KB Financial Group(US:KB)2025-03-05 18:29Audit and Financial Reporting - KB Financial Group Inc. disclosed the audit reports of Kookmin Bank for fiscal year 2024, which are based on International Financial Reporting Standards[3]. - The financial statements for Kookmin Bank as of December 31, 2024, and 2023, remain subject to change and have not yet been approved by shareholders[3]. - The independent auditor, Samil PricewaterhouseCoopers, provided an opinion that the consolidated financial statements present fairly the financial position of the Group as of December 31, 2024, and 2023[11]. - The audit was conducted in accordance with Korean Standards on Auditing, ensuring independence and ethical compliance[12]. - Management is responsible for the preparation of the consolidated financial statements and ensuring they are free from material misstatement[14]. - The auditor's report emphasizes the importance of assessing the Group's ability to continue as a going concern[15]. - The audit procedures included evaluating the appropriateness of accounting policies and the reasonableness of estimates made by management[21]. - The audit report is effective as of March 5, 2025, and may need revision if subsequent events impact the financial statements[20]. - The audit findings will be communicated to those charged with governance, highlighting any significant deficiencies in internal control[19]. Financial Performance - Total assets increased to W 562,887,180 million in 2024, up from W 530,012,853 million in 2023, representing a growth of approximately 6.7%[22]. - Net interest income rose to W 10,223,872 million in 2024, compared to W 9,870,067 million in 2023, reflecting an increase of about 3.6%[24]. - Profit for the period was W 3,151,402 million in 2024, slightly up from W 3,149,952 million in 2023, indicating a marginal growth of 0.05%[24]. - Total liabilities increased to W 524,859,860 million in 2024, from W 493,464,126 million in 2023, marking an increase of approximately 6.4%[22]. - Deposits grew to W 421,200,651 million in 2024, up from W 393,246,702 million in 2023, which is an increase of about 7.1%[22]. - Total equity reached W 38,027,320 million in 2024, compared to W 36,548,727 million in 2023, reflecting a growth of approximately 4.1%[26]. - The provision for credit losses decreased significantly to W 680,087 million in 2024 from W 1,608,128 million in 2023, a reduction of about 57.7%[24]. - Comprehensive income for the period was W 3,319,506 million in 2024, down from W 3,760,873 million in 2023, representing a decline of approximately 11.7%[24]. - The bank's capital surplus decreased to W 4,650,118 million in 2024 from W 4,735,404 million in 2023, a decrease of about 1.8%[26]. - The net defined benefit asset decreased to W 163,892 million in 2024 from W 228,565 million in 2023, a decline of approximately 28.3%[22]. Cash Flow and Investments - Net cash inflow from operating activities decreased to W 5,297,103 million in 2024 from W 7,422,240 million in 2023, a decline of 28.6%[28]. - Net cash outflow from investing activities increased to W 1,457,041 million in 2024 from W 350,930 million in 2023, indicating a rise of 314.5%[28]. - Net cash outflow from financing activities decreased to W 5,823,531 million in 2024 from W 7,825,942 million in 2023, a reduction of 25.6%[28]. - Cash and cash equivalents at the end of the period decreased to W 21,489,706 million in 2024 from W 22,561,791 million in 2023, a decline of 4.8%[28]. Operational Overview - The Bank operates 800 domestic branches and 11 overseas branches as of December 31, 2024[33]. - The Bank's paid-in capital as of December 31, 2024, is W 2,021,896 million[32]. Compliance and Accounting Policies - The Group's financial statements are prepared in accordance with Korean IFRS, ensuring compliance with international standards[34]. - The Group expects that amendments to Korean IFRS will not have a significant impact on the consolidated financial statements[44]. - The Group fully consolidates subsidiaries from the date control is transferred and de-consolidates when control is lost[57]. - The Group measures identifiable assets and liabilities in a business combination at acquisition-date fair values[62]. - The Group applies the equity method for investments in associates, adjusting the carrying amount based on the Group's share of profit or loss[66]. - Unrealized gains and losses from transactions between the Group and associates are eliminated to the extent of the Group's share in associates[66]. - The Group recognizes financial assets and liabilities at fair value upon initial recognition, with subsequent measurement based on classification[81][84]. - The fair value of financial instruments is determined using quoted prices in active markets or valuation techniques when no active market exists[86][87]. - The Group derecognizes financial assets when contractual rights to cash flows expire or when it transfers substantially all risks and rewards of ownership[96]. - The Group recognizes exchange differences arising from foreign currency transactions in profit or loss, except for certain net investments[75]. - The Group translates the results of foreign operations into the presentation currency using average exchange rates for the period[77]. - The Group's Fair Value Evaluation Committee reviews and approves the appropriateness of valuation models used for fair value measurement[92]. Credit Risk and Financial Assets - The Group recognizes expected credit losses for financial assets at amortized cost and fair value through other comprehensive income, with a focus on significant increases in credit risk since initial recognition[110]. - As of December 31, 2024, the expected credit loss allowances under the deterioration scenario amount to 2,152,009 million Korean won, while the crisis situation scenario amounts to 4,323,709 million Korean won[122]. - The Group measures expected credit losses based on a range of macroeconomic variables, including benchmark interest rates and unemployment rates, to assess credit risk[118]. - Financial assets at fair value through profit or loss are measured at fair value, with gains or losses recognized in profit or loss[105]. - The Group applies a general approach for measuring expected credit losses, differentiating based on whether credit risk has increased significantly after initial recognition[111]. Derivative Instruments and Risk Management - Derivative financial instruments are initially recognized at fair value and subsequently measured at fair value, with changes recognized in profit or loss[133]. - The Group's derivative financial instruments business focuses on managing interest rate and currency risks for corporate clients[130]. - The Group hedges interest rate risk entirely and only hedges foreign currency risk related to the proportional part of the notional amount[141]. - The Group uses interest rate swaps to avoid cash flow variability of floating rate debt securities, which may create hedge ineffectiveness due to different payment dates[144]. Asset Measurement and Impairment - The Group measures property and equipment at cost less accumulated depreciation, with buildings depreciated over 20 to 40 years[153]. - Investment properties are measured initially at cost and depreciated using a straight-line method over 40 years[156]. - Intangible assets are initially measured at cost and amortized over their estimated useful life, with software amortized over 4 to 5 years[158]. - Goodwill from business combinations after January 1, 2010, is measured as the excess of consideration transferred over the fair value of net identifiable assets acquired[161]. - The Group assesses non-financial assets for impairment at each reporting period, with impairment losses recognized immediately in profit or loss if the recoverable amount is less than the carrying amount[170]. - Non-current assets held for sale are measured at the lower of carrying amount and fair value less costs to sell, with no depreciation while classified as held for sale[172]. Financial Liabilities and Provisions - Financial liabilities are classified as either at fair value through profit or loss or other financial liabilities, with the latter measured at amortized cost after initial recognition[177]. - The Group recognizes financial liabilities in the consolidated statement of financial position when it becomes a party to the contractual provisions[174]. - Provisions are recognized when there is a present obligation, and a reliable estimate can be made of the amount required to settle the obligation[179]. - Provisions for confirmed and unconfirmed acceptances and guarantees are reviewed at the end of each reporting period and adjusted to reflect the current best estimate[180]. - An onerous contract is recognized when the unavoidable costs exceed the expected economic benefits, measured as provisions[181]. - Financial guarantee contracts are initially recognized at fair value and amortized over the contractual term[183]. Revenue Recognition - Interest income and expense are recognized using the effective interest method, which discounts estimated future cash flows[188]. - Revenue recognition follows a five-step process, including identifying contracts and performance obligations[190]. - Fees related to performance obligations satisfied over time are recognized over the period of performance obligations[195]. - Net gains or losses on financial instruments at fair value through profit or loss include changes in fair value and dividends[199]. - Employee contributions to defined contribution plans are recognized as post-employment benefits for the period[200].