Exhibit 99.1

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Financial Statements

March 31, 2024 and 2023

(Unaudited)

KB Financial Group Inc. and Subsidiaries

 

		Page(s)
Report on Review of Condensed Consolidated Interim Financial Statements			3-4
Consolidated Interim Financial Statements
Consolidated Interim Statements of Financial Position			5
Consolidated Interim Statements of Comprehensive Income			6-7
Consolidated Interim Statements of Changes in Equity			8
Consolidated Interim Statements of Cash Flows			9-10
Notes to the Consolidated Interim Financial Statements			11

Report on Review of Condensed Consolidated Interim Financial Statements

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and the Board of Directors of

KB Financial Group Inc.

Reviewed Financial Statements

We have reviewed the accompanying condensed consolidated interim financial statements of KB Financial Group Inc. and its subsidiaries (collectively referred to as the “Group”). These condensed consolidated interim financial statements consist of the consolidated interim statement of financial position of the Group as at March 31, 2024, and the related consolidated interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2024 and 2023, and material accounting policy information and other selected explanatory notes, expressed in Korean Won.

Management’s Responsibility for the Financial Statements

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

Auditor’s Responsibility

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

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

Conclusion

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

 

3

Other Matters

We have audited the consolidated statement of financial position of the Group as at December 31, 2023, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, not presented herein, in accordance with Korean Standards on Auditing. We expressed an unqualified opinion on those financial statements in our audit report dated March 6, 2024. The consolidated statement of financial position as at December 31, 2023, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as at December 31, 2023.

Review standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries.

/s/ Samil PricewaterhouseCoopers

Seoul, Korea

May 16, 2024

 

This report is effective as of May 16, 2024, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

 

4

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Financial Position

March 31, 2024 and December 31, 2023

 

 

(in millions of Korean won)		Notes				March 31, 2024 (Unaudited)				December 31, 2023
Assets
Cash and due from financial institutions			4,6,7,30			W	30,509,269			W	29,836,311
Financial assets at fair value through profit or loss			4,6,11				77,356,807				77,038,267
Derivative financial assets			4,6,8				7,260,440				6,157,628
Loans measured at amortized cost			4,6,9,10				448,194,423				444,805,287
Financial investments			4,6,11				124,966,655				122,199,529
Investments in associates and joint ventures							700,626				722,222
Insurance contract assets			29				268,419				229,640
Reinsurance contract assets			29				1,552,936				1,655,168
Property and equipment							5,310,307				4,945,699
Investment property							3,962,852				4,109,784
Intangible assets							1,961,022				1,950,858
Net defined benefit assets			18				382,385				374,090
Current income tax assets							274,900				244,317
Deferred income tax assets			12,25				335,124				274,225
Assets held for sale							119,494				208,230
Other assets			4,6				29,084,622				20,986,897
Total assets						W	732,240,281			W	715,738,152
Liabilities
Financial liabilities at fair value through profit or loss			4,6,13			W	11,267,107			W	10,920,435
Derivative financial liabilities			4,6,8				7,236,591				6,210,639
Deposits			4,6,14				418,070,668				406,512,434
Borrowings			4,6,15				62,993,551				69,583,561
Debentures			4,6,16				70,002,922				69,176,668
Insurance contract liabilities			29				50,704,289				50,308,552
Reinsurance contract liabilities			29				37,353				36,030
Provisions			17				2,062,011				1,444,418
Net defined benefit liabilities			18				72,939				81,869
Current income tax liabilities							146,395				145,335
Deferred income tax liabilities			12,25				2,004,644				2,179,966
Other liabilities			4,6				48,434,480				40,264,935
Total liabilities							673,032,950				656,864,842
Equity
Share capital							2,090,558				2,090,558
Hybrid securities							5,431,863				5,032,803
Capital surplus							16,639,873				16,647,916
Accumulated other comprehensive income (loss)			27				1,531,423				2,295,165
Retained earnings							32,439,145				32,029,199
Treasury shares							(996,774	)			(1,165,837	)
Equity attributable to shareholders of the Parent Company			19				57,136,088				56,929,804
Non-controlling interests							2,071,243				1,943,506
Total equity							59,207,331				58,873,310
Total liabilities and equity						W	732,240,281			W	715,738,152

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

 

5

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Comprehensive Income

Three-month Periods Ended March 31, 2024 and 2023

 

 

(in millions of Korean won, except per share amounts)		Notes				2024 (Unaudited)				2023 (Unaudited)
Interest income						W	7,613,962			W	6,866,583
Interest income from financial instruments at fair value through other comprehensive income and amortized cost							7,228,877				6,527,556
Interest income from financial instruments at fair value through profit or loss							376,753				333,477
Insurance finance interest income							8,332				5,550
Interest expense							(4,462,477	)			(4,042,718	)
Interest expense							(4,066,526	)			(3,639,880	)
Insurance finance interest expense							(395,951	)			(402,838	)
Net interest income			5,20				3,151,485				2,823,865
Fee and commission income							1,396,300				1,334,702
Fee and commission expense							(406,207	)			(420,696	)
Net fee and commission income			5,21				990,093				914,006
Insurance income							2,727,558				2,663,134
Insurance income							2,689,474				2,498,548
Reinsurance income							38,084				164,586
Insurance expense							(2,189,179	)			(2,270,727	)
Insurance service expense							(1,973,227	)			(2,073,226	)
Reinsurance expense							(215,952	)			(197,501	)
Net insurance income			5,29				538,379				392,407
Net gains (losses) on financial instruments at fair value through profit or loss			5,22				249,133				773,407
Other insurance finance income (expenses)			29				(112,426	)			(269,060	)
Net other operating expenses			5,23				(404,710	)			(260,124	)
General and administrative expenses			5,18,24				(1,628,236	)			(1,566,286	)
Operating income before provision for credit losses			4				2,783,718				2,808,215
Provision for credit losses			5,7,9,10,17				(428,270	)			(668,188	)
Net operating income			5				2,355,448				2,140,027
Share of profit (loss) of associates and joint ventures			5				(1,419	)			(2,496	)
Net other non-operating income (expenses)			5				(946,545	)			(93,665	)
Net non-operating income (expenses)							(947,964	)			(96,161	)
Profit before income tax expense			5				1,407,484				2,043,866
Income tax expense			5,25				(344,270	)			(533,575	)
Profit for the period			5				1,063,214				1,510,291

 

 

(Continued)

 

6

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Comprehensive Income

Three-month Periods Ended March 31, 2024 and 2023

 

 

(in millions of Korean won, except per share amounts)		Notes				2024 (Unaudited)				2023 (Unaudited)
Items that will not be reclassified to profit or loss:
Remeasurements of net defined benefit liabilities						W	8,995			W	5,828
Share of other comprehensive income (loss) of associates and joint ventures							—				(2	)
Gains (losses) on equity securities at fair value through other comprehensive income							(12,566	)			(110	)
Fair value changes of financial liabilities designated at fair value through profit or loss due to own credit risk							(8,843	)			(49,975	)
							(12,414	)			(44,259	)
Items that may be reclassified subsequently to profit or loss:
Currency translation differences							162,945				115,819
Gains (losses) on debt securities at fair value through other comprehensive income							(657,227	)			1,525,457
Share of other comprehensive income (loss) of associates and joint ventures							(142	)			(4,158	)
Gains on cash flow hedging instruments			8				(36,797	)			(35,465	)
Losses on hedging instruments of net investments in foreign operations			8				(51,203	)			(30,133	)
Insurance finance income (expense)			29				(164,964	)			(1,042,466	)
							(747,388	)			529,054
Other comprehensive income (loss) for the period, net of tax							(759,802	)			484,795
Total comprehensive income (loss) for the period						W	303,412			W	1,995,086
Profit attributable to:			5
Shareholders of the Parent Company						W	1,049,133			W	1,508,708
Non-controlling interests							14,081				1,583
						W	1,063,214			W	1,510,291
Total comprehensive income (loss) for the period attributable to:
Shareholders of the Parent Company						W	281,279			W	1,982,382
Non-controlling interests							22,133				12,704
						W	303,412			W	1,995,086
Earnings per share (in Korean won)			28
Basic earnings per share						W	2,627			W	3,782
Diluted earnings per share							2,584				3,697

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

 

7

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Changes in Equity

Three-month Periods Ended March 31, 2024 and 2023

 

 

				Equity attributable to shareholders of the Parent Company
(in millions of Korean won)		Notes		Share capital				Hybrid securities				Capital surplus				Accumulated other comprehensive income				Retained earnings				Treasury shares				Non-controlling interests				Total equity
Balance as of January 1, 2023 (Before the restatement)				W	2,090,558				4,434,251				16,940,731				1,312,521				28,922,273				(836,188	)			1,280,102				54,144,248
Changes in accounting policies					—				—				—				(62,599	)			26,152				—				—				(36,447	)
Balance as of January 1, 2023 (After the restatement)					2,090,558				4,434,251				16,940,731				1,249,922				28,948,425				(836,188	)			1,280,102				54,107,801
Comprehensive income for the period
Profit (loss) for the period					—				—				—				—				1,508,708				—				1,583				1,510,291
Remeasurements of net defined benefit liabilities					—				—				—				5,032				—				—				796				5,828
Currency translation differences					—				—				—				105,479				—				—				10,340				115,819
Gains (losses) on financial instruments at fair value through other comprehensive income and transfer to retained earnings					—				—				—				1,525,920				(558	)			—				(15	)			1,525,347
Share of other comprehensive loss of associates and joint ventures					—				—				—				(4,160	)			—				—				—				(4,160	)
Gains (losses) on cash flow hedging instruments					—				—				—				(35,465	)			—				—				—				(35,465	)
Losses on hedging instruments of net investments in foreign operations					—				—				—				(30,133	)			—				—				—				(30,133	)
Insurance finance income					—				—				—				(1,042,466	)			—				—				—				(1,042,466	)
Fair value changes of financial liabilities designated at fair value through profit or loss due to own credit risk					—				—				—				(49,975	)			—				—				—				(49,975	)
Total comprehensive income (loss) for the period					—				—				—				474,232				1,508,150				—				12,704				1,995,086
Transactions with shareholders
Annual dividends paid to shareholders of the Parent Company					—				—				—				—				(564,970	)			—				—				(564,970	)
Issuance of hybrid securities					—				598,552				—				—				—				—				409,085				1,007,637
Dividends on hybrid securities					—				—				—				—				(40,703	)			—				(17,467	)			(58,170	)
Acquisition of treasury shares					—				—				—				—				—				(271,745	)			—				(271,745	)
Others					—				—				(42	)			—				—				—				(2,224	)			(2,266	)
Total transactions with shareholders					—				598,552				(42	)			—				(605,673	)			(271,745	)			389,394				110,486
Balance as of March 31, 2023 (Unaudited)				W	2,090,558			W	5,032,803			W	16,940,689			W	1,724,154			W	29,850,902			W	(1,107,933	)		W	1,682,200			W	56,213,373
Balance as of January 1, 2024				W	2,090,558			W	5,032,803			W	16,647,916			W	2,295,165			W	32,029,199			W	(1,165,837	)		W	1,943,506			W	58,873,310
Comprehensive income for the period
Profit for the period					—				—				—				—				1,049,133				—				14,081				1,063,214
Remeasurements of net defined benefit liabilities					—				—				—				8,751				—				—				244				8,995
Currency translation differences					—				—				—				155,039				—				—				7,906				162,945
Losses on financial instruments at fair value through other comprehensive income and transfer to retained earnings					—				—				—				(665,583	)			(4,111	)			—				(99	)			(669,793	)
Share of other comprehensive income of associates and joint ventures					—				—				—				(142	)			—				—				—				(142	)
Losses on cash flow hedging instruments					—				—				—				(36,797	)			—				—				—				(36,797	)
Losses on hedging instruments of net investments in foreign operations					—				—				—				(51,203	)			—				—				—				(51,203	)
Insurance finance expenses					—				—				—				(164,964	)			—				—				—				(164,964	)
Fair value changes of financial liabilities designated at fair value through profit or loss due to own credit risk					—				—				—				(8,843	)			—				—				—				(8,843	)
Total comprehensive income (loss) for the period					—				—				—				(763,742	)			1,045,022				—				22,132				303,412
Transactions with shareholders
Annual dividends paid to shareholders of the Parent Company					—				—				—				—				(587,006	)			—				—				(587,006	)
Issuance of hybrid securities					—				399,060				—				—				—				—				129,973				529,033
Dividends on hybrid securities					—				—				—				—				(48,070	)			—				(22,477	)			(70,547	)
Acquisition of treasury shares					—				—				—				—				—				(65,537	)			—				(65,537	)
Disposal of treasury shares					—				—				—				—				—				234,600				—				234,600
Gains on disposal of treasury shares					—				—				3,975				—				—				—				—				3,975
Others					—				—				(12,018	)			—				—				—				(1,891	)			(13,909	)
Total transactions with shareholders					—				399,060				(8,043	)			—				(635,076	)			169,063				105,605				30,609
Balance as of March 31, 2024 (Unaudited)				W	2,090,558			W	5,431,863			W	16,639,873			W	1,531,423			W	32,439,145			W	(996,774	)		W	2,071,243			W	59,207,331

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

 

8

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Cash Flows

Three-month Periods Ended March 31, 2024 and 2023

 

 

(in millions of Korean won)		Notes				2024 (Unaudited)				2023 (Unaudited)
Cash flows from operating activities
Profit for the period						W	1,063,214			W	1,510,291
Adjustment for non-cash items
Net gains on financial assets at fair value through profit or loss							(126,306	)			(615,765	)
Net losses on derivative financial instruments for hedging purposes							65,926				18,329
Provision for credit losses							428,270				668,188
Net gains on financial investments							(13,521	)			(18,464	)
Share of loss of associates and joint ventures							1,419				2,496
Depreciation and amortization expense							216,882				205,533
Other net losses on property and equipment/intangible assets							73,294				63,603
Share-based payments							59,901				11,361
Provision for policy reserves							—				382
Post-employment benefits							46,391				36,787
Net interest income							(19,621	)			(6,321	)
Gains (losses) on foreign currency translation							462,154				(26,314	)
Insurance finance income							(2,841,375	)			(2,651,431	)
Reinsurance finance expense							440,770				270,218
Other expenses							226,100				194,570
							(979,716	)			(1,846,828	)
Changes in operating assets and liabilities
Financial asset at fair value through profit or loss							208,850				(834,106	)
Derivative financial instruments							(14,054	)			(23,761	)
Loans measured at fair value through other comprehensive income							(98,728	)			(116,388	)
Loans measured at amortized cost							(3,016,264	)			652,151
Current income tax assets							(30,583	)			(14,496	)
Deferred income tax assets							(56,432	)			(11,503	)
Other assets							(8,319,607	)			(6,854,888	)
Financial liabilities at fair value through profit or loss							290,139				(1,062,396	)
Deposits							10,349,069				(6,603,254	)
Current income tax liabilities							1,060				(866,500	)
Deferred income tax liabilities							101,545				1,428,984
Other liabilities							7,133,780				10,039,564
Insurance contract assets							(38,778	)			(69,242	)
Reinsurance contract assets							(336,303	)			(283,615	)
Insurance contract liabilities							3,001,188				3,013,729
Reinsurance contract liabilities							8,218				20,595
Investment contract liabilities							(144,464	)			(225,062	)
							9,038,636				(1,810,188	)
Net cash inflow (outflow) from operating activities							9,122,134				(2,146,725	)

 

(Continued)

 

9

KB Financial Group Inc. and Subsidiaries

Consolidated Interim Statements of Cash Flows

Three-month Periods Ended March 31, 2024 and 2023

 

 

(in millions of Korean won)		Notes				2024 (Unaudited)				2023 (Unaudited)
Cash flows from investing activities
Net cash flows from derivative financial instruments for hedging purposes							(870	)			(2,269	)
Disposal of financial asset at fair value through profit or loss							4,267,546				3,614,766
Acquisition of financial asset at fair value through profit or loss							(4,503,400	)			(1,869,263	)
Disposal of financial investments							11,127,360				12,662,216
Acquisition of financial investments							(14,070,438	)			(9,658,046	)
Disposal of investments in associates and joint ventures							45,989				28,692
Acquisition of investments in associates and joint ventures							(25,069	)			(10,961	)
Disposal of property and equipment							960				1,199
Acquisition of property and equipment							(33,589	)			(34,071	)
Acquisition of investment property							—				(123,549	)
Disposal of intangible assets							3,070				185
Acquisition of intangible assets							(82,508	)			(178,208	)
Net cash flows from changes in ownership of subsidiaries							(40,273	)			(287,482	)
Others							(89,912	)			58,805
Net cash inflow (outflow) from investing activities							(3,401,134	)			4,202,014
Cash flows from financing activities
Net cash flows from derivative financial instruments for hedging purposes							(51,604	)			18,952
Net decrease in borrowings							(7,702,793	)			(4,072,109	)
Increase in debentures							9,124,882				13,466,265
Decrease in debentures							(7,423,739	)			(13,977,682	)
Increase in other payables to trust accounts							786,222				—
Decrease in other payables to trust accounts							—				(103,073	)
Issuance of hybrid securities							399,060				598,552
Dividends paid on hybrid securities							(48,070	)			(40,703	)
Acquisition of treasury shares							(65,537	)			(271,745	)
Redemption of principal of lease liabilities							(73,284	)			(224,646	)
Decrease in non-controlling interests							107,496				391,618
Others							(65,601	)			(299,133	)
Net cash outflow from financing activities							(5,012,968	)			(4,513,704	)
Effect of exchange rate changes on cash and cash equivalents							165,735				22,044
Net increase (decrease) in cash and cash equivalents							873,767				(2,436,371	)
Cash and cash equivalents at the beginning of the period			30				25,826,588				26,534,798
Cash and cash equivalents at the end of the period			30			W	26,700,355			W	24,098,427

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

 

10

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2024 and 2023 (Unaudited), and December 31, 2023

 

1. The Parent Company

KB Financial Group Inc. (the “Parent Company”) was incorporated on September 29, 2008, under the Financial Holding Companies Act of Korea. KB Financial Group Inc. and its subsidiaries (the “Group”) derive substantially all of their revenue and income from providing a broad range of banking and related financial services to consumers and corporations. The Parent Company’s main business purpose is to control subsidiaries that engage in the financial business or subsidiaries closely related to the financial business through the stock ownership. The Parent Company’s headquarter is located at 26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd. and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Group established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Group acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Group included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015, and KB Insurance Co., Ltd. became one of the subsidiaries through a tender offer in May 2017. Also, the Group included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary in October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed its name to KB Securities Co., Ltd. in January 2017. In August 2020, the Group acquired Prudential Life Insurance Company of Korea Ltd. which was classified as a subsidiary and the name was changed to KB Life Insurance Co., Ltd. in December 2022. Then in January 2023, it merged with another existing KB Life Insurance Co., Ltd.

The Parent Company’s share capital as of March 31, 2024, is W 2,090,558 million. The Parent Company has been listed on the Korea Exchange (“KRX”) since October 10, 2008, and on the New York Stock Exchange (“NYSE”) for its American Depositary Shares (“ADS”) since September 29, 2008. Number of shares authorized in its Articles of Incorporation is 1,000 million.

 

11

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

2. Basis of Preparation

2.1 Application of Korean IFRS

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

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

The preparation of the consolidated financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Group’s accounting policies. The areas that require a more complex and higher level of judgment or areas that require significant assumptions and estimations are disclosed in Note 2.4.

The Group’s consolidated interim financial statements for the three-month period ended March 31, 2024, have been prepared in accordance with Korean IFRS No.1034 Interim Financial Reporting and contain less information than is required in annual consolidated financial statements. Selected explanatory notes include descriptions of transactions or events that are significant in understanding change in financial position and financial performance of the Group since the end of the previous annual reporting period. These consolidated interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as of March 31, 2024.

2.1.1 The Group has applied the following new and amended standards for the first time for its annual reporting period commencing January 1, 2024.

- Amendment of Korean IFRS No.1001 “Presentation of Financial Statements” - Classification of Liabilities into Current and Non-Current and Non-current Liabilities with Covenants

Liabilities are classified as current or non-current based on their substantive rights existing at the end of the reporting period, without considering the possibility of exercising the right to delay the payment or management’s expectations. Also, if the transfer of equity instruments is included in the payment of liabilities, it is excluded if the option to pay with equity instruments is recognized separately from the liability in a compound financial instrument and meets the definition of equity instruments. These amendments do not have a significant impact on the financial statements.

- Amendment of Korean IFRS No.1007 “Statement of Cash Flows” and No.1107 “Financial Instruments: Disclosures” – Disclosure of Supplier Finance Arrangements

The amendments require disclosure of the effects of supplier finance arrangements on the Group’s liabilities, cash flows and exposure to liquidity risk. These amendments do not have a significant impact on the financial statements.

 

12

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

2.1.1 The Group has applied the following new and amended standards for the first time for its annual reporting period commencing January 1, 2024. (cont’d)

- Amendment of Korean IFRS No.1116 “Leases” - Lease Liability in a Sale and Leaseback

The amendments require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. These amendments do not have a significant impact on the financial statements.

- Amendment of Korean IFRS No.1001 “Presentation of Financial Statements” – Disclosure of Virtual Asset

The amendments require additional disclosure for virtual assets held by the Group, virtual assets entrusted by customers to the Group, and the issuance and transfer of virtual assets. These amendments do not have a significant impact on the financial statements.

2.1.2 The following are the accounting standards that have been established or announced but have not yet been implemented, which the Group has not applied

- Amendment of Korean IFRS No.1021 “The Effects of Changes in Foreign Exchange Rates” and Korean IFRS No.1101 “First-time Adoption of International Financial Reporting Standards” - Lack of exchangeability

The amendments require the Group to determine a spot exchange rate when exchangeability is lacking, and to disclose information on the nature and financial effects of the currency not being exchangeable into the other currency, the spot exchange rate(s) used, the estimation process, and the risks to which the Group is exposed. This amendment will be applied to the financial statements for the accounting year beginning on or after January 1, 2025. These amendments do not have a significant impact on the financial statements.

2.1.3 Restatement of financial statements for the three-month period ended March 31, 2023 for the application of “Variable Fee Approach”

The Group has initially applied on December 31, 2023, guidelines for calculating policy reserves and recognizing revenue for insurance companies announced by Financial Supervisory Service (FSS) in South Korea. Under these guidelines, the Group applied the “Variable Fee Approach” to the financial statements for the year and as of December 31, 2023. The effects of this change have been retrospectively applied to the comparative disclosure for past periods as a “change in accounting policy.” The consolidated statements of comprehensive income, changes in equity, and cash flows for the three-month period ended March 31, 2023 for the comparative disclosure have been restated to reflect the impact of this retrospective application. The effect of the change in accounting policy to the consolidated statement of financial position as of March 31, 2023 and the consolidated statement of comprehensive income for the three-month period ended March 31, 2023 is as follows.

 

13

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

2.1.3.1 the consolidated statement of comprehensive income for the three-month period ended March 31, 2023

 

		Before the effects of change in accounting policy				After the effects of change in accounting policy				Net increase (decrease)
Interest income		W	2,785,593			W	2,823,865			W	38,272
Insurance finance interest expense			(441,110	)			(402,838	)			38,272
Net insurance income			380,647				392,407				11,760
Insurance income			2,662,112				2,663,134				1,022
Insurance expense			(2,281,465	)			(2,270,727	)			10,738
Other insurance finance income (expenses)			(234,030	)			(269,060	)			(35,030	)
Net operating income			2,125,025				2,140,027				15,002
Net non-operating income (expenses)			(96,161	)			(96,161	)			—
Profit before income tax expense			2,028,864				2,043,866				15,002
Income tax expense			(529,650	)			(533,575	)			(3,925	)
Profit for the period			1,499,214				1,510,291				11,077
Other comprehensive income (loss) for the period, net of tax			486,208				484,795				(1,413	)
Insurance finance income (expense)			(1,041,053	)			(1,042,466	)			(1,413	)
Total comprehensive income (loss) for the period			1,985,422				1,995,086				9,664

2.1.3.2 Due to the effects of change in accounting policy stated above, the Group’s total liabilities and equity has increased and decreased by W 36,447 million, and there is no effect on the consolidated statement of cash flows.

 

14

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

2.2 Measurement Basis

The consolidated financial statements have been prepared based on the historical cost accounting model unless otherwise specified.

2.3 Functional and Presentation Currency

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

2.4 Critical Accounting Estimates

The Group applies accounting policies and uses judgements, accounting estimates and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses). Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment at the reporting date are different from the actual environment.

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

Uncertainties in estimates and assumptions with significant risks used in the preparation of these condensed consolidated interim financial statements are the same as 2023 financial statements, except for the method of estimating income tax expense.

3. Material Accounting Policies

The material accounting policies and calculation methods applied in the preparation of these consolidated interim financial statements are the same as those applied to the consolidated financial statements for the year ended December 31, 2023, except for the impact of changes due to adopting new and amended standards and interpretations described in Note 2.1 and below paragraph.

The Group is subject to Pillar2 income taxes, and has applied a temporary exemption provision regarding the recognition and disclosure of deferred taxes related to the Pillar 2 rules. Income tax expense for the interim period is measured applying the expected average annual income tax rate applicable on expected total annual income.

 

15

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

4. Financial Risk Management

4.1 Summary

4.1.1 Overview of financial risk management policy

The financial risks that the Group is exposed to are credit risk, market risk, liquidity risk, operational risk, and others.

This note regarding financial risk management provides information about the risks that the Group is exposed to and about its objectives, policies, risk assessment and management procedures, and capital management. Additional quantitative information is disclosed throughout the consolidated financial statements.

The Group’s risk management system focuses on efficiently supporting long-term strategy and management decisions of the Group by increasing risk transparency, preventing risk transfer between subsidiaries and preemptive response to rapidly changing financial environments. Credit risk, market risk, operational risk, interest rate risk, insurance risk, liquidity risk, credit concentration risk, strategy risk, and reputation risk are recognized as the Group’s significant risks and measured and managed by quantifying them in the form of internal capital or Value at Risk (“VaR”) using statistical methods.

4.1.2 Risk management organization

4.1.2.1 Risk Management Committee

The Risk Management Committee, as the ultimate decision-making body, deals with risk-related issues, such as establishing risk management strategies in accordance with the strategic direction determined by the board of directors, determining the affordable level of risk appetite, reviewing the level of risk and the status of risk management activities, approving the application of risk management systems, methodologies, and major improvements, and establishing and approving risk management policies and procedures to timely recognize, measure, monitor, and control risks arising from various transactions by the Group.

4.1.2.2 Risk Management Council

The Risk Management Council is responsible for consulting on matters delegated by the Risk Management Committee and requests for review by the Management Executive Committee, consulting on details of each subsidiary’s risk management policies and procedures, monitoring the Group’s risk management status, and establishing and implementing necessary measures.

4.1.2.3 Risk Management Department

The Risk Management Department performs the Group’s risk management detailed policies, procedures, and business processes, and is responsible for calculating the Group’s risk-weighted assets, monitoring and managing internal capital limits.

 

16

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

4.2 Credit Risk

4.2.1 Overview of credit risk

Credit risk is the risk of loss from the portfolio of assets held due to the counterparty’s default, breach of contract, and deterioration of credit quality. For risk management purposes, the Group manages all factors of credit risk exposure, such as default risk of individual borrowers, country risk, and risk of specific sectors in an integrated way.

4.2.2 Credit risk management

The Group measures the expected loss and internal capital for the assets subject to credit risk management, including on-balance and off-balance assets, and uses them as management indicators. The Group allocates and manages credit risk internal capital limits.

In addition, to prevent excessive concentration of exposures by borrower and industry, the total exposure limit at the Group level is introduced, applied, and managed to control the credit concentration risk.

All of the Kookmin Bank’s loan customers (individuals and corporates) are assigned a credit rating and managed by a comprehensive internal credit evaluation system. For individuals, the credit rating is evaluated by utilizing personal information, income and job information, asset information, and bank transaction information. For corporates, the credit rating is evaluated by analyzing and utilizing financial and non-financial information which measures current and future corporate value and ability to repay the debt. Also, the extent to which corporates have the ability to meet debt obligations is comprehensively considered.

The credit rating, once assigned, serves as the fundamental instrument in Kookmin Bank’s credit risk management, and is applied in a wide range of credit risk management processes, including credit approval, credit limit management, loan pricing, and assessment of allowances for credit losses. For corporates, Kookmin Bank conducts a regular credit evaluation at least once a year, and the review and supervision departments regularly validate the adequacy of credit ratings to manage credit risks.

KB Kookmin Card Co., Ltd.’s credit scoring system is divided into Application Scoring System (“ASS”) and Behavior Scoring System (“BSS”). For applications that meet the eligibility criteria for card issuance, the card will be issued only if the ASS credit rating is above the standard. KB Kookmin Card Co., Ltd.’s internal information, external information from the credit bureau company and others, and personal information on the application are used to calculate the ASS credit rating. The BSS, which is recalculated on a weekly basis, predicts the delinquency probability of cardholders, and utilizes it to monitor cardholders and portfolio risk.

In order to establish a credit risk management system, the Group manages credit risk by forming a separate risk management organization. In particular, independently of the Sales Group, the Credit Management & Analysis Group of Kookmin Bank, a subsidiary, is in charge of loan policy, loan system, credit rating, credit analysis, follow-up management, and corporate restructuring. The Risk Management Group of Kookmin Bank is responsible for establishing policies on credit risk management, measuring and limiting internal capital of credit risk, setting credit limits, credit review, and verification of credit rating models.

 

17

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

4.2.3 Maximum exposure to credit risk

The Group’s maximum exposures to credit risk without consideration of collateral values in relation to financial instruments other than equity securities as of March 31, 2024 and December 31, 2023, are as follows:

 

(In millions of Korean won)		March 31, 2024				December 31, 2023
Financial assets
Due from financial institutions measured at amortized cost *		W	27,967,981			W	27,579,279
Financial assets at fair value through profit or loss:
Due from financial institutions measured at fair value through profit or loss			56,158				79,811
Securities measured at fair value through profit or loss			72,403,696				72,658,432
Loans measured at fair value through profit or loss			424,590				183,726
Financial instruments indexed to the price of gold			99,514				93,743
Derivatives			7,260,440				6,157,628
Loans measured at amortized cost *			448,194,423				444,805,287
Financial investments:
Securities measured at fair value through other comprehensive income			82,138,000				78,926,437
Securities measured at amortized cost *			38,963,163				39,701,389
Loans measured at fair value through other comprehensive income			899,713				801,050
Other financial assets *			24,666,655				16,544,513
			703,074,333				687,531,295
Off-balance sheet items
Acceptances and guarantees contracts			14,534,690				13,763,222
Financial guarantee contracts			7,595,798				7,828,205
Commitments			206,046,395				203,906,179
			228,176,883				225,497,606
		W	931,251,216			W	913,028,901

 

*	After netting of allowance

4.2.4 Credit risk of loans

The Group maintains allowances for loan losses associated with credit risk of loans to manage its credit risk.

The Group assesses expected credit losses and recognizes loss allowances of financial assets at amortized cost and financial assets at fair value through other comprehensive income. Financial assets at fair value through profit or loss are excluded. Expected credit losses are a probability-weighted estimate of possible credit losses occurring in a certain range by reflecting reasonable and supportable information that is reasonably available at the end of the reporting period without undue cost or effort, including information about past events, current conditions, and forecasts of future economic conditions. The Group measures the expected credit losses of loans classified as financial assets at amortized cost, by deducting allowances for credit losses. The expected credit losses of loans classified as financial assets at fair value through other comprehensive income are presented in other comprehensive income in the consolidated financial statements.

 

18

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

4.2.4.1 Credit risk exposure

Credit qualities of loans as of March 31, 2024 and December 31, 2023, are as follows:

 

(In millions of Korean won)		March 31, 2024
		12-month expected credit losses				Lifetime expected credit losses								Not applying expected credit losses				Total
						Non-impaired				Impaired
Loans measured at amortized cost *
Corporate
Grade 1		W	143,169,747			W	7,232,694			W	3,938			W	—			W	150,406,379
Grade 2			66,423,252				11,128,347				73,252				—				77,624,851
Grade 3			3,634,556				3,607,094				10,130				—				7,251,780
Grade 4			622,265				1,186,209				44,101				—				1,852,575
Grade 5			16,195				584,658				3,071,387				—				3,672,240
			213,866,015				23,739,002				3,202,808				—				240,807,825
Retail
Grade 1			166,590,778				4,185,542				14,816				—				170,791,136
Grade 2			6,998,522				3,696,494				34,374				—				10,729,390
Grade 3			5,108,022				1,537,938				30,118				—				6,676,078
Grade 4			229,121				336,086				26,399				—				591,606
Grade 5			39,636				794,257				1,158,978				—				1,992,871
			178,966,079				10,550,317				1,264,685				—				190,781,081
Credit card
Grade 1			10,660,264				253,644				—				—				10,913,908
Grade 2			5,853,010				928,811				—				—				6,781,821
Grade 3			1,638,621				1,346,853				—				—				2,985,474
Grade 4			8,612				345,973				—				—				354,585
Grade 5			2,669				227,610				888,387				—				1,118,666
			18,163,176				3,102,891				888,387				—				22,154,454
			410,995,270				37,392,210				5,355,880				—				453,743,360
Loans measured at fair value through other comprehensive income
Corporate
Grade1			858,969				—				—				—				858,969
Grade2			40,744				—				—				—				40,744
Grade3			—				—				—				—				—
Grade4			—				—				—				—				—
Grade5			—				—				—				—				—
			899,713				—				—				—				899,713
			899,713				—				—				—				899,713
		W	411,894,983			W	37,392,210			W	5,355,880			W	—			W	454,643,073

 

19