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6-K 1 d807966d6k.htm FORM 6-K Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2024

Commission File Number: 001-31811

Woori Financial Group Inc.

(Translation of registrant’s name into English)

51, Sogong-ro, Jung-gu, Seoul, 04632, Korea

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Submission of Audit Reports of Woori Bank

On March 6, 2024, Woori Financial Group Inc. disclosed audit reports of Woori Bank, its wholly-owned subsidiary, for the fiscal year 2023 based on the International Financial Reporting Standards as adopted by the Republic of Korea.

The financial statements accompanying such reports have not been approved by the shareholders of Woori Bank and remain subject to change.

Please refer to the audit reports and Woori Bank’s consolidated and separate financial statements, which have been furnished as Exhibits 99.1 and 99.2 hereto, respectively.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Woori Financial Group Inc.
	(Registrant)

Date: March 6, 2024	By: /s/ Sung-Wook Lee
	(Signature)

	Name:	Sung-Wook Lee
	Title:	Deputy President

EX-99.1 2 d807966dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

LOGO

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEAR ENDED

DECEMBER 31, 2023

WOORI BANK


		Page(s)

INDEPENDENT AUDITORS’ REPORT		1-3

Consolidated Financial Statements

Consolidated Statements of Financial Position		5-6

Consolidated Statements of Comprehensive Income		7-8

Consolidated Statements of Changes in Equity		9

Consolidated Statements of Cash Flows		10-11

Notes to the Consolidated Financial Statements		12-160

INDEPENDENT AUDITORS’ REPORT

(Based on a report originally issued in Korean)

The Board of Directors and Shareholder of

Woori Bank

Opinion

We have audited the consolidated financial statements of Woori Bank and its subsidiaries (the “Group”), which comprise the consolidated statements of financial position as of December 31, 2023, and the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising of material accounting policy information and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2023, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Korean International Financial Reporting Standards (K-IFRS).

Basis for Opinion

We conducted our audits in accordance with Korean Standards on Auditing (KSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Other Matters

The consolidated financial statements of the Group for the year ended December 31, 2022, were audited by another auditor who expressed an unmodified opinion on those statements on March 7, 2023.

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

- 1 -

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

•

Evaluate the appropriateness of accounting policies used in the preparation of the consolidated financial statements and the reasonableness of accounting estimates and related disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

- 2 -

•

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

March 6, 2024

This report is effective as of March 6, 2024, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

- 3 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED

DECEMBER 31, 2023 AND 2022

The accompanying consolidated financial statements including all footnote disclosures were

prepared by and are the responsibility of the management of Woori Bank CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Byung Kyu Cho

President and Chief Executive Officer

Main Office Address: (Road Name Address) 51, Sogong-ro, Jung-gu, Seoul

(Phone Number) 02-2002-3000

- 4 -

WOORI BANK AND ITS SUBSIDIARIES

AS OF DECEMBER 31, 2023 AND 2022


	December 31, 2023		December 31, 2022
	(Korean Won in millions)
ASSETS
Cash and cash equivalents (Notes 2, 6 and 45)		29,286,730		32,418,295
Financial assets at fair value through profit or loss (“FVTPL”) (Notes 4, 7, 11, 12, 18, 26 and 45)		20,561,927		18,489,573
Financial assets at fair value through other comprehensive income (“FVTOCI”) (Notes 4, 8, 11, 12 and 18)		37,811,173		33,000,262
Securities at amortized cost (Notes 4, 9, 11, 12 and 18)		23,996,172		28,268,516
Loans and other financial assets at amortized cost (Notes 2, 3, 4, 10, 11, 12, 18 and 45)		340,740,764		325,919,599
Investments in joint ventures and associates (Note 13)		1,029,697		917,581
Investment properties (Note 14)		592,528		603,211
Properties and equipment (Notes 15 and 18)		2,728,961		2,700,817
Intangible assets (Note 16)		519,781		438,484
Assets held for sale (Note 17)		11,573		9,589
Current tax assets (Note 42)		152,898		38,913
Deferred tax assets (Note 42)		44,312		55,732
Derivative assets (Designated for hedging) (Notes 4, 11, 12 and 26)		698		—
Net defined benefit assets(Note 24)		221,545		287,673
Other assets (Notes 18, 19 and 45)		318,307		192,734

Total assets		458,017,066		443,340,979

LIABILITIES
Financial liabilities at FVTPL (Notes 4, 11, 12, 20, 26 and 45)		6,023,306		8,988,077
Deposits due to customers (Notes 4, 11, 21 and 45)		353,851,379		338,923,832
Borrowings (Notes 4, 11, 12, 22 and 45)		25,254,732		23,028,206
Debentures (Notes 4, 11 and 22)		21,277,033		24,639,433
Provisions (Notes 23, 44 and 45)		705,964		466,524
Net defined benefit liability (Note 24)		2,426		2,321
Current tax liabilities (Note 42)		58,085		716,936
Deferred tax liabilities (Note 42)		479,614		29,356
Derivative liabilities (Designated for hedging) (Notes 4, 11, 12, and 26)		135,263		193,831
Other financial liabilities (Notes 4, 11, 12, 25 and 45)		23,230,152		20,359,019
Other liabilities (Notes 25 and 45)		295,660		236,258

Total liabilities		431,313,614		417,583,793

(Continued)

- 5 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2023 AND 2022

(CONTINUED)


	December 31, 2023			December 31, 2022
	(Korean Won in millions)
EQUITY
Owners’ equity:		26,581,075			25,646,249
Share capital (Note 28)		3,581,392			3,581,392
Hybrid securities (Note 29)		1,546,447			2,344,816
Capital surplus (Note 28)		1,096,194			1,096,194
Other equity (Note 30)		(1,568,050	)		(2,324,321	)
Retained earnings (Notes 31 and 32)		21,925,092			20,948,168
(Regulatory reserve for credit loss)		(2,307,974	)		(2,443,576	)
(Regulatory reserve for credit loss to be reversed)		402,620			135,602
(Planned reversal of regulatory reserve for credit loss)		402,620			135,602
Non-controlling interests		122,377			110,937

Total equity		26,703,452			25,757,186

Total liabilities and equity		458,017,066			443,340,979

The accompanying notes are part of these consolidated financial statements.

- 6 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022


	2023			2022
	(Korean Won in millions, except for per share data)
Interest income		18,385,867			12,742,404
Financial assets at FVTPL		116,203			63,515
Financial assets at FVTOCI		999,407			632,615
Financial assets at amortized cost		17,270,257			12,046,274
Interest expense		(10,949,611	)		(5,324,680	)

Net interest income (Notes 11, 34 and 45)		7,436,256			7,417,724
Fees and commissions income		1,103,298			1,151,974
Fees and commissions expense		(223,121	)		(224,860	)

Net fees and commissions income (Notes 11, 35 and 45)		880,177			927,114
Dividend income (Notes 11, 36 and 45)		255,084			151,113
Net gain on financial instruments at FVTPL (Notes 11, 37 and 45)		482,005			214,666
Net loss on financial assets at FVTOCI (Notes 11 and 38)		(37,641	)		(21,498	)
Net gain on financial assets at amortized cost		101,788			35,003
Net gain on disposals of loans and other financial assets at amortized cost (Note 11)		101,788			35,003
Provision for expected credit loss allowance (Notes 11, 39 and 45)		(993,519	)		(458,812	)
General and administrative expenses (Notes 40 and 45)		(3,799,282	)		(3,914,672	)
Other net operating expenses (Notes 40 and 45)		(1,007,910	)		(567,451	)

Operating income		3,316,958			3,783,187
Gain on valuation of investments in associates (Note 13)		88,788			73,958
Net other non-operating income (expenses)		(76,312	)		5,563

Non-operating income (Note 13 and 41)		12,476			79,521
Net income before income tax expense		3,329,434			3,862,708
Income tax expense (Note 42)		(814,354	)		(959,299	)

Net income
(Net income after the provision of regulatory reserve for credit loss for the years ended December 31, 2023 and 2022 are 2,917,700 million Won and 3,039,011 million Won, respectively) (Note 32)		2,515,080			2,903,409

(Continued)

- 7 -

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (CONTINUED)


	2023			2022
	(Korean Won in millions, except for per share data)
Net gain (loss) on valuation of equity securities at FVTOCI		195,032			(35,432	)
Remeasurement of the net defined benefit liability		(65,720	)		226,843
Changes in capital due to equity method		8,603			(4,527	)

Items that will not be reclassified to profit or loss		137,915			186,884
Net gain (loss) on valuation of debt securities at FVTOCI		532,334			(463,724	)
Changes in capital due to equity method		(2,611	)		5,413
Gain on foreign currency translation of foreign operations		48,711			47,258
Loss on evaluation of hedge of net investment in foreign operations		(14,049	)		(20,701	)

Items that may be reclassified to profit or loss		564,385			(431,754	)
Other comprehensive income (loss), net of tax		702,300			(244,870	)

Total comprehensive income		3,217,380			2,658,539

Net income attributable to:		2,515,080			2,903,409
Net income attributable to owners		2,505,587			2,892,165
Net income attributable to non-controlling interests		9,493			11,244
Total comprehensive income attributable to:		3,217,380			2,658,539
Comprehensive income attributable to owners		3,203,098			2,651,873
Comprehensive income attributable to non-controlling interests		14,282			6,666
Earnings per share (Note 43)
Basic and diluted earnings per share (Unit : In Korean Won)		3,366			3,880

The accompanying notes are part of these consolidated financial statements.

- 8 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022


	Share capital		Hybrid securities			Capital surplus		Other equity			Retained earnings			Owner’s equity			Non- controlling interests			Total equity
	(Korean Won in millions)
January 1, 2022		3,581,392		2,555,166			1,096,194		(2,061,097	)		19,383,229			24,554,884			106,635			24,661,519
Net income		—		—			—		—			2,892,165			2,892,165			11,244			2,903,409
Dividends on common stocks		—		—			—		—			(1,175,672	)		(1,175,672	)		(2,365	)		(1,178,037	)
Net loss on valuation of financial assets at FVTOCI		—		—			—		(498,681	)		—			(498,681	)		(475	)		(499,156	)
Net gain(loss) due to disposal of financial assets at FVTOCI		—		—			—		10,473			(10,473	)		—			—			—
Changes in capital due to equity method		—		—			—		886			—			886			—			886
Gain(loss) on foreign currency translation of foreign operations		—		—			—		51,381			—			51,381			(4,122	)		47,259
Loss on evaluation of hedges of net investment in foreign operations		—		—			—		(20,701	)		—			(20,701	)		—			(20,701	)
Disposal of assets held for sale		—		—			—		(279	)		279			—			—			—
Remeasurement of the net defined benefit liability		—		—			—		226,823			—			226,823			20			226,843
Dividends on hybrid securities		—		—			—		—			(113,995	)		(113,995	)		—			(113,995	)
Issuance to hybrid securities		—		349,215			—		—			—			349,215			—			349,215
Redemption of hybrid securities		—		(559,565	)		—		(60,491	)		—			(620,056	)		—			(620,056	)
Appropriation of retained earnings		—		—			—		27,365			(27,365	)		—			—			—

December 31, 2022		3,581,392		2,344,816			1,096,194		(2,324,321	)		20,948,168			25,646,249			110,937			25,757,186

January 1, 2023		3,581,392		2,344,816			1,096,194		(2,324,321	)		20,948,168			25,646,249			110,937			25,757,186
Net income		—		—			—		—			2,505,587			2,505,587			9,493			2,515,080
Dividends on common stocks		—		—			—		—			(1,372,572	)		(1,372,572	)		(2,842	)		(1,375,414	)
Net gain on valuation of financial assets at FVTOCI		—		—			—		727,312			—			727,312			54			727,366
Net gain(loss) due to disposal of financial assets at FVTOCI		—		—			—		(87	)		87			—			—			—
Changes in capital due to equity method		—		—			—		5,992			—			5,992			—			5,992
Equity method capital adjustment		—		—			—		50			(50	)		—			—			—
Gain on foreign currency translation of foreign operations		—		—			—		44,048			—			44,048			4,663			48,711
Loss on evaluation of hedges of net investment in foreign operations		—		—			—		(14,049	)		—			(14,049	)		—			(14,049	)
Remeasurement of the net defined benefit liability		—		—			—		(65,792	)		—			(65,792	)		72			(65,720	)
Dividends on hybrid securities		—		—			—		—			(95,637	)		(95,637	)		—			(95,637	)
Issuance to hybrid securities		—		299,327			—		—			—			299,327			—			299,327
Redemption of hybrid securities		—		(1,097,696	)		—		(1,694	)		—			(1,099,390	)		—			(1,099,390	)
Appropriation of retained earnings		—		—			—		60,491			(60,491	)		—			—			—

December 31, 2023		3,581,392		1,546,447			1,096,194		(1,568,050	)		21,925,092			26,581,075			122,377			26,703,452

The accompanying notes are part of these consolidated financial statements.

- 9 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022


	For the years ended December 31
	2023			2022
	(Korean Won in millions)
Cash flows from operating activities:
Net income		2,515,080			2,903,409
Adjustments:
Income tax expense		814,354			959,299
Interest income		(18,385,867	)		(12,742,404	)
Interest expense		10,949,611			5,324,680
Dividend income		(255,084	)		(151,113	)

		(6,876,986	)		(6,609,538	)

Additions of expenses not involving cash outflows:
Loss on financial instruments at FVTPL		—			827,247
Loss on financial assets at FVTOCI		46,335			23,836
Provision for expected credit loss allowance		993,519			458,812
Loss on valuation of investments in joint ventures and associates		13,016			9,481
Loss on disposal of investments in joint ventures and associates		441			116
Loss on derivatives (designated for hedging)		8,819			250,267
Loss on fair value hedge		72,601			—
Retirement benefits		88,694			136,942
Losses related to other provisions		72,213			24,540
Depreciation and amortization		425,070			456,336
Loss on disposal of Properties and equipment, intangible asset and other assets		1,694			2,875
Impairment loss on Properties and equipment, intangible asset and other assets		22			144
Loss on foreign currency translation		342,930			—
Other losses		—			63,354
Other operating expenses		169,357			—

		2,234,711			2,253,950

Deductions of incomes not involving cash inflows:
Gain on financial instruments at FVTPL		553,797			—
Gain on financial assets at FVTOCI		8,694			2,338
Gain on valuation of investments in joint ventures and in associates		101,804			83,440
Gain on disposal of investments in joint ventures and in associates		32,766			560
Gain on derivatives (designated for hedging)		69,479			1,288
Gain on fair value hedge		8,986			257,910
Gain related to other provisions		14,498			53,796
Gain on disposal of Properties and equipment, intangible assets and other assets		1,853			25,503
Reversal of impairment loss on Properties and equipment, intangible asset and other assets		47			—
Gain on disposal of assets held for sale		3,027			28,525
Loss on foreign currency translation		—			90,522
Other incomes		—			15,880

		794,951			559,762

Changes in operating assets and liabilities:
Financial instruments at FVTPL		(2,035,979	)		(1,698,435	)
Loans and other financial assets at amortized cost		(15,140,110	)		(1,626,419	)
Other assets		(122,039	)		(35,651	)
Deposits due to customers		14,424,924			23,476,007
Provisions		(31,852	)		(23,692	)
Net defined benefit liability		(112,056	)		(103,248	)
Other financial liabilities		1,523,574			(3,414,341	)
Other liabilities		55,886			64,488

		(1,437,652	)		16,638,709

Cash received from operating activities:
Interest income received		18,037,691			12,293,383
Interest expense paid		(9,800,116	)		(4,332,006	)
Dividends received		255,176			151,148
Income tax paid		(1,355,888	)		(856,220	)

Net cash inflow from operating activities		2,777,065			21,883,073

- 10 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

(CONTINUED)


	For the years ended December 31
	2023			2022
	(Korean Won in millions)
Cash flows from investing activities:
Disposal of financial instruments at FVTPL		10,598,578			10,072,904
Acquisition of financial instruments at FVTPL		(12,980,735	)		(11,297,246	)
Disposal of financial assets at FVTOCI		20,648,897			21,713,901
Acquisition of financial assets at FVTOCI		(24,211,511	)		(16,109,821	)
Redemption of securities at amortized cost		8,727,124			5,872,961
Acquisition of securities at amortized cost		(4,244,256	)		(16,873,194	)
Cash inflow from Changes in subsidiaries		—			17,648
Cash outflow from Changes in subsidiaries		—			(100,000	)
Disposal of investments in joint ventures and associates		31,030			40,273
Acquisition of investments in joint ventures and associates		(68,711	)		(18,272	)
Disposal of Properties and equipment		18,849			11,913
Acquisition of Properties and equipment		(129,723	)		(104,825	)
Disposal of intangible assets		1,028			7
Acquisition of intangible assets		(179,648	)		(108,127	)
Disposal of assets held for sale		3,547			52,417
Net increase in other assets		8,277			62,440

Net cash outflow from investing activities		(1,777,254	)		(6,767,021	)

Cash flows from financing activities:
Net increase of derivatives (designated for hedging)		1,394			19,669
Net Increase in borrowings		2,034,234			927,904
Issuance of debentures		12,859,755			10,943,580
Redemption of debentures		(16,412,140	)		(12,778,811	)
Redemption of lease liabilities		(172,682	)		(168,519	)
Net increase of other liabilities		30			453
Dividends paid to common stocks		(1,372,572	)		(1,175,672	)
Issuance of hybrid securities		299,327			349,215
Redemption of hybrid securities		(1,100,000	)		(643,000	)
Dividends paid to hybrid securities		(95,637	)		(113,995	)
Dividends paid to non-controlling interest		(2,842	)		(2,365	)

Net cash outflow from financing activities		(3,961,133	)		(2,641,541	)

Effects of exchange rate changes on cash and cash equivalents		(170,243	)		31,240
Net increase (decrease) in cash and cash equivalents		(3,131,565	)		12,505,751
Cash and cash equivalents, the beginning of the period		32,418,295			19,912,544

Cash and cash equivalents, the end of the period		29,286,730			32,418,295

The accompanying notes are part of these consolidated financial statements.

- 11 -

WOORI BANK AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

GENERAL

(1)	Summary of the Parent company

Woori Bank (hereinafter referred to as the “Bank”), which is a parent company in accordance with K-IFRS No.1110 – Consolidated Financial Statements, was established in 1899 and is engaged in the commercial banking business under the Banking Act, trust business and foreign exchange business under the Financial Investment Services and Capital Market Act.

As of December 31, 2023, the Bank’s shares are wholly owned by Woori Financial Group Inc. (“Woori Financial Group”) which was established in accordance with the Financial Holding Companies Act on January 11, 2019. The Bank has 716 million shares and ordinary share capital amounting to 3,581,392 million Korean Won.

The headquarters of the Bank is located at 51, Sogong-ro, Jung-gu, Seoul, Korea. The Bank has 711 branches and offices in Korea, and 14 branches, 8 branch offices and 4 offices overseas as of December 31, 2023.

(2)	The consolidated financial statements for Woori Bank and its subsidiaries (the “Group”) include the following subsidiaries:

Percentage of ownership
(%)

Location

Financial
statements

as of

(2023)

Subsidiaries

Main business

December
31, 2023

December
31, 2022

Woori Bank:

Woori America Bank

Finance

100.0

U.S.A.

December 31

Woori Global Markets Asia Limited

Finance

100.0

Hong Kong

December 31

Woori Bank China Limited

Finance

100.0

China

December 31

AO Woori Bank(*4)

Finance

100.0

Russia

December 31

PT Bank Woori Saudara Indonesia 1906 Tbk

Finance

84.2

Indonesia

December 31

Banco Woori Bank do Brasil S.A.

Finance

100.0

Brazil

December 31

Korea BTL Infrastructure Fund

Finance

99.9

Korea

December 31

Woori Finance Myanmar Co., Ltd.

Finance

100.0

Myanmar

December 31

Wealth Development Bank

Finance

51.0

Philippines

December 31

Woori Bank Vietnam Limited

Finance

100.0

Vietnam

December 31

Woori Bank (Cambodia) PLC

Finance

100.0

Cambodia

December 31

Woori Bank Europe

Finance

100.0

Germany

December 31

Kumho Trust First Co., Ltd. (*5)

Asset securitization

—

0.0

Korea

—

Asiana Saigon Inc. (*5)

Asset securitization

—

0.0

Korea

—

KAMCO Value Recreation First Securitization Specialty Co., Ltd. (*1)

Asset securitization

15.0

Korea

December 31

Jeonju Iwon Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Wonju I one Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Heitz Third Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woorihansoop 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori International First Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Wibihansoop 1st Co., Ltd. (*5)

Asset securitization

—

0.0

Korea

—

Woori QS 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori Display 2nd Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori Dream 2nd Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori H 1st Co., Ltd. (*5)

Asset securitization

—

0.0

Korea

—

Woori K 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori S 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori Display 3rd Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

TY 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori KC No.1 Co., Ltd. (*5)

Asset securitization

—

0.0

Korea

—

- 12 -

Percentage of ownership
(%)

Location

Financial
statements

as of

(2023)

Subsidiaries

Main business

December
31, 2023

December
31, 2022

Quantum Jump the 2nd Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

ATLANTIC TRANSPORTATION 1 S.A. (*5)

Asset securitization

—

0.0

Marshall Islands

—

Woori Gongdeok First Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

HD Project Co., Ltd. (*5)

Asset securitization

—

0.0

Korea

—

Woori HW 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori HC 2nd Co., Ltd. (*5)

Asset securitization

—

0.0

Korea

—

Woori Dream 3rd Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori SJS 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori Steel 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

SPG the 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori-HWC 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori HC 3rd Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori Park I 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori DS 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori HC 4th Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori SKR 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori H chemical 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

HE the 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori Hub The 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori K The 3rd Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori KF 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori TS 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori H Square 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori L Yongsan 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori HC 5th Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori Ladena 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori HR 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori Lotte Dongtan 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori HC 6th Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori ECO 1st Co. Ltd. (*5)

Asset securitization

—

0.0

Korea

—

Woori HO 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori ESG 1st Co.,Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori Osiria 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori Eco 2nd Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Gangnam Landmark 2nd Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori HP the 1st Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Woori KF 2nd Co., Ltd. (*1)

Asset securitization

0.0

—

Korea

December 31

Woori HD 1st Co., Ltd. (*1)

Asset securitization

0.0

—

Korea

December 31

Woori ST 1st Co., Ltd. (*1)

Asset securitization

0.0

—

Korea

December 31

Woori High End 1st Co., Ltd. (*1)

Asset securitization

0.0

—

Korea

December 31

Woori HW 2nd Co., Ltd. (*1)

Asset securitization

0.0

—

Korea

December 31

Woori Mirae 1st Co., Ltd. (*1)

Asset securitization

0.0

—

Korea

December 31

Heungkuk Global Private Placement Investment Trust No. 1 (*2)

Securities investment

98.8

Korea

December 31

AI Partners UK Water Supply Private Investment Trust No. 2 (*2)

Securities investment

97.3

December 31

Multi Asset Global Real Estate Investment Trust No. 5-2 (*2)

Securities investment

99.0

Korea

December 31

IGIS Australia Investment Trust No. 209-1 (*2)

Securities investment

99.4

Korea

December 31

Woori G North America Infra Private Placement Investment Trust No. 1 (*2)

Securities investment

99.3

Korea

December 31

Woori Global Development Infrastructure Synergy Company Private Placement Investment Trust No. 1 (*2)

Securities investment

99.9

Korea

December 31

Woori G Infrastructure New Deal General Type Private Investment Trust No. 1 (*2)

Securities investment

99.5

Korea

December 31

Woori G Global Secondary Private Placement Investment Trust No. 1 (*2)

Securities investment

98.6

98.3

Korea

December 31

Woori G ESG Infrastructure Development General Type Private Investment Trust No.1 (*2)

Securities investment

95.2

Korea

December 31

Kiwoom Harmony Private Placement Investment Trust No. 2 (*2)

Securities investment

97.2

97.1

Korea

December 31

Kiwoom Harmony Private Placement Investment Trust No. 1 (*2)

Securities investment

97.4

97.2

Korea

December 31

- 13 -

Percentage of ownership
(%)

Location

Financial
statements

as of

(2023)

Subsidiaries

Main business

December
31, 2023

December
31, 2022

JB Airline Private Placement Investment Trust No.8 (*2)

Securities investment

97.0

Korea

December 31

Kiwoom Frontier Private Investment Trust No.23[Bond] (*5)

Securities investment

—

99.8

Korea

—

Kiwoom Harmony Private Placement Investment Trust
No. 4 (*2)

Securities investment

96.2

—

Korea

December 31

Principal Guaranteed Trust (*3)

Trust

0.0

Korea

December 31

Principal and Interest Guaranteed Trust (*3)

Trust

0.0

Korea

December 31

Multi Asset Global Real Estate Investment Trust No. 5-2:

MAGI No.5 LuxCo S.a.r.l.

Asset securitization

54.6

Luxembourg

December 31

MAGI No.5 LuxCo S.a.r.l:

ADP 16 Brussels

Asset securitization

100.0

Belgium

December 31

(*1)

The entity is a structured entity for the purpose of asset securitization. Although the Group is not a majority shareholder, the Group 1) has the power over the investee, 2) is exposed to or has rights to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns.

(*2)

The entity is a structured entity for the purpose of investment in securities. Although the Group is not a majority shareholder, the Group 1) has the power over the investee, 2) is exposed to or has rights to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns.

(*3)

It was determined that the consolidated entity controlled the monetary trust under the Capital Markets Act, taking into account the power of less than half of the ownership stake in investment-related activities, exposure to variable returns, and the ability to use power to affect the variable returns of the consolidated entity.

(*4)

Following Russia’s further invasion of Ukraine in February 2022, various countries, including the United States, have imposed additional sanctions on a number of Russian individuals and entities, and restricted or prohibited certain activities relating to Russia such as making new investments or the provision of certain services. These sanctions may result in a decrease in the value of financial or operating assets held by banks in relation to the disputed country, an increase in the collection period, restrictions on capital transfers, and a decrease in profits. As a result, the Group expect future financial impacts on the business of its subsidiary, AO Woori Bank of Russia, as of December 31, 2023, but it is difficult to assess the maximum potential exposure or the ultimate adverse impact with any degree of certainty.

(*5)	Excluded from the consolidation due to the end of the credit facilities for the years ended December 31, 2023.

- 14 -

(3)	The Group has not consolidated the following entities as of December 31, 2023 and 2022 despite having more than 50% ownership interest:


	As of December 31, 2023
Subsidiaries	Location	Main Business	Percentage of ownership (%)
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*1)	Korea	Securities Investment		59.7
Kiwoom Yonsei Private Equity Investment Trust (*1)	Korea	Securities Investment		88.9
IGIS Europe Private Placement Real Estate Fund No. 163-2 (*2)	Korea	Securities Investment		97.9
IGIS Global Private Placement Real Estate Fund No. 148-1 (*1)	Korea	Securities Investment		69.0
IGIS Global Private Placement Real Estate Fund No. 148-2 (*1)	Korea	Securities Investment		69.0
Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1 (*1)	Korea	Securities Investment		66.7
Hangkang Sewage Treatment Plant Fund (*1)	Korea	Securities Investment		55.6
Korea Investment Pocheon-Hwado Highway Infra Private Placement Special Asset Fund (*1)	Korea	Securities Investment		55.1
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 1 (*1)	Korea	Securities Investment		55.0
Midas Global Private Placement Real Estate Investment Trust No. 7-2 (*1)	Korea	Securities Investment		58.3
Together-Korea Government Private Pool Private Securities Investment Trust No. 3 (*3)	Korea	Securities Investment		100.0
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 2 (*1)	Korea	Securities Investment		55.0
WooriG Woori Bank Partners Private Placement Investment Trust No. 1 (*1)	Korea	Securities Investment		92.6
WooriG Private Investment Trust No. 1 (*1)	Korea	Securities Investment		84.3
INMARK France Private Placement Investment Trust No. 18-1 (*1)	Korea	Securities investment		93.8
Kiwoom Vibrato Private Placement Investment Trust 1-W (EUR) (*2)	Korea	Securities investment		99.5
WooriG Global Mid-market Secondaries Private Placement Investment Trust No. 1 (*1)	Korea	Securities investment		80.0
KOTAM Global Infrastructure Private Equity Investment Trust No.1-4 (*2)	Korea	Securities investment		99.7
Hana UBS Class One Private Equity No. 3 C2 (*1)	Korea	Securities investment		51.0
Consus Gyeongju Green Private Equity Investment Trust No. 1 (*1)	Korea	Securities investment		50.0
Woori G Woori Bank Partners Private Placement Investment Trust No. 2 (*1)	Korea	Securities investment		90.9
Woori G Equity Bridge Loan Private Placement Investment Trust No. 1 (*1)	Korea	Securities investment		65.0
WooriG Private Investment Trust No. 5 (*1)	Korea	Securities investment		87.0
Kiwoom Harmony Private Placement Investment Trust No. 3 (*1)	Korea	Securities investment		76.7
Consus Solar Energy Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		50.0
Woori Innovative Growth New Deal Private Placement Investment Trust No.3 (*1)	Korea	Securities investment		79.8
Woori G Renewable New Deal Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		55.0
Woori G Policy-type New Deal (Infra Investment) Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		66.7
IGIS ESG General Private Investment Trust No.1 (*1)	Korea	Securities investment		60.0
Woori G GP Commitment Loan Private Placement Investment Trust No. 2 (*1)	Korea	Securities investment		80.0
Kiwoom Aurora General Type Private Placement Investment Trust No. 2 (*1)	Korea	Securities investment		60.0
NH-Amundi WSCP VIII Private Fund 2 (USD) (*1)	Korea	Securities investment		65.2
AI Partners Global Infrastructure Specialized Privately Placed Feeder Fund Trust No. 2 (USD) (*2)	Korea	Securities investment		98.0
WooriG Equity Investment General Type Private Investment Trust No.1 (*1)	Korea	Securities investment		93.8
Hangang new deal infra BTL fund 4 (HNBF4) (*1)	Korea	Securities investment		60.0
Woori Busan Logistics Infra Private Placement Special Asset Investment Trust (*1)	Korea	Securities investment		66.7
Woori Financial Digital Investment Association No. 1 (*1)	Korea	Securities investment		88.0
Woori G GP Commitment Loan Private Placement Investment Trust No. 3 (*1)	Korea	Securities investment		85.0
IGIS Global Private Placement Real Estate Fund No. 316-1 (*2)	Korea	Securities investment		99.3
INMARK Spain Private Placement Real Estate Investment Trust No. 26-2 (*2)	Korea	Securities investment		97.7

- 15 -


	As of December 31, 2023
Subsidiaries	Location	Main Business	Percentage of ownership (%)
Woori G Japan Private Placement Real Estate Investment Trust No. 1-2 (*2)	Korea	Securities investment		98.8
Woori G Japan Blind General Type Private Real Estate Feeder Investment Trust No.1 (*2)	Korea	Securities investment		99.9
WooriG Private Investment Trust No.6 (*1)	Korea	Securities investment		85.0
Woori New Growth Credit Fund 1 (*1)	Korea	Securities investment		70.9
Woori Asset Global Partnership Fund No. 5 (*1)	Korea	Securities investment		57.7
Woori PE Secondary Private Placement Investment Trust No. 1 (*1)	Korea	Securities investment		82.6
Kiwoom Harmony Private Placement Investment Trust No. 6 (*1)	Korea	Securities investment		76.9

(*1)

Since the investee is a discretionary funds, the Group does not have power over the investee because the fund manager has the sole authority to decide the relevant activities of the investee. The fund manager’s delegated power is exercised not only for the Group, but also for other investors as well. The Group does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.

(*2)

The investment target for the fund was predefined, and the disposition of investment assets cannot be determined by the Group, and as a fund of funds, the Group does not have ability to make decisions regarding investment assets in parent funds. The Group does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.

(*3)

Since the investee is a stock market stabilization fund, the Group does not have power over such fund as the fund’s relevant activities are determined by the investment management committee, over which the Group does not have substantive rights. The Group does not have the power over the fund’s relevant activities even though the Group holds more than 50% of ownership interest.


	As of December 31, 2022
Subsidiaries	Location	Main Business	Percentage of ownership (%)
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*1)	Korea	Securities Investment		57.6
Kiwoom Yonsei Private Equity Investment Trust (*1)	Korea	Securities Investment		88.9
IGIS Europe Private Placement Real Estate Fund No. 163-2 (*2)	Korea	Securities Investment		97.8
IGIS Global Private Placement Real Estate Fund No. 148-1 (*1)	Korea	Securities Investment		69.0
IGIS Global Private Placement Real Estate Fund No. 148-2 (*1)	Korea	Securities Investment		69.0
Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1 (*1)	Korea	Securities Investment		66.7
Hangang Sewage Treatment Plant Fund (*1)	Korea	Securities Investment		55.6
Korea Investment Pocheon Hwado Expressway Professional Investment Fund (*1)	Korea	Securities Investment		55.2
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 1 (*1)	Korea	Securities Investment		55.0
Midas Global Private Placement Real Estate Fund No. 7-2 (*1)	Korea	Securities Investment		58.3
Together-Korea Government Private Pool Private Securities Investment Trust No. 3 (*3)	Korea	Securities Investment		100.0
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 2 (*1)	Korea	Securities Investment		55.0
WooriG Woori Bank Partners Private Placement Investment Trust No. 1 (*1)	Korea	Securities Investment		92.6
WooriG Private Investment Trust No. 1 (*1)	Korea	Securities Investment		80.0
INMARK France Private Investment Trust No. 18-1 (*1)	Korea	Securities investment		93.8
Kiwoom-Vibrato Private Investment Trust 1-W(EUR) (*2)	Korea	Securities investment		99.5
WooriG Global Mid-market Secondaries Private Placement Investment Trust No. 1 (*1)	Korea	Securities investment		80.0
KOTAM Global Infrastructure Private Equity Investment Trust No.1-4 (*2)	Korea	Securities investment		99.7
Hana UBS Class One Private Equity No. 3 C2 (*1)	Korea	Securities investment		51.0
Consus Gyeongju Green Private Equity Investment Trust No. 1 (*1)	Korea	Securities investment		50.0
Woori G Woori Bank Partners Private Placement Investment Trust No. 2 (*1)	Korea	Securities investment		90.9
Woori G Equity Bridge Loan Private Placement Investment Trust No. 1(*1)	Korea	Securities investment		65.0
WooriG Private Investment Trust No. 5 (*1)	Korea	Securities investment		86.8
Kiwoom Harmony Private Placement Investment Trust No. 3 (*1)	Korea	Securities investment		76.7
Consus Solar Energy Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		50.0
Woori Innovative Growth New Deal Private Investment Trust No.3 (*1)	Korea	Securities investment		79.8

- 16 -


	As of December 31, 2022
Subsidiaries	Location	Main Business	Percentage of ownership (%)
Woori G Renewable New Deal Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		55.0
Woori G Policy-type New Deal (Infra Investment) Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		66.7
IGIS ESG Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		60.0
Woori G GP Commitment Loan Private Placement Investment Trust No.2 (*1)	Korea	Securities investment		80.0
Kiwoom-Aurora Private Securities Investment Trust No. 2 (*1)	Korea	Securities investment		60.0
NH-Amundi WSCP VIII Private Fund 2 (USD) (*1)	Korea	Securities investment		65.2
AI Partners Global Infrastructure Specialized Privately Placed Feeder Fund Trust No. 2 (USD) (*2)	Korea	Securities investment		98.0
WooriG Equity Investment General Type Private Investment Trust No.1 (*1)	Korea	Securities investment		93.8
Hangang new deal infra BTL fund 4 (HNBF4) (*1)	Korea	Securities investment		60.0
Woori Busan Logistics Infra Private Placement Special Asset Investment Trust (*1)	Korea	Securities investment		66.7
Woori Financial Digital Investment Association No. 1 (*1)	Korea	Securities investment		88.0

(*1)

Since the investee is a Discretionary funds, the Group does not have power over the investee because the fund manager has the sole authority to decide the relevant activities of the investee. The fund manager’s delegated power is exercised not only for the group, but also for other investors as well. The Group does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.

(*2)

Since the investee is a Fund of funds, the Group does not have power over such funds because the group cannot decide the relevant activities of the fund through the related contract. The Group does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.

(*3)

Since the investee is a Stock market stabilization fund, the Group does not have power over such fund as the fund’s relevant activities are determined by the management committee, over which the Group does not have substantial control. The Group does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.

- 17 -

(4)	The summarized financial information of the major subsidiaries is as follows. The financial information of each subsidiary was prepared on the basis of consolidated financial statements. (Unit: Korean Won in millions):


	December 31, 2023
	Assets		Liabilities		Operating revenue		Net income (loss) attributable to owners			Comprehensive income (loss) attributable to owners
Woori America Bank		4,380,793		3,780,732		213,835		32,412			43,019
Woori Global Markets Asia Limited		639,748		453,289		49,928		14,507			18,354
Woori Bank China Limited		5,812,416		5,141,122		262,453		33,872			32,226
AO Woori Bank		420,219		345,751		29,542		8,091			(3,140	)
PT Bank Woori Saudara Indonesia 1906 Tbk		4,665,074		3,804,207		348,081		60,277			87,745
Banco Woori Bank do Brasil S.A.		281,784		255,717		25,196		(3,233	)		3,205
Korea BTL Infrastructure Fund		735,206		286		29,905		26,446			25,938
Woori Finance Myanmar Co., Ltd.		37,844		19,132		9,091		2,379			2,629
Wealth Development Bank		294,157		251,010		25,164		(138	)		781
Woori Bank Vietnam Limited		3,533,036		2,926,359		300,630		59,692			54,322
Woori Bank (Cambodia) PLC		1,902,011		1,466,719		244,041		25,194			31,906
Woori Bank Europe		1,187,246		1,071,453		40,621		(5,149	)		1,290
Money trust under the FISCM Act		1,267,803		1,244,632		66,917		9,652			9,652
Structured entity for securitization of financial assets		2,461,932		2,836,902		90,353		(23,767	)		(20,577	)
Structured entity for the investments in securities		1,793,892		53,093		129,183		83,807			97,661


	December 31, 2022
	Assets		Liabilities		Operating revenue		Net income (loss) attributable to owners			Comprehensive income (loss) attributable to owners
Woori America Bank		3,942,049		3,385,007		149,340		36,239			58,319
Woori Global Markets Asia Limited		597,632		429,526		26,399		9,855			19,296
Woori Bank China Limited		6,329,901		5,690,833		295,576		35,860			15,689
AO Woori Bank		785,215		707,608		78,727		12,060			14,700
PT Bank Woori Saudara Indonesia 1906 Tbk		4,220,574		3,429,714		299,256		68,412			42,455
Banco Woori Bank do Brasil S.A.		228,126		205,264		24,029		(1,267	)		854
Korea BTL Infrastructure Fund		735,956		286		26,760		24,193			23,450
Woori Finance Myanmar Co., Ltd.		34,739		18,655		9,787		1,937			244
Wealth Development Bank		285,931		243,565		22,474		819			(155	)
Woori Bank Vietnam Limited		3,388,002		2,835,647		209,756		63,216			73,449
Woori Bank (Cambodia) PLC		1,839,386		1,436,001		229,166		59,836			80,978
Woori Bank Europe		882,891		768,388		15,878		1,329			1,802
Money trust under the FISCM Act		1,312,239		1,298,719		32,957		(16,761	)		(16,761	)
Structured entity for securitization of financial assets		2,735,333		3,082,643		85,171		(996	)		2,720
Structured entity for the investments in securities		1,971,254		136,433		64,550		57,437			58,476

- 18 -

(5)	The financial support that the Group provides to consolidated structured entities is as follows:

•

Structured entity for asset securitization

The structured entity which is established for the purpose of securitization of project financing loans, corporate bonds, and other financial assets. The Group is involved with the structured entity through provision of credit facility over asset-backed commercial papers issued by the entity, originating loans directly to the structured entity, or purchasing 100% of the subordinated debts issued by the structured entity.

•

Structured entity for the investments in securities

The structured entity is established for the purpose of investments in securities. The Group acquires beneficiary certificates through its contribution of funding to the structured entity by the Group, and it is exposed to the risk that it may not be able to recover its fund depending on the result of investment performance of asset managers of the structured entity.

•

Monetary trust under the Financial Investment Services and Capital Markets Act

The Group provides with financial guarantee of principal and interest or solely principal to some of its trust products. Due to the financial guarantees, the Group may be obliged when the principal and interest or principal of the trust product sold is short of the guaranteed amount depending on the result of investment performance of the trust product.

As of December 31, 2023 and 2022, the Group provides 2,445,644 million Won and 231,309 million Won of credit facilities for the structured entities mentioned above. As of December 31, 2023 and 2022, the purchase commitment amount is 1,049,936 million Won and 753,756 million Won, respectively.

(6)

The Group has entered into various agreements with structured entities such as asset securitization, structured finance, investment fund, and trust contract. The characteristics and the nature of risks related to unconsolidated structured entities over which the Group does not have control in accordance with K-IFRS No.1110 - Consolidated Financial Statements are as follows:

The ownership interests on unconsolidated structured entities that the Group hold are classified into asset securitization vehicles, structured finance and investment fund, based on the nature and the purpose of the structured entities.

Unconsolidated structured entities classified as ‘asset securitization vehicles’ are entities that issue asset-backed securities, pay the principal and interest or distribute dividends on asset-backed securities through borrowings or profits from the management, operation and sale of securitized assets. The Group bears related risks by the purchase commitments of asset-backed securities or issuance of asset-backed securities through credit facilities, and the structured entities recognize related interest or fee revenue. There are entities that provide additional funding and conditional debt acquisition commitments before the Group’s financial support, but the Group is still exposed to losses arising from the purchase of financial assets issued by the structured entities when it fails to renew the securities.

Unconsolidated structured entities classified as ‘structured financing’ include real estate project financing investment vehicle, social overhead capital companies, and special purpose vehicles for ship (aircraft) financing. Each entity is incorporated as a separate company with a limited purpose in order to efficiently pursue business goals. ‘Structured financing’ is a financing method for large-scale risky business, with investments made based on feasibility of the specific business or project, instead of credit of business owner or physical collaterals. The investors receive profits from the operation of the business. The Group recognizes interest revenue, profit or loss from evaluation or transactions of financial instruments, or dividend income. With regard to uncertainties involving structured financing, there are entities that provide financial support such as additional fund, guarantees and prioritized credit facilities prior to the Group’s intervention, but the Group is exposed to possible losses due to loss of principal from reduction in investment value or irrecoverable loans arising from failure to collect scheduled cash flows and cessation of projects.

Unconsolidated structured entities classified as ‘investment funds’ include investment trusts and private equity funds. An investment trust orders the investment and operation of funds to the trust manager in accordance with trust contract with profits distributed to the investors. Private equity funds raise funding required to acquire equity securities to enable direction of management and/or improvement of ownership structure, with profit distributed to the investors.

- 19 -

The Group recognizes pro rata amount of dividend income as an investor in the same way as ‘structured finance’, and may be exposed to losses due to reduction in investment value. As of December 31, 2023 and 2022, the investment value in MMF(Money Market Fund) amounted to 1,450,252 million Won and 945,795 million Won, respectively, and there are no additional MMF-related commitments.

Total assets of the unconsolidated structured entities held by the Group, the carrying value of the related items recorded, the maximum exposure to risks, and the loss recognized in conjunction with the unconsolidated structured entities as of December 31, 2023 and 2022 are as follows: The maximum exposure to risks includes the amounts that are recognized in the consolidated financial statements and will be confirmed when certain conditions are met in the future such as investments, purchase commitments, credit facilities and others. (Unit: Korean Won in millions):


	December 31, 2023
	Asset securitization vehicle		Structured finance		Investment funds
Total asset of the unconsolidated structured entities		9,012,541		55,525,814		164,334,970
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities		8,868,621		2,637,529		7,732,375
Financial assets at FVTPL		—		2,111		7,576,233
Financial assets at FVTOCI		2,802,592		43,696		—
Financial assets at amortized cost		6,066,029		2,591,598		—
Investments in joint ventures and associates		—		—		153,958
Derivative assets		—		124		2,184
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities		99		3,207		2,006
Derivative liability		—		1,243		2,006
Other liabilities (provisions)		99		1,964		—
The maximum exposure to risks		8,928,381		3,481,625		13,490,033
Investments		8,868,621		2,637,529		7,732,374
Purchase agreement		—		—		5,757,659
Credit facilities		59,760		844,096		—
Loss recognized on unconsolidated structured entities		—		299		63,614


	December 31, 2022
	Asset securitization vehicle		Structured finance		Investment funds
Total asset of the unconsolidated structured entities		8,127,552		54,808,596		125,754,166
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities		7,500,222		3,124,717		5,495,064
Financial assets at FVTPL		—		2,518		5,315,937
Financial assets at FVTOCI		3,213,331		45,735		—
Financial assets at amortized cost		4,286,891		3,076,341		31,023
Investments in joint ventures and associates		—		—		147,359
Derivative assets		—		123		745
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities		808		6,373		2,091
Derivative liability		729		4,974		2,091
Other liabilities (provisions)		79		1,399		—
The maximum exposure to risks		7,579,502		3,438,402		11,495,473
Investments		7,500,222		3,124,717		5,495,064
Purchase agreement		—		—		6,000,409
Credit facilities		79,280		313,685		—
Loss recognized on unconsolidated structured entities		—		956		74,913

- 20 -

(7)	The share of non-controlling interests on the net income and equity of subsidiaries of which non-controlling interests that are significant to the Group’s consolidated financial statements as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):

Accumulated non-controlling interests at the end of the reporting period


	December 31, 2023		December 31, 2022
PT Bank Woori Saudara Indonesia 1906 Tbk		103,176		92,118
Wealth Development Bank		21,142		20,759

Net income or loss attributable to non-controlling interests


	2023			2022
PT Bank Woori Saudara Indonesia 1906 Tbk		9,521			10,806
Wealth Development Bank		(68	)		401

Dividends to non-controlling interests


	2023		2022
PT Bank Woori Saudara Indonesia 1906 Tbk		2,802		2,330

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2.	BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICIES

(1)	Basis of presentation

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

Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Group’s financial position, financial performance or cash flows, is not presented in the accompanying consolidated financial statements.

The consolidated financial statements of the Group have been prepared in accordance with K-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 material accounting policies applied in the preparation of consolidated financial statements as of and for the year ended December 31, 2023 are stated below, and the accounting policies applied are identical to ones used in the preparation of previous year’s consolidated financial statements, except for the effects of adopting new standards or interpretations as explained below.

The consolidated financial statements are prepared at the end of each reporting period on the historical cost basis, except for certain non-current assets and financial assets that are either revalued or measured in fair value. Historical cost is generally measured at the fair value of consideration given to acquire assets.

Meanwhile, the consolidated financial statements of the Group was initially approved by the board of directors on February 6, 2024, and were revised and approved on February 29, 2024, and is planned for an approval in the annual shareholder’s meeting on March 21, 2024.

1) From the accounting period beginning on January 1, 2023, the Group has newly applied the following amendments and interpretations.

Amendments to K-IFRS No.1001 ‘Presentation of Financial Statements’ and IFRS Practice Statement 2 ‘Making Materiality Judgements’ – Disclosure of Accounting Policy

In order to define and disclose important accounting policies and to provide guidance on how to apply the concept of materiality the IFRS Practice Statement 2 ‘Disclosure of Accounting Policies’ has been revised. The Group expects that there is no significant impact on the consolidated financial statement of the Group due to this amendment.

ii)

Amendments to K-IFRS No.1008 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ – Definition of ‘Accounting Estimates’

The Group defined accounting estimates and clarified the way to distinguish changes in accounting policies from changes in accounting estimates. The Group expects that there is no significant impact on the consolidated financial statement of the Group due to this amendment.

iii)

Amendments to K-IFRS No.1001 ‘Presentation of Financial Statements’—Disclosure of gains or losses on valuation of financial liabilities with conditions for exercise price adjustment

The amendments require disclosure of valuation gains or losses (limited to those recognized in the profit or loss) of the conversion options or warrants (or financial liabilities including them), if all or part of the financial instrument with exercise price that is adjusted depending on the issuer’s share price change is classified as financial liability as defined in paragraph 11 (2) of K-IFRS No.1032. The Group expects that there is no significant impact on the consolidated financial statement of the Group due to this amendment.

- 22 -

iv)

Annual Improvements to K-IFRS No.1012 ‘Income Taxes’ - deferred tax related to assets and liabilities arising from a single transaction.

Additional phrase ‘the temporary difference to be added and the temporary difference to be deducted do not occur in the same amount’ has been added to initial recognition exception for a transaction in which an asset or liability is initially recognized. The Group expects that there is no significant impact on the consolidated financial statement of the Group due to this amendment.

New Standard: K-IFRS No.1117 ‘Insurance Contract’

K-IFRS No.1117 Insurance Contracts replaces K-IFRS No.1104 Insurance Contracts. This Standard estimates future cash flows of an insurance contract and measures insurance liabilities using discount rates applied with assumptions and risks at the measurement date. The entity recognizes insurance revenue on an accrual basis including services (insurance coverage) provided to the policyholder by each annual period. In addition, investment components (Refunds due to termination/maturity) repaid to a policyholder even if an insured event does not occur, are excluded from insurance revenue, and insurance financial income or expense and the investment income or expense are presented separately to enable users of the information to understand the sources of income or expenses. The Group expects that there is no significant impact on the consolidated financial statement of the Group due to this amendment.

vi)

K-IFRS No.1012 ‘Income Taxes’ - International Tax Reform – Pillar Two Model Rules

The Group applies the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. Since the Pillar Two legislation is scheduled to be effective from January 1, 2024, the Group has no current tax expense related to Pillar Two. The impact of the Pillar Two income taxes is described in Note 42.

2) The details of K-IFRS that have been issued and published as of January 1, 2023 but have not yet reached the effective date, and which the Group has not applied at an earlier date are as follows :

Amendments to K-IFRS No.1001 ‘Presentation of Financial Statements’ – Classification of Liabilities as Current or Non-current, Non-current Liabilities with Covenants

The amendments clarify that the classification of either current or non-current liabilities is based on the entity’s rights existing at the end of the reporting period and highlight that the entity is not expected to exercise its right to defer settle the liabilities. At the end of the reporting period, if the borrowing arrangement is in compliance, the right is explained and the definition is clarified by transferring cash, equity instruments, or other assets or services to the counterparty.

The amendments also stipulate that only certain conditions in the borrowing arrangement that must be complied with before the end of the reporting period (hereinafter referred to as the ‘agreement’) affect an entity’s right to defer settlement of the liability for at least 12 months after the reporting period.

Although compliance with the arrangement is assessed only after the reporting period, these arrangements affect the existence of rights as of the end of the reporting period.

In addition. stipulates that agreements that must be followed only after the reporting period do not affect the right to defer payment. However, if an entity’s right to defer settlement of a liability depends on the arrangements it complies with within 12 months of the reporting period, it shall disclose information to users of financial statements to understand the risk that the liability may be repaid within 12 months of the reporting period. This information includes information about the arrangement (including the nature of the arrangement, when the entity should comply with the arrangement), the carrying amount of the liability involved, and facts and circumstances indicating that the arrangement may be difficult to comply with.

- 23 -

The above amendments shall be applied retrospectively for annual periods beginning on or after 1 January 2024 and shall be permitted for early application.

The above enacted or amended standards will not have a significant impact on the consolidated financial statements of the Group.

ii)

Amendments to K-IFRS No.1007 Statement of Cash Flows, K-IFRS No.1107 Financial Instruments: Disclosures – Supplier finance arrangements

When applying supplier finance arrangements, an entity shall disclose information about its supplier finance arrangements that enables users of financial statements to assess the effects of those arrangements on the entity’s liabilities and cash flows and on the entity’s exposure to liquidity risk. The amendments should be applied for annual periods beginning on or after January 1, 2024, and earlier application is permitted.

The above enacted or amended standards will not have a significant impact on the consolidated financial statements of the Group.

iii)

Amendments to K-IFRS No.1116 Leases - Lease Liability in a Sale and Leaseback

When subsequently measuring lease liabilities arising from a sale and leaseback, a seller-lessee shall determine lease payments or revised lease payments in a way that the seller-lessee would not recognize any amount of the gain or loss that relates to the right of use retained by the seller-lessee. The amendments should be applied for annual periods beginning on or after January 1, 2024, and earlier application is permitted.

The above enacted or amended standards will not have a significant impact on the consolidated financial statements of the Group.

iv)

Amendments to K-IFRS No.1001 Presentation of Financial Statements – Disclosure of Cryptographic Assets

The amendments require for an additional disclosure if an entity holds cryptographic assets, or holds cryptographic assets on behalf of the customer, or issues cryptographic assets. The amendments should be applied for annual periods beginning on or after January 1, 2024, and earlier application is permitted.

The above enacted or amended standards will not have a significant impact on the consolidated financial statements of the Group.

- 24 -

(2)	Basis of consolidated financial statement presentation

The consolidated financial statements incorporate the financial statements of the Bank and the entities (including structured entities) controlled by the Bank (and its subsidiaries, which is the “Group”). Control is achieved where the Group 1) has the power over the investee, 2) is exposed, or has rights, to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Group has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not the Group’s voting rights in an investee are sufficient to give it power, including:

•

The relative size of the Group’s holding of voting rights and dispersion of holdings of the other vote holders;

•

Potential voting rights held by the Group, other vote holders or other parties;

•

Rights arising from other contractual arrangements;

•

Any additional facts and circumstances that indicate that the Group has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owner of the Group and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owner of the Group and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

If a subsidiary uses accounting policies other than those of the Group for like transactions and events in similar circumstances, if necessary, adjustments shall be made to make the subsidiary’s accounting policies conform to those of the Group to prepare the consolidated financial statements.

All intra-group transactions and, related assets and liabilities, income and expenses are eliminated in full when preparing the consolidated financial statements.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owner of the parent company.

When the Group loses control of a subsidiary, a gain or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognized in other comprehensive income and accumulated in equity, the amounts previously recognized in other comprehensive income and accumulated in equity are accounted for as if the Group had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly to retained earnings). The fair value of any investment retained in the former subsidiary at the date when control is lost is recognized as the fair value on initial recognition for subsequent accounting under K-IFRS 1109 Financial Instruments or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

(3)	Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured as the sum of the acquisition-date fair values of the assets transferred by the Group in exchange for control of the acquiree, liabilities assumed by the Group for the former owners of the acquiree and the equity interests issued by the Group. Acquisition-related costs are generally recognized in profit or loss as incurred.

- 25 -

At the acquisition date, the acquiree’s identifiable assets, liabilities and contingent liabilities that meet the condition for recognition under K-IFRS No.1103 are recognized at their fair value, except that:

•

deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with K-IFRS No.1012 Income Taxes and K-IFRS No.1019 Employee Benefits, respectively;

•

liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with K-IFRS No.1102 Share-based Payment at the acquisition date; and

•

non-current assets (or disposal groups) that are classified as held for sale in accordance with K-IFRS No.1105 Non-current Assets Held for Sale and Discontinued Operations are measured at the lower of their previous carrying amounts and fair value less costs to sell.

Any excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the Group’s previously held equity interest (if any) in the acquiree over the net of identifiable assets and liabilities assumed of the acquiree at the acquisition date is recognized as goodwill which is included in intangible assets.

If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration other than the above is remeasured at subsequent reporting dates as appropriate, with the corresponding gain or loss being recognized in profit or loss.

When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured at fair value at the acquisition date (i.e., the date when the Group obtains control) and the resulting gain or loss, if any, is recognized in profit or loss (or other comprehensive income, if applicable). Amounts arising from changes in value of interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are recognized, identical to the treatment assuming interests are sold directly.

(4)	Investments in joint ventures and associates

An associate is an entity over which the Group has significant influence, and that is not a subsidiary or a joint venture. Significant influence is the power to participate in making decision on the financial and operating policy of the investee but is not control or joint control over those policies.

- 26 -

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to net assets relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The net income of the current period and the assets and liabilities of the joint ventures and associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with K-IFRS No.1105 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in the joint ventures and associates is initially recognized in the consolidated statements of financial position at cost and adjusted thereafter to recognize the Group’s share of the net assets of the joint ventures and associates and any impairment. When the Group’s share of losses of the joint ventures and associates exceeds the Group’s interest in the associate, the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint ventures and associates.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the joint ventures and associates recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognized immediately in profit or loss.

Upon a loss of significant influence over the joint ventures and associates, the Group discontinues the use of the equity method and measures at fair value of any investment that the Group retains in the former joint ventures and associates from the date when the Group loses significant influence. The fair value of the investment is regarded as its fair value on initial recognition as a financial asset in accordance with K-IFRS No.1109 Financial Instruments; Recognition and Measurement. The Group recognized differences between the carrying amount and fair value in profit or loss and it is included in determination of the gain or loss on disposal of joint ventures and associates. The Group accounts for all amounts recognized in other comprehensive income in relation to that joint ventures and associates on the same basis as would be required if the joint ventures and associates had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by an associate would be reclassified to net income on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to net income as a reclassification adjustment.

When the Group’s ownership of interest in an associate or a joint venture decreases but the Group continues to maintain significant influence over an associate or a joint venture, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that decrease in ownership interest if the gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. Meanwhile, if interest on associate or joint venture meets the definition of non-current asset held for sale, it is accounted for in accordance with K-IFRS No.1105.

The requirements of K-IFRS No.1028 - Investments in Associates and Joint Ventures to determine whether there has been a loss event are applied to identify whether it is necessary to recognize any impairment loss with respect to the Group’s investment in the joint ventures and associates. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with K-IFRS No.1036 - Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized is not allocated to any asset (including goodwill), which forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with K-IFRS No.1036 to the extent that the recoverable amount of the investment subsequently increases.

The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.

When a subsidiary transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognized in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.

- 27 -

(5)	Investment in Joint operation

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

When the Group operates as a joint operator, it recognizes in relation to its interest in a joint operation:

•

its assets, including its share of any assets held jointly;

•

its liabilities, including its share of any liabilities incurred jointly;

•

its revenue from the sale of its share of the output arising from the joint operation;

•

its share of the revenue from the sale of the output by the joint operation; and

•

its expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with K-IFRSs applicable to the particular assets, liabilities, revenues and expenses.

When the Group enters into a transaction with a joint operation in which it is a joint operator, such as a sale or contribution of assets, it is conducting the transaction with the other parties to the joint operation and, as such, the Group recognizes gains and losses resulting from such a transaction only to the extent of the other parties’ interests in the joint operation.

When the Group enters into a transaction with a joint operation in which it is a joint operator, such as a purchase of assets, it does not recognize proportional share of profit or loss until the asset is sold to a third party.

(6)	Revenue recognition

K-IFRS No.1115 requires the recognition of revenues based on transaction price allocated to the performance obligation when or as the Group performs that obligation to the customer. Revenues other than those from contracts with customers, such as interest revenue and loan origination fee (cost), are measured through effective interest rate method.

Revenues from contracts with customers

The Group recognizes revenue when the Group satisfies a performance obligation by transferring a promised good or service to a customer. When a performance obligation is satisfied, the Group shall recognize as a revenue the amount of the transaction price that is allocated to that performance obligation. The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

The Group is recognizing revenue by major sources as shown below:

①

Fees and commission received for brokerage

The fees and commission received for agency are the amount of consideration or fee expected to be entitled to receive in return for providing goods or services to the other parties with the Group acting as an agency, such as in the case of sales of bancassurance and beneficiary certificates. The majority of these fees and commission received for brokerage are from the business activities relevant to Consumer banking segment.

②

Fees and commission received related to credit

The fees and commission received related to credit mainly include the lending fees received from the loan activity and the fees received in the L/C transactions. Except for the fees and commission accounted for in calculating the effective interest rate, it is generally recognized when the performance obligation has been performed. The majority of these fees and commission received related to credit are from the business activities relevant to Consumer banking and Corporate banking segment.

③

Fees and commission received for electronic finance

The fees and commission received for electronic finance include fees received in return for providing various kinds of electronic financial services through firm-banking and CMS. These fees are recognized as revenue immediately upon the completion of services. The majority of these fees and commission received for electronic finance are from the business activities relevant to Consumer banking and Corporate banking segment.

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④

Fees and commission received on foreign exchange handling

The fees and commission received on foreign exchange handling consist of various fees incurred when transferring foreign currency. The point of processing the customer’s request is the time when performance obligation is satisfied, and revenue is immediately recognized when fees and commission are received after requests are processed. The business activities relevant to these fees and commission received on foreign exchange handling are substantially attributable to Corporate banking segment.

⑤

Fees and commission received on foreign exchange

The fees and commission received on foreign exchange consist of fees related to the issuance of various certificates, such as exchange, import and export performance certificates, purchase certificates, etc. The point of processing the customer’s request is the time when performance obligation is satisfied, and revenue is immediately recognized when fees and commission are received after requests are processed. The business activities relevant to these fees and commission received on foreign exchange are substantially attributable to Corporate banking segment.

⑥

Fees and commission received for guarantee

The fees and commission received for guarantee include the fees received for the various warranties. The activities related to the warranty consist mainly of performance obligations satisfied over time and fees and commission are recognized over the guarantee period. The business activities relevant to these fees and commission received for guarantee are substantially attributable to Corporate banking segment.

⑦

Fees and commission received on securities business

The fees and commission received on securities business consist mainly of fees and commission for the sale of beneficiary certificates, and these fees are recognized when the beneficiary certificates are sold to customers. The business activities relevant to these fees and commission received on securities business are substantially attributable to Consumer banking segment.

⑧

Fees and commission from trust management

The fees and commission from trust management consist of fees and commission received in return for the operation and management services for entrusted assets. These operation and management services are performance obligations satisfied over time, and revenue is recognized over the service period. Among the fees and commission from trust management, variable considerations such as profit commission that are affected by the value of entrusted assets and base return of the future periods are recognized as revenue when limitations to the estimates are lifted. The majority of these fees and commission received for brokerage are from the business activities relevant to Consumer banking segment.

⑨

Other fees

Other fees are usually fees related to remittances, but include fees related to various other services provided to customers by the Group. These fees are recognized when transactions occur at the customers’ request and services are provided, at the same time when commission are received. These other fees occur across all operating segments and no single operating segment represents majority of other fees.

Revenues from sources other than contracts with customers

①

Interest income

Interest income on financial assets measured at FVTPL, FVTOCI and financial assets at amortized costs is measured using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating the interest income over the expected life of the asset. The effective interest rate is the rate that exactly discounts estimated future cash flows to the instrument’s initial unamortized cost over the expected period, or shorter if appropriate. Future cash flows include commissions and cost of reward points(limited to the primary component of effective interest rate) and other premiums or discounts that are paid or received between the contractual parties when calculating the effective interest rate, but does not include expected credit losses. All contractual terms of a financial instrument are considered when estimating future cash flows.

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For purchased or originated credit-impaired financial assets, interest revenue is recognized by applying the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition. Even if the financial asset is no longer impaired in the subsequent periods due to credit improvement, the basis of interest revenue calculation is not changed from amortized cost to unamortized cost of the financial assets.

②

Loan origination fees and costs

The commission fees earned on loans, which is part of the effective interest of loans, is accounted for as deferred origination fees. Incremental costs related to the origination of loans are accounted for as deferred origination costs and is being added or deducted to/from interest income on loans using effective interest rate method.

(7)	Accounting for foreign currencies

The Group’s consolidated financial statements are presented in Korean Won, which is the functional currency of the Group. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at its prevailing exchange rates at the date. The effective portion of the changes in fair value of a derivative that qualifies as a cash flow hedge and the foreign exchange differences on monetary items that form part of net investment in foreign operations are recognized in equity.

Assets and liabilities of the foreign operations subject to the consolidation are translated into Korean Won at foreign exchange rates at the end of the reporting period. Except for situations in which it is required to use exchange rates at the date of transaction due to significant changes in exchange rates during the period, items that belong to profit or loss shall be measured by average exchange rate, with foreign exchange differences recognized as other comprehensive income and added to equity (allocated to non-controlling interests, if appropriate). When foreign operations are disposed, the controlling interest’s share of accumulated foreign exchange differences related to such foreign operations will be reclassified to profit or loss, while non-controlling interest’s corresponding share will not be reclassified.

Adjustments to fair value of identifiable assets and liabilities, and goodwill arising from the acquisition of foreign operations will be treated as assets and liabilities of the corresponding foreign operation and is translated using foreign exchange rates at the end of the period. The foreign exchange differences are recognized in equity.

(8)	Cash and cash equivalents

The Group is classifying cash on hand, demand deposits, interest-earning deposits with original maturities of up to three months on acquisition date, and highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value as cash and cash equivalents.

(9)	Financial assets and financial liabilities

Financial assets

A regular way purchase or sale of financial assets is recognized or derecognized on the trade date. A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose term requires delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

On initial recognition, financial assets are classified into financial assets at FVTPL, financial assets at FVTOCI, and financial assets at amortized cost.

Business model

The Group evaluates the way business is being managed, and the purpose of the business model for managing a financial asset best reflects the way information is provided to the management at its portfolio level. Such information considers the following:

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•

The accounting policies and purpose specified for the portfolio, the actual operation of such policies. This includes strategy of the management focusing on the receipt of contractual interest revenue, maintaining a certain level of interest income, matching the duration of financial assets and the duration of corresponding liabilities to obtain the asset, and outflow or realization of expected cash flows from disposal of assets

•

The way the performance of a financial asset held under the business model is evaluated, and the way such evaluation is being reported to the management

•

The risk affecting the performance of the business model (and financial assets held under the business model), and the way such risk is being managed

•

The compensation plan for the management (e.g. whether the management is being compensated based on the fair value of assets or based on contractual cash flows received)

•

Frequency, amount, timing and reason for sale of financial assets in the past and forecast of future sale activities

Contractual cash flows

The principal is defined to be the fair value of a financial asset at initial recognition. Interest is not only composed of consideration for the time value of money, consideration for the credit risk related to remaining principal at a certain period of time, and consideration for other cost (e.g. liquidity risk and cost of operation) and fundamental risk associated with lending, but also profit.

When evaluating whether contractual cash flows are solely payments of principal and interests, the Group considers the contractual terms of the financial instrument. When a financial asset contains contractual conditions that modify the timing and amount of contractual cash flows, it is required to determine whether contractual cash flows that arise during the remaining life of the financial instrument due to such contractual condition are solely payments of principal and interest. The Group considers the following elements when evaluating the above:

•

Conditions that lead to modification of timing or amount of cash flows

•

Contractual terms that adjust contractual nominal interest, including floating rate features

•

Early payment features and maturity extension features

•

Contractual terms that limit the Group’s claim on cash flows arising from certain assets (e.g. non-recourse feature)

•

Terms of holding multiple contractually linked financial tranche that concentrate credit risk. In such case, credit risk comparison information of the instrument itself, the contractual cash flow characteristics of underlying financial instrument group and the underlying financial instrument group

①

Financial assets at FVTPL

The Group is classifying those financial assets that are not classified as either financial assets at amortized cost or financial assets at FVTOCI, and those designated to be measured at FVTPL, as financial assets at FVTPL. Financial assets at FVTPL are measured at fair value, and fair value gains or losses are recognized in profit or loss. Transaction costs related to acquisition at initial recognition is recognized as expense immediately upon its occurrence.

The Group may, at initial recognition, irrevocably designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.

②

Financial assets at FVTOCI

When financial assets are held under a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and when contractual cash flows from such financial assets are solely payments of principal and interest, the financial assets are classified as financial assets at FVTOCI. Also, for investments in equity instruments that are not held for short-term trade, an irrevocable election is available at initial recognition to present subsequent changes in fair value as other comprehensive income.

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At initial recognition, financial assets at FVTOCI is measured at its fair value plus any direct transaction cost and is subsequently measured in fair value. The changes in fair value except for profit or loss items such as impairment losses (reversals), interest revenue calculated by using effective interest method, and foreign exchange gain or loss, and related income tax effects are recognized as other comprehensive income until the asset’s disposal. Upon derecognition, the accumulated other comprehensive income is reclassified from equity to net income for FVTOCI (debt instrument) and reclassified within the equity for FVTOCI (equity instruments).

③

Financial assets at amortized cost

When financial assets are held under a business model whose objective is to hold financial assets in order to collect contractual cash flows, and when contractual cash flows from such financial assets are solely payments of principal and interest, the financial assets are classified as financial assets at amortized cost. At initial recognition, financial assets at amortized cost are recognized at fair value plus any direct transaction cost. Financial assets at amortized cost is presented at amortized cost using effective interest method, less any loss allowance.

Financial liabilities

At initial recognition, financial liabilities are classified into either financial liabilities at FVTPL or financial liabilities at amortized cost.

Financial liabilities are usually classified as financial liabilities at FVTPL when they are acquired with a purpose to repurchase them within a short period of time, when they are part of a certain financial instrument portfolio that is actually and recently being managed with a purpose of short-term profit and joint management by the Group at initial recognition, and when they are derivatives that do not qualify as hedging instruments. Financial liabilities at FVTPL are measured at fair value plus direct transaction cost at initial recognition and are subsequently measured at fair value. Gain or loss arising from financial liabilities at FVTPL is recognized in profit or loss when occurred.

It is possible to designate a financial liability as financial liability at FVTPL if at initial recognition: (a) it is possible to remove or significantly reduce recognition or measurement mismatch that may otherwise have occurred if not for its designation as financial liability at FVTPL; (b) the financial asset forms part of the Group’s financial instrument group (a group composed of a combination of financial asset or liability) according to the Group’s documented risk management or investment strategy, is measured at fair value and is being evaluated for its performance, and such information is provided internally; and (c) the financial liability is part of a contract that contains one or more of embedded derivatives, and is a hybrid contract in which designation as financial liability at FVTPL is allowed under K-IFRS No.1109 Financial Instruments.

Financial liabilities designated as at FVTPL are initially recognized at fair value, with any direct transaction cost recognized in profit or loss and are subsequently measured at fair value. Any profit or loss from financial liabilities at FVTPL are recognized in profit or loss.

Financial liabilities not classified as financial liabilities at FVTPL are measured at amortized cost.

Reclassification

Financial assets are not reclassified after initial recognition unless the Group modifies the business model used to manage financial assets. When the Group modifies the business model used to manage financial assets, all affected financial assets are reclassified on the first day of the first reporting period after the modification.

Derecognition

Financial assets are derecognized when contractual rights to cash flows from the financial assets are expired, or when substantially all of risk and reward for holding financial assets is transferred to another entity as a result of a sale of financial assets. If the Group does not have and does not transfer substantially all of the risk and reward of holding financial assets with control of the transferred financial assets retained, the Group recognizes financial assets to the extent of its continuing involvement. If the Group holds substantially all the risk and reward of holding a financial asset, it continues to recognize that asset and proceeds are accounted for as collateralized borrowings.

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When a financial asset is fully derecognized, the difference between the book value and the sum of proceeds and accumulated other comprehensive income is recognized as profit or loss in case of FVTOCI (debt instruments), and as retained earnings for FVTOCI (equity instruments).

In case when a financial asset is not fully derecognized, the Group allocates the book value into amounts retained in the books and removed from the books, based on the relative fair value of each portion at the date of sale, and based on the degree of continuing involvement. For the derecognized portion of the financial assets, the difference between its book value and the sum of proceeds and the portion of accumulated other comprehensive income attributable to that portion will be recognized in profit or loss in case of debt instruments and recognized in retained earnings in case of equity instruments. The accumulated other comprehensive income is distributed to the portion of book value retained in the books, and to the portion of book value removed from the books.

The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

When the Group exchanges with the existing lender one debt instrument into another one with substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability

Fair value of financial instruments

Financial assets at FVTPL and financial assets at FVTOCI are measured and presented in the consolidated financial statements at their fair values, and all derivatives are also subject to fair value measurement.

Fair value is defined as the price that would be received to exchange an asset or paid to transfer a liability in a recent transaction between independent parties that are reasonable and willing. Fair value is the transaction price of identical financial assets or financial liabilities generated in an active market. An active market is a market where trade volume is sufficient and objective price information is available due to the fact that bid and ask price differences are small.

When trade volume of a financial instrument is low, when transaction prices within the market show large differences among them, or when it cannot be concluded that a financial instrument is being traded within an active market due to disclosures being extremely shallow, fair value is measured using valuation techniques based on alternative market information or using internal valuation techniques based on general and observable information obtained from objective sources. Market information includes maturity and characteristics, duration, similar yield curve, and variability measurement of financial instruments of similar nature. Fair value amount contains unique assumptions on each entity (the Group concluded that it is using assumptions applied in valuing financial instruments in the market, or risk-adjusted assumptions in case marketability does not exist).

The market approach and income approach, which are valuation techniques used to estimate the fair value of financial instruments, both require significant judgment. Market approach measures fair value using either a recent transaction price that includes the financial instrument, or observable information on comparable firm or assets. Income approach measures fair value through discounting future cash flows with a discount rate reflecting market expectations, and revenue, operating income, depreciation, capital expenditures, income tax, working capital and estimated residual value of financial investments are being considered when deriving future cash flows. Valuation techniques such as the above include estimates based on the financial instruments’ complexity and usefulness of observable information in the market.

The valuation techniques used in the evaluation of financial instruments are explained below.

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Financial assets at FVTPL and Financial assets at FVTOCI

The fair value of equity securities included in financial assets at FVTPL and financial assets at FVTOCI category is recognized in the statement of financial position at its available market price. Debt securities traded in the over-the-counter market are generally recognized at an amount computed by an independent appraiser. When the Group uses the fair value determined by independent appraisers, the Group usually obtains three values from three different appraisers for each financial instrument and selects the minimum amount without making additional adjustments. For equity securities without marketability, the Group uses the amount determined by the independent appraiser. The Group verifies the prices obtained from appraisers in various ways, including the evaluation of independent appraisers’ competency, indirect verification through comparison between appraisers’ price and other available market information, and reperformed by employees who have knowledge of valuation models and assumptions that appraisers used.

Derivatives

The Group’s transactions involving derivatives such as futures and exchange traded options are measured at market value. For exchange traded derivatives classified as level 2 in the fair value hierarchy, the fair value is estimated using internal valuation techniques. If there are no publicly available market prices because they are traded over-the-counter, fair value is measured through internal valuation techniques. When using internal valuation techniques to derive fair value, the types of derivatives, base interest rate or characteristics of prices, or stock market indices are considered. When variables used in the internal valuation techniques are not observable information in the market, such variables may contain significant estimates.

Adjustment of valuation amount

The Group is exposed to credit risk when a counterparty to a derivative contract does not perform its contractual obligation, and the exposure amount is equal to the amount of derivative asset recognized in the statement of financial position. When the Group earns income through valuation of derivatives, such income is recognized as derivative asset in the statement of financial position. Some of the derivatives are traded in the market, but most of the derivatives are measured at estimated fair value derived from internal valuation models that use observable information in the market. As such, in order to estimate the fair value there should be an adjustment made to incorporate counterparty’s credit risk, and credit risk adjustment is being considered when valuing derivative assets such as over-the counter derivatives. The amount of financial liabilities is also adjusted by the Group’s own credit risk when valuing them.

The amount of adjustment is derived from counterparty’s probability of default and loss given default. This adjustment considers contractual matters that are designed to reduce the Group’s exposure to each counterparty’s credit risk. When derivatives are under master netting arrangement, the exposure used in the computation of credit risk adjustment is a net amount after adding/deducting cash collateral received (or paid) from loss(or gain) position derivatives with the same counterparty.

Expected credit losses on financial assets

The Group recognizes loss allowance on expected credit losses for the following assets:

•

Financial assets at amortized cost

•

Debt instruments measured at FVTOCI

•

Contract assets as defined by K-IFRS No.1115

Expected credit losses are weighted-average value of a range of possible results, considering the time value of money, and are measured by incorporating information on current conditions and forecasts of future economic conditions that are available without undue cost or effort.

The methods to measure expected credit losses are classified into following three categories in accordance with K-IFRS:

•

General approach: Financial assets that do not belong to below two models and unused loan commitments

•

Simplified approach: When financial assets are either trade receivables, contract assets or lease receivables

•

Credit impairment model: Purchased or originated credit-impaired financial assets

- 34 -

The measurement of loss allowance under general approach is differentiated depending on whether the credit risk has increased significantly after initial recognition. That is, loss allowance is measured based on 12-month expected credit loss when the credit risk has not increased significantly after initial recognition, while loss allowance is measured at lifetime expected credit loss when credit risk has increased significantly. Lifetime is the expected remaining life of the financial instrument up to the maturity date of the contract.

The measurement of loss allowance under simplified approach is always based on lifetime expected credit loss, and loss allowance under credit impairment model is measured as the cumulative change in lifetime expected credit loss since initial recognition.

Measurement of expected credit losses on financial asset at amortized cost

The expected credit losses on financial assets at amortized cost is measured by the difference between the contractual cash flows during the period and the present value of expected cash flows. Expected cash inflows are computed for individually significant financial assets in order to calculate expected credit losses.

Financial assets that are not individually significant, they are included in a group of financial assets with similar credit risk characteristics and expected credit losses of the group are calculated collectively.

Expected credit losses are deducted through loss allowance account, and when the financial asset is determined to be uncollectible, the loss allowance is written off from the books along with the related financial asset. Changes in loss allowance due to subsequent recoveries of amounts previously written off are recognized in profit or loss.

Measurement of expected credit losses on financial asset at FVTOCI

The measurement method of expected credit loss is identical to financial asset at amortized cost, but changes in the loss allowance is recognized in other comprehensive income. When financial assets at FVTOCI is disposed or repaid, the related loss allowance is reclassified from other comprehensive income to net income.

(10) Offsetting financial instruments

Financial assets and liabilities are presented as a net amount in the statements of financial position when the Group has an enforceable legal right and an intention to settle on a net basis or to realize an asset and settle the liability simultaneously.

(11) Investment properties

The Group classifies a property held to earn rentals and/or for capital appreciation as an investment property. Investment properties are measured initially at cost, including transaction costs, less subsequent depreciation and impairment.

Subsequent costs are included in the carrying amount of the asset or recognized as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably, and the book value of a portion of an asset that are replaced by a subsequent expenditure is removed from the books. Routine maintenance and repairs are expensed as incurred.

While land is not depreciated, all other investment properties are depreciated based on the depreciation method and useful lives of Properties and equipment. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, and when it is deemed appropriate to change them, the effect of any change is accounted for as a change in accounting estimates.

An investment property is derecognized from the consolidated financial statements on disposal or when it is permanently withdrawn from use and no future economic benefits are expected even from its disposal. The gain or loss on derecognition of an investment property is calculated as the difference between the net disposal proceeds and the carrying amount of the property and is recognized in profit or loss in the period of derecognition.

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(12) Properties and equipment

Properties and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of Properties and equipment is expenditure directly attributable to their purchase or construction, which includes any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. It also includes the initial estimate of costs of dismantling and removing the item and restoring the site on which it is located.

Subsequent costs are recognized in the carrying amount of an asset or as a separate asset (if appropriate) if it is probable that future economic benefit associated with the assets will flow into the Group and the cost of an asset can be measured reliably. Routine maintenance and repairs are expensed as incurred.

While land is not depreciated, for all other Properties and equipment, depreciation is charged to net income on a straight-line basis by applying the following estimated economic useful lives on the amount of cost or revalued amount less residual value.


	Useful life
Buildings used for business purpose		35 to 57 years
Structures in leased office		4 to 5 years
Properties for business purpose		4 to 5 years

The Group reassesses the depreciation method, the estimated useful lives and residual values of Properties and equipment at the end of each reporting period. If changes in the estimates are deemed appropriate, the changes are accounted for as a change in an accounting estimate. When there is an indicator of impairment and the carrying amount of a Properties and equipment item exceeds the estimated recoverable amount, the carrying amount of such asset is reduced to the recoverable amount.

(13) Intangible assets and goodwill

The Group is recognizing intangible assets measured at the manufacturing cost or acquisition cost plus additional incidental expenses less accumulated amortization and accumulated impairment losses. The Group’s intangible asset are amortized over the following economic lives using the straight-line method. The estimated useful life and amortization method are reviewed at the end of each reporting period. If changes in the estimates are deemed appropriate, the changes are accounted for as a change in an accounting estimate.


	Useful life
Industrial property rights		5 to 10 years
Development costs		5 years
Software and others		4 to 5 years or contract period

In addition, when an indicator that intangible assets are impaired is noted, and the carrying amount of the asset exceeds the estimated recoverable amount of the asset, the carrying amount of the asset is reduced to its recoverable amount.

Goodwill acquired in a business combination is included in intangible assets. Goodwill is not amortized, but is subject to an impairment test at the cash-generating unit level every year, and whenever there is an indicator that goodwill is impaired.

Goodwill is allocated to each of the Group’s cash-generating unit (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

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(14) Impairment of non-monetary assets

Intangible assets with indefinite useful lives or intangible assets that are not yet available for use are tested for impairment annually, regardless of whether or not there is any indication of impairment. All other assets are tested for impairment by estimating the recoverable amount when there is an objective indication that the carrying amount may not be recoverable. Recoverable amount is the higher of value in use or net fair value, less costs to sell. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and such impairment loss is recognized immediately in profit or loss.

(15) Leases

The Group determines whether the agreement is a lease or includes a lease at the time of the agreement. In exchange for consideration in the contract, if the control over the use of the identified asset is transferred for a period of time, the contract is a lease or includes a lease. In determining whether a contract transfers control of the use of the identified asset, the Group uses the definition of a lease in K-IFRS No.1116.

The Group as a lessee

The Group recognizes the right-of-use asset and the lease liability at the commencement date of the lease. The right-of-use asset is measured at cost, which comprises the amount of the initial measurement of the lease liability, lease payments made at or before the commencement date(less any lease incentives received), initial direct costs, and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located.

The right-of-use asset is subsequently depreciated on a straight-line basis from the commencement of the lease to the end of the lease term. However, if the lease transfers ownership of the underlying asset to the lessee by the end of the lease term or if the cost of the right-of-use asset reflects that the lessee will exercise a purchase option, the lessee depreciates the right-of-use asset same as a fixed asset from the commencement date to the end of the useful life of the underlying asset. The right-of-use asset may be reduced by an impairment of the underlying asset or adjusted by remeasurement of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that cannot be readily determined, the Group uses its incremental borrowing rate. The Group generally uses the incremental borrowing rate.

The lease payments included in the measurement of the lease liability comprise the following:

•

Fixed payments (including in-substance fixed payments)

•

Variable lease payments that depend on an index(or a rate), initially measured using the index or rate as at the commencement date

•

Amounts expected to be payable by the lessee under residual value guarantees

•

The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, lease payments of the extended period if the lessee is reasonably certain to exercise extension option, and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease

The lease liability is subsequently increased by the interest expense recognized for the lease liability and decreased by reflecting the payment of the lease payments. The lease liability is remeasured if the future lease payments change depending on changes in the index(or a rate), changes in the expected amount to be paid under the residual value guarantee, and changes in the assessment of whether the purchase or extension option is reasonably certain to be exercised or not to exercise the terminate option.

When remeasuring a lease liability, the related right-of-use asset is adjusted and if the carrying amount of the right-of-use asset decreases to zero, the remeasurement amount is recognized in profit or loss.

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periodsafter termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

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Most extension options in offices and vehicles leases have not been included in the lease liability, because the Group could replace the assets without significant cost or business disruption.

The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an increase in recognized lease liabilities and right-of-use assets of 7,373 million Won.

In the statement of financial position, the Group classified the right-of-use assets that do not meet the definition of investment property as ‘Properties and equipment’ and the lease liabilities as ‘other financial liabilities.’

The Group has chosen a practical expedient that does not recognize the right-of-use asset and lease liabilities for short-term leases with a lease term less than 12 months and leases for which the underlying asset is of low value. The Group recognizes the lease payments associated with those leases as an expense on a straight-line basis over the lease term.

The Group as a lessor

At the date of the agreement or the effective date of the modification containing the lease element, the Group allocates the consideration of the contract to each lease element on the basis of its relative stand-alone price.

As a lessor, the Group classifies its leases as either an operating lease or a finance lease at the commencement date.

The Group subsequently judges whether the lease transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset, otherwise a lease is classified as an operating lease.

If the agreement contains both lease and non-lease elements, the Group applies K-IFRS No.1115 to allocate the consideration of the contract.

The Group applies derecognition and impairment provisions of K-IFRS No.1109 to its net investment in the lease. The Group also carries out regular review of the unguaranteed residual value used to calculate total lease investment.

The Group recognizes lease payments from operating lease as income on a straight-line basis.

The accounting policy that the Group has applied as a lessor is not different from K-IFRS No.1116.

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(16) Derivative instruments

Derivative instruments are classified as forwards, futures, options and swaps, depending on the types of transactions and are classified at the point of transaction as either trading or hedging based on its purpose.

Derivatives are initially recognized at fair value at the date of contract and are subsequently measured at fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument. If derivatives have been designated as hedging instruments and if it is effective, the point of recognition of gain or loss depends on the characteristics of hedging relationship.

Embedded derivatives

Embedded derivatives are components of a hybrid financial instrument that includes a non-derivative host contract. It has an effect of modifying part of cash flows of the hybrid financial instrument similar to an independent derivative.

Embedded derivatives that are part of a hybrid contract of which the host contract is a financial asset within the scope of K-IFRS No.1109 is not separated. The classification is done by considering the hybrid contract as a whole, and subsequent measurement is either at amortized cost or fair value.

If embedded derivatives are part of a hybrid contract of which the host contract is not a financial asset within the scope of K-IFRS No.1109 (e.g. financial liability), then these are treated as separate derivatives if embedded derivatives meet the definition of a derivative, characteristics & risk of the embedded derivatives are not closely related to that of host contract, and if the host contract is not measured at FVTPL.

Hedge accounting

The Group is designating certain derivatives as hedging instrument against fair value changes in relation to the interest rate risk, foreign currency translation and interest rate risk, and foreign currency translation risk.

The Group is documenting the relationship between hedging instruments and hedged items at the commencement of hedging in accordance with their purpose and strategy. Also, the Group documents at the commencement and subsequent dates whether the hedging instrument effectively counters the changes in fair value of hedged items. A hedging instrument is effective only when it meets all the following criteria:

•

When there is an economic relationship between the hedged items and hedging instruments.

•

When the effect of credit risk is not stronger than the change in value due to the economic relationship between the hedged items and hedging instruments.

•

When the hedge ratio of hedging relationship is equal to the proportion of the number of items that the group actually hedges and the number of hedging instruments that the Group actually uses to hedge the number of hedged items

When a hedging relationship no longer meets the hedging effectiveness requirements related to hedge ratio, but when the purpose of risk management on designated hedging relationship is still maintained, the hedge ratio of the hedging relationship is adjusted so that hedging relationship may meet the requirements again (Hedge ratio readjustment).

The Group has designated derivatives as hedging instrument except for the portion on foreign currency basis spread. The fair value change due to foreign currency basis spread is recognized in other comprehensive income and is accumulated in equity. If the hedged item is related to transactions, the accumulated other comprehensive income is reclassified to profit or loss when the hedged item affects the profit or loss. However, when non-monetary items are subsequently recognized due to hedged items, the accumulated equity is removed from the equity directly, and is included in the initial book value of the recognized non-monetary items. Such transfers does not affect other comprehensive income. But if part or all of accumulated equity is not expected to be recovered in the future periods, the amount not expected to be recovered is immediately reclassified to profit or loss. If the hedged item is time-related, then the foreign currency basis spread on the day the derivative is designated as a hedging instrument that is related to the hedged item is reclassified to profit or loss over the term of the hedge.

- 39 -

Fair value hedge

Gain or loss arising from valid hedging instrument is recognized in profit or loss. However, when the hedging instrument mitigates risks on equity instruments designated as financial assets at FVTOCI, related gain or loss is recognized in other comprehensive income.

The book value of hedged items that are not measured in fair value is adjusted by the changes in fair value arising from the hedged risk, with resulting gain or loss reflected in profit or loss. In case of debt instruments measured at FVTOCI, book value is an amount that is already adjusted to fair value and thus gain or loss arising from the hedged risk is recognized in profit or loss instead of other comprehensive income without adjustments in book value. When the hedged item is equity instruments measured at FVTOCI, the gain or loss arising from hedged risk is retained at other comprehensive income in order to match the gain or loss with hedging instruments.

Cash flow hedge

The Group recognizes the effective portion of changes in the fair value of derivatives and other valid hedging instruments that are designated and qualified as cash flow hedges in other comprehensive income, to the extent of cumulative fair value changes of the hedged item from the date of hedge accounting. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.

Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to net income when the hedged item affects net income. However, when non-monetary assets or liabilities are subsequently recognized due to expected transactions involving hedged items, the valuation gain or loss accumulated in the equity as other comprehensive income is removed from the equity and included in the initial book value of the recognized non-monetary assets or liabilities. Such transfers do not affect other comprehensive income. Also, if accumulated other comprehensive income is a loss and part or all of the losses are not expected to be recovered in the future periods, the said amount is immediately reclassified to profit or loss.

Hedge accounting ceases to apply only when hedging relationship (or part of it) does not meet the requirements of hedge accounting (even after hedging relationship readjustment, if applicable). This treatment holds in case of lapse, disposal, expiry and exercise of hedging instruments, and this cease of treatment applies prospectively. At the point of cessation of cash flow hedge, the valuation gain or loss recognized as accumulated other comprehensive income continues to be recognized as equity, and is reclassified to profit or loss when the expected transaction is ultimately recognized as profit or loss. However, when transactions are no longer expected to occur, the valuation gain or loss of hedging instrument recognized as accumulated other comprehensive income is immediately reclassified to profit or loss.

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(17) Assets (or disposal group) held for sale

The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

(18) Provisions

Provisions are recognized if it has present or contractual obligations as a result of the past event, it is probable that an outflow of resources will be required to settle the obligation and the amount of the obligation is reliably estimated. Provisions are not recognized for the future operating losses.

The Group recognizes provision related to the payment guarantees, loan commitment and litigations. Under the terms of lease agreement, the cost incurred by the Group to recover the leased asset to its original state are recognized as provisions at the commencement of the lease or during a specific period in which the obligation is incurred as a result of the using the asset. The provisions are measured as the best estimate of the expenditure required to recover the asset, which is regularly reviewed and sated to the new situation.

Where there are a number of similar obligations, the probability that an outflow will be required in settlement is determined by considering the obligations as a whole. Although the likelihood of outflow for any one item may be small, if it is probable that some outflow of resources will be needed to settle the obligations as a whole, a provision is recognized.

(19) Capital and compound financial instruments

The Group classifies a financial instrument that it issues as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. A financial liability is a contractual obligation to deliver cash or another financial asset to another entity. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

If the Group reacquires its own equity instruments, the consideration paid including the direct transaction costs (net of tax expense) are presented as a deduction from total equity until such instruments are retired or reissued. When these instruments are reissued, the consideration received (net of direct transaction costs) is included in the shareholder’s equity.

(20) Financial guarantee contracts

A financial guarantee contract is a contract where the issuer must pay a certain amount of money in order to compensate losses suffered by the creditor when debtor defaults on a debt instrument in accordance with original or modified contractual terms.

A financial guarantee is initially measured at fair value and is subsequently measured at the higher of the amounts below unless it is designated to be measured at FVTPL or when it arises from disposal of an asset.

•

Loss allowance in accordance with K-IFRS No.1109

•

Initial book value less accumulated profit measured in accordance with K-IFRS No.1115

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(21) Employee benefits and pensions

The Group recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by the employees. Also, the Group recognizes expenses and liabilities in the case of accumulating compensated absences when the employees render services that entitle their right to future compensated absences. Similarly, the Group recognizes expenses and liabilities for customary profit distribution or bonuses when the employees render services, even though the Group does not have legal obligation to do so because it can be construed as constructive obligation.

The Group is operating defined contribution plans and defined benefit plans. Contributions to defined contribution plans are recognized as an expense when employees have rendered services entitling them to receive the benefits. For defined benefit plans, the defined benefit liability is calculated through an actuarial assessment using the projected unit credit method every end of the reporting period, conducted by professional actuaries. Remeasurement, comprising actuarial gains and losses, the return on plan assets (excluding interest), and the effect of the changes to the asset ceiling (if applicable) is reflected immediately in the separate statement of financial position with a charge or credit recognized in other comprehensive income in the period in which they occur.

Remeasurement recognized in the consolidated statement of comprehensive income is not reclassified to profit or loss in the subsequent periods. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are composed of service cost (including current service cost and past service cost, as well as gains and losses on curtailments and settlements), net interest expense (income) and remeasurement.

The Group presents the service cost and net interest expense (income) components in profit or loss, and the remeasurement component in other comprehensive income. Curtailment gains and losses are accounted for as past service costs.

The retirement benefit obligation recognized in the consolidated statement of financial position represents the actual deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is recognized as an asset limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

Liabilities for termination benefits are recognized at the earlier of either the date when the Group is no longer able to cancel its proposal for termination benefits or the date when the Group has recognized the cost of restructuring that accompanies the payment of termination benefits.

(22) Hedge accounting of net investment in a foreign operation

When applying hedge accounting of net investment in a foreign operation, the effective portion of changes in fair value of the hedging instrument is recognized in other comprehensive income and the ineffective portion of the hedge is recognized as current profit or loss in order to offset changes in the fair value of the hedged item caused by the hedging with changes in the fair value of the hedging instrument. The effective portion of hedge recognized in other comprehensive income will be reclassified from other comprehensive income to current profit or loss in accordance with K-IFRS No.1021 The Effects of Changes in Foreign Exchange Rates at the time of disposal of a foreign operation or disposal of a portion of its foreign operations in the future.

(23) Income taxes

Income tax expense is composed of current tax and deferred tax. That is, income tax expense is composed of taxes payable or refundable during the period and deferred taxes calculated by applying asset-liability method to taxable and deductible temporary differences arising from operating loss and tax credit carryforwards. Temporary differences are the differences between the carrying values of assets and liabilities for financial reporting purposes and their tax bases. Deferred income tax benefit or expense is recognized for the change in deferred tax assets or liabilities. Deferred tax assets and liabilities are measured as of the reporting date using the enacted or substantively enacted tax rates expected to apply in the period in which the liability is settled or asset realized. Deferred tax assets, including the carryforwards of unused tax losses, are recognized to the extent it is probable that the deferred tax assets will be realized.

- 42 -

Deferred income tax assets and liabilities are offset if, and only if, the Group has a legally enforceable right to offset current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority or when the entity intends to settle current tax liabilities and assets on a net basis with different taxable entities.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill. Deferred tax assets or liabilities are not recognized if they arise from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity or when it arises from business combination.

The tax uncertainty arises from the compensation claim filed by the Group, and the refund litigation for the amount of tax levied by the tax authority due to differences in tax law analysis. In response, the Group paid taxes in accordance with K-IFRS No.2123 due to the tax authority’s claim but recognized as a corporate tax asset if it is highly probable of a refund in the future.

(24) Criteria of calculating earnings per share (“EPS”)

Basic EPS is a calculation of net income per each common stock. It is calculated by dividing net income attributable to ordinary shareholders by the weighted-average number of common shares outstanding. Diluted EPS is calculated by adjusting the earnings and number of shares for the effects of all dilutive potential common shares.

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3.	SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

The significant accounting estimates and assumptions are continuously being evaluated based on numerous factors including historical experiences and expectations of future events that are reasonably considered probable. Actual results can differ from those estimates based on such definitions. The accounting estimates and assumptions that contain significant risk of materially changing current book values of assets and liabilities in the next accounting periods are as follows:

The Korean government implemented support measures such as loan repayment deferment to mitigate the negative impact of COVID-19. The Group determined that the credit risk of loans affected by the repayment deferment has significantly increased, with a high possibility of default. The Group will continue to evaluate the adequacy of forecast information regarding the duration of the economic aftermath of COVID-19 and future government policies even after the end of the financial support. The Group also manages credit risk on loans with extended maturities.

The Group recognizes additional expected credit loss allowance for loans subject to payment holiday and extended maturities due to the assessment of the high possibility of default.

Total loans subject to payment holiday(loans, payment guarantees) on December 31, 2023 and 2022, among which credit risk has increased significantly due to payment holiday, total loans transferred from 12-month expected credit loss measurement to lifetime expected credit losses (Stage2) and additionally recognized expected credit loss allowance are as follows (Unit: Korean Won in millions):


			December 31, 2023		December 31, 2022
Total loans (loan receivables, payment guarantees) that are subject to payment holiday	Loans	Corporate		1,453,314		1,958,133
		Retail		130,090		216,487
	Off-balance accounts			22,038		2,391

	Total			1,605,442		2,177,011

Total loans that changed its stage from 12-month to lifetime (Stage 2) expected credit losses	Loan	Corporate		1,367,603		1,774,717
		Retail		101,422		169,851
	Off-balance accounts			6,642		2,391

	Total			1,475,667		1,946,959

The expected credit loss allowance that are additionally recognized	Loan	Corporate		210,386		312,054
		Retail		9,318		12,643
	Off-balance accounts			1,734		317

	Total			221,438		325,014

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Total loans subject to extended maturities and additionally expected credit loss allowance as of December 31, 2023 are as follows (Unit: Korean Won in millions):


			December 31, 2023
Total loans subject to maturities are extended	Loans	Corporate		5,227,017
		Retail		2,124,207
	Off-balance accounts			31,976

	Total			7,383,200

The expected credit loss allowance that are additionally recognized	Loan	Corporate		58,545
		Retail		35,515
	Off-balance accounts			115

	Total			94,175

In addition, as of December 31, 2023, the Group reflects the forward-looking information in the estimated probability of default rate and loss given default and recognizes additional expected credit loss allowance appropriations by adjusting the forward-looking indicators in consideration of the Korean government financial providing policies due to COVID-19, increased economic uncertainty, and potential insolvency due to market interest rate hikes.

The impact of changes including methodology for estimating the risk components(RC) during the current period is as follows (Unit: Korean Won in millions):


		Impact of changes in estimates
Expected credit loss allowance	Loans and other financial assets at amortized cost		323,597
	Guarantees and unused commitments		34,473
	Financial assets at FVTOCI		1,489
	Securities at amortized cost		592

Total			360,151

(*) The impact of changes including methodology for estimating probability of default rate and loss given default are 212,428 million Won and 147,723 million Won, respectively.

(1) Income taxes

The Group has recognized current and deferred taxes based on best estimates of expected future income tax effect arising from the Group’s operations until the end of the current reporting period. However, actual tax payment may not be identical to the related assets and/or liabilities already recognized, and these differences may affect current taxes and deferred tax assets/liabilities at the time when income tax effects are finalized. Deferred tax assets relating to tax losses carried forward and deductible temporary differences are recognized only to the extent that it is probable that future taxable profit will be available against which the tax losses carried forward and the deductible temporary differences can be utilized. In this case the Group’s evaluation considers various factors such as estimated future taxable profit based on forecasted operating results, which are based on historical financial performance. The Group is reviewing the book value of deferred tax assets every end of the reporting period and in the event that the possibility of earning future taxable income changes, the deferred tax assets are adjusted up to taxable income sufficient to use deductible temporary differences.

(2) Valuation of financial instruments

Financial assets at FVTPL and FVTOCI are recognized in the consolidated financial statements at fair value. All derivatives are measured at fair value. Valuation techniques are required in order to determine fair values of financial instruments where observable market prices do not exist. Financial instruments that are not actively traded and have low price transparency will have less objective fair value and require broad judgment in liquidity, concentration, uncertainty in market factors and assumption in price determination and other risks.

- 45 -

As described in Note 2. Basis of Preparation and material Accounting Policies (9) 5), ‘Fair value of financial assets and liabilities’, when valuation techniques are used to determine the fair value of a financial instrument, various general and internally developed techniques are used, and various types of assumptions and variables are incorporated during the process.

(3) Impairment of financial instruments

The accuracy of the provision for credit losses is determined by the estimation of the expected cash flows for each tenant for estimating the individually assessed loan-loss allowance, and the assumptions and variables in the model used for estimating the collectively assessed loan-loss, allowance payment guarantee and unused commitment.

The Group has estimated the allowance for credit losses based on reasonable and supportable information that was available without undue cost or effort the end of the current reporting period about past events, current conditions and forecasts of future economic conditions.

The measurement of expected credit loss is described in 4. Risk management (1) 3) Measurement of expected credit loss.

(4) Defined benefit plan

The Group operates a defined benefit pension plan. Defined benefit obligation is calculated at every end of the reporting period by performing actuarial valuation, and estimation of assumptions such as discount rate, expected wage growth rate and mortality rate is required to perform such actuarial valuation. The defined benefit plan, due to its long-term nature, contains significant uncertainties in its estimates.

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4.	RISK MANAGEMENT

The Group’s operating activity is exposed to various financial risks. The Group is required to analyze and assess the level of complex risks and determine the permissible level of risks and manage such risks. The Group’s risk management procedures have been established to improve the quality of assets for holding or investment purposes by making decisions as how to avoid or mitigate risks through the identification of the source of the potential risks and their impact.

The Group has established an approach to manage the acceptable level of risks and reduce the excessive risks in financial instruments in order to maximize the profit given risks present, for which the group has implemented risk management processes of identification, measurement, assessment, control, monitoring and reporting of risk.

The risk is managed by the risk management department in accordance with the Group’s risk management policy. The Risk Management Committee, at the top decision-making level, makes decisions on the risk strategies such as the allocation of internal capital and the establishment of acceptable level of risk.

(1)	Credit risk

Credit risk represents the potential financial losses that may incur in the future when the counterparty refuses to fulfill or lost the ability to fulfill its contractual obligations. The goal of credit risk management is to maintain the Group’s credit risk exposure to a permissible degree and to optimize its rate of return considering such credit risk.

Credit risk management

Credit facilities limit management

The Group calculates and manages the appropriate borrowing limits by aggregation, business and industry through management of aggregation, total exposure and portfolio.

Credit risk monitoring organization and role

①

Large enterprise loan credit department

•

Examination, approval, and maintenance of loans to large enterprises (including small and medium enterprises affiliated with major debt group)

•

Examination, approval, and maintenance of loans to government agencies, Public institutions (more than 50% of investments and contributions by the Group) and other corporations

•

Examination, approval, and maintenance of overseas branches and local corporations of domestic corporations

•

Examination, approval, and maintenance of relevant real estate PF (large or non-confirmed construction enterprises)

•

Operation control, etc. ‘the Credit Management for Affiliate Enterprise Groups’ as specified by the Regulation on Supervision of Bank Business, etc.

②

Small and medium-sized enterprise loan credit department

•

Examination, approval, and follow-up management of loans to small and medium-sized enterprises (excluding small and medium enterprises affiliated with major debt affiliates)

•

Examination, approval, and follow-up management of loans to Public institutions (less than 50% of investments and contributions) and other corporations

•

Consultation on loan examination, and agreement on the approval (including follow-up) of overseas branches and local corporations of the enterprises

•

Examination, approval, and follow-up management of relevant real estate PF (Small- and medium- construction enterprises or non-confirmed)

•

Examination, approval, and follow-up management, etc. of business loans related to National Housing and Urban Fund

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③

Personal loan credit department

•

Examination, approval, and maintenance of personal and individual business loans

•

Examination and approval of collective loans (including cases where construction enterprise is subject to workout)

④

Corporation workout department

•

General management of enterprises subject to workout, etc.

•

General management of enterprises subject to pre-workout, etc. with the management on the borrower in the course of corporate rehabilitation procedures

•

Workout activities such as the establishment and implementation of corporate workout plans performed for relevant enterprise

•

Pre-workout activities such as the establishment and implementation of corporate management diagnosis and management plans performed for relevant enterprise

•

Credit examination, approval, setting total exposure limit and follow-up management for relevant enterprise

•

Examination and execution of loans for sound post-management of rehabilitation bonds such as examination, approval, and follow-up management of overseas branches and local corporations of the relevant enterprise

⑤

Global IB Monitoring Department

•

Credit examination, approval and maintenance related to IB Group Investment Banking

•

Credit examination, approval, and maintenance of overseas branches or subsidiaries of local companies, foreign companies

•

Support for related tasks such as credit screening and follow-up management of overseas review centers

•

Establishing and managing total exposure limits for affiliated companies

•

Management of approved loans (deferred, asset soundness, portfolio, etc.)

•

Credit limit management designated by the Banking Act for the affiliated companies

Credit screening and post monitoring or post management

①

Objective

•

To maintain appropriate credit ratings and improve asset quality

②

Main activities

•

Review the adequacy of credit and credit ratings, and maintain the consistency in application of ratings

•

Review the appropriateness of asset classification by quality and the provision for credit losses

•

Overall analysis of loan portfolio quality

•

Inspection of compliance with loan policies and relevant regulations, and recommendation for modification of policies

•

Review the appropriateness of loan approval and compliance with loan commitments.

•

Post-inspection of the branches’ discretionary decisions for loans

•

Assessing the accuracy of the identification of bad loans and the timeliness of action by the person in charge of the loans

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ii)

Current status by measurement method

Method of calculating risk-weighted assets

①

The Group calculates the risk-weighted assets of the credit risk by obtaining approval of the internal rating based approach.

②

The internal rating based approach meets the qualitative and quantitative requirements set by the Financial Supervisory Service, including the use of advanced techniques in risk measurement, as well as the establishment of an internal control and risks management system. It enables more accurate measurement and management of credit risk than the standard method.

•

The internal rating based approach

Risk-weighted assets are calculated by applying self-estimated risk measurement factors such as probability of default (PD), loss given default (LGD), exposure at default (EAD), and effective maturity (M) according to the internal rating of the Group.

Overview and utilization scope of credit rating evaluation model

①

Definition of corporate credit rating model

The corporate credit rating is the assessment of the possibility of default by the counterparty. It includes both scoring assessments that are evaluated according to quantitative methods using financial statements, etc., representative assessments that are evaluated according to quantitative methods using loans, deposit transactions, etc. of the representative’s the Bank itself and other financial institutions, and judgment evaluations that are evaluated by the evaluator’s subjective judgment. This represents that the degree of credit risk assessed is presented in a systematic manner.

②

Operation of corporate credit rating model

•

General corporate evaluation model: Classified to external audit based on K-IFRS, external audit based on GAAP, non-external audit 1, non-external audit 2 and personal business based on their total assets, sales volume, accounting standards, whether subject to external audit or not, loan size and types of business; such as individuals or corporations.

•

Evaluation model of local governments

•

Evaluation model of public institutions

•

Evaluation model of financial institutions: Banks, insurance companies, financial investment, and other financing

•

Evaluation model of overseas companies

•

Evaluation model of non-profit organization: Private schools, medical institutions, religious organizations, and other organizations

•

Specialized lending evaluation model: PF(Project Financing), OF(Object Financing), CF(Commodities Financing), real estate financing for sale , Real estate financing for rent , fund financing, acquisition financing , asset securitization

③

Corporate credit rating system

The corporate credit rating system is divided into 14 grades (13 normal, 1 default) system, and each credit rating is presented in English (AAA~D).

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①

Definition of retail credit scoring model

This is a model that determines credit rating of retail loan customers by calculating credit score statistically using the customer information and operates two types of scoring system which are Application Scoring System and Behavior Scoring System according to applicable borrowers’ loan types.

•

Application Scoring System(ASS) : The model determines credit rating by statistically calculating credit score for new retail loan applications using personal information, transaction information and credit information.

•

Behavior Scoring System(BSS) : The model determines credit rating by statistically calculating credit score for existing retail loans using transaction information and credit information.

②

Operation of retail credit scoring model

•

SOHO loan credit scoring model : ASS / BSS scoring model

•

Household loan credit scoring model : ASS / BSS scoring model

③

Retail credit scoring model evaluation system : Presented in number from grade 1 to 10.

①

Utilizes as a key component in calculating BIS credit risk-weighted assets

②

Supports prompt loan decision-making by applying for interest rate (pricing), and discretionary decision-making, etc.

③

Utilizes to measure overall risk such as asset quality and provisions for the credit losses

④

Utilizes as an indicator of Risk Adjusted Performance Measurement! and relevant performance measurement.

Control structure for credit evaluation system (including content related to grade change)

①

Securing the independence of granting credit rating

The credit rating is granted through the evaluation department (large enterprise, small and medium-sized enterprise, personal, etc.) that is independent from the sales department, but the head of the branch has authority to grant credit ratings to small-scale loans according to the size of the loans. The Group clearly defines and operates procedures such as override, check list, authority and procedures, and review when granting credit ratings. For credit ratings granted by a sales branch and the evaluation department, periodic and regular loan reviews are performed by the credit supervision department to assess the consistency and timeliness of credit ratings.

②

Securing independence of credit risk control operations

The credit risk management department within the risk management group that is independent of the sales department is responsible for the design, monitoring/supervision of operation and performance, on-going review and modification. The credit risk management department conducts self-validation and monitoring of credit ratings, development and implementation of credit rating models.

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③

Validation of credit evaluation systems by an independent third party

To secure the adequacy of credit evaluation system, the risk management group risk model validation department that is independent from the credit evaluation system department conducts validation of credit evaluation system. The risk model validation department conducts periodic validation to assess the design adequacy of credit evaluation system, to determine whether BIS satisfies with minimum requirements and to validate the utilization and calculation methods of risk measurement components (PD, LGD, EAD, etc.).

A third-party review is conducted in head office audit department for the development/ implementation of credit risk management department’s credit risk model, estimation of risk measurement factors, and the third party’s validation activities of the risk model validation department.

④

Strengthen the role of the Board of Directors and management

Major decision-making related to the credit evaluation system and risk measurement factors are carried out in the approval process of the Risk Management Council and the Committee (Board of Directors). Issues related to validation and monitoring of credit evaluation systems and risk measurement elements are regularly reported to the Risk Management Council and the Committee (Board of Directors).

Scope of application of internal rating method


BIS Ratio calculation method		Exposure category	Date of approval
Standard method	Permanent standard method	Government, public institutions, banks	October 30, 2008

	Standard method	Subsidiaries, overseas branches, other assets	October 30, 2008

Internal rating based model		Large/small, medium-sized enterprise exposure (external audit IFRS, external audit GAAP, non-external audit1, non-external audit2, personal business model), retail exposure, asset-backed exposure (Credit Rating Act)	October 30, 2008 February 13, 2015

Stepwise application		Special financing, financial institutions, non-profit organizations, and public institutions	October 30, 2008

iii)

Measurement of expected credit loss

K-IFRS No.1109 - Financial Instruments requires entities to measure loss allowance equal to 12-month expected credit losses or lifetime expected credit losses after classifying financial assets into one of the three stages, depending on the degree of increase in credit risk since their initial recognition.


Classification	Stage 1	Stage 2	Stage 3
Definition	No significant increase in credit risk after initial recognition (*)	Significant increase in credit risk after initial recognition	Credit-impaired

Loss allowance	12-month expected credit losses	Lifetime expected credit losses
Loss allowance	Expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date	Expected credit losses that result from all possible default events over the life of the financial instrument

(*)	If the financial instrument has low credit risk at the end of the reporting period, the Group may assume that the credit risk has not increased significantly since initial recognition.

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At the end of each reporting period, the Group assesses whether the credit risk has increased significantly since initial recognition by using credit rating, assets soundness, early warning system, days past due and other. For financial assets whose contractual cash flows have been modified, the Group assesses whether there is a significant increase in credit risk on the same basis. The Group performs the above assessment to both corporate and retail exposures, and indicators of significant increase in credit risk are as follows:


Corporate Exposures		Retail Exposures
Asset quality level ‘Precautionary’ or lower		Asset quality level ‘Precautionary’ or lower

More than 30 days past due		More than 30 days past due

‘Warning’ level in early warning system		Significant decrease in credit rating (*)

Debtor experiencing financial difficulties (Capital impairment, Adverse opinion or Disclaimer of opinion by external auditors)		Deferment of repayment of principal and interest

Significant decrease in credit rating (*)		Deferment of interest

Deferment of repayment of principal and interest

Deferment of interest

(*)	The Group has applied the indicators of significant decrease in credit rating since the initial recognition as follows, and the estimation method is regularly being monitored.


Classification	Credit rating	Indicators of significant decrease in credit rating
Corporate	AAA ~ A+	More than 4 steps
	A- ~ BBB	More than 3 steps
	BBB- ~ BB+	More than 2 steps
	BB ~ BB-	More than 1 step
Retail	1 ~ 3	More than 3 steps
	4 ~ 5	More than 2 steps
	6 ~ 9	More than 1 step

The Group determined that there was no significant increase in credit risk after the initial recognition for debt securities, etc. with a credit rating of A + or higher, which are deemed to have low credit risk at the end of the reporting period.

The Group concludes that credit is impaired when financial assets are under conditions stated below:

•

When principal of loan is overdue for 90 days or longer due to significant deterioration in credit

•

For loans overdue for less than 90 days, when it is determined that not even a portion of the loan will be recovered unless claim actions such as disposal of collaterals are taken

•

When other objective indicators of impairment have been noted for the financial asset

The Group has estimated the expected credit loss allowances using an estimation model that additionally reflects the forward looking information based on the past experience loss rate data.

Probability of default (PD) and loss given default (LGD) for each category of financial asset are being calculated by considering factors such as debtor type, credit rating and portfolio. The estimates are regularly being reviewed in order to reduce discrepancies with actual losses.

In measuring the expected credit losses, the Group is reasonably using supportable macroeconomic indicators such as GDP growth rate, Personal consumption expenditures increase/decrease rate, Won-dollar exchange rate, etc., in order to forecast forward looking information conditions.

The Group applies the following forward-looking model and reviews the results regularly.

•

Development of estimation models through regression analysis of borrower(corporate/retail), year-by-year default rate and macroeconomic indicator data by year

- 52 -


Major macroeconomic indicators		Correlation between credit risk and macroeconomic indicators
GDP growth rate		Negative (-) Correlation

Personal consumption expenditures increase/decrease rate		Negative (-) Correlation

Won-dollar exchange rate		Positive (+) Correlation

•

Calculation of estimated default rate incorporating future economic forecasts by applying estimated macroeconomic indicators provided by institutions verified to be reliable such as Bank of Korea and National Assembly Budget Office to the estimation model developed

•

Forecast of macroeconomic variables

①

Probability weight

As of December 31, 2023, the probability weights applied to the scenarios of the forecasts of macroeconomic variables is as follows (Unit: %):


	Base Scenario		Upside Scenario		Downside Scenario		Worst Scenario
Probability weight		44.36		9.41		26.23		20.00

②

Economic forecast of each major macroeconomic variables by scenario (prospect period: 2024)

As of December 31, 2023, the forecasts of major macroeconomic variables by scenario are as follows (Unit: Won, %):


	Base Scenario		Upside Scenario		Downside Scenario		Worst Scenario
GDP growth rate		2.10		2.29		1.76		(-)5.10
Personal consumption expenditures increase/decrease rate		1.90		2.27		1.23		(-)12.22
Won-dollar exchange rate		1,263		1,255		1,277		1,560

As of December 31, 2023 and 2022, the sensitivity of the provision for expected credit losses due to changes in macroeconomic indicators is as follows (Unit: Korean Won in millions):


			December 31, 2023 (*1)			December 31, 2022 (*1)
Corporate	Personal consumption expenditures increase/decrease rate	Increase by 1% point		(46,211	)		(59,987	)
Corporate	Personal consumption expenditures increase/decrease rate	Decrease by 1% point		52,862			68,036
Retail	Consumer price index	Increase by 1% point		—			(24,164	)
	change rate (*2)	Decrease by 1% point		—			28,042

(*1) The sensitivity of GDP growth rate and won-dollar exchange rate to the Group’s expected credit loss allowance is not significant.

(*2) The consumer price index was excluded from the estimation model of the future economic forecast for the year ended December 31, 2023.

•

When reflecting the predicted default rate, the increase rate is used as a future economic forecast adjustment coefficient and reflected in the estimate applied for the current year.

- 53 -

iv)

Maximum exposure to credit risk

The Group’s maximum exposure to credit risk refers to net book value of financial assets net of expected credit loss allowances, which shows the uncertainties of maximum changes of net value of financial assets attributable to a particular risk without considering collateral and other credit enhancements obtained. However, the maximum exposure is the fair value amount (recorded on the books) for derivatives, maximum contractual obligation for payment guarantees loan commitment Additionally, loan commitments are the unused commitment amounts that represent the maximum exposure to credit risk for each loan.

The maximum exposure to credit risk as of December 31, 2023 and 2022 is as follows (Unit: Korean Won in millions):


		December 31, 2023		December 31, 2022
Loans and other financial assets at amortized cost	Korean treasury and government agencies		2,269,614		2,871,872
	Banks		20,630,733		19,407,690
	Corporates		144,719,788		131,310,782
	Retail		173,120,629		172,329,255

	Sub-total		340,740,764		325,919,599

Financial assets at FVTPL (*1)	Due from banks		39,241		34,995
	Debt securities		5,039,784		3,192,217
	Loans		—		19,169
	Derivative assets		5,798,327		8,204,737

	Sub-total		10,877,352		11,451,118

Financial assets at FVTOCI	Debt securities and others		36,694,110		32,145,758
Securities at amortized cost	Debt securities		23,996,172		28,268,516
Derivative assets (Designated for hedging)			698		—
Off-balance accounts	Guarantees (*2)		13,628,841		11,899,320
Off-balance accounts	Loan commitments		84,159,332		76,081,523

	Sub-total		97,788,173		87,980,843

	Total		510,097,269		485,765,834

(*1) Puttable instruments are not included.

(*2) Those guarantees include financial guarantees of 3,497,197 million Won and 3,072,827 million Won as of December 31, 2023 and 2022, respectively.

- 54 -

Credit risk exposure by geographical areas

The following tables analyze credit risk exposure by geographical areas (Unit: Korean Won in millions):


	December 31, 2023
	Korea		China		USA		UK		Japan		Others (*)		Total
Loans and other financial assets at amortized cost		313,519,402		5,068,762		5,527,148		260,834		608,258		15,756,360		340,740,764
Securities at amortized cost		22,529,414		111,832		1,049,669		—		—		305,257		23,996,172
Financial assets at FVTPL		8,117,966		519		1,440,175		355,478		143,229		819,985		10,877,352
Financial assets at FVTOCI		32,422,652		724,786		2,367,997		7		32,194		1,146,474		36,694,110
Derivative assets (Designated for hedging)		—		—		—		—		698		—		698
Off-balance accounts		93,453,166		921,904		745,832		20,045		26,351		2,620,875		97,788,173
Guarantees		11,756,361		428,666		182,740		20,045		26,351		1,214,678		13,628,841
Loan commitments		81,696,805		493,238		563,092		—		—		1,406,197		84,159,332

Total		470,042,600		6,827,803		11,130,821		636,364		810,730		20,648,951		510,097,269

(*) Others consist of financial assets in Indonesia, Hong Kong, Germany, Australia and other countries.


	December 31, 2022
	Korea		China		USA		UK		Japan		Others (*)		Total
Loans and other financial assets at amortized cost		301,855,215		5,188,826		4,721,439		215,174		714,182		13,224,763		325,919,599
Securities at amortized cost		26,883,967		642,089		421,248		16,658		—		304,554		28,268,516
Financial assets at FVTPL		7,311,349		2,607		2,210,580		318,323		168,013		1,440,246		11,451,118
Financial assets at FVTOCI		27,780,323		806,320		2,297,076		1,726		41,421		1,218,892		32,145,758
Off-balance accounts		84,418,210		981,139		380,209		25,644		16,987		2,158,654		87,980,843
Guarantees		10,100,103		446,502		145,084		25,644		16,987		1,165,000		11,899,320
Loan commitments		74,318,107		534,637		235,125		—		—		993,654		76,081,523

Total		448,249,064		7,620,981		10,030,552		577,525		940,603		18,347,109		485,765,834

(*) Others consist of financial assets in Indonesia, Hong Kong, Germany, Australia and other countries.

Credit risk exposure by industries

①

The following tables analyze credit risk exposure by industries, which are service, manufacturing, finance and insurance, construction, individuals and others in accordance with the Korea Standard Industrial Classification Code as of December 31, 2023 and 2022 (Unit: Korean Won in millions):


	December 31, 2023
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and other financial assets at amortized cost		78,336,718		42,610,153		26,776,372		3,894,430		170,434,257		18,688,834		340,740,764
Securities at amortized cost		189,193		—		14,151,799		69,720		—		9,585,460		23,996,172
Financial assets at FVTPL		124,622		174,464		6,013,642		21,687		2,600		4,540,337		10,877,352
Financial assets at FVTOCI		453,694		408,377		25,832,327		290,856		—		9,708,856		36,694,110
Derivative assets (Designated for hedging)		—		—		698		—		—		—		698
Off-balance accounts		20,480,798		22,137,750		14,342,704		2,475,491		33,375,382		4,976,048		97,788,173
Guarantees		5,817,599		4,318,602		2,145,967		541,769		5,768		799,136		13,628,841
Loan commitments		14,663,199		17,819,148		12,196,737		1,933,722		33,369,614		4,176,912		84,159,332

Total		99,585,025		65,330,744		87,117,542		6,752,184		203,812,239		47,499,535		510,097,269


	December 31, 2022
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and other financial assets at amortized cost		72,068,928		35,480,453		27,562,669		4,063,427		169,426,005		17,318,117		325,919,599
Securities at amortized cost		239,141		—		16,198,175		199,924		—		11,631,276		28,268,516
Financial assets at FVTPL		81,836		150,178		8,222,518		10,296		1,167		2,985,123		11,451,118
Financial assets at FVTOCI		417,877		231,132		22,249,839		48,225		—		9,198,685		32,145,758
Off-balance accounts		16,531,999		21,764,034		11,011,217		2,820,360		30,340,751		5,512,482		87,980,843
Guarantees		4,647,666		4,500,906		955,466		779,950		5,801		1,009,531		11,899,320
Loan commitments		11,884,333		17,263,128		10,055,751		2,040,410		30,334,950		4,502,951		76,081,523

Total		89,339,781		57,625,797		85,244,418		7,142,232		199,767,923		46,645,683		485,765,834

- 55 -

Credit risk exposure

Financial assets

The maximum exposure to credit risk by asset quality, except for financial assets at FVTPL and derivative asset (designated for hedging) as of December 31, 2023 and 2022 is as follows (Unit: Korean Won in millions):


	December 31, 2023
	Stage 1				Stage 2				Stage 3		Total		Expected credit loss allowance			Total, net
	Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Stage 3		Total		Expected credit loss allowance			Total, net
Loans and other financial assets at amortized cost		296,033,576		21,955,372		12,050,634		11,626,681		1,217,842		342,884,105		(2,143,341	)		340,740,764
Korean treasury and government agencies		2,271,866		—		—		—		—		2,271,866		(2,252	)		2,269,614
Banks		20,513,289		122,383		21,770		—		15,295		20,672,737		(42,004	)		20,630,733
Corporates		122,509,007		16,455,436		2,334,156		4,305,144		643,838		146,247,581		(1,527,793	)		144,719,788
General business		83,348,441		9,863,108		1,739,452		2,982,436		489,033		98,422,470		(1,090,112	)		97,332,358
Small- and medium-sized enterprise		30,845,647		6,444,048		575,487		1,235,856		154,805		39,255,843		(365,748	)		38,890,095
Project financing and others		8,314,919		148,280		19,217		86,852		—		8,569,268		(71,933	)		8,497,335
Consumers		150,739,414		5,377,553		9,694,708		7,321,537		558,709		173,691,921		(571,292	)		173,120,629
Securities at amortized cost		24,010,113		—		—		—		—		24,010,113		(13,941	)		23,996,172
Financial assets at FVTOCI (*3)		36,481,027		213,083		—		—		—		36,694,110		(27,379	)		36,694,110

Total		356,524,716		22,168,455		12,050,634		11,626,681		1,217,842		403,588,328		(2,184,661	)		401,431,046


	December 31, 2023
	Collateral value
	Stage 1		Stage 2		Stage 3		Total
Loans and other financial assets at amortized cost		220,651,829		20,719,969		606,984		241,978,782
Korean treasury and government agencies		39,199		—		—		39,199
Banks		2,136,530		—		—		2,136,530
Corporates		89,560,890		5,469,252		247,006		95,277,148
General business		52,943,946		4,053,318		169,218		57,166,482
Small- and medium-sized enterprise		31,327,521		1,415,934		77,788		32,821,243
Project financing and others		5,289,423		—		—		5,289,423
Consumers		128,915,210		15,250,717		359,978		144,525,905
Securities at amortized cost		—		—		—		—
Financial assets at FVTOCI (*3)		—		—		—		—

Total		220,651,829		20,719,969		606,984		241,978,782

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.

(*2)	Credit grade of corporates are BBB- ~ C, and consumers are grades 7 ~ 10.

(*3)	Financial assets at FVTOCI were disclosed as the amount before deducting credit loss allowances as it does not reduce the carrying amount.

- 56 -


	December 31, 2022
	Stage 1				Stage 2				Stage 3		Total		Expected credit loss allowance			Total, net
	Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Stage 3		Total		Expected credit loss allowance			Total, net
Loans and other financial assets at amortized cost		285,080,318		19,138,437		12,261,349		10,210,653		952,021		327,642,778		(1,723,179	)		325,919,599
Korean treasury and government agencies		2,873,282		—		—		—		—		2,873,282		(1,410	)		2,871,872
Banks		19,038,873		372,788		2,125		—		17,333		19,431,119		(23,429	)		19,407,690
Corporates		111,501,463		14,240,708		2,282,095		4,071,452		530,069		132,625,787		(1,315,005	)		131,310,782
General business		72,886,649		9,059,573		1,697,255		2,971,706		389,139		87,004,322		(975,675	)		86,028,647
Small- and medium-sized enterprise		29,502,710		5,103,110		563,717		1,062,575		125,930		36,358,042		(286,520	)		36,071,522
Project financing and others		9,112,104		78,025		21,123		37,171		15,000		9,263,423		(52,810	)		9,210,613
Consumers		151,666,700		4,524,941		9,977,129		6,139,201		404,619		172,712,590		(383,335	)		172,329,255
Securities at amortized cost		28,276,901		—		—		—		—		28,276,901		(8,385	)		28,268,516
Financial assets at FVTOCI (*3)		31,914,193		231,565		—		—		—		32,145,758		(11,805	)		32,145,758

Total		345,271,412		19,370,002		12,261,349		10,210,653		952,021		388,065,437		(1,743,369	)		386,333,873


	December 31, 2022
	Collateral value
	Stage 1		Stage 2		Stage 3		Total
Loans and other financial assets at amortized cost		208,651,926		19,055,225		485,156		228,192,307
Korean treasury and government agencies		24,276		—		—		24,276
Banks		1,858,588		—		—		1,858,588
Corporates		78,709,348		4,756,502		239,365		83,705,215
General business		44,447,616		3,389,896		154,617		47,992,129
Small- and medium-sized enterprise		30,114,649		1,366,606		69,748		31,551,003
Project financing and others		4,147,083		—		15,000		4,162,083
Consumers		128,059,714		14,298,723		245,791		142,604,228
Securities at amortized cost		—		—		—		—
Financial assets at FVTOCI (*3)		—		—		—		—

Total		208,651,926		19,055,225		485,156		228,192,307

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.

(*2)	Credit grade of corporates are BBB- ~ C, and consumers are grades 7 ~ 10.

(*3)	Financial assets at FVTOCI were disclosed as the amount before deducting credit loss allowances as it does not reduce the carrying amount.

Guarantees and loan commitments

The credit quality of the guarantees and loan commitments as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
Financial assets	Stage 1				Stage 2				Stage 3		Total
Financial assets	Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Stage 3		Total
Off-balance accounts
Guarantees		12,351,077		1,150,185		73,192		40,890		13,497		13,628,841
Loan commitments		79,417,178		2,613,884		1,938,972		189,268		30		84,159,332

Total		91,768,255		3,764,069		2,012,164		230,158		13,527		97,788,173

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.

(*2)	Credit grade of corporate are BBB- ~ C, and consumers are grades 7 ~ 10.

- 57 -


	December 31, 2022
Financial assets	Stage 1				Stage 2				Stage 3		Total
Financial assets	Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Stage 3		Total
Off-balance accounts
Guarantees		10,768,204		846,997		25,826		245,061		13,232		11,899,320
Loan commitments		72,267,461		1,885,280		1,486,009		442,773		—		76,081,523

Total		83,035,665		2,732,277		1,511,835		687,834		13,232		87,980,843

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.

(*2)	Credit grade of corporate are BBB- ~ C, and consumers are grades 7 ~ 10.

vi)

Collateral and other credit enhancements

For the year ended December 31, 2023, there have been no significant decreases in the value of collateral or other credit enhancements held by the Group or significant changes in collateral or other credit enhancements due to changes in the collateral policy of the Group.

vii)

Among the financial assets that have measured expected credit loss allowances in terms of lifetime expected credit losses, amortized costs before changes in contractual cash flows for the year ended December 31, 2023 is 120,681 million Won, with loss effect of the change recognized 1,283 million Won and for the year end December 31, 2022 is 86,747 million Won, respectively, with net losses recognized along with the changes 4,539 million Won.

viii)

The Group determines which loan is subject to write-off in accordance with internal guidelines and writes off loan receivables when it is determined that the loans are practically irrecoverable. For example, loans are practically irrecoverable when application is made for rehabilitation under the Debtor Rehabilitation and Bankruptcy Act. and loans are confirmed as irrecoverable by the court’s decision to waive debtor’s obligation, or when it is not possible to recover the loan amount through legal means such as selling debtor’s assets via auctions or through any other means available. Notwithstanding the write-off, the Group may still exercise its right of collection after the asset has been written off in accordance with its collection policies.

As the Group manages receivables that have not lost the right of claim to the debtor for the grounds of incomplete statute limitation and uncollected receivables under the related laws as receivable charge-offs, the balance as of December 31, 2023 and 2022 is 8,642,906 million Won and 8,434,449 million Won respectively. In addition, the contractual uncollected amount of financial assets written off during the period ended December 31, 2023, but still in the process of recovery is 388,816 million Won.

(2)	Market risk

Market risk is the possible risk of loss arising from trading activities and non-trading activities in the volatility of market factors such as interest rates, stock prices and foreign exchange rates. Market risk occurs as a result of changes in the interest rates and foreign exchange rates for financial instruments that are not yet settled, and all contracts are exposed to a certain level of volatility according to changes in the interest rates, credit spreads, foreign exchange rates and the price of equity securities.

Market risk management refers to the process of making and implementing decisions for the avoidance, acceptance or mitigation of risks by identifying the underlying source of the risks and measuring its level, and evaluating the appropriateness of the level of accepted market risks.

Market risk management for trading activities

The Group has introduced and applied the Basel III standard method according to Detailed Enforcement Regulations for Supervision of Banking Business <The attached table 3-2> as a measurement method of market risk since 2023. The consolidated equity capital required by sensitivity method, default risk required equity capital, and residual risk required equity capital is combined to calculate the market risk required equity capital used to calculate the BIS ratio and are managed within the set internal capital limit of internal capital.

- 58 -

The sensitivity method measures linear and nonlinear losses that may occur due to unfavorable fluctuations such as interest rates, credit spreads, stock prices, exchange rates, and general commodity prices, and measures losses that may occur due to sudden bankruptcy not considered in the sensitivity method. Other losses not considered in the sensitivity method and default risk are measured in the residual risk required equity capital.

In addition, in the event of extreme situations such as the IMF crisis and the global financial crisis, stress tests are conducted every month to measure the size of losses to prepare for crises.

Market risk limits such as internal capital, loss, and VaR limits are given annually by the Risk Management Committee and the Risk Management Council, and limits for lower business units, excluding derivatives books, are set by the position management department. Compliance with the limit is monitored by the Risk Management Department independently of the operation department, and the details of the limit monitoring are regularly reported to the Risk Management Council and the Risk Management Committee.

Trading activities

The market risk required equity capital at the end of the reporting period by risk group is as follows (Unit: Korean Won in millions):


	Risk group	December 31, 2023
Sensitivity-based risk	General interest rate risk		37,832
	Equity risk		9,376
	General commodity risk		12
	Foreign exchange risk		249,044
	Non-securitization credit spread risk		27,371
	Securitization (excluding correlation trading portfolio, CTP) credit spread risk		—
	CTP credit spread risk		—
Default risk	Non-Securitization bankruptcy risk		—
	Securitization (excluding CTP) default risk		—
	CTP default risk		—
Residual risk	Residual risk		692

Total			324,327

The minimum, maximum and average VaR for the year ended December 31, 2022 and the VaR as of December 31, 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2022			For the year ended December 31, 2022
Risk factor	December 31, 2022			Average			Maximum			Minimum
Interest rate		11,800			8,847			11,987			4,298
Stock price		7,055			6,590			12,448			1,806
Foreign currencies		17,608			14,002			22,251			5,421
Diversification		(17,354	)		(12,725	)		(19,640	)		(4,201	)

Total VaR (*)		19,109			16,714			27,046			7,324

(*) VaR (Value at Risk): Retention period of 1 day, Maximum expected losses under 99% level of confidence.

ii)

Market risk management for non-trading activities

For non-trading sectors of the Group, NII (Net Interest Income) and NPV (Net Present Value) simulations are operated through ALM (Asset Liability Management) system, and then, interest rate risks are managed and measured by various analysis methods such as calculating ΔNII (change in Net Interest Income) and ΔEVE (change in Economic Value of Equity).

- 59 -

ΔNII represents a change in net interest income that may occur over a certain period (E.g., 1 year) due to unfavorable changes in interest rates, and ΔEVE indicates the economic value changes in equity capital that could be caused by changes in interest rates affecting the present value of asset, liabilities, and others.

Applying six scenarios of interest rate risk shocks (parallel increase and decrease, steepener, flattener and short-term interest rate increase and decrease), the interest rate risks of IRRBB (Interest Rate Risk in the Banking Book) are calculated. Based on the above six scenarios, the change in economic value of equity (ΔEVE) is measured, the maximum of which is the final ΔEVE. Also, applying two scenarios (parallel increase and decrease), Based on the two scenarios (parallel increase and decrease) likewise, the maximum is calculated as the final ΔNII.

For assets and liabilities as of December 31, 2023 and 2022 that include the Bank and consolidated trusts and subsidiaries of the Bank, details of ΔEVE and ΔNII calculated based on interest rate risk in banking book (IRRBB) are as follows (Unit: Korean Won in millions):


December 31, 2023		December 31, 2022
ΔEVE(*1)	ΔNII(*2)	ΔEVE(*1)	ΔNII(*2)
683,660	743,489	411,447	448,509

(*1)	ΔEVE: change in Economic Value of Equity

(*2)	ΔNII: change in Net Interest Income

The Group measures and manages the risks resulting from interest rate fluctuations caused by mismatches in interest rates and maturities of assets and liabilities. At the interest rate re-pricing date, cash flows (both principal and interest) of interest bearing assets and liabilities, which is the basis of non-trading position interest rate risk management are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Asset:
Loans and other financial assets at amortized cost		231,931,189		51,219,278		15,180,818		10,039,801		41,683,691		2,846,339		352,901,116
Financial assets at FVTPL		1,384,444		—		—		—		—		—		1,384,444
Financial assets at FVTOCI		5,976,531		3,489,341		2,425,700		3,008,905		22,852,783		756,272		38,509,532
Securities at amortized cost		1,451,409		1,230,486		3,335,565		1,416,082		15,907,380		2,171,914		25,512,836

Total		240,743,573		55,939,105		20,942,083		14,464,788		80,443,854		5,774,525		418,307,928

Liability:
Deposits due to customers		167,780,980		52,405,606		32,440,904		45,399,091		59,988,159		34,406		358,049,146
Borrowings		18,995,694		3,650,406		1,086,213		1,394,729		2,989,361		437,839		28,554,242
Debentures		6,011,955		3,550,214		1,214,427		2,854,877		6,761,968		2,296,383		22,689,824

Total		192,788,629		59,606,226		34,741,544		49,648,697		69,739,488		2,768,628		409,293,212


	December 31, 2022
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Asset:
Loans and other financial assets at amortized cost		213,438,844		53,466,078		12,210,591		13,203,873		45,890,269		5,429,302		343,638,957
Financial assets at FVTPL		945,818		27		27		27		8,838		13,024		967,761
Financial assets at FVTOCI		6,093,805		4,224,460		3,014,625		3,550,982		15,409,527		584,203		32,877,602
Securities at amortized cost		2,749,432		1,806,804		1,768,936		1,427,736		20,126,354		2,100,203		29,979,465

Total		223,227,899		59,497,369		16,994,179		18,182,618		81,434,988		8,126,732		407,463,785

Liability:
Deposits due to customers		166,821,311		49,234,720		32,999,477		38,710,524		54,596,510		69,861		342,432,403
Borrowings		13,383,278		3,474,294		1,379,136		679,472		3,886,808		472,325		23,275,313
Debentures		7,511,274		3,066,434		2,307,509		3,114,290		7,582,817		2,349,306		25,931,630

Total		187,715,863		55,775,448		36,686,122		42,504,286		66,066,135		2,891,492		391,639,346

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iii)

Currency risk

Currency risk arises from the financial instruments denominated in foreign currencies other than the functional currency. Therefore, no currency risk arises from non-monetary items or financial instruments denominated in the functional currency.

Financial instruments in foreign currencies exposed to currency risk as of December 31, 2023 and 2022 are as follows (Unit: USD in millions, JPY in millions, CNY in millions, EUR in millions, and Korean Won in millions):


		December 31, 2023
		USD				JPY				CNY				EUR				Others		Total
		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign Currency		Korean Won Equivalent		Foreign currency		Korean Won Equivalent		Korean Won Equivalent		Korean Won equivalent
Asset	Cash and cash equivalents		8,538		11,008,831		107,487		980,995		1,376		248,903		641		914,935		1,144,924		14,298,588
	Loans and other financial assets at amortized cost		24,461		31,540,624		134,948		1,231,612		30,536		5,522,075		1,791		2,554,780		4,590,795		45,439,886
	Financial assets at FVTPL		889		1,146,904		17,004		155,186		—		—		278		396,290		72,351		1,770,731
	Financial assets at FVTOCI		3,136		4,044,155		—		—		3,882		701,938		6		8,549		738,710		5,493,352
	Securities at amortized cost		1,223		1,576,690		—		—		618		111,839		68		97,393		184,938		1,970,860

	Total		38,247		49,317,204		259,439		2,367,793		36,412		6,584,755		2,784		3,971,947		6,731,718		68,973,417

Liability	Financial liabilities at FVTPL		350		451,700		23,806		217,266		—		—		209		297,521		98,885		1,065,372
	Deposits due to customers		23,962		30,896,252		279,393		2,549,912		23,162		4,188,690		2,122		3,027,521		5,531,315		46,193,690
	Borrowings		9,339		12,041,139		22,598		206,247		1,658		299,748		225		321,529		2,639,360		15,508,023
	Debentures		4,041		5,209,837		—		—		—		—		—		—		—		5,209,837
	Other financial liabilities		3,442		4,438,668		22,087		201,578		7,752		1,401,956		99		141,384		385,361		6,568,947

	Total		41,134		53,037,596		347,884		3,175,003		32,572		5,890,394		2,655		3,787,955		8,654,921		74,545,869

Off-balance accounts			6,977		8,996,028		30,143		275,101		2,043		369,483		601		857,974		568,935		11,067,521

- 61 -


		December 31, 2022
		USD				JPY				CNY				EUR				Others		Total
		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign Currency		Korean Won Equivalent		Foreign currency		Korean Won Equivalent		Korean Won Equivalent		Korean Won equivalent
Asset	Cash and cash equivalents		9,036		11,450,762		64,816		617,810		1,542		279,779		484		653,841		1,015,664		14,017,856
	Loans and other financial assets at amortized cost		24,327		30,829,640		117,903		1,123,824		24,637		4,470,059		2,510		3,391,144		4,952,419		44,767,086
	Financial assets at FVTPL		947		1,199,983		26,769		255,155		—		—		357		481,910		176,057		2,113,105
	Financial assets at FVTOCI		3,307		4,191,383		—		—		3,999		725,511		2		2,573		725,271		5,644,738
	Securities at amortized cost		576		729,811		—		—		3,540		642,214		69		93,250		206,497		1,671,772

	Total		38,193		48,401,579		209,488		1,996,789		33,718		6,117,563		3,422		4,622,718		7,075,908		68,214,557

Liability	Financial liabilities at FVTPL		415		526,553		26,766		255,128		—		—		322		434,590		274,895		1,491,166
	Deposits due to customers		24,569		31,135,886		227,276		2,166,353		28,125		5,102,886		2,108		2,847,863		5,008,508		46,261,496
	Borrowings		6,894		8,737,229		41,765		398,093		1,023		185,652		431		582,034		2,179,502		12,082,510
	Debentures		3,524		4,465,501		—		—		—		—		—		—		339,188		4,804,689
	Other financial liabilities		3,040		3,851,992		8,213		78,281		4,295		779,233		380		513,272		200,249		5,423,027

	Total		38,442		48,717,161		304,020		2,897,855		33,443		6,067,771		3,241		4,377,759		8,002,342		70,062,888

Off-balance accounts			6,048		7,664,629		34,512		328,964		1,141		207,012		592		800,493		868,470		9,869,568

iv)

As of December 31, 2023, there are 252,700 million Won in financial instruments that have not been converted to LIBOR-related alternative indicator interest rates, but the conversion to alternative indicator interest rates will be completed before the repricing date.

- 62 -

(3)	Liquidity risk

Liquidity risk management prevents financial institutions from incurring losses due to lack of funds by effectively managing liquidity shortages that can occur due to inconsistent maturity of assets and liabilities or an unexpected outflow of funds. The entire assets and liabilities within the financial statements and off-balance sheet account that can generate cash-flow are subject to the liquidity risk management.

Liquidity risk management

Basel III regulatory response

Through the standard ALM system, liquidity risks are managed by dividing them into short-term (liquidity coverage ratio, within 30 days) and mid- to long-term (net stabilization fund procurement ratio, over one year). Daily Liquidity Coverage Ratio (LCR) and quarterly Net Stable Funding Ratio (NSFR) are calculated and monitored, and relevant information is provided in accordance with the disclosure standards of the Basel Committee on Banking Supervision (BCBS).

Analysis of financing and operation status by maturity

As assets and liabilities are grouped into ALM account (COA; Chart of account) according to their account characteristics, and the gap ratio is identified through cash flow reports by various time and segment (e.g., by remaining period, contract period, etc.), the Group manages the liquidity risk by keeping the target ratio (limited) set this year. In addition, the Group established and manages the target ratio of concentration of funding for specific funding sources that are highly likely to withdraw. The Group also provides a function through daily ALM system to search relevant maturity report by business group so that related departments (e.g., the Financial Planning Department, the Fund Department, each business group, etc.) can identify liquidity risk management indicators and status.

Establishment and implementation of Contingency Plan

Various inspection items related to liquidity risk are monitored on a daily or weekly basis by establishing and regularly inspecting the preceding Contingency Plan in order to effectively cope with the risk of capital outflow and procurement due to rapid and unexpected changes in market conditions. In addition, the Group has strengthened monitoring related to foreign currency liquidity by operating a foreign currency liquidity plan separately from January 2012.

•

Inspection items related to liquidity risk on the Contingency Plan checklist

∎

The amount of Won and foreign currency and insufficiency of funds

∎

Liquidity coverage ratio (monthly average balance, daily balance)

∎

The amount of deposits and withdrawals (saving deposit in Korean Won, depository)

∎

Overdraft limit exhaustion rate

∎

Percentage of reduction in the balance of deferred deposits

∎

Percentage of concentration of funding by subject and period

∎

Won and foreign currency funding spread

- 63 -

ii)

Maturity analysis of non-derivative financial liabilities

Cash flows of principals and interests by remaining contractual maturities of non-derivative financial liabilities as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		39,524		—		—		—		—		—		39,524
Deposits due to customers		236,085,326		39,021,172		22,074,011		47,439,484		16,265,194		1,549,490		362,434,677
Borrowings		10,367,869		5,123,944		3,399,817		3,398,051		3,207,769		437,839		25,935,289
Debentures		3,783,034		3,692,866		2,496,132		3,723,968		6,761,968		2,296,383		22,754,351
Lease liabilities		69,274		37,159		53,277		30,493		133,291		25,084		348,578
Other financial liabilities		13,223,991		62,788		505		790		106,227		4,193,709		17,588,010

Total		263,569,018		47,937,929		28,023,742		54,592,786		26,474,449		8,502,505		429,100,429


	December 31, 2022
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		35,161		—		—		—		—		—		35,161
Deposits due to customers		227,656,223		37,116,140		23,654,192		41,424,824		14,284,227		1,522,830		345,658,436
Borrowings		7,823,902		5,049,912		3,047,607		2,652,352		4,389,446		484,909		23,448,128
Debentures		4,790,601		5,002,086		2,885,404		3,366,882		7,582,817		2,349,306		25,977,096
Lease liabilities		62,982		32,055		30,231		24,680		124,194		33,007		307,149
Other financial liabilities		13,284,860		68,049		289		842		71,602		3,037,105		16,462,747

Total		253,653,729		47,268,242		29,617,723		47,469,580		26,452,286		7,427,157		411,888,717

Cash flows of principals and interests by expected maturities of non-derivative financial liabilities as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		39,524		—		—		—		—		—		39,524
Deposits due to customers		241,895,128		41,050,492		22,766,281		41,432,233		14,084,245		505,146		361,733,525
Borrowings		10,367,869		5,123,944		3,399,817		3,398,051		3,207,769		437,839		25,935,289
Debentures		3,783,034		3,692,866		2,496,132		3,723,968		6,761,968		2,296,383		22,754,351
Lease liabilities		69,274		38,403		54,639		31,871		145,039		25,746		364,972
Other financial liabilities		13,223,991		62,788		505		790		106,227		4,193,709		17,588,010

Total		269,378,820		49,968,493		28,717,374		48,586,913		24,305,248		7,458,823		428,415,671


	December 31, 2022
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		35,161		—		—		—		—		—		35,161
Deposits due to customers		240,898,476		41,378,805		23,831,814		28,443,089		9,775,704		56,013		344,383,901
Borrowings		7,823,902		5,049,912		3,047,607		2,652,352		4,389,446		484,909		23,448,128
Debentures		4,790,601		5,002,086		2,885,404		3,366,882		7,582,817		2,349,306		25,977,096
Lease liabilities		63,048		32,060		30,472		24,982		130,176		38,584		319,322
Other financial liabilities		13,284,860		68,049		289		842		71,602		3,037,105		16,462,747

Total		266,896,048		51,530,912		29,795,586		34,488,147		21,949,745		5,965,917		410,626,355

- 64 -

iii)

Maturity analysis of derivative financial liabilities

Derivatives held for trading purpose are not managed in accordance with their contractual maturity, since the Group holds such financial instruments with the purpose of disposing or redemption before their maturity. As such, those derivatives are incorporated as “within 3 months” in the table below. Derivatives designated for hedging purpose are estimated by offsetting cash inflows and cash outflows.

The cash flow by the maturity of derivative financial liabilities as of December 31, 2023 and 2022 is as follows (Unit: Korean Won in millions):


		Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years			Total
December 31, 2023	Fair value hedge		29,176		34,370		157		35,272		39,861		—			138,836
December 31, 2023	Trading		5,983,782		—		—		—		—		—			5,983,782
December 31, 2022	Fair value hedge		25,048		16,175		31,974		18,540		118,027		(3,615	)		206,149
December 31, 2022	Trading		8,952,915		—		—		—		—		—			8,952,915

iv)

Maturity analysis of off-balance accounts (Guarantees, loan commitments and others)

A financial guarantee represents an irrevocable undertaking that the Group should meet a customer’s obligations to third parties if the customer fails to do so. The loan commitment represents the limit if the Group has promised a credit to the customer. Commitments to lend include commercial standby facilities and credit lines, liquidity facilities to commercial paper conduits and utilized overdraft facilities. The maximum limit to be paid by the Group in accordance with guarantees and loan commitment only applies to principal amounts. There are contractual maturities for financial guarantees, such as guarantees for debentures issued or loans, unused loan commitments, other credit facilities and commitments, however, under the terms of the guarantees and unused loan commitments, funds should be paid upon demand from the counterparty. Details of off-balance accounts as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Guarantees		13,628,841		11,899,320
Loan commitments		84,159,332		76,081,523
Other commitments		5,892,297		6,112,770

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(4)	Operational risk

Definition

The Group defines the operational risk as the risk of potential losses arising from inadequate or incorrect internal procedures, human resource and system, and/or external factors.

ii)

Operational risk management

The Bank has been running the operational risk management system under Basel for reinforcement in foreign competitions, reducing the amount of risk capitals, managing the risk, and precaution for any unexpected occasions starting December 2005.

In July 2016, the operation risk capital calculation and operation risk management were elaborated through the advancement project of operation risk management, and the upgraded operating risk management system was opened in March 2021 to respond to the new Basel III global regulations introduced in 2023.

Strategy and procedures for operation risk management

The Bank carries out operational risk management according to eight management implementation systems: Risk Self Assessment (RSA), Key Risk Indicators (KRI), early warning system, loss case management, risk capital measurement, monitoring and reporting, cultural diffusion, and countermeasures. Operational risk management follows the procedures for risk recognition, evaluation, measurement, monitoring and reporting, risk control and mitigation.

Operational Risk Management Organization, Structure and Function

The Bank has 3 lines of defense for operational risk management.

•

First line of defense : Self-operation risk management of unit business units (person in charge of business affairs, person in charge of risk management at each branch, head of each branch, and head of the group)

•

Second line of defense : Proactive operation risk management of the operational risk management organization (Risk General Division, Risk Management Group, Risk Management Council, Risk Management Committee) and validate the adequacy of risk model validation department (Risk management group)

•

Third line of defense : Independent third-party inspection of the audit organization(audit department, head office audit department, standing auditor, audit committee)

Status of Operational Risk Reporting System and Measurement System

The Bank has been performing operation risk capital calculation, monitoring, and reporting based on RSA/KRI/loss/response management, cultural diffusion, calculation of operation risk capital through the Basel III standard method through the operation risk management system established since December 2005.

Policies for reducing or hedging operational risks

In order to effectively control risks and establish mitigation policies, the Bank establishes policies for modifying operational risk profiles, selecting policies for acceptance levels, and establishing policies for performance management. In addition, the Bank carries out activities for strengthening control of each module (RSA, KRI, loss) and process improvement based on the relevant criteria, and utilizes them for risk identification and control mitigation activities through analysis of the collected loss data.

- 66 -

Persistent operational risk monitoring strategies and procedures

The Bank conducts monitoring of the progress of the response measures established for controlling and reducing operational risks to review the appropriateness and make remediation if necessary. In addition, the results are used for management activities of operational risks such as adding or modifying RSA/KRI/control activities.

Method of evaluating capital adequacy of operational risks

The Bank evaluates capital adequacy by comparing operational risk capital requirements with BIS-based equity capital, and utilizes the evaluation results for daily management and decision-making, such as limit management and performance evaluation.

iii)

Management methods by assessment and measurement methods

Means of management

Risk Self Assessment (RSA) : Risk assessment (RSA) is a series of risk management activities that identify and evaluate important operational risks and control activities for them and remove or improve risks through countermeasures. This is done for all branches of the Bank.

Key Risk Indicator (KRI) : Key Risk Indicator (KRI) is used to identify and monitor risks and to observe trends in operational risks.

Loss data: The Bank establishes a system for collecting and managing internal loss data by operational risk management system. In addition, the Bank receives the Korea Operational Risk Data Exchange Committee (KOREC) as external loss data and use it risk identification.

Business Continuity Plan (BCP): The Bank establishes BCP plans that are divided into organization, risk assessment, business impact analysis, alternative business sites, and mock training so that banks can recover/re-open key business sectors in response to business disruptions caused by disasters and disasters.

Measurement Method

The Bank measures the amount of operating risk capital by applying the standard method

The standard method is to calculate operating risk equity by multiplying the business indicator (BI), a measure based on consolidated financial statements, by the coefficient, by the BIC, and the internal loss multiplier (ILM), an adjusted multiplier based on the average past loss and operating index.

•

“Operational risk required equity capital” = Business indicator component (BIC) × internal loss multiplier (ILM)

•

“Business Indicator Component (BIC)” = Business Index (BI) × Adjustment Coefficient

•

“Internal Loss Multiplier (ILM)” = ln (exp(1)-1+ (Loss Element (LC)/Business Index Element (BIC))^ 0.8)

- 67 -

(5)	Capital management

The Group complies with the standard of capital adequacy provided by financial regulatory authorities. The capital adequacy standard is based on Basel III published by Basel Committee on Banking Supervision in Bank for International Settlement which has been implemented in Korea in December 2013. The capital adequacy ratio is calculated by dividing own capital by asset (weighted with a risk premium – risk weighted assets) based on the consolidated financial statements of the Group.

According to the regulations above, the Group is required to meet the following new minimum requirements: Common Equity Tier 1 capital ratio of 8.0% , a Tier 1 capital ratio of 9.5% and a minimum total capital ratio of 11.5% as of December 31, 2023 and 2022, respectively.

Details of the Group’s capital adequacy ratio as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023 (*)			December 31, 2022
Risk-weighted assets for credit risk		155,484,214			145,358,395
Risk-weighted assets for market risk		4,054,084			8,416,430
Risk-weighted assets for operational risk		16,535,445			13,657,389

Total risk-weighted assets		176,073,743			167,432,214

Common Equity Tier 1 capital		23,183,323			21,236,314
Other Tier 1 capital		1,554,186			1,652,687
Tier 2 capital		3,500,420			3,230,135

Total risk-adjusted capital		28,237,929			26,119,136

Common Equity Tier 1 ratio		13.17	%		12.68	%

Tier 1 capital ratio		14.05	%		13.67	%

Total capital ratio		16.04	%		15.60	%

(*)	Tier 1 capital ratio as of December 31, 2023 is estimation.

- 68 -

5.	OPERATING SEGMENTS

In evaluating the results of the Group and allocating resources, the Group’s Chief Operation Decision Maker (the “CODM”) utilizes the information per type of customers. This financial information of the segments is regularly reviewed by the CODM.

(1)	Segment by types of customers

The Group’s reporting segments comprise the following customers: consumer banking, corporate banking, investment banking, capital market, and headquarters and others. The reportable segments are classified based on the target customers for whom the service is being provided.

•

Consumer banking: Loans/deposits and financial services for retail and individual consumers, etc.

•

Corporate banking: Loans/deposits and export/import, financial services for corporations, etc.

•

Investment banking: Domestic/foreign investment, structured finance, M&A, Equity & fund investment related business, venture advisory related tasks, real estate SOC development practices, etc.

•

Capital market: investment in securities and derivatives, etc.

•

Headquarters and others: Segments that do not belong to operating segments above.

The details of operating income by each segment for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Consumer banking			Corporate banking			Investment banking			Capital market			Headquarters and others			Sub-total			Adjustments (*)			Continuing operations
Net interest income (expense)		2,910,670			3,536,366			(271,147	)		(47,332	)		410,823			6,539,380			896,876			7,436,256
Interest income		5,915,515			8,117,854			322,965			71,470			3,431,665			17,859,469			526,398			18,385,867
Interest expense		(2,977,982	)		(6,288,716	)		(101	)		—			(2,053,290	)		(11,320,089	)		370,478			(10,949,611	)
Inter-segment		(26,863	)		1,707,228			(594,011	)		(118,802	)		(967,552	)		—			—			—
Net non-interest income (expense)		431,388			410,272			439,925			40,981			250,165			1,572,731			(899,228	)		673,503
Non-interest income		406,362			610,368			559,804			15,898,187			1,884,585			19,359,306			(17,454,772	)		1,904,534
Non-interest expense		(62,751	)		(279,579	)		(119,879	)		(15,857,206	)		(1,467,160	)		(17,786,575	)		16,555,544			(1,231,031	)
Inter-segment		87,777			79,483			—			—			(167,260	)		—						—
Other expense		(1,960,531	)		(1,801,606	)		(29,120	)		(27,055	)		(853,187	)		(4,671,499	)		(121,302	)		(4,792,801	)
Administrative expense		(1,828,368	)		(1,115,797	)		(34,894	)		(27,018	)		(760,635	)		(3,766,712	)		(32,570	)		(3,799,282	)
Reversal of (provision for) allowance for credit loss		(132,163	)		(685,809	)		5,774			(37	)		(92,552	)		(904,787	)		(88,732	)		(993,519	)

Operating income (expense)		1,381,527			2,145,032			139,658			(33,406	)		(192,199	)		3,440,612			(123,654	)		3,316,958

Non-operating income (expense)		(13,561	)		(206	)		69,623			—			(74,573	)		(18,717	)		31,193			12,476
Gain on valuation of investments in associates		—			—			82,339			297			6,152			88,788			—			88,788
Other non-operating income (expense)		(13,561	)		(206	)		(12,716	)		(297	)		(80,725	)		(107,505	)		31,193			(76,312	)

Net income (loss) before income tax expense		1,367,966			2,144,826			209,281			(33,406	)		(266,772	)		3,421,895			(92,461	)		3,329,434
Income tax expense		(361,143	)		(563,269	)		(55,250	)		8,819			182,083			(788,760	)		(25,594	)		(814,354	)

Net income (loss)		1,006,823			1,581,557			154,031			(24,587	)		(84,689	)		2,633,135			(118,055	)		2,515,080

(*)	Adjustments were made for the presentation of profit or loss in accordance with K-IFRS from the reporting segments in accordance with the Managerial Accounting Standards.

- 69 -


	For the year ended December 31, 2022
	Consumer banking			Corporate banking			Investment banking			Capital market			Headquarters and others			Sub-total			Adjustments (*)			Continuing operations
Net interest income (expense)		3,330,962			3,553,264			(175,020	)		46,311			(150,696	)		6,604,821			812,903			7,417,724
Interest income		4,401,332			5,139,910			221,413			27,759			2,500,292			12,290,706			451,698			12,742,404
Interest expense		(1,292,534	)		(3,107,959	)		(48	)		72			(1,285,416	)		(5,685,885	)		361,205			(5,324,680	)
Inter-segment		222,164			1,521,313			(396,385	)		18,480			(1,365,572	)		—			—			—
Net non-interest income (expense)		490,833			597,254			349,600			72,872			(1,609	)		1,508,950			(770,003	)		738,947
Non-interest income		443,632			637,055			487,778			23,384,730			958,704			25,911,899			(24,380,641	)		1,531,258
Non-interest expense		(23,240	)		(114,647	)		(138,178	)		(23,311,858	)		(815,026	)		(24,402,949	)		23,610,638			(792,311	)
Inter-segment		70,441			74,846			—			—			(145,287	)		—			—			—
Other expense		(1,883,582	)		(1,408,313	)		(68,220	)		(26,492	)		(911,021	)		(4,297,628	)		(75,856	)		(4,373,484	)
Administrative expense		(1,848,880	)		(1,047,214	)		(33,256	)		(24,908	)		(929,890	)		(3,884,148	)		(30,524	)		(3,914,672	)
Reversal of (provision for) allowance for credit loss		(34,702	)		(361,099	)		(34,964	)		(1,584	)		18,869			(413,480	)		(45,332	)		(458,812	)

Operating income (expense)		1,938,213			2,742,205			106,360			92,691			(1,063,326	)		3,816,143			(32,956	)		3,783,187

Non-operating income (expense)		(13,008	)		42			38,208			455			26,551			52,248			27,273			79,521
Equity method income		—			—			66,374			(489	)		8,073			73,958			—			73,958
Other non-operating income (expense)		(13,008	)		42			(28,166	)		944			18,478			(21,710	)		27,273			5,563

Net income (loss) before income tax expense		1,925,205			2,742,247			144,568			93,146			(1,036,775	)		3,868,391			(5,683	)		3,862,708
Income tax expense		(529,431	)		(745,082	)		(39,756	)		(25,615	)		403,338			(936,546	)		(22,753	)		(959,299	)

Net income (loss)		1,395,774			1,997,165			104,812			67,531			(633,437	)		2,931,845			(28,436	)		2,903,409

(*)	Adjustments were made for the presentation of profit or loss in accordance with K-IFRS from the reporting segments in accordance with the Managerial Accounting Standards.

(2)	Information about products and services

The products of the Group are classified as interest-bearing products such as loans, deposits and debt securities and non-interest bearing products such as loan commitment, credit commitment, equity securities, and credit card service. This classification of products has been reflected in the segment information presenting interest income and non-interest income.

(3)	Information about geographic area

Among the Group’s revenue (interest income and non-interest income) from services, revenue from the domestic customers for the years ended December 31, 2023 and 2022 amounted to 17,406,079 million Won and 12,230,645 million Won, respectively, and revenue from the foreign customers amounted to 2,884,322 million Won and 2,043,017 million Won, respectively. Among the Group’s non-current assets (investments in joint ventures and associates, investment properties, Properties and equipment and intangible assets), non-current assets attributed to domestic customers as of December 31, 2023 and 2022 are 4,484,448 million Won and 4,291,808 million Won, respectively, and non-current assets attributed to foreign customers are 386,519 million Won and 368,284 million Won, respectively.

(4)	Information about major customers

The Group does not have any single customer that generates 10% or more of the Group’s total revenue for the years ended December 31, 2023 and 2022, respectively.

- 70 -

6.	CASH AND CASH EQUIVALENTS

(1)	Details of cash and cash equivalents as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Cash		1,464,119		1,770,695
Foreign currencies		714,952		628,213
Demand deposits		26,989,563		29,929,373
Fixed deposits		118,096		90,014

Total		29,286,730		32,418,295

(2)	Details of restricted due from banks as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	Counterparty	December 31, 2023		Reason of restriction
Due from banks in local currency:
Due from Bank of Korea(BOK)	BOK		13,420,310	Reserve deposits under the BOK Act
Due from banks in foreign currencies:
Due from banks on demand	Bank of Japan and others		957,627	Reserve deposits and others

Total			14,377,937


	Counterparty	December 31, 2022		Reason of restriction
Due from banks in local currency:
Due from Bank of Korea(BOK)	BOK		16,527,445	Reserve deposits under the BOK Act
Due from banks in foreign currencies:
Due from banks on demand	BOK and others		6,437,717	Reserve deposits under the BOK Act and others

Total			22,965,162

- 71 -

(3)	Among the investing and financing activities, significant transactions not involving cash inflows and outflows for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023			For the year ended December 31, 2022
Changes in other comprehensive income (loss) due to valuation of financial assets at FVTOCI		727,225			(488,209	)
Changes in financial assets at FVTOCI due to debt-equity swap		206			56,274
Changes in other comprehensive income of investment stocks by equity method		5,992			(1,205	)
Changes in other comprehensive loss related to hedges of net investment in foreign operations		(14,049	)		(20,701	)
Changes in other comprehensive income of foreign operations translation		44,048			51,381
Reclassify investment property to Properties and equipment		6,463			—
Reclassify Properties and equipment to investment property		—			19,190
Reclassify Properties and equipment to assets held for sale		2,504			13,109
Increase in the right-of-use assets and lease liabilities		175,932			154,689
Changes in accounts payable related to acquisition of intangible assets		10,146			7,382
Reclassify investments in associates to financial assets at FVTPL		49,341			—

(4)	Adjustments of liabilities from financing activities are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	January 1, 2023		Cash flow			Not involving cash inflows and outflows								December 31, 2023
	January 1, 2023		Cash flow			Foreign Exchange		Changed in value of hedged items			Others			December 31, 2023
Borrowings		23,028,206		2,034,234			192,249		—			43			25,254,732
Debentures		24,639,433		(3,552,385	)		78,287		63,615			48,083			21,277,033
Lease liabilities		271,868		(172,682	)		1,180		—			199,255			299,621
Rental deposit		57,074		30			—		—			—			57,104

Total		47,996,581		(1,690,803	)		271,716		63,615			247,381			46,888,490


	For the year ended December 31, 2022
	January 1, 2022		Cash flow			Not involving cash inflows and outflows								December 31, 2022
	January 1, 2022		Cash flow			Foreign Exchange		Changed in value of hedged items			Others			December 31, 2022
Borrowings		21,376,880		927,906			723,482		—			(62	)		23,028,206
Debentures		26,478,289		(1,835,231	)		240,460		(257,910	)		13,825			24,639,433
Lease liabilities		294,626		(168,519	)		4,645		—			141,116			271,868
Rental deposit		56,621		453			—		—			—			57,074

Total		48,206,416		(1,075,391	)		959,297		(257,910	)		164,169			47,996,581

- 72 -

7.	FINANCIAL ASSETS AT FVTPL

Details of financial assets at FVTPL as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Due from banks:
Gold banking assets		39,241		34,995
Securities:
Debt securities
Korean treasury and government agencies		3,654,404		2,507,689
Financial institutions		560,092		284,142
Corporates		108,324		309,652
Securities loaned		625,398		—
Others		91,566		90,734
Equity securities		294,170		301,621
Capital contributions		1,858,728		1,432,256
Beneficiary certificates		7,308,581		5,120,563
Others		180,690		142,335

Sub-total		14,681,953		10,188,992

Loans		—		19,169
Derivatives assets		5,798,327		8,204,737
Other assets		42,406		41,680

Total		20,561,927		18,489,573

Financial assets designated at FVTPL upon initial recognition is nil as of December 31, 2023 and 2022.

8.	FINANCIAL ASSETS AT FVTOCI

(1)	Details of financial assets at FVTOCI as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Debt securities:
Korean treasury and government agencies		5,654,395		5,487,523
Financial institutions		20,885,924		16,870,619
Corporates		3,994,432		4,044,446
Bonds denominated in foreign currencies		5,010,558		5,061,945
Securities loaned		592,218		98,027
Mortgage-backed debt securities		556,583		583,198

Sub-total		36,694,110		32,145,758

Equity securities		1,117,063		854,504

Total		37,811,173		33,000,262

- 73 -

(2)	Details of equity securities designated as financial assets at FVTOCI as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


Purpose of acquisition	December 31, 2023		December 31, 2022		Remarks
Investment for strategic business partnership purpose		960,080		698,629
Debt-equity swap		156,977		155,869
Others		6		6	Mutual Aid Association Insurance Subscription, etc.

Total		1,117,063		854,504

(3)	Changes in the expected credit loss allowance and gross carrying amount of financial assets at FVTOCI for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):

Credit loss allowances


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(11,805	)		—		—		(11,805	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal(provision) of expected credit loss allowance		(16,542	)		—		—		(16,542	)
Disposal		1,519			—		—		1,519
Others (*)		(551	)		—		—		(551	)

Ending balance		(27,379	)		—		—		(27,379	)

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(12,146	)		—		—		(12,146	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal(provision) of expected credit loss allowance		827			—		—		827
Disposal		714			—		—		714
Others (*)		(1,200	)		—		—		(1,200	)

Ending balance		(11,805	)		—		—		(11,805	)

(*)	Others consist of foreign currencies translation, etc.

- 74 -

Gross carrying amount


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		32,145,758			—		—		32,145,758
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		24,350,759			—		—		24,350,759
Disposal/Redemption		(20,823,293	)		—		—		(20,823,293	)
Gain on fair value valuation		707,739			—		—		707,739
Amortization on the effective interest method		166,401			—		—		166,401
Others (*)		146,746			—		—		146,746

Ending balance		36,694,110			—		—		36,694,110

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		38,126,977			—		—		38,126,977
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		16,108,426			—		—		16,108,426
Disposal/Redemption		(21,670,160	)		—		—		(21,670,160	)
Gain on fair value valuation		(669,936	)		—		—		(669,936	)
Amortization on the effective interest method		41,813			—		—		41,813
Others (*)		208,638			—		—		208,638

Ending balance		32,145,758			—		—		32,145,758

(*)	Others consist of foreign currencies translation, etc.

(4)

During the year ended December 31, 2023, the Group sold its equity securities, designated as financial assets at FVTOCI in accordance with decision of disposal by the creditors, and the fair values at disposal dates were 3,194 million Won and cumulative gains at disposal dates were 118 million Won, respectively. During the year ended December 31, 2022, the Group sold its equity securities, designated as financial assets at FVTOCI in accordance with decision of disposal by the creditors, and the fair values at disposal dates were 3,567 million Won and cumulative losses at disposal dates were 14,444 million Won, respectively.

9.	SECURITIES AT AMORTIZED COST

(1)

Details of securities at amortized cost as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Korean treasury and government agencies		8,143,586			8,983,600
Financial institutions		6,660,465			10,283,631
Corporates		7,235,201			6,237,547
Bonds denominated in foreign currencies		1,922,493			1,600,822
Mortgage-backed debt securities		48,368			1,171,300
Credit loss allowances		(13,941	)		(8,384	)

Total		23,996,172			28,268,516

- 75 -

(2)

Changes in the expected credit loss allowance and gross carrying amount of securities at amortized cost for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):

Credit loss allowances


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(8,384	)		—		—		(8,384	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal (provision) of expected credit loss allowance		(5,549	)		—		—		(5,549	)
Others (*)		(8	)		—		—		(8	)

Ending balance		(13,941	)		—		—		(13,941	)

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(5,235	)		—		—		(5,235	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal (provision) of expected credit loss allowance		(3,151	)		—		—		(3,151	)
Others (*)		2			—		—		2

Ending balance		(8,384	)		—		—		(8,384	)

(*)	Others consist of foreign currencies translation, etc.

ii)

Gross carrying amount


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		28,276,900			—		—		28,276,900
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		4,244,256			—		—		4,244,256
Disposal/Redemption		(8,727,124	)		—		—		(8,727,124	)
Amortization on the effective interest method		167,219			—		—		167,219
Others (*)		48,862			—		—		48,862

Ending balance		24,010,113			—		—		24,010,113

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		17,091,509			—		—		17,091,509
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		16,873,194			—		—		16,873,194
Disposal/Redemption		(5,871,234	)		—		—		(5,871,234	)
Amortization on the effective interest method		86,212			—		—		86,212
Others (*)		97,220			—		—		97,220

Ending balance		28,276,900			—		—		28,276,900

(*)	Others consist of foreign currencies translation, etc.

- 76 -

10.	LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST

(1)	Details of loans and other financial assets at amortized cost as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Due from banks		1,715,223		2,673,618
Loans		327,065,921		315,029,858
Other financial assets		11,959,620		8,216,123

Total		340,740,764		325,919,599

(2)	Details of due from banks as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Due from banks in local currency:
Due from the Bank of Korea (“BOK”)		—			160,000
Due from depository banks		20,008			140,035
Due from non-depository institutions		136			183
Others		27,107			137,784
Expected credit loss allowance		(56	)		(115	)

Sub-total		47,195			437,887

Due from banks in foreign currencies:
Due from banks on demand		221,292			199,671
Due from banks on time		335,816			466,963
Others		1,126,707			1,581,298
Expected credit loss allowance		(15,787	)		(12,201	)

Sub-total		1,668,028			2,235,731

Total		1,715,223			2,673,618

- 77 -

(3)	Details of restricted due from banks as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	Counterparty	December 31, 2023		Reason of restriction
Due from banks in local currency:
Others	Morgan Stanley Bank INTL, SEL and others		27,104	Credit Support Annex (CSA) collateral and others

Sub-total			27,104

Due from banks in foreign currencies:
Due from banks on demand	National Bank of Cambodia and others		216,147	Reserve deposits and others
Due from banks on time	National Bank of Cambodia		321	Deposit using the fund settlement system and others
Others	People’s Bank of China and others		1,062,130	Reserve deposits and others

Sub-total			1,278,598

Total			1,305,702


	Counterparty	December 31, 2022		Reason of restriction
Due from banks in local currency:
Due from BOK	BOK		160,000	Reserve deposits under the BOK Act
Others	The Korea Exchange and others		137,782	Central counterparty KRW margin and others

Sub-total			297,782

Due from banks in foreign currencies:
Due from banks on demand	National Bank of Cambodia and others		193,507	Local capital requirements regulation and others
Due from banks on time	National Bank of Cambodia and others		253	Reserve deposits and others
Others	Yuanta Securities Korea Co., Ltd. and others		1,581,298	Foreign margin deposit for future or option and others

Sub-total			1,775,058

Total			2,072,840

- 78 -

(4)	Changes in the expected credit loss allowance and gross carrying amount of due from banks for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):

Credit loss allowances


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(12,316	)		—		—		(12,316	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal (provision) of expected credit loss allowance		(4,911	)		—		—		(4,911	)
Others (*)		1,384			—		—		1,384

Ending balance		(15,843	)		—		—		(15,843	)

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(6,033	)		—		—		(6,033	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal (provision) of expected credit loss allowance		(7,461	)		—		—		(7,461	)
Others (*)		1,178			—		—		1,178

Ending balance		(12,316	)		—		—		(12,316	)

(*)	Others consist of foreign currencies translation, etc.

ii)

Gross carrying amount


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		2,685,933			—		—		2,685,933
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net increase		(955,586	)		—		—		(955,586	)
Others (*)		719			—		—		719

Ending balance		1,731,066			—		—		1,731,066

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		2,622,513			—		—		2,622,513
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net increase		96,042			—		—		96,042
Others (*)		(32,622	)		—		—		(32,622	)

Ending balance		2,685,933			—		—		2,685,933

(*)	Others consist of foreign currencies translation, etc.

- 79 -

(5)	Details of loans as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Loans in local currency		284,135,456			268,812,961
Loans in foreign currencies		28,585,598			26,984,940
Domestic banker’s usance		2,726,633			2,877,079
Credit card accounts		9,634			8,532
Bills bought in foreign currencies		4,215,955			3,650,792
Bills bought in local currency		62,448			423,329
Factoring receivables		812			15,350
Advances for customers on guarantees		6,393			14,326
Private placement bonds		167,282			63,019
Securitized loans		2,434,771			2,677,220
Call loans		2,719,545			3,586,226
Bonds purchased under repurchase agreements		3,256,392			6,793,938
Others		120			140
Loan origination costs and fees		747,993			712,521
Discounted present value		(75	)		(139	)
Expected credit loss allowance		(2,003,036	)		(1,590,376	)

Total		327,065,921			315,029,858

(6)	Changes in expected credit loss allowance of loans for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(75,149	)		(68,809	)		(117,425	)		(379,026	)		(757,100	)		(192,635	)
Transfer to 12-month expected credit losses		(18,834	)		16,383			2,451			(188,700	)		188,292			408
Transfer to lifetime expected credit losses		5,803			(6,376	)		573			18,587			(20,507	)		1,920
Transfer to credit-impaired financial assets		634			17,399			(18,033	)		13,874			26,984			(40,858	)
Net reversal (provision) of expected credit loss allowance		(36,636	)		(44,151	)		(135,548	)		(354,122	)		9,823			(368,958	)
Recovery		—			—			(55,913	)		—			—			(42,288	)
Write-off		—			—			182,495			—			—			214,695
Disposal		18			418			5,381			30			512			150,918
Interest income from impaired loans		—			—			9,297			—			—			15,474
Others		(218	)		(215	)		16,989			9,827			21,231			(11,661	)

Ending balance		(124,382	)		(85,351	)		(109,733	)		(879,530	)		(530,765	)		(272,985	)


	For the year ended December 31, 2023
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(232	)		—			—			(454,407	)		(825,909	)		(310,060	)
Transfer to 12-month expected credit losses		—			—			—			(207,534	)		204,675			2,859
Transfer to lifetime expected credit losses		—			—			—			24,390			(26,883	)		2,493
Transfer to credit-impaired financial assets		—			—			—			14,508			44,383			(58,891	)
Net reversal (provision) of expected credit loss allowance		4			—			—			(390,754	)		(34,328	)		(504,506	)
Recovery		—			—			—			—			—			(98,201	)
Write-off		—			—			—			—			—			397,190
Disposal		—			—			—			48			930			156,299
Interest income from impaired loans		—			—			—			—			—			24,771
Others		(62	)		—			—			9,547			21,016			5,328

Ending balance		(290	)		—			—			(1,004,202	)		(616,116	)		(382,718	)

- 80 -


	For the year ended December 31, 2022
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(75,119	)		(67,312	)		(104,968	)		(305,511	)		(538,473	)		(211,998	)
Transfer to 12-month expected credit losses		(18,183	)		17,812			371			(68,222	)		62,423			5,799
Transfer to lifetime expected credit losses		5,880			(6,506	)		626			14,722			(17,464	)		2,742
Transfer to credit-impaired financial assets		647			3,188			(3,835	)		1,964			8,174			(10,138	)
Net reversal (provision) of expected credit loss allowance		11,754			(16,304	)		(59,357	)		(9,688	)		(273,692	)		(83,628	)
Recovery		—			—			(61,951	)		—			—			(54,610	)
Write-off		—			—			105,029			—			—			130,421
Disposal		—			62			747			—			128			32,374
Interest income from impaired loans		—			—			5,327			—			—			7,407
Others		(128	)		251			586			(12,291	)		1,804			(11,004	)

Ending balance		(75,149	)		(68,809	)		(117,425	)		(379,026	)		(757,100	)		(192,635	)


	For the year ended December 31, 2022
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(183	)		—			—			(380,813	)		(605,785	)		(316,966	)
Transfer to 12-month expected credit losses		—			—			—			(86,405	)		80,235			6,170
Transfer to lifetime expected credit losses		—			—			—			20,602			(23,970	)		3,368
Transfer to credit-impaired financial assets		—			—			—			2,611			11,362			(13,973	)
Net reversal (provision) of expected credit loss allowance		(46	)		—			—			2,020			(289,996	)		(142,985	)
Recovery		—			—			—			—			—			(116,561	)
Write-off		—			—			—			—			—			235,450
Disposal		—			—			—			—			190			33,121
Interest income from impaired loans		—			—			—			—			—			12,734
Others		(3	)		—			—			(12,422	)		2,055			(10,418	)

Ending balance		(232	)		—			—			(454,407	)		(825,909	)		(310,060	)

(7)	Changes in the gross carrying amount of loans for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		125,597,372			13,557,617			362,977			167,743,636			8,913,295			436,805
Transfer to 12-month expected credit losses		3,932,438			(3,919,317	)		(13,121	)		2,162,460			(2,159,991	)		(2,469	)
Transfer to lifetime expected credit losses		(6,151,874	)		6,166,603			(14,729	)		(4,104,762	)		4,111,752			(6,990	)
Transfer to credit-impaired financial assets		(135,654	)		(140,297	)		275,951			(442,307	)		(207,165	)		649,472
Write-off		—			—			(182,495	)		—			—			(214,695	)
Disposal		(63	)		(491	)		(58,894	)		(98	)		(720	)		(375,359	)
Net increase (decrease)		4,432,434			(1,309,825	)		82,126			11,320,492			(1,402,702	)		157,911

Ending balance		127,674,653			14,354,290			451,815			176,679,421			9,254,469			644,675


	For the year ended December 31, 2023
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		8,532			—			—			293,349,540			22,470,912			799,782
Transfer to 12-month expected credit losses		—			—			—			6,094,898			(6,079,308	)		(15,590	)
Transfer to lifetime expected credit losses		—			—			—			(10,256,636	)		10,278,355			(21,719	)
Transfer to credit-impaired financial assets		—			—			—			(577,961	)		(347,462	)		925,423
Write-off		—			—			—			—			—			(397,190	)
Disposal		—			—			—			(161	)		(1,211	)		(434,253	)
Net increase (decrease)		1,102			—			—			15,754,028			(2,712,527	)		240,037

Ending balance		9,634			—			—			304,363,708			23,608,759			1,096,490

- 81 -


	For the year ended December 31, 2022
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		129,794,825			13,220,663			343,164			161,408,852			7,907,519			461,190
Transfer to 12-month expected credit losses		4,589,594			(4,576,158	)		(13,436	)		1,639,650			(1,624,016	)		(15,634	)
Transfer to lifetime expected credit losses		(6,103,333	)		6,120,717			(17,384	)		(3,513,134	)		3,531,570			(18,436	)
Transfer to credit-impaired financial assets		(82,867	)		(82,848	)		165,714			(218,744	)		(97,728	)		316,473
Write-off		—			—			(105,029	)		—			—			(130,421	)
Disposal		—			(259	)		(16,447	)		—			(391	)		(128,197	)
Net increase (decrease)		(2,600,847	)		(1,124,498	)		6,395			8,427,012			(803,659	)		(48,170	)

Ending balance		125,597,372			13,557,617			362,977			167,743,636			8,913,295			436,805


	For the year ended December 31, 2022
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		7,122			—			—			291,210,799			21,128,182			804,354
Transfer to 12-month expected credit losses		—			—			—			6,229,244			(6,200,174	)		(29,070	)
Transfer to lifetime expected credit losses		—			—			—			(9,616,467	)		9,652,287			(35,820	)
Transfer to credit-impaired financial assets		—			—			—			(301,611	)		(180,576	)		482,187
Write-off		—			—			—			—			—			(235,450	)
Disposal		—			—			—			—			(650	)		(144,644	)
Net increase (decrease)		1,410			—			—			5,827,575			(1,928,157	)		(41,775	)

Ending balance		8,532			—			—			293,349,540			22,470,912			799,782

(8)	Details of other financial assets as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Receivables		8,808,023			5,216,354
Accrued income		1,681,248			1,449,112
Telex and telephone subscription rights and refundable deposits		798,856			806,923
Other assets (*)		795,953			864,223
Expected credit loss allowance		(124,460	)		(120,489	)

Total		11,959,620			8,216,123

(*)	The amount included in other assets related employee incidents in prior fiscal year was 63,354 million Won, which was completely lost.

- 82 -

(9)	Changes in the expected credit loss allowance on other financial assets for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		(1,862	)		(4,871	)		(113,756	)		(120,489	)
Transfer to 12-month expected credit losses		(258	)		157			101			—
Transfer to lifetime expected credit losses		83			(100	)		17			—
Transfer to credit-impaired financial assets		7			55			(62	)		—
Net reversal (provision) of expected credit loss allowance		(2,168	)		143			(3,953	)		(5,978	)
Write-off		—			—			106			106
Disposal		—			—			1,750			1,750
Other increase (decrease)		4			(1	)		148			151

Ending balance		(4,194	)		(4,617	)		(115,649	)		(124,460	)


	For the year ended December 31, 2022
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		(1,426	)		(2,448	)		(47,791	)		(51,665	)
Transfer to 12-month expected credit losses		(129	)		115			14			—
Transfer to lifetime expected credit losses		97			(106	)		9			—
Transfer to credit-impaired financial assets		7			955			(962	)		—
Net reversal (provision) of expected credit loss allowance		(387	)		(3,387	)		(4,106	)		(7,880	)
Write-off		—			—			590			590
Disposal		—			—			726			726
Other increase (decrease) (*)		(24	)		—			(62,235	)		(62,259	)

Ending balance		(1,862	)		(4,871	)		(113,756	)		(120,489	)

(*)	The amount included in others related employee incidents was 63,354 million Won.

(10)	Changes in the gross carrying amount of other financial assets for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		8,013,009			93,549			230,054			8,336,612
Transfer to 12-month expected credit losses		11,500			(11,395	)		(105	)		—
Transfer to lifetime expected credit losses		(22,672	)		22,693			(21	)		—
Transfer to credit-impaired financial assets		(1,400	)		(928	)		2,328			—
Write-off		—			—			(106	)		(106	)
Disposal		—			—			(2,164	)		(2,164	)
Net increase (decrease) and others		3,893,735			(35,364	)		(108,633	)		3,749,738

Ending balance		11,894,172			68,555			121,353			12,084,080


	For the year ended December 31, 2022
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		8,356,450			91,872			164,503			8,612,825
Transfer to 12-month expected credit losses		7,073			(7,057	)		(16	)		—
Transfer to lifetime expected credit losses		(15,045	)		15,057			(12	)		—
Transfer to credit-impaired financial assets		1,193			(1,579	)		386			—
Write-off		—			—			1,657			1,657
Disposal		—			—			(911	)		(911	)
Net increase (decrease) and others		(336,662	)		(4,744	)		64,447			(276,959	)

Ending balance		8,013,009			93,549			230,054			8,336,612

- 83 -

11.	THE FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

(1)	The fair value hierarchy

The fair value hierarchy is determined by the level of market observable inputs. The market observable inputs reflect unique characteristics of a financial instrument or market condition (including transparency and whether there are transactions among market participants), and when a financial instrument is traded in an active market, the best estimate of its fair value is the quoted price in the active market. The Group maximizes the use of market observable inputs and minimizes the use of unobserved firm-specific inputs to selected valuation techniques. Fair value of the Group is measured based on the perspective of a market participant. As such, even when market observable inputs are not readily available, firm-specific inputs reflect factors that market participants would use for measuring the fair value of assets or liabilities.

The fair value measurement is described in one of the following three levels used to classify fair value measurements:


•		Level 1—fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The types of financial assets or liabilities generally included in Level 1 are publicly traded equity securities, derivatives, and debt securities issued by governmental bodies.

•		Level 2— fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., prices) or indirectly (i.e., derived from prices). The types of financial assets or liabilities generally included in Level 2 are debt securities not traded in active markets and derivatives traded in OTC but not required significant judgment.

•		Level 3— fair value measurements are those derived from valuation technique that include inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). The types of financial assets or liabilities generally included in Level 3 are non-public securities and derivatives and debt securities of which valuation techniques require significant judgments and subjectivity.

The inputs used to measure fair value may be categorized different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Group’s assessment of the significance of a particular input to a fair value measurement in its entirety requires judgment and consideration of inherent factors of the asset or liability.

(2)	Fair value hierarchy of financial assets and liabilities measured at fair value as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Level 1 (*)		Level 2 (*)		Level 3		Total
Financial assets:
Financial assets at FVTPL
Due from banks		39,241		—		—		39,241
Debt securities		4,242,901		796,883		—		5,039,784
Equity securities		19,095		—		275,075		294,170
Capital contributions		—		—		1,858,728		1,858,728
Beneficiary certificates		125,549		3,833,122		3,349,910		7,308,581
Derivative assets		112		5,669,880		128,335		5,798,327
Other financial assets in foreign currencies		—		—		42,406		42,406
Others		—		—		180,690		180,690

Sub-total		4,426,898		10,299,885		5,835,144		20,561,927

Financial assets at FVTOCI
Debt securities		12,392,119		24,301,991		—		36,694,110
Equity securities		649,221		—		467,842		1,117,063

Sub-total		13,041,340		24,301,991		467,842		37,811,173

Derivative assets (designated for hedging)		—		698		—		698

Total		17,468,238		34,602,574		6,302,986		58,373,798

- 84 -


	December 31, 2023
	Level 1 (*)		Level 2 (*)		Level 3		Total
Financial liabilities:
Financial liabilities at FVTPL
Deposits due to customers		39,524		—		—		39,524
Derivative liabilities		8,306		5,973,482		1,994		5,983,782

Sub-total		47,830		5,973,482		1,994		6,023,306

Derivative liabilities (designated for hedging)		—		135,263		—		135,263

Total		47,830		6,108,745		1,994		6,158,569

(*)	There were no transfers between Level 1 and Level 2 of financial assets and liabilities measured at fair value. The Group recognizes transfers among levels at the end of the reporting periods in which events have occurred or conditions have changed.


	December 31, 2022
	Level 1 (*)		Level 2 (*)		Level 3		Total
Financial assets:
Financial assets at FVTPL
Due from banks		34,995		—		—		34,995
Debt securities		2,451,239		740,978		—		3,192,217
Equity securities		30,731		—		270,890		301,621
Capital contributions		—		—		1,432,256		1,432,256
Beneficiary certificates		2,217		2,480,586		2,637,760		5,120,563
Loans		—		—		19,169		19,169
Derivative assets		69,316		8,045,083		90,338		8,204,737
Other financial assets in foreign currencies		—		—		41,680		41,680
Others		—		—		142,335		142,335

Sub-total		2,588,498		11,266,647		4,634,428		18,489,573

Financial assets at FVTOCI
Debt securities		9,895,455		22,250,303		—		32,145,758
Equity securities		382,258		—		472,246		854,504

Sub-total		10,277,713		22,250,303		472,246		33,000,262

Total		12,866,211		33,516,950		5,106,674		51,489,835

Financial liabilities:
Financial liabilities at FVTPL
Deposits due to customers		35,161		—		—		35,161
Derivative liabilities		11,700		8,931,766		9,449		8,952,915

Sub-total		46,861		8,931,766		9,449		8,988,076

Derivative liabilities (designated for hedging)		—		193,831		—		193,831

Total		46,861		9,125,597		9,449		9,181,907

(*)

Among financial assets and financial liabilities measured at fair value, the amount transferred from Level 2 to Level 1 is 2,835,187 million Won. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed. There has been a shift between levels due to the change in whether the market in which the relevant financial product is traded is determined to be an active market.

Financial assets and liabilities at FVTPL, financial assets and liabilities designated as at FVTPL, financial assets at FVTOCI, and derivative assets and liabilities are recognized at fair value. Fair value is the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

Financial instruments are measured at fair value using a quoted market price in active markets. If there is no active market for a financial instrument, the Group determines the fair value using valuation methods. Valuation methods and input variables for each type of financial instruments are as follows:

- 85 -

①

Valuation methods and input variables for each type of financial instrument classified into level 2 in December 31, 2023 and 2022 are as follows:


	Valuation methods	Input variables
Debt securities	Fair value is measured by discounting the future cash flows of debt securities applying the risk-free market rate with credit spread	Risk-free market rate, Credit spread

Beneficiary certificates	The beneficiary certificates are measured with Net Asset Value.	Values of underlying assets such as bond

Derivatives	The fair value is measured through Option Pricing Model, etc.	Discount rate, Volatility, Exchange rate, Stock price, etc.

②

Valuation methods and input variables for each type of financial instrument classified into level 3 in December 31, 2023 and 2022 are as follows:


	Valuation methods	Input variables
Loans	The fair value of Loans is measured by the DCF (Discounted Cash Flow) Model and T-F model given the values of underlying assets, and volatility	Values and volatility of underlying assets

Equity securities, capital contributions, Beneficiary certificates and others	Among DCF (Discounted Cash Flow) Model, FCFE (Free Cash Flow to Equity) Model, Comparable Company Analysis, Dividend Discount Model, Risk-adjusted Rate of Return Method, Net Asset Value Method and Least-Squares Monte Carlo and binomial tree, more than one method is used given the characteristic of the subject of fair value measurement.	Risk-free market rate, Market risk premium, Corporate Beta, Stock price, Volatility of underlying assets, etc.

Derivatives	The fair value is measured through Option Pricing Model, etc.	Correlation coefficient, etc.

Others	The fair value of the underlying asset, after calculating the fair value using the DCF model, etc., considering the price and volatility of the calculated underlying asset, is calculated using the Binomial tree, which are commonly used valuation techniques in the market.	Stock price, Volatility of underlying assets, etc.

- 86 -

Valuation methods of financial assets and liabilities measured at fair value and classified into Level 3 and significant but unobservable inputs are as follows:

①

December 31, 2023


	Fair value measurement technique	Type	Significant but unobservable input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Derivative assets	Option valuation model and others	Equity related	Correlation coefficient, etc.	0.32~0.68	Variation of fair value increases as correlation coefficient increases.
Derivative liabilities	Option valuation model and others	Equity related	Correlation coefficient, etc.	0.32~0.68	Variation of fair value increases as correlation coefficient increases.
Equity securities, capital contributions and Beneficiary certificates	Binominal Tree		Stock price, Volatility of underlying asset	27.34%	Variation of fair value increases as stock price and volatility of underlying asset increases.
	DCF model and Others		Discount rate	5.08%~19.90%	Fair value increases as discount rate decreases
			Terminal growth rate	0.00%, 1.00%	Fair value increases as terminal growth rate increases
			Liquidation value	-1.00%~1.00%	Fair value increases as liquidation value increases.
Others	Binominal Tree		Stock price, Volatility of underlying asset	15.48%~76.22%	Variation of fair value increases as stock price and volatility of underlying asset increases.

②

December 31, 2022


	Fair value measurement technique	Type	Significant but unobservable input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Loans	T-F model		Stock price, Volatility of underlying asset	46.53%	Variation of fair value increases as stock price and volatility of underlying asset increases.
Derivative assets	Option valuation model and others	Equity related	Correlation coefficient	0.21 ~ 0.67	Variation of fair value increases as correlation coefficient increases.
Derivative liabilities	Option valuation model and others	Equity related	Correlation coefficient	0.21 ~ 0.67	Variation of fair value increases as correlation coefficient increases.
Equity securities, capital contributions and Beneficiary certificates	Binominal Tree		Stock price, Volatility of underlying asset	28.40%	Variation of fair value increases as stock price and volatility of underlying asset increases
	DCF model and Others		Discount rate	0.00% ~ 19.14%	Fair value increases as discount rate decreases
			Terminal growth rate	0.00%, 1.00%	Fair value increases as terminal growth rate increases.
			Liquidation value	0.00%	Fair value increases as liquidation value increases.
Others	Binomial Tree		Stock price, Volatility of underlying asset	20.15% ~ 36.19%	Variation of fair value increases as stock price and volatility of underlying asset increases

Fair value of financial assets and liabilities classified into Level 3 is measured by the Group using its own valuation methods or using external specialists. Unobservable inputs used in the fair value measurements are produced by the internal system of the Group and the appropriateness of inputs is reviewed regularly.

- 87 -

(3)	Changes in financial assets and liabilities measured at fair value classified into Level 3 for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	January 1, 2023		Net income (loss) (*1)			Other comprehensive income			Purchases/ issuances		Disposal/ settlements			Transfer to or out of Level 3 (*2)			December 31, 2023
Financial assets:
Financial assets at FVTPL
Equity securities		270,890		(2,973	)		—			15,580		(2,582	)		(5,840	)		275,075
Capital contributions		1,432,256		49,518			—			522,230		(145,276	)		—			1,858,728
Beneficiary certificates		2,637,760		49,363			—			849,300		(186,513	)		—			3,349,910
Loans		19,169		—			—			—		(19,169	)		—			—
Derivative assets		90,338		41,737			—			2,271		(6,011	)		—			128,335
Other financial assets in foreign currencies		41,680		726			—			—		—			—			42,406
Others		142,335		9,015			—			32,135		(2,795	)		—			180,690

Sub-total		4,634,428		147,386			—			1,421,516		(362,346	)		(5,840	)		5,835,144

Financial assets at FVTOCI
Equity securities		472,246		—			(4,020	)		343		(704	)		(23	)		467,842
Loans		—		—			—			139,567		(139,567	)		—			—
Sub-total		472,246		—			(4,020	)		139,910		(140,271	)		(23	)		467,842

Total		5,106,674		147,386			(4,020	)		1,561,426		(502,617	)		(5,863	)		6,302,986

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities		9,449		1,994			—			—		(9,449	)		—			1,994

Total		9,449		1,994			—			—		(9,449	)		—			1,994

(*1)

The losses that increase the financial liabilities are presented as positive amounts, and the gains that decrease the financial liabilities are presented as negative amounts. The gain amount to 89,906 million Won for the year ended December 31, 2023, which is from financial assets and liabilities that the Group holds as of December 31, 2023.

(*2)

Changes in the availability of observable market data for the financial instrument have resulted in transfer between fair value hierarchy level, and the Group recognize changes in levels at the end of reporting period that result in changes in events or circumstances that result in transfer between fair value hierarchy level.

- 88 -


	For the year ended December 31, 2022
	January 1, 2022		Net income (loss) (*1)		Other comprehensive income			Purchases/ issuances			Disposal/ settlements			Transfer to or out of Level 3 (*2)			December 31, 2022
Financial assets:
Financial assets at FVTPL
Equity securities		266,605		507		—			15,116			(11,306	)		(32	)		270,890
Capital contributions		930,376		76,479		—			524,007			(98,606	)		—			1,432,256
Beneficiary certificates		1,902,453		3,971		—			910,810			(179,474	)		—			2,637,760
Loans		10,623		11,346		—			—			(2,800	)		—			19,169
Derivative assets		27,475		62,255		—			957			(349	)		—			90,338
Derivative assets in foreign currencies		—		—		—			41,680			—			—			41,680
Others		94,673		16,744		—			39,838			(8,920	)		—			142,335

Sub-total		3,232,205		171,302		—			1,532,408			(301,455	)		(32	)		4,634,428

Financial assets at FVTOCI
Equity securities		503,718		—		(4,316	)		1,677			(28,833	)		—			472,246

Total		3,735,923		171,302		(4,316	)		1,534,085			(330,288	)		(32	)		5,106,674

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities		4,101		8,387		—			(351	)		(2,688	)		—			9,449

Total		4,101		8,387		—			(351	)		(2,688	)		—			9,449

(*1)

The losses that increase the financial liabilities are presented as positive amounts, and the gains that decrease the financial liabilities are presented as negative amounts. The gain amount to 160,237 million Won for the year ended December 31, 2022, which is from financial assets and liabilities that the Group holds as of December 31, 2022.

(*2)

Changes in the availability of observable market data for the financial instrument have resulted in transfer between fair value hierarchy level, and the Group recognize changes in levels at the end of each report that result in changes in events or circumstances that result in transfer between fair value hierarchy level.

(4)	The results of a sensitivity analysis on the rational fluctuation in the unobservable inputs used for measuring Level 3 financial instruments are as follows.

Sensitivity analysis of financial instruments is performed by classifying the effect of changes in unobservable inputs on changes in the value of financial instruments into favorable and unfavorable changes. When the fair value of a financial instrument is affected by more than one unobservable input, the below table presents the most favorable or the most unfavorable circumstances. The sensitivity analysis was performed for two types of level 3 financial instruments: (1) interest rate related derivatives, currency related derivatives, equity related derivatives, equity-linked securities, beneficiary certificates and loans of which fair value changes are recognized as net income; (2) equity securities of which fair value changes are recognized as other comprehensive income.

Meanwhile, among the financial instruments that are classified as Level 3 amounting to 6,304,980 million Won and 5,116,123 million Won as of December 31, 2023 and 2022 respectively, equity investments of 5,778,111 million Won and 4,621,365 million Won that are considered to provide the best estimate of fair value are excluded from the sensitivity analysis.

- 89 -

The following table presents the sensitivity analysis to disclose the effect of reasonably possible volatility on the fair value of a Level 3 financial instruments as of December 31, 2023 and 2022 (Unit: Korean Won in millions):


	December 31, 2023
	Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at FVTPL
Derivatives assets (*1)		88		(95	)		—		—
Equity securities (2) (3) (*4)		10,735		(8,417	)		—		—
Beneficiary certificates (*4)		722		(722	)		—		—
Others (2) (4)		4,098		(3,921	)		—		—
Financial assets at FVTOCI
Equity securities (3) (4)		—		—			17,970		(14,009	)

Total		15,643		(13,155	)		17,970		(14,009	)

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities (*1)		10		(7	)		—		—

Total		10		(7	)		—		—

(*1)	Fair value changes in equity related derivatives assets and liabilities and equity-linked securities are calculated by increasing or decreasing correlation coefficient, which are major unobservable variables, by 10%.

(*2)	The change in fair value is calculated by increasing or decreasing the share price (-10% to 10%) and volatility (-10%p to 10%p), the major unobservable inputs.

(*3)	Fair value changes in equity securities are calculated by increasing or decreasing terminal growth rate (-0.5%p~0.5%p) and discount rate (-1%p~1%p) or liquidation value (-1%p~1%p). The growth rate, discount rate, and liquidation value are major unobservable variables.

(*4)

Even if the sensitivity analysis of the capital contributions and beneficiary certificates is not possible in practice, fair value changes of beneficiary certificates and other securities whose major unobservable variables are composed of the real estate are calculated by increasing or decreasing price fluctuation of real estate which is underlying assets and discount rate by 1%p.

- 90 -


	December 31, 2022
	Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at FVTPL
Derivatives assets (*1)		1,886		(1,993	)		—		—
Equity securities (2) (3) (*4)		9,710		(7,763	)		—		—
Beneficiary certificates (*4)		737		(737	)		—		—
Others (*2)		2,860		(2,790	)		—		—
Financial assets at FVTOCI
Equity securities (3) (4)		—		—			20,131		(13,734	)

Total		15,193		(13,283	)		20,131		(13,734	)

Financial liabilities:
Financial liabilities at FVTPL							—		—
Derivative liabilities (*1)		41		(39	)		—		—

Total		41		(39	)		—		—

(*1)

Fair value changes in equity related derivatives assets and liabilities and equity-linked securities are calculated by increasing or decreasing historical volatility of the stock price and correlation, which are major unobservable variables, by 10%, respectively. In the case of interest rate related derivative assets and liabilities, fair value changes are calculated by increasing or decreasing the volatility of interest rate, which are major unobservable variables, by 10%.

(*2)	The change in fair value is calculated by increasing or decreasing the share price (-10% to 10%) and volatility (-10% to 10%), the major unobservable inputs.

(*3)	Fair value changes of equity securities are calculated by increasing or decreasing terminal growth rate (-0.5~0.5%) and discount rate (-1~1%) or liquidation value (-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.

(*4)

- 91 -

(5)	Fair value and carrying amount of financial assets and liabilities that are recorded at amortized cost as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Fair value								Book value
	Level 1		Level 2		Level 3		Total		Book value
Financial assets:
Securities at amortized cost		2,361,628		21,303,099		—		23,664,727		23,996,172
Loans and other financial assets at amortized cost		—		9,092,255		332,000,571		341,092,826		340,740,764
Financial liabilities:
Deposits due to customers		—		354,203,147		—		354,203,147		353,851,379
Borrowings		—		25,215,080		—		25,215,080		25,254,732
Debentures		—		21,253,938		—		21,253,938		21,277,033
Other financial liabilities (*)		—		22,928,043		—		22,928,043		22,930,531

(*)	Lease liabilities are excluded as of December 31, 2023


	December 31, 2022
	Fair value								Book value
	Level 1		Level 2		Level 3		Total		Book value
Financial assets:
Securities at amortized cost		2,652,449		24,623,370		—		27,275,819		28,268,516
Loans and other financial assets at amortized cost		—		5,597,813		316,058,637		321,656,450		325,919,599
Financial liabilities:
Deposits due to customers		—		338,582,945		—		338,582,945		338,923,832
Borrowings		—		23,028,947		—		23,028,947		23,028,206
Debentures		—		24,154,895		—		24,154,895		24,639,433
Other financial liabilities		—		19,908,621		—		19,908,621		20,087,151

(*)	Lease liabilities are excluded as of December 31, 2022

The fair values of financial instruments are measured using quoted market price in active markets. In case there is no active market for financial instruments, the Group determines the fair value using valuation techniques. Valuation techniques and input variables for financial assets and liabilities that are measured at amortized costs are given as follows:


	Valuation techniques	Input variables
Securities at amortized cost	The fair value is measured by discounting the projected cash flows of debt securities by applying risk-free market rate with credit spread.	Risk-free market rate and credit spread

Loans and other financial assets at amortized cost	The fair value is measured by discounting the projected cash flows of loan products by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the debtor.	Risk-free market rate, credit spread and expected prepayment-rate

Deposits due to customers, borrowings, debentures and other financial liabilities	The fair value is measured by discounting the projected cash flows of debt products by applying the market discount rate that is reflecting credit rating of the Group.	Risk-free market rate and credit spread

- 92 -

(6)	Financial instruments by category

Carrying amounts of financial assets and liabilities by each category as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Financial assets at FVTPL		Financial assets at FVTOCI		Financial assets at amortized cost		Derivative assets (designated for hedging)		Total
Financial assets:
Due from banks		39,241		—		1,715,223		—		1,754,464
Securities		14,681,953		37,811,173		23,996,172		—		76,489,298
Loans		—		—		327,065,921		—		327,065,921
Derivative assets		5,798,327		—		—		698		5,799,025
Other financial assets		42,406		—		11,959,620		—		12,002,026

Total		20,561,927		37,811,173		364,736,936		698		423,110,734


	December 31, 2023
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivative liabilities (designated for hedging)		Total
Financial liabilities:
Deposits due to customers		39,524		353,851,379		—		353,890,903
Borrowings		—		25,254,732		—		25,254,732
Debentures		—		21,277,033		—		21,277,033
Derivative liabilities		5,983,782		—		135,263		6,119,045
Other financial liabilities (*)		—		22,930,531		—		22,930,531

Total		6,023,306		423,313,675		135,263		429,472,244

(*)	Lease liabilities are excluded as of December 31, 2023


	December 31, 2022
	Financial assets at FVTPL		Financial assets at FVTOCI		Financial assets at amortized cost		Total
Financial assets:
Due from banks		34,995		—		2,673,618		2,708,613
Securities		10,188,993		33,000,262		28,268,516		71,457,771
Loans		19,169		—		315,029,858		315,049,027
Derivative assets		8,204,737		—		—		8,204,737
Other financial assets		41,679		—		8,216,123		8,257,802

Total		18,489,573		33,000,262		354,188,115		405,677,950


	December 31, 2022
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivative liabilities (designated for hedging)		Total
Financial liabilities:
Deposits due to customers		35,161		338,923,831		—		338,958,992
Borrowings		—		23,028,206		—		23,028,206
Debentures		—		24,639,433		—		24,639,433
Derivative liabilities		8,952,916		—		193,831		9,146,747
Other financial liabilities (*)		—		20,087,151		—		20,087,151

Total		8,988,077		406,678,621		193,831		415,860,529

(*)	Lease liabilities are excluded as of December 31, 2022

- 93 -

(7)	Income or expense from financial instruments by category

Income or expense from financial instruments by category for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Interest income (expense)			Fees and commissions income (expense)		Reversal (Provision) of credit loss			Gain (loss) on valuation and transaction			Dividend income		Total
Financial assets at FVTPL		116,203			423		—			482,005			239,332		837,963
Financial assets at FVTOCI		999,407			1,621		(16,542	)		(37,641	)		15,752		962,597
Securities at amortized cost		782,513			—		(5,549	)		—			—		776,964
Loans and other financial assets at amortized cost		16,487,744			—		(940,477	)		101,788			—		15,649,055
Financial liabilities at amortized cost		(10,940,804	)		—		—			—			—		(10,940,804	)
Net derivatives (designated for hedging)		—			—		—			(2,955	)		—		(2,955	)

Total		7,445,063			2,044		(962,568	)		543,197			255,084		7,282,820


	December 31, 2022
	Interest income (expense)			Fees and commissions income (expense)		Reversal (Provision) of credit loss			Gain (loss) on valuation and transaction		Dividend income		Total
Financial assets at FVTPL		63,515			—		—			214,666		130,295		408,476
Financial assets at FVTOCI		632,615			1,606		827			—		20,818		655,866
Securities at amortized cost		515,246			—		(3,151	)		—		—		512,095
Loans and other financial assets at amortized cost		11,531,028			40,831		(446,302	)		35,003		—		11,160,560
Financial liabilities at amortized cost		(5,318,502	)		—		—			—		—		(5,318,502	)
Net derivatives (designated for hedging)		—			—		—			8,932		—		8,932

Total		7,423,902			42,437		(448,626	)		258,601		151,113		7,427,427

- 94 -

12.	DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS

(1)	Derecognition of financial instruments

Transferred financial assets that do not meet the condition of derecognition

Bonds sold under repurchase agreements

The financial instruments that were disposed but the Group agreed to repurchase at the fixed amounts at the same time, so that they did not meet the conditions of derecognition, as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


		December 31, 2023		December 31, 2022
Assets transferred	Financial assets at FVTOCI		556,583		583,198
	Securities at amortized cost		48,368		1,171,300
Related liabilities	Bonds sold under repurchase agreements		527,291		1,654,544

Securities loaned

When the Group loans its securities to outside parties, the legal ownerships of the securities are transferred; however, they should be returned at the end of lending period. Therefore, the Group does not derecognize them from the consolidated financial statements as it owns majority of risks and benefits from the securities continuously, regardless of the transfer of legal ownership. The carrying amounts of the securities loaned as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):

December 31,
2023

December 31,
2022

Loaned to

Securities at amortized cost

Korean treasury and government bonds and others

625,398

—

Korea Securities Finance Corporation and others

Financial assets at FVTOCI

Korean treasury and government bonds and others

592,218

98,027

Korea Securities Depository and others

The details of the transferred financial assets that do not meet the condition of derecognition in their entirety, such as disposal of securities under repurchase agreement or securities loaned, are also explained in Note 18.

Securitization of financial assets

As of December 31, 2023 and 2022 the structured entity subject to consolidation issued asset-backed securities using loans and corporate bonds held by the Group, and the Group bears related risks through purchase agreements or credit offerings. The details of the transfer transaction of financial instruments are as follows (Unit: Korean Won in millions):


		December 31, 2023		December 31, 2022
		Book value (*)		Book value (*)
Assets transferred	Loans at amortized cost		2,434,771		2,677,220
Related liabilities	Securitization borrowings		2,434,900		231,800
	Securitization bonds		4,006		4,006

(*)	The carrying amount is the amount before the provision for credit losses is deducted.

- 95 -

(2)	The offset of financial assets and liabilities

The Group possesses both the uncollected domestic exchange receivables and the unpaid domestic exchange payable, which satisfy offsetting criteria of K-IFRS No.1032. Therefore, the total number of uncollected domestic exchange receivables or unpaid domestic exchange payable has been offset with part of unpaid domestic exchange payable or uncollected domestic exchange receivables and has been disclosed in loans and other financial assets at amortized cost and other financial assets and other financial liabilities of the Group’s statements of financial position, respectively

The Group possesses the derivative assets, derivative liabilities, receivable spot exchange and payable spot exchange that do not satisfy the offsetting criteria of K-IFRS No.1032, but provide the Group under the circumstances of the trading party’s defaults, insolvency or bankruptcy, with the right of offsetting. Items such as cash collateral cannot satisfy the offsetting criteria of K-IFRS No.1032, but in accordance with the collateral arrangements and under the circumstances of the trading party’s default, insolvency or bankruptcy, the net amount of derivative assets, derivative liabilities, receivable spot exchange and payable spot exchange can be offset.

The Group has entered into a sale and repurchase agreement and accounted it as a collateralized borrowing. The Group has also entered into a purchase and repurchase agreement and accounted it as a secured loan. The Group under the repurchase agreements has offsetting right only upon the counterparty’s default, insolvency or bankruptcy; thus, the repurchase agreements are applied by the TBMA/ISMA Global Master Repurchase Agreement, which does not satisfy the offsetting criteria of K-IFRS No.1032. The Group disclosed bonds sold under repurchase agreements as borrowings and bonds purchased under repurchase agreements as loans and other financial assets at amortized cost.

As of December 31, 2023 and 2022, the financial instruments to be offset and covered by master netting agreements and similar agreements are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Related amounts not setoff in the consolidated statement of financial position				Net amounts
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Netting agreements and others		Cash collateral received		Net amounts
Financial assets:
Derivative assets (*1)		5,174,267		—		5,174,267		11,314,881		424,466		1,063,392
Receivable spot exchange (*2)		7,628,472		—		7,628,472		11,314,881		424,466		1,063,392
Bonds purchased under resale agreements (*2)		3,256,392		—		3,256,392		3,256,392		—		—
Domestic exchanges settlement credits (2)(5)		49,020,044		48,575,856		444,188		—		—		444,188

Total		65,079,175		48,575,856		16,503,319		14,571,273		424,466		1,507,580


	December 31, 2023
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Related amounts not setoff in the consolidated statement of financial position				Net amounts
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Netting agreements and others		Cash collateral pledged		Net amounts
Financial liabilities:
Derivative liabilities (*1)		5,109,528		—		5,109,528		11,412,659		139,143		1,186,799
Payable spot exchange (*3)		7,629,073		—		7,629,073		11,412,659		139,143		1,186,799
Bonds sold under repurchase agreements (*4)		527,291		—		527,291		527,291		—		—
Domestic exchanges settlement debits (3) (5)		49,943,565		48,575,856		1,367,709		1,367,709		—		—

Total		63,209,457		48,575,856		14,633,601		13,307,659		139,143		1,186,799

(*1)	The items include derivatives held for trading and derivatives designated for hedging.

(*2)	The items are included in loans and other financial assets at amortized cost.

(*3)	The items are included in other financial liabilities.

(*4)	The items are included in borrowings.

(*5)	Certain financial assets and liabilities are presented as net amounts.

- 96 -


	December 31, 2022
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Related amounts not setoff in the consolidated statement of financial position				Net amounts
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Netting agreements and others		Cash collateral received		Net amounts
Financial assets:
Derivative assets (*1)		6,953,283		—		6,953,283		9,109,524		748,981		1,537,651
Receivable spot exchange (*2)		4,442,873		—		4,442,873		9,109,524		748,981		1,537,651
Bonds purchased under resale agreements (*2)		6,793,938		—		6,793,938		6,793,938		—		—
Domestic exchanges settlement credits (2)(5)		39,773,640		39,197,123		576,517		—		—		576,517

Total		57,963,734		39,197,123		18,766,611		15,903,462		748,981		2,114,168


	December 31, 2022
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Related amounts not setoff in the consolidated statement of financial position				Net amounts
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Netting agreements and others		Cash collateral pledged		Net amounts
Financial liabilities:
Derivative liabilities (*1)		7,644,704		—		7,644,704		9,977,200		145,268		1,965,068
Payable spot exchange (*3)		4,442,832		—		4,442,832		9,977,200		145,268		1,965,068
Bonds sold under repurchase agreements (*4)		1,654,544		—		1,654,544		1,654,544		—		—
Domestic exchanges settlement debits (3) (5)		43,812,598		39,197,123		4,615,475		2,504,062		—		2,111,413

Total		57,554,678		39,197,123		18,357,555		14,135,806		145,268		4,076,481

(*1) The items include derivatives held for trading and derivatives designated for hedging.

(*2) The items are included in loans and other financial assets at amortized cost.

(*3) The items are included in other financial liabilities.

(*4) The items are included in borrowings.

(*5) Certain financial assets and liabilities are presented as net amounts.

- 97 -

13.	INVESTMENTS IN ASSOCIATES

(1)	Investments in joint ventures and associates accounted for using the equity method of accounting as of December 31, 2023 and 2022 are as follows:


			Percentage of ownership (%)				Location		Financial statements as of
Joint ventures and Associates	Main business		December 31, 2023		December 31, 2022		Location		Financial statements as of
Woori Bank:
W Service Networks Co., Ltd. (*1)		Freight & staffing services		4.9		4.9		Korea		November 30, 2023 (*4)
Korea Credit Bureau Co., Ltd. (*2)		Credit information		9.9		9.9		Korea		December 31, 2023
Korea Finance Security Co., Ltd. (*2)		Security service		15.0		15.0		Korea		November 30, 2023 (*4)
Dongwoo C & C Co., Ltd. (*3)		Construction		23.2		23.2		Korea		—
SJCO Co., Ltd. (*3)		Aggregate transportation and wholesale		27.5		27.5		Korea		—
G2 Collection Co., Ltd. (*3)		Wholesale and retail sales		28.9		28.9		Korea		—
Kyesan Engineering Co., Ltd. (*3)		Construction		23.2		23.2		Korea		—
Good Software Lap Co., Ltd. (*3)		Service		28.9		28.9		Korea		—
Wongwang Co., Ltd. (*3)		Wholesale and real estate		29.0		29.0		Korea		—
Sejin Construction Co., Ltd. (*3)		Construction		29.6		29.6		Korea		—
DAEA SNC Co., Ltd. (*3)		Wholesale and retail sales		24.0		24.0		Korea		—
ARES-TECH Co., Ltd. (*3)		Electronic component manufacturing		23.4		23.4		Korea		—
POSTECH Co., Ltd. (*6)		Manufacturing		—		24.5		Korea		—
PREXCO Co., Ltd. (*3)		Manufacturing		28.1		28.1		Korea		—
Jiwon Plating Co., Ltd. (*3)		Plating		20.5		20.5		Korea		—
NK Eng Co., Ltd. (*3)		Manufacturing		23.1		23.1		Korea		—
Youngdong Sea Food Co., Ltd. (*3)		Processed sea food manufacturing		24.0		24.0		Korea		—
Beomgyo Co., Ltd. (*3)		Telecommunication equipment retail sales		23.1		23.1		Korea		—
Woori Growth Partnerships New Technology Private Equity Fund (*6)		Other financial services		—		23.1		Korea		—
2016KIF-IMM Woori Bank Technology Venture Fund(*6)		Other financial services		—		20.0		Korea		—
K BANK Co., Ltd. (*2)		Finance		12.6		12.6		Korea		November 30, 2023 (*4)
Woori Bank-Company K Korea Movie Asset Fund(*5)		Other financial services		—		25.0		Korea		—
Partner One Value Up I Private Equity Fund		Other financial services		23.3		23.3		Korea		December 31, 2023
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		Other financial services		20.0		20.0		Korea		December 31, 2023
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		Other financial services		25.0		25.0		Korea		December 31, 2023

- 98 -

Percentage of
ownership (%)

Location

Financial statements
as of

Joint ventures and Associates

Main business

December
31, 2023

December
31, 2022

Woori-Shinyoung Growth-Cap Private Equity Fund I

Other financial
services

24.5

Korea

December 31, 2023

LOTTE CARD Co., Ltd.

Credit card and
installment
financing

20.0

Korea

September 30, 2023

(*4)

Woori-Q Corporate Restructuring Private Equity Fund(*5)

Trust and collective
investment

15.7

22.4

Korea

December 31, 2023

PCC-Woori LP Secondary Fund

Other financial
investment services

26.9

Korea

December 31, 2023

Together-Korea Government Private Pool Private Securities Investment Trust No. 3

Other financial
services

100.0

Korea

December 31, 2023

Union Technology Finance Investment Association

Other financial
investment services

29.7

Korea

December 31, 2023

KUM HWA Co., Ltd(*3)

Telecommunication
equipment retail
sales

20.0

Korea

December 31, 2023

Paratus Woori Material Component Equipment joint venture company

Other financial
investment services

20.8

Korea

December 31, 2023

Dicustody Co., Ltd.(*2)

Other information
technology and
computer-operation
related services

1.0

Korea

December 31, 2023

Jinmyung Plus Co., Ltd.(*3)

Manufacturing

20.2

Korea

September 30, 2023

(*4)

Orient Shipyard Co., Ltd.(*3)

Manufacturing of
ship components

22.7

Korea

November 30, 2023
(*4)

Joongang Network Solution Co., Ltd.(*3)

Other information
technology and
computer-operation
related services

25.3

Korea

September 30, 2023

(*4)

BTS 2nd Private Equity Fund

Other financial
services

20.0

Korea

December 31, 2023

Woori Financial Digital Investment Association No. 1

Other financial
services

88.0

Korea

December 31, 2023

STASSETS NO. 3 Private Equity Investment Limited Specialized In Start-up Ventures

Other financial
services

28.3

Korea

December 31, 2023

KG Fashion Co., Ltd. (*3) (*7)

Manufacturing

20.8

—

Korea

November 30, 2023
(*4)

Win Mortgage Co., Ltd. (*1) (*7)

Other financial
services

4.5

—

Korea

September 30, 2023
(*4)

NH Woori Newdeal Growth Alpha Private Equity Fund 1 (*7)

Other financial
services

22.7

—

Korea

December 31, 2023

SF CREDIT PARTNERS, LLC (*2) (*7)

Other financial
services

10.0

—

Korea

December 31, 2023

Rea Company Ltd. (*3) (*7)

Other financial
services

24.5

—

Korea

September 30, 2023

(*4)

Aram CMC Co., Ltd. (*3) (*7)

Other financial
services

20.0

—

Korea

November 30, 2023
(*4)

(*1)	Most of the significant business transactions of associates are with the Group as of December 31, 2023 and 2022.

(*2)	The Group can participate in decision-making body and exercise significant influence over financial policies and operational policies.

(*3)	There is no investment balance as of December 31, 2023 and 2022.

(*4)

The equity method was applied using the most recent financial statements available because financial statement at the end of the reporting period cannot be obtained, and any significant transactions or events that occurred between the end of the reporting period of the associate and the end of the reporting period of the group were appropriately reflected.

(*5)	It was classified as an associate through the Group holding voting rights based on the initial investment commitment ratio.

(*6)	It was excluded from associates due to the sale liquidation and others for the period ended December 31, 2023.

(*7)	It was added to associates during the period ended December 31, 2023.

- 99 -

(2)	Changes in the carrying value of investments in joint ventures and associates accounted for using the equity method of accounting for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Acquisition cost		January 1, 2023		Share of profits (losses)			Acquisition		Disposal and others			Dividends			Change in capital			December 31, 2023
W Service Networks Co., Ltd.		108		208		13			—		—			(5	)		—			216
Korea Credit Bureau Co., Ltd.		3,313		5,709		814			—		—			(90	)		—			6,433
Korea Finance Security Co., Ltd.		3,267		2,374		(99	)		—		—			—			1,010			3,285
Woori Growth Partnerships New Technology Private Equity Fund		—		10,889		(51	)		—		(10,838	)		—			—			—
2016KIF-IMM Woori Bank Technology Venture Fund		—		9,474		539			—		(10,013	)		—			—			—
K BANK Co., Ltd.		236,232		247,789		5,327			—		—			—			6,936			260,052
Woori Bank-Company K Korea Movie Asset Fund		—		239		52			—		(103	)		(188	)		—			—
Partner One Value Up I Private Equity Fund		5,039		4,278		(1,048	)		—		—			—			—			3,230
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		4,356		10,285		1,162			—		(3,200	)		—			—			8,247
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		4,436		4,355		—			82		—			—			—			4,437
Woori-Shinyoung Growth-Cap Private Equity Fund I		8,237		30,310		(6,814	)		—		—			—			—			23,496
LOTTE CARD Co., Ltd.		346,810		514,131		91,533			—		—			(13,199	)		(5,073	)		587,392
Woori-Q Corporate Restructuring Private Equity Fund		8,435		16,926		1,873			273		(9,220	)		—			—			9,852
PCC-Woori LP Secondary Fund		7,000		8,999		(1,701	)		—		—			—			—			7,298
Together-Korea Government Private Pool Private Securities Investment Trust No. 3		10,000		10,243		297			—		—			—			—			10,540
Union Technology Finance Investment Association		13,449		14,462		(1,004	)		—		(1,188	)		—			—			12,270
KUM HWA Co., Ltd (*)		—		—		—			—		—			—			—			—
Paratus Woori Material Component Equipment joint venture company		12,300		11,987		(188	)		—		—			—			—			11,799
Dicustody Co., Ltd.		1		1		—			—		—			—			—			1
Jinmyung Plus Co., Ltd.		—		10		4			—		—			—			—			14
Orient Shipyard Co., Ltd. (*)		—		—		—			—		—			—			—			—
BTS 2nd Private Equity Fund		5,226		2,881		(243	)		2,200		—			—			—			4,838
Woori Financial Digital Investment Association No. 1		33,000		10,801		(338	)		22,000		—			—			—			32,463
Joongang Network Solution Co., Ltd.		—		—		1			—		—			—			87			88
STASSETS NO. 3 Private Equity Investment Limited Specialized In Start-up Ventures		9,000		1,230		(324	)		7,500		—			—			—			8,406
KG Fashion Co., Ltd. (*)		—		—		—			—		—			—			—			—
Win Mortgage Co., Ltd.		23		—		84			23		—			(2	)		—			105
NH Woori Newdeal Growth Alpha Private Equity Fund 1		23,596		—		(1,206	)		23,596		—			—			—			22,390
SF CREDIT PARTNERS, LLC		13,059		—		99			13,059		—			—			(313	)		12,845

		746,887		917,581		88,782			68,733		(34,562	)		(13,484	)		2,647			1,029,697

(*)

The amount for which no loss was recognized for associates due to discontinuation of the equity method was 2 million Won for KUM-HWA Co., Ltd., 28 million Won for Orient Shipyard Co., Ltd., 120 million Won in KG FASHION Co., Ltd. and the accumulated amount is 4 million Won for KUM- HWA Co., Ltd., 28 million Won for Orient Shipyard Co., Ltd., 120 million Won in KG FASHION Co., Ltd.

- 100 -


	For the year ended December 31, 2022
	Acquisition cost		January 1, 2022		Share of profits (losses)			Acquisition		Disposal and others			Dividends			Change in capital			December 31, 2022
W Service Networks Co., Ltd.		108		183		29			—		—			(4	)		—			208
Korea Credit Bureau Co., Ltd.		3,313		9,423		(3,714	)		—		—			—			—			5,709
Korea Finance Security Co., Ltd.		3,267		3,101		(727	)		—		—			—			—			2,374
Woori Growth Partnerships New Technology Private Equity Fund		12,942		12,448		490			—		(2,049	)		—			—			10,889
2016 KIF-IMM Woori Bank Technology Venture Fund		7,594		12,630		(1,619	)		—		(801	)		(736	)		—			9,474
K BANK Co., Ltd.		236,232		239,493		11,854			—		—			—			(3,558	)		247,789
Woori Bank-Company K Korea Movie Asset Fund		—		345		71			—		—			(177	)		—			239
Partner One Value Up I Private Equity Fund		5,039		6,576		(2,298	)		—		—			—			—			4,278
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		7,556		11,153		1,312			—		(2,180	)		—			—			10,285
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		4,354		4,254		1			100		—			—			—			4,355
Woori-Shinyoung Growth-Cap Private Equity Fund I		8,237		20,067		10,243			—		—			—			—			30,310
LOTTE CARD Co., Ltd.		346,810		458,295		58,400			—		—			(12,960	)		10,396			514,131
Woori-Q Corporate Restructuring Private Equity Fund		17,043		33,493		(489	)		396		(16,474	)		—			—			16,926
PCC-Woori LP Secondary Fund		7,000		8,504		495			—		—			—			—			8,999
POSTECH Co., Ltd. (*)		—		—		56			—		—			—			(56	)		—
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,000		10,070		173			—		—			—			—			10,243
Genesis Environmental Energy Company No. 1 Private Equity Partnership		—		4,126		(41	)		—		(3,738	)		(347	)		—			—
Union Technology Finance Investment Association		14,637		12,388		187			2,250		(363	)		—						14,462
KUM HWA Co., Ltd.(*)		—		—		—			—		—			—			—			—
Paratus Woori Material Component Equipment joint venture company		12,300		12,156		(169	)		—		—			—			—			11,987
Dicustody Co., Ltd.		1		1		—			—		—			—			—			1
Jinmyung Plus Co., Ltd.		—		—		10			—		—			—			—			10
Orient Shipyard Co., Ltd.(*)		—		—		—			—		—			—			—			—
BTS 2nd Private Equity Fund		3,026		—		(145	)		3,026		—			—			—			2,881
Woori Financial Digital Investment Association No. 1		11,000		—		(199	)		11,000		—			—			—			10,801
STASSETS NO. 3 Private Equity Investment Limited Specialized In Start-up Ventures		1,500		—		(270	)		1,500		—			—			—			1,230

		711,959		858,706		73,650			18,272		(25,605	)		(14,224	)		6,782			917,581

(*)

The amount for which no loss was recognized for associates due to discontinuation of the equity method was 665 million Won for POSTECH Co., Ltd., 3,743 million Won for Orient Shipyard Co., Ltd., 0.2 million Won in KUM HWA Co., Ltd. and the accumulated amount is 1,462 million Won for POSTECH Co., Ltd., 3,743 million Won for Orient Shipyard Co., Ltd., 2 million Won in KUM HWA Co., Ltd.

- 101 -

(3)	Summary financial information relating to investments in joint ventures and associates accounted for using the equity method of accounting as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	As of and for the year ended December 31, 2023
Subsidiaries	Assets		Liabilities		Operating revenue			Net income (loss)			Other comprehensive income (loss)			Total comprehensive income (loss)
W Service Networks Co., Ltd.		6,887		2,496		19,350			1,069			—			1,069
Korea Credit Bureau Co., Ltd.		131,164		68,756		163,707			8,012			—			8,012
Korea Finance Security Co., Ltd.		36,185		14,287		44,709			(464	)		6,730			6,266
K BANK Co., Ltd.		20,799,599		18,903,298		826,894			49,853			47,885			97,738
Partner One Value Up I Private Equity Fund		14,182		293		(4,107	)		(4,505	)		—			(4,505	)
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		41,533		305		6,501			5,823			—			5,823
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,754		100		2			(388	)		—			(388	)
Woori-Shinyoung Growth-Cap Private Equity Fund I		97,265		1,522		(26,435	)		(27,768	)		—			(27,768	)
LOTTE CARD Co., Ltd. (*1)		22,329,308		19,191,007		1,937,383			363,673			(19,888	)		343,785
Woori-Q Corporate Restructuring Private Equity Fund		63,265		456		4,945			3,018			—			3,018
PCC-Woori LP Secondary Fund		27,773		668		908			(6,350	)		—			(6,350	)
Together-Korea Government Private Pool Private Securities Investment Trust No. 3		10,543		1		227			222			—			222
Union Technology Finance Investment Association		41,543		233		2,261			(838	)		—			(838	)
KUM HWA Co., Ltd		4		167		—			—			—			—
Paratus Woori Material Component Equipment joint venture company		58,298		1,510		—			(906	)		—			(906	)
Dicustody Co., Ltd.		92		—		—			(3	)		—			(3	)
Jinmyung Plus Co., Ltd.		519		454		146			(3	)		—			(3	)
Orient Shipyard Co., Ltd.		10,708		27,225		—			(124	)		—			(124	)
BTS 2nd Private Equity Fund		25,030		837		4			(1,213	)		—			(1,213	)
Woori Financial Digital Investment Association No. 1		37,084		195		401			(573	)		—			(573	)
Joongang Network Solution Co., Ltd.		1,505		3,156		5,758			5			—			5
STASSETS NO. 3 Private Equity Investment Limited Specialized In Start-up Ventures		30,014		312		95			(1,145	)		—			(1,145	)
KG Fashion Co., Ltd.		2,559		3,022		943			(569	)		—			(569	)
Win Mortgage Co., Ltd.		3,518		1,197		9,309			378			—			378
NH Woori Newdeal Growth Alpha Private Equity Fund 1		100,215		1,588		2			(3,605	)		—			(3,605	)
SF CREDIT PARTNERS, LLC		149,157		25,996		7,618			(4,610	)		(2,819	)		(7,429	)
Rea Company Ltd.		2,248		3,736		802			(694	)		—			(694	)
Aram CMC Co., Ltd.		669		485		1,005			(254	)		—			(254	)

(*1)	The amount is after reflecting the fair value adjustment that occurred when acquiring the shares and the adjustments that occurred by the difference of accounting policies with the Group.

- 102 -


	As of and for the year ended December 31, 2022
Subsidiaries	Assets		Liabilities		Operating revenue			Net income (loss)			Other comprehensive income			Total comprehensive income
W Service Networks Co., Ltd.		7,052		2,825		19,697			1,215			—			1,215
Korea Credit Bureau Co., Ltd.		155,165		100,065		144,907			(37,475	)		—			(37,475	)
Korea Finance Security Co., Ltd.		28,792		12,964		47,043			(3,856	)		—			(3,856	)
Woori Growth Partnerships New Technology Private Equity Fund		47,394		208		2,978			2,185			—			2,185
2016KIF-IMM Woori Bank Technology Venture Fund		47,979		609		665			(7,839	)		—			(7,839	)
K BANK Co., Ltd.		16,694,289		14,896,426		491,880			91,059			(32,156	)		58,903
Woori Bank-Company K Korea Movie Asset Fund (*2)		989		33		462			324			—			324
Partner One Value Up I Private Equity Fund		18,395		—		(9,431	)		(9,831	)		—			(9,831	)
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		51,804		385		8,092			7,288			—			7,288
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,811		95		1			(383	)		—			(383	)
Woori-Shinyoung Growth-Cap Private Equity Fund I		123,824		312		41,780			40,544			—			40,544
LOTTE CARD Co., Ltd. (*1)		19,983,059		17,179,093		1,925,577			267,418			43,162			310,580
Woori-Q Corporate Restructuring Private Equity Fund		75,973		418		3,019			(4,696	)		—			(4,696	)
PCC-Woori LP Secondary Fund		33,591		168		6,127			1,152			—			1,152
POSTECH Co., Ltd.		10,489		24,804		25,182			(2,664	)		—			(2,664	)
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,246		1		177			170			—			170
Union Technology Finance Investment Association		48,991		299		2,300			632			—			632
KUM HWA Co., Ltd.		4		159		—			(8	)		—			(8	)
Paratus Woori Material Component Equipment joint venture company		58,311		617		7			(812	)		—			(812	)
Dicustody Co., Ltd.		95		—		—			(3	)		—			(3	)
Jinmyung Plus Co., Ltd.		696		649		177			(9	)		—			(9	)
Orient Shipyard Co., Ltd.		10,832		27,225		—			(16,467	)		—			(16,467	)
BTS 2nd Private Equity Fund		15,012		608		1			(725	)		—			(725	)
Woori Financial Digital Investment Association No. 1		12,482		209		19			(226	)		—			(226	)
STASSETS NO. 3 Private Equity Investment Limited Specialized In Start-up Ventures		4,660		313		37			(953	)		—			(953	)

(*1)	The amount is after reflecting the fair value adjustment that occurred when acquiring the shares and the adjustments that occurred by the difference of accounting policies with the Group.

(*2)	It is scheduled to be liquidated after disbanding for the year ended December 31, 2021.

(4)	The entities that the Group excluded from the associates although the Group’s ownership interest is more than 20% as of December 31, 2023 and 2022, are as follows:


	December 31, 2023
Associate (*)	Number of shares owned		shareholding ratio (%)
CL Tech Co., Ltd.		10,191		28.6

(*)	Although the Group’s common stock ownership of the entity is more than 20%, the Group does not have significant influence over the entity since it is going through work-out process under receivership, accordingly it is excluded from the investment in joint ventures and associates.


	December 31, 2022
Associate (*)	Number of shares owned		shareholding ratio (%)
CL Tech Co., Ltd.		10,191		28.6

(*)	Although the Group’s common stock ownership of the entity is more than 20%, the Group does not have significant influence over the entity since it is going through work-out process under receivership, accordingly it is excluded from the investment in joint ventures and associates.

- 103 -

(5)	As of December 31, 2023 and 2022, the reconciliations from the net assets of the associates to the book value of the shares of the investment in joint ventures and associates are as follows (Unit: Korean Won in millions except for ownership):


	December 31, 2023
Joint ventures and Associates	Total net asset			Ownership (%)		Ownership portion of net assets			Basis difference		Intercompany transaction and others			Book Value
W Service Networks Co., Ltd.		4,391			4.9		216			—		—			216
Korea Credit Bureau Co., Ltd.		62,408			9.9		6,186			247		—			6,433
Korea Finance Security Co., Ltd.		21,898			15.0		3,285			—		—			3,285
K BANK Co., Ltd. (*)		1,893,785			12.6		238,158			21,894		—			260,052
Partner One Value Up I Private Equity Fund		13,889			23.3		3,230			—		—			3,230
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		41,228			20.0		8,247			—		—			8,247
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,653			25.0		3,914			—		523			4,437
Woori-Shinyoung Growth-Cap Private Equity Fund I		95,743			24.5		23,496			—		—			23,496
LOTTE CARD Co., Ltd. (*)		2,936,964			20.0		587,392			—		—			587,392
Woori-Q Corporate Restructuring Private Equity Fund		62,809			15.7		9,852			—		—			9,852
PCC-Woori LP Secondary Fund		27,105			26.9		7,298			—		—			7,298
Together-Korea Government Private Pool Private Securities Investment Trust No. 3		10,542			100.0		10,540			—		—			10,540
Union Technology Finance Investment Association		41,311			29.7		12,270			—		—			12,270
KUM HWA Co., Ltd		(163	)		20.0		(33	)		—		33			—
Paratus Woori Material Component Equipment joint venture company		56,788			20.8		11,799			—		—			11,799
Dicustody Co., Ltd.		92			1.0		1			—		—			1
Jinmyung Plus Co., Ltd.		65			20.2		14			—		—			14
Orient Shipyard Co., Ltd.		(16,517	)		22.7		(3,754	)		—		3,754			—
BTS 2nd Private Equity Fund		24,193			20.0		4,838			—		—			4,838
Woori Financial Digital Investment Association No. 1		36,889			88.0		32,463			—		—			32,463
Joongang Network Solution Co., Ltd.		(1,651	)		25.3		(419	)		—		507			88
STASSETS NO. 3 Private Equity Investment Limited Specialized In Start-up Ventures		29,702			28.3		8,406			—		—			8,406
KG Fashion Co., Ltd.		(463	)		20.8		(96	)		—		96			—
Win Mortgage Co., Ltd.		2,321			4.5		105			—		—			105
NH Woori Newdeal Growth Alpha Private Equity Fund 1		98,627			22.7		22,390			—		—			22,390
SF CREDIT PARTNERS, LLC		123,161			10.0		12,316			—		529			12,845
Rea Company Ltd.		(1,488	)		24.5		(365	)		—		365			—
Aram CMC Co., Ltd.		184			20.0		37			—		(37	)		—

(*)	The net asset and e net asset equity amount is after the debt-for-equity swap, non-controlling etc.

- 104 -


	December 31, 2022
Joint ventures and Associates	Total net asset			Ownership (%)		Ownership portion of net assets			Basis difference		Intercompany transaction and others			Book Value
W Service Networks Co., Ltd.		4,227			4.9		209			—		(1	)		208
Korea Credit Bureau Co., Ltd.		55,100			9.9		5,462			246		1			5,709
Korea Finance Security Co., Ltd.		15,828			15.0		2,374			—		—			2,374
Woori Growth Partnerships New Technology Private Equity Fund		47,185			23.1		10,889			—		—			10,889
2016KIF-IMM Woori Bank Technology Venture Fund		47,370			20.0		9,474			—		—			9,474
K BANK Co., Ltd. (*)		1,796,269			12.6		225,894			21,894		1			247,789
Woori Bank-Company K Korea Movie Asset Fund		957			25.0		239			—		—			239
Partner One Value Up I Private Equity Fund		18,395			23.3		4,278			—		—			4,278
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		51,419			20.0		10,284			—		1			10,285
Crevisse LIME Impact 1st Startup Venture Specialist Private Equity Fund		15,716			25.0		3,929			—		426			4,355
Woori-Shinyoung Growth-Cap Private Equity Fund I		123,512			24.5		30,310			—		—			30,310
LOTTE CARD Co., Ltd. (*)		2,570,656			20.0		514,131			—		—			514,131
Woori-Q Corporate Restructuring Private Equity Fund		75,555			22.4		16,926			—		—			16,926
PCC-Woori LP Secondary Fund		33,423			26.9		8,999			—		—			8,999
POSTECH Co., Ltd.		(14,315	)		24.5		(3,513	)		—		3,513			—
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,245			100.0		10,244			—		(1	)		10,243
Union Technology Finance Investment Association		48,692			29.7		14,463			—		(1	)		14,462
KUM HWA Co., Ltd.		(155	)		20.0		(31	)		—		31			—
Paratus Woori Material Component Equipment joint venture company		57,694			20.8		11,987			—		—			11,987
Dicustody Co., Ltd.		95			1.0		1			—		—			1
Jinmyung Plus Co., Ltd.		47			20.2		10			—		—			10
Orient Shipyard Co., Ltd.		(16,393	)		22.7		(3,726	)		—		3,726			—
BTS Private Equity Fund No. 2		14,405			20.0		2,881			—		—			2,881
Woori Financial Digital Investment Association No. 1		12,273			88.0		10,801			—		—			10,801
STASSETS NO. 3 Private Equity Investment Limited Specialized In Start-up Ventures		4,347			28.3		1,230			—		—			1,230

(*)	The net asset equity amount is after the debt-for-equity swap, non-controlling etc.

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14.	INVESTMENT PROPERTIES

(1)	Details of investment properties as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Acquisition cost		657,606			659,897
Accumulated depreciation		(65,078	)		(56,686	)

Net carrying value		592,528			603,211

(2)	Changes in investment properties are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023			For the year ended December 31, 2022
Beginning balance		603,211			588,997
Depreciation		(6,599	)		(6,483	)
Transfer (*)		(6,463	)		19,191
Foreign currencies translation adjustments		2,379			1,506

Ending balance		592,528			603,211

(*)	Land and buildings were transferred from Properties and equipment to investment properties for the years ended December 31, 2023 and 2022.

(3)

Fair value of investment properties amounted to 864,351 million Won and 861,628 million Won as of December 31, 2023 and 2022, respectively. The fair value of investment properties has been assessed on the basis of recent similar real estate market price and officially assessed land price in the area of the investment properties, is classified as level 3 on the fair value hierarchy.

(4)

Rental fee earned from investment properties is amounting to 35,869 million Won and 35,102 million Won for the years ended December 31, 2023 and 2022, respectively. The expenses directly related to the investment properties where rental fee was earned are 6,599 million Won and 6,483 million Won, respectively.

(5)	The minimum lease payments expected to be received in the future under the non-refundable lease agreement as of December 31, 2023 and 2022. (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Lease payments:
Within a year		17,413		14,172
More than 1 year and within 2 years		7,114		9,234
More than 2 years and within 3 years		3,716		5,320
More than 3 years and within 4 years		3,144		3,201
More than 4 years and within 5 years		2,988		2,634
More than 5 years		2,944		2,568

Total		37,319		37,129

- 106 -

15.	PROPERTIES AND EQUIPMENT

(1)	Details of properties and equipment as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Land		Building		Properties for business use		Leasehold improvement		Construction in progress		Total
Properties and equipment (owned)		1,495,945		614,415		184,298		52,364		36,486		2,383,508
Right-of-use assets		—		327,554		17,899		—		—		345,453

Carrying value		1,495,945		941,969		202,197		52,364		36,486		2,728,961


	December 31, 2022
	Land		Building		Properties for business use		Leasehold improvement		Construction in progress		Total
Properties and equipment (owned)		1,486,834		630,644		186,181		48,824		32,184		2,384,667
Right-of-use assets		—		303,387		12,763		—		—		316,150

Carrying value		1,486,834		934,031		198,944		48,824		32,184		2,700,817

(2)	Details of properties and equipment (owned) as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Land		Building			Properties for business use			Leasehold improvement			Construction in progress		Total
Acquisition cost		1,495,945		949,578			908,937			459,661			36,486		3,850,607
Accumulated depreciation		—		(335,163	)		(724,639	)		(407,297	)		—		(1,467,099	)

Net carrying value		1,495,945		614,415			184,298			52,364			36,486		2,383,508


	December 31, 2022
	Land		Building			Properties for business use			Leasehold improvement			Construction in progress		Total
Acquisition cost		1,486,834		940,449			881,398			445,397			32,184		3,786,262
Accumulated depreciation		—		(309,805	)		(695,217	)		(396,573	)		—		(1,401,595	)

Net carrying value		1,486,834		630,644			186,181			48,824			32,184		2,384,667

(3)	Details of changes in properties and equipment (owned) for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Land			Building			Properties for business use			Leasehold improvement			Construction in progress			Total
Beginning balance		1,486,834			630,644			186,181			48,824			32,184			2,384,667
Acquisition		—			18,064			81,773			21,803			8,083			129,723
Disposal		(352	)		(520	)		(13,454	)		(1,000	)		(3,600	)		(18,926	)
Depreciation		—			(29,425	)		(70,962	)		(17,577	)		—			(117,964	)
Foreign currencies translation adjustment		492			241			187			192			(68	)		1,044
Transfer (*)		9,907			(3,444	)		—			—			—			6,463
Classification as held for sale		(936	)		(1,568	)		—			—			—			(2,504	)
Others		—			423			573			122			(113	)		1,005

Ending balance		1,495,945			614,415			184,298			52,364			36,486			2,383,508

(*)	Land and buildings transferred from properties and equipment to investment properties for the year ended December 31, 2023.

- 107 -


	For the year ended December 31, 2022
	Land			Building			Properties for business use			Leasehold improvement			Construction in progress			Total
Beginning balance		1,524,032			659,063			196,557			43,178			3,171			2,426,001
Acquisition		24			14,502			66,208			23,432			31,810			135,976
Disposal		(19,021	)		—			(928	)		(622	)		—			(20,571	)
Depreciation		—			(28,812	)		(76,514	)		(17,973	)		—			(123,299	)
Foreign currencies translation adjustment		(297	)		(117	)		764			554			225			1,129
Transfer (*)		(11,915	)		(7,275	)		—			—			—			(19,190	)
Classification as held for sale		(6,405	)		(6,704	)		—			—			—			(13,109	)
Others		416			(13	)		94			255			(3,022	)		(2,270	)

Ending balance		1,486,834			630,644			186,181			48,824			32,184			2,384,667

(*)	Land and buildings transferred from properties and equipment to investment properties for the year ended December 31, 2022.

(4)	Details of right-of-use assets as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Building			Properties for business use			Total
Acquisition cost		639,005			32,565			671,570
Accumulated depreciation		(311,451	)		(14,666	)		(326,117	)

Net carrying value		327,554			17,899			345,453


	December 31, 2022
	Building			Properties for business use			Total
Acquisition cost		548,469			25,002			573,471
Accumulated depreciation		(245,082	)		(12,239	)		(257,321	)

Net carrying value		303,387			12,763			316,150

(5)	Details of changes in right-of-use assets for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions) :


	For the year ended December 31, 2023
	Building			Properties for business use			Total
Beginning balance		303,387			12,763			316,150
New contracts		184,967			16,037			201,004
Changes in contracts		25,564			138			25,702
Termination		(17,277	)		(1,056	)		(18,333	)
Depreciation		(179,709	)		(10,039	)		(189,748	)
Others		10,622			56			10,678

Ending balance		327,554			17,899			345,453


	For the year ended December 31, 2022
	Building			Properties for business use			Total
Beginning balance		320,613			15,096			335,709
New contracts		207,732			7,320			215,052
Changes in contracts		3,514			3			3,517
Termination		(43,175	)		(824	)		(43,999	)
Depreciation		(192,305	)		(8,806	)		(201,111	)
Others		7,008			(26	)		6,982

Ending balance		303,387			12,763			316,150

- 108 -

16.	INTANGIBLE ASSETS

(1)	Details of intangible assets as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership			Construction in progress		Total
Acquisition cost		163,517		49,674			2,118			541,977			987,320			23,270			7,167		1,775,043
Accumulated amortization		—		(28,095	)		(1,629	)		(378,299	)		(812,555	)		—			—		(1,220,578	)
Accumulated impairment losses		—		—			—			—			(33,552	)		(1,132	)		—		(34,684	)

Net carrying value		163,517		21,579			489			163,678			141,213			22,138			7,167		519,781


	December 31, 2022
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership			Construction in progress		Total
Acquisition cost		159,194		45,335			2,052			463,368			888,116			21,243			3,027		1,582,335
Accumulated amortization		—		(21,462	)		(1,431	)		(323,849	)		(762,399	)		—			—		(1,109,141	)
Accumulated impairment losses		—		—			—			—			(33,552	)		(1,158	)		—		(34,710	)

Net carrying value		159,194		23,873			621			139,519			92,165			20,085			3,027		438,484

(2)	Details of changes in intangible assets for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership		Construction in progress			Total
Beginning balance		159,194		23,873			621			139,519			92,165			20,085		3,027			438,484
Acquisition		—		3,915			66			78,619			98,886			2,022		6,287			189,795
Disposal		—		(1,028	)		—			—			—			—		—			(1,028	)
Amortization (*1)		—		(6,055	)		(197	)		(54,459	)		(50,048	)		—		—			(110,759	)
Reversal of impairment loss(*2)		—		—			—			—			—			25		—			25
Foreign currencies translation adjustment		4,323		303			—			(3	)		310			5		(28	)		4,910
Others		—		571			(1	)		2			(100	)		1		(2,119	)		(1,646	)

Ending balance		163,517		21,579			489			163,678			141,213			22,138		7,167			519,781

(*1)	Amortization of other intangible assets amounting to 22,349 million Won is included in other operating expenses.

(*2)	Membership is an intangible asset with an indefinite useful life that recognizes an impairment loss if recoverable value is lower than its carrying amount, while the reversal of an impairment loss should be recognized when the recoverable value is higher than its carrying amount.


	For the year ended December 31, 2022
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership			Construction in progress			Total
Beginning balance		158,498		17,655			691			160,331			108,323			18,854			535			464,887
Acquisition		—		5,293			160			52,119			31,865			1,871			2,120			93,428
Disposal		—		—			—			—			(2	)		(442	)		—			(444	)
Amortization (*1)		—		(5,221	)		(231	)		(72,852	)		(47,140	)		—			—			(125,444	)
Provision of impairment loss(*2)		—		—			—			—			—			(144	)		—			(144	)
Foreign currencies translation adjustment		696		62			—			(6	)		(101	)		(42	)		(53	)		556
Others		—		6,084			1			(73	)		(780	)		(11	)		425			5,646

Ending balance		159,194		23,873			621			139,519			92,165			20,086			3,027			438,485

(*1)	Amortization of other intangible assets amounting to 14,664 million Won is included in other operating expenses.

(*2)

The impairment test for other intangible assets indicates that the recoverable value is less than the carrying amount and thus the impairment loss is recognized. Also, membership is an intangible asset with an indefinite useful life that recognizes an impairment loss if recoverable value is lower than its carrying amount, while the reversal of an impairment loss should be recognized when the recoverable value is higher than its carrying amount.

- 109 -

(3)

Goodwill

Details of major goodwill as of December 31, 2023 and 2022 are as follows (Unit: Korea Won in millions):


Cash Generating Unit (*1)	December 31, 2023		December 31, 2022
PT Bank Woori Saudara Indonesia 1906 Tbk (*2)		100,267		97,029
Woori Bank (Cambodia) PLC (*3)		56,513		55,570

Total		156,780		152,599

(*1)	The goodwill has been allocated to the cash-generating unit that will benefit from the synergies of the business combination, and the cash-generating unit generally consists of a sales unit or its sub-sector.

(*2)	The Group has acquired Saudara Bank to expand retail sales in Indonesia, and recognized the goodwill as it is expected to strengthen our competitiveness by securing a local sales network in Indonesia.

(*3)	The Group has acquired Vision Fund Cambodia to expand Cambodian retail sales, and recognized goodwill based on the economies of scale and acquired customer base.

Impairment test

The recoverable amount of the cash-generating unit is measured at larger amount among the net fair value or the value in use.

The net fair value is calculated by deducting costs of disposal from the amount received from the sale of the cash-generating unit in an arm’s length transaction between the parties with reasonable judgment and willingness to negotiate. In case of difficulty in measuring this amount, the sale amount of a similar cash-generating unit in the past market is calculated by reflecting the characteristics of the cash-generating unit. If reliable information related to fair value less costs to sell is not available, value in use is considered as recoverable amount. Value in use is the present value of future cash flows expected to be generated by the cash-generating unit. Future cash flows are estimated based on the latest financial budget approved by the management, with an estimated period of up to five years. PT Bank Woori Saudara Indonesia 1906 Tbk and Woori Bank (Cambodia) PLC applied growth rate for 1% to estimate future cash flow for the period over five years. The main assumptions used to estimate cash flows are about the size of the market and the share of the group. The appropriate discount rate for discounting future cash flows is the pre-tax discount rate, including assumptions about risk-free interest rates, market risk premium, and systemic risk of cash-generating units. The impairment test, which compares the carrying amount and recoverable amount of the cash-generating unit to which goodwill has been allocated, is conducted every year and every time an impairment sign occurs. (Unit: Korean Won in millions):


Category	PT Bank Woori Saudara Indonesia 1906 Tbk		Woori Bank (Cambodia) PLC
Discount rate (%)		11.39		17.72
Terminal growth rate (%)		1.00		1.00
Recoverable amount		979,387		586,446
Carrying amount		740,558		509,730

As a result of the impairment test on goodwill, it is determined that the carrying amount of the cash-generating unit to which the goodwill has been distributed will not exceed the recoverable amount.

- 110 -

Sensitivity analysis

The sensitivity of fair value measurements due to changes in significant but unobservable inputs used in measuring recoverable amount of PT Bank Woori Saudara Indonesia 1906 Tbk and Woori Bank (Cambodia) PLC as of December 31, 2023, is as follows (Unit: Korean Won in millions):


			PT Bank Woori Saudara Indonesia 1906 Tbk			Woori Bank (Cambodia) PLC
Discount rate	Increase by 1.0	% point		(95,630	)		(47,185	)
Discount rate	Decrease by 1.0	% point		116,564			53,812
Terminal growth rate	Increase by 1.0	% point		47,933			9,762
Terminal growth rate	Decrease by 1.0	% point		(39,513	)		(8,659	)

17.	ASSETS HELD FOR SALE

Assets held for sale as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Properties and equipment (*)		11,573		9,589

(*)	The Group classifies above assets as assets held for sale that are highly likely to be sold within one year from December 31, 2023 and 2022, based on the management’s decision.

- 111 -

18.	ASSETS SUBJECT TO LIEN AND ASSETS ACQUIRED THROUGH FORECLOSURES

(1)	Assets subjected to lien as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


		December 31, 2023
		Collateral given to	Amount		Reason for collateral
Loans and other financial assets at amortized cost	Due from banks in local currency	MORGAN STANLEY BANK INTL, SEL and others		26,854	CSA variable margin and others
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others		765,330	Overseas Futures Option Deposit and others
	Mortgage-backed securities	Public offering		1,242,963	Covered bonds
Financial assets at FVTPL	Korean financial institutions debt securities and others	Korea Exchange and others		385,394	CSA variable margin and others
Financial assets at FVTOCI	Korean treasury and government bonds	Korea Securities Depository		73,846	Related to bonds sold under repurchase agreements (*)
	Korean financial institutions debt securities and others	The BOK and others		8,182,907	Settlement risk and others
	Foreign financial institutions’ debt securities	Postal Savings Bank of China and others		482,737	Related to bonds sold under repurchase agreements (*)
	Foreign financial institutions’ debt securities	Korea Investment & Securities Co., Ltd. and others		955,126	Substitute securities and others
Securities at amortized cost	Korean treasury and government bonds and others	The BOK and others		10,380,306	Settlement risk and others
	Foreign financial institutions’ debt securities	NATIXIS		48,368	Related to bonds sold under repurchase agreements (*)
	Foreign financial institutions’ debt securities	Federal Reserve Bank		23,180	Collateral to receive a borrowing limit

		Total		22,567,011

(*)

The financial assets are not derecognized and provided as collaterals because the Group entered into an agreement to buy the transferred assets back at a predetermined price or the sale price plus a certain return rate. The Group continuously recognize the transferred assets as liabilities (bond sold under repurchase agreements) after the repurchase.

- 112 -


		December 31, 2022
		Collateral given to	Amount		Reason for collateral
Loans and other financial assets at amortized cost	Due from banks in local currency	The Korea Exchange. and others		133,539	CCP variable margin and others
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others		1,142,784	Overseas Futures Option Deposit and others
	Mortgage-backed securities	Public offering		1,892,723	Covered Bonds
Financial assets at FVTPL	Korean financial institutions debt securities and others	Standard Chartered Bank Korea Limited and others		245,876	CSA variable margin and others
Financial assets at FVTOCI	Korean treasury and government bonds	Korea Securities Depository		460	Related to bonds sold under repurchase agreements (*)
	Korean financial institutions debt securities and others	The BOK and others		6,394,890	Settlement risk and others
	Foreign financial institutions debt securities	Standard Chartered Bank, Hong Kong and others		582,738	Related to bonds sold under repurchase agreements (*)
	Foreign financial institutions debt securities	BNP-PARIBAS and others		1,060,120	CSA variable margin and others
Securities at amortized cost	Korean treasury and government bonds	Korea Securities Depository		1,100,351	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government bonds and others	The BOK and others		10,820,136	Settlement risk and others
	Debt securities in foreign currencies	NATIXIS and others		70,949	Related to bonds sold under repurchase agreements (*)
	Debt securities in foreign currencies	FHLB Advance and others		10,570	Collateral to receive a borrowing limit

		Total		23,455,136

(*)

(2)

Assets acquired through foreclosures as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Non-operational real estates		37,596			25,405
Non-operational assets		997			1,047
Real estate assessment provision		(1,611	)		(1,176	)
Accumulated Depreciation		(2,358	)		(1,937	)

Total		34,624			23,339

(3)

Securities loaned as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):

December 31,
2023

December 31,
2022

Loaned to

Financial assets at FVTPL

Korea treasury and government bonds and others

625,398

—

Korea Securities Finance Corporation and others

Financial assets at FVTOCI

Korea treasury and government bonds and others

592,218

98,027

Korea Securities Depository and others

Securities loaned are lending of specific securities to borrowers who agree to return the same quantity of the same security at the end of lending period. As the Group does not derecognize these securities, there are no liabilities recognized through such transactions relates to securities loaned.

- 113 -

(4) Collaterals held that can be permitted to sell or repledge the collateral in the absence of default by the owner of the collateral

Fair values of collaterals held that can be disposed and re-subjected to lien regardless of defaults of counterparties as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Fair values of collaterals		Fair values of collaterals disposed or re-subjected to lien
Securities		3,443,822		—


	December 31, 2022
	Fair values of collaterals		Fair values of collaterals disposed or re-subjected to lien
Securities		7,109,933		—

19.	OTHER ASSETS

Details of other assets as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Prepaid expenses		222,211		153,777
Advance payments		47,521		3,828
Non-operational assets		34,624		23,340
Others		13,951		11,789

Total		318,307		192,734

- 114 -

20. FINANCIAL LIABILITIES AT FVTPL

(1)

Financial liabilities at FVTPL as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Financial liabilities at FVTPL		6,023,306		8,988,077

(2)

Details of financial liabilities at FVTPL as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Deposits
Gold banking liabilities		39,524		35,161
Derivative liabilities		5,983,782		8,952,916

Total		6,023,306		8,988,077

21.	DEPOSITS DUE TO CUSTOMERS

Details of deposits due to customers by type are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Deposits in local currency:
Deposits on demand		8,815,272			15,652,495
Deposits at termination		283,120,740			270,626,822
Mutual installment		21,602			22,995
Certificate of deposits		14,767,307			5,255,889
Other deposits		1,117,673			1,196,487

Sub-total		307,842,594			292,754,688

Deposits in foreign currencies:
Deposits in foreign currencies		46,193,691			46,261,496
Present value discount		(184,906	)		(92,352	)

Total		353,851,379			338,923,832

- 115 -

22. BORROWINGS AND DEBENTURES

(1)	Details of borrowings as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Lenders	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK	The BOK		2.0 ~ 2.0		1,565,444
Borrowings from government funds	Small Enterprise And Market Service and others		0.0 ~ 3.4		1,996,579
Others	The Korea Development Bank and others		0.0 ~ 6.0		6,178,564

Sub-total					9,740,587

Borrowings in foreign currencies	The Export-Import Bank of Korea and others		0.0 ~ 10.0		13,865,152
Bills sold	Others		0.0 ~ 2.7		6,326
Call money	Bank and others		4.1 ~ 6.6		1,115,923
Bonds sold under repurchase agreements	Other financial institutions		1.0 ~ 11.7		527,291
Present value discount					(547	)

Total					25,254,732


	December 31, 2022
	Lenders	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK	The BOK		0.3 ~ 1.8		3,040,877
Borrowings from government funds	Small Enterprise And Market Service and others		0.0 ~ 3.5		2,021,049
Others	The Korea Development Bank and others		0.0 ~ 6.1		4,792,000

Sub-total					9,853,926

Borrowings in foreign currencies	The Export-Import Bank of Korea and others		(0.1) ~ 10.0		11,112,940
Bills sold	Others		0.0 ~ 2.4		7,308
Call money	Bank and others		1.6 ~ 5.5		400,071
Bonds sold under repurchase agreements	Other financial institutions		0.2 ~ 6.4		1,654,544
Present value discount					(583	)

Total					23,028,206

- 116 -

(2)	Details of debentures as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023					December 31, 2022
	Interest rate (%)		Amount			Interest rate (%)		Amount
Face value of bond (*):
Ordinary bonds		0.8 ~ 7.1		17,029,358			0.8 ~ 5.9		19,778,506
Subordinated bonds		1.9 ~ 5.1		4,291,848			1.9 ~ 5.1		4,885,325
Other bonds		17.0		4,006			17.0		4,006

Sub-total				21,325,212					24,667,837

Discounts on bonds				(48,179	)				(28,404	)

Total				21,277,033					24,639,433

(*)

Includes debentures under fair value hedge amounting to 3,943,224 million Won and 3,076,983 million Won as of December 31, 2023 and 2022, respectively.

23.	PROVISIONS

(1)	Details of provisions as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Provisions for guarantees (*1)		78,919		73,743
Provisions for unused commitments		82,491		55,077
Asset retirement obligation		86,290		75,202
Other provisions (*2)		458,264		262,502

Total		705,964		466,524

(*1)

Provisions for guarantees include provisions for financial guarantees of 48,342 million Won and 45,203 million Won as of December 31, 2023 and 2022, respectively.

(*2)

Other provisions consist of provisions for litigation, compensation for loss and others.

(2)	Changes in provisions for guarantees and unused loan commitments for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):

Provisions for guarantees


	For the year ended December 31, 2023
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		41,733			24,325			7,685			73,743
Transfer to 12-month expected credit loss		20,503			(20,503	)		—			—
Transfer to expected credit loss for the entire period		(453	)		453			—			—
Transfer to credit-impaired financial assets		(4	)		(3	)		7			—
Net provision (reversal) of unused amount		5,493			(1,470	)		(467	)		3,556
Other increase (decrease) (*)		1,622			(2	)		—			1,620

Ending balance		68,894			2,800			7,225			78,919

(*) Includes the impact from change of financial guarantee liabilities.

- 117 -


	For the year ended December 31, 2022
	Stage 1			Stage 2			Stage 3		Total
Beginning balance		45,669			15,267			6,767		67,703
Transfer to 12-month expected credit loss		1,206			(1,206	)		—		—
Transfer to expected credit loss for the entire period		(119	)		119			—		—
Transfer to credit-impaired financial assets		(3	)		(338	)		341		—
Net provision (reversal) of unused amount		(3,450	)		10,484			577		7,611
Other increase (decrease) (*)		(1,570	)		(1	)		—		(1,571	)

Ending balance		41,733			24,325			7,685		73,743

(*)	Includes the impact from change of financial guarantee liabilities.

ii)

Provisions for unused loan commitments


	For the year ended December 31, 2023
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		34,509			20,568			—			55,077
Transfer to 12-month expected credit loss		12,268			(12,268	)		—			—
Transfer to expected credit loss for the entire period		(803	)		803			—			—
Transfer to credit-impaired financial assets		(19	)		(18	)		37			—
Net provision (reversal) of unused amount		28,116			(684	)		(37	)		27,395
Other increase (decrease)		19			—			—			19

Ending balance		74,090			8,401			—			82,491


	For the year ended December 31, 2022
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		30,376			22,056			—			52,432
Transfer to 12-month expected credit loss		3,986			(3,986	)		—			—
Transfer to expected credit loss for the entire period		(703	)		703			—			—
Transfer to credit-impaired financial assets		(45	)		(44	)		89			—
Net provision (reversal) of unused amount		826			1,839			(89	)		2,576
Other increase (decrease)		69			—			—			69

Ending balance		34,509			20,568			—			55,077

(3)

Changes in asset retirement obligation for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023			For the year ended December 31, 2022
Beginning balance		75,202			74,193
Provisions provided		4,312			2,605
Provisions used		(1,162	)		(6,705	)
Amortization		1,328			706
Increase in restoration costs and others		6,610			4,403

Ending balance		86,290			75,202

(*)

The amount of the asset retirement obligation is the present value of the best estimate of future expected expenditure to settle the obligation – arising from leased properties as of end of reporting period discounted by appropriate discount rate. The restoration cost is expected to occur by the end of each premise’s lease period, and the Group has used average lease period of each category of leases terminated during the past years in order to rationally estimate the lease period. In addition, the Group used average amount of actual recovery cost for the past 3 years and the inflation rate for the preceding year in order to estimate future recovery cost.

- 118 -

(4)

Changes in other provisions for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023			For the year ended December 31, 2022
	Other provisions			Other provisions
Beginning balance		262,502			300,492
Provisions provided		239,228			24,538
Provisions used and others		(27,125	)		(8,110	)
Reversal of unused amount (*)		(14,497	)		(53,796	)
Foreign currencies translation adjustments		(1,844	)		(622	)

Ending balance		458,264			262,502

(*)

The Group provided Korean won settlement services for trading transaction settlement between Korea and Iran before the prior year, investigated by U.S. prosecutors (federal prosecutors, New York state prosecutors) and New York State Department of Financial Services for violations of U.S. sanctions against Iran, Sudan, Syria and Cuba. In this regard, the Office of Foreign Assets Control concluded its investigation in December 2020 without taking any additional sanctions, and New York State Department of Financial Services concluded its investigation in February 2022 without taking any additional sanctions. Meanwhile, in June 2022, the Group reversed the provision related to the investigation of the U.S. Prosecutors, which have not been completed yet, in consideration of the opinion of an independent legal expert that the probability of sanctions by the U.S. Prosecutors in this case is low during the prior period.

(5)

Others

①

The Group recognized the estimated amount of compensation related to incomplete sales of Derivative Linked Fund (DLF) in 2019 and provisions for fines expected to be imposed by the Financial Services Commission as the best estimate of expenditure required to fulfill its current obligations at the end of the current period.

②

The Group recognized provisions for estimated compensation amounts related to the prepayment arising from the delay in the redemption of funds before the prior fiscal year and the dispute settlement as the best estimate of the expenditure amounting to 180.2 billion won. In addition, The Group recognized provision amounting to 53.6 billion won for estimated compensation of expected customer loss related to delayed redemption of fund during the current period.

- 119 -

24.	NET DEFINED BENEFIT LIABILITY(ASSET)

The retirement benefit of the group is based on the defined benefit retirement pension plan.

Employees and directors with one or more years of service are entitled to receive a payment upon termination of their employment, based on their length of service and rate of salary at the time of termination. The assets of the plans are measured at their fair value at the end of reporting date. The plan liabilities are measured using the projected unit method, which takes account of projected earnings increases, using actuarial assumptions that give the best estimate of the future cash flows that will arise under the plan liabilities.

The Group is exposed to various risks through defined benefit retirement pension plan, and the most significant risks are as follows:


Volatility of asset		The defined benefit obligation was estimated with discount rate calculated based on blue chip corporate bonds earnings. A deficit may occur if the rate of return of plan assets falls short of the discount rate.

Decrease in profitability of blue chip bonds		A decrease in profitability of blue chip bonds will be partially offset by some increase in the value of debt securities that the employee benefit plan owns but will bring an increase in the defined benefit obligation.

Risk of inflation		Most defined benefit obligations are related to inflation rate; the higher the inflation rate is, the higher the level of liabilities. Therefore, deficit occurs in the system if an inflation rate increases.

(1)

Details of net defined benefit liability(asset) as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Present value of defined benefit obligations		1,358,687			1,188,957
Fair value of plan assets		(1,577,806	)		(1,474,309	)
Net defined benefit liability(asset)		(219,119	)		(285,352	)

(2)

Changes in the carrying value of defined benefit obligation for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2023			For the year ended December 31, 2022
Beginning balance			1,188,957			1,414,378
Current service cost			106,850			139,356
Interest cost			62,934			42,216
Remeasurements	Financial assumptions		61,885			(318,068	)
Remeasurements	Experience adjustments		7,204			(9,685	)
Foreign currencies translation adjustments			80			(69	)
Retirement benefit paid			(76,465	)		(80,245	)
Effect of moving in and out of associates			6,895			974
Others			347			100

Ending balance			1,358,687			1,188,957

- 120 -

(3)

Changes in the plan assets for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023			For the year ended December 31, 2022
Beginning balance		1,474,309			1,424,725
Employer’s contributions		120,000			100,000
Interest income		81,090			44,631
Remeasurements		(20,534	)		(15,844	)
Retirement benefit paid		(80,887	)		(76,598	)
Effect of moving in and out of associates		5,950			(296	)
Other		(2,122	)		(2,309	)

Ending balance		1,577,806			1,474,309

(4)

Plan assets wholly consist of time deposits as of December 31, 2023 and 2022. Among plan assets, realized returns on plan assets amount to 60,556 million Won and 28,787 million Won for the years ended December 31, 2023 and 2022, respectively.

Meanwhile, the contribution expected to be paid in the current accounting year amounts to 112,082 million Won.

(5)

The amounts recognized in net income and total comprehensive income in relation to defined benefit plans for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023			For the year ended December 31, 2022
Current service cost		106,850			139,356
Net interest income		(18,156	)		(2,415	)

Cost recognized in net income		88,694			136,941

Remeasurements		89,623			(311,909	)

Cost recognized in total comprehensive income		178,317			(174,968	)

Meanwhile, retirement benefits related to defined contribution plans recognized as expenses are 2,151 million Won and 2,112 million Won for the years ended December 31, 2023 and 2022, respectively.

(6)

Key actuarial assumptions used in defined benefit liability measurement as of December 31, 2023 and 2022 are as follows:


	December 31, 2023	December 31, 2022
Discount rate	4.57%	5.35%
Future wage growth rate	5.18%	5.45%
Mortality rate	Issued by Korea Insurance Development Institute	Issued by Korea Insurance Development Institute
Retirement rate	Experience rate for each employment classification	Experience rate for each employment classification

The weighted average maturity of defined benefit liability is 10.07 years.

(7)

The sensitivity to actuarial assumptions used in the assessment of defined benefit obligation as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


		December 31, 2023(*)			December 31, 2022(*)
Discount rate	Increase by 1% point		(121,166	)		(105,500	)
Discount rate	Decrease by 1% point		140,124			121,886
Future wage growth rate	Increase by 1% point		141,933			125,653
Future wage growth rate	Decrease by 1% point		(124,745	)		(112,637	)

- 121 -

(*)

Although the above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant; in practice, more than one assumption are correlated. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations recognized in the statement of financial position.

(8)

The details of the maturity of the defined benefit obligation as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Less than 1 year		29,180		27,334
After 1 year but less than 2 years		34,093		29,474
After 2 years but less than 5 years		344,670		264,718
After 5 years but less than 10 years		474,739		504,582
After 10 years		1,335,246		1,303,544

25.	OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

Other financial liabilities and other liabilities are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Other financial liabilities:
Accounts payable		9,087,137			5,343,227
Accrued expenses		4,033,440			2,960,084
Borrowings from trust accounts		5,207,791			3,475,118
Agency business revenue		271,944			213,844
Foreign exchange payables		887,817			822,446
Domestic exchange payables		1,367,709			4,615,475
Lease liabilities		299,621			271,868
Other miscellaneous financial liabilities		2,077,324			2,658,688
Present value discount		(2,631	)		(1,731	)

Sub-total		23,230,152			20,359,019

Other liabilities:
Unearned income		103,118			89,449
Other miscellaneous liabilities		192,542			146,809

Sub-total		295,660			236,258

Total		23,525,812			20,595,277

- 122 -

26.	DERIVATIVES

(1) Derivative assets and derivative liabilities as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Nominal amount		Assets				Liabilities
	Nominal amount		For fair value hedge		For trading		For fair value hedge		For trading
Interest rate:
Futures		118,455		—		—		—		—
Forwards		3,960,000		—		83,199		—		169,527
Swaps		138,794,758		698		367,429		135,263		221,293
Purchase options		150,000		—		6,556		—		—
Written options		400,000		—		—		—		15,359
Currency:
Forwards		97,701,656		—		1,935,734		—		886,638
Swaps		78,414,876		—		2,669,550		—		3,676,045
Purchase options		139,309		—		1,500		—		—
Written options		122,698		—		—		—		585
Equity:
Forwards		137		—		36		—		—
Futures		480,311		—		—		—		—
Swaps		461,112		—		126,028		—		1,994
Purchase options		16,444,709		—		608,295		—		—
Written options		16,887,247		—		—		—		1,012,341

Total		354,075,268		698		5,798,327		135,263		5,983,782


	December 31, 2022
	Nominal amount		Assets				Liabilities
	Nominal amount		For fair value hedge		For trading		For fair value hedge		For trading
Interest rate:
Forwards		9,311		—		—		—		—
Futures		2,620,000		—		249,356		—		—
Swaps		136,690,518		—		440,540		193,831		487,258
Purchase options		170,000		—		9,308		—		—
Written options		310,000		—		—		—		16,752
Currency:
Forwards		90,119,960		—		3,081,638		—		1,363,423
Swaps		96,627,189		—		3,105,901		—		5,532,774
Purchase options		487,852		—		23,182		—		—
Written options		570,982		—		—		—		7,929
Equity:
Forwards		183		—		100		—		—
Futures		958,589		—		—		—		—
Swaps		568,835		—		90,237		—		673
Purchase options		29,801,478		—		1,204,475		—		—
Written options		29,874,836		—		—		—		1,544,107

Total		388,809,733		—		8,204,737		193,831		8,952,916

Derivatives held for trading are classified into financial assets at FVTPL (Note 7) and financial liabilities at FVTPL (Note 20), and derivatives held for hedging are presented as derivative assets and derivative liabilities in the consolidated statements of financial position.

- 123 -

(2)	Overview of the Group’s hedge accounting

Fair value hedge

As of December 31, 2023, the Group has applied fair value hedge on fixed interest rate foreign currency denominated debentures amounting to 3,682,140 million Won, and Korean Won denominated loans amounting to 261,084 million Won. The purpose of the hedging is to avoid fair value volatility risk of fixed interest rate foreign currency and Korean Won denominated debentures derived from fluctuations of market interest rate, and as such the Group entered into interest rate swap agreements designated as hedging instruments.

According to the interest rate swap contract, an amount computed by multiplying the difference between the fixed and variable interest rate to the predetermined nominal amount will be exchanged. As a result, the fixed interest rate condition in the foreign currency and Korean Won denominated debentures will practically be converted into variable interest rate, thereby eliminating the risk of fair value fluctuation. Pursuant to the interest rate swap agreement, hedge ratio is determined by matching the nominal value to the face value of the hedging instrument.

In this hedging relationship, only the market interest rate fluctuation, which is the most significant part of the fair value change of the hedged item, is designated as the hedged risk, and other risk factors including credit risk are not included in the hedged risk. Therefore, the ineffective portion of the hedge could arise from fluctuations in the timing of the cash flow of the hedged item, price margin set by counterparty of hedging instrument, and unilateral change in credit risk of any party of hedging instrument.

The interest rate swap agreements and the hedged items are subject to fluctuations in the underlying market rate of interest and the Group expects the value of the interest rate swap contract and the value of the hedged item to generally change in the opposite direction.

The fair value of the interest rate swap at the end of the reporting period is determined by discounting future cash flows estimated using the yield curve at the end of the reporting period and the credit risk embedded in the contract and the average interest rate is determined based on the outstanding balance at the end of the reporting period. The variable interest rate applied to the interest rate swap is Compounding SOFR or CD 3M plus spread. In accordance with the terms of each interest rate swap contract designated as a hedging instrument, the Group receives interest at a fixed interest rate and pays interest at a variable interest rate.

Hedges of net investment

The foreign currency exposure comes from the Group’s net investment in Woori America Bank, Woori Bank(Cambodia) PLC. and Woori Global Markets Asia Limited, which use USD as functional currency. The risk arises from fluctuation in the spot exchange rate between USD and KRW. This may change the net investment amount.

The risk avoided in Hedges of net investment in foreign operations is the weakness of KRW against USD, which could reduce Group’s carrying amount of net investment in Woori America Bank, Woori Ban(Cambodia) PLC. and Woori Global Markets Asia Limited.

- 124 -

Part of the Group’s net investments in Woori America bank, Woori Bank(Cambodia) PLC. and Woori Global Markets Asia Limited are hedged with foreign currency bonds denominated in USD (Carrying amount as of December 31, 2023 : USD 863,959,317) and mitigate the exchange risk arising from the subsidiary’s net assets. The loan has been designated as a hedging instrument for the value change of net investments, which arises from fluctuation in the spot exchange rate between USD and KRW.

To evaluate the effectiveness of the hedge, the Group determines the economic relationship between the hedging instrument and hedged item by comparing(offsetting) changes in the amount of foreign investments due to spot exchange rate fluctuation and in the carrying amount of the liabilities due to spot exchange rate fluctuation. The Group’s policy is to hedge the net investment amount only within the principal range of the liabilities.

(3) The nominal amounts of the hedging instrument as of December 31, 2023 and 2022 are as follows (Unit: USD, AUD, and Korean Won in millions):


	December 31, 2023
	1 year or less		1 year to 5 years		More than 5 years		Total
Fair value hedge
Interest rate risk
Interest rate swap (USD)		1,000,000,000		1,975,000,000		—		2,975,000,000
Interest rate swap (KRW)		240,000		—		20,000		260,000
Hedges of net investment in foreign operations
Foreign exchange risk
Foreign currency denominated debentures (USD)		400,000,000		463,959,317		—		863,959,317


	December 31, 2022
	1 year or less		1 year to 5 years		More than 5 years		Total
Fair value hedge
Interest rate risk
Interest rate swap (USD)		—		2,075,000,000		300,000,000		2,375,000,000
Interest rate swap (AUD)		150,000,000		—		—		150,000,000
Interest rate swap (KRW)		150,000		—		—		150,000
Hedges of net investment in foreign operations
Foreign exchange risk
Foreign currency denominated debentures (USD)		272,390,437		592,000,000		—		864,390,437

(4) The average interest rate and average exchange rate of the hedging instrument as of December 31, 2023 and 2022 are as follows:


		December 31, 2023
		Average interest rate and average currency rate
Fair value hedge
Interest rate risk
Interest rate swaps (USD)		Fixed 3.60% receipt and C.SOFR+1.47% floating paid
Interest rate swaps (KRW)		Fixed 4.13% receipt and CD 3M floating paid
Hedges of net investment in foreign operations
Foreign exchange risk
Foreign currency denominated debentures(USD/KRW)		1,306.12

- 125 -


		December 31, 2022
		Average interest rate and average currency rate
Fair value hedge
Interest rate risk
Interest rate swaps (USD)		Fixed 3.62% receipt and Libor 3M+1.45% floating paid
Interest rate swaps (USD)		Fixed 2.05% receipt and C.SOFR+0.65% floating paid
Interest rate swaps (AUD)		Fixed 0.84% receipt and BBSW 3M+0.72% floating paid
Interest rate swaps (KRW)		Fixed 3.13% receipt and CD 3M floating paid
Hedges of net investment in foreign operations
Foreign exchange risk
Foreign currency denominated debentures(USD/KRW)		1,334.37

(5)	Fair value hedge

The amounts related to items designated as fair value hedging instruments as of December 31, 2023 and 2022 are as follows (Unit: USD, AUD and Korean Won in millions):

December 31, 2023

Nominal amounts of the
hedging instrument

Carrying amounts
of the hedging
instrument

Line item in the statement of
financial position where the
hedging instrument is located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Fair value hedge

Interest rate risk

USD 2,975,000,000

698

135,263

Derivative assets

(designated for hedging)

55,651

Interest rate swaps

260,000

Derivative liabilities

(designated for hedging)

December 31, 2022

Nominal amounts of the
hedging instrument

Carrying amounts
of the hedging
instrument

Line item in the statement of
financial position where the
hedging instrument is located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Fair value hedge

Interest rate risk

USD 2,375,000,000

—

193,841

Derivative assets

(designated for hedging)

(247,765

)

Interest rate swaps

AUD 150,000,000

Derivative liabilities

(designated for hedging)

150,000

- 126 -

Details of carrying amount to fair value hedge and amount due to hedge accounting as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Carrying amounts of the hedging item				Accumulated amount of fair value hedge adjustments on the hedged item included in the carrying amount of the hedged item				Line item in the statement of financial position in which the hedged item is included		Changing in fair value used for calculating hedge ineffectiveness
	Assets		Liabilities		Assets		Liabilities
Fair value hedge
Interest rate risk
Foreign currency denominated debentures		—		3,682,140		—		141,818		Debentures		(57,222	)
Korean Won denominated debentures		—		261,084		—		1,084		Debentures		(1,084	)


	December 31, 2022
	Carrying amounts of the hedging item				Accumulated amount of fair value hedge adjustments on the hedged item included in the carrying amount of the hedged item					Line item in the statement of financial position in which the hedged item is included		Changing in fair value used for calculating hedge ineffectiveness
	Assets		Liabilities		Assets		Liabilities
Fair value hedge
Interest rate risk
Foreign currency denominated debentures		—		2,928,127		—		(199,804	)		Debentures		256,767
Korean Won denominated debentures		—		148,856		—		—			Debentures		1,144

Amounts recognized in profit or loss due to the ineffective portion of fair value hedges are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2023
		Hedge ineffectiveness recognized in profit or loss			Line item in the profit or loss that includes hedge ineffectiveness
Fair value hedge	Interest rate risk		(2,655	)	Other net operating income(expense)


		For the year ended December 31, 2022
		Hedge ineffectiveness recognized in profit or loss		Line item in the profit or loss that includes hedge ineffectiveness
Fair value hedge	Interest rate risk		10,146	Other net operating income(expense)

(6)	Hedges of net investments in foreign operations

The amounts related to items designated as hedges of net investments in foreign operations instruments as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions, USD):

December 31, 2023

Nominal amounts of
the hedging
instrument

Carrying amounts of the hedging
instrument

Line item in the
statement of financial
position where the
hedging instrument is
located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Hedges of net investment in foreign operations

Foreign exchange risk

Foreign currency debentures

USD 863,959,317

—

1,113,989

Foreign currency debentures

(19,088

)

- 127 -

December 31, 2022

Nominal amounts of
the hedging
instrument

Carrying amounts of the hedging
instrument

Line item in the
statement of financial position
where the hedging instrument is
located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Hedges of net investment in foreign operations

Foreign exchange risk

Foreign currency debentures

USD 864,390,437

—

1,095,442

Foreign currency debentures

(28,553

)

The amounts related to items designated as hedges of net investment in foreign operations hedged items as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions, USD):


	December 31, 2023
	Changing in fair value used for calculating hedge ineffectiveness		Balance of foreign currency translation reserve in hedge accounting
Hedges of net investment in foreign operations
Foreign exchange risk
Foreign operations net assets		19,088		(34,750	)


	December 31, 2022
	Changing in fair value used for calculating hedge ineffectiveness		Balance of foreign currency translation reserve in hedge accounting
Hedges of net investment in foreign operations
Foreign exchange risk
Foreign operations net assets		28,553		(20,701	)

The amounts recognized in profit or loss, and other comprehensive income related to hedges of net investment in foreign operations for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Other comprehensive income								Profit or loss
	Hedge gain or loss recognized in other comprehensive income			Income tax effect		Sub-total			Hedge ineffectiveness recognized in profit or loss		Line item recognizing ineffectiveness
Hedges of net investment in foreign operations
Foreign exchange risk		(19,088	)		5,039		(14,049	)		—		—


	December 31, 2022
	Other comprehensive income								Profit or loss
	Hedge gain or loss recognized in other comprehensive income			Income tax effect		Sub-total			Hedge ineffectiveness recognized in profit or loss		Line item recognizing ineffectiveness
Hedges of net investment in foreign operations
Foreign exchange risk		(28,553	)		7,852		(20,701	)		—		—

No amount was reclassified from reserve of hedges of net investment in foreign operations to profit or loss for the years ended December 31, 2023 and 2022.

- 128 -

27.	DEFERRED DAY 1 PROFITS OR LOSSES

Changes in deferred day 1 profits or losses for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023			For the year ended December 31, 2022
Beginning balance		17,964			29,111
New transactions		—			21,656
Amounts recognized in profits or losses		(10,116	)		(32,803	)

Ending balance		7,848			17,964

In case some variables to measure fair values of financial instruments are not observable in the market, valuation techniques are utilized to evaluate such financial instruments. Those financial instruments are recorded at the transaction price, even though there are differences noted between the transaction price and the fair value price produced by the valuation techniques at the time of acquisition. In addition, the difference between fair value and transaction price is deferred and amortized to maturity and reflected in profit or loss. The table above presents the difference yet to be realized as profit or losses.

28.	SHARE CAPITAL AND CAPITAL SURPLUS

(1)	The number of authorized shares and others as of December 31, 2023 and 2022 are as follows:


	December 31, 2023		December 31, 2022
Shares of common stock authorized		5,000,000,000 Shares		5,000,000,000 Shares
Par value per share		5,000 Won		5,000 Won
Shares of common stock issued		716,000,000 Shares		716,000,000 Shares
Share capital		3,581,392 million Won		3,581,392 million Won

(2)	Details of capital surplus as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Capital in excess of par value		1,068,420		1,068,420
Other capital surplus		27,774		27,774

Total		1,096,194		1,096,194

- 129 -

29.	HYBRID SECURITIES

The bond-type hybrid securities classified as owner’s equity as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	Issue date	Maturity date		Interest rate (%)		December 31, 2023			December 31, 2022
Hybrid securities in local currency	April 25, 2013		April 25, 2043		4.4		—			500,000
	November 13, 2013		November 13, 2043		5.7		—			200,000
	June 3, 2015		June 3, 2045		4.4		240,000			240,000
	July 26, 2018		—		4.4		—			400,000
	September 21, 2022		—		5.2		320,000			320,000
	September 21, 2022		—		5.5		30,000			30,000
	October 16, 2023				5.4		300,000			—
Hybrid securities in foreign currencies	October 4, 2019		—		4.3		662,035			662,035
	Issuance cost						(5,588	)		(7,219	)

	Total						1,546,447			2,344,816

The hybrid securities mentioned above are either without a maturity date or its maturity can be extended indefinitely at the maturity date without changing terms, and early redemption may be made after 5, 7 or 10 years from the issuance date (Issuer Call). In addition, interest payments can be deferred at the Group’s discretion.

30.	OTHER EQUITY

(1)	Details of other equity as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Accumulated other comprehensive income:
Net gain (loss) on valuation of financial assets at FVTOCI		53,020			(674,205	)
Gain (loss) on evaluation of investment stocks by equity method		6,697			655
Gain (loss) on foreign currency translation of foreign operations		34,352			(9,696	)
Gain (loss) on evaluation of hedge of net investment in foreign operations		(34,750	)		(20,701	)
Remeasurement gain (loss) related to defined benefit plan		(17,068	)		48,724

Sub-total		42,251			(655,223	)

Other capital adjustments		(1,610,301	)		(1,669,098	)

Total		(1,568,050	)		(2,324,321	)

- 130 -

(2)	Changes in the accumulated other comprehensive income for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments		Income tax effect (*)			Ending balance
Net gain (loss) on valuation of financial assets at FVTOCI		(674,205	)		785,432			200,976		(259,183	)		53,020
Gain (loss) on evaluation of investment stocks by equity method		655			2,698			—		3,344			6,697
Gain (loss) on foreign currency translation of foreign operations		(9,696	)		45,235			—		(1,187	)		34,352
Gain (loss) on evaluation of hedge of net investment in foreign operations		(20,701	)		(19,088	)		—		5,039			(34,750	)
Remeasurement gain (loss) related to defined benefit plan		48,724			(89,623	)		—		23,831			(17,068	)

Total		(655,223	)		724,654			200,976		(228,156	)		42,251

(*)	Net gain (loss) on valuation of financial assets at FVTOCI includes 87 million Won which was transferred to retained earnings due to disposal of equity securities.


	For the year ended December 31, 2022
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments		Income tax effect (*)			Ending balance
Net gain (loss) on valuation of financial assets at FVTOCI		(185,997	)		(682,400	)		29,567		164,625			(674,205	)
Gain (loss) on evaluation of investment stocks by equity method		(231	)		6,888			—		(6,002	)		655
Gain (loss) on foreign currency translation of foreign operations		(61,077	)		51,222			—		159			(9,696	)
Gain (loss) on evaluation of hedges of net investment in foreign operations		—			(28,553	)		—		7,852			(20,701	)
Remeasurement gain (loss) related to defined benefit plan		(178,099	)		311,909			—		(85,086	)		48,724
Equity related to non-current asset held for sale		279			(385	)		—		106			—

Total		(425,125	)		(341,319	)		29,567		81,654			(655,223	)

(*)	Net gain (loss) on valuation of financial assets at FVTOCI includes 10,472 million Won which was transferred to retained earnings due to disposal of equity securities.

- 131 -

31.	RETAINED EARNINGS

(1)	Details of retained earnings as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


		December 31, 2023		December 31, 2022
Legal reserve	Legal Reserves in Korea		2,821,754		2,566,754
	Other legal reserve		33,239		33,239

	Sub-total		2,854,993		2,599,993

Voluntary reserve	Business rationalization reserve		8,000		8,000
Voluntary reserve	Reserve for financial structure improvement		235,400		235,400
	Additional reserve		8,576,104		8,576,104
	Regulatory reserve for credit loss		2,307,974		2,443,576
	Revaluation reserve		700,915		709,137

	Sub-total		11,828,393		11,972,217

Retained earnings before appropriation			7,241,706		6,375,958

	Total		21,925,092		20,948,168

Legal reserve

In accordance with the Article 40, Banking Act of Korea, earned surplus reserve is appropriated at least one tenth of the earnings after tax on every dividend declaration, not exceeding the paid in capital. This reserve may not be used other than for offsetting a deficit or transferring to capital.

Other legal reserve

Other legal reserves were appropriated in the branches located in Japan, India and Bangladesh according to the banking laws of Japan, India and Bangladesh, and may be used to offset any deficit incurred in those branches.

Business rationalization reserve

Pursuant to the Restriction of Special Taxation Act, the Group was previously required to appropriate, as a reserve for business rationalization, amounts equal to tax reductions arising from tax exemptions and tax credits up to December 31, 2001. The requirement was no longer effective from 2002.

Reserve for financial structure improvement

From 2002 to 2014, the Finance Supervisory Services recommended banks in Korea to appropriate at least 10 percent of net income after accumulated deficit for financial structure improvement, until tangible common equity ratio equals 5.5 percent. This reserve is not available for payment of cash dividends; however, it can be used to reduce a deficit or be transferred to capital. The reserve and appropriation are an autonomous judgment matter of the Group since 2015.

Additional reserve

Additional reserve is a voluntary reserve to retain earnings for capital adequacy and soundness of the Group’s operation.

Regulatory reserve for credit loss

In accordance with paragraph 1 and 2 of Article 29 of the Regulation on Supervision of Banking Business (“RSBB”), if provisions for credit loss under K-IFRS for the accounting purpose are lower than provisions for credit loss under RSBB, the Group is prohibited to provide dividends with the regulatory reserve.

- 132 -

7) Revaluation reserve

Revaluation reserve is the amount of limited dividends set by the Board of Directors to be recognized as complementary capital when the gain or loss occurred in the property revaluation by adopting K-IFRS.

32.	REGULATORY RESERVE FOR CREDIT LOSS

In accordance with Paragraph 1 and 2 of Article 29 of the Regulation on Supervision of Banking Business,

the Group calculates and discloses the regulatory reserve for credit loss.

(1)

Balance of the regulatory reserve for credit loss as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Regulatory reserve for credit loss		2,307,974			2,443,576
Planned provision of regulatory reserve (reversal) for credit loss		(402,620	)		(135,602	)

Ending balance		1,905,354			2,307,974

(2)

Planned reserves provided, adjusted net income after the planned reserves provided and adjusted EPS after the planned reserves provided for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions, except for EPS amount):


	For the years ended December 31
	2023			2022
Net income		2,515,080			2,903,409
Provision of regulatory reserve for credit loss		(402,620	)		(135,602	)
Adjusted net income after the provision of regulatory reserve		2,917,700			3,039,011
Adjusted EPS after the provision of regulatory reserve (Unit: Korean Won)(*)		3,941			4,085

(*)	For the years ended December 31, 2023 and 2022, it was calculated by deducting 95,637 million Won and 113,995 million Won, respectively, of dividends on hybrid securities from adjusted net income after the provision of regulatory reserve.

33.

DIVIDENDS

Dividends for the years ended December 31, 2023 and 2022 are 1,581 Won and 1,917 Won per share, respectively, and the total amount of dividends approved are 1,131,996 million Won and 1,372,572 million Won, respectively. Dividends as of December 31, 2023 will be proposed at the regular shareholders’ meeting scheduled on March 21, 2024.

- 133 -

34.	NET INTEREST INCOME

(1)

Interest income recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Financial assets at FVTPL		116,203		63,515
Financial assets at FVTOCI		999,407		632,615
Securities at amortized cost		782,513		515,246
Loans and other financial assets at amortized cost:
Interest on due from banks		488,039		219,063
Interest on loans		15,964,114		11,291,027
Interest on other receivables		35,591		20,938

Sub-total		16,487,744		11,531,028

Total		18,385,867		12,742,404

(2)

Interest expense recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Interest on deposits due to customers		8,593,095		4,036,407
Interest on borrowings		1,112,286		469,310
Interest on debentures		907,765		632,488
Interest on lease liabilities		8,807		6,178
Other interest expense		327,658		180,297

Total		10,949,611		5,324,680

- 134 -

35.	NET FEES AND COMMISSIONS INCOME

(1)

Details of fees and commissions income recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Fees and commission received for brokerage		239,254		289,265
Fees and commission received related to credit		159,597		154,868
Fees and commission received for electronic finance		127,153		131,795
Fees and commission received on foreign exchange handling		55,993		56,812
Fees and commission received on foreign exchange		99,071		96,663
Fees and commission received for guarantee		88,580		85,340
Fees and commission received on credit card		2,313		2,071
Fees and commission received on securities business		37,689		40,811
Fees and commission from trust management		155,140		144,756
Other fees		138,508		149,593

Total		1,103,298		1,151,974

(2)

Details of fees and commissions expense incurred for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Fees and commissions paid		218,798		220,674
Credit card commission		949		734
Brokerage commission		23		26
Others		3,351		3,426

Total		223,121		224,860

- 135 -

36.	DIVIDEND INCOME

(1)

Details of dividend income recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Dividend income related to financial assets at FVTPL
Dividends on stock		33,395		14,895
Dividends on equity capital		67,082		19,221
Dividends on mutual funds		138,855		96,180

Sub-total		239,332		130,296

Dividend income related to financial assets at FVTOCI
Dividends on stock		15,618		20,669
Dividends on equity capital		134		148

Sub-total		15,752		20,817

Total		255,084		151,113

(2)

Details of dividends related to financial assets at FVTOCI for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Dividend income recognized from assets held Equity securities		15,752		20,817

- 136 -

37.	NET GAIN OR LOSS ON FINANCIAL INSTRUMENTS AT FVTPL

(1)

Details of net gain or loss on financial instruments at FVTPL for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Net gain or loss on financial instruments at FVTPL		482,005		214,666

(2) Details of net gain or loss on financial instruments at FVTPL for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


			For the years ended December 31
			2023			2022
Financial instruments at FVTPL	Securities	Gain on transactions and valuation		821,976			243,715
		Loss on transactions and valuation		(141,270	)		(476,751	)

		Sub-total		680,706			(233,036	)

	Loans	Gain on transactions and valuation		1,282			11,346
	Loans
		Sub-total		1,282			11,346

	Other financial instruments	Gain on transactions and valuation		3,512			7,666
		Loss on transactions and valuation		(3,240	)		(7,396	)

		Sub-total		272			270

Sub-total				682,260			(221,420	)

Derivatives (for trading)	Interest rate derivatives	Gain on transactions and valuation		4,716,309			5,191,619
		Loss on transactions and valuation		(4,961,720	)		(3,612,074	)

		Sub-total		(245,411	)		1,579,545

	Currency derivatives	Gain on transactions and valuation		7,675,013			14,593,539
		Loss on transactions and valuation		(7,525,701	)		(15,723,544	)

		Sub-total		149,312			(1,130,005	)

	Equity derivatives	Gain on transactions and valuation		3,169,071			2,836,844
		Loss on transactions and valuation		(3,273,202	)		(2,850,334	)

		Sub-total		(104,131	)		(13,490	)

	Other derivatives	Gain on transactions and valuation		14			49
		Loss on transactions and valuation		(39	)		(13	)

		Sub-total		(25	)		36

Sub-total				(200,255	)		436,086

Total				482,005			214,666

- 137 -

38.	NET GAIN OR LOSS ON FINANCIAL ASSETS AT FVTOCI

Details of net gain or loss on financial assets at FVTOCI recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Gain(loss) on redemption of securities		104			(7	)
Gain(loss) on disposal of securities		(37,745	)		(21,491	)
Total		(37,641	)		(21,498	)

39. REVERSAL OF (PROVISION FOR) EXPECTED CREDIT LOSS ALLOWANCE

Reversal of (provision for) expected credit loss allowance for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Reversal of (provision for) expected credit loss allowance on financial assets measured at FVTOCI		(16,542	)		827
Reversal of (provision for) expected credit loss allowance on securities at amortized cost		(5,549	)		(3,151	)
Reversal of (provision for) expected credit loss allowance on loans and other financial assets at amortized cost		(940,477	)		(446,302	)
Reversal of (provision for) provision on guarantee		(3,556	)		(7,611	)
Reversal of (provision for) unused loan commitments		(27,395	)		(2,575	)

Total		(993,519	)		(458,812	)

- 138 -

40.	GENERAL ADMINISTRATIVE EXPENSES AND OTHER NET OPERATING INCOME (EXPENSES)

(1)	Details of general and administrative expenses recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


			For the years ended December 31
			2023		2022
Employee benefits	Short-term employee benefits	Salaries		1,453,641		1,604,396
Employee benefits	Short-term employee benefits	Employee fringe benefits		503,927		499,501
	Share-based payments			10,584		7,475
	Retirement benefit service costs			90,845		139,053
	Termination benefits			140,419		154,697

	Sub-total			2,199,416		2,405,122

Depreciation and amortization				396,122		435,189

Other general and administrative expenses	Rent			97,117		55,218
	Taxes and public dues			157,550		126,477
	Service charges			230,279		219,178
	Computer and IT related			322,331		282,564
	Telephone and communication			53,986		51,524
	Operating promotion			40,758		40,424
	Advertising			153,648		148,859
	Printing			5,664		6,414
	Traveling			10,546		7,763
	Supplies			7,416		6,388
	Insurance premium			11,669		19,021
	Compensation of actual expense			12,807		7,714
	Maintenance			19,315		19,013
	Water, light and heating			18,301		15,528
	Vehicle maintenance			11,919		12,280
	Others(*)			50,438		55,996

	Sub-total			1,203,744		1,074,361

	Total			3,799,282		3,914,672

(*)	It includes 40,047 million Won and 40,200 million Won in in-house welfare fund contributions for the year ended December 31, 2023 and 2022, respectively.

(2)	Details of other operating income recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Gain on transactions of foreign exchange		1,353,794		1,377,629
Gain on derivatives (designated for hedging)		69,479		1,288
Gains on fair value hedged items		8,986		257,910
Others		28,087		35,411

Total		1,460,346		1,672,238

- 139 -

(3)	Details of other operating expenses recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Losses on transactions of foreign exchange		1,206,638		1,072,933
KDIC deposit insurance premium		450,183		411,833
Contribution to miscellaneous funds		450,145		402,057
Loss on derivatives (designated for hedging)		8,819		250,267
Loss on fair value hedged items		72,601		—
Others (*)		279,871		102,599

Total		2,468,257		2,239,689

(*)	‘Others’ for the years ended December 31, 2023 and 2022 includes 22,349 million Won and 14,664 million Won, respectively, of amortization expenses for intangible assets.

(4)	Share-based Payment

Details of share-based payment of the Group as of December 31, 2023 and 2022 are as follows.

Performance condition share-based payment


Subject to		Shares granted for the year 2019(*4)
Type of payment		Cash-settled
Vesting period		January 1, 2019 ~ December 31, 2022
Date of payment		January 1, 2023
Fair value (Unit: Korean Won) (*1)		—
Valuation method		—
Dividend yield		—
Expected maturity		—
Number of shares measured as of the closing date (2),(3), (*4)	As of December 31, 2023	—
	As of December 31, 2022	524,746 shares
Subject to		Shares granted for the year 2020
Type of payment		Cash-settled
Vesting period		January 1, 2020 ~ December 31, 2023
Date of payment		January 1, 2024
Fair value (Unit: Korean Won) (*1)		12,885
Valuation method		Black-Scholes Model
Dividend yield		6.25%
Expected maturity		0 year
Number of shares measured as of the closing date (2),(3)	As of December 31, 2023	755,073 shares
Number of shares measured as of the closing date (2),(3)	As of December 31, 2022	755,073 shares
Subject to		Shares granted for the year 2021
Type of payment		Cash-settled
Vesting period		January 1, 2021 ~ December 31, 2024
Date of payment		January 1, 2025
Fair value (Unit: Korean Won) (*1)		12,105
Valuation method		Black-Scholes Model
Dividend yield		6.25%
Expected maturity		1 year
Number of shares measured as of the closing date (2),(3)	As of December 31, 2023	865,717 shares
Number of shares measured as of the closing date (2),(3)	As of December 31, 2022	865,717 shares

- 140 -


Subject to		Shares granted for the year 2022
Type of payment		Cash-settled
Vesting period		January 1, 2022 ~ December 31, 2025
Date of payment		January 1, 2026
Fair value (Unit: Korean Won) (*1)		11,371
Valuation method		Black-Scholes Model
Dividend yield		6.25%
Expected maturity		2 years
Number of shares measured as of the closing date (2),(3)	As of December 31, 2023	744,943 shares
Number of shares measured as of the closing date (2),(3)	As of December 31, 2022	744,943 shares
Subject to		Shares granted for the year 2023
Type of payment		Cash-settled
Vesting period		January 1, 2023 ~ December 31, 2026
Date of payment		January 1, 2027
Fair value (Unit: Korean Won) (*1)		10,683
Valuation method		Black-Scholes Model
Dividend yield		6.25%
Expected maturity		3 years
Number of shares measured as of the closing date (2),(3)	As of December 31, 2023	763,148 shares
Number of shares measured as of the closing date (2),(3)	As of December 31, 2022	—

(*1)

As of December 31, 2023, the fair value calculated using the Black-Scholes model was used to measure liabilities by reflecting the average dividend rate for the past four years to the stock price of the weighted average of Woori Financial Group’s trading volume for the past week, month and two months.

(*2)

The number of payable stocks is granted at the initial contract date and the payment rate is determined based on the achievement of the pre-determined performance targets. Performance is evaluated as long-term performance indication including relative shareholder return, net income, return on equity (ROE), C/I ratio, non-performing loan ratio and job performance.

(*3)	As of December 31, 2023, the remaining quantity and granted quantity are the same.

(*4)	It has been fully paid during the year ended December 31, 2023.

ii)

The Group accounts for performance condition share-based payments according to the cash-settled method and the fair value of the liabilities is reflected in the compensation costs by re-measuring per every closing period. As of December 31, 2023 and 2022, the book value of the liabilities related to the performance condition share-based payments recognized by the Group is 37,142 million Won and 33,068 million Won, respectively.

- 141 -

41.	OTHER NON-OPERATING INCOME (EXPENSES)

(1)	Details of gains or losses on valuation of investments in joint ventures and associates for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Gains on valuation of investments in associates		101,804			83,440
Losses on valuation of investments in associates		(13,016	)		(9,482	)

Total		88,788			73,958

(2)	Details of other non-operating income and expenses recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Other non-operating income		118,720			163,881
Other non-operating expenses		(195,032	)		(158,318	)

Total		(76,312	)		5,563

(3)	Details of other non-operating income recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Rental fee income		37,526		36,098
Gains on disposal of assets held for sale		3,027		28,525
Gain on disposal of investments in joint ventures and associates		32,766		6
Gains on disposal of properties and equipment, intangible assets and other assets		1,853		25,759
Others (*)		43,548		73,493

Total		118,720		163,881

(*)	Other special gains related to other provisions for the years ended December 31, 2023 and 2022 include 14,060 million Won and 46,536 million Won, respectively.

- 142 -

(4)	Details of other non-operating expenses recognized for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Depreciation on investment properties		6,599		6,483
Interest expenses of rent leasehold deposits		1,657		997
Losses on disposal of investments in joint ventures and associates		441		116
Losses on disposal of properties and equipment, intangible assets and other assets		1,694		2,875
Impairment losses of properties and equipment, intangible assets and other assets		22		144
Donation		55,752		42,435
Others (*)		128,867		105,268

Total		195,032		158,318

(*)	Other special losses related to other provisions for the years ended December 31, 2023 and 2022 are 66,910 million Won and 18,458 million Won, respectively, and other special losses related to employee incidents for the year ended December 31, 2022 are 63,354 million Won.

42.	INCOME TAX EXPENSE

(1)	Details of income tax expenses for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023			For the year ended December 31, 2022
Current tax expense
Current tax expense in respect of the current year		600,647			1,131,459
Adjustments recognized in the current period in relation to the current tax of prior periods		(19,816	)		(13,003	)
Current tax charged to equity and others directly		5,039			7,852

Sub-total		585,870			1,126,308

Deferred tax expense
Changes in deferred tax assets(liabilities) relating to the temporary differences		461,679			(240,812	)
Current tax charged to equity and others directly:		(233,195	)		73,803

Sub-total		228,484			(167,009	)

Income tax expense		814,354			959,299

(2)	Income tax expense reconciled to net income before income tax expense for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023			For the year ended December 31, 2022
Net income before income tax expense		3,329,434			3,862,708
Tax calculated at statutory tax rate (1) (2)		858,247			1,022,243
Adjustments
Effect of income that is exempt from taxation		(32,743	)		(63,839	)
Effect of expense not deductible in determining taxable profit		7,324			22,250
Adjustments recognized in the current period in relation to the current tax of prior periods		(19,816	)		(13,003	)
Effect of income tax expense that is resulting from consolidated tax return		(49,020	)		(35,482	)
Others		50,362			27,130

Sub-total		(43,893	)		(62,944	)

Income tax expense		814,354			959,299

Effective tax rate		24.5	%		24.8	%

- 143 -

(*1)	The applicable income tax rate; 1) For the year ended December 31, 2023; 9.9% for below 200 million Won, 2) 20.9% for above 200 million Won and below 20 billion Won, 3) 23.1% for above 20 billion Won and below 300 billion Won, 4) 26.4% for above 300 billion Won.

(*2)	The applicable income tax rate; 1) For the year ended December 31, 2022; 11% for below 200 million Won, 2) 22% for above 200 million Won and below 20 billion Won, 3) 24.2% for above 20 billion Won and below 300 billion Won, 4) 27.5% for above 300 billion Won.

(3)	Changes in cumulative temporary differences for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Beginning balance			Recognized as income (expense)			Recognized as other comprehensive income (expense)			Ending Balance
Gain(loss) on financial assets		501,163			(387,565	)		(259,183	)		(145,585	)
Gain(loss) on valuation using the equity method of accounting		22,447			(35,675	)		3,344			(9,884	)
Loss on valuation of derivatives		28,338			21,218			—			49,556
Accrued income		(87,672	)		(40,836	)		—			(128,508	)
Provision for loan losses		(45,917	)		42,551			—			(3,366	)
Loan and receivables written off		4,399			(17	)		—			4,382
Loan origination costs and fees		(130,929	)		(14,535	)		—			(145,464	)
Defined benefit liability		323,225			26,447			23,831			373,503
Deposits with employee retirement insurance trust		(410,763	)		(34,968	)		—			(445,731	)
Provision for guarantee		7,596			207			—			7,803
Other provision		65,443			85,518			—			150,961
Others		(250,954	)		109,171			(1,186	)		(142,969	)

Net deferred tax assets (liabilities)		26,376			(228,484	)		(233,194	)		(435,302	)


	For the year ended December 31, 2022
	Beginning balance			Recognized as income (expense)			Recognized as other comprehensive income (expense)			Ending Balance
Gain(loss) on financial assets		282,317			62,459			156,387			501,163
Gain(loss) on valuation using the equity method of accounting		17,422			(871	)		5,896			22,447
Loss on valuation of derivatives		(149,001	)		177,339			—			28,338
Accrued income		(79,519	)		(8,153	)		—			(87,672	)
Provision for loan losses		(52,807	)		6,890			—			(45,917	)
Loan and receivables written off		4,565			(166	)		—			4,399
Loan origination costs and fees		(156,730	)		25,801			—			(130,929	)
Defined benefit liability		397,954			10,357			(85,086	)		323,225
Deposits with employee retirement insurance trust		(395,249	)		(15,514	)		—			(410,763	)
Provision for guarantee		5,725			1,871			—			7,596
Other provision		78,322			(12,879	)		—			65,443
Others		(167,435	)		(80,125	)		(3,394	)		(250,954	)

Net deferred tax assets (liabilities)		(214,436	)		167,009			73,803			26,376

- 144 -

(4)	Unrealizable temporary differences are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Deductible temporary differences		294,669			319,962
Taxable temporary differences		(1,217,755	)		(981,217	)

Total		(923,086	)		(661,255	)

No deferred income tax asset has been recognized for the deductible temporary difference of 294,669 million Won associated with investments in subsidiaries and associates as of December 31, 2023, because it is not probable that the temporary differences will be reversed in the foreseeable future.

No deferred income tax liability has been recognized for the taxable temporary difference of 1,217,755 million Won associated with investment in subsidiaries and associates as of December 31, 2023, due to the following reasons:

•

The Group is able to control the timing of the reversal of the temporary difference.

•

It is probable that the temporary difference will not be reversed in the foreseeable future.

(5)	Details of accumulated deferred tax charged directly to equity and others as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Net gain (loss) on valuation of financial assets at FVTOCI		(26,538	)		232,645
Share of other comprehensive expense of investment stocks by equity method		(2,738	)		(6,082	)
Gain (loss) on foreign currency translation of foreign operations		3,650			4,837
Gain (loss) on valuation of hedges of net investments in foreign operations		12,891			7,852
Remeasurements of the net defined benefit liability		5,396			(18,435	)

Total		(7,339	)		220,817

(6)	Current tax assets and liabilities are as follows (Unit: Korean Won in millions)


	December 31, 2023		December 31, 2022
Current tax assets		152,898		38,913
Current tax liabilities		58,085		716,936

(7)	Impact of Pillar Two income taxes

The amendments provide a temporary relief from the accounting for deferred taxes arising from legislation enacted to implement the Pillar Two model rules, which aim to reform international corporate taxation for multinational enterprises, and require disclosure of related current tax effects, etc. The Group applies the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. Since the Pillar Two legislation is scheduled to be effective from January 1, 2024, the Group has no current tax expense related to Pillar Two. The Group is in review for the impact of these amendments on the financial statements and does not expect that the impact will be significant.

- 145 -

43.	EARNINGS PER SHARE (“EPS”)

(1)	Basic EPS is calculated by dividing net income by weighted average number of common shares outstanding for the years ended December 31, 2023 and 2022. (Unit: Korean Won in millions, except for EPS and number of shares):


	For the years ended December 31
	2023			2022
Net income for the period attributable to common shareholders		2,505,587			2,892,165
Dividends to hybrid securities		(95,637	)		(113,995	)

Net income attributable to common shareholders		2,409,950			2,778,170

Weighted average number of common shares outstanding		716			716
Basic EPS (Unit: Korean Won)		3,366			3,880

(2)	The weighted average number of common shares outstanding for the years ended December 31, 2023 and 2022 are as follows:

For the year ended December 31, 2023

Period

Number of
shares

Dates

Accumulated number
of shares outstanding
during period

Common shares issued at the beginning of the period

2023-01-01 ~ 2023-12-31

716,000,000

365

261,340,000,000

Sub-total (①)

261,340,000,000

Weighted average number of common shares outstanding (②=(①/365)

716,000,000

For the year ended December 31, 2022

Period

Number of
shares

Dates

Accumulated number
of shares outstanding
during period

Common shares issued at the beginning of the period

2022-01-01 ~ 2022-12-31

716,000,000

365

261,340,000,000

Sub-total (①)

261,340,000,000

Weighted average number of common shares outstanding (②=(①/365)

716,000,000

Diluted EPS is equal to basic EPS because there is no dilution effect for the years ended December 31, 2023 and 2022.

- 146 -

44.	CONTINGENT LIABILITIES AND COMMITMENTS

(1)	Details of guarantees as of December 31, 2023 and December 31, 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023(*)		December 31, 2022(*)
Confirmed guarantees
Guarantee for loans		58,205		39,684
Acceptances		467,964		501,921
Guarantees in acceptances of imported goods		74,916		97,920
Other confirmed guarantees		7,886,356		6,825,448

Sub-total		8,487,441		7,464,973

Unconfirmed guarantees
Local letter of credit		161,608		150,075
Letter of credit		2,873,350		3,014,228
Other unconfirmed guarantees		1,516,585		1,144,498

Sub-total		4,551,543		4,308,801

Commercial paper purchase commitments and others		589,857		125,546

Total		13,628,841		11,899,320

(*)	Includes financial guarantees of 3,497,197 million Won and 3,072,827 million Won as of December 31, 2023 and 2022, respectively.

(2)	Details of loan commitments and others are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Loan commitments		84,159,332		76,081,523
Other commitments		5,892,297		6,112,770

(3)	Litigation case

Legal cases where the Group is involved as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions except for number of cases):

December 31, 2023

December 31, 2022

As plaintiff

As defendant

As plaintiff

As defendant

Number of cases(*)

34 cases

142 cases

40 cases

164 cases

Amount of litigation

295,733

164,334

287,854

335,196

Provisions for litigations

16,053

16,453

(*)	The number of cases as of December 31, 2023 and 2022 does not include cases such as loan-related execution or simple extension of loan prescription, litigation where the substantive party is not the Group, or fraudulent lawsuits.

(4)

Others

During the year ended December 31, 2023, there was an investigation by the Korea Fair Trade Commission regarding the loan-to-value ratio, and the Group received the examination report in January 2024 but the estimation of the impact on the Group’s financial statements as of December 31, 2023 cannot be reasonably estimated.

- 147 -

45.	RELATED PARTY TRANSACTIONS

Related parties of the Group as of December 31, 2023 and its assets and liabilities recognized as of December 31, 2023 and 2022 and major transactions with related parties for the years ended December 31, 2023 and 2022 and compensation to key management are as follows:

(1)	Related parties


		Related parties
Parent company		Woori Financial Group Inc.

Associates		W Service Networks Co., Ltd., Korea Credit Bureau Co., Ltd., Korea Finance Security Co., Ltd., Lotte Card Co., Ltd., K BANK Co., Ltd., and others (Dongwoo C & C Co., Ltd. and 36 associates)

Other related parties		Woori Card Co., Ltd. and its subsidiaries, Woori Investment Bank Co., Ltd. and its subsidiaries and associates, Woori FIS Co., Ltd., Woori Private Equity Asset Management Co., Ltd. and its associates, Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd., Woori Asset Management Co., Ltd. and its subsidiaries and associates, Woori Global Asset Management Co., Ltd. and its subsidiaries and associates, Woori Asset Trust Co., Ltd., Woori Financial Capital Co., Ltd. and its subsidiaries and associates, Woori Financial F&I Co., Ltd. and its subsidiaries, Woori Savings Bank, Woori G Japan General Type Private Real Estate Feeder Investment Trust No.1-1 and its subsidiaries, Godo Kaisha Oceanos I, WOORI ZIP 1, WOORI ZIP 2, JC Assurance No.2 Private Equity Fund, IGEN 2022 Private Equity Fund No.1 , Woori Venture Partners, Woori G Japan Private Placement Real Estate Master Investment Trust No.2-1

(2)	Major assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):


Related parties		A title of account	December 31, 2023			December 31, 2022
Parent company	Woori Financial Group Inc.	Other assets		125,489			15,917
		Deposits due to customers		1,363,507			1,613,361
		Other liabilities		20,635			645,807
Associates	W Service Networks Co., Ltd.	Deposits due to customers		3,245			3,298
		Other liabilities		40			8
	Korea Credit Bureau Co., Ltd.	Deposits due to customers		771			4,450
		Other liabilities		—			40
	Korea Finance Security Co., Ltd.	Loans		3,197			3,397
		Loss allowance		(71	)		(45	)
		Other liabilities		5			3
		Deposits due to customers		1,323			1,764
	Lotte Card Co., Ltd.	Loans		12,209			50,000
		Loss allowance		(269	)		(30	)
		Other assets		2			—
		Deposits due to customers		62,587			35,986
		Other liabilities		289			74
	K BANK Co., Ltd.	Other assets		18			—
		Other liabilities		214,135			108,156
	Others (*)	Loans		41			251
		Loss allowance		—			(1	)
		Deposits due to customers		3,632			2,807
		Other liabilities		992			1
Other related parties	Woori Card Co., Ltd. and its subsidiaries	Loans		12,138			5,486
	Woori Card Co., Ltd. and its subsidiaries	Loss allowance		(61	)		(10	)
		Derivative assets		95			—

- 148 -


Related parties		A title of account	December 31, 2023			December 31, 2022
		Other assets		4,580			15,891
		Deposits due to customers		42,569			59,237
		Borrowing liabilities		24,002			—
		Derivative liabilities		38,286			42,875
		Other liabilities		25,500			21,653
	Woori Investment Bank Co., Ltd. and its subsidiaries and associates	Other assets		—			10,124
		Deposits due to customers		230,276			38,237
		Borrowing liabilities		39			—
		Other liabilities		16,870			26,955
	Woori FIS Co., Ltd.	Other assets		514			121
		Deposits due to customers		14,157			21,183
		Other liabilities		27,091			21,287
	Woori Private Equity Asset Management Co., Ltd. and its associates	Deposits due to customers		28,824			45,635
		Derivative liabilities		1,249			—
		Other liabilities		248			320
	Woori Finance Research Institute Co., Ltd.	Deposits due to customers		1,718			1,338
	Woori Finance Research Institute Co., Ltd.	Other liabilities		503			479
	Woori Credit Information Co., Ltd.	Other assets		—			5
		Deposits due to customers		10,537			8,984
		Other liabilities		10,038			10,066
	Woori Fund Service Co., Ltd.	Deposits due to customers		18,019			16,395
		Other liabilities		1,724			1,663
	Woori Asset Management Co., Ltd. and its subsidiaries and associates	Deposits due to customers		3,969			12,393
		Other liabilities		—			167
	Woori Global Asset Management Co., Ltd. and its subsidiaries and associates	Deposits due to customers		794			1,408
		Other liabilities		33			86
	Woori Asset Trust Co., Ltd.	Deposits due to customers		93,742			142,088
		Other liabilities		386			408
	Woori Finance Capital and its subsidiaries and associates	Deposits due to customers		41,786			29,392
	Woori Finance Capital and its subsidiaries and associates	Derivative liabilities		455			1,453
		Other liabilities		1,187			166
	Woori Financial F&I Inc. and its subsidiaries	Loans		165,800			—
	Woori Financial F&I Inc. and its subsidiaries	Loss allowance		(855	)		—
		Other assets		71			—
		Deposits due to customers		20,012			12,298
		Other liabilities		39			—
	Woori G Japan General Type Private Real Estate Feeder Investment Trust No.1-1 and its subsidiaries	Loans		19,589			20,459
		Loss allowance		(14	)		(8	)
		Other assets		24			25
		Deposits due to customers		153			157
		Derivative liabilities		186			2,914
	Woori Savings Bank	Other assets		11			29
	Woori Venture Partners	Deposits due to customers		23,000			—
		Other liabilities		151			—
	Godo Kaisha Oceanos No. 1	Loans		38,122			39,814
		Loss allowance		(58	)		(32	)

- 149 -


Related parties		A title of account	December 31, 2023			December 31, 2022
		Other assets		33			35
	WOORI ZIP 1	Loans		11,317			11,819
		Loss allowance		(1	)		—
		Other assets		21			22
	WOORI ZIP 2	Loans		16,063			16,776
		Loss allowance		(1	)		(1	)
		Other assets		30			31
	JC Assurance Private Equity Partnership No. 2	Deposits due to customers		74			93
	IGEN 2022 Private Equity Fund No. 1	Deposits due to customers		506			722
	Woori G Japan General Type Private Real Estate Feeder Investment Trust No. 2-1	Derivative liabilities		587			—

(*)	Others include Partner One Value Up I Private Equity Fund, Dongwoo C & C Co., Ltd. and others as of December 31, 2023 and 2022.

(3)	Major gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):


			For the years ended December 31
Related parties		A title of account	2023		2022
Parent company	Woori Financial Group	Fees income		34		12
		Other income		4,315		4,376
		Interest expenses		63,806		25,614
		Fees expenses		1,625		1,596
Associates	W Service Networks Co., Ltd.	Interest expenses		35		14
	Korea Credit Bureau Co., Ltd.	Interest expenses		9		40
	Korea Finance Security Co., Ltd.	Interest income		181		141
		Interest expenses		3		3
		Provision(Reversal) of impairment losses due to credit loss		28		42
	Lotte Card Co., Ltd.	Interest income		10		83
		Fees income		3,903		7,624
		Interest expenses		5,665		1,902
		Provision(Reversal) of impairment losses due to credit loss		455		(27	)
	Others (*)	Interest expenses		9,332		10
		Provision(Reversal) of impairment losses due to credit loss		—		1
Other related parties	Woori Card Co., Ltd. and its subsidiaries	Interest income		990		413
	Woori Card Co., Ltd. and its subsidiaries	Fees income		96,666		106,763
		Gain on derivatives		6,162		—
		Other income		303		415
		Interest expenses		409		275

- 150 -


			For the years ended December 31
Related parties		A title of account	2023		2022
		Fees expenses		512		645
		Loss on derivatives		1,827		27,065
		Provision(Reversal) of impairment losses due to credit loss		76		14
	Woori Investment Bank Co., Ltd. and its subsidiaries and associates	Interest income		82		41
		Fees income		2,100		1,590
		Other income		577		15
		Interest expenses		105		63
		Fees expenses		338		477
		Provision(Reversal) of impairment losses due to credit loss		114		11
		Other expenses		55		—
	Woori FIS Co., Ltd.	Fees income		600		548
		Other income		10,622		9,907
		Interest expenses		2		1
		Other expenses		271,907		238,922
	Woori Private Equity Asset Management Co., Ltd. and its subsidiaries and associates	Fees income		18		11
		Interest expenses		1,094		325
		Loss on derivatives		675		—
	Woori Finance Research Institute Co., Ltd.	Fees income		18		18
		Other income		732		752
		Interest expenses		78		38
	Woori Credit Information Co., Ltd.	Fees income		83		79
		Other income		751		637
		Interest expenses		449		328
		Fees expenses		16,399		12,735
	Woori Fund Service Co., Ltd.	Fees income		288		239
		Other income		284		371
		Interest expenses		551		323
		Fees expenses		328		302
	Woori Asset Management Co., Ltd. and its subsidiaries and associates	Fees income		55		52
		Interest expenses		64		177
	Woori Global Asset Management Co., Ltd. and its subsidiaries and associates	Fees income		23		20
		Interest expenses		1		—
		Fees expenses		167		797
	Woori Asset Trust Co., Ltd.	Fees income		277		188
		Interest expenses		2,966		1,480
		Fees expenses		7,652		4,640
	Woori Finance Capital and its subsidiaries and associates	Interest income		18		—
	Woori Finance Capital and its subsidiaries and associates	Fees income		3,401		2,867
		Gain on derivatives		999		—

- 151 -


			For the years ended December 31
Related parties		A title of account	2023		2022
		Interest expense		49		34
		Provision(Reversal) of impairment losses due to credit loss		85		(29	)
		Loss on derivatives		—		1,112
		Other expenses		787		1,060
	Woori Savings Bank	Fees income		989		1,155
	Woori Venture Partners	Fees income		78		—
		Interest expenses		598		—
	Woori Financial F&I and its subsidiaries	Interest income		533		—
	Woori Financial F&I and its subsidiaries	Fees income		180		—
		Interest expense		15		275
		Provision(Reversal) of impairment losses due to credit loss		892		—
	Woori G Japan General Type Private Real Estate Feeder Investment Trust No. 1-1 and its subsidiaries	Interest income		280		286
		Gain on derivatives		—		—
		Provision(Reversal) of impairment losses due to credit loss		6		2
		Loss on derivatives		186		1,394
	Godo Kaisha Oceanos No. 1	Interest income		381		398
		Provision(Reversal) of impairment losses due to credit loss		26		(92	)
	IGEN 2022 Private Equity Partnership No. 1	Interest expense		1		1
	WOORI ZIP 1	Interest income		124		130
	WOORI ZIP 2	Interest income		177		185
		Provision(Reversal) of impairment losses due to credit loss		1		—
	Woori G Japan General Type Private Real Estate Feeder Investment Trust No. 2-1	Loss on derivatives		541		—

(*)	Others include Partner One Value Up I Private Equity Fund, Dongwoo C & C Co., Ltd. and others as of December 31, 2023 and 2022.

- 152 -

(4)	Major fund transactions with related parties for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2023
Related parties		Beginning balance		Loan		Collection		Others			Ending balance (*)
Associates	Lotte Card Co., Ltd.		50,000		226,318		264,109		—			12,209
	Korea Finance Security Co., Ltd		3,397		2,497		2,697		—			3,197
	Others		251		41		251		—			41
Other related parties	Woori Investment Bank Co., Ltd. and its subsidiaries and associates		—		1,522		1,522		—			—
	Woori Card Co., Ltd and its subsidiaries		5,486		6,564		—		88			12,138
	Woori Financial F&I and its subsidiaries		—		216,300		50,500		—			165,800
	Woori G Japan General Type Private Real Estate Feeder Investment Trust No.1-1 and its subsidiaries		20,459		—		—		(870	)		19,589
	Godo Kaisha Oceanos No. 1		39,814		—		—		(1,692	)		38,122
	WOORI ZIP 1		11,819		—		—		(502	)		11,317
	WOORI ZIP 2		16,776		—		—		(713	)		16,063

(*)	Settlement payment from normal operation among the related parties were excluded, and in the case of a limited loan, it was presented as a net increase or decrease.


		For the year ended December 31, 2022
Related parties		Beginning balance		Loan		Collection		Others			Ending balance (*)
Associates	Lotte Card Co., Ltd.		3,750		50,000		3,750		—			50,000
	Korea Finance Security Co., Ltd		3,397		2,000		2,000		—			3,397
	Others		251		—		—		—			251
Other related parties	Woori Card Co., Ltd and its subsidiaries		4,742		417		—		327			5,486
	Woori G Japan Private Real Estate Investment Trust No. 1		21,939		—		—		(1,480	)		20,459
	Godo Kaisha Oceanos No. 1		43,033		41,467		43,033		(1,653	)		39,814
	WOORI ZIP 1		12,775		—		—		(956	)		11,819
	WOORI ZIP 2		18,132		—		—		(1,356	)		16,776

(*)	Settlement payment from normal operation among the related parties were excluded, and in the case of a limited loan, it was presented as a net increase or decrease.

- 153 -

(5)	Changes in major deposits due to customers with related parties for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2023
Related parties		Beginning balance		Borrowings		Repayment and others		Ending balance (*)
Parent company	Woori Financial Group		1,595,000		5,379,000		5,620,000		1,354,000
Associates	W Service Networks Co., Ltd.		1,200		1,000		1,200		1,000
	Partner One Value Up No.1 Private Equity Fund		100		—		100		—
	Korea Credit Bureau Co., Ltd.		3,000		—		3,000		—
	Win Mortgage Co., Ltd.		—		1,200		600		600
Other related parties	Woori Credit Information Co., Ltd.		4,699		4,600		3,100		6,199
	Woori Fund Service Co., Ltd		14,500		17,000		14,500		17,000
	Woori Investment Bank Co., Ltd. and its subsidiaries and associates		2,000		—		—		2,000
	Woori Finance Research Institute Co., Ltd.		—		14,100		14,100		—
	Woori Asset Trust. Ltd		96,000		605,286		645,286		56,000
	Woori Private equity		42,000		53,000		73,000		22,000
	Woori Asset Management Co., Ltd. and its subsidiaries and associates		10,000		—		10,000		—
	Woori Venture Partners		—		97,000		74,000		23,000

(*)	The details of payments made between related parties and the deposits due to customers that can be taken in and out easily are excluded.


		For the year ended December 31, 2022
Related parties		Beginning balance		Borrowings		Repayment and others		Ending balance (*)
Parent company	Woori Financial Group		520,000		3,930,000		2,855,000		1,595,000
Associates	W Service Networks Co., Ltd.		1,180		1,200		1,180		1,200
	Partner One Value Up No.1 Private Equity Fund		329		550		779		100
	Korea Credit Bureau Co., Ltd.		—		3,000		—		3,000
Other related parties	Woori Investment Bank Co., Ltd. and its subsidiaries and associates		2,000		—		—		2,000
	Woori Finance Research Institute Co., Ltd.		800		8,900		9,700		—
	Woori Credit Information Co., Ltd.		11,699		2,500		9,500		4,699
	Woori Fund Service Co., Ltd		11,500		14,500		11,500		14,500
	Woori Asset Trust. Ltd		6,000		379,918		289,918		96,000
	Woori Finance F&I		—		270,000		270,000		—
	Woori Private Equity Asset Management Co., Ltd.		—		42,000		—		42,000
	Woori Asset Management Co., Ltd. and its subsidiaries and associates		—		10,000		—		10,000

(*)	The details of payments made between related parties and the deposits due to customers that can be taken in and out easily are excluded.

- 154 -

(6)	Major borrowing transactions with related parties for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2023
Related parties		Beginning balance		Borrowing		Repayment		Others		Ending balance
Other related parties	Woori Card Co., Ltd. and its subsidiaries		20,918		312,746		309,662		—		24,002
	Woori Investment Bank Co., Ltd. and its subsidiaries and associates		—		77		38		—		39
	LOTTE CARD Co. Ltd.		—		18,183		18,183		—		—

For the year ended December 31, 2022

Related parties

Beginning
balance

Borrowing

Repayment

Others

Ending
balance

Other related parties

Woori Card Co., Ltd. and its subsidiaries

13,051

196,531

188,664

—

20,918

(7)	Guarantees with the related parties are as follows:

The amount of Guarantees provided to the related parties as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	Warranty	December 31, 2023		December 31, 2022
LOTTE CARD Co. Ltd.	Confirmed guarantees in foreign currencies		1,483		—

The amount of Guarantees and unused loan commitments provided by the related parties to the Group as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	Warranty	December 31, 2023		December 31, 2022
Woori Card Co., Ltd and its subsidiaries	Loan commitment in local currency		124,091		128,964

(8) Amount of commitments with the related parties (Unit: Korean Won in millions):


	Warranty	December 31, 2023		December 31, 2022
Woori Private Equity Asset Management Co., Ltd. and its associates	Derivative		9,471		—
Woori Card Co., Ltd. and its subsidiaries	Derivative		417,880		543,460
	Unsettled commitment		505,559		503,628
Woori Investment Bank Co., Ltd. and its subsidiaries and associates	Unsettled commitment		150,000		150,000
Woori Finance Capital and its subsidiaries and associates	Derivative		40,000		40,000
	Unsettled commitment		200,000		150,000
Woori Financial F&I Inc. and its subsidiaries	Unsettled commitment		67,800		—
Korea Finance Security Co., Ltd	Unsettled commitment		403		403
LOTTE CARD Co. Ltd.	Unsettled commitment		498,400		450,000
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership	Securities purchase commitment		4,664		4,664
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund	Securities purchase commitment		243		325
Together Korea Government Private Securities Investment Trust No.3	Securities purchase commitment		990,000		990,000
Woori-Q Corporate Restructuring Private Equity Fund	Securities purchase commitment		9,011		9,284
STASSETS NO. 3 Private Equity Investment Limited Specialized In Start-up Ventures	Securities purchase commitment		6,000		13,500
NH Woori Newdeal Growth Alpha Private Equity Fund 1 (*)	Securities purchase commitment		26,404		—

- 155 -


	Warranty		December 31, 2023		December 31, 2022
BTS 2nd Private Equity Fund		Securities purchase commitment		4,774		6,974
Woori Financial Digital Investment Association No. 1		Securities purchase commitment		11,000		33,000
Green ESG Growth No.1 Private Equity Fund		Securities purchase commitment		24,264		—
Woori Busan Logistics Infra Private Placement Special Asset Investment Trust		Securities purchase commitment		13,099		19,799
Woori G Equity Bridge Loan Private Placement Investment Trust No. 1		Securities purchase commitment		29,835		39,000
Woori G GP Commitment Loan Private Placement Investment Trust No. 1		Securities purchase commitment		4,448		6,274
Woori G GP Commitment Loan Private Placement Investment Trust No. 2		Securities purchase commitment		5,320		9,560
Woori G GP Commitment Loan Private Placement Investment Trust No. 3		Securities purchase commitment		16,477		—
Woori G Global Mid-market Secondaries Private Placement Investment Trust No. 1		Securities purchase commitment		8,546		12,105
Woori G Senior Loan Private Placement Investment Trust No. 2		Securities purchase commitment		80,750		180,000
Woori G Renewable New Deal Private Placement Investment Trust No.1		Securities purchase commitment		32,366		35,025
Woori G Woori Bank Partners Private Placement Investment Trust No. 1		Securities purchase commitment		332,452		349,177
Woori G Woori Bank Partners Private Placement Investment Trust No. 2		Securities purchase commitment		431,226		626,215
Woori G Private Investment Trust No. 1		Securities purchase commitment		137,163		251,940
Woori G Private Investment Trust No. 5		Securities purchase commitment		106,758		117,223
Woori G Japan General Type Private Real Estate Feeder Investment Trust No.1-1 and its subsidiaries		Derivatives		16,826		16,644
Woori G Japan General Type Private Real Estate Feeder Investment Trust No. 2-1		Derivatives		7,075		—
Woori G Japan Blind General Type Private Real Estate Feeder Investment Trust No.1		Securities purchase commitment		323		—
Woori G Infrastructure New Deal General Investment Private Equity Investment Trust No. 1		Securities purchase commitment		20,056		35,220
Woori G Equity Investment General Type Private Investment Trust No.1		Securities purchase commitment		456		456
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 3		Securities purchase commitment		27,300		41,300
Woori Seoul Beltway Private Special Asset Fund No.1		Securities purchase commitment		34,437		37,146
JC Assurance No.2 Private Equity Fund		Securities purchase commitment		859		859
Woori Asset Global Partnership Fund No. 5		Securities purchase commitment		127,500		—
Woori New Growth Credit Fund 1		Securities purchase commitment		25,177		—
Woori G Clean Energy General Type Private Placement Investment Trust No.2		Securities purchase commitment		8,647		—
WooriG Innovation Growth(Infrastructure) General Type Private Investment Trust No.2		Securities purchase commitment		28,272		—
WooriG General Type private Real Estate Investment Trust No. 6		Securities purchase commitment		275,940		—
WooriG ESG Infrastructure Development General Type Private Investment Trust No.2		Securities purchase commitment		8,694		—
Synaptic Future Growth Private Equity Fund I		Securities purchase commitment		4,389		—

(*)	It was added to associates through acquisition during the year ended December 31, 2023.

As of December 31, 2023 and 2022, the recognized payment guarantee provisions are 755 million Won and 278 million Won, respectively, in relation to the guarantees provided to the related parties above.

- 156 -

(9)	Major investment and Recovery transactions

The details of major investment and recovery transactions with related parties for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
The same parent company and its associates	Investment and others (*)		Recovery and others (*)
Green ESG Growth No.1 Private Equity Fund		5,736		—
Woori Busan Logistics Infra Private Placement Special Asset Investment Trust		6,700		—
Woori G Equity Bridge Loan General Type Private Investment Trust No.1		41,015		32,054
Woori G GP Commitment Loan General Type Private Investment Trust No.1		1,826		5,253
Woori G GP Commitment Loan General Type Private Investment Trust No.2		4,240		961
Woori G GP Commitment Loan General Type Private Investment Trust No.3		523		—
Woori G Global Mid-market Secondary General Type Private Investment Trust No.1 (EUR)		4,014		646
Woori G Senior Loan General Type Private Investment Trust No.2		99,250		6,718
Woori G Renewable New Deal Fund No.1		2,659		66
Woori G Woori Bank Partners General Type Private Investment Trust No.1		16,725		—
Woori G Woori Bank Partners General Type Private Investment Trust No.2		194,990		—
Woori G Private Real Estate Investment Trust No. 1		114,776		—
Woori G Private Real Estate Investment Trust No. 5		10,465		—
Woori G Japan Blind General Type Private Real Estate Feeder Investment Trust No.1		—		2,938
Woori G Policy-Type New Deal (Infrastructure Investment) Private Placement Investment Trust No.1		15,164		—
Woori G Equity Investment General Type Private Investment Trust No.1		—		1,726
Woori Short Term Government and Special Bank Bond Active ETF		19,013		19,013
Woori Innovative Growth New Deal Private Investment Trust No.3		14,000		—
Woori BIG2 Plus Securities Investment Trust(Balanced Bond)		2,000		—
Woori G Senior Loan Private Placement Investment Trust No.1		—		3,915
Woori Short-term Bond Securities Investment Trust(Bond) ClassC-F		—		10,119
Woori Seoul Beltway Private Special Asset Fund No.1		2,709		—
Woori Smart General Private Equity Investment Trust 1 (bond)		40,000		—
Woori General Private Securities Investment Trust (Bond) No.1		50,000		—
Woori General Private Securities Investment Trust (Bond) No.2		30,000		—
Woori Big Satisfaction Money Market Fund (Government & Agency Bonds) ClassicC-F		—		441,470
Woori New Growth Credit Fund 1		24,823		—
Woori G Clean Energy General Type Private Placement Investment Trust No.2		1,353		—
Woori Together Government & Agency Bonds USD Money Market Fund 2		15,128		—
Woori G Government Bond Dollar MMF No. 1 (USD)		65,195		—
WooriG General Type private Real Estate Investment Trust No. 6		24,060		—
WooriG ESG Infrastructure Development General Type Private Investment Trust No.2		1,306		—
Woori General Private Equity Investment Trust 3 (bond)		50,000		—
Woori Asset Global Partnership Fund No. 5		22,500		—
Synaptic Future Growth Private Equity Fund I		5,611		—
Woori PE Secondary Private Placement Investment Trust No. 1		8,678		—
WooriI25-09 Bond(above AA-) Active ETF		29,001		—

(*)	Investment and recovery transactions of associates are described in Note 13.(2).

- 157 -


	For the year ended December 31, 2022
The same parent company and its associates	Investment and others (*)		Recovery and others (*)
Synaptic Green Material Component Equipment No.1 Private Equity Partnership		5,000		—
IGEN 2022 Private Equity Fund No. 1		5,000		297
Orchestra Private Equity No.4 Private Equity Partnership		5,000		—
Woori G Equity Bridge Loan Private Equity Investment Trust No. 1		7,800		—
Woori G GP Commitment Loan Private Placement Investment Trust No. 2		10,440		—
Woori G GP Commitment Loan Private Placement Investment Trust No. 1		3,846		816
Woori G Senior Loan Private Placement Investment Trust No.1		13,403		18,975
Woori G Renewable New Deal Private Placement Investment Trust No. 1		19,975		118
Woori G Woori Bank Partners Private Placement Investment Trust No. 2		272,990		266,047
Woori G Woori Bank Partners Private Placement Investment Trust No. 1		401,667		295,825
Woori G Private Real Estate Investment Trust No. 1		129,035		80,736
Woori G Private Real Estate Investment Trust No. 5		82,307		15,611
Woori G Policy-Type New Deal (Infrastructure Investment) Private Placement Investment Trust No.1		24,780		647
Woori G Equity Investment General Type Private Investment Trust No.1		14,644		—
Woori G Senior Loan Private Placement Investment Trust No.2		70,000		—
Woori Seoul Expressway Private Placement Investment Trust No. 1		2,312		—
Woori Innovative Growth New Deal General Private Equity Investment Trust No. 3		14,000		—
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 1		10,450		2,490
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 2		21,450		—
WooriG Global Mid-market Secondaries Private Placement Investment Trust No. 1		2,439		—
Woori Short-term Bond Securities Investment Trust(Bond) ClassC-F		50,000		200,649
Woori Busan Logistics Infrastructure General Private Equity Investment Trust		201		—
WooriG Government Bond MMF		420,273		480,168
Woori big satisfaction hybrid Money Market Fund No. 3		300,000		—
Woori High Plus Short-Term ESG Bond Securities Investment Trust (Bond)		—		88,552

(*)	Investment and recovery transactions of associates are described in Note 13.(2).

(10)	Compensation to key management is as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023		For the year ended December 31, 2022
Short-term employee benefits		11,810		9,748
Share-based payment		3,582		2,398
Retirement benefit service costs		632		350

Total		16,024		12,496

Key management includes registered executives and non-registered executives. Outstanding assets from transactions with key management amount to 3,932 million Won and 3,620 million Won, as of December 31, 2023 and 2022 respectively and with respect to the assets, the Group has not recognized any allowance nor related impairment loss due to credit losses. Liabilities from transaction with key management amount to 34,054 million Won and 12,660 million Won, respectively, as of December 31, 2023 and 2022.

(11)	The Group, Woori Credit Card Co., Ltd. and its subsidiaries are jointly and severally liable to reimburse the Group’s debts before the split.

(12)

Among the bonds issued by the Group during the year ended December 31, 2023, Woori Investment Bank Co., Ltd. acquired 30,000 million Won in hybrid capital securities and sold them all on the date of issuance. For the year ended December 31, 2022, the Group purchased 50,000 million Won of bonds held by Woori Investment Bank Co., Ltd. Among the bonds issued by the Group during the prior year, Woori Investment Bank Co., Ltd. acquired 35,000 million Won in hybrid capital securities and 40,000 million Won in debentures, and sold them all on the date of issuance.

- 158 -

46. TRUST ACCOUNTS

(1)	Trust accounts of the Group as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	Total assets				Operating income
					For the years ended December 31
	December 31, 2023		December 31, 2022		2023		2022
Trust accounts		75,636,483		71,677,258		2,296,627		1,121,069

(2)	Receivables and payables from the transactions between the Group and trust accounts as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Receivables
Trust fees receivables		48,383		42,337

Payables
Deposits due to customers		166,241		170,417
Borrowings from trust accounts		3,769,913		1,804,847

Total		3,936,154		1,975,264

(3)	Significant transactions between the Group and trust accounts for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Revenue:
Trust fees		141,314		131,656
Termination fees		1,116		1,158

Total		142,430		132,814

Expense:
Interest expenses on deposits due to customers		957		619
Interest expenses on borrowings from trust accounts		88,099		38,583

Total		89,056		39,202

- 159 -

(4)	Principal guaranteed trusts and principal and fixed interest of return guaranteed trusts

As of December 31, 2023 and 2022, the carrying of principal guaranteed trusts and principal and fixed rate of return guaranteed trusts are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Partial principal guaranteed trusts:
Household money		7,767		8,230
Corporate money		217		446
Installment plan purpose		1,515		1,551

Sub-total		9,499		10,227

Principal guaranteed trusts:
Old-age pension trusts		2,582		2,790
Personal pension trusts		429,068		460,839
Pension trusts		642,756		687,971
Retirement trusts		26,082		26,563
New personal pension trusts		6,441		6,792
New old-age pension trusts		892		950

Sub-total		1,107,821		1,185,905

Principal and interest guaranteed trusts:
Development trusts		19		19
Unspecified money trusts		334		335

Sub-total		353		354

Total		1,117,673		1,196,486

47.

LEASES

(1)	The future lease payments under the lease contracts as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Lease payments
Within one year		190,203		149,948
After one year but within five years		133,291		124,194
After five years		25,084		33,007

Total		348,578		307,149

(2)	Total cash outflows from lease for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023		For the year ended December 31, 2022
Cash outflows from leases		172,682		168,519

(3)

There are no lease charges, not included in the measurement of lease liabilities due to small assets or short-term leases for the years ended December 31, 2023 and 2022. The variable lease fee not included in the current lease liability for the years ended December 31, 2023 and 2022 are 32,016 million Won and 5,465 million Won, respectively.

- 160 -

EX-99.2 3 d807966dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

LOGO

WOORI BANK

SEPARATE FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED

DECEMBER 31, 2023

WOORI BANK


	Page(s)

INDEPENDENT AUDITORS’ REPORT		1-3

Separate Financial Statements

Separate Statements of Financial Position		5-6

Separate Statements of Comprehensive Income		7

Separate Statements of Changes in Equity		8

Separate Statements of Cash Flows		9-10

Notes to the Separate Financial Statements		11-156

INDEPENDENT AUDITORS’ REPORT

(Based on a report originally issued in Korean)

The Board of Directors and Shareholder of

Woori Bank

Opinion

We have audited the separate financial statements of Woori Bank (the “Bank”), which comprise the separate statement of financial position as of December 31, 2023, and the separate statement of profit or loss and other comprehensive income, separate statement of changes in equity and separate statement of cash flows for the year then ended, and notes, comprising of material accounting policy information and other explanatory information.

In our opinion, the accompanying separate financial statements present fairly, in all material respects, the separate financial position of the Bank as of December 31, 2023, and its separate financial performance and its separate cash flows for the year then ended in accordance with Korean International Financial Reporting Standards (K-IFRS).

Basis for Opinion

We conducted our audit in accordance with Korean Standards on Auditing (KSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the ethical requirements that are relevant to our audit of the financial statements and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Other Matters

The separate financial statements of the Bank for the year ended December 31, 2022, were audited by another auditor who expressed an unmodified opinion on those statements on March 7, 2023.

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

- 1 -

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Bank’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•

Evaluate the appropriateness of accounting policies used in the preparation of the separate financial statements and the reasonableness of accounting estimates and related disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Bank to cease to continue as a going concern.

•

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

- 2 -

/s/ KPMG Samjong Accounting corp.

Seoul, Korea

March 6, 2024

This report is effective as of March 6, 2024, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying separate financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

- 3 -

WOORI BANK

SEPARATE FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED

DECEMBER 31, 2023 AND 2022

The accompanying separate financial statements including all footnote disclosures were prepared

by and are the responsibility of, the management of Woori Bank.

Byung Kyu Cho

President and Chief Executive Officer

Main Office Address: (Road Name Address) 51, Sogong-ro, Jung-gu, Seoul

(Phone Number) 02-2002-3000

- 4 -

WOORI BANK

SEPARATE STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2023 AND 2022


	December 31, 2023		December 31, 2022
	(Korean Won in millions)
ASSETS
Cash and cash equivalents (Notes 2, 6 and 45)		27,066,108		30,513,261
Financial assets at fair value through profit or loss (“FVTPL”) (Notes 4, 7, 11, 12, 26 and 45)		21,118,307		18,903,736
Financial assets at fair value through other comprehensive income (“FVTOCI”) (Notes 4, 8, 11, 12 and 18)		36,375,201		31,521,739
Securities at amortized cost (Notes 4, 9, 11, 12 and 18)		23,584,608		27,304,915
Loans and other financial assets at amortized cost (Notes 2, 3, 4, 10, 11, 12, 18 and 45)		320,810,617		308,785,393
Investments in subsidiaries and associates (Note 13)		3,734,506		3,701,365
Investment properties (Note 14)		528,615		540,748
Properties and equipment (Notes 15)		2,552,410		2,521,958
Intangible assets (Note 16)		305,640		231,007
Assets held for sale (Note 17)		11,573		9,589
Current tax assets (Note 42)		126,388		13,534
Deferred tax assets (Note 42)		—		60,910
Derivative assets (designated for hedging) (Notes 4, 11, 12 and 26)		698		—
Net defined benefit assets (Note 24)		221,546		287,673
Other assets (Notes 19 and 45)		251,671		139,689

Total assets		436,687,888		424,535,517

LIABILITIES
Financial liabilities at FVTPL (Notes 4, 11, 12, 20, 26 and 45)		6,015,790		9,002,105
Deposits due to customers (Notes 4, 11, 21 and 45)		338,741,703		323,378,015
Borrowings (Notes 4, 11, 12, 22 and 45)		21,461,867		21,717,702
Debentures (Notes 4, 11 and 22)		21,273,027		24,635,427
Provisions (Notes 23, 44 and 45)		705,507		456,396
Current tax liabilities (Note 42)		23,061		664,012
Deferred tax liabilities (Note 42)		372,268		—
Derivative liabilities (designated for hedging) (Notes 4, 11, 12, 26 and 45)		135,263		193,831
Other financial liabilities (Notes 4, 11, 12, 25 and 45)		22,635,153		19,872,997
Other liabilities (Notes 25 and 45)		227,496		181,175

Total liabilities		411,591,135		400,101,660

(Continued)

- 5 -

WOORI BANK

SEPARATE STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2023, AND 2022 (CONTINUED)


	December 31, 2023			December 31, 2022
	(Korean Won in millions)
EQUITY
Owners’ equity:
Share capital (Note 28)		3,581,392			3,581,392
Hybrid securities (Note 29)		1,546,447			2,344,816
Capital surplus (Note 28)		1,068,420			1,068,420
Other equity (Note 30)		51,880			(660,858	)
Retained earnings (Notes 31 and 32)		18,848,614			18,100,087
(Regulatory reserve for credit loss)		(2,164,140	)		(2,311,436	)
(Regulatory reserve for credit loss to be reversed)		396,732			147,296
(Planned reversal of regulatory reserve for credit loss)		396,732			147,296

Total equity		25,096,753			24,433,857

Total liabilities and equity		436,687,888			424,535,517

The accompanying notes are part of these separate financial statements.

- 6 -

WOORI BANK

SEPARATE STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022


	2023			2022
	(Korean Won in millions, except for per share data)
Interest income		16,981,802			11,513,681
Financial assets at FVTPL		92,854			44,079
Financial assets at FVTOCI		945,536			585,206
Financial assets at amortized cost		15,943,412			10,884,396
Interest expense		(10,293,311	)		(4,899,615	)

Net interest income (Notes 11, 34 and 45)		6,688,491			6,614,066
Fees and commissions income		1,046,057			1,084,053
Fees and commissions expense		(196,620	)		(197,939	)

Net fees and commissions income (Notes 11, 35 and 45)		849,437			886,114
Dividend income (Notes 11, 36 and 45)		306,494			180,275
Net gain on financial instruments at FVTPL (Notes 11, 37 and 45)		514,706			282,411
Net gain (loss) on financial assets at FVTOCI (Notes 11 and 38)		(38,399	)		(22,865	)
Net gain on financial assets at amortized cost (Note 11)		101,788			35,003
Net gain on disposals of loans and other financial assets at amortized cost		101,788			35,003
Provision for expected credit loss allowance (Notes 11, 39 and 45)		(930,995	)		(390,611	)
General and administrative expenses (Notes 40 and 45)		(3,409,755	)		(3,545,030	)
Other net operating expenses (Notes 40 and 45)		(1,064,546	)		(682,610	)

Operating income		3,017,221			3,356,753
Net loss on investments in subsidiaries and associates (Note 13)		(1,786	)		—
Net other non-operating income (expense)		(23,503	)		50,283

Non-operating income (loss) (Notes 13 and 41)		(25,289	)		50,283

Net income before income tax expense		2,991,932			3,407,036
Income tax expense (Note 42)		(714,792	)		(859,629	)

Net income
(Net income after the provision of regulatory reserve for credit loss for the years ended December 31, 2023 and 2022 are 2,673,872 million Won and 2,694,703 million Won, respectively) (Note 32)		2,277,140			2,547,407

Net gain (loss) on valuation of equity securities at FVTOCI		195,587			(34,660	)
Remeasurement of the net defined benefit liability		(66,174	)		226,846

Items that will not be reclassified to profit or loss		129,413			192,186
Net gain (loss) on valuation of debt securities at FVTOCI		523,744			(441,749	)
Gain on foreign currency translation of foreign operations		2,364			789
Gain (loss) on evaluation of hedge of net investment in foreign operations		(1,493	)		5,174

Items that may be reclassified to profit or loss		524,615			(435,786	)

Other comprehensive income (loss), net of tax		654,028			(243,600	)

Total comprehensive income		2,931,168			2,303,807

Earnings per share (Note 43)
Basic and diluted earnings per share (Unit: In Korean Won)		3,047			3,399

The accompanying notes are part of these separate financial statements.

- 7 -

WOORI BANK

SEPARATE STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022


	Capital stock		Hybrid securities			Capital surplus		Other equity			Retained earnings			Total equity
	(Korean Won in millions)
January 1, 2022		3,581,392		2,555,166			1,068,420		(394,606	)		16,880,184			23,690,556
Net income		—		—			—		—			2,547,407			2,547,407
Dividends on common stocks		—		—			—		—			(1,175,672	)		(1,175,672	)
Net loss on valuation of financial assets at FVTOCI		—		—			—		(476,407	)		—			(476,407	)
Net gain (loss) due to disposal of financial assets at FVTOCI		—		—			—		10,472			(10,472	)		—
Gain on foreign currency translation of foreign operations		—		—			—		789			—			789
Gain on evaluation of hedges of net investment in foreign operations		—		—			—		5,174			—			5,174
Remeasurement of the net defined benefit liability		—		—			—		226,846			—			226,846
Appropriation of retained earnings		—		—			—		27,365			(27,365	)		—
Dividends on hybrid securities		—		—			—		—			(113,995	)		(113,995	)
Issuance of hybrid securities		—		349,215			—		—			—			349,215
Redemption of hybrid securities		—		(559,565	)		—		(60,491	)		—			(620,056	)

December 31, 2022		3,581,392		2,344,816			1,068,420		(660,858	)		18,100,087			24,433,857

January 1, 2023		3,581,392		2,344,816			1,068,420		(660,858	)		18,100,087			24,433,857
Net income		—		—			—		—			2,277,140			2,277,140
Dividends on common stocks		—		—			—		—			(1,372,572	)		(1,372,572	)
Net gain on valuation of financial assets at FVTOCI		—		—			—		719,331			—			719,331
Net gain (loss) due to disposal of financial assets at FVTOCI		—		—			—		(87	)		87			—
Gain on foreign currency translation of foreign operations		—		—			—		2,364			—			2,364
Loss on evaluation of hedges of net investment in foreign operations		—		—			—		(1,493	)		—			(1,493	)
Remeasurement of the net defined benefit liability		—		—			—		(66,174	)		—			(66,174	)
Appropriation of retained earnings		—		—			—		60,491			(60,491	)		—
Dividends on hybrid securities		—		—			—		—			(95,637	)		(95,637	)
Issuance of hybrid securities		—		299,327			—		—			—			299,327
Redemption of hybrid securities		—		(1,097,696	)		—		(1,694	)		—			(1,099,390	)

December 31, 2023		3,581,392		1,546,447			1,068,420		51,880			18,848,614			25,096,753

The accompanying notes are part of these separate financial statements.

- 8 -

WOORI BANK

SEPARATE STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022


	For the years ended December 31
	2023			2022
	(Korean Won in millions)
Cash flows from operating activities:
Net income		2,277,140			2,547,407
Adjustments:
Income tax expense		714,792			859,629
Interest income		(16,981,802	)		(11,513,681	)
Interest expense		10,293,311			4,899,615
Dividend income		(360,629	)		(228,998	)

		(6,334,328	)		(5,983,435	)

Additions of expenses not involving cash outflows:
Loss on financial instruments at FVTPL		—			805,814
Loss on financial assets at FVTOCI		46,335			23,824
Provision for expected credit loss allowance		930,995			390,612
Impairment losses on investments in subsidiaries and associates		1,786			—
Loss on derivatives (designated for hedging)		8,819			250,267
Loss on fair value hedge		72,601			—
Losses related to other provisions		69,742			24,539
Retirement benefits		88,637			136,868
Depreciation and amortization		361,352			395,483
Loss on disposal of properties and equipment, intangible asset and other assets		1,217			2,117
Impairment loss on properties and equipment, intangible asset and other assets		22			144
Loss on foreign currency translation		394,827			30,858
Other losses		—			63,354
Other operating expenses		169,357			—

		2,145,690			2,123,880

Deductions of incomes not involving cash inflows:
Gain on financial instruments at FVTPL		586,995			—
Gain on financial assets at FVTOCI		7,936			959
Gain on disposal of investments in subsidiaries and associates		33,081			560
Gain on derivatives (designated for hedging)		69,479			1,288
Gain on fair value hedge		8,986			257,910
Gain related to other provisions		14,092			52,659
Gain on disposal of properties and equipment, intangible assets and other assets		1,416			25,317
Reversal of impairment loss on properties and equipment, intangible asset and other assets		47			—
Gain on disposal of assets held for sale		3,027			24,100
Other incomes		—			15,880

		725,059			378,673

Changes in operating assets and liabilities:
Financial assets at FVTPL		(2,162,406	)		(1,702,663	)
Loans and other financial assets at amortized cost		(12,444,391	)		(2,363,406	)
Other assets		(110,980	)		(60,360	)
Deposits due to customers		14,932,187			21,234,110
Provisions		(27,096	)		(20,228	)
Net defined benefit liability		(112,511	)		(103,218	)
Other financial liabilities		1,449,421			(3,127,127	)
Other liabilities		45,523			33,858

		1,569,747			13,890,966

(Continued)

- 9 -

WOORI BANK

SEPARATE STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (CONTINUED)


	For the years ended December 31
	2023			2022
	(Korean Won in millions)
Interest income received		16,616,933			11,101,376
Interest expense paid		(9,178,973	)		(3,933,026	)
Dividends received		360,629			228,998
Income tax paid		(1,270,630	)		(777,380	)

Net cash inflow from operating activities		5,461,149			18,820,113

Cash flows from investing activities:
Disposal of financial instruments at FVTPL		10,690,537			10,110,542
Acquisition of financial instruments at FVTPL		(13,076,753	)		(11,652,579	)
Disposal of financial assets at FVTOCI		19,970,026			20,456,735
Acquisition of financial assets at FVTOCI		(23,604,697	)		(14,892,378	)
Redemption of securities at amortized cost		6,735,231			3,643,712
Acquisition of securities at amortized cost		(2,827,215	)		(14,025,148	)
Disposal of investments in subsidiaries and associates		17,545			26,166
Acquisition of investments in subsidiaries and associates		(68,711	)		(18,272	)
Disposal of properties and equipment		2,242			11,187
Acquisition of properties and equipment		(99,682	)		(83,784	)
Disposal of intangible assets		—			429
Acquisition of intangible assets		(165,835	)		(96,121	)
Disposal of assets held for sale		3,547			52,417
Net increase in other assets		8,545			62,710

Net cash outflow from investing activities		(2,415,220	)		(6,404,384	)

Cash flows from financing activities:
Net increase of derivatives (designated for hedging)		1,394			19,652
Net increase (decrease) in borrowings		(371,695	)		3,218,598
Issuance of debentures		12,859,755			10,943,580
Redemption of debentures		(16,412,140	)		(12,778,811	)
Redemption of lease liabilities		(132,159	)		(134,562	)
Net increase of other liabilities		30			453
Dividends paid to common stocks		(1,372,572	)		(1,175,672	)
Issuance of hybrid securities		299,327			349,215
Redemption of hybrid securities		(1,100,000	)		(643,000	)
Dividends paid to hybrid securities		(95,637	)		(113,995	)

Net cash outflow from financing activities		(6,323,697	)		(314,542	)

Effects of exchange rate changes on cash and cash equivalents		(169,385	)		14,013
Net increase (decrease) in cash and cash equivalents		(3,447,153	)		12,115,200
Cash and cash equivalents, the beginning of the year		30,513,261			18,398,061

Cash and cash equivalents, the end of the year (Note 6)		27,066,108			30,513,261

The accompanying notes are part of these separate financial statements.

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WOORI BANK

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

GENERAL

(1)	Woori Bank

Woori Bank (the “Bank”) was established in 1899 and is engaged in the commercial banking business under the Banking Act, trust business and foreign exchange business under the Financial Investment Services and Capital Market Act.

2.	BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICIES

(1)	Basis of preparation

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

Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Bank’s financial position, financial performance or cash flows, is not presented in the accompanying consolidated financial statements.

The separate financial statements of the Bank have been prepared in accordance with K-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 material accounting policies applied in the preparation of financial statements are stated below, and the accounting policies applied are identical to ones used in the preparation of previous period’s financial statements, except for the effects of adopting new standards or interpretations as explained below.

The financial statements are prepared at the end of each reporting period on the historical cost basis, except for certain non-current assets and financial assets that are either revalued or measured in fair value. Historical cost is generally measured at the fair value of consideration given to acquire assets.

Meanwhile, the financial statements of the Bank were initially approved by the board of directors on February 6, 2024, and were revised and approved on February 29, 2024, and is planned for an approval in the annual shareholder’s meeting on March 21, 2024.

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1)	From the accounting period beginning on January 1, 2023, the Bank has newly applied the following amendments and interpretations.

Amendments to K-IFRS No.1001 ‘Presentation of Financial Statements’ and IFRS Practice Statement 2 ‘Making Materiality Judgments’ - Disclosure of Accounting Policies

In order to define and disclose important accounting policies and to provide guidance on how to apply the concept of materiality the IFRS Practice Statement 2 ‘Disclosure of Accounting Policies’ has been revised. The Bank expects that there is no significant impact on the separate financial statement of the Bank due to this amendment.

ii)

Amendments to K-IFRS No.1008 ‘Accounting Policies, Changes in Accounting Estimates and Errors’—Definition of ‘Accounting Estimates’

The Bank defined accounting estimates and clarified the way to distinguish changes in accounting policies from changes in accounting estimates. The Bank expects that there is no significant impact on the separate financial statement of the Bank due to this amendment.

iii)

Amendments to K-IFRS No.1001 ‘Presentation of Financial Statements’—Disclosure of gains or losses on valuation of financial liabilities with conditions for exercise price adjustment

The amendments require disclosure of valuation gains or losses (limited to those recognized in the profit or loss) of the conversion options or warrants (or financial liabilities including them), if all or part of the financial instrument with exercise price that is adjusted depending on the issuer’s share price change is classified as financial liability as defined in paragraph 11 (2) of K-IFRS No.1032. The Bank expects that there is no significant impact on the separate financial statement of the Bank due to this amendment.

iv)

Annual Improvements to K-IFRS No.1012 ‘Income Taxes’—deferred tax related to assets and liabilities arising from a single transaction

Additional phrase ‘the temporary difference to be added and the temporary difference to be deducted do not occur in the same amount’ has been added to initial recognition exception for a transaction in which an asset or liability is initially recognized. The Bank expects that there is no significant impact on the separate financial statement of the Bank due to this amendment.

New Standard: K-IFRS No.1117 ‘Insurance Contract’

K-IFRS No.1117 Insurance Contracts replaces K-IFRS No.1104 Insurance Contracts. This Standard estimates future cash flows of an insurance contract and measures insurance liabilities using discount rates applied with assumptions and risks at the measurement date. The entity recognizes insurance revenue on an accrual basis including services (insurance coverage) provided to the policyholder by each annual period. In addition, investment components (Refunds due to termination/maturity) repaid to a policyholder even if an insured event does not occur, are excluded from insurance revenue, and insurance financial income or expense and the investment income or expense are presented separately to enable users of the information to understand the sources of income or expenses. The Bank expects that there is no significant impact on the separate financial statement of the Bank due to this standard.

vi)

Amendments to K-IFRS No.1012 ‘Income Taxes’—International Tax Reform – Pillar Two Model Rules

The Bank applies the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. Since the Pillar Two legislation is scheduled to be effective from January 1, 2024, the Bank has no current tax expense related to Pillar Two. The impact of the Pillar Two income taxes is described in Note 42.

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2)	The details of K-IFRS that have been issued and published as of January 1, 2023, but have not yet reached the effective date, and which the Bank has not applied at an earlier date are as follows:

Amendments to K-IFRS No.1001 ‘Presentation of Financial Statements’ – Classification of Liabilities as Current or Non-current, Non-current Liabilities with Covenants

Although compliance with the arrangement is assessed only after the reporting period, these arrangements affect the existence of rights as of the end of the reporting period.

In addition, stipulates that agreements that must be followed only after the reporting period do not affect the right to defer payment. However, if an entity’s right to defer settlement of a liability depends on the arrangements it complies with within 12 months of the reporting period, it shall disclose information to users of financial statements to understand the risk that the liability may be repaid within 12 months of the reporting period. This information includes information about the arrangement (including the nature of the arrangement, when the entity should comply with the arrangement), the carrying amount of the liability involved, and facts and circumstances indicating that the arrangement may be difficult to comply with. The above amendments shall be applied retrospectively for annual periods beginning on or after January 1, 2024 and shall be permitted for early application.

The above enacted or amended standards will not have a significant impact on the separate financial statements of the Bank.

ii)

Amendments to K-IFRS No.1007 ‘Statement of Cash Flows’, K-IFRS No. 1107 ‘Financial Instruments: Disclosures’ – Supplier finance arrangements

The above enacted or amended standards will not have a significant impact on the separate financial statements of the Bank.

iii)

Amendments to K-IFRS No.1116 ‘Leases’ - Lease Liability in a Sale and Leaseback

The above enacted or amended standards will not have a significant impact on the separate financial statements of the Bank.

iv)

Amendments to K-IFRS No.1001 ‘Presentation of Financial Statements’ – Disclosure of ‘Cryptographic Assets’

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The above enacted or amended standards will not have a significant impact on the separate financial statements of the Bank.

(2)	Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured as the sum of the acquisition-date fair values of the assets transferred by the Bank in exchange for control of the acquiree, liabilities assumed by the Bank and the equity interests issued by the Bank. Acquisition-related costs are generally recognized in profit or loss as incurred.

At the acquisition date, the acquiree’s identifiable assets, liabilities and contingent liabilities are recognized at their fair value, except that:

•

deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with K-IFRS No.1012 ‘Income Taxes’ and K-IFRS No.1019 ‘Employee Benefits’, respectively;

•

liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Bank entered into to replace share-based payment arrangements of the acquiree are measured in accordance with K-IFRS No.1102 ‘Share-based Payment’ at the acquisition date; and

•

non-current assets (or disposal groups) that are classified as held for sale in accordance with K-IFRS No.1105 ‘Non-current Assets Held for Sale and Discontinued Operations’ are measured at the lower of their previous carrying amounts and fair value less costs to sell.

Any excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the Bank’s previously held equity interest (if any) in the acquiree over the net of identifiable assets and liabilities assumed of the acquiree at the acquisition date is recognized as goodwill which is included in intangible assets.

If, after reassessment, the Bank’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognized immediately in net income (or other comprehensive income, if applicable) identical to the treatment assuming interests are sold directly.

When the consideration transferred by the Bank in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

When a business combination is achieved in stages, the Bank’s previously held equity interest in the acquiree is remeasured at fair value at the acquisition date (i.e., the date when the Bank obtains control) and the resulting gain or loss, if any, is recognized in net income (or other comprehensive income, if applicable). Amounts arising from changes in value of interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are recognized, identical to the treatment assuming interests are sold directly.

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In cases where i) a common entity ultimately controls over all participating entities, or businesses, in a business combination transaction, prior to and after the transaction continuously, and ii) the control is not temporary, the transaction meets the definition of “business combination under common control” and it is deemed that the transaction only results in the changes in legal substance, and not economic substance, from the perspective of the ultimate controlling party. Thus, in such transactions, the acquirer recognizes the assets and liabilities of the acquiree in its financial statements at the book values as recognized in the ultimate controlling party’s consolidated financial statements, and the difference between the book value of consideration transferred to and the book value of net assets transferred in is recognized as equity.

(3)	Investment in joint operation

When the Bank operates as a joint operator, it recognizes in relation to its interest in a joint operation:

•

its assets, including its share of any assets held jointly;

•

its liabilities, including its share of any liabilities incurred jointly;

•

its revenue from the sale of its share of the output arising from the joint operation;

•

its share of the revenue from the sale of the output by the joint operation; and

•

its expenses, including its share of any expenses incurred jointly.

The Bank accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with K-IFRS applicable to the particular assets, liabilities, revenues and expenses.

When the Bank enters into a transaction with a joint operation in which it is a joint operator, such as a purchase of assets, it does not recognize proportional share of profit or loss until the asset is sold to a third party.

(4)	Revenue recognition

K-IFRS No.1115 requires the recognition of revenues based on transaction price allocated to the performance obligation when or as the Bank performs that obligation to the customer. Revenues other than those from contracts with customers, such as interest revenue and loan origination fee (cost), are measured through effective interest rate method.

Revenue from contracts with customers

The Bank recognizes revenue when the Bank satisfies a performance obligation by transferring a promised good or service to a customer. When a performance obligation is satisfied, the Bank recognizes as a revenue the amount of the transaction price that is allocated to that performance obligation. The transaction price is the amount of consideration to which the Bank expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

The Bank recognizes revenue by major sources as shown below:

①

Fees and commission received for brokerage

The fees and commission received for agency are the amount of consideration or fee expected to be entitled to receive in return for providing goods or services to the other parties with the Bank acting as an agency, such as in the case of sales of bancassurance and beneficiary certificates. The majority of these fees and commission received for brokerage are from the business activities relevant to Consumer banking segment.

②

Fees and commission received related to credit

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③

Fees and commission received for electronic finance

④

Fees and commission received on foreign exchange handling

⑤

Fees and commission received on foreign exchange

⑥

Fees and commission received for guarantee

⑦

Fees and commission received on securities business

The fees and commission received on securities business consist mainly of fees and commission for the sale of beneficiary certificates, and these fees are recognized when the beneficiary certificates are sold to customers. The business activities relevant to these fees and commission received on credit card are substantially attributable to Consumer banking segment.

⑧

Fees and commission from trust management

⑨

Other fees

Other fees are usually fees related to remittances, but include fees related to various other services provided to customers by the Bank. These fees are recognized when transactions occur at the customers’ request and services are provided, at the same time when commissions are received. These other fees occur across all operating segments and no single operating segment represents majority of other fees.

ii)

Other revenue from contracts with customers

①

Interest income

Interest income on financial assets measured at FVTPL, FVTOCI and financial assets at amortized costs is measured using the effective interest method.

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The effective interest method is a method of calculating the amortized cost of debt securities (or group of financial assets) and of allocating the interest income over the expected life of the asset. The effective interest rate is the rate that exactly discounts estimated future cash flows to the instrument’s initial total carrying amount over the expected period, or shorter if appropriate. Future cash flows include commissions and cost of reward points (limited to the primary component of effective interest rate) and other premiums or discounts that are paid or received between the contractual parties, and future cash flows exclude expected credit loss when calculating the effective interest rate. All contractual terms of a financial instrument are considered when estimating future cash flows.

② Loan origination fees and costs

(5)	Accounting for foreign currencies

The Bank’s separate financial statements are presented in Korean Won, which is the functional currency of the Bank. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at its prevailing exchange rates at the date. The effective portion of the changes in fair value of a derivative that qualifies as a cash flow hedge and the foreign exchange differences on monetary items that form part of net investment in foreign operations are recognized in equity.

Assets and liabilities of the foreign operations subject to consolidation are translated into Korean Won at foreign exchange rates at the end of the reporting period. Except for situations in which it is required to use exchange rates at the date of transaction due to significant changes in exchange rates during the period, items that belong to profit or loss are measured by average exchange rate, with foreign exchange differences recognized as other comprehensive income and added to equity. When foreign operations are disposed, the controlling interest’s share of accumulated foreign exchange differences related to such foreign operations will be reclassified to profit or loss.

(6)	Cash and cash equivalents

The Bank is classifying cash on hand, demand deposits, interest-earning deposits with original maturities of up to three months on acquisition date, and highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value as cash and cash equivalents.

(7)	Financial assets and financial liabilities

Financial assets

On initial recognition, financial assets are classified into financial assets at FVTPL, financial assets at FVTOCI, and financial assets at amortized cost.

Business model

The Bank evaluates the way business is being managed, and the purpose of the business model for managing a financial asset best reflects the way information is provided to the management at its portfolio level. Such information considers the following:

•

The accounting policies and purpose specified for the portfolio, and the actual operation of such policies. This includes strategy of the management focusing on the receipt of contractual interest revenue, maintaining a certain level of interest income, matching the duration of financial assets and the duration of corresponding liabilities to obtain the asset, and outflow or realization of expected cash flows from disposal of assets

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•

The way the performance of a financial asset held under the business model is evaluated, and the way such evaluation is being reported to the management

•

The risk affecting the performance of the business model (and financial assets held under the business model), and the way such risk is being managed

•

The compensation plan for the management (e.g., whether the management is being compensated based on the fair value of assets or based on contractual cash flows received)

•

Frequency, amount, timing and reason for sale of financial assets in the past, and forecast of future sale activities

Contractual cash flows

The principal is defined to be the fair value of a financial asset at initial recognition. Interest is not only composed of consideration for the time value of money, consideration for the credit risk related to remaining principal at a certain period of time, and consideration for other cost (e.g., liquidity risk and cost of operation) and fundamental risk associated with lending, but also profit.

When evaluating whether contractual cash flows are solely payments of principal and interests, the Bank considers the contractual terms of the financial instrument. When a financial asset contains contractual conditions that modify the timing and amount of contractual cash flows, it is required to determine whether contractual cash flows that arise during the remaining life of the financial instrument due to such contractual condition are solely payments of principal and interest. The Bank considers the following elements when evaluating the following:

•

Conditions that lead to modification of timing or amount of cash flows

•

Contractual terms that adjust contractual nominal interest, including floating rate features

•

Early payment features and maturity extension features

•

Contractual terms that limit the Bank’s claim on cash flows arising from certain assets (e.g., non-recourse feature)

•

Terms of holding multiple contractually linked financial tranche that concentrate credit risk

In such case, credit risk comparison information of the instrument itself, the contractual cash flow characteristics of underlying financial instrument group and the underlying financial instrument group

①

Financial assets at FVTPL

The Bank is classifying those financial assets that are not classified as either financial assets at amortized cost or financial assets at FVTOCI, and those designated to be measured at FVTPL, as financial assets at FVTPL. Financial assets at FVTPL are measured at fair value, and related profit or loss is recognized in net income. Transaction costs related to acquisition at initial recognition is recognized in net income immediately upon its occurrence.

The Bank may, at initial recognition, irrevocably designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.

②

Financial assets at FVTOCI

At initial recognition, financial assets at FVTOCI is measured at its fair value plus any direct transaction cost, and is subsequently measured in fair value. The changes in fair value except for profit or loss items such as impairment losses (reversals), interest revenue calculated by using effective interest method, and foreign exchange gain or loss, and related income tax effects are recognized as other comprehensive income until the asset’s disposal. Upon derecognition, the accumulated other comprehensive income is reclassified from equity to net income for FVTOCI (debt instruments), and reclassified within the equity for FVTOCI (equity instruments)

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③

Financial assets at amortized cost

Financial liabilities

At initial recognition, financial liabilities are classified into either financial liabilities at FVTPL or financial liabilities at amortized cost.

Financial liabilities are usually classified as financial liabilities at FVTPL when they are acquired with a purpose to repurchase them within a short period of time, when they are part of a certain financial instrument portfolio that is actually and recently being managed with a purpose of short-term profit and joint management by the Bank at initial recognition, and when they are derivatives that do not qualify as hedging instruments. Financial liabilities at FVTPL are measured at fair value plus direct transaction cost at initial recognition and are subsequently measured at fair value. Gain or loss arising from financial liabilities at FVTPL is recognized in profit or loss when occurred.

It is possible to designate a financial liability as financial liability at FVTPL if at initial recognition: (a) it is possible to remove or significantly reduce recognition or measurement mismatch that may otherwise have occurred if not for its designation as financial liability at FVTPL; (b) the financial asset forms part of the Bank’s financial instrument group (a group composed of a combination of financial asset or liability) according to the Bank’s documented risk management or investment strategy, is measured at fair value and is being evaluated for its performance, and such information is provided internally; and (c) the financial liability is part of a contract that contains one or more of embedded derivatives, and is a hybrid contract in which designation as financial liability at FVTPL is allowed under K-IFRS No.1109 ‘Financial Instruments’.

Financial liabilities not classified as financial liabilities at FVTPL are measured at amortized cost.

Reclassification

Financial assets are not reclassified after initial recognition unless the Bank modifies the business model used to manage financial assets. When the Bank modifies the business model used to manage financial assets, all affected financial assets are reclassified on the first day of the first reporting period after the modification.

Derecognition

Financial assets are derecognized when contractual rights to cash flows from the financial assets are expired, or when substantially all of risk and reward for holding financial assets is transferred to another entity as a result of a sale of financial assets. If the Bank does not have and does not transfer substantially all of the risk and reward of holding financial assets with control of the transferred financial assets retained, the Bank recognizes financial assets to the extent of its continuing involvement. If the Bank holds substantially all the risk and reward of holding a financial asset, it continues to recognize that asset and proceeds are accounted for as collateralized borrowings.

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In case when a financial asset is not fully derecognized, the Bank allocates the book value into amounts retained in the books and removed from the books, based on the relative fair value of each portion at the date of sale, and based on the degree of continuing involvement. For the derecognized portion of the financial assets, the difference between its book value and the sum of proceeds and the portion of accumulated other comprehensive income attributable to that portion will be recognized in profit or loss in case of debt instruments and recognized in retained earnings in case of equity instruments. The accumulated other comprehensive income is distributed to the portion of book value retained in the books, and to the portion of book value removed from the books.

The Bank derecognizes financial liabilities when, and only when, the Bank’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

When the Bank exchanges with the existing lender one debt instrument into another one with substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Bank accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability.

Fair value of financial instruments

Financial assets at FVTPL and financial assets at FVTOCI are measured and presented in financial statements at their fair values, and all derivatives are also subject to fair value measurement.

When trade volume of a financial instrument is low, when transaction prices within the market show large differences among them, or when it cannot be concluded that a financial instrument is being traded within an active market due to disclosures being extremely shallow, fair value is measured using valuation techniques based on alternative market information or using internal valuation techniques based on general and observable information obtained from objective sources. Market information includes maturity and characteristics, duration, similar yield curve, and variability measurement of financial instruments of similar nature. Fair value amount contains unique assumptions on each entity (The Bank concluded that it is using assumptions applied in valuing financial instruments in the market, or risk-adjusted assumptions in case marketability does not exist).

The valuation techniques used in the evaluation of financial instruments are explained below.

Financial assets at FVTPL and Financial assets at FVTOCI

The fair value of equity securities included in financial assets at FVTPL and financial assets at FVTOCI category is recognized in the statement of financial position at its available market price. Debt securities traded in the over-the-counter market are generally recognized at an amount computed by an independent appraiser. When the Bank uses the fair value determined by independent appraisers, the Bank usually obtains three values from three different appraisers for each financial instrument, and selects the minimum amount without making additional adjustments. For equity securities without marketability, the Bank uses the amount determined by the independent appraiser. The Bank verifies the prices obtained from appraisers in various ways, including the evaluation of independent appraisers’ competency, indirect verification through comparison between appraisers’ price and other available market information, and reappraisal done by employees who have knowledge of valuation models and assumptions that appraisers used.

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Derivatives

The Bank’s transactions involving derivatives such as futures and exchange traded options are measured at market value. A portion of exchange traded derivatives classified as level 2 in the fair value hierarchy, the fair value is estimated using internal valuation techniques. If there are no publicly available market prices because they are traded over-the-counter, fair value is measured through internal valuation techniques. When using internal valuation techniques to derive fair value, the types of derivatives, base interest rate or characteristics of prices, or stock market indices are considered. When variables used in the internal valuation techniques are not observable information in the market, such variables may contain significant estimates.

Adjustment of valuation amount

The Bank is exposed to credit risk when a counterparty to a derivative contract does not perform its contractual obligation, and the exposure amount is equal to the amount of derivative asset recognized in the statement of financial position. When the Bank earns income through derivatives, such income is recognized as derivative asset in the statement of financial position. Some of the derivatives are traded in the market, but most of the derivatives are measured at estimated fair value derived from internal valuation models that use observable information in the market. As such, in order to estimate the fair value, there should be an adjustment made to incorporate counterparty’s credit risk, and credit risk adjustment is being considered when valuing derivative assets such as over-the counter derivatives. The amount of financial liabilities is also adjusted by the Bank’s own credit risk when valuing them.

The amount of adjustment is derived from counterparty’s probability of default and loss given default. This adjustment considers contractual matters that are designed to reduce the Bank’s exposure to each counterparty’s credit risk. When derivatives are under master netting arrangement, the exposure used in the computation of credit risk adjustment is a net amount after adding/deducting cash collateral received (or paid) from loss(or gain) position derivatives with the same counterparty.

Expected credit losses on financial assets

The Bank recognizes loss allowance on expected credit losses for the following assets:

•

Financial assets at amortized cost

•

Debt instruments measured at FVTOCI

•

Contract assets as defined by K-IFRS No.1115

The methods to measure expected credit losses are classified into following three categories in accordance with K-IFRS:

•

General approach: Financial assets that do not belong to below two models and unused loan commitments

•

Simplified approach: When financial assets are either trade receivables, contract assets or lease receivables

•

Credit impairment model: Purchased or originated credit-impaired financial assets

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Measurement of expected credit losses on financial asset at amortized cost

When financial assets are not individually significant, they are included in a group of financial assets with similar credit risk characteristics and expected credit losses of the Bank are calculated collectively.

Measurement of expected credit losses on financial asset at FVTOCI

The measurement method of expected credit loss is identical to financial asset at amortized cost, but changes in the allowance is recognized in other comprehensive income. When financial assets at FVTOCI is disposed or repaid, the related allowance is reclassified from other comprehensive income to net income.

(8)	Offsetting financial instruments

Financial assets and liabilities are presented as a net amount in the statements of financial position when the Bank has an enforceable legal right and an intention to settle on a net basis or to realize an asset and settle the liability simultaneously.

(9)	Investment properties

The Bank classifies a property held to earn rentals and/or for capital appreciation as an investment property. Investment properties are measured initially at cost, including transaction costs, less subsequent depreciation and impairment.

Subsequent costs are included in the carrying amount of the asset or recognized as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Bank and the cost of an asset can be measured reliably, and the book value of a portion of an asset that are replaced by a subsequent expenditure is removed from the books. Routine maintenance and repairs are expensed as incurred.

While land is not depreciated, all other investment properties are depreciated based on the depreciation method and useful lives of properties and equipment. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, and when it is deemed appropriate to change them, the effect of any change is accounted for as a change in accounting estimates.

An investment property is derecognized from the separate financial statements on disposal or when it is permanently withdrawn from use and no future economic benefits are expected even from its disposal. The gain or loss from derecognition of an investment property is calculated as the difference between the net disposal proceeds and the carrying amount of the property, and is recognized in profit or loss of the period.

(10)	Properties and equipment

Properties and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of properties and equipment is expenditure directly attributable to their purchase or construction, which includes any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. It also includes the initial estimate of costs of dismantling and removing the item and restoring the site on which it is located.

Subsequent costs are recognized in the carrying amount of an asset or as a separate asset (if appropriate) if it is probable that future economic benefit associated with the assets will flow into the Bank and the cost of an asset can be measured reliably. Routine maintenance and repairs are expensed as incurred.

- 22 -

While land is not depreciated, for all other properties and equipment, depreciation is charged to net income on a straight-line basis by applying the following estimated economic useful lives on the amount of cost or revalued amount less residual value.


	Useful life
Buildings used for business purpose		40 years
Structures in leased office		5 years
Properties for business purpose		5 years

The Bank reassesses the depreciation method, the estimated useful lives and residual values of properties and equipment at the end of each reporting period. If changes in the estimates are deemed appropriate, the changes are accounted for as a change in an accounting estimate. When there is an indicator of impairment and the carrying amount of a properties and equipment item exceeds the estimated recoverable amount, the carrying amount of such asset is reduced to the recoverable amount.

(11)	Intangible assets and goodwill

The Bank is recognizing intangible assets measured at the manufacturing cost or acquisition cost plus additional incidental expenses less accumulated amortization and accumulated impairment losses. The Bank’s intangible asset are amortized over the following economic lives using the straight-line method. The estimated useful life and amortization method are reviewed at the end of each reporting period. If changes in the estimates are deemed appropriate, the changes are accounted for as a change in an accounting estimate.


		Useful life
Industrial property rights		5 to 10 years
Development costs		5 years
Other intangible assets		5 years or contract period

Goodwill is not amortized, but is subject to an impairment test every year, and whenever there is an indicator that goodwill is impaired.

Goodwill is allocated to each of the Bank’s cash-generating unit (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill cannot be reversed in subsequent periods.

(12)	Impairment of non-monetary assets

(13)

Leases

The Bank determines whether the agreement is a lease or includes a lease at the time of the agreement. In exchange for consideration in the contract, if the control over the use of the identified asset is transferred for a period of time, the contract is a lease or includes a lease. In determining whether a contract transfers control of the use of the identified asset, the Bank uses the definition of a lease in K-IFRS No.1116.

- 23 -

The Bank as a lessee

The Bank recognizes the right-of-use asset and the lease liability at the commencement date of the lease. The right-of-use asset is measured at cost, which comprises the amount of the initial measurement of the lease liability, lease payments made at or before the commencement date (less any lease incentives received), initial direct costs, and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located.

The lease liability is initially measured at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, but if that cannot be readily determined, the Bank uses its incremental borrowing rate. The Bank generally uses the incremental borrowing rate.

The lease payments included in the measurement of the lease liability comprise the following:

•

Fixed payments (including in-substance fixed payments)

•

Variable lease payments that depend on an index (or a rate), initially measured using the index or rate as at the commencement date

•

Amounts expected to be payable by the lessee under residual value guarantees

•

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

Most extension options in offices and vehicles leases have not been included in the lease liability, because the Bank could replace the assets without significant cost or business disruption.

The lease term is reassessed if an option is actually exercised (or not exercised) or the Bank becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

- 24 -

In the statement of financial position, the Bank classified the right-of-use assets that do not meet the definition of investment property as ‘properties and equipment’ and the lease liabilities as ‘other financial liabilities.’

The Bank has chosen a practical expedient that does not recognize the right-of-use asset and lease liabilities for short-term leases with a lease term less than 12 months and leases for which the underlying asset is of low value. The Bank recognizes the lease payments associated with those leases as an expense on a straight-line basis over the lease term.

The Bank as a lessor

At the date of the agreement or the effective date of the modification containing the lease element, the Bank allocates the consideration of the contract to each lease element on the basis of its relative stand-alone price.

As a lessor, the Bank classifies its leases as either an operating lease or a finance lease at the commencement date.

The Bank subsequently judges whether the lease transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset, otherwise a lease is classified as an operating lease.

If the agreement contains both lease and non-lease elements, the Bank applies K-IFRS No.1115 to allocate the consideration of the contract.

The Bank applies derecognition and impairment provisions of K-IFRS No.1109 to its net investment in the lease. The Bank also carries out regular review of the unguaranteed residual value used to calculate total lease investment.

The Bank recognizes lease payments from operating lease as income on a straight-line basis.

The accounting policy that the Bank has applied as a lessor is not different from K-IFRS No.1116.

(14)	Derivative instruments

Derivatives are initially recognized at fair value at the date of contract and are subsequently measured at fair value at the end of each reporting period. The resulting gain or loss is recognized in net income immediately unless the derivative is designated and effective as a hedging instrument. If derivatives have been designated as hedging instruments and if it is effective, the point of recognition of gain or loss depends on the characteristics of hedging relationship.

Embedded derivatives

If embedded derivatives are part of a hybrid contract of which the host contract is not a financial asset within the scope of K-IFRS No.1109 (e.g., financial liability), then these are treated as separate derivatives if embedded derivatives meet the definition of a derivative, characteristics and risk of the embedded derivatives are not closely related to that of host contract, and if the host contract is not measured at FVTPL.

- 25 -

Hedge accounting

The Bank is applying K-IFRS No.1109 in regard to hedge accounting. The Bank designates certain derivatives as hedging instrument against fair value changes in relation to the interest rate risk, foreign currency translation and interest rate risk, and foreign currency translation risk.

The Bank documents the relationship between hedging instruments and hedged items at the commencement of hedging in accordance with their purpose and strategy. Also, the Bank documents at the commencement and subsequent dates whether the hedging instrument effectively counters the changes in fair value of hedged items. A hedging instrument is effective only when it meets all the following criteria:

•

When there is an economic relationship between the hedged items and hedging instruments.

•

When the effect of credit risk is not stronger than the change in value due to the economic relationship between the hedged items and hedging instruments.

•

When the hedge ratio is equal to the proportion and the number of hedged items to those of the hedging instruments.

The Bank designated only the part of derivative financial instruments except for the foreign currency basis spread. Changes in value due to the corresponding foreign currency basis spread are recognized in other comprehensive income and accumulated in equity items. If the hedged item relates to a transaction, the accumulated other comprehensive income is reclassified to profit or loss when the hedged item affects profit or loss.

However, if the hedged item subsequently recognizes a non-financial item, the accumulated amount in the equity item is removed directly from equity and included in the initial carrying amount of the recognized non-financial item. This transfer does not affect other comprehensive income.

However, if all or some of the accumulated equity items are not expected to recover in a future period, the amounts that are not expected to recover are immediately reclassified to profit or loss. If the hedged item relates to a period, the portion of the foreign currency basis spread at the date the derivative is designated as a hedging instrument is reclassified to profit or loss over the period of the hedge.

Fair value hedge

The book value of hedged items that are not measured in fair value is adjusted by the changes in fair value arising from the hedged risk, with resulting gain or loss reflected in net income. In case of debt instruments measured at FVTOCI, book value is an amount that is already adjusted to fair value and thus gain or loss arising from the hedged risk is recognized in profit or loss instead of other comprehensive income without adjustments in book value. When the hedged item is equity instruments measured at FVTOCI, the gain or loss arising from hedged risk is retained at other comprehensive income in order to match the gain or loss with hedging instruments.

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(15)	Assets (or disposal group) held for sale

The Bank classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered through a sale transaction rather than through continuing use. Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

(16)	Provisions

The Bank recognizes provision if (a) it has present or contractual obligations as a result of the past event, (b) it is probable that an outflow of resources will be required to settle the obligation and (c) the amount of the obligation is reliably estimated. Provision is not recognized for the future operating losses.

The Bank recognizes provision related to the unused membership points, payment guarantees, loan commitment and litigations. Where the Bank is required to restore a leased property that is used as a branch to an agreed condition after the contractual term expires, the present value of expected amounts to be used to dispose, decommission or repair the facilities is recognized as an asset retirement obligation.

(17)	Capital and compound financial instruments

The Bank classifies a financial instrument that it issues as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. A financial liability is a contractual obligation to deliver cash or another financial asset to another entity. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

If the Bank reacquires its own equity instruments, the consideration paid including the direct transaction costs (net of tax expense) are presented as a deduction from total equity until such instruments are retired or reissued. When these instruments are reissued, the consideration received (net of direct transaction costs) is included in the shareholder’s equity.

(18)	Financial guarantee liabilities

•

Loss allowance in accordance with K-IFRS No.1109

•

Initial book value less accumulated profit measured in accordance with K-IFRS No.1115

(19)	Employee benefits and pensions

The Bank recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by the employees. Also, the Bank recognizes expenses and liabilities in the case of accumulating compensated absences when the employees render services that entitle their right to future compensated absences. Similarly, the Bank recognizes expenses and liabilities for customary profit distribution or bonuses when the employees render services, even though the Bank does not have legal obligation to do so because it can be construed as constructive obligation.

The Bank is operating defined contribution plans and defined benefit plans. Contributions to defined contribution plans are recognized as an expense when employees have rendered services entitling them to receive the benefits. For defined benefit plans, the defined benefit liability is calculated through an actuarial assessment using the projected unit credit method every end of the reporting period, conducted by professional actuaries. Remeasurement, comprising actuarial gains and losses, the return on plan assets (excluding interest), and the effect of the changes to the asset ceiling (if applicable) is reflected immediately in the separate statement of financial position with a charge or credit recognized as other comprehensive income in the period in which they occur.

- 27 -

Remeasurement recognized in the statement of comprehensive income is not reclassified to profit or loss in the subsequent periods. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are composed of service cost (including current service cost and past service cost, as well as gains and losses on curtailments and settlements), net interest expense (income) and remeasurement.

The Bank presents the service cost and net interest expense (income) components in profit or loss, and the remeasurement component in other comprehensive income. Curtailment gains and losses are accounted for as past service costs.

The retirement benefit obligation recognized in the separate statement of financial position represents the actual deficit or surplus in the Bank’s defined benefit plans. Any surplus resulting from this calculation is recognized as an asset limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

Liabilities for termination benefits are recognized at the earlier of either 1) the date when the Bank is no longer able to cancel its proposal for termination benefits or 2) the date when the Bank has recognized the cost of restructuring that accompanies the payment of termination benefits.

(20)	Financial liabilities designated as hedge of a net investment in a foreign operation

When applying hedge accounting of net investment in a foreign operation, the effective portion of changes in fair value of the hedging instrument is recognized in other comprehensive income and the ineffective portion of the hedge is recognized as current profit or loss in order to offset changes in the fair value of the hedged item caused by the hedging with changes in the fair value of the hedging instrument. The effective portion of hedge recognized in other comprehensive income will be reclassified from other comprehensive income to current profit or loss in accordance with K-IFRS No.1021 ‘The Effects of Changes’ in Foreign Exchange Rates at the time of disposal of a foreign operation or disposal of a portion of its foreign operations in the future.

(21)	Income taxes

Deferred income tax assets and liabilities are offset if, and only if, the Bank has a legally enforceable right to offset current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority or when the entity intends to settle current tax liabilities and assets on a net basis with different taxable entities.

- 28 -

The tax uncertainty arises from the compensation claim filed by the company, and the refund litigation for the amount of tax levied by the tax authority due to differences in tax law analysis In response, the Bank paid taxes in accordance with K-IFRS No.2123 due to the tax authority’s claim, but recognized as a corporate tax asset if it is highly probable of a refund in the future.

(22)	Earnings per share (“EPS”)

- 29 -

3.	SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

The significant accounting estimates and assumptions are continuously evaluated based on a number of factors, including historical experience and expectations for future events that are reasonably considered probable. Accounting estimates based on these definitions may not match the actual occurrence results. Accounting estimates and assumptions that include significant risks that could significantly alter the carrying amount of assets and liabilities currently accounted for in the next accounting period are as follows:

The Korean government implemented support measures such as loan repayment deferment to mitigate the negative impact of COVID-19. The bank has assessed that the credit risk of loans affected by repayment deferment has significantly increased, with a high possibility of default. The Bank will continue to evaluate the adequacy of forecast information regarding the duration of the economic aftermath of COVID-19 and future government policies even after the end of the financial support. The Bank also manages credit risk on loans with extended maturities.

The Bank recognizes additional expected credit loss allowance for loans subject to payment holiday and extended maturities due to the assessment of the high possibility of default.

Total loans subject to payment holiday (loan, payment guarantees) on December 31, 2023 and 2022, among which credit risk has increased significantly due to payment holiday, total loans transferred from 12-month expected credit loss measurement to lifetime expected credit losses (Stage2) and additionally recognized expected credit loss allowances are as follows (Unit: Korean Won in millions):


			December 31, 2023		December 31, 2022
Total loans that are subject to payment holiday	Loan	Corporate		1,453,314		1,958,133
		Retail		130,090		216,487
	Off-balance accounts			22,038		2,391

	Total			1,605,442		2,177,011

Total loans that changed its stage from 12-month to lifetime (Stage 2) expected credit losses	Loan	Corporate		1,367,603		1,774,717
		Retail		101,422		169,851
	Off-balance accounts			6,642		2,391

	Total			1,475,667		1,946,959

The expected credit loss allowances that are additionally recognized	Loan	Corporate		210,386		312,054
		Retail		9,318		12,643
	Off-balance accounts			1,734		317

	Total			221,438		325,014

Total loans subject to extended maturities and additionally expected credit loss allowance as of December 31, 2023 are as follows (Unit: Korean Won in millions):


			December 31, 2023
Total loans subject to maturities are extended	Loans	Corporate		5,227,017
		Retail		2,124,207
	Off-balance accounts			31,976

	Total			7,383,200

The expected credit loss allowance that are additionally recognized	Loan	Corporate		58,545
		Retail		35,515
	Off-balance accounts			115

	Total			94,175

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In addition, as of December 31, 2023, the Bank reflects the forward-looking information in the estimated probability of default rate and loss given default and recognizes additional expected credit loss allowances appropriations by adjusting the forward-looking indicators in consideration of the Korean government financial providing policies, increased economic uncertainty, and potential insolvency due to market interest rate hikes.

The impact of changes including methodology for estimating the risk components(RC) during the current period is as follows (Unit: Korean Won in millions):


		Impact of changes in estimates
Expected credit loss allowances	Loans and other financial assets at amortized cost		310,636
	Guarantees and unused commitments		39,087
	Financial assets at FVTOCI		788
	Securities at amortized cost		574

	Total		351,085

(*)	The impact of changes including methodology for estimating probability of default rate and loss given default are 203,832 million Won and 147,253 million Won, respectively.

(1)	Income taxes

The Bank has recognized current and deferred taxes based on best estimates of expected future income tax effect arising from the Bank’s operations until the end of the current reporting period. However, actual tax payment may not be identical to the related assets and/or liabilities already recognized, and these differences may affect current taxes and deferred tax assets/liabilities at the time when income tax effects are finalized. Deferred tax assets relating to tax losses carried forward and deductible temporary differences are recognized only to the extent that it is probable that future taxable profit will be available against which the tax losses carried forward and the deductible temporary differences can be utilized. In this case the Bank’s evaluation considers various factors such as estimated future taxable profit based on forecasted operating results, which are based on historical financial performance. The Bank is reviewing the book value of deferred tax assets every end of the reporting period and in the event that the possibility of earning future taxable income changes, the deferred tax assets are adjusted up to taxable income sufficient to use deductible temporary differences.

(2)	Valuation of financial instruments

Financial assets at FVTPL and FVTOCI are recognized in the separate financial statements at fair value. All derivatives are measured at fair value. Valuation techniques are required in order to determine fair values of financial instruments where observable market prices do not exist. Financial instruments that are not actively traded and have low price transparency will have less objective fair value and require broad judgment in liquidity, concentration, uncertainty in market factors and assumption in price determination and other risks.

As described in Note 2 (7) 5), ‘Fair value of financial assets and liabilities’, when valuation techniques are used to determine the fair value of a financial instrument, various general and internally developed techniques are used, and various types of assumptions and variables are incorporated during the process.

(3)	Impairment of financial instruments

The accuracy of the provision for credit losses is determined by the estimation of the expected cash flows for

each tenant for estimating the individually assessed loan-loss allowance, and the assumptions and variables in the model used for estimating the collectively assessed loan-loss allowance payment guarantee and unused commitment.

The Bank has estimated the allowance for credit losses based on reasonable and supportable information that was available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The measurement of expected credit loss is described in 4. Risk management (1) 3) Measurement of expected credit loss.

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(4)	Defined benefit plan

The Bank operates a defined benefit pension plan. Defined benefit obligation is calculated at every end of the reporting period by performing actuarial valuation, and estimation of assumptions such as discount rate, expected wage growth rate and mortality rate is required to perform such actuarial valuation. The defined benefit plan, due to its long-term nature, contains significant uncertainties in its estimates.

4.	RISK MANAGEMENT

The Bank’s operating activity is exposed to various financial risks. The Bank is required to analyze and assess the level of complex risks and determine the permissible level of risks and manage such risks. The Bank’s risk management procedures have been established to improve the quality of assets for holding or investment purposes by making decisions as how to avoid or mitigate risks through the identification of the source of the potential risks and their impact.

The Bank has established an approach to manage the acceptable level of risks and reduce the excessive risks in financial instruments in order to maximize the profit given risks present, for which the Bank has implemented risk management processes of identification, measurement, assessment, control, monitoring and reporting of risk.

The risk is managed in accordance with the Bank’s risk management policy. The Risk Management Committee, at the top decision-making level, makes decisions on the risk strategies such as the allocation of internal capital and the establishment of acceptable level of risk.

(1)	Credit risk

Credit risk represents the potential financial losses that may incur in the future when the counterparty refuses to fulfill or lost the ability to fulfill its contractual obligations. The goal of credit risk management is to maintain the Bank’s credit risk exposure to a permissible degree and to optimize its rate of return considering such credit risk.

Credit risk management

Credit facilities limit management

The Bank calculates and manages the appropriate borrowing limits by aggregation, business and industry through management of aggregation, total exposure and portfolio.

Credit risk monitoring organization and role

①

Large enterprise loan credit department

•

Examination, approval and maintenance of loans to large enterprises (including small and medium enterprises affiliated with major debt group)

•

Examination, approval, and maintenance of loans to government agencies, public (50% or more of investments and contributions) and other corporations

•

Examination, approval, and maintenance of overseas branches and local corporations of domestic corporations

•

Examination, approval, and maintenance of relevant real estate PF (large or non-confirmed construction enterprises

•

Operation control, etc. ‘the Credit Management for Affiliate Enterprise Groups’ as specified by the Regulation on Supervision of Bank Business, etc.

②

Small and medium-sized enterprise loan credit department

•

Examination, approval, and follow-up management of loans to small and medium-sized enterprises (excluding small and medium enterprises affiliated with major debt affiliates)

•

Examination, approval, and follow-up management of loans to public institutions(less than 50% of investments and contributions) and other corporations

•

Consultation on loan examination, and agreement on the approval (including follow-up) of overseas branches and local corporations of the enterprises

- 32 -

•

Examination, approval, and follow-up management of relevant real estate PF (Small- and medium- construction enterprises or non-confirmed)

•

Examination, approval, and follow-up management, etc. of business loans related to National Housing and Urban Fund

③

Personal loan credit department

•

Examination, approval, and maintenance of personal and individual business loans

•

Examination and approval of collective loans (including cases where construction enterprise is subject to workout)

④

Corporation workout department

•

General management of enterprises subject to workout, etc.

•

General management of enterprises subject to pre-workout, etc. with the management on the borrower in the course of corporate rehabilitation procedures

•

Workout activities such as the establishment and implementation of corporate workout plans performed for relevant enterprise

•

Pre-workout activities such as the establishment and implementation of corporate management diagnosis and management plans performed for relevant enterprise

•

Credit examination, approval, setting total exposure limit and maintenance for relevant enterprise

•

Examination and execution of loans for sound post-management of rehabilitation bonds such as examination, approval, and maintenance of overseas branches and local corporations of the relevant enterprise

⑤

Global IB Monitoring Department

•

Credit examination, approval and maintenance related to IB Group Investment Banking

•

Credit examination, approval, and follow-up of overseas branches or subsidiaries of local companies, foreign companies

•

Support for related tasks such as credit screening and maintenance of overseas review centers

•

Establishing and managing total exposure limits for affiliated companies

•

Management of approved loans (deferred, asset soundness, portfolio, etc.)

•

Credit limit management designated by the Banking Act for the affiliated companies.

Credit screening and post monitoring or post management

①

Objective

•

To maintain appropriate credit ratings and improve asset quality

②

Main activities

•

Review the adequacy of credit and credit ratings, and maintain the consistency in application of ratings

•

Review the appropriateness of asset classification by quality and the provision for credit losses

•

Overall analysis of loan portfolio quality

•

Inspection of compliance with loan policies and relevant regulations, and recommendation for modification of policies

•

Review the appropriateness of loan approval and compliance with loan commitments

•

Post-inspection of the branches’ discretionary decision for loans

•

Assessing the accuracy of the identification of bad loans and the timeliness of actions taken by the person in charge of the loan

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ii)	Current status by measurement method

Method of calculating risk-weighted assets

①

The Bank calculates the risk-weighted assets of the credit risk by obtaining approval of the internal rating based approach.

②

The internal rating based approach meets the qualitative and quantitative requirements set by the Financial Supervisory Service, including the use of advanced techniques in risk measurement, as well as the establishment of an internal control and risk management system. It enables more accurate measurement and management of credit risk than the standard method.

•

The internal rating based approach

Overview and utilization scope of credit rating evaluation model

①

Definition of corporate credit rating model

The corporate credit rating is the assessment of the possibility of default by the counterparty. It includes both scoring assessments that are evaluated according to quantitative methods using financial statements, etc., representative assessments that are evaluated according to quantitative methods using loans, deposit transactions, etc. of the representative’s the Bank itself and other financial institutions, and Judgment evaluations that are evaluated by the evaluator’s subjective judgment. This represents that the degree of credit risk assessed is presented in a systematic manner.

②

Operation of corporate credit rating model

•

Evaluation model of local governments

•

Evaluation model of public institutions

•

Evaluation model of financial institutions: Banks, insurance companies, financial investment, and other financing

•

Evaluation model of overseas companies

•

Evaluation model of non-profit organization: Private schools, medical institutions, religious organizations, and other organizations

•

Specialized lending evaluation model: PF(Project Financing), OF(Object Financing), CF(Commodities Financing), real estate financing for sale, Real estate financing for rent, fund financing, acquisition financing, asset securitization.

③

Corporate credit rating system

The corporate credit rating system is divided into 14 grades (13 normal, 1 default) system, and each credit rating is presented in English (AAA~D).

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①

Definition of retail credit scoring model

•

Application Scoring System (ASS) : The model determines credit rating by statistically calculating credit score for new retail loan applications using personal information, transaction information and credit information.

•

Behavior Scoring System (BSS) : The model determines credit rating by statistically calculating credit score for existing retail loans using transaction information and credit information.

②

Operation of retail credit scoring model

•

SOHO loan credit scoring model: ASS / BSS scoring model

•

Household loan credit scoring model: ASS / BSS scoring model

③

Retail credit scoring model evaluation system : Presented in number from grade 1 to 10

①

Utilizes as a key component in calculating BIS credit risk-weighted assets

②

Supports prompt loan decision-making by applying for interest rate (pricing), and discretionary decision-making, etc.

③

Utilizes to measure overall risk such as assets quality and provisions for the credit losses

④

Utilizes as an indicator of Risk Adjusted Performance Measurement and relevant performance measurement

Control structure for credit evaluation system (including content related to grade change)

①

Securing the independence of granting credit rating

The credit rating is granted through the evaluation department ((large enterprise, small and medium-sized enterprise, personal etc.) that is independent from the sales department, but the head of the branch has authority to grant credit ratings to small-scale loans according to the size of the loans. The Bank clearly defines and operates procedures such as override, check list, authority and procedures, and review when granting credit ratings. For credit ratings granted by a sales branch and the evaluation department, periodic and regular loan reviews are performed by the credit supervision department to assess the consistency and timeliness of credit ratings.

②

Securing independence of credit risk control operations

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③

Validation of credit evaluation systems by an independent third party

④

Strengthen the role of the Board of Directors and management

Scope of application of internal rating method


BIS Ratio calculation method		Exposure category	Date of approval
Standard method	Permanent standard method	Government, public institutions, banks	October 30, 2008
	Standard method	Subsidiaries, overseas branches, other assets	October 30, 2008
Internal rating based method		Large/small and medium-sized enterprise exposure (external audit IFRS, external audit GAAP, non-external audit1, non-external audit2, personal business model), retail exposure, asset-backed exposure (Credit Rating Act)	October 30, 2008 February 13, 2015
Stepwise application		Special financing, financial institutions, non-profit organizations, and public institutions	October 30, 2008

iii)	Measurement of expected credit loss

K-IFRS No.1109 ‘Financial Instruments’ requires entities to measure loss allowances equal to 12-month expected credit losses or lifetime expected credit losses after classifying financial assets into one of the three stages, depending on the degree of increase in credit risk since their initial recognition.


Classification	Stage 1	Stage 2	Stage 3
Definition	No significant increase in credit risk after initial recognition (*)	Significant increase in credit risk after initial recognition	Credit-impaired
Loss allowances	12-month expected credit losses	Lifetime expected credit losses
	Expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date	Expected credit losses that result from all possible default events over the life of the financial instrument

(*)	If the financial instrument has low credit risk at the end of the reporting period, the Bank may assume that the credit risk has not increased significantly since initial recognition.

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At the end of each reporting period, the Bank assesses whether the credit risk has increased significantly since initial recognition by using credit rating, assets soundness, early warning system, days past due and other.

The Bank performs the above assessment to both corporate and retail exposures, and indicators of significant increase in credit risk are as follows:


Corporate Exposures		Retail Exposures
Asset quality level ‘Precautionary’ or lower		Asset quality level ‘Precautionary’ or lower

More than 30 days past due		More than 30 days past due

‘Warning’ level in early warning system		Significant decrease in credit rating (*)

Debtor experiencing financial difficulties (Capital impairment, Adverse opinion or Disclaimer of opinion by external auditors)		Deferment of repayment of principal and interest

Significant decrease in credit rating (*)		Deferment of interest

Deferment of repayment of principal and interest

Deferment of interest

(*)	The Bank has applied the indicators of significant decrease in credit rating since the initial recognition as follows, and the estimation method is regularly being monitored.


	Credit rating	Indicators of significant decrease in credit rating
Corporate	AAA ~ A+	More than 4 steps
	A- ~ BBB	More than 3 steps
	BBB- ~ BB+	More than 2 steps
	BB ~ BB-	More than 1 step
Retail	1 ~ 3	More than 3 steps
	4 ~ 5	More than 2 steps
	6 ~ 9	More than 1 step

The Bank determined that there was no significant increase in credit risk after the initial recognition for debt securities, etc. with a credit rating of A + or higher, which are deemed to have low credit risk at the end of the reporting period.

The Bank concludes that credit is impaired when financial assets are under conditions stated below:

•

When principal of loan is overdue for 90 days or longer due to significant deterioration in credit

•

For loans overdue for less than 90 days, when it is determined that not even a portion of the loan will be recovered unless claim actions such as disposal of collaterals are taken

•

When other objective indicators of impairment have been noted for the financial asset

The Bank has estimated the expected credit loss allowances using an estimation model that additionally reflects the forward looking information based on the past experience loss rate data.

Probability of default (PD) and loss given default (LGD) for each category of financial asset are calculated considering factors such as debtor type, credit rating and portfolio. The estimates are regularly being reviewed in order to reduce discrepancies with actual losses.

In measuring the expected credit losses, the Bank is reasonably using supportable macroeconomic indicators such as GDP growth rate, Personal consumption expenditures increase/decrease rate and Won-dollar exchange rate, etc. in order to forecast forward looking information conditions.

- 37 -

The Bank applies the following forward-looking model and reviews the results regularly.

•

Development of estimation models through regression analysis of borrower(corporate/-retail), year-by-year default rate and macroeconomic indicator data by year


Major macroeconomic indicators		Correlation between credit risk and macroeconomic indicators
GDP growth rate		Negative (-) Correlation
Personal consumption expenditures increase/decrease rate		Negative (-) Correlation
Won-dollar exchange rate		Positive (+) Correlation

•

Forecast of macroeconomic variables

Probability weight

As of December 31, 2023, the probability weights applied to the scenarios of the forecasts of macroeconomic variables is as follows (Unit: %):


	Base Scenario		Upside Scenario		Downside Scenario		Worst Scenario
Probability weight		44.36		9.41		26.23		20.00

Economic forecast of each major macroeconomic variables by scenario (prospect period: 2024)

As of December 31, 2023, the forecasts of major macroeconomic variables by scenario are as follows (Unit: Won, %):


	Base Scenario		Upside Scenario		Downside Scenario		Worst Scenario
GDP growth rate		2.10		2.29		1.76		(-)5.10
Personal consumption expenditures increase/decrease rate		1.90		2.27		1.23		(-)12.22
Won-dollar exchange rate		1,263		1,255		1,277		1,560

As of December 31, 2023 and 2022, the sensitivity of the provision for expected credit loss allowances due to changes in macroeconomic indicators is as follows (Unit: Korean Won in millions):


			December 31, 2023 (*1)
Corporate	Personal consumption expenditures increase/decrease rate	Increase by 1% point		(46,211	)
Corporate	Personal consumption expenditures increase/decrease rate	Decrease by 1% point		52,862
Retail	Consumer price index change rate (*2)	Increase by 1% point		—
		Decrease by 1% point		—


			December 31, 2022 (*1)
Corporate	Personal consumption expenditures increase/decrease rate	Increase by 1% point		(59,987	)
Corporate	Personal consumption expenditures increase/decrease rate	Decrease by 1% point		68,036
Retail	Consumer price index change rate (*2)	Increase by 1% point		(24,164	)
		Decrease by 1% point		28,042

(*1)	The sensitivity of GDP growth rate and won-dollar exchange rate to the bank’s expected credit loss allowances is not significant.

(*2)	The consumer price index was excluded from the estimation model of the future economic forecast for the year ended December 31, 2023.

- 38 -

•

When reflecting the predicted default rate, the increase rate is used as a future economic forecast adjustment coefficient and reflected in the estimate applied for the current year.

iv)

Maximum exposure to credit risk

The Bank’s maximum exposure to credit risk refers to net book value of financial assets net of expected credit loss allowances, which shows the uncertainties of maximum changes of net value of financial assets attributable to a particular risk without considering collateral and other credit enhancements obtained. However, the maximum exposure is the fair value amount (recorded on the books) for derivatives, maximum contractual obligation for payment guarantees loan commitment. Additionally, loan commitments are the unused commitment amounts that represent the maximum exposure to credit risk for each loan.

The maximum exposures to credit risk as of December 31, 2023 and 2022, are as follows

(Unit: Korean Won in millions):


		December 31, 2023		December 31, 2022
Loans and other financial assets at amortized cost	Korean treasury and government agencies		2,238,375		2,844,619
	Banks		19,732,220		17,739,805
	Corporates		131,411,383		121,194,896
	Retail		167,428,639		167,006,073

	Sub-total		320,810,617		308,785,393

Financial assets at FVTPL (*1)	Due from banks		39,241		34,995
	Debt securities		4,067,596		2,125,303
	Loans		—		19,169
	Derivative assets		5,791,449		8,183,086

	Sub-total		9,896,289		10,362,553

Financial assets at FVTOCI	Debt securities		35,303,429		30,713,032
Securities at amortized cost	Debt securities		23,584,608		27,304,915
Derivative assets(Designated for hedge)			698		—
Off-balance accounts	Guarantees (*2)		16,029,920		11,944,257
	Loan commitments		83,196,929		75,023,259

	Sub-total		99,226,849		86,967,516

	Total		488,824,487		464,133,409

(*1)	Puttable instruments are not included.

(*2)	Include 6,539,824 million Won and 3,714,228 million Won of financial guarantees as of December 31, 2023 and 2022, respectively.

- 39 -

Credit risk exposure by geographical areas

The following tables analyze credit risk exposure by geographical areas (Unit: Korean Won in millions):


	December 31, 2023
	Korea		U.S.A		U.K		Japan		Others (*)		Total
Loans and other financial assets at amortized cost		310,924,633		1,870,959		260,834		608,258		7,145,933		320,810,617
Securities at amortized cost		22,529,414		1,006,742		—		—		48,452		23,584,608
Financial assets at FVTPL		7,156,903		1,440,175		355,478		143,229		802,501		9,898,286
Financial assets at FVTOCI		32,422,601		2,200,514		—		32,194		648,120		35,303,429
Derivative assets (Designated for hedge)		—		—		—		698		—		698
Off-balance accounts		97,206,159		444,545		20,045		26,351		1,529,749		99,226,849
Guarantees		15,086,472		143,212		20,045		26,351		753,840		16,029,920
Loan commitments		82,119,687		301,333		—		—		775,909		83,196,929

Total		470,239,710		6,962,935		636,357		810,730		10,174,755		488,824,487

(*)	Others consist of financial assets in Hong Kong, Germany, Australia, and other countries.


	December 31, 2022
	Korea		U.S.A		U.K		Japan		Others (*)		Total
Loans and other financial assets at amortized cost		301,119,133		1,336,016		215,174		714,182		5,400,888		308,785,393
Securities at amortized cost		26,883,967		376,247		16,658		—		28,043		27,304,915
Financial assets at FVTPL		6,246,731		2,210,580		318,323		168,013		1,418,906		10,362,553
Financial assets at FVTOCI		27,780,241		2,075,297		1,719		41,421		814,354		30,713,032
Off-balance accounts		85,547,875		157,517		25,644		16,987		1,219,493		86,967,516
Guarantees		10,938,988		89,468		25,644		16,987		873,170		11,944,257
Loan commitments		74,608,887		68,049		—		—		346,323		75,023,259

Total		447,577,947		6,155,657		577,518		940,603		8,881,684		464,133,409

(*)	Others consist of financial assets in Hong Kong, Germany, Australia, and other countries.

- 40 -

Credit risk exposure by industries

①


	December 31, 2023
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and other financial assets at amortized cost		77,382,728		40,376,116		25,964,704		3,326,933		164,618,003		9,142,133		320,810,617
Securities at amortized cost		189,193		—		13,928,774		69,720		—		9,396,921		23,584,608
Financial assets at FVTPL		124,563		185,965		5,655,567		11,744		2,600		3,917,847		9,898,286
Financial assets at FVTOCI		382,694		327,006		25,686,485		284,367		—		8,622,877		35,303,429
Derivative assets (Designated for hedge)		—		—		698		—		—		—		698
Off-balance accounts		20,310,662		25,348,411		14,199,786		2,461,454		33,357,279		3,549,257		99,226,849
Guarantees		5,653,946		7,279,934		2,023,718		531,415		5,768		535,139		16,029,920
Loan commitments		14,656,716		18,068,477		12,176,068		1,930,039		33,351,511		3,014,118		83,196,929

Total		98,389,840		66,237,498		85,436,014		6,154,218		197,977,882		34,629,035		488,824,487


	December 31, 2022
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and other financial assets at amortized cost		71,069,144		35,904,868		25,967,068		3,455,399		164,000,719		8,388,195		308,785,393
Securities at amortized cost		239,141		—		15,957,692		199,924		—		10,908,158		27,304,915
Financial assets at FVTPL		81,836		154,019		7,922,295		5,148		1,167		2,198,088		10,362,553
Financial assets at FVTOCI		344,861		163,823		22,151,984		48,225		—		8,004,139		30,713,032
Off-balance accounts		16,376,336		22,385,528		10,976,271		2,788,217		30,321,298		4,119,866		86,967,516
Guarantees		4,500,381		4,994,311		928,700		750,480		5,801		764,584		11,944,257
Loan commitments		11,875,955		17,391,217		10,047,571		2,037,737		30,315,497		3,355,282		75,023,259

Total		88,111,318		58,608,238		82,975,310		6,496,913		194,323,184		33,618,446		464,133,409

- 41 -

Credit risk exposure

Financial assets

The maximum exposure to credit risk by asset quality, except for financial assets at FVTPL and derivative asset (designated for hedging) as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Stage 1				Stage 2				Stage 3		Total		Expected credit loss allowances			Total, net
	Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Stage 3		Total		Expected credit loss allowances			Total, net
Loans and other financial assets at amortized cost		277,690,549		20,705,266		11,874,593		11,491,512		982,761		322,744,681		(1,934,064	)		320,810,617
Korean treasury and government agencies		2,240,487		—		—		—		—		2,240,487		(2,112	)		2,238,375
Banks		19,740,698		—		19,231		—		—		19,759,929		(27,709	)		19,732,220
Corporates		110,690,795		15,328,976		2,214,562		4,172,633		419,461		132,826,427		(1,415,044	)		131,411,383
General business		76,910,774		9,558,454		1,639,935		2,973,117		319,115		91,401,395		(1,028,932	)		90,372,463
Small and medium-sized enterprise		26,394,816		5,622,242		555,410		1,112,664		100,346		33,785,478		(318,556	)		33,466,922
Project financing and others		7,385,205		148,280		19,217		86,852		—		7,639,554		(67,556	)		7,571,998
Consumers		145,018,569		5,376,290		9,640,800		7,318,879		563,300		167,917,838		(489,199	)		167,428,639
Securities at amortized cost		23,598,234		—		—		—		—		23,598,234		(13,626	)		23,584,608
Financial assets at FVTOCI (*3)		35,245,808		57,621		—		—		—		35,303,429		(24,714	)		35,303,429

Total		336,534,591		20,762,887		11,874,593		11,491,512		982,761		381,646,344		(1,972,404	)		379,698,654


	December 31, 2023
	Collateral value
	Stage 1		Stage 2		Stage 3		Total
Loans and other financial assets at amortized cost		216,106,580		20,699,712		597,203		237,403,495
Korean treasury and government agencies		39,199		—		—		39,199
Banks		2,136,530		—		—		2,136,530
Corporates		85,768,967		5,452,942		238,656		91,460,565
General business		52,943,796		4,053,318		169,218		57,166,332
Small- and medium-sized enterprise		27,535,748		1,399,624		69,438		29,004,810
Project financing and others		5,289,423		—		—		5,289,423
Consumers		128,161,884		15,246,770		358,547		143,767,201
Securities at amortized cost		—		—		—		—
Financial assets at FVTOCI (*3)		—		—		—		—

Total		216,106,580		20,699,712		597,203		237,403,495

(*1)	Credit grade of corporates are AAA ~ BBB, and retails are grades 1 ~ 6.

(*2)	Credit grade of corporates are BBB- ~ C, and retails are grades 7 ~ 10.

(*3)	Financial assets at FVTOCI are disclosed as the amount before deducting allowances for credit losses as it does not reduce the carrying amount.

- 42 -


	December 31, 2022
	Stage 1				Stage 2				Stage 3		Total		Expected credit loss allowances			Total, net
	Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Stage 3		Total		Expected credit loss allowances			Total, net
Loans and other financial assets at amortized cost		270,835,933		16,395,570		12,143,706		10,144,106		829,462		310,348,777		(1,563,384	)		308,785,393
Korean treasury and government agencies		2,845,885		—		—		—		—		2,845,885		(1,266	)		2,844,619
Banks		17,752,769		—		—		—		—		17,752,769		(12,964	)		17,739,805
Corporates		103,845,270		11,872,092		2,225,460		4,005,826		468,547		122,417,195		(1,222,299	)		121,194,896
General business		68,568,649		6,929,965		1,644,253		2,966,336		369,492		80,478,695		(915,531	)		79,563,164
Small and medium-sized enterprise		26,520,622		4,864,164		560,084		1,002,319		84,055		33,031,244		(254,460	)		32,776,784
Project financing and others		8,755,999		77,963		21,123		37,171		15,000		8,907,256		(52,308	)		8,854,948
Consumers		146,392,009		4,523,478		9,918,246		6,138,280		360,915		167,332,928		(326,855	)		167,006,073
Securities at amortized cost		27,313,079		—		—		—		—		27,313,079		(8,164	)		27,304,915
Financial assets at FVTOCI (*3)		30,637,545		75,487		—		—		—		30,713,032		(9,927	)		30,713,032

Total		328,786,557		16,471,057		12,143,706		10,144,106		829,462		368,374,888		(1,581,475	)		366,803,340


	December 31, 2022
	Collateral value
	Stage 1		Stage 2		Stage 3		Total
Loans and other financial assets at amortized cost		205,205,893		19,016,679		480,413		224,702,985
Korean treasury and government agencies		24,276		—		—		24,276
Banks		1,858,588		—		—		1,858,588
Corporates		75,957,277		4,720,094		236,065		80,913,436
General business		44,447,616		3,389,896		154,617		47,992,129
Small- and medium-sized enterprise		27,362,578		1,330,198		66,448		28,759,224
Project financing and others		4,147,083		—		15,000		4,162,083
Consumers		127,365,752		14,296,585		244,348		141,906,685
Securities at amortized cost		—		—		—		—
Financial assets at FVTOCI (*3)		—		—		—		—

Total		205,205,893		19,016,679		480,413		224,702,985

(*1)	Credit grade of corporates are AAA ~ BBB, and retails are grades 1 ~ 6.

(*2)	Credit grade of corporates are BBB- ~ C, and retails are grades 7 ~ 10.

(*3)	Financial assets at FVTOCI are disclosed as the amount before deducting allowance for credit losses as it does not reduce the carrying amount.

- 43 -

Guarantees and loan commitments

The credit quality of the guarantees and loan commitments on December 31, 2023 and 2022, is as follows (Unit: Korean Won in millions):


	December 31, 2023
Financial assets	Stage 1				Stage 2				Stage 3		Total
Financial assets	Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Stage 3		Total
Off-balance accounts
Guarantees		15,189,594		721,678		73,192		31,958		13,498		16,029,920
Loan commitments		78,816,547		2,261,115		1,937,305		181,962		—		83,196,929

Total		94,006,141		2,982,793		2,010,497		213,920		13,498		99,226,849

(*1)	Credit grade of corporates are AAA ~ BBB, and retails are grades 1 ~ 6.

(*2)	Credit grade of corporates are BBB- ~ C, and retails are grades 7 ~ 10.


	December 31, 2022
Financial assets	Stage 1				Stage 2				Stage 3		Total
Financial assets	Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Stage 3		Total
Off-balance accounts
Guarantees		11,232,503		428,307		25,826		244,389		13,232		11,944,257
Loan commitments		71,245,113		1,855,067		1,485,749		437,330		—		75,023,259

Total		82,477,616		2,283,374		1,511,575		681,719		13,232		86,967,516

(*1)	Credit grade of corporates are AAA ~ BBB, and retails are grades 1 ~ 6.

(*2)	Credit grade of corporates are BBB- ~ C, and retails are grades 7 ~ 10.

vi)

Collateral and other credit enhancements

For the year ended December 31, 2023, there have been no significant decreases in the value of collateral or other credit enhancements held by the Bank or significant changes in collateral or other credit enhancements due to changes in the collateral policy of the Bank.

vii)

Among the financial assets that have measured expected credit loss allowances in terms of lifetime expected credit losses, amortized costs before changes in contractual cash flows for the years end December 31, 2023 and 2022 are 120,681 million Won and 86,747 million Won, respectively, with net losses recognized along with the changes 1,283 million Won and 4,539 million Won, respectively.

viii)

The Bank determines which loan is subject to write-off in accordance with internal guidelines and writes off loan receivables when it is determined that the loans are practically irrecoverable. For example, loans are practically irrecoverable when application is made for rehabilitation under the Debtor Rehabilitation and Bankruptcy Act, and loans are confirmed as irrecoverable by the court’s decision to waive debtor’s obligation or when it is not possible to recover the loan amount through legal means such as selling debtor’s assets via auctions or through any other means available. Notwithstanding the write-off, the Bank may still exercise its right of collection after the asset has been written off in accordance with its collection policies.

As the Bank manages receivables that have not lost the right of claim to the debtor for the grounds of incomplete statute limitation and uncollected receivables under the related laws as receivable charge-offs, the balance as of December 31, 2023 and 2022 is 8,266,669 million Won and 8,071,686 million Won, respectively. In addition, the contractual uncollected amount of financial assets written off during the year ended December 31, 2023, but still in the process of recovery is 387,217 million Won.

- 44 -

(2) Market risk

Market risk management refers to the process of making and implementing decisions for the avoidance, acceptance or mitigation of risks by identifying the underlying source of the risks and measuring its level and evaluating the appropriateness of the level of accepted market risks.

Market risk management for trading activities

The Bank has introduced and applied the Basel III standard method according to Detailed Enforcement Regulations for Supervision of Banking Business <The attached table 3-2> as a measurement method of market risk since 2023. The consolidated equity capital required by sensitivity method, default risk required equity capital and residual risk required equity capital are combined to calculate the market risk required equity capital used to calculate the BIS ratio and are managed within the set internal capital limit of internal capital.

In addition, in the event of extreme situations such as the IMF crisis and the global financial crisis, stress tests are conducted every month to measure the size of losses to prepare for crises.

Trading activities

The market risk required equity capital at the end of the reporting period by risk group is as follows (Unit: Korean Won in millions):


	Risk group	December 31, 2023
Sensitivity-based risk	General interest rate risk		37,832
	Equity risk		9,376
	General commodity risk		12
	Foreign exchange risk		249,044
	Non-securitization credit spread risk		27,371
	Securitization (excluding correlation trading portfolio, CTP) credit spread risk		—
	CTP credit spread risk		—
Default risk	Non- Securitization bankruptcy risk		—
	Securitization (excluding CTP) default risk		—
	CTP default risk		—
Residual risk	Residual risk		692

	Total		324,327

- 45 -

The minimum, maximum and average VaR for the year ended December 31, 2022 and the VaR as of December 31, 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2022			For the year ended December 31, 2022
Risk factor	December 31, 2022			Average			Maximum			Minimum
Interest rate		11,800			8,847			11,987			4,298
Stock price		7,055			6,590			12,448			1,806
Foreign currencies		17,608			14,002			22,251			5,421
Diversification		(17,354	)		(12,725	)		(19,640	)		(4,201	)

Total VaR (*)		19,109			16,714			27,046			7,324

(*)	VaR (Value at Risk): Retention period of 1-day, Maximum expected losses under 99% level of confidence.

ii)

Market risk management for non-trading activities

For non-trading sectors of the Bank, NII (Net Interest Income) and NPV (Net Present Value) simulations are operated through ALM (Asset Liability Management) system, and then, interest rate risks are managed and measured by various analysis methods such as calculating ΔNII (change in Net Interest Income) and ΔEVE change in Economic Value of Equity).

NII is primarily an indicator of changes in profit from short-term changes in interest rates and is measured by deducting the interest expenses on the liability from the interest income from the asset. NPV is primarily an indicator of the risk of an economic value perspective resulting from unfavorable changes in interest rates and is measured by subtracting the present value of the liability from the present value of the asset. ΔNII represents a change in net interest income that may occur over a certain period (e.g., 1 year) due to unfavorable changes in interest rates, and ΔEVE indicates the economic value changes in equity capital that could be caused by changes in interest rates affecting the present value of asset, liabilities, and others.

For assets and liabilities as of December 31, 2023 and 2022, ΔEVE and ΔNII calculated based on interest rate risk in banking book (IRRBB) are as follows (Unit: Korean Won in millions):


December 31, 2023		December 31, 2022
ΔEVE (*1)	ΔNII (*2)	ΔEVE (*1)	ΔNII (*2)
1,046,284	822,311	738,286	530,012

(*1)	ΔEVE: change in Economic Value of Equity

(*2)	ΔNII: change in Net Interest Income

- 46 -

The Bank measures and manages the risks resulting from interest rate fluctuations caused by mismatches in interest rates and maturities of assets and liabilities. At the interest rate re-pricing date, cash flows (both principal and interest) of interest bearing assets and liabilities, which is the basis of non-trading position interest rate risk management are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Asset:
Loans and other financial assets at amortized cost		217,755,236		49,838,285		14,170,969		9,067,124		36,464,200		1,741,194		329,037,008
Financial assets at FVTPL		1,384,444		—		—		—		—		—		1,384,444
Financial assets at FVTOCI		5,484,889		3,373,968		2,322,762		2,874,432		22,424,018		613,142		37,093,211
Securities at amortized cost		1,307,554		1,230,133		3,325,495		1,415,891		15,678,508		2,143,376		25,100,957

Total		225,932,123		54,442,386		19,819,226		13,357,447		74,566,726		4,497,712		392,615,620

Liability:
Deposits due to customers		162,719,906		48,227,640		31,478,229		43,574,868		57,554,531		33,981		343,589,155
Borrowings		14,683,246		2,036,827		940,323		1,168,608		2,541,988		437,839		21,808,831
Debentures		6,011,955		3,550,214		1,214,427		2,854,877		6,757,962		2,296,383		22,685,818

Total		183,415,107		53,814,681		33,632,979		47,598,353		66,854,481		2,768,203		388,083,804


	December 31, 2022
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Asset:
Loans and other financial assets at amortized cost		199,942,985		51,934,888		11,026,652		11,890,492		41,400,643		4,583,710		320,779,370
Financial assets at FVTPL		945,818		27		27		27		8,838		13,024		967,761
Financial assets at FVTOCI		5,583,261		4,148,985		2,940,127		3,444,808		14,884,352		440,420		31,441,953
Securities at amortized cost		1,961,824		1,806,385		1,768,909		1,422,483		19,984,921		2,071,121		29,015,643

Total		208,433,888		57,890,285		15,735,715		16,757,810		76,278,754		7,108,275		382,204,727

Liability:
Deposits due to customers		160,801,391		46,026,360		31,969,417		36,629,464		52,299,065		69,355		327,795,052
Borrowings		14,880,726		1,985,094		858,340		644,078		3,190,285		472,325		22,030,848
Debentures		7,511,274		3,066,434		2,307,509		3,114,290		7,578,811		2,349,306		25,927,624

Total		183,193,391		51,077,888		35,135,266		40,387,832		63,068,161		2,890,986		375,753,524

- 47 -

iii)

Currency risk

Financial instruments in foreign currencies exposed to currency risk as of December 31, 2023 and 2022, are as follows (Unit: USD in millions, JPY in millions, CNY in millions, EUR in millions, and Korean Won in millions):


		December 31, 2023
		USD				JPY				CNY				EUR				Others		Total
		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Korean Won equivalent		Korean Won equivalent
Asset	Cash and cash equivalents		8,033		10,357,734		105,041		958,669		476		86,022		248		354,092		423,094		12,179,611
	Loans and other financial assets at amortized cost		17,142		22,102,847		134,964		1,231,760		10,003		1,808,915		1,922		2,741,168		2,179,100		30,063,790
	Financial assets at FVTPL		972		1,253,749		17,004		155,186		—		—		287		408,944		96,696		1,914,575
	Financial assets at FVTOCI		2,820		3,635,713		—		—		—		—		4		5,770		461,130		4,102,613
	Securities at amortized cost		1,186		1,529,826		—		—		—		—		—		—		29,156		1,558,982

	Total		30,153		38,879,869		257,009		2,345,615		10,479		1,894,937		2,461		3,509,974		3,189,176		49,819,571

Liability	Financial liabilities at FVTPL		350		451,700		23,806		217,266		—		—		209		297,521		98,738		1,065,225
	Deposits due to customers		19,236		24,803,202		277,124		2,529,203		1,445		261,292		1,970		2,810,888		1,789,396		32,193,981
	Borrowings		9,924		12,795,608		22,598		206,247		54		9,810		508		724,624		414,937		14,151,226
	Debentures		4,041		5,209,837		—		—		—		—		—		—		—		5,209,837
	Other financial liabilities		3,291		4,243,364		22,082		201,534		6,277		1,135,144		96		137,433		251,203		5,968,678

	Total		36,842		47,503,711		345,610		3,154,250		7,776		1,406,246		2,783		3,970,466		2,554,274		58,588,947

Off-balance accounts			7,381		9,516,438		30,037		274,136		1,602		289,765		579		825,393		509,048		11,414,780


		December 31, 2022
		USD				JPY				CNY				EUR				Others		Total
		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Korean Won equivalent		Korean Won equivalent
Asset	Cash and cash equivalents		8,506		10,779,242		63,948		609,540		655		118,793		258		348,114		353,539		12,209,228
	Loans and other financial assets at amortized cost		16,316		20,677,702		117,289		1,117,976		3,748		680,124		2,213		2,990,367		2,204,263		27,670,432
	Financial assets at FVTPL		932		1,179,711		26,769		255,155		—		—		357		481,910		309,712		2,226,488
	Financial assets at FVTOCI		2,936		3,721,126		—		—		—		—		—		—		490,831		4,211,957
	Securities at amortized cost		523		663,239		—		—		—		—		—		—		44,711		707,951

	Total		29,213		37,021,020		208,006		1,982,671		4,403		798,917		2,828		3,820,391		3,403,056		47,026,056

Liability	Financial liabilities at FVTPL		415		526,553		26,766		255,128		—		—		322		434,590		274,784		1,491,055
	Deposits due to customers		19,405		24,591,418		225,852		2,152,779		2,829		513,352		2,023		2,733,555		1,910,280		31,901,384
	Borrowings		7,372		9,342,174		41,765		398,093		57		10,411		746		1,008,658		330,911		11,090,247
	Debentures		3,524		4,465,501		—		—		—		—		—		—		339,188		4,804,690
	Other financial liabilities		2,898		3,672,685		8,196		78,121		2,940		533,398		377		509,563		129,766		4,923,532

	Total		33,614		42,598,331		302,579		2,884,121		5,826		1,057,161		3,468		4,686,366		2,984,929		54,210,908

Off-balance accounts			6,456		8,181,942		34,512		328,964		1,141		207,012		592		800,493		567,970		10,086,381

- 48 -

iv)	As of December 31, 2023, there are 242,700 million Won in financial instruments that have not been converted to LIBOR-related alternative indicator interest rates, but the conversion to alternative indicator interest rates will be completed before the repricing date.

(3)	Liquidity risk

Liquidity risk management prevents financial institutions from incurring losses due to lack of funds by effectively managing liquidity shortages that can occur due to inconsistent maturity of assets and liabilities or an unexpected outflow of funds. The entire assets and liabilities within the financial statements and also off-balance sheet account that can generate cash-flow are subject to the liquidity risk management.

Liquidity risk management

Basel III regulatory response

Analysis of financing and operation status by maturity

As assets and liabilities are grouped into ALM account (COA; Chart of account) according to their account characteristics, and the gap ratio is identified through cash flow reports by various time and segment (e.g., by remaining period, contract period, etc.), the Bank manages the liquidity risk by keeping the target ratio (limited) set this year. In addition, the Bank established and manages the target ratio of concentration of funding for specific funding sources that are highly likely to withdraw. The Bank also provides a function through daily ALM system to search relevant maturity report by business group so that related departments (e.g., the Financial Planning Department, the Fund Department, each business group, etc.) can identify liquidity risk management indicators and status.

Establishment and implementation of Contingency plan

Various inspection items related to liquidity risk are monitored on a daily or weekly basis by establishing and regularly inspecting the preceding Contingency Plan in order to effectively cope with the risk of capital outflow and procurement due to rapid and unexpected changes in market conditions. In addition, the Bank has strengthened monitoring related to foreign currency liquidity by operating a foreign currency liquidity plan separately from January 2012.

•

Inspection items related to liquidity risk on the Contingency Plan checklist

•

The amount of Won and foreign currency and insufficiency of funds

•

Liquidity coverage ratio (monthly average balance, daily balance)

•

The amount of deposits and withdrawals (saving deposit in Korean Won, depository)

•

Overdraft limit exhaustion rate

•

Percentage of reduction in the balance of deferred deposits

•

Percentage of concentration of funding by subject and period

•

Won and foreign currency funding spread

- 49 -

ii)

Maturity analysis of non-derivative financial liabilities

Cash flows of principals and interests by remaining contractual maturities of non-derivative financial liabilities as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		39,524		—		—		—		—		—		39,524
Deposits due to customers		229,861,273		37,497,154		21,140,439		44,458,765		13,214,084		527,107		346,698,822
Borrowings		7,780,854		4,897,526		3,253,926		3,043,472		2,621,504		437,839		22,035,121
Debentures		3,783,034		3,692,866		2,496,132		3,723,968		6,757,962		2,296,383		22,750,345
Lease liabilities		60,653		30,334		26,874		23,660		107,028		2,193		250,742
Other financial liabilities		12,912,445		—		—		—		—		4,129,721		17,042,166

Total		254,437,783		46,117,880		26,917,371		51,249,865		22,700,578		7,393,243		408,816,720


	December 31, 2022
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		35,161		—		—		—		—		—		35,161
Deposits due to customers		220,952,911		36,259,683		22,653,569		37,809,628		11,559,373		414,690		329,649,854
Borrowings		8,568,831		4,504,135		2,410,790		2,551,020		3,696,653		472,236		22,203,665
Debentures		4,790,601		5,002,086		2,885,404		3,366,882		7,578,811		2,349,306		25,973,090
Lease liabilities		56,985		26,583		24,553		19,357		80,963		4,722		213,163
Other financial liabilities		13,040,233		—		—		—		—		3,008,174		16,048,407

Total		247,444,722		45,792,487		27,974,316		43,746,887		22,915,800		6,249,128		394,123,340

Cash flows of principals and interests by expected maturities of non-derivative financial liabilities as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		39,524		—		—		—		—		—		39,524
Deposits due to customers		235,603,296		39,463,353		21,774,226		38,397,484		10,627,420		231,793		346,097,572
Borrowings		7,780,854		4,897,526		3,253,926		3,043,472		2,621,504		437,839		22,035,121
Debentures		3,783,034		3,692,866		2,496,132		3,723,968		6,757,962		2,296,383		22,750,345
Lease liabilities		60,653		31,578		28,237		25,038		118,776		2,856		267,138
Other financial liabilities		12,912,445		—		—		—		—		4,129,721		17,042,166

Total		260,179,806		48,085,323		27,552,521		45,189,962		20,125,662		7,098,592		408,231,866


	December 31, 2022
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		35,161		—		—		—		—		—		35,161
Deposits due to customers		233,977,351		40,346,664		22,690,260		24,715,785		6,759,985		37,263		328,527,308
Borrowings		8,568,831		4,504,135		2,410,790		2,551,020		3,696,653		472,236		22,203,665
Debentures		4,790,601		5,002,086		2,885,404		3,366,882		7,578,811		2,349,306		25,973,090
Lease liabilities		57,050		26,589		24,794		19,658		86,944		10,300		225,335
Other financial liabilities		13,040,233		—		—		—		—		3,008,174		16,048,407

Total		260,469,227		49,879,474		28,011,248		30,653,345		18,122,393		5,877,279		393,012,966

- 50 -

iii)

Maturity analysis of derivative financial liabilities

Derivatives held for trading purpose are not managed in accordance with their contractual maturity, since the Bank holds such financial instruments with the purpose of disposing or redeeming them before their maturity. As such, those derivatives are incorporated as “within 3 months” in the table below. The cash flows from derivatives designated for hedging purpose are estimated by offsetting cash inflows and cash outflows.

The cash flow by the maturity of derivative financial liabilities as of December 31, 2023 and 2022, is as follows (Unit: Korean Won in millions):


		Remaining maturity
		Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years			Total
December 31, 2023	Fair value hedge		29,176		34,370		157		35,272		39,861		—			138,836
	Trading		5,976,266		—		—		—		—		—			5,976,266
December 31, 2022	Fair value hedge		25,048		16,175		31,974		18,540		118,027		(3,615	)		206,149
	Trading		8,966,944		—		—		—		—		—			8,966,944

iv)

Maturity analysis of off-balance accounts (Guarantees, loan commitments and others)

A financial guarantee represents an irrevocable undertaking that the Bank should meet a customer’s obligations to third parties if the customer fails to do so. The loan commitment represents the limit if the Bank has promised a credit to the customers. Commitments to lend include commercial standby facilities and credit lines, liquidity facilities to commercial paper conduits and utilized overdraft facilities. The maximum limit to be paid by the Bank in accordance with guarantees and loan commitment only applies to principal amounts. There are contractual maturities for financial guarantees, such as guarantees for debentures issued or loans, unused loan commitments, other credit facilities and commitments, however, under the terms of the guarantees and unused loan commitments, funds should be paid upon demand from the counterparty. Details of off-balance accounts as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Guarantees		16,029,920		11,944,257
Loan commitments		83,196,929		75,023,259
Other		7,170,064		7,096,344

(4)	Operational risk

Definition

The Bank defines the operational risk as the risk of potential losses arising from inadequate or incorrect internal procedures, human resource and system, and/or external factors.

ii)

Operational risk management

- 51 -

Strategy and procedures for operation risk management

The Bank carries out operational risk management according to eight management implementation systems: Risk Self-Assessment (RSA), Key Risk Indicators (KRI), early warning system, loss case management, risk capital measurement, monitoring and reporting, cultural diffusion, and countermeasures. Operational risk management follows the procedures for risk recognition, evaluation, measurement, monitoring and reporting, risk control and mitigation.

Operational Risk Management Organization, Structure and Function

The Bank has 3 lines of defense for operational risk management.

•

Third line of defense : Independent third-party inspection of the audit organization (audit department, head office audit department, standing auditor, audit committee)

Status of Operational Risk Reporting System and Measurement System

The Bank has been performing operation risk capital calculation, monitoring, and reporting based on RSA/KRI/loss/response management, cultural diffusion, Calculation of operation risk capital through the Basel III standard method through the operation risk management system established since December 2005.

Policies for reducing or hedging operational risks

In order to effectively control risks and establish mitigation policies, the Bank establishes policies for modifying operational risk profiles, selecting policies for acceptance levels, and establishing policies for performance management. In addition, the Bank carries out activities for strengthening control of each module (RSA, KRI, loss) and process improvement based on the relevant criteria and utilizes them for risk identification and control mitigation activities through analysis of the collected loss data.

Persistent operational risk monitoring strategies and procedures

Method of evaluating capital adequacy of operational risks

The Bank evaluates capital adequacy by comparing operational risk capital requirements with BIS-based equity capital and utilizes the evaluation results for daily management and decision-making, such as limit management and performance evaluation.

iii)

Management methods by assessment and measurement methods

Means of management

- 52 -

Key Risk Indicatory (KRI) : Key Risk Indicator (KRI) is used to identify and monitor risks and to observe trends in operational risks.

Loss data: The Bank establishes a system for collecting and managing internal loss data by operational risk management system. In addition, the bank receives the Korea Operational Risk Data Exchange Committee (KOREC) as external loss data and risk identification.

Measurement Method

The Bank measures the amount of operating risk capital by applying the standard method.

•

“Operational risk required equity capital” = Business indicator component (BIC) × internal loss multiplier (ILM)

•

“Business Indicator Component (BIC)” = Business Index (BI) × adjustment coefficient

•

“Internal Loss Multiplier (ILM)” = ln (Exp(1)-1+ (Loss Element (LC)/Business Index Element (BIC))^0.8)

- 53 -

(5)	Capital management

The Bank complies with the standard of capital adequacy provided by financial regulatory authorities. The capital adequacy standard is based on Basel III published by Basel Committee on Banking Supervision in Bank for International Settlement which has been implemented in Korea in December 2013. The capital adequacy ratio is calculated by dividing own capital by asset (weighted with a risk premium – risk weighted assets) based on the consolidated financial statements of the Bank.

According to the above regulations, the Bank is required to meet the following minimum requirements: Common Equity Tier 1 capital ratio of 8.00%, a Tier 1 capital ratio of 9.50% and a minimum total capital ratio of 11.50% as of December 31, 2023 and 2022, respectively.

Details of the Bank’s capital adequacy ratio as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023 (*)			December 31, 2022
Risk-weighted assets for credit risk		155,484,214			145,358,395
Risk-weighted assets for market risk		4,054,084			8,416,430
Risk-weighted assets for operational risk		16,535,445			13,657,389

Total risk-weighted assets		176,073,743			167,432,214

Common Equity Tier 1 capital		23,183,323			21,236,314
Other Tier 1 capital		1,554,186			1,652,687
Tier 2 capital		3,500,420			3,230,135

Total risk-adjusted capital		28,237,929			26,119,136

Common Equity Tier 1 ratio		13.17	%		12.68	%

Tier 1 capital ratio		14.05	%		13.67	%

Total capital ratio		16.04	%		15.60	%

(*)	Tier 1 capital ratio as of December 31, 2023 is estimation.

5.	OPERATING SEGMENTS

In evaluating the results of the Bank and allocating resources, the Bank’s Chief Operation Decision Maker (the “CODM”) utilizes the information per type of customers. This financial information of the segments is regularly reviewed by the CODM.

(1)	Segment by type of customers

The Bank’s reporting segments comprise the following customers: consumer banking, corporate banking, investment banking, capital market and headquarters and others. The reportable segments are classified based on the target customers for whom the service is being provided.

•

Consumer banking: Loans/deposits and financial services for retail and individual consumers, etc.

•

Corporate banking: Loans/deposits and export/import, financial services for corporations, etc.

•

Investment banking: Domestic/foreign investment, structured finance, M&A, Equity & fund investment related business, venture advisory related tasks, real estate SOC development practices, etc.

•

Capital market: investment in securities and derivatives, etc.

•

Headquarters and others: Segments that do not belong to operating segments above

- 54 -

The details of operating income by each segment for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Consumer banking			Corporate banking			Investment banking			Capital market			Headquarters and others			Sub-total			Adjustments (*)			Total
Net interest income (expense)		2,910,670			3,536,366			(271,147	)		(47,332	)		(335,077	)		5,793,480			895,011			6,688,491
Interest income		5,915,515			8,117,854			322,965			71,470			1,908,257			16,336,061			645,741			16,981,802
Interest expense		(2,977,982	)		(6,288,716	)		(101	)		—			(1,275,782	)		(10,542,581	)		249,270			(10,293,311	)
Inter-segment		(26,863	)		1,707,228			(594,011	)		(118,802	)		(967,552	)		—			—			—
Net non-interest income (expense)		431,388			410,272			439,925			40,981			142,918			1,465,484			(796,004	)		669,480
Non-interest income		406,362			610,368			559,804			15,898,187			1,561,937			19,036,658			(17,106,012	)		1,930,646
Non-interest expense		(62,751	)		(279,579	)		(119,879	)		(15,857,206	)		(1,251,759	)		(17,571,174	)		16,310,008			(1,261,166	)
Inter-segment		87,777			79,483			—			—			(167,260	)		—			—			—
Other income (expense)		(1,960,531	)		(1,801,606	)		(29,120	)		(27,055	)		(423,431	)		(4,241,743	)		(99,007	)		(4,340,750	)
Administrative expense		(1,828,368	)		(1,115,797	)		(34,894	)		(27,018	)		(403,678	)		(3,409,755	)		—			(3,409,755	)
Reversal of (provision for) allowance for credit loss		(132,163	)		(685,809	)		5,774			(37	)		(19,753	)		(831,988	)		—			(930,995	)

Operating income		1,381,527			2,145,032			139,658			(33,406	)		(615,590	)		3,017,221			—			3,017,221

Non-operating income (expense)		(13,561	)		(206	)		69,624			—			(81,146	)		(25,289	)		—			(25,289	)

Net gain (loss) on valuation of investments in subsidiaries and associates		—			—			(1,786	)		—			—			(1,786	)		—			(1,786	)
Other non-operating income (expense)		(13,561	)		(206	)		71,410			—			(81,146	)		(23,503	)		—			(23,503	)
Net income before income tax expense		1,367,966			2,144,826			209,282			(33,406	)		(696,736	)		2,991,932			—			2,991,932
Income tax expense		(361,143	)		(563,269	)		(55,250	)		8,819			256,051			(714,792	)		—			(714,792	)

Net income		1,006,823			1,581,557			154,032			(24,587	)		(440,685	)		2,277,140			—			2,277,140

(*)	Adjustments were made for the presentation of profit or loss in accordance with K-IFRS from the reporting segments in accordance with the Managerial Accounting Standards.

- 55 -


	For the year ended December 31, 2022
	Consumer banking			Corporate banking			Investment banking			Capital market			Headquarters and others			Sub-total			Adjustments (*)			Total
Net interest income (expense)		3,330,962			3,553,264			(175,020	)		46,311			(950,618	)		5,804,899			809,167			6,614,066
Interest income		4,401,332			5,139,910			221,413			27,759			1,211,966			11,002,380			511,301			11,513,681
Interest expense		(1,292,534	)		(3,107,959	)		(48	)		72			(797,012	)		(5,197,481	)		297,866			(4,899,615	)
Inter-segment		222,164			1,521,313			(396,385	)		18,480			(1,365,572	)		—			—			—
Net non-interest income (expense)		490,833			597,254			349,600			72,872			(65,529	)		1,445,030			(766,702	)		678,328
Non-interest income		443,632			637,055			487,778			23,384,730			696,559			25,649,754			(24,090,876	)		1,558,878
Non-interest expense		(23,240	)		(114,647	)		(138,178	)		(23,311,858	)		(616,801	)		(24,204,724	)		23,324,174			(880,550	)
Inter-segment		70,441			74,846			—			—			(145,287	)		—			—			—
Other income (expense)		(1,883,582	)		(1,408,313	)		(68,220	)		(26,492	)		(506,569	)		(3,893,176	)		(42,465	)		(3,935,641	)
Administrative expense		(1,848,880	)		(1,047,214	)		(33,256	)		(24,908	)		(590,772	)		(3,545,030	)		—			(3,545,030	)
Reversal of (provision for) allowance for credit loss		(34,702	)		(361,099	)		(34,964	)		(1,584	)		84,203			(348,146	)		(42,465	)		(390,611	)

Operating income		1,938,213			2,742,205			106,360			92,691			(1,522,716	)		3,356,753			—			3,356,753

Non-operating income (expense)		(13,008	)		42			38,208			455			24,586			50,283			—			50,283
Other non-operating income (expense)		(13,008	)		42			38,208			455			24,586			50,283			—			50,283
Net income before income tax expense		1,925,205			2,742,247			144,568			93,146			(1,498,130	)		3,407,036			—			3,407,036
Income tax expense		(529,431	)		(745,082	)		(39,756	)		(25,615	)		480,255			(859,629	)		—			(859,629	)

Net income		1,395,774			1,997,165			104,812			67,531			(1,017,875	)		2,547,407			—			2,547,407

(*)	Adjustments were made for the presentation of profit or loss in accordance with K-IFRS from the reporting segments in accordance with the Managerial Accounting Standards.

(2)	Information about products and services

The products of the Bank are classified as interest-bearing products such as loans, deposits and debt securities and non-interest-bearing products such as loan commitment, credit commitment, equity securities, and credit card service. This classification of products has been reflected in the segment information presenting interest income and non-interest income.

(3)	Information about geographical area

Among the Bank’s revenue (interest income and non-interest income) from services, revenue from the domestic customers for the years ended December 31, 2023 and 2022 amounted to 17,559,246 million Won and 12,371,813 million Won, respectively, and revenue from the foreign customers amounted to 1,353,202 million Won and 700,746 million Won, respectively. Among the Bank’s non-current assets (investments in subsidiaries and associates, investment properties, Properties and equipment and intangible assets), non-current assets attributed to domestic customers as of December 31, 2023 and 2022 are 7,091,640 million Won and 6,967,577 million Won, respectively, and non-current assets attributed to foreign customers are 29,532 million Won and 27,501 million Won, respectively.

- 56 -

(4)	Information about major customers

The Bank does not have any single customer that generates 10% or more of the Bank’s total revenue for the years ended December 31, 2023 and 2022, respectively.

6.	CASH AND CASH EQUIVALENTS

(1)	Details of cash and cash equivalents as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Cash		1,464,119		1,770,695
Foreign currencies		624,985		544,142
Demand deposits		24,959,408		28,181,410
Time deposits		17,596		17,014

Total		27,066,108		30,513,261

(2)	Details of restricted due from banks as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	Counterparty	December 31, 2023		Reason of restriction
Due from banks in local currency:
Due from BOK	BOK		13,420,310	Reserve deposits under the BOK Act

Due from banks in foreign currencies:
Due from banks on demand	Bank of Japan and others		733,935	Reserve deposits and others

Total			14,154,245


	Counterparty	December 31, 2022		Reason of restriction
Due from banks in local currency:
Due from BOK	BOK		16,527,445	Reserve deposits under the BOK Act

Due from banks in foreign currencies:
Due from banks on demand	BOK and others		6,206,791	Reserve deposits under the BOK Act and others

Total			22,734,236

- 57 -

(3)	Among the investing and financing activities, significant transactions not involving cash inflows and outflows for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Changes in other comprehensive income due to valuation of financial assets at FVTOCI		719,244			(465,936	)
Changes in financial assets at FVTOCI due to debt-equity swap		206			56,274
Changes in other comprehensive income of foreign operation translation		2,364			789
Changes in other comprehensive income of hedges of a net investment in a foreign operation		(1,493	)		5,174
Reclassify investment property to properties and equipment		6,463			—
Reclassify properties and equipment to investment property		—			19,190
Reclassify properties and equipment to assets held for sale		2,504			13,109
Increase in the right-of-use assets and lease liabilities		144,098			134,818
Changes in accounts payable related to acquisition of intangible assets		10,146			7,382
Reclassify investment in associates to financial assets at FVTPL		49,341			—

(4)	Adjustments of liabilities from financing activities in current year for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	January 1, 2023		Cash flow			Not involving cash inflows and outflows						December 31, 2023
	January 1, 2023		Cash flow			Foreign exchange		Changed in value of hedged items		Others		December 31, 2023
Borrowings		21,717,702		(371,695	)		115,817		—		43		21,461,867
Debentures		24,635,427		(3,552,385	)		78,287		63,615		48,083		21,273,027
Lease liabilities		180,672		(132,159	)		291		—		157,050		205,854
Rental deposit		57,074		30			—		—		—		57,104

Total		46,590,875		(4,056,209	)		194,395		63,615		205,176		42,997,852


	For the year ended December 31, 2022
	January 1, 2022		Cash flow			Not involving cash inflows and outflows								December 31, 2022
	January 1, 2022		Cash flow			Foreign exchange		Changed in value of hedged items			Others			December 31, 2022
Borrowings		17,879,734		3,218,598			619,432		—			(62	)		21,717,702
Debentures		26,474,283		(1,835,231	)		240,460		(257,910	)		13,825			24,635,427
Lease liabilities		195,574		(134,562	)		947		—			118,713			180,672
Rental deposit		56,621		453			—		—			—			57,074

Total		44,606,212		1,249,258			860,839		(257,910	)		132,476			46,590,875

- 58 -

7.	FINANCIAL ASSETS AT FVTPL

Details of financial assets at FVTPL as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Due from banks:
Gold banking assets		39,241		34,995
Securities:
Debt securities
Korean treasury and government agencies		3,233,389		2,125,303
Financial institutions		208,809		—
Securities loaned		625,398		—
Equity securities		256,285		265,547
Capital contributions		1,839,972		1,418,022
Beneficiary certificates		8,900,668		6,673,599
Others		180,690		142,335

Sub-total		15,245,211		10,624,806

Loans		—		19,169
Derivatives assets		5,791,449		8,183,086
Others		42,406		41,680

Total		21,118,307		18,903,736

Financial assets designated at FVTPL upon initial recognition is nil as of December 31, 2023 and 2022.

8.	FINANCIAL ASSETS AT FVTOCI

(1)	Details of financial assets at FVTOCI as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Debt securities:
Korean treasury and government agencies		5,654,395		5,487,523
Financial institutions		20,885,924		16,870,619
Corporates		3,994,432		4,044,446
Bonds denominated in foreign currencies		3,986,210		3,907,789
Mortgage-backed debt securities		190,250		304,628
Securities loaned		592,218		98,027

Sub-total		35,303,429		30,713,032

Equity securities		1,071,772		808,707

Total		36,375,201		31,521,739

(2)	Details of equity securities designated as financial assets at FVTOCI as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


Purpose of acquisition	December 31, 2023		December 31, 2022
Investment for strategic business partnership purpose		914,796		652,838
Debt-equity swap		156,976		155,869

Total		1,071,772		808,707

- 59 -

(3)	Changes in the expected credit loss allowance and gross carrying amount of financial assets at FVTOCI for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):

Credit loss allowances


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(9,927	)		—		—		(9,927	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of expected credit loss allowance		(16,388	)		—		—		(16,388	)
Disposal		1,519			—		—		1,519
Others (*)		82			—		—		82

Ending balance		(24,714	)		—		—		(24,714	)

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(11,552	)		—		—		(11,552	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal of expected credit loss allowance		869			—		—		869
Disposal		714			—		—		714
Others (*)		42			—		—		42

Ending balance		(9,927	)		—		—		(9,927	)

(*)	Others consist of foreign currencies translation, etc.

ii)

Gross carrying amount


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		30,713,032			—		—		30,713,032
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		23,604,697			—		—		23,604,697
Disposal / Redemption		(20,005,613	)		—		—		(20,005,613	)
Gain on fair value valuation		696,241			—		—		696,241
Amortization on the effective interest method		161,666			—		—		161,666
Others (*)		133,406			—		—		133,406

Ending balance		35,303,429			—		—		35,303,429

(*)	Others consist of foreign currencies translation, etc.

- 60 -


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		36,588,802			—		—		36,588,802
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		14,892,378			—		—		14,892,378
Disposal / Redemption		(20,440,560	)		—		—		(20,440,560	)
Loss on fair value valuation		(632,925	)		—		—		(632,925	)
Amortization on the effective interest method		51,069			—		—		51,069
Others (*)		254,268			—		—		254,268

Ending balance		30,713,032			—		—		30,713,032

(*)	Others consist of foreign currencies translation, etc.

(4)

During the year ended December 31, 2023, the Bank sold its equity securities, designated as financial assets at FVTOCI in accordance with decision of disposal by the creditors, and the fair values at disposal dates were 3,194 million Won and cumulative gains at disposal dates were 118 million Won. During the year ended December 31, 2022, the Bank sold its equity securities, designated as financial assets at FVTOCI in accordance with decision of disposal by the creditors, and the fair values at disposal dates were 3,567 million Won and cumulative losses at disposal dates were 14,444 million Won.

9.	SECURITIES AT AMORTIZED COST

(1)	Details of securities at amortized cost as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Korean treasury and government agencies		8,143,586			8,983,600
Financial institutions		6,660,465			10,283,631
Corporates		7,235,201			6,237,547
Bond denominated in foreign currencies		1,558,982			707,951
Mortgage-backed debt securities		—			1,100,351
Allowance for credit losses		(13,626	)		(8,165	)

Total		23,584,608			27,304,915

(2)	Changes in the loss allowance and gross carrying amount of securities at amortized cost for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):

Credit loss allowances


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(8,165	)		—		—		(8,165	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of expected credit loss allowance		(5,472	)		—		—		(5,472	)
Others (*)		11			—		—		11

Ending balance		(13,626	)		—		—		(13,626	)

(*)	Others consist of foreign currencies translation, etc.

- 61 -


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(5,181	)		—		—		(5,181	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of expected credit loss allowance		(2,981	)		—		—		(2,981	)
Others (*)		(3	)		—		—		(3	)

Ending balance		(8,165	)		—		—		(8,165	)

(*)	Others consist of foreign currencies translation, etc.

ii)

Gross carrying amount


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		27,313,080			—		—		27,313,080
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		2,827,215			—		—		2,827,215
Disposal / Redemption		(6,735,231	)		—		—		(6,735,231	)
Amortization on the effective interest method		163,278			—		—		163,278
Others (*)		29,892			—		—		29,892

Ending balance		23,598,234			—		—		23,598,234

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		16,825,515			—		—		16,825,515
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		14,025,148			—		—		14,025,148
Disposal / Redemption		(3,641,985	)		—		—		(3,641,985	)
Amortization on the effective interest method		79,381			—		—		79,381
Others (*)		25,021			—		—		25,021

Ending balance		27,313,080			—		—		27,313,080

(*)	Others consist of foreign currencies translation, etc.

- 62 -

10.	LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST

(1)

Details of loans and other financial assets at amortized cost as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Due from banks		922,674		1,585,268
Loans		308,268,223		299,311,317
Other financial assets		11,619,720		7,888,808

Total		320,810,617		308,785,393

(2)

Details of due from banks as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Due from banks in local currency:
Due from the Bank of Korea (“BOK”)		—			160,000
Others		27,107			137,784
Allowance for credit losses		(56	)		(115	)

Sub-total		27,051			297,669

Due from banks in foreign currencies:
Due from banks on demand		26,134			30,554
Due from banks on time		27,380			38,127
Others		845,380			1,219,956
Allowance for credit losses		(3,271	)		(1,038	)

Sub-total		895,623			1,287,599

Total		922,674			1,585,268

(3)	Details of restricted due from banks as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	Counterparty	December 31, 2023		Reason of restriction
Due from banks in local currency:
Others	MORGAN STANLEY BANK INTL, SEL and others		27,104	CSA collateral and others

Sub-total			27,104

Due from banks in foreign currencies:
Due from banks on demand	Reserve Bank of India and others		24,573	Local capital requirements regulation (CRR)
Others	Korea Investment & Securities Co., Ltd. and others		780,803	Deposits for foreign futures and options trading and others

Sub-total			805,376

Total			832,480

- 63 -


	Counterparty	December 31, 2022		Reason of restriction
Due from banks in local currency:
Due from BOK	BOK		160,000	Reserve deposits under the BOK Act
Others	The Korea Exchange and others		137,782	Central counterparty KRW margin and others

Sub-total			297,782

Due from banks in foreign currencies:
Due from banks on demand	Reserve Bank of India and others		28,951	Local capital requirements regulation
Others	Korea Investment & Securities Co., Ltd. and others		1,219,956	Deposits for foreign futures and options trading and others

Sub-total			1,248,907

Total			1,546,689

(4)	Changes in the expected credit loss allowances and gross carrying amount of due from banks for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):

Credit loss allowances


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(1,153	)		—		—		(1,153	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of expected credit loss allowance		(2,174	)		—		—		(2,174	)

Ending balance		(3,327	)		—		—		(3,327	)


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(4,351	)		—		—		(4,351	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal of expected credit loss allowance		3,198			—		—		3,198

Ending balance		(1,153	)		—		—		(1,153	)

- 64 -

ii)

Gross carrying amount


	For the year ended December 31, 2023
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		1,586,422			—		—		1,586,422
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net decrease		(660,421	)		—		—		(660,421	)

Ending balance		926,001			—		—		926,001


	For the year ended December 31, 2022
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		1,816,343			—		—		1,816,343
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net decrease		(229,921	)		—		—		(229,921	)

Ending balance		1,586,422			—		—		1,586,422

(5)	Details of loans as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Loans in local currency		282,174,935			266,893,881
Loans in foreign currencies		15,881,721			15,742,675
Domestic banker’s usance		2,676,723			2,806,153
Bills bought in foreign currencies		4,033,987			3,505,430
Bills bought in local currency		8,412			2,797,789
Factoring receivables		812			15,350
Advances for customers on guarantees		2,787			9,986
Private placement bonds		128,600			25,000
Call loans		1,944,036			2,043,955
Bonds purchased under resale agreements		2,607,250			6,298,779
Others		120			140
Loan origination costs and fees		618,195			614,500
Premiums present value		1			1
Allowance for credit losses		(1,809,356	)		(1,442,322	)

Total		308,268,223			299,311,317

- 65 -

(6)	Changes in the expected credit loss allowance of loans for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(56,249	)		(65,636	)		(92,880	)		(343,054	)		(722,140	)		(162,363	)
Transfer to 12-month expected credit losses		(18,834	)		16,383			2,451			(188,253	)		187,845			408
Transfer to lifetime expected credit losses		5,777			(6,351	)		574			18,410			(19,624	)		1,214
Transfer to credit-impaired financial assets		633			17,399			(18,032	)		13,827			26,915			(40,742	)
Net reversal (provision) of expected credit loss allowance		(36,715	)		(46,415	)		(107,792	)		(322,246	)		8,883			(361,156	)
Recovery		—			—			(55,911	)		—			—			(27,566	)
Write-off		—			—			180,897			—			—			214,694
Disposal		18			418			5,309			30			512			134,453
Interest income from impaired loans		—			—			9,297			—			—			15,474
Others		3			—			17			12,015			485			8,262

Ending balance		(105,367	)		(84,202	)		(76,070	)		(809,271	)		(517,124	)		(217,322	)


	For the year ended December 31, 2023
	Total
	Stage 1			Stage 2			Stage 3
Beginning balance		(399,303	)		(787,776	)		(255,243	)
Transfer to 12-month expected credit losses		(207,087	)		204,228			2,859
Transfer to lifetime expected credit losses		24,187			(25,975	)		1,788
Transfer to credit-impaired financial assets		14,460			44,314			(58,774	)
Net reversal (provision) of expected credit loss allowance		(358,961	)		(37,532	)		(468,948	)
Recovery		—			—			(83,477	)
Write-off		—			—			395,591
Disposal		48			930			139,762
Interest income from impaired loans		—			—			24,771
Others		12,018			485			8,279

Ending balance		(914,638	)		(601,326	)		(293,392	)

- 66 -


	For the year ended December 31, 2022
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(59,529	)		(64,421	)		(86,146	)		(270,940	)		(528,171	)		(170,240	)
Transfer to 12-month expected credit losses		(18,183	)		17,813			370			(68,222	)		62,423			5,799
Transfer to lifetime expected credit losses		5,879			(6,505	)		626			14,589			(17,331	)		2,742
Transfer to credit-impaired financial assets		647			3,188			(3,835	)		1,843			8,012			(9,855	)
Net reversal (provision) of expected credit loss allowance		14,960			(15,773	)		(52,804	)		(8,627	)		(242,436	)		(72,454	)
Recovery		—			—			(61,951	)		—			—			(53,849	)
Write-off		—			—			104,836			—			—			109,611
Disposal		—			62			747			—			128			32,374
Interest income from impaired loans		—			—			5,327			—			—			7,407
Others		(23	)		—			(50	)		(11,697	)		(4,765	)		(13,898	)

Ending balance		(56,249	)		(65,636	)		(92,880	)		(343,054	)		(722,140	)		(162,363	)


	For the year ended December 31, 2022
	Total
	Stage 1			Stage 2			Stage 3
Beginning balance		(330,469	)		(592,592	)		(256,386	)
Transfer to 12-month expected credit losses		(86,405	)		80,236			6,169
Transfer to lifetime expected credit losses		20,468			(23,836	)		3,368
Transfer to credit-impaired financial assets		2,490			11,200			(13,690	)
Net reversal (provision) of expected credit loss allowance		6,333			(258,209	)		(125,258	)
Recovery		—			—			(115,800	)
Write-off		—			—			214,447
Disposal		—			190			33,121
Interest income from impaired loans		—			—			12,734
Others		(11,720	)		(4,765	)		(13,948	)

Ending balance		(399,303	)		(787,776	)		(255,243	)

(7)	Changes in the gross carrying amount of loans for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		120,548,601			13,473,097			298,959			157,259,178			8,759,453			414,350
Transfer to 12-month expected credit losses		3,932,438			(3,919,317	)		(13,121	)		2,158,820			(2,156,351	)		(2,469	)
Transfer to lifetime expected credit losses		(6,149,137	)		6,163,866			(14,729	)		(4,084,959	)		4,090,312			(5,353	)
Transfer to credit-impaired financial assets		(132,530	)		(140,297	)		272,827			(429,594	)		(206,961	)		636,555
Write-off		—			—			(180,897	)		—			—			(214,694	)
Disposal		(63	)		(491	)		(58,814	)		(98	)		(720	)		(334,385	)
Net increase (decrease)		4,008,702			(1,289,002	)		37,613			8,802,055			(1,475,512	)		30,247

Ending balance		122,208,011			14,287,856			341,838			163,705,402			9,010,221			524,251


	For the year ended December 31, 2023
	Total
	Stage 1			Stage 2			Stage 3
Beginning balance		277,807,779			22,232,550			713,309
Transfer to 12-month expected credit losses		6,091,258			(6,075,668	)		(15,590	)
Transfer to lifetime expected credit losses		(10,234,096	)		10,254,178			(20,082	)
Transfer to credit-impaired financial assets		(562,124	)		(347,258	)		909,382
Write-off		—			—			(395,591	)
Disposal		(161	)		(1,211	)		(393,199	)
Net increase (decrease)		12,810,757			(2,764,514	)		67,860

Ending balance		285,913,413			23,298,077			866,089

- 67 -


	For the year ended December 31, 2022
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		125,332,720			13,168,886			263,756			149,439,955			7,829,289			487,451
Transfer to 12-month expected credit losses		4,589,594			(4,576,158	)		(13,436	)		1,639,650			(1,624,016	)		(15,634	)
Transfer to lifetime expected credit losses		(6,102,618	)		6,120,002			(17,384	)		(3,483,832	)		3,502,268			(18,436	)
Transfer to credit-impaired financial assets		(80,893	)		(82,848	)		163,741			(203,103	)		(96,335	)		299,438
Write-off		—			—			(104,836	)		—			—			(109,611	)
Disposal		—			(259	)		(16,447	)		—			(391	)		(128,197	)
Net increase (decrease)		(3,190,202	)		(1,156,526	)		23,565			9,866,508			(851,362	)		(100,661	)

Ending balance		120,548,601			13,473,097			298,959			157,259,178			8,759,453			414,350


	For the year ended December 31, 2022
	Total
	Stage 1			Stage 2			Stage 3
Beginning balance		274,772,675			20,998,175			751,207
Transfer to 12-month expected credit losses		6,229,244			(6,200,174	)		(29,070	)
Transfer to lifetime expected credit losses		(9,586,450	)		9,622,270			(35,820	)
Transfer to credit-impaired financial assets		(283,996	)		(179,183	)		463,179
Write-off		—			—			(214,447	)
Disposal		—			(650	)		(144,644	)
Net increase (decrease)		6,676,306			(2,007,888	)		(77,096	)

Ending balance		277,807,779			22,232,550			713,309

(8)	Details of other financial assets as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Receivables		8,612,499			5,044,880
Accrued income		1,549,256			1,306,330
Telex and telephone subscription rights and refundable deposits		790,577			798,998
Other assets (*)		788,769			858,505
Allowance for credit losses		(121,381	)		(119,905	)

Total		11,619,720			7,888,808

(*)	The amount included in other assets related employee incidents in prior fiscal year was 63,354 million Won, which was completely lost.

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(9)	Changes in the expected credit loss allowance on other financial assets for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		(1,559	)		(4,805	)		(113,542	)		(119,906	)
Transfer to 12-month expected credit losses		(257	)		155			102			—
Transfer to lifetime expected credit losses		82			(94	)		12			—
Transfer to credit-impaired financial assets		7			55			(62	)		—
Net reversal (provision) of expected credit loss allowance		(1,929	)		156			(1,557	)		(3,330	)
Write-off		—			—			106			106
Disposal		—			—			1,749			1,749

Ending balance		(3,656	)		(4,533	)		(113,192	)		(121,381	)


	For the year ended December 31, 2022
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		(993	)		(2,402	)		(46,507	)		(49,902	)
Transfer to 12-month expected credit losses		(129	)		115			14			—
Transfer to lifetime expected credit losses		95			(105	)		10			—
Transfer to credit-impaired financial assets		7			945			(952	)		—
Net provision of expected credit loss allowance		(539	)		(3,358	)		(4,069	)		(7,966	)
Write-off		—			—			590			590
Disposal		—			—			726			726
Others(*)								(63,354	)		(63,354	)

Ending balance		(1,559	)		(4,805	)		(113,542	)		(119,906	)

(*)	The amount included in others related employee incidents was 63,354 million Won.

(10)	Changes in the gross carrying amount of other financial assets for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		7,836,134			55,265			117,315			8,008,714
Transfer to 12-month expected credit losses		11,483			(11,378	)		(105	)		—
Transfer to lifetime expected credit losses		(22,653	)		22,667			(14	)		—
Transfer to credit-impaired financial assets		(1,369	)		(927	)		2,296			—
Write-off		—			—			(106	)		(106	)
Disposal		—			—			(2,164	)		(2,164	)
Net increase (decrease)		3,732,808			2,398			(549	)		3,734,657

Ending balance		11,556,403			68,025			116,673			11,741,101


	For the year ended December 31, 2022
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		8,093,442			29,874			49,738			8,173,054
Transfer to 12-month expected credit losses		7,073			(7,057	)		(16	)		—
Transfer to lifetime expected credit losses		(14,668	)		14,680			(12	)		—
Transfer to credit-impaired financial assets		(460	)		(1,580	)		2,040			—
Disposal		—			—			(911	)		(911	)
Net increase (decrease)		(249,253	)		19,348			66,476			(163,429	)

Ending balance		7,836,134			55,265			117,315			8,008,714

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11.	THE FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

(1)	The fair value hierarchy

The fair value hierarchy is determined by the level of market observable inputs. The market observable inputs reflect unique characteristics of a financial instrument or market condition (including transparency and whether there are transactions among market participants), and when a financial instrument is traded in an active market, the best estimate of its fair value is the quoted price in the active market. The Bank maximizes the use of market observable inputs and minimizes the use of unobserved firm-specific inputs to selected valuation techniques. Fair value of the Bank is measured based on the perspective of a market participant. As such, even when market observable inputs are not readily available, firm-specific inputs reflect factors that market participants would use for measuring the fair value of assets or liabilities.

The fair value measurement is described in one of the following three levels used to classify fair value measurements:

•

Level 1—fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The types of financial assets or liabilities generally included in Level 1 are publicly traded equity securities, derivatives, and debt securities issued by governmental bodies.

•

Level 2— fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., prices) or indirectly (i.e., derived from prices). The types of financial assets or liabilities generally included in Level 2 are debt securities not traded in active markets and derivatives traded in OTC but which do not require significant judgment.

•

Level 3— fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). The types of financial assets or liabilities generally included in Level 3 are non-public securities and derivatives and debt securities of which valuation techniques require significant judgments and subjectivity.

The inputs used to measure fair value may be categorized different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Bank’s assessment of the significance of a particular input to a fair value measurement in its entirety requires judgment and consideration of inherent factors of the asset or liability.

- 70 -

(2)	Fair value hierarchy of financial assets and liabilities measured at fair value are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Level 1 (*)		Level 2 (*)		Level 3		Total
Financial assets:
Financial assets at FVTPL
Due from banks		39,241		—		—		39,241
Debt securities		3,880,903		186,693		—		4,067,596
Equity securities		1,948		—		254,337		256,285
Capital contributions		—		—		1,839,972		1,839,972
Beneficiary certificates		123,299		3,843,596		4,933,773		8,900,668
Derivative assets		112		5,663,002		128,335		5,791,449
Other financial assets in foreign currencies		—		—		42,406		42,406
Others		—		—		180,690		180,690

Sub-total		4,045,503		9,693,291		7,379,513		21,118,307

Financial assets at FVTOCI
Debt securities		12,392,119		22,911,310		—		35,303,429
Equity securities		649,220		—		422,552		1,071,772

Sub-total		13,041,339		22,911,310		422,552		36,375,201

Derivative assets (designated for hedging)		—		698		—		698

Total		17,086,842		32,605,299		7,802,065		57,494,206

Financial liabilities:
Financial liabilities at FVTPL
Deposits due to customers		39,524		—		—		39,524
Derivative liabilities		8,306		5,965,966		1,994		5,976,266

Sub-total		47,830		5,965,966		1,994		6,015,790

Derivative liabilities (designated for hedging)		—		135,263		—		135,263

Total		47,830		6,101,229		1,994		6,151,053

(*)	There were no transfers between Level 1 and Level 2 of financial assets and liabilities measured at fair value. The Bank recognizes transfers among levels at the end of the reporting period in which events have occurred or conditions have changed.

- 71 -


	December 31, 2022
	Level 1 (*)		Level 2 (*)		Level 3		Total
Financial assets:
Financial assets at FVTPL
Due from banks		34,995		—		—		34,995
Debt securities		2,125,303		—		—		2,125,303
Equity securities		16,909		—		248,638		265,547
Capital contributions		—		—		1,418,022		1,418,022
Beneficiary certificates		—		2,591,273		4,082,326		6,673,599
Loans		—		—		19,169		19,169
Derivative assets		69,316		8,023,432		90,338		8,183,086
Other financial assets in foreign currencies		—		—		41,680		41,680
Others		—		—		142,335		142,335

Sub-total		2,246,523		10,614,705		6,042,508		18,903,736

Financial assets at FVTOCI
Debt securities		9,895,455		20,817,577		—		30,713,032
Equity securities		382,257		—		426,450		808,707

Sub-total		10,277,712		20,817,577		426,450		31,521,739

Total		12,524,235		31,432,282		6,468,958		50,425,475

Financial liabilities:
Financial liabilities at FVTPL
Deposits due to customers		35,161		—		—		35,161
Derivative liabilities		11,700		8,945,795		9,449		8,966,944

Sub-total		46,861		8,945,795		9,449		9,002,105

Derivative liabilities (designated for hedging)		—		193,831		—		193,831

Total		46,861		9,139,626		9,449		9,195,936

(*)

Among financial assets and financial liabilities measured at fair value, the amount transferred from Level 2 to Level 1 is 2,835,187 million Won. The Bank recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed. There has been a shift between levels due to the change in whether the market in which the relevant financial product is traded is determined to be an active market.

Financial instruments are measured at fair value using a quoted market price in active markets. If there is no active market for a financial instrument, the Bank determines the fair value using valuation methods. Valuation methods and input variables for each type of financial instruments are as follows:

①

Valuation methods and input variables used for the fair value measurement of level 2 financial assets and liabilities as of December 31, 2023 and 2022, are as follows:


	Valuation methods	Input variables
Debt securities	Fair value is measured by discounting the future cash flows of debt securities applying the risk-free market rate with credit spread.	Risk-free market rate and Credit spread

Beneficiary certificates	The beneficiary certificates are measured with Net Asset Value.	Values of underlying assets such as bond

Derivatives	The fair value is measured through Option pricing model etc.	Discount rate, Volatility, Foreign exchange rate, Stock price etc.

- 72 -

②

Valuation methods and input variables used for the fair value measurement of level 3 financial assets and liabilities as of December 31, 2023 and 2022, are as follows:


	Valuation techniques	Input variables
Loans	The fair value of loans are measured by the T-F Model given the values of underlying assets, volatility and discount rate.	Values and volatility of underlying assets

Equity securities, capital contributions, beneficiary certificates and others	Among DCF (Discounted Cash Flow) Model, FCFE (Free Cash Flow to Equity) Model, Comparable Company Analysis, Dividend Discount Model, Risk-adjusted Rate of Return Method, Net Asset Value Method, Least-Squares Monte Carlo and binomial tree, more than one method is used given the characteristic of the subject of fair value measurement.	Risk-free market rate, Market risk premium, Corporate Beta, Stock price, Volatility of underlying assets, etc.

Derivatives	The fair value is measured through Option pricing model, etc..	Correlation coefficient, etc.

Others	The fair value of the underlying asset, after calculating the fair value using the DCF model, etc., considering the price and volatility of the calculated underlying asset, is calculated using the Binomial Tree which is commonly used valuation technique in the market.	Stock price, Volatility of underlying assets, etc.

Valuation methods of financial assets and liabilities measured at fair value and classified into Level 3 and significant but unobservable inputs as of December 31, 2023 and 2022, are as follows:

①

December 31, 2023


	Fair value measurement technique	Type	Significant but unobservable input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Derivative assets	Option valuation model and others	Equity related	Correlation coefficient, etc.	0.32~0.68	Variation of fair value increases as correlation coefficient increases
Derivative liabilities	Option valuation model and others	Equity related	Correlation coefficient, etc.	0.32~0.68	Variation of fair value increases as correlation coefficient increases
Equity securities, capital contributions, and beneficiary certificates	Binomial Tree		Stock price, Volatility of underlying asset	27.34%	Variation of fair value increases as stock price and volatility of underlying asset increase
	DCF model and others		Discount rate	5.08%~19.90%	Fair value increases as discount rate decreases
			Terminal growth rate	0.00%, 1.00%	Fair value increases as terminal growth rate increases
			Liquidation value	-1.00%~1.00%	Fair value increases as liquidation value increases
Others	Binomial Tree		Stock price, Volatility of underlying asset	15.48%~76.22%	Variation of fair value increases as stock price and volatility of underlying asset increase

- 73 -

②

December 31, 2022


	Fair value measurement technique	Type	Significant but unobservable input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Loans	T-F model		Stock price, Volatility of underlying asset	46.53%	Variation of fair value increases as stock price and volatility of underlying asset increase
Derivative assets	Option valuation model and others	Equity related	Correlation coefficient	0.21~0.67	Variation of fair value increases as correlation coefficient increases
Derivative liabilities	Option valuation model and others	Equity related	Correlation coefficient	0.21~0.67	Variation of fair value increases as correlation coefficient increases
Equity securities, capital contributions, and beneficiary certificates	Binomial Tree		Stock price, Volatility of underlying asset	28.40%	Variation of fair value increases as stock price and volatility of underlying asset increase
	DCF model and Others		Discount rate	0.00%~19.14%	Fair value increases as discount rate decreases
			Terminal growth rate	0.00%, 1.00%	Fair value increases as terminal growth rate increases
			Liquidation value	0.00%	Fair value increases as liquidation value increases
Others	Binomial Tree		Stock price, Volatility of underlying asset	20.15%~36.19%	Variation of fair value increases as stock price and volatility of underlying asset increase

- 74 -

Fair value of financial assets and liabilities classified into Level 3 is measured by the Bank using its own valuation methods or using external specialists. Unobservable inputs used in the fair value measurements are produced by the internal system of the Bank and the appropriateness of inputs is reviewed regularly.

(3)	Changes in financial assets and liabilities measured at fair value classified into Level 3 for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	January 1, 2023		Net income (loss) (*1)			Other comprehensive income			Purchases/ issuances		Disposals/ settlements			Transfer to or out of Level 3 (*2)			December 31, 2023
Financial assets:
Financial assets at FVTPL
Equity securities		248,638		(2,973	)		—			14,659		(147	)		(5,840	)		254,337
Capital contributions		1,418,022		49,104			—			517,858		(145,012	)		—			1,839,972
Beneficiary certificates		4,082,326		79,029			—			1,057,407		(284,989	)		—			4,933,773
Loans		19,169		—			—			—		(19,169	)		—			—
Derivative assets		90,338		41,737			—			2,271		(6,011	)		—			128,335
Other financial assets (foreign currency)		41,680		726			—			—		—			—			42,406
Others		142,335		9,015			—			32,135		(2,795	)		—			180,690

Sub-total		6,042,508		176,638			—			1,624,330		(458,123	)		(5,840	)		7,379,513

Financial assets at FVTOCI
Equity securities		426,450		—			(3,511	)		342		(706	)		(23	)		422,552

Total		6,468,958		176,638			(3,511	)		1,624,672		(458,829	)		(5,863	)		7,802,065

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities		9,449		1,994			—			—		(9,449	)		—			1,994

Total		9,449		1,994			—			—		(9,449	)		—			1,994

(*1)

The losses that increase the financial liabilities are presented as positive amounts, and the gains that decrease the financial liabilities are presented as negative amounts. The gain amount to 117,241 million Won for year ended December 31, 2023, which is from financial assets and liabilities that the Bank holds as at the end of the year.

(*2)

Changes in the availability of observable market data for the financial instrument have resulted in transfer between fair value hierarchy level, and the Bank recognizes changes in levels at the end of reporting period that result in changes in events or circumstances that result in transfer between fair value hierarchy level.

- 75 -


	For the year ended December 31, 2022
	January 1, 2022		Net income (loss) (*1)		Other comprehensive income			Purchases/ issuances			Disposals/ settlements			Transfer to or out of Level 3 (*2)			December 31, 2022
Financial assets:
Financial assets at FVTPL
Equity securities		247,907		506		—			9,842			(9,585	)		(32	)		248,638
Capital contributions		919,447		76,228		—			519,979			(97,632	)		—			1,418,022
Beneficiary certificates		3,180,012		33,328		—			1,125,589			(256,603	)		—			4,082,326
Loans		10,623		9,046		—			—			(500	)		—			19,169
Derivative assets		27,475		62,254		—			958			(349	)		—			90,338
Other financial assets (foreign currency)		—		—		—			41,680			—			—			41,680
Others		94,673		16,744		—			39,838			(8,920	)		—			142,335

Sub-total		4,480,137		198,106		—			1,737,886			(373,589	)		(32	)		6,042,508

Financial assets at FVTOCI
Equity securities		430,978		—		(3,572	)		1,677			(2,633	)		—			426,450

Total		4,911,115		198,106		(3,572	)		1,739,563			(376,222	)		(32	)		6,468,958

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities		4,101		8,387		—			(351	)		(2,688	)		—			9,449

Total		4,101		8,387		—			(351	)		(2,688	)		—			9,449

(*1)

The losses that increase the financial liabilities are presented as positive amounts, and the gains that decrease the financial liabilities are presented as negative amounts. The gain amount to 185,333 million Won for year ended December 31, 2022, which is from financial assets and liabilities that the Bank holds as at the end of the year.

(*2)

(4)	The results of a sensitivity analysis on the rational fluctuation in the unobservable inputs used for measuring Level 3 financial instruments are as follows:

Meanwhile, among the financial instruments that are classified as Level 3 amounting to 7,804,059 million Won and 6,478,407 million Won as of December 31, 2023 and 2022 respectively, equity investments of 7,277,190 million Won and 5,983,649 million Won are excluded from the sensitivity analysis.

- 76 -


	December 31, 2023
	Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at FVTPL
Derivatives assets (*1)		88		(95	)		—		—
Equity securities (2)(3)(*4)		10,735		(8,417	)		—		—
Beneficiary certificates (*4)		722		(722	)		—		—
Others (2)(4)		4,098		(3,921	)		—		—
Financial assets at FVTOCI
Equity securities (3)(4)		—		—			17,970		(14,009	)

Total		15,643		(13,155	)		17,970		(14,009	)

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities (*1)		10		(7	)		—		—

Total		10		(7	)		—		—

(*1)	Fair value changes in equity related derivatives assets and liabilities and equity-linked securities are calculated by increasing or decreasing correlation coefficient, which are major unobservable variables, by 10%.

(*2)	The change in fair value is calculated by increasing or decreasing the share price (-10% to 10%) and volatility (-10%p to 10%p), the major unobservable inputs.

(*3)	Fair value changes in equity securities are calculated by increasing or decreasing terminal growth rate (-0.5p~0.5%p) and discount rate (-1%p~1%p) or liquidation value (-1%p~1%p). The growth rate, discount rate, and liquidation value are major unobservable variables.

(*4)


	December 31, 2022
	Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at FVTPL
Derivatives assets (*1)		1,886		(1,993	)		—		—
Equity securities (2)(3)(*4)		9,710		(7,763	)		—		—
Beneficiary certificates (*4)		737		(737	)		—		—
Others (2)(4)		2,860		(2,790	)		—		—
Financial assets at FVTOCI
Equity securities (3)(4)		—		—			20,131		(13,734	)

Total		15,193		(13,283	)		20,131		(13,734	)

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities (*1)		41		(39	)		—		—

Total		41		(39	)		—		—

(*1)	Fair value changes in equity related derivatives assets and liabilities and equity-linked securities are calculated by increasing or decreasing historical volatility of the stock price and correlation, which are major unobservable variables, by 10%, respectively.

(*2)	The change in fair value is calculated by increasing or decreasing the share price (-10% to 10%) and volatility (-10% to 10%), the major unobservable inputs.

(*3)	Fair value changes of equity securities are calculated by increasing or decreasing terminal growth rate (-1~1%) and discount rate (-1~1%) or liquidation value (-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.

(*4)

- 77 -

(5)	Fair value and carrying amount of financial assets and liabilities that are recorded at amortized cost as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Fair value								Book value
	Level 1		Level 2		Level 3		Total		Book value
Financial assets:
Securities at amortized cost		2,361,628		20,891,536		—		23,253,164		23,584,608
Loans and other financial assets at amortized cost		—		8,977,848		312,184,831		321,162,679		320,810,617
Financial liabilities:
Deposits due to customers		—		339,093,471		—		339,093,471		338,741,703
Borrowings		—		21,422,215		—		21,422,215		21,461,867
Debentures		—		21,249,932		—		21,249,932		21,273,027
Other financial liabilities (*)		—		22,426,811		—		22,426,811		22,429,299

(*)	Lease liabilities are excluded as of December 31, 2023.


	December 31, 2022
	Fair value								Book value
	Level 1		Level 2		Level 3		Total		Book value
Financial assets:
Securities at amortized cost		2,652,449		23,659,769		—		26,312,218		27,304,915
Loans and other financial assets at amortized cost		—		5,510,369		299,011,876		304,522,245		308,785,393
Financial liabilities:
Deposits due to customers		—		323,037,128		—		323,037,128		323,378,015
Borrowings		—		21,718,444		—		21,718,444		21,717,702
Debentures		—		24,150,889		—		24,150,889		24,635,427
Other financial liabilities (*)		—		19,513,793		—		19,513,793		19,692,325

(*)	Lease liabilities are excluded as of December 31, 2022.

The fair values of financial instruments are measured using quoted market price in active markets. In case there is no active market for financial instruments, the Bank determines the fair value using valuation methods. Valuation techniques and input variables for financial assets and liabilities that are measured at amortized costs are given as follows:


	Valuation techniques	Input variables
Securities at amortized cost	The fair value is measured by discounting the projected cash flows of debt securities by applying the market discount rate applied credit spread.	Risk-free market rate and credit spread

Loans and other financial assets at amortized cost	The fair value is measured by discounting the projected cash flows of loan products by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the debtor.	Risk-free market rate, credit spread and expected prepayment-rate

Deposits due to customers, borrowings, debentures and other financial liabilities	The fair value is measured by discounting the projected cash flows of debt products by applying the market discount rate that is reflecting credit rating of the Bank.	Risk-free market rate and credit spread

- 78 -

(6)	Financial instruments by category

Carrying amounts of financial assets and liabilities by each category as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2021
	Financial assets at FVTPL		Financial assets at FVTOCI		Financial assets at amortized cost		Derivative assets (designated for hedging)		Total
Financial assets:
Due from banks		39,241		—		922,674		—		961,915
Securities		15,245,211		36,375,201		23,584,608		—		75,205,020
Loans		—		—		308,268,223		—		308,268,223
Derivative assets		5,791,449		—		—		698		5,792,147
Other financial assets		42,406		—		11,619,720		—		11,662,126

Total		21,118,307		36,375,201		344,395,225		698		401,889,431


	December 31, 2023
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivative liabilities (designated for hedging)		Total
Financial liabilities:
Deposits due to customers		39,524		338,741,703		—		338,781,227
Borrowings		—		21,461,867		—		21,461,867
Debentures		—		21,273,027		—		21,273,027
Derivative liabilities		5,976,266		—		135,263		6,111,529
Other financial liabilities (*)		—		22,429,299		—		22,429,299

Total		6,015,790		403,905,896		135,263		410,056,949

(*)	Lease liabilities are excluded as of December 31, 2023.


	December 31, 2022
	Financial assets at FVTPL		Financial assets at FVTOCI		Financial assets at amortized cost		Total
Financial assets:
Due from banks		34,995		—		1,585,268		1,620,263
Securities		10,624,806		31,521,739		27,304,915		69,451,460
Loans		19,169		—		299,311,317		299,330,486
Derivative assets		8,183,086		—		—		8,183,086
Other financial assets		41,680		—		7,888,808		7,930,488

Total		18,903,736		31,521,739		336,090,308		386,515,783


	December 31, 2022
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivative liabilities (designated for hedging)		Total
Financial liabilities:
Deposits due to customers		35,161		323,378,015		—		323,413,176
Borrowings		—		21,717,702		—		21,717,702
Debentures		—		24,635,427		—		24,635,427
Derivative liabilities		8,966,944		—		193,831		9,160,775
Other financial liabilities (*)		—		19,692,325		—		19,692,325

Total		9,002,105		389,423,469		193,831		398,619,405

(*)	Lease liabilities are excluded as of December 31, 2022.

- 79 -

Income or expense from financial instruments by category during the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Interest income (expense)			Fees and commissions income (expense)		Reversal (Provision) of credit loss			Gain (Loss) on valuation and transaction			Dividends		Total
Financial assets at FVTPL		92,854			423		—			514,706			290,797		898,780
Financial assets at FVTOCI		945,536			1,621		(16,388	)		(38,399	)		15,697		908,067
Securities at amortized cost		765,390			—		(5,472	)		—			—		759,918
Loans and other financial assets at amortized cost		15,178,022			—		(870,945	)		101,788			—		14,408,865
Financial liabilities at amortized cost		(10,286,722	)		—		—			—			—		(10,286,722	)
Net derivatives (designated for hedging)		—			—		—			(2,955	)		—		(2,955	)

Total		6,695,080			2,044		(892,805	)		575,140			306,494		6,685,953


	For the year ended December 31, 2022
	Interest income (expense)			Fees and commissions income (expense)		Reversal (Provision) of credit loss			Gain (Loss) on valuation and transaction			Dividends		Total
Financial assets at FVTPL		44,079			—		—			282,411			159,474		485,964
Financial assets at FVTOCI		585,206			1,606		869			—			20,801		608,482
Securities at amortized cost		497,144			—		(2,981	)		—			—		494,163
Loans and other financial assets at amortized cost		10,387,252			40,831		(381,902	)		35,003			—		10,081,184
Financial liabilities at amortized cost		(4,895,782	)		—		—			—			—		(4,895,782	)
Net derivatives (designated for hedging)		—			—		—			8,932			—		8,932

Total		6,617,899			42,437		(384,014	)		326,346			180,275		6,782,943

- 80 -

12.	DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS

(1)	Derecognition of financial instruments

Transferred financial assets that do not meet the condition of derecognition

Bonds sold under repurchase agreements

The financial instruments that were disposed but the Bank agreed to repurchase at the fixed amounts at the same time, so that they did not meet the conditions of derecognition, as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


		December 31, 2023		December 31, 2022
Asset transferred	Financial assets at FVTOCI		190,250		304,628
Asset transferred	Securities at amortized cost		—		1,100,351
Related liabilities	Bonds sold under repurchase agreements		157,761		1,231,667

Securities loaned

When the Bank loans its securities to outside parties, the legal ownerships of the securities are transferred; however, they should be returned at the end of lending period. Therefore, the Bank does not derecognize them from the financial statements as it owns majority of risks and benefits from the securities continuously, regardless of the transfer of legal ownership. The carrying amounts of the securities loaned as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):

December 31,
2023

December 31,
2022

Loaned to

Financial assets at FVTPL

Korea treasury and government bonds and others

625,398

—

Korea Securities Finance Corporation and others

Financial assets at FVTOCI

Korea treasury and government bonds and others

592,218

98,027

Korea Securities Depository and others

(2)	The offset of financial assets and liabilities

The Bank possesses both the uncollected domestic exchange receivables and the unpaid domestic exchange payable, which satisfy offsetting criteria of K-IFRS No.1032. Therefore, the total number of uncollected domestic exchange receivables or unpaid domestic exchange payable has been offset with part of unpaid domestic exchange payable or uncollected domestic exchange receivables and has been disclosed in loans and other financial assets at amortized cost and other financial liabilities of the Bank’s statements of financial position, respectively.

The Bank possesses the derivative assets, derivative liabilities, receivable spot exchange and payable spot exchange that do not satisfy the offsetting criteria of K-IFRS No.1032, but provide the Bank under the circumstances of the trading party’s defaults, insolvency or bankruptcy, with the right of offsetting. Items such as cash collateral cannot satisfy the offsetting criteria of K-IFRS No.1032, but in accordance with the collateral arrangements and under the circumstances of the trading party’s default, insolvency or bankruptcy, the net amount of derivative assets, derivative liabilities, receivable spot exchange and payable spot exchange can be offset.

The Bank has entered into a sale and repurchase agreement and accounted it as a collateralized borrowing. The Bank has also entered into a purchase and resale agreement and accounted it as a secured loan. The Bank under the repurchase agreements has offsetting right only upon the counterparty’s default, insolvency or bankruptcy; thus, the repurchase agreements are applied by the TBMA/ISMA Global Master Repurchase Agreement, which does not satisfy the offsetting criteria of K-IFRS No.1032. The Bank disclosed bonds sold under repurchase agreements as borrowings and bonds purchased under resale agreements as loans and other financial assets at amortized cost.

- 81 -

As of December 31, 2023 and 2022, the financial instruments to be offset and may be covered by master netting agreements and similar agreements are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Related amounts not setoff in the statement of financial position				Net amounts
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Netting agreements and others		Cash collateral received		Net amounts
Financial assets:
Derivative assets (*1)		5,156,266		—		5,156,266		11,279,763		424,466		1,051,548
Receivable spot exchange (*2)		7,599,511		—		7,599,511
Bonds purchased under resale agreements (*2)		2,607,250		—		2,607,250		2,607,250		—		—
Domestic exchanges settlement credits (2)(5)		49,020,044		48,575,856		444,188		—		—		444,188

Total		64,383,071		48,575,856		15,807,215		13,887,013		424,466		1,495,736


	December 31, 2023
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Related amounts not setoff in the statement of financial position				Net amounts
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Netting agreements and others		Cash collateral pledged		Net amounts
Financial liabilities:
Derivative liabilities (*1)		5,094,975		—		5,094,975		11,377,541		139,143		1,178,349
Payable spot exchange (*3)		7,600,058		—		7,600,058
Bonds sold under repurchase agreements (*4)		157,761		—		157,761		157,761		—		—
Domestic exchanges settlement debits (3)(5)		49,943,565		48,575,856		1,367,709		1,367,709		—		—

Total		62,796,359		48,575,856		14,220,503		12,903,011		139,143		1,178,349

(*1)	The items include derivatives held for trading and derivatives designated for hedging.

(*2)	The items are included in loans and other financial assets at amortized cost.

(*3)	The items are included in other financial liabilities.

(*4)	The items are included in borrowings.

(*5)	Certain financial assets and liabilities are presented as net amounts.

- 82 -


	December 31, 2022
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Related amounts not setoff in the statement of financial position				Net amounts
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Netting agreements and others		Cash collateral received		Net amounts
Financial assets:
Derivative assets (*1)		6,931,262		—		6,931,262		9,063,867		748,694		1,528,199
Receivable spot exchange (*2)		4,409,498		—		4,409,498
Bonds purchased under resale agreements (*2)		6,298,779		—		6,298,779		6,298,779		—		—
Domestic exchanges settlement credits (2)(5)		39,773,640		39,197,123		576,517		—		—		576,517

Total		57,413,179		39,197,123		18,216,056		15,362,646		748,694		2,104,716


	December 31, 2022
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Related amounts not setoff in the statement of financial position				Net amounts
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Netting agreements and others		Cash collateral pledged		Net amounts
Financial liabilities:
Derivative liabilities (*1)		7,625,140		—		7,625,140		9,931,543		145,268		1,957,760
Payable spot exchange (*3)		4,409,431		—		4,409,431
Bonds sold under repurchase agreements (*4)		1,231,667		—		1,231,667		1,231,667		—		—
Domestic exchanges settlement debits (3)(5)		43,812,598		39,197,123		4,615,475		2,504,062		—		2,111,413

Total		57,078,836		39,197,123		17,881,713		13,667,272		145,268		4,069,173

(*1)	The items include derivatives held for trading and derivatives designated for hedging.

(*2)	The items are included in loans and other financial assets at amortized cost.

(*3)	The items are included in other financial liabilities.

(*4)	The items are included in borrowings.

(*5)	Certain financial assets and liabilities are presented as net amounts.

- 83 -

13.	INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES

(1)	The Bank has the following subsidiaries (Unit: Korean Won in 100 million, USD in 10 thousand, EUR in 10 thousand, CNY in 100 million, RUB in 100 million, IDR in 100 million, MMK in 100million, BRL in 10 thousand, PHP in 100 million, VND in trillions):


Subsidiaries	Location	Capital stock		Main business
Woori America Bank	U.S.A	USD	29,250	Finance
PT Bank Woori Saudara Indonesia 1906 Tbk	Indonesia	IDR	8,568	Finance
Woori Global Markets Asia Limited	Hong Kong	USD	10,000	Finance
Woori Bank China Limited	China	CNY	21.6	Finance
AO Woori Bank (*1)	Russia	RUB	14.5	Finance
Banco Woori Bank do Brasil S.A.	Brazil	BRL	7,709	Finance
Korea BTL Infrastructure Fund	Korea	KRW	7,339	Finance
Woori Finance Myanmar Co., Ltd.	Myanmar	MMK	162	Finance
Wealth Development Bank	Philippines	PHP	7.7	Finance
Woori Bank Vietnam Limited	Vietnam	VND	7.7	Finance
WOORI BANK(CAMBODIA) PLC.	Cambodia	USD	17,239	Finance
Woori Bank Europe	Germany	EUR	10,000	Finance

(*1)

The conflict between Russia and Ukraine broke out in February 2022, and international sanctions have been imposed on Russia since then. These sanctions may result in a decrease in the value of financial or operating assets held by banks in relation to the disputed country, an increase in the collection period, restrictions on capital transfers, and a decrease in profits. As a result, the Bank expects future financial impacts on the business of its subsidiary, AO Woori Bank, as of December 31, 2023, but the Bank cannot reasonably anticipate estimates.


	December 31, 2023					December 31, 2022
Subsidiaries	Number of shares owned		Percentage of ownership (%)		Financial statements as of	Number of shares owned		Percentage of ownership (%)		Financial statements as of
Woori America Bank		58,500,000		100.0	December 31, 2023		58,500,000		100.0	December 31, 2022
PT Bank Woori Saudara Indonesia 1906 Tbk		7,214,804,851		84.2	December 31, 2023		7,214,804,851		84.2	December 31, 2022
Woori Global Markets Asia Limited		78,000,000		100.0	December 31, 2023		78,000,000		100.0	December 31, 2022
Woori Bank China Limited		—		100.0	December 31, 2023		—		100.0	December 31, 2022
AO Woori Bank		57,999,999		100.0	December 31, 2023		57,999,999		100.0	December 31, 2022
Banco Woori Bank do Brasil S.A.		77,093,999		100.0	December 31, 2023		77,093,999		100.0	December 31, 2022
Korea BTL Infrastructure Fund		146,625,975		99.9	December 31, 2023		146,625,975		99.9	December 31, 2022
Woori Finance Myanmar Co., Ltd.		1,200,000		100.0	December 31, 2023		1,200,000		100.0	December 31, 2022
Wealth Development Bank		3,931,365		51.0	December 31, 2023		3,931,365		51.0	December 31, 2022
Woori Bank Vietnam Limited		—		100.0	December 31, 2023		—		100.0	December 31, 2022
WOORI BANK(CAMBODIA) PLC.		7,035,803		100.0	December 31, 2023		7,035,803		100.0	December 31, 2022
Woori Bank Europe		100,000,000		100.0	December 31, 2023		100,000,000		100.0	December 31, 2022

(2)

As for the structured entities in accordance with K-IFRS No.1110 and K-IFRS No.1112, it is determined that the Bank controls the entity after considering facts and circumstances, such as the Bank’s power over the entity’s related business activities, the Bank’s exposure to variable returns from its involvement with the entity and the Bank’s ability to affect the returns through its power over the entity.

- 84 -

Details of structured entities that the Bank controls are as follows:


	As of December 31, 2023
Structured entities	Location	Main business	Percentage of ownership (%)		Financial statements as of
Structured entities established for securitization of financial assets (*1)
Jeonju Iwon Ltd. and 49 structured entities	Korea	Asset securitization		—	December 31, 2023
KAMCO Value Recreation First Securitization Specialty Co., Ltd.	Korea	Asset securitization		15.0	December 31, 2023
Money trust under the FISCM Act (*2)
Principal Guaranteed Trust and Principal and Interest Guaranteed Trust	Korea	Trust		—	December 31, 2023
Structured entity for the investments in securities
IGIS Australia Investment Trust No. 209-1	Korea	Securities investment		99.4	December 31, 2023
Multi Asset Global Real Estate Investment Trust No. 5-2	Korea	Securities investment		99.0	December 31, 2023
AI Partners UK Water Supply Private Placement Investment Trust No. 2	UK	Securities investment		97.3	December 31, 2023
Heungkuk Global Private Placement Investment Trust No. 1	Korea	Securities investment		98.8	December 31, 2023
Woori Global Development Infrastructure Synergy Company Private Placement Investment Trust	Korea	Securities investment		99.9	December 31, 2023
Woori G Infras Newdeal Private Placement Investment Trust No. 1	Korea	Securities investment		99.5	December 31, 2023
Woori G North America Energy Infrastructure Private Placement Investment Trust No. 1	Korea	Securities investment		99.3	December 31, 2023
Woori G Global Secondary Private Placement Investment Trust No. 1	Korea	Securities investment		98.6	December 31, 2023
Woori G ESG Infrastructure Development Private Placement Investment Trust No.1	Korea	Securities investment		95.2	December 31, 2023
Kiwoom-Harmony Private Investment Trust Fund No. 1	Korea	Securities investment		97.4	December 31, 2023
Kiwoom-Harmony Private Investment Trust Fund No. 2	Korea	Securities investment		97.2	December 31, 2023
JB Airline Private Equity Investment Trust No.8	Korea	Securities investment		97.0	December 31, 2023
Kiwoom-Harmony Private Investment Trust Fund No. 4	Korea	Securities investment		96.2	December 31, 2023

(*1)

It is determined that the Bank controls the entity after considering all the facts and circumstances, such as the Bank’s power over the entity’s related business activities, the Bank’s exposure to variable returns from its involvement with the entity and the Bank’s ability to affect the returns through its power over the entity, even though the Bank holds less than 50% ownership interest of the entity.

(*2)	The Bank controls the trust because it has power that determines the management performance over the trust and is exposed to variable returns to absorb losses through the guarantees of payment of principal and fixed rate of return.

- 85 -

As of December 31, 2022

Structured entities

Location

Main

business

Percentage
of ownership
(%)

Financial
statements as of

Structured entities established for securitization of financial assets (*1)

Kumho Trust First Co., Ltd. and 52 structured entities

Korea

Asset securitization

—

December 31, 2022

KAMCO Value Recreation First Securitization Specialty Co., Ltd.

Korea

Asset securitization

15.0

December 31, 2022

Money trust under the FISCM Act (*2)

Principal Guaranteed Trust and Principal and Interest Guaranteed Trust

Korea

Trust

—

December 31, 2022

Structured entity for the investments in securities

IGIS Australia Investment Trust No. 209-1

Korea

Securities investment

99.4

December 31, 2022

Multi Asset Global Real Estate Investment Trust No. 5-2

Korea

Securities investment

99.0

December 31, 2022

AI Partners UK Water Supply Private Placement Investment Trust No. 2

Securities investment

97.3

December 31, 2022

Heungkuk Global Private Placement Investment Trust No. 1

Korea

Securities investment

98.8

December 31, 2022

Woori Global Development Infrastructure Synergy Company Private Placement Investment Trust

Korea

Securities investment

99.9

December 31, 2022

Woori G Infras Newdeal Private Placement Investment Trust No. 1

Korea

Securities investment

99.5

December 31, 2022

INMARK Spain Real Estate Investment Trust No. 26-2

Korea

Securities investment

97.7

December 31, 2022

Woori G North America Energy Infrastructure Private Placement Investment Trust No. 1

Korea

Securities investment

99.3

December 31, 2022

Woori G Japan Private Placement Real Estate Investment Trust No. 1-2

Korea

Securities investment

98.8

December 31, 2022

IGIS Global Private Placement Real Estate Fund No. 316-1

Korea

Securities investment

99.3

December 31, 2022

Woori G Global Secondary Private Placement Investment Trust No. 1

Korea

Securities investment

98.3

December 31, 2022

Woori G Japan Blind Private Real Estate Investment Trust No. 1

Korea

Securities investment

99.9

December 31, 2022

Woori GESG Infrastructure Development Private Placement Investment Trust No.1

Korea

Securities investment

95.2

December 31, 2022

Kiwoom-Harmony Private Investment Trust Fund No. 1

Korea

Securities investment

97.2

December 31, 2022

Kiwoom-Harmony Private Investment Trust Fund No. 2

Korea

Securities investment

97.1

December 31, 2022

JB Airline Private Equity Investment Trust No.8

Korea

Securities investment

97.0

December 31, 2022

KIWOOM Frontier Private Investment Trust No.23[Bond]

Korea

Securities investment

99.8

December 31, 2022

(*1)

(*2)	The Bank controls the trust because it has power that determines the management performance over the trust and is exposed to variable returns to absorb losses through the guarantees of payment of principal and fixed rate of return.

- 86 -

ii)

The following companies have been excluded from the consolidation scope despite the Bank’s majority ownership interest as of December 31, 2023 and 2022:


	December 31, 2023
Subsidiaries	Location	Main business	Percentage of ownership (%)
Mirae Asset Maps Clean Water Private Equity Investment Trust No. 7 (*1)	Korea	Securities investment		59.7
Kiwoom Yonsei Private Equity Investment Trust (*1)	Korea	Securities investment		88.9
IGIS Europe Private Placement Real Estate Fund No. 163-2 (*2)	Korea	Securities investment		97.9
IGIS Global Private Placement Real Estate Fund No. 148-1 (*1)	Korea	Securities investment		69.0
IGIS Global Private Placement Real Estate Fund No. 148-2 (*1)	Korea	Securities investment		69.0
Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1 (*1)	Korea	Securities investment		66.7
Hangkang Sewage Treatment Plant Fund (*1)	Korea	Securities investment		55.6
Korea Investment Pocheon Hwado Expressway Professional Investment Fund (*1)	Korea	Securities investment		55.1
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 1 (*1)	Korea	Securities investment		55.0
Midas Global Private Placement Real Estate Fund No. 7-2 (*1)	Korea	Securities investment		58.3
Together-Korea Government Private Pool Private Securities Investment Trust No. 3 (*3)	Korea	Securities investment		100.0
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 2 (*1)	Korea	Securities investment		55.0
Woori G Woori Bank Partners Private Placement Investment Trust No. 1 (*1)	Korea	Securities investment		92.6
Woori G Private Investment Trust Fund No. 1 (*1)	Korea	Securities investment		84.3
INMARK France Real Estate Investment Trust No. 18-1 (*1)	Korea	Securities investment		93.8
Kiwoom-Vibrato Private Investment Trust Fund 1-W(EUR) (*2)	Korea	Securities investment		99.5
Woori G Global Secondary Private Placement Investment Trust No. 1 (*1)	Korea	Securities investment		80.0
KOTAM Global Infrastructure Private Equity Investment Trust No. 1-4 (*2)	Korea	Securities investment		99.7
Hana UBS Class One Private Equity No. 3 C2 (*1)	Korea	Securities investment		51.0
Consus Gyeongju Green Private Equity Investment Trust No. 1 (*1)	Korea	Securities investment		50.0
Woori G Woori Bank Partners Private Placement Investment Trust No. 2 (*1)	Korea	Securities investment		90.9
Woori G Equity Bridge Loan Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		65.0
Woori G Private Investment Trust Fund No. 5 (*1)	Korea	Securities investment		87.0
Kiwoom-Harmony Private Investment Trust Fund No. 3 (*1)	Korea	Securities investment		76.7
Consus Solar Energy Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		50.0
Woori Innovative Growth New Deal Private Placement Investment Trust No.3 (*1)	Korea	Securities investment		79.8
Woori G Renewable New Deal Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		55.0
Woori G Policy-type New Deal (Infra Investment) Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		66.7
IGIS ESG Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		60.0

- 87 -


	December 31, 2023
Subsidiaries	Location	Main business	Percentage of ownership (%)
Woori G GP Commitment Loan Private Placement Investment Trust No. 2 (*1)	Korea	Securities investment		80.0
Kiwoom-Aurora Private Securities Investment Trust No. 2 (*1)	Korea	Securities investment		60.0
NH-Amundi WSCP VIII Private Placement Investment Trust No. 2 (*1)	Korea	Securities investment		65.2
AI Partners Global Infrastructure Private Equity Investment Trust No. 2 (*2)	Korea	Securities investment		98.0
Woori G Private Equity Investment Trust No. 1(*1)	Korea	Securities investment		93.8
Hangang New Deal Infrastructure BTL Private Equity Investment Trust No. 4 (*1)	Korea	Securities investment		60.0
Woori Busan Logistics Infra Private Placement Investment Trust (*1)	Korea	Securities investment		66.7
Woori Financial Digital Investment Association No. 1 (*1)	Korea	Securities investment		88.0
Woori G GP Commitment Loan Private Placement Investment Trust No. 3 (*1)	Korea	Securities investment		85.0
IGIS Global Private Placement Real Estate Fund No. 316-1 (*2)	Korea	Securities investment		99.3
INMARK Spain Private Placement Real Estate Investment Trust No. 26-2 (*2)	Korea	Securities investment		97.7
Woori G Japan Private Placement Real Estate Investment Trust No. 1-2 (*2)	Korea	Securities investment		98.8
Woori G Japan Blind General Type Private Real Estate Feeder Investment Trust No.1 (*2)	Korea	Securities investment		99.9
WooriG Private Investment Trust No.6 (*1)	Korea	Securities investment		85.0
Woori New Growth Credit Fund 1 (*1)	Korea	Securities investment		70.9
Woori Asset Global Partnership Fund No. 5 (*1)	Korea	Securities investment		57.7
Woori PE Secondary Private Placement Investment Trust No. 1 (*1)	Korea	Securities investment		82.6
Kiwoom-Harmony Private Investment Trust Fund No. 6 (*1)	Korea	Securities investment		76.9

(*1)

Since the investee is a discretionary funds, the Bank does not have power over the investee because the fund manager has the sole authority to decide the relevant activities of the investee. The fund manager’s delegated power is exercised not only for the Bank, but also for other investors as well. The Bank does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.

(*2)

The investment target for the fund was determined in advance, and the disposition of investment assets cannot be determined by the Bank, and as a fund of funds, the Bank does not have the power to participate in decision-making regarding investment assets in parent funds. The Bank does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.

(*3)

Since the investee is a Stock market stabilization fund, the Bank does not have power over such fund as the fund’s relevant activities are determined by the management committee, over which the Bank does not have substantial control. The Bank does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.


	December 31, 2022
Subsidiaries	Location	Main business	Percentage of ownership (%)
Mirae Asset Maps Clean Water Private Equity Investment Trust No. 7 (*1)	Korea	Securities investment		57.6
Kiwoom Yonsei Private Equity Investment Trust (*1)	Korea	Securities investment		88.9
IGIS Europe Private Placement Real Estate Fund No. 163-2 (*2)	Korea	Securities investment		97.8
IGIS Global Private Placement Real Estate Fund No. 148-1 (*1)	Korea	Securities investment		69.0

- 88 -


	December 31, 2022
Subsidiaries	Location	Main business	Percentage of ownership (%)
IGIS Global Private Placement Real Estate Fund No. 148-2 (*1)	Korea	Securities investment		69.0
Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1 (*1)	Korea	Securities investment		66.7
Hangkang Sewage Treatment Plant Fund (*1)	Korea	Securities investment		55.6
Korea Investment Pocheon Hwado Expressway Professional Investment Fund (*1)	Korea	Securities investment		55.2
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 1 (*1)	Korea	Securities investment		55.0
Midas Global Private Placement Real Estate Fund No. 7-2 (*1)	Korea	Securities investment		58.3
Together-Korea Government Private Pool Private Securities Investment Trust No. 3 (*3)	Korea	Securities investment		100.0
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 2 (*1)	Korea	Securities investment		55.0
Woori G Woori Bank Partners Private Placement Investment Trust No. 1 (*1)	Korea	Securities investment		92.6
Woori G Private Investment Trust Fund No. 1 (*1)	Korea	Securities investment		80.0
INMARK France Real Estate Investment Trust No. 18-1 (*1)	Korea	Securities investment		93.8
Kiwoom-Vibrato Private Investment Trust Fund 1-W(EUR) (*2)	Korea	Securities investment		99.5
Woori G Global Secondary Private Placement Investment Trust No. 1 (*1)	Korea	Securities investment		80.0
KOTAM Global Infrastructure Private Equity Investment Trust No. 1-4 (*2)	Korea	Securities investment		99.7
Hana UBS Class One Private Equity No. 3 C2 (*1)	Korea	Securities investment		51.0
Consus Gyeongju Green Private Equity Investment Trust No. 1 (*1)	Korea	Securities investment		50.0
Woori G Woori Bank Partners Private Placement Investment Trust No. 2 (*1)	Korea	Securities investment		90.9
Woori G Equity Bridge Loan Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		65.0
Woori G Private Investment Trust Fund No. 5 (*1)	Korea	Securities investment		86.8
Kiwoom-Harmony Private Investment Trust Fund No. 3 (*1)	Korea	Securities investment		76.7
Consus Solar Energy Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		50.0
Woori Innovative Growth New Deal Private Placement Investment Trust No.3 (*1)	Korea	Securities investment		79.8
Woori G Renewable New Deal Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		55.0
Woori G Policy-type New Deal (Infra Investment) Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		66.7
IGIS ESG Private Placement Investment Trust No.1 (*1)	Korea	Securities investment		60.0
Woori G GP Commitment Loan Private Placement Investment Trust No. 2 (*1)	Korea	Securities investment		80.0
Kiwoom-Aurora Private Securities Investment Trust No. 2 (*1)	Korea	Securities investment		60.0
NH-Amundi WSCP VIII Private Placement Investment Trust No. 2 (*1)	Korea	Securities investment		65.2
AI Partners Global Infrastructure Private Equity Investment Trust No. 2 (*2)	Korea	Securities investment		98.0
Woori G Private Equity Investment Trust No. 1 (*1)	Korea	Securities investment		93.8
Hangang New Deal Infrastructure BTL Private Equity Investment Trust No. 4 (*1)	Korea	Securities investment		60.0

- 89 -


	December 31, 2022
Subsidiaries	Location	Main business	Percentage of ownership (%)
Woori Busan Logistics Infra Private Placement Investment Trust (*1)	Korea	Securities investment		66.7
Woori Financial Digital Investment Association No. 1(*1)	Korea	Securities investment		88.0

(*1)

(*2)	Since the investee is a fund of funds, the Bank does not have power over such funds because the Bank cannot decide the relevant activities of the fund through the related contract. The Bank does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.

(*3)

(3)	Investments in associates as of December 31, 2023 and 2022, are as follows:


Investees	Main business	Percentage of ownership (%)				Location	Financial statements as of
Investees	Main business	December 31, 2023		December 31, 2022		Location	Financial statements as of
W Service Networks Co., Ltd. (*1)	Freight & staffing services		4.9		4.9	Korea	November 30, 2023 (*4)
Korea Credit Bureau Co., Ltd. (*2)	Credit information		9.9		9.9	Korea	December 31, 2023
Korea Finance Security Co., Ltd. (*2)	Security service		15.0		15.0	Korea	November 30, 2023 (*4)
Dongwoo C & C Co., Ltd. (*3)	Construction		23.2		23.2	Korea	—
SJCO Co., Ltd. (*3)	Aggregate transportation and wholesale		27.5		27.5	Korea	—
G2 collection Co., Ltd. (*3)	Wholesale and retail sales		28.9		28.9	Korea	—
Kyesan Engineering Co., Ltd. (*3)	Construction		23.2		23.2	Korea	—
Good Software Lab Co., Ltd. (*3)	Service		28.9		28.9	Korea	—
Wongwang Co., Ltd. (*3)	Wholesale and real estate		29.0		29.0	Korea	—
Sejin Construction Co., Ltd. (*3)	Construction		29.6		29.6	Korea	—
DAEA SNC Co., Ltd. (*3)	Wholesale and retail sales		24.0		24.0	Korea	—
ARES-TECH Co., Ltd. (*3)	Electronic component manufacturing		23.4		23.4	Korea	—
Force Tech Co., Ltd. (*6)	Manufacturing		—		24.5	Korea	—
PREXCO Co., Ltd. (*3)	Manufacturing		28.1		28.1	Korea	—
JiWon Plating Co., Ltd. (*3)	Plating		20.5		20.5	Korea	—
NK Eng Co., Ltd. (*3)	Manufacturing		23.1		23.1	Korea	—
Youngdong Sea Food Co., Ltd. (*3)	Processed sea food manufacturing		24.0		24.0	Korea	—
Beomgyo Co., Ltd. (*3)	Communication equipment retail business		23.1		23.1	Korea	—
Woori Growth Partnerships New Technology Private Equity Fund (*6)	Other financial services		—		23.1	Korea	—
2016KIF-IMM Woori Bank Technology Venture Fund (*6)	Other financial services		—		20.0	Korea	—
K BANK Co., Ltd. (*2)	Finance		12.6		12.6	Korea	November 30, 2023 (*4)
Woori Bank-Company K Korea Movie Asset Fund (*5)	Other financial services		—		25.0	Korea	—
Partner One Value Up No.1 Private Equity Fund	Other financial services		23.3		23.3	Korea	December 31, 2023
IBK KIP Seongjang Dideemdol No.1 Private Investment Ltd Partnership	Other financial services		20.0		20.0	Korea	December 31, 2023
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund	Other financial services		25.0		25.0	Korea	December 31, 2023

- 90 -

Investees

Main

business

Percentage of
ownership (%)

Location

Financial

statements

as of

December 31,
2023

December 31,
2022

Woori-Shinyoung Growth-Cap Private Equity Fund No.1

Other financial services

24.5

Korea

December 31, 2023

LOTTE CARD Co., Ltd

Credit card and installment financing

20.0

Korea

September 30, 2023 (*4)

Woori-Q Corporate Restructuring Private Equity Fund (*5)

Trust and collective investment

15.7

22.4

Korea

December 31, 2023

PCC-Woori LP Secondary Fund

Other financial investment services

26.9

Korea

December 31, 2023

Together-Korea Government Private Pool Private Securities Investment Trust No.3

Other financial services

100.0

Korea

December 31, 2023

Union Technology Finance Investment Association

Other financial investment services

29.7

Korea

December 31, 2023

KUM HWA Co., Ltd. (*3)

Communication equipment retail business

20.0

Korea

December 31, 2023

Paratus Woori Material Component Equipment joint venture company

Other financial investment services

20.8

Korea

December 31, 2023

Dicustody Co., Ltd. (*2)

Other information technology and computer operation-related service

1.0

Korea

December 31, 2023

Jinmyung Plus Co., Ltd. (*3)

Manufacturing

20.2

Korea

September 30, 2023 (*4)

Orient Gwangyang Shipbuilding Co., Ltd. (*3)

Manufacturing of ship components

22.7

Korea

November 30, 2023 (*4)

Joongang Network Solution Co., Ltd. (*3)

Other information technology and computer operation-related service

25.3

Korea

September 30, 2023 (*4)

BTS 2nd Private Equity Fund

Other financial services

20.0

Korea

December 31, 2023

Woori Financial Digital Investment Association No.1

Other financial services

88.0

Korea

December 31, 2023

STASSETS No.3 Private Equity Investment Limited Specialized in Start-up Ventures

Other financial services

28.3

Korea

December 31, 2023

KG FASHION CO.,LTD (*3)(*7)

Manufacturing

20.8

—

Korea

November 30, 2023 (*4)

Win Mortgage Co., Ltd. (*1)(*7)

Other financial services

4.5

—

Korea

September 30, 2023 (*4)

NH Woori Newdeal Growth Alpha Private Equity Fund 1 (*7)

Other financial services

22.7

—

Korea

December 31, 2023

SF CREDIT PARTNERS, LLC (*2)(*7)

Other financial services

10.0

—

Korea

December 31, 2023

Rea Company Ltd. (*3)(*7)

Other financial services

24.5

—

Korea

September 30, 2023 (*4)

Aram CMC Co., Ltd. (*3)(*7)

Other financial services

20.0

—

Korea

November 30, 2023 (*4)

(*1)	Most of the significant business transactions of associates are with the Bank as of December 31, 2023 and 2022.

(*2)	The Bank can participate in decision-making body and exercise significant influence over financial policies and operational policies.

(*3)	There is no investment balance as of December 31, 2023 and 2022.

(*4)

(*5)	It was classified as an associate through the Bank holding voting rights based on the initial investment commitment ratio.

(*6)	It was excluded from associates due to the sale liquidation and others for the period ended December 31, 2023.

(*7)	It was added to associates during the period ended December 31, 2023.

- 91 -

(4)	The entities excluded from associates, although the Bank’s shareholding ratio of common stock is higher than 20% as of December 31, 2023 and 2022, are as follows:


	As of December 31, 2023
Associate (*)	Number of shares owned		Percentage of ownership (%)
CL Tech Co., Ltd.		10,191		28.6

(*)	Although the Bank’s common stock ownership in the entity is more than 20%, it is determined that the Bank does not have significant influence over the entity since it is going through workout process under receivership; accordingly, it is excluded from the investment in associates.


	As of December 31, 2022
Associate (*)	Number of shares owned		Percentage of ownership (%)
CL Tech Co., Ltd.		10,191		28.6

(*)	Although the Bank’s common stock ownership in the entity is more than 20%, it is determined that the Bank does not have significant influence over the entity since it is going through workout process under receivership; accordingly, it is excluded from the investment in associates.

- 92 -

(5)

Changes in carrying value of investments in subsidiaries and associates are as follows (Korean Won in millions). As the investments associated with structured entities were classified as financial assets at FVTPL for the years ended December 31, 2023 and 2022, they were excluded from the carrying value of investments in subsidiaries and associates.


	For the year ended December 31, 2023
Investees	January 1, 2023		Acquisition		Disposal and others			Reversal (Impairment)			December 31, 2023
Woori America Bank		399,831		—		—			—			399,831
PT Bank Woori Saudara Indonesia 1906 Tbk		444,813		—		—			—			444,813
Woori Global Markets Asia Limited		113,858		—		—			—			113,858
Woori Bank China Limited		427,802		—		—			—			427,802
AO Woori Bank		51,780		—		—			—			51,780
Banco Woori Bank do Brasil S.A.		22,322		—		—			—			22,322
Korea BTL Infrastructure Fund		736,911		—		—			—			736,911
Woori Finance Myanmar Co., Ltd.		13,649		—		—			—			13,649
Wealth Development Bank		24,355		—		—			—			24,355
Woori Bank Vietnam Limited		384,430		—		—			—			384,430
WOORI BANK(CAMBODIA) PLC.		248,212		—		—			—			248,212
Woori Bank Europe		131,442		—		—			—			131,442
W Service Networks Co., Ltd.		108		—		—			—			108
Korea Credit Bureau Co., Ltd.		3,313		—		—			—			3,313
Korea Finance Security Co., Ltd.		3,267		—		—			—			3,267
Woori Growth Partnerships New Technology Private Equity Fund		12,942		—		(12,942	)		—			—
2016KIF-IMM Woori Bank Technology Venture Fund		7,595		—		(7,595	)		—			—
K BANK Co., Ltd.		236,232		—		—			—			236,232
Partner One Value Up I Private Equity Fund		5,039		—		—			(1,786	)		3,253
IBK KIP Seongjang Dideemdol 1st Private		7,556		—		(3,200	)		—			4,356
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		4,354		82		—			—			4,436
Woori-Shinyoung Growth-Cap Private Equity Fund I		8,237		—		—			—			8,237
LOTTE CARD Co., Ltd.		346,810		—		—			—			346,810
Woori-Q Corporate Restructuring Private Equity Fund		17,043		273		(8,881	)		—			8,435
PCC-Woori LP Secondary Fund		7,000		—		—			—			7,000
Union Technology Finance Investment Association		14,637		—		(1,188	)		—			13,449
Paratus Woori Material Component Equipment joint venture company		12,300		—		—			—			12,300
Dicustody Co., Ltd.		1		—		—			—			1
BTS Private Equity Fund No. 2		3,026		2,200		—			—			5,226
Woori Financial Digital Investment Association No. 1		11,000		22,000		—			—			33,000
STASSETS No.3 Private Equity Investment Limited Specialized in Start-up Ventures		1,500		7,500		—			—			9,000
Win Mortgage Co., Ltd.		—		23		—			—			23
NH Woori Newdeal Growth Alpha Private Equity Fund 1		—		23,596		—			—			23,596
SF CREDIT PARTNERS, LLC				13,059		—			—			13,059

Total		3,701,365		68,733		(33,806	)		(1,786	)		3,734,506

- 93 -


	For the year ended December 31, 2022
Investees	January 1, 2022		Acquisition		Disposal and others			Reversal (Impairment)		December 31, 2022
Woori America Bank		399,831		—		—			—		399,831
PT Bank Woori Saudara Indonesia 1906 Tbk		444,813		—		—			—		444,813
Woori Global Markets Asia Limited		113,858		—		—			—		113,858
Woori Bank China Limited		427,802		—		—			—		427,802
AO Woori Bank		51,780		—		—			—		51,780
Banco Woori Bank do Brasil S.A.		22,322		—		—			—		22,322
Korea BTL Infrastructure Fund		736,911		—		—			—		736,911
Woori Finance Myanmar Co., Ltd.		13,649		—		—			—		13,649
Wealth Development Bank		24,355		—		—			—		24,355
Woori Bank Vietnam Limited		384,430		—		—			—		384,430
WOORI BANK(CAMBODIA) PLC.		248,212		—		—			—		248,212
Woori Bank Europe		131,442		—		—			—		131,442
W Service Networks Co., Ltd.		108		—		—			—		108
Korea Credit Bureau Co., Ltd.		3,313		—		—			—		3,313
Korea Finance Security Co., Ltd.		3,267		—		—			—		3,267
Woori Growth Partnerships New Technology Private Equity Fund		14,991		—		(2,049	)		—		12,942
2016KIF-IMM Woori Bank Technology Venture Fund		8,396		—		(801	)		—		7,595
K BANK Co., Ltd.		236,232		—		—			—		236,232
Partner One Value Up I Private Equity Fund		5,039		—		—			—		5,039
IBK KIP Seongjang Dideemdol 1st Private		9,736		—		(2,180	)		—		7,556
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		4,254		100		—			—		4,354
Woori-Shinyoung Growth-Cap Private Equity Fund I		8,237		—		—			—		8,237
LOTTE CARD Co., Ltd.		346,810		—		—			—		346,810
Woori-Q Corporate Restructuring Private Equity Fund		33,121		396		(16,474	)		—		17,043
PCC-Woori LP Secondary Fund		7,000		—		—			—		7,000
Genesis Environmental Energy Company No. 1 Private Equity Partnership		3,738		—		(3,738	)		—		—
Union Technology Finance Investment Association		12,750		2,250		(363	)		—		14,637
Paratus Woori Material Component Equipment joint venture company		12,300		—		—			—		12,300
Dicustody Co., Ltd.		1		—		—			—		1
BTS Private Equity Fund No. 2		—		3,026		—			—		3,026
Woori Financial Digital Investment Association No. 1		—		11,000		—			—		11,000
STASSETS No.3 Private Equity Investment Limited Specialized in Start-up Ventures		—		1,500		—			—		1,500

Total		3,708,698		18,272		(25,605	)		—		3,701,365

- 94 -

(6)	Changes in the book value of subsidiaries and associated investments classified as financial assets at FVTPL as income securities for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
Investees	January 1, 2023		Acquisition		Disposal			Valuation and others			December 31, 2023
AI Partners UK Water Supply Private Placement Investment Trust No. 2		21,564		—		—			3,021			24,585
IGIS Australia Investment Trust No. 209-1		20,786		—		—			(1,395	)		19,391
Heungkuk Global Private Placement Investment Trust No. 1		7,968		159		(133	)		564			8,558
Multi Asset Global Real Estate Investment Trust No. 5-2		12,132		—		—			772			12,904
Woori Global Development Infrastructure Synergy Company Private Placement Investment Trust		89,369		47,974		(9,038	)		5,329			133,634
Woori G Infras Newdeal Private Placement Investment Trust No. 1		140,205		21,710		(88,279	)		(738	)		72,898
Woori G North America Energy Infrastructure Private Placement Investment Trust No. 1		16,105		—		(2,704	)		(341	)		13,060
Woori G Global Secondary Private Placement Investment Trust No. 1		12,621		2,332		—			(944	)		14,009
Together-Korea Government Private Pool Private Securities Investment Trust No. 3		10,242		—		—			296			10,538
Woori GESG Infrastructure Development Private Placement Investment Trust No.1		3,564		4,380		(308	)		(502	)		7,134
Kiwoom-Harmony Private Investment Trust Fund No. 1		652,249		63,500		—			2,681			718,430
Kiwoom-Harmony Private Investment Trust Fund No. 2		631,379		9,000		(33,297	)		2,598			609,680
JB Airline Private Equity Investment Trust No.8		11,136		—		(1	)		(51	)		11,084
KIWOOM Frontier Private Investment Trust No.23[Bond]		100,538		20,000		(120,538	)		—			—
Kiwoom-Harmony Private Investment Trust Fund No. 4		—		58,160		—			90			58,250

Total		1,729,858		227,215		(254,298	)		11,380			1,714,155

- 95 -


	For the year ended December 31, 2022
Investees	January 1, 2022		Acquisition		Disposal			Valuation and others			December 31, 2022
Heungkuk Woori Tech Company Private Placement Investment Trust No. 1		16,397		—		(17,648	)		1,251			—
AI Partners UK Water Supply Private Placement Investment Trust No. 2		19,397		—		—			2,167			21,564
IGIS Australia Investment Trust No. 209-1		19,147		—		—			1,639			20,786
Heungkuk Global Private Placement Investment Trust No. 1		7,926		—		—			42			7,968
Multi Asset Global Real Estate Investment Trust No. 5-2		12,350		—		(402	)		184			12,132
Woori Global Development Infrastructure Synergy Company Private Placement Investment Trust		67,638		15,917		(2,356	)		8,170			89,369
IGIS Global Private Placement Real Estate Fund No. 316-1		15,942		—		—			(1,225	)		14,717
Woori G Infras Newdeal Private Placement Investment Trust No. 1		47,412		94,014		(866	)		(355	)		140,205
Woori G North America Energy Infrastructure Private Placement Investment Trust No. 1		6,792		5,129		(983	)		5,167			16,105
INMARK Spain Real Estate Investment Trust No. 26-2		12,886		—		(315	)		1,119			13,690
Woori G Japan Private Placement Real Estate Investment Trust No. 1-2		7,615		—		(332	)		(385	)		6,898
Woori G Global Secondary Private Placement Investment Trust No. 1		11,191		1,407		—			23			12,621
Together-Korea Government Private Pool Private Securities Investment Trust No. 3		10,070		—		—			172			10,242
Woori G Japan Blind Private Real Estate Investment Trust No. 1		19,261		28,201		—			(1,182	)		46,280
Woori GESG Infrastructure Development Private Placement Investment Trust No.1		961		2,532		—			71			3,564
Kiwoom-Harmony Private Investment Trust Fund No. 1		458,576		189,700		(3,220	)		7,193			652,249
Kiwoom-Harmony Private Investment Trust Fund No. 2		678,381		—		(50,999	)		3,997			631,379
JB Airline Private Equity Investment Trust No.8		10,754		—		(7	)		389			11,136
KIWOOM Frontier Private Investment Trust No.23[Bond]		—		100,000		—			538			100,538

Total		1,422,696		436,900		(77,128	)		28,975			1,811,443

- 96 -

14.	INVESTMENT PROPERTIES

(1)	Details of investment properties as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Acquisition cost		591,840			596,542
Accumulated depreciation		(63,225	)		(55,794	)

Net carrying value		528,615			540,748

(2)	Changes in investment properties for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Beginning balance		540,748			527,115
Depreciation		(5,682	)		(5,602	)
Transfer (*)		(6,463	)		19,190
Foreign currencies translation adjustments		12			44

Ending balance		528,615			540,748

(*)	Land and buildings were transferred from properties and equipment to investment properties for the years ended December 31, 2023 and 2022.

(3)

Fair value of investment properties amounted to 800,438 million Won and 799,165 million Won as of December 31, 2023 and 2022, respectively. The fair value of investment properties has been assessed on the basis of recent similar real estate market price and officially assessed land price in the area of the investment properties, is classified as Level 3 on the fair value hierarchy.

(4)

Rental fee earned from investment properties amounted to 31,992 million Won and 31,954 million Won for the years ended December 31, 2023 and 2022, respectively. The expenses directly related to the investment property where rental fee was earned are 5,682 million Won and 5,602 million Won, respectively.

(5)	The minimum lease payments expected to be received in the future under non-refundable lease agreement as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Lease payments
Within 1 year		14,473		11,610
After 1 year but within 2 years		4,174		6,672
After 2 years but within 3 years		775		2,758
After 3 years but within 4 years		204		640
After 4 years but within 5 years		47		72
After 5 years		3		7

Total		19,676		21,759

- 97 -

15.	PROPERTIES AND EQUIPMENT

(1)	Details of properties and equipment as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Land		Building		Properties for business use		Leasehold improvement		Construction in progress		Total
Properties and equipment (owned)		1,480,693		607,765		150,824		28,378		31,560		2,299,220
Right-of-use assets		—		236,974		16,216		—		—		253,190

Carrying value		1,480,693		844,739		167,040		28,378		31,560		2,552,410


	December 31, 2022
	Land		Building		Properties for business use		Leasehold improvement		Construction in progress		Total
Properties and equipment (owned)		1,472,064		623,198		139,372		28,484		31,540		2,294,658
Right-of-use assets		—		215,679		11,621		—		—		227,300

Carrying value		1,472,064		838,877		150,993		28,484		31,540		2,521,958

(2)	Details of properties and equipment (owned) as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Land		Building			Properties for business use			Leasehold improvement			Construction in progress		Total
Acquisition cost		1,480,693		932,276			790,446			392,467			31,560		3,627,442
Accumulated depreciation		—		(324,511	)		(639,622	)		(364,089	)		—		(1,328,222	)

Net carrying value		1,480,693		607,765			150,824			28,378			31,560		2,299,220


	December 31, 2022
	Land		Building			Properties for business use			Leasehold improvement			Construction in progress		Total
Acquisition cost		1,472,064		923,528			739,364			386,982			31,540		3,553,478
Accumulated depreciation		—		(300,330	)		(599,992	)		(358,498	)		—		(1,258,820	)

Net carrying value		1,472,064		623,198			139,372			28,484			31,540		2,294,658

(3)	Details of changes in properties and equipment (owned) are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Land			Building			Properties for business use			Leasehold improvement			Construction in progress			Total
Beginning balance		1,472,064			623,198			139,372			28,484			31,540			2,294,658
Acquisition		—			17,941			69,817			11,668			256			99,682
Disposal		(352	)		(520	)		(97	)		(798	)		(235	)		(2,002	)
Depreciation		—			(28,306	)		(58,472	)		(10,987	)		—			(97,765	)
Classification to held for sale		(936	)		(1,568	)		—			—			—			(2,504	)
Transfer (*)		9,907			(3,444	)		—			—			—			6,463
Foreign currencies translation adjustments		10			(26	)		174			11			(1	)		168
Others		—			490			30			—			—			520

Ending balance		1,480,693			607,765			150,824			28,378			31,560			2,299,220

(*)	Land was transferred from investment properties to properties and equipment, and buildings were transferred from properties and equipment to investment properties for the year ended December 31, 2023.

- 98 -


	For the year ended December 31, 2022
	Land			Building			Properties for business use			Leasehold improvement			Construction in progress			Total
Beginning balance		1,508,927			650,448			149,586			25,717			396			2,335,074
Acquisition		24			14,438			53,849			15,471			31,152			114,934
Disposal		(19,021	)		—			(436	)		(300	)		—			(19,757	)
Depreciation		—			(27,673	)		(63,747	)		(12,470	)		—			(103,890	)
Classification to held for sale		(6,405	)		(6,704	)		—			—			—			(13,109	)
Transfer (*)		(11,915	)		(7,275	)		—			—			—			(19,190	)
Foreign currencies translation adjustments		39			(23	)		131			66			(8	)		205
Others		415			(13	)		(11	)		—			—			391

Ending balance		1,472,064			623,198			139,372			28,484			31,540			2,294,658

(*)	Land and buildings were transferred from properties and equipment to investment properties for the year ended December 31, 2022.

(4)	Details of right-of-use assets as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Building			Properties for business use			Total
Acquisition cost		464,366			30,009			494,375
Accumulated depreciation		(227,392	)		(13,793	)		(241,185	)

Net carrying value		236,974			16,216			253,190


	December 31, 2022
	Building			Properties for business use			Total
Acquisition cost		395,404			22,728			418,132
Accumulated depreciation		(179,725	)		(11,107	)		(190,832	)

Net carrying value		215,679			11,621			227,300

(5)	Details of changes in right-of-use assets for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Building			Properties for business use			Total
Beginning balance		215,679			11,621			227,300
New contracts		153,155			14,246			167,401
Changes in contracts		25,385			138			25,523
Termination		(15,345	)		(1,045	)		(16,390	)
Depreciation		(147,705	)		(8,758	)		(156,463	)
Others		5,805			14			5,819

Ending balance		236,974			16,216			253,190


	For the year ended December 31, 2022
	Building			Properties for business use			Total
Beginning balance		224,039			13,654			237,693
New contracts		182,379			5,760			188,139
Changes in contracts		3,514			3			3,517
Termination		(36,634	)		(326	)		(36,960	)
Depreciation		(161,295	)		(7,451	)		(168,746	)
Others		3,676			(19	)		3,657

Ending balance		215,679			11,621			227,300

- 99 -

16.	INTANGIBLE ASSETS

(1)

Details of intangible assets as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Industrial property rights			Development cost			Others			Membership			Construction in progress		Total
Acquisition cost		2,118			541,977			931,801			21,164			98		1,497,158
Accumulated amortization		(1,629	)		(378,299	)		(776,906	)		—			—		(1,156,834	)
Accumulated impairment losses		—			—			(33,552	)		(1,132	)		—		(34,684	)

Net carrying value		489			163,678			121,343			20,032			98		305,640


	December 31, 2022
	Industrial property rights			Development cost			Others			Membership			Total
Acquisition cost		2,052			463,368			836,549			19,139			1,321,108
Accumulated amortization		(1,431	)		(323,849	)		(730,112	)		—			(1,055,392	)
Accumulated impairment losses		—			—			(33,552	)		(1,157	)		(34,709	)

Net carrying value		621			139,519			72,885			17,982			231,007

(2)	Details of changes in intangible assets for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Industrial property rights			Development cost			Others			Membership		Construction in progress		Total
Beginning balance		621			139,519			72,885			17,982		—		231,007
Acquisition		65			78,620			95,242			2,022		33		175,982
Amortization (*1)		(197	)		(54,459	)		(46,786	)		—				(101,442	)
Impairment losses (*2)		—			—			—			25		—		25
Foreign currencies translation adjustment		—			(2	)		2			3		—		3
Other		—			—			—			—		65		65

Ending balance		489			163,678			121,343			20,032		98		305,640

(*1)	Amortization of other intangible assets amounting to 22,349 million Won is included in other operating expenses.

(*2)	Membership is an intangible asset with an indefinite useful life that recognizes an impairment loss if recoverable value is lower than its carrying amount, while the reversal of an impairment loss should be recognized when the recoverable value is higher than its carrying amount.


	For the year ended December 31, 2022
	Industrial property rights			Development cost			Others			Membership			Total
Beginning balance		691			160,331			89,777			16,685			267,484
Acquisition		160			52,119			27,273			1,870			81,422
Disposal		—			—			—			(442	)		(442	)
Amortization (*1)		(230	)		(72,852	)		(44,162	)		—			(117,244	)
Impairment losses (*2)		—			—			—			(144	)		(144	)
Foreign currencies translation adjustment		—			(5	)		—			13			8
Other		—			(74	)		(3	)		—			(77	)

Ending balance		621			139,519			72,885			17,982			231,007

(*1)	Amortization of other intangible assets amounting to 14,664 million Won is included in other operating expenses.

(*2)

The impairment test for other intangible assets indicates that the recoverable value is less than the carrying amount and thus the impairment loss is recognized. Also, membership is an intangible asset with an indefinite useful life that recognizes an impairment loss if recoverable value is less than its carrying amount, while the reversal of an impairment loss should be recognized when the recoverable value is higher than its carrying amount.

- 100 -

17.	ASSETS HELD FOR SALE

Assets held for sale as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Properties and equipment (*)		11,573		9,589

(*)	The Bank classifies above assets as assets held for sale that are highly likely to be sold within one year from December 31, 2023 and 2022, based on the management’s decision.

- 101 -

18.	ASSETS SUBJECT TO LIEN AND ASSETS ACQUIRED THROUGH FORECLOSURES

(1)	Assets subjected to lien as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


		December 31, 2023
		Collateral given to	Amount		Reason for collateral
Loans and other financial assets at amortized cost	Due from banks in local currency	MORGAN STANLEY BANK INTL, SEL and others		26,854	CSA variable margin and others
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others		765,330	Overseas Futures Option Deposit and others
	Mortgage-backed securities	Public offering		1,242,963	Covered Bonds
Financial assets at FVTPL	Korean financial institutions debt securities and others	Korea Exchange and others		385,394	CSA variable margin
Financial assets at FVTOCI	Korean treasury and government bonds and others	Korea Securities Depository		73,846	Related to bonds sold under repurchase agreements (*)
	Korean financial institutions debt securities and others	The BOK and others		8,182,907	Settlement risk and others
	Foreign financial institutions debt securities	Korea Investment & Securities Co., Ltd. and others		845,140	Substitute securities and others
		CCIL Exchange		116,404	Related to bonds sold under repurchase agreements (*)
Securities at amortized cost	Korean treasury and government bonds and others	The BOK and others		10,380,306	Settlement risk and others

		Total		22,019,144

(*)

The financial assets are not derecognized and provided as collaterals because the Bank entered into an agreement to buy the transferred assets back at a predetermined price or the sale price plus a certain return rate. The Bank continuously recognizes the transferred assets as liabilities (bond sold under repurchase agreements) after the repurchase.


		December 31, 2022
		Collateral given to	Amount		Reason for collateral
Loans and other financial assets at amortized cost	Due from banks in local currency	The Korea Exchange and others		133,539	CCP variable margin and others
	Due from banks in foreign currencies	Korea Investment & Securities Co., Ltd. and others		1,142,784	Overseas Futures Option Deposit and others
	Mortgage-backed securities	Public offering		1,892,723	Covered Bonds
Financial assets at FVTPL	Korean financial institutions debt securities and others	SC FIRST BANK KOREA, SEOUL. and others		245,876	CSA variable margin
Financial assets at FVTOCI	Korean treasury and government bonds	Korea Securities Depository		460	Related to bonds sold under repurchase agreements (*)
	Korean financial institutions debt securities and others	The BOK and others		6,394,890	Settlement risk and others
	Foreign financial institutions debt securities	BNP-PARIBAS and others		1,060,120	CSA variable margin and others
		Standard Chartered Bank, Hong Kong and others		304,168	Related to bonds sold under repurchase agreements (*)
Securities at amortized cost	Korean treasury and government bonds and others	Korea Securities Depository		1,100,351	Related to bonds sold under repurchase agreements (*)
		The BOK and others		10,820,136	Settlement risk and others

		Total		23,095,047

(*)

- 102 -

(2)	As of December 31, 2023 and 2022, there is no asset acquired through foreclosures.

(3)	Securities loaned as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):

December 31,
2023

December 31,
2022

Loaned to

Financial assets at FVTPL

Korea treasury and government bonds and others

625,398

—

Korea Securities Finance Corporation and others

Financial assets at FVTOCI

Korea treasury and government bonds and others

592,218

98,027

Korea Securities Depository and others

Securities loaned are lending of specific securities to borrowers who agree to return the same quantity of the same security at the end of lending period. As the Bank does not derecognize these securities, there are no liabilities recognized through such transactions relates to securities loaned.

(4)	Collaterals held that can be permitted to sell or repledge the collateral in the absence of default by the owner of the collateral

Fair values of collaterals held that can be disposed and re-subjected to lien regardless of defaults of counterparties as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Fair values of collaterals		Fair values of collaterals disposed or re-subjected to lien
Securities		2,760,680		—


	December 31, 2022
	Fair values of collaterals		Fair values of collaterals disposed or re-subjected to lien
Securities		6,594,071		—

19.	OTHER ASSETS

Details of other assets as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Prepaid expenses		200,606		133,388
Advance payments		43,375		378
Others		7,690		5,923

Total		251,671		139,689

- 103 -

20.	FINANCIAL LIABILITIES AT FVTPL

(1)	Financial liabilities at FVTPL as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Financial liabilities at fair value through profit or loss mandatorily measured at fair value		6,015,790		9,002,105

(2)	Details of financial liabilities at FVTPL as of December 31, 2023 and December 31, 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Deposits
Gold banking liabilities		39,524		35,161
Derivative liabilities		5,976,266		8,966,944

Total		6,015,790		9,002,105

21.	DEPOSITS DUE TO CUSTOMERS

Details of deposits due to customers by type as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Deposits in local currency:
Deposits on demand		8,815,364			15,652,595
Deposits at termination		283,128,245			270,637,263
Mutual installment		21,602			22,995
Certificate of deposits		14,767,307			5,255,889

Sub-total		306,732,518			291,568,742

Deposits in foreign currencies:
Deposits in foreign currencies		32,193,981			31,901,384
Present value discount		(184,796	)		(92,111	)

Total		338,741,703			323,378,015

22.	BORROWINGS AND DEBENTURES

(1)	Details of borrowings as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Lenders	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK	The BOK		2.0 ~ 2.0		1,565,444
Borrowings from government funds	Small Enterprise and Market Service and others		0.0 ~ 3.4		1,996,579
Others	The Korea Development Bank and others		0.0 ~ 4.5		3,742,496

Sub-total					7,304,519

Borrowings in foreign currencies:
Borrowings in foreign currencies	The Export-Import Bank of Korea and others		0.2 ~ 6.3		13,082,055
Bills sold	Others		0.0 ~ 2.7		6,326
Call money	Banks and others		3.9 ~ 6.0		911,753
Bonds sold under repurchase agreements	Other financial institutions		1.0 ~ 6.8		157,761

Present value discount					(547	)

Total					21,461,867

- 104 -


	December 31, 2022
	Lenders	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK	The BOK		0.3 ~ 1.8		3,040,877
Borrowings from government funds	Small Enterprise and Market Service and others		0.0 ~ 3.5		2,021,049
Others	The Korea Development Bank and others		0.0 ~ 5.6		4,558,461

Sub-total					9,620,387

Borrowings in foreign currencies:
Borrowings in foreign currencies	The Export-Import Bank of Korea and others		0.0 ~ 5.6		10,717,898
Bills sold	Others		0.0 ~ 2.4		7,308
Call money	Banks and others		1.6 ~ 5.0		141,025
Bonds sold under repurchase agreements	Other financial institutions		1.0 ~ 6.4		1,231,667

Present value discount					(583	)

Total					21,717,702

(2)	Details of debentures as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023					December 31, 2022
	Interest rate (%)		Amount			Interest rate (%)		Amount
Face value of bond (*):
Ordinary bonds		0.8 ~ 7.1		17,029,358			0.8 ~ 5.9		19,778,506
Subordinated bonds		1.9 ~ 5.1		4,291,848			1.9 ~ 5.1		4,885,325

Sub-total				21,321,206					24,663,831

Discounts on bonds				(48,179	)				(28,404	)

Total				21,273,027					24,635,427

(*)	Includes debentures under fair value hedge amounting to 3,943,224 million Won and 3,076,983 million Won as of December 31, 2023 and 2022, respectively.

- 105 -

23.	PROVISIONS

(1)	Details of provisions are as follows (Unit: Korean Won in millions):


	December 31,2023		December 31, 2022
Provisions for guarantees (*1)		86,511		72,919
Provisions for unused commitments		80,426		53,878
Asset retirement obligation		86,290		75,202
Other provisions (*2)		452,280		254,398

Total		705,507		456,397

(*1)	Provisions for guarantees include provisions for financial guarantees of 56,954 million Won and 45,796 million Won as of December 31, 2023 and 2022, respectively.

(*2)	Other provisions consist of provisions for litigation, compensation for loss and others.

(2)	Changes in provisions for guarantees and unused loan commitments for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):

Provisions for guarantees


	For the year ended December 31, 2023
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		40,907			24,327			7,685			72,919
Transfer to 12-month expected credit loss		20,505			(20,505	)		—			—
Transfer to expected credit loss for the entire period		(453	)		453			—			—
Transfer to credit-impaired financial assets		(4	)		(3	)		7			—
Net provision (reversal) of unused amount		13,588			(1,492	)		(467	)		11,629
Other increase (decrease) (*)		1,964			(1	)		—			1,963

Ending balance		76,507			2,779			7,225			86,511

(*)	Includes the impact from change of financial guarantee liabilities.


	For the year ended December 31, 2022
	Stage 1			Stage 2			Stage 3		Total
Beginning balance		48,269			15,269			6,767		70,305
Transfer to 12-month expected credit loss		1,206			(1,206	)		—		—
Transfer to expected credit loss for the entire period		(119	)		119			—		—
Transfer to credit-impaired financial assets		(3	)		(338	)		341		—
Net provision (reversal) of unused amount		(6,894	)		10,483			577		4,166
Other decrease (*)		(1,552	)		—			—		(1,552	)

Ending balance		40,907			24,327			7,685		72,919

(*)	Includes the impact from change of financial guarantee liabilities.

- 106 -

ii)

Provisions for unused loan commitments


	For the year ended December 31, 2023
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		33,375			20,503			—			53,878
Transfer to 12-month expected credit loss		12,268			(12,268	)		—			—
Transfer to expected credit loss for the entire period		(803	)		803			—			—
Transfer to credit-impaired financial assets		(19	)		(18	)		37			—
Net provision (reversal) of unused amount		27,235			(637	)		(37	)		26,561
Other decrease		(13	)		—			—			(13	)

Ending balance		72,043			8,383			—			80,426


	For the year ended December 31, 2022
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		29,348			22,054			—			51,402
Transfer to 12-month expected credit loss		3,986			(3,986	)		—			—
Transfer to expected credit loss for the entire period		(703	)		703			—			—
Transfer to credit-impaired financial assets		(45	)		(44	)		89			—
Net provision (reversal) of unused amount		745			1,776			(89	)		2,432
Other increase		44			—			—			44

Ending balance		33,375			20,503			—			53,878

(3)	Changes in asset retirement obligation for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Beginning balance		75,202			74,193
Provisions provided		4,312			2,605
Provisions used		(1,162	)		(6,705	)
Amortization		1,328			706
Increase in restoration costs and others		6,610			4,403

Ending balance		86,290			75,202

The amount of the asset retirement obligation is the present value of the best estimate of future expected expenditure to settle the obligation – arising from leased properties as of end of reporting period discounted by appropriate discount rate. The restoration cost is expected to occur by the end of each premise’s lease period, and the Bank has used average lease period of each category of leases terminated during the past years in order to rationally estimate the lease period. In addition, the Bank used average amount of actual recovery cost for the past 3 years and the inflation rate for the preceding year in order to estimate future recovery cost.

(4)	Changes in other provisions for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Beginning balance		254,398			287,791
Provisions provided		239,099			24,539
Provisions used and others		(27,125	)		(8,110	)
Reversal of unused amount (*)		(14,092	)		(52,659	)
Foreign currencies translation adjustments		—			2,837

Ending balance		452,280			254,398

(*)

The Bank provided Korean won settlement services for trading transaction settlement between Korea and Iran before the prior period, investigated by U.S. prosecutors (federal prosecutors, New York state prosecutors) and New York State Department of Financial Services for violations of U.S. sanctions against Iran, Sudan, Syria and Cuba. In this regard, the Office of Foreign Assets Control concluded its investigation in December 2020 without taking any additional sanctions, and New York State Department of Financial Services concluded its investigation in February 2022 without taking any additional sanctions. Meanwhile, in June 2022, the Bank reversed the provision related to the investigation of the U.S. Prosecutors, which have not been completed yet, in consideration of the opinion of an independent legal expert that the probability of sanctions by the U.S. Prosecutors in this case is low during the prior period.

- 107 -

(5)

Others

①

The Bank recognized the estimated amount of compensation related to incomplete sales of Derivative Linked Fund (DLF) in 2019 and provisions for fines expected to be imposed by the Financial Services Commission as the best estimate of expenditure required to fulfill its current obligations at the end of the period.

②

The Bank recognized provisions for estimated compensation amounts related to the prepayment arising from the delay in the redemption of funds in prior fiscal year and the dispute settlement as the best estimate of the expenditure amounting to 180.2 billion Won. In addition, The Bank recognized provision amounting to 53.6 billion Won for estimated compensation of expected customer loss related to delayed redemption of fund during the current period.

- 108 -

24.	NET DEFINED BENEFIT LIABILITY(ASSET)

The retirement benefit of the Bank is based on the defined benefit retirement pension plan.

The Bank is exposed to various risks through defined benefit retirement pension plan, and the most significant risks are as follows:


Volatility of asset		The defined benefit obligation was estimated with an interest rate calculated based on blue chip corporate bonds earnings. A deficit may occur if the rate of return of plan assets falls short of the discount rate.

Decrease in profitability of blue-chip bonds		A decrease in profitability of blue-chip bonds will be partially offset by some increase in the value of debt securities that the employee benefit plan owns but will bring an increase in the defined benefit obligation.

Risk of inflation		Most defined benefit obligations are related to inflation rate; the higher the inflation rate is, the higher the level of liabilities. Therefore, deficit occurs in the system if an inflation rate increases.

(1)	Details of net defined benefit liability(asset) as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Present value of defined benefit obligations		1,356,260			1,186,636
Fair value of plan assets		(1,577,806	)		(1,474,309	)

Net defined benefit liability(asset)		(221,546	)		(287,673	)

(2)	Changes in the carrying value of defined benefit obligation for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


		December 31, 2023			December 31, 2022
Beginning balance			1,186,636			1,412,041
Current service cost			106,810			139,296
Interest cost			62,917			42,202
Remeasurements	Financial assumptions		62,267			(318,158	)
Remeasurements	Experience adjustments		7,204			(9,617	)
Foreign currencies translation adjustments			(2	)		(4	)
Retirement benefit paid			(76,465	)		(80,245	)
Effect of moving in and out of associates			6,895			974
Other			(2	)		147

Ending balance			1,356,260			1,186,636

- 109 -

(3)	Changes in the plan assets for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Beginning balance		1,474,309			1,424,725
Interest income		81,090			44,631
Remeasurements		(20,534	)		(15,844	)
Employer’s contributions		120,000			100,000
Retirement benefit paid		(80,887	)		(76,598	)
Effect of moving in and out of associates		5,950			(296	)
Other		(2,122	)		(2,309	)

Ending balance		1,577,806			1,474,309

(4)	Plan assets wholly consist of time deposits as of December 31, 2023 and 2022. Among plan assets, realized returns on plan assets amount to 60,556 million Won and 28,787 million Won for the years ended December 31, 2023 and 2022, respectively.

Meanwhile, the contribution expected to be paid in the current accounting year amounts to 112,082 million Won.

(5)	The amounts recognized in net income and total comprehensive income in relation to defined benefit plans for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Current service cost		106,810			139,296
Net interest income (loss)		(18,173	)		(2,429	)

Cost recognized in profit or loss		88,637			136,867

Remeasurements		90,005			(311,932	)

Cost recognized in total comprehensive income (loss)		178,642			(175,065	)

Meanwhile, retirement benefits related to defined contribution plans recognized as expenses are 2,151 million Won and 2,112 million Won for the years ended December 31, 2023 and 2022, respectively.

(6)	Key actuarial assumptions used in defined benefit liability measurement as of December 31, 2023 and 2022, are as follows:


	December 31, 2023	December 31, 2022
Discount rate	4.57%	5.35%
Future wage growth rate	5.18%	5.45%
Mortality rate	Issued by Korea Insurance Development Institute	Issued by Korea Insurance Development Institute
Retirement rate	Experience rate for each employment classification	Experience rate for each employment classification

The weighted average maturity of defined benefit liability is 10.07 years.

- 110 -

(7)	The sensitivity to actuarial assumptions used in the assessment of defined benefit obligation as of December 31, 2023 and 2022, is as follows (Unit: Korean Won in millions):


		December 31, 2023(*)			December 31, 2022(*)
Discount rate	Increase by 1% point		(121,166	)		(105,500	)
Discount rate	Decrease by 1% point		140,124			121,886
Future wage growth rate	Increase by 1% point		141,933			125,653
Future wage growth rate	Decrease by 1% point		(124,745	)		(112,637	)

(*)

Although the above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant; in practice, more than one assumption are correlated. The sensitivity of the defined benefit obligation to changes in principle actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations recognized in the statement of financial position.

(8)	The details of the maturity of the defined benefit obligation as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Within 1 year		29,180		27,334
After 1 year but within 2 years		34,093		29,474
After 2 years but within 5 years		344,670		264,718
After 5 years but within 10 years		474,739		504,582
After 10 years		1,335,246		1,303,544

25.	OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

Other financial liabilities and other liabilities as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Other financial liabilities:
Accounts payable		8,803,689			5,120,067
Accrued expenses		3,848,785			2,807,831
Borrowings from trust accounts		5,389,764			3,650,743
Agency business revenue		271,944			213,844
Foreign exchange payables		867,132			809,618
Domestic exchanges payable		1,367,709			4,615,475
Lease liabilities		205,854			180,672
Other miscellaneous financial liabilities		1,882,907			2,476,478
Present value discount		(2,631	)		(1,732	)

Sub-total		22,635,153			19,872,996

Other liabilities:
Unearned income		67,686			67,824
Other miscellaneous liabilities		159,810			113,351

Sub-total		227,496			181,175

Total		22,862,649			20,054,171

- 111 -

26.	DERIVATIVES

(1)	Derivative assets and derivative liabilities as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023
			Assets				Liabilities
	Nominal amount		For fair value hedge		For trading		For fair value hedge		For trading
Interest rate:
Futures		118,455		—		—		—		—
Forwards		3,960,000		—		83,199		—		169,527
Swaps		140,183,500		698		378,307		135,263		227,166
Purchase options		150,000		—		6,556		—		—
Written options		400,000		—		—		—		15,359
Currency:
Forwards		97,073,935		—		1,931,493		—		884,397
Swaps		77,644,494		—		2,656,035		—		3,664,897
Purchase options		139,311		—		1,500		—		—
Written options		122,698		—		—		—		585
Equity:
Forwards		137		—		36		—		—
Futures		480,311		—		—		—		—
Swaps		461,112		—		126,028		—		1,994
Purchase options		16,444,709		—		608,295		—		—
Written options		16,887,247		—		—		—		1,012,341

Total		354,065,909		698		5,791,449		135,263		5,976,266


	December 31, 2022
			Assets				Liabilities
	Nominal amount		For fair value hedge		For trading		For fair value hedge		For trading
Interest rate:
Futures		9,311		—		—		—		—
Forwards		2,620,000		—		249,356		—		—
Swaps		138,529,552		—		440,926		193,831		517,710
Purchase options		170,000		—		9,308		—		—
Written options		310,000		—		—		—		16,752
Currency:
Forwards		89,540,297		—		3,075,882		—		1,361,583
Swaps		96,234,758		—		3,089,620		—		5,518,190
Purchase options		487,854		—		23,182		—		—
Written options		570,984		—		—		—		7,929
Equity:
Forwards		183		—		100		—		—
Futures		958,589		—		—		—		—
Swaps		568,835		—		90,237		—		673
Purchase options		29,801,478		—		1,204,475		—		—
Written options		29,874,836		—		—		—		1,544,107

Total		389,676,677		—		8,183,086		193,831		8,966,944

Derivatives held for trading are classified into financial assets at FVTPL (Note 7) and financial liabilities at FVTPL (Note 20), and derivatives held for hedging are presented as derivative assets (designated for hedging) and derivative liabilities (designated for hedging) in the statements of financial position.

- 112 -

(2)	Overview of the Bank’s hedge accounting

Fair value hedge

As of December 31, 2023, the Bank has applied fair value hedge on fixed interest rate foreign currency denominated loans amounting to 3,682,140 million Won, and Korean Won denominated loans amounting to 261,084 million Won. The purpose of the hedging is to avoid fair value volatility risk of fixed interest rate foreign currency and Korean Won denominated debentures derived from fluctuations of market interest rate, and as such the Bank entered into interest rate swap agreements designated as hedging instruments.

The interest rate swap agreements and the hedged items are subject to fluctuations in the underlying market rate of interest and the Bank expects the value of the interest rate swap contract and the value of the hedged item to generally change in the opposite direction.

The fair value of the interest rate swap at the end of the reporting period is determined by discounting future cash flows estimated using the yield curve at the end of the reporting period and the credit risk embedded in the contract and the average interest rate is determined based on the outstanding balance at the end of the reporting period. The variable interest rate applied to the interest rate swap is Compounding SOFR or CD 3M plus spread. In accordance with the terms of each interest rate swap contract designated as a hedging instrument, the Bank receives interest at a fixed interest rate and pays interest at a variable interest rate.

Hedges of net investment in foreign operations

Foreign currency exposures are made from the Bank’s net investments in New York branch, LA branch, Singapore branch and etc. which use USD as a functional currency. The risk arises from fluctuation in the spot exchange rate between USD and KRW. This may change the net investment amount.

The risk hedged from net investment hedging is the weak risk of KRW against USD, which could reduce the net investment carrying amount of the Bank in New York branch, LA branch, Singapore branch.

Some of the bank’s net investments in New York branch, LA branch, Singapore branch are hedged in USD-denominated foreign currency bonds (Carrying amount as of December 31, 2023: USD 92,000,000) and mitigated the exchange risk arising from the net assets of branch. The bond was designated as a hedging instrument for changes in the value of net investment resulting from changes in the spot exchange rate of USD/KRW.

To assess the effectiveness of the hedging instrument, the Bank determines the economic relationship between the hedging instrument and the hedged item by comparing the changes in the amount of investment in overseas projects due to changes in the spot exchange rate with the changes in the carrying amount of liabilities due to changes in the spot exchange rate. The Bank’s policy is to hedge the amount of its net investment only within the principal amount of its liabilities.

- 113 -

(3)	The nominal amounts of the hedging instrument as of December 31, 2023 and 2022, are as follows (Unit: USD, AUD and Korean Won in millions):


	December 31, 2023
	1 year or less		1 year to 5 years		More than 5 years		Total
Fair value hedge
Interest rate risk
Interest rate swap (USD)		1,000,000,000		1,975,000,000		—		2,975,000,000
Interest rate swap (KRW)		240,000		—		20,000		260,000
Hedges of net investment in foreign operations
Foreign exchange risk
Foreign currency denominated debentures (USD)		—		92,000,000		—		92,000,000


	December 31, 2022
	1 year or less		1 year to 5 years		More than 5 years		Total
Fair value hedge
Interest rate risk
Interest rate swap (USD)		—		2,075,000,000		300,000,000		2,375,000,000
Interest rate swap (AUD)		150,000,000		—		—		150,000,000
Interest rate swap (KRW)		150,000		—		—		150,000
Hedges of net investment in foreign operations
Foreign exchange risk
Foreign currency denominated debentures (USD)		—		92,000,000		—		92,000,000

- 114 -

(4)	The average interest rate and average exchange rate of the hedging instrument as of December 31, 2023 and 2022, are as follows:


		December 31, 2023
		Average interest rate
Fair value hedge
Interest rate risk
Interest rate swaps (USD)		Fixed 3.60% receipt and C.SOFR+1.47% floating paid
Interest rate swap (KRW)		Fixed 4.13% receipt and CD 3M floating paid
Hedges of net investment in foreign operations
Foreign exchange risk
Foreign currency denominated debentures (USD/KRW)		1,306.12


		December 31, 2022
		Average interest rate
Fair value hedge
Interest rate risk
Interest rate swaps (USD)		Fixed 3.62% receipt and Libor 3M+1.45% floating paid
Interest rate swaps (USD)		Fixed 2.05% receipt and C.SOFR+0.65% floating paid
Interest rate swaps (AUD)		Fixed 0.84% receipt and BBSW 3M+0.72% floating paid
Interest rate swap (KRW)		Fixed 3.13% receipt and CD 3M floating paid
Hedges of net investment in foreign operations
Foreign exchange risk
Foreign currency denominated debentures (USD/KRW)		1,368.65

(5)	Fair value hedge

The amounts related to items designated as hedging instruments as of December 31, 2023 and 2022, are as follows (Unit: USD, AUD, and Korean Won in millions):

December 31, 2023

Nominal amounts of
the hedging
instrument

Carrying amounts of the hedging
instrument

Line item in the

statement of financial

position where the

hedging instrument is

located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Fair value hedge

Interest rate risk

Derivative assets

Interest rate swaps

USD 2,975,000,000

(designated for hedging)

698

135,263

Derivative liabilities

55,651

260,000

(designated for hedging)

December 31, 2022

Nominal amounts of
the hedging
instrument

Carrying amounts of the hedging
instrument

Line item in the

statement of financial

position where the

hedging instrument is

located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Fair value hedge

Interest rate risk

Derivative assets

Interest rate swaps

USD 2,375,000,000

(designated for hedging)

AUD 150,000,000

—

193,831

Derivative liabilities

(247,765

)

150,000

(designated for hedging)

- 115 -

Details of carrying amount to hedged and amount adjusted due to hedge accounting as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	December 31, 2023
	Carrying amounts of the hedging item				Accumulated amount of fair value hedge adjustments on the hedged item included in the carrying amount of the hedged item				Line item in the statement of financial position in which the hedged item is included		Changing in fair value used for calculating hedge ineffectiveness
	Assets		Liabilities		Assets		Liabilities
Fair value hedge
Interest rate risk
Foreign currency denominated debentures		—		3,682,140		—		141,818		Debentures		(57,222	)
Korean Won denominated debentures		—		261,084		—		1,084		Debentures		(1,084	)


	December 31, 2022
	Carrying amounts of the hedging item				Accumulated amount of fair value hedge adjustments on the hedged item included in the carrying amount of the hedged item					Line item in the statement of financial position in which the hedged item is included		Changing in fair value used for calculating hedge ineffectiveness
	Assets		Liabilities		Assets		Liabilities
Fair value hedge
Interest rate risk
Foreign currency denominated debentures		—		2,928,127		—		(199,804	)		Debentures		256,767
Korean Won denominated debentures		—		148,856		—		—			Debentures		1,144

Amounts recognized in profit or loss due to the ineffective portion of fair value hedges for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2023
		Hedge ineffectiveness recognized in profit or loss			Line item in the profit or loss that includes hedge ineffectiveness
Fair value hedge	Interest rate risk		(2,655	)	Other net operating income(expense)


		For the year ended December 31, 2022
		Hedge ineffectiveness recognized in profit or loss		Line item in the profit or loss that includes hedge ineffectiveness
Fair value hedge	Interest rate risk		10,146	Other net operating income(expense)

- 116 -

(6)	Hedges of net investment in foreign operations

The amounts related to items designated as hedging instruments in a net investment in a foreign operation as of December 31, 2023 and 2022, are as follows (Unit: USD and Korean Won in millions):

December 31, 2023

Nominal amounts of
the hedging
instrument

Carrying amounts of the hedging
instrument

Line item in the
statement of financial
position where the
hedging instrument is
located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Hedges of net investment in foreign operations

Foreign exchange risk

Foreign currency debentures

USD 92,000,000

—

118,625

Foreign currency debentures

(2,028

)

December 31, 2022

Nominal amounts of
the hedging
instrument

Carrying amounts of the hedging
instrument

Line item in the
statement of financial
position where the
hedging instrument is

located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Hedges of net investment in foreign operations

Foreign exchange risk

Foreign currency debentures

USD 92,000,000

—

116,592

Foreign currency debentures

7,137

The amounts related to items designated as hedged items in net investment in foreign operations as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


		December 31, 2023
		Changing in fair value used for calculating hedge ineffectiveness		Balance of foreign currency translation reserve in hedge accounting
Hedges of net investment in foreign operations	Foreign exchange risk
	Net assets in a foreign operation		2,028		3,681


		December 31, 2022
		Changing in fair value used for calculating hedge ineffectiveness			Balance of foreign currency translation reserve in hedge accounting
Hedges of net investment in foreign operations	Foreign exchange risk
	Net assets in a foreign operation		(7,137	)		5,174

- 117 -

The amounts recognized in other comprehensive income and profit or loss related to net investment hedges in foreign operations for the years December 31, 2023 and 2022, are as follows: (Unit: Korean Won in millions):


	December 31, 2023
	Other comprehensive income								Profit or loss
	Hedge gain or loss recognized in other comprehensive income			Income tax effect		Sub-total			Hedge ineffectiveness recognized in profit or loss		Line item recognizing ineffectiveness
Hedges of net investment in foreign operations
Foreign exchange risk		(2,028	)		535		(1,493	)		—		—

December 31, 2022

Other comprehensive income

Profit or loss

Hedge gain or loss
recognized in other
comprehensive income

Income tax
effect

Sub-total

Hedge ineffectiveness
recognized in profit or
loss

Line item
recognizing
ineffectiveness

Hedges of net investment in foreign operations

Foreign exchange risk

7,137

(1,963

)

5,174

—

There is no reclassified amount in profit or loss from the net investment hedging reserve in foreign operations for the years ended December 31, 2023 and 2022.

- 118 -

27.	DEFERRED DAY 1 PROFITS OR LOSSES

Changes in deferred day 1 profits or losses as of December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Beginning balance		17,964			29,111
New transactions		—			21,656
Amounts recognized in profits or losses		(10,116	)		(32,803	)

Ending balance		7,848			17,964

28.	SHARE CAPITAL AND CAPITAL SURPLUS

(1)	The number of authorized shares and others as of December 31, 2023 and 2022, are as follows:


	December 31, 2023		December 31, 2022
Shares of common stock authorized		5,000,000,000 Shares		5,000,000,000 Shares
Par value per share		5,000 Won		5,000 Won
Shares of common stock issued		716,000,000 Shares		716,000,000 Shares
Capital stock		3,581,392 million Won		3,581,392 million Won

(2)	Details of capital surplus as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Capital in excess of par value		1,068,420		1,068,420

29.	HYBRID SECURITIES

The bond-type hybrid securities classified as owner’s equity as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	Issue date	Maturity date		Interest rate (%)		December 31, 2023			December 31, 2022
Securities in local currency	April 25, 2013		April 25, 2043		4.4		—			500,000
	November 13, 2013		November 13, 2043		5.7		—			200,000
	June 3, 2015		June 3, 2045		4.4		240,000			240,000
	July 26, 2018		—		4.4		—			400,000
	September 21, 2022		—		5.2		320,000			320,000
	September 21, 2022		—		5.5		30,000			30,000
	October 16, 2023		—		5.4		300,000			—
Securities in foreign currencies	October 4, 2019		—		4.3		662,035			662,035

Issuance cost							(5,588	)		(7,219	)

Total							1,546,447			2,344,816

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30.	OTHER EQUITY

(1)	Details of other equity as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Accumulated other comprehensive income:
Net gain (loss) on valuation of financial assets at FVTOCI		73,985			(645,259	)
Loss on foreign currency translation of foreign operations		(9,050	)		(11,414	)
Gain on hedges of net investment in foreign operations		3,681			5,174
Remeasurement gain (loss) related to defined benefit plan		(15,042	)		51,132

Sub-total		53,574			(600,367	)

Other capital adjustments		(1,694	)		(60,491	)

Total		51,880			(660,858	)

(2)	Changes in the accumulated other comprehensive income for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments		Income tax effect (*)			Ending balance
Net gain (loss) on valuation of financial assets at FVTOCI		(645,259	)		776,847			201,580		(259,183	)		73,985
Gain (loss) on foreign currency translation of foreign operations		(11,414	)		3,233			—		(869	)		(9,050	)
Gain (loss) on hedges of net investment in foreign operations		5,174			(2,028	)		—		535			3,681
Remeasurement gain (loss) related to defined benefit plan		51,132			(90,005	)		—		23,831			(15,042	)

Total		(600,367	)		688,047			201,580		(235,686	)		53,574

(*)	Net gain (loss) on valuation of financial assets at FVTOCI includes 87 million Won which was transferred to retained earnings due to disposal of equity securities.


	For the year ended December 31, 2022
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments		Income tax effect (*)			Ending balance
Net gain (loss) on valuation of financial assets at FVTOCI		(179,324	)		(660,127	)		29,567		164,625			(645,259	)
Gain (loss) on foreign currency translation of foreign operations		(12,203	)		1,302			—		(513	)		(11,414	)
Gain (loss) on hedges of net investment in foreign operations		—			7,137			—		(1,963	)		5,174
Remeasurement gain (loss) related to defined benefit plan		(175,714	)		311,932			—		(85,086	)		51,132

Total		(367,241	)		(339,756	)		29,567		77,063			(600,367	)

(*)	Net gain (loss) on valuation of financial assets at FVTOCI includes 10,472 million Won which was transferred to retained earnings due to disposal of equity securities.

- 120 -

31.	RETAINED EARNINGS

(1)	Details of retained earnings as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


		December 31, 2023		December 31, 2022
Legal reserve	Earned surplus reserve		2,821,754		2,566,754
	Other legal reserve		33,239		33,239

	Sub-total		2,854,993		2,599,993

Voluntary reserve	Business rationalization reserve		8,000		8,000
	Reserve for financial structure improvement		235,400		235,400
	Additional reserve		8,576,104		8,576,104
	Regulatory reserve for credit loss		2,164,140		2,311,436
	Revaluation reserve		700,915		709,137

	Sub-total		11,684,559		11,840,077

Retained earnings before appropriation			4,309,062		3,660,017

Total			18,848,614		18,100,087

Legal Reserve

Other legal reserve

Business rationalization reserve

Pursuant to the Restriction of Special Taxation Act, the Bank was previously required to appropriate, as a reserve for business rationalization, amounts equal to tax reductions arising from tax exemptions and tax credits up to December 31, 2001. The requirement was no longer effective from 2002.

Reserve for financial structure improvement

Additional reserve

Additional reserve is a voluntary reserve to retain earnings for capital adequacy and soundness of the Bank’s operation.

Regulatory reserve for credit loss

In accordance with paragraph 1 and 2 of Article 29 of the Regulation on Supervision of Banking Business (“RSBB”), if provisions for credit loss under K-IFRS for the accounting purpose are lower than provisions for credit loss under RSBB, the Bank is prohibited to provide dividends with the regulatory reserve.

Revaluation reserve

Revaluation reserve is the amount of limited dividends set by the Board of Directors to be recognized as complementary capital when the gains or losses occurred in the property revaluation by adopting K-IFRS.

- 121 -

(2) Statements of appropriations of retained earnings (plan) for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean won in millions):


	For the years ended December 31
	2023			2022
Unappropriated retained earnings:
Unappropriated retained earnings carried over from prior years		2,127,472			1,237,077
Disposal gain or loss in FVTOCI financial assets		87			(10,472	)
Net income		2,277,140			2,547,407
Dividend on hybrid equity securities		(95,637	)		(113,995	)

		4,309,062			3,660,017

Transfer from retained earnings:
Provision of revaluation excess		—			8,222
Credit loss		396,732			147,296

		396,732			155,518

Appropriation of retained earnings:
Legal reserve		228,000			255,000
Regulatory reserve for credit loss		770			—
Amortization of loss of repayment of hybrid equity securities		1,695			60,491
Cash dividend (dividend per share (%))
(2023: Common shares of 1,581 Won (32%)
2022: Common shares of 1,917 Won (38%))		1,131,996			1,372,572

		1,362,461			1,688,063

Unappropriated retained earnings to be carried forward to next year		3,343,333			2,127,472

The appropriation of retained earnings for the year ended December 31, 2023, is expected to be appropriated at the shareholders’ meeting on March 21, 2024. The appropriation date for the year ended December 31, 2022, was March 23, 2023.

- 122 -

32.	REGULATORY RESERVE FOR CREDIT LOSS

In accordance with Paragraph 1 and 2 of Article 29 of the Regulation on Supervision of Banking Business, the Bank calculates and discloses the regulatory reserve for credit loss.

(1)	Balances of the regulatory reserve for credit loss as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Regulatory reserve for credit loss		2,164,140			2,311,436
Planned provision of regulatory reserve for credit loss		(396,732	)		(147,296	)

Ending balance		1,767,408			2,164,140

(2)	Planned reserves provided, adjusted net income after the planned reserves provided and adjusted EPS after the planned reserves provided for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions, except for EPS amount):


	For the years ended December 31
	2023			2022
Net income		2,277,140			2,547,407
Required reversal of regulatory reserve for credit loss		(396,732	)		(147,296	)
Adjusted net income after the provision (reversal) of regulatory reserve		2,673,872			2,694,703
Adjusted EPS after the provision of regulatory reserve (Unit: Korean Won) (*)		3,601			3,604

(*)	For the years ended December 31, 2023 and 2022, it was calculated by deducting 95,637 million Won and KRW 113,995 million Won, respectively, of dividends on hybrid securities from adjusted net income after the provision of regulatory reserve.

33.

DIVIDENDS

34.	NET INTEREST INCOME

(1)	Interest income recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Financial assets at FVTPL		92,854		44,079
Financial assets at FVTOCI		945,536		585,206
Securities at amortized cost		765,390		497,144
Loans and other financial assets at amortized cost:
Interest on due from banks		402,385		186,049
Interest on loans		14,742,809		10,181,742
Interest on other receivables		32,828		19,461

Sub-total		15,178,022		10,387,252

Total		16,981,802		11,513,681

- 123 -

(2)	Interest expense recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Interest on deposits due to customers		8,164,274		3,732,963
Interest on borrowings		882,974		349,900
Interest on debentures		907,765		632,488
Interest on lease liability		6,589		3,833
Other interest expense		331,709		180,431

Total		10,293,311		4,899,615

35.	NET FEES AND COMMISSIONS INCOME

(1)	Details of fees and commissions income recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Fees and commission received for brokerage		239,254		289,265
Fees and commission received related to credit		155,159		150,138
Fees and commission received for electronic finance		127,153		131,795
Fees and commission received on foreign exchange handling		43,230		44,128
Fees and commission received on foreign exchange		34,943		32,791
Fees and commission received for guarantee		105,657		92,180
Fees and commission received on securities business		37,762		40,884
Fees and commission from trust management		161,692		150,949
Other fees		141,207		151,923

Total		1,046,057		1,084,053

(2)	Details of fees and commissions expense incurred for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Fees and commissions paid		196,430		197,790
Others		190		149

Total		196,620		197,939

- 124 -

36.	DIVIDEND INCOME

(1)	Details of dividend income recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Dividend income related to financial assets at FVTPL
Dividends on stock		9,216		10,199
Dividends on equity capital		67,082		19,221
Dividends on mutual funds		214,499		130,055

Sub-total		290,797		159,475
Dividend income related to financial assets at FVTOCI
Dividends on stock		15,563		20,653
Dividends on equity capital		134		147

Sub-total		15,697		20,800

Total		306,494		180,275

(2)	Details of dividends related to financial assets at FVTOCI for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Dividend income recognized from assets held
Equity securities		15,697		20,800

37.	NET GAIN OR LOSS ON FINANCIAL INSTRUMENTS AT FVTPL

(1)	Details of net gain or loss on financial instruments at FVTPL for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Net gain on financial instruments at FVTPL		514,706		282,411

- 125 -

(2)	Details of net gain or loss on financial instruments at FVTPL for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


			For the years ended December 31
			2023			2022
Financial assets at FVTPL	Securities	Gain on transactions and valuation		788,029			263,560
		Loss on transactions and valuation		(106,389	)		(440,566	)

		Sub-total		681,640			(177,006	)

	Loans	Gain on transactions and valuation		1,282			9,045

		Sub-total		1,282			9,045

	Other financial assets	Gain on transactions and valuation		3,511			7,666
		Loss on transactions and valuation		(3,240	)		(7,396	)

		Sub-total		271			270

	Sub-total			683,193			(167,691	)

Derivatives (for trading)	Interest rate derivatives	Gain on transactions and valuation		4,746,388			5,191,764
		Loss on transactions and valuation		(4,961,484	)		(3,639,595	)

		Sub-total		(215,096	)		1,552,169

	Currency derivatives	Gain on transactions and valuation		7,611,512			14,543,215
		Loss on transactions and valuation		(7,460,747	)		(15,631,827	)

		Sub-total		150,765			(1,088,612	)

	Equity derivatives	Gain on transactions and valuation		3,169,071			2,836,844
		Loss on transactions and valuation		(3,273,202	)		(2,850,334	)

		Sub-total		(104,131	)		(13,490	)

	Other derivatives	Gain on transactions and valuation		14			48
		Loss on transactions and valuation		(39	)		(13	)

		Sub-total		(25	)		35

	Sub-total			(168,487	)		450,102

	Total			514,706			282,411

- 126 -

38.	NET GAIN OR LOSS ON FINANCIAL ASSETS AT FVTOCI

Details of net gain or loss on financial assets at FVTOCI recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Net loss on redemption of securities		—			(7	)
Net loss on disposal of securities		(38,399	)		(22,858	)

Total		(38,399	)		(22,865	)

39.	REVERSAL OF (PROVISION FOR) IMPAIRMENT LOSSES DUE TO CREDIT LOSS

Reversal of (provision for) impairment losses due to credit loss for the years ended December 31, 2023 and 2022 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Reversal of (provision for) expected credit loss allowance on financial assets measured at FVTOCI		(16,388	)		869
Reversal of (provision for) expected credit loss allowance on securities at amortized cost		(5,472	)		(2,981	)
Reversal of (provision for) expected credit loss allowance on loans and other financial assets at amortized cost		(870,945	)		(381,902	)
Reversal of (provision for) provision on guarantee		(11,629	)		(4,166	)
Reversal of (provision for) unused loan commitments		(26,561	)		(2,432	)

Total		(930,995	)		(390,612	)

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40.	GENERAL ADMINISTRATIVE EXPENSES AND OTHER NET OPERATING INCOME (EXPENSES)

(1)	Details of general and administrative expenses recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


			For the years ended December 31
			2023		2022
Employee benefits	Short-term employee benefits	Salaries		1,281,891		1,444,757
		Employee benefits		470,105		467,422
	Share based payments			10,584		7,475
	Retirement benefit service costs			90,787		138,980
	Termination			140,419		154,697

	Sub-total			1,993,786		2,213,331

Depreciation and amortization				333,321		375,217

Other general and administrative expenses	Rent			83,026		49,366
	Taxes and public dues			144,670		114,240
	Service charges			213,674		203,735
	Computer and IT related			300,853		262,608
	Telephone and communication			42,932		41,132
	Operating promotion			37,247		36,935
	Advertising			146,744		143,363
	Printing			4,134		4,641
	Traveling			7,245		5,274
	Supplies			5,751		4,743
	Insurance premium			3,287		3,425
	Reimbursement			12,327		7,465
	Maintenance			13,699		14,422
	Water, light and heating			15,066		12,595
	Vehicle maintenance			6,883		6,909
	Others (*)			45,110		45,629

	Sub-total			1,082,648		956,482

	Total			3,409,755		3,545,030

(*)	It includes 40,047 million Won and 40,200 million Won in in-house welfare fund contributions for the year ended December 31, 2023 and 2022, respectively.

(2)	Details of other operating income recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Gain on transactions of foreign exchange		1,316,869		1,288,360
Gain related to derivatives (Hedging purpose)		69,479		1,288
Gain on fair value hedged items		8,986		257,910
Others		9,758		22,132

Total		1,405,092		1,569,690

- 128 -

(3)	Details of other operating expenses recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Losses on transactions of foreign exchange		1,221,609		1,105,043
KDIC deposit insurance premium		446,878		409,256
Contribution to miscellaneous funds		448,133		399,911
Losses related to derivatives (Hedging purpose)		8,819		250,267
Losses on fair value hedged items		72,601		—
Others (*)		271,598		87,823

Total		2,469,638		2,252,300

(*)	‘Others’ for the years ended December 31, 2023 and 2022 include 22,349 million Won and 14,664 million Won, respectively, of amortization expense for intangible assets.

(4)	Share-based Payment

Details of performance condition share-based payment granted to executives as of December 31, 2023 and 2022, are as follows:

Performance condition share-based payment


Subject to		Shares granted for the year 2019 (*4)
Type of payment		Cash-settled
Vesting period		January 1, 2019 ~ December 31, 2022
Date of payment		January 1, 2023
Fair value (Unit: Korean Won) (*1)		—
Valuation methods		—
Dividend yield		—
Expected maturity		—
Number of shares measured as of the closing date (2)(3)(*4)	As of December 31, 2023	—
	As of December 31, 2022	524,746 shares
Subject to		Shares granted for the year 2020
Type of payment		Cash-settled
Vesting period		January 1, 2020 ~ December 31, 2023
Date of payment		January 1, 2024
Fair value (Unit: Korean Won) (*1)		12,885
Valuation method		Black-Scholes Model
Dividend yield		6.25%
Expected maturity		0 year
Number of shares measured as of the closing date (2)(3) (*4)	As of December 31, 2023	755,073 shares
	As of December 31, 2022	755,073 shares
Subject to		Shares granted for the year 2021
Type of payment		Cash-settled
Vesting period		January 1, 2021 ~ December 31, 2024
Date of payment		January 1, 2025
Fair value (Unit: Korean Won) (*1)		12,105
Valuation methods		Black-Scholes Model
Dividend yield		6.25%
Expected maturity		1 year
Number of shares measured as of the closing date (2)(3) (*4)	As of December 31, 2023	865,717 shares
	As of December 31, 2022	865,717 shares

- 129 -


Subject to		Shares granted for the year 2022
Type of payment		Cash-settled
Vesting period		January 1, 2022 ~ December 31, 2025
Date of payment		January 1, 2026
Fair value (Unit: Korean Won) (*1)		11,371
Valuation methods		Black-Scholes Model
Dividend yield		6.25%
Expected maturity		2 years
Number of shares measured as of the closing date (2)(3) (*4)	As of December 31, 2023	744,943 shares
	As of December 31, 2022	744,943 shares
Subject to		Shares granted for the year 2023
Type of payment		Cash-settled
Vesting period		January 1, 2023 ~ December 31, 2026
Date of payment		January 1, 2027
Fair value (Unit: Korean Won) (*1)		10,683
Valuation methods		Black-Scholes Model
Dividend yield		6.25%
Expected maturity		3 years
Number of shares measured as of the closing date (2)(3) (*4)	As of December 31, 2023	763,148 shares
	As of December 31, 2022	—

(*1)

(*2)

(*3)	As of December 31, 2023, the remaining quantity and granted quantity are the same.

(*4)	It has been fully paid during the year ended December 31, 2023.

The Bank accounts for performance condition share-based payments according to the cash-settled method and the fair value of the liabilities is reflected in the compensation costs by re-measuring per every closing period. As of December 31, 2023 and 2022, the book value of the liabilities related to the performance condition share-based payments recognized by the bank is 37,142 million Won and 33,068 million Won, respectively.

- 130 -

41.	OTHER NON-OPERATING INCOME (EXPENSES)

(1)	Details of gains or losses on valuation of investments in subsidiaries and associates for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Impairment loss		1,786		—

(2)	Details of other non-operating income and expenses recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Other non-operating income		161,028			203,190
Other non-operating expenses		(184,531	)		(152,907	)

Total		(23,503	)		50,283

(3)	Details of other non-operating income recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Rental fee income		33,649		32,951
Dividend gains on investment assets of subsidiaries and associates		54,135		48,722
Gains on disposal of investment assets of subsidiaries and associates		33,081		—
Gains on disposal of asset held for sale		3,027		24,100
Gains on disposal of properties and equipment, intangible assets and other assets		1,416		25,317
Others (*)		35,720		72,100

Total		161,028		203,190

(*)	Other special gains related to other provisions for the years ended December 31, 2023 and 2022 include 14,060 million Won and 46,536 million Won, respectively.

(4)	Details of other non-operating expenses recognized for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Depreciation on investment properties		5,682		5,602
Interest expenses of rent leasehold deposits		1,657		997
Losses on disposal of properties and equipment, intangible assets and other assets		1,217		2,117
Impairment losses of properties and equipment, intangible assets and other assets		22		144
Donation		54,520		42,145
Others (*)		121,433		101,902

Total		184,531		152,907

(*)	Other special losses related to other provisions for the years ended December 31, 2023 and 2022 are 64,568 million Won and 18,458 million Won, respectively, and other special losses related to employee incidents for the year ended December 31, 2022 are 63,354 million Won.

- 131 -

42.	INCOME TAX EXPENSE

(1)	Details of income tax expenses for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Current tax expense
Current tax expense in respect of the current year		537,116			1,030,142
Adjustments recognized in the current period in relation to the current tax of prior periods		(19,816	)		(13,003	)
Deferred tax charged directly to equity		535			(1,963	)

Sub-total		517,835			1,015,176

Deferred tax expense
Change in deferred tax assets (liabilities) relating to the temporary differences		433,178			(234,573	)
Deferred tax charged directly to equity		(236,221	)		79,026

Sub-total		196,957			(155,547	)

Income tax expense		714,792			859,629

(2)	Income tax expenses reconciled to net income before income tax expense for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023			2022
Net income before income tax expense		2,991,932			3,407,037
Tax calculated at statutory tax rate (1)(2)		779,508			926,573
Adjustments
Effect of income that is exempt from taxation		(32,743	)		(34,736	)
Effect of expense not deductible in determining taxable profit		7,324			(302	)
Adjustments recognized in the current period in relation to the current tax of prior periods		(19,816	)		(13,004	)
Effect of income tax expense that is resulting from consolidation		(49,020	)		(35,482	)
Others		29,539			16,580

Sub-total		(64,716	)		(66,944	)

Income tax expense		714,792			859,629

Effective tax rate		23.9	%		25.2	%

(*1)	The applicable income tax rate; 1) For the year ended December 31, 2023; 9.9% for below 200 million Won, 2) 20.9% for above 200 million Won and below 20 billion Won, 3) 23.1% for above 20 billion Won and below 300 billion Won, 4) 26.4% for above 300 billion Won.

(*2)	The applicable income tax rate; 1) For the year ended December 31, 2022; 11% for below 200 million Won, 2) 22% for above 200 million Won and below 20 billion Won, 3) 24.2% for above 20 billion Won and below 300 billion Won, 4) 27.5% for above 300 billion Won.

- 132 -

(3)	Changes in cumulative temporary differences for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2023
	Beginning balance			Recognized as income (loss)			Recognized as other comprehensive income (loss)			Ending balance
Gain (loss) on financial assets		383,056			(270,677	)		(259,183	)		(146,804	)
Gain on valuation of derivatives		25,474			24,082			—			49,556
Accrued income		(106,801	)		(21,707	)		—			(128,508	)
Reversal of loan losses		306			573			—			879
Loans and receivables written off		4,399			(17	)		—			4,382
Deferred loan origination costs and fees		(142,201	)		(3,263	)		—			(145,464	)
Defined benefit liability		327,013			22,659			23,831			373,503
Deposits with employee retirement insurance trust		(414,551	)		(31,180	)		—			(445,731	)
Provision for guarantee		7,188			615			—			7,803
Other provision		79,761			71,200			—			150,961
Others		(102,734	)		10,758			(869	)		(92,845	)

Net deferred tax assets (liabilities)		60,910			(196,957	)		(236,221	)		(372,268	)


	For the year ended December 31, 2022
	Beginning balance			Recognized as income (loss)			Recognized as other comprehensive income (loss)			Ending balance
Gain on financial assets		173,896			52,773			156,387			383,056
Gain (loss) on valuation of derivatives		(149,002	)		174,476			—			25,474
Accrued income		(79,519	)		(27,282	)		—			(106,801	)
Reversal of (provision for) loan losses		1,196			(890	)		—			306
Loans and receivables written off		4,565			(166	)		—			4,399
Deferred loan origination costs and fees		(156,730	)		14,529			—			(142,201	)
Defined benefit liability		397,955			14,144			(85,086	)		327,013
Deposits with employee retirement insurance trust		(395,248	)		(19,303	)		—			(414,551	)
Provision for guarantee		5,724			1,464			—			7,188
Other provision		78,322			1,439			—			79,761
Others		(54,821	)		(55,638	)		7,725			(102,734	)

Net deferred tax assets (liabilities)		(173,662	)		155,546			79,026			60,910

(4)	Unrealizable temporary differences as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Deductible temporary differences		258,693			258,693
Taxable temporary differences		(108,055	)		(108,055	)

Total		150,638			150,638

No deferred income tax asset has been recognized for the deductible temporary difference of 258,693 million Won associated with investments in subsidiaries and associates as of December 31, 2023, because it is not probable that the temporary differences will be reversed in the foreseeable future.

- 133 -

No deferred income tax liability has been recognized for the taxable temporary difference of 108,055 million Won associated with investment in subsidiaries and associates as of December 31, 2023, due to the following reasons:

•

The Bank can control the timing of the reversal of the temporary differences.

•

It is probable that the temporary differences will not be reversed in the foreseeable future.

(5)	Details of accumulated deferred tax charged direct to equity is as follows (Unit: Korean Won in millions):


	December 31, 2023			December 31, 2022
Net gain or loss on valuation of financial assets at FVTOCI		(26,539	)		232,644
Foreign currency translation of foreign operations		3,246			4,115
Hedges of net investment in foreign operations		(1,428	)		(1,963	)
Remeasurements of the net defined benefit liability		5,396			(18,435	)

Total		(19,325	)		216,361

(6)	Current tax assets and liabilities as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Current tax assets		126,388		13,534
Current tax liabilities		23,061		664,012

(7)	Impact of Pillar Two income taxes

The amendments provide a temporary relief from the accounting for deferred taxes arising from legislation enacted to implement the Pillar Two model rules, which aim to reform international corporate taxation for multinational enterprises, and require disclosure of related current tax effects, etc. The Bank applies the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. Since the Pillar Two legislation is scheduled to be effective from January 1, 2024, the Bank has no current tax expense related to Pillar Two. The Bank is in review for the impact of these amendments on the financial statements and does not expect that the impact will be significant.

- 134 -

43.	EARNINGS PER SHARE (“EPS”)

(1)	Basic EPS is calculated by dividing net income by weighted average number of common shares outstanding (Unit: Korean Won in millions, except for EPS and number of shares):


	For the years ended December 31
	2023			2022
Net income for the period attributable to common shareholders		2,277,140			2,547,407
Dividends to hybrid securities		(95,637	)		(113,995	)
Net income attributable to common shareholders		2,181,503			2,433,412
Weighted-average number of common shares outstanding		716			716
Basic EPS (Unit: Korean Won)		3,047			3,399

(2)	The weighted average number of common shares outstanding is as follows:

For the year ended December 31, 2023

Period

Number of
shares

Dates

Accumulated
number of shares
outstanding
during period

Common shares issued at the beginning of the period

2023-01-01 ~ 2023-12-31

716,000,000

365

261,340,000,000

Sub-total (①)

261,340,000,000

Weighted average number of common shares
outstanding (②=(①/365)

716,000,000

For the year ended December 31, 2022

Period

Number of
shares

Dates

Accumulated
number of shares
outstanding
during period

Common shares issued at the beginning of the period

2022-01-01 ~ 2022-12-31

716,000,000

365

261,340,000,000

Sub-total (①)

261,340,000,000

Weighted average number of common shares
outstanding (②=(①/365)

716,000,000

Diluted EPS is equal to basic EPS because there is no dilution effect for the years ended December 31, 2023 and 2022.

- 135 -

44.	CONTINGENT LIABILITIES AND COMMITMENTS

(1)	Details of guarantees as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023 (*)		December 31, 2022 (*)
Confirmed guarantees
Guarantee for loans		58,205		39,684
Acceptances		106,456		188,012
Guarantees in acceptances of imported goods		74,695		97,920
Other confirmed guarantees		8,309,663		7,065,820

Sub-total		8,549,019		7,391,436

Unconfirmed guarantees
Local letter of credit		161,608		150,075
Letter of credit		2,822,982		2,970,804
Other unconfirmed guarantees		1,471,553		1,084,595

Sub-total		4,456,143		4,205,474

Commercial paper purchase commitments and others		3,024,758		347,347

Total		16,029,920		11,944,257

(*)	Includes financial guarantees of 6,539,824 million Won and 3,714,228 million Won as of December 31, 2023 and 2022, respectively.

(2)	Details of loan commitments and others as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Loan commitments		83,196,929		75,023,259
Other commitments		7,170,064		7,096,344

(3)	Litigation case

Legal cases where the Bank is involved as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions except for number of cases):

December 31, 2023

December 31, 2022

As plaintiff

As defendant

As plaintiff

As defendant

Number of cases (*)

29 cases

140 cases

33 cases

160 cases

Amount of litigation

257,683

164,314

279,960

334,543

Provisions for litigations

16,053

16,453

(*)	The number of cases as of December 31, 2023 and 2022 does not include cases such as loan-related execution or simple extension of loan prescription, litigation where the substantive party is not the Bank, or fraudulent lawsuits.

(4)

Others

During the year ended December 31, 2023, there was an investigation by the Korea Fair Trade Commission regarding the loan-to-value ratio, and the Bank received the examination report in January 2024 but the estimation of the impact on the Bank’s financial statements as of December 31, 2023 cannot be reasonably estimated.

- 136 -

45.	RELATED PARTY TRANSACTIONS

Related parties of the Bank as of December 31, 2023 and 2022 and its assets and liabilities recognized as of December 31, 2023 and 2022 and major transactions with related parties for the years ended December 31, 2023 and 2022 and compensation to key management are as follows:

(1)	Related parties


		Related parties
Parent company		Woori Financial Group Inc.

Subsidiaries		Woori America Bank, PT Bank Woori Saudara Indonesia 1906 Tbk, Woori Global Markets Asia Limited, Woori Bank China Limited, AO Woori Bank, Banco Woori Bank do Brasil, S.A Korea BTL Infrastructure Fund, WOORI BANK(CAMBODIA) PLC., Woori Finance Myanmar Co., Ltd., Wealth Development Bank, Woori Bank Vietnam Limited, Woori Bank Europe, Woori Bank Principal Guaranteed Trust and Woori Bank Principal and Interest Guaranteed Trust(Consolidated Trusts), Jeonju Iwon Ltd. and 50 SPCs, Heungkuk Global Private Placement Investment Trust No.1 and 12 beneficiary certificates

Associates		W Service Networks Co., Ltd., Korea Credit Bureau Co., Ltd., Korea Finance Security Co., Ltd., Lotte Card Co., Ltd., K BANK Co., Ltd., and others (Dongwoo C & C Co., Ltd. and 36 associates)

Other related parties		Woori Card Co., Ltd. and its subsidiaries, Woori Investment Bank Co., Ltd. and its subsidiaries and associates , Woori FIS Co., Ltd., Woori Private Equity Asset Management Co., Ltd. and its associates, Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd., Woori Asset Management Co., Ltd. and its subsidiaries and associates, Woori Global Asset Management Co., Ltd. and its subsidiaries and associates, Woori Asset Trust Co., Ltd., Woori Finance Capital and its subsidiaries and associates, Woori Financial F&I Co., Ltd. and its subsidiaries, Woori Savings Bank, Woori G Japan General Type Private Real Estate Feeder Investment Trust No.1-1 and its subsidiaries, Godo Kaisha Oceanos No.1, WOORI ZIP 1, WOORI ZIP 2, JC Assurance No.2 Private Equity Fund, IGEN 2022 Private Equity Fund No.1, Woori Venture Partners, Woori G Japan Private Placement Real Estate Master Investment Trust No.2-1

(2)	Major assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):


Related parties		A title of account	December 31, 2023			December 31, 2022
Parent company	Woori Financial Group Inc.	Other assets		125,489			15,917
		Deposits due to customers		1,363,507			1,613,361
		Other liabilities		20,635			645,807
Subsidiaries	Woori America Bank	Cash and cash equivalents		79,816			16,181
		Loans		17,119			16,214
		Loss allowance		(11	)		(4	)
		Other assets		7			—
	PT Bank Woori Saudara Indonesia 1906 Tbk	Cash and cash equivalents		20,785			5,799
		Loans		322,350			582,958
		Loss allowance		(198	)		(348	)
		Other assets		26			—
	Woori Global Markets Asia Ltd.	Loans		404,506			422,470
		Loss allowance		(248	)		(252	)
		Other assets		6			—
		Deposits due to customers		1,790			11,999
	Woori Bank China Ltd.	Cash and cash equivalents		19,781			19,105
		Loans		—			15,539
		Loss allowance		—			(8	)
		Derivative assets		—			4
		Other assets		4,940			7,322
		Deposits due to customers		279,069			196,488
		Borrowings		13,589			5,448
		Derivative liabilities		—			1,724
		Other liabilities		4,892			7,318

- 137 -


Related parties		A title of account	December 31, 2023			December 31, 2022
	AO Woori Bank	Cash and cash equivalents		35,186			7,423
		Loans		153,741			148,839
		Loss allowance		(3,570	)		(2,771	)
		Other assets		7,143			1,019
		Deposits due to customers		5,394			—
	Woori Finance Myanmar Co., Ltd.	Loans		8,701			7,894
		Loss allowance		(18	)		(5	)
		Other assets		20			—
		Other liabilities		128			78
	Woori Bank Vietnam Limited	Cash and cash equivalents		10,318			13,454
		Loans		283,251			53,098
		Loss allowance		(601	)		(32	)
		Other assets		6,483			2
		Deposits due to customers		2,159			1,972
		Borrowings		434,780			304,152
		Other liabilities		4,280			2,813
	WOORI BANK(CAMBODIA) PLC.	Loan		699,757			763,168
		Loss allowance		(1,451	)		(456	)
		Other assets		14			—
		Other liabilities		178			28
	Woori Bank Europe	Cash and cash equivalents		5,086			2,705
		Loans		571,156			533,726
		Loss allowance		(2,175	)		(318	)
		Other assets		2,713			2,147
		Borrowings		66,801			47,372
		Other liabilities		—			530
	Banco Woori Bank do Brasil, S.A	Loans		3,739			8,491
		Loss allowance		(2	)		(2	)
		Other assets		10			—
	Wealth Development Bank	Other assets		4			—
		Other liabilities		39			34
	Korea BTL Infrastructure Fund	Other assets		9			9
	Consolidated trusts	Other liabilities		181,973			175,625
	Consolidated SPC	Loans		9,956			2,469,820
		Loss allowance		(37	)		(2,153	)
		Derivative assets		11,125			568
		Other assets		522			550
		Deposits due to customers		7,597			10,541
		Derivative liabilities		6,020			30,563
		Other liabilities		22,372			16,349
	Consolidated beneficiary certificates	Derivative liabilities		1,016			1,618
Associates	W Service Networks Co., Ltd.	Deposits due to customers		3,245			3,298
		Other liabilities		40			8
	Korea Credit Bureau Co., Ltd.	Deposits due to customers		771			4,450
		Other liabilities		—			40
	Korea Finance Security Co., Ltd.	Loans		3,197			3,397
		Loss allowance		(71	)		(45	)
		Deposits due to customers		1,323			1,764
		Other liabilities		5			3
	Lotte Card Co., Ltd.	Loans		—			50,000
		Loss allowance		—			(30	)
		Deposits due to customers		62,587			35,986
		Other liabilities		289			74

- 138 -


Related parties		A title of account	December 31, 2023			December 31, 2022
	K BANK Co., Ltd.	Other assets		18			—
		Other liabilities		214,135			108,156
	Others (*)	Loans		41			251
		Loss allowance		—			(1	)
		Deposits due to customers		3,632			2,807
		Other liabilities		992			1
Other related parties	Woori Card Co., Ltd. and its subsidiaries	Loans		5,158			5,069
		Loss allowance		(37	)		(8	)
		Derivative assets		95			—
		Other assets		4,580			15,891
		Borrowings		42,496			—
		Deposits due to customers		24,002			59,217
		Derivative liabilities		38,286			42,875
		Other liabilities		25,500			21,653
	Woori Investment Bank Co., Ltd. and its subsidiaries and associates	Other assets		—			10,124
		Deposits due to customers		230,276			38,237
		Other liabilities		16,870			26,955
	Woori FIS Co., Ltd.	Other assets		514			121
		Deposits due to customers		14,157			21,183
		Other liabilities		26,322			20,347
	Woori Private Equity Asset Management Co., Ltd., and its associates	Deposits due to customers		28,824			45,635
		Derivative liabilities		1,249			—
		Other liabilities		248			320
	Woori Finance Research Institute Co., Ltd.	Deposits due to customers		1,718			1,338
		Other liabilities		503			479
	Woori Credit Information Co., Ltd.	Other assets		—			5
		Deposits due to customers		10,537			8,984
		Other liabilities		10,038			10,066
	Woori Fund Service Co., Ltd.	Deposits due to customers		18,019			16,395
		Other liabilities		1,698			1,625
	Woori Asset Management Co., Ltd. and its subsidiaries and associates	Deposits due to customers		3,969			12,393
		Other liabilities		—			167
	Woori Global Asset Management Co., Ltd., and its subsidiaries and associates	Deposits due to customers		794			1,408
		Other liabilities		33			86
	Woori Asset Trust Co., Ltd.	Deposits due to customers		93,742			142,088
		Other liabilities		386			408
	Woori Finance Capital and its subsidiaries and associates	Deposits due to customers		41,786			29,392
		Derivative liabilities		455			1,453
		Other liabilities		1,187			166
	Woori Financial F&I Co., Ltd. and its subsidiaries	Loans		165,800			—
		Loss allowance		(855	)		—
		Other assets		71			—
		Deposits due to customers		20,012			12,298
		Other liabilities		39			—

- 139 -


Related parties		A title of account	December 31, 2023			December 31, 2022
	Woori G Japan General Type Private Real Estate	Loans		19,589			20,459
		Loss allowance		(14	)		(8	)
	Feeder Investment Trust No.1-1 and its subsidiaries	Other assets		24			25
		Deposits due to customers		153			157
		Derivative liabilities		186			2,914
	Woori Savings bank	Other assets		11			29
	Godo Kaisha Oceanos No. 1	Loans		38,122			39,814
		Loss allowance		(58	)		(32	)
		Other assets		33			35
	Woori Venture Partners	Deposits due to customers		23,000			—
		Other liabilities		151			—
	WOORI ZIP 1	Loans		11,317			11,819
		Loss allowance		(1	)		—
		Other assets		21			22
	WOORI ZIP 2	Loans		16,063			16,776
		Loss allowance		(1	)		(1	)
		Other assets		30			31
	JC Assurance Private Equity Partnership No. 2	Deposits due to customers		74			93
	Izen 2022 Private Equity Partnership No. 1	Deposits due to customers		506			722
	Woori G Japan Private Placement Real Estate Master Investment Trust No.2-1	Derivative liabilities		587			—

(*)	Others include Partner One Value Up I Private Equity Fund, Dongwoo C & C Co., Ltd. and others as of December 31, 2023 and 2022.

(3)	Major gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):


			For the years ended December 31
Related party		A title of account	2023			2022
Parent company	Woori Financial Group	Fees income		34			12
		Other income		4,315			4,376
		Interest expenses		63,806			25,614
		Fee expenses		1,625			1,596
Subsidiaries	Woori America Bank	Interest income		619			91
		Fees income		306			288
		Other income		202			199
		Provision (Reversal) of impairment losses due to credit loss		7			(3	)
	PT Bank Woori Saudara Indonesia 1906 Tbk	Interest income		32,056			21,603
		Dividend income		13,993			11,345
		Fees income		177			162
		Provision (Reversal) of impairment losses due to credit loss		(150	)		(334	)
	Woori Global Markets Asia Limited	Interest income		22,298			8,054
		Fees income		6			58
		Interest expenses		—			56
		Provision (Reversal) of impairment losses due to credit loss		(4	)		(48	)

- 140 -


			For the years ended December 31
Related party		A title of account	2023			2022
	Woori Bank China Limited	Interest income		367			602
		Fees income		445			493
		Gains on derivatives		20,060			24
		Interest expenses		464			1,286
		Fee expenses		134			39
		Provision (Reversal) of impairment losses due to credit loss		(8	)		(384	)
		Losses on derivatives		21,344			1,083
	AO Woori Bank	Interest income		7,412			2,248
		Fees income		4			2,560
		Provision (Reversal) of impairment losses due to credit loss		799			4
	Banco Woori Bank do Brasil, S.A	Interest income		370			117
		Fees income		10			9
							—
	Wealth Development Bank	Fees income		15			15
		Provision (Reversal) of impairment losses due to credit loss		5			15
	Korea BTL Infrastructure Fund	Dividend income		26,657			23,155
		Fees income		73			73
	Woori Finance Myanmar Co., Ltd.	Interest income		592			286
		Fees income		117			17
		Provision (Reversal) of impairment losses due to credit loss		16			24
	Woori Bank Vietnam Limited	Interest income		15,935			255
		Fees income		382			228
		Interest expenses		8,095			9,483
		Provision (Reversal) of impairment losses due to credit loss		617			(292	)
	WOORI BANK(CAMBODIA) PLC.	Interest income		4,231			3,710
		Fees income		470			310
		Provision (Reversal) of impairment losses due to credit loss		1,144			48
	Woori Bank Europe	Interest income		20,117			4,949
		Fees income		62			261
		Provision (Reversal) of impairment losses due to credit loss		1,857			25
		Interest expenses		—			1,642
	Consolidated trusts	Other income		6,552			6,193
		Interest expenses		6,193			3,623

- 141 -


			For the years ended December 31
Related party		A title of account	2023		2022
	Consolidated beneficiary certificates	Gains on derivatives		602		—
		Losses on derivatives		—		1,351
	Consolidated SPC	Interest income		145		1,591
		Fees income		20,690		13,114
		Gains on derivatives		23,781		627
		Interest expenses		—		6
		Losses on derivatives		—		27,658
		Provision (Reversal) of impairment losses due to credit loss		5,906		(1,391	)
Associates	W Service Networks Co., Ltd.	Dividend income		5		4
		Interest expenses		35		14
	Korea Credit Bureau Co., Ltd.	Dividend income		90		—
		Interest expenses		9		40
	Korea Finance Security Co., Ltd.	Interest income		181		141
		Interest expenses		3		3
		Provision (Reversal) of impairment losses due to credit loss		28		42
	Lotte Card Co., Ltd	Interest income		—		83
		Fees income		3,903		7,624
		Dividend income		13,199		12,960
		Interest expenses		5,665		1,902
		Provision (Reversal) of impairment losses due to credit loss		186		(27	)
	Others (*1)	Dividend income		191		1
		Interest expenses		9,332		1,259
		Provision (Reversal) of impairment losses due to credit loss		—		10
Other related parties	Woori Card Co., Ltd and its subsidiaries	Interest income		673		403
		Fees income		96,666		106,763
		Gains on derivatives		6,162		—
		Other income		303		415
		Interest expenses		409		275
		Fees expenses		512		645
		Losses on derivatives		1,827		27,065
		Provision (Reversal) of impairment losses due to credit loss		54		12
	Woori Investment Bank Co., Ltd and its subsidiaries and associates	Interest income		82		41
		Fees income		2,100		1,590
		Other income		577		15
		Interest expenses		104		477
		Fees expenses		338		63
		Provision (Reversal) of impairment losses due to credit loss		114		11

- 142 -


			For the years ended December 31
Related party		A title of account	2023		2022
	Woori FIS Co., Ltd	Fees income		600		548
		Other income		10,622		9,907
		Interest expenses		2		1
		Other expenses		268,487		234,676
	Woori Private Equity Asset Management Co., Ltd. and its associates	Fees income		18		11
		Interest expenses		1,094		325
		Losses on derivatives		675		—
	Woori Finance Research Institute Co., Ltd.	Fees income		18		18
		Other income		732		752
		Interest expenses		78		38
	Woori Credit Information Co., Ltd	Fees income		83		79
		Other income		751		637
		Interest expenses		449		328
		Fees expenses		16,399		12,735
	Woori Fund Service	Fees income		288		239
		Other income		284		371
		Interest expenses		551		323
		Fees expenses		106		—
	Woori Asset Management co., Ltd and its subsidiaries and associates	Fees income		55		52
		Interest expenses		64		177
	Woori global asset Management co., Ltd and its subsidiaries and associates	Fees income		23		20
		Interest expenses		1		—
		Fees expenses		167		797
	Woori asset trust Co., Ltd	Fees income		277		188
		Interest expenses		2,966		1,480
		Fees expenses		7,652		4,640
	Woori Finance Capital and its subsidiaries and associates	Interest income		18		—
		Fee income		3,401		2,867
		Gains on derivatives		999		—
		Interest expenses		49		34
		Provision (Reversal) of impairment losses due to credit loss		85		(29	)
		Losses on derivatives		—		1,112
		Other expenses		787		1,060
	Woori Financial F&I Co., Ltd. and its subsidiaries	Interest income		533		—
		Fee income		180		—
		Interest expenses		15		275
		Provision (Reversal) of impairment losses due to credit loss		892		—

- 143 -


			For the years ended December 31
Related party		A title of account	2023		2022
	Woori savings bank	Fee income		989		1,155
	Woori Venture Partners	Fee income		78		—
		Interest expenses		598		—
	Woori G Japan General Type Private Real Estate Feeder Investment Trust No.1-1 and its subsidiaries	Interest income		280		286
		Gains on derivatives		—		—
		Provision (Reversal) of impairment losses due to credit loss		6		2
		Losses on derivatives		186		1,394
	Godo Kaisha Oceanos No. 1	Interest income		381		398
		Provision (Reversal) of impairment losses due to credit loss		26		(92	)
	Izen 2022 Private Equity Partnership No. 1	Interest expenses		1		1
	WOORI ZIP 1	Interest income		124		130
	WOORI ZIP 2	Interest income		177		185
		Provision (Reversal) of impairment losses due to credit loss		1		—
	Woori G Japan Private Placement Real Estate Master Investment Trust No.2-1	Losses on derivatives		541		—

(*1)	Others include Partner One Value Up I Private Equity Fund, Dongwoo C & C Co., Ltd. and others as of December 31, 2023 and 2022.

(4)	Major loan transactions with related parties for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2023
Related parties		Beginning balance		Loan		Collection		Others			Ending balance (*)
Subsidiaries	PT Bank Woori Saudara Indonesia 1906 Tbk		582,958		66,995		341,095		13,492			322,350
	Woori Global Markets Asia Limited		422,470		852,313		878,863		8,586			404,506
	Woori Bank China Limited		15,539		39,114		56,418		1,765			—
	AO Woori Bank		148,839		521,368		522,914		6,448			153,741
	Banco Woori Bank do Brasil, S.A		8,491		3,768		8,590		70			3,739
	Woori Finance Myanmar Co., Ltd.		7,894		687		—		120			8,701
	Woori Bank Vietnam Limited		53,098		716,900		509,878		23,131			283,251
	WOORI BANK(CAMBODIA) PLC.		763,168		434,626		309,422		(188,615	)		699,757
	Woori America Bank		16,214		68,468		68,194		631			17,119
	Woori Bank Europe		533,726		1,532,423		1,516,152		21,159			571,156
	Consolidated SPC		2,469,820		37,662		2,498,566		1,040			9,956
Associates	Lotte Card Co., Ltd.		50,000		201,510		251,510		—			—
	Korea Finance Security Co., Ltd.		3,397		2,497		2,697		—			3,197
	Others		251		41		251		—			41

- 144 -


		For the year ended December 31, 2023
Related parties		Beginning balance		Loan		Collection		Others			Ending balance (*)
Other related parties	Woori Investment Bank Co., Ltd and its subsidiaries and associates		—		1,522		1,522		—			—
	Woori Card Co., Ltd. and its subsidiaries		5,069		—		—		89			5,158
	Woori Financial F&I Co., Ltd. and its subsidiaries		—		216,300		50,500		—			165,800
	Woori G Japan Private Real Estate Investment Trust No.1		20,459		—		—		(870	)		19,589
	Godo Kaisha Oceanos No. 1		39,814		—		—		(1,692	)		38,122
	WOORI ZIP 1		11,819		—		—		(502	)		11,317
	WOORI ZIP 2		16,776		—		—		(713	)		16,063

(*)	Settlement payment from normal operation among the related parties were excluded, and in the case of a limited loan, it was presented as a net increase or decrease.


		For the year ended December 31, 2022
Related parties		Beginning balance		Loan		Collection		Others			Ending balance (*1)
Subsidiaries	PT Bank Woori Saudara Indonesia 1906 Tbk		438,635		576,778		441,165		8,710			582,958
	Woori Global Markets Asia Limited		452,423		971,378		999,413		(1,918	)		422,470
	Woori Bank China Limited		266,056		33,065		282,906		(676	)		15,539
	AO Woori Bank		136,121		534,582		522,983		1,120			148,840
	Banco Woori Bank do Brasil, S.A		3,557		20,720		16,237		451			8,491
	Woori Finance Myanmar Co., Ltd.		7,113		290		—		491			7,894
	Woori Bank Vietnam Limited		496,479		194,005		636,396		(990	)		53,098
	WOORI BANK(CAMBODIA) PLC. (*2)		638,036		301,431		217,385		41,086			763,168
	Woori America Bank		16,108		49,321		49,320		105			16,214
	Woori Bank Europe		144,857		566,233		173,708		(3,656	)		533,726
	Consolidated SPC		463,360		2,759,141		773,343		20,662			2,469,820
Associates	Lotte Card Co., Ltd.		3,750		50,000		3,750		—			50,000
	Korea Finance Security Co., Ltd.		3,397		2,000		2,000		—			3,397
	Others (*3)		—		251		—		—			251
Other related parties	Woori G Japan Private Real Estate Investment Trust No.1		21,939		—		—		(1,480	)		20,459
	Woori Card Co., Ltd.		4,742		—		—		327			5,069
	Godo Kaisha Oceanos No. 1		43,033		41,467		43,033		(1,653	)		39,814
	WOORI ZIP 1		12,775		—		—		(956	)		11,819
	WOORI ZIP 2		18,132		—		—		(1,356	)		16,776

(*1)	Settlement payment from normal operation among the related parties were excluded, and in case of a limited loan, it was presented as a net increase or decrease.

(*2)	WB Finance Co., Ltd. changed its name to WOORI BANK(CAMBODIA) PLC. during the year ended December 31, 2021.

(*3)	JoongAng Network Solution Co., Ltd., an associate included in others, was converted into an associate during the current period, so it was marked as a limited loan.

- 145 -

(5)	Changes in major deposits due to customers with related parties for years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2023
Related parties		Beginning balance		Borrowings		Repayment and others		Ending balance (*)
Parent company	Woori Financial Group		1,595,000		5,379,000		5,620,000		1,354,000
Associates	W Service Networks Co., Ltd.		1,200		1,000		1,200		1,000
	Partner One Value Up I Private Equity Fund		100		—		100		—
	Korea Credit Bureau Co., Ltd.		3,000		—		3,000		—
	Win Mortgage Co., Ltd.		—		1,200		600		600
Other related parties	Woori Credit Information Co., Ltd.		4,699		4,600		3,100		6,199
	Woori Fund Service Co., Ltd.		14,500		17,000		14,500		17,000
	Woori Investment Bank Co., Ltd and its subsidiaries and associates		2,000		—		—		2,000
	Woori Finance Research Institute Co., Ltd.		—		14,100		14,100		—
	Woori Asset Trust. Ltd.		96,000		605,286		645,286		56,000
	Woori Private Equity Asset Management Co., Ltd.		42,000		53,000		73,000		22,000
	Woori Asset Management Corp and its subsidiaries and associates		10,000		—		10,000		—
	Woori Venture Partners		—		97,000		74,000		23,000

(*)	The details of payments made between related parties and the deposits due to customers that can be taken in and out easily are excluded.


		For the year ended December 31, 2022
Related parties		Beginning balance		Borrowings		Repayment and others		Ending balance (*)
Parent company	Woori Financial Group		520,000		3,930,000		2,855,000		1,595,000
Subsidiaries	Woori Global Markets Asia Limited		14,519		—		14,519		—
Associates	W Service Networks Co., Ltd.		1,180		1,200		1,180		1,200
	Partner One Value Up I Private Equity Fund		329		550		779		100
	Korea Credit Bureau Co., Ltd.		—		3,000		—		3,000
Other related parties	Woori Credit Information Co., Ltd.		11,699		2,500		9,500		4,699
	Woori Fund Service Co., Ltd.		11,500		14,500		11,500		14,500
	Woori Investment Bank Co., Ltd.		2,000		—		—		2,000
	Woori Finance Research Institute Co., Ltd.		800		8,900		9,700		—
	Woori Asset Trust. Ltd.		6,000		379,918		289,918		96,000
	Woori Financial F&I Co., Ltd.		—		270,000		270,000		—
	Woori Private Equity Asset Management Co., Ltd.		—		42,000		—		42,000
	Woori Asset Management Corp		—		10,000		—		10,000

(*)	The details of payments made between related parties and the deposits due to customers that can be taken in and out easily are excluded.

- 146 -

(6)	Major borrowing transactions with related parties for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2023
Related parties		Beginning balance		Borrowings		Repayment		Others		Ending balance
Subsidiaries	Woori Bank China Limited		5,447		55,005		46,863		—		13,589
	Woori Bank Vietnam Limited		304,152		617,405		486,777		—		434,780
	Woori Bank Europe		47,373		150,958		131,530		—		66,801
Other related parties	Woori Card Co., Ltd. and its subsidiaries		20,918		312,746		309,662		—		24,002


		For the year ended December 31, 2022
Related parties		Beginning balance		Borrowings		Repayment		Others		Ending balance
Subsidiaries	Woori Global Markets Asia Limited		3,238		—		3,238		—		—
	Woori Bank China Limited		732		5,441		726		—		5,447
	Woori Bank Vietnam Limited		378,601		395,649		470,098		—		304,152
	Woori Bank Europe		38,997		47,363		38,987		—		47,373
Other related parties	Woori Card Co., Ltd. and its subsidiaries		13,051		196,531		188,664		—		20,918

- 147 -

(7)	Guarantees provided to the related parties are as follows (Unit: Korean Won in millions):

As of December 31, 2023 and 2022, guarantees provided to the related parties by the Bank are as follows:


	December 31, 2023		December 31, 2022		Warranty
PT Bank Woori Saudara Indonesia 1906 Tbk		47,235		47,803	Confirmed guarantees in foreign currencies and others
Woori Bank China Limited		221,820		47,978	Confirmed guarantees in foreign currencies and others
AO Woori Bank		11,502		12,183	Confirmed guarantees in foreign currencies and others
Banco Woori Bank do Brasil S.A.		10,552		2,617	Confirmed guarantees in foreign currencies and others
Woori Global Markets Asia Limited		233,577		219,233	Confirmed guarantees in foreign currencies and others
Woori Bank Europe		23,527		14,012	Confirmed guarantees in foreign currencies and others
Woori Bank Vietnam Limited		111,348		52,675	Confirmed guarantees in foreign currencies and others
Woori Finance Myanmar Co., Ltd.		13,926		19,415	Confirmed guarantees in foreign currencies
Wealth Development Bank		17,407		17,235	Confirmed guarantees in foreign currencies
Lotte Card Co., Ltd.		1,483		—	Confirmed guarantees in foreign currencies

As of December 31, 2023 and 2022, guarantees and unused commitments provided from the related parties are as follows:


	December 31, 2023		December 31, 2022		Warranty
Woori Card Co., Ltd., and its subsidiaries		124,091		128,964	Loan commitment in local currency
Woori Bank Vietnam Limited		242,283		128,430	Confirmed guarantees in foreign currencies and others
PT Bank Woori Saudara Indonesia 1906 Tbk		5,304		2,041	Confirmed guarantees in foreign currencies and others
Woori Bank China Limited		4,222		59,887	Confirmed guarantees in foreign currencies and others

(8)	Commitments of derivatives to the related parties are as follows (Unit: Korean Won in millions):


	Warranty	December 31, 2023		December 31, 2022
Woori Private Equity Asset Management Co., Ltd. and its associates	Derivatives		9,471		—
Woori Card Co., Ltd. and its subsidiaries	Derivatives		417,880		543,460
	Unsettled commitment		500,000		500,000
Woori Investment Bank Co., Ltd. and its subsidiaries and associates	Unsettled commitment		150,000		150,000
Woori Finance Capital and its subsidiaries and associates	Derivatives		40,000		40,000
Woori Finance Capital and its subsidiaries and associates	Unsettled commitment		200,000		150,000
Woori Financial F&I Co., Ltd. and its subsidiaries	Unsettled commitment		67,800		—
Woori Finance Myanmar Co., Ltd.	Unsettled commitment		170		825
Woori Bank China Limited	Derivatives		150		16,258
WOORI BANK(CAMBODIA) PLC.	Loan commitment in foreign currency		220,487		121,661
WOORI BANK(CAMBODIA) PLC.	Unsettled commitment		111,275		65,646

- 148 -


	Warranty	December 31, 2023		December 31, 2022
Korea BTL Infrastructure Fund	Securities purchase commitment		240,078		240,078
Woori Bank Vietnam Ltd.	Loan commitment in foreign currency		7,543		—
	Unsettled commitment		90,675		93,139
Consolidated beneficiary securities	Derivatives		14,714		13,936
	Securities purchase commitment		1,049,936		753,756
	Commercial paper purchase commitment and others		2,434,900		221,800
Consolidated SPC	Unsettled commitment		10,744		9,509
	Derivatives		1,443,400		1,866,900
Korea Finance Security Co., Ltd.	Unsettled commitment		403		403
Lotte Card Co., Ltd.	Unsettled commitment		498,400		450,000
IBK KIP Seongjang Dideemdol No. 1 Private Investment Ltd. Partnership	Securities purchase commitment		4,664		4,664
Crevisse Raim Impact No. 1 Startup Venture Specialist Private Equity Fund	Securities purchase commitment		243		325
Together Korea Government Private Securities Investment Trust No.3	Securities purchase commitment		990,000		990,000
Woori-Q Corporate Restructuring Private Equity Fund	Securities purchase commitment		9,011		9,284
STASSETS No.3 Private Equity Investment Limited Specialized in Start-up Ventures	Securities purchase commitment		6,000		13,500
NH Woori Newdeal Growth Alpha Private Equity Fund 1 (*)	Securities purchase commitment		26,404		—
BTS 2nd Private Equity Fund	Securities purchase commitment		4,774		6,974
Woori Financial Digital Investment Association No. 1	Securities purchase commitment		11,000		33,000
Green ESG Growth No.1 Private Equity Fund	Securities purchase commitment		24,264		—
Woori Busan Logistics Infra Private Placement Special Asset Investment Trust	Securities purchase commitment		13,099		19,799
Woori G Equity Bridge Loan Private Placement Investment Trust No. 1	Securities purchase commitment		29,835		39,000
Woori G GP Commitment Loan Private Placement Investment Trust No. 1	Securities purchase commitment		4,448		6,274
Woori G GP Commitment Loan Private Placement Investment Trust No. 2	Securities purchase commitment		5,320		9,560
Woori G GP Commitment Loan Private Placement Investment Trust No. 3	Securities purchase commitment		16,477		—

- 149 -


	Warranty	December 31, 2023		December 31, 2022
Woori G Global Mid-market Secondaries Private Placement Investment Trust No. 1	Securities purchase commitment		8,546		12,105
Woori G Senior Loan Private Placement Investment Trust No. 2	Securities purchase commitment		80,750		180,000
Woori G Renewable New Deal Private Placement Investment Trust No.1	Securities purchase commitment		32,366		35,025
Woori G Woori Bank Partners Private Placement Investment Trust No. 1	Securities purchase commitment		332,452		349,177
Woori G Woori Bank Partners Private Placement Investment Trust No. 2	Securities purchase commitment		431,226		626,215
Woori G Private Investment Trust No. 1	Securities purchase commitment		137,163		251,940
Woori G Private Investment Trust No. 5	Securities purchase commitment		106,758		117,223
Woori G Japan General Type Private Real Estate Feeder Investment Trust No.1-1 and its subsidiaries	Derivatives		16,826		16,644
Woori G Japan General Type Private Real Estate Feeder Investment Trust No. 2-1	Derivatives		7,075		—
Woori G Japan Blind General Type Private Real Estate Feeder Investment Trust No.1	Securities purchase commitment		323		—
Woori G Infrastructure New Deal General Investment Private Equity Investment Trust No. 1	Securities purchase commitment		20,056		35,220
Woori G Equity Investment General Type Private Investment Trust No.1	Securities purchase commitment		456		456
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 3	Securities purchase commitment		27,300		41,300
Woori Seoul Beltway Private Special Asset Fund No.1	Securities purchase commitment		34,437		37,146
JC Assurance No.2 Private Equity Fund	Securities purchase commitment		859		859
Woori Asset Global Partnership Fund No. 5	Securities purchase commitment		127,500		—
Woori New Growth Credit Fund 1	Securities purchase commitment		25,177		—
Woori G Clean Energy General Type Private Placement Investment Trust No.2	Securities purchase commitment		8,647		—
WooriG Innovation Growth(Infrastructure) General Type Private Investment Trust No.2	Securities purchase commitment		28,272		—

- 150 -


	Warranty	December 31, 2023		December 31, 2022
WooriG General Type private Real Estate Investment Trust No. 6	Securities purchase commitment		275,940		—
WooriG ESG Infrastructure Development General Type Private Investment Trust No.2	Securities purchase commitment		8,694		—
Synaptic Future Growth Private Equity Fund I	Securities purchase commitment		4,389		—

(*)	It was added to associates through acquisition during the period ended December 31, 2023.

As of December 31, 2023 and 2022, the recognized provisions for guarantees and commitments to the related parties are 9,608 million Won and 912 million Won, respectively.

(9)	Major investment and recovery transactions

The details of major investment and recovery transactions with related parties for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023
The same parent company and its associates	Investment and others (*)		Recovery and others (*)
Green ESG Growth No.1 Private Equity Fund		5,736		—
Woori Busan Logistics Infrastructure General Private Equity Investment Trust		6,700		—
Woori G Equity Bridge Loan General Type Private Investment Trust No.1		41,015		32,054
Woori G GP Commitment Loan General Type Private Investment Trust No.1		1,826		5,253
Woori G GP Commitment Loan General Type Private Investment Trust No.2		4,240		961
Woori G GP Commitment Loan General Type Private Investment Trust No.3		523		—
Woori G Global Mid-market Secondary General Type Private Equity Trust No.1(EUR)		4,014		646
Woori G Senior Loan General Type Private Equity Trust No.2		99,250		6,718
Woori G Renewable New Deal Fund No.1		2,659		66
Woori G Woori Bank Partners General Type Private Equity Trust No.1		16,725		—
Woori G Woori Bank Partners General Type Private Equity Trust No.2		194,990		—
Woori G General Private Equity Investment Trust No.1		114,776		—
Woori G General Private Equity Investment Trust No.5		10,465		—
Woori G Japan Blind General Type Private Real Estate Feeder Investment Trust No.1		—		2,938
Woori G Policy New Deal (Infrastructure Investment) General Private Equity Investment Trust No.1		15,164		—
Woori G Equity Investment General Type Private Investment Trust No.1		—		1,726
WOORI Short Term Government and Special Bank Bond Active ETF		19,013		19,013
Woori Innovative Growth New Deal Private Investment Trust No.3		14,000		—
Woori BIG2 Plus Securities Investment Trust(Balanced Bond)		2,000		—
WooriG Senior Loan General Private Equity Investment Trust No.1		—		3,915
Woori Short-term Bond Securities Investment Trust(Bond) ClassC-F		—		10,119
Woori Seoul Beltway Private Special Asset Fund No.1		2,709		—
Woori Smart General Private Equity Investment Trust 1 (Bond)		40,000		—
Woori General Private Securities Investment Trust (Bond) No.1		50,000		—
Woori General Private Securities Investment Trust (Bond) No.2		30,000		—
Woori Big Satisfaction Money Market Fund No.3		—		441,470
Woori New Growth Credit Fund 1		24,823		—
Woori G Clean Energy General Type Private Placement Investment Trust No.2		1,353		—
WooriG Innovation Growth(Infrastructure) General Type Private Investment Trust No.2		15,128		—
Woori Together Government & Agency Bonds USD Money Market Fund 1		65,195		—
WooriG General Type private Real Estate Investment Trust No. 6		24,060		—
WooriG ESG Infrastructure Development General Type Private Investment Trust No.2		1,306		—
Woori General Private Equity Investment Trust 3 (bond)		50,000		—
Woori Asset Global Partnership Fund No. 5		22,500		—
Synaptic Future Growth Private Equity Fund I		5,611		—
Woori PE Secondary Private Placement Investment Trust No. 1		8,678		—
WooriI25-09 Bond(above AA-) Active ETF		29,001		—

(*)	Investment and recovery transactions of subsidiaries and associates are described in Note 13. (5).

- 151 -


	December 31, 2022
The same parent company and its associates	Investment and others (*)		Recovery and others (*)
Synaptic Green Material Component Equipment No.1 Private Equity Partnership		5,000		—
Izen 2022 Private Equity Partnership No. 1		5,000		297
Orchestra Private Equity No.4 Private Equity Partnership		5,000		—
Woori G Equity Bridge Loan Private Equity Investment Trust No. 1		7,800		—
Woori G GP Commitment Loan Private Placement Investment Trust No. 2		10,440		—
Woori G GP Commitment Loan Private Placement Investment Trust No. 1		3,846		816
Woori G Senior Loan Private Placement Investment Trust No.1		13,403		18,975
Woori G Renewable New Deal Private Placement Investment Trust No. 1		19,975		118
Woori G Woori Bank Partners Private Placement Investment Trust No. 2		272,990		266,047
Woori G Woori Bank Partners Private Placement Investment Trust No. 1		401,667		295,825
Woori G Private Real Estate Investment Trust No. 1		129,035		80,736
Woori G Private Real Estate Investment Trust No. 5		82,307		15,611
Woori G Policy-Type New Deal (Infrastructure Investment) Private Placement Investment Trust No.1		24,780		647
Woori G Equity Investment General Type Private Investment Trust No.1		14,644		—
Woori G Senior Loan Private Placement Investment Trust No.2		70,000		—
Woori Seoul Beltway Private Special Asset Fund No.1		2,312		—
Woori Innovative Growth New Deal General Private Equity Investment Trust No. 3		14,000		—
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 1		10,450		2,490
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 2		21,450		—
Woori G Global Mid-market Secondaries Private Placement Investment Trust No. 1		2,439		—
Woori Short-term Bond Securities Investment Trust(Bond) ClassC-F		50,000		200,649
Woori Busan Logistics Infrastructure General Private Equity Investment Trust		201		—
Woori G Government Bond MMF		420,273		480,168
Woori Big Satisfaction Money Market Fund (Goverment&Agency Bonds)ClassC		300,000		—
Woori High Plus Short-Term ESG Bond Securities Investment Trust (Bond)		—		88,552

(*)	Investment and recovery transactions of subsidiaries and associates are described in Note 13. (5).

- 152 -

(10)	Compensation to key management is as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Short-term employee benefits		11,810		9,748
Share-based payment		3,582		2,398
Retirement benefit service costs		632		350

Total		16,024		12,496

The key management are registered and non-registered executives of the Bank and members of the Woori Financial Group Management Council. Outstanding assets from transactions with key management amount to 3,932 million Won and 3,620 million Won, as of December 31, 2023 and 2022, respectively, and with respect to the assets, the Bank has not recognized any allowance nor related impairment loss due to credit losses. Also, liabilities from transaction with key management amount to 34,054 million Won and 12,660 million Won as of December 31, 2023 and 2022, respectively.

(11)	The Bank and Woori Credit Card Co., Ltd. and its subsidiaries are liable to jointly reimburse the bank debts before the split.

(12)

Among the bonds issued by the Bank during the year ended December 31, 2023, Woori Investment Bank Co., Ltd. acquired 30,000 million Won in hybrid capital securities and sold them all on the date of issuance. For the year ended December 31, 2022, the Bank purchased 50,000 million Won of bonds held by Woori Investment Bank Co., Ltd. Among the bonds issued by the Bank during the prior year, Woori Investment Bank Co., Ltd. acquired 35,000 million Won in hybrid capital securities and 40,000 million Won in debentures, and sold them all on the date of issuance.

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46.	TRUST ACCOUNTS

(1)	Trust accounts of the Bank as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	Total assets				Operating income
	December 31, 2023		December 31, 2022		For the years ended December 31
	December 31, 2023		December 31, 2022		2023		2022
Trust accounts		75,636,483		71,677,258		2,296,627		1,121,069

(2)	Receivables and payables from the transactions between the Bank and trust accounts as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Receivables
Trust fees receivables		48,383		42,337

Payables
Deposits due to customers		166,241		170,417
Borrowings from trust accounts		3,951,886		1,980,472

Total		4,118,127		2,150,889

(3)	Significant transactions between the Bank and trust accounts for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Revenue:
Trust fees		147,866		137,849
Termination fees		1,116		1,158

Total		148,982		139,007

Expense:
Interest expenses on deposits due to customers		957		619
Interest expenses on borrowings from trust accounts		94,292		42,206

Total		95,249		42,825

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(4)	Principal guaranteed trusts and principal and fixed interest of return guaranteed trusts

As of December 31, 2023 and 2022, the carrying of principal guaranteed trusts and principal and interest guaranteed trusts are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Partial principal guaranteed trusts:
Household money		7,767		8,230
Corporate money		217		446
Installment plan purpose		1,515		1,551

Sub-total		9,499		10,227

Principal guaranteed trusts:
Old-age pension trusts		2,582		2,790
Personal pension trusts		429,068		460,839
Pension trusts		642,756		687,971
Retirement trusts		26,082		26,563
New personal pension trusts		6,441		6,792
New old-age pension trusts		892		950

Sub-total		1,107,821		1,185,905

Principal and interest guaranteed trusts:
Development trusts		19		19
Unspecified money trusts		334		335

Sub-total		353		354

Total		1,117,673		1,196,486

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47.

LEASES

(1)	The future lease payments under lease contracts as of December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	December 31, 2023		December 31, 2022
Lease payments
Within one year		141,521		127,478
After one year but within five years		107,028		80,963
After five years		2,193		4,722

Total		250,742		213,163

(2)	Total cash outflows from leases for the years ended December 31, 2023 and 2022, are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2023		2022
Cash outflows from leases		132,159		134,562

(3)

There are no lease payments that are not included in the measurement of lease liabilities due to the fact that they are short-term leases or leases for which the underlying asset is of low value for years ended December 31, 2023 and 2022. Variable lease payments not included in the measurement of lease liabilities for the years ended December 31, 2023 and 2022 are 32,016 million Won and 5,465 million Won, respectively.

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ICFR Review Report

Independent Auditors’ Review Report on Internal Control over Financial Reporting

Based on a report originally issued in Korean

To the Board of directors and shareholder of

Woori Bank:

We have reviewed the accompanying Report on the Operational Status of Internal Controls over Financial Reporting (the “ICFR Report”) of Woori Bank (the “Company”) as of December 31, 2023. The Company’s management is responsible for designing and maintaining effective ICFR and for its assessment of the effectiveness of ICFR. Our responsibility is to review management’s assessment and issue a report based on our review. In the accompanying report of management’s assessment of ICFR, it is stated that: “Based on the assessment of the operational status of the ICFR by Company’s Chief Executive Officer and Internal Accounting Manager, the Company’s ICFR has been effectively designed and is operating as of December 31, 2023, in all material respects, in accordance with the Conceptual Framework for Designing and Operating Internal Control over Financial Reporting (the “Conceptual Framework”) issued by the Operating Committee of Internal Control over Financial Reporting in the Republic of Korea (the “ICFR Committee”).”

We conducted our review in accordance with ICFR Review Standards issued by the Korean Institute of Certified Public Accountants. Those standards require that we plan and perform the review to obtain assurance of a level less than that of an audit as to whether the Company’s ICFR Report is free of material misstatement. Our review consists principally of obtaining an understanding of the Company’s ICFR, inquiries of company personnel about the details of the report, and tracing to related documents we considered necessary in the circumstances.

A company’s ICFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Korean International Financial Reporting Standards (“K-IFRS”). A company’s ICFR includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with K-IFRS, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, ICFR may not prevent or detect material misstatements in the financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on our review of the Company’s ICFR Report, nothing has come to our attention that causes us to believe that the ICFR Report as of December 31, 2023 is not prepared in all material respects, in accordance with the Management Guideline for Evaluation and Reporting of Internal Control over Financial Reporting issued by the ICFR Committee.

This report applies to the Company’s ICFR in existence as of December 31, 2023. We did not review the Company’s ICFR subsequent to December 31, 2023. This report has been prepared for Korean regulatory purposes, pursuant to the Act on External Audit of Stock Companies, Etc. and may not be appropriate for other purposes or for other users.

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/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

March 6, 2024

Notice to Readers

This report is annexed in relation to the audit of the separate financial statements as of and for the year ended December 31, 2023.

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