| Net Defined Benefit Liability (Asset) |
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NET DEFINED BENEFIT LIABILITY(ASSET) | The Group’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 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:
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Volatility of assets |
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The defined benefit obligation was estimated with an interest rate calculated based on the return on high quality corporate bond. A deficit may occur if the rate of return of plan assets falls short of the interest rate. |
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Decrease in the return on high quality corporate bond |
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A decrease in the return on high quality corporate 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. |
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Risk of inflation |
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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 (asset) are as follows (Unit: Korean Won in millions): |
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Present value of defined benefit obligation |
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1,751,605 |
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1,982,526 |
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Fair value of plan assets (*) |
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(1,892,290 |
) |
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(2,157,163 |
) |
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Net defined benefit liabilities (assets) (*) |
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(140,685 |
) |
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(174,637 |
) |
Intercompany transaction adjustments |
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— |
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269,170 |
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Net defined benefit liabilities (assets) (after intercompany offsets) |
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(140,685 |
) |
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94,533 |
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(*) |
The amount before intercompany offsets within the consolidated entity. |
(2) |
Changes in the carrying value of defined benefit obligation are as follows (Unit: Korean Won in millions): |
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For the years ended December 31 |
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Beginning balance |
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1,377,545 |
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1,574,087 |
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1,751,605 |
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Current service cost |
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132,302 |
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143,051 |
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161,468 |
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— |
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— |
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28,060 |
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Interest cost |
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72,683 |
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70,959 |
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76,312 |
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Remeasurements |
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Financial assumption |
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70,284 |
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88,078 |
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(36,629 |
) |
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Demographic
assumptions |
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— |
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(264 |
) |
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2,767 |
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Experience adjustments |
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13,926 |
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(18,547 |
) |
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37,161 |
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Retirement benefit paid |
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(92,146 |
) |
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(101,008 |
) |
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(136,267 |
) |
Foreign currencies translation adjustments |
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80 |
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|
401 |
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|
779 |
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Changes due to business combinations |
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— |
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— |
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101,464 |
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Others |
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(587 |
) |
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(5,152 |
) |
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(4,194 |
) |
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Ending balance |
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1,574,087 |
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1,751,605 |
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1,982,526 |
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(*) |
This was caused by changes in the criteria for assessing ordinary wages during the year ended December 31, 2025. |
(3) |
Changes in the plan assets are as follows (Unit: Korean Won in millions): |
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For the years ended December 31 |
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Beginning balance |
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1,661,623 |
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1,807,408 |
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1,892,290 |
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Interest income |
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91,550 |
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84,981 |
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78,326 |
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Remeasurements |
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(23,752 |
) |
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(15,323 |
) |
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(12,240 |
) |
Employer’s contributions |
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175,220 |
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115,159 |
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261,143 |
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Retirement benefit paid |
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(94,607 |
) |
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(94,940 |
) |
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(138,874 |
) |
Changes due to business combinations |
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— |
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— |
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80,980 |
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Others |
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(2,626 |
) |
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(4,995 |
) |
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(4,462 |
) |
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Ending balance |
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1,807,408 |
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1,892,290 |
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2,157,163 |
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| (4) |
The fair value of the plan assets by composition as of December 31, 2024 and 2025 are as follows (Unit: Korean Won in millions): |
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Cash and due from banks and others |
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1,892,290 |
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2,157,163 |
| Meanwhile, among plan assets, realized returns on plan assets amount to 69,658 million Won and million Won for the years ended December 31, 2024 and 2025, respectively. The contribution expected to be paid in the next accounting year amounts to
(5) |
Amounts related to the defined benefit plan that are recognized in the consolidated statements of comprehensive income are as follows (Unit: Korean Won in millions): |
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For the years ended December 31 |
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Current service cost |
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132,302 |
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|
143,051 |
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|
161,468 |
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— |
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— |
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28,060 |
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Net interest income (expense) |
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(18,867 |
) |
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(14,022 |
) |
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(2,014 |
) |
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Cost recognized in net income |
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113,435 |
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129,029 |
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187,514 |
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107,962 |
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84,590 |
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15,539 |
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Cost recognized in total comprehensive income |
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221,397 |
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213,619 |
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203,053 |
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(*1) |
This was caused by changes in the criteria for assessing ordinary wages during the year ended December 31, 2025. |
Retirement benefits related to defined contribution plans recognized as expenses are 6,217 million Won, 5,470 million Won and million Won for the years ended December 31, 2023, 2024 and 2025, respectively.
(6) |
Key actuarial assumptions used in net defined benefit liability(asset) measurement are as follows: |
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| Discount rate |
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4.25% ~ 5.15% |
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3.68% ~ 4.62% |
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3.6% ~ 5.48% |
Future wage growth rate |
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2.24% ~ 5.79% |
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2.40% ~ 6.01% |
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2.40% ~ 6.39% |
| Mortality rate |
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Issued by Korea
Insurance Development
Institute |
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Issued by Korea
Insurance Development
Institute |
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Issued by Korea
Insurance Development
Institute |
| Retirement rate |
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Experience rate for each
employment
classification |
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Experience rate for each
employment
classification |
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Experience rate for each
employment
classification | The weighted average maturity of defined benefit liability is a minimum of 4.67 to a maximum 10.64 years.
| (7) |
The sensitivity to actuarial assumptions used in the assessment of defined benefit obligation is as follows (Unit: Korean Won in millions): |
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Discount rate |
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Increase by 1% point |
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(182,522 |
) |
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(166,963 |
) |
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Decrease by 1% point |
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213,568 |
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192,449 |
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Future wage growth rate |
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Increase by 1% point |
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214,942 |
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193,539 |
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Decrease by 1% point |
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(185,974 |
) |
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(170,732 |
) |
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