Exhibit 99.2

KB Financial Group Inc.

Separate Interim Financial Statements

June 30, 2024 and 2023

(Unaudited)

KB Financial Group Inc.

 

		Page(s)
Report on Review of Condensed Separate Interim Financial Statements			1-2
Separate Interim Financial Statements
Separate Interim Statements of Financial Position			3
Separate Interim Statements of Comprehensive Income			4
Separate Interim Statements of Changes in Equity			5
Separate Interim Statements of Cash Flows			6
Notes to the Separate Interim Financial Statements			7

Report on Review of Condensed Separate 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 separate interim financial statements of KB Financial Group Inc. (the “Company”). These condensed separate interim financial statements consist of the separate interim statement of financial position of the Company as at June 30, 2024, and the related separate interim statements of comprehensive income for the three-month and six month periods ended June 30, 2024 and 2023, and separate interim statements of changes in equity and cash flows for the six-month periods ended June 30, 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 separate 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 separate 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 separate 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 separate interim financial statements are not prepared, in all material respects, in accordance with Korean IFRS No. 1034 Interim Financial Reporting.

 

1

Other Matters

We have audited the separate statement of financial position of the Company as at December 31, 2023, and the related separate 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 separate 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

August 14, 2024

 

This report is effective as of August 14, 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 separate 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.

 

2

KB Financial Group Inc.

Separate Interim Statements of Financial Position

June 30, 2024 and December 31, 2023

 

(In millions of Korean won)

 

		Notes				June 30, 2024 (Unaudited)				December 31, 2023
Assets
Cash and due from financial institutions			4,5,6,23			W	1,346,198			W	256,337
Financial assets at fair value through profit or loss			4,5,7				1,227,370				1,376,423
Loans measured at amortized cost			4,5,8				712,960				608,286
Investments in subsidiaries			9				26,717,817				26,717,817
Property and equipment							3,156				3,080
Intangible assets							14,819				15,954
Net defined benefit assets			13				2,923				3,694
Deferred income tax assets			10				5,823				4,492
Other assets			4,5				691,100				542,815
Total assets						W	30,722,166			W	29,528,898
Liabilities
Borrowings			4,5,11				865,000				100,000
Debentures			4,5,12				2,982,533				3,871,820
Current income tax liabilities							294,151				104,299
Other liabilities			4,5				351,766				410,704
Total liabilities							4,493,450				4,486,823
Equity			14
Share capital							2,090,558				2,090,558
Hybrid securities							5,082,359				5,032,518
Capital surplus							14,754,475				14,754,747
Accumulated other comprehensive loss							(6,773	)			(6,809	)
Retained earnings							5,559,334				4,336,898
Treasury shares							(1,251,237	)			(1,165,837	)
Total equity							26,228,716				25,042,075
Total liabilities and equity						W	30,722,166			W	29,528,898

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

 

3

KB Financial Group Inc.

Separate Interim Statements of Comprehensive Income

Three-Month and Six-Month Periods Ended June 30, 2024 and 2023

 

(In millions of Korean won, except per share amounts)

 

		Notes				2024 (Unaudited)								2023 (Unaudited)
						Three months				Six months				Three months				Six months
Interest income						W	12,546			W	22,363			W	11,479			W	18,149
Interest income from financial instruments at amortized cost							11,845				20,960				10,800				16,351
Interest income from financial instruments at fair value through profit or loss							701				1,403				679				1,798
Interest expense							(24,858	)			(48,400	)			(24,859	)			(51,583	)
Net interest expense			16				(12,312	)			(26,037	)			(13,380	)			(33,434	)
Fee and commission income							616				994				409				781
Fee and commission expense							(3,040	)			(4,560	)			(3,498	)			(5,117	)
Net fee and commission expense			17				(2,424	)			(3,566	)			(3,089	)			(4,336	)
Net gains (losses) on financial instruments at fair value through profit or loss			18				27,755				43,334				6,242				51,670
Net other operating income			19				—				2,243,250				—				2,192,380
General and administrative expenses			20				(23,843	)			(48,030	)			(22,979	)			(45,881	)
Operating income before provision for credit losses							(10,824	)			2,208,951				(33,206	)			2,160,399
Provision for credit losses							(249	)			(345	)			(7	)			(7	)
Net operating income							(11,073	)			2,208,606				(33,213	)			2,160,392
Net non-operating income (expense)							567				(79	)			4,393				4,406
Profit before tax							(10,506	)			2,208,527				(28,820	)			2,164,798
Income tax benefit (expense)			21				(2,054	)			1,532				2,370				(8,321	)
Profit for the period							(12,560	)			2,210,059				(26,450	)			2,156,477
Items that will not be reclassified to profit or loss:
Remeasurements of net defined benefit liabilities							(11	)			36				8				25
Other comprehensive income (loss) for the period, net of tax							(11	)			36				8				25
Total comprehensive income for the period						W	(12,571	)		W	2,210,095			W	(26,442	)		W	2,156,502
Earnings per share			22
Basic earnings per share						W	(171	)		W	5,541			W	(194	)		W	5,354
Diluted earnings per share							(169	)			5,470				(188	)			5,234

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

 

4

KB Financial Group Inc.

Separate Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2024 and 2023

 

(In millions of Korean won)

 

		Share capital				Hybrid securities				Capital surplus				Accumulated other comprehensive income				Retained earnings				Treasury shares				Total equity
Balance as of January 1, 2023		W	2,090,558			W	4,433,981			W	14,754,747			W	(5,847	)		W	3,794,565			W	(836,188	)		W	24,231,816
Comprehensive income for the period
Profit for the period			—				—				—				—				2,156,477				—				2,156,477
Remeasurements of net defined benefit liabilities			—				—				—				25				—				—				25
Total comprehensive income for the period			—				—				—				25				2,156,477				—				2,156,502
Transactions with shareholders
Annual dividends			—				—				—				—				(564,970	)			—				(564,970	)
Quarterly dividends			—				—				—				—				(195,967	)			—				(195,967	)
Acquisition of treasury shares			—				—				—				—				—				(271,745	)			(271,745	)
Retirement of treasury shares			—				—				—				—				(242,096	)			242,096				—
Issuance of hybrid securities			—				598,537				—				—				—				—				598,537
Dividends on hybrid securities			—				—				—				—				(88,772	)			—				(88,772	)
Total transactions with shareholders			—				598,537				—				—				(1,091,805	)			(29,649	)			(522,917	)
Balance as of June 30, 2023 (Unaudited)		W	2,090,558			W	5,032,518			W	14,754,747			W	(5,822	)		W	4,859,237			W	(865,837	)		W	25,865,401
Balance as of January 1, 2024		W	2,090,558			W	5,032,518			W	14,754,747			W	(6,809	)		W	4,336,898			W	(1,165,837	)		W	25,042,075
Comprehensive income for the period
Profit for the period			—				—				—				—				2,210,059				—				2,210,059
Remeasurements of net defined benefit liabilities			—				—				—				36				—				—				36
Total comprehensive income for the period			—				—				—				36				2,210,059				—				2,210,095
Transactions with shareholders
Annual dividends			—				—				—				—				(587,006	)			—				(587,006	)
Quarterly dividends			—				—				—				—				(300,087	)			—				(300,087	)
Acquisition of treasury shares			—				—				—				—				—				(320,000	)			(320,000	)
Disposal of treasury shares			—				—				3,975				—				—				234,600				238,575
Consideration for exchange right of exchangeable bonds			—				—				(11,933	)			—				—				—				(11,933	)
Issuance of hybrid securities			—				399,045				—				—				—				—				399,045
Redemption of hybrid securities			—				(349,204	)			—				—				—				—				(349,204	)
Dividends on hybrid securities			—				—				—				—				(100,530	)			—				(100,530	)
Others			—				—				7,686				—				—				—				7,686
Total transactions with shareholders			—				49,841				(272	)			—				(987,623	)			(85,400	)			(1,023,454	)
Balance as of June 30, 2024 (Unaudited)		W	2,090,558				5,082,359				14,754,475				(6,773	)			5,559,334				(1,251,237	)			26,228,716

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

 

5

KB Financial Group Inc.

Separate Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2024 and 2023

 

(In millions of Korean won)

 

		Notes		2024 (Unaudited)				2023 (Unaudited)
Cash flows from operating activities
Profit for the period				W	2,210,059			W	2,156,477
Adjustment for non-cash items
Depreciation and amortization expense					2,915				2,717
Provision for credit losses					345				7
Share-based payments					8,946				2,886
Net interest expense					6,367				1,307
Valuation losses (gains) on financial assets at fair value through profit or loss					(16,180	)			(25,814	)
Disposal gains of subsidiaries					—				(3,917	)
Net other income (expense)					1,439				762
					3,832				(22,052	)
Changes in operating assets and liabilities
Due from financial institutions					40,000				30,000
Deferred income tax assets					(1,532	)			8,321
Other assets					215,272				(6,037	)
Other liabilities					(251,193	)			815
					2,547				33,099
Net cash inflow from operating activities					2,216,438				2,167,524
Cash flows from investing activities
Acquisition of financial assets at fair value through profit or loss					(150,000	)			(300,000	)
Disposal of financial assets at fair value through profit of loss					316,080				300,000
Increase in loans measured at amortized cost					(105,000	)			—
Disposal of subsidiaries					—				27,539
Acquisition of property and equipment					(65	)			(101	)
Acquisition of intangible assets					(332	)			(140	)
Disposal of intangible assets					—				34
Net increase in guarantee deposits paid					1,597				(80	)
Other investing activities					—				(349	)
Net cash inflow from investing activities					62,280				26,903
Cash flows from financing activities
Increase in borrowings					765,000				—
Increase in debentures					—				109
Decrease in debentures					(655,000	)			(790,000	)
Redemption of principal of lease liabilities					(290	)			(284	)
Dividends paid to shareholders					(887,093	)			(760,937	)
Acquisition of treasury shares					(320,000	)			(271,745	)
Issuance of hybrid securities					399,045				598,537
Redemption of hybrid securities					(349,204	)			—
Dividends paid on hybrid securities					(100,530	)			(88,773	)
Other financing activities					(785	)			—
Net cash outflow from financing activities					(1,148,857	)			(1,313,093	)
Net increase in cash and cash equivalents					1,129,861				881,334
Cash and cash equivalents at the beginning of the period		23			116,334				231,053
Cash and cash equivalents at the end of the period		23		W	1,246,195			W	1,112,387

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

 

6

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

1. The Company

KB Financial Group Inc. (the “Company”), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfers with the former shareholders of Kookmin Bank, KB Investment & Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd., and the 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 headquarter is located at 26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul. The Company’s share capital as of June 30, 2024, is W 2,090,558 million. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Company established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Company acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Company included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015, and KB Insurance Co., Ltd. became one of the subsidiaries through a tender offer in May 2017. Also, the Company 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 Company sold 100% shares of KB Credit Information Co., Ltd. to KB Kookmin Card Co., Ltd. on June 30, 2023.

The Company has been listed on the Korea Exchange (“KRX”) since October 10, 2008, and on the New York Stock Exchange (“NYSE”) for its American Depositary Shares (“ADS”) since September 29, 2008. Number of shares authorized on its Articles of Incorporation is 1,000 million.

2. Basis of Preparation

2.1 Application of Korean IFRS

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

The separate financial statements of the Company 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 separate financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Company’s accounting policies. The areas 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 separate financial statements have been prepared in accordance with Korean IFRS No.1027 Separate Financial Statements.

 

7

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

2.1 Application of Korean IFRS (cont’d)

 

The Company’s condensed separate interim financial statements for the six-month period ended June 30, 2024, have been prepared in accordance with Korean IFRS No.1034 Interim Financial Reporting and contain less information than is required in annual separate financial statements. Selected explanatory notes include descriptions of transactions or events that are significant in understanding change in financial position and financial performance of the Company since the end of the previous annual reporting period. These separate interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as of June 30, 2024.

2.1.1 The Company 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 Company’s liabilities, cash flows and exposure to liquidity risk. These amendments do not have a significant impact on the financial statements.

 

•

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 Company, virtual assets entrusted by customers to the Company, and the issuance and transfer of virtual assets. These amendments do not have a significant impact on the financial statements.

 

8

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

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 Company 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 Company 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.

2.2 Measurement Basis

The separate financial statements have been prepared under the historical cost convention unless otherwise specified.

2.3 Functional and Presentation Currency

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

2.4 Critical Accounting Estimates

The Company applies accounting policies and uses judgements, accounting estimates, and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses) in preparing the separate financial statements. Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment 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 separate 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 condensed separate interim financial statements are the same as those applied to the separate 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 Company 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.

 

9

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 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 Company is exposed to are credit risk, market risk, liquidity risk and others.

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

The Company’s risk management system focuses on efficiently supporting long-term strategy and management decisions of the Company by increasing risk transparency, preventing risk transfer between subsidiaries and preemptive response to rapidly changing financial environments. Credit risk, market risk, liquidity risk, operational risk, interest rate risk, insurance risk, credit concentration risk, strategy risk, and reputation risk are recognized as significant risks.

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 Company and subsidiaries (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 Group 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 Company’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.

 

10

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 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 Company considers default risk of individual borrowers.

4.2.2 Credit risk management

The Company measures the expected losses of assets subject to credit risk management and uses them as a management indicator.

4.2.3 Maximum exposure to credit risk

The Company’s maximum exposures to credit risk without consideration of collateral values in relation to financial instruments other than equity securities as of June 30, 2024 and December 31, 2023, are as follows:

 

(In millions of Korean won)		June 30, 2024				December 31, 2023
Due from financial institutions		W	1,346,198			W	256,337
Loans measured at amortized cost *			712,960				608,286
Loans measured at fair value through profit or loss			51,457				48,981
Other financial assets *			70,756				57,562
		W	2,181,371			W	971,166

 

*	After netting of allowance

4.2.4 Credit risk of loans

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

The Company 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 Company measures the expected credit losses on 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 financial statements.

 

11

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

4.2.4 Credit risk of loans (cont’d)

 

Credit qualities of loans measured at amortized cost as of June 30, 2024 and December 31 2023, are classified as follows:

(In millions of Korean won)

 

		June 30, 2024
		12-month expected credit losses				Lifetime expected credit losses								Not applying expected credit losses				Total
						Not impaired				Impaired
Loans measured at amortized cost *
Corporate
Grade 1		W	715,000			W	—			W	—			W	—			W	715,000
Grade 2			—				—				—				—				—
Grade 3			—				—				—				—				—
Grade 4			—				—				—				—				—
Grade 5			—				—				—				—				—
		W	715,000			W	—			W	—			W	—			W	715,000

(In millions of Korean won)

 

		December 31, 2023
		12-month expected credit losses				Lifetime expected credit losses								Not applying expected credit losses				Total
						Not impaired				Impaired
Loans measured at amortized cost *
Corporate
Grade 1		W	610,000			W	—			W	—			W	—			W	610,000
Grade 2			—				—				—				—				—
Grade 3			—				—				—				—				—
Grade 4			—				—				—				—				—
Grade 5			—				—				—				—				—
		W	610,000			W	—			W	—			W	—			W	610,000

 

*	Before netting of allowance

Credit qualities of loans graded according to the probability of default as June 30, 2024 and December 31 2023, are as follows:

 

		Range of probability of default (%)
Grade 1		0.0 ~ 1.0
Grade 2		1.0 ~ 5.0
Grade 3		5.0 ~ 15.0
Grade 4		15.0 ~ 30.0
Grade 5		30.0 ~

 

12

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

4.2.5 Credit risk of due from financial institutions

Credit qualities of due from financial institutions as of June 30, 2024 and December 31, 2023, are as follows:

(In millions of Korean won)

 

		June 30, 2024
		12-month expected credit losses				Lifetime expected credit losses								Not applying expected credit losses				Total
						Not impaired				Impaired
Due from financial institutions measured at amortized cost
Grade 1		W	1,346,198			W	—			W	—			W	—			W	1,346,198
Grade 2			—				—				—				—				—
Grade 3			—				—				—				—				—
Grade 4			—				—				—				—				—
Grade 5			—				—				—				—				—
		W	1,346,198			W	—			W	—			W	—			W	1,346,198

(In millions of Korean won)

 

		December 31, 2023
		12-month expected credit losses				Lifetime expected credit losses								Not applying expected credit losses				Total
						Not impaired				Impaired
Due from financial institutions measured at amortized cost
Grade 1		W	256,337			W	—			W	—			W	—			W	256,337
Grade 2			—				—				—				—				—
Grade 3			—				—				—				—				—
Grade 4			—				—				—				—				—
Grade 5			—				—				—				—				—
		W	256,337			W	—			W	—			W	—			W	256,337

 

13

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

4.2.6 Credit risk concentration analysis

4.2.6.1 Classifications of corporate loans by industry as of June 30, 2024 and December 31, 2023, are as follows:

 

(In millions of Korean won)		June 30, 2024
		Corporate loans *				%				Allowances				Carrying amount
Financial institutions		W	766,457				100.00			W	(2,040	)		W	764,417
(In millions of Korean won)		December 31, 2023
		Corporate loans *				%				Allowances				Carrying amount
Financial institutions		W	658,981				100.00			W	(1,714	)		W	657,267

 

*	Amount includes loans measured at fair value through profit or loss and amortized cost.

4.2.6.2 Classifications of due from financial institutions by industry as of June 30, 2024 and December 31 2023, are as follows:

 

(In millions of Korean won)

June 30, 2024

Amount

%

Allowances

Carrying amount

Due from financial institutions measured at amortized cost

Financial institutions

W

1,346,198

100.00

W

—

W

1,346,198

(In millions of Korean won)

December 31, 2023

Amount

%

Allowances

Carrying amount

Due from financial institutions measured at amortized cost

Financial institutions

W

256,337

100.00

W

—

W

256,337

 

14

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

4.3 Liquidity Risk

4.3.1 Overview of liquidity risk

Liquidity risk is a risk that the Company becomes insolvent due to the mismatch between the inflow and outflow of funds, unexpected cash outflows, or a risk of loss due to financing funds at a high interest rate or disposing of securities at an unfavorable price due to lack of available funds. The Company manages its liquidity risk through analysis of the contractual maturity of all financial assets and liabilities and discloses in six categories such as on demand, less than one month, between one month to three months, between three months to one year, between one year to five years, and over five years.

4.3.2. Liquidity risk management

The liquidity risk is managed by risk management policies and liquidity risk management guidelines set forth in these policies that apply to all risk management policies and procedures that may arise throughout the overall business of the Company.

4.3.3. Analysis of remaining contractual maturity of financial liabilities

The cash flows disclosed in the maturity analysis are undiscounted contractual amounts including principal and future interest payments; as such, amounts in the table below do not match with those in the statements of financial position which are based on discounted cash flows. The future interest payments for floating-rate liabilities are calculated on the assumption that the current interest rate is the same until maturity.

Remaining contractual maturity of financial liabilities as of June 30, 2024 and December 31, 2023, are as follows:

 

(In millions of Korean won)		June 30, 2024
		On Demand				Up to 1 month				1-3 months				3-12 months				1-5 years				Over 5 years				Total
Financial liabilities
Borrowings		W	—			W	100,000			W	—			W	765,000			W	—			W	—			W	865,000
Debentures			—				103,074				184,258				775,676				1,291,715				854,014				3,208,737
Lease liabilities			—				53				103				454				631				—				1,241
Other financial liabilities			—				45,169				—				10,761				—				—				55,930
		W	—			W	248,296			W	184,361			W	1,551,891			W	1,292,346			W	854,014			W	4,130,908
(In millions of Korean won)		December 31, 2023
		On Demand				Up to 1 month				1-3 months				3-12 months				1-5 years				Over 5 years				Total
Financial liabilities
Borrowings		W	—			W	—			W	—			W	100,000			W	—			W	—			W	100,000
Debentures			—				3,074				388,246				757,507				1,880,375				1,115,241				4,144,443
Lease liabilities			—				50				62				256				245				—				613
Other financial liabilities			—				2,063				—				—				—				—				2,063
		W	—			W	5,187			W	388,308			W	857,763			W	1,880,620			W	1,115,241			W	4,247,119

 

15

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

4.4 Market Risk

4.4.1 Concept

Market risk refers to risks that can result in losses due to changes in market factors such as interest rate, stock price, and foreign exchange rate, etc. The Company manages the market risks by dividing them into those arising from the trading position and those arising from the non-trading position.

4.4.2 Trading position

In accordance with Financial Holding Companies Act, the Company’s main business is to control financial companies or companies closely related to the financial service. And the Company cannot perform any other business other than managing activities as a holding company, therefore there is no risk of trading position.

4.4.3 Non-trading position

Non-trading position refers to the part except trading position, and the main risk the Company is managing is interest rate risk.

4.4.3.1 Interest rate risk

(a) Definition of interest rate risk

Interest rate risk refers to the risk of changes in the value (fair value) of the items in the statement of financial position due to changes in interest rate and the risk of changes in cash flows related to interest income and interest expense arising from investment and financing activities.

(b) Observation method and management indicator on interest rate risk

The main objective of interest rate risk management is to protect the value changes from interest rate fluctuations. In addition to the Interest Rate Risk in the Banking Book (“IRRBB”) standard methodology required for disclosure to measure interest rate risk.

 

16

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

5. Financial Assets and Financial Liabilities

5.1 Classification and Fair Value of Financial Instruments

5.1.1 Carrying amount and fair value of financial assets and liabilities by category as of June 30, 2024 and December 31, 2023, are as follows:

 

(In millions of Korean won)		June 30, 2024
		Carrying amount				Fair value
Financial assets
Financial assets at fair value through profit or loss
Hybrid securities		W	1,175,913			W	1,175,913
Loans			51,457				51,457
Financial assets at amortized cost
Due from financial institutions			1,346,198				1,346,198
Loans			712,960				712,960
Other financial assets			70,756				70,756
		W	3,357,284			W	3,357,284
Financial liabilities
Financial liabilities at amortized cost
Borrowings		W	865,000			W	865,000
Debentures			2,982,533				2,883,657
Other financial liabilities			63,698				63,698
		W	3,911,231			W	3,812,355

 

(In millions of Korean won)		December 31, 2023
		Carrying amount				Fair value
Financial assets
Financial assets at fair value through profit or loss
Hybrid securities		W	1,011,362			W	1,011,362
Beneficiary certificates			316,080				316,080
Loans			48,981				48,981
Financial assets at amortized cost
Due from financial institutions			256,337				256,337
Loans			608,286				608,286
Other financial assets			57,562				57,562
		W	2,298,608			W	2,298,608
Financial liabilities
Financial liabilities at amortized cost
Borrowings		W	100,000			W	100,000
Debentures			3,871,820				3,715,939
Other financial liabilities			10,381				10,381
		W	3,982,201			W	3,826,320

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

 

17

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

5.1.1 Carrying amount and fair value of financial assets and liabilities by category as of June 30, 2024 and December 31, 2023, are as follows: (cont’d)

 

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

 

Cash and due from financial institutions		Fair value of cash is same as carrying amount. Carrying amount of demand deposit and settlement deposit is a reasonable approximation of fair value because these financial instruments do not have a fixed maturity and are receivable on demand. Fair value of general deposit is measured using Discounted Cash Flow (“DCF”) Model.
Securities		Fair value of financial instruments that are quoted in an active market is determined using the quoted prices. If there is no quoted price, fair value is determined using external professional valuation institutions. The institutions use one or more valuation techniques that are deemed appropriate considering the characteristics of the financial instruments among DCF Model, Imputed Market Value Model, Free Cash Flow to Equity Model, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method.
Derivatives		Fair value of exchange traded derivatives is determined using quoted price in an active market, and fair value of OTC derivatives is determined using valuation techniques. The Company uses internally developed valuation models that are widely used by market participants to determine fair value of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method (“FDM”), and the MonteCarlo Simulation or valuation results from independent external professional valuation institution.
Loans		Fair value of loans is determined using DCF model discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate.
Borrowings		DCF model is used to determine the fair value of borrowings, but in the case of short-term maturity, carrying amount is a reasonable approximation of fair value.
Debentures		Fair value is determined by using valuation results of external professional valuation institutions, which are calculated using market inputs.
Other financial assets and other financial liabilities		Carrying amount is a reasonable approximation of fair value because other financial assets and other financial liabilities are temporary accounts used for other various transactions and their maturities are relatively short or not defined.

 

18

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

June 30, 2024 and 2023 (Unaudited), and December 31, 2023

 

 

5.1.2 Fair value hierarchy

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

The Company classifies and discloses fair value of the financial instruments into the three fair value levels as follows:

 

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

The fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. If an observable input requires an adjustment using an unobservable input and that adjustment results in a significantly higher or lower fair value measurement, the resulting measurement would be categorized within Level 3 of the fair value hierarchy.

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

Fair value hierarchy of financial assets at fair value in the statements of financial position as of June 30, 2024 and December 31, 2023, are as follows:

 

(In millions of Korean won)		June 30, 2024
		Fair value hierarchy												Total
		Level 1				Level 2				Level 3
Financial assets
Financial assets at fair value through profit or loss:
Hybrid securities		W	—			W	—			W	1,175,913			W	1,175,913
Loans			—				51,457				—				51,457
		W	—			W	51,457			W	1,175,913			W	1,227,370
(In millions of Korean won)		December 31, 2023
		Fair value hierarchy												Total
		Level 1				Level 2				Level 3
Financial assets
Financial assets at fair value through profit or loss:
Hybrid securities		W	—			W	—			W	1,011,362			W	1,011,362
Beneficiary certificates			—				316,080				—				316,080
Loans			—				48,981				—				48,981
		W	—			W	365,061			W	1,011,362			W	1,376,423

 

19