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6-K

Woori Financial Group Inc. (WF)

6-K 2020-11-16 For: 2020-11-16
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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 November 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 3Q Business Report
2. Exhibit 99.1 Woori Financial Group Review Report for 2020 3Q (Consolidated)
3. Exhibit 99.2 Woori Financial Group Review Report for 2020 3Q (Separate)

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Summary of 2020 Third Quarter 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 September 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 theCompany
1.   Overview of theCompany
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 September 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

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2. Capital Structure (Changes in Capital)
As of September 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 September 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 December 31, 2019 (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 11,669,293 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 3Q 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 3Q.

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II. Business Overview
1. Results of Operations
--- ---
As of September 30, 2020 (unit: billions of Won)
--- --- --- --- --- --- ---
Type 2020 3Q 2019 2018
Operating income 1,848 2,800 —
Non-operating income -138 -77 —
Income from continuing operations before income tax 1,710 2,723 —
Income tax expense from continuing operations 414 685 —
Income from discontinued operations — — —
Net income 1,296 2,038 —
Controlling Interest 1,141 1,872 —
Non-controlling Interest 155 165 —

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 3Q 2019
AverageBalance InterestRate Proportion AverageBalance InterestRate Proportion
Source Deposits 260,793,336 1.15 71.57 249,106,041 1.51 71.14
Borrowings 19,515,819 1.45 5.36 18,013,074 1.92 5.14
Debentures 30,989,756 2.29 8.50 30,401,987 2.56 8.68
Others 27,296,291 — 7.49 28,928,780 — 8.26
Total Liabilities 338,595,201 — 92.92 326,449,882 — 93.23
Total Equity 25,814,440 — 7.08 23,703,431 — 6.77
Total Liabilities & Equity 364,409,642 — 100.00 350,153,313 — 100.00

Note 1) 2020 3Q Average Balance: average of balances as of December 31, 2019, March 31, 2020, June 30, 2020 and September 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 3Q 2019
Average<br>Balance InterestRate Proportion AverageBalance InterestRate Proportion
Use Cash & Due from Banks 11,688,934 0.49 3.21 9,202,054 1.55 2.63
Marketable securities 54,297,919 1.96 14.90 50,396,362 2.29 14.39
Loans 265,296,005 3.05 72.80 254,691,201 3.48 72.74
Loans in local currency 228,924,743 2.80 62.82 219,418,214 3.22 62.66
Loans in foreign currency 22,701,742 4.08 6.23 20,982,894 4.59 5.99
Guarantee payments 11,981 5.48 0.00 12,410 1.48 0.00
Credit card receivables 8,125,894 7.94 2.23 8,139,789 7.98 2.32
Foreign bills bought 5,531,644 1.77 1.52 6,137,894 2.96 1.75
Bad debt expense in local currency (-) -1,662,486 — -0.46 -1,666,215 — -0.48
Other 34,789,270 — 9.55 37,529,911 — 10.72
Total Assets 364,409,642 — 100.00 350,153,313 — 100.00

Note 1) 2020 3Q Average Balance: average of balances as of December 31, 2019, March 31, 2020, June 30, 2020 and September 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 3Q 2019
Equity capital (A) 27,261 27,115
Risk weighted assets (B) 191,562 228,046
BIS(Capital adequacy) ratio (A/B) 14.23 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

Note 3) 2019 figures based on Standardised Approach / 2020 3Q figures based on IRB Approach

Note 4) 2020 3Q figures reflect the adoption of the Basel III credit risk framework

Note 5) 2020 3Q figures are estimates only and are subject to change

Figures of Affiliated Companies

As of the end of the periods indicated (units: 100 millions of Won, % )
Name of Company Type 2020 3Q 2019 2018
Woori Bank BIS ratio Equity capital (A) 260,795 243,142 242,508
Risk weighted assets (B) 1,478,668 1,578,895 1,549,710
Capital adequacy ratio (A/B) 17.64 15.40 15.65
Woori Card Adjusted capital ratio 20.36 18.33 18.08
Tangible common equity ratio 14.00 14.29 13.54
Woori Investment Bank BIS ratio Equity capital (A) 3,902 3,381 3,003
Risk weighted assets (B) 30,251 26,303 23,192
Capital adequacy ratio (A/B) 12.90 12.86 12.95
Woori Asset Trust Operating capital ratio 1,225.91 1,397.97 957.76
Woori Asset Management Minimum operating capital ratio 723.57 655.8 558.9

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 3Q 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 3Q 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) 426,755 31,541 1,353.0 45,079 7,475 603.1 —
Woori Card<br><br><br>Note 2) 5,977,320 1,610,221 371.2 5,976,031 1,407,335 424.6 6,055,752 1,349,874 448.6
Woori Investment Bank<br><br><br>Note 2) 2,323,693 1,088,701 213.4 1,671,823 1,118,318 149.5 1,183,476 444,475 266.3
Woori Asset Trust<br><br><br>Note 3) 93,502 11,537 810.5 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 3Q 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) 1,594 — — 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 3Q 2019 2018
Woori Bank Liquidity coverage ratio Note 1) 93.46 107.27 103.40
Foreign currency liquidity coverage ratio Note 2) 108.94 110.50 108.98
Ratio of business purpose premises and equipment 11.44 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 3Q, 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 March 2021.

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 3Q, 2019 4Q and 2018 4Q; foreign currency liquidity coverage ratio for each month during the current quarter : July : 111.14%, August : 111.40%, September : 104.36%

Profitability Ratios

(unit: % )
Type 2020 3Q 2019 2018
ROA ROE ROA ROE ROA ROE
Woori Financial Group Note 1)
Including non-controlling interests 0.46 7.82 0.57 10.11 —
Excluding non-controlling interests 0.41 6.88 0.52 9.29 —
Woori Bank Note 2) 0.43 6.58 0.55 8.36 0.60 8.82
Woori Card Note 2) 1.21 6.54 0.90 5.05 0.72 4.00
Woori Investment Bank Note 2) 1.66 14.91 1.69 13.66 1.30 10.49
Woori Asset Trust Note 3) 23.61 33.73 25.18 37.40 28.73 49.43
Woori Asset Management 5.92 6.20 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 3Q 2019 2018
Total loans 285,248 266,432 —
Substandard and below loans 1,138 1,198 —
Substandard and below ratio 0.40 0.45 —
Non-Performing Loans 1,029 1,068 —
NPL Ratio 0.36 0.40 —
Substandard and below coverage ratio (A/B) 151.9 133.6 —
Loan Loss reserve (A) 1,728 1,600 —
Substandard and below loans (B) 1,138 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 3Q 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 0.34 0.32 151.10 0.40 0.36 121.80 0.51 0.43 119.42
Woori Card 0.70 — 102.77 0.80 — 102.84 0.80 — 104.02
Woori Investment Bank 0.32 0.12 241.03 0.49 0.21 167.39 1.51 1.49 51.21
Woori Asset Trust 62.53 — — 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 3Q 2019 2018
ASSETS
Cash and cash equivalents 8,814,244 6,392,566 6,747,894
Financial assets at fair value through profit or loss (“FVTPL”) 10,565,822 8,069,144 6,126,316
Financial assets at fair value through other comprehensive income 29,644,347 27,730,531 18,063,423
Securities at amortized cost 17,889,922 20,320,539 22,932,559
Loans and other financial assets at amortized cost 307,778,061 293,717,693 282,457,578
Investments in joint ventures and associates 1,076,855 806,360 361,766
Investment properties 311,344 280,239 378,196
Premises and equipment 3,278,633 3,364,716 2,450,492
Intangible assets 799,803 844,110 597,520
Assets held for sale 59,899 10,556 17,912
Net defined benefit asset — 2,582 —
Current tax assets 74,130 47,367 20,730
Deferred tax assets 36,860 39,544 59,641
Derivative assets (designated for hedging) 228,580 121,131 35,503
Other assets 280,411 233,646 197,653
Total assets **** 380,838,911 **** **** 361,980,724 **** **** 340,447,183 ****
LIABILITIES
Financial liabilities at FVTPL 3,817,831 2,958,302 2,282,686
Deposits due to customers 278,588,976 264,685,578 248,690,939
Borrowings 22,768,493 18,998,920 16,202,986
Debentures 29,964,791 30,858,055 28,735,862
Provisions 463,198 443,980 391,313
Net defined benefit liability 186,044 92,470 173,109
Current tax liabilities 129,537 182,690 159,078
Deferred tax liabilities 286,705 134,322 18,156
Derivative liabilities (designated for hedging) 23,039 6,837 51,408
Other financial liabilities 17,941,940 17,706,767 21,442,524
Other liabilities 459,607 420,471 346,078
Total liabilities **** 354,630,161 **** **** 336,488,392 **** **** 318,494,139 ****
EQUITY
Owners’ equity: 22,753,163 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 627,496 626,295 285,889
Other equity (2,297,529 ) (2,249,322 ) (2,213,970 )
Retained earnings 19,116,037 18,524,515 17,124,657
Non-controlling interests 3,455,587 3,981,962 213,113
Total equity **** 26,208,750 **** **** 25,492,332 **** **** 21,953,044 ****
Total liabilities and equity **** 380,838,911 **** **** 361,980,724 **** **** 340,447,183 ****
Number of Consolidated Subsidiaries (excluding holding company) 118 102 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 3Q 2019 3Q 2019 2018
Operating income **** 1,847,758 **** **** 2,369,703 **** **** 2,799,976 **** **** 2,759,301 ****
Net interest income 4,428,288 4,416,850 5,893,706 5,650,951
Net fees and commissions income 731,049 840,744 1,102,628 1,069,974
Dividend income 99,140 84,556 107,959 90,552
Net gain or loss on financial instruments at FVTPL (fair value through profit or loss) 531,931 101,608 25,455 214,443
Net gain or loss on financial assets at FVTOCI 18,677 8,036 11,015 2,047
Net gain arising on financial assets at amortized cost 40,319 99,107 102,115 79,532
Impairment losses due to credit loss (586,720 ) (323,755 ) (374,244 ) (329,574 )
General and administrative expenses (2,688,620 ) (2,576,277 ) (3,766,077 ) (3,624,033 )
Other net operating income (expenses) (726,306 ) (281,166 ) (302,581 ) (394,591 )
Non-operating income(expense) **** (137,929 ) **** 28,649 **** **** (76,927 ) **** 45,571 ****
Net income before income tax expense **** 1,709,829 **** **** 2,398,352 **** **** 2,723,049 **** **** 2,804,872 ****
Income tax expense **** (414,081 ) **** (592,281 ) **** (685,453 ) **** (753,223 )
Net income **** 1,295,748 **** **** 1,806,071 **** **** 2,037,596 **** **** 2,051,649 ****
Net income attributable to owners 1,140,764 1,665,697 1,872,207 2,033,182
Net income attributable to the non-controlling<br>interests 154,984 140,374 165,389 18,467
Other comprehensive income (loss), net of tax **** (29,330 ) **** 142,498 **** **** 51,782 **** **** (92,236 )
Items that will not be reclassified to profit or loss (49,753 ) (90,468 ) (92,777 ) (115,384 )
Items that may be reclassified to profit or loss 20,423 232,966 144,559 23,148
Total comprehensive income **** 1,266,418 **** **** 1,948,569 **** **** 2,089,378 **** **** 1,959,413 ****
Comprehensive income attributable to the owners 1,116,291 1,795,631 1,914,393 1,943,885
Comprehensive income attributable to non-controlling<br>interests 150,127 152,938 174,985 15,528
Net income per share:
Basic and diluted loss per share (in Korean Won) 1,532 2,459 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 3Q 2019
ASSETS
Cash and cash equivalents 97,695 43,670
Financial assets at fair value through profit or loss 9,434 9,434
Financial assets at fair value through other comprehensive income 150,528 —
Loans and other financial assets at amortized cost 993,777 1,269,203
Investments in subsidiaries 20,873,593 19,873,593
Premises and equipment 8,301 7,383
Intangible assets 5,428 3,310
Deferred tax assets 692 —
Other assets 264 —
Total assets **** 22,139,712 **** **** 21,206,593 ****
LIABILITIES
Debentures 1,147,410 947,679
Provisions 718 600
Net defined benefit liability 9,146 3,482
Current tax liabilities 89,437 133,526
Deferred tax liabilities — 154
Other financial liabilities 9,807 10,745
Other liabilities 1,170 4,142
Total liabilities **** 1,257,688 **** **** 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 (1,868 ) (631 )
Retained Earnings 702,649 623,930
Total equity **** 20,882,024 **** **** 20,106,265 ****
Total liabilities and equity **** 22,139,712 **** **** 21,206,593 ****

17

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Summary Statement of Comprehensive Income

(The Company, for the period indicated) (unit: millions of Won, except per share amounts)
Classification 2020 3Q 2019 3Q 2019
Operating Income: **** 618,788 **** **** 636,606 **** **** 629,437 ****
Net interest income (7,751 ) 765 40
Interest income 8,998 3,981 7,741
Interest expense (16,749 ) (3,216 ) (7,701 )
Net fees and commissions loss (10,730 ) (9,925 ) (15,833 )
Fees and commissions income — — —
Fees and commissions expense (10,730 ) (9,925 ) (15,833 )
Dividend income 679,085 676,000 676,000
Net gain on financial instruments at FVTPL — — 9,434
Impairment losses due to credit loss (174 ) — (263 )
General and administrative expenses (41,642 ) (30,234 ) (39,941 )
Non-operating loss **** (220 ) **** (755 ) **** (750 )
Net Income before income tax expense **** 618,568 **** **** 635,851 **** **** 628,687 ****
Income tax expense **** 378 **** **** 639 **** **** (394 )
Net Income **** 618,946 **** **** 636,490 **** **** 628,293 ****
Other comprehensive loss, net of tax **** (1,237 ) **** (761 ) **** (631 )
Items that will not be reclassified to profit or loss **** (1,237 ) **** (761 ) **** (631 )
Net gain on valuation of equity securities at FVTOCI **** 383 **** **** — **** **** — ****
Remeasurement loss related to defined benefit plan **** (1,620 ) **** (761 ) **** (631 )
Total comprehensive Income **** 617,709 **** **** 635,729 **** **** 627,662 ****
Net Income per share:
Basic and diluted Income per share (In Korean Won) 809 926 900

18

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IV. Independent Auditor’s Opinion
1. Independent Auditor’s Opinion
--- ---
2020 3Q 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 3Q Samil PricewaterhouseCoopers 3Q review KRW 1,135 million 3,865 hours
1H review 2,505 hours
1Q review 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 6,095 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

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c. Current Status of Audit Service Agreements with the Independent Auditor Relating to U.S. Listing
Term Auditor Description Fee
--- --- --- ---
2020 Samil<br>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
--- --- --- --- --- --- --- ---
2020 July 9, 2020 Tax adjustment (including review relating to application of consolidated tax) July 9, 2020 ~ May 31, 2021 KRW 61million
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 September 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

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2. Affiliated Companies (As of September 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 September 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 September 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

Note 2) Small scale stock exchange between Woori Financial Group and Woori Card.

23

Table of Contents
c. Share Ownership of More Than 5%
As of September 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 55,046,834 7.62 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 April<br>2020 May<br>2020 June<br>2020 July<br>2020 August<br>2020 September<br>2020
Common Shares High 8,440 9,130 10,350 9,060 9,240 8,620
Low 7,270 7,810 8,690 8,410 8,390 8,080
Average 7,893 8,114 9,405 8,783 8,744 8,432
Monthly<br><br><br>Trade Volume High 4,688,039 7,434,397 4,612,618 2,645,106 3,535,877 1,978,885
Low 1,974,492 1,395,328 1,258,950 682,717 1,033,160 813,220
Monthly Total 57,640,374 53,303,073 54,242,951 36,616,493 37,441,383 27,777,816

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 April<br>2020 May<br>2020 June<br>2020 July<br>2020 August<br>2020 September<br>2020
ADS High 21.47 22.08 26.07 23.19 23.50 22.08
Low 17.31 18.98 21.74 21.32 20.93 20.71
Average 19.50 19.99 23.30 21.99 22.17 21.57
Won<br><br><br>Conversion High 26,305 27,365 31,737 27,837 27,845 25,910
Low 21,118 23,305 26,057 25,466 24,887 24,114
Average 23,895 24,564 28,192 26,360 26,318 25,431
Monthly<br><br><br>Trade Volume High 214,700 164,700 106,900 169,200 58,700 53,800
Low 34,600 34,600 18,500 19,900 10,900 19,600
Monthly Total 2,009,400 1,413,000 1,254,900 1,028,500 752,900 619,600

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 September 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 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 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 Park 17,000 January 11, 2019 ~ December 31, 2020
Deputy President Non-Registered Myung-Hyuk 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 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 Chung 20,951 February 11, 2020 ~ January 10, 2021
Managing Director Non-Registered Weong-Cheol Hwang 2,000 July 3, 2020 ~ December 31, 2020
Managing Director Non-Registered Shin-Kook Kang 3,000 February 11, 2020 ~ December 31, 2021
Managing Director Non-Registered Gyu-Soon 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 Woo 3,500 February 11, 2020 ~ February 10, 2022
Managing Director Non-Registered Sung-Wook Lee 8,000 February 11, 2020 ~ December 31, 2021

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) Term commencement date: date of inauguration for registered officers or directors / date of appointment for non-registered officers or directors

Note 5) Common shares owned are as of the date of submission of this report, and those owned by executives exclude shares owned through the Employee Stock Ownership Association.

26

Table of Contents
2. Employee Status
As of September 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 144 — 32 — 176 16 months<br> <br>(15 years<br><br><br>4 months) 20,509 117 —

Note 1) 51 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 September 30, 2020 (units: persons, millions of Won)
--- --- --- --- --- --- --- --- ---
Items NumberofPersons TotalCompensation AverageCompensation<br>Per Director Note
Registered Directors<br><br><br>(excludes outside directors and audit committee members) 3 1,095 365 —
Outside Directors<br><br><br>(excludes audit committee members) 3 135 45 —
Audit Committee Members 3 120 40 —
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.<br><br><br>(Registrant)
Date: November 16, 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 NINE-MONTH PERIODS ENDED

SEPTEMBER 30, 2020 AND 2019

WOORI FINANCIAL 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
Consolidated Interim Statements of Comprehensive Income 5-6
Consolidated Interim Statements of Changes in Equity 7
Consolidated Interim Statements of Cash Flows 8-9
Notes to the Consolidated Interim Financial Statements 10-115

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 Inc. 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 September 30, 2020 and the related consolidated interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2020, and consolidated interim statements of changes in equity and cash flows for the nine-month period ended September 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.

Other Matters

The consolidated interim financial statements of comprehensive income for the three-month and nine-month periods ended September 30, 2019, and consolidated interim statements of changes in equity and cash flows for the nine-month period ended September 30, 2019, presented herein for comparative purposes, were reviewed by Deloitte Anjin LLC whose report dated November 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

November 13, 2020

Notice to Readers

This report is effective as of November 13, 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 NINE-MONTH PERIODS ENDED

SEPTEMBER 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 SEPTEMBER 30, 2020 (UNAUDITED) AND DECEMBER 31, 2019

September 30,<br>2020 December 31,<br>2019
(Korean Won in millions)
ASSETS
Cash and cash equivalents (Note 6) 8,814,244 6,392,566
Financial assets at fair value through profit or loss (“FVTPL”) (Notes 4, 7, 11, 12, 18<br>and 26) 10,565,822 8,069,144
Financial assets at fair value through other comprehensive income (“FVTOCI”) (Notes 4,<br>8, 11, 12, and 18) 29,644,347 27,730,531
Securities at amortized cost (Notes 4, 9, 11, 12 and 18) 17,889,922 20,320,539
Loans and other financial assets at amortized cost (Notes 4, 10, 11, 12, 18 and 41) 307,778,061 293,717,693
Investments in joint ventures and associates (Note 13) 1,076,855 806,360
Investment properties (Note 14) 311,344 280,239
Premises and equipment (Notes 15 and 18) 3,278,633 3,364,716
Intangible assets (Note 16) 799,803 844,110
Assets held for distribution (sale) (Note 17) 59,899 10,556
Net defined benefit asset (Note 24) — 2,582
Current tax assets 74,130 47,367
Deferred tax assets 36,860 39,544
Derivative assets (Designated for hedging) (Notes 4,11,12 and 26) 228,580 121,131
Other assets (Notes 19 and 41) 280,411 233,646
Total assets 380,838,911 361,980,724
LIABILITIES
Financial liabilities at fair value through profit or loss (“FVTPL”) (Notes 4, 11, 12,<br>20 and 26) 3,817,831 2,958,302
Deposits due to customers (Notes 4,11,21 and 41) 278,588,976 264,685,578
Borrowings (Notes 4, 11, 12 and 22) 22,768,493 18,998,920
Debentures (Notes 4, 11 and 22) 29,964,791 30,858,055
Provisions (Notes 23, 40 and 41) 463,198 443,980
Net defined benefit liability (Note 24) 186,044 92,470
Current tax liabilities 129,537 182,690
Deferred tax liabilities 286,705 134,322
Derivative liabilities (Designated for hedging) (Notes 4,11,12 and 26) 23,039 6,837
Other financial liabilities (Notes 4,11,12, 25 and 41) 17,941,940 17,706,767
Other liabilities (Notes 25 and 41) 459,607 420,471
Total liabilities 354,630,161 336,488,392
EQUITY
Owners’ equity (Note 28)
Capital stock 3,611,338 3,611,338
Hybrid securities 1,695,821 997,544
Capital surplus 627,496 626,295
Other equity (2,297,529 ) (2,249,322 )
Retained earnings 19,116,037 18,524,515
22,753,163 21,510,370
Non-controlling interests 3,455,587 3,981,962
Total equity 26,208,750 25,492,332
Total liabilities and equity 380,838,911 361,980,724

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

  • 4 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

Periods ended September 30, 2020 Periods ended September 30, 2019
Three-month Nine-month Three-month Nine-month
(Korean Won in millions, except per share data)
Interest income 2,272,434 7,188,437 2,691,515 7,969,207
Financial assets at FVTPL 12,908 39,118 13,970 41,875
Financial assets at FVTOCI 103,380 344,380 135,081 344,183
Financial assets at amortized cost 2,156,146 6,804,939 2,542,464 7,583,149
Interest expense (784,995 ) (2,760,149 ) (1,205,717 ) (3,552,357 )
Net interest income (Notes 11, 30 and 41) **** 1,487,439 **** **** 4,428,288 **** **** 1,485,798 **** **** 4,416,850 ****
Fees and commissions income 399,010 1,207,003 426,708 1,274,949
Fees and commissions expense (166,310 ) (475,954 ) (146,054 ) (434,205 )
Net fees and commissions income (Notes 11, 31 and 41) **** 232,700 **** **** 731,049 **** **** 280,654 **** **** 840,744 ****
Dividend income (Notes 11, 32 and 41) 28,138 99,140 19,973 84,556
Net gain on financial instruments at FVTPL (Notes 11, 33 and 41) 130,342 531,931 21,527 101,608
Net gain on financial assets at FVTOCI (Notes 11 and 34) 7,650 18,677 4,591 8,036
Net gain arising on financial assets at amortized cost (Note 11) 7,657 40,319 4,488 99,107
Impairment losses due to credit loss (Notes 35 and 41) (140,041 ) (586,720 ) (187,209 ) (323,755 )
General and administrative expenses (Notes 36 and 41) (899,062 ) (2,688,620 ) (880,491 ) (2,576,277 )
Other net operating expenses (Notes 11, 26, 36 and 41) (179,663 ) (726,306 ) (90,040 ) (281,166 )
Operating income **** 675,160 **** **** 1,847,758 **** **** 659,291 **** **** 2,369,703 ****
Share of gain of joint ventures and associates (Note 13) 9,983 33,935 10,103 20,960
Other non-operating income(expense) (9,163 ) (171,864 ) 876 7,689
Non-operating income(expense) (Note 37) **** 820 **** **** (137,929 ) **** 10,979 **** **** 28,649 ****
Net income before income tax expense 675,980 1,709,829 670,270 2,398,352
Income tax expense (Note 38) (154,265 ) (414,081 ) (136,162 ) (592,281 )
Net income **** 521,715 **** **** 1,295,748 **** **** 534,108 **** **** 1,806,071 ****
Net gain(loss) on valuation of equity securities at FVTOCI 69,689 (25,525 ) (3,121 ) (50,498 )
Remeasurement gain(loss) related to defined benefit plan 2,012 (24,228 ) (702 ) (39,970 )
Items that will not be reclassified to profit or loss: **** 71,701 **** **** (49,753 ) **** (3,823 ) **** (90,468 )
Net gain(loss) on valuation of debt securities at FVTOCI (23,328 ) 46,135 10,389 64,326
Changes in capital due to equity method 1,987 (2,634 ) (9 ) (427 )
Net gain(loss) on foreign currency translation of foreign operations (75,989 ) (18,514 ) 67,652 170,446
Net gain(loss) on valuation of cash flow hedge 5,466 (4,564 ) (209 ) (1,379 )
Items that may be reclassified to profit or loss: **** (91,864 ) **** 20,423 **** **** 77,823 **** **** 232,966 ****
Other comprehensive income (loss), net of tax **** (20,163 ) **** (29,330 ) **** 74,000 **** **** 142,498 ****
Total comprehensive income **** 501,552 **** **** 1,266,418 **** **** 608,108 **** **** 1,948,569 ****

(Continued)

  • 5 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

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

Periods ended September 30, 2020 Periods ended September 30, 2019
Three-month Nine-month Three-month Nine-month
(Korean Won in millions, except per share data)
Net income attributable to: **** 521,715 **** 1,295,748 **** 534,108 **** 1,806,071
Net income attributable to owners 480,200 1,140,764 486,009 1,665,697
Net income attributable to non-controlling interests 41,515 154,984 48,099 140,374
Total comprehensive income attributable to: **** 501,552 **** 1,266,418 **** 608,108 **** 1,948,569
Comprehensive income attributable to owners 467,871 1,116,291 555,478 1,795,631
Comprehensive income attributable to non-controlling interests 33,681 150,127 52,630 152,938
Earnings per share (Note 39)
Basic and diluted earnings per share (Unit: In Korean Won) 645 1,532 708 2,459

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

  • 6 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

Capital<br>Stock Hybrid<br>securities Capital<br>surplus Other<br>equity Retained<br>earnings Owners’<br>equity in total Non-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 — — — — 1,665,697 1,665,697 140,374 1,806,071
Net gain on valuation of financial instruments at FVTOCI — — — 13,705 — 13,705 123 13,828
Net gain(loss) due to disposal of equity securities at FVTOCI — — — 26,719 (26,719 ) — — —
Changes in capital due to equity method — — — (427 ) — (427 ) — (427 )
Gain on foreign currency translation of foreign operations — — — 157,766 — 157,766 12,680 170,446
Loss on valuation of cash flow hedge — — — (1,379 ) — (1,379 ) — (1,379 )
Remeasurement loss related to defined benefit plan — — — (39,732 ) — (39,732 ) (238 ) (39,970 )
Transactions with owners
Dividends to common stocks — — — — (437,626 ) (437,626 ) (2,014 ) (439,640 )
Acquisition of subsidiaries 229,946 — 335,338 — — 565,284 29,299 594,583
New stocks issue cost — — (3,034 ) — — (3,034 ) — (3,034 )
Net decrease of treasury stocks — — — (163,175 ) — (163,175 ) — (163,175 )
Gain and losses on sale of treasury share — — — 13,991 — 13,991 — 13,991
Issuance of hybrid securities — 498,783 — — — 498,783 — 498,783
Dividends to hybrid securities — — — — (3,571 ) (3,571 ) (118,614 ) (122,185 )
Exchange of non-controlling interests in hybrid securities — (3,161,963 ) — — — (3,161,963 ) 3,161,963 —
Changes in subsidiaries’ capital — — 416 — — 416 (28 ) 388
Appropriation of retained earnings — — — 368 (368 ) — — —
September 30, 2019 (Unaudited) 3,611,338 498,783 618,609 (2,206,134 ) 18,322,070 20,844,666 3,436,658 24,281,324
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 — — — — 1,140,764 1,140,764 154,984 1,295,748
Net gain(loss) on valuation of financial instruments at FVTOCI — — — 20,647 — 20,647 (37 ) 20,610
Net gain(loss) due to disposal of equity securities at FVTOCI — — — 2,665 (2,665 ) — — —
Changes in capital due to equity method — — — (2,634 ) — (2,634 ) — (2,634 )
Gain on foreign currency translation of foreign operations — — — (13,670 ) — (13,670 ) (4,844 ) (18,514 )
Loss on valuation of cash flow hedge — — — (4,564 ) — (4,564 ) — (4,564 )
Remeasurement loss related to defined benefit plan — — — (24,252 ) — (24,252 ) 24 (24,228 )
Transactions with owners — — — — — — —
Dividends to common stocks — — — — (505,587 ) (505,587 ) (2,062 ) (507,649 )
Issuance of hybrid securities — 698,277 — — — 698,277 — 698,277
Dividends to hybrid securities — — — — (34,640 ) (34,640 ) (118,659 ) (153,299 )
Redemption of hybrid securities — — — (31,252 ) — (31,252 ) (555,744 ) (586,996 )
Changes in subsidiaries’ capital — — 1,201 4,853 (6,350 ) (296 ) (37 ) (333 )
September 30, 2020 (Unaudited) 3,611,338 1,695,821 627,496 (2,297,529 ) 19,116,037 22,753,163 3,455,587 26,208,750

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

  • 7 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

For the nine-month period ended September 30
2020 2019
(Korean Won in millions)
Cash flows from operating activities:
Net income 1,295,748 1,806,071
Adjustments to net income:
Income tax expense 414,081 592,281
Interest income (7,188,437 ) (7,969,207 )
Interest expense 2,760,149 3,552,357
Dividend income (99,140 ) (84,556 )
(4,113,347 ) (3,909,125 )
Additions of expenses not involving cash outflows:
Gain on financial assets at FVTOCI 535 174
Impairment loss due to credit loss 586,720 323,755
Loss on other provisions 171,114 20,841
Retirement benefit 129,699 124,058
Depreciation and amortization 398,713 364,127
Net gain on foreign currency translation 357,877 —
Loss on derivatives (designated for hedge) 20,746 1,890
Loss on fair value hedge 91,251 112,352
Loss on valuation of investments in joint ventures and associates 16,974 12,062
Loss on disposal of premises and equipment, intangible assets and other assets 1,736 1,606
Impairment loss on premises and equipment, intangible assets and other assets 8,429 1,422
1,783,794 962,287
Deductions of income not involving cash inflows:
Gain on valuation of financial instruments at FVTPL 162,056 240,428
Gain on financial assets at FVTOCI 19,212 8,210
Gain on other provisions 353 4,137
Gain on derivatives (designated for hedge) 102,540 169,127
Gain on fair value hedge 4,767 —
Gain on valuation of investments in joint ventures and associates 50,909 33,022
Gain on disposal of premises and equipment, intangible assets and other assets 6,549 1,375
Reversal of impairment loss on premises and equipment, intangible assets and other assets 87 45
Other income 9,351 —
355,824 456,344
Changes in operating assets and liabilities:
Financial instruments at FVTPL (428,484 ) 321,687
Loans and other financial assets at amortized cost (14,528,362 ) (17,520,776 )
Other assets (118,168 ) 110,115
Deposits due to customers 13,688,884 13,288,359
Provisions (169,146 ) (11,616 )
Net defined benefit liability (68,569 ) (118,470 )
Other financial liabilities 485,840 3,127,528
Other liabilities 40,249 388
(1,097,756 ) (802,785 )
Interest income received 7,329,781 7,885,061
Interest expense paid (3,101,429 ) (3,132,990 )
Dividends received 99,269 84,660
Income tax paid (323,310 ) (386,099 )
Net cash inflow from operating activities 1,516,926 2,050,736

(Continued)

  • 8 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) (CONTINUED)

For the nine-month period ended September 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 491 —
Disposal of financial instruments at FVTPL 4,969,738 8,242,090
Disposal of financial assets at FVTOCI 15,843,334 9,101,560
Redemption of securities at amortized cost 4,148,133 6,713,880
Disposal of investments in joint ventures and associates 36,162 27,669
Disposal of investment properties 356 73
Disposal of premises and equipment 17,401 7,873
Disposal of intangible assets 611 750
25,016,226 24,093,895
Cash out-flows from investing activities:
Net cash in-flows of business combination — 140,217
Acquisition of financial instruments at FVTPL 6,007,849 8,361,213
Acquisition of financial assets at FVTOCI 17,747,437 18,544,686
Acquisition of securities at amortized cost 1,712,770 3,937,980
Acquisition of investments in joint ventures and associates 327,295 26,060
Acquisition of investment properties 2,432 246,329
Acquisition of premises and equipment 90,450 204,969
Acquisition of intangible assets 88,294 88,619
Net increase of other assets 2,671 —
25,979,198 31,550,073
Net cash outflow from investing activities (962,972 ) (7,456,178 )
Cash flows from financing activities:
Cash in-flows from financing activities:
Net increase in borrowings 3,661,819 4,721,799
Issuance of debentures 15,295,688 20,854,461
Net increase of other liabilities 2,704 232
Issuance of hybrid securities 698,277 498,783
Retirement of treasury stocks — 610,369
19,658,488 26,685,644
Cash out-flows from financing activities:
Net cash out-flows from hedging activities 15,943 —
Redemption of debentures 16,217,533 18,489,990
Redemption of lease liabilities 151,688 153,686
Net decrease of other liabilities — 237
New stock issue cost — 19,358
Acquisition of treasury stocks — 184,164
Dividends paid 505,587 437,626
Redemption of hybrid stocks 598,850 —
Dividends paid to hybrid securities 153,299 109,033
Dividends paid to non-controlling interest 2,062 2,014
Paid-in capital decrease on non-controlling interests 13 28
17,644,975 19,396,136
Net cash inflow from financing activities 2,013,513 7,289,508
Net increase (decrease) in cash and cash equivalents 2,567,467 1,884,066
Cash and cash equivalents, beginning of the period 6,392,566 6,747,894
Effects of exchange rate changes on cash and cash equivalents (145,789 ) (243,125 )
Cash and cash equivalents, end of the period (Note 6) 8,814,244 8,388,835

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

  • 9 -

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

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

Woori Financial Group, Inc. (hereinafter referred to 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.

  • 10 -
(2) Details of the Parent company and subsidiaries (hereinafter ‘Group’) as of September 30, 2020<br>and December 31, 2019 are as follows:
Percentage of ownership<br>(%) Location Financial<br>statements date<br>          of use      <br>
--- --- --- --- --- --- --- ---
Subsidiaries Main business September 30,<br>2020 December 31,<br>2019
Held by Woori Financial Group Inc.
Woori Bank Bank 100.0 100.0 Korea September 30
Woori Card Co., Ltd. Finance 100.0 100.0 Korea September 30
Woori Investment Bank Co., Ltd. Other credit finance business 59.8 59.8 Korea September 30
Woori FIS Co., Ltd. System software development & maintenance 100.0 100.0 Korea September 30
Woori Finance Research Institute Co., Ltd. Other service business 100.0 100.0 Korea September 30
Woori Credit Information Co., Ltd. Credit information 100.0 100.0 Korea September 30
Woori Fund Service Co., Ltd. Finance 100.0 100.0 Korea September 30
Woori Asset Trust Co., Ltd. Real estate trust 67.2 67.2 Korea September 30
Woori Asset Management Corp. Finance 73.0 73.0 Korea September 30
Woori Private Equity Asset Management Co., Ltd. Finance 100.0 100.0 Korea September 30
Woori Global Asset Management Co., Ltd. Finance 100.0 100.0 Korea September 30
Held by Woori Bank
Woori America Bank Finance 100.0 100.0 America September 30
Woori Global Markets Asia Limited Finance 100.0 100.0 Hong Kong September 30
Woori Bank China Limited Finance 100.0 100.0 China September 30
AO Woori Bank Finance 100.0 100.0 Russia September 30
PT Bank Woori Saudara Indonesia 1906 Tbk Finance 79.9 79.9 Indonesia September 30
Banco Woori Bank do Brasil S.A. Finance 100.0 100.0 Brazil September 30
Korea BTL Infrastructure Fund Finance 99.9 99.9 Korea September 30
Woori Finance Cambodia PLC. (*1) Finance — 100.0 Cambodia (*5)
Woori Finance Myanmar Co., Ltd. Finance 100.0 100.0 Myanmar September 30
Wealth Development Bank Finance 51.0 51.0 Philippines September 30
Woori Bank Vietnam Limited Finance 100.0 100.0 Vietnam September 30
WB Finance Co., Ltd. Finance 100.0 100.0 Cambodia September 30
Woori Bank Europe Finance 100.0 100.0 Germany September 30
Kumho Trust First Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Asiana Saigon Inc. (*2) Asset securitization 0.0 0.0 Korea September 30
KAMCO Value Recreation First Securitization Specialty Co., Ltd. (*2) Asset securitization 15.0 15.0 Korea September 30
Hermes STX Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
BWL First Co., LLC (*2) Asset securitization 0.0 0.0 Korea September 30
Deogi Dream Fourth Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Jeonju Iwon Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Wonju I one Inc. (*2) Asset securitization 0.0 0.0 Korea September 30
Heitz Third Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woorihansoop 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Electric Cable First Co., Ltd. (*2) Asset securitization — 0.0 Korea (*5)
Woori International First Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori WEBST 1st Co., Ltd. (*2) Asset securitization — 0.0 Korea (*5)
Wibihansoop 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Uri QS 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Uri Display 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Tiger Eyes 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori Serveone 1st Co., Ltd. (*2) Asset securitization — 0.0 Korea (*5)
Uri Display 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori the Colony Unjung Securitization Specialty Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
  • 11 -
Percentage of ownership<br>(%) Location Financial<br>statements date<br>          of use      <br>
Subsidiaries Main business September 30,<br>2020 December 31,<br>2019
Woori Dream 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori Dream 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori H 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori HS 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori Sinnonhyeon 1st Inc. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori K 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Uri S 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Smart Casting Inc. (*2) Asset securitization — 0.0 Korea (*5)
Uri Display 3rd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
TY 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori HJ 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori-HJ 3rd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Uri K 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori KC No.1 Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori Lake 1st., Ltd. (*2) Asset securitization — 0.0 Korea (*5)
Woori QSell 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Quantum Jump the 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Quantum Jump the 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori BK the 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori-HC 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Wivi Synergy 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
ATLANTIC TRANSPORTATION 1 S.A. (*2) Asset securitization 0.0 0.0 Marshall islands September 30
Woori Gongdeok First Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
HD Project Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori HW 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori HC 2nd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori Dream 3rd Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori SJS 1st Co., Ltd. (*2) Asset securitization 0.0 0.0 Korea September 30
Woori Steel 1^st^ Co., Ltd (*2) Asset securitization 0.0 — Korea September 30
Woori-HWC 1st Co., Ltd. Asset securitization 0.0 — Korea September 30
SPG the 1^st^Co., Ltd. Asset securitization 0.0 — Korea September 30
G5 Pro Short-term Bond Investment Fund 13 (*3) Securities investment and others 100.0 100.0 Korea September 30
Heungkuk Global Private Placement Investment Trust No. 1 (*3) Securities investment and others 98.5 98.5 Korea September 30
AI Partners UK Water Supply Private Placement Investment Trust No.2 (*3) Securities investment and others 97.3 97.3 England September 30
Consus Sakhalin Real Estate Investment Trust 1st (*3) Securities investment and others 75.0 75.0 Korea September 30
Multi Asset Global Real Estate Investment Trust No. 5-2 (*3) Securities investment and others 99.0 99.0 Korea September 30
INMARK Spain Private Placement Real Estate Investment Trust No. 26-2 (*3) Securities investment and others 97.7 — Korea September 30
Igis Australia Investment Trust No. 209-1 (*3) Securities investment and others 99.4 99.4 Korea September 30
IGIS Global Private Placement Real Estate Fund No. 316-1 (*3) Securities investment and others 99.3 99.3 Korea September 30
Woori G Japan Investment Trust No. 1-2 (*3) Securities investment and others 98.8 — Korea September 30
Principal Guaranteed Trust (*4) Trust 0.0 0.0 Korea September 30
Principal and Interest Guaranteed Trust (*4) Trust 0.0 0.0 Korea September 30
Held by Multi Asset Global Real Estate Investment Trust No. 5-2:
MAGI No.5 LuxCo S.a.r.l. (*3) Asset securitization 54.6 54.6 Luxembourg September 30
Held by MAGI No.5 LuxCo S.a.r.l.:
ADP 16 Brussels (*2) Asset securitization 0.0 0.0 Belgium September 30
  • 12 -
Percentage of ownership<br>(%) Location Financial<br>statements date<br>          of use      <br>
Subsidiaries Main business September 30,<br>2020 December 31,<br>2019
Held by Woori Investment Bank Co., Ltd.:
Dongwoo First Securitization Specialty Co., Ltd. (*2) Asset securitization — 5.0 Korea (*5)
Seari First Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea September 30
Seari Second Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea September 30
Namjong 1st Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea September 30
Bukgeum First Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea September 30
Bukgeum Second Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea September 30
WS1909 Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 5.0 Korea September 30
WS2003 Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 — Korea September 30
WS2006 Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 — Korea September 30
WJ2008 Securitization Specialty Co., Ltd. (*2) Asset securitization 5.0 — Korea September 30
One Punch Korea the 1st Co., Ltd. (*2). Asset securitization 0.0 0.0 Korea September 30
One Punch blue the 1^st^ Co., Ltd.<br>(*2) Asset securitization 0.0 0.0 Korea September 30
Held by Woori Card Co., Ltd.:
TUTU Finance –WCI Myanmar Co., Ltd. Finance 100.0 100.0 Myanmar September 30
Woori Card one of 2017-1 Securitization Specialty Co., Ltd. (*2) Asset securitization — 0.5 Korea (*5)
Woori Card one of 2017-2 Securitization Specialty Co., Ltd. (*2) Asset securitization 0.5 0.5 Korea September 30
Woori Card one of 2018-1 Securitization Specialty Co., Ltd. (*2) Asset securitization 0.5 0.5 Korea September 30
Woori Card 2019-1 Asset Securitization Specialty Co., Ltd. (*2) Asset securitization 0.5 0.5 Korea September 30
Woori Card 2020-1 Asset Securitization Specialty Co., Ltd. (*2) Asset securitization 0.5 — Korea September 30
Held by Woori Private Equity Asset Management Co., Ltd. and Woori Investment Bank Co., Ltd.:<br>(*6)
Japanese Hotel Real Estate Private Equity Fund 1 (*3) Securities investment and others 45.5 45.5 Korea September 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 99.5 98.8 Korea September 30
Woori China Convertible Bond Master Fund (debt-oriented hybrid) (*3) Securities investment and others 50.5 98.6 Korea September 30
Woori Yellow Chip High Yield Strategic Allocation 1 (FOF) (*3) Securities investment and others 44.5 — Korea September 30
Woori Together TDF 2025 (*3) Securities investment and others 49.7 — Korea September 30
Woori Together TDF 2030 (*3) Securities investment and others 50.0 — Korea September 30
Woori Together TDF 2035 (*3) Securities investment and others 49.9 — Korea September 30
  • 13 -
Percentage of ownership<br>(%) Location Financial<br>statements date<br>          of use      <br>
Subsidiaries Main business September 30,<br>2020 December 31,<br>2019
Woori Together TDF 2040 (*3) Securities investment and others 49.9 - Korea September 30
Woori Together TDF 2045 (*3) Securities investment and others 50.0 — Korea September 30
Woori Together TDF 2050 (*3) Securities investment and others 97.9 — Korea September 30
Woori All-in-One World Balanced EMP40(FOF) (*3) Securities investment and others 51.1 — Korea September 30
Woori All-in-One World EMP(Equity-FOF) (*3) Securities investment and others 54.4 — Korea September 30
Woori All-in-One World EMP(Bond-FOF) (*3) Securities investment and others 54.4 — Korea September 30
Held by Woori Global Asset Management Co., Ltd.:
WOORIG China Value Equity (C/C(F)) (*3) Securities investment and others — 95.1 Korea (*5)
WooriG Global Multi Asset Income Private Placement Investment Trust [FoF]_Class Cs (*3) Securities investment and others 22.2 — Korea September 30
Held by Woori Bank, Woori Investment Bank Co., Ltd and Woori Private Equity Asset Management Co.,<br>Ltd.: (*6)
Woori Innovative Growth Professional Investment Type Private Investment Trust No.1 (*3) Securities investment and others 60.0 60.0 Korea September 30
Woori Innovative Growth Professional Investment Type Private Investment Trust No.2 (*3) Securities investment and others 65.0 — Korea September 30
Held by Woori bank and Woori Investment Bank Co., Ltd.: (*6)
Heungkuk Woori Tech Company Private Placement Investment Trust No. 1 (*3) Securities investment and others 100.0 100.0 Korea September 30
Woori Global Development Infrastructure Synergy Company Private Placement Investment Trust No.1<br>(*3) Securities investment and others 100.0 100.0 Korea September 30
WooriG NorthAmerica Infra Private Placement Investment Trust No. 1 (*3) Securities investment and others 100.0 — Korea September 30
Held by Woori bank (*6)
WooriG Woori Bank Partners Private Placement Investment Trust No. 1 (*3) Securities investment and others 92.6 — Korea September 30
WooriG Secondary Private Placement Investment Trust No. 1 (*3) Securities investment and others 97.2 — Korea September 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>
--- ---
(*5) Companies are excluded from the consolidation as of September 30, 2020.
--- ---
(*6) Determined that the Group controls the investees, considering the Group 1) has the power over the investee, 2)<br>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, by two or more subsidiaries’ investment or operation.
--- ---
  • 14 -
(3) The Group has not consolidated the following entities as of September 30, 2020 and December 31, 2019<br>despite having more than 50% ownership interest:
As of September 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.
--- ---
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.
--- ---
  • 15 -
(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 nine-month period ended September 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 365,537,820 342,117,151 17,760,315 1,158,642 1,147,932
Woori Card Co., Ltd. 10,826,338 8,793,286 1,014,678 107,412 96,260
Woori Investment Bank Co., Ltd. 4,196,255 3,778,843 194,798 50,143 50,075
Woori FIS Co., Ltd. 99,242 59,315 192,206 4,093 3,959
Woori Finance Research Institute Co., Ltd. 5,902 2,177 4,751 283 277
Woori Credit Information Co., Ltd. 40,025 9,016 30,152 1,738 1,579
Woori Fund Service Co., Ltd. 17,997 1,892 9,839 1,883 1,883
Woori Asset Trust Co., Ltd. 168,465 47,943 56,790 27,270 27,238
Woori Asset Management Corp. 134,579 23,100 17,764 5,156 4,743
Woori Private Equity Asset Management Co., Ltd. 37,261 2,123 3,548 (91 ) (120 )
Woori Global Asset Management Co., Ltd. 37,942 9,522 7,482 (1,157 ) (1,157 )
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 (before 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.
--- ---
(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 September 30, 2020, the Group provides 2,155,914 million won of credit facilities for the structured entities mentioned above.

  • 16 -
(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 has been purchasing commitments of asset-backed securities or issuing 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.

  • 17 -
September 30, 2020
Asset<br>securitization<br>vehicle Structured<br>Finance Investment<br>Funds Real-estate<br>trust
Total asset of the unconsolidated structured entities 7,802,960 66,828,161 31,705,064 77,146
Assets recognized in the consolidated financial statements related to the unconsolidated<br>structured entities 5,064,015 3,778,956 3,937,034 59,296
Financial assets at FVTPL 309,076 9,430 3,432,254 —
Financial assets at FVTOCI 1,637,138 49,025 — —
Financial assets at amortized cost 3,115,978 3,708,441 — 59,296
Investments in joint ventures and associates — 2,100 504,780 —
Derivative assets 1,823 9,960 — —
Liabilities recognized in the consolidated financial statements related to the unconsolidated<br>structured entities 329 1,379 — 1,358
Derivative liabilities — — — 502
Other liabilities (provisions) 329 1,379 — 856
The maximum exposure to risks 5,444,792 4,637,965 4,000,426 102,206
Investment assets 5,064,015 3,778,956 3,937,034 59,296
Credit facilities and others 380,777 859,009 63,392 42,910
Loss recognized on unconsolidated structured entities — 3,845 3,290 1,838
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
  • 18 -
(7) As of September 30, 2020 and December 31, 2019, the share of non-controlling interests on the net<br>income and equity of subsidiaries in which non-controlling interests are significant are as follows: (Unit: Korean Won in millions):
1) Accumulated non-controlling interests at the end of the reporting period
--- ---
September 30,<br>2020 December 31,<br>2019
--- --- --- --- ---
Woori Bank (*) 3,105,070 3,660,814
Woori Investment Bank Co., Ltd. 171,470 151,170
Woori Asset Trust Co., Ltd 47,341 40,161
Woori Asset Management Corp 30,979 29,800
PT Bank Woori Saudara Indonesia 1906 Tbk 82,234 83,315
Wealth Development Bank 20,352 18,524
(*) Hybrid securities issued by Woori Bank
--- ---
2) Net income attributable to non-controlling interests
--- ---
For the nine-month<br>period ended September 30
--- --- --- --- ---
2020 2019
Woori Bank (*) 118,659 118,614
Woori Investment Bank Co., Ltd. 20,329 14,368
Woori Asset Trust Co., Ltd 7,556 —
Woori Asset Management Corp 1,290 186
PT Bank Woori Saudara Indonesia 1906 Tbk 6,534 7,007
Wealth Development Bank 588 166
(*) Distribution of the hybrid securities issued by Woori Bank
--- ---
3) Dividends to non-controlling interests
--- ---
For the nine-month<br>period ended September 30
--- --- --- --- ---
2020 2019
Woori Bank (*) 118,659 118,614
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
--- ---
  • 19 -
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 condensed consolidated interim 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.

(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.

  • 20 -
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 nine-month period ended September 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 September 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, Woori Bank has increased credit loss allowance for 162,911 million won as of June 30, 2020 and 27,152 million won for additional update as of September 30, 2020. Credit loss allowances for Woori Card Co., Ltd. and Woori Investment Bank Co., Ltd. have increased 9,614 million won and 3,371 million won, respectively. The Group will continue to evaluate future prospects related to the duration of COVID-19’s economic impact and the government’s policies.

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.

  • 21 -
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.

  • 22 -
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 September 30, 2020 and December 31, 2019 is as follows (Unit: Korean Won in millions):

September 30, 2020 December 31, 2019
Loans and other financial assets at amortized cost Korean treasury and government agencies 11,867,476 14,797,040
Banks 19,294,058 18,597,206
Corporates 108,718,098 101,041,110
Consumers 167,898,429 159,282,337
Sub-total 307,778,061 293,717,693
Financial assets at FVTPL (*) Deposit 45,704 27,901
Debt securities 2,650,541 2,337,085
Loans 350,902 212,473
Derivative assets 4,027,744 2,921,903
Sub-total 7,074,891 5,499,362
Financial assets at FVTOCI Debt securities 28,713,096 26,795,161
Securities at amortized cost Debt securities 17,889,922 20,320,539
Derivative assets Derivative assets (Designated for hedging) 228,580 121,131
Off-balance accounts Guarantees 11,575,359 12,618,917
Loan commitments 110,958,256 103,651,674
Sub-total 122,533,615 116,270,591
Total 484,218,165 462,724,477
(*) Puttable financial instruments are not included
--- ---
  • 23 -
a) Credit risk exposure by geographical areas

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

September 30, 2020
Korea China USA UK Japan Others (*) Total
Loans and other financial assets at amortized cost 282,308,903 5,319,154 4,063,888 1,686,193 1,268,650 13,131,273 307,778,061
Securities at amortized cost 17,679,048 — 45,044 — — 165,830 17,889,922
Financial assets at FVTPL 5,258,363 13,288 688,838 226,289 108,918 779,195 7,074,891
Financial assets at FVTOCI 25,547,545 569,304 1,279,228 6 5,908 1,311,105 28,713,096
Derivative assets (Designated for hedging) 18,222 — 200,031 — — 10,327 228,580
Off-balance accounts 118,391,030 1,545,048 443,905 39,270 42,953 2,071,409 122,533,615
Total 449,203,111 7,446,794 6,720,934 1,951,758 1,426,429 17,469,139 484,218,165
(*) 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 September 30, 2020 and December 31, 2019 (Unit: Korean Won in millions):
--- ---
September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Service Manufacturing Finance and<br>insurance Construction Individuals Others Total
Loans and other financial assets at amortized cost 55,346,261 37,529,070 35,190,506 3,498,360 163,546,744 12,667,120 307,778,061
Securities at amortized cost 442,598 6,846 9,955,969 312,423 — 7,172,086 17,889,922
Financial assets at FVTPL 241,406 195,152 5,334,500 14,047 19,508 1,270,278 7,074,891
Financial assets at FVTOCI 362,799 120,373 23,371,309 160,895 — 4,697,720 28,713,096
Derivative assets (Designated for hedging) — — 228,580 — — — 228,580
Off-balance accounts 18,175,514 22,436,926 11,903,032 4,054,556 59,005,695 6,957,892 122,533,615
Total 74,568,578 60,288,367 85,983,896 8,040,281 222,571,947 32,765,096 484,218,165
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
  • 24 -
② The detailed industries of financial assets and corporate loans that might get affected by the spread of<br>COVID-19 as of September 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 968,106 4,232 5,866
General<br>wholesale<br>business 1,435,984 2,020 —
Sub-total 2,404,090 6,252 5,866
Accommodation business 1,766,031 5,640 5,866
Travel business 90,681 78 —
Art/sports, leisure service 1,370,626 19,261 —
Food business 1,018,429 1,747 —
Air transport business 427,028 499 —
Education business 358,722 513 —
Others 1,279,607 3,469 —
Sub-total 8,715,214 37,459 11,732
Manufacturing Textile 2,377,090 3,495 7,051
Metal 1,476,130 8,636 —
Non-metal 747,522 7,082 —
Chemical 1,635,414 9,578 —
Transportation 3,606,539 2,851 —
Electronics 1,530,994 13,935 —
Cosmetics 326,429 255 —
Others 566,645 360 —
Sub-total 12,266,763 46,192 7,051
Total 20,981,977 83,651 18,783
Off-balance accounts Total
--- --- --- --- --- --- ---
Service business Distribution business General retail<br>business 905,707 1,883,911
General<br>wholesale<br>business 479,786 1,917,790
Sub-total 1,385,493 3,801,701
Accommodation business 156,457 1,933,994
Travel business 22,036 112,795
Art/sports, leisure service 67,061 1,456,948
Food business 177,420 1,197,596
Air transport business 201,163 628,690
Education business 47,247 406,482
Others 297,574 1,580,650
Sub-total 2,354,451 11,118,856
Manufacturing Textile 1,094,996 3,482,632
Metal 1,608,380 3,093,146
Non-metal 323,636 1,078,240
Chemical 3,480,329 5,125,321
Transportation 1,980,606 5,589,996
Electronics 1,797,185 3,342,114
Cosmetics 76,756 403,440
Others 1,506,912 2,073,917
Sub-total 11,868,800 24,188,806
Total 14,223,251 35,307,662
  • 25 -

< 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 2,415 — — 14,426 16,841
Travel business 1,770 — — 22,780 24,550
Aviation 604 — — 4,161 4,765
Cosmetics industry 2,567 — — 14,712 17,279
Distribution business 8,608 — — 52,701 61,309
Food industry 30,280 — — 184,135 214,415
Art/sports, leisure service 6,520 — — 56,987 63,507
Total 52,764 — — 349,902 402,666

< 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
Cosmetics industry 4,850 — — — 4,850
Distribution business 22,700 — — — 22,700
Art/sports, leisure service 30,000 — — — 30,000
Total 111,950 — — — 111,950
  • 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 September 30, 2020 and December 31, 2019 is as follows (Unit: Korean Won in millions):

September 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 270,357,556 20,045,589 8,315,022 9,385,286 1,467,427 309,570,880 (1,792,819 ) 307,778,061
Korean treasury and government agencies 11,869,212 1,194 — — — 11,870,406 (2,930 ) 11,867,476
Banks 18,961,537 264,084 58,134 — 27,966 19,311,721 (17,663 ) 19,294,058
Corporates 90,315,511 14,412,421 577,925 3,769,085 807,440 109,882,382 (1,164,284 ) 108,718,098
General business 60,320,443 9,791,119 519,660 2,618,776 557,981 73,807,979 (839,714 ) 72,968,265
Small- and medium-sized enterprise 25,060,651 4,431,761 58,265 1,071,743 222,950 30,845,370 (282,725 ) 30,562,645
Project financing and others 4,934,417 189,541 — 78,566 26,509 5,229,033 (41,845 ) 5,187,188
Consumers 149,211,296 5,367,890 7,678,963 5,616,201 632,021 168,506,371 (607,942 ) 167,898,429
Securities at amortized cost 17,895,308 — — — — 17,895,308 (5,386 ) 17,889,922
Financial assets at FVTOCI (*3) 28,554,423 158,673 — — — 28,713,096 (9,705 ) 28,713,096
Total 316,807,287 20,204,262 8,315,022 9,385,286 1,467,427 356,179,284 (1,807,910 ) 354,381,079
September 30, 2020
--- --- --- --- --- --- --- --- ---
Collateral value
Stage1 Stage2 Stage3 Total
Loans and other financial assets at amortized cost 180,721,500 13,769,569 641,123 195,132,192
Korean treasury and government agencies — — — —
Banks 893,739 — — 893,739
Corporates 61,267,315 2,765,491 353,006 64,385,812
General business 35,772,108 1,843,734 249,095 37,864,937
Small- and medium-sized enterprise 23,852,298 921,757 100,563 24,874,618
Project financing and others 1,642,909 — 3,348 1,646,257
Consumers 118,560,446 11,004,078 288,117 129,852,641
Securities at amortized cost — — — —
Financial assets at FVTOCI (*3) — — — —
Total 180,721,500 13,769,569 641,123 195,132,192
(*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
Stage1 Stage2 Stage3 Total
Loans and other financial assets at amortized cost 169,438,539 14,451,806 692,139 184,582,484
Korean treasury and government agencies — — — —
Banks 612,200 2,028 — 614,228
Corporates 55,602,818 2,335,496 394,860 58,333,174
General business 22,291,348 1,023,766 240,771 23,555,885
Small- and medium-sized enterprise 31,517,538 1,311,730 145,061 32,974,329
Project financing and others 1,793,932 — 9,028 1,802,960
Consumers 113,223,521 12,114,282 297,279 125,635,082
Securities at amortized cost — — — —
Financial assets at FVTOCI (*4) — — — —
Total 169,438,539 14,451,806 692,139 184,582,484
(*1) Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
--- ---
(*2) Credit grade of corporates are A- ~ BBB, and consumers are grades 1 ~ 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 September 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):

September 30, 2020
Financial assets Stage 1 Stage 2 Stage3 Total
Above<br>appropriate<br>credit rating<br>(*1) Less than a<br>limited<br>credit rating<br>(*2) Above<br>appropriate<br>credit rating<br>(*1) Less than a<br>limited<br>credit rating<br>(*2)
Off-balance accounts:
Guarantees 9,981,695 1,321,610 408 164,714 106,932 11,575,359
Loan Commitments 104,951,671 3,507,772 1,520,432 972,236 6,145 110,958,256
Total 114,933,366 4,829,382 1,520,840 1,136,950 113,077 122,533,615
(*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 Stage3 Total
Above<br>appropriate<br>credit rating<br>(*1) Less than a<br>limited<br>credit rating<br>(*3) Above<br>appropriate<br>credit rating<br>(*2) Less than a<br>limited<br>credit rating<br>(*3)
Off-balance accounts
Guarantees 10,952,917 1,333,561 355 223,657 108,427 12,618,917
Loan Commitments 97,854,790 3,479,295 1,388,136 906,033 23,420 103,651,674
Total 108,807,707 4,812,856 1,388,491 1,129,690 131,847 116,270,591
(*1) Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
--- ---
(*2) Credit grade of corporates are A- ~ BBB, and consumers are grades 1 ~ 6.
--- ---
(*3) Credit grade of corporate are BBB- ~ C, and consumers are grades 7 ~ 10.
--- ---
4) Collateral and other credit enhancements
--- ---

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

September 30,<br>2020 For the nine-month period ended<br>September 30, 2020 December 31,<br>2019 For the year ended<br>December 31, 2019
Risk factor Average Maximum Minimum Average Maximum Minimum
Interest rate 9,433 7,716 15,065 2,427 5,052 3,406 5,725 1,176
Stock price 5,818 6,213 14,394 2,580 3,730 3,203 5,935 1,146
Foreign currencies 10,826 8,311 10,826 4,613 5,028 5,033 6,469 4,395
Commodity price — — — — — 1 32 —
Diversification (11,617 ) (10,785 ) (18,388 ) (4,050 ) (6,233 ) (5,127 ) (9,229 ) (2,339 )
Total VaR(*) 14,460 11,455 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 D NII(Change in Net Interest Income) and D EVE(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. D NII 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 D EVE 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 September 30, 2020 and December 31, 2019 that include bank, consolidated trusts and subsidiaries of the bank, details of D EVE and DNII calculated based on interest rate risk in banking book (IRRBB) are as follows (Unit: Korean Won in millions):

September 30, 2020 December 31, 2019
DEVE<br>(*1) DNII (*2) DEVE (*1) DNII<br>(*2)
478,303 24,085 490,981 162,023
(*1) D EVE: change in Economic Value of Equity
--- ---
(*2) D NII: change in Net Interest Income
--- ---

For the remaining subsidiaries except the bank, consolidated trusts, and consolidated subsidiaries of the bank as of September 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):

September 30, 2020 December 31, 2019
EaR (*1) VaR (*2) EaR (*1) VaR (*2)
103,381 148,074 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):

September 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 161,905,506 50,820,533 15,272,183 11,541,924 60,375,038 5,266,725 305,181,909
Financial assets at FVTPL 612,405 12,237 90,658 1,906 176,306 13,266 906,778
Financial assets at FVTOCI 4,904,835 3,376,694 3,408,530 3,661,321 13,331,873 529,438 29,212,691
Securities at amortized cost 1,592,174 1,191,944 1,419,990 934,188 12,549,997 982,600 18,670,893
Total 169,014,920 55,401,408 20,191,361 16,139,339 86,433,214 6,792,029 353,972,271
Liability:
Deposits due to customers 126,528,635 46,198,807 34,533,653 20,967,450 50,048,984 80,954 278,358,483
Borrowings 12,635,260 3,463,786 952,236 1,121,723 3,750,646 481,154 22,404,805
Debentures 2,585,963 2,438,694 2,833,556 2,897,003 17,526,203 3,313,939 31,595,358
Total 141,749,858 52,101,287 38,319,445 24,986,176 71,325,833 3,876,047 332,358,646
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 September 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):

September 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 Cash and cash equivalents 5,657,077 108,923 1,841 316,522 206,676 430,929 6,720,127
Loans and other financial assets at amortized cost 27,626,300 1,340,418 26,698 4,589,417 3,148,571 5,962,996 42,667,702
Financial assets at FVTPL 318,649 145,583 36 6,112 288,815 182,802 941,961
Financial assets at FVTOCI 3,312,235 — 2,236 384,434 50,618 549,588 4,296,875
Securities at amortized cost 300,945 — — — 46,314 119,537 466,796
Total 37,215,206 1,594,924 30,811 5,296,485 3,740,994 7,245,852 55,093,461
Liability Financial liabilities at FVTPL 512,361 125,801 — — 315,621 204,332 1,158,115
Deposits due to customers 19,950,174 2,104,965 26,447 4,546,260 1,632,322 3,520,178 31,753,899
Borrowings 7,495,344 185,513 — — 692,184 1,083,325 9,456,366
Debentures 4,655,997 — — — — 223,694 4,879,691
Other financial liabilities 3,829,962 284,048 2,426 417,108 286,399 226,256 5,043,773
Total 36,443,838 2,700,327 28,873 4,963,368 2,926,526 5,257,785 52,291,844
Off-balance accounts 7,874,744 296,014 3,223 554,005 715,741 557,493 9,997,997

All values are in US Dollars.

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.

  • 33 -
(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 September 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):

September 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
Financial liabilities at FVTPL 45,886 12,228 3,580 648 — — 62,342
Deposits due to customers 186,622,512 34,070,411 25,374,261 23,607,779 8,882,524 1,877,822 280,435,309
Borrowings 11,074,287 3,889,187 1,397,366 2,018,281 4,249,390 492,888 23,121,399
Debentures 2,585,963 2,438,694 2,833,556 2,897,003 17,526,202 3,313,939 31,595,357
Lease liabilities 45,822 47,107 39,941 49,866 196,181 29,221 408,138
Other financial liabilities 11,932,181 61,888 6,468 4,080 188,189 1,924,658 14,117,464
Total 212,306,651 40,519,515 29,655,172 28,577,657 31,042,486 7,638,528 349,740,009
December 31, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Within 3<br>months 4 to 6<br>months 7 to 9<br>months 10 to 12<br>months 1 to 5<br>years Over<br>5 years Total
Financial liabilities at FVTPL 115,156 — — — — — 115,156
Deposits due to customers 166,474,535 36,697,168 24,634,859 31,233,844 6,590,119 1,877,594 267,508,119
Borrowings 8,596,202 2,948,384 2,162,846 1,880,424 3,682,214 520,936 19,791,006
Debentures 2,378,211 2,894,577 3,330,658 2,466,142 19,211,409 2,537,391 32,818,388
Lease liabilities 46,072 42,549 37,420 35,210 232,985 40,698 434,934
Other financial liabilities 11,242,367 60,981 119,633 10,344 71,561 2,660,640 14,165,526
Total 188,852,543 42,643,659 30,285,416 35,625,964 29,788,288 7,637,259 334,833,129
  • 34 -

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

September 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 62,342 — — — — — 62,342
Deposits due to customers 194,645,377 35,423,215 23,151,344 19,081,177 7,513,265 161,167 279,975,545
Borrowings 11,074,287 3,889,187 1,397,366 2,018,281 4,249,390 492,888 23,121,399
Debentures 2,585,963 2,438,694 2,833,556 2,897,003 17,526,202 3,313,939 31,595,357
Lease liabilities 45,822 47,107 39,941 49,866 196,181 29,221 408,138
Other financial liabilities 11,931,879 61,888 6,468 4,080 188,189 1,924,658 14,117,162
Total 220,345,670 41,860,091 27,428,675 24,050,407 29,673,227 5,921,873 349,279,943
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 September 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
September 30, 2020 Cash flow risk hedge 484 921 699 579 16,432 120 19,235
Trading purpose 3,508,171 716 6 — — — 3,508,893
December 31, 2019 Cash flow risk hedge 1,839 (341 ) (298 ) (247 ) 6,249 — 7,202
Trading purpose 2,843,195 — — — — — 2,843,195
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. The loan commitment represents the limit if the Group has promised a credit to the customer. Commitments to lend include commercial standby facilities and credit lines, liquidity facilities to commercial paper conduits and utilized overdraft facilities. The maximum limit to be paid by the Group in accordance with guarantees and loan commitment only applies to principal amounts. There are contractual maturities for financial guarantees, such as guarantees for debentures issued or loans, unused loan commitments, and other 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):

September 30, 2020 December 31, 2019
Guarantees 11,575,359 12,618,917
Loan commitments 110,958,256 103,651,674
Other commitments 4,634,115 3,411,334
  • 35 -
(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 established and operated an operating risk management system to strengthen external competitiveness, reduce risk capital volume, enhance operational risk management capacity and prevent accidents through compliance with Basel II, and has obtained approval from the Financial Supervisory Service for “Advanced Measurement Approaches”(AMA) based on self-compliance verification and independent third-party inspection results.

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.

  • 36 -
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 nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Banking Credit card Investment<br>banking Others (*1) Sub-total Adjustments (*2) Total
Net Interest income(expense) 3,407,584 420,518 55,990 (2,099 ) 3,881,993 546,295 4,428,288
Non-interest income(expense) 1,096,317 8,527 29,062 959,560 2,093,466 (1,398,656 ) 694,810
Impairment losses due to credit loss (413,446 ) (139,026 ) (2,302 ) (1,877 ) (556,651 ) (30,069 ) (586,720 )
General and administrative expense (2,425,439 ) (145,997 ) (25,928 ) (284,823 ) (2,882,187 ) 193,567 (2,688,620 )
Net operating income(expense) 1,665,016 144,022 56,822 670,761 2,536,621 (688,863 ) 1,847,758
Non-operating income(expense) (127,036 ) (3,614 ) (455 ) (105 ) (131,210 ) (6,719 ) (137,929 )
Net income(expense) before tax 1,537,980 140,408 56,367 670,656 2,405,411 (695,582 ) 1,709,829
Tax income(expense) (360,240 ) (32,996 ) (6,224 ) (12,535 ) (411,995 ) (2,086 ) (414,081 )
Net income(loss) 1,177,740 107,412 50,143 658,121 1,993,416 (697,668 ) 1,295,748
(*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.
--- ---
  • 37 -
For the nine-month period ended September 30, 2019
Banking Credit card Investment<br>banking Others (*1) Sub-total Adjustments (*2) Total
Net Interest income(expense) 3,450,061 410,973 37,447 2,374 3,900,855 515,995 4,416,850
Non-interest income(expense) 1,223,037 25,621 23,681 880,176 2,152,515 (1,299,630 ) 852,885
Impairment losses due to credit loss (54,055 ) (191,496 ) (460 ) (17 ) (246,028 ) (77,727 ) (323,755 )
General and administrative expense (2,374,062 ) (136,439 ) (19,322 ) (242,631 ) (2,772,454 ) 196,177 (2,576,277 )
Net operating income(expense) 2,244,981 108,659 41,346 639,902 3,034,888 (665,185 ) 2,369,703
Non-operating income(expense) 48,118 15,373 (1,405 ) (1,691 ) 60,395 (31,746 ) 28,649
Net income(expense) before tax 2,293,099 124,032 39,941 638,211 3,095,283 (696,931 ) 2,398,352
Tax income(expense) (561,036 ) (29,201 ) (4,165 ) 1,982 (592,420 ) 139 (592,281 )
Net income(loss) 1,732,063 94,831 35,776 640,193 2,502,863 (696,792 ) 1,806,071
(*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 Management Corp., Woori Private Equity Asset Management Co., Ltd. and Woori Global Asset Management Co., Ltd.
--- ---
(*2) Adjustments were made for the presentation of profit or loss in accordance with the Accounting Standards from<br>the reporting segments in accordance with the Managerial Accounting Standards
--- ---
(3) Operating profit or loss from external customers for the nine-month period ended September 30, 2020 and<br>2019 are as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period ended<br>September 30, 2020 For the nine-month period ended<br>September 30, 2019
--- --- --- --- ---
Domestic 1,714,237 2,130,716
Foreign 133,521 238,987
Total 1,847,758 2,369,703
(4) Major non-current assets as of September 30, 2020 and December 31, 2019 are as follows (Unit: Korean<br>Won in millions):
--- ---
September 30, 2020 (*) December 31, 2019 (*)
--- --- --- --- ---
Domestic 5,082,530 4,908,140
Foreign 384,105 387,284
Total 5,466,635 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 nine-month period ended September 30, 2020 and 2019.

  • 38 -
6. STATEMENTS OF CASH FLOWS
(1) Details of cash and cash equivalents are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Cash 1,542,610 1,957,997
Foreign currencies 569,430 625,999
Demand deposits 6,267,645 3,684,044
Fixed deposits 434,559 124,526
Total 8,814,244 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 nine-month period ended September 30
--- --- --- --- --- --- ---
2020 2019
Changes in other comprehensive income related to valuation of financial assets at FVTOCI 20,610 13,828
Changes in other comprehensive income related to valuation of equity method investments (2,634 ) (427 )
Changes in other comprehensive income related to valuation profit or loss on cash flow<br>hedge (4,564 ) (1,379 )
Changes in financial assets measure at FVTOCI due to debt-for-equity swap 3,575 95,137
Changes in the investment assets of associates due to the replacement of the account 50,411 650
Changes in financial assets at FVTPL and assets held-for-sale (2,385 ) —
Transfer of investment properties and premises and equipment 29,580 —
Transfer from property, plant and equipment to assets held for sale — 95
Changes in account payables related to intangible assets (11,651 ) 35,038
Redemption of debentures 116,475 —
Changes in right-of-use assets and lease liabilities 165,987 630,237
Changes in accrued dividends of hybrid securities — 13,154
  • 39 -
7. FINANCIAL ASSETS AT FVTPL
(1) Details of financial assets at FVTPL as of September 30, 2020 and December 31, 2019 are as follows<br>(Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Financial assets at fair value through profit or loss measured at fair value 10,565,822 8,069,144
(2) Financial assets at fair value through profit or loss measured at fair value are as follows (Unit: Korean Won<br>in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Deposits:
Gold banking asset 45,704 27,901
Securities:
Debt securities
Korean treasury and government agencies 1,139,556 872,954
Financial institutions 718,948 600,303
Corporates 719,977 762,265
Others 72,060 101,563
Equity securities 585,301 688,350
Capital contributions 641,853 515,199
Beneficiary certificates 2,263,777 1,366,233
Sub-total 6,141,472 4,906,867
Loans 350,902 212,473
Derivatives assets 4,027,744 2,921,903
Total 10,565,822 8,069,144

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

8. FINANCIAL ASSETS AT FVTOCI
(1) Details of financial assets at FVTOCI as of September 30, 2020 and December 31, 2019 are as follows<br>(Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Debt securities:
Korean treasury and government agencies 2,147,410 1,152,711
Financial institutions 18,344,904 17,769,924
Corporates 3,853,610 3,917,004
Bond denominated in foreign currencies 4,296,821 3,874,785
Securities loaned 70,351 80,737
Sub-total 28,713,096 26,795,161
Equity securities 931,251 935,370
Total 29,644,347 27,730,531
  • 40 -
(2) Details of equity securities designated as financial assets at FVTOCI as of September 30, 2020 and<br>December 31, 2019 are as follows (Unit: Korean Won in millions):
Purpose of acquisition September 30, 2020 December 31, 2019 Remarks
--- --- --- --- --- --- ---
Investment for strategic business partnership purpose 653,114 678,846
Debt-equity swap 278,095 256,480
Others 42 44 Cooperative insurance, etc.
Total 931,251 935,370
(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 nine-month period ended September 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 (1,425 ) — — (1,425 )
Disposal 504 — — 504
Others (*) (214 ) — — (214 )
Ending balance (9,704 ) — — (9,704 )
(*) Others consist of foreign currencies translation, etc.
--- ---
For the nine-month period ended September 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 (3,679 ) 235 — (3,444 )
Disposal 212 — — 212
Others (*) 111 65 — 176
Ending balance (9,233 ) — — (9,233 )
(*) Others consist of foreign currencies translation, etc.
--- ---
  • 41 -
2) Gross carrying amount
For the nine-month period ended September 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 17,717,064 — — 17,717,064
Disposal/Redemption (15,833,741 ) — — (15,833,741 )
Gain (loss) on valuation 70,225 — — 70,225
Amortization based on effective interest method (9,446 ) — — (9,446 )
Others (*) (26,167 ) — — (26,167 )
Ending balance 28,713,096 — — 28,713,096
(*) Changes due to foreign currencies translation, etc.
--- ---
For the nine-month period ended September 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 18,418,213 — — 18,418,213
Disposal/Redemption (9,301,713 ) (15,000 ) — (9,316,713 )
Gain (loss) on valuation 76,755 — — 76,755
Amortization based on effective interest method 17,645 — — 17,645
Business combination 24,986 — — 24,986
Others (*) 220,301 (5,226 ) — 215,075
Ending balance 26,548,210 — — 26,548,210
(*) Changes due to foreign currencies translation, etc.
--- ---
(4) During the nine-month period ended September 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 2,844 million won and 28,722 million won, respectively and cumulative losses at disposal dates<br>were 3,667 million won and 39,079 million won, respectively.
--- ---
9. SECURITIES AT AMORTIZED COST
--- ---
(1) Details of securities at amortized cost as of September 30, 2020 and December 31, 2019 are as follows<br>(Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Korean treasury and government agencies 6,890,843 8,044,040
Financial institutions 5,644,175 6,694,614
Corporates 4,893,494 5,068,489
Bond denominated in foreign currencies 466,796 518,907
Allowance for credit losses (5,386 ) (5,511 )
Total 17,889,922 20,320,539
  • 42 -
(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 nine-month period ended September 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 reversal of loss allowance 122 — — 122
Others (*) 3 — — 3
Ending balance (5,386 ) — — (5,386 )
(*) Changes due to foreign currencies translation, etc.
--- ---
For the nine-month period ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance (6,925 ) — — (6,925 )
Transfer to 12-month expected credit losses — — — —
Transfer to lifetime expected credit losses — — — —
Transfer to credit-impaired financial assets — — — —
Net reversal of loss allowance 920 — — 920
Others (*) (5 ) — — (5 )
Ending balance (6,010 ) — — (6,010 )
(*) Changes due to foreign currencies translation, etc.
--- ---
2) Gross carrying amount
--- ---
For the nine-month period ended September 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 1,712,770 — — 1,712,770
Disposal / Redemption (4,148,133 ) — — (4,148,133 )
Amortization based on effective interest method 407 — — 407
Others (*) 4,214 — — 4,214
Ending balance 17,895,308 — — 17,895,308
(*) Changes due to foreign currencies translation, etc.
--- ---
For the nine-month period ended September 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 3,937,980 — — 3,937,980
Disposal / Redemption (6,713,880 ) — — (6,713,880 )
Amortization based on effective interest method (37 ) — — (37 )
Others (*) 20,975 — — 20,975
Ending balance 20,184,522 — — 20,184,522
(*) Changes due to foreign currencies translation, etc.
--- ---
  • 43 -
10. LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST
(1) Details of loans and other financial assets at amortized cost as of September 30, 2020 and<br>December 31, 2019 are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Due from banks 13,246,055 14,492,223
Loans 284,353,563 271,032,244
Other financial assets 10,178,443 8,193,226
Total 307,778,061 293,717,693
(2) Details of due from banks are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Due from banks in local currency:
Due from The Bank of Korea (“BOK”) 9,563,448 11,028,850
Due from depository banks 90,358 82,509
Due from non-depository institutions 191 378
Due from the Korea Exchange 110 50,113
Others 29,215 43,253
Loss allowance (2,257 ) (2,865 )
Sub-total 9,681,065 11,202,238
Due from banks in foreign currencies: —
Due from banks on demand 1,692,799 1,122,521
Due from banks on time 660,782 1,296,842
Others 1,214,791 872,617
Loss allowance (3,382 ) (1,995 )
Sub-total 3,564,990 3,289,985
Total 13,246,055 14,492,223
(3) Details of restricted due from banks are as follows (Unit: Korean Won in millions):
--- ---
Counterparty September 30, 2020 Reason of restriction
--- --- --- --- ---
Due from banks in local currency:
Due from BOK The BOK 9,563,448 Reserve deposits<br><br><br>under the BOK Act
Due from KSFC KB Securities Co. Ltd. 110 Futures trading margin
Others The Korea Exchange and others 27,535 Central counterparty KRW margin and others
Sub-total 9,591,093
Due from banks in foreign currencies:
Due from banks on demand The BOK and others 1,684,968 Reserve deposits under the BOK Act and others
Foreign currency deposits on time National Bank Cambodia 59 Reserve deposits and others
Others Korea Investment & Securities and others 1,214,791 Reserve deposits and others
Sub-total 2,899,818
Total 12,490,911
  • 44 -
Counterparty December 31, 2019 Reason of restriction
Due from banks in local currency:
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
(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 nine-month period ended September 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 — — — —
Provision for allowance for credit loss (888 ) — — (888 )
Others (*) 109 — — 109
Ending balance (5,639 ) — — (5,639 )
(*) Changes due to foreign currencies translation, etc.
--- ---
For the nine-month period ended September 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 — — — —
Reversal for allowance for credit loss 786 — — 786
Others (*) 330 — — 330
Ending balance (4,271 ) — — (4,271 )
(*) Changes due to foreign currencies translation, etc.
--- ---
  • 45 -
2) Gross carrying amount
For the nine-month period ended September 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 decrease (1,272,308 ) — — (1,272,308 )
Others (*) 26,919 — — 26,919
Ending balance 13,251,694 — — 13,251,694
(*) Changes due to foreign currencies translation, etc.
--- ---
For the nine-month period ended September 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 decrease (4,528,451 ) — — (4,528,451 )
Business combination 35,901 — — 35,901
Others (*) 21,714 — — 21,714
Ending balance 9,685,563 — — 9,685,563
(*) Changes due to foreign currencies translation, etc.
--- ---
(5) Details of loans are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Loans in local currency 236,521,465 221,484,049
Loans in foreign currencies 20,919,221 18,534,270
Domestic banker’s usance 2,646,829 2,899,651
Credit card accounts 8,321,224 8,398,605
Bills bought in foreign currencies 6,590,727 4,772,093
Bills bought in local currency 112,172 61,362
Factoring receivables 33,351 20,905
Advances for customers on guarantees 14,580 12,616
Private placement bonds 279,574 307,339
Securitized loans 2,174,507 2,250,042
Call loans 2,417,983 3,290,167
Bonds purchased under resale agreements 3,939,909 8,981,752
Others 1,436,685 980,448
Loan origination costs and fees 657,913 620,791
Discounted present value (5,618 ) (6,826 )
Allowance for credit losses (1,706,959 ) (1,575,020 )
Total 284,353,563 271,032,244
  • 46 -
(6) Changes in the loss allowance of loans are as follows (Unit: Korean Won in millions):
For the nine-month period ended September 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 (20,419 ) 19,749 670 (32,413 ) 24,104 8,309
Transfer to lifetime expected credit losses 8,531 (10,276 ) 1,745 16,401 (40,792 ) 24,391
Transfer to credit-impaired financial assets 5,022 8,224 (13,246 ) 2,539 11,605 (14,144 )
Net reversal (provision) of loss allowance 1,277 (7,969 ) (85,126 ) (75,525 ) (90,303 ) (172,839 )
Recovery — — (52,491 ) — — (52,146 )
Charge-off — — 140,741 — — 155,732
Disposal 61 2 976 — 13 33,645
Interest income from impaired loans — — 7,016 — — 11,271
Others 461 58 471 782 (85 ) 23,261
Ending balance (90,215 ) (68,174 ) (124,832 ) (412,474 ) (393,176 ) (372,565 )
For the nine-month period ended September 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 (14,400 ) 14,262 138 (67,232 ) 58,115 9,117
Transfer to lifetime expected credit losses 6,467 (6,839 ) 372 31,399 (57,907 ) 26,508
Transfer to credit-impaired financial assets 50,628 64,597 (115,225 ) 58,189 84,426 (142,615 )
Net reversal (provision) of loss allowance (45,746 ) (62,535 ) (28,508 ) (119,994 ) (160,807 ) (286,473 )
Recovery — — (48,385 ) — — (153,022 )
Charge-off — — 190,299 — — 486,772
Disposal — — 23,653 61 15 58,274
Interest income from impaired loans — — — — — 18,287
Others — — — 1,243 (27 ) 23,732
Ending balance (77,777 ) (62,048 ) (105,698 ) (580,466 ) (523,398 ) (603,095 )
For the nine-month period ended September 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 (10,055 ) 9,417 638 (54,361 ) 45,286 9,075
Transfer to lifetime expected credit losses 5,862 (7,628 ) 1,766 13,477 (23,673 ) 10,196
Transfer to credit-impaired financial assets 1,387 3,992 (5,379 ) 2,764 15,238 (18,002 )
Net reversal (provision) of loss allowance (4,808 ) (7,576 ) (121,502 ) 27,628 8,759 (40,500 )
Recovery — — (45,215 ) — — (49,284 )
Charge-off 3,675 4,799 158,749 154 8 145,747
Disposal — — 2,009 — — 33,044
Interest income from impaired loans — — 7,200 — — 13,767
Others (425 ) (28 ) (498 ) (18,132 ) (250 ) (484 )
Ending balance (118,873 ) (45,392 ) (132,138 ) (376,781 ) (304,251 ) (424,114 )
For the nine-month period ended September 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 (15,975 ) 15,826 149 (80,391 ) 70,529 9,862
Transfer to lifetime expected credit losses 6,455 (6,738 ) 283 25,794 (38,039 ) 12,245
Transfer to credit-impaired financial assets 787 1,659 (2,446 ) 4,938 20,889 (25,827 )
Net reversal (provision) of loss allowance (48,598 ) (80,671 ) (46,282 ) (25,778 ) (79,488 ) (208,284 )
Recovery — — (44,274 ) — — (138,773 )
Charge-off 52,135 77,305 74,305 55,964 82,112 378,801
Disposal — — — — — 35,053
Interest income from impaired loans — — — — — 20,967
Others (4 ) — — (18,561 ) (278 ) (982 )
Ending balance (69,987 ) (70,750 ) (135,037 ) (565,641 ) (420,393 ) (691,289 )
  • 47 -
(7) Changes in the gross carrying amount of loans are as follows (Unit: Korean Won in millions):<br>
For the nine-month period ended September 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 4,555,200 (4,545,485 ) (9,715 ) 1,157,712 (1,136,783 ) (20,929 )
Transfer to lifetime expected credit losses (5,135,772 ) 5,161,330 (25,558 ) (2,825,991 ) 2,839,992 (14,001 )
Transfer to credit-impaired financial assets (82,417 ) (105,893 ) 188,310 (251,852 ) (93,720 ) 345,572
Charge-off — — (140,741 ) — — (155,732 )
Disposal (5,635,127 ) (4,269 ) (38,403 ) — (398 ) (104,818 )
Net increase (decrease) 14,224,482 (1,688,347 ) 15,597 8,122,039 (956,679 ) (107,737 )
Ending balance 119,179,649 11,266,143 407,164 140,645,887 5,563,010 682,612
For the nine-month period ended September 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 258,784 (258,584 ) (200 ) 5,971,696 (5,940,852 ) (30,844 )
Transfer to lifetime expected credit losses (292,625 ) 293,064 (439 ) (8,254,388 ) 8,294,386 (39,998 )
Transfer to credit-impaired financial assets (80,228 ) (77,346 ) 157,574 (414,497 ) (276,959 ) 691,456
Charge-off — — (190,299 ) — — (486,772 )
Disposal — — (43,781 ) (5,635,127 ) (4,667 ) (187,002 )
Net increase (decrease) 169,470 (45,545 ) 33,546 22,515,991 (2,690,571 ) (58,594 )
Ending balance 7,333,868 797,421 184,768 267,159,404 17,626,574 1,274,544
For the nine-month period ended September 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 2,019,769 (2,010,087 ) (9,682 ) 1,720,159 (1,690,032 ) (30,127 )
Transfer to lifetime expected credit losses (3,029,925 ) 3,049,741 (19,816 ) (2,190,694 ) 2,213,546 (22,852 )
Transfer to credit-impaired financial assets (128,679 ) (101,712 ) 230,391 (210,537 ) (137,790 ) 348,327
Charge-off (3,675 ) (4,799 ) (158,749 ) (154 ) (8 ) (145,747 )
Disposal — (29 ) (51,089 ) — — (126,722 )
Net increase (decrease) 8,059,606 (860,967 ) 33,922 9,730,188 (294,018 ) (149,932 )
Business combination 100 — — 851 — —
Ending balance 117,536,438 6,100,156 416,471 140,503,540 5,122,956 893,605
For the nine-month period ended September 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 277,200 (277,027 ) (173 ) 4,017,128 (3,977,146 ) (39,982 )
Transfer to lifetime expected credit losses (321,235 ) 321,594 (359 ) (5,541,854 ) 5,584,881 (43,027 )
Transfer to credit-impaired financial assets (34,326 ) (17,992 ) 52,318 (373,542 ) (257,494 ) 631,036
Charge-off (52,135 ) (77,305 ) (74,305 ) (55,964 ) (82,112 ) (378,801 )
Disposal — — — — (29 ) (177,811 )
Net increase (decrease) 349,153 (26,644 ) 49,084 18,138,947 (1,181,629 ) (66,926 )
Business combination 100 — — 851 — —
Ending balance 7,080,501 905,398 235,554 265,120,479 12,128,510 1,545,630
(8) Details of other financial assets are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
CMA accounts 197,000 199,000
Receivables 7,622,794 5,653,997
Accrued income 948,607 1,012,240
Telex and telephone subscription rights and refundable deposits 943,304 949,118
Other assets 546,959 456,010
Allowance for credit losses (80,221 ) (77,139 )
Total 10,178,443 8,193,226
  • 48 -
(9) Changes in the allowances for credit losses on other financial assets are as follows (Unit: Korean Won in<br>millions):
For the nine-month period ended September 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 (142 ) 132 10 —
Transfer to lifetime expected credit losses 102 (125 ) 23 —
Transfer to credit-impaired financial assets 380 75 (455 ) —
Net provision (reversal) of loss allowance (1,753 ) (1,334 ) (1,808 ) (4,895 )
Charge-off — — 414 414
Disposal — — 1,131 1,131
Others 701 — (433 ) 268
Ending balance (3,908 ) (2,918 ) (73,395 ) (80,221 )
For the nine-month period ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- ---
Stage 1 Stage 2 Stage 3 Total
Beginning balance (3,469 ) (1,971 ) (62,501 ) (67,941 )
Transfer to 12-month expected credit losses (207 ) 199 8 —
Transfer to lifetime expected credit losses 106 (139 ) 33 —
Transfer to credit-impaired financial assets 21 181 (202 ) —
Net provision (reversal) of loss allowance 125 27 (3,776 ) (3,624 )
Charge-off — — 1,760 1,760
Disposal — — 1,338 1,338
Business combination (388 ) — (1,553 ) (1,941 )
Others (39 ) — — (39 )
Ending balance (3,851 ) (1,703 ) (64,893 ) (70,447 )
(10) Changes in the gross carrying amount of other financial assets are as follows (Unit: Korean Won in millions):<br>
--- ---
For the nine-month period ended September 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 8,760 (8,743 ) (17 ) —
Transfer to lifetime expected credit losses (12,595 ) 12,608 (13 ) —
Transfer to credit-impaired financial assets (2,153 ) (728 ) 2,881 —
Charge-off — — (414 ) (414 )
Disposal — — (1,311 ) (1,311 )
Net increase (decrease) 1,938,191 (22,050 ) 73,883 1,990,024
Ending balance 9,992,047 73,734 192,883 10,258,664
For the nine-month period ended September 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 6,992 (6,977 ) (15 ) —
Transfer to lifetime expected credit losses (10,867 ) 10,928 (61 ) —
Transfer to credit-impaired financial assets (930 ) (1,090 ) 2,020 —
Charge-off — — (1,760 ) (1,760 )
Disposal — — (1,204 ) (1,204 )
Net increase (decrease) 5,874,579 (3,384 ) (1,671 ) 5,869,524
Business combination 4,117 — 1,941 6,058
Ending balance 13,328,281 27,670 71,257 13,427,208
  • 49 -
11. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
(1) The fair value hierarchy
--- ---

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.

  • 50 -
(2) Fair value hierarchy of financial assets and liabilities measured at fair value are as follows (Unit: Korean<br>Won in millions):
September 30, 2020
--- --- --- --- --- --- --- --- ---
Level 1 (*) Level 2 (*) Level 3 Total
Financial assets:
Financial assets at FVTPL
Deposits 45,704 — — 45,704
Debt securities 603,734 2,040,720 6,087 2,650,541
Equity securities 23,755 — 484,998 508,753
Capital contributions — — 641,853 641,853
Beneficiary certificates 31,178 617,721 1,614,878 2,263,777
Loans — 154,770 196,132 350,902
Derivative assets (Designated for trading) 14,867 3,968,257 44,620 4,027,744
Others — — 76,548 76,548
Sub-total 719,238 6,781,468 3,065,116 10,565,822
Financial assets at FVTOCI
Debt securities 2,691,712 26,021,384 — 28,713,096
Equity securities 425,455 — 505,796 931,251
Sub-total 3,117,167 26,021,384` 505,796 29,644,347
Derivative assets (Designated for hedging) — 228,580 — 228,580
Total 3,836,405 33,031,432 3,570,912 40,438,749
Financial liabilities:
Financial liabilities at FVTPL
Deposits due to customers 45,886 — — 45,886
Derivative liabilities (Designated for trading) 3,170 3,482,420 23,303 3,508,893
Securities sold 246,596 — — 246,596
Sub-total 295,652 3,482,420 23,303 3,801,375
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities — — 16,456 16,456
Derivative liabilities (Designated for hedging) — 23,039 — 23,039
Total 295,652 3,505,459 39,759 3,840,870
(*) 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.
--- ---
  • 51 -
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.
--- ---
  • 52 -

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>September 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>September 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 and LSMC given the values of underlying<br>assets and volatility. Values of underlying assets, volatility
Debt securities The fair value is measured by discounting the projected cash flows of debt securities by applying<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, Net Asset Value Method, and LSMC, more than one method is used given the characteristic of the subject of fair value measurement. Risk-free market rate, market risk premium, corporate Beta, stock 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 Hull-White model. Volatility of underlying assets, correlation coefficient, discount rate, regression<br>coefficient
Others Fair value is measured by DCF model, LSMC, etc. Stock prices, volatility of underlying assets, etc.
  • 53 -

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 30.91% Variation of fair value increases as volatility of underlying asset increases.
LSMC Stock, Volatility of underlying asset 22.31% 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 26.20%~273.30% Variation of fair value increases as volatility of underlying assets increases.
Equity related Correlation coefficient 0.31~0.74 Variation of fair value increases as correlation coefficient increases.
Volatility of underlying asset 28.93%~29.91% 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 26.20%~273.30% Variation of fair value increases as volatility of underlying assets increases.
Equity related Correlation coefficient 0.31~0.74 Variation of fair value increases as correlation coefficient increases.
Volatility of underlying asset 28.93%~29.91% 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<br> <br>coefficient 0.31~0.74 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 decrease.
Volatility of underlying asset 28.93%~65.06%
  • 54 -
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 0.00% Variation of fair value increases as volatility of underlying asset<br><br><br>increases.
LSMC Stock, Volatility of underlying<br> <br>asset 22.31%~33.45% Variation of fair value increases as volatility of underlying asset<br><br><br>increases.
DCF model Terminal growth rate 0~1% Fair value increases as terminal growth rate increases.
Discount rate 4.09%~35.99% Fair value increases as discount rate decreases.
Liquidation value — Variation of liquidation value increases as volatility of underlying assets increases
Others DCF model Discount rate 13.91% Variation of fair value increases as volatility of underlying asset increases.
Terminal growth rate 1.00% Fair value increases as terminal growth rate increases.
LSMC Stock, Volatility of underlying<br> <br>asset 17.86%~35.03% Variation of fair value increases as volatility of underlying asset increases.

Fair value of financial assets and liabilities classified into Level 3 is measured by the Group using its own valuation methods or using external specialists. Unobservable inputs used in the fair value measurements are produced by the internal system of the Group and the appropriateness of inputs is reviewed regularly.

(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 nine-month period ended September 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 5,826 337 — — (76 ) — 6,087
Equity securities 464,741 31,537 — 2,837 (14,149 ) 32 484,998
Capital contributions 515,199 20,873 — 144,875 (39,094 ) — 641,853
Beneficiary certificates 1,275,734 15,230 — 493,404 (169,490 ) — 1,614,878
Loans 152,629 6,244 — 125,654 (88,395 ) — 196,132
Derivative assets 25,048 41,478 — 10,161 (19,843 ) (12,224 ) 44,620
Others 63,880 3,670 — 8,998 — — 76,548
Sub-total 2,503,057 119,369 — 785,929 (331,047 ) (12,192 ) 3,065,116
Financial assets at FVTOCI
Equity securities 493,698 — (19,452 ) 31,836 (2,478 ) 2,192 505,796
Total 2,996,755 119,369 (19,452 ) 817,765 (333,525 ) (10,000 ) 3,570,912
Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities 72,039 18,282 — 4,762 (53,246 ) (18,534 ) 23,303
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities 87,626 (4,141 ) — — (67,029 ) — 16,456
Derivative liabilities (Designated for hedging) 321 — — — (321 ) — —
Total 159,986 14,141 — 4,762 (120,596 ) (18,534 ) 39,759
(*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 116,771 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.
--- ---
  • 55 -
For the nine-month period ended September 30, 2019
January 1,<br>2019 Business<br>Combination 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) Ending<br>balance
Financial assets:
Financial assets at FVTPL
Debt securities 8,389 — 324 — 2,001 (5,059 ) — 5,655
Equity securities 401,860 — 48,194 — 54,450 (4,703 ) — 499,801
Capital contributions 422,614 707 (6,431 ) — 105,477 (61,499 ) — 460,868
Beneficiary certificates 854,299 — 18,369 — 218,353 (150,821 ) — 940,200
Loans 180,450 — (2,331 ) — 54,993 (64,747 ) — 168,365
Derivative assets 48,798 — 15,648 — 3,946 (37,277 ) 2,761 33,876
Sub-total 1,916,410 707 73,773 — 439,220 (324,106 ) 2,761 2,108,765
Financial assets at FVTOCI
Equity securities 468,847 1,408 — 20,604 649 (75 ) (1 ) 491,432
Total 2,385,257 2,115 73,773 20,604 439,869 (324,181 ) 2,760 2,600,197
Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities 16,691 — 46,063 — (6,481 ) (14,409 ) (2,729 ) 39,135
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities 164,767 — 27,122 — 1,809 (108,142 ) — 85,556
Total 181,458 — 73,185 — (4,672 ) (122,551 ) (2,729 ) 124,691
(*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 58,830 million won for the nine-month period ended September 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.
--- ---
  • 56 -
(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 3,610,671 million won and 3,156,741 million won as of September 30, 2020 and December 31, 2019 respectively, equity instruments of 3,038,658 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 September 30, 2020 and December 31, 2019 is as follows (Unit: Korean Won in millions):

September 30, 2020
Net income (loss) Other comprehensive income (loss)
Favorable Unfavorable Favorable Unfavorable
Financial assets:
Financial assets at FVTPL
Derivative assets (*1) 2,124 (2,465 ) — —
Loans (*2) 1,181 (1,202 ) — —
Debt securities 29 (28 ) — —
Equity securities (*2) (*3) (*4) 10,338 (8,696 ) — —
Beneficiary certificates (*4) 936 (965 ) — —
Others (*2) 337 (309 ) — —
Financial assets at FVTOCI
Equity securities (*3) (*4) — — 24,034 (18,537 )
Total 14,945 (13,665 ) 24,034 (18,537 )
Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities (*1) 1,015 (804 ) — —
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities (*1) 33 (8 ) — —
Total 1,048 (812 ) — —
(*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%.
--- ---
  • 57 -
December 31, 2019
Net income (loss) Other comprehensive income (loss)
Favorable Unfavorable Favorable Unfavorable
Financial assets:
Financial assets at FVTPL
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%.
--- ---
  • 58 -
(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):
September 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Fair value Book<br>value
Level 1 Level 2 Level 3 Total
Financial assets:
Securities at amortized cost 2,895,147 15,328,070 — 18,223,217 17,889,922
Loans and other financial assets at amortized cost 17,110 — 304,705,608 304,722,718 307,778,061
Financial liabilities:
Deposits due to customers — 278,899,205 — 278,899,205 278,588,976
Borrowings — 22,745,081 — 22,745,081 22,768,493
Debentures — 30,525,301 — 30,525,301 29,964,791
Other financial liabilities — 17,329,702 202,210 17,531,912 17,537,263
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
  • 59 -
(6) Financial instruments by category

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

September 30, 2020
Financial<br>asset at<br>FVTPL Financial<br>assets at<br>FVTOCI Financial<br>assets at<br>amortized cost Derivatives<br>assets<br>(Designated<br>for hedging) Total
Financial assets
Deposits 45,704 — 13,246,055 — 13,291,759
Securities 6,141,472 29,644,347 17,889,922 — 53,675,741
Loans 350,902 — 284,353,563 — 284,704,465
Derivative assets 4,027,744 — — 228,580 4,256,324
Other financial assets — — 10,178,443 — 10,178,443
Total 10,565,822 29,644,347 325,667,983 228,580 366,106,732
September 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
Financial liabilities
Deposits due to customers 45,886 — 278,588,976 — 278,634,862
Borrowings 246,596 16,456 22,768,493 — 23,031,545
Debentures — — 29,964,791 — 29,964,791
Derivative liabilities 3,508,893 — — 23,039 3,531,932
Other financial liabilities — — 17,537,263 — 17,537,263
Total 3,801,375 16,456 348,859,523 23,039 352,700,393
December 31, 2019
--- --- --- --- --- --- --- --- --- --- ---
Financial<br>asset at<br>FVTPL Financial<br>assets at<br>FVTOCI Financial<br>assets at<br>amortized 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<br>for hedging) Total
Financial liabilities
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 at<br>amortized cost included in provisions.
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  • 60 -
(7) Income or expense from financial instruments by category

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

For the nine-month period ended September 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 38,855 — — 613,994 652,849
Financial assets at FVTOCI 344,380 209 (1,425 ) 35,754 378,918
Securities at amortized cost 294,673 — 122 — 294,795
Loans and other financial assets at amortized cost 6,510,266 39,638 (573,057 ) 40,319 6,017,166
Financial liabilities at amortized cost (2,752,819 ) — — — (2,752,819 )
Net derivatives (designated for hedging) — — — (4,690 ) (4,690 )
Total 4,435,355 39,847 (574,360 ) 685,377 4,586,219
For the nine-month period ended September 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 40,642 76,432 — 166,934 284,008
Financial assets at FVTOCI 344,183 — (3,444 ) 27,266 368,005
Securities at amortized cost 332,617 — 920 — 333,537
Loans and other financial assets at amortized cost 7,250,532 214,065 (316,388 ) 99,107 7,247,316
Financial liabilities at amortized cost (3,551,124 ) — — — (3,551,124 )
Net derivatives (designated for hedging) — — — 54,885 54,885
Total 4,416,850 290,497 (318,912 ) 348,192 4,736,627
  • 61 -
12. DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS
(1) Derecognition of financial instruments
--- ---

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

1) Bonds sold under repurchase agreements

The financial instruments that were disposed but the Group agreed to repurchase at the fixed amounts at the same time, so that they did not meet the conditions of derecognition, are as follows (Unit: Korean Won in millions):

September 30, 2020 December 31, 2019
Assets transferred Financial assets at FVTPL 450,888 407,985
Financial assets at FVTOCI 105,058 56,975
Securities at amortized cost 42,361 42,841
Loans and other financial assets at amortized cost 286,058 82,594
Total 884,365 590,395
Related liabilities Bonds sold under repurchase agreements 903,583 569,002
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):

September 30,<br>2020 December 31,<br>2019 Loaned to
Financial assets at FVTOCI Korean financial institution’s debt securities and others 70,351 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.

  • 62 -
(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 September 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):

September 30, 2020
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) 3,776,019 — 3,776,019 9,131,440 409,698 1,014,794
Receivable spot exchange (*2) 6,779,913 — 6,779,913
Bonds purchased under resale agreements (*2) 3,939,909 — 3,939,909 3,939,909 — —
Domestic exchange settlement debits (*2) (*6) 27,577,986 27,224,781 353,205 — — 353,205
Total 42,073,827 27,224,781 14,849,046 13,071,349 409,698 1,367,999
Financial liabilities:
Derivative liabilities (*1) 2,813,803 — 2,813,803 8,888,665 223,782 498,951
Equity-linked securities in short position (*3) 16,456 — 16,456
Payable spot exchange (*4) 6,781,139 — 6,781,139
Bonds sold under repurchase agreements (*5) 903,583 — 903,583 445,483 458,100 —
Domestic exchange settlement credits (*4) (*6) 28,508,172 27,224,781 1,283,391 1,278,387 — 5,004
Total 39,023,153 27,224,781 11,798,372 10,612,535 681,882 503,955

(*1) The items include derivative assets and liabilities held for trading and designated for hedging.

(*2) The items are included in loan at amortized cost and other financial assets.

(*3) The items are equity linked securities related to derivatives and are included in financial liabilities at 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.

  • 63 -
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.

(*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 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.

  • 64 -
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 September 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 2020.08.31(*5)
Korea Credit Bureau Co., Ltd. (*2) Credit information 9.9 9.9 Korea 2020.09.30
Korea Finance Security Co., Ltd. (*1) Security service 15.0 15.0 Korea 2020.08.31(*5)
Saman Corporation (*2) General construction Technology service 9.2 9.2 Korea 2020.06.30(*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 2020.09.30
2016KIF-IMM Woori Bank Technology Venture Fund Other financial services 20.0 20.0 Korea 2020.09.30
K BANK Co., Ltd. (*2) (*7) Finance 26.2 14.5 Korea 2020.08.31(*5)
Smart Private Equity Fund No.2 Other financial services 20.0 20.0 Korea 2020.09.30
Woori Bank-Company K Korea Movie Asset Fund Other financial services 25.0 25.0 Korea 2020.09.30
Well to Sea No. 3 Private Equity Fund (*6) Finance 50.0 50.0 Korea 2020.06.30(*5)
Partner One Value Up I Private Equity Fund Other financial services 23.3 23.3 Korea 2020.09.30
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership Other financial services 20.0 20.0 Korea 2020.09.30
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund Other financial services 25.0 25.0 Korea 2020.09.30
LOTTE CARD Co., Ltd. Credit card and installment financing 20.0 20.0 Korea 2020.06.30(*5)
Together-Korea Government Private Pool Private Securities Investment Trust No.3 Securities Investment 100.0 — Korea 2020.09.30
Genesis Environmental Energy Company 1st Private Equity Fund Trust and collective investment 24.8 — Korea 2020.09.30
Japanese Hotel Real Estate Private Equity Fund 2 Other financial services 19.9 19.9 Korea 2020.09.30
Woori G Senior Loan No.1 Investment trust and discretionary investment business 20.6 — Korea 2020.09.30
Woori G Clean Energy No.1 Investment trust and discretionary investment business 50.0 — Korea 2020.09.30
Woori Asset Management Co. Ltd.:
  • 65 -
Percentage of ownership<br>(%)
Joint ventures and associates Main business September 30,<br>2020 December 31,<br>2019 Location Financial<br>statements as of
Woori High plus G.B. Securities Feeder Fund1(G.B.) Collective investment business 22.2 — Korea 2020.09.30
Woori Private Equity Asset Management Co., Ltd.:
Uri Hanhwa Eureka Private Equity Fund (*2) Other financial services 0.8 0.8 Korea 2020.09.30
Japanese Hotel Real Estate Private Equity Fund 1:
Godo Kaisha Oceanos 1 Other financial services 47.8 47.8 Japan 2020.07.31(*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 —
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 2020.09.30
Woori Bank and Woori Investment Bank Co., Ltd.:
Chin Hung International Inc. (*3) Construction — 25.3 Korea —
PCC-Woori LP Secondary Fund Other financial services 38.8 38.8 Korea 2020.09.30
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 2020.09.30
(*1) Most of the significant business transactions of associates are with the Group as of September 30, 2020<br>and December 31, 2019.
--- ---
(*2) The Group can participate in decision-making body and exercise significant influence over financial policies<br>and operational policies decision making of the associates.
--- ---
(*3) As of September 30, 2020, it is classified as assets held for sale. Quoted market prices per share of Chin<br>Hung International Inc. are 2,215 Won and 2,310 Won as of September 30, 2020 and December 31, 2019, respectively.
--- ---
(*4) There is no investment balance as of September 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.
--- ---
  • 66 -
(*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) The Group invested 163,082 million won in its affiliate, K BANK Co., Ltd., in July, 2020.<br>
--- ---
  • 67 -
(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 nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Acquisition<br>cost January 1,<br>2020 Share of<br>profits<br>(losses) Acquisition Disposal Dividends Change<br>in<br>capital September 30,<br>2020
W Service Networks Co., Ltd. 108 186 1 — — (3 ) — 184
Korea Credit Bureau Co., Ltd. 3,313 6,845 1,358 — — (90 ) — 8,113
Korea Finance Security Co., Ltd. 3,267 3,287 (241 ) — — — — 3,046
Chin Hung International Inc. 130,779 51,176 (742 ) — (50,411 ) — (23 ) —
Saman Corporation 8,521 849 (406 ) — — — 37 480
Woori Growth Partnerships New Technology Private Equity Fund 18,666 19,212 (1,863 ) — (1,728 ) (212 ) — 15,409
2016KIF-IMM Woori Bank Technology Venture Fund 12,385 15,141 900 — (492 ) (1,088 ) (1,563 ) 12,898
K BANK Co., Ltd. 73,150 31,254 (12,108 ) 163,082 — — (1,733 ) 180,495
Smart Private Equity Fund No.2 2,915 2,764 (31 ) — — — — 2,733
Woori Bank-Company K Korea Movie Asset Fund 2,100 3,323 439 — (900 ) — — 2,862
Well to Sea No.3 Private Equity Fund 101,483 209,023 28,869 — — (24,651 ) (1,174 ) 212,067
Partner One Value Up I Private Equity Fund 10,000 9,908 (74 ) — — — — 9,834
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership 7,736 4,576 — 3,160 — — — 7,736
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund 4,130 4,375 — 75 (321 ) — — 4,129
Woori-Shinyoung Growth-Cap Private Equity Fund I 32,572 11,841 (121 ) 19,907 — — — 31,627
LOTTE CARD Co.,Ltd 346,810 409,444 16,251 810 — (5,710 ) (1,146 ) 419,649
Woori-Q Corporate Restructuring Private Equity Fund 6,129 6,046 (90 ) 8,152 — — — 14,108
PCC-Woori LP Secondary Fund 7,575 2,525 (131 ) 5,050 — — — 7,444
Force TEC Co., Ltd. — — 1,470 — — — (448 ) 1,022
Together-Korea Government Private Pool Private Securities Investment Trust No.3 100,000 — 130 100,000 — — — 100,130
Genesis Environmental Energy Company 1st Private Equity Fund 4,084 — (88 ) 4,084 — — — 3,996
Uri Hanhwa Eureka Private Equity Fund 350 342 (3 ) — — — — 339
Godo Kaisha Oceanos 1 10,800 10,952 (47 ) — — (850 ) 238 10,293
Japanese Hotel Real Estate Private Equity Fund 2 3,291 3,291 184 — — (117 ) (12 ) 3,346
Woori High plus G.B. Securities Feeder Fund1(G.B.) 6,000 — 142 6,141 — — — 6,283
Woori G Senior Loan No.1 18,557 — 49 18,557 — — — 18,606
Woori G Clean Energy No.1 26 — — 26 — — — 26
914,747 806,360 33,848 329,044 (53,852 ) (32,721 ) (5,824 ) 1,076,855
  • 68 -
For the nine-month period ended September 30, 2019
Acquisition<br>cost January 1,<br>2019 Share of<br>profits<br>(losses) Acquisition Disposal Dividends Change<br>in<br>capital September 30,<br>2019
W Service Networks Co., Ltd. 108 157 16 — — (2 ) — 171
Korea Credit Bureau Co., Ltd. 3,313 6,790 1,031 — — (135 ) — 7,686
Korea Finance Security Co., Ltd. 3,267 3,456 (135 ) — — — — 3,321
Chin Hung International Inc. 130,779 44,741 5,708 — — — 8 50,457
Saman Corporation 8,521 1,014 (388 ) — — — 32 658
Woori Growth Partnerships New Technology Private Equity Fund 19,385 25,091 1,424 309 (6,770 ) (164 ) — 19,890
2016KIF-IMM Woori Bank Technology Venture Fund 13,065 15,300 908 — (1,935 ) — (384 ) 13,889
K BANK Co., Ltd. 73,150 43,709 (10,815 ) 5,807 — — 197 38,898
Smart Private Equity Fund No.2 2,915 2,890 (31 ) — (85 ) — — 2,774
Woori Bank-Company K Korea Movie Asset Fund 3,000 2,700 803 — — — — 3,503
Well to Sea No.3 Private Equity Fund 101,483 197,393 23,110 — — (18,578 ) (1,850 ) 200,075
Partner One Value Up I Private Equity Fund 10,000 9,948 (29 ) — — — — 9,919
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 — — (787 ) — — —
Uri Hanhwa Eureka Private Equity Fund 350 339 (2 ) — — — — 337
Godo Kaisha Oceanos 1 11,020 — — 11,020 — (70 ) 688 11,638
Woori-Shinyoung Growth-Cap Private Equity Fund I 7,649 — (640 ) 7,649 — — — 7,009
397,731 361,766 20,960 26,060 (9,577 ) (18,949 ) (1,309 ) 378,951
  • 69 -
(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):
September 30, 2020
--- --- --- --- --- --- --- --- --- ---
Assets Liabilities Operating<br>revenue Net income<br>(loss)
W Service Networks Co., Ltd. 6,107 2,377 13,633 1,070
Korea Credit Bureau Co., Ltd. 114,062 34,707 77,957 13,268
Korea Finance Security Co., Ltd. 36,658 16,353 44,105 (2,123 )
Saman Corporation 121,151 99,147 66,949 (107 )
Woori Growth Partnerships New Technology Private Equity Fund 67,053 278 1,428 (7,965 )
2016KIF-IMM Woori Bank Technology Venture Fund 62,139 929 5,445 4,500
K BANK Co., Ltd. 3,141,943 2,607,546 45,922 (60,227 )
Smart Private Equity Fund No.2 13,717 50 1 (154 )
Woori Bank-Company K Korea Movie Asset Fund 11,544 96 1,854 1,755
Well to Sea No.3 Private Equity Fund 8,172,581 7,562,271 406,218 39,241
Partner One Value Up I Private Equity Fund 42,476 193 229 (250 )
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership 36,189 328 574 (456 )
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund 15,870 123 — (85 )
Woori-Shinyoung Growth-Cap Private Equity Fund I 99,273 1,228 615 (1,376 )
LOTTE CARD Co.,Ltd (*) 14,231,821 11,906,418 882,641 62,921
Woori-Q Corporate Restructuring Private Equity Fund 35,500 383 — (1,284 )
PCC-Woori LP Secondary Fund 19,324 164 154 (338 )
Force TEC Co., Ltd. 51,005 47,042 18,333 (697 )
Together-Korea Government Private Pool Private Securities Investment Trust No.3 100,153 13 163 130
Genesis Environmental Energy Company 1st Private Equity Fund 16,194 48 — (354 )
Uri Hanhwa Eureka Private Equity Fund 42,235 117 4 (354 )
Godo Kaisha Oceanos 1 67,080 45,550 674 (98 )
Japanese Hotel Real Estate Private Equity Fund 2 16,866 16 946 946
Woori High plus G.B. Securities Feeder Fund1(G.B.) 28,321 17 801 741
Woori G Senior Loan No.1 90,244 5 237 237
Woori G Clean Energy No.1 53 — — —
(*) 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.
--- ---
  • 70 -
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 September 30, 2020 and December 31, 2019 are as follows:
--- ---
September 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.
--- ---
  • 71 -
(5) As of September 30, 2020 and December 31, 2019, the reconciliations from the net assets of the<br>associates to the book value of the shares of the investment in joint ventures and associates are as follows (Unit: Korean Won in millions except for ownership):
September 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. 3,730 4.9 184 — — — 184
Korea Credit Bureau Co., Ltd. 79,355 9.9 7,864 246 — 3 8,113
Korea Finance Security Co., Ltd. 20,304 15.0 3,046 — — — 3,046
Saman Corporation (*2) 22,004 9.2 2,022 5,372 (6,915 ) 1 480
Woori Growth Partnerships New Technology Private Equity Fund 66,775 23.1 15,412 — — (3 ) 15,409
2016KIF-IMM Woori Bank Technology Venture Fund 61,210 20.0 12,242 — — 656 12,898
K BANK Co., Ltd. (*1) (*2) 534,398 26.2 140,012 44,117 (3,634 ) — 180,495
Smart Private Equity Fund No.2 13,666 20.0 2,733 — — — 2,733
Woori Bank-Company K Korea Movie Asset Fund 11,448 25.0 2,862 — — — 2,862
Well to Sea No.3 Private Equity Fund (*1) 424,341 50.0 212,086 — — (19 ) 212,067
Partner One Value Up Ist Private Equity Fund 42,283 23.3 9,835 — — (1 ) 9,834
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership 35,861 20.0 7,172 — — 564 7,736
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund 15,747 25.0 3,937 — — 192 4,129
Woori-Shinyoung Growth-Cap Private Equity Fund I 98,045 31.9 31,627 — — — 31,627
LOTTE CARD Co., Ltd (*1) 2,098,239 20.0 419,648 — — 1 419,649
Woori-Q Corporate Restructuring Private Equity Fund 35,117 38.4 13,511 — — 597 14,108
PCC-Woori LP Secondary Fund 19,160 38.8 7,443 — — 1 7,444
Force TEC 3,963 25.8 1,022 — — — 1,022
Together-Korea Government Private Pool Private Securities Investment Trust No.3 100,140 100.0 100,140 — — (10 ) 100,130
Genesis Environmental Energy Company 1st Private Equity Fund 16,146 24.8 3,997 — — (1 ) 3,996
Uri Hanhwa Eureka Private Equity Fund 42,118 0.8 339 — — — 339
Godo Kaisha Oceanos 1 21,530 47.8 10,293 — — — 10,293
Japanese Hotel Real Estate Private Equity Fund 2 16,850 19.9 3,346 — — — 3,346
Woori High plus G.B. Securities Feeder Fund1(G.B.) 28,304 22.2 6,283 — — — 6,283
Woori G Senior Loan No.1 90,239 20.6 18,606 — — — 18,606
Woori G Clean Energy No.1 53 50.0 26 — — — 26
(*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.
--- ---
  • 72 -
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.
--- ---
  • 73 -
14. INVESTMENT PROPERTIES
(1) Details of investment properties are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Acquisition cost 333,001 299,802
Accumulated depreciation (21,657 ) (19,563 )
Net carrying value 311,344 280,239
(2) Changes in investment properties are as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period ended September 30
--- --- --- --- --- --- ---
2020 2019
Beginning balance 280,239 178,910
Acquisition 2,432 246,329
Disposal (356 ) (176 )
Depreciation (1,812 ) (1,766 )
Transfer 29,580 15,535
Foreign currencies translation adjustments 446 502
Others 815 109
Ending balance 311,344 439,443
(3) Rental fee earned from investment properties is amounting to 9,944 million won and 6,750 million won<br>for the nine-month period ended September 30, 2020 and 2019, respectively. Operating expenses directly related to the investment properties where rental fee was earned is amounting to 1,907 million won and 1,848 million won.<br>
--- ---
15. PREMISES AND EQUIPMENT
--- ---
(1) Details of premises and equipment as of September 30, 2020 and December 31, 2019 are as follows<br>(Unit: Korean Won in millions):
--- ---
September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land Building Equipment<br>and vehicles Leasehold<br>improvement Construction<br>in progress Structures Total
Premises and equipment (owned) 1,725,907 783,459 265,784 50,356 4,856 2 2,830,364
Right-of-use asset — 434,809 13,460 — — — 448,269
Carrying value 1,725,907 1,218,268 279,244 50,356 4,856 2 3,278,633
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
  • 74 -
(2) Details of premises and equipment (owned) as of September 30, 2020 and December 31, 2019 are as<br>follows (Unit: Korean Won in millions):
September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Land Building Equipment<br>and vehicles Leasehold<br>improvement Construction<br>in progress Structures Total
Acquisition cost 1,725,907 1,067,040 1,117,098 469,754 4,856 20 4,384,675
Accumulated depreciation — (283,581 ) (851,314 ) (419,398 ) — (18 ) (1,554,311 )
Net carrying value 1,725,907 783,459 265,784 50,356 4,856 2 2,830,364
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 nine-month period ended September 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 13,870 57,293 15,113 4,084 — 90,415
Disposals (6,478 ) (346 ) (982 ) (353 ) — — (8,159 )
Depreciation — (26,849 ) (70,779 ) (19,787 ) — — (117,415 )
Transfer (28,266 ) (1,314 ) — — — — (29,580 )
Foreign currencies translation adjustments (563 ) (622 ) 335 305 (13 ) — (558 )
Others — (3,579 ) 1,901 239 (502 ) — (1,941 )
Ending balance 1,725,907 783,459 265,784 50,356 4,856 2 2,830,364
For the nine-month period ended September 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 51,856 34,279 91,019 21,215 6,600 — 204,969
Disposals (3,002 ) (2,245 ) (398 ) (2,321 ) — — (7,966 )
Depreciation — (22,434 ) (64,458 ) (19,750 ) — (1 ) (106,643 )
Classified as held-for-sale (21 ) (74 ) — — — — (95 )
Transfer 106,841 87,214 2,734 912 (13,950 ) — 183,751
Foreign currencies translation adjustments 1,155 1,059 2,100 1,158 78 — 5,550
Business combination — — 400 1 — — 401
Others — 1,672 (1,440 ) (4,357 ) (173 ) — (4,298 )
Ending balance 1,638,700 761,383 269,970 54,452 1,654 2 2,726,161
  • 75 -
(4) Details of right-of-use assets as of September 30, 2020 and December 31, 2019 are as follows (Unit:<br>Korean Won in millions):
September 30, 2020
--- --- --- --- --- --- --- --- --- ---
Building Equipment and vehicles Total
Acquisition cost 703,573 28,154 731,727
Accumulated depreciation (268,764 ) (14,694 ) (283,458 )
Net carrying value 434,809 13,460 448,269
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 nine-month period ended September 30, 2020 and 2019 are<br>as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- ---
Building Equipment and vehicles Total
Beginning balance 449,878 17,236 467,114
New contracts 156,329 5,231 161,560
Changes in contract 9,374 50 9,424
Termination (4,674 ) (323 ) (4,997 )
Depreciation (170,039 ) (7,640 ) (177,679 )
Business combination — — —
Others (6,059 ) (1,094 ) (7,153 )
Ending balance 434,809 13,460 448,269
For the nine-month period ended September 30, 2019
--- --- --- --- --- --- --- --- --- ---
Building Equipment and vehicles Total
Beginning balance 416,827 18,964 435,791
New contracts 187,352 5,470 192,822
Changes in contract — — —
Termination (213 ) (105 ) (318 )
Depreciation (153,288 ) (7,484 ) (160,772 )
Business combination 3,324 34 3,358
Others (2,057 ) 669 (1,388 )
Ending balance 451,945 17,548 469,493
  • 76 -
16. INTANGIBLE ASSETS
(1) Details of intangible assets are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Goodwill Software Industrial<br>property rights Development<br>cost Other<br>intangible<br>assets Membership<br>deposit Construction<br>in<br>progress Total
Acquisition cost 340,068 186,871 1,799 555,721 879,804 36,715 6,709 2,007,687
Accumulated amortization — (146,392 ) (1,044 ) (345,120 ) (678,447 ) — — (1,171,003 )
Accumulated impairment losses — — — — (33,680 ) (3,201 ) — (36,881 )
Net carrying value 340,068 40,479 755 210,601 167,677 33,514 6,709 799,803
December 31, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Goodwill Software Industrial<br>property 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 nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Goodwill Software Industrial<br>property 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 — 12,171 223 38,256 17,795 4,960 3,238 76,643
Disposal — — — — — (759 ) — (759 )
Amortization (*) — (6,731 ) (160 ) (53,079 ) (41,835 ) — — (101,805 )
Impairment losses — — — — (7,687 ) (17 ) — (7,704 )
Transfer — — — 428 164 — (592 ) —
Foreign currencies translation adjustments (8,997 ) (621 ) — — (56 ) 69 (3 ) (9,608 )
Others (1,617 ) (172 ) — (197 ) 981 (69 ) — (1,074 )
Ending balance 340,068 40,479 755 210,601 167,677 33,514 6,709 799,803
(*) Amortization of other intangible assets amounting to 9,363 million won is included in other operating<br>expenses.
--- ---
For the nine-month period ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Goodwill Software Industrial<br>property 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 — 10,505 260 24,331 75,110 4,846 8,605 123,657
Disposal — — — — (27 ) (537 ) — (564 )
Amortization (*) — (7,125 ) (138 ) (48,083 ) (39,600 ) — — (94,946 )
Impairment losses — — — — — (854 ) — (854 )
Transfer — — — 7,928 6,605 — (14,533 ) —
Foreign currencies translation adjustments 14,422 233 — — 2,994 155 — 17,804
Business combination 45,264 336 — — 6,456 139 — 52,195
Others — 179 — — (679 ) — — (500 )
Ending balance 213,288 33,855 684 224,496 190,156 27,346 4,487 694,312
(*) Amortization of other intangible assets amounting to 16,211 million won is included in other operating<br>expenses.
--- ---
  • 77 -
17. ASSETS HELD FOR SALE

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

Assets (*) September 30, 2020 December 31, 2019
Lands 4,737 5,164
Buildings 4,301 4,815
Investments of associates 50,411 —
Others 450 577
Total 59,899 10,556
(*) The Group classifies assets as held for sale that are highly likely to be sold within one year from<br>September 30, 2020 or December 31, 2019.
--- ---

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):
--- ---
September 30, 2020
--- --- --- --- --- ---
Collateral given to Amount Reason for collateral
Financial assets at FVTPL Korean treasury and government bonds and others Kookmin bank and others 250,250 Related to bonds sold under repurchase agreements (*)
Korean treasury and government bonds and others Korea Securities Depository 6,073 Securities borrowing collateral
Korean treasury and government bonds and others Shinhan Investment Corp. 4,049 Collateral for futures transaction
Korean financial institutions’ debt securities and others Korea Securities Depository 161,061 Securities borrowing collateral
Korean financial institutions’ debt securities and others Kookmin bank 49,995 Related to bonds sold under repurchase agreements (*)
Korean corporate debt securities Kookmin bank 150,643 Related to bonds sold under repurchase agreements (*)
Korean corporate debt securities Eugene investment & futures co., Ltd. 3,034 Collateral for futures transaction
Korean corporate debt securities Korea Securities Depository 111,730 Securities borrowing collateral
Financial assets at FVTOCI Korean financial institutions’ debt securities and others The BOK and others 3,489,897 Settlement risk and others
Foreign financial institutions’ debt securities Spain BBVA and others 105,058 Related to bonds sold under repurchase agreements (*)
Securities at amortized cost Korean treasury and government bonds and others Korea Securities Depository 419 Related to bonds sold under repurchase agreements (*)
Korean treasury and government bonds and others The BOK and others 5,850,585 Settlement risk and others
Foreign financial institutions’ debt securities NATIXIS and others 41,942 Related to bonds sold under repurchase agreements (*)
Foreign financial institutions’ debt securities Federal Reserve Bank 16,036 Related to the borrowing limit
Loan at amortized cost and other financial assets Due from banks in local currency Daishin AMC Co.,Ltd. and others 1,500 Right of pledge
Other due from banks in local currency Samsung Securities Co., Ltd. and others 17,884 Margin deposit for futures or<br>option
  • 78 -
September 30, 2020
Collateral given to Amount Reason for collateral
Other due from banks in foreign currencies Korea Investment & Securities Co., Ltd. and others 484,392 Foreign margin deposit for future or option and others
Foreign currency loan bonds Industrial and Commercial Bank of China 286,058 Related to bonds sold under repurchase agreements (*)
Mortgage loan Public offering 3,430,550 Related to covered bonds
Investment real estate Land and building Credit Counselling & Recovery Service and others 5,715 Right to collateral and others
Premises and equipment Land and building Credit Counselling & Recovery Service and others 1,984 Right to collateral and others
Total 14,468,855
(*) 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 currency Daishin AMC and others 1,500 Right of pledge
Other due from banks in local currency 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.
--- ---
(2) As of September 30, 2020 and December 31, 2019 there is no asset acquired through foreclosures.<br>
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Other assets
Land 6,349 27
Real estate assessment provision (89 ) (27 )
Sub-total 6,260 —
Assets held for sale
Land 4,737 5,143
Building 4,301 4,742
Others 450 577
Sub-total 9,488 10,462
Total 15,748 10,462
  • 80 -
(3) Securities loaned are as follows (Unit: Korean Won in millions):
September 30,<br>2020 December 31,<br>2019 Loaned to
--- --- --- --- --- --- ---
Financial assets at FVTOCI Korean financial institutions’ debt securities and others 70,351 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.

(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 September 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):

September 30, 2020
Fair values of collaterals Fair values of collaterals<br>were disposed or re-subjected to lien
Securities 4,106,529 —
December 31, 2019
Fair values of collaterals Fair values of collaterals<br>were 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):

September 30, 2020 December 31, 2019
Prepaid expenses 240,696 135,010
Advance payments 9,029 78,306
Non-operational assets 6,260 —
Others 24,426 20,330
Total 280,411 233,646
  • 81 -
20. FINANCIAL LIABILITIES AT FVTPL
(1) Financial liabilities at FVTPL are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Financial instruments at fair value through profit or loss measured at fair value 3,801,375 2,870,676
Financial liabilities at fair value through profit or loss designated as upon initial<br>recognition 16,456 87,626
Total 3,817,831 2,958,302
(2) Financial liabilities at fair value through profit or loss measured at fair value are as follows (Unit: Korean<br>Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Deposits
Gold banking liabilities 45,886 27,530
Borrowings
Securities sold 246,596 —
Derivative liabilities 3,508,893 2,843,146
Total 3,801,375 2,870,676
(3) Financial liabilities at fair value through profit or loss designated as upon initial recognition as of<br>September 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Equity-linked securities
Equity-linked securities in short position 16,456 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):
September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Carrying amount 16,456 87,626
Nominal amount at maturity 27,531 97,503
Difference (11,075 ) (9,877 )
  • 82 -
21. DEPOSITS DUE TO CUSTOMERS

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

September 30, 2020 December 31, 2019
Deposits in local currency:
Deposits on demand 11,840,761 8,655,228
Deposits at termination 229,240,105 224,115,771
Mutual installment 27,011 28,574
Deposits on notes payables 2,668,971 2,174,995
Deposits on CMA 145,825 150,300
Certificate of deposits 1,542,872 973,625
Other deposits 1,377,728 1,451,470
Sub-total 246,843,273 237,549,963
Deposits in foreign currencies:
Deposits in foreign currencies 31,753,896 27,143,710
Present value discount (8,193 ) (8,095 )
Total 278,588,976 264,685,578
  • 83 -
22. BORROWINGS AND DEBENTURES
(1) Details of borrowings are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020
--- --- --- --- --- --- ---
Lenders Interest rate (%) Amount
Borrowings in local currency:
Borrowings from The BOK The BOK 0.3 2,621,920
Borrowings from government funds Small Enterprise And Market Service and others 0.0 ~ 3.5 2,201,717
Others The Korea Development Bank and others 0.0 ~ 3.7 6,515,772
Sub-total 11,339,409
Borrowings in foreign currencies (*):
Borrowings in foreign currencies JPMorgan Chase & Co. and others (0.4) ~ 7.3 7,941,602
Sub-total 7,941,602
Bills sold Others 0.0 ~ 0.9 16,315
Call money Bank and others (0.3) ~ 2.0 2,567,949
Bonds sold under repurchase agreements Other financial institutions (0.5) ~ 10.6 903,583
Present value discount (365 )
Total 22,768,493
December 31, 2019
--- --- --- --- --- --- ---
Lenders Interest rate (%) Amount
Borrowings in local currency:
Borrowings from The BOK The BOK 0.5 ~ 0.8 1,770,726
Borrowings from government funds Small Enterprise And Market Service and others 0.0 ~ 2.8 1,844,798
Others The Korea Development Bank and others 0.0 ~ 5.0 6,070,201
Sub-total 9,685,725
Borrowings in foreign currencies (*):
Borrowings in foreign currencies The Export-Import Bank of Korea and others (0.3) ~ 8.3 8,566,872
Offshore borrowings in foreign currencies HSBC, HKG 3.0 34,734
Sub-total 8,601,606
Bills sold Others 0.0 ~ 1.6 9,367
Call money Bank and others (0.3) ~ 3.5 133,519
Bonds sold under repurchase agreements Other financial institutions 1.4 ~ 12.7 569,002
Present value discount (299 )
Total 18,998,920
(*) Included borrowing in foreign currencies under cash flow hedge amounting to 34,443 million won as of<br>December 31, 2019.
--- ---
  • 84 -
(2) Details of debentures are as follows (Unit: Korean Won in millions):
September 30, 2020 December 31, 2019
--- --- --- --- --- --- --- --- --- --- ---
Interest rate<br>(%) Amount Interest rate<br>(%) Amount
Face value of bond (*):
Ordinary bonds 0.9 ~ 3.1 21,549,754 0.0 ~ 4.3 23,207,600
Subordinated bonds 1.9 ~ 5.9 7,291,791 2.1 ~ 5.9 6,732,687
Other bonds 0.7 ~ 17 1,147,798 1.2 ~ 17.0 942,421
Sub-total 29,989,343 30,882,708
Discounts on bonds (24,552 ) (24,653 )
Total 29,964,791 30,858,055
(*) Included debentures under fair value hedge amounting to 2,872,198 million won and 3,151,172 million<br>won as of September 30, 2020 and December 31, 2019 respectively. Also, debentures under cash flow hedge amounting to 1,085,986 million won and 829,082 million won are included as of September 30, 2020 and December 31,<br>2019 respectively.
--- ---
23. PROVISIONS
--- ---
(1) Details of provisions are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Asset retirement obligation 69,093 66,485
Provisions for guarantees (*1) 83,205 92,486
Provisions for unused loan commitments 137,103 112,554
Other provisions (*2) 173,797 172,455
Total 463,198 443,980
(*1) Provisions for guarantees includes provision for financial guarantee of 55,257 million won and<br>62,764 million won as of September 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 nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- ---
Stage1 Stage2 Stage3 Total
Beginning balance 50,801 26,303 15,382 92,486
Transfer to 12-month expected credit loss 61 (61 ) — —
Transfer to expected credit loss for the entire period (372 ) 1,615 (1,243 ) —
Transfer to credit-impaired financial assets (13 ) (3 ) 16 —
Provisions used — — — —
Net provision (reversal) of unused amount 1,392 (14,823 ) 1,239 (12,192 )
Others (*) 2,910 — 1 2,911
Ending balance 54,779 13,031 15,395 83,205
(*) Others have occurred as a result of new financial guarantee contract valued at initial fair value.<br>
--- ---
  • 85 -
For the nine-month period ended September 30, 2019
Stage1 Stage2 Stage3 Total
Beginning balance 44,903 33,760 11,098 89,761
Transfer to 12-month expected credit loss 13,570 (13,570 ) — —
Transfer to expected credit loss for the entire period (400 ) 400 — —
Transfer to credit-impaired financial assets (14 ) (33 ) 47 —
Provisions used (18,190 ) — — (18,190 )
Net provision (reversal) of unused amount (14,240 ) 5,322 8,161 (757 )
Others (*) 25,956 2 2 25,960
Ending balance 51,585 25,881 19,308 96,774
(*) 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 nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- ---
Stage1 Stage2 Stage3 Total
Beginning balance 65,038 43,164 4,352 112,554
Transfer to 12-month expected credit loss 6,651 (6,265 ) (386 ) —
Transfer to expected credit loss for the entire period (1,815 ) 2,326 (511 ) —
Transfer to credit-impaired financial assets (154 ) (283 ) 437 —
Net provision (reversal) of unused amount 7,437 15,731 1,384 24,552
Others (3 ) — — (3 )
Ending balance 77,154 54,673 5,276 137,103
For the nine-month period ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- --- ---
Stage1 Stage2 Stage3 Total
Beginning balance 74,625 45,283 1,627 121,535
Transfer to 12-month expected credit loss 15,979 (15,565 ) (414 ) —
Transfer to expected credit loss for the entire period (3,047 ) 3,188 (141 ) —
Transfer to credit-impaired financial assets (355 ) (443 ) 798 —
Net provision (reversal) of unused amount (8,739 ) 10,365 3,974 5,600
Others (3,405 ) 5,163 (1,652 ) 106
Ending balance 75,058 47,991 4,192 127,241
  • 86 -
(3) Changes in asset retirement for the nine-month period ended September 30, 2020 and 2019, obligation are as<br>follows (Unit: Korean Won in millions):
For the nine-month period ended September 30
--- --- --- --- --- --- ---
2020 2019
Beginning balance 66,485 67,200
Provisions provided 3,722 2,230
Provisions used (1,368 ) (2,143 )
Reversal of provisions unused (94 ) (2,677 )
Unwinding of discount 348 327
Business combination — 329
Others — 292
Ending balance 69,093 65,558

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 September 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 nine-month period ended September 30, 2020 and 2019, are as follows<br>(Unit: Korean Won in millions):
For the nine-month period ended September 30
--- --- --- --- --- --- ---
2020 2019
Beginning balance 172,455 63,637
Provisions provided 171,099 4,118
Provisions used (170,933 ) (3,777 )
Provision (reversal) of provisions unused (259 ) (66 )
Foreign currencies translation adjustments 1,520 11
Others (85 ) 2,166
Ending balance 173,797 66,089
(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 nine-month period ended September 30, 2020, the Group recognized the provisions for the required<br>expenditure as the best estimate to fulfill its obligations as of September 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.
--- ---
  • 87 -
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):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Present value of defined benefit obligation 1,578,583 1,442,859
Fair value of plan assets (1,392,539 ) (1,352,971 )
Net defined benefit liabilities (*) 186,044 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 nine-month period ended September 30
--- --- --- --- --- --- --- ---
2020 2019
Beginning balance 1,442,859 1,275,020
Transfer-in / out — 93
Current service cost 130,247 122,730
Interest cost 25,184 24,939
Remeasurements Financial assumption 25,680 76,628
Demographic assumptions — —
Experience adjustments 1,903 (29,329 )
Retirement benefit paid (48,622 ) (66,038 )
Foreign currencies translation adjustments (56 ) 236
Others 1,388 (270 )
Ending balance 1,578,583 1,404,009
  • 88 -
(3) Changes in the plan assets are as follows (Unit: Korean Won in millions):
For the nine-month period ended September 30
--- --- --- --- --- --- ---
2020 2019
Beginning balance 1,352,971 1,101,911
Transfer-in / out — 93
Interest income 25,732 23,611
Remeasurements (5,835 ) (7,568 )
Employer’s contributions 67,809 118,266
Retirement benefit paid (47,862 ) (65,610 )
Others (276 ) (193 )
Ending balance 1,392,539 1,170,510
(4) Plan assets consist of fixed deposits and others as of September 30, 2020 and December 31, 2019.<br>Among plan assets, realized returns on plan assets amount to 19,897 million won and 16,043 million won for the nine-month period ended September 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 nine-month period ended September 30
--- --- --- --- --- ---
2020 2019
Current service cost 130,247 122,730
Net interest expense (income) (548 ) 1,328
Cost recognized in net income 129,699 124,058
Remeasurements (*) 33,418 54,867
Cost recognized in total comprehensive income 163,117 178,925
(*) Amount before tax
--- ---

Retirement benefits related to defined contribution plans recognized as expenses are 3,028 million won, and 2,504 million won for the nine-month period ended September 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):

September 30, 2020 December 31, 2019
Other financial liabilities:
Accounts payable 8,059,616 6,131,339
Accrued expenses 1,846,734 2,516,231
Borrowings from trust accounts 3,245,572 3,277,795
Agency business revenue 683,438 362,820
Foreign exchange payables 437,284 1,153,457
Domestic exchange settlement credits 1,283,391 1,261,928
Lease liabilities 404,677 419,045
Other miscellaneous financial liabilities 1,986,875 2,587,193
Present value discount (5,647 ) (3,041 )
Sub-total 17,941,940 17,706,767
Other liabilities:
Unearned income 233,107 224,840
Other miscellaneous liabilities 226,500 195,631
Sub-total 459,607 420,471
Total 18,401,547 18,127,238
  • 89 -
26. DERIVATIVES
(1) Derivative assets and derivative liabilities are as follows (Unit: Korean Won in millions):<br>
--- ---
September 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 458,821 — — — — — —
Swaps 141,008,845 — 217,225 404,836 2,100 — 624,709
Purchase options 370,000 — — 10,844 — — —
Written options 285,868 — — — — — 7,983
Currency:
Futures 1,643 — — — — — —
Forwards 123,347,349 — — 1,617,858 — — 916,409
Swaps 91,507,843 11,355 — 1,375,650 20,939 — 1,220,367
Purchase options 1,749,246 — — 23,229 — — —
Written options 2,593,852 — — — — — 17,704
Equity:
Futures 429,538 — — — — — —
Forwards 11 — — — — — —
Swaps 670,587 — — 30,319 — — 7,946
Purchase options 11,076,092 — — 565,008 — — —
Written options 11,741,739 — — — — — 713,775
Total 385,241,434 11,355 217,225 4,027,744 23,039 — 3,508,893
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 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, and USD 6M LIBOR. The nominal amounts of hedging instruments related to USD 1M LIBOR, USD 3M LIBOR, and USD 6M LIBOR in the hedging relationships of the Group are USD 620,000,000, USD 2,230,000,000, and USD 500,000,000, respectively. The entity pays close attention to discussions in the market and industry regarding the applicable alternative benchmark interest rates for the exposed interest rate. The entity judges related uncertainty is expected to be no longer present when the exposed interest rates are replaced by the applicable benchmark interest rates.

1) Fair value hedge

As of the September 30, 2020, the Group has applied fair value hedge on fixed interest rate foreign currency denominated debentures amounting to 2,872,198 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) Cash Flow Hedge

As of the September 30, 2020, the Group has applied cash flow hedge on local currency denominated debentures amounting to 149,925 million won, debentures on foreign currency amounting to 936,061 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.

  • 91 -

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 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.

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(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 () 1,000,000,000 1,000,000,000 300,000,000 2,300,000,000
Cash flow hedge
Interest rate risk
Interest rate swap (KRW) — 150,000 — 150,000
Foreign currencies translation risk and interest rate risk
Currency swap () 205,000,000 470,000,000 — 675,000,000
Foreign currencies translation risk
Currency swap (SGD) 170,000,000 — — 170,000,000

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.

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(4) The average interest rate and average currency rate of the hedging instrument as of September 30, 2020 and<br>December 31, 2019 are as follows:
September 30, 2020
--- ---
Average interest rate and average exchange rate
Fair value hedge
Interest rate risk
Interest rate swap (USD) Fixed 4.22% receipt and Libor 3M+1.71% floating paid<br><br><br>Fixed 5.88% receipt and Libor 6M+2.15% floating paid
Cash flow hedge
Interest rate risk
Interest rate swap (KRW) KRW 3Y CMS+0.40% receipt, 2.38% paid<br><br><br>KRW CD+0.69% receipt, 2.06% paid
Foreign currencies translation risk and interest rate risk
Currency swap (USD) USD 3M Libor+0.80% receipt, KRW 1.45% paid, USD/KRW = 1,155<br><br><br>USD 1M Libor+0.67% receipt, KRW 1.14% paid, USD/KRW = 1,190
Foreign currencies translation risk
Currency swap (SGD) SGD 1.91% receipt, KRW 1.98% paid, SGD/KRW = 827.57
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
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(5) The amounts related to items designated as hedging instruments are as follows (Unit: Korean Won in millions,<br>USD, EUR, SGD and JPY):
September 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Nominal amounts of<br>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 2,300,000,000 217,225 — Derivative assets<br><br><br>(designated for hedging) 90,725
Cash flow hedge
Interest rate risk
Interest rate swap KRW 150,000 — 2,100 Derivative assets<br><br><br>(designated for hedging) (820 )
Foreign currency translation risk and interest rate risk
Currency swap 675,000,000 6,637 20,939 Derivative assets<br><br><br>(designated for hedging)<br> <br>Derivative<br>liabilities<br> <br>(designated for hedging) (15,027 )
Foreign currency translation risk
Currency swap SGD 170,000,000 4,718 — Derivative assets<br><br><br>(designated for hedging) (877 )
December 31, 2019
Nominal amounts of<br>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><br><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>Derivative<br>liabilities<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.

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(6) Details of carrying amount to hedge and amount due to hedge accounting are as follows (Unit: Korean Won in<br>millions):
September 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 is<br>included Changing in<br>fair value used<br>for calculating<br>hedge<br>ineffectiveness Cash flow<br>hedge<br>reserve (*)
Assets Liabilities Assets Liabilities
Fair value hedge
Interest rate risk
Debentures — 2,872,198 — 179,095 Debentures (86,695 ) —
Cash flow hedge
Interest rate risk
Debentures — 149,925 — — Debentures 3,314 (1,361 )
Foreign currencies translation risk and interest rate risk
Debentures — 790,778 — — Debentures 11,437 (7,460 )
Foreign currencies translation risk
Debentures — 145,283 — — Debentures 1,342 (1,436 )
(*) After tax amount
--- ---
December 31, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Carrying amounts of<br>the<br>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 currencies — 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
--- ---
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(7) Amounts recognized in profit or loss due to the ineffective portion of fair value hedges during the current<br>period are as follows (Unit: Korean Won in millions):
For the nine-month period ended September 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 4,030 Other net operating<br> <br>income(expense)
For the nine-month period ended September 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 3,062 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 nine-month period ended September 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 (703 ) (74 ) — Other net<br>operating<br>income<br>(expense) (43 ) Other net<br>operating<br>income<br>(expense)
Foreign currencies<br>translation risk<br>and interest rate<br>risk (16,212 ) 84 1,849 Other net<br>operating<br>income<br>(expense) 9,304 Other net<br>operating<br>income<br>(expense)
Foreign currencies<br>translation risk (228 ) 151 298 Other net<br>operating<br>income<br>(expense) 797 Other net<br>operating<br>income<br>(expense)
For the nine-month period ended September 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 (1,058 ) — — Other net<br>operating<br>income<br>(expense) — Other net<br>operating<br>income<br>(expense)
Foreign currencies<br>translation risk<br>and interest rate<br>risk 41,873 65 42 Other net<br>operating<br>income<br>(expense) (4,308 ) Other net<br>operating<br>income<br>(expense)
Foreign currencies<br>translation risk 10,506 (874 ) 158 Other net<br>operating<br>income<br>(expense) (1,051 ) Other net<br>operating<br>income<br>(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 nine-month period ended September 30
2020 2019
Beginning balance 52,260 25,463
New transactions 26,267 52,561
Amounts recognized in losses (57,572 ) (23,350 )
Ending balance 20,955 54,674

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 September 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in<br>millions):
--- ---
September 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 763 1,153
Others 18,385 16,794
Sub-total 627,496 626,295
Capital adjustments
Treasury stocks — —
Other adjustments (*1) (1,775,066 ) (1,748,667 )
Sub-total (1,775,066 ) (1,748,667 )
Accumulated other comprehensive income
Financial assets at FVTOCI (48,602 ) (71,914 )
Changes in capital due to equity method (3,410 ) 915
Loss from foreign business translation (166,657 ) (152,987 )
Remeasurements of defined benefit plan (295,229 ) (270,977 )
Loss on evaluation of cash flow hedge (10,256 ) (5,692 )
Capital related to noncurrent assets held for sale 1,691 —
Sub-total (522,463 ) (500,655 )
Retained earnings (*2) (*3) 19,116,037 18,524,515
Non-controlling interest (*4) 3,455,587 3,981,962
Total 26,208,750 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 September 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>September 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 September 30, 2020 and December 31, 2019, respectively, are recognized as non-controlling interests. 118,659 million won and 118,614 million won of dividends for the hybrid securities are allocated to net profit and loss of<br>the non-controlling interests for the nine-month period ended September 30, 2020 and 2019, respectively.
--- ---
  • 98 -
(2) The number of authorized shares and others of the Group are as follows:
September 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>(%) September 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 nine-month period ended September 30, 2020
Beginning<br>balance Increase<br>(decrease) (*) Reclassification<br>adjustments Classified as<br>held-for-sale Income tax<br>effect Ending<br>balance
Net gain (loss) on valuation of financial assets at FVTOCI (71,914 ) 53,778 (20,083 ) — (10,383 ) (48,602 )
Changes in capital due to equity method 915 (4,275 ) — (1,691 ) 1,641 (3,410 )
Gain (loss) on foreign currency translation of foreign operations (152,987 ) (13,841 ) — — 171 (166,657 )
Remeasurement gain (loss) related to defined benefit plan (270,977 ) (33,451 ) — — 9,199 (295,229 )
Gain (loss) on valuation of derivatives designated as cash flow hedges (5,692 ) (4,892 ) — — 328 (10,256 )
Capital related to noncurrent assets held for sale — — — 1,691 — 1,691
Total (500,655 ) (2,681 ) (20,083 ) — 956 (522,463 )
(*) 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 2,665 million won are due to disposal of equity securities during the period.
--- ---
  • 99 -
For the nine-month period ended September 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 ) 53,379 687 (13,642 ) (46,758 )
Changes in capital due to equity method 302 (924 ) — 497 (125 )
Gain (loss) on foreign currency translation of foreign operations (244,735 ) 167,220 — (9,454 ) (86,969 )
Remeasurement gain (loss) related to defined benefit plan (236,726 ) (53,455 ) — 13,723 (276,458 )
Gain (loss) on valuation of derivatives designated as cash flow hedges (3,869 ) 13,141 (14,030 ) (489 ) (5,247 )
Total (572,210 ) 179,361 (13,343 ) (9,365 ) (415,557 )
(*) 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 26,719 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):

September 30,<br>2020 December 31,<br>2019
Beginning balance 2,547,547 2,356,246
Planned provision of regulatory reserve (reversal) for credit loss 64,029 191,301
Ending balance 2,611,576 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 September 30, 2020 Periods ended September 30, 2019
Three-month Nine-month Three-month Nine-month
Net income before regulatory reserve 521,715 1,295,748 534,108 1,806,071
Provision of regulatory reserve (reversal) for credit loss 76,265 64,029 81,367 200,612
Adjusted net income after the provision of regulatory reserve 445,450 1,231,719 452,741 1,605,459
Dividends to hybrid securities (14,275 ) (34,640 ) (3,571 ) (3,571 )
Adjusted net income after regulatory reserve and dividends to hybrid securities 431,175 1,197,079 449,170 1,601,888
Adjusted EPS after regulatory reserve and the dividends to hybrid securities (Unit: Korean<br>Won) 596 1,657 659 2,370
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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 September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Financial assets at FVTPL 12,908 39,118 13,970 41,875
Financial assets at FVTOCI 103,380 344,380 135,081 344,183
Financial assets at amortized cost:
Securities at amortized cost 92,613 294,673 107,421 332,617
Loans and other financial assets at amortized cost:
Interest on due from banks 10,479 43,214 31,309 97,617
Interest on loans 2,046,402 6,444,651 2,396,154 7,130,354
Interest of other receivables 6,652 22,401 7,580 22,561
Subtotal 2,063,533 6,510,266 2,435,043 7,250,532
Total 2,272,434 7,188,437 2,691,515 7,969,207
(2) Details of interest expense recognized are as follows (Unit: Korean Won in millions):
--- ---
Periods ended September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Interest on deposits due to customers 555,484 1,968,985 875,992 2,592,803
Interest on borrowings 56,860 222,446 104,069 297,194
Interest on debentures 164,712 531,904 199,124 582,939
Other interest expense 5,890 29,484 24,114 73,092
Interest on lease liabilities 2,049 7,330 2,418 6,329
Total 784,995 2,760,149 1,205,717 3,552,357
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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 September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Fees and commission received for brokerage 40,617 121,753 40,825 123,385
Fees and commission received related to credit 46,243 143,146 46,054 130,682
Fees and commission received for electronic finance 31,905 93,669 35,098 102,594
Fees and commission received on foreign exchange handling 14,185 41,982 15,694 45,769
Fees and commission received on foreign exchange 18,622 50,656 20,887 69,104
Fees and commission received for guarantee 17,847 54,914 18,841 53,881
Fees and commission received on credit card 128,884 378,151 138,678 407,198
Fees and commission received on securities business 20,778 59,674 29,955 95,555
Fees and commission from trust management 34,813 121,105 43,073 132,918
Fees and commission received on credit information 3,298 10,492 3,169 9,522
Other fees 41,818 131,461 34,434 104,341
Total 399,010 1,207,003 426,708 1,274,949
(2) Details of fees and commissions expense incurred are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Fees and commissions paid 57,521 150,926 39,987 122,893
Credit card commission 106,910 318,694 103,576 303,919
Brokerage commission 159 376 167 648
Others 1,720 5,958 2,324 6,745
Total 166,310 475,954 146,054 434,205
32. DIVIDEND INCOME
--- ---
(1) Details of dividend income recognized are as follows (Unit: Korean Won in millions):
--- ---
Periods ended September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Dividend income related to financial assets at FVTPL 25,510 82,063 18,229 65,326
Dividend income related to financial assets at FVTOCI 2,628 17,077 1,744 19,230
Total 28,138 99,140 19,973 84,556
(2) Details of dividends related to financial assets at FVTOCI are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended<br>September 30,<br>2020 Periods ended<br>September 30,<br>2019
--- --- --- --- --- --- --- --- ---
Three-<br>month Nine-<br>month Three-<br>month Nine-<br>month
Dividend income recognized from assets held:
Equity securities 2,628 17,077 1,744 19,230
  • 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 September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Gain on financial instruments at fair value through profit or loss measured at fair value 134,622 527,790 18,354 128,730
Gain (loss) on financial instruments at fair value through profit or loss designated as upon<br>initial recognition (4,280 ) 4,141 3,173 (27,122 )
Total 130,342 531,931 21,527 101,608
(2) Details of net gain or loss on financial instruments at fair value through profit or loss measured at fair<br>value and financial instruments held for trading are as follows (Unit: Korean Won in millions):
--- ---
Periods ended September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Financial<br>assets at FVTPL Securities Gain on transactions and valuation 36,230 133,432 36,324 137,405
Loss on transactions and valuation 2,851 (68,367 ) (23,643 ) (59,228 )
Sub-total 39,081 65,065 12,681 78,177
Loans Gain on transactions and valuation 133 1,863 566 1,508
Loss on transactions and valuation 12 (850 ) 10 (15 )
Sub-total 145 1,013 576 1,493
Other financial assets Gain on transactions and valuation 2,921 7,426 1,682 2,958
Loss on transactions and valuation (3,103 ) (7,298 ) (1,532 ) (2,650 )
Sub-total (182 ) 128 150 308
Sub-total 39,044 66,206 13,407 79,978
Derivatives (Held for trading) Interest rates derivatives Gain on transactions and valuation 538,619 1,525,179 578,660 1,273,068
Loss on transactions and valuation (519,081 ) (1,839,640 ) (616,635 ) (1,462,035 )
Sub-total 19,538 (314,461 ) (37,975 ) (188,967 )
Currency derivatives Gain on transactions and valuation 659,344 6,860,252 3,113,284 7,297,751
Loss on transactions and valuation (592,399 ) (6,090,197 ) (3,079,971 ) (7,099,135 )
Sub-total 66,945 770,055 33,313 198,616
Equity derivatives Gain on transactions and valuation 219,449 1,326,986 140,614 562,475
Loss on transactions and valuation (210,328 ) (1,320,607 ) (130,842 ) (522,854 )
Sub-total 9,121 6,379 9,772 39,621
Other derivatives Gain on transactions and valuation — — 51 690
Loss on transactions and valuation (26 ) (389 ) (214 ) (1,208 )
Sub-total (26 ) (389 ) (163 ) (518 )
Sub-total 95,578 461,584 4,947 48,752
Net, total 134,622 527,790 18,354 128,730
  • 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 September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Gain (loss) on equity-linked securities (4,280 ) 4,141 3,173 (27,122 )
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 September 30, 2020 Periods ended September 30, 2019
Three-month Nine-month Three-month Nine-month
Gain on redemption of securities (14 ) (88 ) (9 ) 28
Gain on transactions of securities 7,664 18,765 4,600 8,008
Total 7,650 18,677 4,591 8,036
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 September 30, 2020 Periods ended September 30, 2019
Three-month Nine-month Three-month Nine-month
Impairment loss due to credit loss on<br><br><br>financial assets measured at FVTOCI (643 ) (1,425 ) (1,465 ) (3,444 )
Reversal of impairment loss due to credit loss on securities at amortized cost 169 122 151 920
Provision for impairment loss due to credit loss on loan and other financial assets at amortized<br>cost (150,990 ) (573,057 ) (193,799 ) (316,388 )
Reversal of provision on guarantee 16,164 12,192 8,897 757
Provision for unused loan commitment (4,741 ) (24,552 ) (993 ) (5,600 )
Total (140,041 ) (586,720 ) (187,209 ) (323,755 )
  • 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 September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Employee benefits Short-term employee benefits Salaries 383,963 1,154,277 372,794 1,090,636
Employee fringe benefits 128,017 376,478 111,065 341,538
Share based payment 1,187 3,502 1,190 4,854
Retirement benefit service costs 44,520 132,727 42,030 126,562
Termination 69 290 428 7,994
Subtotal 557,756 1,667,274 527,507 1,571,584
Depreciation and amortization 128,574 387,538 131,407 346,149
Other general and administrative expenses Rent 22,106 57,278 17,224 78,009
Taxes and public dues 26,220 100,488 38,782 112,545
Service charges 61,610 178,234 58,580 170,779
Computer and IT related 28,049 80,888 24,447 67,754
Telephone and communication 17,233 52,324 18,556 51,641
Operating promotion 10,744 31,462 11,791 31,173
Advertising 18,417 46,828 19,955 50,145
Printing 1,560 4,936 1,766 5,611
Traveling 1,745 5,443 3,339 9,620
Supplies 1,932 8,839 1,858 5,207
Insurance premium 2,116 7,667 2,509 6,752
Reimbursement 3,877 8,732 5,386 11,765
Maintenance 5,095 13,089 4,403 13,335
Water, light, and heating 3,980 11,620 4,114 11,611
Vehicle maintenance 2,686 7,507 2,781 7,658
Others 5,362 18,473 6,086 24,939
Sub-total 212,732 633,808 221,577 658,544
Total 899,062 2,688,620 880,491 2,576,277
(2) Details of other operating income recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Gain on transactions of foreign exchange 127,787 396,938 230,782 477,913
Gain related to derivatives (Designated for hedging) (29,816 ) 102,540 50,973 169,127
Gain on fair value hedged items 4,767 4,767 — —
Others 11,279 44,033 5,655 41,747
Total 114,017 548,278 287,410 688,787
(3) Details of other operating expenses recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Losses on transactions of foreign exchange 92,805 557,345 158,005 263,336
KDIC deposit insurance premium 94,054 274,584 84,437 246,156
Contribution to miscellaneous funds 85,046 242,015 81,055 237,114
Losses related to derivatives (Designated for hedging) 11,422 20,746 366 1,890
Losses on fair value hedged items (16,840 ) 91,251 22,154 112,352
Others (*) 27,193 88,643 31,434 109,105
Total 293,680 1,274,584 377,451 969,953
(*) Other expense includes such expenses amounting to 9,363 million won and 16,211 million won,<br>respectively, of intangible asset amortization expense for the nine-month period ended September 30, 2020 and 2019, respectively.
--- ---
  • 105 -
(4) Share-based payment

Details of performance condition share-based payment granted to executives as of September 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 (*1) 7,724 Won
Valuation method Black-Scholes Model
Expected dividend rate 4.13%
Expected maturity date 2.25 years
Number of shares remaining As of September 30, 2020 602,474 shares
As of December 31, 2019 602,474 shares
Number of shares granted (*2) As of September 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 (*1) 7,412 Won
Valuation method Black-Scholes Model
Expected dividend rate 4.13%
Expected maturity date 3.25 years
Number of shares remaining As of September 30, 2020 698,428 shares
As of December 31, 2019 —
Number of shares granted (*2) As of September 30, 2020 698,428 shares
As of December 31, 2019 —
(*1) As the amount of payment varies according to the base price (the arithmetic average of the weighted average<br>stock price of transactions in the past one week, the past one month, and the past two months) at the date of payment, the fair value is calculated and used to measure the liability according to the Black Shawls model based on the base price at the<br>time of each settlement.
--- ---
(*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 September 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 9,830 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 September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Gains on valuation of investments in joint ventures and associates 15,226 50,909 13,723 33,022
Losses on valuation of investments in joint ventures and associates (5,243 ) (16,974 ) (3,620 ) (12,062 )
Total 9,983 33,935 10,103 20,960
(2) Details of other non-operating income and expenses recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Other non-operating incomes 2,801 39,915 7,590 54,526
Other non-operating expenses (11,964 ) (211,779 ) (6,714 ) (46,837 )
Total (9,163 ) (171,864 ) 876 7,689
(3) Details of other non-operating income recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Rental fee income 2,367 9,944 3,308 6,750
Gains on disposal of premises and equipment, intangible assets and other assets (26 ) 6,549 72 1,375
Reversal of impairment loss of premises and equipment, intangible assets and other assets 32 87 (677 ) 45
Others 428 23,335 4,887 46,356
Total 2,801 39,915 7,590 54,526
(4) Details of other non-operating expenses recognized are as follows (Unit: Korean Won in millions):<br>
--- ---
Periods ended September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Depreciation on investment properties 725 1,812 468 1,766
Operating expenses on investment properties 199 581 216 578
Losses on disposal of premises and equipment, intangible assets and other assets 916 1,736 358 1,606
Impairment losses of premises and equipment, intangible assets and other assets 175 8,429 (258 ) 1,422
Donation 7,118 18,423 1,760 25,729
Others (*) 2,831 180,798 4,170 15,736
Total 11,964 211,779 6,714 46,837
(*) Included 165,015 million won of other special losses related to other provisions for the nine-month period<br>ended September 30,2020.
--- ---
  • 107 -
38. INCOME TAX EXPENSE
(1) Details of income tax expenses are as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period ended September 30
--- --- --- --- --- --- ---
2020 2019
Current tax expense:
Current tax expense with respect to the current period 292,519 498,849
Adjustments recognized in the current period in relation to the tax expense of prior<br>periods (34,461 ) (52,942 )
Sub-total 258,058 445,907
Deferred tax expense
Change in deferred tax assets (liabilities) due to temporary differences 155,067 155,739
Income tax expense directly attributable to equity 956 (9,365 )
Sub-total 156,023 146,374
Income tax expense 414,081 592,281

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 September 30, 2020, is 24.2% (The weighted average annual effective tax rate for the September 30, 2019, is 24.7%).

  • 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 September 30, 2020 Periods ended September 30, 2019
--- --- --- --- --- --- --- --- --- --- --- --- ---
Three-month Nine-month Three-month Nine-month
Net income attributable to common shareholders 480,200 1,140,764 486,009 1,665,697
Dividends to hybrid securities (14,275 ) (34,640 ) (3,571 ) (3,571 )
Net income attributable to common shareholders 465,925 1,106,124 482,438 1,662,126
Weighted average number of common shares outstanding 722 shares in million 722 shares in million 682 Shares in million 676 Shares in million
Basic EPS (Unit: Korean Won) 645 1,532 708 2,459
(2) The weighted average number of common shares outstanding is as follows: (Unit: number of shares, days)<br>
--- ---
For the nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
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 2020-01-01 ~ 2020-09-30 722,267,683 274 197,901,345,142
Treasury stock 2020-01-01 ~ 2020-09-30 (2 ) 274 (548 )
Sub-total (①) 197,901,344,594
Weighted average number of common shares outstanding (②=(①/274) 722,267,681
For the nine-month period ended September 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 ~ 2019-09-30 673,271,226 273 183,803,044,698
Purchase of treasury stock 2019-01-08 ~ 2019-09-30 (11,453,702 ) 266 (3,046,684,732 )
Disposal of treasury stock 2019-03-22 ~ 2019-09-30 18,346,782 193 3,540,928,926
Disposal of treasury stock (*) 2019-09-26 ~ 2019-09-30 28,890,707 5 144,453,535
Sub-total (①) 184,441,742,427
Weighted average number of common shares outstanding (②=(①/273) 675,610,778
(*) In September 2019, Woori Bank disposed of 28,890,707 shares out of 42,103,377 shares acquired through<br>comprehensive exchange of shares in Woori Card Co., Ltd. and its parent company Woori Financial Group Inc.
--- ---

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

  • 109 -
40. CONTINGENT LIABILITIES AND COMMITMENTS
(1) Details of guarantees are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Confirmed guarantees
Guarantee for loans 79,141 89,699
Acceptances 624,485 391,688
Guarantees in acceptances of imported goods 77,433 224,746
Other confirmed guarantees 6,821,763 6,982,889
Sub-total 7,602,822 7,689,022
Unconfirmed guarantees
Local letters of credit 198,157 193,096
Letters of credit 2,393,460 3,081,390
Other unconfirmed guarantees 488,463 771,378
Sub-total 3,080,080 4,045,864
Commercial paper purchase commitments and others 892,457 884,031
Total 11,575,359 12,618,917
(2) Details of unused loan commitments and others are as follows (Unit: Korean Won in millions):<br>
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Loan commitments 110,958,256 103,651,674
Other commitments (*) 7,947,547 5,993,608
(*) As of September 30, 2020 and December 31, 2019, the amount of unsecured bills (purchase note sales)<br>and discounts on electronic short-term bond sales (purchase) are 3,313,432 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):

September 30, 2020 December 31, 2019
As plaintiff As defendant As plaintiff As defendant
Number of cases (*) 103 cases 443 cases 119 cases 415 cases
Amount of litigation 284,624 437,575 291,880 391,362
Provisions for litigations 25,408 27,029
(*) The number of lawsuits as of September 30, 2020 and December 31, 2019 do not include fraud lawsuits,<br>etc. and those lawsuits that are filed only to extend the statute of limitation.
--- ---
(4) Other commitments
--- ---

The Group decided to enter into a stock sales agreement with a major shareholder of Woori Asset Trust Co., Ltd. (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 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 112,663 million won as other financial liabilities for the second sales agreement.

  • 110 -
41. RELATED PARTY TRANSACTIONS

Related parties of the Group as of September 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 nine-month period ended September 30, 2020 and 2019 are as follows:

(1) Assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
Related parties Account title September 30,<br>2020 December 31,<br>2019
--- --- --- --- --- --- --- --- ---
Associates W Service Networks Co., Ltd. Loans 50 23
Loss allowance — (1 )
Deposits due to customers 2,572 1,881
Accrued expenses 6 6
Other liabilities 464 429
Korea Credit Bureau Co., Ltd. Loans 1 3
Deposits due to customers 1,599 26
Other liabilities 3 —
Korea Finance Security Co., Ltd. Loans 3,942 1,860
Loss allowance (9 ) (3 )
Deposits due to customers 1,063 1,371
Chin Hung International Inc. Loans 283 244
Loss allowance (3 ) (2 )
Deposits due to customers 6,602 5,381
Other liabilities 423 321
LOTTE CARD Co. Ltd. Loans 7,500 7,500
Loss allowance (94 ) (30 )
Other assets 10 —
Deposits due to customers 54,262 2,726
Other liabilities 54 —
K BANK Co., Ltd. Loans 179 141
Account receivables 64 24
Other assets — 4
Well to Sea No.3 Private Equity Fund Loans 72,050 4,490
Loss allowance (80 ) (8 )
Deposits due to customers 2,199 714
Other liabilities 86 47
Others (*1) (*2) Loans — 84
Loss allowance — (84 )
Other assets 840 338
Deposits due to customers 5,459 5,577
Other liabilities 168 172
(*1) Others include Saman Corporation, Woori Growth Partnerships New Technology Private Equity Fund, Woori-Shinyoung<br>Growth-Cap Private Equity Fund, 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 Fund 2, Partner One Value Up I<br>Private Equity Fund and etc., as of September 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.
--- ---
  • 111 -
(2) Gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
For the nine-month period September 30
--- --- --- --- --- --- --- --- ---
Related parties Account title 2020 2019
Associates W Service Network Co., Ltd. Other income 24 24
Interest expenses 12 15
Fees expenses 373 337
Reversal of allowance for credit loss (3 ) (1 )
Other expenses 1,555 1,004
Korea Credit Bureau Co., Ltd. Interest expenses 3 29
Fees expenses 2,357 1,880
Korea Finance Security Co., Ltd. Interest income 52 —
Interest expenses 2 8
Provisions for allowance for credit loss 6 1
Other expenses 69 87
Chin Hung International Inc Interest expenses 15 24
Provisions for allowance for credit loss 107 32
LOTTE CARD Co., Ltd. Interest income 215 —
Fees income 2,580 —
Interest expenses 86 —
Provision for allowance for credit loss 64 —
K BANK Co., Ltd. Fees income 1,313 951
Well to Sea No.3 Private Equity Fund Interest income 1,883 1,255
Interest expenses 4 9
Provision for allowance for credit loss 111 91
Others (*1) (*2) Fees income 1,779 957
Other income 12 13
Interest expenses 22 45
Reversal of allowance for credit loss — (5 )
(*1) Others include Saman Corporation, Woori Growth Partnerships New Technology Private Equity Fund, Woori-Shinyoung<br>Growth-Cap Private Equity Fund, 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 Fund 2, Partner One Value Up I<br>Private Equity Fund, PCC-Woori LP Secondary Fund and etc., as of September 30, 2020.
--- ---
(*2) Others include Saman Corporation, Woori Growth Partnerships New Technology Private Equity Fund, Woori-Shinyoung<br>Growth-Cap Private Equity Fund, Uri Hanhwa Eureka Private Equity Fund, Partner One Value Up I Private Equity Fund and etc, as of September 30, 2019.
--- ---
  • 112 -
(3) Major loan transactions with related parties for the nine-month period ended September 30, 2020 and 2019<br>are as follows (Unit: Korean Won in millions):
For the nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- ---
Related parties Beginning<br>balance Loan Collection Ending<br>balance<br>(*)
Associates Well to Sea No. 3 Private Equity Fund 4,490 67,560 — 72,050
LOTTE CARD Co., Ltd. 7,500 — — 7,500
Korea Finance Security Co., Ltd. 1,860 2,485 403 3,942
Korea Credit Bureau Co., Ltd. 3 14 16 1
W Service Network Co., Ltd. 23 272 245 50
Chin Hung International Inc 244 1,774 1,735 283
K BANK Co., Ltd. 141 1,544 1,506 179
(*) 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 nine-month period ended September 30, 2019
--- --- --- --- --- --- --- --- --- ---
Related parties Beginning<br>balance Loan Collection Ending<br>balance<br>(*)
Associates Well to Sea No. 3 Private Equity Fund 1,857 100,300 9,167 92,990
Korea Finance Security Co., Ltd. 57 440 445 52
Korea Credit Bureau Co., Ltd. 7 22 26 3
W Service Network Co., Ltd. 69 239 277 31
Chin Hung International Inc 241 1,643 1,717 167
K BANK Co., Ltd. 185 1,798 1,812 171
(*) Payments that occurred for business reasons among related parties are excluded and net increase or decrease was<br>used for limited credit loan.
--- ---
(4) Details of changes in major deposits due to customers with related parties for the nine-month period<br>September 30, 2020 and 2019 are as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- ---
Related parties Beginning<br>balance Increase Decrease Ending<br>balance<br>(*)
Associates Saman Corporation 2,522 34 — 2,556
W Service Networks Co., Ltd 1,180 1,180 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 nine-month period ended September 30,<br>2019
--- --- --- --- --- --- --- --- --- ---
Related parties Beginning<br>balance Increase Decrease Ending<br>balance<br>(*)
Associates Saman Corporation 2,436 181 — 2,617
W Service Networks Co., Ltd 1,180 1,260 1,260 1,180
Chin Hung International Inc 765 400 400 765
Partner One Value Up I Private Equity Fund 1,403 1,617 1,556 1,464
Korea Credit Bureau Co., Ltd. 6,000 — 6,000 —
Korea Finance Security Co., Ltd. 535 25 560 —
(*) Details of payment between related parties, demand deposit due to customers and etc. are excluded.<br>
--- ---
(5) There are no major borrowing transactions with related parties for the nine-month period ended<br>September 30, 2020 and 2019.
--- ---
  • 113 -
(6) Guarantees provided to the related parties are as follows (Unit: Korean Won in millions):<br>
Warrantee September 30, 2020 December 31, 2019 Warranty
--- --- --- --- --- --- ---
Korea Finance Security Co., Ltd. 318 400 Unused loan commitment
Korea Credit Bureau Co., Ltd. 34 32 Unused loan commitment
W Service Network Co., Ltd. 150 177 Unused loan commitment
Chin Hung International Inc. 32,016 32,055 Unused loan commitment
K BANK Co., Ltd. 121 159 Unused loan commitment
Well to Sea No.3 Private Equity Fund 302,950 210,510 Unused loan commitment
LOTTE CARD Co. Ltd. 150,000 150,000 Unused loan commitment
Together-Korea Government Private Pool Private Securities Investment Trust No.3 900,000 — Securities purchase contract

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

(7) Amount of derivatives-related commitments with the related parties
Warrantee September 30, 2020 December 31, 2019 Warranty
--- --- --- --- --- --- ---
Well to Sea No.3 Private Equity Fund 598,560 584,377 Open interest
(8) Commitments among related parties
--- ---

As of September 30, 2020, the Group has entered into an investment agreement with PCC-Woori LP Secondary Fund for 3,100 million won. Among the agreed amount, 2,325 million won was executed as of September 30, 2020 and outstanding balance amounts to 775 million won. The contract period is from December 31, 2019 and December 31, 2023.

(9) Compensation for key management is as follows (Unit: Korean Won in millions):
For the nine-month period ended<br>September 30
--- --- --- --- ---
2020 2019
Short-term employee salaries 12,331 9,979
Retirement benefit service costs 461 668
Share-based compensation 1,576 1,934
Total 14,368 12,581

Key management includes registered executives and non-registered executives. Outstanding assets from transactions with key management amount to 3,116 million won and 2,414 million won, as of September 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 9,732 million won and 6,543 million won, respectively, as of September 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>
--- ---
September 30,<br>2020 December 31,<br>2019
--- --- --- --- ---
Lease payments
Within one year 186,238 161,251
After one year but within five years 193,656 232,985
After five years 29,221 40,698
Total 409,115 434,934
(2) Total cash outflows from lease are as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period ended<br>September 30
--- --- --- --- ---
2020 2019
Total cash outflows from lease 153,249 153,686
(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 nine-month period ended<br>September 30
--- --- --- --- ---
2020 2019
Lease payments for short-term leases 1,156 1,178
Lease payments for which the underlying asset is of low value 405 227
Total 1,561 1,405
(4) As mentioned in Note 2, the Group uses a practical expedient for rent concession as a direct consequence of<br>COVID-19. Accordingly, the amount recognized in profit or loss during the reporting period is 9,351 million won, to reflect changes in lease payments arising from the rent concession.
--- ---
(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. 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.<br>
--- ---
43. EVENTS AFTER THE REPORTING PERIOD
--- ---
(1) In October 2020, the Group concluded a contract to acquire a 74.04% stake (42,605,000 common stocks) in Aju<br>Capital Co., Ltd., and the completion date of the transaction is not yet decided as subsequent procedures for closing the transaction (approval of inclusion by the financial authorities, etc.) is still in progress.    <br>
--- ---
(2) Woori Investment Bank Co., Ltd., a subsidiary of the Group, decided to raise 100 billion won in shareholder<br>allocation at the board meeting on August 28, 2020 and completed the payment of the shares on November 5, 2020, and the Group was allocated 109,757,854 shares in relation to the paid-in capital increase.
--- ---
  • 115 -

EX-99.2

Exhibit 99.2

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM FINANCIAL STATEMENTS ****

AS OF SEPTEMBER 30, 2020 AND FOR THE THREE-MONTH AND NINE-MONTH

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

PERIOD ENDED SEPTEMBER 30, 2019 AND THE PERIOD FROM

JANUARY 11, 2019 (DATE OF INCORPORATION) TO SEPTEMBER 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 9-44

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 Inc. (the “Company”). These financial statements consist of the separate interim statement of financial position of the Company as at September 30, 2020 and the related separate interim statements of comprehensive income for the three-month and nine-month periods ended September 30, 2020, and separate interim statements of changes in equity and cash flows for the nine-month period ended September 30, 2020, and a summary of significant accounting policies and other explanatory notes, expressed in Korean won.

Management’sResponsibility 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

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.

Other Matters

The separate interim financial statements of comprehensive income for the three-month period ended September 30, 2019, and separate interim statements of comprehensive income, changes in equity and cash flows for the period from January 11, 2019 (date of incorporation) to September 30, 2019, presented herein for comparative purposes, were reviewed by Deloitte Anjin LLC whose report dated November 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

November 13, 2020

Notice to Readers

This report is effective as of November 13, 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.

SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020 AND FOR THE THREE-MONTH AND NINE-MONTH

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

PERIOD ENDED SEPTEMBER 30, 2019 AND THE PERIOD FROM JANUARY 11, 2019

(DATE OF INCORPORATION) TO SEPTEMBER 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

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM STATEMENTS OF FINANCIAL POSITION

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

September 30, 2020 December 31, 2019
(Korean Won in millions)
ASSETS
Cash and cash equivalents (Notes 5 and 30) 97,695 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) 150,528 —
Loans and other financial assets at amortized cost (Notes 4, 8, 9 and 30) 993,777 1,269,203
Investments in subsidiaries (Notes 10 and 30) 20,873,593 19,873,593
Premises and equipment (Notes 11 and 30) 8,301 7,383
Intangible assets (Note 12) 5,428 3,310
Deferred tax assets (Note 27) 692 —
Other assets (Note 13) 264 —
Total assets 22,139,712 21,206,593
LIABILITIES
Debentures (Notes 4, 9 and 14) 1,147,410 947,679
Provisions (Note 15) 718 600
Net defined benefit liability (Note 16) 9,146 3,482
Current tax liabilities (Note 27) 89,437 133,526
Deferred tax liabilities (Note 27) — 154
Other financial liabilities (Notes 4, 9, 17, 30 and 31) 9,807 10,745
Other liabilities (Notes 17 and 30) 1,170 4,142
Total liabilities 1,257,688 1,100,328
EQUITY (Note 19)
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 (1,868 ) (631 )
Retained earnings 702,649 623,930
Total equity 20,882,024 20,106,265
Total liabilities and equity 22,139,712 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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2020 AND FOR

THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2019

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

TO SEPTEMBER 30, 2019 (UNAUDITED)

2020 2019
For the three-month<br>period ended<br>September 30, 2020 For the nine-month<br>period ended<br>September 30, 2020 For the three-month<br>period ended<br>September 30, 2019 For the period from January 11,<br>2019 (date of incorporation)<br>to September 30, 2019
(Korean Won in millions,<br><br><br>except for per share data)
Interest income 1,299 8,998 3,472 3,981
Interest expense (5,718 ) (16,749 ) (2,353 ) (3,216 )
Net interest income (Notes 9, 21 and 30) **** (4,419 ) **** (7,751 ) **** 1,119 **** **** 765 ****
Fees and commissions income — — — —
Fees and commissions expense (2,562 ) (10,730 ) (2,513 ) (9,925 )
Net fees and commissions loss (Notes 22 and 30) **** (2,562 ) **** (10,730 ) **** (2,513 ) **** (9,925 )
Dividend income (Notes 23 and 30) 1,290 679,085 — 676,000
Provision of impairment losses due to credit loss (Notes 24 and 30) (183 ) (174 ) — —
General and administrative expenses (Notes 25 and 30) (13,488 ) (41,642 ) (9,624 ) (30,234 )
Operating income (loss) **** (19,362 ) **** 618,788 **** **** (11,018 ) **** 636,606 ****
Other non-operating expense (200 ) (220 ) (155 ) (755 )
Non-operating expense (Note 26) **** (200 ) **** (220 ) **** (155 ) **** (755 )
Net income (loss) before income tax expense **** (19,562 ) **** 618,568 **** **** (11,173 ) **** 635,851 ****
Income tax income (Note 27) (1,436 ) (378 ) (232 ) (639 )
Net income (loss) **** (18,126 ) **** 618,946 **** **** (10,941 ) **** 636,490 ****
Net gain on valuation of equity securities at FVTOCI 191 383 — —
Remeasurement loss related to defined benefit plan (659 ) (1,620 ) (316 ) (761 )
Items that will not be reclassified to profit or loss: **** (468 ) **** (1,237 ) **** (316 ) **** (761 )
Other comprehensive loss, net of tax **** (468 ) **** (1,237 ) **** (316 ) **** (761 )
Total comprehensive income (loss) **** (18,594 ) **** 617,709 **** **** (11,257 ) **** 635,729 ****
Earnings per share (Note 28)
Basic and diluted earnings per share (In Korean Won) **** (45 ) **** 809 **** **** (21 ) **** 926 ****

The accompanying notes are part of this interim financial statement.

  • 5 -

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2020

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

TO SEPTEMBER 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 — — — — 636,490 636,490
Remeasurement loss related to defined benefit plan — — — (761 ) — (761 )
Transactions with owners
Comprehensive stock exchange(Note 1) 210,516 309,460 — — — 519,976
New stocks issue cost — (3,034 ) — — — (3,034 )
Issuance of hybrid securities — — 498,783 — — 498,783
Dividends to hybrid securities — — — — (3,572 ) (3,572 )
September 30, 2019 (Unaudited) 3,611,338 14,872,063 498,783 (761 ) 632,918 19,614,341
January 01, 2020 3,611,338 14,874,084 997,544 (631 ) 623,930 20,106,265
Total comprehensive income
Net income — — — — 618,946 618,946
Net gain on valuation of equity securities at FVTOCI — — — 383 — 383
Remeasurement loss related to defined benefit plan — — — (1,620 ) — (1,620 )
Transactions with owners
Dividends to common stocks — — — — (505,587 ) (505,587 )
Issuance of hybrid securities — — 698,277 — — 698,277
Dividends to hybrid securities — — — — (34,640 ) (34,640 )
September 30, 2020 (Unaudited) 3,611,338 14,874,084 1,695,821 (1,868 ) 702,649 20,882,024

The accompanying notes are part of this interim financial statement.

  • 6 -

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2020

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

TO SEPTEMBER 30, 2019 (UNAUDITED)

For the nine-month<br>period ended<br>September 30, 2020 For the period from January 11,<br>2019 (date of incorporation)<br>to September 30, 2019
(Korean Won in millions)
Cash flows from operating activities:
Net income 618,946 636,490
Adjustments to net income:
Income tax expense (income) (378 ) (639 )
Interest income (8,998 ) (3,981 )
Interest expense 16,749 3,216
Dividend income (679,085 ) (676,000 )
(671,712 ) (677,404 )
Additions of expenses not involving cash outflows:
Provision of impairment losses due to credit loss 174 —
Retirement benefit 2,844 4,582
Depreciation and amortization 3,943 2,915
6,961 7,497
Changes in operating assets and liabilities:
Loans and other financial assets at amortized cost 43,263 (421,082 )
Other assets (265 ) (184 )
Net defined benefit liability 586 —
Other financial liabilities (44,569 ) (12,339 )
Other liabilities (2,971 ) 4,680
(3,956 ) (428,925 )
Interest income received 11,688 2,978
Interest expense paid (16,459 ) (2,205 )
Dividends received 679,085 676,000
Income tax paid (199 ) —
674,115 676,773
Net cash provided by operating activities 624,354 214,431
Cash flows from investing activities:
Cash in-flows from investing activities:
Decrease on other investment assets 1,530,000 —
1,530,000 —
Cash out-flows from investing activities:
Acquisition of investments in subsidiaries 1,000,000 1,146,635
Acquisition of financial assets at FVTOCI 150,000 —
Acquisition of premises and equipment 2,718 6,596
Acquisition of intangible assets 2,948 4,630
Increase on guarantee deposits for leases 709 955
Increase on other investment assets 1,300,000 —
2,456,375 1,158,816
Net cash used in investing activities (926,375 ) (1,158,816 )

(Continued)

  • 7 -

WOORI FINANCIAL GROUP INC.

SEPARATE INTERIM STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2020

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

TO SEPTEMBER 30, 2019 (UNAUDITED) (CONTINUED)

For the nine-month<br>period ended<br>September 30, 2020 For the period from January 11,<br>2019 (date of incorporation)<br>to September 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 199,556 698,171
Issuance of hybrid securities 698,277 498,783
897,833 1,261,723
Cash out-flows from financing activities:
Decrease in borrowings — 64,769
Redemption of lease liabilities 1,560 953
New stock issue cost — 3,034
Dividends paid to hybrid securities 34,640 —
Dividends paid 505,587 —
541,787 68,756
Net cash provided by financing activities 356,046 1,192,967
Net increase in cash and cash equivalents 54,025 248,582
Cash and cash equivalents, beginning of the period 43,670 —
Cash and cash equivalents, end of the period (Note 5) 97,695 248,582

The accompanying notes are part of this interim financial statement.

  • 8 -

WOORI FINANCIAL GROUP INC.

NOTES TO SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 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 September 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 condensed 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 condensed 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 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 will continue to assess the impact COVID-19 will bring to the Company through the duration of effect on the economy and government policies.

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 Company.

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 Company’s management strategy and by determining the Company’s acceptable level of risk.

CRO assists the Risk Management Committee and operates the Company Risk Management Council, which is composed of the risk management managers of the subsidiaries, to periodically check and improve the external environment and the Company’s risk burden. The Risk Management Department which is independently structured, controls the risk management matter of the Company 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):

September 30, 2020 December 31, 2019
Loans and other financial assets at amortized cost Banks 969,912 1,228,918
Corporates 23,865 40,285
Sub-total 993,777 1,269,203
Financial assets at FVTPL Derivative assets 9,434 9,434
Total 1,003,211 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):

September 30, 2020 December 31, 2019
Korea Korea
Loans and other financial assets at amortized cost 993,777 1,269,203
Financial assets at FVTPL 9,434 9,434
Total 1,003,211 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 September 30, 2020 and December 31, 2019 (Unit: Korean Won in millions):

September 30, 2020
Finance and<br>insurance Others Total
Loans and other financial assets at amortized cost 991,298 2,479 993,777
Financial assets at FVPTL 9,434 — 9,434
Total 1,000,732 2,479 1,003,211
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 September 30, 2020 and December 31, 2019 is as follows (Unit: Korean Won in millions):

September 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 994,214 — — — — 994,214 (437 ) 993,777
Banks 970,349 — — — — 970,349 (437 ) 969,912
Corporates 23,865 — — — — 23,865 — 23,865
General business 23,865 — — — — 23,865 — 23,865
Total 994,214 — — — — 994,214 (437 ) 993,777
(*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<br>credit 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):

September 30, 2020
Within 3<br>months (*1) 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) 798,345 200,600 — — — — 998,945
Financial assets at FVTOCI (*2) — — — — — 150,528 150,528
Sub-total 798,345 200,600 — — — 150,528 1,149,473
Liability:
Debentures 6,100 6,100 6,100 6,100 292,688 1,033,403 1,350,491
December 31, 2019
Within 3<br>months (*1) 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 97,695 million won and 43,670 million won as of September 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):
--- ---
September 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 6,100 6,100 6,100 6,100 292,688 1,033,403 1,350,491
Lease liabilities 589 175 94 94 291 — 1,243
Other financial liabilities 3,597 929 427 2,053 1,572 — 8,578
Total 10,286 7,204 6,621 8,247 294,551 1,033,403 1,360,312
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):
--- ---
September 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 6,100 6,100 6,100 6,100 292,688 1,033,403 1,350,491
Lease liabilities 589 175 94 94 291 — 1,243
Other financial liabilities 3,597 929 427 2,053 1,572 — 8,578
Total 10,286 7,204 6,621 8,247 294,551 1,033,403 1,360,312
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):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Demand deposits 97,695 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 nine-month<br>period ended September 30,<br>2020 For the period from January 11, 2019 (date of<br>incorporation) to September 30, 2019
--- --- --- --- ---
Changes in other comprehensive income related to valuation of financial assets at FVTOCI 383 —
Changes in<br>right-of-use assets due to new contract 1,312 3,439
Changes in lease liabilities due to new contract 1,197 2,812
Comprehensive stock transfer — 18,502,760
Changes in accrued dividends of hybrid securities — 3,572
6. FINANCIAL ASSETS AT FVTPL
--- ---
(1) Details of financial assets at FVTPL as of September 30, 2020 and December 31, 2019 are as follows<br>(Unit: Korean Won in millions):
--- ---
September 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):
--- ---
September 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>September 30, 2020 and December 31, 2019.
--- ---
  • 16 -
7. FINANCIAL ASSETS AT FVTOCI
(1) Details of financial assets at FVTOCI as of September 30, 2020 and December 31, 2019 are as follows<br>(Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Hybrid securities 150,528 —
(2) Details of equity securities designated as financial assets at FVTOCI as of September 30, 2020 and<br>December 31, 2019 are as follows (Unit: Korean Won in millions):
--- ---
Purpose of acquisition September 30, 2020 December 31, 2019
--- --- --- --- ---
Investment for political purpose 150,528 —
8. LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST
--- ---
(1) Details of loans and other financial assets at amortized cost as of September 30, 2020 and<br>December 31, 2019 are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Due from banks 899,563 1,129,738
Other financial assets 94,214 139,465
Total 993,777 1,269,203
(2) Details of due from banks are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Due from banks in local currency:
Due from depository banks 900,000 1,130,000
Loss allowance (437 ) (262 )
Total 899,563 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 September 30, 2019. (Unit: Korean Won in millions):
--- ---
1) Allowance for credit losses
--- ---
For the nine-month period ended September 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 — — — —
Provision of allowance for credit loss (175 ) — — (175 )
Ending balance (437 ) — — (437 )
2) Gross carrying amount
--- ---
For the nine-month period ended September 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) (230,000 ) — — (230,000 )
Ending balance 900,000 — — 900,000
  • 17 -
(4) Details of other financial assets are as follows (Unit: Korean Won in millions):
September 30, 2020 December 31, 2019
--- --- --- --- --- ---
Receivables 91,627 134,891
Accrued income 931 3,641
Lease deposits 1,656 934
Allowance for credit losses — (1 )
Total 94,214 139,465
(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 September 30, 2019. (Unit: Korean Won in millions).
--- ---
1) Allowance for credit losses
--- ---
For the nine-month period ended September 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 nine-month period ended September 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) (45,252 ) — — (45,252 )
Ending balance 94,214 — — 94,214
  • 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 2 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):
September 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 — — 150,528 150,528
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.

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:

  • 19 -
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 and 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 0.50 %~ 1.58%<br><br><br>Market rate 1.72% ~ 4.39% 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 September 30, 2019. (Unit: Korean Won in millions):
For the nine-month period ended September 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 — — 528 150,000 — — 150,528
(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):

September 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) — — 7,061 (6,745 )
(*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 liabilities that are recorded at amortized cost are as follows<br>(Unit: Korean Won in millions):
--- ---
September 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Fair value Carrying amount
Level 1 Level 2 Level 3 Total
Financial assets:
Loans and other financial assets at amortized cost (*) — — 993,777 993,777 993,777
Financial liabilities:
Debentures — 1,205,535 — 1,205,535 1,147,410
Other financial liabilities (*) — — 8,577 8,577 8,577
(*) 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 (*) — — 9,177 9,177 9,177
(*) 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 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):

September 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 — — 899,563 899,563
Hybrid securities — 150,528 — 150,528
Derivative assets 9,434 — — 9,434
Other financial assets — — 94,214 94,214
Total 9,434 150,528 993,777 1,153,739
December 31, 2019
--- --- --- --- --- --- ---
Financial assets Financial      <br>assets at 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
September 30, 2020 December 31, 2019
--- --- --- --- ---
Financial liabilities Financial<br>liabilities at<br>amortized cost Financial<br>liabilities at<br>amortized cost
Debentures 1,147,410 947,679
Other financial liabilities 8,577 9,177
Total 1,155,987 956,856
  • 22 -
(7) Income or expense from financial instruments by category

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

For the nine-month period ended September 30, 2020
Interest<br>Income(expense) Reversal<br>(Provision) of credit<br>loss Others Total
Financial assets at FVTOCI — — 1,290 1,290
Loans and other financial assets at amortized cost (*) 8,998 (174 ) — 8,824
Financial liabilities at amortized cost (16,714 ) — — (16,714 )
Total (7,716 ) (174 ) 1,290 (6,600 )
(*) 2,780 million won interest income of cash and cash equivalents are included.
--- ---
For the period from January 11, 2019 (date of incorporation) to September 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Interest<br>Income(expense) Reversal<br>(Provision) of credit<br>loss Others Total
Loans and other financial assets at amortized cost (*) 3,981 — — 3,981
Financial liabilities at amortized cost (3,172 ) — — (3,172 )
Total 809 — — 809
(*) 3,584 million won interest income of cash equivalents is included.
--- ---
  • 23 -
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
September 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 September 30,<br>2020 676,000,000 100.0 December<br> <br>31,2019
Woori Card Co., Ltd. 179,266,200 100.0 September 30,<br>2020 179,266,200 100.0 December<br> <br>31,2019
Woori Investment Bank Co., Ltd. 403,404,538 59.8 September 30,<br>2020 403,404,538 59.8 December<br> <br>31,2019
Woori FIS Co., Ltd. 4,900,000 100.0 September 30,<br>2020 4,900,000 100.0 December<br> <br>31,2019
Woori Finance Research Institute Co., Ltd. 600,000 100.0 September 30,<br>2020 600,000 100.0 December<br> <br>31,2019
Woori Credit Information Co., Ltd. 1,008,000 100.0 September 30,<br>2020 1,008,000 100.0 December<br> <br>31,2019
Woori Fund Service Co., Ltd. 2,000,000 100.0 September 30,<br>2020 2,000,000 100.0 December<br> <br>31,2019
Woori Asset Trust Co., Ltd 1,560,000 67.2 September 30,<br>2020 1,560,000 67.2 December<br> <br>31,2019
Woori Asset Management Corp. 2,920,000 73.0 September 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 September 30,<br>2020 6,000,000 100.0 December<br> <br>31,2019
Woori Global Asset Management Co., Ltd. 4,000,000 100.0 September 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>
--- ---
  • 24 -
(2) Changes in the carrying value of investments in subsidiaries are as follows (Unit: Korean Won in millions):<br>
For the nine-month period ended September 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 September 30, 2019
--- --- --- --- --- --- --- --- ---
Beginning<br>balance<br>(date of incorporation) Acquisition Disposal Ending<br>balance
Woori Bank (*1) 17,921,151 — — 17,921,151
Woori Card Co., Ltd. (*2) — 1,118,367 — 1,118,367
Woori Investment Bank Co., Ltd. (*2) — 392,795 — 392,795
Woori FIS Co., Ltd. (*1) 21,754 — — 21,754
Woori Finance Research Institute Co., Ltd. (*1) 1,677 — — 1,677
Woori Credit Information Co., Ltd. (*1) 16,466 — — 16,466
Woori Fund Service Co., Ltd. (*1) 13,939 — — 13,939
Woori Asset Management Corp. (*3) — 122,449 — 122,449
Woori Private Equity Asset Management Co., Ltd. (*1) 7,797 — — 7,797
ABL Global Asset Management Co., Ltd. (*4) — 33,000 — 33,000
Total 17,982,784 1,666,611 — 19,649,395
(*1) Acquired by the comprehensive stock transfer at the date of incorporation.
--- ---
(*2) Woori card Co., Ltd. And Woori investment Bank Co., Ltd. were transferred from second-tier subsidiaries into<br>subsidiaries in September 2019.
--- ---
(*3) The Company newly acquired a 73% stake in Tongyang Asset Management Corporation and changed the name to Woori<br>Asset Management Corporation in August 2019.
--- ---
(*4) The remaining payment was completed in August 2019 after the request for the change of major shareholder was<br>approved by the Financial Service Commission in July 2019. The subsequent process is in progress to close the deal.
--- ---
  • 25 -
11. PREMISES AND EQUIPMENT
(1) Details of premises and equipment as of September 30, 2020 and December 31, 2019 are as follows<br>(Unit: Korean Won in millions):
--- ---
September 30, 2020
--- --- --- --- --- --- --- --- ---
Building Properties for<br>business use Leasehold<br>improvements Total
Premises and equipment(owned) — 3,888 3,189 7,077
Right-of-use<br>asset 604 620 — 1,224
Total 604 4,508 3,189 8,301
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 September 30, 2020 and December 31, 2019 are as<br>follows (Unit: Korean Won in millions):
--- ---
September 30, 2020
--- --- --- --- --- --- --- --- --- ---
Properties for business use Leasehold improvements Total
Acquisition cost 5,407 4,034 9,441
Accumulated depreciation (1,519 ) (845 ) (2,364 )
Net carrying amount 3,888 3,189 7,077
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 nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- ---
Properties for business use Leasehold improvements Total
Beginning balance 3,767 1,797 5,564
Acquisitions 869 1,849 2,718
Depreciation (748 ) (457 ) (1,205 )
Ending balance 3,888 3,189 7,077
For the period from January 11, 2019 (date of incorporation) to September 30, 2019
--- --- --- --- --- --- --- --- --- ---
Properties for business use Leasehold improvements Total
Beginning balance — — —
Acquisitions 4,412 2,184 6,596
Depreciation (546 ) (278 ) (824 )
Ending balance 3,866 1,906 5,772
  • 26 -
(4) Details of right-of-use assets<br>as of September 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in millions):
September 30, 2020
--- --- --- --- --- --- --- --- --- ---
Building Properties for business use Total
Acquisition cost 3,704 1,047 4,751
Accumulated depreciation (3,100 ) (427 ) (3,527 )
Net carrying amount 604 620 1,224
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 nine-month period ended September 30, 2020 and for the period from January 11, 2019 (date of incorporation) to September 30,<br>2019 are as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- ---
Building Properties for business use Total
Beginning balance 1,436 384 1,820
New contracts 833 479 1,312
Depreciation (1,665 ) (243 ) (1,908 )
Ending balance 604 620 1,224
For the period from January 11, 2019 (date of incorporation) to September 30, 2019
--- --- --- --- --- --- --- --- --- ---
Building Properties for business use Total
Beginning balance — — —
New contracts 2,871 568 3,439
Depreciation (1,076 ) (137 ) (1,213 )
Ending balance 1,795 431 2,226
12. INTANGIBLE ASSETS
--- ---
(1) Details of intangible assets are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Software Development<br>cost Membership<br>deposit Construction in progress Total
Acquisition cost 3,049 2,116 2,371 41 7,577
Accumulated amortization (1,674 ) (475 ) — — (2,149 )
Net carrying amount 1,375 1,641 2,371 41 5,428
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
  • 27 -
(2) Details of changes in intangible assets are as follows (Unit: Korean Won in millions):
For the nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Software Development cost Membership<br>deposit Construction<br>in progress Total
Beginning balance 1,585 1,725 — — 3,310
Acquisitions 320 216 2,371 41 2,948
Amortization (530 ) (300 ) — — (830 )
Ending balance 1,375 1,641 2,371 41 5,428
For the period from January 11, 2019 (date of incorporation) to September 30, 2019
--- --- --- --- --- --- --- --- --- ---
Software Development cost Total
Beginning balance — — —
Acquisitions 2,729 1,901 4,630
Amortization (797 ) (81 ) (878 )
Ending balance 1,932 1,820 3,752
13. OTHER ASSETS
--- ---

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

September 30, 2020 December 31, 2019
Prepaid expenses 264 —
14. DEBENTURES
--- ---

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

September 30, 2020 December 31, 2019
Interest rate (%) Amount Interest rate (%) Amount
Face value of bonds:
General bonds 1.23 200,000 — —
Subordinated bonds 2.13 ~ 2.55 950,000 2.13 ~ 2.55 950,000
Sub-total 1,150,000 950,000
Deducted item:
Discounts on bonds (2,590 ) (2,321 )
Total 1,147,410 947,679
  • 28 -
15. PROVISIONS
(1) Details of provisions are as follows (Unit: Korean Won in millions):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Asset retirement obligation 718 600
(2) Changes in asset retirement obligation are as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period ended<br>September 30,2020 For the period from January 11, 2019<br>(date of incorporation) to September 30, 2019
--- --- --- --- ---
Beginning balance 600 —
Increase 108 588
Amortization 10 9
Ending balance 718 597
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):
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Present value of defined benefit obligation 23,897 14,174
Fair value of plan assets (14,751 ) (10,692 )
Net defined benefit liability 9,146 3,482
  • 29 -
(2) Changes in the carrying value of defined benefit obligation are as follows (Unit: Korean Won in millions):<br>
For the nine-month period ended<br>September 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to September 30, 2019
--- --- --- --- --- ---
Beginning balance 14,174 —
Transfer-in / out 4,656 8,877
Recruit / Transfer in 1,266 3,360
Current service cost 1,509 1,119
Interest cost 288 190
Remeasurements
Financial assumption 425 717
Demographic assumptions — —
Experience adjustment 1,740 312
Retirement benefit paid (93 ) —
Others (68 ) —
Ending balance 23,897 14,575
(3) Changes in the plan assets are as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period ended<br>September 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to September 30, 2019
--- --- --- --- --- --- ---
Beginning balance 10,692 —
Transfer-in / out 4,056 8,877
Interest income 219 87
Remeasurements (69 ) (22 )
Retirement benefit paid (147 ) —
Ending balance 14,751 8,942
(4) Plan assets wholly consist of fixed deposits as of September 30, 2020 and December 31, 2019. Among<br>plan assets, realized returns on plan assets amount to 150 million won and 65 million won for the nine-month period ended September 30, 2020 and for the period from January 11, 2019 (date of incorporation) to September 30,<br>2019, respectively.
--- ---
(5) The amount recognized in profit or loss and total comprehensive income related to the defined benefit plan for<br>the nine-month period ended September 30, 2020 and for the period from January 11, 2019 (date of incorporation) to September 30, 2019 is as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period ended<br>September 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to September 30, 2019
--- --- --- --- ---
Current service cost 1,509 1,119
Recruit / Transfer in 1,266 3,360
Net interest expense (Income) 69 103
Cost recognized in net income 2,844 4,582
Remeasurements (*) 2,234 1,050
Cost recognized in total comprehensive income 5,078 5,632
(*) The amount is before income tax expense effect.
--- ---
  • 30 -
17. OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

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

September 30, 2020 December 31, 2019
Other financial liabilities:
Accounts payable 706 2,424
Accrued expenses 7,669 6,651
Lease liabilities 1,230 1,568
Other miscellaneous financial liabilities 202 102
Sub-total 9,807 10,745
Other liabilities:
Other miscellaneous liabilities 1,170 4,142
Total 10,977 14,887
18. DERIVATIVES
--- ---

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

September 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).

  • 31 -
19. EQUITY
(1) Details of equity as of September 30, 2020 and December 31, 2019 are as follows (Unit: Korean Won in<br>millions):
--- ---
September 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 (1,868 ) (631 )
Retained earnings 702,649 623,930
Total 20,882,024 20,106,265
(2) The number of authorized shares and others of the Company are as follows:
--- ---
September 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 (%) September 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 nine-month period ended September 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 — 528 (145 ) 383
Remeasurement loss related to defined benefit plan (631 ) (2,234 ) 614 (2,251 )
Total (631 ) (1,706 ) 469 (1,868 )
For the period from January 11, 2019<br>(date of incorporation) to September 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Beginning<br>balance Increase<br>(decrease) Income tax<br>effect Ending<br>balance
Remeasurement loss related to defined benefit plan — (1,050 ) 289 (761 )
  • 32 -
(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):

September 30,<br>2020 December 31,<br>2019
Beginning balance 692 —
Planned provision (reversal) of regulatory reserve for credit loss (230 ) 692
Ending balance 462 692
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 September<br>30, 2020 For the nine-<br>month period<br>ended<br>September 30,<br>2020 For the three-<br>month period<br>ended<br>September 30,<br>2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>September 30, 2019
Net income before regulatory reserve (18,126 ) 618,946 (10,941 ) 636,490
Provision (reversal) of regulatory reserve for credit loss 160 (230 ) 2 1,012
Adjusted net income after the provision of regulatory reserve (18,286 ) 619,176 (10,943 ) 635,478
Dividends to hybrid securities (14,275 ) (34,640 ) (3,572 ) (3,572 )
Adjusted net income after regulatory reserve and dividends to hybrid securities (32,561 ) 584,536 (14,515 ) 631,906
Adjusted EPS after regulatory reserve and dividends to hybrid securities (Unit: Korean<br>Won) (45 ) 809 (21 ) 924
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.

  • 33 -
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>September 30, 2020 For the nine-<br>month period<br>ended<br>September 30, 2020 For the three-<br>month period<br>ended<br>September 30, 2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>September 30, 2019
Interest on due from banks 1,292 8,978 3,467 3,968
Other interest income 7 20 5 13
Total 1,299 8,998 3,472 3,981
(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>September 30, 2020 For the nine-<br>month period<br>ended<br>September 30, 2020 For the three-<br>month period<br>ended<br>September 30,<br>2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>September 30, 2019
Interest on borrowings — — — 495
Interest on debentures 5,707 16,714 2,339 2,677
Other interest expense 4 10 3 9
Interest on lease liabilities 7 25 11 35
Total 5,718 16,749 2,353 3,216
22. NET FEES AND COMMISSIONS INCOME
--- ---
(1) There are no fees and commissions income recognized for the nine-month period ended September 30, 2020 and<br>for the period from January 11, 2019 (date of incorporation) to September 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>September 30, 2020 For the nine-<br>month period<br>ended<br>September 30, 2020 For the three-<br>month period<br>ended<br>September 30, 2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>September 30, 2019
Fees and commissions paid 774 5,016 801 3,786
Others 1,788 5,714 1,712 6,139
Total 2,562 10,730 2,513 9,925
  • 34 -
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>September 30, 2020 For the nine-<br>month period<br>ended<br>September 30, 2020 For the three-<br>month period<br>ended<br>September 30, 2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>September 30, 2019
Dividend income recognized from investments in subsidiaries — 677,795 — 676,000
Dividend income recognized from FVTOVI 1,290 1,290 — —
Total 1,290 679,085 — 676,000
24. PROVISION FOR IMPAIRMENT LOSSES DUE TO CREDIT LOSS
--- ---

Details of provision for 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>September 30, 2020 For the nine-<br>month period<br>ended<br>September 30, 2020 For the three-<br>month period<br>ended<br>September 30, 2019 For the period<br>from January 11,<br>2019 (date of<br>incorporation) to<br>September 30, 2019
Provision for impairment losses due to credit loss on loans and other financial assets at<br>amortized cost (183 ) (174 ) — —
  • 35 -
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 September 30,<br>2020 For the nine-<br>month period<br>ended September 30,<br>2020 For the three-<br>month period<br>ended September 30,<br>2019 For the<br>period from<br>January 11,<br>2019<br>(date of<br>incorporation)<br>to September 30,<br>2019
Employee benefits Short-term employee<br> <br>benefits Salaries 6,937 19,528 4,782 12,063
Employee fringe<br> <br>benefits 1,374 6,583 882 4,007
Retirement benefit service costs 640 2,844 393 4,582
Share based payments 243 736 97 627
Sub-total 9,194 29,691 6,154 21,279
Depreciation and amortization 1,430 3,943 1,149 2,915
Other general and administrative expenses Rent 298 790 177 511
Taxes and public dues 85 300 65 175
Service charges 777 2,443 945 1,929
Computer and IT related 839 2,054 435 1,124
Telephone and communication 68 258 52 152
Operating promotion 379 881 182 433
Advertising 12 113 13 473
Printing 7 35 15 60
Traveling 9 43 146 252
Supplies 37 156 27 82
Insurance premium — 19 — 164
Reimbursement 280 729 222 585
Vehicle maintenance 67 154 38 87
Others 6 33 4 13
Sub-total 2,864 8,008 2,321 6,040
Total 13,488 41,642 9,624 30,234
  • 36 -
(2) Share-based payment

Details of performance condition share-based payment granted to executives as of September 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><br><br>December 31, 2022
Date of payment 2023-01-01
Fair value (*1) 7,724 Won
Valuation method Black-Scholes Model
Expected dividend rate 4.13%
Expected maturity date 2.25 years
Number of shares remaining As of September 30, 2020 77,728 shares
As of December 31, 2019 77,728 shares
Number of shares granted (*2) As of September 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><br><br>December 31, 2023
Date of payment 2024-01-01
Fair value (*1) 7,412 Won
Valuation method Black-Scholes Model
Expected dividend rate 4.13%
Expected maturity date 3.25 years
Number of shares remaining As of September 30, 2020 128,755 shares
As of December 31, 2019 —
Number of shares granted (*2) As of September 30, 2020 128,755 shares
As of December 31, 2019 —
(*1) As the amount of payment varies according to the base price (the arithmetic average of the weighted average<br>stock price of transactions in the past one week, the past one month, and the past two months) at the date of payment, the fair value is calculated and used to measure the liability according to the Black Shawls model based on the base price at the<br>time of each settlement.
--- ---
(*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 September 30, 2020 and December 31, 2019 the book value of the liabilities related<br>to the performance condition share-based payments recognized by the Company is 1,555 million won and 819 million won.
--- ---
  • 37 -
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 September 30,<br>2020 For the nine-month<br>period<br>ended September 30,<br>2020 For the three-month<br>period<br>ended September 30,<br>2019 For the period<br>from<br>January 11, 2019<br>(date of<br>incorporation)<br>to September 30,<br>2019
Other non-operating income — 181 — —
Other non-operating expense (200 ) (401 ) (155 ) (755 )
Total (200 ) (220 ) (155 ) (755 )
(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 September 30,<br>2020 For the nine-month<br>period<br>ended September 30,<br>2020 For the three-month<br>period<br>ended September 30,<br>2019 For the period<br>from<br>January 11,<br>2019<br>(date of<br>incorporation)<br>to September 30,<br>2019
Others — 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 September 30,<br>2020 For the nine-month<br>period<br>ended September 30,<br>2020 For the three-month<br>period<br>ended September 30,<br>2019 For the period<br>from<br>January 11,<br>2019<br>(date of<br>incorporation)<br>to September 30,<br>2019
Donations 200 401 155 755
  • 38 -
27. INCOME TAX EXPENSE (INCOME)

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

For the nine-month<br>period<br>ended September 30,<br>2020 For the period from<br>January 11, 2019<br>(date of incorporation)<br>to September 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 (847 ) (928 )
Income tax expense directly attributable to equity 469 289
Sub-total (378 ) (639 )
Income tax expense (income) (378 ) (639 )

Income tax expense (income) was recognized based on the estimate of the best weighted average annual effective tax rate expected for the interim period. It is tax income for the nine-month period ended September 30, 2020 and for the period from January 11, 2019 (date of incorporation), so the annual effective tax rate was not calculated.

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 September 30, 2020 For the nine-month<br>period<br>ended September 30, 2020 For the three-month<br>period<br>ended September 30, 2019 For the period from<br>January 11, 2019<br>(date of<br>incorporation)<br>to September 30, 2019
Net income attributable to Owners (18,126 ) 618,946 (10,941 ) 636,490
Dividends to hybrid securities (14,275 ) (34,640 ) (3,572 ) (3,572 )
Net income attributable to common shareholders (32,401 ) 584,306 (14,513 ) 632,918
Weighted average number of common shares outstanding 722 722 690 684
Basic EPS (Unit: Korean Won) (45 ) 809 (21 ) 926
(2) The weighted average number of common shares outstanding is as follows: (Unit: number of shares, days)<br>
--- ---
For the nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- ---
Period Number of<br>shares Dates Accumulated number<br>of shares outstanding<br>during period
Common shares issued at the beginning of the period 2020-01-01 ~ 2020-09-30 722,267,683 274 197,901,345,142
Treasury stock 2020-01-01 ~ 2020-09-30 (2) 274 (548)
Sub-total (①) 197,901,344,594
Weighted average number of common shares outstanding (②=(①/274) 722,267,681
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For the period from January 11, 2019 (date of incorporation)<br>to September 30, 2019
Period Number of<br>shares Dates Accumulated<br>number of shares<br>outstanding during<br>period
Common shares issued at the beginning date of incorporation of the period 2019-01-11~2019-09-30 680,164,306 263 178,883,212,478
Stock issuance (Comprehensive stock exchange) 2019-09-10 ~ 2019-09-30 42,103,377 21 884,170,917
Sub-total (①) 179,767,383,395
Weighted average number of common shares outstanding (②=(①/263) 683,526,173

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

29. CONTINGENT LIABILITIES AND COMMITMENTS
(1) Litigation case
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As of September 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>
September 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.
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In regards to this acquisition, the Company recognized 9,434 million won as derivative assets as of September 30, 2020 and December 31, 2019 (seeing Note 18).

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30. RELATED PARTY TRANSACTIONS

Related parties of the Company as of September 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 nine-month period ended September 30, 2020 and for the period from January 11, 2019 (date of incorporation) to September 30, 2019 are as follows:

(1) Assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
Related party Title of account September 30, 2020 December 31, 2019
--- --- --- --- --- --- --- ---
Subsidiaries
Woori Bank Cash and cash equivalents 97,695 43,670
Other financial assets 970,350 1,229,181
Allowance for credit losses (437 ) (263 )
Other financial liabilities 578 601
Woori Card Co., Ltd. Other financial assets 20,926 37,754
Other financial liabilities 266 267
Woori FIS Co., Ltd. Other financial assets 1,671 1,386
Other financial liabilities 242 190
Woori Finance Research Institute Co., Ltd. Other financial assets 146 21
Other financial liabilities — 1,320
Woori Credit<br><br><br>Information Co., Ltd. Other financial assets 662 568
Woori Fund Service <br>Co., Ltd. Other financial assets 460 556
Associates of subsidiaries
W Service Networks Co., Ltd. Other financial liabilities 125 64
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(2) Gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):<br>
Related party Title of account For the nine-month<br>period ended<br>September 30, 2020 For the period from<br>January 11, 2019<br>(date of incorporation) to<br>September 30, 2019
--- --- --- --- --- ---
Subsidiaries (*1)
Woori Bank Interest income 8,998 3,981
Dividend income 676,000 676,000
Interest expenses (*2) 25 37
Fees and commissions expense 11 2
Provision of impairment loss due to credit loss 174 —
General and administrative expenses (*2) 2,420 1,574
Woori Card Co., Ltd. Dividend income 1,290 —
Woori FIS Co., Ltd. General and administrative expenses 1,867 872
Woori Finance Research Institute Co., Ltd. Fees and commissions expenses 4,725 4,200
Woori Credit Information Co., Ltd. Dividend income 494 —
Woori Fund Service <br>Co., Ltd. Dividend income 521 —
Woori Asset Trust Co., Ltd Dividend income 780 —
Associates of subsidiaries
W Service Networks Co., Ltd. General and administrative expenses 984 577
(*1) The Company issued debentures of 200,000 million won during the period, of which 40,000 million won<br>was underwritten by Woori Investment Bank and paid 40 million won as acquisition fee which is included in the discount on debentures issued.
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(*2) The depreciation of<br>right-of-use assets and interest expense of lease liabilities arising from lease transactions during the current term are included.
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(3) The details of the right-of-use<br>assets and lease liabilities due to lease transactions with related parties as of September 30, 2020 and December 31, 2019 are as follows (Unit: Korea Won in millions):
--- ---
Related<br>parties                                        <br> Title of account September 30, 2020 December 31, 2019
--- --- --- --- --- --- ---
Subsidiaries Woori Bank Right-of-use assets 604 1,436
Lease liabilities (*) 578 1,164
(*) Cash outflows of lease liabilities redemption for the nine-month period ended September 30, 2020 and for<br>the period from January 11, 2019 (date of incorporation) to September 30, 2019 are 1,319 million won, 829 million won, respectively.
--- ---
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(4) The details of loan and borrowing transactions with related parties for the nine-month period ended<br>September 30, 2020 and for the period from January 11, 2019 (date of incorporation) to September 30, 2019 are as follows (Unit: Korea Won in millions):
Related parties (*1) Title of account For the nine-month period ended September 30, 2020
--- --- --- --- --- --- --- --- --- --- ---
Beginning<br>balance Increase Decrease Ending<br>balance
Subsidiaries Woori Bank Due from banks (*2) 1,130,000 3,330,000 3,560,000 900,000
(*1) Woori Investment Bank acquired 40,000 million won out of 200,000 million won in non-guaranteed bonds issued during the nine-month period ended September 30, 2020 and sold the entire amount to the market on the date of issuance.
--- ---
(*2) Excludes due from banks without withdrawal limitations.
--- ---
Related parties Title of account For the period from January 11, 2019<br>(date of incorporation) to September 30, 2019
--- --- --- --- --- --- --- --- --- --- ---
Beginning<br>balance Increase Decrease Ending<br>balance
Subsidiaries Woori Bank Due from banks (*) — 1,800,000 1,200,000 600,000
(*) Excludes due from banks without withdrawal limitations.
--- ---
(5) The details of equity-related transactions with related parties for the nine-month period ended<br>September 30, 2020 are as follows (Unit: Korean Won in million)
--- ---
Related parties Contribution Acquisition of hybrid securities
--- --- --- --- --- ---
Subsidiaries Woori Bank 1,000,000 —
Woori Card Co., Ltd. — 150,000
(6) 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):
--- ---
Related parties September 30, 2020 December 31, 2019 Warranty
--- --- --- --- --- --- ---
Subsidiaries Woori Card Co., Ltd. 202 495 Unused loan commitment
(7) Compensation for key management is as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period<br>ended September 30, 2020 For the period from<br>January 11, 2019<br>(date of incorporation)<br>to September 30, 2019
--- --- --- --- ---
Short-term employee salaries 4,308 2,808
Retirement benefit service costs 170 392
Share-based compensation 576 405
Total 5,054 3,605

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 September 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>
--- ---
September 30, 2020 December 31, 2019
--- --- --- --- ---
Lease payments:
Within one year 952 1,341
After one year but within five years 291 249
Total 1,243 1,590
(2) Total cash outflows from lease are as follows (Unit: Korean Won in millions):
--- ---
For the nine-month period<br>ended September 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to September 30, <br>2019
--- --- --- --- ---
Cash outflows from lease 1,656 1,023
(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 nine-month period<br>ended September 30, 2020 For the period from January 11, 2019<br>(date of incorporation) to September 30, <br>2019
--- --- --- --- ---
Lease payments for which the underlying asset is of low value 95 70

There are no lease payments not included in the lease liabilities measurement, resulting from short-term leases for the nine-month period ended September 30, 2020 and for the period from January 11, 2019 (date of incorporation) to September 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.
32. EVENTS AFTER THE REPORTING PERIOD
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(1) In October 2020, the Company concluded a contract to acquire a 74.04% stake (42,605,000 common stocks) in Aju<br>Capital Co., Ltd., and the completion date of the transaction is not yet decided as subsequent procedures for closing the transaction (approval of inclusion by the financial authorities, etc.) is still in progress.
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(2) Woori Investment Bank Co., Ltd., a subsidiary of the Company, decided to raise 100 billion won in<br>shareholder allocation at the board meeting on August 28, 2020 and completed the payment of the shares on November 5, 2020, and the Company was allocated 109,757,854 shares in relation to the paid-in<br>capital increase.
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