KB Financial : Separate Review Report 1st Half 2020

August 19, 2020 at 04:52 am EDT

KB Financial Group Inc.

Separate Interim Financial Statements

June 30, 2020

Contents

	Page
Independent Auditors' Review Report	1
Separate Interim Statements of Financial Position	3
Separate Interim Statements of Comprehensive Income	4
Separate Interim Statements of Changes in Equity	5
Separate Interim Statements of Cash Flows	6
Notes to the Separate Interim Financial Statements	7

152, Teheran-ro,Gangnam-gu, Seoul 06236

(Yeoksam-dong, Gangnam Finance Center 27th Floor)

Republic of Korea

Independent Auditors' Review Report

Based on a report originally issued in Korean

The Board of Directors and Stockholders

KB Financial Group Inc.:

Reviewed financial statements

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

Management's responsibility

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

Auditors' review responsibility

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

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

Conclusion

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

Emphasis of matter

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

As described in Note 29.2 to the condensed separate interim financial statements, the ongoing COVID-19 pandemic has increased the estimation uncertainty on the Company's expected credit losses on certain portfolios and potential impairment on assets and may have negative impacts on the Company's separate interim financial statements.

Other matters

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

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

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

Seoul, Korea

August 14, 2020

KB Financial Group Inc.

Separate Interim Statements of Financial Position

June 30, 2020 and December 31, 2019

(In millions of Korean won)
	Notes		June 30, 2020
		(Unaudited)		December 31, 2019
Assets
Cash and due from financial institutions	4,5,6,28	￦	32,080		￦	18,537
Financial assets at fair value through profit or loss	4,5,7		1,568,882			413,909
Loans at amortized cost	4,5,8		150,000			120,000
Investments in subsidiaries	9		24,212,116			24,162,116
Property and equipment	10		3,688			4,170
Intangible assets	11		11,212			11,092
Deferred income tax assets	12		1,794			7,526
Other assets	4,5,13		623,905			609,286
Total assets		￦	26,603,677		￦	25,346,636
Liabilities
Debts	4,5,14	￦	100,000		￦	-
Debentures	4,5,15		6,255,663			5,543,446
Net defined benefit liabilities	16		1,530			437
Current income tax liabilities			449,799			417,414
Other liabilities	4,5,17		187,038			203,440
Total liabilities			6,994,030			6,164,737
Equity
Share capital	18		2,090,558			2,090,558
Hybrid securities	18		797,996			399,085
Capital surplus	18		14,759,273			14,742,814
Accumulated other comprehensive income	18		(7,702)			(7,664)
Retained earnings	18		3,105,710			3,093,294
Treasury shares	18		(1,136,188)			(1,136,188)
Total equity			19,609,647			19,181,899
Total liabilities and equity		￦	26,603,677		￦	25,346,636

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

KB Financial Group Inc.

Separate Interim Statements of Comprehensive Income

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

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

	Notes		2020			2019
		(Unaudited)			(Unaudited)
		Three months	Six months	Three months		Six months
Interest income		￦	2,281	￦	4,078		￦	3,737	￦	5,321
Interest expense			(32,351)		(64,449)			(33,120)		(64,746)
Net interest expense	20		(30,070)		(60,371)			(29,383)		(59,425)
Fee and commission income			231		378			214		350
Fee and commission expense			(2,941)		(4,197)			(2,360)		(3,218)
Net fee and commission expense	21		(2,710)		(3,819)			(2,146)		(2,868)
Net gains on financial assets at fair value
through profit or loss	22		3,373		6,332			4,968		9,765
Net other operating income	23		-		974,930			-		926,934
General and administrative expenses	24		(16,155)		(31,466)			(16,544)		(30,942)
Operating profit (loss) before
provision for credit losses			(45,562)		885,606			(43,105)		843,464
Provision for credit losses			-		-			-		-
Operating profit (loss)			(45,562)		885,606			(43,105)		843,464
Net non-operating income (expenses)	25		(5)		162			22		(48)
Profit (loss) before income tax			(45,567)		885,768			(43,083)		843,416
Income tax expense (benefit)	26		(4,038)		(5,747)			356		(1,466)
Profit (loss) for the period			(49,605)		880,021			(42,727)		841,950
Items that will not be reclassified to profit or loss:
Remeasurements of net defined benefit liabilities			37		(38)			(21)		(41)
Other comprehensive income (loss) for the period, net of tax		37		(38)			(21)		(41)
Total comprehensive income (loss) for the period		￦	(49,568)	￦	879,983		￦	(42,748)	￦	841,909
Earnings (loss) per share	27
Basic earnings (loss) per share		￦	(136)	￦	2,242		￦	(109)	￦	2,144
Diluted earnings (loss) per share			(135)		2,224			(109)		2,130

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

KB Financial Group Inc.

Separate Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2020 and 2019

(In millions of Korean won)

											Accumulated
											Other
		Share			Hybrid			Capital		Comprehensive			Retained			Treasury			Total
		Capital			Securities			Surplus			Income			Earnings			Shares			Equity
Balance at January 1, 2019
￦	2,090,558		￦	-		￦	14,742,814		￦	(7,144)		￦	3,213,556		￦	(968,549)		￦	19,071,235
Comprehensive income

Profit for the period		-			-			-			-			841,950			-			841,950
Remeasurements of net defined benefit liabilities		-			-			-			(41)			-			-			(41)
Total comprehensive income
	-			-			-			(41)			841,950			-			841,909
Transactions with shareholders
Annual dividends		-			-			-			-			(759,736)			-			(759,736)
Acquisition of treasury shares		-			-			-			-			-			(267,639)			(267,639)
Issuance of hybrid securities		-			399,085			-			-			-			-			399,085
Dividends on hybrid securities		-			-			-			-			(2,142)			-			(2,142)
Total transactions with shareholders
	-			399,085			-			-			(761,878)			(267,639)			(630,432)
Balance at June 30, 2019 (Unaudited)	￦	2,090,558		￦	399,085		￦	14,742,814		￦	(7,185)		￦	3,293,628		￦	(1,236,188)		￦	19,282,712
Balance at January 1, 2020
￦	2,090,558		￦	399,085		￦	14,742,814		￦	(7,664)		￦	3,093,294		￦	(1,136,188)		￦	19,181,899
Comprehensive income

Profit for the period		-			-			-			-			880,021			-			880,021
Remeasurements of net defined benefit liabilities		-			-			-			(38)			-			-			(38)
Total comprehensive income
	-			-			-			(38)			880,021			-			879,983
Transactions with shareholders
Annual dividends		-			-			-			-			(861,092)			-			(861,092)
Consideration for exchaneable rights		-			-			16,459			-			-			-			16,459
Issuance of hybrid securities		-			398,911			-			-			-			-			398,911
Dividends on hybrid securities		-			-			-			-			(6,513)			-			(6,513)
Total transactions with shareholders
	-			398,911			16,459			-			(867,605)			-			(452,235)
Balance at June 30, 2020 (Unaudited)	￦	2,090,558		￦	797,996		￦	14,759,273		￦	(7,702)		￦	3,105,710		￦	(1,136,188)		￦	19,609,647

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

KB Financial Group Inc.

Separate Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2020 and 2019

(In millions of Korean won)
			2020		2019
	Notes		(Unaudited)		(Unaudited)
Cash flows from operating activities
Profit for the period		￦	880,021	￦	841,950
Adjustment for non-cash items
Depreciation and amortization			1,864		2,408
Share-based payments			(687)		1,713
Net interest expense			988		2,378
Net losses (gains) on valuation on financial assets at fair
value through profit or loss			612		(2,981)
Net other expenses			581		1,121
			3,358		4,639
Changes in operating assets and liabilities
Deferred income tax assets			5,747		1,458
Other assets			475,285		(893)
Other liabilities			(472,046)		(7,980)
			8,986		(7,415)
Net cash inflow from operating activities			892,365		839,174
Cash flows from investing activities
Acquisition of financial assets at fair value through
profit or loss			(2,694,561)		(2,010,000)
Disposal of financial assets at fair value through profit of loss			1,538,976		1,828,054
Acquisition of investments in subsidiaries			(50,000)		(100,000)
Increase in loans at amortized cost			(30,000)		(70,000)
Acquisition of property and equipment			(586)		(4,028)
Acquisition of intangible assets			(171)		(703)
Disposal of intangible assets			-		41
Net decrease(increase) in guarantee deposits paid			380		(1,515)
Other investing activities			(1,471)		(86)
Net cash outflow from investing activities			(1,237,433)		(358,237)
Cash flows from financing activities
Increase in debts			100,000		418,705
Decrease in debts			-		(717,026)
Increase in debentures			1,297,566		818,087
Decrease in debentures			(570,000)		(648,579)
Dividends paid to shareholders			(861,092)		(759,736)
Principal elements of lease payments			(261)		(273)
Acquisition of treasury shares			-		(269,219)
Issuance of hybrid securities			398,911		399,085
Dividends paid on hybrid securities			(6,513)		-
Net cash inflow (outflow) from financing activities			358,611		(758,956)
Net increase (decrease) in cash and cash equivalents			13,543		(278,019)
Cash and cash equivalents at the beginning of the period	28		18,534		344,299
Cash and cash equivalents at the end of the period	28	￦	32,077	￦	66,280

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

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

1. The Company

KB Financial Group Inc. (the "Company"), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfers with the former shareholders of Kookmin Bank, KB Investment

Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd. in order to provide management services and financing to associated companies. The headquarters are located at 26, Gukjegeumyung-ro-8-gil,Yeongdeungpo-gu, Seoul. The Company's share capital as of June 30, 2020, is ₩ 2,090,558 million. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Company established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Company acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Company included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015. Also, the Company included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary on October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed the name to KB Securities Co., Ltd. in January 2017. KB Insurance Co., Ltd. became one of the subsidiaries through a tender after in May 2017.

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

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

2. Basis of Preparation

2.1 Application of Korean IFRS

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

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

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

The separate financial statements were prepared in accordance with Korean IFRS 1027, Separate Financial Statements.

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

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

2.1.1 New and amended standards and interpretations adopted by the Company

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

- Amendments to Korean IFRS 1103 Business Combination - Definition of a Business

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

Amendments to Korean IFRS 1001 Presentation of Financial Statements and Korean IFRS 1008 Accounting policies, changes in accounting estimates and errors - Definition of Material

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

- The IFRS Interpretations Committee (IFRIC) Agenda Decision - Lease term

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

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

2.1.2 New standards and interpretations not yet adopted by the Company

The Company has not applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2020.

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

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

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

2.2 Measurement Basis

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

2.3 Functional and Presentation Currency

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

2.4 Critical Accounting Estimates

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

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

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

3. Significant Accounting Policies

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

3.1 Income Tax Expenses for the Interim Period

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

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4. Financial Risk Management 4.1 Summary

4.1.1 Overview of financial risk management policy

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

The note regarding financial risk management provides information about the risks that the Company is exposed to, including the objectives, policies, assessment and management process of risks. Additional quantitative information is disclosed throughout the separate financial statements.

The Company's risk management system focuses on increasing transparency, developing the risk management environment, and the preemptive response to risk due to rapid changes in the financial environment to support the Company's long-term strategy and business decisions efficiently. Credit risk, market risk and liquidity risk have been recognized as the Company's key risks. These risks are measured and managed in Internal Capital or VaR (Value at Risk) using a statistical method.

4.1.2 Risk management organization

Risk Management Committee

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

Risk Management Council

The Risk Management Council is a consultative group which reviews and makes decisions on matters delegated by the Risk Management Committee, and discusses the detailed issues relating to the Company's risk management.

Risk Management Division

The Risk Management Division is responsible for conducting detailed policies, procedures and working processes relating to the Company's risk management.

4.2 Credit Risk

4.2.1 Overview of credit risk

Credit risk is the risk of possible losses in an asset portfolio in the event of counterparty's default, breach of contract and deterioration in the credit quality of the counterparty. For risk management reporting purposes, the individual borrower's default risk is considered.

4.2.2 Credit risk management

The Company measures expected losses on assets that are subject to credit risk management and uses it as a management indicator.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.2.3 Maximum exposure to credit risk

The Company's maximum exposures of financial instruments to credit risk without consideration of collateral values as of June 30, 2020 and December 31, 2019, are as follows:

		June 30,	December 31,
(In millions of Korean won)		2020		2019
Due from financial institutions	₩	32,080	₩	18,537
Loans at amortized cost		150,000		120,000
Loans at fair value through profit or loss		1,277,993		122,408
Other financial assets		24,540		19,814
	₩	1,484,613	₩	280,759

4.2.4 Credit risk of loans

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

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

4.2.4.1 Credit risk exposure

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

(In millions of							June 30, 2020
Korean won)	The financial		The financial instruments
		instruments	applying lifetime expected credit			Financial
			applying		losses			instruments
			12-month							not applying
			expected							expected
Financial assets	credit losses		Non-impaired			Impaired		credit losses					Total
at amortized cost
Corporate		150,000				-		-				-		150,000
Grade 1	₩			₩		₩		₩			₩
Grade 2		-				-		-				-		-
Grade 3		-				-		-				-		-
Grade 4		-				-		-				-		-
Grade 5		-				-		-				-		-
		₩	150,000			₩	-	₩	-			₩	-	₩	150,000

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.2.4.1 Credit risk exposure (cont'd)

(In millions of						December 31, 2019
Korean won)	The financial		The financial instruments
		instruments	applying lifetime expected credit	Financial
			applying		losses			instruments
			12-month							not applying
			expected							expected
Financial assets	credit losses		Non-impaired			Impaired		credit losses					Total
at amortized cost
Corporate		120,000				-			-			-		120,000
Grade 1	₩			₩		₩		₩			₩
Grade 2		-				-			-			-		-
Grade 3		-				-			-			-		-
Grade 4		-				-			-			-		-
Grade 5		-				-			-			-		-
		₩	120,000			₩	-		₩	-		₩	-	₩	120,000

Credit quality of loans graded according to the probability of default as of June 30, 2020 and December 31, 2019, are as follows:

	Range of PD (%)
Grade 1	(Probability of Default)
0.0	~ 1.0
Grade 2	1.0	~ 5.0
Grade 3	5.0 ~ 15.0
Grade 4	15.0	~ 30.0
Grade 5	30.0 ~

4.2.5 Credit risk of due from financial institutions

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

(In millions of							June 30, 2020
Korean won)	The financial						Financial
		instruments	The financial instruments applying
			applying	instruments
			lifetime expected credit losses
			12-month		not applying

		expected credit						expected credit
			losses	Non-impaired			Impaired			losses				Total
Due from financial institutions at amortized cost
Grade 1	₩	32,080		₩	-		₩	-		₩	-		₩	32,080
Grade 2		-			-			-			-			-
Grade 3		-			-			-			-			-
Grade 4		-			-			-			-			-
Grade 5		-			-			-			-			-
		₩	32,080		₩	-		₩	-		₩	-		₩	32,080

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.2.5 Credit risk of due from financial institutions (cont'd)

(In millions of							December 31, 2019
Korean won)	The financial							Financial
		instruments	The financial instruments applying
			applying	instruments
			lifetime expected credit losses
			12-month			not applying

		expected credit							expected credit
			losses		Non-impaired			Impaired			losses				Total
Due from financial institutions at amortized cost
Grade 1	₩	18,537			₩	-		₩	-		₩	-		₩	18,537
Grade 2		-				-			-			-			-
Grade 3		-				-			-			-			-
Grade 4		-				-			-			-			-
Grade 5		-				-			-			-			-
		₩	18,537			₩	-		₩	-		₩	-		₩	18,537

4.2.6 Credit risk concentration analysis

Details of the Company's loans by country as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of				June 30, 2020
Korean won)	Corporate loans		%	Allowances		Carrying amount
Korea	₩	1,427,993	100.00	₩	-	₩	1,427,993
(In millions of				December 31, 2019
Korean won)	Corporate loans		%	Allowances		Carrying amount
Korea	₩	242,408	100.00	₩	-	₩	242,408

1 The amounts include Loans at fair value through profit and loss and Loans at amortized cost.

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

(In millions of			June 30, 2020
Korean won)	Corporate loans	%	Allowances		Carrying amount
Financial		1,427,993			-	1,427,993
institutions	₩	100.00	₩	₩
(In millions of			December 31, 2019
Korean won)	Corporate loans	%	Allowances		Carrying amount
Financial		242,408			-	242,408
institutions	₩	100.00	₩	₩

1 The amounts include Loans at fair value through profit and loss and Loans at amortized cost.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.2.6 Credit risk concentration analysis (cont'd)

Details of the Company's due from financial institutions by industry as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of				June 30, 2020
Korean won)	Corporate loans		%		Allowances			Carrying amount
Due from financial institutions at amortized cost
Financial institutions	₩	32,080		100.00		₩	-		₩	32,080
(In millions of				December 31, 2019
Korean won)	Corporate loans		%		Allowances			Carrying amount
Due from financial institutions at amortized cost
Financial institutions	₩	18,537		100.00		₩	-		₩	18,537

Details of the Company's due from financial institutions by country as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of				June 30, 2020
Korean won)	Corporate loans		%		Allowances			Carrying amount
Due from financial institutions at amortized cost
Korea	₩	32,080		100.00		₩	-		₩	32,080
(In millions of				December 31, 2019
Korean won)	Corporate loans		%		Allowances			Carrying amount
Due from financial institutions at amortized cost
Korea	₩	18,537		100.00		₩	-		₩	18,537

4.3 Liquidity Risk

4.3.1 Overview of liquidity risk

Liquidity risk is a risk that the Company becomes insolvent due to uncertain liquidity caused by unexpected cash outflows, or a risk of borrowing high interest debts or disposal of liquid and other assets at a substantial discount. The Company manages its liquidity risk through analysis of the contractual maturity of all financial assets, liabilities and off-balance items by maturity groups: on demand, less than one month, between one month to three months, between three months to one year, between one year to five years and over five years.

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

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.3.2. Liquidity risk management

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

4.3.3. Analysis of remaining contractual maturity of financial assets and liabilities

The remaining contractual maturity of financial assets and liabilities as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)										June 30, 2020
			On			Up to			1-3			3-12			1-5			Over 5
			demand		1 month		months			months			years			years			Total
Financial assets
	32,080			-			-			-			-			-			32,080
Cash and due from financial institutions1	₩		₩		₩		₩		₩		₩		₩
Financial assets at fair value through profit or loss2		1,277,993			-			-			-			-			290,889			1,568,882
Loans at amortized cost		-			51,098			-			102,189			-			-			153,287
Other financial assets		428			6,185			15,824			190			230			-			22,857

		₩	1,310,501		₩	57,283		₩	15,824		₩	102,379		₩	230		₩	290,889		₩	1,777,106
Financial liabilities
	-			-			-			100,000			-			-			100,000
Debts	₩		₩		₩		₩		₩		₩		₩
Debentures		-			6,182			146,331			1,010,097			3,879,145			1,812,581			6,854,336
Lease liabilities		-			46			88			279			191			-			604
Other financial liabilities		-			5,894			-			8,412			-			-			14,306

		₩	-		₩	12,122		₩	146,419		₩	1,118,788		₩	3,879,336		₩	1,812,581		₩	6,969,246

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

(In millions of Korean won)								December 31, 2019
			On			Up to			1-3			3-12				1-5			Over 5
		demand		1 month		months		months		years			years		Total
Financial assets
	18,619			-			-			-				-			-			18,619
Cash and due from financial institutions1	₩		₩		₩		₩			₩		₩		₩
Financial assets at fair value through profit or loss2		122,408			-			-			-				-			291,501			413,909
Loans at amortized cost		-			-			71,523			51,098				-			-			122,621
Other financial assets		-			925			-			15,660				-			-			16,585

		₩	141,027		₩	925		₩	71,523		₩	66,758			₩	-		₩	291,501		₩	571,734
Financial liabilities
	-			105,903			224,578			723,474				3,624,305			1,134,756			5,813,016
Debentures	₩		₩		₩		₩			₩		₩		₩
Lease liabilities		-			44			85			249				215			-			593
Other financial liabilities		-			1,819			-			-				-			-			1,819

		₩	-		₩	107,766		₩	224,663		₩	723,723			₩	3,624,520		₩	1,134,756		₩	5,815,428

The amount of ₩ 3 million and ₩ 3 million, respectively, which is restricted due from the financial institutions as of June 30, 2020 and December 31, 2019, is excluded.
Hybrid securities included in financial assets at fair value through profit or loss are included in the 'Over 5 years' category since the point of disposal is uncertain.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

4.4 Market Risk

4.4.1 Concept

Market risk is the risk of possible losses which arise from changes in market factors; such as, interest rate, stock price, foreign exchange rate and other market factors that affect the fair value of future cash flows of financial instruments. The most significant risk of the Company is interest rate risk.

4.4.2 Interest rate risk

Definition of interest rate risk

Interest rate risk is the risk that may occur due to changes in interest rates; such as, the value (fair value) change risk in statement of financial position line items and cash flow change risk in interest income and expense arising from investing and financing activities.

Observation method and management indicator on interest rate risk

The main objective of interest rate risk management is to protect asset values against interest rate fluctuations. The Company manages the risk through measurement and management of Value at Risk for the interest rate.

5. Financial Assets and Financial Liabilities

5.1 Classification and Fair value of Financial Instruments

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)		June 30, 2020
Financial assets	Carrying amount	Fair value

Financial assets at fair value through profit or loss		290,889		290,889
Hybrid securities	₩		₩
Loans		1,277,993		1,277,993
Financial assets at amortized cost
Due from financial institutions		32,080		32,080
Loans		150,000		150,000
Other financial assets		24,540		24,540
		₩	1,775,502	₩	1,775,502
Financial liabilities

Financial liabilities at amortized cost		100,000		100,000
Debts	₩		₩
Debentures		6,255,663		6,427,397
Other financial liabilities		28,215		28,215
		₩	6,383,878	₩	6,555,612

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of June 30, 2020 and December 31, 2019, are as follows: (cont'd)

(In millions of Korean won)		December 31, 2019
Financial assets	Carrying amount	Fair value

Financial assets at fair value through profit or loss		291,501		291,501
Hybrid securities	₩		₩
Loans		122,408		122,408
Financial assets at amortized cost
Due from financial institutions		18,537		18,537
Loans		120,000		120,000
Other financial assets		19,814		19,814
		₩	572,260	₩	572,260
Financial liabilities
Financial liabilities at amortized cost		5,543,446		5,631,217
Debentures	₩		₩
Other financial liabilities		14,940		14,940
		₩	5,558,386	₩	5,646,157

Fair value is the amount for which an asset could be exchanged, or a liability could be settled, between knowledgeable, willing parties in an arm's length transaction. For each class of financial assets and financial liabilities, the Company discloses the fair value of that class of assets and liabilities in a way that permits it to be compared with its carrying amount at the end of each reporting period. The best evidence of fair value of financial instruments is quoted price in an active market.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.1.1 The carrying amounts and fair value of financial assets and liabilities by category as of June 30, 2020 and December 31, 2019, are as follows: (cont'd)

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

Cash and due from	The carrying amounts of cash and demand due from financial institutions and
financial institutions	payment due from financial institutions are a reasonable approximation of fair
	values. These financial instruments do not have a fixed maturity and are
	receivable on demand. Fair value of ordinary due from financial institutions is
Investment securities	measured using DCF model (Discounted Cash Flow Model).
The fair value of financial instruments that are quoted in active markets is
	determined using the quoted prices. Fair value is determined through the use of
	external professional valuation institution where quoted prices are not available.
	The institutions use one or more of the following valuation techniques including
	DCF Model, Imputed Market Value Model, Free Cash Flow to Equity Model,
	Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset
Derivatives	Value Method.
For exchange traded derivatives, quoted price in an active market is used to
	determine fair value and for OTC derivatives, fair value is determined using
	valuation techniques. The Company uses internally developed valuation models
	that are widely used by market participants to determine fair values of plain vanilla
	OTC derivatives including options, interest rate swaps, and currency swaps,
	based on observable market parameters. However, some complex financial
	instruments are valued using appropriate models developed from generally
	accepted market valuation models including the Finite Difference Method and the
	Monte Carlo Simulation or valuation results from independent external

professional valuation institution.

Loans at amortized cost DCF model is used to determine the fair value of loans. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted

Debts	by the expected prepayment rate, at appropriate discount rate.
DCF model is used to determine the fair value of debts, but in the case of short-
Debentures	term maturity, the carrying amount is used as the fair value.
Fair value is determined by using the valuations of external professional valuation
Other financial assets	institution, which are calculated using market inputs.
The carrying amounts are reasonable approximation of fair values. These financial
and liabilities	instruments are temporary accounts used for other various transactions and their
	maturities are relatively short or not defined.
5.1.2 Fair value hierarchy

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

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.1.2 Fair value hierarchy (cont'd)

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

Level 1

Level 2 Level 3

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.

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.

The fair values are based on unobservable inputs for the asset or liability.

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

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

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

(In millions of Korean won)

June 30, 2020

Fair value hierarchy

Total

Financial assets

Level 1

Level 2

Level 3

Financial assets at fair value through

profit or loss

Hybrid securities

₩

290,889

₩

290,889

Loans

1,277,993

₩

1,277,993

₩

290,889

₩

1,568,882

(In millions of Korean won)

December 31, 2019

Fair value hierarchy

Total

Financial assets

Level 1

Level 2

Level 3

Financial assets at fair value through

profit or loss

Hybrid securities

₩

291,501

₩

291,501

Loans

122,408

₩

122,408

₩

291,501

₩

413,909

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

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

(In millions of Korean won)				June 30, 2020
				Valuation
Financial assets	Fair value		techniques		Inputs

Financial assets at fair value through
profit or loss						Interest,
Loans	₩	1,277,993		DCF model
		Discount rate, etc.

(In millions of Korean won)				December 31, 2019
				Valuation
Financial assets	Fair value		techniques		Inputs

Financial assets at fair value through
profit or loss						Interest,
Loans	₩	122,408		DCF model
		Discount rate, etc.

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

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

(In millions of Korean won)

Financial assets

Cash and due from financial institutions1

Loans at amortized cost2 Other financial assets3

			June 30,	2020
	Fair value hierarchy				Total
	Level 1		Level 2		Level 3
₩	-	₩	32,080			₩	-	₩	32,080
	-		-				150,000		150,000
	-		-				24,540		24,540
₩	-	₩	32,080			₩	174,540	₩	206,620

Financial liabilities
Debts4	₩	-	₩	100,000	₩	-	₩	100,000
Debentures		-		6,427,397		-		6,427,397
Other financial liabilities3		-		-		28,215		28,215
	₩	-	₩	6,527,397	₩	28,215	₩	6,555,612

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

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

(In millions of Korean won)					December 31, 2019
			Fair value hierarchy				Total
Financial assets	Level 1				Level 2	Level 3

Cash and due from financial		-			18,537			-			18,537
institutions1	₩		₩			₩	₩
Loans at amortized cost2		-			-			120,000			120,000
Other financial assets3		-			-			19,814			19,814
		₩	-		₩	18,537		₩	139,814		₩	158,351
Financial liabilities

Debentures	₩	-		₩	5,631,217		₩	-		₩	5,631,217
Other financial liabilities3		-			-			14,940			14,940
		₩	-		₩	5,631,217		₩	14,940		₩	5,646,157

Because due from financial institutions classified as level 2 are deposits on demand, carrying amounts are reasonable approximations of fair values.
Because loans at amortized cost classified as level 3 are loans with residual maturity of less than one year, carrying amounts are reasonable approximations of fair values.
For other financial assets and other financial liabilities classified as level 3, carrying amounts are reasonable approximations of fair values.

4For borrowings classified as Level 2, the carrying amount was considered an approximation of fair value and the carrying amount was disclosed at fair value.

Valuation techniques and inputs used in the fair value measurement

For financial assets and liabilities whose carrying amount is a reasonable approximation of fair value, we do not disclose valuation techniques and inputs.

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

(In millions of Korean won)	Fair value		Valuation
	June 30,		December 31,
Financial liabilities	2020	2019		Techniques	Inputs
₩ 6,427,397		₩ 5,631,217		DCF model	Discount rate
Debentures

5.2 Level 3 of the Fair Value Hierarchy Disclosure

5.2.1 Valuation policy and process for fair value measurement categorized as Level 3

The Company uses external, independent and qualified professional valuer's valuation to determine the fair value of the Company's assets at the end of every reporting period.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.2.2 Changes in fair value (Level 3) measured using valuation technique based on assumption that is unobservable in the market

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

	Financial assets at fair		Financial assets at fair
		value			value
(In millions of Korean won)	through profit or loss		through profit or loss
		2020			2019
Beginning balance	₩	291,501		₩	289,179
Total gains or losses		(612)			2,980
- Profit or loss for the period
- Other comprehensive income		-			-
Purchases		-			-
Sales		-			-
Issues		-			-
Settlements		-			-
Transfers into Level 3		-			-
Transfers out of Level 3		-			-
Ending balance	₩	290,889		₩	292,159

In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the period, and profit or loss from financial instruments held at the end of the reporting period in the statement of comprehensive income for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)

Total gains or losses included in profit or loss for the period

Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period

	2020			2019
Losses from				Gains from
financial				financial
investments at				investments at
fair value		Other		fair value	Other
through profit		operating	Net interest	through profit	operating	Net interest
or loss		income	income	or loss	income	income

₩ (612) ₩ -

₩ - ₩ 2,980 ₩ -

₩ -

₩ (612) ₩ -

₩ - ₩ 2,980 ₩ -

₩ -

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.2.3 Sensitivity analysis of changes in unobservable inputs

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

(In millions of Korean won)

June 30, 2020

Range of

Valuation

unobservable

Relationship of unobservable inputs

Financial assets

Fair value

technique

Inputs

Unobservable inputs

inputs (%)

to fair value

Financial assets at fair value through profit or loss

Matrix YTM,

Discount rate

1.99 ~ 4.50

The lower the discount rate,

Hybrid securities

₩

290,889

Hull and White

Model,

Additional spread by grade,

the higher the fair value

Monte Carlo

Risk spread of company,

Volatility of interest rate

0.54

The higher the volatility,

Simulation

Valid credit rating,

the higher the fair value fluctuation

Disclosed information of securities,

Interest rate estimation variability

(In millions of Korean won)

December 31, 2019

Range of

Valuation

unobservable

Relationship of unobservable inputs

Financial assets

Fair value

technique

Inputs

Unobservable inputs

inputs (%)

to fair value

Financial assets at fair value through profit or loss

Matrix YTM,

Discount rate

2.05 ~ 4.45

The lower the discount rate,

Hybrid securities

₩

291,501

Hull and White

Model,

Additional spread by grade,

the higher the fair value

Monte Carlo

Risk spread of company,

Volatility of interest rate

0.50

The higher the volatility,

Simulation

Valid credit rating,

the higher the fair value fluctuation

Disclosed information of securities,

Interest rate estimation variability

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

5.2.3.2 Sensitivity analysis of changes in unobservable inputs

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of financial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair value is affected by more than two input parameters, the amounts represent the most favorable or most unfavorable outcome. There are hybrid securities whose fair value changes are recognized in profit or loss.

The results of the sensitivity analysis from changes in inputs as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)					June 30, 2020
	Recognition in profit or loss		Other comprehensive income
	Favorable		Unfavorable		Favorable		Unfavorable
Financial assets	changes		changes		changes		changes

Financial assets at fair value
through profit or loss
Hybrid securities1	₩	2,042		₩	(2,049)	₩	- ₩	-

1 For equity securities, the changes in fair value are calculated by increasing or decreasing correlations between discount rate (1.99 ~ 4.50%) which are principal unobservable input parameters. And, the changes in fair value are calculated by increasing or decreasing the correlation coefficient between short-term and long-term interests or volatility of the interest rates, which are unobservable inputs, by 1%.

(In millions of Korean won)					December 31, 2019
	Recognition in profit or loss		Other comprehensive income
	Favorable		Unfavorable		Favorable		Unfavorable
Financial assets	changes		changes		changes		changes

Financial assets at fair value
through profit or loss
Hybrid securities1	₩	3,215		₩	(3,195)	₩	- ₩	-

1 For equity securities, the changes in fair value are calculated by increasing or decreasing correlations between discount rate (2.05 ~ 4.45%) which are principal unobservable input parameters. And, the changes in fair value are calculated by increasing or decreasing the correlation coefficient between short-term and long-term interests or volatility of the interest rates, which are unobservable inputs, by 1%.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

6. Due from Financial Institution

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

(In millions of Korean won)	Financial		Interest rate (%)
			(As of			June 30,		December 31,
Due from financial		Institution		June 30, 2020)			2020		2019
Due from	Kookmin Bank	0.00 ~ 0.25			32,080			18,537
institution in	banks		₩		₩
Korean won

Details of a maturity analysis of due from financial institution, excluding restricted cash, as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean

June 30, 2020

won)

Up to

3~6

6~12

Over

Due from financial

3 months

months

1~3 years

3 years

Total

institution in Korean

₩ 32,077

32,077

won

₩

(In millions of Korean

December 31, 2019

won)

Up to

3~6

6~12

Over

Due from financial

3 months

months

1~3 years

3 years

Total

institution in Korean

₩ 18,534

18,534

won

₩

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

(In millions of Korean	Financial		June 30,			December 31,
won)	Institution	2020				2019
Due from financial				3			3
institution in Korean	Kookmin Bank		₩		₩
won

Reason for restriction

Pledged as collateral for the overdraft establishment

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

7. Financial Assets at Fair Value through Profit or Loss

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

(In millions of Korean won)		June 30,		December 31,
	2020			2019
Financial assets at fair value through profit or loss
	290,889			291,501
Hybrid securities	₩		₩
Loans		1,277,993			122,408
		₩	1,568,882		₩	413,909

8. Loans at amortized cost

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

(In millions of Korean won)				June 30,		December 31,
			2020				2019
Financial assets at fair value through profit or loss
	150,000				120,000
Loans at amortized cost			₩			₩
Less: Allowances for loan losses				-				-
Carrying amount			₩	150,000			₩	120,000
9. Investments in Subsidiaries
Details of subsidiaries as of June 30, 2020, are as follows:
Name of subsidiary		Industry				Location
Kookmin Bank		Banking and domestic, foreign exchange			Korea
		transaction
KB Securities Co., Ltd.		Financial investment				Korea
KB Insurance Co., Ltd		Insurance				Korea
KB Kookmin Card Co., Ltd.		Credit card				Korea
KB Asset Management Co., Ltd.		Investment advisory and collective			Korea
		investment
KB Capital Co., Ltd.		Financial leasing				Korea
KB Life Insurance Co., Ltd.		Life insurance				Korea
KB Real Estate Trust Co., Ltd.		Real estate trust management			Korea
KB Savings Bank Co., Ltd.		Savings banking				Korea
KB Investment Co., Ltd.		Capital investment				Korea
KB Data System Co., Ltd.		System software, development and supply			Korea
KB Credit Information Co., Ltd.		Collection of receivables and credit			Korea
		investigation

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

9. Investments in Subsidiaries (cont'd)

Investments in subsidiaries as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won, except	Number of
for shares and ownership %)	Issued		Ownership
	Shares	(%)			Carrying amount
						June 30,		December 31,
Name of subsidiary	As of June 30, 2020			2020			2019
Kookmin Bank	404,379,116	100.00		₩	14,821,721		₩	14,821,721
KB Securities Co., Ltd.	298,620,424	100.00			3,342,391			3,342,391
KB Insurance Co., Ltd	66,500,000	100.00			2,375,430			2,375,430
KB Kookmin Card Co., Ltd.	92,000,000	100.00			1,953,175			1,953,175
KB Asset Management Co., Ltd.	7,667,550	100.00			96,312			96,312
KB Capital Co., Ltd.1	25,227,566	100.00			673,811			623,811
KB Life Insurance Co., Ltd.	91,200,000	100.00			485,314			485,314
KB Real Estate Trust Co., Ltd.	16,000,000	100.00			121,553			121,553
KB Savings Bank Co., Ltd.	8,001,912	100.00			157,544			157,544
KB Investment Co., Ltd.	22,525,328	100.00			154,910			154,910
KB Data System Co., Ltd.	800,000	100.00			6,334			6,334
KB Credit Information Co., Ltd.	1,252,400	100.00			23,621			23,621
					₩	24,212,116		₩	24,162,116

1 Carrying amount of investments in KB Capital Co., Ltd. increased ₩ 50 billion due to paid-in capital increase for the six-month period ended June 30, 2020.

Changes in accumulated impairment losses on investments in subsidiaries for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)				2020
Accumulated impairment losses	Beginning	Impairment				Others		Ending
	(51,742)		-				-	(51,742)
on investments in subsidiaries	₩	₩			₩		₩
(In millions of Korean won)				2019
Accumulated impairment losses	Beginning	Impairment				Others		Ending
	(51,742)		-				-	(51,742)
on investments in subsidiaries	₩	₩			₩		₩

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

10. Property and Equipment

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

(In millions of Korean won)					June 30, 2020
								Accumulated
		Acquisition		Accumulated		impairment				Carrying
			cost		depreciation		losses				amount
Leasehold improvements	₩	4,119		₩	(2,787)		₩	-		₩		1,332
Equipment and others		5,404			(3,498)			-				1,906
Right-of-use property and
equipment-Buildings		827			(679)			-				148
Right-of-use property and
equipment -Vehicles		998			(704)			-				294
Right-of-use property and
equipment -Others		36			(28)			-				8
		₩	11,384		₩	(7,696)		₩	-		₩		3,688

(In millions of Korean won)					December 31, 2019
								Accumulated
		Acquisition		Accumulated		impairment				Carrying
			cost		depreciation		losses				amount
Leasehold improvements	₩	4,119		₩	(2,309)		₩	-			₩	1,810
Equipment and others		4,818			(2,946)			-				1,872
Right-of-use property and
equipment-Buildings		683			(490)			-				193
Right-of-use property and
equipment -Vehicles		904			(624)			-				280
Right-of-use property and
equipment -Others		36			(21)			-				15
		₩	10,560		₩	(6,390)		₩	-			₩	4,170

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

11. Intangible Assets

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

(In millions of Korean won)				June 30, 2020
						Accumulated
			Accumulated		impairment		Carrying
	Acquisition cost	amortization	losses			amount
Software	₩	4,978	₩	(3,386)		₩	-	₩	1,592
Membership rights		9,765		-			(1,338)		8,427
Other intangible assets		5,493		(4,300)			-		1,193
	₩	20,236	₩	(7,686)		₩	(1,338)	₩	11,212

(In millions of Korean won)				December 31, 2019
			Accumulated		Accumulated
				impairment		Carrying
	Acquisition cost	amortization	losses			amount
Software	₩	4,849	₩	(3,101)		₩	-	₩	1,748
Membership rights		9,765		-			(1,786)		7,979
Other intangible assets		5,451		(4,086)			-		1,365
	₩	20,065	₩	(7,187)		₩	(1,786)	₩	11,092

12. Deferred Income Tax Assets and Liabilities

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

(In millions of Korean won)				June 30, 2020
			Assets		Liabilities		Net amounts
Share-based payments	₩	2,269		₩	-		₩	2,269
Membership rights		368			-			368
Defined benefit obligation		2,887			-			2,887
Plan assets		-			(2,887)			(2,887)
Short-term employee benefits		862			-			862
Financial assets at fair value through profit or loss		2,506			-			2,506
Others		538			(4,749)			(4,211)
			9,430			(7,636)			1,794
Offsetting of deferred tax assets and liabilities		(7,636)			7,636			-
		₩	1,794		₩	-		₩	1,794

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

12. Deferred Income Tax Assets and Liabilities (cont'd)
(In millions of Korean won)			December 31, 2019
			Assets		Liabilities	Net amounts
Share-based payments	₩	3,260		₩	-		₩	3,260
Membership rights		491			-			491
Defined benefit obligation		2,888			-			2,888
Plan assets		-			(2,888)			(2,888)
Short-term employee benefits		1,193			-			1,193
Financial assets at fair value through profit or loss		2,337			-			2,337
Others		449			(204)			245
			10,618			(3,092)			7,526
Offsetting of deferred tax assets and liabilities		(3,092)			3,092			-
		₩	7,526		₩	-		₩	7,526

13. Other Assets

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

			June 30,	December 31,
(In millions of Korean won)		2020		2019
Other financial assets		5,334		-
Receivables	₩		₩
Accrued income		3,320		3,654
Guarantee deposits		15,886		16,160
Other non-financial assets		24,540		19,814

Receivables		596,459		588,765
Prepaid expenses		1,275		556
Advanced payments		1,631		151
			599,365		589,472
		₩	623,905	₩	609,286

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

14. Debts

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

(In millions of Korean won)	June 30, 2020		December 31, 2019
Borrowings	₩	100,000		₩	-

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

(In millions of Korean won)

Annual interest rates

Maturity

(%)

Lender

Issued date

date

as of June 30, 2020

June 30, 2020

December 31, 2019

Borrowings in

Other

MERITZ Securities

June 29,

Nov. 03,

100,000

Korean won

borrowings

Co., Ltd.

2020

1.06

₩

The maturities of debts as of June 30, 2020, are as follows:

(In millions of

June 30, 2020

Korean won)

Up to

3~6

6~12

1~3

Over

Borrowings in

3 months

months

years

3 years

Total

₩ 100,000

Korean won

₩

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

15. Debentures

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

(In millions of Korean won)				Annual interest rates (%)				December 31,
	Issued date	Expiration date		as of June 30, 2020		June 30, 2020		2019
Unguaranteed debentures No. 3-3	Aug. 13, 2013	Aug. 13, 2020	3.65		₩	70,000	₩	70,000
Unguaranteed debentures No. 5-2	Mar. 19, 2014	Mar. 19, 2021	3.50			50,000		50,000
Unguaranteed debentures No. 6	Feb. 26, 2015	Feb. 26, 2022	2.38			30,000		30,000
Unguaranteed debentures No. 8	June 23, 2015	June 23, 2020	2.34			-		100,000
Unguaranteed debentures No. 9	June 23, 2015	June 23, 2022	2.52			150,000		150,000
Unguaranteed debentures No. 10	Sept. 17, 2015	Sept. 17, 2020	2.16			20,000		20,000
Unguaranteed debentures No. 11	Sept. 23, 2015	Sept. 23, 2020	2.06			30,000		30,000
Unguaranteed debentures No. 12-2	Nov. 27, 2015	Nov. 27, 2020	2.26			110,000		110,000
Unguaranteed debentures No. 12-3	Nov. 27, 2015	Nov. 27, 2022	2.38			50,000		50,000
Unguaranteed debentures No. 14-1	Dec. 09, 2015	Dec. 09, 2020	2.27			140,000		140,000
Unguaranteed debentures No. 14-2	Dec. 09, 2015	Dec. 09, 2022	2.38			30,000		30,000
Unguaranteed debentures No. 15-2	May 12, 2016	May 12, 2021	1.72			220,000		220,000
Unguaranteed debentures No. 15-3	May 12, 2016	May 12, 2026	2.01			200,000		200,000
Unguaranteed debentures No. 16-2	May 27, 2016	May 27, 2021	1.78			60,000		60,000
Unguaranteed debentures No. 16-3	May 27, 2016	May 27, 2023	1.91			150,000		150,000
Unguaranteed debentures No. 17	June 27, 2016	June 27, 2021	1.51			50,000		50,000
Unguaranteed debentures No. 18-2	July 25, 2016	July 25, 2021	1.45			110,000		110,000
Unguaranteed debentures No. 18-3	July 25, 2016	July 25, 2026	1.69			80,000		80,000
Unguaranteed debentures No. 19-2	Aug. 25, 2016	Aug. 25, 2021	1.46			100,000		100,000
Unguaranteed debentures No. 19-3	Aug. 25, 2016	Aug. 25, 2026	1.69			120,000		120,000
Unguaranteed debentures No. 20-2	Nov. 28, 2016	Nov. 28, 2021	2.28			50,000		50,000
Unguaranteed debentures No. 21	Jan. 25, 2017	Jan. 23, 2020	1.82			-		100,000
Unguaranteed debentures No. 22-1	Feb. 28, 2017	Feb. 28, 2020	1.89			-		120,000
Unguaranteed debentures No. 22-2	Feb. 28, 2017	Feb. 28, 2022	2.11			110,000		110,000
Unguaranteed debentures No. 23	Mar. 23, 2017	Mar. 23, 2020	1.95			-		80,000
Unguaranteed debentures No. 24	Apr. 06, 2017	Apr. 06, 2020	1.97			-		70,000
Unguaranteed debentures No. 25-2	May 24, 2017	May 24, 2020	1.97			-		100,000
Unguaranteed debentures No. 25-3	May 24, 2017	May 24, 2022	2.23			270,000		270,000
Unguaranteed debentures No. 25-4	May 24, 2017	May 24, 2027	2.62			80,000		80,000
Unguaranteed debentures No. 26-1	June 27, 2017	June 27, 2022	2.18			50,000		50,000
Unguaranteed debentures No. 26-2	June 27, 2017	June 27, 2024	2.34			200,000		200,000
Unguaranteed debentures No. 27	July 19, 2017	July 19, 2024	2.41			100,000		100,000
Unguaranteed debentures No. 28-1	Aug. 30, 2017	Aug. 30, 2022	2.30			60,000		60,000
Unguaranteed debentures No. 28-2	Aug. 30, 2017	Aug. 30, 2024	2.43			30,000		30,000
Unguaranteed debentures No. 28-3	Aug. 30, 2017	Aug. 30, 2027	2.60			60,000		60,000
Unguaranteed debentures No. 29-1	Sept. 19, 2017	Sept. 19, 2022	2.29			150,000		150,000
Unguaranteed debentures No. 29-2	Sept. 19, 2017	Sept. 19, 2024	2.44			110,000		110,000
Unguaranteed debentures No. 30	Jan. 25, 2018	Jan. 25, 2021	2.45			80,000		80,000
Unguaranteed debentures No. 31-1	Feb. 28, 2018	Feb. 26, 2021	2.57			150,000		150,000
Unguaranteed debentures No. 31-2	Feb. 28, 2018	Feb. 28, 2023	2.81			50,000		50,000
Unguaranteed debentures No. 31-3	Feb. 28, 2018	Feb. 28, 2028	3.02			60,000		60,000
Unguaranteed debentures No. 32-1	Apr. 06, 2018	Apr. 06, 2021	2.50			60,000		60,000
Unguaranteed debentures No. 32-2	Apr. 06, 2018	Apr. 06, 2023	2.71			80,000		80,000
Unguaranteed debentures No. 32-3	Apr. 06, 2018	Apr. 06, 2028	2.86			20,000		20,000
Unguaranteed debentures No. 33-1	June 12, 2018	June 12, 2023	2.81			100,000		100,000
Unguaranteed debentures No. 33-2	June 12, 2018	June 12, 2028	2.92			30,000		30,000
Unguaranteed debentures No. 34-1	July 25, 2018	July 23, 2021	2.41			40,000		40,000
Unguaranteed debentures No. 34-2	July 25, 2018	July 25, 2023	2.65			70,000		70,000
Unguaranteed debentures No. 34-3	July 25, 2018	July 25, 2025	2.71			20,000		20,000
Unguaranteed debentures No. 34-4	July 25, 2018	July 25, 2028	2.76			20,000		20,000
Unguaranteed debentures No. 35	Oct. 05, 2018	Oct. 05, 2023	2.52			120,000		120,000
Unguaranteed debentures No. 36-1	Feb. 22, 2019	Feb. 22, 2022	2.03			120,000		120,000
Unguaranteed debentures No. 36-2	Feb. 22, 2019	Feb. 22, 2024	2.11			230,000		230,000
Unguaranteed debentures No. 36-3	Feb. 22, 2019	Feb. 22, 2029	2.22			60,000		60,000
Unguaranteed debentures No. 37-1	Mar. 15, 2019	Mar. 15, 2024	2.06			140,000		140,000
Unguaranteed debentures No. 37-2	Mar. 15, 2019	Mar. 15, 2029	2.16			70,000		70,000
Unguaranteed debentures No. 38-1	June. 19, 2019	June 19, 2026	1.73			80,000		80,000
Unguaranteed debentures No. 38-2	June. 19, 2019	June 19, 2029	1.77			120,000		120,000
Unguaranteed debentures No. 39-1	Oct. 15, 2019	Oct. 15, 2024	1.60			80,000		80,000
Unguaranteed debentures No. 39-2	Oct. 15, 2019	Oct. 15, 2029	1.67			40,000		40,000
Unguaranteed debentures No. 40-1	Dec. 04, 2019	Dec. 04, 2024	1.76			70,000		70,000
Unguaranteed debentures No. 40-2	Dec. 04, 2019	Dec. 04, 2029	1.87			30,000		30,000
Unguaranteed debentures No. 41-1	Jan. 16, 2020	Jan. 16, 2023	1.64			110,000		-
Unguaranteed debentures No. 41-2	Jan. 16, 2020	Jan. 16, 2025	1.74			100,000		-
Unguaranteed debentures No. 41-3	Jan. 16, 2020	Jan. 16, 2030	1.88			40,000		-

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

15. Debentures (cont'd)

(In millions of Korean won)					Annual interest rates (%)					December 31,

Subordinated debentures No. 1-1	Issued date		Expiration date		as of June 30, 2020		June 30, 2020			2019
Feb. 18, 2020		Feb. 18, 2030		2.21			370,000			-
Subordinated debentures No. 1-2	Feb. 18, 2020		Feb. 18, 2035	2.26			30,000			-
Unguaranteed debentures No. 42-1	May 13, 2020		May 13, 2025	1.59			130,000			-
Unguaranteed debentures No. 42-2	May 13, 2020		May 13, 2030	1.78			70,000			-
Unguaranteed debentures No. 43-1	June 16, 2020		June 16, 2023	1.18			50,000			-
Unguaranteed debentures No. 43-2	June 16, 2020		June 16, 2025	1.44			110,000			-
Unguaranteed debentures No. 43-3	June 16, 2020		June 16, 2030	1.63			50,000			-
Exchangeable bonds No.11	June 30, 2020		June 30, 2025	0.00			240,000			-
								6,280,000			5,550,000
			Less: Bond Discounts			(7,751)			(6,554)
			Less: adjustment on exchange right			(16,586)			-
							₩	6,255,663		₩	5,543,446

1 Fair value of the liability component of exchangeable bonds is calculated by using market interest rates of bonds under the same conditions without the exchangeable rights. The residual amount, after deducting liability component from the issuance amount, represents the value of exchangeable rights and is recorded in equity. Shares to be exchanged are 5 million treasury shares of KB Financial Group Inc. with the exchange price of ₩ 48,000. Exercise period for exchangeable rights is from the 60th day from the Issued date to 10 days before the Expiration date.

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

(In millions of

June 30, 2020

Korean won)

Up to

3~6

6~12

1~3

Over

Debentures in

3 months

months

years

3 years

Total

₩ 120,000

₩ 250,000

₩ 670,000

1,860,000

₩ 3,380,000

₩ 6,280,000

Korean won

₩

(In millions of

December 31, 2019

Korean won)

Up to

3~6

6~12

1~3

Over

Debentures in

3 months

months

years

3 years

Total

₩ 300,000

₩ 270,000

₩ 370,000

1,990,000

₩ 2,620,000

₩ 5,550,000

Korean won

₩

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

(In millions of Korean won)

2020

Beginning

Issue

Repayment

Ending

Debentures in Korean won

₩

5,550,000

₩

1,300,000

₩

(570,000)

₩

6,280,000

(In millions of Korean won)

2019

Beginning

Issue

Repayment

Ending

Debentures in Korean won

₩

5,380,000

₩

820,000

₩

(650,000)

₩

5,550,000

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

16. Net Defined Benefit Liabilities

Defined benefit plan

The Company operates defined benefit plans which have the following characteristics:

The Company has the obligation to pay the agreed benefits to all its current and former employees.
Actuarial risk (that benefits will cost more than expected) and investment risk fall, in substance, on the Company.

The net defined benefit liability recognized in the statements of financial position is calculated in accordance with actuarial valuation methods using market data; such as, interest rates, future salary increase rate and mortality rate based on historical data. Actuarial assumptions may differ from actual results, due to changes in the market, economic trends and mortality trends.

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

(In millions of Korean won)					2020
		Present value of
		defined benefit		Fair value of plan		Net defined
			obligation			assets		benefit liabilities
Beginning	₩	20,312		₩	(19,875)		₩	437
Current service cost		1,040			-			1,040
Interest cost (income)		202			(199)			3
Remeasurements:								-
Return on plan assets (excluding amounts
included in interest income)		-			53			53
Payments from plans (benefit payments)		(1,245)			1,245			-
Payments from the Company		(3)			-			(3)
Transfer in		1,735			(1,735)			-
Transfer out		(1,706)			1,706			-
Ending		₩	20,335		₩	(18,805)		₩	1,530
(In millions of Korean won)					2019
		Present value of
		defined benefit		Fair value of plan		Net defined
			obligation			assets		benefit liabilities
Beginning	₩	20,363		₩	(20,180)		₩	183
Current service cost		1,110			-			1,110
Interest cost (income)		233			(231)			2
Remeasurements:
Return on plan assets (excluding amounts
included in interest income)		-			56			56
Payments from plans (benefit payments)		(1,554)			1,554			-
Transfer in		1,158			(1,158)			-
Transfer out		(2,574)			2,574			-
Ending		₩	18,736		₩	(17,385)		₩	1,351

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

16. Net Defined Benefit Liabilities (cont'd)

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

(In millions of Korean won)		June 30,	December 31,
		2020		2019
Present value of defined benefit obligation	₩	20,335	₩	20,312
Fair value of plan assets		(18,805)		(19,875)
Net defined benefit liabilities	₩	1,530	₩	437

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

(In millions of Korean won)		2020
Current service cost	₩	1,040
Net interest expenses of net defined benefit liabilities		3
Post-employment benefits	₩	1,043

17. Other Liabilities

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

2019

1,110
2
1,112

(In millions of Korean won)		June 30,		December 31,
			2020			2019
Other financial liabilities		5,410			1,134
Payables	₩		₩
Accrued expenses		22,213			13,218
Lease liability		592			588
			28,215			14,940
Other non-financial liabilities
Payables		64,568			59,263
Accrued expenses		93,971			128,824
Withholding taxes		284			413
			158,823			188,500
		₩	187,038		₩	203,440

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

18. Equity

18.1 Share Capital

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

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

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

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

18.2 Hybrid securities

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

	Issuance				Interest rate			June 30,		December 31,
(In millions of Korean won)	date		Maturity	(%)			2020			2019
			Perpetual
The 1-1st Hybrid securities	May 2, 2019		bond	3.23		￦	349,204		￦	349,204
			Perpetual
The 1-2nd Hybrid securities	May 2, 2019		bond	3.44			49,881			49,881
The 2-1st Hybrid securities			Perpetual
May 8, 2020		bond	3.30			324,099			-
The 2-2nd Hybrid securities			Perpetual
May 8, 2020		bond	3.43			74,812			-
							￦	797,996		￦	399,085

The above hybrid securities may be redeemed by the Company after 5 or 10 years from the issuance date.

18.3 Capital Surplus

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

(In millions of Korean won)	June 30, 2020		December 31, 2019
Share premium	₩	13,190,275		₩	13,190,275
Other capital surplus		1,465,893			1,465,893
Gain on sales of treasury share		86,646			86,646
Consideration for exchange rights		16,459			-
	₩	14,759,273		₩	14,742,814

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

18.4 Accumulated Other Comprehensive Income

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

(In millions of Korean won)	June 30, 2020	December 31, 2019
Remeasurements of net defined benefit liabilities	₩	(7,702)	₩	(7,664)

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

(In millions of Korean won)				2020
Remeasurements of net		Beginning		Changes	Tax effect			Ending

defined benefit liabilities	₩	(7,664)	₩	(53)	₩	15	₩	(7,702)
(In millions of Korean won)				2019
Remeasurements of net		Beginning		Changes	Tax effect			Ending

defined benefit liabilities	₩	(7,144)	₩	(56)	₩	15	₩	(7,185)

18.5 Retained Earnings

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

(In millions of Korean won)		June 30,	December 31,
		2020		2019
Legal reserves	₩	557,405	₩	482,807
Voluntary reserves		982,000		982,000
Regulatory reserve for credit losses		4,175		4,458
Retained earnings before appropriation		1,562,130		1,624,029
	₩	3,105,710	₩	3,093,294

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

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

18.5.1 Regulatory reserve for credit losses

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

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

(In millions of Korean won)		June 30,		December 31,
			2020			2019
Beginning	₩	4,175		₩	4,458
Estimated amounts subject to provision (reversal)		5,999			(283)
Ending		₩	10,174		₩	4,175

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

(In millions of Korean won)		2020				2019
Provision (reversal) of regulatory reserve for	Three months	Six months		Three months	Six months
	(726)		5,999			(998)		(495)
credit losses	₩	₩		₩	₩
Adjusted profit (loss) after provision
(reversal) of regulatory reserve for credit		(52,136)		867,509			(41,730)		842,444
losses1,2
Adjusted basic earnings (losses) per share
after provision of regulatory reserve for
credit losses1 (In Korean won)		(134)		2,226			(107)		2,146
Adjusted diluted earnings (losses) per share
after provision of regulatory reserve for
credit losses1 (In Korean won)		(133)		2,208			(107)		2,131

Adjusted profit after provision (reversal) of regulatory reserve for credit losses is not in accordance with Korean IFRS and calculated on the assumption that provision (reversal) of regulatory reserve for credit losses before income tax is adjusted to the profit for the period.
Amount after deducting dividends on hybrid securities.

18.6 Treasury Shares

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

(In millions of Korean won and in number of shares)

						2020
Number of treasury shares		Beginning		Acquisition			Retirement				Ending
	26,173,585			-			-			26,173,585
Carrying amount		₩	1,136,188		₩	-		₩	-		₩	1,136,188

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

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

18.6 Treasury Shares (cont'd)

(In millions of Korean won and in number of shares)

						2019
Number of treasury shares		Beginning			Acquisition		Retirement				Ending
	22,560,240			5,916,962			-			28,477,202
Carrying amount		₩	(968,549)		₩	(267,639)		₩	-		₩	(1,236,188)

19. Dividends

The dividends to the shareholders of the Company in respect of the year ended December 31, 2019, of ₩ 2,210 per share, amounting to total dividends of ₩ 861,092 million, were paid in April 2020. The dividends paid to the shareholders of the Company in 2019 were ₩ 759,736 million (₩ 1,920 per share).

20. Net Interest Expense

Details of interest income and interest expense for the three-month and the six-month periods ended June 30,

2020 and 2019, are as follows:

(In millions of Korean won)		2020				2019
Interest income	Three months	Six months		Three months	Six months
	24			37				831				1,895
Due from financial institutions	₩		₩			₩				₩
Loans at amortized cost		815			1,506				934				1,013
Loans at fair value through profit or loss		1,376			2,409				1,890				2,255
Other		66			126				82				158
Interest expense		2,281			4,078				3,737				5,321

Debts		3			3				1,294				2,488
Debentures		32,345			64,440				31,821				62,249
Other		3			6				5				9
Net interest expense		32,351			64,449				33,120				64,746
₩	(30,070)		₩	(60,371)			₩	(29,383)			₩	(59,425)

21. Net Fee and Commission Expense

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

(In millions of Korean won)		2020					2019
Fee and commission income	Three months	Six months			Three months	Six months
	231			378				214			350
Fees earned in Korean won	₩		₩			₩		₩
Fee and commission expense									2,360			3,139
Fees paid in Korean won		2,914			4,081
Fees paid in foreign currency		27			116				-			79
			2,941			4,197				2,360			3,218
Net fee and commission expense		₩	(2,710)		₩	(3,819)			₩	(2,146)		₩	(2,868)

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

22. Net Gains on Financial assets at Fair value through Profit or Loss

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

(In millions of Korean won)		2020					2019
Gains related to financial instruments at	Three months	Six months			Three months	Six months

fair value through profit or loss
Dividend income on financial assets
designated at fair value through profit or		3,533			6,945				3,390		6,784
loss	₩		₩			₩		₩
Gains on valuation on financial assets
designated at fair value through profit or
loss		210			607				1,754		3,304
Losses related to financial instruments		3,743			7,552				5,144		10,088

at fair value through profit or loss
Losses on valuation on financial assets
designated at fair value through profit or
loss		370			1,220				176		323
			370			1,220				176		323
Net gains on financial instruments at		3,373			6,332				4,968		9,765
fair value through profit or loss		₩		₩			₩		₩

23. Net Other Operating Income

Details of other operating income and expenses for the three-month and the six-month periods ended June 30,

2020 and 2019, are as follows:

(In millions of Korean won)

2020

2019

Other operating income

Three months

Six months

Three months

Six months

974,930

926,934

Dividend income from subsidiaries

₩

Net other operating income

₩

974,930

₩

926,934

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

24. General and Administrative Expenses 24.1 General and Administrative Expenses

Details of general and administrative expenses for the three-month and the six-month periods ended June 30,

2020 and 2019, are as follows:

(In millions of Korean won)		2020				2019
Employee benefits	Three months	Six months		Three months	Six months

Salaries and other short-term employee		6,092			12,152		5,829	₩ 10,770
benefits - salaries	₩		₩		₩
Salaries and other short-term employee
benefits - others		1,065			2,011		1,052	1,955
Post-employment benefits - defined
benefit plans		521			1,043		557	1,112
Share-based payments		840			(687)		1,929	1,713
		8,518			14,519		9,367	15,550
Depreciation and amortization		959			1,864		1,259	2,408

Other general and administrative

expenses
Travel	-		51		440		636
Communications	136		395		229		398
Tax and dues	87		280		79		291
Publication	72		124		91		148
Rental expense	209		420		241		408
Vehicle	31		55		39		61
Service fees	4,643		9,833		2,919		6,793
Advertising	19		425		15		397
Training	44		304		233		538
Others	1,437		3,196		1,632		3,314
		6,678		15,083		5,918		12,984
	₩	16,155	₩	31,466	₩	16,544	₩	30,942

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

24.2 Share-based Payments

The Company entered into share-based payment plan for executives and employees of the Company and its subsidiaries.

Details of stock grants linked to long-term performance as of June 30, 2020, are as follows:

(In number of shares)

KB Financial Group Inc.	Grant date

Series 19	Nov. 21, 2017
Series 21	Jan. 01, 2019
Series 22	Apr. 01, 2019
Series 23	May 27, 2019
Series 24	Jul. 17, 2019
Series 25	Jan. 01, 2020
Series 26	Mar. 18, 2020

Series 27	June 15, 2020

Deferred grant in 2015	-
Deferred grant in 2016	-
Deferred grant in 2017	-
Deferred grant in 2018	-
Deferred grant in 2019	-
Kookmin Bank
Series 75	Jan. 1, 2019
Series 76	Apr. 1, 2019
Series 77	May. 27, 2019
Series 78	Nov. 21, 2019
Series 79	Jan. 1, 2020
Series 80	Mar 1, 2020
Deferred grant in 2015	-
Deferred grant in 2016	-
Deferred grant in 2017	-
Deferred grant in 2018	-
Deferred grant in 2019	-

Number of granted		Vesting conditions2
shares1
46,890		Service fulfillment, market performance3 35% and non-
	market performance5 65%

25,172		Service fulfillment, market performance3 0~30% and
	non-market performance4 70~100%

3,226		Service fulfillment, market performance3 30% and non-
	market performance4 70%

1,436		Service fulfillment, market performance3 30% and non-
	market performance4 70%

11,224		Service fulfillment, market performance3 30% and non-
	market performance4 70%

80,568		Service fulfillment, market performance3 0~30% and
	non-market performance4 70~100%

1,086		Service fulfillment, market performance3 30% and non-
	market performance4 70%

687		Service fulfillment, market performance3 30% and non-
	market performance4 70%

7,674		Satisfied
8,705		Satisfied
30,001		Satisfied
5,960		Satisfied
26,437		Satisfied
249,066
154,997		Service fulfillment, market performance 3 0~50%, and
	non-market performance4 50~100%

5,380		Service fulfillment, market performance3 30~50%, and
	non-market performance4 50~70%

4,468		Service fulfillment, market performance3 30~50%, and
	non-market performance4 50~70%

36,443		Service fulfillment, market performance3 30%, and
	non-market performance6 70%

266,488		Service fulfillment, market performance3 0~50%, and
	non-market performance4 50~100%

7,711		Service fulfillment, market performance3 30~50%, and
	non-market performance4 50~70%

2,759		Satisfied
19,109		Satisfied
58,380		Satisfied
65,587		Satisfied
98,194		Satisfied
719,516

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

24.2 Share-based Payments (cont'd)

(In number of shares)	Grant date			Number of granted	Vesting conditions2
			shares1
Other subsidiaries
Stock granted in 2010	-	106
Stock granted in 2011	-	146
Stock granted in 2012	-	420
Stock granted in 2013	-	622
Stock granted in 2014	-	1,100		Services fulfillment,
Stock granted in 2015	-	3,323		market performance3 10~50%
Stock granted in 2016	-	6,664		and non-market performance4 50~90%
Stock granted in 2017	-	32,717
Stock granted in 2018	-	120,189
Stock granted in 2019	-	334,543
Stock granted in 2020	-	240,498
				740,328
				1,708,910
1

Granted shares represent the total number of shares initially granted to directors and employees that have residual shares at the end of reporting period (Deferred grants are residual shares at the end of the reporting period).
Executives and employees were given the option of deferring payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement when the deferred grant has been confirmed.
Relative TSR (Total Shareholders Return): [(Fair value at the end of the contract - Fair value at the beginning of the contract) + (Total amount of dividend per share paid during the contract period)] / Fair value at the beginning of the contract)
Accomplishment of corporates' and individuals' performance results
EPS, Asset Quality, HCROI, Non-banking sector profit
EPS, Asset Quality

The stock grant award program is an incentive plan that sets, on grant date, the maximum amount of shares that can be awarded. Actual stock granted at the end of the vesting period is determined in accordance with achievement of pre-specified targets over the vesting period.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

24.2 Share-based Payments (cont'd)

Details of stock grants linked to short-term performances as of June 30, 2020, are as follows:

		Estimated number of vested		Vesting
KB Financial Group Inc.	shares1		Conditions

Stock granted in 2015	7,524		Satisfied
Stock granted in 2016	6,595		Satisfied
Stock granted in 2017	7,385		Satisfied
Stock granted in 2018	14,292		Satisfied
Stock granted in 2019	28,030		Satisfied
Stock granted in 2020	24,985		Proportional to service period
Kookmin Bank
Stock granted in 2015	9,887		Satisfied
Stock granted in 2016	22,442		Satisfied
Stock granted in 2017	31,522		Satisfied
Stock granted in 2018	77,367		Satisfied
Stock granted in 2019	125,342		Satisfied
Stock granted in 2020	82,385		Proportional to service period
Other subsidiaries
Stock granted in 2015	12,190		Satisfied
Stock granted in 2016	40,942		Satisfied
Stock granted in 2017	149,272		Satisfied
Stock granted in 2018	345,625		Satisfied
Stock granted in 2019	551,667		Satisfied
Stock granted in 2020	193,525		Proportional to service period
		1,730,977

1 Executives and employees were given the option of deferring payment of the granted shares (after the date of retirement), payment ratio, and payment period. Accordingly, a certain percentage of the granted amount is deferred for up to five years after the date of retirement when the deferred grant has been confirmed.

Share-based payment arrangement for subsidiaries was transferred to the Company in 2010, and the related compensation cost paid to the executives and employees of subsidiaries is reimbursed by these companies. The accrued expenses representing share-based payments as of June 30, 2020 and December 31, 2019, are

90,078 million and ₩ 124,853 million, respectively, and the receivables to be reimbursed by the subsidiaries for the compensation costs are ₩ 81,918 million and ₩ 112,997 million, respectively. In addition, The compensation costs from share-based payments that amount to ₩ 687 million were recognized as an reversal for the six-month period ended June 30, 2020 and ₩ 1,713 million were recognized for the six-month period ended June 30, 2019.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

25. Non-operating Income (Expense)

Details of non-operating income and expenses for the three-month and the six-month periods ended June 30,

2020 and 2019, are as follows:

(In millions of Korean won)		2020				2019
		Three months	Six months		Three months	Six months
Non-operating income
Reversal of impairment losses on		268		448				-		-
intangible assets	₩		₩		₩		₩
Others		59		103				591		594
			327		551				591		594
Non-operating expenses
Impairment losses on intangible assets		-		-				4		4
Donation		325		382				565		632
Others		7		7				-		6
			332		389				569		642
Non-operating income (expenses)		₩	(5)	₩	162			₩	22	₩	(48)

26. Income Tax Benefit

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

(In millions of Korean won)

Tax payable

Change in deferred tax assets and liabilities Origination and reversal of temporary differences

Tax expense recognized directly in equity Remeasurements of net defined benefit liabilities

Income tax expense

	2020		2019
₩	-	₩	-
	5,732		1,451
	5,732		1,451
	15		15
	15		15
₩	5,747	₩	1,466

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

27. Earnings (Losses) per Share

27.1 Basic Earnings (Losses) per Share

Calculations of basic earnings (losses) per share on the profit attributable to ordinary shares are as follows:

27.1.1 Weighted average number of ordinary shares outstanding

Details of weighted average number of ordinary shares outstanding for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)	2020	2019
		Three months	Six months			Three months	Six months
Beginning (A)	415,807,920			415,807,920	418,111,537			418,111,537
Acquisition of treasury shares (B)	(26,173,585)			(26,173,585)	(26,966,534)			(25,457,689)
Weighted average number of ordinary
shares outstanding (C=A+B)		389,634,335			389,634,335		391,145,003		392,653,848

27.1.2 Basic earnings (losses) per share

Details of basic earnings (losses) per share for the three-month and the six-month periods ended June 30,

2020 and 2019, are as follows:

(In Korean won and		2020			2019
In number of shares)
		Three months			Six months		Three months			Six months
Profit (loss) for the period	₩(49,605,610,263)		₩ 880,020,574,695		₩ (42,727,690,967)			₩ 841,949,721,037
Deduction: Dividends on hybrid
securities		3,256,250,000			6,512,500,000			-			-
Profit (loss) attributable to the
ordinary equity holders (A)	(52,861,860,263)			873,508,074,695	(42,727,690,967)	841,949,721,037
Weighted average number of
ordinary shares outstanding (B)		389,634,335			389,634,335			391,145,003			392,653,848
Basic earnings (losses) per share		(136)			2,242			(109)			2,144
(A / B)		₩		₩		₩			₩

27.2 Diluted Earnings (Losses) per Share

Diluted earnings (losses) per share is calculated using the weighted average number of ordinary shares outstanding which is adjusted by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. The Company's dilutive potential ordinary shares include stock grants.

A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market share price of the Company's outstanding shares for the period) based on the monetary value of the subscription rights attached to the stock grants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of stock grants.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

27.2.1 Adjusted profit (loss) for diluted earnings (losses) per share

Adjusted profit (loss) for diluted earnings (losses) per share for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In Korean won)

Profit (loss) attributable to the ordinary equity holders1

Adjustment

Adjusted profit (loss) for diluted earnings (losses) per share

2020	2019
Three months		Six months	Three months		Six months
₩ (52,861,860,263)		₩ 873,508,074,695	₩ (42,727,690,967)	₩ 841,949,721,037
-		-	-		-
₩ (52,861,860,263)		₩ 873,508,074,695	₩ (42,727,690,967)	₩ 841,949,721,037

1 The amount is after deducting dividends on hybrid securities.

27.2.2 Weighted average number of ordinary shares outstanding for diluted earnings per share

Adjusted weighted average number of ordinary shares outstanding to calculate diluted earnings per share for the three-month and the six-month periods ended June 30, 2020 and 2019, are as follows:

(In number of shares)	2020			2019
	Three months	Six months		Three months	Six months

Weighted average number of ordinary shares issued and

outstanding389,634,335 389,634,335 391,145,003 392,653,848 Adjustment

Stock grants	2,907,973	3,200,650	-	2,626,443
Adjusted weighted
average number of
ordinary shares
outstanding for diluted						395,280,291
earnings per share		392,542,308		392,834,985	391,145,003

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

27.2.3 Diluted earnings per share

Details of diluted earnings per share for the three-month and six-month periods ended June 30, 2020 and 2019, are as follows:

(In Korean won and in

2020

2019

number of shares)

Adjusted profit (loss) for

Three months

Six months

Three months

Six months

diluted earnings (losses) per

(52,861,860,263)

873,508,074,695

(42,727,690,967)

841,949,721,037

₩

Adjusted weighted average

number of ordinary shares

outstanding for diluted

earnings (losses) per share

392,542,308

392,834,985

391,145,003

395,280,291

Diluted earnings (losses) per

(135)

2,224

(109)

2,130

₩

28. Supplemental Cash Flow Information

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

(In millions of Korean won)		June 30, 2020	December 31, 2019
Due from financial institutions	₩	32,080	₩	18,537
Restricted cash from financial institutions		(3)		(3)
	₩	32,077	₩	18,534

Significant non-cash transactions for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)		2020		2019
Changes in receivables and payables from		71,235		(347,491)
consolidated tax	₩		₩
Changes in receivables and payables relating to
stock grants		(31,080)		(8,727)
Other payables due to treasury shares trust
agreement, etc.		-		5,099

Cash inflows and outflows due to interest and dividends for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	Activity	2020			2019
Prepaid income tax expense	Operating		₩	1,079	₩	1,049
Interest received	Operating			3,762		4,145
Interest paid	Operating			62,918		65,364
Dividends received	Operating			981,935		933,747
Dividends paid	Financing			867,604		759,736

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

29. Contingent Liabilities and Commitments 29.1 Commitments

Commitments made with financial institutions as of June 30, 2020 and December 31, 2019, are as follows:

		June 30, 2020				December 31, 2019
	Amount of		Amounts			Amount of		Amounts
	commitment		borrowed			commitment		borrowed
KEB Hana Bank	₩	200,000		₩	-		₩	50,000	₩	-

29.2 Other Matters (including litigation)

The Company has no pending lawsuit as the defendant.
The ongoing COVID-19 pandemic has had a negative impact on the global economy, and has increased has increased uncertainty in estimation of the Company's expected credit losses on certain portfolios and potential impairment on assets. The Company's ability to generate revenue may be adversely affected by the factors including;

uncertainties arising from significant increases in credit risks of borrowers affected by COVID-19 pandemic
uncertainties arising from forward-looking macroeconomic information in estimating expected credit losses
depreciation of Korean won against major currencies causing increase in the payment amount of principal and interests of debts denominated in foreign currencies; and
a significant decline in fair value of the Company's investments in companies affected by COVID-19 pandemic.

On April 10, 2020, the Company has entered into share purchase agreement to acquire 15,000,000 ordinary shares (100% of investments) of Prudential Life Insurance Company Korea Ltd. at ₩ 2,265 billion. The final acquisition amount is expected to be fixed at the acquisition amount above by reflecting the agreed interests (₩ 75 billion) until the Closing date of transactions and the Company's external outflows until the Closing date of transactions. The Closing date will be determined after the preapproval of the financial authorities.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

30. Related Party Transactions

According to Korean IFRS 1024, the Company includes subsidiaries and key management (including family members) in the scope of related parties. Additionally, the Company discloses balances (receivables and payables) and other amounts arising from the related party transactions in the notes to the separate financial statements. Refer to Note 9 for details on subsidiaries.

Key management includes the directors of the Company, their close family members, and the companies where the directors and/or their close family members have control or joint control.

Significant related party transactions for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)
Subsidiaries	Interest income		2020			2019
Kookmin Bank	₩	43		₩	1,212
	Fee and commission income		418			779
	Net other operating income		731,926			667,226
	General and administrative expenses		4,211			3,445
KB Securities Co., Ltd.	Net other operating income		80,000			50,000
	General and administrative expenses		474			564
KB Insurance Co., Ltd.	Fee and commission income		-			3
	General and administrative expenses		800			678
KB Kookmin Card Co., Ltd.	Net other operating income		100,004			200,008
	General and administrative expenses		317			457
	Net non-operating income		3			3
KB Asset Management Co., Ltd.	Net other operating income		30,000			-
KB Capital Co., Ltd	Net gains on financial assets at fair		6,333			9,765
	value through profit or loss

	General and administrative expenses		65			39
KB Life Insurance Co., Ltd.	General and administrative expenses		136			49
KB Real Estate Trust. Co., Ltd.	Net other operating income		30,000			4,700
KB Savings Bank Co., Ltd.	Net other operating income		3,000			5,000
KB Investment Co., Ltd.	Interest income		1,506			1,013
KB Data Systems Co., Ltd.	General and administrative expenses		560			949

1 Net other operating income includes dividend income from subsidiaries.

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

30. Related Party Transactions (cont'd)

Significant receivables and payables, and related allowance for loan losses arising from the related party transactions as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)
			June 30,		December 31,
Subsidiaries	Cash and due from financial institutions		2020			2019
Kookmin Bank	₩	32,080		₩	18,537
	Other assets		463,679			418,114
	Other liabilities		3,958			35
	Property and equipment		47			152
KB Securities Co., Ltd.	Other assets		29,955			52,068
	Other liabilities		50,897			-
KB Insurance Co., Ltd.	Other assets		10,680			14,492
	Other liabilities		7,914			47,580
KB Kookmin Card Co., Ltd.	Other assets		65,772			60,705
	Other liabilities		751			1,394
KB Asset Management Co., Ltd.	Other assets		9,783			15,590
KB Capital Co., Ltd.	Financial assets at fair value through		290,889			291,501
	profit or loss

	Other assets		16,119			18,995
	Other liabilities		65			-
KB Life Insurance Co., Ltd.	Other assets		2,372			3,956
	Other liabilities		5,787			8,636
KB Real Estate Trust Co., Ltd.	Other assets		15,015			13,979
KB Savings Bank Co., Ltd.	Other assets		3,064			3,727
KB Investment Co., Ltd.	Loans at amortized cost		150,000			120,000
	Other assets		3,802			2,904
	Other liabilities		-			59
KB Data Systems Co., Ltd.	Property and equipment		390			438
	Intangible assets		1,984			1,145
	Other assets		1,837			2,721
	Other liabilities		445			333
KB Credit Information Co., Ltd.	Other assets		702			849
	Other liabilities		-			241

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

30. Related Party Transactions (cont'd)

Right-of-use assets and lease liability with related parties as of June 30, 2020 and December 31, 2019, are as follows:

(In millions of Korean won)		June 30,		December 31,
Subsidiary	Kookmin Bank	Right-of-use assets		2020	2019
₩	47		₩	152
Unused commitments by a related party as of June 30, 2020 and December 31, 2019, are as follows:
(In millions of Korean won)		June 30,		December 31,
	KB Kookmin Card Co.,	Unused commitments		2020	2019
Subsidiary	₩	2,577		₩	2,255
Ltd.	of credit card

Share transactions with related parties for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)	Paid-in capital increase		2020			2019
Subsidiary	KB Capital Co., Ltd.	₩	50,000		₩	50,000
of ordinary shares

Subsidiary	KB Investment Co., Ltd.	Paid-in capital increase		-			50,000
		of ordinary shares

Loan transactions with related parties for the six-month periods ended June 30, 2020 and 2019, are as follows:

(In millions of Korean won)			2020
			Beginning	Loans	Ending
Subsidiary	KB Investment Co., Ltd.	Loan	₩ 120,000	₩ 30,000	₩ 150,000
(In millions of Korean won)			2019
			Beginning	Loans	Ending
Subsidiary	KB Investment Co., Ltd.	Loan	₩ 50,000	₩ 70,000	₩ 120,000

KB Financial Group Inc.

Notes to the Separate Interim Financial Statements

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

30. Related Party Transactions (cont'd)

Compensation to key management for the six-month periods ended June 30, 2020 and 2019, consists of:

(In millions of Korean won)					2020
		Short-term
		employee		Post-employmentShare-based
Registered director	benefits		benefits				payments		Total
	578			14				(319)			273
(executive)	₩		₩			₩		₩
Registered director
(non-executive)		315			-				-			315
Non-registered director		2,174			71				(368)			1,877
		₩	3,067		₩	85			₩	(687)		₩	2,465

(In millions of Korean won)					2019
		Short-term
		employee		Post-employmentShare-based
Registered director	benefits		benefits				payments		Total
	487			13				413			913
(executive)	₩		₩			₩		₩
Registered director
(non-executive)		293			-				-			293
Non-registered director		1,797			70				1,300			3,167
		₩	2,577		₩	83			₩	1,713		₩	4,373

The Company paid ₩ 35 million and ₩ 225 million to KB Securities Co., Ltd., a subsidiary, for the underwriting and arrangement of debentures and hybrid securities for the six-month periods ended June 30, 2020 and 2019, respectively.

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KB Financial Group Inc. published this content on 14 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 August 2020 08:51:17 UTC

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May. 08	Kookmin Bank Files for Singapore Listing of $600 Million of Bonds	MT
Apr. 25	Transcript : KB Financial Group Inc., Q1 2024 Earnings Call, Apr 25, 2024

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