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6-K

Woori Financial Group Inc. (WF)

6-K 2020-08-17 For: 2020-08-14
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Added on April 10, 2026
Table of Contents

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 August 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.

Table of Contents

Index

1. Summary of 2020 1H Business Report
2. Exhibit 99.1 Woori Financial Group Review Report for 2020 1H (Consolidated)
3. Exhibit 99.2 Woori Financial Group Review Report for 2020 1H (Separate)

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Table of Contents

Summary of 2020 First Half Business Report

Table of Contents

I. INTRODUCTION OF THE COMPANY 5
1. Overview of the Company 5
2. Capital Structure (Changes in Capital) 7
3. Total Number of Authorized Shares 7
4. Voting Rights 8
5. Dividend Information 8
II. BUSINESS OVERVIEW 9
1. Results of Operations 9
2. Funding Sources and Uses of Funds 9
3. Other Information Necessary for Making Investment Decisions 11
III. FINANCIAL INFORMATION 15
1. Condensed Financial Statements (Consolidated) 15
2. Condensed Financial Statements (Separate) 17
IV. INDEPENDENT AUDITOR’S OPINION 19
1. Independent Auditor’s Opinion 19
2. Compensation to the Independent Auditor 19
V. CORPORATE GOVERNANCE AND AFFILIATED COMPANIES 21
1. About the Board of Directors 21
2. Affiliated Companies (As of June 30, 2020) 22
VI. SHAREHOLDER INFORMATION 23
1. Share Distribution 23
2. Stock Price and Stock Market Performance 24
VII. DIRECTORS AND EMPLOYEE INFORMATION 26
1. Directors and Executives 26
2. Employee Status 27
3. Directors’ Compensation 27

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Table of Contents

Except where indicated otherwise, financial information contained in this document (including the attached financial statements) has been prepared in accordance with the Korean equivalent of International Financial Reporting Standards (“Korean IFRS”), which differ in certain important respects from generally accepted accounting principles in the United States.

All references to “Woori Financial Group,” “we,” “us” or the “Company” are to Woori Financial Group Inc. and, unless the context requires otherwise, its subsidiaries. In addition, all references to “Won” or “KRW” in this document are to the currency of the Republic of Korea.

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I. Introduction of the Company
1. Overview of the Company
--- ---
a. History
--- ---
January 11, 2019 Establishment of the Company pursuant to a comprehensive stock transfer, by which Woori Bank, Woori FIS, Woori Finance Research Institute, Woori Credit Information, Woori Fund Services and Woori Private Equity Asset Management<br>became wholly-owned subsidiaries of the Company.
--- ---
February 13, 2019 Listed on the Korea Exchange (KRX).
April 5, 2019 Entered into share purchase agreements to acquire Tongyang Asset Management Corp. and ABL Global Asset Management Co., Ltd.
June 21, 2019 Entered into a purchase agreement with Woori Bank to acquire the common shares of Woori Investment Bank Co., Ltd. (“Woori Investment Bank”) and integrate Woori Investment Bank as a first-tier subsidiary of the Company<br>(Buyer: Woori Financial Group, Seller: Woori Bank)
July 3, 2019 Entered into a stock exchange agreement between the Company and Woori Card Co., Ltd (“Woori Card”) to integrate Woori Card as a first-tier subsidiary of the Company
July 25, 2019 Entered into a share purchase agreement to acquire Kukje Asset Trust, Ltd.
August 1, 2019 Integrated Woori Asset Management Corp. (formerly known as Tongyang Asset Management Co., Ltd.) as a first-tier subsidiary of the Company.
September 10, 2019 Integrated Woori Card and Woori Investment Bank as first-tier subsidiaries of the Company.
September 26, 2019 Disposed 4% of common shares of the Company held by Woori Bank to a Taiwanese company, Fubon Life Insurance Co., Ltd.
December 6, 2019 Integrated Woori Global Asset Management Corp. as a first-tier subsidiary of the Company
December 30, 2019 Integrated Woori Asset Trust Ltd., as a first-tier subsidiary of the Company
March 25, 2020 Held the first annual general meeting of shareholders of Woori Financial Group; reappointed the Chief Executive Officer

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b. Affiliated Companies
(1) Overview of Business Group
--- ---
1. Name of business group: Woori Financial Group Inc.
--- ---
(2) Affiliated companies within the business group
--- ---

As of June 30, 2020

Type Name of Company (Controlling Company)
Company Woori Financial Group —
First^^Tier Subsidiaries<br><br><br>(11 companies) Woori Bank (equity ownership 100.0%) Woori Financial Group
Woori Card (equity ownership 100.0%)
Woori Investment Bank (equity ownership 59.83%)
Woori FIS (equity ownership 100.0%)
Woori Finance Research Institute (equity ownership 100.0%)
Woori Credit Information (equity ownership 100.0%)
Woori Fund Services (equity ownership 100.0%)
Woori Asset Trust (equity ownership 51.0)%
Woori Asset Management (equity ownership 73.0%)
Woori Private Equity Asset Management (equity ownership 100.0%)
Woori Global Asset Management (equity ownership 100.0%)
Second^^Tier Subsidiaries<br><br><br>(14 companies) Korea BTL Infrastructure Fund (equity ownership 99.88%) Woori Bank
Woori America Bank (equity ownership 100.0%)
Woori Bank China Limited (equity ownership 100.0%)
PT. Bank Woori Saudara Indonesia (equity ownership 79.88%)
AO Woori Bank (equity ownership 100.0% - 1 share)
Banco Woori Bank do Brazil S.A. (equity ownership 100.0% - 1 share)
WB Finance Co., Ltd (Cambodia) (equity ownership 100.0%)
Woori Finance Myanmar (equity ownership 100.0%)
Woori Wealth Development Bank (equity ownership 51%)
Woori Bank Vietnam Limited (equity ownership 100.0%)
Woori Bank Europe Gmbh (equity ownership 100.0%)
Woori Global Markets Asia Limited (equity ownership 100.0%)
Tutu Finance-WCI Myanmar (equity ownership 100.0%) Woori Card
Woori-Hanwha Eureka Private Equity Fund (equity ownership 0.80%) Woori Private Equity Asset Management
Note 1) Listed Companies : Woori Financial Group, Woori Investment Bank and PT. Bank Woori Saudara Indonesia<br>
--- ---

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2. Capital Structure (Changes in Capital)
As of June 30, 2020 (units: Won, shares)
--- --- --- --- --- --- --- --- --- --- --- ---
Stock Decrease/Increase
Date Category Type Quantity ParValue Issueprice Note
January 11, 2019 — Common 680,164,306 5,000 26,415 Establishment<br> <br>(comprehensive stock transfer)
September 10,<br><br><br>2019 — Common 42,103,377 5,000 12,350 Comprehensive stock exchange<br> <br>Stock increase ratio: 6.19018%

Note 1) Due to Woori Financial Group’s establishment through a comprehensive stock transfer, the issue price was calculated by dividing the total equity from its financial statements at the time of establishment (KRW 17,966,458,911,689) by the total number of issued shares (680,164,306).

Note 2) Our capital in 2019 3Q changed due to the comprehensive stock exchange. The issue price is based on the closing stock price of the comprehensive stock exchange date.

3. Total Number of Authorized Shares
As of June 30, 2020 (unit: shares)
--- --- --- --- --- --- --- ---
Items Type Notes
Common Shares Total
Number of authorized shares 4,000,000,000 4,000,000,000
Number of issued shares 722,267,683 722,267,683 Note 1 )
Number of treasury shares 2 2 Note 2 )
Number of outstanding shares 722,267,681 722,267,681

Note 1) New common shares of 42,103,377 were issued on September 10, 2019 due to the small scale stock exchange between Woori Financial Group and Woori Card.

Note 2) Acquired from the issuance of fractional shares

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4. Voting Rights
As of June 30, 2020 (unit: shares)
--- --- --- --- --- --- --- ---
Items Number ofshares Notes
Number of issued shares Common Shares 722,267,683 —
Preferred Shares — —
Number of shares without voting rights Common Shares 2 Note 1 )
Preferred Shares — —
Number of shares for which voting rights are excluded pursuant to the articles of<br>incorporation Common Shares — —
Preferred Shares — —
Number of shares for which voting rights are limited by law Common Shares 11,669,295 Note 2 )
Preferred Shares — —
Number of shares for which voting rights have been restored Common Shares — —
Preferred Shares — —
Number of shares for which voting rights may be exercised Common Shares 710,598,388 —
Preferred Shares — —

Note 1) Acquired treasury shares from the issuance of fractional shares (based on Article 369 of the Commercial Act).

Note 2) Pursuant to Article 8-2 of the Financial Holding Company Act, a non-financial business operator is restricted from exercising voting rights in excess of 4% of the total number of outstanding voting shares of a financial holding company.

5. Dividend Information

Woori Financial Group was established on January 11, 2019.

Items 2020 1H 2019 2018
Par value per share (Won) — 5,000 —
Net profit (Millions of Won) — 1,872,207 —
Earnings per share (Won) — 2,727
Total cash dividends (Millions of Won) — 505,587 —
Total stock dividends (Millions of Won) — — —
Cash dividend payout ratio (%) — 27.00 —
Cash dividend yield (%) Common Shares — 5.8 —
Preferred Shares — — —
Stock dividend yield (%) Common Shares — — —
Preferred Shares — — —
Cash dividend per share (Won) Common Shares — 700 —
Preferred Shares — — —
Stock dividend per share (Share) Common Shares — — —
Preferred Shares — — —

Note 1) There were no board resolutions regarding dividends during 2020 1H.

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II. Business Overview
1. Results of Operations
--- ---
As of June 30, 2020 (unit: billions of Won)
--- --- --- --- --- --- ---
Type 2020 1H 2019 2018
Operating income 1,173 2,800 —
Non-operating income -139 -77 —
Income from continuing operations before income tax 1,034 2,723 —
Income tax expense from continuing operations 260 685 —
Income from discontinued operations — — —
Net income 774 2,038 —
Controlling Interest 661 1,872
Non-controlling Interest 113 165

Note 1) Based on K-IFRS consolidated financial statements

2. Funding Sources and Uses of Funds
a. Sources of Funds
--- ---
For the periods indicated other than as noted below (units: millions of Won, %)
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Classification Funding Source 2020 1H 2019
AverageBalance InterestRate Proportion AverageBalance InterestRate Proportion
Source Deposits 258,068,563 1.24 71.26 249,106,401 1.51 71.14
Borrowings 19,506,526 1.61 5.39 18,013,074 1.92 5.14
Debentures 31,331,411 2.36 8.65 30,401,987 2.56 8.68
Others 27,550,822 7.61 28,928,780 — 8.26
Total Liabilities 336,457,321 92.91 326,449,882 — 93.23
Total Equity 25,683,004 7.09 23,703,431 — 6.77
Total Liabilities & Equity 362,140,325 100.00 350,153,313 — 100.00

Note 1) 2020 1H Average Balance: average of balances as of December 31, 2019, March 31, 2020 and June 30,2020.

2019 Average Balance: average of balances as of March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019.

Note 2) Based on K-IFRS consolidated financial statements

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b. Use of Funds

For the periods indicated other than as noted below (units: millions of Won, %)
Type Managed Item 2020 1H 2019
Average<br>Balance InterestRate Proportion AverageBalance InterestRate Proportion
Use Cash & Due from Banks 11,628,729 0.57 3.21 9,202,054 1.55 2.63
Marketable securities 54,146,360 1.99 14.95 50,396,362 2.29 14.39
Loans 261,945,510 3.18 72.33 254,691,201 3.48 72.74
Loans in local currency 226,278,644 2.91 62.48 219,418,214 3.22 62.66
Loans in foreign currency 22,413,640 4.31 6.19 20,982,894 4.59 5.99
Guarantee payments 11,527 8.23 0.00 12,410 1.48 0.00
Credit card receivables 8,063,083 8.06 2.23 8,139,789 7.98 2.32
Foreign bills bought 5,178,617 2.29 1.43 6,137,894 2.96 1.75
Bad debt expense in local currency (-) -1,638,965 -0.45 -1,666,215 — -0.48
Other 36,058,691 9.96 37,529,911 — 10.72
Total Assets 362,140,325 100.00 350,153,313 — 100.00

Note 1) 2020 1H Average Balance: average of balances as of December 31, 2019, March 31, 2020 and June 30, 2020.

2019 Average Balance: average of balances as of March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019.

Note 2) Based on K-IFRS consolidated financial statements

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3. Other Information Necessary for Making Investment Decisions
a. Selected Ratios
--- ---

Group BIS Capital Adequacy Ratios

As of the end of the period indicated (units: billions of Won, % )
Type 2020 1H 2019
Equity capital (A) 27,352 27,115
Risk weighted assets (B) 214,815 228,046
BIS(Capital adequacy) ratio (A/B) 12.73 11.89

Note 1) BIS (Bank for International Settlements) Capital Adequacy Ratios : Equity capital / Risk weighted assets * 100

Note 2) Based on K-IFRS consolidated financial statements and Basel III standards

Figures of Affiliated Companies

As of the end of the periods indicated (units: 100 millions of Won, % )
Name of Company Type 2020 1H 2019 2018
Woori Bank BIS ratio Equity capital (A) 253,719 243,142 242,508
Risk weighted assets (B) 1,714,652 1,578,895 1,549,710
Capital adequacy ratio (A/B) 14.80 15.40 15.65
Woori Card Adjusted capital ratio 19.97 18.33 18.08
Tangible common equity ratio 13.84 14.29 13.54
Woori Investment Bank BIS ratio Equity capital (A) 3,680 3,381 3,003
Risk weighted assets (B) 30,069 26,303 23,192
Capital adequacy ratio (A/B) 12.24 12.86 12.95
Woori Asset Trust Operating capital ratio 1,182.00 1,397.97 957.76
Woori Asset Management Minimum operating capital ratio 709.36 655.8 558.9

Note 1) BIS (Bank for International Settlements) Capital Adequacy Ratio : Equity capital / Risk weighted assets * 100

Note 2) Figures for Woori Bank are based on K-IFRS consolidated financial statements and Basel III standards

Note 3) Figures for Woori Card are based on the applicable standards for business reports submitted to the Financial Supervisory Service

Note 4) Figures for Woori Investment Bank are based on the applicable standards for business reports submitted to the Financial Supervisory Service and our K-IFRS consolidated financial statements

Note 5) Figures for Woori Asset Trust are based on K-IFRS separate financial statements

Note 6) Figures for Woori Asset Management are based on K-IFRS separate financial statements

Note 7) 2020 1H figures are estimates only and are subject to change

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Won Liquidity Ratios

As of the end of the periods indicated (units: millions of Won, % )
Type 2020 1H 2019 2018
Won<br>Liquidity<br>Assets Won<br>Liquidity<br>Liabilities Won<br>Liquidity<br>Ratio Won<br>Liquidity<br>Assets Won<br>Liquidity<br>Liabilities Won<br>Liquidity<br>Ratio Won<br>Liquidity<br>Assets Won<br>Liquidity<br>Liabilities Won<br>Liquidity<br>Ratio
Woori Financial Group<br><br><br>Note 1) 79,538 2,078 3,827.6 45,079 7,475 603.1 —
Woori Card<br><br><br>Note 2) 6,283,500 1,574,185 399.2 5,976,031 1,407,335 424.6 6,055,752 1,349,874 448.6
Woori Investment Bank<br><br><br>Note 2) 1,989,498 945,697 210.4 1,671,823 1,118,318 149.5 1,183,476 444,475 266.3
Woori Asset Trust<br><br><br>Note 3) 87,421 11,517 759.07 67,555 14,595 462.9 61,161 9,411 649.9

Note 1) Based on current assets and liabilities within one month of maturity.

Note 2) Based on current assets and liabilities within 90 days of maturity.

Note 3) Based on K-IFRS separate financial statements as well as current assets and liabilities within 90 days of maturity.

Foreign Currency (FC) Liquidity Ratios

As of the end of the periods indicated (units: millions of Won, % )
Type 2020 1H 2019 2018
FC<br>Liquidity<br>Assets FC<br>Liquidity<br>Liabilities FC<br>Liquidity<br>Ratio FC<br>Liquidity<br>Assets FC<br>Liquidity<br>Liabilities FC<br>Liquidity<br>Ratio FC<br>Liquidity<br>Assets FC<br>Liquidity<br>Liabilities FC<br>Liquidity<br>Ratio
Woori Investment Bank<br><br><br>Note 1) 38,752 — — 38,111 34,734 109.7 82,633 78,104 105.8

Note 1) Based on current assets and liabilities within three months of maturity.

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Liquidity Coverage Ratios

(unit: % )
Name of Company Type 2020 1H 2019 2018
Woori Bank Liquidity coverage ratio Note 1) 104.45 107.27 103.40
Foreign currency liquidity coverage ratio Note 2) 115.02 110.50 108.98
Ratio of business purpose premises and equipment 11.48 12.22 12.34

Note 1) Method of calculation based on business disclosure (average of daily ratios for business days in a quarter), periods applicable are 2020 2Q, 2019 4Q and 2018 4Q

- Under the [Plans for Temporary Easing of Financial Regulations in Response to<br>COVID-19] announced by the Financial Services Commission, the liquidity coverage ratio requirement for banks has been reduced from 100% to 85% until the end of September 2020.

Note 2) Implemented in January 2017 (increased 10% annually; current minimum ratio is 80% in 2019); method of calculation of average LCR based on business disclosure

Periods applicable are 2020 2Q, 2019 4Q and 2018 4Q; foreign currency liquidity coverage ratio for each month during the current quarter : April : 121.04%, May : 110.82%, June: 113.80%

Profitability Ratios

(unit: % )
Type 2020 1H 2019 2018
ROA ROE ROA ROE ROA ROE
Woori Financial Group Note 1)
Including non-controlling interests 0.41 7.08 0.57 10.11 —
Excluding non-controlling interests 0.35 6.04 0.52 9.29 —
Woori Bank Note 2) 0.38 5.86 0.55 8.36 0.60 8.82
Woori Card Note 2) 1.13 6.14 0.90 5.05 0.72 4.00
Woori Investment Bank Note 2) 1.58 13.73 1.69 13.66 1.30 10.49
Woori Asset Trust Note 3) 27.08 39.01 25.18 37.40 28.73 49.43
Woori Asset Management 5.63 5.93 7.41 7.77 6.06 6.32

Note 1) On an annualized basis based on the applicable standards for financial holding company business reports submitted to the Financial Supervisory Service. Average Balance of total assets and equity calculated by averaging the balances at the beginning and end of each quarter (2019: March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019).

Note 2) Based on the applicable standards for business reports submitted to the Financial Supervisory Service

Note 3) Non-consolidated basis: total assets and total equity are average balances of end of previous year end and each quarter ending balances.

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Group Asset Quality

(units: billions of Won, % )
Type 2020 1H 2019 2018
Total loans 278,661 266,432 —
Substandard and below loans 1,205 1,198 —
Substandard and below ratio 0.43 0.45 —
Non-Performing Loans 1,102 1,068 —
NPL Ratio 0.40 0.40 —
Substandard and below coverage ratio (A/B) 142.4 133.6 —
Loan Loss reserve (A) 1,716 1,600 —
Substandard and below loans (B) 1,205 1,198 —

Note 1) Based on the applicable standards for financial holding company business reports submitted to the Financial Supervisory Service

Asset Quality for Significant Subsidiaries and Consolidated Companies

(units: % )
Type 2020 1H 2019 2018
Substandard<br>and below<br>ratio NPL<br>ratio Substandard<br>and below<br>coverage<br>ratio Substandard<br>and below<br>ratio NPL<br>ratio Substandard<br>and below<br>coverage<br>ratio Substandard<br>and below<br>ratio NPL<br>ratio Substandard<br>and below<br>coverage<br>ratio
Woori Bank 0.38 0.36 136.42 0.40 0.36 121.80 0.51 0.43 119.42
Woori Card 0.69 — 102.85 0.80 — 102.84 0.80 — 104.02
Woori Investment Bank 0.52 0.30 145.30 0.49 0.21 167.39 1.51 1.49 51.21
Woori Asset Trust 46.31 — — 37.51 — — 10.52 — —

Note 1) Based on the applicable standards for company business reports submitted to the Financial Supervisory Service

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III. Financial Information
1. Condensed Financial Statements (Consolidated)
--- ---

Summary Consolidated Statement of Financial Position

(The Company and its Consolidated Subsidiaries, as of the end of the periods indicated) (unit: millions of Won)
Classification 2020 1H 2019 2018
ASSETS
Cash and cash equivalents 9,437,619 6,392,566 6,747,894
Financial assets at fair value through profit or loss (“FVTPL”) 10,067,062 8,069,144 6,126,316
Financial assets at fair value through other comprehensive income 29,612,408 27,730,531 18,063,423
Securities at amortized cost 18,610,602 20,320,539 22,932,559
Loans and other financial assets at amortized cost 306,418,069 293,717,693 282,457,578
Investments in joint ventures and associates 928,161 806,360 361,766
Investment properties 312,806 280,239 378,196
Premises and equipment 3,311,009 3,364,716 2,450,492
Intangible assets 820,380 844,110 597,520
Assets held for sale 9,614 10,556 17,912
Net defined benefit asset — 2,582 —
Current tax assets 39,230 47,367 20,730
Deferred tax assets 39,440 39,544 59,641
Derivative assets (designated for hedging) 249,880 121,131 35,503
Other assets 221,096 233,646 197,653
Total assets **** 380,077,376 **** **** 361,980,724 **** **** 340,447,183 ****
LIABILITIES
Financial liabilities at FVTPL 4,031,235 2,958,302 2,282,686
Deposits due to customers 276,967,229 264,685,578 248,690,939
Borrowings 21,263,126 18,998,920 16,202,986
Debentures 31,029,872 30,858,055 28,735,862
Provisions 551,389 443,980 391,313
Net defined benefit liability 146,325 92,470 173,109
Current tax liabilities 102,278 182,690 159,078
Deferred tax liabilities 200,263 134,322 18,156
Derivative liabilities (designated for hedging) 15,022 6,837 51,408
Other financial liabilities 19,635,458 17,706,767 21,442,524
Other liabilities 383,491 420,471 346,078
Total liabilities **** 354,325,688 **** **** 336,488,392 **** **** 318,494,139 ****
EQUITY
Owners’ equity: 22,301,193 21,510,370 21,739,931
Capital stock 3,611,338 3,611,338 3,381,392
Hybrid securities 1,695,821 997,544 3,161,963
Capital surplus 627,625 626,295 285,889
Other equity (2,285,790 ) (2,249,322 ) (2,213,970 )
Retained earnings 18,652,199 18,524,515 17,124,657
Non-controlling interests 3,450,495 3,981,962 213,113
Total equity **** 25,751,688 **** **** 25,492,332 **** **** 21,953,044 ****
Total liabilities and equity **** 380,077,376 **** **** 361,980,724 **** **** 340,447,183 ****
Number of Consolidated Subsidiaries (excluding holding company) 104 102 65

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Summary Consolidated Statement of Comprehensive Income

(The Company and its Consolidated Subsidiaries, for the periods indicated) (unit: millions of Won, except per share amounts)
Classification 2020 1H 2019 1H 2019 2018
Operating income **** 1,172,598 **** **** 1,710,412 **** **** 2,799,976 **** **** 2,759,301 ****
Net interest income 2,940,849 2,931,052 5,893,706 5,650,951
Net fees and commissions income 498,349 560,090 1,102,628 1,069,974
Dividend income 71,002 64,583 107,959 90,552
Net gain or loss on financial instruments at FVTPL (fair value through profit or loss) 401,589 80,081 25,455 214,443
Net gain or loss on financial assets at FVTOCI 11,027 3,445 11,015 2,047
Net gain on disposals of financial assets at amortized cost 32,662 94,619 102,115 79,532
Impairment losses due to credit loss (446,679 ) (136,546 ) (374,244 ) (329,574 )
General and administrative expenses (1,789,558 ) (1,695,786 ) (3,766,077 ) (3,624,033 )
Other net operating income (expenses) (546,643 ) (191,126 ) (302,581 ) (394,591 )
Non-operating income(expense) **** (138,749 ) **** 17,670 **** **** (76,927 ) **** 45,571 ****
Net income before income tax expense **** 1,033,849 **** **** 1,728,082 **** **** 2,723,049 **** **** 2,804,872 ****
Income tax expense **** 259,816 **** **** 456,119 **** **** 685,453 **** **** 753,223 ****
Net income **** 774,033 **** **** 1,271,963 **** **** 2,037,596 **** **** 2,051,649 ****
Net income attributable to owners 660,564 1,179,688 1,872,207 2,033,182
Net income attributable to the non-controlling<br>interests 113,469 92,275 165,389 18,467
Other comprehensive income (loss), net of tax **** (9,167 ) **** 68,498 **** **** 51,782 **** **** (92,236 )
Items that will not be reclassified to profit or loss (121,454 ) (86,645 ) (92,777 ) (115,384 )
Items that may be reclassified to profit or loss 112,287 155,143 144,559 23,148
Total comprehensive income **** 764,866 **** **** 1,340,461 **** **** 2,089,378 **** **** 1,959,413 ****
Comprehensive income attributable to the owners 648,420 1,240,153 1,914,393 1,943,885
Comprehensive income attributable to non-controlling<br>interests 116,446 100,308 174,985 15,528
Net income per share:
Basic and diluted loss per share (in Korean Won) 887 1,755 2,727 2,796

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2. Condensed Financial Statements (Separate)

Summary Statement of Financial Position

(The Company, as of the end of the period indicated) (unit: millions of Won)
Classification 2020 1H 2019
ASSETS
Cash and cash equivalents 129,525 43,670
Financial assets at fair value through profit or loss 9,434 9,434
Financial assets at fair value through other comprehensive income 150,265 —
Loans and other financial assets at amortized cost 761,795 1,269,203
Investments in subsidiaries 20,873,593 19,873,593
Premises and equipment 9,384 7,383
Intangible assets 5,609 3,310
Other assets 15 —
Total assets **** 21,939,620 **** **** 21,206,593 ****
LIABILITIES
Debentures 947,789 947,679
Provisions 714 600
Net defined benefit liability 7,566 3,482
Current tax liabilities 57,554 133,526
Deferred tax liabilities 921 154
Other financial liabilities 9,860 10,745
Other liabilities 323 4,142
Total liabilities **** 1,024,727 **** **** 1,100,328 ****
EQUITY
Capital stock 3,611,338 3,611,338
Hybrid securities 1,695,821 997,544
Capital surplus 14,874,084 14,874,084
Other equity (1,400 ) (631 )
Retained Earnings 735,050 623,930
Total equity **** 20,914,893 **** **** 20,106,265 ****
Total liabilities and equity **** 21,939,620 **** **** 21,206,593 ****

17

Table of Contents

Summary Statement of Comprehensive Income

(The Company, for the period indicated) (unit: millions of Won, except per share amounts)
Classification 2020 1H 2019 1H 2019
Operating Income: **** 638,150 **** **** 647,624 **** **** 629,437 ****
Net interest income (3,332 ) (354 ) 40
Interest income 7,699 509 7,741
Interest expense 11,031 863 7,701
Net fees and commissions loss (8,168 ) (7,412 ) (15,833 )
Fees and commissions income — — —
Fees and commissions expense 8,168 7,412 15,833
Dividend income 677,795 676,000 676,000
Net gain on financial instruments at FVTPL — — 9,434
Impairment losses due to credit loss 9 — (263 )
General and administrative expenses (28,154 ) (20,610 ) (39,941 )
Non-operating loss **** (20 ) **** (600 ) **** (750 )
Net Income before income tax expense **** 638,130 **** **** 647,024 **** **** 628,687 ****
Income tax expense **** 1,058 **** **** (407 ) **** (394 )
Net Income **** 637,072 **** **** 647,431 **** **** 628,293 ****
Other comprehensive loss, net of tax **** (769 ) **** (445 ) **** (631 )
Items that will not be reclassified to profit or loss **** (769 ) **** (445 ) **** (631 )
Net gain on valuation of equity securities at FVTOCI **** 192 **** **** — **** **** — ****
Remeasurement loss related to defined benefit plan **** (961 ) **** (445 ) **** (631 )
Total comprehensive Income **** 636,303 **** **** 646,986 **** **** 627,662 ****
Net Income per share:
Basic and diluted Income per share (In Korean Won) 854 952 900

18

Table of Contents
IV. Independent Auditor’s Opinion
1. Independent Auditor’s Opinion
--- ---
2020 1H 2019 2018
--- --- --- --- ---
Auditor Samil PricewaterhouseCoopers Deloitte Anjin LLC —
Auditor’s Opinion Note 1) Note 2) —

Note 1) In its review report attached to this report, Samil PricewaterhouseCoopers has stated that nothing had come to their attention that caused them to believe that the accompanying consolidated and separate interim financial statements of Woori Financial Group are not presented fairly in all material respects, in accordance with Korean IFRS.

Note 2) In its audit report, Deloitte Anjin LLC has stated that the financial statements are presented fairly, in all material respects, in accordance with Korean IFRS.

2. Compensation to the Independent Auditor
a. Audit Services
--- ---
Term Auditor Description Fee Total Time
--- --- --- --- --- --- --- ---
2020 1H Samil PricewaterhouseCoopers 1H review<br><br><br>1Q review KRW 1,135 million 2,505 hours<br> <br>1,350 hours
2019 Deloitte Anjin LLC Closing audit<br>(including internal accounting management system) KRW 752 million 10,849 hours
Interim audit 7,074 hours
3Q review 3,366 hours
1H review 2,591 hours
1Q review 856 hours

Note 1) Total time includes planning time up until the commencement of the applicable services

b. Other Audit Services
Term Auditor Description Fee
--- --- --- --- --- ---
2019 Deloitte Anjin LLC Auditing services provided in connection with the submission of a holding company establishment report to the Fair Trade Commission KRW 67 million

19

Table of Contents
c. Current Status of Audit Service Agreements with the Independent Auditor Relating to U.S. Listing
Term Auditor Description Fee
--- --- --- ---
2020 Samil PricewaterhouseCoopers U.S. PCAOB standard audit of consolidated financial statements and internal control over financial<br>reporting KRW 2,280 million
2019 Deloitte Anjin LLC U.S. PCAOB standard audit of consolidated financial statements and internal control over financial<br>reporting KRW 1,873 million
d. Non-Audit Services
--- ---
Term Date of Execution<br>of Agreement Description of Service Service Term Fees
--- --- --- --- --- --- --- ---
2019 April 18, 2019 Tax adjustment (including review relating to application of consolidated tax) April 18, 2019 ~ May 31, 2020 KRW 88 million
May 14, 2019 Issuance of agreed-upon procedure report relating to asset management company establishment registration submitted to the Financial Supervisory Service May 14, 2019 ~ May 31, 2020 KRW 18 million

20

Table of Contents
V. Corporate Governance and Affiliated Companies
1. About the Board of Directors
--- ---
a. Composition of the Board of Directors
--- ---

The board of directors consists of standing directors, outside directors and non-standing directors.

b. Committees under the Board of Directors

We currently have the following committees serving under the board of directors:

(a) Audit Committee
(b) Board Risk Management Committee
--- ---
(c) Compensation Committee
--- ---
(d) Committee for Recommending Executive Officer Candidates
--- ---
(e) Committee for Recommending Group Executive Officer Candidates
--- ---
(f) Committee for Internal Control Management
--- ---
(As of June 30, 2020)<br><br><br>Name of Committee Composition Names of Members
--- --- ---
Audit Committee Three outside directors (Chairman) Chan-Hyoung Chung (outside director)<br><br><br>Sung-Tae Ro (outside director)<br><br><br>Dong-Woo Chang (outside director)
Board Risk Management Committee Three outside directors<br><br><br>One non-standing director<br><br><br>One standing director (Chairman) Sang-Yong Park (outside director)<br><br><br>Dennis Chan (outside director)<br><br><br>Zhiping Tian (outside director)<br> <br>Hong-Tae Kim (non-standing director)<br> <br>Won-Duk Lee (standing<br>director)
Compensation Committee Six outside directors<br><br><br>One non-standing director (Chairman) Chan-Hyoung Chung (outside director)<br><br><br>Sung-Tae Ro (outside director)<br><br><br>Sang-Yong Park (outside director)<br><br><br>Dennis Chan (outside director)<br><br><br>Zhiping Tian (outside director)<br> <br>Dong-Woo Chang (outside director)<br> <br>Hong-Tae Kim (non-standing director)
Committee for Recommending Executive Officer Candidates Six outside directors (Chairman) Dong-Woo Chang (outside director)<br><br><br>Sung-Tae Ro (outside director)<br><br><br>Sang-Yong Park (outside director)<br><br><br>Chan-Hyoung Chung (outside director)<br><br><br>Dennis Chan (outside director)<br><br><br>Zhiping Tian (outside director)
Committee for Recommending Group Executive Officer Candidates Six outside directors<br><br><br>One standing director (Chairman) Tae-Seung Son (standing director)<br><br><br>Sung-Tae Ro (outside director)<br><br><br>Sang-Yong Park (outside director)<br><br><br>Chan-Hyoung Chung (outside director)<br><br><br>Dennis Chan (outside director)<br><br><br>Zhiping Tian (outside director)<br> <br>Dong-Woo Chang (outside director)
Committee for Internal Control Management One outside director<br><br><br>One non-standing director<br><br><br>One standing director (Chairman) Sang-Yong Park (outside director)<br><br><br>Hong-Tae Kim (non-standing director)<br><br><br>Tae-Seung Son (standing director)

21

Table of Contents
2. Affiliated Companies (As of June 30, 2020)

LOGO

22

Table of Contents
VI. Shareholder Information
1. Share Distribution
--- ---
a. Share Information of the Largest Shareholder and Specially Related Parties
--- ---
As of June 30, 2020 (units: shares, %)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Name Relation Type Shares Held Notes
Beginning balance Ending balance
Number Share Number Share
Korea Deposit<br><br><br>Insurance Corporation (KDIC) Largest<br> <br>Shareholder Common 124,604,797 17.25 124,604,797 17.25 Note 1 )
Total Common 124,604,797 17.25 124,604,797 17.25
Others — — — —

Note 1) Refer to ‘b. Changes in the largest shareholder’ for changes in the number and percentage of shares held by the KDIC

b. Changes in the largest shareholder
As of June 30, 2020 (units: shares, %)
--- --- --- --- --- --- ---
Change of Date Largest Shareholder Number Held Share Notes
January 11, 2019 Korea Deposit Insurance Corporation 124,604,797 18.32 Comprehensive Stock Transfer<br> <br>(Woori Financial Group) Note 1)
September 10, 2019 Korea Deposit Insurance Corporation 124,604,797 17.25 Issuance of new common shares<br>(42,103,377 shares) Note 2)

Note 1) Woori Financial Group was established pursuant to a comprehensive stock transfer of Woori Bank and five other companies, and the KDIC received new shares of Woori Financial Group in accordance with the stock transfer ratio.

transfer ratio Woori Bank : Woori Financial Group = 1: 1.0000000

Note2) Small scale stock exchange between Woori Financial Group and Woori Card.

23

Table of Contents
c. Share Ownership of More Than 5%
As of June 30, 2020 (units: shares, %)
--- --- --- --- --- --- --- --- ---
Name Shares Notes
No. of shares Percentage of shareholding
Share ownership of more than 5% Korea Deposit Insurance Corporation 124,604,797 17.25 —
National Pension Service 71,378,664 9.88 1 )
Nobis1, Inc. (IMM PE) 40,560,000 5.62 —
Employee Stock Ownership Association 53,713,148 7.44 2 )

Note 1) Shares based on publicly disclosed information on July 3, 2020

Note 2) Total shares of the employee stock ownership association of Woori Financial Group and Woori Bank

2. Stock Price and Stock Market Performance
a. Domestic Stock Market
--- ---
(units: Won, shares)
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Period January<br>2020 February<br>2020 March<br>2020 April<br>2020 May<br>2020 June<br>2020
Common Shares High 11,400 10,500 9,630 8,440 9,130 10,350
Low 10,150 9,400 6,560 7,270 7,810 8,690
Average 10,728 10,067 7,989 7,893 8,114 9,405
Monthly<br><br><br>Trade Volume High 3,032,036 7,798,094 5,753,690 4,688,039 7,434,397 4,612,618
Low 1,196,984 1,449,936 1,895,258 1,974,492 1,395,328 1,258,950
Monthly Total 38,739,407 47,347,306 74,783,169 57,640,374 53,303,073 54,242,951

Note 1) Source: KRX KOSPI Market

Note 2) Share prices are based on closing prices.

24

Table of Contents
b. Foreign Stock Market (NYSE)
(units: US Dollars, Won, ADSs)
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Period January<br>2020 February<br>2020 March<br>2020 April<br>2020 May<br>2020 June<br>2020
ADS High 30.09 26.62 24.77 21.47 22.08 26.07
Low 25.40 22.88 15.60 17.31 18.98 21.74
Average 27.60 25.18 20.10 19.50 19.99 23.30
Won<br><br><br>Conversion High 34,838 31,520 29,510 26,305 27,365 31,737
Low 30,060 27,584 19,563 21,118 23,305 26,057
Average 32,134 30,055 24,518 23,895 24,564 28,192
Monthly<br><br><br>Trade Volume High 110,600 93,100 237,600 214,700 164,700 106,900
Low 18,500 15,500 65,000 34,600 34,600 18,500
Monthly Total 839,000 946,100 2,700,200 2,009,400 1,413,000 1,254,900

Note 1) Source: standard trading rate (daily and monthly average) (Seoul Money Brokerage, www.smbs.biz)

Note 2) One ADS represents three common shares.

Note 3) Share prices are based on closing prices.

25

Table of Contents
VII. Directors and Employee Information
1. Directors and Executives
--- ---
As of June 30, 2020
--- --- --- --- --- --- ---
Position Name CommonSharesOwned Term<br>Commencement Date Expiration of Term
Chief Executive Officer Registered Tae-Seung Son 83,127 January 11, 2019 ~ Note 1)
Deputy President Registered Won-Duk Lee 19,500 March 25, 2020 ~ Note 2)
Outside Director Registered Sung-Tae Ro 5,000 January 11, 2019 ~ Note 2)
Outside Director Registered Sang-Yong Park 1,000 January 11, 2019 ~ Note 2)
Outside Director Registered Chan-Hyoung<br>Chung 10,532 January 11, 2019 ~ Note 2)
Outside Director Registered Dennis Chan — March 25, 2020 ~ Note 3)
Outside Director Registered Zhiping Tian — January 11, 2019 ~ Note 2)
Outside Director Registered Dong-Woo<br>Chang — January 11, 2019 ~ Note 2)
Non-standing Director Registered Hong-Tae Kim — March 25, 2020 ~ Note 3)
Deputy President Non-Registered Jeong-Ki Kim 31,385 February 11, 2020 ~ December 31, 2020
Deputy President Non-Registered Dong-Su Choi 17,738 January 11, 2019 ~ December 31, 2020
Deputy President Non-Registered Kyong-Hoon<br>Park 17,000 January 11, 2019 ~ December 31, 2020
Deputy President Non-Registered Myung-Hyuk<br>Shin 5,000 February 11, 2020 ~ December 31, 2020
Deputy President Non-Registered Jin-Ho Noh 4,000 February 11, 2020 ~ December 31, 2020
Senior Managing Director Non-Registered Kyu-Mok<br>Hwang 14,239 February 11, 2020 ~ December 31, 2020
Senior Managing Director Non-Registered Seok-Tae Lee 16,857 February 11, 2020 ~ December 31, 2020
Senior Managing Director Non-Registered Seok-Young<br>Chung 20,951 February 11, 2020 ~ January 10, 2021
Managing Director Non-Registered Shin-Kook<br>Kang 3,000 February 11, 2020 ~ December 31, 2021
Managing Director Non-Registered Gyu-Soon<br>Hwang 4,000 February 11, 2020 ~ December 31, 2021
Managing Director Non-Registered Jong-Il Park 12,619 February 11, 2020 ~ December 31, 2021
Managing Director Non-Registered Byoung-Kwon<br>Woo 3,500 February 11, 2020 ~ February 10, 2022
Managing Director Non-Registered Sung-Wook Lee 8,000 February 11, 2020 ~ December 31, 2021
Managing Director Non-Registered Weong-Cheol<br>Hwang 2,000 July 3, 2020 ~ December 31, 2020

Note 1) Date of the 2023 annual general meeting of shareholders

Note 2) Date of the 2021 annual general meeting of shareholders

Note 3) Date of the 2022 annual general meeting of shareholders

Note 4) Common shares owned are as of the date of submission of this report

Note 5) Common shares owned by executives exclude shares owned through the Employee Stock Ownership Association.

26

Table of Contents
2. Employee Status
As of June 30, 2020 (units: persons, millions of Won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Number of Employees Average<br>Tenure TotalCompensation AverageCompensation<br>Per Person Note
Regular Contract Total
Total (Short time<br>worker) Total (Short time<br>worker)
Total 141 — 31 — 172 13 months<br> <br>(15 years<br><br><br>2 months) 13,455 78 —

Note 1) 49 employees concurrently employed by affiliated companies are excluded

Note 2) Average tenure: term in (  ) includes tenure at affiliated companies

Note 3) Contract employees include non-registered executives

3. Directors’ Compensation
As of June 30, 2020 (units: persons, millions of Won)
--- --- --- --- --- --- --- --- ---
Items Number ofPersons TotalCompensation AverageCompensation<br>Per Director Note
Registered Directors<br><br><br>(excludes outside directors and audit committee members) 3 816 272 —
Outside Directors<br><br><br>(excludes audit committee members) 3 87 29 —
Audit Committee Members 3 84 28 —
Auditor — — — —

Note 1) Registered directors and audit committee members include uncompensated directors

Note 2) Only the compensation amount paid by Woori Financial Group is included for the three executives concurrently employed by Woori Bank

27

Table of Contents

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: August 14, 2020 By: /s/ Kyong-Hoon Park
(Signature)
Name: Kyong-Hoon Park
Title: Deputy President

28

EX-99.1

Exhibit 99.1

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF AND FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED

JUNE 30, 2020 AND 2019

WOORIFINANCIAL GROUP INC.

Page(s)
Report on Review of Consolidated Interim Financial Statements 1-2
Consolidated Interim Financial Statements
Consolidated Interim Statements of Financial Position 4-5
Consolidated Interim Statements of Comprehensive Income 6-7
Consolidated Interim Statements of Changes in Equity 8
Consolidated Interim Statements of Cash Flows 9-10
Notes to the Consolidated Interim Financial Statements 11-115

Report on Review of Consolidated Interim Financial Statements

English Translation of a Report Originally Issued in Korean

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

Reviewed Financial Statements

We have reviewed the accompanying consolidated interim financial statements of Woori Financial Group and its subsidiaries (collectively referred to as the “Group”). These financial statements consist of the consolidated interim statement of financial position of the Group as at June 30, 2020 and the related consolidated interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2020, and consolidated interim statements of changes in equity and cash flows for the six-month period ended June 30, 2020, and a summary of significant accounting policies and other explanatory notes, expressed in Korean won.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”) 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to issue a report on these consolidated interim financial statements based on our review.

We conducted our review in accordance with quarterly or semi-annual review standards established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe the accompanying consolidated interim financial statements are not presented fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting.

LOGO

  • 1 -

Emphasis of Matters

Without qualifying our conclusion, we draw attention to Note 3 of the financial statements, which indicates that the outbreak of COVID-19 in 2020 may have a negative impact on the Group’s financial condition and results of operations. Our conclusion is not affected by this item.

Other Matters

The consolidated interim financial statements of comprehensive income for the three-month and six-month periods ended June 30, 2019, and consolidated interim statements of changes in equity and cash flows for the six-month period ended June 30, 2019, presented herein for comparative purposes, were reviewed by Deloitte Anjin LLC whose report dated August 14, 2019. Based on their review, nothing has come to their attention that causes them to believe the accompanying financial statements do not present fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting.

The consolidated financial statements of the Group for the year ended December 31, 2019, were audited by Deloitte Anjin LLC who expressed an unqualified opinion on those statements, not presented herein, on March 16, 2020. The consolidated statement of financial position as at December 31, 2019, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as at December 31, 2019.

/s/ Samil PricewaterhouseCoopers

August 14, 2020

Notice to Readers

This report is effective as of August 14, 2020 the review report date. Certain subsequent events or circumstances may have occurred between the review report date and the time the review report is read. Such events or circumstances could significantly affect the consolidated interim financial statements and may result in modifications to the review report.

  • 2 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF AND FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED

JUNE 30, 2020 AND 2019

The accompanying consolidated interim 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

  • 3 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2020 (UNAUDITED) AND DECEMBER 31, 2019

June 30,<br>2020 December 31,<br>2019
(Korean Won in millions)
ASSETS
Cash and cash equivalents (Note 6) 9,437,619 6,392,566
Financial assets at fair value through profit or loss (“FVTPL”) (Notes 4, 7, 11, 12, 18<br>and 26) 10,067,062 8,069,144
Financial assets at fair value through other comprehensive income (“FVTOCI”) (Notes 4,<br>8, 11, 12, and 18) 29,612,408 27,730,531
Securities at amortized cost (Notes 4, 9, 11, 12 and 18) 18,610,602 20,320,539
Loans and other financial assets at amortized cost (Notes 4, 10, 11, 12, 18 and 41) 306,418,069 293,717,693
Investments in joint ventures and associates (Note 13) 928,161 806,360
Investment properties (Note 14) 312,806 280,239
Premises and equipment (Notes 15 and 18) 3,311,009 3,364,716
Intangible assets (Note 16) 820,380 844,110
Assets held for distribution (sale) (Note 17) 9,614 10,556
Net defined benefit asset (Note 24) — 2,582
Current tax assets 39,230 47,367
Deferred tax assets 39,440 39,544
Derivative assets (Designated for hedging) (Notes 4,11,12 and 26) 249,880 121,131
Other assets (Notes 19 and 41) 221,096 233,646
Total assets 380,077,376 361,980,724
LIABILITIES
Financial liabilities at fair value through profit or loss (“FVTPL”) (Notes 4, 11, 12,<br>20 and 26) 4,031,235 2,958,302
Deposits due to customers (Notes 4,11,21 and 41) 276,967,229 264,685,578
Borrowings (Notes 4, 11, 12 and 22) 21,263,126 18,998,920
Debentures (Notes 4, 11 and 22) 31,029,872 30,858,055
Provisions (Notes 23, 40 and 41) 551,389 443,980
Net defined benefit liability (Note 24) 146,325 92,470
Current tax liabilities 102,278 182,690
Deferred tax liabilities 200,263 134,322
Derivative liabilities (Designated for hedging) (Notes 4,11,12 and 26) 15,022 6,837
Other financial liabilities (Notes 4,11,12, 25 and 41) 19,635,458 17,706,767
Other liabilities (Notes 25 and 41) 383,491 420,471
Total liabilities 354,325,688 336,488,392

(Continued)

  • 4 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED IMTERIM STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2020 (UNAUDITED) AND DECEMBER 31, 2019 (CONTINUED)

June 30,<br>2020 December 31,<br>2019
(Korean Won in millions)
EQUITY
Owners’ equity (Note 28)
Capital stock 3,611,338 3,611,338
Hybrid securities 1,695,821 997,544
Capital surplus 627,625 626,295
Other equity (2,285,790 ) (2,249,322 )
Retained earnings 18,652,199 18,524,515
Regulatory reserve for credit loss (2,547,547 ) (2,356,246 )
Required reversal(provision) of regulatory reserve for credit loss 12,236 (191,301 )
Planned reversal(provision) of regulatory reserve for credit loss 12,236 (191,301 )
22,301,193 21,510,370
Non-controlling interests 3,450,495 3,981,962
Total equity 25,751,688 25,492,332
Total liabilities and equity 380,077,376 361,980,724

The accompanying notes are part of this consolidated interim financial statement.

  • 5 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2020 AND 2019 (UNAUDITED)

Periods ended June 30, 2020 Periods ended June 30, 2019
Three-month Six-month Three-month Six-month
(Korean Won in millions, except per share data)
Interest income 2,412,189 4,916,003 2,673,958 5,277,692
Financial assets at FVTPL 13,681 26,210 14,771 27,905
Financial assets at FVTOCI 114,823 241,000 113,790 209,102
Financial assets at amortized cost 2,283,685 4,648,793 2,545,397 5,040,685
Interest expense (934,299 ) (1,975,154 ) (1,197,497 ) (2,346,640 )
Net interest income (Notes 11, 30 and 41) **** 1,477,890 **** **** 2,940,849 **** **** 1,476,461 **** **** 2,931,052 ****
Fees and commissions income 397,282 807,993 436,680 848,241
Fees and commissions expense (172,913 ) (309,644 ) (151,591 ) (288,151 )
Net fees and commissions income (Notes 11, 31 and 41) **** 224,369 **** **** 498,349 **** **** 285,089 **** **** 560,090 ****
Dividend income (Notes 11, 32 and 41) 23,233 71,002 25,100 64,583
Net gain on financial instruments at FVTPL (Notes 11, 33 and 41) (66,486 ) 401,589 63,495 80,081
Net gain on financial assets at FVTOCI (Notes 11 and 34) 8,427 11,027 2,654 3,445
Net gain arising on financial assets at amortized cost (Note 11) 5,915 32,662 73,954 94,619
Net gain on disposals of loans and other financial assets at amortized cost 5,915 32,662 73,954 94,619
Impairment losses due to credit loss (Notes 35 and 41) (335,787 ) (446,679 ) (76,539 ) (136,546 )
General and administrative expenses (Notes 36 and 41) (897,032 ) (1,789,558 ) (864,334 ) (1,695,786 )
Other net operating expenses (Notes 11, 26, 37 and 41) (41,269 ) (546,643 ) (109,467 ) (191,126 )
Operating income **** 399,260 **** **** 1,172,598 **** **** 876,413 **** **** 1,710,412 ****
Share of gain of joint ventures and associates (Note 13) 16,798 23,952 5,247 10,857
Other non-operating expense (134,822 ) (162,701 ) 20,612 6,813
Non-operating expense (Note 37) **** (118,024 ) **** (138,749 ) **** 25,859 **** **** 17,670 ****
Net income before income tax expense **** 281,236 **** **** 1,033,849 **** **** 902,272 **** **** 1,728,082 ****
Income tax expense (Note 38) 64,974 259,816 244,838 456,119

(Continued)

  • 6 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2020 AND 2019 (UNAUDITED) (CONTINUED)

Periods ended June 30, 2020 Periods ended June 30, 2019
Three-month Six-month Three-month Six-month
(Korean Won in millions, except per share data)
Net income
(Net income after the provision of regulatory reserve for credit loss for the six-month period<br>ended June 30, 2020 and 2019, is 786,269 million Won and 1,152,718 million Won, respectively, and net income after the provision of regulatory reserve for credit loss for the three-month period ended June 30, 2020 and 2019 are 296,417<br>million Won and 619,275 million Won, respectively) (Note 28) **** 216,262 **** **** 774,033 **** **** 657,434 **** **** 1,271,963 ****
Net loss on valuation of equity securities at FVTOCI 14,957 (95,214 ) (35,133 ) (47,377 )
Remeasurement loss related to defined benefit plan (6,911 ) (26,240 ) (6,732 ) (39,268 )
Items that will not be reclassified to profit or loss: **** 8,046 **** **** (121,454 ) **** (41,865 ) **** (86,645 )
Net gain on valuation of debt securities at FVTOCI 45,464 69,463 31,001 53,937
Changes in capital due to equity method (3,614 ) (4,621 ) (92 ) (418 )
Net gain on foreign currency translation of foreign operations 43,478 57,475 37,457 102,794
Net gain (loss) on valuation of cash flow hedge (545 ) (10,030 ) (1,572 ) (1,170 )
Items that may be reclassified to profit or loss: **** 84,783 **** **** 112,287 **** **** 66,794 **** **** 155,143 ****
Other comprehensive income (loss), net of tax **** 92,829 **** **** (9,167 ) **** 24,929 **** **** 68,498 ****
Total comprehensive income **** 309,091 **** **** 764,866 **** **** 682,363 **** **** 1,340,461 ****
Net income attributable to: 216,262 774,033 657,434 1,271,963
Net income attributable to owners 142,348 660,564 610,999 1,179,688
Net income attributable to non-controlling interests 73,914 113,469 46,435 92,275
Total comprehensive income attributable to: 309,091 764,866 682,363 1,340,461
Comprehensive income attributable to owners 221,161 648,420 632,796 1,240,153
Comprehensive income attributable to non-controlling interests 87,930 116,446 49,567 100,308
Earnings per share (Note 39)
Basic and diluted earnings per share (Unit: In Korean Won) 181 887 899 1,755

The accompanying notes are part of this consolidated interim financial statement.

  • 7 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2020 AND 2019 (UNAUDITED)

Capital<br>Stock Hybrid<br>securities Capital<br>surplus Other<br>equity Retained<br>earnings Owners’<br>equity in<br>total Non-<br>controlling<br>interests Total<br>equity
(Korean Won in millions)
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
Total comprehensive income
Net income — — — — 1,179,688 1,179,688 92,275 1,271,963
Net gain on valuation of financial instruments at FVTOCI — — — 6,491 — 6,491 69 6,560
Changes in other comprehensive income due to disposal of equity securities at FVTOCI — — — 27,002 (27,002 ) — — —
Changes in capital due to equity method — — — (418 ) — (418 ) — (418 )
Gain on foreign currency translation of foreign operations — — — 94,591 — 94,591 8,203 102,794
Loss on valuation of cash flow hedge — — — (1,170 ) — (1,170 ) — (1,170 )
Remeasurement loss related to defined benefit plan — — — (39,029 ) — (39,029 ) (239 ) (39,268 )
Transactions with owners
Dividends to common stocks — — — — (437,626 ) (437,626 ) (2,002 ) (439,628 )
Acquisition of subsidiaries 19,430 — 25,878 — — 45,308 10 45,318
New stocks issue cost — — (3 ) — — (3 ) — (3 )
Net increase of treasury stocks — — — 17,230 — 17,230 — 17,230
Dividends to hybrid securities — — — — — — (78,290 ) (78,290 )
Exchange of non-controlling interests in hybrid securities — (3,161,963 ) — — — (3,161,963 ) 3,161,963 —
Changes in subsidiaries’ capital — — 99 — — 99 (13 ) 86
Appropriation of retained earnings — — — 368 (368 ) — — —
June 30, 2019 (Unaudited) 3,400,822 — 311,863 (2,108,905 ) 17,839,349 19,443,129 3,395,089 22,838,218
January 1, 2020 3,611,338 997,544 626,295 (2,249,322 ) 18,524,515 21,510,370 3,981,962 25,492,332
Total comprehensive income
Net income — — — — 660,564 660,564 113,469 774,033
Net loss on valuation of financial instruments at FVTOCI — — — (25,697 ) — (25,697 ) (54 ) (25,751 )
Changes in other comprehensive income due to disposal of equity securities at FVTOCI — — — 578 (578 ) — — —
Changes in capital due to equity method — — — (4,621 ) — (4,621 ) — (4,621 )
Gain on foreign currency translation of foreign operations — — — 54,445 — 54,445 3,030 57,475
Loss on valuation of cash flow hedge — — — (10,030 ) — (10,030 ) — (10,030 )
Remeasurement gain (loss) related to defined benefit plan — — — (26,241 ) — (26,241 ) 1 (26,240 )
Transactions with owners
Dividends to common stocks — — — — (505,587 ) (505,587 ) (2,054 ) (507,641 )
Issuance of hybrid securities — 698,277 — — — 698,277 — 698,277
Dividends to hybrid securities — — — — (20,365 ) (20,365 ) (90,091 ) (110,456 )
Redemption of hybrid securities — — — (31,252 ) — (31,252 ) (555,744 ) (586,996 )
Changes in subsidiaries’ capital — — 1,330 6,350 (6,350 ) 1,330 (24 ) 1,306
June 30, 2020 (Unaudited) 3,611,338 1,695,821 627,625 (2,285,790 ) 18,652,199 22,301,193 3,450,495 25,751,688

The accompanying notes are part of this consolidated interim financial statement.

  • 8 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2020 AND 2019 (UNAUDITED)

For the six-month period ended June 30
2020 2019
(Korean Won in millions)
Cash flows from operating activities:
Net income 774,033 1,271,963
Adjustments to net income:
Income tax expense 259,816 456,119
Interest income (4,916,003 ) (5,277,692 )
Interest expense 1,975,154 2,346,640
Dividend income (71,002 ) (64,583 )
(2,752,035 ) (2,539,516 )
Additions of expenses not involving cash outflows:
Loss on financial assets at FVTOCI 344 164
Impairment loss due to credit loss 446,679 136,546
Loss on other provisions 169,349 13,972
Retirement benefit 86,185 83,071
Depreciation and amortization 266,837 226,632
Net loss on foreign currency translation 339,687 —
Loss on derivatives (designated for hedge) 9,324 1,524
Loss on fair value hedge 108,090 90,198
Loss on valuation of investments in joint ventures and associates 11,731 8,442
Loss on disposal of premises and equipment, intangible assets and other assets 821 1,248
Impairment loss on premises and equipment, intangible assets and other assets 8,254 1,680
1,447,301 563,477
Deductions of income not involving cash inflows:
Gain on valuation of financial instruments at FVTPL 249,455 85,953
Gain on financial assets at FVTOCI 11,371 3,609
Gain on other provisions 124 3,375
Gain on derivatives (designated for hedge) 132,356 118,154
Gain on valuation of investments in joint ventures and associates 35,683 19,299
Gain on disposal of premises and equipment, intangible assets and other assets 6,575 1,302
Reversal of impairment loss on premises and equipment, intangible assets and other assets 55 722
Other income 4,608 —
440,227 232,414
Changes in operating assets and liabilities:
Financial instruments at FVTPL (167,347 ) 747,897
Loans and other financial assets at amortized cost (12,171,466 ) (11,154,473 )
Other assets (56,319 ) 151,747
Deposits due to customers 11,526,133 7,426,159
Provisions (90,706 ) (6,843 )
Net defined benefit liability (67,202 ) (117,182 )
Other financial liabilities 1,929,411 3,673,978
Other liabilities (38,327 ) (10,093 )
864,177 711,190
Interest income received 5,052,912 5,108,638
Interest expense paid (2,268,755 ) (2,120,787 )
Dividends received 71,134 64,689
Income tax paid (236,188 ) (272,284 )
Net cash inflow from operating activities 2,512,352 2,554,956

(Continued)

  • 9 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2020 AND 2019 (UNAUDITED) (CONTINUED)

For the six-month period ended June 30
2020 2019
(Korean Won in millions)
Cash flows from investing activities:
Cash in-flows from investing activities:
Net cash in-flows from hedging activities 499 —
Disposal of financial instruments at FVTPL 3,485,089 6,206,458
Disposal of financial assets at FVTOCI 11,062,888 4,984,305
Redemption of securities at amortized cost 3,406,645 4,803,559
Disposal of investments in joint ventures and associates 32,162 26,691
Disposal of investment properties 354 22
Disposal of premises and equipment 17,212 6,973
Disposal of intangible assets 371 995
Net cash flow from changes in subsidiaries — 6,131
18,005,220 16,035,134
Cash out-flows from investing activities:
Acquisition of financial instruments at FVTPL 3,995,877 7,540,803
Acquisition of financial assets at FVTOCI 12,883,464 12,214,487
Acquisition of securities at amortized cost 1,678,871 2,353,102
Acquisition of investments in joint ventures and associates 130,261 8,915
Acquisition of investment properties 1,514 135,974
Acquisition of premises and equipment 57,266 97,859
Acquisition of intangible assets 56,640 65,350
Net increase of other assets 2,671 —
18,806,564 22,416,490
Net cash outflow from investing activities (801,344 ) (6,381,356 )
Cash flows from financing activities:
Cash in-flows from financing activities:
Increase in borrowings 8,171,641 7,924,071
Issuance of debentures 10,849,477 14,119,727
Net increase of other liabilities 5,516 —
Issuance of hybrid securities 698,277 —
Retirement of treasury stocks — 256,415
19,724,911 22,300,213
Cash out-flows from financing activities:
Net cash out-flows from hedging activities 6,054 —
Decrease in borrowings 6,211,491 5,182,146
Redemption of debentures 10,893,170 12,544,547
Redemption of lease liabilities 102,968 95,887
New stock issue cost — 16,326
Acquisition of treasury stocks — 184,164
Dividends paid 505,587 437,626
Redemption of hybrid stocks 598,850 —
Dividends paid to hybrid securities 110,456 78,059
Dividends paid to non-controlling interest 2,054 2,002
18,430,630 18,540,757
Net cash inflow from financing activities 1,294,281 3,759,456
Net increase (decrease) in cash and cash equivalents 3,005,289 (66,944 )
Cash and cash equivalents, beginning of the period 6,392,566 6,747,894
Effects of exchange rate changes on cash and cash equivalents 39,764 157,626
Cash and cash equivalents, end of the period (Note 6) 9,437,619 6,838,576

The accompanying notes are part of this consolidated interim financial statement.

  • 10 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2020 AND 2019 (UNAUDITED)

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

Woori Financial Group, Inc. (hereinafter referred to the “Group” or the “Parent company”) 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 (hereinafter referred to the “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 Parent company is located at 51, Sogong-ro, Jung-gu, Seoul, Korea, and the capital is 3,611,338 million Won at the establishment while the Korea Deposit Insurance Corp. (“KDIC”), the Parent company’s largest shareholder, owns 124,604,797 shares (17.25%) of the Parent 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 between the Parent company and subsidiaries as of incorporation are as follows (Unit: Number of shares)

Stock transfer company Total number of<br>issued shares Exchange ratio<br>per share Number of Parent<br>company’s stocks
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., Ltd. 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 Parent 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 company 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.

  • 11 -
(2) Details of the Parent company and subsidiaries (hereinafter ‘Group’) as of June 30, 2020 and<br>December 31, 2019 are as follows:
Percentage of ownership<br>(%) Location Financial<br><br><br>statements date<br><br><br>of use
--- --- --- --- --- --- --- ---
Subsidiaries Main business June 30,<br>2020 December 31,<br>2019
Held by Woori Financial Group Inc.
Woori Bank Bank 100.0 100.0 Korea June 30
Woori Card Co., Ltd. Finance 100.0 100.0 Korea June 30
Woori Investment Bank Co., Ltd. Other credit finance business 59.8 59.8 Korea June 30
Woori FIS Co., Ltd. System software development & maintenance 100.0 100.0 Korea June 30
Woori Finance Research Institute Co., Ltd. Other service business 100.0 100.0 Korea June 30
Woori Credit Information Co., Ltd. Credit information 100.0 100.0 Korea June 30
Woori Fund Service Co., Ltd. Finance 100.0 100.0 Korea June 30
Woori Asset Trust Co., Ltd. Real estate trust 67.2 67.2 Korea June 30
Woori Asset Management Corp. Finance 73.0 73.0 Korea June 30
Woori Private Equity Asset Management Co., Ltd. Finance 100.0 100.0 Korea June 30
Woori Global Asset Management Co., Ltd. Finance 100.0 100.0 Korea June 30
Held by Woori Bank
Woori America Bank Finance 100.0 100.0 America June 30
Woori Global Markets Asia Limited Finance 100.0 100.0 Hong Kong June 30
Woori Bank China Limited Finance 100.0 100.0 China June 30
AO Woori Bank Finance 100.0 100.0 Russia June 30
PT Bank Woori Saudara Indonesia 1906 Tbk Finance 79.9 79.9 Indonesia June 30
Banco Woori Bank do Brasil S.A. Finance 100.0 100.0 Brazil June 30
Korea BTL Infrastructure Fund Finance 99.9 99.9 Korea June 30
Woori Finance Cambodia PLC. (*1) Finance — 100.0 Cambodia -
Woori Finance Myanmar Co., Ltd. Finance 100.0 100.0 Myanmar June 30
Wealth Development Bank Finance 51.0 51.0 Philippines June 30
Woori Bank Vietnam Limited Finance 100.0 100.0 Vietnam June 30
WB Finance Co., Ltd. Finance 100.0 100.0 Cambodia June 30
Woori Bank Europe Finance 100.0 100.0 Germany June 30
Kumho Trust First Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Asiana Saigon Inc. (*2) Asset securitization 0.0 0.0 Korea June 30
KAMCO Value Recreation First Securitization Specialty Co., Ltd. (*2) Asset securitization 15.0 15.0 Korea June 30
Hermes STX Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
BWL First Co., LLC (*2) Asset securitization 0.0 0.0 Korea June 30
Deogi Dream Fourth Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Jeonju Iwon Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Wonju I one Inc. (*2) Asset securitization 0.0 0.0 Korea June 30
Heitz Third Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woorihansoop 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Electric Cable First Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori International First Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori WEBST 1st Co., Ltd. (*2) Asset securitization — 0.0 Korea June 30
Wibihansoop 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Uri QS 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Uri Display 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Tiger Eyes 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori Serveone 1st Co., Ltd. (*2) Asset securitization — 0.0 Korea -
Uri Display 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori the Colony Unjung Securitization Specialty Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
  • 12 -
Percentage of ownership<br>(%) Location Financial<br><br><br>statements date<br><br><br>of use
Subsidiaries Main business June 30,<br>2020 December 31,<br>2019
Woori Dream 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori Dream 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori H 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori HS 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori Sinnonhyeon 1st Inc. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori K 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Uri S 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Smart Casting Inc. (*2) Asset securitization 0.0 0.0 Korea June 30
Uri Display 3rd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
TY 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori HJ 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori-HJ 3rd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Uri K 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori KC No.1 Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori Lake 1st., Ltd. (*2) Asset securitization — 0.0 Korea -
Woori QSell 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Quantum Jump the 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Quantum Jump the 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori BK the 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori-HC 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Wivi Synergy 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
ATLANTIC TRANSPORTATION 1 S.A. (*2) Asset securitization 0.0 0.0 Marshall islands June 30
Woori Gongdeok First Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
HD Project Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori HW 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori HC 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori Dream 3rd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori SJS 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea June 30
Woori Steel 1^st^ Co., Ltd (*2) Asset securitization 0.0 — Korea June 30
G5 Pro Short-term Bond Investment Fund 13 (*3) Securities investment and others 100.0 100.0 Korea June 30
Heungkuk Global Private Placement Investment Trust No. 1 (*3) Securities investment and others 98.5 98.5 Korea June 30
AI Partners UK Water Supply Private Placement Investment Trust No.2 (*3) Securities investment and others 97.3 97.3 England June 30
Consus Sakhalin Real Estate Investment Trust 1st (*3) Securities investment and others 75.0 75.0 Korea June 30
Multi Asset Global Real Estate Investment Trust No. 5-2 (*3) Securities investment and others 99.0 99.0 Korea June 30
Igis Australia Investment Trust No. 209-1 (*3) Securities investment and others 99.4 99.4 Korea June 30
INMARK Spain Private Placement Real Estate Investment Trust No. 26-2 (*3) Securities investment and others 97.7 — Korea June 30
WooriG NorthAmerica Infra Private Placement Investment Trust No. 1 (*3) Securities investment and others 99.3 — Korea June 30
Woori Global Development Infrastructure Synergy Company Private Placement Investment Trust No.1<br>(*3) Securities investment and others 99.9 99.9 Korea June 30
IGIS Global Private Placement Real Estate Fund No. 316-1 (*3) Securities investment and others 99.3 99.3 Korea June 30
Woori G Japan Investment Trust No. 1-2 (*3) Securities investment and others 98.8 — Korea June 30
Principal Guaranteed Trust (*4) Trust 0.0 0.0 Korea June 30
Principal and Interest Guaranteed Trust (*4) Trust 0.0 0.0 Korea June 30
Held by Multi Asset Global Real Estate Investment Trust No. 5-2:
  • 13 -
Percentage of ownership<br>(%) Location Financial<br><br><br>statements date<br><br><br>of use
Subsidiaries Main business June 30,<br>2020 December 31,<br>2019
MAGI No.5 LuxCo S.a.r.l. (*2) Asset securitization 54.6 54.6 Luxembourg June 30
Held by MAGI No.5 LuxCo S.a.r.l.:
ADP 16 Brussels (*2) Asset securitization 0.0 0.0 Belgium June 30
Held by Woori Investment Bank Co., Ltd.:
Dongwoo First Securitization Specialty Co., Ltd. (*2) Asset securitization — 5.0 Korea -
Seari First Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea June 30
Seari Second Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea June 30
Namjong 1st Securitization Specialty Co.,<br><br><br>Ltd. (*2) Asset securitization 5.0 5.0 Korea June 30
Bukgeum First Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea June 30
Bukgeum Second Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea June 30
WS1909 Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea June 30
WS2003 Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 — Korea June 30
WS2006 Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 — Korea June 30
One Punch Korea the 1st Co., Ltd. (*2). Asset securitization 0.0 0.0 Korea June 30
One Punch blue the 1^st^ Co., Ltd.<br>(*2) Asset securitization 0.0 0.0 Korea June 30
Held by Woori Card Co., Ltd.:
TUTU Finance –WCI Myanmar Co., Ltd. Finance 100.0 100.0 Myanmar June 30
Woori Card one of 2017-1 Securitization Specialty Co., Ltd. (*2) Asset securitization — 0.5 Korea -
Woori Card one of 2017-2 Securitization Specialty Co., Ltd. (*2) Asset securitization 0.5 0.5 Korea June 30
Woori Card one of 2018-1 Securitization Specialty Co., Ltd. (*2) Asset securitization 0.5 0.5 Korea June 30
Woori Card 2019-1 Asset Securitization Specialty Co., Ltd. (*2) Asset securitization 0.5 0.5 Korea June 30
Woori Card 2020-1 Asset Securitization Specialty Co., Ltd. (*2) Asset securitization 0.5 — Korea June 30
Held by Woori Private Equity Asset Management Co., Ltd. and Woori Investment Bank Co.,<br>Ltd.:
Japanese Hotel Real Estate Private Equity Fund 1 (*3) Securities investment and others 45.5 45.5 Korea June 30
Held by Woori Asset Management Corp.:
Woori China Convertible Bond Hedging feeder Investment Trust H (debt-oriented hybrid)<br>(*3) Securities investment and others 98.7 98.8 Korea June 30
Woori China Convertible Bond Master Fund (debt-oriented hybrid) (*3) Securities investment and others 95.0 98.6 Korea June 30
Held by Woori Global Asset Management Co., Ltd.:
WOORIG China Value Equity (C/C(F)) (*3) Securities investment and others — 95.1 Korea -
WooriG Global Multi Asset Income Private Placement Investment Trust [FoF]_Class Cs (*3) Securities investment and others 22.2 — Korea June 30
  • 14 -
Percentage of ownership<br>                 (%) Location Financial<br>statements date<br>        of use
Subsidiaries Main business June 30,<br>2020 December 31,<br>2019
Held by 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 60.0 Korea June 30
Held by Woori bank and Woori Investment Bank Co., Ltd.:
Heungkuk Woori Tech Company Private Placement Investment Trust No. 1 (*3) Securities investment and others 100.0 100.0 Korea June 30
(*1) The entity was merged with WB Finance Co., Ltd., which is a second-tier subsidiary, during current period.<br>
--- ---
(*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 June 30, 2020 and December 31, 2019<br>despite having more than 50% ownership interest:
--- ---
As of June 30, 2020
--- --- --- --- --- --- ---
Subsidiaries Location Main Business Percentage of<br>ownership (%)
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 No. 163-2 (*) Korea Securities Investment 97.9
IGIS Global Private Placement Real Estate Fund No. 148-1 (*) Korea Securities Investment 75.0
IGIS Global Private Placement Real Estate Fund 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 52.4
Heungkuk Woori middle priority acquisition Financing 2 types(*) Korea Securities Investment 83.0
Kiwoom-Harmony Private Placement Investment Trust No.2 (*) Korea Securities Investment 96.0
Kiwoom-Harmony Private Placement Investment Trust No.1 (*) Korea Securities Investment 95.7
Midas Global Private Placement Real Estate Investment Trust No. 7-2 (*) Korea Securities Investment 58.3
Together-Korea Government Private Pool Private Securities Investment Trust No.3 (*) Korea Securities Investment 100.0
(*) 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.
--- ---
  • 15 -
As of December 31, 2019
Subsidiaries Location Main 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 No. 163-2 (*) Korea Securities Investment 97.9
IGIS Global Private Placement Real Estate Fund No. 148-1 (*) Korea Securities Investment 75.0
IGIS Global Private Placement Real Estate Fund 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.
--- ---
(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 six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- ---
Subsidiaries 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 365,351,997 342,347,344 13,836,037 677,937 696,858
Woori Card Co., Ltd. 10,783,650 8,795,540 708,328 79,654 50,029
Woori Investment Bank Co., Ltd. 3,773,077 3,374,438 135,093 31,435 31,301
Woori FIS Co., Ltd. 93,868 55,749 128,979 2,220 2,152
Woori Finance Research Institute Co., Ltd. 5,846 2,157 3,169 242 242
Woori Credit Information Co., Ltd. 39,623 8,882 20,774 1,469 1,311
Woori Fund Service Co., Ltd. 16,752 1,540 6,300 990 990
Woori Asset Trust Co., Ltd. 159,155 45,695 39,079 20,198 20,177
Woori Asset Management Corp. 114,239 4,733 12,059 3,183 2,771
Woori Private Equity Asset Management Co., Ltd. 37,644 2,358 2,424 74 28
Woori Global Asset Management Co., Ltd. 38,304 9,487 5,602 (760 ) (760 )
As of and for the year ended December 31, 2019
--- --- --- --- --- --- --- --- --- --- --- --- ---
Subsidiaries 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 gain or loss information of Woori Asset Trust Co., Ltd., Woori Asset Management Corp. and Woori Global<br>Asset Management Co., Ltd. are prepared on the accumulated gains or losses from the date on which the entities were transferred as subsidiaries, to December 31, 2019.
--- ---
  • 16 -
(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 June 30, 2020, the Group provides 1,891,650 million Won of credit facilities for the structured entities mentioned above.

  • 17 -
(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 are as follows:

The interests in 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 each structured entity.

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 companies 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 consolidated 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 consolidated 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.

  • 18 -
June 30, 2020
Asset<br>securitization<br>vehicle Structured<br>Finance Investment<br>Funds Real-estate<br>trust
Total asset of the unconsolidated structured entities 8,266,927 46,234,075 44,918,870 484,642
Assets recognized in the consolidated financial statements related to the unconsolidated<br>structured entities 5,671,503 2,459,734 3,674,444 57,499
Financial assets at FVTPL 451,584 4,540 2,399,233 1,155
Financial assets at FVTOCI 1,652,891 41,851 — —
Financial assets at amortized cost 3,565,070 2,396,221 1,098,540 56,344
Investments in joint ventures and associates — 7,399 176,671 —
Derivative assets 1,958 9,723 — —
Liabilities recognized in the consolidated financial statements related to the unconsolidated<br>structured entities 219 1,097 — 1,966
Other liabilities (provisions) 219 1,097 — 1,966
The maximum exposure to risks 5,970,750 3,255,317 4,529,834 123,123
Investment assets 5,671,503 2,459,734 3,674,444 57,499
Credit facilities and others 299,247 795,583 855,390 65,624
Loss recognized on unconsolidated structured entities — 2,186 18,491 304
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 and others 432,778 550,322 45,759 19,189
Loss recognized on unconsolidated structured entities — 4,660 34,312 5,218
  • 19 -
(7) As of June 30, 2020 and December 31, 2019, the share of non-controlling interests on the net income<br>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 period
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Woori Bank (*) 3,105,070 3,660,814
Woori Investment Bank 163,869 151,170
Woori Asset Trust Co., Ltd 45,487 40,161
Woori Asset Management Corp 30,480 29,800
PT Bank Woori Saudara Indonesia 1906 Tbk 87,387 83,315
Wealth Development Bank 20,051 18,524
(*) Hybrid securities issued by Woori Bank
--- ---
2) Net income attributable to non-controlling interests
--- ---
For the six-month<br>period ended June 30
--- --- --- --- ---
2020 2019
Woori Bank (*) 90,091 78,290
Woori Investment Bank 12,753 8,964
Woori Asset Trust Co., Ltd 5,699 —
Woori Asset Management Corp 791 —
PT Bank Woori Saudara Indonesia 1906 Tbk 3,796 4,920
Wealth Development Bank 321 79
(*) Distribution of the hybrid securities issued by Woori Bank
--- ---
3) Dividends to non-controlling interests
--- ---
For the six-month<br>period ended June 30
--- --- --- --- ---
2020 2019
Woori Bank (*) 90,091 78,290
Woori Asset Trust Co., Ltd 365 —
PT Bank Woori Saudara Indonesia 1906 Tbk 1,669 1,981
(*) Distribution of the hybrid securities issued by Woori Bank
--- ---
  • 20 -
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

The Group’s condensed consolidated interim financial statements are condensed interim financial statements prepared in applying International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”) 1034 Interim Finance Reporting for some of periods in which the annual consolidated financial statements belong. It is necessary to use the Group’s annual consolidated financial statements for the year ended December 31, 2019 for understanding of the accompanying interim financial statements.

(1) Except for the impacts on the newly adopted standards and interpretations explained below, the accounting<br>policies applied in preparing the accompanying condensed consolidated interim financial statements have been applied consistently with the annual consolidated financial statements as of and for the year ended December 31, 2019.<br>
1) Amendments to Korean IFRS 1103 Business Combination – Definition of a Business
--- ---

To consider the integration of the required activities and assets as a business, the amended definition of a business requires an acquisition to include an input and a substantive process that together significantly contribute to the ability to create outputs and excludes economic benefits from the lower costs. An entity can apply a concentration test, an optional test, where substantially all of the fair value of gross assets acquired is concentrated in a single asset or a group of similar assets, the assets acquired would not represent a business. The amendment does not have a significant impact on the financial statements.

2) Amendments to Korean IFRS 1001 Presentation of Financial Statements and Korean IFRS 1008 Accounting policies,<br>changes in accounting estimates and errors – Definition of Material

The amendments clarify the explanation of the definition of material and amended Korean IFRS 1001 and Korean IFRS 1008 in accordance with the clarified definitions. Materiality is assessed by reference to omission or misstatement of material information as well as effects of immaterial information, and to the nature of the users when determining the information to be disclosed by the Group. The amendment does not have a significant impact on the financial statements.

3) Amendments to Korean IFRS 1116 Lease – Practical expedient for COVID-19-Related Rent Exemption,<br>Concessions, Suspension

As a practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying this Standard if the change were not a lease modification.

With implementation of Korean IFRS 1116 Lease, the Group has changed accounting policy. The Group has adopted Korean IFRS 1116 retrospectively, as permitted under the specific transitional provisions in the standard. There was no cumulative impact on the beginning balance of retained earnings as at January 1, 2020 by retrospectively applying this standard, and the Group did not restate comparatives for the 2019 reporting period. The impact of the adoption of the leasing standard are disclosed in Note 42.

The Group does not expect that these enactments and amendments have a significant impact on the consolidated financial statements.

  • 21 -
(2) Significant accounting policies and method of computation used in the preparation of the condensed consolidated<br>interim financial statements are consistent with those of the consolidated financial statements for the year ended December 31, 2019, except for the one described below.
• Income tax expense
--- ---

Income tax expense for the interim period is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate is applied to the pre-tax income.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

The outbreak of COVID-19 in 2020 has had a significant impact on the global economy including Korea. Financial and economic shocks may have negative impacts on the Group’s financial condition and results of operations in various forms both domestically and internationally, however, the Korean government is providing unprecedented financial and economic relief measures such as extension of maturity of loan receivables. Despite the announcement of these various forms of government support policies, the negative impact of the COVID-19 on the global economy continues.

Significant changes have been made in future forecast information affecting expected credit losses for the period of six-month period ended June 30, 2020, and major economic factors are expected to remain negative for a considerable period of time after 2020 due to the influence of COVID-19, and uncertainties in recovery or deterioration will persist.

Considering this situation comprehensively, as of the end June 30, 2020, the Group updated the forward-looking information used to estimate expected credit losses in accordance with K-IFRS 1109 Financial Instruments by changing major variables such as GDP to reflect the impact of COVID-19, which has brought about a global economic recession. As a result, the credit loss allowance has increased 175,478 million Won (consists of 162,911 million Won for Woori Bank, 9,764 million Won for Woori Card, and 2,803 million Won for Woori Investment Bank.) The Group will continue to evaluate future prospects related to the duration of COVID-19’s economic impact and the government’s policies every quarter.

The management shall make judgments, estimates and assumptions that affect the application of accounting policies and application of assets, liabilities and revenues and expenses in preparing condensed consolidated interim financial statements. Therefore, the actual results may differ from these estimates.

The important decisions made by management on the application of accounting policy of the Group and the main sources of estimation uncertainty in preparing condensed consolidated interim financial statements are the same as those applied to the consolidated financial statements for the year ended December 31, 2019, unless otherwise stated.

  • 22 -
4. RISK MANAGEMENT

The Group’s operating activity is exposed to various financial risks and the and the main types of risks are credit risk, market risk, liquidity risk and etc. The risk management department analyze and assess the level of complex risks in order to manage the risks and the risk management standards such as policies, regulations, management systems and decision-making have been established and operated for sound management of the Group.

The risk management organization is operated by risk management committee, risk management responsible, and risk management department. The Board of Directors operates a risk management committee comprised of outside directors for professional risk management. The risk management committee plays a role as the top decision-making body in risk management by establishing basic policies for risk management that are in line with the Group’s management strategy and determining the risk level that the Group is willing to take. The risk management office (CRO) assists the risk management committee and operates a group risk management council comprised of risk management managers of subsidiaries to periodically check and improve the risk burden of external environments and the Group. The risk management department is independent and is in charge of risk management of the Group. It also supports reporting and decision-making of key risk-related issues.

(1) Credit risk

Credit risk represents the possibility of financial losses incurred due to the refusal of the transaction or 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.

  • 23 -
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 as of June 30, 2020 and December 31, 2019 is as follows (Unit: Korean Won in millions):

June 30, 2020 December 31, 2019
Loans and other financial assets at amortized cost Korean treasury and government agencies 11,208,287 14,797,040
Banks 21,782,441 18,597,206
Corporates 109,829,991 101,041,110
Consumers 163,597,350 159,282,337
Sub-total 306,418,069 293,717,693
Financial assets at FVTPL (*) Deposit 29,631 27,901
Debt securities 2,507,653 2,337,085
Loans 328,602 212,473
Derivative assets 4,266,297 2,921,903
Sub-total 7,132,183 5,499,362
Financial assets at FVTOCI Debt securities 28,804,809 26,795,161
Securities at amortized cost Debt securities 18,610,602 20,320,539
Derivative assets Derivative assets (Designated for hedging) 249,880 121,131
Off-balance accounts Guarantees 12,789,313 12,618,917
Unused loan commitments 106,987,014 103,651,674
Sub-total 119,776,327 116,270,591
Total 480,991,870 462,724,477
(*) Puttable financial instruments are not included
--- ---
  • 24 -
a) Credit risk exposure by geographical areas

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

June 30, 2020
Korea China USA UK Japan Others (*) Total
Loans and other financial assets at amortized cost 282,322,715 4,751,008 3,881,935 1,561,978 1,178,814 12,721,619 306,418,069
Securities at amortized cost 18,390,596 — 47,437 — — 172,569 18,610,602
Financial assets at FVTPL 7,090,010 11,251 — 29,631 1,291 — 7,132,183
Financial assets at FVTOCI 25,389,634 511,999 1,632,819 — 6,045 1,264,312 28,804,809
Derivative assets (Designated for hedging) 249,880 — — — — — 249,880
Off-balance accounts 115,993,317 897,684 424,611 49,236 37,402 2,374,077 119,776,327
Total 449,436,152 6,171,942 5,986,802 1,640,845 1,223,552 16,532,577 480,991,870
(*) Others consist of financial assets in Indonesia, Hong Kong, Germany, Australia, and other countries.<br>
--- ---
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, Germany, Australia, and other countries.<br>
--- ---
b) Credit risk exposure by industries
--- ---
① The following tables analyze credit risk exposure by industries, which are service, manufacturing, finance and<br>insurance, construction, individuals and others in accordance with the Korea Standard Industrial Classification Code as of June 30, 2020 and December 31, 2019 (Unit: Korean Won in millions):
--- ---
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Service Manufacturing Finance and<br>insurance Construction Individuals Others Total
Loans and other financial assets at amortized cost 55,564,965 35,763,906 36,200,358 3,317,785 159,203,039 16,368,016 306,418,069
Securities at amortized cost 343,126 6,750 10,427,805 332,818 — 7,500,103 18,610,602
Financial assets at FVTPL 251,335 220,702 5,501,612 21,799 22,228 1,114,507 7,132,183
Financial assets at FVTOCI 249,436 116,768 23,913,643 191,165 — 4,333,797 28,804,809
Derivative assets (Designated for hedging) — — 249,880 — — — 249,880
Off-balance accounts 17,755,956 23,689,352 10,434,635 3,968,265 56,868,506 7,059,613 119,776,327
Total 74,164,818 59,797,478 86,727,933 7,831,832 216,093,773 36,376,036 480,991,870
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
  • 25 -
② The detailed industries of financial assets and corporate loans that might get affected by the spread of<br>COVID-19 as of June 30, 2020 are as follow and the industries that can be affected may change by future economic conditions. (Unit: Korean Won in millions):

< Woori Bank >

Loans and other<br>financial assets at<br>amortized cost Financial assets<br>at FVTPL Financial assets<br>at FVTOCI
Service business Distribution business General retail<br>business 1,519,530 5,711 6,002
Cosmetics 48,898 100 —
Sub-total 1,568,428 5,811 6,002
Accommodation business 1,625,207 5,489 6,002
Travel business 93,709 78 —
Art/sports, leisure service 1,303,996 19,830 —
Food business 1,083,793 1,881 —
Air transport business 274,924 463 —
Sub-total 5,950,057 33,552 12,004
Manufacturing Cosmetics 321,848 278 —
Total 6,271,905 33,830 12,004
Off-balance accounts Total
--- --- --- --- --- --- ---
Service business Distribution business General retail<br>business 1,025,404 2,556,647
Cosmetics 31,216 80,214
Sub-total 1,056,620 2,636,861
Accommodation business 148,513 1,785,211
Travel business 21,830 115,617
Art/sports, leisure service 80,987 1,404,813
Food business 161,437 1,247,111
Air transport business 201,070 476,457
Sub-total 1,670,457 7,666,070
Manufacturing Cosmetics 70,451 392,577
Total 1,740,908 8,058,647

< Woori Card Co., Ltd. >

Loans and other<br>financial assets at<br>amortized cost Financial assets<br>at FVTPL Financial assets<br>at FVTOCI Off-balance<br>accounts Total
Accommodation business 2,380 — — 12,724 15,104
Travel business 1,926 — — 18,871 20,797
Aviation 541 — — 2,701 3,242
Cosmetics industry 2,464 — — 13,036 15,500
Distribution business 6,852 — — 42,470 49,322
Food industry 29,866 — — 188,864 218,730
Art/sports, leisure service 6,887 — — 47,810 54,697
Total 50,916 — — 326,476 377,392

< Woori Investment Bank Co., Ltd. >

Loans and other<br>financial assets<br>at amortized<br>cost Financial assets<br>at FVTPL Financial assets<br>at FVTOCI Off-balance<br>accounts Total
Accommodation business 54,400 — — — 54,400
Distribution business 27,707 — — — 27,707
Art/sports, leisure service 18,000 — — — 18,000
Total 100,107 — — — 100,107
  • 26 -
3) Credit risk exposure
a) Financial assets
--- ---

The maximum exposure to credit risk by asset quality, except for financial assets at FVTPL and derivative asset (Designated for hedging) as of June 30, 2020 and December 31, 2019 is as follows (Unit: Korean Won in millions):

June 30, 2020
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 credit<br>rating<br>(*2) Above<br>appropriate<br>credit rating<br>(*1) Less than a<br>limited<br>credit rating<br>(*2)
Loans and other financial assets at amortized cost 269,075,108 19,582,226 8,186,194 9,815,662 1,538,922 308,198,112 (1,780,043 ) 306,418,069
Korean treasury and government agencies 11,203,774 7,260 28 — — 11,211,062 (2,775 ) 11,208,287
Banks 21,617,966 103,205 58,243 — 27,609 21,807,023 (24,582 ) 21,782,441
Corporates 91,524,519 14,267,567 533,388 3,789,419 841,801 110,956,694 (1,126,703 ) 109,829,991
General business 60,897,909 9,219,829 488,249 2,633,192 485,066 73,724,245 (767,133 ) 72,957,112
Small- and medium-sized enterprise 25,308,013 4,830,679 45,139 1,071,132 326,014 31,580,977 (317,458 ) 31,263,519
Project financing and others 5,318,597 217,059 — 85,095 30,721 5,651,472 (42,112 ) 5,609,360
Consumers 144,728,849 5,204,194 7,594,535 6,026,243 669,512 164,223,333 (625,983 ) 163,597,350
Securities at amortized cost 18,616,159 — — — — 18,616,159 (5,557 ) 18,610,602
Financial assets at FVTOCI (*3) 28,664,453 140,356 — — — 28,804,809 (9,184 ) 28,804,809
Total 316,355,720 19,722,582 8,186,194 9,815,662 1,538,922 355,619,080 (1,794,784 ) 353,833,480
June 30, 2020
--- --- --- --- --- --- --- --- ---
Collateral value
Stage 1 Stage 2 Stage 3 Total
Loans and other financial assets at amortized cost 177,843,796 13,985,335 710,642 192,539,773
Korean treasury and government agencies — — — —
Banks 845,959 — — 845,959
Corporates 60,271,450 2,719,002 397,811 63,388,263
General business 33,453,429 1,831,783 197,005 35,482,217
Small- and medium-sized enterprise 24,634,801 887,219 178,237 25,700,257
Project financing and others 2,183,220 — 22,569 2,205,789
Consumers 116,726,387 11,266,333 312,831 128,305,551
Securities at amortized cost — — — —
Financial assets at FVTOCI (*3) — — — —
Total 177,843,796 13,985,335 710,642 192,539,773
(*1) Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
--- ---
(*2) Credit grade of corporates are BBB- ~ C, and consumers are grades 7 ~ 10.
--- ---
(*3) Financial assets at FVTOCI has been disclosed as the amount before deducting loss allowance because loss<br>allowance does not reduce the carrying amount.
--- ---
  • 27 -
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 credit<br>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 45,769,233 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
Stage 1 Stage 2 Stage 3 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 ~ 6.
--- ---
(*3) Credit grade of corporates are BBB- ~ C, and consumers are grades 7 ~ 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.
--- ---
  • 28 -
b) Guarantees and commitments

The credit quality of the guarantees and loan commitments as of June 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):

June 30, 2020
Financial assets Stage 1 Stage 2 Stage 3 Total
Above<br>appropriate<br>credit rating<br>(*1) Less than a<br>limited<br>credit rating<br>(*2) Above<br>appropriate<br>credit rating<br>(*1) Less than a<br>limited<br>credit rating<br>(*2)
Off-balance accounts:
Guarantees 11,066,524 1,374,335 10,357 220,968 117,129 12,789,313
Loan Commitments 101,117,856 3,365,611 1,479,511 1,017,266 6,770 106,987,014
Total 112,184,380 4,739,946 1,489,868 1,238,234 123,899 119,776,327
(*1) Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
--- ---
(*2) Credit grade of corporate are BBB- ~ C, and consumers are grades 7 ~ 10.
--- ---
December 31, 2019
--- --- --- --- --- --- --- --- --- --- --- --- ---
Financial assets Stage 1 Stage 2 Stage 3 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 ~ 6.
--- ---
(*3) Credit grade of corporate are BBB- ~ C, and consumers are grades 7 ~ 10.
--- ---
4) Collateral and other credit enhancements
--- ---

For the six-month period ended June 30, 2020 and for the year ended December 31, 2019, 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 June 30, 2020, there are no financial assets that do not recognize the allowance for losses just because financial assets have collateral.

  • 29 -
(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 the standard method and the internally developed model (the Bank) in measuring market risk for trading positions, and allocates market risk capital through the Risk Management Committee. Risk management departments of the Group and its subsidiaries manage limits in detail including those on risk and loss with their management result regularly reported to the Risk Management Committee.

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 six-month period June 30, 2020 and for the year ended December 31, 2019, and the VaR of the Group as of June 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):

June 30,<br>2020 For the six-month period ended<br>June 30, 2020 December 31,<br>2019 For the year ended<br>December 31, 2019
Risk factor Average Maximum Minimum Average Maximum Minimum
Interest rate 7,698 6,220 11,787 2,427 5,052 3,406 5,725 1,176
Stock price 9,331 6,719 14,394 2,580 3,730 3,203 5,935 1,146
Foreign currencies 10,498 7,577 10,498 4,613 5,028 5,033 6,469 4,395
Commodity price — — — — — 1 32 —
Diversification (10,506 ) (8,847 ) (14,782 ) (4,050 ) (6,233 ) (5,127 ) (9,229 ) (2,339 )
Total VaR(*) 17,021 11,669 21,897 5,570 7,577 6,516 8,932 4,378
(*) VaR (Value at Risk): Retention period of 1 day, Maximum expected losses under 99% level of confidence.<br>
--- ---
  • 30 -
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 DNII(Change in Net Interest Income) and DEVE(Change in Economic Value of Equity) simulated by NII (Net Interest Income) and EVE (Economic Value of Equity).

NII is primarily an indicator of changes in profit from short-term changes in interest rates and is measured by deducting the interest expenses on the liability from the interest income from the asset. NPV is primarily an indicator of the risk of an economic value perspective resulting from unfavorable changes in interest rates and is measured by subtracting the present value of the liability from the present value of the asset.

DNII 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 DEVE 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.

For assets and liabilities as of June 30, 2020 and December 31, 2019 that include bank, consolidated trusts and subsidiaries of the bank, details of DEVE and DNII calculated based on interest rate risk in banking book (IRRBB) are as follows (Unit: Korean Won in millions):

June 30, 2020 December 31, 2019
DEVE<br>(*1) DNII (*2) DEVE (*1) DNII<br>(*2)
327,497 23,448 490,981 162,023
(*1) DEVE: change in Economic Value of Equity
--- ---
(*2) DNII: change in Net Interest Income
--- ---

For the remaining subsidiaries except the bank, consolidated trusts, and consolidated subsidiaries of the bank as of June 30, 2020 and December 31, 2019, the interest rate EaR and VaR calculated based on the BIS Framework are as follows (Unit: Korean Won in millions):

June 30, 2020 December 31, 2019
EaR (*1) VaR (*2) EaR (*1) VaR (*2)
65,469 151,261 92,439 87,872
(*1) EaR (Earning at Risk): Change of Maximum expected income and expense
--- ---
(*2) VaR (Value at Risk): Maximum expected losses
--- ---
  • 31 -

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):

June 30, 2020
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 158,793,844 48,168,334 15,484,544 14,977,654 59,563,802 5,843,335 302,831,513
Financial assets at FVTPL 239,952 47,799 12,192 96,088 166,679 13,293 576,003
Financial assets at FVTOCI 5,205,346 3,863,456 3,031,647 3,342,430 13,319,160 573,435 29,335,474
Securities at amortized cost 805,526 1,405,340 1,197,336 1,423,161 13,626,111 1,034,100 19,491,574
Total 165,044,668 53,484,929 19,725,719 19,839,333 86,675,752 7,464,163 352,234,564
Liability:
Deposits due to customers 122,545,248 47,711,593 35,251,985 23,508,278 47,846,875 61,590 276,925,569
Borrowings 11,951,066 3,141,297 1,352,582 812,867 3,836,500 486,695 21,581,007
Debentures 3,393,589 2,462,773 2,443,652 2,561,024 18,614,699 3,355,062 32,830,799
Total 137,889,903 53,315,663 39,048,219 26,882,169 70,298,074 3,903,347 331,337,375
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 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
Liability:
Deposits due to customers 116,490,812 45,803,202 32,683,132 26,740,013 43,175,232 59,305 264,951,696
Borrowings 12,105,234 1,910,759 1,048,991 706,952 3,264,861 509,359 19,546,156
Debentures 2,378,211 2,894,577 3,330,658 2,466,142 19,211,409 2,537,391 32,818,388
Total 130,974,257 50,608,538 37,062,781 29,913,107 65,651,502 3,106,055 317,316,240
  • 32 -
2) Currency risk

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

Financial instruments in foreign currencies exposed to currency risk as of June 30, 2020 and December 31, 2019 are as follows (Unit: USD in millions, JPY in millions, CNY in millions, EUR in millions, and Korean Won in millions):

June 30, 2020
CNY Others Total
Foreigncurrency Korean 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 Won<br>equivalent
Asset Loans and other financial assets at amortized cost (*) 33,813,226 1,288,030 30,939 5,249,050 2,690,882 5,174,443 48,215,631
Financial assets at FVTPL 289,820 137,660 27 4,716 289,169 128,515 849,880
Financial assets at FVTOCI 3,736,603 — 2,156 365,728 50,398 520,089 4,672,818
Securities at amortized cost 310,188 — — — 45,712 126,288 482,188
Total 38,149,837 1,425,690 33,122 5,619,494 3,076,161 5,949,335 54,220,517
Liability Financial liabilities at FVTPL 585,483 122,830 — — 372,654 201,733 1,282,700
Deposits due to customers 19,598,984 2,059,393 27,204 4,615,457 1,974,355 3,236,127 31,484,316
Borrowings 7,829,616 44,079 — — 739,706 1,463,208 10,076,609
Debentures 5,233,777 — — — — 255,888 5,489,665
Other financial liabilities 5,008,649 49,147 2,162 366,875 162,480 191,803 5,778,954
Total 38,256,509 2,275,449 29,366 4,982,332 3,249,195 5,348,759 54,112,244
Off-balance accounts 8,603,941 349,787 4,017 681,581 725,804 524,025 10,885,138

All values are in US Dollars.

(*) Includes cash and cash equivalents.
  • 33 -
December 31, 2019
CNY Others Total
Foreigncurrency Korean 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 Won<br>equivalent
Asset Loans and other financial assets at amortized cost (*) 26,531,794 1,600,140 31,393 5,203,131 2,929,312 5,272,352 41,536,729
Financial assets at FVTPL 190,733 56,602 25 4,155 135,827 64,185 451,502
Financial assets at FVTOCI 3,102,752 — 2,005 332,319 33,017 406,753 3,874,841
Securities at amortized cost 369,677 — — — 52,139 97,092 518,908
Total 30,194,956 1,656,742 33,423 5,539,605 3,150,295 5,840,382 46,381,980
Liability Financial liabilities at FVTPL 291,102 46,957 — — 87,776 83,790 509,625
Deposits due to customers 15,291,671 1,766,526 27,739 4,597,467 2,240,884 3,247,164 27,143,712
Borrowings 7,627,665 117,634 16 2,743 668,060 499,046 8,915,148
Debentures 4,629,944 — — — 136,230 271,790 5,037,964
Other financial liabilities 3,492,462 119,529 3,079 510,281 466,240 6,906 4,595,418
Total 31,332,844 2,050,646 30,834 5,110,491 3,599,190 4,108,696 46,201,867
Off-balance accounts 8,139,395 364,946 4,525 749,973 726,323 634,870 10,615,507

All values are in US Dollars.

(*) Includes cash and cash equivalents.
  • 34 -
(3) 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

a) Cash flows of principals and interests by remaining contractual maturities of non-derivative financial liabilities as of June 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):

June 30, 2020
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
Financial liabilities at FVTPL 30,021 — 21,571 2,468 448 — 54,508
Deposits due to customers 174,451,640 36,933,721 26,898,235 29,765,914 9,220,888 1,879,658 279,150,056
Borrowings 9,927,257 3,317,550 2,403,875 1,313,598 4,135,475 498,702 21,596,457
Debentures 3,393,589 2,462,773 2,443,652 2,561,024 18,614,699 3,355,062 32,830,799
Lease liabilities 46,310 47,222 42,714 35,438 227,812 34,208 433,704
Other financial liabilities 13,485,838 60,845 5,788 5,080 145,383 2,167,180 15,870,114
Total 201,334,655 42,822,111 31,815,835 33,683,522 32,344,705 7,934,810 349,935,638
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
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
  • 35 -

b) Cash flows of principals and interests by expected maturities of non-derivative financial liabilities as of June 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):

June 30, 2020
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
Financial liabilities at FVTPL 54,508 — — — — — 54,508
Deposits due to customers 182,923,739 39,210,484 25,006,334 23,401,668 7,959,980 156,763 278,658,968
Borrowings 9,927,257 3,317,550 2,403,875 1,313,598 4,135,475 498,702 21,596,457
Debentures 3,393,589 2,462,773 2,443,652 2,561,024 18,614,699 3,355,062 32,830,799
Lease liabilities 46,310 47,222 42,714 35,438 227,812 34,208 433,704
Other financial liabilities 13,485,838 60,845 5,788 5,080 145,383 2,167,180 15,870,114
Total 209,831,241 45,098,874 29,902,363 27,316,808 31,083,349 6,211,915 349,444,550
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
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
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 197,687,279 44,166,284 29,299,981 28,494,870 28,745,401 5,909,898 334,303,713
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 June 30, 2020 and December 31, 2019 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 5<br>years Total
June 30, 2020 Cash flow risk hedge 184 487 593 387 9,250 268 11,169
Trading purpose 3,976,722 — — — — — 3,976,722
December 31, 2019 Cash flow risk hedge 1,839 (341 ) (298 ) (247 ) 6,249 — 7,202
Trading purpose 2,843,195 — — — — — 2,843,195
  • 36 -
4) Maturity analysis of off-balance accounts (Guarantees and loan commitments)

A financial guarantee represents an irrevocable undertaking that the Group should meet a customer’s obligations to third parties if the customer fails to do so. 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):

June 30, 2020 December 31, 2019
Guarantees 12,789,313 12,618,917
Loan commitments 106,987,014 103,651,674
Other commitments 5,057,141 3,411,334
(4) 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.

  • 37 -
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 Loans/deposits and relevant services for Woori Bank and overseas subsidiaries’ customers
Credit card Credit card, cash services, card loans and relevant work of Woori Card Co., Ltd.
Investment banking Securities operation, sale of financial instruments, project financing and other related activities for comprehensive financing of Woori Investment bank Co., Ltd.
Others Woori Financial Group Inc., Woori FIS Co., Ltd., Woori Finance Research Institute, Woori Credit Information Co., Ltd., Woori Fund Services Inc., Woori Asset Trust Co., Ltd., Woori Asset Management Corp., Ltd., Woori Private Equity<br>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 six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Banking Credit<br>card Investment<br>banking Others (*1) Sub-total Adjustments (*2) Total
Net Interest income(expense) 2,271,005 280,777 35,066 737 2,587,585 353,264 2,940,849
Non-interest income(expense) 721,678 16,935 18,328 864,510 1,621,451 (1,153,465 ) 467,986
Impairment losses due to credit loss (337,796 ) (94,537 ) (727 ) (211 ) (433,271 ) (13,408 ) (446,679 )
General and administrative expense (1,615,836 ) (96,684 ) (17,132 ) (189,974 ) (1,919,626 ) 130,068 (1,789,558 )
Net operating income(expense) 1,039,051 106,491 35,535 675,062 1,856,139 (683,541 ) 1,172,598
Non-operating income(expense) (125,655 ) (2,208 ) (294 ) (97 ) (128,254 ) (10,495 ) (138,749 )
Net income(expense) before tax 913,396 104,283 35,241 674,965 1,727,885 (694,036 ) 1,033,849
Tax income(expense) (222,569 ) (24,629 ) (3,806 ) (10,278 ) (261,282 ) 1,466 (259,816 )
Net income(loss) 690,827 79,654 31,435 664,687 1,466,603 (692,570 ) 774,033
(*1) Other segments 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 Trust Co., Ltd., Woori Asset Management Corp., Woori Private Equity Asset Management Co., Ltd. and Woori Global Asset Management Co., Ltd.<br>
--- ---
(*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.
--- ---
  • 38 -
For the six-month period ended June 30, 2019
Banking Credit card Investment<br>banking Others (*1) Sub-total Adjustments (*2) Total
Net Interest income(expense) 2,303,318 267,948 23,516 517 2,595,299 335,753 2,931,052
Non-interest income(expense) 824,249 20,343 15,083 806,380 1,666,055 (1,054,363 ) 611,692
Impairment losses due to credit loss 69,858 (126,351 ) (1,046 ) 1 (57,538 ) (79,008 ) (136,546 )
General and administrative expense (1,562,939 ) (91,177 ) (11,635 ) (161,162 ) (1,826,913 ) 131,127 (1,695,786 )
Net operating income(expense) 1,634,486 70,763 25,918 645,736 2,376,903 (666,491 ) 1,710,412
Non-operating income(expense) (17,269 ) 16,728 (1,021 ) (994 ) (2,556 ) 20,226 17,670
Net income(expense) before tax 1,617,217 87,491 24,897 644,742 2,374,347 (646,265 ) 1,728,082
Tax income(expense) (433,671 ) (20,991 ) (2,574 ) (949 ) (458,185 ) 2,066 (456,119 )
Net income(loss) 1,183,546 66,500 22,323 643,793 1,916,162 (644,199 ) 1,271,963
(*1) Other segments 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. and Woori Private Equity 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) Operating profit or loss from external customers for the six-month period ended June 30, 2020 and 2019 are<br>as follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended<br>June 30, 2020 For the six-month period ended<br>June 30, 2019
--- --- --- --- ---
Domestic 1,108,347 1,544,248
Foreign 64,251 166,164
Total 1,172,598 1,710,412
(4) Major non-current assets as of June 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won<br>in millions):
--- ---
June 30, 2020 (*) December 31, 2019 (*)
--- --- --- --- ---
Domestic 4,880,409 4,908,140
Foreign 491,947 387,284
Total 5,372,356 5,295,424
(*) Major non-current assets included joint ventures and related business investments, investment properties,<br>property, plant and equipment, and intangible assets.
--- ---
(5) Information about major customers
--- ---

The Group does not have any single customer that generates 10% or more of the Group’s total revenue for the six-month period ended June 30, 2020 and 2019.

  • 39 -
6. STATEMENTS OF CASH FLOWS
(1) Details of cash and cash equivalents are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Cash 1,813,004 1,957,997
Foreign currencies 600,051 625,999
Demand deposits 6,593,103 3,684,044
Fixed deposits 431,461 124,526
Total 9,437,619 6,392,566
(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 six-month period ended June 30
--- --- --- --- --- --- ---
2020 2019
Changes in other comprehensive income related to valuation of financial assets at FVTOCI (25,751 ) 6,560
Changes in other comprehensive income related to valuation of equity method investments (4,621 ) (418 )
Changes in other comprehensive income related to valuation profit or loss on cash flow<br>hedge (10,030 ) (1,170 )
Changes in financial assets measure at FVTOCI due to debt-for-equity swap 3,629 94,710
Changes in the investment assets of associates due to the replacement of the account 6,141 —
Changes in financial assets at FVTPL and assets held for sale (2,385 ) 119
Transfer of investment properties and premises and equipment (31,681 ) 172,891
Changes in account payables related to intangible assets (10,157 ) 32,689
Changes in right-of-use assets and lease liabilities 111,466 572,851
Changes in unpaid dividends on hybrid equity securities — 231
  • 40 -
7. FINANCIAL ASSETS AT FVTPL
(1) Details of financial assets at FVTPL as of June 30, 2020 and December 31, 2019 are as follows (Unit:<br>Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Financial assets at fair value through profit or loss mandatorily measured at fair value 10,067,062 8,069,144
(2) Financial assets at fair value through profit or loss mandatorily measured at fair value are as follows (Unit:<br>Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Deposits:
Gold banking asset 29,631 27,901
Securities:
Debt securities
Korean treasury and government agencies 975,677 872,954
Financial institutions 573,758 600,303
Corporates 887,425 762,265
Others 70,793 101,563
Equity securities 553,995 688,350
Capital contributions 614,036 515,199
Beneficiary certificates 1,766,848 1,366,233
Sub-total 5,442,532 4,906,867
Loans 328,602 212,473
Derivatives assets 4,266,297 2,921,903
Total 10,067,062 8,069,144

The Group does not have financial assets at fair value through profit or loss designated as upon initial recognition as of June 30, 2020 and December 31, 2019.

8. FINANCIAL ASSETS AT FVTOCI
(1) Details of financial assets at FVTOCI as of June 30, 2020 and December 31, 2019 are as follows (Unit:<br>Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Debt securities:
Korean treasury and government agencies 1,792,875 1,152,711
Financial institutions 18,497,960 17,769,924
Corporates 3,791,148 3,917,004
Bond denominated in foreign currencies 4,672,762 3,874,785
Securities loaned 50,064 80,737
Sub-total 28,804,809 26,795,161
Equity securities 807,599 935,370
Total 29,612,408 27,730,531
  • 41 -
(2) Details of equity securities designated as financial assets at FVTOCI as of June 30, 2020 and<br>December 31, 2019 are as follows (Unit: Korean Won in millions):
Purpose of acquisition June 30, 2020 December 31, 2019 Remarks
--- --- --- --- --- --- ---
Investment for strategic business partnership purpose 564,425 678,846
Debt-equity swap 243,130 256,480
Others 44 44 Cooperative insurance, etc.
Total 807,599 935,370
(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 six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance (8,569 ) — — (8,569 )
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Net provision of loss allowance (782 ) — — (782 )
Disposal 337 — — 337
Others (*) (170 ) — — (170 )
Ending balance (9,184 ) — — (9,184 )
(*) Others consist of foreign currencies translation, etc.
--- ---
For the six-month period ended June 30, 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 62 (62 ) — —
Transfer to credit-impaired financial assets — — — —
Net provision (reversal) of loss allowance (2,214 ) 235 — (1,979 )
Disposal 117 — — 117
Others (*) 167 — — 167
Ending balance (7,807 ) (65 ) — (7,872 )
(*) Others consist of foreign currencies translation, etc.
--- ---
2) Gross carrying amount
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance 26,795,161 — — 26,795,161
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Acquisition 12,879,766 — — 12,879,766
Disposal/Redemption (11,051,251 ) — — (11,051,251 )
Gain (loss) on valuation 114,000 — — 114,000
Amortization based on effective interest method 4,073 — — 4,073
Others (*) 63,060 — — 63,060
Ending balance 28,804,809 — — 28,804,809
(*) Changes due to foreign currencies translation, etc.
--- ---
  • 42 -
For the six-month period ended June 30, 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 10,043 (10,043 ) — —
Transfer to lifetime expected credit losses (5,116 ) 5,116 — —
Transfer to credit-impaired financial assets — — — —
Acquisition 12,508,275 — — 12,508,275
Disposal/Redemption (5,090,732 ) (10,088 ) — (5,100,820 )
Gain (loss) on valuation 66,013 (112 ) — 65,901
Amortization based on effective interest method 9,960 — — 9,960
Others (*) 81,543 — — 81,543
Ending balance 24,667,082 10,026 — 24,677,108
(*) Changes due to foreign currencies translation, etc.
--- ---
(4) During the six-month period ended June 30, 2020 and 2019, the Group sold its equity securities.,<br>designated as financial assets at FVTOCI in accordance with decision of disposal by the creditors, and the fair values at disposal dates were 52 million Won and 27,984 million Won, respectively and cumulative losses at disposal dates were<br>48 million Won and 36,500 million Won, respectively.
--- ---
9. SECURITIES AT AMORTIZED COST
--- ---
(1) Details of securities at amortized cost as of June 30, 2020 and December 31, 2019 are as follows<br>(Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Korean treasury and government agencies 7,118,115 8,044,040
Financial institutions 5,714,972 6,694,614
Corporates 5,300,884 5,068,489
Bond denominated in foreign currencies 482,188 518,907
Allowance for credit losses (5,557 ) (5,511 )
Total 18,610,602 20,320,539
(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 six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance (5,511 ) — — (5,511 )
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Net provision of loss allowance (47 ) — — (47 )
Others (*) 1 — — 1
Ending balance (5,557 ) — — (5,557 )
(*) Changes due to foreign currencies translation, etc.
--- ---
  • 43 -
For the six-month period ended June 30, 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 768 — — 768
Others (*) (5 ) — — (5 )
Ending balance (6,161 ) — — (6,161 )
(*) Changes due to foreign currencies translation, etc.
--- ---
2) Gross carrying amount
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance 20,326,050 — — 20,326,050
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Acquisition 1,678,871 — — 1,678,871
Disposal / Redemption (3,406,644 ) — — (3,406,644 )
Amortization based on effective interest method 388 — — 388
Others (*) 17,494 — — 17,494
Ending balance 18,616,159 — — 18,616,159
(*) Changes due to foreign currencies translation, etc.
--- ---
For the six-month period ended June 30, 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 2,353,102 — — 2,353,102
Disposal / Redemption (4,803,559 ) — — (4,803,559 )
Amortization based on effective interest method 1,184 — — 1,184
Others (*) 9,397 — — 9,397
Ending balance 20,499,608 — — 20,499,608
(*) Changes due to foreign currencies translation, etc.
--- ---
  • 44 -
10. LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST
(1) Details of loans and other financial assets at amortized cost as of June 30, 2020 and December 31,<br>2019 are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Due from banks 12,947,209 14,492,223
Loans 280,972,081 271,032,244
Other financial assets 12,498,779 8,193,226
Total 306,418,069 293,717,693
(2) Details of due from banks are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Due from banks in local currency:
Due from The Bank of Korea (“BOK”) 9,178,893 11,028,850
Due from depository banks 63,409 82,509
Due from non-depository institutions 3,247 378
Due from the Korea Exchange 81 50,113
Others 46,522 43,253
Loss allowance (2,188 ) (2,865 )
Sub-total 9,289,964 11,202,238
Due from banks in foreign currencies:
Due from banks on demand 1,394,988 1,122,521
Due from banks on time 676,128 1,296,842
Others 1,590,003 872,617
Loss allowance (3,874 ) (1,995 )
Sub-total 3,657,245 3,289,985
Total 12,947,209 14,492,223
  • 45 -
(3) Details of restricted due from banks are as follows (Unit: Korean Won in millions):
Counterparty June 30, 2020 Reason of restriction
--- --- --- --- ---
Due from banks in local currencies:
Due from BOK The BOK 9,178,893 Reserve deposits<br><br><br>under the BOK Act
Due from KSFC KB Securities Co. Ltd. 81 Futures trading margin
Others The Korea Exchange and others 44,863 Central counterparty KRW margin and others
Sub-total 9,223,837
Due from banks in foreign currencies:
Due from banks on demand The BOK and others 1,387,278 Reserve deposits under the BOK Act and others
Foreign currency deposits on time National Bank Cambodia 60 Reserve deposits and others
Others Korea Investment & Securities and others 1,590,002 Overseas futures and options trade deposits and others
Sub-total 2,977,340
Total 12,201,177
Counterparty December 31, 2019 Reason of restriction
--- --- --- --- ---
Due from banks in local currencies:
Due from BOK The BOK 11,028,850 Reserve deposits<br><br><br>under the BOK Act
Due from KSFC Korea Securities Finance Corp. and others 50,113 Customer’s deposit reserve
Others The Korea Exchange and others 41,645 Central counterparty KRW margin and others
Sub-total 11,120,608
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 13,097,186
  • 46 -
(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 six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance (4,860 ) — — (4,860 )
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Net provision of loss allowance (1,305 ) — — (1,305 )
Others (*) 103 — — 103
Ending balance (6,062 ) — — (6,062 )
(*) Changes due to foreign currencies translation, etc.
--- ---
For the six-month period ended June 30, 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 — — — —
Net provision of loss allowance (708 ) — — (708 )
Others (*) (27 ) — — (27 )
Ending balance (6,122 ) — — (6,122 )
(*) Changes due to foreign currencies translation, etc.
--- ---
2) Gross carrying amount
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance 14,497,083 — — 14,497,083
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Net increase (decrease) (1,523,664 ) — — (1,523,664 )
Others (*) (20,148 ) — — (20,148 )
Ending balance 12,953,271 — — 12,953,271
(*) Changes due to foreign currencies translation, etc.
--- ---
For the six-month period ended June 30, 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) (2,856,414 ) — — (2,856,414 )
Others (*) 72,930 — — 72,930
Ending balance 11,372,915 — — 11,372,915
(*) Changes due to foreign currencies translation, etc.
--- ---
  • 47 -
(5) Details of loans are as follows (Unit: Korean Won in millions):
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Loans in local currency 231,766,891 221,484,049
Loans in foreign currencies 19,911,198 18,534,270
Domestic banker’s usance 2,751,815 2,899,651
Credit card accounts 7,875,508 8,398,605
Bills bought in foreign currencies 4,862,524 4,772,093
Bills bought in local currency 169,528 61,362
Factoring receivables 37,493 20,905
Advances for customers on guarantees 13,693 12,616
Private placement bonds 246,251 307,339
Securitized loans 2,123,577 2,250,042
Call loans 2,655,435 3,290,167
Bonds purchased under resale agreements 8,358,028 8,981,752
Others 1,263,343 980,448
Loan origination costs and fees 635,360 620,791
Discounted present value (4,751 ) (6,826 )
Allowance for credit losses (1,693,812 ) (1,575,020 )
Total 280,972,081 271,032,244
  • 48 -
(6) Changes in the loss allowance of loans are as follows (Unit: Korean Won in millions):
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Consumers Corporates
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance (85,148 ) (77,962 ) (125,588 ) (324,258 ) (297,718 ) (390,045 )
Transfer to 12-month expected credit losses (19,356 ) 18,821 535 (30,128 ) 22,088 8,040
Transfer to lifetime expected credit losses 8,766 (10,576 ) 1,810 16,628 (73,095 ) 56,467
Transfer to credit-impaired financial assets 2,225 9,617 (11,842 ) 12,976 12,525 (25,501 )
Net reversal (provision) of loss allowance 6,109 (13,315 ) (61,278 ) (74,693 ) (30,747 ) (142,540 )
Recovery — — (33,774 ) — — (43,300 )
Charge-off — — 91,333 — — 101,899
Disposal 48 2 346 — — 22,255
Interest income from impaired loans — — 4,735 — — 7,622
Others (124 ) (5 ) (131 ) (7,593 ) (84 ) 24,127
Ending balance (87,480 ) (73,418 ) (133,854 ) (407,068 ) (367,031 ) (380,976 )
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Credit card accounts Total
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance (74,726 ) (71,533 ) (128,042 ) (484,132 ) (447,213 ) (643,675 )
Transfer to 12-month expected credit losses (13,837 ) 13,795 42 (63,321 ) 54,704 8,617
Transfer to lifetime expected credit losses 7,041 (7,438 ) 397 32,435 (91,109 ) 58,674
Transfer to credit-impaired financial assets 22,209 59,874 (82,083 ) 37,410 82,016 (119,426 )
Net reversal (provision) of loss allowance (17,597 ) (59,668 ) (22,731 ) (86,181 ) (103,730 ) (226,549 )
Recovery — — (31,690 ) — — (108,764 )
Charge-off — — 138,351 — — 331,583
Disposal — — 23,653 48 2 46,254
Interest income from impaired loans — — — — — 12,357
Others (2 ) — — (7,719 ) (89 ) 23,996
Ending balance (76,912 ) (64,970 ) (102,103 ) (571,460 ) (505,419 ) (616,933 )
For the six-month period ended June 30, 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 (9,605 ) 8,953 652 (51,272 ) 42,198 9,074
Transfer to lifetime expected credit losses 5,742 (7,568 ) 1,826 13,759 (15,607 ) 1,848
Transfer to credit-impaired financial assets 1,955 10,039 (11,994 ) 2,454 17,764 (20,218 )
Net reversal (provision) of loss allowance 1,344 (10,896 ) (74,447 ) 17,220 10,863 54,799
Recovery — — (34,635 ) — — (32,585 )
Charge-off — — 105,473 — — 92,575
Disposal — — 1,191 — — 20,019
Interest income from impaired loans — — 4,743 — — 9,341
Others (302 ) (27 ) (415 ) 1,352 (187 ) (525 )
Ending balance (115,375 ) (47,867 ) (137,512 ) (364,798 ) (294,588 ) (393,345 )
For the six-month period ended June 30, 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 (15,296 ) 15,262 34 (76,173 ) 66,413 9,760
Transfer to lifetime expected credit losses 7,269 (7,557 ) 288 26,770 (30,732 ) 3,962
Transfer to credit-impaired financial assets 15,055 59,063 (74,118 ) 19,464 86,866 (106,330 )
Net reversal (provision) of loss allowance (10,462 ) (61,468 ) (45,786 ) 8,102 (61,501 ) (65,434 )
Recovery — — (29,035 ) — — (96,255 )
Charge-off — — 138,944 — — 336,992
Disposal — — — — — 21,210
Interest income from impaired loans — — — — — 14,084
Others (1 ) 1 (2 ) 1,049 (213 ) (942 )
Ending balance (68,222 ) (72,830 ) (126,447 ) (548,395 ) (415,285 ) (657,304 )
  • 49 -
(7) Changes in the gross carrying amount of loans are as follows (Unit: Korean Won in millions):<br>
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Consumers Corporates
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance 111,253,283 12,448,807 417,674 134,443,979 4,910,598 740,257
Transfer to 12-month expected credit losses 4,318,903 (4,310,929 ) (7,974 ) 1,067,885 (1,046,149 ) (21,736 )
Transfer to lifetime expected credit losses (4,980,916 ) 5,002,670 (21,754 ) (2,571,677 ) 2,646,989 (75,312 )
Transfer to credit-impaired financial assets (77,204 ) (118,765 ) 195,969 (235,257 ) (115,332 ) 350,589
Charge-off — — (91,333 ) — — (101,899 )
Disposal (3,920,591 ) (3,971 ) (16,378 ) — — (42,390 )
Net increase (decrease) 8,332,255 (1,442,779 ) (35,155 ) 8,840,031 (833,148 ) (105,787 )
Ending balance 114,925,730 11,575,033 441,049 141,544,961 5,562,958 743,722
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Credit card accounts Total
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance 7,278,467 885,832 228,367 252,975,729 18,245,237 1,386,298
Transfer to 12-month expected credit losses 266,322 (266,266 ) (56 ) 5,653,110 (5,623,344 ) (29,766 )
Transfer to lifetime expected credit losses (305,371 ) 305,870 (499 ) (7,857,964 ) 7,955,529 (97,565 )
Transfer to credit-impaired financial assets (51,913 ) (75,435 ) 127,348 (364,374 ) (309,532 ) 673,906
Charge-off — — (138,351 ) — — (331,583 )
Disposal — — (43,781 ) (3,920,591 ) (3,971 ) (102,549 )
Net increase (decrease) (296,819 ) (50,674 ) 9,399 16,875,467 (2,326,601 ) (131,543 )
Ending balance 6,890,686 799,327 182,427 263,361,377 17,937,318 1,367,198
For the six-month period ended June 30, 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 1,866,758 (1,859,811 ) (6,947 ) 1,513,913 (1,483,846 ) (30,067 )
Transfer to lifetime expected credit losses (2,833,438 ) 2,854,387 (20,949 ) (1,984,611 ) 1,993,221 (8,610 )
Transfer to credit-impaired financial assets (91,588 ) (114,797 ) 206,385 (187,112 ) (167,681 ) 354,793
Charge-off — — (105,473 ) — — (92,575 )
Disposal — (29 ) (31,916 ) — — (79,296 )
Net increase (decrease) 4,013,693 (665,771 ) (22,332 ) 5,402,273 (489,901 ) (273,450 )
Ending balance 113,574,667 6,241,988 410,262 136,198,190 4,883,051 891,453
For the six-month period ended June 30, 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 286,975 (286,924 ) (51 ) 3,667,646 (3,630,581 ) (37,065 )
Transfer to lifetime expected credit losses (336,040 ) 336,410 (370 ) (5,154,089 ) 5,184,018 (29,929 )
Transfer to credit-impaired financial assets (48,082 ) (80,178 ) 128,260 (326,782 ) (362,656 ) 689,438
Charge-off — — (138,944 ) — — (336,992 )
Disposal — — — — (29 ) (111,212 )
Net increase (decrease) 99,345 (15,877 ) 25,258 9,515,311 (1,171,549 ) (270,524 )
Ending balance 6,864,042 936,203 223,142 256,636,899 12,061,242 1,524,857
(8) Details of other financial assets are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
CMA accounts 163,000 199,000
Receivables 10,219,710 5,653,997
Accrued income 911,420 1,012,240
Telex and telephone subscription rights and refundable deposits 942,486 949,118
Other assets 342,332 456,010
Allowance for credit losses (80,169 ) (77,139 )
Total 12,498,779 8,193,226
  • 50 -
(9) Changes in the allowances for credit losses on other financial assets are as follows (Unit: Korean Won in<br>millions):
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance (3,196 ) (1,666 ) (72,277 ) (77,139 )
Transfer to 12-month expected credit losses (140 ) 131 9 —
Transfer to lifetime expected credit losses 536 (150 ) (386 ) —
Transfer to credit-impaired financial assets 26 142 (168 ) —
Net provision of loss allowance (767 ) (262 ) (3,272 ) (4,301 )
Charge-off — — 248 248
Disposal — — 489 489
Others 545 — (11 ) 534
Ending balance (2,996 ) (1,805 ) (75,368 ) (80,169 )
For the six-month period ended June 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 (122 ) 116 6 —
Transfer to lifetime expected credit losses 79 (93 ) 14 —
Transfer to credit-impaired financial assets 18 227 (245 ) —
Net provision of loss allowance (99 ) (243 ) (2,706 ) (3,048 )
Charge-off — — 151 151
Disposal — — 381 381
Others (72 ) 117 854 899
Ending balance (3,665 ) (1,847 ) (64,046 ) (69,558 )
(10) Changes in the gross carrying amount of other financial assets are as follows (Unit: Korean Won in millions):<br>
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance 8,059,844 92,647 117,874 8,270,365
Transfer to 12-month expected credit losses 8,420 (8,404 ) (16 ) —
Transfer to lifetime expected credit losses (12,735 ) 12,752 (17 ) —
Transfer to credit-impaired financial assets (1,743 ) (1,096 ) 2,839 —
Charge-off — — (248 ) (248 )
Disposal — — (549 ) (549 )
Net increase (decrease) 4,288,900 (31,361 ) 51,841 4,309,380
Ending balance 12,342,686 64,538 171,724 12,578,948
For the six-month period ended June 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 5,247 (5,236 ) (11 ) —
Transfer to lifetime expected credit losses (6,111 ) 6,151 (40 ) —
Transfer to credit-impaired financial assets (474 ) (1,653 ) 2,127 —
Charge-off — — (151 ) (151 )
Disposal — — (581 ) (581 )
Net increase (decrease) 7,148,221 3,462 (584 ) 7,151,099
Ending balance 14,601,273 30,917 72,767 14,704,957
  • 51 -
11. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
(1) The fair value hierarchy
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The fair value hierarchy for financial instruments is determined by the amount of observable market data. The specific financial instruments characteristics and market condition such as the existence of the transactions among market participants 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 active<br>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 derivatives and debt securities of which valuation<br>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.

  • 52 -
(2) Fair value hierarchy of financial assets and liabilities measured at fair value are as follows (Unit: Korean<br>Won in millions):
June 30, 2020
--- --- --- --- --- --- --- --- ---
Level 1 (*) Level 2 (*) Level 3 Total
Financial assets:
Financial assets at FVTPL
Deposits 29,631 — — 29,631
Debt securities 448,552 2,053,336 5,765 2,507,653
Equity securities 15,365 — 538,630 553,995
Capital contributions — 300 613,736 614,036
Beneficiary certificates 10,303 288,122 1,468,423 1,766,848
Loans — 139,704 188,898 328,602
Derivative assets (Designated for trading) 32,778 4,130,088 103,431 4,266,297
Sub-total 536,629 6,611,550 2,918,883 10,067,062
Financial assets at FVTOCI
Debt securities 2,733,044 26,071,765 — 28,804,809
Equity securities 365,234 — 442,365 807,599
Sub-total 3,098,278 26,071,765 442,365 29,612,408
Derivative assets (Designated for hedging) — 249,880 — 249,880
Total 3,634,907 32,933,195 3,361,248 39,929,350
Financial liabilities:
Financial liabilities at FVTPL
Deposits due to customers 30,022 — — 30,022
Derivative liabilities (Designated for trading) 2,240 3,955,066 19,421 3,976,727
Sub-total 32,262 3,955,066 19,421 4,006,749
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities — — 24,486 24,486
Derivative liabilities (Designated for hedging) — 15,022 — 15,022
Total 32,262 3,970,088 43,907 4,046,257
(*) There were no transfers between Level 1 and Level 2 of financial assets and liabilities measured at fair value.<br>The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.
--- ---
  • 53 -
December 31, 2019
Level 1 (*) Level 2 (*) Level 3 Total
Financial assets:
Financial assets at FVTPL
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 FVTPL
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 FVTPL designated as upon initial 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 fair value.<br>The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.
--- ---
  • 54 -

Financial assets and liabilities at FVTPL, financial liabilities at FVTPL designated as upon initial recognition, financial assets at FVTOCI, and derivative assets and liabilities are recognized at fair value. Fair value is the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

Financial instruments are measured at fair value using a quoted market price in active markets. If there is no active market for a financial instrument, the Group determines the fair value using valuation methods. Valuation methods and input variables for each type of financial instruments are as follows:

1) Valuation methods and input variables for each type of financial instrument classified into level 2 in<br>June 30, 2020 and December 31, 2019 are as follows:
Valuation methods Input variables
--- --- ---
Loans The fair value is measured by discounting the projected cash flows of loan products by applying<br>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<br>risk-free market rate with credit spread. Risk-free market rate, credit spread
Beneficiary certificates The beneficiary certificates classified as Level 2 are measured through Net Asset Value<br>Method. Value of underlying assets such as bonds
Derivatives The fair value is measured through option model (Closed Form), DCF Model, FDM, Monte Carlo<br>Simulation, etc. Risk-free market rate, forward rate, foreign exchange rate, market rate, stock prices and value of<br>underlying assets, volatility, and etc.
2) Valuation methods and input variables for each type of financial instrument classified into level 3 in<br>June 30, 2020 and December 31, 2019 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<br>volatility. Values of underlying assets, volatility
Debt securities The fair value is measured by discounting the projected cash flows of debt securities by applying<br>the market discount rate that has been applied to a proxy company that has similar credit rating to the issuers of the securities. Risk-free market rate, credit spread, growth rate, etc.
Equity securities, capital contributions and Beneficiary certificates Among DCF (Discounted Cash Flow) Model, FCFE (Free Cash Flow to Equity) Model, Comparable Company<br>Analysis, Dividend Discount Model, Risk-adjusted Rate of Return Method, and Net Asset Value Method, more than one method is used given the characteristic of the subject of fair value measurement. Risk-free market rate, market risk premium, corporate Beta, stock prices, volatility of underlying<br>asset, etc.
Derivatives Fair value is measured by models such as option model (Closed form), DCF model, FDM and Monte<br>Carlo Simulation. Risk-free market rate, market rate, values of underlying assets such as foreign exchange rate and<br>stock prices, volatility, etc.
Equity-linked securities Fair value is measured by models such as option model (Closed form), DCF model, FDM and Monte<br>Carlo Simulation. Values of underlying assets, market rate, dividend, volatility, correlation coefficient and<br>foreign exchange rate, etc.
  • 55 -

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<br><br><br>measurement<br> <br>technique Type Input variable Range Impact of changes in significant<br>unobservable inputs on fair value<br>measurement
Loans, convertible bonds, bond with options and others Binomial Tree Stock, Volatility of underlying asset 29.61%~42.35% Variation of fair value increases 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 28.03%~279.95% Variation of fair value increases as volatility of underlying assets increases.
Equity related Correlation coefficient 0.20~0.71 Variation of fair value increases as correlation coefficient increases.
Volatility of underlying asset 32.31%~32.57% Variation of fair value increases as volatility of underlying assets increases.
DCF model Currency related Credit risk adjustment ratio 100.00% Variation of fair value decreases as credit risk adjustment ratio increases.
Derivative liabilities Option valuation model and others Interest rate related Correlation coefficient 0.90~0.98 Variation of fair value increases as correlation coefficient increases.
Volatility of underlying asset 28.03%~279.95% Variation of fair value increases as volatility of underlying assets increases.
Equity related Correlation coefficient 0.20~0.71 Variation of fair value increases as correlation coefficient increases.
Volatility of underlying asset 32.31%~32.57% Variation of fair value increases as volatility of underlying assets increases.
Equity-linked securities Monte Carlo<br> <br>Simulation<br><br><br>and others Equity related Correlation coefficient 0.40~0.50 Fair value of equity-linked securities increases if both historical volatility and correlation coefficient increase. However, when correlation coefficient decreases despite the increase in volatility of underlying asset, the fair<br>value variation of equity-linked securities may decreases.
Volatility of underlying asset 32.31%~48.13%
  • 56 -
Fair value<br><br><br>measurement<br> <br>technique Type Input variable Range Impact of changes in significant<br>unobservable inputs on fair value<br>measurement
Equity securities, capital contributions, and beneficiary certificates Binomial Tree Stock, Volatility of underlying<br> <br>asset 28.18%~38.50% Variation of fair value increases as volatility of underlying asset<br><br><br>increases.
DCF model and others Terminal growth rate 0~1% Fair value increases as terminal growth rate increases.
Discount rate 4.12%~35.78% Fair value increases as discount rate decreases.
Volatility of real estate sale price — Fair value increases as real estate sale price increases.
liquidation value — Variation of liquidation 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.

(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 six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Beginning<br>balance Net Income<br>(loss)<br>(*1) Other<br>comprehensive<br>income Purchases/<br>issuances Disposals /<br>settlements Transfer to<br>or out of Level 3<br>(*2) Ending<br>balance
Financial assets:
Financial assets at FVTPL
Debt securities 5,826 (9 ) — — (52 ) — 5,765
Equity securities 528,621 13,220 — 10,472 (13,714 ) 31 538,630
Capital contributions 515,199 12,324 — 98,219 (12,006 ) — 613,736
Beneficiary certificates 1,275,734 15,939 — 315,069 (138,319 ) — 1,468,423
Loans 152,629 4,556 — 93,987 (62,274 ) — 188,898
Derivative assets 25,048 95,112 — 10,891 (19,233 ) (8,387 ) 103,431
Sub-total 2,503,057 141,142 — 528,638 (245,598 ) (8,356 ) 2,918,883
Financial assets at FVTOCI
Equity securities 493,698 — (56,593 ) 3,698 (630 ) 2,192 442,365
Total 2,996,755 141,142 (56,593 ) 532,336 (246,228 ) (6,164 ) 3,361,248
Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities 72,039 495 — 11,001 (49,806 ) (14,308 ) 19,421
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities 87,626 (8,421 ) — — (54,719 ) — 24,486
Derivative liabilities (Designated for hedging) 321 — — — (321 ) — —
Total 159,986 (7,926 ) — 11,001 (104,846 ) (14,308 ) 43,907
(*1) For financial liabilities, positive numbers represent losses that increase balance and negative numbers<br>represent gains that decrease balance. The interim statements of comprehensive income includes gain of 140,315 million Won included in net gain (loss) on financial assets at FVTPL and net gain (loss) on financial assets at FVTOCI pertaining to<br>the assets and liabilities held by the Group at the end of the period.
--- ---
(*2) The Group recognizes transfers between levels at the end of reporting period within which events have occurred<br>or conditions have changed.
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  • 57 -
For the six-month period ended June 30, 2019
January 1,<br>2019 Net<br>Income (loss)<br>(*1) Other<br>comprehensive<br>income Purchases/<br>issuances Disposals/<br>settlements Transfer to or<br>out of Level 3<br>(*2) June 30,<br>2019
Financial assets:
Financial assets at FVTPL
Debt securities 8,389 8 — 2,000 (302 ) — 10,095
Equity securities 401,860 39,060 — 23,446 (4,304 ) — 460,062
Capital contributions 422,614 (10,446 ) — 72,074 (48,179 ) — 436,063
Beneficiary certificates 854,299 10,854 — 147,759 (128,144 ) 1 884,769
Loans 180,450 (1,316 ) — 500 (32,390 ) — 147,244
Derivative assets 48,798 13,483 — 1,726 (35,998 ) (3,626 ) 24,383
Sub-total 1,916,410 51,643 — 247,505 (249,317 ) (3,625 ) 1,962,616
Financial assets at FVTOCI
Equity securities 468,847 — 6,473 62 (76 ) — 475,306
Total 2,385,257 51,643 6,473 247,567 (249,393 ) (3,625 ) 2,437,922
Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities 16,691 61,459 — (10,098 ) (10,034 ) (2,728 ) 55,290
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities 164,767 26,361 — 1,809 (37,059 ) — 155,878
Total 181,458 87,820 — (8,289 ) (47,093 ) (2,728 ) 211,168
(*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 38,488 million Won for the six-month period ended June 30, 2019, which is from financial assets and liabilities that the Group holds as at the end of the<br>period, has 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.
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  • 58 -
(4) Sensitivity analysis results on reasonable fluctuation of the significant unobservable input variables for the<br>fair value of Level 3 financial instruments are as follows.

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.

Meanwhile, among the financial instruments that are classified as Level 3 amounting to 3,405,155 million Won and 3,156,741 million Won as of June 30, 2020 and December 31, 2019 respectively, equity instruments of 2,533,903 million Won and 2,194,320 million Won whose carrying amount are considered to represent the reasonable approximation of fair value are excluded from the sensitivity analysis.

The sensitivity on fluctuation of input variables by financial instruments as of June 30, 2020 and December 31, 2019 is as follows (Unit: Korean Won in millions):

June 30, 2020
Net income (loss) Other comprehensive income (loss)
Favorable Unfavorable Favorable Unfavorable
Financial assets:
Financial assets at FVTPL
Derivative assets (*1) 5,610 (5,753 ) — —
Loans (*2) 426 (498 ) — —
Debt securities 14 (12 ) — —
Equity securities (*2) (*3) (*4) 10,246 (7,704 ) — —
Beneficiary certificates (*4) 1,049 (1,044 ) — —
Financial assets at FVTOCI — — — —
Equity securities (*3) (*4) — — 32,678 (24,785 )
Total 17,345 (15,011 ) 32,678 (24,785 )
Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities (*1) 1,307 (348 ) — —
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities (*1) 108 (101 ) — —
Total 1,415 (449 ) — —
(*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<br>volatility (-10~10%). The stock prices and volatility are major unobservable variables.
--- ---
(*3) Fair value changes of equity securities are calculated by increasing or decreasing terminal growth rate (0~1%)<br>and discount rate (-1~1%) or liquidation value (-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.
--- ---
(*4) Even if the sensitivity analysis of the capital contributions and beneficiary certificates is not possible in<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 rate of real estate which is underlying<br>assets and discount rate by 1%.
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  • 59 -
December 31, 2019
Net income (loss) Other comprehensive income (loss)
Favorable Unfavorable Favorable Unfavorable
Financial assets:
Financial assets at FVPL
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 FVTPL
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<br>volatility (-10~10%). The stock prices and volatility are major unobservable variables.
--- ---
(*3) Fair value changes of equity securities are calculated by increasing or decreasing terminal growth rate (0~1%)<br>and discount rate 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 rate of real estate which is underlying<br>assets and discount rate by 1%.
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  • 60 -
(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):
June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Fair value Book<br>value
Level 1 Level 2 Level 3 Total
Financial assets:
Securities at amortized cost 2,953,540 16,000,595 — 18,954,135 18,610,602
Loans and other financial assets at amortized cost 20,000 — 304,171,889 304,191,889 306,418,069
Financial liabilities:
Deposits due to customers — 277,435,175 — 277,435,175 276,967,229
Borrowings — 21,264,706 — 21,264,706 21,263,126
Debentures — 31,701,489 — 31,701,489 31,029,872
Other financial liabilities — 18,645,293 161,712 18,807,005 19,209,529
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 54,507 283,058,699 283,139,108 293,717,693
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

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<br>risk-free market rate with credit spread. Risk-free market rate and credit spread
Loans and other financial assets at amortized cost The fair value is measured by discounting the projected cash flows of loan products by applying<br>the market discount rate that has been applied to a proxy company that has similar credit rating to the debtor. Risk-free market rate, credit spread and prepayment rate
Deposits due to customers, borrowings, debentures and other financial liabilities The fair value is measured by discounting the projected cash flows of debt products by applying<br>the market discount rate that is reflecting credit rating of the Group. Risk-free market rate, credit spread and forward rate
  • 61 -
(6) Financial instruments by category

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

June 30, 2020
Financial<br>asset at<br>FVTPL Financial<br>assets at<br>FVTOCI Financial<br>assets at<br>amortized<br>cost Derivatives<br>assets<br>(Designated<br>for hedging) Total
Financial assets
Deposits 29,631 — 12,947,209 — 12,976,840
Securities 5,442,532 29,612,408 18,610,602 — 53,665,542
Loans 328,602 — 280,972,081 — 281,300,683
Derivative assets 4,266,297 — — 249,880 4,516,177
Other financial assets — — 12,498,779 — 12,498,779
Total 10,067,062 29,612,408 325,028,671 249,880 364,958,021
June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Financial<br>liabilities at<br>FVTPL Financial<br>liabilities<br>designated<br>at FVTPL Financial<br>liabilities at<br>amortized cost Derivatives<br>liabilities<br>(Designated<br>for hedging) Total
Deposits due to customers 30,022 — 276,967,229 — 276,997,251
Borrowings — 24,486 21,263,126 — 21,287,612
Debentures — — 31,029,872 — 31,029,872
Derivative liabilities 3,976,727 — — 15,022 3,991,749
Other financial liabilities — — 19,209,529 — 19,209,529
Total 4,006,749 24,486 348,469,756 15,022 352,516,013
December 31, 2019
--- --- --- --- --- --- --- --- --- --- ---
Financial<br>asset at<br>FVTPL Financial<br>assets at<br>FVTOCI Financial<br>assets at<br>amortized<br>cost Derivatives<br>assets<br>(Designated<br>for hedging) Total
Financial assets
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
December 31, 2019
--- --- --- --- --- --- --- --- --- --- ---
Financial<br>liabilities at<br>FVTPL Financial<br>liabilities<br>designated<br>at FVTPL Financial<br>liabilities at<br>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 2,870,676 87,626 332,312,084 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.
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  • 62 -
(7) Income or expense from financial instruments by category

Income or expense from financial assets and liabilities by each category during the six-month period ended June 30, 2020 and 2019 are as follows (Unit: Korean Won in millions):

For the six-month period ended June 30, 2020
Interest<br>Income<br>(expense) Fees and<br>Commissions<br>Income<br>(expense) Provision<br>(reversal) of<br>credit loss Others Total
Financial assets at FVTPL 26,210 — — 455,971 482,181
Financial assets at FVTOCI 241,000 102 (782 ) 27,647 267,967
Securities at amortized cost 202,060 — (47 ) — 202,013
Loans and other financial assets at amortized cost 4,446,733 27,476 (422,066 ) 32,662 4,084,805
Financial liabilities at amortized cost (1,969,872 ) — — — (1,969,872 )
Net derivatives (designated for hedging) — — — 14,942 14,942
Total 2,946,131 27,578 (422,895 ) 531,222 3,082,036
For the six-month period ended June 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Interest<br>Income<br>(expense) Fees and<br>Commissions<br>Income<br>(expense) Provision<br>(reversal) of<br>credit loss Others Total
Financial assets at FVTPL 27,905 54,775 — 127,178 209,858
Financial assets at FVTOCI 209,102 — (1,979 ) 20,930 228,053
Securities at amortized cost 225,195 — 769 — 225,964
Loans and other financial assets at amortized cost 4,815,489 137,106 (122,589 ) 94,619 4,924,625
Financial liabilities at FVTPL (719 ) — — — (719 )
Financial liabilities at amortized cost (2,345,920 ) — — — (2,345,920 )
Net derivatives (designated for hedging) — — — 26,432 26,432
Off-balance provisions — 35,040 (12,747 ) — 22,293
Total 2,931,052 226,921 (136,546 ) 269,159 3,290,586
  • 63 -
12. DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS
(1) Derecognition of financial instruments
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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):

June 30, 2020 December 31, 2019
Assets transferred Financial assets at FVTPL 464,542 407,985
Financial assets at FVTOCI 95,278 56,975
Securities at amortized cost 95,709 42,841
Loans and other financial assets at amortized cost — 82,594
Total 655,529 590,395
Related liabilities Bonds sold under repurchase agreements 620,963 569,002
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):

June 30,<br>2020 December 31,<br>2019 Loaned to
Financial assets at FVTOCI Korean financial institution’s debt securities and others 50,064 80,737 Korea Securities<br>    Finance Corporation

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.

  • 64 -
(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 payables 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.

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 June 30, 2020 and December 31, 2019, the financial instruments to be offset and may be covered by master netting agreements and similar agreements are as follows (Unit: Korean Won in millions):

June 30, 2020
Gross<br>amounts of<br>recognized<br>financial<br>assets Gross<br>amounts of<br>recognized<br>financial<br>assets<br>setoff Net<br>amounts of<br>financial<br>assets<br>presented Related amounts not setoff<br>in the consolidated statement<br>of financial position Net<br>amounts
Netting<br>agreements<br>and others Cash<br>collateral<br>received
Financial assets:
Derivative assets (*1) 4,015,508 — 4,015,508 11,070,878 642,295 1,061,726
Receivable spot exchange (*2) 8,759,391 — 8,759,391
Bonds purchased under resale agreements (*2) 8,358,028 — 8,358,028 8,358,028 — —
Domestic exchange settlement debits (*2) (*6) 33,576,738 33,451,045 125,693 — — 125,693
Total 54,709,665 33,451,045 21,258,620 19,428,906 642,295 1,187,419
Financial liabilities:
Derivative liabilities (*1) 3,188,188 — 3,188,188 11,069,505 359,031 544,565
Equity-linked securities in short position (*3) 24,486 — 24,486
Payable spot exchange (*4) 8,760,427 — 8,760,427
Bonds sold under repurchase agreements (*5) 620,963 — 620,963 145,367 442,900 32,696
Domestic exchange settlement credits (*4) (*6) 33,859,951 33,451,046 408,905 403,874 — 5,031
Total 46,454,015 33,451,046 13,002,969 11,618,746 801,931 582,292
(*1) The items include derivative assets and liabilities held for trading and designated for hedging.<br>
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(*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.

  • 65 -
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 statement<br>of financial 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 7,058,885 111,122 975,093
Receivable spot exchange (*2) 5,112,206 — 5,112,206
Bonds purchased under resale agreements (*2) 8,981,752 — 8,981,752 8,981,752 — —
Domestic exchange settlement debits (*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 7,071,549 172,488 779,424
Equity-linked securities in short position (*3) 87,626 — 87,626
Payable spot exchange (*4) 5,111,386 — 5,111,386
Bonds sold under repurchase agreements (*5) 569,002 — 569,002 180,402 388,600 —
Domestic exchange settlement credits (*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.
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(*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.
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  • 66 -
13. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
(1) Investments in associates accounted for using the equity method of accounting are as follows:<br>
--- ---
Percentage of ownership<br>(%)
--- --- --- --- --- --- --- --- --- ---
Joint ventures and associates Main business June 30,<br>2020 December 31,<br>2019 Location Financial<br>statements as of
Woori Bank:
W Service Networks Co., Ltd. (*1) Freight & staffing services 4.9 4.9 Korea May 31, 2020 (*5)
Korea Credit Bureau Co., Ltd. (*2) Credit information 9.9 9.9 Korea June 30, 2020
Korea Finance Security Co., Ltd. (*1) Security service 15.0 15.0 Korea May 31, 2020 (*5)
Saman Corporation (*2) General construction Technology service 9.2 9.2 Korea March 31, 2020 (*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 —
Goodskt Co., Ltd. (*4) Telecommunication equipment retail sales 23.1 23.1 Korea —
Woori Growth Partnerships New Technology Private Equity Fund Other financial services 23.1 23.1 Korea June 30, 2020
2016KIF-IMM Woori Bank Technology Venture Fund Other financial services 20.0 20.0 Korea June 30, 2020
K BANK Co., Ltd. (*2) (*8) Finance 14.5 14.5 Korea May 31, 2020 (*5)
Smart Private Equity Fund No. 2 Other financial services 20.0 20.0 Korea June 30, 2020
Woori Bank-Company K Korea Movie Asset Fund Other financial services 25.0 25.0 Korea June 30, 2020
Well to Sea No. 3 Private Equity Fund (*6) Finance 50.0 50.0 Korea March 31, 2020 (*5)
Partner One Value Up I Private Equity Fund Other financial services 23.3 23.3 Korea June 30, 2020
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership Other financial services 20.0 20.0 Korea June 30, 2020
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund Other financial services 25.0 25.0 Korea June 30, 2020
LOTTE CARD Co., Ltd. Credit card and installment financing 20.0 20.0 Korea March 31, 2020 (*5)
Together-Korea Government Private Pool Private Securities Investment Trust No. 3 (*7) Securities Investment 100.0 — Korea June 30, 2020
Japanese Hotel Real Estate Private Equity Fund 2 Other financial services 19.9 19.9 Korea June 30, 2020
Woori Asset Management Co. Ltd.:
Woori All-in-One World EMP 40 [Bond Mixed-FOF] (*7) Collective investment business 23.9 — Korea June 30, 2020
Woori High plus G.B. Securities Feeder Fund 1 (G.B.) Collective investment business 22.9 — Korea June 30, 2020
Woori Private Equity Asset Management Co., Ltd.:
  • 67 -
Percentage of ownership<br>(%)
Joint ventures and associates Main business June 30,<br>2020 December 31,<br>2019 Location Financial<br>statements as of
Uri Hanhwa Eureka Private Equity Fund (*2) Other financial services 0.8 0.8 Korea June 30, 2020
Japanese Hotel Real Estate Private Equity Fund 1:
Godo Kaisha Oceanos 1 Other financial services 47.8 47.8 Japan April 30, 2020 (*5)
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 wholesale 28.7 28.7 Korea —
G2 Collection Co., Ltd. (*4) Wholesale and retail sales 29.2 29.2 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 brokerage 49.8 49.8 Korea —
DAEA SNC Co., Ltd. (*4) Wholesale and retail sales 25.5 25.5 Korea —
Force TEC Co., Ltd. (*4) Manufacturing 25.8 25.8 Korea March 31, 2020<br>(*5)
Sinseong Trading Co., Ltd. (*4) Manufacturing 27.9 27.9 Korea —
PREXCO Co., Ltd. (*4) Manufacturing 28.1 28.1 Korea —
Jiwon Plating Co., Ltd. (*4) Plating 20.8 20.8 Korea —
Youngdong Sea Food Co., Ltd. (*4) Processed sea food manufacturing 24.5 24.5 Korea —
Woori Bank , Woori Investment Bank Co., Ltd. and Woori Private Equity Asset Management Co.,<br>Ltd.:
Woori-Shinyoung Growth-Cap Private Equity Fund I Other financial services 31.9 31.9 Korea June 30, 2020
Woori Bank and Woori Investment Bank Co., Ltd.:
Chin Hung International Inc. (*3) Construction 25.3 25.3 Korea May 31, 2020 (*5)
PCC-Woori LP Secondary Fund Other financial services 38.8 38.8 Korea June 30, 2020
Woori Bank and Woori Private Equity Asset Management Co., Ltd.:
Woori-Q Corporate Restructuring Private Equity Fund Trust and collective investment 38.4 38.4 Korea June 30, 2020
(*1) Most of the significant business transactions of associates are with the Group as of June 30, 2020 and<br>December 31, 2019.
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(*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.
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(*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 1,970 Won and 2,310 Won as of June 30, 2020 and December 31, 2019, respectively.
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(*4) There is no investment balance as of June 30, 2020 and December 31, 2019.
--- ---
(*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.
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(*6) 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.
--- ---
(*7) Due to capital contribution by the Group for the six-month period ended June 30, 2020, the entities have<br>been included in associates.
--- ---
(*8) The Group invested 163,082 million Won in its affiliate, K BANK Co., Ltd., in July, 2020.<br>
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  • 68-
(2) Changes in the carrying value of investments in associates accounted for using the equity method of accounting<br>are as follows (Unit: Korean Won in millions):
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Acquisition<br>cost January 1,<br>2020 Share of<br>profits<br>(losses) Acquisi-<br>tion Disposal<br>and<br>others Dividends Change<br>in<br>capital June 30,<br>2020
W Service Networks Co., Ltd. 108 186 (19 ) — — (3 ) — 164
Korea Credit Bureau Co., Ltd. 3,313 6,845 743 — — (90 ) — 7,498
Korea Finance Security Co., Ltd. 3,267 3,287 (83 ) — — — — 3,204
Chin Hung International Inc. 130,779 51,176 (726 ) — — — (22 ) 50,428
Saman Corporation 8,521 849 (418 ) — — — 37 468
Woori Growth Partnerships New Technology Private Equity Fund 18,666 19,212 (2,064 ) — — — — 17,148
2016KIF-IMM Woori Bank Technology Venture Fund 12,385 15,141 1,176 — — — (1,563 ) 14,754
K BANK Co., Ltd. 73,150 31,254 (6,917 ) — — — 21 24,358
Smart Private Equity Fund No. 2 2,915 2,764 (21 ) — — — — 2,743
Woori Bank-Company K Korea Movie Asset Fund 2,100 3,323 315 — (900 ) — — 2,738
Well to Sea No. 3 Private Equity Fund 101,483 209,023 16,385 — — (24,393 ) (1,085 ) 199,930
Partner One Value Up I Private Equity Fund 10,000 9,908 (41 ) — — — — 9,867
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership 6,596 4,576 — 2,020 — — — 6,596
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund 4,055 4,375 — — (321 ) — — 4,054
Woori-Shinyoung Growth-Cap Private Equity Fund I 32,572 11,841 (61 ) 19,906 — — — 31,686
LOTTE CARD Co.,Ltd 346,810 409,444 13,822 810 — (5,710 ) (3,343 ) 415,023
Woori-Q Corporate Restructuring Private Equity Fund 6,129 6,046 (80 ) — — — — 5,966
PCC-Woori LP Secondary Fund 5,050 2,525 (124 ) 2,525 — — — 4,926
Force TEC Co., Ltd. — — 1,563 — — — (442 ) 1,121
Together-Korea Government Private Pool Private Securities Investment Trust No.3 100,000 — 80 100,000 — — — 100,080
Uri Hanhwa Eureka Private Equity Fund 350 342 (2 ) — — — — 340
Godo Kaisha Oceanos 1 10,800 10,952 209 — — (689 ) 20 10,492
Japanese Hotel Real Estate Private Equity Fund 2 3,291 3,291 188 — — (56 ) — 3,423
Woori All-in-One World EMP 40 [Bond Mixed-FOF] 5,000 — (107 ) 5,000 — — — 4,893
Woori High plus G.B. Securities Feeder Fund 1 (G.B.) 6,141 — 120 6,141 — — — 6,261
893,481 806,360 23,938 136,402 (1,221 ) (30,941 ) (6,377 ) 928,161
  • 69 -
For the six-month period ended June 30, 2019
Acquisition<br>cost January 1,<br>2019 Share of<br>profits<br>(losses) Acquisi-<br>tion Disposal<br>and<br>others Dividends Change<br>in<br>capital June 30,<br>2019
W Service Networks Co., Ltd. 108 157 (2 ) — — (2 ) — 153
Korea Credit Bureau Co., Ltd. 3,313 6,790 604 — — (135 ) — 7,259
Korea Finance Security Co., Ltd. 3,267 3,456 (165 ) — — — — 3,291
Chin Hung International Inc. 130,779 44,741 3,348 — — — 6 48,095
Saman Corporation 8,521 1,014 (175 ) — — — 32 871
Woori Growth Partnerships New Technology Private Equity Fund 19,385 25,091 1,543 309 (6,770 ) (164 ) — 20,009
2016KIF-IMM Woori Bank Technology Venture Fund 13,785 15,300 — — (1,215 ) — (301 ) 13,784
K BANK Co., Ltd. 67,343 43,709 (7,536 ) — — — 112 36,285
Smart Private Equity Fund No. 2 2,915 2,890 (21 ) — (85 ) — — 2,784
Woori Bank-Company K Korea Movie Asset Fund 3,000 2,700 196 — — — — 2,896
Well to Sea No. 3 Private Equity Fund 101,483 197,393 13,608 — — (18,320 ) (695 ) 191,986
Partner One Value Up I Private Equity Fund 10,000 9,948 (18 ) — — — — 9,930
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 4,150 3,025 — 1,125 — — — 4,150
Nomura-Rifa Private Real Estate Investment Trust No. 17 1,000 787 (113 ) — — — — 674
Uri Hanhwa Eureka Private Equity Fund 350 339 (2 ) — — — — 337
Woori-Shinyoung Growth-Cap Private Equity Fund I 7,331 — (410 ) 7,331 — — — 6,921
381,306 361,766 10,857 8,915 (8,070 ) (18,621 ) (846 ) 354,001
  • 70 -
(3) Summary financial information relating to investments in associates accounted for using the equity method of<br>accounting is as follows (Unit: Korean Won in millions):
June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Assets Liabilities Operating<br>revenue Net income<br>(loss)
W Service Networks Co., Ltd. 6,001 2,693 8,591 648
Korea Credit Bureau Co., Ltd. 105,112 31,962 49,321 7,063
Korea Finance Security Co., Ltd. 36,895 15,534 27,614 (1,069 )
Chin Hung International Inc. 354,886 252,528 147,900 5,000
Saman Corporation 94,609 72,735 31,682 (238 )
Woori Growth Partnerships New Technology Private Equity Fund 74,631 321 143 (8,943 )
2016KIF-IMM Woori Bank Technology Venture Fund 70,489 — 5,891 5,879
K BANK Co., Ltd. 1,912,523 1,744,333 29,666 (36,766 )
Smart Private Equity Fund No. 2 13,767 50 1 (103 )
Woori Bank-Company K Korea Movie Asset Fund 11,026 73 1,336 1,260
Well to Sea No. 3 Private Equity Fund 7,825,825 7,196,602 194,164 16,827
Partner One Value Up I Private Equity Fund 42,426 — 214 (107 )
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership 30,948 640 382 (308 )
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund 15,684 114 284 38
Woori-Shinyoung Growth-Cap Private Equity Fund I 98,845 659 136 (1,235 )
LOTTE CARD Co., Ltd (*) 13,607,250 11,304,878 526,035 50,029
Woori-Q Corporate Restructuring Private Equity Fund 15,102 749 — (799 )
PCC-Woori LP Secondary Fund 12,681 2 9 (319 )
Force TEC Co., Ltd. 50,271 45,922 8,405 (337 )
Together-Korea Government Private Pool Private Securities Investment Trust No. 3 100,103 13 94 81
Uri Hanhwa Eureka Private Equity Fund 42,464 232 1 (239 )
Godo Kaisha Oceanos 1 67,488 45,542 3,246 437
Japanese Hotel Real Estate Private Equity Fund 2 17,247 15 580 564
Woori All-in-One World EMP 40 [Bond Mixed-FOF] 20,610 — (372 ) (373 )
Woori High plus G.B. Securities Feeder Fund 1 (G.B.) 27,375 — (10 ) (10 )
(*) 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.
--- ---
  • 71 -
December 31, 2019
Assets Liabilities Operating<br>revenue Net income<br>(loss)
W 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 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.
--- ---
(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 June 30, 2020 and December 31, 2019 are as follows:
--- ---
June 30, 2020
--- --- --- --- ---
Associate (*) Number of<br>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.
--- ---
December 31, 2019
--- --- --- --- ---
Associate (*) Number of<br>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
(*) 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.
--- ---
  • 72 -
(5) As of June 30, 2020 and December 31, 2019, the reconciliations from the net assets of the associates<br>to the book value of the shares of the investment in joint ventures and associates are as follows (Unit: Korean Won in millions except for ownership):
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Total net<br>asset Ownership<br>(%) Ownership<br>portion of net<br>assets Basis<br>difference Impairment Intercompany<br>transaction Book<br>value
W Service Networks Co., Ltd. 3,308 4.9 % 164 — — — 164
Korea Credit Bureau Co., Ltd. 73,150 9.9 % 7,249 246 — 3 7,498
Korea Finance Security Co., Ltd. 21,361 15.0 % 3,204 — — — 3,204
Chin Hung International Inc. (*1) 102,358 25.3 % 25,898 24,565 — (35 ) 50,428
Saman Corporation (*2) 21,874 9.2 % 2,011 5,372 (6,915 ) — 468
Woori Growth Partnerships New Technology Private Equity Fund 74,310 23.1 % 17,151 — — (3 ) 17,148
2016KIF-IMM Woori Bank Technology Venture Fund 70,489 20.0 % 14,098 — — 656 14,754
K BANK Co., Ltd. (*1) (*2) 168,189 14.5 % 24,354 3,634 (3,634 ) 4 24,358
Smart Private Equity Fund No. 2 13,716 20.0 % 2,743 — — — 2,743
Woori Bank-Company K Korea Movie Asset Fund 10,952 25.0 % 2,738 — — — 2,738
Well to Sea No. 3 Private Equity Fund (*1) 400,054 50.0 % 199,948 — — (18 ) 199,930
Partner One Value Up Ist Private Equity Fund 42,426 23.3 % 9,868 — — (1 ) 9,867
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership 30,309 20.0 % 6,062 — — 534 6,596
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund 15,570 25.0 % 3,892 — — 162 4,054
Woori-Shinyoung Growth-Cap Private Equity Fund I 98,186 31.9 % 31,686 — — — 31,686
LOTTE CARD Co., Ltd (*1) 2,075,117 20.0 % 415,023 — — — 415,023
Woori-Q Corporate Restructuring Private Equity Fund 14,353 38.4 % 5,506 — — 460 5,966
PCC-Woori LP Secondary Fund 12,679 38.8 % 4,923 3 — — 4,926
Force TEC 4,349 25.8 % 1,121 — — — 1,121
Together-Korea Government Private Pool Private Securities Investment Trust No. 3 100,091 100.0 % 100,080 — — — 100,080
Uri Hanhwa Eureka Private Equity Fund 42,232 0.8 % 340 — — — 340
Godo Kaisha Oceanos 1 21,946 47.8 % 10,492 — — — 10,492
Japanese Hotel Real Estate Private Equity Fund 2 17,232 19.9 % 3,423 — — — 3,423
Woori All-in-One World EMP 40 [Bond Mixed-FOF] 20,610 23.9 % 4,893 — — — 4,893
Woori High plus G.B. Securities Feeder Fund 1 (G.B.) 27,375 22.9 % 6,261 — — — 6,261
(*1) The net asset equity amount is after the 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.
--- ---
  • 73 -
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
W 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 (*2) 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 Fund I 37,022 31.9 % 11,841 — — — 11,841
LOTTE CARD Co., Ltd (*1) 2,047,220 20.0 % 409,444 — — — 409,444
Woori-Q Corporate Restructuring Private Equity 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 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.
--- ---
  • 74 -
14. INVESTMENT PROPERTIES
(1) Details of investment properties are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Acquisition cost 333,946 299,802
Accumulated depreciation (21,140 ) (19,563 )
Net carrying value 312,806 280,239
(2) Changes in investment properties are as follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended June 30
--- --- --- --- --- --- ---
2020 2019
Beginning balance 280,239 378,196
Acquisition 1,514 135,974
Disposal (354 ) —
Depreciation (1,087 ) (1,298 )
Transfers from (to) premises and equipment 31,681 (172,798 )
Foreign currencies translation adjustments 430 2,013
Others 383 7,311
Ending balance 312,806 349,398
(3) Rental fee earned from investment properties is amounting to 7,577 million Won and 3,442 million Won<br>for the six-month period ended June 30, 2020 and 2019, respectively. Operating expenses directly related to the investment properties where rental fee was earned is amounting to 1,146 million Won and 1,346 million Won.<br>
--- ---
15. PREMISES AND EQUIPMENT
--- ---
(1) Details of premises and equipment as of June 30, 2020 and December 31, 2019 are as follows (Unit:<br>Korean Won in millions):
--- ---
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land Building Equipment<br>and vehicles Leasehold<br>improvement Construction<br>in progress Structures Total
Premises and equipment (owned) 1,724,481 788,704 270,275 53,060 863 2 2,837,385
Right-of-use asset — 458,452 15,172 — — — 473,624
Carrying value 1,724,481 1,247,156 285,447 53,060 863 2 3,311,009
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 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
  • 75 -
(2) Details of premises and equipment (owned) as of June 30, 2020 and December 31, 2019 are as follows<br>(Unit: Korean Won in millions):
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land Building Equipment<br>and vehicles Leasehold<br>improvement Construction<br>in progress Structures Total
Acquisition cost 1,724,481 1,065,020 1,151,011 469,111 863 20 4,410,506
Accumulated depreciation — (276,316 ) (880,736 ) (416,051 ) — (18 ) (1,573,121 )
Net carrying value 1,724,481 788,704 270,275 53,060 863 2 2,837,385
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
(3) Details of changes in premises and equipment (owned) are as follows (Unit: Korean Won in millions):<br>
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land Building Equipment<br>and vehicles Leasehold<br>improvement Construction<br>in progress Structures Total
Beginning balance 1,761,159 802,299 278,016 54,839 1,287 2 2,897,602
Acquisitions 55 9,068 37,525 10,528 90 — 57,266
Disposals (6,422 ) (332 ) (804 ) (304 ) — — (7,862 )
Depreciation — (17,708 ) (46,975 ) (13,822 ) — — (78,505 )
Transfer (30,518 ) (1,163 ) — — — — (31,681 )
Foreign currencies translation adjustments 207 178 1,529 583 25 — 2,522
Others — (3,638 ) 984 1,236 (539 ) — (1,957 )
Ending balance 1,724,481 788,704 270,275 53,060 863 2 2,837,385
For the six-month period ended June 30, 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 301 13,084 65,596 12,911 5,967 — 97,859
Disposals (3,232 ) (2,245 ) (66 ) (1,557 ) — — (7,100 )
Depreciation — (14,775 ) (42,152 ) (13,000 ) — (1 ) (69,928 )
Transfer 97,761 85,554 2,658 987 (13,950 ) — 173,010
Foreign currencies translation adjustments 707 662 1,274 628 36 — 3,307
Others — 87 (304 ) (3,170 ) (272 ) — (3,659 )
Ending balance 1,577,408 744,279 267,019 54,393 880 2 2,643,981
  • 76 -
(4) Details of right-of-use assets as of June 30, 2020 and December 31, 2019 are as follows (Unit: Korean<br>Won in millions):
June 30, 2020
--- --- --- --- --- --- --- --- --- ---
Building Equipment and vehicles Total
Acquisition cost 701,528 26,782 728,310
Accumulated depreciation (243,076 ) (11,610 ) (254,686 )
Net carrying value 458,452 15,172 473,624
December 31, 2019
--- --- --- --- --- --- --- --- --- ---
Building Equipment and vehicles 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 right-of-use assets for the six-month period ended June 30, 2020 and 2019 are as<br>follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- ---
Building Equipment and vehicles Total
Beginning balance 449,878 17,236 467,114
New contracts 111,610 3,158 114,768
Changes in contract 5,922 13 5,935
Termination (3,020 ) (282 ) (3,302 )
Depreciation (114,536 ) (5,026 ) (119,562 )
Others 8,598 73 8,671
Ending balance 458,452 15,172 473,624
For the six-month period ended June 30, 2019
--- --- --- --- --- --- --- --- --- ---
Building Equipment and vehicles Total
Beginning balance 416,827 18,964 435,791
New contracts 139,147 4,357 143,504
Changes in contract (341 ) 404 63
Termination (3,247 ) (239 ) (3,486 )
Depreciation (88,482 ) (4,803 ) (93,285 )
Others (564 ) (162 ) (726 )
Ending balance 463,340 18,521 481,861
  • 77 -
16. INTANGIBLE ASSETS
(1) Details of intangible assets are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Goodwill Software Industrial<br>property<br>rights Development<br>cost Other<br>intangible<br>assets Membership<br>deposit Construction<br>in<br>progress Total
Acquisition cost 354,404 180,874 1,699 544,724 873,222 36,134 3,908 1,994,965
Accumulated amortization — (144,148 ) (988 ) (326,915 ) (665,669 ) — — (1,137,720 )
Accumulated impairment losses — — — — (33,682 ) (3,183 ) — (36,865 )
Net carrying value 354,404 36,726 711 217,809 173,871 32,951 3,908 820,380
December 31, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Goodwill Software Industrial<br>property<br>rights Development<br>cost Other<br>intangible<br>assets Membership<br>deposit Construction<br>in<br>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
(2) Details of changes in intangible assets are as follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Goodwill Software Industrial<br>property<br>rights Development<br>cost Other<br>intangible<br>assets Membership<br>deposit Construction<br>in<br>progress Total
Beginning balance 350,682 35,832 692 225,193 198,315 29,330 4,066 844,110
Acquisitions — 4,891 123 27,060 10,233 3,903 273 46,483
Disposal — — — — — (300 ) — (300 )
Amortization (*) — (4,422 ) (104 ) (34,872 ) (28,284 ) — — (67,682 )
Impairment losses — — — — (7,687 ) — — (7,687 )
Transfer — — — 428 — — (428 ) —
Foreign currencies translation adjustment 5,348 562 — — 329 63 (3 ) 6,299
Others (1,626 ) (137 ) — — 965 (45 ) — (843 )
Ending balance 354,404 36,726 711 217,809 173,871 32,951 3,908 820,380
(*) Amortization of other intangible assets amounting to 6,786 million Won is included in other operating<br>expenses.
--- ---
For the six-month period ended June 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Goodwill Software Industrial<br>property<br>rights Development<br>cost Other<br>intangible<br>assets Membership<br>deposit Construction<br>in<br>progress Total
Beginning balance 153,602 29,727 562 240,320 139,297 23,597 10,415 597,520
Acquisitions — 7,784 132 14,680 67,712 4,811 2,922 98,041
Disposal — — — — — (989 ) — (989 )
Amortization (*) — (5,665 ) (89 ) (31,644 ) (24,723 ) — — (62,121 )
Impairment losses — — — — — (447 ) — (447 )
Transfer — — — 7,928 165 — (8,093 ) —
Foreign currencies translation adjustment 8,477 755 — — 1,189 82 — 10,503
Others — 63 — (13 ) (175 ) 588 2 465
Ending balance 162,079 32,664 605 231,271 183,465 27,642 5,246 642,972
(*) Amortization of other intangible assets amounting to 10,592 million Won is included in other operating<br>expenses.
--- ---
  • 78 -
17. ASSETS HELD FOR SALE

The Group is planning to sell land, buildings and machinery, which are the inflow of subsidiaries, Seari First Securitization Specialty Co., Ltd., Namjong 1st Securitization Specialty Co.,Ltd. and Bukgeum First Securitization Specialty Co., Ltd. in October 2020 and has classified the assets as held for sale.

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

June 30, 2020 December 31, 2019
Lands 4,770 5,164
Buildings 4,392 4,815
Others 452 577
Total 9,614 10,556

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):
--- ---
June 30, 2020
--- --- --- --- --- ---
Collateral given to Amount Reason for collateral
Financial assets at FVTPL Korean treasury and government bonds and others Kookmin bank and others 464,542 Related to bonds sold under repurchase agreements (*)
Korean treasury and government bonds and others Shinhan Investment Corp. 506 Collateral for futures transaction
Korean corporate debt securities Eugene investment &<br><br><br>futures co., Ltd. 4,556 Collateral for futures transaction
Financial assets at FVTOCI Korean financial institutions’ debt securities and others The BOK and others 3,668,634 Settlement risk and others
Foreign financial institutions’ debt securities Spain BBVA and others 95,278 Related to bonds sold under repurchase agreements (*)
Foreign financial institutions’ debt securities FHLB Advance 5,166 Related to the borrowing limit
Securities at amortized cost Korean treasury and government bonds and others Korea Securities Depository 5,579 Related to bonds sold under repurchase agreements (*)
Foreign financial institutions’ debt securities NATIXIS and others 90,130 Related to bonds sold under repurchase agreements (*)
Korean treasury and government bonds and others The BOK and others 6,659,827 Settlement risk and others
Foreign financial institutions’ debt securities Federal Reserve Bank 16,848 Related to the borrowing limit
Loan at amortized cost and other financial assets Due from banks in local currencies Daishin AMC Co.,Ltd. and others 1,500 Right of pledge
Other due from banks in local currencies Samsung Securities Co., Ltd. and others 31,167 Margin deposit for futures or option
Other due from banks in foreign currencies Korea Investment & Securities Co., Ltd. and others 718,177 Foreign margin deposit for future or option and others
Investment real estate Land and building Credit Counselling & Recovery Service and others 5,754 Right to collateral and others
Premises and equipment Land and building Credit Counselling & Recovery Service and others 1,999 Right to collateral and others
Total 11,769,663
(*) 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). The asset is equivalent to a mortgage-backed debt security.
--- ---
  • 79 -
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><br>futures co., Ltd. 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 The BOK and others 5,127,383 Settlement risk and others
Foreign financial institutions’ 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 (*)
Premises and equipment Land and building Credit Counselling & Recovery Service and others 689 Right to collateral and others
Total 12,132,263
(*) 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). The asset is equivalent to a mortgage-backed debt security.
--- ---
  • 80 -
(2) As of June 30, 2020 and December 31, 2019 there is no asset acquired through foreclosures.<br>
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Other assets
Land 6,792 27
Real estate assessment provision (95 ) (27 )
Sub-total 6,697 —
Assets held for sale
Land 4,770 5,143
Building 4,392 4,742
Others 452 577
Sub-total 9,614 10,462
Total 16,311 10,462
(3) Securities loaned are as follows (Unit: Korean Won in millions):
--- ---
June 30,<br>2020 December 31,<br>2019 Loaned to
--- --- --- --- --- --- ---
Financial assets at FVTOCI Korean financial institutions’ debt securities and others 50,064 80,737 Korea Securities Finance Corporation

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.

(4) Collaterals held that can be disposed and re-subjected to lien regardless of defaults of counterparties<br>

Fair values of collaterals held that can be disposed and re-subjected to lien regardless of defaults of counterparties as of June 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):

June 30, 2020
Fair values of collaterals Fair values of collaterals were<br>disposed or re-subjected to lien
Securities 8,722,185 —
December 31, 2019
Fair values of collaterals Fair values of collaterals were<br>disposed or re-subjected to lien
Securities 9,340,517 —
19. OTHER ASSETS
--- ---

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

June 30, 2020 December 31, 2019
Prepaid expenses 176,748 135,010
Advance payments 12,697 78,306
Non-operational assets 6,697 —
Others 24,954 20,330
Total 221,096 233,646
  • 81 -
20. FINANCIAL LIABILITIES AT FVTPL
(1) Financial liabilities at FVTPL are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Financial instruments at fair value through profit or loss mandatorily measured at fair<br>value 4,006,749 2,870,676
Financial liabilities at fair value through profit or loss designated as upon initial<br>recognition 24,486 87,626
Total 4,031,235 2,958,302
(2) Financial liabilities at fair value through profit or loss mandatorily measured at fair value are as follows<br>(Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Deposits
Gold banking liabilities 30,022 27,530
Derivative liabilities 3,976,727 2,843,146
Total 4,006,749 2,870,676
(3) Financial liabilities at fair value through profit or loss designated as upon initial recognition as of<br>June 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Equity-linked securities
Equity-linked securities in short position 24,486 87,626

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):
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Carrying amount 24,486 87,626
Nominal amount at maturity 40,436 97,503
Difference (15,950 ) (9,877 )
  • 82 -
21. DEPOSITS DUE TO CUSTOMERS

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

June 30, 2020 December 31, 2019
Deposits in local currency:
Deposits on demand 11,121,608 8,655,228
Deposits at termination 228,392,829 224,115,771
Mutual installment 27,534 28,574
Deposits on notes payables 2,601,529 2,174,995
Deposits on CMA 146,554 150,300
Certificate of deposits 1,811,837 973,625
Other deposits 1,390,155 1,451,470
Sub-total 245,492,046 237,549,963
Deposits in foreign currency:
Deposits in foreign currencies 31,484,315 27,143,710
Present value discount (9,132 ) (8,095 )
Total 276,967,229 264,685,578
  • 83 -
22. BORROWINGS AND DEBENTURES
(1) Details of borrowings are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020
--- --- --- --- --- --- ---
Lenders Interest rate (%) Amount
Borrowings in local currency:
Borrowings from The BOK The BOK 0.3 2,337,238
Borrowings from government funds Small Enterprise And Market Service and others 0.0 ~ 2.4 2,228,910
Others The Korea Development Bank and others 0.0 ~ 4.0 6,171,765
Sub-total 10,737,913
Borrowings in foreign currencies (*):
Borrowings in foreign currencies The Export-Import Bank of Korea and others 0.0 ~ 8.0 8,734,938
Offshore borrowings in foreign currencies HSBC, HKG — —
Sub-total 8,734,938
Bills sold Others 0.0 ~ 1.2 10,489
Call money Bank and others (0.1) ~ 4.1 1,159,167
Bonds sold under repurchase agreements Other financial institutions (0.5) ~ 10.6 620,963
Present value discount (344 )
Total 21,263,126
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 35,860 million Won and<br>34,443 million Won as of June 30, 2020 and December 31, 2019.
--- ---
  • 84 -
(2) Details of debentures are as follows (Unit: Korean Won in millions):
June 30, 2020 December 31, 2019
--- --- --- --- --- --- --- --- --- --- ---
Interest rate<br>(%) Amount Interest rate<br>(%) Amount
Face value of bond (*):
Ordinary bonds 0.9 ~ 3.1 22,318,449 0.0 ~ 4.3 23,207,600
Subordinated bonds 1.9 ~ 5.9 7,511,510 2.1 ~ 5.9 6,732,687
Other bonds 0.7 ~ 17.0 1,224,385 1.2 ~ 17.0 942,421
Sub-total 31,054,344 30,882,708
Discounts on bonds (24,472 ) (24,653 )
Total 31,029,872 30,858,055
(*) Included debentures under fair value hedge amounting to 3,377,943 million Won and 3,151,172 million<br>Won as of June 30, 2020 and December 31, 2019 respectively. Also, debentures under cash flow hedge amounting to 1,164,367 million Won and 829,082 million Won are included as of June 30, 2020 and December 31, 2019<br>respectively.
--- ---
23. PROVISIONS
--- ---
(1) Details of provisions are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Asset retirement obligation 68,519 66,485
Provisions for guarantees (*1) 94,670 92,486
Provisions for unused loan commitments 132,409 112,554
Other provisions (*2) 255,791 172,455
Total 551,389 443,980
(*1) Provisions for guarantees includes provision for financial guarantee of 58,360 million Won and<br>62,764 million Won as of June 30, 2020 and December 31, 2019, respectively.
--- ---
(*2) 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 six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance 50,801 26,303 15,382 92,486
Transfer to 12-month expected credit loss 120 (120 ) — —
Transfer to expected credit loss for the entire period (718 ) 1,961 (1,243 ) —
Transfer to credit-impaired financial assets (40 ) (32 ) 72 —
Provisions used — — — —
Net provision (reversal) of unused amount 2,184 (3,807 ) 5,595 3,972
Others (*) (1,788 ) — — (1,788 )
Ending balance 50,559 24,305 19,806 94,670
(*) Others have occurred as a result of new financial guarantee contract valued at initial fair value.<br>
--- ---
  • 85 -
For the six-month period ended June 30, 2019
Stage 1 Stage 2 Stage 3 Total
Beginning balance 44,903 33,760 11,098 89,761
Transfer to 12-month expected credit loss (13,839 ) 13,839 — —
Transfer to expected credit loss for the entire period 654 (654 ) — —
Transfer to credit-impaired financial assets 13 27 (40 ) —
Provisions used (10,997 ) — — (10,997 )
Net provision (reversal) of unused amount (14,805 ) 9,385 13,560 8,140
Others (*) 17,036 2 1 17,039
Ending balance 22,965 56,359 24,619 103,943
(*) 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 six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance 65,038 43,164 4,352 112,554
Transfer to 12-month expected credit loss 5,533 (5,387 ) (146 ) —
Transfer to expected credit loss for the entire period (1,880 ) 2,374 (494 ) —
Transfer to credit-impaired financial assets (134 ) (194 ) 328 —
Net provision (reversal) of unused amount 4,336 16,159 (683 ) 19,812
Others 43 — — 43
Ending balance 72,936 56,116 3,357 132,409
For the six-month period ended June 30, 2019
--- --- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance 74,624 45,285 1,626 121,535
Transfer to 12-month expected credit loss 10,177 (10,115 ) (62 ) —
Transfer to expected credit loss for the entire period (1,912 ) 1,993 (81 ) —
Transfer to credit-impaired financial assets (194 ) (225 ) 419 —
Net provision (reversal) of unused amount (7,699 ) 11,032 1,274 4,607
Others 52 — — 52
Ending balance 75,048 47,970 3,176 126,194
  • 86 -
(3) Changes in asset retirement for the six-month period ended June 30, 2020 and 2019, obligation are as<br>follows (Unit: Korean Won in millions):
For the six-month period ended June 30
--- --- --- --- --- --- ---
2020 2019
Beginning balance 66,485 67,200
Provisions provided 2,442 1,367
Provisions used (548 ) (901 )
Reversal of provisions unused (94 ) (2,664 )
Increase in restoration costs and others 234 202
Others — 326
Ending balance 68,519 65,530

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 June 30, 2020, 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 for the six-month period ended June 30, 2020 and 2019, are as follows (Unit:<br>Korean Won in millions):
For the six-month period ended June 30
--- --- --- --- --- --- ---
2020 2019
Beginning balance 172,455 63,637
Provisions provided 169,338 1,037
Provisions used (87,260 ) (1,835 )
Reversal of provisions unused (30 ) (47 )
Foreign currencies translation adjustments 1,374 44
Others (86 ) —
Ending balance 255,791 62,836
(5) Others
--- ---
1) As of September 23, 2019, the Group temporarily suspended the Won-payment business due to tightened U.S.<br>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 investigated by US government agencies including US prosecutors (United States<br>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 participating in prohibited transactions involving the following countries:<br>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 previous term and a fine 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.<br>
--- ---
3) For the six-month period ended June 30, 2020, the Group recognized the provisions for the required<br>expenditure as the best estimate to fulfill its obligations as of June 30, 2020 due to the expected losses of clients arising from the delay in the redemption of funds by Lime Asset Management and the dispute settlement by the Financial<br>Supervisory Service.
--- ---
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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):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Present value of defined benefit obligation 1,532,495 1,442,859
Fair value of plan assets (1,386,170 ) (1,352,971 )
Net defined benefit liabilities (*) 146,325 89,888
(*) Net defined benefit liability of 89,888 million Won as of December 31, 2019 is the subtracted amount<br>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 six-month period ended June 30
--- --- --- --- --- --- --- ---
2020 2019
Beginning balance 1,442,859 1,275,020
Transfer-in / out — 7,409
Current service cost 86,569 82,172
Interest cost 16,768 16,207
Remeasurements Financial assumption 15,857 54,669
Demographic assumptions — —
Experience adjustment 16,264 (10,741 )
Retirement benefit paid (47,118 ) (67,284 )
Foreign currencies translation adjustments 43 152
Others 1,253 585
Ending balance 1,532,495 1,358,189
  • 88 -
(3) Changes in the plan assets are as follows (Unit: Korean Won in millions):
For the six-month period ended June 30
--- --- --- --- --- --- ---
2020 2019
Beginning balance 1,352,971 1,101,911
Transfer-in / out — 7,409
Interest income 17,152 15,308
Remeasurements (4,073 ) (5,556 )
Employer’s contributions 66,809 113,666
Retirement benefit paid (46,725 ) (67,284 )
Others 36 (97 )
Ending balance 1,386,170 1,165,357
(4) Plan assets consist of fixed deposits and others as of June 30, 2020 and December 31, 2019. Among<br>plan assets, realized returns on plan assets amount to 13,079 million Won and 9,752 million Won for the six-month period ended June 30, 2020 and 2019, respectively.
--- ---
(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 six-month period ended June 30
--- --- --- --- --- ---
2020 2019
Current service cost 86,569 82,172
Net interest expense (income) (384 ) 899
Cost recognized in net income 86,185 83,071
Remeasurements (*) 36,194 49,484
Cost recognized in total comprehensive income 122,379 132,555
(*) Amount before tax
--- ---

Retirement benefits related to defined contribution plans recognized as expenses are 2,022 million Won, and 1,461 million Won for the six-month period ended June 30, 2020 and 2019, respectively.

25. OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

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

June 30, 2020 December 31, 2019
Other financial liabilities:
Accounts payable 10,107,251 6,131,339
Accrued expenses 1,904,644 2,516,231
Borrowings from trust accounts 3,261,198 3,277,795
Agency business revenue 415,256 362,820
Foreign exchange payables 479,939 1,153,457
Domestic exchange settlement credits 408,905 1,261,928
Lease liabilities 425,929 419,045
Other miscellaneous financial liabilities 2,636,882 2,587,193
Present value discount (4,546 ) (3,041 )
Sub-total 19,635,458 17,706,767
Other liabilities:
Unearned income 229,562 224,840
Other miscellaneous liabilities 153,929 195,631
Sub-total 383,491 420,471
Total 20,018,949 18,127,238
  • 89 -
26. DERIVATIVES
(1) Derivative assets and derivative liabilities are as follows (Unit: Korean Won in millions):<br>
--- ---
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Assets Liabilities
Nominal<br>amount For cash<br>flow hedge For fair<br>value<br>hedge For trading For cash<br>flow hedge For fair<br>value<br>hedge For trading
Interest rate:
Futures 284,401 — — — — — —
Swaps 149,305,140 — 228,360 437,653 2,488 — 698,257
Purchase options 370,000 — — 12,266 — — —
Written options 286,004 — — — — — 9,389
Currency:
Futures 47,800 — — — — — —
Forwards 114,776,890 — 665 1,891,495 — — 928,900
Swaps 90,895,590 20,855 — 1,332,196 12,534 — 1,542,861
Purchase options 1,932,976 — — 18,112 — — —
Written options 2,734,002 — — — — — 15,738
Equity:
Futures 497,100 — — — — — —
Forwards 11 — — — — — —
Swaps 1,122,075 — — 90,100 — — 4,035
Purchase options 8,701,549 — — 484,475 — — —
Written options 10,173,879 — — — — — 777,547
Total 381,127,417 20,855 229,025 4,266,297 15,022 — 3,976,727
December 31, 2019
Assets Liabilities
Nominal<br>amount For cash<br>flow hedge For fair<br>value<br>hedge For trading For cash<br>flow hedge For fair<br>value<br>hedge For<br>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 9,367 — 966,181 5,193 — 1,106,423
Purchase options 1,588,746 — — 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

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.

  • 90 -
(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 USD 1M LIBOR, USD 3M LIBOR, USD 6M LIBOR and 3M EURIBOR in the hedging relationships of the Group are USD 620,000,000, 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
① Interest rate risk
--- ---

As of the June 30, 2020, the Group has applied fair value hedge on fixed interest rate foreign currency denominated debentures amounting to 3,377,943 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 hedging 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, price margin set by counterparty of hedging instrument, and unilateral change in credit risk of any party of hedging instrument.

The interest rate swap agreements and the hedged items are subject to fluctuations in the underlying market rate of interest and the Group expects the 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 Currency exchange rate risk

As of the June 30, 2020, the Group has applied a fair value hedge on equity securities in foreign currency amounting to 13,881 million Won. The Group’s hedging strategies are to mitigate the risk of the fair value fluctuation of equity securities in foreign currency invested in the EUR due to changes in the spot exchange rate (USD/EUR) and thereby designating it as a hedging instrument by entering into currency forward contracts in accordance with this strategy.

By applying the difference of currency exchange rate to the predetermined nominal amount of equity securities in foreign currency by the currency forward contracts, the calculated difference is recognized at fair value, which results in the conversion of the nominal amount from EUR to USD and eliminates the risk of fair value fluctuation due to currency change.

  • 91 -

In this hedging relationship, only the spot element of currency forward is designated as the hedging relationship and the spot element is measured at the market price of the spot exchange rate. 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 forward currency exchange contract and the hedged item are all affected by the changes in spot exchange rate which are basic factors of the derivative.

2) Cash Flow Hedge

As of the June 30, 2020, the Group has applied cash flow hedge on local currency denominated debentures amounting to 149,914 million Won, debentures on foreign currency amounting to 1,014,453 million Won and borrowings in foreign currency amounting to 35,860 million 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.

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 value of the hedged item will generally fluctuate in opposite direction.

  • 92 -
(3) The nominal amounts of the hedging instrument are as follows (Unit: USD, EUR, SGD, JPY and Korean Won in<br>millions):
--- --- --- --- --- --- --- ---
1 year to 5 years More than 5<br>years Total
Fair value hedge
Interest rate risk
Interest rate swap () 850,000,000 1,500,000,000 300,000,000 2,650,000,000
Currency exchange rate risk
Currency forward (/) — — 10,313,901 10,313,901
Cash flow hedge
Interest rate risk
Interest rate swap () — 26,635,556 — 26,635,556
Interest rate swap (KRW) — 150,000 — 150,000
Foreign currencies translation risk and interest rate risk
Currency swap () 230,000,000 470,000,000 — 700,000,000
Foreign currencies translation risk
Currency swap (SGD) 204,000,000 — — 204,000,000

All values are in US Dollars.
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.

  • 93 -
(4) The average interest rate and average currency rate of the hedging instrument as of June 30, 2020 and<br>December 31, 2019 are as follows:
June 30, 2020
--- ---
Average interest rate and average exchange rate
Fair value hedge
Interest rate risk
Interest rate swap (USD) 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
Currency exchange rate risk
Currency forward (EUR/USD) USD 13,369,909.86 receipt, EUR 10,313,901 paid
Cash flow hedge
Interest rate risk
Interest rate swap (EUR) 3M EURIBOR receipt, EUR 0.09% paid
Interest rate swap (KRW) KRW 3Y CMS+0.40% receipt, KRW 2.38% paid<br><br><br>KRW CD+0.33% receipt, KRW 1.68% paid
Foreign currencies translation risk and interest rate risk
Currency swap (USD) USD 3M Libor+0.8% receipt, KRW 1.45% paid, KRW/USD = 1,155<br><br><br>USD 1M Libor+0.54% receipt, KRW 1.52% paid, KRW/USD = 1,151<br><br><br>USD 1M LIBOR+0.82% receipt, KRW 0.75% paid, KRW/USD = 1,233
Foreign currencies translation risk
Currency swap (SGD) SGD 1.91% receipt, KRW 1.98% paid, KRW/SGD = 828
December 31, 2019
--- ---
Average interest rate and average exchange rate
Fair value hedge
Interest rate risk
Interest rate swap (USD) 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 (EUR) 3M EURIBOR receipt, EUR 0.09% paid
Interest rate swap (KRW) KRW 3Y CMS+0.40% receipt, 2.38% paid
Foreign currencies translation risk and interest rate risk
Currency swap (USD) 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 (JPY) KRW/JPY = 10.47
  • 94 -
(5) The amounts related to items designated as hedging instruments are as follows (Unit: Korean Won in millions,<br>USD, EUR, SGD and JPY):
June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Nominal amounts of<br>the hedging<br>instrument Carrying amounts of the hedging<br>instrument Line item in<br>the statement of financial position<br>where the hedging instrument is <br>located Changing in fair<br>value used for<br>calculating hedge<br>ineffectiveness
Liabilities
Fair value hedge
Interest rate risk
Interest rate swap 2,650,000,000 228,360 — Derivative assets<br><br><br>(designated for hedging) 110,674
Currency exchange rate risk
Currency forward 10,313,901 665 — Derivative assets<br><br><br>(designated for hedging) 665
Cash flow hedge
Interest rate risk
Interest rate swap 26,635,556 — 58 Derivative liabilities<br><br><br>(designated for hedging) 58
Interest rate swap KRW 150,000 — 2,430 Derivative liabilities<br><br><br>(designated for hedging) (1,150 )
Foreign currency translation risk and interest rate risk
Currency swap 700,000,000 14,074 12,534 Derivative assets<br><br><br>(designated for hedging)<br><br><br>Derivative liabilities<br><br><br>(designated for hedging) 2,254
Foreign currency translation risk
Currency swap SGD 204,000,000 6,781 Derivative assets<br><br><br>(designated for hedging) 1,478
December 31, 2019
Nominal amounts<br>of the hedging<br>instrument Carrying amounts of the hedging<br>instrument Line item in<br><br><br>the statement of financial position<br><br><br>where the hedging instrument is<br>located Changing in fair<br>value used for<br>calculating hedge<br>ineffectiveness
Liabilities
Fair value hedge
Interest rate risk
Interest rate swap 2,650,000,000 111,764 - Derivative assets<br><br><br>(designated for hedging) 90,244
Cash flow hedge
Interest rate risk
Interest rate swap 26,635,556 — 43 Derivative liabilities<br><br><br>(designated for hedging) (43 )
Interest rate swap KRW 100,000 — 1,280 Derivative liabilities<br><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><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><br>(designated for hedging) 8,918
Currency forward 1,109,229,087 — 321 Derivative liabilities<br><br><br>(designated for hedging) 321

All values are in US Dollars.

  • 95 -
(6) Details of carrying amount to hedge and amount due to hedge accounting are as follows (Unit: Korean Won in<br>millions):
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Carrying amounts of<br>the hedged 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 <br>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 — 3,377,943 — 202,844 Debentures (108,090 ) —
Currency exchange rate risk
Securities in foreign currency 13,881 — (665 ) — Securities<br>in foreign<br>currency (665 ) —
Cash flow hedge
Interest rate risk
Borrowings in foreign currency — 35,860 — — Borrowing<br>foreign<br>currency 58 (58 )
Debentures — 149,914 — — Debentures 2,094 (1,600 )
Foreign currencies translation risk and interest rate risk
Debentures — 838,902 — — Debentures (8,935 ) (12,346 )
Foreign currencies translation risk
Debentures — 175,551 — — Debentures (1,172 ) (1,776 )
(*) After tax amount
--- ---
December 31, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Carrying amounts of<br>the hedged 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<br>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
--- ---
  • 96 -
(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 six-month period ended June 30, 2020
--- --- --- --- ---
Hedge ineffectiveness<br>recognized in profit or loss Line item in the profit or loss that<br>includes hedge ineffectiveness
Fair value hedge Interest rate risk 2,584 Other net operating<br> <br>income(expense)
For the six-month period ended June 30, 2019
--- --- --- --- ---
Hedge ineffectiveness<br>recognized in profit or loss Line item in the profit or loss that<br>includes hedge ineffectiveness
Fair value hedge Interest rate risk 1,280 Other net operating<br> <br>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 six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Changes in<br>the value of<br>hedging<br>instruments<br>recognized in OCI Hedge<br>ineffectiveness<br>recognized in<br>profit or loss Changes in<br>the value<br>of foreign<br>basis<br>spread<br>recognized<br>in OCI Line item<br>recognized<br>in the profit<br>or loss Amounts<br>reclassified<br>from cash<br>flow hedge<br>reserve to<br>profit or<br>loss Line item affected in<br>profit or loss due to<br>reclassification
Cash flow hedge Interest rate risk (1,133 ) (54 ) — Other net<br>operating<br>income<br>(expense) — Other net operating<br>income (expense)
Foreign currencies<br>translation risk<br>and interest rate<br>risk 1,581 673 (1,812 ) Other net<br>operating<br>income<br>(expense) (9,816 ) Other net operating<br>income (expense)
Foreign currencies<br>translation risk 1,172 306 7 Other net<br>operating<br>income<br>(expense) (651 ) Other net operating<br>income (expense)
For the six-month period ended June 30, 2019
Changes in<br>the value of<br>hedging<br>instruments<br>recognized in OCI Hedge<br>ineffectiveness<br>recognized in<br>profit or loss Changes in<br>the value<br>of foreign<br>basis<br>spread<br>recognized<br>in OCI Line item<br>recognized<br>in the profit<br>or loss Amounts<br>reclassified<br>from cash<br>flow hedge<br>reserve to<br>profit or<br>loss Line item affected in<br>profit or loss due to<br>reclassification
Cash flow hedge Interest rate risk (785 ) — — Other net<br>operating<br>income<br>(expense) — Other net operating<br>income (expense)
Foreign currencies<br>translation risk<br>and interest rate<br>risk 18,349 65 285 Other net<br>operating<br>income<br>(expense) (19,105 ) Other net operating<br>income (expense)
Foreign currencies<br>translation risk 7,423 510 (2 ) Other net<br>operating<br>income<br>(expense) (7,430 ) Other net operating<br>income (expense)
  • 97 -
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 six-month period ended June 30
2020 2019
Beginning balance 52,260 25,463
New transactions 26,267 50,981
Amounts recognized in losses (35,306 ) (21,112 )
Ending balance 43,221 55,332

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, which is deferred and amortized to maturity using the effective interest method and reflected in profit and loss. The table above presents the difference yet to be realized as profit or losses.

28. EQUITY
(1) Details of equity as of June 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in<br>millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Capital
Common stock capital 3,611,338 3,611,338
Hybrid securities 1,695,821 997,544
Capital surplus
Paid in capital in excess of par 608,348 608,348
Equity method 895 1,153
Others 18,382 16,794
Sub-total 627,625 626,295
Capital adjustments
Treasury stocks — —
Other adjustments (*1) (1,773,569 ) (1,748,667 )
Sub-total (1,773,569 ) (1,748,667 )
Accumulated other comprehensive income
Financial assets at FVTOCI (97,033 ) (71,914 )
Changes in capital due to equity method (3,706 ) 915
Loss from foreign business translation (98,542 ) (152,987 )
Remeasurements of defined benefit plan (297,218 ) (270,977 )
Loss on evaluation of cash flow hedge (15,722 ) (5,692 )
Sub-total (512,221 ) (500,655 )
Retained earnings (*2) (*3) 18,652,199 18,524,515
Non-controlling interest (*4) 3,450,495 3,981,962
Total 25,751,688 25,492,332
(*1) Included capital transaction gains and losses recognized by the 2014 merger of Woori Bank and, formerly, Woori<br>Financial Group Inc. During the previous term, the Group entered an agreement to acquire additional interest in the Woori Asset Trust Co., Ltd., and the capital adjustment reduced by 111,242 million Won.
--- ---
(*2) The earned surplus reserve in retained earnings amounted to 2,547,547 million Won and<br>2,356,246 million Won as of June 30, 2020 and December 31, 2019, respectively in accordance with the relevant article.
--- ---
(*3) The regulatory reserve for credit loss in retained earnings amounted to 62,830 million Won as of<br>June 30, 2020 in accordance with the Article 53 of the Financial Holding Company Act.
--- ---
(*4) The hybrid securities issued by Woori Bank amounting to 3,105,070 million Won and 3,660,814 million<br>Won as of June 30, 2020 and December 31, 2019, respectively, are recognized as non-controlling interests. 90,091 million Won and 78,290 million Won of dividends for the hybrid securities are allocated to net profit and loss of<br>the non-controlling interests for the six-month period ended June 30, 2020 and 2019, respectively.
--- ---
  • 98 -
(2) The number of authorized shares and others of the Group are as follows:
June 30, 2020 December 31, 2019
--- --- --- --- ---
Shares of common stock authorized 4,000,000,000 Shares 4,000,000,000 Shares
Par value 5,000 Won 5,000 Won
Shares of common stock issued 722,267,683 Shares 722,267,683 Shares
Capital stock 3,611,338 million Won 3,611,338 million Won
(3) Hybrid securities
--- ---

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

Issue date Maturity Interest rate<br>(%) June 30,<br>2020 December 31,<br>2019
Securities in local currency 2019-07-18 — 3.49 500,000 500,000
Securities in local currency 2019-10-11 — 3.32 500,000 500,000
Securities in local currency 2020-02-06 — 3.34 400,000 —
Securities in local currency 2020-06-12 — 3.23 300,000 —
Issuance cost (4,179 ) (2,456 )
Total 1,695,821 997,544

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

(4) Accumulated other comprehensive income

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

For the six-month period ended June 30, 2020
Beginning<br>balance Increase<br>(decrease) (*) Reclassification<br>adjustments Income tax<br>effect Ending<br>balance
Net gain (loss) on valuation of financial assets at FVTOCI (71,914 ) (20,412 ) (13,587 ) 8,880 (97,033 )
Changes in capital due to equity method 915 (6,374 ) — 1,753 (3,706 )
Gain (loss) on foreign currency translation of foreign operations (152,987 ) 58,028 — (3,583 ) (98,542 )
Remeasurement gain (loss) related to defined benefit plan (270,977 ) (36,194 ) — 9,953 (297,218 )
Gain (loss) on valuation of derivatives designated as cash flow hedges (5,692 ) (11,032 ) — 1,002 (15,722 )
Total (500,655 ) (15,984 ) (13,587 ) 18,005 (512,221 )
(*) 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 the reclassification adjustments amounting to 578 million Won are due to disposal of equity securities during the period.
--- ---
  • 99 -
For the six-month period ended June 30, 2019
Beginning<br>balance Increase<br>(decrease) (*) Reclassification<br>adjustments Income tax<br>effect Ending<br>balance
Net gain (loss) on valuation of financial assets at FVTOCI (87,182 ) 44,136 688 (11,331 ) (53,689 )
Changes in capital due to equity method 302 (650 ) — 232 (116 )
Gain (loss) on foreign currency translation of foreign operations (244,735 ) 99,546 — (4,955 ) (150,144 )
Remeasurement gain (loss) related to defined benefit plan (236,726 ) (48,857 ) — 9,828 (275,755 )
Gain (loss) on valuation of derivatives designated as cash flow hedges (3,869 ) 13,569 (14,032 ) (707 ) (5,039 )
Total (572,210 ) 107,744 (13,344 ) (6,933 ) (484,743 )
(*) 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 the reclassification adjustments amounting to 27,002 million Won are due to disposal of equity securities during the period.
--- ---
(5) Regulatory Reserve for Credit Loss
--- ---

In accordance with Article 26 ~ 28 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):

June 30,<br>2020 December 31,<br>2019
Beginning balance 2,547,547 2,356,246
Planned provision of regulatory reserve (reversal) for credit loss (12,236 ) 191,301
Ending balance 2,535,311 2,547,547
2) Provision of regulatory reserve for credit loss, adjusted income after the provision of regulatory reserve and<br>others
--- ---

Planned reserves provided, adjusted net income after the planned reserves provided and adjusted EPS after the planned reserves provided are as follows (Unit: Korean Won in millions, except for EPS amount):

Periods ended June 30, 2020 Periods ended June 30, 2019
Three-month Six-month Three-month Six-month
Net income before regulatory reserve 216,262 774,033 657,434 1,271,963
Provision of regulatory reserve (reversal) for credit loss (80,155 ) (12,236 ) 38,159 119,245
Adjusted net income after the provision of regulatory reserve 296,417 786,269 619,275 1,152,718
Dividends to hybrid securities (11,852 ) (20,365 ) — —
Adjusted net income after regulatory reserve and dividends to hybrid securities 284,565 765,904 619,275 1,152,718
Adjusted EPS after regulatory reserve and the dividends to hybrid securities (Unit: Korean<br>Won) 394 1,061 911 1,715
  • 100 -
29. DIVIDENDS

Dividends per share and the total dividends for the fiscal year ending December 31, 2019 were 700 Won and 505,587 million Won, respectively, and the dividends were approved at the regular general shareholders’ meeting held on March 25, 2020.

30. NET INTEREST INCOME
(1) Interest income recognized is as follows (Unit: Korean Won in millions):
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Financial assets at FVTPL 13,681 26,210 14,771 27,905
Financial assets at FVTOCI 114,823 241,000 113,790 209,102
Financial assets at amortized cost:
Securities at amortized cost 98,001 202,060 108,900 225,196
Loans and other financial assets at amortized cost:
Interest on due from banks 9,866 32,735 33,049 66,308
Interest on loans 2,168,347 4,398,249 2,395,747 4,734,200
Interest of other receivables 7,471 15,749 7,701 14,981
Subtotal 2,185,684 4,446,733 2,436,497 4,815,489
Total 2,412,189 4,916,003 2,673,958 5,277,692
(2) Details of interest expense recognized are as follows (Unit: Korean Won in millions):
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Interest on deposits due to customers 664,329 1,413,501 869,350 1,716,811
Interest on borrowings 80,915 165,586 103,094 193,125
Interest on debentures 178,699 367,192 200,075 383,815
Other interest expense 8,232 23,593 22,925 48,978
Interest on lease liabilities 2,124 5,282 2,053 3,911
Total 934,299 1,975,154 1,197,497 2,346,640
  • 101 -
31. NET FEES AND COMMISSIONS INCOME
(1) Details of fees and commissions income recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Fees and commission received for brokerage 40,910 81,136 39,840 82,560
Fees and commission received related to credit 43,976 96,904 43,367 84,628
Fees and commission received for electronic finance 30,081 61,764 35,238 67,496
Fees and commission received on foreign exchange handling 13,407 27,798 15,599 30,075
Fees and commission received on foreign exchange 15,359 32,034 28,597 48,217
Fees and commission received for guarantee 18,940 37,068 18,169 35,040
Fees and commission received on credit card 125,980 249,267 135,927 268,520
Fees and commission received on securities business 22,465 38,896 35,284 65,600
Fees and commission from trust management 35,929 86,292 47,825 89,845
Fees and commission received on credit information 3,791 7,194 3,224 6,353
Other fees 46,444 89,640 33,610 69,907
Total 397,282 807,993 436,680 848,241
(2) Details of fees and commissions expense incurred are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Fees and commissions paid 52,045 93,405 43,564 82,906
Credit card commission 118,647 211,784 106,296 200,343
Brokerage commission 156 217 276 481
Others 2,065 4,238 1,455 4,421
Total 172,913 309,644 151,591 288,151
32. DIVIDEND INCOME
--- ---
(1) Details of dividend income recognized are as follows (Unit: Korean Won in millions):
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Dividend income related to financial assets at FVTPL 21,576 54,382 22,616 47,097
Dividend income related to financial assets at FVTOCI 1,657 16,620 2,484 17,486
Total 23,233 71,002 25,100 64,583
(2) Details of dividends related to financial assets at FVTOCI are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Dividend income recognized from assets held:
Equity securities 1,657 16,620 2,484 17,486
  • 102 -
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):
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Gain on financial instruments at fair value through profit or loss mandatorily measured at fair<br>value (64,135 ) 393,168 70,362 110,376
Gain (loss) on financial instruments at fair value through profit or loss designated as upon<br>initial recognition (2,351 ) 8,421 (6,867 ) (30,295 )
Total (66,486 ) 401,589 63,495 80,081
(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):
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Financial<br>assets at FVTPL Securities Gain on transactions and valuation 48,576 97,202 43,575 101,080
Loss on transactions and valuation (2,851 ) (71,218 ) (21,701 ) (35,584 )
Sub-total 45,725 25,984 21,874 65,496
Loans Gain on transactions and valuation 1,660 1,730 336 942
Loss on transactions and valuation (100 ) (862 ) 52 (25 )
Sub-total 1,560 868 388 917
Other financial assets Gain on transactions and valuation 1,638 4,505 839 1,276
Loss on transactions and valuation (1,508 ) (4,195 ) (753 ) (1,118 )
Sub-total 130 310 86 158
Sub-total 47,415 27,162 22,348 66,571
Derivatives<br>(Held for trading) Interest rates derivatives Gain on transactions and valuation 356,000 986,560 372,513 694,408
Loss on transactions and valuation (375,781 ) (1,320,559 ) (460,701 ) (845,400 )
Sub-total (19,781 ) (333,999 ) (88,188 ) (150,992 )
Currency derivatives Gain on transactions and valuation 45,273 6,200,908 2,384,208 4,184,468
Loss on transactions and valuation (110,208 ) (5,497,798 ) (2,252,893 ) (4,019,164 )
Sub-total (64,935 ) 703,110 131,315 165,304
Equity derivatives Gain on transactions and valuation (41,433 ) 1,107,537 160,842 421,861
Loss on transactions and valuation 14,755 (1,110,279 ) (155,759 ) (392,012 )
Sub-total (26,678 ) (2,742 ) 5,083 29,849
Other derivatives Gain on transactions and valuation — — 338 639
Loss on transactions and valuation (156 ) (363 ) (534 ) (995 )
Sub-total (156 ) (363 ) (196 ) (356 )
Sub-total (111,550 ) 366,006 48,014 43,805
Net, total (64,135 ) 393,168 70,362 110,376
  • 103 -
(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):
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Gain (loss) on equity-linked securities (2,351 ) 8,421 (6,867 ) (30,295 )
34. NET GAIN OR LOSS ON FINANCIAL ASSETS AT FVTOCI
--- ---

Details of net gain or loss on financial assets at FVTOCI recognized are as follows (Unit: Korean Won in millions):

Periods ended June 30, 2020 Periods ended June 30, 2019
Three-month Six-month Three-month Six-month
Gain on redemption of securities (35 ) (74 ) 16 37
Gain on transactions of securities 8,462 11,101 2,638 3,408
Total 8,427 11,027 2,654 3,445
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):

Periods ended June 30, 2020 Periods ended June 30, 2019
Three-month Six-month Three-month Six-month
Impairment loss due to credit loss on financial assets measured at FVTOCI (770 ) (782 ) (1,265 ) (1,979 )
Reversal of (Provision for) impairment loss due to credit loss on securities at amortized<br>cost (190 ) (47 ) 245 769
Provision for credit loss on loan and other financial assets at amortized cost (319,532 ) (422,066 ) (65,030 ) (122,589 )
Reversal of provision on (provision for) guarantee 2,435 (3,972 ) (10,358 ) (8,140 )
Provision for unused loan commitment (17,730 ) (19,812 ) (131 ) (4,607 )
Total (335,787 ) (446,679 ) (76,539 ) (136,546 )
  • 104 -
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>
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Employee benefits Short-term employee benefits Salaries 374,978 770,314 354,786 717,842
Employee fringe benefits 126,905 248,461 122,801 230,473
Share based payment 2,745 2,316 1,577 3,664
Retirement benefit service costs 43,860 88,207 39,339 84,532
Termination 558 221 — 7,566
Subtotal 549,046 1,109,519 518,503 1,044,077
Depreciation and amortization 124,289 258,964 118,030 214,742
Other general and administrative expenses Rent 20,246 35,172 23,787 60,785
Taxes and public dues 40,080 74,268 39,226 73,763
Service charges 59,737 116,624 59,945 112,199
Computer and IT related 26,416 52,839 22,768 43,307
Telephone and communication 18,266 35,091 17,050 33,085
Operating promotion 9,696 20,718 9,485 19,382
Advertising 19,060 28,412 20,801 30,190
Printing 1,481 3,376 1,939 3,845
Traveling 1,521 3,698 3,310 6,281
Supplies 3,670 6,907 1,693 3,349
Insurance premium 2,746 5,551 2,178 4,243
Reimbursement 4,185 4,855 5,662 6,379
Maintenance 4,088 7,994 4,720 8,932
Water, light, and heating 3,188 7,640 3,302 7,497
Vehicle maintenance 2,346 4,821 2,626 4,877
Others 6,971 13,109 9,309 18,853
Sub-total 223,697 421,075 227,801 436,967
Total 897,032 1,789,558 864,334 1,695,786
(2) Details of other operating income recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Gain on transactions of foreign exchange 191,767 269,151 32,083 247,131
Gain related to derivatives<br>(Designated for hedging) (7,637 ) 132,356 65,735 118,154
Others 23,948 32,754 24,458 36,092
Total 208,078 434,261 122,276 401,377
  • 105 -
(3) Details of other operating expenses recognized are as follows (Unit: Korean Won in millions):<br>
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Losses on transactions of foreign exchange 47,544 464,540 (19,043 ) 105,331
KDIC deposit insurance premium 91,319 180,530 82,582 161,719
Contribution to miscellaneous funds 78,335 156,969 78,279 156,059
Losses related to derivatives (Designated for hedging) 8,950 9,324 1,518 1,524
Losses on fair value hedged items 2,322 108,090 52,388 90,198
Others (*) 20,877 61,451 36,020 77,672
Total 249,347 980,904 231,744 592,503
(*) Other expense includes such expenses amounting to 6,786 million Won and 10,592 million Won,<br>respectively, of intangible asset amortization expense for the six-month period ended June 30, 2020 and 2019, respectively.
--- ---
(4) Share-based payment
--- ---

Details of performance condition share-based payment granted to executives as of June 30, 2020 and December 31, 2019 are 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
Fair value 8,215 Won
Valuation method Black-Scholes Model
Stock price (*1) 8,810 Won
Expected dividend rate 4.13%
Expected maturity date 2.5 years
Number of shares measured as of the closing date (*2) As of June 30, 2020 602,474 shares
As of December 31, 2019 602,474 shares
Subject to Shares granted for the year 2020
Type of payment Cash-settled
Vesting period January 1, 2020 ~ December 31, 2023
Date of payment 2024-01-01
Fair value 7,882 Won
Valuation method Black-Scholes Model
Stock price (*1) 8,810 Won
Expected dividend rate 4.13%
Expected maturity date 3.5 years
Number of shares measured as of the closing date (*2) As of June 30, 2020 468,378 shares
As of December 31, 2019 —
(*1) Closing price of Woori Financial Group Inc. at the end of June.
--- ---
(*2) It is a system in which the amount of stock payable is determined at the beginning, and the payment rate is<br>determined in accordance with the degree of achievement of the pre-set performance target. Performance is evaluated by long-term performance indicators such as relative shareholder return, net profit, return on equity (ROE), non-performing loan<br>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 June 30, 2020 and December 31, 2019, the book value of the liabilities related to the performance condition share-based<br>payments recognized by the Group amounts to 8,644 million Won and 6,328 million Won, respectively.
--- ---
  • 106 -
37. 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):
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Gains on valuation of investments in joint ventures and associates 20,620 35,683 9,650 19,299
Losses on valuation of investments in joint ventures and associates (3,822 ) (11,731 ) (4,403 ) (8,442 )
Total 16,798 23,952 5,247 10,857
(2) Details of other non-operating income and expenses recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Other non-operating incomes 17,890 37,114 36,498 46,936
Other non-operating expenses (152,712 ) (199,815 ) (15,886 ) (40,123 )
Total (134,822 ) (162,701 ) 20,612 6,813
(3) Details of other non-operating income recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Rental fee income 3,996 7,577 1,445 3,442
Gains on disposal of premises and equipment, intangible assets and other assets 126 6,575 578 1,303
Reversal of impairment loss of premises and equipment, intangible assets and other assets 20 55 722 722
Others 13,748 22,907 33,753 41,469
Total 17,890 37,114 36,498 46,936
(4) Details of other non-operating expenses recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Depreciation on investment properties 540 1,087 284 1,298
Operating expenses on investment properties 158 382 175 362
Losses on disposal of premises and equipment, intangible assets and other assets 491 821 712 1,248
Impairment losses of premises and equipment, intangible assets and other assets 7,687 8,254 1,670 1,680
Donation 6,767 11,305 6,680 23,969
Others (*) 137,069 177,966 6,365 11,566
Total 152,712 199,815 15,886 40,123
(*) Included 165,558 million Won of other special losses related to other provisions for the six-month period<br>ended June 30,2020.
--- ---
  • 107 -
38. INCOME TAX EXPENSE
(1) Details of income tax expenses are as follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended June 30
--- --- --- --- --- --- ---
2020 2019
Current tax expense:
Current tax expense with respect to the current period 180,059 349,921
Adjustments recognized in the current period in relation to the tax expense of prior<br>periods (4,292 ) (1,578 )
Sub-total 175,767 348,343
Deferred tax expense
Change in deferred tax assets (liabilities) due to temporary differences 66,044 114,709
Income tax expense directly attributable to equity 18,005 (6,933 )
Sub-total 84,049 107,776
Income tax expense 259,816 456,119

Income tax expense (income) was recognized based on the estimate of the best weighted average annual effective tax rate expected for the interim period. The weighted average annual effective tax rate for the June 30, 2020, is 25.1% (The weighted average annual effective tax rate for the June 30, 2019, is 26.4%).

  • 108 -
39. EARNINGS PER SHARE (“EPS”)
(1) Basic EPS is calculated by dividing net income attributable to common shareholders by weighted-average number<br>of common shares outstanding (Unit: Korean Won in millions, except for EPS and number of shares):
--- ---
Periods ended June 30, 2020 Periods ended June 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Three-month Six-month Three-month Six-month
Net income attributable to common shareholders 142,348 660,564 610,999 1,179,688
Dividends to hybrid securities (11,852 ) (20,365 ) — —
Net income attributable to common shareholders 130,496 640,199 610,999 1,179,688
Weighted average number of common shares outstanding 722 shares in million 722 shares in million 680 shares in million 672 shares in million
Basic EPS (Unit: Korean Won) 181 887 899 1,755
(2) The weighted average number of common shares outstanding is as follows: (Unit: number of shares, days)<br>
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Period Number of<br>shares Dates<br>(Unit:<br>Day) Accumulated number<br>of shares outstanding<br>during period
Common shares outstanding at the beginning of the period 2020-01-01 ~ 2020-06-30 722,267,681 182 131,452,717,942
Sub-total (①) 131,452,717,942
Weighted average number of common shares outstanding (②=(①/182) 722,267,681
For the six-month period ended June 30, 2019
Period Number of<br>shares Dates<br>(Unit:<br>Day) Accumulated number<br>of shares outstanding<br>during period
Common shares issued at the beginning of the period 2019-01-01 ~ 2019-06-30 673,271,226 181 121,862,091,906
Purchase of treasury stock 2019-01-08 ~ 2019-06-30 (11,453,702 ) 174 (1,992,944,148 )
Disposal of treasury stock 2019-03-22 ~ 2019-06-30 18,346,782 101 1,853,024,982
Sub-total (①) 121,722,172,740
Weighted average number of common shares outstanding (②=(①/181) 672,498,192

Diluted EPS is equal to basic EPS because there is no dilution effect for the six-month period ended June 30, 2020 and 2019.

  • 109 -
40. CONTINGENT LIABILITIES AND COMMITMENTS
(1) Details of guarantees are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Confirmed guarantees
Guarantee for loans 81,339 89,699
Acceptances 638,504 391,688
Guarantees in acceptances of imported goods 216,901 224,746
Other confirmed guarantees 7,747,116 6,982,889
Sub-total 8,683,860 7,689,022
Unconfirmed guarantees
Local letters of credit 186,591 193,096
Letters of credit 2,471,575 3,081,390
Other unconfirmed guarantees 625,271 771,378
Sub-total 3,283,437 4,045,864
Commercial paper purchase commitments and others 822,016 884,031
Total 12,789,313 12,618,917
(2) Details of unused loan commitments and others are as follows (Unit: Korean Won in millions):<br>
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Loan commitments 106,987,014 103,651,674
Other commitments(*) 9,742,632 5,993,608
(*) As of June 30, 2020 and 2019, the amount of unsecured bills (purchase note sales) and discounts on<br>electronic short-term bond sales (purchase) are 4,685,491 million Won and 2,582,274 million Won, respectively.
--- ---
(3) Litigation case
--- ---

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

June 30, 2020 December 31, 2019
As plaintiff As defendant As plaintiff As defendant
Number of cases (*) 107 cases 451 cases 119 cases 415 cases
Amount of litigation 304,540 425,690 291,880 391,362
Provisions for litigations 27,746 27,029
(*) The number of lawsuits as of June 30, 2020 and December 31, 2019 do not include fraud lawsuits, etc.<br>and those lawsuits that are filed only to extend the statute of limitation.
--- ---
(4) Other commitments
--- ---
1) 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% of interest (58.6% of voting rights) in July, 2019, and to acquire additional 21.3% of interest (28.0% of voting rights) after a certain period. As a result, the Group acquired the interest of<br>the first sales agreement in December 2019 and is planning to acquire the interest of the second sales agreement after a certain period. In regard to this acquisition, the Group recognized 112,187 million Won as other financial liabilities for<br>the second sales agreement.
--- ---
2) On March 31, 2020, the Financial Services Commission, the Korea Development Bank, the five major financial<br>groups, and 17 forwarding financial institutions and Korea Securities Finance have agreed to create a Together Korea Fund (Securities Market Stabilization Fund) together to cope with the crisis in the securities market. Woori Bank, one of the<br>subsidiaries, invested 100 billion Won on April 9, 2020.
--- ---
3) As of June 30, 2020, the Group has entered into an investment agreement with PCC-Woori LP Secondary Fund<br>for 3,100 million Won. Among the agreed amount, 1,550 million Won was executed as of June 31, 2020 and outstanding balance amounts to 1,550 million Won. The contract period is from December 31, 2019 and December 31,<br>2023.
--- ---
  • 110 -
41. RELATED PARTY TRANSACTIONS

Related parties of the Group as of June 30, 2020 and December 31, 2019, and assets and liabilities recognized, guarantees and commitments, major transactions with related parties and compensation to key management for the six-month period ended June 30, 2020 and 2019 are as follows:

(1) Related parties
Related parties
--- ---
Associates W 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 Fund, K BANK Co., Ltd., Well to Sea No. 3<br>Private Equity Fund, and Others (Dongwoo C & C Co., Ltd. and other 35 associates)
(2) Assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
--- ---
Related parties A title of account June 30,<br>2020 December 31,<br>2019
--- --- --- --- --- --- --- --- ---
Associates W Service Networks Co., Ltd. Loans 21 23
Loss allowance — (1 )
Deposits due to customers 1,913 1,881
Accrued expenses 6 6
Other liabilities 501 429
Korea Credit Bureau Co., Ltd. Loans 1 3
Deposits due to customers 1,875 26
Korea Finance Security Co., Ltd. Loans 3,939 1,860
Loss allowance (9 ) (3 )
Deposits due to customers 1,566 1,371
Other liabilities 9 —
Chin Hung International Inc. Loans 147 244
Loss allowance (1 ) (2 )
Deposits due to customers 5,256 5,381
Other liabilities 407 321
LOTTE CARD Co. Ltd. Loans 7,500 7,500
Loss allowance (90 ) (30 )
Other assets 19 —
Deposits due to customers 21,836 2,726
Other liabilities 52 —
K BANK Co., Ltd. Loans 91 141
Account receivables 33 24
Other assets — 4
Well to Sea No. 3 Private Equity Fund Loans 71,200 4,490
Loss allowance (75 ) (8 )
Deposits due to customers 3,787 714
Other liabilities 56 47
Others (*1) (*2) Loans — 84
Loss allowance — (84 )
Other assets 740 338
Deposits due to customers 5,484 5,577
Other liabilities 162 172
  • 111 -
(*1) Others include Saman Corporation, Woori Growth Partnerships New Technology Private Equity Fund, Woori-Shinyoung<br>Growth-Cap Private Equity Fund, Woori All-in-One World EMP 40, Woori-Q Corporate Restructuring Private Equity Fund, Woori High plus G.B. Securities Feeder Fund1(G.B.), Uri Hanhwa Eureka Private Equity Fund, Japanese Hotel Real Estate Private Equity<br>Fund 2, Partner One Value Up I Private Equity Fund and etc., as of June 30, 2020.
(*2) Others include Saman Corporation, Woori-Shinyoung Growth-Cap Private Equity Fund, Uri Hanhwa Eureka Private<br>Equity Fund, Kyesan Engineering Co., Ltd. and DAEA SNC Co., Ltd. and etc., as of December 31, 2019.
--- ---
(3) Gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
--- ---
For the six-month period June 30
--- --- --- --- --- --- --- --- ---
Related parties A title of account 2020 2019
Associates W Service Network Co., Ltd. Other income 16 16
Interest expenses 9 10
Fees expenses 226 219
Provisions for (reversal of) allowance for credit loss (4 ) 1
Other expenses 1,001 645
Korea Credit Bureau Co., Ltd. Interest expenses 1 29
Fees expenses 1,544 1,171
Korea Finance Security Co., Ltd. Interest expenses 2 7
Provisions for (reversal of) allowance for credit loss 6 (2 )
Other expenses 51 60
Chin Hung International Inc Interest expenses 11 16
Provisions for (reversal of) allowance for credit loss 90 (32 )
LOTTE CARD Co., Ltd. Interest income 150 —
Fees income 1,330 —
Interest expenses 53 —
K BANK Co., Ltd. Fees income 851 619
Well to Sea No.3 Private Equity Fund Interest income 1,328 759
Interest expenses 2 —
Provision for (reversal of) allowance for credit loss 77 (57 )
Others (*1) (*2) Fees income 1,261 634
Other income 8 8
Interest expenses 15 31
(*1) Others include Saman Corporation, Woori Growth Partnerships New Technology Private Equity Fund, Woori-Shinyoung<br>Growth-Cap Private Equity Fund, Woori All-in-One World EMP 40, Woori-Q Corporate Restructuring Private Equity Fund, Woori High plus G.B. Securities Feeder Fund1(G.B.), Uri Hanhwa Eureka Private Equity Fund, Japanese Hotel Real Estate Private Equity<br>Fund 2, Partner One Value Up I Private Equity Fund, PCC-Woori LP Secondary Fund and etc., as of June 30, 2020.
--- ---
(*2) Others include Saman Corporation, Kyesan Engineering Co., Ltd. and DAEA SNC Co., Ltd. and etc., as of<br>December 31, 2019.
--- ---
  • 112 -
(4) Major loan transactions with related parties for the six-month period ended June 30, 2020 and 2019 are as<br>follows (Unit: Korean Won in millions):
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- ---
Related parties Beginning<br>balance Loan Collection Ending<br>balance<br>(*)
Associates Well to Sea No. 3 Private Equity Fund 4,490 66,710 — 71,200
LOTTE CARD Co., Ltd. 7,500 — — 7,500
Korea Finance Security Co., Ltd. 1,860 2,356 277 3,939
Korea Credit Bureau Co., Ltd. 3 8 10 1
W Service Network Co., Ltd. 23 190 192 21
Chin Hung International Inc 244 1,095 1,192 147
K BANK Co., Ltd. 141 896 946 91
(*) Payments that occurred for business reasons among related parties are excluded and net increase or decrease was<br>used for limited credit loan.
--- ---
For the six-month period ended June 30, 2019
--- --- --- --- --- --- --- --- --- ---
Related parties Beginning<br>balance Loan Collection Ending<br>balance<br>(*)
Associates Well to Sea No. 3 Private Equity Fund 1,857 60,000 367 61,490
Korea Finance Security Co., Ltd. 57 284 311 30
Korea Credit Bureau Co., Ltd. 7 14 18 3
W Service Network Co., Ltd. 69 155 200 24
Chin Hung International Inc 241 1,038 1,115 164
K BANK Co., Ltd. 185 1,077 1,163 99
(*) Payments that occurred for business reasons among related parties are excluded and net increase or decrease was<br>used for limited credit loan.
--- ---
(5) Details of changes in major deposits due to customers with related parties for the six-month period<br>June 30, 2020 and 2019 are as follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- ---
Related parties Beginning<br>balance Increase Decrease Ending<br>balance<br>(*)
Associates Saman Corporation 2,522 94 — 2,616
W Service Networks Co., Ltd 1,180 — — 1,180
Chin Hung International Inc 400 — 400 —
Partner One Value Up I Private Equity Fund 1,150 1,356 1,303 1,203
Korea Credit Bureau Co., Ltd. — 1,000 — 1,000
(*) Details of payment between related parties, demand deposit due to customers and etc. are excluded.<br>
--- ---
For the six-month period ended June 30,<br>2019
--- --- --- --- --- --- --- --- --- ---
Related parties Beginning<br>balance Increase Decrease Ending<br>balance<br>(*)
Associates Saman Corporation 2,436 84 — 2,520
W Service Networks Co., Ltd 1,180 280 280 1,180
Chin Hung International Inc 765 400 400 765
. Korea Credit Bureau Co., Ltd. 6,000 — 6,000 —
Partner One Value Up I Private Equity Fund 1,403 1,617 1,403 1,617
Korea Finance Security Co., Ltd. 535 25 560 —
(*) Details of payment between related parties, demand deposit due to customers and etc. are excluded.<br>
--- ---
(6) There are no major borrowing transactions with related parties for the six-month period ended June 30,<br>2020 and 2019.
--- ---
  • 113 -
(7) Guarantees provided to the related parties are as follows (Unit: Korean Won in millions):<br>
Warrantee June 30, 2020 December 31, 2019 Warranty
--- --- --- --- --- ---
Korea Finance Security Co., Ltd. 217 400 Unused loan commitment
Korea Credit Bureau Co., Ltd. 34 32 Unused loan commitment
W Service Network Co., Ltd. 99 177 Unused loan commitment
Chin Hung International Inc. 32,152 32,055 Unused loan commitment
K BANK Co., Ltd. 209 159 Unused loan commitment
Well to Sea No. 3 Private Equity Fund 203,800 210,510 Unused loan commitment
LOTTE CARD Co. Ltd. 150,000 150,000 Unused loan commitment

There no recognized provisions for guarantees provided to the related parties as of June 30, 2020 and December 31, 2019, respectively.

(8) Amount of derivatives-related commitments with the related parties
Warrantee June 30, 2020 December 31, 2019 Warranty
--- --- --- --- --- --- ---
Well to Sea No. 3 Private Equity Fund 622,128 584,377 Open interest
(9) Commitments among related parties
--- ---

As of June 30, 2020, Group has entered into an investment agreement with PCC-Woori LP Secondary Fund for 3,100 million Won. Among the agreed amount, 1,550 million Won was executed as of June 31, 2020 and outstanding balance amounts to 1,550 million Won. The contract period is from December 31, 2019 and December 31, 2023.

(10) Compensation for key management is as follows (Unit: Korean Won in millions):
For the six-month period ended<br>June 30
--- --- --- --- ---
2020 2019
Short-term employee salaries 8,084 6,328
Retirement benefit service costs 311 730
Share-based compensation 1,054 1,503
Total 9,449 8,561

Key management includes registered executives and non-registered executives. Outstanding assets from transactions with key management amount to 3,034 million Won and 2,414 million Won, as of June 30, 2020 and December 31, 2019 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 9,745 million Won and 6,543 million Won, respectively, as of June 30, 2020 and December 31, 2019,

  • 114 -
42. LEASES
(1) The future lease payments under the lease contracts are as follows (Unit: Korean Won in millions):<br>
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Lease payments
Within one year 175,667 161,251
After one year but within five years 224,651 232,985
After five years 34,201 40,698
Total 434,519 434,934
(2) Total cash outflows from lease are as follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended<br>June 30
--- --- --- --- ---
2020 2019
Total cash outflows from lease 103,985 96,569
(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 six-month period ended<br>June 30
--- --- --- --- ---
2020 2019
Lease payments for short-term leases 743 589
Lease payments for which the underlying asset is of low value 274 93
Total 1,017 682
(4) As mentioned in Note 2, the Group applies a simple method that does not assess whether the rent discount as a<br>direct result of COVID-19 is a lease modification or not. As a result, the amount recognized in profit or loss during the reporting period is KRW 4,608 million to reflect changes in lease payments arising from the discount.<br>
--- ---
(5) IFRS Interpretations Committee published its interpretation of ‘Lease Period and Lease Improvement Useful<br>Life’ as of December 16, 2019. The Interpretation Committee discussed a question about how to determine the lease term for cancellable or renewable leases. According to the interpretation, the Group should identify factors to consider<br>extensive economic penalties, and then determine the lease period. Due to large number of lease contracts held by the Group and the varying terms of the contracts, sufficient time is needed to analyze the contract and establish accounting policies.<br>Therefore, the Group is planning to reflect the effect in consolidated financial statements after the effect analysis of changes in accounting policies for the lease term is completed.
--- ---
  • 115 -

EX-99.2

Exhibit 99.2

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2020 AND FOR THE THREE-MONTH AND SIX-MONTH

PERIODS ENDED JUNE 30, 2020 AND FOR THE THREE-MONTH

PERIOD ENDED JUNE 30, 2019 AND THE PERIOD FROM

JANUARY 11, 2019 (DATE OF INCORPORATION) TO JUNE 30, 2019

WOORI FINANCIAL GROUP INC.

Page(s)
Report on Review of Separate Interim Financial Statements 1-2
Separate Interim Financial Statements
Separate Interim Statements of Financial Position 4
Separate Interim Statements of Comprehensive Income 5
Separate Interim Statements of Changes in Equity 6
Separate Interim Statements of Cash Flows 7-8
Notes to the Separate Interim Financial Statements 9-43

Report on Review of Separate Interim Financial Statements

English Translation of a Report Originally Issued in Korean

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

Reviewed Financial Statements

We have reviewed the accompanying separate interim financial statements of Woori Financial Group (the “Company”). These financial statements consist of the separate interim statement of financial position of the Company as at June 30, 2020 and the related separate interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2020, and separate interim statements of changes in equity and cash flows for the six-month period ended June 30, 2020, and a summary of significant accounting policies and other explanatory notes, expressed in Korean Won.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these separate interim financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”) 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to issue a report on these separate interim financial statements based on our review.

We conducted our review in accordance with quarterly or semi-annual review standards established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe the accompanying separate interim financial statements are not presented fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting.

LOGO

  • 1 -

Emphasis of Matters

Without qualifying our conclusion, we draw attention to Note 3 of the financial statements, which indicates that the outbreak of COVID-19 in 2020 may have a negative impact on the Company’s financial condition and results of operations. Our conclusion is not affected by this item.

Other Matters

The separate interim financial statements of comprehensive income for the three-month period ended June 30, 2020, and separate interim statements of comprehensive income, changes in equity and cash flows for the period from January 11, 2019 (date of incorporation) to June 30, 2019, presented herein for comparative purposes, were reviewed by Deloitte Anjin LLC whose report dated August 14, 2019. Based on their review, nothing has come to their attention that causes them to believe the accompanying financial statements do not present fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting.

The separate financial statements of the Company for the year ended December 31, 2019, were audited by Deloitte Anjin LLC who expressed an unqualified opinion on those statements, not presented herein, on March 16, 2020. The separate statement of financial position as at December 31, 2019, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as at December 31, 2019.

/s/ Samil PricewaterhouseCoopers

August 14, 2020

Notice to Readers

This report is effective as of August 14, 2020 the review report date. Certain subsequent events or circumstances may have occurred between the review report date and the time the review report is read. Such events or circumstances could significantly affect the separate interim financial statements and may result in modifications to the review report.

  • 2 -
WOORI FINANCIAL GROUP INC.<br><br><br>SEPARATE INTERIM FINANCIAL STATEMENTS<br><br><br>AS OF JUNE 30, 2020 AND FOR THE THREE-MONTH AND SIX-MONTH<br><br><br>PERIODS ENDED JUNE 30, 2020 AND FOR THE THREE-MONTH<br><br><br>PERIOD ENDED JUNE 30, 2019 AND THE PERIOD FROM JANUARY 11, 2019<br><br><br>(DATE OF INCORPORATION) TO JUNE 30, 2019

The accompanying separate interim 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: (Road Name Address) 51, Sogong-ro, Jung-gu, Seoul

(Phone Number)    02-2125-2000

  • 3 -

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2020 (UNAUDITED) AND DECEMBER 31, 2019

June 30, 2020 December 31, 2019
(Korean Won in millions)
ASSETS
Cash and cash equivalents (Notes 5 and 30) 129,525 43,670
Financial assets at fair value through profit or loss (“FVTPL”) (Notes 4, 6, 9 and<br>18) 9,434 9,434
Financial assets at fair value through other comprehensive income (“FVTOVI”) (Notes 4, 7<br>and 9) 150,265 —
Loans and other financial assets at amortized cost (Notes 4, 8, 9 and 30) 761,795 1,269,203
Investments in subsidiaries (Notes 10 and 30) 20,873,593 19,873,593
Premises and equipment (Notes 11 and 30) 9,384 7,383
Intangible assets (Note 12) 5,609 3,310
Other assets (Note 13) 15 —
Total assets 21,939,620 21,206,593
LIABILITIES
Debentures (Notes 4, 9 and 14) 947,789 947,679
Provisions (Note 15) 714 600
Net defined benefit liability (Note 16) 7,566 3,482
Current tax liabilities (Note 27) 57,554 133,526
Deferred tax liabilities (Note 27) 921 154
Other financial liabilities (Notes 4, 9, 17, 30 and 31) 9,860 10,745
Other liabilities (Notes 17 and 30) 323 4,142
Total liabilities 1,024,727 1,100,328
EQUITY
Capital stock 3,611,338 3,611,338
Hybrid securities 1,695,821 997,544
Capital surplus 14,874,084 14,874,084
Other equity (1,400 ) (631 )
Retained earnings 735,050 623,930
Regulatory reserve for credit loss (692 ) —
Required reversal(provision) of regulatory reserve for credit loss 390 (692 )
Planned reversal(provision) of regulatory reserve for credit loss 390 (692 )
Total equity 20,914,893 20,106,265
Total liabilities and equity 21,939,620 21,206,593

The accompanying notes are part of this interim financial statement.

  • 4 -

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH AND SIX-MONTH PERIOD ENDED JUNE 30, 2020 AND FOR

THE THREE-MONTH PERIOD ENDED JUNE 30, 2019

AND THE PERIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION)

TO JUNE 30, 2019 (UNAUDITED)

2020 2019
For the three-month<br>period ended<br>June 30, 2020 For the six-month<br>period ended<br>June 30, 2020 For the three-month<br>period ended<br>June 30, 2019 For the period from January 11,<br>2019 (date of incorporation)<br>to June 30, 2019
(Korean Won in millions,<br><br><br>except for per share data)
Interest income 3,185 7,699 482 509
Interest expense 5,495 11,031 684 863
Net interest loss (Notes 9, 21 and 30) **** (2,310 ) **** (3,332 ) **** (202 ) **** (354 )
Fees and commissions income — — — —
Fees and commissions expense 5,529 8,168 3,598 7,412
Net fees and commissions loss (Notes 22 and 30) **** (5,529 ) **** (8,168 ) **** (3,598 ) **** (7,412 )
Dividend income (Notes 23 and 30) — 677,795 676,000 676,000
Reversal of impairment losses due to credit loss (Notes 24 and 30) 9 9 — —
General and administrative expenses (Notes 25 and 30) (15,829 ) (28,154 ) (10,075 ) (20,610 )
Operating income (loss) **** (23,659 ) **** 638,150 **** **** 662,125 **** **** 647,624 ****
Other non-operating expense 180 (20 ) (200 ) (600 )
Non-operating expense (Note 26) **** 180 **** **** (20 ) **** (200 ) **** (600 )
Net income (loss) before income tax expense **** (23,479 ) **** 638,130 **** **** 661,925 **** **** 647,024 ****
Income tax expense (income) (Note 27) (221 ) 1,058 (147 ) (407 )
Net income (loss)
(Net income after the provision of regulatory reserve for credit loss for the six-month period ended June 30, 2020 and the period from January 11, 2019(Date of incorporation) to June 30, 2019 is 637,462 million Won and 646,421 million Won, respectively, and net income after the<br>provision of regulatory reserve for credit loss for the three-month period ended June 30, 2020 and 2019 are (22,774) million Won and 661,062 million Won, respectively) (Note 19) **** (23,258 ) **** 637,072 **** **** 662,072 **** **** 647,431 ****
Net gain on valuation of equity securities at FVTOCI 192 192 — —
Remeasurement loss related to defined benefit plan 253 (961 ) (372 ) (445 )
Items that will not be reclassified to profit or loss: **** 445 **** **** (769 ) **** (372 ) **** (445 )
Other comprehensive loss, net of tax **** 445 **** **** (769 ) **** (372 ) **** (445 )
Total comprehensive income (loss) **** (22,813 ) **** 636,303 **** **** 661,700 **** **** 646,986 ****
Earnings per share (Note 28)
Basic and diluted earnings per share (In Korean Won) (49 ) 854 974 952

The accompanying notes are part of this interim financial statement.

  • 5 -

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2020

AND FOR THE PERIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION)

TO JUNE 30, 2019 (UNAUDITED)

Capital<br>stock Capital<br>surplus Hybrid<br>securities Other<br>equity Retained<br>earnings Total<br>equity
(Korean Won in millions)
January 11, 2019 (Date of incorporation) 3,400,822 14,565,637 — — — 17,966,459
Total comprehensive income
Net income — — — — 647,431 647,431
Remeasurement loss related to defined benefit plan — — — (445 ) — (445 )
Transactions with owners
New stocks issue cost — (2 ) — — — (2 )
June 30, 2019 (Unaudited) 3,400,822 14,565,635 — (445 ) 647,431 18,613,443
January 01, 2020 3,611,338 14,874,084 997,544 (631 ) 623,930 20,106,265
Total comprehensive income
Net income — — — — 637,072 637,072
Net gain on valuation of equity securities at FVTOCI — — — 192 — 192
Remeasurement loss related to defined benefit plan — — — (961 ) — (961 )
Transactions with owners
Dividends to common stocks — — — — (505,587 ) (505,587 )
Issuance of hybrid securities — — 698,277 — — 698,277
Dividends to hybrid securities — — — — (20,365 ) (20,365 )
June 30, 2020 (Unaudited) 3,611,338 14,874,084 1,695,821 (1,400 ) 735,050 20,914,893

The accompanying notes are part of this interim financial statement.

  • 6 -

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2020

AND FOR THE PERIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION)

TO JUNE 30, 2019 (UNAUDITED)

For the six-month<br>period ended<br>June 30, 2020 For the period from January 11,<br>2019 (date of incorporation)<br>to June 30, 2019
(Korean Won in millions)
Cash flows from operating activities:
Net income 637,072 647,431
Adjustments to net income:
Income tax expense(income) 1,058 (407 )
Interest income (7,699 ) (509 )
Interest expense 11,031 863
Dividend income (677,795 ) (676,000 )
(673,405 ) (676,053 )
Additions of expenses not involving cash outflows:
Retirement benefit 2,204 4,189
Depreciation and amortization 2,513 1,764
4,717 5,953
Deductions of income not involving cash inflows:
Reversal of impairment losses due to credit loss 9 —
9 —
Changes in operating assets and liabilities:
Loans and other financial assets at amortized cost 75,816 (16,915 )
Other assets (15 ) (10 )
Net defined benefit liability 554 —
Other financial liabilities (77,046 ) (12,177 )
Other liabilities (3,819 ) 405
(4,510 ) (28,697 )
Interest income received 10,002 29
Interest expense paid (10,973 ) (455 )
Dividends received 677,795 676,000
Income tax paid — —
676,824 675,574
Net cash provided by operating activities 640,689 624,208
Cash flows from investing activities:
Cash in-flows from investing activities:
Decrease on other investment assets 1,130,000 —
1,130,000 —
Cash out-flows from investing activities:
Acquisition of investments in subsidiaries 1,000,000 —
Acquisition of financial assets at FVTOCI 150,000 —
Acquisition of premises and equipment 2,626 6,596
Acquisition of intangible assets 2,857 3,919
Increase on guarantee deposits for leases 709 955
Increase on other investment assets 700,000 —
1,856,192 11,470
Net cash used in investing activities (726,192 ) (11,470 )

(Continued)

  • 7 -

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2020

AND FOR THE PERIOD FROM JANUARY 11, 2019 (DATE OF INCORPORATION)

TO JUNE 30, 2019 (UNAUDITED) (CONTINUED)

For the six-month<br>period ended<br>June 30, 2020 For the period from January 11,<br>2019 (date of incorporation)<br>to June 30, 2019
(Korean Won in millions)
Cash flows from financing activities:
Cash in-flows from financing activities:
Increase in borrowings — 64,769
Issuance of debentures — 299,144
Issuance of hybrid securities 698,277 —
698,277 363,913
Cash out-flows from financing activities:
Decrease in borrowings — 64,769
Redemption of lease liabilities 967 620
New stock issue cost — 2
Dividends paid to hybrid securities 20,365 —
Dividends paid 505,587 —
526,919 65,391
Net cash provided by financing activities 171,358 298,522
Net increase in cash and cash equivalents 85,855 911,260
Cash and cash equivalents, beginning of the period 43,670 —
Cash and cash equivalents, end of the period (Note 5) 129,525 911,260

The accompanying notes are part of this interim financial statement.

  • 10 -

WOORI FINANCIAL GROUP INC.

NOTES TO SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2020 AND 2019 (UNAUDITED)

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

Woori Financial Group, Inc. (hereinafter referred to the “Company”) 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 June 30, 2020 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 Total number of<br>issued shares Exchange ratio<br>per share Number of Parent<br>company’s stocks
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% interest in Woori Asset Management Co. (Formerly Tongyang Asset Management Corp.). 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., Ltd. (formerly ABL Global Asset Management Co., Ltd), and added it 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 67.2% interests in Woori Asset Trust Co. (formerly Kukje Asset Trust Co.).

  • 9 -
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

The Company’s financial statements are interim financial statements prepared in accordance with Korean IFRS 1034, Interim Financial Reporting for some of periods in which the annual separate financial statements belong. They are also separate financial statements prepared in accordance with Korean IFRS 1027 Separate Financial Statements. It is necessary to use the Company’s annual separate financial statements for the year ended December 31, 2019 for understanding of the accompanying interim financial statements.

1) Except for the impacts on the newly adopted standards and interpretations explained below, the accounting<br>policies applied in preparing the accompanying interim financial statements have been applied consistently with the annual financial statements as of and for the year ended December 31, 2019.
• Amendments to Korean IFRS 1001 Presentation of Financial Statements and Korean IFRS 1008 Accounting policies,<br>changes in accounting estimates and errors – Definition of Material
--- ---

The amendments clarify the explanation of the definition of material and amended Korean IFRS 1001 and Korean IFRS 1008 in accordance with the clarified definitions. Materiality is assessed by reference to omission or misstatement of material information as well as effects of immaterial information, and to the nature of the users when determining the information to be disclosed by the Company. The amendment does not have a significant impact on the financial statements.

• Amendments to Korean IFRS 1103 Business Combination – Definition of a Business

To consider the integration of the required activities and assets as a business, the amended definition of a business requires an acquisition to include an input and a substantive process that together significantly contribute to the ability to create outputs and excludes economic benefits from the lower costs. An entity can apply a concentration test, an optional test, where substantially all of the fair value of gross assets acquired is concentrated in a single asset or a group of similar assets, the assets acquired would not represent a business. The amendment does not have a significant impact on the financial statements.

• Amendments to Korean IFRS 1116 Lease – Practical expedient for<br>COVID-19 Related Rent Exemption, Concessions, Suspension

The amendment permits lessees, as a practical expedient, not to assess whether particular rent concessions occurring as a direct consequence of the COVID-19 pandemic. For those who applied this accounting treatment shall account for changes in lease payments, such as rent discounts, consistently with the way the standard specifies when those changes are not lease changes.

The Company changed its accounting policies in accordance with the amendments made to IFRS 16. The revised accounting policies were applied retrospectively in accordance with the transitional regulation in IFRS 16. The amendments do not have a significant impact on the financial statements.

  • 10 -
2) Significant accounting policies and method of computation used in the preparation of the condensed interim<br>financial statements are consistent with those of the annual financial statements for the year ended December 31, 2019, except for the changes due to the application of amendment and enactments of standards described in Note 2.(1) and the one<br>described below.
• Income tax expense
--- ---

Income tax expense for the interim period is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate is applied to the pre-tax income.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

The outbreak of COVID-19 in 2020 has had a significant impact on the global economy including Korea. Financial and economic conditions arising may have a negative impact on the Company’s financial condition and results of operations in various forms both domestically and internationally. The Company is closely monitoring the impact of COVID-19 and assessing its effect on the company as of the end of this quarter.

The management shall make judgements, estimates and assumptions that affect the application of accounting policies and application of assets, liabilities and revenues and expenses in preparing condensed interim financial statements. Therefore, the actual results may differ from these estimates.

The important judgements by the management on accounting policies and the main sources of estimation uncertainty for preparing condensed interim financial statements are identical to ones used in the Company’s annual separate financial statements for the year ended December 31, 2019, except for the methods of estimation used to determine income tax expense.

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 managers 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.

  • 11 -
(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 Company’s credit risk exposure to a permissible degree and to optimize its rate of return considering such credit risk.

1) Credit risk management

The Company measures expected loss on assets subject to credit risk management and uses it as a management indicator.

2) Maximum exposure to credit risk

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

June 30, 2020 December 31, 2019
Loans and other financial assets at amortized cost Banks 737,914 1,228,918
Corporates 23,881 40,285
Sub-total 761,795 1,269,203
Financial assets at FVTPL Derivative assets 9,434 9,434
Total 771,229 1,278,637

a) Credit risk exposure by geographical areas

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

June 30, 2020 December 31, 2019
Korea Korea
Loans and other financial assets at amortized cost 761,795 1,269,203
Financial assets at FVTPL 9,434 9,434
Total 771,229 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 as of June 30, 2020 and December 31, 2019 (Unit: Korean Won in millions):

June 30, 2020
Finance and<br>insurance Others Total
Loans and other financial assets at amortized cost 760,118 1,677 761,795
Financial assets at FVPTL 9,434 — 9,434
Total 769,552 1,677 771,229
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
  • 12 -

3) Credit risk exposure

The maximum exposure to credit risk by asset quality, except for financial assets at FVTPL as of June 30, 2020 and December 31, 2019 is as follows (Unit: Korean Won in millions):

June 30, 2020
Stage 1 Stage 2 Stage 3 Total Loss<br>allowance Total, net
Financial assets Above<br>appropriate<br>credit rating<br>(*1) Less than a<br>limited<br>credit rating<br>(*3) Above<br>appropriate<br>credit<br>rating (*2) Less than a<br>limited credit<br>rating<br>(*3)
Loans and other financial assets at amortized cost 762,049 — — — — 762,049 (254 ) 761,795
Banks 738,168 — — — — 738,168 (254 ) 737,914
Corporates 23,881 — — — — 23,881 — 23,881
General business 23,881 — — — — 23,881 — 23,881
Total 762,049 — — — — 762,049 (254 ) 761,795
(*1) Credit grade of corporates are AAA ~ BBB.
--- ---
(*2) Credit grade of corporates are A- ~ BBB.
--- ---
(*3) Credit grade of corporates are BBB- ~ C.
--- ---
December 31, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total Loss<br>allowance Total, net
Financial assets Above<br>appropriate<br>credit rating<br>(*1) Less than a<br>limited<br>credit rating<br>(*3) Above<br>appropriate<br>credit<br>rating (*2) Less than a<br>limited credit<br>rating<br>(*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 business 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.
--- ---
  • 13 -
(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, and the Company’s main 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 re-pricing date, are as follows (Unit: Korean Won in millions):

June 30, 2020
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 (*1) 530,191 300,600 — — — — 830,791
Financial assets at FVTOCI (*2) — — — — — 150,265 150,265
Sub-total 530,191 300,600 — — — 150,265 981,056
Liability:
Debentures 5,486 5,486 5,486 5,487 87,780 1,038,890 1,148,615
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 (*1) 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
(*1) The principal and interest cash flows of cash and cash equivalents are included in the cash flows within three<br>months, with 129,558 million Won and 43,670 million Won as of June 30, 2020 and December 31, 2019, respectively.
--- ---
(*2) Due to the uncertain timing of the sale, it is included in the section for over 5 years in accordance with the<br>expiration of the remaining contract
--- ---
(3) Liquidity risk
--- ---

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

1) Liquidity risk management

Liquidity risk management is to prevent damages from potential liquidity shortages with effective risk management that could arise from 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.).

  • 14 -
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):
--- ---
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
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 1,038,890 1,148,615
Lease liabilities 589 594 174 94 385 — 1,836
Other financial liabilities 4,657 342 — 1,715 1,329 — 8,043
Total 10,732 6,422 5,660 7,296 89,494 1,038,890 1,158,494
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
b) Cash flows of principals and interests by expected maturities of<br>non-derivative financial liabilities are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
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 1,038,890 1,148,615
Lease liabilities 589 594 174 94 385 — 1,836
Other financial liabilities 4,657 342 — 1,715 1,329 — 8,043
Total 10,732 6,422 5,660 7,296 89,494 1,038,890 1,158,494
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
  • 15 -
5. STATEMENTS OF CASH FLOWS
(1) Details of cash and cash equivalents are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Demand deposits 79,525 43,670
Fixed deposits 50,000 —
Total 129,525 43,670
(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 six-month<br>period ended June 30,<br>2020 For the period from January 11, 2019 (date of<br>incorporation) to June 30, 2019
--- --- --- --- ---
Changes in other comprehensive income related to valuation of financial assets at FVTOCI 192 —
Increase in account payables related to acquisition of premises and equipment 8 —
Increase in account payables related to acquisition of intangible assets 10 —
Changes in<br>right-of-use assets due to new contract 1,311 3,409
Changes in lease liabilities due to new contract 1,197 2,782
Comprehensive stock transfer — 17,982,783
6. FINANCIAL ASSETS AT FVTPL
--- ---
(1) Details of financial assets at FVTPL as of June 30, 2020 and December 31, 2019 are as follows (Unit:<br>Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Financial assets at fair value through profit or loss mandatorily measured at fair value 9,434 9,434
(2) Financial assets at fair value through profit or loss mandatorily measured at fair value are as follows (Unit:<br>Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Derivatives assets 9,434 9,434
(3) Financial assets at FVTPL designated as upon initial recognition is nil among financial assets at FVTPL as of<br>June 30, 2020 and December 31, 2019.
--- ---
7. FINANCIAL ASSETS AT FVTOCI
--- ---
(1) Details of financial assets at FVTOCI as of June 30, 2020 and December 31, 2019 are as follows (Unit:<br>Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Hybrid securities 150,265 —
(2) Details of equity securities designated as financial assets at FVTOCI as of June 30, 2020 and<br>December 31, 2019 are as follows (Unit: Korean Won in millions):
--- ---
Purpose of acquisition June 30, 2020 December 31, 2019
--- --- --- --- ---
Investment for political purpose 150,265 —
  • 16 -
8. LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST
(1) Details of loans and other financial assets at amortized cost as of June 30, 2020 and December 31,<br>2019 are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Due from banks 699,746 1,129,738
Other financial assets 62,049 139,465
Total 761,795 1,269,203
(2) Details of due from banks are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Due from banks in local currency:
Due from depository banks 700,000 1,130,000
Loss allowance (254 ) (262 )
Total 699,746 1,129,738
(3) Changes in the allowance for credit losses and gross carrying amount of due from banks are as follows and it is<br>not applicable for June 30, 2019. (Unit: Korean Won in millions):
--- ---
1) Allowance for credit losses
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance (262 ) — — (262 )
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Reversal of allowance for credit loss 8 — — 8
Ending balance (254 ) — — (254 )
2) Gross carrying amount
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance 1,130,000 — — 1,130,000
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Net increase (decrease) (430,000 ) — — (430,000 )
Ending balance 700,000 — — 700,000
  • 17 -
(4) Details of other financial assets are as follows (Unit: Korean Won in millions):
June 30, 2020 December 31, 2019
--- --- --- --- --- ---
Receivables 59,075 134,891
Accrued income 1,326 3,641
Lease deposits 1,648 934
Allowance for credit losses — (1 )
Total 62,049 139,465
(5) Changes in the allowances for credit losses and gross carrying amount of other financial assets are as follows<br>and it is not applicable for June 30, 2019. (Unit: Korean Won in millions).
--- ---
1) Allowance for credit losses
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance (1 ) — — (1 )
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Reversal of allowance for credit loss 1 — — 1
Ending balance — — — —
2) Gross carrying amount
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance 139,466 — — 139,466
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Net increase (decrease) (77,417 ) — — (77,417 )
Ending balance 62,049 — — 62,049
  • 18 -
9. 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—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 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 and liabilities measured at fair value are as follows (Unit: Korean<br>Won in millions):
June 30, 2020
--- --- --- --- --- --- --- --- ---
Level 1 Level 2 Level 3 Total
Financial assets:
Financial assets at FVTPL
Derivative assets — — 9,434 9,434
Financial assets at FVTOCI
Hybrid securities — — 150,265 150,265
December 31, 2019
--- --- --- --- --- --- --- --- ---
Level 1 Level 2 Level 3 Total
Financial assets:
Financial assets at FVTPL
Derivative assets — — 9,434 9,434

Financial assets measured at FVTPL 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.

  • 19 -

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 Company determines the fair value using valuation methods. Valuation methods and input variables for each type of financial instruments are as follows:

Valuation methods Input variables
Derivatives The fair value is measured considering the price and volatility of the underlying assets using the Binomial Tree, a commonly used technique in the market Values of underlying assets, volatility, risk-free market return, corporate bond yield rate
Hybrid securities The fair value is measured using the Monte Carlo Simulations and the Hull-White model YTM Matrix, Additive spread by grade, Risk spread by entity, Effective Credit rating, Issuing information by item, Interest rate volatility estimate

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<br><br><br>measurement<br> <br>technique Type Significant<br>unobservable<br>inputs Range Impact of changes in significant<br>unobservable inputs on fair value<br>measurement
Derivative assets Option valuation model and others Equity related Value of underlying assets and volatility 12.58%~15.38% Variation of fair value increases as value of underlying assets and volatility increases.
Hybrid securities Hull and White model and others Hybrid securities related Interest rate (YTM) Interest rate<br><br><br>0.48%~1.61%<br> <br>Market rate<br><br><br>1.80%~4.40% Variation of fair value increases as variation of interest rate (YTM) increases.

The fair value of financial assets classified as level 3 uses external valuation figures.

(3) Changes in financial assets and liabilities measured at fair value classified into Level 3 are as follows<br>and it is not applicable for June 30, 2019. (Unit: Korean Won in millions):
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Beginning<br>balance Net<br>Income<br>(loss) Other<br>comprehensive<br>income Purchases/<br>issuances Disposals/<br>settlements Transfer to<br>or out of<br>Level 3 Ending<br>balance
Financial assets:
Financial assets at FVTPL
Derivative assets 9,434 — — — — — 9,434
Financial assets at FVTOCI
Hybrid securities — — 265 150,000 — — 150,265
(4) Sensitivity analysis results on reasonable fluctuation of the significant unobservable input variables for the<br>fair value of Level 3 financial instruments are as follows.
--- ---

The sensitivity analysis on financial instruments shows how changes in unobservable inputs affect changes in fair value of the instruments through favorable and unfavorable changes. 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 equity related derivatives of which fair value changes are recognized as net income and hybrid securities of which fair value changes are recognized as other comprehensive income among level 3 financial instruments.

  • 20 -

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):

June 30, 2020
Net income (loss) Other comprehensive income (loss)
Favorable Unfavorable Favorable Unfavorable
Financial assets:
Financial assets at FVTPL
Derivative assets (*1) 943 (943 ) — —
Financial assets at FVTOCI
Hybrid securities (*2) — — 7,399 (7,050 )
(*1) Fair value changes of equity related derivatives are calculated by increasing or decreasing stock price<br>volatility rate of underlying assets and correlation, which are major unobservable variables, by 10%, respectively.
--- ---
(*2) Fair value changes of hybrid securities are calculated by increasing or decreasing market rate, which is the<br>major unobservable variable, by 1%, respectively.
--- ---
December 31, 2019
--- --- --- --- --- ---
Net income (loss)
Favorable Unfavorable
Financial assets:
Financial assets at fair value through profit or loss mandatorily measured at fair value
Derivative assets (*) 943 (943 )
(*) Fair value changes of equity related derivatives are calculated by increasing or decreasing stock price<br>volatility rate of underlying assets 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):
--- ---
June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Fair value Carrying amount
Level 1 Level 2 Level 3 Total
Financial assets:
Loans and other financial assets at amortized cost (*) — — 761,795 761,795 761,795
Financial liabilities:
Debentures — 1,001,613 — 1,001,613 947,789
Other financial liabilities (*) — — 9,860 9,860 9,860
(*) The carrying amount is disclosed at fair value considering the carrying amount as an approximation of fair<br>value.
--- ---
December 31, 2019
--- --- --- --- --- --- --- --- --- --- ---
Fair value Carrying amount
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
(*) The carrying amount is disclosed at fair value considering the carrying amount as an approximation of fair<br>value.
--- ---
  • 21 -

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 and input variables for the fair value of financial assets and liabilities that are recorded at amortized cost are as follows:

Valuation methods Input variables
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. Risk-free market rate, etc.
(6) Financial instruments by category
--- ---

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

June 30, 2020
Financial assets Financial      <br>assets at<br>FVTPL Financial<br>assets at<br>FVTOCI Financial<br>assets at<br>amortized<br>cost Total
Deposits — — 699,746 699,746
Hybrid securities — 150,265 — 150,265
Derivative assets 9,434 — — 9,434
Other financial assets — — 62,049 62,049
Total 9,434 150,265 761,795 921,494
December 31, 2019
--- --- --- --- --- --- ---
Financial assets Financial      <br>assets at<br>FVTPL Financial<br>assets at<br>amortized<br>cost Total
Deposits — 1,129,738 1,129,738
Derivative assets 9,434 — 9,434
Other financial assets — 139,465 139,465
Total 9,434 1,269,203 1,278,637
June 30, 2020 December 31, 2019
--- --- --- --- ---
Financial liabilities Financial<br>liabilities at<br>amortized cost Financial<br>liabilities at<br>amortized cost
Debentures 947,789 947,679
Other financial liabilities 8,043 10,745
Total 955,832 958,424
  • 22 -
(7) Income or expense from financial instruments by category

Income or expense from financial assets and liabilities by each category for the six-month period ended June 30, 2020 and for the period from January 11, 2019 (date of incorporation) to June 30, 2019 are as follows (Unit: Korean Won in millions):

For the six-month period ended June 30, 2020
Interest<br>Income (expense) Reversal<br>(Provision) of credit<br>loss Others Total
Loans and other financial assets at amortized cost (*1) 7,699 9 — 7,708
Financial liabilities at amortized cost (*2) (11,013 ) — — (11,013 )
Total (3,314 ) 9 — (3,305 )
(*1) 2,692 million won interest income of cash and cash equivalents are included.
--- ---
(*2) 7 million won interest expense of asset retirement obligation is included.
--- ---
For the period from January 11, 2019 (date of incorporation) to June 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Interest<br>Income (expense) Reversal<br>(Provision) of credit<br>loss Others Total
Loans and other financial assets at amortized cost (*1) 509 — — 509
Financial liabilities at amortized cost (*2) (863 ) — — (863 )
Total (354 ) — — (354 )
(*1) 500 million won interest income of cash equivalents is included.
--- ---
(*2) 6 million won interest expense of asset retirement obligation is included.
--- ---
10. INVESTMENTS IN SUBSIDIARIES
--- ---
(1) Details of Investments in subsidiaries are as follows (Unit: Korean Won in millions and number of shares):<br>
--- ---
Subsidiaries Location Capital<br>stock Main business
--- --- --- --- --- ---
Woori Bank Korea 3,581,400 Finance
Woori Card Co., Ltd. Korea 896,300 Finance
Woori Investment Bank Co., Ltd. Korea 337,100 Other credit finance
Woori FIS Co., Ltd. Korea 24,500 System software development &<br>maintenance
Woori Finance Research Institute Co., Ltd. Korea 3,000 Other service business
Woori Credit Information Co., Ltd. Korea 5,000 Credit information
Woori Fund Service Co., Ltd. Korea 10,000 Finance
Woori Asset Trust Co., Ltd Korea 15,300 Finance
Woori Asset Management Corp. Korea 20,000 Finance
Woori Private Equity Asset Management Co., Ltd. Korea 30,000 Finance
Woori Global Asset Management Co., Ltd. Korea 20,000 Finance
  • 23 -
June 30, 2020 December 31, 2019
Subsidiaries (*1) Number of<br>shares Percentage of<br>ownership<br>(%)(*2) Financial<br>statements<br>date of use Number of<br>shares Percentage of<br>ownership<br>(%)(*2) Financial<br>statements<br>date of use
Woori Bank 716,000,000 100.0 June 30,<br>2020 676,000,000 100.0 December<br> <br>31,2019
Woori Card Co., Ltd. 179,266,200 100.0 June 30,<br>2020 179,266,200 100.0 December<br> <br>31,2019
Woori Investment Bank Co., Ltd. 403,404,538 59.8 June 30,<br>2020 403,404,538 59.8 December<br> <br>31,2019
Woori FIS Co., Ltd. 4,900,000 100.0 June 30,<br>2020 4,900,000 100.0 December<br> <br>31,2019
Woori Finance Research Institute Co., Ltd. 600,000 100.0 June 30,<br>2020 600,000 100.0 December<br> <br>31,2019
Woori Credit Information Co., Ltd. 1,008,000 100.0 June 30,<br>2020 1,008,000 100.0 December<br> <br>31,2019
Woori Fund Service Co., Ltd. 2,000,000 100.0 June 30,<br>2020 2,000,000 100.0 December<br> <br>31,2019
Woori Asset Trust Co., Ltd 1,560,000 67.2 June 30,<br>2020 1,560,000 67.2 December<br> <br>31,2019
Woori Asset Management Corp. 2,920,000 73.0 June 30,<br>2020 2,920,000 73.0 December<br> <br>31,2019
Woori Private Equity Asset Management Co., Ltd. 6,000,000 100.0 June 30,<br>2020 6,000,000 100.0 December<br> <br>31,2019
Woori Global Asset Management Co., Ltd. 4,000,000 100.0 June 30,<br>2020 4,000,000 100.0 December<br> <br>31,2019
(*1) Only subsidiaries invested directly by the company are included.
--- ---
(*2) The percentage is based on the effective shareholding rate relative to the number of stocks outstanding.<br>
--- ---
(2) Changes in the carrying value of investments in subsidiaries are as follows (Unit: Korean Won in millions):<br>
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- ---
Beginning<br>balance Acquisition Disposal Ending<br>balance
Woori Bank 17,921,151 1,000,000 — 18,921,151
Woori Card Co., Ltd. 1,118,367 — — 1,118,367
Woori Investment Bank Co., Ltd. 392,795 — — 392,795
Woori FIS Co., Ltd. 21,754 — — 21,754
Woori Finance Research Institute Co., Ltd. 1,677 — — 1,677
Woori Credit Information Co., Ltd. 16,466 — — 16,466
Woori Fund Service Co., Ltd. 13,939 — — 13,939
Woori Asset Trust Co., Ltd 224,198 — — 224,198
Woori Asset Management Corp. 122,449 — — 122,449
Woori Private Equity Asset Management Co., Ltd. 7,797 — — 7,797
Woori Global Asset Management Co., Ltd. 33,000 — — 33,000
Total 19,873,593 1,000,000 — 20,873,593
For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
--- --- --- --- --- --- --- --- ---
Beginning<br>balance<br>(date of incorporation) Acquisition Disposal Ending<br>balance
Woori Bank (*) 17,921,151 — — 17,921,151
Woori FIS Co., Ltd. (*) 21,754 — — 21,754
Woori Finance Research Institute Co., Ltd. (*) 1,677 — — 1,677
Woori Credit Information Co., Ltd. (*) 16,466 — — 16,466
Woori Fund Service Co., Ltd. (*) 13,939 — — 13,939
Woori Private Equity Asset Management Co., Ltd. (*) 7,797 — — 7,797
Total 17,982,784 — — 17,982,784
(*) Acquired by the comprehensive stock transfer at the date of incorporation.
--- ---
  • 24 -
11. PREMISES AND EQUIPMENT
(1) Details of premises and equipment as of June 30, 2020 and December 31, 2019 are as follows (Unit:<br>Korean Won in millions):
--- ---
June 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Building Properties for<br>business use Leasehold<br>improvements Asset under<br>construction Total
Premises and equipment(owned) — 4,133 3,324 7 7,464
Right-of-use<br>asset 1,209 711 — — 1,920
Total 1,209 4,844 3,324 7 9,384
December 31, 2019
--- --- --- --- --- --- --- --- ---
Building Properties for<br>business use Leasehold<br>improvements Total
Premises and equipment(owned) — 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) Details of premises and equipment (owned) as of June 30, 2020 and December 31, 2019 are as follows<br>(Unit: Korean Won in millions):
--- ---
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- ---
Properties for business use Leasehold improvements Asset under construction Total
Acquisition cost 5,383 3,967 7 9,357
Accumulated depreciation (1,250 ) (643 ) — (1,893 )
Net carrying amount 4,133 3,324 7 7,464
December 31, 2019
--- --- --- --- --- --- --- --- --- ---
Properties for business use Leasehold improvements Total
Acquisition cost 4,538 2,184 6,722
Accumulated depreciation (771 ) (388 ) (1,159 )
Net carrying amount 3,767 1,796 5,563
(3) Details of changes in premises and equipment (owned) are as follows (Unit: Korean Won in millions):<br>
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- ---
Properties for business use Leasehold improvements Asset under construction Total
Beginning balance 3,767 1,797 — 5,564
Acquisition 845 1,782 7 2,634
Depreciation (479 ) (255 ) — (734 )
Ending balance 4,133 3,324 7 7,464
For the period from January 11, 2019 (date of incorporation) to June 30, 2019
--- --- --- --- --- --- --- --- --- ---
Properties for business use Leasehold improvements Total
Beginning balance — — —
Acquisitions 4,412 2,184 6,596
Depreciation (326 ) (169 ) (495 )
Ending balance 4,086 2,015 6,101
  • 25 -
(4) Details of right-of-use assets<br>as of June 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):
June 30, 2020
--- --- --- --- --- --- --- --- --- ---
Building Properties for business use Total
Acquisition cost 3,704 1,047 4,751
Accumulated depreciation (2,495 ) (336 ) (2,831 )
Net carrying amount 1,209 711 1,920
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 amount 1,436 384 1,820
(5) Details of changes in<br>right-of-use assets for the six-month period ended June 30, 2020 and for the period from January 11, 2019 (date of<br>incorporation) to June 30, 2019 are as follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- ---
Building Properties for business use Total
Beginning balance 1,436 384 1,820
New contracts 833 478 1,311
Depreciation (1,060 ) (151 ) (1,211 )
Ending balance 1,209 711 1,920
For the period from January 11, 2019 (date of incorporation) to June 30, 2019
--- --- --- --- --- --- --- --- --- ---
Building Properties for business use Total
Beginning balance — — —
New contracts 2,871 538 3,409
Depreciation (718 ) (89 ) (807 )
Ending balance 2,153 449 2,602
12. INTANGIBLE ASSETS
--- ---
(1) Details of intangible assets are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Software Development<br>cost Membership<br>deposit Construction in progress Total
Acquisition cost 2,999 2,116 2,371 10 7,496
Accumulated amortization (1,518 ) (369 ) — — (1,887 )
Net carrying amount 1,481 1,747 2,371 10 5,609
December 31, 2019
--- --- --- --- --- --- --- --- --- ---
Software Development cost Total
Acquisition cost 2,729 1,901 4,630
Accumulated amortization (1,144 ) (176 ) (1,320 )
Net carrying amount 1,585 1,725 3,310
  • 26 -
(2) Details of changes in intangible assets are as follows (Unit: Korean Won in millions):
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Software Development cost Membership<br>deposit Construction<br>in progress Total
Beginning balance 1,585 1,725 — — 3,310
Acquisitions 270 216 2,371 10 2,867
Amortization (374 ) (194 ) — — (568 )
Ending balance 1,481 1,747 2,371 10 5,609
For the period from January 11, 2019 (date of incorporation) to June 30, 2019
--- --- --- --- --- --- --- --- --- --- --- ---
Software Development Cost Construction in progress Total
Beginning balance — — — —
Acquisitions 2,728 266 925 3,919
Amortization (449 ) (13 ) — (462 )
Ending balance 2,279 253 925 3,457
13. OTHER ASSETS
--- ---

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

June 30, 2020 December 31, 2019
Prepaid expenses 15 —
14. DEBENTURES
--- ---
Details of debentures are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- --- --- --- --- --- --- ---
Interest rate (%) Amount Interest rate (%) Amount
Face value of bonds:
Subordinated bonds 2.13 ~ 2.55 950,000 2.13 ~ 2.55 950,000
Deducted item:
Discounts on bonds (2,211 ) (2,321 )
Total 947,789 947,679
  • 27 -
15. PROVISIONS
(1) Details of provisions are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Asset retirement obligation 714 600
(2) Changes in asset retirement obligation are as follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended<br>June 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
--- --- --- --- ---
Beginning balance 600 —
Increase 108 588
Amortization 6 6
Ending balance 714 594
16. NET DEFINED BENEFIT LIABILITY
--- ---

The Company’s pension plan is based on the defined benefit retirement pension plan. Employees and directors with one or more years of service are entitled to receive a payment upon termination of their employment, based on their length of service and rate of salary at the time of termination. The assets of the plans are measured at their fair value at the end of reporting date. The plan liabilities are measured using the projected unit method, which takes account of projected earnings increases, using actuarial assumptions that give the best estimate of the future cash flows that will arise under the plan liabilities.

The 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 an interest rate calculated based on blue chip<br>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<br>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<br>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):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Present value of defined benefit obligation 21,872 14,174
Fair value of plan assets (14,306 ) (10,692 )
Net defined benefit liability 7,566 3,482
  • 28 -
(2) Changes in the carrying value of defined benefit obligation are as follows (Unit: Korean Won in millions):<br>
For the six-month period ended<br>June 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
--- --- --- --- --- ---
Beginning balance 14,174 —
Transfer-in / out 4,246 7,315
Recruit / Transfer in 1,266 3,360
Current service cost 906 746
Interest cost 166 126
Remeasurements
Financial assumption 255 476
Demographic assumptions — —
Experience adjustment 1,024 124
Retirement benefit paid (93 ) —
Others (72 ) —
Ending balance 21,872 12,147
(3) Changes in the plan assets are as follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended<br>June 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
--- --- --- --- --- --- ---
Beginning balance 10,692 —
Transfer-in / out 3,673 7,315
Interest income 134 43
Remeasurements (46 ) (12 )
Retirement benefit paid (147 ) —
Ending balance 14,306 7,346
(4) Plan assets wholly consist of fixed deposits as of June 30, 2020 and December 31, 2019. Among plan<br>assets, realized returns on plan assets amount to 88 million Won and 31 million Won for the six-month period ended June 30, 2020 and for the period from January 11, 2019 (date of<br>incorporation) to June 30, 2019, respectively.
--- ---
(5) The amount recognized in profit or loss and total comprehensive income related to the defined benefit plan for<br>the six-month period ended June 30, 2020 and for the period from January 11, 2019 (date of incorporation) to June 30, 2019 is as follows (Unit: Korean Won in millions):
--- ---
For the six-month period ended<br>June 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
--- --- --- --- ---
Current service cost 906 746
Recruit/Transfer in 1,266 3,360
Net interest expense (Income) 32 83
Cost recognized in net income 2,204 4,189
Remeasurements (*) 1,326 612
Cost recognized in total comprehensive income 3,530 4,801
(*) The amount is before income tax expense effect.
--- ---
  • 29 -
17. OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

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

June 30, 2020 December 31, 2019
Other financial liabilities:
Accounts payable 694 2,424
Accrued expenses 7,137 6,651
Lease liabilities 1,817 1,568
Other miscellaneous financial liabilities 212 102
Sub-total 9,860 10,745
Other liabilities:
Other miscellaneous liabilities 323 4,142
Total 10,183 14,887
18. DERIVATIVES
--- ---

Derivative assets and derivative liabilities are as follows (Unit: Korean Won in millions):

June 30, 2020 December 31, 2019
Nominal<br>amount Assets<br>For trading Nominal<br>amount Assets<br>For trading
Equity Forwards 117,535 9,434 117,535 9,434

Derivatives held for trading are classified into financial assets at FVTPL in the statements of financial position (seeing Note 6).

  • 30 -
19. EQUITY
(1) Details of equity as of June 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in<br>millions):
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Capital 3,611,338 3,611,338
Hybrid securities 1,695,821 997,544
Capital surplus 14,874,084 14,874,084
Accumulated other comprehensive income (1,400 ) (631 )
Retained earnings 735,050 623,930
Total 20,914,893 20,106,265
(2) The number of authorized shares and others of the Company are as follows:
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Shares of common stock authorized 4,000,000,000 Shares 4,000,000,000 Shares
Par value 5,000 Won 5,000 Won
Shares of common stock issued 722,267,683 Shares 722,267,683 Shares
Capital stock 3,611,338 million Won 3,611,338 million Won
(3) Hybrid securities
--- ---

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

Issue date Maturity Interest rate<br>(%) June 30,<br>2020 December 31,<br>2019
Securities in local currency 2019-07-18 — 3.49 500,000 500,000
Securities in local currency 2019-10-11 — 3.32 500,000 500,000
Securities in local currency 2020-02-06 — 3.34 400,000 —
Securities in local currency 2020-06-12 — 3.23 300,000 —
Issuance cost (4,179 ) (2,456 )
Total 1,695,821 997,544

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

(4) Accumulated other comprehensive income

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

For the six-month period ended June 30, 2020
Beginning<br>balance Increase<br>(decrease) Income tax<br>effect Ending<br>balance
Net gain (loss) on valuation of financial assets at FVTOCI — 265 (73 ) 192
Remeasurement loss related to defined benefit plan (631 ) (1,326 ) 365 (1,592 )
Total (631 ) (1,061 ) 292 (1,400 )
For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Beginning<br>balance Increase<br>(decrease) Income tax<br>effect Ending<br>balance
Remeasurement loss related to defined benefit plan — (612 ) 167 (445 )
  • 31 -
(5) Regulatory Reserve for Credit Loss

In accordance with Article 26 ~ 28 of the Financial holding company Supervision Regulations, the Company 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):

June 30,<br>2020 December 31,<br>2019
Beginning balance 692 —
Planned provision of regulatory reserve (reversal) for credit loss (390 ) 692
Ending balance 302 692
2) Provision of regulatory reserve for credit loss, adjusted net income after the provision of regulatory reserve<br>and others
--- ---

Planned reserves provided, adjusted net income after the planned reserves provided and adjusted EPS after the planned reserves provided are as follows (Unit: Korean Won in millions, except for EPS amount):

2020 2019
For the three-<br>month period<br>ended<br>June 30, 2020 For the six-<br>month period<br>ended<br>June 30,<br>2020 For the three-<br>month period<br>ended<br>June 30, 2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>June 30, 2019
Net income before regulatory reserve (23,258 ) 637,072 662,072 647,431
Provision(reversal) of regulatory reserve for credit loss (484 ) (390 ) 1,010 1,010
Adjusted net income after the provision of regulatory reserve (22,774 ) 637,462 661,062 646,421
Dividends to hybrid securities (11,853 ) (20,365 ) — —
Adjusted net income after regulatory reserve and dividends to hybrid securities (34,627 ) 617,097 661,062 646,421
Adjusted EPS after regulatory reserve and dividends to hybrid securities (Unit: Korean<br>Won) (48 ) 855 972 951
20. DIVIDENDS
--- ---

Dividends per share and the total dividends for the fiscal year ending December 31, 2019 were 700 Won and 505,587 million Won, respectively, approved at the regular general shareholders’ meeting held on March 25, 2020.

  • 32 -
21. NET INTEREST INCOME
(1) Interest income recognized is as follows (Unit: Korean Won in millions):
--- ---
2020 2019
--- --- --- --- --- --- --- --- ---
For the three-<br>month period<br>ended<br>June 30, 2020 For the six-<br>month period<br>ended<br>June 30, 2020 For the three-<br>month period<br>ended June 30,<br>2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>June 30, 2019
Interest on due from banks 3,177 7,686 477 500
Other interest income 8 13 5 9
Total 3,185 7,699 482 509
(2) Details of interest expense recognized are as follows (Unit: Korean Won in millions):
--- ---
2020 2019
--- --- --- --- --- --- --- --- ---
For the three-<br>month period<br>ended<br>June 30, 2020 For the six-<br>month period<br>ended<br>June 30, 2020 For the three-<br>month period<br>ended June 30,<br>2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>June 30, 2019
Interest on borrowings — — 330 495
Interest on debentures 5,481 11,007 338 338
Other interest expense 4 6 3 6
Interest on lease liabilities 10 18 13 24
Total 5,495 11,031 684 863
22. NET FEES AND COMMISSIONS INCOME
--- ---
(1) There are no fees and commissions income recognized for the six-month<br>period ended June 30, 2020 and for the period from January 11, 2019 (date of incorporation) to June 30, 2019.
--- ---
(2) Details of fees and commissions expense incurred are as follows (Unit: Korean Won in millions):<br>
--- ---
2020 2019
--- --- --- --- --- --- --- --- ---
For the three-<br>month period<br>ended<br>June 30, 2020 For the six-<br>month period<br>ended<br>June 30, 2020 For the three-<br>month period<br>ended June 30,<br>2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>June 30, 2019
Fees and commissions paid 3,773 4,243 1,929 2,985
Others 1,756 3,925 1,669 4,427
Total 5,529 8,168 3,598 7,412
  • 33 -
23. DIVIDEND INCOME

Details of dividend income recognized are as follows (Unit: Korean Won in millions):

2020 2019
For the three-<br>month period<br>ended<br>June 30, 2020 For the six-<br>month period<br>ended<br>June 30, 2020 For the three-<br>month period<br>ended June 30,<br>2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>June 30, 2019
Dividend income recognized from<br><br><br>investments in subsidiaries — 677,795 676,000 676,000
24. PROVISION FOR IMPAIRMENT LOSSES DUE TO CREDIT LOSS
--- ---

Details of reversal of impairment losses due to credit loss recognized are as follows (Unit: Korean Won in millions):

2020 2019
For the three-<br>month period<br>ended<br>June 30, 2020 For the six-<br>month period<br>ended<br>June 30, 2020 For the three-<br>month period<br>ended June 30,<br>2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>June 30, 2019
Reversal of impairment loss due to credit loss on loans and other financial assets at amortized<br>cost 9 9 — —
  • 34 -
25. GENERAL AND ADMINISTRATIVE EXPENSES
(1) Details of general and administrative expenses recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
2020 2019
--- --- --- --- --- --- --- --- --- --- ---
For the three-<br>month period<br>ended June 30,<br>2020 For the six-month<br>period ended<br>June 30, 2020 For the three-<br>month period<br>ended June 30,<br>2019 For the<br>period from<br>January 11,<br>2019<br>(date of<br>incorporation)<br>to June 30,<br>2019
Employee benefits Short-term employee benefits Salaries 6,545 12,591 4,099 7,281
Employee fringe<br> <br>benefits 3,140 5,209 2,621 3,125
Retirement benefit service costs 1,784 2,204 393 4,189
Share based payments 517 493 254 531
Sub-total 11,986 20,497 7,367 15,126
Depreciation and amortization 1,341 2,513 1,083 1,764
Other general and administrative expenses Rent 318 493 177 333
Taxes and public dues 53 214 69 110
Service charges 642 1,666 391 984
Computer and IT related 682 1,215 400 689
Telephone and communication 64 190 41 100
Operating promotion 293 502 135 251
Advertising 29 101 30 460
Printing 12 28 6 44
Traveling 13 34 81 106
Supplies 74 119 30 55
Insurance premium 19 19 19 164
Reimbursement 231 449 206 364
Vehicle maintenance 52 87 33 50
Others 20 27 7 10
Sub-total 2,502 5,144 1,625 3,720
Total 15,829 28,154 10,075 20,610
  • 35 -
(2) Share-based payment

Details of performance condition share-based payment granted to executives as of June 30, 2020 and 2019 are as follows.

1) Performance condition share-based payment
Subject to Shares granted for the year 2019
--- --- ---
Type of payment Cash-settled
Vesting period January 11, 2019 ~<br>December 31, 2022
Date of payment 2023-01-01
Fair value 8,215 Won
Valuation method Black-Scholes Model
Stock price(*1) 8,810 Won
Expected dividend rate 4.13%
Expected maturity date 2.5 years
Number of shares measured as of the closing date (*2) As of June 30, 2020 77,728 shares
As of December 31, 2019 77,728 shares
Subject to Shares granted for the year 2020
--- --- ---
Type of payment Cash-settled
Vesting period January 1, 2020 ~<br>December 31, 2023
Date of payment 2024-01-01
Fair value 7,882 Won
Valuation method Black-Scholes Model
Stock price(*1) 8,810 Won
Expected dividend rate 4.13%
Expected maturity date 3.5 years
Number of shares measured as of the closing date (*2) As of June 30, 2020 85,079 shares
As of December 31, 2019 —
(*1) Closing price of Woori Financial Group Inc. at the end of June.
--- ---
(*2) 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 Company accounts for performance condition share-based payments according to the cash-settled method and<br>the fair value of the liabilities is reflected in the compensation costs by re-measuring every closing period. As of June 30, 2020 and December 31, 2019 the book value of the liabilities related to<br>the performance condition share-based payments recognized by the company is 1,312 million Won and 819 million Won.
--- ---
  • 36 -
26. NON-OPERATING INCOME (EXPENSES)
(1) Details of non-operating income and expenses recognized are as follows<br>(Unit: Korean Won in millions):
--- ---
2020 2019
--- --- --- --- --- --- --- --- --- --- --- --- ---
For the three-month<br>period<br>ended June 30, 2020 For the six-month<br>period<br>ended June 30, 2020 For the three-month<br>period<br>ended June 30, 2019 For the period<br>from<br>January 11, 2019<br>(date of<br>incorporation)<br>to June 30, 2019
Other non-operating income 181 181 — —
Other non-operating expense (1 ) (201 ) (200 ) (600 )
Total 180 (20 ) (200 ) (600 )
(2) Details of other non-operating income recognized are as follows (Unit:<br>Korean Won in millions):
--- ---
2020 2019
--- --- --- --- --- --- --- --- ---
For the three-month<br>period<br>ended June 30, 2020 For the six-month<br>period<br>ended June 30, 2020 For the three-month<br>period<br>ended June 30, 2019 For the period<br>from<br>January 11, 2019<br>(date of<br>incorporation)<br>to June 30, 2019
Others 181 181 — —
(3) Details of other non-operating expenses recognized are as follows<br>(Unit: Korean Won in millions):
--- ---
2020 2019
--- --- --- --- --- --- --- --- ---
For the three-month<br>period<br>ended June 30, 2020 For the six-month<br>period<br>ended June 30, 2020 For the three-month<br>period<br>ended June 30, 2019 For the period<br>from<br>January 11, 2019<br>(date of<br>incorporation)<br>to June 30, 2019
Donations 1 201 200 600
27. INCOME TAX EXPENSE (INCOME)
--- ---

Details of income tax expense (income) are as follows (Unit: Korean Won in millions):

For the six-month period ended<br>June 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
Current tax expense:
Current tax expense with respect to the current period — —
Sub-total — —
Deferred tax expense(income)
Change in deferred tax assets(liabilities) due to temporary differences 766 (574 )
Income tax expense directly attributable to equity 292 167
Sub-total 1,058 (407 )
Income tax expense (income) 1,058 (407 )

Income tax expense (income) was recognized based on the estimate of the best weighted average annual effective tax rate expected for the interim period. The weighted average annual effective tax rate for the June 30, 2020, is 0.2% and the interim period from January 11, 2019 (date of incorporation) to June 30, 2019 is tax income, so the annual effective tax rate was not calculated.

  • 37 -
28. EARNINGS PER SHARE (“EPS”)
(1) Basic EPS is calculated by dividing net income attributable to common shareholders by weighted-average number<br>of common shares outstanding (Unit: Korean Won in millions, except for EPS and number of shares):
--- ---
2020 2019
--- --- --- --- --- --- --- --- --- --- ---
For the three-month<br>period<br>ended June 30, 2020 For the six-month<br>period<br>ended June 30, 2020 For the three-month<br>period<br>ended June 30, 2019 For the period from<br>January 11, 2019<br>(date of<br>incorporation)<br>to June 30, 2019
Net income attributable to Owners (23,258 ) 637,072 662,072 647,431
Dividends to hybrid securities (11,853 ) (20,365 ) — —
Net income attributable to common shareholders (35,111 ) 616,707 662,072 647,431
Weighted average number of common shares outstanding 722 722 680 680
Basic EPS (Unit: Korean Won) (49 ) 854 974 952
(2) The weighted average number of common shares outstanding is as follows: (Unit: number of shares, days)<br>
--- ---
For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- ---
Period Number of<br>shares Dates Accumulated number<br>of shares outstanding<br>during period
Common shares outstanding at the beginning of the period 2020-01-01~2020-06-30 722,267,681 182 131,452,717,942
Sub-total (①) 131,452,717,942
Weighted average number of common shares outstanding (②=(①/182) 722,267,681
For the period from January 11, 2019 (date of incorporation)<br>to June 30, 2019
--- --- --- --- --- --- --- --- ---
Period Number of<br>shares Dates Accumulated number<br>of shares outstanding<br>during period
Common shares issued at the beginning date of incorporation of the period 2019-01-11~2019-06-30 680,164,306 171 116,308,096,326
Sub-total (①) 116,308,096,326
Weighted average number of common shares outstanding (②=(①/171) 680,164,306

Diluted EPS is equal to basic EPS because there is no dilution effect for the six-month period ended June 30, 2020 and for the period from January 11, 2019 (date of incorporation) to June 30, 2019.

  • 38 -
29. CONTINGENT LIABILITIES AND COMMITMENTS
(1) Litigation case
--- ---

As of June 30, 2020 and December 31, 2019, the Company has no litigation case in progress.

(2) Details of loan commitments with financial institutions are as follows (Unit: Korean Won in millions):<br>
June 30, 2020 December 31, 2019
--- --- --- --- --- --- --- --- --- ---
Financial institutions Line of credit Loan balance Line of credit Loan balance
Loans Standard Chartered Bank Korea Ltd. 65,000 — 65,000 —
Kookmin Bank 35,000 — 35,000 —
Total 100,000 — 100,000 —
(3) The Company decided to enter into a stock sales agreement with a major shareholder of Woori Asset Trust Co.,<br>Ltd (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 Company acquired the interest<br>of the 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 Company recognized 9,434 million Won as derivative assets as of June 30, 2020 and December 31, 2019 (seeing Note 18).

(4) On March 31, 2020, the Financial Services Commission, the Korea Development Bank, and the five major financial<br>groups, 17 leading financial institutions and Korea Securities Finance agreed to create a Korea Fund (Securities Market Stabilization Fund) together to cope with the crisis in the securities market. Woori Financial Group will participate in the fund<br>within 1 trillion Won. On April 9, 2020 Woori Bank invested 100 billion won.
  • 39 -
30. RELATED PARTY TRANSACTIONS

Related parties of the Company as of June 30, 2020 and December 31, 2019, and assets and liabilities recognized, guarantees and commitments, major transactions with related parties and compensation to key management for the six-month period ended June 30, 2020 and for the period from January 11, 2019 (date of incorporation) to June 30, 2019 are as follows:

(1) Related parties

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 Myanmar Co., Ltd., Wealth Development Bank, Woori Bank Vietnam Limited, WB Finance Co., Ltd., Woori Bank Europe, TUTU<br>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 61 SPCs, Heungkuk<br>Woori Tech Company Private Placement Investment Trust No. 1 and 16 beneficiary certificates
Associates W 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 35 associates)
(2) Assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
--- ---
Related party Title of account June 30, 2020 December 31, 2019
--- --- --- --- --- --- --- ---
Woori Bank Cash and cash equivalents 129,525 43,670
Other financial assets 738,168 1,229,181
Allowance for credit losses (254 ) (263 )
Other financial liabilities 1,952 601
Woori Card Co., Ltd. Other financial assets 21,921 37,754
Other financial liabilities 227 267
Woori FIS Co., Ltd. Other financial assets 698 1,386
Other financial liabilities 206 190
Woori Finance Research Institute Co., Ltd. Other financial assets 154 21
Other financial liabilities — 1,320
Woori Credit Information Co., Ltd. Other financial assets 826 568
Woori Fund Service Co., Ltd. Other financial assets 282 556
W Service Networks Co., Ltd. Other financial liabilities 121 64
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(3) Gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):

Related party Title of account For the six-month<br>period ended<br>June 30, 2020 For the period from<br>January 11, 2019<br>(date of incorporation) to<br>June 30, 2019
Woori Bank Interest income 7,699 509
Dividend income 676,000 676,000
Interest expenses (*) 18 25
Fees and commissions expense 9 1
Reversal of impairment loss due to credit loss 9 —
General and administrative expenses (*) 1,533 1,043
Woori FIS Co., Ltd. General and administrative expenses 1,105 488
Woori Finance Research Institute Co., Ltd. Fees and commissions expenses 3,150 2,800
Woori Credit Information Co., Ltd. Dividend income 494 —
Woori Fund Service Co., Ltd. Dividend income 521 —
Woori Asset Trust Co., Ltd Dividend income 780 —
W Service Networks Co., Ltd. General and administrative expenses 620 377
(*) 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 June 30, 2020 and December 31, 2019 are as follows (Unit: Korea Won in millions):
--- ---
Related parties Title of account June 30, 2020 December 31, 2019
--- --- --- --- --- ---
Woori Bank Right-of-use assets 1,209 1,436
Lease liabilities (*) 1,073 1,164
(*) Cash outflows of lease liabilities redemption for the six-month period<br>ended June 30, 2020 and for the period from January 11, 2019 (date of incorporation) to June 30, 2019 are 820 million Won, 542 million Won, respectively.
--- ---
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(5) The details of loan and borrowing transactions with related parties for the<br>six-month period ended June 30, 2020 and for the period from January 11, 2019 (date of incorporation) to June 30, 2019 are as follows (Unit: Korea Won in millions):
Related parties Title of account For the six-month period ended June 30, 2020
--- --- --- --- --- --- --- --- --- ---
Beginning<br>balance Increase Decrease Ending<br>balance
Woori Bank Due from banks 1,130,000 2,700,000 3,080,000 750,000
(*) Details such as ordinary deposits that can be frequently deposited or withdrawn are excluded.<br>
--- ---
Related parties Title of account For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
--- --- --- --- --- --- --- --- --- ---
Beginning<br>balance Increase Decrease Ending<br>balance
Woori Bank Due from banks — 900,000 — 900,000
(*) Details such as ordinary deposits that can be frequently deposited or withdrawn are excluded.<br>
--- ---
(6) The details of equity-related transactions with related parties for the<br>six-month period ended June 30, 2020 are as follows (Unit: Korean Won in million)
--- ---
Related parties Contribution Acquisition<br>of hybrid<br>securities
--- --- --- --- ---
Woori Bank 1,000,000 —
Woori Card Co., Ltd. — 150,000
(7) There are no guarantees provided to the related parties. The unused commitments provided from the related<br>parties are as follows (Unit: Korean Won in millions):
--- ---
June 30, 2020 December 31, 2019 Warranty
--- --- --- --- --- ---
Woori Card Co., Ltd. 229 495 Unused loan commitment
(8) Compensation for key management is as follows (Unit: Korean Won in millions):
--- ---
For the six-month period<br>ended June 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
--- --- --- --- ---
Short-term employee salaries 2,786 1,751
Retirement benefit service costs 108 534
Share-based compensation 397 368
Total 3,291 2,653

Key management includes registered executives and non-registered executives. The Company has not recognized any outstanding assets, liabilities, allowance and related impairment loss due to credit losses from transaction with key management as of June 30, 2020 and December 31, 2019.

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31. LEASES
(1) The future lease payments under the lease contracts are as follows (Unit: Korean Won in millions):<br>
--- ---
June 30, 2020 December 31, 2019
--- --- --- --- ---
Lease payments:
Within one year 1,451 1,341
After one year but within five years 385 249
Total 1,836 1,590
(2) Total cash outflows from lease are as follows (Unit: Korean Won in millions):
--- ---
For the six-month period<br>ended June 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
--- --- --- --- ---
Cash outflows from lease 1,031 620
(3) Details of lease payments that are not included in the measurement of lease liabilities due to the fact that<br>they are leases for which the underlying asset is of low value are as follows (Unit: Korean Won in millions):
--- ---
For the six-month period<br>ended June 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to June 30, 2019
--- --- --- --- ---
Lease payments for which the underlying asset is of low value 64 44

There are no lease payments not included in the lease liabilities measurement, resulting from short-term leases for the six-month period ended June 30, 2020 and for the period from January 11, 2019 (date of incorporation) to June 30, 2019.

(4) On December 16, 2019 the IFRS Interpretation Committee(IC) announced its interpretation on lease term and<br>useful life of leasehold improvements. The IC discussed how to determine the lease term of a cancellable lease or a renewable lease. The Committee also observed that in determining the enforceable period of lease an entity should consider broader<br>economic penalty. The company plans to reflect its effect subsequent to the analysis of the change in accounting policy regarding lease term.
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