Enhanced Investments - Financial Portal

Published: 2023-03-07 08:57:57 ET

<<< go to WF company page

EX-99.1 2 d464671dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

LOGO

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED

DECEMBER 31, 2022 AND 2021

WOORI BANK


	Page(s)
INDEPENDENT AUDITOR’S REPORT		1-3

Consolidated Financial Statements

Consolidated Statements of Financial Position		5-6

Consolidated Statements of Comprehensive Income		7-8

Consolidated Statements of Changes in Equity		9

Consolidated Statements of Cash Flows		10-11

Notes to the Consolidated Financial Statements		12-160

LOGO

INDEPENDENT AUDITOR’S REPORT

(English Translation of a Report Originally Issued in Korean)

To the Shareholder and Board of Directors of Woori Bank

Opinion

We have audited the accompanying consolidated financial statements of Woori Bank and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated statements of financial position as of December 31, 2022 and 2021, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS).

Basis for Opinion

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

Other Matter

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

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

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

- 1 -

LOGO

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations.

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

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

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

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

•

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

•

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

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

•

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

•

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

•

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

- 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.

Samil PricewaterhouseCoopers /s/

Seoul, Korea

March 7, 2023

This report is effective as of March 7, 2023, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

- 3 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED

DECEMBER 31, 2022 AND 2021

The accompanying consolidated financial statements including all footnote disclosures were prepared by and are the responsibility of the management of Woori Bank

Won Deok Lee

President and Chief Executive Officer

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

(Phone Number) 02-2002-3000

- 4 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2022 AND 2021


	December 31, 2022		December 31, 2021
	(Korean Won in millions)
ASSETS
Cash and cash equivalents (Notes 2, 6 and 45)		32,418,295		19,912,544
Financial assets at fair value through profit or loss (“FVTPL”) (Notes 4, 7, 11, 12, 26 and 45)		18,489,573		11,933,349
Financial assets at fair value through other comprehensive income (“FVTOCI”) (Notes 4, 8, 11, 12 and 18)		33,000,262		39,042,051
Securities at amortized cost (Notes 4, 9, 11, 12 and 18)		28,268,516		17,086,274
Loans and other financial assets at amortized cost (Notes 2, 4, 10, 11, 12, 18 and 45)		325,919,599		323,017,411
Investments in joint ventures and associates (Note 13)		917,581		858,706
Investment properties (Note 14)		603,211		588,997
Premises and equipment (Notes 15 and 18)		2,700,817		2,761,710
Intangible assets (Note 16)		438,484		464,887
Assets held for sale (Note 17)		9,589		20,372
Current tax assets (Note 42)		38,913		22,491
Deferred tax assets (Note 42)		55,732		—
Derivative assets (designated for hedging) (Notes 4, 11, 12, 26)		—		95,103
Net defined benefit assets (Note 24)		287,673		12,684
Other assets (Notes 18, 19 and 45)		192,734		160,048

Total assets		443,340,979		415,976,627

LIABILITIES
Financial liabilities at FVTPL (Notes 4, 11, 12, 20 and 26)		8,988,077		4,681,447
Deposits due to customers (Notes 4, 11, 21 and 45)		338,923,832		314,778,574
Borrowings (Notes 4, 11, 12, 22 and 45)		23,028,206		21,376,880
Debentures (Notes 4, 11 and 22)		24,639,433		26,478,289
Provisions (Notes 23, 44 and 45)		466,524		494,820
Net defined benefit liability (Note 24)		2,321		2,337
Current tax liabilities (Note 42)		716,936		484,984
Deferred tax liabilities (Note 42)		29,356		214,436
Derivative liabilities (designated for hedging) (Notes 4, 11, 12, 26 and 45)		193,831		20,287
Other financial liabilities (Notes 4, 11, 12, 25 and 45)		20,359,019		22,616,804
Other liabilities (Notes 25 and 45)		236,258		166,250

Total liabilities		417,583,793		391,315,108

(Continued)

- 5 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2022 AND 2021

(CONTINUED)


	December 31, 2022			December 31, 2021
	(Korean Won in millions)
EQUITY
Owners’ equity:		25,646,249			24,554,884
Capital stock (Note 28)		3,581,392			3,581,392
Hybrid securities (Note 29)		2,344,816			2,555,166
Capital surplus (Note 28)		1,096,194			1,096,194
Other equity (Note 30)		(2,324,321	)		(2,061,097	)
Retained earnings (Notes 31 and 32)		20,948,168			19,383,229
Regulatory reserve for credit loss		(2,443,576	)		(2,126,017	)
Regulatory reserve for credit loss to reversed (reserved)		135,602			(317,559	)
Planned reversal (provision) of regulatory reserve for credit loss		135,602			(317,559	)
Non-controlling interests		110,937			106,635

Total equity		25,757,186			24,661,519

Total liabilities and equity		443,340,979			415,976,627

The accompanying notes are part of these consolidated financial statements.

- 6 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021


	2022			2021
	(Korean Won in millions, except for per share data)
Interest income		12,742,404			8,434,027
Financial assets at FVTPL		63,515			22,318
Financial assets at FVTOCI		632,615			381,814
Financial assets at amortized cost		12,046,274			8,029,895
Interest expense		5,324,680			2,512,007

Net interest income (Notes 11, 34 and 45)		7,417,724			5,922,020

Fees and commissions income		1,151,974			1,119,034
Fees and commissions expense		224,860			186,644

Net fees and commissions income (Notes 11, 35 and 45)		927,114			932,390

Dividend income (Notes 11, 36 and 45)		151,113			283,257
Net gain on financial instruments at FVTPL (Notes 11, 37 and 45)		214,666			254,201
Net gain (loss) on financial assets at FVTOCI (Notes 11 and 38)		(21,498	)		32,624
Net gain (loss) on disposals of financial assets at Amortized cost (Notes 11)		35,003			57,714
Net gain on disposals of loans and other financial assets at Amortized cost		35,003			57,714
Impairment losses due to credit loss (Notes 39 and 45)		(458,812	)		(196,775	)
General and administrative expenses (Notes 40 and 45)		(3,914,672	)		(3,606,715	)
Other net operating expenses (Notes 40 and 45)		(567,451	)		(606,024	)

Operating income		3,783,187			3,072,692

Net gain on valuation of investments in subsidiaries and associates (Note 13)		73,958			60,050
Net other non-operating income		5,563			42,541

Non-operating income (Note 13 and 41)		79,521			102,591

Net income before income tax expense		3,862,708			3,175,283

Income tax expense (Note 42)		959,299			790,177

Net income
(Net income after reflecting the provision of regulatory reserve for credit loss for the years ended December 31, 2022 and 2021 are 3,039,011 million Won and 2,067,541 million Won, respectively) (Note 32)		2,903,409			2,385,106

(Continued)

- 7 -

WOORI BANK AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (CONTINUED)


	2022			2021

	(Korean Won in millions, except for per share data)
Net gain (loss) on valuation of equity securities at FVTOCI		(35,432	)		33,360
Share of other comprehensive loss of joint ventures and associates		(4,527	)		(2,607	)
Remeasurement gain related to defined benefit plan		226,843			59,421

Items that will not be reclassified to profit or loss		186,884			90,174

Net loss on valuation of debt securities at FVTOCI		(463,724	)		(184,396	)
Share of other comprehensive loss of joint ventures and associates		5,413			4,232
Gain on foreign currency translation of foreign operations		47,258			250,555
Loss on valuation of cash flow hedge		(20,701	)		—

Items that may be reclassified to profit or loss		(431,754	)		70,391

Other comprehensive income (loss), net of tax		(244,870	)		160,565

Total comprehensive income		2,658,539			2,545,671

Net income attributable to:		2,903,409			2,385,106
Net income attributable to owners		2,892,165			2,375,525
Net income attributable to non-controlling interests		11,244			9,581

Total comprehensive income attributable to:		2,658,539			2,545,671
Comprehensive income attributable to owners		2,651,873			2,523,847
Comprehensive income attributable to non-controlling interests		6,666			21,824

Earnings per share (Note 43)
Basic and diluted earnings per share (In Korean Won)		3,880			3,115

The accompanying notes are part of these consolidated financial statements.

- 8 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021


	Capital stock		Hybrid securities			Capital surplus		Other equity			Retained earnings			Controlling interests			Non-controlling interests			Total equity
	(Korean Won in millions)
January 1, 2021		3,581,392		3,105,070			1,086,812		(2,212,278	)		17,861,857			23,422,853			97,403			23,520,256
Capital increase with consideration		—		—			9,382		(303	)		—			9,079			(11,297	)		(2,218	)
Net income		—		—			—		—			2,375,525			2,375,525			9,581			2,385,106
Dividends to common stocks		—		—			—		—			(680,200	)		(680,200	)		(1,295	)		(681,495	)
Gain (loss) on valuation of financial assets at FVTOCI		—		—			—		(151,121	)		—			(151,121	)		85			(151,036	)
Changes in other comprehensive income due to disposal of financial assets at FVTOCI		—		—			—		(2,221	)		2,221			—			—			—
Changes in capital due to equity method		—		—			—		1,625			—			1,625			—			1,625
Changes in capital adjustments of investments using the equity method		—		—			—		1,497			—			1,497			—			1,497
Gain (loss) on disposal of investments in associates		—		—			—		946			(946	)		—			—			—
Gain (loss) on foreign currency translation of foreign operations		—		—			—		238,330			—			238,330			12,225			250,555
Disposal of assets held for sale		—		—			—		(947	)		947			—			—			—
Remeasurement loss related to defined benefit liability		—		—			—		59,488			—			59,488			(67	)		59,421
Dividends to hybrid securities		—		—			—		—			(144,923	)		(144,923	)		—			(144,923	)
Redemption of hybrid securities		—		(549,904	)		—		(27,365	)		—			(577,269	)		—			(577,269	)
Appropriation of retained earnings		—		—			—		31,252			(31,252	)		—			—			—

December 31, 2021		3,581,392		2,555,166			1,096,194		(2,061,097	)		19,383,229			24,554,884			106,635			24,661,519

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

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

The accompanying notes are part of these consolidated financial statements.

- 9 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021


	2022			2021
	(Korean Won in millions)
Cash flows from operating activities:
Net income		2,903,409			2,385,106
Adjustments:
Income tax expense		959,299			790,177
Interest income		(12,742,404	)		(8,434,027	)
Interest expense		5,324,680			2,512,007
Dividend income		(151,113	)		(283,257	)

		(6,609,538	)		(5,415,100	)

Additions of expenses not involving cash outflows:
Loss on financial instruments at FVTPL		827,247			62,853
Loss on financial assets at FVTOCI		23,836			15,812
Impairment losses due to credit loss		458,812			196,775
Loss on valuation of investments in joint ventures and associates		9,481			6,626
Loss on disposal of investments in joint ventures and associates		116			—
Loss on derivatives (designated for hedging)		250,267			93,084
Loss on fair value hedge		—			1,947
Losses related to other provisions		24,540			81,383
Retirement benefits		136,942			148,725
Depreciation and amortization		456,336			469,309
Loss on disposal of premises and equipment, intangible asset and other assets		2,875			2,398
Impairment loss on premises and equipment, intangible asset and other assets		144			276
Loss on foreign currency translation		—			33,051
Other losses		63,354			—

		2,253,950			1,112,239

Deductions of incomes not involving cash inflows:
Gain on financial assets at FVTOCI		2,338			48,435
Gain on valuation of investments in joint ventures and associates		83,440			66,675
Gain on disposal of investments in joint ventures and associates		560			70,173
Gain on derivatives for hedging		1,288			—
Gain on hedged items (fair value hedge)		257,910			106,253
Reversal of provisions for other liabilities		53,796			102
Gain on disposal of premises and equipment, intangible assets and other assets		25,503			1,765
Gain on disposal of assets held for sale		28,525			48,430
Gain on foreign currency translation		90,522			—
Other incomes		15,880			35,717

		559,762			377,550

Changes in operating assets and liabilities:
Financial instruments at FVTPL		(1,698,435	)		37,037
Loans and other financial assets at amortized cost		(1,626,419	)		(26,521,313	)
Other assets		(35,651	)		16,549
Deposits due to customers		23,476,007			23,675,440
Provisions		(23,692	)		(6,115	)
Net defined benefit liability		(103,248	)		(82,689	)
Other financial liabilities		(3,414,341	)		9,223,038
Other liabilities		64,488			(22,762	)

		16,638,709			6,319,185

Cash received from operating activities:
Interest income received		12,293,383			8,476,294
Interest expense paid		(4,332,006	)		(2,577,864	)
Dividends received		151,148			283,142
Income tax paid		(856,220	)		(470,820	)

Net cash inflow from operating activities		21,883,073			9,734,632

(Continued)

- 10 -

WOORI BANK AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(CONTINUED)


	2022			2021
	(Korean Won in millions)
Cash flows from investing activities:
Cash inflows from investing activities:
Disposal of financial instruments at FVTPL		10,072,904			10,474,231
Disposal of financial assets at FVTOCI		21,713,901			21,645,907
Redemption of securities at amortized cost		5,872,961			6,425,062
Changes in subsidiary		17,648			—
Disposal of investments in joint ventures and associates		40,273			79,079
Disposal of premises and equipment		11,913			2,631
Disposal of intangible assets		7			500
Disposal of assets held for sale		52,417			91,321
Net decrease in other assets		62,440			74,262

		37,844,464			38,792,993

Cash outflows from investing activities:
Acquisition of financial instruments at FVTPL		11,297,246			12,693,496
Acquisition of financial assets at FVTOCI		16,109,821			30,522,451
Acquisition of securities at amortized cost		16,873,194			6,435,692
Changes in subsidiary		100,000			—
Acquisition of investments in joint ventures and associates		18,272			55,117
Acquisition of premises and equipment		104,825			86,677
Acquisition of intangible assets		108,127			96,322

		44,611,485			49,889,755

Net cash outflow from investing activities		(6,767,021	)		(11,096,762	)

Cash flows from financing activities:
Cash inflows from financing activities:
Increase in borrowings		21,494,771			10,588,100
Issuance of debentures		10,943,580			13,152,334
Issuance of hybrid securities		349,215			—
Capital decrease with changes in non-controlling interests		—			1,623
Net increase of derivative financial instruments designated for hedging		19,669			6,892
Net increase of other liabilities		453			3,584

		32,807,688			23,752,533

Cash outflows from financing activities:
Decrease in borrowings		20,566,867			9,916,446
Redemption of debentures		12,778,811			8,764,907
Redemption of lease liabilities		168,519			163,298
Redemption of hybrid securities		643,000			587,650
Dividends paid to common stocks		1,175,672			680,200
Dividends paid to hybrid securities		113,995			144,923
Dividends paid to non-controlling interest		2,365			1,295

		35,449,229			20,258,719

Net cash inflow (outflow) from financing activities		(2,641,541	)		3,493,814

Net increase in cash and cash equivalents		12,474,511			2,131,684

Cash and cash equivalents, the beginning of the year		19,912,544			16,718,696

Effects of exchange rate changes on cash and cash equivalents		31,240			1,062,164

Cash and cash equivalents, the end of the year (Note 2 and 6)		32,418,295			19,912,544

The accompanying notes are part of these consolidated financial statements.

- 11 -

WOORI BANK AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

1.	GENERAL

(1)	Summary of the Parent company

Woori Bank (hereinafter referred to the “Bank”), which is a parent company in accordance with Korean IFRS 1110 – Consolidated Financial Statements, was established in 1899 and is engaged in the commercial banking business under the Banking Act, trust business and foreign exchange business under the Financial Investment Services and Capital Market Act.

As of December 31, 2022, 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 Korean Won.

The headquarters of the Bank is located at 51, Sogong-ro, Jung-gu, Seoul, Korea. The Bank has 713 branches and offices in Korea, and 22 branches, branch office and 4 offices overseas as of December 31, 2022.

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

Percentage of ownership
(%)

Location

Financial
statements
as of
(2022)

Subsidiaries

Main business

December 31,
2022

December 31,
2021

Woori Bank:

Woori America Bank(*4)

Finance

100.0

U.S.A.

December 31

Woori Global Markets Asia Limited

Finance

100.0

Hong Kong

December 31

Woori Bank China Limited

Finance

100.0

China

December 31

AO Woori Bank(*8)

Finance

100.0

Russia

December 31

PT Bank Woori Saudara Indonesia 1906 Tbk (*4)

Finance

84.2

Indonesia

December 31

Banco Woori Bank do Brasil S.A.

Finance

100.0

Brazil

December 31

Korea BTL Infrastructure Fund

Finance

99.9

Korea

December 31

Woori Finance Myanmar Co., Ltd.

Finance

100.0

Myanmar

December 31

Wealth Development Bank

Finance

51.0

Philippines

December 31

Woori Bank Vietnam Limited

Finance

100.0

Vietnam

December 31

WOORI BANK (CAMBODIA) PLC. (*5)

Finance

100.0

Cambodia

December 31

Woori Bank Europe(*4)

Finance

100.0

Germany

December 31

Kumho Trust First Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Asiana Saigon Inc. (*1)

Asset securitization

0.0

Korea

December 31

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

Asset securitization

15.0

Korea

December 31

Deogi Dream Fourth Co., Ltd. (*1)(*6)

Asset securitization

—

0.0

Korea

—

Jeonju Iwon Ltd. (*1)

Asset securitization

0.0

Korea

December 31

Wonju I one Inc. (*1)

Asset securitization

0.0

Korea

December 31

Heitz Third Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

Woori Display 1st Co., Ltd. (*1)(*9)

Asset securitization

—

0.0

Korea

—

Tiger Eyes 2nd Co., Ltd. (*1)(*9)

Asset securitization

—

0.0

Korea

—

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

Woori HJ 3rd Co., Ltd. (*1)(*9)

Asset securitization

—

0.0

Korea

—

Woori K 2nd Co., Ltd. (*1)(*9)

Asset securitization

—

0.0

Korea

—

- 12 -

Percentage of ownership
(%)

Location

Financial
statements
as of
(2022)

Subsidiaries

Main business

December 31,
2022

December 31,
2021

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

Quantum Jump the 1st Co., Ltd. (*1)(*9)

Asset securitization

—

0.0

Korea

—

Woori BK the 1st Co., Ltd. (*1) (*9)

Asset securitization

—

0.0

Korea

—

Woori-HC 1st Co., Ltd. (*1)(*9)

Asset securitization

—

0.0

Korea

—

Wivi Synergy 1st Co., Ltd. (*1)(*9)

Asset securitization

—

0.0

Korea

—

ATLANTIC TRANSPORTATION 1 S.A. (*1)

Asset securitization

0.0

Marshall islands

December 31

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

Asset securitization

0.0

Korea

December 31

HD Project Co., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

SPG 1st (*1)

Asset securitization

0.0

Korea

December 31

Woori HWC 1stCo., Ltd. (*1)

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

Korea

December 31

Woori Eco 1^st Co. Ltd. (*1)

Asset securitization

0.0

Korea

December 31

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

Asset securitization

0.0

—

Korea

December 31

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

Asset securitization

0.0

—

Korea

December 31

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

Asset securitization

0.0

—

Korea

December 31

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

Asset securitization

0.0

—

Korea

December 31

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

Asset securitization

0.0

—

Korea

December 31

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

Asset securitization

0.0

—

Korea

December 31

G5 Pro Short-term Bond Investment Fund 13 (*2)(*7)

Securities investment

and others

—

100.0

Korea

—

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

Securities investment

and others

98.8

Korea

December 31

HeungkukWoori Tech Company Private Placement Investment Trust No. 1 (*2)(*7)

Securities investment

and others

—

98.0

Korea

—

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

Securities investment

and others

97.3

England

December 31

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

Securities investment

and others

99.0

Korea

December 31

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

Securities investment

and others

99.4

Korea

December 31

INMARK Spain Real Estate Investment Trust No. 26-2 (*2)

Securities investment

and others

97.7

Korea

December 31

Woori G Noth America Energy Infrastructure Private Placement Investment Trust No. 1 (*2)

Securities investment

and others

99.3

Korea

December 31

- 13 -

Percentage of ownership
(%)

Location

Financial
statements
as of
(2022)

Subsidiaries

Main business

December 31,
2022

December 31,
2021

Woori G Japan Private Placement Investment Trust No. 1-2 (*2)

Securities investment

and others

98.8

Korea

December 31

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

Securities investment

and others

99.9

Korea

December 31

IGIS Global Private Placement Real Estate Fund No. 316-1 (*2)

Securities investment

and others

99.3

Korea

December 31

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

Securities investment

and others

99.5

98.0

Korea

December 31

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

Securities investment

and others

98.3

98.1

Korea

December 31

Woori G Japan Private Real Estate Investment Trust No. 1 (*2)

Securities investment

and others

99.9

99.8

Korea

December 31

Woori G ESG Infra Development Private Placement Investment Trust No.1 (*2)

Securities investment

and others

95.2

Korea

December 31

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

Securities investment

and others

97.1

Korea

December 31

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

Securities investment

and others

97.2

96.0

Korea

December 31

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

Securities investment

and others

97.0

Korea

December 31

KIWOOM Frontier Private Investment Trust No. 23 [Bond] (*2)

Securities investment

and others

99.8

—

Korea

December 31

Principle Guaranteed Trust (*3)

Trust

0.0

Korea

December 31

Principle and Interest Guaranteed Trust (*3)

Trust

0.0

Korea

December 31

Multi Asset Global Real Estate Investment Trust No. 5-2 MAGI No.5 LuxCo S.a.r.l.

Asset securitization

54.6

Luxembourg

December 31

MAGI No.5 LuxCo S.a.r.l ADP 16 Brussels

Asset securitization

100.0

Belgium

December 31

(*1)

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

(*2)

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

(*3)

The entity is a ‘money trust’ under the Financial Investment Services and Capital Markets Act. Although the Group is not a majority shareholder, the Group 1) has the power over the investee, 2) is exposed to or has rights to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns.

(*4)	Additional investments were made in subsidiaries during the previous year.

(*5)	WB Finance Co., Ltd., a subsidiary, changed its name to WOORI BANK(CAMBODIA) PLC. during the previous year.

(*6)	The entity was excluded from the consolidation as the Group renounced its right on receivables (extinctive prescription completed)

(*7)	The entity is excluded from the consolidation as the Bank sold its shared during the current period.

(*8)

The Russia – Ukraine conflict has been escalated in February 2022, and Russia became subject to the international sanctions. Due to the sanctions, the lack of liquidity in the Russian foreign exchange market as well as the significant decline in value of the Rubles and the decline in value of Russian companies’ securities are in progress. As a result, the Group may experience situations such as a decrease in value of financial assets or operating assets owned by the Group regarding the conflict, increases in receivable payment terms, limitation to transfer funds, decrease in the profit. As of December 31, 2022, the Group expects such conflict and sanctions would have financial impacts on the business of AO Woori Bank, one of the subsidiaries, in the future. However, the Group cannot reasonably predict the financial impacts because it is very uncertain to estimate the impact on the Group’s financial position and business performance.

(*9)	The entity is excluded from the consolidation due to termination of credit extension, during the current period.

- 14 -

(3)	The Group has not consolidated the following entities as of December 31, 2022 and 2021 despite having more than 50% ownership interest:

As of December 31, 2022

Subsidiaries

Location

Main
Business

Percentage of
ownership (%)

Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*1)

Korea

Securities Investment

57.6

Kiwoom Yonsei Private Equity Investment Trust (*1)

Korea

Securities Investment

88.9

IGIS Europe Private Placement Real Estate Fund No. 163-2 (*2)

Korea

Securities Investment

97.8

IGIS Global Private Placement Real Estate Fund No. 148-1 (*1)

Korea

Securities Investment

69.0

IGIS Global Private Placement Real Estate Fund No. 148-2 (*1)

Korea

Securities Investment

69.0

Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1 (*1)

Korea

Securities Investment

66.7

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

WooriG Woori Bank Partners Private Placement Investment Trust No. 1 (*1)

Korea

Securities Investment

92.6

WooriG Private Investment Trust No. 1 (*1)

Korea

Securities Investment

80.0

INMARK France Private Investment Trust No. 18-1 (*1)

Korea

Securities investment

93.8

Kiwoom-Vibrato Private Investment Trust 1-W(EUR) (*2)

Korea

Securities investment

99.5

WooriG Global Mid-market Secondaries Private Placement Investment Trust No. 1 (*1)

Korea

Securities investment

80.0

KOTAM Global Infrastructure Private Equity Investment Trust No.1-4 (*2)

Korea

Securities investment

99.7

Hana UBS Class One Private Equity No. 3 C2 (*1)

Korea

Securities investment

51.0

Consus Gyeongju Green Private Equity Investment Trust No. 1 (*1)

Korea

Securities investment

50.0

Woori G Woori Bank Partners Private Placement Investment Trust No. 2(*1)

Korea

Securities investment

90.9

Woori G Equity Bridge Loan Private Placement Investment Trust No. 1(*1)

Korea

Securities investment

65.0

WooriG Private Investment Trust No. 5 (*1)

Korea

Securities investment

86.8

Kiwoom Harmony Private Placement Investment Trust No. 3 (*1)

Korea

Securities investment

76.7

Consus Solar Energy Private Placement Investment Truns 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 Fund 2(*1)

Korea

Securities investment

65.2

AI Partners Global Infrastructure Specialized Privately Placed Feeder Fund Trust No. 2(*2)

Korea

Securities investment

98.0

WooriG Equity Investment General Type Private Investment Trust No.1(*1)

Korea

Securities investment

93.8

Hangang new deal infra BTL fund 4 (HNBF4) (*1)

Korea

Securities investment

60.0

Woori Busan Logistics Infrastructure Private Equity Investment Trust(*1)

Korea

Securities investment

66.7

Woori Financial Digital Investment Association No. 1(*1)

Korea

Securities investment

88.0

(*1)

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

(*2)

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

(*3)

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

- 15 -

As of December 31, 2021

Subsidiaries

Location

Main
Business

Percentage of
ownership (%)

Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*1)

Korea

Securities Investment

59.7

Kiwoom Yonsei Private Equity Investment Trust (*1)

Korea

Securities Investment

88.9

IGIS Europe Private Placement Real Estate Fund No. 163-2 (*2) (*4)

Korea

Securities Investment

97.9

IGIS Global Private Placement Real Estate Fund No. 148-1 (*1) (*4)

Korea

Securities Investment

69.0

IGIS Global Private Placement Real Estate Fund No. 148-2 (*1) (*4)

Korea

Securities Investment

69.0

Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1 (*1) (*4)

Korea

Securities Investment

66.7

Hangkang Sewage Treatment Plant Fund (*1) (*4)

Korea

Securities Investment

55.6

Korea Investment Pocheon Hwado Expressway Professional Investment
Fund (*1) (*4)

Korea

Securities Investment

55.2

Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 1 (*1) (*4)

Korea

Securities Investment

55.0

Midas Global Private Placement Real Estate Fund No. 7-2 (*1) (*4)

Korea

Securities Investment

58.3

Together-Korea Government Private Pool Private Securities Investment Trust No. 3 (*3) (*4)

Korea

Securities Investment

100.0

Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 2 (*1) (*4)

Korea

Securities Investment

55.0

WooriG Woori Bank Partners Private Placement Investment Trust No. 1 (*1) (*4)

Korea

Securities Investment

92.6

WooriG Private Investment Trust No. 1 (*1) (*4)

Korea

Securities Investment

80.0

INMARK France Private Investment Trust No. 18-1 (*1) (*4)

Korea

Securities investment

93.8

Kiwoom-Vibrato Private Investment Trust 1-W(EUR) (*1) (*4)

Korea

Securities investment

99.5

WooriG Global Mid-market Secondaries Private Placement Investment Trust No. 1 (*2) (*4)

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) (*4)

Korea

Securities investment

50.0

Woori G Woori Bank Partners Private Placement Investment Trust No. 2(*1) (*4)

Korea

Securities investment

90.9

Woori G Equity Bridge Loan Private Placement Investment Trust
No. 1(*1) (*4)

Korea

Securities investment

65.0

WooriG Private Investment Trust No. 5 (*1) (*4)

Korea

Securities investment

87.0

Kiwoom Harmony Private Placement Investment Trust No. 3 (*1) (*4)

Korea

Securities investment

76.7

Consus Solar Energy Private Placement Investment Truns 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

(*1)

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

(*2)

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

(*3)

(*4)	In accordance with the revision of the Capital Market Act, a hedge fund has been changed to a private equity fund.

- 16 -

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


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

	As of and for the year ended December 31, 2021
	Assets		Liabilities		Operating revenue		Net income (loss) attributable to owners			Comprehensive income (loss) attributable to owners
Woori America Bank		3,566,197		3,067,474		100,904		20,651			49,980
Woori Global Markets Asia Limited		606,543		457,734		16,641		7,666			19,781
Woori Bank China Limited		6,341,895		5,718,516		205,945		12,891			78,442
AO Woori Bank		521,807		458,899		21,767		5,331			6,599
PT Bank Woori Saudara Indonesia 1906 Tbk		3,790,150		3,026,996		218,460		47,296			91,282
Banco Woori Bank do Brasil S.A.		247,379		225,371		18,442		3,042			(2,959	)
Korea BTL Infrastructure Fund		735,690		288		25,459		22,940			22,082
Woori Finance Myanmar Co., Ltd.		31,141		15,301		8,673		347			(3,210	)
Wealth Development Bank		298,436		255,916		21,424		1,894			2,927
Woori Bank Vietnam Limited		3,023,277		2,544,372		97,179		27,357			71,226
WOORI BANK(CAMBODIA) PLC.		1,385,603		1,063,195		149,105		48,769			72,894
Woori Bank Europe		423,082		310,380		6,703		(649	)		(772	)
Money trust under the FISCM Act		1,433,822		1,403,542		27,492		(244	)		(244	)
Structured entity for securitization of financial assets		2,919,935		3,303,927		74,219		5,631			2,455
Structured entity for the investments in securities		1,506,475		51,159		33,121		16,243			24,407

- 17 -

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

Structured entity for asset securitization

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

Structured entity for the investments in securities

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

Money trust under the Financial Investment Services and Capital Markets Act

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

As of December 31, 2022 and 2021, the Group provides 231,309 million Won and 2,423,131 million Won of credit facilities for the structured entities mentioned above. As of December 31, 2022 and 2021, the purchase commitment amount is 753,756 million Won and 1,014,549 million Won, respectively.

(6)

The Group has entered into various agreements with structured entities such as asset securitization, structured finance, investment fund, and monetary trust. The characteristics and the nature of risks related to unconsolidated structured entities over which the Group does not have control in accordance with Korean IFRS 1110 are as follows:

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

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

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

Unconsolidated structured entities classified as ‘investment funds’ include investment trusts and private equity funds. An investment trust orders the investment and operation of funds to the trust manager in accordance with trust contract with profits distributed to the investors. Private equity funds finance money required to acquire equity securities to enable direction of management and/or improvement of ownership structure, with profit distributed to the investors. The Group recognizes pro rata amount of dividend income as an investor in the same way as ‘structured finance’, and may be exposed to losses due to reduction in investment value. As of December 31, 2022 and 2021, the invested in MMF(Money Market Fund) amounted to 945,795 million Won and 841,977 million Won, respectively, and there are no additional MMF-related commitments.

- 18 -

Total assets of the unconsolidated structured entities, the carrying value of the related items recorded, the maximum exposure to risks, and the loss recognized in conjunction with the unconsolidated structured entities as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions): The maximum exposure to risks includes the amounts that are recognized in the financial statements and will be confirmed when certain conditions are met in the future such as investments, purchase commitments, credit facilities and others.


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

	December 31, 2021
	Asset securitization vehicle		Structured finance		Investment funds
Total assets of the unconsolidated structured entities		9,850,415		71,748,569		89,531,669
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities		7,936,625		2,827,956		4,394,743
Financial assets at FVTPL		—		3,366		4,174,912
Financial assets at FVTOCI		3,878,882		46,478		—
Financial assets at amortized cost		4,057,573		2,775,503		71,622
Investments in associates		—		—		148,209
Derivative assets		170		2,609		—
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities		480		1,403		—
Derivative liability		—		673		—
Other liabilities (provisions)		480		730		—
The maximum exposure to risks		8,116,171		3,838,653		8,547,148
Investments		7,936,625		2,827,956		4,394,742
Purchase agreement		—		20,000		4,152,406
Credit facilities		179,546		990,697		—
Loss recognized on unconsolidated structured entities		94		2,703		55,366

- 19 -

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

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


	December 31, 2022		December 31, 2021
PT Bank Woori Saudara Indonesia 1906 Tbk		92,118		87,741
Wealth Development Bank		20,759		20,835

Net income or loss attributable to non-controlling interests


	2022		2021
PT Bank Woori Saudara Indonesia 1906 Tbk		10,806		8,619
Wealth Development Bank		401		928

Dividends to non-controlling interests


	2022		2021
PT Bank Woori Saudara Indonesia 1906 Tbk		2,330		1,262

- 20 -

2.	BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

(1)	Basis of presentation

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

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

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

The significant accounting policies applied in the preparation of consolidated financial statements as of and for the year ended December 31, 2022 are stated below, and the accounting policies applied are identical to ones used in the preparation of previous year’s consolidated financial statements, except for the effects of adopting new standards or interpretations as explained below.

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

Meanwhile, the consolidated financial statements of the Group was initially approved by the board of directors on February 8, 2023, and were revised and approved on March 3, 2023, and is planned for an approval in the annual shareholder’s meeting on March 23, 2023.

1)	From the accounting period beginning on January 1, 2022, the Group has newly applied the following amendments and interpretations.

Amendments to Korean IFRS‘Statement of cash flow’ - Cash and cash equivalents

The Group did not classify deposits with restrictions under relevant regulations, such as reserve deposits, as cash and cash equivalents. However, in accordance of the IFRS Interpretation Committee’s agenda decision in April 2022 ‘Demand deposits restricted on use under contracts with third parties’ and reply to K-IFRS inquiries on ‘whether the reserve deposit should be classified as cash and cash equivalents’ the policy was changed to classify the reserve deposits with restrictions under relevant regulations which meet the criteria of demand deposits as cash and cash equivalent and applied the modification retrospectively. The impact of this change in accounting policy is as follows:

Impact on the statements of financial position


	December 31, 2022			December 31, 2021			January 1, 2021
Increase in cash and cash equivalents		22,965,162			13,047,255			7,352,253
Decrease in loans and other financial assets at amortized cost		(22,965,162	)		(13,047,255	)		(7,352,253	)

- 21 -

Impact on the statements of cash flow


	2022			2021
Increase in cash flows from operating activities		9,981,310			5,600,710
Increase in exchange rate changes on cash and cash equivalents denominated in foreign currencies		(63,403	)		94,292
Net increase in cash and cash equivalents		9,981,310			5,600,710
Increase in cash and cash equivalents, the beginning of the year		13,047,255			7,352,253
Increase in cash and cash equivalents, the end of the year		22,965,162			13,047,255

ii)

Amendments to Korean IFRS 1103 ‘Business Combination’ – Reference to the Conceptual Framework

The amendments update a reference of definition of assets and liabilities qualify for recognition in revised Conceptual Framework for Financial Reporting. However, the amendments add an exception for the recognition of liabilities and contingent liabilities within the scope of Korean IFRS 1037 ‘Provisions, Contingent Liabilities and Contingent Assets’, and Korean IFRS 2121 ‘Levies’. The amendments also confirm that contingent assets should not be recognized at the acquisition date. The amendments do not have a significant impact on the consolidated financial statements.

iii)

Amendments to Korean IFRS 1016 ‘Property, Plant and Equipment’ – Proceeds before Intended Use

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. Instead, the entity will recognize the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendments do not have a significant impact on the financial statements.

iv)

Amendments to Korean IFRS 1037 ‘Provisions, Contingent Liabilities and Contingent Assets’ – Onerous Contracts: Cost of Fulfilling a Contract

The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The amendments do not have a significant impact on the consolidated financial statements.

Annual Improvements to Korean IFRS 2018-2020

Annual improvements of Korean IFRS 2018-2020 Cycle have been applied from January 1, 2022. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

Korean IFRS 1101 ‘First time Adoption of Korean International Financial Reporting Standards’ - Subsidiaries that are first-time adopters

Korean IFRS 1109 ‘Financial Instruments’ - Fees related to the 10% test for derecognition of financial liabilities

Korean IFRS 1116 ‘Leases’ - Lease incentives

Korean IFRS 1041 ‘Agriculture’ - Fair value measurement

- 22 -

2)	The details of Korean IFRS that have been issued and published as of December 31, 2022 but have not yet reached the effective date, and have not been early adopted by the Group are as follows:

Amendments to Korean IFRS 1001 ‘Presentation of Financial Statements’ – Classification of Liabilities as Current or Non-current

The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise right to defer settlement of the liability or the expectations of management. Also, the settlement of liability includes the transfer of the entity’s own equity instruments, however, it would be excluded if an option to settle them by the entity’s own equity instruments if compound financial instruments is met the definition of equity instruments and recognized separately from the liability. The amendments should be applied for annual periods beginning on or after January 1, 2024, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

ii)

Amendments to Korean IFRS 1001 ‘Presentation of Financial Statements’ - Disclosure of ‘Accounting Policy’

The amendments defined and required the Group to disclose their material accounting policies. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

iii)

Amendments to Korean IFRS 1008 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ - Definition of ‘Accounting Estimates’

The amendments defined accounting estimates and clarified how to distinguish them from changes in accounting policies. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

iv)

Amendments to Korean IFRS 1012 ‘Income Taxes’ - deferred tax related to assets and liabilities arising from a single transaction

The amendments include an additional condition to the exemption to initial recognition of an asset or liability that a transaction does not give rise to equal taxable and deductible temporary differences at the time of the transaction. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

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

- 23 -

(2)	Basis of consolidated financial statement presentation

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

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

•

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

•

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

•

Rights arising from other contractual arrangements;

•

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

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

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

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

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

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

(3)	Business combinations

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

- 24 -

At the acquisition date, the acquiree’s identifiable assets, liabilities and contingent liabilities that meet the condition for recognition under Korean IFRS 1103 are recognized at their fair value, except that:

•

deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with Korean IFRS 1012 Income Taxes and Korean IFRS 1019 Employee Benefits, respectively;

•

liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with Korean IFRS 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 Korean IFRS 1105 Non-current Assets Held for Sale and Discontinued Operations are measured at the lower of their previous carrying amounts and fair value less costs to sell.

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

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

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

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

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

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

(4)	Investments in joint ventures and associates

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

- 25 -

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

The net income of the current period and the assets and liabilities of the joint ventures and associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with Korean IFRS 1105 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in the joint ventures and associates is initially recognized in the consolidated statements of financial position at cost and adjusted thereafter to recognize the Group’s share of the net assets of the joint ventures and associates and any impairment. When the Group’s share of losses of the joint ventures and associates exceeds the Group’s interest in the associate, the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint ventures and associates.

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

Upon a loss of significant influence over the joint ventures and associates, the Group discontinues the use of the equity method and measures at fair value of any investment that the Group retains in the former joint ventures and associates from the date when the Group loses significant influence. The fair value of the investment is regarded as its fair value on initial recognition as a financial asset in accordance with Korean IFRS 1109 Financial Instruments; Recognition and Measurement. The Group recognized differences between the carrying amount and fair value in profit or loss and it is included in determination of the gain or loss on disposal of joint ventures and associates. The Group accounts for all amounts recognized in other comprehensive income in relation to that joint ventures and associates on the same basis as would be required if the joint ventures and associates had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by an associate would be reclassified to net income on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to net income as a reclassification adjustment.

When the Group’s ownership of interest in an associate or a joint venture decreases but the Group continues to maintain significant influence over an associate or a joint venture, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that decrease in ownership interest if the gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. Meanwhile, if interest on associate or joint venture meets the definition of non-current asset held for sale, it is accounted for in accordance with Korean IFRS 1105.

The requirements of Korean IFRS 1028 - Investments in Associates and Joint Ventures to determine whether there has been a loss event are applied to identify whether it is necessary to recognize any impairment loss with respect to the Group’s investment in the joint ventures and associates. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with Korean IFRS 1036 - Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized is not allocated to any asset (including goodwill), which forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with Korean IFRS 1036 to the extent that the recoverable amount of the investment subsequently increases.

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

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

- 26 -

(5)	Investment in Joint operation

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

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

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

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

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

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

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

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

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

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

(6)	Revenue recognition

Korean IFRS 1115 requires the recognition of revenues based on transaction price allocated to the performance obligation when or as the Group performs that obligation to the customer. Revenues other than those from contracts with customers, such as interest revenue and loan origination fee (cost), are measured through effective interest rate method.

Revenues from contracts with customers

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

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

①

Fees and commission received for brokerage

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

②

Fees and commission received related to credit

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

③

Fees and commission received for electronic finance

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

- 27 -

④

Fees and commission received on foreign exchange handling

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

⑤

Fees and commission received on foreign exchange

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

⑥

Fees and commission received for guarantee

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

⑦

Fees and commission received on securities business

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

⑧

Fees and commission from trust management

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

⑨

Other fees

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

Revenues from sources other than contracts with customers

①

Interest income

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

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

- 28 -

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

②

Loan origination fees and costs

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

(7)	Accounting for foreign currencies

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

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

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

(8)	Cash and cash equivalents

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

(9)	Financial assets and financial liabilities

Financial assets

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

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

Business model

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

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

- 29 -

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

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

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

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

Contractual cash flows

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

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

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

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

Early payment features and maturity extension features

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

Terms of holding multiple contractually linked financial tranche that concentrate credit risk.

In such case, credit risk comparison information of the instrument itself, the contractual cash flow characteristics of underlying financial instrument group and the underlying financial instrument group

①

Financial assets at FVTPL

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

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

②

Financial assets at FVTOCI

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

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

- 30 -

③

Financial assets at amortized cost

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

Financial liabilities

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

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

It is possible to designate a financial liability as financial liability at FVTPL if at initial recognition: (a) it is possible to remove or significantly reduce recognition or measurement mismatch that may otherwise have occurred if not for its designation as financial liability at FVTPL; (b) the financial asset forms part of the Group’s financial instrument group (a group composed of a combination of financial asset or liability) according to the Group’s documented risk management or investment strategy, is measured at fair value and is being evaluated for its performance, and such information is provided internally; and (c) the financial liability is part of a contract that contains one or more of embedded derivatives, and is a hybrid contract in which designation as financial liability at FVTPL is allowed under Korean IFRS 1109 Financial Instruments.

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

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

Reclassification

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

Derecognition

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

- 31 -

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

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

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

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

Fair value of financial instruments

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

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

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

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

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

- 32 -

Financial assets at FVTPL and Financial assets at FVTOCI

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

Derivatives

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

Adjustment of valuation amount

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

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

- 33 -

Expected credit losses on financial assets

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

Financial assets at amortized cost

Debt instruments measured at FVTOCI

Contract assets as defined by Korean IFRS 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 Korean 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.

Measurement of expected credit losses on financial asset at amortized cost

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

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

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

Measurement of expected credit losses on financial asset at FVTOCI

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

- 34 -

(10)	Offsetting financial instruments

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

(11)	Investment properties

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

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

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

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

(12)	Premises and equipment

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

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

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


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

The Group reassesses the depreciation method, the estimated useful lives and residual values of premises 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 premises and equipment item exceeds the estimated recoverable amount, the carrying amount of such asset is reduced to the recoverable amount.

- 35 -

(13)	Intangible assets and goodwill

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


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

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

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

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

(14)	Impairment of non-monetary assets

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

- 36 -

(15)

Leases

The Group determines whether the agreement is a lease or includes a lease at the time of the agreement. In exchange for consideration in the contract, if the control over the use of the identified asset is transferred for a period of time, the contract is a lease or includes a lease. In determining whether a contract transfers control of the use of the identified asset, the Group uses the definition of a lease in Korean IFRS 1116.

The Group as a lessee

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

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

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

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

Fixed payments (including in-substance fixed payments)

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

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

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

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

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

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or 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 Group could replace the assets without significant cost or business disruption.

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

- 37 -

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 1,650 million Won.

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

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

The Group as a lessor

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

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

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

If the agreement contains both lease and non-lease elements, the Group applies Korean IFRS 1115 to allocate the consideration of the contract.

The Group applies derecognition and impairment provisions of Korean IFRS 1109 to its net investment in the lease. The Group also carries out regular review of the unguaranteed residual value used to calculate total lease investment.

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

The accounting policy that the Group has applied as a lessor is not different from Korean IFRS 1116.

- 38 -

(16)	Derivative instruments

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

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

Embedded derivatives

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

Embedded derivatives that are part of a hybrid contract of which the host contract is a financial asset within the scope of Korean IFRS 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 Korean IFRS 1109 (e.g. financial liability), then these are treated as separate derivatives if embedded derivatives meet the definition of a derivative, characteristics & risk of the embedded derivatives are not closely related to that of host contract, and if the host contract is not measured at FVTPL.

Hedge accounting

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

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

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

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

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

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

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

- 39 -

Fair value hedge

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

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

Cash flow hedge

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

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

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

- 40 -

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

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

(18)	Provisions

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

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

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

(19)	Capital and compound financial instruments

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

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

(20)	Financial guarantee contracts

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

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

-	Loss allowance in accordance with Korean IFRS 1109

-	Initial book value less accumulated profit measured in accordance with Korean IFRS 1115

- 41 -

(21)	Employee benefits and pensions

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

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

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

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

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

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

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

When applying hedge accounting of net investment in a foreign operation, the effective portion of changes in fair value of the hedging instrument is recognized in other comprehensive income and the ineffective portion of the hedge is recognized as current profit or loss in order to offset changes in the fair value of the hedged item caused by the hedging with changes in the fair value of the hedging instrument. The effective portion of hedge recognized in other comprehensive income will be reclassified from other comprehensive income to current profit or loss in accordance with Korean IFRS 1021 The Effects of Changes in Foreign Exchange Rates at the time of disposal of a foreign operation or disposal of a portion of its foreign operations in the future.

(23)	Income taxes

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

- 42 -

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

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

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

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

The tax uncertainty arises from the compensation claim filed by the Group, and the refund litigation for the amount of tax levied by the tax authority due to differences in tax law analysis.

In response, the Group paid taxes in accordance with Korean IFRS 2123 due to the tax authority’s claim but recognized as a corporate tax asset if it is highly probable of a refund in the future.

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

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

- 43 -

3.	SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

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

The prolonged of Coronavirus disease 2019 (“COVID-19”) has a material impact on the global economy including Korea. Financial and economic shocks may have a negative impact in various forms on the financial condition and financial performance of the Group. However, the Korean government is providing unprecedented supports; such as, loan deferment, to mitigate the negative impact. Despite these various forms of government supports being announced, the negative impact of the global economy from COVID-19 continues.

The Group determined that the credit risk of loan affected by the loan deferment has significantly increased; and evaluated that the possibility of default is high. The Group will continue to assess the adequacy of forward-looking information related to the duration of the impact of COVID-19 on economy and government policies.

As of December 31, 2022 and 2021, total loans (loan receivables, payment guarantees) that are subject to loan deferment and interest deferment, total loans that changed its stage from 12-month to lifetime expected credit losses (Stage 2), and the expected credit loss allowances recognized additionally are as follows: (Unit: Korean Won in millions):


		December 31, 2022		December 31, 2021
Total loans (loan receivables, payment guarantees) that are subject to loan deferment and interest deferment	Corporate		1,960,524		2,428,496
	Retail		216,487		167,146

	Total		2,177,011		2,595,642

Total loans that changed its stage from 12-month to lifetime (Stage 2) expected credit losses	Corporate		1,777,108		2,125,492
	Retail		169,851		134,920

	Total		1,946,959		2,260,412

The expected credit loss allowances that be additionally recognized	Corporate		312,371		275,057
	Retail		12,643		9,657

	Total		325,014		284,714

In addition, as of December 31, 2022, the Group applied the overlay in consideration of the potential for insolvency due to market interest rate hikes and the increase in economic uncertainty due to the prolonged of COVID-19 when forecasting the future economy.

As of December 31, 2022 and 2021, the increase in the provision for expected credit loss due to the application of the future economic forecast overlay is as follows. (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Corporate		347,752		48,583
Retail		16,252		6,237
Total		364,004		54,820

- 44 -

(1)	Income taxes

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

(2)	Valuation of financial instruments

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

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

(3)	Impairment of financial instruments

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

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

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

(4)	Defined benefit plan

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

- 45 -

4.	RISK MANAGEMENT

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

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

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

(1)	Credit risk

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

Credit risk management

Credit facilities limit management

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

Review organization and role

①

Large enterprise loan credit department

Examination, approval, and follow-up management of loans to large enterprise es (including small and medium enterprises affiliated with major debt affiliates)

Examination, approval, and follow-up management of loans to government agencies, public (More than 50% of investments and contributions) and other corporations

Examination, approval, and follow-up management of overseas branches and local corporations of domestic corporations

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

‘General access to the credit management for the group of affiliated enterprises,’ etc. prescribed by the Regulation on Supervision of Banking Business, etc.

②

Small and medium-sized enterprise loan credit department

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

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

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

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

Examination, approval, and follow-up management, etc. of business loans related to housing city fund loans

- 46 -

③

Personal loan credit department

Examination, approval, and follow-up management of personal and individual business loans

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

④

Corporation workout department

General management of enterprises subject to workout, etc.

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

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

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

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

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

⑤

Global IB Review Department

Credit examination, approval and follow-up management related to IB Group Investment Banking

Credit examination, approval, and follow-up of overseas branches of domestic companies, local subsidiaries, and pure overseas companies

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

Establishing and managing Total Exposure limits for affiliated companies

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

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

Credit screening and follow-up management

①

Objective

To maintain appropriate credit ratings and improve asset health

②

Main activities

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

Review the appropriateness of asset forward looking criteria 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 operation manager’s 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.

ii)

Current status by measurement method

Method of calculating risk-weighted assets

①

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

- 47 -

②

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

The internal rating based approach

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

Overview and utilization scope of credit rating evaluation model

①

Definition of corporate credit rating model

The evaluation model 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, receipts, etc. of the representative’s subsidiaries 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 Korean 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, external audit determination, loan size and types of business; such as individuals or corporations.

Evaluation model of local governments

Evaluation model of public institutions

Evaluation model of finance 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

Special financial evaluation model: PF, OF, CF, IPRE, HVCRE

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).

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.

- 48 -

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 forward looking and provisions for the credit losses

④

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

②

Securing independence of credit risk control operations

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

③

Validation of credit evaluation systems by an independent third party

To secure the adequacy of credit evaluation system, the risk management group model validation team that is independent from the credit evaluation system department conducts validation of credit evaluation system. The model validation team conducts periodic validation to assess the design adequacy of credit evaluation system, to determine whether new 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 the 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 model validation team.

- 49 -

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

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

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

iii)

Measurement of expected credit loss

Korean IFRS 1109 requires entities to measure loss allowance equal to 12-month expected credit losses or lifetime expected credit losses after classifying financial assets into one of the three stages, depends on the degree of increase in credit risk since their initial recognition.


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

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

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

- 50 -

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


Corporate Exposures		Retail Exposures
Asset quality level ‘Precautionary’ or lower		Asset quality level ‘Precautionary’ or lower
More than 30 days past due		More than 30 days past due
‘Warning’ level in early warning system		Significant decrease in credit rating(*)
Debtor experiencing financial difficulties (Capital impairment, Adverse opinion or Disclaimer of opinion by external auditors)		Deferment of repayment of principal and interest
Significant decrease in credit rating (*)		Deferment of interest
Deferment of repayment of principal and interest
Deferment of interest

(*)	The Group has applied the above indicators of significant decrease in credit rating since 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 ~ 10	More than 1 step

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

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

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

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

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

The Group has estimated the allowance for credit losses using an estimation model that additionally reflects the future economic forward information based on the past experience loss rate data.

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

In measuring the expected credit losses, the Group is using reasonable and supportable macroeconomic indicators such as GDP growth rate, Personal consumption expenditures increase/decrease rate, consumer price index change rate in order to forecast future economic conditions.

- 51 -

The Group is conducting the following procedures to estimate and apply future economic forecast information.

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

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

Forecast of macroeconomic variables

①

Probability weight

As of December 31, 2022, the probability weights applied to the scenarios of the forecasts of macroeconomic variables is as follows (Unit: %):


	Basic Scenario		Upside Scenario		Downside Scenario
Probability weight		52.57		12.52		34.91

②

Economic forecast of each major macroeconomic variables by scenario (prospect period: 2023)

As of December 31, 2022, the forecasts of major macroeconomic variables by scenario is as follows (Unit: %):


	Basic Scenario		Upside Scenario		Downside Scenario
GDP growth rate		1.70		1.89		1.36
Personal consumption expenditures increase/decrease rate		2.70		3.11		1.97
Consumer price index change rate		3.60		3.39		3.97

As of December 31, 2022 and 2021, the sensitivity of the provision for expected credit losses due to changes in macroeconomic indicators is as follows (Unit: Korean Won in millions):


			December 31, 2022
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	Increase by 1% point		(24,164	)
Retail	Consumer price index change rate	Decrease by 1% point		28,042


			December 31, 2021
Corporate	GDP growth rate	Increase by 1% point		(68,140	)
	GDP growth rate	Decrease by 1% point		74,495
	Personal consumption expenditures increase/decrease rate	Increase by 1% point		(40,654	)
	Personal consumption expenditures increase/decrease rate	Decrease by 1% point		43,028
Retail	GDP growth rate	Increase by 1% point		(8,798	)
	GDP growth rate	Decrease by 1% point		9,163
	Consumer price index change rate	Increase by 1% point		(29,469	)
	Consumer price index change rate	Decrease by 1% point		34,352

The increase rate between the measured default rate and the predicted default rate is used as a future economic forecast adjustment coefficient and reflected in the estimate applied for the current year.

- 52 -

iv)

Maximum exposure to credit risk

The Group’s maximum exposure to credit risk refers to net book value of financial assets net of 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.

The maximum exposure to credit risk as of December 31, 2022 and 2021 is as follows (Unit: Korean Won in millions):


		December 31, 2022		December 31, 2021
Loans and other financial assets at amortized cost	Korean treasury and government agencies		2,871,872		2,184,352
	Banks		19,407,690		23,673,164
	Corporates		131,310,782		120,509,302
	Retail		172,329,255		176,650,594

	Sub-total		325,919,599		323,017,412

Financial assets at FVTPL (*1)	Due from banks		34,995		65,072
	Debt securities		3,192,217		1,471,718
	Loans		19,169		10,623
	Derivative assets		8,204,737		4,802,957

	Sub-total		11,451,118		6,350,370

Financial assets at FVTOCI	Debt securities		32,145,758		38,126,977
Securities at amortized cost	Debt securities		28,268,516		17,086,274
Derivative assets	Derivative assets (designated for hedging)		—		95,103
Off-balance accounts	Guarantees (*2)		11,899,320		12,913,362
	Loan commitments		76,081,523		70,387,647

	Sub-total		87,980,843		83,301,009

Total			485,765,834		467,977,145

(*1)	Financial instruments available for put are not included.

(*2)	Those guarantees include financial guarantees of 3,072,827 million Won and 3,885,937 million Won as of December 31, 2022 and 2021, respectively.

- 53 -

Credit risk exposure by geographical areas

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


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

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


	December 31, 2021
	Korea		China		USA		UK		Japan		Others (*)		Total
Loans and other financial assets at amortized cost		300,108,987		5,620,622		3,742,328		212,821		630,592		12,702,062		323,017,412
Securities at amortized cost		16,785,265		92,880		27,018		—		—		181,111		17,086,274
Financial assets at FVTPL		4,220,406		1,330		1,188,358		195,048		61,315		683,913		6,350,370
Financial assets at FVTOCI		34,242,133		808,359		1,713,435		1,755		23,193		1,338,102		38,126,977
Derivative assets (designated for hedging)		17		—		95,086		—		—		—		95,103
Off-balance accounts		79,274,578		1,001,429		375,929		31,116		32,402		2,585,555		83,301,009
Guarantees		10,783,987		590,990		167,541		31,116		32,402		1,307,326		12,913,362
Loan commitments		68,490,591		410,439		208,388		—		—		1,278,229		70,387,647

Total		434,631,386		7,524,620		7,142,154		440,740		747,502		17,490,743		467,977,145

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

- 54 -

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, 2022 and 2021 (Unit: Korean Won in millions):


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

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


	December 31, 2021
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and other financial assets at amortized cost		64,532,721		36,697,082		30,802,871		3,259,250		172,270,921		15,454,567		323,017,412
Securities at amortized cost		479,291		—		7,061,770		250,607		—		9,294,606		17,086,274
Financial assets at FVTPL		55,447		116,355		4,981,797		2,505		1,836		1,192,430		6,350,370
Financial assets at FVTOCI		376,998		258,866		29,444,989		131,967		—		7,914,157		38,126,977
Derivative assets (designated for hedging)		—		—		95,103		—		—		—		95,103
Off-balance accounts		16,369,326		18,224,550		12,342,461		3,520,613		27,527,027		5,317,032		83,301,009
Guarantees		5,519,493		3,024,323		2,189,980		1,158,597		5,186		1,015,783		12,913,362
Loan commitments		10,849,833		15,200,227		10,152,481		2,362,016		27,521,841		4,301,249		70,387,647

Total		81,813,783		55,296,853		84,728,991		7,164,942		199,799,784		39,172,792		467,977,145

- 55 -

②

Details of financial instruments and corporate loans by industry as of December 31, 2022 that may have impact from the spread of the COVID-19 are as follows, and industries that will have impacts are subject to change based on future economy condition. (Unit : Korean Won in millions):


			December 31, 2022
			Loans and other financial assets at amortized cost		Financial assets at FVTPL		Financial assets at FVTOCI		Off-balance accounts		Total
Service business	Distribution business	General retail business		1,157,537		824		6,296		496,830		1,661,487
		General wholesale business		1,801,361		1,659		—		533,368		2,336,388
		Sub-total		2,958,898		2,483		6,296		1,030,198		3,997,875
	Accommodation business			1,434,456		2,228		24,121		161,573		1,622,378
	Travel business			48,655		—		—		16,369		65,024
	Arts, Sports and Leisure service			1,780,739		1,012		—		104,065		1,885,816
	Food business			1,520,098		426		—		179,977		1,700,501
	Transport business			357,940		181		—		248,801		606,922
	Education			425,779		169		—		40,891		466,839
	Others			1,560,457		773		—		301,343		1,862,573
		Sub-total		10,087,022		7,272		30,417		2,083,217		12,207,928
Manufacturing	Textile			2,361,092		767		8,898		1,076,002		3,446,759
	Metal			1,579,004		191		—		1,225,601		2,804,796
	Non-metal			796,671		1,529		7,629		381,014		1,186,843
	Chemical			3,649,189		158		—		3,627,183		7,276,530
	Electronics			1,409,475		58		—		1,202,758		2,612,291
	Others			3,280,434		1,287		11,452		2,530,964		5,824,137
		Sub-total		13,075,865		3,990		27,979		10,043,522		23,151,356

	Total			23,162,887		11,262		58,396		12,126,739		35,359,284

Details of financial instruments and corporate loans by industry as of December 31, 2021 that may have impact from the spread of the COVID-19 are as follows (Unit : Korean Won in millions):


			December 31, 2021
			Loans and other financial assets at amortized cost		Financial assets at FVTPL		Financial assets at FVTOCI		Off-balance accounts		Total
Service business	Distribution business	General retail business		754,850		274		—		299,064		1,054,188
		General wholesale business		809,893		221		—		237,678		1,047,792
		Sub-total		1,564,743		495		—		536,742		2,101,980
	Accommodation business			1,441,185		625		23,840		181,563		1,647,213
	Travel business			53,302		—		—		12,455		65,757
	Arts, Sports and Leisure service			600,746		503		—		63,660		664,909
	Food business			1,279,128		216		—		179,799		1,459,143
	Transport business			404,120		77		—		167,883		572,080
	Others			1,050,229		599		—		191,837		1,242,665
		Sub-total		6,393,453		2,515		23,840		1,333,939		7,753,747
Manufacturing	Textile			2,626,493		724		10,718		1,012,989		3,650,924
	Metal			199,877		10		—		9,704		209,591
	Non-metal			148,471		24		—		48,171		196,666
	Chemical			904,563		1,994		—		689,895		1,596,452
	Electronics			103,510		31		—		33,389		136,930
	Others			191,865		—		—		87,587		279,452
		Sub-total		4,174,779		2,783		10,718		1,881,735		6,070,015

Total				10,568,232		5,298		34,558		3,215,674		13,823,762

- 56 -

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, 2022 and 2021 is as follows (Unit: Korean Won in millions):


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

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


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

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

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

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

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

- 57 -


	December 31, 2021
	Stage 1				Stage 2				Stage 3		Total		Loss allowance			Total, net
	Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Above appropriate credit rating (*1)		Lower than a limited credit rating (*2)		Stage 3		Total		Loss allowance			Total, net
Loans and other financial assets at amortized cost		283,565,471		18,624,292		12,231,201		8,988,853		968,857		324,378,674		(1,361,262	)		323,017,412
Korean treasury and government agencies		2,188,261		—		9		—		—		2,188,270		(3,918	)		2,184,352
Banks		23,126,109		492,437		46,373		—		22,788		23,687,707		(14,543	)		23,673,164
Corporates		101,561,012		13,461,216		2,349,023		3,579,128		570,173		121,520,552		(1,011,250	)		120,509,302
General business		66,937,885		8,659,543		1,708,778		2,477,966		398,652		80,182,824		(750,626	)		79,432,198
Small- and medium-sized enterprise		28,958,516		4,713,234		618,828		1,087,829		110,854		35,489,261		(220,117	)		35,269,144
Project financing and others		5,664,611		88,439		21,417		13,333		60,667		5,848,467		(40,507	)		5,807,960
Consumers		156,690,089		4,670,639		9,835,796		5,409,725		375,896		176,982,145		(331,551	)		176,650,594
Securities at amortized cost		17,091,509		—		—		—		—		17,091,509		(5,235	)		17,086,274
Financial assets at FVTOCI (*3)		37,917,921		209,056		—		—		—		38,126,977		(12,146	)		38,126,977

Total		338,574,901		18,833,348		12,231,201		8,988,853		968,857		379,597,160		(1,378,643	)		378,230,663


	December 31, 2021
	Collateral value
	Stage 1		Stage 2		Stage 3		Total
Loans and other financial assets at amortized cost		204,832,977		17,804,901		586,962		223,224,840
Korean treasury and government agencies		20,679		—		—		20,679
Banks		1,287,055		—		—		1,287,055
Corporates		71,937,733		4,576,048		345,085		76,858,866
General business		40,235,793		3,108,160		220,792		43,564,745
Small- and medium-sized enterprise		29,222,070		1,467,888		74,293		30,764,251
Project financing and others		2,479,870		—		50,000		2,529,870
Consumers		131,587,510		13,228,853		241,877		145,058,240
Securities at amortized cost		—		—		—		—
Financial assets at FVTOCI (*3)		—		—		—		—

Total		204,832,977		17,804,901		586,962		223,224,840

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

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

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

- 58 -

Guarantees and loan commitments

The credit quality of the guarantees and loan commitments as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


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

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

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

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


	December 31, 2021
Financial assets	Stage 1				Stage 2				Stage 3		Total
Financial assets	Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Stage 3		Total
Off-balance accounts
Guarantees		11,486,461		1,037,142		47,549		275,166		67,044		12,913,362
Loan commitments		65,472,824		2,732,039		1,711,338		471,375		71		70,387,647

Total		76,959,285		3,769,181		1,758,887		746,541		67,115		83,301,009

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

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

vi)

Collateral and other credit enhancements

For the year ended December 31, 2022, there have been no significant decreases in the value of collateral or other credit enhancements held by the Group or significant changes in collateral or other credit enhancements due to changes in the collateral policy of the Group.

vii)

Among the financial assets that have measured loan-loss allowance in terms of lifetime expected credit losses, amortized costs before changes in contractual cash flows for the years ended December 31, 2022 and 2021 are 86,747 million Won and 145,594 million Won, respectively, with net losses recognized along with the changes 4,539 million Won and 11,734 million Won, respectively.

viii)

The Group determines which loan is subject to write-off in accordance with internal guidelines and writes off loan receivables when it is determined that the loans are practically irrecoverable. For example, loans are practically irrecoverable when application is made for rehabilitation under the Debtor Rehabilitation and Bankruptcy Act and loans are confirmed as irrecoverable by the court’s decision to waive debtor’s obligation, or when it is impossible to recover the loan amount through legal means such as auctioning of debtor’s assets or through any other means of recovery available. Notwithstanding the write-off, the Group may still exercise its right of collection after the asset has been written off in accordance with its collection policies.

As the Group manages receivables that have not lost the right of claim to the debtor for the grounds of incomplete statute limitation and uncollected receivables under the related laws as receivable charge-offs, the balance as of December 31, 2022 and 2021 is 8,434,449 million Won and 8,634,641 million Won, respectively. In addition, the contractual uncollected amount of financial assets written off during the year ended December 31, 2022, but still in the process of recovery is 220,924 million Won.

- 59 -

(2)	Market risk

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

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

Market risk management for trading activities

The Group uses both a standard-based and an internal model-based approach to measure market risk. The standard-based approach is used to calculate individual market risk of owned capital while the internal model-based approach is used to calculate general capital market risk and managing internal risk. The Value at Risk (VaR) methodology is used to manage and measure market risk. The Group also uses the internal model approved by the Financial Supervisory Service to measure the VaR using the Historical Simulation Method based on a 99% confidence level and a 10-day retention period, and calculates the required capital risk for calculating the BIS ratio. For internal management purposes, limit management is performed on a daily basis measuring VaR based on a 99% confidence and 1 day retention period. In addition, the Group performs a daily verification that compares VaR measurement and profit and loss to verify the suitability of the model.

In addition, for crisis management, the Group performs stress testing on a monthly basis, which is to measure the expected loss amount in case of extreme situation, such as IMF bailout in 1997 or global financial crisis in 2008.

Each year, the Risk Management Committee establishes the VaR limit, loss limit and risk capital limit discriminated by managerial unit(group, department, team, risk element, etc.), and as for minor operating units, the limits are decided by position operating department up to given limit. Limit compliance is independently monitored by risk general department and periodically reported to risk management committee and risk management council.

The minimum, maximum and average VaR for the years ended December 31, 2022 and 2021, respectively, and the VaR as of December 31, 2022 and 2021, respectively, are as follows (Unit: Korean Won in millions):


	December 31, 2022			For the year ended December 31, 2022									December 31, 2021			For the year ended December 31, 2021
Risk factor	December 31, 2022			Average			Maximum			Minimum			December 31, 2021			Average			Maximum			Minimum
Interest rate		11,800			8,847			11,987			4,298			4,177			4,681			14,017			2,405
Stock price		7,055			6,590			12,448			1,806			2,972			3,637			6,676			1,609
Foreign currencies		17,608			14,002			22,251			5,421			5,904			6,745			13,144			4,747
Diversification		(17,354	)		(12,725	)		(19,640	)		(4,201	)		(6,072	)		(7,300	)		(20,007	)		(3,628	)

Total VaR (*)		19,109			16,714			27,046			7,324			6,981			7,763			13,830			5,133

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

ii)

Market risk management for non-trading activities

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

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.

- 60 -

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.

- 61 -

For assets and liabilities as of December 31, 2022 and 2021 that include the Bank and consolidated trusts and subsidiaries of the Bank, details of ΔEVE and ΔNII calculated based on interest rate risk in banking book (IRRBB) are as follows (Unit: Korean Won in millions):


December 31, 2022		December 31, 2021
ΔEVE(*1)	ΔNII(*2)	ΔEVE(*1)	ΔNII(*2)
411,447	448,509	920,290	195,186

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

(*2)	ΔNII: change in Net Interest Income

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


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

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

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

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


	December 31, 2021
	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		196,577,479		55,969,032		12,424,001		11,061,432		50,657,635		4,798,802		331,488,381
Financial assets at FVTPL		1,187,567		529		27		27		431		13,131		1,201,712
Financial assets at FVTOCI		5,489,649		4,741,319		3,915,011		4,139,102		19,962,071		634,111		38,881,263
Securities at amortized cost		1,297,865		847,134		813,405		949,475		11,990,559		2,116,986		18,015,424

Total		204,552,560		61,558,014		17,152,444		16,150,036		82,610,696		7,563,030		389,586,780

Liability:
Deposits due to customers		145,230,737		47,170,403		32,747,529		28,275,351		61,531,873		59,152		315,015,045
Borrowings		10,594,673		3,757,710		1,447,638		1,249,992		4,027,839		428,660		21,506,512
Debentures		6,819,495		1,733,375		2,273,774		1,813,136		12,550,020		2,128,570		27,318,370

Total		162,644,905		52,661,488		36,468,941		31,338,479		78,109,732		2,616,382		363,839,927

- 62 -

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, 2022 and 2021 are as follows (Unit: USD in millions, JPY in millions, CNY in millions, EUR in millions, and Korean Won in millions):


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

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

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

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

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


		December 31, 2021
		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		5,707		6,765,996		43,146		444,510		1,236		230,188		93		125,491		966,095		8,532,280
	Loans and other financial assets at amortized cost		26,240		31,107,940		139,282		1,415,093		23,733		4,420,552		2,329		3,126,359		5,579,288		45,649,232
	Financial assets at FVTPL		427		506,505		17,283		178,059		—		—		326		437,045		71,369		1,192,978
	Financial assets at FVTOCI		3,195		3,787,466		—		—		3,899		726,310		33		44,638		741,348		5,299,762
	Securities at amortized cost		240		283,935		—		—		499		92,917		29		39,142		138,422		554,416

	Total		35,809		42,451,842		199,711		2,037,662		29,367		5,469,967		2,810		3,772,675		7,496,522		61,228,668

Liability	Financial liabilities at FVTPL		274		324,420		16,384		168,798		—		—		239		321,354		203,523		1,018,095
	Deposits due to customers		19,803		23,476,384		219,531		2,261,701		26,342		4,906,441		1,640		2,201,233		4,796,156		37,641,915
	Borrowings		5,766		6,835,191		29,001		298,784		—		—		349		469,124		1,395,597		8,998,696
	Debentures		2,716		3,220,380		—		—		—		—		—		—		341,621		3,562,001
	Other financial liabilities		2,731		3,237,053		10,181		104,884		2,658		495,125		335		449,891		210,757		4,497,710

	Total		31,290		37,093,428		275,097		2,834,167		29,000		5,401,566		2,563		3,441,602		6,947,654		55,718,417

Off-balance accounts			7,197		8,532,510		32,777		337,685		2,533		471,852		598		803,357		1,250,186		11,395,590

- 63 -

iv)

Interest rate indicator reform risk management

The Group is closely monitoring the output and market of various industry working groups that manage the transition to new interest rate indicators, including those announced by London Interbank Offered Rate (LIBOR) regulators.

A fundamental shift in interest rate indicators (hereafter, ‘interest rate indicator reform’) is taking place around the world, and certain interbank lending rates (hereinafter, ‘IBORs’) are being replaced by new risk-free rates. In particular, LIBOR, with the exception of overnight, 1-month, 3-month, 6-month, and 12-month USD LIBOR, all of the calculations were stopped as of December 31, 2021, and five USD LIBORs which were mentioned earlier will also be discontinued as of June 30, 2023.

The Group has established a LIBOR-related response plan consisting of work flows such as risk management, accounting, taxation, law, computerization, and customer management. The purpose of the plan is to identify the impacts and risks associated with interest rate reform within the business, and to prepare and implement an action plan to facilitate the transition to an alternative interest rate indicator. The Group aims to complete the response plan in accordance with the supervisory authority’s response guidelines.

The details of financial instruments that have not completed the LIBOR-related conversion to interest rates benchmark as of December 31, 2022, are as follows. Non-derivative financial instruments are in the carrying amount. Derivatives and commitments and financial guarantees are in the nominal amount. (Unit: Korean Won in millions)


	USD (*1)
	Total amount (*2)		With interest rate substitution clause
Non-derivative financial assets
Financial assets at FVTOCI		514,935		355,247
Financial assets at amortized cost		4,214,876		3,237,567

Sub-total		4,729,811		3,592,814

Non-derivative financial liabilities
Financial assets at amortized cost		89,326		89,326
Derivatives
Interest rate related (for trading)		26,210,037		26,208,438
Currency related (for trading)		33,886,969		33,598,769
Interest rate related (for hedging)		2,344,505		2,344,505

Sub-total		62,441,511		62,151,712

(*1)

Financial instruments related to USD Libor (overnight rate, 1, 3, 6, 12 month rates) that are expired before June 30, 2023 are excluded.

(*2)

For contracts that do not have an interest rate alternative clause, we are in the process of negotiating to add an interest rate alternative clause.

The KRW CD interest rate is planned to be replaced by the Korea Overnight Financing Repo Rate (KOFR) in the long term, but the policy direction to activate the replacement rate or when the CD rate calculation will be stopped is not clear.

- 64 -

(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 one month) and mid- to long-term (net stabilization fund procurement ratio, over one year). Daily Liquidity Coverage Ratio(LCR) and quarterly Net Stable Funding Ratio(NSFR) are calculated and monitored, and relevant information is provided in accordance with the disclosure standards of the Basel Committee on Banking Supervision (BCBS).

Analysis of financing and operation status by maturity

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

Establishment and implementation of Contingency plan

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

Inspection items related to liquidity risk on the Contingency Plan checklist

∎

The amount of Won/foreign currency funds and shortages

∎

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 receipts

∎

Percentage of fund bias by subject and period

∎

Won and foreign currency funding spread

- 65 -

ii)

Maturity analysis of non-derivative financial liabilities

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


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

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


	December 31, 2021
	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		100,976		—		—		—		—		—		100,976
Deposits due to customers		223,651,106		32,061,611		19,762,035		31,197,665		8,869,531		1,615,196		317,157,144
Borrowings		8,697,161		3,685,707		2,190,705		2,239,620		4,259,963		440,506		21,513,662
Debentures		1,516,215		3,137,770		4,064,603		3,959,258		12,550,020		2,128,570		27,356,436
Lease liabilities		37,436		49,457		26,535		21,816		122,468		38,275		295,987
Other financial liabilities		16,833,929		206,429		281		114		2,389		1,999,198		19,042,340

Total		250,836,823		39,140,974		26,044,159		37,418,473		25,804,371		6,221,745		385,466,545

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


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

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


	December 31, 2021
	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		100,976		—		—		—		—		—		100,976
Deposits due to customers		229,593,127		33,208,402		19,579,259		26,760,691		7,527,939		89,640		316,759,058
Borrowings		8,697,161		3,685,707		2,190,705		2,239,620		4,259,963		440,506		21,513,662
Debentures		1,516,215		3,137,770		4,064,603		3,959,258		12,550,020		2,128,570		27,356,436
Lease liabilities		37,436		49,477		26,602		21,972		128,377		41,814		305,678
Other financial liabilities		16,833,929		206,429		281		114		2,389		1,999,198		19,042,340

Total		256,778,844		40,287,785		25,861,450		32,981,655		24,468,688		4,699,728		385,078,150

- 66 -

iii)

Maturity analysis of derivative financial liabilities

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

The cash flow by the maturity of derivative financial liabilities as of December 31, 2022 and 2021 is as follows (Unit: Korean Won in millions):


		Within 3 months			4 to 6 months		7 to 9 months			10 to 12 months		1 to 5 years		Over 5 years			Total
December 31, 2022	Fair value hedge		25,048			16,175		31,974			18,540		118,027		(3,615	)		206,149
	Trading		8,952,915			—		—			—		—		—			8,952,915
December 31, 2021	Fair value hedge		(1,656	)		598		(940	)		1,392		21,552		—			20,946
	Trading		4,584,667			—		—			—		—		—			4,584,667

iv)

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

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


	December 31, 2022		December 31, 2021
Guarantees		11,899,320		12,913,362
Loan commitments		76,081,523		70,387,647
Others		6,112,770		4,322,265

(4)	Operational risk

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.

Operational risk management

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

In addition, based on the objectivity of the overall operation risk management system through self-compliance validation and independent third-party inspection, the Bank obtained the approval of the Financial Supervisory Service for the use of Advanced Measurement Approaches (“AMA”) in June 2009 and has applied the method since June 30, 2009.

In July 2016, the operation risk capital calculation and operation risk management were elaborated through the advancement project of operation risk management, and a joint project has been being performed with Woori Financial Group since January 2020 for compliance with the new Basel III global regulation, which will be implemented from 2023. The Bank was newly opened and is operating an operating risk management system upgraded on March 2, 2021.

- 67 -

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 line 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 model validation team (Risk management group)

Third line of defense: Independent third-party inspection of the audit department(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, scenario evaluation, and advanced measurement methods 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.

- 68 -

ii)

Management methods by assessment and measurement methods

Means of management

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

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

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

Scenario Analysis: Because of the nature of the operational risk, it is difficult to apply statistical methods due to the lack of accumulated loss data, so the Bank predicts the potential losses and the number of annual occurrences of future operational risk losses based on various information such as internal data, external data, and opinions of experts in each department store.

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 capital volume of the operation risk by applying the advanced measurement method and the subsidiary based on the consolidated basis applies the basic index method. The Basic Indicators Act calculates 15% of the Bank’s total profits as operating risk capital.

Advanced measurement method draws the total annual loss distribution through integrated loss distribution method combining loss data and scenarios, and calculates the value equivalent to 99.9 percent per centile as operational risk capital.

Based on Basel II standards, the Bank sets the 9X7 matrix as an operational risk capital measurement unit by adding the ‘support’ area corresponding to the common business of the Bank, and calculates all four basic elements (internal data, external data, scenarios, business environment, and internal control factors) of the measurement of operational risk capital.

The Bank does not use insurance to reduce operational risk capital.

- 69 -

(5)	Capital management

The Group complies with the standard of capital adequacy provided by financial regulatory authorities. The capital adequacy standard is based on Basel published by Basel III Committee on Banking Supervision in Bank for International Settlement in 2010 and was implemented in Korea in December 2013. The capital adequacy ratio is calculated by dividing own capital by asset (weighted with a risk premium – risk weighted assets) based on the consolidated financial statements of the Group.

According to the above regulations, the Group is required to meet the following new 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, 2022 and 2021, respectively.

Details of the Group’s capital adequacy ratio as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2022 (*)			December 31, 2021
Risk-weighted assets for credit risk		145,358,395			139,182,195
Risk-weighted assets for market risk		8,416,430			5,297,820
Risk-weighted assets for operational risk		13,657,389			12,795,750

Total risk-weighted assets		167,432,214			157,275,765

Common Equity Tier 1 capital		21,236,314			20,371,283
Other Tier 1 capital		1,652,687			2,031,988
Tier 2 capital		3,230,135			3,069,763

Total risk-adjusted capital		26,119,136			25,473,034

Total capital ratio		15.60	%		16.20	%

Common Equity Tier 1 ratio		12.68	%		12.95	%

Tier 1 capital ratio		13.67	%		14.24	%

(*)	Tier 1 capital ratio as of December 31, 2022 is the estimation.

- 70 -

5.	OPERATING SEGMENTS

In evaluating the results of the Group and allocating resources, the Group’s Chief Operation Decision Maker (the “CODM”) utilizes the information per type of customers. This financial information of the segments is regularly reviewed by the CODM to make decisions about resources to be allocated to each segment and evaluate its performance.

(1)	Segment by type of customers

The Group’s reporting segments comprise the following customers: consumer banking, corporate banking, investment banking, capital market, credit card 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: Fund management, investment in securities and derivatives, etc.

•

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

The details of operating income by each segment are as follows (Unit: Korean Won in millions):


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

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

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

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

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

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

- 71 -


	For the year ended December 31, 2021
	Consumer banking			Corporate banking			Investment banking			Capital market			Headquarters and others			Sub-total			Adjustments (*)			Continuing operations
Net interest income (expense)		1,988,570			2,139,044			(18,492	)		44,747			1,020,904			5,174,773			747,247			5,922,020
Interest income		3,352,218			2,998,745			129,461			1,898			1,581,733			8,064,055			369,972			8,434,027
Interest expense		(698,079	)		(1,436,147	)		—			—			(755,056	)		(2,889,282	)		377,275			(2,512,007	)
Inter-segment		(665,569	)		576,446			(147,953	)		42,849			194,227			—			—			—
Net non-interest income (expense)		511,052			617,674			355,270			80,264			95,399			1,659,659			(705,497	)		954,162
Non-interest income		454,157			653,424			472,542			14,166,144			68,914			15,815,181			(14,068,351	)		1,746,830
Non-interest expense		(25,735	)		(102,379	)		(117,272	)		(14,085,880	)		175,744			(14,155,522	)		13,362,854			(792,668	)
Inter-segment		82,630			66,629			—			—			(149,259	)		—			—			—
Other income (expense)		(1,837,386	)		(1,122,785	)		(30,901	)		(19,416	)		(709,737	)		(3,720,225	)		(83,265	)		(3,803,490	)
Administrative expense		(1,767,149	)		(999,022	)		(27,552	)		(22,177	)		(762,074	)		(3,577,974	)		(28,741	)		(3,606,715	)
Reversal of (provision for) allowance for credit loss		(70,237	)		(123,763	)		(3,349	)		2,761			52,337			(142,251	)		(54,524	)		(196,775	)

Operating income		662,236			1,633,933			305,877			105,595			406,566			3,114,207			(41,515	)		3,072,692

Non-operating income (expense)		(15,525	)		(1,411	)		55,253			—			27,281			65,598			36,993			102,591
Equity method income (expense)		—			—			61,456			47			(1,453	)		60,050			—			60,050
Other non-operating income (expense)		(15,525	)		(1,411	)		(6,203	)		(47	)		28,734			5,548			36,993			42,541

Net income before income tax expense		646,711			1,632,522			361,130			105,595			433,847			3,179,805			(4,522	)		3,175,283
Income tax expense		(177,846	)		(445,682	)		(99,311	)		(29,039	)		(26,288	)		(778,166	)		(12,011	)		(790,177	)

Net income		468,865			1,186,840			261,819			76,556			407,559			2,401,639			(16,533	)		2,385,106

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

(2)	Information on products and services

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

(3)	Information on geographical areas

Among the Group’s revenue (interest income and non-interest income) from services, revenue from the domestic customers for the years ended December 31, 2022 and 2021 amounted to 12,230,645 million Won and 8,989,700 million Won, respectively, and revenue from the foreign customers amounted to 2,043,017 million Won and 1,191,157 million Won, respectively. Among the Group’s non-current assets (investments in joint ventures and associates, investment properties, premises and equipment and intangible assets), non-current assets attributed to domestic subsidiaries as of December 31, 2022 and 2021 are 4,291,808 million Won and 4,299,239 million Won, respectively, and foreign subsidiaries are 368,284 million Won and 375,061 million Won, respectively.

(4)	Information about major customers

The Group does not have any single customer that generates 10% or more of the Group’s total revenue for the years ended December 31, 2022 and 2021, respectively.

- 72 -

6.	CASH AND CASH EQUIVALENTS

(1)	Details of cash and cash equivalents are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Cash		1,770,695		1,741,702
Foreign currencies		628,213		502,931
Demand deposits		29,929,373		17,634,286
Fixed deposits		90,014		33,625

Total		32,418,295		19,912,544

(2)	Details of restricted cash and cash equivalents are as follows (Unit: Korean Won in millions):


	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		6,437,717	Reserve deposits under the BOK Act and others

Total			22,965,162


	Counterparty	December 31, 2021		Reason of restriction
Due from banks in local currency:
Due from BOK	BOK		9,619,055	Reserve deposits under the BOK Act

Due from banks in foreign currencies:
Due from banks on demand	BOK and others		3,428,199	Reserve deposits under the BOK Act and others

Total			13,047,254

(3)	Among the investing and financing activities, significant transactions not involving cash inflows and outflows are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022			For the year ended December 31, 2021
Changes in other comprehensive income due to valuation of financial assets at FVTOCI		(488,209	)		(151,036	)
Accounts payable due to disposal of financial assets at FVTOCI		—			2,640
Changes in other comprehensive income of investments accounted for using the equity method		(1,205	)		1,625
Changes in other comprehensive income of foreign operations translation		51,381			250,555
Changes in other comprehensive income of hedges of a net investment in a foreign operation		(20,701	)		—
Changes in financial assets at FVTOCI as a result of debt-equity swap		56,274			79
Changes in accounts payable related to acquisition of intangible assets		7,382			5,678
Changes in intangible assets related to accrued payable		13,109			12,852
Reclassify premises and equipment to investment property		19,190			9,937
Increase in the right-of-use assets and lease liabilities		154,689			101,800
Changes from investment assets of associates to FVTPL		—			615

- 73 -

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


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

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


	For the year ended December 31, 2021
						Not involving cash inflows and outflows
	January 1, 2021		Cash flow			Foreign Exchange		Variation of gains on valuation of hedged items			Others			December 31, 2021
Borrowings		19,900,256		671,654			805,039		—			(69	)		21,376,880
Debentures		21,866,767		4,387,427			316,457		(104,306	)		11,944			26,478,289
Lease liabilities		379,981		(163,298	)		10,950		—			66,993			294,626
Rental deposit		53,036		3,585			—		—			—			56,621

Total		42,200,040		4,899,368			1,132,446		(104,306	)		78,868			48,206,416

- 74 -

7.	FINANCIAL ASSETS AT FVTPL

Details of financial assets at FVTPL are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Due from banks:
Gold banking assets		34,995		65,072
Securities:
Debt securities
Korean treasury and government agencies		2,507,689		783,295
Financial institutions		284,142		288,602
Corporates		309,652		329,404
Others		90,734		70,417
Equity securities		301,621		291,125
Capital contributions		1,432,256		930,376
Beneficiary certificates		5,120,563		4,266,805
Others		142,335		94,673

Sub-total		10,188,992		7,054,697

Loans		19,169		10,623
Derivatives assets		8,204,737		4,802,957
Other assets		41,680		—

Total		18,489,573		11,933,349

Financial assets designated at FVTPL upon initial recognition is nil as of December 31, 2022 and 2021.

8.	FINANCIAL ASSETS AT FVTOCI

(1)	Details of financial assets at FVTOCI as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Debt securities:
Korean treasury and government agencies		5,487,523		4,727,615
Financial institutions		16,870,619		22,909,615
Corporates		4,044,446		5,091,035
Bonds denominated in foreign currencies		5,061,945		5,173,112
Securities loaned		98,027		98,535
Mortgage-backed debt securities		583,198		127,065

Sub-total		32,145,758		38,126,977

Equity securities		854,504		915,074

Total		33,000,262		39,042,051

(2)	Details of equity securities designated as financial assets at FVTOCI are as follows (Unit: Korean Won in millions):


Purpose of acquisition	December 31, 2022		December 31, 2021		Remarks
Investment for strategic business partnership purpose		698,629		720,402
Debt-equity swap		155,869		194,666
Others		6		6		Mutual Aid Association Insurance Subscription, etc

Total		854,504		915,074

- 75 -

(3)	Changes in the loss allowance and gross carrying amount of financial assets at FVTOCI are as follows (Unit: Korean Won in millions):

Allowance for credit losses


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

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

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


	For the year ended December 31, 2021
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(9,631	)		—		—		(9,631	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal (provision) of allowance for credit losses		(4,909	)		—		—		(4,909	)
Disposal		2,378			—		—		2,378
Others (*)		16			—		—		16

Ending balance		(12,146	)		—		—		(12,146	)

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

Gross carrying amount


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

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

- 76 -

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


	For the year ended December 31, 2021
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		28,948,141			—		—		28,948,141
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		30,522,426			—		—		30,522,426
Disposal		(21,533,361	)		—		—		(21,533,361	)
Gain on fair value valuation		(213,517	)		—		—		(213,517	)
Amortization on the interest method		31,641			—		—		31,641
Others (*)		371,647			—		—		371,647

Ending balance		38,126,977			—		—		38,126,977

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

(4)

During the years ended December 31, 2022 and 2021 the Bank sold equity securities designated as financial assets at FVTOCI in accordance with disposal resolution by the creditors. The fair value at the disposal date is 3,567 million Won and 138,511 million Won, respectively, and cumulative gain on disposal amounts to 14,444 million Won for the years ended December 31, 2022 and loss on disposal amounts to 3,062 million Won for the year ended December 31, 2021.

9.	SECURITIES AT AMORTIZED COST

(1)	Details of securities at amortized cost as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Korean treasury and government agencies		8,983,600			8,882,500
Financial institutions		10,283,631			1,835,947
Corporates		6,237,547			5,818,646
Bonds denominated in foreign currencies		1,600,822			515,421
Mortgage-backed debt securities		1,171,300			38,995
Allowance for credit losses		(8,384	)		(5,235	)

Total		28,268,516			17,086,274

- 77 -

(2)	Changes in the loss allowance and gross carrying amount of securities at amortized cost are as follows (Unit: Korean Won in millions):

Allowance for credit losses


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

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


	For the year ended December 31, 2021
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(4,566	)		—		—		(4,566	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal of loss allowance		(664	)		—		—		(664	)
Others (*)		(5	)		—		—		(5	)

Ending balance		(5,235	)		—		—		(5,235	)

(*)	Others consist of foreign currencies translation, etc

ii)

Gross carrying amount


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

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


	For the year ended December 31, 2021
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		17,025,405			—		—		17,025,405
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		6,435,692			—		—		6,435,692
Disposal/Redemption		(6,425,408	)		—		—		(6,425,408	)
Amortization on the effective interest method		14,810			—		—		14,810
Others (*)		41,010			—		—		41,010

Ending balance		17,091,509			—		—		17,091,509

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

- 78 -

10.

LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST

(1)

Details of loans and other financial assets at amortized cost as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Due from banks		2,673,618		2,616,480
Loans		315,029,858		311,839,771
Other financial assets		8,216,123		8,561,160

Total		325,919,599		323,017,411

(2)

Details of due from banks are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Due from banks in local currency:
Due from the Bank of Korea (“BOK”)		160,000			600,000
Due from depository banks		140,035			80,167
Due from non-depository institutions		183			14,146
Others		137,784			25,594
Allowance for credit losses		(115	)		(2,450	)

Sub-total		437,887			717,457

Due from banks in foreign currencies:
Due from banks on demand		199,671			194,781
Due from banks on time		466,963			205,351
Others		1,581,298			1,502,474
Allowance for credit losses		(12,201	)		(3,583	)

Sub-total		2,235,731			1,899,023

Total		2,673,618			2,616,480

- 79 -

(3)

Details of restricted due from banks are as follows (Unit: Korean Won in millions):


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

Sub-total			297,782

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

Sub-total			1,775,058

Total			2,072,840


	Counterparty	December 31, 2021		Reason of restriction
Due from banks in local currency:
Due from BOK	BOK		600,000	Reserve deposits under the BOK Act
Others	The Korea Exchange and others		25,588	Central counterparty KRW margin and others

Sub-total			625,588

Due from banks in foreign currencies:
Due from banks on demand	National Bank of Cambodia and others		128,492	Local capital requirements regulation(CRR)
Due from banks on time	National Bank of Cambodia and others		237	Reserve deposits and others
Others	Korea Investment & Securities and others		1,502,474	Foreign margin deposit for future or option and others

Sub-total			1,631,203

Total			2,256,791

- 80 -

(4)

Changes in the loss allowance and gross carrying amount of due from banks are as follows (Unit: Korean Won in millions):

Allowance for credit losses


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

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

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


	For the year ended December 31, 2021
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(4,363	)		—		—		(4,363	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of loss allowance		(1,555	)		—		—		(1,555	)
Others (*)		(115	)		—		—		(115	)

Ending balance		(6,033	)		—		—		(6,033	)

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

ii)

Gross carrying amount


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

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

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


	For the year ended December 31, 2021
	Stage 1		Stage 2		Stage 3		Total
Beginning balance		2,291,667		—		—		2,291,667
Transfer to 12-month expected credit losses		—		—		—		—
Transfer to lifetime expected credit losses		—		—		—		—
Transfer to credit-impaired financial assets		—		—		—		—
Net decrease		258,387		—		—		258,387
Others (*)		72,459		—		—		72,459

Ending balance		2,622,513		—		—		2,622,513

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

- 81 -

(5)

Details of loans are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Loans in local currency		268,812,961			262,234,746
Loans in foreign currencies(*)		26,984,940			24,510,272
Domestic banker’s usance		2,877,079			3,403,021
Credit card accounts		8,532			7,122
Bills bought in foreign currencies		3,650,792			5,310,080
Bills bought in local currency		423,329			120,975
Factoring receivables		15,350			9,309
Advances for customers on guarantees		14,326			11,493
Private placement bonds		63,019			139,170
Securitized loans		2,677,220			2,874,480
Call loans		3,586,226			3,470,719
Bonds purchased under resale agreements		6,793,938			10,332,858
Others		140			160
Loan origination costs and fees		712,521			719,072
Discounted present value		(139	)		(142	)
Allowance for credit losses		(1,590,376	)		(1,303,564	)

Total		315,029,858			311,839,771

(6)

Changes in the loss allowance of loans are as follows (Unit: Korean Won in millions):


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

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


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

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

- 82 -


	For the year ended December 31, 2021
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(75,393	)		(63,601	)		(111,189	)		(303,086	)		(502,276	)		(346,036	)
Transfer to 12-month expected credit losses		(17,553	)		16,918			635			(78,241	)		48,930			29,311
Transfer to lifetime expected credit losses		5,926			(6,796	)		870			13,222			(34,694	)		21,472
Transfer to credit-impaired financial assets		568			3,100			(3,668	)		1,385			16,899			(18,284	)
Net reversal (provision) of loss allowance		11,065			(17,842	)		(69,732	)		79,817			(71,326	)		(150,104	)
Recovery		—			—			(66,587	)		—			—			(51,190	)
Write-off		—			—			134,593			—			—			218,110
Disposal		—			93			1,291			—			144			58,187
Interest income from impaired loans		—			—			6,599			—			—			10,549
Others		268			816			2,220			(18,608	)		3,850			15,987

Ending balance		(75,119	)		(67,312	)		(104,968	)		(305,511	)		(538,473	)		(211,998	)


	For the year ended December 31, 2021
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(64	)		—			—			(378,543	)		(565,877	)		(457,225	)
Transfer to 12-month expected credit losses		—			—			—			(95,794	)		65,848			29,946
Transfer to lifetime expected credit losses		—			—			—			19,148			(41,490	)		22,342
Transfer to credit-impaired financial assets		—			—			—			1,953			19,999			(21,952	)
Net reversal (provision) of loss allowance		(116	)		—			—			90,766			(89,168	)		(219,836	)
Recovery		—			—			—			—			—			(117,777	)
Write-off		—			—			—			—			—			352,703
Disposal		—			—			—			—			237			59,478
Interest income from impaired loans		—			—			—			—			—			17,148
Others		(3	)		—			—			(18,343	)		4,666			18,207

Ending balance		(183	)		—			—			(380,813	)		(605,785	)		(316,966	)

(7)

Changes in the gross carrying amount of loans are as follows (Unit: Korean Won in millions):


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

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


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

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

- 83 -


	For the year ended December 31, 2021
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		121,881,531			11,844,848			382,393			143,636,123			6,913,611			638,521
Transfer to 12-month expected credit losses		4,333,155			(4,317,289	)		(15,866	)		1,586,486			(1,553,047	)		(33,439	)
Transfer to lifetime expected credit losses		(5,964,065	)		5,985,474			(21,409	)		(3,504,245	)		3,547,048			(42,803	)
Transfer to credit-impaired financial assets		(67,040	)		(62,568	)		129,608			(238,917	)		(122,901	)		361,818
Write-off		—			—			(134,593	)		—			—			(218,110	)
Disposal		—			(621	)		(32,137	)		—			(1,476	)		(177,820	)
Net increase (decrease)		9,611,244			(229,181	)		35,168			19,929,405			(875,716	)		(66,977	)

Ending balance		129,794,825			13,220,663			343,164			161,408,852			7,907,519			461,190


	For the year ended December 31, 2021
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		6,088			—			—			265,523,742			18,758,459			1,020,914
Transfer to 12-month expected credit losses		—			—			—			5,919,641			(5,870,336	)		(49,305	)
Transfer to lifetime expected credit losses		—			—			—			(9,468,310	)		9,532,522			(64,212	)
Transfer to credit-impaired financial assets		—			—			—			(305,957	)		(185,469	)		491,426
Write-off		—			—			—			—			—			(352,703	)
Disposal		—			—			—			—			(2,097	)		(209,957	)
Net increase (decrease)		1,034			—			—			29,541,683			(1,104,897	)		(31,809	)

Ending balance		7,122			—			—			291,210,799			21,128,182			804,354

(8)	Details of other financial assets as of December 31 2022 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Receivables		5,216,354			6,503,644
Accrued income		1,449,112			916,338
Telex and telephone subscription rights and refundable deposits		806,923			868,801
Other assets (*)		864,223			324,042
Allowance for credit losses		(120,489	)		(51,665	)

Total		8,216,123			8,561,160

(*)

The Group became aware of employee embezzlement incidents that occurred before the end of April 2022, and the Financial Supervisory Service conducted on-site inspections from April 28 to May 30, 2022. An accusation of embezzlement and provisional seizure of found property were made, and an investigation by an investigative agency is currently underway. The related amount included in other assets amounted to 63,354 million Won, which was treated as a loss in its entirety because its recoverability was uncertain.

(9)	Changes in the allowances for credit losses on other financial assets are as follows (Unit: Korean Won in millions):


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

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

(*)

The Group became aware of employee embezzlement incidents that occurred before the end of April 2022, and the Financial Supervisory Service conducted on-site inspections from April 28 to May 30, 2022. An accusation of embezzlement and provisional seizure of found property were made. The related amount included in other assets amounted to 63,354 million Won, which was treated as a loss in its entirety because its recoverability was uncertain

- 84 -


	For the year ended December 31, 2021
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		(872	)		(2,319	)		(63,106	)		(66,297	)
Transfer to 12-month expected credit losses		(108	)		100			8			—
Transfer to lifetime expected credit losses		43			(64	)		21			—
Transfer to credit-impaired financial assets		9			75			(84	)		—
Net provision of loss allowance		(216	)		(235	)		5,620			5,169
Write-off		—			—			8,478			8,478
Disposal		—			1			1,392			1,393
Other increase(decrease)		(282	)		(6	)		(120	)		(408	)

Ending balance		(1,426	)		(2,448	)		(47,791	)		(51,665	)

(10)

Changes in the gross carrying amount of other financial assets are as follows (Unit: Korean Won in millions):


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

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


	For the year ended December 31, 2021
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		6,658,149			65,091			176,805			6,900,045
Transfer to 12-month expected credit losses		6,795			(6,782	)		(13	)		—
Transfer to lifetime expected credit losses		(10,769	)		10,794			(25	)		—
Transfer to credit-impaired financial assets		(538	)		(467	)		1,005			—
Write-off		—			—			(8,478	)		(8,478	)
Disposal		—			(8	)		(1,702	)		(1,710	)
Net increase (decrease) and others		1,702,813			23,244			(3,089	)		1,722,968

Ending balance		8,356,450			91,872			164,503			8,612,825

- 85 -

11.

THE FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

(1)	The fair value hierarchy

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

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

•

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

•

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

•

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

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

(2)	Fair value hierarchy of financial assets and liabilities measured at fair value are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Level 1 (*)		Level 2 (*)		Level 3		Total
Financial assets:
Financial assets at FVTPL
Due from banks		34,995		—		—		34,995
Debt securities		2,451,239		740,978		—		3,192,217
Equity securities		30,731		—		270,890		301,621
Capital contributions		—		—		1,432,256		1,432,256
Beneficiary certificates		2,217		2,480,586		2,637,760		5,120,563
Loans		—		—		19,169		19,169
Derivative assets		69,316		8,045,083		90,338		8,204,737
Other financial assets (foreign currency)		—		—		41,680		41,680
Others		—		—		142,335		142,335

Sub-total		2,588,498		11,266,647		4,634,428		18,489,573

Financial assets at FVTOCI
Debt securities		9,895,455		22,250,303		—		32,145,758
Equity securities		382,258		—		472,246		854,504

Sub-total		10,277,713		22,250,303		472,246		33,000,262

Derivative assets (designated for hedging)		—		—		—		—

Total		12,866,211		33,516,950		5,106,674		51,489,835

- 86 -


	December 31, 2022
	Level 1 (*)		Level 2 (*)		Level 3		Total
Financial liabilities:
Financial liabilities at FVTPL
Deposits due to customers		35,161		—		—		35,161
Derivative liabilities		11,700		8,931,766		9,449		8,952,915

Sub-total		46,861		8,931,766		9,449		8,988,076

Derivative liabilities (designated for hedging)		—		193,831		—		193,831

Total		46,861		9,125,597		9,449		9,181,907

(*)

Among financial assets and financial liabilities measured at fair value, the amount transferred from Level 2 to Level 1 is 2,835,187 million Won. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed. There has been a shift between levels due to the change in whether the market in which the relevant financial product is traded is determined to be an active market.


	December 31, 2021
	Level 1 (*)		Level 2 (*)		Level 3		Total
Financial assets:
Financial assets at FVTPL
Due from banks		65,072		—		—		65,072
Debt securities		724,842		746,876		—		1,471,718
Equity securities		24,520		—		266,605		291,125
Capital contributions		—		—		930,376		930,376
Beneficiary certificates		26,716		2,337,636		1,902,453		4,266,805
Loans		—		—		10,623		10,623
Derivative assets		10,910		4,764,572		27,475		4,802,957
Others		—		—		94,673		94,673

Sub-total		852,060		7,849,084		3,232,205		11,933,349

Financial assets at FVTOCI
Debt securities		5,578,457		32,548,520		—		38,126,977
Equity securities		411,356		—		503,718		915,074

Sub-total		5,989,813		32,548,520		503,718		39,042,051

Derivative assets (designated for hedging)		—		95,103		—		95,103

Total		6,841,873		40,492,707		3,735,923		51,070,503

Financial liabilities:
Financial liabilities at FVTPL
Deposits due to customers		65,016		—		—		65,016
Borrowings		1,998		29,766		—		31,764
Derivative liabilities		10,258		4,570,308		4,101		4,584,667

Sub-total		77,272		4,600,074		4,101		4,681,447

Derivative liabilities (designated for hedging)		—		20,287		—		20,287

Total		77,272		4,620,361		4,101		4,701,734

(*)	There were no transfers between Level 1 and Level 2 of financial assets and liabilities measured at fair value. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.

Financial assets and liabilities measured at fair value, financial assets and liabilities designated as at FVTPL, financial assets at FVTOCI, and derivative assets (designated for hedging) and liabilities (designated for hedging) are recognized at fair value. Fair value is the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

Financial instruments are measured at fair value using a quoted market price in active markets. If there is no active market for a financial instrument, the Group determines the fair value using valuation methods. Valuation methods and input variables for each type of financial instruments are as follows:

- 87 -

①

Valuation methods and input variables for each type of financial instrument classified into level 2 in December 31, 2022 and 2021 are as follows:


	Valuation methods	Input variables
Debt securities	Fair value is measured by discounting the future cash flows of debt securities applying the risk-free market rate with credit spread	Risk-free market rate, Credit spread

Beneficiary certificates	The beneficiary certificates classified as Level 2 are measured at base price.	Values of underlying assets such as bond

Derivatives	The fair value is measured through option model (Closed Form), DCF Model, FDM, Monte Carlo Simulation and etc.	Discount rate, Values of underlying assets such as foreign exchange rate and stock prices, Volatility, etc.

②

Valuation methods and input variables for each type of financial instrument classified into level 3 in December 31, 2022 and 2021 are as follows:


	Valuation methods	Input variables
Loans	The fair value of loans is measured by the T-F model. LSMC (Least-Squares Monte Carlo simulation) and T-F Model given the values of underlying assets, volatility, and discount rate.	Values of underlying assets, Volatility, Discount rate

Equity securities, capital contributions, Beneficiary certificates and others	Among DCF (Discounted Cash Flow) Model, FCFE (Free Cash Flow to Equity) Model, Comparable Company Analysis, Dividend Discount Model, Risk-adjusted Rate of Return Method, Net Asset Value Method and LSMC, 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	Fair value is measured by models such as option model (Closed form), DCF model, FDM and Monte Carlo Simulation.	Discount rate, Values of underlying assets such as foreign exchange rate and Stock prices, Volatility, 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, s calculated using the binomial tree and least-squares Monte Carlo simulation (LSMC), which are commonly used valuation techniques in the market.	Stock price, Volatility of underlying assets etc.

- 88 -

Valuation methods of financial assets and liabilities measured at fair value and classified into Level 3 and significant but unobservable inputs are as follows:

①

December 31, 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 volatility of underlying asset increases.
Derivative assets	Option valuation model and others	Equity related	Correlation coefficient	0.21 ~ 0.67	Variation of fair value increases as correlation coefficient increases.
Derivative liabilities	Option valuation model and others	Equity related	Correlation coefficient	0.21 ~ 0.67	Variation of fair value increases as correlation coefficient increases.
Equity securities, capital contributions and Beneficiary certificates	Binominal Tree		Stock price, Volatility of underlying asset	28.40%	Variation of fair value increases as volatility of stock price, underlying asset increases.
	DCF 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 volatility of stock price, underlying asset increases.

- 89 -

②

December 31, 2021


	Fair value measurement technique	Type	Significant but unobservable input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Loans	Binomial tree		Stock price, Volatility of underlying asset	22.62%	Variation of fair value increases as volatility of underlying asset increases.
	LSMC		Stock price, Volatility of underlying asset	19.48%	Variation of fair value increases as volatility of underlying asset increases.
Derivative assets	Option valuation model and others	Interest rate related	Correlation coefficient	0.9 ~ 0.98	Variation of fair value increases as correlation coefficient increases.
			Volatility of underlying asset	28.84% ~ 97.50%	Variation of fair value increases as volatility of underlying asset increases.
		Equity related	Correlation coefficient	0.18 ~ 0.76	Variation of fair value increases as correlation coefficient increases.
	DCF model	Interest rate related	Credit risk adjustment ratio	100.00%	Variation of fair value decreases as credit risk adjustment ratio increases.
Derivative liabilities	Option valuation model and others	Interest rate related	Correlation coefficient	0.9 ~ 0.98	Variation of fair value increases as correlation coefficient increases.
			Volatility of underlying asset	24.84%~97.50%	Variation of fair value increases as volatility of underlying asset increases.
		Equity related	Correlation coefficient	0.18 ~ 0.76	Variation of fair value increases as correlation coefficient increases.
Equity securities, capital contributions and Beneficiary certificates	LSMC		Volatility of underlying asset	19.48%	Variation of fair value increases as volatility of underlying asset increases.
			Discount rate	11.52%~19.94%	Fair value increases as discount rate decreases
	DCF and Others		Discount rate	0% ~ 35.92%	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	LSMC		Stock price, Volatility of underlying asset	19.48% ~ 28.41%	Variation of fair value increases as volatility of underlying asset increases.

Fair value of financial assets and liabilities classified into Level 3 is measured by the Group using its own valuation methods or using external specialists. Unobservable inputs used in the fair value measurements are produced by the internal system of the Group and the appropriateness of inputs is reviewed regularly.

- 90 -

(3)	Changes in financial assets and liabilities measured at fair value classified into Level 3 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022
	January 1, 2022		Net income (loss) (*1)		Other comprehensive income			Purchases/ issuances			Disposal/ settlements			Transfer to or out of Level 3 (*2)			December 31, 2022
Financial assets:
Financial assets at FVTPL
Equity securities		266,605		507		—			15,116			(11,306	)		(32	)		270,890
Capital contributions		930,376		76,479		—			524,007			(98,606	)		—			1,432,256
Beneficiary certificates		1,902,453		3,971		—			910,810			(179,474	)		—			2,637,760
Loans		10,623		11,346		—			—			(2,800	)		—			19,169
Derivative assets		27,475		62,255		—			957			(349	)		—			90,338
Other financial assets (foreign currency)		—		—		—			41,680			—			—			41,680
Others		94,673		16,744		—			39,838			(8,920	)		—			142,335

Sub-total		3,232,205		171,302		—			1,532,408			(301,455	)		(32	)		4,634,428

Financial assets at FVTOCI
Equity securities		503,718		—		(4,316	)		1,677			(28,833	)		—			472,246

Total		3,735,923		171,302		(4,316	)		1,534,085			(330,288	)		(32	)		5,106,674

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities		4,101		8,387		—			(351	)		(2,688	)		—			9,449

Total		4,101		8,387		—			(351	)		(2,688	)		—			9,449

(*1)

The losses that increase the financial liabilities are presented as positive amounts, and the gains that decrease the financial liabilities are presented as negative amounts. The gain amounting to 160,237 million Won for the year ended December 31, 2022, which is from financial assets and liabilities that the Group holds as at the end of the year.

(*2)	There were transfers between levels as the availability of observable market data for these financial instruments changed. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.

- 91 -


	For the year ended December 31, 2021
	January 1, 2021		Net income (loss) (*1)			Other comprehensive income		Purchases/ issuances			Disposal/ settlements			Transfer to or out of Level 3 (*2)			December 31, 2021
Financial assets:
Financial assets at FVTPL
Equity securities		409,605		(24,131	)		—		13,570			(132,439	)		—			266,605
Capital contributions		652,733		60,107			—		401,973			(184,437	)		—			930,376
Beneficiary certificates		2,038,241		15,734			—		50,459			(201,981	)		—			1,902,453
Loans		9,698		1,115			—		—			(190	)		—			10,623
Derivative assets		6,676		21,971			—		4,666			—			(5,838	)		27,475
Others		84,979		12,244			—		13,998			(16,548	)		—			94,673

Sub-total		3,201,932		87,040			—		484,666			(535,595	)		(5,838	)		3,232,205

Financial assets at FVTOCI
Equity securities		494,427		—			10,433		125			(1,267	)		—			503,718

Total		3,696,359		87,040			10,433		484,791			(536,862	)		(5,838	)		3,735,923

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities		20,075		4,857			—		(4,480	)		(10,097	)		(6,254	)		4,101
Financial liabilities designated at FVTPL
Equity-linked securities		19,631		(102	)		—		—			(19,529	)		—			—

Total		39,706		4,755			—		(4,480	)		(29,626	)		(6,254	)		4,101

(*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 99,110 million Won for the year ended December 31, 2021, which is from financial assets and liabilities that the Group holds as at the end of the year.

(*2)	There were transfers between levels as the availability of observable market data for these financial instruments changed. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.

(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 5,116,123 million Won and 3,740,024 million Won as of December 31, 2022 and 2021 respectively, equity investments of 4,621,365 million Won and 3,346,291 million Won that are considered to provide the best estimate of fair value are excluded from the sensitivity analysis.

- 92 -

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 (Unit: Korean Won in millions):


	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	)		—		—
Loans(*2)		—		—			—		—
Equity securities (2) (3) (*4)		9,710		(7,763	)		—		—
Beneficiary certificates (*4)		737		(737	)		—		—
Others(*2)		2,860		(2,790	)		—		—
Financial assets at FVTOCI
Equity securities (3) (4)		—		—			20,131		(13,734	)

Total		15,193		(13,283	)		20,131		(13,734	)

Financial liabilities:
Financial liabilities at FVTPL		41		(39	)		—		—
Derivative liabilities (*1)		41		(39	)		—		—

(*1)

Fair value changes of equity related derivatives assets and liabilities and equity-linked securities are calculated by increasing or decreasing historical volatility of the stock price and correlation, which are major unobservable variables, by 10%, respectively. In the case of interest rate related derivative assets and liabilities, fair value changes are calculated by increasing or decreasing the volatility of interest rate, which are major unobservable variables, by 10%.

(*2)	The change in fair value is calculated by increasing or decreasing the share price (-10% to 10%) and volatility (-10% to 10%), the major unobservable inputs.

(*3)	Fair value changes of equity securities are calculated by increasing or decreasing terminal growth rate (-0.5~0.5%) and discount rate (-1~1%) or liquidation value (-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.

(*4)

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%.

- 93 -


	December 31, 2021
	Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at FVTPL
Derivatives assets (*1)		1,222		(1,378	)		—		—
Loans (*2)		13		(12	)		—		—
Equity securities (2) (3)		5,185		(4,432	)		—		—
Beneficiary certificates (*4)		1,305		(1,171	)		—		—
Others (2) (4)		921		(876	)		—		—
Financial assets at FVTOCI
Equity securities (3) (4)		—		—			21,054		(16,437	)

Total		8,646		(7,869	)		21,054		(16,437	)

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities (*1)		205		(264	)		—		—

(*1)

(*2)	The change in fair value is calculated by increasing or decreasing the share price (-10% to 10%) and volatility (-10% to 10%), the major unobservable inputs.

(*3)	Fair value changes of equity securities are calculated by increasing or decreasing terminal growth rate (-0.5~0.5%) and discount rate (-1~1%) or liquidation value (-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.

(*4)

- 94 -

(5)

Fair value and carrying amount of financial assets and liabilities that are recorded at amortized cost are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Fair value								Book value
	Level 1		Level 2		Level 3		Total		Book value
Financial assets:
Securities at amortized cost		2,652,449		24,623,370		—		27,275,819		28,268,516
Loans and other financial assets at amortized cost		—		5,597,813		316,058,637		321,656,450		325,919,599
Financial liabilities:
Deposits due to customers		—		338,582,945		—		338,582,945		338,923,832
Borrowings		—		23,028,947		—		23,028,947		23,028,206
Debentures		—		24,154,895		—		24,154,895		24,639,433
Other financial liabilities		—		19,908,621		—		19,908,621		20,087,151


	December 31, 2021
	Fair value								Book value
	Level 1		Level 2		Level 3		Total		Book value
Financial assets:
Securities at amortized cost		2,122,401		14,921,119		—		17,043,520		17,086,274
Loans and other financial assets at amortized cost		—		—		320,430,352		320,430,352		323,017,411
Financial liabilities:
Deposits due to customers		—		314,636,593		—		314,636,593		314,778,574
Borrowings		—		21,315,000		—		21,315,000		21,376,880
Debentures		—		26,462,877		—		26,462,877		26,478,289
Other financial liabilities		—		22,320,629		—		22,320,629		22,322,178

The fair values of financial instruments are measured using quoted market price in active markets. In case there is no active market for financial instruments, the Group determines the fair value using valuation techniques. Valuation techniques and input variables for financial assets and liabilities that are measured at amortized costs are given as follows:


	Valuation techniques	Input variables
Securities at amortized cost	The fair value is measured by discounting the projected cash flows of debt securities by applying risk-free market rate with credit spread.	Risk-free market rate and credit spread

Loans and other financial assets at amortized cost	The fair value is measured by discounting the projected cash flows of loan products by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the debtor.	Risk-free market rate, credit spread and prepayment-rate

Deposits due to customers, borrowings, debentures and other financial liabilities	The fair value is measured by discounting the projected cash flows of debt products by applying the market discount rate that is reflecting credit rating of the Group.	Risk-free market rate and forward rate

- 95 -

(6)

Carrying amounts of financial assets and liabilities by each category are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Financial assets at FVTPL		Financial assets at FVTOCI		Financial assets at amortized cost		Total
Financial assets:
Due from banks		34,995		—		2,673,618		2,708,613
Securities		10,188,993		33,000,262		28,268,516		71,457,771
Loans		19,169		—		315,029,858		315,049,027
Derivative assets		8,204,737		—		—		8,204,737
Other financial assets		41,679		—		8,216,123		8,257,802

Total		18,489,573		33,000,262		354,188,115		405,677,950

	December 31, 2022
	Financial assets at FVTPL		Financial assets at amortized cost		Derivative assets (designated for hedging)		Total
Financial liabilities:
Deposits due to customers		35,161		338,923,831		—		338,958,992
Borrowings		—		23,028,206		—		23,028,206
Debentures		—		24,639,433		—		24,639,433
Derivative liabilities		8,952,916		—		193,831		9,146,747
Other financial liabilities		—		20,087,151		—		20,087,151

Total		8,988,077		406,678,621		193,831		415,860,529


	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		65,072		—		2,616,480		—		2,681,552
Securities		7,054,696		39,042,051		17,086,274		—		63,183,021
Loans		10,623		—		311,839,771		—		311,850,394
Derivative assets		4,802,958		—		—		95,103		4,898,061
Other financial assets		—		—		8,561,160		—		8,561,160

Total		11,933,349		39,042,051		340,103,685		95,103		391,174,188


	December 31, 2021
	Financial assets at FVTPL		Financial assets at amortized cost		Derivative assets (designated for hedging)		Total
Financial liabilities:
Deposits due to customers		65,016		314,778,574		—		314,843,590
Borrowings		31,764		21,376,880		—		21,408,644
Debentures		—		26,478,289		—		26,478,289
Derivative liabilities		4,584,667		—		20,287		4,604,954
Other financial liabilities		—		22,322,178		—		22,322,178

Total		4,681,447		384,955,921		20,287		389,657,655

- 96 -

(7)	Income or expense from financial instruments by category are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Interest income (expense)			Fees and commissions income (expense)		Reversal (Provision) of credit loss			Gain(loss) on valuation		Dividend		Total
Financial assets at FVTPL		63,515			—		—			214,666		130,295		408,476
Financial assets at FVTOCI		632,615			1,606		827			—		20,818		655,866
Securities at amortized cost		515,246			—		(3,151	)		—		—		512,095
Loans and other financial assets at amortized cost		11,531,028			40,831		(446,302	)		35,003		—		11,160,560
Financial liabilities at amortized cost		(5,318,502	)		—		—			—		—		(5,318,502	)
Net derivatives (designated for hedging)		—			—		—			8,932		—		8,932

Total		7,423,902			42,437		(448,626	)		258,601		151,113		7,427,427


	December 31, 2021
	Interest income (expense)			Fees and commissions income (expense)		Reversal (Provision) of credit loss			Gain(loss) on valuation		Dividend		Total
Financial assets at FVTPL		22,319			—		—			254,099		261,319		537,737
Financial assets designated at FVTPL		—			—		—			102		—		102
Financial assets at FVTOCI		381,814			1,343		(4,909	)		32,624		21,939		432,811
Securities at amortized cost		324,920			—		(664	)		—		—		324,256
Loans and other financial assets at amortized cost		7,704,975			44,879		(214,624	)		57,714		—		7,592,944
Financial liabilities at amortized cost		(2,505,445	)		—		—			—		—		(2,505,445	)
Net derivatives (designated for hedging)		—			—		—			11,222		—		11,222

Total		5,928,583			46,222		(220,197	)		355,761		283,258		6,393,627

12.

DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS

(1)	Derecognition of financial instruments

Transferred financial assets that do not meet the condition of derecognition

Bonds sold under repurchase agreements

The financial instruments that were disposed but the Group agreed to repurchase at the fixed amounts at the same time, so that they did not meet the conditions of derecognition, are as follows (Unit: Korean Won in millions):


		December 31, 2022		December 31, 2021
Assets transferred	Financial assets at FVTOCI		583,198		127,065
	Securities at amortized cost		1,171,300		38,995
Related liabilities	Bonds sold under repurchase agreements		1,654,544		162,976

- 97 -

Securities loaned

When the Group loans its securities to outside parties, the legal ownerships of the securities are transferred; however, they should be returned at the end of lending period. Therefore, the Group does not derecognize them from the consolidated financial statements as it owns majority of risks and benefits from the securities continuously, regardless of the transfer of legal ownership. The carrying amounts of the securities loaned are as follows (Unit: Korean Won in millions):

December 31,
2022

December 31,
2021

Loaned to

Financial assets at FVTOCI

Korean treasury and government bonds and others

98,027

98,535

Korea Securities Finance Corporation

The details of the transferred financial assets that do not meet the condition of derecognition in their entirety, such as disposal of securities under repurchase agreement or securities loaned, are also explained in Note 18.

Securitization of financial assets

As of the end December 31,2022 and 2021 the structured entity subject to consolidation issued asset-backed securities using loans and corporate bonds held by the Group, and the Group bears related risks through purchase agreements or credit offerings. The details of the transfer transaction of financial instruments are as follows (Unit: Korean Won in millions):


		December 31, 2022		December 31, 2021
		Book value (*)		Book value (*)
Transferred assets	Loans at amortized cost		2,677,220		2,874,480
Related liabilities	Securitization borrowings		231,800		2,424,080
	Securitization bonds		4,006		4,006

(*)	The carrying amount is the amount before the provision for credit losses is deducted.

- 98 -

(2)	The offset of financial assets and liabilities

The Group possesses both the uncollected domestic exchange receivables and the unpaid domestic exchange payable, which satisfy offsetting criteria of Korean IFRS 1032. Therefore, the total number of uncollected domestic exchange receivables or unpaid domestic exchange payable has been offset with part of unpaid domestic exchange payable or uncollected domestic exchange receivables and has been disclosed in loans and other financial assets at amortized cost and other financial assets and other financial liabilities of the Group’s statements of financial position, respectively.

The Group possesses the derivative assets, derivative liabilities, receivable spot exchange and payable spot exchange that do not satisfy the offsetting criteria of Korean IFRS 1032, but provide the Group under the circumstances of the trading party’s defaults, insolvency or bankruptcy, with the right of offsetting. Items such as cash collateral cannot satisfy the offsetting criteria of Korean IFRS 1032, but in accordance with the collateral arrangements and under the circumstances of the trading party’s default, insolvency or bankruptcy, the net amount of derivative assets, derivative liabilities, receivable spot exchange and payable spot exchange can be offset.

The Group has entered into a sale and repurchase agreement and accounted it as a collateralized borrowing. The Group has also entered into a purchase and resale agreement and accounted it as a secured loan. The Group under the repurchase agreements has offsetting right only upon the counterparty’s default, insolvency or bankruptcy; thus, the repurchase agreements are applied by the TBMA/ISMA Global Master Repurchase Agreement, which does not satisfy the offsetting criteria of Korean IFRS 1032. The Group disclosed bonds sold under repurchase agreements as borrowings and bonds purchased under resale agreements as loans and other financial assets at amortized cost.

As of December 31, 2022 and 2021, the financial instruments to be offset and covered by master netting agreements and similar agreements are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Related amounts not setoff in the consolidated statement of financial position				Net amounts
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Netting agreements and others		Cash collateral received		Net amounts
Financial assets:
Derivative assets (*1)		6,953,283		—		6,953,283		9,109,524		748,981		1,537,651
Receivable spot exchange (*2)		4,442,873		—		4,442,873		9,109,524		748,981		1,537,651
Bonds purchased under resale agreements (*2)		6,793,938		—		6,793,938		6,793,938		—		—
Domestic exchanges settlement credits (2)(5)		39,773,640		39,197,123		576,517		—		—		576,517

Total		57,963,734		39,197,123		18,766,611		15,903,462		748,981		2,114,168


	December 31, 2022
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Related amounts not setoff in the consolidated statement of financial position				Net amounts
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Netting agreements and others		Cash collateral pledged		Net amounts
Financial liabilities:
Derivative liabilities (*1)		7,644,704		—		7,644,704		9,977,200		145,268		1,965,068
Payable spot exchange (*3)		4,442,832		—		4,442,832		9,977,200		145,268		1,965,068
Bonds sold under repurchase agreements (*4)		1,654,544		—		1,654,544		1,654,544		—		—
Domestic exchanges settlement debits (3) (5)		43,812,598		39,197,123		4,615,475		2,504,062		—		2,111,413

Total		57,554,678		39,197,123		18,357,555		14,135,806		145,268		4,076,481

(*1)	The items include derivatives held for trading and derivatives designated for hedging.

(*2)	The items are included in loans and other financial assets at amortized cost.

(*3)	The items are included in other financial liabilities.

(*4)	The items are included in borrowings.

- 99 -

(*5)	Certain financial assets and liabilities are presented as net amounts.


	December 31, 2021
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Related amounts not setoff in the consolidated statement of financial position				Net amounts
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of financial assets presented		Netting agreements and others		Cash collateral received		Net amounts
Financial assets:
Derivative assets (*1)		4,172,426		—		4,172,426		8,244,175		557,026		1,273,490
Receivable spot exchange (*2)		5,902,265		—		5,902,265
Bonds purchased under resale agreements (*2)		10,332,858		—		10,332,858		10,332,858		—		—
Domestic exchanges settlement credits (2)(5)		42,356,630		42,275,583		81,047		—		—		81,047

Total		62,764,179		42,275,583		20,488,596		18,577,033		557,026		1,354,537


	December 31, 2021
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Related amounts not setoff in the consolidated statement of financial position				Net amounts
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial liabilities setoff		Net amounts of financial liabilities presented		Netting agreements and others		Cash collateral pledged		Net amounts
Financial liabilities:
Derivative liabilities (*1)		3,708,540		—		3,708,540		8,811,005		162,138		639,158
Payable spot exchange (*3)		5,903,761		—		5,903,761
Bonds sold under repurchase agreements (*4)		162,976		—		162,976		162,976		—		—
Domestic exchanges settlement debits (3) (5)		48,979,260		42,275,583		6,703,677		3,401,251		—		3,302,426

Total		58,754,537		42,275,583		16,478,954		12,375,232		162,138		3,941,584

(*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.

- 100 -

13.

INVESTMENTS IN JOINT VENTURES AND ASSOCIATES

(1)	Investments in associates accounted for using the equity method of accounting are as follows:


		Percentage of ownership (%)				Location		Financial statements as of
Associates	Main business	December 31, 2022		December 31, 2021		Location		Financial statements as of
Woori Bank:
W Service Networks Co., Ltd. (*1)	Freight & staffing services		4.9		4.9		Korea	November 30, 2022 (*4)
Korea Credit Bureau Co., Ltd. (*2)	Credit information		9.9		9.9		Korea	December 31, 2022
Korea Finance Security Co., Ltd. (*2)	Security service		15.0		15.0		Korea	November 30, 2022 (*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	—
The Base Enterprise Co., Ltd. (*7)	Manufacturing		—		48.4		Korea	—
Kyesan Engineering Co., Ltd. (*3)	Construction		23.2		23.2		Korea	—
Good Software Lap Co., Ltd. (*3)	Service		28.9		28.9		Korea	—
Wongwang Co., Ltd. (*3)	Wholesale and real estate		29.0		29.0		Korea	—
Sejin Construction Co., Ltd. (*3)	Construction		29.6		29.6		Korea	—
QTS Shipping Co., Ltd. (*7)	Complex transportation brokerage		—		49.4		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 TEC Co., Ltd.	Manufacturing		24.5		24.5		Korea	September 30, 2022 (*4)
Reading Doctors Co., Ltd. (*7)	Other services		—		35.4		Korea	—
PREXCO Co., Ltd. (*3)	Manufacturing		28.1		28.1		Korea	—
Jiwon Plating Co., Ltd. (*3)	Plating		20.5		20.5		Korea	—
Cultizm Korea LTD Co., Ltd. (*7)	Wholesale and retail sales		—		31.3		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.,Ltd (*3)	Communication equipment retail business		23.1		23.1		Korea	—
Woori Growth Partnerships New Technology Private Equity Fund	Other financial services		23.1		23.1		Korea	December 31, 2022
2016KIF-IMM Woori Bank Technology Venture Fund	Other financial services		20.0		20.0		Korea	December 31, 2022
K BANK Co., Ltd. (*2)	Finance		12.6		12.6		Korea	December 31, 2022
Woori Bank-Company K Korea Movie Asset Fund(*6)	Other financial services		25.0		25.0		Korea	December 31, 2022

- 101 -

Percentage of ownership (%)

Location

Financial
statements as of

Associates

Main business

December 31,
2022

December 31,
2021

Partner One Value Up I Private Equity Fund

Other financial services

23.3

Korea

December 31, 2022

IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership

Other financial services

20.0

Korea

December 31, 2022

Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund

Other financial services

25.0

Korea

December 31, 2022

Woori-Shinyoung Growth-Cap Private Equity Fund I

Other financial services

24.5

Korea

December 31, 2022

LOTTE CARD Co.,Ltd.

Credit card and installment financing

20.0

Korea

September 30, 2022 (*4)

Woori-Q Corporate Restructuring Private Equity Fund

Trust and collective investment

22.4

27.8

Korea

December 31, 2022

PCC-Woori LP Secondary Fund

Other financial investment services

26.9

Korea

December 31, 2022

Together-Korea Government Private Pool Private Securities Investment Trust No. 3

Other financial services

100.0

Korea

December 31, 2022

Genesis Environment Energy Private Equity Fund No. 1(*5)

Trust and collective investment

—

24.8

Korea

—

Union Technology Finance Investment Association

Other financial investment services

29.7

Korea

December 31, 2022

KUM HWA Co., Ltd(*3)

Telecommunication equipment retail sales

20.0

Korea

September 30, 2022 (*4)

Paratus Woori Material Component Equipment joint venture company

Other financial investment services

20.8

Korea

December 31, 2022

Dicustody Co., Ltd.(*2)

Other information technology and computer-operation related services

1.0

Korea

December 31, 2022

Jinmyung Plus Co.,Ltd.(*3)

Manufacturing

20.2

Korea

September 30, 2022 (*4)

Orient Shipyard Co.,Ltd.(*3)

Manufacturing of ship components

22.7

—

Korea

December 31, 2022

Joongang Network Solution Co.,Ltd.(*3)

Other information technology and computer-operation related services

25.3

—

Korea

—

BTS Private Equity Fund No. 2(*8)

Other financial services

20.0

—

Korea

December 31, 2022

Woori Financial Digital Investment Association No. 1(*8)

Other financial services

88.0

—

Korea

December 31, 2022

STASSETS FUND III(*8)

Other financial services

28.3

—

Korea

December 31, 2022

(*1)	Most of the significant business transactions of associates are with the Group as of December 31, 2022 and 2021.

(*2)	The Group can participate in decision-making body and exercise significant influence over financial policies and operational policies.

(*3)	There is no investment balance as of December 31, 2022 and 2021.

(*4)

The equity method was applied using the most recent financial statements available because financial statement at the end of the reporting period cannot be obtained, and any significant transactions or events that occurred between the end of the reporting period of the associate and the end of the reporting period of the group were appropriately reflected.

(*5)	It was excluded from associates due to liquidation during the year ended December 31, 2022.

(*6)	It is scheduled to be liquidated after disbanding for the year ended December 31, 2021.

(*7)	It was excluded from associates due to the sale liquidation for the year ended December 31, 2022.

(*8)	It was added to associates through acquisition during the year ended December 31, 2022.

- 102 -

(2)	Changes in the carrying value of investments in associates accounted for using the equity method of accounting are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022
	Acquisition cost		January 1, 2022		Share of profits (losses)			Acquisition		Disposal and others			Dividends			Change in capital			December 31, 2022
W Service Networks Co., Ltd.		108		183		29			—		—			(4	)		—			208
Korea Credit Bureau Co., Ltd.		3,313		9,423		(3,714	)		—		—			—			—			5,709
Korea Finance Security Co., Ltd.		3,267		3,101		(727	)		—		—			—			—			2,374
Woori Growth Partnerships New Technology Private Equity Fund		12,942		12,448		490			—		(2,049	)		—			—			10,889
2016KIF-IMM Woori Bank Technology Venture Fund		7,594		12,630		(1,619	)		—		(801	)		(736	)		—			9,474
K BANK Co., Ltd.		236,232		239,493		11,854			—		—			—			(3,558	)		247,789
Woori Bank-Company K Korea Movie Asset Fund		—		345		71			—		—			(177	)		—			239
Partner One Value Up I Private Equity Fund		5,039		6,576		(2,298	)		—		—			—			—			4,278
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		7,556		11,153		1,312			—		(2,180	)		—			—			10,285
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		4,354		4,254		1			100		—			—			—			4,355
Woori-Shinyoung Growth-Cap Private Equity Fund I		8,237		20,067		10,243			—		—			—			—			30,310
LOTTE CARD Co.,Ltd.		346,810		458,295		58,400			—		—			(12,960	)		10,396			514,131
Woori-Q Corporate Restructuring Private Equity Fund		17,043		33,493		(489	)		396		(16,474	)		—			—			16,926
PCC-Woori LP Secondary Fund		7,000		8,504		495			—		—			—			—			8,999
Force TEC Co., Ltd.(*)		—		—		56			—		—			—			(56	)		—
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,000		10,070		173			—		—			—			—			10,243
Genesis Environmental Energy Company No. 1 Private Equity Partnership		—		4,126		(41	)		—		(3,738	)		(347	)		—			—
Union Technology Finance Investment Association		14,637		12,388		187			2,250		(363	)		—						14,462
KUM HWA Co., Ltd.(*)		—		—		—			—		—			—			—			—
Paratus Woori Material Component Equipment joint venture company		12,300		12,156		(169	)		—		—			—			—			11,987
Dicustody Co., Ltd.		1		1		—			—		—			—			—			1
Jinmyung Plus Co., Ltd.		—		—		10			—		—			—			—			10
Orient Shipyard Co.,Ltd.(*)		—		—		—			—		—			—			—			—
BTS Private Equity Fund No. 2		3,026		—		(145	)		3,026		—			—			—			2,881
Woori Financial Digital Investment Association No. 1		11,000		—		(199	)		11,000		—			—			—			10,801
STASSETS FUND III		1,500		—		(270	)		1,500		—			—			—			1,230

		711,959		858,706		73,650			18,272		(25,605	)		(14,224	)		6,782			917,581

(*)

The amount for which no loss was recognized for associates due to discontinuation of the equity method was 665 million Won for Force TEC Co., Ltd., 3,743 million Won for Orient Shipyard Co.,Ltd., 0.2 million Won in KUM HWA Co., Ltd. and the accumulated amount is 1,462 million Won for Force TEC Co., Ltd., 3,743 million Won for Orient Shipyard Co., Ltd., 2 million Won in KUM HWA Co., Ltd.

- 103 -


	For the year ended December 31, 2021
	Acquisition cost		January 1, 2021		Share of profits (losses)			Acquisition		Disposal and others			Dividends			Change in capital			December 31, 2021
W Service Networks Co., Ltd.		108		191		(4	)		—		—			(4	)		—			183
Korea Credit Bureau Co., Ltd.		3,313		8,125		1,388			—		—			(90	)		—			9,423
Korea Finance Security Co., Ltd.		3,267		3,066		35			—		—			—			—			3,101
Woori Growth Partnerships New Technology Private Equity Fund		14,991		15,032		(637	)		—		(1,947	)		—			—			12,448
2016KIF-IMM Woori Bank Technology Venture Fund		8,396		13,238		3,520			—		(3,497	)		(631	)		—			12,630
K BANK Co., Ltd.(*1)		236,232		174,097		67,553			—		—			—			(2,157	)		239,493
Smart Private Equity Fund No.2		—		1,481		(797	)		—		(684	)		—			—			—
Woori Bank-Company K Korea Movie Asset Fund		—		2,788		137			—		(2,100	)		(480	)		—			345
Well to Sea No.3 Private Equity Fund		—		15,687		134			—		—			(15,821	)		—			—
Partner One Value Up I Private Equity Fund		5,039		9,816		2,521			—		(4,961	)		(800	)		—			6,576
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		9,736		9,756		1,417			5,040		(5,060	)		—			—			11,153
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		4,255		4,129		—			125		—			—			—			4,254
Woori-Shinyoung Growth-Cap Private Equity Fund I		8,237		26,902		14,711			8,982		(23,125	)		(7,403	)		—			20,067
LOTTE CARD Co.,Ltd.		346,810		422,832		39,301			—		—			(10,374	)		6,536			458,295
Woori-Q Corporate Restructuring Private Equity Fund		33,121		17,116		372			18,669		(2,664	)		—			—			33,493
PCC-Woori LP Secondary Fund		7,000		5,634		1,120			1,750		—			—			—			8,504
Force TEC Co., Ltd.(*2)		—		393		(393	)		—		—			—			—			—
KUM HWA Co., Ltd(*2)		—		—		—			—		—			—			—			—
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,000		10,023		47			—		—			—			—			10,070
Genesis Environmental Energy Company No. 1 Private Equity Partnership		3,738		3,979		147			—		—			—			—			4,126
Union Technology Finance Investment Association		12,750		4,485		(347	)		8,250		—			—			—			12,388
Paratus Woori Material Component Equipment joint venture company		12,300		—		(144	)		12,300		—			—			—			12,156
Dicustody Co., Ltd.		1		—		—			1		—			—			—			1
Jinmyung Plus Co., Ltd.		—		—		—			—		—			—			—			—

		719,294		748,770		130,081			55,117		(44,038	)		(35,603	)		4,379			858,706

(*1)	Included 70,120 million Won of deemed gain on disposal in accordance with the decrease in percentage of ownership from disproportionate contribution for the year ended December 31, 2021.

(*2)	As a result of discontinuation of the equity method, related companies’ losses amount not recognized is 797 million Won for Force TEC Co., Ltd. and 2 million Won for KUM HWA Co., Ltd.

- 104 -

(3)	Summary financial information relating to investments in associates accounted for using the equity method of accounting is as follows (Unit: Korean Won in millions):


	As of and for the year ended December 31, 2022
	Assets		Liabilities		Operating revenue			Net income (loss)			Other comprehensive income			Total comprehensive income
W Service Networks Co., Ltd.		7,052		2,825		19,697			1,215			—			1,215
Korea Credit Bureau Co., Ltd.		155,165		100,065		144,907			(37,475	)		—			(37,475	)
Korea Finance Security Co., Ltd.		28,792		12,964		47,043			(3,856	)		—			(3,856	)
Woori Growth Partnerships New Technology Private Equity Fund		47,394		208		2,978			2,185			—			2,185
2016KIF-IMM Woori Bank Technology Venture Fund		47,979		609		665			(7,839	)		—			(7,839	)
K BANK Co., Ltd.		16,694,289		14,896,426		491,880			91,059			(32,156	)		58,903
Woori Bank-Company K Korea Movie Asset Fund(*2)		989		33		462			324			—			324
Partner One Value Up I Private Equity Fund		18,395		—		(9,431	)		(9,831	)		—			(9,831	)
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		51,804		385		8,092			7,288			—			7,288
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,811		95		1			(383	)		—			(383	)
Woori-Shinyoung Growth-Cap Private Equity Fund I		123,824		312		41,780			40,544			—			40,544
LOTTE CARD Co.,Ltd.(*1)		19,983,059		17,179,093		1,925,577			267,418			43,162			310,580
Woori-Q Corporate Restructuring Private Equity Fund		75,973		418		3,019			(4,696	)		—			(4,696	)
PCC-Woori LP Secondary Fund		33,591		168		6,127			1,152			—			1,152
Force TEC Co., Ltd.		10,489		24,804		25,182			(2,664	)		—			(2,664	)
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,246		1		177			170			—			170
Union Technology Finance Investment Association		48,991		299		2,300			632			—			632
KUM HWA Co., Ltd.		4		159		—			(8	)		—			(8	)
Paratus Woori Material Component Equipment joint venture company		58,311		617		7			(812	)		—			(812	)
Dicustody Co., Ltd.		95		—		—			(3	)		—			(3	)
Jinmyung Plus Co., Ltd.		696		649		177			(9	)		—			(9	)
Orient Shipyard Co.,Ltd.		10,832		27,225		—			(16,467	)		—			(16,467	)
BTS Private Equity Fund No. 2		15,012		608		1			(725	)		—			(725	)
Woori Financial Digital Investment Association No. 1		12,482		209		19			(226	)		—			(226	)
STASSETS FUND III		4,660		313		37			(953	)		—			(953	)

(*1)	The amount is after reflecting the fair value adjustment that occurred when acquiring the shares and the adjustments that occurred by difference of accounting policies with the Group.

(*2)	It was scheduled to be liquidated after disbanding during the previous year.


	As of and for the year ended December 31, 2021
	Assets		Liabilities		Operating revenue		Net income (loss)			Other comprehensive income			Total comprehensive income
W Service Networks Co., Ltd.		6,208		2,504		17,019		840			—			840
Korea Credit Bureau Co., Ltd.		113,859		21,284		127,751		20,486			—			20,486
Korea Finance Security Co., Ltd.		34,957		14,286		57,462		249			—			249
Woori Growth Partnerships New Technology Private Equity Fund		54,173		231		3,807		(2,228	)		—			(2,228	)
2016KIF-IMM Woori Bank Technology Venture Fund		63,983		837		23,010		21,119			—			21,119
K BANK Co., Ltd.		14,021,789		12,291,131		250,502		19,348			(32,072	)		(12,724	)
Woori Bank-Company K Korea Movie Asset Fund		1,383		2		1,075		543			—			543
Partner One Value Up I Private Equity Fund		28,273		—		11,972		10,914			—			10,914

- 105 -


	As of and for the year ended December 31, 2021
	Assets		Liabilities		Operating revenue		Net income (loss)			Other comprehensive income		Total comprehensive income
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		56,363		597		11,422		10,077			—		10,077
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,799		5		—		(332	)		—		(332	)
Woori-Shinyoung Growth-Cap Private Equity Fund		82,087		314		83,143		81,550			—		81,550
LOTTE CARD Co., Ltd. (*)		15,980,312		13,460,156		1,499,867		184,919			25,612		210,531
Woori-Q Corporate Restructuring Private Equity Fund		121,057		555		327		(1,547	)		—		(1,547	)
PCC-Woori LP Secondary Fund		31,585		—		5,720		4,162			—		4,162
Force TEC Co., Ltd.		11,904		23,508		20,941		(9,188	)		—		(9,188	)
Together-Korea Government Private Pool Private Securities Investment Trust No. 3		10,073		1		41		37			—		37
Genesis Environmental Energy Company No. 1 Private Equity Partnership		20,610		3,941		11,347		694			—		694
Union Technology Finance Investment Association		41,996		290		13		(1,168	)		—		(1,168	)
KUM HWA Co., Ltd		20		176		58		(10	)		—		(10	)
Paratus Woori Material Component Equipment joint venture company		58,507		—		7		(693	)		—		(693	)
Dicustody Co., Ltd.		98		—		—		(2	)		—		(2	)
Jinmyung Plus Co., Ltd.		568		445		209		5			—		5

(*)	The amount is after reflecting the fair value adjustment that occurred when acquiring the shares and the adjustments that occurred by difference of accounting policies with the Group.

- 106 -

(4)	The entities that the Group excluded from the associates although the Group’s ownership interest is more than 20% as of December 31, 2022 and 2021, are as follows:


	December 31, 2022
Associate (*)	Number of shares owned		Ownership (%)
CL Tech Co., Ltd.		10,191		28.6

(*)	Although the Group’s ownership interest of the entity is more than 20%, the Group does not have significant influence over the entity since it is going through work-out process under receivership, accordingly it is excluded from the investment in joint ventures and associates.


	December 31, 2021
Associate (*)	Number of shares owned		Ownership (%)
Orient Shipyard Co., Ltd.		464,812		21.4
Yuil PESC Co., Ltd.		8,642		24.0
CL Tech Co., Ltd.		13,759		38.6

(*)	Although the Group’s ownership interest of the entity is more than 20%, the Group does not have significant influence over the entity since it is going through work-out process under receivership, accordingly it is excluded from the investment in joint ventures and associates.

(5)	As of December 31, 2022 and 2021, the reconciliations from the net assets of the associates to the book value of the shares of the investment in joint ventures and associates are as follows (Unit: Korean Won in millions except for ownership):


	December 31, 2022
	Total net asset			Ownership (%)		Ownership portion of net assets			Basis difference		Intercompany transaction and others			Book Value
W Service Networks Co., Ltd.		4,227			4.9		209			—		(1	)		208
Korea Credit Bureau Co., Ltd.		55,100			9.9		5,462			246		1			5,709
Korea Finance Security Co., Ltd.		15,828			15.0		2,374			—		—			2,374
Woori Growth Partnerships New Technology Private Equity Fund		47,185			23.1		10,889			—		—			10,889
2016KIF-IMM Woori Bank Technology Venture Fund		47,370			20.0		9,474			—					9,474
K BANK Co., Ltd.(*)		1,796,269			12.6		225,894			21,894		1			247,789
Woori Bank-Company K Korea Movie Asset Fund		957			25.0		239			—		—			239
Partner One Value Up I Private Equity Fund		18,395			23.3		4,278			—		—			4,278
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		51,419			20.0		10,284			—		1			10,285
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,716			25.0		3,929			—		426			4,355
Woori-Shinyoung Growth-Cap Private Equity Fund I		123,512			24.5		30,310			—					30,310
LOTTE CARD Co.,Ltd.(*)		2,570,656			20.0		514,131			—		—			514,131
Woori-Q Corporate Restructuring Private Equity Fund		75,555			22.4		16,926			—		—			16,926
PCC-Woori LP Secondary Fund		33,423			26.9		8,999			—		—			8,999
Force TEC Co., Ltd.		(14,315	)		24.5		(3,513	)		—		3,513			—
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,245			100.0		10,244			—		(1	)		10,243
Union Technology Finance Investment Association		48,692			29.7		14,463			—		(1	)		14,462
KUM HWA Co., Ltd.		(155	)		20.0		(31	)		—		31			—

- 107 -


	December 31, 2022
	Total net asset			Ownership (%)		Ownership portion of net assets			Basis difference		Intercompany transaction and others		Book Value
Paratus Woori Material Component Equipment joint venture company		57,694			20.8		11,987			—				11,987
Dicustody Co., Ltd.		95			1.0		1			—		—		1
Jinmyung Plus Co., Ltd.		47			20.2		10			—		—		10
Orient Shipyard Co.,Ltd.		(16,393	)		22.7		(3,726	)				3,726		—
BTS Private Equity Fund No. 2		14,405			20.0		2,881			—		—		2,881
Woori Financial Digital Investment Association No. 1		12,273			88.0		10,801			—		—		10,801
STASSETS FUND III		4,347			28.3		1,230			—		—		1,230

(*)	The net asset equity amount is after the debt-for-equity swap, non-controlling etc.


	December 31, 2021
	Total net asset			Ownership (%)		Ownership portion of net assets			Basis difference		Intercompany transaction and others			Book Value
W Service Networks Co., Ltd.		3,704			4.9		183			—		—			183
Korea Credit Bureau Co., Ltd.		92,575			9.9		9,177			246		—			9,423
Korea Finance Security Co., Ltd.		20,671			15.0		3,101			—		—			3,101
Woori Growth Partnerships New Technology Private Equity Fund		53,942			23.1		12,448			—		—			12,448
2016KIF-IMM Woori Bank Technology Venture Fund		63,146			20.0		12,630			—		—			12,630
K BANK Co., Ltd. (*)		1,730,307			12.6		217,599			21,894		—			239,493
Woori Bank-Company K Korea Movie Asset Fund		1,381			25.0		345			—		—			345
Partner One Value Up I Private Equity Fund		28,273			23.3		6,576			—		—			6,576
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		55,767			20.0		11,153			—		—			11,153
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,794			25.0		3,949			—		305			4,254
Woori-Shinyoung Growth-Cap Private Equity Fund I		81,773			24.5		20,067			—		—			20,067
LOTTE CARD Co., Ltd. (*)		2,291,474			20.0		458,295			—		—			458,295
Woori-Q Corporate Restructuring Private Equity Fund		120,502			27.8		33,493			—		—			33,493
PCC-Woori LP Secondary Fund		31,585			26.9		8,504			—		—			8,504
Force TEC Co., Ltd.		(11,604	)		24.5		(2,848	)		—		2,848			—
Together-Korea Government Private Pool Private Securities Investment Trust No. 3		10,071			100.0		10,070			—		—			10,070
Genesis Environmental Energy Company No. 1 Private Equity Partnership		16,669			24.8		4,126			—		—			4,126
Union Technology Finance Investment Association		41,706			29.7		12,388			—		—			12,388
KUM HWA Co., Ltd		(156	)		20.0		(31	)		—		31			—
Paratus Woori Material Component Equipment joint venture company		58,507			20.8		12,156			—		—			12,156
Dicustody Co., Ltd.		98			1.0		1			—		—			1
Jinmyung Plus Co., Ltd.		123			20.2		25			—		(25	)		—

(*)	The net asset equity amount is after the debt-for-equity swap, non-controlling etc.

- 108 -

14.

INVESTMENT PROPERTIES

(1)	Details of investment properties are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Acquisition cost		659,897			637,616
Accumulated depreciation		(56,686	)		(48,619	)

Net carrying value		603,211			588,997

(2)	Changes in investment properties are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022			For the year ended December 31, 2021
Beginning balance		588,997			584,144
Depreciation		(6,483	)		(5,325	)
Transfer		19,191			9,937
Foreign currencies translation adjustments		1,506			241

Ending balance		603,211			588,997

(*)	Land and buildings were transferred from premises and equipment to investment properties for the year ended December 31, 2022, and 2021.

(3)

Fair value of investment properties amounted to 861,628 million Won and 857,454 million Won as of December 31, 2022 and 2021, respectively. The fair value of investment properties has been assessed on the basis of recent similar real estate market price and officially assessed land price in the area of the investment properties, is classified as level 3 on the fair value hierarchy.

(4)

Rental fee earned from investment properties is amounting to 35,102 million Won and 26,661million Won for the years ended December 31, 2022 and 2021, respectively. The expenses directly related to the investment properties where rental fee was earned are 6,483 million Won and 5,325 million Won, respectively.

(5)	The minimum lease payments expected to be received in the future under the non-refundable lease agreement as of December 31, 2022 and 2021. (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Lease payments:
Within a year		14,172		15,481
More than 1 year and within 2 years		9,234		9,454
More than 2 years and within 3 years		5,320		7,743
More than 3 years and within 4 years		3,201		5,009
More than 4 years and within 5 years		2,634		2,953
More than 5 years		2,568		2,603

Total		37,129		43,243

- 109 -

15.

PREMISES AND EQUIPMENT

(1) Details of premises and equipment as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Land		Building		Properties for business use		Leasehold improvement		Construction in progress		Total
Premises and equipment (owned)		1,486,834		630,644		186,181		48,824		32,184		2,384,667
Right-of-use assets		—		303,387		12,763		—		—		316,150

Carrying value		1,486,834		934,031		198,944		48,824		32,184		2,700,817


	December 31, 2021
	Land		Building		Properties for business use		Leasehold improvement		Construction in progress		Total
Premises and equipment (owned)		1,524,032		659,063		196,557		43,178		3,171		2,426,001
Right-of-use assets		—		320,613		15,096		—		—		335,709

Carrying value		1,524,032		979,676		211,653		43,178		3,171		2,761,710

(2)	Details of premises and equipment (owned) as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Land		Building			Properties for business use			Leasehold improvement			Construction in progress		Total
Acquisition cost		1,486,834		940,449			881,398			445,397			32,184		3,786,262
Accumulated depreciation		—		(309,805	)		(695,217	)		(396,573	)		—		(1,401,595	)

Net carrying value		1,486,834		630,644			186,181			48,824			32,184		2,384,667


	December 31, 2021
	Land		Building			Properties for business use			Leasehold improvement			Construction in progress		Total
Acquisition cost		1,524,032		945,035			827,643			453,160			3,171		3,753,041
Accumulated depreciation		—		(285,972	)		(631,086	)		(409,982	)		—		(1,327,040	)

Net carrying value		1,524,032		659,063			196,557			43,178			3,171		2,426,001

(3)	Details of changes in premises and equipment (owned) are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022
	Land			Building			Properties for business use			Leasehold improvement			Construction in progress			Total
Beginning balance		1,524,032			659,063			196,557			43,178			3,171			2,426,001
Acquisition		24			14,502			66,208			23,432			31,810			135,976
Disposal		(19,021	)		—			(928	)		(622	)		—			(20,571	)
Depreciation		—			(28,812	)		(76,514	)		(17,973	)		—			(123,299	)
Foreign currencies translation adjustment		(297	)		(117	)		764			554			225			1,129
Transfer (*)		(11,915	)		(7,275	)		—			—			—			(19,190	)
Classification to held for sale		(6,405	)		(6,704	)		—			—			—			(13,109	)
Others		416			(13	)		94			255			(3,022	)		(2,270	)

Ending balance		1,486,834			630,644			186,181			48,824			32,184			2,384,667

(*)	Land and buildings transferred from premises and equipment to investment properties for the year ended December 31, 2022.

- 110 -


	For the year ended December 31, 2021
	Land			Building			Properties for business use			Leasehold improvement			Construction in progress			Total
Beginning balance		1,533,523			686,819			222,243			44,831			1,406			2,488,822
Acquisition		—			15,750			49,364			18,485			3,078			86,677
Disposal		—			(1,994	)		(720	)		(918	)		—			(3,632	)
Depreciation		—			(30,132	)		(76,527	)		(20,422	)		—			(127,081	)
Foreign currencies translation adjustment		991			712			2,868			1,580			153			6,304
Transfer (*)		(6,419	)		(3,518	)		—			—			—			(9,937	)
Classification to held for sale		(7,157	)		(5,695	)		—			—			—			(12,852	)
Others		3,094			(2,879	)		(671	)		(378	)		(1,466	)		(2,300	)

Ending balance		1,524,032			659,063			196,557			43,178			3,171			2,426,001

(*)	Land and buildings transferred from premises and equipment to investment properties for the year ended December 31, 2021.

(4)	Details of right-of-use assets as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Building			Properties for business use			Total
Acquisition cost		548,469			25,002			573,471
Accumulated depreciation		(245,082	)		(12,239	)		(257,321	)

Net carrying value		303,387			12,763			316,150


	December 31, 2021
	Building			Properties for business use			Total
Acquisition cost		572,098			23,653			595,751
Accumulated depreciation		(251,485	)		(8,557	)		(260,042	)

Net carrying value		320,613			15,096			335,709

(5)	Details of changes in right-of-use assets for the years ended December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions) :


	December 31, 2022
	Building			Properties for business use			Total
Beginning balance		320,613			15,096			335,709
New contracts		207,732			7,320			215,052
Changes in contracts		3,514			3			3,517
Termination		(43,175	)		(824	)		(43,999	)
Depreciation		(192,305	)		(8,806	)		(201,111	)
Others		7,008			(26	)		6,982

Ending balance		303,387			12,763			316,150


	December 31, 2021
	Building			Properties for business use			Total
Beginning balance		410,325			9,313			419,638
New contracts		132,742			14,498			147,240
Changes in contracts		9,064			226			9,290
Termination		(46,721	)		(1,654	)		(48,375	)
Depreciation		(210,924	)		(8,516	)		(219,440	)
Others		26,127			1,229			27,356

Ending balance		320,613			15,096			335,709

- 111 -

16.

INTANGIBLE ASSETS

(1)	Details of intangible assets are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership			Construction in progress		Total
Acquisition cost		159,194		45,335			2,052			463,368			888,116			21,243			3,027		1,582,335
Accumulated amortization		—		(21,462	)		(1,431	)		(323,849	)		(762,399	)		—			—		(1,109,141	)
Accumulated impairment losses		—		—			—			—			(33,552	)		(1,158	)		—		(34,710	)

Net carrying value		159,194		23,873			621			139,519			92,165			20,085			3,027		438,484


	December 31, 2021
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership			Construction in progress		Total
Acquisition cost		158,498		34,643			1,892			411,468			858,290			19,867			535		1,485,193
Accumulated amortization		—		(16,988	)		(1,201	)		(251,137	)		(716,415	)		—			—		(985,741	)
Accumulated impairment losses		—		—			—			—			(33,552	)		(1,013	)		—		(34,565	)

Net carrying value		158,498		17,655			691			160,331			108,323			18,854			535		464,887

- 112 -

(2)	Details of changes in intangible assets are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership			Construction in progress			Total
Beginning balance		158,498		17,655			691			160,331			108,323			18,854			535			464,887
Acquisition		—		5,293			160			52,119			31,865			1,871			2,120			93,428
Disposal		—		—			—			—			(2	)		(442	)		—			(444	)
Amortization (*1)		—		(5,221	)		(231	)		(72,852	)		(47,140	)		—			—			(125,444	)
Provision of impairment losses(*2)		—		—			—			—			—			(144	)		—			(144	)
Foreign currencies translation adjustment		696		62			—			(6	)		(101	)		(42	)		(53	)		556
Others		—		6,084			1			(73	)		(780	)		(11	)		425			5,646

Ending balance		159,194		23,873			621			139,519			92,165			20,086			3,027			438,485

(*1)	Amortization of other intangible assets amounting to 14,664 million Won is included in other operating expenses.

(*2)

The impairment test for other intangible assets indicates that the recoverable value is less than the carrying amount and thus the impairment loss is recognized. Also, membership is an intangible asset with an indefinite useful life that recognizes an impairment loss if recoverable value is lower than its carrying amount, while the reversal of an impairment loss should be recognized when the recoverable value is higher than its carrying amount.


	For the year ended December 31, 2021
	Goodwill		Software			Industrial property rights			Development cost			Others			Membership			Construction in progress			Total
Beginning balance		147,339		16,925			666			174,795			117,640			18,235			6,668			482,268
Acquisition		—		1,011			243			50,326			31,582			1,359			—			84,521
Amortization (*1)		—		(3,808	)		(218	)		(68,538	)		(44,897	)		—			—			(117,461	)
Provision of impairment losses (*2)		—		—			—			—			(18	)		(258	)		—			(276	)
Foreign currencies translation adjustment		11,159		2,015			—			—			936			232			—			14,342
Transfer		—		—			—			3,748			2,920			—			(6,668	)		—
Others(*3)		—		1,512			—			—			160			(714	)		535			1,493

Ending balance		158,498		17,655			691			160,331			108,323			18,854			535			464,887

(*1)	Amortization of other intangible assets amounting to 13,693 million Won is included in other operating expenses.

(*2)

(*3)	Other increases or decreases in membership include the return of membership rights of 500 million Won.

(3)

Goodwill

Details of major goodwill as of December 31, 2022 and 2021 are as follows (Unit: Korea Won in millions):


	For the year ended December 31
Cash Generating Unit (*1)	2022		2021
PT Bank Woori Saudara Indonesia 1906 Tbk (*2)		97,029		99,667
WOORI BANK(CAMBODIA) PLC. (*3)		55,570		52,082

Total		152,599		151,749

(*1)	The goodwill has been allocated to the cash-generating unit that will benefit from the synergies of the business combination, and the cash-generating unit generally consists of a sales unit or its sub-sector.

(*2)	The Group has acquired Saudara Bank to expand retail sales in Indonesia, and recognized the goodwill as it is expected to strengthen our competitiveness by securing a local sales network in Indonesia.

(*3)	The Group has acquired VisionFund Cambodia to expand Cambodian retail sales, and recognized goodwill based on the economies of scale and acquired customer base.

- 113 -

Impairment test

The recoverable amount of the cash-generating unit is measured at larger amount among the net fair value or the value in use.

The net fair value is calculated by deducting costs of disposal from the amount received from the sale of the cash-generating unit in an arm’s length transaction between the parties with reasonable judgment and willingness to negotiate. In case of difficulty in measuring this amount, the sale amount of a similar cash-generating unit in the past market is calculated by reflecting the characteristics of the cash-generating unit. If reliable information related to fair value less costs to sell is not available, value in use is considered as recoverable amount. Value in use is the present value of future cash flows expected to be generated by the cash-generating unit. Future cash flows are estimated based on the latest financial budget approved by the management, with an estimated period of up to five years. PT Bank Woori Saudara Indonesia 1906 Tbk applied zero growth rate to estimate future cash flow for the period over five years. The main assumptions used to estimate cash flows are about the size of the market and the share of the group. The appropriate discount rate for discounting future cash flows is the pre-tax discount rate, including assumptions about risk-free interest rates, market risk premium, and systemic risk of cash-generating units. The impairment test, which compares the carrying amount and recoverable amount of the cash-generating unit to which goodwill has been allocated, is conducted every year and every time an impairment sign occurs. (Unit: Korean Won in millions):


Category	PT Bank Woori Saudara Indonesia 1906 Tbk			WOORI BANK(CAMBODIA) PLC.
Discount rate (%)		15.98	%		16.88	%
Terminal growth rate (%)		—			—
Recoverable amount		784,787			544,693
Carrying amount		739,878			499,823

As a result of the impairment test on goodwill, it is determined that the carrying amount of the cash-generating unit to which the goodwill has been distributed will not exceed the recoverable amount.

Sensitivity analysis

The sensitivity of fair value measurements due to changes in significant but unobservable inputs used in measuring recoverable amount of PT Bank Woori Saudara Indonesia 1906 Tbk and WOORI BANK(CAMBODIA) PLC. as of December 31, 2022, is as follows (Unit: Korean Won in millions):


		PT Bank Woori Saudara Indonesia 1906 Tbk			WOORI BANK(CAMBODIA) PLC.
Discount rate	Increase by 1% point		(61,030	)		(38,845	)
	Decrease by 1% point		71,658			45,066
Terminal growth rate	Increase by 0.5% point		21,026			12,753
	Increase by 1.0% point		43,855			26,515

17.

ASSETS HELD FOR SALE

Assets held for sale are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Premises and equipment, etc. (*)		9,589		8,900
Investments in subsidiaries and associates (*)		—		11,472

Total		9,589		20,372

(*)	The Group classifies above assets as assets held for sale that are highly likely to be sold within one year from December 31, 2022 and 2021, based on the management’s decision.

- 114 -

18.

ASSETS SUBJECT TO LIEN AND ASSETS ACQUIRED THROUGH FORECLOSURES

(1)	Assets subjected to lien are as follows (Unit: Korean Won in millions):


		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		245,876	CSA variable margin and others
Financial assets at FVTOCI	Korean treasury and government bonds	Korea Securities Depository		460	Related to bonds sold under repurchase agreements (*)
	Korean financial institutions debt securities and others	The BOK and others		6,394,890	Settlement risk and others
	Foreign financial institutions debt securities	Standard Chartered Bank, Hong Kong and others		582,738	Related to bonds sold under repurchase agreements (*)
		BNP-PARIBAS and others		1,060,120	CSA variable margin and others
Securities at amortized cost	Korean treasury and government bonds	Korea Securities Depository		1,100,351	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government bonds and others	The BOK and others		10,820,136	Settlement risk and others
	Debt securities in foreign currencies	NATIXIS and others		70,949	Related to bonds sold under repurchase agreements (*)
		FHLB Advance and others		10,570	Collateral to receive a borrowing limit

		Total		23,455,136

(*)

The financial assets are not derecognized and provided as collaterals because the Group entered into an agreement to buy the transferred assets back at a predetermined price or the sale price plus a certain return rate. The Group continuously recognize the transferred assets as liabilities (bond sold under repurchase agreements) after the repurchase.


		December 31, 2021
		Collateral given to	Amount		Reason for collateral
Loans and other financial assets at amortized cost	Due from banks in local currency	Samsung Securities Co., Ltd. and others		25,338	Margin deposit for futures or option
	Due from banks in foreign currencies	Yuanta Securities Korea Co., Ltd.		1,051,006	Overseas Futures Option Deposit and others
	Mortgage-backed securities	Public offering		2,494,333	Covered bonds
Financial assets at FVTPL	Korean financial institutions debt securities and others	Korea Securities Finance Corporation		54,419	Provision of security for securities loan purpose
Financial assets at FVTOCI	Korean treasury and government bonds	Korea Securities Depository		470	Related to bonds sold under repurchase agreements (*)
	Korean financial institutions debt securities and others	The BOK and others		3,666,849	Settlement risk and others
	Foreign financial institutions’ debt securities	STANDARD BANK LONDON LTD		126,595	Related to bonds sold under repurchase agreements (*)
Securities at amortized cost	Korean treasury and government bonds	The BOK and others		8,977,748	Settlement risk and others
	Foreign financial institutions’ debt securities	NATIXIS and others		38,995	Related to bonds sold under repurchase agreements (*)
		FHLB Advance		10,375	Related to offer the limit on borrowings

		Total		16,446,128

- 115 -

(*)

The financial assets are not derecognized and provided as collaterals because the Group entered into an agreement to buy the transferred assets back at a predetermined price or the sale price plus a certain return rate. The Group continuously recognizes the transferred assets as liabilities (bond sold under repurchase agreements) after the repurchase.

(2)	Assets acquired through foreclosures are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Non-operational real estates		25,405			17,972
Non-operational property		1,047			1,027
Real estate assessment provision		(1,176	)		(1,129	)
Accumulated Depreciation		(1,937	)		(1,624	)

Total		23,339			16,246

(3)	Securities loaned are as follows (Unit: Korean Won in millions):

December 31,
2022

December 31,
2021

Loaned to

Financial assets at FVTOCI

Korean financial institution’s debt securities and others

98,027

98,535

Korea Securities Finance Corporation

Securities loaned are lending of specific securities to borrowers who agree to return the same quantity of the same security at the end of lending period. As the Group does not derecognize these securities, there are no liabilities recognized through such transactions relates to securities loaned.

(4)	Collaterals held that can be disposed and re-subjected to lien regardless of defaults of counterparties

Fair values of collaterals held that can be disposed and re-subjected to lien regardless of defaults of counterparties as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Fair values of collaterals		Fair values of collaterals disposed or re-subjected to lien
Securities		7,109,933	—

	December 31, 2021
	Fair values of collaterals		Fair values of collaterals disposed or re-subjected to lien
Securities		10,785,412	—

19.

OTHER ASSETS

Details of other assets are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Prepaid expenses		153,777		126,323
Advance payments		3,828		3,828
Non-operational assets		23,340		16,248
Others		11,789		13,649

Total		192,734		160,048

- 116 -

20.

FINANCIAL LIABILITIES AT FVTPL

(1)	Financial liabilities at FVTPL are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Financial liabilities at fair value through profit or loss mandatorily measured at fair value		8,988,077		4,681,447

Total		8,988,077		4,681,447

(2)	Financial liabilities at fair value through profit or loss mandatorily measured at fair value are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Deposits
Gold banking liabilities		35,161		65,016
Borrowings		—		31,764
Derivative liabilities		8,952,916		4,584,667

Total		8,988,077		4,681,447

- 117 -

21.

DEPOSITS DUE TO CUSTOMERS

Details of deposits due to customers by type are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Deposits in local currency:
Deposits on demand		15,652,495			18,076,164
Deposits at termination		270,626,822			254,199,558
Mutual installment		22,995			24,620
Certificate of deposits		5,255,889			3,586,423
Other deposits		1,196,487			1,286,720

Sub-total		292,754,688			277,173,485

Deposits in foreign currencies:
Deposits in foreign currencies		46,261,496			37,641,915
Present value discount		(92,352	)		(36,826	)

Total		338,923,832			314,778,574

22.

BORROWINGS AND DEBENTURES

(1)	Details of borrowings are as follows (Unit: Korean Won in millions):


	December 31, 2022
	Lenders	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK	The BOK		0.3 ~ 1.8		3,040,877
Borrowings from government funds	Small Enterprise And Market Service and others		0.0 ~ 3.5		2,021,049
Others	The Korea Development Bank and others		0.0 ~ 6.1		4,792,000

Sub-total					9,853,926

Borrowings in foreign currencies(*)	The Export-Import Bank of Korea and others		(0.1) ~ 10.0		11,112,940
Bills sold	Others		0.0 ~ 2.4		7,308
Call money	Bank and others		1.6 ~ 5.5		400,071
Bonds sold under repurchase agreements	Other financial institutions		0.2 ~ 6.4		1,654,544
Present value discount					(583	)

Total					23,028,206


	December 31, 2021
	Lenders	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from the BOK	The BOK		0.3		3,144,897
Borrowings from government funds	Small Enterprise And Market Service and others		0.0 ~ 2.4		2,053,611
Others	The Korea Development Bank and others		0.0 ~ 3.1		7,170,701

Sub-total					12,369,209

Borrowings in foreign currencies(*)	The Export-Import Bank of Korea and others		(0.5) ~ 7.3		8,518,117
Bills sold	Others		0.0 ~ 1.3		9,111
Call money	Bank and others		(0.5) ~ 2.6		317,961
Bonds sold under repurchase agreements	Other financial institutions		(0.5) ~ 10.6		162,975
Present value discount					(493	)

Total					21,376,880

(*)	As of December 31, 2021, foreign currency borrowings subject to fair value hedges were included in the amount of 35,694 million Won.

- 118 -

(2)	Details of debentures are as follows (Unit: Korean Won in millions):


	December 31, 2022					December 31, 2021
	Interest rate (%)		Amount			Interest rate (%)		Amount
Face value of bond (*):
Ordinary bonds		0.8 ~ 5.9		19,778,506			0.7 ~ 2.8		20,674,925
Subordinated bonds		1.9 ~ 5.1		4,885,325			1.9 ~ 5.1		5,817,442
Other bonds		17.0		4,006			17.0		4,006

Sub-total				24,667,837					26,496,373

Discounts on bonds				(28,404	)				(18,084	)

Total				24,639,433					26,478,289

(*)	Includes debentures under fair value hedge amounting to 3,076,983 million Won and 2,366,724 million Won as of December 31, 2022 and 2021, respectively.

23.

PROVISIONS

(1)	Details of provisions are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Provisions for guarantees (*1)		73,743		67,703
Provisions for unused commitments		55,077		52,432
Asset retirement obligation		75,202		74,193
Other provisions (*2)		262,502		300,492

Total		466,524		494,820

(*1)	Provisions for guarantees include provisions for financial guarantees of 45,203 million Won and 46,158 million Won as of December 31, 2022 and 2021, respectively.

(*2)	Other provisions consist of provisions for litigation and others.

(2)	Changes in provisions for guarantees and unused loan commitments are as follows (Unit: Korean Won in millions):

Provisions for guarantees


	For the year ended December 31, 2022
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		45,669			15,267			6,767			67,703
Transfer to 12-month expected credit loss		1,206			(1,206	)		—			—
Transfer to expected credit loss for the entire period		(119	)		119			—			—
Transfer to credit-impaired financial assets		(3	)		(338	)		341			—
Net provision (reversal) of unused amount		(3,450	)		10,484			577			7,611
Other increase (decrease) (*)		(1,570	)		(1	)		—			(1,571	)

Ending balance		41,733			24,325			7,685			73,743


	For the year ended December 31, 2021
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		50,676			16,745			8,043			75,464
Transfer to 12-month expected credit loss		2,146			(2,144	)		(2	)		—
Transfer to expected credit loss for the entire period		(162	)		193			(31	)		—
Transfer to credit-impaired financial assets		(2	)		(163	)		165			—
Net provision (reversal) of unused amount		(9,929	)		636			(1,408	)		(10,701	)
Other increase (decrease) (*)		2,940			—			—			2,940

Ending balance		45,669			15,267			6,767			67,703

(*)	Includes the impact from change of financial guarantee liability.

- 119 -

ii)

Provisions for unused loan commitments


	For the year ended December 31, 2022
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		30,376			22,056			—			52,432
Transfer to 12-month expected credit loss		3,986			(3,986	)		—			—
Transfer to expected credit loss for the entire period		(703	)		703			—			—
Transfer to credit-impaired financial assets		(45	)		(44	)		89			—
Net provision (reversal) of unused amount		826			1,839			(89	)		2,576
Other increase (decrease)		69			—			—			69

Ending balance		34,509			20,568			—			55,077


	For the year ended December 31, 2021
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		32,912			32,110			—			65,022
Transfer to 12-month expected credit loss		2,013			(2,013	)		—			—
Transfer to expected credit loss for the entire period		(661	)		661			—			—
Transfer to credit-impaired financial assets		(32	)		(61	)		93			—
Net reversal of unused amount		(3,987	)		(8,641	)		(93	)		(12,721	)
Other increase (decrease)		131			—			—			131

Ending balance		30,376			22,056			—			52,432

(3)	Changes in asset retirement obligation are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022			For the year ended December 31, 2021
Beginning balance		74,193			62,618
Provisions provided		2,605			1,083
Provisions used		(6,705	)		(4,748	)
Amortization		706			329
Increase in restoration costs and others		4,403			14,911

Ending balance		75,202			74,193

(*)

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 premises as of end of reporting period discounted by appropriate discount rate. The restoration cost is expected to occur by the end of each premise’s lease period, and the Group has used average lease period of each category of leases terminated during the past years in order to rationally estimate the lease period. In addition, the Group used average amount of actual recovery cost for the past 3 years and the inflation rate for the preceding year in order to estimate future recovery cost.

- 120 -

(4)	Changes in other obligation are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022			For the year ended December 31, 2021
	Other provisions			Other provisions
Beginning balance		300,492			216,456
Provisions provided		24,538			81,383
Provisions used and others		(8,110	)		(9,199	)
Reversal of unused amount (*)		(53,796	)		(105	)
Foreign currencies translation adjustments		(622	)		11,957

Ending balance		262,502			300,492

(*)

The Group provided Korean won settlement services for trading transaction settlement between Korea and Iran, investigated by U.S. prosecutors (federal prosecutors, New York state prosecutors) and New York State Department of Financial Services for violations of U.S. sanctions against Iran, Sudan, Syria and Cuba. In this regard, the Office of Foreign Assets Control concluded its investigation in December 2020 without taking any additional sanctions, and New York State Department of Financial Services concluded its investigation in February 2022 without taking any additional sanctions. Meanwhile, in June 2022, the Group reversed the provision related to the investigation of the U.S. Prosecutors, which have not been completed yet, in consideration of the opinion of an independent legal expert that the probability of sanctions by the U.S. Prosecutors in this case is low.

(5)

Others

The Group recognized the provision of the estimated compensation and penalty amounts related to the incomplete selling of the Derivative Linked Fund (DLF), which occurred in 2019, expected to be imposed by the Financial Services Commission as the best estimate for the expenditure required to meet its obligations at the end of the reporting period.

The Group recognized provisions for estimated compensation amounts related to the prepayment arising from the delay in the redemption of funds in 2020 by Lime Asset Management and the dispute settlement by the Financial Supervisory Service as the best estimate of the expenditure. As of December 31, 2022, the provision for the case is 122.1 billion Won.

The Group resolved advance payment for the delay in the redemption of funds by Platform Asia Fund and others, and this was a resolution by the Board of Directors on October 22, 2021. Provisions for estimated compensation amounts related to expected customer loss was recognized as the best estimate of the expenditure. As of December 31, 2022, the revenue for Platform Asia, Heritage DLS, and Gen2 Partners DLS are 85 billion Won, 22.3 billion Won, and 90.2 billion Won respectively, and provision is 35.7 billion Won, 22.3 billion Won, and 12.6 billion Won respectively.

- 121 -

24.

NET DEFINED BENEFIT LIABILITY(ASSET)

The characteristics of the Group’s defined benefit retirement pension plans are as follows:

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 pay 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 actuarial assumption that is considered to be the most reasonable estimate of future cash flows (the projected unit method, which takes account of projected earnings increases).

The Group is exposed to various risks through defined benefit retirement pension plan, and the most significant risks are as follows:



Volatility of asset		The defined benefit obligation was estimated with 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) are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Present value of defined benefit obligations		1,188,957			1,414,378
Fair value of plan assets		(1,474,309	)		(1,424,725	)

Net defined benefit liability(asset)		(285,352	)		(10,347	)

(2)	Changes in the carrying value of defined benefit obligation are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2022			For the year ended December 31, 2021
Beginning balance			1,414,378			1,418,005
Current service cost			139,356			150,599
Interest cost			42,216			35,087
Remeasurements	Financial assumptions		(318,068	)		(82,213	)
	Experience adjustments		(9,685	)		(13,428	)
Foreign currencies translation adjustments			(69	)		165
Retirement benefit paid			(80,245	)		(93,943	)
Effect of moving in and out of associates			974			727
Others			100			(621	)

Ending balance			1,188,957			1,414,378

- 122 -

(3)	Changes in the plan assets are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022			For the year ended December 31, 2021
Beginning balance		1,424,725			1,414,926
Interest income		44,631			36,961
Remeasurements		(15,844	)		(13,323	)
Employer’s contributions		100,000			75,000
Retirement benefit paid		(76,598	)		(89,093	)
Effect of moving in and out of associates		(296	)		2,549
Other		(2,309	)		(2,295	)

Ending balance		1,474,309			1,424,725

(4)	Plan assets wholly consist of time deposits as of December 31, 2022 and 2021. Among plan assets, realized returns on plan assets amount to 28,787 million Won and 23,638 million Won for the years ended December 31, 2022 and 2021, respectively.

Meanwhile, the contribution expected to be paid in the current accounting year amounts to 103,359 million Won.

(5)	Amounts related to the defined benefit plan that are recognized in the consolidated statements of comprehensive income are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022			For the year ended December 31, 2021
Current service cost		139,356			150,599
Net interest income		(2,415	)		(1,874	)

Cost recognized in net income		136,941			148,725

Remeasurements		(311,909	)		(82,318	)

Cost recognized in total comprehensive income		(174,968	)		66,407

Retirement benefits related to defined contribution plans recognized as expenses are 2,112 million Won and 2,290 million Won for the years ended December 31, 2022 and 2021, respectively.

(6)	Key actuarial assumptions used in defined benefit liability measurement are as follows:


	December 31, 2022	December 31, 2021
Discount rate	5.35%	3.01%
Future wage growth rate	5.45%	5.46%
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 10.11 years.

(7)	The sensitivity to actuarial assumptions used in the assessment of defined benefit obligation is as follows (Unit: Korean Won in millions):


		December 31, 2022(*)			December 31, 2021(*)
Discount rate	Increase by 1% point		(105,500	)		(143,753	)
	Decrease by 1% point		121,886			169,151
Future wage growth rate	Increase by 1% point		125,653			168,078
	Decrease by 1% point		(112,637	)		(145,570	)

(*)

Although the above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant; in practice, more than one assumption are correlated. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations recognized in the statement of financial position.

- 123 -

(8)	The details of the maturity of the defined benefit obligation as of December 31, 2022 and 2021

are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Within 1 year		27,334		25,390
After 1 year but within 2 years		29,474		30,498
After 2 years but within 5 years		264,718		218,347
After 5 years but within 10 years		504,582		520,271
After 10 years		1,303,544		1,223,136

25.

OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

Other financial liabilities and other liabilities are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Other financial liabilities:
Accounts payable		5,343,227			6,608,940
Accrued expenses		2,960,084			1,833,209
Borrowings from trust accounts		3,475,118			3,107,456
Agency business revenue		213,844			433,040
Foreign exchange payables		822,446			782,176
Domestic exchange payables		4,615,475			6,703,676
Lease liabilities		271,868			294,626
Other miscellaneous financial liabilities		2,658,688			2,855,047
Present value discount		(1,731	)		(1,366	)

Sub-total		20,359,019			22,616,804

Other liabilities:
Unearned income		89,449			60,816
Other miscellaneous liabilities		146,809			105,434

Sub-total		236,258			166,250

Total		20,595,277			22,783,054

- 124 -

26.

DERIVATIVES

(1)	Derivative assets and derivative liabilities are as follows (Unit: Korean Won in millions):


	December 31, 2021
	Nominal amount		Assets				Liabilities
	Nominal amount		For fair value hedge		For trading		For fair value hedge		For trading
Interest rate:
Forwards		9,311		—		—		—		—
Futures		2,620,000		—		249,356		—		—
Swaps		136,690,518		—		440,540		193,831		487,258
Purchase options		170,000		—		9,308		—		—
Written options		310,000		—		—		—		16,752
Currency:
Forwards		90,119,960		—		3,081,638		—		1,363,423
Swaps		96,627,189		—		3,105,901		—		5,532,774
Purchase options		487,852		—		23,182		—		—
Written options		570,982		—		—		—		7,929
Equity:
Forwards		183		—		100		—		—
Futures		958,589		—		—		—		—
Swaps		568,835		—		90,237		—		673
Purchase options		29,801,478		—		1,204,475		—		—
Written options		29,874,836		—		—		—		1,544,107

Total		388,809,733		—		8,204,737		193,831		8,952,916


	December 31, 2021
	Nominal amount		Assets				Liabilities
	Nominal amount		For fair value hedge		For trading		For fair value hedge		For trading
Interest rate:
Forwards		8,700		—		—		—		—
Futures		340,000		—		16,434		—		—
Swaps		134,326,189		95,103		136,242		20,287		309,838
Purchase options		170,000		—		3,959		—		—
Written options		340,000		—		—		—		8,552
Currency:
Forwards		114,036,151		—		2,466,662		—		995,071
Swaps		100,584,084		—		1,444,634		—		2,357,492
Purchase options		1,079,610		—		10,968		—		—
Written options		1,686,787		—		—		—		8,952
Equity:
Forwards		233		—		64		—		—
Futures		337,916		—		—		—		—
Swaps		642,963		—		27,031		—		3,784
Purchase options		17,503,553		—		696,963		—		—
Written options		19,106,573		—		—		—		900,978

Total		390,162,759		95,103		4,802,957		20,287		4,584,667

Derivatives held for trading are classified into financial assets at FVTPL (Note 7) and financial liabilities at FVTPL (Note 20), and derivatives held for hedging are presented as derivative assets and derivative liabilities in the consolidated statements of financial position.

- 125 -

(2)	Overview of the Group’s hedge accounting

The hedging relationships that the Group applies fair value hedge accounting is affected by interest rate, which is related to Interest Rate Benchmark Reform. The interest rates to which the hedging relationships are exposed are USD 3M LIBOR, Compounding SOFR, AUD 3M BBSW, CD 3M. The nominal amounts of hedging instruments related to USD 3M LIBOR, Compounding SOFR, AUD 3M BBSW, CD 3M are USD 1,850,000,000, USD 525,000,000 AUD 150,000,000, KRW 150,000 million won, respectively. The Group pays close attention to discussions in the market and industry regarding the applicable alternative benchmark interest rates for the exposed interest rate. The Group judges related uncertainty is expected to be no longer present when the exposed interest rates are replaced by the applicable benchmark interest rates.

Fair value hedge

As of December 31, 2022, the Group has applied fair value hedge on fixed interest rate foreign currency denominated debentures amounting to 2,928,127 million Won, and Korean Won denominated loans amounting to 148,856 million Won. The purpose of the hedging is to avoid fair value volatility risk of fixed interest rate foreign currency denominated debentures derived from fluctuations of market interest rate, and as such the Group entered into interest rate swap agreements designated as hedging instruments.

According to the interest rate swap contract, an amount computed by multiplying the difference between the fixed and variable interest rate to the predetermined nominal amount will be exchanged. As a result, the fixed interest rate condition in the foreign currency denominated debentures will practically be converted into variable interest rate, thereby eliminating the risk of fair value fluctuation. Pursuant to the interest rate swap agreement, hedge ratio is determined by matching the nominal value to the face value of the hedging instrument.

In this hedging relationship, only the market interest rate fluctuation, which is the most significant part of the fair value change of the hedged item, is designated as the hedged risk, and other risk factors including credit risk are not included in the hedged risk. Therefore, the ineffective portion of the hedge could arise from fluctuations in the timing of the cash flow of the hedged item, price margin set by counterparty of hedging instrument, and unilateral change in credit risk of any party of hedging instrument.

The interest rate swap agreements and the hedged items are subject to fluctuations in the underlying market rate of interest and the Group expects the value of the interest rate swap contract and the value of the hedged item to generally change in the opposite direction.

The fair value of the interest rate swap at the end of the reporting period is determined by discounting future cash flows estimated using the yield curve at the end of the reporting period and the credit risk embedded in the contract and the average interest rate is determined based on the outstanding balance at the end of the reporting period. The variable interest rate applied to the interest rate swap is USD Libor 3M, AUD BBSW 3M, Compounding SOFR or CD 3M plus spread. In accordance with the terms of each interest rate swap contract designated as a hedging instrument, the Group receives interest at a fixed interest rate and pays interest at a variable interest rate.

Hedges of net investment

The foreign currency exposures are made from the Group’s net investments in Woori America Bank, Woori Bank(Cambodia) PLC. and Woori Global Markets Asia Limited, which use USD as functional currency. The risk arises from fluctuation in the spot exchange rate between USD and KRW. This may change the net investment amount.

The risk hedged from of net investment is the weakness of KRW against USD, which could reduce Group’s carrying amount of net investment in Woori America Bank, Woori Bank(Cambodia) PLC. and Woori Global Markets Asia Limited.

Part of the Group’s net investments in Woori America bank, Woori Bank(Cambodia) PLC. And Woori Global Markets Asia Limited are hedged with foreign currency bonds denominated in USD (Carrying amount as of December 31, 2022 : 864,390,437 USD) and mitigated the exchange risk arising from the subsidiary’s net assets. The loan has been designated as a hedging instrument for the value change of net investments, which arises from fluctuation in the spot exchange rate between USD and KRW.

- 126 -

To evaluate the effectiveness of the hedge, the Group determines the economic relationship between the hedging instrument and hedged item by comparing(offsetting) changes in the amount of foreign investments due to spot exchange rate fluctuation and in the carrying amount of the liabilities due to spot exchange rate fluctuation. The Group’s policy is to hedge the net investment amount only within the principal range of the liabilities.

(3)	The nominal amounts of the hedging instrument as of December 31, 2022 and 2021 are as follows (Unit: USD, AUD, EUR):


	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
Foreign exchange risk
Foreign currency denominated debentures (USD)		272,390,437		592,000,000		—		864,390,437

	December 31, 2021
	1 year or less		1 year to 5 years		More than 5 years		Total
Fair value hedge
Interest rate risk
Interest rate swap (USD)		—		1,550,000,000		300,000,000		1,850,000,000
Interest rate swap (AUD)		—		150,000,000		—		150,000,000
Interest rate swap (EUR)		—		26,591,163		—		26,591,163

(4)	The average interest rate and average currency rate of the hedging instrument as of December 31, 2022 and 2021 are as follows:


		December 31, 2022
		Average interest rate and average currency rate
Fair value hedge
Interest rate risk
Interest rate swaps (USD)		Fixed 3.62% receipt and Libor 3M+1.45% floating paid
Interest rate swaps (USD)		Fixed 2.05% receipt and C.SOFR+0.65% floating paid
Interest rate swaps (AUD)		Fixed 0.84% receipt and BBSW 3M+0.72% floating paid
Interest rate swaps (KRW)		Fixed 3.13% receipt and CD 3M floating paid
Hedges of net investment
Interest rate risk
Foreign currency denominated debentures(KRW/USD)		1,334.37

		December 31, 2021
		Average interest rate and average currency rate
Fair value hedge
Interest rate risk
Interest rate swaps (USD)		Fixed 3.62% receipt and Libor 3M+1.45% floating paid
Interest rate swaps (AUD)		Fixed 0.84% receipt and BBSW 3M+0.72% floating paid
Interest rate swaps (EUR)		EURIBOR 3M+0.09% receipt and fixed EUR 1.5% paid

- 127 -

(5)	Fair value hedge

The amounts related to items designated as hedging instruments as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions, USD, AUD, EUR):

December 31, 2022

Nominal amounts of the
hedging instrument

Carrying amounts of the hedging
instrument

Line item in the statement of
financial position where the
hedging instrument is located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Fair value hedge

Interest rate risk

USD

2,375,000,000

—

193,841

Derivative assets

(designated for hedging)

(247,765

)

Interest rate swaps

AUD

150,000,000

Derivative liabilities

(designated for hedging)

150,000

December 31, 2021

Nominal amounts of
the hedging
instrument

Carrying amounts of the hedging
instrument

Line item in the
statement of financial
position where the
hedging instrument is
located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Fair value hedge

Interest rate risk

USD

1,850,000,000

95,086

20,287

Derivative assets

(designated for hedging)

(83,821

)

Interest rate swaps

AUD

150,000,000

Derivative liabilities

(designated for hedging)

Interest rate swaps

EUR

26,591,163

—

Derivative assets

(designated for hedging)

Derivative liabilities

(designated for hedging)

Details of carrying amount to hedge and amount due to hedge accounting as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	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
Debentures		—		2,928,127		—		(199,804	)		Debentures		256,767
Borrowings in foreign currency		—		148,856		—		—			Debentures		1,144

	December 31, 2021
	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
Debentures		—		2,366,724		—		53,160			Debentures		100,343
Borrowings in foreign currency		—		35,694		—		—			Borrowings in foreign currency		(17	)

- 128 -

3)	Amounts recognized in profit or loss due to the ineffective portion of fair value hedges are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 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)

		For the year ended December 31, 2021
		Hedge ineffectiveness recognized in profit or loss		Line item in the profit or loss that includes hedge ineffectiveness
Fair value hedge	Interest rate risk		16,522	Other net operating income (expense)

(6)	Hedges of net investments in foreign operations

The amounts related to items designated as hedges of net investments in foreign operations instruments as of December 31, 2022 are as follows (Unit: Korean Won in millions, USD, AUD, EUR):

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

Currency risk

Debentures in foreign currency

USD

864,390,437

—

1,095,442

Debentures in
foreign currency

(28,553

)

Details of carrying amount to hedge and amount due to hedge accounting are as follows (Unit: Korean Won in millions):


	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
Currency risk
Net assets in foreign operations		28,553		(20,701	)

Amounts recognized in other comprehensive income and profit or loss due to the ineffective portion of fair value hedges are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022
	Hedges recognized in other comprehensive income			Hedges recognized in profit or loss		Items recognizing hedge ineffectiveness
Hedges of net investment in foreign operations
Currency risk		(20,701	)		—		—

No amount was reclassified from reserve of hedges of net investment in foreign operations to profit or loss.

- 129 -

27.

DEFERRED DAY 1 PROFITS OR LOSSES

Changes in deferred day 1 profits or losses are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022			For the year ended December 31, 2021
Beginning balance		29,111			6,939
New transactions		21,656			49,523
Amounts recognized in profits or losses		(32,803	)		(27,351	)

Ending balance		17,964			29,111

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. And the difference between fair value and transaction price is deferred and amortized to maturity and reflected in profit or loss. The table above presents the difference yet to be realized as profit or losses.

28.

CAPITAL STOCK AND CAPITAL SURPLUS

(1)	The number of authorized shares and others are as follows:


	December 31, 2022		December 31, 2021
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 are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Capital in excess of par value		1,068,420		1,068,420
Other capital surplus		27,774		27,774

Total		1,096,194		1,096,194

- 130 -

29.

HYBRID SECURITIES

The bond-type hybrid securities classified as owner’s equity are as follows (Unit: Korean Won in millions):


	Issue date		Maturity date		Interest rate (%)		December 31, 2022			December 31, 2021
Securities in local currency		April 25, 2013		April 25, 2043		4.4		500,000			500,000
		November 13, 2013		November 13, 2043		5.7		200,000			200,000
		June 3, 2015		June 3, 2045		4.4		240,000			240,000
		July 26, 2018		—		4.4		400,000			400,000
		September 21, 2022		—		5.2		320,000			—
		September 21, 2022		—		5.5		30,000			—
Securities in foreign currencies		May 16, 2017		—		5.3		—			562,700
		October 4, 2019		—		4.3		662,035			662,035
Issuance cost								(7,219	)		(9,569	)

Total								2,344,816			2,555,166

The hybrid securities mentioned above are either without a maturity date or its maturity can be extended indefinitely at the maturity date without changing terms, and early redemption may be made after 5, 7 or 10 years from the issuance date (Issuer Call). In addition, interest payments can be deferred at the Group’s discretion.

- 131 -

30.

OTHER EQUITY

(1)	Details of other equity are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Accumulated other comprehensive income:
Net gain (loss) on valuation of financial assets at FVTOCI		(674,205	)		(185,997	)
Gain (loss) on evaluation of investment stocks by equity method		655			(231	)
Gain (loss) on foreign currency translation of foreign operations		(9,696	)		(61,077	)
Gain (loss) on evaluation of hedges of net investment in foreign operations		(20,701	)		—
Remeasurement gain (loss) related to defined benefit plan		48,724			(178,099	)
Equity related to non-current assets held for sale		—			279

Sub-total		(655,223	)		(425,125	)

Other capital adjustments		(1,669,098	)		(1,635,972	)

Total		(2,324,321	)		(2,061,097	)

(2)	Changes in the accumulated other comprehensive income are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments		Income tax effect (*)			Ending balance
Net gain (loss) on valuation of financial assets at FVTOCI		(185,997	)		(682,400	)		29,567		164,625			(674,205	)
Gain (loss) on evaluation of investment stocks by equity method		(231	)		6,888			—		(6,002	)		655
Gain (loss) on foreign currency translation of foreign operations		(61,077	)		51,222			—		159			(9,696	)
Gain (loss) on evaluation of hedges of net investment in foreign operations		—			(28,553	)		—		7,852			(20,701	)
Remeasurement gain (loss) related to defined benefit plan		(178,099	)		311,909			—		(85,086	)		48,724
Equity related to non-current asset held for sale		279			(385	)		—		106			—

Total		(425,125	)		(341,319	)		29,567		81,654			(655,223	)

(*)	Net gain (loss) on valuation of financial assets at FVTOCI includes 10,472 million Won which was transferred to retained earnings due to disposal of equity securities.


	For the year ended December 31, 2021
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments			Income tax effect (*)			Ending balance
Net gain (loss) on valuation of financial assets at FVTOCI		(32,655	)		(156,238	)		(51,629	)		54,525			(185,997	)
Gain (loss) on evaluation of investment stocks by equity method		(2,802	)		4,082			—			(1,511	)		(231	)
Gain (loss) on foreign currency translation of foreign operations		(299,407	)		244,931			—			(6,601	)		(61,077	)
Remeasurement gain (loss) related to defined benefit plan		(237,587	)		82,318			—			(22,830	)		(178,099	)
Equity related to non-current asset held for sale		1,226			(1,306	)		—			359			279

Total		(571,225	)		173,787			(51,629	)		23,942			(425,125	)

(*)

Net gain (loss) on valuation of financial assets at FVTOCI and gain (loss) on evaluation of investment stocks accounted for using the equity method include 2,221 million Won and 946 million Won, respectively, transferred to retained earnings due to disposal of equity securities and investment in associates.

- 132 -

31.

RETAINED EARNINGS

(1)	Details of retained earnings are as follows (Unit: Korean Won in millions):


		December 31, 2022		December 31, 2021
Legal reserve	Earned surplus reserve		2,566,754		2,350,754
	Other legal reserve		33,239		33,278

	Sub-total		2,599,993		2,384,032

Voluntary reserve	Business rationalization reserve		8,000		8,000
	Reserve for financial structure improvement		235,400		235,400
	Additional reserve		8,576,104		8,576,105
	Regulatory reserve for credit loss		2,443,576		2,126,017
	Revaluation reserve		709,137		709,223

	Sub-total		11,972,217		11,654,745

Retained earnings before appropriation			6,375,958		5,344,452

Total			20,948,168		19,383,229

Earned surplus reserve

In accordance with the Article 40, Banking Act, earned surplus reserve is appropriated at least one tenth of the earnings after tax on every dividend declaration, not exceeding the paid in capital. This reserve may not be used other than for offsetting a deficit or transferring to capital.

Other legal reserve

Other legal reserves were appropriated in the branches located in Japan, India and Bangladesh according to the banking laws of Japan, India and Bangladesh, and may be used to offset any deficit incurred in those branches.

Business rationalization reserve

Pursuant to the Restriction of Special Taxation Act, the Group was previously required to appropriate, as a reserve for business rationalization, amounts equal to tax reductions arising from tax exemptions and tax credits up to December 31, 2001. The requirement was no longer effective from 2002.

Reserve for financial structure improvement

From 2002 to 2014, the Finance Supervisory Services recommended banks in Korea to appropriate at least 10 percent of net income after accumulated deficit for financial structure improvement, until tangible common equity ratio equals 5.5 percent. This reserve is not available for payment of cash dividends; however, it can be used to reduce a deficit or be transferred to capital. The reserve and appropriation are an autonomous judgment matter of the Group since 2015.

Additional reserve

Additional reserve is a voluntary reserve to retain earnings for capital adequacy and soundness of the Group’s operation.

Regulatory reserve for credit loss

In accordance with paragraph 1 and 2 of Article 29 of the Regulation on Supervision of Banking Business (“RSBB”), if provisions for credit loss under Korean IFRS for the accounting purpose are lower than provisions for credit loss under RSBB, the Group is prohibited to provide dividends with the regulatory reserve.

Revaluation reserve

Revaluation reserve is the amount of limited dividends set by the Board of Directors to be recognized as complementary capital when the gain or loss occurred in the property revaluation by adopting Korean IFRS.

- 133 -

32.

REGULATORY RESERVE FOR CREDIT LOSS

In accordance with Paragraph 1 and 2 of Article 29 of the Regulation on Supervision of Banking Business,

the Group calculates and discloses the regulatory reserve for credit loss.

(1)	Balance of the planned regulatory reserve for credit loss is as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Regulatory reserve for credit loss		2,443,576			2,126,017
Planned provision of regulatory reserve (reversal) for credit loss		(135,602	)		317,559

Ending balance		2,307,974			2,443,576

(2)	Planned reserves provided, adjusted net income after the planned reserves provided and adjusted EPS after the planned reserves provided are as follows (Unit: Korean Won in millions, except for EPS amount):


	For the years ended December 31
	2022			2021
Net income		2,903,409			2,385,106
Required provision(reversal of) for regulatory reserve for credit loss		(135,602	)		317,559
Adjusted net income after the provision of regulatory reserve		3,039,011			2,067,547
Adjusted EPS after the provision of regulatory reserve (Unit: Korean Won)(*)		4,085			2,685

(*)	For the years ended December 31, 2022 and 2021, it was calculated by deducting 113,995 million Won and 144,923 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, 2022 and 2021 are 1,917 Won and 1,642Won per share, respectively, and the total amount of dividends approved are 1,372,575 million Won and 1,175,672 million Won, respectively. Dividends as of December 31, 2022 will be proposed at the regular shareholders’ meeting scheduled on March 24, 2023.

- 134 -

34.

NET INTEREST INCOME

(1)	Interest income recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Financial assets at FVTPL		63,515		22,319
Financial assets at FVTOCI		632,615		381,814
Securities at amortized cost		515,246		324,920
Loans and other financial assets at amortized cost:
Interest on due from banks		219,063		41,705
Interest on loans		11,291,027		7,651,609
Interest of other receivables		20,938		11,660

Sub-total		11,531,028		7,704,974

Total		12,742,404		8,434,027

(2)	Interest expense recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Interest on deposits due to customers		4,036,407		1,854,196
Interest on borrowings		469,310		196,584
Interest on debentures		632,488		415,122
Interest on lease liabilities		6,178		6,562
Other interest expense		180,297		39,543

Total		5,324,680		2,512,007

- 135 -

35.

NET FEES AND COMMISSIONS INCOME

(1)	Details of fees and commissions income recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Fees and commission received for brokerage		289,265		286,319
Fees and commission received related to credit		154,868		167,884
Fees and commission received for electronic finance		131,795		132,559
Fees and commission received on foreign exchange handling		56,812		56,210
Fees and commission received on foreign exchange		96,663		73,894
Fees and commission received for guarantee		85,340		76,428
Fees and commission received on credit card		2,071		1,771
Fees and commission received on securities business		40,811		59,499
Fees and commission from trust management		144,756		128,988
Other fees		149,593		135,482

Total		1,151,974		1,119,034

(2)	Details of fees and commissions expense incurred are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Fees and commissions paid		220,674		183,320
Credit card commission		734		487
Brokerage commission		26		32
Others		3,426		2,805

Total		224,860		186,644

- 136 -

36.

DIVIDEND INCOME

(1)	Details of dividend income recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Dividend income related to financial assets at FVTPL
Dividends on stock		14,895		103,846
Dividends on equity capital		19,221		76,883
Dividends on mutual funds		96,180		80,589

Sub-total		130,296		261,318
Dividend income related to financial assets at FVTOCI
Dividends on stock		20,669		21,654
Dividends on equity capital		148		285

Sub-total		20,817		21,939

Total		151,113		283,257

(2)	Details of dividends related to financial assets at FVTOCI for the years ended December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Dividend income recognized from assets held Equity securities		20,817		21,939

- 137 -

37.

NET GAIN OR LOSS ON FINANCIAL INSTRUMENTS AT FVTPL

(1)	Details of net gain or loss on financial instruments at FVTPL are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Gain on financial instruments at fair value through profit or loss mandatorily measured at fair value		214,666		254,099
Gain on financial instruments designated at fair value through profit or loss upon initial recognition		—		102

Total		214,666		254,201

(2)	Details of net gain or loss on financial instruments at FVTPL mandatorily measured at fair value are as follows (Unit: Korean Won in millions):


			For the years ended December 31
			2022			2021
Financial assets at FVTPL	Securities	Gain on transactions and valuation		243,715			199,304
		Loss on transactions and valuation		(476,751	)		(169,756	)

		Sub-total		(233,036	)		29,548

	Loans	Gain on transactions and valuation		11,346			1,116
		Loss on transactions and valuation		—			(1	)

		Sub-total		11,346			1,115

	Other financial assets	Gain on transactions and valuation		7,666			3,828
		Loss on transactions and valuation		(7,396	)		(3,360	)

		Sub-total		270			468

Sub-total				(221,420	)		31,131

Derivatives (for trading)	Interest rate derivatives	Gain on transactions and valuation		5,191,619			1,985,694
		Loss on transactions and valuation		(3,612,074	)		(1,724,245	)

		Sub-total		1,579,545			261,449

	Currency derivatives	Gain on transactions and valuation		14,593,539			9,683,429
		Loss on transactions and valuation		(15,723,544	)		(9,728,570	)

		Sub-total		(1,130,005	)		(45,141	)

	Equity derivatives	Gain on transactions and valuation		2,836,844			1,754,671
		Loss on transactions and valuation		(2,850,334	)		(1,744,294	)

		Sub-total		(13,490	)		10,377

	Other derivatives	Gain on transactions and valuation		49			64

		Loss on transactions and valuation		(13	)		(3,781	)

		Sub-total		36			(3,717	)
Sub-total				436,086			222,968

Total				214,666			254,099

- 138 -

(3)	Details of net gain or loss on financial instruments at FVTPL are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Gain (loss) on equity-linked securities
Gain(loss) on disposal of equity-linked securities		—		102

Total		—		102

38.

NET GAIN OR LOSS ON FINANCIAL ASSETS AT FVTOCI

Details of net gain or loss on financial assets at FVTOCI recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022			2021
Loss on redemption of securities		(7	)		(24	)
Gain(loss) on disposal of securities		(21,491	)		32,648

Total		(21,498	)		32,624

39.

REVERSAL OF (PROVISION FOR) IMPAIRMENT LOSSES DUE TO CREDIT LOSS

Reversal of (provision for) impairment losses due to credit loss are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022			2021
Reversal of (provision for) Impairment loss due to credit loss on financial assets measured at FVTOCI		827			(4,909	)
Provision for impairment loss due to credit loss on securities at amortized cost		(3,151	)		(664	)
Provision for impairment loss due to credit loss on loan and other financial assets at amortized cost		(446,302)			(214,624	)
Reversal of (provision for) provision on guarantee		(7,611	)		10,701
Provision for unused loan commitment		(2,575	)		12,721

Total		(458,812	)		(196,775	)

- 139 -

40.

GENERAL ADMINISTRATIVE EXPENSES AND OTHER NET OPERATING INCOME (EXPENSES)

(1)	Details of general and administrative expenses recognized are as follows (Unit: Korean Won in millions):


			For the years ended December 31
			2022		2021
Employee benefits	Short-term employee benefits	Salaries Employee benefits		1,604,396 499,501		1,437,772 470,511
	Share-based payments			7,475		14,147
	Retirement benefit service costs			139,053		151,015
	Termination			154,697		171,316

	Sub-total			2,405,122		2,244,761

Depreciation and amortization				435,189		450,020

Other general and administrative expenses	Rent			55,218		59,736
	Taxes and public dues			126,477		107,714
	Service charges			219,178		216,655
	Computer and IT related			282,564		264,888
	Telephone and communication			51,524		47,324
	Operating promotion			40,424		34,123
	Advertising			148,859		94,209
	Printing			6,414		5,911
	Traveling			7,763		5,704
	Supplies			6,388		5,821
	Insurance premium			19,021		9,243
	Reimbursement			7,714		8,536
	Maintenance			19,013		17,585
	Water, light and heating			15,528		13,968
	Vehicle maintenance			12,280		9,667
	Others			55,996		10,850

	Sub-total			1,074,361		911,934

Total				3,914,672		3,606,715

(2)	Details of other operating income recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Gain on transactions of foreign exchange		1,377,629		551,906
Gain related to derivatives (Hedging purpose)		1,288		—
Gains on fair value hedged items		257,910		106,253
Others		35,411		42,833

Total		1,672,238		700,992

- 140 -

(3)	Details of other operating expenses recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Losses on transactions of foreign exchange		1,072,933		363,215
KDIC deposit insurance premium		411,833		395,982
Contribution to miscellaneous funds		402,057		367,961
Losses related to derivatives (Hedging purpose)		250,267		93,084
Losses on fair value hedged items		—		1,947
Others (*)		102,599		84,827

Total		2,239,689		1,307,016

(*)	‘Others’ for the years ended December 31, 2022 and 2021 includes 14,664 million Won and 13,693 million Won, respectively, of amortization expenses for intangible assets.

(4)	Share-based Payment

Details of performance condition share-based payment granted to executives as of December 31, 2022 and 2021 are as follows.

Performance condition share-based payment


Subject to		Shares granted for the year 2019
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)		12,406
Valuation methods		Black-Scholes Model
Dividend yield		5.05%
Expected maturity		0 year
Number of shares measured as of the closing date (2),(3)	As of December 31, 2022	524,746 shares
	As of December 31, 2021	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)		11,796
Valuation method		Black-Scholes Model
Dividend yield		5.05%
Expected maturity		1 years
Number of shares measured as of the closing date (2),(3)	As of December 31, 2022	755,073 shares
	As of December 31, 2021	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)		11,215
Valuation method		Black-Scholes Model
Dividend yield		5.05%
Expected maturity		2 years
Number of shares measured as of the closing date (2),(3)	As of December 31, 2022	865,717 shares
	As of December 31, 2021	865,717 shares

- 141 -


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)		10,662
Valuation methods		Black-Scholes Model
Dividend yield		5.05%
Expected maturity		3 years
Number of shares measured as of the closing date (2),(3)	As of December 31, 2022	744,943 shares
	As of December 31, 2021	—

(*1)

As of December 31, 2022, the fair value calculated using the Black-Scholes model was used to measure liabilities by reflecting the average dividend rate for the past four years to the stock price of the weighted average of Woori Financial Group’s trading volume for the past week, month and two months.

(*2)

The number of payable stocks is granted at the initial contract date and the payment rate is determined based on the achievement of the pre-determined performance targets. Performance is evaluated as long-term performance indication including relative shareholder return, net income, return on equity (ROE), C/I ratio, non-performing loan ratio and job performance.

(*3)	As of December 31, 2022, the remaining quantity and granted quantity are the same.

ii)

The Group accounts for performance condition share-based payments according to the cash-settled method and the fair value of the liabilities is reflected in the compensation costs by re-measuring per every closing period. As of December 31, 2022 and 2021, the book value of the liabilities related to the performance condition share-based payments recognized by the Group is 33,068 million Won and 25,593 million Won, respectively.

- 142 -

41.

OTHER NON-OPERATING INCOME (EXPENSES)

(1)	Details of gains or losses on valuation of investments in joint ventures and associates are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022			2021
Gains on valuation of investments in joint ventures and associates		83,440			66,676
Losses on valuation of investments in joint venture and associates		(9,482	)		(6,626	)

Total		73,958			60,050

(2)	Details of other non-operating income and expenses recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022			2021
Non-operating income		163,881			192,230
Non-operating expenses		(158,318	)		(149,689	)

Total		5,563			42,541

(3)	Details of other non-operating income recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Rental fee income		36,098		27,369
Gain on disposal of assets held for sale		6		70,120
Gains on disposal of premises and equipment, intangible assets and other assets		25,759		1,815
Gains on disposal of assets held for sale		28,525		48,430
Others(*)		73,493		44,496

Total		163,881		192,230

(*)	‘Others’ for the year ended December 31, 2022 include 46,536 million Won of other special gain related to other provisions.

- 143 -

(4)	Details of other non-operating expenses recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Depreciation on investment properties		6,483		5,325
Interest expenses of refundable deposits		997		708
Loss on disposal of investments in associates		116		—
Losses on disposal of premises and equipment, intangible assets and other assets		2,875		2,398
Impairment losses of premises and equipment, intangible assets and other assets		144		276
Donation		42,435		36,400
Others(*)		105,268		104,582

Total		158,318		149,689

(*)

‘Others’ for the year ended December 31, 2022 include 63,354 million Won of other special loss related to embezzlement incidents and 18,458 million Won of other special loss related to other provisions. ‘Others’ for the year ended December 31, 2021 include 75,921 million Won of other special loss related to other provisions.

42.

INCOME TAX EXPENSE

(1)	Details of income tax expenses are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022			For the year ended December 31, 2021
Current tax expense
Current tax expense in respect of the current year		1,131,459			738,952
Adjustments recognized in the current period in relation to the current tax of prior periods		(13,003	)		(1,942	)
Deferred tax charged directly to equity		7,852			—

Sub-total		1,126,308			737,010

Deferred tax expense
Changes in deferred tax assets(liabilities) relating to the temporary differences		(240,812	)		29,225
Current tax charged to equity and others directly:		73,803			23,942

Sub-total		(167,009	)		53,167

Income tax expense		959,299			790,177

(2)	Income tax expense reconciled to net income before income tax expense is as follows (Unit: Korean Won in millions) :


	For the year ended December 31, 2022			For the year ended December 31, 2021
Net income before income tax expense		3,862,708			3,175,283
Tax calculated at statutory tax rate (*)		1,022,243			844,681
Adjustments
Effect of income that is exempt from taxation		(63,839	)		(46,617	)
Effect of expense not deductible in determining taxable profit		22,250			16,050
Adjustments recognized in the current period in relation to the current tax of prior periods		(13,003	)		(1,942	)
Effect of income tax expense that is resulting from consolidation		(35,482	)		(34,587	)
Others		27,130			12,592

Sub-total		(62,944	)		(54,504	)

Income tax expense		959,299			790,177

Effective tax rate		24.8	%		24.9	%

- 144 -

(*)	The applicable income tax rate; 1) 11% for below 200 million Won, 2) 22% for above 200 million Won and below 20 billion Won, 3) 24.2% for above 20 billion Won and below 300 billion Won, 4) 27.5% for above 300 billion Won.

(3)	Changes in cumulative temporary differences for the years ended December 31, 2022 and 2021, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022
	Beginning balance			Recognized as income (expense)			Recognized as other comprehensive income (expense)			Ending Balance
Gain on financial assets		282,317			62,459			156,387			501,163
Gain(loss) on valuation using the equity method of accounting		17,422			(871	)		5,896			22,447
Loss on valuation of derivatives		(149,001	)		177,339			—			28,338
Accrued income		(79,519	)		(8,153	)		—			(87,672	)
Provision for loan losses		(52,807	)		6,890			—			(45,917	)
Loan and receivables written off		4,565			(166	)		—			4,399
Loan origination costs and fees		(156,730	)		25,801			—			(130,929	)
Defined benefit liability		397,954			10,357			(85,086	)		323,225
Deposits with employee retirement insurance trust		(395,249	)		(15,514	)		—			(410,763	)
Provision for guarantee		5,725			1,871			—			7,596
Other provision		78,322			(12,879	)		—			65,443
Others		(167,435	)		(80,125	)		(3,394	)		(250,954	)

Net deferred tax assets (liabilities)s		(214,436	)		167,009			73,803			26,376


	For the year ended December 31, 2021
	Beginning balance			Recognized as income (expense)			Recognized as other comprehensive income (expense)			Ending Balance
Gain (loss) on financial assets		285,811			(58,019	)		54,525			282,317
Gain(loss) on valuation using the equity method of accounting		34,981			(16,408	)		(1,151	)		17,422
Gain (loss) on valuation of derivatives		(146,137	)		(2,864	)		—			(149,001	)
Accrued income		(60,390	)		(19,129	)		—			(79,519	)
Provision for loan losses		(53,230	)		423			—			(52,807	)
Loan and receivables written off		4,565			—			—			4,565
Loan origination costs and fees		(145,459	)		(11,271	)		—			(156,730	)
Defined benefit liability		394,166			26,618			(22,830	)		397,954
Deposits with employee retirement insurance trust		(391,461	)		(3,788	)		—			(395,249	)
Provision for guarantee		6,133			(408	)		—			5,725
Other provision		64,004			14,318			—			78,322
Others		(178,194	)		17,361			(6,602	)		(167,435	)

Net deferred tax assets (liabilities)		(185,211	)		(53,167	)		23,942			(214,436	)

(4)	Unrealizable temporary differences are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Deductible temporary differences		319,962			258,693
Taxable temporary differences		(981,217	)		(108,055	)

Total		(661,255	)		150,638

- 145 -

No deferred income tax asset has been recognized for the deductible temporary difference of 319,962 million Won associated with investments in subsidiaries and associates as of December 31, 2022, because it is not probable that the temporary differences will be reversed in the foreseeable future.

No deferred income tax liability has been recognized for the taxable temporary difference of 981,217 million Won associated with investment in subsidiaries and associates as of December 31, 2022, due to the following reasons:

- The Group is able to control the timing of the reversal of the temporary difference.

- It is probable that the temporary difference will not be reversed in the foreseeable future.

(5)	Details of accumulated deferred tax charged directly to other equity are as follows (Unit: Korean Won in millions):


	December 31, 2022			December 31, 2021
Net gain on valuation of financial assets at FVTOCI		232,645			68,019
Share of other comprehensive loss of and associates		(6,082	)		(186	)
Gain on foreign currency translation of foreign operations		4,837			4,678
Gain on valuation of hedges of net investments in foreign operations		7,852			—
Remeasurements of the net defined benefit liability		(18,435	)		66,650

Total		220,817			139,161

(6)	Current tax assets and liabilities are as follows (Unit: Korean Won in millions)


	December 31, 2022		December 31, 2021
Current tax assets		38,913		22,491
Current tax liabilities		716,936		484,984

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
	2022			2021
Net income for the period attributable to common shareholders		2,892,165			2,375,525
Dividends to hybrid securities		(113,995	)		(144,923	)
Net income attributable to common shareholders		2,778,170			2,230,602
Weighted average number of common shares outstanding		716			716
Basic EPS (Unit: Korean Won)		3,880			3,115

(2)	The weighted average number of common shares outstanding is as follows:

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

- 146 -

For the year ended December 31, 2021

Period

Number of
shares

Dates

Accumulated number
of shares outstanding
during period

Common shares issued at the beginning of the period

2021-01-01 ~ 2021-12-31

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, 2022 and 2021.

44.

CONTINGENT LIABILITIES AND COMMITMENTS

(1)	Details of guarantees are as follows (Unit: Korean Won in millions):


	December 31, 2022(*)		December 31, 2021(*)
Confirmed guarantees
Guarantee for loans		39,684		38,897
Acceptances		501,921		622,758
Guarantees in acceptances of imported goods		97,920		111,195
Other confirmed guarantees		6,825,448		7,141,110

Sub-total		7,464,973		7,913,960

Unconfirmed guarantees
Local letter of credit		150,075		243,071
Letter of credit		3,014,228		3,186,513
Other unconfirmed guarantees		1,144,498		778,089

Sub-total		4,308,801		4,207,673

Commercial paper purchase commitments and others		125,546		791,729

Total		11,899,320		12,913,362

(*)	Includes financial guarantees of 3,072,827 million Won and 3,885,937 million Won as of December 31, 2022 and 2021, respectively.

(2)	Details of loan commitments and others are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Loan commitments		76,081,523		70,387,647
Other commitments		6,112,770		4,322,265

- 147 -

(3)	Litigation case

Legal cases where the Group is involved are as follows (Unit: Korean Won in millions except for number of cases) :

December 31, 2022

December 31, 2021

As plaintiff

As defendant

As plaintiff

As defendant

Number of cases(*)

40 cases

164 cases

39 cases

148 cases

Amount of litigation

287,854

335,196

248,036

344,686

Provisions for litigations

16,453

17,422

(*)	The number of cases as of December 31, 2022 and 2021 does not include cases such as loan-related execution or simple extension of loan prescription, litigation where the substantive party is not the Group, or fraudulent lawsuits.

- 148 -

45.

RELATED PARTY TRANSACTIONS

Related parties of the Group as of December 31, 2022 and its assets and liabilities recognized as of December 31, 2022 and 2021 and major transactions with related parties for the years ended December 31, 2022 and 2021 and compensation to key management are as follows:

(1)	Related parties


		Related parties
Parent company		Woori Financial Group Inc.

Associates		W Service Networks Co., Ltd., Korea Credit Bureau Co., Ltd., Korea Finance Security Co., Ltd., Lotte Card Co., Ltd., K BANK Co., Ltd. and others (Dongwoo C & C Co., Ltd. and 34 associates),

Other related parties		Woori Card Co., Ltd. and its subsidiaries, Woori Investment Bank Co., Ltd. and its subsidiaries, Woori FIS Co., Ltd., Woori Private Equity Asset Management Co., Ltd. and its subsidiaries and 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, Woori Asset Trust Co. Ltd., Woori Finance Capital and its subsidiaries and associates, Woori Financial F&I Inc., Woori Savings Bank, Woori G Japan Private Real Estate Investment Trust No. 1, Godo Kaisha Oceanos No. 1,WOORI ZIP 1 and WOORI ZIP 2, JC Assurance Private Equity Fund No. 2, IGEN2022No. 1 Private Equity Fund

(2)	Major assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):


Related party		A title of account	December 31, 2022			December 31, 2021
Parent	Woori Financial Group Inc.	Other assets		15,917			850
		Deposits due to customers		1,613,361			738,725
		Other liabilities		645,807			425,052
Associates	W Service Networks Co., Ltd.	Deposits due to customers		3,298			2,832
		Other liabilities		8			306
	Korea Credit Bureau Co., Ltd.	Deposits due to customers		4,450			1,557
		Other liabilities		40			—
	Korea Finance Security Co., Ltd.	Loans		3,397			3,397
		Loss allowance		(45	)		(6	)
		Other liabilities		3			1
		Deposits due to customers		1,764			1,887
	Lotte Card Co., Ltd.	Loans		50,000			3,750
		Loss allowance		(30	)		(39	)
		Other assets		—			10
		Deposits due to customers		35,986			13,482
		Other liabilities		74			91
	K BANK Co., Ltd.	Other liabilities		108,156			84,935
	Others (*)	Loans		251			—
		Loss allowance		(1	)		—
		Deposits due to customers		2,807			1,063
		Other liabilities		1			3
Other Related Parties	Woori Card Co., Ltd. and its subsidiaries	Loans		5,486			4,742
		Loss allowance		(10	)		(7	)
		Other assets		15,891			12,623

- 149 -


Related party		A title of account	December 31, 2022			December 31, 2021
	Woori Card Co., Ltd. and its subsidiaries	Deposits due to customers		59,237			55,209
		Derivative liabilities		42,875			15,810
		Other liabilities		21,653			13,786
	Woori Investment Bank Co., Ltd. and its subsidiaries and associates	Other assets		10,124			3,555
		Deposits due to customers		38,237			52,891
		Other liabilities		26,955			20,359
	Woori FIS Co., Ltd.	Other assets		121			115
		Deposits due to customers		21,183			17,993
		Other liabilities		21,287			21,318
	Woori Private Equity Asset Management Co., Ltd. and its subsidiaries and associates	Deposits due to customers		45,635			1,903
		Other liabilities		320			—
	Woori Finance Research Institute Co., Ltd.	Deposits due to customers		1,338			1,268
		Other liabilities		479			515
	Woori Credit Information Co., Ltd.	Other assets		5			5
		Deposits due to customers		8,984			14,180
		Other liabilities		10,066			10,427
	Woori Fund Service Co., Ltd.	Deposits due to customers		16,395			13,652
		Other liabilities		1,663			1,366
	Woori Asset Management Co., Ltd. and its subsidiaries and associates	Deposits due to customers Other liabilities		12,393 167			11,555 —
	Woori Global Asset Management Co., Ltd. and its subsidiaries and associates	Deposits due to customers		1,408			659
		Other liabilities		86			30
	Woori Asset Trust Co., Ltd.	Deposits due to customers		142,088			47,603
		Other liabilities		408			12
	Woori Finance Capital and its subsidiaries and associates	Derivative assets		—			57
		Deposits due to customers		29,392			35,524
		Derivative liabilities		1,453			342
		Other liabilities		166			51
	Woori Financial F&I Inc.	Deposits due to customers		12,298			—
	Woori G Japan Private Real Estate Investment Trust No.1	Loans		20,459			21,939
		Loss allowance		(8	)		—
		Other assets		25			—
		Deposits due to customers		157			181
		Derivative liabilities		2,914			1,528
	Woori Savings Bank	Other assets		29			16
	Godo Kaisha Oceanos No. 1	Loans		39,814			43,033
		Loss allowance		(32	)		(124	)
		Other assets		35			—
	WOORI ZIP 1	Loans		11,819			12,775
		Other assets		22			—
	WOORI ZIP 2	Loans		16,776			18,132

- 150 -


Related party		A title of account	December 31, 2022	December 31, 2021
	WOORI ZIP 2	Loss allowance	(1)	—
		Other assets	31	—
	JC Assurance Private Equity Partnership No. 2	Deposits due to customers	93	—
	Izen 2022 Private Equity Partnership No. 1	Deposits due to customers	722	—

(*)	Others include Partner One Value Up I Private Equity Fund, Woori Growth Partnerships New Technology Private Equity Fund, 2016 KIF-IMM Woori Bank Technology Venture Fund and others as of December 31, 2022 and December 31, 2021.

(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	2022			2021
Parent company	Woori Financial Group	Fees income		12			13
		Other income		4,376			3,827
		Interest expenses		25,614			4,236
		Fees expenses		1,596			1,306
Associates	W Service Networks Co., Ltd.	Other income		—			30
		Interest expenses		14			7
	Korea Credit Bureau Co., Ltd.	Interest expenses		40			4
	Korea Finance Security Co., Ltd.	Interest income		141			80
		Interest expenses		3			2
		Provision (Reversal) of impairment losses due to credit loss		42			(1	)
	Lotte Card Co., Ltd.	Interest income		83			196
		Fees income		7,624			10,248
		Interest expenses		1,902			462
		Provision (Reversal) of impairment losses due to credit loss		(27	)		(59	)
	Others (*)	Interest expenses		10			17
		Provision of impairment losses		1			—
Other related parties	Woori Card Co., Ltd. and its subsidiaries	Interest income		413			284
		Fees income		106,763			106,194
		Other income		415			524
		Interest expenses		275			81
		Fees expenses		645			488
		Loss on derivatives		27,065			21,132
		Provision (Reversal) of impairment losses due to credit loss		14			20

- 151 -


			For the years ended December 31
Related party		A title of account	2022			2021
	Woori Investment Bank Co., Ltd. and its subsidiaries and associates	Interest income		41			128
		Fees income		1,590			1,094
		Other income		15			2,199
		Interest expenses		63			42
		Fee expenses		477			—
		Reversal of impairment losses due to credit loss		11			(15	)
	Woori FIS Co., Ltd.	Fees income		548			506
		Other income		9,907			9,495
		Interest expenses		1			2
		Other expenses		238,922			221,577
	Woori Private Equity Asset Management Co., Ltd. and its subsidiaries and associates	Fees income		11			15
		Interest expenses		325			5
	Woori Finance Research Institute Co., Ltd.	Fees income		18			17
		Other income		752			648
		Interest expenses		38			16
	Woori Credit Information Co., Ltd.	Fees income		79			85
		Other income		637			546
		Interest expenses		328			238
		Fees expenses		12,735			13,182
	Woori Fund Service Co., Ltd.	Fees income		239			230
		Other income		371			255
		Interest expenses		323			130
		Other expenses		—			49
		Fees expenses		302			228
	Woori Asset Management Co., Ltd. and its subsidiaries and associates	Fees income		52			47
		Interest expenses	177			35
	Woori Global Asset Management Co., Ltd. and its subsidiaries and associates	Fees income		20			17
		Fees expenses		797			812
	Woori Asset Trust Ltd.	Fees income		188			159
		Interest expenses		1,480			134
		Fees expenses		4,640			3,959
	Woori Finance Capital and its subsidiaries and associates	Interest income		—			1,239
		Fees income		2,867			3,390
		Interest expense		34			54
		Other expenses		1,060			—
		Gain on derivatives		—			1,440
		Loss on derivatives		1,112			1,440
		Provision(Reversal) of impairment losses due to credit loss		(29	)		(68	)

- 152 -


			For the years ended December 31
Related party		A title of account	2022			2021
	Woori Savings Bank	Fees income		1,155			470
	Woori Finance F&I	Interest expense		275			—
	Godo Kaisha Oceanos No. 1
		Interest income		398			430
		Provision(Reversal) of impairment losses due to credit loss		(92	)		(2	)
	Woori G Japan Private Real Estate Investment Trust No.1	Interest income		286			—
		Provision of impairment losses due to credit loss		2			—
		Loss on derivatives		1,394			402
	WOORI ZIP 1	Interest income		130			103
	WOORI ZIP 2	Interest income		185			146
	Izen 2022 Private Equity Partnership No. 1	Interest expense		1			—

(*)	Others include Woori Growth Partnerships New Technology Private Equity Fund, Partner One Value Up I Private Equity Fund, and others as of December 31, 2022 and 2021.

- 153 -

(4)	Major fund transactions with related parties for the years ended December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2022
Related parties		Beginning balance		Loan		Collection		Others			Ending balance (*1)
Associates	Korea Finance Security Co., Ltd		3,397		2,000		2,000		—			3,397
	Lotte Card Co., Ltd.		3,750		50,000		3,750		—			50,000
	Others		251		—		—		—			251
Other related parties	Woori Card Co., Ltd and its subsidiaries		4,742		417		—		327			5,486
	Woori G Japan Private Real Estate Investment Trust No. 1		21,939		—		—		(1,480	)		20,459
	Godo Kaisha Oceanos No. 1		43,033		41,467		43,033		(1,653	)		39,814
	WOORI ZIP 1		12,775		—		—		(956	)		11,819
	WOORI ZIP 2		18,132		—		—		(1,356	)		16,776

(*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.


		For the year ended December 31, 2021
Related parties		Beginning balance		Loan		Collection		Others			Ending balance (*1)
Associates	Korea Finance Security Co., Ltd		3,397		—		—		—			3,397
	Lotte Card Co., Ltd.		7,500		—		3,750		—			3,750
Other related parties	Woori Investment Bank Co., Ltd. and its subsidiaries		7,600		10,500		18,100		—			—
	Woori Card Co., Ltd and its subsidiaries		4,352		—		—		390			4,742
	Woori Finance Capital and its subsidiaries		70,000		—		70,000		—			—
	Woori G Japan Private Real Estate Investment Trust No. 1		23,539		—		—		(1,600	)		21,939
	Godo Kaisha Oceanos No. 1		44,036		—		—		(1,003	)		43,033
	WOORI ZIP 1		—		13,121		—		(346	)		12,775
	WOORI ZIP 2		—		18,624		—		(492	)		18,132

(*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.

- 154 -

(5)	Changes in major deposits due to customers with related parties for the years ended December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2022
Related parties		Beginning balance		Borrowings		Repayment and others		Ending balance (*)
Parent company	Woori Financial Group		520,000		3,930,000		2,855,000		1,595,000
Associates	W Service Networks Co., Ltd.		1,180		1,200		1,180		1,200
	Partner One Value Up No.1 Private Equity Fund		329		550		779		100
	Korea Credit Bureau Co., Ltd.		—		3,000		—		3,000
Other related parties	Woori Investment Bank Co., Ltd. and its subsidiaries and affiliates		2,000		—		—		2,000
	Woori Finance Research Institute Co., Ltd.		800		8,900		9,700		—
	Woori Credit Information Co., Ltd.		11,699		2,500		9,500		4,699
	Woori Fund Service Co., Ltd		11,500		14,500		11,500		14,500
	Woori Asset Trust. Ltd		6,000		379,918		289,918		96,000
	Woori Finance F&I		—		270,000		270,000		—
	Woori Private equity		—		42,000		—		42,000
	Woori Asset Management Co., Ltd. and its subsidiaries and associates		—		10,000		—		10,000

(*)	The details of payments made between related parties and the deposits due to customers that can be taken in and out easily are excluded.


		For the year ended December 31, 2021
Related parties		Beginning balance		Borrowings		Repayment and others		Ending balance (*)
Parent company	Woori Financial Group		450,000		2,250,000		2,180,000		520,000
Associates	W Service Networks Co., Ltd.		1,180		1,180		1,180		1,180
	Partner One Value Up I Private Equity Fund		863		637		1,171		329
	Korea Credit Bureau Co., Ltd.		1,000		—		1,000		—
Other related parties	Woori Investment Bank Co., Ltd. and its subsidiaries.		2,000		—		—		2,000
	Woori Finance Research Institute Co., Ltd.		1,500		3,600		4,300		800
	Woori Credit Information Co., Ltd.		14,199		19,500		22,000		11,699
	Woori Fund Service Co., Ltd.		9,300		11,500		9,300		11,500
	Woori Asset Trust Co., Ltd.		34,000		89,367		117,367		6,000

(*)	The details of payments made between related parties and the deposits due to customers that can be taken in and out easily are excluded.

(6)	Major borrowing transactions with related parties for the years ended December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):

For the year ended December 31, 2022

Related parties

Beginning
balance

Borrowing

Repayment

Others

Ending
balance

Other related parties

Woori Card Co., Ltd. and its subsidiaries

13,051

196,531

188,664

—

20,918

For the year ended December 31, 2021

Related parties

Beginning
balance

Borrowing

Repayment

Others

Ending
balance

Other related parties

Woori Card Co., Ltd and its subsidiaries

14,622

183,804

185,375

—

13,051

- 155 -

(7)	The amount of guarantees and unused loan commitments provided by the related parties to the Group as of December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	Warranty	December 31, 2022		December 31, 2021
Woori Card Co., Ltd and its subsidiaries	Loan commitment in local currency		128,964		176,130

(8)	Amount of commitments with the related parties (Unit: Korean Won in millions):


	Warranty	December 31, 2022		December 31, 2021
Woori Card Co., Ltd. and its subsidiaries	Derivative		543,460		337,100
	Unsettled commitment		503,628		500,000
Woori Investment Bank Co., Ltd. and its subsidiaries and associates	Unsettled commitment		150,000		100,000
Woori Finance Capital and its subsidiaries and associates	Derivative		40,000		80,000
	Unsettled commitment		150,000		240,000
Korea Finance Security Co., Ltd	Unsettled commitment		403		603
Lotte Card Co., Ltd.	Unsettled commitment		450,000		500,000
Woori-Q Corporate Restructuring Private Equity Fund	Securities purchase commitment		9,284		8,215
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		325		425
Woori G Woori Bank Partners Private Placement Investment Trust No. 1	Securities purchase commitment		349,177		457,558
Woori G Private Placement Investment Trust No. 1	Securities purchase commitment		251,940		301,504
JC Assurance Private Equity Fund No. 2	Securities purchase commitment		859		859
Woori Seoul Expressway Private Placement Investment Trust No. 1	Securities purchase commitment		37,146		39,458
Woori G Japan Private Real Estate Investment Trust No. 1	Derivatives		16,644		18,633
WooriG GP Commitment Loan Private Placement Investment Trust No. 1	Securities purchase commitment		6,274		10,120
Woori G Equity Bridge Loan Private Placement Investment Trust No. 1	Securities purchase commitment		39,000		46,800
Woori G Woori Bank Partners Private Placement Investment Trust No. 2	Securities purchase commitment		626,215		108,033
Woori G GP Commitment Loan Private Placement Investment Trust No. 2	Securities purchase commitment		9,560		—
STASSETS FUND III	Securities purchase commitment		13,500
WooriG Equity Investment General Type Private Investment Trust No.1	Securities purchase commitment		456		—
Woori G Senior Loan Private Placement Investment Trust No. 2	Securities purchase commitment		180,000		—
Together-Korea Government Private Pool Private Securities Investment Trust No. 3	Securities purchase commitment		990,000		—
WooriG Global Mid-market Secondaries Private Placement Investment Trust No. 1	Securities purchase commitment		12,105		—
Woori G Renewable New Deal Private Placement Investment Trust No.1	Securities purchase commitment		35,025		—
WooriG Private Investment Trust No. 5	Securities purchase commitment		117,223		—
Woori G Infrastructure New Deal General Investment Private Equity Investment Trust No. 1	Securities purchase commitment		35,220		—

- 156 -


	Warranty	December 31, 2022		December 31, 2021
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 3	Securities purchase commitment		41,300		—
BTS No. 2 Private Equity Joint Venture	Securities purchase commitment		6,974		—
Woori Busan Logistics Infrastructure General Private Equity Investment Trust	Securities purchase commitment		19,799		—
Woori Financial Digital Investment Association No. 1	Securities purchase commitment		33,000		—
Union Technology Finance Investment Association	Securities purchase commitment		—		2,250
Genesis Environmental Energy Company No.1 Private Equity Partnership	Securities purchase commitment		—		916
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 1	Securities purchase commitment		—		10,450
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 2	Securities purchase commitment		—		21,450
Woori G Senior Loan Private Placement Investment Trust No.1	Securities purchase commitment		—		13,604
Genesis Environmental Company No.1 Private Equity Partnership	Securities purchase commitment		—		130

As of December 31, 2022 and 2021, the recognized payment guarantee provisions are 278 million Won and 300 million Won, respectively, in relation to the guarantees provided to the related parties above.

(9)	Major investment and Recovery transactions

The details of major investment and recovery transactions with related parties for the years ended December 31, 2022 and 2021 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022
Entities under common control 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 Expressway Private Placement Investment Trust No. 1		2,312		—
Woori Innovative Growth New Deal General Private Equity Investment Trust No. 3		14,000		—
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 1		10,450		2,490
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 2		21,450		—
WooriG Global Mid-market Secondaries Private Placement Investment Trust No. 1		2,439		—
Woori Short-term Bond Securities Investment Trust(Bond) ClassC-F		50,000		200,649
Woori Busan Logistics Infrastructure General Private Equity Investment Trust		201		—
WooriG Goverment Bond MMF		420,273		480,168
Woori big satisfaction hybrid Money Market Fund No. 3		300,000		—
Woori High Plus Short-Term ESG Bond Securities Investment Trust (Bond)		—		88,552

- 157 -


	For the year ended December 31, 2021
Entities under common control and its associates	Investment and others(*)		Recovery and others(*)
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 1		22,000		—
Woori Innovative Growth General Private Equity Special Asset Investment Trust No. 2		22,000		—
WooriG GP Commitment Loan Private Placement Investment Trust No. 1		9,880		—
Woori G Woori Bank Partners Private Placement Investment Trust No. 1		168,738		40,323
Woori G Private Placement Investment Trust No. 1		54,693		18,254
Woori G Private Placement Investment Trust No. 2		191,967		—
WooriG Global Mid-market Secondaries Private Placement Investment Trust No. 1		4,422		—
Woori Innovative Growth New Deal Private Placement Investment Trust No.1		14,700		—
Woori G Equity Bridge Loan Private Placement Investment Trust No. 1		18,200		—
Woori Seoul Expressway Private Placement Investment Trust No. 1		1,935		—
Woori G Clean Energy Private Placement Investment Trust No. 1		3,882		4,560
Woori G Senior Loan Private Placement Investment Trust No.1		36,911		2,868
Woori Goseong Thermal Power Generation EBL Private Placement Investment		14,915		30,573
JC Assurance Private Equity Fund No. 2		195		—
Dream Enterprise Growth No. 1 Private Equity Joint Venture Company		—		294
Genesis Environment No. 1 Private Equity Joint Venture Company		7,870		—
Midas No. 8 Private Equity Joint Venture Company		9,500		—

(*)

Investment and recovery transactions of associates are described in Note 13.(2)

(10)	Compensation to key management is as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022		For the year ended December 31, 2021
Short-term employee benefits		9,748		9,928
Share-based payment		2,398		4,313
Retirement benefit service costs		350		342

Total		12,496		14,583

Key management includes registered executives and non-registered executives. Outstanding assets from transactions with key management amount to 3,620 million Won and 3,821 million Won, as of December 31, 2022 and 2021 respectively and with respect to the assets, the Group has not recognized any allowance nor related impairment loss due to credit losses. Liabilities from transaction with key management amount to 12,660 million Won and 11,542 million Won, respectively, as of December 31, 2022 and 2021.

(11)	The Group, Woori Credit Card Co., Ltd. and its subsidiaries are jointly and severally liable to reimburse the Group’s debts before the split.

(12)

For the year ended December 31 2022, the Group purchased 50,000 million Won of bonds held by Woori Investment Bank Co., Ltd. Among the bonds issued by the Group during the current 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 to the market on the date of issuance. The amount of bonds purchased or sold by the Group through Woori Investment Bank Co., Ltd. amount to 1,044,633 million Won and 70,230 million Won, respectively, for the year ended December 31, 2021. Also, the amount of bonds issued by the Group and acquired by Woori Investment Bank Co., Ltd. is 30,000 million Won for the year ended December 31, 2021.

- 158 -

46.

TRUST ACCOUNTS

(1)	Trust accounts of the Group are as follows (Unit: Korean Won in millions):


	Total assets				Operating income
	December 31, 2022		December 31, 2021		For the years ended December 31
	December 31, 2022		December 31, 2021		2022		2021
Trust accounts		71,677,258		69,472,846		1,121,069		876,800

(2)	Receivables and payables from the transactions between the Group and trust accounts are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Receivables
Trust fees receivables		42,337		35,448

Payables
Deposits due to customers		170,417		234,136
Borrowings from trust accounts		1,804,847		1,621,209

Total		1,975,264		1,855,345

(3)	Significant transactions between the Group and trust accounts are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2022		2021
Revenue:
Trust fees		131,656		117,459
Termination fees		1,158		10,599

Total		132,814		128,058

Expense:
Interest expenses on deposits due to customers		619		503
Interest expenses on borrowings from trust accounts		38,583		11,391

Total		39,202		11,894

- 159 -

(4)	Principal guaranteed trusts and principal and fixed rate of return guaranteed trusts

As of December 31, 2022 and 2021, the carrying of principal guaranteed trusts and principal and fixed rate of return guaranteed trusts are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Partial principal guaranteed trusts:
Household money		8,230		8,932
Corporate money		446		627
Installment plan purpose		1,551		1,558

Sub-total		10,227		11,117

Principal guaranteed trusts:
Old-age pension trusts		2,790		3,004
Personal pension trusts		460,839		486,203
Pension trusts		687,971		749,317
Retirement trusts		26,563		28,354
New personal pension trusts		6,792		7,282
New old-age pension trusts		950		1,076

Sub-total		1,185,905		1,275,236

Principal and interest guaranteed trusts:
Development trusts		19		19
Unspecified money trusts		335		348

Sub-total		354		367

Total		1,196,486		1,286,720

47.

LEASES

(1)	The future lease payments under the lease contracts are as follows (Unit: Korean Won in millions):


	December 31, 2022		December 31, 2021
Lease payments
Within one year		149,948		135,245
After one year but within five years		124,194		122,468
After five years		33,007		38,275

Total		307,149		295,988

(2)	Total cash outflows from lease are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2022		For the year ended December 31, 2021
Cash outflows from leases		168,519		163,298

(3)

There are no lease charges, not included in the measurement of lease liabilities due to small assets or short-term leases for the years ended December 31, 2022 and 2021. Variable lease payments not included in the measurement of lease liabilities for the year ended December 31, 2022 is 5,465 million Won.

(4)

The Group applies a simple method that does not assess as to whether the rent discount as a direct result of COVID-19 is a lease modification. As a result, the amount recognized in profit or loss during the reporting period is 15,880 million Won to reflect changes in lease payments arising from the discount.

- 160 -