S-B

As filed with the Securities and Exchange Commission on March 22, 2012

Registration Statement No. 333-            

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

REGISTRATION STATEMENT

UNDER

SCHEDULE B

OF

THE SECURITIES ACT OF 1933

THE EXPORT-IMPORT BANK OF KOREA

(Name of Registrant)

THE REPUBLIC OF KOREA

(Co-Registrant and Guarantor)

Names and Addresses of Authorized Representatives:

Seung-hyun Yoo Or Sang Hun Kim Duly Authorized Representatives in the United States of the Export-Import Bank of Korea 460 Park Avenue, 8^th Floor New York, New York 10022 Byeong Sun Song Duly Authorized Representative in the United States of The Republic of Korea 335 East 45th Street New York, New York 10017

Copies to:

Jinduk Han, Esq.

Cleary Gottlieb Steen & Hamilton LLP

39th Floor, Bank of China Tower

One Garden Road

Hong Kong

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

The securities registered hereby will be offered on a delayed or continuous basis pursuant to the procedures set forth in Securities Act Release Nos. 33-6240 and 33-6424.

CALCULATION OF REGISTRATION FEE

Title of each class of securities being registered	Amount to be registered (1)	Amount of registration fee
Debt securities with or without warrants to purchase debt securities	US$5,000,000,000	US$573,000
Guarantees of The Republic of Korea	—  (2)	—   (2)

(1) Or an equivalent amount in another currency or currencies or in composite currencies or as determined by reference to an index or, if the debt securities are to be offered at a discount, the approximate proceeds to The Export-Import Bank of Korea. Includes the maximum principal amount of the obligations to be guaranteed by the Registrants under the guarantees registered hereby.

(2) The Republic of Korea may irrevocably guarantee the debt securities being registered hereby. Pursuant to Rule 457(n) of the Securities Act of 1933, no registration fee is required with respect to the guarantees.

Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus contained in this Registration Statement and supplements to such Prospectus will also be used in connection with US$4,807,248,627 of debt securities with or without warrants to purchase debt securities registered under Registration Statement No. 333-172648.

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

* This Registration Statement also constitutes Post-Effective Amendment No. 3 to Registration Statement No. 333-172648.

EXPLANATORY NOTE

This registration statement relates to US$5,000,000,000 aggregate amount of (i) debt securities (with or without warrants) of The Export-Import Bank of Korea to be offered from time to time as separate issues on terms and in the manner to be specified in a prospectus supplement to be delivered in connection with each such offering and (ii) guarantees that may be issued by The Republic of Korea in respect of debt securities of The Export-Import Bank of Korea on terms and in the manner to be specified in a prospectus supplement to be delivered in connection with each such issuance. The prospectus constituting a part of this registration statement relates to (i) the debt securities (with or without warrants) registered hereunder, (ii) guarantees that may be issued by The Republic of Korea, registered hereunder and (iii) US$4,807,248,627 aggregate principal amount of debt securities (with or without warrants) registered under Registration Statement No.333-172648 (including an aggregate principal amount of US$640,000,000 of debt securities that may be sold by us from time to time in a continuous offering designated Medium-Term Notes, Series A, Due Not Less Than Nine Months From Date of Issue (the “MTNs”)).

This registration statement contains a form of prospectus supplement filed as Exhibit K to this registration statement to be used in connection with the sale by us of the MTNs in a continuous offering.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MARCH 22, 2012

PROSPECTUS

$5,000,000,000

The Export-Import Bank of Korea

Debt Securities

Warrants to Purchase Debt Securities

The Republic of Korea

Guarantees

We will provide the specific terms of these securities in supplements to this prospectus. You should read this prospectus and any prospectus supplement carefully before you invest.

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

This prospectus is dated                     , 2012

TABLE OF CONTENTS

	Page
Certain Defined Terms and Conventions		1
Use of Proceeds		2
The Export-Import Bank of Korea		3
Overview		3
Capitalization		4
Business		4
Selected Financial Statement Data		7
Operations		9
Description of Assets and Liabilities		15
Debt		24
Credit Policies, Credit Approval and Risk Management		26
Capital Adequacy		27
Overseas Operations		28
Property		29
Management and Employees		29
Tables and Supplementary Information		31
Financial Statements and the Auditors		38
The Republic of Korea		96
Land and History		96
Government and Politics		97
The Economy		101
Principal Sectors of the Economy		109
The Financial System		114
Monetary Policy		119
Balance of Payments and Foreign Trade		123
Government Finance		130
Debt		132
Tables and Supplementary Information		134
Description of the Securities		140
Description of Debt Securities		140
Description of Warrants		146
Terms Applicable to Debt Securities and Warrants		147
Description of Guarantees		148
Limitations on Issuance of Bearer Debt Securities and Bearer Warrants		149
Taxation		150
Korean Taxation		150
United States Tax Considerations		152
Plan of Distribution		159
Legal Matters		160
Authorized Representatives in the United States		160
Official Statements and Documents		160
Experts		160
Forward-Looking Statements		161
Further Information		163

CERTAIN DEFINED TERMS AND CONVENTIONS

All references to the “Bank”, “we”, “our” or “us” mean The Export-Import Bank of Korea. All references to “Korea” or the “Republic” contained in this prospectus mean The Republic of Korea. All references to the “Government” mean the government of Korea.

Unless otherwise indicated, all references to “won”, “Won” or “(Won)” contained in this prospectus are to the currency of Korea, references to “U.S. dollars”, “Dollars”, “USD”, “$” or “US$” are to the currency of the United States of America, references to “Euro”, “EUR” or “ €” are to the currency of the European Union, references to “Japanese Yen”, “JPY” or “¥” are to the currency of Japan, references to “Chinese Renminbi” or “CNY” are to the currency of the People’s Republic of China, references to “Swiss franc” or “CHF” are to the currency of Switzerland, references to “pound sterling” or “GBP” are to the currency of the United Kingdom, references to “Hong Kong dollar” or “HKD” are to the currency of Hong Kong, S.A.R., references to “Singapore dollar” or “SGD” are to the currency of Singapore, references to “Turkish Lira” or “TRY” are to the currency of Turkey, references to “Malaysia Ringgit” or “MYR” are to the currency of Malaysia, references to “Brazilian Real” or “BRL” are to the currency of Federative Republic of Brazil, references to “Mexican Peso” or “MXN” are to the currency of the United Mexican States, references to “New Zealand Dollar” or “NZD” are to the currency of New Zealand, references to “Taiwan Dollar” or “TWD” are to the currency of Taiwan, references to “Thai Baht” or “THB” are to the currency of Thailand, references to “Australian dollar” or “AUD” are to the currency of Australia, references to “Indian Rupee” or “INR” are to the currency of India, references to “Indonesian Rupiah” or “IDR” are to the currency of Indonesia, references to “Philippine Peso” or “PHP” are to the currency of the Republic of the Philippines, references to “Saudi Riyal” or “SR” are to the currency of Saudi Arabia and references to “Peruvian nuevo sol” or “PEN” are to the currency of Peru.

In this prospectus, where information has been prepared in thousands, millions or billions of units, amounts may have been rounded up or down. Accordingly, actual numbers may differ from those contained herein due to rounding. All discrepancies in any table between totals and the sums of the amounts listed are due to rounding.

Our principal financial statements are our non-consolidated financial statements. Unless specified otherwise, our financial and other information is presented on a non-consolidated basis and does not include such information with respect to our subsidiaries.

1

USE OF PROCEEDS

Unless otherwise specified in the applicable prospectus supplement, we will use the net proceeds from the sale of the securities for our general operations.

2

THE EXPORT-IMPORT BANK OF KOREA

Overview

We were established in 1976 as a special governmental financial institution pursuant to the Export-Import Bank of Korea Act, as amended (the “KEXIM Act”). Since our establishment, we have been promoting the export and competitiveness of Korean goods and services in international markets. To this end, we have introduced financing facilities and implemented lending policies that are responsive to the needs of Korean exporters.

Our primary purpose, as stated in the KEXIM Act, is to “promote the sound development of the national economy and economic cooperation with foreign countries by extending the financial aid required for export and import transactions, overseas investment and the development of natural resources abroad.” Over the years, we have developed various financing facilities and lending policies that are consistent with the Government’s overall economic policies. In the latter part of the 1980s, as a result of changing trade conditions and the increased internationalization of the Korean economy, overseas investment credits and import credits were promoted and began to constitute an important portion of our business. In recent years, we have focused on the development of new financing facilities, including structured financing for ships and project financing for the construction of industrial plants and the development of natural resources abroad.

As of December 31, 2011, we had (Won)47,959 billion of outstanding loans, including (Won)27,904 billion of outstanding export credits, (Won)15,565 billion of outstanding overseas investment credits and (Won)2,235 billion of outstanding import credits, as compared to (Won)41,230 billion of outstanding loans, including (Won)23,073 billion of outstanding export credits, (Won)13,727 billion of outstanding overseas investment credits and (Won)2,501 billion of outstanding import credits as of December 31, 2010.

Although our management has control of our day-to-day operations, our operations are subject to the close supervision of the Government. The Government’s determination each fiscal year regarding the amount of financial support to extend to us, in the form of loans, contributions to capital or transfers of our income to reserves, plays an important role in determining our lending capacity. The Government has the power to appoint or dismiss our President, Deputy President, Executive Directors and Auditor. Moreover, the Minister of Strategy and Finance (formerly the Minister of Finance and Economy) of the Republic has, on behalf of the Republic, signed the registration statement of which this Prospectus forms a part.

The Government supports our operations pursuant to Article 37 of the KEXIM Act. Article 37 of the KEXIM Act provides that “the annual net losses of the Export-Import Bank of Korea shall be offset each year by the reserve, and if the reserve be insufficient, the Government shall provide funds to cover the deficit.” As a result of the KEXIM Act, the Government is generally responsible for our operations and is legally obligated to replenish any deficit that arises if our reserves, consisting of our surplus and capital surplus items, are insufficient to cover any of our annual net losses. In light of the above, if we have insufficient funds to make any payment under any of our obligations, including the debt securities covered by this prospectus, the Government would take appropriate steps, such as by making a capital contribution, by allocating funds or by taking other action, to enable us to make such payment when due. The provisions of Article 37 do not, however, constitute a direct guarantee by the Government of our obligations, and the provisions of the KEXIM Act, including Article 37, may be amended at any time by action of the National Assembly.

3

Capitalization

As of December 31, 2011, our authorized capital was (Won)8,000 billion and capitalization was as follows:

	December 31, 2011  (1)
	(billions of Won)
Long-Term Debt (2)(3)(4)(5):
Borrowings in Korean Won	(Won)	—
Borrowings in Foreign Currencies		1,286
Export-Import Financing Debentures		26,141
Total Long-term Debt	(Won)	27,427
Capital and Reserves:
Paid-in Capital (6)	(Won)	6,259
Accumulated Legal Reserve (7)		284
Accumulated Voluntary Reserve (7)		870
Unappropriated Retained Earnings		147
Accumulated Other Comprehensive Income		(50	)
Total Capital and Reserve	(Won)	7,509
Total Capitalization (7)	(Won)	34,936

(1) Except as described in this prospectus, there has been no material adverse change in our capitalization since December 31, 2011.

(2) We have translated borrowings in foreign currencies as of December 31, 2011 into Won at the rate of (Won)1,153.3 to US$1.00, which was the market average exchange rate as announced by the Seoul Monetary Brokerage Services Ltd., on December 31, 2011.

(3) As of December 31, 2011, we had contingent liabilities totaling (Won)61,443 billion, which consisted of (Won)42,470 billion under outstanding guarantees and acceptances and (Won)18,973 billion under contingent guarantees and acceptances issued on behalf of our clients. For further information relating to our contingent liabilities under outstanding guarantees as of December 31, 2011, see “Notes to Non-Consolidated Financial Statements of December 31, 2011 and 2010—Note 11”. See also “Notes to Non-Consolidated Financial Statements of December 31, 2011 and 2010—Note 15” for a description of our commitments and contingencies as of December 31, 2011.

(4) As of December 31, 2011, we had entered into 92 interest rate related derivative contracts with a notional amount of (Won)12,100 billion and 207 currency related derivative contracts with a notional amount of (Won)14,929 billion in accordance with our policy to hedge interest rate and currency risks. See “Notes to Non-Consolidated Financial Statements of December 31, 2011 and 2010—Note 16”.

(5) See “Sources of Funding” for an explanation of these sources of funds. All our borrowings, whether domestic or international, are unsecured and unguaranteed.

(6) As of December 31, 2011, our authorized ordinary share capital is (Won)8,000 billion and issued fully-paid ordinary share capital is (Won)6,259 billion. See “Government Support and Supervision.”

(7) See “Government Support and Supervision” for a description of the manner in which annual net income is transferred to the legal reserve and may be transferred to the voluntary reserve.

Business

Purpose and Authority

We were established in 1976 as a special governmental financial institution pursuant to the KEXIM Act. The KEXIM Act, the Enforcement Decree of the KEXIM Act (the “KEXIM Decree”) and our Articles of Incorporation (the “By-laws”) define and regulate our powers and authority. We are treated as a special juridical entity under Korean law and are not subject to certain of the laws regulating activities of commercial banks.

4

We were established, as stated in the KEXIM Act, to “promote the sound development of the national economy and economic cooperation with foreign countries by extending the financial aid required for export and import transactions, overseas investment and the development of natural resources abroad.” As an instrument in serving the Government’s public policy objectives, we do not seek to maximize our profits. We do, however, strive to maintain an adequate level of profitability to strengthen our equity base in order to support the growth in the volume of our business.

Our primary purpose has been the provision of loans to facilitate Korean exports of capital and non-capital goods and technical services. Most of our activities have been carried out pursuant to this authority and we characterize such loans as export credits. In January 2008, the Government amended the KEXIM Act and KEXIM Decree to expand the types of goods and services eligible for export credits that we may extend to include intangible goods and non-technical services.

We have the authority to undertake a range of other financial activities. These fall into three principal categories:

• overseas investment credits;

• import credits; and

• guarantee facilities.

Overseas investment credits consist of loans to finance Korean overseas investments and projects. Import credits include the extension of loans to finance Korean imports of essential materials and natural resources. Guarantee facilities are made available to support the obligations of Korean exporters and importers.

We also have the authority to administer, on behalf of the Government, the Government’s Economic Development Cooperation Fund and the Inter-Korea Cooperation Fund, formerly known as South and North Korea Co-operation Fund.

We may also undertake other business activities incidental to the foregoing, including currency and interest rate swap transactions. We have engaged in such swap transactions for hedging purposes only.

Government Support and Supervision

The Government’s determination each fiscal year, regarding the amount of financial support to extend to us, plays an important role in determining our lending capacity. Such support has included contributions to capital, loans and transfers of our income to reserves.

Our authorized capital was (Won)30 billion when the Government enacted the KEXIM Act in 1969. The National Assembly amended the KEXIM Act and increased our authorized capital to (Won)150 billion in 1974, (Won)500 billion in 1977, (Won)1,000 billion in 1986, (Won)2,000 billion in January 1998 and (Won)4,000 billion in September 1998. In January 2009, the Government further increased our authorized capital to (Won)8,000 billion.

As of December 31, 1996, the capital contribution from the Government was approximately (Won)686 billion, all in cash. Since 1997, the Government has made capital contributions not only in cash but also in the form of shares of common stock of Government-affiliated entities. In 1997, the Government contributed (Won)185 billion in cash and in the form of shares of common stock of KT&G (formerly known as Korea Tobacco & Ginseng). In 1998, the Government contributed (Won)805 billion in cash and in the form of shares of common stock of KT&G, Korea Electric Power Corporation and Korea Expressway Corporation (formerly known as Korea Highway Corporation). From 1999 to 2004, the Government contributed (Won)1,100 billion in cash to our capital, directly and indirectly through The Bank of Korea and the Korea Development Bank.

5

In April 2005, the Government contributed (Won)500 billion in the form of shares of common stock of Korea Expressway Corporation owned by the Government and (Won)20 billion in cash to our capital to further support our lending to Korean manufacturers and exporters, in accordance with the Government policy to promote the Republic’s exports by providing such entities with the funds required for the construction and export of capital goods (such as industrial plants, industrial machinery, natural resource development, information infrastructure and overseas construction projects). In July 2007, the Government contributed (Won)3 billion in cash to our capital. In December 2008, the Government contributed (Won)650 billion in the form of shares of common stock of Kyobo Life Insurance Co., Ltd. and Korea Expressway Corporation to our capital. The Government contributed to our capital (Won)300 billion in cash in January 2009, (Won)500 billion in the form of shares of common stock of Korea Expressway Corporation in March 2009 and (Won)250 billion in cash in May 2009, in order to support our lending to Korean exporters, including small and medium-sized enterprises. In January 2010 and January 2011, the Government further contributed (Won)150 billion and (Won)50 billion, respectively, in cash to our capital. In April 2011, the Government contributed, indirectly through Korea Finance Corporation, (Won)1,000 billion in the form of shares of common stock of Korea Expressway Corporation to our capital in order to enhance our capability to undertake large-scale overseas project financings. In November 2011, the Government contributed to our capital (Won)50 billion in cash, in order to support our lending to Korean exporters. Taking into account these capital contributions, as of December 31, 2011, our total paid-in capital was (Won)6,259 billion. As of the date of this prospectus, our paid-in capital was (Won)6,259 billion.

Pursuant to the KEXIM Act, only the Government, The Bank of Korea, Korea Finance Corporation, certain designated domestic banking institutions, exporters’ associations and international financial organizations may contribute to our paid-in capital. As of December 31, 2011, the Government directly owned 63.0% of our paid-in capital and indirectly owned, through The Bank of Korea and Korea Finance Corporation, 18.6% and 18.4%, respectively, of our paid-in capital. See “Notes to Non-Consolidated Financial Statements of December 31, 2011 and 2010—Note 1”.

In addition to contributions to our capital, the Government provides funding for our financing activities. The Government has made loans available to us for our lending activities. See “Description of Assets and Liabilities—Sources of Funding.”

The Government also supports our operation pursuant to Articles 36 and 37 of the KEXIM Act. Article 36 of the KEXIM Act and the By-laws provide that we shall apply our net income earned during each fiscal year, after deduction of depreciation expense for such fiscal year, in the following manner and in order of priority:

• first, 10% of such net income is transferred to our legal reserve until the total amount of our legal reserve equals the total amount of our paid-in capital;

• second, if the Minister of Strategy and Finance approves such distribution, the balance of any such net income, after such transfer to the legal reserve, is distributed to the institutions, other than the Government, that have contributed to our capital (up to a maximum 15% annual dividend rate); and

• third, the remaining balance of any such net income is distributed in whatever manner our Operations Committee determines and the Minister of Strategy and Finance approves, such as additions to our voluntary reserve. As of December 31, 2011, we had a legal reserve of (Won)284 billion and a voluntary reserve of (Won)870 billion.

Article 37 of the KEXIM Act provides that “the annual net losses of the Export-Import Bank of Korea shall be offset each year by the reserve, and if the reserve be insufficient, the Government shall provide funds to cover the deficit.” As a result of the KEXIM Act, the Government is generally responsible for our operations and is legally obligated to replenish any deficit that arises if our reserves are insufficient to cover any of our annual net losses. In light of this provision, if we have insufficient funds to make any payment under any of our obligations, the Government would take appropriate steps by making a capital contribution, by allocating funds or by taking other action to enable us to make such payment when due. The provisions of Article 37 do not, however, constitute a direct guarantee by the Government of our obligations, and the provisions of the KEXIM Act, including Article 37, may be amended at any time by action of the National Assembly.

6

The Government closely supervises our operations including in the following ways:

• the President of the Republic appoints our President upon the recommendation of the Minister of Strategy and Finance;

• the Minister of Strategy and Finance appoints our Deputy President and Executive Directors upon the recommendation of our President;

• the Minister of Strategy and Finance appoints our Auditor;

• one month prior to the beginning of each fiscal year, we must submit our proposed program of operations and budget for the fiscal year to the Minister of Strategy and Finance for his approval;

• the Minister of Strategy and Finance must approve our operating manual, which sets out guidelines for all principal operating matters, including the range of permitted financings;

• the Board of Audit and Inspection, a Government department, examines our settlement of accounts annually;

• each of the Minister of Strategy and Finance and the Financial Services Commission has broad authority to require reports from us on any matter and to examine our books, records and other documents. On the basis of the reports and examinations, the Minister of Strategy and Finance may issue any orders it deems necessary to enforce the KEXIM Act or delegate examinations to the Financial Services Commission;

• the Financial Services Commission may supervise our operations to ensure managerial soundness based upon the KEXIM Decree and the Supervisory Regulations of Banking Business legislated by the Financial Services Commission and may issue orders deemed necessary for such supervision;

• we must submit our annual report to the Ministry of Strategy and Finance (formerly, the Ministry of Finance and Economy) within two months after the end of each fiscal year and to the National Assembly within nine months after the end of each fiscal year outlining our operations and analyzing our activities during the relevant fiscal year; and

• we may amend our By-laws and operating manual only with the approval of the Minister of Strategy and Finance.

Selected Financial Statement Data

You should read the following financial statement data together with our non-consolidated financial statements and notes included in this prospectus:

	Year Ended December 31,
	2007 (1)			2008			2009			2010			2011
	(billions of Won)
Income Statement Data
Total Interest Income	(Won)	1,042		(Won)	1,448		(Won)	1,445		(Won)	1,288		(Won)	1,404
Total Interest Expense		804			1,107			1,224			946			1,074
Net Interest Income		238			342			221			342			330
Total Revenues		2,123			5,122			3,960			4,095			4,138
Total Expenses		1,874			4,927			3,926			3,997			3,984
Net Income before Income Tax		249			196			34			98			154
Income Tax Benefit (expense)		(64	)		(102	)		(8	)		(31	)		(7	)
Net Income		184			94			26			67			147

7

	As of December 31,
	2007		2008		2009		2010		2011
	(billions of Won)
Balance Sheet Data
Total Loans (2)	(Won)	20,739	(Won)	32,390	(Won)	37,423	(Won)	41,230	(Won)	47,959
Total Borrowings (3)		17,412		27,771		33,302		37,217		44,556
Total Assets		23,639		35,982		42,028		46,689		55,133
Total Liabilities		18,704		30,892		35,565		40,167		47,624
Total Shareholders’ Equity (4)		4,936		5,090		6,463		6,523		7,509

(1) Effective January 1, 2008, we record “amount received (paid) on currency interest swaps” as “interest revenue (expense)” in our Statements of Income; prior to the change, such amount was accounted for as “gain (loss) on derivatives”. In connection with the change, our income statement data for the year ended December 31, 2007 have been reclassified to conform with the presentation of our financial information for the years ended December 31, 2008, 2009, 2010 and 2011 for comparative purposes.

(2) Gross amount, including bills bought, foreign exchange bought, call loans, inter-bank loans in foreign currency and others and before deducting valuation adjustment of loans in foreign currencies, deferred loan origination fees and allowance for loan losses. See “Notes to Non-Consolidated Financial Statements of December 31, 2011 and 2010—Note 5.”

(3) Includes debentures.

(4) Includes unappropriated retained earnings.

2011

We had net income of (Won)147 billion in 2011 compared to net income of (Won)67 billion in 2010.

The principal factors for the increase in net income in 2011 compared to 2010 included:

• reversals of (Won)108 billion of provision for acceptance and guarantee losses in 2011 compared to additional provision for acceptance and guarantee losses of (Won)413 billion in 2010, primarily due to enhanced guarantee asset quality; and

• an increase in dividend income to (Won)107 billion in 2011 from (Won)39 billion in 2010, primarily due to an increase in dividend income from Korea Exchange Bank.

The above factors were partially offset by a decrease in gain on disposal of available-for-sale securities to (Won)0 billion in 2011 from (Won)453 billion in 2010; the (Won)453 billion gain in 2010 reflected principally the sale of our equity interest in Daewoo International Corporation.

As of December 31, 2011, our total assets increased by 18% to (Won)55,133 billion from (Won)46,689 billion as of December 31, 2010, primarily due to a 16% increase in loans to (Won)47,959 billion as of December 31, 2011 from (Won)41,230 billion as of December 31, 2010.

As of December 31, 2011, our total liabilities increased by 19% to (Won)47,624 billion from (Won)40,167 billion as of December 31, 2010. The increase in liabilities was primarily due to a 20% increase in borrowings and debentures to (Won)44,556 billion as of December 31, 2011 from (Won)37,217 billion as of December 31, 2010.

The increase in assets and liabilities was primarily due to an increase in the volume of loans and debt, respectively. The depreciation of the Won against the U.S. dollar as of December 31, 2011 compared to December 31, 2010 magnified the effect of the increase in the volume of loans and debt, as a majority of our assets and liabilities consisted of foreign currency loans and debt.

As of December 31, 2011, our total shareholders’ equity increased by 15% to (Won)7,509 billion from (Won)6,523 billion as of December 31, 2010, primarily due to the Government’s (Won)1,100 billion contribution to our capital in

8

2010 and an increase in retaining earnings to (Won)1,301 billion in 2011 from (Won)1,166 billion in 2010, which were partially offset by accumulated other comprehensive loss of (Won)50 billion in 2011 compared to accumulated other comprehensive income of (Won)198 billion in 2010.

2010

We had net income of (Won)67 billion in 2010 compared to net income of (Won)26 billion in 2009.

The principal factors for the increase in net income in 2010 compared to 2009 included:

• an increase in gain on sale of available-for-sale securities to (Won)454 billion in 2010 from (Won)25 billion in 2009, primarily due to gain from the sale of our equity interest in Daewoo International Corporation; and

• an increase in net interest income to (Won)342 billion in 2010 from (Won)221 billion in 2009, primarily due to decreased funding costs for foreign currency borrowings.

The above factors were partially offset by (1) an increase in provision for acceptance and guarantee losses to (Won)413 billion in 2010 from (Won)56 billion in 2009, primarily due to downgrades in the classification of certain of our guarantees from normal to precautionary and (2) an increase in provision for loan losses to (Won)469 billion in 2010 from (Won)339 billion in 2009, primarily due to downgrades in the classification of certain of our loans from normal to precautionary.

As of December 31, 2010, our total assets increased by 11% to (Won)46,689 billion from (Won)42,028 billion as of December 31, 2009, primarily due to a 10% increase in loans to (Won)41,230 billion as of December 31, 2010 from (Won)37,423 billion as of December 31, 2009.

As of December 31, 2010, our total liabilities increased by 13% to (Won)40,167 billion from (Won)35,565 billion as of December 31, 2009. The increase in liabilities was primarily due to a 12% increase in borrowings and debentures to (Won)37,217 billion as of December 31, 2010 from (Won)33,301 billion as of December 31, 2009.

The increase in assets and liabilities was primarily due to an increase in the volume of loans and debt, respectively. The appreciation of the Won against the U.S. dollar as of December 31, 2010 compared to December 31, 2009 partially offset the effect of the increase in the volume of loans and debt, as a majority of our assets and liabilities consisted of foreign currency loans and debt.

As of December 31, 2010, our total shareholders’ equity increased by 1% to (Won)6,523 billion from (Won)6,463 billion as of December 31, 2009, primarily due to the Government’s (Won)150 billion contribution to our capital in January 2010.

Operations

Loan Operations

Our primary objective since our establishment has been to promote the export and competitiveness of Korean goods and services in international markets. To this end, we have introduced various financing facilities and implemented lending policies that are responsive to the needs of Korean exporters and foreign importers. Over the years, we have also developed financing facilities and lending policies that are consistent with the Government’s overall economic policies. In the latter part of the 1980s, as a result of changing trade conditions and the increased internationalization of the Korean economy, overseas investment credits and import credits were promoted and began to constitute an important portion of our business. Our lending programs include (1) export credits to Korean exporters or foreign buyers of Korean goods and services, (2) overseas investment credits to Korean firms and (3) import credits to Korean importers.

9

Before approving a credit, we consider:

• economic benefits to the Republic;

• the industry’s rank in the order of priorities established by the Government’s export-import policy;

• credit risk associated with the loans to be extended; and

• the goal of diversifying our lending activities.

The KEXIM Act and the By-laws provide that we may extend credit only where repayment “is considered probable.” Accordingly, we carefully investigate the financial position of each prospective borrower and the technical and financial aspects of the project to be financed, and a loan is made only if we believe there is reasonable assurance of repayment. See “Credit Policies, Credit Approval and Risk Management—Credit Approval”.

We are currently required by the KEXIM Act and the KEXIM Decree to make loans with original maturities of not more than 30 years. The overall average life of our loans is approximately 3 years.

In 2011, we provided total loans of (Won)38,767 billion, an increase of 18% from the previous year, while our loan commitments amounted to (Won)47,341 billion, an increase of 31% from the previous year. The increase in loan disbursements was attributable mainly to an increase in disbursements of overseas investment credits. The increase in overseas investment credits was primarily due to an increase in overseas natural resources development projects undertaken by Korean companies.

The following table sets out the total amounts of our outstanding loans, categorized by type of credit:

	As of December 31,						As % of 2011 Total
	2009		2010		2011
	(billions of Won)
Export Credits (1)
Ships	(Won)	10,550	(Won)	9,164	(Won)	8,638		18	%
Industrial Plants		4,785		5,249		8,424		18
Machinery		722		902		1,350		3
Foreign Exchange Bought		560		867		2,039		4
Trade Bill Rediscount		—		1,551		1,991		4
Others (2)		5,794		5,340		5,462		11
Sub-total		22,410		23,073		27,904		58
Overseas Investment Credits		10,395		13,727		15,565		33
Import Credits		2,464		2,501		2,235		5
Others (3)		271		289		602		1
Call Loans and Inter-bank Loans in Foreign Currency		1,884		1,640		1,653		3
Total	(Won)	37,423	(Won)	41,230	(Won)	47,959		100	%

(1) Includes bills bought.

(2) Includes interbank export loans, offshore loans, etc.

(3) Includes domestic usance, loans for debt-equity swap, advances for customers, etc.

Source: Internal accounting records

10

The following table sets out our new loan commitments, categorized by type of credit:

New Loan Commitments by Type of Credit

	Year Ended December 31,						As % of 2011 Total
	2009		2010		2011
	(billions of Won)
Export Credits (1)
Ships	(Won)	6,904	(Won)	6,225	(Won)	6,982		12	%
Industrial Plants		2,772		5,674		9,825		18
Machinery		2,129		2,364		2,327		4
Foreign Exchange Bought		560		4,823		7,156		13
Trade Bill Rediscount		—		5,715		5,263		10
Others (2)		16,106		10,740		8,955		17
Sub-total		28,471		35,541		40,508		74
Overseas Investment Credits		4,080		7,652		9,583		18
Import Credits		3,707		4,148		4,204		8
Total	(Won)	36,258	(Won)	47,341	(Won)	54,295		100	%

(1) Includes bills bought.

(2) Includes interbank export loans, offshore loans, etc.

Source: Internal accounting records

Export Credits

We offer export credits to either domestic suppliers or foreign buyers to finance export transactions.

Export Credits to domestic suppliers include:

• export loans to Korean exporters that export capital goods such as ships, industrial plants and machinery;

• pre-shipment credit to Korean exporters or manufacturers producing export products;

• technical service credit to Korean companies that export technical services abroad, including overseas construction projects;

• short-term trade financing to Korean exporters that manufacture export goods under short-term export contracts;

• small business export credit to small and medium-sized enterprises that manufacture export goods or supply materials needed by their primary exporters;

• rediscount on trade bills to domestic commercial banks for exporters;

• forfeiting to Korean exporters by discounting trade bills under the usance line of credit from export transactions on a non-recourse basis; and

• export factoring to Korean exporters by discounting trade receivables that occurs from open account export transactions on credit on a non-recourse basis.

Export credits to foreign buyers include:

• direct loans to foreign buyers that purchase Korean goods and services;

• project finance to foreign companies that intend to import industrial plants, facilities and technical services from Korea for large-scale projects, of which the cash flows from such projects are the main source for repayment;

11

• structured finance to foreign shipping companies that purchase ships from Korean shipyards, of which the repayment usually depends on the cash flows generated by the operation of ships; and

• interbank export loans to creditworthy banks in foreign countries to help foreign buyers obtain credit for the purchase of goods and services of Korean origin.

As of December 31, 2011, export credits in the amount of (Won)27,904 billion represented 58% of our total outstanding loans. Our disbursements and commitments of export credits in 2011 amounted to (Won)31,861 billion and (Won)40,508 billion, respectively, an increase of 18% and 14%, respectively, over the previous year. This increase in disbursements and new commitments for export credits was primarily due to increased volume of foreign exchange bought, as Korean companies demanded more trade finance in line with increased export volume, as well as an increase in export credits for construction of industrial plants.

We offer export credits to Korean manufacturers and exporters in order to provide them with the funds required for the construction and export of Korean capital goods and technical services designated in our operating manual. Capital goods eligible for export credit financings currently include ships, industrial plants, industrial machinery and overseas construction projects. With respect to eligible items supported by our export credits, ships have traditionally had the largest share of our export credit operations. In September 1998, the Government amended the KEXIM Act to expand the types of goods eligible for our export credits to include non-capital goods.

We offer export loans and technical service credits to domestic suppliers at fixed (no less than the Commercial Interest Reference Rate) or floating rates of interest with maturities of up to twelve years for ships and maturities of varying terms, from two to 18 years, for financings of other eligible items. We typically require a minimum down payment of 20% of the contract amount for ship export financings and a minimum down payment of 15% for financings of other eligible items. When the credit rating of a prospective borrower does not meet our internal rating criteria, these export credits are secured by promissory notes issued in connection with the relevant transaction, or letters of guarantees or letters of credit issued or confirmed by a creditworthy international bank or the importer’s government or central bank. Other terms and conditions under such export credit facilities must be in accordance with the Arrangement on Guidelines for Officially Supported Export Credits by the Organization for Economic Cooperation and Development. We offer direct loans to foreign buyers, project finance to project companies and structured finance for ships to foreign shipping companies under similar terms and conditions as export credit financings to domestic suppliers. We offer interbank export loans to overseas banks to facilitate imports by foreign importers of Korean manufactured goods. Interbank export loans are offered at fixed or floating rates of interest with maturities of up to ten years.

Overseas Investment Credits

We extend overseas investment credits to either Korean companies or foreign companies in which a Korean company has an equity share, to finance investments in eligible overseas businesses and projects. Such financing programs include:

• overseas investment credit to Korean companies that invest abroad in the form of capital subscription, acquisition of stocks and long-term credit;

• overseas project credit to Korean companies or their overseas subsidiaries engaging in businesses outside Korea;

• major resources development credit to Korean companies for development of natural resources and acquisition of mining rights abroad; and

• overseas business credit to foreign companies in which Korean companies have an equity stake, in the form of funds for purchasing equipment or working capital.

As of December 31, 2011, overseas investment credits amounted to (Won)15,565 billion, representing 32% of our total outstanding loans. Our disbursements of overseas investment in 2011 decreased by 11% to (Won)6,744

12

billion from the previous year, primarily due to decreased disbursements in overseas natural resources development projects, but our commitments of overseas investment credits in 2011 increased by 25% to (Won)9,583 billion from the previous year, primarily due to increased commitments in industrial plant construction projects undertaken by Korean companies. Most of the overseas investment credits were loans to foreign companies in which a Korean company has an equity share.

Proposals for overseas investment credits to finance the acquisition of important materials or the development of natural resources for the Korean economy, as determined by the Government, are given priority, together with projects that promote the export of Korean goods and services. As a result, projects financed by our overseas investment credit program have been mainly in the fields of manufacturing or development of natural resources.

We offer overseas investment credits at either fixed or floating rates of interest with maturities up to 30 years (with a maximum five-year grace period on repayment). Such facilities may require security in the form of a bank guarantee, pledge or mortgage on the borrower’s local assets. Depending upon the size of the borrower, we will provide up to 100% of the financing required for the overseas investment project.

Import Credits

We offer import credits to Korean companies that directly import essential materials, natural resources and high-technology materials whose stable and timely supply is required for the national economy, or to Korean companies that import such items after developing them overseas. Import credits are extended for importation of eligible items, including nuclear fuels, aircraft, mineral ores, crude oil, lumber, wood pulp, grains, cotton, sugar, and equipment and machinery for research and development, and for use in advanced technological industries.

As of December 31, 2011, import credits in the amount of (Won)2,235 billion represented 5% of our total outstanding loans. Disbursements and new commitments of import credits amounted to (Won)4,236 billion and (Won)4,204 billion, respectively, in 2011, an increase of 1% and 1%, respectively, over the previous year.

We offer import credits at either fixed or floating rates of interest with maturities up to ten years for equipment and machinery and shorter maturities of up to two years for other items, which may require security in the form of a bank guarantee, pledge or mortgage on the borrower’s local assets. We generally provide up to 80% of the import contract amount, but provide up to 90% of the import contract amount in the case of small and medium-sized enterprises and up to 100% for transactions with a letter of credit opened by a bank.

Guarantee Operations

We provide guarantees in favor of Korean commercial banks and foreign banks or foreign importers in respect of the obligations of Korean exporters in order to facilitate export and import financings. Such guarantee programs for Korean exporters and importers include (1) financial guarantees to co-financing banks that provide loans for transactions that satisfy our eligibility requirements and (2) project-related guarantees to foreign importers for the performance of Korean exporters on eligible projects in the form of bid bonds, advance payment bonds, performance bonds and retention bonds. Guarantee commitments as of December 31, 2011 decreased to (Won)61,443 billion from (Won)68,148 billion as of December 31, 2010. Guarantees we had confirmed as of December 31, 2011 decreased to (Won)42,470 billion from (Won)44,176 billion as of December 31, 2010.

We mainly issue project-related guarantees, which include:

• advance payment guarantees that are issued to overseas importers of Korean goods and services to support obligations to refund down payments made to Korean exporters in the event of a failure to deliver the goods to be exported; and

• performance guarantees that are issued to foreign importers to support the performance by Korean exporters of their contractual obligations.

13

In 2011, we issued project-related confirmed guarantees in the amount of (Won)24,445 billion, a decrease of 4% from the previous year, which was mainly due to a decrease in refund guarantees resulting from a downturn in the global shipbuilding industry in 2011.

We also issue letters of credit to foreign exporters to assist in the financing of projects approved in connection with import credit loans, and to Korean exporters to assist in the financing of projects approved in connection with export credit loans.

For further information regarding our guarantee and letter of credit operations, see “Notes to Non-Consolidated Financial Statements of December 31, 2011 and 2010—Note 11”.

Government Account Operations

Economic Development Cooperation Fund

In 1987, the Government established the Economic Development Cooperation Fund (the “EDCF”) to provide loans, at concessional interest rates, to governments or agencies of developing countries for projects that contribute to industrial development or economic stabilization of such countries. We administer the EDCF on behalf of the Government and are responsible for project appraisal, documentation and administrative work relating to the EDCF Loans. The EDCF business accounts are maintained separately from our own account on behalf of the Government, and we derive no separate income or expenditures from our operation of the EDCF business. Government contributions constitute the primary funding source of the EDCF. Loan disbursements by the EDCF in 2011 amounted to (Won)510 billion for 84 projects in 25 countries, an increase of 24% from the previous year. As of December 31, 2011, the total outstanding loans extended by the EDCF was (Won)2,777 billion, an increase of 18% from the previous year.

Inter-Korea Cooperation Fund

In 1991, the Government established the Inter-Korea Cooperation Fund (the “IKCF”) to promote mutual exchanges and cooperation between the Republic and North Korea by engaging in funding and financing activities to support family reunions, cultural events, academic seminars, trade and economic cooperation between the two countries. We administer the IKCF under the initiative and policy coordination of the Ministry of Unification. The IKCF accounts are maintained separately from our own account on behalf of the Government. Government contributions are the major funding source of the IKCF. The IKCF disbursements during 2011 amounted to (Won)42 billion for 94 projects, and cumulative total disbursements as of December 31, 2011 were (Won)5,639 billion, an increase of 1% from (Won)5,597 billion as of December 31, 2010.

Other Operations

We engage in various other activities related to our financing activities.

Activities in which we currently engage include:

• country information services performed by the Overseas Economic Research Institute, which conducts country studies and country risk evaluation to assist in the efficient utilization of our financial resources;

• export credit advisory services, which are aimed at bringing about a larger share of overseas bidding by giving Korean exporters a wide range of knowledge on the country, industry, market and financial situation of the importing country in the early stage of the tendering process or contract negotiations;

• consulting services by in-house professionals including lawyers, accountants and regional experts who consult on international transactions; and

• management of Korea’s foreign direct investment database.

14

Description of Assets and Liabilities

Except where expressly indicated otherwise, loans in Won and loans in foreign currencies are collectively referred to as the “Loans”. Bills bought, foreign exchange bought and advances for customers are collectively referred to as the “Other Loans”. Loans and Other Loans are collectively referred to as the “Loan Credits”. Confirmed guarantees and acceptances are collectively referred to as the “Guarantees”. Loan Credits and Guarantees are collectively referred to as the “Credit Exposure”.

Total Credit Exposure

We extend credits to support export and import transactions, overseas investment projects and other relevant products in various forms including loans and guarantees.

The following table sets out our Credit Exposure as of December 31, 2009, 2010 and 2011, categorized by type of exposure extended:

		As of December 31,
		2009					2010					2011
		(billions of Won, except for percentages)
A	Loans in Won	(Won)	9,710		12	%	(Won)	9,090		11	%	(Won)	10,528		12	%
B	Loans in Foreign Currencies		25,108		31			29,548		35			33,634		38
C	Loans (A+B)		34,818		43			38,638		46			44,162		50
D	Other Loans		721		1			952		1			2,144		2
E	Call Loans and Inter-bank Loans in Foreign Currency		1,884		2			1,640		2			1,653		2
F	Loan Credits (C+D+E)		37,423		46			41,230		49			47,959		54
G	Allowances for Loan Losses		(1,182	)	(1	)		(1,448	)	1			(1,942	)	2
H	Present Value Discount (PVD)		(42	)	(—	)		(25	)	(—	)		(29	)	(—	)
I	Loan Credits including PVD (F-G-H)		36,199		45			39,757		47			45,988		52
J	Guarantees		45,165		55			44,176		53			42,470		48
K	Credit Exposure (I+J)		81,364		100			83,933		100			88,458		100

Loan Credits by Geographic Area

The following table sets out the total amount of our outstanding Loan Credits (excluding call loans and inter-bank loans in foreign currency) as of December 31, 2009, 2010 and 2011, categorized by geographic area ⁽¹⁾:

	As of December 31 (1)(2),						As % of 2011 Total
	2009		2010		2011
	(billions of Won)
Asia	(Won)	30,958	(Won)	34,716	(Won)	39,705		83	%
Europe		5,352		5,287		4,812		10
America		1,100		1,203		2,842		6
Africa		12		24		601		1
Oceania		1		—		—		—
Total	(Won)	37,423	(Won)	41,230	(Won)	47,959		100	%

(1) For purposes of this table, export credits have been allocated to the geographic areas in which the foreign buyers of Korean exports are located; overseas investment credits have been allocated to the geographic areas in which the overseas investments being financed are located; and import credits have been allocated to the geographic areas in which the sellers of the imported goods are located.

(2) Excludes call loans, inter-bank loans in foreign currency, and loan value adjustments.

Source: Internal accounting records.

15

We engage in business related to Iran, including transactions involving as counterparties Iranian banks that may be indirectly owned or controlled by the Iranian government. The U.S. State Department has designated Iran as a state sponsor of terrorism, and U.S. law generally prohibits U.S. persons from doing business in Iran. We are a Korean bank and our activities with respect to Iran have not involved any U.S. person in either a managerial or operational role and have been subject to policies and procedures designed to ensure compliance with applicable Korean laws and regulations. We believe that our activities related to Iran are not subject to the mandatory sanctions under Section 104 of the U.S. Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”) and the Iran Financial Sanctions Regulations issued by the U.S. Secretary of the Treasury thereunder (the “IFSR”).

Our business related to Iran consists solely of extensions of credit and financing provided in connection with exports of Korean goods and services to Iran and our disbursements of Iran-related credits are made directly to Korean suppliers or exporters except certain credits made to Iranian banks. Such activities have involved export-related credits to finance the export contracts of Korean exporters supplying goods and services to Iranian companies, credit line extensions to Iranian banks to finance consumer products exports by Korean exporters, extensions of credit through non-recourse discounting of export trade bills, and purchases of promissory notes securing export transactions. . Our Loans to Iran represented 2%, 1% and 2% of our total assets as of December 31, 2009, December 31, 2010 and December 31, 2011, respectively, and also represented 2%, 2% and 2% of our Loan Credits, respectively, as of the above dates. Our Loans to Iran, categorized by country that has the final redemption risk of loans, represented 3% and 3% of our total assets and 3% and 3% of our Loan Credits as of December 31, 2010 and December 31, 2011, respectively. Our total revenues from transactions with Iran in 2009, 2010 and 2011 represented 2%, 1% and 2% of our total revenues, respectively, in those periods.

We are aware, through press reports and other means, of initiatives by governmental entities in the U.S. and by U.S. institutions such as universities and pension funds, to adopt laws, regulations or policies prohibiting transactions with or investment in, or requiring divestment from, entities doing business with Iran, including CISADA and IFSR. It is possible that such initiatives may result in our being unable to gain or retain entities subject to such prohibitions as customers or as investors in our debt securities. In addition, our reputation may suffer due to our association with Iran. Such a result could have significant adverse effects on our business or the price of our debt securities.

Individual Exposure

The KEXIM Decree imposes limits on our aggregate credits extended to a single person or business group. As of the date hereof, we are in compliance with such requirements.

As of December 31, 2011, our largest Credit Exposure was to Daewoo Shipbuilding & Marine Engineering in the amount of (Won)12,052 billion. As of December 31, 2011, our second largest and third largest Credit Exposures, respectively, were to Samsung Heavy Industries in the amount of (Won)8,681 billion and to Hyundai Heavy Industries in the amount of (Won)6,516 billion.

The following table sets out our five largest Credit Exposures as of December 31, 2011 ⁽¹⁾:

Rank	Name of Borrower	Loans		Guarantees		Total
		(billions of Won)
1	Daewoo Shipbuilding & Marine Engineering	(Won)	654	(Won)	11,398	(Won)	12,052
2	Samsung Heavy Industries		270		8,411		8,681
3	Hyundai Heavy Industries		494		6,022		6,516
4	Sungdong Shipbuilding		288		2,337		2,625
5	STX Shipbuilding & Marine Engineering		88		2,453		2,542

(1) Includes loans and guarantees extended to affiliates.

16

Asset Quality

The Supervisory Regulation of Banking Business (“Supervisory Regulation”) legislated by the Financial Services Commission requires banks, including us, to analyze and classify their credits into one of five categories as normal, precautionary, substandard, doubtful or estimated loss by taking into account borrowers’ repayment capacity as well as a number of other factors including the financial position, profitability, transaction history of the relevant borrower and the value of any collateral or guarantee taken as security for the extension of credit. Categorizations are applied to all loans except call loans and interbank loans, which are classified as normal. The Supervisory Regulation also requires banks, including us, to provide the minimum rate of loan loss provision for each category. Credit categorizations and minimum reserve ratios are as follows:

Normal	Credits extended to customers which, in consideration of their business and operations, financial conditions and future cash flows, do not raise concerns regarding their ability to repay the credits. 0.85% or more reserves required (for companies in certain industries 0.9% or more).
Precautionary	Credits extended to customers (1) which, in consideration of their business and operations, financial conditions and future cash flows, are judged to have potential risks with respect to their ability to repay the credits in the future, although there have not occurred any immediate risks of default in repayment; or (2) which are in arrears for one month or more but less than three months. 7.0% or more reserves required.
Substandard	(1) Credits extended to customers, which in consideration of their business and operations, financial conditions and future cash flows, are judged to have incurred considerable risks for default in repayment as the customers’ ability to repay has deteriorated; or (2) that portion which is expected to be collected of total credits (a) extended to customers which have been in arrears for three months or more, (b) extended to customers which are judged to have incurred serious risks due to the occurrence of final refusal to pay their promissory notes, liquidation or bankruptcy proceedings, or closure of their businesses or (c) of “Doubtful Customers” or “Estimated-loss Customers” (each as defined below). 20% or more reserves required.
Doubtful	That portion of credits in excess of the amount expected to be collected of total credits extended to (1) customers (“Doubtful Customers”) which, in consideration of their business and operations, financial conditions and future cash flows, are judged to have incurred serious risks of default in repayment due to noticeable deterioration in their ability to repay; or (2) customers which have been in arrears for three months or more but less than twelve months. 50% or more reserves required.
Estimated Loss	That portion of credits in excess of the amount expected to be collected of total credits extended to (1) customers (“Estimated-loss Customers”), which, in consideration of their business and operations, financial conditions and future cash flows, are judged to have to be accounted as a loss as the inability to repay became certain due to serious deterioration in their ability to repay; (2) customers which have been in arrears for twelve months or more; or (3) customers which are judged to have incurred serious risks of default in repayment due to the occurrence of final refusal to pay their promissory notes, liquidation or bankruptcy proceedings, or closure of their businesses. 100% reserves required.

In November 2004, the Financial Services Commission announced loan loss provisioning guidelines for banks, which include a requirement that banks take into account “expected loss” based on their own “historical loss” with respect to credits in establishing their allowance for loan losses, instead of establishing such allowances based on the classification of credits under the current asset classification criteria.

17

Based on the guidelines, we established new loan loss provisioning levels taking into account a borrower’s industry risk, individual credit risk and financial risk based on our system for evaluating “expected loss”. In 2005, we also modified our loan loss provisioning methodology with respect to normal loans. Loans classified as normal were categorized either as domestic loans or overseas loans. Domestic loans were further subdivided into small and medium-sized business loans and big enterprise loans. Our loan loss provisioning level for domestic loans was established based on a basic loan loss provisioning rate and default risk level according to the term of such loan (i.e., the year of maturity). The basic loan loss provisioning rate for small and medium-sized business loans was calculated based on our system for evaluating “historical loss”. With respect to the basic loan loss provisioning rate for big enterprise loans, we did not have enough statistical data for historical loan losses with respect to such loans so we applied an average rate of other Korean banks’ provisioning levels for normal loans. Our loan loss allowance for overseas normal loans was calculated based on sovereign credit ratings and on whether a borrower was a public or private enterprise. In addition, we changed our reserve policies for confirmed acceptances and guarantees pursuant to the amended Supervisory Regulation of Banking Business. We have also established reserves for unconfirmed acceptances and guarantees as well as commitments since January 1, 2005. In January 2008, we further modified our loan loss provisioning methodology with respect to normal loans and established loan loss provisioning levels using the expected loss method. The expected loss method analyzes factors of expected loss based on probability of default, or “PD”, and loss given default, or “LGD”, based on a loan credit rating classification. This credit rating model considers the industry risk, the individual risk and the financial risk of a borrower and classifies the borrower’s credit risk within 6 rating categories (in the case of domestic loans), 14 rating categories (in the case of overseas loans for a private enterprise) or 4 rating categories (in the case of overseas loans for a sovereign or a public enterprise) to assess the PD based on historical data for the past years. The 5 rating categories of LGD are determined by the type of loan and collateral and based on Basel II guidelines. The provision rate is calculated by multiplying the PD and LGD.

Asset Classifications

The following table provides information on our loan loss reserves:

	As of December 31, 2009							As of December 31, 2010							As of December 31, 2011
	Loan Amount (1)  (2)		Minimum Reserve Ratio			Loan Loss Reserve  (2)		Loan Amount (1)  (2)		Minimum Reserve Ratio			Loan Loss Reserve  (2)		Loan Amount (1)  (2)		Minimum Reserve Ratio			Loan Loss Reserve  (2)
	(in billions of Won, except percentages)
Normal		(Won)77,908		0.85	% (3)	(Won)	1,032	(Won)	78,128		0.85	% (3)	(Won)	1,174	(Won)	83,797		0.85	% (3)	(Won)	1,401
Precautionary		2,327		7.0	%		236		4,963		7.0	%		586		4,369		7.0	%		781
Sub-standard		192		20.0	%		84		318		20.0	%		139		234		20.0	%		102
Doubtful		103		50.0	%		98		49		50.0	%		46		94		50.0	%		89
Estimated Loss		132		100.0	%		132		274		100.0	%		241		252		100.0	%		252
Total		(Won)80,662				(Won)	1,581	(Won)	83,732				(Won)	2,185	(Won)	88,746				(Won)	2,625

(1) These figures include loans (excluding interbank loans and call loans), domestic usance bills, bills bought, notes bought, advances for customers, confirmed acceptances and guarantees.

(2) These figures include present value discount.

(3) 0.9% for companies in certain industries.

Reserves for Credit Losses

Non-performing assets (“NPA”) are (i) assets classified as doubtful or estimated loss, (ii) assets in delinquency of repayments of principal or interest more than three months, or (iii) assets exempted from interest payments due to restructuring or rescheduling.

18

The following table sets out our 10 largest non-performing assets as of December 31, 2011:

Borrower	Loans		Guarantees		Total
	(billions of Won)
Sekwang Heavy Industries	(Won)	141	(Won)	25	(Won)	166
Keumho Tires Co., Ltd.		30		24		54
Samho Shipbuilding		41		—		41
21st Century Shipbuilding Co., Ltd.		8		26		34
Pyeongsan		33		—		33
Taesan LCD Co., Ltd.		20		—		20
Hongwon Paper Mtg. Co., Ltd.		16		—		16
Pantech.		12		—		12
PSM(DALIAN) Co., Ltd.		11		—		11
Pantech Mobile Mexico S.A.		11		—		11
Total	(Won)	323	(Won)	75	(Won)	398

In the early 1990’s, at the direction of the Government, we extended a commodity loan in the aggregate amount of US$466 million to Vnesheconombank, the Bank for Foreign Economic Affairs of the former Soviet Union, which was guaranteed by the government of the former Soviet Union, as part of the Government’s policy to enhance economic cooperation between the two countries. Since the dissolution of the Soviet Union, the Government had been negotiating repayment terms with the government of the Russian Federation, which agreed to assume the guarantee of the former Soviet Union in respect of the obligations of Vnesheconombank under such loan. In 1995, the two governments came to an agreement on a repayment schedule in respect of approximately half of the loan. Since the agreement was made, US$229 million of the principal was repaid.

In June 2003, the two governments reached an agreement as to the rescheduling of the remaining portion of the loan and the change of the borrower from Vnesheconombank to the government of the Russian Federation. As a result, in September 2003, we upgraded the classification of the outstanding (Won)258 billion (including accrued and unpaid interest) of our exposure to the government of the Russian Federation from estimated loss to doubtful in terms of asset quality and established a 70% provisioning level for that credit exposure. In June 2004, we further upgraded the classification of our exposure to the government of the Russian Federation from doubtful to precautionary in terms of asset quality, following the continued repayment of the loan by the government of the Russian Federation in accordance with the agreed payment schedule. As of December 31, 2011, our exposure to the government of the Russian Federation amounted to (Won)171 billion and we established a 2.85% provisioning level for that credit exposure.

We cannot provide any assurance that our current level of exposure to non-performing assets will continue in the future or that any of its borrowers (including its largest borrowers as described above) is not currently facing, or in the future will not face, material financial difficulties.

As of December 31, 2011, the amount of our non-performing assets was (Won)414 billion, a decrease of 52% from (Won)854 billion as of December 31, 2010. As of December 31, 2011, our non-performing asset ratio was 0.5%, compared to 1.0% as of December 31, 2010.

The following table sets forth our reserves for possible credit losses as of December 31, 2010 and 2011:

	As of December 31,
	2010			2011
	(billions of Won, except for percentages)
Loan Loss Reserve (A)	(Won)	2,185		(Won)	2,625
NPA (B) (1)		854			414
Total Equity (C)		6,523			7,509
Reserve to NPA (A/B)		256	%		634	%
Equity at Risk (B-A)/C		—			—

19

(1) Non-performing assets, which are defined as (a) assets classified as doubtful and estimated loss, (b) assets in delinquency of repayments of principles or interests more than 3 months or (c) assets exempted from interest payments due to restructuring or rescheduling.

Source: Internal accounting records.

The following table sets forth our actual loan loss reserve ratios under the Financial Services Commission guidelines as of December 31, 2010 and 2011:

Classification of Loans	Financial Services Commission Guidelines			Actual Reserve Coverage (as of December 31, 2010)			Actual Reserve Coverage (as of December 31, 2011)
Normal		More than 0.85	%		2.0	%		2.1	%
Precautionary		More than 7.0	%		16.3	%		24.2	%
Substandard		More than 20.0	%		43.5	%		43.5	%
Doubtful		More than 50.0	%		94.7	%		94.7	%
Estimated Loss		100.0	%		100.0	%		100.0	%

Investments

Under the KEXIM Decree, we are not allowed to hold stocks or securities of more than three years’ maturity in excess of 60% of our equity capital. However, investment in the following securities is not subject to this restriction:

• Government bonds;

• BOK currency stabilization bonds;

• securities acquired via Government investment; and

• securities acquired through investment approved by the Government, for research related to our operations, for our financing or pursuant to Korean statutes.

As of December 31, 2011, our total investment in securities amounted to (Won)3,949 billion, representing 7% of our total assets. Our securities portfolio consists primarily of available-for-sale securities. Available-for-sale securities mainly comprises marketable securities (including equity securities in Korea Exchange Bank and Industrial Bank of Korea which were recapitalized by the Government through us) and non-marketable securities (including equity securities in Korea Expressway Corporation which were in-kind contributions made by the Government to us). In October 2005, we sold 32,000,000 shares of common stock, which represented 79% of our holding of common stock in Industrial Bank of Korea, for (Won)421 billion. In May 2006, we sold 49,134,208 shares of common stock, which represented 55% of our holding of common stock in Korea Exchange Bank, for (Won)417 billion. In 2007, we sold 2,376,495 shares of common stock, which represented 18% of our holding of common stock in SK Networks, and 469,932 shares of preferred stock, which represented 60% of our holding of preferred stock in SK Networks, for (Won)103 billion. In 2008, we sold 317,510 shares of preferred stock, which represented all of our holding of preferred stock in SK Networks, for (Won)28 billion. In 2009, we sold 628,445 shares of common stock, which represented 18% of our holding of common stock in SK Networks, for (Won)7 billion and 300,000 shares of common stock, which represented 3% of our holding of common stock in Daewoo International Corporation, for (Won)10.5 billion. In 2010, we sold 11,326,292 shares of common stock, which represented all of our holding of common stock in Daewoo International, for (Won)508 billion and acquired 7,197,800 shares of common stock of Kumho Tires, representing 8% of its total outstanding shares, in connection with Kumho Group’s debt restructuring.

20

The following table sets out the composition of our securities as of December 31, 2010 and December 31, 2011:

	As of December 31, 2010					As of December 31, 2011
Type of Investment Securities	Amount		%			Amount		%
	(billions of Won)					(billions of Won)
Available-for-sale Securities	(Won)	2,970		93	%	(Won)	3,700		94	%
Held-to-maturity Securities		—		—			—		—
Investments in Associates		235		7	%		249		6	%
Total	(Won)	3,205		100	%	(Won)	3,949		100	%

For further information relating to the classification guidelines and methods of valuation for unrealized gains and losses on our securities, see “Notes to Non-Consolidated Financial Statements of December 31, 2011 and 2010—Note 2”.

Guarantees and Acceptances and Contingent Liabilities

We have credit risk factors that are not reflected on the balance sheet, which include risks associated with guarantees and acceptances. Guarantees and acceptances do not appear on the balance sheet, but rather are recorded as an off-balance sheet item in the notes to the financial statements. Guarantees and acceptances include financial guarantees, project related guarantees, such as bid bond, advance payment bond, performance bond or retention bond, and acceptances and advances relating to trade financings such as letters of credit or import freight. Contingent liabilities, for which the guaranteed amounts were not finalized, appear as unconfirmed guarantees and acceptance items in the notes to the financial statements as off-balance sheet items.

As of December 31, 2011, we had issued a total amount of (Won)42,470 billion in confirmed guarantees and acceptances, of which (Won)39,878 billion, representing 94% of the total amount, was classified as normal, (Won)2,510 billion, representing 6% of the total amount, was classified as precautionary, and (Won)81 billion, representing 0.2% of the total amount, was classified as substandard or below.

Derivatives

The objective in our strategy and policies on derivatives is to actively manage and minimize our foreign exchange and interest rate risks. We do not take proprietary derivative positions. It is our policy to hedge all currency and interest rate risks wherever possible (taking into consideration the cost of hedging). We use various hedging instruments, including foreign exchange forwards and options, interest rate swaps, and cross currency swaps.

Under our internal trading rules that have been submitted to the Financial Supervisory Service, our policy is to engage in derivative transactions mainly for hedging our own position. As part of our total exposure management system, we monitor our exposure to derivatives and may make real-time inquiries, which enables our Risk Management Department to check our exposure on a regular basis. Under the guidelines set by the Financial Supervisory Service, we are required to submit reports on our derivatives exposure to the Financial Supervisory Service on a quarterly basis. As a measure to reduce the risk of intentional manipulation or error, we have separated responsibility for different functions such as initiation, authorization, approval, recording, monitoring and reporting to the Financial Supervisory Service. The Risk Management Department conducts regular reviews of derivative transactions to monitor any breach of compliance with the relevant regulatory requirements.

As of December 31, 2011, our outstanding loans made at floating rates of interest totaled approximately (Won)29,914 billion, whereas our outstanding borrowings made at floating rates of interest totaled approximately (Won)28,766 billion, including those raised in Japanese Yen, Swiss franc, Singapore dollar, Hong Kong dollar,

21

Mexican Peso and Euro and swapped into U.S. dollar floating rate borrowings. As a result, we are exposed to possible interest rate risks to the extent that the amount of our loans made at floating rates of interest exceeds the amount of our borrowings made at floating rates of interest. Foreign exchange risk arises because a majority of our assets and liabilities are denominated in non-Won currencies. In order to match our currency and interest rate structure, we generally enter into swap transactions.

The following table shows the unsettled notional amounts and estimated fair values of derivatives we held as of the dates indicated.

	As of December 31,
	2009						2010						2011
	Unsettled Notional Amount		Fair Value of Assets		Fair Value of Liabilities		Unsettled Notional Amount		Fair Value of Assets		Fair Value of Liabilities		Unsettled Notional Amount		Fair Value of Assets		Fair Value of Liabilities
	(in billions of Won)
Currency forwards	(Won)	1,639	(Won)	20	(Won)	29	(Won)	721	(Won)	11	(Won)	5	(Won)	842	(Won)	3	(Won)	13
Currency swaps		8,882		554		195		9,461		820		214		14,088		787		614
Interest rate swaps		11,900		136		286		11,523		263		420		12,100		408		366
Total	(Won)	22,421	(Won)	710	(Won)	510	(Won)	21,705	(Won)	1,094	(Won)	638	(Won)	27,030	(Won)	1,199	(Won)	993

As of December 31, 2011, we had entered into 207 currency related derivative contracts with a notional amount of (Won)14,088 billion and valuation for BIS capital ratio purposes of (Won)207 billion and had entered into 92 interest rate related derivative contracts with a notional amount of (Won)12,100 billion and valuation for BIS capital ratio purposes of (Won)9 billion. In connection with our currency forwards and currency swaps, we had net valuation loss of (Won)250 billion in 2011 compared to net valuation gain of (Won)377 billion in 2010, primarily due to the appreciation of the U.S. dollar against other currencies in 2011, which resulted in an increase in the value of our obligations denominated in U.S. dollars. In connection with our interest rate swaps, we recorded net valuation gain of (Won)184 billion in 2011 compared to net valuation loss of (Won)7 billion in 2010, primarily due to a decrease in benchmark interest rates, such as US dollar interest rate swaps, in 2011, which resulted in an increase in the value of our floating-for-fixed interest rate swaps. See “Notes to Non-Consolidated Financial Statements of December 31, 2011 and 2010—Note 16”.

Sources of Funding

We obtain funds primarily through borrowings from the Government or governmental agencies, the issuance of bonds in both domestic and international capital markets, borrowings from domestic and foreign financial institutions, capital contributions and internally generated funds. Internally generated funds result from various activities we carried on and include principal and interest payments on our loans, fees from guarantee operations and other services, and income from marketable securities we hold.

We raised a net total of (Won)45,429 billion (new borrowings plus loan repayments by our clients less repayment of our existing debt) during 2011, a 12% increase compared with the previous year’s (Won)40,678 billion. The total loan repayments, including prepayments by our clients, during 2011 amounted to (Won)37,068 billion, an increase of 8% from (Won)34,360 billion during 2010.

Since our establishment, borrowings from the Government have provided a substantial portion of our financial resources. As of December 31, 2003, the outstanding amount of our borrowings from the Government was (Won)1,188 billion, which consisted of (Won)110 billion in Won and (Won)1,078 billion in foreign currencies. In 2004, we repaid all of the amounts borrowed from the Government. The Government provided us with loans in the amount of US$2,595 million in 2008 and US$383 million in the first quarter of 2009 to support our lending to Korean exporters and provide U.S. dollar liquidity to us. In 2009, we repaid all of the amounts borrowed from the Government and as of December 31, 2011, we had no outstanding borrowings from the Government. We also issued Won-denominated domestic bonds in the aggregate amount of (Won)8,150 billion, (Won)8,920 billion and (Won)9,460 billion during 2009, 2010 and 2011, respectively.

22

We have diversified our funding sources by borrowing from various overseas sources and issuing long-term floating-rate notes and fixed-rate debentures in the international capital markets. These issues were in foreign currencies, including the U.S. dollar, pound sterling, Thai Baht, Malaysia Ringgit, Japanese Yen, Australian Dollar, Euro, Hong Kong dollar, Singapore dollar, Swiss franc, Brazilian Real, Turkish Lira and Mexican Peso, Peruvian sol, Indian rupee, Indonesian Rupiah, Chinese Yuan, Philippine Peso, New Zealand Dollar, Saudi Riyal, Taiwan Dollar, South African Rand and have original maturities ranging from one to ten years.

During 2011, we issued eurobonds in the aggregate principal amount of US$5,309 million in various types of currencies under our existing Euro medium term notes program (the “EMTN Program”), a 56% increase from US$3,406 million in 2010. These bond issues consisted of offerings of US$1,014 million, HKD 3,763 million, SGD 855 million, BRL 1,185 million, AUD 337 million, PEN 205 million, INR 7,422 million, IDR 4,012,220 million, CNY 2,825 million, TRY 260 million, NZD 212 million, TWD 600 million and JPY 49,800 million. In addition, we issued global bonds during 2011 in the aggregate amount of US$1,700 million under our U.S. shelf registration statement (the “U.S. Shelf Program”) compared with US$3,250 million in 2010. As of December 31, 2011, the outstanding amounts of our notes and debentures were US$ 15,799 million, AUD 375 million, JPY 194,800 million, CHF 1,225 million, EUR 2,285 million, SGD 1,130 million, HKD 7,649 million, MXN 3,300 million, MYR 2,975 million, THB 15,200 million, PEN 266 million, INR 17,257 million, IDR 5,737,220 million, CNY 2,825 million, TRY 180 million, TWD 600 million, NZD 212 million, SR 750 million, PHP 11,350 million and BRL 1,257 million. In January 2012, we issued global bonds in the aggregate principal amount of US$2,250 million pursuant to the U.S. Shelf Program.

We also borrow from foreign financial institutions in the form of loans that are principally made by syndicates of commercial banks at floating or fixed interest rates and in foreign currencies, with original maturities ranging from one to three years. As of December 31, 2011, the outstanding amount of such borrowings from foreign financial institutions was US$ 1,970 million.

Our paid-in capital has increased from time to time since our establishment. From January 1998 to December 2011, the Government contributed (Won)4,399 billion to our capital. As of December 31, 2011, our total paid-in capital amounted to (Won)6,209 billion, and the Government, The Bank of Korea and Korea Finance Corporation owned 62.7%, 18.7% and 18.6%, respectively, of our paid-in capital.

In connection with our fund raising activities, we have from time to time sold third parties promissory notes, including related guarantees, acquired as collateral in connection with export credit financings.

The KEXIM Act provides that the aggregate outstanding principal amount of all of our borrowings, including the total outstanding export-import financing debentures we issued in accordance with the KEXIM Decree, may not exceed an amount equal to thirty times the sum of our paid-in capital plus our reserves. As of December 31, 2011, the aggregate outstanding principal amount of our borrowings (including export-import financing debentures), which was (Won)44,556 billion, was equal to 20% of the authorized amount of (Won)222,384 billion.

We are not permitted to accept demand or time deposits.

23

Each year we must submit to the Government for its approval an operating plan which includes our target levels for different types of funding. The following table is the part of the operating plan dealing with fund-raising for 2012:

Sources of Fund	(billions of Won)
Capital Contribution	(Won)	—
Borrowings		20,770
Net Collection of Loans		22,360
Collection of Loans		34,188
Repayment of Debts		(11,828	)
Others		1,870
Total	(Won)	45,000

Debt

Debt Repayment Schedule

The following table sets out the principal repayment schedule for our outstanding debt (consisting of borrowings and debentures) as of December 31, 2011:

Debt Principal Repayment Schedule

	Maturing on or before December 31,
Currency (1)	2012		2013		2014		2015		Thereafter
	(billions of won)
Won	(Won)	5,000	(Won)	1,290	(Won)	540	(Won)	450	(Won)	250
Foreign		8,963		5,522		5,328		5,406		8,649
Total Won Equivalent	(Won)	13,963	(Won)	6,812	(Won)	5,868	(Won)	5,856	(Won)	8,899

(1) Borrowings and debentures in foreign currency have been translated into Won at the market average exchange rates on December 31, 2011, as announced by the Seoul Money Brokerage Services Ltd.

Normally we determine the level of our foreign currency reserves based upon an estimate, at any given time, of aggregate loan disbursements to be made over the next two to three months. Our average foreign currency reserves in 2010 and 2011 were approximately US$1,620 million and US$2,189 million, respectively. Although we currently believe that such reserves, together with additional borrowings available under our uncommitted short-term backup credit facilities and commercial paper programs, will be sufficient to repay our outstanding debt as it becomes due, there can be no assurance that we will continue to be able to borrow under such credit facilities, or that the devaluation of the Won will not adversely affect our ability to access funds sufficient to repay our foreign currency denominated indebtedness in the future. In addition to maintaining sufficient foreign currency reserves, we monitor the maturity profile of our foreign currency assets and liabilities to ensure that there are sufficient maturing assets to meet our liabilities as they become due. As of December 31, 2011, our foreign currency assets maturing within three months, six months and one year exceeded our foreign currency liabilities coming due within such periods by US$3,330 million, US$3,639 million and US$2,078 million, respectively. As of December 31, 2011, our total foreign currency liabilities exceeded our total foreign currency assets by US$5,885 million.

24

Internal and External Debt of the Bank

The following table summarizes, as of December 31 of the years indicated, the outstanding internal debt of the Bank:

Internal Debt of the Bank

	(billions of Won)
2007		1,639
2008		3,686
2009		7,030
2010		6,320
2011		7,530

The following table sets out, by currency and the equivalent amount in U.S. Dollars, the outstanding external debt of the Bank as of December 31, 2011:

External Debt of the Bank

	Amount in Original Currency		Equivalent Amount in U.S. Dollars (1)
	(billions)
US$	US$	14.2	US$	14.2
Japanese yen (¥)	¥	194.8		2.5
Euro (EUR)	EUR	1.9		2.4
Singapore dollar (SGD)	SGD	1.1		0.9
Hong Kong dollar (HKD)	HKD	7.6		1.0
Philippine peso (PHP)	PHP	11.4		0.3
Swiss franc (CHF)	CHF	1.2		1.3
Malaysian Ringgit (MYR)	MYR	3.0		0.9
Australian Dollars (AUD)	AUD	0.4		0.4
Indonesian rupiah (IDR)	IDR	5,737.2		0.6
Indian Rupee (INR)	INR	17.3		0.3
Thai Bhat (THB)	THB	15.2		0.5
Mexican Peso (MXN)	MXN	3.3		0.2
Brazilian real (BRL)	BRL	1.3		0.7
Chinese Yuan (CNY)	CNY	2.8		0.4
New Zealand Dollar (NZD)	NZD	0.2		0.2
Peru Nuevo sol (PEN)	PEN	0.3		0.1
Saudi Riyal (SR)	SR	0.8		0.2
Turkish Lira (TRY)	TRY	0.2		0.1
Taiwan Dollar (TWD)	TWD	0.6		0.1
			US$	27.3

(1) Amounts expressed in currencies other than US$ are converted to US$ at the exchange rate announced by the Seoul Money Brokerage Services, Ltd. in effect on December 31, 2011 or the prevailing market rate on December 31, 2011.

25

The following table summarizes, as of December 31 of the years indicated, the outstanding external debt of the Bank:

External Debt of the Bank

	(billions of Won)
2007		15,884
2008		23,895
2009		26,050
2010		30,668
2011		36,838

For further information on the outstanding indebtedness of the Bank, see “—Tables and Supplementary Information.”

Debt Record

We have never defaulted in the payment of principal of, or interest on, any of our obligations.

Credit Policies, Credit Approval and Risk Management

Credit Policies

The Credit Policy Department functions as our centralized policy-making and planning division with respect to our lending activities. The Credit Policy Department formulates and revises our internal regulations on loan programs, sets basic lending guidelines on a country basis and gathers data from our various operating groups and produces various internal and external reports.

Credit Approval

We have multiple levels of loan approval authority, depending on the loan amount and other factors such as the nature of the credit, the conditions of the transaction, and whether the loan is secured. Our Executive Board of Directors can approve loans of any amount. The Chief Executive Committee, Credit Committee, Loan Officer Committee, Director Generals and Directors (Team Heads) each have authority to approve loans up to a specified amount. The amount differs depending on the type of loan and certain other factors, for example, whether a loan is collateralized or guaranteed.

At each level of authority, loan applications are reviewed on the basis of the feasibility of the project from a technical, financial and economic point of view in addition to evaluating the probability of recovery. In conducting such a review, the following factors are considered:

• eligibility of the transaction under our financing criteria;

• country risk of the country of the borrower and the country in which the related project is located;

• credit risk of the borrower;

• a supplier’s ability to perform under the related supply contract;

• legal disputes over the related project and supply contract; and

• availability of collateral.

26

When the credit rating of a prospective borrower does not meet our internal rating criteria, our policy is to ensure that the loans are either guaranteed by leading international banks or governments or made on a partially or fully secured basis. Guarantees are required if the credit rating of a prospective borrower does not meet our internal rating criteria. As of December 31, 2011, approximately 5% of our total outstanding loans were guaranteed by banks or governments and made on a partially or fully secured basis.

Risk Management

Our overall risk management policy is set by the Risk Management Committee, which meets on a quarterly basis and from time to time to establish tolerance limits for various exposures, whereas the overall risk management is overseen by the Risk Management Department, which is responsible for monitoring risk exposure.

The Risk Management Department reports our loan portfolio to the Financial Supervisory Service on a quarterly basis. The Risk Management Department also monitors our operating groups’ compliance with internal guidelines and procedures. To manage liquidity risk, we review the strategy for the sources and uses of funds, with each division submitting projected sources and uses to the Treasury Department. The Risk Management Department and the Treasury Department continually monitor our overall liquidity and the Treasury Department prepares both weekly and monthly cash flow forecasts. Our policy is to maintain a liquidity level, which can cover loan disbursements for a period of two to three months going forward. We protect ourselves from potential liquidity squeezes by maintaining sufficient amount of liquid assets with additional back-up of short-term credit lines.

Our core lending activities expose us to market risk, mostly in the form of interest rate and foreign currency risks. The Risk Management Department reports six-month projections of our interest rate and foreign exchange gap positions to the Risk Management Committee on a quarterly basis. We also monitor changes in, and matches of, foreign currency assets and liabilities in order to reduce exposure to currency fluctuations.

One of the key components of our risk management policy, which also affects our fund-raising efforts, is to monitor matches of asset maturities and liability maturities. The average maturity as of December 31, 2011 for our Won- and foreign currency-denominated loans was 12 months and 34 months, respectively, and for Won-and foreign currency-denominated liabilities was 18 months and 34 months, respectively.

We follow an overall risk management process where we:

• determine the risk management objectives;

• identify key exposures;

• measure key risks; and

• monitor risk management results.

Our risk management system is a continuous system that is frequently evaluated and updated on an ongoing basis.

Capital Adequacy

Under the Financial Supervisory Service’s guidelines on risk-adjusted capital which were introduced in consideration of the standards set by the Bank for International Settlements, all banks in Korea, including us, are required to maintain a capital adequacy ratio (Tier I and Tier II) of at least 8% on a consolidated basis. To the extent that we fail to maintain this ratio, the Korean regulatory authorities may require corrective measures ranging from management improvement recommendations to emergency measures such as disposal of assets. Beginning on January 1, 2008, the Financial Services Commission implemented the new Basel Capital Accord, referred to as Basel II, in Korea, substantially affecting the way risk is measured among Korean financial

27

institutions, including us. Building upon the initial Basel Capital Accord of 1988, which focused primarily on credit risk, market risk, capital adequacy and asset soundness as a measure of risk, Basel II expands this approach to contemplate additional areas of risk such as operations risk. Basel II also institutes new measures that require us to take into account individual borrower credit risk and operations risk when calculating risk-weighted assets. As of December 31, 2011, our capital adequacy ratio was 10.6%, a decrease from 10.8% as of December 31, 2010, which was primarily due to an increase in risk adjusted assets which more than offset an increase in total capital.

The following table sets forth our capital base and capital adequacy ratios reported as of December 31, 2009, 2010 and 2011:

	As of December 31,
	2009			2010			2011
	(billions of Won, except for percentages)
Tier I	(Won)	5,858		(Won)	5,930		(Won)	6,819
Paid-in Capital		5,009			5,159			6,259
Retained Earnings		1,108			1,170			1,306
Deductions from Tier I Capital		(261	)		(399	)		(746	)
Capital Adjustments		(140	)		(93	)		(226	)
Deferred Tax Asset		(118	)		(302	)		(513	)
Others		(3	)		(4	)		(7	)
Tier II (General Loan Loss Reserves)		966			914			986
Deductions from all capital		—			—			—
Total Capital		6,822			6,844			7,805
Risk Adjusted Assets		60,632			63,498			73,398
Capital Adequacy Ratios
Tier I		9.7	%		9.3	%		9.3	%
Tier I and Tier II		11.3	%		10.8	%		10.6	%

Source: Internal accounting records.

Overseas Operations

We maintain an international presence through 15 overseas representative offices, which are located in New York, Tokyo, Beijing, Sâo Paolo, Paris, Washington D.C., Shanghai, New Delhi, Dubai, Moscow, Mexico City, Tashkent, Hanoi, Manila and Jakarta.

We also have three wholly-owned subsidiaries, KEXIM Bank (UK) Ltd., London, KEXIM (Asia) Ltd., Hong Kong, and KEXIM Vietnam Leasing Co., Ltd., Ho Chi Minh City. These subsidiaries are engaged in the merchant banking and lease financing businesses, and assist us in raising overseas financing. We also own 85% of P.T. Koexim Mandiri Finance, a subsidiary in Jakarta, which is primarily engaged in the business of lease financing.

The table below sets forth brief details of our subsidiaries as of December 31, 2011:

	Principal Place of Business	Type of Business	Book Value		Bank’s Holding
			(billions of Won)		(%)
Kexim Bank (UK) Ltd.	United Kingdom	Commercial Banking	(Won)	47		100	%
KEXIM (Asia) Ltd.	Hong Kong	Commercial Banking		44		100
P.T. Koexim Mandiri Finance	Indonesia	Leasing and Factoring		22		85
Kexim Vietnam Leasing Co., Ltd.	Vietnam	Leasing and Guarantees		9		100

28

Property

Our head office is located at 16-1 Yoido-dong, Youngdeungpo-gu, Seoul 150-996, Korea, a 34,820 square meter building completed in 1985 on a site of 9,110 square meters and owned by us. In addition to the head office, we own a staff training center located near Seoul on a site of 47,881 square meters. We also maintain 10 branches in Busan, Gwangju, Daegu, Changwon, Daejeon, Suwon, Inchon, Ulsan, Chungju and Jeonju. Our domestic branch offices and overseas representative offices are located in facilities held under long-term leases.

Management and Employees

Management

Our governance and management is the responsibility of our Board of Directors, which has authority to decide important matters relating to our business. The Board of Directors is chaired by our President and is comprised of five Directors consisting of the President, the Deputy President, one Executive Director and two Non-executive Directors. The President of Korea appoints our President upon the recommendation of the Minister of Strategy and Finance. The Minister of Strategy and Finance appoints the Deputy President and all the other Directors upon the recommendation of our President. All Board members serve for three years and are eligible for re-appointment for successive terms of office.

The members of the Board of Directors are currently as follows:

Name	Age		Executive Director Since		Position
Yong-hwan Kim		60		February 7, 2011		Chairman and President
Dong-soo Park		58		December 29, 2009		Deputy President
Ki-sub Nam		58		July 18, 2011		Executive Director
Seung-ho Choi		66		February 1, 2010		Non-executive Director
Woo-kyu Park		63		February 1, 2010		Non-executive Director

Our basic policy guidelines for activities are established by the Operations Committee. According to the By-laws, the Operations Committee is composed of officials nominated as follows:

• President of KEXIM;

• official of the Ministry of Strategy and Finance, nominated by the Minister of Strategy and Finance;

• official of the Ministry of Foreign Affairs and Trade, nominated by the Minister of Foreign Affairs and Trade;

• official of the Ministry of Knowledge Economy, nominated by the Minister of Knowledge Economy;

• official of the Ministry of Land, Transport and Maritime Affairs, nominated by the Minister of Land, Transport and Maritime Affairs;

• official of the Financial Services Commission, nominated by the Chairman of the Financial Services Commission;

• executive director of The Bank of Korea, nominated by the Governor of The Bank of Korea;

• executive director of the Korea Federation of Banks, nominated by the Chairman of the Korea Federation of Banks;

• representative of an exporters’ association (Korea International Trade Association), nominated by the Minister of Strategy and Finance after consultation with the Minister of Knowledge Economy;

• officer of the Korea Trade Insurance Corporation established under the Trade Insurance Act, nominated by the Chairman and President of the Korea Trade Insurance Corporation; and

• up to two persons who have extensive knowledge and experience in international economic cooperation work, recommended by our President and appointed by the Minister of Strategy and Finance.

29

The members of the Operations Committee are currently as follows:

Name	Age		Member Since	Position
Yong-hwan Kim		60	February 7, 2011	Chairman and President of KEXIM
Jong-gu Choi		55	April 10, 2011	Deputy Minister for International Affairs, Ministry of Strategy and Finance
Si-hyung Lee		55	February 9, 2011	Deputy Minister for Trade, Ministry of Foreign Affairs and Trade
Jin-hyun Han		53	June 15, 2011	Deputy Minister for Trade and Investment Policy, Ministry of Knowledge Economy
Min-woo Park		51	July 12, 2011	Director General for Construction Policy, Ministry of Land, Transport and Maritime Affairs
Joo-hyun Kim		54	December 7, 2009	Secretary General, Financial Services Commission
Kwang-june Lee		60	April 26, 2009	Deputy Governor, The Bank of Korea
Tae-Sik Roh		58	March 16, 2009	Vice Chairman, Korea Federation of Banks
Hyun-Ho Ahn		55	December 15, 2011	Executive Vice Chairman, Korea International Trade Association
Moon-hong Kwon		57	September 15, 2011	Deputy President, Korea Export Insurance Corporation
Seung-Hun Chun (Private Sector)		65	November 24, 2008	President, Korea Institute for Development Strategy
Tai-kyoo Kim (Private Sector)		55	November 24, 2010	Hannam University

30

Employees

As of December 31, 2011, we had 775 employees, among which 525 employees were members of our labor union. We have never experienced a work stoppage of a serious nature. Every year during the fourth quarter, the management and union negotiate and enter into a collective bargaining agreement that has a one-year duration. The most recent collective bargaining agreement was entered into in October 2011.

Tables and Supplementary Information

A. External Debt of the Bank

(1) External Bonds of the Bank

Currency	Original Principal Amount		Interest Rate (%)	Issue Date		Maturity Date		Principal Amount Outstanding as of December 31, 2011
USD		500,000,000	5.25		February 10, 2004		February 10, 2014		500,000,000
USD		200,000,000	5.25		April 23, 2004		February 10, 2014		200,000,000
USD		600,000,000	5.125		March 16, 2005		May 16, 2015		600,000,000
USD		300,000,000	5.375		October 4, 2006		October 4, 2016		300,000,000
USD		50,000,000	3M USD Libor + 0.16		June 12, 2007		June 12, 2012		50,000,000
USD		50,000,000	3M USD Libor + 0.16		June 12, 2007		June 12, 2012		50,000,000
USD		1,500,000,000	5.5		October 17, 2007		October 17, 2012		1,500,000,000
USD		50,000,000	3M USD Libor + 0.45		October 22, 2007		October 22, 2012		50,000,000
USD		15,000,000	3M USD Libor + 0.45		October 23, 2007		October 23, 2012		15,000,000
USD		40,000,000	3M USD Libor + 0.45		October 24, 2007		October 24, 2012		40,000,000
USD		100,000,000	3M USD Libor + 0.95		February 27, 2008		February 27, 2013		100,000,000
USD		50,000,000	3M USD Libor + 0.98		May 16, 2008		May 14, 2012		50,000,000
USD		20,000,000	3M USD Libor + 1.45		August 26, 2008		August 26, 2013		20,000,000
USD		50,000,000	3M USD Libor + 0.98		October 9, 2008		September 25, 2013		50,000,000
USD		30,000,000	7.04		December 19, 2008		December 19, 2013		30,000,000
USD		2,000,000,000	8.125		January 20, 2009		January 21, 2014		2,000,000,000
USD		50,000,000	7.8		April 27, 2009		April 29, 2019		50,000,000
USD		19,500,000	5.75		May 12, 2009		April 9, 2012		19,500,000
USD		50,000,000	6.4		May 19, 2009		May 19, 2016		50,000,000
USD		1,500,000,000	5.875		July 14, 2009		January 14, 2015		1,500,000,000
USD		20,000,000	4.2		August 11, 2009		May 11, 2012		20,000,000
USD		20,000,000	4.15		August 11, 2009		May 11, 2012		20,000,000
USD		25,000,000	3M USD Libor + 1.95		August 11, 2009		February 11, 2012		9,000,000
USD		25,000,000	3M USD Libor + 1.45		September 29, 2009		March 29, 2012		25,000,000
USD		50,000,000	3M USD Libor + 1.40		November 12, 2009		November 12, 2012		50,000,000
USD		50,000,000	3M USD Libor + 1.38		December 7, 2009		December 7, 2012		50,000,000
USD		30,000,000	3M USD Libor + 1.27		December 24, 2009		December 24, 2012		30,000,000
USD		50,000,000	3M USD Libor + 0.80		February 5, 2010		February 5, 2012		50,000,000
USD		1,000,000,000	4.125		March 9, 2010		September 9, 2015		1,000,000,000
USD		270,000,000	2.65		June 23, 2010		December 23, 2013		270,000,000
USD		1,250,000,000	5.125		June 29, 2010		June 29, 2020		1,250,000,000
USD		500,000,000	3M USD Libor + 1.05		September 13, 2010		March 13, 2012		500,000,000
USD		35,000,000	1.74		October 4, 2010		October 4, 2012		35,000,000
USD		1,000,000,000	4		October 20, 2010		January 29, 2021		1,000,000,000
USD		50,000,000	3M USD Libor + 1.19		November 26, 2010		November 26, 2013		50,000,000
USD		50,000,000	3M USD Libor + 0.85		January 25, 2011		January 25, 2012		50,000,000
USD		90,000,000	3M USD Libor + 0.85		March 2, 2011		March 2, 2012		90,000,000
USD		90,000,000	1.225		March 18, 2011		March 16 2012		90,000,000
USD		44,300,000	1.225		March 22, 2011		March 20, 2012		44,300,000
USD		40,000,000	3M USD Libor + 0.84		March 29, 2011		March 29, 2012		40,000,000
USD		50,000,000	1.36		April 2011.04.06		April 5, 2012		50,000,000
USD		700,000,000	3.75		April 20, 2011		October 20, 2016		700,000,000
USD		48,500,000	3M USD Libor + 0.70		June 2, 2011		June 7, 2012		48,500,000
USD		50,000,000	3M USD Libor + 1.08		September 14, 2011		September 14, 2012		50,000,000
USD		1,000,000,000	4.375		September 15, 2011		September 15, 2021		1,000,000,000
USD		20,000,000	3M USD Libor + 1.08		September 20, 2011		September 20, 2012		20,000,000
USD		10,000,000	3M USD Libor + 1.20		October 11, 2011		October 11, 2013		10,000,000
USD		100,000,000	1.1		October 21, 2011		October 22, 2012		100,000,000

31

Currency	Original Principal Amount		Interest Rate (%)	Issue Date		Maturity Date		Principal Amount Outstanding as of December 31, 2011
USD		20,000,000	2.16125		November 14, 2011		November 16, 2012		20,000,000
USD		33,700,000	3M USD Libor + 1.57		November 21, 2011		November 21, 2012		33,700,000
USD		25,000,000	1.25		November 25, 2011		May 24, 2012		25,000,000
USD		55,000,000	1.01		November 28, 2011		February 28, 2012		55,000,000
USD		32,000,000	3M USD Libor + 1.45		December 21, 2011		December 21, 2012		32,000,000
USD		75,000,000	1.4		December 23, 2011		December 21, 2012		75,000,000
USD		150,000,000	1.5		December 30, 2011		June 28, 2012		150,000,000
USD		15,000,000	1.3		December 30, 2011		June 28, 2012		15,000,000
			Subtotal in Original Currency					USD	14,232,000,000
			Subtotal in Equivalent Amount of Won(1)					(Won)	16,413,765,600,000
SGD		70,000,000	2.8		November 4, 2009		May 4, 2012		70,000,000
SGD		56,000,000	2.4		December 4, 2009		June 4, 2012		56,000,000
SGD		68,000,000	2.07		May 7, 2010		May 7, 2013		68,000,000
SGD		31,000,000	1.57		May 24, 2010		May 24, 2012		31,000,000
SGD		50,000,000	1.51		November 18, 2010		November 16, 2012		50,000,000
SGD		250,000,000	1.05		March 3, 2011		March 3, 2012		250,000,000
SGD		70,000,000	1.2		April 13, 2011		April 13, 2012		70,000,000
SGD		50,000,000	1		June 1, 2011		June 7, 2012		50,000,000
SGD		30,000,000	1.32		July 8, 2011		July 9, 2013		30,000,000
SGD		30,000,000	1.58		July 19, 2011		July 21, 2014		30,000,000
SGD		30,000,000	1.27		July 29, 2011		July 29, 2013		30,000,000
SGD		30,000,000	1.25		July 29, 2011		July 29, 2013		30,000,000
SGD		30,000,000	1.08		August 5, 2011		August 5, 2013		30,000,000
SGD		30,000,000	1.08		August 8, 2011		August 8, 2013		30,000,000
SGD		30,000,000	1		August 26, 2011		August 29, 2014		30,000,000
SGD		90,000,000	1.45		October 24, 2011		October 24, 2012		90,000,000
SGD		135,000,000	1.6		November 17, 2011		November 17, 2012		135,000,000
SGD		50,000,000	1.65		November 18, 2011		November 18, 2013		50,000,000
			Subtotal in Original Currency					SGD	1,130,000,000
			Subtotal in Equivalent Amount of Won(2)					(Won)	1,001,677,200,000
JPY		35,000,000,000	1.84		June 26, 2007		June 26, 2012		35,000,000,000
JPY		1,000,000,000	6M USD Libor + 0.86		February 14, 2008		February 14, 2013		1,000,000,000
JPY		15,000,000,000	3.24		June 20, 2008		June 20, 2018		15,000,000,000
JPY		5,000,000,000	2.6		September 4, 2008		September 4, 2013		5,000,000,000
JPY		5,000,000,000	2.5		December 29, 2009		December 27, 2019		5,000,000,000
JPY		4,000,000,000	1		December 7, 2010		December 7, 2015		4,000,000,000
JPY		40,000,000,000	1.05		February 17, 2011		February 17, 2015		40,000,000,000
JPY		58,400,000,000	0.93		July 8, 2011		July 8, 2013		58,400,000,000
JPY		11,600,000,000	1.06		July 8, 2011		July 8, 2014		11,600,000,000
JPY		10,000,000,000	1.32		July 8, 2011		July 8, 2016		10,000,000,000
JPY		3,600,000,000	0.5		September 15, 2011		September 15, 2021		3,600,000,000
JPY		500,000,000	0.8		September 15, 2011		September 18, 2012		500,000,000
JPY		3,000,000,000	0.92		September 20, 2011		September 20, 2016		3,000,000,000
JPY		2,000,000,000	0.85		October 4, 2011		October 4, 2012		2,000,000,000
JPY		700,000,000	1.23		November 17, 2011		November 20, 2012		700,000,000
			Subtotal in Original Currency					JPY	194,800,000,000
			Subtotal in Equivalent Amount of Won(3)					(Won)	2,893,091,680,000
HKD		375,000,000	3.84		February 1, 2008		February 1, 2015		375,000,000
HKD		168,000,000	4.25		June 15, 2009		June 15, 2012		168,000,000
HKD		230,000,000	4.05		September 9, 2009		September 9, 2013		230,000,000
HKD		150,000,000	3.07		October 15, 2009		October 15, 2012		150,000,000
HKD		166,000,000	3.3		November 5, 2009		November 5, 2012		166,000,000
HKD		200,000,000	2.55		January 15, 2010		January 15, 2013		200,000,000
HKD		185,000,000	2.32		January 25, 2010		January 25, 2013		185,000,000
HKD		151,000,000	2.33		February 1, 2010		February 1, 2013		151,000,000
HKD		156,000,000	2.33		February 25, 2010		February 25, 2013		156,000,000
HKD		160,000,000	2.46		February 26, 2010		February 26, 2013		160,000,000
HKD		380,000,000	1.77		May 27, 2010		May 27, 2012		380,000,000

32

Currency	Original Principal Amount		Interest Rate (%)	Issue Date		Maturity Date		Principal Amount Outstanding as of December 31, 2011
HKD		120,000,000	1.77		May 27, 2010		May 27, 2012		120,000,000
HKD		100,000,000	2.35		June 24, 2010		June 24, 2013		100,000,000
HKD		252,000,000	4.05		June 24, 2010		June 24, 2020		252,000,000
HKD		156,000,000	1.9		July 2, 2010		July 2, 2012		156,000,000
HKD		201,000,000	2.72		September 7, 2010		September 8, 2015		201,000,000
HKD		194,000,000	2		September 13, 2010		September 13, 2013		194,000,000
HKD		155,000,000	3M Hibor + 0.80		October 29, 2010		October 29, 2012		155,000,000
HKD		387,000,000	1.73		November 19, 2010		November 19, 2013		387,000,000
HKD		150,000,000	0.95		January 26, 2011		January 26, 2012		150,000,000
HKD		155,000,000	2.18		January 26, 2011		January 27, 2014		155,000,000
HKD		156,000,000	0.95		January 28, 2011		January 27, 2012		156,000,000
HKD		155,000,000	0.96		February 7, 2011		February 7, 2012		155,000,000
HKD		235,000,000	1.62		February 28, 2011		February 28, 2013		235,000,000
HKD		238,000,000	3.4		March 7, 2011		March 7, 2016		238,000,000
HKD		155,000,000	2.57		April 1, 2011		September 30, 2014		155,000,000
HKD		200,000,000	2.31		April 4, 2011		April 4, 2014		200,000,000
HKD		210,000,000	1.93		June 1, 2011		June 3, 2014		210,000,000
HKD		300,000,000	1.75		June 22, 2011		June 23, 2014		300,000,000
HKD		155,000,000	1.76		June 29, 2011		July 2, 2014		155,000,000
HKD		150,000,000	1.745		June 30, 2011		July 3, 2014		150,000,000
HKD		388,000,000	1.76		July 8, 2011		July 8, 2014		388,000,000
HKD		99,000,000	2.3		August 31, 2011		August 31, 2016		99,000,000
HKD		120,000,000	3.45		September 23, 2011		September 23, 2021		120,000,000
HKD		143,000,000	1.8		October 26, 2011		October 26, 2012		143,000,000
HKD		250,000,000	3.92		November 8, 2011		November 8, 2021		250,000,000
HKD		60,000,000	3.92		November 8, 2011		November 8, 2021		60,000,000
HKD		130,000,000	1.83		November 14, 2011		November 14, 2012		130,000,000
HKD		102,000,000	2.95		November 18, 2011		November 18, 2016		102,000,000
HKD		127,000,000	1.8		December 5, 2011		December5, 2012		127,000,000
HKD		84,700,000	1.92		December 21, 2011		December 21, 2012		84,700,000
			Subtotal in Original Currency					HKD	7,648,700,000
			Subtotal in Equivalent Amount of Won(4)					(Won)	1,134,914,106,000
MYR		500,000,000	4.08		March 12, 2008		March 12, 2013		500,000,000
MYR		500,000,000	4.50		March 12, 2008		March 12, 2018		500,000,000
MYR		220,000,000	4.75		February 18, 2009		February 17. 2012		220,000,000
MYR		500,000,000	4.10		September 9, 2009		September 7, 2012		500,000,000
MYR		175,000,000	4.10		September 15, 2009		September 14, 2012		175,000,000
MYR		230,000,000	4.50		March 10, 2010		March 10, 2015		230,000,000
MYR		150,000,000	4.00		July 1, 2010		July 1, 2013		150,000,000
MYR		400,000,000	4.50		July 1, 2010		July 1, 2015		400,000,000
MYR		150,000,000	4.00		July 1, 2010		July, 1, 2013		150,000,000
MYR		150,000,000	4.00		July 15, 2010		July 15, 2013		150,000,000
			Subtotal in Original Currency					MYR	2,975,000,000
			Subtotal in Equivalent Amount of Won(5)					(Won)	1,079,806,000,000
BRL		43,000,000	9.30		September 10, 2010		September 10, 2012		43,000,000
BRL		29,000,000	8.45		November 19, 2010		May 19, 2012		29,000,000
BRL		208,900,000	10.47		March 30, 2011		June 29, 2012		208,900,000
BRL		11,200,000	8.15		May 20, 2011		May 22, 2012		11,200,000
BRL		9,600,000	8.15		June 3, 2011		June 7, 2012		9,600,000
BRL		60,000,000	0.5		August 11, 2011		August 10, 2016		60,000,000
BRL		130,000,000	0.5		September 28, 2011		September 28, 2016		130,000,000
BRL		200,000,000	0.5		October 27, 2011		October 27, 2011		200,000,000
BRL		100,000,000	0.5		November 21, 2011		November 21, 2017		100,000,000
BRL		200,000,000	0.5		November 28, 2011		November 28, 2016		200,000,000
BRL		65,000,000	0.5		December 21, 2010		December 22, 2016		65,000,000
BRL		200,000,000	0.5		December 28, 2010		December 22, 2017		200,000,000
			Subtotal in Original Currency					BRL	1,256,700,000
			Subtotal in Equivalent Amount of Won(6)					(Won)	776,829,105,000

33

Currency	Original Principal Amount		Interest Rate (%)	Issue Date		Maturity Date		Principal Amount Outstanding as of December 31, 2011
EUR		325,000,000	3M Euribor + 0.24		February 14, 2006		February 14, 2013		325,000,000
EUR		750,000,000	4.625		February 20, 2007		February 20, 2017		750,000,000
EUR		750,000,000	5.75		May 22, 2008		May 22, 2013		750,000,000
EUR		60,000,000	3M Euribor + 1.45		July 9, 2008		July 9, 2013		60,000,000
			Subtotal in Original Currency					EUR	1,885,000,000
			Subtotal in Equivalent Amount of Won(7)					(Won)	2,816,378,500,000
MXN		1,000,000,000	8.61		October 11, 2007		October 11, 2017		1,000,000,000
MXN		1,200,000,000	1M TIIE + 0.30		January 28, 2008		January 28, 2013		1,200,000,000
MXN		800,000,000	8.61		April 29, 2008		October 11, 2017		800,000,000
MXN		300,000,000	8.61		May 6, 2008		October 11, 2017		300,000,000
			Subtotal in Original Currency					MXN	3,300,000,000
			Subtotal in Equivalent Amount of Won(8)					(Won)	271,524,000,000
THB		1,500,000,000	6.28		August 7, 2008		August 7, 2018		1,500,000,000
THB		1,000,000,000	2.80		June 28, 2010		June 28, 2013		1,000,000,000
THB		3,000,000,000	3.95		June 28, 2010		June 28, 2020		3,000,000,000
THB		2,200,000,000	3.72		February 8, 2011		February 10, 2014		2,200,000,000
THB		6,500,000,000	4.16		November 25, 2011		November 25, 2014		6,500,000,000
THB		1,000,000,000	4.40		November 25, 2011		November 25, 2021		1,000,000,000
			Subtotal in Original Currency					THB	15,200,000,000
			Subtotal in Equivalent Amount of Won(9)					(Won)	552,064,000,000
CHF		350,000,000	2.75		January 18, 2007		January 18, 2012		350,000,000
CHF		500,000,000	2.50		October 26, 2009		October 26, 2012		500,000,000
CHF		250,000,000	2.375		March 30, 2011		March 30, 2015		250,000,000
CHF		150,000,000	2.375		November 10, 2011		March 30, 2015		125,000,000
			Subtotal in Original Currency					CHF	1,225,000,000
			Subtotal in Equivalent Amount of Won(10)					(Won)	1,501,690,750,000
AUD		38,000,000	7.30		July 12, 2010		July 12, 2015		38,000,000
AUD		45,000,000	7.35		August 10, 2011		August 10, 2021		45,000,000
AUD		200,000,000	5.35		September 19, 2011		September 23, 2013		200,000,000
AUD		10,500,000	BBSW 3M + 1.6		November 1, 2011		November 3, 2012		10,500,000
AUD		72,300,000	5.73		November 29, 2011		November 20, 2014		72,300,000
AUD		9,000,000	5.05		December 14, 2011		June 7, 2013		9,000,000
			Subtotal in Original Currency					AUD	374,800,000
			Subtotal in Equivalent Amount of Won(11)					(Won)	438,242,396,000
INR		2,235,000,000	5.50		October 22, 2010		October 22, 2013		2,235,000,000
INR		7,600,000,000	5.10		October 29, 2010		October 29, 2013		7,600,000,000
INR		5,500,000,000	6.50		January 25, 2011		January 25, 2012		5,500,000,000
INR		452,000,000	6.50		March 3, 2011		January 25, 2012		452,000,000
INR		900,000,000	6.50		March 21, 2011		March 21, 2012		900,000,000
INR		300,000,000	6.50		May 20, 2011		May 22, 2012		300,000,000
INR		270,000,000	6.00		June 3, 2011		June 7, 2012		270,000,000
			Subtotal in Original Currency					INR	17,257,000,000
			Subtotal in Equivalent Amount of Won(12)					(Won)	375,339,750,000
CNY		200,000,000	0.75		November 15, 2010		November 15, 2015		200,000,000
CNY		130,000,000	0.75		June 10, 2011		November 15, 2015		130,000,000
CNY		200,000,000	1.00		August 12, 2011		August 14, 2012		200,000,000
CNY		65,000,000	0.80		August 17, 2011		August 17, 2012		65,000,000
CNY		127,800,000	0.90		August 25, 2011		August 25, 2014		127,800,000
CNY		77,000,000	2.00		October 27, 2011		October 27, 2012		77,000,000
CNY		305,000,000	2.20		November 1, 2011		November 2, 2012		305,000,000
CNY		135,000,000	2.00		November 3, 2011		November 5, 2012		135,000,000
CNY		200,000,000	2.10		November 14, 2011		November 15, 2012		200,000,000

34

Currency	Original Principal Amount		Interest Rate (%)	Issue Date		Maturity Date		Principal Amount Outstanding as of December 31, 2011
CNY		550,000,000	2.00		November 14, 2011		November 14, 2012		550,000,000
CNY		117,000,000	2.25		November 22, 2011		November 23, 2012		117,000,000
CNY		80,000,000	3.12		December 13, 2011		December 15, 2014		80,000,000
CNY		214,000,000	3.035		December 13, 2011		December 13, 2012		214,000,000
CNY		69,000,000	2.70		December 19, 2011		December 19, 2012		69,000,000
CNY		205,000,000	2.75		December 21, 2011		December 21, 2012		205,000,000
CNY		150,000,000	3.505		December 30, 2011		December 30, 2012		150,000,000
			Subtotal in Original Currency					CNY	2,824,800,000
			Subtotal in Equivalent Amount of Won(13)					(Won)	515,554,248,000
IDR		1,725,000,000,000	6.6		November 4, 2010		November 4, 2013		1,725,000,000,000
IDR		451,500,000,000	6.6		February 10, 2011		November 4, 2013		451,500,000,000
IDR		887,500,000,000	8.3		March 15, 2011		March 15, 2014		887,500,000,000
IDR		1,315,500,000,000	8.3		March 22, 2011		March 15, 2014		1,315,500,000,000
IDR		171,520,000,000	8.3		June 15, 2011		March 15, 2014		171,520,000,000
IDR		425,000,000,000	8.4		July 6, 2011		July 6, 2016		425,000,000,000
IDR		425,000,000,000	8.4		July 13, 2011		July 6, 2016		425,000,000,000
IDR		166,600,000,000	6		August 12, 2011		August 12, 2014		166,600,000,000
IDR		169,600,000,000	8.4		August 22, 2011		July 6, 2016		169,600,000,000
			Subtotal in Original Currency					IDR	5,737,220,000,000
			Subtotal in Equivalent Amount of Won(14)					(Won)	729,200,662,000
PEN		61,000,000	6.875		September 7, 2010		September 7, 2022		61,000,000
PEN		47,000,000	6.875		July 8, 2011		September 7, 2022		47,000,000
PEN		20,000,000	6.875		July 19, 2011		September 7, 2022		20,000,000
PEN		15,000,000	6.875		August 5, 2011		September 7, 2022		15,000,000
PEN		54,500,000	7.25		October 25, 2011		October 25, 2041		54,500,000
PEN		13,600,000	7.15		November 4, 2011		November 4, 2021		13,600,000
PEN		54,500,000	6.875		November 21, 2011		September 7, 2022		54,500,000
PEN		54,500,000	6.875		November 21, 2011		September 7, 2022		54,500,000
			Subtotal in Original Currency					PEN	320,100,000
			Subtotal in Equivalent Amount of Won(15)					(Won)	136,906,770,000
PHP		11,350,000,000	4.00		November 26, 2010		November 26, 2015		11,350,000,000
			Subtotal in Original Currency					PHP	11,350,000,000
			Subtotal in Equivalent Amount of Won(16)					(Won)	298,505,000,000
TRY		140,000,000	0.5		2011.10.20		2017.10.23		140,000,000
TRY		40,000,000	0.5		2011.12.21		2017.12.22		40,000,000
			Subtotal in Original Currency					TRY	180,000,000
			Subtotal in Equivalent Amount of Won(17)					(Won)	108,262,800,000
TWD		600,000,000	0.7		July 1, 2011		July 1, 2016		600,000,000
			Subtotal in Original Currency					TWD	600,000,000
			Subtotal in Equivalent Amount of Won(18)					(Won)	22,860,000,000
NZD		212,300,000	4.93		November 29, 2011		November 20, 2014		212,300,000
			Subtotal in Original Currency					NZD	212,300,000
			Subtotal in Equivalent Amount of Won(19)					(Won)	188,874,818,000
SAR		750,000,000	3M Sibor + 1.70		December 6, 2011		December 6, 2016		750,000,000
			Subtotal in Original Currency					SAR	750,000,000
			Subtotal in Equivalent Amount of Won(20)					(Won)	230,655,000,000
		Total External Bonds of the Bank in Equivalent Amount of Won						(Won)	31,504,595,185,000

(1) U.S. dollar amounts are converted to Won amounts at the rate of US$1.00 to Won 1,153.00, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

35

(2) Singapore dollar amounts are converted to Won amounts at the rate of SGD1.00 to Won 886.44, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(3) Japanese yen amounts are converted to Won amounts at the rate of JPY 100.00 to Won 1,485.16, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(4) Hong Kong dollar amounts are converted to Won amounts at the rate of HKD 1.00 to Won 148.38, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(5) Malaysia ringgit amounts are converted to Won amounts at the rate of MYR 1.00 to Won 362.96, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(6) Brazilian real amounts are converted to Won amounts at the rate of BRL 1.00 to Won 618.15, the prevailing market rate on December 31, 2011.

(7) Euro amounts are converted to Won amounts at the rate of EUR 1.00 to Won 1,494.1, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(8) Mexican pesos amounts are converted to Won amounts at the rate of MXN 1.00 to Won 82.28, the prevailing market rate on December 31, 2011.

(9) Thai baht amounts are converted to Won amounts at the rate of THB 1.00 to Won 36.32, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(10) Swiss franc amounts are converted to Won amounts at the rate of CHF 1.00 to Won 1,225.87, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(11) Australian dollar amounts are converted to Won amounts at the rate of AUD 1.00 to Won 1,169.27, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(12) Indian Rupee amounts are converted to Won amounts at the rate of INR 1.00 to Won 21.75, the prevailing market rate on December 31, 2011.

(13) Chinese yuan amounts are converted to Won amounts at the rate of CNY 1.00 to Won 182.51, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(14) Indonesian rupiah amounts are converted to Won amounts at the rate of IDR 100.00 to Won 12.71, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(15) Peru nuevo sol amounts are converted to Won amounts at the rate of PEN 1.00 to Won 427.70, the prevailing market rate on December 31, 2011.

(16) Philippine pesos amounts are converted to Won amounts at the rate of PHP 1.00 to Won 26.3, the prevailing market rate on December 31, 2011.

(17) Turkish lira amounts are converted to Won amounts at the rate of TRY 1.00 to Won 601.46, the prevailing market rate on December 31, 2011.

(18) Taiwan dollar amounts are converted to Won amounts at the rate of TWD 1.00 to Won 38.1, the prevailing market rate on December 31, 2011.

(19) New Zealand dollar amounts are converted to Won amounts at the rate of NZD 1.00 to Won 889.66, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

(20) Saudi riyal amounts are converted to Won amounts at the rate of SR 1.00 to Won 307.54, the market average exchange rate in effect on December 31, 2011, as announced by Seoul Money Brokerage Services, Ltd.

36

(2) External Borrowings of the Bank

Lender	Classifications	Range of Interest Rates		Range of Years of Issue		Range of Years of Maturity		Principal Amount Outstanding as of December 31, 2011(1)(2)
		(%)						(millions of Won)
Bank of Tokyo-Mitsubishi UFJ, LTD	Borrowings from BMTU		3M Libor + 3.70		2009		2012	(Won)	219,127
Mizuho Corporate Bank, LTD	Borrowing from Mizuho		1M~6M Libor +0.62		2010		2012		115,330
Mizuho Corporate Bank, Hong Kong	Borrowing from Mizuho		1M~6M Libor +0.77		2010		2013		115,330
Toronto Dominion Bank, Singapore BR	Borrowing from TDB		3M Libor + 1.10		2010		2012		34,599
UBS Securities Japan LTD	Borrowing from UBS		3M Libor + 0.75		2010		2013		11,533
Deutsche Bank AG, Seoul	Borrowing from TCB		3M Libor + 1.0		2010		2013		302,165
UBS Securities Japan LTD.	Borrowing from UBS		3M Libor + 0.75		2010		2013		23,066
Mizuho Corporate Bank, LTD., Seoul	Borrowing from Mizuho		3M Libor + 0.85		2011		2014		288,325
Bank of America NA	Borrowing from BOA		3M Euribor + 0.4		2011		2012		298,820
Bank of Tokyo-Mitsubishi UFJ, LTD	Borrowings from BMTU		3M Libor + 0.70		2011		2014		345,990
Bank of America NA	Borrowing from BOA		3M Euribor + 0.3		2011		2012		298,820
Mitsubishi UFJ Trust and Banking	Borrowing from MUTB		3M Libor + 0.4		2011		2012		115,330
HSBC, Seoul	Borrowing from HSBC		3M Libor + 0.8		2011		2013		57,665
Mizuho Corporate Bank, LTD	Borrowing from Mizuho		3M Libor + 1.0		2011		2014		115,330
Banco Bilbao Vizcaya Argentaria SA.	Off-shore long- term borrowings		3M Libor + 1.60		2009		2012		28,833
Sumitomo Trust and Banking Corp	Off-shore long- term borrowings		3M Libor + 0.70		2011		2014		34,599
Long-term Borrowings								(Won)	2,404,861
Foreign Currency CP			0.17 ~ 4.69		2011		2012	(Won)	2,081,114
Off-Shore Foreign Currency CP			1.02		2011		2012	(Won)	22,161
								(Won)	2,103,275
Short-term borrowings and Others(3)	Libor 3 month + 0.00 ~ Libor 1 year + 2.49, 0.62 ~ 0.925							(Won)	397,673
Foreign Currency Call Money			5.33 ~ 5.35		2011		2012	(Won)	47,940
Other Borrowings								(Won)	378,429
Total External Borrowings of the Bank								(Won)	5,332,178

(1) Converted to Won amounts at the relevant market average exchange rates in effect on December 31, 2011 as announced by Seoul Money Brokerage Services, Ltd.

(2) Amount after amortizing present value discount

(3) Domestic Import Usance included

37

B. Internal Debt of the Bank

Title	Range of Interest Rates		Range of Years of Issue		Range of Years of Original Maturity		Principal Amounts Outstanding as of December 31, 2011
	(%)						(millions of Won)
Bonds
Short-term Industrial Finance Bonds		3.37~3.74		2011		2012	(Won)	2,570,000
Long-term Industrial Finance Bonds		3.30~5.27		2009~2011		2012~2026		4,960,000
Total Bonds		3.30~5.27		2009~2011		2012~2026		7,530,000
Total Internal Debt							(Won)	7,530,000

Financial Statements and the Auditors

The Minister of Strategy and Finance appoints our Auditor who is responsible for examining our financial operations and auditing our financial statements and records. The present Auditor is Sun-Young Bae, who was appointed for a three-year term on April 13, 2011.

We prepare our financial statements annually for submission to the Minister of Strategy and Finance, accompanied by an opinion of the Auditor. Although we are not legally required to have financial statements audited by external auditors, an independent public accounting firm has audited our non-consolidated financial statements commencing with such non-consolidated financial statements as of and for the year ended December 31, 1983 and consolidated financial statements commencing with such financial statements as of and for the year ended December 31, 1998. As of the date of this prospectus, our independent auditor is Deloitte Anjin LLC, located at 9^th Floor, One IFC Bldg., 23 Youido-dong, Youngdeungpo-gu, Seoul, Korea which has audited our non-consolidated financial statements as of and for the year ended 2011 included in this prospectus. KPMG Samjong Accounting Corp., located at 10^th Floor, Gangnam Finance Center, 737 Yeoksam-dong, Gangnam-gu, Seoul, Korea, has audited our non-consolidated financial statements as of and for the year ended December 31, 2010 included in this prospectus.

Our non-consolidated financial statements appearing in this prospectus were prepared in conformity with Korean law and in accordance with the KEXIM Act and the related accounting principles, summarized in “Notes to Non-Consolidated Financial Statements of December 31, 2011 and 2010—Note 2”. These principles and procedures differ in certain material respects from generally accepted accounting principles in the United States.

We recognize interest income on loans and debt securities on an accrual basis. However, interest income on delinquent and dishonored loans and debt securities, other than those collateralized with security deposits or guaranteed by financial institutions, is recognized on a cash basis. Interest expense is recorded on an accrual basis.

We classify securities that are actively and frequently bought and sold as trading securities. We classify debt securities with fixed or determinable payments and fixed maturities, and which we intend to hold to maturity, as held-to-maturity securities. We classify investments that are categorized as neither trading securities nor held-to-maturity securities as available-for-sale securities. We record our trading and available-for-sale securities, except for non-marketable equity securities classified as available-for-sale securities, at fair value. We record held-to-maturity securities at amortized cost. We recognize impairment losses on securities in current operations when the recoverable amounts are less than the acquisition cost of equity securities or amortized cost of debt securities.

38

We record debenture issuance costs as discounts on debentures and amortize them over the maturity period of the debentures using the effective interest method.

We record our equity investments in companies in which we exercise significant control or influence by using the equity method, pursuant to which we account for adjustments in the value of our investments resulting from changes to the investee’s net asset value.

We record the value of our premises and equipment on our balance sheet on the basis of a revaluation conducted as of July 1, 1998. The Minister of Strategy and Finance approved the revaluation in accordance with applicable Korean law. We value additions to premises and equipment since such date at cost.

39

Independent Auditors’ Report

To the Shareholders and Board of Directors of

The Export-Import Bank of Korea:

We have audited the accompanying non-consolidated statement of financial position of The Export-Import Bank of Korea (the “Bank”) as of December 31, 2011, and the related non-consolidated statements of income, appropriations of retained earnings, changes in shareholders’ equity and cash flows for the year then ended, all expressed in Korean won. These non-consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these non-consolidated financial statements based on our audit. The non-consolidated financial statements of the Bank as of and for the year ended December 31, 2010, presented herein for comparative purposes, were audited by other auditors whose report dated February 28, 2011, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted in the Republic of Korea. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the non-consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Bank as of December 31, 2011, and its results of operations and its cash flows for the year then ended in conformity with the Export-Import Bank of Korea Act-related accounting principles applied by the Bank.

As explained in Note 2 to the accompanying non-consolidated financial statements, pursuant to the revised Regulations on Supervision of Banking Business on exceptions of application of Korean International Financial Reporting Standards (“K-IFRS”) announced by the Financial Supervisory Commission, the Bank prepares its financial information as of and for the year ended December 31, 2011, in conformity with the Accounting Standards for Banking Industry, detailed standards established by Superintendent of the Financial Supervisory Service, foreign exchange settlement rules and certain K-IFRS in connection with derecognition of financial instruments and others. The standard for derecognition of financial instruments is stated in K-IFRS 1039, Financial Instruments: Recognition and Measurement, and K-IFRS 1107, Financial Instruments: Disclosures. As a result, the Bank adopted such derecognition standard with regard to transactions of financial assets that occurred on or after January 1, 2010, in conformity with the Detailed Regulations on Supervision of Banking Business Appendix 4-2 Article 5, with no impact on the accompanying non-consolidated financial statements of the Bank.

40

Accounting principles and auditing standards and their application in practice vary among countries. The accompanying non-consolidated financial statements are not intended to present the financial position, results of operations, changes in shareholders’ equity and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to audit such non-consolidated financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying non-consolidated financial statements are for use by those knowledgeable about Korean accounting procedures and auditing standards and their application in practice.

February 29, 2012

Notice to Readers

This report is effective as of February 29, 2012, the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’ report date and the time the auditors’ report is read. Such events or circumstances could significantly affect the accompanying non-consolidated financial statements and may result in modifications to the auditors’ report.

41

THE EXPORT-IMPORT BANK OF KOREA

NON-CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2011 AND 2010

	Korean won
	2011			2010
	(In millions)
ASSETS
Due from banks (Notes 3, 20 and 24)	(Won)	2,707,643		(Won)	1,610,027
Securities (Notes 4 and 20)		3,948,931			3,205,255
Loans, net (Notes 5, 6, 20 and 23)		46,117,902			39,907,922
Tangible assets (Note 7)		33,182			33,493
Other assets (Notes 8, 16 and 19)		2,325,685			1,932,785
	(Won)	55,133,343		(Won)	46,689,482
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Borrowings (Notes 9, 20 and 23)	(Won)	44,555,746		(Won)	37,216,945
Other liabilities (Notes 10, 11, 12, 13 and 16)		3,068,297			2,949,651
		47,624,043			40,166,596
SHAREHOLDERS’ EQUITY:
Capital stock (Note 14)		6,258,755			5,158,755
Accumulated other comprehensive income (loss) (Notes 4 and 21)		(50,307	)		197,740
Retained earnings (Note 14)		1,300,852			1,166,391
		7,509,300			6,522,886
	(Won)	55,133,343		(Won)	46,689,482

See accompanying notes to non-consolidated financial statements.

42

THE EXPORT-IMPORT BANK OF KOREA

NON-CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	Korean won
	2011		2010
	(In millions)
OPERATING REVENUE:
Interest income (Notes 17 and 23):
Interest on due from banks	(Won)	30,577	(Won)	24,819
Interest on securities		2,181		—
Interest on loans		1,371,175		1,263,668
		1,403,933		1,288,487
Gain on valuation and disposal of securities:
Gain on disposal of available-for-sale securities		—		453,494
		—		453,494
Gain on valuation and disposal of loans:
Gain on disposal of loans		25		571
		25		571
Foreign exchange trading income		1,316,884		851,707
Gain on financial derivatives (Note 16):
Gain on financial derivatives trading		171,027		264,311
Gain on valuation of financial derivatives		487,066		702,963
Gain on valuation of fair-value-hedged items		242,799		210,264
		900,892		1,177,538
Commission:
Commission income (Note 23)		67,673		44,756
Guarantee income		215,950		225,025
		283,623		269,781
Dividend on available-for-sale securities		107,099		38,596
Other operating revenue:
Reversal of allowance for losses on acceptance and guarantee (Note 11)		108,071		—
Profit on redemption		20		2
Other operating revenue		4,580		5,010
		112,671		5,012
Total operating revenue		4,125,127		4,085,186

(Continued)

43

THE EXPORT-IMPORT BANK OF KOREA

NON-CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	Korean won
	2011		2010
	(In millions)
OPERATING EXPENSES:
Interest expenses (Notes 17 and 23):
Interest on call money	(Won)	9,587	(Won)	6,898
Interest on borrowings		46,944		46,089
Interest on debentures		1,017,825		893,528
		1,074,356		946,515
Loss on valuation and disposal of securities:
Impairment loss on available-for-sale securities		4,644		22
		4,644		22
Loss on valuation and disposal of loans:
Provision for possible loan losses (Note 6)		502,325		469,058
Loss on disposal of loans		—		37
		502,325		469,095
Foreign exchange trading losses		1,077,037		1,301,802
Loss on financial derivatives (Note 16):
Loss on financial derivatives trading		142,350		180,573
Loss on valuation of financial derivatives		552,617		333,101
Loss on valuation of fair-value-hedged items		434,483		214,692
		1,129,450		728,366
Commission expenses		8,058		2,903
General and administrative expenses (Note 18)		142,286		117,258
Contribution to miscellaneous funds		6,426		6,396
Other operating expenses:
Provision for acceptance and guarantee losses (Note 11)		—		412,613
Provision for unused credit line of loan commitments (Note 11)		30,341		4,120
Provision for others (Note 12)		4,134		729
Loss on redemption		16		7
Other operating expenses		369		288
		34,860		417,757
Total operating expenses		3,979,442		3,990,114
OPERATING INCOME		145,685		95,072
NON-OPERATING INCOME		12,622		10,128
NON-OPERATING EXPENSES		4,181		6,897
NET INCOME BEFORE INCOME TAX EXPENSE		154,126		98,303
INCOME TAX EXPENSE (Note 19)		7,324		31,600
NET INCOME	(Won)	146,802	(Won)	66,703

(Concluded)

See accompanying notes to non-consolidated financial statements.

44

THE EXPORT-IMPORT BANK OF KOREA

NON-CONSOLIDATED STATEMENTS OF APPROPRIATIONS OF RETAINED EARNINGS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	Korean won
	2011		2010
	(In millions)
RETAINED EARNINGS BEFORE APPROPRIATIONS:
Unappropriated retained earnings carried over from prior years	(Won)	—	(Won)	—
Net income		146,802		66,703
		146,802		66,703
APPROPRIATIONS:
Legal reserve		14,680		13,341
Other reserve		98,504		41,022
Dividends		33,618		12,340
		146,802		66,703
UNAPPROPRIATED RETAINED EARNINGS TO BE CARRIED FORWARD TO SUBSEQUENT YEAR	(Won)	—	(Won)	—

See accompanying notes to non-consolidated financial statements.

45

THE EXPORT-IMPORT BANK OF KOREA

NON-CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	Capital stock		Accumulated other comprehensive income (loss)			Retained earnings			Total
	(In millions)
January 1, 2010	(Won)	5,008,755	(Won)	350,392		(Won)	1,104,208		(Won)	6,463,355
Dividends		—		—			(4,520	)		(4,520	)
Balance after appropriations		5,008,755		350,392			1,099,688			6,458,835
Increase in capital stock		150,000		—			—			150,000
Net income		—		—			66,703			66,703
Loss on valuation of available-for-sale securities		—		(153,786	)		—			(153,786	)
Gain on valuation of securities using equity method		—		1,134			—			1,134
December 31, 2010	(Won)	5,158,755	(Won)	197,740		(Won)	1,166,391		(Won)	6,522,886
January 1, 2011	(Won)	5,158,755	(Won)	197,740		(Won)	1,166,391		(Won)	6,522,886
Dividends		—		—			(12,341	)		(12,341	)
Balance after appropriations		5,158,755		197,740			1,154,050			6,510,545
Increase in capital stock		1,100,000		—			—			1,100,000
Net income		—		—			146,802			146,802
Loss on valuation of available-for-sale securities		—		(248,512	)		—			(248,512	)
Gain on valuation of securities using equity method		—		465			—			465
December 31, 2011	(Won)	6,258,755	(Won)	(50,307	)	(Won)	1,300,852		(Won)	7,509,300

See accompanying notes to non-consolidated financial statements.

46

THE EXPORT-IMPORT BANK OF KOREA

NON-CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	Korean won
	2011			2010
	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	(Won)	146,802		(Won)	66,703
Adjustments to reconcile net income to net cash used in operating activities:
Amortization of discount on debentures		340,939			112,778
Impairment loss of available-for-sale securities		4,644			22
Provision for possible loan losses		502,325			469,058
Foreign exchange trading losses		1,017,377			1,301,802
Loss on valuation of financial derivatives		552,617			333,101
Loss on hedged items		410,258			214,692
Provision for severance benefits		7,116			6,176
Depreciation		3,364			3,309
Amortization		1,300			1,122
Provision for allowance for losses on acceptance and guarantee		—			412,613
Provision for allowance for losses on unused credit line of loan commitments		30,341			4,120
Loss on redemption		4,134			729
Provision for others		16			7
Loss on disposal of tangible assets		3			2
Amortization of present-value discount		(7,175	)		(7,131	)
Foreign exchange trading income		(1,166,687	)		(851,707	)
Gain on valuation of financial derivatives		(487,066	)		(702,963	)
Gain on hedged items		(242,799	)		(210,264	)
Reversal of allowance for losses on acceptance and guarantee		(108,071	)		—
Gain on redemption		(20	)		(2	)
Gain on disposal of tangible assets		(79	)		(95	)
Gain on valuation of securities using the equity method		(10,541	)		(8,881	)
		851,996			1,078,488
Changes in assets and liabilities resulting from operations:
Net decrease (increase) in available-for-sale securities		(20,717	)		32,763
Net decrease in securities using the equity method		627			—
Net increase in loans		(6,090,268	)		(4,948,106	)
Net decrease (increase) in accrued income		(36,897	)		134,247
Net increase in deferred income tax assets		(140,228	)		(142,657	)
Net decrease in financial derivatives assets		385,524			316,163

(Continued)

47

THE EXPORT-IMPORT BANK OF KOREA

NON-CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	Korean won
	2011			2010
	(In millions)
Payment of severance benefits	(Won)	(2,399	)	(Won)	(1,637	)
Net increase (decrease) in allowance for others		(2,091	)		44,130
Net increase (decrease) in foreign exchange settlement account—credit		(246,796	)		245,324
Net increase (decrease) in accounts payable		(59,508	)		151,109
Net increase (decrease) in unearned revenue		48,738			(30,554	)
Net decrease in derivative liabilities		(202,398	)		(198,362	)
Others, net		44,927			(245,306	)
		(6,321,486	)		(4,642,886	)
Net cash used in operating activities		(5,322,688	)		(3,497,695	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of securities using the equity method		—			(116,561	)
Purchase of tangible assets		(3,058	)		(1,936	)
Disposal of tangible assets		81			94
Others, net		(5,480	)		(5,921	)
Net cash used in investing activities		(8,457	)		(124,324	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in borrowings in foreign currencies		(690,514	)		789,256
Net increase in call money		1,689,256			665,103
Net increase (decrease) in debentures in local currency		887,672			(776,585	)
Net increase in debentures in foreign currencies		4,453,699			3,535,024
Net increase in guarantees deposits received		988			—
Net increase in capital		100,000			150,000
Payment of dividends		(12,340	)		(4,520	)
Net cash provided by financing activities		6,428,761			4,358,278
NET INCREASE IN DUE FROM BANKS		1,097,616			736,259
DUE FROM BANKS, BEGINNING OF YEAR		1,610,027			873,768
DUE FROM BANKS, END OF YEAR (Note 23)	(Won)	2,707,643		(Won)	1,610,027

(Concluded)

See accompanying notes to non-consolidated financial statements.

48

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

1. GENERAL:

The Export-Import Bank of Korea (the “Bank”) was established in 1976 as a special financial institution under the Export-Import Bank of Korea Act (the “EXIM Bank Act”) to grant financial facilities for overseas trade (i.e., import and export), investments and resources development activities. As of December 31, 2011, the Bank operates 10 domestic branches, four overseas subsidiaries and fifteen overseas offices.

The Bank’s authorized capital is (Won)8,000,000 million, and through numerous capital increases since the establishment, its paid-in capital is (Won)6,258,755 million as of December 31, 2011. The Government of the Republic of Korea (the “Government”), the Bank of Korea (“BOK”) and Korea Finance Corporation hold 62.96%, 18.61% and 18.43% of the ownership of the Bank, respectively, as of December 31, 2011.

The Bank, as a trustee of the Government, has managed the Economic Development Cooperation Fund since June 1987 and the Inter-Korean Cooperation Fund since March 1991. The funds are accounted independently and not included in the Bank’s non-consolidated financial statements. The Bank receives a fee from the Government for the trustee service.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Non-consolidated Financial Statement Presentation

The Bank maintains its accounting records in Korean won and prepares non-consolidated financial statements in the Korean language in conformity with accounting principles generally accepted in the Republic of Korea. Certain accounting principles applied by the Bank that conform with financial accounting standards and accounting principles in the Republic of Korea may not conform with generally accepted accounting principles in other countries. Accordingly, these non-consolidated financial statements are intended solely for use by those who are informed about Korean accounting principles and practices.

The significant accounting policies followed by the Bank in preparing the accompanying non-consolidated financial statements are summarized below.

Pursuant to the revised Regulations on Supervision of Banking Business on exceptions of application of Korean International Financial Reporting Standards (“K-IFRS”) announced by the Financial Supervisory Commission, the Bank prepares its financial information as of and for the year ended December 31, 2011, in conformity with the Accounting Standards for Banking Industry, detailed standards established by Superintendent of the Financial Supervisory Service, foreign exchange settlement rules and certain K-IFRS in connection with derecognition of financial instruments and others. The standard for derecognition of financial instruments is stated in K-IFRS 1039, Financial Instruments: Recognition and Measurement, and K-IFRS 1107, Financial Instruments: Disclosures. As a result, the Bank adopted such derecognition standard with regard to transactions of financial assets that occurred on or after January 1, 2010, in conformity with the Detailed Regulations on Supervision of Banking Business Appendix 4-2 Article 5, with no impact on the accompanying non-consolidated financial statements of the Bank.

49

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

The 2011 non-consolidated financial statements were authorized for issue on February 29, 2012, by the Operation Committee of the Bank.

Revenue Recognition

The Bank recognizes interest income from deposits, loans and securities on an accrual basis. However, the Bank recognizes interest income when payments are received for the loans for which principal or interest payments are overdue without guarantee of payment by financial institutions and of which repayment is significantly uncertain. The interest accrued but not recognized on such loans amounted to (Won)30,408 million and (Won)32,235 million as of December 31, 2011 and 2010, respectively. Any uncollected interest previously accrued on such loans is reversed and recorded as deduction of current period’s interest income.

Investments in Securities (Excluding Investments in Associates and Subsidiaries)

1) Classification

Upon acquisition, the Bank classifies debt and equity securities (excluding investments in subsidiaries, associates and joint ventures) into the following categories: held-to-maturity, available-for-sale or trading securities.

Investments in debt securities where the Bank has the positive intent and ability to hold to maturity are classified as held-to-maturity securities. Securities that are acquired principally for the purpose of selling in the short term are classified as trading securities. Investments not classified as either held-to-maturity or trading securities are classified as available-for-sale securities.

2) Initial recognition

Investments in securities (excluding investments in subsidiaries, associates and joint ventures) are initially recognized at cost.

3) Subsequent measurement and income recognition

Trading securities are subsequently carried at fair value. Gains and losses arising from changes in the fair value of trading securities are included in the non-consolidated statement of income in the period in which they arise. Available-for-sale securities are subsequently carried at fair value. Gains and losses arising from changes in the fair value of available-for-sale securities are recognized as accumulated other comprehensive income, net of tax, directly in equity. Investments in available-for-sale securities that do not have readily determinable fair values are recognized at cost, less impairment, if any. Held-to-maturity investments are carried at amortized cost with interest income and expense recognized in the non-consolidated statement of income using the effective interest rate method.

4) Fair value information

The fair value of marketable securities is determined using quoted market prices as of the period-end. Non-marketable debt securities are valued by discounting cash flows using the prevailing market rates for debt with a similar credit risk and remaining maturity. Credit risk is determined using the Bank’s credit rating as announced by accredited credit rating agencies in Korea. The fair value of investments in money market funds is determined by investment management companies.

50

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

5) Impairment

The Bank reviews investments in securities whenever events or changes in circumstances indicate that the carrying amount of the investments may not be recoverable. Impairment losses are recognized when the reasonably estimated recoverable amounts are less than the carrying amounts and it is not obviously evidenced that impairment is unnecessary.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized and a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

Investments in Associates and Subsidiaries

Associates are entities of the Bank and its subsidiaries that have the ability to significantly influence the financial and operating policies. It is presumed to have significant influence if the Bank holds directly or indirectly 15% or more of the voting power, unless it can be clearly demonstrated that this is not the case. Subsidiaries are entities controlled by the Bank.

Investments in associates and subsidiaries are accounted for using the equity method of accounting and are initially recognized at cost.

The Bank’s investments in associates and subsidiaries include goodwill identified on the acquisition date (net of any accumulated impairment loss). Goodwill is calculated as the excess of the acquisition cost of an investment in an associate or subsidiary over the Bank’s share of the fair value of the identifiable net assets acquired. Goodwill is amortized using the straight-line method over five years. Amortization of goodwill is recorded together with equity income (losses).

When events or circumstances indicate that the carrying value of goodwill may not be recoverable, the Bank reviews goodwill for impairment and records any impairment loss immediately in the non-consolidated statement of income.

The Bank’s share of its postacquisition profits or losses in investments in associates and subsidiaries is recognized in the non-consolidated statement of income, and its share of postacquisition movements in equity is recognized in equity. The cumulative postacquisition movements are adjusted against the carrying amount of each investment. Changes in the carrying amount of an investment resulting from dividends by an associate or subsidiary are recognized when the associate or subsidiary declares the dividend. When the Bank’s share of losses in an associate or subsidiary equals or exceeds its interest in the associate or subsidiary, including preferred stock or other long-term loans and receivables issued by the associate or subsidiary, the Bank does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate or subsidiary.

If the investee is a subsidiary, net income and net assets of the parent company’s separate non-consolidated financial statements should agree with the parent company’s share in the net income and net assets of the consolidated financial statements, except when the parent company discontinues the application of the equity method due to its investment in a subsidiary being reduced to zero.

Unrealized gains on transactions between the Bank and its associates or subsidiaries are eliminated to the extent of the Bank’s interest in each associate or subsidiary.

51

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

Allowance for Loan Losses

Based on future loan repayment capacity of the borrower and past repayment history, the Bank classifies loans into five categories: “normal,” “precautionary,” “substandard,” “doubtful” and “estimated loss,” in accordance with the banking regulation in the Republic of Korea. Except for call loans and interbank loans with “normal” classification, the Bank provides allowance by each loan classification with the amount greater of using the expected loss method or the prescribed minimum levels of allowances in accordance with the Financial Supervisory Service Guideline (“FSS Guideline”).

(a) Expected Loss Method

The allowance for normal loans is calculated by multiplying each outstanding loan balance by probability of default and loss given default. The Bank provides additional allowance for considering risks associated with a certain industry and country concentration. The allowances for loans classified other than “normal” are estimated based on expected future cash flows.

(b) FSS Guideline

The prescribed minimum levels of allowances in the Regulations for the Supervision of Banks guide are as follows:

Normal (*)	0.85	%
Precautionary	7	%
Substandard	20	%
Doubtful	50	%
Estimated loss	100	%

(*) 0.9% for market sensitive sectors, including construction, real estate and rental services, retail and wholesale, lodging and restaurant

Troubled Debt Restructuring

Loans with modified contract terms by a troubled debt restructuring program are accounted for at the present value of the rescheduled future cash flows expected, of which the discount rate is same as the effective rate of the original loan. The excess of the carrying amount over the present value of expected cash flows is recorded in allowance for loan loss in the current period. The present-value discounts are recorded in allowance for loan loss and reflected as a deduction from the nominal value of the loans. If the previously recognized allowance for loan loss is greater than the present-value discount, the difference is recorded as reversal of allowance for loan loss.

Deferred Loan Origination Fees

Certain fees associated with lending activities, which meet specified criteria, are deferred and amortized over the life of the loan as an adjustment to the carrying amount of the loan using the effective yield method and recognized as interest income.

Tangible Assets

Tangible assets are stated at cost (acquisition cost or manufacturing cost, plus expenditures directly related to preparing the asset ready for use for a place). Assets acquired through investment in-kind or donations are

52

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

recorded at their fair value upon acquisition. For assets acquired in exchange for a non-monetary asset, the fair value of the asset given up is used to measure the cost of the asset received, unless the fair value of the asset received is more clearly evident.

Significant additions or improvements extending the useful life of assets are capitalized. Normal maintenance and repairs are charged to expense as incurred.

Tangible assets are depreciated over the estimated useful lives of the assets using the following methods:

	Useful lives (years)	Depreciation method
Buildings	10–60		Straight line (*)
Vehicles	4		Declining balance
Equipment	4–20		Declining balance

(*) Buildings acquired and related improvements made prior to January 1, 1995, are depreciated using the declining-balance method.

The Bank reviews tangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when the expected estimated undiscounted future net cash flows from the use of the asset and its eventual disposal are less than its carrying amount.

Intangible Assets

Intangible assets are stated at the production or purchase cost, plus incidental expenses and capital expenditures. Amortization is computed using the straight-line method over five years and directly reduced from intangible assets.

Intangible assets are subject to an impairment review if there are events or changes in circumstances that indicate that the carrying amount may not be recoverable. An impairment loss is recognized by reducing the carrying amount to the recoverable amount.

Discount (Premium) on Debentures

Discount (premium) on debentures issued, which represents the difference between the face value and issuance price of debentures, is amortized (accreted) using the effective interest rate method over the life of the debentures. The amount amortized (accreted) is included in interest expense (income).

Retirement and Severance Benefits

Employees who have been with the Bank for more than one year are entitled to lump-sum payments based on salary rates and length of service at the time they leave the Bank. The Bank’s estimated liability under the plan, which would be payable if all employees left at the end of the reporting period, is accrued in the accompanying non-consolidated statements of financial position.

Allowance for Losses on Acceptances and Guarantees

The Bank provides allowance for losses on outstanding acceptances and guarantees, the amount after considering the credit conversion factors (CCFs), using the same allowance methodology used for estimating allowance for loan loss. However, the Bank does not provide additional allowance for risks associated with a certain industry and country concentration for unconfirmed acceptances and guarantees.

53

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

Allowance for Losses on Unused Loan Commitments

The Bank provides allowance for loss on unused loan commitments, the amount after considering the CCFs, using the same allowance methodology used for estimating allowance for loan loss. However, the Bank does not provide the additional allowance for risks associated with a certain industry and country concentration for unused loan commitments.

Provisions

Provisions are recognized when all of the following are met: (1) the Bank has a present obligation as a result of a past event, (2) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and (3) a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, a provision is recorded at the present value of the expenditures expected to be required to settle the obligation.

Where the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognized as a separate asset when, and only when, it is virtually certain that reimbursement will be received if the Bank settles the obligation. The expense generated by the provision is presented net of the amount of expected reimbursement.

Derivatives and Hedge Accounting

The Bank holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Attributable transaction costs are recognized in profit or loss when incurred.

1) Hedge accounting

Where a derivative, which meets certain criteria, is used for hedging the exposure to changes in the fair value of a recognized asset, liability or firm commitment, it is designated as a fair value hedge. Where a derivative, which meets certain criteria, is used for hedging the exposure to the variability of the future cash flows of a forecasted transaction, it is designated as a cash flow hedge.

The Bank documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Bank also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting the changes in fair values or cash flows of hedged items.

2) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the non-consolidated statement of income, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

3) Derivatives that do not qualify for hedge accounting

Changes in the fair value of derivative instruments that are not designated as fair value hedges are recognized immediately in the non-consolidated statement of income.

54

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

Income Taxes

Income tax on the income or loss for the year comprises current and deferred taxes. Income tax is recognized in the non-consolidated statement of income, except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the year using tax rates enacted.

Deferred tax is provided using the asset and liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the end of the reporting period.

A deferred tax asset is recognized only to the extent that it is probable that future taxable income will be available against which the unused tax losses and credits can be utilized. Deferred income tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Changes in deferred taxes due to a change in the tax rate, except for those related to items initially recognized outside profit or loss (either in other comprehensive income or directly in equity), are recognized as income in the current year.

Foreign Currency Translation

Monetary assets and liabilities denominated in foreign currencies are translated into Korean won at the foreign exchange rate at the end of the reporting period, with the resulting gains or losses recognized in the non-consolidated statement of income. Monetary assets and liabilities denominated in foreign currencies are translated into Korean won at (Won)1,153.3 and (Won)1,138.9 to USD 1 based on the basic exchange rate and the cross-exchange rate announced by the Seoul Monetary Brokerage Services Ltd. on December 31, 2011 and 2010, respectively. Financial statements of foreign-based operations, branches and companies accounted for using the equity method are translated at the rate of exchange at the end of the reporting period.

Use of Estimates

The preparation of non-consolidated financial statements in accordance with the EXIM Bank Act-related accounting principles applied by the Bank requires management to make estimates and assumptions that affect the amounts reported in the non-consolidated financial statements and related notes to non-consolidated financial statements. Actual results could differ from those estimates.

55

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

3. DUE FROM BANKS:

(1) Due from banks as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	Financial institution	Interest (%)		2011		2010
Due from banks in local currency	Reserve deposit		—	(Won)	18	(Won)	35
	Demand deposits		—		973		2,216
	Time deposits		3.80–4.14		592,000		1,223,000
	Certificate of deposits		—		—		44,177
	Others		1.9–3.35		387,550		296,200
					980,541		1,565,628
Due from banks in foreign currencies	Demand deposits		—		84,079		23,405
	Others		Federal funds rate - 0.18 and others		1,643,023		20,994
					1,727,102		44,399
				(Won)	2,707,643	(Won)	1,610,027

(2) As of December 31, 2011 and 2010, the Bank does not have the restricted deposits.

(3) Due from banks by financial institution as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011						2010
	Due from banks in local currency		Due from banks in foreign currencies		Total		Due from banks in local currency		Due from banks in foreign currencies		Total
BOK	(Won)	18	(Won)	—	(Won)	18	(Won)	35	(Won)	—	(Won)	35
Banks		607,523		1,725,937		2,333,460		1,315,593		43,902		1,359,495
Others		373,000		1,165		374,165		250,000		497		250,497
	(Won)	980,541	(Won)	1,727,102	(Won)	2,707,643	(Won)	1,565,628	(Won)	44,399	(Won)	1,610,027

(4) The maturities of due from banks as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Due in 3 months or less		Due after 3 months to 6 months		Due after 6 months to 12 months		Total
Due from banks in local currency	(Won)	198,000	(Won)	142,550	(Won)	639,991	(Won)	980,541
Due from banks in foreign currencies		1,218,690		—		508,412		1,727,102
	(Won)	1,416,690	(Won)	142,550	(Won)	1,148,403	(Won)	2,707,643

56

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

2010

	Due in 3 months or less		Due after 3 months to 6 months		Due after 6 months to 12 months		Total
Due from banks in local currency	(Won)	1,033,015	(Won)	319,881	(Won)	212,732	(Won)	1,565,628
Due from banks in foreign currencies		44,399		—		—		44,399
	(Won)	1,077,414	(Won)	319,881	(Won)	212,732	(Won)	1,610,027

4. SECURITIES:

(1) Securities as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Equity securities:
Marketable equity securities	(Won)	571,514	(Won)	808,920
Non-marketable equity securities		3,097,968		2,136,475
Beneficiary certificates		3,003		5,606
Equity investment		22,939		2,112
		3,695,424		2,953,113
Debt securities:
Other securities in foreign currencies		4,877		16,701
Equity method-accounted investments		248,630		235,441
	(Won)	3,948,931	(Won)	3,205,255

1) Debt securities as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Face value		Acquisition costs		Amortized costs (*1)		Fair value (*2)		Book value
Other securities in foreign currencies	(Won)	17,435	(Won)	17,996	(Won)	17,618	(Won)	4,877	(Won)	4,877

2010

	Face value		Acquisition costs		Amortized costs (*1)		Fair value (*2)		Book value
Other securities in foreign currencies	(Won)	15,967	(Won)	16,521	(Won)	16,390	(Won)	16,701	(Won)	16,701

(*1) The difference between face value and acquisition cost is amortized using the effective interest rate method.

(*2) Fair value of debt securities in foreign currency was calculated by using standard price for the latest transaction date presented by Euroclear, a securities and depository clearing house.

57

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

2) The maturities of debt securities as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Due in 1 year or less		Due after 1 year to 5 years		Due after 5 years to 10 years		Due after 10 years		Total
Other securities in foreign currencies	(Won)	—	(Won)	123	(Won)	3,944	(Won)	810	(Won)	4,877

2010

	Due in 1 year or less		Due after 1 year to 5 years		Due after 5 years to 10 years		Due after 10 years		Total
Other securities in foreign currencies	(Won)	—	(Won)	413	(Won)	13,975	(Won)	2,313	(Won)	16,701

3) Marketable equity securities as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Number of shares		Ownership (%)		Book value before fair value adjustment		Fair value (book value)
Korea Exchange Bank (“KEB”)		40,314,387		6.25	(Won)	475,710	(Won)	296,311
Industrial Bank of Korea		8,501,153		1.56		159,396		106,264
SK Networks Co., Ltd.		9,886,160		3.98		131,980		99,850
Keumho Tires Co., Inc. (*)		7,197,800		7.50		40,891		63,046
SAMT Co., Inc. (*)		3,459,279		4.30		3,865		3,781
Unison Co., Ltd.		156,363		0.37		946		1,251
Hanchang Paper Co., Ltd. (*)		1,293,600		2.50		653		653
JY Solutec Co., Ltd. (*)		546,667		1.71		290		358
					(Won)	813,731	(Won)	571,514

(*) Shares of Keumho Tires Co., Inc.; SAMT Co., Inc.; Hanchang Paper Co., Ltd. and JY Solutec Co., Ltd. are restricted for sale as of December 31, 2011. The Bank recorded the fair value of these securities restricted for sale by using the fair value information from the external pricing agency, the Korea Asset Pricing (“KAP”).

58

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

2010

	Number of shares		Ownership (%)		Book value before fair value adjustment		Fair value (book value)
KEB		40,314,387		6.25	(Won)	584,559	(Won)	475,710
Industrial Bank of Korea		8,501,153		1.56		119,016		159,396
SK Networks Co., Ltd.		9,886,160		3.98		116,904		131,980
Keumho Tires Co., Inc. (*)		7,197,800		7.93		36,191		40,891
Hanchang Paper Co., Ltd. (*)		1,293,600		2.85		675		653
JY Solutec Co., Ltd. (*)		546,667		1.71		290		290
					(Won)	857,635	(Won)	808,920

(*) Shares of Keumho Tires Co., Inc.; Hanchang Paper Co., Ltd. and JY Solutec Co., Ltd. are restricted for sale as of December 31, 2010. The Bank recorded the fair value of these securities restricted for sale by using the fair value information from the external pricing agency, the KAP.

4) Non-marketable equity securities as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Number of shares		Ownership (%)		Book value before fair value adjustment		Book Value (*)
Korea Expressway Corp.		280,961,704		11.82	(Won)	2,695,829	(Won)	2,659,864
Kyobo Life Insurance Co., Ltd.		1,199,001		5.85		307,704		317,136
Industrial Bank of Korea (preferred stock)		6,210,000		6.34		104,794		69,863
Pantech Co., Ltd.		58,713,052		3.43		23,837		25,540
Daehan Shipbuilding Co., Ltd.		2,863,400		10.32		24,116		21,278
Korea Ship Finance		254,000		14.99		1,528		1,646
Cosmotech Co., Ltd.		1,978,000		4.29		595		595
SB Telcom		420,984		3.29		210		210
Daewoo Electronics Corp.		1,122		0.21		194		167
Korea Data Systems Co., Ltd.		320		0.01		1		—
Others		1,408,347		—		2,377		1,669
					(Won)	3,161,185	(Won)	3,097,968

(*) As of December 31, 2011, the Bank recorded the fair value of the shares of Korea Expressway Corp.; Kyobo Life Insurance Co., Ltd.; Industrial Bank of Korea (preferred stock); Pantech Co., Ltd.; Daehan Shipbuilding Co., Ltd.; Korea Ship Finance; Daewoo Electronics Corp. and Korea Data Systems Co., Ltd. by using the fair value information from KAP. The other securities were recorded at the acquisition costs since the fair value was not readily determinable. The shares of Daewoo Electronics Corp.; Pantech Co., Ltd.; SB Telcom and Korea Data Systems Co., Ltd. are restricted for sale as of December 31, 2011.

59

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

2010

	Number of shares		Ownership (%)		Book value before fair value adjustment		Book Value (*)
Korea Expressway Corp.		180,580,254		7.66	(Won)	1,634,071	(Won)	1,695,829
Kyobo Life Insurance Co., Ltd.		1,199,001		5.85		288,659		307,704
Industrial Bank of Korea (preferred stock)		6,210,000		6.34		78,246		104,794
Pantech Co., Ltd.		58,713,052		3.56		24,425		23,837
Korea Ship Finance		254,000		14.99		1,496		1,528
SB Telcom		420,984		3.29		210		210
Daewoo Electronics Corp.		224,580		0.21		175		194
Korea Data Systems Co., Ltd.		320		0.01		2		1
Others		898,651		—		1,414		2,378
					(Won)	2,028,698	(Won)	2,136,475

(*) As of December 31, 2010, the Bank recorded the fair value of the shares of Korea Expressway Corp.; Kyobo Life Insurance Co., Ltd.; Industrial Bank of Korea (preferred stock); Pantech Co., Ltd.; Korea Ship Finance; Daewoo Electronics Corp. and Korea Data Systems Co., Ltd. by using the fair value information from KAP. The other securities were recorded at the acquisition costs since the fair value was not readily determinable. The shares of Pantech Co., Ltd.; SB Telcom; Daewoo Electronics Corp. and Korea Data Systems Co., Ltd. are restricted for sale as of December 31, 2010.

5) Beneficiary certificates as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Ownership (%)		Book value before fair value adjustment		Book value
KEXIM Carbon Fund		14.97	(Won)	5,606	(Won)	3,003

2010

	Ownership (%)		Book value before fair value adjustment		Book value
KEXIM Carbon Fund		14.97	(Won)	5,749	(Won)	5,606

60

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

6) Equity investments as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Ownership (%)		Book value before fair value adjustment		Book value
Korea Asset Management Corporation		0.14	(Won)	1,220	(Won)	1,220
Korea Money Brokerage Corporation		0.56		323		433
KEXIM Resource Development Fund 1		9.16		20,929		20,929
KEXIM Resource Development Fund 2		8.33		357		357
			(Won)	22,829	(Won)	22,939

2010

	Ownership (%)		Book value before fair value adjustment		Book value
Korea Asset Management Corporation		0.14	(Won)	1,220	(Won)	1,220
Korea Money Brokerage Corporation		0.56		239		323
KEXIM Resource Development Fund 1		9.16		484		484
KEXIM Resource Development Fund 2		7.46		85		85
			(Won)	2,028	(Won)	2,112

(2) Details of equity method-accounted investments as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	Ownership (%)		Acquisition costs		Book value
					2011		2010
KEXIM Bank UK Limited		100	(Won)	44,071	(Won)	48,460	(Won)	46,705
KEXIM Vietnam Leasing Co.		100		7,876		10,276		8,783
PT. KOEXIM Mandiri Finance		85		18,221		25,269		22,332
KEXIM Asia Limited		100		42,102		49,139		43,731
Credit Guarantee and Investment Fund (“CGIF”)		15		115,330		115,486		113,890
			(Won)	227,600	(Won)	248,630	(Won)	235,441

61

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

1) As of December 31, 2011 and 2010, the valuation gain and loss on equity method-accounted investments are as follows (Korean won in millions):

2011

	Beginning balance		Dividend		Gain		Accumulated other comprehensive income		Others		Ending balance
KEXIM Bank UK Limited	(Won)	46,705	(Won)	(-)151	(Won)	1,387	(Won)	—	(Won)	519	(Won)	48,460
KEXIM Vietnam Leasing Co.		8,783		—		1,382		—		111		10,276
PT. KOEXIM Mandiri Finance		22,332		(-)185		3,034		—		88		25,269
KEXIM Asia Limited		43,731		(-)291		4,582		595		522		49,139
CGIF		113,890		—		156		—		1,440		115,486
	(Won)	235,441	(Won)	(-)627	(Won)	10,541	(Won)	595	(Won)	2,680	(Won)	248,630

(*) Due to the time lag in obtaining audited or reviewed financial statements of the investees for the preparation of the Bank’s non-consolidated financial statements, the financial statements prepared by the investees’ management have been used for equity method accounting. The Bank performed additional procedures to review the reliability of those financial statements prepared by the investees’ management.

2010

	Beginning balance		Dividend		Gain		Accumulated other comprehensive income		Others		Ending balance
KEXIM Bank UK Limited	(Won)	46,590	(Won)	(-)37	(Won)	3,130	(Won)	—	(Won)	(-)2,978	(Won)	46,705
KEXIM Vietnam Leasing Co.		8,781		—		217		—		(-)215		8,783
PT. KOEXIM Mandiri Finance		20,035		(-)49		1,891		—		455		22,332
KEXIM Asia Limited		39,688		(-)67		3,643		1,455		(-)988		43,731
CGIF		116,710		—		—		—		(-)2,820		113,890
	(Won)	231,804	(Won)	(-)153	(Won)	8,881	(Won)	1,455	(Won)	(-)6,546	(Won)	235,441

(*) Due to the time lag in obtaining audited or reviewed financial statements of the investees for the preparation of the Bank’s non-consolidated financial statements, the financial statements prepared by the investees’ management have been used for equity method accounting. The Bank performed additional procedures to review the reliability of those financial statements prepared by the investees’ management. According to an agreement of ASEAN Finance Minister Conference in May 2010, the Bank, on behalf of the Government, made an equity investment in CGIF in December 2010. During the current period, there were no operating activities. Therefore, equity method accounting was not applied to the related investments in the current period.

62

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

2) A summary of financial positions and operating results of the entities in equity method-accounted investments as of December 31, 2011 and 2010, is as follows (Korean won in millions):

2011

	Assets		Liabilities		Stockholders’ equity		Net income
KEXIM Bank UK Limited	(Won)	454,747	(Won)	408,760	(Won)	45,987	(Won)	1,775
KEXIM Vietnam Leasing Co.		106,020		96,622		9,398		1,522
PT. KOEXIM Mandiri Finance		191,597		167,496		24,101		2,706
KEXIM Asia Limited		368,062		320,770		47,292		4,606
CGIF		1,436,298		707,679		728,619		785
	(Won)	2,556,724	(Won)	1,701,327	(Won)	855,397	(Won)	11,394

2010

	Assets		Liabilities		Stockholders’ equity		Net income
KEXIM Bank UK Limited	(Won)	423,828	(Won)	380,091	(Won)	43,737	(Won)	1,472
KEXIM Vietnam Leasing Co.		96,205		88,428		7,777		200
PT. KOEXIM Mandiri Finance		161,188		139,620		21,568		1,658
KEXIM Asia Limited		352,389		310,506		41,883		3,064
CGIF		797,230		—		797,230		—
	(Won)	1,830,840	(Won)	918,645	(Won)	912,195	(Won)	6,394

3) Changes in valuation gain (loss) on available-for-sale securities and equity method-accounted investments recorded in accumulated other comprehensive income for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Beginning balance		Unrealized gain (loss)		Disposition		Ending balance
Available-for-sale securities	(Won)	197,353	(Won)	(-)250,653	(Won)	2,141	(Won)	(-)51,159
Equity method-accounted investments		387		465		—		852
	(Won)	197,740	(Won)	(-)250,188	(Won)	2,141	(Won)	(-)50,307

2010

	Beginning balance		Unrealized Gain		Disposition		Ending balance
Available-for-sale securities	(Won)	351,139	(Won)	46,648	(Won)	(-)200,434	(Won)	197,353
Equity method-accounted investments		(-)747		1,134		—		387
	(Won)	350,392	(Won)	47,782	(Won)	(-)200,434	(Won)	197,740

63

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

5. LOANS:

(1) Loans outstanding as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Loans in local currency:
Loans for export	(Won)	7,687,598	(Won)	6,419,344
Loans for overseas investment		1,271,457		1,306,227
Loans for import		1,293,707		1,342,216
Others		275,277		22,091
		10,528,039		9,089,878
Loans in foreign currencies:
Loans for export		15,374,527		13,457,453
Loans for overseas investment		14,270,392		12,398,219
Loans for rediscounted trading notes		1,990,901		1,551,182
Loans for import		940,826		1,158,907
Overseas funding loans		777,729		735,268
Domestic usance bills		256,340		224,698
Interbank loans		113,315		158,957
Others		23,066		22,778
		33,747,096		29,707,462
Changes in fair values of loans in foreign currencies (*)		303,575		286,596
Deferred loan origination fees		(-)173,290		(-)126,523
		33,877,381		29,867,535
Call loans in local currency		90,000		—
Call loans in foreign currencies		1,449,861		1,480,890
Notes bought		34,406		42,213
Bills bought		2,038,759		867,119
Advances for customers		70,381		42,249
Total loans before allowances for loan losses		48,088,827		41,389,884
Allowance for loan losses		(-)1,970,925		(-)1,481,962
Loans, net of allowance for loan losses	(Won)	46,117,902	(Won)	39,907,922

(*) Interest rate swap was contracted to hedge the changes in the fair value of loan commitment in foreign currencies resulting from the volatility in interest rates. The gain on valuation of loan commitment, which was confirmed, was recognized as changes in fair values of loans in foreign currencies.

64

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(2) Loans classified by customer as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Loans in local currency		Loans in foreign currencies (*2)		Total		Ratio (%)
Large corporations	(Won)	8,337,060	(Won)	14,254,993	(Won)	22,592,053		51.02
Small and medium company (*1)		1,983,583		2,797,277		4,780,860		10.80
Public sector and others		207,396		16,694,826		16,902,222		38.18
	(Won)	10,528,039	(Won)	33,747,096	(Won)	44,275,135		100.00

2010

	Loans in local currency		Loans in foreign currencies (*2)		Total		Ratio (%)
Large corporations	(Won)	6,546,068	(Won)	12,362,787	(Won)	18,908,855		48.74
Small and medium company (*1)		2,526,910		2,698,817		5,225,727		13.47
Public sector and others		16,900		14,645,858		14,662,758		37.79
	(Won)	9,089,878	(Won)	29,707,462	(Won)	38,797,340		100.00

(*1) Small and medium company is defined in Paragraph 1 of Article 2 of the Small and Medium Company Law.

(*2) The amounts of loans in foreign currencies in the above table exclude deferred loan origination fees and changes in fair-value-hedged loans in foreign currencies.

(3) Loans to other financial institutions as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Banks		Others		Total
Loans in local currency	(Won)	330,000	(Won)	—	(Won)	330,000
Loans in foreign currencies		1,679,510		2,168,895		3,848,405
Other		—		2,584,329		2,584,329
	(Won)	2,009,510	(Won)	4,753,224	(Won)	6,762,734

2010

	Banks		Others		Total
Loans in local currency	(Won)	350,000	(Won)	—	(Won)	350,000
Loans in foreign currencies		1,346,180		2,474,482		3,820,662
Other		5,695		1,952,443		1,958,138
	(Won)	1,701,875	(Won)	4,426,925	(Won)	6,128,800

65

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(4) Loans classified by industry as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Loans in local currency		Loans in foreign currencies (*1)		Others (*2)		Total		Ratio (%)
Manufacturing	(Won)	8,079,117	(Won)	13,016,262	(Won)	690,587	(Won)	21,785,966		45.43
Transportation		132,790		7,691,419		—		7,824,209		16.31
Finance and insurance		330,000		3,848,405		2,584,329		6,762,734		14.10
Wholesale and retail		1,107,705		1,747,770		203,087		3,058,562		6.38
Real estate		—		17,876		—		17,876		0.04
Construction		726,070		1,177,641		—		1,903,711		3.97
Public sector and others		152,357		6,247,723		205,404		6,605,484		13.77
	(Won)	10,528,039	(Won)	33,747,096	(Won)	3,683,407	(Won)	47,958,542		100.00

2010

	Loans in local currency		Loans in foreign currencies (*1)		Others (*2)		Total		Ratio (%)
Manufacturing	(Won)	6,903,805	(Won)	10,367,590	(Won)	275,896	(Won)	17,547,291		42.56
Transportation		181,990		7,857,902		—		8,039,892		19.50
Finance and insurance		350,000		3,820,662		1,958,138		6,128,800		14.86
Wholesale and retail		714,964		1,046,779		80,254		1,841,997		4.47
Real estate		—		21,070		—		21,070		0.05
Construction		834,967		911,146		—		1,746,113		4.24
Public sector and others		104,152		5,682,313		118,183		5,904,648		14.32
	(Won)	9,089,878	(Won)	29,707,462	(Won)	2,432,471	(Won)	41,229,811		100.00

(*1) The amounts of loans in foreign currencies in the above table exclude deferred loan origination fees and changes in fair-value-hedged loans in foreign currencies.

(*2) Others are composed of call loans in foreign currencies, notes bought, bills bought and advances for customers.

66

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(5) Loans classified by risk-exposed country as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Loans in local currency		Loans in foreign currencies (*)		Others		Total		Ratio (%)
Asia:
Korea	(Won)	10,528,039	(Won)	18,580,339	(Won)	1,833,550	(Won)	30,941,928		64.52
Saudi Arabia		—		1,885,855		20,417		1,906,272		3.97
Iran		—		925,023		542,365		1,467,388		3.06
India		—		942,057		25,316		967,373		2.02
Qatar		—		780,558		385		780,943		1.63
Indonesia		—		650,432		6,064		656,496		1.37
Singapore		—		234,261		41,353		275,614		0.57
Yemen		—		237,266		—		237,266		0.49
Others		—		1,932,046		539,295		2,471,341		5.15
		10,528,039		26,167,837		3,008,745		39,704,621		82.78
Europe:
England		—		1,301,998		4,371		1,306,369		2.72
Sweden		—		536,909		—		536,909		1.12
France		—		439,995		6,867		446,862		0.93
Belgium		—		331,132		2,654		333,786		0.70
Netherlands		—		195,943		69,026		264,969		0.55
Others		—		1,561,859		360,784		1,922,643		4.01
		—		4,367,836		443,702		4,811,538		10.03
America:
United States		—		548,428		164,577		713,005		1.49
Brazil		—		655,817		1,009		656,826		1.37
Canada		—		551,833		—		551,833		1.15
Peru		—		176,702		—		176,702		0.37
Others		—		740,905		2,413		743,318		1.55
		—		2,673,685		167,999		2,841,684		5.93
Africa:
Nigeria		—		12,986		265		13,251		0.03
Others		—		524,752		62,696		587,448		1.23
		—		537,738		62,961		600,699		1.26
	(Won)	10,528,039	(Won)	33,747,096	(Won)	3,683,407	(Won)	47,958,542		100.00

67

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

2010

	Loans in local currency		Loans in foreign currencies (*)		Others		Total		Ratio (%)
Asia:
Korea	(Won)	9,089,878	(Won)	16,898,068	(Won)	1,654,180	(Won)	27,642,126		67.04
Saudi Arabia		—		1,685,814		62		1,685,876		4.09
Iran		—		1,180,086		59,176		1,239,262		3.00
Qatar		—		971,058		971		972,029		2.36
Singapore		—		682,114		30,864		712,978		1.73
Yemen		—		253,820		131		253,951		0.62
India		—		662,430		37,683		700,113		1.70
Indonesia		—		362,712		6,362		369,074		0.89
Others		—		927,008		213,449		1,140,457		2.77
		9,089,878		23,623,110		2,002,878		34,715,866		84.20
Europe:
England		—		1,471,991		21,500		1,493,491		3.62
France		—		392,005		7,951		399,956		0.97
Sweden		—		578,941		—		578,941		1.41
Ireland		—		470,833		—		470,833		1.14
Belgium		—		372,793		7,893		380,686		0.92
Netherlands		—		217,960		56,945		274,905		0.67
Others		—		1,529,761		158,032		1,687,793		4.09
		—		5,034,284		252,321		5,286,605		12.82
America:
Canada		—		319,404		41		319,445		0.77
Brazil		—		162,863		5,023		167,886		0.41
Peru		—		187,919		—		187,919		0.46
United States		—		164,823		156,346		321,169		0.78
Others		—		202,235		4,152		206,387		0.50
		—		1,037,244		165,562		1,202,806		2.92
Africa:
Nigeria		—		12,824		—		12,824		0.03
Others		—		—		11,710		11,710		0.03
		—		12,824		11,710		24,534		0.06
	(Won)	9,089,878	(Won)	29,707,462	(Won)	2,432,471	(Won)	41,229,811		100.00

(*) The amounts of loans in foreign currencies in the above table exclude deferred loan origination fees and changes in fair values of loans in foreign currencies.

68

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(6) Changes in present-value discounts relating to the troubled debt restructuring for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

Discount rate (%)

Term (years)

Beginning balance

Addition

Amortization

Changes in exchange rate

Ending balance

Troubled debt restructuring(*)

2.87–13.85

1–14

(Won)

34,422

(Won)

219

(Won)

(-)5,654

(Won)

340

(Won)

29,327

2010

Discount rate (%)

Term (years)

Beginning balance

Addition

Amortization

Changes in exchange rate

Ending balance

Troubled debt restructuring(*)

4.12–13.85

3–18

(Won)

42,404

(Won)

3,212

(Won)

(-)10,343

(Won)

(-)851

(Won)

34,422

(*) As of February 20, 2004, the Bank restructured the remaining balance of USD 299 million overdue loan to Russia (USD 422 million—the principal and interest amounting to USD 262 million and USD 160 million, respectively, at the time of restructuring) after the reduction of unpaid interest of USD 123 million in accordance with the bilateral agreement between the Government and Russian government. As of December 31, 2011 and 2010, the balance of restructured loan to Russia was (Won)170,755 million and (Won)180,670 million, respectively, and the balance of present-value discounts was (Won)24,835 million and (Won)27,773 million, respectively.

(7) The maturities of loans as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Loans in local currency		Loans in foreign currencies (*)		Others		Total		Ratio (%)
Due in 3 months or less	(Won)	1,513,037	(Won)	3,752,854	(Won)	2,718,926	(Won)	7,984,817		16.65
Due after 3 months to 6 months		3,752,968		3,826,765		342,342		7,922,075		16.52
Due after 6 months to 1 year		2,359,783		3,036,335		517,352		5,913,470		12.33
Due after 1 year to 2 years		975,549		2,115,546		—		3,091,095		6.44
Due after 2 years to 3 years		244,559		2,573,155		—		2,817,714		5.87
Due after 3 years to 4 years		639,380		520,397		—		1,159,777		2.42
Due after 4 years to 5 years		74,392		1,103,659		—		1,178,051		2.46
Due after 5 years		968,371		16,818,385		104,787		17,891,543		37.31
	(Won)	10,528,039	(Won)	33,747,096	(Won)	3,683,407	(Won)	47,958,542		100.00

69

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

2010

	Loans in local currency		Loans in foreign currencies (*)		Others		Total		Ratio (%)
Due in 3 months or less	(Won)	1,483,544	(Won)	4,471,776	(Won)	2,245,581	(Won)	8,200,901		19.89
Due after 3 months to 6 months		3,916,327		2,561,752		83,021		6,561,100		15.91
Due after 6 months to 1 year		700,156		3,595,668		21,981		4,317,805		10.47
Due after 1 year to 2 years		453,035		1,661,078		—		2,114,113		5.13
Due after 2 years to 3 years		872,534		2,412,046		—		3,284,580		7.97
Due after 3 years to 4 years		482,793		2,804,285		39,639		3,326,717		8.07
Due after 4 years to 5 years		603,979		5,397,044		—		6,001,023		14.56
Due after 5 years		577,510		6,803,813		42,249		7,423,572		18.00
	(Won)	9,089,878	(Won)	29,707,462	(Won)	2,432,471	(Won)	41,229,811		100.00

(*) The amounts of loans in foreign currencies in the above table exclude deferred loan origination fees and changes in fair-value-hedged loans in foreign currencies.

6. ALLOWANCES FOR LOAN LOSSES:

(1) As of December 31, 2011 and 2010, loan balances and allowances for loan losses by asset classification criteria are as follows (Korean won in millions):

2011

		Balance (*)		Allowance		Provision ratio (%)
Loans in local currency	Normal	(Won)	8,560,491	(Won)	132,711		1.55
	Precautionary		1,775,052		535,146		30.15
	Substandard		109,091		47,509		43.55
	Doubtful		36,682		34,766		94.78
	Estimated loss		46,723		46,723		100.00
			10,528,039		796,855		7.57
Loans in foreign currencies	Normal		33,348,449		821,990		2.46
	Precautionary		52,777		9,329		17.68
	Substandard		95,042		41,391		43.55
	Doubtful		13,917		13,199		94.84
	Estimated loss		123,596		123,596		100.00
			33,633,781		1,009,505		3.00
Other	Normal		2,034,709		83,648		4.11
	Precautionary		34,406		8,200		23.83
	Substandard		—		—		—
	Doubtful		44,786		42,390		94.65
	Estimated loss		30,327		30,327		100.00
			2,144,228		164,565		7.67
		(Won)	46,306,048	(Won)	1,970,925		4.26

(*) The loan balances in the above table do not include the present-value discounts. Interbank loans of (Won)113,315 million and call loans of (Won)1,539,861 million, which were classified as normal, are excluded

70

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

from the loan balances in the above table, while suspense payments on credit of (Won)682 million are included. Changes in fair-value-hedged loans in foreign currencies of (Won)303,575 million and deferred loan origination fees of (Won)173,290 million are not included.

2010

		Balance (*)		Allowance		Provision ratio (%)
Loans in local currency	Normal	(Won)	7,620,754	(Won)	117,324		1.54
	Precautionary		1,300,684		243,823		18.75
	Substandard		103,577		45,108		43.55
	Doubtful		33,991		32,280		94.97
	Estimated loss		30,872		30,872		100.00
			9,089,878		469,407		5.16
Loans in foreign currencies	Normal	(Won)	28,750,584	(Won)	700,433		2.44
	Precautionary		512,139		51,209		10.00
	Substandard		151,615		66,028		43.55
	Doubtful		16,890		16,020		94.85
	Estimated loss		117,277		117,277		100.00
			29,548,505		950,967		3.22
Other	Normal		877,144		18,224		2.08
	Precautionary		39,639		9,756		24.61
	Substandard		2,198		957		43.55
	Doubtful		5		5		94.65
	Estimated loss		32,646		32,646		100.00
			951,632		61,588		6.47
		(Won)	39,590,015	(Won)	1,481,962		3.74

(*) The loan balances in the above table do not include the present-value discounts. Interbank loans of (Won)158,957 million and call loans of (Won)1,480,890 million, which were classified as normal, are excluded from the loan balances in the above table, while suspense payments on credit of (Won)51 million are included. Changes in fair-value-hedged loans in foreign currencies of (Won)286,596 million and deferred loan origination fees of (Won)126,523 million are not included.

(2) Changes in allowances for loan losses for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Beginning balance	(Won)	1,481,962	(Won)	1,224,406
Provision for possible loan losses (*)		502,544		469,058
Write-off		(-)19,845		(-)157,018
Decrease in present-value discounts		(-)5,654		(-)10,343
Changes in exchange rates and others		11,918		(-)44,141
Ending balance	(Won)	1,970,925	(Won)	1,481,962

(*) Increase in present-value discounts is included.

71

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(3) The allowances for loan losses compared to loans subject to allowance for loan losses, net of present-value discount, are summarized as follows (Korean won in millions):

	2011		2010		2009
Loans subject to allowance for loan losses	(Won)	46,306,048	(Won)	39,590,015	(Won)	35,539,550
Allowances for loan losses (*)	(Won)	1,941,598	(Won)	1,447,540	(Won)	1,182,003
Ratio (%)		4.19		3.66		3.33

(*) Present-value discounts are excluded.

7. TANGIBLE ASSETS:

(1) Tangible assets and the related accumulated depreciation as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011						2010
	Acquisition cost		Accumulated depreciation		Book value		Acquisition cost		Accumulated depreciation		Book value
Land	(Won)	4,484	(Won)	—	(Won)	4,484	(Won)	4,484	(Won)	—	(Won)	4,484
Buildings		45,208		(-)20,288		24,920		44,612		(-)18,794		25,818
Vehicles		2,743		(-)1,927		816		2,452		(-)1,738		714
Equipment		17,647		(-)14,685		2,962		16,083		(-)13,606		2,477
	(Won)	70,082	(Won)	(-)36,900	(Won)	33,182	(Won)	67,631	(Won)	(-)34,138	(Won)	33,493

(2) The officially declared value of land at December 31, 2011 and 2010, as announced by the Ministry of Land, Transport and Maritime Affairs, was (Won)103,924 million and (Won)103,096 million, respectively.

(3) Changes in book value of tangible assets for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Beginning balance		Acquisitions		Disposals		Depreciation		Ending balance
Land	(Won)	4,484	(Won)	—	(Won)	—	(Won)	—	(Won)	4,484
Buildings		25,818		597		—		(-)1,495		24,920
Vehicles		714		560		(-)1		(-)457		816
Equipment		2,477		1,901		(-)4		(-)1,412		2,962
	(Won)	33,493	(Won)	3,058	(Won)	(-)5	(Won)	(-)3,364	(Won)	33,182

2010

	Beginning balance		Acquisitions		Disposals		Depreciation		Ending balance
Land	(Won)	4,484	(Won)	—	(Won)	—	(Won)	—	(Won)	4,484
Buildings		27,320		—		—		(-)1,502		25,818
Vehicles		781		499		—		(-)566		714
Equipment		2,283		1,437		(-)2		(-)1,241		2,477
	(Won)	34,868	(Won)	1,936	(Won)	(-)2	(Won)	(-)3,309	(Won)	33,493

72

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(4) Insured assets as of December 31, 2011 and 2010, are as follows (Korean won in millions):

		2011				2010
	Insurance company	Book value		Insured amount		Book value		Insured amount
Buildings	Samsung Fire Co., Ltd. and others	(Won)	24,920	(Won)	21,498	(Won)	25,818	(Won)	22,854
Equipment	Meritz Fire Co., Ltd. and others		2,962		1,930		2,477		2,198
		(Won)	27,882	(Won)	23,428	(Won)	28,295	(Won)	25,052

In addition to the above, the Bank carries a commercial liability package and gas liability insurance with a maximum coverage of (Won)80 million per accidental death and (Won)300 million per accidental property damage. All vehicles are covered by comprehensive auto insurance.

8. OTHER ASSETS:

(1) Details of other assets as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Security deposits	(Won)	26,484	(Won)	25,199
Accounts receivable		44,557		44,756
Accrued income		408,830		371,933
Prepaid expense		113,184		76,314
Deferred income tax assets (Note 19)		511,907		301,717
Derivative assets (Note 16)		1,199,017		1,094,491
Intangible assets		6,576		3,675
Sundry assets:
Other loans		7,383		7,601
Other suspense payments		964		939
Suspense payments on credit		682		51
Membership certificates		6,091		6,098
Others		10		11
	(Won)	2,325,685	(Won)	1,932,785

(2) Changes in intangible assets for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Beginning balance	(Won)	3,675	(Won)	3,370
Increase		4,201		1,427
Amortization		(-)1,300		(-)1,122
Ending balance	(Won)	6,576	(Won)	3,675

73

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

9. BORROWINGS:

(1) Details of borrowings as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Call money	(Won)	67,940	(Won)	785,841
Borrowings in foreign currencies		5,284,238		3,499,009
Debentures		39,203,568		32,932,095
Ending balance	(Won)	44,555,746	(Won)	37,216,945

(2) Details of call money and borrowings in foreign currencies as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	Interest rate (%)		2011		2010
Call money:
Local currency		3.05–3.18	(Won)	20,000	(Won)	—
Foreign currencies		5.33–5.35		47,940		785,841
				67,940		785,841
Borrowings in foreign currencies:
Borrowings from banks		One-month London InterBank Offered Rate (LIBOR) + 0.3 and others		2,802,534		1,814,535
Commercial papers		0.17–4.69		2,081,114		1,397,136
Offshore commercial papers		1.02		22,161		62,640
Other borrowings		0.07–0.08		378,429		224,698
				5,284,238		3,499,009
			(Won)	5,352,178	(Won)	4,284,850

74

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(3) Details of debentures as of December 31, 2011 and 2010 are as follows (Korean won in millions):

	Interest rate (%)		2011		2010
Local currency:
Floating-rate debentures in local currency		Certificate of deposits + 0.14 and others	(Won)	300,000	(Won)	200,000
Fixed-rate debentures in local currency		3.30–5.27		7,230,000		6,120,000
Discount on debentures				(-)75,332		(-)68,958
			(Won)	7,454,668	(Won)	6,251,042
Foreign currencies:
Floating-rate debentures in foreign currencies		Three-month LIBOR + 1.07 and others	(Won)	654,311	(Won)	4,397,046
Fixed-rate debentures in foreign currencies		0.50–10.47		30,808,522		21,986,520
				31,462,833		26,383,566
Gain on valuation of fair-value-hedged items, net				582,789		378,090
				32,045,622		26,761,656
Discount on debentures				(-)302,050		(-)80,603
Premium on debentures				5,328		—
			(Won)	31,748,900	(Won)	26,681,053

(4) Call money and borrowings in foreign currencies from financial institution as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011						2010
	Call money		Borrowings in foreign currencies		Total		Call money		Borrowings in foreign currencies		Total
Banks	(Won)	—	(Won)	4,910,904	(Won)	4,910,904	(Won)	785,841	(Won)	3,274,311	(Won)	4,060,152
Others		67,940		373,334		441,274		—		224,698		224,698
	(Won)	67,940	(Won)	5,284,238	(Won)	5,352,178	(Won)	785,841	(Won)	3,499,009	(Won)	4,284,850

75

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(5) The term structures of borrowings and debentures as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Due in 3 months or less		Due after 3 months to 6 months		Due after 6 months to 1 year		Due after 1 year to 3 years		Due after 3 years		Total
Borrowings:
Call money	(Won)	67,940	(Won)	—	(Won)	—	(Won)	—	(Won)	—	(Won)	67,940
Borrowings in foreign currencies		2,088,747		992,129		917,411		1,285,951		—		5,284,238
	(Won)	2,156,687	(Won)	992,129	(Won)	917,411	(Won)	1,285,951	(Won)	—	(Won)	5,352,178
Debentures:
Debentures in local currency	(Won)	530,000	(Won)	1,680,000	(Won)	2,790,000	(Won)	1,830,000	(Won)	700,000	(Won)	7,530,000
Debentures in foreign currencies		2,047,391		1,697,622		4,106,681		9,556,163		14,054,976		31,462,833
	(Won)	2,577,391	(Won)	3,377,622	(Won)	6,896,681	(Won)	11,386,163	(Won)	14,754,976	(Won)	38,992,833

2010

	Due in 3 months or less		Due after 3 months to 6 months		Due after 6 months to 1 year		Due after 1 year to 3 years		Due after 3 years		Total
Borrowings:
Call money	(Won)	785,841	(Won)	—	(Won)	—	(Won)	—	(Won)	—	(Won)	785,841
Borrowings in foreign currencies		1,995,361		483,696		186,743		833,209		—		3,499,009
	(Won)	2,781,202	(Won)	483,696	(Won)	186,743	(Won)	833,209	(Won)	—	(Won)	4,284,850
Debentures:
Debentures in local currency	(Won)	1,630,000	(Won)	1,800,000	(Won)	2,210,000	(Won)	390,000	(Won)	290,000	(Won)	6,320,000
Debentures in foreign currencies		1,042,874		1,096,007		2,935,924		8,521,915		12,786,846		26,383,566
	(Won)	2,672,874	(Won)	2,896,007	(Won)	5,145,924	(Won)	8,911,915	(Won)	13,076,846	(Won)	32,703,566

76

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

10. OTHER LIABILITIES:

Details of other liabilities as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Accrued retirement and severance benefits (Note 13)	(Won)	30,019	(Won)	25,302
Allowance for losses on acceptances and guarantees (Note 11)		773,833		874,080
Allowance for losses on unused loan commitments (Note 11)		100,006		69,055
Allowance for others (Note 12)		48,625		46,582
Foreign exchange settlement account-credit		95,418		346,179
Accounts payable		100,184		159,621
Accrued expenses		498,604		435,378
Unearned revenue		320,819		268,194
Guarantees deposits received		1,112		109
Derivative liabilities (Note 16)		992,552		638,479
Sundry liabilities:
Suspense receipts		106,198		85,826
Taxes withheld		919		840
Others		8		6
	(Won)	3,068,297	(Won)	2,949,651

11. ACCEPTANCES, GUARANTEES AND LOAN COMMITMENTS:

(1) Details of acceptances and guarantees as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Confirmed acceptances and guarantees:
Local currency:
Guarantees for performance of contracts	(Won)	122,863	(Won)	101,845
Guarantees for repayment of advances		143,035		159,658
Others		155,133		176,300
		421,031		437,803
Foreign currencies:
Guarantees for performance of contracts		9,827,922		7,379,960
Guarantees for repayment of advances		26,593,100		32,396,456
Acceptances on import credit memorandum		135,943		191,545
Others		5,491,779		3,770,143
		42,048,744		43,738,104
	(Won)	42,469,775	(Won)	44,175,907
Unconfirmed acceptances and guarantees:
Letters of credit	(Won)	135,467	(Won)	112,000
Guarantees for repayment of advances		17,349,898		22,514,736
Others		1,488,094		1,345,786
	(Won)	18,973,459	(Won)	23,972,522

77

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(2) As of December 31, 2011 and 2010, details of allowance for loss on acceptances and guarantees outstanding are as follows (Korean won in millions):

	2011						2010
	Acceptances and guarantees		Allowance (*)		Ratio (%)		Acceptances and guarantees		Allowance (*)		Ratio (%)
Confirmed acceptances and guarantees:
Normal	(Won)	39,878,168	(Won)	387,234		0.97	(Won)	40,907,098	(Won)	365,676		0.89
Precautionary		2,510,337		231,628		9.23		3,114,102		284,954		9.15
Substandard		29,543		12,862		43.54		60,873		26,510		43.55
Doubtful		36		17		47.22		36		17		47.32
Estimated loss		51,691		51,632		99.89		93,798		60,680		64.69
		42,469,775		683,373		1.61		44,175,907		737,837		1.67
Unconfirmed acceptances and guarantees:
Normal		17,468,685		33,132		0.19		21,508,124		39,069		0.18
Precautionary		1,499,763		56,886		3.79		2,436,931		92,147		3.78
Substandard		4,991		438		8.78		5,499		634		11.52
Doubtful		—		—		—		—		—		—
Estimated loss		20		4		20.00		21,968		4,393		20.00
		18,973,459		90,460		0.48		23,972,522		136,243		0.57
	(Won)	61,443,234	(Won)	773,833		1.26	(Won)	68,148,429	(Won)	874,080		1.28

(*) The Bank estimated allowance for the estimated losses on acceptances and guarantees considering the credit conversion factor by Financial Services Commission by applying the same methodology that was used to determine the allowance for loan losses.

(3) Changes in allowance for losses on acceptances and guarantees for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Beginning balance	(Won)	874,080	(Won)	476,522
Provision for (reversal of) allowance for possible losses		(-)108,071		412,613
Changes in foreign exchange rates and others		7,824		(-)15,055
Ending balance	(Won)	773,833	(Won)	874,080

78

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(4) Acceptances and guarantees classified by industry as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Confirmed				Unconfirmed				Total
	Acceptances and guarantees		Ratio (%)		Acceptances and guarantees		Ratio (%)		Acceptances and guarantees		Ratio (%)
Manufacturing	(Won)	26,314,289		61.96	(Won)	17,099,226		90.12	(Won)	43,413,515		70.66
Construction		9,141,779		21.53		852,641		4.50		9,994,420		16.27
Service		3,090,900		7.28		76,284		0.40		3,167,184		5.14
Finance and insurance		1,108,314		2.61		142,554		0.75		1,250,868		2.04
Wholesale and retail		931,874		2.19		7,322		0.04		939,196		1.53
Others		1,882,619		4.43		795,432		4.19		2,678,051		4.36
	(Won)	42,469,775		100.00	(Won)	18,973,459		100.00	(Won)	61,443,234		100.00

2010

	Confirmed				Unconfirmed				Total
	Acceptances and guarantees		Ratio (%)		Acceptances and guarantees		Ratio (%)		Acceptances and guarantees		Ratio (%)
Manufacturing	(Won)	32,723,505		74.08	(Won)	22,426,256		93.55	(Won)	55,149,761		80.93
Construction		5,652,164		12.79		473,121		1.97		6,125,285		8.99
Service		2,778,246		6.29		56,408		0.24		2,834,654		4.16
Finance and insurance		933,221		2.11		32,952		0.14		966,173		1.42
Wholesale and retail		469,497		1.06		37,953		0.16		507,450		0.74
Others		1,619,274		3.67		945,832		3.94		2,565,106		3.76
	(Won)	44,175,907		100.00	(Won)	23,972,522		100.00	(Won)	68,148,429		100.00

79

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(5) Acceptances and guarantees classified by risk-exposed country as of December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Confirmed				Unconfirmed				Total
	Acceptances and guarantees		Ratio (%)		Acceptances and guarantees		Ratio (%)		Acceptances and guarantees		Ratio (%)
Asia:
Korea	(Won)	40,120,588		94.47	(Won)	17,517,972		92.33	(Won)	57,638,560		93.81
India		334,515		0.79		47,080		0.25		381,595		0.62
Saudi Arabia		150,134		0.35		133,576		0.70		283,710		0.46
Yemen		158,177		0.37		—		—		158,177		0.26
Jordan		104,676		0.25		5,234		0.03		109,910		0.18
Indonesia		88,741		0.21		21,053		0.11		109,794		0.18
Japan		102,441		0.24		—		—		102,441		0.17
Hong Kong		69,198		0.16		—		—		69,198		0.11
Others		322,717		0.76		717,030		3.78		1,039,747		1.69
		41,451,187		97.60		18,441,945		97.20		59,893,132		97.48
Europe:
France		175,783		0.41		67,168		0.36		242,951		0.39
Russia		—		—		135,321		0.71		135,321		0.22
England		105,785		0.25		—		—		105,785		0.17
Greece		28,833		0.07		—		—		28,833		0.05
Others		3,492		0.01		—		—		3,492		0.01
		313,893		0.74		202,489		1.07		516,382		0.84
America:
Mexico		282,994		0.67		96,759		0.51		379,753		0.62
Peru		144,574		0.34		—		—		144,574		0.23
Canada		52,234		0.12		24,671		0.13		76,905		0.13
		479,802		1.13		121,430		0.64		601,232		0.98
Africa:
Madagascar		224,893		0.53		—		—		224,893		0.36
Egypt		—		—		207,595		1.09		207,595		0.34
		224,893		0.53		207,595		1.09		432,488		0.70
	(Won)	42,469,775		100.00	(Won)	18,973,459		100.00	(Won)	61,443,234		100.00

80

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

2010

	Confirmed				Unconfirmed				Total
	Acceptances and guarantees		Ratio (%)		Acceptances and guarantees		Ratio (%)		Acceptances and guarantees		Ratio (%)
Asia:
Korea	(Won)	42,485,310		96.18	(Won)	22,632,669		94.41	(Won)	65,117,979		95.55
India		304,708		0.69		89,044		0.37		393,752		0.58
Yemen		169,213		0.38		—		—		169,213		0.25
Jordan		86,406		0.20		22,131		0.09		108,537		0.16
Japan		85,707		0.19		—		—		85,707		0.13
Hong Kong		68,334		0.15		—		—		68,334		0.10
Indonesia		71,809		0.16		36,614		0.15		108,423		0.16
Saudi Arabia		—		—		280,161		1.17		280,161		0.41
Others		141,891		0.32		32,579		0.14		174,470		0.25
		43,413,378		98.27		23,093,198		96.33		66,506,576		97.59
Europe:
France		116,832		0.26		294,141		1.23		410,973		0.60
Greece		20,471		0.05		93,419		0.39		113,890		0.17
England		81,687		0.19		—		—		81,687		0.12
Russia		—		—		94,684		0.39		94,684		0.14
		218,990		0.50		482,244		2.01		701,234		1.03
America:
Mexico		197,222		0.45		82,963		0.35		280,185		0.41
Peru		153,752		0.34		—		—		153,752		0.23
Canada		—		—		79,595		0.33		79,595		0.11
		350,974		0.79		162,558		0.68		513,532		0.75
Africa:
Madagascar		192,565		0.44		29,520		0.12		222,085		0.33
Egypt		—		—		205,002		0.86		205,002		0.30
		192,565		0.44		234,522		0.98		427,087		0.63
	(Won)	44,175,907		100.00	(Won)	23,972,522		100.00	(Won)	68,148,429		100.00

(6) The ratio of allowance for loss on acceptances and guarantees to acceptance and guarantees subject to allowances for the years ended December 31, 2011, 2010 and 2009, are as follows (Korean won in millions):

	2011		2010		2009
Acceptances and guarantees subject to allowances	(Won)	61,443,234	(Won)	68,148,429	(Won)	75,869,224
Allowances	(Won)	773,833	(Won)	874,080	(Won)	476,522
Ratio (%)		1.26		1.28		0.63

81

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(7) Details of unused loan commitments and related allowances as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Unused line of credit for loan commitments	(Won)	15,765,343	(Won)	11,343,105
Allowances (*)	(Won)	100,006	(Won)	69,055
Ratio (%)		0.63		0.61

(*) The Bank estimated allowance for the estimated losses on loan commitments considering the credit conversion factor by Financial Services Commission by applying the same methodology that was used to determine the allowance for loan losses.

(8) Changes in allowances for unused loan commitments for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Beginning balance	(Won)	69,055	(Won)	67,121
Provision for allowances for unused loan commitments		30,341		4,120
Changes in foreign exchange rates and others		610		(-)2,186
Ending balance	(Won)	100,006	(Won)	69,055

12. ALLOWANCE FOR OTHERS:

Changes in the allowance for others for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Beginning balance	(Won)	46,582	(Won)	1,724
Increase		4,134		729
Decrease		(-)2,091		(-)362
Others (*)		—		44,491
Ending balance	(Won)	48,625	(Won)	46,582

(*) Claim reserves that are deposited in escrow bank account relating to the sale of Daewoo International Corporation shares had accounted for accounts receivable, and the same amount had reflected as allowance.

82

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

13. RETIREMENT AND SEVERANCE BENEFITS:

Changes in retirement and severance benefits for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Beginning balance		Provision		Payment		Ending balance
Retirement and severance benefits	(Won)	25,302	(Won)	7,116	(Won)	2,399	(Won)	30,019

2010

	Beginning balance		Provision		Payment		Ending balance
Retirement and severance benefits	(Won)	20,763	(Won)	6,176	(Won)	1,637	(Won)	25,302

14. SHAREHOLDERS’ EQUITY:

(1) Capital Stock

As of December 31, 2011, the authorized capital and paid-in capital of the Bank are (Won)8,000,000 million and (Won)6,258,755 million, respectively. The Bank’s capital has increased by (Won)1,100,000 million due to the Government and the Korea Finance Corporation’s contributions. The Bank does not issue share certificates.

(2) Retained Earnings

1) Legal Reserve

Pursuant to the EXIM Bank Act, the Bank appropriates 10 percent of net earnings for each accounting period as legal reserve until the accumulated reserve equals to its paid-in capital.

2) Voluntary Reserve

The Bank appropriates the remaining balance of net earnings, after the appropriation of legal reserve and declaration of dividends, to voluntary reserve.

15. COMMITMENTS AND CONTINGENCIES:

(1) Details of commitments as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Confirmed acceptances and guarantees	(Won)	42,469,775	(Won)	44,175,907
Unconfirmed acceptances and guarantees		18,973,459		23,972,522
Unused loan commitments		15,301,081		10,835,255
Other commitments		464,262		507,850
Written-off loans		341,522		326,341
	(Won)	77,550,099	(Won)	79,817,875

83

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(2) Litigations

As of December 31, 2011, eight lawsuits were filed by the Bank and is plaintiff for one pending litigation. The Bank’s management is unable to estimate the impact from these lawsuits and the Bank’s financial position and results of operation do not include the potential impact, if any, from these lawsuits.

(3) Sale of the Shares of KEB

The Bank sold 30,865,792 shares of KEB to LSF-KEB Holdings, SCA (“LSF”) on October 30, 2003, at (Won)5,400 per share. LSF exercised its call option, which was issued by the Bank in relation to the aforementioned sales transaction, and additionally purchased 49,134,208 shares of KEB at (Won)8,487.50 per share before the prior fiscal year.

In addition to the above transactions, under the mutual agreement between the Bank and LSF, the Bank has the right to ask LSF (Tag) or be asked by LSF (Drag) for selling the Bank’s remaining holding shares of KEB to the counterparty at the same condition of LSF’s sale.

The Bank had used its “Tag Along” rights on its shares of KEB in December 20, 2011. Hence, the Bank sold 40,314,387 shares of KEB (percentage of ownership 6.25%), the entire shares holding as of Feb. 9, 2012, to Hana Financial Group at (Won)11,900 per share after the reporting period.

(4) Global Medium-Term Note Program (“GMTN”) and Commercial Paper (“CP”) Programs

The Bank has been establishing the following programs regarding the issue of foreign currency bond and CP:

1) Established on August 1, 1991, initially and annually renewed, the U.S. Shelf Program to issue foreign bond under the Securities and Exchange Commission rule of the United States of America with an issuance limit of USD 25 billion,

2) Established on November 6, 1997, initially and annually renewed, Euro MTN Program to issue mid-long-term foreign currency bond with an issuance limit of USD 15 billion,

3) Established on June 20, 2008, initially and annually renewed, Yen Shelf Program to issue Samurai bond with an issuance limit of USD 2 billion,

4) Established on January 17, 2011, Uridashi Shelf Program to issue Uridashi bond with an issuance limit of USD 2 billion,

5) Established on February 13, 2008, initially and annually renewed, to issue Malaysian Ringgit-denoted bond of MYR 4 billion,

6) Established on May 14, 1997 and May 16, 1997, initially and annually renewed, CP Program to issue CP with issuance limits of USD 4 billion and USD 2 billion, respectively.

84

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

16. DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING:

Details of derivative transactions for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Unsettled notional amount						Valuation gain (loss) - (non-consolidated statement of income)						Fair value (non- consolidated statement of financial position - assets (liabilities))
	Total		Hedging purpose		Hedge accounting purpose		Total		Hedging purpose		Hedge accounting purpose
Currency forwards	(Won)	841,586	(Won)	841,586	(Won)	—	(Won)	2,833 (-)12,549	(Won)	2,833 (-)12,549	(Won)	—	(Won)	2,833 (-)12,549
Currency swaps		14,087,839		1,780,047		12,307,792		209,792 (-)450,494		38,839 (-)68,533		170,953 (-)381,961		787,705 (-)614,220
Interest rate swaps		12,100,233		578,515		11,521,718		274,441 (-)89,574		753 (-)15,133		273,688 (-)74,441		408,479 (-)365,783
	(Won)	27,029,658	(Won)	3,200,148	(Won)	23,829,510	(Won)	487,066 (-)552,617	(Won)	42,425 (-)96,215	(Won)	444,641 (-)456,402	(Won)	1,199,017 (-)992,552

2010

	Unsettled notional amount						Valuation gain (loss) - (non-consolidated statement of income)						Fair value (non- consolidated statement of financial position - assets (liabilities))
	Total		Hedging purpose		Hedge accounting purpose		Total		Hedging purpose		Hedge accounting purpose
Currency forwards	(Won)	720,952	(Won)	720,952	(Won)	—	(Won)	11,470 (-)5,203	(Won)	11,470 (-)5,203	(Won)	—	(Won)	11,470 (-)5,203
Currency swaps		9,461,112		1,240,476		8,220,636		546,304 (-)175,924		102,514 (-)7,905		443,790 (-)168,019		819,877 (-)213,527
Interest rate swaps		11,522,693		430,076		11,092,617		145,189 (-)151,974		691 (-)9,635		144,498 (-)142,339		263,144 (-)419,749
	(Won)	21,704,757	(Won)	2,391,504	(Won)	19,313,253	(Won)	702,963 (-)333,101	(Won)	114,675 (-)22,743	(Won)	588,288 (-)310,358	(Won)	1,094,491 (-)638,479

The Bank holds derivative instruments to hedge the interest rate and foreign exchange risks derived from its loan, debentures and borrowing activities. The notional amounts of unsettled derivative contracts and valuation gain or loss for hedge accounting purpose in the above table represent the derivative instruments accounted for using hedge accounting pursuant to the Interpretations on Financial Accounting Standards 53-70 “Accounting for Derivatives.”

Hedged items, for fair value hedge accounting purpose, consist of loans, debentures and borrowings. The Bank recognized gain of (Won)38,711 million from the hedged item of loans and loss of (Won)206,170 million from the hedged item of debentures in the non-consolidated statement of income for the year ended December 31, 2011.

85

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

17. INTEREST INCOME AND EXPENSE:

Average balances of the interest-bearing assets and liabilities, and the related interest income and expenses as of and for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011				2010
	Average balance		Interest income/expense		Average balance		Interest income/expense
Interest-bearing assets:
Loans	(Won)	1,305,558	(Won)	30,577	(Won)	947,234	(Won)	24,819
Available-for-sale securities		18,356		2,181		133		—
Due from banks		41,653,612		1,371,175		38,664,288		1,263,668
	(Won)	42,977,526	(Won)	1,403,933	(Won)	39,611,655	(Won)	1,288,487
Interest-bearing liabilities:
Call money	(Won)	499,557	(Won)	9,587	(Won)	398,520	(Won)	6,898
Borrowings		3,830,467		46,944		3,744,628		46,089
Debentures		34,613,674		1,017,825		31,223,748		893,528
	(Won)	38,943,698	(Won)	1,074,356	(Won)	35,366,896	(Won)	946,515

18. GENERAL AND ADMINISTRATIVE EXPENSE:

Details of general and administrative expense for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Financial management expenses:
Salaries and wages	(Won)	67,775	(Won)	62,711
Others		37,527		34,277
		105,302		96,988
Fund management expenses		1,174		1,051
Other general and administrative expenses:
Retirement and severance benefits (Note 13)		7,116		6,176
Special retirement		3,855		—
Depreciation (Note 7)		3,364		3,309
Amortization of intangible assets (Note 8)		1,300		1,122
Taxes and dues		20,175		8,612
		35,810		19,219
	(Won)	142,286	(Won)	117,258

86

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

19. INCOME TAXES:

(1) The components of income tax expense for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Income tax	(Won)	147,552	(Won)	174,270
Changes in deferred tax arising from temporary differences (*1)		(-)210,190		(-)222,527
Deferred income tax on tax loss carryforwards (*2)		—		36,803
Deferred tax effects directly charged to equity		69,962		43,054
Income tax expense	(Won)	7,324	(Won)	31,600

(*1) Changes in deferred income taxes due to temporary differences for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Changes in deferred income taxes due to temporary differences:
End of year	(Won)	511,907	(Won)	301,717
Beginning of year		301,717		79,190
	(Won)	210,190	(Won)	222,527

(*2) Changes in deferred income taxes due to tax losses for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Changes in deferred income taxes due to tax losses:
End of year	(Won)	—	(Won)	—
Beginning of year		—		36,803
	(Won)	—	(Won)	(-)36,803

(2) The income tax expense calculated by applying statutory tax rates to the Bank’s income before income taxes for the years differs from the actual tax expense in the non-consolidated statements of income for the years ended December 31, 2011 and 2010, for the following reasons (Korean won in millions):

	2011		2010
Income before income taxes	(Won)	154,126	(Won)	98,303
Income taxes at applicable tax rates		37,272		23,763
Adjustment:
Tax-exempt benefits		(-)6,479		(-)2,147
Non-deduction expense		1,352		236
Tax effects on unrecognized deferred income tax assets		1,720		—
Tax effects of tax rate change		(-)25,997		9,647
Others		(-)544		101
Income tax expense	(Won)	7,324	(Won)	31,600
Effective tax rate (%)		4.75		32.15

87

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(3) Changes in significant accumulated temporary differences and tax effects for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

2011

	Beginning Balance(*1)		Decrease		Increase		Ending balance
Temporary differences:
Loss on fair value hedges	(Won)	91,494	(Won)	91,494	(Won)	279,214	(Won)	279,214
Depreciation		4,493		1,010		898		4,381
Retirement and severance benefits		20,891		133		3,942		24,700
Allowance for loan losses		656,428		656,428		1,016,063		1,016,063
Gain on valuation of equity method-accounted investments		(-)40,279		—		(-)13,232		(-)53,511
Loss on valuation of derivatives		401,077		401,077		124,895		124,895
Gain on valuation of derivatives		(-)456,013		(-)456,013		(-)206,465		(-)206,465
Available-for-sale securities (KEB)		(-)118,985		—		—		(-)118,985
Debt-to-equity swap		52,888		—		3,298		56,186
Allowance for losses on acceptances and guarantees		874,080		874,080		773,833		773,833
Allowance for losses on unused loan commitments		69,055		69,055		100,006		100,006
Others		29,527		13,549		47,501		63,479
Total temporary differences	(Won)	1,584,656	(Won)	1,650,813	(Won)	2,129,953	(Won)	2,063,796
Tax effects of temporary differences							(Won)	497,718
Tax effects of tax loss carryforwards								—
The deferred tax effects that were directly charged to equity(*3)								14,189
Deferred income tax assets(*2,3)							(Won)	511,907

88

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

2010

	Beginning Balance(*1)		Decrease		Increase		Ending balance
Temporary differences:
Loss on fair value hedges	(Won)	94,882	(Won)	44,054	(Won)	40,666	(Won)	91,494
Depreciation		5,633		—		(-)1,140		4,493
Retirement and severance benefits		24,846		—		(-)3,955		20,891
Allowance for loan losses		470,989		—		185,439		656,428
Gain on valuation of equity method-accounted investments		(-)31,398		—		(-)8,881		(-)40,279
Loss on valuation of derivatives		(-)52,884		(-)453,961		—		401,077
Gain on valuation of derivatives		(-)200,254		255,759		—		(-)456,013
Available-for-sale securities (KEB)		(-)118,985		—		—		(-)118,985
Debt-to-equity swap		65,880		12,992		—		52,888
Allowance for losses on acceptances and guarantees		476,523		—		397,557		874,080
Allowance for losses on unused loan commitments		68,195		—		860		69,055
Others		(-)3,647		1,632		34,806		29,527
Total temporary differences	(Won)	799,780	(Won)	(-)139,524	(Won)	645,352	(Won)	1,584,656
Tax effects of temporary differences							(Won)	357,491
Tax effects of tax loss carryforwards								—
The deferred tax effects that were directly charged to equity(*3)								(-)55,774
Deferred income tax assets(*2,3)							(Won)	301,717

(*1) Beginning temporary difference at January 1, 2011 and 2010, is the amount of deferred income tax assets (liabilities) recorded at December 31, 2010 and 2009, respectively. Changes in such beginning temporary difference resulting from the actual tax return are adjusted in the years ended December 31, 2011 and 2010, respectively.

(*2) The deferred income tax assets are realizable because taxable income of the Bank in future years will exceed the deductible temporary differences.

(*3) Deferred income assets and liabilities are calculated based on the expected tax rate to be applied at the reversal period of the related assets or liabilities.

(4) Deductible temporary differences and other not recognized as deferred income tax assets as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010		Total
Impairment loss of available-for-sale securities	(Won)	7,113	(Won)	—	Realizable period has already passed

89

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(5) Deferred income tax assets and liabilities that were directly charged or credited to accumulate other comprehensive income as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011				2010
	Temporary differences		Deferred income tax assets (liabilities)		Temporary differences		Deferred income tax assets (liabilities)
Valuation gain (loss) on available-for-sale securities	(Won)	(-)318,605	(Won)	70,093	(Won)	(-)197,162	(Won)	43,375
Valuation gain (loss) on equity for the equity method-accounted investments		594		(-)131		1,455		(-)321
	(Won)	(-)318,011	(Won)	69,962	(Won)	(-)195,707	(Won)	43,054

(6) Balances of deferred income tax assets and deferred income tax liabilities as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Deferred income tax assets before offsetting	(Won)	720,994	(Won)	608,231
Deferred income tax liabilities before offsetting		209,087		306,514
Deferred income tax assets after offsetting	(Won)	511,907	(Won)	301,717

(7) Balances of income tax payable and prepaid income tax as of December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Prepaid income tax before offsetting	(Won)	66,123	(Won)	25,754
Income tax payable before offsetting		148,042		174,270
Income tax payable after offsetting	(Won)	81,919	(Won)	148,516

90

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

20. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCY:

(1) Details of assets denominated in foreign currencies as of December 31, 2011 and 2010, are as follows (Korean won in millions and U.S. dollars in thousands):

	2011				2010
	In foreign currency (USD)		In local currency (Korean won)		In foreign currency (USD)		In local currency (Korean won)
Due from banks	$	1,497,531	(Won)	1,727,102	$	38,984	(Won)	44,399
Available-for-sale securities		4,341		5,006		15,334		17,463
Equity method-accounted investments		211,586		248,630		206,727		235,441
Call loans		1,257,141		1,449,861		1,300,281		1,480,890
Notes bought		29,832		34,406		37,064		42,213
Bills bought		1,176,638		1,357,016		761,365		867,119
Loans (*)		29,261,334		33,747,096		26,084,346		29,707,462
Advance for customers		61,026		70,381		37,096		42,249
	$	33,499,429	(Won)	38,639,498	$	28,481,197	(Won)	32,437,236

(*) The amounts of loans in the above table exclude deferred loan-origination fees and changes in fair-value-hedged loans.

(2) Details of liabilities denominated in foreign currencies as of December 31, 2011 and 2010, are as follows (Korean won in millions and U.S. dollars in thousands):

	2011				2010
	In foreign currency (USD)		In local currency (Korean won)		In foreign currency (USD)		In local currency (Korean won)
Call money	$	41,568	(Won)	47,940	$	690,000	(Won)	785,841
Borrowings (*1)		4,588,823		5,292,289		3,077,679		3,505,169
Debentures (*2)		27,280,897		31,462,833		23,165,915		26,383,566
	$	31,911,288	(Won)	36,803,062	$	26,933,594	(Won)	30,674,576

(*1) The amounts of borrowings in the above table exclude discount on present value.

(*2) The amounts of debentures in the above table exclude discount (premium) on debentures and changes in fair-value-hedged debentures.

Foreign currencies other than U.S. dollars are translated into U.S. dollar equivalent amounts at the exchange rates published by Seoul Money Brokerage Services, Ltd. (see Note 2).

91

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

21. COMPREHENSIVE LOSS:

Comprehensive loss for the years ended December 31, 2011 and 2010, is as follows (Korean won in millions):

	2011		2010
Net income	(Won)	146,802	(Won)	66,703
Change in fair value of available-for-sale securities, net of tax effect of (Won)70,093 million in 2011 and (Won)43,375 million in 2010		(-)248,512		(-)153,786
Change in capital by equity method-accounted investments, net of tax effect of (Won)(-)131 million in 2011 and (Won)(-)321 million in 2010		465		1,134
Comprehensive loss	(Won)	(-)101,245	(Won)	(-)85,949

22. DIVIDENDS:

(1) Details of dividends for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
The Government	(Won)	21,164	(Won)	9,187
The BOK		6,258		2,787
Korea Finance Corporation		6,196		367
	(Won)	33,618	(Won)	12,341

(2) Dividends as a percentage of net income for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Dividend amount	(Won)	33,618	(Won)	12,340
Net income	(Won)	146,802	(Won)	66,703
Dividends as a percentage of net income (%)		22.90		18.50

23. TRANSACTIONS AND BALANCES WITH RELATED PARTIES:

(1) The Bank has related parties as of December 31, 2011 and 2010, as follows (Korean won in millions).

					Capital
	Number of shares		Ownership (%)		2011		2010
KEXIM Bank UK Limited		20,000,000		100.00	(Won)	35,545	(Won)	35,154
KEXIM Vietnam Leasing Co. (*)		—		100.00		14,993		14,806
PT. KOEXIM Mandiri Finance		442		85.00		6,609		6,583
KEXIM Asia Limited		30,000,000		100.00		34,599		34,167
CGIF (*)		—		15.85		727,848		718,760

(*) This entity does not issue share certificates.

92

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(2) Significant balances and transactions with the related parties as of and for the year ended December 31, 2011, are as follows (Korean won in millions):

Assets

	Loans in foreign currencies		Call loans		Total
KEXIM Bank UK Limited	(Won)	144,162	(Won)	—	(Won)	144,162
KEXIM Vietnam Leasing Co.		90,534		—		90,534
PT. KOEXIM Mandiri Finance		164,922		—		164,922
KEXIM Asia Limited		128,308		—		128,308
	(Won)	527,926	(Won)	—	(Won)	527,926

Liabilities

	Borrowing in foreign currencies		Debentures in foreign currencies		Total
KEXIM Bank UK Limited	(Won)	—	(Won)	5,767	(Won)	5,767

Transactions

	Interest income		Interest expenses		Commission income
KEXIM Bank UK Limited	(Won)	2,149	(Won)	289	(Won)	39
KEXIM Vietnam Leasing Co.		833		—		10
PT. KOEXIM Mandiri Finance		1,470		—		—
KEXIM Asia Limited		1,164		—		83
	(Won)	5,616	(Won)	289	(Won)	132

(3) Significant balances and transactions with the related parties as of and for the year ended December 31, 2010, are as follows (Korean won in millions):

Assets

	Loans in foreign currencies		Call loans		Total
KEXIM Bank UK Limited	(Won)	187,919	(Won)	3,784	(Won)	191,703
KEXIM Vietnam Leasing Co.		82,001		—		82,001
PT. KOEXIM Mandiri Finance		138,946		—		138,946
KEXIM Asia Limited		74,029		22,289		96,318
	(Won)	482,895	(Won)	26,073	(Won)	508,968

93

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

Liabilities

	Borrowing in foreign currencies		Debentures in foreign currencies		Total
KEXIM Bank UK Limited	(Won)	—	(Won)	5,695	(Won)	5,695

Transactions

	Interest income		Interest expenses		Commission income
KEXIM Bank UK Limited	(Won)	2,607	(Won)	155	(Won)	10
KEXIM Vietnam Leasing Co.		648		—		3
PT. KOEXIM Mandiri Finance		1,169		—		—
KEXIM Asia Limited		1,400		—		35
	(Won)	5,824	(Won)	155	(Won)	48

24. NON-CONSOLIDATED STATEMENTS OF CASH FLOWS:

(1) Due from banks in the non-consolidated statements of cash flows as of December 31, 2011 and 2010, is as follows (Korean won in millions):

	2011		2010
Due from banks in local currency	(Won)	980,541	(Won)	1,565,628
Due from banks in foreign currencies		1,727,102		44,399
	(Won)	2,707,643	(Won)	1,610,027

(2) Significant transactions not involving cash inflows or outflows for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Change in gain on valuation of available-for-sale securities	(Won)	(-)248,512	(Won)	(-)153,786
Change in capital by equity method-accounted investments		465		1,134
Debt-to-equity swap		31,351		36,820
Acquisition of securities through investment in-kind		1,000,000		—

94

THE EXPORT-IMPORT BANK OF KOREA

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

25. EMPLOYEE WELFARE:

The Bank provides employee welfare programs, including housing loans, cafeteria, scholarship, medical insurance, workers’ compensation and gymnasium and recreational facilities. The Bank’s expenses on the employee welfare programs for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Meal expenses	(Won)	34	(Won)	108
Medical expenses		420		391
Fringe benefits		6,208		5,834
Healthcare expenses		344		371
	(Won)	7,006	(Won)	6,704

26. VALUE-ADDED INFORMATION:

Details of accounts included in the computation of value-added information for the years ended December 31, 2011 and 2010, are as follows (Korean won in millions):

	2011		2010
Salaries and wages	(Won)	67,775	(Won)	62,711
Rent		573		550
Depreciation		3,364		3,309
Amortization of intangible assets		1,300		1,122
Taxes and dues		20,175		8,612
	(Won)	93,187	(Won)	76,304

27. PLANNING AND ADOPTION OF K-IFRS:

The Bank plans to issue non-consolidated financial statements prepared in accordance with K-IFRS in the future. The Bank has been outsourced to an external advisors in April 2011 to proceed the analysis of major changes in accounting policies and to set up the new K-IFRS system. The areas of accounting under the current non-consolidated financial statements for which the application of K-IFRS is expected to give rise to significant differences include loss provisions, financial instruments, tangible assets, intangible assets and employee benefits, among others.

95

THE REPUBLIC OF KOREA

Land and History

Territory and Population

Located generally south of the 38th parallel on the Korean peninsula, The Republic of Korea covers about 38,000 square miles, approximately one-fourth of which is arable. The Republic has a population of approximately 48 million people. The country’s largest city and capital, Seoul, has a population of about 11 million people.

Map of the Republic of Korea

Political History

Dr. Rhee Seungman, who was elected President in each of 1948, 1952, 1956 and 1960, dominated the years after the Republic’s founding in 1948. Shortly after President Rhee’s resignation in 1960 in response to student-led demonstrations, a group of military leaders headed by Park Chung Hee assumed power by coup. The military leaders established a civilian government, and the country elected Mr. Park as President in October 1963. President Park served as President until his assassination in 1979 following a period of increasing strife between the Government and its critics. The Government declared martial law and formed an interim

96

government under Prime Minister Choi Kyu Hah, who became the next President. After clashes between the Government and its critics, President Choi resigned, and General Chun Doo Hwan, who took control of the Korean army, became President in 1980.

In late 1980, the country approved, by national referendum, a new Constitution, providing for indirect election of the President by an electoral college and for certain democratic reforms, and shortly thereafter, in early 1981, re-elected President Chun.

Responding to public demonstrations in 1987, the legislature revised the Constitution to provide for direct election of the President. In December 1987, Roh Tae Woo won the Presidency by a narrow plurality, after opposition parties led by Kim Young Sam and Kim Dae Jung failed to unite behind a single candidate. In February 1990, two opposition political parties, including the one led by Kim Young Sam, merged into President Roh’s ruling Democratic Liberal Party.

In December 1992, the country elected Kim Young Sam as President. The election of a civilian and former opposition party leader considerably lessened the controversy concerning the legitimacy of the political regime. President Kim’s administration reformed the political sector and deregulated and internationalized the Korean economy.

In December 1997, the country elected Kim Dae Jung as President. President Kim’s party, the Millennium Democratic Party (formerly known as the National Congress for New Politics), formed a coalition with the United Liberal Democrats led by Kim Jong Pil, with Kim Jong Pil becoming the first prime minister in President Kim’s administration. The coalition, which temporarily ended before the election held in April 2000, continued with the appointment of Lee Han Dong of the United Liberal Democrats as the Prime Minister in June 2000. The coalition again ended in September 2001.

In December 2002, the country elected Roh Moo Hyun as President. President Roh and his supporters left the Millennium Democratic Party in 2003 and formed a new party, the Uri Party, in November 2003. On August 15, 2007, 85 members of the National Assembly, previously belonging to the Uri Party, or the Democratic Party, formed the United New Democratic Party (the “UNDP”). The Uri Party merged into the UNDP in August 20, 2007. In February 2008, the UNDP merged back into the Democratic Party. In December 2011, the Democratic Party merged with the Citizens Unity Party to form the Democratic United Party.

In December 2007, the country elected Lee Myung-Bak as President. He commenced his term on February 25, 2008. The Lee administration’s key policy priorities include:

• pursuing a lively market economy through deregulation, free trade and the attraction of foreign investment;

• establishing an efficient government by reorganizing government functions and privatizing state-owned enterprises;

• taking initiatives on the denuclearization of North Korea;

• seeking a productive welfare system based on customized welfare benefits and job training; and

• strengthening the competitiveness of Korea’s education system.

Government and Politics

Government and Administrative Structure

Governmental authority in the Republic is centralized and concentrated in a strong Presidency. The President is elected by popular vote and can only serve one term of five years. The President chairs the State Council, which consists of the prime minister, the deputy prime ministers, the respective heads of Government ministries and the ministers of state. The President can select the members of the State Council and appoint or remove all other Government officials, except for elected local officials.

97

The President can veto new legislation and take emergency measures in cases of natural disaster, serious fiscal or economic crisis, state of war or other similar circumstances. The President must promptly seek the concurrence of the National Assembly for any emergency measures taken and failing to do so automatically invalidates the emergency measures. In the case of martial law, the President may declare martial law without the consent of the National Assembly; provided, however, that the National Assembly may request the President to rescind such martial law.

The National Assembly exercises the country’s legislative power. The Constitution and the Election for Public Offices Act provide for the direct election of about 82% of the members of the National Assembly and the distribution of the remaining seats proportionately among parties winning more than 5 seats in the direct election or receiving over 3% of the popular vote. National Assembly members serve four-year terms. The National Assembly enacts laws, ratifies treaties and approves the national budget. The executive branch drafts most legislation and submits it to the National Assembly for approval.

The country’s judicial branch comprises the Supreme Court, the Constitutional Court and lower courts of various levels. The President appoints the Chief Justice of the Supreme Court and appoints the other Justices of the Supreme Court upon the recommendation of the Chief Justice. All appointments to the Supreme Court require the consent of the National Assembly. The Chief Justice, with the consent of the conference of Supreme Court Justices, appoints all the other judges in Korea. Supreme Court Justices serve for six years and all other judges serve for ten years. Other than the Chief Justice, justices and judges may be reappointed to successive terms.

The President formally appoints all nine judges of the Constitutional Court, but three judges must be designated by the National Assembly and three by the Chief Justice of the Supreme Court. Constitutional Court judges serve for six years and may be reappointed to successive terms.

Administratively, the Republic comprises nine provinces and seven cities with provincial status: Seoul, Busan, Daegu, Incheon, Gwangju, Daejon and Ulsan. From 1961 to 1995, the national government controlled the provinces and the President appointed provincial officials. Local autonomy, including the election of provincial officials, was reintroduced in June 1995.

Political Organizations

The 18th legislative general election was held on April 9, 2008 and the term of the National Assembly members elected in the 18th legislative general election commenced on May 30, 2008. Currently, there are two major political parties, the Saenuri Party (formerly known as the Grand National Party), or SP, and the Democratic United Party, or DUP.

As of March 21, 2012, the parties control the following number of seats in the National Assembly:

	SP		DUP		Others		Total
Number of Seats		162		80		51		293

Relations with North Korea

Relations between the Republic and North Korea have been tense over most of the Republic’s history. The Korean War, which took place between 1950 and 1953 began with the invasion of the Republic by communist forces from North Korea and, following a military stalemate, an armistice was reached establishing a demilitarized zone monitored by the United Nations in the vicinity of the 38th parallel.

North Korea maintains a regular military force estimated at more than 1,000,000 troops, mostly concentrated near the northern border of the demilitarized zone. The Republic’s military forces, composed of

98

approximately 650,000 regular troops and almost 3.0 million reserves, maintain a state of military preparedness along the southern border of the demilitarized zone. In addition, the United States has historically maintained its military presence in the Republic. In October 2004, the United States and the Republic agreed to a three-phase withdrawal of approximately one-third of the 37,500 troops stationed in the Republic by the end of 2008. By the end of 2004, 5,000 U.S. troops departed the Republic in the first phase of such withdrawal and in the plan’s second phase, the United States removed 5,000 troops by the end of 2006. In the final phase, another 2,500 U.S. troops were scheduled to depart by the end of 2008. In April 2008, however, the United States and the Republic decided not to proceed with the final phase of withdrawal and agreed to maintain 28,500 U.S. troops in the Republic. In February 2007, the United States and the Republic agreed to dissolve their joint command structure by 2012, which would allow the Republic to assume the command of its own armed forces in the event of war on the Korean peninsula.

The level of tension between the two Koreas has fluctuated and may increase abruptly as a result of current and future events. In recent years, there have been heightened security concerns stemming from North Korea’s nuclear weapons and long-range missile programs and increased uncertainty regarding North Korea’s actions and possible responses from the international community. In December 2002, North Korea removed the seals and surveillance equipment from its Yongbyon nuclear power plant and evicted inspectors from the United Nations International Atomic Energy Agency. In January 2003, North Korea renounced its obligations under the Nuclear Non-Proliferation Treaty. Since the renouncement, the Republic, the United States, North Korea, China, Japan and Russia have held numerous rounds of six party multi-lateral talks in an effort to resolve issues relating to North Korea’s nuclear weapons program.

In addition to conducting test flights of long-range missiles, North Korea announced in October 2006 that it had successfully conducted a nuclear test, which increased tensions in the region and elicited strong objections worldwide. In response, the United Nations Security Council passed a resolution that prohibits any United Nations member state from conducting transactions with North Korea in connection with any large scale arms and material or technology related to missile development or weapons of mass destruction and from providing luxury goods to North Korea, imposes an asset freeze and travel ban on persons associated with North Korea’s weapons program, and calls upon all United Nations member states to take cooperative action, including thorough inspection of cargo to or from North Korea. In response, North Korea agreed in February 2007 at the six-party talks to shut down and seal the Yongbyon nuclear facility, including the reprocessing facility, and readmit international inspectors to conduct all necessary monitoring and verifications.

In April 2009, North Korea launched a long-range rocket over the Pacific Ocean. The Republic, Japan and the United States responded that the launch poses a threat to neighboring nations and that it was in violation of the United Nations Security Council resolution adopted in 2006 against nuclear tests by North Korea, and the United Nations Security Council unanimously passed a resolution that condemned North Korea for the launch and decided to tighten sanctions against North Korea. Subsequently, North Korea announced that it would permanently pull out of the six-party talks and restart its nuclear program, and the International Atomic Energy Agency reported that its inspectors had been ordered to remove surveillance devices and other equipment at the Yongbyon nuclear power plant and to leave North Korea. In May 2009, North Korea announced that it had successfully conducted a second nuclear test and test-fired three short-range, surface-to-air missiles. In response, the United Nations Security Council unanimously passed a resolution that condemned North Korea for the nuclear test and decided to expand and tighten sanctions against North Korea. In March 2010, a Korean warship was destroyed by an underwater explosion, killing many of the crewmen on board. The Government formally accused North Korea of causing the sinking in May 2010. North Korea has denied responsibility for the sinking and has threatened retaliation for any attempt to punish it for the act. On November 23, 2010, North Korean forces fired more than one hundred artillery shells targeting Yeonpyeong Island located near the maritime border between the Republic and North Korea on the west coast of the Korean peninsula, killing two Korean soldiers and two civilians as well as causing substantial property damage. The Republic responded by firing approximately 80 artillery shells and putting the military on its highest alert level. The Government condemned North Korea for the act and vowed stern retaliation should there be further provocation.

99

There recently has been increased uncertainty with respect to the future of North Korea’s political leadership and concern regarding its implications for economic and political stability in the region. In June 2009, U.S. and Korean officials announced that Kim Jong-il, the North Korean ruler who reportedly suffered a stroke in August 2008, designated his third son, Kim Jong-eun, who is reportedly in his twenties, to become his successor. In September 2010, Kim Jong-eun was made a general in the North Korean army, named the vice chairman of the Central Military Commission and appointed to the Central Committee of the Workers’ Party in a series of measures widely believed to be part of the succession plan. In addition, North Korea’s economy faces severe challenges. For example, in November 2009, the North Korean government redenominated its currency at a ratio of 100 to 1 as part of a currency reform undertaken in an attempt to control inflation and reduce income gaps. In tandem with the currency redenomination, the North Korean government banned the use or possession of foreign currency by its residents and closed down privately run markets, which led to severe inflation and food shortages. Such developments may further aggravate social and political tensions within North Korea.

Since the death of Kim Jong-il, the former North Korean ruler, in mid-December 2011, there has been increased uncertainty with respect to the future of North Korea’s political leadership and concern regarding its implications for political and economic stability in the region. Although before his death, Kim Jong-il designated his third son, Kim Jong-eun, as his successor, the eventual outcome of such leadership transition remains uncertain. Furthermore, as only limited information is available outside of North Korea about Kim Jong-eun, and it is unclear which individuals or factions, if any, will share political power with Kim Jong-eun or assume the leadership if the transition is not successful, there is significant uncertainty regarding the policies, actions and initiatives that North Korea might pursue in the future.

There can be no assurance that the level of tension on the Korean peninsula will not escalate in the future or that such escalation will not have a material adverse impact on the Republic’s economy or its ability to obtain future funding. Any further increase in tension, which may occur, for example, if North Korea experiences a leadership crisis, high-level contacts between the Republic and North Korea break down or military hostilities occur, could have a material adverse effect on the Republic’s economy.

Over the longer term, reunification of the two Koreas could occur. Reunification may entail a significant economic commitment by the Republic. In President Lee’s national address on August 15, 2010, he suggested the possible adoption of a reunification tax as a potential means of alleviating the potential long-term economic burden associated with reunification. Such discussions on reunification are very preliminary, and it has not been decided whether or when such a reunification tax would be implemented. If a reunification tax is implemented, depending on how it is structured, it may lead to a decrease in domestic consumption, which in turn may have a material adverse effect on the Republic’s economy.

Foreign Relations and International Organizations

The Republic maintains diplomatic relations with most nations of the world, most importantly with the United States with which it entered into a mutual defense treaty and several economic agreements. The Republic also has important relationships with Japan and China, its largest trading partners together with the United States.

The Republic belongs to a number of supranational organizations, including:

• the International Monetary Fund, or the IMF;

• the World Bank;

• the Asian Development Bank, or ADB;

• the Multilateral Investment Guarantee Agency;

• the International Finance Corporation;

• the International Development Association;

• the African Development Bank;

100

• the European Bank for Reconstruction and Development;

• the Bank for International Settlements;

• the World Trade Organization, or WTO; and

• the Inter-American Development Bank, or IDB.

In September 1991, the Republic and North Korea became members of the United Nations. During the 1996 and 1997 sessions, the Republic served as a non-permanent member of the United Nations Security Council.

In March 1995, the Republic applied for admission to the Organization for Economic Cooperation and Development, or the OECD, which the Republic officially joined as the twenty-ninth regular member in December 1996.

The Economy

Current Worldwide Economic and Financial Difficulties

Recent difficulties affecting the U.S. and global financial sectors, adverse conditions and volatility in the U.S. and worldwide credit and financial markets, fluctuations in oil and commodity prices and the general weakness of the U.S. and global economy during the second half of 2008 and first half of 2009 increased the uncertainty of global economic prospects in general and adversely affected, and may continue to adversely affect, the Korean economy. During the second and third quarter of 2007, credit markets in the United States started to experience difficult conditions and volatility that in turn have affected worldwide financial markets. In particular, in late July and early August 2007, market uncertainty in the U.S. sub-prime mortgage sector increased dramatically and further expanded to other markets such as those for leveraged finance, collateralized debt obligations and other structured products. In September and October 2008, liquidity and credit concerns and volatility in the global credit and financial markets increased significantly with the bankruptcy or acquisition of, and government assistance to, several major U.S. and European financial institutions. These developments resulted in reduced liquidity, greater volatility, widening of credit spreads and a lack of price transparency in the United States and global credit and financial markets.

As liquidity and credit concerns and volatility in the global financial markets increased significantly since September 2008, the value of the Won relative to the U.S. dollar depreciated at an accelerated rate during the fourth quarter of 2008 and first half of 2009. See “Monetary Policy—Foreign Exchange.” Such depreciation of the Won increased the cost of imported goods and services and the Won revenue needed by Korean companies to service foreign currency-denominated debt. Furthermore, as a result of adverse global and Korean economic conditions, there was a significant overall decline and continuing volatility in the stock prices of Korean companies. The Korea Composite Stock Price Index declined by 27.8% from 1,852.0 on May 30, 2008 to 1,336.7 on April 16, 2009. See “The Financial System—Securities Markets”. Further declines in the Korea Composite Stock Price Index and large amounts of sales of Korean securities by foreign investors and subsequent repatriation of the proceeds of such sales may continue to adversely affect the value of the Won, the foreign currency reserves held by financial institutions in Korea, and the ability of Korean companies to raise capital. In addition, increases in credit spreads, as well as limitations on the availability of credit resulting from heightened concerns about the stability of the markets generally and the strength of counterparties specifically that led many lenders and institutional investors to reduce or cease funding to borrowers, adversely affected Korean banks’ ability to borrow, particularly with respect to foreign currency funding, during the fourth quarter of 2008 and first half of 2009. Moreover, GDP in the first quarter of 2009 contracted by 4.3% at chained 2005 year prices compared with the same period in 2008, and exports in the first quarter of 2009 decreased by 24.8% to US$74.7 billion from US$99.4 billion in the same period in 2008. In the event that such difficult conditions in the global credit markets continue or the global economy deteriorates in the future, the Korean economy could be adversely affected and Korean banks, including us, may be forced to fund their operations at a higher cost or may be unable to raise as much funding as they need to support their lending and other activities.

101

In response to these developments, legislators and financial regulators in the United States and other jurisdictions, including Korea, implemented a number of policy measures designed to add stability to the financial markets, including the provision of direct and indirect assistance to distressed financial institutions. In particular, the Government has implemented or announced, among other things, the following measures during the fourth quarter of 2008 and in 2009:

• in October 2008, the Government implemented a guarantee program to guarantee foreign currency- denominated debt incurred by Korean banks and their overseas branches between October 20, 2008 and June 30, 2009 (subsequently extended to December 31, 2009), up to an aggregate amount of US$100 billion, for a period of three years (subsequently extended to five years) from the date such debt was incurred;

• in October 2008, The Bank of Korea established a temporary reciprocal currency swap arrangement with the Federal Reserve Board of the United States for up to US$30 billion, effective until April 30, 2009 (subsequently extended to October 30, 2009). The Bank of Korea provided U.S. dollar liquidity, through competitive auction facilities, to financial institutions established in Korea, using funds from the swap line;

• in December 2008, a (Won)10 trillion bond market stabilization fund was established to purchase financial and corporate bonds and debentures in order to provide liquidity to companies and financial institutions;

• in December 2008, The Bank of Korea agreed with the People’s Bank of China to establish a bilateral currency swap arrangement for up to (Won)38 trillion, effective for three years, and agreed with the Bank of Japan to increase the maximum amount of their bilateral swap arrangement from US$3 billion to US$20 billion, effective until April 30, 2009;

• in December 2008 and March 2009, the Government, through Korea Asset Management Corporation, purchased non-performing loans held by savings banks in the amount of approximately (Won)1.7 trillion;

• in February 2009, the Government announced its plan to contribute capital to Korean banks through a (Won)20 trillion bank recapitalization fund and received applications from 14 banks;

• during the first quarter of 2009, the Government, through the Bank of Korea and the Korea Development Bank, purchased from Korean banks hybrid securities and subordinated bonds in the amount of approximately (Won)4 trillion;

• during the fourth quarter of 2008 and the first quarter of 2009, The Bank of Korea decreased the policy rate by a total of 3.25% points to 2.00% in order to address financial market instability and to help combat the slowdown of the domestic economy;

• in April 2009, the National Assembly authorized the expansion of the 2009 national budget by (Won)28.4 trillion to provide stimulus for the Korean economy. The stimulus plan includes (Won)17.2 trillion to be used for cash handouts, low-interest loans, infrastructure spending and job training, as well as (Won)11.2 trillion in various tax incentives; and

• in December 2009, the Government, together with the member countries of the Association of Southeast Asian Nations, China and Japan, signed the Chiang Mai Initiative Multilateralization Agreement to address balance-of-payments and short-term liquidity difficulties in the region and to supplement the existing international financial arrangements.

However, the overall impact of these legislative and regulatory efforts on the financial markets is uncertain, and they may not have the intended stabilizing effects.

In November 2009, the Dubai government announced a moratorium on the outstanding debt of Dubai World, a government-affiliated investment company. In addition, many governments in Europe have shown increasing signs of fiscal stress and may experience difficulties in meeting their debt service requirements. For

102

example, in November 2008, the Icelandic government, facing mounting debt problems, reached an agreement with the IMF to receive loans in the amount of US$2.1 billion over a two-year period, and in May 2010 and March 2012, the Greek government reached an agreement with the IMF and the European Union to receive loans in the amount of Euro 110 billion over a three-year period and to receive additional loans in the amount of Euro 130 billion over a four-year period, respectively. The global financial markets have experienced significant volatility in recent months as a result of, among other things, the downgrading by Standard & Poor’s Rating Services of the long-term sovereign credit rating of the United States to “AA+” from “AAA” in August 2011, as well as the continuing financial difficulties and resulting ratings downgrades experienced by the governments of Greece and other countries in Europe. Any of these or other developments could potentially trigger another financial and economic crisis, which could have a material adverse effect on the Korean economy and financial markets (including depreciation of the value of the Won, decline and volatility in the stock prices of Korean companies, increases in credit spreads and funding costs and decreases in exports) and our financial conditions and results of operations.

There have been increased volatility and substantial declines in the Korea Composite Stock Index recently, due to adverse global financial and economic conditions. See “—The Financial System—Securities Markets”. There is no guarantee that the stock prices of Korean companies will not decline again in the future. Future declines in the index and large amounts of sales of Korean securities by foreign investors and subsequent repatriation of the proceeds of such sales may continue to adversely affect the value of the Won, the foreign currency reserves held by financial institutions in Korea, and the ability of Korean companies and banks (including us) to raise capital.

Furthermore, while many governments worldwide are considering or are in the process of implementing “exit strategies”, in the form of reduced government spending, higher interest rates or otherwise, with respect to the economic stimulus measures adopted in response to the global financial crisis, such strategies may, for reasons related to timing, magnitude or other factors, have the unintended consequence of prolonging or worsening global economic and financial difficulties. In light of the high level of interdependence of the global economy, any of the foregoing developments could have a material adverse effect on the Korean economy and financial markets.

Gross Domestic Product

Gross domestic product, or GDP, measures the market value of all final goods and services produced within a country for a given period and reveals whether a country’s productive output rises or falls over time. Economists present GDP in both current market prices and “real” or “inflation-adjusted” terms. In March 2009, the Republic adopted a method known as the “chain-linked” measure of GDP, replacing the previous fixed-base, or “constant” measure of GDP, to show the real growth of the aggregate economic activity, as recommended by the System of National Accounts 1993. GDP at current market prices values a country’s output using the actual prices of each year, whereas the “chain-linked” measure of GDP is compiled by using “chained indices” linking volume growth between consecutive time periods.

103

The following table sets out the composition of the Republic’s GDP at current and chained 2005 year prices and the annual average increase in the Republic’s GDP.

Gross Domestic Product

	2007			2008			2009			2010			2011 (1)			As % of GDP 2011 (1)
	(billions of Won)
Gross Domestic Product at Current Market Prices:
Private		530,264.1			561,627.5			575,970.2			615,406.9			N/A	(5)		N/A	(5)
Government		143,262.2			156,944.1			170,324.7			180,053.8			N/A	(5)		N/A	(5)
Gross Capital Formation		286,917.6			320,368.8			279,858.1			341,902.8			N/A	(5)		N/A	(5)
Exports of Goods and Services		408,754.1			544,110.7			529,645.1			614,451.0			N/A	(5)		N/A	(5)
Less Imports of Goods and Services		(394,026.2	)		(556,197.9	)		(490,188.3	)		581,735.8			N/A	(5)		N/A	(5)
Statistical Discrepancy		(158.9	)		(401.4	)		(573.0	)		2,724.6			N/A	(5)		N/A	(5)
Expenditures on Gross Domestic Product		975,013.0			1,026,451.8			1,065,036.8			1,172,803.4			N/A	(5)		N/A	(5)
Net Factor Income from the Rest of the World		1,800.9			7,663.6			4,746.2			320.0			N/A	(5)		N/A	(5)
Gross National Income (2)		976,813.9			1,034,115.4			1,069,783.1			1,173,123.4			N/A	(5)		N/A	(5)
Gross Domestic Product at Chained 2005 Year Prices:
Private		512,094.8			518,820.8			518,776.0			540,254.7			552,405.0			51.2
Government		134,806.9			140,633.6			148,471.7			152,948.6			156,399.0			14.5
Gross Capital Formation		277,729.0			277,772.8			240,411.7			277,460.4			279,609.7			25.9
Exports of Goods and Services		426,070.6			454,248.9			448,813.8			514,032.7			565,366.9			52.4
Less Imports of Goods and Services		(393,207.1	)		(410,567.7	)		(377,795.8	)		(441,692.8	)		(470,804.2	)		(43.6	)
Statistical Discrepancy		91.3			(323.6	)		(528.1	)		(1,028.7	)		(2,219.1	)		0.2
Expenditures on Gross Domestic Product (3)		956,514.5			978,498.8			981,625.1			1,042,111.3			1,079,765.6			100.0
Net Factor Income from the Rest of the World in the Terms of Trade		1,622.9			6,776.2			4,055.5			114.9			N/A	(5)		N/A	(5)
Trading Gains and Losses from Changes in the Terms of Trade		(16,827.8	)		(50,031.9	)		(35,622.1	)		(39,741.5	)		(65,910.5	)		(6.1	)
Gross National Income (4)		941,317.3			935,248.8			950,041.1			1,002,473.2			N/A	(5)		N/A	(5)
Percentage Increase (Decrease) of GDP over Previous Year At Current Prices		7.3			5.3			3.8			10.1			N/A	(5)		—
At Chained 2005 Year Prices		5.1			2.3			0.3			6.2			3.6			—

(1) Preliminary.

(2) GDP plus net factor income from the rest of the world is equal to the Republic’s gross national product.

(3) Under the “chain-linked” measure of GDP, the components of GDP will not necessarily add to the total GDP.

(4) Under the “chain-linked” measure of Gross National Income, the components of Gross National Income will not necessarily add to the total Gross National Income.

Source : The Bank of Korea.

104

The following table sets out the Republic’s GDP by economic sector at current prices:

Gross Domestic Product by Economic Sector

(at current market prices)

	2006		2007		2008		2009		2010 (1)		As % of GDP 2010  (1)
	(billions of Won)
Industrial Sectors:
Agriculture, Forestry and Fisheries		25,751.2		25,208.8		24,686.0		26,615.0		27,018.7		2.3
Mining and Manufacturing		222,865.9		240,612.1		258,545.4		268,798.7		325,287.2		27.7
Mining and Quarrying		1,925.8		2,001.2		2,336.0		2,220.5		2,237.3		0.2
Manufacturing		220,940.1		238,610.9		256,209.4		266,578.2		323,049.9		27.5
Electricity, Gas and Water		18,546.9		19,155.3		12,298.6		17,258.2		21,044.6		1.8
Construction		61,359.3		64,979.0		64,612.2		66,576.6		68,800.8		5.9
Services:		486,162.9		524,826.9		559,545.8		579,587.5		614,860.2		52.4
Wholesale and Retail Trade, Restaurants and Hotels		87,320.8		93,405.5		100,419.3		103,994.8		114,245.4		9.7
Transportation, Storage and Communication		36,424.2		40,070.5		41,613.1		40,162.5		42,909.6		3.7
Financial Intermediation		55,234.7		61,114.0		65,132.2		65,035.5		72,476.6		6.2
Real Estate, Renting and Business Activities		65,534.7		69,435.7		71,886.2		74,361.1		74,773.1		6.4
Information, Communication		37,969.9		39,198.1		39,666.8		41,225.0		43,159.5		3.7
Business Activities		41,292.3		45,056.0		49,905.7		51,001.9		53,956.6		4.6
Public Administration and Defense; Compulsory Social Security		52,262.6		55,515.9		59,396.8		63,706.6		66,031.0		5.6
Education		51,036.7		55,554.4		60,940.1		63,448.7		65,139.4		5.6
Health and Social Work		31,617.7		35,451.6		38,452.1		43,092.1		47,332.0		4.0
Recreational, Cultural and Sporting		10,859.2		12,209.1		13,048.9		13,693.8		14,056.9		1.2
Other Service Activities		16,610.1		17,816.1		19,084.6		19,865.5		20,780.1		1.8
Taxes less subsidies on products		94,057.8		100,231.0		106,763.8		106,200.8		115,791.6		9.9
Gross Domestic Product at Current Prices		908,743.8		975,013.0		1,026,451.8		1,065,036.8		1,172,803.4		100.0
Net Factor Income from the Rest of the World		1,390.3		1,800.9		7,663.6		4,746.2		320.0		0.0
Gross National Income at Current Price		910,134.2		976,813.9		1,034,115.4		1,069,783.1		1,173,123.4		100.0

(1) Preliminary.

Source : The Bank of Korea.

105

The following table sets out the Republic’s GDP per capita:

Gross Domestic Product per capita

(at current market prices)

	2006		2007		2008		2009		2010 (1)
GDP per capita (thousands of Won)		18,820		20,120		21,120		21,848		23,996
GDP per capita (U.S. dollar)		19,692		21,655		19,153		17,117		20,753
Average Exchange Rate (in Won per U.S. dollar)		955.5		929.2		1,102.6		1,276.4		1,156.3

(1) Preliminary.

Source: The Bank of Korea.

The following table sets out the Republic’s Gross National Income, or GNI, per capita:

Gross National Income per capita

(at current market prices)

	2006		2007		2008		2009		2010
GNI per capita (thousands of Won)		18,840		20,160		21,280		21,950		24,003
GNI per capita (U.S. dollar)		19,772		21,695		19,296		17,193		20,759
Average Exchange Rate (in Won per U.S. dollar)		955.5		929.2		1,102.6		1,276.4		1,156.3

(1) Preliminary.

Source : The Bank of Korea.

106

The following table sets out the Republic’s GDP by economic sector at chained 2005 year prices:

Gross Domestic Product by Economic Sector

(at chained 2005 year prices)

	2007		2008		2009		2010		2011 (1)		As % of GDP 2011 (1)
	(billions of Won)
Industrial Sectors:
Agriculture, Forestry and Fisheries		27,294.0		28,826.9		29,759.2		28,475.4		28,195.0		2.6
Mining and Manufacturing		249,317.9		254,658.8		252,473.7		289,358.3		309,606.0		28.7
Mining and Quarrying		1,909.8		1,922.1		1,906.0		1,758.2		1,716.5		0.2
Manufacturing		247,408.1		254,466.7		250,567.7		287,600.1		307,889.5		28.5
Electricity, Gas and Water		19,026.2		20,199.0		21,023.6		22,020.4		22,766.1		2.1
Construction		62,134.9		60,611.1		61,716.0		61,681.6		58,235.7		5.4
Services:		502,050.0		515,983.6		521,915.1		540,293.6		554,844.1		51.4
Wholesale and Retail Trade, Restaurants and Hotels		90,291.3		91,512.4		90,725.7		96,878.5		101,914.8		9.4
Transportation and Storage		39,136.8		41,033.4		38,666.2		42,367.1		44,005.0		4.1
Financial Intermediation		61,614.4		64,612.2		67,425.2		69,080.2		70,139.9		6.5
Real Estate and Renting		65,524.8		66,491.6		66,368.7		66,570.8		67,636.0		6.3
Information and Communication		39,664.7		41,024.7		41,933.8		43,473.1		45,966.1		4.3
Business Activities		41,800.2		42,990.6		42,727.5		43,211.9		43,553.1		4.0
Public Administration and Defense: Compulsory Social Security		52,183.9		52,903.0		54,887.7		55,821.1		56,439.4		5.2
Education		49,971.2		51,619.6		52,135.1		52,658.8		52,795.1		4.9
Health and Social Work		32,905.8		34,197.6		36,897.6		39,509.6		41,361.9		3.8
Culture and Entertainment Services		11,781.1		12,175.8		12,477.2		12,562.3		12,706.1		1.2
Other Service Activities		17,175.8		17,422.7		17,670.4		18,160.2		18,326.7		1.7
Taxes less subsidies on products		96,992.4		97,090.1		95,514.0		101,396.0		107,314.5		9.9
Gross Domestic Product at Market Prices (2)		956,514.5		978,498.8		981,625.1		1,042,111.3		1,079,765.6		100.0

(1) Preliminary.

(2) Under the “chain-linked” measure of GDP, the components of GDP will not necessarily add to the total GDP.

Source : The Bank of Korea.

GDP growth in 2007 was 5.1% at chained 2005 year prices, as aggregate private and general government consumption expenditures increased by 5.1%, exports of goods and services increased by 12.6% and gross domestic fixed capital formation increased by 4.2%, each compared with 2006.

GDP growth in 2008 was 2.3% at chained 2005 year prices, as aggregate private and general government consumption expenditures increased by 2.0% and exports of goods and services increased by 6.6%, which more than offset a decrease in gross domestic fixed capital formation by 1.9%, each compared with 2007.

107

GDP growth in 2009 was 0.3% at chained 2005 year prices, as aggregate private and general government consumption expenditures increased by 1.2%, which more than offset a decrease in exports of goods and services by 1.2% and a decrease in gross domestic fixed capital formation by 1.0%, each compared with 2008.

Based on preliminary data, GDP growth in 2010 was 6.2% at chained 2005 year prices, as aggregate private and general government consumption expenditures increased by 3.9%, exports of goods and services increased by 14.5% and gross domestic fixed capital formation increased by 7.0%, each compared with 2009.

Based on preliminary data, GDP growth in 2011 was 3.6% at chained 2005 year prices, as aggregate private and general government consumption expenditures increased by 2.3% and exports of goods and services increased by 10.0%, which more than offset a decrease in gross domestic fixed capital formation by 2.1%, each compared with 2010.

108

Principal Sectors of the Economy

Industrial Sectors

The following table sets out production indices for the principal industrial products of the Republic and their relative contribution to total industrial production:

Industrial Production

(2005 = 100)

	Index Weight  (1)		2007		2008		2009		2010		2011 (2)
All Industries		10,000.0		115.9		119.8		119.7		139.2		148.7
Mining and Manufacturing		9,458.5		116.3		120.1		119.9		139.8		149.6
Mining		36.5		91.5		82.3		87.9		81.5		80.8
Petroleum, Crude Petroleum and Natural Gas		8.7		82.1		65.7		89.1		87.3		77.8
Metal Ores		0.5		171.0		154.9		122.2		221.5		276.7
Non-metallic Minerals		27.3		93.0		86.4		86.8		77.1		78.2
Manufacturing		9,422.0		116.4		120.3		120.0		140.1		149.9
Food Products		479.2		101.8		99.4		99.0		105.0		105.7
Beverage Products		159.0		101.7		104.8		99.3		104.4		107.9
Tobacco Products		55.1		116.2		120.8		120.3		116.2		118.1
Textiles		226.0		98.9		90.9		85.8		96.3		97.8
Wearing Apparel, Clothing Accessories and Fur Articles		174.6		116.3		122.1		118.5		124.5		126.0
Tanning and Dressing of Leather, Luggage and Footwear		47.9		100.5		98.8		87.1		82.7		78.1
Wood and Products of Wood and Cork (Except Furniture)		46.7		107.1		99.7		88.2		87.3		84.5
Pulp, Paper and Paper Products		145.0		104.8		103.2		100.2		106.9		109.2
Printing and Reproduction of Recorded Media		77.0		101.8		112.0		99.2		113.3		101.3
Coke, hard-coal and lignite fuel briquettes and Refined Petroleum Products		315.2		102.5		103.2		102.0		105.5		113.4
Chemicals and Chemical Products		772.2		109.6		110.8		116.6		126.1		129.9
Pharmaceuticals, Medicinal Chemicals and Botanical Products		187.1		120.6		130.3		138.3		144.2		143.7
Rubber and Plastic Products		434.2		113.0		109.2		100.0		112.2		117.1
Non-metallic Minerals		309.9		112.2		113.4		112.2		118.4		117.1
Basic Metals		753.2		108.4		110.0		99.7		119.7		128.4
Fabricated Metal Products		490.8		112.0		118.3		106.4		115.5		127.3
Electronic Components, Computer, Radio, Television and Communication Equipment and Apparatuses		1,970.4		138.9		151.6		165.7		207.4		228.2
Medical, Precision and Optical Instruments, Watches and Clocks		102.8		112.5		117.9		119.7		133.9		151.3
Electrical Equipment		449.5		104.8		111.4		113.1		124.4		124.3
Other Machinery and Equipment		737.5		120.4		121.2		108.5		150.4		160.8
Motor Vehicles, Trailers and Semitrailers		1,101.2		114.8		111.0		103.9		128.0		145.7
Other Transport Equipment		254.3		115.9		142.6		160.7		149.6		159.6
Furniture		79.0		100.6		102.8		92.0		97.2		100.4
Other Products		54.2		93.9		79.8		75.2		86.8		88.9
Electricity, Gas		541.5		108.8		114.5		116.5		127.5		132.9
Publishing activities		109.3		96.0		94.8		91.5		89.8		86.6
Total Index (including Publishing Activities)		10,109.3		115.7		119.5		119.4		138.6		148.1

(1) Index weights were established on the basis of an industrial census in 2005 and reflect the average annual value added by production in each of the classifications shown, expressed as a percentage of total value added in the mining, manufacturing and electricity and gas industries in that year.

(2) Preliminary

Source: The Bank of Korea; Korea National Statistical Office.

109

Industrial production increased by 6.8% in 2007, primarily due to solid export growth and domestic consumption. Industrial production growth was only 3.3% in 2008, primarily due to a slowdown in growth of exports and domestic consumption as a result of adverse global and Korean economic conditions beginning in the second half of 2008. Industrial production decreased by 0.1% in 2009, primarily due to decreased exports as a result of adverse global economic conditions. Industrial production increased by 16.1% in 2010, primarily due to increased exports and domestic consumption. Based on preliminary data, industrial production increased by 6.9% in 2011, primarily due to increased exports and domestic consumption.

Manufacturing

The manufacturing sector increased production by 7.1% in 2007 and 3.4% in 2008. In 2009, the manufacturing sector decreased production by 0.2%. The manufacturing sector increased production by 16.8% in 2010 and 7.0% in 2011.

Automobiles. In 2007, automobile production increased by 6.4%, domestic sales volume recorded an increase of 4.7% and export sales volume recorded an increase of 7.5%, compared with 2006. In 2007, export sales of automobiles constituted approximately 9.3% of the Republic’s total exports. In 2008, automobile production decreased by 6.4%, domestic sales volume recorded a decrease of 5.3% and export sales volume recorded a decrease of 5.7%, compared with 2007, primarily due to a decrease in the domestic and global demand for automobiles as a result of adverse global and Korean economic conditions. In 2008, export sales of automobiles constituted approximately 7.4% of the Republic’s total exports. In 2009, automobile production decreased by 8.2%, domestic sales volume recorded an increase of 20.7% and export sales volume recorded a decrease of 19.9%, compared with 2008, primarily due to the continued decrease in global demand for automobiles. In 2009, export sales of automobiles constituted approximately 6.2% of the Republic’s total exports. The automobile stimulus programs of a number of governments, including those in the United States and Europe, encouraged demand for automobiles in the relevant countries for the first nine months of 2009, the effect of which partially offset the decrease in global demand for Korean automobiles during the duration of such stimulus programs. In the fourth quarter of 2009, export sales of automobiles increased compared to previous quarters of 2009, primarily due to the recovery of global demand for automobiles, the effect of which more than offset the negative impact of termination of most of such governments’ automobile stimulus programs in the second half of 2009. In 2010, automobile production increased by 21.6%, domestic sales volume recorded an increase of 5.1% and export sales volume recorded an increase of 29.0%, compared with 2009. In 2011, automobile production increased by 9.0%, domestic sales volume recorded an increase of 0.6% and export sales volume recorded an increase of 13.7%, compared with 2010.

Electronics. In 2006, electronics production amounted to (Won)216,956 billion, an increase of 22.3% from the previous year, and exports amounted to US$119.1 billion, an increase of 18.6% from the previous year. In 2006, export sales of semiconductor memory chips constituted approximately 11.5% of the Republic’s total exports. In 2007, electronics production amounted to (Won)226,741 billion, an increase of 4.5% from the previous year, and exports amounted to US$130.1 billion, an increase of 9.2% from the previous year. In 2007, export sales of semiconductor memory chips constituted approximately 10.5% of the Republic’s total exports. In 2008, electronics production amounted to (Won)252,695 billion, an increase of 11.5% from the previous year, and exports amounted to US$131.2 billion, an increase of 0.8% from the previous year. In 2008, export sales of semiconductor memory chips constituted approximately 7.8% of the Republic’s total exports. In 2009, electronics production amounted to (Won)261,456 billion, an increase of 3.5% from the previous year, and exports amounted to US$120.9 billion, a decrease of 7.8% from the previous year. In 2009, export sales of semiconductor memory chips constituted approximately 8.5% of the Republic’s total exports. In 2010, electronics production amounted to (Won)322,027 billion, an increase of 22.8% from the previous year, and exports amounted to US$153.9 billion, an increase of 27.3% from the previous year. In 2010, export sales of semiconductor memory chips constituted approximately 10.9% of the Republic’s total exports.

110

Iron and Steel. In 2007, crude steel production totaled 51.5 million tons, an increase of 6.3% from 2006. Domestic sales volume increased by 10.8% and export sales volume increased by 5.2%. In 2008, crude steel production totaled 53.3 million tons, an increase of 3.8% from 2007. Domestic sales volume increased by 6.2% and export sales volume increased by 8.6%. In 2009, crude steel production totaled 48.6 million tons, a decrease of 8.9% from 2008. Domestic sales volume and export sales volume decreased by 22.5% and 1.2%, respectively. In 2010, crude steel production totaled 58.9 million tons, an increase of 20.2% from 2009. Domestic sales volume and export sales volume increased by 14.3% and 21.1%, respectively. Based on preliminary data, in 2011, crude steel production totaled 68.5 million tons, an increase of 20.2% from 2010. Domestic sales volume and export sales volume increased by 7.6% and 16.9%, respectively.

Shipbuilding. In 2006, the Republic’s shipbuilding orders amounted to 19 million compensated gross tons, an increase of 35.7% compared to 2005. In 2007, the Republic’s shipbuilding orders amounted to 32 million compensated gross tons, an increase of 68.4% compared to 2006. In 2008, the Republic’s shipbuilding orders amounted to 14 million compensated gross tons, a decrease of 56.3% compared to 2007. In 2009, the Republic’s shipbuilding orders amounted to 2 million compensated gross tons, a decrease of 85.7% compared to 2008 as a result of a decrease in ship orders due to adverse global economic conditions. In 2010, the Republic’s shipbuilding orders amounted to 8 million compensated gross tons, an increase of 300.0% compared to 2009.

Agriculture, Forestry and Fisheries

The Government’s agricultural policy has traditionally focused on:

• grain production;

• development of irrigation systems;

• land consolidation and reclamation;

• seed improvement;

• mechanization measures to combat drought and flood damage; and

• increasing agricultural incomes.

Recently, however, the Government has increased emphasis on cultivating profitable crops and strengthening international competitiveness in anticipation of opening the domestic agricultural market.

In 2006, rice production decreased 2.1% from 2005 to 4.7 million tons. In 2007, rice production decreased 6.4% from 2006 to 4.4 million tons. In 2008, rice production increased 9.1% from 2007 to 4.8 million tons. Based on preliminary data, in 2009, rice production increased 2.1% from 2008 to 4.9 million tons. Based on preliminary data, in 2010, rice production decreased 12.6% from 2009 to 4.3 million tons. Based on preliminary data, in 2011, rice production decreased 14.0% from 2010 to 4.9 million tons. Due to limited crop yields resulting from geographical and physical constraints, the Republic depends on imports for certain basic foodstuffs.

The Government is seeking to develop the fishing industry by encouraging the building of large fishing vessels and modernizing fishing equipment, marketing techniques and distribution outlets.

In 2007, the agriculture, forestry and fisheries industry increased by 4.0% compared to 2006 primarily due to an increase in fishing catch which offset a decrease in the production of rice. In 2008, the agriculture, forestry and fisheries industry increased by 5.6% compared to 2007. In 2009, the agriculture, forestry and fisheries industry increased by 3.2% compared to 2008. In 2010, the agriculture, forestry and fisheries industry decreased by 4.3% compared to 2009. Based on preliminary data, in 2011, the agriculture, forestry and fisheries industry decreased by 1.0% compared to 2010.

111

Construction

In 2007, the construction industry increased by 2.6% compared to 2006 primarily due to an increase in the construction of commercial buildings which offset a slight decrease in the construction of residential buildings. In 2008, the construction industry decreased by 2.5% compared to 2007 primarily due to a significant decrease in the construction of commercial and residential buildings. In 2009, the construction industry increased by 1.8% compared to 2008. In 2010, the construction industry decreased by 0.1% compared to 2009. Based on preliminary data, in 2011, the construction industry decreased by 5.6% compared to 2010. The construction industry has experienced a significant downturn since the second half of 2009, due to excessive investment in recent years in residential property development projects, stagnation of real property prices and reduced demand for residential property, especially in areas outside of Seoul, as a result of deteriorating conditions in the Korean economy in the second half of 2009 and into 2010. The Government has taken measures to support the Korean construction industry, including a (Won)5 trillion program to buy unsold housing units and land from construction companies. However, the effect of these measures is uncertain and the construction industry may continue to experience adverse conditions.

Electricity and Gas

The following table sets out the Republic’s dependence on imports for energy consumption:

Dependence on Imports for Energy Consumption

	Total Energy Consumption		Imports		Imports Dependence Ratio
	(millions of tons of oil equivalents, except ratios)
2006		233.4		225.2		96.5
2007		236.5		228.3		96.5
2008		240.8		232.2		96.4
2009		243.3		234.7		96.5
2010		262.6		253.4		96.5

Source: Korea Energy Economics Institute.

Korea has almost no domestic oil or gas production and depends on imported oil and gas to meet its energy requirements. Accordingly, the international prices of oil and gas significantly affect the Korean economy. Any significant long-term increase in the prices of oil and gas will increase inflationary pressures in Korea and adversely affect the Republic’s balance of trade.

To reduce its dependence on oil and gas imports, the Government has encouraged energy conservation and energy source diversification emphasizing nuclear energy. The following table sets out the principal primary sources of energy consumed in the Republic, expressed in oil equivalents and as a percentage of total energy consumption.

Consumption of Energy by Source

	Coal				Petroleum				Nuclear				Others (1)				Total
	Quantity		%		Quantity		%		Quantity		%		Quantity		%		Quantity		%
2006		56.7		24.3		101.8		43.6		37.2		15.9		37.7		16.2		233.4		100.0
2007		59.7		25.2		105.5		44.6		30.7		13.0		40.6		17.2		236.5		100.0
2008		66.1		27.5		100.2		41.6		32.5		13.5		42.0		17.4		240.8		100.0
2009		68.6		28.2		102.3		42.0		31.8		13.1		40.6		16.7		243.3		100.0
2010		75.9		28.9		104.3		39.7		31.9		12.1		50.5		19.2		262.6		100.0

(1) Includes natural gas, hydroelectric power and renewable energy.

Source: Korea Energy Economics Institute.

112

The Republic’s first nuclear power plant went into full operation in 1978 with a rated generating capacity of 587 megawatts. Construction of an additional 18 nuclear power plants was completed by July 2004, adding 16,129 megawatts of generating capacity. The Republic’s total nuclear power generating capacity is estimated to be 17,716 megawatts as of December 31, 2010.

Services Sector

In 2007, the transportation and storage sector increased by 5.5%, the financial intermediation sector increased by 10.8% and the real estate and renting sector increased by 1.4%, each compared with 2006. In 2008, the transportation and storage sector increased by 4.8%, the financial intermediation sector increased by 4.9% and the real estate and renting sector increased by 1.5%, each compared with 2007. In 2009, the transportation and storage sector decreased by 5.8%, the financial intermediation sector increased by 4.4% and the real estate and renting sector decreased by 0.2%, each compared with 2008. In 2010, the transportation and storage sector increased by 9.6%, the financial intermediation sector increased by 2.5% and the real estate and renting sector increased by 0.3%, each compared with 2009. Based on preliminary data, in 2011, the transportation and storage sector increased by 3.9%, the financial intermediation sector increased by 1.5% and the real estate and renting sector increased by 1.6%, each compared with 2009

Prices, Wages and Employment

The following table shows selected price and wage indices and unemployment rates:

	Producer Price Index (1)		Increase Over Previous Year			Consumer Price Index  (1)		Increase Over Previous Year		Wage Index (1) (2)			Increase Over Previous Year			Unemployment Rate (1) (3)
	(2005=100)		(%)			(2010=100)		(%)		(2005=100)			(%)			(%)
2006		100.9		0.9			88.1		2.2		105.6			5.6			3.5
2007		102.3		1.4			90.3		2.5		112.8			6.8			3.2
2008		111.1		8.6			94.5		4.7		111.4			(1.2	)		3.2
2009		110.9		(0.2	)		97.1		2.8		113.7			2.1			3.6
2010		115.1		3.8			100.0		3.0		124.1			9.1			3.7
2011		122.1		6.1			104.0		4.0		N/A	(4)		N/A	(4)		3.4

(1) Average for year.

(2) Nominal wage index of earnings in manufacturing industry.

(3) Expressed as a percentage of the economically active population.

(4) Not available.

Source: The Bank of Korea; Korea National Statistical Office.

The inflation rate, on an annualized basis, was 2.5% in 2007, 4.7% in 2008, 2.8% in 2009, 3.0% in 2010 and 4.0% in 2011.

The unemployment rate was 3.5% in 2006, 3.2% in 2007, 3.2% in 2008, 3.6% in 2009, 3.7% in 2010 and 3.4% in 2011.

From 1992 to 2009, the economically active population of the Republic increased by approximately 24.8% to 24.3 million, while the number of employees increased by approximately 23.7% to 23.5 million. The economically active population over 15 years old as a percentage of the total over-15 population has remained between 60% and 63% over the past decade. Literacy among workers under 50 is almost universal. As of December 31, 2010, the economically active population of the Republic was 24.8 million and the number of employees was 23.8 million.

113

As of July 1, 2004, the Republic adopted a five-day workweek for large corporations with over 1,000 employees, publicly-owned (state-run) companies, banks and insurance companies, reducing working hours from 44 to 40 hours a week. The adoption of the five-day workweek has been extended to companies with over 300 employees and to government employees as of July 1, 2005 and to companies with over 100 employees as of July 1, 2006. Companies with more than 50 employees adopted the five-day workweek as of July 1, 2007 and those with over 20 adopted the five-day workweek as of July 1, 2008. Companies with less than 20 employees are also scheduled to adopt the five-day workweek by July 1, 2011.

Approximately 9.8% of the Republic’s workers were unionized as of December 31, 2010. In the early 2000s, the labor unions of several of the Republic’s largest commercial banks, including Kookmin Bank, Chohung Bank (which was later acquired by Shinhan Bank) and Citibank Korea Inc. (formerly KorAm Bank), staged strikes in response to consolidation in the banking industry. In addition, in the summer of 2004 and 2005, respectively, unionized workers of GS Caltex Corporation and Asiana Airlines staged strikes demanding better compensation and working conditions. In the fall of 2005, unionized workers at Hyundai Motor Company and Kia Motors Corp. went on strikes during annual contract talks. In December 2005, Korean Air’s unionized pilots also staged strikes demanding a higher wage increase. In the summer of 2006, unionized workers of Hyundai Motor Company and Kia Motors Corp. went on partial strikes demanding better compensation and working conditions, and unionized workers of Ssangyong Motor Company went on strike in response to the company’s proposed layoff plans. In July 2006, unionized workers of POSCO’s subcontractors initiated a sit-in strike at POSCO’s headquarters in Pohang demanding better wages and working conditions, disrupting POSCO’s operations for nine days. In June 2007, unionized workers of Hyundai Motor Company went on partial strikes demanding a higher bonus increase. Also, in May 2009, unionized workers of Ssangyong Motor Company went on full-scale strike and illegally occupied the company’s factory premises in Pyungtaek opposing the company’s reorganization plan. Actions such as these by labor unions may hinder implementation of the labor reform measures and disrupt the Government’s plans to create a more flexible labor market. Although much effort is being expended to resolve labor disputes in a peaceful manner, there can be no assurance that further labor unrest will not occur in the future. Continued labor unrest in key industries of the Republic may have an adverse effect on the economy.

In 1997, the Korean Confederation of Trade Unions organized a political alliance, which led to the formation of the Democratic Labor Party in January 2000. The Democratic Labor Party, which seeks to represent the interests of workers, controlled five seats in the National Assembly from May 30, 2008 as a result of the 18th legislative general election held on April 9, 2008. The Democratic Labor Party merged with The People’s Participation Party and changed its name to The Unified Progressive Party in December 2011. The Unified Progressive Party controls seven seats in the National Assembly as of March 21, 2012.

The Financial System

Structure of the Financial Sector

The Republic’s financial sector includes the following categories of financial institutions:

• The Bank of Korea;

• banking institutions;

• non-bank financial institutions; and

• other financial entities, including:

• financial investment companies;

• credit guarantee institutions;

• venture capital companies; and

• miscellaneous others.

114

To increase transparency in financial transactions and enhance the integrity and efficiency of the financial markets, Korean law requires that financial institutions confirm that their clients use their real names when transacting business. To ease the liquidity crisis, the Government altered the real-name financial transactions system during 1998, to allow the sale or deposit of foreign currencies through domestic financial institutions and the purchase of certain bonds, including Government bonds, without identification. The Government also strengthened confidentiality protection for private financial transactions.

In July 2007, the Korean National Assembly passed the Financial Investment Services and Capital Markets Act or FSCMA, under which various industry-based capital markets regulatory systems currently were consolidated into a single regulatory system. The FSCMA, which became effective in February 2009, expands the scope of permitted investment-related financial products and activities through expansive definitions of financial instruments and function-based regulations that allow financial investment companies to offer a wider range of financial services, as well as strengthening investor protection and disclosure requirements. The Enforcement Decree of the FSCMA classifies the financial investment companies into a total of 82 categories depending on the types of (i) financial investment services, (ii) financial investment products, and (iii) investors.

Prior to the effective date of the Financial Investment Services and Capital Markets Act, separate laws regulated various types of financial institutions depending on the type of the financial institution (for example, securities companies, futures companies, trust business companies and asset management companies) and subjected financial institutions to different licensing and ongoing regulatory requirements (for example, under the Securities and Exchange Act, the Futures Business Act and the Indirect Investment Asset Management Business Act). By applying one uniform set of rules to financial businesses having the same economic function, the Financial Investment Services and Capital Markets Act attempts to improve and address issues caused by the previous regulatory system under which the same economic function relating to capital markets-related business were governed by multiple regulations. To this end, the Financial Investment Services and Capital Markets Act categorizes capital markets-related businesses into six different functions, as follows:

• investment dealing (trading and underwriting of financial investment products);

• investment brokerage (brokerage of financial investment products);

• collective investment (establishment of collective investment schemes and the management thereof);

• investment advice;

• discretionary investment management; and

• trusts (together with the five businesses set forth above, “Financial Investment Businesses”).

Accordingly, all financial businesses relating to financial investment products are reclassified as one or more of the Financial Investment Businesses described above, and financial institutions are subject to the regulations applicable to their relevant Financial Investment Businesses, irrespective of what type of financial institution it is. For example, under the Financial Investment Services and Capital Markets Act, derivative businesses conducted by securities companies and future companies will be subject to the same regulations under the Financial Investment Services and Capital Markets Act, at least in principle.

The banking business and the insurance business are not subject to the Financial Investment Services and Capital Markets Act and will continue to be regulated under separate laws; provided, however, that they are subject to the Financial Investment Services and Capital Markets Act if their activities involve any Financial Investment Businesses requiring a license based on the Financial Investment Services and Capital Markets Act.

Banking Industry

The banking industry comprises commercial banks and specialized banks. Commercial banks serve the general public and corporate sectors. They include nationwide banks, regional banks and branches of foreign banks. Regional banks provide services similar to nationwide banks, but operate in a geographically restricted

115

region. Branches of foreign banks have operated in the Republic since 1967 but provide a relatively small proportion of the country’s banking services. As of December 31, 2010, commercial banks consisted of seven nationwide banks, all of which have branch networks throughout the Republic, six regional banks and 53 branches of 37 foreign banks operating in the country. Nationwide and regional banks had, in the aggregate, 5,515 domestic branches and offices, 41 overseas branches, 17 overseas representative offices and 32 overseas subsidiaries as of December 31, 2010.

Specialized banks meet the needs of specific sectors of the economy in accordance with Government policy; they are organized under, or chartered by, special laws. Specialized banks include:

• The Korea Development Bank;

• The Export-Import Bank of Korea;

• The Industrial Bank of Korea;

• National Federation of Fisheries Cooperatives; and

• NH Bank (which was established by a spin-off of the credit and banking unit from the National Agricultural Cooperative Federation in March 2012).

The economic difficulties in 1997 and 1998 caused an increase in Korean banks’ non-performing assets and a decline in capital adequacy ratios of Korean banks. From 1998 through 2002, the Financial Services Commission amended banking regulations several times to adopt more stringent criteria for non-performing loans that more closely followed international standards. The new criteria increased the level of non-performing loans held by banks and other financial institutions. The following table sets out the total loans and discounts and non-performing assets of the commercial banking sector.

	Total Loans		Non-Performing Assets		Percentage of Total
	(trillions of won)				(percentage)
December 31, 2007		1,073.8		6.5		0.6
December 31, 2008		1,288.1		11.0		0.9
December 31, 2009		1,285.8		10.4		0.8
December 31, 2010		1,308.9		24.8		1.9
December 31, 2011		1,387.6		18.8		1.4

Source : Financial Supervisory Service.

Most of the growth in total loans since the end of 2002 has been attributable to loans to the retail sector, accounting for 38.1% of total loans as of December 31, 2010, compared to 34.3% as of December 31, 1999.

In 2007, these banks posted an aggregate net profit of (Won)15.0 trillion. In 2008, these banks posted an aggregate net profit of (Won)7.7 trillion, compared to an aggregate net profit of (Won)15.0 trillion in 2007, primarily due to increased loan loss provisions. In 2009, these banks posted an aggregate net profit of (Won)6.9 trillion, compared to an aggregate net profit of (Won)7.7 trillion in 2008, primarily due to increased non-performing loans. In 2010, these banks posted an aggregate net profit of (Won)9.3 trillion, compared to an aggregate net profit of (Won)6.9 trillion in 2009, primarily due to increased net interest income. Based on preliminary data, in 2011, these banks posted an aggregate net profit of (Won)12.0 trillion, compared to an aggregate net profit of (Won)9.3 trillion in 2010, primarily due to decreased non-performing loans.

116

Non-Bank Financial Institutions

Non-bank financial institutions include:

• savings institutions, including trust accounts of banks, mutual savings banks, credit unions, mutual credit facilities, community credit cooperatives and postal savings;

• life insurance institutions; and

• credit card companies.

The country had 105 mutual savings banks as of December 31, 2010, with assets totaling (Won)86.9 trillion.

As of December 31, 2010, 13 domestic life insurance institutions, two joint venture life insurance institutions and nine wholly-owned subsidiaries of foreign life insurance companies, with assets totaling approximately (Won)408.5 trillion as of December 31, 2010, were operating in the Republic.

As of December 31, 2010, six credit card companies operated in the country with loans totaling approximately (Won)54.5 trillion.

Money Markets

In the Republic, the money markets consist of the call market and markets for a wide range of other short- term financial instruments, including treasury bills, monetary stabilization bonds, negotiable certificates of deposits, repurchase agreements and commercial paper.

Securities Markets

On January 27, 2005, the Korea Exchange was established pursuant to the now repealed Korea Securities and Futures Exchange Act by consolidating the Korea Stock Exchange, the Korea Futures Exchange, the KOSDAQ Stock Market, Inc., or the KOSDAQ, and the KOSDAQ Committee of the Korea Securities Dealers Association, which had formerly managed the KOSDAQ. There are three different markets operated by the Korea Exchange: the KRX KOSPI Market, the KRX KOSDAQ Market, and the KRX Derivatives Market. The Korea Exchange has two trading floors located in Seoul, one for the KRX KOSPI Market and one for the KRX KOSDAQ Market, and one trading floor in Busan for the KRX Derivatives Market. The Korea Exchange is a joint stock company with limited liability, the shares of which are held by (i) financial investment companies that were formerly members of the Korea Futures Exchange or the Korea Stock Exchange and (ii) the stockholders of the KOSDAQ. Currently, the Korea Exchange is the only stock exchange in Korea and is operated by membership, having as its members Korean financial investment companies and some Korean branches of foreign financial investment companies.

The Korea Exchange publishes the Korea Composite Stock Price Index every ten seconds, which is an index of all equity securities listed on the Korea Exchange. The Korea Composite Stock Price Index is computed using the aggregate value method, whereby the market capitalizations of all listed companies are aggregated, subject to certain adjustments, and this aggregate is expressed as a percentage of the aggregate market capitalization of all listed companies as of the base date, January 4, 1980.

117

The following table shows the value of the Korea Composite Stock Price Index as of the dates indicated:

December 28, 2006	1,434.5
January 31, 2007	1,360.2
February 28, 2007	1,417.3
March 31, 2007	1,452.6
April 30, 2007	1,542.2
May 31, 2007	1,700.9
June 30, 2007	1,743.6
July 31, 2007	1,933.3
August 31, 2007	1,873.2
September 28, 2007	1,946.5
October 31, 2007	2,064.9
November 30, 2007	1,906.0
December 28, 2007	1,897.1
January 31, 2008	1,624.7
February 29, 2008	1,711.6
March 31, 2008	1,704.0
April 30, 2008	1,825.5
May 30, 2008	1,852.0
June 30, 2008	1,674.9
July 31, 2008	1,594.7
August 29, 2008	1,474.2
September 30, 2008	1,448.1
October 31, 2008	1,113.1
November 28, 2008	1,076.1
December 31, 2008	1,124.5
January 30, 2009	1,162.1
February 27, 2009	1,063.0
March 31, 2009	1,206.3
April 30, 2009	1,369.4
May 29, 2009	1,395.9
June 30, 2009	1,390.1
July 31, 2009	1,557.3

August 31, 2009	1,591.9
September 30, 2009	1,673.1
October 31, 2009	1,580.7
November 30, 2009	1,555.6
December 31, 2009	1,682.8
January 29, 2010	1,602.4
February 26, 2010	1,594.6
March 31, 2010	1,692.9
April 30, 2010	1,741.6
May 31, 2010	1,641.3
June 30, 2010	1,698.3
July 30, 2010	1,759.3
August 31, 2010	1,742.8
September 30, 2010	1,872.8
October 29, 2010	1,883.0
November 30, 2010	1,904.6
December 31, 2010	2,051.0
January 31, 2011	2,069.7
February 28, 2011	1,939.3
March 31, 2011	2,106.7
April 30, 2011	2,192.4
May 29, 2011	2,142.5
June 30, 2011	2,100.7
July 31, 2011	2,133.2
August 31, 2011	1,880.1
September 30, 2011	1,769.7
October 31, 2011	1,909.0
November 30, 2011	1,847.5
December 31, 2011	1,825.7
January 31, 2012	1,955.8
February 29, 2012	2,030.3

On December 27, 1997, the last day of trading in 1997, the index stood at 376.3, a sharp decline from 647.1 on September 30, 1997. The fall resulted from growing concerns about the Republic’s weakening financial and corporate sectors, the Republic’s falling foreign currency reserves, the sharp depreciation of the Won against the U.S. Dollar and other external factors, such as a sharp decline in stock prices in Hong Kong on October 24, 1997 and financial turmoil in Southeast Asian countries. The Korea Composite Stock Price Index recovered to reach a high of 2,064.9 in late 2007 but since then the index declined. As liquidity and credit concerns and volatility in the global financial markets increased significantly since September 2008, there was a significant overall decline and continuing volatility in the stock prices of Korean companies during the fourth quarter of 2008 and first half of 2009. The index was 2,027.2 on March 21, 2012.

Supervision System

The Office of Bank Supervision, the Securities Supervisory Board, the Insurance Supervisory Board and all other financial sector regulatory bodies merged in January 1999 to form the Financial Services Commission. The Financial Services Commission acts as the executive body over the Financial Supervisory Service. The Financial Services Commission reports to, but operates independently of, the Prime Minister’s office.

118

The Ministry of Strategy and Finance (formerly the Ministry of Finance and Economy) focuses on financial policy and foreign currency regulations. The Bank of Korea manages monetary policy focusing on price stabilization.

Deposit Insurance System

The Republic’s deposit insurance system insures amounts on deposit with banks, non-bank financial institutions, securities companies and life insurance companies.

Since January 2001, deposits at any single financial institution are insured only up to (Won)50 million per person regardless of the amount deposited.

The Government excluded certain deposits, such as repurchase agreements, from the insurance scheme, expanded the definition of unsound financial institutions to which the insurance scheme would apply and gradually increased the insurance premiums payable by insured financial institutions.

Monetary Policy

The Bank of Korea

The Bank of Korea was established in 1950 as Korea’s central bank and the country’s sole currency issuing bank. A seven-member Monetary Policy Committee, chaired by the Governor of The Bank of Korea, formulates and controls monetary and credit policies.

Inflation targeting is the basic system of operation for Korean monetary policy. The consumer price index is used as The Bank of Korea’s target indicator. To achieve its established inflation target, the Monetary Policy Committee of The Bank of Korea determines and announces the “Bank of Korea Base Rate,” the reference rate applied in transactions such as repurchase agreements between The Bank of Korea and its financial institution counterparts. The Bank of Korea uses open market operations as its primary instrument to keep the call rate in line with the Monetary Policy Committee’s target rate. In addition, The Bank of Korea is able to establish policies regarding its lending to banks in Korea and their reserve requirements.

Interest Rates

On October 11, 2005, The Bank of Korea raised the policy rate from 3.25% to 3.5%, which was further raised to 3.75% on December 8, 2005, to 4.0% on February 9, 2006, to 4.25% on June 8, 2006 and to 4.50% on August 10, 2006, in response to the increasing side-effects of a low interest rate environment including inflationary pressures coupled with signs of recovery of the real economy. On July 12, 2007, The Bank of Korea raised the policy rate to 4.75% from 4.5%, and raised it further to 5.0% on August 9, 2007. The rationale for this change was the concern that the ample market liquidity might put upside pressure on inflation in the medium to long term as the economic upswing continued. On August 7, 2008, The Bank of Korea raised the policy rate to 5.25% from 5.0%, taking the view that inflation in consumer prices had picked up its pace, due to the direct and indirect effects of high oil prices, at a time when domestic economic activity had slackened. On October 9, 2008, The Bank of Korea cut its policy rate to 5.0% from 5.25%, and continued to lower it further to 4.25% on October 27, 2008, 4.0% on November 7, 2008, 3.0% on December 11, 2008, 2.5% on January 9, 2009 and 2.0% on February 12, 2009, in order to address financial market instability and to help combat the slowdown of the domestic economy. On July 9, 2010, The Bank of Korea raised the policy rate to 2.25% from 2.0%, which was further raised to 2.5% on November 16, 2010, in response to signs of inflationary pressures and the continued growth of domestic economy. On January 13, 2011, The Bank of Korea raised the policy rate to 2.75%, which was further increased to 3.0% on March 10, 2011 and to 3.25% on June 10, 2011, in response to inflationary pressures driven mainly by rises in the prices of petroleum products and farm products.

119

With the deregulation of interest rates on banks’ demand deposits on February 2, 2004, The Bank of Korea completed the interest rate deregulation based upon the “Four-Stage Interest Rate Liberalization Plan” announced in 1991. The prohibition on the payment of interest on ordinary checking accounts was, however, maintained.

Money Supply

The following table shows the volume of the Republic’s money supply:

	December 31,
	2007			2008			2009			2010			2011
	(billions of Won)
Money Supply (M1) (1)		316,382.7			330,623.7			389,394.5			427,791.6			442,077.5
Quasi-money (2)		957,229.2			1,095,263.8			1,177,455.5			1,232,738.4			1,309,380.9
Money Supply (M2) (3)		1,273,611.9			1,425,887.5			1,566,850.0			1,660,530.0			1,751,458.4
Percentage Increase Over Previous Year		10.8	%		12.0	%		9.9	%		6.0	%		5.5	%

(1) Consists of currency in circulation and demand and instant access savings deposits at financial institutions.

(2) Includes time and installment savings deposits, marketable instruments, yield-based dividend instruments and financial debentures, excluding financial instruments with a maturity of more than two years.

(3) Money Supply (M2) is the sum of Money Supply (M1) and quasi-money.

Source: The Bank of Korea.

Exchange Controls

Authorized foreign exchange banks, as registered with the Ministry of Strategy and Finance, handle foreign exchange transactions. The ministry has designated other types of financial institutions to handle foreign exchange transactions on a limited basis.

Korean laws and regulations generally require a report to either the Ministry of Strategy and Finance, The Bank of Korea or authorized foreign exchange banks, as applicable, for issuances of international bonds and other instruments, overseas investments and certain other transactions involving foreign exchange payments.

In 1994 and 1995, the Government relaxed regulations of foreign exchange position ceilings and foreign exchange transaction documentation and created free Won accounts which may be opened by non-residents at Korean foreign exchange banks. The Won funds deposited into the free Won accounts may be converted into foreign currencies and remitted outside Korea without any governmental approval. In December 1996, after joining the OECD, the Republic freed the repatriation of investment funds, dividends and profits, as well as loan repayments and interest payments. The Government continues to reduce exchange controls in response to changes in the world economy, including the new trade regime under the WTO, anticipating that such foreign exchange reform will improve the Republic’s competitiveness and encourage strategic alliances between domestic and foreign entities.

In September 1998, the National Assembly passed the Foreign Exchange Transactions Act, which became effective in April 1999 and was subsequently amended in October 2000, December 2000, December 2005, October 2006, January 2007, August 2007, February 2008, January 2009, April 2009 and April 2011. In principle, most currency and capital transactions, including, among others, the following transactions, have been liberalized:

• the investment in real property located overseas by Korean companies and financial institutions;

• the establishment of overseas branches and subsidiaries by Korean companies and financial institutions;

120

• the investment by non-residents in deposits and trust products having more than one year maturities; and

• the issuance of debentures by non-residents in the Korean market.

To minimize the adverse effects from further opening of the Korean capital markets, the Ministry of Strategy and Finance is authorized to introduce a variable deposit requirement system to restrict the influx of short-term speculative funds.

The Government has also embarked on a second set of liberalization initiatives starting in January 2001, under which ceilings on international payments for Korean residents have been eliminated, including overseas travel expenses, overseas inheritance remittances and emigration expenses. Overseas deposits, trusts, acquisitions of foreign securities and other foreign capital transactions made by residents and the making of deposits in Korean currency by non-residents have also been liberalized. In line with the foregoing liberalization, measures will also be adopted to curb illegal foreign exchange transactions and to stabilize the foreign exchange market.

Effective as of January 1, 2006, the Government liberalized the regulations governing “capital transactions.” The regulations provide that no regulatory approvals are required for any capital transactions. The capital transactions previously subject to approval requirements are now subject only to reporting requirements.

In January 2010, the Financial Supervisory Services released FX Derivative Transactions Risk Management Guideline to prevent over-hedging of foreign exchange risk by corporate investors. According to the guideline as amended in July 2010, if a corporate investor, other than a financial institution or a public enterprise, wishes to enter into a foreign exchange forward, option or swap agreement with a bank, the bank is required to verify whether the corporate investor’s assets, liabilities or contracts face foreign exchange risks that could be mitigated by a foreign exchange forward, option or swap agreement. In addition, the bank is required to ensure that the corporate investor’s risk hedge ratio, which is the ratio of the aggregate notional amount to the aggregate amount of risk, does not exceed 100%.

121

Foreign Exchange

The following table shows the exchange rate between the Won and the U.S. Dollar (in Won per U.S. Dollar) as announced by the Seoul Money Brokerage Services, Ltd. as of the dates indicated:

Exchange Rates

	Won/U.S. Dollar Exchange Rate
December 29, 2006		929.6
January 31, 2007		940.9
February 28, 2007		938.3
March 31, 2007		940.3
April 30, 2007		929.4
May 31, 2007		929.9
June 30, 2007		926.8
July 31, 2007		923.2
August 31, 2007		939.9
September 28, 2007		920.7
October 31, 2007		907.4
November 30, 2007		929.6
December 31, 2007		938.2
January 31, 2008		943.9
February 29, 2008		937.3
March 31, 2008		991.7
April 30, 2008		999.7
May 31, 2008		1,031.4
June 30, 2008		1,043.4
July 31, 2008		1,008.5
August 29, 2008		1,081.8
September 30, 2008		1,187.7
October 31, 2008		1,291.4
November 28, 2008		1,482.7
December 31, 2008		1,257.5
January 31, 2009		1,368.5
February 27, 2009		1,516.4
March 31, 2009		1,377.1
April 30, 2009		1,348.0
May 29, 2009		1,272.9
June 30, 2009		1,284.7
July 31, 2009		1,240.5

	Won/U.S. Dollar Exchange Rate
August 31, 2009		1,244.9
September 30, 2009		1,188.7
October 31, 2009		1,200.6
November 30, 2009		1,167.4
December 31, 2009		1,167.6
January 29, 2010		1,156.5
February 26, 2010		1,158.4
March 31, 2010		1,130.8
April 30, 2010		1,115.5
May 31, 2010		1,200.2
June 30, 2010		1,210.3
July 30, 2010		1,187.2
August 31, 2010		1,189.1
September 30, 2010		1,142.0
October 29, 2010		1,126.6
November 30, 2010		1,157.3
December 31, 2010		1,138.9
January 31, 2011		1,114.3
February 28, 2011		1,127.9
March 31, 2011		1,107.2
April 30, 2011		1,072.3
May 31, 2011		1,080.6
June 30, 2011		1,078.1
July 30, 2011		1,052.6
August 31, 2011		1,071.7
September 30, 2011		1,179.5
October 31, 2011		1,104.9
November 30, 2011		1,150.3
December 31, 2011		1,153.3
January 31, 2012		1,125.0
February 29, 2012		1,126.5

Prior to November 1997, the Government permitted exchange rates to float within a daily range of 2.25%. In response to the substantial downward pressures on the Won caused by the Republic’s economic difficulties in late 1997, in November 1997, the Government expanded the range of permitted daily exchange rate fluctuations to 10%. The Government eliminated the daily exchange rate band in December 1997, and the Won now floats according to market forces. The value of the Won relative to the U.S. dollar depreciated from (Won)888.1 to US$1.00 on June 30, 1997 to (Won)1,964.8 to US$1.00 on December 24, 1997. Due to improved economic conditions and increases in trade surplus, the Won has generally appreciated against the U.S. dollar, although the trend reversed in March 2008. During the period from January 2, 2008 through April 16, 2009, the value of the Won relative to the U.S. dollar declined by approximately 29.9%, due primarily to adverse economic conditions resulting from liquidity and credit concerns and volatility in the global credit and financial markets and repatriations by foreign investors of their investments in the Korean stock market. The market average exchange rate was (Won)1,123.1 to US$1.00 on March 21, 2012.

122

Balance of Payments and Foreign Trade

Balance of Payments

Balance of payments figures measure the relative flow of goods, services and capital into and out of the country as represented in the current balance and the capital balance. The current balance tracks a country’s trade in goods and services and transfer payments and measures whether a country is living within its income from trading and investments. The capital balance covers all transactions involving the transfer of capital into and out of the country, including loans and investments. The overall balance represents the sum of the current and capital balances. An overall balance surplus indicates a net inflow of foreign currencies, thereby increasing demand for and strengthening the local currency. An overall balance deficit indicates a net outflow of foreign currencies, thereby decreasing demand for and weakening the local currency. The financial account mirrors the overall balance. If the overall balance is positive, the surplus, which represents the nation’s savings, finances the overall deficit of the country’s trading partners. Accordingly, the financial account will indicate cash outflows equal to the overall surplus. If, however, the overall balance is negative, the nation has an international deficit which must be financed. Accordingly, the financial account will indicate cash inflows equal to the overall deficit.

The following table sets out certain information with respect to the Republic’s balance of payments:

Balance of Payments ⁽¹⁾

Classification	2007			2008			2009			2010			2011 (4)
	(millions of dollars)
Current Account		21,769.7			3,197.5			32,790.5			29,393.5			26,505.3
Goods		37,129.1			5,170.1			37,866.0			40,082.5			30,950.3
Exports (2)		389,568.5			434,651.5			358,189.7			461,444.9			552,564.3
Imports (2)		352,439.4			429,481.4			320,323.7			421,362.4			521,614.0
Services		(11,967.3	)		(5,734.1	)		(6,640.5	)		(8,626.0	)		(4,377.4	)
Income		135.0			4,435.4			2,276.7			1,015.9			2,455.8
Current Transfers		(3,527.1	)		(673.9	)		(711.7	)		(3,078.9	)		(2,523.4	)
Capital and Financial Account		(23,876.6	)		(1,154.0	)		(34,651.2	)		(27,478.5	)		(31,964.6	)
Capital Account		(2,387.5	)		109.3			289.6			(217.9	)		150
Financial Account (3)		(21,489.1	)		(1,263.3	)		(34,940.7	)		(27,260.6	)		(32,114.6	)
Net Errors and Omissions		2,106.9			(2,043.5	)		1,860.7			(1,915.0	)		5,459.3

(1) Figures are prepared based on the sixth edition of Balance of Payment Manual, or BPM6, published by International Monetary Fund in December 2008 and implemented by the Government in December 2010.

(2) These entries are derived from trade statistics and are valued on a free on board basis, meaning that the insurance and freight costs are not included.

(3) Includes borrowings from the IMF, syndicated bank loans and short-term borrowings.

(4) Preliminary.

Source: The Bank of Korea.

The Republic recorded a current account surplus of approximately US$29.4 billion in 2010. The current account surplus in 2010 decreased from the current account surplus of US$32.8 billion in 2009, primarily due to increases in deficit from the current transfers account and the services account which more than offset an increase in surplus from the goods account.

Based on preliminary data, the Republic recorded a current account surplus of approximately US$26.5 billion in 2011. The current account surplus in 2011 decreased from the current account surplus of US$29.4 billion in 2010, primarily due to a decrease in surplus from the goods account which more than offset a decrease in deficit from the services account.

123

Foreign Direct Investment

Since 1960, the Government has adopted a broad range of related laws, administrative rules and regulations, providing a framework for the conduct and regulation of foreign investment activities. In September 1998, the Government promulgated the Foreign Investment Promotion Act (the “FIPA”), which replaced previous foreign direct investment related laws, rules and regulations, to promote inbound foreign investments by providing incentives to, and facilitating investment activities in the Republic by, foreign nationals. The FIPA prescribes, among others, procedural requirements for inbound foreign investments, incentives for foreign investments such as tax reductions, and requirements relating to designation and development of foreign investment target regions. The Government believes that providing a stable and receptive environment for foreign direct investment will accelerate the inflow of foreign capital, technology and management techniques.

The following table sets forth information regarding annual foreign direct investment in the Republic for the periods indicated.

Foreign Direct Investment

	2007		2008		2009		2010		2011
	(billions of dollars)
Contracted and Reported Investment
Greenfield Investment (1)		8.0		7.3		8.1		11.1		11.7
Merger & Acquisition		2.5		4.4		3.4		2.0		2.0
Total		10.5		11.7		11.5		13.1		13.7
Actual Investment		7.8		8.4		6.7		5.4		6.5

(1) Includes building new factories and operational facilities.

Source: Ministry of Knowledge Economy

In 2011, the contracted and reported amount of foreign direct investment in the Republic increased to US$13.7 billion from US$13.1 billion in 2010, primarily due to an increase in foreign investment in the service sector to US$7.3 billion in 2010 from US$6.3 billion in 2010 and an increase in foreign investment in the electricity and gas section to US$0.7 billion in 2011 from US$0.1 billion in 2010, which was partially offset by a decrease in foreign investment in the manufacturing sector to US$5.7 billion in 2010 from US$6.7 billion in 2010.

124

The following table sets forth information regarding the source of foreign direct investment by region and country for the periods indicated:

Foreign Direct Investment by Region and Country

	2007		2008		2009		2010		2011
	(billions of dollars)
North America
U.S.A		2.3		1.3		1.5		2.0		2.4
Others		0.9		0.6		0.7		0.7		1.3
		3.2		1.9		2.2		2.7		3.7
Asia
Japan		1.0		1.4		1.9		2.1		2.3
Hong Kong		0.1		0.2		0.8		0.1		0.6
Singapore		0.5		0.9		0.4		0.8		0.6
China		0.4		0.4		0.2		0.4		0.7
Others		0.3		0.4		0.4		3.5		0.2
		2.3		3.3		3.7		6.9		4.4
European Union
England		0.3		1.2		2.0		0.6		0.9
Netherlands		2.0		1.2		1.9		1.2		1.0
Germany		0.4		0.7		0.6		0.3		1.5
France		0.4		0.5		0.1		0.2		0.2
Others		1.2		2.7		0.7		1.0		1.8
		4.3		6.3		5.3		3.3		5.4
Others regions and countries		0.7		0.2		0.3		0.2		0.2
Total		10.5		11.7		11.5		13.1		13.7

Source: Ministry of Knowledge Economy

Trade Balance

Trade balance figures measure the difference between a country’s exports and imports. If exports exceed imports the country has a trade balance surplus while if imports exceed exports the country has a deficit. A deficit, indicating that a country’s receipts from abroad fall short of its payments to foreigners, must be financed, rendering the country a debtor nation. A surplus, indicating that a country’s receipts exceed its payments to foreigners, allows the country to finance its trading partners’ net deficit to the extent of the surplus, rendering the country a creditor nation.

125

The following table summarizes the Republic’s trade balance for the periods indicated:

Trade Balance

	Exports (1)		Imports (2)		Balance of Trade			Exports as % of Imports
	(millions of dollars, except percentages)
2007		371,489.0		356,845.7		14,643.3			104.1
2008		422,007.3		435,274.7		(13,267.4	)		97.0
2009		363,533.6		323,084.5		40,449.1			112.5
2010		466,383.8		425,212.2		41,171.6			109.7
2011(3)		555,213.7		524,413.1		30,800.6			105.9

(1) These entries are derived from trade statistics and are valued on a free on board basis, meaning that the insurance and freight costs are not included.

(2) These entries are derived from customs clearance statistics on a C.I.F. basis, meaning that the price of goods include insurance and freight cost.

(3) Preliminary.

Source: The Bank of Korea.

Overall exports increased during the period from 2005 to 2008 primarily due to the continued increase in global demand (including strong demand in China) for electronics products (including semiconductors and information technology products), iron and steel products and machinery and precision equipment. Overall exports decreased in 2009 compared to 2008 due to the effects of the global financial crisis on global demand for goods in general.

The Republic, due to its lack of natural resources, relies on extensive trading activity for growth. The country meets virtually all domestic requirements for petroleum, wood and rubber with imports, as well as much of its coal and iron needs. Exports consistently represent a high percentage of GDP and, accordingly, the international economic environment is of crucial importance to the Republic’s economy.

126

The following tables give information regarding the Republic’s exports and imports by major commodity groups:

Exports by Major Commodity Groups (F.O.B.) ⁽¹⁾

	2006		As % of Total		2007		As % of Total		2008		As % of Total		2009		As % of Total		2010		As % of Total
	(billions of dollars, except percentages)
Foods & Consumer Goods		3.2		1.0		3.5		1.0		4.1		1.0		4.3		1.2		5.4		1.2
Raw Materials and Fuels		25.1		7.7		29.4		7.9		44.1		10.5		27.9		7.7		38.5		8.3
Petroleum & Derivatives		20.6		6.3		24.2		6.5		37.8		9.0		23.2		6.4		31.9		6.8
Light Industrial Products		26.9		8.3		27.5		7.4		29.4		7.0		27.5		7.6		32.7		7.0
Heavy & Chemical Industrial Products		270.4		83.1		311.0		83.7		344.4		81.6		303.9		83.6		389.9		83.6
Electronic & Electronic Products		115.7		35.6		126.9		34.2		127.2		30.0		121.2		33.3		154.2		33.1
Chemicals & Chemical Products		31.2		9.6		36.8		9.9		41.9		9.9		36.6		10.1		47.5		10.2
Metal Goods		27.2		8.3		31.6		8.5		38.1		9.0		29.9		8.2		37.7		8.1
Machinery & Precision Equipment		29.0		8.9		36.2		9.7		42.9		10.3		32.8		9.0		44.0		9.4
Passenger Cars		30.5		9.4		34.5		9.3		31.3		7.4		22.4		6.2		31.8		6.8
Ship & Boat		21.7		6.7		26.9		7.2		41.3		9.8		42.8		11.8		47.1		10.1
Total		325.5		100.0		371.5		100.0		422.0		100.0		363.5		100.0		466.4		100.0

Notes:

(1) These entries are derived from trade statistics and are valued on a free on board basis, meaning that the insurance and freight costs are not included.

Source: The Bank of Korea.

Imports by Major Commodity Groups (C.I.F.) ⁽¹⁾

	2006		As % of Total		2007		As % of Total		2008		As % of Total		2009		As % of Total		2010		As % of Total
	(billions of dollars, except percentages)
Industrial Materials and Fuels		173.9		56.2		201.7		56.5		269.0		61.8		184.4		57.1		247.2		58.1
Crude Petroleum		55.9		18.1		60.3		16.9		85.9		19.7		50.8		15.7		68.7		16.2
Mineral		13.0		4.2		16.0		4.5		19.6		4.5		13.7		4.2		21.4		5.0
Chemicals		25.2		8.1		29.2		8.8		33.1		7.6		28.7		8.9		37.7		8.9
Iron & Steel Products		17.7		5.7		24.1		6.7		37.1		8.5		21.6		6.7		27.3		6.4
Non-ferrous Metal		12.3		4.0		14.3		4.0		13.4		3.1		9.1		2.8		12.6		0.0
Capital Goods		105.1		34.0		118.1		33.1		124.1		28.5		104.5		32.4		135.7		31.9
Machinery & Precision Equipment		35.4		11.5		39.3		11.0		40.0		9.2		33.6		10.4		47.7		11.2
Electric & Electronic Machines		60.1		19.4		67.0		18.7		70.4		16.2		59.8		18.5		73.3		17.2
Transport Equipment		8.0		2.6		10.0		2.8		11.7		2.7		9.5		3.0		12.9		3.0
Consumer Goods		30.4		9.8		37.0		10.4		42.1		9.7		34.1		10.6		42.3		9.9
Cereals		3.5		1.1		4.7		1.3		7.4		1.7		5.3		1.6		5.9		1.4
Goods for Direct Consumption		8.3		2.7		9.7		2.7		10.2		2.3		8.9		2.7		11.0		2.6
Consumer Durable Goods		11.8		3.8		14.6		4.1		16.4		3.8		12.9		4.0		16.2		3.8
Consumer Nondurable Goods		6.8		2.2		8.0		2.2		8.2		1.9		7.1		2.2		9.2		2.2
Total		309.4		100.0		356.8		100.0		435.3		100.0		323.1		100.0		425.2		100.0

Notes:

(1) These entries are derived from customs clearance statistics. C.I.F. means that the price of goods includes insurance and freight costs.

127

In 2006, the Republic recorded a trade surplus of US$16.1 billion. Exports increased by 14.5% to US$325.5 billion and imports increased by 18.5% to US$309.4 billion from US$284.4 billion of exports and US$261.2 billion of imports, respectively, in 2005.

In 2007, the Republic recorded a trade surplus of US$14.6 billion. Exports increased by 14.1% to US$371.5 billion and imports increased by 15.3% to US$356.8 billion from US$325.5 billion of exports and US$309.4 billion of imports, respectively, in 2006.

In 2008, the Republic recorded a trade deficit of US$13.3 billion. Exports increased by 13.6% to US$422.0 billion and imports increased by 22.0% to US$435.3 billion from US$371.5 billion of exports and US$356.8 billion of imports, respectively, in 2007.

In 2009, the Republic recorded a trade surplus of US$40.4 billion. Exports decreased by 13.9% to US$363.5 billion and imports decreased by 25.8% to US$323.1 billion from US$422.0 billion of exports and US$435.3 billion of imports, respectively, in 2008.

In 2010, the Republic recorded a trade surplus of US$41.2 billion. Exports increased by 28.3% to US$466.4 billion and imports increased by 31.6% to US$425.2 billion from US$363.5 billion of exports and US$323.1 billion of imports, respectively, in 2009.

Based on preliminary data, the Republic recorded a trade surplus of US$30.8 billion in 2011. Exports increased by 19.0% to US$555.2 billion and imports increased by 23.3% to US$524.4 billion from US$466.4 billion of exports and US$425.2 billion of imports, respectively, in 2010.

The following table sets forth the Republic’s exports trading partners:

Exports

	2007		As % of 2007 Total		2008		As % of 2008 Total		2009		As % of 2009 Total		2010		As % of 2010 Total		2011 (1)		As % of 2011 Total  (1)
	(millions of dollars, except percentages)
China		81,985.2		22.1		91,388.9		21.7		86,703.2		23.9		116,837.8		25.1		134,185.0		24.2
United States		45,766.1		12.3		46,376.6		11.0		37,649.9		10.4		49,816.1		10.7		56,207.7		10.1
Japan		26,370.2		7.1		28,252.5		6.7		21,770.8		6.0		28,176.3		6.0		39,679.7		7.1
Hong Kong		18,654.5		5.0		19,771.9		4.7		19,661.1		5.4		25,294.3		5.4		30,968.4		5.6
Singapore		11,949.5		3.2		16,293.0		3.9		13,617.0		3.7		15,244.2		3.3		20,839.0		3.8
Taiwan		13,027.1		3.5		11,462.0		2.7		9,501.1		2.6		14,830.5		3.2		18,206.0		3.3
Germany		11,542.5		3.1		10,522.7		2.5		8,820.9		2.4		10,702.2		2.3		9,500.9		1.7
India		6,600.0		1.8		8,977.1		2.1		8,013.3		2.2		11,434.6		2.5		12,654.1		2.3
Russia		8,087.7		2.2		9,748.0		2.3		4,194.1		1.2		7,759.8		1.7		10,304.9		1.9
Indonesia		5,770.6		1.6		7,933.6		1.9		5,999.9		1.7		8,897.3		1.9		13,564.5		2.4
Others (2)		141,735.7		38.2		171,281.0		40.6		147,602.3		40.6		177,390.7		38.0		209,103.5		37.7
Total		371,489.1		100.0		422,007.3		100.0		363,533.6		100.0		466,383.8		100.0		555,213.7		100.0

(1) Preliminary

(2) Includes more than 200 countries and regions with lower exports levels than those shown above.

Source : The Bank of Korea.

128

The following table sets forth the Republic’s imports trading partners:

Imports

	2007		As % of 2007 Total		2008		As % of 2008 Total		2009		As % of 2009 Total		2010		As % of 2010 Total		2011 (1)		As % of 2011 Total  (1)
	(millions of dollars, except percentages)
China		63,027.8		17.7		76,930.3		17.7		54,246.1		16.8		71,573.6		16.8		86,432.2		16.5
Japan		56,250.1		15.8		60,956.4		14.0		49,427.5		15.3		64,296.1		15.1		68,320.2		13.0
United States		37,219.3		10.4		38,364.8		8.8		29,039.5		9.0		40,402.7		9.5		44,569.0		8.5
Saudi Arabia		21,163.5		5.9		33,781.5		7.8		19,736.8		6.1		26,820.0		6.3		36,972.6		7.1
Australia		13,232.5		3.7		18,000.3		4.1		14,756.1		4.6		20,456.2		4.8		26,316.3		5.0
Germany		13,534.3		3.8		14,769.1		3.4		12,298.5		3.8		14,304.9		3.4		16,962.6		3.2
Taiwan		9,966.5		2.8		10,642.9		2.4		9,851.4		3.0		13,647.1		3.2		14,693.6		2.8
United Arab Emirates		12,656.2		3.5		19,248.5		4.4		9,310.0		2.9		12,170.1		2.9		14,759.4		2.8
Indonesia		9,113.8		2.6		11,320.3		2.6		9,264.1		2.9		13,985.8		3.3		17,216.4		3.3
Malaysia		8,442.2		2.4		9,909.1		2.3		7,574.1		2.3		9,531.0		2.2		10,467.8		2.0
Others (2)		112,239.5		31.4		141,351.5		32.5		107,580.4		33.3		138,024.7		32.5		187,703.0		35.8
Total		356,845.7		100.0		435,274.7		100.0		323,084.5		100.0		425,212.2		100.0		524,413.1		100.0

(1) Preliminary

(2) Includes more than 200 countries and regions with lower imports levels than those shown above.

Source : The Bank of Korea.

In 2003, the outbreak of severe acute respiratory syndrome, or SARS, and the avian influenza in Asia (including China) and other parts of the world increased uncertainty about prospects for international trade and economic growth for affected countries, as well as world economic prospects in general. The avian influenza carried by migrating wild birds spread to several Asian countries, Russia, Romania and Turkey. In response to these outbreaks of avian influenza, the Government issued an advisory on disease prevention as of October 14, 2005 and conducted special monitoring of poultry farms. In addition, the Government continued to cooperate with regional and international efforts to develop and implement additional measures to contain and prevent SARS, the avian influenza and other diseases. Another outbreak of SARS, the avian influenza or similar incidents in the future may have an adverse effect on Korean and world economies and on international trade.

On October 6, 2010, the Republic and the EU signed an agreement on a bilateral free trade agreement, or FTA, which provisionally came into effect on July 1, 2011 after approval of the EU parliament and ratification by the Republic and EU member states. In April 2007, the Republic and the United States reached a FTA, which was subsequently renegotiated and signed by both nations in December 2010. The FTA was ratified by the U.S. Congress in October 2011 and the Korean National Assembly in November 2011 and came into effect on March 15, 2012.

Non-Commodities Trade Balance

The non-commodities trade deficit was US$15.4 billion in 2007, US$2.0 billion in 2008, US$5.1 billion in 2009 and US$10.7 billion in 2010. Based on preliminary data, the non-commodities trade deficit was US$4.4 billion in 2011.

129

Foreign Currency Reserves

The following table shows the Republic’s total official foreign currency reserves:

Total Official Reserves

	December 31,
	2007		2008		2009		2010		2011
	(millions of dollars)
Gold (1)	$	74.3	$	75.7	$	79.0	$	79.6	$	2,166.6
Foreign Exchange		261,770.7		200,479.1		265,202.3		286,926.4		298,232.9
Total Gold and Foreign Exchange		261,845.0		200,554.8		265,281.3		287,006.0		300,399.5
Reserve Position at IMF.		310.5		582.6		981.6		1,024.7		2,556.2
Special Drawing Rights		68.6		86.0		3,731.8		3,539.9		3,446.7
Total Official Reserves	$	262,224.1	$	201,223.4	$	269,994.7	$	291,570.7	$	306,402.5

(1) For this purpose, domestically-owned gold is valued at US$42.22 per troy ounce (31.1035 grams) and gold deposited overseas is calculated at cost of purchase.

Source: The Bank of Korea.

The Government’s foreign currency reserves increased to US$262.2 billion as of December 31, 2007 from US$8.9 billion as of December 31, 1997, primarily due to continued balance of trade surpluses and capital inflows. In 2008, the Government’s foreign currency reserves decreased, falling to US$201.2 billion as of December 31, 2008, partially as a result of the Government’s use of the foreign currency reserve to provide foreign currency liquidity to Korean financial institutions and to defend the value of the Won against depreciation. The amount of the Government’s foreign currency reserve was US$315.8 billion as of February 29, 2012.

Government Finance

The Ministry of Strategy and Finance prepares the Government budget and administers the Government’s finances.

The Government’s fiscal year commences on January 1. The Government must submit the budget, which is drafted by the Minister of Strategy and Finance and approved by the President of the Republic, to the National Assembly not later than 90 days prior to the start of the fiscal year and may submit supplementary budgets revising the original budget at any time during the fiscal year.

130

The following table shows consolidated Government revenues and expenditures:

Consolidated Central Government Revenues and Expenditures

	December 31,
	2005		2006		2007		2008		2009		2010 (1)
	(billions of Won)
Total Revenues		191,446		209,573		243,633		250,713		250,810		270,923
Current Revenues		190,165		208,091		241,693		248,809		248,278		268,540
Total Tax Revenues		127,466		138,044		161,459		167,306		164,542		177,718
Social Security Contribution		24,905		27,315		29,739		32,896		33,896		35,601
Non-Tax Revenues		37,795		42,733		50,495		48,607		49,840		55,221
Capital Revenues		1,281		1,482		1,940		1,904		2,532		2,383
Total Expenditures and Net Lending		187,946		205,928		206,584		238,854		268,431		254,231
Total Expenditures		184,922		200,181		199,477		229,374		250,382		251,146
Current Expenditures		160,274		173,688		173,278		200,935		215,134		216,937
Goods and Services		36,165		38,987		41,340		45,410		48,724		49,821
Interest Payments		10,094		12,150		10,218		10,376		11,519		13,387
Subsidies and Other Transfers (3)		111,448		119,997		119,565		142,782		151,791		151,030
Non-Financial Public Enterprises Expenditures		2,566		2,554		2,155		2,367		3,100		2,699
Capital Expenditures		24,648		26,493		26,199		28,439		35,248		34,209
Net Lending		3,024		5,746		7,107		5,480		18,049		3,084

(1) Preliminary.

(2) Not available.

(3) Includes transfers to local governments, non-profit institutions, households and abroad.

Source: Ministry of Strategy and Finance; Korea National Statistical Office.

The consolidated Government account consists of a General Account, Special Accounts (including a non-financial public enterprise special account) and Public Funds. The Government segregates the accounts of certain functions of the Government into Special Accounts and Public Funds for more effective administration and fiscal control. The Special Accounts and Public Funds relate to business type activities, such as economic development, road and railway construction and maintenance, monopolies, and communications developments and the administration of loans received from official international financial organizations and foreign governments.

Revenues derive mainly from national taxes and non-tax revenues. Taxes in Korea can be roughly classified into the following types:

• income tax and capital gains tax,

• property tax,

• value-added tax,

• customs duty tax, and

• other taxes.

Income tax and capital gains tax are imposed on income derived from labor, business operation and ownership of assets and profits derived from capital appreciation. Income tax and capital gains tax, depending on the type of taxpayer, can be further classified into corporate income tax and individual income tax. Property tax

131

is imposed on exchange or ownership of property and includes inheritance tax and gift tax. Value-added tax is imposed on value added to goods and services. Customs duty tax is imposed on imported goods. Other taxes include tax on certain securities transactions and a stamp tax for certain documents.

Expenditures include general administration, national defense, community service, education, health, social security, certain annuities and pensions and local finance, which involves the transfer of tax revenues to local governments.

For 2006, revenues increased by approximately 9.5%, which represented 24.7% of the Republic’s GDP, principally due to higher tax revenues. Tax revenues increased principally as a result of the country’s export growth and the accompanying increase in corporate income. The Republic had a fiscal surplus of (Won)3.6 trillion in 2006.

For 2007, revenues increased by approximately 16.3%, which represented 27.0% of the Republic’s GDP, principally due to higher tax revenues. Tax revenues increased principally as a result of the country’s export growth and the accompanying increase in corporate income. The Republic had a fiscal surplus of (Won)37.0 trillion in 2007.

For 2008, revenues increased by approximately 2.9% principally due to higher tax revenues. Tax revenues increased principally as a result of the country’s export growth and the accompanying increase in corporate income. The Republic had a fiscal surplus of (Won)15.9 trillion in 2008.

For 2009, the Republic recorded total revenues of (Won)250.8 trillion and total expenditures and net lending of (Won)272.9 trillion in 2009. The Republic had a fiscal deficit of (Won)17.6 trillion in 2009.

Based on preliminary data, the Republic recorded total revenues of (Won)270.9 trillion and total expenditures and net lending of (Won)254.2 trillion in 2010. The Republic had a fiscal surplus of (Won)16.7 trillion in 2010.

Debt

The Government estimates that the total outstanding debt of the Government (including guarantees by the Government) as of December 31, 2010 amounted to approximately (Won)405.5 trillion, an increase of 8.8% over the previous year.

External and Internal Debt of the Government

The following table sets out, by currency and the equivalent amount in U.S. Dollars, the estimated outstanding direct external debt of the Government as of December 31, 2010:

Direct External Debt of the Government

	Amount in Original Currency		Equivalent Amount in U.S. Dollars (1)
	(millions)
US$	US$	7,401.7	US$	7,401.7
Japanese Yen (¥)	¥	10,963.1		134.5
Euro (EUR)	EUR	876.6		1,165.0
Total			US$	8,701.2

(1) Amounts expressed in currencies other than US$ are converted to US$ at the arbitrage rate announced by the Seoul Money Brokerage Services, Ltd. in effect on December 31, 2010.

132

The following table summarizes, as of December 31 of the years indicated, the outstanding direct internal debt of the Republic:

Direct Internal Debt of the Government

	(billions of Won)
2006		262,380.6
2007		278,800.8
2008		288,719.8
2009		331,904.1
2010		360,804.5

The following table sets out all guarantees by the Government of indebtedness of others:

Guarantees by the Government

	December 31,
	2006		2007		2008		2009		2010
	(billions of Won)
Domestic		36,436.6		33,031.1		28,112.8		28,292.4		33,291.7
External (1)		73.4		31.8		—		1,508.4		1,508.3
Total		36,510.1		33,062.9		28,112.8		29,800.8		34,800.0

(1) Converted to Won at foreign exchange banks’ telegraphed transfer selling rates to customers or the market average exchange rates in effect on December 31 of each year.

For further information on the outstanding indebtedness, including guarantees, of the Republic, see “—Tables and Supplementary Information”.

External Debt

The following tables set out certain information regarding the Republic’s external debt calculated under the criteria based on the sixth edition of Balance of Payment Manual, or BPM6, published by the International Monetary Fund in December 2008 and implemented by the Government in December 2010. Under BPM6, in particular, prepayments received in connection with the construction of ships are excluded from the external debt.

	December 31,
	2006		2007		2008		2009		2010
	(billions of dollars)
Long-term Debt		111.5		173.2		167.5		196.2		225.0
General Government		10.3		31.7		21.1		27.8		44.2
Monetary Authorities		5.7		12.3		13.1		28.3		25.3
Banks		40.4		58.9		59.0		64.6		72.4
Other Sectors		55.0		70.2		74.2		75.5		83.1
Short-term Debt		113.7		160.2		149.9		149.2		135.0
Monetary Authorities		3.9		9.6		18.3		11.7		10.3
Banks		96.1		134.0		110.4		115.7		101.3
Other Sectors		13.7		16.7		21.2		21.8		23.4
Total External Liabilities		225.2		333.4		317.4		345.4		360.0

133

Tables and Supplementary Information

A. External Debt of the Government

(1) External Bonds of the Government

Series	Issue Date		Maturity Date		Interest Rate (%)		Currency		Original Principal Amount		Principal Amount Outstanding as of December 31, 2010
2003-001		June 3, 2003		June 1, 2013		4.25		USD		1,000,000,000		1,000,000,000
2004-001		September 22, 2004		September 22, 2014		4.875		USD		1,000,000,000		1,000,000,000
2005-001		November 2, 2005		November 3, 2025		5.625		USD		400,000,000		400,000,000
2005-002		November 2, 2005		November 2, 2015		3.625		EUR		500,000,000		500,000,000
2006-001		December 7, 2006		December 7, 2016		5.125		USD		500,000,000		500,000,000
2006-002		December 7, 2006		December 7, 2021		4.25		EUR		375,000,000		375,000,000
2009-001		April 16, 2009		April 16, 2014		5.75		USD		1,500,000,000		1,500,000,000
2009-002		April 16, 2009		April 16, 2019		7.125		USD		1,500,000,000		1,500,000,000
Total External Bonds in Original Currencies											USD	5,900,000,000
											EUR	875,000,000
Total External Bonds in Equivalent Amount of Won (1)											(Won)	8,043,910,000,000

(1) U.S. dollar amounts are converted to Won amounts at the rate of US$1.00 to (Won)1,138.9, the market average exchange rate in effect on December 31, 2010, as announced by Seoul Money Brokerage Services, Ltd. Euro amounts are converted to Won amounts at the rate of EUR1.00 to (Won)1,513.6, the market average exchange rate in effect on December 31, 2010, as announced by Seoul Money Brokerage Services, Ltd.

134

(2) External Borrowings of the Government

a. Borrowings in U.S. Dollars

Date of Borrowing	Original Maturity (Years)		Interest Rate (%)		Original Principal Amount (USD)		Principal Amount Outstanding as of December 31, 2010 (USD)
February 26, 1969		42		3		5,000,000		132,538
March 20, 1970		40		3		4,000,000		119,629
June 3, 1970		41		3		10,000,000		214,773
January 29, 1971		40		3		29,300,000		943,903
January 29, 1971		41		3		29,200,000		1,878,810
March 6, 1971		40		3		35,000,000		788,451
April 12, 1971		40		3		29,600,000		895,449
April 12, 1971		30		3		400,000		21,777
June 24, 1971		40		3		14,000,000		1,024,817
August 31, 1971		41		3		6,000,000		433,064
January 20, 1972		41		3		2,000,000		264,311
February 14, 1972		41		3		40,000,000		3,460,416
February 14, 1972		40		3		162,200,000		10,064,083
March 16, 1972		41		3		17,000,000		2,043,685
June 27, 1972		40		3		5,000,000		467,668
September 13, 1972		41		3		2,500,000		286,646
February 28, 1973		40		3		25,000,000		3,458,373
April 12, 1973		42		3		96,300,000		15,042,830
April 12, 1973		43		3		5,300,000		991,249
April 12, 1973		40		3		25,200,000		2,367,574
January 28, 1974		40		3		5,000,000		649,508
April 19, 1974		40		3		2,800,000		473,686
September 11, 1974		41		3		25,700,000		5,400,863
September 13, 1975		41		3		5,000,000		982,945
September 13, 1975		41		3		5,000,000		981,867
September 13, 1975		41		3		5,000,000		1,358,594
February 18, 1976		40		3		11,900,000		1,862,543
February 18, 1976		40		3		27,900,000		4,644,194
February 18, 1976		40		3		23,400,000		5,829,298
February 18, 1976		40		3		90,800,000		16,528,863
July 21, 1977		41		3		59,500,000		14,349,380
July 21, 1977		40		3		43,800,000		9,268,853
June 7, 1979		30		3		40,000,000		10,882,277
January 25, 1980		40		3		30,000,000		9,068,823
May 18, 1981		40		3		27,000,000		8,789,239
October 12, 1994		20		6.25		1,640,370,000		489,108,316
March 27, 1998		15		LIBOR+0.75		2,000,000,000		268,856,448
September 14, 1998		16		LIBOR+0.5		48,000,000		7,813,369
October 23, 1998		15		LIBOR+0.75		2,000,000,000		600,000,000
Subtotal in Original Currency							USD	1,501,749,112
Subtotal in Equivalent Amount of Won (1)							(Won)	1,710,342,064,040

(1) U.S. dollar amounts are converted to Won amounts at the rate of US$1.00 to (Won)1,138.9, the market average exchange rate in effect on December 31, 2010, as announced by Seoul Money Brokerage Services, Ltd.

135

b. Borrowings in Euro

Date of Borrowing	Original Maturity (Years)		Interest Rate (%)		Original Principal Amount (EUR)		Principal Amount Outstanding as of December 31, 2010 (EUR)
April 19, 1982		39		2		7,029,215		957,624
March 27, 1985		30		2		2,039,087		658,088
Subtotal in Original Currency							EUR	1,615,712
Subtotal in Equivalent Amount of Won (1)							(Won)	2,445,541,350

(1) Euro amounts are converted to Won amounts at the rate of EUR1.00 to (Won)1,513.6, the market average exchange rate in effect on December 31, 2010, as announced by Seoul Money Brokerage Services, Ltd.

c. Borrowings in Japanese Yen

Date of Borrowing	Original Maturity (Years)		Interest Rate (%)		Original Principal Amount (JPY)		Principal Amount Outstanding as of December 31, 2010 (JPY)
August 18, 1987		25		4.25		7,750,000,000		837,836,000
August 18, 1987		25		4.25		12,911,000,000		1,307,244,000
May 24, 1988		24		Floating		7,567,732,075		694,717,775
June 22, 1988		25		4.25		2,679,000,000		357,325,000
June 22, 1988		25		4.25		5,920,000,000		777,375,000
June 22, 1988		25		4.25		5,254,000,000		518,585,000
June 22, 1988		25		4.25		4,440,000,000		599,125,000
December 13, 1989		25		Floating		8,745,658,966		3,562,106,766
October 31, 1990		25		4		4,320,000,000		1,126,610,000
October 31, 1990		25		4		5,414,000,000		598,740,000
October 31, 1990		25		4		2,160,000,000		583,390,000
Subtotal in Original Currency							JPY	10,963,054,541
Subtotal in Equivalent Amount of Won (1)							(Won)	153,162,642,380
Total External Borrowings in Equivalent Amount of Won							(Won)	1,865,950,247,770

(1) Japanese yen amounts are converted to Won amounts at the rate of JPY100.00 to (Won)1,397.08, the market average exchange rate in effect on December 31, 2010, as announced by Seoul Money Brokerage Services, Ltd.

136

B. External Guaranteed Debt of the Government

Borrower	Issue Date	Maturity Date	Interest Rate (%)		Currency		Original Principal Amount		Principal Amount Outstanding as of December 31, 2010
Hana Bank	April 9, 2009	April 9, 2012		6.5		USD		1,000,000,000		1,000,000,000
Hana Bank	June 30, 2009	December 30, 2011		4.8		MYR		710,000,000		710,000,000
Hana Bank	June 30, 2009	June 29, 2012		4.85		MYR		290,000,000		290,000,000
Total External Guaranteed Debt in Original Currencies									USD	1,000,000,000
									MYR	1,000,000,000
Total External Guaranteed Debt in Equivalent Amount of Won (1)									(Won)	1,508,250,000,000

(1) U.S. dollar amounts are converted to Won amounts at the rate of US$1.00 to (Won)1,138.9, the market average exchange rate in effect on December 31, 2010, as announced by Seoul Money Brokerage Services, Ltd. Malaysian ringgit amounts are converted to Won amounts at the rate of MYR1.00 to (Won)369.35, the market average exchange rate in effect on December 31, 2010, as announced by Seoul Money Brokerage Services, Ltd.

137

C. Internal Debt of the Government

Title	Range of Interest Rates		Range of Years of Issue		Range of Years of Original Maturity		Principal Amounts Outstanding as of December 31, 2010
	(%)						(billions of Won)
1. Bonds
Interest-Bearing Treasury Bond for Treasury Bond Management Fund		2.75-7.65		2001-2010		2011-2030		310,076.7
Interest-Bearing Treasury Bond for National Housing I		3.0		2001-2010		2006-2015		44,067.0
Interest-Bearing Treasury Bond for National Housing II		0.0-3.0		1986-2010		2006-2030		4,383.1
Interest-Bearing Treasury Bond for National Housing III		0		2005		2015		594.2
Non-interest-Bearing Treasury Bond for Contribution to International Organizations (1)		—		1967-1985		—		11.3
Total Bonds								359,132.3
2. Borrowings
Borrowings from The Bank of Korea		2.24		2010		2011		1,117.2
Borrowings from the Sports Promotion Fund		3.64-5.0		2009-2010		2012-2015		400.0
Borrowings from the Private School Teachers’ Pension Fund		5.17-5.27		2006		2011		65.0
Borrowings from the Korea Foundation Fund		4.31		2009		2014		30.0
Borrowings from the Government Employees’ Pension Fund		2.8		2009		2012		10.0
Borrowings from the Film Industry Development Fund		3.04-3.85		2010		2013		30.0
Borrowings from the Culture and Arts Promotion Fund		3.29		2010		2013		20.0
Total Borrowings								1,672.2
Total Internal Funded Debt								360,804.5

(1) Interest Rates and Years of Maturity not applicable.

138

D. Internal Guaranteed Debt of the Government

Title	Range of Interest Rates		Range of Years of Issue		Range of Years of Original Maturity		Principal Amounts Outstanding as of December 31, 2010
	(%)						(billions of Won)
1. Bonds of Government-Affiliated Corporations
Korea Deposit Insurance Corporation		4.09-6.32		2006-2010		2011-2015		26,690.0
KAMCO		Floating-5.27		2009-2010		2012-2015		3,969.1
Korea Student Aid Foundation		Floating-5.26		2010		2012-2020		2,510.0
Total Bonds								33,169.1
2. Borrowings of Government-Affiliated Corporations
Rural Development Corporation and Federation of Farmland		5.5		1989		2023		122.6
Total Borrowings								122.6
Total Internal Guaranteed Debt								33,291.7

139

DESCRIPTION OF THE SECURITIES

Description of Debt Securities

We will issue debt securities under a fiscal agency agreement or agreements. The description below summarizes the material provisions of the debt securities and the fiscal agency agreement. Since it is only a summary, the description may not contain all of the information that may be important to you as a potential investor in the debt securities. Therefore, we urge you to read the form of fiscal agency agreement and the form of global debt security before deciding whether to invest in the debt securities. We have filed a copy of these documents with the Securities and Exchange Commission as exhibits to the registration statement of which this prospectus is a part. You should refer to such exhibits for more complete information.

The financial terms and other specific terms of your debt securities will be described in the prospectus supplement relating to your debt securities. The description in the prospectus supplement will supplement this description or, to the extent inconsistent with this description, replace it.

We will appoint a fiscal agent or agents in connection with debt securities whose duties will be governed by the fiscal agency agreement. We may replace the fiscal agent or appoint different fiscal agents for different series of debt securities.

General Terms of the Debt Securities

We may issue debt securities in separate series at various times. The Republic may irrevocably guarantee the payment of principal of, and interest on, one or more series of debt securities. The prospectus supplement that relates to your debt securities will specify some or all of the following terms:

• the aggregate principal amount;

• the currency of denomination and payment;

• any limitation on principal amount and authorized denominations;

• the percentage of their principal amount at which the debt securities will be issued;

• the maturity date or dates;

• the interest rate for the debt securities and, if variable, the method by which the interest rate will be calculated;

• whether any amount payable in respect of the debt securities will be determined based on an index or formula, and how any such amount will be determined;

• the dates from which interest, if any, will accrue for payment of interest and the record dates for any such interest payments;

• where and how we will pay principal and interest;

• whether and in what circumstances the debt securities may be redeemed before maturity;

• any sinking fund or similar provision;

• whether any part or all of the debt securities will be in the form of a global security and the circumstances in which a global security is exchangeable for certificated securities;

• if issued in certificated form, whether the debt securities will be in bearer form with interest coupons, if any, or in registered form without interest coupons, or both forms, and any restrictions on exchanges from one form to the other;

• whether any of the terms set out herein will differ for the debt securities

140

• whether the Republic will irrevocably guarantee the payment of principal of, and interest on, the debt securities; and

• other specific provisions.

Depending on the terms of the debt securities we issue, the prospectus supplement relating to the debt securities may also describe applicable U.S. federal income tax and other considerations additional to the disclosure in this prospectus.

Unless otherwise specified in the applicable prospectus supplement, we will maintain at an office in the Borough of Manhattan, The City of New York, a register for the registration of transfers of debt securities issued in registered form.

Payments of Principal, Premium and Interest

On every payment date specified in the relevant prospectus supplement, we will pay the principal, premium and/or interest due on that date to the registered holder of the relevant debt security at the close of business on the related record date. We will make all payments at the place and in the currency set out in the prospectus supplement. Unless otherwise specified in the relevant prospectus supplement or the debt securities, we will make payments in U.S. dollars at the New York office of the fiscal agent or, outside the United States, at the office of any paying agent. Unless otherwise specified in the applicable prospectus supplement or debt securities, we will pay interest by check, payable to the registered holder.

We will make any payments on debt securities in bearer form at the offices and agencies of the fiscal agent or any other paying agent outside the United States as we may designate. At the option of the holder of the bearer debt securities, we will make such payments by check or by transfer to an account maintained by the holder with a bank located outside of the United States. We will not make payments on bearer debt securities at the corporate trust office of the fiscal agent in the United States or at any other paying agency in the United States. In addition, we will not make any payment by mail to an address in the United States or by transfer to an account maintained by a holder of bearer debt securities with a bank in the United States. Nevertheless, we will make payments on a bearer debt security denominated and payable in U.S. dollars at an office or agency in the United States if:

• payment outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions; and

• the payment is then permitted under United States law, without material adverse consequences to us.

If we issue bearer debt securities, we will designate the offices of at least one paying agent outside the United States as the location for payment.

Repayment of Funds; Prescription

If no one claims money paid by us to the fiscal agent for the payment of principal or interest in respect of any series of debt securities for two years after the payment was due and payable, the fiscal agent or paying agent will repay the money to us. After such repayment, the fiscal agent or paying agent will not be liable with respect to the amounts so repaid, and you may look only to us for any payment under the debt securities.

Under Korea law, you will not be permitted to file a claim against us for payment of principal or interest on any series of debt securities unless you do so within five years, in the case of principal, and three years, in the case of interest, from the date on which payment was due.

Global Securities

The prospectus supplement relating to a series of debt securities will indicate whether any of that series of debt securities will be represented by a global security. The prospectus supplement will also describe any unique

141

specific terms of the depositary arrangement with respect to that series. Unless otherwise specified in the prospectus supplement, we anticipate that the following provisions will apply to depositary arrangements.

Registered Ownership of the Global Security

The global security will be registered in the name of a depositary identified in the prospectus supplement, or its nominee, and will be deposited with the depositary, its nominee or a custodian. The depositary, or its nominee, will therefore be considered the sole owner or holder of debt securities represented by the global security for all purposes under the fiscal agency agreement. Except as specified below or in the applicable prospectus supplement, beneficial owners:

• will not be entitled to have any of the debt securities represented by the global security registered in their names;

• will not receive physical delivery of any debt securities in definitive form;

• will not be considered the owners or holders of the debt securities;

• must rely on the procedures of the depositary and, if applicable, any participants (institutions that have accounts with the depositary or a nominee of the depositary, such as securities brokers and dealers) to exercise any rights of a holder; and

• will receive payments of principal and interest from the depositary or its participants rather than directly from us.

We understand that, under existing industry practice, the depositary and participants will allow beneficial owners to take all actions required of, and exercise all rights granted to, the registered holders of the debt securities.

We will register debt securities in the name of a person other than the depositary or its nominee only if:

• the depositary for a series of debt securities is unwilling or unable to continue as depositary; or

• we determine, in our sole discretion, not to have a series of debt securities represented by a global security.

In either such instance, an owner of a beneficial interest in a global security will be entitled to registration of a principal amount of debt securities equal to its beneficial interest in its name and to physical delivery of the debt securities in definitive form.

Beneficial Interests in and Payments on a Global Security

Only participants, and persons that may hold beneficial interests through participants, can own a beneficial interest in the global security. The depositary keeps records of the ownership and transfer of beneficial interests in the global security by its participants. In turn, participants keep records of the ownership and transfer of beneficial interests in the global security by other persons (such as their customers). No other records of the ownership and transfer of beneficial interests in the global security will be kept.

All payments on a global security will be made to the depositary or its nominee. When the depositary receives payment of principal or interest on the global security, we expect the depositary to credit its participants’ accounts with amounts that correspond to their respective beneficial interests in the global security. We also expect that, after the participants’ accounts are credited, the participants will credit the accounts of the owners of beneficial interests in the global security with amounts that correspond to the owners’ respective beneficial interests in the global security.

The depositary and its participants establish policies and procedures governing payments, transfers, exchanges and other important matters that affect owners of beneficial interests in a global security. The

142

depositary and its participants may change these policies and procedures from time to time. We have no responsibility or liability for the records of ownership of beneficial interests in the global security, or for payments made or not made to owners of such beneficial interests. We also have no responsibility or liability for any aspect of the relationship between the depositary and its participants or for any aspect of the relationship between participants and owners of beneficial interests in the global security.

Bearer Securities

We may issue debt securities in a series in the form of one or more bearer global debt securities deposited with a common depositary for the Euroclear and Clearstream, or with a nominee identified in the applicable prospectus supplement. The specific terms and procedures, including the specific terms of the depositary arrangement, with respect to any portion of a series of debt securities to be represented by a global security will be described in the applicable prospectus supplement.

Additional Amounts

We will make all payments of principal of, and premium and interest, if any, on the debt securities, without withholding or deducting any present or future taxes imposed by the Republic or any of its political subdivisions, unless required by law. If Korean law requires us to deduct or withhold taxes, we will pay additional amounts as necessary to ensure that you receive the same amount as you would have received without such withholding or deduction.

We will not pay, however, any additional amounts if you are liable for Korean tax because:

• you are connected with the Republic other than by merely owning the debt security or receiving income or payments on the debt security;

• you failed to complete and submit a declaration of your status as a non-resident of the Republic after we or the relevant tax authority requested you to do so; or

• you failed to present your debt security for payment within 30 days of when the payment is due or, if the fiscal agent did not receive the money prior to the due date, the date notice is given to holders that the fiscal agent has received the full amount due to holders. Nevertheless, we will pay additional amounts to the extent you would have been entitled to such amounts had you presented your debt security for payment on the last day of the 30-day period.

We will not pay any additional amounts for taxes on the debt securities except for taxes payable through deduction or withholding from payments of principal, premium or interest. Examples of the types of taxes for which we will not pay additional amounts include the following: estate or inheritance taxes, gift taxes, sales or transfer taxes, personal property or related taxes, assessments or other governmental charges. We will pay stamp or other similar taxes that may be imposed by the Republic, the United States or any political subdivision or taxing authority in one of those two countries on the fiscal agency agreement or be payable in connection with the issuance of the debt securities.

Status of Debt Securities

The debt securities will:

• constitute our direct, unconditional, unsecured and unsubordinated obligations;

• rank at least equally in right of payment among themselves, regardless of when issued or currency of payment; and

• rank at least equally in right of payment with all of our other unsecured and unsubordinated obligations, subject to certain statutory exceptions under Korean law.

143

Negative Pledge Covenant

If any debt securities are outstanding, we will not create or permit any security interests on our assets as security for any of our Long-Term External Indebtedness or guarantees issued by us, unless the security interest also secures our obligations under the debt securities. “Long-Term External Indebtedness” means any obligation for the payment or repayment of money borrowed that is denominated in a currency other than the currency of the Republic and which has a final maturity of one year or more from its date of issuance.

We may, however, create or permit a security interest:

• in favor of the Government or The Bank of Korea or any other agency or instrumentality of or controlled by the Government;

• arising from, or any deposit or other arrangement made or entered into in connection with, the sale, assignment or other disposition or the discounting of any of our notes or receivables, or any other transaction in the ordinary course of our business; or

• on any asset (or documents of title to such asset) incurred when the asset was purchased or improved to secure payment of the cost of the activity.

Events of Default

Each of the following constitutes an event of default with respect to any series of debt securities:

1. Non-Payment: we do not pay principal or interest or premium or deposit any sinking fund payment on any debt securities of the series when due and such failure to pay continues for 30 days.

2. Breach of Other Obligations: we fail to observe or perform any of the covenants in the series of debt securities (other than non-payment) for 60 days after written notice of the default is delivered to us at the corporate trust office of the fiscal agent in New York City by holders representing at least 10% of the aggregate principal amount of the debt securities of the series.

3. Cross Default and Cross Acceleration:

• we default on any External Indebtedness, and, as a result, becomes obligated to pay an amount equal to or greater than US$10,000,000 in aggregate principal amount prior to its due date; or

• we fail to pay when due, including any grace period, any of our External Indebtedness in aggregate principal amount equal to or greater than US$10,000,000 or we fail to pay when requested and required by the terms thereof any guarantee for External Indebtedness of another person equal to or greater than US$10,000,000 in aggregate principal amount, except in any such case where such External Indebtedness or guarantee is being contested in good faith by appropriate proceedings.

4. Moratorium/Default:

• we declare a general moratorium on the payment of our External Indebtedness, including obligations under guarantees;

• the Republic declares a general moratorium on the payment of its External Indebtedness, including obligations under guarantees;

• the Republic becomes liable to repay prior to maturity any amount of External Indebtedness, including obligations under guarantees, as a result of a default under such External Indebtedness or obligations; or

• the international monetary reserves of the Republic become subject to a security interest or segregation or other preferential arrangement for the benefit of any creditors.

144

5. Bankruptcy:

• we are declared bankrupt or insolvent by any court or administrative agency with jurisdiction over us;

• we pass a resolution to apply for bankruptcy or to request the appointment of a receiver or trustee or similar official in insolvency;

• a substantial part of our assets are liquidated; or

• we cease to conduct the banking business.

6. Failure of Support: the Republic fails to provide financial support for us as required under Article 37 of the KEXIM Act as of the date of the debt securities of such series.

7. Control of Assets: the Republic ceases to control us (directly or indirectly).

8. IMF Membership/World Bank Membership: the Republic ceases to be a member of the IMF or the International Bank for Reconstruction and Development (World Bank).

For purposes of the foregoing, “External Indebtedness” means any obligation for the payment or repayment of money borrowed that is denominated in a currency other than the currency of the Republic.

If an event of default occurs, any holder may declare the principal amount of debt securities that it holds to be immediately due and payable by written notice to us and the fiscal agent.

You should note that:

• despite the procedure described above, no debt securities may be declared due and payable if we cure the applicable event of default before we receive the written notice from the debt security holder;

• we are not required to provide periodic evidence of the absence of defaults; and

• the fiscal agency agreement does not require us to notify holders of the debt securities of an event of default or grant any debt security holder a right to examine the security register.

Modifications and Amendments; Debt Securityholders’ Meetings

Each holder of a series of debt securities must consent to any amendment or modification of the terms of that series of debt securities or the fiscal agency agreement that would, among other things:

• change the stated maturity of the principal of the debt securities or any installment of interest;

• reduce the principal amount of such series of debt securities or the portion of the principal amount payable upon acceleration of such debt securities;

• change the debt security’s interest rate or premium payable;

• change the currency of payment of principal, interest or premium;

• amend either the procedures provided for a redemption event or the definition of a redemption event;

• shorten the period during which we are not allowed to redeem the debt securities or grant us a right to redeem the debt securities which we previously did not have; or

• reduce the percentage of the outstanding principal amount needed to modify or amend the fiscal agency agreement or the terms of such series of debt securities.

145

We may, with the exception of the above changes, with the consent of the holders of at least 66 ²/3 % in principal amount of the debt securities of a series that are outstanding, modify and amend other terms of that series of debt securities.

The fiscal agency agreement and a series of debt securities may be modified or amended, without the consent of the holders of the debt securities, to:

• add covenants made by us that benefit holders of the debt securities;

• surrender any right or power given to us;

• secure the debt securities;

• permit registered securities to be exchanged for bearer securities or relax or eliminate restrictions on the payment of principal, premium or interest on bearer securities to the extent permitted under United States Department of Treasury regulations, provided that holders of the debt securities do not suffer any adverse tax consequences as a result; and

• cure any ambiguity or correct or supplement any defective provision in the fiscal agency agreement or the debt securities, without materially and adversely affecting the interests of the holders of the debt securities.

Fiscal Agent

The fiscal agency agreement governs the duties of each fiscal agent. We may maintain bank accounts and a banking relationship with each fiscal agent. The fiscal agent is our agent and does not act as a trustee for the holders of the debt securities.

Further Issues of Debt Securities

We may, without the consent of the holders of the debt securities, create and issue additional debt securities with the same terms and conditions as any series of debt securities (or that are the same except for the amount of the first interest payment and for the interest paid on the series of debt securities prior to the issuance of the additional debt securities). We may consolidate such additional debt securities with the outstanding debt securities to form a single series.

We may offer additional debt securities with original issue discount (“OID”) for U.S. federal income tax purposes as part of a further issue. Purchasers of debt securities after the date of any further issue will not be able to differentiate between debt securities sold as part of the further issue and previously issued debt securities of the same series. If we were to issue further debt securities with OID, purchasers of debt securities after such further issue may be required to accrue OID (or greater amounts of OID that they would otherwise have accrued) with respect to their debt securities. This may affect the price of outstanding debt securities following a further issue. Purchasers are advised to consult legal counsel with respect to the implications of any future decision by us to undertake a further issue of debt securities with OID.

Description of Warrants

The description below summarizes some of the provisions of warrants for the purchase of debt securities that we may issue from time to time and of the warrant agreement. Copies of the forms of warrants and the warrant agreement are or will be filed as exhibits to the registration statement of which this prospectus is a part. Since it is only a summary, the description may not contain all of the information that is important to you as a potential investor in the warrants.

146

The description of the warrants that will be contained in the prospectus supplement will supplement this description and, to the extent inconsistent with this description, replace it.

General Terms of the Warrants

Each series of warrants will be issued under a warrant agreement to be entered into between us and a bank or trust company, as warrant agent. The prospectus supplement relating to the series of warrants will describe:

• the terms of the debt securities purchasable upon exercise of the warrants, as described above under “Description of the Securities—Description of Debt Securities—General Terms of the Debt Securities”;

• the principal amount of debt securities purchasable upon exercise of one warrant and the exercise price;

• the procedures and conditions for the exercise of the warrants;

• the dates on which the right to exercise the warrants begins and expires;

• whether and under what conditions the warrants may be terminated or canceled by us;

• whether and under what conditions the warrants and any debt securities issued with the warrants will be separately transferable;

• whether the warrants will be issued in bearer or registered form;

• whether the warrants will be exchangeable between registered and bearer form, and, if issued in registered form, where they may be transferred and registered; and

• other specific provisions.

Terms Applicable to Debt Securities and Warrants

Governing Law

The fiscal agency agreement, any warrant agreement and the debt securities and any warrants will be governed by the laws of the State of New York without regard to any principles of New York law requiring the application of the laws of another jurisdiction. Nevertheless, all matters governing our authorization, execution and delivery of the debt securities and the fiscal agency agreement and any warrants and warrant agreement by us will be governed by the laws of the Republic.

Jurisdiction and Consent to Service

We are owned by a foreign sovereign government and all of our directors and executive officers and some of the experts named in this prospectus are residents of Korea. In addition, all or most our assets and the assets of the people named in the preceding sentence are located outside of the United States. For that reason, you may have difficultly serving process on us or the individuals described above in the United States or enforcing in a U.S. court a U.S.-court judgment based on the U.S. federal securities laws. Our Korean counsel has informed us that there is doubt regarding the enforceability in Korea, either in original actions or in actions for the enforcement of U.S.-court judgments, of civil liabilities based on the U.S. federal securities laws.

We have appointed the Chief Representative of our New York Representative Office, Mr. Seung-hyun Yoo, and a Senior Representative of our New York Representative Office, Mr. Sang Hun Kim, and each of their successors in the future, as our authorized agents to receive service of process in any suit which a holder of any series of debt securities or warrants may bring in any state or federal court in New York City and we have accepted the jurisdiction of those courts for those actions. Our New York Representative Office is located at 460 Park Avenue, 8^th Floor, New York, New York 10022. These appointments are irrevocable as long as any amounts

147

of principal, premium or interest remain payable by us to the Fiscal Agent under any series of debt securities or any warrants have not expired or otherwise terminated under their terms. If for any reason either of these two men ceases to act as our authorized agent or ceases to have an address in Manhattan, we shall appoint a replacement. The appointment of agents for receipt of service of process and the acceptance of jurisdiction of state or federal courts in New York City do not, however, apply to actions brought under the United States federal securities laws. We may also be sued in courts having jurisdiction over us located in the Republic.

We will irrevocably consent to any relief and process in connection with a suit against us in relation to the debt securities or warrants, including the enforcement or execution of any order or judgment of the court. To the extent permitted by law, we will waive irrevocably any immunity from jurisdiction to which we might otherwise be entitled in any suit based on any series of debt securities or warrants.

Foreign Exchange Controls

Before we may issue debt securities outside the Republic, the Minister of Strategy and Finance of Korea must receive a report with respect to the issuance by us of debt securities in accordance with the Foreign Exchange Transaction Act and Regulation of Korea. After issuance of debt securities outside the Republic, we are required to notify the Minister of Strategy and Finance of such issuance. No further approval or authorization is required for us to pay principal of or interest on the debt securities.

Description of Guarantees

The description below summarizes some of the provisions of the guarantees that the Republic may issue from time to time to guarantee our debt securities. Since it is only a summary, the description may not contain all of the information that is important to you as a potential beneficiary of a guarantee.

The prospectus supplement relating to a guarantee to be issued by the Republic will specify other specific provisions. The description of a guarantee to be issued by the Republic that will be contained in the prospectus supplement will supplement this description and, to the extent inconsistent with this description, replace it.

General Terms of the Guarantees

Each guarantee will be issued by the Republic as guarantor. The prospectus supplement relating to a guarantee will specify:

• the relevant obligor and the obligations guaranteed under the guarantee;

• the nature and scope of the guarantee, including whether or not it is irrevocable and unconditional;

• the status of the guarantee in relation to the Republic’s other obligations;

• the governing law of the guarantee; and

• other relevant provisions of the guarantee.

148

LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES AND BEARER WARRANTS

Bearer securities will not be offered, sold or delivered in the United States or its possessions or to a United States person; except in certain circumstances permitted by United States tax regulations. Bearer securities will initially be represented by temporary global securities, without interest coupons, deposited with a common depositary in London for Euroclear and Clearstream for credit to designated accounts. Unless otherwise indicated in the prospectus supplement:

• each temporary global security will be exchangeable for definitive bearer securities on or after the date that is 40 days after issuance only upon receipt of certification of non-United States beneficial ownership of the temporary global security as provided for in United States tax regulations, provided that no bearer security will be mailed or otherwise delivered to any location in the United States in connection with the exchange; and

• any interest payable on any portion of a temporary global security with respect to any interest payment date occurring prior to the issuance of definitive bearer securities will be paid only upon receipt of certification of non-United States beneficial ownership of the temporary global security as provided for in United States tax regulations.

Bearer securities, other than temporary global debt securities, and any related coupons will bear the following legend: “Any United States person who holds this obligation will be subject to limitations under the United States federal income tax laws, including the limitations provided in Section 165(j) and 1287(a) of the Internal Revenue Code.” The sections referred to in the legend provide that, with certain exceptions, a United States person who holds a bearer security or coupon will not be allowed to deduct any loss realized on the disposition of the bearer security, and any gain, which might otherwise be characterized as capital gain, recognized on the disposition will be treated as ordinary income.

For purposes of this section, “United States person” means:

• a citizen or resident of the United States;

• a corporation, partnership or other entity created or organized in or under the laws of the United States of any political subdivision thereof; or

• an estate or trust the income of which is subject to United States federal income taxation regardless of its source.

For purposes of this section, “United States” means the United States of America, including each state and the District of Columbia, its territories, possessions and other areas subject to its jurisdiction.

149

TAXATION

The following discussion summarizes certain Korean and U.S. federal income tax considerations that may be relevant to you if you invest in debt securities. This summary is based on laws, regulations, rulings and decisions in effect as of the date of this Prospectus. These laws, regulations, rulings and/or decisions may change; any such change could apply retroactively and could affect the continued validity of this summary.

This summary does not describe all of the tax considerations that may be relevant to you or your situation, particularly if you are subject to special tax rules. You should consult your tax adviser about the tax consequences of holding the debt securities, including the relevance to your particular situation of the considerations discussed below, as well as of state, local or other tax laws.

Korean Taxation

The following summary of Korean tax considerations applies to you so long as you are not:

• a citizen of Korea;

• a resident of Korea;

• a corporation organized under Korean law;

• a corporation of which the place of management is located in Korea; or

• engaging in a trade or business in Korea through a permanent establishment or a fixed base to which the relevant income is attributable or with which the relevant income is effectively connected.

Tax on Interest Payments

Under the Special Tax Treatment Control Law (the “STTCL”), when we make payments of interest to you on the debt securities, no amount will be withheld from such payments for, or on account of, taxes of any kind imposed, levied, withheld or assessed by Korea or any political subdivision or taxing authority thereof or therein; provided that the debt securities are deemed to be foreign currency denominated bonds issued outside of Korea for the purpose of the STTCL.

Tax on Capital Gains

You will not be subject to any Korean income or withholding taxes in connection with the sale, exchange or other disposition of a debt security, provided that the disposition does not involve a transfer of the debt security to a resident of Korea (or the Korean permanent establishment of a non-resident). In addition, the STTCL exempts you from Korean taxation on any capital gains that you earn from the transfer of the debt securities outside of Korea; provided that the offering of the debt securities is deemed to be an overseas issuance for the purpose of the STTCL. If you sell or otherwise dispose of debt securities to a Korean resident and such disposition or sale is made within Korea, any gain realized on the transaction will be taxable at ordinary Korean withholding tax rates at the lower of 22% (including local income surtax) of net gain (subject to the production of satisfactory evidence of the acquisition costs and certain direct transaction costs) or 11% (including local income surtax) of gross sale proceeds with respect to transactions, unless an exemption is available under an applicable income tax treaty. For example, if you are a resident of the United States for the purposes of the income tax treaty currently in force between Korea and the United States, you are generally entitled to an exemption from Korean taxation in respect of any gain realized on a disposition of a debt security, regardless of whether the disposition is to a Korean resident. For more information regarding tax treaties, please refer to the heading “Tax Treaties” below.

With respect to computing the above-mentioned 22% withholding taxes (including local income surtax) on net gain, please note that there is no provision under relevant Korean law for offsetting gains and losses or

150

otherwise aggregating transactions for the purpose of computing the net gain attributable to sales of the debt securities. The purchaser of the debt securities or, in the case of the sale of the debt securities through a securities company in Korea, the securities company through which such sale is effected, is required under Korean law to withhold the applicable amount of Korean tax and make payment thereof to the relevant Korean tax authority. Unless you, as the seller, can either claim the benefit of an exemption or a reduced rate of tax under an applicable tax treaty or produce satisfactory evidence of your acquisition cost and certain direct transaction costs in relation to the debt securities being sold, the purchaser or the securities company, as applicable, must withhold an amount equal to 11% of the gross sale proceeds. Any withheld tax must be paid no later than the tenth day of the month following the month in which the payment for the purchase of the relevant debt securities occurred. Failure to timely transmit the withheld tax to the Korean tax authorities technically subjects the purchaser or the securities company to penalties under Korean tax laws.

Inheritance Tax and Gift Tax

If you die while domiciled in Korea, Korean inheritance tax will be imposed upon the transfer by succession of any of the debt securities, wherever located, that you own at the time of death. Furthermore, regardless of where you are domiciled when you die, Korean inheritance tax will be imposed upon the transfer by succession of any of the debt securities you own that are located in Korea at the time of death. Similarly, if you give the debt securities as a gift to any other person, the donee will be subject to Korean gift tax, based on where you are domiciled or where the debt securities are located at the time that you make the gift. The amount, if any, of the applicable inheritance or gift tax imposed in specific cases depends on the value of the debt securities (or other property) and the identities of the parties involved.

Under Korean inheritance and gift tax laws, debt securities issued by Korean corporations are deemed to be located in Korea irrespective of where they are physically located or by whom they are owned.

Stamp Duty

You will not be subject to any Korean stamp duty, registration duty or similar documentary tax in respect of or in connection with a transfer of any debt securities or in connection with the exercise of exchange rights or conversion rights that may be acquired with the debt securities.

Guarantees

Although there are no Korean tax laws, regulations or rulings specific to the payment under the guarantee herein, we believe any payments of interest on and principal amount of the debt securities (or the issued price if the debt securities were originally issued at a discount) by the Republic under the Republic’s guarantee on the debt securities denominated in a foreign currency and issued by us are not subject to withholding tax. Further details of the tax consequences of the holders of our debt securities guaranteed by the Republic may be provided in the relevant prospectus supplement.

Tax Treaties

At the date of this prospectus, Korea has tax treaties with, among others, Australia, Austria, Bangladesh, Belgium, Brazil, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, Finland, France, Germany, Hungary, India, Indonesia, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, Mongolia, the Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Republic of Fiji, Romania, Singapore, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Tunisia, Turkey, the United Kingdom, the United States of America and Vietnam under which the rate of withholding tax on interest and dividends is reduced, generally to between 5% and 16.5%, and the tax on capital gains is often eliminated.

With respect to any gains subject to Korean withholding tax, as described under the heading “Tax on Capital Gains” above, you should inquire for yourself whether you are entitled to the benefit of a tax treaty with Korea. It

151

will be your responsibility to claim the benefits of any tax treaty that may exist between your country and Korea in respect of capital gains, and to provide to the purchaser of the debt securities, or the relevant securities company through which the transfer of the debt securities is effected, as applicable, a certificate as to your country of tax residence. In the absence of sufficient proof, the purchaser, or the relevant securities company, as the case may be, must withhold tax at normal rates.

In addition, subject to certain exceptions, in order to receive the benefit of a tax exemption available under any applicable tax treaty, you may also be required to submit to the payer of such Korean source income an application for tax exemption under a tax treaty, together with a certificate as to your country of tax residence. The payer of such Korean source income, in turn, will be required to submit such exemption application to the relevant district tax office in Korea by the ninth day of the month following the date of the first payment of such income.

At present, Korea has not entered into any tax treaties regarding inheritance or gift tax.

United States Tax Considerations

The following discussion summarizes certain U.S. federal income tax considerations that may be relevant to you if you invest in debt securities and are a U.S. holder. You will be a U.S. holder if you are an individual who is a citizen or resident of the United States, a U.S. domestic corporation, or any other person that is subject to U.S. federal income tax on a net income basis in respect of its investment in a debt security. This summary deals only with U.S. holders that hold debt securities as capital assets for tax purposes. This summary does not apply to you if you are an investor that is subject to special tax rules, such as:

• a bank or thrift;

• a real estate investment trust;

• a regulated investment company;

• an insurance company;

• a dealer in securities or currencies;

• a trader in securities or commodities that elects mark-to-market treatment;

• a person that will hold debt securities as a hedge against currency risk or as a position in a straddle or conversion transaction for tax purposes;

• a tax exempt organization; or

• a person whose functional currency for tax purposes is not the U.S. dollar.

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, existing and proposed regulations promulgated thereunder, and published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis.

Any special U.S. federal income tax considerations relevant to a particular issuance of debt securities will be discussed in the applicable prospectus supplement. You should consult your tax adviser about the tax consequences of holding debt securities, including the relevance to your particular situation of the considerations discussed below, as well as of state, local or other tax laws.

Payments or Accruals of Interest

Payments or accruals of “qualified stated interest” (as defined below) on a debt security will be taxable to you as ordinary interest income at the time that you receive or accrue such amounts, in accordance with your regular method of tax accounting. If you use the cash method of tax accounting and you receive payments of

152

interest pursuant to the terms of a debt security in a currency other than U.S. dollars (a “foreign currency”), the amount of interest income you will realize will be the U.S. dollar value of the foreign currency payment based on the exchange rate in effect on the date you receive the payment regardless of whether you convert the payment into U.S. dollars. If you are an accrual-basis U.S. holder, the amount of interest income you will realize will be based on the average exchange rate in effect during the interest accrual period or, with respect to an interest accrual period that spans two taxable years, at the average exchange rate for the partial period within the taxable year. Alternatively, as an accrual-basis U.S. holder you may elect to translate all interest income on foreign currency-denominated debt securities at the spot rate on the last day of the accrual period (or the last day of the taxable year, in the case of an accrual period that spans more than one taxable year), or on the date that you receive the interest payment if that date is within five business days of the end of the accrual period. If you make this election you must apply it consistently to all debt instruments from year to year and you cannot change the election without the consent of the Internal Revenue Service. If you use the accrual method of accounting for tax purposes you will recognize foreign currency gain or loss on the receipt of a foreign currency interest payment if the exchange rate in effect on the date the payment is received differs from the rate applicable to a previous accrual of that interest income. This foreign currency gain or loss will be treated as ordinary income or loss, but generally will not be treated as an adjustment to interest income received on the debt security.

Purchase, Sale and Retirement of Notes

Initially, your tax basis in a debt security generally will equal the cost of the debt security to you. Your basis will increase by any amounts that you are required to include in income under the rules governing original issue discount and market discount, and will decrease by the amount of any amortized premium and any payments other than qualified stated interest made on the debt security. The rules for determining these amounts are discussed below. If you purchase a debt security that is denominated in a foreign currency, the cost to you, and therefore generally your initial tax basis, will be the U.S. dollar value of the foreign currency purchase price on the date of purchase calculated at the exchange rate in effect on that date. If the foreign currency-denominated debt security is traded on an established securities market and you are a cash-basis taxpayer, or if you are an accrual-basis taxpayer that makes a special election, then you will determine the U.S. dollar value of the cost of the debt security by translating the amount of the foreign currency that you paid for the debt security at the spot rate of exchange on the settlement date of your purchase. The amount of any subsequent adjustments to your tax basis in a foreign currency-denominated debt security in respect of original issue discount, market discount and premium will be determined in the manner described below. If you convert U.S. dollars into a foreign currency and then immediately use that foreign currency to purchase a debt security, you generally will not have any taxable gain or loss as a result of the purchase.

When you sell or exchange a debt security, or if a debt security is retired, you generally will recognize gain or loss equal to the difference between the amount you realize on the transaction, less any accrued qualified stated interest, which will be subject to tax in the manner described above, and your tax basis in the debt security. If you sell or exchange a debt security for a foreign currency, or receive foreign currency on the retirement of a debt security, the amount you will realize for U.S. tax purposes generally will be the dollar value of the foreign currency that you receive calculated at the exchange rate in effect on the date the foreign currency debt security is disposed of or retired. If you dispose of a foreign currency debt security that is traded on an established securities market and you are a cash-basis U.S. holder, or if you are an accrual-basis holder that makes a special election, then you will determine the U.S. dollar value of the amount realized by translating the amount at the spot rate of exchange on the settlement date of the sale, exchange or retirement.

The special election available to you if you are an accrual-basis taxpayer in respect of the purchase and sale of foreign currency debt securities traded on an established securities market, which is discussed in the two preceding paragraphs, must be applied consistently to all debt instruments from year to year and cannot be changed without the consent of the Internal Revenue Service.

153

Except as discussed below with respect to market discount, short-term debt securities and foreign currency gain or loss, the gain or loss that you recognize on the sale, exchange or retirement of a debt security generally will be long-term capital gain or loss if you have held the debt security for more than one year. The Code provides preferential treatment under certain circumstances for net long-term capital gains recognized by individual investors. The ability of U.S. holders to offset capital losses against ordinary income is limited.

The gain or loss that you recognize on the sale, exchange or retirement of a foreign currency debt security generally will be treated as ordinary income or loss to the extent that the gain or loss is attributable to changes in exchange rates during the period in which you held the debt security. This foreign currency gain or loss will not be treated as an adjustment to interest income that you receive on the debt security.

Original Issue Discount

If we issue debt securities at a discount from their stated redemption price at maturity, and the discount is equal to or more than the product of one-fourth of one percent (0.25%) of the stated redemption price at maturity of the debt securities multiplied by the number of whole years to their maturity, the debt securities will be “Original Issue Discount Debt Securities.” The difference between the issue price and their stated redemption price at maturity will be the “original issue discount.” The “issue price” of the debt securities will be the first price at which a substantial amount of the debt securities are sold to the public (i.e., excluding sales of debt securities to underwriters, placement agents, wholesalers, or similar persons). The “stated redemption price at maturity” will include all payments under the debt securities other than payments of qualified stated interest. The term “qualified stated interest” generally means stated interest that is unconditionally payable in cash or property, other than debt instruments issued by the Company, at least annually during the entire term of a debt security at a single fixed interest rate or, subject to certain conditions, based on one or more interest indices.

If you invest in Original Issue Discount Debt Securities you generally will be subject to the special tax accounting rules for original issue discount obligations provided by the Internal Revenue Code and certain Treasury regulations (the “OID regulations”). You should be aware that, as described in greater detail below, if you invest in an Original Issue Discount Debt Security you generally will be required to include original issue discount in ordinary gross income for U.S. federal income tax purposes as it accrues, before you receive the cash attributable to that income.

In general, and regardless of whether you use the cash or the accrual method of tax accounting, if you are the holder of an Original Issue Discount Debt Security with a maturity greater than one year, you will be required to include in ordinary gross income the sum of the “daily portions” of original issue discount on that debt security for all days during the taxable year that you own the debt security. The daily portions of original issue discount on an Original Issue Discount Debt Security are determined by allocating to each day in any accrual period a ratable portion of the original issue discount allocable to that period. Accrual periods may be any length and may vary in length over the term of an Original Issue Discount Debt Security, so long as no accrual period is longer than one year and each scheduled payment of principal or interest occurs on the first or last day of an accrual period. If you are the initial holder of the debt security, the amount of original issue discount on an Original Issue Discount Debt Security allocable to each accrual period is determined by:

(i) multiplying the “adjusted issue price” (as defined below) of the debt security at the beginning of the accrual period by a fraction, the numerator of which is the annual yield to maturity of the debt security and the denominator of which is the number of accrual periods in a year; and

(ii) subtracting from that product the amount, if any, payable as qualified stated interest allocable to that accrual period.

In the case of an Original Issue Discount Debt Security that is a floating rate debt security, both the “annual yield to maturity” and the qualified stated interest will be determined for these purposes as though the debt security had borne interest in all periods at a fixed rate generally equal to the rate that would be applicable to

154

interest payments on the debt security on its date of issue or, in the case of some floating rate debt securities, the rate that reflects the yield that is reasonably expected for the debt security. Additional rules may apply if interest on a floating rate debt security is based on more than one interest index. The “adjusted issue price” of an Original Issue Discount Debt Security at the beginning of any accrual period will generally be the sum of its issue price, including any accrued interest, and the amount of original issue discount allocable to all prior accrual periods, reduced by the amount of all payments other than any qualified stated interest payments on the debt security in all prior accrual periods. All payments on an Original Issue Discount Debt Security, other than qualified stated interest, will generally be viewed first as payments of previously accrued original issue discount, to the extent of the previously accrued discount, with payments considered made from the earliest accrual periods first, and then as a payment of principal. The “annual yield to maturity” of a debt security is the discount rate, appropriately adjusted to reflect the length of accrual periods, that causes the present value on the issue date of all payments on the debt security to equal the issue price. As a result of this “constant yield” method of including original issue discount income, the amounts you will be required to include in your gross income if you invest in an Original Issue Discount Debt Security denominated in U.S. dollars will generally be less in the early years and greater in the later years than amounts that would be includible on a straight-line basis.

You generally may make an irrevocable election to include in income your entire return on a debt security (i.e., the excess of all remaining payments to be received on the debt security, including payments of qualified stated interest, over the amount you paid for the debt security) under the constant yield method described above. For debt securities purchased at a premium or bearing market discount in your hands, if you make this election you will also be deemed to have made the election (discussed below under “Premium and Market Discount”) to amortize premium or to accrue market discount in income currently on a constant yield basis.

In the case of an Original Issue Discount Debt Security that is also a foreign currency-denominated debt security, you should determine the U.S. dollar amount includible as original issue discount for each accrual period by (i) calculating the amount of original issue discount allocable to each accrual period in the foreign currency using the constant yield method, and (ii) translating the foreign currency amount so determined at the average exchange rate in effect during that accrual period (or, with respect to an interest accrual period that spans two taxable years, at the average exchange rate for each partial period). Alternatively, you may translate the foreign currency amount so determined at the spot rate of exchange on the last day of the accrual period (or the last day of the taxable year, for an accrual period that spans two taxable years), or at the spot rate of exchange on the date of receipt, if that date is within five business days of the last day of the accrual period, provided that you have made the election described under the caption “Payments or Accruals of Interest” above. Because exchange rates may fluctuate, if you are the holder of an Original Issue Discount Debt Security that is also a foreign currency debt security you may recognize a different amount of original issue discount income in each accrual period than would be the case if you were the holder of an otherwise similar Original Issue Discount Debt Security denominated in U.S. dollars. Upon the receipt of an amount attributable to original issue discount, whether in connection with a payment of an amount that is not qualified stated interest or the sale or retirement of the Original Issue Discount Debt Security, you will recognize ordinary income or loss measured by the difference between the amount received, translated into U.S. dollars at the exchange rate in effect on the date of receipt or on the date of disposition of the Original Issue Discount Debt Security, as the case may be, and the amount accrued, using the exchange rate applicable to such previous accrual.

If you purchase an Original Issue Discount Debt Security outside of the initial offering at a cost less than its “remaining redemption amount”, or if you purchase an Original Issue Discount Debt Security in the initial offering at a price other than the debt security’s issue price, you will also generally be required to include in gross income the daily portions of original issue discount, calculated as described above. However, if you acquire an Original Issue Discount Debt Security at a price greater than its adjusted issue price, you will be entitled to reduce your periodic inclusions of original issue discount to reflect the premium paid over the adjusted issue price. The remaining redemption amount for an Original Issue Discount Debt Security is the total of all future payments to be made on the debt security other than qualified stated interest.

155

Floating rate debt securities generally will be treated as “variable rate debt instruments” under the OID regulations. Accordingly, the stated interest on a floating rate debt security generally will be treated as qualified stated interest, and such a debt security will not have original issue discount solely as a result of the fact that it provides for interest at a variable rate. A floating rate debt security that does not qualify as a variable rate debt instrument will be subject to special rules (the “contingent payment regulations”) that govern the tax treatment of debt obligations that provide for contingent payments (“contingent debt obligations”). A detailed description of the tax considerations relevant to U.S. holders of any such debt securities will be provided in the applicable prospectus supplement.

Certain debt securities may be redeemed prior to maturity, either at our option or at the option of the holder, or may have special repayment or interest rate reset features as indicated in the prospectus supplement. Original Issue Discount Debt Securities containing these features may be subject to rules that differ from the general rules discussed above. If you purchase Original Issue Discount Debt Securities with these features, you should carefully examine the prospectus supplement and consult your tax adviser about their treatment since the tax consequences with respect to original issue discount will depend, in part, on the particular terms and features of the debt securities.

Short-Term Debt Securities

The rules described above will also generally apply to Original Issue Discount Debt Securities with maturities of one year or less (“short-term debt securities”), but with some modifications.

First, the original issue discount rules treat none of the interest on a short-term debt security as qualified stated interest, but treat a short-term debt security as having original issue discount. Thus, all short-term debt securities will be Original Issue Discount Debt Securities. Except as noted below, if you are a cash-basis holder of a short-term debt security and you do not identify the short-term debt security as part of a hedging transaction you will generally not be required to accrue original issue discount currently, but you will be required to treat any gain realized on a sale, exchange or retirement of the debt security as ordinary income to the extent such gain does not exceed the original issue discount accrued with respect to the debt security during the period you held the debt security. You may not be allowed to deduct all of the interest paid or accrued on any indebtedness incurred or maintained to purchase or carry a short-term debt security until the maturity of the debt security or its earlier disposition in a taxable transaction. Notwithstanding the foregoing, if you are a cash-basis U.S. holder of a short-term debt security you may elect to accrue original issue discount on a current basis, in which case the limitation on the deductibility of interest described above will not apply. A U.S. holder using the accrual method of tax accounting and some cash method holders, including banks, securities dealers, regulated investment companies and certain trust funds, generally will be required to include original issue discount on a short-term debt security in gross income on a current basis. Original issue discount will be treated as accruing for these purposes on a ratable basis or, at the election of the holder, on a constant yield basis based on daily compounding.

Second, regardless of whether you are a cash- or accrual-basis holder, if you are the holder of a short-term debt security you can elect to accrue any “acquisition discount” with respect to the debt security on a current basis. Acquisition discount is the excess of the remaining redemption amount of the debt security at the time of acquisition over the purchase price. Acquisition discount will be treated as accruing ratably or, at the election of the holder, under a constant yield method based on daily compounding. If you elect to accrue acquisition discount, the original issue discount rules will not apply.

Finally, the market discount rules described below will not apply to short-term debt securities.

As described above, certain of the debt securities may be subject to special redemption features. These features may affect the determination of whether a debt security has a maturity of one year or less and thus is a short-term debt security. If you purchase debt securities with these features, you should carefully examine the prospectus supplement and consult your tax adviser about these features.

156

Premium and Market Discount

If you purchase a debt security at a cost greater than the debt security’s remaining redemption amount, you will be considered to have purchased the debt security at a premium, and you may elect to amortize the premium as an offset to interest income, using a constant yield method, over the remaining term of the debt security. If you make this election, it generally will apply to all debt instruments that you hold at the time of the election, as well as any debt instruments that you subsequently acquire. In addition, you may not revoke the election without the consent of the Internal Revenue Service. If you elect to amortize the premium you will be required to reduce your tax basis in the debt security by the amount of the premium amortized during your holding period. Original Issue Discount Debt Securities purchased at a premium will not be subject to the original issue discount rules described above. In the case of premium on a foreign currency debt security, you should calculate the amortization of the premium in the foreign currency. Amortization deductions attributable to a period reduce interest payments in respect of that period, and therefore are translated into U.S. dollars at the rate that you use for those interest payments. Exchange gain or loss will be realized with respect to amortized premium on a foreign currency debt security based on the difference between the exchange rate computed on the date or dates the premium is amortized against interest payments on the debt security and the exchange rate on the date when the holder acquired the debt security. For a U.S. holder that does not elect to amortize premium, the amount of premium will be included in your tax basis when the debt security matures or is disposed of. Therefore, if you do not elect to amortize premium and you hold the debt security to maturity, you generally will be required to treat the premium as capital loss when the debt security matures.

If you purchase a debt security at a price that is lower than the debt security’s remaining redemption amount, or in the case of an Original Issue Discount Debt Security, the debt security’s adjusted issue price, by 0.25% or more of the remaining redemption amount, or adjusted issue price, multiplied by the number of remaining whole years to maturity, the debt security will be considered to bear “market discount” in your hands. In this case, any gain that you realize on the disposition of the debt security generally will be treated as ordinary interest income to the extent of the market discount that accrued on the debt security during your holding period. In addition, you could be required to defer the deduction of a portion of the interest paid on any indebtedness that you incurred or continued to purchase or carry the debt security. In general, market discount will be treated as accruing ratably over the term of the debt security, or, at your election, under a constant yield method. You must accrue market discount on a foreign currency debt security in the specified currency. The amount that you will be required to include in income in respect of accrued market discount will be the U.S. dollar value of the accrued amount, generally calculated at the exchange rate in effect on the date that you dispose of the debt security.

You may elect to include market discount in gross income currently as it accrues (on either a ratable or constant yield basis), in lieu of treating a portion of any gain realized on a sale of the debt security as ordinary income. If you elect to include market discount on a current basis, the interest deduction deferral rule described above will not apply. If you do make such an election, it will apply to all market discount debt instruments that you acquire on or after the first day of the first taxable year to which the election applies. The election may not be revoked without the consent of the Internal Revenue Service. Any accrued market discount on a foreign currency debt security that is currently includible in income will be translated into U.S. dollars at the average exchange rate for the accrual period (or portion thereof within the holder’s taxable year).

Warrants

A description of the tax consequences of an investment in warrants will be provided in the applicable prospectus supplement.

Indexed Notes and Other Notes Providing for Contingent Payments

The contingent payment regulations generally require accrual of interest income on a constant yield basis in respect of contingent debt obligations at a yield determined at the time of issuance of the obligation, and may require adjustments to these accruals when any contingent payments are made. In addition, special rules may

157

apply to floating rate debt securities if the interest payable on the debt securities is based on more than one interest index. We will provide a detailed description of the tax considerations relevant to U.S. holders of any debt securities that are subject to the special rules discussed in this paragraph in the relevant prospectus supplement.

Information Reporting and Backup Withholding

The paying agent must file information returns with the United States Internal Revenue Service in connection with debt security payments made to certain United States persons. If you are a United States person, you generally will not be subject to United States backup withholding tax on such payments if you provide your taxpayer identification number to the paying agent. You may also be subject to information reporting and backup withholding tax requirements with respect to the proceeds from a sale of the debt securities. If you are not a United States person, in order to avoid information reporting and backup withholding tax requirements you may have to comply with certification procedures to establish that you are not a United States person.

In addition, a United States Holder should be aware that reporting requirements are imposed with respect to the holding of certain foreign financial assets, including debt of foreign issuers, if the aggregate value of all of such assets exceeds $50,000. A United States Holder should consult its own tax advisor regarding the application of these information reporting rules to our Notes and its particular situation.

158

PLAN OF DISTRIBUTION

We and the Republic, if a guarantee by the Republic is furnished, may sell or issue the debt securities or warrants or guarantees in any of three ways:

• through underwriters or dealers;

• directly to one or more purchasers; or

• through agents.

The prospectus supplement relating to a particular series of debt securities or warrants or guarantees will state:

• the names of any underwriters;

• the purchase price of the securities;

• the proceeds to us from the sale;

• any underwriting discounts and other compensation;

• the initial public offering price;

• any discounts or concessions allowed or paid to dealers; and

• any securities exchanges on which the securities will be listed.

Any underwriter involved in the sale of securities will acquire the securities for its own account. The underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices to be determined at the time of sale. The securities may be offered to the public either by underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Unless the prospectus supplement states otherwise, certain conditions must be satisfied before the underwriters become obligated to purchase securities from us and the Republic, if applicable, and they will be obligated to purchase all of the securities if any are purchased. The underwriters may change any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers.

If we and the Republic, if a guarantee by the Republic is furnished, sell any securities through agents, the prospectus supplement will identify the agent and indicate any commissions payable by us and the Republic, if applicable. Unless the prospectus supplement states otherwise, all agents will act on a best efforts basis and will not acquire the securities for their own account.

We and the Republic, if a guarantee by the Republic is furnished, may authorize agents, underwriters or dealers to solicit offers by certain specified entities to purchase the securities from us and the Republic, if applicable, at the public offering price set forth in a prospectus supplement pursuant to delayed delivery contracts. The prospectus supplement will set out the conditions of the delayed delivery contracts and the commission receivable by the agents, underwriters or dealers for soliciting the contracts.

We and the Republic, if a guarantee by the Republic is furnished, may offer debt securities as consideration for the purchase of other of our debt securities, either in connection with a publicly announced tender offer or in privately negotiated transactions. The offer may be in addition to or in lieu of sales of debt securities directly or through underwriters or agents.

Agents and underwriters may be entitled to indemnification by us against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribution from us with respect to certain payments which the agents or underwriters may be required to make. Agents and underwriters may be customers of, engage in transactions with, or perform services (including commercial and investment banking services) for, us and the Republic in the ordinary course of business.

159

LEGAL MATTERS

The validity of any particular series of debt securities or warrants issued with debt securities will be passed upon for us and any underwriters or agents by United States and Korean counsel identified in the related prospectus supplement.

AUTHORIZED REPRESENTATIVES IN THE UNITED STATES

Our authorized agents in the United States are Mr. Seung-hyun Yoo, Chief Representative of our New York Representative Office, or Mr. Sang Hun Kim, Senior Representative of our New York Representative Office. The address of our New York Representative Office is 460 Park Avenue, 8^th Floor, New York, New York 10022. The authorized representative of the Republic in the United States is Mr. Byeong Sun Song, Financial Attaché, Korean Consulate General in New York, located at 335 East 45th Street, New York, New York 10017.

OFFICIAL STATEMENTS AND DOCUMENTS

Our Chairman and President, in his official capacity, has supplied the information set forth under “The Export-Import Bank of Korea” (except for the information set out under “The Export-Import Bank of Korea—Business—Government Support and Supervision”). Such information is stated on his authority.

The Minister of Strategy and Finance of The Republic of Korea, in his official capacity, has supplied the information set out under “The Export-Import Bank of Korea—Business—Government Support and Supervision” and “The Republic of Korea”. Such information is stated on his authority. The documents identified in the portion of this prospectus captioned “The Republic of Korea” as the sources of financial or statistical data are official public documents of the Republic or its agencies and instrumentalities.

EXPERTS

Our non-consolidated financial statements as of and for the year ended December 31, 2011 included in this prospectus and included elsewhere in the registration statement have been audited by Deloitte Anjin LLC, an independent accounting firm, as stated in their report (which expresses an unqualified opinion on the non-consolidated financial statements and includes an explanatory paragraph referring to the application of the KEXIM Act and the related accounting principles) appearing herein and elsewhere in the registration statement. Such non-consolidated financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

Our non-consolidated financial statements as of and for the year ended December 31, 2010 have been included in this prospectus in reliance upon the report of KPMG Samjong Accounting Corp., an independent accounting firm, appearing elsewhere herein, and upon the authority of such firm as experts in accounting and auditing.

160

FORWARD-LOOKING STATEMENTS

This prospectus includes future expectations, projections or “forward-looking statements”, as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “believe”, “expect”, “anticipate”, “estimate”, “project” and similar words identify forward-looking statements. In addition, all statements other than statements of historical facts included in this prospectus are forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove correct. This prospectus discloses important factors that could cause actual results to differ materially from our expectations (“Cautionary Statements”). All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements.

Factors that could adversely affect the future performance of the Korean economy include:

• continuing difficulties in the housing and financial sectors in the United States and elsewhere and the resulting adverse effects on the global financial markets;

• adverse conditions and volatility in the United States and worldwide credit and financial markets and the general weakness of the global economy;

• financial difficulties and resulting ratings downgrades experienced by the governments of Greece and other countries in Europe;

• adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the U.S. dollar or Japanese Yen exchange rates or revaluation of the Chinese Renminbi), interest rates and stock markets;

• substantial decreases in the market prices of Korean real estate;

• increasing delinquencies and credit defaults by consumer and small and medium sized enterprise borrowers;

• declines in consumer confidence and a slowdown in consumer spending;

• adverse developments in the economies of countries that are important export markets for the Republic, such as the United States, Europe, Japan and China, or in emerging market economies in Asia or elsewhere;

• the continued emergence of the Chinese economy, to the extent its benefits (such as increased exports to China) are outweighed by its costs (such as competition in export markets or for foreign investment and the relocation of the manufacturing base from the Republic to China);

• social and labor unrest;

• a decrease in tax revenues and a substantial increase in the Government’s expenditures for fiscal stimulus measures, unemployment compensation and other economic and social programs that, together, would lead to an increased government budget deficit;

• financial problems or lack of progress in the restructuring of Korean conglomerates, other large troubled companies, their suppliers or the financial sector;

• loss of investor confidence arising from corporate accounting irregularities and corporate governance issues at certain Korean conglomerates;

• the economic impact of any pending or future free trade agreements;

• geo-political uncertainty and risk of further attacks by terrorist groups around the world;

• the recurrence of severe acute respiratory syndrome, or SARS, or an outbreak of swine or avian flu in Asia and other parts of the world;

161

• deterioration in economic or diplomatic relations between the Republic and its trading partners or allies, including deterioration resulting from trade disputes or disagreements in foreign policy;

• political uncertainty or increasing strife among or within political parties in the Republic;

• hostilities or unrest involving oil producing countries in the Middle East and Northern Africa and any material disruption in the supply of oil or increase in the price of oil;

• the occurrence of severe earthquakes, tsunamis or other natural disasters in Korea and other parts of the world, particularly in trading partners (such as the March 2011 earthquake in Japan, which also resulted in the release of radioactive materials from a nuclear plant that had been damaged by the earthquake); and

• an increase in the level of tension or an outbreak of hostilities between North Korea and the Republic or the United States.

162

FURTHER INFORMATION

We filed a registration statement with respect to the securities with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and its related rules and regulations. You can find additional information concerning ourselves and the securities in the registration statement and any pre- or post-effective amendment, including its various exhibits, which may be inspected at the public reference facilities maintained by the Securities and Exchange Commission at 100 F Street, N.E., Washington, D.C. 20549. These filings are also available to the public from the Securities and Exchange Commission’s website at http://www.sec.gov.

163

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 11.    Estimated Expenses.*

It is estimated that our expenses in connection with the sale of the debt securities, warrants and guarantees hereunder, exclusive of compensation payable to underwriters and agents, will be as follows:

SEC Registration Fee	US$	573,000
Printing Costs		250,000
Legal Fees and Expenses		450,000
Fiscal Agent Fees and Expenses		50,000
Blue Sky Fees and Expenses		50,000
Rating Agencies’ Fees		350,000
Miscellaneous (including amounts to be paid to underwriters in lieu of reimbursement of certain expenses)		600,000
Total	US$	2,323,000

* Based on three underwritten offerings of the debt securities.

II-1

UNDERTAKINGS

The Registrants hereby undertake:

(a) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereto) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement;

(b) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and

(c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(d) That, for purposes of determining liability under the Securities Act of 1933 to any purchaser:

each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(e) That, for the purpose of determining any liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrants undertake that in a primary offering of securities of the undersigned registrants pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrants will be sellers to the purchaser and will be considered to offer or sell such securities to such purchaser;

(i) Any preliminary prospectus or prospectus of the undersigned registrants relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrants or used or referred to by the undersigned registrants;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrants or their securities provided by or on behalf of the undersigned registrants; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrants to the purchaser.

II-2

CONTENTS

This Registration Statement is comprised of:

(1) Facing Sheet.

(2) Explanatory Note.

(3) Part I, consisting of the Prospectus.

(4) Part II, consisting of pages II-1 to II-9.

(5) The following Exhibits:

A-1	-	Form of Underwriting Agreement Standard Terms, incorporated herein by reference to Exhibit A-1 to the Registration Statement of The Export-Import Bank of Korea (No. 33-41654).
B-1	-	Form of Fiscal Agency Agreement, including forms of Debt Securities, incorporated herein by reference to Exhibit B-1 to the Registration Statement of The Export-Import Bank of Korea (No. 33-41654).
B-2	-	Form of global Debt Security that bears interest at a fixed rate, incorporated herein by reference to Exhibit B-2 to the Registration Statement of The Export-Import Bank of Korea (No. 33-41654).
B-3	-	Letter of successor Fiscal Agent, incorporated herein by reference to Exhibit B-3 to the Registration Statement of The Export-Import Bank of Korea (No. 33-41654).
B-4	-	Letter of 2nd successor Fiscal Agent, incorporated herein by reference to Exhibit B-4 to the Registration Statement of The Export-Import Bank of Korea (No. 333-9564).
B-5	-	Letter of 3rd successor Fiscal Agent, incorporated herein by reference to Exhibit B-5 to the Registration Statement of The Export-Import Bank of Korea (No. 333-136378).
B-6	-	Form of Guarantee to be issued by The Republic of Korea.**
C	-	Form of Warrant Agreement, including form of Warrants.**
D-1	-	Consent of the Executive Director and Member of Board of Directors of The Export-Import Bank of Korea (included on page II-5).
D-2	-	Power of Attorney of the Executive Director and Member of Board of Directors of The Export-Import Bank of Korea, incorporated herein by reference to Exhibit D-2 to the Registration Statement of The Export-Import Bank of Korea (No. 333-172648).
E-1	-	Consent of the Minister of Strategy and Finance of The Republic of Korea (included on Page II-6).
E-2	-	Power of Attorney of the Minister of Strategy and Finance of The Republic of Korea, incorporated herein by reference to Exhibit E-2 to the Registration Statement of The Export-Import Bank of Korea (No. 333-156218).
F	-	Consent of Deloitte Anjin LLC
G-1	-	Letter appointing certain persons as authorized agents of The Export-Import Bank of Korea in the United States, incorporated herein by reference to Exhibit G-1 to the Registration Statement of The Export-Import Bank of Korea (No. 333-172648).
G-2	-	Letter appointing Authorized Agents of The Republic of Korea in the United States (included in Exhibit E-2).
H	-	The Export-Import Bank of Korea Act, incorporated herein by reference to Exhibit H to the Registration Statement of The Export-Import Bank of Korea (No. 333-172648).

II-3

I	-	The Enforcement Decree of The Export-Import Bank of Korea Act, incorporated herein by reference to Exhibit I to the Registration Statement of The Export-Import Bank of Korea (No. 333-172648).
J	-	The Articles of Incorporation of The Export-Import Bank of Korea.
K	-	Form of Prospectus Supplement relating to The Export-Import Bank of Korea’s Medium-Term Notes, Series A, Due Not Less Than Nine Months From Date of Issue (the “MTNs”), incorporated herein by reference to Exhibit K to the Registration Statement of The Export-Import Bank of Korea (No.33-41654).
L	-	Form of Distribution Agreement between The Export-Import Bank of Korea and the Agents named therein relating to the offer and sale from time to time of the MTNs, incorporated herein by reference to Exhibit L to the Registration Statement of The Export-Import Bank of Korea (No.33-41654).
M-1	-	Opinion (including consent) of Cleary Gottlieb Steen & Hamilton LLP, 39th Floor, Bank of China Tower, One Garden Road, Hong Kong, United States counsel to the Export-Import Bank of Korea, in respect of the legality of the Debt Securities (with or without Warrants).
M-2	-	Opinion (including consent) of Yoon & Yang LLC, 22nd Floor, ASEM Tower, 159 Samsung-dong, Gangnam-ku, Seoul 135-798, The Republic of Korea, Korean counsel to the Export-Import Bank of Korea, in respect of the legality of the Debt Securities (with or without Warrants) and the Guarantees to be issued by The Republic of Korea.
N-1	-	Form of the MTNs that bears interest at a fixed rate, incorporated herein by reference to Exhibit N-1 to the Registration Statement of The Export-Import Bank of Korea (No.33-41654).
N-2	-	Form of the MTNs that bears interest at a floating rate, incorporated herein by reference to Exhibit N-2 to the Registration Statement of The Export-Import Bank of Korea (No.33-41654).
O	-	Form of Calculation Agency Agreement between The Export-Import Bank of Korea and the calculation agent named therein relating to the MTNs that bear interest at a floating rate, incorporated herein by reference to Exhibit O to the Registration Statement of The Export-Import Bank of Korea (No.33-41654).

* Previously filed.

** May be filed by amendment.

II-4

SIGNATURE OF THE EXPORT-IMPORT BANK OF KOREA

Pursuant to the requirements of the Securities Act of 1933, as amended, The Export-Import Bank of Korea has duly caused this Registration Statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in Seoul, The Republic of Korea, on the 22nd day of March, 2012.

THE EXPORT-IMPORT BANK OF KOREA
By:	YOON-YUNG KIM*†
	Executive Director and Member of Board of Directors
†By:	/s/    Seung-Keon Lee
	Seung-Keon Lee (Attorney-in-fact)

* Consent is hereby given to use of his name in connection with the information specified in this Registration Statement or amendment thereto to have been supplied by him and stated on his authority.

II-5

SIGNATURE OF THE REPUBLIC OF KOREA

Pursuant to the requirements of the Securities Act of 1933, as amended, The Republic of Korea has duly caused this Registration Statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in The City of New York, New York, on the 22nd day of March, 2012.

THE REPUBLIC OF KOREA
By:	JAE-WAN BAHK*†
	Minister of Strategy and Finance
†By:	/s/    BYEONG SUN SONG
	Byeong Sun Song
	(Attorney-in-fact)

* Consent is hereby given to use of his name in connection with the information specified in this Registration Statement or amendment thereto to have been supplied by him and stated on his authority.

II-6

SIGNATURE OF AUTHORIZED REPRESENTATIVE

OF THE EXPORT-IMPORT BANK OF KOREA

Pursuant to the Securities Act of 1933, as amended, the undersigned, a duly authorized representative in the United States of The Export-Import Bank of Korea, has signed this Registration Statement or amendment thereto in The City of New York, New York, on the 22nd day of March, 2012.

†By:	/s/    SEUNG-HYUN YOO
	Seung-hyun Yoo
	New York Representative Office
	The Export-Import Bank of Korea

II-7

SIGNATURE OF AUTHORIZED REPRESENTATIVE

OF THE EXPORT-IMPORT BANK OF KOREA

Pursuant to the Securities Act of 1933, as amended, the undersigned, a duly authorized representative in the United States of The Export-Import Bank of Korea, has signed this Registration Statement or amendment thereto in The City of New York, New York, on the 22nd day of March, 2012.

†By:	/s/    SANG HUN KIM
	Sang Hun Kim
	New York Representative Office
	The Export-Import Bank of Korea

II-8

SIGNATURE OF AUTHORIZED REPRESENTATIVE

OF THE REPUBLIC OF KOREA

Pursuant to the Securities Act of 1933, as amended, the undersigned, a duly authorized representative in the United States of The Republic of Korea, has signed this Registration Statement or amendment thereto in The City of New York, New York, on the 22nd day of March, 2012.

†By:	/s/    BYEONG SUN SONG
	Byeong Sun Song
	Financial Attaché
	Korean Consulate General in New York

II-9

EXHIBIT INDEX

A-1	-	Form of Underwriting Agreement Standard Terms, incorporated herein by reference to Exhibit A-1 to the Registration Statement of The Export-Import Bank of Korea (No. 33-41654).
B-1	-	Form of Fiscal Agency Agreement, including forms of Debt Securities, incorporated herein by reference to Exhibit B-1 to the Registration Statement of The Export-Import Bank of Korea (No. 33-41654).
B-2	-	Form of global Debt Security that bears interest at a fixed rate, incorporated herein by reference to Exhibit B-2 to the Registration Statement of The Export-Import Bank of Korea (No. 33-41654).
B-3	-	Letter of successor Fiscal Agent, incorporated herein by reference to Exhibit B-3 to the Registration Statement of The Export-Import Bank of Korea (No. 33-41654).
B-4	-	Letter of 2nd successor Fiscal Agent, incorporated herein by reference to Exhibit B-4 to the Registration Statement of The Export-Import Bank of Korea (No. 333-9564).
B-5	-	Letter of 3rd successor Fiscal Agent, incorporated herein by reference to Exhibit B-5 to the Registration Statement of The Export-Import Bank of Korea (No. 333-136378).
B-6	-	Form of Guarantee to be issued by The Republic of Korea.**
C	-	Form of Warrant Agreement, including form of Warrants.**
D-1	-	Consent of the Executive Director and Member of Board of Directors of The Export-Import Bank of Korea (included on page II-5).
D-2	-	Power of Attorney of the Executive Director and Member of Board of Directors of The Export-Import Bank of Korea, incorporated herein by reference to Exhibit D-2 to the Registration Statement of The Export-Import Bank of Korea (No. 333-172648).
E-1	-	Consent of the Minister of Strategy and Finance of The Republic of Korea (included on Page II-6).
E-2	-	Power of Attorney of the Minister of Strategy and Finance of The Republic of Korea, incorporated herein by reference to Exhibit E-2 to the Registration Statement of The Export-Import Bank of Korea (No. 333-156218).
F	-	Consent of Deloitte Anjin LLC
G-1	-	Letter appointing certain persons as authorized agents of The Export-Import Bank of Korea in the United States, incorporated herein by reference to Exhibit G-1 to the Registration Statement of The Export-Import Bank of Korea (No. 333-172648).
G-2	-	Letter appointing Authorized Agents of The Republic of Korea in the United States (included in Exhibit E-2).
H	-	The Export-Import Bank of Korea Act, incorporated herein by reference to Exhibit H to the Registration Statement of The Export-Import Bank of Korea (No. 333-172648).
I	-	The Enforcement Decree of The Export-Import Bank of Korea Act, incorporated herein by reference to Exhibit I to the Registration Statement of The Export-Import Bank of Korea (No. 333-172648).
J	-	The Articles of Incorporation of The Export-Import Bank of Korea.
K	-	Form of Prospectus Supplement relating to The Export-Import Bank of Korea’s Medium-Term Notes, Series A, Due Not Less Than Nine Months From Date of Issue (the “MTNs”), incorporated herein by reference to Exhibit K to the Registration Statement of The Export-Import Bank of Korea (No.33-41654).
L	-	Form of Distribution Agreement between The Export-Import Bank of Korea and the Agents named therein relating to the offer and sale from time to time of the MTNs, incorporated herein by reference to Exhibit L to the Registration Statement of The Export-Import Bank of Korea (No.33-41654).

M-1	-	Opinion (including consent) of Cleary Gottlieb Steen & Hamilton LLP, 39th Floor, Bank of China Tower, One Garden Road, Hong Kong, United States counsel to the Export-Import Bank of Korea, in respect of the legality of the Debt Securities (with or without Warrants).
M-2	-	Opinion (including consent) of Yoon & Yang LLC, 22nd Floor, ASEM Tower, 159 Samsung-dong, Gangnam-ku, Seoul 135-798, The Republic of Korea, Korean counsel to the Export-Import Bank of Korea, in respect of the legality of the Debt Securities (with or without Warrants) and the Guarantees to be issued by The Republic of Korea.
N-1	-	Form of the MTNs that bears interest at a fixed rate, incorporated herein by reference to Exhibit N-1 to the Registration Statement of The Export-Import Bank of Korea (No.33-41654).
N-2	-	Form of the MTNs that bears interest at a floating rate, incorporated herein by reference to Exhibit N-2 to the Registration Statement of The Export-Import Bank of Korea (No.33-41654).
O	-	Form of Calculation Agency Agreement between The Export-Import Bank of Korea and the calculation agent named therein relating to the MTNs that bear interest at a floating rate, incorporated herein by reference to Exhibit O to the Registration Statement of The Export-Import Bank of Korea (No.33-41654).

* Previously filed.

** May be filed by amendment.

EX-99.(F)

Exhibit F

[Deloitte Anjin LLC Letterhead]

To the Board of Directors

The Export-Import Bank of Korea

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the use in this Registration Statement on Schedule B of our report dated February 29, 2012 relating to the non-consolidated financial statements of The Export Import Bank of Korea as of and for the year ended December 31, 2011 (which expresses an unqualified opinion on the non-consolidated financial statements and includes an explanatory paragraph referring to the application of The Export-Import Bank of Korea Act and the related accounting principles) appearing in the Prospectus, which is a part of this Registration Statement, and to the reference to us under the heading “Financial Statements and the Auditors” and “Experts” in such Prospectus.

/s/    Deloitte Anjin LLC

Deloitte Anjin LLC

Seoul, Korea

March 22, 2012

EX-99.(J)

Exhibit J

ARTICLES OF INCORPORATION

Enacted on July 1, 1976

Amended on January 1, 1977

Amended on July 1, 1977

Amended on December 29, 1977

Amended on March 7, 1986

Amended on May 2, 1987

Amended on November 17, 1987

Amended on March 13, 1989

Amended on December 16, 1989

Amended on February 13, 1991

Amended on June 30, 1992

Amended on December 4, 1992

Amended on February 28,1994

Amended on June 14, 1995

Amended on February 16, 1998

Amended on November 10, 1998

Amended on April 17, 2000

Amended on April 30, 2002

Amended on July 31, 2006

Amended on July 11, 2008

Amended on April 27, 2009

Amended on December 4, 2009

Amended on September 8, 2011

Chapter I General Provisions

Article 1 (Purpose)

The primary purpose of the Bank is to execute the business of providing finance required for the overseas economic cooperation, such as export and import, overseas investment and exploitation of overseas resources as such.

Article 2 (Name)

(1) The Bank is established under the Export-Import Bank of Korea Act (hereinafter referred to as the “Act”) and shall be called “The Export-Import Bank of Korea”.

(2) The name of the Bank in English shall be “The Export-Import Bank of Korea”.

Article 3 (Head Office, Branches, Sub-Branches, and Agencies)

(1) The Bank shall have its head office in Seoul Special Metropolitan City.

(2) The Bank may have domestic branches, sub-branches, or agencies where necessary.

(3) The Bank may have overseas branches, offices or representatives where necessary.

Article 4 (Capital)

(1) The capital of the Bank shall be eight trillion won((Won)8,000,000,000,000) and shall be contributed by the Government of the Republic of Korea, the Bank of Korea, the Korea Finance Corporation under the Korea Finance Corporation Act, any financial institution under Article 2 (1) 2 of the Banking Act, any exporters’ association and any international financial organization.

(2) The first contribution of capital referred to in paragraph (1) shall be made by the Bank of Korea or the Korea Exchange Bank not later than the registration of incorporation of the Bank. The governmental funds, which had been provided by the Government to the Korea Exchange Bank conducting the Bank’s business to finance exports on a deferred payment basis, shall be converted to the contribution of the Bank’s capital after the registration of incorporation of the Bank.

(3) The Bank may issue certificates for capital contribution to the contributing institutions after the registration of the Bank’s establishment or after each capital contribution has been made.

Article 5 (Amendment of Articles of Incorporation)

Any revision of the articles of incorporation shall be made with the approval of the Minister of Strategy and Finance after a resolution of the operating committee of the Bank.

Article 6 (Other Matters)

Any matters deemed necessary for the operation of business of the Bank, but not provided for by the provisions of the articles of incorporation, shall be determined separately by a resolution of the operating committee of the Bank.

Chapter II Executives and Staffs

Article 7 (Executive)

(1) The Bank shall have one President, one managing director, directors not more than five in number and one auditor as executives.

(2) Directors shall include at least one executive director and one non-executive director.

Article 8 (Duty of Executive)

(1) The President shall represent the Bank and take the overall control of the operations of the Bank.

(2) The managing director shall assist the President and, when the President cannot perform his/her duties due to any inevitable reasons, he/she shall perform duties of the President on behalf of the President.

(3) The executive director shall assist the President and the managing director and take partial charge of the operations of the Bank as designated by the President.

(4) The non-executive director may deliberate on the matters brought to the board of directors and participate in resolution as a member of the board of directors. In addition, the non-executive director may assist the President and the managing director in connection with the management of the Bank as requested by the President.

(5) When both the President and the managing director cannot perform their duties due to any inevitable reasons, the executive director shall perform their duties on behalf of them in the order of precedence designated beforehand by the President.

(6) The auditor shall audit and inspect the operations and accounting of the Bank.

Article 9 (Appointment and Dismissal of Executive)

(1) The President shall be appointed and dismissed by the President of the Republic of Korea on the recommendation of the Minister of Strategy and Finance.

(2) The managing director and directors shall be appointed and dismissed by the Minister of Strategy and Finance on the recommendation of the President.

(3) The non-executive director shall be appointed among persons falling under any of the following subparagraphs:

1. have substantial knowledge and experience in business management, economy, accounting, law, or economic cooperation with foreign countries;

2. have substantial knowledge and experience in the management of the Bank and other related fields.

(4) The auditor shall be appointed and dismissed by the Minister of Strategy and Finance.

Article 10 (Term of Office of Executive)

(1) The term of office of an executive shall be three (3) years, and he/she may be reappointed.

(2) If any vacancy occurs in the office of an executive, a new executive shall be appointed and his/her term of office shall be the term under paragraph (1).

Article 11 (Remuneration of Executive)

The board of directors shall determine the remuneration and allowances for the President, the managing director, the directors and the auditor within the limit of the approved budget.

Article 12 (Restriction of Concurrent Offices)

(1) The President, the managing director or the executive director shall not be engaged in any other occupation other than such cases where he/she has been granted permission from the Minister of Strategy and Finance.

(2) The non-executive director shall not be an executive director of the Bank of Korea or other financial institutions.

Article 13 (Restriction on Power of Representation of Executives)

(1) The President, the managing director or any executive director shall not represent the Bank concerning the matters in which interests of the President, the managing director, or the executive director conflict with those of the Bank.

(2) If no other executive director representing the Bank exists in cases of paragraph (1), an auditor shall represent the Bank.

Article 14 (Appointment of Attorneys)

The President may, through a resolution of the board of directors, appoint attorneys from among the executives or staff who is empowered to exercise all judicial or non-judicial acts concerning the operations of the Bank.

Article 15 (Appointment and Dismissal of Staff)

The staff of the Bank shall be appointed and dismissed by the President of the Bank.

Chapter III Operating Committee

Article 16 (Operating Committee)

(1) The Bank shall have the operating committee (hereinafter referred to as the “Committee”).

(2) The Committee shall be comprised of the following members:

1. The President of the Bank;

2. One person whom the Minister of Strategy and Finance, the Minister of Foreign Affairs and Trade, the Minister of Knowledge Economy, the Minister of Land, Transport and Maritime Affairs and the chairperson of the Financial Services Commission each designate from among public officials under their control;

3.One person whom the Governor of the Bank of Korea and the chairperson of the Korea Federation of Banks established under permission of the Financial Services Commission under Article 32 of the Civil Act each designate from among executive officers or directors under their control;

4.One person whom the Minister of Strategy and Finance designates from among representatives of exporters’ organizations upon consultation with the Minister of Knowledge Economy;

5.One person whom the president of the Korea Trade Insurance Corporation under the Trade Insurance Act designates from among executive officers of his/her Corporation; and

6. No more than two persons entrusted by the Minister of Strategy and Finance with recommendation of the President of the Bank from among persons with abundant knowledge and experience in economic cooperation with foreign countries.

(3) When the Committee deliberates any matter related to another ministry, a public official of which is not a member of the Committee pursuant to paragraph (2) 2, the chairperson of the Committee may request a public official appointed by the minister of that another ministry to attend and express his/her opinions at the meetings of the Committee.

(4) The term of office of the member set out in paragraph (2) 4 shall be three(3) years, and the term of office of the members in the subparagraph 6 of the same paragraph shall be two(2) years.

(5) The Committee shall establish the basic policies pertaining to the operation and management of the Bank and may make the rules and regulations necessary for the performance of its functions.

Article 17 (Convocation of Meetings of the Committee)

(1) The President of the Bank shall call the Committee and shall become the chairperson of the Committee.

(2) Where the chairperson cannot perform his/her duties due to inevitable reasons, one of the members of the Committee shall act for the chairperson, in the order designated in advance by the chairperson.

(3) The chairperson shall call a meeting, without delay, upon the request of a majority of the members of the Committee or the auditor.

Article 18 (Method of Resolution)

The Committee shall open by the attendance of a majority of the constituent members of the Committee and shall resolve by the affirmative vote of a majority of the constituent members present.

Article 19 (Voting Limitation at Meetings by Members)

Where any member of the Committee has personal interests in a particular matter subject to the resolutions of the Committee, he/she shall not exercise his/her vote on that matter.

Article 20 (Exception to Powers of Committee)

(1) When immediate action is required at the time of war, incident, or similar state of national emergency, the President of the Bank may, if unable to call the Committee, take the necessary measures within the scope of authority of the Committee with the approval of the Minister of Strategy and Finance.

(2) When the President of the Bank has taken necessary measures referred to in paragraph (1), he/she shall call the Committee without delay and shall report the details thereof.

(3) The Committee may confirm, amend or suspend the measures referred to in paragraph (1).

Article 21 (Permission of Attendance at Meetings)

The managing director, directors and the auditor may attend the meetings of the Committee and state their opinions at such meetings.

Chapter IV Board of Directors

Article 22 (Board of Directors)

(1) The Bank shall have a board of directors.

(2) The board of directors shall be comprised of the President, the managing director and directors.

(3) The board of directors shall resolve important matters concerning the operations of the Bank and may establish the regulations necessary for the performance of its functions.

Article 23 (Convocations of Meetings of the Board of Directors)

The President shall call the board of directors and shall become the chairperson of the board of directors.

Article 24 (Method of Resolution)

The board of directors shall open by the attendance of a majority of the constituent members of the board of directors and shall resolve by the affirmative vote of at least two thirds of constituent members present.

Article 25 (Attendance at Meetings by Auditor)

The auditor may attend and state his/her opinion at the board of directors.

Chapter V Operations and Execution

Article 26 (Scope of Operations)

In order to achieve the purposes described in Article 1, the Bank shall engage in the operations as prescribed in Article 18 of the Act.

Article 27 (Borrowing of Funds and Ceilings Thereon)

(1) The Bank may borrow funds from the Government, the Bank of Korea, foreign governments, international financial organizations or domestic and overseas financial institutions in order to fill up the revenue source of funds required for the performance of its duties.

(2) Ceilings on borrowings pursuant to paragraph (1) or export-import financial debentures issuable by the Bank pursuant to Article 20 of the Act shall be thirty(30) times of the total amount of its paid-in capital and reserve funds.

Article 27-2 (Capital Contribution to Corporations etc.)

The Bank may make capital contributions or investments as prescribed in Article 20-2 of the Act.

Article 28 (Operational Plan)

(1) The Bank shall draw out an operational plan each business year and submit it to the Minister of Strategy and Finance one month prior to the commencement of the relevant business year for his/her approval.

(2) The operational plan referred to in paragraph (1) shall be divided into the funds supply plan under the provisions of Article 18 (1) though (3) and the funds raising plan under Articles 4, 19 and 20 of the Act. Quarterly operation plans shall be attached to the operational plan referred to in paragraph (1).

Article 29 (Business Manual)

The Bank shall draw out a business manual prescribing the method of handling business under Article 18 (1) through (3) of the Act, and shall obtain approval of the Minister of Strategy and Finance through the resolution of the Committee. The same shall also apply when the Bank intends to amend it.

Article 30 (Interest Rates on Loan and Discount and Rates for Guarantee Fees)

When the Bank assesses the interest rates on loan and discount, and rates for guarantee fees under Article 18 (1) through (3) of the Act, it shall fix those rates so that they can be appropriated for office operating expenses, commission for business agency, interests-on borrowings, other miscellaneous expenses and depreciation of assets, except for the inevitable cases for the maintenance of international competitiveness for the promotion of export and for the promotion of overseas investment or exploitation of overseas resources.

Article 31 (Restriction on Business)

(1) When the Bank loans funds, discounts bills, or guarantees obligations under Article 18 (1) and (2) of the Act, it shall make trustworthy and sufficient examination on the relevant repayment, payment or fulfillment of such obligations and shall set up the term of thirty(30) years or less for the relevant repayment, payment or fulfillment of such obligations.

(2) The term of loans under Article 18 (3) of the Act shall be thirty (30) years or less.

(3) The ceilings of loan under Article 18 (3) of the Act shall be the sum of the amount invested by or borrowed from the Government, reserve and surplus.

Article 32 (Prohibition of Competition with Other Financial Institutions)

The Bank shall not compete with other financial institutions in performing the operations provided for in Article 18 of the Act.

Chapter VI Export-Import Financial Debentures

Article 33 (Export-Import Financial Debentures)

The Bank may issue export-import financial debentures as provided for in Article 20 of the Act, and Articles 19 through 31 of the Presidential Decree.

Chapter VII Accounting

Article 34 (Business Year)

The business year of the Bank shall commence each year on 1st of January and end on 31st of December.

Article 35 (Budget)

The Bank shall make up a budget for incomings and outgoings each business year, and submit it to the Minister of Strategy and Finance one month prior to the commencement of the relevant business year for his/her approval.

Article 36 (Supplementary Revised Budget)

The Bank may make up a supplementary revised budget if it is necessary to revise the budget due to reasons arisen after the budget has been established. In this case, it shall be approved by the Minister of Strategy and Finance.

Article 37 (Reserve Funds)

(1) The Bank may include reserve funds in the budget to appropriate unforeseeable expenditures beyond the budget or in excess of the budget.

(2) The Bank shall obtain approval of the Minister of Strategy and Finance to use the reserve funds under paragraph (1).

Article 38 (Retirement Allowance)

The Bank may pay retirement allowances to its retiring executives and staffs.

Article 39 (Bonus)

The Bank may pay bonuses to its executives and staffs.

Article 40 (Study Allowances and Overseas Training Expenses)

The Bank may grant study allowances or provide overseas training expenses to its promising staffs or other eligible persons.

Article 41 (Settlement of Accounts)

(1) Within two (2) months after the lapse of each business year, the Bank shall settle accounts and prepare financial statements for settlement of accounts such as balance sheets, income statements, surplus appropriation statements and report on the appraisal of the achievement of the operational program, documents annexed to the financial statements and other documents necessary for the settlement of accounts, and shall report them to the Minister of Strategy and Finance.

(2) The Bank, after submitting the documents described in paragraph (1), shall give public notice of them and keep the originals and / or copies of them at the Head Office, all branches, sub-branches and agencies.

Article 42 (Disposal of Profit)

The Bank shall dispose of the net profit of final accounts in the order of the following subparagraphs after appropriating the depreciation of assets each business year:

1. The Bank shall reserve not less than ten percent (10%) of the profit until the reserve reaches the paid-in capital;

2. The Bank shall distribute the profit preferentially to investors other than the Government at the rate of not more than fifteen percent (15%), with approval of the Minister of Strategy and Finance; and

3. The Bank shall dispose of the remaining profit subtracting the reserve in subparagraph 1 and the dividend in subparagraph 2 with approval of the Minister of Strategy and Finance through the resolutions of the Committee.

Article 43 (Compensation for Amount of Loss)

The Bank shall compensate for net loss of final accounts with the reserve each business year, and the Government shall compensate for the loss when the reserve is insufficient.

Chapter VIII Other Provisions

Article 44 (Method of Public Notice)

All public notices of the Bank shall be by advertisement in one or more of the daily newspapers published in Seoul Special Metropolitan City.

Article 45 (Vicarious Performance of Duties)

The Bank may have another financial institution perform some of its duties on its behalf.

Article 46 (Use of Surplus Funds)

The Bank may use surplus funds to the extent that it does not impede performance of the operations as prescribed in Article 18 of the Act, provided that the Minister of Strategy and Finance may, if necessary, restrict the method of its use.

Article 47 (Research)

The Bank may establish and operate the Overseas Economic Research Institute in order to perform research and investigations relating to the operations provided for in Article 26.

SUPPLEMENTARY PROVISIONS

Article 48 (Office Organization)

The office organization of the Bank shall be prescribed by the board of directors regulation; provided that, the office organization established by a resolution of the organizing committee shall be regarded as established by the articles of incorporation.

Article 49 (Advisors and Part-time Staffs)

The Bank may, when it deems necessary for the execution of its operations, employ Korean nationals and/or foreigners as advisors or part-time staffs.

Article 50 (Scope of Application of the Articles of Incorporation)

In performing the operations entrusted by the Government to implement Article 18 of the Act as prescribed in Article 26, these articles of incorporation shall not be applied to the matters separately stipulated in the relevant laws and ordinances.

ADDENDA

Article 1 (Enforcement Date)

These Articles of Incorporation shall enter into force on the date of the Bank’s establishment.

Article 2 (Interim Measures)

The first fiscal year of the Bank shall cover the period from the date of establishment to December 31, 1976.

Article 3 (Signature of the Members of the Organizing Committee)

The following organizing committee members have hereby prepared these articles of incorporation pursuant to the provisions of Article 2 (2) of the Addenda to the Act, and have set their hands hereunder:

Choong-Hoon Cho

Vice-Minister of Finance

82, Sejong-ro, Chongro-ku, Seoul

In-Sang Song

President of the Export-Import Bank of Korea

10, Kwanchul-dong, Chongro-ku, Seoul

Yung-Gi Ha

Deputy Governor of the Bank of Korea

110, 3-ka, Namdaemoon-ro, Chung-ku, Seoul

Byung-Woo Ko

Assistant Minister for Financial Affairs of the Ministry of Finance

82, Sejong-ro, Chongro-ku, Seoul

Pil-Soo Park

Assistant Minister for Commerce and Trade of the

Ministry of Commerce and Industry

77, Sejong-ro, Chongro-ku, Seoul

Dong-Sun Ha

Director of the Finance Bureau of the Ministry of Finance

82, Sejong-ro, Chongro-ku, Seoul

In-Yong Jeong

Director of International Finance Bureau of the Ministry of Finance

82, Sejong-ro, Chongro-ku, Seoul

Wan-Mo Hong

Director and Deputy President of the Korea Exchange Bank

10, Kwanchul-dong, Chongro-ku, Seoul

Tae-Ho Lee

10, Kwanchul-dong, Chongro-ku, Seoul

ADDENDUM (1)

This Articles of Incorporation shall enter into force on the 1st day of January, 1977.

ADDENDUM (2)

This Articles of Incorporation shall enter into force on the 1st day of July, 1977.

ADDENDUM (3)

This Articles of Incorporation shall enter into force on the 29th day of December, 1977.

ADDENDUM (4)

This Articles of Incorporation shall enter into force on the 7th day of March, 1986.

ADDENDUM (5)

This Articles of Incorporation shall enter into force on the 2nd day of May, 1987.

ADDENDUM (6)

This Articles of Incorporation shall enter into force on the 17th day of November, 1987.

ADDENDUM (7)

This Articles of Incorporation shall enter into force on the 13th day of March, 1989.

ADDENDUM (8)

This Articles of Incorporation shall enter into force on the 16th day of December, 1989.

ADDENDUM (9)

This Articles of Incorporation shall enter into force on the 13th day of February, 1991.

ADDENDUM (10)

This Articles of Incorporation shall enter into force on the 30th day of June, 1992.

ADDENDUM (11)

This Articles of Incorporation shall enter into force on the 4th day of December, 1992.

ADDENDUM (12)

This Articles of Incorporation shall enter into force on the 28th day of February, 1994.

ADDENDUM (13)

This Articles of Incorporation shall enter into force on the 14th day of June, 1995.

ADDENDUM (14)

This Articles of Incorporation shall enter into force on the 16th day of February, 1998. Provided that the term of office of the Auditor being in office at the time of enforcement of these Articles of Incorporation shall, notwithstanding the revised provision of Article 10, be two (2) years.

ADDENDUM (15)

This Articles of Incorporation shall enter into force on the 10th day of November, 1998.

ADDENDUM (16)

This Articles of Incorporation shall enter into force on the 17th day of April, 2000.

ADDENDUM (17)

This Articles of Incorporation shall enter into force on the 30th day of April, 2002.

ADDENDUM (18)

This Articles of Incorporation shall enter into force on the 31st day of July, 2006.

ADDENDUM (19)

This Articles of Incorporation shall enter into force on the 11st day of July, 2008.

ADDENDUM (20)

This Articles of Incorporation shall enter into force on the 27th day of April, 2009.

ADDENDUM (21)

This Articles of Incorporation shall enter into force on the 4th day of December 2009. Provided that the provisions related to the executive and non-executive director are applied upon the first appointment of a non-executive director.

ADDENDUM (22)

This Articles of Incorporation shall enter into force on the 8th day of September, 2011.

EX-99.(M-1)

Exhibit M-1

[Cleary Gottlieb Steen & Hamilton LLP Letterhead]

March 22, 2012

The Export-Import Bank of Korea

16-1, Youido-dong

Yongdeungpo-ku

Seoul 150-996

Korea

Ladies and Gentlemen:

We have acted as special United States counsel to The Export-Import Bank of Korea, a statutory juridical entity established in the Republic of Korea under The Export-Import Bank of Korea Act of 1969, as amended (the “KEXIM”), and The Republic of Korea (the “ROK”, and together with the KEXIM, the “Registrants”) in connection with the preparation and filing with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), of the Registrants’ registration statement under Schedule B (the “Registration Statement”) relating to the offering from time to time, as set forth in the Registration Statement, the form of prospectus contained therein (the “Prospectus”) and one or more supplements to the Prospectus, of (1) the KEXIM’s unsecured debt securities (the “Securities”) and (2) any guarantees by the ROK of the Securities (the “Guarantees”). The Registration Statement relates to the Securities and the Guarantees having an aggregate initial public offering price or purchase price of up to U.S.$5,000,000,000 or the equivalent thereof. The Securities are to be issued in one or more series pursuant to a fiscal agency agreement dated as of August 1, 1991 (the “Fiscal Agency Agreement”) between the KEXIM and The Bank of New York (the “Fiscal Agent”).

We have reviewed the originals or copies certified or otherwise identified to our satisfaction of such instruments and other documents, and we have made such investigations of law, as we have deemed appropriate as a basis for the opinion expressed below.

Based on the foregoing, and subject to the further assumptions and qualifications set forth below, it is our opinion that the Securities will be valid, binding and enforceable obligations of the KEXIM, entitled to the benefits of the Fiscal Agency Agreement.

Insofar as the foregoing opinion relates to the validity, binding effect or enforceability of any agreement or obligation of the KEXIM, (a) we have assumed that the KEXIM and each other party to such agreement or obligation have satisfied those legal requirements that are applicable to it to the extent necessary to make such agreement or obligation enforceable against it (except that no such assumption is made as to the KEXIM regarding matters of the federal law of the United States of America or the law of the State of New York that in our experience normally would be applicable with respect to such agreement or obligation); (b) such opinion is subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity; and (c) such opinion is subject to the effect of judicial application of foreign laws or foreign governmental actions affecting creditors’ rights. In addition, we note that the enforceability of the waiver of immunities by the KEXIM set forth in the Securities and Section 15 of the Fiscal Agency Agreement is subject to the limitations imposed by the Foreign Sovereign Immunities Act of 1976.

In rendering the opinion expressed above, we have assumed that each series of Securities will be issued with an original aggregate principal amount (or, in the case of any Securities issued at original issue discount, an aggregate issue price) of US$2,500,000 or more.

We have further assumed that (i) the Registration Statement and any amendments thereto (including post-effective amendments) will have become effective and comply with all applicable laws, (ii) the Registration Statement will be effective and will comply with all applicable laws at the time the Securities are offered or issued as contemplated by the Registration Statement, (iii) the terms of all Securities will conform to the forms thereof contained in the Fiscal Agency Agreement and will not violate any applicable law, result in a default under or breach of any agreement or instrument binding upon or violate any requirement or restriction imposed by any court or governmental body having jurisdiction over the KEXIM, (iv) the Securities will be issued, sold and delivered to, and paid for by, the purchasers at the price specified in, and in accordance with the terms of, an agreement or agreements duly authorized, executed and delivered by the parties thereto, (v) the KEXIM will authorize the offering and issuance of the Securities and will authorize, approve and establish the final terms and conditions thereof and will enter together with the Fiscal Agent into any necessary supplemental fiscal agency agreement relating to the Securities and will take any other appropriate additional action, and (vi) certificates, if required, representing the Securities will be duly executed and delivered and, to the extent required by the Fiscal Agency Agreement, duly authenticated and countersigned.

We express no opinion (i) as to the subject matter jurisdiction of any United States federal court to adjudicate any action relating to the Fiscal Agency Agreement where jurisdiction based on diversity of citizenship under 28 U.S.C. §1332 does not exist; or (ii) as to the provisions of the last sentence of Section 4(b) and the second sentence of Section 8(a) of the Fiscal Agency Agreement. We note that the designation in Section 15 of the Fiscal Agency Agreement of the United States federal courts sitting in The City of New York as the venue for actions or proceedings relating to the Fiscal Agency Agreement is (notwithstanding the waiver in Section 15 of the Fiscal Agency Agreement) subject to the power of such courts to transfer actions pursuant to 28 U.S.C. §1404(a) or to dismiss such actions or proceedings on the grounds that such a federal court is an inconvenient forum for such an action or proceeding.

With respect to any Securities that may be issued in a currency other than U.S. dollars, we note that by statute New York provides that a judgment or decree rendered in a currency other than the currency of the United States shall be converted into U.S. dollars at the rate of exchange prevailing on the date of entry of the judgment or decree. There is no corresponding Federal statute and no controlling Federal court decision on this issue. Accordingly, we express no opinion as to whether a Federal court would award a judgment in a currency other than U.S. dollars or, if it did so, whether it would order conversion of the judgment into U.S. dollars.

The foregoing opinion is limited to the federal law of the United States of America and the law of the State of New York.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, to the incorporation by reference of this opinion in any registration statement relating thereto filed by the Registrants with the Commission pursuant to Rule 462(b) under the Securities Act and to the references to us under the heading “Legal Matters” in the Prospectus and any prospectus relating to any such other registration statement. In giving such consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

Very truly yours,
CLEARY GOTTLIEB STEEN & HAMILTON LLP
By	/s/ Jinduk Han
	Jinduk Han, a Partner

EX-99.(M-2)

Exhibit M-2

[YOON & YANG LLC Letterhead]

March 22, 2012

The Export-Import Bank of Korea

16-1, Youido-dong

Youngdeungpo-ku, Seoul

Republic of Korea

Ladies and Gentlemen:

We have acted as Korean counsel for The Export-Import Bank of Korea (the “Issuer”), a statutory juridical entity established pursuant to the Export-Import Bank of Korea Act (the “KEXIM Act”) and validly existing under the laws of the Republic of Korea (“Korea”) in connection with the Issuer’s offering pursuant to a registration statement under Schedule B of the Securities Act of 1933, as amended (the “Securities Act”) when it became effective (the “Registration Statement”) of (i) the Issuer’s debt securities in the aggregate principal amount up to US$ 5,000,000,000 (the “Notes”), to be issued under the Fiscal Agency Agreement dated August 1, 1991 and made by the Issuer and the Fiscal Agent (the “Fiscal Agent”) named therein (the “Fiscal Agency Agreement”) and (ii) any guarantee by Korea of the Notes (the “Guarantee”).

We have reviewed the originals or copies, certified or otherwise identified to our satisfaction of such instruments and other documents, and we have made such investigations of law, as we have deemed appropriate as a basis for the opinion expressed below. In such examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or Photostatic copies, and the authenticity of the originals of such copies. As to any facts material to this opinion that we did not independently establish or verify, we have relied upon statements and representations of officers and other representatives of the Issuer.

In addition, and without prejudice to the generality of the immediately preceding paragraph, in arriving at the opinion expressed below, we have reviewed the following specific documents relating to the Notes:

(a) the Registration Statement;

(b) the form of Prospectus contained in the Registration Statement (the “Prospectus”);

(c) an executed copy of the Fiscal Agency Agreement;

(d) a copy of the Issuer’s Articles of Incorporation as last amended on, and in effect from, September 8, 2011; and

(e) a copy of the commercial registry extracts of the Issuer dated March 22, 2012.

As to any other matters of fact material to the opinion expressed herein, we have made no independent inquiry and have relied solely upon the certificates or oral or written statements of officers and other representatives of the Issuer.

We are admitted to practice law in Korea, and the legal opinions provided herein are confined to and given on the basis of the laws of Korea in effect as at the date hereof. We do not represent ourselves to be familiar with the laws of any jurisdiction other than Korea, and we do not pass upon nor express any opinion in respect of those matters that are governed by or construed in accordance with any of such laws.

Based upon the foregoing, and subject to further qualifications set forth below, we are of the opinion that:

(a) The Issuer is a statutory juridical entity established under the KEXIM Act and validly existing under the laws of Korea, with power and authority to own its properties and conduct its business as described in the Prospectus forming a part of the Registration Statement;

(b) The Fiscal Agency Agreement has been duly authorized and executed by the Issuer;

(c) The statements in the Prospectus concerning matters of Korean law (except for the financial statements and related schedules and other financial and statistical data contained therein as to which we express no opinion) are accurate and up-to-date as of the date hereof in all material respects;

(d) When the Notes are duly authorized by all necessary actions by the Issuer and issued by the Issuer as contemplated in the Registration Statement and have been duly paid for by the purchasers thereof, the Notes will constitute legal, valid, binding and enforceable obligations of the Issuer; and

(e) When the Guarantee is duly authorized and approved by all necessary actions by Korea and the Issuer and issued by Korea in accordance with the KEXIM Act, the State Finance Act, the State Guarantee Obligation Management Rule, and other relevant regulations then in effect, the Guarantee will constitute legal, valid, binding and enforceable obligations of Korea.

Our opinion is subject to the following reservations and qualifications that obligations and enforcement thereof may be limited or affected generally by (i) the bankruptcy, insolvency, liquidation, reorganization, rehabilitation or the restructuring of the Issuer pursuant to the laws of Korea now in force or subsequently enacted which generally affect the enforcement of creditors’ rights, (ii) certain restrictions that may be imposed by the Minister of the Ministry of Strategy and Finance (the “MOSF”), such as temporary suspension of payment or requiring KEXIM to obtain prior approval from the MOSF for repatriation of any amount payable under the Note, in the event of emergency circumstances including but not limited to grave and sudden changes in domestic and foreign economic conditions or serious difficulty in international balance of payment, and (iii) the general principles of good morals and public order as provided in the Civil Code of Korea.

This opinion is limited to the matters addressed herein and is not to be read as an opinion with respect to any other matter. This opinion is given with respect to the laws of Korea as currently in effect and we do not pass upon and we express no opinion in respect of those matters governed by or construed in accordance with the laws of any jurisdiction other than Korea.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading “Legal Matters” in the Registration Statement, without thereby admitting that we are “experts” under the Securities Act or the rules and regulations of the Commission thereunder for the purpose of any part of the Registration Statement, including the exhibit as which this opinion is filed.

Best regards,

/s/ Yoon & Yang

YOON & YANG LLC