Exhibit 99.1(H)

KB Capital Co., Ltd.

Financial Statements

December 31, 2016 and 2015

KB Capital Co., Ltd.

Index

December 31, 2016 and 2015

Independent Auditor’s Report

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and Board of Directors of

KB Capital Co., Ltd.

We have audited the accompanying financial statements of KB Capital Co., Ltd. (the Company), which comprise the statement of financial position as of December 31, 2016, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

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

Auditor’s responsibility

Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with the Korean Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2016, and its financial performance and its cash flows for the year then ended in accordance with the Korean IFRS.

Other Matters

The financial statements of the Company for the year ended December 31, 2015, were audited by another auditor who expressed an unqualified opinion on those statements on February 29, 2016.

Auditing standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries.

/s/ Samil PricewaterhouseCoopers

Seoul, Korea

March 8, 2017

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KB Capital Co., Ltd.

Statements of Financial Position

December 31, 2016 and 2015

The accompanying notes are an integral part of these financial statements.

3

KB Capital Co., Ltd.

Statements of Comprehensive Income

Years Ended December 31, 2016 and 2015

The accompanying notes are an integral part of these financial statements.

4

KB Capital Co., Ltd.

Statements of Changes in Equity

Years Ended December 31, 2016 and 2015

The accompanying notes are an integral part of these financial statements.

5

KB Capital Co., Ltd.

Statements of Cash Flows

Years Ended December 31, 2016 and 2015

The accompanying notes are an integral part of these financial statements.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

1. The Company

KB Capital Co., Ltd. (the ‘Company’) was established in September 1989 and is engaged in the facilities’ lease, installment financing, factoring and new technology financing.

Upon incorporation, the Company’s stock amounted to 10 billion Korean won. As a result of several capital increases by issuing new stocks and reduction of capital since incorporation, as of December 31, 2016, the Company’s stock amounted to 107.5 billion Korean won. On November 19, 1996, the Company listed its common shares on the Korea Exchange.

On March 20, 2014, KB Financial Group Inc. purchased 11,180,630 common shares from Woori Finance Holdings Co., Ltd. and became the Company’s largest shareholder.

As of December 31, 2016, the Company’s shareholders and their respective percentage of ownership are as follows:

2. Significant Accounting Policies

The significant accounting policies applied in the preparation of the financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated.

2.1 Basis of Preparation

The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (“Hangeul”) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”). The accompanying financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Company’s financial position, financial performance or cash flows, is not presented in the accompanying financial statements.

The financial statements of the Company have been prepared in accordance with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (“IASB”) that have been adopted by the Republic of Korea.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

The preparation of financial statements requires the use of certain critical accounting estimates. Management also needs to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

2.2 Accounting Policies

(1) New and amended standards adopted by the Company

The Company newly applied the following amended and enacted standards and interpretation for the annual period beginning on January 1, 2016, and this application does not have a material impact on the financial statements.

- Amendments to Korean IFRS 1001 Presentation of Financial Statements

Korean IFRS 1001 Presentation of Financial Statements clarifies that materiality applies to the exclusion or inclusion or aggregation of the disclosures in the notes. And also, clarifies that the share of OCI arising from equity-accounted should be presented in total for items which will and will not be reclassified to profit or loss. Additional amendments are made in relation to a particular order of the notes and other.

- Amendments to Korean IFRS 1016 Property, Plant and Equipment, and Korean IFRS 1038 Intangible assets

Amendments to Korean IFRS 1016 Property, Plant and Equipment clarify that a revenue-based method should not be used to calculate the depreciation of items of property, plant and equipment. Korean IFRS 1038 Intangible assets now includes a rebuttable presumption that the amortization of intangible assets based on revenue is inappropriate. This presumption can be overcome if either; the intangible asset is expressed as a measure of revenue, or it can be shown that revenue and the consumption of economic benefits generated by the asset are highly correlated.

- Amendments to Korean IFRS 1110, Consolidated Financial Statements

Amendments made to Korean IFRS 1110 Consolidated Financial Statements clarify that the exception from preparing consolidated financial statement is also available to intermediate parent entities which are subsidiaries of investment entities. If an investment entity has a subsidiary that is an investment entity and whose activities are providing services that related to the investment entity’s investment activities, the investment entity measures the subsidiary at fair value through profit or loss.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

- Amendments to Korean IFRS 1028, Investments in Associates and Joint Ventures

Amendments made to Korean IFRS 1028 Investments in Associates and Joint Ventures clarify that entities which are not investment entities but have an interest in an associate which is an investment entity have a policy choice when applying the equity method of accounting.

- Amendments made to Korean IFRS 1112 Disclosures of Interests in Other Entities

Amendments made to Korean IFRS 1112 Disclosures of Interests in Other Entities clarify that an investment entity which does not prepare consolidated financial statements should present disclosures relating to investment entities required by Korean IFRS 1112.

- Amendment to Korean IFRS 1111, Joint Arrangements

Korean IFRS 1111, Joint Arrangements, clarifies that an acquirer of an interest in a joint operation where the activities of the operation constitute a business is required to apply all of the principles of accounting for business combination.

- Annual Improvements to Korean IFRS 2012-2014 Cycle

Korean IFRS 1105 Non-current Assets Held for Sale and Discontinued Operation – clarifies when an asset (or disposal group) is reclassified from ‘held for sale’ to ‘held for distribution’ or vice versa, this does not have to be accounted for as such.

Korean IFRS 1107 Financial Instruments: Disclosures – clarifies the specific guidance for transferred financial assets to help management determine whether the terms of a servicing arrangement constitute ‘continuing involvement’, and also clarifies that the additional disclosures relating to the amendments in 2012 ‘Offsetting of Financial Assets and Financial Liabilities’ only need to be included in interim reports if required by Korean IFRS 1034 Interim Financial Reporting.

Korean IFRS 1019 Employee Benefits clarifies that when determining the discount rate for post-employment benefit obligations, it is the currency in which the liabilities are denominated that is important, and not the country where they arise.

Korean IFRS 1034 Interim Financial Reporting clarifies what is meant by the reference in the standard to ‘information disclosed elsewhere in the interim financial report’; and also amended requirements for a cross-reference from the interim financial statements to the location of that information.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

(2) New standards and interpretations not yet adopted by the Company

New standards and interpretations issued, but not effective for the financial period beginning January 1, 2016, and not early adopted are as follows.

- Amendments to Korean IFRS 1007 Statement of Cash Flows

Amendments to Korean IFRS 1007 Statement of Cash flows requires to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash flows. This amendment will be effective for annual periods beginning on or after January 1, 2017 with early adoption permitted. The Company does not expect the amendments to have a significant impact on the financial statements.

- Amendments to Korean IFRS 1012 Income Tax

Amendments to Korean IFRS 1012 clarify how to account for deferred tax assets related to debt instruments measured at fair value. Korean IFRS 1012 provides requirements on the recognition and measurement of current or deferred tax liabilities or assets. The amendments issued clarify the requirements on recognition of deferred tax assets for unrealized losses, to address diversity in practice. This amendment will be effective for annual periods beginning on or after January 1, 2017 with early adoption permitted. The Company does not expect the amendments to have a significant impact on the financial statements.

- Amendments to Korean IFRS 1102 Share-based Payment

Amendments to Korean IFRS 1102 clarifies accounting for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. And also, clarifies that the measurement approach should treat the terms and conditions of a cash-settled award in the same way as for an equity-settled award. This amendment will be effective for annual periods beginning on or after January 1, 2018 with early adoption permitted. The Company does not expect the amendments to have a significant impact on the financial statements.

- Korean IFRS 1109 Financial Instruments

The new standard for financial instruments issued on September 25, 2015 are effective for annual periods beginning on or after January 1, 2018 with early application permitted. This standard will replace Korean IFRS 1039 Financial Instruments: Recognition and Measurement. The Company will apply the standards for annual periods beginning on or after January 1, 2018.

The standard requires retrospective application with some exceptions. For example, an entity is not required to restate prior period in relation to classification and measurement (including impairment) of financial instruments. The standard requires prospective application of its hedge accounting requirements for all hedging relationships except the accounting for time value of options and other exceptions.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

Korean IFRS 1109 Financial Instruments requires all financial assets to be classified and measured on the basis of the entity’s business model for managing financial assets and the contractual cash flow characteristics of the financial assets. A new impairment model, an expected credit loss model, is introduced and any subsequent changes in expected credit losses will be recognized in profit or loss. Also, hedge accounting rules amended to extend the hedging relationship, which consists only of eligible hedging instruments and hedged items, qualifies for hedge accounting.

An effective implementation of Korean IFRS 1109 requires preparation processes including financial impact assessment, accounting policy establishment, accounting system development and the system stabilization. The impact on the Company’s financial statements due to the application of the standard is dependent on judgements made in applying the standard, financial instruments held by the Company and macroeconomic variables.

Within the Company, Korean IFRS 1109 Task Force Team (‘TFT’) has been set up to prepare for implementation of Korean IFRS 1109. There are three stages for implementation of Korean IFRS, such as analysis, design and implementation, and preparation for application. The Company is analyzing financial impacts of Korean IFRS 1109 on its financial statements.

Meanwhile, the following areas are likely to be affected in general.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

(a) Classification and Measurement of Financial Assets

When implementing Korean IFRS 1109, the classification of financial assets will be driven by the Company’s business model for managing the financial assets and contractual terms of cash flow. The following table shows the classification of financial assets measured subsequently at amortized cost, at fair value through other comprehensive income and at fair value through profit or loss. If a hybrid contract contains a host that is a financial asset, the classification of the hybrid contract shall be determined for the entire contract without separating the embedded derivative.

(b) Classification and Measurement of Financial Liabilities

Korean IFRS 1109 requires the amount of the change in the liability’s fair value attributable to changes in the credit risk to be recognized in other comprehensive income, unless this treatment of the credit risk component creates or enlarges a measurement mismatch. Amounts presented in other comprehensive income are not subsequently transferred to profit or loss.

(c) Impairment: Financial Assets and Contract Assets

Korean IFRS 1109 sets out a new forward looking ‘expected credit loss impairment model’ which replaces the incurred loss model under Korean IFRS 1039 that impaired assets if there is an objective evidence and applies to:

Under Korean IFRS 1109, a credit event (or impairment ‘trigger’) no longer has to occur before credit losses are recognized. The Company will always recognize (at a minimum) 12-month expected credit losses in profit or loss. Lifetime expected losses will be recognized on assets for which there is a significant increase in credit risk after initial recognition.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

Under Korean IFRS 1109, the asset that is credit-impaired at initial recognition would recognize all changes in lifetime expected credit losses since the initial recognition as a loss allowance with any changes recognized in profit or loss.

- Korean IFRS 1115 Revenue from Contracts with Customers

Korean IFRS 1115 Revenue from Contracts with Customers issued on November 6, 2015 for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. This standard replaces Korean IFRS 1018 Revenue, Korean IFRS 1011 Construction Contracts, Interpretation 2031 Revenue-Barter Transactions Involving Advertising Services, Interpretation 2113 Customer Loyalty Programs, Interpretation 2115 Agreements for the Construction of Real Estate and Interpretation 2118 Transfers of assets from customers.

The Company will apply Korean IFRS 1115 for annual reporting periods beginning on or after January 1, 2018, and will apply the standard retrospectively to prior reporting period presented in accordance with Korean IFRS 1008 Accounting Policies, Changes in Accounting Estimates and Errors and apply simplified transition method with no restatement for completed contracts and other as of January 1, 2017.

The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer so the notion of control replaces the existing notion of risks and rewards. A new five-step process must be applied before revenue from contract with customer can be recognized:

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

The Company is in the process of analyzing the financial impact of adopting Korean IFRS 1115 on its financial statements.

(3) Property, plant and equipment

Property, plant and equipment are stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

The cost of an item of property, plant and equipment is directly attributable to its purchase or construction, which includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. It also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Subsequent costs are recognized in carrying amount of an asset or as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Company and the cost of an asset can be measured reliably.

The carrying amount of the replaced part is eliminated from the books. Routine maintenance and repairs are expensed as incurred.

The Company does not depreciate land. Depreciation expense is computed using the straight-line method based on the estimated useful lives of the assets as follows:

The Company reviews the depreciation method, the estimated useful lives and residual values of property, plant and equipment at the end of each annual reporting period. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognized.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

(4) Goodwill

Goodwill resulting from an acquisition of a business is carried at cost as established at the date of acquisition of the business, less accumulated impairment losses, if any.

For the purpose of impairment testing, goodwill is allocated to each of the Company’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently, when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

(5) Intangible assets

1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost, less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost, less accumulated impairment losses.

(2) Internally generated intangible assets - research and development expenditure

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

Expenditure arising from development (or from the development phase of an internal project) is recognized as an intangible asset if, and only if, the development project is designed to produce new or substantially improved products, and the Company can demonstrate the technical and economic feasibility and measure reliably the resources attributable to the intangible asset during its development.

The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria. Where no internally generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

3) Intangible assets acquired in a business combination

Intangible assets that are acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

4) Derecognition of intangible assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from its use. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.

(6) Impairment of property, plant and equipment and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise, they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or the cash-generating unit) is reduced to its recoverable amount and the reduced amount is recognized in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or the cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

(7) Investment property

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are reported at cost less accumulated depreciation and accumulated impairment losses.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

Subsequent costs are recognized in carrying amount of an asset or as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Company and the cost of an asset can be measured reliably. Routine maintenance and repairs are expensed as incurred.

While land is not depreciated, all other investment properties are depreciated based on the respective assets’ estimated useful lives range using the straight-line method.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognized.

(8) Financial assets and financial liabilities

1) Classification of financial assets

Financial assets are classified into the following specified categories: ‘financial assets at fair value through profit or loss (“FVTPL”),’ ‘held-to-maturity (“HTM”) investments,’ ‘available-for-sale (“AFS”) financial assets’ and ‘loans and receivables.’ The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

a) Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is either held for trading or designated as at FVTPL. A financial asset is classified as held for trading if it has been acquired principally to be sold in the near future.

b) Loans and receivables

Non-derivative financial assets that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables.’

c) AFS financial assets

Non-derivative financial assets that are either designated as AFS or not classified as ‘financial assets at FVTPL,’ ‘HTM investments’ or ‘loans and receivables’ are classified as AFS.

d) HTM investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity are classified as HTM financial assets.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

2) Classification of financial liabilities

Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities measured at amortized cost.

a) Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when they are either held for trading or designated as at FVTPL. A financial liability is classified as held for trading if it has been acquired principally to be repurchased in the near future.

b) Financial liabilities measured at amortized costs

Financial liabilities that are not classified as at FVTPL are measured at amortized costs. Deposits and debt securities that are not designated as at FVTPL are classified as financial liabilities measured at amortized costs.

3) Recognition and Measurement

Ragular way purchase and sales of a financial asset is recognized at the date of transaction when the Company becomes a party to the contractual provisions of the asset. All types of financial instruments, except financial assets/liabilities at FVTPL, are measured at fair value at initial recognition plus transaction costs that are directly attributable to the acquisition. Financial assets/liabilities at FVTPL are initially recognized at fair value, and transaction costs directly attributable to the acquisition are recognized in the statement of comprehensive income.

Financial assets/liabilities at FVTPL and AFS financial assets are subsequently measured at fair value. HTM financial assets, loans and receivables and other financial liabilities are measured at amortized costs using the effective interest rate method.

Interest income and expense in accordance with financial assets and liabilities are recognized in net income on an accrual basis using the effective interest rate method.

Gains or losses arising from changes in the fair value of the financial assets/liabilities at FVTPL are presented in the statement of comprehensive income during the period in which they arise. Changes in the fair value of AFS financial assets presented in foreign currencies consist of difference of foreign currencies and changes in other carrying amount. Difference of foreign currencies of monetary AFS financial assets is recognized in profit or loss for the period, while difference of foreign currencies of non-monetary assets is recognized in other comprehensive income (“OCI”).

Dividends income of financial assets at FVTPL and AFS financial assets is recognized in net income loss when the Company’s right to receive the dividend is established.

AFS financial assets recognize cumulative fair value adjustment, which is previously recognized in the equity, in net income when disposing of assets or recognizing impairment loss.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

4) Derecognition of financial assets and liabilities

The Company derecognizes a financial asset when the contractual right to the cash flows from the asset is expired, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another company. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, canceled or expired.

(9) Offsetting financial instruments

Financial assets and liabilities are presented net in the statement of financial position when the Company has an enforceable legal right to set off and an intention to settle on a net basis or to realize an asset and settle the liability.

(10) Impairment of financial assets

1) Assets carried at amortized costs

The Company assesses at the end of each reporting period whether there is any objective evidence that a financial asset (or a group of financial assets) is impaired. A financial asset (or a group of financial assets) is regarded as impaired when there is an objective evidence of impairment loss as a result of one or more events (the “loss event”) that occurred after the initial recognition and the loss event has an impact on the estimated future cash flows of the financial asset.

For all other financial assets, objective evidence of impairment include:

For individually significant financial assets, the Company assesses whether objective evidence of impairment exists individually, and it assesses for impairment of financial assets that are not significant on an individual or collective basis.

If there is no objective evidence of impairment exists for financial assets individually assessed, the Company includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets for which the Company recognizes impairment based on an individual assessment or impairment loss is continuously recognized are not subject to a collective impairment assessment.

The amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit loss that is not yet incurred), which is discounted at the financial asset’s original effective interest rate. The amount of loss is reduced directly from the asset’s carrying value or by using a provision account, and it is recognized in net income.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

For loans and receivables or HTM financial assets with the variable interest rate, the current effective interest rate, which is determined under the contract, is used to measure impairment loss.

Whether collateral inflow is probable or not, the present value of the estimated future cash flows of collateralized financial asset is calculated as the cash flows, which may arise from collateral inflow, less costs of acquiring and selling collateral.

For a collective assessment on impairment, financial assets are classified based on similar credit risk characteristics (i.e., based on the assessment of credit risk or grading process, considering asset type, industry, geographical location, collateral type, past-due status, and other relevant elements) indicating the debtor’s ability to pay all amounts of debt under the contractual terms. These characteristics are relevant to the estimation of future cash flows for groups of such assets as being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated.

Future cash flows for a group of financial assets that are collectively assessed for impairment are estimated based on the historical loss experience of assets having credit risk characteristics, similar to those in the Company of financial assets. If the historical loss experience is not enough or did not exist, similar corporation’s comparable historical loss experience of a group of financial assets is used. The effects of current conditions that do not have an impact in the historical loss experience period are reflected, and the historical loss experience is adjusted based on the current observable data in order to remove the effects of conditions that currently do not exist but existed in the historical loss experience period.

When the amount of impairment loss decreases subsequently and the decrease is related to an event occurred after the impairment is recognized (i.e., an improvement in the debtor’s credit rating), the previously recognized impairment loss is reversed directly from or by adjusting the provision account. The reversed amount is recognized in net income for the current period.

2) AFS financial assets

The Company assesses at the end of each reporting period whether there is objective evidence that the Company’s financial asset (or a group of financial assets) is impaired.

For equity investments classified as AFS financial assets, a significant or prolonged decline in the fair value below the cost is considered as an objective evidence of impairment. When the fair value of an AFS financial asset is decreased below its acquisition cost, which is considered as an objective evidence of impairment, the cumulative loss, amounting to the difference between the acquisition cost and the current fair value, is removed from OCI and recognized in net income as an impairment loss.

For AFS equity instruments, impairment losses recognized in net income on equity instruments are not reversed in net income. Meanwhile, when the fair value of AFS debt instrument increases in a subsequent period and the evidence is objectively related to an event occurred after recognizing the impairment loss, the impairment loss is reversed and recognized in net income.

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KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

(11) Lease

1) Classification

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

j The lease transfers ownership of the asset to the lessee by the end of the lease term;

k The lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised;

l The lease term is for the major part of the economic life of the asset even if the title is not transferred;

m At the inception of the lease, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset; or

n The leased assets are of such a specialized nature that only the lessee can use them without major modifications.

The lease that is not classified as a finance lease is classified as operating leases.

2) Operating leases

The property on operating leases is stated at acquisition cost, net of accumulated depreciation. Expenditures that are incurred for the lease contract made but not executed at the date of the statement of financial position are accounted for as prepaid leased assets and are reclassified as operating lease assets at the inception of the lease term. Rentals from operating lease other than any guaranteed residual value are reported as revenues on a straight-line basis over the lease term. Initial direct costs incurred during the period of preparing the lease contract are recognized as operating lease assets and are amortized over the lease term in proportion to the recognition of income on leased assets. If a lease agreement is canceled in the middle of lease term, the balance of operating leased assets is substituted for canceled lease assets. The canceled lease assets are depreciated over their residual useful life, but are mostly disposed of in the month of cancellation.

3) Finance leases

Finance lease assets are recognized in the Company’s statement of financial position at amounts equal to the net investment, and interest income is recognized by applying effective interest rate to uncollected net investment of finance lease. Minimum lease payments are the payment over the lease term that the lessee is required to pay to the lessor and include the following:

The minimum rental payments called for by the lease over the lease term

j Any payment that the lessee must make, provided that the lessor is supposed to transfer the ownership of the lease property to lessee at the expiration of the lease

k Any guarantee of the residual value at the expiration of the lease term by a third party unrelated to either the lessee or the lessor, provided the third party is financially capable of discharging the obligations that may arise from the guarantee

l The amount of bargain purchase option if the lease contains a bargain purchase option

21

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

4) Initial direct costs

For operating lease, the initial direct costs, including fees that arise directly or additionally relating to the lease during the negotiating or contracting phase, and legal expenses are recognized as separate asset by the title of initial direct costs and recorded as expenses during the lease term in response to the profit of lease payment.

For finance lease, the initial direct costs are included in the initial recognition amount of finance lease receivables and recorded by the method to depreciate them according to effective interest method during the lease term and then deducted from the profit of finance lease.

5) Adjusted lease payment

The lease payment whose amount is not fixed but decided on the basis of the future amount from the elements (e.g., the fixed ratio of sales, use amount, price index and market interest rate) out of lapse or the period is recognized as the profit and loss during the term of lease payment accrued.

6) Prepaid lease assets

The expenditure accrued relating to the finance lease agreement that was concluded but not carried out as of the end of the term is recorded as prepaid lease assets.

7) Canceled lease

In case of canceled operating lease agreement, the amount recoverable from the lease user or lease surety relating to the lease agreement is recorded as the profit and loss for the financial year of the cancellation date.

(12) Derivative financial instruments

Derivatives are initially recognized at fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument. In such case the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.

1) Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in the line of the statement of comprehensive income relating to the hedged item.

22

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

Hedge accounting is discontinued when the Company revokes the hedging relationship, when the hedging instrument expires or is sold, terminated or exercised, or when it no longer qualifies for hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortized to profit or loss from that date.

2) Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in OCI. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.

Amounts previously recognized in OCI and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognized in profit or loss, in the same line of the statement of comprehensive income as the recognized hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.

Hedge accounting is discontinued when the Company revokes the hedging relationship, when the hedging instrument expires or is sold, terminated or exercised, or it no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

(13) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of income and comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

23

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset if, and only if, the Company has a legally enforceable right to set off current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities that intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

For the purpose of measuring deferred tax liabilities and deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale.

3) Current and deferred tax for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in OCI or directly in equity, in which case, the current and deferred taxes are also recognized in OCI or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

(14) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

24

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material). The discount rate used is a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage is recognized in profit or loss as a borrowing cost.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

At the end of each reporting period, the remaining provision balance is reviewed and assessed to determine if the current best estimate is being recognized. If the existence of an obligation to transfer economic benefit is no longer probable, the related provision is reversed during the period.

(15) Financial guarantee contracts

A financial guarantee contract refers to the contract that requires the issuer to pay the specified amounts to reimburse the holder for a loss because the specified debtor fails to make payment when due under original or revised contractual terms of debt instruments.

Financial guarantee contract liabilities are initially measured at their fair values and are subsequently measured at the higher of:

(16) Employee Benefits

1) Retirement benefit costs

The Company operates defined contribution plans and defined benefit retirement benefit plans. For defined contribution plan, the Company pays contribution to privately administered pension insurance plans on mandatory basis. The contributions are recognized as employee benefit expense when they are due.

For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognized in OCI in the period in which they occur. Remeasurement recognized in OCI is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are composed of service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements), net interest expense (income), and remeasurement.

25

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

The Company presents the service cost and net interest expense (income) components in profit or loss, and the remeasurement component in OCI. Curtailment gains and losses are accounted for as past service costs.

The retirement benefit obligation recognized in the statements of financial position represents the actual deficit or surplus in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.

2) Short-term employee benefits

Short-term employee benefits that are due to be settled within 12 months after the end of the fiscal period in which the employees render the related service, are recognized as profits or loss when an employee has provided service for the amount expected to be paid in exchange for service. Short-term employee benefits are measured on an undiscounted basis.

The expected cost of profit-sharing and bonus payments are recognized as liabilities when the Company has legal or constructive obligation for payment as a result of past service render by employees and a reliable estimate of the obligation can be made.

3) Share-based payment

The Company measures equity-settled share-based payment at fair value on grant date. Until the liability is settled, the Company remeasures the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss for the year.

4) Termination benefits

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits at the earlier of the following dates: (a) when the Company can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that is within the scope of IAS 37 and involves the payment of terminations benefits.

(17) Interest income and expense recognition

The Company recognizes interest income and expenses from HTM financial assets measured at amortized cost, loans and receivables and other financial liabilities on an accrual basis using the effective interest rate method.

Effective interest rate method is the method of calculating the amortized cost of financial assets or liabilities and allocating the interest income or expense over the relevant period. The effective interest rate reconciles the expected future cash in and out through the expected life of financial instruments or shorter period, if appropriate, and net carrying value of financial assets or liabilities.

26

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

When calculating the effective interest rate, the Company estimates future cash flows considering all contractual terms of the financial instruments, such as prepayment option, except the loss on future credit risk. Also, the effective interest rate calculation reflects commission, points (only responsible for the effective interest rate) that are paid or earned between contracting parties, transaction costs, and other premiums and discounts.

(18) Fee income

The Company recognizes financial service fees in accordance with the accounting standard of the financial instrument related to the fees earned.

(a) Fees that are an integral part of the effective interest of a financial instrument

Such fees are generally treated as adjustments of effective interest. However, fees relating to the creation or acquisition of a financial instrument at fair value through profit or loss are recognized as revenue immediately.

(b) Fees earned as services are provided

Such fees are recognized as revenue as the services are provided.

(c) Fees that are earned on the execution of a significant act

Such fees are recognized as revenue when the significant act has been completed.

(19) Dividend Income

Dividend income is recognized when the right to receive payment is established. It is presented in the statement of comprehensive income through related profit and loss account in accordance with the classification of equity securities. Dividend income from available-for-sale financial assets is recorded as other operating income in the statement of comprehensive income.

(20) Income and expenses incidental to loan origination

The company defers income and expense incurred incidental to loan originations as adjustments to loan balance when future economic benefits can be identified and matched to corresponding loans and amortize during the duration of loans and adjust the interest income.

(21) Purchases and disposals of loans

When the Company purchases loans, the difference between the contractual interest rates under loan purchase agreements and original contractual interest rates with borrowers as discounts or accretions and amortize them using effective interest rate method and adjust to interest income during the duration of loans. Deferred income and expense incidental to loan origination are also amortized using effective interest method and adjust to interest income.

When the Company disposes of loans, the difference between the book value and the selling price is recognized as gains and losses on disposal.

27

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

(22) Fair value

Fair value is the price 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of K-IFRS 1102 Share-based payment, leasing transactions that are within the scope of K-IFRS 1017 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in K-IFRS 1002 Inventories or value in use in K-IFRS 1036 Impairment of Assets.

In addition, for financial reporting purposes, fair value measurements are categorized into Levels 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

(23) Investments in associates

In application of equity method accounting policies under K-IFRS 1028 Investments in associates, the Company assesses at the end of each reporting period whether there is any objective evidence that investments in associates is impaired. If there is any objective evidence existed, impairment losses are recognized as ‘other operating income’ in the statement of comprehensive income if the recoverable amount is less than its carrying amount.

3. Significant Estimates and Assumptions

In application of accounting policies described in Note 2, the Company assumes and estimates about its future events. Assumptions and estimates are assessed regularly given the future events reasonably foreseen by past experience and current situation. The estimates may be different from actual results.

28

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

The following are the accounting estimates and assumptions that have a significant risk of causing changes to the carrying amounts of assets and liabilities within the next accounting period:

(1) Impairment loss of goodwill

In order to determine whether or not goodwill is impaired, it is necessary to estimate value in use of cash-generating unit that is allocating goodwill. To calculate value in use, reasonable discount rate should be determined to compute estimation of future cash flows and present value.

(2) Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses its judgment to select a variety of valuation techniques and make assumptions based on market conditions existing at the end of each reporting period.

(3) Impairment loss on financial assets

The Company individually recognizes an impairment loss on financial assets by assessing the occurrence of loss events or assesses impairment for a group of financial assets with similar credit risk characteristics. Impairment loss on financial assets is the difference between such assets’ carrying value and the present value of estimated recoverable cash flows. The future cash flows are computed in the basis of accounting estimate.

(4) Defined benefit plan

The Company operates defined benefit retirement pension plans. Defined benefit obligation is measured through actuarial valuation method every end of reporting period. In order to apply such actuarial valuation method, it is necessary to estimate discount rate, future wage growth rate and mortality ratio. Retirement pension plans contain significant uncertainty in these estimates due to its long-term characteristic.

4. Financial Risk Management

The Company’s operating activity is exposed to various financial risks; hence, the Company is required to analyze and assess the level of complex risks, determine the level of risks to be accepted or manage the risks.

The Company’s risk management procedure is set for improvement in the quality of assets held and investments by making a decision about how to avoid or mitigate risks through the identification of the cause of the potential risk and its scope.

The Company takes an approach to minimize the risk and maximize the profit by managing the risks acceptable to the Company and by eliminating the excessive risks of financial instruments. For this, the following procedures are performed: risk recognition, measurement and assessment, control and monitoring and reporting.

The risk is managed by the risk management department according to the Company’s policy. The Risk Management Committee of the Company makes the decision on the risk strategy, such as allocation of risk assets and limit settlement.

29

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

(1) Credit risk

Credit risk represents the possibility of financial losses incurred when the counterparty fails to fulfill its contractual obligations. The objective of credit risk management is to maintain the credit risk exposure to a permissible degree and to optimize the rate of return considering such credit risk.

1) Credit risk management

The Company considers the probability of failure in performing the obligation of its counterparties, credit exposure to the counterparty and the related default risk and the rate of default loss.

2) Credit line management

In order to manage credit risk limit, the Company establishes the appropriate credit line per obligor, company or industry and monitors obligors’ credit line, total exposures and loan portfolios when approving the loan.

3) Maximum exposure to credit risk

The Company’s maximum exposure to credit risk refers to net book value of financial assets, net of allowances, which shows the uncertainties of maximum changes in net value of financial assets attributable to a particular risk without considering collateral and other credit enhancements obtained. The maximum exposed amount to credit risk of the finance guarantee is the maximum amount to be paid by the principal debtor’s claim.

The maximum exposures of financial instruments, excluding equity securities, to credit risk are as follows (Unit: thousands of Korean won):

30

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

4) Credit risk of loans

The credit risk of loans and receivables by loan conditions is as follows (Unit: thousands of Korean won):

a) Loans neither overdue nor impaired

Carrying amount of loans that are neither overdue nor impaired by credit rating as of December 31, 2016 and 2015, is as follows (Unit: thousands of Korean won):

31

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

b) Loans overdue but not impaired

Carrying amount of loans that is overdue but not impaired by age as of December 31, 2016 and 2015, is as follows (Unit: thousands of Korean won):

c) Impaired loans

Carrying amount of impaired loans as of December 31, 2016 and 2015, is as follows (Unit: thousands of Korean won):

32

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

5) Reduced effect of credit risk owing to collateral

Details of quantitative effect of credit risk mitigated due to collateral retained and other credit enhancement as of December 31, 2016 and 2015, are as follows (Unit: thousands of Korean won):

6) Concentration analysis of credit risk

Details of the Company’s corporate loans by industry are as follows (Unit: thousands of Korean won):

33

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

The details of the Company’s consumer loans are classified as follows (Unit: thousands of Korean won):

(2) Market risk

Market risk is the possible risk of loss arising from trading activities in the volatility of market factors, such as interest rates, stock prices and foreign exchange rates. Market risk occurs as a result of changes in the interest rates and foreign exchange rates for financial instruments that are not yet settled, and all contracts are exposed to a certain level of volatility according to the interest rates, credit spreads, foreign exchange rates and the price of equity securities.

1) Market risk management

For trading activities, the Company avoids, takes or mitigates risks by identifying the underlying source of risks, measuring parameters and evaluating their reasonableness.

2) Market risk measurement

The Risk Management Committee allocates owned capital to market risk. The Risk Management department measures the Value at Risk (“VaR,” maximum losses) limit by department and risk factor and loss limit on a daily basis and regularly reports to the Risk Management Committee.

3) Risk control

At the beginning of every year, the Risk Management Committee establishes the VaR limit, loss limit and risk capital limit for its management purposes. Risk limit by desk/dealer is independently managed to the extent of the limit given to each department and the investment limit is managed by risk management personnel within the department.

34

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

4) Exposure to market risk

a) Interest rate risk

Interest rate risk is that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. Details of financial assets and liabilities exposed to interest rate risk as of December 31, 2016 and 2015, are as follows (Unit: thousands of Korean won):

b) Stock price risk

Stock price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). The details of financial assets and liabilities exposed to stock price risk as of December 31, 2016 and 2015, are as follows (Unit: thousands of Korean won):

c) Currency risk

Currency risk is that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates as of December 31, 2016 and 2015. There are no financial assets and liabilities exposed to currency risk.

5) Sensitivity analysis of market risk

a) Interest rate risk

The Company measured risk using Earning at Risk(“EaR”) which is the maximum possible loss due to interest rate risk under a normal distribution at a 99.94% confidence level, and assuming the fluctuation in 2% interest rate, the analysis in detail of one-year EaR in the future for the financial assets exposed to the interest rate risk as of December 31, 2016 and 2015, is as follows (Unit: thousands of Korean won):

35

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015

However, the methodology has shortcomings, since it is based on the volatility of interest rates during the previous periods at specified confidence level.

b) Stock price risk

Financial assets exposed to stock price risk as of December 31, 2016 and 2015, are 2,611,106 thousand won and 39,252 thousand won, respectively. It is considered that the effect of the stock price risk is not significant.

(3) Liquidity risk

Liquidity risk refers to the Company’s risk of encountering difficulties in meeting obligations from its financial liabilities.

1) Liquidity risk management

Liquidity risk management is to prevent potential cash shortage as a result of mismatching the use of funds (assets) and sources of funds (liabilities) or unexpected cash outflows. The target for liquidity risk management includes entire assets and liabilities in the statement of financial position and derivatives that cash flows may be generating from marginal account.

Assets and liabilities are grouped by account under Asset Liability Management in accordance with the characteristics of the account. The Company manages liquidity risk by identifying maturity gap and such gap ratio through various cash flows analyses (i.e., based on remaining maturity and contract period), while maintaining the gap ratio at or below the target limit.

The following table analyzes the Company’s remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table below includes both interest and principal cash flows.

Financial liabilities are classified depending on the maturities. If there is no maturity or maturity allocation is needed, the Company allocates the financial liability’s maturity based on the nature of products.

In case of request of transaction counterparty for financial guarantee and loan commitment, the Company will allocate the earliest period either when the payment is able to be required or when the payment is allowed since it should carry out the payment immediately (Unit: thousands of Korean won):

36

KB Capital Co., Ltd.

Notes to Financial Statements

December 31, 2016 and 2015