KB Financial Group Inc. | CIK:0001445930 |

Filed: 4/27/2018

Entity registrant name: KB Financial Group Inc. (CIK: 0001445930)

Generator: Fujitsu

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ifrs-full:DisclosureOfFinancialInstrumentsExplanatory

6. Financial Assets and Financial Liabilities

6.1 Classification and Fair Value of Financial Instruments

Carrying amount and fair value of financial assets and liabilities as of December 31, 2016 and 2017, are as follows:


	2016				2017
	Carrying amount		Fair value		Carrying amount		Fair value
	(In millions of Korean won)
Financial assets
Cash and due from financial institutions	￦	17,884,863	￦	17,878,714	￦	19,817,825	￦	19,805,138
Financial assets held for trading		26,099,518		26,099,518		30,177,293		30,177,293
Debt securities		22,986,570		22,986,570		25,168,338		25,168,338
Equity securities		3,040,599		3,040,599		4,935,100		4,935,100
Others		72,349		72,349		73,855		73,855
Financial assets designated at fair value through profit or loss		1,758,846		1,758,846		2,050,052		2,050,052
Debt securities		331,664		331,664		368,820		368,820
Equity securities		65,591		65,591		67,828		67,828
Derivative-linked securities		1,361,591		1,361,591		1,613,404		1,613,404
Derivatives held for trading		3,298,328		3,298,328		2,998,042		2,998,042
Derivatives held for hedging		83,607		83,607		312,124		312,124
Loans		265,486,134		265,144,250		290,122,838		289,807,038
Available-for-sale financial assets		33,970,293		33,970,293		48,116,263		48,116,263
Debt securities		27,445,752		27,445,752		38,959,401		38,959,401
Equity securities		6,524,541		6,524,541		9,156,862		9,156,862
Held-to-maturity financial assets		11,177,504		11,400,616		18,491,980		18,483,065
Other financial assets		7,322,335		7,322,335		10,195,015		10,195,015

Total	￦	367,081,428	￦	366,956,507	￦	422,281,432	￦	421,944,030

Financial liabilities
Financial liabilities held for trading	￦	1,143,510	￦	1,143,510	￦	1,944,770	￦	1,944,770
Financial liabilities designated at fair value through profit or loss		10,979,326		10,979,326		10,078,288		10,078,288
Derivatives held for trading		3,717,819		3,717,819		3,054,614		3,054,614
Derivatives held for hedging		89,309		89,309		88,151		88,151
Deposits		239,729,695		240,223,353		255,800,048		256,222,490
Debts		26,251,486		26,247,768		28,820,928		28,814,801
Debentures		34,992,057		35,443,751		44,992,724		44,400,325
Other financial liabilities		16,286,578		16,257,142		18,330,004		18,328,276

Total	￦	333,189,780	￦	334,101,978	￦	363,109,527	￦	362,931,715

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

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


Cash and due from financial institutions		The carrying amounts of cash and demand due from financial institutions and payment due from financial institutions are a reasonable approximation of fair values. These financial instruments do not have a fixed maturity and are receivable on demand. Fair value of ordinary due from financial institutions is measured using DCF model (Discounted Cash Flow Model).

Investment securities		The fair value of financial instruments that are quoted in active markets is determined using the quoted prices. Fair value is determined through the use of external professional valuation institution where quoted prices are not available. The institutions use one or more of the following valuation techniques including DCF Model, Free Cash Flow to Equity Model, Comparable Company Analysis, Dividend Discount Model, Risk Adjusted Discount Rate Method, and Net Asset Value Method.

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

Derivatives and Financial assets at fair value through profit or loss		For exchange traded derivatives, quoted price in an active market is used to determine fair value and for OTC derivatives, fair value is determined using valuation techniques. The Group uses internally developed valuation models that are widely used by market participants to determine fair values of plain vanilla OTC derivatives including options, interest rate swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued using appropriate models developed from generally accepted market valuation models including the Finite Difference Method, the Monte Carlo Simulation, Black-Scholes Model, Hull and White Model, Closed Form and Tree Model or valuation results from independent external professional valuation institution.

Deposits		Carrying amount of demand deposits is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of time deposits is determined using a DCF model. Fair value is determined by discounting the expected cash flows, which are contractual cash flows adjusted by the expected prepayment rate, at an appropriate discount rate.

Debts		Carrying amount of overdraft in foreign currency is regarded as representative of fair value because they do not have a fixed maturity and are payable on demand. Fair value of other debts is determined using a DCF model discounting contractual future cash flows at an appropriate discount rate.

Debentures		Fair value is determined by using the valuations of external professional valuation institution, which are calculated using market inputs.

Other financial assets and liabilities		The carrying amounts are reasonable approximation of fair values. These financial instruments are temporary accounts used for other various transactions and their maturities are relatively short or not defined. However, fair value of finance lease liabilities is measured using a DCF model.

Fair value hierarchy

The Group believes that valuation methods used for measuring the fair values of financial instruments are reasonable and that the fair values recognized in the 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.

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

Level 1: The fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: The fair values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: The fair values are based on unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety shall be determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

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

The fair value hierarchy of financial assets and liabilities measured at fair value in the statements of financial position as of December 31, 2016 and 2017, is as follows:


	2016
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
	(In millions of Korean won)
Financial assets
Financial assets held for trading
Debt securities	￦	7,426,480	￦	15,560,090	￦	—	￦	22,986,570
Equity securities		1,137,531		1,903,068		—		3,040,599
Others		72,349		—		—		72,349

Sub-total		8,636,360		17,463,158		—		26,099,518

Financial assets designated at fair value through profit or loss
Debt securities		—		237,595		94,069		331,664
Equity securities		—		—		65,591		65,591
Derivative-linked securities		—		757,979		603,612		1,361,591

Sub-total		—		995,574		763,272		1,758,846

Derivatives held for trading		128,236		3,033,156		136,936		3,298,328

Derivatives held for hedging		—		82,144		1,463		83,607

Available-for-sale financial assets¹
Debt securities		10,456,882		16,978,619		10,251		27,445,752
Equity securities		1,112,502		2,349,998		3,062,041		6,524,541

Sub-total		11,569,384		19,328,617		3,072,292		33,970,293

Total	￦	20,333,980	￦	40,902,649	￦	3,973,963	￦	65,210,592

Financial liabilities
Financial liabilities held for trading	￦	1,143,510	￦	—	￦	—	￦	1,143,510
Financial liabilities designated at fair value through profit or loss		566		3,181,621		7,797,139		10,979,326
Derivatives held for trading		474,921		3,041,052		201,846		3,717,819
Derivatives held for hedging		—		89,123		186		89,309

Total	￦	1,618,997	￦	6,311,796	￦	7,999,171	￦	15,929,964


	2017
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
	(In millions of Korean won)
Financial assets
Financial assets held for trading
Debt securities	￦	7,814,921	￦	17,353,417	￦	—	￦	25,168,338
Equity securities		2,340,497		2,594,603		—		4,935,100
Others		73,855		—		—		73,855

Sub-total		10,229,273		19,948,020		—		30,177,293

Financial assets designated at fair value through profit or loss
Debt securities		—		66,969		301,851		368,820
Equity securities		—		—		67,828		67,828
Derivative-linked securities		—		668,739		944,665		1,613,404

Sub-total		—		735,708		1,314,344		2,050,052

Derivatives held for trading		80,678		2,720,285		197,079		2,998,042

Derivatives held for hedging		—		311,349		775		312,124

Available-for-sale financial assets¹
Debt securities		10,446,001		28,464,019		49,381		38,959,401
Equity securities		1,550,766		1,789,501		5,816,595		9,156,862

Sub-total		11,996,767		30,253,520		5,865,976		48,116,263

Total	￦	22,306,718	￦	53,968,882	￦	7,378,174	￦	83,653,774

Financial liabilities
Financial liabilities held for trading	￦	1,944,770	￦	—	￦	—	￦	1,944,770
Financial liabilities designated at fair value through profit or loss		843		1,389,553		8,687,892		10,078,288
Derivatives held for trading		272,766		2,717,862		63,986		3,054,614
Derivatives held for hedging		—		88,081		70		88,151

Total	￦	2,218,379	￦	4,195,496	￦	8,751,948	￦	15,165,823

The amounts of equity securities carried at cost in “Level 3”, which do not have a quoted market price in an active market and cannot be measured reliably at fair value, are ￦223,398 million and ￦116,629 million as of December 31, 2016 and 2017, respectively. These equity securities are carried at cost because it is practically difficult to quantify the intrinsic values of the equity securities issued by unlisted public and non-profit entities. In addition, due to significant fluctuations in estimated cash flows arising from entities being in its initial stages, which further results in varying and unpredictable probabilities, unlisted equity securities issued by project financing cannot be reliably and reasonably assessed. Therefore, these equity securities are carried at cost. The Group has no plan to sell these instruments in the near future.

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

Financial assets and liabilities measured at fair value classified as Level 2 in the statements of financial position as of December 31, 2016 and 2017, are as follows:

Fair value

Valuation techniques

Inputs

2016

2017

(In millions of Korean won)

Financial assets

Financial assets held for trading

Debt securities

￦

15,560,090

￦

17,353,417

DCF Model, Option model

Underlying asset Index, Discount rate, Volatility

Equity securities

1,903,068

2,594,603

DCF Model, Net Asset Value, Option Model

Underlying asset Index, Volatility, Discount rate, Fair value of underlying asset

Sub-total

17,463,158

19,948,020

Financial assets designated at fair value through profit or loss

Debt securities

237,595

66,969

DCF Model, Hull and White Model

Discount rate, Volatility

Derivative-linked securities

757,979

668,739

DCF Model, Closed Form, Monte Carlo Simulation, Option Model

Underlying asset Index, Discount rate, Volatility

Sub-total

995,574

735,708

Derivatives held for trading

3,033,156

2,720,285

DCF Model, Closed Form, FDM, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and Others

Underlying asset Index, Discount rate, Volatility, Foreign exchange rate, Stock price, Dividend rate and others

Derivatives held for hedging

82,144

311,349

DCF Model, Closed Form, FDM

Discount rate, Volatility, Foreign exchange rate and others

Available-for-sale financial assets

Debt securities

16,978,619

28,464,019

DCF Model, Option model, Net Asset Value

Discount rate

Equity securities

2,349,998

1,789,501

DCF Model, Option Model, Net Asset Value

Discount rate, Fair value of underlying asset

Sub-total

19,328,617

30,253,520

Total

￦

40,902,649

￦

53,968,882

Financial liabilities

Financial liabilities designated at fair value through profit or loss

Derivative-linked securities

￦

3,181,621

￦

1,389,553

DCF Model, Closed Form, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model and others

Price of Underlying asset, Discount rate, Dividend rate, Volatility

Sub-total

3,181,621

1,389,553

Derivatives held for trading

3,041,052

2,717,862

DCF Model, Closed Form, FDM, Monte Carlo Simulation, Black-Scholes Model, Hull and White Model, Option Valuation Model and others

Discount rate, Price of Underlying asset, Volatility, Foreign exchange rate, Credit Spread, Stock price and others

Derivatives held for hedging

89,123

88,081

DCF Model, Closed Form, FDM

Discount rate, Volatility, Foreign exchange rate and others

Total

￦

6,311,796

￦

4,195,496

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

The fair value hierarchy of financial assets and liabilities whose the fair values are disclosed as of December 31, 2016 and 2017, are as follows:


	2016
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
	(In millions of Korean won)
Financial assets
Cash and due from financial institutions¹	￦	2,625,516	￦	13,390,534	￦	1,862,664	￦	17,878,714
Loans		—		—		265,144,250		265,144,250
Held-to-maturity financial assets		1,505,288		9,895,328		—		11,400,616
Other financial assets²		—		—		7,322,335		7,322,335

Total	￦	4,130,804	￦	23,285,862	￦	274,329,249	￦	301,745,915

Financial liabilities
Deposits¹	￦	—	￦	116,068,290	￦	124,155,063	￦	240,223,353
Debts³		—		1,444,983		24,802,785		26,247,768
Debentures		—		33,504,039		1,939,712		35,443,751
Other financial liabilities⁴		—		—		16,257,142		16,257,142

Total	￦	—	￦	151,017,312	￦	167,154,702	￦	318,172,014


	2017
	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
	(In millions of Korean won)
Financial assets
Cash and due from financial institutions¹	￦	2,754,086	￦	15,281,705	￦	1,769,347	￦	19,805,138
Loans		—		569,625		289,237,413		289,807,038
Held-to-maturity financial assets		4,825,393		13,653,429		4,243		18,483,065
Other financial assets²		—		—		10,195,015		10,195,015

Total	￦	7,579,479	￦	29,504,759	￦	301,206,018	￦	338,290,256

Financial liabilities
Deposits¹	￦	—	￦	125,154,284	￦	131,068,206	￦	256,222,490
Debts³		—		853,615		27,961,186		28,814,801
Debentures		—		41,058,076		3,342,249		44,400,325
Other financial liabilities⁴		—		—		18,328,276		18,328,276

Total	￦	—	￦	167,065,975	￦	180,699,917	￦	347,765,892

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

²	Other financial assets of ￦7,322,335 million and ￦10,195,015 million are included in Level 3, the carrying amounts that are reasonable approximations of fair values as of December 31, 2016 and 2017, respectively.

³	Debts of ￦70,624 million and ￦19,820 million included in Level 2 are the carrying amounts which are reasonable approximations of fair values as of December 31, 2016 and 2017, respectively.

⁴	Other financial liabilities of ￦15,890,765 million and ￦17,882,909 million included in Level 3 are the carrying amounts which are reasonable approximations of fair values as of December 31, 2016 and 2017, respectively.

Valuation techniques and the inputs used in the fair value measurement

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

Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 2 as of December 31, 2016 and 2017, are as follows:

Fair value

Valuation
technique

Inputs

2016

2017

(In millions of Korean won)

Financial assets

Loans

￦

—

￦

569,625

DCF Model

Discount rate

Held-to-maturity financial assets

9,895,328

13,653,429

DCF Model

Discount rate

Financial liabilities

Debts

1,374,359

833,795

DCF Model

Discount rate

Debentures

33,504,039

41,058,076

DCF Model

Discount rate

Valuation techniques and inputs of financial assets and liabilities whose fair values are disclosed and classified as Level 3 as of December 31, 2016 and 2017, are as follows:


	Fair value			Valuation technique	Inputs
	2016		2017	Valuation technique	Inputs
	(In millions of Korean won)
Financial assets
Cash and due from financial institutions	￦	1,862,664	￦1,769,347	DCF Model	Credit spread, Other spread, Interest rates
Loans		265,144,250	289,237,413	DCF Model	Credit spread, Other spread, Prepayment rate, Interest rates
Held-to-maturity financial assets		—	4,243	DCF Model	Interest rates

Total	￦	267,006,914	￦291,011,003

Financial liabilities
Deposits	￦	124,155,063	￦131,068,206	DCF Model	Other spread, Prepayment rate, Interest rates
Debts		24,802,785	27,961,186	DCF Model	Other spread, Interest rates
Debentures		1,939,712	3,342,249	DCF Model	Other spread, Implied default probability, Interest rates
Other financial liabilities		366,377	445,367	DCF Model	Other spread, Interest rates

Total	￦	151,263,937	￦162,817,008

6.2 Level 3 of the Fair Value Hierarchy Disclosure

6.2.1 Valuation Policy and Process for Fair Value Measurement Categorized Within Level 3.

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

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

6.2.2 Changes in Fair Value (Level 3) Measured Using Valuation Technique Based on Unobservable in Market

Details of changes in Level 3 of the fair value hierarchy for the years ended December 31, 2016 and 2017, are as follows:


	2016
	Financial assets at fair value through profit or loss			Financial investments			Financial liabilities at fair value through profit or loss			Net derivatives financial instruments
	Designated at fair value through profit or loss			Available-for-sale financial assets			Designated at fair value through profit or loss			Derivatives held for trading			Derivatives held for hedging
	(In millions of Korean won)
Beginning balance	￦	386,838		￦	1,888,439		￦	(1,819,379	)	￦	(89,042	)	￦	714
Total gains or losses
—Profit or loss		62,717			(12,038	)		(382,798	)		25,649			676
—Other comprehensive income		—			86,320			—			—			—
Purchases		278,743			744,221			—			33,664			—
Sales		(345,846	)		(288,082	)		—			(178,670	)		—
Issues		—			—			(4,085,714	)		(26,049	)		—
Settlements		(118,913	)		—			4,182,978			282,671			(113	)
Transfers into Level 3¹		—			—			—			8,815			—
Transfers out of Level 3¹		(337,217	)		(24,816	)		2,388,485			(72,571	)		—
Business combination		836,950			678,248			(8,080,711	)		(49,377	)		—

Ending balance	￦	763,272		￦	3,072,292		￦	(7,797,139	)	￦	(64,910	)	￦	1,277


	2017
	Financial assets at fair value through profit or loss			Financial investments			Financial liabilities at fair value through profit or loss			Net derivatives financial instruments
	Designated at fair value through profit or loss			Available-for-sale financial assets			Designated at fair value through profit or loss			Derivatives held for trading			Derivatives held for hedging
	(In millions of Korean won)
Beginning balance	￦	763,272		￦	3,072,292		￦	(7,797,139	)	￦	(64,910	)	￦	1,277
Total gains or losses
—Profit or loss		52,936			(20,827	)		(846,704	)		504,627			(408	)
—Other comprehensive income		—			6,356			—			—			—
Purchases		1,315,500			1,713,098			—			35,649			—
Sales		(1,076,928	)		(916,778	)		—			(270,435	)		—
Issues		—			—			(11,528,433	)		(67,958	)		—
Settlements		(264,816	)		—			11,484,384			(3,760	)		(164	)
Transfers into Level 3¹		—			14,168			—			—			—
Transfers out of Level 3¹		—			(922	)		—			(642	)		—
Business combination		524,380			2,038,779			—			522			—
Changes from replacement of assets Of disposal group as held for sale		—			(40,190	)		—			—			—

Ending balance	￦	1,314,344		￦	5,865,976		￦	(8,687,892	)	￦	133,093		￦	705

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

In relation to changes in Level 3 of the fair value hierarchy, total gains or losses recognized in profit or loss for the period, and total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period in the statements of comprehensive income for the years ended December 31, 2015, 2016 and 2017, are as follows:


	2015
	Net income(loss) from financial investments at fair value through profit or loss		Other operating income(loss)			Net interest income
	(In millions of Korean won)
Total gains or losses included in profit or loss for the period	￦	8,699	￦	125,331		￦	7
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period		30,926		(24,143	)		7


	2016
	Net income(loss) from financial investments at fair value through profit or loss			Other operating income(loss)			Net interest income
	(In millions of Korean won)
Total gains or losses included in profit or loss for the period	￦	(294,432	)	￦	(11,375	)	￦	13
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period		(89,797	)		(15,306	)		—


	2017
	Net income(loss) from financial investments at fair value through profit or loss			Other operating income(loss)			Net interest income
	(In millions of Korean won)
Total gains or losses included in profit or loss for the period	￦	(289,141	)	￦	(21,235	)	￦	—
Total gains or losses for the period included in profit or loss for financial instruments held at the end of the reporting period		48,333			(90,103	)		—

6.2.3 Sensitivity Analysis of Changes in Unobservable Inputs

Information about fair value measurements using unobservable inputs as of December 31, 2016 and 2017, are as follows:

2016

Fair value

Valuation

technique

Unobservable inputs

Range of
unobservable
inputs(%)

Relationship of unobservable inputs to

fair value

(In millions of

Korean won)

Financial assets

Financial assets designated at fair value through profit or loss

Debt securities

￦

94,069

Black-Scholes Model

Volatility of the underlying asset

10.51~27.70

The higher the volatility, the higher the fair value fluctuation

Equity securities

65,591

Black-Scholes Model

Volatility of the underlying asset

10.51~30.97

The higher the volatility, the higher the fair value fluctuation

Derivative-linked securities

603,612

DCF Model, Closed Form, FDM, Monte Carlo

Simulation, Hull and White Model, Black-Scholes Model

Volatility of the underlying asset

15.00~49.00

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

4.00~73.07

The higher the correlation, the higher the fair value fluctuation

Derivatives held for trading

Stock and index

124,888

DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Tree Model

Volatility of the underlying asset

5.60~55.00

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

4.00~69.00

The higher the correlation, the higher the fair value fluctuation

Currency, interest rate and others

12,048

DCF Model, Hull and White Model, Closed Form, Monte Carlo Simulation, Tree Model

Loss given default

0.80~0.84

The higher the loss given default, the lower the fair value

Volatility of the stock price

14.82~30.97

The higher the volatility, the higher the fair value fluctuation

Volatility of the interest rate

0.57

The higher the volatility, the higher the fair value fluctuation

Volatility of the underlying asset

18.00~59.00

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

-5.00~47.00

The higher the absolute value of correlation, the higher the fair value fluctuation

Derivatives held for hedging

Interest rate

1,463

DCF Model, Closed Form, FDM, Monte Carlo Simulation, Tree Model

Volatility of the underlying asset

5.04

The higher the volatility, the higher the fair value fluctuation

Available-for-sale financial assets

Debt securities

10,251

DCF Model

Discount rate

6.55

The lower the discount rate, the higher the fair value

Equity securities

3,062,041

DCF Model, Comparable Company Analysis, Adjusted discount rate method, Net asset value method, Dividend discount model, Hull and White model, Discounted cash flows to equity, Income approach

Growth rate

0.00~1.00

The higher the growth rate, the higher the fair value

Discount rate

1.49~22.01

The lower the discount rate, the higher the fair value

Liquidation value

0.00

The higher the liquidation value, the higher the fair value

Recovery rate of receivables’ acquisition cost

155.83

The higher the recovery rate of receivables’ acquisition cost, the higher the fair value

Total

￦

3,973,963

Financial liabilities

Financial liabilities designated at fair value through profit or loss

Derivative-linked securities

￦

7,797,139

DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black Scholes-Model

Volatility of the underlying asset

1.00~49.00

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

-5.00~77.00

The higher the absolute value of correlation, the higher the fair value fluctuation

Derivatives held for trading

Stock and index

153,419

DCF Model, Closed Form, FDM, Monte Carlo Simulation

Volatility of the underlying asset

17.00~43.00

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

4.00~59.00

The higher the correlation, the higher the fair value fluctuation

Others

48,427

DCF Model, Closed Form, Monte Carlo Simulation, Hull and White Model, Tree Model

Volatility of the stock price

14.82

The higher the volatility, the higher the fair value fluctuation

Volatility of the interest rate

0.57~37.15

The higher the volatility, the higher the fair value fluctuation

Discount rate

2.09

The lower the discount rate, the higher the fair value

Volatility of the underlying asset

18.00~30.15

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

-5.00~47.00

The higher the absolute value of correlation, the higher the fair value fluctuation

Derivatives held for hedging

Interest rate

186

DCF Model, Closed Form, FDM, Monte Carlo Simulation, Tree Model

Volatility of the underlying asset

2.74

The higher the volatility, the higher the fair value fluctuation

Total

￦

7,999,171

2017

Fair value

Valuation

technique

Unobservable inputs

Range of
unobservable
inputs(%)

Relationship of unobservable inputs to

fair value

(In millions of

Korean won)

Financial assets

Financial assets designated at fair value through profit or loss

Debt securities

￦

301,851

Tree Model, DCF Model, Hull and White Model

Volatility of the underlying asset

9.96~29.53

The higher the volatility, the higher the fair value fluctuation

Equity securities

67,828

Tree Model

Volatility of the underlying asset

11.45~24.01

The higher the volatility, the higher the fair value fluctuation

Derivative-linked securities

944,665

DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Option Model, Tree Model

Volatility of the underlying asset

10.00~30.07

The higher the volatility, the higher the fair value fluctuation

Recovery rate

40.00

The higher the recovery rate, the higher the fair value

Correlation between underlying assets

8.27~90.00

The higher the correlation, the higher the fair value fluctuation

Derivatives held for trading

Stock and index

138,972

DCF Model, FDM, Closed Form, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Tree Model

Volatility of the underlying asset

1.00~39.00

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

3.00~67.00

The higher the value of correlation, the higher the fair value fluctuation

Currency, Interest rate and others

58,107

DCF Model, Closed Form, Monte Carlo Simulation, Hull and White Model, Black-Scholes Model, Tree Model, Option Model

Loss given default

0.56

The higher the loss given default, the lower the fair value

Volatility of the interest rate

0.47

The higher the volatility, the higher the fair value fluctuation

Volatility of the underlying asset

3.00~51.00

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

-13.00~90.00

The higher the absolute value of correlation, the higher the fair value fluctuation

Derivatives held for hedging

Interest rate

775

DCF Model, Closed Form, FDM, Monte Carlo Simulation

Volatility of the underlying asset

3.02

The higher the volatility, the higher the fair value fluctuation

Available-for-sale financial assets

Debt securities

49,381

DCF Model, Option Model, Net asset value method, Market approach

Discount rate

2.57~11.08

The lower the discount rate, the higher the fair value

Volatility

15.26~30.07

The Volatility is different for each item

Correlation between underlying assets

48.82~82.16

The coefficient of correlation is different for each item

Growth rate

0.00~2.20

The higher the growth rate, the higher the fair value

Equity securities

5,816,595

DCF Model, Comparable Company Analysis, Adjusted discount rate method, Dividend Discount Model, Net asset value method, Discounted cash flows to equity, Income approach, Market approach, One Factor Hull-White Model, Usage of past transactions, Cost methods, Asset value approach, Tree Model and others

Growth rate

-1.00~1.00

The higher the growth rate, the higher the fair value

Discount rate

-1.00~52.68

The lower the discount rate, the higher the fair value

Asset value

-1.00~1.00

The higher the asset value, the higher the fair value

Correlation between underlying assets

48.82~82.16

The coefficient of correlation is different for each item

Volatility

15.26~30.07

The Volatility is different for each item

Total

￦

7,378,174

Financial liabilities

Financial liabilities designated at fair value through profit or loss

Derivative-linked securities

￦

8,687,892

DCF Model, Closed Form, FDM, Monte Carlo Simulation, Hull and White Model, Black Scholes-Model

Volatility of the underlying asset

1.00~52.00

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

-13.42~90.24

The higher the absolute value of correlation, the higher the fair value fluctuation

Derivatives held for trading

Stock and index

14,796

DCF Model, Closed Form, Monte Carlo Simulation, FDM

Volatility of the underlying asset

1.00~33.00

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

7.00~67.00

The higher the correlation, the higher the fair value fluctuation

Others

49,190

DCF Model, Closed Form, Monte Carlo Simulation, Hull and White Model, Option Model

Volatility of the stock price

15.84

The higher the volatility, the higher the fair value fluctuation

Volatility of the interest rate

0.47

The higher the volatility, the higher the fair value fluctuation

Discount rate

2.57~2.69

The lower the discount rate, the higher the fair value

Volatility of the underlying asset

1.00~49.00

The higher the volatility, the higher the fair value fluctuation

Correlation between underlying assets

25.00~90.00

The higher the correlation, the higher the fair value fluctuation

Derivatives held for hedging

Interest rate

DCF Model, Closed Form, FDM, Monte Carlo Simulation, Tree Model

Volatility of the underlying asset

2.64

The higher the volatility, the higher the fair value fluctuation

Total

￦

8,751,948

Sensitivity analysis of changes in unobservable inputs

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of financial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair value is affected by more than two input parameters, the amounts represent the most favorable or most unfavorable. Level 3 financial instruments subject to sensitivity analysis are equity-related derivatives, currency-related derivatives and interest rate-related derivatives whose fair value changes are recognized in profit or loss as well as debt securities and unlisted equity securities (including private equity funds) whose fair value changes are recognized in profit or loss or other comprehensive income.

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


	2016
	Recognition in profit or loss					Other comprehensive income
	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
	(In millions of Korean won)
Financial assets
Financial assets designated at fair value through profit or loss¹
Debt securities	￦	1,029	￦	(866	)	￦	—	￦	—
Equity securities		840		(521	)		—		—
Derivative-linked securities		5,666		(5,463	)		—		—
Derivatives held for trading²		28,334		(29,486	)		—		—
Derivatives held for hedging²		9		(6	)		—		—
Available-for-sale financial assets
Debt securities³		—		—			69		(45	)
Equity securities⁴		—		—			168,225		(87,529	)

Total	￦	35,878	￦	(36,342	)	￦	168,294	￦	(87,574	)

Financial liabilities
Financial liabilities designated at fair value through profit or loss¹	￦	97,429	￦	(97,571	)	￦	—	￦	—
Derivatives held for trading²		31,759		(33,715	)		—		—
Derivatives held for hedging²		3		(3	)		—		—

Total	￦	129,191	￦	(131,289	)	￦	—	￦	—


	2017
	Recognition in profit or loss					Other comprehensive income
	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
	(In millions of Korean won)
Financial assets
Financial assets designated at fair value through profit or loss¹
Debt securities	￦	3,220	￦	(2,563	)	￦	—	￦	—
Equity securities		654		(626	)		—		—
Derivative-linked securities		6,906		(6,820	)		—		—
Derivatives held for trading²		25,616		(28,488	)		—		—
Derivatives held for hedging²		—		—			—		—
Available-for-sale financial assets
Debt securities³		—		—			205		(51	)
Equity securities⁴		—		—			126,916		(71,396	)

Total	￦	36,396	￦	(38,497	)	￦	127,121	￦	(71,447	)

Financial liabilities
Financial liabilities designated at fair value through profit or loss¹	￦	40,020	￦	(36,757	)	￦	—	￦	—
Derivatives held for trading²		11,091		(10,827	)		—		—
Derivatives held for hedging²		2		(2	)		—		—

Total	￦	51,113	￦	(47,586	)	￦	—	￦	—

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

For stock and index-related derivatives, changes in fair value are calculated by shifting principal unobservable input parameters such as correlation of the rates of return on stocks and volatility of the underlying asset by ± 10%. For currency-related derivatives, changes in fair value are calculated by shifting unobservable input parameters, such as loss given default ratio by ± 1%. For interest rate-related derivatives, correlation of the interest rates or volatility of the underlying asset is shifted by ± 10% to calculate fair value changes.

³	For debt securities, changes in fair value are calculated by shifting principal unobservable input parameters; such as, discount rate by ± 1%.

⁴

For equity securities, the changes in fair value are calculated by shifting principal unobservable input parameters such as correlation between growth rate (0~0.5%) and discount rate, liquidation value (-1~1%) and discount rate, or recovery rate of receivables’ acquisition cost (-1~1%). Sensitivity of fair values to unobservable parameters of private equity fund is practically impossible, but in the case of equity fund composed of real estates, the changes in fair value are calculated by shifting correlation between discount rate (-1~1%) and volatilities of real estate price (-1~1%).

6.2.4 Day One Gain or Loss

If the Group uses a valuation technique that incorporates data not obtained from observable markets for the fair value at initial recognition of financial instruments, there could be a difference between the transaction price and the amount determined using that valuation technique. In these circumstances, the fair value of financial instruments is recognized as the transaction price, and the difference is deferred and not recognized in profit or loss, and is amortized by using the straight-line method over the life of the financial instrument. When the fair value of the financial instruments is subsequently determined using observable market inputs, the remaining deferred amount is recognized in profit or loss.

The aggregate difference yet to be recognized in profit or loss at the beginning and end of the period and a reconciliation of changes in the balance of this difference for the years ended December 31, 2016 and 2017, are as follows:


	2016			2017
	(In millions of Korean won)
Balance at the beginning of the period	￦	4,055		￦	39,033
New transactions and others		37,819			58,445
Changes during the period		(2,841	)		(74,664	)

Balance at the end of the year	￦	39,033		￦	22,814

6.3 Carrying Amounts of Financial Instruments by Category

Financial assets and liabilities are measured at fair value or amortized cost. Measurement policies for each class of financial assets and liabilities are disclosed in Note 3, ‘Significant accounting policies’.

The carrying amounts of financial assets and liabilities by category as of December 31, 2016 and 2017, are as follows:


	2016
	Financial assets at fair value through profit or loss
	Held for trading		Designated at fair value through profit or loss		Loans and receivables		Available- for-sale financial assets		Held-to- Maturity financial assets		Derivatives held for hedging		Total
	(In millions of Korean won)
Financial assets
Cash and due from financial institutions	￦	—	￦	—	￦	17,884,863	￦	—	￦	—	￦	—	￦	17,884,863
Financial assets at fair value through profit or loss		26,099,518		1,758,846		—		—		—		—		27,858,364
Derivatives		3,298,328		—		—		—		—		83,607		3,381,935
Loans		—		—		265,486,134		—		—		—		265,486,134
Financial investments		—		—		—		33,970,293		11,177,504		—		45,147,797
Other financial assets		—		—		7,322,335		—		—		—		7,322,335

Total	￦	29,397,846	￦	1,758,846	￦	290,693,332	￦	33,970,293	￦	11,177,504	￦	83,607	￦	367,081,428


	2016
	Financial liabilities at fair value through profit or loss
	Held for trading		Designated at fair value through profit or loss		Financial liabilities at amortized cost		Derivatives held for hedging		Total
	(In millions of Korean won)
Financial liabilities
Financial liabilities at fair value through profit or loss	￦	1,143,510	￦	10,979,326	￦	—	￦	—	￦	12,122,836
Derivatives		3,717,819		—		—		89,309		3,807,128
Deposits		—		—		239,729,695		—		239,729,695
Debts		—		—		26,251,486		—		26,251,486
Debentures		—		—		34,992,057		—		34,992,057
Other financial liabilities		—		—		16,286,578		—		16,286,578

Total	￦	4,861,329	￦	10,979,326	￦	317,259,816	￦	89,309	￦	333,189,780


	2017
	Financial assets at fair value through profit or loss
	Held for trading		Designated at fair value through profit or loss		Loans and receivables		Available- for-sale financial assets		Held-to- Maturity financial assets		Derivatives held for hedging		Total
	(In millions of Korean won)
Financial assets
Cash and due from financial institutions	￦	—	￦	—	￦	19,817,825	￦	—	￦	—	￦	—	￦	19,817,825
Financial assets at fair value through profit or loss		30,177,293		2,050,052		—		—		—		—		32,227,345
Derivatives		2,998,042		—		—		—		—		312,124		3,310,166
Loans		—		—		290,122,838		—		—		—		290,122,838
Financial investments		—		—		—		48,116,263		18,491,980		—		66,608,243
Other financial assets		—		—		10,195,015		—		—		—		10,195,015

Total	￦	33,175,335	￦	2,050,052	￦	320,135,678	￦	48,116,263	￦	18,491,980	￦	312,124	￦	422,281,432


	2017
	Financial liabilities at fair value through profit or loss
	Held for trading		Designated at fair value through profit or loss		Financial liabilities at amortized cost		Derivatives held for hedging		Total
	(In millions of Korean won)
Financial liabilities
Financial liabilities at fair value through profit or loss	￦	1,944,770	￦	10,078,288	￦	—	￦	—	￦	12,023,058
Derivatives		3,054,614		—		—		88,151		3,142,765
Deposits		—		—		255,800,048		—		255,800,048
Debts		—		—		28,820,928		—		28,820,928
Debentures		—		—		44,992,724		—		44,992,724
Other financial liabilities		—		—		18,330,004		—		18,330,004

Total	￦	4,999,384	￦	10,078,288	￦	347,943,704	￦	88,151	￦	363,109,527

6.4 Transfer of Financial Assets

6.4.1 Transferred financial assets derecognized in their entirety.

The Group transferred loans and other financial assets that are derecognized in their entirety to SPEs, while the maximum exposure to loss(carrying amount) from its continuing involvement in the derecognized financial assets as of December 31, 2016 and 2017, are as follows:

2016

Type of continuing
involvement

Classification of financial
instruments

Carrying amount
of continuing
involvement
in statement of
financial position

Fair value of
continuing
involvement

(In millions of Korean won)

EAK ABS Co., Ltd.

Subordinate debt

Available-for-sale financial assets

￦

AP ABS First Co., Ltd.

Subordinate debt

Available-for-sale financial assets

1,393

Discovery ABS First Co., Ltd.

Subordinate debt

Available-for-sale financial assets

6,876

EAK ABS Second Co., Ltd.

Subordinate debt

Available-for-sale financial assets

12,302

FK1411 Co., Ltd.

Subordinate debt

Available-for-sale financial assets

15,212

AP 3B ABS Ltd.

Subordinate debt

Available-for-sale financial assets

14,374

AP 4D ABS Ltd.¹

Senior debt

Loans and receivables

13,626

13,689

Subordinated debt

Available-for-sale financial assets

14,450

Total

￦

78,240

￦

78,303

¹	Recognized net gain from transferring loans to the SPEs amounts to ￦6,705 million.

²	In addition to the above, the recovered portion in excess of the consideration paid attributable to adjustments based on the agreement with the National Happiness Fund for non-performing loans amounts to ￦4,394 million during 2016.

2017

Type of continuing
involvement

Classification of financial
instruments

Carrying amount
of continuing
involvement
in statement of
financial position

Fair value of
continuing
involvement

(In millions of Korean won)

Discovery ABS Second Co., Ltd.

Subordinate debt

Available-for-sale financial assets

￦

6,022

￦

6,022

EAK ABS Second Co., Ltd.

Subordinate debt

Available-for-sale financial assets

5,339

FK1411 Co., Ltd.

Subordinate debt

Available-for-sale financial assets

9,601

AP 3B ABS Ltd.

Subordinate debt

Available-for-sale financial assets

9,902

AP 4D ABS Ltd.

Senior debt

Loans and receivables

2,248

2,251

Subordinated debt

Available-for-sale financial assets

14,160

Total

￦

47,272

￦

47,275

¹	In addition to the above, the recovered portion in excess of the consideration paid attributable to adjustments based on the agreement with the National Happiness Fund for non-performing loans amounts to ￦2,989 million as of December 31, 2017.

6.4.2 Transferred financial assets that are not derecognized in their entirety

The Group securitized the loans and issued the asset-backed debentures. The senior debentures and related securitized assets as of December 31, 2016 and 2017, are as follows:


(In millions of Korean won)	2016				2017
	Carrying amount of underlying assets		Carrying amount of senior debentures		Carrying amount of underlying assets		Carrying amount of senior debentures
	(In millions of Korean won)
KB Kookmin Card Second Securitization Co., Ltd.¹	￦	605,958	￦	361,769	￦	495,545	￦	107,093
KB Kookmin Card Third Securitization Co., Ltd.¹		—		—		600,813		324,425
KB Kookmin Card Fourth Securitization Co., Ltd.¹		—		—		561,495		320,892
Wise Mobile Eighth Securitization Specialty²		11,209		—		—		—
Wise Mobile Ninth Securitization Specialty²		6,027		—		—		—
Wise Mobile Tenth Securitization Specialty²		17,485		9,999		—		—
Wise Mobile Eleventh Securitization Specialty²		16,830		9,998		—		—
Wise Mobile Twelfth Securitization Specialty²		27,107		19,995		—		—
Wise Mobile Thirteenth Securitization Specialty²		31,873		24,996		7,284		—
Wise Mobile Fourteenth Securitization Specialty²		52,583		44,991		8,504		—
Wise Mobile Fifteenth Securitization Specialty²		68,270		64,983		4,105		—
Wise Mobile Sixteenth Securitization Specialty²		114,213		109,966		5,500		—
Wise Mobile Seventeenth Securitization Specialty²		118,767		114,955		10,407		4,999
Wise Mobile Eighteenth Securitization Specialty²		97,910		94,950		9,340		4,999

	￦	1,168,232	￦	856,602	￦	1,702,993	￦	762,408

The Company has an obligation to early redeem the asset-backed debentures upon occurrence of an event specified in the agreement such as when the outstanding balance of the eligible asset-backed securitization (ABS), a trust-type ABS, is below the solvency margin ratio (minimum rate: 104.5%) of the beneficiary interest in the trust. In addition, the Company can entrust additional eligible card transaction accounts and deposits. To avoid such early redemption, the Company entrusts accounts and deposits in addition to the previously entrusted card accounts. Accordingly, as asset-backed debenture holders’ recourse is not limited to the underlying assets, the fair value is not disclosed.

According to the liquidity facility agreement entered between the Special Purpose Companies (SPC) and Woori Bank and NH Bank, if the senior debentures cannot be redeemed by the underlying assets, the senior debentures should be redeemed by borrowings from the liquidity facilities. Accordingly, as senior debenture holders’ recourse is not limited to the underlying assets, the fair value is not disclosed.

6.4.3 Securities under repurchase agreements and loaned securities

The Group continues to recognize the financial assets related to repurchase agreements and securities lending transactions on the statements of financial position since those transactions are not qualified for derecognition even though the Group transfers the financial assets. A financial asset is sold under a repurchase agreement to repurchase the same asset at a fixed price, or loaned under a securities lending agreement to be returned as the same asset. Thus, the Group retains substantially all the risks and rewards of ownership of the financial asset. The amounts of transferred assets and related liabilities as of December 31, 2016 and 2017, are as follows:


	2016
	Carrying amount of transferred assets		Carrying amount of related liabilities
	(In millions of Korean won)
Repurchase agreements	￦	9,302,087	￦	8,815,027
Loaned securities
Government bond		108,062		—
Stock		552,872		—
Others		16,250		—

Total	￦	9,979,271	￦	8,815,027


	2017
	Carrying amount of transferred assets		Carrying amount of related liabilities
	(In millions of Korean won)
Repurchase agreements	￦	10,111,732	￦	10,666,315
Loaned securities
Government bond		418,966		—
Stock		729,702		—
Others		—		—

Total	￦	11,260,400	￦	10,666,315

6.5 Offsetting Financial Assets and Financial Liabilities

The Group enters into International Swaps and Derivatives Association (“ISDA”) master netting agreements and other similar arrangements with the Group’s derivative and spot exchange counterparties. Similar netting agreements are also entered into with the Group’s reverse repurchase, securities and others. Pursuant to these agreements, in the event of default by one party, contracts are to be terminated and receivables and payables are to be offset. Further, as the law allows for the right to offset, domestic uncollected receivables balances and domestic accrued liabilities balances are shown in its net settlement balance in the consolidated statement of financial position.

Details of financial assets subject to offsetting, enforceable master netting arrangements or similar agreement as of December 31, 2016 and 2017, are as follows:


	2016
	Gross assets		Gross liabilities offset			Net amounts presented in the statement of financial position		Non-offsetting amount						Net amount
	Gross assets		Gross liabilities offset					Financial instruments			Cash collateral			Net amount
	(In millions of Korean won)
Derivatives held for trading and Derivatives linked securities	￦	3,800,978	￦	—		￦	3,800,978	￦	(2,390,096	)	￦	(2,711	)	￦	1,408,171
Derivatives held for hedging		80,718		—			80,718		(10,980	)		—			69,738
Receivable spot exchange		2,557,424		—			2,557,424		(2,555,485	)		—			1,939
Reverse repurchase agreements		2,926,515		—			2,926,515		(2,926,515	)		—			—
Domestic exchange settlement debits		19,854,611		(19,323,418	)		531,193		—			—			531,193
Other financial instruments		1,055,379		(829,137	)		226,242		(7,222	)		—			219,020

Total	￦	30,275,625	￦	(20,152,555	)	￦	10,123,070	￦	(7,890,298	)	￦	(2,711	)	￦	2,230,061


	2017
	Gross assets		Gross liabilities offset			Net amounts presented in the statement of financial position		Non-offsetting amount						Net amount
	Gross assets		Gross liabilities offset					Financial instruments			Cash collateral			Net amount
	(In millions of Korean won)
Derivatives held for trading and Derivatives linked securities	￦	2,981,437	￦	—		￦	2,981,437	￦	(2,195,210	)	￦	(191,349	)	￦	594,878
Derivatives held for hedging		312,124		—			312,124		(21,990	)		(21,830	)		268,304
Receivable spot exchange		3,443,674		—			3,443,674		(3,443,298	)		—			376
Reverse repurchase agreements		2,617,700		—			2,617,700		(2,617,700	)		—			—
Domestic exchange settlement debits		30,904,611		(29,959,914	)		944,697		—			—			944,697
Other financial instruments		1,542,035		(1,531,622	)		10,413		(9,525	)		—			888

Total	￦	41,801,581	￦	(31,491,536	)	￦	10,310,045	￦	(8,287,723	)	￦	(213,179	)	￦	1,809,143

Details of financial liabilities subject to offsetting, enforceable master netting arrangements or similar agreement as of December 31, 2016 and 2017, are as follows:


	2016
	Gross liabilities		Gross assets offset			Net amounts presented in the statement of financial position		Non-offsetting amount						Net amount
	Gross liabilities		Gross assets offset					Financial instruments			Cash collateral			Net amount
	(In millions of Korean won)
Derivatives held for trading and Derivatives linked securities	￦	4,622,729	￦	—		￦	4,622,729	￦	(3,005,000	)	￦	(207,797	)	￦	1,409,932
Derivatives held for hedging		88,506		—			88,506		(22,795	)		(11,922	)		53,789
Payable spot exchange		2,556,009		—			2,556,009		(2,555,485	)		—			524
Repurchase agreements¹		8,815,027		—			8,815,027		(8,815,027	)		—			—
Securities borrowing agreements		1,063,056		—			1,063,056		(1,063,056	)		—			—
Domestic exchange settlement credits		20,655,999		(19,323,418	)		1,332,581		(1,332,503	)		—			78
Other financial instruments		953,137		(829,137	)		124,000		(7,252	)		—			116,748

Total	￦	38,754,463	￦	(20,152,555	)	￦	18,601,908	￦	(16,801,118	)	￦	(219,719	)	￦	1,581,071


	2017
	Gross liabilities		Gross asset offset			Net amounts presented in the statement of financial position		Non-offsetting amount
	Gross liabilities		Gross asset offset					Financial instruments			Cash collateral			Net amount
	(In millions of Korean won)
Derivatives held for trading and Derivatives linked securities	￦	3,193,238	￦	—		￦	3,193,238	￦	(1,540,336	)	￦	(32,585	)	￦	1,620,317
Derivatives held for hedging		88,151		—			88,151		(11,770	)		(9,139	)		67,242
Payable spot exchange		3,445,098		—			3,445,098		(3,443,298	)		—			1,800
Repurchase agreements¹		10,666,315		—			10,666,315		(10,666,315	)		—			—
Securities borrowing agreements		1,870,579		—			1,870,579		(1,870,579	)		—			—
Domestic exchange settlement credits		29,999,359		(29,959,914	)		39,445		(39,445	)		—			—
Other financial instruments		1,721,862		(1,530,488	)		191,374		(194	)		—			191,180

Total	￦	50,984,602	￦	(31,490,402	)	￦	19,494,200	￦	(17,571,937	)	￦	(41,724	)	￦	1,880,539

¹	Includes repurchase agreements sold to customers.