Enhanced Investments - Financial Portal

Business Index (BI) section

The coefficient

1.4 trillion Won or less

More than 1.4 trillion Won and less than or equal 42 trillion Won

Over 42 trillion Won

Published: 2024-03-06 10:45:42 ET

<<< go to WF company page

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.

•

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 Bank’s 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 -

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 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.

- 10 -

WOORI BANK

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

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

1.	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.

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 common stocks amounting to 3,581,392 million 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.	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.

- 11 -

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.

- 12 -

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

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. 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

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 separate financial statements of the Bank.

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 separate financial statements of the Bank.

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.

- 13 -

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.

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 or, when applicable.

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.

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 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.

- 14 -

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

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 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

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.

- 15 -

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.

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 credit card 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 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.

- 16 -

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.

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.

(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

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 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

- 17 -

•

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

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.

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)

- 18 -

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 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 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 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.

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).

- 19 -

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.

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 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 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.

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.

- 20 -

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

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

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.

- 21 -

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.

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.

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 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

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 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

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.

(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 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, 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

•

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 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 -

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 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

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 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

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 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.

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 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

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 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.

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. The fair value adjustments made to book value of hedged item due to hedged risk is amortized from the date of discontinuance of hedge accounting and is recognized in profit or loss.

- 26 -

(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.

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.

(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

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

(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

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.

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.

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.

- 28 -

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 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”)

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.

- 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

- 30 -

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.

- 31 -

(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

- 33 -

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

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 Bank.

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).

- 34 -

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 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

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.

- 35 -

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 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.

- 36 -

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

•

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

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

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		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 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 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.

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

- 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.

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, 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

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		8,033		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

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 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

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.

- 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.

•

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.

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 bank branches.

- 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.

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)

- 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.

- 68 -

(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

- 69 -

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 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 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:

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 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 -

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 (-0.5p~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)

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.


	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

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.

(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)

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 bank were appropriately reflected.

(*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.

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 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.

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 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

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 for the years ended December 31, 2023 and 2022.

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

- 119 -

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 canceled at the bank’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		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

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 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

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 Bank since 2015.

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

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.

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	)

- 127 -

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)

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), 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.

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.

- 153 -

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

- 154 -

(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

- 155 -

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.

- 156 -

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.

- 157 -

/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.

- 158 -