About KB Financial Group

KB Financial Group Inc., through its subsidiaries, engages in a range of businesses, including commercial banking, credit cards, asset management, non-life and life insurance, capital markets activities, and international banking and finance. As part of its commercial banking activities, the company provides credit and related financial services to individuals and small- and medium-sized enterprises and, to a lesser extent, to large corporate customers. The company also provides a full range of deposit products and related services to both individuals and enterprises of all sizes. The company provides these services predominantly through Kookmin Bank. By their nature, the company’s core consumer and small- and medium-sized enterprise operations place a high premium on customer access and convenience. The company’s combined banking network of branches, one of the most extensive in Korea, provides a solid foundation for its business and is a major source of its competitive strength. This network provides the company with a large, stable and cost effective funding source, enables it to provide its customers convenient access and gives it the ability to provide the customer attention and service essential to conducting its business, particularly in an increasingly competitive environment. The company’s branch network is further enhanced by automated banking machines and fixed-line, smartphone and Internet banking. As of December 31, 2022, the company had a customer base of approximately 37.1 million retail customers, which represented over one-half of the Korean population. The company provides a full range of personal lending products and retail banking services to individual customers, including mortgage loans. The company is the largest private sector mortgage lender in Korea. Lending to small- and medium-sized enterprises is the single largest component of the company’s non-retail credit portfolio] and represents a widely diversified exposure to a broad spectrum of the Korean corporate community, both by type of lending and type of customer, with one of the categories being collateralized loans to SOHO customers that are among the smallest of the small- and medium-sized enterprises. The volume of the company’s loans to small- and medium-sized enterprises requires a customer-oriented approach that is facilitated by its large and geographically diverse branch network. With respect to large corporate customers, the company continues to seek to maintain and expand quality relationships by providing them with an increasing range of fee-related services. Retail Banking Due to Kookmin Bank’s history and development as a retail bank and the know-how and expertise the company has acquired from its activities in that market, retail banking has been and will continue to remain one of its core businesses. The company’s retail banking activities consist primarily of lending and deposit-taking. Lending Activities The company offers various loan products that target different segments of the population, with features tailored to each segment’s financial profile and other characteristics. The company’s retail loans consist of: Mortgage loans, which are loans made to customers to finance home purchases, construction, improvements or rentals; and home equity loans, which are loans made to its customers secured by their homes to ensure loan repayment. The company also provides overdraft loans in connection with its home equity loans. Other consumer loans, which are loans made to customers for any purpose (other than mortgage and home equity loans). These include overdraft loans, which are loans extended to customers to cover insufficient funds when they withdraw funds from their demand deposit accounts with the company in excess of the amount in such accounts up to a limit established by it. For secured loans, including mortgage and home equity loans, the company’s policy is to lend up to 100% of the adjusted collateral value (except in areas of high speculation designated by the government where it generally limit its lending to between 10% and 60% of the appraised value of collateral) minus the value of any lien or other security interests that are prior to its security interest. In calculating the adjusted collateral value for real estate, the company uses the appraisal value of the collateral multiplied by a factor, generally between 40% to 88% (10% to 70% in the case of mortgage and home equity loans). A borrower’s eligibility for its mortgage loans depends on the value of the mortgage property, the appropriateness of the use of proceeds and the borrower’s creditworthiness. A borrower’s eligibility for home equity loans is determined by the borrower’s credit and the value of the property, while the borrower’s eligibility for other consumer loans is primarily determined by the borrower’s credit. If the borrower’s credit deteriorates, it may be difficult for the company to recover the loan. As a result, the company reviews the borrower’s creditworthiness, collateral value, credit scoring and third party guarantees when evaluating a borrower. In addition, to reduce the interest rate of a loan or to qualify for a loan, a borrower may provide collateral, deposits or guarantees from third parties. Mortgage and Home Equity Lending The housing finance market in Korea is divided into public sector and private sector lending. In the public sector, two government entities, the National Housing and Urban Fund and the National Agricultural Cooperative Federation, are responsible for most of the mortgage lending. Private sector mortgage and home equity lending in Korea has expanded substantially in recent years. The company provides customers with a number of mortgage and home equity loan products that have flexible features, including terms, repayment schedules, amounts and eligibility for loans, and it offers interest rates on a commercial basis. The maximum term of mortgage loans is 40 years and the majority of the company’s mortgage loans have long-term maturities, which may be renewed. Non-amortizing home equity loans have a maturity of one to five years and home equity loans subject to amortization of principal may have a maximum term of up to 35 years. Any customer is eligible for a mortgage or an individual home equity loan regardless of whether it participates in one of the company’s housing related savings programs and so long as that customer is not barred by regulation from obtaining a loan because of bad credit history. However, customers with whom it frequently transacts business and provide it with significant revenue receive preferential interest rates on loans. For the year ended December 31, 2022, the average initial loan-to-value ratio of the company’s mortgage loans, which is a measure of the amount of loan exposure to the appraised value of the security collateralizing the loan, was approximately 39.7%. There are three reasons that the company’s loan-to-value ratio is relatively lower (as is the case with other Korean banks) compared to similar ratios in other countries, such as the United States. The first reason is that housing prices are high in Korea relative to average income, so most people cannot afford to borrow an amount equal to the entire value of their collateral and make interest payments on such an amount. The second reason relates to the jeonsae system, through which people provide a key money deposit while residing in the property prior to its purchase. At the time of purchase, most people use the key money deposit as part of their payment and borrow the remaining amount from Korean banks, which results in a loan that will be for an amount smaller than the appraised value of the property for collateral and assessment purposes. The third reason is that Korean banks discount the appraised value of the borrower’s property for collateral and assessment purposes so that a portion of the appraised value is reserved in order to provide recourse to a renter who lives at the borrower’s property. This is in the event that the borrower’s property is seized by a creditor, and the renter is no longer able to reside at that property. The company’s home equity loan portfolio includes loans that are in a second lien position. In addition to the underwriting procedures the company performs when issue home equity loans in general, it performs additional underwriting procedures with respect to home equity loans secured by a second lien to assess and confirm the value and status of any loans secured by security interests on the collateral which would be prior to its security interest under the second lien home equity loan. Under regulations implemented by the Financial Supervisory Service, the company’s home equity loans are subject to maximum loan-to-value ratios (i.e., the ratio of the aggregate principal amount of loans, including first and second lien loans, secured by a particular item of collateral to the appraised value of such collateral) of between 10% and 70%. Accordingly, in order to ascertain the value of loans secured by security interests on the collateral which would be prior to the company’s security interest and to confirm the status of such loans, it performs additional underwriting procedures including a review of the relevant title and security interest registration documents and bank documents and certificates regarding such loans. In addition, for purposes of calculating debt-to-income ratios applicable to loans secured by certain types of housing under regulations implemented by the Financial Supervisory Service, which it applies on a nationwide basis for its home equity loans, it performs additional adjustments in its debt-to-income ratio calculations with respect to second lien home equity loans to account for the value of loans secured by security interests on the collateral that are prior to its security interest. Following the issuance of a home equity loan, the company makes use of the Korea Credit Information Services’ database of delinquent borrowers to generally monitor the compliance of its borrowers with their other loan obligations, including the compliance of its second lien borrowers with their first lien loans. The interest rates on the company’s home equity loans are determined on the same basis as its retail mortgage loans. Other Consumer Loans Other consumer loans are primarily unsecured. However, such loans may be secured by real estate, deposits or securities. Deposit-taking Activities Due to the company’s extensive nationwide network of branches, together with its long history of development and its resulting know-how and expertise, as of December 31, 2022, it had the largest number of retail customers and retail deposits among Korean commercial banks. The company offers many deposit products that target different segments of its retail customer base, with features tailored to each segment’s financial profile, characteristics and needs, including: Demand deposits, which either do not accrue interest or accrue interest at a lower rate than time deposits. Demand deposits allow the customer to deposit and withdraw funds at any time and, if they are interest bearing, accrue interest at a variable rate depending on the amount of deposit. Time deposits, which generally require the customer to maintain a deposit for a fixed term, during which the deposit accrues interest at a fixed rate or a variable rate based on the KOSPI, or to deposit specified amounts on an installment basis. Certificates of deposit, the maturities of which typically range from 30 days to 730 days with a required minimum deposit of won10 million. Interest rates on certificates of deposit are determined based on the length of the deposit and prevailing market rates. The company’s certificates of deposit are sold at a discount to their face value, reflecting the interest payable on the certificates of deposit. Foreign currency deposits, which are available to Korean and foreign residents, non-residents and overseas immigrants. The company offers foreign currency demand deposits and time deposits, as well as checking accounts in 11 currencies. Foreign currency demand deposits, which accrue interest at a variable rate, allow customers to deposit and withdraw funds at any time. Foreign currency time deposits generally require customers to maintain the deposit for a fixed term, during which the deposit accrues interest at a fixed rate. The company offers varying interest rates on its deposit products depending upon average funding costs, the rate of return on its interest-earning assets and the interest rates offered by other commercial banks. The company also offers comprehensive savings deposits for housing subscription, which are monthly installment savings deposits that provide the holder with preferential rights to subscribe for both public and private housing under the Housing Act. This law is the basic law setting forth various measures supporting the purchase of houses and the supply of such houses by construction companies. In 2002, after significant research and planning, the company launched private banking operations at Kookmin Bank’s headquarters. Shortly thereafter, the company launched a comprehensive strategy with respect to customers with higher net worth, which included staffing appropriate representatives, marketing aggressively, establishing IT systems, selecting appropriate branch locations and readying such branches with the necessary facilities to service such customers. The Monetary Policy Board of the Bank of Korea, or the Monetary Policy Board, imposes a reserve requirement on Won currency deposits of commercial banks based generally on the type of deposit instrument. The reserve requirement is up to 7%. Credit Cards Credit cards are another of the company’s core retail products. The company issues most of its credit cards under the KB Kookmin Card brand. The company’s credit card business is operated by its subsidiary, KB Kookmin Card Co., Ltd. To promote its credit card business, the company offers services targeted to various financial profiles and customer requirements and are concentrating on: strengthening cross-sales to existing customers and offering integrated financial services; offering cards that provide additional benefits, such as frequent flyer miles and reward program points that can be redeemed by the customer for complementary services, prizes and cash; offering platinum cards, VVIP cards and other prime members’ cards, which have a higher credit limit and provide additional services in return for a higher fee; acquiring new customers through strategic alliances and cross-marketing with retailers; encouraging increased use of credit cards by existing customers through special offers for frequent users; introducing new features such as travel services and insurance through alliance partners; and developing fraud detection and security systems to prevent the misuse of credit cards. As of December 31, 2022, the company had approximately 12.1 million credit cardholders. Of the credit cards outstanding, approximately 90.2% were active, meaning that they had been used at least once during the previous six months. The company’s card revenues consist principally of cash advance fees, merchant fees, credit card installment fees, interest income from credit card loans, annual fees paid by cardholders, interest and fees on late payments and, with respect to revolving payment plans it offers, interest and fees relating to revolving balances. Under non-exclusive license agreements with overseas financial services corporations, the company also issues MasterCard, Visa, American Express, JCB and China UnionPay credit cards. The company issues debit cards and charge merchants commissions in the amount of approximately 1.0% of the amounts purchased using a debit card. The company also issues check cards, which are similar to debit cards except that check cards are accepted by all merchants that accept credit cards, and charge merchants commissions that typically range from 0.25% to 1.50%. Much like debit cards, check card purchases are also debited directly from customers’ accounts with the company. Corporate Banking The company lends to and take deposits from small- and medium-sized enterprises and, to a lesser extent, large corporate customers. Kookmin Bank, the company’s banking subsidiary, had 432,172 small- and medium-sized enterprise borrowers and 1,896 large corporate borrowers for Won-currency loans as of December 31, 2022. For 2022, the company received fee revenue from cash management services offered to corporate customers, which include firm-banking services, such as inter-account transfers, transfers of funds from various branches and agencies of a company (such as insurance premium payments) to the account of the headquarters of such company and transfers of funds from various customers of a company to the main account of such company. Of its branch network as of December 31, 2022, the company had two branches that primarily handled large corporate banking. On the deposit-taking side, the company offers its corporate customers several types of corporate deposits. The company’s corporate deposit products can be divided into two general categories, such as demand deposits that have no restrictions on deposits or withdrawals, but which offer a relatively low interest rate; and deposits from which withdrawals are restricted for a period of time, but offer higher interest rates. The company also offers installment savings deposits, certificates of deposit and repurchase instruments. The company offers varying interest rates on deposit products depending upon the rate of return on its income-earning assets, average funding costs and interest rates offered by other nationwide commercial banks. Small- and Medium-sized Enterprise Banking The company’s small- and medium-sized enterprise banking business has traditionally been and will remain one of its core businesses because of both its historical development and its accumulated expertise. The company possesses the necessary elements to succeed in the small- and medium-sized enterprise market, including its extensive branch network, its credit rating system for credit approval, its marketing capabilities and its ability to take advantage of economies of scale. The company uses the term small- and medium-sized enterprises as defined in the Framework Act on Small and Medium Enterprises and related regulations. Lending Activities The company’s principal loan products for its small- and medium-sized enterprise customers are working capital loans and facilities loans. As of December 31, 2022, Kookmin Bank, the company’s banking subsidiary, had 432,172 small- and medium-sized enterprise customers on the lending side. As of December 31, 2022, secured loans and guaranteed loans accounted for, in the aggregate, 82.7% of the company’s small- and medium-sized enterprise loans. Among the secured loans, 97.8% were secured by real estate and 2.2% were secured by deposits or securities. When evaluating the extension of working capital loans, the company reviews the corporate customer’s creditworthiness and capability to generate cash. Furthermore, the company takes credit guaranty letters from other financial institutions and use time deposits that the borrower has with it as collateral, and may require additional collateral. The value of any collateral is defined using a formula that takes into account the appraised value of the property, any prior liens or other claims against the property and an adjustment factor based on a number of considerations including, with respect to property, the value of any nearby property sold in a court-supervised auction during the previous five years. The company revalues any collateral on a periodic basis (generally every year) or if a trigger event occurs with respect to the loan in question. The company also offers mortgage loans to home builders or developers who build or sell single- or multi-family housing units, principally apartment buildings. Many of these builders and developers are categorized as small- and medium-sized enterprises. The company offers a variety of such mortgage loans, including loans to purchase property or finance the construction of housing units and loans to contractors used for working capital purposes. Such mortgage loans subject the company to the risk that the housing units will not be sold. As a result, the company reviews the probability of the sale of the housing unit when evaluating the extension of a loan. The company also reviews the borrower’s creditworthiness and the adequacy of the intended use of proceeds. Furthermore, the company takes a lien on the land on which the housing unit is to be constructed as collateral. A substantial number of the company’s small- and medium-sized enterprise customers are SOHOs, which it defines to include sole proprietorships and individual business interests. With respect to SOHOs, the company applies credit risk evaluation models, which not only use quantitative analysis related to a customer’s accounts, personal credit and financial information and due amounts but also require its credit officers to perform a qualitative analysis of each potential SOHO customer. Large Corporate Banking Large corporate customers include all companies that are not small- and medium-sized enterprise customers. Kookmin Bank’s articles of incorporation provide that financial services to large corporate customers must be no more than 40% of the total amount of the company’s Won-denominated loans. The company’s business focus with respect to large corporate banking is to selectively increase the proportion of high quality large corporate customers. Specifically, the company is carrying out various initiatives to improve its customer relationship with large corporate customers and have been seeking to expand its service offerings to this segment. Lending Activities The company’s principal loan products for its large corporate customers are working capital loans and facilities loans. The company also offers mortgage loans to large corporate clients who build or sell single- or multi-family housing units. As of December 31, 2022, secured loans and guaranteed loans accounted for, in the aggregate, 39.3% of the company’s large corporate loans. Among the secured loans, 71.1% were secured by real estate and 28.9% were secured by deposits or securities. In its unsecured lending to large corporate customers, a critical consideration in the company’s policy regarding the extension of such unsecured loans is the borrower’s creditworthiness. The company assigns each borrower a credit rating based on the judgment of its experts or scores calculated using the appropriate credit rating system, taking into account both financial factors and non-financial factors (such as its perception of a borrower’s reliability, management and operational risk and risk relating to the borrower’s industry). The credit ratings, along with such factors, are key determinants in the company’s lending to large corporate customers. Large corporate customers generally have higher credit ratings due to their higher repayment capability compared to other types of borrowers, such as small- and medium-sized enterprise borrowers. In addition, large corporate borrowers generally are affected to a lesser extent than small- and medium-sized enterprise borrowers by fluctuations in the Korean economy and also maintain more sophisticated financial records. The company monitors the credit status of large corporate borrowers and collect information to adjust its ratings appropriately. The company also manages and monitors its large corporate customers through a dedicated Corporate Banking Branch and Kookmin Bank’s Large Corporate Business Department. In addition, Kookmin Bank’s Credit Risk Department manages the exposures to each large corporate customer and conducts in-depth analysis of various economic and industry-related risks that are relevant to large corporate customers. Capital Markets Activities and International Banking/Finance Through its capital markets operations, the company invests and trades in debt and equity securities and, to a lesser extent, engage in derivatives and asset securitization transactions and make call loans. The company also provides investment banking and securities brokerage services. Securities Investment and Trading The company invests in and trades securities for its own account in order to maintain adequate sources of liquidity and to generate interest and dividend income and capital gains. The company’s trading and investment portfolios consist primarily of Korean treasury securities and debt securities issued by Korean government agencies, local governments or certain government-invested enterprises and debt securities issued by financial institutions. The company’s equity securities consist primarily of marketable beneficiary certificates and equities listed on the KRX KOSPI Market, the KRX KOSDAQ Market or the KRX KONEX Market. The company’s trading portfolio also includes derivative-linked securities, the underlying assets of which were linked to, among other things, interest rates, exchange rates, stock price indices or credit risks. Derivatives Trading The company engages in derivatives trading, including on behalf of its customers. The company provides and trades a range of derivatives products, including interest rate swaps and options, relating to interest rate risks; cross-currency swaps, forwards and options relating to foreign exchange risks; and stock price index options linked to the KOSPI index. The company’s derivatives operations focus on addressing the needs of its corporate clients to hedge their risk exposure and the need to hedge its risk exposure that results from such client contracts. The company also engages in derivatives trading activities to hedge the interest rate and foreign currency risk exposures that arise from its own assets and liabilities. In addition, the company engages in proprietary trading of derivatives within its regulated open position limits. Asset Securitization Transactions The company is active in the Korean asset-backed securities market. Based on its diverse experience with respect to product development and management capabilities relating to asset securitization, it offers customers a wide range of financial products and participate in various asset securitization transactions, including through its subsidiary KB Securities, to reinforce its position as a leading financial services provider with respect to the asset securitization market. Call Loans The company makes call loans and borrow call money in the short-term money market. Call loans are defined as short-term lending among banks and financial institutions either in Won or in foreign currencies with maturities of 90 days or less. Typically, call loans have maturities of one day. Investment Banking The company has focused on selectively expanding its investment banking activities in order to increase its fee income and diversify its revenue base. The company provides investment banking services primarily through KB Securities and Kookmin Bank. The company’s principal investment banking services include securities underwriting; financing and financial advisory services for mergers and acquisitions; project finance and financial advisory services for social overhead capital projects, such as highway, port, power, water and sewage projects; financing and financial advisory services for real estate development projects; and structured finance. In May 2016, the company acquired 22.56% of the outstanding shares of Hyundai Securities Co., Ltd., a publicly listed Korean securities firm, and further increased its shareholding in Hyundai Securities to 29.62% in June 2016 by acquiring treasury shares of Hyundai Securities. In October 2016, the company effected a comprehensive stock swap of the outstanding shares of Hyundai Securities for newly issued shares of the company, as a result of which Hyundai Securities became a wholly-owned subsidiary. Through the acquisition of Hyundai Securities and the creation of an integrated securities firm, the company sought to strengthen its investment banking and securities brokerage capabilities, as well as to achieve economies of scale. Securities Brokerage The company provides securities brokerage services through KB Securities. The company’s activities include provision of brokerage services to its retail and corporate customers relating to a wide range of investment products, including stocks, futures, options, equity- and derivative-linked securities and debt instruments, as well as provision of prime brokerage services to hedge funds. In addition, the company offers self-directed brokerage services through KB Securities’ online and smartphone brokerage platforms. International Banking and Finance The company engages in various international banking and finance activities, including foreign exchange services and derivatives dealing, import and export-related services, offshore lending, syndicated loans, foreign currency securities investment and non-life insurance. These services are provided primarily to the company’s domestic customers and overseas subsidiaries and affiliates of Korean corporations and to a limited extent, to local companies and individuals. The company also raises foreign currency funds through its international banking and finance operations. Trustee and Custodian Services Relating to Investment Trusts and Other Functions The company acts as a trustee for 107 financial investment companies with a collective investment license, which invest in investment assets using funds raised by the sale of beneficiary certificates of investment trusts to investors. The company also acts as custodian for 274 financial institutions and as fund administrator for 138 financial institutions with respect to various investments, as well as acting as settlement agent in connection with such services. The company receives a fee for acting in these capacities and generally perform various functions, such as holding assets for the benefit of the investment trusts or institutional investors; receiving and making payments in respect of such investments; acting as settlement agent in respect of such investments on behalf of the investment trust or institutional investors, in the domestic and overseas markets; providing reports on assets held in custody; providing certain foreign exchange services for overseas investment and foreign investors; and providing fund-related administration and accounting services. Other Businesses Trust Account Management Services Money Trust Management Services The company provides trust account management services for both specified money trusts and unspecified money trusts. The company receives fees for its trust account management services consisting of basic fees that are based upon a percentage of either the net asset value of the assets or the principal under management and, for certain types of trust account operations, performance fees that are based upon the performance of the trust account operations. The company also charges performance fees with respect to certain types of trust account products. The company receives penalty payments when customers terminate their trust accounts prior to the original contract maturity. The company provides trust account management services for 20 types of money trusts. The maturities of the money trusts the company manages vary by the type of the trust. Approximately 2.8% of the company’s money trusts also provide periodic payments of dividends which are added to the assets held in such trusts and not distributed. Under Korean law, the assets of the company’s trust accounts are segregated from its banking account assets and are not available to satisfy the claims of any of its potential creditors. Property Trust Management Services The company also offers property trust management services, where it manages non-monetary assets in return for a fee. Non-monetary assets include mostly securities, but can also include other liquid receivables and real estate. Under these arrangements, the company renders custodial services for the property in question and collect fee income in return. Investment Trust Management Through KB Asset Management and KB Securities, the company offers investment trust products to customers and manage the funds invested by them in investment trusts. Insurance Non-Life Insurance In June 2015, the company acquired a 19.47% stake in KB Insurance Co., Ltd. (KB Insurance), a publicly listed Korean non-life insurance company. KB Insurance offers a variety of non-life insurance products, including principally the following: Long-Term Insurance Products: Long-term insurance products are sold to retail customers and provide protection against various types of losses, with specified coverage periods of at least three years and ranging up to 30 years or ending at specified ages. Unlike general property and casualty insurance products, which usually have a coverage period of one year or less and only have pure protection features, substantially all long-term insurance policies in Korea also have an integrated savings feature. KB Insurance offers a broad range of long-term insurance products covering the policyholder’s injuries, illnesses, long-term care, disabilities, accidents, property losses or other events. Automobile Insurance Products: Automobile insurance products are sold to both retail and institutional customers and generally provide coverage for the following types of losses resulting from the policyholder’s ownership or use of an insured automobile, such as liability to third parties for bodily injuries or death, as well as damage to automobiles or other personal property; and the policyholder’s own bodily injuries and automobile damage or theft. KB Insurance’s automobile insurance policies typically have a coverage period of one year or less. General Property and Casualty Insurance Products: General property and casualty insurance products are sold to institutional customers and include the following fire and allied lines insurance policies, providing protective coverage for damage to buildings and facilities and their contents against fire, flood, storm, lightening, explosion, theft and other risks; marine insurance policies, providing protective coverage for damage to marine vessels and their cargo; and specialty insurance policies, which cover various other types of specified risks faced by businesses, including liabilities and business interruption. KB Insurance operates a multi-channel distribution platform in Korea, comprising agencies (which are independent insurance brokerage companies), a network of financial consultants, bancassurance arrangements with commercial banks and other financial institutions, direct marketing channels (including home shopping television networks and the Internet) and a corporate sales force. Life Insurance In January 2023, in order to maximize the synergy effects in the company’s life insurance operations, it merged the Former KB Life Insurance with and into Prudential Life Insurance, and the surviving entity is called KB Life Insurance Co., Ltd. Through KB Life Insurance, the company offers a variety of individual and group life insurance products, including annuities, savings insurance, variable life insurance, whole life insurance and term life insurance, as well as health insurance. The company utilizes its multi-channel distribution platforms to market these products, which includes sales through agencies, financial consultants, telemarketers and bancassurance arrangements with commercial banks and other financial institutions. Bancassurance Through the bancassurance operations of Kookmin Bank, the company offers insurance products of other institutions to retail customers in Korea. The company markets a wide range of bancassurance products and seeks to generate additional fee-based revenues by expanding its offering of these products. The company’s bancassurance business has alliances with life insurance companies (including its subsidiary, KB Life Insurance) and non-life insurance companies (including its subsidiary, KB Insurance) and offers different products through its branch network. These products are composed of types of life insurance policies, such as annuities, savings insurance and variable life insurance, and types of non-life insurance products. Consumer Finance The company provides consumer finance services through KB Capital Co., Ltd. The company acquired 52.02% of the outstanding shares of KB Capital in 2014. KB Capital provides leasing services and installment finance services for various products, including automobiles, heavy machineries and medical equipment, as well as microlending services. The company expects KB Capital to continue to expand its customer base by providing a variety of non-banking financial services to retail customers, as well as synergies through coordinated business operations with its other subsidiaries, including Kookmin Bank. Management of the National Housing and Urban Fund The National Housing and Urban Fund is a government fund that provides financial support to low-income households in Korea by providing mortgage financing and construction loans for projects to build small-sized housing. The operations of the National Housing and Urban Fund include providing and managing National Housing and Urban Fund loans, issuing National Housing and Urban Fund bonds and collecting subscription savings deposits. In February 2013, the Ministry of Land, Infrastructure and Transport designated the comopany as one of the managers of the National Housing and Urban Fund. The financial accounting for the National Housing and Urban Fund is entirely separate from the company’s financial accounting, and the non-performing loans and loan losses of the National Housing and Urban Fund, in general, do not impact its financial condition. Regulations and guidelines for managing the National Housing and Urban Fund are issued by the Minister of Land, Infrastructure and Transport pursuant to the Housing and Urban Fund Act. Distribution Channels Banking Branch Network Kookmin Bank operates a network of branches and sub-branches in Korea, which was one of the largest branch networks among Korean commercial banks. An extensive branch network is important to attracting and maintaining retail customers, who use branches extensively and value convenience. The company’s extensive branch network in Korea and retail customer base provide it with a source of stable. In addition, the company has continued to implement the specialization of its branch functions. Of its branch network as of December 31, 2022, the company had two branches that primarily handled large corporate banking. In order to support its branch network, the company has established an extensive network of ATMs, which are located in branches and in unmanned outlets known as autobanks. The company has actively promoted the use of these distribution outlets in order to provide convenient service to customers, as well as to maximize the marketing and sales functions at the branch level. Other Banking Channels Internet Banking The company’s Internet banking services include: basic banking services, including fund transfers, balance and transaction inquiries, pre-set automatic transfers, product inquiries, online bill and tax payments and foreign exchange services; investment services, including opening deposit accounts and investing in funds; processing of loan applications; electronic certification services, which permit users to authenticate their identity and transactions on a confidential basis through digital signatures; and wealth management and advisory services, including financial planning and real estate information services. Phone Banking The company offers a variety of phone banking services, including inter-account fund transfers, balance and transaction inquiries, customer service inquiries and bill payments. The company also has call centers, which it primarily uses to: advise clients with respect to deposits, loans and credit cards and to provide the company’s customers a way to report any emergencies with respect to their accounts; allow its customers to conduct transactions with respect to their accounts, such as balance and transfer inquiries, transfers or payments and opening accounts; and conduct telemarketing to the company’s customers or potential customers to advertise products or services. Smartphone Banking KB Star Banking, the company’s mobile banking application for smartphones, allows its customers the flexibility to conduct a variety of financial transactions, including balance and transaction inquiries, fund transfers and asset management, anywhere at any time. It is also intended to act as a hub for all of the company’s finance services, including securities transactions and insurance, by providing its customers with access to the key services offered by a number of its subsidiaries, such as KB Securities and KB Insurance. The company’s smartphone banking services include: basic banking services, including fund transfers, balance and transaction inquiries, bill payments and foreign exchange services; investment services, including investing in savings deposits that are designed specifically for and offered to smartphone banking customers; and processing of loan applications and bancassurance services. The company also continues to develop innovative mobile applications that cater to specific customer needs and lifestyles. For example, the company offers Liiv Next, a finance platform that provides easy-to-use banking services, such as wire transfers and electronic payments, as well as a variety of non-banking services, such as games and quizzes to its younger Generation Z customers. The company also offers a range of other mobile applications, including Liiv Talk Talk, its mobile peer-to-peer payment and messaging application, Liiv M, a mobile virtual network operator (MVNO) that offers a fusion of finance and mobile services and KB Real Estate, its new cloud-based real estate application that provides various information on real properties. The company also offers MyData services through several channels, including KB Star Banking, its mobile banking application, and KB Pay, a MyData-based platform operated by KB Kookmin Card. Other Channels The company provides cash management services, which include automatic transfers, connection services to other financial institutions, real-time firm banking, automatic fund concentration and transmittal of trading information. Distribution Channels for Other Services Through its non-banking subsidiaries, the company operates a network of dedicated branches and other distribution channels through which its customers can access credit card, securities brokerage, insurance and consumer finance products and services. The company’s other non-banking subsidiaries also operate a number of branches in Seoul and other areas. The company also provides credit card, securities brokerage, insurance and consumer finance services through dedicated call centers, smartphone applications and Internet websites operated by KB Kookmin Card, KB Securities, KB Insurance, KB Life Insurance and KB Capital. Strategy The company’s strategic focus is to become a world-class financial group that ranks among the leaders of the financial industry in Asia and globally. The company plans to continue to solidify its market position as Korea’s leading financial group, enhance its ability to provide comprehensive financial services to its retail and corporate customers, and strengthen its overseas operating platform and network. The key elements of the company’s strategy include providing comprehensive financial services and maximizing synergies among its subsidiaries through its financial holding company structure; identifying, targeting and marketing to attractive customer segments and providing superior customer value and service to such segments; focusing on expanding and improving credit quality in its corporate lending business and increasing market share in the corporate financial services market; strengthening internal risk management capabilities; and cultivating a performance-based, customer-oriented culture that emphasizes market best practices. Supervision and Regulation The company’s investments in securities are subject to a number of guidelines, including limitations prescribed under the Financial Holding Company Act and the Bank Act. History KB Financial Group Inc. was founded in 1963. The company was incorporated in 2008 under the Financial Holding Companies Act of Korea.