As filed with the Securities and Exchange Commission on April 27, 2021

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

 

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

OR

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 .

OR

 

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                 .

Commission file number 000-53445

KB Financial Group Inc.

(Exact name of Registrant as specified in its charter)

KB Financial Group Inc.

(Translation of Registrant’s name into English)

The Republic of Korea

(Jurisdiction of incorporation or organization)

26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul 07331, Korea

(Address of principal executive offices)

Peter BongJoong Kwon

18F, Kookmin Bank, 141, Uisadang-daero, Yeongdeungpo-gu, Seoul 07332, Korea

Telephone No.: +82-2-2073-7807

Facsimile No.: +82-2-2073-2848

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
American Depositary Shares, each representing one share of Common Stock		KB		New York Stock Exchange
Common Stock, par value ￦5,000 per share		KB		New York Stock Exchange*

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

389,634,335 shares of Common Stock, par value ￦5,000 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  ☒ Yes  ☐ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  ☐ Yes  ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

☒     Large accelerated filer            ☐     Accelerated filer            ☐     Non-accelerated filer            ☐     Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act:  ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (§ 15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒ Yes  ☐ No

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

☐     U.S. GAAP		☒     International Financial Reporting Standards as issued by the International Accounting Standards Board		☐		Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.  ☐ Item 17  ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes  ☒ No

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (§ 15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒ Yes  ☐ No

* Not for trading, but only in connection with the registration of the American Depositary Shares.

 

 

 

TABLE OF CONTENTS

 

PRESENTATION OF FINANCIAL AND OTHER INFORMATION							1
FORWARD-LOOKING STATEMENTS							2
Item 1.		IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS					3
Item 2.		OFFER STATISTICS AND EXPECTED TIMETABLE					3
Item 3.		KEY INFORMATION					3
		Item 3.A.		Selected Financial Data			3
		Item 3.B.		Capitalization and Indebtedness			12
		Item 3.C.		Reasons for the Offer and Use of Proceeds			12
		Item 3.D.		Risk Factors			12
Item 4.		INFORMATION ON THE COMPANY					39
		Item 4.A.		History and Development of the Company			39
		Item 4.B.		Business Overview			41
		Item 4.C.		Organizational Structure			124
		Item 4.D.		Property, Plants and Equipment			126
Item 4A.		UNRESOLVED STAFF COMMENTS					126
Item 5.		OPERATING AND FINANCIAL REVIEW AND PROSPECTS					127
		Item 5.A.		Operating Results			127
		Item 5.B.		Liquidity and Capital Resources			166
		Item 5.C.		Research and Development, Patents and Licenses, etc.			173
		Item 5.D.		Trend Information			173
		Item 5.E.		Off-Balance Sheet Arrangements			173
		Item 5.F.		Tabular Disclosure of Contractual Obligations			173
		Item 5.G.		Safe Harbor			173
Item 6.		DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES					173
		Item 6.A.		Directors and Senior Management			173
		Item 6.B.		Compensation			179
		Item 6.C.		Board Practices			180
		Item 6.D.		Employees			182
		Item 6.E.		Share Ownership			184
Item 7.		MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS					185
		Item 7.A.		Major Shareholders			185
		Item 7.B.		Related Party Transactions			185
		Item 7.C.		Interests of Experts and Counsel			186
Item 8.		FINANCIAL INFORMATION					186
		Item 8.A.		Consolidated Statements and Other Financial Information			186
		Item 8.B.		Significant Changes			188

 

i

Item 9.		THE OFFER AND LISTING					188
		Item 9.A.		Offering and Listing Details			188
		Item 9.B.		Plan of Distribution			190
		Item 9.C.		Markets			191
		Item 9.D.		Selling Shareholders			191
		Item 9.E.		Dilution			191
		Item 9.F.		Expenses of the Issue			191
Item 10.		ADDITIONAL INFORMATION					191
		Item 10.A.		Share Capital			191
		Item 10.B.		Memorandum and Articles of Association			191
		Item 10.C.		Material Contracts			198
		Item 10.D.		Exchange Controls			198
		Item 10.E.		Taxation			199
		Item 10.F.		Dividends and Paying Agents			205
		Item 10.G.		Statement by Experts			205
		Item 10.H.		Documents on Display			205
		Item 10.I.		Subsidiary Information			205
Item 11.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK					205
Item 12.		DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES					227
Item 13.		DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES					228
Item 14.		MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS					228
Item 15.		CONTROLS AND PROCEDURES					228
Item 16.		[RESERVED]					230
Item 16A.		AUDIT COMMITTEE FINANCIAL EXPERT					230
Item 16B.		CODE OF ETHICS					230
Item 16C.		PRINCIPAL ACCOUNTANT FEES AND SERVICES					230
Item 16D.		EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES					231
Item 16E.		PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS					231
Item 16F.		CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT					231
Item 16G.		CORPORATE GOVERNANCE					232
Item 16H.		MINE SAFETY DISCLOSURE					233
Item 17.		FINANCIAL STATEMENTS					233
Item 18.		FINANCIAL STATEMENTS					233
Item 19.		EXHIBITS					234

 

ii

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

The financial statements included in this annual report are prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. As such, we make an explicit and unreserved statement of compliance with IFRS as issued by the IASB with respect to our consolidated financial statements as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020 included in this annual report. Unless indicated otherwise, the financial information in this annual report as of and for the years ended December 31, 2016, 2017, 2018, 2019 and 2020 has been prepared in accordance with IFRS as issued by the IASB, which is not comparable to information prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.

Unless expressly stated otherwise, all financial data included in this annual report are presented on a consolidated basis.

In this annual report:

 

•

references to “we,” “us” or “KB Financial Group” are to KB Financial Group Inc. and, unless the context otherwise requires, its subsidiaries;

 

•

references to “Korea” are to the Republic of Korea;

 

•

references to the “government” are to the government of the Republic of Korea;

 

•

references to “Won” or “￦” are to the currency of Korea; and

 

•

references to “U.S. dollars,” “$” or “US$” are to United States dollars.

Discrepancies between totals and the sums of the amounts contained in any table may be a result of rounding.

For your convenience, this annual report contains translations of Won amounts into U.S. dollars at the noon buying rate of the Federal Reserve Bank of New York for Won in effect on December 31, 2020, which was ￦1,086.11 = US$1.00.

 

1

FORWARD-LOOKING STATEMENTS

The U.S. Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This annual report contains forward-looking statements.

Words and phrases such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “estimate,” “expect,” “future,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “predict,” “project,” “risk,” “seek to,” “shall,” “should,” “will likely result,” “will pursue,” “plan” and words and terms of similar substance used in connection with any discussion of future operating or financial performance or our expectations, plans, projections or business prospects identify forward-looking statements. In particular, the statements under the headings “Item 3.D. Risk Factors,” “Item 5. Operating and Financial Review and Prospects” and “Item 4.B. Business Overview” regarding our financial condition and other future events or prospects are forward-looking statements. All forward-looking statements are management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

In addition to the risks related to our business discussed under “Item 3.D. Risk Factors,” other factors could cause actual results to differ materially from those described in the forward-looking statements. These factors include, but are not limited to:

 

•

our ability to successfully implement our strategy;

 

•

future levels of non-performing loans;

 

•

our growth and expansion;

 

•

the adequacy of allowances for credit and investment losses;

 

•

technological changes;

 

•

interest rates;

 

•

investment income;

 

•

availability of funding and liquidity;

 

•

cash flow projections;

 

•

our exposure to market risks; and

 

•

adverse market and regulatory conditions.

By their nature, certain disclosures relating to these and other risks are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains, losses or impact on our income or results of operations could materially differ from those that have been estimated. For example, revenues could decrease, costs could increase, capital costs could increase, capital investment could be delayed and anticipated improvements in performance might not be fully realized.

In addition, other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this annual report could include, but are not limited to:

 

•

the occurrence of severe health epidemics (including the ongoing outbreak of the COVID-19 pandemic), in Korea or other parts of the world;

 

•

general economic and political conditions in Korea or other countries that have an impact on our business activities or investments;

 

•

the monetary and interest rate policies of Korea;

 

2

•

inflation or deflation;

 

•

unanticipated volatility in interest rates;

 

•

foreign exchange rates;

 

•

prices and yields of equity and debt securities;

 

•

the performance of the financial markets in Korea and globally;

 

•

changes in domestic and foreign laws, regulations and taxes;

 

•

changes in competition and the pricing environments in Korea; and

 

•

regional or general changes in asset valuations.

For further discussion of the factors that could cause actual results to differ, see the discussion under “Item 3.D. Risk Factors” contained in this annual report. We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this annual report. Except as required by law, we are not under any obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

All subsequent forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this annual report.

 

Item 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

 

Item 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

 

Item 3.

KEY INFORMATION

 

Item 3.A.

Selected Financial Data

The selected consolidated financial and operating data as of and for the years ended December 31, 2016, 2017, 2018, 2019 and 2020 set forth below have been derived from our audited consolidated financial statements, which have been prepared in accordance with IFRS as issued by the IASB. Our consolidated financial statements as of and for the years ended December 31, 2016, 2017, 2018 and 2019 have been audited by Samil PricewaterhouseCoopers, an independent registered public accounting firm. Our consolidated financial statements as of and for the year ended December 31, 2020 have been audited by KPMG Samjong Accounting Corp., an independent registered public accounting firm.

IFRS 9 Financial Instruments, or IFRS 9, is effective for annual periods beginning on or after January 1, 2018 and replaces International Accounting Standard 39 Financial Instruments: Recognition and Measurement, or IAS 39. We have applied IFRS 9 in our consolidated financial statements as of and for the years ended December 31, 2018, 2019 and 2020 included elsewhere in this annual report. As permitted by the transition rules of IFRS 9, our consolidated financial statements as of and for the year ended December 31, 2016 and 2017 have not been restated to retroactively apply IFRS 9.

You should read the following data together with the more detailed information contained in “Item 5. Operating and Financial Review and Prospects” and our consolidated financial statements included elsewhere in this annual report. Historical results do not necessarily predict future results.

 

3

Consolidated statements of comprehensive income data

 

		Year Ended December 31,
		2016				2017				2018(1)				2019(1)				2020(1)				2020(1)(2)
		(in billions of Won, except common share data)																				(in millions of US$, except common share data)
Interest income		￦	10,335			￦	11,919			￦	13,735			￦	14,639			￦	14,486			US$	13,337
Interest expense			(3,619	)			(3,672	)			(4,830	)			(5,442	)			(4,764	)			(4,386	)
Net interest income			6,716				8,247				8,905				9,197				9,722				8,951
Fee and commission income			3,151				3,988				3,718				3,879				4,527				4,168
Fee and commission expense			(1,566	)			(1,938	)			(1,474	)			(1,524	)			(1,568	)			(1,444	)
Net fee and commission income			1,585				2,050				2,243				2,355				2,959				2,724
Insurance income			1,201				8,971				11,975				12,317				14,387				13,246
Insurance expense			(1,319	)			(8,377	)			(11,485	)			(12,018	)			(14,087	)			(12,970	)
Net insurance income (expenses)			(118	)			594				490				300				300				276
Net gains on financial assets and liabilities at fair value through profit or loss			—				—				352				644				1,011				931
Net gains (losses) on financial assets and liabilities at fair value through profit or loss (under IAS 39)			(322	)			203				—				—				—				—
Net other operating income (expenses)			(416	)			(902	)			(1,130	)			(1,063	)			(1,500	)			(1,381	)
General and administrative expenses			(5,229	)			(5,629	)			(5,919	)			(6,271	)			(6,833	)			(6,291	)
Operating profit before provision for credit losses			2,216				4,563				4,941				5,161				5,659				5,211
Provision for credit losses			(539	)			(548	)			(674	)			(670	)			(1,043	)			(961	)
Net operating income			1,677				4,015				4,267				4,491				4,616				4,250
Share of profit (losses) of associates and joint ventures			281				84				24				16				(44	)			(40	)
Net other non-operating income			671				39				10				27				190				174
Net non-operating income			952				123				34				43				146				134
Profit before income tax expense			2,629				4,138				4,302				4,534				4,762				4,384
Income tax expense			(439	)			(795	)			(1,240	)			(1,221	)			(1,260	)			(1,160	)
Profit for the year		￦	2,190			￦	3,343			￦	3,062			￦	3,313			￦	3,502			US$	3,224
Items that will not be reclassified to profit or loss:
Remeasurements of net defined benefit liabilities			13				23				(138	)			(56	)			(10	)			(10	)
Shares of other comprehensive income (loss) of associates and joint ventures			4				—				(0	)			(0	)			(0	)			(0	)
Net gains (losses) on equity instruments at fair value through other comprehensive income			—				—				(31	)			(17	)			822				757
Fair value changes on financial liabilities designated at fair value due to own credit risk			—				—				1				(11	)			9				8
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations			20				(110	)			49				38				(187	)			(172	)
Net gains (losses) on debt instruments at fair value through other comprehensive income			—				—				119				35				(356	)			(328	)
Valuation gains (losses) on financial investments			(48	)			89				—				—				—				—
Shares of other comprehensive income (loss) of associates and joint ventures			(11	)			101				(4	)			8				(7	)			(6	)
Gains (losses) on cash flow hedging instruments			4				21				(9	)			(33	)			(1	)			(1	)
Gains (losses) on hedges of a net investment in a foreign operation			(7	)			27				(27	)			(9	)			64				59
Other comprehensive income (loss) of separate account			—				(14	)			30				3				(10	)			(9	)
Net gains on overlay adjustment			—				—				0				194				152				140
Other comprehensive income (loss) for the year, net of tax			(25	)			136				(10	)			152				476				438
Total comprehensive income for the year		￦	2,165			￦	3,480			￦	3,052			￦	3,465			￦	3,978			US$	3,662
Profit attributable to:
Shareholders of the parent company		￦	2,144			￦	3,311			￦	3,061			￦	3,312			￦	3,455			US$	3,181
Non-controlling interests			46				32				1				1				47				43
		￦	2,190			￦	3,343			￦	3,062			￦	3,313			￦	3,502			US$	3,224
Total comprehensive income attributable to:
Shareholders of the parent company		￦	2,119			￦	3,446			￦	3,051			￦	3,464			￦	3,956			US$	3,642
Non-controlling interests			46				34				1				2				22				20
		￦	2,165			￦	3,480			￦	3,052			￦	3,465			￦	3,978			US$	3,662
Earnings per share
Basic earnings per share		￦	5,588			￦	8,305			￦	7,721			￦	8,451			￦	8,809			US$	8.11
Diluted earnings per share			5,559				8,257				7,676				8,389				8,697				8.01

 

4

 

(1)	Figures for 2018, 2019 and 2020 reflect the application of IFRS 9 and therefore may not be directly comparable to corresponding figures for prior years.

(2)	Won amounts are expressed in U.S. dollars at the rate of ￦1,086.11 to US$1.00, the noon buying rate in effect on December 31, 2020 as quoted by the Federal Reserve Bank of New York in the United States.

 

5

Consolidated statements of financial position data

 

		Year Ended December 31,
		2016				2017				2018(1)				2019(1)				2020(1)				2020(1)(2)
		(in billions of Won)																				(in millions of US$)
Assets
Cash and due from financial institutions		￦	17,885			￦	19,818			￦	20,274			￦	20,838			￦	25,609			US$	23,578
Financial assets at fair value through profit or loss			—				—				50,988				53,549				61,035				56,196
Financial assets at fair value through profit or loss (IAS 39)			27,858				32,227				—				—				—				—
Derivative financial assets			3,382				3,310				2,026				3,191				5,545				5,106
Loans measured at amortized cost			265,486				290,123				319,202				339,684				377,167				347,264
Financial investments			45,148				66,608				61,665				71,783				98,695				90,871
Investments in associates and joint ventures			1,771				335				505				598				771				710
Property and equipment			3,627				4,202				4,272				5,067				5,434				5,003
Investment property			755				849				2,120				2,828				2,534				2,333
Intangible assets			652				2,943				2,756				2,738				3,351				3,085
Net defined benefit assets			—				1				—				1				3				3
Current income tax assets			66				6				10				19				110				101
Deferred income tax assets			134				4				4				4				65				60
Assets held for sale			52				156				17				23				198				182
Other assets			8,858				16,204				15,749				18,216				30,155				27,764
Total assets		￦	375,674			￦	436,786			￦	479,588			￦	518,538			￦	610,672			US$	562,256
Liabilities
Financial liabilities at fair value through profit or loss		￦	—			￦	—			￦	15,327			￦	15,368			￦	11,810			US$	10,874
Financial liabilities at fair value through profit or loss (IAS 39)			12,123				12,023				—				—				—				—
Derivative financial liabilities			3,807				3,143				2,901				3,007				5,223				4,809
Deposits			239,731				255,800				276,770				305,593				338,580				311,737
Borrowings			26,251				28,821				33,005				37,819				49,827				45,877
Debentures			34,992				44,993				53,279				50,936				62,761				57,785
Provisions			538				568				526				528				715				658
Net defined benefit liabilities			96				155				262				254				248				229
Current income tax liabilities			442				434				699				432				765				704
Deferred income tax liabilities			103				533				493				778				1,162				1,070
Insurance contract liabilities			7,291				31,801				33,413				34,967				54,415				50,101
Other liabilities			19,039				24,470				27,200				29,737				41,805				38,489
Total liabilities		￦	344,413			￦	402,741			￦	443,875			￦	479,419			￦	567,311			US$	522,333
Total Equity
Capital stock		￦	2,091			￦	2,091			￦	2,091			￦	2,091			￦	2,091			US$	1,925
Hybrid securities			—				—				—				399				1,696				1,562
Capital surplus			16,995				17,122				17,122				17,123				16,724				15,398
Accumulated other comprehensive income			405				538				178				348				612				564
Retained earnings			12,229				15,044				17,282				19,710				22,517				20,731
Treasury shares			(722	)			(756	)			(969	)			(1,136	)			(1,136	)			(1,046	)
Equity attributable to shareholders of the parent company			30,998				34,039				35,704				38,534				42,504				39,134
Non-controlling interests			263				6				9				585			￦	857			US$	789
Total equity		￦	31,261			￦	34,045			￦	35,713			￦	39,119			￦	43,361			US$	39,923
Total liabilities and equity		￦	375,674			￦	436,786			￦	479,588			￦	518,538			￦	610,672			US$	562,256

 

6

 

(1)	Figures as of December 31, 2018, 2019 and 2020 reflect the application of IFRS 9 and therefore may not be directly comparable to corresponding figures as of prior dates.

(2)	Won amounts are expressed in U.S. dollars at the rate of ￦1,086.11 to US$1.00, the noon buying rate in effect on December 31, 2020 as quoted by the Federal Reserve Bank of New York in the United States.

Profitability ratios and other data

 

		As of or for the year Ended December 31,
		2016				2017				2018				2019				2020
		(Percentages)
Profit (loss) attributable to stockholders as a percentage of:
Average total assets(1)			0.62	%			0.80	%			0.67	%			0.66	%			0.60	%
Average stockholders’ equity(1)			7.13				9.56				8.58				8.66				8.48
Dividend payout ratio(2)			23.23				23.17				24.83				26.00				19.97
Net interest spread(3)			2.01				2.11				2.05				1.96				1.85
Net interest margin(4)			2.13				2.27				2.23				2.14				1.98
Efficiency ratio(5)			70.24				55.23				54.50				54.85				54.70
Cost-to-average assets ratio(6)			1.50				1.36				1.29				1.25				1.20
Won loans (gross) as a percentage of Won deposits			110.77				114.02				115.98				111.83				115.37
Total loans (gross) as a percentage of total deposits			111.69				114.24				116.27				111.94				112.37

 

(1)	Average balances are based on daily balances for our banking, credit card and investment and securities operations and monthly or quarterly balances for our other operations.

(2)	Represents the ratio of total dividends declared on common stock as a percentage of profit attributable to stockholders.

(3)	Represents the difference between the yield on average interest-earning assets and cost of average interest-bearing liabilities.

(4)	Represents the ratio of net interest income to average interest-earning assets.

(5)	Represents the ratio of general and administrative expenses to the sum of net interest income, net fee and commission income, net insurance income, net gain on financial assets and liabilities at fair value through profit or loss and net other operating income.

(6)	Represents the ratio of general and administrative expenses to average total assets.

Capital ratios

 

		As of or for the year Ended December 31,
		2018				2019				2020
		(Percentages)
Consolidated capital adequacy ratio of KB Financial Group(1)			14.60	%			14.48	%			15.28	%
Capital adequacy ratios of Kookmin Bank
Tier I capital adequacy ratio(2)			14.33				14.68				15.42
Common equity Tier I capital adequacy ratio(2)			14.33				14.37				15.10
Tier II capital adequacy ratio(2)			1.19				1.17				2.36
Average stockholders’ equity as a percentage of average total assets			7.75				7.65				7.13

 

(1)

Under applicable guidelines of the Financial Services Commission, we, as a bank holding company, were required to maintain a total minimum consolidated capital adequacy ratio of 11.5% (including applicable additional capital buffers and requirements) as of December 31, 2020. See “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Capital Adequacy.”

(2)	Kookmin Bank’s capital adequacy ratios are computed in accordance with the guidelines issued by the Financial Services Commission. See “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Banks—Capital Adequacy.”

 

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Credit portfolio ratios and other data

 

		As of December 31,
		2016				2017				2018				2019				2020
		(in billions of Won, except percentages)
Total loans(1)		￦	267,764			￦	292,233			￦	321,811			￦	342,092			￦	380,450
Total non-performing loans(2)			923				758				725				756				1,108
Other impaired loans not included in non-performing loans			1,613				1,509				1,377				1,151				2,326
Total of non-performing loans and other impaired loans			2,536				2,267				2,102				1,907				3,434
Total allowances for loan losses			2,278				2,110				2,609				2,408				3,283
Non-performing loans as a percentage of total loans			0.34	%			0.26	%			0.23	%			0.22	%			0.29	%
Non-performing loans as a percentage of total assets			0.25	%			0.17	%			0.15	%			0.15	%			0.18	%
Total of non-performing loans and other impaired loans as a percentage of total loans			0.95	%			0.78	%			0.65	%			0.56	%			0.90	%
Allowances for loan losses as a percentage of total loans			0.85	%			0.72	%			0.81	%			0.70	%			0.86	%

 

(1)	Before deduction of allowances for loan losses.

(2)	Non-performing loans are defined as those loans, including corporate, retail and other loans, which are past due by 90 days or more.

 

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Selected Statistical Information

Average Balance Sheets and Related Interest

The following table shows our average balances and interest rates for the past three years:

 

		Year Ended December 31,
		2018												2019												2020
		Average Balance(1)				Interest Income(2)				Average Yield				Average Balance(1)				Interest Income(2)				Average Yield				Average Balance(1)				Interest Income(2)				Average Yield
		(in billions of Won, except percentages)
Assets
Cash and interest earning deposits in other banks		￦	8,162			￦	109				1.34	%		￦	10,436			￦	151				1.45	%		￦	14,240			￦	92				0.65	%
Financial assets at fair value through profit or loss (debt securities)(3)			27,911				749				2.68				27,164				704				2.59				30,232				659				2.18
Financial investments (debt securities)(4)			56,585				1,325				2.34				63,699				1,389				2.18				80,087				1,355				1.69
Loans:
Corporate			134,938				4,471				3.31				141,600				4,788				3.38				158,508				4,547				2.87
Mortgage			65,799				1,994				3.03				72,897				2,233				3.06				82,765				2,161				2.61
Home equity			32,661				1,020				3.12				30,188				964				3.19				27,682				786				2.84
Other consumer(5)			52,333				2,491				4.76				58,514				2,680				4.58				64,220				2,639				4.11
Credit cards(6)			16,725				1,386				8.29				17,949				1,451				8.08				18,586				1,438				7.74
Foreign(7)			4,254				190				4.47				6,599				279				4.23				14,683				809				5.51
Loans (total)			306,710				11,552				3.77				327,747				12,395				3.78				366,444				12,380				3.38
Total average interest-earning assets		￦	399,368			￦	13,735				3.44	%		￦	429,046			￦	14,639				3.41	%		￦	491,003			￦	14,486				2.95	%
Cash and due from banks			11,072				—				—				11,681				—				—				11,314				—				—
Financial assets at fair value through profit or loss (excluding debt securities):
Equity securities			4,646				—				—				5,576				—				—				5,225				—				—
Other			17,051				—				—				18,410				—				—				22,952				—				—
Financial assets at fair value through profit or loss (excluding debt securities) (total)			21,697				—				—				23,986				—				—				28,177				—				—
Financial investment (equity securities)			2,628				—				—				2,598				—				—				2,427				—				—
Investment in associates			432				—				—				575				—				—				612				—				—
Derivative financial assets			2,470				—				—				2,989				—				—				4,189				—				—
Premises and equipment			5,639				—				—				7,398				—				—				8,048				—				—
Intangible assets			2,839				—				—				2,720				—				—				3,000				—				—
Allowances for loan losses			(2,827	)			—				—				(2,714	)			—				—				(2,954	)			—				—
Other non-interest-earning assets			16,963				—				—				21,623				—				—				25,414				—				—
Total average non-interest earning assets			60,913				—				—				70,856				—				—				80,227				—				—
Total average assets		￦	460,281			￦	13,735				2.98	%		￦	499,902			￦	14,639				2.93	%		￦	571,230			￦	14,486				2.54	%

 

9