ANNUAL REPORT 2008 new for a New Era ANNUAL REPORT 2008 9-1, 2-ga, Namdaemun-ro, Jung-gu, Seoul 100-703, Korea Tel: (822) 2073-7114 www.kbfng.com CONTENTS 002 KB Financial Group at a Glance 003 Financial Indicators 004 Message from the Chairman 008 2008 Highlights 010 2008 Awards & Recognition New Star for New Corporate Value 014 Vision & Strategy 016 Senior Management 018 KB FGI Organization Chart 019 KB Financial Group Organization Chart 020 Synergy Creation 022 IT Systems 024 Risk Management New Star for New Social Value 030 Corporate Governance 032 Board of Directors 034 Ethical Management 036 Shareholder Relations 037 Corporate Culture 038 Social Contribution New Star for New Customer Value 042 Kookmin Bank 050 KB Investment & Securities 052 KB Futures 054 KB Asset Management 056 KB Real Estate Trust 058 KB Investment 060 KB Futures 062 KB Credit Information 064 KB Data Systems New Star for New Intrinsic Value 068 Management’s Discussion & Analysis 094 Auditor’s Report 188 Overseas Network 189 Forward-Looking Statements Business Summary Business Summary Business Summary Business Summary Business Summary Business Summary Business Summary Business Summary Business Summary Korea’s largest bank in terms of customers Joining KB Financial Group in March 2008, KB KB Life Insurance was established with KB Asset Management has made a vital KB Real Estate Trust seeks to lead the real KB Investment assists small and medium-sized KB Futures, a brokerage firm specializing in KB Credit Information specializes in the Established in 1991, KB Data Systems is a A new and branches, Kookmin Bank was also first Investment & Securities is a comprehensive capital participation by Kookmin Bank and ING contribution to the industry’s high growth with estate trust industry by providing superior enterprises in financial and business decision- derivatives, contributes to the development of management of unpaid receivables and specialized financial system company for IT in the financial industry to record net income securities company. In addition to its leadership Group, the internationally renowned financial its comprehensive asset management services. integrated services through a nationwide branch making through each stage of a company’s sound investment practices and provides state- commands a leading position among domestic project development, system management, over KRW2 trillion for three consecutive years in the primary market for corporate bonds and institution. Initiating bancassurance operations Its main businesses include the trading & network comprising its head office in Seoul and growth, from establishment to listing on the of-the-art professional services equipped with debt collection companies in terms of asset sales of financial IT solution packages and in 2007. Kookmin Bank has strengthened ABS, as well as real estate project financing, in June 2004 through Kookmin Bank’s domestic brokerage of collective investment schemes regional offices in Busan, Daejeon, Daegu and Kosdaq. Its corporate support solutions provided experienced industry professionals, superior scale, profitability and services. Through rapid resale of IT hardware equipment, and serves marketing systems through G-CRM, improved the company offers brokerage services branches, KB Life Insurance provides an array managed by the company, asset management of Gwangju. in cooperation with Kookmin Bank enable KB IT infrastructure, insightful research, and an and effective disposal of non-performing debts as IT partner for Kookmin Bank. Based on asset soundness, ranked No. 1 in customer for institutional and foreign investors, and of insurance products via diversified sales a wide range of collective investment schemes, Hereafter, in addition to collaboration with KB Investment to offer differentiated services for its advanced risk management system. based on its high-caliber expertise and advanced its accumulated experience, the company satisfaction, acquired the highest credit ratings investment banking services including IPO, ECM, channels, including the newly launched General and investment advisory & investment trust Financial Group subsidiaries, KB Real Estate invested companies. KB Futures aims to rise to the top of Korea’s debt management systems, the company strives is transferring financial IT knowhow to among Korea’s banks, and upgraded risk and M&A advisory. It also generates steady Agency (GA) and telemarketing (TM). In 2009, it business. To become Korea’s leading asset Trust will elevate its business network through As a specialist and long-term investor in non- futures industry through a combination of a to support restoration of the debtor’s credit and countries overseas, including Indonesia and to Lead management systems in line with the highest earnings from equities, bonds, and derivatives, will launch a Total Consultant by Tele-skill (TC) management company armed with world-class strategic alliances with domestic & foreign listed companies in new growth sectors, it strong financial structure and sophisticated a smooth cycle of financial transactions. Japan, and taking steps to improve its global global standards. and has expanded into retail market with the channel to serve as the key outbound face-to- management processes, it puts into practice real estate firms and strengthen its financial will expand its business scope from venture management knowhow, and its customer- In line with its vision of “Becoming the No. 1 competitiveness. the Asian To cope with intensified competition in the launch of “KB plustar” home trading system face channel of KB Financial Group to market a its management philosophies of “Optimal structure and risk management systems. This investment to mid-sized M&As and other centered, honest business practices and talent- credit information company through end-to- In line with its corporate vision to become financial sector and growing uncertainty in the (HTS). full range of financial products. customer satisfaction through optimal risk- will enable it to respond aggressively to changes corporate investment, while playing a key role in focused management philosophy. end service,” KB Credit Information seeks “Korea’s Premier Financial SI Company,” KB Financial Industry global economy, Kookmin Bank will implement With KB Financial Group’s extensive domestic & To become the “customer’s first choice” among adjusted return” and “Dynamic work ethic and in economic conditions and grow into Korea’s maximizing group-wide synergy creation. to maintain its lead in the debt collection Data Systems keeps pace with financial industry its “New Start” management strategy in 2009 overseas networks, it aims to become one of the insurance companies, it will diversify sales environment created by passionate and driven leading real estate IB. industry and grow into a comprehensive credit changes and the paradigm shift in competition, through profit-centered cost management, top three comprehensive financial investment channels and enhance operation processes, professionals.” information service provider through total and puts its management philosophy of With the launch of KB FGI in September 2008, KB Financial Group boasts a comprehensive array of strengthened risk management, customer- companies in Korea by 2013 and grow into one infrastructure and risk management in pursuit integration of KB Financial Group subsidiaries’ customer trust, employee emphasis, creative financial services, the nation’s largest customer base, and unmatched financial stability. focused sales activities, and accelerated synergy of Asia’s leading securities companies. of steady, with its goal of joining the industry’s credit evaluation processes. innovation and honest management into daily creation. “Top 5 by 2013.” practice. We will leverage these competitive advantages to become “A Global Financial Group, Leading the Asian Financial Industry” and a genuine “Global Financial Star” serving our shareholders, customers, • Key Financial Indicators • Key Financial Indicators • Key Financial Indicators • Key Financial Indicators • Key Financial Indicators • Key Financial Indicators • Key Financial Indicators • Key Financial Indicators • Key Financial Indicators management and employees, and every member of society. (in KRW billion) (in KRW billion) (in KRW billion) (in KRW billion) (in KRW billion) (in KRW billion) (in KRW billion) (in KRW billion) (in KRW billion) Total Assets 262,093.2 Total Assets 2,052.3 Total Assets 1,769.3 Total Assets 126.8 Total Assets 221.4 Total Assets 115.4 Total Assets 150.1 Total Assets 50.6 Total Assets 46.5 Total Shareholders’ Equity 17,314.1 Total Shareholders’ Equity 322.1 Total Shareholders’ Equity 126.5 Total Shareholders’ Equity 116.5 Total Shareholders’ Equity 97.5 Total Shareholders’ Equity 103.8 Total Shareholders’ Equity 38.2 Total Shareholders’ Equity 44.5 Total Shareholders’ Equity 26.5 Net Income 1,510.8 Net Income 34.8 Net Income -6.5 Net Income 27.9 Net Income 1.2 Net Income 3.2 Net Income 5.8 Net Income 4.1 Net Income 6.3 Major Products and Services Major Products and Services Major Products and Services Major Products and Services Major Products and Services Major Products and Services Major Products and Services Major Products and Services Major Products and Services •Deposit & Loans • Equities and derivatives brokerage services • Nonparticipating KB Platinum Annuity •Asset management of collective investment • Land development trusts, real estate •Venture investment • Domestic/international futures & option • Debt collection