BNK Financial Group Sustainability Report Contents 2014 Vision Of BNK Financial Group 01 CEO Message 02 The Two-Bank System For Future Potentials 04 BNK Financial Group History 06 Stable Corporate Governance 08 Integrated Risk Management 10 Transparent Ethical Management 12 Initiating Sustainable Management 14 Stakeholder Engagement 15 Materiality Test 16 Sustainability Key Aspects Report 1. Laying the Foundation for Sustainable Growth 20 2. Providing Customer-Centered Financial Services 26 3. Response to Climate and Energy Reduction 34 4. Suggesting a New Win-Win Growth Model with 40 the Regional communities 5. Fostering Financial Specialists 48 Reporting Aspects prior to Sustainable Management Protection of Financial Consumers 56 Happiness with You, Together Practice Busan Bank 60 Kyongnam Bank 62 BNK Securities 64 BNK Capital 66 BNK Savings Bank 68 BNK Credit Information 70 BNK System 72 Financial Statements 74 Appendix Performance Data of Sustainability Management 105 GRI Guideline Index 110 Assurance Statement on GHG Emissions 113 Third - Party Assurance Report 114 Explanations about the Report 116 BNK Financial Group Vision Corporate Vision BNK Financial Group With the incorporation of Kyongnam Bank as an affiliate of BNK Financial Group, the group achieved the mid-and long-term man- Sustainability Report agement plan under the Vision 2015. As of 2014-end, our total assets reached KRW 93 trillion with approximately 8,000 employees, 2014 BNK has emerged as one of the top five financial groups (among financial groups for commercial banks), and we have paved the way to expand our horizons to the global market as Korea’s representative regional financial group. Management Principles Under a management philosophy of ‘To the world with the region and to a better future with the customers’ for a higher leap, BNK Financial Group is committed to expanding its business presence beyond the southeastern economic zone of Korea up to the met- ropolitan area in Korea and major countries in Asia. We plan to become ‘a Global Super Regional Financial Group which is among Asia's top 30 and one of the top 100 global financial groups by 2020’ to achieve the vision of serving as ‘a global premier regional financial group 'To this end, we will continue to explore business for new growth, scale up the share of our non-banking sector businesses and expand our reach overseas focusing especially on Southeast Asia. Customer Satisfac- Value Creation Win-Win Employee Happi- BNK Financial Group Vision tion Management Management Management ness Management Raise customer sat- Create the highest Practice social Satisfy employees isfaction levels and corporate value responsibilities by creating a work- put emphasis on based on long- through contri- place with joy and Vision 2015 Vision 2020 customer interests term profitability bution to local a sense of pride communities and region-focused Korea’s Super Regional Financial Group Global Super Regional Financial Group management BNK Financial Group seeks to become the first superior BNK Financial Group seeks to become a premier regional regional financial group that represents Korea. financial group with global competitiveness. As Korea’s No.1 regional financial group, we will conduct our We aim to fly higher as a globally competitive, world-class business lines as a comprehensive financial group, and premier financial group. We are focused on going-beyond secure specialized competitiveness as a regional financial our first rank in Korea and aim to emerge as a superior Core Values group to make inroads into the global market. regional financial group equipped with a comprehen- sive financial service system. Happiness with You Customer Challenge and Responsibility Communication In Starting ‘Happiness with You’ -oriented Innovation and Trust and Teamwork The ‘Happiness with You’ project that began in 2012 has been highly acclaimed because it laid a new foundation in corporate social contribution activities as BNK Financial Group’s customized social contribution project. It has garnered strong trust from local com- munities and customers as well. We aim to spread the benefits of the project to Busan, Ulsan and Gyeongnam regions to reach out to more local residents. ‘Happiness with You’ Fostered by BNK Financial Group BNK Financial Group’s corporate slogan is 'Happiness with You'. It implies that we will practice the Happiness with You to create a loving world. The slogan also implies Giving Hope through Happiness for the future by spearheading initiatives forsocially respon- sible management and creative finance. It also conveys our commitment for continued passion toward the development of local communities driven by our key business focused on socially responsible projects in the group level. We are ready to make a happier future with stakeholders as all our affiliates are unwaveringly engaged in practicing the ‘Happiness with You’ based on the four man- agement principles: win-win strategies, customer satisfaction, value creation and employees’ happiness. 02 BNK Financial Group Sustainability Report 2014 03 CEO Message BNK’s ‘Happiness with You’ will make a world of happiness giving hopes. Since the establishment of Busan Bank in 1967 that has ma- Second, we will concentrate on intensifying profitability and tured with the local regions, BNK Financial Group was launched management efficiency based on solid management driven in 2011. The group has leaped higher as Korea’s representative by stable growth. Based on strategies that focus on profitability regional financial group with seven affiliates in a space of mere- and soundness, all-out efforts will be underway to boost the ly four years. competencies of all affiliates by exploring new businesses for each affiliate, diversifying income sources, maximizing synergies With the incorporation of Kyongnam Bank last October, we es- and establishing a profit-oriented organization. tablished a two-bank system. As a result, we have solidified our presence as one of Korea’s top five financial groups with total Lastly, we will practice distinctive socially responsible man- assets of KRW 93 trillion, 8,000 employees and 500 branches as agement to serve as the most trusted financial partner. We of end-2014. will dramatically upgrade the 'Happiness with You' project that has been maintained for the past three years, and take the lead The corporate title was changed from ‘BS Financial Group’ into in creating values to be shared in the financial industry. Projects ‘BNK Financial Group’ because 'BS' might be understood as to support the creative finance and facilitation of the regional geographically confined to Busan, while BNK as an acronym for economies including technology financing, relationship finance ‘Beyond No.1 Korea’and 'Busan and Kyongnam'. This will push us and job creation will be further explored and initiated as we do to move forward to become a 'Global Super Regional Financial the utmost to fulfill social responsibilities for regional communi- Group'. ties and residents. We have intensified the scope and depth of the Happiness with BNK Financial Group promises to rise as the most exemplary You project that has cemented its presence as an iconic brand holding company model that has grown into a world-class fi- of BNK Financial Group while leading socially responsible man- nancial group originating from local regions. This will be driven agement practices in the financial sector from 2012. As such, by the core value of “Dynamic”,“Glocal”,“Partnership” symbolized we are committed to practicing noblesse oblige befitting the by BNK and its new CI, and the management motto to grow higher prestige of BNK Financial Group. higher i.e., ‘To the world with the region and to a better future This year’s corporate slogan for BNK Financial Group is ‘Giving with the customers.’ Hope through Happiness‘. Accordingly, we plan to extend We would like to express our thanks to our stakeholders, cus- financial services that give hope to local communities and tomers, shareholders and local communities, for their continu- customers by scaling up the creative finance, and initiating ous interest and support for BNK Financial Group’s sustainable region-focused social contribution projects that have stories to growth. tell and touch the hearts of people. We aim to create our exclusive differentiated values by selecting the following action plans according to our management prin- ciple of ‘Great Innovation 2015 – Forward-looking Management System’ in order to establish the basis for sustainable growth. First, we will secure engines for sustainable growth by car- rying out distinctive strategies. We will establish our unparal- leled stature as a leading regional financial group, and boost our May 2015 roles as a financial group specialized in Busan as the mecca of finance. Seeking to tap into oversea markets where the group’s future growth engines lie, we will initiate optimized business model strategies in Asia through cross-affiliate collaboration and enable business localization in a preemptive manner. Chairman and CEO of BNK Financial Group Se Whan Sung 04 BNK Financial Group Sustainability Report 2014 05 The Two-Bank System for Future Potentials Expanding Efficiency in Regional Finance Shareholder Status A Representative Regional Financial Group in the Southeastern BNK Financial Group generates synergies while raising regional finance by establishing close coop- (Unit: %) Economic Zone of Korea eration as well as seamless exchanges between Busan Bank and Kyongnam Bank. Joint investment Since the launch of BNK Financial Group as a premierfinancial holding company among regional is made in financial investment fields such as PF, SOC and ship finance in order to boost the yield, banks in March 2011, the group has established itself as a representative financial group in the while profits are generated by adopting the common brand card, improving hybrid branches and southeastern economic zone of Korea, equipped with seven affiliates: Busan Bank, Kyongnam Bank, engaging in mutual cooperation. We laid the foundation to establish an integrated IT center in the BNK Securities, BNK Capital, BNK Savings Bank, BNK Credit Information and BNK System.