Exhibit 99.1

KB Financial Group Inc.

Consolidated Financial Statements

December 31, 2024 and 2023

(With Independent Auditor’s Report Thereon)

KB Financial Group Inc.

 

		Page(s)
Independent Auditor’s Report			1-5
Consolidated Financial Statements
Consolidated Statements of Financial Position			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
Independent Auditor’s Report on Internal Control over Financial Reporting for Consolidation Purposes			344-345
Operating Status Report of Internal Control over Financial Reporting for Consolidation Purposes			346

Independent Auditor’s Report

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and the Board of Directors of

KB Financial Group Inc.

Opinion

We have audited the accompanying consolidated financial statements of KB Financial Group Co., Ltd. and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated statements of financial position as at December 31, 2024 and 2023, and the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2024 and 2023, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS).

We also have audited, in accordance with Korean Standards on Auditing, the Company’s Internal Control over Financial Reporting for consolidation purposes as of December 31, 2024, based on Conceptual Framework for Designing and Operating Internal Control over Financial Reporting, and our report dated March 5, 2025 expressed an unqualified opinion.

Basis for Opinion

We conducted our audit in accordance with Korean Standards on Auditing. 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 of the Republic of Korea that are relevant to our audit of the consolidated financial statements and we have fulfilled our other ethical responsibilities in accordance with the ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

1

1. Allowance for Expected Credit Losses on Loans Measured at Amortized Cost

Reason why the matter was determined to be a Key Audit Matter:

The impairment guidance under Korean IFRS No.1109 Financial Instruments requires the determination of significant increases in credit risk and measurement of expected credit losses using forward-looking information and others. Accordingly, the Group developed a new measurement model utilizing various types of information, which requires a higher level of management’s interpretation and judgment.

The Group measures expected credit losses on loans measured at amortized cost based on both individual and collective assessments. Individual assessment of expected credit losses is performed based on estimates of future forecast cash flow, and collective assessment of expected credit losses is involved with a variety and complex variable inputs and assumptions that requires management’s estimates and judgments. Due to these facts, expected credit losses of loans measured at amortized costs are determined as a key audit matter.

As described in Note 10, loans measured at amortized cost subject to individual or collective assessments amount to 477,705,220 million, with allowances for credit losses of 5,633,380 million as of December 31, 2024.

How our audit addressed the Key Audit Matter:

(1) Assessment of expected credit losses on an individual basis

We obtained an understanding and validated the processes and controls relating to the assessment of expected credit losses on an individual basis. In particular, we focused on the reasonableness of the assumptions used in estimating future cash flows. We evaluated whether management’s estimation was reasonable and we assessed the key assumptions in the cash flow projection including growth rate of entities subject to individual assessment and collateral valuation. As part of these procedures, we assessed whether sales growth rate, operating income ratio, and assumptions on investment activities were consistent with historical operating performance and current market conditions. Furthermore, we assessed the appropriateness of collateral valuation by conducting our own research on recent property prices and engaged independent appraisal specialists in assessing reasonableness of appraisal reports, models and methodologies used by management.

(2) Assessment of expected credit losses on a collective basis

We obtained an understanding and validated the processes and controls relating to management’s calculation of expected credit losses on a collective basis in accordance with impairment requirements under Korean IFRS No.1109 Financial Instruments. As explained in Note 3(6) and 4, management assesses credit ratings to recognize lifetime expected credit losses on loans with significant increase in credit risk and impaired loans. Other than these cases, management recognizes 12-months of expected credit losses. To calculate all expected credit losses, management has applied forward-looking information, possible multiple scenarios, probability of default, loss given default and other assumptions estimated through its internal procedures and controls implemented for various assumptions.

We assessed the design and operating effectiveness of controls relating to credit ratings that reasonably reflect both qualitative and quantitative information. Our testing over the accuracy and reliability of the information included agreeing qualitative and quantitative information with relevant evidence.

We reviewed the appropriateness of management policies and procedures to determine significant increases in credit risk, and tested reasonableness of expected credit loss model applied by each of the three stages (Stage 1, 2 and 3) depending on how significantly credit risk was increased.

We used risk specialists in verifying the reasonableness and possibility of forward-looking information and multiple scenarios produced by management. Also, we used risk specialists to statistically analyze the correlation between forward-looking information and probability of default or loss given default. We assessed the appropriateness of methodologies for adjusting the probability of default and loss given default to reflect forward-looking information on estimation of expected credit losses. We further tested the reasonableness and mathematical accuracy of the information through recalculation and inspection of supporting evidences.

 

2

We reviewed the methodologies used by management to verify that probability of default and loss given default were calibrated using sufficient and reasonable historical data. We determined that the default and loss data used were appropriately gathered and applied in accordance with internal control procedures. In addition, we assessed the reasonableness and accuracy of probability of default and loss given default through procedures including recalculation, and evaluated the accuracy of calculations regarding default and loss data used by management through agreeing them with relevant evidence.

2. Loss ratio assumptions used to estimate fulfilment cash flows of the insurance contracts

Reason why the matter was determined to be a Key Audit Matter:

Korean IFRS No.1117 Insurance Contract requires insurance liabilities to be measured by estimating all future cash flows of insurance contracts, and the estimates shall reflect conditions existing at the measurement date, including assumptions at that date about the future in a reasonable and unbiased way. The Group has developed a methodology for estimating future cash flows that uses a variety of information to make reasonable estimates of future cash flows, which requires high degree of management interpretation and judgment.

As described in Notes 2 and 3, management estimates future cash flows using various actuarial assumptions as inputs. Among the actuarial assumptions, the calculation of loss ratio assumptions includes various and complex inputs, including historical data, and management’s estimates and judgment. Due to these facts, loss ratio assumptions are determined as a key audit matter.

As described in Notes 38, the net book value of the liability for remaining coverage was 49,652,372 million, which is presented as insurance contract liabilities, reinsurance contract liabilities, insurance contract assets, and reinsurance contract assets in the consolidated statement of financial position as of December 31, 2024.

How our audit addressed the Key Audit Matter:

We obtained an understanding of management’s processes and validated controls related to loss ratio assumption. We assessed the methodology whether the loss ratio assumption is estimated based on sufficient and reasonable historical data, and evaluated the underlying information including historical data used in estimates was properly compiled and used in accordance with internal control procedures. Also, we obtained an understanding of the calculation of the loss ratio assumption, evaluated the reasonableness and accuracy of the loss ratio assumption by performing recalculations and other procedures, and tested the accuracy and completeness of the historical data used in management’s estimates by reconciling the data to supporting documents. Actuarial specialists were involved in performing audit procedures above.

Other Matters

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

 

3

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 Korean 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.

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

Auditor’s 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 Korean Standards on Auditing 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 Korean Standards on Auditing, 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.

 

•

Evaluate the appropriateness of accounting policies used 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 auditor’s 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 auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

 

4

•

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.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Yeob Yu, Certified Public Accountant.

/s/ Samil PricewaterhouseCoopers

Seoul, Korea

March 5, 2025

 

 

5

KB Financial Group Inc. and Subsidiaries

Consolidated Statements of Financial Position

December 31, 2024 and 2023, and January 1, 2023

 

(in millions of Korean won)

 

		Notes				December 31, 2024				December 31, 2023				January 1, 2023
Assets
Cash and due from financial institutions			4,6,7,8,39				29,869,111				29,836,311				32,474,750
Financial assets at fair value through profit or loss			4,6,8,12				79,450,093				77,038,267				70,092,497
Derivative financial assets			4,6,9				11,730,767				6,157,628				9,446,580
Loans measured at amortized cost			4,6,10,11				472,071,840				444,805,287				433,038,931
Financial investments			4,6,8,12				131,009,464				122,199,529				115,452,659
Investments in associates and joint ventures			13				947,390				722,222				682,669
Insurance contract assets			38				276,191				229,640				83,304
Reinsurance contract assets			38				1,497,147				1,642,432				1,484,622
Property and equipment			14				5,390,015				4,945,699				4,991,467
Investment property			14				3,759,176				4,109,784				3,148,340
Intangible assets			15				1,966,684				1,950,858				1,858,470
Net defined benefit assets			25				258,500				374,090				478,934
Current income tax assets							339,855				244,317				204,690
Deferred income tax assets			17,34				278,824				274,225				188,372
Assets held for sale			18				136,838				208,230				211,758
Other assets			4,6,19				18,863,637				20,986,897				14,815,439
Total assets							757,845,532				715,725,416				688,653,482
Liabilities
Financial liabilities at fair value through profit or loss			4,6,20				10,720,231				10,920,435				12,271,604
Derivative financial liabilities			4,6,9				11,783,494				6,210,639				9,509,769
Deposits			4,6,21				435,687,897				406,512,434				393,928,904
Borrowings			4,6,22				68,077,012				69,583,561				71,717,366
Debentures			4,6,23				76,171,257				69,176,668				68,698,203
Insurance contract liabilities			38				55,863,701				50,617,990				46,372,434
Reinsurance contract liabilities			38				56,266				36,030				31,728
Provisions			24				927,632				1,444,418				933,701
Net defined benefit liabilities			25				100,187				81,869				85,745
Current income tax liabilities							530,720				145,335				998,681
Deferred income tax liabilities			17,34				1,682,292				2,094,912				1,452,057
Other liabilities			4,6,26				36,429,662				40,264,935				28,850,033
Total liabilities							698,030,351				657,089,226				634,850,225
Equity
Share capital							2,090,558				2,090,558				2,090,558
Hybrid securities							5,082,578				5,032,803				4,434,251
Capital surplus							16,646,734				16,647,916				16,940,731
Accumulated other comprehensive income			36				496,922				2,152,644				1,002,881
Retained earnings							34,808,220				31,934,600				28,890,922
Treasury shares							(1,236,060	)			(1,165,837	)			(836,188	)
Equity attributable to shareholders of the Parent Company			27				57,888,952				56,692,684				52,523,155
Non-controlling interests							1,926,229				1,943,506				1,280,102
Total equity							59,815,181				58,636,190				53,803,257
Total liabilities and equity							757,845,532				715,725,416				688,653,482

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

 

6

KB Financial Group Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

Years Ended December 31, 2024 and 2023

 

 

(in millions of Korean won, except per share amounts)		Notes				2024				2023
Interest income							30,491,385				29,142,024
Interest income from financial instruments at fair value through other comprehensive income and amortized cost							29,001,556				27,705,759
Interest income from financial instruments at fair value through profit or loss							1,458,512				1,415,366
Insurance finance interest income							31,317				20,899
Interest expense							(17,664,671	)			(16,961,164	)
Interest expense							(16,186,914	)			(15,426,706	)
Insurance finance interest expense							(1,477,757	)			(1,534,458	)
Net interest income			5,28				12,826,714				12,180,860
Fee and commission income							5,481,843				5,368,074
Fee and commission expense							(1,632,216	)			(1,694,550	)
Net fee and commission income			5,29				3,849,627				3,673,524
Insurance income							11,456,191				11,005,471
Insurance income							11,017,155				10,322,356
Reinsurance income							439,036				683,115
Insurance expense							(9,806,430	)			(9,558,619	)
Insurance service expense							(8,884,168	)			(8,720,568	)
Reinsurance expense							(922,262	)			(838,051	)
Net insurance income			5,38				1,649,761				1,446,852
Net gains on financial instruments at fair value through profit or loss			5,30				1,012,081				2,163,065
Other insurance finance expenses			38				(437,001	)			(572,476	)
Net other operating expenses			5,31				(1,873,011	)			(2,712,989	)
General and administrative expenses			5,32				(6,938,624	)			(6,647,406	)
Operating income before provision for credit losses			5				10,089,547				9,531,430
Provision for credit losses			5,7,11,12,19,24				(2,044,286	)			(3,146,409	)
Net operating income							8,045,261				6,385,021
Share of profit (loss) of associates and joint ventures			13				(16,884	)			33,110
Net other non-operating expenses			33				(1,043,130	)			(297,980	)
Net non-operating expenses							(1,060,014	)			(264,870	)
Profit before income tax expense							6,985,247				6,120,151
Income tax expense			34				(1,956,641	)			(1,593,817	)
Profit for the year			5				5,028,606				4,526,334

 

7

KB Financial Group Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

Years Ended December 31, 2024 and 2023 (cont’d)

 

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

 

		Notes				2024				2023
Items that will not be reclassified to profit or loss:
Remeasurements of net defined benefit liabilities			25				(85,375	)			(72,170	)
Share of other comprehensive loss of associates and joint ventures							—				(2	)
Gains (losses) on equity securities at fair value through other comprehensive income							(254,864	)			69,605
Fair value changes of financial liabilities designated at fair value through profit or loss due to own credit risk							(5,514	)			(52,863	)
							(345,753	)			(55,430	)
Items that may be reclassified subsequently to profit or loss:
Currency translation differences							582,872				317
Gains on debt securities at fair value through other comprehensive income							1,468,299				3,304,471
Share of other comprehensive income of associates and joint ventures							165				26
Gains on cash flow hedging instruments			9				34,741				53,923
Losses on hedging instruments of net investments in foreign operations			9				(186,708	)			(14,659	)
Insurance finance expense			38				(3,176,328	)			(2,117,504	)
							(1,276,959	)			1,226,574
Other comprehensive income (expense) for the year, net of tax							(1,622,712	)			1,171,144
Total comprehensive income for the year							3,405,894				5,697,478
Profit (loss) attributable to:			5
Shareholders of the Parent Company							5,078,221				4,594,835
Non-controlling interests							(49,615	)			(68,501	)
							5,028,606				4,526,334
Total comprehensive income for the year attributable to:
Shareholders of the Parent Company							3,419,852				5,772,352
Non-controlling interests							(13,958	)			(74,874	)
							3,405,894				5,697,478
Earnings per share			37
Basic earnings per share							12,880				11,483
Diluted earnings per share							12,726				11,218

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

 

8

KB Financial Group Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

Years Ended December 31, 2024 and 2023

 

(in millions of Korean won)

 

				Equity attributable to shareholders of the Parent Company
		Notes		Share capital				Hybrid securities				Capital surplus				Accumulated other comprehensive income				Retained earnings				Treasury shares				Non-controlling interests				Total equity
Balance as of January 1, 2023					2,090,558				4,434,251				16,940,731				1,249,922				28,948,425				(836,188	)			1,280,102				54,107,801
Changes in accounting policies																	(247,041	)			(57,503	)											(304,544	)
Balance as of January 1, 2023 (After the restatement)					2,090,558				4,434,251				16,940,731				1,002,881				28,890,922				(836,188	)			1,280,102				53,803,257
Comprehensive income for the year
Profit (loss) for the year					—				—				—				—				4,594,835				—				(68,501	)			4,526,334
Remeasurements of net defined benefit liabilities					—				—				—				(72,525	)			—				—				355				(72,170	)
Currency translation differences					—				—				—				7,306				—				—				(6,989	)			317
Gains on financial instruments at fair value through other comprehensive income and transfer to retained earnings					—				—				—				3,346,061				27,755				—				260				3,374,076
Share of other comprehensive income of associates and joint ventures					—				—				—				24				—				—				—				24
Gains on cash flow hedging instruments					—				—				—				53,923				—				—				—				53,923
Losses on hedging instruments of net investments in foreign operations					—				—				—				(14,659	)			—				—				—				(14,659	)
Insurance finance expenses					—				—				—				(2,117,504	)			—				—				—				(2,117,504	)
Fair value changes of financial liabilities designated at fair value through profit or loss due to own credit risk					—				—				—				(52,863	)			—				—				—				(52,863	)
Total comprehensive income for the year					—				—				—				1,149,763				4,622,590				—				(74,875	)			5,697,478
Transactions with shareholders
Annual dividends paid to shareholders of the Parent Company					—				—				—				—				(564,970	)			—				—				(564,970	)
Quarterly dividends paid to shareholders of the Parent Company					—				—				—				—				(586,931	)			—				—				(586,931	)
Issuance of hybrid securities					—				598,552				—				—				—				—				429,078				1,027,630
Dividends on hybrid securities					—				—				—				—				(184,915	)			—				(57,179	)			(242,094	)
Acquisition of treasury shares					—				—				—				—				—				(571,745	)			—				(571,745	)
Retirement of treasury shares					—				—				—				—				(242,096	)			242,096				—				—
Ownership changes in subsidiaries					—				—				(292,815	)			—				—				—				366,380				73,565
Total transactions with shareholders					—				598,552				(292,815	)			—				(1,578,912	)			(329,649	)			738,279				(864,545	)
Balance as of December 31, 2023					2,090,558				5,032,803				16,647,916				2,152,644				31,934,600				(1,165,837	)			1,943,506				58,636,190
Balance as of January 1, 2024					2,090,558				5,032,803				16,647,916				2,152,644				31,934,600				(1,165,837	)			1,943,506				58,636,190
Comprehensive income for the year
Profit (loss) for the year					—				—				—				—				5,078,221				—				(49,615	)			5,028,606
Remeasurements of net defined benefit liabilities					—				—				—				(85,946	)			—				—				571				(85,375	)
Currency translation differences					—				—				—				547,337				—				—				35,535				582,872
Gains (losses) on financial instruments at fair value through other comprehensive income and transfer to retained earnings					—				—				—				1,216,509				(2,647	)			—				(427	)			1,213,435
Share of other comprehensive income of associates and joint ventures					—				—				—				165				—				—				—				165
Gains (losses) on cash flow hedging instruments					—				—				—				34,763				—				—				(22	)			34,741
Losses on hedging instruments of net investments in foreign operations					—				—				—				(186,708	)			—				—				—				(186,708	)
Insurance finance expenses					—				—				—				(3,176,328	)			—				—				—				(3,176,328	)
Fair value changes of financial liabilities designated at fair value through profit or loss due to own credit risk					—				—				—				(5,514	)			—				—				—				(5,514	)
Total comprehensive income for the year					—				—				—				(1,655,722	)			5,075,574				—				(13,958	)			3,405,894
Transactions with shareholders
Annual dividends paid to shareholders of the Parent Company					—				—				—				—				(587,006	)			—				—				(587,006	)
Quarterly dividends paid to shareholders of the Parent Company					—				—				—				—				(899,971	)			—				—				(899,971	)
Issuance of hybrid securities					—				399,059				—				—				—				—				756,317				1,155,376
Dividends on hybrid securities					—				—				—				—				(199,800	)			—				(77,162	)			(276,962	)
Redemption of hybrid securities					—				(349,284	)			—				—				—				—				(659,866	)			(1,009,150	)
Acquisition of treasury shares					—				—				—				—				—				(820,000	)			—				(820,000	)
Disposal of treasury shares					—				—				3,975				—				—				234,600				—				238,575
Retirement of treasury shares					—				—				—				—				(515,177	)			515,177				—				—
Ownership changes in subsidiaries					—				—				—				—				—				—				12,198				12,198
Others					—				—				(5,157	)			—				—				—				(34,806	)			(39,963	)
Total transactions with shareholders					—				49,775				(1,182	)			—				(2,201,954	)			(70,223	)			(3,319	)			(2,226,903	)
Balance as of December 31, 2024					2,090,558				5,082,578				16,646,734				496,922				34,808,220				(1,236,060	)			1,926,229				59,815,181

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

 

9

KB Financial Group Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended December 31, 2024 and 2023

 

 

(in millions of Korean won)		Notes				2024				2023
Cash flows from operating activities
Profit for the year							5,028,606				4,526,334
Adjustment for non-cash items
Net losses (gains) on financial assets at fair value through profit or loss							29,212				(1,793,351	)
Net losses on derivative financial instruments for hedging purposes							168,387				53,073
Provision for credit losses							2,044,286				3,146,409
Net losses on financial investments							103,986				255,989
Share of loss (profit) of associates and joint ventures							16,884				(33,110	)
Depreciation and amortization expense							916,295				865,927
Other net losses on property and equipment/intangible assets							145,164				131,270
Share-based payments							140,453				69,703
Post-employment benefits							177,481				155,720
Net interest expense							6,122				274,681
Losses on foreign currency translation							620,754				200,486
Insurance finance income							(10,922,966	)			(7,695,017	)
Reinsurance finance expense							1,659,880				1,318,610
Other expenses							793,690				827,254
							(4,100,372	)			(2,222,356	)
Changes in operating assets and liabilities
Financial asset at fair value through profit or loss							(700,633	)			(6,247,689	)
Derivative financial instruments							(207,969	)			(152,753	)
Loans measured at fair value through other comprehensive income							(646,377	)			(252,695	)
Loans measured at amortized cost							(27,515,988	)			(15,308,932	)
Current income tax assets							(95,539	)			(39,627	)
Deferred income tax assets							5,201				(84,148	)
Other assets			39				1,393,446				(3,775,944	)
Financial liabilities at fair value through profit or loss							(183,609	)			(1,467,780	)
Deposits							23,821,056				12,195,807
Current income tax liabilities							385,385				(853,347	)
Deferred income tax liabilities							367,748				245,859
Other liabilities							(4,948,829	)			9,967,626
Insurance contract assets							(46,550	)			(146,335	)
Reinsurance contract assets							(1,498,923	)			(1,470,578	)
Insurance contract liabilities							11,807,838				9,009,220
Reinsurance contract liabilities							49,018				37,217
Investment contract liabilities							1,106,677				148,937
							3,091,952				1,804,838
Net cash inflow from operating activities							4,020,186				4,108,816

 

10

KB Financial Group Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended December 31, 2024 and 2023 (cont’d)

 

 

(in millions of Korean won)		Notes		2024				2023
Cash flows from investing activities
Net cash flows from derivative financial instruments for hedging purposes					(44,552	)			(48,122	)
Disposal of financial asset at fair value through profit or loss					15,648,112				12,389,938
Acquisition of financial asset at fair value through profit or loss					(16,365,119	)			(11,312,232	)
Disposal of financial investments					45,225,323				43,472,217
Acquisition of financial investments					(47,328,121	)			(47,125,014	)
Disposal of investments in associates and joint ventures					98,497				99,834
Acquisition of investments in associates and joint ventures					(339,469	)			(114,904	)
Disposal of property and equipment					18,616				8,177
Acquisition of property and equipment					(337,178	)			(350,138	)
Disposal of investment property					264,948				3,669
Acquisition of investment property					(88,756	)			(1,018,598	)
Disposal of intangible assets					21,073				5,359
Acquisition of intangible assets					(289,731	)			(330,427	)
Net cash flows from changes in ownership of subsidiaries					88,528				1,297,001
Others					(397,226	)			(496,252	)
Net cash outflow from investing activities					(3,825,055	)			(3,519,492	)
Cash flows from financing activities
Net cash flows from derivative financial instruments for hedging purposes					(216,883	)			(73,335	)
Net decrease in borrowings					(4,358,474	)			(2,223,069	)
Increase in debentures					86,031,647				83,777,490
Decrease in debentures					(80,848,086	)			(83,683,272	)
Increase in other payables to trust accounts					89,900				2,333,656
Dividends paid to shareholders of the Parent Company					(1,486,978	)			(1,151,900	)
Issuance of hybrid securities					399,059				598,552
Redemption of hybrid securities					(350,000	)			—
Dividends paid on hybrid securities					(199,800	)			(184,915	)
Acquisition of treasury shares					(820,000	)			(571,745	)
Redemption of principal of lease liabilities					(311,363	)			(235,052	)
Decrease in non-controlling interests					115,292				721,101
Others					(28,151	)			(546,580	)
Net cash outflow from financing activities					(1,983,837	)			(1,239,069	)
Effect of exchange rate changes on cash and cash equivalents		39			570,985				(58,465	)
Net decrease in cash and cash equivalents					(1,217,721	)			(708,210	)
Cash and cash equivalents at the beginning of the year		39			25,826,588				26,534,798
Cash and cash equivalents at the end of the year		39			24,608,867				25,826,588

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

 

11

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

1. The Parent Company

KB Financial Group Inc. (the “Parent Company”) was incorporated on September 29, 2008, under the Financial Holding Companies Act of Korea. KB Financial Group Inc. and its subsidiaries (the “Group”) derive substantially all of their revenue and income from providing a broad range of banking and related financial services to consumers and corporations. The Parent Company’s main business purpose is to control subsidiaries that engage in the financial business or subsidiaries closely related to the financial business through the stock ownership. The Parent Company’s headquarter is located at 26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd. and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Group established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Group acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Group included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015, aand KB Insurance Co., Ltd. became one of the subsidiaries through a tender offer in May 2017. Also, the Group included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary in October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed its name to KB Securities Co., Ltd. in January 2017. In August 2020, the Group acquired Prudential Life Insurance Company of Korea Ltd. which was classified as a subsidiary and the name was changed to KB Life Insurance Co., Ltd. in December 2022. Then in January 2023, it merged with another existing KB Life Insurance Co., Ltd. The Parent Company sold 100% shares of KB Credit Information Co., Ltd. to KB Kookmin Card Co., Ltd. on June 30, 2023.

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

2. Basis of Preparation

2.1 Application of Korean IFRS

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

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

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

 

12

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

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

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

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

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

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

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

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

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

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

 

13

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

2.1.2 The following new and amended standards have been published that are not mandatory for December 31, 2024 reporting period and have not been adopted by the Group.

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

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

- Amendment of Korean IFRS No.1109 “Financial Instruments” and No.1107 “Financial Instruments: Disclosures”

The amendments address practical concerns and introduce new requirements, such as permitting the deeming of financial liabilities as settled (derecognized) through an electronic payment system if certain criteria are met before the payment date. It also includes additional disclosures for equity instruments designated as financial assets measured at fair value through other comprehensive income. This amendment will be effective for annual reporting periods beginning on or after January 1, 2026. The Group is currently reviewing the impact of these amendments on its financial statements.

- Korean IFRS Accounting Standards Annual Improvements Volume 11

Korean IFRS Accounting Standards Annual Improvements Volume 11 will be effective for annual reporting periods beginning on or after January 1, 2026. These amendments do not have a significant impact on the financial statements.

 

•

Korean IFRS No.1101 “First-time adoption of International Financial Reporting Standards”: Hedge accounting by a first-time adopter

 

•

Korean IFRS No.1107 “Financial Instruments: Disclosures”: Gain or loss on derecognition, Application guidance

 

•

Korean IFRS No.1109 “Financial Instruments”: Derecognition of lease liabilities, Definition of transaction price

 

•

Korean IFRS No.1110 “Consolidated Financial Statements”: Determination of a ‘de facto agent’

 

•

Korean IFRS Bo.1007 “Statement of Cash Flows”: Cost method

2.1.3 Restatement of financial statements for the years ended December 31, 2023 for the application of Insurance Contract accounting policy changes

In applying K-IFRS No. 1117, the Group has developed and applied its own accounting policies for areas where accounting treatment is not clearly defined. In order to provide more reliable and relevant information, the consolidated entity has changed some of these policies during the current period and has retrospectively applied them to each prior reporting period presented in accordance with Korean IFRS No. 1008, “Accounting Policies, Changes in Accounting Estimates, and Errors”.

There is no effect on the statement of cash flows due to the change in accounting policy. The effects of applying the changes in accounting policies on the comprehensive income statement for the year ended December 31, 2023, and the financial position as of December 31, 2024 and 2023, are as follows:

 

14

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

2.1.3.1 The consolidated statement of comprehensive income for the years ended December 31, 2023

 

(In millions of Korean won)
		Before the effects of change in accounting policy				After the effects of change in accounting policy				Net increase (decrease)
Interest income			12,141,717				12,180,860				39,143
Insurance finance interest income			23,954				20,899				(3,055	)
Insurance finance interest expense			(1,576,656	)			(1,534,458	)			42,198
Net insurance income			1,422,952				1,446,852				23,900
Insurance income			10,978,808				11,005,471				26,663
Insurance income			10,295,693				10,322,356				26,663
Insurance expense			(9,555,856	)			(9,558,619	)			(2,763	)
Insurance service expense			(8,718,748	)			(8,720,568	)			(1,820	)
Reinsurance expense			(837,108	)			(838,051	)			(943	)
Other insurance finance expenses			(459,135	)			(572,476	)			(113,341	)
Net operating income			6,435,319				6,385,021				(50,298	)
Net non-operating expenses			(264,870	)			(264,870	)			—
Profit before income tax expense			6,170,449				6,120,151				(50,298	)
Income tax expense			(1,607,018	)			(1,593,817	)			13,201
Profit for the period			4,563,431				4,526,334				(37,097	)
Other comprehensive income (loss), net of tax			1,066,624				1,171,144				104,520
Net Financial Income (Expense) of Insurance Contract Assets (Liabilities)			(2,222,024	)			(2,117,504	)			104,520
Total comprehensive income			5,630,055				5,697,478				67,423

 

15

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

2.1.3.2 The consolidated statements of financial position for the years ended December 31, 2023

 

(In millions of Korean won)
		Before the effects of change in accounting policy				After the effects of change in accounting policy				Net increase (decrease)
Reinsurance contract assets			1,655,168				1,642,432				(12,736	)
Total assets			715,738,152				715,725,416				(12,736	)
Insurance contract liabilities			50,308,552				50,617,990				309,438
Deferred income tax liabilities			2,179,966				2,094,912				(85,054	)
Total liabilities			656,864,842				657,089,226				224,384
Accumulated other comprehensive income (loss)			2,295,165				2,152,644				(142,521	)
Retained earnings			32,029,199				31,934,600				(94,599	)
Total equity			58,873,310				58,636,190				(237,120	)
Total liabilities and equity			715,738,152				715,725,416				(12,736	)

2.1.3.3 The consolidated statements of financial position for the years ended January 1, 2023

 

(In millions of Korean won)
		Before the effects of change in accounting policy				After the effects of change in accounting policy				Net increase (decrease)
Reinsurance contract assets			1,495,966				1,484,622				(11,344	)
Total assets			688,664,826				688,653,482				(11,344	)
Insurance contract liabilities			45,969,434				46,372,434				403,000
Deferred income tax liabilities			1,561,857				1,452,057				(109,800	)
Total liabilities			634,557,025				634,850,225				293,200
Accumulated other comprehensive income (loss)			1,249,922				1,002,881				(247,041	)
Retained earnings			28,948,425				28,890,922				(57,503	)
Total equity			54,107,801				53,803,257				(304,544	)
Total liabilities and equity			688,664,826				688,653,482				(11,344	)

2.2 Measurement Basis

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

2.3 Functional and Presentation Currency

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

 

16

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

2.4 Critical Accounting Estimates

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

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

Uncertainties in estimates and assumptions with significant risks that may result in material adjustments to the consolidated financial statements are as follows:

2.4.1 Income taxes

As the income taxes on the Group’s taxable income is calculated by applying the tax laws of various countries and the decisions of tax authorities, there is uncertainty in calculating the final tax effect.

If a certain portion of the taxable income is not used for investments, wages, etc. in accordance with the Korean regulation called ‘Special Taxation for Facilitation of Investment and Mutually-beneficial Cooperation’, the Group is liable to pay additional income tax calculated based on the tax laws. Therefore, the effect of recirculation of corporate income should be reflected in current and deferred income tax. As the Group’s income tax is dependent on the actual investments, wages, etc. per each year, there are uncertainties in measuring the final tax effects during the period when the tax law is applied.

2.4.2 Fair value of financial instruments

The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available is determined by using valuation techniques. Financial instruments, which are not actively traded in the market and those with less transparent market prices, will have less objective fair values and require broad judgment on liquidity, concentration, uncertainty in market factors, assumptions in fair value determination, and other risks.

As described in the material accounting policies in Note 3.3 Recognition and Measurement of Financial Instruments, diverse valuation techniques are used to determine the fair value of financial instruments, from generally accepted market valuation models to internally developed valuation models that incorporate various types of assumptions and variables.

2.4.3 Allowances and provisions for credit losses

The Group recognizes and measures allowances for credit losses of debt instruments measured at amortized cost, debt instruments measured at fair value through other comprehensive income, and lease receivables. Also, the Group recognizes and measures provisions for credit losses of acceptances and guarantees, and unused loan commitments. Accuracy of allowances and provisions for credit losses is dependent upon estimation of expected cash flows of the borrower subject to individual assessment of impairment, and upon assumptions and variables of model used in collective assessment of impairment and estimation of provisions for credit losses of acceptances and guarantees, and unused loan commitments.

 

17

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

2.4.4 Impairment of goodwill

The recoverable amounts of cash-generating units are determined based on value-in-use calculations to test whether impairment of goodwill has occurred.

2.4.5 The judgment and estimation uncertainty in measurement of insurance contracts

2.4.5.1 Methods used to measure the future cash flows and estimation process of input variable

The estimated future cash flows are measured as the probability-weighted average of all possible outcomes, utilizing all reasonable and relevant information available without excessive cost or effort. Market and non-market variables are considered in measuring the cash flows within the boundary of the insurance contract. While deterministic scenarios (representing a range of probabilities) are typically used for calculating the probability-weighted average, probabilistic scenarios are employed when cash flows are influenced by complex underlying factors and nonlinear responses to economic conditions. The cash flows within the boundary of an insurance contract portfolio include both directly attributable cash flows and cash flows allocated from a higher level than the insurance contract portfolio. These cash flows are systematically and reasonably allocated, ensuring consistent methods are applied for similar types of cash flows.

The key assumptions used in estimating the future cash flows of the Group are as follows:

- Loss ratio: The loss ratio refers to the ratio of insurance claims paid to policyholders to the premiums received by the insurance company for providing risk coverage services to policyholders. The loss ratio, which is an estimation of future premiums and claims payable, is estimated based on objective and reliable data, using the best available methods to suit the intended application. Objective and reliable data refers to the most recent measured results made using the Group’s experience statistics, insurance industry statistics, or national statistics, and others. It also means the best method that reasonably distinguishes characteristics such as the policyholder’s gender, contract type, risk characteristics by distribution channel, and others.

- Expense ratio: Expense ratio refers to the costs incurred by insurance companies for the sale and management of insurance contracts. Expense ratio is calculated primarily considering the ongoing costs incurred by the insurance company, taking into account the going concern, and includes the allocation of both fixed and variable indirect expenses directly related to insurance contracts. Expense ratio also considers costs such as contract acquisition expense (regardless of whether premiums are paid or not), contract maintenance expense, and claims expense, distributed in order to manage cost by product and distribution channel.

- Lapse ratio: The lapse ratio is an estimate of future cancellations or lapses of insurance contracts among current customers of the insurance company. It is calculated for the purpose of predicting the level of future current premium payments and cancellation refunds. The statistics used for estimation primarily rely on experience statistics of the Group, and lapse ratio is calculated based on characteristics such as product type, distribution channel, payment method, and others, which can significantly affect lapse ratio.

 

18

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

2.4.5.2 Estimation of Discretionary Cash Flows

Some contracts issued by the Group grant discretion to the Group regarding cash flows to be paid to policyholders. Changes in discretionary cash flows are considered related to future services, and adjust the contractual service margin. The Group identifies changes in discretionary cash flow by identifying assured cash flows at the initial recognition date of the contract. However, if it is not possible to distinguish between the portion considered assured and the portion considered discretionary, the profit within the estimated fulfillment cash flows is considered assured, and is updated to reflect current assumptions related to financial risk.

2.4.5.3 Estimation of Risk Adjustment for Non-Financial Risk

Risk adjustment for non-financial risk is to adjust the present value estimates of future cash flows to reflect the compensation required by the Group for bearing the uncertainty about the amount and timing of cash flows arising from non-financial risk. This adjustment reflects the uncertainty of cash flows arising from all non-financial risks related to the insurance contracts and is estimated separately from all of the other estimates. The Group uses the confidence lever technique and the cost of capital methods for determining the risk adjustment for non-financial risk. Changes in risk adjustment for non-financial risk are disclosed separately for insurance service results and insurance finance income. The Group calculates this adjustment considering the diversification effect at the consolidated level and then allocated to individual contract units.

2.4.5.4 Estimation of Discount Rate

The discount rate should only include relevant factors such as the time value of money, characteristics of cash flows from insurance contracts, and liquidity characteristics, and should be calculated using observable input variables to the maximum extent possible. The discount rate should also reflect all reasonable and supportable information on internal and external non-market variables available without undue cost or effort. The Group estimates the discount rate using a bottom-up approach.

In the bottom-up approach, the discount rate is calculated using an unleveraged yield curve adjusted to reflect the characteristics of cash flows and liquidity of insurance contracts. To reflect the liquidity characteristics of insurance contracts, the risk-free yield curve is adjusted for illiquidity premium.

2.4.5.5 Estimation of Investment Component

The investment component is the amount that the Group must repay to policyholders under insurance contracts in all circumstances, regardless of the occurrence of insurance events. The Group classifies cash outflows such as maturity refunds, cancellation refunds, annuity payments, and cash flows related to insurance policy loans as investment components.

2.4.5.6 Estimation of Coverage Units

The quantity of insurance contract services provided is calculated based on the expected coverage period and maximum coverage amount (insurance amount), and for investment (related) services it is calculated based on the premium reserve (net of insurance policy loans). If insurance contracts within the group provide multiple services, weights are applied based on the total premium of each service. The quantity of services for each period and expected coverage period are calculated based on the expected persistency ratio applied in estimating the fulfillment cash flows, applied the present value effect.

 

19

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

3. Material Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

3.1 Consolidation

3.1.1 Subsidiaries

Subsidiaries are companies that are controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Also, the existence and effects of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls the investee. Subsidiaries are fully consolidated from the date when control is transferred to the Group and de-consolidated from the date when control is lost.

If a subsidiary uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to that subsidiary’s financial statements in preparing the consolidated financial statements to ensure conformity with the Group’s accounting policies.

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests, if any. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions (i.e., transactions with owners in their capacity as owners). The difference between fair value of any consideration paid and carrying amount of the subsidiary’s net assets attributable to the additional interests acquired, is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

When the Group loses control, any investment retained in the former subsidiary is recognized at its fair value at the date when control is lost, with the resulting difference recognized in profit or loss. This fair value will be the fair value on initial recognition of a financial asset in accordance with Korean IFRS No.1109 or, when appropriate, the cost on initial recognition of an investment in an associate or joint venture. In addition, all amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for on the same basis as would be required if the Group had directly disposed of the related assets or liabilities. Therefore, amounts previously recognized in other comprehensive income are reclassified to profit or loss.

The Group accounts for each business combination by applying the acquisition method. The consideration transferred is measured at fair value, and identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are initially measured at acquisition-date fair values. For each business combination, the Group measures non-controlling interests in the acquiree that entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidation at either (a) fair value or (b) the proportionate share in the recognized amounts of the acquiree’s identifiable net assets. Acquisition-related costs are expensed in the periods in which the costs are incurred.

 

20

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

3.1.1 Subsidiaries (cont’d)

 

In a business combination achieved in stages, the Group shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss or other comprehensive income, as appropriate. In prior reporting periods, the Group may have recognized changes in the value of its equity interest in the acquiree in other comprehensive income. If so, the amount that was recognized in other comprehensive income shall be reclassified as profit or loss, or retained earnings, on the same basis as would be required if the Group had directly disposed of the previously held equity interest.

The Group applies the book-value method to account for business combinations of entities under common control. Identifiable assets acquired and liabilities assumed in a business combination are measured at their book value on the consolidated financial statements of the Group. In addition, the difference between (a) the sum of consolidated net book value of the assets and liabilities transferred and accumulated other comprehensive income and (b) the consideration paid, is recognized as capital surplus.

3.1.2 Associates and joint ventures

Associates are entities over which the Group has significant influence over the financial and operating policy decisions. Generally, if the Group holds 20% or more of the voting power of the investee, it is presumed that the Group has significant influence.

Joint ventures are investments in which the Group has joint control over economic activities pursuant to contractual arrangement. Decisions about strategic financial and operating policies require unanimous consent of the parties sharing control.

Investments in associates and joint ventures are initially recognized at cost and equity method is applied after initial recognition. The carrying amount is increased or decreased to recognize the Group’s share of the profit or loss of the investee and changes in the investee’s equity after the date of acquisition. Distributions received from an investee reduce the carrying amount of the investment. Unrealized gains and losses resulting from transactions between the Group and associates are eliminated to the extent of the Group’s share in associates. If unrealized losses are an indication of an impairment that requires recognition in the consolidated financial statements, those losses are recognized for the period.

If associates or joint ventures use 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 associates or joint ventures’ accounting policies conform to those of the Group when the associates or joint ventures’ financial statements are used by the Group in applying the equity method.

If the Group’s share of losses of associates and joint ventures equals or exceeds its interest in the associates (including long-term interests that, in substance, form part of the Group’s net investment in the associates), the Group discontinues recognizing its share of further losses. After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee.

The Group determines at each reporting period whether there is any objective evidence that the investments in the associates are impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associates and its carrying amount and recognizes the amount as non-operating expenses in the consolidated statement of comprehensive income.

 

21

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

3.1.3 Structured entity

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. When the Group decides whether it has power over the structured entities in which the Group has interests, it considers factors such as the purpose, the form, the substantive ability to direct the relevant activities of a structured entity, the nature of its relationship with a structured entity, and the amount of exposure to variable returns.

3.1.4 Funds management

The Group manages and operates trust assets, collective investment, and other funds on behalf of investors. These trusts and funds are not consolidated, except for trusts and funds over which the Group has control.

3.1.5 Intragroup transactions

Intragroup balances, income, expenses, and any unrealized gains and losses resulting from intragroup transactions are eliminated in full, in preparing the consolidated financial statements. If unrealized losses are an indication of an impairment that requires recognition in the consolidated financial statements, those losses are recognized for the period.

3.2 Foreign Currency

3.2.1 Foreign currency transactions

A foreign currency transaction is recorded, at initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of each reporting period, foreign currency monetary items are translated using the closing rate which is the spot exchange rate at the end of the reporting period. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was measured and non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Except for the exchange differences for the net investment in a foreign operation and the financial liability designated as a hedging instrument of net investment, exchange differences arising on the settlement of monetary items or on translating monetary items are recognized in profit or loss. When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income, conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

3.2.2 Foreign operations

The results and financial position of a foreign operation, whose functional currency differs from the Group’s presentation currency, are translated into the Group’s presentation currency based on the following procedures.

If the functional currency of a foreign operation is not the currency of a hyperinflationary economy, assets and liabilities for each statement of financial position presented (including comparatives) are translated at the closing rate at the end of the reporting period, income and expenses for each statement of comprehensive income presented (including comparatives) are translated using the average exchange rates for the period. All resulting exchange differences are recognized in other comprehensive income.

 

22

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

3.2.2 Foreign operations (cont’d)

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation are treated as assets and liabilities of the foreign operation. Thus, they are expressed in the functional currency of the foreign operation and are translated into the presentation currency at the closing rate.

On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss (as a reclassification adjustment) when the gain or loss on disposal is recognized. On the partial disposal of a subsidiary that includes a foreign operation, the Group re-attributes the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income to the non-controlling interests in that foreign operation. In any other partial disposal of a foreign operation, the Group reclassifies to profit or loss only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income.

3.2.3 Translation of the net investment in a foreign operation

A monetary item that is receivable from or payable to a foreign operation, for which settlement is neither planned nor likely to occur in the foreseeable future is, in substance, a part of the Group’s net investment in that foreign operation, then foreign currency difference arising from that monetary item is recognized in the other comprehensive income and shall be reclassified to profit or loss on disposal of the net investment.

3.3 Recognition and Measurement of Financial Instruments

3.3.1 Initial recognition

The Group recognizes a financial asset or a financial liability in its consolidated statement of financial position when the Group becomes party to the contractual provisions of the instrument. A regular way purchase or sale of financial assets (a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned) is recognized and derecognized using trade date accounting.

For financial reporting purpose, the Group classifies (a) financial assets as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, or financial assets at amortized cost and (b) financial liabilities as financial liabilities at fair value through profit or loss, or other financial liabilities. These classifications are based on the business model for managing financial instruments and the contractual cash flow characteristics of the financial instrument at initial recognition.

At initial recognition, a financial asset or financial liability is measured at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of a financial instrument on initial recognition is normally the transaction price (that is, the fair value of the consideration given or received) in an arm’s length transaction.

3.3.2 Subsequent measurement

After initial recognition, financial instruments are measured at amortized cost or fair value based on classification at initial recognition.

 

23

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

3.3.2.1 Amortized cost

The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.

3.3.2.2 Fair value

The Group uses quoted price in an active market which is based on listed market price or dealer price quotations of financial instruments traded in an active market as best estimate of fair value. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

If there is no active market for a financial instrument, fair value is determined either by using a valuation technique or independent third-party valuation service. Valuation techniques include using recent arm’s length market transactions between knowledgeable and willing parties, if available, referencing the current fair value of another instrument that is substantially the same, discounted cash flow analysis, and option pricing models.

The Group uses valuation models that are commonly used by market participants and customized for the Group to determine fair values of common over-the-counter (“OTC”) derivatives such as options, interest rate swaps, and currency swaps which are based on the inputs observable in markets. However, for some complex financial instruments that require fair value measurement by valuation techniques based on certain assumptions because some or all inputs used in the model are not observable in the market, the Group uses internal valuation models developed from general valuation models or valuation results from independent external valuation institutions.

In addition, the fair value information recognized in the consolidated statement of financial position is classified into the following fair value hierarchy, reflecting the significance of the input variables used in the fair value measurement.

 

Level 1 :

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date

 

Level 2 :

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

 

Level 3 :

Unobservable inputs for the asset or liability

The fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety.

If a fair value measurement uses observable inputs that require significant adjustment using unobservable inputs, that measurement is a Level 3 measurement.

If the valuation technique does not reflect all factors which market participants would consider in pricing the asset or liability, the fair value is adjusted to reflect those factors. Those factors include counterparty credit risk, bid-ask spread, liquidity risk, and others.

 

24

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

3.3.2.2 Fair value (cont’d)

The Group uses valuation technique which maximizes the use of market inputs and minimizes the use of entity-specific inputs. It incorporates all factors that market participants would consider in pricing the asset or liability and is consistent with economic methodologies applied for pricing financial instruments. Periodically, the Group calibrates the valuation technique and tests its validity using prices of observable current market transactions of the same instrument or based on other relevant observable market data.

3.3.3 Derecognition

Derecognition is the removal of a previously recognized financial asset or financial liability from the consolidated statement of financial position. The derecognition criteria for financial assets and financial liabilities are as follows:

3.3.3.1 Derecognition of financial assets

A financial asset is derecognized when the contractual rights to the cash flows from the financial assets expire or the Group transfers substantially all the risks and rewards of ownership of the financial asset, or the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset and the Group has not retained control. Therefore, if the Group does not transfer substantially all the risks and rewards of ownership of the financial asset, the Group continues to recognize the financial asset to the extent of its continuing involvement in the financial asset.

If the Group transfers the contractual rights to receive the cash flows of the financial asset but retains substantially all the risks and rewards of ownership of the financial asset, the Group continues to recognize the transferred asset in its entirety and recognize a financial liability for the consideration received.

The Group writes off a financial asset when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. In general, the Group considers write-off when it is determined that the debtor does not have sufficient funds or income to cover the principal and interest. The write-off decision is made in accordance with internal regulations. After the write-off, the Group can continue to collect the written-off loans according to the internal policy. Recovered amounts from financial assets previously written-off are recognized in profit or loss.

3.3.3.2 Derecognition of financial liabilities

A financial liability is derecognized from the consolidated statement of financial position when it is extinguished (i.e., the obligation specified in the contract is discharged, canceled or expires).

3.3.4 Offsetting

A financial asset and a financial liability are offset, and the net amount is presented in the consolidated statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on a future event and must be legally enforceable in the normal course of business, the event of default, and the event of insolvency or bankruptcy of the Group and all of the counterparties.

 

25

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

3.4 Cash and Due from Financial Institutions

Cash and due from financial institutions include cash on hand, foreign currency, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and due from financial institutions. Cash and due from financial institutions are measured at amortized cost.

3.5 Non-derivative Financial Assets

3.5.1 Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss unless they are classified as financial assets at amortized cost or at fair value through other comprehensive income.

The Group may designate certain financial assets upon initial recognition as at fair value through profit or loss when the designation eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.

After initial recognition, a financial asset at fair value through profit or loss is measured at fair value and gains or losses arising from a change in fair value are recognized in profit or loss. Interest income using the effective interest method and dividend income from financial assets at fair value through profit or loss are also recognized in profit or loss.

3.5.2 Financial assets at fair value through other comprehensive income

The Group classifies below financial assets as financial assets at fair value through other comprehensive income:

 

•

Debt instruments that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and where the assets’ cash flows represent solely payments of principal and interest on the principal amount outstanding and;

 

•

Equity instruments that are not held for short-term trading but held for strategic investment, and designated as financial assets at fair value through other comprehensive income

After initial recognition, a financial asset at fair value through other comprehensive income is measured at fair value. Gains or losses arising from a change in fair value, other than dividend income, interest income calculated using the effective interest method and exchange differences arising on monetary items which are recognized directly in profit or loss, are recognized in other comprehensive income in equity.

When the financial assets at fair value through other comprehensive income is disposed of, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. However, cumulative gain or loss of equity instruments designated at fair value through other comprehensive income is reclassified to retained earnings not to profit or loss at disposal.

A financial asset at fair value through other comprehensive income denominated in foreign currency is translated at the closing rate. Exchange differences resulting from changes in amortized cost are recognized in profit or loss, and other changes are recognized in equity.

 

26

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

3.5.3 Financial assets at amortized cost

A financial asset, which is held within the business model whose objective is achieved by collecting contractual cash flows, and where the assets’ cash flows represent solely payments of principal and interest on the principal amount outstanding, is classified as a financial asset at amortized cost. After initial recognition, a financial asset at amortized cost is measured at amortized cost using the effective interest method and interest income is calculated using the effective interest method.

3.6 Expected Credit Losses of Financial Assets (Debt Instruments)

The Group recognizes loss allowances for expected credit losses at the end of the reporting period for financial assets at amortized cost and fair value through other comprehensive income except for financial assets at fair value through profit or loss.

Expected credit losses are estimated at present value of probability-weighted amount that is determined by evaluating a range of possible outcomes. The Group measures expected credit losses by reflecting all reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions, and forecasts of future economic conditions.

The approaches of measuring expected credit losses in accordance with Korean IFRS are as follows:

 

•

General approach: for financial assets and unused loan commitments not subject to the below 2 approaches

 

•

Simplified approach: for trade receivables, contract assets, and lease receivables

 

•

Credit-impaired approach: for financial assets that are credit-impaired at the time of acquisition

Application of general approach is differentiated depending on whether credit risk has increased significantly after initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures loss allowances for that financial instrument at an amount equal to 12-month expected credit losses, whereas if the credit risk on a financial instrument has increased significantly since initial recognition, the Group measures loss allowances for a financial instrument at an amount equal to the lifetime expected credit losses. Lifetime is the period until the contractual maturity date of financial instruments and means the expected life.

The Group assesses whether the credit risk has increased significantly using the following criteria, and if one or more of the following criteria are met, it is deemed as significant increase in credit risk. Criterion of more than 30 days past due is applied to all subsidiaries, and other criteria are applied selectively considering specific indicators of each subsidiary or additionally considering specific indicators of each subsidiary. If the contractual cash flows of a financial asset have been renegotiated or modified, the Group assesses whether the credit risk has increased significantly using the same following criteria.

 

•

More than 30 days past due

 

•

Decline in credit rating at the end of the reporting period by certain notches or more compared to the time of initial recognition

 

•

Subsequent managing ratings below certain level in the early warning system

 

•

Debt restructuring (except for impaired financial assets) and

 

•

Credit delinquency information of Korea Federation of Banks, etc.

 

27

KB Financial Group Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

 

 

3.6 Expected Credit Losses of Financial Assets (Debt Instruments) (cont’d)

 

Under simplified approach, the Group always measures loss allowances at an amount equal to lifetime expected credit losses. Under credit-impaired approach, the Group only recognizes the cumulative changes in lifetime expected credit losses since initial recognition as loss allowances at the end of the reporting period. In assessing credit impairment, the Group uses definition of default as in the new Basel Accord which rules calculation of Capital Adequacy Ratio.

The Group generally considers the loan to be credit-impaired if one or more of the following criteria are met:

 

•

90 days or more past due

 

•

Legal proceedings related to collection

 

•

A borrower registered on the credit management list of Korea Federation of Banks

 

•

A corporate borrower with the credit rating C and D

 

•

Refinancing and

 

•

Debt restructuring, etc.

3.6.1 Forward-looking information

The Group uses forward-looking information, when determining whether credit risk has increased significantly and measuring expected credit losses.

The Group assumes that the risk components have a constant correlation with the economic cycle and uses statistical methodologies to estimate the relation between key macroeconomic variables and risk components for the expected credit losses.

The correlation between the major macroeconomic variables and the credit risk are as follows:

 

Key macroeconomic variables		Correlation between the major macroeconomic variables and the credit risk
Benchmark interest rate		(+)
AA- rated corporate bond (3-year)		(+)
BBB- rated corporate bond (3-year)		(+)
Composite stock index		(-)
Rate of increase in housing transaction price index (Whole Country)		(-)
Rate of increase in housing transaction price index (Metropolitan Area)		(-)
WTI crude oil price		(+)
Growth rate of private consumption		(-)
Rate of increase or decrease in unemployment rate		(+)
Household loan growth rate		(-)
CD distribution yield		(-)
Unemployment rate		(+)
Interest rate spread		(+)
Private consumption growth rate		(-)
Leading composite index (Cyclical Component)		(-)

 

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