for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	Hedge ineffectiveness recognized in profit or loss
	2020		2019
From hedge accounting
Interest rate	W	1,255	W	6,993
Currency rate		9,379		1,781
	W	10,634	W	8,774

Gains and losses from fair value hedging instruments and hedged items attributable to the hedged risk for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020			2019
Gains (losses) on hedging instruments	W	(48,023	)	W	22,464
Gains (losses) on the hedged items attributable to the hedged risk		69,829			(21,441	)
	W	21,806		W	1,023

74

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

8. Derivative Financial Instruments and Hedge Accounting (cont’d)

Cash Flow Hedge

Details of hedged items in cash flow hedge as of June 30, 2020 and December 31, 2019 are as follows:

(In millions of Korean won)
	June 30, 2020					December 31, 2019
	Changes in fair value		Other comprehensive income for cash flow hedge			Changes in fair value1		Other comprehensive income for cash flow hedge
Hedge accounting
Interest rate risk	W	35,714	W	(40,538	)	W	33,751	W	(15,670	)
Foreign currency change risk		46,976		(25,980	)		52,519		(11,663	)
	W	82,690	W	(66,518	)	W	86,270	W	(27,333	)

¹ Fair value changes in the six-month period ended June 30, 2019

Details of derivative instruments designated as cash flow hedge as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
	June 30, 2020
	National amount		Assets		Liabilities		Changes in the fair value
Interest rate
Swaps	W	3,433,180	W	13	W	61,019	W	(35,737	)
Currency
Swaps		2,354,939		21,410		106,130		(46,054	)
	W	5,788,119	W	21,423	W	167,149	W	(81,791	)

(In millions of Korean won)
	December 31, 2019
	National amount		Assets		Liabilities		Changes in the fair value1
Interest rate
Swaps	W	3,600,334	W	3,698	W	28,484	W	(31,419	)
Currency
Swaps		2,613,901		23,382		73,067		(51,942	)
	W	6,214,235	W	27,080	W	101,551	W	(83,361	)

¹ Fair value changes in the six-month period ended June 30, 2019

75

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

8. Derivative Financial Instruments and Hedge Accounting (cont’d)

Gains and losses from cash flow hedging instruments and hedged items attributable to the hedged risk for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020			2019
Losses on hedging instruments	W	(81,791	)	W	(83,361	)
Losses on effectiveness (amount recognized in other comprehensive income)		(82,317	)		(83,665	)
Gains on ineffectiveness (amount recognized in profit or loss)	W	526		W	304

Amounts recognized in other comprehensive income and reclassified from equity to profit or loss for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020			2019
Amount recognized in other comprehensive income	W	(82,317	)	W	(83,665	)
Amount reclassified from equity to profit or loss		29,457			31,735
Tax effect		13,674			13,572
Amount recognized in other comprehensive income net of tax	W	(39,186	)	W	(38,358	)

Hedge on Net Investments in Foreign Operations

Details of hedged items in hedge on foreign operation net investments hedge as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Changes in fair value			Other comprehensive income for hedge on net investment in a foreign operation
Hedge accounting
Currency (foreign currency change risk)	W	(358	)	W	(40,699	)

(In millions of Korean won)	December 31, 2019
	Changes in fair value1		Other comprehensive income for hedge on net investment in a foreign operation
Hedge accounting
Currency (foreign currency change risk)	W	12,388	W	(41,992	)

¹ Fair value changes in the six-month period ended June 30, 2019

76

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

8. Derivative Financial Instruments and Hedge Accounting (cont’d)

Details of financial instruments designated as hedging instruments in hedge on net investments in foreign operations as of June 30, 2020 and December 31, 2019, is as follows:

(In millions of Korean won)
	June 30, 2020
	Nominal amount		Assets		Liabilities		Changes in the fair value
Currency
Forwards	W	281,622	W	3,573	W	6,444	W	(8,189	)
Financial debentures in foreign currencies		701,209		—		701,209		8,547
	W	982,831	W	3,573	W	707,653	W	358

(In millions of Korean won)
	December 31, 2019
	Nominal amount		Assets		Liabilities		Changes in the fair value1
Currency
Forwards	W	275,569	W	3,407	W	5,302	W	(9,182	)
Swap		—		—		—		(110	)
Financial debentures in foreign currencies		97,255		—		97,255		(3,096	)
	W	372,824	W	3,407	W	102,557	W	(12,388	)

¹ Fair value changes in the six-month period ended June 30, 2019

The fair value of non-derivative financial instruments designated as hedging instruments as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Financial debentures in foreign currencies	W	702,400	W	97,737

Gain or loss from hedging instruments in hedge of net investments in foreign operations and hedged items attributable to the hedged risk for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020		2019
Gains (losses) on hedging instruments	W	358	W	(12,388	)
Effective portion of gains (losses) on hedge on net investment in a foreign operation (amount recognized in other comprehensive income)		358		(12,388	)

77

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

8. Derivative Financial Instruments and Hedge Accounting (cont’d)

The effective portion of gains (losses) on hedging instruments recognized in other comprehensive income for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020		2019
Amount recognized in other comprehensive income	W	358	W	(12,388	)
Amount of other comprehensive income reclassified to profit or loss		—		1,317
Tax effect		935		3,045
Amount recognized in other comprehensive income, net of tax	W	1,293	W	(8,026	)

9. Loans at Amortized Cost

Details of loans as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020			December 31, 2019
Loans at amortized cost	W	369,694,473		W	341,363,805
Deferred loan origination fees and costs		714,106			728,270
Less: Allowances for loan losses		(2,546,096	)		(2,408,016	)
Carrying amount	W	367,862,483		W	339,684,059

Details of loans for other banks as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020			December 31, 2019
Loans at amortized cost	W	8,516,192		W	4,011,246
Less: Allowances for loan losses		(786	)		(432	)
Carrying amount	W	8,515,406		W	4,010,814

78

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

9. Loans at Amortized Cost (cont’d)

Details of loan types and customer types of loans to customers, other than banks, as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Retail			Corporate			Credit card			Total
Loans in Korean won	W	165,715,091		W	141,900,832		W	—		W	307,615,923
Loans in foreign currencies		1,646,489			13,407,463			—			15,053,952
Domestic import usance bills		—			2,651,335			—			2,651,335
Off-shore funding loans		—			1,366,481			—			1,366,481
Call loans		—			1,078,099			—			1,078,099
Bills bought in Korean won		—			384			—			384
Bills bought in foreign currencies		—			984,364			—			984,364
Guarantee payments under payment guarantee		22			7,539			—			7,561
Credit card receivables in Korean won		—			—			17,724,951			17,724,951
Credit card receivables in foreign currencies		—			—			2,650			2,650
Reverse repurchase agreements		—			6,240,988			—			6,240,988
Privately placed bonds		—			1,458,266			—			1,458,266
Factored receivables		108			21			—			129
Lease receivables		1,238,697			281,039			—			1,519,736
Loans for installment credit		6,142,906			44,662			—			6,187,568
		174,743,313			169,421,473			17,727,601			361,892,387
Proportion (%)		48.29			46.81			4.90			100
Less: Allowances		(821,233	)		(989,310	)		(734,767	)		(2,545,310	)
	W	173,922,080		W	168,432,163		W	16,992,834		W	359,347,077

79

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

9. Loans at Amortized Cost (cont’d)

(In millions of Korean won)	December 31, 2019
	Retail			Corporate			Credit card			Total
Loans in Korean won	W	159,232,495		W	130,383,260		W	—		W	289,615,755
Loans in foreign currencies		433,399			8,125,029			—			8,558,428
Domestic import usance bills		—			2,617,862			—			2,617,862
Off-shore funding loans		—			1,387,798			—			1,387,798
Call loans		—			610,001			—			610,001
Bills bought in Korean won		—			2,843			—			2,843
Bills bought in foreign currencies		—			2,158,877			—			2,158,877
Guarantee payments under payment guarantee		36			3,312			—			3,348
Credit card receivables in Korean won		—			—			18,642,111			18,642,111
Credit card receivables in foreign currencies		—			—			6,299			6,299
Reverse repurchase agreements		—			6,149,458			—			6,149,458
Privately placed bonds		—			971,414			—			971,414
Factored receivables		117			167			—			284
Lease receivables		1,385,617			194,576			—			1,580,193
Loans for installment credit		5,737,458			38,700			—			5,776,158
		166,789,122			152,643,297			18,648,410			338,080,829
Proportion (%)		49.33			45.15			5.52			100.00
Less: Allowances		(711,322	)		(956,554	)		(739,708	)		(2,407,584	)
	W	166,077,800		W	151,686,743		W	17,908,702		W	335,673,245

80

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

10. Allowances for Loan Losses

Changes in the allowances for loan losses for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Retails									Corporates									Credit cards
	The financial instruments applying 12- month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying 12- month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying 12- month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired			Impaired						Non-impaired			Impaired						Non-impaired			Impaired
Beginning	W	278,380		W	224,905		W	208,036		W	215,069		W	290,309		W	451,608		W	209,651		W	266,183		W	263,876
Transfer between stages
Transfer to 12-month expected credit losses		77,506			(76,670	)		(836	)		50,288			(42,839	)		(7,449	)		46,480			(45,874	)		(606	)
Transfer to lifetime expected credit losses		(62,350	)		77,819			(15,469	)		(45,568	)		102,224			(56,656	)		(25,279	)		26,386			(1,107	)
Impairment		(3,282	)		(48,446	)		51,728			(3,004	)		(21,412	)		24,416			(2,268	)		(21,233	)		23,501
Write-offs		—			—			(229,734	)		—			—			(96,237	)		—			—			(265,534	)
Disposal		(636	)		(42	)		(913	)		—			—			(8,865	)		—			—			—
Provision (reversal) for loan losses1,2,3		39,159			66,494			203,695			17,156			(21,015	)		73,064			7,673			(5,688	)		265,342
Business combination		32,534			506			2,542			56,768			1,485			6,752			—			—			—
Others (change of currency ratio, etc.)		(2,093	)		578			(2,178	)		2,997			2,146			(1,141	)		—			—			(6,736	)
Ending	W	359,218		W	245,144		W	216,871		W	293,706		W	310,898		W	385,492		W	236,257		W	219,774		W	278,736

¹ Provision for credit losses in the statement of comprehensive income also include provision (reversal) for due from financial institutions (Note 7), and provision (reversal) for securities (Note 11), provision for unused commitments and guarantees (Note 22), provision (reversal) for financial guarantees contracts (Note 22), and provision (reversal) for other financial assets (Note 17).

²  Includes W172,410 million of recover from write-offs

³  Includes provision related to COVID-19; Retails W57,755 million (forward-looking recalculation W57,750 million, lifetime expected credit losses(Non-impaired) W5 million), Corporates W 73,296 million (forward-looking recalculation W36,929 million, lifetime expected credit losses(Non-impaired) W20,267 million), Individual assessment W 16,100 million, Credit cards W 24,479 million (forward-looking recalculation W 24,479 million)

81

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

10. Allowances for Loan Losses (cont’d)

(In millions of Korean won)	2019
	Retails									Corporates									Credit cards
	The financial instruments applying 12- month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying 12- month expected credit losses			The financial instruments applying lifetime expected credit losses						The financial instruments applying 12- month expected credit losses			The financial instruments applying lifetime expected credit losses
				Non-impaired			Impaired						Non-impaired			Impaired						Non-impaired			Impaired
Beginning	W	237,440		W	215,743		W	189,714		W	214,312		W	318,656		W	722,875		W	180,467		W	290,025		W	240,449
Transfer between stages
Transfer to 12-month expected credit losses		61,688			(61,410	)		(278	)		37,417			(23,933	)		(13,484	)		48,023			(47,351	)		(672	)
Transfer to lifetime expected credit losses		(46,500	)		59,013			(12,513	)		(25,345	)		47,761			(22,416	)		(25,960	)		27,132			(1,172	)
Impairment		(1,127	)		(45,219	)		46,346			(1,420	)		(27,453	)		28,873			(1,972	)		(22,700	)		24,672
Write-offs		(2	)		26			(206,109	)		—			2			(108,947	)		—			—			(257,053	)
Disposal		(448	)		(16	)		(606	)		—			—			(5,887	)		—			—			(40	)
Provision (reversal) for loan losses1,2		2,030			44,030			193,248			(12,729	)		(17,426	)		(23,642	)		(14,898	)		21,468			254,106
Others (change of currency ratio, etc.)		42			103			(671	)		544			176			(865	)		—			—			(4,956	)
Ending	W	253,123		W	212,270		W	209,131		W	212,779		W	297,783		W	576,507		W	185,660		W	268,574		W	255,334

¹  Provision for credit losses in statements of comprehensive income also include provision (reversal) for due from financial institutions (Note 7), and provision (reversal) for securities (Note 11), provision for unused commitments and guarantees (Note 22), provision (reversal) for financial guarantees contracts (Note 22), and provision (reversal) for other financial assets (Note 17).

²  Included W173,621 million from recover from write-offs.

82

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

10. Allowances for Loan Losses (cont’d)

The Group manages the written-off loans that their legal extinctive prescription did not meet, and that are not collected; the balance of those are respectively W 11,266,673 million and W 11,264,785 million as of June 30, 2020 and December 31, 2019.

Changes in the book amount of loans at amortized cost for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	12-month expected credit losses			Lifetime expected credit losses
				Non-impaired			Impaired
Beginning	W	316,377,009		W	23,814,108		W	1,900,958
Transfer between stages
Transfer to 12-month expected credit losses		15,231,664			(15,168,720	)		(62,944	)
Transfer to lifetime expected credit losses (non-impaired)		(19,462,075	)		19,790,612			(328,537	)
Transfer to lifetime expected credit losses (impaired)		(278,738	)		(1,027,943	)		1,306,681
Write-offs		—			—			(591,505	)
Disposal		(4,275,193	)		(17,400	)		(86,045	)
Business combination		3,083,489			69,103			13,790
Net increase (decrease) (Execution, repayment and others)		32,522,904			(2,132,017	)		(270,622	)
Ending	W	343,199,060		W	25,327,743		W	1,881,776

(In millions of Korean won)	2019
	12-month expected credit losses			Lifetime expected credit losses
				Non-impaired			Impaired
Beginning	W	293,296,370		W	26,417,165		W	2,097,749
Transfer between stages
Transfer to 12-month expected credit losses		6,072,086			(6,050,681	)		(21,405	)
Transfer to lifetime expected credit losses (non-impaired)		(10,130,540	)		10,229,927			(99,387	)
Transfer to lifetime expected credit losses (impaired)		(406,917	)		(678,406	)		1,085,323
Write-offs		(2	)		29			(572,110	)
Disposal		(880,647	)		(13,013	)		(76,328	)
Net increase (decrease) (Execution, repayment and others)		10,589,568			(3,127,635	)		(359,524	)
Ending	W	298,539,918		W	26,777,386		W	2,054,318

83

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

11. Financial Assets at Fair Value through Profit or Loss and Financial Investments

Details of financial assets at fair value through profit or loss and financial investments as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020			December 31, 2019
Financial assets at fair value through profit or loss
Debt securities:
Government and public bonds	W	9,842,715		W	6,569,472
Financial bonds		14,944,298			16,360,495
Corporate bonds		4,033,344			3,218,480
Asset-backed securities		136,640			124,898
Beneficiary certificates		13,802,721			12,375,326
Derivatives linked securities		3,091,343			3,623,648
Other debt securities		9,424,692			8,449,207
Equity securities:
Stocks		1,197,796			1,716,149
Other equity securities		512,143			387,694
Loans:
Private placed corporate bonds		133,583			265,499
Other loans		1,319,482			162,046
Due from financial institutions:
Other due from financial institutions		135,780			216,367
Others		78,444			79,805
	W	58,652,981		W	53,549,086
Financial Investments
Financial assets measured at fair value through other comprehensive income
Debt securities:
Government and public bonds	W	7,341,342		W	9,501,642
Financial bonds		22,298,445			20,913,361
Corporate bonds		14,327,493			12,289,820
Asset-backed securities		1,518,941			832,160
Other debt securities		154,635			19,865
Equity securities:
Stocks		1,891,689			2,377,994
Equity investments		34,256			41,042
Other equity securities		165,047			85,069
Loans:
Private placed corporate bonds		316,896			375,098
Other loans		34,073			—
		48,082,817			46,436,051
Financial assets at amortized cost
Debt securities:
Government and public bonds		5,846,351			5,395,720
Financial bonds		6,931,939			8,157,428
Corporate bonds		7,884,192			7,536,805
Asset-backed securities		6,036,983			4,258,274
Other debt securities		30,037
Allowance		(2,010	)		(1,672	)
		26,727,492			25,346,555
	W	74,810,309		W	71,782,606

84

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

11. Financial Assets at Fair Value through Profit or Loss and Financial Investments (cont’d)

Dividend incomes from the equity securities measured at fair value through other comprehensive income for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020				2019
	From the financial asset derecognized		From the remaining financial asset		From the financial asset derecognized		From the remaining financial asset
Equity securities at fair value through other comprehensive income
Stocks
Listed	W	7,000	W	8,685	W	—	W	18,732
Unlisted		—		20,253		—		24,950
Equity investments		—		261		—		—
Other equity securities		—		1,872		—		1,470
	W	7,000	W	31,071	W	—	W	45,152

The derecognized equity securities, measured at fair value through other comprehensive income for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020				2019
	Disposal price		Accumulated OCI as of disposal date		Disposal price		Accumulated OCI as of disposal date
Equity securities at fair value through other comprehensive income
Stocks
Listed	W	503,243	W	331,842	W	12,308	W	(25,278	)
Unlisted		—		—		737		(114	)
	W	503,243	W	331,842	W	13,045	W	(25,392	)

Provision (reversal) for the allowance of financial investments for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Provision		Reversal of impairment			Total
Securities measured at fair value through other comprehensive income	W	1,140	W	(142	)	W	998
Loans measured at fair value through other comprehensive income		104		(261	)		(157	)
Securities measured at amortized cost		692		(356	)		336
	W	1,936	W	(759	)	W	1,177

(In millions of Korean won)	2019
	Provision		Reversal of impairment			Total
Securities measured at fair value through other comprehensive income	W	1,353	W	(762	)	W	591
Loans measured at fair value through other comprehensive income		761		(140	)		621
Securities measured at amortized cost		174		(115	)		59
	W	2,288	W	(1,017	)	W	1,271

85

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

11. Financial Assets at Fair Value through Profit or Loss and Financial Investments (cont’d)

Changes in the allowances for financial investments for the six-month periods ended June 30, 2020 and 2019 are as follows:

(In millions of Korean won)	2020
	12-month expected credit losses			Lifetime expected credit losses
				Non-impaired			Impaired
Beginning	W	5,370		W	—		W	—
Transfer between stages
Transfer to 12-month expected credit losses		(5	)		5			—
Transfer to lifetime expected credit losses		—			—			—
Impairment		—			—			—
Disposal		(467	)		—			—
Provision (reversal) for loan losses		1,108			70			—
Others (change of currency ratio, etc.)		38			(1	)		73
Ending	W	6,044		W	74		W	73

(In millions of Korean won)	2019
	12-month expected credit losses			Lifetime expected credit losses
				Non-impaired			Impaired
Beginning	W	5,657		W	192		W	322
Transfer between stages
Transfer to 12-month expected credit losses		437			(189	)		(249	)
Transfer to lifetime expected credit losses		(669	)		669			—
Impairment		—			—			—
Disposal		(214	)		(229	)		—
Provision (reversal) for loan losses		606			665			—
Others (change of currency ratio, etc.)		39			259			—
Ending	W	5,856		W	1,367		W	73

86

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures

Investments in associates and joint ventures as of June 30, 2020 and December 31, 2019, are as follows:

(in millions of Korean won)	June 30, 2020
	Ownership (%)		Acquisition cost		Share of net asset amount			Carrying amount		Industry	Location
Associates
KB Pre IPO Secondary Venture Fund 1st1		15.19	W	551	W	1,101		W	1,101	Investment finance	Korea
KB GwS Private Securities Investment Trust		26.74		113,880		140,645			138,799	Investment finance	Korea
KB-KDBC Pre-IPO New Technology Business investment Fund2		66.66		19,001		18,312			18,312	Investment finance	Korea
KB Star office Private real estate Investment Trust No.1		21.05		20,000		20,071			20,071	Investment finance	Korea
PT Bank Bukopin TBK5,6		22.00		116,422		96,577			102,703	Banking and foreign exchange transaction	Indonesia
Balhae Infrastructure Company1		12.61		105,643		101,327			101,327	Investment finance	Korea
Aju Good Technology Venture Fund		38.46		19,998		22,533			22,533	Investment finance	Korea
SY Auto Capital Co., Ltd.		49.00		9,800		18,384			15,269	Installment loan	Korea
Incheon Bridge Co., Ltd.1		14.99		9,158		(15,830	)		—	Operation of highways and related facilities	Korea
Big Dipper Co., Ltd.		29.33		440		49			147	Big data consulting	Korea
Paycoms Co., Ltd.1,3		11.70		800		13			36	System software publishing	Korea
Food Factory Co., Ltd.4		22.22		1,000		349			1,209	Farm product distribution industry	Korea
KBSP Private Equity Fund IV1,2		14.95		6,100		6,010			6,010	Investment finance	Korea
KB Private Equity FundIII 1		15.69		8,000		7,715			7,715	Investment finance	Korea
Korea Credit Bureau Co., Ltd.1		9.00		4,500		6,584			6,584	Credit information	Korea
KoFC POSCO HANHWA KB shared growth Private Equity Fund No.2		25.00		9,739		9,550			9,740	Investment finance	Korea
Keystone-Hyundai Securities No. 1 Private Equity Fund1		4.49		1,908		1,620			1,620	Investment finance	Korea
KB Social Impact Fund		30.00		1,500		1,421			1,421	Investment finance	Korea
KB-Solidus Global Healthcare Fund		43.33		50,627		48,864			49,560	Investment finance	Korea
POSCO-KB Shipbuilding Fund		31.25		10,375		11,201			11,201	Investment finance	Korea
KBTS Technology Venture Private Equity Fund2		56.00		19,824		19,243			19,243	Investment finance	Korea
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund2		42.55		21,250		20,971			20,221	Investment finance	Korea
KB-SJ Tourism Venture Fund1,2		18.52		4,000		3,697			3,697	Investment finance	Korea
UNION Media Commerce Fund		28.99		1,000		960			960	Investment finance	Korea
KB-Stonebridge Secondary Private Equity Fund1		14.56		6,748		6,326			6,326	Investment finance	Korea
KB SPROTT Renewable Private Equity FundI		37.69		4,349		3,788			3,788	Investment finance	Korea
KB-UTC Inno-Tech Venture Fund		44.29		10,126		9,861			9,861	Investment finance	Korea

87

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures (cont’d)

(in millions of Korean won)	June 30, 2020
	Ownership (%)		Acquisition cost		Share of net asset amount		Carrying amount		Industry	Location
WJ Private Equity FundI		26.95	W	10,000	W	9,802	W	9,802	Investment finance		Korea
All Together Korea Fund 2		99.99		100,000		100,081		100,081	Asset management		Korea
KB-NAU Special Situation Corporate Restructuring Private Equity Fund1		12.00		1,224		2,328		1,164	Asset management		Korea
Others				2,477		3,363		1,199
			W	690,440	W	676,916	W	691,700

(in millions of Korean won)	December 31, 2019
	Ownership (%)		Acquisition cost		Share of net asset amount			Carrying amount		Industry	Location
Associates
KB Pre IPO Secondary Venture Fund 1st1		15.19	W	1,137	W	1,705		W	1,705	Investment finance	Korea
KB GwS Private Securities Investment Trust		26.74		113,880		138,013			136,168	Investment finance	Korea
KB-KDBC Pre-IPO New Technology Business investment Fund2		66.66		20,000		18,988			18,988	Investment finance	Korea
KB Star office Private real estate Investment Trust No.1		21.05		20,000		19,839			19,839	Investment finance	Korea
PT Bank Bukopin TBK5,6		22.00		116,422		115,321			121,381	Banking and foreign exchange transaction	Indonesia
Balhae Infrastructure Company1		12.61		105,214		101,391			101,391	Investment finance	Korea
Aju Good Technology Venture Fund		38.46		19,998		23,016			23,016	Investment finance	Korea
SY Auto Capital Co., Ltd.		49.00		9,800		17,736			12,725	Installment loan	Korea
Incheon Bridge Co., Ltd.1		14.99		9,158		(14,746	)		—	Operation of highways and related facilities	Korea
Big Dipper Co., Ltd.		29.33		440		10			125	Big data consulting	Korea
Paycoms Co., Ltd.1,3		11.70		800		17			45	System software publishing	Korea
Food Factory Co., Ltd.4		22.22		1,000		398			1,000	Farm product distribution industry	Korea
KBSP Private Equity Fund IV1,2		14.95		6,100		5,904			5,904	Investment finance	Korea
KB Private Equity FundIII1		15.69		8,000		7,754			7,754	Investment finance	Korea
Korea Credit Bureau Co., Ltd.1		9.00		4,500		5,991			5,991	Credit information	Korea
KoFC POSCO HANHWA KB shared growth Private Equity Fund No.2		25.00		12,970		13,616			13,616	Investment finance	Korea
Keystone-Hyundai Securities No. 1 Private Equity Fund1		4.49		1,908		1,625			1,625	Investment finance	Korea
KB Social Impact Fund		30.00		1,500		1,465			1,465	Investment finance	Korea
KB-Solidus Global Healthcare Fund		43.33		42,697		45,021			45,718	Investment finance	Korea

88

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures (cont’d)

(in millions of Korean won)	December 31, 2019
	Ownership (%)		Acquisition cost		Share of net asset amount		Carrying amount		Industry	Location
POSCO-KB Shipbuilding Fund		31.25	W	7,500	W	6,847	W	6,847	Investment finance	Korea
KBTS Technology Venture Private Equity Fund2		56.00		19,824		19,731		19,731	Investment finance	Korea
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund2		42.55		21,250		20,504		19,752	Investment finance	Korea
KB-SJ Tourism Venture Fund1,2		18.52		3,000		2,761		2,761	Investment finance	Korea
UNION Media Commerce Fund		28.99		1,000		961		961	Investment finance	Korea
KB-Stonebridge Secondary Private Equity Fund1		14.56		5,215		4,944		4,944	Investment finance	Korea
KB SPROTT Renewable Private Equity FundI		37.69		1,667		1,295		1,295	Investment finance	Korea
KB-UTC Inno-Tech Venture Fund		44.29		450		417		417	Investment finance	Korea
A-PRO Co., Ltd.1		15.19		1,500		2,565		2,790	Manufacture of electric power storage system	Korea
GH Real Estate I LP		42.00		17,678		19,042		19,042	Asset management	Guernsey
Others				2,505		2,243		1,244
			W	577,113	W	584,374	W	598,240

¹ As of June 30, 2020 and December 31, 2019, the Group is represented on the governing bodies of its associates. Therefore, the Group has a significant influence over the decision-making process relating to their financial and business policies.

²  In order to direct relevant activities, it is necessary to obtain the consent of the two co-operative members; the Group has applied the equity method as the Group cannot control the investee by itself.

³ The ownership of Paycoms Co., Ltd. would be 22.96% and 22.96% as of June 30, 2020 and December 31, 2019, respectively, considering the potential voting rights from convertible bond.

⁴ The ownership of Food Factory Co., Ltd. would be 30.00% and 30.00% as of June 30, 2020 and December 31, 2019, respectively, considering the potential voting rights from convertible bond.

⁵ The Group has entered into an agreement with PT Bosowa Corporindo, the major shareholder of PT Bank Bukopin TBK. Under this agreement, the Group has a right of first refusal, a tag-along right and a drag-along right. The drag-along right can be exercised for the duration of two years after three years from the acquisition date, subject to the occurrence of certain situations as defined in the agreement.

⁶ The fair value of PT Bank Bukopin TBK ordinary share is W 39,783 million and W 47,709 million as of June 30, 2020 and December 31, 2019, respectively.

⁷  In accordance with Korean IFRS 1028 Investments in Associates and Joint Ventures, the Group has applied exemption of equity method for Rainist Co., Ltd. and 20 others, and recognized them as financial assets at fair value through profit or loss.

89

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures (cont’d)

The condensed financial information of major investments in associates and joint ventures as of June 30, 2020 and December 31, 2019, and for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	June 30, 20201
	Total assets		Total liabilities		Share capital		Equity			Share of net asset amount			Unrealized gains (losses)			Consolidated carrying amount
Associates and joint ventures
KB Pre IPO Secondary Venture Fund 1st	W	7,248	W	—	W	5,940	W	7,248		W	1,101		W	—		W	1,101
KB GwS Private Securities Investment Trust		526,219		253		425,814		525,966			140,645			(1,846	)		138,799
KB-KDBC Pre-IPO New Technology Business Investment Fund		27,767		300		28,500		27,467			18,312			—			18,312
KB Star office Private real estate Investment Trust No.1		231,515		122,767		95,000		108,748			20,071			—			20,071
PT Bank Bukopin TBK2		7,412,793		6,973,804		106,536		438,989			96,577			6,126			102,703
Balhae Infrastructure Company		805,703		1,840		838,106		803,863			101,327			—			101,327
Aju Good Technology Venture Fund		59,018		428		52,000		58,590			22,533			—			22,533
SY Auto Capital Co., Ltd.		92,264		54,747		20,000		37,517			18,384			(3,115	)		15,269
Incheon Bridge Co., Ltd.		587,789		693,395		61,096		(105,606	)		(15,830	)		15,830			—
Big Dipper Co., Ltd.		431		234		1,750		197			49			98			147
Paycoms Co., Ltd.		1,850		1,738		855		112			13			23			36
Food Factory Co., Ltd.		6,127		3,789		450		2,338			349			860			1,209
KBSP Private Equity Fund IV		40,215		17		40,800		40,198			6,010			—			6,010
KB Private Equity FundIII		49,186		4		51,000		49,182			7,715			—			7,715
Korea Credit Bureau Co., Ltd.		105,112		31,962		10,000		73,150			6,584			—			6,584
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		41,075		2,876		38,960		38,199			9,550			190			9,740
Keystone-Hyundai Securities No. 1 Private Equity Fund		184,366		135,430		42,837		48,936			1,620			—			1,620
KB Social Impact Fund		4,735		—		5,000		4,735			1,421			—			1,421
KB-Solidus Global Healthcare Fund		113,274		514		80,100		112,760			48,864			696			49,560
POSCO-KB Shipbuilding Fund		36,167		324		33,200		35,843			11,201			—			11,201
KBTS Technology Venture Private Equity Fund		35,491		1,127		35,400		34,364			19,243			—			19,243
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund		49,592		310		51,700		49,282			20,971			(750	)		20,221
KB-SJ Tourism Venture Fund		19,972		5		21,600		19,967			3,697			—			3,697
UNION Media Commerce Fund		3,318		6		3,450		3,312			960			—			960
KB-Stonebridge Secondary Private Equity Fund1		43,914		480		46,330		43,434			6,326			—			6,326
KB SPROTT Renewable Private Equity FundI		10,306		250		11,540		10,056			3,788			—			3,788
KB-UTC Inno-Tech Venture Fund		22,516		254		22,860		22,262			9,861			—			9,861
WJ Private Equity FundI		36,509		144		37,100		36,365			9,802			—			9,802
All Together Korea Fund 2		100,103		12		100,010		100,091			100,081			—			100,081
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		20,113		715		20,400		19,398			2,328			(1,164	)		1,164

90

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures (cont’d)

(In millions of Korean won)	20201
	Operating income		Profit (loss)			Other comprehensive income		Total comprehensive income (loss)			Dividends
Associates and joint ventures
KB Pre IPO Secondary Venture Fund 1st	W	165	W	(119	)	W	—	W	(119	)	W	—
KB GwS Private Securities Investment Trust		24,251		23,763			—		23,763			5,326
KB-KDBC Pre-IPO New Technology Business Investment Fund		29		(275	)		—		(275	)		—
KB Star office Private real estate Investment Trust No.1		2,461		1,104			—		1,104			—
PT Bank Bukopin TBK		283,453		(105,565	)		20,343		(85,222	)		—
Balhae Infrastructure Company		31,356		23,726			—		23,726			3,484
Aju Good Technology Venture Fund		2,569		(1,606	)		—		(1,606	)		—
SY Auto Capital Co., Ltd.		8,611		1,335			—		1,335			—
Incheon Bridge Co., Ltd.		38,054		(8,059	)		—		(8,059	)		—
Big Dipper Co., Ltd.		497		(87	)		—		(87	)		—
Paycoms Co., Ltd.		1,013		(374	)		—		(374	)		—
Food Factory Co., Ltd.		1,970		(46	)		—		(46	)		—
KBSP Private Equity Fund IV		4		708			—		708			—
KB Private Equity FundIII		—		(250	)		—		(250	)		—
Korea Credit Bureau Co., Ltd.		49,321		7,063			—		7,063			89
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		811		(555	)		—		(555	)		—
Keystone-Hyundai Securities No. 1 Private Equity Fund		9,678		(112	)		—		(112	)		—
KB Social Impact Fund		5		(147	)		—		(147	)		—
KB-Solidus Global Healthcare Fund		1,991		(9,431	)		—		(9,431	)		—
POSCO-KB Shipbuilding Fund		5,308		4,732			—		4,732			—
KBTS Technology Venture Private Equity Fund		1,688		1,132			—		1,132			—
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund		895		(1,080	)		—		(1,080	)		—
KB-SJ Tourism Venture Fund		—		(343	)		—		(343	)		—
UNION Media Commerce Fund		—		(2	)		—		(2	)		—
KB-Stonebridge Secondary Private Equity Fund		2		(1,035	)		—		(1,035	)		—
KB SPROTT Renewable Private Equity FundI		—		(498	)		—		(498	)		—
KB-UTC Inno-Tech Venture Fund		—		(523	)		—		(523	)		—
WJ Private Equity FundI		—		(735	)		—		(735	)		—
All Together Korea Fund 2		94		81			—		81			—
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		—		(1,002	)		—		(1,002	)		—

91

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures (cont’d)

(In millions of Korean won)	December 31, 20191
	Total assets		Total liabilities		Share capital		Equity			Share of net asset amount			Unrealized gains (losses)			Consolidated carrying amount
Associates and joint ventures
KB Pre IPO Secondary Venture Fund 1st	W	11,237	W	20	W	8,690	W	11,217		W	1,705		W	—		W	1,705
KB GwS Private Securities Investment Trust		522,865		741		425,814		522,124			138,013			(1,845	)		136,168
KB-KDBC Pre-IPO New Technology Business Investment Fund		29,086		603		30,000		28,483			18,988			—			18,988
KB Star office Private real estate Investment Trust No.1		218,611		122,465		95,000		96,146			19,839			—			19,839
PT Bank Bukopin TBK2		8,148,013		7,623,829		106,536		524,184			115,321			6,060			121,381
RAND Bio Science Co., Ltd.		7,026		74		1,340		6,952			1,037			(1,037	)		—
Balhae Infrastructure Company		806,218		1,854		834,695		804,364			101,391			—			101,391
Aju Good Technology Venture Fund		60,675		828		52,000		59,847			23,016			—			23,016
Acts Co., Ltd.		5,302		6,973		117		(1,671	)		(119	)		119			—
SY Auto Capital Co., Ltd.		88,611		52,415		20,000		36,196			17,736			(5,011	)		12,725
Incheon Bridge Co., Ltd.		609,194		707,563		61,096		(98,369	)		(14,746	)		14,746			—
Big Dipper Co., Ltd.		370		336		1,500		34			10			115			125
Builton Co., Ltd.		47,164		30,281		2,468		16,883			2,565			225			2,790
Paycoms Co., Ltd.		1,763		1,620		855		143			17			28			45
Food Factory Co., Ltd.		5,587		3,797		450		1,790			398			602			1,000
KB IGen Private Equity Fund No. 1		191		8		7,270		183			—			—			—
KB No.17 Special Purpose Acquisition Company		11,857		1,328		546		10,529			1			—			1
KB No.18 Special Purpose Acquisition Company		17,242		2,022		782		15,220			3			—			3
KB No.19 Special Purpose Acquisition Company		9,123		924		430		8,199			2			—			2
KB No.20 Special Purpose Acquisition Company		1,991		1,372		50		619			1			—			1
KBSP Private Equity Fund IV		39,492		2		40,800		39,490			5,904			—			5,904
KB Private Equity FundIII		49,437		4		51,000		49,433			7,754			—			7,754
Korea Credit Bureau Co., Ltd.		96,855		30,289		10,000		66,566			5,991			—			5,991
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		55,524		1,063		51,880		54,461			13,616			—			13,616
Keystone-Hyundai Securities No. 1 Private Equity Fund		187,156		153,842		42,837		33,314			1,625			—			1,625
KB Social Impact Fund		4,885		3		5,000		4,882			1,465			—			1,465
KB-Solidus Global Healthcare Fund		103,896		5		61,800		103,891			45,021			697			45,718
POSCO-KB Shipbuilding Fund		21,916		4		24,000		21,912			6,847			—			6,847
GH Real Estate I LP		45,340		61		42,093		45,279			19,042			—			19,042
KBTS Technology Venture Private Equity Fund		36,445		1,212		35,400		35,233			19,731			—			19,731
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund		48,369		185		51,700		48,184			20,504			(752	)		19,752
KB-SJ Tourism Venture Fund		14,914		4		16,200		14,910			2,761			—			2,761
UNION Media Commerce Fund		3,318		4		3,450		3,314			961			—			961
KB-Stonebridge Secondary Private Equity Fund		34,450		507		35,805		33,943			4,944			—			4,944
KB SPROTT Renewable Private Equity FundI		3,686		249		9,640		3,437			1,295			—			1,295
KB-UTC Inno-Tech Venture Fund		1,016		75		1,016		941			417			—			417

92

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures (cont’d)

(In millions of Korean won)	20191
	Operating income		Profit (loss)			Other comprehensive income		Total comprehensive income (loss)			Dividends
Associates and joint ventures
KB Pre IPO Secondary Venture Fund 1st	W	510	W	445		W	—	W	445		W	—
KB GwS Private Securities Investment Trust		21,253		20,767			—		20,767			5,219
KB-KDBC Pre-IPO New Technology Business Investment Fund		45		(256	)		—		(256	)		—
KB Star office Private real estate Investment Trust No.1		7,033		3,063			—		3,063			624
PT Bank Bukopin TBK		282,559		(18,153	)		32,377		14,224			—
Sun Surgery Center Inc.		2,373		1,346			772		2,118			—
RAND Bio Science Co., Ltd.		—		(256	)		—		(256	)		—
Balhae Infrastructure Company		30,799		(23,961	)		—		(23,961	)		3,428
Aju Good Technology Venture Fund		7,480		6,740			—		6,740			—
Acts Co., Ltd.		3,929		657			—		657			—
SY Auto Capital Co., Ltd.		9,231		2,230			—		2,230			—
Incheon Bridge Co., Ltd.		49,957		1,012			—		1,012			—
Big Dipper Co., Ltd.		284		(262	)		—		(262	)		—
Builton Co., Ltd.		527		(229	)		—		(229	)		—
A-PRO Co., Ltd.		21,105		3,683			—		3,683			—
Paycoms Co., Ltd.		1,002		(529	)		—		(529	)		—
Food Factory Co., Ltd.		1,773		147			—		147			—
KB IGen Private Equity Fund No. 1		—		5,873			—		5,873			—
KB No.10 Special Purpose Acquisition Company		—		19			—		19			—
KB No.11 Special Purpose Acquisition Company		—		2			—		2			—
KB No.17 Special Purpose Acquisition Company		—		(228	)		—		(228	)		—
KB No.18 Special Purpose Acquisition Company		—		(15	)		—		(15	)		—
KB Private Equity FundIII		—		(245	)		—		(245	)		—
Korea Credit Bureau Co., Ltd.		41,936		5,657			—		5,657			135
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		1,007		(275	)		—		(275	)		—
Keystone-Hyundai Securities No. 1 Private Equity Fund		10,237		196			—		196			—
POSCO-KB Shipbuilding Fund		1,360		16			—		16			—
GH Real Estate I LP		4,875		1,796			1,236		3,032			—
KBTS Technology Venture Private Equity Fund		1,102		608			—		608			—
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund		56		(553	)		—		(553	)		—
KB-SJ Tourism Venture Fund		—		(332	)		—		(332	)		—
UNION Media Commerce Fund		—		(2	)		—		(2	)		—
KB-Stonebridge Secondary Private Equity Fund		2		(1,029	)		—		(1,029	)		—
KB SPROTT Renewable Private Equity FundI		—		(247	)		—		(247	)		—

¹  The amounts included in the financial statements of the associates and joint ventures are adjusted to reflect adjustments made by the entity, such as, fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies.

²  The amounts of goodwill on PT Bank Bukopin TBK is W 4,502 million and W 4,437 million as of June 30, 2020 and December 31, 2019, respectively.

93

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures (cont’d)

Changes in investments in associates and joint ventures for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Beginning		Acquisition and others		Disposal and others			Dividends			Gains (losses) on equity- method accounting			Other comprehensive income		Ending
Associates and joint ventures
KB Pre IPO Secondary Venture Fund 1st	W	1,705	W	—	W	(586	)	W	—		W	(18	)	W	—	W	1,101
KB GwS Private Securities Investment Trust		136,168		—		—			(5,326	)		7,957			—		138,799
KB-KDBC Pre-IPO New Technology Business Investment Fund		18,988		—		(999	)		—			323			—		18,312
KB Star office Private real estate Investment Trust No.1		19,839		—		—			—			232			—		20,071
PT Bank Bukopin TBK		121,381		—		—			—			(23,224	)		4,546		102,703
Balhae Infrastructure Company		101,391		429		—			(3,484	)		2,991			—		101,327
Aju Good Technology Venture Fund		23,016		—		—			—			(483	)		—		22,533
SY Auto Capital Co., Ltd.		12,725		—		—			—			2,522			22		15,269
Incheon Bridge Co., Ltd.		—		—		—			—			—			—		—
Big Dipper Co., Ltd.		125		—		—			—			22			—		147
Paycoms Co., Ltd.		45		—		—			—			(9	)		—		36
Food Factory Co., Ltd.		1,000		—		—			—			91			118		1,209
KBSP Private Equity Fund IV		5,904		—		—			—			106			—		6,010
KB Private Equity FundIII		7,754		—		—			—			(39	)		—		7,715
Korea Credit Bureau Co., Ltd.		5,991		—		—			(89	)		682			—		6,584
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		13,616		—		(3,231	)		—			(645	)		—		9,740

94

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures (cont’d)

(In millions of Korean won)	2020
	Beginning		Acquisition and others		Disposal and others			Dividends			Gains (losses) on equity- method accounting			Other comprehensive income (loss)			Ending
Keystone-Hyundai Securities No. 1 Private Equity Fund	W	1,625	W	—	W	—		W	—		W		(5)	W	—		W	1,620
KB Social Impact Fund		1,465		—		—			—			(44	)		—			1,421
KB-Solidus Global Healthcare Fund		45,718		10,920		(2,990	)		—			(4,088	)		—			49,560
POSCO-KB Shipbuilding Fund		6,847		5,000		(2,125	)		—			1,479			—			11,201
KBTS Technology Venture Private Equity Fund		19,731		—		—			—			(402	)		(86	)		19,243
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund		19,752		—		—			—			469			—			20,221
KB-SJ Tourism Venture Fund		2,761		1,000		—			—			(64	)		—			3,697
UNION Media Commerce Fund		961		—		—			—			(1	)		—			960
KB-Stonebridge Secondary Private Equity Fund		4,944		1,533		—			—			(151	)		—			6,326
KB SPROTT Renewable Private Equity Fund No.1		1,295		2,682		—			—			(189	)		—			3,788
KB-UTC Inno-Tech Venture Fund		417		9,676		—			—			(232	)		—			9,861
WJ Private Equity FundI		—		10,000		—			—			(198	)		—			9,802
All Together Korea Fund 2		—		100,000		—			—			81			—			100,081
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		—		1,224		—			—			(60	)		—			1,164
Others		23,076		—		(21,860	)		—			(18	)		1			1,199
	W	598,240	W	142,464	W	(31,791	)	W	(8,899	)	W	(12,915	)	W	4,601		W	691,700

¹ Gain on disposal of investments in associates and joint ventures for the six-month period ended June 30, 2020 is W 223 million.

95

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures (cont’d)

(In millions of Korean won)	2019
	Beginning		Acquisition and others		Disposal and others			Dividends			Gains (losses) on equity- method accounting			Other comprehensive income		Ending
Associates and joint ventures
KB Pre IPO Secondary Venture Fund 1st	W	1,649	W	—	W	—		W	—		W	68		W	—	W	1,717
KB GwS Private Securities Investment Trust		134,362		—		—			(5,219	)		5,551			—		134,694
KB-KDBC Pre-IPO New Technology Business Investment Fund		14,594		—		—			—			(351	)		—		14,243
KB Star office Private real estate Investment Trust No.1		19,839		—		—			(624	)		645			—		19,860
PT Bank Bukopin TBK		113,932		—		—			—			(3,994	)		7,390		117,328
Sun Surgery Center Inc.		2,715		—		—			—			396			210		3,321
RAND Bio Science Co., Ltd.		843		—		—			—			(843	)		—		—
Balhae Infrastructure Company		108,050		190		—			(3,428	)		(3,020	)		—		101,792
Aju Good Technology Venture Fund		18,134		—		—			—			2,540			—		20,674
SY Auto Capital Co., Ltd.		10,672		—		—			—			1,485			—		12,157
KB No.9 Special Purpose Acquisition Company		31		—		(31	)		—			—			—		—
KB No.10 Special Purpose Acquisition Company		20		—		—			—			—			—		20
KB No.11 Special Purpose Acquisition Company		19		—		—			—			—			—		19
KB No.17 Special Purpose Acquisition Company		—		1		—			—			—			1		2
KB No.18 Special Purpose Acquisition Company		—		2		—			—			—			—		2

96

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Investments in Associates and Joint Ventures (cont’d)

(In millions of Korean won)	2019
	Beginning		Acquisition and others		Disposal and others			Dividends			Gains (losses) on equity- method accounting			Other comprehensive income		Ending
KB Private Equity FundIII	W	7,830	W	—	W	—		W	—		W		(38)	W	—	W	7,792
Korea Credit Bureau Co., Ltd.		5,941		—		—			(135	)		561			—		6,367
KoFC KBIC Frontier Champ 2010-5(PEF)		233		—		(233	)		—			—			—		—
KoFC POSCO HANHWA KB shared growth Private Equity Fund No. 2		14,601		—		—			—			(77	)		—		14,524
Keystone-Hyundai Securities No. 1 Private Equity Fund		1,581		—		—			—			11			—		1,592
POSCO-KB Shipbuilding Fund		4,463		—		—			—			6			—		4,469
GH Real Estate I LP		17,252		—		—			—			754			496		18,502
KBTS Technology Venture Private Equity Fund		13,777		1,792		—			—			340			—		15,909
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund		7,930		8,000		—			—			(234	)		—		15,696
KB-SJ Tourism Venture Fund		1,386		1,500		—			—			(62	)		—		2,824
UNION Media Commerce Fund		962		—		—			—			(1	)		—		961
KB-Stonebridge Secondary Private Equity Fund		—		7,070		—			—			(43	)		—		7,027
KB SPROTT Renewable Private Equity Fund No.1		—		473		—			—			(93	)		—		380
Others		5,263		3		(264	)		—			(177	)		211		5,036
	W	506,079	W	19,031	W	(528	)	W	(9,406	)	W	3,424		W	8,308	W	526,908

¹ Gain on disposal of investments in associates and joint ventures for the six-month period ended June 30, 2019 is W 270 million.

97

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

13. Property and Equipment, and Investment Property

Details of property and equipment as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Acquisition cost		Accumulated depreciation			Accumulated impairment losses			Carrying amount
Land	W	2,375,097	W	—		W	(1,018	)	W	2,374,079
Buildings		2,243,358		(770,563	)		(5,859	)		1,466,936
Leasehold improvements		887,314		(782,649	)		—			104,665
Equipment and vehicles		1,908,693		(1,572,182	)		—			336,511
Construction in progress		169,675		—			—			169,675
Right-of-use assets		965,363		(411,303	)		—			554,060
	W	8,549,500	W	(3,536,697	)	W	(6,877	)	W	5,005,926

(In millions of Korean won)	December 31, 2019
	Acquisition cost		Accumulated depreciation			Accumulated impairment losses			Carrying amount
Land	W	2,431,812	W	—		W	(1,018	)	W	2,430,794
Buildings		2,265,929		(757,147	)		(5,859	)		1,502,923
Leasehold improvements		865,531		(749,407	)		—			116,124
Equipment and vehicles		1,867,739		(1,487,386	)		—			380,353
Construction in progress		86,303		—			—			86,303
Right-of-use assets		854,327		(302,269	)		(1,178	)		550,880
	W	8,371,641	W	(3,296,209	)	W	(8,055	)	W	5,067,377

Details of investment property as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Acquisition cost		Accumulated depreciation			Accumulated impairment losses		Carrying amount
Land	W	1,561,405	W	—		W	—	W	1,561,405
Buildings		1,476,615		(189,812	)		—		1,286,803
	W	3,038,020	W	(189,812	)	W	—	W	2,848,208

(In millions of Korean won)	December 31, 2019
	Acquisition cost		Accumulated depreciation			Accumulated impairment losses		Carrying amount
Land	W	1,537,240	W	—		W	—	W	1,537,240
Buildings		1,463,736		(172,988	)		—		1,290,748
	W	3,000,976	W	(172,988	)	W	—	W	2,827,988

98

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

14. Intangible Assets

Details of intangible assets as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Acquisition cost		Accumulated amortization			Accumulated impairment losses			Other			Carrying amount
Goodwill	W	746,219	W	—		W	(70,517	)	W	(2,967	)	W	672,735
Other intangible assets		4,513,524		(2,104,698	)		(27,799	)		—			2,381,027
	W	5,259,743	W	(2,104,698	)	W	(98,316	)	W	(2,967	)	W	3,053,762

(In millions of Korean won)	December 31, 2019
	Acquisition cost		Accumulated amortization			Accumulated impairment losses			Other			Carrying amount
Goodwill	W	346,314	W	—		W	(70,517	)	W	(56	)	W	275,741
Other intangible assets		4,420,371		(1,926,647	)		(31,652	)		—			2,462,072
	W	4,766,685	W	(1,926,647	)	W	(102,169	)	W	(56	)	W	2,737,813

Details of goodwill as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020				December 31, 2019
	Acquisition cost		Carrying amount2		Acquisition cost		Carrying amount
Housing & Commercial Bank	W	65,288	W	65,288	W	65,288	W	65,288
KB Cambodia Bank		1,202		—		1,202		—
KB Securities Co., Ltd.1		70,265		58,889		70,265		58,889
KB Capital Co., Ltd.		79,609		79,609		79,609		79,609
KB Savings Bank Co., Ltd.		115,343		57,404		115,343		57,404
KB Securities Vietnam Joint Stock Company		13,092		13,455		13,092		12,987
KB Daehan Specialized Bank PLC.		1,515		1,622		1,515		1,564
PRASAC Microfinance Institution PLC.		396,942		393,505		—		—
PT Sunindo Kookmin Best Finance		2,963		2,963		—		—
	W	746,219	W	672,735	W	346,314	W	275,741

¹ The amount occurred from formerly known as KB Investment & Securities Co., Ltd.

²  Includes the effect of exchange rate changes

99

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

14. Intangible Assets (cont’d)

Details of intangible assets, excluding goodwill, as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Acquisition cost		Accumulated amortization			Accumulated impairment losses			Carrying amount
Industrial property rights	W	5,838	W	(3,148	)	W	(19	)	W	2,671
Software		1,503,535		(1,119,450	)		—			384,085
Other intangible assets		573,720		(277,951	)		(27,780	)		267,989
Value of Business Acquired (VOBA)		2,395,291		(674,714	)		—			1,720,577
Right-of-use assets		35,140		(29,435	)		—			5,705
	W	4,513,524	W	(2,104,698	)	W	(27,799	)	W	2,381,027

(In millions of Korean won)	December 31, 2019
	Acquisition cost		Accumulated amortization			Accumulated impairment losses			Carrying amount
Industrial property rights	W	5,802	W	(2,930	)	W	(19	)	W	2,853
Software		1,428,655		(1,055,136	)		—			373,519
Other intangible assets		555,424		(257,274	)		(31,633	)		266,517
Value of Business Acquired (VOBA)		2,395,290		(585,805	)		—			1,809,485
Right-of-use assets		35,200		(25,502	)		—			9,698
	W	4,420,371	W	(1,926,647	)	W	(31,652	)	W	2,462,072

100

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

15. Deferred Income Tax Assets and Liabilities

Details of deferred income tax assets and liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Assets			Liabilities			Net amount
Other provisions	W	128,451		W	—		W	128,451
Allowances for loan losses		9,135			(3,655	)		5,480
Impairment losses on property and equipment		6,707			(1,966	)		4,741
Share-based payments		11,743			—			11,743
Provisions for guarantees		19,230			—			19,230
Losses (gains) from valuation on derivative financial instruments		78,635			(125,594	)		(46,959	)
Present value discount		10,001			(5,626	)		4,375
Losses from fair value hedged items		41,302			—			41,302
Accrued interest		—			(80,708	)		(80,708	)
Deferred loan origination fees and costs		15,495			(219,912	)		(204,417	)
Advanced depreciation provision		—			(1,703	)		(1,703	)
Losses (gains) from revaluation		549			(326,266	)		(325,717	)
Investments in subsidiaries and others		58,852			(100,277	)		(41,425	)
Losses (gains) on valuation of security investment		80,861			(247,241	)		(166,380	)
Defined benefit liabilities		561,023			(7,173	)		553,850
Accrued expenses		147,023			—			147,023
Retirement insurance expense		—			(470,050	)		(470,050	)
Adjustments to the prepaid contributions		—			(27,514	)		(27,514	)
Derivative-linked securities		4,042			(37,302	)		(33,260	)
Others		500,646			(812,122	)		(311,476	)
		1,673,695			(2,467,109	)		(793,414	)
Offsetting of deferred income tax assets and liabilities		(1,646,197	)		1,646,197			—
	W	27,498		W	(820,912	)	W	(793,414	)

101

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

15. Deferred Income Tax Assets and Liabilities (cont’d)

(In millions of Korean won)	December 31, 2019
	Assets			Liabilities			Net amount
Other provisions	W	115,500		W	—		W	115,500
Allowances for loan losses		451			(3,266	)		(2,815	)
Impairment losses on property and equipment		4,396			(1,952	)		2,444
Share-based payments		18,002			—			18,002
Provisions for guarantees		20,959			—			20,959
Losses (gains) from valuation on derivative financial instruments		51,160			(158,604	)		(107,444	)
Present value discount		8,244			(4,201	)		4,043
Losses from fair value hedged items		12,123			—			12,123
Accrued interest		—			(110,359	)		(110,359	)
Deferred loan origination fees and costs		531			(199,000	)		(198,469	)
Advanced depreciation provision		—			(1,703	)		(1,703	)
Losses (gains) from revaluation		549			(329,331	)		(328,782	)
Investments in subsidiaries and others		35,306			(105,470	)		(70,164	)
Losses (gains) on valuation of security investment		39,949			(265,934	)		(225,985	)
Defined benefit liabilities		557,423			—			557,423
Accrued expenses		249,999			—			249,999
Retirement insurance expense		—			(489,602	)		(489,602	)
Adjustments to the prepaid contributions		—			(22,897	)		(22,897	)
Derivative-linked securities		131,259			(34,635	)		96,624
Others		469,540			(762,633	)		(293,093	)
		1,715,391			(2,489,587	)		(774,196	)
Offsetting of deferred income tax assets and liabilities		(1,711,794	)		1,711,794			—
	W	3,597		W	(777,793	)	W	(774,196	)

102

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

16. Assets Held for Sale

Details of assets held for sale as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Acquisition cost1		Accumulated impairment			Carrying amount		Fair value less costs to sell
Land held for sale	W	41,453	W	(1,921	)	W	39,532	W	56,666
Buildings held for sale		18,720		(9,110	)		9,610		11,070
	W	60,173	W	(11,031	)	W	49,142	W	67,736

(In millions of Korean won)	December 31, 2019
	Acquisition cost1		Accumulated impairment			Carrying amount		Fair value less costs to sell
Land held for sale	W	14,542	W	(1,530	)	W	13,012	W	14,374
Buildings held for sale		11,391		(1,252	)		10,139		12,396
	W	25,933	W	(2,782	)	W	23,151	W	26,770

¹ Acquisition cost of buildings held for sale is net of accumulated depreciation.

103

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

17. Other Assets

Details of other assets as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020			December 31, 2019
Other financial assets
Other receivables	W	16,957,477		W	5,792,814
Accrued income		1,593,942			1,659,182
Guarantee deposits		1,114,587			1,146,000
Domestic exchange settlement debits		642,746			531,356
Others		117,636			129,039
Allowances		(127,496	)		(104,629	)
Present value discount		(7,329	)		(6,703	)
		20,291,563			9,147,059
Other non-financial assets
Other receivables		1,070			1,294
Prepaid expenses		265,069			198,893
Guarantee deposits		3,857			4,084
Insurance assets		1,931,557			1,662,016
Separate account assets		4,769,061			5,052,804
Others		2,743,741			2,173,693
Allowances		(15,986	)		(24,235	)
		9,698,369			9,068,549
	W	29,989,932		W	18,215,608

Changes in allowances on other assets for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Other financial assets			Other non-financial assets			Total
Beginning	W	104,629		W	24,235		W	128,864
Written-off		(1,358	)		(8,396	)		(9,754	)
Provision (reversal)		23,666			2			23,668
Others		559			145			704
Ending	W	127,496		W	15,986		W	143,482

(In millions of Korean won)	2019
	Other financial assets			Other non-financial assets			Total
Beginning	W	106,275		W	24,780		W	131,055
Written-off		(3,628	)		(48	)		(3,676	)
Provision (reversal)		12,780			(852	)		11,928
Others		(130	)		—			(130	)
Ending	W	115,297		W	23,880		W	139,177

104

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

18. Financial Liabilities at Fair Value through Profit or Loss

Details of financial liabilities at fair value through profit or loss, and financial liabilities designated at fair value through profit or loss as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Financial liabilities held for trading
Securities sold	W	2,050,724	W	2,583,092
Other		78,880		80,235
		2,129,604		2,663,327
Financial liabilities designated at fair value through profit or loss
Derivative-linked securities		11,236,833		12,704,826
		11,236,833		12,704,826
Total financial liabilities at fair value through profit or loss	W	13,366,437	W	15,368,153

The difference between the carrying amount and contractual cash flow amount of financial liabilities designated at fair value through profit or loss as of June 30, 2020 and December 31, 2019 is as follows:

(In millions of Korean won)	June 30, 2020			December 31, 2019
Contractual cash flow amount	W	10,980,073		W	12,515,734
Carrying amount		11,236,833			12,704,826
Difference	W	(256,760	)	W	(189,092	)

19. Deposits

Details of deposits as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Demand deposits
Demand deposits in Korean won	W	144,751,775	W	127,790,349
Demand deposits in foreign currencies		10,786,551		8,550,068
		155,538,326		136,340,417
Time deposits
Time deposits in Korean won		158,605,396		157,653,603
		158,605,396		157,653,603
Time deposits in foreign currencies		9,161,689		7,377,173
Fair value adjustments on valuation of fair value hedged items		5,002		(18,391	)
		9,166,691		7,358,782
		167,772,087		165,012,385
Certificates of deposits		4,433,061		4,239,969
Total deposits	W	327,743,474	W	305,592,771

105

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

20. Debts

Details of debts as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Borrowings	W	32,631,670	W	24,370,567
Repurchase agreements and others		13,234,245		13,015,506
Call money		1,051,700		432,787
	W	46,917,615	W	37,818,860

Details of borrowings as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)		Lenders	Annual interest rate (%)	June 30, 2020		December 31, 2019
Borrowings in Korean won	Borrowings from Bank of Korea	Bank of Korea	0.25	W	4,430,445	W	2,649,851
	Borrowings from the government	SEMAS and others	0.00 ~ 2.70		2,308,552		1,658,810
	Borrowings from banks	Shinhan Bank and others	1.18 ~ 3.25		117,160		116,160
	Borrowings from non-banking financial institutions	Korea Securities Finance Corporation and others	0.20 ~ 3.80		2,430,600		1,982,242
	Other borrowings	The Korea Development Bank and others	0.00 ~ 5.30		9,661,505		8,022,921
					18,948,262		14,429,984
Borrowings in foreign currencies	Due to banks	KEB Hana Bank and others	—		295		4,682
	Borrowings from banks	Central Bank of Uzbekistan and others	0.00 ~ 12.10		11,968,853		8,089,368
	Borrowings from other financial institutions	The Export-Import Bank of Korea and others	0.65 ~ 2.71		7,003		7,081
	Other borrowings	ING Bank N.V. and others	0.00 ~ 2.80		1,707,257		1,839,452
					13,683,408		9,940,583
				W	32,631,670	W	24,370,567

106

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

21. Debentures

Details of debentures as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	Annual interest rate (%)		June 30, 2020			December 31, 2019
Debentures in Korean won
Structured debentures		5.65 ~ 5.86	W	33,070		W	33,310
Exchangeable bonds1		0.00		240,000			—
Subordinated fixed rate debentures		2.02 ~ 4.35		4,335,022			3,386,590
Fixed rate debentures		0.00 ~ 3.65		45,033,872			40,596,755
Floating rate debentures		0.00 ~ 1.84		1,814,300			1,580,000
				51,456,264			45,596,655
Fair value adjustments on fair value hedged debentures in Korean won				30,221			21,070
Less: Discount on debentures in Korean won				(35,167	)		(30,029	)
Less: Adjustment for exchangeable rights in Korean won				(16,586	)		—
				51,434,732			45,587,696
Debentures in foreign currencies
Floating rate debentures		0.68 ~ 2.17		1,977,953			2,227,607
Fixed rate debentures		0.00 ~ 4.50		3,913,743			3,094,196
				5,891,696			5,321,803
Fair value adjustments on fair value hedged debentures in foreign currencies				114,966			41,406
Less: Discount on debentures in foreign currencies				(18,587	)		(15,322	)
				5,988,075			5,347,887
			W	57,422,807		W	50,935,583

¹  Fair value of the liability component of exchangeable bonds is calculated by using market interest rates of bonds under the same conditions without the exchangeable rights. The residual amount, after deducting liability component from the issuance amount, represents the value of the exchangeable rights and is recorded in equity. Shares to be exchanged are 5 million treasury shares of KB Financial Group Inc. with the exchange price of W48,000. Exercise period for exchangeable rights is from the 60th day from the issued date (June 30, 2020) to 10 days before the expiration date (June 30, 2025).

107

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

21. Debentures (cont’d)

Changes in debentures based on face value for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Beginning		Issues		Repayments			Business Combination		Others		Ending
Debentures in Korean won
Structured debentures	W	33,310	W	—	W	(240	)	W	—	W	—	W	33,070
Exchangeable bonds		—		240,000		—			—		—		240,000
Subordinated fixed rate debentures		3,386,590		1,250,000		(301,568	)		—		—		4,335,022
Fixed rate debentures		40,596,755		56,517,118		(52,080,001	)		—		—		45,033,872
Floating rate debentures		1,580,000		274,300		(40,000	)		—		—		1,814,300
		45,596,655		58,281,418		(52,421,809	)		—		—		51,456,264
Debentures in foreign currencies
Floating rate debentures		2,227,607		155,688		(483,285	)		—		77,943		1,977,953
Fixed rate debentures		3,094,196		737,870		(109,239	)		89,570		101,346		3,913,743
		5,321,803		893,558		(592,524	)		89,570		179,289		5,891,696
	W	50,918,458	W	59,174,976	W	(53,014,333	)	W	89,570	W	179,289	W	57,347,960

(In millions of Korean won)	2019
	Beginning		Issues		Repayments			Others		Ending
Debentures in Korean won
Structured debentures	W	34,320	W	—	W	(380	)	W	—	W	33,940
Subordinated fixed rate debentures		3,437,729		—		(50,119	)		—		3,387,610
Fixed rate debentures		43,466,085		46,204,860		(49,413,671	)		—		40,257,274
Floating rate debentures		1,650,000		50,000		(490,000	)		—		1,210,000
		48,588,134		46,254,860		(49,954,170	)		—		44,888,824
Debentures in foreign currencies
Floating rate debentures		1,791,868		462,720		—			61,813		2,316,401
Fixed rate debentures		2,951,251		565,834		(3,060	)		124,809		3,638,834
		4,743,119		1,028,554		(3,060	)		186,622		5,955,235
	W	53,331,253	W	47,283,414	W	(49,957,230	)	W	186,622	W	50,844,059

108

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

22. Provisions

Details of provisions as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Provisions for unused loan commitments	W	261,485	W	208,148
Provisions for payment guarantees		69,936		77,759
Provisions for financial guarantee contracts		4,547		6,063
Provisions for restoration cost		123,809		120,340
Others		135,280		115,619
	W	595,057	W	527,929

Changes in provisions for unused loan commitments, payment guarantees for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Provisions for unused loan commitments									Provisions for payment guarantees
	12-month expected credit losses			Lifetime expected credit losses						12-month expected credit losses			Lifetime expected credit losses
				Non- impaired			Impaired						Non- impaired			Impaired
Beginning	W	127,297		W	71,464		W	9,387		W	24,961		W	36,012		W	16,786
Transfer between stages
Transfer to 12-month expected credit losses		19,573			(18,652	)		(921	)		132			(129	)		(3	)
Transfer to lifetime expected credit losses		(6,787	)		9,062			(2,275	)		(313	)		313			—
Impairment		(248	)		(3,235	)		3,483			(3	)		(451	)		454
Provision (reversal) for credit losses1		4,649			44,972			1,359			3,379			(11,960	)		1,009
Others (change of exchange rate, etc.)		1,499			858			—			(584	)		(97	)		430
Ending	W	145,983		W	104,469		W	11,033		W	27,572		W	23,688		W	18,676

¹  Includes provision related to COVID-19; Provisions for unused loan commitments W42,080 million (forward-looking recalculation W15,049 million, lifetime expected credit losses (Non-impaired) W27,031 million), Provisions for payment guarantees W4,760 million (forward-looking recalculation)

(In millions of Korean won)	2019
	Provisions for unused loan commitments									Provisions for payment guarantees
	12-month expected credit losses			Lifetime expected credit losses						12-month expected credit losses			Lifetime expected credit losses
				Non- impaired			Impaired						Non- impaired			Impaired
Beginning	W	132,876		W	68,920		W	8,881		W	27,084		W	30,109		W	17,982
Transfer between stages
Transfer to 12-month expected credit losses		21,801			(20,704	)		(1,097	)		343			(343	)		—
Transfer to lifetime expected credit losses		(8,285	)		8,500			(215	)		(902	)		986			(84	)
Impairment		(282	)		(1,235	)		1,517			(24	)		(280	)		304
Provision (reversal) for credit losses		(13,656	)		12,301			(2,145	)		1,179			13,916			(6,753	)
Others (change of exchange rate, etc.)		389			195			—			375			398			158
Ending	W	132,843		W	67,977		W	6,941		W	28,055		W	44,786		W	11,607

109

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

22. Provisions (cont’d)

Changes in provisions for financial guarantee contracts for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020			2019
Beginning	W	6,063		W	4,275
Provision (reversal)		(1,516	)		2,191
Others		—			(77	)
Ending	W	4,547		W	6,389

Changes in provisions for restoration cost for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020			2019
Beginning	W	120,340		W	108,000
Provision		10,338			2,711
Reversal		(2,246	)		(571	)
Used		(5,972	)		(337	)
Unwinding of discount		1,349			1,028
Ending	W	123,809		W	110,831

Provisions for restoration cost are the present value of estimated costs to be incurred for the restoration of the leased properties. Actual expenses are expected to be incurred at the end of each lease contract. Three-year historical data of expired leases were used to estimate the average lease period. Also, the average restoration expense based on actual three-year historical data and the three-year historical average inflation rate were used to estimate the present value of estimated costs.

110

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

22. Provisions (cont’d)

Changes in other provisions for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Membership rewards program			Dormant accounts			Litigations			Others1			Total
Beginning	W	14,669		W	3,579		W	28,690		W	68,681		W	115,619
Increase		36,974			1,162			1,599			47,784			87,519
Decrease		(33,615	)		(1,460	)		(4,232	)		(28,551	)		(67,858	)
Ending	W	18,028		W	3,281		W	26,057		W	87,914		W	135,280

¹ As of June 30, 2020, the Group’s provision on incomplete sales on cardssurance are W 1,310 million.

(In millions of Korean won)	2019
	Membership rewards program			Dormant accounts			Litigations			Others1			Total
Beginning	W	12,654		W	4,377		W	21,190		W	89,511		W	127,732
Increase		25,590			807			8,504			21,850			56,751
Decrease		(25,256	)		(1,277	)		(3,820	)		(26,745	)		(57,098	)
Ending	W	12,988		W	3,907		W	25,874		W	84,616		W	127,385

¹  As of June 30, 2019, the Group’s provision on incomplete sales on cardssurance are W 24,847 million.

111

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

23. Net Defined Benefit Liabilities (Assets)

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 by independent actuaries in accordance with actuarial valuation methods.

The net defined benefit obligation is calculated using the Projected Unit Credit method (the ‘PUC’). Data used in the PUC such as interest rates, future salary increase rate, mortality rate and consumer price index are based on observable market data and historical data which are updated annually.

Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends which may impact defined benefit liabilities and future payments. Actuarial gains and losses arising from changes in actuarial assumptions are recognized in the period incurred through other comprehensive income.

Changes in the net defined benefit liabilities for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Present value of defined benefit obligation			Fair value of plan assets			Net defined benefit liabilities
Beginning	W	2,341,753		W	(2,088,710	)	W	253,043
Current service cost		114,528			—			114,528
Interest expense (income)		22,813			(20,504	)		2,309
Remeasurements:
Return on plan assets (excluding amounts included in interest income)		—			2,967			2,967
Contributions		—			(2,023	)		(2,023	)
Payments from plans (benefit payments)		(125,427	)		123,368			(2,059	)
Payments from the Group		(21,367	)		—			(21,367	)
Transfer in		7,274			(7,274	)		—
Transfer out		(7,152	)		7,152			—
Effect of exchange rate changes		19			—			19
Others		102			(1	)		101
Ending	W	2,332,543		W	(1,985,025	)	W	347,518

112

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

23. Net Defined Benefit Liabilities (Assets) (cont’d)

(In millions of Korean won)	2019
	Present value of defined benefit obligation			Fair value of plan assets			Net defined benefit liabilities
Beginning	W	2,172,260		W	(1,910,047	)	W	262,213
Current service cost		113,054			—			113,054
Interest expense (income)		24,397			(21,623	)		2,774
Remeasurements:
Return on plan assets (excluding amounts included in interest income)		—			6,535			6,535
Contributions		—			(21,783	)		(21,783	)
Payments from plans (benefit payments)		(117,433	)		117,425			(8	)
Payments from the Group		(24,469	)		—			(24,469	)
Transfer in		6,522			(6,522	)		—
Transfer out		(6,519	)		6,519			—
Effect of exchange rate changes		3			—			3
Others		(80	)		—			(80	)
Ending	W	2,167,735		W	(1,829,496	)	W	338,239

Details of the net defined benefit liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020			December 31, 2019
Present value of defined benefit obligation	W	2,332,543		W	2,341,753
Fair value of plan assets		(1,985,025	)		(2,088,710	)
Net defined benefit liabilities	W	347,518		W	253,043

Details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020		2019
Current service cost	W	114,528	W	113,054
Net interest expenses of net defined benefit liabilities		2,309		2,774
Post-employment benefits1	W	116,837	W	115,828

¹  Including post-employment benefits amounting to W 1,316 million recognized as other operating expense and prepayment of W 67 million recognized as other assets as of and for the six-month period ended June 30, 2020, and post-employment benefits amounting to W 1,139 million recognized as other operating expense and prepayment of W 60 million recognized as other assets as of and for the six-month period ended June 30, 2019.

113

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

24. Other Liabilities

Details of other liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Other financial liabilities
Other payables	W	19,332,443	W	9,485,597
Prepaid card and debit card payables		37,507		27,555
Accrued expenses		3,101,097		3,066,445
Financial guarantee liabilities		55,500		46,428
Deposits for letter of guarantees and others		892,329		862,968
Domestic exchange settlement credits		2,561,716		2,079,636
Foreign exchanges settlement credits		136,160		114,316
Borrowings from other business accounts		22,101		256
Other payables from trust accounts		6,582,718		5,216,460
Liability incurred from agency relationships		798,557		771,609
Account for agency businesses		394,816		407,475
Dividend payables		472		473
Lease liabilities		566,235		544,439
Others		53,058		5,930
		34,534,709		22,629,587
Other non-financial liabilities
Other payables		50,205		283,771
Unearned revenue		602,908		465,501
Accrued expenses		592,391		716,180
Deferred revenue on credit card points		210,509		206,188
Withholding taxes		106,335		158,992
Separate account liabilities		4,766,276		5,047,080
Others		204,536		229,960
		6,533,160		7,107,672
	W	41,067,869	W	29,737,259

114

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

25. Equity

25.1 Share Capital

Details of share capital and number of issued shares of the Parent Company as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Type of share		Ordinary share		Ordinary share
Number of authorized shares		1,000,000,000		1,000,000,000
Par value per share (In Korean won)	W	5,000	W	5,000
Number of issued shares		415,807,920		415,807,920
Share capital	W	2,090,558	W	2,090,558

Changes in outstanding shares for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)	2020		2019
Beginning		389,634,335		395,551,297
Increase		—		—
Decrease		—		(5,916,962	)
Ending		389,634,335		389,634,335

25.2 Hybrid Securities

Details of hybrid securities classified as equity as of June 30, 2020 and December 31, 2019 are as follows:

(In millions of Korean won)	Issuance date	Maturity		Interest rate (%)		June 30, 2020		December 31, 2019
The 1-1st Hybrid securities	May 2, 2019		Perpetual bond		3.23	W	349,309	W	349,309
The 1-2nd Hybrid securities	May 2, 2019		Perpetual bond		3.44		49,896		49,896
The 2-1st Hybrid securities	May 8, 2020		Perpetual bond		3.30		324,099		—
The 2-2nd Hybrid securities	May 8, 2020		Perpetual bond		3.43		74,812		—
						W	798,116	W	399,205

The above hybrid securities are early redeemable by the Group after 5 or 10 years from the issuance date. On the other hand, hybrid securities of W 574,580 million issued by Kookmin Bank are recognized as non-controlling interests and are early redeemable by the Group every five years after the issuance date.

115

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

25.3 Capital Surplus

Details of capital surplus as of June 30, 2020 and December 31, 2019, are as follows

(In millions of Korean won)	June 30, 2020			December 31, 2019
Share premium	W	13,190,274		W	13,190,274
Loss on sales of treasury shares		(481,332	)		(481,332	)
Other capital surplus		4,002,714			4,413,835
Consideration for exchangeable rights		16,459			—
	W	16,728,115		W	17,122,777

25.4 Accumulated Other Comprehensive Income

Details of accumulated other comprehensive income as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020			December 31, 2019
Remeasurements of net defined benefit liabilities	W	(292,378	)	W	(290,228	)
Exchange differences on translating foreign operations		77,915			31,793
Revaluation gains on financial instruments at fair value through other comprehensive income		342,153			487,331
Share of other comprehensive income of associates and joint ventures		6,604			3,318
Cash flow hedges		(66,519	)		(27,333	)
Losses on hedges of a net investment in a foreign operation		(40,699	)		(41,992	)
Other comprehensive income arising from separate account		22,289			18,381
Fair value changes on financial liabilities designated at fair value due to own credit risk		9,641			(20,326	)
Net gains on overlay approach adjustment		231,252			187,077
	W	290,258		W	348,021

116

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

25.5 Retained Earnings

Details of retained earnings as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Legal reserves1	W	557,405	W	482,807
Voluntary reserves		982,000		982,000
Unappropriated retained earnings		19,254,460		18,244,738
	W	20,793,865	W	19,709,545

¹ With respect to the allocation of net profit earned in a fiscal term, the Parent Company must set aside in its legal reserve an amount equal to at least 10% of its profit after tax as reported in the consolidated statement of comprehensive income each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its share capital in accordance with Article 53 of the Financial Holding Company Act. The reserve is not available for the payment of cash dividends, but may be transferred to share capital, or used to reduce accumulated deficit.

25.5.1 Regulatory reserve for credit losses

Measurement and disclosure of regulatory reserve for credit losses are required in accordance with Articles 26 through 28 of Supervisory Regulations on Financial Holding Companies.

Details of the regulatory reserve for credit losses as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Regulatory reserve for credit losses attributable to:
Shareholders of the Parent Company	W	3,543,189	W	3,419,614
Non-controlling interests		3,541,710		3,418,136
	W	1,479	W	1,478

The adjustments to the regulatory reserve for credit losses for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won, except earnings per share)	2020					2019
	Three months			Six months		Three months		Six months
Provision (reversal) of regulatory reserve for credit losses	W	(48,463	)	W	123,574	W	96,227	W	131,881
Adjusted profit after provision of regulatory reserve for credit losses1,2		1,027,092			1,581,253		894,965		1,704,963
Adjusted basic earnings per share after provision of regulatory reserve for credit losses1		2,636 won			4,058 won		2,259 won		4,342 won
Adjusted diluted earnings per share after provision of regulatory reserve for credit losses1		2,615 won			4,025 won		2,247 won		4,313 won

¹  Adjusted profit after provision (reversal) of regulatory reserve for credit losses is not based on Korean IFRS; this is calculated reflecting provision (reversal) of the reserve before tax to the net profit to shareholders of the Parent Company.

²  After deducting dividends on hybrid securities.

117

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

25.6 Treasury Shares

Changes in treasury shares outstanding for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won and in number of shares)
	2020
	Beginning			Acquisition		Disposal		Ending
Number of treasury shares		26,173,585			—		—		26,173,585
Carrying amount	W	(1,136,188	)	W	—	W	—	W	(1,136,188	)

5,000,000 treasury shares are deposited at Korea Securities Depository for issuing exchangeable bonds.

(In millions of Korean won and in number of shares)
	2019
	Beginning			Acquisition			Disposal		Ending
Number of treasury shares		22,560,240			5,916,962			—		28,477,202
Carrying amount	W	(968,549	)	W	(267,639	)	W	—	W	(1,236,188	)

26. Net Interest Income

Details of interest income and interest expense for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Three months		Six months
Interest income
Deposits at fair value through profit or loss	W	252	W	489
Securities measured at fair value through profit or loss		165,804		342,865
Loans measured at fair value through profit or loss		2,815		5,519
Securities measured at fair value through other comprehensive income		170,245		354,406
Loans measured at fair value through other comprehensive income		2,487		5,210
Deposits at amortized cost		23,117		58,418
Securities at amortized cost		143,192		293,557
Loans at amortized cost		3,070,313		6,067,849
Other		23,546		93,434
		3,601,771		7,221,747
Interest expenses
Deposits		786,198		1,575,071
Debts		151,863		305,390
Debentures		308,340		608,694
Other		21,323		49,344
		1,267,724		2,538,499
Net interest income	W	2,334,047	W	4,683,248

118

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

26. Net Interest Income (cont’d)

(In millions of Korean won)	2019
	Three months		Six months
Interest income
Deposits at fair value through profit or loss	W	1,342	W	3,609
Securities measured at fair value through profit or loss		168,563		340,941
Loans measured at fair value through profit or loss		14,178		22,302
Securities measured at fair value through other comprehensive income		196,021		384,789
Loans measured at fair value through other comprehensive income		3,979		7,445
Deposits at amortized cost		40,296		71,493
Securities at amortized cost		153,055		300,579
Loans at amortized cost		3,080,193		6,137,946
Other		36,319		71,285
		3,693,946		7,340,389
Interest expenses
Deposits		895,638		1,787,073
Debts		153,481		305,442
Debentures		314,639		633,711
Other		33,087		64,996
		1,396,845		2,791,222
Net interest income	W	2,297,101	W	4,549,167

119

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

27. Net Fee and Commission Income

Details of fee and commission income, and fee and commission expense for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020				2019
	Three months		Six months		Three months		Six months
Fee and commission income
Banking activity fees	W	46,217	W	96,075	W	54,698	W	107,470
Lending activity fees		21,838		46,461		19,537		39,792
Credit & Debit card related fees and commissions		344,884		665,230		311,084		631,089
Agent activity fees		46,931		96,889		43,864		81,293
Trust and other fiduciary fees		61,467		161,095		112,953		203,610
Fund management related fees		37,935		74,830		39,559		78,399
Guarantee fees		14,780		27,836		12,935		24,483
Foreign currency related fees		43,026		76,219		40,120		67,143
Commissions from transfer agent services		41,360		81,756		38,258		73,082
Other business account commission on consignment		10,059		22,302		8,444		19,530
Commissions received on securities business		193,038		337,859		112,086		211,949
Lease fees		152,398		288,091		106,171		199,389
Others		79,974		160,727		66,056		140,247
		1,093,907		2,135,370		965,765		1,877,476
Fee and commission expense
Trading activity related fees1		11,417		20,747		7,259		13,939
Lending activity fees		7,242		12,338		10,142		11,591
Credit & Debit card related fees and commissions		210,886		418,780		224,027		443,467
Outsourcing related fees		52,024		93,672		49,506		90,085
Foreign currency related fees		11,804		25,260		10,979		20,082
Others		89,352		183,259		78,821		162,634
		382,725		754,056		380,734		741,798
Net fee and commission income	W	711,182	W	1,381,314	W	585,031	W	1,135,678

¹ The fees from financial assets/liabilities at fair value through profit or loss.

120

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

28. Net Gains (Losses) on Financial Instruments at Fair Value through Profit or Loss

28.1 Net Gains (Losses) on Financial Instruments at Fair Value through Profit or Loss

Net gain or loss from financial instruments at fair value through profit or loss includes dividend income, gains or losses arising from changes in the fair values, sales and redemptions. Details of net gain or loss from financial instruments at fair value through profit or loss for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Three months			Six months
Revenue from financial instruments at fair value through profit or loss
Financial assets at fair value through profit or loss
Debt securities	W	455,265		W	1,120,457
Equity securities		185,071			304,816
		640,336			1,425,273
Derivatives held for trading
Interest rate		810,512			2,932,842
Currency		283,266			4,063,580
Stock or stock index		472,040			1,699,801
Credit		3,258			16,489
Commodity		5,275			12,340
Other		39,376			186,936
		1,613,727			8,911,988
Financial liabilities at fair value through profit or loss		(108,905	)		41,626
Other financial instruments		20			410
		2,145,178			10,379,297
Expense from financial instruments at fair value through profit or loss
Financial assets at fair value through profit or loss
Debt securities		(32,056	)		669,442
Equity securities		41,829			233,508
		9,773			902,950
Derivatives held for trading
Interest rate		845,885			3,069,804
Currency		287,596			3,937,298
Stock or stock index		(206,982	)		1,965,335
Credit		1,816			14,915
Commodity		5,103			16,542
Other		(8,494	)		243,061
		924,924			9,246,955
Financial liabilities at fair value through profit or loss		49,242			75,114
Other financial instruments		22			40
		983,961			10,225,059
Net gains on financial instruments at fair value through profit or losses	W	1,161,217		W	154,238

121

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

28.1 Net Gains (Losses) on Financial Instruments at Fair Value through Profit or Loss (cont’d)

(In millions of Korean won)	2019
	Three months		Six months
Revenue from financial instruments at fair value through profit or loss
Financial assets at fair value through profit or loss
Debt securities	W	478,282	W	1,015,281
Equity securities		70,170		203,703
		548,452		1,218,984
Derivatives held for trading
Interest rate		1,046,732		1,909,494
Currency		1,775,213		3,102,286
Stock or stock index		406,063		1,404,427
Credit		5,399		24,558
Commodity		4,733		11,274
Other		60,531		157,940
		3,298,671		6,609,979
Financial liabilities at fair value through profit or loss		12,359		28,606
Other financial instruments		51		70
		3,859,533		7,857,639
Expense from financial instruments at fair value through profit or loss
Financial assets at fair value through profit or loss
Debt securities		92,787		187,728
Equity securities		98,267		179,322
		191,054		367,050
Derivatives held for trading
Interest rate		1,111,943		1,995,888
Currency		1,741,697		3,053,844
Stock or stock index		328,400		842,199
Credit		5,218		25,270
Commodity		2,245		6,218
Other		28,436		46,020
		3,217,939		5,969,439
Financial liabilities at fair value through profit or loss		28,153		79,703
Other financial instruments		23		23
		3,437,169		6,416,215
Net gains on financial instruments at fair value through profit or losses	W	422,364	W	1,441,424

122

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

28.2 Net Gains (Losses) on Financial Instruments Designated at Fair Value through Profit or Loss

Net gain or loss from financial instruments designated at fair value through profit or loss includes dividend income, gains or losses arising from changes in the fair values, sales and redemptions. Details of net gain or loss from financial instruments designated at fair value through profit or loss for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Three months			Six months
Revenue from financial instruments designated at fair value through profit or loss
Financial liabilities designated at fair value through profit or loss	W	(636,783	)	W	625,835
		(636,783	)		625,835
Expense from financial instruments designated at fair value through profit or loss
Financial liabilities designated at fair value through profit or loss		151,204			545,355
		151,204			545,355
Net gains or losses on financial instruments designated at fair value through profit or loss	W	(787,987	)	W	80,480

(In millions of Korean won)	2019
	Three months			Six months
Revenue from financial instruments designated at fair value through profit or loss
Financial liabilities designated at fair value through profit or loss	W	134,854		W	222,274
		134,854			222,274
Expense from financial instruments designated at fair value through profit or loss
Financial liabilities designated at fair value through profit or loss		427,805			1,334,613
		427,805			1,334,613
Net losses on financial instruments designated at fair value through profit or loss	W	(292,951	)	W	(1,112,339	)

123

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

29. Net Other Operating Expenses

Details of other operating income and expenses for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Three months			Six months
Other operating income
Revenue related to financial instruments measured at fair value through other comprehensive income
Gain on redemption of financial instruments measured at fair value through other comprehensive income	W	215		W	325
Gain on disposal of financial instruments measured at fair value through other comprehensive income		101,261			237,725
		101,476			238,050
Revenue related to financial assets at amortized cost
Gain on sale of loans at amortized cost		45,281			97,579
Gain on disposal of securities measured at amortized cost		—			229
		45,281			97,808
Gain on foreign exchange transactions		745,483			2,008,772
Dividend income		3,466			38,071
Others		57,101			414,504
		952,807			2,797,205
Other operating expenses
Expenses related to financial instruments measured at fair value through other comprehensive income
Losses on redemption of financial instruments measured at fair value through other comprehensive income		32			35
Losses on disposal of financial instruments measured at fair value through other comprehensive income		259			3,738
		291			3,773
Expenses related to financial assets at amortized cost
Loss on sale of loans at amortized cost		2,565			3,374
Loss on disposal of securities measured at amortized cost		2,749			2,749
		5,314			6,123
Loss on foreign exchanges transactions		669,231			1,920,969
Others		525,853			1,331,148
		1,200,689			3,262,013
Net other operating expenses	W	(247,882	)	W	(464,808	)

124

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

29. Net Other Operating Expenses (cont’d)

(In millions of Korean won)	2019
	Three months			Six months
Other operating income
Revenue related to financial instruments measured at fair value through other comprehensive income
Gain on redemption of financial instruments measured at fair value through other comprehensive income	W	46		W	50
Gain on disposal of financial instruments measured at fair value through other comprehensive income		48,530			97,427
		48,576			97,477
Revenue related to financial assets at amortized cost
Gain on sale of loans at amortized cost		25,296			41,258
		25,296			41,258
Gain on foreign exchange transactions		695,664			1,033,305
Dividend income		4,614			45,152
Others		133,582			256,381
		907,732			1,473,573
Other operating expenses
Expenses related to financial instruments measured at fair value through other comprehensive income
Losses on disposal of financial instruments measured at fair value through other comprehensive income		85			542
		85			542
Expenses related to financial assets at amortized cost
Loss on sale of loans at amortized cost		2,464			3,390
		2,464			3,390
Loss on foreign exchanges transactions		638,372			920,606
Others		500,994			1,029,546
		1,141,915			1,954,084
Net other operating expenses	W	(234,183	)	W	(480,511	)

125

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30. General and Administrative Expenses

30.1 General and Administrative Expenses

Details of general and administrative expenses for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020				2019
	Three months		Six months		Three months		Six months
Employee Benefits
Salaries and employee benefits - salaries	W	652,711	W	1,261,713	W	654,243	W	1,241,526
Salaries and employee benefits - others		264,864		466,203		182,797		485,026
Post-employment benefits - defined benefit plans		57,629		115,454		57,459		114,629
Post-employment benefits - defined contribution plans		8,182		16,110		6,642		13,003
Termination benefits		198		8,811		280		45,123
Share-based payments		7,607		1,396		17,915		13,327
		991,191		1,869,687		919,336		1,912,634
Depreciation and amortization		204,590		416,290		185,704		363,094
Other general and administrative expenses
Rental expense		27,069		56,259		26,243		54,462
Tax and dues		72,947		137,822		67,879		129,379
Communication		11,633		23,865		12,291		23,545
Electricity and utilities		6,723		14,509		5,637		12,694
Publication		3,105		6,317		3,543		7,422
Repairs and maintenance		5,723		11,002		5,577		10,211
Vehicle		3,689		6,111		2,978		5,243
Travel		2,551		6,104		6,047		10,857
Training		3,210		9,345		6,437		13,199
Service fees		60,518		113,394		54,272		100,687
Electronic data processing expenses		68,410		139,214		61,582		122,466
Advertising		55,080		95,538		55,936		94,979
Others		69,970		140,149		73,505		139,973
		390,628		759,629		381,927		725,117
	W	1,586,409	W	3,045,606	W	1,486,967	W	3,000,845

126

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30.2 Share-based Payments

30.2.1 Stock grants

The Group changed the scheme of share-based payment from stock options to stock grants in November 2007. The stock grant award program is an incentive plan that sets, on grant date, the maximum number of shares that can be awarded. Actual stock granted at the end of the vesting period is determined in accordance with achievement of pre-specified targets over the vesting period.

Details of stock grants linked to long-term performance as of June 30, 2020, are as follows:

(In number of shares)
	Grant date	Number of granted shares1		Vesting conditions2
KB Financial Group Inc.
Series 19	Nov. 21, 2017		46,890	Services fulfillment, market performance3 35% and non-market performance5 65%
Series 21	Jan. 01, 2019		25,172	Services fulfillment, market performance3 0~30% and non-market performance4 70~100%
Series 22	Apr. 01, 2019		3,226	Services fulfillment, market performance3 30% and non-market performance4 70%
Series 23	May 27, 2019		1,436	Services fulfillment, market performance3 30% and non-market performance4 70%
Series 24	Jul. 17, 2019		11,224	Services fulfillment, market performance3 30% and non-market performance4 70%
Series 25	Jan. 01, 2020		80,568	Services fulfillment, market performance3 0~30% and non-market performance4 70%~100%
Series 26	Mar. 18, 2020		1,086	Services fulfillment, market performance3 30% and non-market performance4 70%
Series 27	Jun. 15, 2020		687	Services fulfillment, market performance3 30% and non-market performance4 70%
Deferred grant	2015		7,674	Satisfied
	2016		8,705	Satisfied
	2017		30,001	Satisfied
	2018		5,960	Satisfied
	2019		26,437	Satisfied
			249,066

127

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30.2.1 Stock grants (cont’d)

(In number of shares)
	Grant date	Number of granted shares1		Vesting conditions2
Kookmin Bank
Series 75	Jan. 01, 2019		154,997	Services fulfillment, market performance3 30~50% and non-market performance4 50~70%
Series 76	Apr. 01, 2019		5,380	Services fulfillment, market performance3 30~50% and non-market performance4 50~70%
Series 77	May 27, 2019		4,468	Services fulfillment, market performance3 30~50% and non-market performance4 50~70%
Series 78	Nov. 21, 2019		36,443	Services fulfillment, market performance3 30% and non-market performance6 70%
Series 79	Jan. 01, 2020		266,488	Services fulfillment, market performance3 30~50% and non-market performance4 50~70%
Series 80	Mar. 01, 2020		7,711	Services fulfillment, market performance3 30~50% and non-market performance4 50~70%
Deferred grant	2015		2,759	Satisfied
	2016		19,109	Satisfied
	2017		58,380	Satisfied
	2018		65,587	Satisfied
	2019		98,194	Satisfied
			719,516

128

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30.2.1 Stock grants (cont’d)

(In number of shares)
	Grant date		Number of granted shares1		Vesting conditions2
Other subsidiaries
Stock granted in 2010		—		106	Services
Stock granted in 2011		—		146	fulfillment,
Stock granted in 2012		—		420	market
Stock granted in 2013		—		622	performance3
Stock granted in 2014		—		1,100	10~50% and
Stock granted in 2015		—		3,323	non-market
Stock granted in 2016		—		6,664	performance4,
Stock granted in 2017		—		32,717	50~90%
Stock granted in 2018		—		120,189
Stock granted in 2019		—		334,543
Stock granted in 2020		—		240,498
				740,328
				1,708,910

¹ Granted shares represent the total number of shares initially granted to executives and employees that have residual shares as of June 30, 2020 (Deferred grants are residual shares as of June 30, 2020).    

² Executives and employees were given the option of deferred payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement after the deferred grant has been confirmed.

³ Relative TSR (Total Shareholders Return): [(Fair value at the end of the contract—Fair value at the beginning of the contract) + (Total amount of dividend per share paid during the contract period)] / Fair value at the beginning of the contract

⁴ Accomplishment of subsidiaries’ performance and accomplishment of performance results.

⁵ EPS, Asset Quality, HCROI, Profit from non-banking segment

⁶  EPS, Asset Quality

129

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30.2.1 Stock grants (cont’d)

Details of stock grants linked to short-term performance as of June 30, 2020, are as follows:

	Estimated number of vested shares1		Vesting conditions
KB Financial Group Inc.
Stock granted in 2015		7,524	Satisfied
Stock granted in 2016		6,595	Satisfied
Stock granted in 2017		7,385	Satisfied
Stock granted in 2018		14,292	Satisfied
Stock granted in 2019		28,030	Satisfied
Stock granted in 2020		24,985	Proportional to service period
Kookmin Bank
Stock granted in 2015		9,887	Satisfied
Stock granted in 2016		22,442	Satisfied
Stock granted in 2017		31,522	Satisfied
Stock granted in 2018		77,367	Satisfied
Stock granted in 2019		125,342	Satisfied
Stock granted in 2020		82,385	Proportional to service period
Other subsidiaries
Stock granted in 2015		12,190	Satisfied
Stock granted in 2016		40,942	Satisfied
Stock granted in 2017		149,272	Satisfied
Stock granted in 2018		345,625	Satisfied
Stock granted in 2019		551,667	Satisfied
Stock granted in 2020		193,525	Proportional to service period
		1,730,977

¹ Executives and employees were given the option of deferred payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement after the deferred grant has been confirmed.

The accrued expenses representing share-based payments as of June 30, 2020 and December 31, 2019, are W 90,078 million and W 124,853 million, respectively. In addition, the reversal of compensation costs from share-based payments that amounts to W 1,396 million and W 13,327 million were recognized for the six-month periods ended June 30, 2020 and 2019, respectively.

130

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30.2.2 Mileage Stock

Details of mileage stock as of June 30, 2020, are as follows:

(In number of shares)
Grant date	Number of granted shares1		Expected exercise period (years) 2		Remaining shares
Stock granted in 2017
Jul. 03, 2017		52		0.00~0.01		52
Aug. 07, 2017		29		0.00~0.10		19
Aug. 08, 2017		5		0.00~0.10		2
Aug. 16, 2017		204		0.00~0.13		140
Aug. 17, 2017		40		0.00~0.13		24
Aug. 24, 2017		387		0.00~0.15		269
Sep. 08, 2017		83		0.00~0.19		73
Nov. 01, 2017		120		0.00~0.34		103
Nov. 06, 2017		106		0.00~0.35		101
Dec. 06, 2017		105		0.00~0.43		83
Dec. 26, 2017		255		0.00~0.49		170
Dec. 29, 2017		114		0.00~0.50		58
Stock granted in 2018
Jan. 10, 2018		19,197		0.00~0.53		14,347
Feb. 12, 2018		9		0.00~0.62		7
Apr. 02, 2018		115		0.00~0.75		99
Apr. 30, 2018		86		0.00~0.83		58
May 08, 2018		170		0.00~0.85		147
Jun. 01, 2018		140		0.00~0.92		116
Jul. 02, 2018		180		0.00~1.00		123
Aug. 07, 2018		194		0.00~1.10		153
Aug. 09, 2018		47		0.00~1.11		36
Aug. 14, 2018		30		0.00~1.12		30
Aug. 16, 2018		130		0.00~1.13		103
Sep. 07, 2018		106		0.00~1.19		82
Oct. 04, 2018		129		0.00~1.26		88
Nov. 01, 2018		258		0.00~1.34		221
Nov. 06, 2018		236		0.00~1.35		173
Dec. 03, 2018		132		0.00~1.42		132
Dec. 04, 2018		21		0.00~1.43		21
Dec. 07, 2018		91		0.00~1.44		85
Dec. 12, 2018		64		0.00~1.45		38
Dec. 18, 2018		271		0.00~1.47		241
Dec. 19, 2018		42		0.00~1.47		34
Dec. 31, 2018		127		0.00~1.50		106

131

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30.2.2 Mileage Stock (cont’d)

(In number of shares)
Grant date	Number of granted shares1		Expected exercise period (years) 2		Remaining shares
Stock granted in 2019
Jan. 11, 2019		26,580		0.00~1.53		22,948
Feb. 01, 2019		12		0.00~1.59		8
Apr. 01, 2019		167		0.00~1.75		119
Apr. 18, 2019		105		0.00~1.80		105
Apr. 22, 2019		33		0.00~1.81		33
Jul. 01, 2019		109		0.00~2.00		109
Aug. 29, 2019		39		0.00~2.16		39
Sep. 02, 2019		50		0.00~2.17		50
Nov. 01, 2019		119		0.00~2.34		119
Nov. 08, 2019		14		0.00~2.36		14
Dec. 05, 2019		56		0.00~2.43		56
Dec. 06, 2019		84		0.00~2.43		84
Dec. 31, 2019		87		0.00~2.50		87
Stock granted in 2020
Jan. 18, 2020		29,065		0.00~2.55		28,155
May 12, 2020		46		0.00~2.87		46
Jun. 30, 2020		206		0.00~3.00		206
		80,047				69,712

¹ Mileage stock may be exercised after one year from the grant date for two years. When the mileage stock is exercised, the closing price of prior month is applied. However, in case of transfer or retirement during the vesting period, mileage stock may still be exercised at the closing price of prior month.

² The remaining shares are assessed based on the stock price as of June 30, 2020. These shares are vested immediately at grant date.

The accrued expenses representing mileage stock share-based payments as of June 30, 2020 and December 31, 2019, are W 2,367 million and W 2,704 million, respectively. In addition, the compensation costs from mileage stock share-based payments that amount to W 427 million and W 1,210 million were recognized for the six-month periods ended June 30, 2020 and 2019, respectively.

132

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

31. Net Other Non-operating Income (Expenses)

Details of other non-operating income and expenses for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020						2019
	Three months			Six months			Three months		Six months
Other non-operating income
Gain on disposal of property and equipment	W	3,058		W	4,705		W	28,418	W	28,701
Rent received		27,140			52,406			18,154		40,104
Others		23,372			43,121			26,323		52,048
		53,570			100,232			72,895		120,853
Other non-operating expenses
Loss on disposal in property and equipment		8,225			8,923			872		4,424
Donation		8,953			46,972			13,843		39,893
Restoration cost		829			1,117			1,270		2,670
Management cost for special bonds		710			1,521			788		1,620
Others		39,304			62,836			8,053		21,687
		58,021			121,369			24,826		70,294
Net other non-operating income (expenses)	W	(4,451	)	W	(21,137	)	W	48,069	W	50,559

133

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

32. Income Tax Expense

Income tax expense for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020			2019
Tax payable
Current tax expense	W	581,440		W	468,166
Adjustments recognized in the period for current tax of prior years		8,752			(22,936	)
		590,192			445,230
Changes in deferred income tax assets (liabilities)		19,218			344,240
Income tax recognized directly in equity
Remeasurements of net defined benefit liabilities		816			1,797
Exchange difference in foreign operation		(5,744	)		(10,813	)
Financial assets measured at fair value through other comprehensive income		55,812			(51,985	)
Shares of other comprehensive income of investments in associates and joint ventures		(1,315	)		(2,242	)
Cash flow hedges		13,674			13,572
Hedges of a net investment in a foreign operation		935			3,045
Other comprehensive income of separate account		(1,482	)		(9,079	)
Fair value changes on financial liabilities designated at fair value due to own credit risk		(11,375	)		8,319
Net overlay adjustments		(26,203	)		(54,733	)
Others		29,470			—
		54,588			(102,119	)
Others		190			—
Tax expense	W	664,188		W	687,351

33. Dividends

The dividends to the shareholders of the Company in respect of the year ended December 31, 2019, of W 2,210 per share, amounting to total dividends of W 861,092 million, were paid in April 2020. The dividends paid to the shareholders of the Parent Company in 2019 were W 759,736 million (W 1,920 per share).

134

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

34. Accumulated Other Comprehensive Income

Details of changes in accumulated other comprehensive income for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Beginning balance			Changes except for reclassification			Reclassification to profit or loss			Replaced by retained earnings			Tax effect			Ending balance
Remeasurements of net defined benefit liabilities	W	(290,228	)	W	(2,966	)	W	—		W	—		W	816		W	(292,378	)
Exchange differences on translating foreign operations		31,793			51,866			—			—			(5,744	)		77,915
Revaluation gains (losses) on financial instruments at fair value through other comprehensive income		487,331			259,702			(128,850	)		(331,842	)		55,812			342,153
Share of other comprehensive income of associates and joint ventures		3,318			4,601			—			—			(1,315	)		6,604
Cash flow hedges		(27,333	)		(82,317	)		29,457			—			13,674			(66,519	)
Losses on hedges of a net investment in a foreign operation		(41,992	)		358			—			—			935			(40,699	)
Other comprehensive income arising from separate account		18,381			12,068			(6,678	)		—			(1,482	)		22,289
Fair value changes on financial liabilities designated at fair value due to own credit risk		(20,326	)		41,342			—			—			(11,375	)		9,641
Net gains on overlay approach adjustment		187,077			41,594			28,784			—			(26,203	)		231,252
	W	348,021		W	326,248		W	(77,287	)	W	(331,842	)	W	25,118		W	290,258

135

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

34. Accumulated Other Comprehensive Income (cont’d)

(In millions of Korean won)	2019
	Beginning balance			Changes except for reclassification			Reclassification to profit or loss			Replaced by retained earnings		Tax effect			Ending balance
Remeasurements of net defined benefit liabilities	W	(234,401	)	W	(6,535	)	W	—		W	—	W	1,797		W	(239,139	)
Exchange differences on translating foreign operations		(5,784	)		60,398			5,353			—		(10,813	)		49,154
Revaluation gains on financial instruments at fair value through other comprehensive income		450,694			235,453			(71,410	)		25,392		(51,985	)		588,144
Share of other comprehensive income (losses) of associates and joint ventures		(4,377	)		8,177			—			—		(2,242	)		1,558
Cash flow hedges		5,849			(83,665	)		31,735			—		13,572			(32,509	)
Losses on hedges of a net investment in a foreign operation		(33,092	)		(12,388	)		1,317			—		3,045			(41,118	)
Other comprehensive income arising from separate account		15,017			43,359			(2,210	)		—		(9,079	)		47,087
Fair value changes on financial liabilities designated at fair value due to own credit risk		(8,954	)		(30,249	)		—			—		8,319			(30,884	)
Net gains (losses) on overlay approach adjustment		(7,146	)		200,835			(4,826	)		—		(54,733	)		134,130
	W	177,806		W	415,385		W	(40,041	)	W	25,392	W	(102,119	)	W	476,423

136

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

35. Earnings per Share

35.1 Basic Earnings per Share

Calculations of basic earnings per share on the profit attributable to ordinary equity holders of the Parent Company are as follows:

35.1.1 Weighted average number of ordinary shares outstanding

Details of weighted average number of ordinary shares outstanding for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)	2020						2019
	Three months			Six months			Three months			Six months
Beginning (A)		415,807,920			415,807,920			418,111,537			418,111,537
Acquisition of treasury shares (B)		(26,173,585	)		(26,173,585	)		(26,966,534	)		(25,457,689	)
Weighted average number of ordinary shares outstanding (C=A+B)		389,634,335			389,634,335			391,145,003			392,653,848

35.1.2 Basic earnings per share

Details of basic earnings per share for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In Korean won and in number of shares)	2020
	Three months		Six months
Profit attributable to shareholders of the Parent Company	W	981,886,212,117	W	1,711,339,827,348
Deduction: Dividends on hybrid securities		3,256,250,000		6,512,500,000
Profit attributable to the ordinary equity holders of the Parent Company (A)		978,629,962,117		1,704,827,327,348
Weighted average number of ordinary shares outstanding (B)		389,634,335		389,634,335
Basic earnings per share (A / B)	W	2,512	W	4,375

(In Korean won and in number of shares)	2019
	Three months		Six months
Profit attributable to shareholders of the Parent Company	W	991,192,030,539	W	1,836,844,408,147
Deduction: Dividends on hybrid securities		—		—
Profit attributable to the ordinary equity holders of the Parent Company (A)		991,192,030,539		1,836,844,408,147
Weighted average number of ordinary shares outstanding (B)		391,145,003		392,653,848
Basic earnings per share (A / B)	W	2,534	W	4,678

137

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

35.2 Diluted Earnings per Share

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group’s dilutive potential ordinary shares include Stock Grants.

A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market share price of the Group’s outstanding shares for the year) based on the monetary value of Stock Grants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the settlement of Stock Grants.

35.2.1 Adjusted profit for diluted earnings per share

Adjusted profit for diluted earnings per share for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In Korean won)	2020
	Three months		Six months
Profit attributable to shareholders of the Parent Company	W	981,886,212,117	W	1,711,339,827,348
Deduction: Dividends on hybrid securities		3,256,250,000		6,512,500,000
Profit attributable to ordinary equity holders of the Parent Company		978,629,962,117		1,704,827,327,348
Adjusted profit for diluted earnings per share	W	978,629,962,117	W	1,704,827,327,348

(In Korean won)	2019
	Three months		Six months
Profit attributable to shareholders of the Parent Company	W	991,192,030,539	W	1,836,844,408,147
Deduction: Dividends on hybrid securities		—		—
Profit attributable to ordinary equity holders of the Parent Company		991,192,030,539		1,836,844,408,147
Adjusted profit for diluted earnings per share	W	991,192,030,539	W	1,836,844,408,147

138

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

35.2.2 Weighted average number of ordinary shares outstanding for diluted earnings per share

Adjusted weighted average number of ordinary shares outstanding to calculate diluted earnings per share for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)	2020
	Three months		Six months
Weighted average number of ordinary shares issued and outstanding		389,634,335		389,634,335
Adjustment
Stock grants		2,907,973		3,200,650
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share		392,542,308		392,834,985

(In number of shares)	2019
	Three months		Six months
Weighted average number of ordinary shares issued and outstanding		391,145,003		392,653,848
Adjustment
Stock grants		2,433,403		2,626,443
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share		393,578,406		395,280,291

35.2.3 Diluted earnings per share

Details of diluted earnings per share for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In Korean won and in number of shares)	2020
	Three months		Six months
Adjusted profit for diluted earnings per share	W	978,629,962,117	W	1,704,827,327,348
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share		392,542,308		392,834,985
Diluted earnings per share	W	2,493	W	4,340

(In Korean won and in number of shares)	2019
	Three months		Six months
Adjusted profit for diluted earnings per share	W	991,192,030,539	W	1,836,844,408,147
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share		393,578,406		395,280,291
Diluted earnings per share	W	2,518	W	4,647

139

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

36. Insurance Contracts

36.1 Insurance Contract Liabilities

Details of insurance contract liabilities presented within other liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Non-life insurance		Life insurance		Others		Total
Long-term insurance premium reserve	W	24,375,523	W	7,076,773	W	—	W	31,452,296
Reserve for outstanding claims		2,479,076		140,807		2,324		2,622,207
Unearned premium reserve		1,778,364		6,348		661		1,785,373
Reserve for participating policyholders’ dividends		114,122		27,790		—		141,912
Unallocated divisible surplus to future policyholders		60,034		5,093		—		65,127
Reserve for compensation for losses on dividend-paying insurance contracts		20,090		6,214		—		26,304
Guarantee reserve		—		24,699		—		24,699
	W	28,827,209	W	7,287,724	W	2,985	W	36,117,918

(In millions of Korean won)	December 31, 2019
	Non-life insurance		Life insurance		Others		Total
Long-term insurance premium reserve	W	23,799,607	W	6,991,247	W	—	W	30,790,854
Reserve for outstanding claims		2,297,256		101,690		2,563		2,401,509
Unearned premium reserve		1,522,827		4,603		845		1,528,275
Reserve for participating policyholders’ dividends		117,094		29,745		—		146,839
Unallocated divisible surplus to future policyholders		46,901		4,202		—		51,103
Reserve for compensation for losses on dividend-paying insurance contracts		20,090		5,784		—		25,874
Guarantee reserve		—		22,229		—		22,229
	W	27,803,775	W	7,159,500	W	3,408	W	34,966,683

140

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

36.2 Liability Adequacy Test for Insurance Contract (LAT)

Non-life Insurance

The assumptions and the basis of calculation applied in the adequacy test of non-life insurance liabilities as of June 30, 2020 and 2019 are as follows:

	June 30, 2020		June 30, 2019		Basis of calculation
Long-term insurance
Discount rate		1.55%~8.84%		1.30%~5.47%	Discount rate is calculated by applying risk-free rate curve plus liquidity premium presented by Financial Supervisory Service.
Insurance operating expense rate		6.60%		6.43%	Insurance operating expense rate is calculated by considering the future expense plan based on historical data for the latest one year.
Surrender rate		1.51%~34.13%		1.5%~31.4%	Surrender rate is calculated based on historical data for the latest five years.
Risk premium rate		13.1%~1,037.3%		9.0%~724.0%	Risk premium rate is calculated by the ratio of insurance claims paid to risk premiums based on historical data for the latest five years.
General insurance
Insurance operating expense rate		11.55%		10.74%	Ratio of maintenance costs incurred to earned premiums by the types of contracts within a year from the base date
Claim handling expense rate		4.45%		4.79%	Ratio of claim handling expenses incurred to insurance claims paid by the type of contracts within 3 years from the base date
Insurance claim ratio		66.85%		63.37%	Ratio of insurance claims incurred to earned premiums by the type of contracts within 5 years from the base date
Automobile insurance
Insurance operating expense rate		9.77%		9.82%	Ratio of maintenance costs incurred to earned premiums by the type of collaterals within a year from the base date
Claim handling expense rate		8.70%		8.99%	Ratio of claim handling expenses incurred to insurance claims paid by the type of collaterals within 3 years from the base date
Insurance claim ratio		78.29%		77.96%	Ratio of insurance claims incurred to earned premiums by the type of collaterals within 5 years from the base date

141

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

36.2 Liability Adequacy Test for Insurance Contract (LAT) (cont’d)

Details of the result of the adequacy test of non-life insurance liabilities as of June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Reserve for test1		LAT base		Deficit (Surplus)
General insurance	W	482,002	W	412,218	W	(69,784	)
Automobile insurance		1,259,284		1,195,170		(64,114	)
Long-term insurance		20,310,565		9,563,591		(10,746,974	)
	W	22,051,851	W	11,170,979	W	(10,880,872	)

(In millions of Korean won)	June 30, 2019
	Reserve for test1		LAT base		Deficit (Surplus)
General insurance	W	406,895	W	338,288	W	(68,607	)
Automobile insurance		1,091,707		1,035,128		(56,579	)
Long-term insurance		19,132,459		8,221,652		(10,910,807	)
	W	20,631,061	W	9,595,068	W	(11,035,993	)

¹ Long-term insurance is for premium reserves and unrecognized premium reserves; the premium reserve is the amount deducted from the unearned premiums and insurance contract loans in accordance with Article 6-3 of the Insurance Supervisory Regulation.

Life insurance

The assumptions and basis of calculation applied in the adequacy test of life insurance liabilities as of June 30, 2020 and 2019, are as follows:

	June 30, 2020	June 30, 2019	Basis of calculation
Surrender rate	0%~65.39%	0%~64.95%	The ratio of cancelled premiums to premiums by product group, method of payment, channel, and elapsed period calculated based on the most recent five-year experience statistics
Insurance claim ratio	11%~132%	7%~124%	The ratio of incidents by collateral, gender, elapsed period to the number of holding insurances based on the most recent seven-year experience statistics
Discount rate	1.38%~9.71%	1.61%~5.59%	Estimated investment assets profit ratio based on the interest rate scenario provided by the Financial Supervisory Service

Indirect insurance operating expenses are calculated by applying the unit cost determined based on historical data for the latest one year in accordance with the standard of the allocation of insurance operating expenses under Regulations on Supervision of Insurance Business. Direct insurance operating expenses including acquisition costs are the estimated expense amount to be incurred in the future in accordance with the Group’s internal regulations.

142

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

36.2 Liability Adequacy Test for Insurance Contract (LAT) (cont’d)

Details of the result of the adequacy test of life insurance liabilities as of June 30, 2020 and 2019, are as follows:

(In millions of Korean won)		June 30, 2020
		Reserve for test			LAT base			Deficit (Surplus)
Interest rate-fixed	Participating	W	30,475		W	55,420		W	24,945
	Non-participating		211,416			(40,223	)		(251,639	)
Interest rate-linked	Participating		988,829			1,014,760			25,931
	Non-participating		5,441,422			5,112,344			(329,078	)
Variable life insurance			(36,806	)		(137,168	)		(100,362	)
		W	6,635,336		W	6,005,133		W	(630,203	)

(In millions of Korean won)		June 30, 2019
		Reserve for test			LAT base			Deficit (Surplus)
Interest rate-fixed	Participating	W	30,589		W	55,560		W	24,971
	Non-participating		154,274			89,667			(64,607	)
Interest rate-linked	Participating		1,049,473			1,060,250			10,777
	Non-participating		5,406,364			5,024,568			(381,796	)
Variable life insurance			(34,886	)		(143,568	)		(108,682	)
		W	6,605,814		W	6,086,477		W	(519,337	)

The Group did not record the additional reserve since the surplus exceeded the deficit based on the result of LAT, resulting no additional accounting treatment as of June 30, 2020 and 2019.

143

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

36.3 Net Insurance Income

Details of insurance income and expenses for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)
	2020		2019
Insurance Income
Premium income	W	6,185,774	W	5,590,344
Reinsurance income		411,862		400,931
Reversal of policy reserves		422		—
Separate account income		91,521		93,042
Income of change in reinsurance assets		144,241		64,873
Other insurance income		3,634		7,029
		6,837,454		6,156,219
Insurance Expense
Insurance claims paid		2,586,451		2,445,622
Dividend expense		5,620		5,008
Refunds of surrender value		1,599,246		1,408,309
Reinsurance expense		570,778		509,534
Provision of policy reserves		1,143,523		804,130
Separate account expenses		54,341		62,875
Insurance operating expenses		213,590		224,023
Deferred acquisition costs		358,446		340,535
Expenses of change in reinsurance assets		79		48
Claim survey expenses paid		29,237		22,740
Other insurance expenses		95,687		102,817
		6,656,998		5,925,641
Net insurance income	W	180,456	W	230,578

144

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

36.4 Application of the Overlay Approach

The Group adopted the overlay approach in accordance with Korean IFRS 1104, for the first-time application of Korean IFRS 1109.

36.4.1 Overlay Approach

Details of the financial assets with the overlay approach applied as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
	June 30, 2020		December 31, 2019
Financial assets at fair value through profit or loss
Due from financial institutions	W	67,930	W	166,891
Debt securities		7,668,324		7,955,286
Equity securities		44,489		52,250
	W	7,780,743	W	8,174,427

36.4.2 Net gains (losses) on Overlay Approach Adjustment

Changes in net gains (losses) on overlay adjustment for the six-month period ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)
	2020		2019
Beginning1	W	187,077	W	(7,146	)
Recognition of other comprehensive income due to acquisition and valuation		23,307		144,775
Reclassification to profit or loss due to disposal		20,868		(3,499	)
Ending	W	231,252	W	134,130

¹  Amounts are net of tax

145

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

37. Supplemental Statement of Cash Flows

Details of cash and cash equivalents as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
	June 30, 2020			December 31, 2019
Cash	W	2,485,381		W	2,311,418
Checks with other banks		413,974			383,500
Due from Bank of Korea		9,727,483			8,607,911
Due from other financial institutions		9,882,617			9,535,049
		22,509,455			20,837,878
Due from financial institutions at fair value through profit or loss		135,780			216,367
		22,645,235			21,054,245
Restricted cash from financial institutions		(13,342,068	)		(13,372,966	)
Due from financial institutions with original maturities over three months		(1,553,760	)		(1,557,554	)
		(14,895,828	)		(14,930,520	)
	W	7,749,407		W	6,123,725

Cash inflows and outflows from income tax, interests and dividends for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	Activity		2020		2019
Income tax paid		Operating	W	624,535	W	769,137
Interest received		Operating		7,047,187		7,411,777
Interest paid		Operating		2,477,068		2,606,054
Dividends received		Operating		117,524		140,673
Dividends paid		Financing		6,513		759,736

146

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

38. Contingent Liabilities and Commitments

38.1 Payment Guarantees

Details of payment guarantees as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
	June 30, 2020		December 31, 2019
Confirmed payment guarantees
Confirmed payment guarantees in Korean won
Payment guarantees for KB purchasing loan	W	165,540	W	161,314
Other payment guarantees		1,052,311		746,823
		1,217,851		908,137
Confirmed payment guarantees in foreign currency
Acceptances of letter of credit		248,916		155,151
Letter of guarantees		44,786		49,754
Bid bond		42,495		37,765
Performance bond		786,280		718,097
Refund guarantees		873,913		1,022,646
Other payment guarantees in foreign currency		2,571,422		2,935,939
		4,567,812		4,919,352
Financial guarantees
Payment guarantees for mortgage		85,431		47,384
Overseas debt guarantees		294,339		406,680
International financing guarantees in foreign currencies		240,665		231,685
Other financing payment guarantees		50,950		230,000
		671,385		915,749
		6,457,048		6,743,238
Unconfirmed acceptances and guarantees
Guarantees of letter of credit		1,611,040		1,845,508
Refund guarantees		565,170		654,497
		2,176,210		2,500,005
	W	8,633,258	W	9,243,243

147

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

38.2 Commitments

Details of commitments as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
	June 30, 2020		December 31, 2019
Commitments
Corporate loan commitments	W	42,662,548	W	41,930,407
Retail loan commitments		46,374,834		42,582,736
Credit line on credit cards		65,347,660		60,667,219
Purchase of other security investment and others		8,183,647		6,617,253
		162,568,689		151,797,615
Financial Guarantees
Credit line		3,352,675		2,340,141
Purchase of security investment		601,200		591,500
		3,953,875		2,931,641
	W	166,522,564	W	154,729,256

38.3 Other Matters (including litigation)

a) The Group has filed 103 lawsuits as a plaintiff (excluding minor lawsuits in relation to the collection or management of loans), involving aggregate claims of W 347,757 million, and faces 227 lawsuits as a defendant (excluding minor lawsuits in relation to the collection or management of loans) involving aggregate damages of W 335,191 million, which arose in the normal course of the business and are still pending as of June 30, 2020.

b) As of June 30, 2020, Kookmin bank has entered into a construction contract of building the integrated company building, amounting to W 163,960 million, and the amount of total expenses incurred in relation to the construction contract is W 101,237 million for the six-month period ended June 30, 2020.

c) As of June 30, 2020, Kookmin Bank has entered into construction contracts amounting to W 256,165 million related to The K Project(IT infrastructure construction for KB’s digital transformation to cope with change of IT technology and finance environment), and the amount of total expenses incurred is W 78,949 million for the six-month period ended June 30, 2020.

d) Kookmin Bank’s Board of Directors determined to acquire additional ordinary shares of PT Bukopin TBK, Kookmin Bank’s associate in Indonesia, in two times of capital increases in the form of an allotment to shareholders (the first) and third party allocation (the second) on July 16, 2020. Accordingly, 2,967,600,372 shares of common stock issued as an allotment to shareholders (first) were acquired at IDR 534,168,066,960 (W 43,909 million) on July 30, 2020, and the ownership percentage after the acquirement is 33.9%.

e) While setting up a fraud detection system, a computer contractor employed by the personal credit ratings firm Korea Credit Bureau caused a widespread data breach in June 2013, resulting in the theft of cardholders’ personal information. As a result of the breach of customer personal information, the KB Kookmin Card received a notification from the Financial Services Commission that the KB Kookmin Card is subject to a temporary three-month operating suspension as of February 16, 2014. In respect of the incident, the Group faces 3 and 11 legal claims filed as a defendant, with an aggregate claim of W 152 million and W 444 million as of June 30, 2020 and December 31, 2019, respectively. A provision liability of W 357 million and W 2,549 million have been recognized for these pending lawsuits as of June 30, 2020 and December 31, 2019. In addition, the Group took out the personal information protection liability insurance. On the other hand, the further appeals can be filed against the Group, however, the final outcome cannot be reasonably measured.

148

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

38.3 Other Matters (including litigation) (cont’d)

f) KB Kookmin Card signed a stock sale agreement to acquire 80% of the shares of PT. Finansia Multi Finance, Indonesian financial company, for US$ 75,280,000 in December 2019 and payment was completed in July 2020. In addition, KB Kookmin Card entered into a contract to acquire bonds, which includes the right to exchange 5% of PT. Finansia Multi Finance shares, issued by PT. Finansia Multi Finance shareholders for US$ 5,000,000.

g) As of June 30, 2020, the Group is not able to dispose, transfer or collateralize the shares of a joint-venture lease company or the rights for those to a third party without the written consent of Kolao Holdings for five years (the restriction period for the disposal of its equity) from the date of initial investment for KB KOLAO LEASING Co., LTD. However, KB Kookmin Card and KB Capital Co., Ltd. may transfer all or part of the shares of the joint-venture lease company to an affiliate that has complied with all the terms and conditions of the contract regarding the establishment and operation of the joint-venture lease company and has agreed to take over the liability for the joint-venture lease company. Each party of the joint venture lease company may transfer all or part of its equity, as determined separately, after the restriction period for the disposal of its equity has expired. Meanwhile, according to the agreement, KB KOLAO LEASING Co., LTD. disposes affiliated receivables, which are overdue for more than three months, of Kolao Holdings to Lanexang Leasing Co., Ltd.

h) As of June 30, 2020, KB Capital Co., Ltd. and PT Sunindo Primasura shall retain the shares of PT Sunindo KB Finance for five years from the completion of share purchase. If one party sells all or part of the shares, provides them as collateral, trades or disposed of them , the other party could exercise a call option through a written proposal including transfer price, payment method and others provided by the counterparty. Meanwhile, the shareholders of PT Sunindo KB Finance are allowed to have dividends for up to 20% of net profit after taxes for each fiscal year starting from the first fiscal year after third consecutive year of income available for dividends.

i) KB Securities is a professional private equity investment firm which sells private investment funds that loans capital to corporations (borrowers) who invest in rental apartment of disables in Australia. KB Securities sold W 326,500 million in funds and trusts to individuals and institutional investors. However, KB Securities is in probable of a loss of investment principal because the operation of the funds became impossible due to a contract breach of a local borrower. In this regard, 2 lawsuits were filed with the Group in June 30, 2020. There is a possibility of further lawsuits in the future. The result of the lawsuits is unpredictable as of now.

j) Regarding Lime Asset Management, KB Securities is holding PIS(Portfolio Index Swap) contract in related to Lime Thetis Qualified Investor Private Investment Trust No.2 and Lime Pluto FI Qualified Investor Private Investment Trust No.D-1, which are suspended to repurchase in fourth quarter of 2019 and KB Securities holds beneficiary certificates and TRS contracts as underlying asset amount to W 347,000 million. On the other hand, KB Securities has sold feeder fund of applicable funds amounts to W 68,100 million. Lime Asset Management has a repurchase and management plan in place, however, at the current status, either the availability or timing of repurchase of the fund cannot be predicted. There is possibility of lawsuits to be filed in the future, but the impact on the financial statements is unpredictable as of now.

k) On April 10, 2020, the Group has entered into share purchase agreement to acquire 15,000,000 ordinary shares (100% of investments) of Prudential Life Insurance Company Korea Ltd. at W 2,265 billion. The final acquisition amount is expected to be fixed at the acquisition amount above by reflecting the agreed interests (W 75 billion) until the Closing date of transactions and the Group’s external outflows until the Closing date of transactions. The Closing date will be determined after the preapproval of the financial authorities.

149

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

38.3 Other Matters (including litigation) (cont’d)

l) The ongoing COVID-19 pandemic has a negative impact on the global economy, and has increased uncertainty in estimation of the Group’s expected credit losses on certain portfolios and potential impairment on assets. The Group’s ability to generate revenue may be adversely affected by the factors including;

• uncertainties arising from significant increases in credit risks of borrowers affected by COVID-19 pandemic

• uncertainties arising from forward-looking macroeconomic information in estimating expected credit losses

• depreciation of Korean won against major currencies causing increase in the payment amount of principal and interests of debts denominated in foreign currencies; and

• a significant decline in fair value of the Group’s investments in companies affected by COVID-19 pandemic.

Meanwhile, the Group’s accounting policy is described in Note 3.2 Assessment of expected credit losses on financial instruments related to COVID-19 and the impact on estimating expected credit losses is described in Note 10 Changes in the allowances for loan losses and Note 22 Changes in provisions for unused loan commitments, payment guarantees.

150

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

39. Subsidiaries

39.1 Consolidated subsidiaries

Details of major subsidiaries as of June 30, 2020, are as follows:

Investor	Investee	Ownership interests			Location	Date of financial statements		Industry
KB Financial Group Inc.	Kookmin Bank		100.00	%	Korea		June. 30	Banking and foreign exchange transaction
	KB Kookmin Card Co., Ltd.		100.00	%	Korea		June. 30	Credit card and installment finance
	KB Life Insurance Co., Ltd.		100.00	%	Korea		June. 30	Life insurance
	KB Asset Management Co., Ltd.		100.00	%	Korea		June. 30	Collective investment and advisory
	KB Capital Co., Ltd.		100.00	%	Korea		June. 30	Financial Leasing
	KB Savings Bank Co., Ltd.		100.00	%	Korea		June. 30	Savings banking
	KB Real Estate Trust Co., Ltd.		100.00	%	Korea		June. 30	Real estate trust management
	KB Investment Co., Ltd.		100.00	%	Korea		June. 30	Capital investment
	KB Credit Information Co., Ltd.		100.00	%	Korea		June. 30	Collection of receivables or credit investigation
	KB Data System Co., Ltd.		100.00	%	Korea		June. 30	Software advisory, development, and supply
	KB Securities Co., Ltd.		100.00	%	Korea		June. 30	Financial investment
	KB Insurance Co., Ltd.		100.00	%	Korea		June. 30	Non-life insurance
Kookmin Bank	Kookmin Bank Cambodia PLC.		100.00	%	Cambodia		June. 30	Banking and foreign exchange transaction
	Kookmin Bank Int’l Ltd. (London) 1		0.00	%	United Kingdom		June. 30	Banking and foreign exchange transaction
	Kookmin Bank(China) Ltd.		100.00	%	China		June. 30	Banking and foreign exchange transaction
	KB Microfinance Myanmar Co., Ltd.		100.00	%	Myanmar		June. 30	Other credit granting n.e.c.
	PRASAC Microfinance Institution PLC.		70.00	%	Cambodia		June. 30	Other credit granting n.e.c.

151

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

39.1 Consolidated subsidiaries (cont’d)

Investor	Investee	Ownership interests			Location	Date of financial statements		Industry
KB Securities Co., Ltd.	KBFG Securities America Inc.		100.00	%	United States of America		June. 30	Investment advisory and securities dealing activities
	KB Securities Hong Kong Ltd.		100.00	%	China		June. 30	Investment advisory and securities dealing activities
	KB SECURITEIS VIETNAM JOINT STOCK COMPANY		99.70	%	Vietnam		June. 30	Investment advisory and securities dealing activities
KB Insurance Co., Ltd.	Leading Insurance Services, Inc.		100.00	%	United States of America		June. 30	Management service
	LIG Insurance (China) Co., Ltd.		100.00	%	China		June. 30	Non-life insurance
	PT. KB Insurance Indonesia		70.00	%	Indonesia		June. 30	Non-life insurance
	KB Claims Survey & Adjusting		100.00	%	Korea		June. 30	Claim service
	KB Sonbo CNS		100.00	%	Korea		June. 30	Management service
	KB Golden Life Care Co., Ltd.		100.00	%	Korea		June. 30	Service
KB Kookmin Card Co., Ltd.	KB DAEHAN SPECIALIZED BANK PLC.		95.71	%	Cambodia		June. 30	Banking
KB Capital Co., Ltd.	PT Sunindo Kookmin Best Finance		85.00	%	Indonesia		June. 30	Auto Installment Finance
KB Kookmin Card Co., Ltd., KB Capital Co., Ltd.	KB KOLAO LEASING CO., Ltd		80.00	%	Laos		June. 30	Auto Installment Finance
KB Asset Management Co., Ltd.	KBAM Shanghai Advisory Services Co., Ltd		100.00	%	China		June. 30	General advisory

¹ Disposal is in progress as of June 30, 2020.

152

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

39.2 Consolidated Structured Companies

Details of consolidated structured companies as of June 30, 2020, are as follows:

	Consolidated structured companies	Reason for consolidation
Trusts	Kookmin Bank (development trust) and 10 others	The Group controls the trust because it has power that determines the management performance over the trust and is exposed to variable returns to absorb losses through the guarantees of payment of principal, or payment of principal and fixed rate of return.
Asset-backed securitization	Able NS Co., Ltd and 125 others	The Group controls these investees as it has power over relevant activities in case of default; is significantly exposed to variable returns by providing lines of credit or ABCP purchase commitments or due to acquisition of subordinated debt; and has ability to affect those returns through its power.
Investment funds	KB Global Platform Fund and 155 others	Recognized as companies subject to consolidation if the Group, as a collective investor, operating manager (member), etc., can manage fund assets on behalf of other investors or dismiss the collective investor and operating manager, and is substantially exposed to significant variable returns or has such rights.

Structured companies that hold more than half of their ownership percentage but do not have the strength to related activities in accordance with agreements with trust and other related parties are excluded from the consolidation.

153

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

39.3 Condensed financial statements

The condensed financial information of major subsidiaries as of June 30, 2020 and December 31, 2019, and for the six-month period ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

	June 30, 2020						2020
	Assets		Liabilities		Equity		Operating income		Profit (loss) for the period			Total compre- hensive income (loss) for the period
Kookmin Bank1	W	425,310,236	W	395,987,212	W	29,323,024	W	13,532,177	W	1,246,754		W	1,318,866
KB Securities Co., Ltd.1,2		56,606,560		51,802,355		4,804,205		6,438,213		128,836			199,530
KB Insurance Co., Ltd.1,2		37,677,077		33,620,095		4,056,982		6,833,027		143,955			194,125
KB Kookmin Card Co., Ltd.1		23,858,804		19,760,540		4,098,264		1,589,119		163,784			133,124
KB Asset Management Co., Ltd.1		385,903		198,306		187,597		86,064		21,554			22,356
KB Capital Co., Ltd.1,2		12,140,443		10,866,457		1,273,986		610,354		73,538			73,570
KB Life Insurance Co., Ltd.1		9,998,780		9,361,900		636,880		957,331		11,784			21,542
KB Real Estate Trust Co., Ltd.		393,399		92,305		301,094		73,162		38,287			38,288
KB Savings Bank Co., Ltd.		1,549,992		1,331,087		218,905		49,977		9,912			9,499
KB Investment Co., Ltd.1		801,325		585,097		216,228		41,139		1,467			1,478
KB Data System Co., Ltd.		44,453		22,884		21,569		77,361		880			878
KB Credit Information Co., Ltd.		28,520		13,764		14,756		19,593		(140	)		(142	)

154

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

39.3 Condensed financial statements (cont’d)

(In millions of Korean won)

	December 31, 2019						2019
	Assets		Liabilities		Equity		Operating income		Profit (loss) for the period			Total compre- hensive income (loss) for the period
Kookmin Bank1	W	387,425,038	W	358,420,805	W	29,004,233	W	11,472,979	W	1,305,109		W	1,347,860
KB Securities Co., Ltd.1,2		47,816,512		43,131,858		4,684,654		4,507,410		168,890			179,111
KB Insurance Co., Ltd.1,2		36,552,368		32,689,460		3,862,908		6,380,595		166,153			365,754
KB Kookmin Card Co., Ltd.1		22,990,114		18,925,195		4,064,919		1,515,798		146,100			133,331
KB Asset Management Co., Ltd.1		310,018		114,776		195,242		75,468		25,720			26,026
KB Capital Co., Ltd.1,2		11,190,568		10,036,077		1,154,491		444,542		63,094			63,208
KB Life Insurance Co., Ltd.1		9,801,905		9,186,567		615,338		814,360		16,524			64,799
KB Real Estate Trust Co., Ltd.		377,938		85,132		292,806		55,822		30,640			30,640
KB Savings Bank Co., Ltd.		1,361,032		1,148,625		212,407		46,601		9,852			9,580
KB Investment Co., Ltd.1		756,972		542,221		214,751		36,647		2,103			2,166
KB Data System Co., Ltd.		41,690		20,999		20,691		70,402		2,486			2,470
KB Credit Information Co., Ltd.		27,834		12,936		14,898		19,307		(263	)		(266	)

¹ Financial information is based on its consolidated financial statements.

² The amount includes the fair value adjustments due to the merger.

39.4 Nature of the risks associated with interests in consolidated structured entities

39.4.1 The terms of contractual arrangements to provide financial support to a consolidated structured entity

• The Group has provided payment guarantees of W 3,863,152 million to K plus 1st L.L.C and other subsidiaries.

• The Group provides capital commitment to KB Wise Star Private Real Estate Feeder Fund 1st. and 17 other subsidiaries. The unexecuted amount of the investment agreement is W 625,859 million. Based on the capital commitment, the Group is subject to increase its investment upon the request of the asset management company or the additional agreement among investors.

• The Group provides the guarantees of payment of principal, or principal and fixed rate of return in case the operating results of the trusts are less than the guaranteed principal, or principal and fixed rate of return.

155

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

39.5 Changes in subsidiaries

The subsidiaries newly included in consolidation during the six-month period ended June 30, 2020, are as follows:

Company	Reason for obtaining control
PRASAC Microfinance Institution PLC. and 14 others	Holds over than a majority of the ownership interests
KB Hwaseong 1st L.L.C. and 39 others	Holds the power in the case of default and exposed to variable returns by providing lines of credit, ABCP purchase commitments or acquiring subordinated debt
KB Global Infrastructure Synergy Private Special Asset Fund and 11 others	Holds the power to determine the operation of the trust and exposed to variable returns by holding significant amount of ownership interests

The subsidiaries excluded from consolidation during the six-month period ended June 30, 2020, are as follows:

Company	Reason for losing control
KBH the 3rd L.L.C and 20 others	Termination of the commitments
Sechste Casalog KG and 1 other	Liquidation
KB Contents Panda iMBC Contents Venture Fund and 2 others	Disposal
Hyundai Smart Index Alpha Securities Feeder Investment Trust No.1 and 20 others	Ownership decrease

156

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

40. Unconsolidated Structured Entity

The nature, purpose and activities of the unconsolidated structured entities and how the structured entities are financed, are as follows:

Nature	Purpose	Activity	Method of Financing
Structured financing	Granting PF loans to SOC and real estate Granting loans to ships/aircrafts SPC	Construction of SOC and real estate Building ships/ construction and purchase of aircrafts	Loan commitments through Credit Line, providing lines of credit and investment agreements
Investment funds	Investment in beneficiary certificates Investment in PEF and partnerships	Management of fund assets Payment of fund fees and allocation of fund profits	Sales of beneficiary certificate instruments Investment of managing partners and limited partners
Trusts	Management of financial trusts; •  Development trust •  General unspecified money trust •  Guarantees of payment of principal trust •  Other trusts	Management of trusted financial assets Payment of trust fees and allocation of trust profits.	Sales of trusted financial assets
Asset-backed securitization	Early cash generation through transfer of securitization assets Fees earned as services to SPC, such as providing lines of credit and ABCP purchase commitments	Fulfillment of Asset-backed securitization plan Purchase and transfer of securitization assets Issuance and repayment of ABS and ABCP	Issuance of ABS and ABCP based on securitization assets

157

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

40. Unconsolidated Structured Entity (cont’d)

Details of scale of unconsolidated structured entities and nature of the risks associated with the Group’s interests in unconsolidated structured entities as of June 30, 2020, and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Structured financing		Investment funds		Trusts		Asset-backed securitization and others		Total
Total assets of unconsolidated structured entity	W	111,541,966	W	219,456,723	W	2,475,067	W	102,962,694	W	436,436,450
Carrying amount on financial statements
Assets
Financial assets at fair value through profit or loss		165,462		11,063,475		—		2,500,385		13,729,322
Derivative financial assets		—		—		—		3,916		3,916
Loans at amortized cost		4,963,046		398,321		279,121		1,013,600		6,654,088
Financial investments		—		—		—		7,658,143		7,658,143
Investment in associates		—		464,451		—		—		464,451
Other assets		2,871		2,214		103,029		17,845		125,959
	W	5,131,379	W	11,928,461	W	382,150	W	11,193,889	W	28,635,879
Liabilities
Deposits	W	617,272	W	50,995	W	—	W	375,034	W	1,043,301
Derivative financial liabilities		—		—		—		396		396
Other liabilities		9,969		126		—		15,247		25,342
	W	627,241	W	51,121	W	—	W	390,677	W	1,069,039
Maximum exposure to loss1
Holding assets	W	5,131,379	W	11,928,461	W	382,150	W	11,193,889	W	28,635,879
Purchase and investment commitments		26,250		5,783,661		—		828,678		6,638,589
Unused credit		1,338,912		2,900		15,910		3,124,648		4,482,370
Payment guarantee and loan commitments		1,142,338		11,670		—		603,917		1,757,925
	W	7,638,879	W	17,726,692	W	398,060	W	15,751,132	W	41,514,763
Methods of determining the maximum exposure to loss		Loan commitments / investment agreements / purchase commitments and acceptances and guarantees		Investments / loans and capital commitments		Dividends by results trust: Total amount of trust exposure		Providing lines of credit / purchase commitments / loan commitments and acceptances and guarantees

158

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

40. Unconsolidated Structured Entity (cont’d)

(In millions of Korean won)	December 31, 2019
	Structured financing		Investment funds		Trusts		Asset-backed securitization and others		Total
Total assets of unconsolidated structured entity	W	54,206,404	W	180,236,568	W	2,287,172	W	99,012,931	W	335,743,075
Carrying amount on financial statements
Assets
Financial assets at fair value through profit or loss		132,685		9,846,278		—		2,405,228		12,384,191
Derivative financial assets		—		—		—		2,959		2,959
Loans at amortized cost		4,775,723		293,221		266,974		920,863		6,256,781
Financial investments		—		—		—		5,166,578		5,166,578
Investment in associates		—		352,488		—		—		352,488
Other assets		1,876		69,353		93,613		9,181		174,023
		4,910,284		10,561,340		360,587		8,504,809		24,337,020
Liabilities
Deposits		523,086		90,131		—		409,246		1,022,463
Derivative financial liabilities		—		—		—		228		228
Other liabilities		1,362		78		—		16,169		17,609
		524,448		90,209		—		425,643		1,040,300
Maximum exposure to loss1
Holding assets		4,910,284		10,561,340		360,587		8,504,809		24,337,020
Purchase and investment commitments		38,650		3,980,356		—		945,598		4,964,604
Unused credit		654,203		2,900		28,427		1,927,902		2,613,432
Payment guarantee and loan commitments		1,816,411		7,188		—		600,664		2,424,263
	W	7,419,548	W	14,551,784	W	389,014	W	11,978,973	W	34,339,319
Methods of determining the maximum exposure to loss		Loan commitments /investment agreements / purchase commitments and acceptances and guarantees		Investments / loans and capital commitments		Dividends by results trust: Total amount of trust exposure		Providing lines of credit/ purchase commitments/ loan commitments and acceptances and guarantees

¹ Maximum exposure to loss includes the asset amounts, after deducting loss (provision for assets, impairment losses and others), recognized in the financial statements of the Group.

159

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41. Related Party Transactions

41.1 Profit or loss

Profit and loss arising from transactions with related parties for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)
Associates and joint ventures		2020		2019
Balhae Infrastructure Fund	Fee and commission income	W	3,382	W	3,338
Korea Credit Bureau Co., Ltd.	Interest expense		1		18
	Fee and commission income		490		546
	Insurance income		2		1
	Fee and commission expense		1,662		1,068
	Contribution of provision for credit losses		—		1
KB GwS Private Securities Investment Trust	Fee and commission income		424		422
Incheon Bridge Co., Ltd.	Interest income		2,091		4,423
	Interest expense		176		220
	Fee and commission income		12		12
	Fee and commission expense		3		3
	Insurance income		138		143
	Revenue on financial assets/liabilities at fair value through profit or loss		1,819		3,287
	Contribution of provision for credit losses		508		—
KoFC POSCO HANHWA KB Shared Growth Private Equity Fund No. 2	Fee and commission income		12		89
Aju Good Technology Venture Fund	Interest expense		11		14
KB Star Office Private Real Estate Investment Trust No.1	Interest income		184		183
	Interest expense		43		53
	Fee and commission income		217		216
RAND Bio Science Co., Ltd.	Interest expense		8		2
SY Auto Capital Co., Ltd.	Interest income		550		650
	Fee and commission income		14		26
	Fee and commission expense		—		235
	Insurance income		20		13
	Other operating income		734		347
	Other operating expense		65		189
	Reversal of provision for credit losses		17		—

160

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.1 Profit or loss (cont’d)

(In millions of Korean won)
Associates and joint ventures		2020		2019
Food Factory Co., Ltd.	Interest income	W	22	W	10
	Interest expense		7		—
	Insurance income		3		2
	Fee and commission expense		—		8
	Revenue on financial assets/liabilities at fair value through profit or loss		48		32
	Reversal of provision for credit losses		1		—
KB Pre IPO Secondary Venture Fund 1st	Interest expense		3		3
	Fee and commission income		55		55
Builton Co., Ltd.1	Interest income		—		2
	Insurance income		—		1
	Revenue on financial assets/liabilities at fair value through profit or loss		—		4
KB Private Equity Fund III	Fee and commission income		239		238
Wise Asset Management Co., Ltd.	Interest expense		—		1
Acts Co., Ltd.	Insurance income		1		—
	Revenue on financial assets/liabilities at fair value through profit or loss		—		30
Dongjo Co., Ltd.	Insurance income		—		2
A-PRO Co., Ltd. 1	Interest income		7		—
	Interest expense		1		1
	Insurance income		1		2
	Contribution of provision for credit losses		1		—
POSCO-KB Shipbuilding Investment Fund	Fee and commission income		284		245
Dae-A Leisure Co., Ltd.	Interest expense		4		4
Paycoms Co., Ltd.	Interest income		5		5
	Insurance income		—		1
	Revenue on financial assets/liabilities at fair value through profit or loss		36		87
KB-KDBC Pre-IPO New Technology Business Investment Fund	Interest expense		20		26
	Fee and commission income		300		149

161

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.1 Profit or loss (cont’d)

(In millions of Korean won)
Associates and joint ventures		2020		2019
KBTS Technology Venture Private Equity Fund	Fee and commission income	W	126	W	239
	Revenue on financial assets/liabilities at fair value through profit or loss		419		—
KB-SJ Tourism Venture Fund	Fee and commission income		169		169
JLK INSPECTION Inc.1	Interest expense		—		1
TESTIAN Inc.1	Interest income		—		2
	Revenue on financial assets/liabilities at fair value through profit or loss		—		29
Rainist Co., Ltd.	Fee and commission income		18		—
IWON ALLOY CO.,LTD.	Insurance income		1		1
Bioprotect Ltd.	Revenue on financial assets/liabilities at fair value through profit or loss		122		—
RMGP Bio-Pharma Investment Fund, L.P.	Other non-operating income		18		17
	Revenue on financial assets/liabilities at fair value through profit or loss		232		119
	Expense on financial assets/liabilities at fair value through profit or loss		—		850
KB-MDI Centauri Fund LP	Fee and commission income		132		—
	Expense on financial assets/liabilities at fair value through profit or loss		2		—
S&E BIO	Interest expense		1		—
Contents First	Interest expense		4		—
Hasys.	Revenue on financial assets/liabilities at fair value through profit or loss		—		128
	Insurance income		29		22
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund	Revenue on financial assets/liabilities at fair value through profit or loss		122		—
	Interest expense		27		59
	Fee and commission income		549		183
Spark Biopharma, Inc1	Interest expense		—		9
SKYDIGITAL INC	Fee and commission income		2		2

162

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.1 Profit or loss (cont’d)

(In millions of Korean won)
Associates and joint ventures		2020		2019
KB No.9 Special Purpose Acquisition Company1	Interest expense	W	—	W	(23	)
KB No.10 Special Purpose Acquisition Company1	Interest expense		—		14
	Revenue on financial assets/liabilities at fair value through profit or loss		—		3,066
KB No.11 Special Purpose Acquisition Company1	Interest expense		—		5
	Revenue on financial assets/liabilities at fair value through profit or loss		—		180
KB No.17 Special Purpose Acquisition Company	Fee and commission income		—		175
	Revenue on financial assets/liabilities at fair value through profit or loss		8		1,461
	Expense on financial assets/liabilities at fair value through profit or loss		25		—
	Interest expense		13		13
KB No.18 Special Purpose Acquisition Company	Fee and commission income		—		263
	Revenue on financial assets/liabilities at fair value through profit or loss		—		2,200
	Expense on financial assets/liabilities at fair value through profit or loss		1		—
	Interest expense		17		8
KB No.19 Special Purpose Acquisition Company	Expense on financial assets/liabilities at fair value through profit or loss		25		—
	Interest expense		8		—
KB No.20 Special Purpose Acquisition Company	Fee and commission income		210		—
	Expense on financial assets/liabilities at fair value through profit or loss		1,499		—
	Interest expense		13		—
KB SPROTT Renewable Private Equity FundI	Fee and commission income		365		123
KB-Stonebridge Secondary Private Equity FundI	Fee and commission income		864		288
	Expense on financial assets/liabilities at fair value through profit or loss		11		—

163

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.1 Profit or loss (cont’d)

(In millions of Korean won)
Associates and joint ventures		2020		2019
KOSESEUJITO CO., LTD.	Revenue on financial assets/liabilities at fair value through profit or loss	W	—	W	7
CWhy Inc.	Insurance income		—		1
Stratio, Inc.	Interest expense		—		1
NEXOLON CO.,LTD.1	Interest expense		—		2
CellinCells Co., Ltd.	Interest expense		4		10
Bomapp Inc.	Fee and commission expense		3		—
	Insurance income		4		—
KB Social Impact Investment Association	Fee and commission income		150		—
KB-UTC Inno-Tech Venture Fund	Fee and commission income		292		—
KBSP Private Equity Fund IV	Fee and commission income		185		—
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	Fee and commission income		233		—
KB-Solidus Global Healthcare Fund	Fee and commission income		402		—
	Expense on financial assets/liabilities at fair value through profit or loss		682		—
Fabric Time Co.,Ltd.	Fee and commission income		3		—
	Interest expense		17		—
BNF Corporation Ltd.1	Interest income		401		—
	Fee and commission income		2		—
	Contribution of provision for credit losses		8		—
KB Cape No.1 Private Equity Fund	Fee and commission income		72		—
Keystone-Hyundai Securities No. 1 Private Equity Fund	Fee and commission income		69		50
Other
Retirement pension	Fee and commission income		598		466
	Interest expense		2		2

¹ Excluded from the Group’s related party as of June 30, 2020.

Meanwhile, the Group purchased installment financial assets, etc. from SY Auto Capital Co., Ltd. amounting to W 683,556 million and W 581,471 million during the six-month periods ended June 30, 2020 and 2019, respectively.

164

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.2 Outstanding Balances with Related Party Transactions

Details of outstanding balances, and the related allowance for credit losses arising from the related party transactions as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
Associates and joint ventures		June 30, 2020		December 31, 2019
Balhae Infrastructure Fund	Other assets	W	1,706	W	1,718
Korea Credit Bureau Co., Ltd.	Loans at amortized cost (Gross amount)		32		43
	Deposits		5,453		17,966
	Provisions		1		1
	Insurance contract liabilities		4		2
	Other liabilities		267		—
KB GwS Private Securities Investment Trust	Other assets		212		641
Incheon Bridge Co., Ltd.	Financial assets at fair value through profit or loss		39,676		37,857
	Loans at amortized cost (Gross amount)		140,356		147,707
	Allowances for loan losses		196		12
	Other assets		492		520
	Deposits		44,218		45,447
	Provisions		333		10
	Insurance contract liabilities		232		108
	Other liabilities		77		346
KoFC POSCO HANHWA KB Shared Growth Private Equity Fund No. 2	Other assets		—		89
Jungdo Co., Ltd.	Deposits		4		4
Dongjo Co., Ltd.	Insurance contract liabilities		—		1
Dae-A Leisure Co., Ltd.	Deposits		983		753
	Other liabilities		17		14
Aju Good Technology Venture Fund	Deposits		5,266		5,456
	Other liabilities		1		2
KB Star Office Private Real Estate Investment Trust No.1	Loans at amortized cost (Gross amount)		10,000		10,000
	Allowances for loan losses		4		4
	Other assets		137		136
	Deposits		6,679		8,293
	Other liabilities		42		66
KBTS Technology Venture Private Equity Fund	Financial assets at fair value through profit or loss		3,959		3,540
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund	Financial assets at fair value through profit or loss		2,801		2,678
	Deposits		14,153		13,118
	Other liabilities		1		4
WJ PEF I	Deposits		146		—

165

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.2 Outstanding Balances with Related Party Transactions (cont’d)

(In millions of Korean won)
Associates and joint ventures		June 30, 2020		December 31, 2019
KB-Stonebridge Secondary Private Equity Fund	Financial assets at fair value through profit or loss	W	922	W	713
KB IGen Private Equity Fund No.11	Deposits		—		147
KB Cape No.1 Private Equity Fund	Financial assets at fair value through profit or loss		2,000		2,000
	Other assets		72		—
RAND Bio Science Co., Ltd.	Deposits		1,993		4,452
	Loans at amortized cost (Gross amount)		1		1
	Other liabilities		1		—
SY Auto Capital Co., Ltd.	Loans at amortized cost (Gross amount)		40,062		41,990
	Allowances for loan losses		—		4
	Other assets		316		63
	Deposits		7		8
	Provisions		—		13
	Insurance contract liabilities		24		13
	Other liabilities		162		70
Food Factory Co., Ltd.	Financial assets at fair value through profit or loss		638		590
	Loans at amortized cost (Gross amount)		1,978		1,992
	Allowances for loan losses		1		2
	Other assets		1		1
	Deposits		1,245		1,073
	Insurance contract liabilities		1		4
	Other liabilities		7		1
KB Pre IPO Secondary Venture Fund 1st	Deposits		199		2,955
	Other liabilities		—		1
Wise Asset Management Co., Ltd.	Deposits		—		21
Acts Co., Ltd.	Deposits		8		1
	Other liabilities		100		100
POSCO-KB Shipbuilding Fund	Other assets		162		—
Paycoms Co., Ltd.	Other assets		—		1
	Financial assets at fair value through profit or loss		1,194		1,157
	Deposits		1		1
Big Dipper Co., Ltd.	Loans at amortized cost (Gross amount)		2		11
	Deposits		94		6
KB-KDBC Pre-IPO New Technology Business Investment Fund	Deposits		2,980		7,054
	Other liabilities		—		4

166

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.2 Outstanding Balances with Related Party Transactions (cont’d)

(In millions of Korean won)
Associates and joint ventures		June 30, 2020		December 31, 2019
A-PRO Co., Ltd.1	Loans at amortized cost (Gross amount)	W	—	W	2,019
	Insurance contract liabilities		—		2
	Deposits		—		3,201
	Other liabilities		—		1
IWON ALLOY CO.,LTD.	Deposits		1		—
	Insurance contract liabilities		1		1
CARLIFE CO.,LTD.	Loans at amortized cost (Gross amount)		9		—
COMPUTERLIFE CO.,LTD.	Deposits		2		1
PT Bank Bukopin TBK	Cash and deposits		240,140		—
RMGP Bio-Pharma Investment Fund, L.P.	Financial assets at fair value through profit or loss		4,217		3,419
	Other liabilities		80		2
RMGP Bio-Pharma Investment, L.P.	Financial assets at fair value through profit or loss		9		8
Hasys.	Financial assets at fair value through profit or loss		6,000		6,000
	Deposits		1		—
	Insurance contract liabilities		8		37
SKYDIGITAL INC	Deposits		283		25
Rainist Co., Ltd.	Financial assets at fair value through profit or loss		7,504		7,504
UPRISE, Inc.	Financial assets at fair value through profit or loss		250		250
Stratio, Inc.	Financial assets at fair value through profit or loss		1,000		1,000
	Deposits		306		726
Honest Fund, Inc.	Financial assets at fair value through profit or loss		3,999		3,999
CellinCells Co., Ltd.	Financial assets at fair value through profit or loss		2,000		2,000
	Loans at amortized cost (Gross amount)		8		4
	Deposits		905		1,545
	Other liabilities		—		1
Joyang Industry Co., Ltd.	Deposits		1		2
KB No.17 Special Purpose Acquisition Company	Financial assets at fair value through profit or loss		2,651		2,683
	Deposits		1,734		1,742
	Other liabilities		11		27
KB No.18 Special Purpose Acquisition Company	Financial assets at fair value through profit or loss		3,787		3,786
	Deposits		2,132		2,140
	Other liabilities		6		28

167

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.2 Outstanding Balances with Related Party Transactions (cont’d)

(In millions of Korean won)
Associates and joint ventures		June 30 2020		December 31, 2019
KB No.19 Special Purpose Acquisition Company	Financial assets at fair value through profit or loss	W	2,019	W	2,043
	Deposits		1,062		1,093
	Other liabilities		16		7
KB No.20 Special Purpose Acquisition Company	Financial assets at fair value through profit or loss		2,998		1,499
	Deposits		1,717		1,984
	Other liabilities		16		3
KOSESEUJITO CO., LTD.	Financial assets at fair value through profit or loss		4,930		2,930
CWhy Inc.	Financial assets at fair value through profit or loss		2,000		2,000
Bomapp Inc.	Financial assets at fair value through profit or loss		1,999		1,999
	Insurance contract liabilities		8		2
ZOYI corporation INC.	Financial assets at fair value through profit or loss		4,551		2,000
MitoImmune Therapeutics	Financial assets at fair value through profit or loss		5,000		5,000
KB-Solidus Global Healthcare Fund	Financial assets at fair value through profit or loss		11,213		10,405
	Other assets		332		—
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	Financial assets at fair value through profit or loss		408		—
Bioprotect Ltd.	Financial assets at fair value through profit or loss		3,602		—
GOMI CORPORATION	Financial assets at fair value through profit or loss		500		—
	Loans at amortized cost (Gross amount)		7		—
	Deposits		30		—
Copin Communications, Inc.	Financial assets at fair value through profit or loss		1,500		—
Go2joy Co., Ltd.	Financial assets at fair value through profit or loss		1,200		—
ClavisTherapeutics, Inc.	Financial assets at fair value through profit or loss		2,000		—
S&E BIO	Financial assets at fair value through profit or loss		2,000		—
	Deposits		1,491		—
Bluepointpartners.Inc.	Financial assets at fair value through profit or loss		1,500		—
4N Inc.	Financial assets at fair value through profit or loss		200		—
	Deposits		180		—

168

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.2 Outstanding Balances with Related Party Transactions (cont’d)

(In millions of Korean won)
Associates and joint ventures		June 30 2020		December 31, 2019
Xenohelix Co.,Ltd	Financial assets at fair value through profit or loss	W	2,100	W	—
Contents First	Financial assets at fair value through profit or loss		6,146		—
	Deposits		3,082		—
	Other liabilities		4		—
KB-MDI Centauri Fund LP	Financial assets at fair value through profit or loss		1,756		—
	Other assets		132		—
KB Social Impact Investment Association	Other assets		—		73
Fabric Time Co.,Ltd.	Financial assets at fair value through profit or loss		3,345		1,845
	Loans at amortized cost (Gross amount)		28		—
	Deposits		5,574		395
	Other liabilities		17		2
BNF Corporation Ltd.1	Financial assets at fair value through profit or loss		—		2,259
	Loans at amortized cost (Gross amount)		—		1,400
	Other assets		—		2
	Deposits		—		947
	Other liabilities		—		6
Key management	Loans at amortized cost (Gross amount)		4,374		3,538
	Allowances for loan losses		2		1
	Other assets		4		3
	Deposits		16,076		15,339
	Insurance contract liabilities		1,809		1,984
	Other liabilities		348		289
Other
Retirement pension	Other assets		615		366
	Other liabilities		17		17,620

¹  Excluded from the Group’s related party as of June 30, 2020, and the remaining outstanding balances with the entities are omitted.

According to Korean IFRS 1024, the Group includes investments in associates, key management (including family members), and post-employment benefit plans of the Group and its related party companies in the scope of 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 interim financial statements. Please refer to Note 12 for details on investments in associates and joint ventures.

169

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.3 Lending transactions

Significant lending transactions with related parties for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Beginning		Increase		Decrease			Ending
Associates
Korea Credit Bureau Co., Ltd.	W	43	W	32	W	(43	)	W	32
Incheon Bridge Co., Ltd.		185,564		1,825		(7,357	)		180,032
KB Star Office Private Real Estate Investment Trust No.1		10,000		—		—			10,000
KBTS Technology Venture Private Equity Fund		3,540		419		—			3,959
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund		2,678		123		—			2,801
KB-Stonebridge Secondary Private Equity Fund		713		209		—			922
KB Cape No.1 Private Equity Fund		2,000		—		—			2,000
RAND Bio Science Co., Ltd.		1		1		(1	)		1
SY Auto Capital Co., Ltd.		41,990		11,312		(13,240	)		40,062
Food Factory Co., Ltd.		2,582		52		(18	)		2,616
Acts Co., Ltd.		—		74		(74	)		—
Paycoms Co., Ltd.		1,157		37		—			1,194
Big Dipper Co., Ltd.		11		2		(11	)		2
A-PRO Co., Ltd.1		2,019		2,000		(4,019	)		—
CARLIFE CO.,LTD.		—		9		—			9
RMGP Bio-Pharma Investment Fund, L.P.		3,419		798		—			4,217
RMGP Bio-Pharma Investment, L.P.		8		1		—			9
Hasys.		6,000		—		—			6,000
Rainist Co., Ltd.		7,504		—		—			7,504
UPRISE, Inc.		250		—		—			250
Stratio, Inc.		1,000		—		—			1,000
Honest Fund, Inc.		3,999		—		—			3,999
CellinCells Co., Ltd.		2,004		8		(4	)		2,008
KB No.17 Special Purpose Acquisition Company1		2,683		—		(32	)		2,651
KB No.18 Special Purpose Acquisition Company		3,786		2		(1	)		3,787
KB No.19 Special Purpose Acquisition Company		2,043		—		(24	)		2,019
KB No.20 Special Purpose Acquisition Company		1,499		1,499		—			2,998

170

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.3 Lending transactions (cont’d)

(In millions of Korean won)	2020
	Beginning		Increase		Decrease			Ending
KOSESEUJITO CO., LTD.		2,930		2,000		—			4,930
CWhy Inc.		2,000		—		—			2,000
Bomapp Inc.		1,999		—		—			1,999
ZOYI corporation INC.		2,000		2,551		—			4,551
MitoImmune Therapeutics		5,000		—		—			5,000
KB-Solidus Global Healthcare Fund		10,405		2,520		(1,712	)		11,213
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		—		408		—			408
Bioprotect Ltd.		—		3,602		—			3,602
GOMI CORPORATION		—		507		—			507
Copin Communications, Inc.		—		1,500		—			1,500
Go2joy Co., Ltd.		—		1,200		—			1,200
ClavisTherapeutics, Inc.		—		2,000		—			2,000
S&E BIO		—		2,000		—			2,000
Bluepointpartners.Inc.		—		1,500		—			1,500
4N Inc.		—		200		—			200
Xenohelix Co.,Ltd		—		2,100		—			2,100
Contents First		—		6,146		—			6,146
KB-MDI Centauri Fund LP		—		1,756		—			1,756
Fabric Time Co.,Ltd.		1,845		1,528		—			3,373
BNF Corporation Ltd.1		3,659		1,000		(4,659	)		—
Key management		3,538		3,525		(2,689	)		4,374

171

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.3 Lending transactions (cont’d)

(In millions of Korean won)	2019
	Beginning		Increase		Decrease			Ending
Associates
Korea Credit Bureau Co., Ltd.	W	22	W	42	W	(22	)	W	42
Incheon Bridge Co., Ltd.		191,088		3,294		(5,256	)		189,126
KB Star Office Private Real Estate Investment Trust No.1		10,000		—		—			10,000
KB Cape No.1 Private Equity Fund		—		2,000		—			2,000
RAND Bio Science Co., Ltd.		1		2		(1	)		2
SY Auto Capital Co., Ltd.		48,356		6,289		(7,155	)		47,490
Food Factory Co., Ltd.		730		1,038		(10	)		1,758
Builton Co., Ltd1.		401		5		(2	)		404
Acts Co., Ltd.		—		68		—			68
Paycoms Co., Ltd.		1,032		87		—			1,119
Big Dipper Co., Ltd.		5		4		(5	)		4
JLK INSPECTION Inc.1		7,300		4,000		—			11,300
TESTIAN Inc1.		615		29		—			644
RMGP Bio-Pharma Investment Fund, L.P.		3,051		109		—			3,160
RMGP Bio-Pharma Investment, L.P.		4		3		—			7
Hasys.		5,864		128		—			5,992
Rainist Co., Ltd.		2,504		—		—			2,504
Spark Biopharma, Inc.1		6,500		—		—			6,500
UPRISE, Inc.		250		—		—			250
Stratio, Inc.		1,000		—		—			1,000
Honest Fund, Inc.		—		3,999		—			3,999
NEXOLON CO.,LTD1.		—		300		—			300
CellinCells Co., Ltd.		—		2,000		—			2,000
KB No.9 Special Purpose Acquisition Company1		2,481		—		(2,481	)		—
KB No.10 Special Purpose Acquisition Company1		2,025		526		—			2,551
KB No.11 Special Purpose Acquisition Company1		737		19		—			756
KB No.17 Special Purpose Acquisition Company		—		2,760		—			2,760
KB No.18 Special Purpose Acquisition Company		—		4,088		—			4,088
KOSESEUJITO CO., LTD.		—		1,442		—			1,442
CWhy Inc.		—		2,000		—			2,000
Bomapp Inc.		—		1,999		—			1,999
ZOYI corporation INC.		—		2,000		—			2,000
Key management		2,404		1,737		(355	)		3,786

¹ Excluded from the Group’s related party as of June 30, 2020.

172

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.4 Borrowing transactions

Significant borrowing transactions with related parties for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Beginning		Borrowing		Repayment			Others1			Ending
Associates
Korea Credit Bureau Co., Ltd.	W	17,966	W	1,000	W	—		W	(13,513	)	W	5,453
Incheon Bridge Co., Ltd.		45,447		20,000		(20,000	)		(1,229	)		44,218
Jungdo Co., Ltd.		4		—		—			—			4
Dae-A Leisure Co., Ltd.		753		—		—			230			983
IWON ALLOY CO.,LTD.		—		—		—			1			1
COMPUTERLIFE CO.,LTD.,		1		—		—			1			2
SKYDIGITAL INC		25		—		—			258			283
Joyang Industry Co., Ltd.		2		—		—			(1	)		1
Aju Good Technology Venture Fund		5,456		—		—			(190	)		5,266
KB-KDBC Pre-IPO New Technology Business Fund		7,054		1,500		(6,500	)		926			2,980
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund		13,118		—		—			1,035			14,153
WJ PEF I		—		—		—			146			146
KB Star Office Private Real Estate Investment Trust No.1		8,293		2,117		(3,619	)		(112	)		6,679
SY Auto Capital Co., Ltd.		8		—		—			(1	)		7
KB No.17 Special Purpose Acquisition Company2		1,742		1,525		(1,500	)		(33	)		1,734
KB No.18 Special Purpose Acquisition Company		2,140		2,063		(2,100	)		29			2,132
KB No.19 Special Purpose Acquisition Company		1,093		—		—			(31	)		1,062
KB No.20 Special Purpose Acquisition Company		1,984		—		—			(267	)		1,717
RAND Bio Science Co., Ltd.		4,452		1,600		(2,200	)		(1,859	)		1,993
Wise Asset Management Co., Ltd.		21		—		—			(21	)		—
Food Factory Co., Ltd.		1,073		1,000		—			(828	)		1,245
Acts Co., Ltd.		1		—		—			7			8
Paycoms Co., Ltd.		1		—		—			—			1
Big Dipper Co., Ltd.		6		—		—			88			94
A-PRO Co., Ltd.2		3,201		—		—			(3,201	)		—
Hasys.		—		—		—			1			1
Stratio, Inc.		726		—		—			(420	)		306
CellinCells Co., Ltd.		1,545		—		—			(640	)		905
Fabric Time Co.,Ltd.		395		7,002		(2,301	)		478			5,574
BNF Corporation Ltd.2		947		—		—			(947	)		—
GOMI CORPORATION		—		—		—			30			30
S&E BIO		—		—		—			1,491			1,491
KB IGen Private Equity Fund No.12		147		—		—			(147	)		—
KB Pre IPO Secondary Venture Fund 1st		2,955		—		—			(2,756	)		199
4N Inc.		—		—		—			180			180
Contents First		—		3,000		—			82			3,082
Key management		15,338		13,799		(12,757	)		(304	)		16,076

173

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.4 Borrowing transactions (cont’d)

(In millions of Korean won)	2019
	Beginning		Borrowing		Repayment			Others1			Ending
Associates
Korea Credit Bureau Co., Ltd.	W	15,674	W	—	W	(2,000	)	W	(6,424	)	W	7,250
Incheon Bridge Co., Ltd.		43,666		24,000		(4,000	)		(18,981	)		44,685
Doosung Metal Co., Ltd		3		—		—			—			3
Jungdo Co., Ltd.		4		—		—			—			4
Dae-A Leisure Co., Ltd.		1,229		—		—			(38	)		1,191
CARLIFE CO.,LTD.		2		—		—			(2	)		—
COMPUTERLIFE CO.,LTD.,		1		—		—			1			2
SKYDIGITAL INC		16		—		—			(2	)		14
Joyang Industry Co., Ltd.		—		—		—			4			4
Aju Good Technology Venture Fund		6,439		—		—			(4,607	)		1,832
KB-KDBC Pre-IPO New Technology Business Fund		7,088		7,000		(7,000	)		(5,059	)		2,029
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund		18,813		—		—			(12,121	)		6,692
KB Star Office Private Real Estate Investment Trust No.1		7,946		2,926		(3,010	)		444			8,306
SY Auto Capital Co., Ltd.		5		—		—			—			5
KB No.9 Special Purpose Acquisition Company2		2,275		—		(2,266	)		(9	)		—
KB No.10 Special Purpose Acquisition Company2		1,666		—		(180	)		98			1,584
KB No.11 Special Purpose Acquisition Company2		658		—		—			(28	)		630
KB No.17 Special Purpose Acquisition Company		—		1,500		—			—			1,500
KB No.18 Special Purpose Acquisition Company		—		2,200		(100	)		—			2,100
RAND Bio Science Co., Ltd.		232		—		—			7,979			8,211
Wise Asset Management Co., Ltd.		696		—		(682	)		10			24
Builton Co., Ltd. 2		7		—		—			(2	)		5
Food Factory Co., Ltd.		68		—		—			334			402
Acts Co., Ltd.		29		—		—			74			103
Paycoms Co., Ltd.		1		—		—			(1	)		—
Big Dipper Co., Ltd.		182		—		—			(173	)		9
A-PRO Co., Ltd. 2		2,201		—		—			1			2,202
JLK INSPECTION Inc.		—		—		—			1			1
Rainist Co., Ltd.		1		—		—			—			1
Spark Biopharma, Inc. 2		2,630		—		(1,000	)		(420	)		1,210
Stratio, Inc.		516		—		—			937			1,453
NEXOLON CO.,LTD2.		—		—		(200	)		200			—
KB IGen Private Equity Fund No.12		148		—		—			(1	)		147
KB Pre IPO Secondary Venture Fund 1st		1,115		—		—			(1,038	)		77
Key management		13,818		8,383		(6,580	)		233			15,854

¹ Transactions from operating activities with related parties (i.e. such as settlement, deposit on demand, etc.) are netted.

² Excluded from the Group’s related party as of June 30, 2020.

174

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.5 Equity investments and withdrawal

Significant investment and collection transaction with related parties for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020				2019
	Equity investments		Withdrawal and others		Equity investments		Withdrawal and others
Balhae Infrastructure Company	W	430	W	3,484	W	191	W	3,429
KB GwS Private Securities Investment Trust		—		4,167		—		4,084
KoFC POSCO HANHWA KB Shared Growth Private Equity Fund No.2		—		3,230		—		—
POSCO-KB Shipbuilding Fund		5,000		2,125		—		—
KB Pre IPO Secondary Venture Fund 1st		—		418		—		—
KB-KDBC Pre-IPO New Technology Business investment Fund		—		1,000		—		—
KB-SJ Tourism Venture Fund		1,000		—		1,500		—
Korea Credit Bureau Co., Ltd.		—		90		—		135
KB-UTC Inno-Tech Venture Fund		9,675		—		—		—
KB-Solidus Global Healthcare Fund		10,920		2,990		—		—
KB-Stonebridge Secondary Private Equity Fund		1,533		—		7,070		—
WJ PEF I		10,000		—		—		—
All Together Korea Fund 2		100,000		—		—		—
KB Star Office Private Real Estate Investment Trust No.1		—		621		—		624
KB SPROTT Renewable Private Equity FundI		2,683		—		472		—
KB-NAU Special Situation Corporate Restructuring Private Equity Fund		2,448		—		—		—
KoFC KBIC Frontier Champ 2010-5(PEF)1		—		—		—		138
KBTS Technology Venture Private Equity Fund		—		—		1,792		—

175

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.5 Equity investments and withdrawal (cont’d)

(In millions of Korean won)	2020				2019
	Equity investments		Withdrawal and others		Equity investments		Withdrawal and others
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund		—		—		5,000		—
KB Cape No.1 Private Equity Fund.		—		—		2,000		—
KB No.9 Special Purpose Acquisition Company1		—		—		—		16
KB No.17 Special Purpose Acquisition Company		—		—		1		—
KB No.18 Special Purpose Acquisition Company		—		—		1		—

¹ Excluded from the Group’s related party as of June 30, 2020.

176

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.6 Unused commitments

Unused commitments to related parties as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won or in a US Dollar)		June 30, 2020		December 31, 2019
Associates and joint ventures
Balhae Infrastructure Fund	Purchase of security investment	W	6,897	W	7,327
Korea Credit Bureau Co., Ltd.	Unused commitments of credit card		568		557
KB GwS Private Securities Investment Trust	Purchase of security investment		—		876
Aju Good Technology Venture Fund	Purchase of security investment		—		1,154
Incheon Bridge Co., Ltd.	Loan commitments in Korean won		20,000		20,000
	Unused commitments of credit card		94		93
KoFC POSCO HANHWA KB	Purchase of security investment		—		12,550
Shared Growth Private Equity Fund No. 2	Preferred loss allowance agreement		10,000		10,000
SY Auto Capital Co., Ltd.	Loan commitments in Korean won		—		8,100
	Unused commitments of credit card		88		60
KB No.18 Special Purpose Acquisition Company	Unused commitments of credit card		15		15
KB No.19 Special Purpose Acquisition Company	Unused commitments of credit card		—		1
CellinCells Co., Ltd	Unused commitments of credit card		16		20
RAND Bio Science Co., Ltd.	Unused commitments of credit card		24		24
Food Factory Co., Ltd.	Unused commitments of credit card		26		25
Big Dipper Co., Ltd.	Unused commitments of credit card		98		89
Fabric Time Co.,Ltd.	Unused commitments of credit card		471		—
GOMI CORPORATION	Unused commitments of credit card		8		—
KB Pre IPO Secondary Venture Fund 1st	Preferred loss allowance agreement		1,671		1,671
POSCO-KB Shipbuilding Fund	Purchase of security investment		—		5,000

177

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.6 Unused commitments (cont’d)

(In millions of Korean won and US Dollar)
		June 30, 2020	December 31, 2019
Associates and joint ventures
KBTS Technology Venture Private Equity Fund	Purchase of security investment	W                  5,936	W                5,936
KB-SJ Tourism Venture Fund	Purchase of security investment	1,000	2,000
KB-Brain KOSDAQ Scale-up New Technology Business Investment Fund	Purchase of security investment	18,000	18,000
KB SPROTT Renewable Private Equity Fund I	Purchase of security investment	22,285	22,833
KB-Stonebridge Secondary Private Equity Fund	Purchase of security investment	26,397	27,930
KB Social Impact Investment Association	Purchase of security investment	3,000	3,000
BNF Corporation Ltd. 1	Loan commitments in Korean won	—	360
A-PRO Co., Ltd. 1	Unused commitments of credit card	—	96
KB-UTC Inno-Tech Venture Fund	Purchase of security investment	13,275	22,050
KB-NAU Special Situation Corporate Restructuring Private Equity Fund	Purchase of security investment	27,552	—
All Together Korea Fund 2	Purchase of security investment	900,000	—
KB-Solidus Global Healthcare Fund	Purchase of security investment	12,720	24,700
RMGP Bio-Pharma Investment Fund, L.P.	Purchase of security investment	US$      8,441,595	US$    8,911,002
RMGP Bio-Pharma Investment, L.P.	Purchase of security investment	US$           12,483	US$         13,150
KB-MDI Centauri Fund LP	Purchase of security investment	US$    13,537,500	—
Key management	Loan commitments in Korean won	1,689	1,695

¹  Excluded from the Group’s related party as of June 30, 2020.

178

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

41.7 Executive compensation

Compensation to key management for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Short-term employee benefits		Post-employment benefits		Share-based payments			Total
Registered directors (executive)	W	3,826	W	371	W	(94	)	W	4,103
Registered directors (non-executive)		533		—		—			533
Non-registered directors		5,246		220		604			6,070
	W	9,605	W	591	W	510		W	10,706

(In millions of Korean won)	2019
	Short-term employee benefits		Post-employment benefits		Share-based payments		Total
Registered directors (executive)	W	3,972	W	259	W	3,520	W	7,751
Registered directors (non-executive)		467		—		—		467
Non-registered directors		4,509		157		3,138		7,804
	W	8,948	W	416	W	6,658	W	16,022

41.8 Collateral

Details of collateral received from related parties as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
		June 30, 2020		December 31, 2019
Associates
KB Star Office Private Real Estate Investment Trust No.1	Real estate	W	13,000	W	13,000
Key management	Time deposits and others		222		192
	Real estate		4,063		2,922

As of June 30, 2020, Incheon Bridge Co., Ltd., a related party, provides fund management account, civil engineering completed risk insurance, and management rights as senior collateral amounting to W611,000 million to a financial syndicate that consists of the Group and 5 other institutions, and as subordinated collateral amounting to W384,800 million to subordinated debt holders that consist of the Group and two other institutions. Also, it provides certificate of credit guarantee amounting to W400,000 million as collateral to a financial syndicate consisting of the Group and 5 other institutions.

179

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

42. Business Combination

On April 10, 2020, the Group acquired a 70 percent share in PRASAC Microfinance Institution PLC. (“PRASAC”), a microfinance company in Cambodia, for US$ 603 million from an existing stockholder. Therefore, PRASAC became a subsidiary to the Group.

The main purpose of the business combination is to improve competitiveness of global business by maximizing the operational synergy with foreign subsidiaries.

(In millions of Korean won)	2020
Consideration
Cash	W	733,976
Total consideration transferred		733,976
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash and due from financial institutions		658,865
Loans at amortized cost		3,194,211
Financial investments		35
Property and equipment		24,472
Intangible assets		1,821
Current income tax assets		873
Deferred income tax assets		26,330
Other assets		37,325
Total Assets		3,943,932
Deposits		2,222,944
Debts		1,038,684
Debentures		89,570
Current income tax liabilities		9,238
Deferred income tax liabilities		323
Other liabilities		101,696
Total Liabilities		3,462,455
Total identifiable net assets3	W	481,477
Non-controlling interests1		144,443
Goodwill2		396,942

¹  Measured at the proportionate share(30%) of the fair value of the PRASAC’s net assets as of the acquisition date.

²  As a result of the business combination, there was a goodwill and the Group recognized it as intangible assets in the consolidated statement of financial position.

³  The fair value of the net identifiable assets is temporarily determined, which can be adjusted during the measurement period permitted by K-IFRS No.1103 “Business Combinations” based on new information about facts and circumstances that existed as of the acquisition date.

180

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

42. Business Combination (cont’d)

Details of loans acquired are as follows:

(In millions of Korean won)	2020
Carrying amount of existing loans	W	3,256,059
Present value of contractual cash flows not expected to be paid		(61,848	)
Fair value of loans		3,194,211

The Group has signed an agreement with the existing shareholders of PRASAC. The existing shareholders have the right of put option to sell 30% of the remaining shares to the Group, and they are entitled to exercise their rights at the exercise price calculated on the basis of the adjusted book value of net asset as of 2021 year-end, within six months from the issue date of the audit report or the confirmation date of the adjusted value. If existing shareholders do not exercise the put option within the exercise period, the Group has the right of call option to buy the shares of existing shareholders within six months from the end of the put option exercisable period. All stockholders are restricted from selling shares or additional pledge before exercising the put option and call option. In addition, the Group has agreed to pay dividends to existing shareholders of PRASAC amounting 30% of the adjusted book value (of net asset) over USD 3.7 million; this payment can be added to the exercised price of put option in accordance with agreement with shareholders.

Amount of the recognized liabilities and deducted equity in relation to the above agreement with shareholders are as follows:

(In millions of Korean won)	2020
Agreement with shareholders (purchase of remaining shares and payment of dividends)
Other payables (present value of exercising price of options)	W	308,236
Other payables (present value of expected dividends)		102,986
		411,222
Attributable to ordinary equity holders of the Parent Company (capital surplus)		(411,222	)

Operating income and net profit of PRASAC for the period after the acquisition date were W43,679 million and W35,080 million, respectively, which are reflected in the consolidated statement of comprehensive income. If PRASAC was consolidated from the beginning of the current period, its operating income and net profit to be reflected in the consolidated statement of comprehensive income would be W 79,631 million and W 63,954 million, respectively.

181

EX-99.2

Exhibit 99.2

KB Financial Group Inc.

Separate Interim Financial Statements

June 30, 2020

(Unaudited)

(With Independent Auditors’ Review Report Thereon)

Contents

	Page
Independent Auditors’ Review Report		1
Separate Interim Statements of Financial Position		3
Separate Interim Statements of Comprehensive Income		4
Separate Interim Statements of Changes in Equity		5
Separate Interim Statements of Cash Flows		6
Notes to the Separate Interim Financial Statements		7

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Stockholders

KB Financial Group Inc.:

Reviewed financial statements

We have reviewed the accompanying condensed separate interim financial statements of KB Financial Group Inc. (the “Company”), which comprise the separate interim statement of financial position as of June 30, 2020, the separate interim statements of comprehensive income for the three-month and six month periods ended June 30, 2020, changes in equity and cash flows for the six-month period ended June 30, 2020 and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

Management is responsible for the preparation and fair presentation of these condensed separate interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No.1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of the condensed separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ review responsibility

Our responsibility is to issue a report on these condensed separate interim financial statements based on our review.

We conducted our review in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed separate interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

Emphasis of matter

The following matter may be helpful to the readers in their understanding of the condensed separate interim financial statements. Our review conclusion is not affected by this matter.

As described in Note 29.2 to the condensed separate interim financial statements, the ongoing COVID-19 pandemic has increased the estimation uncertainty on the Company’s expected credit losses on certain portfolios and potential impairment on assets and may have negative impacts on the Company’s separate interim financial statements.

1

Other matters

The procedures and practices utilized in the Republic of Korea to review such condensed separate interim financial statements may differ from those generally accepted and applied in other countries.

The accompanying separate interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2019, changes in equity and cash flows for the six-month period ended June 30, 2019, were reviewed by other auditors whose report thereon, dated August 14, 2019, expressed that nothing came to their attention that caused them to believe that those interim financial statements are not prepared, in all material respects, in accordance with K-IFRS No. 1034 Interim Financial Reporting.

The separate statement of financial position of the Company as of December 31, 2019, and the related separate statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by other auditors in accordance with Korean Standards on Auditing and their report thereon, dated March 5, 2020, expressed an unqualified opinion. The accompanying separate statement of financial position of the Company as of December 31, 2019, presented for comparative purposes, is consistent, in all material respects, with the audited separate statement of financial position from which it has been derived.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

August 14, 2020

This report is effective as of August 14, 2020, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

2

KB Financial Group Inc.

Separate Interim Statements of Financial Position

June 30, 2020 and December 31, 2019

(In millions of Korean won)	Notes		June 30, 2020 (Unaudited)			December 31, 2019
Assets
Cash and due from financial institutions		4,5,6,28	W	32,080		W	18,537
Financial assets at fair value through profit or loss		4,5,7		1,568,882			413,909
Loans at amortized cost		4,5,8		150,000			120,000
Investments in subsidiaries		9		24,212,116			24,162,116
Property and equipment		10		3,688			4,170
Intangible assets		11		11,212			11,092
Deferred income tax assets		12		1,794			7,526
Other assets		4,5,13		623,905			609,286
Total assets			W	26,603,677		W	25,346,636
Liabilities
Debts		4,5,14	W	100,000		W	—
Debentures		4,5,15		6,255,663			5,543,446
Net defined benefit liabilities		16		1,530			437
Current income tax liabilities				449,799			417,414
Other liabilities		4,5,17		187,038			203,440
Total liabilities				6,994,030			6,164,737
Equity
Share capital		18		2,090,558			2,090,558
Hybrid securities		18		797,996			399,085
Capital surplus		18		14,759,273			14,742,814
Accumulated other comprehensive income		18		(7,702	)		(7,664	)
Retained earnings		18		3,105,710			3,093,294
Treasury shares		18		(1,136,188	)		(1,136,188	)
Total equity				19,609,647			19,181,899
Total liabilities and equity			W	26,603,677		W	25,346,636

The above separate interim statements of financial position should be read in conjunction with the accompanying notes.

3

KB Financial Group Inc.

Separate Interim Statements of Comprehensive Income

Three-Month and Six-Month Periods Ended June 30, 2020 and 2019

(In millions of Korean won, except per share amounts)	Notes	2020 (Unaudited)						2019 (Unaudited)
		Three months			Six months			Three months			Six months
Interest income		W	2,281		W	4,078		W	3,737		W	5,321
Interest expense			(32,351	)		(64,449	)		(33,120	)		(64,746	)
Net interest expense	20		(30,070	)		(60,371	)		(29,383	)		(59,425	)
Fee and commission income			231			378			214			350
Fee and commission expense			(2,941	)		(4,197	)		(2,360	)		(3,218	)
Net fee and commission expense	21		(2,710	)		(3,819	)		(2,146	)		(2,868	)
Net gains on financial assets at fair value through profit or loss	22		3,373			6,332			4,968			9,765
Net other operating income	23		—			974,930			—			926,934
General and administrative expenses	24		(16,155	)		(31,466	)		(16,544	)		(30,942	)
Operating profit (loss) before provision for credit losses			(45,562	)		885,606			(43,105	)		843,464
Provision for credit losses			—			—			—			—
Operating profit (loss)			(45,562	)		885,606			(43,105	)		843,464
Net non-operating income (expenses)	25		(5	)		162			22			(48	)
Profit (loss) before income tax			(45,567	)		885,768			(43,083	)		843,416
Income tax expense (benefit)	26		(4,038	)		(5,747	)		356			(1,466	)
Profit (loss) for the period			(49,605	)		880,021			(42,727	)		841,950
Items that will not be reclassified to profit or loss:
Remeasurements of net defined benefit liabilities			37			(38	)		(21	)		(41	)
Other comprehensive income (loss) for the period, net of tax			37			(38	)		(21	)		(41	)
Total comprehensive income (loss) for the period		W	(49,568	)	W	879,983		W	(42,748	)	W	841,909
Earnings (loss) per share	27
Basic earnings (loss) per share		W	(136	)	W	2,242		W	(109	)	W	2,144
Diluted earnings (loss) per share			(135	)		2,224			(109	)		2,130

The above separate interim statements of comprehensive income should be read in conjunction with the accompanying notes.

4

KB Financial Group Inc.     

Separate Interim Statements of Changes in Equity    

Six-Month Periods Ended June 30, 2020 and 2019    

							Accumulated
							Other
(In millions of Korean won)	Share		Hybrid		Capital		Comprehensive			Retained			Treasury			Total
	Capital		Securities		Surplus		Income			Earnings			Shares			Equity
Balance at January 1, 2019	W	2,090,558	W	—	W	14,742,814	W	(7,144	)	W	3,213,556		W	(968,549	)	W	19,071,235
Comprehensive income
Profit for the period		—		—		—		—			841,950			—			841,950
Remeasurements of net defined benefit liabilities		—		—		—		(41	)		—			—			(41	)
Total comprehensive income		—		—		—		(41	)		841,950			—			841,909
Transactions with shareholders
Annual dividends		—		—		—		—			(759,736	)		—			(759,736	)
Acquisition of treasury shares		—		—		—		—			—			(267,639	)		(267,639	)
Issuance of hybrid securities		—		399,085		—		—			—			—			399,085
Dividends on hybrid securities		—		—		—		—			(2,142	)		—			(2,142	)
Total transactions with shareholders		—		399,085		—		—			(761,878	)		(267,639	)		(630,432	)
Balance at June 30, 2019 (Unaudited)	W	2,090,558	W	399,085	W	14,742,814	W	(7,185	)	W	3,293,628		W	(1,236,188	)	W	19,282,712
Balance at January 1, 2020	W	2,090,558	W	399,085	W	14,742,814	W	(7,664	)	W	3,093,294		W	(1,136,188	)	W	19,181,899
Comprehensive income
Profit for the period		—		—		—		—			880,021			—			880,021
Remeasurements of net defined benefit liabilities		—		—		—		(38	)		—			—			(38	)
Total comprehensive income		—		—		—		(38	)		880,021			—			879,983
Transactions with shareholders
Annual dividends		—		—		—		—			(861,092	)		—			(861,092	)
Consideration for exchaneable rights		—		—		16,459		—			—			—			16,459
Issuance of hybrid securities		—		398,911		—		—			—			—			398,911
Dividends on hybrid securities		—		—		—		—			(6,513	)		—			(6,513	)
Total transactions with shareholders		—		398,911		16,459		—			(867,605	)		—			(452,235	)
Balance at June 30, 2020 (Unaudited)	W	2,090,558	W	797,996	W	14,759,273	W	(7,702	)	W	3,105,710		W	(1,136,188	)	W	19,609,647

The above separate interim statements of changes in equity should be read in conjunction with the accompanying notes.

5

KB Financial Group Inc.     

Separate Interim Statements of Cash Flows    

Six-Month Periods Ended June 30, 2020 and 2019    

(In millions of Korean won)	Notes	2020 (Unaudited)			2019 (Unaudited)
Cash flows from operating activities
Profit for the period		W	880,021		W	841,950
Adjustment for non-cash items
Depreciation and amortization			1,864			2,408
Share-based payments			(687	)		1,713
Net interest expense			988			2,378
Net losses (gains) on valuation on financial assets at fair value through profit or loss			612			(2,981	)
Net other expenses			581			1,121
			3,358			4,639
Changes in operating assets and liabilities
Deferred income tax assets			5,747			1,458
Other assets			475,285			(893	)
Other liabilities			(472,046	)		(7,980	)
			8,986			(7,415	)
Net cash inflow from operating activities			892,365			839,174
Cash flows from investing activities
Acquisition of financial assets at fair value through profit or loss			(2,694,561	)		(2,010,000	)
Disposal of financial assets at fair value through profit of loss			1,538,976			1,828,054
Acquisition of investments in subsidiaries			(50,000	)		(100,000	)
Increase in loans at amortized cost			(30,000	)		(70,000	)
Acquisition of property and equipment			(586	)		(4,028	)
Acquisition of intangible assets			(171	)		(703	)
Disposal of intangible assets			—			41
Net decrease(increase) in guarantee deposits paid			380			(1,515	)
Other investing activities			(1,471	)		(86	)
Net cash outflow from investing activities			(1,237,433	)		(358,237	)
Cash flows from financing activities
Increase in debts			100,000			418,705
Decrease in debts			—			(717,026	)
Increase in debentures			1,297,566			818,087
Decrease in debentures			(570,000	)		(648,579	)
Dividends paid to shareholders			(861,092	)		(759,736	)
Principal elements of lease payments			(261	)		(273	)
Acquisition of treasury shares			—			(269,219	)
Issuance of hybrid securities			398,911			399,085
Dividends paid on hybrid securities			(6,513	)		—
Net cash inflow (outflow) from financing activities			358,611			(758,956	)
Net increase (decrease) in cash and cash equivalents			13,543			(278,019	)
Cash and cash equivalents at the beginning of the period	28		18,534			344,299
Cash and cash equivalents at the end of the period	28	W	32,077		W	66,280

The above separate interim statements of cash flows should be read in conjunction with the accompanying notes.

6

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

1. The Company

KB Financial Group Inc. (the “Company”), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfers with the former shareholders of Kookmin Bank, KB Investment & Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd. in order to provide management services and financing to associated companies. The headquarters are located at 26, Gukjegeumyung-ro-8-gil, Yeongdeungpo-gu, Seoul. The Company’s share capital as of June 30, 2020, is W 2,090,558 million. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Company established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Company acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Company included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015. Also, the Company included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary on October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed the name to KB Securities Co., Ltd. in January 2017. KB Insurance Co., Ltd. became one of the subsidiaries through a tender after in May 2017.

The Company has been listed on the Korea Exchange (“KRX”) since October 10, 2008, and on the New York Stock Exchange (“NYSE”) for its American Depositary Shares (“ADS”) since September 29, 2008. Number of shares authorized on its Articles of Incorporation is 1,000 million.

7

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

2. Basis of Preparation

2.1 Application of Korean IFRS

The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (“Hangeul”) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”). The accompanying separate financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

The separate financial statements of the Company have been prepared in accordance with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (“IASB”) that have been adopted by the Republic of Korea.

The preparation of separate financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate financial statements are disclosed in Note 2.4.

The separate financial statements were prepared in accordance with Korean IFRS 1027, Separate Financial Statements.

The Company’s separate interim financial statements for the six-month period ended June 30, 2020, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting and contain less information than is required in annual separate financial statements. Selected explanatory notes include descriptions of transactions or events that are significant in understanding change in financial position and financial performance of the Company since the end of the previous annual reporting period. These separate interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as of June 30, 2020.

8

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

2.1.1 New and amended standards and interpretations adopted by the Company

The Company has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2020.

• Amendments to Korean IFRS 1103 Business Combination – Definition of a Business

To assess whether an acquired set of activities and assets is a business, the amendments requires an entity to consider an input that have the ability to contribute to the creation of outputs significantly and a substantive process and exclude economic benefits from lower costs. An entity can apply a concentration test, an optional test, where substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar assets, the assets acquired would not represent a business. The amendment does not have a significant impact on the financial statements. However, the amendment may have impact on the financial statements if business combination occurs in the future.

• Amendments to Korean IFRS 1001 Presentation of Financial Statements and Korean IFRS 1008 Accounting policies, changes in accounting estimates and errors – Definition of Material

The amendments clarify the explanation of the definition of materiality. The feature of information users needs to be considered when the Company determines the information to be disclosed and the effects of immaterial information as well as omission or misstatement of material information when determining materiality. The amendment does not have a significant impact on the financial statements.

• The IFRS Interpretations Committee (IFRIC) Agenda Decision – Lease term

On December 16, 2019, the IFRS Interpretations Committee announced an interpretation of the “lease term and useful life of leasehold improvements”. This interpretation deals with how to determine the lease term of a cancellable lease or a renewable lease and whether the useful life of non-removable leasehold improvements is limited by the relevant lease term. According to this interpretation, the Company should identify factors to consider the broader economic penalty, reflect identified factors to accounting policies, and calculate lease term based on accounting policy.

The Company is assessing the impact that the change in accounting policy of enforceable period will have on the Company’s financial statements, and the Company will apply the impact in the financial statements once the assessment is completed.

2.1.2 New standards and interpretations not yet adopted by the Company

The Company has not applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2020.

• Amendments to Korean IFRS 1116 Lease – Practical expedient for COVID-19-Related Rent Exemption, Concessions, Suspension

As a practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying this Standard if the change were not a lease modification. These amendments should be applied for annual periods beginning on or after June 1, 2020, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the financial statements.

9

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

2.2 Measurement Basis

The separate financial statements have been prepared under the historical cost convention unless otherwise specified.

2.3 Functional and Presentation Currency

Items included in the separate financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (“the functional currency”). The separate financial statements are presented in Korean won, which is the Company’s functional and presentation currency.

2.4 Critical Accounting Estimates

The preparation of the separate financial statements requires the application of accounting policies, certain critical accounting estimates and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses). Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment at the reporting date are different from the actual environment.

Estimates and underlying assumptions are continually evaluated, and changes in accounting estimates are recognized in the period in which the estimates are changed and in any future periods affected.

Significant accounting estimates and assumptions applied in the preparation of these separate interim financial statements are the same as those applied to the separate financial statements for the year ended December 31, 2019, except for the estimates used to determine income tax expense.

3. Significant Accounting Policies

The significant accounting policies and calculation methods applied in the preparation of these separate financial statements have been consistently applied to all periods presented, except for the impact of changes due to adopting new and amended standards and interpretations.

3.1 Income Tax Expenses for the Interim Period

Income tax expense for the interim period is measured applying the expected average annual income tax rate applicable on expected total annual income.

10

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4. Financial Risk Management

4.1 Summary

4.1.1 Overview of financial risk management policy

The financial risks that the Company is exposed to are credit risk, market risk, liquidity risk and others.

The note regarding financial risk management provides information about the risks that the Company is exposed to, including the objectives, policies, assessment and management process of risks. Additional quantitative information is disclosed throughout the separate financial statements.

The Company’s risk management system focuses on increasing transparency, developing the risk management environment, and the preemptive response to risk due to rapid changes in the financial environment to support the Company’s long-term strategy and business decisions efficiently. Credit risk, market risk and liquidity risk have been recognized as the Company’s key risks. These risks are measured and managed in Internal Capital or VaR (Value at Risk) using a statistical method.

4.1.2 Risk management organization

Risk Management Committee

The Risk Management Committee establishes risk management strategies in accordance with the directives of the Board of Directors and determines the Company’s target risk appetite. The committee approves significant risk matters and reviews the level of risks that the Company is exposed to and the appropriateness of the Company’s risk management operations as an ultimate decision-making authority.

Risk Management Council

The Risk Management Council is a consultative group which reviews and makes decisions on matters delegated by the Risk Management Committee, and discusses the detailed issues relating to the Company’s risk management.

Risk Management Division

The Risk Management Division is responsible for conducting detailed policies, procedures and working processes relating to the Company’s risk management.

4.2 Credit Risk

4.2.1 Overview of credit risk

Credit risk is the risk of possible losses in an asset portfolio in the event of counterparty’s default, breach of contract and deterioration in the credit quality of the counterparty. For risk management reporting purposes, the individual borrower’s default risk is considered.

4.2.2 Credit risk management

The Company measures expected losses on assets that are subject to credit risk management and uses it as a management indicator.

11

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.3 Maximum exposure to credit risk

The Company’s maximum exposures of financial instruments to credit risk without consideration of collateral values as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Due from financial institutions	W	32,080	W	18,537
Loans at amortized cost		150,000		120,000
Loans at fair value through profit or loss		1,277,993		122,408
Other financial assets		24,540		19,814
	W	1,484,613	W	280,759

4.2.4 Credit risk of loans

The Company maintains an allowance for loan losses associated with credit risk on loans to manage its credit risk.

The Company assesses expected credit loss on financial asset at amortized cost and financial asset at fair value through other comprehensive income other than financial asset at fair value through profit or loss and recognizes loss allowance. Expected credit losses are a probability-weighted estimate of possible credit losses within certain range by reflecting reasonable and supportable information that is reasonably available at the reporting date without undue cost or effort, including information about past events, current conditions and forecasts of future economic conditions. For financial assets at amortized cost, the Company measures the expected credit losses and presents it in the financial statements netting the allowance from the related loans; for financial assets measured at fair value through other comprehensive income, the Company presents it in the statements using other comprehensive income.

4.2.4.1 Credit risk exposure

Loans as of June 30, 2020 and December 31, 2019, are classified as follows:

(In millions of Korean won)	June 30, 2020
	The financial instruments applying 12-month expected credit  losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Financial assets at amortized cost
Corporate
Grade 1	W	150,000	W	—	W	—	W	—	W	150,000
Grade 2		—		—		—		—		—
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
	W	150,000	W	—	W	—	W	—	W	150,000

12

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.4.1 Credit risk exposure (cont’d)

(In millions of Korean won)	December 31, 2019
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Financial assets at amortized cost
Corporate
Grade 1	W	120,000	W	—	W	—	W	—	W	120,000
Grade 2		—		—		—		—		—
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
	W	120,000	W	—	W	—	W	—	W	120,000

Credit quality of loans graded according to the probability of default as of June 30, 2020 and December 31, 2019, are as follows:

	Range of PD (%) (Probability of Default)
Grade 1	0.0 ~ 1.0
Grade 2	1.0 ~ 5.0
Grade 3	5.0 ~ 15.0
Grade 4	15.0 ~ 30.0
Grade 5	30.0 ~

4.2.5 Credit risk of due from financial institutions

The credit quality of due from financial institutions as of June 30, 2020 and December 31, 2019, are classified as follows:

(In millions of Korean won)	June 30, 2020
	The financial instruments applying 12-month expected credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Due from financial institutions at amortized cost
Grade 1	W	32,080	W	—	W	—	W	—	W	32,080
Grade 2		—		—		—		—		—
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
	W	32,080	W	—	W	—	W	—	W	32,080

13

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.5 Credit risk of due from financial institutions (cont’d)

(In millions of Korean won)	December 31, 2019
	The financial instruments applying 12-month expected  credit losses		The financial instruments applying lifetime expected credit losses				Financial instruments not applying expected credit losses		Total
			Non-impaired		Impaired
Due from financial institutions at amortized cost
Grade 1	W	18,537	W	—	W	—	W	—	W	18,537
Grade 2		—		—		—		—		—
Grade 3		—		—		—		—		—
Grade 4		—		—		—		—		—
Grade 5		—		—		—		—		—
	W	18,537	W	—	W	—	W	—	W	18,537

4.2.6 Credit risk concentration analysis

Details of the Company’s loans by country as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Corporate loans		%		Allowances		Carrying amount
Korea	W	1,427,993		100.00	W	—	W	1,427,993
(In millions of Korean won)	December 31, 2019
	Corporate loans		%		Allowances		Carrying amount
Korea	W	242,408		100.00	W	—	W	242,408

¹  The amounts include Loans at fair value through profit and loss and Loans at amortized cost.

Details of the Company’s corporate loans by industry as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Corporate loans		%		Allowances		Carrying amount
Financial institutions	W	1,427,993		100.00	W	—	W	1,427,993
(In millions of Korean won)	December 31, 2019
	Corporate loans		%		Allowances		Carrying amount
Financial institutions	W	242,408		100.00	W	—	W	242,408

¹  The amounts include Loans at fair value through profit and loss and Loans at amortized cost.

14

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.2.6 Credit risk concentration analysis (cont’d)

Details of the Company’s due from financial institutions by industry as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Corporate loans		%		Allowances		Carrying amount
Due from financial institutions at amortized cost
Financial institutions	W	32,080		100.00	W	—	W	32,080

(In millions of Korean won)	December 31, 2019
	Corporate loans		%		Allowances		Carrying amount
Due from financial institutions at amortized cost
Financial institutions	W	18,537		100.00	W	—	W	18,537

Details of the Company’s due from financial institutions by country as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Corporate loans		%		Allowances		Carrying amount
Due from financial institutions at amortized cost
Korea	W	32,080		100.00	W	—	W	32,080

(In millions of Korean won)	December 31, 2019
	Corporate loans		%		Allowances		Carrying amount
Due from financial institutions at amortized cost
Korea	W	18,537		100.00	W	—	W	18,537

4.3 Liquidity Risk

4.3.1 Overview of liquidity risk

Liquidity risk is a risk that the Company becomes insolvent due to uncertain liquidity caused by unexpected cash outflows, or a risk of borrowing high interest debts or disposal of liquid and other assets at a substantial discount. The Company manages its liquidity risk through analysis of the contractual maturity of all financial assets, liabilities and off-balance items by maturity groups: on demand, less than one month, between one month to three months, between three months to one year, between one year to five years and over five years.

Cash flows disclosed for the maturity analysis are undiscounted contractual principal and interest to be received (paid) and; thus, are not identical to the amount in the financial statements that are based on the present value of expected cash flows in some cases. The amount of interest to be received or paid on floating rate assets and liabilities is measured on the assumption that the current interest rate would be the same through the maturity.

15

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.3.2. Liquidity risk management

The liquidity risk is managed by liquidity management principles and related guidelines which are applied to the risk management policies and procedures that address all the possible risks that arise from the overall business of the Company.

4.3.3. Analysis of remaining contractual maturity of financial assets and liabilities

The remaining contractual maturity of financial assets and liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	On demand		Up to 1 month		1-3 months		3-12 months		1-5 years		Over 5 years		Total
Financial assets
Cash and due from financial institutions1	W	32,080	W	—	W	—	W	—	W	—	W	—	W	32,080
Financial assets at fair value through profit or loss2		1,277,993		—		—		—		—		290,889		1,568,882
Loans at amortized cost		—		51,098		—		102,189		—		—		153,287
Other financial assets		428		6,185		15,824		190		230		—		22,857
	W	1,310,501	W	57,283	W	15,824	W	102,379	W	230	W	290,889	W	1,777,106
Financial liabilities
Debts	W	—	W	—	W	—	W	100,000	W	—	W	—	W	100,000
Debentures		—		6,182		146,331		1,010,097		3,879,145		1,812,581		6,854,336
Lease liabilities		—		46		88		279		191		—		604
Other financial liabilities		—		5,894		—		8,412		—		—		14,306
	W	—	W	12,122	W	146,419	W	1,118,788	W	3,879,336	W	1,812,581	W	6,969,246

16

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.3.3. Analysis of remaining contractual maturity of financial assets and liabilities (cont’d)

(In millions of Korean won)	December 31, 2019
	On demand		Up to 1 month		1-3 months		3-12 months		1-5 years		Over 5 years		Total
Financial assets
Cash and due from financial institutions1	W	18,619	W	—	W	—	W	—	W	—	W	—	W	18,619
Financial assets at fair value through profit or loss2		122,408		—		—		—		—		291,501		413,909
Loans at amortized cost		—		—		71,523		51,098		—		—		122,621
Other financial assets		—		925		—		15,660		—		—		16,585
	W	141,027	W	925	W	71,523	W	66,758	W	—	W	291,501	W	571,734
Financial liabilities
Debentures	W	—	W	105,903	W	224,578	W	723,474	W	3,624,305	W	1,134,756	W	5,813,016
Lease liabilities		—		44		85		249		215		—		593
Other financial liabilities		—		1,819		—		—		—		—		1,819
	W	—	W	107,766	W	224,663	W	723,723	W	3,624,520	W	1,134,756	W	5,815,428

¹ The amount of W 3 million and W 3 million, respectively, which is restricted due from the financial institutions as of June 30, 2020 and December 31, 2019, is excluded.

² Hybrid securities included in financial assets at fair value through profit or loss are included in the ‘Over 5 years’ category since the point of disposal is uncertain.

17

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

4.4 Market Risk

4.4.1 Concept

Market risk is the risk of possible losses which arise from changes in market factors; such as, interest rate, stock price, foreign exchange rate and other market factors that affect the fair value of future cash flows of financial instruments. The most significant risk of the Company is interest rate risk.

4.4.2 Interest rate risk

Definition of interest rate risk

Interest rate risk is the risk that may occur due to changes in interest rates; such as, the value (fair value) change risk in statement of financial position line items and cash flow change risk in interest income and expense arising from investing and financing activities.

Observation method and management indicator on interest rate risk

The main objective of interest rate risk management is to protect asset values against interest rate fluctuations. The Company manages the risk through measurement and management of Value at Risk for the interest rate.

5. Financial Assets and Financial Liabilities

5.1 Classification and Fair value of Financial Instruments

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Carrying amount		Fair value
Financial assets
Financial assets at fair value through profit or loss
Hybrid securities	W	290,889	W	290,889
Loans		1,277,993		1,277,993
Financial assets at amortized cost
Due from financial institutions		32,080		32,080
Loans		150,000		150,000
Other financial assets		24,540		24,540
	W	1,775,502	W	1,775,502
Financial liabilities
Financial liabilities at amortized cost
Debts	W	100,000	W	100,000
Debentures		6,255,663		6,427,397
Other financial liabilities		28,215		28,215
	W	6,383,878	W	6,555,612

18

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of June 30, 2020 and December 31, 2019, are as follows: (cont’d)

(In millions of Korean won)	December 31, 2019
	Carrying amount		Fair value
Financial assets
Financial assets at fair value through profit or loss
Hybrid securities	W	291,501	W	291,501
Loans		122,408		122,408
Financial assets at amortized cost
Due from financial institutions		18,537		18,537
Loans		120,000		120,000
Other financial assets		19,814		19,814
	W	572,260	W	572,260
Financial liabilities
Financial liabilities at amortized cost
Debentures	W	5,543,446	W	5,631,217
Other financial liabilities		14,940		14,940
	W	5,558,386	W	5,646,157

Fair value is the amount for which an asset could be exchanged, or a liability could be settled, between knowledgeable, willing parties in an arm’s length transaction. For each class of financial assets and financial liabilities, the Company discloses the fair value of that class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is quoted price in an active market.

19

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of June 30, 2020 and December 31, 2019, are as follows: (cont’d)

Methods of determining fair value of financial instruments are as follows:

Cash and due from financial institutions	The carrying amounts of cash and demand due from financial institutions and payment due from financial institutions are a reasonable approximation of fair values. These financial instruments do not have a fixed maturity and are receivable on demand. Fair value of ordinary due from financial institutions is measured using DCF model (Discounted Cash Flow Model).
Investment securities	The fair value of financial instruments that are quoted in active markets is determined using the quoted prices. Fair value is determined through the use of external professional valuation institution where quoted prices are not available. The institutions use one or more of the following valuation techniques including DCF Model, Imputed Market Value Model, Free Cash Flow to Equity Model, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method.
Derivatives	For exchange traded derivatives, quoted price in an active market is used to determine fair value and for OTC derivatives, fair value is determined using valuation techniques. The Company uses internally developed valuation models that are widely used by market participants to determine fair values of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method and the Monte Carlo Simulation or valuation results from independent external professional valuation institution.
Loans at amortized cost	DCF model is used to determine the fair value of loans. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at appropriate discount rate.
Debts	DCF model is used to determine the fair value of debts, but in the case of short-term maturity, the carrying amount is used as the fair value.
Debentures	Fair value is determined by using the valuations of external professional valuation institution, which are calculated using market inputs.
Other financial assets and liabilities	The carrying amounts are reasonable approximation of fair values. These financial instruments are temporary accounts used for other various transactions and their maturities are relatively short or not defined.

5.1.2 Fair value hierarchy

The Company believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the statements of financial position are appropriate. However, the fair values of the financial instruments recognized in the statements of financial position may be different if other valuation methods or assumptions are used. Additionally, as there is a variety of valuation techniques and assumptions used in measuring fair value, it may be difficult to reasonably compare the fair value with that of other financial institutions.

20

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1.2 Fair value hierarchy (cont’d)

The Company classifies and discloses fair value of the financial instruments into the three-level hierarchy as follows:

Level 1	The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2	The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3	The fair values are based on unobservable inputs for the asset or liability.

When the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. Assessing the significance of a particular input to the entire measurement requires judgment, taking into account factors specific to the asset or liability. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

5.1.2.1 Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position

The fair value hierarchy of financial assets measured at fair value in the statement of financial position as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at fair value through profit or loss
Hybrid securities	W	—	W	—	W	290,889	W	290,889
Loans		—		1,277,993		—		1,277,993
	W	—	W	1,277,993	W	290,889	W	1,568,882
(In millions of Korean won)	December 31, 2019
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
Financial assets
Financial assets at fair value through profit or loss
Hybrid securities	W	—	W	—	W	291,501	W	291,501
Loans		—		122,408		—		122,408
	W	—	W	122,408	W	291,501	W	413,909

21

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1.2.1 Fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position (cont’d)

Valuation techniques and inputs of financial assets and liabilities at fair value in the statements of financial position and classified as Level 2 as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Fair value		Valuation techniques	Inputs
Financial assets
Financial assets at fair value through profit or loss
Loans	W	1,277,993	DCF model		Interest, Discount rate, etc.

(In millions of Korean won)	December 31, 2019
	Fair value		Valuation techniques	Inputs
Financial assets
Financial assets at fair value through profit or loss
Loans	W	122,408	DCF model		Interest, Discount rate, etc.

5.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed

The fair value hierarchy of financial assets and liabilities whose fair values are disclosed as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
Financial assets
Cash and due from financial institutions1	W	—	W	32,080	W	—	W	32,080
Loans at amortized cost2		—		—		150,000		150,000
Other financial assets3		—		—		24,540		24,540
	W	—	W	32,080	W	174,540	W	206,620
Financial liabilities
Debts4		W—	W	100,000	W	—	W	100,000
Debentures		—		6,427,397		—		6,427,397
Other financial liabilities3		—		—		28,215		28,215
	W	—	W	6,527,397	W	28,215	W	6,555,612

22

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.1.2.2 Fair value hierarchy of financial assets and liabilities whose fair values are disclosed (cont’d)

(In millions of Korean won)	December 31, 2019
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
Financial assets
Cash and due from financial institutions1	W	—	W	18,537	W	—	W	18,537
Loans at amortized cost2		—		—		120,000		120,000
Other financial assets3		—		—		19,814		19,814
	W	—	W	18,537	W	139,814	W	158,351
Financial liabilities
Debentures	W	—	W	5,631,217	W	—	W	5,631,217
Other financial liabilities3		—		—		14,940		14,940
	W	—	W	5,631,217	W	14,940	W	5,646,157

¹  Because due from financial institutions classified as level 2 are deposits on demand, carrying amounts are reasonable approximations of fair values.

²  Because loans at amortized cost classified as level 3 are loans with residual maturity of less than one year, carrying amounts are reasonable approximations of fair values.

³  For other financial assets and other financial liabilities classified as level 3, carrying amounts are reasonable approximations of fair values.

⁴  For borrowings classified as Level 2, the carrying amount was considered an approximation of fair value and the carrying amount was disclosed at fair value.

Valuation techniques and inputs used in the fair value measurement

For financial assets and liabilities whose carrying amount is a reasonable approximation of fair value, we do not disclose valuation techniques and inputs.

Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 2 as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	Fair value				Valuation Techniques		Inputs
	June 30, 2020		December 31, 2019
Financial liabilities
Debentures	W	6,427,397	W	5,631,217		DCF model		Discount rate

5.2 Level 3 of the Fair Value Hierarchy Disclosure

5.2.1 Valuation policy and process for fair value measurement categorized as Level 3

The Company uses external, independent and qualified professional valuer’s valuation to determine the fair value of the Company’s assets at the end of every reporting period.

23

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.2.2 Changes in fair value (Level 3) measured using valuation technique based on assumption that is unobservable in the market

Details of changes in Level 3 of the fair value hierarchy for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	Financial assets at fair value through profit or loss			Financial assets at fair value through profit or loss
	2020			2019
Beginning balance	W	291,501		W	289,179
Total gains or losses
- Profit or loss for the period		(612	)		2,980
- Other comprehensive income		—			—
Purchases		—			—
Sales		—			—
Issues		—			—
Settlements		—			—
Transfers into Level 3		—			—
Transfers out of Level 3		—			—
Ending balance	W	290,889		W	292,159

In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the period, and profit or loss from financial instruments held at the end of the reporting period in the statement of comprehensive income for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020							2019
	Losses from financial investments at fair value through profit or loss			Other operating income		Net interest income		Gains from financial investments at fair value through profit or loss		Other operating income		Net interest income
Total gains or losses included in profit or loss for the period	W	(612	)	W	—	W	—	W	2,980	W	—	W	—
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period	W	(612	)	W	—	W	—	W	2,980	W	—	W	—

24

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.2.3 Sensitivity analysis of changes in unobservable inputs

5.2.3.1 Information about fair value measurements using unobservable inputs as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Fair value	Valuation technique	Inputs	Unobservable inputs	Range of unobservable inputs (%)	Relationship of unobservable inputs to fair value
Financial assets
Financial assets at fair value through profit or loss
Hybrid securities	W290,889	Hull and White Model, Monte Carlo Simulation	Matrix YTM, Additional spread by grade, Risk spread of company, Valid credit rating, Disclosed information of securities, Interest rate estimation variability	Discount rate	1.99 ~ 4.50	The lower the discount rate, the higher the fair value
				Volatility of interest rate	0.54	The higher the volatility, the higher the fair value fluctuation

(In millions of Korean won)	December 31, 2019
	Fair value	Valuation technique	Inputs	Unobservable inputs	Range of unobservable inputs (%)	Relationship of unobservable inputs to fair value
Financial assets
Financial assets at fair value through profit or loss
Hybrid securities	W291,501	Hull and White Model, Monte Carlo Simulation	Matrix YTM, Additional spread by grade, Risk spread of company, Valid credit rating, Disclosed information of securities, Interest rate estimation variability	Discount rate	2.05 ~ 4.45	The lower the discount rate, the higher the fair value
				Volatility of interest rate	0.50	The higher the volatility, the higher the fair value fluctuation

25

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

5.2.3.2 Sensitivity analysis of changes in unobservable inputs

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of financial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair value is affected by more than two input parameters, the amounts represent the most favorable or most unfavorable outcome. There are hybrid securities whose fair value changes are recognized in profit or loss.

The results of the sensitivity analysis from changes in inputs as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Recognition in profit or loss					Other comprehensive income
	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Financial assets
Financial assets at fair value through profit or loss
Hybrid securities1	W	2,042	W	(2,049	)	W	—	W	—

¹  For equity securities, the changes in fair value are calculated by increasing or decreasing correlations between discount rate (1.99 ~ 4.50%) which are principal unobservable input parameters. And, the changes in fair value are calculated by increasing or decreasing the correlation coefficient between short-term and long-term interests or volatility of the interest rates, which are unobservable inputs, by 1%.

(In millions of Korean won)	December 31, 2019
	Recognition in profit or loss					Other comprehensive income
	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Financial assets
Financial assets at fair value through profit or loss
Hybrid securities1	W	3,215	W	(3,195	)	W	—	W	—

¹  For equity securities, the changes in fair value are calculated by increasing or decreasing correlations between discount rate (2.05 ~ 4.45%) which are principal unobservable input parameters. And, the changes in fair value are calculated by increasing or decreasing the correlation coefficient between short-term and long-term interests or volatility of the interest rates, which are unobservable inputs, by 1%.

26

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

6. Due from Financial Institution

Details of due from financial institution as June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)		Financial Institution		Interest rate (%) (As of June 30, 2020)		June 30, 2020		December 31, 2019
Due from financial institution in Korean won	Due from banks		Kookmin Bank		0.00 ~ 0.25	W	32,080	W	18,537

Details of a maturity analysis of due from financial institution, excluding restricted cash, as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

Up to 3 months

3~6 months

6~12 months

1~3 years

Over 3 years

Total

Due from financial institution in Korean won

W

32,077

W

—

W

—

W

—

W

—

W

32,077

(In millions of Korean won)

December 31, 2019

Up to 3 months

3~6 months

6~12 months

1~3 years

Over 3 years

Total

Due from financial institution in Korean won

W

18,534

W

—

W

—

W

—

W

—

W

18,534

Restricted cash from financial institution as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	Financial Institution	June 30, 2020		December 31, 2019		Reason for restriction
Due from financial institution in Korean won	Kookmin Bank	W	3	W	3	Pledged as collateral for the overdraft establishment

27

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

7. Financial Assets at Fair Value through Profit or Loss

Details of financial assets at fair value through profit or loss as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Financial assets at fair value through profit or loss
Hybrid securities	W	290,889	W	291,501
Loans		1,277,993		122,408
	W	1,568,882	W	413,909

8. Loans at amortized cost

Details of loans at amortized cost as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Financial assets at fair value through profit or loss
Loans at amortized cost	W	150,000	W	120,000
Less: Allowances for loan losses		—		—
Carrying amount	W	150,000	W	120,000

9. Investments in Subsidiaries

Details of subsidiaries as of June 30, 2020, are as follows:

Name of subsidiary	Industry	Location
Kookmin Bank	Banking and domestic, foreign exchange transaction	Korea
KB Securities Co., Ltd.	Financial investment	Korea
KB Insurance Co., Ltd	Insurance	Korea
KB Kookmin Card Co., Ltd.	Credit card	Korea
KB Asset Management Co., Ltd.	Investment advisory and collective investment	Korea
KB Capital Co., Ltd.	Financial leasing	Korea
KB Life Insurance Co., Ltd.	Life insurance	Korea
KB Real Estate Trust Co., Ltd.	Real estate trust management	Korea
KB Savings Bank Co., Ltd.	Savings banking	Korea
KB Investment Co., Ltd.	Capital investment	Korea
KB Data System Co., Ltd.	System software, development and supply	Korea
KB Credit Information Co., Ltd.	Collection of receivables and credit investigation	Korea

28

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

9. Investments in Subsidiaries (cont’d)

Investments in subsidiaries as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won, except for shares and ownership %)	Number of Issued Shares		Ownership (%)		Carrying amount
Name of subsidiary	As of June 30, 2020				June 30, 2020		December 31, 2019
Kookmin Bank		404,379,116		100.00	W	14,821,721	W	14,821,721
KB Securities Co., Ltd.		298,620,424		100.00		3,342,391		3,342,391
KB Insurance Co., Ltd		66,500,000		100.00		2,375,430		2,375,430
KB Kookmin Card Co., Ltd.		92,000,000		100.00		1,953,175		1,953,175
KB Asset Management Co., Ltd.		7,667,550		100.00		96,312		96,312
KB Capital Co., Ltd.1		25,227,566		100.00		673,811		623,811
KB Life Insurance Co., Ltd.		91,200,000		100.00		485,314		485,314
KB Real Estate Trust Co., Ltd.		16,000,000		100.00		121,553		121,553
KB Savings Bank Co., Ltd.		8,001,912		100.00		157,544		157,544
KB Investment Co., Ltd.		22,525,328		100.00		154,910		154,910
KB Data System Co., Ltd.		800,000		100.00		6,334		6,334
KB Credit Information Co., Ltd.		1,252,400		100.00		23,621		23,621
					W	24,212,116	W	24,162,116

¹  Carrying amount of investments in KB Capital Co., Ltd. increased W 50 billion due to paid-in capital increase for the six-month period ended June 30, 2020.

Changes in accumulated impairment losses on investments in subsidiaries for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Beginning			Impairment		Others		Ending
Accumulated impairment losses on investments in subsidiaries	W	(51,742	)	W	—	W	—	W	(51,742	)

(In millions of Korean won)	2019
	Beginning			Impairment		Others		Ending
Accumulated impairment losses on investments in subsidiaries	W	(51,742	)	W	—	W	—	W	(51,742	)

29

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

10. Property and Equipment

Details of property and equipment as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Acquisition cost		Accumulated depreciation			Accumulated impairment losses		Carrying amount
Leasehold improvements	W	4,119	W	(2,787	)	W	—	W	1,332
Equipment and others		5,404		(3,498	)		—		1,906
Right-of-use property and equipment-Buildings		827		(679	)		—		148
Right-of-use property and equipment -Vehicles		998		(704	)		—		294
Right-of-use property and equipment -Others		36		(28	)		—		8
	W	11,384	W	(7,696	)	W	—	W	3,688

(In millions of Korean won)	December 31, 2019
	Acquisition cost		Accumulated depreciation			Accumulated impairment losses		Carrying amount
Leasehold improvements	W	4,119	W	(2,309	)	W	—	W	1,810
Equipment and others		4,818		(2,946	)		—		1,872
Right-of-use property and equipment-Buildings		683		(490	)		—		193
Right-of-use property and equipment -Vehicles		904		(624	)		—		280
Right-of-use property and equipment -Others		36		(21	)		—		15
	W	10,560	W	(6,390	)	W	—	W	4,170

30

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

11. Intangible Assets

Details of intangible assets as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Acquisition cost		Accumulated amortization			Accumulated impairment losses			Carrying amount
Software	W	4,978	W	(3,386	)	W	—		W	1,592
Membership rights		9,765		—			(1,338	)		8,427
Other intangible assets		5,493		(4,300	)		—			1,193
	W	20,236	W	(7,686	)	W	(1,338	)	W	11,212

(In millions of Korean won)	December 31, 2019
	Acquisition cost		Accumulated amortization			Accumulated impairment losses			Carrying amount
Software	W	4,849	W	(3,101	)	W	—		W	1,748
Membership rights		9,765		—			(1,786	)		7,979
Other intangible assets		5,451		(4,086	)		—			1,365
	W	20,065	W	(7,187	)	W	(1,786	)	W	11,092

12. Deferred Income Tax Assets and Liabilities

Details of deferred income tax assets and liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020
	Assets			Liabilities			Net amounts
Share-based payments	W	2,269		W	—		W	2,269
Membership rights		368			—			368
Defined benefit obligation		2,887			—			2,887
Plan assets		—			(2,887	)		(2,887	)
Short-term employee benefits		862			—			862
Financial assets at fair value through profit or loss		2,506			—			2,506
Others		538			(4,749	)		(4,211	)
		9,430			(7,636	)		1,794
Offsetting of deferred tax assets and liabilities		(7,636	)		7,636			—
	W	1,794		W	—		W	1,794

31

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

12. Deferred Income Tax Assets and Liabilities (cont’d)

(In millions of Korean won)	December 31, 2019
	Assets			Liabilities			Net amounts
Share-based payments	W	3,260		W	—		W	3,260
Membership rights		491			—			491
Defined benefit obligation		2,888			—			2,888
Plan assets		—			(2,888	)		(2,888	)
Short-term employee benefits		1,193			—			1,193
Financial assets at fair value through profit or loss		2,337			—			2,337
Others		449			(204	)		245
		10,618			(3,092	)		7,526
Offsetting of deferred tax assets and liabilities		(3,092	)		3,092			—
	W	7,526		W	—		W	7,526

13. Other Assets

Details of other assets as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Other financial assets
Receivables	W	5,334	W	—
Accrued income		3,320		3,654
Guarantee deposits		15,886		16,160
		24,540		19,814
Other non-financial assets
Receivables		596,459		588,765
Prepaid expenses		1,275		556
Advanced payments		1,631		151
		599,365		589,472
	W	623,905	W	609,286

32

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

14. Debts

Debts as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Borrowings	W	100,000	W	—

Details of borrowings as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)		Lender	Issued date	Maturity date	Annual interest rates (%) as of June 30, 2020	June 30, 2020		December 31, 2019
Borrowings in Korean won	Other borrowings	MERITZ Securities Co., Ltd.	June 29, 2020	Nov. 03, 2020	1.06	W	100,000	W	—

The maturities of debts as of June 30, 2020, are as follows:

(In millions of Korean won)

June 30, 2020

Up to 3 months

3~6 months

6~12 months

1~3 years

Over 3 years

Total

Borrowings in Korean won

W

—

W

100,000

W

—

W

—

W

—

W

100,000

33

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

15. Debentures

Details of debentures as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
	Issued date		Expiration date		Annual interest rates (%) as of June 30, 2020		June 30, 2020		December 31, 2019
Unguaranteed debentures No. 3-3		Aug. 13, 2013		Aug. 13, 2020		3.65	W	70,000	W	70,000
Unguaranteed debentures No. 5-2		Mar. 19, 2014		Mar. 19, 2021		3.50		50,000		50,000
Unguaranteed debentures No. 6		Feb. 26, 2015		Feb. 26, 2022		2.38		30,000		30,000
Unguaranteed debentures No. 8		June 23, 2015		June 23, 2020		2.34		—		100,000
Unguaranteed debentures No. 9		June 23, 2015		June 23, 2022		2.52		150,000		150,000
Unguaranteed debentures No. 10		Sept. 17, 2015		Sept. 17, 2020		2.16		20,000		20,000
Unguaranteed debentures No. 11		Sept. 23, 2015		Sept. 23, 2020		2.06		30,000		30,000
Unguaranteed debentures No. 12-2		Nov. 27, 2015		Nov. 27, 2020		2.26		110,000		110,000
Unguaranteed debentures No. 12-3		Nov. 27, 2015		Nov. 27, 2022		2.38		50,000		50,000
Unguaranteed debentures No. 14-1		Dec. 09, 2015		Dec. 09, 2020		2.27		140,000		140,000
Unguaranteed debentures No. 14-2		Dec. 09, 2015		Dec. 09, 2022		2.38		30,000		30,000
Unguaranteed debentures No. 15-2		May 12, 2016		May 12, 2021		1.72		220,000		220,000
Unguaranteed debentures No. 15-3		May 12, 2016		May 12, 2026		2.01		200,000		200,000
Unguaranteed debentures No. 16-2		May 27, 2016		May 27, 2021		1.78		60,000		60,000
Unguaranteed debentures No. 16-3		May 27, 2016		May 27, 2023		1.91		150,000		150,000
Unguaranteed debentures No. 17		June 27, 2016		June 27, 2021		1.51		50,000		50,000
Unguaranteed debentures No. 18-2		July 25, 2016		July 25, 2021		1.45		110,000		110,000
Unguaranteed debentures No. 18-3		July 25, 2016		July 25, 2026		1.69		80,000		80,000
Unguaranteed debentures No. 19-2		Aug. 25, 2016		Aug. 25, 2021		1.46		100,000		100,000
Unguaranteed debentures No. 19-3		Aug. 25, 2016		Aug. 25, 2026		1.69		120,000		120,000
Unguaranteed debentures No. 20-2		Nov. 28, 2016		Nov. 28, 2021		2.28		50,000		50,000
Unguaranteed debentures No. 21		Jan. 25, 2017		Jan. 23, 2020		1.82		—		100,000
Unguaranteed debentures No. 22-1		Feb. 28, 2017		Feb. 28, 2020		1.89		—		120,000
Unguaranteed debentures No. 22-2		Feb. 28, 2017		Feb. 28, 2022		2.11		110,000		110,000
Unguaranteed debentures No. 23		Mar. 23, 2017		Mar. 23, 2020		1.95		—		80,000
Unguaranteed debentures No. 24		Apr. 06, 2017		Apr. 06, 2020		1.97		—		70,000
Unguaranteed debentures No. 25-2		May 24, 2017		May 24, 2020		1.97		—		100,000
Unguaranteed debentures No. 25-3		May 24, 2017		May 24, 2022		2.23		270,000		270,000
Unguaranteed debentures No. 25-4		May 24, 2017		May 24, 2027		2.62		80,000		80,000
Unguaranteed debentures No. 26-1		June 27, 2017		June 27, 2022		2.18		50,000		50,000
Unguaranteed debentures No. 26-2		June 27, 2017		June 27, 2024		2.34		200,000		200,000
Unguaranteed debentures No. 27		July 19, 2017		July 19, 2024		2.41		100,000		100,000
Unguaranteed debentures No. 28-1		Aug. 30, 2017		Aug. 30, 2022		2.30		60,000		60,000
Unguaranteed debentures No. 28-2		Aug. 30, 2017		Aug. 30, 2024		2.43		30,000		30,000
Unguaranteed debentures No. 28-3		Aug. 30, 2017		Aug. 30, 2027		2.60		60,000		60,000
Unguaranteed debentures No. 29-1		Sept. 19, 2017		Sept. 19, 2022		2.29		150,000		150,000
Unguaranteed debentures No. 29-2		Sept. 19, 2017		Sept. 19, 2024		2.44		110,000		110,000
Unguaranteed debentures No. 30		Jan. 25, 2018		Jan. 25, 2021		2.45		80,000		80,000
Unguaranteed debentures No. 31-1		Feb. 28, 2018		Feb. 26, 2021		2.57		150,000		150,000
Unguaranteed debentures No. 31-2		Feb. 28, 2018		Feb. 28, 2023		2.81		50,000		50,000
Unguaranteed debentures No. 31-3		Feb. 28, 2018		Feb. 28, 2028		3.02		60,000		60,000
Unguaranteed debentures No. 32-1		Apr. 06, 2018		Apr. 06, 2021		2.50		60,000		60,000
Unguaranteed debentures No. 32-2		Apr. 06, 2018		Apr. 06, 2023		2.71		80,000		80,000
Unguaranteed debentures No. 32-3		Apr. 06, 2018		Apr. 06, 2028		2.86		20,000		20,000
Unguaranteed debentures No. 33-1		June 12, 2018		June 12, 2023		2.81		100,000		100,000
Unguaranteed debentures No. 33-2		June 12, 2018		June 12, 2028		2.92		30,000		30,000
Unguaranteed debentures No. 34-1		July 25, 2018		July 23, 2021		2.41		40,000		40,000
Unguaranteed debentures No. 34-2		July 25, 2018		July 25, 2023		2.65		70,000		70,000
Unguaranteed debentures No. 34-3		July 25, 2018		July 25, 2025		2.71		20,000		20,000
Unguaranteed debentures No. 34-4		July 25, 2018		July 25, 2028		2.76		20,000		20,000
Unguaranteed debentures No. 35		Oct. 05, 2018		Oct. 05, 2023		2.52		120,000		120,000
Unguaranteed debentures No. 36-1		Feb. 22, 2019		Feb. 22, 2022		2.03		120,000		120,000
Unguaranteed debentures No. 36-2		Feb. 22, 2019		Feb. 22, 2024		2.11		230,000		230,000
Unguaranteed debentures No. 36-3		Feb. 22, 2019		Feb. 22, 2029		2.22		60,000		60,000
Unguaranteed debentures No. 37-1		Mar. 15, 2019		Mar. 15, 2024		2.06		140,000		140,000
Unguaranteed debentures No. 37-2		Mar. 15, 2019		Mar. 15, 2029		2.16		70,000		70,000
Unguaranteed debentures No. 38-1		June. 19, 2019		June 19, 2026		1.73		80,000		80,000
Unguaranteed debentures No. 38-2		June. 19, 2019		June 19, 2029		1.77		120,000		120,000
Unguaranteed debentures No. 39-1		Oct. 15, 2019		Oct. 15, 2024		1.60		80,000		80,000
Unguaranteed debentures No. 39-2		Oct. 15, 2019		Oct. 15, 2029		1.67		40,000		40,000
Unguaranteed debentures No. 40-1		Dec. 04, 2019		Dec. 04, 2024		1.76		70,000		70,000
Unguaranteed debentures No. 40-2		Dec. 04, 2019		Dec. 04, 2029		1.87		30,000		30,000
Unguaranteed debentures No. 41-1		Jan. 16, 2020		Jan. 16, 2023		1.64		110,000		—
Unguaranteed debentures No. 41-2		Jan. 16, 2020		Jan. 16, 2025		1.74		100,000		—
Unguaranteed debentures No. 41-3		Jan. 16, 2020		Jan. 16, 2030		1.88		40,000		—

34

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

15. Debentures (cont’d)

(In millions of Korean won)
	Issued date		Expiration date		Annual interest rates (%) as of June 30, 2020		June 30, 2020			December 31, 2019
Subordinated debentures No. 1-1		Feb. 18, 2020		Feb. 18, 2030		2.21		370,000			—
Subordinated debentures No. 1-2		Feb. 18, 2020		Feb. 18, 2035		2.26		30,000			—
Unguaranteed debentures No. 42-1		May 13, 2020		May 13, 2025		1.59		130,000			—
Unguaranteed debentures No. 42-2		May 13, 2020		May 13, 2030		1.78		70,000			—
Unguaranteed debentures No. 43-1		June 16, 2020		June 16, 2023		1.18		50,000			—
Unguaranteed debentures No. 43-2		June 16, 2020		June 16, 2025		1.44		110,000			—
Unguaranteed debentures No. 43-3		June 16, 2020		June 16, 2030		1.63		50,000			—
Exchangeable bonds No.11		June 30, 2020		June 30, 2025		0.00		240,000			—
								6,280,000			5,550,000
				Less: Bond Discounts				(7,751	)		(6,554	)
				Less: adjustment on exchange right				(16,586	)		—
							W	6,255,663		W	5,543,446

¹ Fair value of the liability component of exchangeable bonds is calculated by using market interest rates of bonds under the same conditions without the exchangeable rights. The residual amount, after deducting liability component from the issuance amount, represents the value of exchangeable rights and is recorded in equity. Shares to be exchanged are 5 million treasury shares of KB Financial Group Inc. with the exchange price of W 48,000. Exercise period for exchangeable rights is from the 60th day from the Issued date to 10 days before the Expiration date.

The maturities of debentures as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)

June 30, 2020

Up to 3 months

3~6 months

6~12 months

1~3 years

Over 3 years

Total

Debentures in Korean won

W

120,000

W

250,000

W

670,000

W

1,860,000

W

3,380,000

W

6,280,000

(In millions of Korean won)

December 31, 2019

Up to 3 months

3~6 months

6~12 months

1~3 years

Over 3 years

Total

Debentures in Korean won

W

300,000

W

270,000

W

370,000

W

1,990,000

W

2,620,000

W

5,550,000

Changes in debentures based on face value for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Beginning		Issue		Repayment			Ending
Debentures in Korean won	W	5,550,000	W	1,300,000	W	(570,000	)	W	6,280,000
(In millions of Korean won)	2019
	Beginning		Issue		Repayment			Ending
Debentures in Korean won	W	5,380,000	W	820,000	W	(650,000	)	W	5,550,000

35

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

16. Net Defined Benefit Liabilities

Defined benefit plan

The Company operates defined benefit plans which have the following characteristics:

• The Company has the obligation to pay the agreed benefits to all its current and former employees.

• Actuarial risk (that benefits will cost more than expected) and investment risk fall, in substance, on the Company.

The net defined benefit liability recognized in the statements of financial position is calculated in accordance with actuarial valuation methods using market data; such as, interest rates, future salary increase rate and mortality rate based on historical data. Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends.

Changes in the defined benefit obligation for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Present value of defined benefit obligation			Fair value of plan assets			Net defined benefit liabilities
Beginning	W	20,312		W	(19,875	)	W	437
Current service cost		1,040			—			1,040
Interest cost (income)		202			(199	)		3
Remeasurements:								—
Return on plan assets (excluding amounts included in interest income)		—			53			53
Payments from plans (benefit payments)		(1,245	)		1,245			—
Payments from the Company		(3	)		—			(3	)
Transfer in		1,735			(1,735	)		—
Transfer out		(1,706	)		1,706			—
Ending	W	20,335		W	(18,805	)	W	1,530

(In millions of Korean won)	2019
	Present value of defined benefit obligation			Fair value of plan assets			Net defined benefit liabilities
Beginning	W	20,363		W	(20,180	)	W	183
Current service cost		1,110			—			1,110
Interest cost (income)		233			(231	)		2
Remeasurements:
Return on plan assets (excluding amounts included in interest income)		—			56			56
Payments from plans (benefit payments)		(1,554	)		1,554			—
Transfer in		1,158			(1,158	)		—
Transfer out		(2,574	)		2,574			—
Ending	W	18,736		W	(17,385	)	W	1,351

36

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

16. Net Defined Benefit Liabilities (cont’d)

Details of the net defined benefit liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020			December 31, 2019
Present value of defined benefit obligation	W	20,335		W	20,312
Fair value of plan assets		(18,805	)		(19,875	)
Net defined benefit liabilities	W	1,530		W	437

Details of post-employment benefits recognized in profit or loss as employee compensation and benefits for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020		2019
Current service cost	W	1,040	W	1,110
Net interest expenses of net defined benefit liabilities		3		2
Post-employment benefits	W	1,043	W	1,112

17. Other Liabilities

Details of other liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Other financial liabilities
Payables	W	5,410	W	1,134
Accrued expenses		22,213		13,218
Lease liability		592		588
		28,215		14,940
Other non-financial liabilities
Payables		64,568		59,263
Accrued expenses		93,971		128,824
Withholding taxes		284		413
		158,823		188,500
	W	187,038	W	203,440

37

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

18. Equity

18.1 Share Capital

Details of share capital and number of issued shares as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Type of share		Ordinary share		Ordinary share
Number of authorized shares		1,000,000,000		1,000,000,000
Par value per share (In Korean won)	W	5,000	W	5,000
Number of issued shares		415,807,920		415,807,920
Share capital	W	2,090,558	W	2,090,558

Changes in shares outstanding for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)	2020		2019
Beginning		389,634,335		395,551,297
Decrease		—		(5,916,962	)
Ending		389,634,335		389,634,335

18.2 Hybrid securities

Details of hybrid securities classified as equity as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	Issuance date	Maturity		Interest rate (%)		June 30, 2020		December 31, 2019
The 1-1st Hybrid securities	May 2, 2019		Perpetual bond		3.23	W	349,204	W	349,204
The 1-2nd Hybrid securities	May 2, 2019		Perpetual bond		3.44		49,881		49,881
The 2-1st Hybrid securities	May 8, 2020		Perpetual bond		3.30		324,099		—
The 2-2nd Hybrid securities	May 8, 2020		Perpetual bond		3.43		74,812		—
						W	797,996	W	399,085

The above hybrid securities may be redeemed by the Company after 5 or 10 years from the issuance date.

18.3 Capital Surplus

Details of capital surplus as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Share premium	W	13,190,275	W	13,190,275
Other capital surplus		1,465,893		1,465,893
Gain on sales of treasury share		86,646		86,646
Consideration for exchange rights		16,459		—
	W	14,759,273	W	14,742,814

38

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

18.4 Accumulated Other Comprehensive Income

Details of accumulated other comprehensive income as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020			December 31, 2019
Remeasurements of net defined benefit liabilities	W	(7,702	)	W	(7,664	)

Changes in accumulated other comprehensive income for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020
	Beginning			Changes			Tax effect		Ending
Remeasurements of net defined benefit liabilities	W	(7,664	)	W	(53	)	W	15	W	(7,702	)

(In millions of Korean won)	2019
	Beginning			Changes			Tax effect		Ending
Remeasurements of net defined benefit liabilities	W	(7,144	)	W	(56	)	W	15	W	(7,185	)

18.5 Retained Earnings

Details of retained earnings as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Legal reserves	W	557,405	W	482,807
Voluntary reserves		982,000		982,000
Regulatory reserve for credit losses		4,175		4,458
Retained earnings before appropriation		1,562,130		1,624,029
	W	3,105,710	W	3,093,294

With respect to the allocation of net profit earned in a fiscal term, the Company must set aside in its legal reserve an amount equal to at least 10% of its net income after tax as reported in the separate statement of comprehensive income each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its share capital in accordance with Article 53 of the Financial Holding Company Act. The reserve is not available for the payment of cash dividends, but may be transferred to share capital, or used to reduce accumulated deficit.

39

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

18.5.1 Regulatory reserve for credit losses

Measurement and disclosure of regulatory reserve for credit losses are required in accordance with Articles 26 through 28 of the Supervisory Regulations on Financial Holding Companies.

Details of the regulatory reserve for credit losses as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020		December 31, 2019
Beginning	W	4,175	W	4,458
Estimated amounts subject to provision (reversal)		5,999		(283	)
Ending	W	10,174	W	4,175

The adjustments to the regulatory reserve for credit losses for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020					2019
	Three months			Six months		Three months			Six months
Provision (reversal) of regulatory reserve for credit losses	W	(726	)	W	5,999	W	(998	)	W	(495	)
Adjusted profit (loss) after provision (reversal) of regulatory reserve for credit losses1,2		(52,136	)		867,509		(41,730	)		842,444
Adjusted basic earnings (losses) per share after provision of regulatory reserve for credit losses1 (In Korean won)		(134	)		2,226		(107	)		2,146
Adjusted diluted earnings (losses) per share after provision of regulatory reserve for credit losses1 (In Korean won)		(133	)		2,208		(107	)		2,131

¹ Adjusted profit after provision (reversal) of regulatory reserve for credit losses is not in accordance with Korean IFRS and calculated on the assumption that provision (reversal) of regulatory reserve for credit losses before income tax is adjusted to the profit for the period.

² Amount after deducting dividends on hybrid securities.

18.6 Treasury Shares

Changes in treasury shares outstanding for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won and in number of shares)	2020
	Beginning		Acquisition		Retirement		Ending
Number of treasury shares		26,173,585		—		—		26,173,585
Carrying amount	W	1,136,188	W	—	W	—	W	1,136,188

5,000,000 treasury shares are deposited at Korea Securities Depository for issuing exchangeable bonds.

(In millions of Korean won and in number of shares)	2019
	Beginning			Acquisition			Retirement		Ending
Number of treasury shares		22,560,240			5,916,962			—		28,477,202
Carrying amount	W	(968,549	)	W	(267,639	)	W	—	W	(1,236,188	)

40

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

19. Dividends

The dividends to the shareholders of the Company in respect of the year ended December 31, 2019, of W 2,210 per share, amounting to total dividends of W 861,092 million, were paid in April 2020. The dividends paid to the shareholders of the Company in 2019 were W 759,736 million (W 1,920 per share).

20. Net Interest Expense

Details of interest income and interest expense for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020						2019
	Three months			Six months			Three months			Six months
Interest income
Due from financial institutions	W	24		W	37		W	831		W	1,895
Loans at amortized cost		815			1,506			934			1,013
Loans at fair value through profit or loss		1,376			2,409			1,890			2,255
Other		66			126			82			158
		2,281			4,078			3,737			5,321
Interest expense
Debts		3			3			1,294			2,488
Debentures		32,345			64,440			31,821			62,249
Other		3			6			5			9
		32,351			64,449			33,120			64,746
Net interest expense	W	(30,070	)	W	(60,371	)	W	(29,383	)	W	(59,425	)

21. Net Fee and Commission Expense

Details of fee and commission income, and fee and commission expense for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020						2019
	Three months			Six months			Three months			Six months
Fee and commission income
Fees earned in Korean won	W	231		W	378		W	214		W	350
Fee and commission expense
Fees paid in Korean won		2,914			4,081			2,360			3,139
Fees paid in foreign currency		27			116			—			79
		2,941			4,197			2,360			3,218
Net fee and commission expense	W	(2,710	)	W	(3,819	)	W	(2,146	)	W	(2,868	)

41

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

22. Net Gains on Financial assets at Fair value through Profit or Loss

Net gains on financial assets at fair value through profit or loss consist of gains or losses related to financial instrument that includes dividend income and gains or losses arising from changes in the fair values, sales and redemptions. Details net gains on financial assets at fair value through profit or loss for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020				2019
	Three months		Six months		Three months		Six months
Gains related to financial instruments at fair value through profit or loss
Dividend income on financial assets designated at fair value through profit or loss	W	3,533	W	6,945	W	3,390	W	6,784
Gains on valuation on financial assets designated at fair value through profit or loss		210		607		1,754		3,304
		3,743		7,552		5,144		10,088
Losses related to financial instruments at fair value through profit or loss
Losses on valuation on financial assets designated at fair value through profit or loss		370		1,220		176		323
		370		1,220		176		323
Net gains on financial instruments at fair value through profit or loss	W	3,373	W	6,332	W	4,968	W	9,765

23. Net Other Operating Income

Details of other operating income and expenses for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020				2019
	Three months		Six months		Three months		Six months
Other operating income
Dividend income from subsidiaries	W	—	W	974,930	W	—	W	926,934
Net other operating income	W	—	W	974,930	W	—	W	926,934

42

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

24. General and Administrative Expenses

24.1 General and Administrative Expenses

Details of general and administrative expenses for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020					2019
	Three months		Six months			Three months		Six months
Employee benefits
Salaries and other short-term employee benefits—salaries	W	6,092	W	12,152		W	5,829	W	10,770
Salaries and other short-term employee benefits—others		1,065		2,011			1,052		1,955
Post-employment benefits—defined benefit plans		521		1,043			557		1,112
Share-based payments		840		(687	)		1,929		1,713
		8,518		14,519			9,367		15,550
Depreciation and amortization		959		1,864			1,259		2,408
Other general and administrative expenses
Travel		—		51			440		636
Communications		136		395			229		398
Tax and dues		87		280			79		291
Publication		72		124			91		148
Rental expense		209		420			241		408
Vehicle		31		55			39		61
Service fees		4,643		9,833			2,919		6,793
Advertising		19		425			15		397
Training		44		304			233		538
Others		1,437		3,196			1,632		3,314
		6,678		15,083			5,918		12,984
	W	16,155	W	31,466		W	16,544	W	30,942

43

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

24.2 Share-based Payments

The Company entered into share-based payment plan for executives and employees of the Company and its subsidiaries.

Details of stock grants linked to long-term performance as of June 30, 2020, are as follows:

(In number of shares)	Grant date	Number of granted shares1		Vesting conditions2
KB Financial Group Inc.
Series 19	Nov. 21, 2017		46,890	Service fulfillment, market performance3 35% and non-market performance5 65%
Series 21	Jan. 01, 2019		25,172	Service fulfillment, market performance3 0~30% and non-market performance4 70~100%
Series 22	Apr. 01, 2019		3,226	Service fulfillment, market performance3 30% and non-market performance4 70%
Series 23	May 27, 2019		1,436	Service fulfillment, market performance3 30% and non-market performance4 70%
Series 24	Jul. 17, 2019		11,224	Service fulfillment, market performance3 30% and non-market performance4 70%
Series 25	Jan. 01, 2020		80,568	Service fulfillment, market performance3 0~30% and non-market performance4 70~100%
Series 26	Mar. 18, 2020		1,086	Service fulfillment, market performance3 30% and non-market performance4 70%
Series 27	June 15, 2020		687	Service fulfillment, market performance3 30% and non-market performance4 70%
Deferred grant in 2015	—		7,674	Satisfied
Deferred grant in 2016	—		8,705	Satisfied
Deferred grant in 2017	—		30,001	Satisfied
Deferred grant in 2018	—		5,960	Satisfied
Deferred grant in 2019	—		26,437	Satisfied
			249,066
Kookmin Bank
Series 75	Jan. 1, 2019		154,997	Service fulfillment, market performance 3 0~50%, and non-market performance4 50~100%
Series 76	Apr. 1, 2019		5,380	Service fulfillment, market performance3 30~50%, and non-market performance4 50~70%
Series 77	May. 27, 2019		4,468	Service fulfillment, market performance3 30~50%, and non-market performance4 50~70%
Series 78	Nov. 21, 2019		36,443	Service fulfillment, market performance3 30%, and non-market performance6 70%
Series 79	Jan. 1, 2020		266,488	Service fulfillment, market performance3 0~50%, and non-market performance4 50~100%
Series 80	Mar 1, 2020		7,711	Service fulfillment, market performance3 30~50%, and non-market performance4 50~70%
Deferred grant in 2015	—		2,759	Satisfied
Deferred grant in 2016	—		19,109	Satisfied
Deferred grant in 2017	—		58,380	Satisfied
Deferred grant in 2018	—		65,587	Satisfied
Deferred grant in 2019	—		98,194	Satisfied
			719,516

44

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

24.2 Share-based Payments (cont’d)

(In number of shares)	Grant date	Number of granted shares1		Vesting conditions2
Other subsidiaries
Stock granted in 2010	—		106	Services fulfillment, market performance3 10~50% and non-market performance4 50~90%
Stock granted in 2011	—		146
Stock granted in 2012	—		420
Stock granted in 2013	—		622
Stock granted in 2014	—		1,100
Stock granted in 2015	—		3,323
Stock granted in 2016	—		6,664
Stock granted in 2017	—		32,717
Stock granted in 2018	—		120,189
Stock granted in 2019	—		334,543
Stock granted in 2020	—		240,498
			740,328
			1,708,910

¹

¹ Granted shares represent the total number of shares initially granted to directors and employees that have residual shares at the end of reporting period (Deferred grants are residual shares at the end of the reporting period).

² Executives and employees were given the option of deferring payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement when the deferred grant has been confirmed.

³ Relative TSR (Total Shareholders Return): [(Fair value at the end of the contract—Fair value at the beginning of the contract) + (Total amount of dividend per share paid during the contract period)] / Fair value at the beginning of the contract)

⁴ Accomplishment of corporates’ and individuals’ performance results

⁵ EPS, Asset Quality, HCROI, Non-banking sector profit

⁶ EPS, Asset Quality

The stock grant award program is an incentive plan that sets, on grant date, the maximum amount of shares that can be awarded. Actual stock granted at the end of the vesting period is determined in accordance with achievement of pre-specified targets over the vesting period.

45

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

24.2 Share-based Payments (cont’d)

Details of stock grants linked to short-term performances as of June 30, 2020, are as follows:

	Estimated number of vested shares1		Vesting Conditions
KB Financial Group Inc.
Stock granted in 2015		7,524		Satisfied
Stock granted in 2016		6,595		Satisfied
Stock granted in 2017		7,385		Satisfied
Stock granted in 2018		14,292		Satisfied
Stock granted in 2019		28,030		Satisfied
Stock granted in 2020		24,985		Proportional to service period
Kookmin Bank
Stock granted in 2015		9,887		Satisfied
Stock granted in 2016		22,442		Satisfied
Stock granted in 2017		31,522		Satisfied
Stock granted in 2018		77,367		Satisfied
Stock granted in 2019		125,342		Satisfied
Stock granted in 2020		82,385		Proportional to service period
Other subsidiaries
Stock granted in 2015		12,190		Satisfied
Stock granted in 2016		40,942		Satisfied
Stock granted in 2017		149,272		Satisfied
Stock granted in 2018		345,625		Satisfied
Stock granted in 2019		551,667		Satisfied
Stock granted in 2020		193,525		Proportional to service period
	1,730,977

¹ Executives and employees were given the option of deferring payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement when the deferred grant has been confirmed.

Share-based payment arrangement for subsidiaries was transferred to the Company in 2010, and the related compensation cost paid to the executives and employees of subsidiaries is reimbursed by these companies. The accrued expenses representing share-based payments as of June 30, 2020 and December 31, 2019, are W 90,078 million and W 124,853 million, respectively, and the receivables to be reimbursed by the subsidiaries for the compensation costs are W 81,918 million and W 112,997 million, respectively. In addition, The compensation costs from share-based payments that amount to W 687 million were recognized as an reversal for the six-month period ended June 30, 2020 and W 1,713 million were recognized for the six-month period ended June 30, 2019.

46

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

25. Non-operating Income (Expense)

Details of non-operating income and expenses for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020					2019
	Three months			Six months		Three months		Six months
Non-operating income
Reversal of impairment losses on intangible assets	W	268		W	448	W	—	W	—
Others		59			103		591		594
		327			551		591		594
Non-operating expenses
Impairment losses on intangible assets		—			—		4		4
Donation		325			382		565		632
Others		7			7		—		6
		332			389		569		642
Non-operating income (expenses)	W	(5	)	W	162	W	22	W	(48	)

26. Income Tax Benefit

Details of income tax benefit for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	2020		2019
Tax payable	W	—	W	—
Change in deferred tax assets and liabilities		5,732		1,451
Origination and reversal of temporary differences		5,732		1,451
Tax expense recognized directly in equity		15		15
Remeasurements of net defined benefit liabilities		15		15
Income tax expense	W	5,747	W	1,466

47

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

27. Earnings (Losses) per Share

27.1 Basic Earnings (Losses) per Share

Calculations of basic earnings (losses) per share on the profit attributable to ordinary shares are as follows:

27.1.1 Weighted average number of ordinary shares outstanding

Details of weighted average number of ordinary shares outstanding for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)	2020						2019
	Three months			Six months			Three months			Six months
Beginning (A)		415,807,920			415,807,920			418,111,537			418,111,537
Acquisition of treasury shares (B)		(26,173,585	)		(26,173,585	)		(26,966,534	)		(25,457,689	)
Weighted average number of ordinary shares outstanding (C=A+B)		389,634,335			389,634,335			391,145,003			392,653,848

27.1.2 Basic earnings (losses) per share

Details of basic earnings (losses) per share for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In Korean won and In number of shares)	2020					2019
	Three months			Six months		Three months			Six months
Profit (loss) for the period	W	(49,605,610,263	)	W	880,020,574,695	W	(42,727,690,967	)	W	841,949,721,037
Deduction: Dividends on hybrid securities		3,256,250,000			6,512,500,000		—			—
Profit (loss) attributable to the ordinary equity holders (A)		(52,861,860,263	)		873,508,074,695		(42,727,690,967	)		841,949,721,037
Weighted average number of ordinary shares outstanding (B)		389,634,335			389,634,335		391,145,003			392,653,848
Basic earnings (losses) per share (A / B)	W	(136	)	W	2,242	W	(109	)	W	2,144

27.2 Diluted Earnings (Losses) per Share

Diluted earnings (losses) per share is calculated using the weighted average number of ordinary shares outstanding which is adjusted by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. The Company’s dilutive potential ordinary shares include stock grants.

A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market share price of the Company’s outstanding shares for the period) based on the monetary value of the subscription rights attached to the stock grants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of stock grants.

48

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

27.2.1 Adjusted profit (loss) for diluted earnings (losses) per share

Adjusted profit (loss) for diluted earnings (losses) per share for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In Korean won)	2020					2019
	Three months			Six months		Three months			Six months
Profit (loss) attributable to the ordinary equity holders1	W	(52,861,860,263	)	W	873,508,074,695	W	(42,727,690,967	)	W	841,949,721,037
Adjustment		—			—		—			—
Adjusted profit (loss) for diluted earnings (losses) per share	W	(52,861,860,263	)	W	873,508,074,695	W	(42,727,690,967	)	W	841,949,721,037

¹ The amount is after deducting dividends on hybrid securities.

27.2.2 Weighted average number of ordinary shares outstanding for diluted earnings per share

Adjusted weighted average number of ordinary shares outstanding to calculate diluted earnings per share for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)	2020				2019
	Three months		Six months		Three months		Six months
Weighted average number of ordinary shares issued and outstanding		389,634,335		389,634,335		391,145,003		392,653,848
Adjustment
Stock grants		2,907,973		3,200,650		—		2,626,443
Adjusted weighted average number of ordinary shares outstanding for diluted earnings per share		392,542,308		392,834,985		391,145,003		395,280,291

49

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

27.2.3 Diluted earnings per share

Details of diluted earnings per share for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In Korean won and in number of shares)	2020					2019
	Three months			Six months		Three months			Six months
Adjusted profit (loss) for diluted earnings (losses) per share	W	(52,861,860,263	)	W	873,508,074,695	W	(42,727,690,967	)	W	841,949,721,037
Adjusted weighted average number of ordinary shares outstanding for diluted earnings (losses) per share		392,542,308			392,834,985		391,145,003			395,280,291
Diluted earnings (losses) per share	W	(135	)	W	2,224	W	(109	)	W	2,130

28. Supplemental Cash Flow Information

Details of cash and cash equivalents as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)	June 30, 2020			December 31, 2019
Due from financial institutions	W	32,080		W	18,537
Restricted cash from financial institutions		(3	)		(3	)
	W	32,077		W	18,534

Significant non-cash transactions for the six-month periods ended June 30, 2020 and 2019, are as follows:

((In millions of Korean won)	2020			2019
Changes in receivables and payables from consolidated tax	W	71,235		W	(347,491	)
Changes in receivables and payables relating to stock grants		(31,080	)		(8,727	)
Other payables due to treasury shares trust agreement, etc.		—			5,099

Cash inflows and outflows due to interest and dividends for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	Activity		2020		2019
Prepaid income tax expense		Operating	W	1,079	W	1,049
Interest received		Operating		3,762		4,145
Interest paid		Operating		62,918		65,364
Dividends received		Operating		981,935		933,747
Dividends paid		Financing		867,604		759,736

50

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

29. Contingent Liabilities and Commitments

29.1 Commitments

Commitments made with financial institutions as of June 30, 2020 and December 31, 2019, are as follows:

	June 30, 2020				December 31, 2019
	Amount of commitment		Amounts borrowed		Amount of commitment		Amounts borrowed
KEB Hana Bank	W	200,000	W	—	W	50,000	W	—

29.2 Other Matters (including litigation)

a) The Company has no pending lawsuit as the defendant.

b) The ongoing COVID-19 pandemic has had a negative impact on the global economy, and has increased uncertainty in estimation of the Company’s expected credit losses on certain portfolios and potential impairment on assets. The Company’s ability to generate revenue may be adversely affected by the factors including;

• uncertainties arising from significant increases in credit risks of borrowers affected by COVID-19 pandemic

• uncertainties arising from forward-looking macroeconomic information in estimating expected credit losses

• depreciation of Korean won against major currencies causing increase in the payment amount of principal and interests of debts denominated in foreign currencies; and

• a significant decline in fair value of the Company’s investments in companies affected by COVID-19 pandemic.

c) On April 10, 2020, the Company has entered into share purchase agreement to acquire 15,000,000 ordinary shares (100% of investments) of Prudential Life Insurance Company Korea Ltd. at W 2,265 billion. The final acquisition amount is expected to be fixed at the acquisition amount above by reflecting the agreed interests (W 75 billion) until the Closing date of transactions and the Company’s external outflows until the Closing date of transactions. The Closing date will be determined after the preapproval of the financial authorities.

51

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30. Related Party Transactions

According to Korean IFRS 1024, the Company includes subsidiaries and key management (including family members) in the scope of related parties. Additionally, the Company discloses balances (receivables and payables) and other amounts arising from the related party transactions in the notes to the separate financial statements. Refer to Note 9 for details on subsidiaries.

Key management includes the directors of the Company, their close family members, and the companies where the directors and/or their close family members have control or joint control.

Significant related party transactions for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)
Subsidiaries		2020		2019
Kookmin Bank	Interest income	W	43	W	1,212
	Fee and commission income		418		779
	Net other operating income		731,926		667,226
	General and administrative expenses		4,211		3,445
KB Securities Co., Ltd.	Net other operating income		80,000		50,000
	General and administrative expenses		474		564
KB Insurance Co., Ltd.	Fee and commission income		—		3
	General and administrative expenses		800		678
KB Kookmin Card Co., Ltd.	Net other operating income		100,004		200,008
	General and administrative expenses		317		457
	Net non-operating income		3		3
KB Asset Management Co., Ltd.	Net other operating income		30,000		—
KB Capital Co., Ltd	Net gains on financial assets at fair value through profit or loss		6,333		9,765
	General and administrative expenses		65		39
KB Life Insurance Co., Ltd.	General and administrative expenses		136		49
KB Real Estate Trust. Co., Ltd.	Net other operating income		30,000		4,700
KB Savings Bank Co., Ltd.	Net other operating income		3,000		5,000
KB Investment Co., Ltd.	Interest income		1,506		1,013
KB Data Systems Co., Ltd.	General and administrative expenses		560		949

¹ Net other operating income includes dividend income from subsidiaries.

52

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30. Related Party Transactions (cont’d)

Significant receivables and payables, and related allowance for loan losses arising from the related party transactions as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
Subsidiaries		June 30, 2020		December 31, 2019
Kookmin Bank	Cash and due from financial institutions	W	32,080	W	18,537
	Other assets		463,679		418,114
	Other liabilities		3,958		35
	Property and equipment		47		152
KB Securities Co., Ltd.	Other assets		29,955		52,068
	Other liabilities		50,897		—
KB Insurance Co., Ltd.	Other assets		10,680		14,492
	Other liabilities		7,914		47,580
KB Kookmin Card Co., Ltd.	Other assets		65,772		60,705
	Other liabilities		751		1,394
KB Asset Management Co., Ltd.	Other assets		9,783		15,590
KB Capital Co., Ltd.	Financial assets at fair value through profit or loss		290,889		291,501
	Other assets		16,119		18,995
	Other liabilities		65		—
KB Life Insurance Co., Ltd.	Other assets		2,372		3,956
	Other liabilities		5,787		8,636
KB Real Estate Trust Co., Ltd.	Other assets		15,015		13,979
KB Savings Bank Co., Ltd.	Other assets		3,064		3,727
KB Investment Co., Ltd.	Loans at amortized cost		150,000		120,000
	Other assets		3,802		2,904
	Other liabilities		—		59
KB Data Systems Co., Ltd.	Property and equipment		390		438
	Intangible assets		1,984		1,145
	Other assets		1,837		2,721
	Other liabilities		445		333
KB Credit Information Co., Ltd.	Other assets		702		849
	Other liabilities		—		241

53

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30. Related Party Transactions (cont’d)

Right-of-use assets and lease liability with related parties as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)			June 30, 2020		December 31, 2019
Subsidiary	Kookmin Bank	Right-of-use assets	W	47	W	152

Unused commitments by a related party as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)			June 30, 2020		December 31, 2019
Subsidiary	KB Kookmin Card Co., Ltd.	Unused commitments of credit card	W	2,577	W	2,255

Share transactions with related parties for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)			2020		2019
Subsidiary	KB Capital Co., Ltd.	Paid-in capital increase of ordinary shares	W	50,000	W	50,000
Subsidiary	KB Investment Co., Ltd.	Paid-in capital increase of ordinary shares		—	W	50,000

Loan transactions with related parties for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)			2020
			Beginning		Loans		Ending
Subsidiary	KB Investment Co., Ltd.	Loan	W	120,000	W	30,000	W	150,000
(In millions of Korean won)			2019
			Beginning		Loans		Ending
Subsidiary	KB Investment Co., Ltd.	Loan	W	50,000	W	70,000	W	120,000

54

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2020 and 2019 (Unaudited), and December 31, 2019

30. Related Party Transactions (cont’d)

Compensation to key management for the six-month periods ended June 30, 2020 and 2019, consists of:

(In millions of Korean won)	2020
	Short-term employee benefits		Post-employment benefits		Share-based payments			Total
Registered director (executive)	W	578	W	14	W	(319	)	W	273
Registered director (non-executive)		315		—		—			315
Non-registered director		2,174		71		(368	)		1,877
	W	3,067	W	85	W	(687	)	W	2,465

(In millions of Korean won)	2019
	Short-term employee benefits		Post-employment benefits		Share-based payments		Total
Registered director (executive)	W	487	W	13	W	413	W	913
Registered director (non-executive)		293		—		—		293
Non-registered director		1,797		70		1,300		3,167
	W	2,577	W	83	W	1,713	W	4,373

The Company paid W 35 million and W 225 million to KB Securities Co., Ltd., a subsidiary, for the underwriting and arrangement of debentures and hybrid securities for the six-month periods ended June 30, 2020 and 2019, respectively.

55