WF 6-K, filed Mar 17, 2020, 0001193125-20-075396

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OFFOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2020

Commission File Number: 001-31811

Woori Financial Group Inc.

(Translation of registrant’s name into English)

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

(Address of principal executive office)

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

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submission to furnish a report or other document that the registration foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Submission of Audit Reports of Woori Financial Group Inc.

On March 16, 2020, Woori Financial Group Inc. disclosed audit reports for the fiscal year 2019 based on the International Financial Reporting Standards as adopted by the Republic of Korea.

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

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

SIGNATURES

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

	Woori Financial Group Inc.
	(Registrant)
Date: March 17, 2020	By: /s/ Kyong-Hoon Park
	(Signature)
	Name:	Kyong-Hoon Park
	Title:	Deputy President

EX-99.1

Exhibit 99.1

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED

DECEMBER 31, 2019 AND 2018

ATTACHMENT: INDEPENDENT AUDITORS’ REPORT

WOORI FINANCIAL GROUP INC.

INDEPENDENT AUDITORS’ REPORT

English Translation of a Report Originally Issued in Korean on March 16, 2020

To the Shareholders and the Board of Directors of Woori Financial Group Inc.

Report on the Audited Consolidated Financial Statements

Audit Opinion

We have audited the accompanying consolidated financial statements of Woori Financial Group and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as of December 31, 2019 and December 31, 2018, respectively, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows, for the years then ended, and a summary of significant accounting policies and other explanatory information.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2019 and December 31, 2018, respectively, and its financial performance and its cash flows for the years then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

Basis for Audit Opinion

We conducted our audits in accordance with the Korean Standards on Auditing (“KSAs”). Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements, including those related to independence, that are relevant to our audit of the consolidated financial statements in the Republic of Korea as required by prevailing audit regulations. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

Allowance for credit loss in accordance with K-IFRS 1109‘Financial Instruments’

Key audit matter description

As described in notes 2, 3, 4 and 10, the Group estimates and records an allowance for loans based on expected credit losses. In order to estimate expected credit losses, the Group segregated its portfolio in retail, corporate and credit card loans. Loans measured at amortized cost are KRW 272,607,264 million, with loan loss allowances of KRW 1,575,020 million, as of December 31, 2019. Both the individual and collective impairment methodologies must consider historical losses adjusted for forward looking information and include multiple scenarios for macroeconomic factors. The allowance for certain loans is measured, at least in part, based on the valuation of collaterals which must take into account an expectation of when and for how much the collateral will be sold.

There was a significant amount of judgment required by management when determining the appropriateness of the forward looking and macroeconomic information used in the calculation of the expected losses in its loan portfolio.

Given the level of subjectivity and judgment, auditing the estimated allowance for loan losses involved especially complex and subjective judgment.

How the scope of our audit responded to the key audit matter

Our audit procedures related to the assumptions and unobservable inputs used by management for the estimate of impaired loans included the following:

•	We tested the design and operating effectiveness of controls over the appropriateness of the cash-flows estimated<br>to be collected in individually significant loans, including the estimates of collateral values.
•	We tested the design and operating effectiveness of the controls over the appropriateness of the models used to<br>determine the calculation of the allowance for loan losses for collectively assessed loans and most importantly the determination of the relevant model and assumptions to incorporate forward looking and macro-economic information.<br>
---	---
•	We used our credit specialists to assist us in challenging the reasonableness of the methodologies and inputs<br>used in the calculation of the allowance for loan losses for collectively assessed loans, most importantly in determining the appropriateness of forward looking and macro-economic scenarios used by management.
---	---
•	We reperformed the client’s estimates of future operating cash flows from borrowers with significant loans<br>outstanding to determine the available cash flows to repay the loans. In addition, we challenged these estimates by searching for contradictory evidence available at the balance sheet date.
---	---
•	We selected samples of loans subject to individual assessments and performed the following:<br>
---	---
✓	Verified the appropriateness of the process of calculating future cash flows from borrowers with significant<br>loans outstanding to determine the available cash flows to repay the loans.
---	---
✓	With assistance of our appraisal specialists and using property auctions price information sources<br>independently from the Group, we evaluated the reasonableness of cash flow estimates based on the future sale of collateral.
---	---

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

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

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

Those Charged with Governance is 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 KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

•	Identify and assess the risks of material misstatement of the consolidated financial statements, design and<br>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<br>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<br>appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
---	---
•	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and<br>related disclosures made by management.
---	---
•	Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based<br>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<br>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<br>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<br>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<br>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 are solely responsible for our audit opinion.
---	---

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

We also provide the those Charged with Governance of the Group with a statement that we have complied with relevant ethical requirements, including those related to independence, and to communicate with them all matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those Charged with Governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter.

As described in the Note 43, Woori Financial Group Inc. was established on January 11, 2019 as a comprehensive transfer with shareholders of Woori Bank, Woori Finance Research Institute Co., Ltd., Woori FIS Co., Ltd., Woori Fund Service Co., Ltd., Woori Credit Information Co., Ltd., and Woori Private Equity Asset Management Co., Ltd. Under the deal, Woori Bank and its subsidiaries were incorporated into wholly-owned subsidiaries of Woori Financial Group Inc., while Woori Financial Group Inc. was listed on the Korea Exchange on February 13, 2019, replacing Woori Bank’s shares in the company. American Depository Shares (ADS) has also been traded on the New York Stock Exchange as the underlying common stock since the same date. Therefore, consolidated financial statements for the comparing period ended 31 December 2018 are consolidated financial statements of Woori Bank, which have been adjusted as before the classification of assets held for sale for the Woori Finance Research Institute Co., Ltd., Woori FIS Co., Ltd., Woori Fund Service Co., Ltd., Woori Credit Information Co., Ltd., and Woori Private Equity Asset Management Co., Ltd. except Woori Bank.

In accordance with the Korean Standard on Auditing, We audited the consolidated statement of financial position as of December 31, 2018, consolidated statement of comprehensive income, consolidated statement changes in equity and consolidated statement of cash flows for the fiscal year ending the same date. The audit report of Woori Bank as of December 31, 2018 was issued with an unqualified opinion on March 19, 2019.

The engagement partner on the audit resulting in this independent auditor’s report is Tae Jin Jo.

March 16, 2020

Notice to Readers

This report is effective as of March 16, 2020 the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’ report date and the time the auditors’ report is read. Such events or circumstances could significantly affect the consolidated financial statements and may result in modifications to the auditors’ report.

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED

DECEMBER 31, 2019 AND 2018

The accompanying consolidated financial statements including all footnote disclosures were

prepared by, and are the responsibility of, the management of Woori Financial Group Inc.

Tae Seung Sohn

President and Chief Executive Officer

Main Office Address: (Address) 51, Sogong-ro, Jung-gu, Seoul
(Phone Number)		02-2125-2000

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2019 AND 2018

	December 31,<br>2019
	(Korean Won in millions)
ASSETS
Cash and cash equivalents (Note 6)		6,392,566	6,747,894
Financial assets at fair value through profit or loss (“FVTPL”)<br>(Notes 4, 7, 11, 12,<br>18 and 26)		8,069,144	6,126,316
Financial assets at financial assets at fair value through other comprehensive income<br>(“FVTOCI”)<br>(Notes 4, 8, 11, 12, and 18)		27,730,531	18,063,423
Securities at amortized cost (Notes 4, 9, 11, 12 and 18)		20,320,539	22,932,559
Loans and other financial assets at amortized cost (Notes 4, 10, 11, 12, 18 and 41)		293,717,693	282,457,578
Investments in joint ventures and associates (Note 13)		806,360	361,766
Investment properties (Note 14)		280,239	378,196
Premises and equipment (Notes 15 and 18)		3,364,716	2,450,492
Intangible assets and goodwill (Note 16)		844,110	597,520
Assets held for distribution (sale) (Note 17)		10,556	17,912
Net defined benefit asset (Note 24)		2,582	—
Current tax assets (Note 38)		47,367	20,730
Deferred tax assets (Note 38)		39,544	59,641
Derivative assets (Designated for hedging) (Notes 4,11,12 and 26)		121,131	35,503
Other assets (Notes 19 and 41)		233,646	197,653

Total assets		361,980,724	340,447,183

LIABILITIES
Financial liabilities at FVTPL (Notes 4, 11, 12, 20 and 26)		2,958,302	2,282,686
Deposits due to customers (Notes 4,11,21 and 41)		264,685,578	248,690,939
Borrowings (Notes 4, 11, 12 and 22)		18,998,920	16,202,986
Debentures (Notes 4, 11 and 22)		30,858,055	28,735,862
Provisions (Notes 23, 40 and 41)		443,980	391,313
Net defined benefit liability (Note 24)		92,470	173,109
Current tax liabilities (Note 38)		182,690	159,078
Deferred tax liabilities (Note 38)		134,322	18,156
Derivative liabilities (Designated for hedging) (Notes 4,11,12 and 26)		6,837	51,408
Other financial liabilities (Notes 4,11,12, 25 and 41)		17,706,767	21,442,524
Other liabilities (Notes 25 and 41)		420,471	346,078

Total liabilities		336,488,392	318,494,139

(Continued)

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2019 AND 2018 (CONTINUED)

	December 31,<br>2019
	(Korean Won in millions)
EQUITY
Owners’ equity (Note 28)		21,510,370		21,739,931
Capital stock		3,611,338		3,381,392
Hybrid securities		997,544		3,161,963
Capital surplus		626,295		285,889
Other equity		(2,249,322	)	(2,213,970	)
Retained earnings
Regulatory reserve for credit loss as of December 31, 2019 and 2018 is 2,356,246 million<br>Won and 2,578,457 million Won, respectively
Regulatory reserve for credit loss to be reserved as of December 31, 2019 and 2018 is<br>191,301 million Won and (-) 222,211 million Won, respectively
Planned provision of regulatory reserve for credit loss as of December 31, 2019 and 2018 is<br>191,301 million Won and (-) 222,211 million Won, respectively		18,524,515		17,124,657
Non-controlling interests		3,981,962		213,113

Total equity		25,492,332		21,953,044

Total liabilities and equity		361,980,724		340,447,183

See accompanying notes

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

	2019
	(Korean Won in millions,<br>except for per share data)
Interest income		10,576,770		9,684,499
Financial assets at FVTPL		50,619		54,243
Financial assets at FVTOCI		474,751		280,371
Financial assets at amortized cost		10,051,400		9,349,885
Interest expense		(4,683,064	)	(4,033,548	)

Net interest income (Notes 11, 30 and 41)		5,893,706		5,650,951
Fees and commissions income		1,709,326		1,680,764
Fees and commissions expense		(606,698	)	(610,790	)

Net fees and commissions income (Notes 11, 31 and 41)		1,102,628		1,069,974
Dividend income (Note 32)		107,959		90,552
Net gain on financial instruments at FVTPL (Notes 11, 33 and 41)		25,455		214,443
Net gain on financial assets at FVTOCI (Notes 11 and 33)		11,015		2,047
Net gain arising on financial assets at amortized cost (Note 11 and 34)		102,115		79,532
Net gain on disposals of securities at amortized cost		—		431
Net gain on disposals of loans and other financial assets at amortized cost		102,115		79,101
Impairment losses due to credit loss (Notes 11, 35 and 41)		(374,244	)	(329,574	)
General and administrative expenses (Notes 36 and 41)		(3,766,077	)	(3,624,033	)
Other net operating expenses (Notes 36 and 41)		(302,581	)	(394,591	)

Operating income		2,799,976		2,759,301
Share of gain of joint ventures and associates		83,997		3,019
Other non-operating income (expense)		(160,924	)	42,552

Non-operating income (expense) (Note 11,<br>37)		(76,927	)	45,571
Net income before income tax expense		2,723,049		2,804,872
Income tax expense (Note 38)		(685,453	)	(753,223	)

(Continued)

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (CONTINUED)

	2019
	(Korean Won in millions,<br>except for per share data)
Net income
(Net income after the provision of regulatory reserve for credit loss for the years ended<br>December 31, 2019 and 2018, is 1,846,295 million won and 2,010,774 million won, respectively) (Note 28)		2,037,596		2,051,649

Items that will not be reclassified to profit or loss:
Net loss on valuation of equity securities at FVTOCI		(58,129	)	(30,855	)
Net gain on valuation of financial liabilities designated at FVTPL due to own credit risk		—		100
Remeasurement gain (loss) related to defined benefit plan		(34,648	)	(84,629	)

		(92,777	)	(115,384	)
Items that may be reclassified to profit or loss:
Net gain on valuation of debt securities at FVTOCI		43,988		33,360
Share of other comprehensive gain of joint ventures and associates		613		2,958
Net gain (loss) on foreign currency translation of foreign operations		101,781		(4,379	)
Net loss on valuation of cash flow hedge		(1,823	)	(4,646	)
Other comprehensive income on valuation of assets held for sale		—		(4,145	)

		144,559		23,148
Other comprehensive income (loss), net of tax		51,782		(92,236	)
Total comprehensive income		2,089,378		1,959,413

Net income attributable to:
Net income attributable to shareholders		1,872,207		2,033,182
Net income attributable to non-controlling<br>interests		165,389		18,467
Total comprehensive income attributable to:
Comprehensive income attributable to shareholders		1,914,393		1,943,885
Comprehensive income attributable to non-controlling<br>interests		174,985		15,528
Earnings per share (Note 39)
Basic and diluted earnings per share (In Korean Won)		2,727		2,796

See accompanying notes

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR YEARS ENDED DECEMBER 31, 2019 AND 2018

	Capital<br>Stock
	(Korean Won in millions)
January 1, 2018		3,381,392	3,017,888		285,880		(1,939,274	)	15,620,006		20,365,892		199,008		20,564,900
Cumulative effect of change in accounting policy		—	—		—		(392,176	)	177,091		(215,085	)	723		(214,362	)
Adjusted balance, beginning of period		3,381,392	3,017,888		285,880		(2,331,450	)	15,797,097		20,150,807		199,731		20,350,538

Net income		—	—		—		—		2,033,182		2,033,182		18,467		2,051,649
Dividends to common stocks		—	—		—		—		(336,636	)	(336,636	)	(2,128	)	(338,764	)
Change in capital of subsidiaries		—	—		9		—		—		9		(18	)	(9	)
Net gain on valuation of financial liabilities designated as at FVTPL due to own credit<br>risk		—	—		—		100		—		100		—		100
Changes in other comprehensive income due to redemption of financial liabilities designated as at<br>FVTPL		—	—		—		(4	)	4		—		—		—
Net gain (loss) on valuation of financial assets at FVTOCI		—	—		—		2,733		—		2,733		(228	)	2,505
Changes in other comprehensive income due to disposal of equity securities at FVTOCI		—	—		—		(1,009	)	1,009		—		—		—
Changes in capital due to equity method		—	—		—		2,958		(10,647	)	(7,689	)	—		(7,689	)
Loss on foreign currency translation of foreign operations		—	—		—		(1,929	)	—		(1,929	)	(2,450	)	(4,379	)
Loss on valuation of cash flow hedge		—	—		—		(4,646	)	—		(4,646	)	—		(4,646	)
Remeasurement loss related to defined benefit plan		—	—		—		(84,368	)	—		(84,368	)	(261	)	(84,629	)
Capital related to assets held for distribution (sale) (Note 43)		—	—		—		(4,145	)	—		(4,145	)	—		(4,145	)
Dividends to hybrid securities		—	—		—		—		(151,194	)	(151,194	)	—		(151,194	)
Issuance of hybrid securities		—	398,707		—		—		—		398,707		—		398,707
Redemption of hybrid securities		—	(254,632	)	—		(368	)	—		(255,000	)	—		(255,000	)
Appropriation of retained earnings		—	—		—		208,158		(208,158	)	—		—		—

December 31, 2018		3,381,392	3,161,963		285,889		(2,213,970	)	17,124,657		21,739,931		213,113		21,953,044

January 1, 2019		3,381,392	3,161,963		285,889		(2,213,970	)	17,124,657		21,739,931		213,113		21,953,044
Exchange of non-controlling interests in hybrid<br>securities		—	(3,161,963	)	—		—		—		(3,161,963	)	3,161,963		—
Net income		—	—		—		—		1,872,207		1,872,207		165,389		2,037,596
Dividends to common shares		—	—		—		—		(437,626	)	(437,626	)	(2,014	)	(439,640	)
Changes in subsidiaries’ capital		—	—		438		—		—		438		(50	)	388
Net loss on valuation of financial assets at FVTOCI		—	—		—		(14,101	)	—		(14,101	)	(40	)	(14,141	)
Changes in other comprehensive income due to disposal of equity securities at FVTOCI		—	—		—		29,368		(29,368	)	—		—		—
Changes in capital due to equity method		—	—		1,153		613		—		1,766		—		1,766
Gain on foreign currency translation of foreign operations		—	—		—		91,748		—		91,748		10,033		101,781
Loss on valuation of cash flow hedge		—	—		—		(1,823	)	—		(1,823	)	—		(1,823	)
Remeasurement loss related to defined benefit plan		—	—		—		(34,251	)	—		(34,251	)	(397	)	(34,648	)
Comprehensive stock exchange (Note 1)		229,946			351,663		—		—		581,609		—		581,609
Acquisition of subsidiaries		—	—		—		—		—		—		69,534		69,534
New stocks issue cost		—	—		(12,848	)	—		—		(12,848	)	—		(12,848	)
Net increase of treasury stocks		—	—		—		4,245		—		4,245		—		4,245
Dividends to hybrid securities		—	—		—		—		(4,362	)	(4,362	)	(134,421	)	(138,783	)
Issuance of hybrid securities		—	997,544		—		—		—		997,544		658,470		1,656,014
Redemption of hybrid securities		—	—		—		(277	)	—		(277	)	(159,618	)	(159,895	)
Appropriation of retained earnings		—	—		—		368		(368	)	—		—		—
Other changes in consolidated capital		—	—		—		(111,242	)	(625	)	(111,867	)	—		(111,867	)

December 31, 2019		3,611,338	997,544		626,295		(2,249,322	)	18,524,515		21,510,370		3,981,962		25,492,332

See accompanying notes

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

	2019
	(Korean Won in millions)
Cash flows from operating activities:
Net income		2,037,596		2,051,649
Adjustments to net income:
Income tax expense		685,453		753,223
Interest income		(10,576,770	)	(9,684,499	)
Interest expense		4,683,064		4,033,548
Dividend income		(107,959	)	(90,552	)

		(5,316,212	)	(4,988,280	)

Additions of expenses not involving cash outflows:
Impairment loss due to credit loss		374,244		329,574
Loss on financial assets at FVTOCI		1,375		1,053
Loss on derivatives (designated for hedge)		3,686		36,483
Loss on fair value hedge		86,214		17,299
Loss on other provisions		129,682		28,350
Loss on valuation of investments in joint ventures and associates		19,778		22,772
Loss on disposal of investments in joint ventures and associates		—		2,931
Retirement benefit		165,125		142,712
Depreciation and amortization		505,718		272,550
Loss on disposal of premises and equipment, intangible assets and other assets		3,433		1,160
Impairment loss on premises and equipment, intangible assets and other assets		28,295		87

		1,317,550		854,971

Deductions of income not involving cash inflows:
Gain on valuation of financial assets at FVTPL		246,175		215,711
Gain on redemption of debentures		—		1,597
Gain on securities at FVTOCI		12,390		3,100
Gain on securities at amortized cost		—		431
Gain on derivatives (designated for hedge)		126,651		35,810
Gain on fair value hedge		231		42,797
Gain on other provisions		3,302		2,014
Gain on valuation of investments in joint ventures and associates		103,775		25,791
Gain on disposal of investments in joint ventures and associates		—		50,511
Gain on disposal of premises and equipment, intangible assets and other assets		1,632		30,278
Reversal of impairment loss on premises and equipment, intangible assets and other assets		103		761

		494,259		408,801

Changes in operating assets and liabilities:
Financial assets at FVTPL		(506,772	)	670,872
Loans and other financial assets at amortized cost		(11,265,714	)	(15,718,714	)
Other assets		86,237		32,328
Deposits due to customers		15,407,222		13,995,747
Provisions		(63,751	)	(11,920	)
Net defined benefit liability		(293,008	)	(135,313	)
Other financial liabilities		(4,719,399	)	7,411,617
Other liabilities		30,693		96,900

		(1,324,492	)	6,341,517

Cash received from operating activities:
Interest income received		10,478,357		9,617,201
Interest expense paid		(4,383,916	)	(3,847,275	)
Dividends received		107,940		90,651
Income tax paid		(552,215	)	(551,560	)

		5,650,166		5,309,017

Net cash provided by operating activities		1,870,349		9,160,073

(Continued)

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (CONTINUED)

	2019
	(Korean Won in millions)
Cash flows from investing activities:
Cash in-flows from investing activities:
Disposal of financial assets at FVTPL		11,357,056		11,919,335
Disposal of financial assets at FVTOCI		14,303,197		9,146,307
Redemption of securities at amortized cost		8,709,947		9,426,757
Disposal of investments in joint ventures and associates		30,098		51,435
Disposal of investment properties		193		3,512
Disposal of premises and equipment		7,735		5,545
Disposal of intangible assets		939		9,199
Disposal of assets held for distribution (sale)		5,608		80,347

		34,414,773		30,642,437

Cash out-flows from investing activities:
Net cash out-flows of business combination		296,813		134,967
Acquisition of financial assets at FVTPL		11,823,630		12,322,160
Acquisition of financial assets at FVTOCI		23,775,062		13,275,429
Acquisition of securities at amortized cost		6,092,078		15,622,847
Acquisition of investments in joint ventures and associates		389,096		48,272
Acquisition of investment properties		70,346		15,195
Acquisition of premises and equipment		429,547		118,668
Acquisition of intangible assets		126,342		176,067

		43,002,914		41,713,605

Net cash used in investing activities		(8,588,141	)	(11,071,168	)

Cash flows from financing activities:
Cash in-flows from financing activities:
Increase in borrowings		14,467,287		9,606,126
Issuance of debentures		25,510,713		21,505,849
Issuance of hybrid securities		1,656,014		398,707
Retirement of treasury stocks		760,101		—

		42,394,115		31,510,682

Cash out-flows from financing activities:
Cash out-flows from hedging activities		5,520		—
Decrease in borrowings		11,385,530		8,349,005
Redemption of debentures		23,651,950		20,903,518
Redemption of lease liabilities		217,867		—
New stock issue cost		17,337		—
Acquisition of treasury stocks		184,164		—
Dividends paid		437,626		336,636
Redemption of hybrid securities		160,000		255,000
Dividends paid to hybrid securities		161,052		147,625
Dividends paid to non-controlling interest		2,014		2,128
Capital increase with consideration for non-controlling<br>interest		50		—

		36,223,110		29,993,912

Net cash provided by financing activities		6,171,005		1,516,770

Net decrease in cash and cash equivalents		(546,787	)	(394,325	)
Cash and cash equivalents, beginning of the period		6,747,894		6,908,286
Effects of exchange rate changes on cash and cash equivalents		191,459		233,933

Cash and cash equivalents, end of the period (Note 6)		6,392,566		6,747,894

See accompanying notes

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

1.	GENERAL
(1)	Summary of the parent company
---	---

Woori Financial Group, Inc. (hereinafter referred to the “Group” ) is primarily aimed at controlling subsidiaries that operate in the financial industry or those that are closely related to the financial industry through the ownership of shares and was established on January 11, 2019 under the Financial Holding Company Act through the comprehensive transfer with shareholders of Woori Bank, Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Services Co., Ltd. and Woori Private Equity Asset Management Co. Ltd. The headquarters of the company is located at 51, Sogong-ro, Jung-gu, Seoul, Korea, and the capital is 3,611,338 million won as of the end of the current term while the Korea Deposit Insurance Corp. (KDIC), the company’s largest shareholder, owns 124,604,797 shares (17.25%) of the company’s stocks issued. The company’s stocks were listed on the Korea Exchange on February 13, 2019, and its American Depository Shares (ADS) are also being traded as the underlying common stock on the New York Stock Exchange since the same date.

The details of stock transfer from the company and subsidiaries as of incorporation are as follows (Unit: Number of shares)

Stock transfer company
Woori Bank	676,000,000	1.0000000	676,000,000
Woori FIS Co., Ltd.	4,900,000	0.2999708	1,469,857
Woori Finance Research Institute Co., Ltd.	600,000	0.1888165	113,289
Woori Credit Information Co., Ltd.	1,008,000	1.1037292	1,112,559
Woori Fund Service Co., Ltd.	2,000,000	0.4709031	941,806
Woori Private Equity Asset Management Co., Ltd.	6,000,000	0.0877992	526,795

As of August 1, 2019, the parent company acquired a 73% interest in Tongyang Asset Management Co. and changed the name to Woori Asset Management Corp. Also, as of August 1, 2019, the parent company gained 100% control of ABL Asset Management Co., Ltd., added it as a consolidated subsidiary and changed the name to Woori Global Asset Management Co., Ltd. on December 6, 2019.

The parent company paid 598,391 million won in cash and 42,103,377 new shares of the parent company to acquire 100% interest of Woori Card Co., Ltd. from its subsidiary Woori Bank on September 10, 2019. On the same date, the company also acquired 59.83% interest of Woori Investment Bank Co., Ltd. from Woori Bank with 392,795 million won in cash.

As of December 30, 2019, the parent acquired a 67.2% interest (excluding treasury stocks, 51% interest including treasury stocks) in Woori Asset Trust Co., Ltd (formerly Kukje Asset Trust Co., Ltd) and added it as a consolidated subsidiary at the end of 2019.

(2)	The companies and subsidiaries (hereinafter ‘consolidated company’) as of December 31, 2019 and<br>2018 are as follows:
						Percentage of ownership<br>(%)						Location			Financial<br>statements date<br>of use
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Subsidiaries		Main business				December 31,<br>2019			December 31,<br>2018
Woori Financial Group Inc.
Woori Bank			Bank				100.0			—			Korea			December 31
Woori Card Co., Ltd.			Finance				100.0			—			Korea			December 31
Woori Investment Bank Co., Ltd.			Other credit finance business				59.8			—			Korea			December 31
Woori FIS Co., Ltd.			System software<br>development & maintenance				100.0			—			Korea			December 31
		Percentage of ownership<br>(%)				Location	Financial<br>statements date<br>of use
---	---	---	---	---	---	---	---
Subsidiaries	Main business	December 31,<br>2019		December 31,<br>2018
Woori Finance Research Institute Co., Ltd.	Other service business		100.0		—	Korea	December 31
Woori Credit Information Co., Ltd.	Credit information		100.0		—	Korea	December 31
Woori Fund Service Co., Ltd.	Finance		100.0		—	Korea	December 31
Woori Asset Trust Co., Ltd. (*1)	Real-estate		67.2		—	Korea	December 31
Woori Asset Management Corp.	Finance		73.0		—	Korea	December 31
Woori Private Equity Asset Management Co., Ltd.	Finance		100.0		—	Korea	December 31
Woori Global Asset Management Co., Ltd.	Finance		100.0		—	Korea	December 31
Woori Bank
Woori Card Co., Ltd.	Finance		—		100.0	Korea	December 31
Woori Investment Bank Co., Ltd.	Other credit finance business		—		59.8	Korea	December 31
Woori FIS Co., Ltd.	System software development & maintenance		—		100.0	Korea	December 31
Woori Finance Research Institute Co., Ltd.	Other service business		—		100.0	Korea	December 31
Woori Credit Information Co., Ltd.	Credit information		—		100.0	Korea	December 31
Woori Fund Service Co., Ltd.	Finance		—		100.0	Korea	December 31
Woori Private Equity Asset Management Co., Ltd.	Finance		—		100.0	Korea	December 31
Woori America Bank	Finance		100.0		100.0	America	December 31
Woori Global Markets Asia Limited	Finance		100.0		100.0	Hong Kong	December 31
Woori Bank China Limited	Finance		100.0		100.0	China	December 31
AO Woori Bank	Finance		100.0		100.0	Russia	December 31
PT Bank Woori Saudara Indonesia 1906 Tbk	Finance		79.9		79.9	Indonesia	December 31
Banco Woori Bank do Brasil S.A.	Finance		100.0		100.0	Brazil	December 31
Korea BTL Infrastructure Fund	Finance		99.9		99.9	Korea	December 31
Woori Finance Cambodia PLC.	Finance		100.0		100.0	Cambodia	December 31
Woori Finance Myanmar Co., Ltd.	Finance		100.0		100.0	Myanmar	December 31
Wealth Development Bank	Finance		51.0		51.0	Philippines	December 31
Woori Bank Vietnam Limited	Finance		100.0		100.0	Vietnam	December 31
WB Finance Co., Ltd.	Finance		100.0		100.0	Cambodia	December 31
Woori Bank Europe	Finance		100.0		100.0	Germany	December 31
Kumho Trust First Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Asiana Saigon Inc. (*2)	Asset securitization		0.0		0.0	Korea	December 31
KAMCO Value Recreation First Securitization Specialty Co., Ltd. (*2)	Asset securitization		15.0		15.0	Korea	December 31
Hermes STX Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
BWL First Co., LLC (*2)	Asset securitization		0.0		0.0	Korea	December 31
Deogi Dream Fourth Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Jeonju Iwon Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Wonju I one Inc. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Heitz Third Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woorihansoop 1st Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Electric Cable First Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woori International First Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woori WEBST 1st Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Wibihansoop 1st Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Uri QS 1st Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Uri Display 1st Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Tiger Eyes 2nd Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woori Serveone 1st Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Uri Display 2nd Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woori the Colony Unjung Securitization Specialty Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woori Dream 1st Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woori Dream 2nd Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woori H 1st Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woori HS 1st Co., Ltd.	Asset securitization		—		0.0	Korea	December 31
Woori HS 2nd Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woori Sinnonhyeon 1st Inc. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Woori K 1st Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Uri S 1st Co., Ltd. (*2)	Asset securitization		0.0		0.0	Korea	December 31
Smart Casting Inc. (*2)	Asset securitization		0.0		0.0	Korea	December 31

- 3 -

		Percentage of ownership<br>(%)				Location	Financial<br>statements date<br>of use
Subsidiaries	Main business	December 31,<br>2019		December 31,<br>2018
Uri Display 3rd Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
TY 1st Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori HJ 2nd Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori-HJ 3rd Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Uri K 2nd Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori KC No.1 Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori Lake 1st., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori QSell 2nd Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Quantum Jump the 1st Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Quantum Jump the 2nd Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori BK the 1st Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori-HC 1st Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Wivi Synergy 1st Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
ATLANTIC TRANSPORTATION 1 S.A. (*2)	Asset securitization		0.0		—	Marshall islands	December 31
Woori Gongdeok First Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
HD Project Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori HW 1st Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori HC 2nd Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori Dream 3rd Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
Woori SJS 1st Co., Ltd. (*2)	Asset securitization		0.0		—	Korea	December 31
G5 Pro Short-term Bond Investment Fund 13 (*3)	Securities investment and others		100.0		100.0	Korea	December 31
Heungkuk Global Private Placement Investment Trust No. 1 (*3)	Securities investment and others		98.5		98.5	Korea	December 31
AI Partners UK Water Supply Private Placement Investment Trust No.2 (*3)	Securities investment and others		97.3		97.3	England	December 31
Consus Sakhalin Real Estate Investment Trust 1st (*3)	Securities investment and others		75.0		75.0	Korea	December 31
Multi Asset Global Real Estate Investment Trust<br>No. 5-2 (*3)	Securities investment and others		99.0		—	Korea	December 31
Igis Australia Investment Trust No. 209-1<br>(*3)	Securities investment and others		99.4		—	Korea	December 31
Woori Global Development Infrastructure Synergy Company Private Placement Investment Trust<br>No.1 (*3)	Securities investment and others		99.9		—	Korea	December 31
IGIS Global Private Placement Real Estate Fund<br>No. 316-1 (*3)	Securities investment and others		99.3		—	Korea	December 31
Principal Guaranteed Trust (*4)	Trust		0.0		0.0	Korea	December 31
Principal and Interest Guaranteed Trust (*4)	Trust		0.0		0.0	Korea	December 31
Multi Asset Global Real Estate Investment Trust<br>No. 5-2:
MAGI No.5 LuxCo S.a.r.l. (*2)	Asset securitization		54.6		—	Luxembourg	December 31
MAGI No.5 LuxCo S.a.r.l.:
ADP 16 Brussels (*2)	Asset securitization		0.0		—	Belgium	December 31
Woori Investment Bank Co., Ltd.:
Dongwoo First Securitization Specialty Co., Ltd. (*2)	Asset securitization		5.0		5.0	Korea	December 31
Seari First Securitization Specialty Co., Ltd. (*2)	Asset securitization		5.0		5.0	Korea	December 31
Seari Second Securitization Specialty Co., Ltd. (*2)	Asset securitization		5.0		5.0	Korea	December 31
Namjong 1st Securitization Specialty Co., Ltd. (*2)	Asset securitization		5.0		5.0	Korea	December 31
Bukgeum First Securitization Specialty Co., Ltd. (*2)	Asset securitization		5.0		5.0	Korea	December 31
Bukgeum Second Securitization Specialty Co., Ltd. (*2)	Asset securitization		5.0		5.0	Korea	December 31
WS1909 Securitization Specialty Co., Ltd. (*2)	Asset securitization		5.0		—	Korea	December 31
One Punch Korea the 1st Co., Ltd. (*2).	Asset securitization		0.0		—	Korea	December 31
One Punch blue the 1^st^ Co., Ltd.<br>(*2)	Asset securitization		0.0		—	Korea	December 31
Woori Card Co., Ltd.:
TUTU Finance –WCI Myanmar Co., Ltd.	Finance		100.0		100.0	Myanmar	December 31
Woori Card one of 2017-1 Securitization Specialty Co.,<br>Ltd. (*2)	Asset securitization		0.5		0.5	Korea	December 31
Woori Card one of 2017-2 Securitization Specialty Co.,<br>Ltd. (*2)	Asset securitization		0.5		0.5	Korea	December 31

- 4 -

		Percentage of ownership<br>(%)				Location	Financial<br>statements date<br>of use
Subsidiaries	Main business	December 31,<br>2019		December 31,<br>2018
Woori Card one of 2018-1 Securitization Specialty Co.,<br>Ltd. (*2)	Asset securitization		0.5		0.5	Korea	December 31
WOORI CARD 2019-1 ASSET SECURITIZATION SPECIALTY CO., LTD.<br>(*2)	Asset securitization		0.5		—	Korea	December 31
Woori Private Equity Asset Management Co., Ltd. and Woori Investment Bank Co., Ltd.:
Japanese Hotel Real Estate Private Equity Fund 1 (*2)	Securities investment and others		45.5		—	Korea	December 31
Woori Asset Management Corp.:
Woori china convertible bond fund (*3)	Securities investment and others		98.6		—	Korea	December 31
Woori Global Asset Management Co.,Ltd.:
WOORIG China Value Equity (C/C(F)) (*3)	Securities investment and others		95.1		—	Korea	December 31
Woori Bank, Woori Investment Bank Co., Ltd and Woori Private Equity Asset Management Co.,<br>Ltd.:
Woori Innovative Growth Professional Investment Type Private Investment Trust No.1 (*3)	Securities investment and others		60.0		—	Korea	December 31
Woori bank and Woori Investment Bank Co., Ltd.:
Heungkuk Woori Tech Company Private Placement Investment Trust No. 1 (*3)	Securities investment and others		100.0		98.0	Korea	December 31
(*1)	As of December 31, 2018, Woori bank held 8.6% interest and hold 67.2% interest as of December 31,<br>2019 as acquiring 58.6% interests additionally during current period.
---	---
(*2)	The entity is a structured entity for the purpose of asset securitization. Although the Group is not a majority<br>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 structured entity for the purpose of investment in securities. Although the Group is not a<br>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)	The entity is a ‘money trust’ under the Financial Investment Services and Capital Markets Act.<br>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.<br>
---	---
(3)	The Group has not consolidated the following entities as of December 31, 2019 and 2018 despite having more<br>than 50% ownership interest:
---	---
		As of December 31, 2019
---	---	---	---	---	---	---	---	---	---
Subsidiaries		Location			Main<br>Business			Percentage of<br>ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)			Korea			Securities Investment			60.0
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)			Korea			Securities Investment			59.7
Kiwoom Yonsei Private Equity Investment Trust (*)			Korea			Securities Investment			88.9
IGIS Europe Private Placement Real Estate Fund<br>No. 163-2 (*)			Korea			Securities Investment			97.9
IGIS Global Private Placement Real Estate Fund<br>No. 148-1 (*)			Korea			Securities Investment			75.0
IGIS Global Private Placement Real Estate Fund<br>No. 148-2 (*)			Korea			Securities Investment			75.0
Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1 (*)			Korea			Securities Investment			66.7
Hangkang Sewage Treatment Plant Fund (*)			Korea			Securities Investment			55.6
KIM Pocheon-Hwado Highway Infra Private Placement Special Asset Fund (*)			Korea			Securities Investment			55.2
(*)	Since the investee is a private equity investment fund, the Group does not have the power over the fund’s<br>activities even though it holds more than 50% of ownership interest.
---	---

- 5 -

		As of December 31, 2018
Subsidiaries		Location			Main<br>Business			Percentage of<br>ownership (%)
Golden Bridge NHN Online Private Equity Investment (*)			Korea			Securities Investment			60.0
Mirae Asset Seobu Underground Expressway Professional Investment (*)			Korea			Securities Investment			65.8
Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)			Korea			Securities investment			59.7
Kiwoom Yonsei Private Equity Investment Trust (*)			Korea			Securities investment			88.9
Hana Walmart Real Estate Investment Trust 41-1<br>(*)			Korea			Securities investment			89.6
IGIS Europe Private Placement Real Estate Fund<br>No. 163-2 (*)			Korea			Securities investment			97.9
IGIS Global Private Placement Real Estate Fund<br>No. 148-1 (*)			Korea			Securities investment			75.0
IGIS Global Private Placement Real Estate Fund<br>No. 148-2 (*)			Korea			Securities investment			75.0
KB Nongso Sewage Treatment Equipment Private Special Asset (*)			Korea			Securities investment			50.0
Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1 (*)			Korea			Securities investment			66.2
Hangkang Sewage Treatment Plant Fund (*)			Korea			Securities investment			55.6
Consus KyungJu Green Private Placement Real Estate Fund No. 1 (*)			Korea			Securities investment			52.4
(*)	Since the investee is a private equity investment fund, the Group does not have the power over the fund’s<br>activities even though it holds more than 50% of ownership interest.
---	---
(4)	The summarized financial information of the major subsidiaries are as follows. The financial information of<br>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, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Assets			Liabilities			Operating<br>revenue			Net income<br>(loss)<br>attributable to<br>owners			Comprehensive<br>income (loss)<br>attributable to<br>owners
Woori Bank (*1)			348,181,658			325,526,568			22,240,947			1,505,547			1,531,793
Woori Card Co., Ltd.			10,087,342			8,299,175			1,368,234			114,196			111,782
Woori Investment Bank Co., Ltd.			3,398,960			3,031,622			204,655			53,358			52,095
Woori FIS Co., Ltd.			91,079			55,112			244,923			3,107			3,119
Woori Finance Research Institute Co., Ltd.			5,447			1,999			5,452			160			117
Woori Credit Information Co., Ltd.			37,872			7,948			39,118			1,698			1,389
Woori Fund Service Co., Ltd.			16,852			2,109			11,071			1,735			1,735
Woori Asset Trust Co., Ltd. (*2)			139,839			45,410			—			—			—
Woori Asset Management Corp. (*2)			113,037			6,301			9,204			1,720			2,544
Woori Private Equity Asset Management Co., Ltd.			38,243			2,985			4,152			(2,087	)		(2,124	)
Woori Global Asset Management Co., Ltd. (*2)			32,807			3,230			3,588			(1,360	)		(1,360	)
(*1)	The amount is prepared based on the consolidated financial statements of Woori Bank (reflecting the<br>classification of profit or loss of the discontinued operation).
---	---
(*2)	The income or loss information of Woori Asset Management Corp. and Woori Global Asset Management Co., Ltd. are<br>prepared based on the income or loss from August 1, 2019, the date on which the power was obtained, to December 31, 2019. In addition, the Group acquired Woori Asset Trust Co., Ltd on December 30, 2019, thus the income or loss<br>information of Woori Asset Trust Co., Ltd are not included.
---	---
		As of and for the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Assets			Liabilities			Operating<br>revenue			Net income<br>(loss)<br>attributable to<br>owners			Comprehensive<br>income (loss)<br>attributable to<br>owners
Woori FIS Co., Ltd.			96,260			63,412			271,651			2,840			269
Woori Private Equity Asset Management Co., Ltd.			38,820			1,439			1,713			(2,794	)		(2,843	)
Woori Finance Research Institute Co., Ltd.			3,891			560			4,708			7			(109	)
Woori Card Co., Ltd.			9,987,057			8,305,093			1,371,301			114,767			106,517
Woori Investment Bank Co., Ltd.			2,682,660			2,367,418			205,446			25,552			25,533
Woori Credit Information Co., Ltd.			34,921			6,386			36,883			1,657			1,411
Woori America Bank			2,182,454			1,878,117			90,975			20,510			32,335
Woori Global Markets Asia Limited			517,627			396,216			18,748			5,144			9,647
Woori Bank China Limited			5,470,927			4,953,813			366,973			21,879			19,194
AO Woori Bank			305,521			256,260			19,433			5,163			(3,234	)
PT Bank Woori Saudara Indonesia 1906 Tbk			2,355,975			1,853,768			192,719			40,385			27,109
Banco Woori Bank do Brasil S.A.			179,130			149,146			13,971			1,262			(2,326	)

- 6 -

		As of and for the year ended December 31, 2018
		Assets		Liabilities		Operating<br>revenue		Net income<br>(loss)<br>attributable to<br>owners			Comprehensive<br>income (loss)<br>attributable to<br>owners
Korea BTL Infrastructure Fund			777,437		299		29,760		26,057			26,057
Woori Fund Service Co., Ltd.			14,448		1,440		10,052		1,597			1,597
Woori Finance Cambodia PLC.			93,239		71,133		11,038		2,826			3,676
Woori Finance Myanmar Co., Ltd.			19,340		6,886		4,496		640			(1,256	)
Wealth Development Bank			218,134		184,344		13,668		80			(451	)
Woori Bank Vietnam Limited			954,580		720,554		48,716		10,710			13,618
WB Finance Co., Ltd.			268,794		225,655		24,310		2,421			2,329
Woori Bank Europe			58,399		311		5		(5,959	)		(5,974	)
Money trust under the FISCM Act			1,582,765		1,552,594		54,860		259			259
Structured entity for the securitization of financial assets			1,369,745		1,786,869		53,578		4,990			(5,681	)
Structured entity for the investments in securities			63,676		142		1,826		(1,299	)		(3,009	)
(*)	The financial statements of the major subsidiaries as of December 31, 2018 are prepared based on the Woori<br>Bank which was the controlling company at the end of the previous term.
---	---
(5)	The financial support that the Group provides to consolidated structured entities is as follows:<br>
---	---
-	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, 2019, the Group provides 2,241,640 million won of credit facilities for the structured entities mentioned above.

- 7 -

(6)	The Group has entered into various agreements with structured entities such as asset securitization, structured<br>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 K-IFRS 1110<br>are as follows:

The ownership interests on unconsolidated structured entities that the Group hold are classified into asset securitization vehicles, structured finance, investment fund and real-estate trust, 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 finances 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 valuation gain or loss on investment and dividend income as an investor and may be exposed to losses due to reduction in investment value.

‘Real estate trust’ is to be entrusted the underlying property for the purpose of managing, disposing, operating or developing from the consignor who owns the property and distributes the proceeds achieved through the trust to the beneficiary. When the consignee does not fulfill his or her important obligations in the trust contract or it is, in fact, difficult to run the business, the Group may be exposed to the threat of compensating the loss.

The total assets of the unconsolidated structured entity held by the Group, the carrying amount of the items recognized in the financial statements, the maximum loss exposure, and the losses from the unconsolidated structured entity are as follows. The maximum loss exposure includes the amount of investment recognized in the financial statements and the amount that is likely to be confirmed in the future when satisfies certain conditions by contracts such as purchase arrangements, credit offerings.

- 8 -

		December 31, 2019
		Asset<br>securitization<br>vehicle			Structured<br>Finance			Investment<br>Funds		Real-estate<br>trust
Total asset of the unconsolidated structured entities			8,230,254			62,879,421			18,265,273		152,257
Assets recognized in the consolidated financial statements related to the unconsolidated<br>structured entities			5,128,616			2,982,217			1,411,639		57,928
Financial assets at FVTPL			324,414			28,834			1,109,621		655
Financial assets at FVTOCI			2,006,230			42,305			—		—
Financial assets at amortized cost			2,796,695			2,897,620			120,072		57,273
Investments in joint ventures and associates			—			7,475			181,946		—
Derivative assets			1,277			5,983			—		—
Liabilities recognized in the consolidated financial statements related to the unconsolidated<br>structured entities			184			1,291			—		2,808
Derivative liabilities			—			15			—		—
Other liabilities (provisions)			184			1,276			—		2,808
The maximum exposure to risks			5,561,394			3,532,539			1,457,398		77,117
Investment assets			5,128,616			2,982,217			1,411,639		57,928
Credit facilities			432,778			550,322			45,759		19,189
Loss recognized on unconsolidated structured entities			—			4,660			34,312		5,218
		December 31, 2018
---	---	---	---	---	---	---	---	---	---
		Asset<br>securitization<br>vehicle			Structured<br>finance			Investment<br>funds
Total asset of the unconsolidated structured entities			6,796,235			58,161,494			11,138,822
Assets recognized in the consolidated financial statements related to the unconsolidated<br>structured entities			2,571,835			2,831,842			1,530,767
Financial assets at FVTPL			285,156			70,219			1,197,844
Financial assets at FVTOCI			281,919			48,961			—
Financial assets at amortized cost			2,003,921			2,511,055			71,150
Investments in joint ventures and associates			—			197,393			261,773
Derivative assets			839			4,214			—
Liabilities recognized in the consolidated financial statements related to the unconsolidated<br>structured entities			1,260			905			—
Derivative liabilities			116			248			—
Other liabilities (provisions)			1,144			657			—
The maximum exposure to risks			3,252,329			3,408,271			1,587,325
Investments			2,571,835			2,831,842			1,530,767
Credit facilities			680,494			576,429			56,558
Loss recognized on unconsolidated structured entities			5,764			11,609			13,868

- 9 -

(7)	As of December 31, 2019 and 2018, the share of non-controlling<br>interests on the net income and equity of subsidiaries in which non-controlling interests are significant are as follows: (Unit: Korean Won in millions):
1)	Accumulated non-controlling interests at the end of the reporting<br>period
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Woori Bank (*)			3,660,814			—
Woori Investment Bank			151,170			130,088
Woori Asset Trust Co., Ltd			40,161			—
Woori Asset Management Corp			29,800			—
PT Bank Woori Saudara Indonesia 1906 Tbk			83,315			68,250
Wealth Development Bank			18,524			16,557
(*)	Hybrid securities issued by Woori Bank
---	---
2)	Net income attributable to non-controlling interests<br>
---	---
		For the year ended<br>December 31, 2019			For the year ended<br>December 31, 2018
---	---	---	---	---	---	---
Woori Bank (*)			134,421			—
Woori Investment Bank			21,588			10,262
Woori Asset Trust Co., Ltd			—			—
Woori Asset Management Corp			408			—
PT Bank Woori Saudara Indonesia 1906 Tbk			8,502			8,126
Wealth Development Bank			427			39
(*)	Distribution of the hybrid securities issued by Woori Bank
---	---
3)	Dividends to non-controlling interests
---	---
		For the year ended<br>December 31, 2019			For the year ended<br>December 31, 2018
---	---	---	---	---	---	---
PT Bank Woori Saudara Indonesia 1906 Tbk			1,981			2,082

- 10 -

2.	BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
(1)	Basis of presentation
---	---

The Group’s consolidated financial statements are prepared in accordance with Korean Financial Reporting Standards (“K-IFRS”)

The significant accounting policies applied in the preparation of consolidated financial statements as of and for the year ended December 31, 2019 are stated below, and the accounting policies applied are identical to ones used in the preparation of Woori Bank’s previous period consolidated financial statements, except for the effects of adopting new standards or interpretations as explained below.

The consolidated financial statements, as described in following paragraphs of accounting policy, are prepared at the end of each reporting period in 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.

The consolidated financial statements of the Group were approved for the issuance on March 3, 2020 by the Board of Directors, and the final approval will be made in the annual general shareholders’ meeting on March 25, 2020.

1)	The standards and interpretations that are newly adopted by the Group during the current period, and the<br>changes in accounting policies thereof are as follows:
①	K-IFRS 1109 ‘Financial Instruments,’ K-IFRS 1107 ‘Financial Instruments: Disclosure’ amendments
---	---

The Group has adopted the amendments of K-IFRS 1109 and 1107 for the first time in the current year. The amendments mainly deal with the addition of temporary exceptions from applying specific hedge accounting requirements while the uncertainty arises from interest rate benchmark reform. The amendment requires that for the purpose of determining whether a forecast transaction (or a component thereof) is highly probable, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform. When applying the prospective assessment, the amendment further requires that an entity shall assume that the hedged risk or the interest rate benchmark on which the hedged item or the hedging instrument is based is not altered as a result of the reform. Additionally, for a hedge of a non-contractually specified benchmark component of interest rate risk, an entity shall apply the requirement that the risk component shall be separately identifiable only at the inception of the hedging relationship. Meanwhile, an entity shall prospectively cease applying the temporary exceptions to a hedged item at the earlier of: (a)when the uncertainty arising from interest rate benchmark reform is no longer present with respect to the timing and the amount of the interest rate benchmark-based cash flows of the hedged item; and (b)when the hedging relationship that the hedged item is part of is discontinued. Note 26 sets out details of the hedge accounting applied by the Group. These amendments will be effective from January 1, 2020 but the Group has applied such amendments in current year as the early adoption is permitted.

②	K-IFRS 1116 Leases

The Group initially applied K-IFRS 1116 on January 1, 2019.

K-IFRS 1116 introduces an accounting model for the single lessee and as a result, the Group, as a lessee, recognizes right-of-use assets which represent a lessee’s right to use an underlying asset and lease liabilities which represent an obligation to make lease payments. An accounting model for the lessor is similar to the previous accounting policy.

The Group recognized the cumulative effects due to the initial application of K-IFRS 1116 on January 1, 2019, which is the date of initial application. Therefore, the comparative financial information applies K-IFRS 1017 and K-IFRS 2104 as reported previously, and was not restated. The details of the changes to the accounting policy are described below.

- 11 -

i)	Definition of lease

Previously, the Group determined whether an arrangement is, or contains, a lease on the arrangement date by applying K-IFRS 2104 ‘Determining whether an arrangement contains a lease’ which focused on ‘risks and consideration’. The Group has started to determine whether the contract is, or contains, a lease, based on the new definition of a lease. Under K-IFRS 1116, a contract determines whether a lease includes control of the use of an underlying asset that is identified in exchange for consideration.

On the date of initial application for K-IFRS 1116, the Group elected to apply a practical expedient which does not require the Group to reassess whether the contract is a lease. The Group applied K-IFRS 1116 only to the contracts that were previously identified as a lease and did not reassess the contracts that were not identified as a lease in line with K-IFRS 1017 and K-IFRS 2104. Therefore, the definition of lease under K-IFRS 1116 is only applicable to contracts that are entered into or modified after January 1, 2019.

For the agreed or revalued date of the contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease and non-lease components.

The Group elected not to recognize right-to-use assets and lease liabilities for certain leases of low-value assets (e.g. IT facilities) and short-term leases (less than one year). The Group will recognize the related lease payments as expenses equally over the lease period.

IFRS Interpretations Committee published its interpretation of ‘Lease Period and Lease Improvement Useful Life’ as of December 16, 2019. The Interpretation Committee discussed a question about how to determine the lease term for cancellable or renewable leases and according to the interpretation, the lease term will depend on both the termination penalties in the contract and the broader economics of the contract. Agenda decisions issued by the Interpretations Committee do not have an application date, but are expected to be implemented as soon as possible. The Group is currently assessing the impact of the agenda decision and does not expect a material impact to the financial statements.

ii)	Lessee

The Group leases various assets, including buildings, vehicles and IT equipment.

Previously, the Group classified its leases either as operating leases or as finance leases based on whether the lease substantially transfers the risk and reward of owning the underlying assets. According to K-IFRS 1116, the Group recognizes right-of-use assets and lease liabilities for most of its leases, which means most of its leases are presented in the statement of financial position.

For the right-of-use assets that do not satisfy the definition of an investment property, the Group presents those assets as the same item as the item that the corresponding underlying asset would have been presented for. Right-of-use assets that meet the definition of investment properties would be presented as investment properties.

The Group presents lease liability as other financial liabilities in the consolidated statement of financial position.

iii)	Regulation on lease terms

On the date of initial application, a lease classified as an operating lease in accordance with K-IFRS 1017 is measured at present value of the remaining lease payments discounted at the incremental borrowing rate of the subsidiary as of January 1, 2019. However, the Group chose an exception that does not apply the lessee’s recognition, measurement and presentation on low value asset leases. The right-of-use asset is measured as follows:

The same amount as lease liability (pre-paid or incurred (unpaid) lease payments are adjusted). The Group applies this method to all leases.

- 12 -

When the Group applies K-IFRS 1116 to the leases classified as operating leases in accordance with K-IFRS 1017, following practical expedients are used:

-	Opening direct costs are excluded from the measurement of the right-of-use asset at the date of initial application.
-	An entity should apply K-IFRS 1037 ‘Provisions, Contingent<br>Liabilities and Contingent Assets’ right before the date of initial application to determine whether a lease is a loss-bearing contract and therefore conduct an impairment review.
---	---
-	The right-of-use assets and<br>lease liabilities are not recognized for short-term leases (residual term less than a year)
---	---
-	If the contract includes a lease extension or exit option, use hindsight to determine the lease term.<br>
---	---
iv)	Impacts to the financial statements
---	---
a)	Impacts at date of initial application
---	---

At the date of initial application of K-IFRS 1116, the Group additionally recognized the right-of-use assets and lease liabilities, and the impacts as of January 1, 2019 are as follows (Unit: Korean won in millions):


Right-of-use<br>assets presented as premises and equipment (*)		435,791
Lease liability (*)		377,030
(*)	The differences have occurred due to prepaid, unpaid lease payment, transfer, etc. and there is no effect on<br>retained earnings.
---	---

When measuring lease liabilities for leases that were previously classified as operating lease, the Group used its incremental borrowing rate as of January 1, 2019 as the discount rate. The applied weighted-average incremental borrowing rate is 2.0~5.6%.


Operating leases as of December 31, 2018		398,147
- Application of exemption rule for low value assets leases		(616	)
- Application of exemption rule for leases with remaining terms are less than 12 months at the<br>time of transition		(187	)
Operating lease agreement after subtraction of exemption rule applied items as of<br>December 31, 2018		397,344

Amount discounted with incremental borrowing rate at the date of initial application (January 1,<br>2019)		377,030

Lease liabilities recognized at the date of initial application (January 1, 2019)		377,030

b)	Impacts during the transition
---	---

The Group recognized depreciation expenses and interest expenses instead of the operating lease expenses for the leases in line with K-IFRS 1116. The Group recognized depreciation expenses of 229,727 million Won and interest expenses of 9,086 million Won for the lease for the year ended December 31, 2019.

③	It is believed that the following issued, revised standards will not have a significant impact on the Group.<br>
-	K-IFRS 2123 Uncertainty over Income Tax Treatments (Issued)<br>
---	---
-	K-IFRS 1109 Financial Instrument (Revised)
---	---
-	K-IFRS 1028 Investment in Associates and Joint Ventures (Revised)<br>
---	---
-	K-IFRS 1019 Employee Benefits (Revised)
---	---
-	K-IFRS 1115 Revenue from Contracts with Customers (Revised)<br>
---	---
-	Annual Improvements to IFRSs 2015-2017 Cycle
---	---

The annual improvements include partial amendments of K-IFRS 1012 ‘Income Tax,’ K-IFRS 1023 ‘Borrowing Cost,’ K-IFRS 1103 ‘Business Combination’ and K-IFRS 1111 ‘Joint Arrangements

- 13 -

2)	The details of K-IFRSs that have been issued and published as of the<br>date of issue approval of financial statements but have not yet reached the effective date, and which the Group has not applied at an earlier date are as follows:
-	Revised Conceptual Framework for Financial Reporting
---	---
-	Revised K-IFRS 1103 ‘Business Combinations’<br>
---	---
-	Revised K-IFRS 1001 ‘Financial Statements Presentation’ and K-IFRS 1008 ‘Change and Error of Accounting Policy and Accounting Estimates’
---	---

It will be applied to period beginning on or after January 1, 2020. It is believed that revised standards listed above, will not have a significant impact on the company

3)	The standards and interpretations that are newly adopted by the Group during the previous period, and the<br>changes in accounting policies thereof are as follows:
-	Adoption of K-IFRS 1109 – Financial instruments<br>
---	---

The Group initially applied K-IFRS 1109 and related amendments made to other standards during the previous period, with January 1, 2018 as the date of initial application. K-IFRS 1109 introduces new rules on: 1) classification and measurement of financial assets and financial liabilities, 2) impairment of financial assets, and 3) hedge accounting. Additionally, the Group adopted consequential amendments to K-IFRS 1037 Financial Instruments: Disclosures that were applied to the disclosures for 2018.

a) Classification and measurement of financial assets

All financial assets included in the scope of K-IFRS 1109 are subsequently measured at amortized cost or fair value based on the Group’s business model for the management of financial assets and the nature of the contractual cash flows of the financial assets.

Debt instruments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods (Financial assets at amortized cost).

Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at fair value through other comprehensive income (Financial assets at fair value through other comprehensive income (“FVTOCI”)).

All other debt instruments and equity instruments are measured at their fair value at the end of subsequent accounting periods, and any change in the fair value is recognized as profit or loss (Financial assets at fair value through profit or loss (“FVTPL”)).

Notwithstanding the foregoing, the Group may make the following irrevocable choice or designation at the time of initial recognition of a financial asset.

The Group may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument within the scope of this standard that is neither held for trading nor is a contingent consideration recognized by an acquirer in a business combination to which K-IFRS 1103 applies.

At initial recognition, financial assets at amortized cost or FVTOCI may be irrevocably designated as financial assets at fair value through profit or loss mandatorily measured at fair value if doing so eliminates or significantly reduces a measurement or recognition inconsistency.

As of the date of initial application of K-IFRS 1109, there are no debt instruments classified either as financial assets at amortized cost or FVTOCI that are designated as financial assets at fair value through profit or loss.

- 14 -

When debt instruments measured at FVTOCI are derecognized, the cumulative gain or loss recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. On the other hand, for equity instruments designated as financial assets at fair value through other comprehensive income, cumulative gains or losses previously recognized in other comprehensive income are subsequently reclassified to retained earnings. Debt instruments measured subsequently at amortized cost or at FVTOCI are subject to impairment.

The classification and measurement of financial assets and liabilities in accordance with K-IFRS 1109 and K-IFRS 1039 as of January 1, 2018 are as follows (Unit: Korean Won in millions):

	Classification in<br>accordance with<br><br><br>K-IFRS 1039	Classification in<br>accordance with<br><br><br>K-IFRS 1109
Deposit	Loans and receivables	Loan and other financial assets at amortized cost	8,870,835	—		—	8,870,835
Deposit	Financial assets at FVTPL	Financial assets at FVTPL	25,972	—		—	25,972
Debt securities	Financial assets at FVTPL	Financial assets at FVTPL (*1)	2,654,027	—		—	2,654,027
Equity securities	Financial assets at FVTPL	Financial assets at FVTPL (*1)	47,304	—		—	47,304
Derivative assets	Financial assets at FVTPL	Financial assets at FVTPL (*1)	3,115,775	(2,137	)	—	3,113,638
Equity securities	AFS financial assets	Financial assets at FVTPL (*1)	1,273,498	1,219		—	1,274,717
Equity securities	AFS financial assets	Financial assets at FVTOCI	850,207	—		—	850,207
Debt securities	AFS financial assets	Financial assets at FVTPL	46,855	—		—	46,855
Debt securities	AFS financial assets	Financial assets at FVTOCI	12,874,209	—		—	12,874,209
Debt securities	AFS financial assets	Securities at amortized cost	308,181	—		14,119	322,300
Debt securities	HTM financial assets	Securities at amortized cost	16,749,296	—		—	16,749,296
Loans	Loans and receivables	Financial assets at FVTPL (*1)	279,032	918		50	280,000
Loans	Loans and receivables	Loan and other financial assets at amortized cost	253,014,491	—		—	253,014,491
Derivative assets (Designated for hedging)	Derivative assets (Designated for hedging)	Derivative assets (Designated for hedging)	59,272	—		—	59,272
Other financial assets	Loans and receivables	Loan and other financial assets at amortized cost	6,772,088	—		—	6,772,088

Total financial assets			306,941,042	—		14,169	306,955,211

- 15 -

		Classification in<br>accordance with<br><br><br>K-IFRS 1039	Classification in<br>accordance with<br><br><br>K-IFRS 1109
Deposit due to customers		Financial liabilities at FVTPL	Financial liabilities at FVTPL	25,964	—	—	25,964
Deposit due to customers		Financial liabilities at amortized cost	Financial liabilities at amortized cost	234,695,084	—	—	234,695,084
Borrowings		Financial liabilities at amortized cost	Financial liabilities at amortized cost	14,784,706	—	—	14,784,706
Debentures		Financial liabilities at FVTPL	Financial liabilities at FVTPL	91,739	—	—	91,739
Debentures		Financial liabilities at amortized cost	Financial liabilities at amortized cost	27,869,651	—	—	27,869,651
Equity-linked securities		Financial liabilities at FVTPL	Financial liabilities at FVTPL	160,057	—	—	160,057
Derivatives liabilities		Financial liabilities at FVTPL	Financial liabilities at FVTPL	3,150,149	—	—	3,150,149
Derivatives liabilities<br>(Designated for hedging)		Derivatives liabilities (Designated for hedging)	Derivatives liabilities (Designated for hedging)	67,754	—	—	67,754
Other financial liabilities		Financial liabilities at amortized cost	Financial liabilities at amortized cost	13,892,461	—	—	13,892,461
Provision for financial guarantee		Provision	Financial liabilities at amortized cost	71,697	—	—	71,697

Total<br>financial liabilities				294,809,262	—	—	294,809,262

(*1)	Under K-IFRS 1039, the embedded derivatives out of hybrid financial<br>instruments were accounted for as derivative assets or liabilities if the criteria for separation of the embedded derivatives were met; and the host contracts in those instruments were recorded as available-for-sale financial assets or loans and receivables respectively. However, since K-IFRS 1109 requires financial instruments to be accounted for based on the<br>terms of the entire financial instrument, hybrid financial assets are revalued and classified as financial assets at fair value through profit or loss.
---	---
(*2)	The remeasurement effect due to expected credit losses is not included (The remeasurement effect of expected<br>credit losses is as follows: b) Impairment of financial assets).
---	---

At the date of the initial application of K-IFRS 1109, there were no financial assets or liabilities measured at FVTPL that were reclassified to FVTOCI or amortized cost category.

The financial assets at FVTPL or FVTOCI that are reclassified to the amortized cost measurement category as of the date of initial application of K-IFRS 1109, and the related valuation gain or loss and fair value of the financial assets as of December 31, 2018 had it not been reclassified, are as follows (Unit: Korean Won in millions):

Account subject		Category before the adoption of<br>K-IFRS 1109
Debt securities (*)		AFS financial assets	2	257,665
(*)	Those financial assets that are removed from the books as of December 31, 2018 are not presented in the<br>table above.
---	---

- 16 -

b) Impairment of financial assets

The impairment model under K-IFRS 1109 reflects expected credit losses, as opposed to incurred credit losses under K-IFRS 1039. Under the impairment approach in K-IFRS 1109, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, the Group accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses should be updated at each reporting date to reflect changes in credit risk since initial recognition.

The Group is required to recognize the expected credit losses for financial instruments measured at amortized cost or FVTOCI (debt instrument), and unused loan commitments and financial guarantee contracts that are subject to the impairment provisions of K-IFRS 1109. In particular, K-IFRS 1109 requires the Group to measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument has increased significantly since initial recognition, or if the financial instrument is a purchased or originated credit-impaired financial asset. If the credit risk of a financial instruments does not increase significantly after initial recognition (excluding “purchased or originated credit-impaired loans” - for financial assets already impaired at initial recognition), the Group measures the loss allowance on the financial instruments at the amount equivalent to the expected 12-month credit loss.

Management assessed the impairment of the Group’s financial assets, lending arrangements and financial guarantees at the date of initial application by using reasonable and supportive measures that can be used without undue cost or effort in determining the credit risk of the financial instruments at initial recognition in accordance with K-IFRS 1109 and in comparing above credit risk with the credit risk at the date of initial application. As of January 1, 2018, the results of the assessment are as follows (Unit: Korean Won in millions):

	Classification<br><br><br>in accordance<br> <br>with K-IFRS<br> <br>1039	Classification in<br><br><br>accordance with<br> <br>K-IFRS 1109
Deposit	Loans and receivables	Loans and other financial assets at amortized cost	2,458	3,092	634
Debt securities
AFS securities	AFS financial assets	Financial assets at FVTOCI	—	4,236	4,236
HTM securities	HTM financial assets	Securities at amortized cost	—	5,078	5,078
Loans and other financial assets	Loans and receivables	Loans and other financial assets at amortized cost	1,827,785	2,076,873	249,088
Payment guarantee			183,247	192,924	9,677
Loan commitment			66,115	104,985	38,870

Total			2,079,605	2,387,188	307,583

c) Classification and measurement of financial liabilities

One of the major changes related to the classification and measurement of financial liabilities as a result of the adoption of K-IFRS 1109 is the accounting for change in the fair value of financial liabilities designated as at fair value through profit or loss due to the changes in issuer’s own credit risk. The Group recognizes the effect of changes in the credit risk of financial liabilities designated as at FVTOCI in other comprehensive income, except for cases where it creates or enlarges accounting mismatch of the profit or loss. Changes in fair value due to credit risk of financial liabilities are not subsequently reclassified to profit or loss, but are reclassified as retained earnings when financial liabilities are derecognized.

- 17 -

In accordance with K-IFRS 1039, the entire of changes in fair value of financial liabilities designated as at FVTPL are recognized in profit or loss. As of January 1, 2018, the Group designated 251,796 million Korean Won of FVTPL out of 294,813,795 million of financial liabilities to be measured at FVTPL, and recognized 133 million Korean Won as accumulated other comprehensive loss in relation to the changes in own credit risk of financial liabilities.

d) Hedge accounting

The new hedge accounting model maintains three types of hedge accounting. However, it introduced more flexibility in the types of transactions that are eligible for hedge accounting and expanded the types of hedging instruments and non-financial hedge items that qualify for hedge accounting. The standard related to the evaluation of hedge accounting has been amended as a whole, where it is now replaced by the principle of “economic relationship” between the hedged item and the hedging instrument. Retrospective assessment of the hedging effectiveness is no longer required. Additional disclosure requirements have been introduced in relation to the Group’s risk management activities.

In accordance with the transitional provisions of K-IFRS 1109 on hedge accounting, the Group adopted the hedge accounting provisions of K-IFRS 1109 prospectively from January 1, 2018. As of the date of initial application, the Group concluded that the hedging relationship in accordance with K-IFRS 1039 is appropriate for hedge accounting under K-IFRS 1109, thus the hedging relationship is considered to exist continually. Since the major conditions for hedging instruments and the hedged items are consistent, all hedging relationships are consistent within the effectiveness assessment requirements of K-IFRS 1109. The Group has not designated a hedging relationship in accordance with K-IFRS 1109 in which the hedge relationship would not have met the requirements for hedge accounting under K-IFRS 1039.

e) Effect on equity as a result of adoption of K-IFRS 1109

The effect on equity due to the adoption of K-IFRS 1109 as of January 1, 2018 is as follows (Unit: Korean Won in millions):

-	Impact on accumulated other comprehensive loss due to financial assets at FVTOCI, etc.
		Amount
---	---	---	---	---
Balance as of December 31, 2017 (prior to K-IFRS<br>1109)			(89,723	)
Adjustments			(392,177	)
Reclassification of<br>available-for-sale financial assets to financial assets at FVTPL			(152,124	)
Recognition of expected credit losses of debt securities at FVTOCI			4,293
Reclassification of available for sale financial assets (equity securities) to financial assets at<br>FVTOCI			(397,508	)
Effect on changes in credit risk of financial liabilities at fair value through profit or loss<br>designated as upon initial recognition			(133	)
Others			3,499
Income tax effect			149,796

Balance as of January 1, 2018 (based on K-IFRS<br>1109)			(481,900	)

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-	Retained earnings impact
		Amount
---	---	---	---	---
Balance as of December 31, 2017 (prior to K-IFRS<br>1109)			15,620,006
Adjustments			177,091
Reclassification of<br>available-for-sale financial assets to financial assets at FVTPL			152,124
Recognition of expected credit losses of debt instruments at FVTOCI			(4,293	)
Reclassification of<br>available-for-sale financial assets (equity securities) to financial assets at FVTOCI			397,508
Effect on revaluation of financial assets at amortized cost from loan and receivables or AFS<br>financial assets			282
Recognition of expected credit losses of financial assets at amortized cost which were previously<br>loan and receivables			(240,683	)
Effect on provision for guarantees and unused loan commitments on liabilities			(48,548	)
Effect on changes in credit risk of financial liabilities at fair value through profit or loss<br>designated as upon initial recognition			133
Others			(4,950	)
Income tax effect			(74,482	)

Balance as of January 1, 2018 (based on K-IFRS<br>1109)			15,797,097

(2)	Basis of consolidated financial statement presentation
---	---

The consolidated financial statements incorporate the financial statements of the Group and the entities (including structured entities) controlled by the Group (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<br>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<br>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. The carrying amount of the non-controlling interest after the acquisition is the amount initially recognized plus the amount of proportionate interest of the non-controlling interest in the changes in equity since the acquisition. 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.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intra-group transactions and, related assets and liabilities, income and expenses are eliminated in full on consolidation.

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Non-controlling interest of a subsidiary are separately identified from the equity of the Group. 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. The carrying amount of the non-controlling interest after the acquisition is the amount initially recognized with the amount entitled to the proportionate interest of the non-controlling interest when there are changes in equity since the acquisition. 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.

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 are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owner of the parent company.

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

(3)	Business combinations

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

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

•	deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are<br>recognized and measured in accordance with K-IFRS 1012 Income Taxes and K-IFRS 1019 Employee Benefits, respectively;
•	liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based<br>payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with K-IFRS 1102 Share-based Payment at the acquisition date; and<br>
---	---
•	non-current assets (or disposal groups) that are classified as held for<br>sale are measured in accordance with K-IFRS 1105 ‘Non-current Assets Held for Sale and Discontinued Operations’
---	---

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.

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 net income as a bargain purchase gain.

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.

- 20 -

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 net income (or other comprehensive income, if applicable). Amounts arising from changes in value of interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are recognized, identical to the treatment assuming interests are sold directly.

In case where i) a common entity ultimately controls over all participating entities, or businesses, in a business combination transaction, prior to and after the transaction continuously, and ii) the control is not temporary, the transaction meets the definition of “business combination under common control” and it is deemed that the transaction only results in the changes in legal substance, and not economic substance, from the perspective of the ultimate controlling party. Thus, in such transactions, the acquirer recognizes the assets and liabilities of the acquiree in its financial statements at the book values as recognized in the ultimate controlling party’s consolidated financial statements, and the difference between the book value of consideration transferred to and the book value of net assets transferred in is recognized as equity.

If the initial accounting for a business combination is not completed by the end of the reporting period in which the business combination occurred, the Group reports in consolidated financial statements the provisional amount of items that have not been accounted for. If there is new information about the facts and circumstances that existed as of the acquisition date during the measurement period (see above), the Group retrospectively adjusts the provisional amounts recognized at the acquisition date or recognizes additional assets and liabilities to reflect the information that would have affected the measurement of the amount recognized at the acquisition date if it had already known at the acquisition date.

(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.

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 current period and the assets and liabilities of the joint ventures and associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with K-IFRS 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.

- 21 -

Investment in joint ventures and associates are accounted for and applied with the equity method from the time the investee becomes an associate or a joint venture.

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 exists after the review, it is recognized immediately in net income.

The requirements of K-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 K-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 K-IFRS 1036 to the extent that the recoverable amount of the investment subsequently increases.

The Group ceases to use the equity method from the time it fails meet the definition of an associate or a joint venture. Upon a loss of significant influence over the joint ventures and associates, the Group discontinues the use of the equity method and measures at fair value of any investment that the Group retains in the former joint ventures and associates from the date when the Group loses significant influence. The fair value of the investment is regarded as its fair value on initial recognition as a financial asset in accordance with K-IFRS 1109 Financial Instruments; Recognition and Measurement. The Group recognized differences between the carrying amount and fair value in net income 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 or a joint venture would be reclassified to net income on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to net income as a reclassification adjustment.

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

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.

The Group applies K-IFRS 1109 ‘Financial Instruments’, including the impairment requirements, to its long-term investment interests in associates and joint ventures that form part of its net investment without applying the equity method. In addition, when applying K-IFRS 1109 to long-term investments, the Group does not consider adjustments to the carrying amount required by K-IFRS 1028. Examples of such adjustments include an impairment assessment or an adjustment to the carrying amount of the long-term investment interest resulting from the allocation of losses to the investee in accordance with K-IFRS 1028.

- 22 -

(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;
---	---
-	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 the K-IFRSs applicable to the particular assets, liabilities, revenues and expenses.

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

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

(6)	Revenue recognition

K-IFRS 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. Since revenues other than those from contracts with customers, such as interest revenue and loan origination fee (cost), are measured through effective interest rate method.

1)	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 recognizes as a revenue the amount of the transaction price that is allocated to that performance obligation. The transaction price is the amount of consideration to which the 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 Banking segment.

- 23 -

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 Banking, Credit card and Investment 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 Banking and Investment banking segment.

④	Fees and commission received on foreign exchange handling

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

⑦	Fees and commission received on credit card

The fees and commission received on credit card consist mainly of merchant account fees and annual fees. The Group recognizes merchant account fees by multiplying agreed commission rate to the amount paid by using the credit card. The annual fees are performance obligation satisfied over time and are recognized over agreed periods after the annual fees are paid in advance. The business activities relevant to these fees and commission received on credit card are substantially attributable to Credit cards segment.

⑧	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 Banking and Investment banking segment.

- 24 -

⑨	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 Banking segment.

⑩	Fees and commission received on credit Information

The fees and commission received on credit Information are composed of the fees and commission received by performing credit investigation and proxy collection services. Credit investigation fees and commission are the amount received in return for verifying the information requested by the customer and are recognized as revenue at the time the verification is completed. Proxy collection service fees are recognized by multiplying the applicable rate to the collected amount at the time when collection services are completed. The majority of these fees and commission received for brokerage are from the business activities relevant to other segment.

	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.

Revenues from sources other than contracts with customers

①	Interest income

Interest income on financial assets measured at 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.

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 fees 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.

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Assets and liabilities of the foreign operations subject to consolidation are translated into Korean Won at foreign exchange rates at the end of the reporting period. Except for situations in which it is required to use exchange rates at the date of transaction due to significant changes in exchange rates during the period, items that belong to profit or loss 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 other comprehensive income.

(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
1)	Financial assets
---	---

A regular way purchase or sale of financial assets is recognized or derecognized on the trade or settlement 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 according to its business model and contractual cash flows.

a)	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<br>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,<br>and outflow or realization of expected cash flows from disposal of assets
-	The way the performance of a financial asset held under the business model is evaluated, and the way such<br>evaluation is being reported to the management
---	---
-	The risk affecting the performance of the business model (and financial assets held under the business model),<br>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<br>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<br>activities.
---	---
b)	Contractual cash flows
---	---

The principal is defined to be the fair value of a financial assets 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.

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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<br>
---	---
-	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)
---	---
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 related profit or loss is recognized in net income. Transaction costs related to acquisition at initial recognition is recognized in net income immediately upon its occurrence.

It is possible to designate a financial asset as financial asset 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 asset 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), is measured at fair value and is being evaluated for its performance, and such information is provided internally; and (c) the financial asset is part of a contract that contains one or more of embedded derivatives, and is a hybrid contract in which designation as financial asset at FVTPL is allowed under K-IFRS 1109 ‘Financial Instruments’. However, the designation is irrevocable.

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. However, for equity instruments that do not have a quotation in an active market and in which fair value cannot be measured reliably, they are measured at cost. The income tax effects related to 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 about debt instrument are recognized as other comprehensive income until the asset’s disposal. Upon derecognition, the accumulated other comprehensive income is reclassified from equity to net income for FVTOCI (debt instrument), and reclassified within the equity for FVTOCI (equity instruments).

③	Financial assets at amortized cost

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

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2)	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. Profit or loss arising from financial liabilities at FVTPL is recognized in net income when occurred.

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

3)	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.

4)	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.

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.

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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 the 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

5)	Fair value of financial instruments

Financial assets at FVTPL and financial assets at FVTOCI are measured and presented in 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.

a) 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.

- 29 -

b) 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.

c) 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.

6)	Expected credit losses on financial assets

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

- Financial assets at amortized cost

- Debt instruments measured at FVTOCI

- Contract assets as defined by K-IFRS 1115

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

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

- General approach: Financial assets that does 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.

- 30 -

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.

a) Measurement of expected credit losses on financial asset at amortized cost

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

When financial assets 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. When loan receivable previously written off is subsequently collected, the related loss allowance is increased and changes in loss allowance are recognized in profit or loss.

b) Measurement of expected credit losses on financial asset at FVTOCI

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

(10)	Offsetting financial instruments

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

(11)	Investment properties

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

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

While land is not depreciated, all other investment properties are depreciated based on the depreciation method and useful lives of 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 the 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 the derecognition.

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(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
Right-of-use<br>assets		Useful lives of the same kind or similar other premises and equipment

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.

(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		10 years
Development costs		5 years
Software and others		4 to 10 years

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 resulting from an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

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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 net income.

(15)	Leases

As the Group applied IFRS 16 using the revised retrospective method, the comparative financial information has not been prepared. The Group also applied K-IFRS 1017 and 2104. The accounting policies in accordance with K-IFRS 1017 and 2104 are separately disclosed.

1)	Accounting policy applied as of January 1, 2019.

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 IFRS 16.

This accounting policy applies to contracts entered into as of January 1, 2019.

①	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.

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

-	Fixed payments (including in-substance fixed payments)<br>
-	Variable lease payments that depend on an index (or a rate), initially measured using the index or rate as at<br>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<br>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<br>
---	---

The lease liability is subsequently increased be 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.

The Group applies its judgment when determining the lease term for some lease contracts that include the extension option. The assessment of whether the Group is reasonably certain to exercise the option significantly affects the lease term and therefore has a significant impact on the amount of lease liabilities and the right-of-use asset.

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.

②	The Group as a lessor

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

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

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

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

The Group applies the derecognition and impairment provisions of K-IFRS 9 to its net investment in the lease. The Group also carries out regular review of the unguaranteed residual value used to calculate total lease investment.

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

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

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2)	Accounting policy applied until January 1, 2019

The Group classifies a lease as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, and all lease contracts other than finance leases are classified as operating leases.

①	The Group as a lessee

In case of finance leases, the lesser amount of the present value of the minimum lease payments at the commencement date of the lease term or the fair value of the leased asset are recognized as financial lease assets and liabilities in the statement of financial position. Lease payments are allocated as interest expense and repayment of the lease liability so that the same period interest rate is calculated for the balance of the liability. Adjustment to the lease payments are accounted for as expenses during the period.

The operating lease payments are recognized as an expense on a straight-line basis if there is no other systematic basis that is more representative of the pattern in which benefit from the use of underlying asset. Adjustment lease payments from the operating leases are accounted for as expenses during the period in which they are incurred.

②	The Group as a lessor

The Group recognizes a finance lease receivable equal to the present value of the minimum lease and the non-guaranteed residual value, which is the net investment of the finance lease. The accounting for recognizing interest income by reporting period is carried out on a financial lease receivable after the commencement date of the lease term by applying a method in which a certain interest rate of the Group’s net investment in the lease is calculated.

The Group recognizes income from lease payments of operating lease on a straight line basis over the lease term, and the direct costs of the lease incurred during the negotiation and contract phase of the operating lease is added to the carrying value of the lease asset and recognized as an expense over the lease term on a straight-line basis. Operating lease assets are included in other assets and are depreciated over their economic useful life.

(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 net income immediately unless the derivative is designated or 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.

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Derivatives that have positive (+) fair values are recognized as financial assets and those that have negative (-) fair values are recognized as financial liabilities. Derivatives are not offset in the consolidated financial statements unless they have legally enforceable right to set off or are intended to set off.

Embedded derivatives

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

Embedded derivatives that are part of a hybrid contract of which the host contract is a financial asset within the scope of K-IFRS 1109 is not separated. The classification is done by considering the hybrid contract as a whole, and subsequent measurement is either at amortized cost or fair value.

If embedded derivatives are part of a hybrid contract of which the host contract is not a financial asset within the scope of K-IFRS 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 applying K-IFRS 1109 in regard to 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<br>the hedged items and hedging instruments.
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•	When the hedge ratio of hedging relationship is equal to the proportion of the number of items that the group<br>actually hedges and the number of hedging instruments that the Group actually uses to hedge the number of hedged items.
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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.

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Fair value hedge

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

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

When gains or losses arising from the hedged risk are recognized in profit or loss of the current term, they are recognized as items related to the hedged items.

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 starting date of hedge accounting and it is cumulated in the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognized immediately in net income.

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 does not affect other comprehensive income. Also, if the cash flow hedge reserve is loss and accumulated other comprehensive income is a loss and part or all of the losses are not expected to be recovered in the future periods, the said amount is immediately reclassified to profit or loss.

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

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

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

(18) Provisions

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

The Group recognizes provisions 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.

At the end of each reporting period, the remaining provision balance is reviewed an assessed to determine if the current best estimate is being recognized.

(19) Equity instruments issued by the Group

1)	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. The compound financial instruments are financial instruments where it is neither a financial liability nor an equity instrument because it was designed to contain both equity and debt elements.

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.

2)	Hybrid securities

The Group classifies hybrid securities that have the unconditional right to avoid contractual obligations, such as to deliver cash or other financial assets in relation to financial instruments into equity instruments and presents as part of equity. Meanwhile, hybrid securities issued by subsidiaries of the group are classified as non-controlling interests according to the criteria, and the distribution paid is treated as net profit attributable to non-controlling interests in the consolidated comprehensive income statement.

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(20) Financial guarantee contracts

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

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

- Loss allowance in accordance with K-IFRS 1109

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

(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 a professional actuaries. Remeasurement, comprising actuarial gains and losses, the return on plan assets (excluding the amount included in net interest from net defined benefit liability (asset)), and the effect of the changes to the asset ceiling 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 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.

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(22) 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 is realized. Deferred tax assets, including the carryforwards of unused tax losses, are recognized to the extent it is probable that the deferred tax assets will be realized.

Deferred income tax assets and liabilities are offset if, and only if, the 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 refund litigation for the amount of tax levied by the tax authority due to differences in tax law analysis. In response, the Group paid taxes in accordance with K-IFRS 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.

(23) 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.

(24) Share-based payment

For cash-settled share-based payment transactions that provide cash in return for the goods or services received, the Group measures the goods or services received, and the corresponding liability at the fair value and recognizes as employee benefit expenses and liabilities during the vesting period. The fair value of the liability is remeasured at the end of each reporting period and the settlement date until the liability is settled, and changes in fair value are recognized as employee benefits.

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3.	SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

The significant accounting estimates and assumptions are continuously being evaluated based on numerous factors including historical experiences and expectations of future events 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:

(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-(9)-5), ‘Fair value of financial instruments’, 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

K-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, which depends on the degree of increase in credit risk after their initial recognition.

		Stage 1	Stage 2	Stage 3
		Credit risk has not significantly increased<br><br><br>since initial recognition (*)	Credit risk has significantly<br><br><br>increased since initial<br><br><br>recognition	Credit has<br><br><br>been impaired
Allowance for expected credit losses		Expected 12-month credit losses:<br><br><br>Expected credit losses due to possible defaults on financial instruments within a 12-month period from the year-end.	Expected lifetime credit losses:<br><br><br>Expected credit losses from all possible defaults during the expected lifetime of the financial instruments.
(*)	Credit risk may be considered not to have been significantly increased when credit risk is low at year-end.
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The Group has estimated the allowance for credit losses based on reasonable and supportable information that was available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

Probability of default (PD) and Loss given default (LGD) for each category of financial asset is 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.

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In measuring the expected credit losses, the Group is using reasonable and supportable macroeconomic indicators such as economic growth rates, interest rates, market index rates, etc., in order to forecast future economic conditions.

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

Development of prediction models by analyzing the correlation between default rates of corporate and retail exposures per year and macroeconomic indicators
Calculation of predicted 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 prediction model developed.

At the end of every reporting period, the Group evaluates whether credit risk reflecting forward-looking information has significantly been increased since the date of initial recognition. When evaluating whether credit risk has significantly been increased, the changes in the probability of default over the financial instrument’s remaining life is used instead of changes in the amount of expected credit losses. The Group performs the above evaluation with distinctions made to 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<br>opinion by external auditors)
Significant decrease in credit rating (*)
(*)	Determining whether there has been a significant decrease in the credit rating of corporate and retail<br>exposures applies only to credit ratings that are measured through 12-month expected credit loss. The Woori Bank, which is an important subsidiary of the Group, has applied the above indicators of significant<br>decrease in credit rating since initial recognition as follows, and the estimation method is regularly being monitored.
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		Credit rating		Significant increased indicator of the credit rating
---	---	---	---	---
Corporate		AAA ~ A+		More than or equal to 4 steps
		A- ~ BBB		More than or equal to 3 steps
		BBB- ~ BB+		More than or equal to 2 steps
		BB ~ BB-		More than or equal to 1 step
Retail		1 ~ 3		More than or equal to 3 steps
		4 ~ 5		More than or equal to 2 steps
		6 ~ 10		More than or equal to 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<br>
-	For loans overdue for less than 90 days, when it is determined that not even a portion of the loan will be<br>recovered unless claim actions such as disposal of collaterals are taken
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-	When other objective indicators of impairment has been noted for the financial asset.
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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.

(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.

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, assessment, control, and 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 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 possibility of financial losses incurred when the counterparty fails 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.

1)	Credit risk management

The Group considers the probability of failure in performing the obligation of its counterparties, credit exposure to the counterparty, the related default risk and the rate of default loss. The Group uses the credit rating model to assess the possibility of counterparty’s default risk; and when assessing the obligor’s credit grade, the Group utilizes credit grades derived using statistical methods.

In order to manage credit risk limit, the Group establishes the appropriate credit line per obligor, company or industry. It monitors obligor’s credit line, total exposures and loan portfolios when approving the loan.

The Group mitigates credit risk resulting from the obligor’s credit condition by using financial and physical collateral, guarantees, netting agreements and credit derivatives. The Group has adopted the entrapment method to mitigate its credit risk. Credit risk mitigation is reflected in qualifying financial collateral, trade receivables, guarantees, residential and commercial real estate and other collaterals. The Group regularly performs a revaluation of collateral reflecting such credit risk mitigation.

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2)	Maximum exposure to credit risk

The Group’s maximum exposure to credit risk shows the uncertainties related to the maximum possible variation of financial assets’ net value as a result of changes in the specific risk factors, prior to the consideration of collaterals that are recorded at net book value after allowances and other credit enhancements. However, the maximum exposure is the fair value amount (recorded on the books) for derivatives, maximum contractual obligation for payment guarantees and unused amount of commitments for loan commitment.

The maximum exposure to credit risk is as follows (Unit: Korean Won in millions):


Loans and other financial assets at amortized cost		Korean treasury and government agencies	14,797,040	13,547,154
		Banks	18,597,206	22,283,842
		Corporates	101,041,110	96,627,671
		Consumers	159,282,337	149,998,911

		Sub-total	293,717,693	282,457,578

Financial assets at FVTPL (*)		Deposit	27,901	26,935
		Debt securities	2,337,085	1,824,155
		Loans	212,473	385,450
		Derivative assets	2,921,903	2,026,079

		Sub-total	5,499,362	4,262,619

Financial assets at FVTOCI		Debt securities	26,795,161	17,112,249
Securities at amortized cost		Debt securities	20,320,539	22,932,559
Derivative assets		Derivative assets (Designated for hedging)	121,131	35,503
Off-balance accounts		Guarantees	12,618,917	12,666,417
		Unused loan commitments	103,651,674	97,796,704

		Sub-total	116,270,591	110,463,121

		Total	462,724,477	437,263,629

(*)	Puttable financial instruments are not included
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a)	Credit risk exposure by geographical areas
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The following tables analyze credit risk exposure by geographical areas (Unit: Korean Won in millions):

		December 31, 2019
		Korea		China		USA		UK		Japan		Others (*)		Total
Loans and other financial assets at amortized cost			268,316,454		5,108,144		5,077,666		1,844,374		1,172,209		12,198,846		293,717,693
Securities at amortized cost			20,104,604		—		66,747		—		—		149,188		20,320,539
Financial assets at FVTPL			5,488,229		10,409		—		—		724		—		5,499,362
Financial assets at FVTOCI			24,553,655		332,319		144,601		102,311		2		1,662,273		26,795,161
Derivative assets (Designated for hedging)			121,131		—		—		—		—		—		121,131
Off-balance accounts			112,602,603		1,211,857		387,795		78,850		46,662		1,942,824		116,270,591

Total			431,186,676		6,662,729		5,676,809		2,025,535		1,219,597		15,953,131		462,724,477

(*)	Others consist of financial assets in Indonesia, Hong Kong, Singapore, and other countries.<br>
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		December 31, 2018
		Korea		China		USA		UK		Japan		Others (*)		Total
Loans and other financial assets at amortized cost			261,547,407		4,592,153		4,597,119		1,526,532		893,354		9,301,013		282,457,578
Securities at amortized cost			22,757,048		—		70,578		—		—		104,933		22,932,559
Financial assets at FVTPL			4,261,110		1,243		—		—		266		—		4,262,619
Financial assets at FVTOCI			15,697,518		261,085		103,755		24,960		2,247		1,022,684		17,112,249
Derivative assets (Designated for hedging)			35,503		—		—		—		—		—		35,503
Off-balance accounts			107,632,858		801,978		343,323		136,727		35,000		1,513,235		110,463,121

Total			411,931,444		5,656,459		5,114,775		1,688,219		930,867		11,941,865		437,263,629

(*)	Others consist of financial assets in Indonesia, Hong Kong, Singapore, and other countries.<br>
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b)	Credit risk exposure by industries
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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 (Unit: Korean Won in millions):

		December 31, 2019
		Service			Manufacturing			Finance and<br>insurance			Construction			Individuals			Others			Total
Loans and other financial assets at amortized cost			51,233,088			32,983,972			36,141,770			3,291,001			155,120,055			14,947,807			293,717,693
Securities at amortized cost			8,545,838			—			10,979,001			364,591			—			431,109			20,320,539
Financial assets at FVTPL			162,780			128,666			4,084,698			39,193			15,430			1,068,595			5,499,362
Financial assets at FVTOCI			85,609			139,098			18,968,456			10,047			9,241			7,582,710			26,795,161
Derivative assets (Designated for hedging)			—			—			121,131			—			—			—			121,131
Off-balance accounts			17,813,366			23,841,881			10,015,897			4,161,139			53,335,209			7,103,099			116,270,591

Total			77,840,681			57,093,617			80,310,953			7,865,971			208,479,935			31,133,320			462,724,477

		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Service			Manufacturing			Finance and<br>insurance			Construction			Individuals			Others			Total
Loans and other financial assets at amortized cost			48,319,987			34,972,072			40,338,823			3,295,967			145,715,074			9,815,655			282,457,578
Securities at amortized cost			1,157,512			—			13,414,743			527,847			—			7,832,457			22,932,559
Financial assets at FVTPL			120,659			153,159			3,117,845			16,118			7,614			847,224			4,262,619
Financial assets at FVTOCI			382,409			109,749			13,017,646			224,665			5,535			3,372,245			17,112,249
Derivative assets (Designated for hedging)			—			—			35,503			—			—			—			35,503
Off-balance accounts			17,645,104			22,300,388			9,654,685			4,146,708			49,948,865			6,767,371			110,463,121

Total			67,625,671			57,535,368			79,579,245			8,211,305			195,677,088			28,634,952			437,263,629

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3)	Credit risk exposure
a)	Financial assets
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The maximum exposure to credit risk by asset quality, except for financial assets at FVTPL and derivative asset (Designated for hedging) is as follows (Unit: Korean Won in millions):

		December 31, 2019
		Stage 1						Stage 2					Stage 3		Total		Loss<br>allowance			Total, net
		Above<br>appropriate<br>credit rating<br>(*1)			Less than a<br>limited<br>credit rating<br>(*3)			Above<br>appropriate<br>credit rating<br>(*2)			Less than a<br>limited<br>credit rating<br>(*3)
Loans and other financial assets at amortized cost			255,709,205			19,823,451			8,712,860			9,625,024		1,504,172		295,374,712		(1,657,019	)		293,717,693
Korean treasury and government agencies			14,789,933			10,390			—			—		1		14,800,324		(3,284	)		14,797,040
Banks			18,336,664			109,667			150,318			—		21,907		18,618,556		(21,350	)		18,597,206
Corporates			82,286,304			15,201,687			485,469			3,267,311		792,375		102,033,146		(992,036	)		101,041,110
General business			45,769,223			6,191,625			441,089			1,620,761		544,238		54,566,946		(678,237	)		53,888,709
Small- and medium-sized enterprise			32,180,551			8,507,800			44,380			1,586,865		230,901		42,550,497		(287,027	)		42,263,470
Project financing and others			4,336,520			502,262			—			59,685		17,236		4,915,703		(26,772	)		4,888,931
Consumers			140,296,304			4,501,707			8,077,073			6,357,713		689,889		159,922,686		(640,349	)		159,282,337
Securities at amortized cost			20,326,050			—			—			—		—		20,326,050		(5,511	)		20,320,539
Financial assets at FVTOCI (*4)			26,684,601			110,560			—			—		—		26,795,161		(8,569	)		26,795,161

Total			302,719,856			19,934,011			8,712,860			9,625,024		1,504,172		342,495,923		(1,671,099	)		340,833,393

		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Collateral value
		Stage1			Stage2			Stage3			Total
Loans and other financial assets at amortized cost			169,438,539			14,451,806			692,139			184,582,484
Korean treasury and government agencies			—			—			—			—
Banks			612,200			2,028			—			614,228
Corporates			55,602,818			2,335,496			394,860			58,333,174
General business			22,291,348			1,023,766			240,771			23,555,885
Small- and medium-sized enterprise			31,517,538			1,311,730			145,061			32,974,329
Project financing and others			1,793,932			—			9,028			1,802,960
Consumers			113,223,521			12,114,282			297,279			125,635,082
Securities at amortized cost			—			—			—			—
Financial assets at FVTOCI (*4)			—			—			—			—

Total			169,438,539			14,451,806			692,139			184,582,484

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
---	---
(*2)	Credit grade of corporates are A- ~ BBB, and consumers are grades 1 ~<br>6.
---	---
(*3)	Credit grade of corporates are BBB- ~ C, and consumers are grades 7 ~<br>10.
---	---
(*4)	Financial assets at FVTOCI has been disclosed as the amount before deducting loss allowance because loss<br>allowance does not reduce the carrying amount.
---	---

- 46 -

		December 31, 2018
		Stage 1						Stage 2					Stage 3		Total		Loss<br>allowance			Total, net
		Above<br>appropriate<br>credit rating<br>(*1)			Less than a<br>limited<br>credit rating<br>(*3)			Above<br>appropriate<br>credit rating<br>(*2)			Less than a<br>limited<br>credit rating<br>(*3)
Loans and other financial assets at amortized cost			252,921,186			17,624,416			6,330,382			5,739,850		1,693,148		284,308,982		(1,851,404	)		282,457,578
Korean treasury and government agencies			13,549,305			1,009			1			—		—		13,550,315		(3,161	)		13,547,154
Banks			22,163,951			105,583			27,777			—		14,307		22,311,618		(27,776	)		22,283,842
Corporates			77,160,502			15,550,301			655,907			3,424,215		1,034,030		97,824,955		(1,197,284	)		96,627,671
General business			43,173,952			6,474,057			526,303			1,723,704		716,722		52,614,738		(817,002	)		51,797,736
Small- and medium-sized enterprise			29,510,917			8,527,542			107,998			1,547,761		277,825		39,972,043		(335,469	)		39,636,574
Project financing and others			4,475,633			548,702			21,606			152,750		39,483		5,238,174		(44,813	)		5,193,361
Consumers			140,047,428			1,967,523			5,646,697			2,315,635		644,811		150,622,094		(623,183	)		149,998,911
Securities at amortized cost			22,939,039			—			195			—		250		22,939,484		(6,925	)		22,932,559
Financial assets at FVTOCI (*4)			16,940,654			146,442			25,153			—		—		17,112,249		(6,177	)		17,112,249

Total			292,800,879			17,770,858			6,355,730			5,739,850		1,693,398		324,360,715		(1,864,506	)		322,502,386

		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---
		Collateral value
		Stage1			Stage2			Stage3			Total
Loans and other financial assets at amortized cost			163,329,105			8,836,440			698,593			172,864,138
Korean treasury and government agencies			11,600			—			—			11,600
Banks			361,024			3,334			—			364,358
Corporates			51,595,949			2,509,620			426,325			54,531,894
General business			19,907,948			1,167,993			241,651			21,317,592
Small- and medium-sized enterprise			29,780,716			1,291,222			184,674			31,256,612
Project financing and others			1,907,285			50,405			—			1,957,690
Consumers			111,360,532			6,323,486			272,268			117,956,286
Securities at amortized cost			—			—			—			—
Financial assets at FVTOCI (*4)			—			—			—			—

Total			163,329,105			8,836,440			698,593			172,864,138

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
---	---
(*2)	Credit grade of corporates are A- ~ BBB, and consumers are grades 1 ~<br>6.
---	---
(*3)	Credit grade of corporates are BBB- ~ C, and consumers are grades 7 ~<br>10.
---	---
(*4)	Financial assets at FVTOCI has been disclosed as the amount before deducting loss allowance because loss<br>allowance does not reduce the carrying amount.
---	---

- 47 -

b)	Guarantees and loan commitments

The credit quality of the guarantees and loan commitments as of December 31, 2019 and 2018 are as follows (Unit: Korean Won in millions):

		December 31, 2019
Financial assets		Stage 1						Stage 2						Stage3			Total
		Above<br>appropriate<br>credit rating<br>(*1)			Less than a<br>limited<br>credit rating<br>(*3)			Above<br>appropriate<br>credit rating<br>(*2)			Less than a<br>limited<br>credit rating<br>(*3)
Off-balance accounts
Guarantees			10,952,917			1,333,561			355			223,657			108,427			12,618,917
Loan Commitments			97,854,790			3,479,295			1,388,136			906,033			23,420			103,651,674

Total			108,807,707			4,812,856			1,388,491			1,129,690			131,847			116,270,591

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
---	---
(*2)	Credit grade of corporates are A- ~ BBB, and consumers are grades 1 ~<br>6.
---	---
(*3)	Credit grade of corporate are BBB- ~ C, and consumers are grades 7 ~<br>10.
---	---
		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Financial assets		Stage 1						Stage 2						Stage3			Total
		Above<br>appropriate<br>credit rating<br>(*1)			Less than a<br>limited<br>credit rating<br>(*3)			Above<br>appropriate<br>credit rating<br>(*2)			Less than a<br>limited<br>credit rating<br>(*3)
Off-balance accounts
Guarantees			11,212,772			1,063,551			7,147			261,599			121,348			12,666,417
Loan commitments			91,734,567			3,632,586			1,529,330			880,518			19,703			97,796,704

Total			102,947,339			4,696,137			1,536,477			1,142,117			141,051			110,463,121

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
---	---
(*2)	Credit grade of corporates are A- ~ BBB, and consumers are grades 1 ~<br>6.
---	---
(*3)	Credit grade of corporate are BBB- ~ C, and consumers are grades 7 ~<br>10.
---	---
4)	Collateral and other credit enhancements
---	---

During the current period, there have been no significant changes in the value of collateral or other credit enhancements held by the Group and there have been no significant changes in collateral or other credit enhancements due to changes in the collateral policy of the Group. As of December 31, 2019, there are no financial assets that do not recognize the allowance for losses just because financial assets have collateral.

For the financial assets that record loss allowance as total expected credit loss, the amortized cost before the change in contractual cash flows is 18,735 million won, and the net loss due to the change is 82 million won.
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, 2019 and 2018 are 9,667,169 million won and 9,578,796 million won.

- 48 -

(2) Market	risk

Market risk is the possible risk of loss arising from trading position and non-trading position as a result of the volatility of market factors such as interest rates, stock prices and foreign exchange rates.

1)	Market risk management

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.

a)	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.

Woori Bank, a subsidiary of the Group, 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, Woori Bank perform a daily verification that compares VaR measurement and profit and loss to verify the suitability of the model.

The minimum, maximum and average VaR of the Group for the year ended December 31, 2019 and 2018, respectively, and the VaR of the Group as of December 31, 2019 and 2018, respectively, are as follows (Unit: Korean Won in millions):

				For the year ended<br>December 31, 2019											For the year ended<br>December 31, 2018
Risk factor				Average			Maximum			Minimum					Average			Maximum			Minimum
Interest rate		5,052			3,406			5,725			1,176		3,107			3,702			5,528			1,730
Stock price		3,730			3,203			5,935			1,146		2,353			2,669			5,081			1,138
Foreign currencies		5,028			5,033			6,469			4,395		4,972			4,678			6,136			3,439
Commodity price		—			1			32			—		—			3			24			—
Diversification		(6,233	)		(5,127	)		(9,229	)		(2,339	)	(4,445	)		(4,869	)		(8,155	)		(1,815	)

Total VaR (*)		7,577			6,516			8,932			4,378		5,987			6,183			8,614			4,492

(*)	VaR (Value at Risk): Retention period of 1 day, Maximum expected losses under 99% level of confidence.<br>
---	---
b)	Non-trading activities
---	---

For non-trading sectors of the bank, consolidated trusts and subsidiaries of the Bank, the risk is managed and measured by rNII (change in Net Interest Income) and rEVE (change in Economic Value of Equity) through NII (Net Interest Income) and NPV (Net Present Value) simulation, and for the remaining subsidiaries, the risk is managed and measured with interest rate EaR (Earning at Risk, maximum of the expected change for profit or loss) and interest rate VaR that are in accordance with BIS Framework.

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. rNII 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 rEVE 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. The interest rate EaR represents the maximum amount of decrease in net interest income that could result from unfavorable changes in interest rate over a certain period (e.g., 1 year), and the interest rate VaR represents the maximum expected loss that indicates how much net asset value can decrease at present or in the future due to unfavorable changes in interest rates.

- 49 -

For assets and liabilities as of December 31, 2019 that include bank, consolidated trusts and subsidiaries of the bank, details of rEVE and rNII calculated based on interest rate risk in banking book (IRRBB) are as follows (Unit: Korean Won in millions):

December 31, 2019
rEVE<br>(*1)		rNII<br>(*2)
490,981		162,023
(*1)	rEVE: change in Economic Value of Equity<br>
---	---
(*2)	rNII: change in Net Interest Income
---	---

NII and NPV according to interest rate change scenario for assets and liabilities held by banks and connected trusts as of December 31, 2018 are as follows (Unit: Korean Won in millions):

		December 31, 2018

		NII (*1)		NPV (*2)
Base case			4,895,332		24,636,678
Base case (Prepay)			4,887,799		24,225,946
IR 100bp up			5,575,470		24,415,761
IR 100bp down			4,329,543		24,907,344
IR 200bp up			6,603,132		24,232,738
IR 200bp down			3,508,859		25,245,667
IR 300bp up			7,560,155		24,079,415
IR 300bp down			3,352,267		25,680,084
(*1)	NII: Net Interest Income
---	---
(*2)	NPV: Net Portfolio Value
---	---

For the remaining subsidiaries except the bank, consolidated trusts, and consolidated subsidiaries of the bank as of December 31, 2019, and for the subsidiaries other than the bank and consolidated trusts as of December 31, 2018, the interest rate EaR and VaR calculated based on the BIS Framework are as follows (Unit: Korean Won in millions):

December 31, 2019			December 31, 2018
EaR (*1)		VaR (*2)	EaR (*1)	VaR (*2)
92,439		87,872	248,364	141,484
(*1)	EaR (Earning at Risk): Change of Maximum expected income and expense
---	---
(*2)	VaR (Value at Risk): Maximum expected losses
---	---

- 50 -

The Group estimates and manages risks related to changes in interest rate due to the difference in the maturities of interest-bearing assets and liabilities and discrepancies in the terms of interest rates. Cash flows (both principal and interest), interest bearing assets and liabilities, presented by each re-pricing date, are as follows (Unit: Korean Won in millions):

		December 31, 2019
		Within 3<br>months			4 to 6<br>months			7 to 9<br>months			10 to 12<br>months			1 to 5<br>years			Over 5 years			Total
Asset:
Loans and other financial assets at amortized cost			153,023,603			49,505,606			12,505,250			10,506,470			57,582,270			5,209,670			288,332,869
Financial assets at FVTPL			150,149			23,648			63,825			34,299			131,206			13,347			416,474
Financial assets at FVTOCI			5,414,586			5,486,113			3,450,669			3,174,893			9,367,756			318,371			27,212,388
Securities at amortized cost			1,844,868			1,696,004			738,383			1,409,549			14,869,227			858,142			21,416,173

Total			160,433,206			56,711,371			16,758,127			15,125,211			81,950,459			6,399,530			337,377,904

			116,490,812			45,803,202			32,683,132			26,740,013			43,175,232			59,305			264,951,696
Liability:
Deposits due to customers			12,105,234			1,910,759			1,048,991			706,952			3,264,861			509,359			19,546,156
Borrowings			2,378,211			2,894,577			3,330,658			2,466,142			19,211,409			2,537,391			32,818,388
Debentures			153,023,603			49,505,606			12,505,250			10,506,470			57,582,270			5,209,670			288,332,869

Total			130,974,257			50,608,538			37,062,781			29,913,107			65,651,502			3,106,055			318,573,271

		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Within 3<br>months			4 to 6<br>months			7 to 9<br>months			10 to 12<br>months			1 to 5 years			Over 5 years			Total
Asset:
Loans and other financial assets at amortized cost			159,894,065			45,387,214			8,878,060			9,903,959			46,459,450			4,201,379			274,724,127
Financial assets at FVTPL			371,984			32,278			24,951			64,838			145,121			27,536			666,708
Financial assets at FVTOCI			2,579,442			1,775,435			1,486,953			2,223,494			9,289,742			185,320			17,540,386
Securities at amortized cost			2,449,416			2,251,180			1,735,698			1,946,948			15,177,608			402,671			23,963,521

Total			165,294,907			49,446,107			12,125,662			14,139,239			71,071,921			4,816,906			316,894,742

Liability:
Deposits due to customers			100,232,916			44,207,416			29,419,951			35,427,657			40,130,055			72,276			249,490,271
Borrowings			9,971,680			1,924,390			670,404			518,167			2,723,156			626,364			16,434,161
Debentures			2,153,916			2,416,483			2,201,070			2,584,230			18,955,400			2,403,077			30,714,176

Total			112,358,512			48,548,289			32,291,425			38,530,054			61,808,611			3,101,717			296,638,608

- 51 -

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

		December 31, 2019
							CNY						Others	Total
		Foreigncurrency	Korean<br>Won<br>equivalent	Foreigncurrency	Korean<br>Won<br>equivalent		Foreign<br>currency		Korean<br>Won<br>equivalent		Foreigncurrency	Korean<br>Won<br>equivalent	Korean<br>Won<br>equivalent	Korean<br>Won<br>equivalent
Asset	Loans and other financial assets at amortized cost		22,916	26,531,794		150,462		1,600,140		31,393		5,203,131	2,258	2,929,312	5,272,352	41,536,729
	Financial assets at FVTPL		165	190,733		5,322		56,602		25		4,155	105	135,827	64,185	451,502
	Financial assets at FVTOCI		2,679	3,102,752		—		—		2,005		332,319	25	33,017	406,753	3,874,841
	Securities at amortized cost		319	369,677		—		—		—		—	40	52,139	97,092	518,908

	Total		26,079	30,194,956		155,784		1,656,742		33,423		5,539,605	2,428	3,150,295	5,840,382	46,381,980

Liability	Financial liabilities at FVTPL		251	291,102		4,415		46,957		—		—	68	87,776	83,790	509,625
	Deposits due to customers		13,208	15,291,671		166,108		1,766,526		27,739		4,597,467	1,727	2,240,884	3,247,164	27,143,712
	Borrowings		6,588	7,627,665		11,061		117,634		16		2,743	515	668,060	499,046	8,915,148
	Debentures		3,999	4,629,944		—		—		—		—	105	136,230	271,790	5,037,964
	Other financial liabilities		3,016	3,492,462		11,240		119,529		3,079		510,281	359	466,240	6,906	4,595,418

	Total		27,062	31,332,844		192,824		2,050,646		30,834		5,110,491	2,774	3,599,190	4,108,696	46,201,867

Off-balance accounts			7,030	8,139,395		34,316		364,946		4,525		749,973	560	726,323	634,870	10,615,507

All values are in US Dollars.

		December 31, 2018
							CNY						Others	Total
		Foreigncurrency	Korean<br>Won<br>equivalent	Foreigncurrency	Korean<br>Won<br>equivalent		Foreign<br>currency		Korean<br>Won<br>equivalent		Foreigncurrency	Korean<br>Won<br>equivalent	Korean<br>Won<br>equivalent	Korean<br>Won<br>equivalent
Asset	Loans and other financial assets at amortized cost		20,406	22,816,027		167,419		1,696,255		29,880		4,863,230	1,994	2,550,147	4,742,340	36,667,999
	Financial assets at FVTPL		74	82,197		1,425		14,434		—		—	59	75,169	79,584	251,384
	Financial assets at FVTOCI		1,472	1,645,595		—		—		1,604		261,085	—	—	729,581	2,636,261
	Securities at amortized cost		52	58,489		—		—		—		—	—	—	175,552	234,041

	Total		22,004	24,602,308		168,844		1,710,689		31,484		5,124,315	2,053	2,625,316	5,727,057	39,789,685

Liability	Financial liabilities at FVTPL		118	131,927		1,956		19,815		—		—	55	70,250	121,658	343,650
	Deposits due to customers		11,159	12,477,154		169,770		1,720,072		23,967		3,900,923	887	1,135,149	4,392,936	23,626,234
	Borrowings		6,606	7,386,616		3,834		38,847		381		61,947	286	365,585	505,541	8,358,536
	Debentures		3,645	4,075,084		—		—		—		—	—	—	285,339	4,360,423
	Other financial liabilities		2,522	2,820,290		28,955		293,362		1,818		295,919	193	246,584	18,527	3,674,682

	Total		24,050	26,891,071		204,515		2,072,096		26,166		4,258,789	1,421	1,817,568	5,324,001	40,363,525

Off-balance accounts			7,453	8,333,153		33,347		337,868		1,557		253,366	474	606,714	823,655	10,354,756

All values are in US Dollars.

- 52 -

(4)	Liquidity risk

Liquidity risk refers to the risk that the Group may encounter difficulties in meeting obligations from its financial liabilities.

1)	Liquidity risk management

Liquidity risk management is to prevent potential cash shortages as a result of mismatching the use of funds (assets) and sources of funds (liabilities) or unexpected cash outflows. The financial liabilities that are relevant to liquidity risk are incorporated within the scope of risk management. Derivatives instruments are excluded from those financial liabilities as they reflect expected cash flows for a pre-determined period.

Assets and liabilities are grouped by account under Asset Liability Management (“ALM”) in accordance with the characteristics of the account. The Group manages liquidity risk by identifying the maturity gap and such gap ratio through various cash flows analysis (i.e. based on remaining maturity and contract period, etc.), while maintaining the gap ratio at or below the target limit.

2)	Maturity analysis of non-derivative financial liabilities<br>
a)	Cash flows of principals and interests by remaining contractual maturities of<br>non-derivative financial liabilities are as follows (Unit: Korean Won in millions):
---	---
	December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Within 3<br>months			4 to 6<br>months			7 to 9<br>months			10 to 12<br>months			1 to 5<br>years			Over<br>5 years			Total
Financial liabilities at FVTPL		115,156			—			—			—			—			—			115,156
Deposits due to customers		166,474,535			36,697,168			24,634,859			31,233,844			6,590,119			1,877,594			267,508,119
Borrowings		8,596,202			2,948,384			2,162,846			1,880,424			3,682,214			520,936			19,791,006
Debentures		2,378,211			2,894,577			3,330,658			2,466,142			19,211,409			2,537,391			32,818,388
Lease liabilities		46,072			42,549			37,420			35,210			232,985			40,698			434,934
Other financial liabilities		11,242,367			60,981			119,633			10,344			71,561			2,660,640			14,165,526

Total		188,852,543			42,643,659			30,285,416			35,625,964			29,788,288			7,637,259			334,833,129

		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Within 3<br>months			4 to 6<br>months			7 to 9<br>Months			10 to 12<br>months			1 to 5<br>years			Over<br>5 years			Total
Financial liabilities at FVTPL			191,825			—			—			—			—			—			191,825
Deposits due to customers			145,187,689			33,825,662			22,186,833			42,046,740			7,098,907			1,870,334			252,216,165
Borrowings			6,373,835			2,846,294			1,874,069			1,607,985			3,156,128			642,017			16,500,328
Debentures			2,153,916			2,416,483			2,201,070			2,584,230			18,955,400			2,403,077			30,714,176
Other financial liabilities			14,240,022			44,572			169,996			1,201			90,615			2,288,560			16,834,966

Total			168,147,287			39,133,011			26,431,968			46,240,156			29,301,050			7,203,988			316,457,460

- 53 -

b)	Cash flows of principals and interests by expected maturities of<br>non-derivative financial liabilities are as follows (Unit: Korean Won in millions):
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Within 3<br>months			4 to 6<br>months			7 to 9<br>months			10 to 12<br>months			1 to 5<br>years			Over<br>5 years			Total
Financial liabilities at FVTPL			115,156			—			—			—			—			—			115,156
Deposits due to customers			175,309,271			38,219,793			23,649,424			24,102,750			5,547,232			150,233			266,978,703
Borrowings			8,596,202			2,948,384			2,162,846			1,880,424			3,682,214			520,936			19,791,006
Debentures			2,378,211			2,894,577			3,330,658			2,466,142			19,211,409			2,537,391			32,818,388
Other financial liabilities			46,072			42,549			37,420			35,210			232,985			40,698			434,934

Total			11,242,367			60,981			119,633			10,344			71,561			2,660,640			14,165,526

		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Within 3<br>months			4 to 6<br>months			7 to 9<br>months			10 to 12<br>months			1 to 5<br>years			Over<br>5 years			Total
Financial liabilities at FVTPL			191,825			—			—			—			—			—			191,825
Deposits due to customers			163,787,990			38,126,886			20,993,436			23,262,092			5,230,533			17,649			251,418,586
Borrowings			6,373,835			2,846,294			1,874,069			1,607,985			3,156,128			642,017			16,500,328
Debentures			2,153,916			2,416,483			2,201,070			2,584,230			18,955,400			2,403,077			30,714,176
Other financial liabilities			14,240,022			44,572			169,996			1,201			90,615			2,288,560			16,834,966

Total			186,747,588			43,434,235			25,238,571			27,455,508			27,432,676			5,351,303			315,659,881

3)	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, 2019 and 2018 is as follows (Unit: Korean Won in millions):

			Remaining maturity
			Within 3<br>months			4 to 6<br>months			7 to 9<br>months			10 to 12<br>months			1 to 5<br>years		Over<br>5 years		Total
December 31, 2019		Cash flow risk hedge		1,839			(341	)		(298	)		(247	)		6,249		—		7,202
		Trading purpose		2,843,195			—			—			—			—		—		2,843,195
December 31, 2018		Cash flow risk hedge		(1,880	)		(683	)		8,080			14,133			14,103		—		33,753
		Fair value risk hedge		(3,835	)		9,448			(3,541	)		9,133			6,991		—		18,196
		Trading purpose		2,090,861			—			—			—			—		—		2,090,861
4)	Maturity analysis of off-balance accounts (Guarantees and loan<br>commitments)
---	---

The Group provides guarantees on behalf of customers. 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. Under a loan commitment, the Group agrees to make funds available to a customer in the future. 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 guarantees, 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, 2019			December 31, 2018
Guarantees			12,618,917			12,666,417
Loan commitments			103,651,674			97,796,704

- 54 -

(5)	Operational risk

The Group defines the operational risk that could cause a negative effect on capital resulting from inadequate internal process, labor work and systematic problem or external factors.

1)	Operational risk management

The Group has been running the operational risk management system under Basel II. The Group developed Advanced Measurement Approaches (“AMA”) to quantify required capital for operational risk. This system is used for reinforcement in foreign competitions, reducing the amount of risk capitals, managing the risk, and precaution for any unexpected occasions. This system has been tested by an independent third party and approved by the Financial Supervisory Service.

2)	Operational risk measurement

To quantify required capital for operational risk, the Group applies AMA using internal and external loss data, business environment and internal control factors, and scenario analysis. For the operational risk management for its subsidiaries, the Group adopted the Basic Indicator Approach.

(6)	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: Tier 1 common capital ratio of 7.00%, a Tier 1 capital ratio of 8.5% and a minimum total capital ratio of 10.5% as of December 31, 2019.

Details of the Group’s capital adequacy ratio as of December 31, 2019 are as follows (Unit: Korean Won in millions):


Tier 1 capital	19,135,300
Other Tier 1 capital	3,340,252
Tier 2 capital	4,639,519

Total risk-adjusted capital	27,115,071

Risk-weighted assets for credit risk	209,802,895
Risk-weighted assets for market risk	5,586,757
Risk-weighted assets for operational risk	12,656,301

Total risk-weighted assets	228,045,953

Common Equity Tier 1 ratio	8.39	%

Tier 1 capital ratio	9.86	%

Total capital ratio	11.89	%

- 55 -

5.	OPERATING SEGMENTS

In evaluating the results of the Group and allocating resources, the Group’s Chief Operation Decision Maker (“CODM”) utilizes the information per type of customers. With the establishment of Woori Financial Group Inc. during the current term, the company reports to the CODM according to the organizational sectors below. 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 organization

The Group’s reporting segments consist of banking, credit card, comprehensive finance and other sectors, and the composition of such reporting segments was divided based on internal report data periodically reviewed by the management to evaluate the performance of the segment and make decisions on the resources to be distributed.

		Operational scope
Banking<br>Credit card<br> Investment<br>banking<br>Others		Loans/deposits and relevant services for Woori Bank and overseas subsidiaries’ customers Credit card, cash services, card loans and<br>relevant work of Woori Card Co., Ltd.<br> <br>Securities operation, sale of financial instruments, project financing and other related activities for comprehensive<br>financing of Woori Investment bank Co., Ltd.<br> <br>Woori Financial Group Inc., Woori FIS Co., Ltd., Woori Finance Research Institute, Woori Credit Information<br>Co., Ltd., Woori Fund Services Inc., Woori Asset Management Corp., Ltd., Woori Private Equity Asset Management Co., Ltd., Woori Global Asset Management Co., Ltd.
(2)	The details of income (expense) by each segment are as follows (Unit: Korean Won in millions):<br>
---	---
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Banking			Credit card			Investment<br>banking			Others (*1)			Sub-total			Adjustments<br>(*2)			Total
Net Interest income (expense)			4,583,386			553,956			54,077			2,290			5,193,709			699,997			5,893,706
Non-interest income (expense)			1,557,247			31,842			33,539			957,880			2,580,508			(1,533,917	)		1,046,591
Impairment losses due to credit loss			(32,621	)		(259,604	)		(572	)		(538	)		(293,335	)		(80,909	)		(374,244	)
General and administrative expense (*3)			(3,478,535	)		(190,062	)		(31,183	)		(323,528	)		(4,023,308	)		257,231			(3,766,077	)
Net operating income (expense)			2,629,477			136,132			55,861			636,104			3,457,574			(657,598	)		2,799,976

Non-operating income (expense)			(151,348	)		13,889			(3,501	)		(1,545	)		(142,505	)		65,578			(76,927	)

Net income (expense) before tax			2,478,129			150,021			52,360			634,559			3,315,069			(592,020	)		2,723,049
Tax income (expense)			(616,110	)		(35,825	)		998			(1,294	)		(652,231	)		(33,222	)		(685,453	)

Net income (loss)			1,862,019			114,196			53,358			633,265			2,662,838			(625,242	)		2,037,596

(*1)	Other subsidiaries include gains and losses from Woori Financial Group Inc., Woori FIS Co., Ltd., Woori Finance<br>Research Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Inc., Woori Asset Management Corp., Woori Private Equity Asset Management Co., Ltd. and Woori Global Asset Management Co., Ltd.
---	---
(*2)	Adjustments were made for the presentation of profit or loss in accordance with the Accounting Standards from<br>the reporting segments in accordance with the Managerial Accounting Standards.
---	---
(*3)	Depreciation and amortization 481,176 million won are included in General and administrative expense. There are<br>the Banking (435,227 million), Credit card (28,367 million), Investment banking (2,212 million won), others (16,492 million) and adjustments ((-) 1,122 million) respectively.
---	---

- 56 -

		For the year ended December 31, 2018 (*1)
		Banking			Credit card			Investment<br>Banking			Others (*2)			Reporting<br>segment total			Adjustments<br>(*3)			Total
Net Interest income (expense)			4,453,511			509,999			43,081			1,142			5,007,732			643,219			5,650,951
Non-interest income (expense)			1,517,141			59,971			19,814			297,196			1,894,122			(832,165	)		1,061,957
Impairment losses due to credit loss			4,913			(227,144	)		(3,898	)		(166	)		(226,296	)		(103,278	)		(329,574	)
General and administrative expense (*4)			(3,416,320	)		(170,765	)		(26,081	)		(292,826	)		(3,905,993	)		281,960			(3,624,033	)
Net operating income (expense)			2,559,245			172,060			32,915			5,345			2,769,565			(10,264	)		2,759,301

Non-operating income (expense)			69,897			(5,547	)		(295	)		199			64,255			(18,684	)		45,571

Net income (expense) before tax			2,629,142			166,513			32,621			5,545			2,833,821			(28,949	)		2,804,872
Tax income (expense)			(713,178	)		(39,979	)		743			(2,238	)		(754,651	)		1,428			(753,223	)

Net income (loss)			1,915,964			126,534			33,364			3,307			2,079,169			(27,520	)		2,051,649

(*1)	For comparative display, the category information of each customer from the previous term has been reclassified<br>to profit or loss by operating segment according to the organization.
---	---
(*2)	Other subsidiaries include gains and losses from Woori FIS Co., Ltd., Woori Finance Research Co., Ltd., Woori<br>Credit Information Co., Ltd., Woori Fund Service Inc. and Woori Private Equity Asset Management Co., Ltd.
---	---
(*3)	Adjustments were made for the presentation of profit or loss in accordance with the Accounting Standards from<br>the reporting segments in accordance with the Managerial Accounting Standards.
---	---
(*4)	Depreciation and amortization 216,735 million won are included in General and administrative expense. There are<br>the Banking (177,882 million), Credit card (11,477 million), Investment banking (977 million won), others (26,398 million) and adjustments (1 million), respectively.
---	---
(3)	Operating profit or loss and major non-current assets from external<br>customers for the period are as follows (Unit: Korean Won in millions):
---	---
		For the year ended December 31, 2019
---	---	---	---	---	---	---
		Operating income (expense) from external<br>customers			Major non-current assets (*)
Domestic			2,500,504			4,908,140
Foreign			299,472			387,284

Total			2,799,976			5,295,424

(*)	Investments in joint ventures and associates, investment properties, premises and equipment and intangible<br>assets and right-of-use assets are included in major non-current assets.
---	---
		For the year ended December 31, 2018
---	---	---	---	---	---	---
		Operating income (expense) from external<br>customers			Major non-current assets (*)
Domestic			2,505,813			3,551,924
Foreign			253,488			236,050

Total			2,759,301			3,787,974

(*)	Investments in joint ventures and associates, investment properties, premises and equipment and intangible<br>assets and right-of-use assets are included in major non-current assets.
---	---
(4)	Information about major customers
---	---

The Group does not have any single customer that generates 10% or more of the Group’s total revenue as of December 31, 2019 and 2018.

- 57 -

6.	STATEMENTS OF CASH FLOWS
(1)	Details of cash and cash equivalents are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Cash			1,957,997			2,107,861
Foreign currencies			625,999			725,083
Demand deposits			3,684,044			3,512,216
Fixed deposits			124,526			402,734

Total			6,392,566			6,747,894

(2)	Significant transactions of investing activities and financing activities not involving cash inflows and<br>outflows are as follows (Unit: Korean Won in millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---	---	---
		2019				2018
Changes in other comprehensive income related to valuation of financial assets at FVTOCI			(14,141	)			2,505
Changes in other comprehensive income related to valuation of equity method investments			613				2,958
Changes in other comprehensive income related to valuation loss on cash flow hedge			(1,823	)			(4,646	)
Changes in equity related to assets held for sale			—				(4,145	)
Changes in financial assets at FVTOCI as a result of debt-equity swap			96,527				14,378
Changes in investments in associates due to accounts transfer			651				(89,151	)
Classified to premises and equipment from investment properties			166,892				—
Changes in intangible assets related to account payables			29,705				—
Classified to assets held for distribution (sale) from premises and equipment			(95	)			6,243
Increase in<br>right-of-use assets and lease liabilities			692,103				—
Changes in unpaid dividends on hybrid equity securities			—				3,569
Comprehensive stock exchange			581,609				—

- 58 -

(3)	Adjustments of liabilities from financing activities in current and prior year are as follows (Unit: Korean Won<br>in millions):
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Beginning<br>balance			Cash flow			Not involving cash inflows and outflows												Ending<br>balance
								Foreign<br>Exchange			Variation of<br>gains on<br>valuation of<br>hedged<br>items			Business<br>Combination<br>(Note 45)			Others
Borrowings			16,202,986			3,081,757			(285,607	)		—			—			(216	)		18,998,920
Debentures			28,735,862			1,858,762			155,433			85,984			—			22,014			30,858,055
Lease liabilities (*)			377,030			(217,867	)		(819	)		—			5,552			255,149			419,045

Total			45,315,878			4,722,652			(130,993	)		85,984			5,552			276,947			50,276,020

(*) The amount of lease liability at the beginning of the current in applying K-IFRS 1116 is reflected.

		For the year ended December 31, 2018
		Beginning<br>balance			Cash flow		Not involving cash inflows and outflows							Ending<br>balance
							Foreign<br>Exchange		Variation of<br>gains on<br>valuation of<br>hedged items			Others
Borrowings			14,784,706			1,257,121		161,078		—			81		16,202,986
Debentures			27,869,651			612,331		267,339		(25,498	)		12,039		28,735,862

Total			42,654,357			1,869,452		428,417		(25,498	)		12,120		44,938,848

7.	FINANCIAL ASSETS AT FVTPL
---	---
(1)	Details of financial assets at FVTPL as of December 31, 2019 and 2018 are as follows (Unit: Korean Won in<br>millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Financial assets at fair value through profit or loss measured at fair value			8,069,144			6,126,316
(2)	Financial assets at fair value through profit or loss mandatorily measured at fair value and financial assets<br>held for trading are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Deposits:
Gold banking asset			27,901			26,935
Securities:
Debt securities
Korean treasury and government agencies			872,954			516,173
Financial institutions			600,303			533,393
Corporates			762,265			774,589
Others			101,563			—
Equity securities			688,350			455,666
Capital contributions			515,199			422,614
Beneficiary certificates			1,366,233			985,417

Sub-total			4,906,867			3,687,852

Loans			212,473			385,450
Derivatives assets			2,921,903			2,026,079

Total			8,069,144			6,126,316

(3)	Financial assets at fair value through profit or loss designated as upon initial recognition is nil as of<br>December 31, 2018 and 2019.
---	---

- 59 -

8.	FINANCIAL ASSETS AT FVTOCI
(1)	Details of financial assets at FVTOCI as of December 31, 2019 and 2018 is as follows (Unit: Korean Won in<br>millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Debt securities:
Korean treasury and government agencies			1,152,711			1,358,378
Financial institutions			17,769,924			11,252,790
Corporates			3,917,004			1,824,843
Bond denominated in foreign currencies			3,874,785			2,636,209

Sub-total			26,714,424			17,072,220

Equity securities			935,370			951,174
Securities loaned			80,737			40,029

Total			27,730,531			18,063,423

(2)	Details of equity securities designated as financial assets at FVTOCI as of December 31, 2019 and 2018 are<br>as follows (Unit: Korean Won in millions):
---	---
Purpose of acquisition		December 31, 2019			December 31, 2018			Remarks
---	---	---	---	---	---	---	---	---	---
Investment for strategic business partnership purpose			678,846			662,934
Debt-equity swap			256,480			287,990
Others			44			250			Cooperative insurance, etc.

Total			935,370			951,174

(3)	Changes in the loss allowance and gross carrying amount of financial assets at FVTOCI are as follows (Unit:<br>Korean Won in millions):
---	---
1)	Allowance for credit losses
---	---
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2				Stage 3			Total
Beginning balance			(5,939	)			(238	)			—			(6,177	)
Transfer to 12-month expected credit losses			—				—				—			—
Transfer to lifetime expected credit losses			—				—				—			—
Transfer to credit-impaired financial assets			—				—				—			—
Net provision of loss allowance			(3,297	)			—				—			(3,297	)
Disposal			615				238				—			853
Others (*)			52				—				—			52

Ending balance			(8,569	)			—				—			(8,569	)

(*)	Others consist of foreign currencies translation, etc.
---	---
		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2				Stage 3			Total
Beginning balance			(4,107	)			(129	)			—			(4,236	)
Transfer to 12-month expected credit losses			—				—				—			—
Transfer to lifetime expected credit losses			—				—				—			—
Transfer to credit-impaired financial assets			—				—				—			—
Net provision of loss allowance			(1,918	)			(109	)			—			(2,027	)
Others (*)			86				—				—			86

Ending balance			(5,939	)			(238	)			—			(6,177	)

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

- 60 -

2)	Gross carrying amount
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2				Stage 3			Total
Beginning balance			17,087,096				25,153				—			17,112,249
Transfer to 12-month expected credit losses			—				—				—			—
Transfer to lifetime expected credit losses			—				—				—			—
Transfer to credit-impaired financial assets			—				—				—			—
Acquisition			23,774,375				—				—			23,774,375
Disposal / Redemption			(14,224,358	)			(25,000	)			—			(14,249,358	)
Gain (loss) on valuation			48,956				(153	)			—			48,803
Amortization based on effective interest method			14,629				—				—			14,629
Business combination (Note 45)			24,985				—				—			24,985
Others (*)			69,478				—				—			69,478

Ending balance			26,795,161				—				—			26,795,161

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

	For the year ended December 31, 2018
	Stage 1			Stage 2			Stage 3		Total
Beginning balance		12,843,997			30,212			—		12,874,209
Transfer to 12-month expected credit losses		—			—			—		—
Transfer to lifetime expected credit losses		—			—			—		—
Transfer to credit-impaired financial assets		—			—			—		—
Acquisition		13,275,429			10,000			—		13,285,429
Disposal / Redemption		(9,146,307	)		(15,047	)		—		(9,161,354	)
Gain (loss) on valuation		70,017			(59	)		—		69,958
Amortization based on effective interest method		10,195			47			—		10,242
Others (*)		33,765			—			—		33,765

Ending balance		17,087,096			25,153			—		17,112,249

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

(4)	During the term, the Group sold its equity securities., designated as financial assets at FVTOCI in accordance<br>with the sale settlement of the creditors and the fair value at disposal is 34,841 million Won and the cumulative loss at disposal is 38,995 million Won.
9.	SECURITIES AT AMORTIZED COST
---	---
(1)	Details of securities at amortized cost as of December 31, 2019 and December 31, 2018 are as follows<br>(Unit: Korean Won in millions):
---	---
		December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---
Korean treasury and government agencies			8,044,040				7,523,458
Financial institutions			6,694,614				9,474,922
Corporates			5,068,489				5,707,063
Bond denominated in foreign currencies			518,907				234,041
Allowance for credit losses			(5,511	)			(6,925	)

Total			20,320,539				22,932,559

- 61 -

(2)	Changes in the loss allowance and gross carrying amount of securities at amortized cost are as follows (Unit:<br>Korean Won in millions):
1)	Loss allowance
---	---
		For the years ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2			Stage 3			Total
Beginning balance			(6,924	)			—			—			(6,924	)
Transfer to 12-month expected credit losses			—				—			—			—
Transfer to lifetime expected credit losses			—				—			—			—
Transfer to credit-impaired financial assets			—				—			—			—
Net reversal of loss allowance			1,415				—			—			1,415
Others (*)			(2	)			—			—			(2	)

Ending balance			(5,511	)			—			—			(5,511	)

(*)	Others consist of foreign currencies translation, etc.
---	---
		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2			Stage 3			Total
Beginning balance			(5,078	)			—			—			(5,078	)
Transfer to 12-month expected credit losses			—				—			—			—
Transfer to lifetime expected credit losses			—				—			—			—
Transfer to credit-impaired financial assets			—				—			—			—
Net provision of loss allowance			(1,922	)			—			—			(1,922	)
Disposal			22				—			—			22
Others (*)			54				—			—			54

Ending balance			(6,924	)			—			—			(6,924	)

(*)	Others consist of foreign currencies translation, etc.
---	---
2)	Gross carrying amount
---	---
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2			Stage 3			Total
Beginning balance			22,939,484				—			—			22,939,484
Transfer to 12-month expected credit losses			—				—			—			—
Transfer to lifetime expected credit losses			—				—			—			—
Transfer to credit-impaired financial assets			—				—			—			—
Acquisition			6,092,078				—			—			6,092,078
Disposal/Redemption			(8,709,947	)			—			—			(8,709,947	)
Amortization based on effective interest method			(3,286	)			—			—			(3,286	)
Others (*)			7,721				—			—			7,721

Ending balance			20,326,050				—			—			20,326,050

(*)	Others consist of foreign currencies translation, etc.
---	---
		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2			Stage 3			Total
Beginning balance			16,749,296				—			—			16,749,296
Transfer to 12-month expected credit losses			—				—			—			—
Transfer to lifetime expected credit losses			—				—			—			—
Transfer to credit-impaired financial assets			—				—			—			—
Acquisition			15,622,847				—			—			15,622,847
Disposal/Redemption			(9,426,757	)			—			—			(9,426,757	)
Amortization based on effective interest method			(7,970	)			—			—			(7,970	)
Others (*)			2,068				—			—			2,068

Ending balance			22,939,484				—			—			22,939,484

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

- 62 -

10.	LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST, AND LOANS AND RECEIVABLES
(1)	Details of loans and other financial assets at amortized cost as of December 31, 2019 and loans and<br>receivables as of December 31, 2018 are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Due from banks			14,492,223			14,151,012
Loans			271,032,244			260,819,917
Other financial assets			8,193,226			7,486,649

Total			293,717,693			282,457,578

(2)	Details of due from banks are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---
Due from banks in local currency:
Due from The Bank of Korea (“BOK”)			11,028,850				11,034,602
Due from depository banks			82,509				90,988
Due from non-depository institutions			378				76
Due from the Korea Exchange			50,113				30,000
Others			43,253				85,915
Loss allowance			(2,865	)			(3,069	)

Sub-total			11,202,238				11,238,512

Due from banks in foreign currencies:
Due from banks on demand			1,122,521				828,022
Due from banks on time			1,296,842				1,288,303
Others			872,617				798,493
Loss allowance			(1,995	)			(2,318	)

Sub-total			3,289,985				2,912,500

Total			14,492,223				14,151,012

- 63 -

(3)	Details of restricted due from banks are as follows (Unit: Korean Won in millions):
		Counterparty		Amount			Reason of restriction
---	---	---	---	---	---	---	---
Due from banks in local currencies:
Due from BOK		The BOK			11,028,850		Reserve deposits under the BOK Act
Due from SEC		Korea Securities Finance Corp.			50,000		Customer’s deposit reserve
Others		The Korea Exchange and others			41,645		Central counterparty KRW margin and others

Sub-total					11,120,495

Due from banks in foreign currencies:
Due from banks on demand		The BOK and others			1,103,917		Reserve deposits under the BOK Act and others
Foreign currency deposits on time		National Bank Cambodia			58		Reserve deposits and others
Others		Korea Investment & Securities and others			872,603		Overseas futures and options trade deposits and others

Sub-total					1,976,578

Total					13,097,073

		Counterparty		December 31, 2018			Reason of restriction
---	---	---	---	---	---	---	---
Due from banks in local currencies:
Due from BOK		The BOK			11,034,602		Reserve deposits under the BOK Act
Due from SEC		Korea Securities Finance Corp.			30,000		Customer’s deposit reserve
Others		The Korea Exchange and others			51,889		Central counterparty KRW margin and others

Sub-total					11,116,491

Due from banks in foreign currencies:
Due from banks on demand		The BOK and others			780,576		Reserve deposits under the BOK Act and others
Others		The People’s Bank of China and others			798,493		Reserve deposits and others

Sub-total					1,579,069

Total					12,695,560

- 64 -

(4)	Changes in the loss allowance and gross carrying amount of due from banks are as follows (Unit: Korean won in<br>millions):
1)	Allowance for credit losses
---	---
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2			Stage 3			Total
Beginning balance			(5,387	)			—			—			(5,387	)
Transfer to 12-month expected credit losses			—				—			—			—
Transfer to lifetime expected credit losses			—				—			—			—
Transfer to credit-impaired financial assets			—				—			—			—
Reversal of loss allowance			544				—			—			544
Others (*)			(17	)			—			—			(17	)

Ending balance			(4,860	)			—			—			(4,860	)

(*)	Others consist of foreign currencies translation, etc.
---	---
		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2			Stage 3			Total
Beginning balance			(3,092	)			—			—			(3,092	)
Transfer to 12-month expected credit losses			—				—			—			—
Transfer to lifetime expected credit losses			—				—			—			—
Transfer to credit-impaired financial assets			—				—			—			—
Net provision of loss allowance			(2,219	)			—			—			(2,219	)
Others (*)			(76	)			—			—			(76	)

Ending balance			(5,387	)			—			—			(5,387	)

(*)	Others consist of foreign currencies translation, etc.
---	---
2)	Gross carrying amount
---	---
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2			Stage 3			Total
Beginning balance			14,156,399				—			—			14,156,399
Transfer to 12-month expected credit losses			—				—			—			—
Transfer to lifetime expected credit losses			—				—			—			—
Transfer to credit-impaired financial assets			—				—			—			—
Net increase (decrease)			313,991				—			—			313,991
Business combination (Note 45)			35,910				—			—			35,910
Others (*)			(9,217	)			—			—			(9,217	)

Ending balance			14,497,083				—			—			14,497,083

(*)	Others consist of foreign currencies translation, etc.
---	---
		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2			Stage 3			Total
Beginning balance			8,870,835				—			—			8,870,835
Transfer to 12-month expected credit losses			—				—			—			—
Transfer to lifetime expected credit losses			—				—			—			—
Transfer to credit-impaired financial assets			—				—			—			—
Net increase (decrease)			5,302,244				—			—			5,302,244
Others (*)			(16,680	)									(16,680	)

Ending balance			14,156,399				—			—			14,156,399

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

- 65 -

(5)	Details of loans are as follows (Unit: Korean won in millions):
		December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---
Loans in local currency			221,484,049				210,701,421
Loans in foreign currencies			18,534,270				15,239,032
Domestic banker’s usance			2,899,651				2,934,366
Credit card accounts			8,398,605				8,051,384
Bills bought in foreign currencies			4,772,093				7,874,457
Bills bought in local currency			61,362				22,885
Factoring receivables			20,905				45,851
Advances for customers on guarantees			12,616				13,810
Private placement bonds			307,339				365,531
Securitized loans			2,250,042				1,377,072
Call loans			3,290,167				2,669,080
Bonds purchased under resale agreements			8,981,752				11,701,951
Others			980,448				1,037,283
Loan origination costs and fees			620,791				574,178
Discounted present value			(6,826	)			(10,308	)
Allowance for credit losses			(1,575,020	)			(1,778,076	)

Total			271,032,244				260,819,917

(6)	Changes in the loss allowance of loans are as follows (Unit: Korean won in millions):
---	---
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Consumers									Corporates
		Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance			(114,509	)		(48,368	)		(129,906	)		(348,311	)		(349,619	)		(527,673	)
Transfer to 12-month expected credit losses			(14,430	)		13,661			769			(58,537	)		49,884			8,653
Transfer to lifetime expected credit losses			14,022			(15,332	)		1,310			8,215			(20,473	)		12,258
Transfer to credit-impaired financial assets			8,603			10,312			(18,915	)		3,308			17,852			(21,160	)
Net reversal (provision) of loss allowance			21,802			(38,203	)		(146,204	)		86,565			6,855			(75,392	)
Recovery			—			—			(61,914	)		—			—			(66,359	)
Charge-off			—			—			217,382			—			—			222,537
Disposal			—			—			2,763			—			1			42,095
Interest income from impaired loans			—			—			9,647			—			—			17,887
Business combination (Note 45)			—			—			—			(9	)		(2,008	)		(3,150	)
Others (*)			(636	)		(32	)		(520	)		(15,489	)		(210	)		259

Ending balance			(85,148	)		(77,962	)		(125,588	)		(324,258	)		(297,718	)		(390,045	)

		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Credit card accounts									Total
		Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance			(64,787	)		(78,131	)		(116,772	)		(527,607	)		(476,118	)		(774,351	)
Transfer to 12-month expected credit losses			(15,712	)		15,231			481			(88,679	)		78,776			9,903
Transfer to lifetime expected credit losses			6,031			(6,317	)		286			28,268			(42,122	)		13,854
Transfer to credit-impaired financial assets			98,647			94,116			(192,763	)		110,558			122,280			(232,838	)
Net reversal (provision) of loss allowance			(98,888	)		(96,434	)		(40,343	)		9,479			(127,782	)		(261,939	)
Recovery			—			—			(60,365	)		—			—			(188,638	)
Charge-off			—			—			281,420			—			—			721,339
Disposal			—			—			—			—			1			44,858
Interest income from impaired loans			—			—			—			—			—			27,534
Business combination (Note 45)			—			—			—			(9	)		(2,008	)		(3,150	)
Others (*)			(17	)		2			14			(16,142	)		(240	)		(247	)

Ending balance			(74,726	)		(71,533	)		(128,042	)		(484,132	)		(447,213	)		(643,675	)

(*)	Changes due to debt-equity swap, foreign currencies translation, and etc.
---	---

- 66 -

		For the year ended December 31, 2018
		Consumers									Corporates
		Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance			(101,479	)		(41,358	)		(117,168	)		(365,251	)		(255,922	)		(905,243	)
Transfer to 12-month expected credit losses			(9,848	)		8,966			882			(24,324	)		22,658			1,666
Transfer to lifetime expected credit losses			5,905			(7,183	)		1,278			15,074			(407,780	)		392,706
Transfer to credit-impaired financial assets			79,078			47,343			(126,421	)		62,731			97,750			(160,481	)
Net reversal (provision) of loss allowance			(86,224	)		(56,164	)		(49,637	)		(68,381	)		193,392			(94,004	)
Recovery			—			—			(51,855	)		—			—			(127,630	)
Charge-off			—			—			204,552			—			—			290,109
Disposal			—			33			1,633			—			237			49,902
Interest income from impaired loans			—			—			7,945			—			—			23,381
Others (*)			(1,941	)		(5	)		(1,115	)		31,840			46			1,921

Ending balance			(114,509	)		(48,368	)		(129,906	)		(348,311	)		(349,619	)		(527,673	)

		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Credit card accounts									Total
		Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance			(57,134	)		(71,463	)		(102,858	)		(523,864	)		(368,743	)		(1,125,269	)
Transfer to 12-month expected credit losses			(13,846	)		13,738			108			(48,018	)		45,362			2,656
Transfer to lifetime expected credit losses			5,871			(6,194	)		323			26,850			(421,157	)		394,307
Transfer to credit-impaired financial assets			82,406			84,048			(166,454	)		224,215			229,141			(453,356	)
Net reversal (provision) of loss allowance			(82,083	)		(98,260	)		(33,205	)		(236,688	)		38,968			(176,846	)
Recovery			—			—			(57,565	)		—			—			(237,050	)
Charge-off			—			—			242,879			—			—			737,540
Disposal			—			—			—			—			270			51,535
Interest income from impaired loans			—			—			—			—			—			31,326
Others (*)			(1	)		—			—			29,898			41			806

Ending balance			(64,787	)		(78,131	)		(116,772	)		(527,607	)		(476,118	)		(774,351	)

(*)	Changes due to debt-equity swap, foreign currencies translation, and etc.
---	---

- 67 -

(7)	Changes in the gross carrying amount of loans are as follows (Unit: Korean won in millions):<br>
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Consumers									Corporates
		Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance			110,619,242			6,028,009			391,494			131,453,727			5,031,258			1,020,658
Transfer to 12-month expected credit losses			2,626,998			(2,614,767	)		(12,231	)		1,560,734			(1,550,164	)		(10,570	)
Transfer to lifetime expected credit losses			(8,238,499	)		8,256,600			(18,101	)		(2,306,186	)		2,341,881			(35,695	)
Transfer to credit-impaired financial assets			(152,128	)		(104,129	)		256,257			(252,249	)		(142,902	)		395,151
Charge-off			—			—			(217,382	)		—			—			(222,537	)
Disposal			—			(55	)		(67,924	)		—			(70	)		(161,318	)
Net increase (decrease)			6,397,570			883,149			85,561			3,985,392			(809,566	)		(266,432	)
Business combination (Note 45)			100			—			—			2,561			40,161			21,000

Ending balance			111,253,283			12,448,807			417,674			134,443,979			4,910,598			740,257

		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Credit card accounts									Total
		Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance			6,861,844			982,772			208,989			248,934,813			12,042,039			1,621,141
Transfer to 12-month expected credit losses			258,674			(258,166	)		(508	)		4,446,406			(4,423,097	)		(23,309	)
Transfer to lifetime expected credit losses			(307,100	)		307,450			(350	)		(10,851,785	)		10,905,931			(54,146	)
Transfer to credit-impaired financial assets			(124,675	)		(104,712	)		229,387			(529,052	)		(351,743	)		880,795
Charge-off			—			—			(281,420	)		—			—			(721,339	)
Disposal			—			—			—			—			(125	)		(229,242	)
Net increase (decrease)			589,724			(41,512	)		72,269			10,972,686			32,071			(108,602	)
Business combination (Note 45)			—			—			—			2,661			40,161			21,000

Ending balance			7,278,467			885,832			228,367			252,975,729			18,245,237			1,386,298

		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Consumers									Corporates
		Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance			103,502,347			5,487,758			326,739			131,096,396			4,466,354			1,622,409
Transfer to 12-month expected credit losses			1,921,485			(1,912,046	)		(9,439	)		1,081,702			(1,077,895	)		(3,807	)
Transfer to lifetime expected credit losses			(3,186,506	)		3,199,993			(13,487	)		(2,275,984	)		2,733,860			(457,876	)
Transfer to credit-impaired financial assets			(218,943	)		(127,447	)		346,390			(348,503	)		(275,189	)		623,692
Charge-off			—			—			(204,552	)		—			—			(290,109	)
Disposal			—			(478	)		(31,910	)		—			(2,781	)		(166,347	)
Net increase (decrease)			8,600,859			(619,771	)		(22,247	)		1,900,116			(813,091	)		(307,304	)

Ending balance			110,619,242			6,028,009			391,494			131,453,727			5,031,258			1,020,658

		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Credit card accounts									Total
		Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance			5,721,743			935,266			177,983			240,320,486			10,889,378			2,127,131
Transfer to 12-month expected credit losses			221,984			(221,841	)		(143	)		3,225,171			(3,211,782	)		(13,389	)
Transfer to lifetime expected credit losses			(287,623	)		288,027			(404	)		(5,750,113	)		6,221,880			(471,767	)
Transfer to credit-impaired financial assets			(104,459	)		(95,758	)		200,217			(671,905	)		(498,394	)		1,170,299
Charge-off			—			—			(242,879	)		—			—			(737,540	)
Disposal			—			—			—			—			(3,259	)		(198,257	)
Net increase (decrease)			1,310,199			77,078			74,215			11,811,174			(1,355,784	)		(255,336	)

Ending balance			6,861,844			982,772			208,989			248,934,813			12,042,039			1,621,141

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(8)	Details of other financial assets are as follows (Unit: Korean won in millions):
		December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---
CMA accounts			199,000				185,999
Receivables			5,653,997				4,864,738
Accrued income			1,012,240				1,002,964
Telex and telephone subscription rights and refundable deposits			949,118				986,834
Other receivables			456,010				514,055
Allowance for credit losses			(77,139	)			(67,941	)

Total			8,193,226				7,486,649

(9)	Changes in the allowances for credit losses on other financial assets are as follows (Unit: Korean won in<br>millions):
---	---
		For the year ended December 30, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2				Stage 3				Total
Beginning balance			(3,469	)			(1,971	)			(62,501	)			(67,941	)
Transfer to 12-month expected credit losses			(207	)			198				9				—
Transfer to lifetime expected credit losses			116				(43	)			(73	)			—
Transfer to credit-impaired financial assets			19				159				(178	)			—
Net reversal (provision) of loss allowance			802				(9	)			(6,854	)			(6,061	)
Charge-off			—				—				2,506				2,506
Disposal			—				—				1,685				1,685
Business combination (Note 45)			(401	)			—				(7,268	)			(7,669	)
Others			(56	)			—				397				341

Ending balance			(3,196	)			(1,666	)			(72,277	)			(77,139	)

		For the year ended December 30, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2				Stage 3				Total
Beginning balance			(2,955	)			(1,832	)			(54,211	)			(58,998	)
Transfer to 12-month expected credit losses			(150	)			139				11				—
Transfer to lifetime expected credit losses			105				(416	)			311				—
Transfer to credit-impaired financial assets			6,509				304				(6,813	)			—
Net provision of loss allowance			(6,583	)			(166	)			(31,550	)			(38,299	)
Charge-off			—				—				28,200				28,200
Disposal			—				1				1,264				1,265
Others			(395	)			(1	)			287				(109	)

Ending balance			(3,469	)			(1,971	)			(62,501	)			(67,941	)

(10)	Changes in the gross carrying amount of other financial assets are as follows (Unit: Korean won in millions):<br>
---	---
		For the year ended December 30, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2				Stage 3				Total
Beginning balance			7,454,390				28,193				72,007				7,554,590
Transfer to 12-month expected credit losses			8,036				(8,019	)			(17	)			—
Transfer to lifetime expected credit losses			(17,678	)			17,740				(62	)			—
Transfer to credit-impaired financial assets			(952	)			(918	)			1,870				—
Charge-off			—				—				(2,506	)			(2,506	)
Disposal			—				—				(2,212	)			(2,212	)
Net increase (decrease)			606,457				55,651				41,138				703,246
Business combination (Note 45)			9,591				—				7,656				17,247

Ending balance			8,059,844				92,647				117,874				8,270,365

		For the year ended December 30, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2				Stage 3				Total
Beginning balance			6,662,335				29,124				79,912				6,771,371
Transfer to 12-month expected credit losses			7,573				(7,556	)			(17	)			—
Transfer to lifetime expected credit losses			(11,418	)			11,734				(316	)			—
Transfer to credit-impaired financial assets			(7,580	)			(1,110	)			8,690				—
Charge-off			—				—				(28,201	)			(28,201	)
Disposal			—				(5	)			(1,640	)			(1,645	)
Net increase (decrease)			803,480				(3,994	)			13,579				813,065

Ending balance			7,454,390				28,193				72,007				7,554,590

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

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11.	FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
(1)	The fair value hierarchy
---	---

The fair value hierarchy is determined by the levels of judgment involved in estimating fair values of financial assets and liabilities. The specific financial instruments characteristics and market condition such as volume of transactions and transparency are reflected to the market observable inputs. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities. The Group maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value of its financial assets and financial liabilities. Fair value is measured based on the perspective of a market participant. As such, even when market assumptions are not readily available, the Group’s own assumptions reflect those that market participants would use for measuring the assets or liabilities at the measurement date.

The fair value measurement is described in the 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<br>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<br>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<br>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<br>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<br>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.

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(2)	Fair value hierarchy of financial assets and liabilities measured at fair value are as follows (Unit: Korean<br>Won in millions):
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Level 1 (*)			Level 2 (*)			Level 3			Total
Financial assets:
Financial assets at fair value through profit or loss mandatorily measured at fair value
Deposits			27,901			—			—			27,901
Debt securities			420,330			1,910,929			5,826			2,337,085
Equity securities			157,895			1,834			528,621			688,350
Capital contributions			—			—			515,199			515,199
Beneficiary certificates			1			90,498			1,275,734			1,366,233
Loans			—			59,844			152,629			212,473
Derivative assets (Designated for trading)			3,057			2,893,798			25,048			2,921,903

Sub-total			609,184			4,956,903			2,503,057			8,069,144

Financial assets at FVTOCI
Debt securities			2,146,163			24,568,261			—			26,714,424
Equity securities			441,672			—			493,698			935,370
Securities loaned			—			80,737			—			80,737

Sub-total			2,587,835			24,648,998			493,698			27,730,531

Derivative assets (Designated for hedging)			—			121,131			—			121,131

Total			3,197,019			29,727,032			2,996,755			35,920,806

Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair<br>value
Deposits due to customers			27,530			—			—			27,530
Derivative liabilities (Designated for trading)			4,336			2,766,771			72,039			2,843,146

Sub-total			31,866			2,766,771			72,039			2,870,676

Financial liabilities at fair value through profit or loss designated as upon initial<br>recognition
Equity-linked securities			—			—			87,626			87,626

Derivative liabilities (Designated for hedging)			—			6,516			321			6,837

Total			31,866			2,773,287			159,986			2,965,139

(*)	There were no transfers between Level 1 and Level 2 of financial assets and liabilities measured at<br>fair value. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.
---	---

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		December 31, 2018
		Level 1 (*)		Level 2 (*)		Level 3		Total
Financial assets:
Financial assets at fair value through profit or loss mandatorily measured at fair value
Deposits			26,935		—		—		26,935
Debt securities			239,794		1,575,972		8,389		1,824,155
Equity securities			53,806		—		401,860		455,666
Capital contributions			—		—		422,614		422,614
Beneficiary certificates			2,130		128,988		854,299		985,417
Loans			—		205,000		180,450		385,450
Derivative assets (Designated for trading)			13,216		1,964,065		48,798		2,026,079

Sub-total			335,881		3,874,025		1,916,410		6,126,316

Financial assets at FVTOCI
Debt securities			1,838,409		15,233,811		—		17,072,220
Equity securities			482,327		—		468,847		951,174
Securities loaned			—		40,029		—		40,029

Sub-total			2,320,736		15,273,840		468,847		18,063,423

Derivative assets (Designated for hedging)			—		35,503		—		35,503

Total			2,656,617		19,183,368		2,385,257		24,225,242

Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair<br>value
Deposits due to customers			27,058		—		—		27,058
Derivative liabilities (Designated for trading)			2,245		2,071,925		16,691		2,090,861

Sub-total			29,303		2,071,925		16,691		2,117,919

Financial liabilities at fair value through profit or loss designated as upon initial<br>recognition
Equity-linked securities			—		—		164,767		164,767

Derivative liabilities (Designated for hedging)			—		51,408		—		51,408

Total			29,303		2,123,333		181,458		2,334,094

(*)	There were no transfers between Level 1 and Level 2 of financial assets and liabilities measured at<br>fair value. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.
---	---

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Financial assets and liabilities at fair value through profit or loss, 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:

①	Valuation methods and input variables for each type of financial instrument classified into level 2 in<br>December 31, 2019 and 2018 are as follows:
		Valuation methods		Input variables
---	---	---	---	---
Loans		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
Debt securities and Securities loaned		Fair value is measured by discounting the future cash flows of debt securities applying the risk-free market rate.		Risk-free market rate Credit spread
Beneficiary certificates		The beneficiary certificates classified as Level 2 are MMF and are measured at base price.		Base price
Derivatives		The fair value is measured through option model (Closed Form), DCF Model, FDM, Monte Carlo Simulation and etc.		Market rate, foreign exchange rate, stock prices and value of underlying assets, volatility, and etc.
②	Valuation methods and input variables for each type of financial instrument classified into level 3 in<br>December 31, 2019 and 2018 are as follows:
---	---
		Valuation methods		Input variables
---	---	---	---	---
Loans		The fair value of Loans is measured by the Binomial tree given the values of underlying assets and volatility.		Values of underlying assets, Volatility
Debt securities		The fair value is measured by discounting the projected cash flows of debt securities by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the issuers of the<br>securities.		Risk-free market rate, Credit spread
Equity securities, capital contributions and Beneficiary certificates		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, and Net Asset Value Method, more than one method is used<br>given the characteristic of the subject of fair value measurement.		Risk-free market rate, market risk premium, corporate Beta, etc.
Derivatives		Fair value is measured by models such as option model (Closed form), DCF model, FDM and Monte Carlo Simulation.		Market rate, values of underlying assets such as foreign exchange rate and stock prices, volatility, etc.
Equity-linked securities		Fair value is measured by models such as option model (Closed form), DCF model, FDM and Monte Carlo Simulation.		Values of underlying assets, market rate, dividend, volatility, correlation coefficient and foreign exchange rate, etc.

- 73 -

Valuation methods of financial assets and liabilities measured at fair value and classified into Level 3 and significant but unobservable inputs are as follows:

	Fair value measurement<br>technique	Type	Input variable	Range	Impact of changes in significant unobservable inputs on<br>fair<br>value measurement
Loans	Binomial tree, DCF		Stock, Volatility of underlying asset	14.50%~46.06%	Variation of fair value as volatility of underlying asset increases.
Derivative assets	Option valuation model and others	Interest rate related	Correlation coefficient	0.90~0.98	Variation of fair value increases as correlation coefficient increases.
			Volatility of underlying asset	16.30%~41.20%	Variation of fair value increases as volatility increases.
		Equity related	Correlation coefficient	0.237~0.675	Variation of fair value increases as correlation coefficient increases.
	DCF model	Currency related	Credit risk adjustment ratio	7.70%~100.00%	Variation of fair value increases as credit risk adjustment ratio increases.
Derivative liabilities	Option valuation model and others	Interest rate related	Correlation coefficient	0.90~0.98	Variation of fair value increases as correlation coefficient increases.
			Volatility of underlying asset	16.30%~41.20%	Variation of fair value increases as volatility increases.
		Equity related	Correlation coefficient	0.237~0.675	Variation of fair value increases as correlation coefficient increases.
			Volatility of underlying	21.40%~22.40%	Variation of fair value increases as volatility increases.
Equity-linked securities	Monte Carlo Simulation and others		Correlation coefficient	0.294~0.675	Equity-linked securities’ variation of fair value increases if both volatility and correlation coefficient increase. However, when correlation coefficient decreases despite the increase in volatility, the<br>variation of fair value of a compound financial instrument may decrease.
			Volatility of underlying asset	19.10%~25.30%
Equity securities, capital contributions, debt securities, and beneficiary<br>certificates	External appraisal value and others		Terminal growth rate	0.00%~ 9.15%	Fair value increases as terminal growth rate increases.
			Discount rate	0.35%~19.21%	Fair value increases as discount rate decreases.
			Volatility of real estate sale price	0.00	Fair value increases as real estate sale price increases.
			Volatility of underlying assets	13.21%~52.48%	Variation of fair value increases as volatility of underlying assets 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.

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(3)	Changes in financial assets and liabilities measured at fair value classified into Level 3 are as follows<br>(Unit: Korean Won in millions):
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		January 1,<br>2019			Business<br>combination			Net<br>Income<br>(loss) (*1)			Other<br>comprehensive<br>income			Purchases/<br>issuances			Disposals/<br>settlements			Transfer to<br>or out<br>Level 3 (*2)			December 31,<br>2019
Financial assets:
Financial assets at fair value through profit or loss mandatorily measured at fair value																					—
Debt securities			8,389			—			476			—			2,000			(5,039	)		—			5,826
Equity securities			401,860			—			59,537			—			95,511			(28,287	)		—			528,621
Capital contributions			422,614			707			(13,270	)		—			173,064			(67,916	)		—			515,199
Beneficiary certificates			854,299			—			18,450			—			578,228			(183,684	)		8,441			1,275,734
Loans			180,450			—			6,854			—			60,696			(95,371	)		—			152,629
Derivative assets			48,798			—			16,935			—			1,115			(40,343	)		(1,457	)		25,048

Sub-total			1,916,410			707			88,982			—			910,614			(420,640	)		6,984			2,503,057

Financial assets at FVTOCI
Equity securities			468,847			1,408			—			23,063			687			(306	)		(1	)		493,698

Total			2,385,257			2,115			88,982			23,063			911,301			(420,946	)		6,983			2,996,755

Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair<br>value
Derivative liabilities (Designated for trading)			16,691			—			84,033			—			(11,140	)		(14,817	)		(2,728	)		72,039
Financial liabilities at fair value through profit or loss designated as upon initial<br>recognition
Equity-linked securities			164,767			—			33,237			—			1,809			(112,187	)		—			87,626
Derivatives liabilities (designated for hedging)			—			—			—			—			321			—			—			321

Total			181,458			—			117,270			—			(9,010	)		(127,004	)		(2,728	)		159,986

(*1)	The losses that increase financial liabilities are presented as positive amounts, and the gains that decrease<br>financial liabilities are presented as negative amounts. The loss amounting to 21,809 million Won for the years ended December 31, 2019, which is from financial assets and liabilities that the Group holds as at the end of the periods, has<br>been recognized in net gain (loss) on financial assets at FVTPL and net gain (loss) on financial assets at FVTOCI in the consolidated statement of comprehensive income.
---	---
(*2)	The Group recognizes transfers between levels at the end of reporting period within which events have occurred<br>or conditions have changed.
---	---

- 75 -

		For the year ended December 31, 2018
		January 1,<br>2018		Net<br>Income<br>(loss) (*1)			Other<br>comprehensive<br>income		Purchases/<br>issuances		Disposals/<br>settlements			Transfer to<br>or out of<br>Level 3 (*2)			December 31,<br>2018
Financial assets:
Financial assets at fair value through profit or loss mandatorily measured at fair value
Debt securities			9,694		(28	)		—		3,000		(4,277	)		—			8,389
Equity securities			280,171		56,271			—		67,953		(2,535	)		—			401,860
Capital contributions			294,121		16,119			—		144,207		(31,833	)		—			422,614
Beneficiary certificates			654,066		16,391			—		5,151,535		(4,971,003	)		3,310			854,299
Loans			165,001		3,378			—		150,103		(138,032	)		—			180,450
Derivative assets			19,346		75,696			—		4,722		(50,966	)		—			48,798

Sub-total			1,422,399		167,827			—		5,521,520		(5,198,646	)		3,310			1,916,410

Financial assets at FVTOCI
Equity securities			451,287		—			19,688		432		(2,560	)		—			468,847

Total			1,873,686		167,827			19,688		5,521,952		(5,201,206	)		3,310			2,385,257

Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair<br>value
Derivative liabilities			20,951		46,409			—		255		(50,921	)		(3	)		16,691
Financial liabilities at fair value through profit or loss designated as upon initial<br>recognition
Equity-linked securities			160,057		(16,243	)		—		183,039		(162,086	)		—			164,767

Total			181,008		30,166			—		183,294		(213,007	)		(3	)		181,458

(*1)	The losses that increase financial liabilities are presented as positive amounts, and the gains that decrease<br>financial liabilities are presented as negative amounts. The gain amounting to 137,777 million Won for the years ended December 31, 2018, which is from financial assets and liabilities that the Group holds as at the end of the periods, has<br>been recognized in net gain (loss) on financial assets at FVTPL and net gain (loss) on financial assets at FVTOCI in the consolidated statement of comprehensive income.
---	---
(*2)	The Group recognizes transfers between levels at the end of reporting period within which events have occurred<br>or conditions have changed.
---	---

- 76 -

(4)	Sensitivity analysis on the unobservable inputs used for measuring Level 3 financial instruments<br>

The sensitivity analysis of the financial instruments has been performed by classifying with favorable and unfavorable changes based on how changes in unobservable assumptions would have effects on the fluctuations of financial instruments’ value. When the fair value of a financial instrument is affected by more than one unobservable assumption, the below table reflects the most favorable or the most unfavorable changes which resulted from varying the assumptions individually. 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.

Among the financial instruments that are classified as Level 3 amounting to 3,156,741 million Won and 2,566,715 million Won as of December 31, 2019 and 2018 respectively, equity investments of 2,194,320 million Won and 1,641,875 million Won that are considered to provide the best estimate of fair value are excluded from the sensitivity analysis.

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, 2019
		Net income (loss)					Other comprehensive income (loss)
		Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at fair value through profit or loss mandatorily measured at fair value
Derivative assets (*1)			640		(935	)		—		—
Loans (*2)			152		(128	)		—		—
Debt securities			652		(640	)		—		—
Equity securities (3) (4)			16,104		(10,929	)		—		—
Beneficiary certificates (*4)			1,125		(1,125	)		—		—
Financial assets at FVTOCI
Equity securities (3) (4)			—		—			26,380		(11,981	)

Total			18,673		(13,757	)		26,380		(11,981	)

Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair<br>value
Derivative liabilities (*1)			1,054		(816	)		—		—
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities (*1)			136		(142	)		—		—

Total			1,190		(958	)		—		—

(*1)	Fair value changes of equity related derivatives assets and liabilities and equity-linked securities are<br>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<br>are calculated by increasing or decreasing the volatility of interest rate, which are major unobservable variables, by 10%.
---	---
(*2)	Fair value changes of equity securities are calculated by increasing or decreasing stock prices (-10%~10%) and volatility (-10~10%) and discount rate. The stock prices, volatility, and discount rate are major unobservable variables.
---	---
(*3)	Fair value changes of equity securities are calculated by increasing or decreasing growth rate (0~1%) and<br>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<br>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<br>and discount rate by 1%.
---	---

- 77 -

		December 31, 2018
		Net income (loss)					Other comprehensive income (loss)
		Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at fair value through profit or loss mandatorily measured at fair value
Derivative assets (*1)			4,578		(4,352	)		—		—
Loans			146		(127	)		—		—
Debt securities			68		(35	)		—		—
Equity securities (2) (3)			12,700		(9,165	)		—		—
Beneficiary certificates (*3)			1,582		(1,582	)		—		—
Financial assets at FVTOCI
Equity securities (2) (3)			—		—			23,798		(10,078	)

Total			19,074		(15,261	)		23,798		(10,078	)

Financial liabilities:
Financial liabilities at fair value through profit or loss mandatorily measured at fair<br>value
Derivative liabilities (*1)			2,433		(2,751	)		—		—
Financial liabilities at fair value through profit or loss designated as upon initial<br>recognition
Equity-linked securities (*1)			1,561		(1,669	)		—		—

Total			3,994		(4,420	)		—		—

(*1)	Fair value changes of equity related derivatives assets and liabilities and equity-linked securities are<br>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<br>are calculated by increasing or decreasing the volatility of interest rate, which are major unobservable variables, by 10%.
---	---
(*2)	Fair value changes of equity securities are calculated by increasing or decreasing growth rate (0~1%) and<br>discount rate or liquidation value (-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.
---	---
(*3)	Even if the sensitivity analysis of the capital contributions and beneficiary certificates is not possible in<br>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<br>and discount rate by 1%.
---	---

- 78 -

(5)	Fair value and carrying amount of financial assets and liabilities that are recorded at amortized cost are as<br>follows (Unit: Korean Won in millions):
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Fair value												Book<br>value
		Level 1			Level 2			Level 3			Total
Financial assets:
Securities at amortized cost			3,123,898			17,378,920			—			20,502,818			20,320,539
Loans and other financial assets at amortized cost			25,902			54,507			283,058,699			283,139,108			293,711,693
Financial liabilities:
Deposits due to customers			—			264,909,974			—			264,909,974			264,685,578
Borrowings			—			18,919,018			—			18,919,018			18,998,920
Debentures			—			31,173,189			—			31,173,189			30,858,055
Other financial liabilities			—			17,693,559			—			17,693,559			17,706,767
		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Fair value												Book<br>value
		Level 1			Level 2			Level 3			Total
Financial assets:
Securities at amortized cost			3,618,213			19,417,130			—			23,035,343			22,932,559
Loans and other financial assets at amortized cost			—			—			282,342,760			282,342,760			282,457,578
Financial liabilities:
Deposits due to customers			—			248,763,952			—			248,763,952			248,690,939
Borrowings			—			16,203,070			—			16,203,070			16,202,986
Debentures			—			28,765,251			—			28,765,251			28,735,862
Other financial liabilities			—			21,461,397			—			21,461,397			21,442,524

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 by using valuation methods. Valuation methods and input variables for financial assets and liabilities that are measured at amortized cost are given as follows:

	Valuation methods	Input variables
Securities at amortized cost	The fair value is measured by discounting the projected cash flows of debt securities by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the issuers of the<br>securities.	Risk-free market rate, credit spread, prepayment rate, etc.
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, prepayment rate, etc.
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, forward rate, etc.

- 79 -

(6)	Financial instruments by category

Carrying amounts of financial assets and liabilities by each category are as follows (Unit: Korean Won in millions):

		December 31, 2019
Financial assets		Financial asset at<br>FVTPL			Financial assets<br>at FVTOCI			Financial assets at<br>amortized cost			Derivatives<br>assets<br>(Designated for<br>hedging)			Total
Deposits			27,901			—			14,492,223			—			14,520,124
Securities			4,906,867			27,730,531			20,320,539			—			52,957,937
Loans			212,473			—			271,032,244			—			271,244,717
Derivative assets			2,921,903			—			—			121,131			3,043,034
Other financial assets			—			—			8,193,226			—			8,193,226

Total			8,069,144			27,730,531			314,038,232			121,131			349,959,038

Financial liabilities		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Financial liabilities at<br>FVTPL			Financial liabilities<br>at amortized cost			Derivatives<br>liabilities<br>(Designated for<br>hedging)			Total
Deposits due to customers			27,530			264,685,578			—			264,713,108
Borrowings			87,626			18,998,920			—			19,086,546
Debentures			—			30,858,055			—			30,858,055
Derivative liabilities			2,843,146			—			6,837			2,849,983
Other financial liabilities (*)			—			17,769,531			—			17,769,531

Total			2,958,302			332,312,084			6,837			335,277,223

*()**	Other financial liabilities include 62,764 million Won of financial guarantee liabilities measured<br>at amortized cost included in provisions.
---	---
		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Financial assets		Financial asset at<br>FVTPL			Financial assets<br>at FVTOCI			Financial assets at<br>amortized cost			Derivatives<br>assets<br>(Designated for<br>hedging)			Total
Deposits			26,935			—			14,151,012			—			14,177,947
Securities			3,687,852			18,063,423			22,932,559			—			44,683,834
Loans			385,450			—			260,819,917			—			261,205,367
Derivative assets			2,026,079			—			—			35,503			2,061,582
Other financial assets			—			—			7,486,649			—			7,486,649

Total			6,126,316			18,063,423			305,390,137			35,503			329,615,379

Financial liabilities		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---
		Financial liabilities at<br>FVTPL			Financial liabilities<br>at amortized cost			Derivatives<br>liabilities<br>(Designated for<br>hedging)			Total
Deposits due to customers			27,058			248,690,939			—			248,717,997
Borrowings			164,767			16,202,986			—			16,367,753
Debentures			—			28,735,862			—			28,735,862
Derivative liabilities			2,090,861			—			51,408			2,142,269
Other financial liabilities (*)			—			21,490,341			—			21,490,341

Total			2,282,686			315,120,128			51,408			317,454,222

*()**	Other financial liabilities include 47,817 million Won of financial guarantee liabilities measured<br>at amortized cost included in provisions.
---	---

- 80 -

(7)	Income or expense from financial instruments by category

Income or expense from financial assets and liabilities by each category during the years ended December 31, 2019 and 2018 are as follows (Unit: Korean Won in millions):

	December 31, 2019
	Interest<br>Income (expense)			Fees and<br>Commissions<br>Income (expense)		Provision (reversal)<br>of credit loss			Others			Total
Financial assets at FVTPL		50,277			89,817		—			112,434			252,528
Financial assets at FVTOCI		474,751			—		(3,297	)		31,995			503,449
Securities at amortized cost		436,340			—		1,415			—			437,755
Loans and other financial assets at amortized cost		9,615,060			296,435		(385,758	)		102,115			9,627,852
Financial liabilities at FVTPL		—			—		—			—			—
Financial liabilities at amortized cost		(4,682,722	)		—		—			—			(4,682,722	)
Net derivatives (designated for hedging)		—			—		—			36,982			36,982
Off-balance provisions		—			71,106		13,396			—			84,502

Total		5,893,706			457,358		(374,244	)		283,526			6,260,346

	December 31, 2018
	Interest<br>Income (expense)			Fees and<br>Commissions<br>Income (expense)		Provision (reversal)<br>of credit loss			Others			Total
Financial assets at FVTPL		54,243			86,845		—			264,850			405,938
Financial assets at FVTOCI		280,371			66		(2,027	)		24,707			303,117
Securities at amortized cost		376,788			—		(1,922	)		431			375,297
Loans and other financial assets at amortized cost		8,973,097			317,316		(415,084	)		79,101			8,954,430
Financial liabilities at FVTPL		(3,164	)		—		—			17,485			14,321
Financial liabilities at amortized cost		(4,030,384	)		27,742		—			25,498			(3,977,144	)
Net derivatives (designated for hedging)		—			—		—			(672	)		(672	)
Off-balance provisions		—			—		89,459			—			89,459

Total		5,650,951			431,969		(329,574	)		411,400			6,164,746

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12.	DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS
(1)	Derecognition of financial instruments
---	---

Transferred financial assets that do not meet the condition of derecognition in their entirety.

1)	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):


Assets transferred		Financial assets at FVTPL	407,985	—
		Financial assets at FVTOCI	56,975	33,588
		Securities at amortized cost	42,841	5,552
		Loans and other financial assets at amortized cost	82,594	—

		Total	590,395	39,140

Related liabilities		Bonds sold under repurchase agreements	569,002	42,907

2)	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):

				Loaned to
Financial assets at FVTOCI	Korean financial institution’s debt securities and others	80,737	40,029	Korea Securities Finance Corporation

	Total	80,737	40,029

The details of the transferred financial assets that do not meet the conditions of derecognition in their entirety, such as disposal of securities under repurchase agreement or securities loaned, are explained in Note 18. The Group does not have continuing involvement in transferred financial assets.

(2)	The offset of financial assets and liabilities

The Group possesses both the uncollected domestic exchange receivables and the unpaid domestic exchange payable, which satisfy offsetting criteria of K-IFRS 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 at amortized cost and other financial assets and other financial liabilities of the Group’s statements of financial position respectively.

The Group possesses the derivative assets, derivative liabilities, receivable spot exchange and payable spot exchange that do not satisfy the offsetting criteria of K-IFRS 1032, but provide the Group under the circumstances of the trading party’s defaults, insolvency or bankruptcy, with the right of offsetting. Items such as cash collateral cannot satisfy the offsetting criteria of K-IFRS 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 and derivative liabilities, receivable spot exchange and payable spot exchange can be offset.

- 82 -

The Group has entered into a resale and repurchase agreement and accounted it as a collateralized borrowing. The Group has also entered into a resale and purchase agreement and accounted it as a secured loans. The Group under the repurchase agreements has an offsetting right only upon the counterparty’s default, insolvency or bankruptcy; thus, the repurchase agreements are applied by the TBMA/ISMA Global Master Repurchase Agreement, which does not satisfy the offsetting criteria of K-IFRS 1032. The Group disclosed bonds sold under repurchase agreements as borrowings and bonds purchased under resale agreements as loan at amortized cost and other financial assets.

As of December 31, 2019 and 2018, the financial instruments to be off set and may be covered by master netting agreements and similar agreements are as follows (Unit: Korean Won in millions):

		December 31, 2019
		Gross<br>amounts of<br>recognized<br>financial<br>assets		Gross<br>amounts of<br>recognized<br>financial<br>assets setoff		Net<br>amounts of<br>financial<br>assets<br>presented		Related amounts not setoff<br>in the consolidated<br>statement of financial<br>position				Net<br>amounts
								Netting<br>agreements<br>and others		Cash<br>collateral<br>received
Financial assets:
Derivative assets (*1)			3,032,894		—		3,032,894
Receivable spot exchange (*2)			5,112,206		—		5,112,206		7,058,885		111,122		975,093
Bonds purchased under resale agreements (*2)			8,981,752		—		8,981,752		8,981,752		—		—
Domestic exchange settlement credits (2)(6)			31,642,486		31,269,258		373,228		—		—		373,228

Total			48,769,338		31,269,258		17,500,080		16,040,637		111,122		1,348,321

Financial liabilities:
Derivative liabilities (*1)			2,824,449		—		2,824,449
Equity-linked securities in short position (*3)			87,626		—		87,626
Payable spot exchange (*4)			5,111,386		—		5,111,386		7,071,549		172,488		779,424
Bonds sold under repurchase agreements (*5)			569,002		—		569,002		180,402		388,600		—
Domestic exchange settlement debits (4)(6)			32,531,186		31,269,258		1,261,928		1,257,280		—		4,648

Total			41,123,649		31,269,258		9,854,391		8,509,231		561,088		784,072

(*1)	The items include derivatives held for trading, derivatives designated for hedging.
---	---
(*2)	The items are included in loan at amortized cost and other financial assets.
---	---
(*3)	The items are equity linked securities related to derivatives and are included in financial liabilities at<br>FVTPL.
---	---
(*4)	The items are included in other financial liabilities.
---	---
(*5)	The items are included in borrowings.
---	---
(*6)	Certain financial assets and liabilities are presented as net amounts.
---	---

- 83 -

		December 31, 2018
		Gross<br>amounts of<br>recognized<br>financial<br>assets		Gross<br>amounts of<br>recognized<br>financial<br>assets setoff		Net<br>amounts of<br>financial<br>assets<br>presented		Related amounts not setoff<br>in the consolidated<br>statement of financial<br>position				Net<br>amounts
								Netting<br>agreements<br>and others		Cash<br>collateral<br>received
Financial assets:
Derivative assets (*1)			1,908,542		—		1,908,542
Receivable spot exchange (*2)			4,200,532		—		4,200,532		5,527,117		66,857		515,100
Bonds purchased under resale agreements (*2)			11,701,951		—		11,701,951		11,701,951		—		—
Domestic exchange settlement credits (2)(6)			30,090,598		29,699,412		391,186		—		—		391,186

Total			47,901,623		29,699,412		18,202,211		17,229,068		66,857		906,286

Financial liabilities:
Derivative liabilities (*1)			1,862,681		—		1,862,681
Equity-linked securities index in short position (*3)			164,767		—		164,767
Payable spot exchange (*4)			4,206,027		—		4,206,027		5,540,147		115,615		577,713
Bonds sold under repurchase agreements (*5)			42,907		—		42,907		42,907		—		—
Domestic exchange settlement debits (4)(6)			36,832,774		29,699,412		7,133,362		6,231,538		—		901,824

Total			43,109,156		29,699,412		13,409,744		11,814,592		115,615		1,479,537

(*1)	The items include derivatives held for trading, derivatives designated for hedging.
---	---
(*2)	The items are included in loan at amortized cost and other financial assets.
---	---
(*3)	The items are equity linked securities related to derivatives and are included in financial liabilities at<br>FVTPL.
---	---
(*4)	The items are included in other financial liabilities.
---	---
(*5)	The items are included in borrowings.
---	---
(*6)	Certain financial assets and liabilities are presented as net amounts.
---	---

- 84 -

13.	INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
(1)	Investments in joint ventures and associates accounted for using the equity method of accounting are as<br>follows:
---	---
				Percentage of<br>ownership (%)						Location			Financial<br>statements as of
---	---	---	---	---	---	---	---	---	---	---	---	---	---
Joint ventures and associates		Main business		December 31,<br>2019			December 31,<br>2018
Woori Bank:
Woori Service Networks Co., Ltd. (*1)		Freight & staffing services			4.9			4.9			Korea		November 30, 2019 (*5)
Korea Credit Bureau Co., Ltd. (*2)		Credit information			9.9			9.9			Korea		December 31, 2019
Korea Finance Security Co., Ltd. (*1)		Security service			15.0			15.0			Korea		November 30, 2019 (*5)
Saman Corporation (*2)		General construction Technology service			9.2			9.2			Korea		September 30, 2019 (*5)
Wongwang Co., Ltd. (*4)		Wholesale and real estate			29.0			29.0			Korea		—
Sejin Construction Co., Ltd. (*4)		Construction			29.6			29.6			Korea		—
ARES-TECH Co., Ltd. (*4)		Electronic component manufacturing			23.4			23.4			Korea		—
Reading Doctors Co., Ltd. (*4)		Other services			35.4			35.4			Korea		—
Cultizm Korea LTD Co., Ltd. (*4)		Wholesale and retail sales			31.3			31.3			Korea		—
NK Eng Co., Ltd. (*4)		Manufacturing			23.1			23.1			Korea		—
Woori Growth Partnerships New Technology Private Equity Fund		Other financial services			23.1			23.1			Korea		December 31, 2019
2016KIF-IMM Woori Bank Technology Venture Fund		Other financial services			20.0			20.0			Korea		December 31, 2019
K BANK Co., Ltd. (*2)		Finance			14.5			14.1			Korea		November 30, 2019 (*5)
Smart Private Equity Fund No. 2		Other financial services			20.0			20.0			Korea		December 31, 2019
Woori Bank-Company K Korea Movie Asset Fund		Other financial services			25.0			25.0			Korea		December 31, 2019
Well to Sea No. 3 Private Equity Fund (*7)		Finance			50.0			50.0			Korea		September 30, 2019 (*5)
Partner One Value Up I Private Equity Fund		Other financial services			23.3			23.3			Korea		December 31, 2019
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		Other financial services			20.0			20.0			Korea		December 31, 2019
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		Other financial services			25.0			25.0			Korea		December 31, 2019
LOTTE CARD Co., Ltd. (*8)		Credit card and installment financing			20.0			—			Korea		September 30, 2019 (*5)
Japanese Hotel Real Estate Private Equity Fund 2 (*8)		Other financial services			19.9			—			Korea		October 31, 2019 (*5)
Woori Investment Bank Co., Ltd.:
Nomura-Rifa Private Real Estate Investment Trust No. 17 (*6)		Other financial services			—			19.4			Korea		—
Woori Private Equity Asset Management Co., Ltd.:
Uri Hanhwa Eureka Private Equity Fund		Other financial services			0.8			0.8			Korea		December 31, 2019
Japanese Hotel Real Estate Private Equity Fund 1:
Godo Kaisha Oceanos 1 (*8)		Other financial services			47.8			—			Japan		October 31, 2019 (*5)

- 85 -

				Percentage of<br>ownership (%)					Financial<br><br><br>statements as of
Joint ventures and Associates		Main business		December 31,<br>2019		December 31,<br>2018
Woori bank and Woori card Co., Ltd.:
Dongwoo C & C Co., Ltd. (*4)			Construction		24.5		24.5	Korea	—
SJCO Co., Ltd. (*4)			Aggregate transportation and<br>wholesale		28.7		26.5	Korea	—
G2 Collection Co., Ltd. (*4)			Wholesale and retail sales		29.2		28.9	Korea	—
The Base Enterprise Co., Ltd. (*4)			Manufacturing		48.4		48.4	Korea	—
Kyesan Engineering Co., Ltd. (*4)			Construction		23.3		23.3	Korea	—
Good Software Lap Co., Ltd. (*4)			Service		29.4		29.4	Korea	—
QTS Shipping Co., Ltd. (*4)			Complex transportation<br>brokerage		49.8		49.4	Korea	—
DAEA SNC Co., Ltd. (*4)			Wholesale and retail sales		25.5		24.0	Korea	—
Force TEC Co., Ltd. (*4)			Manufacturing		25.8		25.8	Korea	—
Sinseong Trading Co., Ltd. (*4)			Manufacturing		27.9		27.2	Korea	—
PREXCO Co., Ltd. (*4)			Manufacturing		28.1		28.1	Korea	—
Jiwon Plating Co., Ltd. (*4)			Plating		20.8		20.8	Korea	—
Gil Co.,Ltd. (*6)			Manufacturing		—		26.1	Korea	—
Youngdong Sea Food Co., Ltd. (*4)			Processed sea food<br>manufacturing		24.5		24.0	Korea	—
Woori Bank , Woori Investment Bank Co., Ltd. and Woori Private Equity Asset Management Co.,<br>Ltd.:
Woori-Shinyoung Growth-Cap Private Equity<br>Fund I (*8)			Other financial services		31.9		—	Korea	December 31,2019
Woori Bank and Woori Investment Bank Co., Ltd.:
Chin Hung International Inc. (*3)			Construction		25.3		25.3	Korea	November 30,2019 (*5)
PCC-Woori LP Secondary Fund (*8)			Other financial services		38.8		—	Korea	December 31,2019
Woori Bank and Woori Private Equity Asset Management Co., Ltd.:
Woori-Q Corporate Restructuring Private Equity<br>Fund (*8)			Trust and collective<br>investment		38.4		—	Korea	December 31,2019
(*1)	Most of the significant business transactions of associates are with the Group as of December 31, 2019 and<br>2018.
---	---
(*2)	The Group can participate in decision-making body and exercise significant influence over financial policies<br>and operational policies decision making of the associates.
---	---
(*3)	Equity securities that have published market price among investment assets of associates are common shares of<br>Chin Hung International Inc. Quoted market prices of Chin Hung International Inc. are 2,310 Won and 2,065 Won as of December 31, 2019 and 2018, respectively.
---	---
(*4)	There is no investment balance as of December 31, 2019 and 2018.
---	---
(*5)	The equity method was applied using the most recent financial statements available from the settlement date<br>because no financial statements were available at the end of December and the 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 subsidiary were duly<br>reflected.
---	---
(*6)	The entity was excluded from the associate as the group sold its entire stake during the year ended<br>December 31, 2019.
---	---
(*7)	The Group has signed a contract that the Group (or the third party designated by the Group) has the priority to<br>purchase the underlying assets (Aju Capital Co. Ltd.) when it is disposed by Well to Sea No. 3 Private Equity Fund.
---	---
(*8)	Due to capital contribution by the Group for the year ended December 31, 2018, the entities have been<br>included in and associates.
---	---

- 86 -

(2)	Changes in the carrying value of investments in joint ventures and associates accounted for using the equity<br>method of accounting are as follows (Unit: Korean Won in millions):
	For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Acquisition<br>cost		January 1,<br>2019		Share of<br>profits (losses)			Acquisi-tion		Disposal<br>and<br>others			Dividends			Change in<br>capital			December 31,<br>2019
Woori Service Networks Co., Ltd.		108		157		31			—		—			(2	)		—			186
Korea Credit Bureau Co., Ltd.		3,313		6,790		190			—		—			(135	)		—			6,845
Korea Finance Security Co., Ltd.		3,267		3,456		(169	)		—		—			—			—			3,287
Chin Hung International Inc.		130,779		44,741		6,426			—		—			—			9			51,176
Saman Corporation		8,521		1,014		(198	)		—		—			—			33			849
Woori Growth Partnerships New Technology Private Equity Fund		18,666		25,091		1,466			309		(7,490	)		(164	)		—			19,212
2016KIF-IMM Woori Bank Technology Venture Fund		12,385		15,300		1,193			—		(2,615	)		—			1,263			15,141
K BANK Co., Ltd.		73,150		43,709		(18,233	)		5,807		—			—			(29	)		31,254
Smart Private Equity Fund No. 2		2,915		2,890		(41	)		—		(85	)		—			—			2,764
Woori Bank-Company K Korea Movie Asset Fund		3,000		2,700		623			—		—			—			—			3,323
Well to Sea No. 3 Private Equity Fund		101,483		197,393		30,343			—		—			(18,836	)		123			209,023
Partner One Value Up I Private Equity Fund		10,000		9,948		(40	)		—		—			—			—			9,908
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		4,576		4,426		—			150		—			—			—			4,576
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		4,375		3,025		—			1,350		—			—			—			4,375
Woori-Shinyoung Growth-Cap Private Equity Fund I		12,665		—		(824	)		12,665		—			—			—			11,841
LOTTE CARD Co.,Ltd		346,000		—		63,444			346,000		—			—			—			409,444
Woori-Q Corporate Restructuring Private Equity<br>Fund		6,129		—		(83	)		6,129		—			—			—			6,046
PCC-Woori LP Secondary Fund		2,525		—		—			2,525		—			—			—			2,525
Nomura-Rifa Private Real Estate Investment Trust No. 17		1,000		787		(136	)		—		(651	)		—			—			—
Uri Hanhwa Eureka Private Equity Fund		350		339		3			—		—			—			—			342
Godo Kaisha Oceanos 1		10,870		—		2			10,870		(15	)		(105	)		200			10,952
Japanese Hotel Real Estate Private Equity Fund 2		3,291		—		—			3,291		—			—			—			3,291

		759,368		361,766		83,997			389,096		(10,856	)		(19,242	)		1,599			806,360

- 87 -

	For the year ended December 31, 2018
	Acquisition<br>cost		January 1,<br>2018		Share of<br>profits<br>(losses)			Acquisition		Disposal<br>and others<br>(*)			Dividends			Change in<br>capital			Impairment			Others		December 31,<br>2018
Kumho Tire Co., Inc.		175,652		98,933		(10,451	)		—		(83,286	)		—			(5,196	)		—			—		—
Woori Service Networks Co., Ltd.		108		158		1			—		—			(2	)		—			—			—		157
Korea Credit Bureau Co., Ltd.		3,313		5,816		1,087			—		—			(113	)		—			—			—		6,790
Korea Finance Security Co., Ltd.		3,267		3,519		(10	)		—		—			(54	)		1			—			—		3,456
Chin Hung International Inc.		130,779		45,101		1,206			—		—			—			(1,725	)		—			159		44,741
Poonglim Industrial Co., Ltd.		13,916		—		—			—		—			—			—			—			—		—
STX Corporation		50,760		6,947		(816	)		—		(5,865	)		—			(266	)		—			—		—
Saman Corporation		8,521		1,254		(98	)		—		—			—			35			(177	)		—		1,014
Woori Growth Partnerships New Technology Private Equity Fund		25,847		27,611		950			360		(3,346	)		(484	)		—			—			—		25,091
2016KIF-IMM Woori Bank Technology Venture Fund		15,000		6,840		—			8,160		—			—			300			—			—		15,300
K BANK Co., Ltd.		67,343		31,735		(10,705	)		21,951		—			—			144			—			584		43,709
Smart Private Equity Fund No. 2		3,000		2,932		(42	)		—		—			—			—			—			—		2,890
Woori Bank-Company K Korea Movie Asset Fund		3,000		2,957		(257	)		—		—			—			—			—			—		2,700
Well to Sea No. 3 Private Equity Fund		101,992		182,309		22,546			—		(508	)		(517	)		(6,437	)		—			—		197,393
Partner One Value Up Ist Private Equity Fund		10,000		—		(52	)		10,000		—			—			—			—			—		9,948
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		4,426		—		—			4,426		—			—			—			—			—		4,426
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		3,025		—		—			3,025		—			—			—			—			—		3,025
Nomura-Rifa Private Real Estate Investment Trust No. 17		1,000		939		(152	)		—		—			—			—			—			—		787
Uri Hanhwa Eureka Private Equity Fund		350		—		(11	)		350		—			—			—			—			—		339

	621,299		417,051		3,196			48,272		(93,005)			(1,170)			(13,144)			(177)			743		361,766

(*)	The amount transferred from the investments in joint ventures and associates to financial assets at FVTOCI is<br>83,286 million won.
---	---

- 88 -

(3)	Summary financial information relating to investments in joint ventures and associates accounted for using the<br>equity method of accounting is as follows (Unit: Korean Won in millions):
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Assets			Liabilities			Operating<br>revenue			Net income<br>(loss)
Woori Service Networks Co., Ltd.			5,742			1,969			17,572			1,322
Korea Credit Bureau Co., Ltd.			96,855			30,289			91,200			1,480
Korea Finance Security Co., Ltd.			32,574			10,660			61,939			(1,265	)
Chin Hung International Inc.			335,147			229,764			499,152			26,617
Saman Corporation			92,206			66,184			91,088			(485	)
Woori Growth Partnerships New Technology Private Equity Fund			83,583			330			7,866			6,355
2016KIF-IMM Woori Bank Technology Venture Fund			72,768			343			8,939			7,462
K BANK Co., Ltd.			2,679,968			2,464,168			84,928			(89,779	)
Smart Private Equity Fund No. 2			13,872			51			2			(204	)
Woori Bank-Company K Korea Movie Asset Fund			13,294			2			4,532			2,492
Well to Sea No.3 Private Equity Fund			7,073,363			6,470,540			524,319			48,357
Partner One Value Up I Private Equity Fund			42,602			—			457			(175	)
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership			21,208			691			766			(676	)
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund			16,939			124			10			(494	)
Woori-Shinyoung Growth-Cap Private Equity Fund I			37,642			620			2			(2,679	)
LOTTE CARD Co.,Ltd (*)			12,936,977			10,659,889			1,366,512			42,538
Woori-Q Corporate Restructuring Private Equity<br>Fund			15,975			823			—			(823	)
PCC-Woori LP Secondary Fund			6,498			—			—			(2	)
Uri Hanhwa Eureka Private Equity Fund			41,950			236			41			(436	)
Godo Kaisha Oceanos 1			70,869			47,960			778			119
Japanese Hotel Real Estate Private Equity Fund 2			16,561			6			—			(600	)
(*)	The amount is after reflecting the fair value adjustment that occurred when acquiring the shares and the<br>adjustments that occurred by difference of accounting policies with the Group.
---	---
		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Assets			Liabilities			Operating<br>revenue			Net income<br>(loss)
Woori Service Networks Co., Ltd.			5,066			1,886			15,803			819
Korea Credit Bureau Co., Ltd.			88,797			22,788			78,018			9,901
Korea Finance Security Co., Ltd.			35,155			12,114			60,706			17
Chin Hung International Inc.			412,205			332,268			606,192			6,402
Saman Corporation			97,720			69,915			75,825			(869	)
Woori Growth Partnerships New Technology Private Equity Fund			109,167			440			5,943			4,117
2016KIF-IMM Woori Bank Technology Venture Fund			73,231			12			16			(1,510	)
K BANK Co., Ltd.			2,024,856			1,807,502			60,039			(69,256	)
Smart Private Equity Fund No. 2			14,502			51			1			(209	)
Woori Bank-Company K Korea Movie Asset Fund			10,805			5			1,663			(299	)
Well to Sea No.3 Private Equity Fund			5,968,591			5,395,307			429,742			39,711
Partner One Value Up Ist Private Equity Fund			42,776			—			326			(224	)
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership			21,200			757			390			(1,268	)
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund			12,014			105			3			(191	)
Nomura-Rifa Private Real Estate Investment Trust No. 17			20,197			16,178			10			(228	)
Uri Hanhwa Eureka Private Equity Fund			42,332			181			1			(1,349	)

- 89 -

(4)	The entities that the Group has not applied equity method of accounting although the Group’s ownership<br>interest is more than 20% as of December 31, 2019 and 2018, are as follows:
		December 31, 2019
---	---	---	---	---	---	---
Associate (*)		Number of shares owned			Ownership (%)
Orient Shipyard Co., Ltd.			464,812			21.4
Saenuel Co., Ltd.			3,531			37.4
E Mirae Tech Co., Ltd.			7,837			41.8
Jehin Trading Co., Ltd.			83,056			27.7
The Season Company Co., Ltd.			18,283			30.3
Yuil PESC Co., Ltd.			8,642			24.0
CL Tech Co., Ltd.			13,759			38.6
		December 31, 2018
---	---	---	---	---	---	---
Associate (*)		Number of shares owned			Ownership (%)
Orient Shipyard Co., Ltd.			464,812			21.4
Saenuel Co., Ltd.			3,531			37.4
E Mirae Tech Co., Ltd.			7,696			41.0
Jehin Trading Co., Ltd.			81,610			27.3
The Season Company Co., Ltd.			18,187			30.1
Yuil PESC Co., Ltd.			8,642			24.0
CL Tech Co., Ltd.			13,759			38.6
(*)	Even though the Group’s ownership interest of the entity is more than 20%, the Group does not have<br>significant influence over the entity since it is going through work-out process under receivership, thus it is excluded from the investment in joint ventures and associates.
---	---
(5)	As of December 31, 2019 and 2018, the reconciliations from the net assets of the associates to the book<br>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, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Total net<br>asset			Ownership<br>(%)			Ownership<br>portion of net<br>assets			Basis<br>difference			Impairment			Intercompany<br>transaction			Book<br>value
Woori Service Networks Co., Ltd.			3,773			4.9			186			—			—			—			186
Korea Credit Bureau Co., Ltd.			66,566			9.9			6,597			246			—			2			6,845
Korea Finance Security Co., Ltd.			21,914			15.0			3,287			—			—			—			3,287
Chin Hung International Inc. (*1)			105,383			25.3			26,646			24,565			—			(35	)		51,176
Saman Corporation			26,022			9.2			2,391			5,373			(6,915	)		—			849
Woori Growth Partnerships New Technology Private Equity Fund			83,253			23.1			19,215			—			—			(3	)		19,212
2016KIF-IMM Woori Bank Technology Venture Fund			72,425			20.0			14,485			—			—			656			15,141
K BANK Co., Ltd. (1)(2)			215,800			14.5			31,248			3,634			(3,634	)		6			31,254
Smart Private Equity Fund No.2			13,821			20.0			2,764			—			—			—			2,764
Woori Bank-Company K Korea Movie Asset Fund			13,292			25.0			3,323			—			—			—			3,323
Well to Sea No.3 Private Equity Fund (*1)			418,250			50.0			209,041			—			—			(18	)		209,023
Partner One Value Up Ist Private Equity Fund			42,602			23.3			9,909			—			—			(1	)		9,908
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership			20,517			20.0			4,103			—			—			473			4,576
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund			16,815			25.0			4,204			—			—			171			4,375
Woori-Shinyoung Growth-Cap Private Equity<br>Fund I			37,022			31.9			11,841			—			—			—			11,841
LOTTE CARD Co., Ltd (*1)			2,047,220			20.0			409,444			—			—			—			409,444

- 90 -

		December 31, 2019
		Total net<br>asset			Ownership<br>(%)			Ownership<br>portion of net<br>assets			Basis<br>difference			Impairment			Intercompany<br>transaction			Book<br>value
Woori-Q Corporate Restructuring Private Equity<br>Fund			15,152			38.4			5,813			—			—			233			6,046
PCC-Woori LP Secondary Fund			6,498			38.8			2,524			—			—			1			2,525
Uri Hanhwa Eureka Private Equity Fund			41,714			0.8			342			—			—			—			342
Godo Kaisha Oceanos 1			22,909			47.8			10,952			—			—			—			10,952
Japanese Hotel Real Estate Private Equity Fund 2			16,555			19.9			3,291			—			—			—			3,291
(*1)	The net asset equity amount is after the<br>debt-for-equity swap, non-controlling etc.
---	---
(*2)	As a result of conducting an impairment test on the investment stocks of the related companies, the recoverable<br>value was less than the carrying amount and thus the impairment loss was recognized.
---	---
		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Total net<br>asset			Ownership<br>(%)			Ownership<br>portion of net<br>assets			Basis<br>difference			Impairment			Intercompany<br>transaction			Book<br>value
Woori Service Networks Co., Ltd.			3,180			4.9			157			—			—			—			157
Korea Credit Bureau Co., Ltd.			66,009			9.9			6,544			246			—			—			6,790
Korea Finance Security Co., Ltd.			23,041			15.0			3,456			—			—			—			3,456
Chin Hung International Inc. (*)			79,793			25.3			20,192			24,565			—			(16	)		44,741
Saman Corporation			27,805			9.2			2,556			5,373			(6,915	)		—			1,014
Woori Growth Partnerships New Technology Private Equity Fund			108,727			23.1			25,091			—			—			—			25,091
2016KIF-IMM Woori Bank Technology Venture Fund			73,219			20.0			14,644			—			—			656			15,300
K BANK Co., Ltd. (*)			290,597			14.1			40,984			2,725			—			—			43,709
Smart Private Equity Fund No. 2			14,451			20.0			2,890			—			—			—			2,890
Woori Bank-Company K Korea Movie Asset Fund			10,800			25.0			2,700			—			—			—			2,700
Well to Sea No. 3 Private Equity Fund (*)			396,248			50.0			198,027			—			—			(634	)		197,393
Partner One Value Up Ist Private Equity Fund			42,776			23.3			9,948			—			—			—			9,948
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership			20,443			20.0			4,089			—			—			337			4,426
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund			11,909			25.0			2,977			—			—			48			3,025
Nomura-Rifa Private Real Estate Investment Trust No. 17			4,019			19.4			780			—			—			7			787
Uri Hanhwa Eureka Private Equity Fund			42,151			0.8			339			—			—			—			339
(*)	The net asset equity amount is after the<br>debt-for-equity swap.
---	---

- 91 -

14.	INVESTMENT PROPERTIES
(1)	Details of investment properties are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---
Acquisition cost			299,802				416,796
Accumulated depreciation			(19,563	)			(38,600	)

Net carrying value			280,239				378,196

(2)	Changes in investment properties are as follows (Unit: Korean Won in millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---	---	---
		2019				2018
Beginning balance (*)			178,910				371,301
Acquisition			70,346				15,195
Disposal			(193	)			(3,045	)
Depreciation			(2,225	)			(4,045	)
Transfers from (to) premises and equipment			32,394				7,623
Classified to assets held for sale			—				(10,056	)
Foreign currencies translation adjustments			402				(5	)
Others			605				1,228

Ending balance			280,239				378,196

(*)	199,286 million Won is deducted which was reclassified from the investment properties to premises and<br>equipment at the beginning of the period within the net carrying mount of the previous term.
---	---
(3)	Fair value of investment properties amounted to 502,305 million Won and 438,534 million Won as of<br>December 31, 2019 and 2018, 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<br>classified as level 3 on the fair value hierarchy.
---	---
(4)	Rental fee earned from investment properties amounted to 10,106 million Won and 5,080 million Won for<br>the years ended December 31, 2019 and 2018, respectively. Operating expenses directly related to the investment properties where rental fee was earned amounted to 3,010 million won and 4,120 million won.
---	---
(5)	The lease payments expected to be received in the future under lease contracts as of December 31, 2019 and<br>2018 are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Lease payments:
Within a year			6,574			5,454
More than 1 year and within 2 years			4,924			3,702
More than 2 years and within 3 years			4,018			3,009
More than 3 years and within 4 years			3,618			2,619
More than 4 years and within 5 years			3,126			2,222
More than 5 years			241			—

Total			22,501			17,006

- 92 -

15.	PREMISES AND EQUIPMENT
(1)	Details of premises and equipment as of December 31, 2019 are as follows (Unit: Korean Won in millions):<br>
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Land			Building			Equipment<br>and vehicles			Leasehold<br>improvement			Construction<br>in progress			Structures			Total
Premises and equipment (owned)			1,761,159			802,299			278,016			54,839			1,287			2			2,897,602
Right-of-use<br>asset			—			449,878			17,236			—			—			—			467,114
Carrying value			1,761,159			1,252,177			295,252			54,839			1,287			2			3,364,716
(2)	Details of premises and equipment (owned) as of December 31, 2019 and 2018 are as follows (Unit: Korean<br>Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Land			Building			Equipment<br>and vehicles			Leasehold<br>improvement			Construction<br>in progress			Structures			Total
Acquisition cost			1,761,159			1,063,756			1,123,101			463,181			1,287			20			4,412,504
Accumulated depreciation			—			(261,457	)		(845,085	)		(408,342	)		—			(18	)		(1,514,902	)

Net carrying value			1,761,159			802,299			278,016			54,839			1,287			2			2,897,602

		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Land			Building			Equipment<br>and vehicles			Leasehold<br>improvement			Construction<br>in progress			Structures			Total
Acquisition cost			1,481,871			872,282			1,031,431			446,264			9,099			20			3,840,967
Accumulated depreciation			—			(210,370	)		(791,418	)		(388,670	)		—			(17	)		(1,390,475	)

Net carrying value			1,481,871			661,912			240,013			57,594			9,099			3			2,450,492

- 93 -

(3)	Details of changes in premises and equipment are as follows (Unit: Korean Won in millions):<br>
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Land			Building			Equipment<br>and vehicles			Leasehold<br>improvement			Construction<br>in progress			Structures			Total
Beginning balance			1,481,871			661,912			240,013			57,594			9,099			3			2,450,492
Acquisitions			186,303			87,667			119,474			28,788			7,315			—			429,547
Disposals			(3,015	)		(2,245	)		(1,203	)		(2,738	)		—			—			(9,201	)
Depreciation			—			(30,766	)		(87,453	)		(27,134	)		—			(1	)		(145,354	)
Classified to assets held for sale			(21	)		(74	)		—			—			—			—			(95	)
Transfer			93,956			83,260			3,670			912			(14,886	)		—			166,912
Foreign currencies translation adjustments			880			801			1,459			609			36			—			3,785
Business combination (Note 45)			1,185			74			926			1			—			—			2,186
Others			—			1,670			1,130			(3,193	)		(277	)		—			(670	)

Ending balance			1,761,159			802,299			278,016			54,839			1,287			2			2,897,602

		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Land			Building			Equipment<br>and vehicles			Leasehold<br>improvement			Construction<br>in progress			Structures			Total
Beginning balance			1,487,278			680,846			180,072			64,787			64,559			3			2,477,545
Acquisitions			1,372			14,701			76,783			17,527			8,285			—			118,668
Disposals			(29	)		—			(5,192	)		(737	)		(187	)		—			(6,145	)
Depreciation			—			(26,014	)		(76,171	)		(32,162	)		—			—			(134,347	)
Classified to assets held for sale			(3,651	)		(2,592	)		—			—			—			—			(6,243	)
Transfer			(2,863	)		(4,760	)		63,432			—			(63,432	)		—			(7,623	)
Foreign currencies translation adjustments			(236	)		(257	)		(69	)		323			(126	)		—			(365	)
Business combination			—			—			969			661			—			—			1,630
Others			—			(12	)		189			7,195			—			—			7,372

Ending balance			1,481,871			661,912			240,013			57,594			9,099			3			2,450,492

(4)	Details of right-of-use assets<br>as of December 31, 2019 are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---
		Building			Other tangible assets			Total
Acquisition cost			615,201			25,563			640,764
Accumulated depreciation			(165,323	)		(8,327	)		(173,650	)

Net carrying value			449,878			17,236			467,114

(5)	Details of changes in<br>right-of-use assets as of December 31, 2019 are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---
		Building			Other tangible assets			Total
Beginning balance			416,828			18,963			435,791
New contracts			251,992			8,306			260,298
Termination			(3,803	)		(178	)		(3,981	)
Depreciation			(219,743	)		(9,984	)		(229,727	)
Business combination (Note 45)			5,438			114			5,552
Others			(834	)		15			(819	)

Ending balance			449,878			17,236			467,114

- 94 -

16.	INTANGIBLE ASSETS
(1)	Details of intangible assets are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Goodwill			Software			Industrial<br>property rights			Development<br>cost			Other<br>intangible<br>assets			Membership<br>deposit			Construction<br>in progress			Total
Acquisition cost			350,682			174,132			1,576			517,224			862,313			32,583			4,066			1,942,576
Accumulated amortization			—			(138,300	)		(884	)		(292,031	)		(638,005	)		—			—			(1,069,220	)
Accumulated impairment losses			—			—			—			—			(25,993	)		(3,253	)		—			(29,246	)

Net carrying value			350,682			35,832			692			225,193			198,315			29,330			4,066			844,110

		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Goodwill			Software			Industrial<br>property rights			Development<br>cost			Other<br>intangible<br>assets			Membership<br>deposit			Construction<br>in progress			Total
Acquisition cost			153,602			156,109			1,258			469,226			729,052			27,025			10,415			1,546,687
Accumulated amortization			—			(126,382	)		(696	)		(228,906	)		(589,618	)		—			—			(945,602	)
Accumulated impairment losses			—			—			—			—			(137	)		(3,428	)		—			(3,565	)

Net carrying value			153,602			29,727			562			240,320			139,297			23,597			10,415			597,520

(2)	Details of changes in intangible assets are as follows (Unit: Korean Won in millions):
---	---
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Goodwill			Software			Industrial<br>property rights			Development<br>cost			Other<br>intangible<br>assets			Membership<br>deposit			Construction<br>in progress			Total
Beginning balance			153,602			29,727			562			240,320			139,297			23,597			10,415			597,520
Acquisitions			—			13,133			318			41,373			87,538			4,931			8,754			156,047
Disposal			—			—			—			—			—			(675	)		—			(675	)
Amortization (*1)			—			(9,389	)		(188	)		(64,415	)		(54,421	)		—			—			(128,413	)
Impairment losses (*2)			—			—			—			—			(25,858	)		(939	)		—			(26,797	)
Transfer			—			—			—			7,915			7,188			—			(15,103	)		—
Foreign currencies translation adjustment			10,234			1,269			—			—			1,023			60			—			12,586
Business combination (Note 45)			186,846			835			—			—			43,530			2,143			—			233,354
Others			—			257			—			—			18			213			—			488

Ending balance			350,682			35,832			692			225,193			198,315			29,330			4,066			844,110

(*1)	Amortization of other intangible assets amounting to 22,317 million Won is included in other operating<br>expenses.
---	---
(*2)	The impairment test for other intangible assets indicates that the recoverable value is less than the carrying<br>amount and thus the impairment loss is recognized.
---	---
		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Goodwill			Software			Industrial<br>property rights			Development<br>cost			Other<br>intangible<br>assets			Membership<br>deposit			Construction<br>in progress			Total
Beginning balance			108,707			40,672			539			77,241			117,546			20,685			153,209			518,599
Acquisitions			—			6,839			195			20,935			45,205			5,162			97,067			175,403
Disposal			—			(4,359	)		—			—			(196	)		(2,871	)		—			(7,426	)
Amortization (*)			—			(14,028	)		(172	)		(46,045	)		(73,913	)		—			—			(134,158	)
Reversal of impairment loss			—			—			—			—			—			674			—			674
Transfer			—			—			—			188,189			51,672			—			(239,861	)		—
Business combination			46,752			763			—			—			—			—			—			47,515
Foreign currencies translation adjustment			(1,857	)		(165	)		—			—			(227	)		(53	)		—			(2,302	)
Others			—			5			—			—			(790	)		—			—			(785	)

Ending balance			153,602			29,727			562			240,320			139,297			23,597			10,415			597,520

(*)	Amortization of other intangible assets amounting to 51,770 million Won is included in other operating<br>expenses.
---	---

- 95 -

(3)	Goodwill.
1)	Details of allocated goodwill based on each cash-generating unit as of December 31, 2019 and 2018 are as<br>follows (Unit: Korean won in million):
---	---
Cash-generating unit (*1)		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Woori Asset Management Corp.			43,036			—
Woori Global Asset Management Co., Ltd.			2,030			—
Woori Asset Trust Co., Ltd.			141,780			—
PT Bank Woori Saudara Indonesia 1906 Tbk (*2)			106,173			98,229
WB Finance Co., Ltd (*3)			49,374			47,681
Others			8,289			7,692

Total			350,682			153,602

(*1)	Allocated to the cash-generating unit that will benefit from the synergy effect of the business combination,<br>and the cash-generating unit is generally comprised of the operating or sub-sectors.
---	---
(*2)	The Group has acquired Saudara Bank to expand retail sales in Indonesia, and recognized the goodwill as it is<br>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<br>the economies of scale and acquired customer base.
---	---
2)	Impairment test
---	---

The recoverable amount of the cash-generating unit is measured at larger amount among the fair value less costs to sell or the value to 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. The Group estimates cash flows based on an annual growth rate of up to 4.0% in relation to cash flows after the longest period. 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.

Category
Discount rate (%).	7.3	8.8,	18.3	17.3
Terminal growth rate (%)	1.0	1.0	4.0	3.0
Recoverable amount.	145,820	45,367	952,692	133,149
Carrying amount	106,735	29,577	577,075	93,143

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 allocated will not exceed the recoverable amount.

- 96 -

17.	ASSETS HELD FOR SALE

As of the end of the current term, the Group is planning to sell lands, buildings and machinery items that are from subsidiary companies, Seari First Securitization Specialty Co., Ltd., Namjong 1^st^ Securitization Specialty Co., Ltd., Bukgeum First Securitization First Specialty Co., Ltd. and Bukgeum Second Securitization Specialty Co., Ltd., and therefore they are classified as assets held for sale. In addition, tangible assets that are highly likely to be sold within another year are classified as held for sale.

Assets held for distribution (sale) are as follows (Unit: Korean Won in millions):


Lands	5,164	7,280
Buildings	4,815	7,736
Others	577	2,896

Total	10,556	17,912

The Group measured assets held for sale at the lower of their net fair value or carrying amount

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, 2019
---	---	---	---	---	---	---	---	---	---
				Collateral given to		Amount			Reason for collateral
Financial assets at FVTPL		Korean treasury and government bonds and others		Nonghyup bank			19,720		Related to bonds sold under repurchase agreements (*)
		Korean corporate debt securities		Kookmin bank and others			168,327		Related to bonds sold under repurchase agreements (*)
		Korean corporate debt securities		Eugene investment &<br> <br>futures co., Ltd.<br>..			3,008		Collateral for futures transaction
		Korean financial institutions’ debt securities and others		Nonghyup bank and others			219,938		Related to bonds sold under repurchase agreements (*)
Financial assets at FVTOCI		Korean financial institutions’ debt securities and others		BOK and others			5,127,383		Settlement risk
		Foreign corporate debt securities		Spain BBVA and others			56,975		Related to bonds sold under repurchase agreements (*)
		Korean corporate debt securities		Nonghyup bank futures and others			9,042		Collateral for futures transaction
Securities at amortized cost		Korean treasury and government bonds		Korea Securities Depository			5,570		Related to bonds sold under repurchase agreements (*)
		Korean treasury and government bonds and others		The BOK and others			6,190,630		Settlement risk and others
		Foreign financial institutions’ debt securities		NATIXIS and others			37,271		Related to bonds sold under repurchase agreements (*)
Loan at amortized cost and other financial assets		Due from banks in local currency		Branch of IBK at Phnom Penh and others			11,352		Collateral deposits for local currency borrowings
		Due from banks in local currencies		Daishin AMC and others			1,500		Right of pledge
		Other due from banks in local currencies		Samsung Securities Co., Ltd. and others			17,345		Margin deposit for futures or option
		Other due from banks in foreign currencies		Korea Investment & Securities Co., Ltd. and others			180,919		Foreign margin deposit for future or option and others
		Foreign currency loans		Industrial and Commercial Bank of China			82,594		Related to bonds sold under repurchase agreements (*)

- 97 -

				December 31, 2019
				Collateral given to		Amount			Reason for collateral
Premises and equipment		Land and building		Credit Counselling &<br>Recovery Service and others			689		Right to collateral and others

				Total			12,132,263

				December 31, 2018
				Collateral given to		Amount			Reason for collateral
Loan at amortized cost and other financial assets		Due from banks on time in<br>local currency		Daishin AMC and others			1,500		Right of pledge
		Due from banks in local currencies		Samsung Securities Co.,<br>Ltd. and others			38,112		Margin deposit for futures<br>or option
		Due from banks in foreign currencies		Korea Investment &<br>Securities Co., Ltd. and<br>others			202,156		Foreign margin deposit for<br>future or option and<br>others
Financial assets at FVTOCI		Korean financial institutions’<br>debt securities and others		The BOK and others			2,919,042		Settlement risk and others
		Korean financial institutions’<br>debt securities		Banco Bilbao Vizcaya<br>Argentaria, S.A			33,588		Related to bonds sold under<br>repurchase agreements (*)
Securities at amortized cost		Korean treasury and<br>government bonds		Korea Securities<br>Depository			5,552		Related to bonds sold under<br>repurchase agreements (*)
		Korean treasury and<br>government bonds and<br>others		The BOK and others			6,382,188		Settlement risk and others
Premises and equipment		Land and building		Credit Counselling &<br>Recovery Service and<br>others			5,987		Right to collateral and<br>others

				Total			9,588,125

(*)	The Group has the agreements to repurchase the sold assets at the predetermined price or the price that<br>includes the rate of return and to provide the guarantee on the assets. The transferee has the right to sell or to provide as guarantee. Therefore, the Group does not derecognize the assets, but recognizes the relevant amounts as liability (bonds<br>sold under repurchase agreements).
---	---
(2)	As of December 31, 2019 and December 31, 2018 there is no asset acquired through foreclosures.<br>
---	---
(3)	Securities loaned are as follows (Unit: Korean Won in millions):
---	---
				December 31,<br>2019			December 31,<br>2018			Loaned to
---	---	---	---	---	---	---	---	---	---	---
Financial assets at FVTOCI		Korean financial institutions’ debt securities and others			80,737			40,029		Korea Securities Finance<br>Corporation

Total					80,737			40,029

Securities loaned are lending of specific securities to borrowers who agree to return the same amount 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.

- 98 -

(4)	Collaterals held that can be disposed and re-subjected to lien<br>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, 2019 and 2018 are as follows (Unit: Korean Won in millions):

		December 31, 2019
		Fair values of collaterals		Fair values of collaterals were disposed or re-subjected to lien
Securities		9,340,517		—
		December 31, 2018
---	---	---	---	---
		Fair values of collaterals		Fair values of collaterals were disposed or re-subjected to lien
Securities		12,262,041		—
19.	OTHER ASSETS
---	---

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

		December 31, 2019			December 31, 2018
Prepaid expenses			135,010			161,129
Advance payments			78,306			18,467
Others			20,330			18,057

Total			233,646			197,653

20.	FINANCIAL LIABILITIES AT FVTPL
---	---
(1)	Financial liabilities at FVTPL are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Financial instruments at fair value through profit or loss mandatorily measured at fair<br>value			2,870,676			2,117,919
Financial liabilities at fair value through profit or loss designated as upon initial<br>recognition			87,626			164,767

Total			2,958,302			2,282,686

(2)	Financial liabilities at fair value through profit or loss mandatorily measured at fair value are as follows<br>(Unit: Korean Won in millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Deposits
Gold banking liabilities			27,530			27,058
Derivative liabilities			2,843,146			2,090,861

Total			2,870,676			2,117,919

- 99 -

(3)	Financial liabilities at fair value through profit or loss designated as upon initial recognition as of<br>December 31, 2019 and 2018 are as follows (Unit: Korean Won in millions):
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Equity-linked securities
Equity-linked securities in short position			87,626			164,767

Total			87,626			164,767

Financial liabilities at fair value through profit or loss designated as upon initial recognition are designated in order to eliminate or significantly reduce accounting mismatch arising from recognition or measurement.

(4)	There are no accumulated changes in credit risk adjustments to financial liabilities at fair value through<br>profit or loss designated as upon initial recognition.

The adjustment to reflect Group’s credit risk is considered in measuring the fair value of equity-linked securities index. The Group’s credit risk is determined by adjusting credit spread observed in credit rating of Group.

(5)	The difference between carrying amount and maturity amount of financial liabilities at fair value through<br>profit or loss designated as upon initial recognition (Financial liabilities designated as at FVTPL) are as follows (Unit: Korean Won in millions):
		December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---
Carrying amount			87,626				164,767
Nominal amount at maturity			97,503				217,280

Difference			(9,877	)			(52,513	)

(6)	Changes in equity in relation to financial liabilities at fair value through profit or loss designated as upon<br>initial recognition
---	---

The cumulative gain or loss realized as a result of the derecognition of financial liabilities designated as at fair value through profit or loss that is presented in other comprehensive income and transferred within equity is 4 million (after income tax expense) Won for the year ended December 31, 2018.

21.	DEPOSITS DUE TO CUSTOMERS

Details of deposits due to customers by type are as follows (Unit: Korean Won in millions):


Deposits in local currency:
Deposits on demand	8,655,228		11,076,417
Deposits at termination	224,115,771		204,051,570
Mutual installment	28,574		30,783
Deposits on notes payables	2,174,995		1,891,556
Deposits on CMA	150,300		137,316
Customer deposit for security investment	—		30,000
Certificate of deposits	973,625		6,510,571
Other deposits	1,451,470		1,409,505

Sub-total	237,549,963		225,137,718

Deposits in foreign currency:
Deposits in foreign currencies	27,143,710		23,626,234

Present value discount	(8,095	)	(73,013	)

Total	264,685,578		248,690,939

- 100 -

22.	BORROWINGS AND DEBENTURES
(1)	Details of borrowings are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---
		Lenders		Interest rate (%)			Amount
Borrowings in local currency:
Borrowings from The BOK		The BOK			0.5~0.8			1,770,726
Borrowings from government funds		Small Enterprise And Market Service and others			0.0~2.8			1,844,798
Others		The Korea Development Bank and others			0.0~5.0			6,070,201

Sub-total								9,685,725
Borrowings in foreign currencies (*):
Borrowings in foreign currencies		The Export-Import Bank of Korea and others			(0.3)~8.3			8,566,872
Offshore borrowings in foreign currencies		HSBC, HKG			3.0			34,734

Sub-total								8,601,606

Bills sold		Others			0.0~1.6			9,367
Call money		Bank and others			(0.3)~3.5			133,519
Bonds sold under repurchase agreements		Other financial institutions			1.4~12.7			569,002
Present value discount								(299	)

Total								18,998,920

(*)	Included borrowing in foreign currencies under cash flow hedge amounting to 34,443 million Won as of December<br>31, 2019.
---	---
		December 31, 2018
---	---	---	---	---	---	---	---	---	---
		Lenders		Interest rate (%)			Amount
Borrowings in local currency:
Borrowings from The BOK		The BOK			0.5 ~ 0.8			1,335,459
Borrowings from government funds		Small Enterprise And Market Service and others			0.0 ~ 3.5			1,771,379
Others		The Korea Development Bank and others			0.0 ~ 4.0			4,716,231

Sub-total								7,823,069

Borrowings in foreign currencies:
Borrowings in foreign currencies		The Export-Import Bank of Korea and others			0.0 ~ 7.5			7,308,857
Offshore borrowings in foreign currencies		JPMORGAN CHASE BANK			2.9			33,543

Sub-total								7,342,400

Bills sold		Others			0.0 ~ 1.8			19,336
Call money		Bank and others			0.0 ~ 7.3			975,358
Bonds sold under repurchase agreements		Other financial institutions			0.8 ~ 12.7			42,907
Present value discount								(84	)

Total								16,202,986

- 101 -

(2)	Details of debentures are as follows (Unit: Korean Won in millions):
		December 31, 2019							December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Interest rate (%)			Amount				Interest rate (%)			Amount
Face value of bond (*):
Ordinary bonds			0.0~4.3			23,207,600				1.6 ~ 4.5			22,432,183
Subordinated bonds			2.1~5.9			6,732,687				3.0 ~ 12.6			5,358,838
Other bonds			1.2~17.0			942,421				1.9 ~ 17.0			974,230

Sub-total						30,882,708							28,765,251

Discounts on bonds						(24,653	)						(29,389	)

Total						30,858,055							28,735,862

(*)	Included debentures under fair value hedge amounting to 3,151,172 million Won and 2,956,565 million<br>Won as of December 31, 2019 and 2018, respectively. Debentures under cash flow hedge amounting to 829,082 million Won and 823,219 million Won are also included as of December 31, 2019 and 2018, respectively.<br>
---	---
23.	PROVISIONS
---	---
(1)	Details of provisions are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Asset retirement obligation			66,485			67,200
Provisions for guarantees (*1)			92,486			89,761
Provisions for unused loan commitments			112,554			121,535
Provisions for customer reward credits (*2)			—			49,180
Other provisions (*3)			172,455			63,637

Total			443,980			391,313

(*1)	Provisions for guarantees includes provision for financial guarantee of 62,764 million Won and<br>47,817 million Won as of December 31, 2019 and 2018, respectively.
---	---
(*2)	The provisions for existing points that are paid to credit card members and others have been reclassified to<br>other liabilities.
---	---
(*3)	Other provisions consist of provision for litigation, loss compensation and others.
---	---
(2)	Changes in provisions for guarantees and unused loan commitments are as follows (Unit: Korean Won in millions):<br>
---	---
1)	Provisions for guarantees
---	---
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage1				Stage2				Stage3				Total
Beginning balance			44,903				33,760				11,098				89,761
Transfer to 12-month expected credit loss			13,568				(13,568	)			—				—
Transfer to expected credit loss for the entire period			(317	)			532				(215	)			—
Transfer to credit-impaired financial assets			(30	)			(32	)			62				—
Provisions used			(27,711	)			—				—				(27,711	)
Net provision (reversal) of unused amount			(14,400	)			5,611				4,437				(4,352	)
Others (*)			34,788				—				—				34,788

Ending balance			50,801				26,303				15,382				92,486

(*)	Others have occurred as a result of new financial guarantee contract valued at initial fair value.<br>
---	---

- 102 -

		For the year ended December 31, 2018
		Stage1				Stage2				Stage3				Total
Beginning balance			47,132				18,281				127,511				192,924
Transfer to 12-month expected credit loss			92				(92	)			—				—
Transfer to expected credit loss for the entire period			(237	)			91,008				(90,771	)			—
Transfer to credit-impaired financial assets			(38	)			(29	)			67				—
Provisions used			(20,429	)			—				—				(20,429	)
Net reversal of unused amount			(4,866	)			(75,410	)			(25,709	)			(105,985	)
Others (*)			23,249				2				—				23,251

Ending balance			44,903				33,760				11,098				89,761

(*)	Others have occurred as a result of new financial guarantee contract valued at initial fair value.<br>
---	---
2)	Provisions for unused loan commitment
---	---
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage1				Stage2				Stage3				Total
Beginning balance			74,624				45,285				1,626				121,535
Transfer to 12-month expected credit loss			11,771				(11,024	)			(747	)			—
Transfer to expected credit loss for the entire period			(1,813	)			1,945				(132	)			—
Transfer to credit-impaired financial assets			(213	)			(275	)			488				—
Net provision (reversal) of unused amount			(19,394	)			7,233				3,117				(9,044	)
Others			63				—				—				63

Ending balance			65,038				43,164				4,352				112,554

		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage1				Stage2				Stage3				Total
Beginning balance			75,232				27,875				1,878				104,985
Transfer to 12-month expected credit loss			7,770				(7,396	)			(374	)			—
Transfer to expected credit loss for the entire period			(2,376	)			2,525				(149	)			—
Transfer to credit-impaired financial assets			(213	)			(1,579	)			1,792				—
Net provision (reversal) of unused amount			(5,813	)			23,860				(1,521	)			16,526
Others			24				—				—				24

Ending balance			74,624				45,285				1,626				121,535

(3)	Changes in asset retirement obligation are as follows (Unit: Korean Won in millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---	---	---
		2019				2018
Beginning balance			67,200				61,872
Provisions provided			2,729				1,489
Provisions used			(2,276	)			(913	)
Reversal of provisions unused			(2,926	)			(1,038	)
Amortization			435				564
Increase in restoration costs and others			994				5,226
Business Combination (Note 45)			329				—

Ending balance			66,485				67,200

- 103 -

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 December 31, 2019, 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 last year in order to estimate future recovery cost.

(4)	Changes in other provisions are as follows (Unit: Korean Won in millions):
		For the year ended December 31, 2019
---	---	---	---	---
		Other provisions
Beginning balance			63,637
Provisions provided			109,875
Provisions used			(6,123	)
Reversal of provisions unused			(171	)
Foreign currencies translation adjustments			1,193
Others			224
Business combination (Note 45)			3,820

Ending balance			172,455

		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---
		Provisions for customer<br>reward credits				Other<br>provisions				Total
Beginning balance			40,445				58,791				99,236
Provisions provided			70,138				8,384				78,522
Provisions used			(98,170	)			(6,940	)			(105,110	)
Reversal of unused amount			—				(52	)			(52	)
Foreign currencies translation adjustments			—				(194	)			(194	)
Transfer (*1)			9,228				—				9,228
Others			27,539				3,648				31,187

Ending balance (*2)			49,180				63,637				112,817

(*1)	Provision for customer reward credits have increased for the Group due to the point transfer from partners<br>during the year ended in December 31, 2018.
---	---
(*2)	The provisions for existing points that are paid to credit card members and others have been reclassified to<br>other liabilities.
---	---
(5)	Others
---	---
1)	As of September 23, 2019, the Group temporarily suspended the<br>won-payment business due to tightened U.S. sanctions on Iran while it was ongoing to settle trade transactions between Korea and Iran. In connection with these services, the Group is currently being<br>investigated by US government agencies including US prosecutors (United States Attorney’s Office and New York State Attorney General’s Office) and Office of Foreign Assets Control as to whether the Group has violated United States laws by<br>participating in prohibited transactions involving the following countries: Iran, Sudan, Syria and Cuba, which have been sanctioned by the US.
---	---
2)	The Group recognized the provision of the estimated compensation amount related to the miss-selling of the<br>Derivative Linked Fund (DLF) incurred during the current term and a fine is expected to be imposed by the Financial Supervisory Service as the best estimate for the expenditure required to meet its obligations at the end of the reporting period. The<br>Group estimated such provision will be paid at the request of each counterparty, and estimates all amount will be paid within 2020. On the other hand, the actual amount of compensation of the Group may change due to interest rate changes since the<br>end of the reporting period.
---	---

- 104 -

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 salary at the time of termination. The assets of the plans are measured at their fair value at the end of reporting date. The plan liabilities are measured using the projected unit method, which takes account of projected earnings increases, using actuarial assumptions that give the best estimate of the future cash flows that will arise under the plan liabilities.

The Group is exposed to various risks through defined benefit retirement pension plan, and the most significant risks are as follows:

Volatility of asset		The defined benefit obligation was estimated with 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 interest rate.
Decrease in profitability of blue chip bonds		A decrease in profitability of blue chip bonds will be 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		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 are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---
Present value of defined benefit obligation			1,442,859				1,275,020
Fair value of plan assets			(1,352,971	)			(1,101,911	)

Net defined benefit liability (*)			89,888				173,109

(*) Net defined benefit liability of 89,888 million won at the end of the current term is the subtracted amount of the net defined benefit asset of 2,582 million won from the net defined benefit liability of 92,470 million won.

(2)	Changes in the carrying value of defined benefit obligation are as follows (Unit: Korean Won in millions):<br>
				For the year ended<br>December 31, 2019				For the year ended<br>December 31, 2018
---	---	---	---	---	---	---	---	---	---	---
Beginning balance					1,275,020				1,071,170
Subsequent amount from transfer company					93				—
Current service cost (*)					163,369				144,394
Interest cost (*)					32,693				32,143
		Financial assumption			32,831				59,429
Remeasurements		Demographic assumptions			49,453				7,728
		Experience adjustment			(33,518	)			33,697
Foreign currencies translation adjustments					179				(3	)
Retirement benefit paid					(79,908	)			(74,952	)
Business combination (Note 45)					4,674				—
Others					(2,027	)			1,414

Ending balance					1,442,859				1,275,020

- 105 -

(3)	Changes in the plan assets are as follows (Unit: Korean Won in millions):
		For the year ended<br>December 31, 2019				For the year ended<br>December 31, 2018
---	---	---	---	---	---	---	---	---
Beginning balance			1,101,911				1,027,906
Subsequent amount from transfer company			93				—
Interest income			30,937				33,825
Remeasurements			125				(14,783	)
Employer’s contributions			292,095				128,926
Retirement benefit paid			(76,304	)			(71,672	)
Others			(2,255	)			(2,291	)
Business combination (Note 45)			6,369				—

Ending balance			1,352,971				1,101,911

(4)	Plan assets wholly consist of fixed deposits as of December 31, 2019 and 2018. Among plan assets, realized<br>returns on plan assets amount to 31,062 million Won and 19,042 million Won for the years ended December 31, 2019 and 2018, respectively.
---	---

Meanwhile, the contribution expected to be paid in the next accounting year amounts to 156,396 million Won.

(5)	Current service cost, net interest income, loss (gain) on the curtailment or settlement and remeasurements<br>recognized in the consolidated statements comprehensive income are as follows (Unit: Korean Won in millions):
		For the year ended<br>December 31, 2019			For the year ended<br>December 31, 2019
---	---	---	---	---	---	---	---
Current service cost			163,369			144,394
Net interest expense (Income)			1,756			(1,682	)

Cost recognized in net income			165,125			142,712

Remeasurements			48,641			115,637

Cost recognized in total comprehensive income			213,766			258,349

Retirement benefits related to defined contribution plans recognized as expenses are 3,297 million Won and 2,437 million Won for the years ended December 31, 2019 and 2018, respectively.

- 106 -

(6)	Key actuarial assumptions used in net defined benefit liability measurement are as follows:<br>
		December 31, 2019		December 31, 2018
---	---	---	---	---
Discount rate		2.18~2.50%		2,69%
Future wage growth rate		1.89~6.00%		6.18%
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 a minimum of 6.91 to a maximum 11.85 years.

(7)	The sensitivity to actuarial assumptions used in the assessment of defined benefit obligation is as follows<br>(Unit: Korean Won in millions):
				December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---	---	---
Discount rate		Increase by 1% point			(151,104	)			(116,812	)
		Decrease by 1% point			178,434				136,990
Future wage growth rate		Increase by 1% point			176,169				135,767
		Decrease by 1% point			(152,174	)			(118,020	)
25.	OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES
---	---

Other financial liabilities and other liabilities are as follows (Unit: Korean Won in millions):


Other financial liabilities:
Accounts payable	6,131,339		5,409,268
Accrued expenses	2,516,231		2,224,330
Borrowings from trust accounts	3,277,795		3,747,492
Agency business revenue	362,820		396,735
Foreign exchange payables	1,153,457		539,554
Domestic exchange settlement credits	1,261,928		7,134,966
Lease liabilities	419,045		—
Other miscellaneous financial liabilities	2,587,193		1,992,663
Present value discount	(3,041	)	(2,484	)

Sub-total	17,706,767		21,442,524

Other liabilities:
Unearned income	224,840		204,034
Other miscellaneous liabilities	195,631		142,044

Sub-total	420,471		346,078

Total	18,127,238		21,788,602

- 107 -

26.	DERIVATIVES
(1)	Derivative assets and derivative liabilities are as follows (Unit: Korean Won in millions):<br>
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Nominal<br>amount			Assets									Liabilities
					For cash flow<br>hedge			For fair value<br>hedge			For trading			For cash flow<br>hedge			For fair value<br>hedge			For trading
Interest rate:
Futures			124,737			—			—			—			—			—			—
Swaps			150,731,987			—			111,764			300,750			1,323			—			413,195
Purchase options			460,000			—			—			11,888			—			—			—
Written options			395,789			—			—			—			—			—			9,655
Currency:
Futures			1,934						—			—			—			—			—
Forwards			113,988,295			—			—			1,447,811			321			—			1,030,246
Swaps			82,125,050			—			—			966,181			5,193			—			1,106,423
Purchase options			1,588,746			9,367			—			18,835			—			—			—
Written options			2,341,179			—			—			—			—			—			9,403
Equity:
Futures			630,562			—			—			—			—			—			—
Forwards			11			—			—			—			—			—			—
Swaps			1,280,436			—			—			1,217			—			—			54,393
Purchase options			8,851,984			—			—			175,221			—			—			—
Written options			8,978,953			—			—			—			—			—			219,831

Total			371,499,663			9,367			111,764			2,921,903			6,837			—			2,843,146

		December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Nominal<br>Amount			Assets						Liabilities
					For fair value<br>hedge			For trading			For cash flow<br>hedge			For fair value<br>hedge			For trading
Interest rate:
Futures			—			—			—			—			—			—
Swaps			150,710,490			35,503			218,140			665			17,654			266,207
Purchase options			530,000			—			10,461			—			—			—
Written options			525,000			—			—			—			—			12,438
Currency:
Futures			320,213			—			—			—			—			—
Forwards			88,376,776			—			843,621			—			—			777,039
Swaps			67,179,195			—			761,907			33,089			—			773,701
Purchase options			1,933,454			—			17,544			—			—			—
Written options			3,134,774			—			—			—			—			20,747
Equity:
Futures			186,737			—			—			—			—			—
Swaps			441,573			—			31,377			—			—			1,217
Purchase options			4,925,315			—			143,029			—			—			—
Written options			6,145,935			—			—			—			—			239,512

Total			324,409,462			35,503			2,026,079			33,754			17,654			2,090,861

- 108 -

Derivatives held for trading are classified into financial assets at FVTPL (Note 7) and financial liabilities at FVTPL (Note 20), and derivatives designated for hedging are presented as a separate line item in the consolidated statements of financial position.

(2)	Overview of the Group’s hedge accounting

The hedging relationships the entity applies fair value hedge accounting and cash flow hedge accounting to are affected by interest rate which is related with Interest Rate Benchmark Reform. The interest rates to which the hedging relationships are exposed are USD 1M LIBOR, USD 3M LIBOR, USD 6M LIBOR, and 3M EURIBOR. The nominal amounts of hedging instruments related to 1M LIBOR, 3M LIBOR, 6M LIBOR and 3M EURIBOR are USD 400,000,000, USD 2,230,000,000, USD 500,000,000, and EUR 26,635,556, respectively. The entity pays close attention to discussions in the market and industry regarding the applicable alternative benchmark interest rates for the exposed interest rate. The entity judges related uncertainty is expected to be no longer present when the exposed interest rates are replaced by the applicable benchmark interest rates.

1)	Fair value hedge

As of the current period end, the Group has applied fair value hedge on fixed interest rate foreign currency denominated debentures amounting to 3,151,172 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.

Pursuant to the interest rate swap agreement, by swapping the calculated difference between the fixed interest rate and floating interest rate applied to the nominal value, the fair value fluctuation risk is hedged as the foreign currency denominated debentures fixed interest rate terms are converted to floating interest rate. Pursuant to the interest rate swap agreement, hedge ratio is determined by matching the nominal value of hedged instrument to the face value of the hedged item.

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, the change in the total amount and price of the hedged item, or significant credit risk fluctuation of either party of the 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 fair 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 by 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 (6M) 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.

2)	Cash Flow Hedge

As of the December, 31 2019, the Group has applied cash flow hedge on local currency denominated debentures amounting to 99,941 million Won, debentures on foreign currency amounting to 729,141 million Won and Borrowings in foreign currency amounting to 34,443million won. The Group’s hedging strategies are to ① Mitigate risks of cash flow fluctuation from variable interest rate debentures on local currency due to changes in market interest rate by entering into an interest rate swap contract and thereby designating it as hedging instrument; ② Mitigate the risks of cash flow fluctuation from principal and interest of variable-interest rate debentures denominated in foreign currency due to changes in foreign exchange rates and interest rates by entering into a currency swap contract and thereby designating it as hedging instrument; ③ Mitigate the risks of cash flow fluctuation from principal and interest of fixed-interest rate debentures denominated in foreign currency due to changes in foreign exchange rates by entering into a currency swap contract and thereby designating it as hedging instrument and ④ Mitigate the risks of cash flow fluctuation in variable-interest rate foreign currency borrowings resulting from changes in market interest rates and designate it as a hedging instrument through entering into currency swap contracts and interest rate swap contracts.

- 109 -

This means exchanging a predetermined nominal amount as set forth in the interest rate swap contract adjusted by the differences between the fixed and variable interest rates, which results in the conversion of interest rates of debentures in local currency and borrowings in foreign currency from variable interest into fixed interest, eliminating the cash flow fluctuation risk.

In addition, this also means a payment of predetermined principal amount as set forth in the currency swap adjusted by fixed interest rate, an exchange of an amount calculated by applying variable interest rate to USD or applying fixed interest rate to SGD, and an exchange of the principal denominated in KRW and principal denominated in foreign currency at maturity eliminating cash flow fluctuation risk on principal and interest.

The hedge ratio is determined by matching the nominal amount of the hedging instrument to the face amount of the hedged item in accordance with interest rate swap and currency swap.

Only interest rate and foreign exchange rate fluctuation risk, which is the most significant factor in the cash flow fluctuation of the hedged item, is addressed in this hedging relationship, and other risk factors such as credit risk are not subject to hedging.

Thus, there could be hedge ineffectiveness arising from price margin set by the counterparty of hedging instruments and unilateral change in credit risk of any party in the transaction.

The interest rate swap, currency swap contract and the hedged item are all affected by the changes in market interest rate and foreign exchange rates which are basic factors of the derivative. The Group expects that the value of interest rate swap contract, currency swap contract and the hedged item will generally fluctuate in opposite direction.

(3)	The nominal amounts of the hedging instrument are as follows (Unit: USD, EUR, SGD, JPY and Korean Won in<br>millions):
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		1 year or less			1 year to 5 years			More than 5<br>years			Total
Fair value hedge
Interest rate risk
Interest rate swap ()		350,000,000			2,000,000,000			300,000,000			2,650,000,000
Cash flow hedge
Interest rate risk
Interest rate swap ()		—			26,635,556			—			26,635,556
Interest rate swap (KRW)		—			100,000			—			100,000
Foreign currencies translation risk and interest rate risk
Currency swap ()		150,000,000			330,000,000			—			480,000,000
Foreign currencies translation risk
Currency swap (SGD)		136,000,000			68,000,000			—			204,000,000
Currency forward ()		49,325,155			1,059,903,932			—			1,109,229,087

All values are in US Dollars.

- 110 -

	December 31, 2018
	1 year or less	1 year to 5 years	More than 5<br>years	Total
Fair value hedge
Interest rate risk
Interest rate swap ()	—	1,350,000,000	1,300,000,000	2,650,000,000
Cash flow hedge
Interest rate risk
Interest rate swap (KRW)	—	100,000	—	100,000
Foreign currencies translation risk and interest rate risk
Currency swap ()	50,000,000	450,000,000	—	500,000,000
Foreign currencies translation risk
Currency swap (SGD)	—	204,000,000	—	204,000,000

All values are in US Dollars.

(4)	The average interest rate and average currency rate of the hedging instrument as of December 31, 2019 and<br>December 31, 2018 are as follows:
		December 31, 2019
---	---	---
		Average interest rate and average exchange rate
Fair value hedge
Interest rate risk
Interest rate swap ()	Fixed 3.96% receipt and Libor 3M+1.61% floating paid<br><br><br>Fixed 5.88% receipt and Libor 6M+2.15% floating paid
Cash flow hedge
Interest rate risk
Interest rate swap ()	3M EURIBOR receipt, EUR 0.09% paid
Interest rate swap (KRW)	CMS 3Y+0.40% receipt, 2.38% paid
Foreign currencies translation risk and interest rate risk
Currency swap ()	USD 3M Libor+0.8% receipt, KRW 1.45% paid, KRW/USD = 1,155<br><br><br>USD 1M Libor+0.54% receipt, KRW 1.53% paid, KRW/USD = 1,158
Foreign currencies translation risk
Currency swap (SGD)	SGD 1.91% receipt, KRW 1.98% paid, KRW/SGD = 828
Currency forward ()	KRW/JPY = 10.47

All values are in US Dollars.

		December 31, 2018
		Average interest rate and average exchange rate
Fair value hedge
Interest rate risk
Interest rate swaps ()	Fixed 3.96% receipt and Libor 3M+1.61% floating paid<br><br><br>Fixed 5.88% receipt and Libor 6M+2.15% floating paid
Cash flow hedge
Interest rate risk
Interest rate swap (KRW)	CMS 3Y+0.40% receipt, 2.38% paid
Foreign currencies translation risk and interest rate risk
Currency swap ()	USD 3M Libor+0.70% receipt, KRW 1.74% paid, KRW/USD = 1,136<br><br><br>USD 1M Libor+0.52% receipt, KRW 1.70% paid, KRW/USD = 1,178
Foreign currencies translation risk
Currency swap (SGD)	SGD 1.91% receipt, KRW 1.98% paid, KRW/SGD = 828

All values are in US Dollars.

- 111 -

(5)	The amounts related to items designated as hedging instruments are as follows (Unit: Korean Won in millions,<br>USD, EUR, SGD and JPY):
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Nominal amounts ofthe hedginginstrument	Carrying amounts of the hedging<br>instrument						Line item in the<br>statement of financial<br>position where the hedging<br>instrument <br>is<br>located			Changing in fair<br>value used for<br>calculating hedge<br>ineffectiveness
				Assets			Liabilities
Fair value hedge
Interest rate risk
Interest rate swap		2,650,000,000		111,764			—			Derivative assets<br> <br>(designated for hedging)			90,244
Cash flow hedge
Interest rate risk
Interest rate swap		26,635,556		—			43			Derivative liabilities<br> <br>(designated for hedging)			(43	)
Interest rate swap		KRW 100,000		—			1,280			Derivative liabilities<br> <br>(designated for hedging)			(615	)
Foreign currency translation risk and interest rate risk
Currency swap		480,000,000		4,070			5,193			Derivative assets<br> <br>(designated for hedging)<br><br><br>Derivative liabilities<br><br><br>(designated for hedging)			22,364
Foreign currency translation risk
Currency swap		SGD 204,000,000		5,297			—			Derivative assets<br> <br>(designated for hedging)			8,918
Currency forward		1,109,229,087		—			321			Derivative liabilities<br> <br>(designated for hedging)			321

All values are in US Dollars.

	December 31, 2018
	Nominal amounts ofthe hedginginstrument	Carrying amounts of the hedging<br>instrument			Line item in the<br>statement of financial<br>position where the hedging<br>instrument is<br>located		Changing in fair<br>value used for<br>calculating hedge<br>ineffectiveness
			Assets	Liabilities
Fair value hedge
Interest rate risk
Interest rate swap	2,650,000,000		35,503	17,654		Derivative assets<br> <br>(Designated for hedging)<br><br><br>Derivative liabilities<br><br><br>(Designated for hedging)		(27,362	)
Cash flow hedge
Interest rate risk
Interest rate swap	KRW 100,000		—	665		Derivative liabilities<br> <br>(Designated for hedging)		(665	)
Foreign currencies translation risk and interest rate risk
Currency swap	500,000,000		—	28,907		Derivative liabilities<br> <br>(Designated for hedging)		21,582
Foreign currencies translation risk
Currency swap	SGD 204,000,000		—	4,182		Derivative liabilities<br> <br>(Designated for hedging)		2,353

All values are in US Dollars.

- 112 -

(6)	Details of carrying amount to hedge and amount due to hedge accounting are as follows (Unit: Korean won in<br>millions):
		December 30, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Carrying amounts of<br>the hedging item						Accumulated amount of fair<br>value hedge adjustments on<br>the hedged item included in<br>the carrying amount of the<br>hedged item						Line item in the<br>statement of<br>financial position<br>in which the<br>hedged item is<br>included				Changing in<br>fair value used<br>for calculating<br>hedge<br>ineffectiveness			Cash flow<br>hedge<br>reserve (*)
		Assets			Liabilities			Assets			Liabilities
Fair value hedge
Interest rate risk
Debentures			—			3,151,172			—			91,368			Debentures				(85,984	)		—
Cash flow hedge
Interest rate risk
Borrowings in foreign currency			—			34,443			—			—			Borrowing foreign<br>currency				43			(43	)
Debentures			—			99,941			—			—			Debentures				663			(821	)
Foreign currencies translation risk and interest rate risk
Debentures			—			554,433			—			—			Debentures				(25,057	)		(2,525	)
Foreign currencies translation risk
Debentures			—			174,708			—			—			Debentures				(8,315	)		(2,304	)

(*) After tax amount

	December 31, 2018
	Carrying amounts of<br>the hedging item				Accumulated amount of fair<br>value hedge adjustments on<br>the hedged item included in<br>the carrying amount of the<br>hedged item				Line item in the<br>statement of<br>financial position<br>in which the<br>hedged item is<br>included		Changing in<br>fair value used<br>for calculating<br>hedge<br>ineffectiveness			Cash flow<br>hedge<br>reserve (*)
	Assets		Liabilities		Assets		Liabilities
Fair value hedge
Interest rate risk
Debentures		—		2,956,565		—		5,200		Debentures		25,498			—
Cash flow hedge
Interest rate risk
Debentures		—		99,911		—		—		Debentures		521			(371	)
Foreign currencies translation risk and interest rate risk
Debentures		—		557,186		—		—		Debentures		(16,790	)		(1,211	)
Foreign currencies translation risk
Debentures		—		166,122		—		—		Debentures		(1,762	)		(2,287	)

(*) After tax amount

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(7)	Amounts recognized in profit or loss due to the ineffective portion of fair value hedges during the current<br>period are as follows (Unit: Korean Won in millions):
		For the year ended December 30, 2019
---	---	---	---	---	---	---	---
				Hedge ineffectiveness<br>recognized in profit or loss			Line item in the profit or loss that includes hedge<br>ineffectiveness
Fair value hedge		Interest rate risk			4,260		Other net operating income (expense)
		For the year ended December 30, 2018
---	---	---	---	---	---	---	---
				Hedge ineffectiveness<br>recognized in profit or loss			Line item in the profit or loss that includes hedge<br>ineffectiveness
Fair value hedge		Interest rate risk			(1,864	)	Other net operating income (expense)
(8)	Reclassification of profit or loss from other comprehensive income and equity related to cash flow hedges are<br>as follows (Unit: Korean won in millions):
---	---
				For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
				Changes in<br>the value of<br>hedging<br>instruments<br>recognized in<br>cash flow<br>hedge reserve			Hedge<br>ineffectiveness<br>recognized<br>in profit<br>or loss			Changes in<br>the value<br>of foreign<br>basis<br>spread<br>recognized<br>in OCI			Line item in the<br>profit or loss that<br>includes hedge<br>ineffectiveness	Amounts<br>reclassified<br>from cash<br>flow hedge<br>reserve to<br>profit or<br>loss			Line item<br>affected in profit<br>or loss due<br>to<br>reclassification
Cash flow hedge		Interest rate risk			(658	)		—			—		Other net<br>operating<br>income<br>(expense)		—		Other net<br>operating<br>income<br>(expense)
		Foreign currencies translation<br> <br>risk and interest rate risk			21,420			944			838		Other net<br>operating<br>income<br>(expense)		(23,541	)	Other net<br>operating<br>income<br>(expense)
		Foreign currencies translation<br>risk			7,638			1,601			560		Other net<br>operating<br>income<br>(expense)		(8,215	)	Other net<br>operating<br>income<br>(expense)
				For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
				Changes in<br>the value of<br>hedging<br>instruments<br>recognized in<br>cash flow<br>hedge reserve			Hedge<br>ineffectiveness<br>recognized<br>in profit<br>or loss			Changes in<br>the value<br>of foreign<br>basis<br>spread<br>recognized<br>in OCI			Line item in the<br>profit or loss that<br>includes hedge<br>ineffectiveness	Amounts<br>reclassified<br>from cash<br>flow hedge<br>reserve to<br>profit or<br>loss			Line item<br>affected in profit<br>or loss due<br>to<br>reclassification
Cash flow hedge		Interest rate risk			(517	)		(148	)		—		Other net<br>operating<br>income<br>(expense)		—		Other net<br>operating<br>income<br>(expense)
		Foreign currencies translation<br>risk and interest rate risk			21,429			153			(882	)	Other net<br>operating<br>income<br>(expense)		(23,084	)	Other net<br>operating<br>income<br>(expense)
		Foreign currencies translation<br>risk			2,353			—			(491	)	Other net<br>operating<br>income<br>(expense)		(3,601	)	Other net<br>operating<br>income<br>(expense)

- 114 -

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 years ended December 31
	2019			2018
Beginning balance		25,463			7,416
New transactions		53,289			23,678
Amounts recognized in losses		(26,493	)		(5,631	)

Ending balance		52,259			25,463

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 the transaction price as at the time of acquisition, even though there are difference noted between the transaction price and the fair value. The table above presents the difference yet to be realized as profit or losses.

28.	EQUITY
(1)	Details of equity as of December 31, 2019 and 2018 are as follows (Unit: Korean Won in millions):<br>
---	---
		December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---
Capital
Common stock capital			3,611,338				3,381,392
Hybrid securities (*1)			997,544				3,161,963
Capital surplus
Paid in capital in excess of par (*2)			608,348				269,533
Equity method			1,153				—
Others			16,794				16,356
Sub-total			626,295				285,889
Capital adjustments
Treasury stocks			—				(34,113	)
Other adjustments (*3)			(1,748,667	)			(1,607,647	)
Sub-total			(1,748,667	)			(1,641,760	)
Accumulated other comprehensive income
Financial assets at FVTOCI			(71,914	)			(87,182	)
Gain (loss) on evaluation of investment stocks by equity method			915				302
Gain (loss) from foreign business translation			(152,987	)			(244,735	)
Remeasurements of defined benefit plan			(270,977	)			(236,726	)
Gain (loss) on evaluation of cash flow hedge			(5,692	)			(3,869	)
Sub-total			(500,655	)			(572,210	)
Retained earnings (*4)			18,524,515				17,124,657
Non-controlling interest (1)(5)			3,981,962				213,113
Total			25,492,332				21,953,044

- 115 -

(*1)	At the end of the previous term, hybrid securities were issued by Woori Bank, a subsidiary company, and were<br>classified as non-controlling interests of capital from the 11th of January, 2019.
(*2)	Capital surplus increased as new shares were issued through a comprehensive stock exchange of shares when Woori<br>Financial Inc. was established. (Note 1)
---	---
(*3)	Included capital transaction gains and losses recognized by the 2014 merger of Woori Bank and (formerly) Woori<br>Financial Group Inc. During the current term, the Group entered to acquire and additional interest in the Woori Asset Trust Co., Ltd., reducing the capital adjustment by 111,242 million won.
---	---
(*4)	The regulatory reserved for credit loss under the relevant laws as of December 31, 2019 and 2018 are<br>2,356,246 million won, and 2,578,457 million won, respectively.
---	---
(*5)	69,533 million won increased as of December 31, 2019 due to business combination of Woori Asset<br>Management Corp., and Woori Asset Trust Co., Ltd. (Note 45)
---	---
(2)	The number of authorized shares and others of the Group are as follows:
---	---
		December 31, 2019
---	---	---	---
Shares of common stock authorized			4,000,000,000 Shares
Par value			5,000 Won
Shares of common stock issued			722,267,683 Shares
Capital stock			3,611,338 million Won
(3)	Details of changes in shares of the Group issued are as follows:
---	---
		December 31, 2019
---	---	---	---
Date of incorporation (*1)			680,164,306
Increase (*2)			42,103,377
Decrease			—
Ending Balance			722,267,683
(*1)	The number of shares issued by Woori Bank at the end of the business combination period is 676,000,000. When<br>Woori Financial Group Inc. was established, 4,164,306 shares were issued as a result of stock comprehensive exchange with Woori Bank which is a shareholder of Woori FIS Co., Ltd., Woori Finance Management Research Institute Co., Ltd., Woori Credit<br>Information Co., Ltd., Woori Private Equity Asset Management Co., Ltd., and Woori Fund Service Co., Ltd.
---	---
(*2)	New stocks were issued for the comprehensive stock exchange which was to transfer Woori Card Co., Ltd., as a<br>first level of subsidiary from second-tier subsidiary in September, 2019.
---	---
(4)	Hybrid securities
---	---

The bond-type hybrid securities classified as owner’s equity are as follows (Unit: Korean Won in millions):

	Issue date	Maturity
Securities in local currency	July 18, 2019	—	3.49	500,000
	October 11, 2019	—	3.32	500,000
Issuance cost				(2,456	)

Total				997,544

The hybrid securities mentioned above do not have maturity date but are redeemable after 5 years.

- 116 -

(5)	Details of changes in capital adjustments are as follows (Unit: Korean Won in millions):
		December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---
Beginning balance			(1,641,760	)			(1,849,551	)
Losses on redemption of hybrid securities			(277	)			(368	)
Net increase of treasury stocks			4,245				—
Transaction with other owners (*)			(110,875	)			208,159

Ending balance			(1,748,667	)			(1,641,760	)

(*)	111,242 million won is included which has been reduced by the Group to obtain an additional stake in the<br>Woori Asset Trust Co., Ltd.
---	---
(6)	Accumulated other comprehensive income
---	---

Changes in the accumulated other comprehensive income are as follows (Unit: Korean Won in millions):

		For the year ended December 31, 2019
		Beginning<br>balance			Increase<br>(decrease)<br>(*)			Reclassif-<br>ication<br>adjustments			Income<br>tax<br>effect			Ending<br>balance
Net gain (loss) on valuation of financial assets at FVTOCI			(87,182	)		(24,180	)		43,021			(3,573	)		(71,914	)
Share of other comprehensive gain (loss) of joint ventures and associates			302			(1,420	)		—			2,033			915
Gain (loss) on foreign currency translation of foreign operations			(244,735	)		96,157			—			(4,409	)		(152,987	)
Remeasurement gain (loss) related to defined benefit plan			(236,726	)		(48,244	)		—			13,993			(270,977	)
Gain (loss) on valuation of derivatives designated as cash flow hedges			(3,869	)		(32,719	)		31,756			(860	)		(5,692	)

Total			(572,210	)		(10,406	)		74,777			7,184			(500,655	)

(*)	The increase and decrease of financial asset valuation profit or loss at fair value through other comprehensive<br>income is a change due to the period evaluation and includes the amount of 29,368 million won replaced by retained earnings due to the disposal of the equity securities.
---	---
		For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Beginning<br>balance			Increase<br>(decrease)<br>(1)(2)			Reclassif<br>ication<br>adjustments			Income<br>tax<br>effect			Ending<br>balance
Net gain (loss) on valuation of financial assets at FVTOCI			(88,906	)		(8,677	)		8,015			2,386			(87,182	)
Gain (loss) on financial liabilities at FVTPL designated as upon initial recognition due to own<br>credit risk			(96	)		132			—			(36	)		—
Share of other comprehensive gain (loss) of joint ventures and associates			(2,656	)		4,080			—			(1,122	)		302
Gain (loss) on foreign currency translation of foreign operations			(242,806	)		(2,661	)		—			732			(244,735	)
Remeasurement gain (loss) related to defined benefit plan			(152,358	)		(111,401	)		—			27,033			(236,726	)
Gain (loss) on valuation of derivatives designated as cash flow hedges			777			30,655			(26,871	)		(8,430	)		(3,869	)
Transfer to assets held for distribution (sale)			4,145			(4,145	)		—			—			—

Total			(481,900	)		(92,017	)		(18,856	)		20,563			(572,210	)

(*1)	Net gain (loss) on valuation of financial assets at FVTOCI included the 1,009 million won transfer to<br>retained earnings due to disposal of equity securities.
---	---
(*2)	Gain (loss) on financial liabilities at fair value through profit or loss designated as upon initial<br>recognition due to credit risk included the 4 million won transferred to retained earnings due to redemption.
---	---

- 117 -

(7)	Regulatory Reserve for Credit Loss

In accordance with Paragraphs 1 and 3 of Article 27 of the Financial holding company Supervision Regulations, the Group calculates and discloses the regulatory reserve for credit loss.

1)	Balance of the regulatory reserve for credit loss

Balance of the planned regulatory reserve for credit loss is as follows (Unit: Korean Won in millions):

		December 31, 2019			December 31, 2018(*)
Beginning balance			2,356,246			2,578,457
Planned provision of regulatory reserve (reversal) for credit loss			191,301			(222,211	)

Ending balance			2,547,547			2,356,246

(*)	The amount is calculated and accumulated in accordance with Article 29 of the Banking Supervision Regulations,<br>paragraphs 1 and 2.
---	---
2)	Planned reserves provided, adjusted net income after the planned reserves provided and adjusted EPS after the<br>planned reserves provided are as follows (Unit: Korean Won in millions, except for EPS amount):
---	---
		For the years ended December 31
---	---	---	---	---	---	---
		2019			2018
Net income			2,037,596			2,051,649
Provision of regulatory reserve for credit loss (*)			191,301			40,875
Adjusted net income after the provision of regulatory reserve			1,846,295			2,010,774
Adjusted EPS after the provision of regulatory reserve<br><br><br>(Unit: Korean Won)			2,689			2,762
(*)	The amount of reserve for credit loss for the year ended December 31, 2018 is calculated<br>considering only the change in the reserve for credit loss after the accounting policy change due to adoption of K-IFRS 1109. Therefore, the effect of reducing the reserve for credit losses due to changes in<br>accounting policies was excluded.
---	---
(8)	Treasury stock
---	---

Details of treasury stocks are as follows (Unit: Shares, Korean Won in millions):

		December 31, 2019
		Number of<br>shares			Book<br>value
Beginning balance			2,728,774			34,113
Acquisition (*)			57,721,387			799,886
Disposal			(60,450,159	)		(833,999	)

Ending balance			2			—

(*)	At the establishment of Woori Financial Group Inc., Woori Bank acquired 15,618,008 shares of the Group. (The<br>comprehensive stock transfer of Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Woori Fund Services Co., Woori Private Equity Asset Management Co. and the parent company, Woori Financial Group Inc.<br>:4,164,306 shares, execution of the right to purchase shares from shareholders who were against to comprehensive stock transfer: 11,453,702 shares) In September 2019, Woori Bank acquired 42,103,377 additional shares of Woori Financial Group Inc.<br>through a comprehensive exchange of shares of Woori Card Co., Ltd. and Woori Financial Group Inc., the parent company. 2 shares of treasury stocks have been incurred for the provision for odd-lot payment<br>incurred during the partial stock replacement of the shareholders who possess physical stock certificate.
---	---

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29.	DIVIDENDS

Dividends for the years 2019 and 2018 are 700 Won and 650 Won, respectively, and the total amount of dividends paid are 505,587 million Won and 437,626 million Won, respectively. The dividends for the current period will be submitted as an agenda in the upcoming annual shareholders’ meeting scheduled on March 25, 2020.

30.	NET INTEREST INCOME
(1)	Interest income recognized is as follows (Unit: Korean Won in millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---
		2019			2018
Financial assets at FVTPL			50,619			54,243
Financial assets at FVTOCI			474,751			280,371
Financial assets at amortized cost
Securities at amortized cost			436,340			376,788
Loans and other financial assets at amortized cost:
Interest on due from banks			141,330			112,581
Interest on loans			9,443,740			8,832,485
Interest of other receivables			29,990			28,031

Sub-total			10,051,400			9,349,885

Total			10,576,770			9,684,499

(2)	Interest expense recognized are as follows (Unit: Korean Won in millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---
		2019			2018
Interest on deposits due to customers			3,424,441			2,917,165
Interest on borrowings			383,213			306,739
Interest on debentures			777,322			720,394
Other interest expense			89,002			89,250
Interest on lease liabilities			9,086			—

Total			4,683,064			4,033,548

31.	NET FEES AND COMMISSIONS INCOME
---	---
(1)	Details of fees and commissions income recognized are as follows (Unit: Korean Won in millions):<br>
---	---
		For the years ended December 31
---	---	---	---	---	---	---
		2019			2018
Fees and commission received for brokerage			156,578			162,344
Fees and commission received related to credit			189,597			173,233
Fees and commission received for electronic finance			137,289			121,250
Fees and commission received on foreign exchange handling			61,756			60,433
Fees and commission received on foreign exchange			92,408			66,036
Fees and commission received for guarantee			71,106			65,254
Fees and commission received on credit card			548,580			598,705
Fees and commission received on securities business			113,346			96,379
Fees and commission from trust management			180,290			177,456
Fees and commission received on credit Information			12,626			12,985
Other fees			145,750			146,689

Total			1,709,326			1,680,764

- 119 -

(2)	Details of fees and commissions expense incurred are as follows (Unit: Korean Won in millions):<br>
		For the years ended<br>December 31
---	---	---	---	---	---	---
		2019			2018
Fees and commissions paid			189,789			174,669
Credit card commission			407,689			428,613
Brokerage commission			775			1,833
Others			8,445			5,675

Total			606,698			610,790

32.	DIVIDEND INCOME
---	---
(1)	Details of dividend income recognized are as follows (Unit: Korean Won in millions):
---	---
		For the years ended<br>December 31
---	---	---	---	---	---	---
		2019			2018
Dividend income related to financial assets at FVTPL			86,979			67,892
Dividend income financial assets at FVTOCI			20,980			22,660

Total			107,959			90,552

(2)	Details of dividends related to financial assets at FVTOCI are as follows (Unit: Korean Won in millions):<br>
---	---
		For the years ended<br>December 31
---	---	---	---	---	---	---
		2019			2018
Dividend income recognized from assets held
Equity securities			20,980			22,386
Dividend income recognized in assets derecognized			—			274

Total			20,980			22,660

33.	NET GAIN OR LOSS ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS MANDATORILY MEASURED AT FAIRVALUE
---	---
(1)	Details of gains or losses related to net gain or loss on financial instruments at FVTPL are as follows (Unit:<br>Korean won in millions):
---	---
		For the years ended<br>December 31
---	---	---	---	---	---	---	---
		2019				2018
Gain on financial instruments at fair value through profit or loss mandatorily measured at fair<br>value			58,692				196,959
Gain on financial instruments at fair value through profit or loss designated as upon initial<br>recognition			(33,237	)			17,484

Total			25,455				214,443

- 120 -

(2)	Details of net gain or loss on financial instruments at fair value through profit or loss mandatorily measured<br>at fair value and financial instruments held for trading are as follows (Unit: Korean Won in millions):
								For the years ended December 31
---	---	---	---	---	---	---	---	---	---	---	---	---	---
								2019			2018
Financial assets at FVTPL (financial assets held for trading)			Securities			Gain on valuation			121,794			137,237
						Gain on disposals			64,600			45,105
						Loss on valuation			(61,288	)		(25,499	)
						Loss on disposals			(19,018	)		(26,728	)

						Sub-total			106,088			130,115

			Loans			Gain on valuation			1,037			1,606
						Gain on disposals			519			4,136
						Loss on valuation			(21	)		(4,805	)
						Loss on disposals			—			(117	)

						Sub-total		1,535			820

			Other financial<br>assets			Gain on valuation			2,062			2,050
						Gain on disposals			1,901			530
						Loss on valuation			(1,755	)		(2,280	)
						Loss on disposals			(1,815	)		(86	)

						Sub-total		393			214

			Sub-total						108,016			131,149

Derivatives<br><br><br>(for trading)			Interest rate<br>derivatives			Gain on transactions and valuation			1,507,254			1,255,581
						Loss on transactions and valuation			(1,615,833	)		(1,303,244	)

						Sub-total			(108,579	)		(47,663	)

			Currency<br>derivatives			Gain on transactions and valuation			6,872,513			4,935,922
						Loss on transactions and valuation			(6,855,447	)		(4,822,915	)

						Sub-total			17,066			113,007

			Equity<br>derivatives			Gain on transactions and valuation			839,196			486,560
						Loss on transactions and valuation			(796,336	)		(484,986	)

						Sub-total			42,860			1,574

			Other derivatives			Gain on transactions and valuation			695			4,138
						Loss on transactions and valuation			(1,366	)		(5,246	)

						Sub-total			(671	)		(1,108	)

			Sub-total						(49,324	)		65,810

			Total						58,692			196,959

- 121 -

(3)	Details of net gain (loss) on financial instruments at fair value through profit or loss designated as upon<br>initial recognition and Losses on financial instruments designated as at fair value through profit or loss are as follows (Unit: Korean Won in millions):
		For the years ended December 31
---	---	---	---	---	---	---	---	---
		2019				2018
Gain (loss) on equity-linked securities:
Loss on disposal of equity-linked securities			(16,006	)			(2,058	)
Gain (loss) on valuation of equity-linked securities			(17,231	)			17,945
Sub-total			(33,237	)			15,887
Gain on other financial instruments:
Gain on valuation of other financial instruments			—				1,597

Total			(33,237	)			17,484

34.	NET GAIN OR LOSS ON FINANCIAL ASSETS AT FVTOCI AND AFS FINANCIAL ASSETS
---	---

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
		2019		2018
Gain on redemption of securities			15		53
Gain on transactions of securities			11,000		1,994

Total			11,015		2,047

35.	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
	2019			2018
Impairment loss due to credit loss on<br><br><br>financial assets measured at FVTOCI		(3,297	)		(2,027	)
Impairment loss due to credit loss on securities at amortized cost		1,415			(1,922	)
Reversal for credit loss on loan<br><br><br>and other financial assets at amortized cost		(385,758	)		(415,084	)
Reversal of provision on guarantee		4,352			105,985
Reversal of provision on (provision for) unused loan commitment		9,044			(16,526	)

Total		(374,244	)		(329,574	)

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36.	GENERAL AND ADMINISTRATIVE EXPENSES AND OTHER NET OPERATING INCOME (EXPENSES)
(1)	Details of general and administrative expenses recognized are as follows (Unit: Korean Won in millions):<br>
---	---
						For the years ended December 31
---	---	---	---	---	---	---	---	---	---	---
						2019			2018
Employee<br><br><br>benefits		Short-term employee benefits		Salaries			1,584,791			1,484,236
				Employee fringe<br> <br>benefits			475,238			468,012
		Share based payments					6,328			—
		Retirement benefit service costs					168,423			145,149
		Termination					156,441			225,106

		Sub-total					2,391,221			2,322,503

Depreciation and amortization							481,176			216,735

Other general<br><br><br>and<br><br><br>administrative<br><br><br>expenses		Rent					85,705			321,198
		Taxes and public dues					137,137			115,454
		Service charges					235,117			222,530
		Computer and IT related					93,573			88,689
		Telephone and communication					70,220			70,618
		Operating promotion					45,594			43,540
		Advertising					85,887			72,450
		Printing					7,845			8,601
		Traveling					13,255			12,757
		Supplies					7,736			7,071
		Insurance premium					9,668			8,355
		Reimbursement					23,577			23,474
		Maintenance					18,495			17,384
		Water, light and heating					15,272			14,686
		Vehicle maintenance					10,564			10,264
		Others					34,035			47,724

		Sub-total					893,680			1,084,795

Total							3,766,077			3,624,033

(2)	Details of other operating income recognized are as follows (Unit: Korean Won in millions):<br>
---	---
		For the years ended December 31
---	---	---	---	---	---	---
		2019			2018
Gain on transactions of foreign exchange			602,115			1,227,561
Gain related to derivatives (Designated for hedging)			126,651			35,810
Gain on fair value hedged items			231			42,797
Others (*)			45,706			82,417

Total			774,703			1,388,585

(*)	Other income includes income amounting to 29,316 million Won for the years ended December 31, 2018,<br>that the Group recognized for it is to receive from other creditor financial institutions in accordance with the creditor financial institutions committee agreement.
---	---

- 123 -

(3)	Details of other operating expenses recognized are as follows (Unit: Korean Won in millions):<br>
		For the years ended December 31
---	---	---	---	---	---	---
		2019			2018
Losses on transactions of foreign exchange			192,331			991,423
KDIC deposit insurance premium			333,600			315,315
Contribution to miscellaneous funds			317,667			298,416
Losses related to derivatives (Designated for hedging)			3,686			36,483
Losses on fair value hedged items			86,214			17,299
Others (*)			143,786			124,240

Total			1,077,284			1,783,176

(*)	Other expense includes such expenses amounting to 1,594 million for the years ended December 31, 2018<br>, which are related to the Group’s expected payments to other creditor financial institutions in accordance with the creditor financial institutions committee agreement. In addition, in includes 22,317 million Won and 51,770 million<br>Won, respectively, of intangible asset amortization expense for the years ended December 31, 2019 and 2018, respectively.
---	---
(4)	Share-based payment
---	---

Details of performance condition share-based payment granted to executives as of December 31, 2019 is as follows.

1)	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		2023-01-01
Number of shares measured as of the closing date (*)		524,746 shares
(*)	The number of payable stocks is granted at the initial contract date and the payment rate is determined based<br>on the achievement of the pre-determined performance targets. Performance is evaluated as long-term performance indication including relative shareholder return, net income, return on equity (ROE), non-performing loan ratio and job performance.
---	---
2)	The Group accounts for performance condition share-based payments according to the cash-settled method and the<br>fair value of the liabilities is reflected in the compensation costs by re-measuring every closing period. As of December 31, 2019, the book value of the liabilities related to the performance condition<br>share-based payments recognized by the Group is 6,328 million Won.
---	---

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37.	OTHER NON-OPERATING INCOME (EXPENSES)
(1)	Details of gains or losses on valuation of investments in joint ventures and associates are as follows (Unit:<br>Korean Won in millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---	---	---
		2019				2018
Gains on valuation of investments in joint ventures and associates			103,775				25,791
Losses on valuation of investments in joint ventures and associates			(16,144	)			(22,595	)
Impairment losses of investments in joint ventures and associates			(3,634	)			(177	)

Total			83,997				3,019

(2)	Details of other non-operating income and expenses recognized are as<br>follows (Unit: Korean Won in millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---	---	---
		2019				2018
Other non-operating incomes			68,459				129,709
Other non-operating expenses			(229,383	)			(87,157	)

Total			(160,924	)			42,552

(3)	Details of other non-operating income recognized are as follows (Unit:<br>Korean Won in millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---
		2019			2018
Rental fee income			10,106			6,835
Gains on disposal of investments in joint ventures and associates			—			50,511
Gains on disposal of premises and equipment, intangible assets and other assets			1,632			30,278
Reversal of impairment loss of premises and equipment, intangible assets and other assets			103			761
Others			56,618			41,324

Total			68,459			129,709

(4)	Details of other non-operating expenses recognized are as follows<br>(Unit: Korean Won in millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---
		2019			2018
Depreciation on investment properties			2,225			4,045
Interest expenses of refundable deposits			834			620
Losses on disposal of investment in joint ventures and associates			—			2,931
Losses on disposal of premises and equipment, intangible assets and other assets			3,433			1,160
Impairment losses of premises and equipment, intangible assets and other assets			28,295			87
Donation			62,545			51,983
Others			132,051			26,331

Total			229,383			87,157

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38.	INCOME TAX EXPENSE
(1)	Details of income tax expenses are as follows (Unit: Korean Won in millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---	---
		2019				2018
Current tax expense:
Current tax expense with respect to the current period			612,680				432,645
Adjustments recognized in the current period in relation to the tax expense of prior<br>periods			(65,227	)			5,923

Sub-total			547,453				438,568

Deferred tax expense			138,000				314,655

Income tax expense			685,453				753,223

(2)	Income tax expense reconciled to net income before income tax expense is as follows (Unit: Korean Won in<br>millions):
---	---
		For the years ended December 31
---	---	---	---	---	---	---	---
		2019			2018
Net income before income tax expense			2,723,049			2,804,872
Tax calculated at statutory tax rate (*)			738,476			760,978
Adjustments:
Effect of income that is exempt from taxation			(61,730	)		(49,418	)
Effect of expenses that are not deductible in determining taxable income			31,549			18,639
Adjustments recognized in the current period in relation to the current tax of prior<br>periods			(65,227	)		5,923
Others			42,385			17,101

Sub-total			(53,023	)		(7,755	)

Income tax expense			685,453			753,223

Effective tax rate			25.2	%		26.9	%
(*)	The applicable income tax rate: 1) 11% for taxable income below 200 million Won, 2) 22% for above<br>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.
---	---

- 126 -

(3)	Changes in cumulative temporary differences for the years ended Deferred 31, 2019 and 2018, are as follows<br>(Unit: Korean Won in millions):
		For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Beginning<br>balance			Business<br>combination			Recognized as<br>income<br>(expense)			Recognized as<br>other<br>comprehensive<br>income<br>(expense) (*2)			Ending<br>Balance
Gain (loss) on financial assets			372,346			1,360			(91,781	)		(3,573	)		278,352
Gain on valuation using the equity method of accounting			28,354			90			(17,648	)		(83	)		10,713
Gain (loss) on valuation of derivatives			(27,507	)		6			(48,217	)		306			(75,412	)
Accrued income			(55,846	)		(52	)		(10,486	)		—			(66,384	)
Provision for loan losses			(52,345	)		—			(366	)		—			(52,711	)
Loan and receivables written off			6,672			—			221			—			6,893
Loan origination costs and fees			(154,431	)		—			(8,011	)		—			(162,442	)
Defined benefit liability			360,087			1,131			21,234			13,850			396,302
Deposits with employee retirement insurance trust			(318,330	)		(1,131	)		(62,458	)		143			(381,776	)
Provision for guarantee			11,374			—			(3,459	)		—			7,915
Other provision			75,194			76			10,958			2,228			88,456
Others (*1)			(204,083	)		(6,927	)		72,013			(5,687	)		(144,684	)

Net deferred tax assets			41,485			(5,447	)		(138,000	)		7,184			(94,778	)

(*1)	Among the deferred tax assets and liabilities classified as ‘Others,’ the deferred tax asset arising<br>from unused tax losses amounts to 21,656 million Won.
---	---
(*2)	Includes 2,737 million Won presented on non-controlling interests.<br>
---	---

- 127 -

		For the year ended December 31, 2018
					K-IFRS 1109 adoption effect
		Beginning<br>balance			Recognized as<br>retained<br>earnings			Recognized as<br>other<br>comprehensive<br>income (loss)		Beginning<br>balance after<br>K-IFRS<br>1109<br>adoption			Business<br>combination		Recognized as<br>income<br>(expense)			Recognized as<br>other<br>comprehensive<br>income<br>(expense) (*2)			Ending<br>Balance
Gain (loss) on financial assets			479,065			(150,140	)		149,796		478,721			—		(102,170	)		(4,205	)		372,346
Gain on valuation using the equity method of accounting			24,482			—			—		24,482			—		3,203			669			28,354
Gain (loss) on valuation of derivatives			(10,260	)		(3,990	)		—		(14,250	)		—		(13,617	)		360			(27,507	)
Accrued income			(60,987	)		—			—		(60,987	)		621		4,520			—			(55,846	)
Provision for loan losses			(47,697	)		47,446			—		(251	)		399		(52,493	)		—			(52,345	)
Loan and receivables written off			9,777			—			—		9,777			—		(3,105	)		—			6,672
Loan origination costs and fees			(137,320	)		36			—		(137,284	)		—		(17,147	)		—			(154,431	)
Defined benefit liability			284,234			—			—		284,234			317		43,821			31,715			360,087
Deposits with employee retirement insurance trust			(287,333	)		—			—		(287,333	)		—		(31,092	)		95			(318,330	)
Provision for guarantee			30,602			1,370			—		31,972			—		(20,598	)		—			11,374
Other provision			45,153			25,879			—		71,032			—		4,162			—			75,194
Others (*1)			(72,265	)		4,917			—		(67,348	)		44		(130,137	)		(6,642	)		(204,083	)

Net deferred tax assets			257,451			(74,482	)		149,796		332,765			1,381		(314,653	)		21,992			41,485

(*1)	Among the deferred tax assets and liabilities classified as ‘Others,’ the deferred tax asset arising<br>from unused tax losses amounts to 18,154 million Won.
---	---
(*2)	Includes 1,429 million Won presented on non-controlling interests.<br>
---	---

- 128 -

(4)	Unrealizable temporary differences are as follows (Unit: Korean Won in millions):
		December 31, 2019				December 31, 2018
---	---	---	---	---	---	---	---	---
Deductible temporary differences			171,714				272,911
Tax loss carry forward			41,546				149,035
Taxable temporary differences			(8,024,406	)			(868,541	)

Total			(7,811,146	)			(446,595	)

No deferred income tax asset has been recognized for the deductible temporary difference of 165,679 million Won associated with investments in subsidiaries and associates as of December 31, 2019, because it is not probable that the temporary differences will be reversed in the foreseeable future. 6,035 million Won associated with others, respectively, as of December 31, 2019, due to the uncertainty that these will be realized in the future.

No deferred income tax liability has been recognized for the taxable temporary difference of KRW 8,024,406 million associated with investment in subsidiaries and associates as of December 31, 2019, 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.

As of December 31, 2019, the expected extinctive date of tax loss carry forward that are not recognized as deferred tax assets are as follows (Unit: Korean Won in millions):

		1 year or less			1 –2 years
Tax loss carry forward			—			—		—	41,546
(5)	Details of accumulated deferred tax charged directly to other equity are as follows (Unit: Korean Won in<br>millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---	---
Gain on valuation of financial assets at FVTOCI			27,849			31,422
Gain on foreign currency translation of foreign operations			1,748			(285	)
Remeasurements of the net defined benefit liability			3,774			8,183
Gain on derivatives designated as cash flow hedge			102,120			88,127
Gain on valuation of financial assets at FVTOCI			280			1,140

Total			135,771			128,587

(6)	Current tax assets and liabilities are as follows (Unit: Korean Won in millions)
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Current tax assets			47,367			20,730
Current tax liabilities			182,690			159,078

- 129 -

39.	EARNINGS PER SHARE (“EPS”)

(1) Basic EPS is calculated by dividing net income attributable to common shareholders 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
	2019			2018
Net income attributable to Owners		1,872,207			2,033,182
Dividends to hybrid securities		(4,362	)		(151,194	)
Net income attributable to common shareholders		1,867,845			1,881,988
Weighted average number of common shares outstanding		685 million shares			673 million shares
Basic EPS		2,727 Won			2,796 Won

(2) **** The weighted average number of common shares outstanding is as follows:

	For the year ended December 31, 2019
	Period		Number of<br>shares			Dates		Accumulated number<br>of shares outstanding<br>during period
Common shares issued at the beginning of the period		2019-01-01 ~ 2019-12-31		673,271,226			365		245,743,997,490
Purchase of treasury stock		2019-01-08 ~ 2019-12-31		(11,453,702	)		358		(4,100,425,316	)
Disposal of treasury stock		2019-03-22 ~ 2019-12-31		18,346,782			285		5,228,832,870
Disposal of treasury stock (*)		2019-09-26 ~ 2019-12-31		28,890,707			97		2,802,398,579
Disposal of treasury stock (*)		2019-11-12 ~ 2019-12-31		13,212,670			40		528,506,800

Sub-total<br>(①)									250,203,310,423

Weighted average number of common shares outstanding (②=(①/365)									685,488,522

(*) Woori Bank disposed 42,103,377 shares of Woori Financial Group Inc. which were acquired through comprehensive stock exchange with the shares of Woori Card Co., Ltd., and its parent company, Woori Financial Group Inc.

	For the year ended December 31, 2018
	Period		Number of<br>shares		Dates		Accumulated number<br>of shares outstanding<br>during period
Common shares issued at the beginning of the period		2018-01-01 ~ 2018-12-31		673,271,226		365		245,743,997,490

Sub-total<br>(①)								245,743,997,490

Weighted average number of common shares outstanding (②=(①/365)								673,271,226

Diluted EPS is equal to basic EPS because there is no dilution effect for the three months ended December 31, 2019 and 2018.

- 130 -

40.	CONTINGENT LIABILITIES AND COMMITMENTS
(1)	Details of guarantees are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Confirmed guarantees
Guarantee for loans			89,699			125,870
Acceptances			391,688			371,525
Guarantees in acceptances of imported goods			224,746			158,179
Other confirmed guarantees			6,982,889			6,452,791

Sub-total			7,689,022			7,108,365

Unconfirmed guarantees
Local letters of credit			193,096			305,057
Letters of credit			3,081,390			3,322,731
Other unconfirmed guarantees			771,378			669,677

Sub-total			4,045,864			4,297,465

Commercial paper purchase commitments and others			884,031			1,260,587

Total			12,618,917			12,666,417

(2)	Details of unused loan commitments and others are as follows (Unit: Korean Won in millions):<br>
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Loan commitments			103,651,674			97,796,704
Other commitments			5,993,608			5,041,314
(3)	Litigation case
---	---

Legal cases where the Group is involved are as follows (Unit: Korean Won in millions):

		December 31, 2019				December 31, 2018
		As plaintiff		As defendant		As plaintiff		As defendant
Number of cases (*)			119 cases		415 cases		77 cases		154 cases
Amount of litigation			291,880		391,362		494,645		246,826
Provisions for litigations					27,029				17,925
(*)	The number of lawsuits as of December 31, 2019 and 2018 does not include fraud lawsuits, etc. and those<br>lawsuits that are filed only to extend the statute of limitation.
---	---
(4)	Recently, the FSS announced ‘Results of interim inspection of Lime Asset Management Co., Ltd and future<br>countermeasures’ regarding the deferment of the redemption of Lime Asset Management Co., Ltd. The status of the sale of the Lime Asset Management Co., Ltd. operation deferral fund of the Group is 357.7 billion won for 1,640 accounts as of<br>the end of December 2019. Currently, a full-time management team is dispatched to monitor the implementation of the normal repurchase and management plan of lime and proper performance of internal control work.
---	---
(5)	The Group decided to enter into a stock sales agreement with a major shareholder of Woori Asset Trust Co., Ltd<br>(formerly Kukje Asset Trust Co., Ltd) to acquire 44.5% interest (58.6% of voting rights) during July, 2019, and to acquire additional 21.3% interest (28.0% of voting rights) after a certain period. As a result, the Group acquired the interest of the<br>first sales agreement in December 2019 and is planning to acquire the interest of the second sales agreement after a certain period. In regards to this acquisition, the Group recognized 111,242 million as other financial liabilities for the second<br>sales agreement.
---	---

- 131 -

41.	RELATED PARTY TRANSACTIONS

Related parties of the Group as of December 31, 2019 and 2018, and assets and liabilities recognized, guarantees and commitments, major transactions with related parties and compensation to key management for the years ended December 31, 2019 and 2018 are as follows:

(1)	Related parties
		Related parties
---	---	---
Associates		Woori Service Networks Co., Ltd., Korea Credit Bureau Co., Ltd., Korea Finance Security Co., Ltd., LOTTE CARD Co., Ltd, Chin Hung International Inc., 2016KIF-IMM Woori Bank Technology<br>Venture Fund, K BANK Co., Ltd., Well to Sea No. 3 Private Equity Fund, and Others (Dongwoo C & C Co., Ltd. and other 31 associates)
(2)	Assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
---	---
Related party				A title of account		December 31,<br>2019			December 31,<br>2018
---	---	---	---	---	---	---	---	---	---	---	---
Associates		Woori Service Networks Co., Ltd.		Loans			23			69
				Loss allowance			(1	)		—
				Deposits due to customers			1,881			1,967
				Accrued expenses			6			—
				Other liabilities			429			333
		Korea Credit Bureau Co., Ltd.		Loans			3			7
				Deposits due to customers			26			6,494
				Other liabilities			—			19
		Korea Finance Security Co., Ltd.		Loans			1,860			57
				Loss allowance			(3	)		(4	)
				Deposits due to customers			1,371			5,040
				Other liabilities			—			10
		Chin Hung International Inc.		Loans			244			411
				Loss allowance			(2	)		(204	)
				Deposits due to customers			5,381			11,605
				Other liabilities			321			2,974
		LOTTE CARD Co. Ltd.		Loans			7,500			—
				Loss allowance			(30	)		—
				Deposits due to customers			2,726			—
		K BANK Co., Ltd.		Loans			141			190
				Account receivables			24			—
				Other assets			4			—
		Well to Sea No.3 Private Equity Fund		Loans			4,490			1,857
				Loss allowance			(8	)		(9	)
				Deposits due to customers			714			356
				Other liabilities			47			64
		Others (*)		Loans			84			4,783
				Loss allowance			(84	)		(324	)
				Other assets			338			9
				Deposits due to customers			5,577			8,049
				Other liabilities			172			165
(*)	Others include Saman Corporation,. Woori-Shinyoung Growth-Cap Private<br>Equity Fund, Uri Hanhwa Eureka Private Equity Fund, Kyesan Engineering Co., Ltd. and DAEA SNC Co., Ltd. etc., as of December 31, 2019 and 2018.
---	---

- 132 -

(3)	Gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
						For the years ended<br>December 31
---	---	---	---	---	---	---	---	---	---	---	---
Related party				A title of account		2019			2018
Associates		Kumho Tire Co., Inc. (* 1)		Interest income			—			1,098
				Reversal of allowance for credit loss			—			(156,712	)
		Woori Service Networks Co., Ltd		Other income			32			30
		.		Interest expenses			20			14
				Reversal of allowance for credit loss			(3	)		—
				Fees expenses			448			561
				Other expenses			1,423			580
		Korea Credit Bureau Co., Ltd.		Interest expenses			29			62
				Fees expenses			2,608			2,310
Associates		Korea Finance Security Co., Ltd.		Interest expenses			9			12
				Provisions for allowance for credit loss			8			4
				Other expenses			112			146
		Chin Hung International Inc		Interest expenses			35			43
				Provisions for allowance for credit loss			44			182
		STX Engine Co., Ltd. (*2)		Interest income			—			333
				Interest expenses			—			86
				Reversal of allowance for credit loss			—			(88,734	)
		STX Corporation (*2)		Interest expenses			—			2
				Reversal of allowance for credit loss			—			(31,210	)
		LOTTE CARD Co., Ltd.		Interest income			213			—
				Fees income			593			—
				Interest expenses			53			—
				Provisions for allowance for credit loss			30			—
		K BANK Co., Ltd.		Fees income			1,468			1,134
				Other income			—			19
		Well to Sea No. 3<br><br><br>Private Equity Fund		Interest income			1,774			2,179
				Interest expenses			11			9
				Reversal of allowance for credit loss			(18	)		(30	)
		Others (*3,4)		Interest income			—			233
				Fees income			1,281			23
				Other income			17			14
				Interest expenses			55			40
				Reversal of allowance for credit loss			(5	)		(147	)

- 133 -

(*1)	The Group lost significant influence over the entity due to the termination of the joint management procedures<br>of the creditors’ financial institution during the year ended December 31, 2018, and thus the entity was excluded from the list of associates.
(*2)	The shares of the entity were sold after it was transferred to assets held for distribution (sale) during the<br>year ended December 31, 2018 and thus was excluded from the list of associates.
---	---
(*3)	Others include Saman Corporation,. Woori-Shinyoung Growth-Cap Private<br>Equity Fund, Uri Hanhwa Eureka Private Equity Fund, PCC-Woori LP Secondary Fund, Kyesan Engineering Co., Ltd. and DAEA SNC Co., Ltd. etc., as of December 31, 2019.
---	---
(*4)	Others include Saman Corporation, Uri Hanhwa Eureka Private Equity Fund, Kyesan Engineering Co., Ltd, DAEA SNC<br>Co., Ltd. etc., as of December 31, 2018.
---	---
(4)	Major loan transactions with related parties for the years ended December 31, 2019 and 2018 are as follows<br>(Unit: Korean Won in millions):
---	---
				For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Related parties				Beginning<br>balance			Loan			Collection			Others			Ending<br>balance (*1)
Associates		Well to Sea No. 3 Private Equity Fund			1,857			2,633			—			—			4,490
		Korea Finance Security Co., Ltd.			—			1,800			—			—			1,800
		LOTTE CARD Co., Ltd.			—			7,500			—			—			7,500
				For the year ended December 31, 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Related parties				Beginning<br>balance			Loan			Collection			Others			Ending<br>balance (*1)
Associates		Kumho Tire Co., Inc. (*2)			57,470			—			7,057			(50,413	)		—
		Well to Sea No. 3 Private Equity Fund			73,810			16,857			88,810			—			1,857
		STX Engine Co., Ltd. (*3)			39,886			—			2,177			(37,709	)		—
(*1)	Payments that occurred for business reasons among related parties are excluded and net increase or decrease was<br>used for limited credit loan.
---	---
(*2)	The Group lost significant influence over the entity due to the termination of the joint management procedures<br>of the creditors’ financial institution during the year ended December 31, 2018, and thus the entity was excluded from the list of associates.
---	---
(*3)	The shares of the entity were sold after it was transferred to assets held for distribution (sale) during the<br>year ended December 31, 2018 and thus was excluded from the list of associates.
---	---
(5)	Details of changes in major deposits due to customers with related parties for the years ended<br>December 31, 2019 and 2018 are as follows (Unit: Korean Won in millions):
---	---
				For the year ended December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Related parties				Beginning<br>balance			Borrowings			Repayment<br>and others			Ending<br>balance (*1)
Associates		Saman Corporation			2,436			86			—			2,522
		Woori Service Networks Co., Ltd			1,180			1,460			1,460			1,180
		Chin Hung International Inc			765			400			765			400
.		Korea Credit Bureau Co., Ltd.			6,000			—			6,000			—
		Partner One Value Up I Private Equity Fund			1,403			1,617			1,870			1,150
		Korea Finance Security Co., Ltd.			535			25			560			—
				For the year ended December 31, 2018
Related parties				Beginning<br>balance			Borrowings			Repayment<br>and others			Ending<br>balance (*1)
Associates		Saman Corporation			2,334			102			—			2,436
		Woori Service Networks Co., Ltd			1,135			1,025			980			1,180
		Chin Hung International Inc			765			765			765			765
.		Korea Credit Bureau Co., Ltd.			4,000			12,000			10,000			6,000
		Partner One Value Up I Private Equity Fund			—			1,803			400			1,403
		Korea Finance Security Co., Ltd.			635			560			660			535
		STX Corporation (*2)			330			—			330			—
		STX Engine Co., Ltd. (*2)			10,256			—			10,256			—
		Kumho Tire Co., Inc. (*2)			37			—			37			—
		Hyunwoo International Co., Ltd. (*2)			41			—			41			—
(*1)	Details of payment between related parties and demand deposit due to customers etc. are excluded.<br>
---	---
(*2)	Excluded from associates due to disposal during the previous year.
---	---
(6)	There are no major borrowing transactions with related parties for the years ended December 31, 2019 and<br>2018.
---	---

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(7)	Guarantees provided to the related parties are as follows (Unit: Korean Won in millions):<br>
		December 31,<br>2019			December 31,<br>2018			Warranty
---	---	---	---	---	---	---	---	---
Korea Finance Security Co., Ltd.			400			203		Unused loan commitment
Korea Credit Bureau Co., Ltd.			32			28		Unused loan commitment
Woori Service Networks Co., Ltd.			177			131		Unused loan commitment
Chin Hung International Inc.			32,055			32,058		Unused loan commitment
K BANK Co., Ltd.			159			15		Unused loan commitment
Well to Sea No.3 Private Equity Fund			210,510			208,143		Unused loan commitment
LOTTE CARD Co. Ltd.			150,000			—		Unused loan commitment

There no recognized provisions for guarantees provided to the related parties as of December 31, 2019 and 2018, respectively.

(8)	Amount of derivatives-related commitments with the related parties
		For the years ended December 31
---	---	---	---	---	---	---	---	---
Warrantee		2019			2018			Warranty
Well to Sea No.3 Private Equity Fund			584,377			439,243		Open interest
(9)	Compensation for key management is as follows (Unit: Korean Won in millions):
---	---
		For the years ended<br>December 31
---	---	---	---	---	---	---
		2019			2018
Short-term employee salaries			13,427			12,326
Retirement benefit service costs			783			489
Share-based compensation			2,494			—

Total			16,704			12,815

Key management includes registered executives and non-registered executives. Outstanding assets from transactions with key management amount to 2,414 million Won and 2,816 million Won, as of December 31, 2019 and 2018 respectively and with respect to the assets, the Group has not recognized any allowance nor related impairment loss due to credit losses. Also, liabilities from transaction with key management amount to 6,543 million Won and 6,096 million Won, respectively, as of December 31, 2019 December 31, 2018,

42.	TRUST ACCOUNTS
(1)	Trust accounts of the Bank are as follows (Unit: Korean Won in millions):
---	---
		Total assets						Operating income
---	---	---	---	---	---	---	---	---	---	---	---	---
								For the years ended December 31
		December 31, 2019			December 31, 2018			2019			2018
Trust accounts			60,288,399			53,560,071			1,118,746			1,049,105
(2)	Receivables and payables between the Bank and trust accounts are as follows (Unit: Korean Won in millions):<br>
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Receivables:
Trust fees receivables			31,533			28,703

Payables:
Deposits due to customers			392,453			574,330
Borrowings from trust accounts			2,730,806			3,020,371

Total			3,123,259			3,594,701

- 135 -

(3)	Significant transactions between the Bank and trust accounts are as follows (Unit: Korean Won in millions):<br>
		For the years ended December 31
---	---	---	---	---	---	---
		2019			2018
Revenue:
Trust fees			171,072			177,913
Termination fees			488			5,885

Total			171,560			183,798

Expense:
Interest expenses on deposits due to customers			6,684			7,813
Interest expenses on borrowings from trust accounts			40,489			38,873

Total			47,173			46,686

(4)	Principal guaranteed trusts and principal and interest guaranteed trusts are as follows;
---	---
1)	The carrying value of principal guaranteed trusts and principal and interest guaranteed trusts are as follows<br>(Unit: Korean Won in millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Partial principal guaranteed trusts
Personal trust			9,430			9,989
Corporate trust			630			633
Deposit purpose			1,651			1,737

Sub-total			11,711			12,359

Principal guaranteed trusts
Old-age pension trusts			3,298			3,564
Personal pension trusts			516,913			521,200
Pension trusts			824,735			819,102
Retirement trusts			34,374			42,187
New personal pension trusts			7,807			8,104
New old-age pension trusts			1,742			2,134

Sub-total			1,388,869			1,396,291

Principal and interest guaranteed trusts
Development trusts			19			19
Unspecified money trusts			871			835

Sub-total			890			854

Total			1,401,470			1,409,504

2)	The amounts that the Bank must pay by the operating results of the principal guaranteed trusts or the principal<br>and interest guaranteed trusts are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019			December 31, 2018
---	---	---	---	---	---	---
Liabilities for the account (subsidy for trust account adjustment)			35			33

- 136 -

43.	RESTRUCTURING OF THE GOVERNANCE STRUCTURE OF THE GROUP
(1)	Establishment of the Group
---	---

On November 7, 2018, Woori Bank, a subsidiary of the parent company, obtained approval from the Financial Services Commission for the establishment of a holding company, and Woori Bank, held an extraordinary general meeting of shareholders on December 28, 2018 to approve the comprehensive transfer of six companies’ shares of Woori Bank and its subsidiaries Woori Finance Management Research Institute, Woori FIS Co., Ltd., Woori Fund Services Inc., Woori Credit Information Co. and Woori Private Equity Asset Management Co. to establish the financial holding company. As a result, Woori Bank and its subsidiaries Woori Finance Research Institute Co., Ltd., Woori FIS Co., Ltd., Woori Fund Services Inc., Woori Credit Information Co., Ltd., and Woori Private Equity Asset Management Co., Ltd. were transferred as wholly-owned subsidiaries to the Group. The Group’s common stocks were listed on the Korea Exchange on February 13, 2019 and its American Depositary Shares (ADSs) are being traded underlying common stock on the New York Stock Exchange since the same date.

(2)	Accounting treatment of the Group

From the perspective of the Group, the establishment of the parent company in a comprehensive share transfer of the controlling, subordinate or subsidiary to restructure the governance under the same control is a transaction that lacks commercial substance with no change in the assets and liabilities of the subsidiary, with no significant change in the existing owners’ absolute and relative interest in the Group net assets. Therefore, the Group accounted for the governance restructuring as it saw the consolidation entity continuing and presented the consolidated financial statements and notes in comparison. Consolidated financial statements in the comparative period are consolidated financial statements of Woori Bank and its subsidiaries (before the scheduled sale classification of five subsidiaries excluding Woori Bank) and consolidated financial statements in the first (current) period are consolidated financial statements of the parent and its subsidiaries, including Woori Bank.

- 137 -

44.	LEASES
(1)	The future lease payments under the lease contracts are as follows (Unit: Korean won in millions):<br>
---	---
		December 31, 2019
---	---	---	---
Lease payments
Within one year			161,251
After one year but within five years			232,985
After five years			40,698

Total			434,934

(2)	Total cash outflows from lease are as follows (Unit: Korean won in millions):
---	---
		For the year ended<br>December 31, 2019
---	---	---	---
Cash outflows from lease			217,867
(3)	Details of lease payments that are not included in the measurement of lease liabilities due to the fact that<br>they are short-term leases or leases for which the underlying asset is of low value are as follows (Unit: Korean won in millions):
---	---
		For the years ended December 31
---	---	---	---
Lease payments for short-term leases			1,964
Lease payments for which the underlying asset is of low value			332

Total			2,296

45.	BUSINESS COMBINATION
---	---
(1)	General
---	---

As of August 1, 2019, the Group acquired 73% interests in Tong Yang Asset Management Co., Ltd. and changed the name of Tong Yang Asset Management Co., Ltd. to Woori Asset Management Corp. As of August 1, 2019, the Group obtained control of 100% of ABL Global Asset Management Co., Ltd. and transferred it as a subsidiary as of December 6, 2019, and changed its name to Woori Global Asset Management Co., Ltd.. As of December 30, 2019, the Group acquired 67.2% interests (including 8.6% interest that Woori Bank held) in the Kukje Asset Trust Co., Ltd. and changed the name Woori Asset Trust Co., Ltd.. The main reasons for the business combination are to maximize synergy between the consolidated subsidiaries and to strengthen the non-bank business portfolio.

The operating profit and net profit of Woori Asset Management Corp., reflected in the consolidated statement of comprehensive income for the five months after the acquisition date, are 2,365 million won and 1,720 million won, respectively, and the operating and net losses of Woori Global Asset Management Co., Ltd. are 1,751 million won and 1,360 million won, respectively. Assuming that the acquisition of Woori Asset Management Corp., Woori Global Asset Management Co., Ltd. and Woori Asset Trust Co., Ltd. was settled on January 1, 2019, the starting date of the annual reporting period, the operating and net profit of Woori Asset Management Corp. would be 10,572 and 7,976 million won, respectively, the operating and net losses of Woori Global Asset Management Co., Ltd. would be 3,711 million and 2,774 million won, respectively, and the operating and net profit of Woori Asset Trust Co., Ltd. would be 41,154 million and 30,981 million won.

- 138 -

(2)	Identifiable net assets

Identified assets and liabilities as of December 31, 2019 are as follows (Unit: Korean Won in millions):

		Accounts
Assets		Cash and cash equivalent	12,914	2,318	67,555
		Financial assets at FVTPL	49,446	2,470	654
		Financial assets at FVTOCI	26,393	—	—
		Financial assets at amortized cost (1)(3)	16,739	25,612	61,792
		Premises and equipment	1,610	2,145	3,983
		Intangible assets (*2)	6,667	264	39,577
		Deferred tax assets	1,547	1,551	1,524
		Others	63	60	1,828

		Sub-total	115,379	34,420	176,913

Liabilities		Financial liabilities	5,129	3,329	12,180
		Provision liabilities	221	108	3,820
		Deferred tax liabilities	1,085	13	8,971
		Others	159	—	29,410

		Sub-total	6,594	3,450	54,381

Fair value of net identifiable assets			108,785	30,970	122,532

(*1)	The acquired financial assets at amortized cost were estimated at fair value. The contractual total of the<br>financial assets at amortized cost of Woori Asset Management Corp. is 18,680 million won, and the contractual cash flows that are not expected to be recovered as of the acquisition date are 1,941 million won. Woori Global Asset Management<br>Co., Ltd. has a contractual total of 25,613 million won for financial assets measured at amortized cost. The contractual total of Woori Asset Trust Co., Ltd.’s financial assets at amortized cos are 72,686 million won and will be<br>recovered as of the acquisition date. Unexpected contractual cash flow is 10,894 million won.
---	---
(*2)	The intangible assets of Woori Asset Management Corp. and Woori Asset Trust Co., Ltd. each include<br>6,456 million won in customer relationships and 37,074 million won in order backlog as a result of business combination and were valued at fair value through the Multi-Period Over-Return Act (MEEM) as they were judged separately<br>identifiable intangible assets. A multi-term excess profit method is a method to estimate the future cash flows generated by each intangible asset and to discount the cash flows generated purely by that intangible asset to its present value by<br>deducting the portion of the asset’s contribution to that cash flow generation.
---	---
(*3)	The Group has set 100% loan loss allowance for non-collected accrued<br>income form operation Woori Asset Management Corp. In addition, although the fund investors have filed a lawsuit seeking compensation for damages, this financial effect was not reflected in the consolidated financial statements as of the end of the<br>current term because the possibility of loss and extent of loss cannot be measured reliably at the end of the current term.
---	---

If, within one year of the acquisition date, new information obtained about the facts and circumstances that existed at the acquisition date requires the adjustment of the amounts recognized at the acquisition date, or the recognition of additional provisions existing at the acquisition date, the accounting for the business combination will be adjusted.

- 139 -

(3)	Goodwill

Recognized goodwill as a result of business combination are as follows (Unit: Korean Won in million):


Transfer price		122,450	33,000	224,150
Fair value of net identifiable asset		108,785	30,970	122,532
Non-controlling interest (*)		29,371	—	40,162
Goodwill		43,036	2,030	141,780
(*)	The non-controlling interest in Woori Asset Management Corp. and Woori<br>Asset Trust Co., Ltd. acquired during the year ended December 31, 2019, was measured as the proportion of the non-controlling interest in the acquiree’s identifiable net assets.<br>
---	---

In the event of a business combination, the consideration transferred includes the premium paid to acquire Woori Asset Management Corp., Woori Global Asset Management Co., Ltd. and Woori Asset Trust Co., Ltd. which results in goodwill. In addition, the consideration paid for the business combination includes expected synergies, revenue growth, and the amount related to future market growth. However, these benefits through Woori Global Asset Management Co., Ltd. did not meet the identifiable intangible asset recognition requirements and were not recognized separately from goodwill.

The Group also acquired a relationship with a customer of Woori Asset Management Corp. and order backlog of Woori Asset Trust Co., Ltd. as part of the acquisition. These relationships with customers were recognized separately from goodwill because they met the reparability criteria to meet the recognition requirements for intangible assets.

(4)	Business combination cost

The Group incurred 2,634 million won, including legal fees and due diligence fees, in relation to the business combination, and the amount was recognized as a fee expense in the consolidated statement of comprehensive income of the Group.

(5)	Net cash outflow due to business combination

Details of net cash outflows due to business combination are as follows (Unit: Korean Won in million):


Consideration paid in cash		122,450	33,000	224,150
Acquired cash and cash equivalents		12,914	2,318	67,555

Deduction in total		109,536	30,682	156,595

46.	EVENTS AFTER THE REPORTING PERIOD
---	---

The Coronavirus disease (COVID-19) outbreak in January, 2020 is having a negative impacts on the global economy, including Korea. As a result, the macroeconomic environment is unstable overall. The Group is closely monitoring the situation; however, the impact on the Group due to the Coronavirus cannot be estimated as of the financial statements approval for the issuance date.

- 140 -

EX-99.2

Exhibit 99.2

WOORI FINANCIAL GROUP

SEPARATE FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND FOR THE PERIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION) TO DECEMBER 31, 2019

ATTACHMENT: INDEPENDENT AUDITOR’ REPORT

WOORIFINANCIAL GROUP

INDEPENDENT AUDITORS’ REPORT

English Translation of a Report Originally Issued in Korean on March 16, 2020

To the Shareholders and the Board of Directors of Woori Financial Group Inc.

Report on the Separate Financial Statements

AuditOpinion

We have audited the separate financial statements of Woori Financial Group (the “Company”), which comprise the separate statement of financial position as of December 31, 2019, and the separate statement of comprehensive income, separate statement of changes in equity and separate statement of cash flows, for the period from January 11, 2019 (date of incorporation) to December 31, 2019, and a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying separate financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and its financial performance and its cash flows for the the period from January 11, 2019 (date of incorporation) to December 31, 2019 in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

Basis for Audit Opinion

We conducted our audits in accordance with the Korean Standards on Auditing (“KSAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements, including those related to independence, that are relevant to our audit of the separate financial statements in the Republic of Korea as required by prevailing audit regulations. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

Impairment Losses of Subsidiary Investment Equities in compliance withK-IFRS 1036 ‘Impairment of Assets’

Key audit matter description

As described in notes 2 and 9, the company accounts for its investment in subsidiaries by selecting the cost method in accordance with K-IFRS 1027 and assessing their potential for impairment. If there is any indication of objective impairment, the difference between the recoverable amount and the carrying amount of the subsidiary investment shares is recognized as impairment losses, and the recoverable amount is measured by calculating the estimated future cash flows based on the previous financial and operating plan data.

The measure of recoverable amount of subsidiary investment shares uses discount rate, growth rate and expected economic indicators, and significant management judgment is involved in determining their adequacy.

Given the high level of estimation and judgement of management, the audit of impairment assessment of subsidiary investment shares involves complex and subjective judgment by experts. Therefore, we selected the impairment loss assessment of subsidiaries’ investment shares as the key audit matter

How the scope of our audit responded to the key audit matter

Our audit procedures related to the assumptions and unobservable inputs used by management for the estimate of the recoverable amount included the following:

-	The effectiveness of the design and operation of internal controls related to the impairment assessment<br>process, including the use of external experts by the company’s management, has been tested.
-	We verified the process of determining the rationale of the input variables used and the discount rate, growth<br>rate, and expected economic indicators by using the shareholder cash flow discount method by engaging a fair value valuation specialist.
---	---
-	The recoverable amount was recalculated by considering the discount rate and future cash flows deemed<br>appropriate with the fair value valuation specialist.
---	---

Responsibilities of Management and the Those Charged with Governance for the Separate FinancialStatements

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

In preparing the separate financial statements, management of the Company is responsible for assessing the Company’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 Company or to cease operations, or has no realistic alternative but to do so.

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

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

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

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

-	Identify and assess the risks of material misstatement of the separate financial statements, whether due to<br>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<br>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<br>appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
---	---
-	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and<br>related disclosures made by management.
---	---
-	Conclude on the appropriateness of the management’s use of the going concern basis of accounting and,<br>based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty<br>exists, we are required to draw attention in our auditor’s report to the related disclosures in the separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence<br>obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
---	---
-	Evaluate the overall presentation, structure and content of the separate financial statements, including the<br>disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
---	---

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

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

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

The engagement partner on the audit resulting in this independent auditor’s report is Tae Jin Jo.

March 16, 2020

Notice to Readers

This report is effective as of March 16, 2020 the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’ report date and the time the auditors’ report is read. Such events or circumstances could significantly affect the separate financial statements and may result in modifications to the auditors’ report.

WOORI FINANCIAL GROUP INC.

SEPARATE FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND FOR THE PERIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION) TO DECEMBER 31, 2019

The accompanying separate financial statements, including all footnote disclosures, were

prepared by, and are the responsibility of, the management of Woori Financial Group Inc.

Tae Seung Son

President and Chief Executive Officer

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

(Phone Number) 02-2125-2000

WOORI FINANCIAL GROUP INC.

SEPARATE STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2019

	December 31,<br>2019
	(Korean Won in millions)
ASSETS
Cash and cash equivalents (Note 5 and 28)		43,670
Financial assets at fair value through profit or loss (“FVTPL”) (Note 4, 6, 8 and<br>16)		9,434
Loans and other financial assets at amortized cost (Notes 4, 7, 8 and 28)		1,269,203
Investments in subsidiaries (Note 9 and 28)		19,873,593
Premises and equipment (Note 10 and 28)		7,383
Intangible assets (Note 11)		3,310

Total assets		21,206,593

LIABILITIES
Debentures (Notes 4, 8 and 12)		947,679
Provisions (Note 13)		600
Net defined benefit liability (Note 14)		3,482
Current tax liabilities (Note 25)		133,526
Deferred tax liabilities (Note 25)		154
Other financial liabilities (Notes 4, 8, 15, 28 and 29)		10,745
Other liabilities (Notes 15 and 28)		4,142

Total liabilities		1,100,328

EQUITY
Owners’ equity:
Capital stock (Note 17)		3,611,338
Hybrid security (Note 17)		997,544
Capital surplus (Note 17)		14,874,084
Other equity (Note 17)		(631	)
Retained Earnings (Note 17)<br>(Regulatory reserve for credit loss has no balance.<br>Regulatory<br>reserve for credit loss to be reserved is 692 million Won.<br>Planned provision of regulatory reserve for credit loss is 692 million Won)		623,930

Total equity		20,106,265

Total liabilities and equity		21,206,593

See accompanying notes

WOORI FINANCIAL GROUP INC.

SEPARATE STATEMENTS OF COMPREHENSIVE INCOME

FOR THE PEIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION) TO DECEMBER 31, 2019

	For the period from<br>January 11, 2019<br>(Date of incorporation) to<br>December 31, 2019
	(Korean Won in millions,<br>except for per share data)
Interest income		7,741
Interest expense		(7,701	)

Net interest income (Note 8,18 and 28)		40
Fees and commissions income		—
Fees and commissions expense		(15,833	)

Net fees and commissions loss (Note 19 and 28)		(15,833	)
Dividend income (Note 20 and 28)		676,000
Net gain on financial instruments at FVTPL (Note 8 and 21)		9,434
Impairment losses due to credit loss (Note 8, 22 and 28)		(263	)
General and administrative expenses (Notes 23 and 28)		(39,941	)

Operating income		629,437
Net other non-operating expense		(750	)

Non-operating loss (Note 24)		(750	)

Net income before income tax expense		628,687
Income tax expense (Note 25)		(394	)

Net income for the period(Adjusted net income after the provision of regulatory<br>reserve:<br>For the period from January 11, 2019 (Date of incorporation) to December 31, 2019: 627,601 million Won) (Note 17)		628,293

Remeasurement of the net defined benefit liability		(631	)

Other comprehensive loss, net of tax		(631	)

Total comprehensive income		627,662

Basic and diluted income per share (in Korean Won) (Note 26)		900

See accompanying notes

WOORI FINANCIAL GROUP INC.

SEPARATE STATEMENTS OF CHANGES IN EQUITY

FOR THE PERIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION) TO DECEMBER 31, 2019

	Capital<br>stock
	(Korean Won in millions)
January 11, 2019<br><br><br>(Date of incorporation)		3,400,822	14,565,637		—	—		—		17,966,459
New stock issuance<br><br><br>(Comprehensive stock exchange)		210,516	309,460		—	—		—		519,976
New stock issuance costs		—	(1,013	)	—	—		—		(1,013	)
Net income		—	—		—	—		628,293		628,293
Remeasurement of the net defined benefit liability		—	—		—	(631	)	—		(631	)
Issuance of hybrid security		—	—		997,544	—		—		997,544
Dividends to hybrid security		—	—		—	—		(4,363	)	(4,363	)

December 31, 2019		3,611,338	14,874,084		997,544	(631	)	623,930		20,106,265

See accompanying notes

WOORI FINANCIAL GROUP INC.

SEPARATE STATEMENTS OF CASH FLOWS

FOR THE PERIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION) TO DECEMBER 31, 2019

	For the period from<br>January 11, 2019<br>(Date of incorporation) to<br>December 31, 2019
	(Korean Won in millions)
Cash flows from operating activities:
Net income		628,293
Adjustments:
Income tax expense		394
Interest income		(7,741	)
Interest expense		7,701
Dividend income		(676,000	)

		(675,646	)

Additions of expenses not involving cash outflows:
Impairment losses due to credit loss		263
Retirement benefits		4,899
Depreciation and amortization		4,098

		9,260

Deductions of incomes not involving cash<br>in-flows:
Gain on valuation of financial instruments at FVTPL		9,434

		9,434

Changes in operating assets and liabilities:
Loans and other financial assets at amortized cost		(1,365	)
Net defined benefit liabilities		(1,687	)
Other financial liabilities		7,055
Other liabilities		4,142

		8,145

Interest income received		4,082
Interest expense paid		(6,097	)
Dividend income received		676,000

Net cash provided by operating activities		634,603

Cash flows from investing activities:
Cash in-flows from investing activities		—
Cash out-flows from investing activities:
Acquisition of investments subsidiaries		1,370,785
Acquisition of premises and equipment		6,722
Acquisition of intangible assets		4,630
Increase in guarantee deposits for leases		955
Increase in other investment assets		1,130,000

		2,513,092

Net cash used in investing activities		(2,513,092	)

Cash flows from financing activities:
Cash in-flows from financing activities:
Increase in borrowings		64,769
Issuance of debentures		947,604
Issuance of hybrid security		997,544

		2,009,917

(Continued)

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM STATEMENTS OF CASH FLOWS

FOR THE PERIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION) TO DECEMBER 31, 2019

(CONTINUED)

	For the period from<br>January 11, 2019<br>(Date of incorporation) to<br>December 31, 2019
	(Korean Won in millions)
Cash out-flows from financing activities:
Decrease in borrowings		64,769
Repayment of lease liabilities		1,289
New stock issuance costs		17,337
Dividends to hybrid security		4,363

		87,758

Net cash provided by financing activities		1,922,159

Net increase in cash and cash equivalents		43,670
Cash and cash equivalents, date of incorporation (Note 5)		—

Cash and cash equivalents, end of the year (Note 5)		43,670

See accompanying notes

WOORI FINANCIAL GROUP INC.

NOTES TO SEPARATE FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2019 AND FOR THE PERIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION) TO DECEMBER 31, 2019

1.	GENERAL
(1)	Woori Financial Group
---	---

Effective as of January 11, 2019, Woori Financial Group Inc. (hereinafter referred to the “Company”) was established in accordance with the Financial Holding Companies Act for the main purposes of controlling subsidiaries that operate financial business and similar business closely related to finance, through comprehensive stock transfer under Article 360-15 of the Korean Commercial Code of Woori Bank, Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd. and Woori Private Equity Asset Management Co., Ltd..

The head office of the Company is located in 51, Sogong-ro, Jung Gu, Seoul, Korea. As of September 30, 2019, the common stock of the Company amounts to 3,611,338 million Korean won, and the Korea Deposit Insurance Corporation (“KDIC”), the majority shareholder of the Company holds 124,604,797 shares (17.25% ownership interest) of the Company’s shares issued. The Company’s common stocks were listed on the Korea Exchange on February 13, 2019 and its American Depositary Shares (“ADS”) are being traded as the original stock on the New York Stock Exchange since the same date.

(2)	The stock transfer of the Company and its subsidiaries on the date of incorporation is as follows (Unit: Number<br>of shares):
Subsidiaries		Total number of<br>issued shares			Exchange ratio<br>per share			Number of shares in<br>the Company
---	---	---	---	---	---	---	---	---	---
Woori Bank			676,000,000			1.0000000			676,000,000
Woori FIS Co., Ltd.			4,900,000			0.2999708			1,469,857
Woori Finance Research Institute Co., Ltd.			600,000			0.1888165			113,289
Woori Credit Information Co., Ltd.			1,008,000			1.1037292			1,112,559
Woori Fund Service Co., Ltd.			2,000,000			0.4709031			941,806
Woori Private Equity Asset Management Co., Ltd.			6,000,000			0.0877992			526,795

As of August 1, 2019, the company acquired a 73% stake in Woori Asset Management Co. (Formerly Tongyang Asset Management Co.). The remaining payment was completed in August, 2019 after the request for the change of major shareholder was approved by the Financial Service Commission in July, 2019 and the company gained 100% control of Woori Global Asset Management Co. (formerly ABL Global Asset Management Co.) to add as a consolidated subsidiary at the end of 2019.

The company paid 598,391 million won in cash and 42,103,377 new shares of the parent company to acquire 100% interest of Woori Card Co., Ltd. from its subsidiary Woori Bank on September 10, 2019. On the same date, the company also acquired 59.8% interest of Woori Investment Bank Co., Ltd. from Woori Bank with 392,795 million won in cash.

As of December 30, 2019, the company acquired a 67.2% interest in Woori Asset Trust Co. (formerly Kukje Asset Trust Co.).

2.	BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
(1)	Basis of presentation
---	---

The Company’s separate financial statements are prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”). Significant accounting policies applied in the preparation of the financial statements are described below.

The Company is preparing its financial statements in accordance with the K-IFRS, and the separate financial statements are prepared in accordance with K-IFRS 1027 “Separate Financial Statements”. The financial statements of the parent, associate or joint venture represent the investment assets in a manner that is based on direct equity investments, not based on the reported performance and net assets of the investee.

The financial statements are prepared at the end of each reporting period on the 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.

The financial statements of the company were approved with adjustments as of March 3, 2020 after the initial approval for the issuance as of February 7, 2020, and are planned to be finalized at the shareholder’s meeting on March 25, 2020.

1.1	It is believed that the following issued and revised standards that have been newly applied during the current<br>term will not have a significant impact on the company.
-	K-IFRS 2123 Uncertainty over Income Tax Treatments (Issued)<br>
---	---
-	K-IFRS 1109 Financial Instruments (Revised)
---	---
-	K-IFRS 1028 Investment in Associates and Joint Ventures (Revised)<br>
---	---
-	K-IFRS 1019 Employee Benefits (Revised)
---	---
-	K-IFRS 1115 Revenue from Contracts with Customers (Revised)<br>
---	---
-	Annual Improvements to IFRSs 2015-2017 Cycle
---	---

The annual improvements include partial amendments of K-IFRS 1012 ‘Income Tax,’ K-IFRS 1023 ‘Borrowing Cost,’ K-IFRS 1103 ‘Business Combination’ and K-IFRS 1111 ‘Joint Arrangements.’

1.2	The details of K-IFRSs that have been issued and published as of the<br>date of issue approval of the financial statements but have not yet reached the effective date, and which the Company has not applied at an earlier date are as follows:
-	Revised Conceptual Framework for Financial Reporting
---	---
-	Revised K-IFRS 1103 ‘Business Combinations’<br>
---	---
-	Revised K-IFRS 1001 ‘Financial Statements Presentation’ and K-IFRS 1008 ‘Accounting policies, changes in Accounting Estimates and Errors’
---	---

It is believed that the above revised standards will not have a significant impact on the company.

(2)	Investments in subsidiaries and Associates in separate financial statements

The Company selects and processes the cost method in accordance with K-IFRS 1027 for investments in subsidiaries, associates and jointly controlled entities, except for those classified as held for sale in accordance with K-IFRS 1105 ‘Non-current Assets Held for Sale and Discontinued Operations’. Dividends received from subsidiaries, associates and jointly controlled entities are recognized as dividend income when the right to receive dividends is established.

(3)	Revenue recognition

3.1 Revenue from contracts with customers

The Company recognizes revenue when the Company satisfies a performance obligation by transferring a promised good or service to a customer. When a performance obligation is satisfied, the Company 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 Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

- 2 -

3.2 Revenues from sources other than contracts with customers

Interest income on financial assets measured at 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 debt securities (or group of financial assets) and of allocating the interest income over the expected life of the asset. The effective interest rate is the rate that exactly discounts estimated future cash flows to the instrument’s initial total carrying amount over the expected period, or shorter if appropriate. Future cash flows include commissions and cost of reward points (limited to the primary component of effective interest rate) and other premiums or discounts that are paid or received between the contractual parties, and future cash flows exclude expected credit loss when calculating the effective interest rate. All contractual terms of a financial instrument are considered when estimating future cash flows.

(4)	Accounting for foreign currencies

The Company’s separate financial statements are presented in Korean Won, which is the functional currency of the Company. 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.

(5)	Cash and cash equivalents

The Company 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.

(6)	Financial assets and financial liabilities

The Company’s accounting policies in accordance with the newly adopted K-IFRS 1109 are as follows:

6.1	Financial assets

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

6.1.1	Business model

The Company 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:

- 3 -

-	The accounting policies and purpose specified for the portfolio, and the actual operation of such policies.<br>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<br>asset, and outflow or realization of expected cash flows from disposal of assets.
-	The way the performance of a financial asset held under the business model is evaluated, and the way such<br>evaluation is being reported to the management
---	---
-	The risk affecting the performance of the business model (and financial assets held under the business model),<br>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<br>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<br>activities
---	---
6.1.2	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 Company 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 Company 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<br>
---	---
-	Early payment features and maturity extension features
---	---
-	Contractual terms that limit the Company’s claim on cash flows arising from certain assets (e.g. non-recourse feature)
---	---
6.1.2.1	Financial assets at FVTPL
---	---

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

It is possible to designate a financial asset as financial asset 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 asset at FVTPL; (b) the financial asset forms part of the Company’s financial instrument group (A group composed of a combination of financial asset or liability), is measured at fair value and is being evaluated for its performance, and such information is provided internally; and (c) the financial asset is part of a contract that contains one or more of embedded derivatives, and is a hybrid contract in which designation as financial asset at FVTPL is allowed under K-IFRS 1109 ‘Financial Instruments’. However, the designation is irrevocable.

6.1.2.2	Financial assets at FVTOCI

- 4 -

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. However, for equity instruments that do not have a quotation in an active market and in which fair value cannot be measured reliably, they are measured at cost. 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)

6.1.2.3	Financial assets at amortized cost

6.2	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 Company 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. Profit or loss arising from financial liabilities at FVTPL is recognized in net income 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 liability forms part of the Company’s financial instrument group (a group composed of a combination of financial asset or liability) according to the Company’s documented risk management or investment strategy, is measured at fair value and is being evaluated for its performance, and such information is provided internally; and (c) the financial liability is part of a contract that contains one or more of embedded derivatives, and is a hybrid contract in which designation as financial liability at FVTPL is allowed under K-IFRS 1109 ‘Financial Instruments’.

Financial liabilities not classified as financial liabilities at FVTPL are measured at amortized cost. The Company is classifying liabilities such as borrowings etc. as financial liabilities at amortized cost.

6.3	Reclassification

Financial assets are not reclassified after initial recognition unless the Company modifies the business model used to manage financial assets. When the Company 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.

- 5 -

6.4	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 Company 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 Company recognizes financial assets to the extent of its continuing involvement. If the Company 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.

In cases when a financial asset is not fully derecognized, the Company 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 Company derecognizes financial liabilities only when, the Company’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 Company exchanges with the existing lender one debt instrument into another one with the 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 Company 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.

6.5	Fair value of financial instruments

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

When trade volume of a financial instrument is low, when transaction prices within the market show large differences among them, or when it cannot be concluded that a financial instrument is being traded within an active market due to disclosures being extremely limited, 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 Company concluded that it is using assumptions applied in valuing financial instruments in the market, or risk-adjusted assumptions in case marketability does not exist).

- 6 -

6.5.1	Expected credit losses on financial assets

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

Financial assets at amortized cost
Debt instruments measured at FVTOCI
Contract assets as defined by K-IFRS 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 past events, current conditions and forecasts of future economic conditions that are available without undue cost or effort at the reporting date.

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

-	General approach: Financial assets that does not belong to below two models and unused loan commitments<br>
-	Simplified approach: When financial assets are either trade receivables, contract assets or lease receivables<br>
---	---
-	Credit impairment model: Purchased or originated credit-impaired financial assets
---	---
a)	Measurement of expected credit losses on financial asset at amortized cost
---	---

b)	Measurement of expected credit losses on financial asset at FVTOCI

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

(7)	Offsetting financial instruments

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

- 7 -

(8)	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 expenditures 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 Company and the cost of an asset can be measured reliably. Routine maintenance and repairs are expensed as incurred.

		Useful life
Leasehold Improvement			5 years
Properties for business purpose			5 years
Right-of-use<br>asset			Lease period

The Company 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.

(9)	Intangible assets and goodwill

The Company is recognizing intangible assets measured at the manufacturing cost or acquisition cost plus additional incidental expenses less accumulated amortization and accumulated impairment losses. The Company’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
Software			5 years or period of use
Development cost			5 years

(10)	Impairment of non-monetary assets

(11)	Provisions

The Company recognizes provision if (a) it has present or contractual obligations as a result of the past event, (b) it is probable that an outflow of resources will be required to settle the obligation and (c) the amount of the obligation is reliably estimated. Provision is not recognized for the future operating losses.

- 8 -

Where the Company is required to restore a leased property that is used as an office to an agreed condition after the contractual term expires, the present value of expected amounts to be used to dispose, decommission or repair the facilities is recognized as an asset retirement obligation.

(12)	Equity instruments issued by the Company

The Company 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. In case of hybrid securities that have the unconditional right to avoid contractual obligations, such as to deliver cash or other financial assets related to financial instruments, they are classifies as equity instruments and presented as part of equity.

If the Company reacquires its own equity instruments, the consideration paid including the direct transaction costs (net of income 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.

(13)	Employee benefits and pensions

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

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

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

Liabilities for termination benefits are recognized at the earlier of either 1) the date when the Company is no longer able to cancel its proposal for termination benefits or 2) the date when the Company has recognized the cost of restructuring that accompanies the payment of termination benefits.

- 9 -

(14)	Share-based payments

For cash-settled share-based payment transactions that provide cash in return for the goods or services received, the Company measures the goods or services received, and the corresponding liability at the fair value and recognizes as employee benefit expenses and liabilities during the vesting period.

The fair value of the liability is remeasured at the end of each reporting period and the settlement date until the liability is settled, and changes in fair value are recognized as employee benefits.

(15)	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.

The Company, as a consolidation group for its wholly-owned subsidiaries applies consolidated tax return approach, in which the Company and its subsidiaries are consolidated into a single tax base and tax amount. The Company determined whether temporary differences are realizable by considering the Company and each subsidiary’s future taxable income. For the changes in deferred income tax asset (liability), the Company recognized income tax expense (benefit), excluding the amounts that are directly adjusted from equity. Also, as the Company became the consolidation entity for tax filings and tax returns, it recognized the total amount of income tax payables as liabilities and individual tax amounts to be received from each of its wholly-owned subsidiaries as receivables.

Deferred income tax assets and liabilities are offset if, and only if, the Company 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.

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.

The tax uncertainty arises from the compensation claim filed by the Company, and refund litigation for the amount of tax levied by the tax authority due to differences in tax law analysis. In response, the Company paid taxes in accordance with K-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.

(16)	Earnings per share (“EPS”)

- 10 -

(17)	Leases
17.1	Definition of lease
---	---

The Company determines whether the contract is, or contains, a lease at the date of initial application. A contract is or contains a lease if the right to control the use of an identified asset is transferred in exchange for the consideration received for a period of time. For a contract that contains a lease component, as a practical expedient, the company may elect, by class of underlying asset, not to separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component.

IFRS Interpretations Committee published its interpretation of ‘Lease Period and Lease Improvement Useful Life’ as of December 16, 2019. The Interpretation Committee discussed a question about how to determine the lease term for cancellable or renewable leases and according to the interpretation, the lease term will depend on both the termination penalties in the contract and the broader economics of the contract. Agenda decisions issued by the Interpretations Committee do not have an application date, but are expected to be implemented as soon as possible. The Company is currently assessing the impact of the agenda decision and does not expect a material impact to the financial statement.

17.2	Lessee

At the commencement date, the Company recognizes a right-of-use asset and a lease liability. For initial recognition, a right-of-use asset is measured at a cost less any accumulated depreciation and any accumulated impairment losses, adjusted for any remeasurement of the lease liability. If a right-of-use asset satisfies the definition of an investment property, it can be presented as an investment property. A right-of-use asset as an investment property is initially measured at a cost and subsequently measured at fair value, in line with the Company’s accounting policy on the investment property.

At the commencement date, a lease liability is 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 the rate can be readily determined. If the rate cannot be readily determined, the Company’s incremental borrowing rate can be used. Generally, the Company uses incremental borrowing rate as a discount rate.

A lease liability is subsequently measured by increasing the carrying amount to reflect interest rate on the lease liability and reducing the carrying amount to reflect the lease payments made. A lease liability is remeasured when future lease payments change, depending on the changes in an index or a rate, change in amounts expected to be payable due to residual value guarantees, assessment of whether the Company is reasonably certain to exercise the purchase option and extension option, the Company is not reasonably certain to exercise the termination options.

A Company’s judgment is used when determining the lease term for some contracts that contain extension options. The assessment on whether the Company is reasonably certain to exercise the extension option could affect the lease term, and therefore, the lease liability and the right-of-use asset could be significantly affected.

The Company chose not to recognize the right-of-use asset and the lease liability for the short-term leases and some leases for which the underlying asset is of low value (e.g. IT facilities). The Company recognizes the lease payments associated with those leases as an expense on a straight-line basis over the lease term.

17.3	Lessor

The Company classifies its leases as either an operating lease or a finance lease, and has different accounting treatments for the two types of lease.

According to the Standards, if a lessor subleases an asset, the head lease and sublease must be accounted for as separate contracts, and the sublease is classified by reference to the assets arising from its head lease.

- 11 -

3.	SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

(1)	Income taxes

The Company has recognized current and deferred taxes based on best estimates of expected future income tax effect arising from the Company’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 Company’s evaluation considers various factors such as estimated future taxable profit based on forecasted operating results, which are based on historical financial performance. The Company is reviewing the book value of deferred tax assets every end of the reporting period and in the event that the possibility of earning future taxable income changes, the deferred tax assets are adjusted up to taxable income sufficient to use deductible temporary differences.

(2)	Valuation of financial instruments

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

As described in Note 2, (6.5), ‘Fair value of financial instruments’, 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

KIFRS 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, which depends on the degree of increase in credit risk after their initial recognition.

		Stage 1	Stage 2	Stage 3
		Credit risk has not significantly increased<br><br><br>since initial recognition (*)	Credit risk has significantly<br><br><br>increased since initial<br><br><br>recognition	Credit has<br><br><br>been impaired
Allowance for expected credit losses		Expected 12-month credit losses:<br><br><br>Expected credit losses due to possible defaults on financial instruments within a 12-month period from the end of<br>reporting period.	Expected lifetime credit losses:<br><br><br>Expected credit losses from all possible defaults during the expected lifetime of the financial instruments.
(*)	Credit risk may be considered to not have been significantly increased when credit risk is low at the end of<br>reporting period.
---	---

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

- 12 -

(4)	Defined benefit plan

The Company 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.

(5)	Impairment of non-monetary assets

At the end of each reporting period, the company assesses the existence of impairment indications for all non-monetary assets. An intangible asset with indefinite useful life is tested for impairment annually or in the event of signs of impairment, and other non-monetary assets are tested for impairment when there are indications that the carrying amount will be not recoverable. To calculate value in use, management estimates future expected cash flows from the asset or cash-generating unit and selects an appropriate discount rate to calculate the present value of this future cash flow.

4.	RISK MANAGEMENT

The Company is exposed to various risks that may arise from its operating activities and credit risk, market risk and liquidity risk are the main types of risks. In order to manage such risks, the Risk Management Committee analyzes, assesses, and establishes risk management standards, including policies, guidelines, management systems and decision-making to ensure sound management of the Group.

The Risk Management Committee, Chief Risk Officer (“CRO”) and the Risk Management Department are operated as risk management organizations. The board of directors operates the Risk Management Committee, composed of nonexecutive directors for professional risk management. The Risk Management Committee performs as the top decision-making body for risk management by establishing fundamental risk management policies that are consistent with the Group’s management strategy and by determining the Group’s acceptable level of risk.

CRO assists the Risk Management Committee and operates the Group Risk Management Council, which is composed of the risk management officers of the subsidiaries, to periodically check and improve the external environment and the Group’s risk burden. The Risk Management Department which is independently structured, controls the risk management matter of the Group and reports key risks and assists decision-making.

(1)	Credit risk

Credit risk represents the possibility of financial losses incurred when the counterparty fails to fulfill its contractual obligations. The goals of credit risk management are to maintain the Company’s credit risk exposure to a permissible degree and to optimize its rate of return considering such credit risk.

1.1 Credit risk management

The Company measures expected loss on assets subject to credit risk management and uses it as a management indicator.

1.2 Maximum exposure to credit risk

The maximum exposure to credit risk for financial instruments is as follows (Unit: Korean Won in millions):


Loans and other financial assets at amortized cost	Banks	1,228,918
	Corporates	40,285

		1,269,203

Financial assets at FVTPL	Derivatives	9,434

	Total	1,278,637

- 13 -

a)	Credit risk exposure by geographical areas

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

		December 31, 2019
		Korea
Loans and other financial assets at amortized cost			1,269,203
Financial assets at FVTPL			9,434

Total			1,278,637

b)	Credit risk exposure by industries
---	---

The following tables analyze credit risk exposure by industries, which are finance and insurance and others in accordance with the Korea Standard Industrial Classification Code (Unit: Korean Won in millions):

		December 31, 2019
		Finance and<br>insurance		Others		Total
Loans and other financial assets at amortized cost			1,267,228		1,975		1,269,203
Financial assets at FVPTL			9,434		—		9,434

Total			1,276,662		1,975		1,278,637

1.3	Credit risk exposure
---	---

The credit soundness for financial assets is as follows (Unit: Korean Won in millions):

		December 31, 2019
		Stage 1				Stage 2				Stage 3		Total		Allowance<br>for loan<br>losses			Total, net		Collateral<br>value of<br>impaired<br>asset
		Above<br>appropriate<br>credit rating (*1)		Less than a<br>limited<br>credit<br>rating (*3)		Above<br>appropriate<br>credit rating (*2)		Less than a<br>limited<br>credit rating (*3)
Loans and other financial assets at amortized cost			1,269,466		—		—		—		—		1,269,466		(263	)		1,269,203		—
Banks			1,229,181		—		—		—		—		1,229,181		(263	)		1,228,918		—
Corporates			40,285		—		—		—		—		40,285		—			40,285		—
General corporates			40,285		—		—		—		—		40,285		—			40,285		—

Total			1,269,466		—		—		—		—		1,269,466		(263	)		1,269,203		—

(*1)	Credit grade of corporates are AAA ~ BBB.
---	---
(*2)	Credit grade of corporates are A- ~ BBB
---	---
(*3)	Credit grade of corporates are BBB- ~ C.
---	---

- 14 -

(2)	Market risk

Market risk is the possible risk of loss arising from trading and non-trading activities in the volatility of market factors such as interest rates, stock prices, and foreign exchange rates. The Company’s major market risk is interest rate risk.

The Company estimates and manages risks related to changes in interest rate due to the difference in the maturities of interest-bearing assets and liabilities and discrepancies in the terms of interest rates. Cash flows (both principal and interest), interest-bearing assets and liabilities, presented by each repricing date, are as follows (Unit: Korean Won in millions):

		December 31, 2019
		Within 3<br>months		4 to 6<br>months		7 to 9<br>months		10 to 12<br>months		1 to 5<br>years		Over 5<br>years		Total
Asset:
Loans and other financial assets at amortized cost			445,070		733,330		—		—		—		—		1,178,400
Liability:
Debentures			5,486		5,486		5,486		5,487		87,780		1,049,863		1,159,588
(3)	Liquidity risk
---	---

Liquidity risk refers to the risk that the Company may encounter difficulties in meeting obligations from its financial liabilities.

3.1	Liquidity risk management

Liquidity risk management is to prevent potential cash shortages as a result of mismatching the assets and liabilities or unexpected cash outflows. The financial liabilities in the statement of financial position that are relevant to liquidity risk are incorporated within the scope of risk management.

The Company manages liquidity risk by identifying the maturity gap and such gap ratio through various cash flows analysis (i.e. based on remaining maturity and contract period, etc.).

3.2	Maturity analysis of non-derivative financial liabilities<br>
a)	Cash flows of principals and interests by remaining contractual maturities of<br>non-derivative financial liabilities are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Within 3<br>months			4 to 6<br>months			7 to 9<br>months			10 to 12<br>months			1 to 5<br>years			Over<br>5 years			Total
Debentures			5,486			5,486			5,486			5,487			87,780			1,049,863			1,159,588
Lease liabilities			335.			335			335			336			249			—			1,590
Other financial liabilities			6,131			2,043			—			183			820			—			9,177

Total			11,952			7,864			5,821			6,006			88,849			1,049,863			1,170,355

- 15 -

b)	Cash flows of principals and interests by expected maturities of<br>non-derivative financial liabilities are as follows (Unit: Korean Won in millions):
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Within 3<br>months			4 to 6<br>months			7 to 9<br>months			10 to 12<br>months			1 to 5<br>years			Over 5<br>years			Total
Debentures			5,486			5,486			5,486			5,487			87,780			1,049,863			1,159,588
Lease liabilities			335.			335			335			336			249			—			1,590
Other financial liabilities			6,131			2,043			—			183			820			—			9,177

Total			11,952			7,864			5,821			6,006			88,849			1,049,863			1,170,355

(4)	Capital management
---	---

The Company 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 company.

According to the above regulations, the Company is required to meet the following new minimum requirements: Common Equity Tier 1 capital ratio of 7.0%, a Tier 1 capital ratio of 8.5% and a minimum total capital ratio of 10.5% as of December 31, 2019, respectively.

Details of the Group’s capital adequacy ratio as of December 31, 2019 are as follows (Unit: Korean Won in millions):

		December 31, 2019
Tier 1 capital			19,135,300
Other Tier 1 capital			3,340,252
Tier 2 capital			4,639,519

Total risk-adjusted capital			27,115,071

Risk-weighted assets for credit risk			209,802,895
Risk-weighted assets for market risk			5,586,757
Risk-weighted assets for operational risk			12,656,301

Total risk-weighted assets			228,045,953

Common Equity Tier 1 ratio			8.39	%

Tier 1 capital ratio			9.86	%

Total capital ratio			11.89	%

5.	STATEMENTS OF CASH FLOWS
---	---
(1)	Details of cash and cash equivalents are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---
Demand deposits			43,670

- 16 -

(2)	Significant transactions not involving cash inflows and outflows from investing and financing activities are as<br>follows (Unit: Korean Won in millions):
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Changes in<br>right-of-use assets due to new contract			3,439
Changes in lease liabilities due to new contract			2,812
Comprehensive stock transfer			18,502,760
(3)	Adjustments of liabilities from financing activities in current year are as follows (Unit: Korean Won in<br>millions):
---	---
		For the period from January 11,2019 (date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Beginning			Cash flow			Not involving cash inflows and outflows									Ending
								Foreign<br>Exchange			Variation of<br>gains on<br>valuation of<br>hedged items			Others
Debentures			—			947,604			—			—			75			947,679
Lease liabilities			—			(1,289	)		—			—			2,857			1,568

Total			—			946,315			—			—			2,932			949,247

6.	FINANCIAL ASSETS AT FVTPL
---	---
(1)	Details of financial assets at FVTPL are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---
Financial assets at FVTPL			9,434
(2)	Details of financial assets at FVTPL are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---
Derivatives			9,434
(3)	As of December 31, 2019, the Company does not hold financial assets designated at FVTPL.<br>
---	---
7.	LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST
---	---
(1)	Details of loans and other financial assets at amortized cost are as follows (Unit: Korean Won in millions):<br>
---	---
		December 31, 2019
---	---	---	---
Due from banks			1,129,738
Other financial assets			139,465

Total			1,269,203

(2)	Details of due from banks are as follows (Unit: Korean won in millions):
---	---
		December 31, 2019
---	---	---	---	---
Due from banks in local currency:
Due from depository banks			1,130,000
Allowance for credit loss			(262	)

Total			1,129,738

- 17 -

(3)	Changes in the loss allowance and gross carrying amount of due from banks are as follows (Unit: Korean Won in<br>millions):
3.1	Allowance for credit losses
---	---
		For the period from January 11, 2019 (date of incorporation)<br>to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2			Stage 3			Total
Beginning balance			—				—			—			—
Transfer to 12-month expected credit losses			—				—			—			—
Transfer to lifetime expected credit losses			—				—			—			—
Transfer to credit-impaired financial assets			—				—			—			—
Net provision of loss allowance			(262	)			—			—			(262	)

Ending balance			(262	)			—			—			(262	)

3.2	Gross carrying amount
---	---
		For the period from January 11, 2019 (date of incorporation)<br>to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1			Stage 2			Stage 3			Total
Beginning balance			—			—			—			—
Transfer to 12-month expected credit losses			—			—			—			—
Transfer to lifetime expected credit losses			—			—			—			—
Transfer to credit-impaired financial assets			—			—			—			—
Net increase and decrease			1,130,000			—			—			1,130,000

Ending balance			1,130,000			—			—			1,130,000

(4)	Details of other financial assets are as follows (Unit: Korean Won in million):
---	---
		December 31, 2019
---	---	---	---	---
Receivables			134,891
Accrued income			3,641
Lease deposits			934
Allowance for credit loss			(1	)

Total			139,465

(5)	Changes in the loss allowance and gross carrying amount of other financial assets are as follows (Unit: Korean<br>Won in millions):
---	---
5.1	Allowance for credit loss
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1				Stage 2			Stage 3			Total
Beginning balance			—				—			—			—
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	)			—			—			(1	)

Ending balance			(1	)			—			—			(1	)

- 18 -

5.2	Gross carrying amount
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Stage 1			Stage 2			Stage 3			Total
Beginning balance			—			—			—			—
Transfer to 12-month expected credit losses			—			—			—			—
Transfer to lifetime expected credit losses			—			—			—			—
Transfer to credit-impaired financial assets			—			—			—			—
Net increase			139,466			—			—			139,466

Ending balance			139,466			—			—			139,466

8.	THE FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
---	---
(1)	The fair value hierarchy
---	---

The fair value hierarchy is determined by the levels of judgment involved in estimating fair values of financial assets and liabilities. The specific financial instruments characteristics and market condition such as volume of transactions and transparency are reflected to the market observable inputs. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value of its financial assets and financial liabilities. Fair value is measured based on the perspective of a market participant. As such, even when market assumptions are not readily available, the Company’s own assumptions reflect those that market participants would use for measuring the assets or liabilities at the measurement date.

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

•	Level 1— When fair value of a financial instrument is measured using its fair value at the quoted price<br>in the active market, the fair value of such financial instruments is classified as Level 1. The types of financial instruments generally included in Level 1 are publicly traded equity securities, derivatives, and debt securities issued by<br>governmental bodies.
•	Level 2— When fair value of a financial instrument is measured using valuation techniques, the fair<br>value is classified as Level 2 when all major elements are market observable inputs. The types of financial instruments generally included in Level 2 are most of the debt securities both in local and foreign currencies and regular OTC<br>derivatives such as swaps, forwards, options, etc.
---	---
•	Level 3— When fair value of a financial instrument is measured using valuation techniques, the fair<br>value is classified as Level 3 when one or more major elements are inputs that are not observable in the market. The types of financial instruments generally included in Level 3 are non-public<br>securities, complex structured debt securities, and complex OTC derivatives.
---	---

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 Company’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 measured at fair value are as follows (Unit: Korean Won in millions):<br>
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Fair value
		Level 1			Level 2			Level 3			Total
Financial assets:
Financial assets at FVTPL:
Derivative assets			—			—			9,434			9,434

- 19 -

Financial assets measured at FVTPL are recognized at fair value. Fair value refers to the price that will be paid at the measurement date as the assets are sold or the liabilities transferred in a normal transaction between market participants.

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 Company determines the fair value using valuation methods. Valuation methods and input variables for financial assets and liabilities that are measured at fair value are given as follows:

		Valuation methods		Input variables
Derivatives		The fair value is measured considering the price and volatility of the underlying asset using the Binomial Tree, a commonly used technique in the market		Price of underlying asset, volatility, risk-free market return, corporate bond yield rate

Level 3 financial asset valuation techniques measured at fair value that are significant but unobservable inputs variables are as follows:

		Fair value<br>valuation<br>technique		Type		Significant but<br>not observable<br>input variables	Range	Correlation between unobservable<br><br><br>inputs and fair value
Derivative assets		Optional pricing<br>model etc.		Stock-<br>related		Price and<br>volatility of<br>underlying asset	12.58%~15.38%	The higher the price and volatility of the underlying asset, the greater the change in fair value

The fair value of financial assets classified as level 3 uses external valuation figures.

(3)	Changes in financial assets measured at fair value classified into Level 3 are as follows (Unit: Korean<br>Won in millions):
		For the period from January 11, 2019 (date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Beginning			Net<br>Income<br>(*)			Other<br>comprehensive<br>income			Purchases/<br>issuances			Disposals/<br>settlements			Transfer to or<br>out of<br>Level 3			Ending
Financial assets:
Financial assets at FVTPL
Derivatives assets			—			9,434			—			—			—			—			9,434
(*)	The gain amounting to 9,434 million Won for the period from January 11, 2019 (date of incorporation)<br>to December 31, 2019, which is from financial assets that the company holds as at the end of the periods, has been recognized in net gain on financial instruments at FVTPL in the separate statement of comprehensive income.<br>
---	---
(4)	The results of a sensitivity analysis on the rational fluctuation in the unobservable inputs used for measuring<br>Level 3 financial instruments are as follows.
---	---

The sensitivity analysis of the financial instruments has been performed by classifying favorable and unfavorable changes based on how changes in unobservable inputs would lead to the fluctuations of financial instruments’ value. When the fair value of a financial instrument is affected by more than one unobservable input, the below table reflects the most favorable or the most unfavorable circumstances. The sensitivity analysis was performed for level 3 financial instruments whose fair value changes are recognized in profit or loss and includes stock-related derivatives.

- 20 -

The following table shows the sensitivity analysis to disclose the effect of reasonably possible volatility on the fair value of Level 3 financial instruments (Unit: Korean Won in millions):

		As of December 31,<br>2019
		Net income (loss)
		Favorable			Unfavorable
Financial assets:
Financial assets at FVTPL
Derivative assets (*)			943			(943	)
(*)	Fair value changes of equity related derivatives assets and liabilities are calculated by increasing or<br>decreasing historical volatility of the stock price and correlation, which are major unobservable variables, by 10%, respectively.
---	---
(5)	Fair value and carrying amount of financial assets and liabilities that are recorded at amortized cost are as<br>follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Fair value												Book<br>value
		Level 1			Level 2			Level 3			Total
Financial assets:
Loans and other financial assets at amortized cost (*)			—			—			1,269,203			1,269,203			1,269,203
Financial liabilities:
Debentures			—			951,387			—			951,387			947,679
Other financial liabilities (*)			—			—			10,745			10,745			10,745
(*)	For loans, other financial assets and liabilities at amortized cost classified as Level 3, the carrying<br>amount was disclosed at fair value considering the carrying amount as an approximation of fair value.
---	---

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 company determines the fair value using valuation methods. For the disclosed items in which book value is considered to be the approximate value of fair value, valuation techniques and input variables are not disclosed. Valuation techniques for the fair value of financial assets and liabilities that are recorded at amortized cost are as follows.:

		Valuation methods
Debentures		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 Company.
(6)	Financial instruments by category
---	---

Carrying amounts of financial assets and liabilities by category are as follows (Unit: Korean Won in millions):

Financial assets:		December 31, 2019
		Financial assets at<br>FVTPL		Financial assets at<br>amortized cost		Total
Due from banks			—		1,129,738		1,129,738
Derivatives			9,434		—		9,434
Other financial assets at amortized cost			—		139,465		139,465

Total			9,434		1,269,203		1,278,637

Financial liabilities:		December 31, 2019
---	---	---	---
		Financial liabilities<br>at amortized cost
Debentures			947,679
Other financial liabilities			10,745

Total			958,424

- 21 -

(7)	Income or expense from financial assets and liabilities by each category are as follows (Unit: Korean Won in<br>millions):
		For the period from January 11, 2019 (date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Interest<br>income(expense)			Reversal of<br>(provision for)<br>credit losses			Others			Total
Financial assets at FVTPL			—			—			9,434			9,434
Loans and other financial assets at amortized cost			7,741			(263	)		—			7,478
Financial liabilities at amortized cost			(7,701	)		—			—			(7,701	)

Total			40			(263	)		9,434			9,211

9.	INVESTMENTS IN SUBSIDIARIES
---	---
(1)	Investments in subsidiaries are as follows (Unit: Korean Won in millions):
---	---
									December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Subsidiaries (*1)		Location		Capital stock			Main business		Number of<br>shares			Percentage<br>of ownership<br>(%)(*2)			Financial<br>statements<br>date of use
Woori Bank		Korea			3,381,400		Finance			676,000,000			100			December 31,2019
Woori Card Co., Ltd.		Korea			896,300		Finance			179,266,200			100			December 31,2019
Woori Investment Bank Co., Ltd.		Korea			337,100		Other credit finance			403,404,538			59.8			December 31,2019
Woori FIS Co., Ltd.		Korea			24,500		System software development & maintenance			4,900,000			100			December 31,2019
Woori Finance Research Institute Co., Ltd.		Korea			3,000		Other service business			600,000			100			December 31,2019
Woori Credit Information Co., Ltd.		Korea			5,000		Credit information			1,008,000			100			December 31,2019
Woori Fund Service Co., Ltd.		Korea			10,000		Finance			2,000,000			100			December 31,2019
Woori Asset Trust Co., Ltd		Korea			15,300		Finance			1,560,000			67.2			December 31,2019
Woori Asset Management Corp.		Korea			20,000		Finance			2,920,000			73.0			December 31,2019
Woori Private Equity Asset Management Co., Ltd.		Korea			30,000		Finance			6,000,000			100			December 31,2019
Woori Global Asset Management Co., Ltd.		Korea			20,000		Finance			4,000,000			100			December 31,2019
(*1)	Only subsidiaries invested directly by the company are included.
---	---
(*2)	The percentage is based on the effective interest rate relative to the number of outstanding shares.<br>
---	---

- 22 -

(2)	Changes in the carrying value of investments in subsidiaries are as follows (Unit: Korean Won in millions):<br>
		For the period from January 11, 2019 (date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Beginning balance			Acquisition			Disposal			Ending balance
Woori Bank (*1)			17,921,151						—			17,921,151
Woori Card Co., Ltd. (*2)			—			1,118,367			—			1,118,367
Woori Investment Bank Co., Ltd. (*2)			—			392,795			—			392,795
Woori FIS Co., Ltd. (*1)			21,754			—			—			21,754
Woori Finance Research Institute Co., Ltd. (*1)			1,677			—			—			1,677
Woori Credit Information Co., Ltd. (*1)			16,466			—			—			16,466
Woori Fund Service Co., Ltd. (*1)			13,939			—			—			13,939
Woori Asset Trust Co., Ltd (*5)			—			224,198			—			224,198
Woori Asset Management Corp. (*3)			—			122,449			—			122,449
Woori Private Equity Asset Management Co., Ltd. (*1)			7,797			—			—			7,797
Woori Global Asset Management Co., Ltd. (*4)			—			33,000			—			33,000

Total			17,982,784			1,890,809			—			19,873,593

(*1)	The Company acquired through the comprehensive stock transfer when established.
---	---
(*2)	Woori Card Co., Ltd. And Woori investment Bank Co., Ltd. were transferred from second-tier subsidiaries into<br>subsidiaries in September, 2019.
---	---
(*3)	The company newly acquired 73% interest in Tongyang Asset Management Corporation and changed the name as Woori<br>Asset Management Corporation.
---	---
(*4)	The remaining payment was completed in August, 2019 after the request for the change of major shareholder was<br>approved by the Financial Service Commission in July, 2019. The name has changed to Woori Global Asset Management Co., Ltd after acquiring.
---	---
(*5)	The name has changed to Woori Asset Trust Co., Ltd., after acquiring 67.2% interest of Kukje Trust Co. in<br>December 2019.
---	---
10.	PREMISES AND EQUIPMENT
---	---
(1)	Details of premises and equipment are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Building			Properties for<br>business use			Leasehold<br>Improvement			Total
Premises and equipment (ownership)			—			3,767			1,796			5,563
Right-of-use<br>asset			1,436			384			—			1,820

Total			1,436			4,151			1,796			7,383

(2)	Premises and equipment (ownership)
---	---
2.1	Details of premises and equipment (ownership) are as follows (Unit: Korean Won in millions):<br>
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Properties for business use				Leasehold Improvement				Total
Acquisition cost			4,538				2,184				6,722
Accumulated depreciation			(771	)			(388	)			(1,159	)

Net carrying value			3,767				1,796				5,563

- 23 -

2.2	Details of changes in premises and equipment (ownership) are as follows (Unit: Korean Won in millions):<br>
	For the period from January 11, 2019 (date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---
	Properties for business use			Leasehold Improvement			Total
Beginning balance		—			—			—
Acquisition		4,538			2,184			6,722
Depreciation		(771	)		(388	)		(1,159	)

Ending balance		3,767			1,796			5,563

(3)	Right-of-use asset<br>
---	---
3.1	Details of right-of-use asset<br>are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Building				Properties for business use				Total
Acquisition cost			2,871				568				3,439
Accumulated depreciation			(1,435	)			(184	)			(1,619	)

Net carrying value			1,436				384				1,820

3.2	Details of changes in<br>right-of-use asset are as follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019 (date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Building				Properties for business use				Total
Beginning balance			—				—				—
New contract			2,871				568				3,439
Depreciation			(1,435	)			(184	)			(1,619	)

Ending balance			1,436				384				1,820

11.	INTANGIBLE ASSETS
---	---
(1)	Details of intangible assets are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
		Software				Development Cost				Total
Acquisition cost			2,729				1,901				4,630
Accumulated amortization			(1,144	)			(176	)			(1,320	)

Net carrying value			1,585				1,725				3,310

(2)	Details of changes in intangible assets are as follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019 (date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---
		Software			Development Cost				Total
Beginning balance			—			—				—
Acquisition			2,729			1,901				4,630
Amortization			(1,144	)		(176	)			(1,320	)

Ending balance			1,585			1,725				3,310

- 24 -

12.	DEBENTURES

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

		December 31, 2019
		Interest rate (%)			Amount
Debentures in local currency:
Others			2.13%~2.55	%		950,000
Deduction:
Discounts on bond			(2,321)

Total			947,679

13.	PROVISIONS
---	---
(1)	Details of provisions are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---
Asset retirement obligation			600
(2)	Changes in asset retirement obligation are as follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Beginning balance			—
Provisions provided			588
Amortization			12

Ending balance			600

The amount of the asset retirement obligation is the present value of the best estimate of expected future expenditure to settle the obligation – arising from leased premises as of December 31, 2019, discounted by appropriate discount rate. Expenditures on the asset retirement obligation are expected to take place at the end of the lease contract for leased assets and the average value of the actual recovery construction cost of the subsidiaries where the restoration work took place over the past three years and the average inflation rate of the previous 3-year period were used to calculate the expected expenditures.

- 25 -

14.	NET DEFINED BENEFIT LIABILITY

The characteristics of the Company’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 assumptions (projected unit credit method which considers the increase of projected earnings) that give the best estimate of the future cash flows that will arise under the plan liabilities.

The Company 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 a discount rate calculated based on blue chip corporate bonds earnings. A deficit may occur if the rate of return on 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 defined benefit retirement pension plans if an inflation rate<br>increases.
(1)	Details of net defined benefit liability are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---
Present value of defined benefit obligation			14,174
Fair value of plan assets			(10,692	)

Net defined benefit liability			3,482

(2)	Changes in the carrying value of defined benefit obligation are as follows (Unit: Korean Won in millions):<br>
---	---
	For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Beginning balance		—
Succession from transferred-out company (to transferred-in company) (*)		8,276
Effect of new/transfer		3,360
Current service cost		1,415
Interest cost		253
Remeasurements
Financial assumptions		(457	)
Demographic assumptions		542
Experience adjustments		762
Retirement benefit paid		(54	)
Others		77

Ending balance		14,174

(*)	601 million won that succeeded to the transferred in company regarding to employees transferred during the<br>current term has been deducted.
---	---

- 26 -

(3)	Changes in the plan assets are as follows (Unit: Korean Won in millions):
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---	---
Beginning balance			—
Succession from transferred-out company (*)			8,877
Interest income			129
Remeasurements			(24	)
Employer’s contributions			1,710

Ending balance			10,692

(*)	601 million won is supposed to succeed to the transferred-in company regarding to employees transferred<br>during the current term.
---	---
(4)	Plan assets consist of fixed deposits and etc. as of December 31, 2019 and the realized return on plan<br>assets amount to 105 million Won for the period from January 11, 2019 (date of incorporation) to December 31, 2019.
---	---

Meanwhile, the contribution expected to be paid in the next accounting year amounts to 1,629 million Won.

(5)	Amounts related to the defined benefit plan that are recognized in the separate statements of net income and<br>total comprehensive income are as follows (Unit: Korean Won in millions):
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Current service cost			1,415
Effect of new/transfer			3,360
Net interest income			124

Cost recognized in net income			4,899

Remeasurements (*)			871

Cost recognized in total comprehensive income			5,770

(*)	This is an amount before considering the tax effects.
---	---
(6)	Key actuarial assumptions used in defined benefit liability measurement are as follows:
---	---
		December 31, 2019
---	---	---
Discount rate		2.40%
Future wage growth rate		5.27%
Mortality rate		Issued by Korea Insurance Development Institute
Retirement rate		Issued by Korea Insurance Development Institute

The weighted average maturity of the defined benefit obligation is 10.98 years.

(7)	The sensitivity to actuarial assumptions used in the assessment of defined benefit obligation is as follows<br>(Unit: Korean Won in millions):
				December 31, 2019
---	---	---	---	---	---	---
Discount rate		Increase by 1% point			(1,367	)
		Decrease by 1% point			1,596
Future wage growth rate		Increase by 1% point			1,535
		Decrease by 1% point			(1,345	)

- 27 -

15.	OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

Other financial liabilities and other liabilities are as follows (Unit: Korean Won in millions):


Other financial liabilities:
Accounts payable		2,424
Accrued expenses		6,651
Lease liabilities		1,568
Other miscellaneous financial liabilities		102

Sub-total		10,745

Other liabilities:
Other miscellaneous liabilities		4,142

Total		14,887

16.	DERIVATIVES
---	---

Details of derivative assets as of December 31, 2019 are as follows (Unit: Korean Won in millions):

					Assets
		Contract price			For trading
Stock forwards			117,535			9,434

Derivatives held for trading are classified to financial assets at FVTPL in the statements of financial position (see Note 6).

17.	EQUITY
(1)	Details of equity are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---
Capital stock			3,611,338
Hybrid security			997,544
Capital surplus (*)			14,874,084
Capital adjustment			—
Accumulated other comprehensive income			(631	)
Retained Earnings			623,930

Total equity			20,106,265

(*)	The amount is paid-in capital in excess of par value due to<br>comprehensive stock transfer at the date of establishment and due to the issuance of new shares at the time of stock exchange with Woori Card shareholders during the current term.
---	---
(2)	The number of shares authorized and others are as follows:
---	---
		December 31, 2019
---	---	---	---
Shares of common stock authorized			4,000,000,000
Par value			5,000 won
Shares of common stock issued			722,267,683
Capital			3,611,338 million Won
(3)	The Company issued 42,103,377 new shares in the stock exchange process with the shareholders of Woori Card<br>during the current term, which changed the total number of issued shares from 680,164,306 as of the date of establishment to 722,267,683 as of the end of the current term.
---	---

- 28 -

(4)	Hybrid security

Details of bond-type hybrid tier 1 securities classified as equity are as follows (Unit: Korean Won in millions)

Type	Issue Date
Securities in local currency	2019-07-18	—	3.49	500,000
	2019-10-11	—	3.32	500,000
Issue Cost				(2,456	)

Total				997,544

The hybrid security has no fixed maturity but can be called in advance after 5 years from the date of issuance.

(5)	Accumulated other comprehensive income

Changes in the accumulated other comprehensive income are as follows (Unit: Korean Won in millions):

		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
		Beginning<br>balance		Decrease			Income tax<br>effect		Ending<br>balance
Remeasurement loss related to defined benefit plan			—		(871	)		240		(631	)
(6)	Regulatory Reserve for Credit loss
---	---

In accordance with Paragraphs 1 and 3 of Article 27 of the Regulation on the Supervision of Financial Holding Companies, the Company discloses the regulatory reserve for credit loss.

6.1	Balance of the planned regulatory reserve for credit loss is as follows (Unit: Korean Won in millions):<br>
		December 31, 2019
---	---	---	---
Regulatory reserve for credit loss			—
Planned provision of regulatory reserve for credit loss			692

Ending balance of regulatory reserve for credit loss			692

6.2	Planned reserves provided, adjusted net income after the planned reserves provided and adjusted EPS after the<br>planned reserves provided are as follows (Unit: Korean Won in millions, except for EPS amount):
---	---
	For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---
Net income		628,293
Regulatory reserve for credit loss to be reserved		692
Adjusted net income after the provision of regulatory reserve		627,601
Adjusted EPS after the provision of regulatory reserve (Unit: Korean Won) (*)		899
(*)	The dividends of hybrid security are excluded.
---	---

- 29 -

(7)	Statement of appropriations of retained earnings (plan) is as follows (Unit: Korean Won in millions):<br>
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019<br>(Expected date of disposal:<br>March 25, 2020)
---	---	---	---	---
Unappropriated retained earnings:
Dividend on hybrid equity securities			(4,363	)
Net income			628,293

			623,930

Appropriation of retained earnings:
Legal reserve			62,830
Regulatory reserve for credit loss			692
Cash dividend (dividend per share (%)) 2019: 700 won (14%),			505,587

			569,109

Unappropriated retained earnings to be carried forward to next year			54,821

(8)	Details of treasury stocks are as follows (Unit: Shares, Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---	---	---	---
		Number of shares			Book value
Beginning			—			—
Repurchase (*)			2			—
Retirement			—			—
Ending			2			—
(*)	Treasury stocks have been occurred for the provision for odd-lot<br>payment incurred during the partial stock replacement of the shareholders who possess physical stock certificate.
---	---
18.	NET INTEREST INCOME
---	---
(1)	Interest income recognized is as follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Loans and other financial assets at amortized cost:
Interest on due from banks			7,723
Interest on other receivables			18

Total			7,741

(2)	Interest expense recognized is as follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Interest on borrowings			495
Interest on debentures			7,149
Interest on lease liabilities			45
Other interest expense			12

Total			7,701

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19.	NET FEES AND COMMISSIONS LOSS
(1)	There is no fees and commissions income for the period from January 11, 2019 (date of incorporation) to<br>December 31, 2019.
---	---
(2)	Details of fees and commissions expense incurred are as follows (Unit: Korean Won in millions):<br>
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Fees and commissions paid			8,202
Others			7,631

Total			15,833

20.	DIVIDEND INCOME
---	---

Details of dividend income recognized are as follows (Unit: Korean Won in millions):

	For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
Dividend income recognized from investments in subsidiaries		676,000
21.	NET GAIN OR LOSS ON FINANCIAL INSTRUMENTS AT FVTPL
---	---
(1)	Details of gain or loss related to net gain or loss on financial instruments at FVTPL are as follows (Unit:<br>Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Gains on financial instruments at fair value through profit or loss mandatorily measured at fair<br>value			9,434

Total			9,434

(2)	Details of net gain or loss on financial instrument at FVTPL are as follows (Unit: Korean Won in millions):<br>
---	---
						For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---
Derivatives (for trading)		Equity forward		Gain on valuation			9,434
22.	IMPAIRMENT LOSS DUE TO CREDIT LOSS
---	---

Impairment loss due to credit loss are as follows (Unit: Korean Won in millions):

		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
Impairment loss due to credit loss on loans and other financial assets at amortized cost			263

- 31 -

23.	GENERAL AND ADMINISTRATIVE EXPENSES
(1)	Details of general and administrative expenses are as follows (Unit: Korean Won in millions):<br>
---	---
						For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---
Employee benefits		Short-term employee benefits		Salaries			16,706
				Employee fringe<br>benefits			5,340
		Retirement benefit service costs					4,899
		Share-based payment					819

		Sub-total					27,764

Depreciation and amortization							4,098

Other general and administrative expenses		Rent					714
		Taxes and public dues					375
		Service charges					2,290
		Computer and IT related					1,654
		Telephone and communication					482
		Operating promotion					645
		Advertising					65
		Printing					76
		Traveling					373
		Supplies					131
		Insurance premium					280
		Reimbursement					847
		Vehicle maintenance					129
		Others					18

		Sub-total					8,079

Total							39,941

(2)	Performance condition share-based payment
---	---

Details of performance condition share-based payment granted to executives as of December 31, 2019 are as follows.

2.1	Share-based payment
Subject to		Shares granted for the year 2019
---	---	---
Type of payment		Cash-settled
Performance evaluation period		January 11, 2019 (date of incorporation) ~ December 31, 2022
Base date for payment		January 1, 2023
Number of shares measured as of the closing date (*)		78,023
(*)	The number of payable stocks is granted at the initial contract date and the payment rate is determined based<br>on the achievement of the pre-determined performance targets. Performance is evaluated as long-term performance indication including relative shareholder return, net income, return on equity (ROE), non-performing loan ratio and job performance.
---	---
2.2	The Company accounts for performance condition share-based payment according to the cash-settled method and the<br>fair value of the liabilities is reflected in the compensation costs by re-measuring per every closing period. As of December 31, 2019, expenses and the book value of the liabilities related to the<br>performance condition share-based payment recognized by the Company is 819 million Won.
---	---

- 32 -

24.	NON-OPERATING LOSS
(1)	Details of other non-operating income and expenses recognized are as<br>follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---	---
Other non-operating income			5
Other non-operating expenses			(755	)

Total			(750	)

(2)	Details of other non-operating income recognized are as follows (Unit:<br>Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Others			5
(3)	Details of other non-operating expenses recognized are as follows<br>(Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Donation			755
25.	INCOME TAX EXPENSE
---	---
(1)	Details of income tax expense are as follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Current tax expense:
Current tax expense in respect of the current period			—

Sub-total			—

Deferred tax expense:
Deferred tax assets (liabilities) relating to the origination and reversal of temporary<br>differences			154
Income tax expense relating to items that are recognized directly in equity			240

Income tax expense			394

- 33 -

(2)	The relationship between income before income tax expense deduction and income tax expense in the current<br>comprehensive income statement is as follows:
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---	---
Net income before income tax expense			628,687
Tax calculated at statutory tax rate (*)			165,527
Adjustments:
Effects of income that is exempt from taxation			(179,186	)
Effect of expenses that are not deductible in determining taxable profit			1,190
Effect of corporate tax dues to consolidate tax plans			15,839
Others			24

Sub-total			(162,133	)

Income tax expense			394

Effective tax rate			0.1	%

(*)	The corporate tax rate is 11% up to 200 million Won in tax basis, 22% over 200 million Won to<br>20 billion Won, 24.2% over 20 billion Won to 300 billion Won and 27.5% over 300 billion Won.
---	---
(3)	Details of changes in deferred income tax assets and liabilities for the period from January 11, 2019<br>(date of incorporation) to December 31, 2019 are as follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Beginning balance			Recognized as<br>income (expense)				Recognized as<br>other<br>comprehensive<br>income (expense)			Ending<br>Balance
Gain (loss) on valuation of derivatives			—			(2,594	)			—			(2,594	)
Provision for loan losses			—			72				—			72
Defined benefit liability			—			1,389				233			1,622
Deposits with employee retirement insurance trust			—			(736	)			7			(729	)
Provisions			—			165				—			165
Share based payment			—			225				—			225
Others			—			1,085				—			1,085

Net deferred tax assets (liabilities) in total			—			(394	)			240			(154	)

(4)	Unrealizable temporary differences are as follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---	---
Deductible temporary differences			3,222
Taxable temporary differences			(7,916,351	)

Total			(7,913,129	)

No deferred income tax asset has been recognized for the deductible temporary difference of 3,222million Won associated with investments in subsidiaries as of December 31, 2019, because it is not probable that the temporary differences will be reversed in the foreseeable future.

- 34 -

No deferred income tax liability has been recognized for the taxable temporary difference of 7,916,351 million Won associated with investment in subsidiaries as of December 31, 2019, due to the following reasons:

-	The Company is able to control the temporary difference of extinguishment.
-	It is probable that the temporary difference will not be reversed in the foreseeable future.<br>
---	---
(5)	Details of accumulated deferred tax charged directly to other equity are as follows (Unit: Korean Won in<br>millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Remeasurement of the net defined benefit liability			240
(6)	Current tax assets and liabilities are as follows (Unit: Korean Won in millions)
---	---
		December 31, 2019
---	---	---	---
Current tax assets			—
Current tax liabilities			133,526
26.	EARNINGS PER SHARE
---	---
(1)	Basic earnings per share is calculated by dividing net income by weighted-average number of common shares<br>outstanding (Unit: Korean Won in millions, except for earnings per share and number of shares):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---	---
Net income for the period attributable to owners			628,293
Dividends to hybrid securities			(4,363	)
Net income attributable to common shareholders			623,930
Weighted-average number of common shares outstanding (Unit: shares in million)			694
Basic earnings per share (Unit: Korean Won)			900
(2)	Weighted-average number of common shares outstanding as of December 31, 2019 is as follows.<br>
---	---
		For the period from January 11,2019 (date of incorporation) to December 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
		Period		Number of<br>shares				Dates				Accumulated number<br>of shares outstanding<br>during period
Common shares at the time of incorporation		2019-01-11 ~ 2019-12-31			680,164,306				355				241,458,328,630
Stock issuance (Comprehensive stock exchange)		2019-09-10 ~ 2019-12-31			42,103,377				113				4,757,681,601
Purchase of treasury stock		2019-08-26 ~ 2019-12-31			(1	)			128				(128	)
Purchase of treasury stock		2019-12-13 ~ 2019-12-31			(1	)			19				(19	)

Sub-total<br>(①)													246,216,010,084

Weighted average number of common shares outstanding (②=(①/355)													693,566,226

Diluted earnings per share is equal to basic earnings per share because there is no dilution effect for the period from January 11, 2019 (date of incorporation) to December 31, 2019.

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27.	CONTINGENT LIABILITIES AND COMMITMENTS
(1)	As of December 31, 2019, the Company has no litigation cases in progress.
---	---
(2)	Details of agreements with financial institutions as of December 31, 2019 are as follows (Unit: Korea Won<br>in millions)
---	---
				December 31, 2019
---	---	---	---	---	---	---	---	---
		Financial institutions		Line of credit			Loan balance
Loan		Standard Chartered Bank Korea Ltd.			65,000			—
		Kookmin Bank			35,000			—

		Total			100,000			—

(3)	Other agreements
---	---

The Company decided to enter into a stock sales agreement with a major shareholder of Kukje Trust Co., Ltd. to acquire 44.5% interest (58.6% of voting rights) during July, 2019, and to acquire additional 21.3% interest (28.0% of voting rights) after a certain period. As a result, the Company acquired the interest of the first sales agreement in December 2019 and is planning to acquire the interest of the second sales agreement after a certain period.

The Company recognized 9,434 million Won of derivative assets according to the agreement as of December 31, 2019 (see Note 16).

28.	RELATED PARTY TRANSACTIONS

Related parties of the Company as of December 31, 2019 and its assets and liabilities recognized as of December 31, 2019, major transactions with related parties for the period from January 11, 2019 (date of incorporation) to December 31, 2019 and compensation to key management are as follows:

(1)	Related parties as of December 31, 2019 are as follows:
		Related parties
---	---	---
Subsidiaries		Woori Bank, Woori Card Co., Ltd., Woori Investment Bank Co., Ltd., Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd., Woori Asset Trust Corp. Ltd.,<br>Woori Asset Management Corp., Woori Private Equity Asset Management Co., Ltd., Woori Global Asset Management Co., Ltd., Woori America Bank, PT Bank Woori Saudara Indonesia 1906 Tbk, Woori Global Markets Asia Limited, Woori Bank China Limited, AO<br>Woori Bank, Banco Woori Bank do Brasil S.A., Korea BTL Infrastructure Fund, Woori Finance Cambodia PLC., Woori Finance Myanmar Co., Ltd., Wealth Development Bank, Woori Bank Vietnam Limited, WB Finance Co., Ltd., Woori Bank Europe, TUTU Finance-WCI Myanmar Co., Ltd., Woori Bank Principal and Interest Guaranteed Trust and Woori Bank Principal Guaranteed Trust (“Consolidated trusts”), Kumho Trust First Co., Ltd. and 62 SPCs, Heungkuk Woori<br>Tech Company Private Placement Investment Trust No. 1 and 12 beneficiary certificates
Associates		Woori Service Networks Co., Ltd., Korea Credit Bureau Co., Ltd., Korea Finance Security Co., Ltd., Lotte card Co., Ltd, Chin Hung International Inc., 2016KIF-IMM Woori Bank Technology Venture<br>Fund, K BANK Co., Ltd., Well to Sea No. 3 Private Equity Fund, and others (Dongwoo C & C Co., Ltd. and 31 associates)

- 36 -

(2)	Assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
Related party		Title of account		December 31, 2019
---	---	---	---	---	---	---
Woori Bank		Cash and cash equivalents			43,670
		Other financial assets			1,229,181
		Allowance for credit losses			(263	)
		Other financial liabilities			601
Woori Card Co., Ltd.		Other financial assets			37,754
		Other financial liabilities			267
Woori FIS Co., Ltd.		Other financial assets			1,386
		Other financial liabilities			190
Woori Finance Research Institute Co., Ltd.		Other financial assets			21
		Other financial liabilities			1,320
Woori Credit Information Co., Ltd.		Other financial assets			568
Woori Fund Service Co., Ltd.		Other financial assets			556
Woori Service Networks Co., Ltd.		Other financial liabilities			64
(3)	Gains or losses from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
---	---
Related party		Title of account		For the period from<br>January 11, 2019<br>(date of incorporation)<br>to December 31, 2019
---	---	---	---	---	---
Woori Bank		Interest income			7,741
		Dividend income			676,000
		Interest expenses (*)			47
		Fees and commissions expense			4
		Impairment losses on credit loss			263
		General and administrative expenses (*)			2,365
Woori FIS Co., Ltd.		General and administrative expenses			1,492
Woori Finance Research Institute Co., Ltd.		Fees and commissions expenses			5,400
Woori Service Networks Co., Ltd.		General and administrative expenses			775
(*)	The depreciation of<br>right-of-use assets and interest expense of lease liabilities arising from lease transactions during the current term are included.
---	---
(4)	The details of the right-of-use<br>assets and lease liabilities due to lease transactions with related parties as of the end of the current tem are as follows (Unit: Korea Won in millions):
---	---
Related party		Title of account		For the period from<br>January 11, 2019<br>(date of incorporation)<br>to December 31, 2019
---	---	---	---	---	---
Woori Bank		Right-of-use assets (*)			1,436
		Lease liabilities			1,164
(*)	Asset retirement obligations due to lease transactions are included.
---	---

- 37 -

(5)	There is no major borrowing and loan transactions with the related parties during the period from<br>January 11, 2019 (date of incorporation) to December 31, 2019.

(6) There are no guarantees provided to the related parties. The unused commitments provided from the related parties are as follows (Unit: Korean Won in millions):

		December 31, 2019
Woori Card Co., Ltd.			495	Unused commitments
(7)	Details of compensation to key management are as follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation)<br>to December 31, 2019
---	---	---	---
Short-term employee benefits			3,683
Retirement benefit service costs			419
Share-based payment			529

Total			4,631

Key management includes registered executives and non-registered executives. As of December 31, 2019, there is no assets, liabilities, allowance and impairment loss due to credit losses from transactions with key management.

(8)	Details of equity transactions with related parties for the period from January 11,2019 (date of<br>incorporation) to December 31, 2019 are as follows (Unit: Korean Won in millions):
		Company	Transaction details	December 31,<br>2019
---	---	---	---	---	---
Purchase of investment interest		Woori Bank<br>(Subsidiaries)	Woori Card Co. ltd stocks<br>(Investments in subsidiaries)		1,118,367
Purchase of investment interest		Woori Bank<br>(Subsidiaries)	Woori investment bank stocks<br>(Investments in subsidiaries)		392,795
Purchase of investment interest		Woori Bank<br>(Subsidiaries)	Kukje Asset Trust Co. stocks<br>(Investments in subsidiaries) (*)		23,550
(*)	After the acquisition of the shares, the name has changed to Woori Asset Trust Co., Ltd.
---	---

- 38 -

29.	LEASES
(1)	Details of lease liability are as follows (Unit: Korean Won in millions):
---	---
		December 31, 2019
---	---	---	---
Lease payments
Within one year			1,341
After one year but within five years			249
(2)	Total cash outflows from lease for the period from January 11, 2019 (date of incorporation) to<br>December 31, 2019 are as follows (Unit: Korean Won in millions):
---	---
		For the period from January 11, 2019<br>(date of incorporation) to December 31, 2019
---	---	---	---
Cash outflows from lease			1,289
(3)	The Company recognized the amount of 95 million Won as the lease payments for low-value assets for the period from January 11, 2019 (date of incorporations) to December 31, 2019. There are no lease payments that are not included in total lease payments considered for lease liability<br>measurement as they are short-term leases.
---	---
30.	EVENTS AFTER THE REPORTING PERIOD
---	---

The Coronavirus disease (COVID-19) outbreak in January, 2020 is having a negative impact on the global economy, including Korea. As a result, the macroeconomic environment is unstable overall. The Company is closely monitoring the situation; however, the impact on the Company due to the Coronavirus cannot be estimated as of the financial statements approval for the issuance date.

- 39 -

Woori Financial Group Inc 6-K, filed Mar 17, 2020

About this 6-K