.2

KB Financial Group Inc.

Separate Financial Statements

December 31, 2025 and 2024

(With Independent Auditor’s Report Thereon)

 

KB Financial Group Inc.

 

		Page(s)
Independent Auditor’s Report			1-3
Separate Financial Statements
Separate Statements of Financial Position			4
Separate Statements of Comprehensive Income			5
Separate Statements of Changes in Equity			6
Separate Statements of Cash Flows			7
Notes to the Separate Financial Statements			8
Independent Auditor’s Report on Internal Control over Financial Reporting			86-87
Operating Status Report of the Internal Control over Financial Reporting			88

 

Independent Auditor’s Report

(English Translation of a Report Originally Issued in Korean)

To Shareholders and the Board of Directors of

KB Financial Group Inc.

Opinion

We have audited the accompanying separate financial statements of KB Financial Group Inc. (the Company), which comprise the separate statements of financial position as at December 31, 2025 and 2024, and the separate statements of comprehensive income, separate statements of changes in equity and separate statements of cash flows for the years then ended, and notes to the separate financial statements, including material accounting policy information.

In our opinion, the accompanying separate financial statements present fairly, in all material respects, the separate financial position of the Company as at December 31, 2025 and 2024, and its separate financial performance and its separate cash flows for the years then ended in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS).

We also have audited, in accordance with Korean Standards on Auditing, the Company’s Internal Control over Financial Reporting as of December 31, 2025, based on Conceptual Framework for Designing and Operating Internal Control over Financial Reporting, and our report dated March 6, 2026 expressed an unqualified opinion.

Basis for Opinion

We conducted our audits in accordance with Korean Standards on Auditing. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements of the Republic of Korea that are relevant to our audit of the financial statements and we have fulfilled our other ethical responsibilities in accordance with the ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Key Audit Matters

There is no key audit matter identified to be described in this audit report.

Other Matter

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.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with 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.

 

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In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Korean Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Korean Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

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Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

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Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

 

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Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

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Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

 

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Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Hee-Won Seo, Certified Public Accountant.

/s/ Samil PricewaterhouseCoopers

Seoul, Korea

March 6, 2026

 

 

3

KB Financial Group Inc.

Separate Statements of Financial Position

December 31, 2025 and 2024

 

(In millions of Korean won)		Notes				December 31, 2025				December 31, 2024
Assets
Cash and due from financial institutions			4,5,6,29			W	974,585			W	398,391
Financial assets at fair value through profit or loss			4,5,7				1,251,607				1,243,471
Loans measured at amortized cost			4,5,8				349,112				359,054
Investments in subsidiaries			9				26,867,817				26,867,817
Property and equipment			10				2,896				2,800
Intangible assets			11				13,207				14,497
Net defined benefit assets			17				3,058				2,902
Deferred income tax assets			13				9,354				5,257
Other assets			4,5,14				1,381,504				912,634
Total assets						W	30,853,140			W	29,806,823
Liabilities
Borrowings			4,5,15				—				965,000
Debentures			4,5,16				4,520,297				2,962,032
Current income tax liabilities							544,056				502,705
Other liabilities			4,5,18				853,551				388,528
Total liabilities							5,917,904				4,818,265
Equity			19
Share capital							2,090,558				2,090,558
Hybrid securities							4,359,256				5,082,359
Capital surplus							14,751,591				14,754,475
Accumulated other comprehensive loss							(8,601	)			(8,316	)
Retained earnings							5,643,970				4,305,542
Treasury shares							(1,901,538	)			(1,236,060	)
Total equity							24,935,236				24,988,558
Total liabilities and equity						W	30,853,140			W	29,806,823

The above separate statements of financial position should be read in conjunction with the accompanying notes.

 

4

KB Financial Group Inc.

Separate Statements of Comprehensive Income

Years Ended December 31, 2025 and 2024

 

(In millions of Korean won, except per share amounts)		Notes				2025				2024
Interest income						W	31,879			W	38,702
Interest income from financial instruments at amortized cost							28,534				35,860
Interest income from financial instruments at fair value through profit or loss							3,345				2,842
Interest expense							(118,080	)			(101,073	)
Net interest expense			21				(86,201	)			(62,371	)
Fee and commission income							2,134				2,213
Fee and commission expense							(9,068	)			(9,460	)
Net fee and commission expense			22				(6,934	)			(7,247	)
Net gains (losses) on financial instruments at fair value through profit or loss			23				76,649				91,892
Net other operating income			24				3,778,449				2,243,253
General and administrative expenses			25				(102,905	)			(95,655	)
Operating income before provision for credit losses							3,659,058				2,169,872
Provision (reversal) for credit losses							56				773
Net operating income							3,659,114				2,170,645
Net non-operating income (expense)			26				(795	)			10
Profit before tax							3,658,319				2,170,655
Income tax benefit (expense)			27				(686	)			(58	)
Profit for the period							3,657,633				2,170,597
Items that will not be reclassified to profit or loss:
Remeasurements of net defined benefit liabilities							(285	)			(1,507	)
Other comprehensive income (loss) for the period, net of tax							(285	)			(1,507	)
Total comprehensive income for the period						W	3,657,348			W	2,169,090
Earnings per share			28
Basic earnings per share						W	9,456			W	5,203
Diluted earnings per share							9,364				5,142

The above separate statements of comprehensive income should be read in conjunction with the accompanying notes.

 

5

KB Financial Group Inc.

Separate Statements of Changes in Equity

Years Ended December 31, 2025 and 2024

 

(In millions of Korean won)		Share capital				Hybrid securities				Capital surplus				Accumulated other comprehensive income				Retained earnings				Treasury shares				Total equity
Balance as of January 1, 2024		W	2,090,558			W	5,032,518			W	14,754,747			W	(6,809	)		W	4,336,898			W	(1,165,837	)		W	25,042,075
Comprehensive income for the period
Profit for the period			—				—				—				—				2,170,597				—				2,170,597
Remeasurements of net defined benefit liabilities			—				—				—				(1,507	)			—				—				(1,507	)
Total comprehensive income for the period			—				—				—				(1,507	)			2,170,597				—				2,169,090
Transactions with shareholders
Annual dividends			—				—				—				—				(587,006	)			—				(587,006	)
Quarterly dividends			—				—				—				—				(899,972	)			—				(899,972	)
Acquisition of treasury shares			—				—				—				—				—				(820,000	)			(820,000	)
Disposal of treasury shares			—				—				3,975				—				—				234,600				238,575
Retirement of treasury shares			—				—				—				—				(515,177	)			515,177				—
Consideration for exchange right of exchangeable bonds			—				—				(11,933	)			—				—				—				(11,933	)
Issuance of hybrid securities			—				399,045				—				—				—				—				399,045
Redemption of hybrid securities			—				(349,204	)			—				—				—				—				(349,204	)
Dividends on hybrid securities			—				—				—				—				(199,798	)			—				(199,798	)
Others			—				—				7,686				—				—				—				7,686
Total transactions with shareholders			—				49,841				(272	)			—				(2,201,953	)			(70,223	)			(2,222,607	)
Balance as of December 31, 2024		W	2,090,558			W	5,082,359			W	14,754,475			W	(8,316	)		W	4,305,542			W	(1,236,060	)		W	24,988,558
Balance as of January 1, 2025		W	2,090,558			W	5,082,359			W	14,754,475			W	(8,316	)		W	4,305,542			W	(1,236,060	)		W	24,988,558
Comprehensive income for the period
Profit for the period			—				—				—				—				3,657,633				—				3,657,633
Remeasurements of net defined benefit liabilities			—				—				—				(285	)			—				—				(285	)
Total comprehensive income for the period			—				—				—				(285	)			3,657,633				—				3,657,348
Transactions with shareholders
Annual dividends			—				—				—				—				(298,285	)			—				(298,285	)
Quarterly dividends			—				—				—				—				(1,004,006	)			—				(1,004,006	)
Acquisition of treasury shares			—				—				—				—				—				(1,480,000	)			(1,480,000	)
Retirement of treasury shares			—				—				—				—				(814,522	)			814,522				—
Issuance of hybrid securities			—				404,013				—				—				—				—				404,013
Redemption of hybrid securities			—				(1,127,116	)			—				—				—				—				(1,127,116	)
Dividends on hybrid securities			—				—				—				—				(202,392	)			—				(202,392	)
Others			—				—				(2,884	)			—				—				—				(2,884	)
Total transactions with shareholders			—				(723,103	)			(2,884	)			—				(2,319,205	)			(665,478	)			(3,710,670	)
Balance as of December 31, 2025		W	2,090,558				4,359,256				14,751,591				(8,601	)			5,643,970				(1,901,538	)			24,935,236

The above separate statements of changes in equity should be read in conjunction with the accompanying notes.

 

6

KB Financial Group Inc.

Separate Statements of Cash Flows

Years Ended December 31, 2025 and 2024

 

(In millions of Korean won)
		Notes				2025				2024
Cash flows from operating activities
Profit for the period						W	3,657,633			W	2,170,597
Adjustment for non-cash items
Depreciation and amortization expense							5,333				6,051
Provision (reversal) for credit losses							(56	)			(773	)
Share-based payments							19,195				14,998
Net interest expense							12,638				22,898
Valuation losses (gains) on financial assets at fair value through profit or loss							(6,323	)			(31,403	)
Net other income (expense)							2,652				2,216
							33,439				13,987
Changes in operating assets and liabilities
Due from financial institutions							80,000				60,000
Deferred income tax assets							(3,995	)			(413	)
Other assets							568,740				260,420
Other liabilities							(570,032	)			(297,859	)
							74,713				22,148
Net cash inflow from operating activities							3,765,785				2,206,732
Cash flows from investing activities
Acquisition of financial assets at fair value through profit or loss							—				(150,000	)
Disposal of financial assets at fair value through profit of loss							—				316,080
Acquisition of Subsidiaries							—				(150,000	)
Increase in loans measured at amortized cost							—				(105,000	)
Decrease in loans measured at amortized cost							10,000				355,000
Acquisition of property and equipment							(1,606	)			(1,627	)
Acquisition of intangible assets							(1,643	)			(1,481	)
Disposal of intangible assets							134				173
Net increase in guarantee deposits paid							3,646				1,597
Net cash inflow from investing activities							10,531				264,742
Cash flows from financing activities
Increase in borrowings							250,000				965,000
Decrease in borrowings							(1,215,000	)			(100,000	)
Increase in debentures							2,236,135				398,945
Decrease in debentures							(680,000	)			(1,075,000	)
Redemption of principal of lease liabilities							(619	)			(644	)
Dividends paid to shareholders							(1,302,291	)			(1,486,978	)
Acquisition of treasury shares							(1,480,000	)			(820,000	)
Issuance of hybrid securities							404,013				399,045
Redemption of hybrid securities							(1,130,000	)			(350,000	)
Dividends paid on hybrid securities							(202,392	)			(199,798	)
Other financing activities							32				10
Net cash outflow from financing activities							(3,120,122	)			(2,269,420	)
Net increase in cash and cash equivalents							656,194				202,054
Cash and cash equivalents at the beginning of the period			29				318,388				116,334
Cash and cash equivalents at the end of the period			29			W	974,582			W	318,388

The above separate statements of cash flows should be read in conjunction with the accompanying notes.

 

7

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

1. The Company

KB Financial Group Inc. (the “Company”), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfers with the former shareholders of Kookmin Bank, KB Investment & Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd., and the Company’s main business purpose is to control subsidiaries that engage in the financial business or subsidiaries closely related to the financial business through the stock ownership. The headquarter is located at 26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul. The Company’s share capital as of December 31, 2025, is W 2,090,558 million. In 2011, Kookmin Bank spun off its credit card business segment and established a new separate credit card company, KB Kookmin Card Co., Ltd., and KB Investment & Securities Co., Ltd. merged with KB Futures Co., Ltd. The Company established KB Savings Bank Co., Ltd. in January 2012, acquired Yehansoul Savings Bank Co., Ltd. in September 2013, and KB Savings Bank Co., Ltd. merged with Yehansoul Savings Bank Co., Ltd. in January 2014. In March 2014, the Company acquired Woori Financial Co., Ltd. and changed the name to KB Capital Co., Ltd. Meanwhile, the Company included LIG Insurance Co., Ltd. as an associate and changed the name to KB Insurance Co., Ltd. in June 2015, and KB Insurance Co., Ltd. became one of the subsidiaries through a tender offer in May 2017. Also, the Company included Hyundai Securities Co., Ltd. as an associate in June 2016 and included as a subsidiary in October 2016 by comprehensive exchange of shares. Hyundai Securities Co., Ltd. merged with KB Investment & Securities Co., Ltd. in December 2016 and changed its name to KB Securities Co., Ltd. in January 2017. In August 2020, the Group acquired Prudential Life Insurance Company of Korea Ltd. which was classified as a subsidiary and the name was changed to KB Life Insurance Co., Ltd. in December 2022. Then in January 2023, it merged with another existing KB Life Insurance Co., Ltd. The Company sold 100% shares of KB Credit Information Co., Ltd. to KB Kookmin Card Co., Ltd. on June 30, 2023.

The Company has been listed on the Korea Exchange (“KRX”) since October 10, 2008, and on the New York Stock Exchange (“NYSE”) for its American Depositary Shares (“ADS”) since September 29, 2008. Number of shares authorized on its Articles of Incorporation is 1,000 million.

2. Basis of Preparation

2.1 Application of Korean IFRS

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

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

The preparation of separate 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 that require a more complex and higher level of judgment or areas that require significant assumptions and estimations are disclosed in Note 2.4.

The separate financial statements have been prepared in accordance with Korean IFRS No.1027 Separate Financial Statements.

 

8

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

2.1.1 The Company has applied the following new and amended standards for the first time for its annual reporting period commencing January 1, 2025.

 

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Amendment of Korean IFRS No.1021 “The Effects of Changes in Foreign Exchange Rates” and Korean IFRS No.1101 “First-time Adoption of International Financial Reporting Standards” - Lack of exchangeability

The amendments require the Company to determine a spot exchange rate when exchangeability is lacking, and to disclose information on the nature and financial effects of the currency not being exchangeable into another currency, the spot exchange rate(s) used, the estimation process, and the risks to which the Company is exposed. These amendments do not have a significant impact on the financial statements.

2.1.2 The following are the accounting standards that have been established or announced but have not yet been implemented, which the Company has not applied.

 

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Amendment of Korean IFRS No.1109 “Financial Instruments” and No.1107 “Financial Instruments: Disclosures”

Korean IFRS No.1109 Financial Instruments and Korean IFRS No.1107 Financial Instruments: Disclosures have been amended to respond to recent questions arising in practice, and to include new requirements. The amendments should be applied for annual periods beginning on or after January 1, 2026, and earlier application is permitted. The amendments do not have a significant impact on the financial statements. These amendments:

 

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clarify the date of recognition and derecognition of some financial assets and liabilities, with a new exception for some financial liabilities settled through an electronic cash transfer system;

 

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clarify and add further guidance for assessing whether a financial asset meets the solely payments of principal and interest (SPPI) criterion;

 

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add new disclosures of impact on the entity and the extent to which the entity is exposed for each type of financial instruments if the timing or amount of contractual cash flow changes due to amendment of contract term; and

 

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update the disclosures for equity instruments designated at fair value through other comprehensive income (FVOCI)

 

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Korean IFRS Accounting Standards Annual Improvements Volume 11

Korean IFRS Accounting Standards Annual Improvements Volume 11 will be effective for annual reporting periods beginning on or after January 1, 2026. These amendments do not have a significant impact on the financial statements.

 

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Korean IFRS No.1101 “First-time adoption of International Financial Reporting Standards”: Hedge accounting by a first-time adopter

 

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Korean IFRS No.1107 “Financial Instruments: Disclosures”: Gain or loss on derecognition, Application guidance

 

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Korean IFRS No.1109 “Financial Instruments”: Derecognition of lease liabilities, Definition of transaction price

 

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Korean IFRS No.1110 “Consolidated Financial Statements”: Determination of a ‘de facto agent’

 

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Korean IFRS No.1007 “Statement of Cash Flows”: Cost method

 

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Korean IFRS No.1118 Presentation and Disclosures in Financial Statements

Korean IFRS No.1118 “Presentation and Disclosure in Financial Statements” replaces Korean IFRS No.1001 “Presentation of Financial Statements.” Korean IFRS No.1118 introduces new presentation requirements, particularly with respect to the definition of operating profit or loss, which are expected to enhance comparability of financial performance among similar entities. In addition, the disclosure requirements for management-defined performance measures are intended to improve transparency. The Standard is effective for annual reporting periods beginning on or after January 1, 2027, with early adoption permitted. In accordance with the retrospective application requirements of the Standard, the Company will restate the comparative information for the year ending December 31, 2026 in accordance with Korean IFRS No.1118.

 

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KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

The Company has not yet adopted Korean IFRS No.1118 and is currently assessing the impact that the application of the Standard will have on its financial statements. The Company has prepared a transition plan and is on track to report their first Korean IFRS No.1118-compliant interim financial statements for the period ending March 31, 2027 and annual financial statements for the period ending December 31, 2027.

2.2 Measurement Basis

The separate financial statements have been prepared under the historical cost convention unless otherwise specified.

2.3 Functional and Presentation Currency

Items included in the separate financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (“functional currency”). The separate financial statements are presented in Korean won, which is the Company’s functional and presentation currency.

 

10

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

2.4 Critical Accounting Estimates

The Company applies accounting policies and uses judgements, accounting estimates, and assumptions that may have a significant impact on the assets (liabilities) and incomes (expenses) in preparing the separate financial statements. Management’s estimates of outcomes may differ from actual outcomes if management’s estimates and assumptions based on management’s best judgment are different from the actual environment.

Estimates and underlying assumptions are continually evaluated, and changes in accounting estimates are recognized in the period in which the estimates are changed and in any future periods affected.

Uncertainties in estimates and assumptions with significant risks that may result in material adjustments to the separate financial statements are as follows:

2.4.1 Income taxes

As the income taxes on the Company’s taxable income is calculated by applying the tax laws of various countries and the decisions of tax authorities, there is uncertainty in calculating the final tax effect.

2.4.2 Fair value of financial instruments

The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available is determined by using valuation techniques. Financial instruments, which are not actively traded in the market and those with less transparent market prices, will have less objective fair values and require broad judgment on liquidity, concentration, uncertainty in market factors, assumptions in fair value determination, and other risks.

As described in the significant accounting policies in Note 3.1 Recognition and Measurement of Financial Instruments, diverse valuation techniques are used to determine the fair value of financial instruments, from generally accepted market valuation models to internally developed valuation models that incorporate various types of assumptions and variables.

 

11

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3. Material Accounting Policies

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

3.1 Recognition and Measurement of Financial Instruments

3.1.1 Initial recognition

The Company recognizes a financial asset or a financial liability in its statement of financial position when the Company becomes party to the contractual provisions of the instrument. A regular way purchase or sale of financial assets (a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned) is recognized and derecognized using trade date accounting.

For financial reporting purpose, the Company classifies (a) financial assets as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, or financial assets at amortized cost and (b) financial liabilities as financial liabilities at fair value through profit or loss, or other financial liabilities. These classifications are based on the business model for managing financial instruments and the contractual cash flow characteristics of the financial instrument at initial recognition.

At initial recognition, a financial asset or financial liability is measured at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of a financial instrument on initial recognition is normally the transaction price (that is, the fair value of the consideration given or received) in an arm’s length transaction.

3.1.2 Subsequent measurement

After initial recognition, financial instruments are measured at amortized cost or fair value based on classification at initial recognition.

3.1.2.1 Amortized cost

The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.

3.1.2.2 Fair value

The Company uses quoted price in an active market which is based on listed market price or dealer price quotations of financial instruments traded in an active market as best estimate of fair value. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

If there is no active market for a financial instrument, fair value is determined either by using a valuation technique or independent third-party valuation service. Valuation techniques include using recent arm’s length market transactions between knowledgeable and willing parties, if available, referencing the current fair value of another instrument that is substantially the same, discounted cash flow analysis, and option pricing models.

 

12

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.1.2.2 Fair value (cont’d)

 

The Company uses valuation models that are commonly used by market participants and customized for the Company to determine fair values of common over-the-counter (OTC) derivatives such as options, interest rate swaps, and currency swaps which are based on the inputs observable in markets. However, for some complex financial instruments that require fair value measurement by valuation techniques based on certain assumptions because some or all inputs used in the model are not observable in the market, the Company uses internal valuation models developed from general valuation models or valuation results from independent external valuation institutions.

In addition, the fair value information recognized in the statement of financial position is classified into the following fair value hierarchy, reflecting the significance of the input variables used in the fair value measurement.

 

Level 1:

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date

 

Level 2:

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

 

Level 3:

Unobservable inputs for the asset or liability

The fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety.

If a fair value measurement uses observable inputs that require significant adjustment using unobservable inputs, that measurement is a Level 3 measurement.

If the valuation technique does not reflect all factors which market participants would consider in pricing the asset or liability, the fair value is adjusted to reflect those factors. Those factors include counterparty credit risk, liquidity risk, and others.

The Company uses valuation technique which maximizes the use of market inputs and minimizes the use of entity-specific inputs. It incorporates all factors that market participants would consider in pricing the asset or liability and is consistent with economic methodologies applied for pricing financial instruments. Periodically, the Company calibrates the valuation technique and tests its validity using prices of observable current market transactions of the same instrument or based on other relevant observable market data.

 

13

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.1.3 Derecognition

Derecognition is the removal of a previously recognized financial asset or financial liability from the statement of financial position. The derecognition criteria for financial assets and financial liabilities are as follows:

3.1.3.1 Derecognition of financial assets

A financial asset is derecognized when the contractual rights to the cash flows from the financial assets expire or the Company transfers substantially all the risks and rewards of ownership of the financial asset, or the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset and the Company has not retained control. Therefore, if the Company does not transfer substantially all the risks and rewards of ownership of the financial asset, the Company continues to recognize the financial asset to the extent of its continuing involvement in the financial asset.

If the Company transfers the contractual rights to receive the cash flows of the financial asset but retains substantially all the risks and rewards of ownership of the financial asset, the Company continues to recognize the transferred asset in its entirety and recognize a financial liability for the consideration received.

The Company writes off a financial asset when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. In general, the Company considers write-off when it is determined that the debtor does not have sufficient funds or income to cover the principal and interest. The write-off decision is made in accordance with internal regulations. After the write-off, the Company can collect the written-off loans continuously according to the internal policy. Recovered amounts from financial assets previously written-off are recognized in profit or loss.

3.1.3.2 Derecognition of financial liabilities

A financial liability is derecognized from the statement of financial position when it is extinguished (i.e., the obligation specified in the contract is discharged, canceled or expires).

3.1.4 Offsetting

A financial asset and a financial liability are offset, and the net amount is presented in the statement of financial position when, and only when, the Company currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on a future event and must be legally enforceable in the normal course of business, the event of default, and the event of insolvency or bankruptcy of the Company and all of the counterparties.

3.2 Cash and Due from Financial Institutions

Cash and due from financial institutions include cash on hand, foreign currency, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and due from financial institutions. Cash and due from financial institutions are measured at amortized cost.

 

14

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.3 Non-derivative Financial Assets

3.3.1 Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss unless they are classified as financial assets at amortized cost or at fair value through other comprehensive income.

The Company may designate certain financial assets upon initial recognition as at fair value through profit or loss when the designation eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.

After initial recognition, a financial asset at fair value through profit or loss is measured at fair value and gains or losses arising from a change in fair value are recognized in profit or loss. Interest income using the effective interest method and dividend income from financial assets at fair value through profit or loss are also recognized in profit or loss.

3.3.2 Financial assets at fair value through other comprehensive income

The Company classifies below financial assets as financial assets at fair value through other comprehensive income:

 

•

Debt instruments that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and where the assets’ cash flows represent solely payments of principal and interest on the principal amount outstanding and;

 

•

Equity instruments that are not held for short-term trading but held for strategic investment, and designated as financial assets at fair value through other comprehensive income

After initial recognition, a financial asset at fair value through other comprehensive income is measured at fair value. Gains or losses arising from a change in fair value, other than dividend income, interest income calculated using the effective interest method and exchange differences arising on monetary items which are recognized directly in profit or loss, are recognized in other comprehensive income in equity.

When the financial assets at fair value through other comprehensive income is disposed of, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. However, cumulative gain or loss of equity instruments designated at fair value through other comprehensive income is reclassified to retained earnings not to profit or loss at disposal.

A financial asset at fair value through other comprehensive income denominated in foreign currency is translated at the closing rate. Exchange differences resulting from changes in amortized cost are recognized in profit or loss, and other changes are recognized in equity.

3.3.3 Financial assets at amortized cost

A financial asset, which is held within the business model whose objective is achieved by collecting contractual cash flows, and where the assets’ cash flows represent solely payments of principal and interest on the principal amount outstanding, is classified as a financial asset at amortized cost. After initial recognition, a financial asset at amortized cost is measured at amortized cost using the effective interest method and interest income is calculated using the effective interest method.

 

15

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.4 Expected Credit Losses of Financial Assets (Debt Instruments)

The Company recognizes loss allowances for expected credit losses at the end of the reporting period for financial assets at amortized cost and fair value through other comprehensive income except for financial assets at fair value through profit or loss.

Expected credit losses are estimated at present value of probability-weighted amount that is determined by evaluating a range of possible outcomes. The Company measures expected credit losses by reflecting all reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions, and forecasts of future economic conditions.

The approaches of measuring expected credit losses in accordance with Korean IFRS are as follows:

 

•

General approach: for financial assets and unused loan commitments not subject to the below 2 approaches

 

•

Simplified approach: for trade receivables, contract assets, and lease receivables

 

•

Credit-impaired approach: for financial assets that are credit-impaired at the time of acquisition

Application of general approach is differentiated depending on whether credit risk has increased significantly after initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures loss allowances for that financial instrument at an amount equal to 12-month expected credit losses, whereas if the credit risk on a financial instrument has increased significantly since initial recognition, the Company measures loss allowances for a financial instrument at an amount equal to the lifetime expected credit losses. Lifetime is the period until the contractual maturity date of financial instruments and means the expected life.

The Company assesses whether the credit risk has increased significantly using the following criteria, and if one or more of the following criteria are met, it is deemed as significant increase in credit risk. If the contractual cash flows of a financial asset have been renegotiated or modified, the Company assesses whether the credit risk has increased significantly using the same following criteria.

 

•

More than 30 days past due

 

•

Decline in credit rating at the end of the reporting period by certain notches or more compared to the time of initial recognition

 

•

Debt restructuring (except for impaired financial assets) and

 

•

Credit delinquency information of Korea Credit Information Services, etc.

Under simplified approach, the Company always measures loss allowances at an amount equal to lifetime expected credit losses. Under credit-impaired approach, the Company only recognizes the cumulative changes in lifetime expected credit losses since initial recognition as loss allowances at the end of the reporting period.

The Company generally considers the loan to be credit-impaired if one or more of the following criteria are met:

 

•

90 days or more past due

 

•

Legal proceedings related to collection

 

•

A borrower registered on the credit management list of Korea Federation of Banks

 

•

A corporate borrower with the credit rating C and D

 

•

Debt restructuring, etc.

 

16

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.4.1 Forward-looking information

The Company uses forward-looking information, when determining whether credit risk has increased significantly and measuring expected credit losses.

The Company assumes that the risk components have a constant correlation with the economic cycle and uses statistical methodologies to estimate the relation between key macroeconomic variables and risk components for the expected credit losses. The Company has derived a correlation between the time series data of 15 years or more and the key macroeconomic variables and calculates the expected credit losses by reflecting the results of the correlation on the risk component.

The correlation between the major macroeconomic variables and the credit risk are as follows:

 

Key macroeconomic variables		Correlation between the major macroeconomic variables and the credit risk
Benchmark interest rate		(+)
AA- rated corporate bond (3-year)		(+)
BBB- rated corporate bond (3-year)		(+)
Composite stock index		(-)
Rate of increase in housing transaction price index (Whole Country)		(-)
Rate of increase in housing transaction price index (Metropolitan Area)		(-)
WTI crude oil price		(+)

Forward-looking information used in the calculation of expected credit losses is based on the macroeconomic forecasts utilized by management of the Company for its business plan considering reliable external agency’s forecasts and others. The forward-looking information is generated by KB Research with a comprehensive approach to capture the possibility of various economic forecast scenarios that are derived from the internal and external viewpoints of the macroeconomic situation. The Company determines the macroeconomic variables to be used in forecasting future conditions of the economy, considering the direction of the forecast scenario based on GDP growth and the significant relationship between macroeconomic variables and time series data. Some macroeconomic variables used are different than those used in the previous year.

As of December 31, 2025, the Company measured expected credit losses by incorporating both the worsening and crisis macroeconomic scenarios, taking into account potential credit risks arising from the uncertain domestic and global financial environment and the sharp economic downturn.

3.4.2 Measuring expected credit losses on financial assets at amortized cost

The expected credit losses of financial assets at amortized cost are measured as present value of the difference between the contractual cash flows to be received and the cash flows expected to be received. The Company estimates expected future cash flows for financial assets that are individually significant. The Company selects the individually significant financial assets by comprehensively considering quantitative and qualitative factors (such as debt restructuring or negative net assets, etc.) among financial assets with the credit risk has increased significantly or credit-impaired (individual assessment of impairment).

For financial assets that are not individually significant, the Company collectively estimates expected credit losses by grouping loans with a homogeneous credit risk profile (collective assessment of impairment).

 

17

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.4.2.1 Individual assessment of impairment

Individual assessment of impairment losses is performed using management’s best estimate on the present value of expected future cash flows. The Company uses all the available information including financial condition of the borrower such as operating cash flow and net realizable value of any collateral held.

3.4.2.2 Collective assessment of impairment

Collective assessment of impairment losses is performed by using a methodology based on historical loss experience and reflecting forward-looking information. Such a process incorporates factors such as type of collateral, type of product, type of borrower, credit rating, size of portfolio, and recovery period and applies Probability of Default (“PD”) on a group of assets and Loss Given Default (“LGD”) by type of recovery method. Also, the Company applies certain assumptions to model expected credit losses assessment and to determine input based on loss experience and forward-looking information. These models and assumptions are periodically reviewed to reduce the gap between loss estimate and actual loss experience.

The lifetime expected credit losses are measured by applying the PD to the carrying amount calculated by deducting the expected principal repayment amount from the carrying amount as of the reporting date and the LGD adjusted to reflect changes in the carrying amount.

3.4.3 Measuring expected credit losses on financial assets at fair value through other comprehensive income

The Company measures expected credit losses on financial assets at fair value through other comprehensive income in a manner that is consistent with the requirements that are applicable to financial assets at amortized cost. However, loss allowances are recognized in other comprehensive income. Upon disposal or repayment of financial assets at fair value through other comprehensive income, the amount of loss allowances is reclassified from other comprehensive income to profit or loss.

3.5 Revenue Recognition

The Company recognizes revenues in accordance with the following steps determined in accordance with Korean IFRS No.1115 Revenue from Contracts with Customers.

 

•

Step 1: Identify the contract with a customer.

 

•

Step 2: Identify the performance obligations in the contract.

 

•

Step 3: Determine the transaction price.

 

•

Step 4: Allocate the transaction price to the performance obligations in the contract.

 

•

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

3.5.1 Interest income and expense

Interest income and expense on debt securities at fair value through profit or loss (excluding beneficiary certificates, equity investments, and other debt securities), loans, financial instruments at amortized cost, and debt securities at fair value through other comprehensive income are recognized in the statement of comprehensive income using the effective interest method in accordance with Korean IFRS No.1109 Financial Instruments. The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability and allocating the interest income or interest expense over the relevant period.

 

18

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.5.1 Interest income and expense (cont’d)

 

The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument or, where appropriate, a shorter period, to the gross carrying amount of a financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates expected cash flows by considering all contractual terms of the financial instrument but does not consider expected credit losses. The calculation includes all fees and points paid (main components of effective interest rate only) or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. In those rare cases when it is not possible to reliably estimate the cash flows and the expected life of a financial instrument, the Company uses the contractual cash flows over the full contractual term of the financial instrument

Interest income on impaired financial assets is recognized using the interest rate used to discount the expected cash flows for the purpose of measuring the impairment loss.

Interest income on debt securities at fair value through profit or loss is also classified as interest income in the statement of comprehensive income.

3.5.2 Fee and commission income

The Company recognizes financial service fees in accordance with the purpose of charging the fees and the accounting standards of the financial instrument related to the fees earned.

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

Such fees are generally treated as adjustments of effective interest rate. Such fees may include compensation for activities such as evaluating the borrower’s financial condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating the terms of the instrument, preparing and processing documents, and closing the transaction and origination fees received on issuing financial liabilities at amortized cost. However, fees relating to the creation or acquisition of a financial instrument at fair value through profit or loss are recognized as revenue immediately.

3.5.2.2 Fees related to performance obligations satisfied over time

If the control of a good or service is transferred over time, the Company recognizes revenue related to performance obligations over the period of performance obligations. Fees charged in return for the services for a certain period of time, such as asset management fees, consignment business fees, etc. are recognized over the period of performance obligations.

3.5.2.3 Fees related to performance obligations satisfied at a point in time

Fees earned at a point in time are recognized as revenue when a customer obtains controls of a promised good or service and the Company satisfies a performance obligation.

3.5.3 Net gains/losses on financial instruments at fair value through profit or loss

Net gains or losses on financial instruments at fair value through profit or loss (including changes in fair value, dividends, and gains or losses from foreign currency translation) include gains or losses on financial instruments as follows:

 

19

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.5.3 Net gains/losses on financial instruments at fair value through profit or loss (cont’d)

 

 

•

Gains or losses relating to financial instruments at fair value through profit or loss (excluding interest income using the effective interest rate method)

 

•

Gains or losses relating to derivative financial instruments for trading (including derivative financial instruments for hedging purpose but do not qualify for hedge accounting)

3.5.4 Dividend income

Dividend income is recognized in profit or loss when the right to receive payment is established. Dividend income is recognized as net gains or losses on financial instruments at fair value through profit or loss or other operating income depending on the classification of equity securities.

3.6 Investments in Subsidiaries and Associates

Investments in subsidiaries and associates are accounted at cost method in accordance with Korean IFRS No.1027. The Company determines at each reporting period whether there is any objective evidence that the investments in the subsidiaries and associates are impaired. If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the subsidiaries or associates and its carrying value.

3.7 Property and Equipment

3.7.1 Recognition and measurement

Property and equipment that qualify for recognition as an asset are measured at cost and subsequently carried at its cost less any accumulated depreciation and any accumulated impairment losses.

The cost of property and equipment 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 and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Subsequent expenditures are capitalized only when they prolong the useful life or enhance values of the assets but the costs of the day-to-day servicing of the assets such as repair and maintenance costs are recognized in profit or loss as incurred. When part of an item of property and equipment has a useful life different from that of the entire asset, it is recognized as a separate asset.

3.7.2 Depreciation

Land is not depreciated, whereas other property and equipment are depreciated using the method that reflects the pattern in which the asset’s future economic benefits are expected to be consumed by the Company. The depreciable amount of an asset is determined after deducting its residual value.

Each part of an item of property and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

 

20

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.7.2 Depreciation (cont’d)

 

The depreciation method and estimated useful life of property and equipment are as follows:

 

Property and equipment		Depreciation method		Estimated useful life
Leasehold improvements Equipment and vehicles		Declining-balance Declining-balance		4 years 4 years

The residual value, the useful life, and the depreciation method applied to an asset are reviewed at each financial year-end and, if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.

3.8 Intangible Assets

Intangible assets are measured initially at cost and subsequently carried at their cost less any accumulated amortization and any accumulated impairment losses.

Intangible assets, except for membership rights, are amortized using the straight-line method with no residual value over their estimated useful life since the assets are available for use.

 

Intangible assets		Amortization method		Estimated useful life
Software		Straight-line		4 years
Others		Straight-line		4 ~ 19 years

The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Where an intangible asset is not being amortized because its useful life is indefinite, the Company carries out a review in each accounting period to confirm whether events and circumstances still support an indefinite useful life assessment. If they do not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate.

3.9 Impairment of Non-financial Assets

The Company assesses at the end of each reporting period whether there is any indication that a non-financial asset, except for (a) deferred income tax assets, (b) assets arising from employee benefits and (c) non-current assets (or group of assets to be sold) classified as held for sale, may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset.

The recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Company determines the recoverable amount of the cash-generating unit to which the asset belongs. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit that are discounted by a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss and recognized immediately in profit or loss.

 

21

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.10 Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Inevitable risks and uncertainties surrounding related events and circumstances are considered in measuring the best estimate of the provisions, and where the effect of the time value of money is material, the amount of provisions is the present value of the expenditures expected to be required to settle the obligation.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provisions are reversed.

3.11 Equity Instrument Issued by the Company

An equity instrument is any contract or agreement that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

3.11.1 Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or the exercise of stock option are deducted from the equity, net of any tax effects.

3.11.2 Hybrid securities

The financial instruments can be classified as either financial liabilities or equity in accordance with the terms of the contract. The Company classifies hybrid securities as an equity if the Company has the unconditional right to avoid any contractual obligation to deliver cash or another financial asset in relation to the financial instruments.

3.11.3 Treasury shares

If the Company acquires its own equity instruments, these are accounted for as treasury shares and are deducted directly from equity. No gains or losses are recognized in profit or loss on the purchase, sale, issue or retirement of own equity instruments.

3.12 Employee Compensation and Benefits

3.12.1 Post-employment benefits

3.12.1.1 Defined contribution plans

When an employee has rendered service to the Company during a period, the Company recognizes the contribution payable to a defined contribution plan in exchange for that service as post-employment benefits for the period.

 

22

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.12.1.2 Defined benefit plans

All post-employment benefits, other than defined contribution plans, are classified as defined benefit plans. The amount recognized as a net defined benefit liability is the present value of the defined benefit obligation less the fair value of plan assets at the end of the reporting period.

The present value of the defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit method. The rate used to discount post-employment benefit obligations is determined by reference to market yields at the end of the reporting period on high quality corporate bonds. The currency and term of the corporate bonds are consistent with the currency and estimated term of the post-employment benefit obligations. Actuarial gains and losses resulted from changes in actuarial assumptions and experience adjustments are recognized in other comprehensive income.

When the present value of the defined benefit obligation minus the fair value of plan assets results in an asset, it is recognized to the extent of the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

Past service cost is the change in the present value of the defined benefit obligation for employee service in prior periods, resulting from the introduction or changes to a defined benefit plan. Such past service cost is immediately recognized as an expense for the period.

3.12.2 Short-term employee benefits

Short-term employee benefits are employee benefits that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service. When an employee has rendered service to the Company during an accounting period, the Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service as an expense for the period.

The expected cost of profit-sharing and bonus payments is recognized as liabilities when the Company has a present legal or constructive obligation to make payments as a result of past events, such as service rendered by employees, and a reliable estimate of the obligation can be made.

3.12.3 Share-based payment

The Company provides stock grants program to executives and employees of the Company and its subsidiaries. When stock grants are exercised, the Company can either select to distribute newly issued shares or treasury shares or compensate in cash based on the share price.

For a share-based payment transaction in which the terms of the arrangement provide the Company with the choice of whether to settle in cash or by issuing equity instruments, the Company accounts for the transaction in accordance with the requirements applying to cash-settled share-based payment transactions because the Company determines that it has a present obligation to settle in cash based on a past practice and a stated policy of settling in cash.

Therefore, the Company measures the liability incurred as consideration for the service received at fair value and recognizes related expense and accrued expense over the vesting periods. 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 as share-based payments.

 

23

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.12.4 Termination benefits

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or an employee’s decision to accept an offer of benefits in exchange for the termination of employment. The Company recognizes a liability and expense for termination benefits at the earlier of the following dates; when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring that is within the scope of Korean IFRS No.1037 and involves the payment of termination benefits. If the termination benefits are not expected to be settled wholly before twelve months after the end of the annual reporting period, then the termination benefits are discounted to present value.

3.13 Income Tax Expense

Income tax expense comprises current tax expense and deferred income tax expense. Current and deferred income tax are recognized as income or expense and included in profit or loss for the period, except to the extent that the tax arises from (a) a transaction or event which is recognized, in the same or a different period, outside profit or loss, either in other comprehensive income or directly in equity and (b) a business combination.

3.13.1 Current income tax

Current income tax is the amount of income tax payable (recoverable) in respect of the taxable profit (tax loss) for a period. A difference between the taxable profit and accounting profit may arise when income or expense is included in accounting profit in one period but is included in taxable profit in a different period. Differences may also arise if there is revenue that is exempt from taxation, or expense that is not deductible in determining taxable profit (loss). Current income tax liabilities for the current and prior periods are measured using the tax rates that have been enacted or substantively enacted by the end of the reporting period.

The Company offsets current income tax assets and current income tax liabilities if, and only if, the Company (a) has a legally enforceable right to set off the recognized amounts and (b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

3.13.2 Deferred income tax

Deferred income tax is recognized, using the asset-liability method, on temporary differences arising between the tax-based amount of assets and liabilities and their carrying amount in the financial statements. Deferred income tax liabilities are recognized for all taxable temporary differences and deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax assets and liabilities are not recognized if they arise from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction, affects neither accounting nor taxable profit or loss.

The carrying amount of a deferred income tax asset is reviewed at the end of each reporting period. The Company reduces the carrying amount of a deferred income tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilized.

 

24

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.13.2 Deferred income tax (cont’d)

 

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, 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 income tax liabilities and deferred income tax 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.

The Company offsets deferred income tax assets and deferred income tax liabilities if, and only if the Company has a legally enforceable right to set off current income tax assets against current income tax liabilities and the deferred income tax assets and the deferred income tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current income 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 income tax liabilities or assets are expected to be settled or recovered.

3.13.3 Uncertain tax positions

Uncertain tax positions arise from tax treatments applied by the Company which may be challenged by the tax authorities due to the complexity of the transaction or different interpretation of the tax laws, such as a claim for rectification, a claim for a refund related to additional tax or a tax investigation by the tax authorities. The Company recognizes its uncertain tax positions in the financial statements in accordance with Korean IFRS No.1012 and Interpretation of Korean IFRS No.2123. The income tax asset is recognized if a tax refund is probable for taxes levied by the tax authority, and the amount to be paid as a result of the tax investigation and others is recognized as the current tax payable. However, penalty tax and additional refund on tax are regarded as penalty or interest and are accounted for in accordance with Korean IFRS No.1037.

3.14 Earnings per Share

The Company calculates basic earnings per share amounts and diluted earnings per share amounts for profit or loss for the period and presents them in the statement of comprehensive income. Basic earnings per share is calculated by dividing profit or loss attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated by adjusting the profit or loss attributable to ordinary equity holders of the Parent Company and weighted average number of shares outstanding, taking into account all potential dilution effects, such as exchangeable bonds and share-based payments given to employees.

 

25

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

3.15 Leases

The Company as a lessor recognizes lease payments from operating leases as income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature.

A lessee is required to recognize a right-of-use asset (lease assets) representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Assets and liabilities arising from a lease are initially measured at the present value.

Lease liabilities include the net present value of the following lease payments:

 

•

Fixed payments (including in-substance fixed payments), less any lease incentives receivable

 

•

Variable lease payments that depend on an index or a rate

 

•

Amounts expected to be payable by the lessee under residual value guarantees

 

•

The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

 

•

Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease

The lease payments are discounted using the interest rate implicit in the lease if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used, which is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.

Right-of-use assets are measured at cost comprising the following:

 

•

The amount of the initial measurement of the lease liability

 

•

Any lease payments made at or before the commencement date, less any lease incentives received

 

•

Any initial direct costs incurred by the lessee, and

 

•

An estimate of restoration costs

However, the Company can elect not to apply the requirements of Korean IFRS No.1116 to short-term lease (lease that, at the commencement date, has a lease term of 12 months or less) and leases for which the underlying asset is of low value (for example, underlying leased asset under $ 5,000).

The right-of-use asset is depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

For sale and leaseback transactions, the Company applies the requirements of Korean IFRS No.1115 Revenue from Contracts with Customers, to determine whether the transfer of an asset is accounted for as a sale of that asset.

 

26

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

4. Financial Risk Management

4.1 Summary

4.1.1 Overview of financial risk management policy

The financial risks that the Company is exposed to are credit risk, market risk, liquidity risk, operational risk and others.

This note regarding financial risk management provides information about the risks that the Company is exposed to and about its objectives, policies, risk assessment and management procedures, and capital management. Additional quantitative information is disclosed throughout the separate financial statements.

The Company’s risk management system focuses on efficiently supporting long-term strategy and management decisions of the Company by increasing risk transparency, preventing risk transfer between subsidiaries and preemptive response to rapidly changing financial environments. Credit risk, market risk, liquidity risk, operational risk, interest rate risk, insurance risk, credit concentration risk, strategy risk, reputation risk and foreign exchange settlement risk are recognized as significant risks.

4.1.2 Risk management organization

4.1.2.1 Risk Management Committee

The Risk Management Committee, as the ultimate decision-making body, deals with risk-related issues, such as establishing risk management strategies in accordance with the strategic direction determined by the board of directors, determining the affordable level of risk appetite, reviewing the level of risk and the status of risk management activities, approving the application of risk management systems, methodologies, and major improvements, and establishing and approving risk management strategies and procedures to timely recognize, measure, monitor, and control risks arising from various transactions by the Company and subsidiaries (the “Group”).

4.1.2.2 Risk Management Council

The Risk Management Council is responsible for consulting on matters delegated by the Risk Management Committee and requests for review by the Group Management Executive Committee, consulting on details of each subsidiary’s risk management strategies and procedures, monitoring the Group’s risk management status, and establishing and implementing necessary measures.

4.1.2.3 Risk Management Department

The Risk Management Department performs the Company’s risk management detailed strategies, procedures, and business processes, and is responsible for calculating the Group’s risk-weighted assets, monitoring and managing internal capital limits.

4.2 Credit Risk

4.2.1 Overview of credit risk

Credit risk is the risk of loss from the portfolio of assets held due to the counterparty’s default, breach of contract, and deterioration of credit quality. For risk management purposes, the Company considers default risk of individual borrowers.

 

27

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

4.2.2 Credit risk management

The Company measures the expected losses of assets subject to credit risk management and uses them as a management indicator.

4.2.3 Maximum exposure to credit risk

The Company’s maximum exposures to credit risk without consideration of collateral values in relation to financial instruments other than equity securities as of December 31, 2025 and 2024, are as follows:

 

(In millions of Korean won)		December 31, 2025				December 31, 2024
Due from financial institutions		W	974,585			W	398,391
Loans measured at amortized cost *			349,112				359,054
Loans measured at fair value through profit or loss			54,502				53,952
Other financial assets *			46,688				48,614
		W	1,424,887			W	860,011

 

*	After netting of allowance

4.2.4 Credit risk of loans

The Company maintains allowances for loan losses associated with credit risk of loans to manage its credit risk.

The Company assesses expected credit losses and recognizes loss allowances of financial assets at amortized cost and financial asset at fair value through other comprehensive income. Financial assets at fair value through profit or loss are excluded. Expected credit losses are a probability-weighted estimate of possible credit losses occurring in a certain range by reflecting reasonable and supportable information that is reasonably available at the end of the reporting period without undue cost or effort, including information about past events, current conditions, and forecasts of future economic conditions. The Company measures the expected credit losses on loans classified as financial assets at amortized cost, by deducting allowances for credit losses. The expected credit losses of loans classified as financial assets at fair value through other comprehensive income are presented in other comprehensive income in the financial statements.

Credit qualities of loans measured at amortized cost as of December 31, 2025 and 2024, are classified as follows:

(In millions of Korean won)

 

		December 31, 2025
		12-month expected credit losses				Lifetime expected credit losses								Not applying expected credit losses				Total
						Non-impaired				Impaired
Loans measured at amortized cost *
Corporate
Grade 1		W	350,000			W	—			W	—			W	—			W	350,000
Grade 2			—				—				—				—				—
Grade 3			—				—				—				—				—
Grade 4			—				—				—				—				—
Grade 5			—				—				—				—				—
		W	350,000			W	—			W	—			W	—			W	350,000

 

28

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

4.2.4 Credit risk of loans (cont’d)

 

 

		December 31, 2024
(In millions of Korean won)		12-month expected credit losses				Lifetime expected credit losses								Not applying expected credit losses				Total
						Non-impaired				Impaired
Loans measured at amortized cost *
Corporate
Grade 1		W	360,000			W	—			W	—			W	—			W	360,000
Grade 2			—				—				—				—				—
Grade 3			—				—				—				—				—
Grade 4			—				—				—				—				—
Grade 5			—				—				—				—				—
		W	360,000			W	—			W	—			W	—			W	360,000

* Before netting of allowance

Credit qualities of loans graded according to the probability of default as of December 31, 2025 and 2024, are as follows:

 

		Range of probability of default (%)
Grade 1			0.0 ~ 1.0
Grade 2			1.0 ~ 5.0
Grade 3			5.0 ~ 15.0
Grade 4			15.0 ~ 30.0
Grade 5			30.0 ~

4.2.5 Credit risk of due from financial institutions

Credit qualities of due from financial institutions as of December 31, 2025 and 2024, are as follows:

 

 

		December 31, 2025
(In millions of Korean won)		12-month expected credit losses				Lifetime expected credit losses								Not applying expected credit losses				Total
						Non-impaired				Impaired
Due from financial institutions measured at amortized cost
Grade 1		W	974,585			W	—			W	—			W	—			W	974,585
Grade 2			—				—				—				—				—
Grade 3			—				—				—				—				—
Grade 4			—				—				—				—				—
Grade 5			—				—				—				—				—
		W	974,585			W	—			W	—			W	—			W	974,585

 

29

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

4.2.5 Credit risk of due from financial institutions (cont’d)

 

 

		December 31, 2024
(In millions of Korean won)		12-month expected credit losses				Lifetime expected credit losses								Not applying expected credit losses				Total
						Non-impaired				Impaired
Due from financial institutions measured at amortized cost
Grade 1		W	398,391			W	—			W	—			W	—			W	398,391
Grade 2			—				—				—				—				—
Grade 3			—				—				—				—				—
Grade 4			—				—				—				—				—
Grade 5			—				—				—				—				—
		W	398,391			W	—			W	—			W	—			W	398,391

4.2.6 Credit risk concentration analysis

4.2.6.1 Classifications of loans by country as of December 31, 2025 and 2024, are as follows:

 

(In millions of Korean won)		December 31, 2025
		Corporate loans *				%				Allowances				Carrying amount
Korea		W	404,502				100.00			W	(888	)		W	403,614

 

(In millions of Korean won)		December 31, 2024
		Corporate loans *				%				Allowances				Carrying amount
Korea		W	413,952				100.00			W	(946	)		W	413,006

 

*	Amount includes loans measured at fair value through profit or loss and amortized cost.

4.2.6.2 Classifications of corporate loans by industry as of December 31, 2025 and 2024, are as follows:

 

		December 31, 2025
(In millions of Korean won)		Corporate loans *				%				Allowances				Carrying amount
Financial institutions		W	404,502				100.00			W	(888	)		W	403,614

 

		December 31, 2024
(In millions of Korean won)		Corporate loans *				%				Allowances				Carrying amount
Financial institutions		W	413,952				100.00				(946	)			413,006

 

*	Amount includes loans measured at fair value through profit or loss and amortized cost.

 

30

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

4.2.6.3 Classifications of due from financial institutions by industry as of December 31, 2025 and 2024, are as follows:

 

December 31, 2025

(In millions of Korean won)

Amount

%

Allowances

Carrying amount

Due from financial institutions measured at amortized cost

Financial institutions

W

974,585

100.00

W

—

W

974,585

 

December 31, 2024

(In millions of Korean won)

Amount

%

Allowances

Carrying amount

Due from financial institutions measured at amortized cost

Financial institutions

W

398,391

100.00

W

—

W

398,391

4.2.6.4 Classifications of due from financial institutions by country as of December 31, 2025 and 2024, are as follows:

 

December 31, 2025

(In millions of Korean won)

Amount

%

Allowances

Carrying amount

Due from financial institutions measured at amortized cost

Korea

W

974,585

100.00

W

—

W

974,585

 

December 31, 2024

(In millions of Korean won)

Amount

%

Allowances

Carrying amount

Due from financial institutions measured at amortized cost

Korea

W

398,391

100.00

W

—

W

398,391

 

31

KB Financial Group Inc.

Notes to the Separate Financial Statements

December 31, 2025 and 2024

 

4.3 Liquidity Risk

4.3.1 Overview of liquidity risk

Liquidity risk is a risk that the Company becomes insolvent due to the mismatch between the inflow and outflow of funds, unexpected cash outflows, or a risk of loss due to financing funds at a high interest rate or disposing of securities at an unfavorable price due to lack of available funds. The Company manages its liquidity risk through analysis of the contractual maturity of all financial assets and liabilities and discloses in six categories such as on demand, less than one month, between one month to three months, between three months to one year, between one year to five years, and over five years.

4.3.2. Liquidity risk management

The liquidity risk is managed by risk management policies and liquidity risk management guidelines set forth in these policies that apply to all risk management policies and procedures that may arise throughout the overall business of the Company.

4.3.3. Analysis of remaining contractual maturity of financial liabilities

The cash flows disclosed in the maturity analysis are undiscounted contractual amounts including principal and future interest payments; as such, amounts in the table below do not match with those in the statements of financial position which are based on discounted cash flows. The future interest payments for floating-rate liabilities are calculated on the assumption that the current interest rate is the same until maturity.

Remaining contractual maturity of financial liabilities as of December 31, 2025 and 2024, are as follows:

 

 

		December 31, 2025
(In millions of Korean won)		On Demand				Up to 1 month				1-3 months				3-12 months				1-5 years				Over 5 years				Total
Financial liabilities
Debentures		W	—			W	41,812			W	17,285			W	783,422			W	3,736,418			W	234,604			W	4,813,541
Lease liabilities			—				51				89				365				258				—				763
Other financial liabilities			—				2,041				508				—				—				—				2,549
		W	—			W	43,904			W	17,882			W	783,787			W	3,736,676			W	234,604			W	4,816,853

 

 

		December 31, 2024
(In millions of Korean won)		On Demand				Up to 1 month				1-3 months				3-12 months				1-5 years				Over 5 years				Total
Financial liabilities
Borrowings		W	—			W	—			W	365,000			W	600,000			W	—			W	—			W	965,000
Debentures			—				105,451				13,009				626,993				1,662,628				774,560				3,182,641
Lease liabilities			—				48				91				362				375				—				876
Other financial liabilities			—				2,088				462				—				—				—				2,550
		W	—			W	107,587			W	378,562			W	1,227,355			W	1,663,003			W	774,560			W	4,151,067

 

32