Consolidated Interim Financial Statements (2017)Full Document 

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WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2017 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

ATTACHMENT: INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

WOORI BANK


LOGO

Deloitte Anjin LLC

9F., One IFC,

10, Gukjegeumyung-ro Youngdeungpo-gu, Seoul

07326, Korea

Tel: +82 (2) 6676 1000

Fax: +82 (2) 6674 2114

www.deloitteanjin.co.kr

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

English Translation of a Report Originally Issued in Korean on November 13, 2017

To the Shareholders and the Board of Directors of

Woori Bank

Report on the Consolidated Financial Statements

We have reviewed the accompanying consolidated interim financial statements of Woori Bank and subsidiaries (the "Group"). The financial statements consist of the consolidated interim statements of financial position as of September 30, 2017 and the consolidated interim statements of comprehensive income for the three and nine months ended September 30, 2017 and 2016, consolidated interim statements of changes in shareholders’ equity and consolidated interim statements of cash flows, all expressed in Korean Won, for the nine months ended September 30, 2017 and 2016, respectively, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Interim Financial Statements

The Group’s management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with Korean International Financial Reporting Standards ("K-IFRS") and for such internal control as management determines is necessary to enable the preparation of consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Independent Accountants’ Responsibility

Our responsibility is to express a conclusion on the accompanying consolidated interim financial statements based on our reviews.

We conducted our reviews in accordance with standards for review of consolidated interim financial statements in the Republic of Korea. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data, and this provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Review conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial statements of the Group are not presented fairly, in all material respects, in accordance with K-IFRS 1034, Interim Financial Reporting.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Please see www.deloitte.com/kr/about to learn more about our global network of member firms.

© 2017. For information, contact Deloitte Anjin LLC


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Others

We audited the consolidated interim statement of financial position as of December 31, 2016, and the related consolidated interim statements of comprehensive income, changes in shareholders’ equity and cash flows for the year ended December 31, 2016 (not presented in the accompanying consolidated financial statements, all expressed in Korean Won), in accordance with auditing standards generally accepted in the Republic of Korea. We expressed an unqualified opinion in our independent auditors’ report dated on March 3, 2017. The consolidated statement of financial position as of December 31, 2016 presented as a comparative purpose in the accompanying financial statements does not differ, in all material respects, from the audited consolidated statement of financial position as of December 31, 2016.

Accounting principles and review standards and their application in practice vary among countries. The accompanying consolidated financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying consolidated financial statements are for use by those knowledgeable about Korean accounting procedures and review standards and their application in practice.

November 13, 2017

Notice to Readers

This report is effective as of November 13, 2017, 2017, the accountants’ review report date. Certain subsequent events or circumstances may have occurred between the accountants’ review report date and the time the accountants’ review report is read. Such events or circumstances could significantly affect the consolidated financial statements and may result in modifications to the accountants’ review report.


WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2017 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

The accompanying consolidated interim financial statements including all footnote disclosures were prepared by and are the responsibility of the Group.

Kwang Goo Lee

President and Chief Executive Officer

Main Office Address: (Road Name Address) 51, Sogong-ro, Jung-gu, Seoul
(Phone Number) 02-2002-3000


WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2017 AND DECEMBER 31, 2016

September 30,
2017
December 31,
2016
(Korean Won in millions)
ASSETS

Cash and cash equivalents (Note 6)

6,812,489 7,591,324

Financial assets at fair value through profit or loss (Notes 4,7,11,12,18 and 26)

4,609,487 5,650,724

Available-for-sale financial assets (Notes 4,8,11,12 and 18)

18,624,588 20,817,583

Held-to-maturity financial assets (Notes 4,9,11,12 and 18)

16,325,482 13,910,251

Loans and receivables (Notes 4,10,11,12,18 and 45)

266,972,072 258,392,633

Investments in joint ventures and associates (Note 13)

557,860 439,012

Investment properties (Note 14)

361,355 358,497

Premises and equipment (Notes 15 and 18)

2,490,725 2,458,025

Intangible assets and goodwill (Note 16)

524,914 483,739

Assets held for sale (Note 17)

2,909 2,342

Current tax assets

4,105 6,229

Deferred tax assets

258,031 232,007

Derivative assets (Notes 4,11,12 and 26)

109,828 140,577

Net defined benefit assets (Note 24)

5,934 70,938

Other assets (Notes 19 and 45)

215,383 128,846

Total assets

317,875,162 310,682,727

LIABILITIES

Financial liabilities at fair value through profit or loss (Notes 4,11,12,20 and 26)

2,468,106 3,803,358

Deposits due to customers (Notes 4,11,21 and 45)

226,344,233 221,020,411

Borrowings (Notes 4,11,12 and 22)

16,314,499 18,769,515

Debentures (Notes 4,11 and 22)

27,537,013 23,565,449

Provisions (Notes 23 and 44)

401,185 428,477

Net defined benefit liability (Note 24)

26,433 64,666

Current tax liabilities

249,960 171,192

Deferred tax liabilities

22,303 22,023

Derivative liabilities (Notes 4,11,12 and 26)

41,619 7,221

Other financial liabilities (Notes 4,11,12, 25 and 45)

23,529,630 21,985,086

Other liabilities (Notes 25 and 45)

323,213 299,376

Total liabilities

297,258,194 290,136,774

(Continued)


WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2017 AND DECEMBER 31, 2016 (CONTINUED)

September 30,
2017
December 31,
2016
(Korean Won in millions)
EQUITY

Owners’ equity:

20,450,563 20,386,160

Capital stock (Note 28)

3,381,392 3,381,392

Hybrid securities (Note 29)

3,017,888 3,574,896

Capital surplus (Note 28)

287,066 286,331

Other equity (Note 30)

(1,759,299 ) (1,468,025 )

Retained earnings (Notes 31 and 32)

(Regulatory reserve for credit loss as of September 30, 2017 and December 31, 2016 is 2,438,191 million Won and 2,255,252 million Won, respectively

Regulatory reserve for credit loss to be reserved as of September 30, 2017 and December 31, 2016 is 102,705 million Won and 182,939 million Won, respectively

Planned provision of regulatory reserve for credit loss as of September 30, 2017 and December 31, 2016 is 102,705 million Won and 182,939 million Won, respectively)

15,523,516 14,611,566

Non-controlling interests (Note 1)

166,405 159,793

Total equity

20,616,968 20,545,953

Total liabilities and equity

317,875,162 310,682,727

See accompanying notes


WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND NINE MONTHS

ENDED SEPTEMBER 30, 2017 AND 2016

2017 2016
Three months
ended
September 30
Nine months
ended
September 30
Three months
ended
September 30
Nine months
ended
September 30
(Korean Won in millions, except per share data)

Interest income

2,187,829 6,377,413 2,108,925 6,402,487

Interest expense

836,273 2,475,537 852,483 2,657,287

Net interest income (Notes 34 and 45)

1,351,556 3,901,876 1,256,442 3,745,200

Fees and commissions income

534,597 1,548,490 482,002 1,388,832

Fees and commissions expense

257,728 733,921 240,495 679,319

Net fees and commissions income (Notes 35 and 45)

276,869 814,569 241,507 709,513

Dividend Income (Note 36)

48,842 108,287 16,881 137,280

Net gain (loss) on financial instruments at fair value through profit or loss (Note 37)

48,773 (97,636 ) (102,362 ) (43,766 )

Net gain on available-for-sale financial assets (Note 38)

44,273 148,445 3,889 32,772

Impairment losses on credit loss (Notes 39 and 45)

(217,259 ) (501,022 ) (240,099 ) (670,843 )

General and administrative expenses (Note 40 and 45)

(1,108,625 ) (2,647,052 ) (767,230 ) (2,411,782 )

Other net operating income (expenses) (Notes 40 and 45)

(126,741 ) 74,449 31,090 (109,153 )

Operating income

317,688 1,801,916 440,118 1,389,221

Share of gains (losses) of joint ventures and associates (Note 13)

69,670 5,392 (6,375 ) (18,019 )

Other net non-operating income (loss)

(15,720 ) (5,722 ) 14,532 (11,806 )

Non-operating income (loss) (Note 41)

53,950 (330 ) 8,157 (29,825 )

Net income before income tax expense

371,638 1,801,586 448,275 1,359,396

Income tax expense (Note 42)

88,212 409,145 88,883 242,217

Net income

(Net income after the provision of regulatory reserve for credit loss for the three months ended September 30, 2017 and 2016 are 230,682 million Won and 372,698 million Won, respectively, and net income after the provision of regulatory reserve for credit loss for the nine months ended September 30, 2017 and 2016 are 1,289,736 million Won and 1,117,659 million Won, respectively) (Note 32)

283,426 1,392,441 359,392 1,117,179

Remeasurement of the net defined benefit liability

22,820 13,143 (8,121 ) (52,788 )

Items that will not be reclassified to profit or loss

22,820 13,143 (8,121 ) (52,788 )

Gain (loss) on available-for-sale financial assets

(22,335 ) (51,041 ) (27,945 ) 52,278

Share of other comprehensive gain (loss) of joint ventures and associates

3,410 4,917 (2,732 ) (2,965 )

Gain (loss) on foreign currency translation for foreign operations

14,488 (54,522 ) (72,392 ) (75,041 )

Gain (loss) on valuation of cashflow hedge

279 (1,247 ) 10,371

Items that may be reclassified to net income

(4,158 ) (101,893 ) (103,069 ) (15,357 )

Other comprehensive income (loss), net of tax

18,662 (88,750 ) (111,190 ) (68,145 )

Total comprehensive income

302,088 1,303,691 248,202 1,049,034

Net income attributable to:

Net income attributable to owners

280,146 1,378,507 355,649 1,105,915

Net income attributable to non-controlling interests

3,280 13,934 3,743 11,264

Total comprehensive income attributable to:

Comprehensive income attributable to owners

299,649 1,295,391 248,848 1,037,516

Comprehensive income (loss) attributable to non-controlling interests

2,439 8,300 (646 ) 11,518

Basic and diluted earnings per share (In Korean Won) (Note 43)

358 1,855 455 1,421

See accompanying notes


WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

Capital
stock
Hybrid
securities
Capital
surplus
Other
Equity and
others
Retained
earnings
Controlling
interests
Non-
controlling
interests
Total
equity
(Korean Won in millions)

January 1, 2016

3,381,392 3,334,002 294,259 (1,547,303 ) 13,726,122 19,188,472 121,443 19,309,915

Net income

1,105,915 1,105,915 11,264 1,117,179

Dividends

(168,317 ) (168,317 ) (1,275 ) (169,592 )

Disposal of investments in consolidated subsidiaries

1 1 1

Gain on valuation of available-for-sale financial assets

51,654 51,654 624 52,278

Changes in equity of joint ventures and associates

(2,965 ) (2,965 ) (2,965 )

Loss on foreign currencies translation of foreign operations

(74,675 ) (74,675 ) (366 ) (75,041 )

Gain on valuation of cash flow hedge

10,371 10,371 10,371

Remeasurement of the net defined benefit liability

(52,783 ) (52,783 ) (5 ) (52,788 )

Dividends on hybrid securities

(149,506 ) (149,506 ) (149,506 )

Issuance of hybrid securities

549,905 549,905 549,905

September 30, 2016

3,381,392 3,883,907 294,260 (1,615,701 ) 14,514,214 20,458,072 131,685 20,589,757

January 1, 2017

3,381,392 3,574,896 286,331 (1,468,025 ) 14,611,566 20,386,160 159,793 20,545,953

Net income

1,378,507 1,378,507 13,934 1,392,441

Dividends

(336,636 ) (336,636 ) (1,544 ) (338,180 )

Subsidiary capital increase

735 735 (144 ) 591

Gain(loss) on valuation of available-for-sale financial assets

(51,480 ) (51,480 ) 439 (51,041 )

Changes in equity of joint ventures and associates

4,917 4,917 4,917

Loss on foreign currencies translation of foreign operations

(48,506 ) (48,506 ) (6,016 ) (54,522 )

Loss on valuation of cash flow hedge

(1,247 ) (1,247 ) (1,247 )

Remeasurement of the net defined benefit liability

13,200 13,200 (57 ) 13,143

Dividends on hybrid securities

(129,921 ) (129,921 ) (129,921 )

Issuance of hybrid securities

559,565 559,565 559,565

Redemption of hybrid securities

(1,116,573 ) (208,158 ) (1,324,731 ) (1,324,731 )

September 30, 2017

3,381,392 3,017,888 287,066 (1,759,299 ) 15,523,516 20,450,563 166,405 20,616,968

See accompanying notes


WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

For the nine months ended September 30
2017 2016
(Korean Won in millions)

Cash flows from operating activities:

Net income

1,392,441 1,117,179

Adjustments:

Income tax expense

409,145 242,217

Interest income

(6,377,413 ) (6,402,487 )

Interest expense

2,475,537 2,657,287

Dividend income

(108,287 ) (137,280 )

(3,601,018 ) (3,640,263 )

Additions of expenses not involving cash outflows:

Impairment losses on credit loss

501,022 670,843

Impairment loss on investments in joint ventures and associates

74,171 29,280

Loss on transaction and valuation of derivatives instruments (hedging)

39,768 31,778

Loss on hedged items (fair value hedge)

6,856 82,263

Provisions

52,391 22,695

Retirement benefits

107,430 114,277

Depreciation and amortization

179,085 191,127

Loss on disposal of investments in joint ventures and associates

38,701 15,060

Loss on disposal of premises and equipment and other assets

8,574 6,611

Impairment loss on premises and equipment and other assets

269 1,403

1,008,267 1,165,337

Deduction of revenues not involving cash inflows:

Gain on valuation of financial instruments at fair value through profit or loss

65,764 182,767

Gain on available-for-sale financial assets

148,445 32,772

Gain on valuation of investments in joint ventures and associates

79,563 11,261

Gain on transaction and valuation of derivatives instruments (hedging)

7,695 77,723

Gain on hedged items (fair value hedge)

25,055 30,602

Reversal of provisions

2,000 864

Gain on disposal of investments in joint ventures and associates

33,194 1,250

Gain on disposal of premises and equipment and other assets

4,895 1,525

Reversal of impairment loss on premises and equipment and other assets

604 3,711

367,215 342,475

Changes in operating assets and liabilities:

Financial instruments at fair value through profit or loss

(232,152 ) (137,199 )

Loans and receivables

(10,076,492 ) (17,776,026 )

Other assets

(86,535 ) (94,998 )

Deposits due to customers

5,326,478 11,323,759

Provision

(98,616 ) (58,034 )

Net defined benefit liability

(19,952 ) (249,297 )

Other financial liabilities

1,644,842 9,621,522

Other liabilities

14,749 18,750

(3,527,678 ) 2,648,477

(Continued)


WOORI BANK AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (CONTINUED)

For the nine months ended
September 30
2017 2016
(Korean Won in millions)

Cash received from (paid for) operating activities:

Interest income received

6,445,201 6,409,990

Interest expense paid

(2,535,668 ) (2,498,628 )

Dividends received

110,855 136,163

Income tax paid

(328,793 ) (211,346 )

Net cash provided by (used in) operating activities

(1,403,608 ) 4,784,434

Cash flows from investing activities:

Cash in-flows from investing activities:

Disposal of available-for-sale financial assets

18,991,381 14,997,100

Redemption of held-to-maturity financial assets

6,851,014 5,958,431

Disposal of investments in joint ventures and associates

78,204 57,035

Disposal of investment properties

356

Disposal of premises and equipment

6,425 250

Disposal of intangible assets

998 3,784

Disposal of assets held for sale

6,832 13,876

25,935,210 21,030,476

Cash out-flows from investing activities:

Acquisition of available-for-sale financial assets

15,777,632 16,194,628

Acquisition of held-to-maturity financial assets

9,280,802 6,224,158

Acquisition of investments in joint ventures and associates

137,411 800

Acquisition of investment properties

5,080 3,133

Acquisition of premises and equipment

133,728 82,727

Acquisition of intangible assets

168,676 115,445

25,503,329 22,620,891

Net cash provided by (used in) investing activities

431,881 (1,590,415 )

Cash flows from financing activities:

Cash inflows from financing activities:

Increase in borrowings

9,856,662 5,698,152

Issuance of debentures

14,556,550 11,913,773

Issuance of hybrid securities

559,565 549,905

Capital increase of subsidiaries

635

24,973,412 18,161,830

Cash outflows from financing activities:

Decrease in borrowings

12,308,155 8,512,585

Repayment of debentures

10,581,681 10,691,486

Redemption of hybrid securities

1,323,400

Payment of dividends

336,636 168,317

Dividends paid on hybrid securities

131,423 125,946

Dividends paid on non-controlling interests

1,544 1,275

24,682,839 19,499,609

Net cash provided by (used in) financing activities

290,573 (1,337,779 )

Net increase (decrease) in cash and cash equivalents

(681,154 ) 1,856,240

Cash and cash equivalents, beginning of the period

7,591,324 6,644,055

Effects of exchange rate changes on cash and cash equivalents

(97,681 ) (218,785 )

Cash and cash equivalents, end of the period

6,812,489 8,281,510

See accompanying notes


WOORI BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2017 AND FOR THE THREE MONTHS AND THE NINE MONTHS

ENDED SEPTEMBER 30, 2017 AND 2016

1. GENERAL

(1) Summary of the parent company

Woori Bank (hereinafter referred to the "Bank"), which is a controlling entity in accordance with Korean International Financial Reporting Standards ("K-IFRS") 1110 – Consolidated Financial Statements, was established in 1899 and is engaged in the commercial banking business under the Banking Law, trust business under the Financial Investment Services and Capital Market Act, and foreign currencies exchange business with approval from The Bank of Korea ("BOK") and the Ministry of Finance and Economy ("MOFE").

Previously, Woori Finance Holdings Co., Ltd., the former holding company of Woori Financial Group, established on March 27, 2001 held a 100% ownership of the Bank. Effective November 1, 2014, Woori Finance Holdings Co., Ltd. completed its merger with and into Woori Bank, its wholly-owned subsidiary, as contemplated by the merger agreement dated November 1, 2014, by and between Woori Finance Holdings Co., Ltd. and Woori Bank. Accordingly, the shares of the Bank, 597 million shares, prior to the merger, were reduced to nil in accordance with capital reduction procedure, and then, in accordance with the merger ratio, the Bank newly issued 676 million shares. As a result, as of September 30, 2017, the common stock of the Bank amounts, expressed in Korean Won (the "KRW" or "Won"), to 3,381,392 million Won.

During the year ended December 31, 2016, the Korea Deposit Insurance Corporation ("KDIC"), the majority shareholder of the Bank, sold its 187 million shares in the Bank in accordance with the contract of "Disposal of Woori Bank’s shares to Oligopolistic Shareholders". In addition to the sale, during the nine months ended September 30, 2017, KDIC sold additional 33 million shares. As of September 30, 2017 and December 31, 2016, KDIC held 125 million shares and 158 million shares (18.52% and 23.37% ownership interest) respectively, of the Bank’s shares issued.

On June 24, 2002, Woori Finance Holdings Co., Ltd. listed its common shares on the Korea Exchange through public offering. In addition, on September 29, 2003, the holding company registered with the Securities and Exchange Commission in the United States of America and, on the same day, listed its American Depositary Shares on the New York Stock Exchange. As a result of such merger, the Bank incorporated Woori Card Co., Ltd., Woori Investment Bank Co., Ltd., Woori FIS Co., Ltd., Woori Private Equity Asset Management Co., Ltd., and Woori Finance Research Institute Co., Ltd. as its subsidiaries.

The head office of the Bank is located in 51, Sogong-ro, Jung Gu, Seoul, Korea. The Bank has 875 branches and offices in Korea, and 23 branches and offices overseas as of September 30, 2017.

(2) The consolidated financial statements for Woori Bank and its subsidiaries (the "Group") include the following subsidiaries:

Percentage of ownership
(%)
Location Financial
statements
as of
(2017)

Subsidiaries

Main business September 30,
2017
December 31,
2016

Woori Bank:

Woori FIS Co., Ltd.


System software development &
maintenance

100.0 100.0 Korea September 30

Woori Private Equity Asset Management Co., Ltd.

Finance 100.0 100.0 Korea September 30

Woori Finance Research Institute Co., Ltd.

Other service business 100.0 100.0 Korea September 30

Woori Card Co., Ltd.

Finance 100.0 100.0 Korea September 30

Woori Investment Bank Co., Ltd.

Other credit finance business 58.2 58.2 Korea September 30

Woori Credit Information Co., Ltd.

Credit information 100.0 100.0 Korea September 30

Woori America Bank

Finance 100.0 100.0 U.S.A. September 30

Woori Global Markets Asia Limited

" 100.0 100.0 Hong Kong September 30


Percentage of ownership
(%)
Location Financial
statements
as of
(2017)

Subsidiaries

Main business September 30,
2017
December 31,
2016

Woori Bank (China) Limited

Finance 100.0 100.0 China September 30

AO Woori Bank

" 100.0 100.0 Russia September 30

PT Bank Woori Saudara Indonesia 1906 Tbk(*1)

" 79.9 74.0 Indonesia September 30

Banco Woori Bank do Brasil S.A.

" 100.0 100.0 Brazil September 30

Korea BTL Infrastructure Fund

" 99.9 99.9 Korea September 30

Woori Fund Service Co., Ltd.

" 100.0 100.0 Korea September 30

Woori Finance Cambodia PLC.

" 100.0 100.0 Cambodia September 30

Woori Finance Myanmar Co., Ltd.

" 100.0 100.0 Myanmar September 30

Wealth Development Bank

" 51.0 51.0 Philippines September 30

Woori Bank Vietnam Limited

" 100.0 100.0 Vietnam September 30

Kumho Trust First Co., Ltd. (*2)

Asset securitization 0.0 0.0 Korea September 30

Asiana Saigon Inc. (*2)

" 0.0 0.0 Korea September 30

An-Dong Raja First Co., Ltd. (*6)

" 0.0 Korea September 30

Consus Eighth Co., LLC (*2)

" 0.0 0.0 Korea September 30

KAMCO Value Recreation First Securitization Specialty Co., Ltd. (*2)

" 15.0 15.0 Korea September 30

Hermes STX Co., Ltd. (*2)

" 0.0 0.0 Korea September 30

BWL First Co., LLC (*2)

" 0.0 0.0 Korea September 30

Woori Poongsan Co., Ltd. (*2)

" 0.0 0.0 Korea September 30

Deogi Dream Fourth Co., Ltd. (*2)

" 0.0 0.0 Korea September 30

Jeonju Iwon Ltd. (*2)

" 0.0 0.0 Korea September 30

Wonju I one Inc. (*2)

" 0.0 0.0 Korea September 30

Heitz Third Co., Ltd. (*2)

" 0.0 0.0 Korea September 30

Woorihansoop 1st Co., Ltd. (*2)

" 0.0 0.0 Korea September 30

Electric Cable First Co., Ltd (*2)

" 0.0 0.0 Korea September 30

Woori International First Co., Ltd. (*2)

" 0.0 0.0 Korea September 30

Woori HJ First Co., Ltd. (*2)

" 0.0 0.0 Korea September 30

Woori WEBST 1st Co., Ltd. (*2)

" 0.0 Korea September 30

HNLD 1st Inc.(*2)

" 0.0 Korea September 30

Wibihansoop 1st Co., Ltd. (*2)

" 0.0 Korea September 30

Uri QS 1st Co., Ltd (*2)

" 0.0 Korea September 30

Uri Display 1st Co., Ltd.(*2)

" 0.0 Korea September 30

Tiger Eyes 2nd Co., Ltd.(*2)

" 0.0 Korea September 30

Samsung Plus Private Equity Investment Trust 36th and 22 beneficiary certificates for the rest (*3)

Securities investment and
others
Korea September 30

Principle Guaranteed Trust (*4)

Trust 0.0 0.0 Korea September 30

Principle and Interest Guaranteed Trust (*4)

" 0.0 0.0 Korea September 30

Woori Bank and Woori Private Equity Asset Management Co., Ltd.:

Woori Private Equity Fund (*5)

Other financial business 31.9 Korea September 30

Woori Private Equity Fund:

Woori EL Co., Ltd. (*5)

Other financial business 100.0 Korea September 30

Woori Investment Bank:

Dongwoo First Securitization Specialty Co., Ltd. (*2)

Asset securitization 5.0 5.0 Korea September 30

Seari First Securitization Specialty Co., Ltd. (*2)

" 5.0 Korea September 30

Namjong 1st Securitization Specialty Co., Ltd. (*2)

" 5.0 Korea September 30

Woori Card Co., Ltd.:

TUTU Finance-WCI Myanmar Co., Ltd

Finance 100.0 100.0 Myanmar September 30

Woori Card one of 2017-1 Securitization Specialty Co., Ltd. (*2)

Asset securitization 0.5 Korea September 30

(*1) The ownership ratio has been increased, attributed to unequal capital increase of the subsidiary.
(*2) The entity was a structured entity for the purpose of asset securitization and was in scope for consolidation. Although the Group is not a majority shareholder, the Group 1) had the power over the investee, 2) was exposed, or had rights, to variable returns from its involvement with the investee, and 3) had the ability to use its power to affect its returns.

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(*3) The entity was a structured entity for the purpose of investment in securities and was in scope for consolidation, considering that the Group 1) had the power over the investee, 2) was exposed, or has rights, to variable returns from its involvement with the investee, and 3) had the ability to use its power to affect its returns.
(*4) The entity was a money trust under the Financial Investment Services and Capital Markets Act and was in scope for consolidation. Although the Group was not a majority shareholder, the Group 1) had the power over the investee, 2) was exposed, or had rights, to variable returns from its involvement with the investee, and 3) had the ability to use its power to affect its returns.
(*5) Due to return of capital invested occurred during the nine months ended September 30, 2017, both capital stock and the number of shares became nil. Residual net assets will be distributed in proportion to ownership interests.
(*6) Due to liquidation for the nine months ended as of September 30, 2017, the entity was excluded from the scope for consolidation.

(3) As of September 30, 2017, and December 31, 2016, despite having more than a 50% ownership interest, the Group has not consolidated the following companies as the Group does not have the ability to control following subsidiaries:

As of September 30, 2017

Subsidiaries

Location Main
business
Percentage of
ownership (%)

Golden Bridge NHN Online Private Equity Investment (*)

Korea Securities Investment 60.0

Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)

Korea Securities Investment 59.7

Kiwoom Yonsei Private Equity Investment Trust (*)

Korea Securities Investment 88.9

Hana Walmart Real Estate Investment Trust 41-1(*)

Korea Securities Investment 77.0

(*) The Group owns the majority ownership interest in these structured entities, but has no power on the investees’ relevant activities. As results, it is deemed that the Group has no power or control on the structured entities.

As of December 31, 2016

Subsidiaries

Location Main
business
Percentage of
ownership (%)

Golden Bridge NHN Online Private Equity Investment (*)

Korea Securities Investment 60.0

Mirae Asset Maps Clean Water Private Equity Investment Trust 7th (*)

Korea Securities Investment 59.7

Kiwoom Yonsei Private Equity Investment Trust (*)

Korea Securities Investment 88.9

Kiwoom Frontier Professional Investment Private Fund 6(Bond) (*)

Korea Securities Investment 50.0

(*) The Group owns the majority ownership interest in these structured entities, but has no power on the investees’ relevant activities. As results, it is deemed that the Group has no power or control on the structured entities.

(4) The summarized financial information before the elimination of intercompany transactions of the subsidiaries whose financial information was prepared under K-IFRS for the Group’s consolidated financial statements is as follows (Unit: Korean Won in millions):

As of and for the nine months ended September 30, 2017
Assets Liabilities Operating
revenue
Net income
(loss)
attributable to
owners
Comprehensive
income (loss)
attributable to
owners

Woori FIS Co., Ltd.

95,497 59,583 185,862 406 406

Woori Private Equity Asset Management Co., Ltd.

43,113 2,249 6,996 (3,403 ) (3,434 )

Woori Finance Research Institute Co., Ltd.

4,616 736 4,258 512 504

Woori Card Co., Ltd.

8,671,596 7,064,054 1,285,385 81,333 82,576

Woori Investment Bank Co., Ltd.

2,016,621 1,828,201 142,970 15,579 16,358

Woori Credit Information Co., Ltd.

32,270 5,028 22,802 953 870

Woori America Bank

2,056,706 1,762,696 61,031 11,293 2,124

Woori Global Markets Asia Limited

290,025 170,884 7,370 1,159 (5,286 )

Woori Bank (China) Limited

5,002,274 4,478,421 295,639 9,084 6,647

AO Woori Bank

214,735 160,288 11,886 3,488 3,062

PT Bank Woori Saudara Indonesia 1906 Tbk

2,363,036 1,854,080 145,535 27,799 4,820

Banco Woori Bank do Brasil S.A.

199,452 163,714 16,029 1,571 552

Korea BTL Infrastructure Fund

786,511 301 22,656 19,919 19,919

Woori Fund Service Co., Ltd.

12,219 1,031 6,712 1,175 1,175

Woori Finance Cambodia PLC.

43,196 23,407 4,097 1,052 885

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As of and for the nine months ended September 30, 2017
Assets Liabilities Operating
revenue
Net income
(loss)
attributable to
owners
Comprehensive
income (loss)
attributable to
owners

Woori Finance Myanmar Co., Ltd.

18,927 5,387 1,658 501 627

Wealth Development Bank

192,043 155,878 10,260 1,333 833

Woori Bank Vietnam Limited

695,263 539,606 22,410 4,458 (3,289 )

Money trust under the FISCM Act (*)

1,559,927 1,530,440 34,718 157 157

Structured entity for the securitization of financial assets

830,013 1,241,198 17,545 1,491 (2,434 )

Structured entity for the investments in securities

1,701,265 125,483 48,176 20,066 4,328

(*) FISCM Act: Financial Investment Services and Capital Markets Act

As of and for the year ended December 31, 2016
Assets Liabilities Operating
revenue
Net income
(loss)
attributable to
owners
Comprehensive
income (loss)
attributable to
owners

Woori FIS Co., Ltd.

141,329 105,821 244,783 1,048 1,432

Woori Private Equity Asset Management Co., Ltd.

97,338 53,244 2,154 312 219

Woori Finance Research Institute Co., Ltd.

3,710 334 4,445 108 100

Woori Card Co., Ltd.

7,606,108 6,180,893 1,555,373 109,393 116,381

Woori Investment Bank Co., Ltd.

1,576,627 1,404,566 178,572 23,872 23,897

Woori Credit Information

31,292 4,416 27,884 543 618

Woori America Bank

2,186,049 1,973,263 73,909 15,266 20,899

Woori Global Markets Asia Limited

272,008 147,581 7,255 1,863 5,582

Woori Bank (China) Limited

4,984,017 4,466,812 475,174 32,025 11,505

AO Woori Bank

239,860 188,474 16,221 5,650 15,553

PT Bank Woori Saudara Indonesia 1906 Tbk

2,089,822 1,693,111 179,014 24,573 48,542

Banco Woori Bank do Brasil S.A.

241,229 206,043 17,059 2,786 9,600

Korea BTL Infrastructure Fund

784,770 299 33,476 29,617 29,617

Woori Fund Service Co., Ltd.

11,386 1,372 7,787 1,011 1,011

Woori Finance Cambodia PLC.

32,405 24,751 4,545 1,250 1,494

Woori Finance Myanmar Co., Ltd.

4,305 2,651 380 (613 ) (569 )

Wealth Development Bank

209,779 174,446 12,519 1,248 1,876

Woori Bank Vietnam Limited

159,223 278 (346 ) 3,545

Money trust under the FISCM Act (*)

1,525,145 1,495,815 55,540 697 697

Structured entity for the securitization of financial assets

487,431 895,824 29,480 6,912 7,138

Structured entity for the investments in securities

4,397,163 1,898,977 137,896 56,605 61,535

(*) FISCM Act: Financial Investment Services and Capital Markets Act

(5) The financial support that the Group provides to consolidated structured entities is as follows:

- Structured entity for the securitization of financial assets

The structured entity is established for the purpose of securitization of project financing loans, corporate bonds, and other financial assets. The Group is involved with the structured entity through providing with credit facility over asset-backed commercial papers issued by the entity, originating loans directly to the structured entity, or purchasing 100% of the subordinated debts issued by the structured entity.

- Structured entity for the investments in securities

The structured entity is established for the purpose of investments in securities. The Group acquires beneficiary certificates through its contribution of fund to the structured entity, and it is exposed to the risk that it may not be able to recover its fund depending on the result of investment performance of asset managers of the structured entity.

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- Money trust under the Financial Investment Services and Capital Markets Act

The Group provides with financial guarantee of principal and interest or principal only to some of its trust products. Due to the financial guarantees, the Group may be obliged to supplement when the principal and interest or principal of the trust product sold is short of the guaranteed amount depending on the result of investment performance of the trust product.

(6) The details of the limitations with regard to the transfer of assets or the redemption of liabilities within the Group are provided below.

Some subsidiaries are regulated by the rules of the jurisdictions, in which they were incorporated, with regard to funding or management of deposits. Also, there is the limitation that they must have pre-approval from their regulators in case of remittance of earnings to the Bank.

(7) The Group has entered into various agreements with structured entities such as asset securitization vehicles, structured finance and investment funds, and monetary funds. Where it is determined in accordance with K-IFRS 1110 that the Group has no controlling power over such structured entities, the entities are not consolidated. The nature of interests, which the Group retains, and the risks, to which the Group is exposed, of the unconsolidated structured entities are as follows:

The interests to unconsolidated structured entities, which the Group retains, are classified to asset securitization vehicles, structured finance and investment fund, based on the nature and the purpose of the structured entities.

Asset securitization vehicle issues asset-backed securities and redeems the principal and interest or distributes dividends on asset-backed securities with profits from collecting cash flows or sale of securitized assets. The Group, as a secondary guarantor, provides purchase commitments for its asset-backed securities or guarantees to such asset securitization vehicle and recognizes commission income or interest income related to the commitment or guarantees. Therefore, the Group would be exposed to risks to purchases or pays back asset-backed securities issued by the vehicles when a primary guarantor fails to provide the financing asset securitization vehicles.

Structured finance includes investments in project financing on real estates, social overhead capital ("SOC"), infrastructure and shipping finance. They are formed as special purpose entity by funding through equity investments and loans from various investors. Investment decisions are made by the Group based on business outlook of such projects. In relation to such investments, the Group recognizes interest income on loans, gains or losses on valuation of equity investments or dividend income. The structured finance is secured by additional funding agreement, guarantee or credit facilities. However, the structured financing project would fail to return the capital of equity investments or principal of loans to the Group if it is discontinued or did not achieve business outcome.

Investment funds include trusts and private equity funds. A trust is formed by contributions from various investors, operated by a manager engaged to the trust and distributed proceeds from sales of investments to the investors. A private equity fund is established in order to acquire ownership interests in a portfolio company with exit strategy after implementing financial and operational restructuring of the company. The Group recognizes unrealized gains or losses on change in value of investments in proposition of ownership interests in investments. The Group would be exposed to risks of loss when the value of portfolio investment is decreased.

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Total assets of the unconsolidated structured entities, the carrying value of the related items recorded, the maximum exposure to risks, and the loss recognized in conjunction with the unconsolidated structured entities as of September 30, 2017 and December 31, 2016 are as follows (Unit: Korean Won in millions):

September 30, 2017
Asset
securitization
vehicle
Structured
finance
Investment
Funds

Total asset of the unconsolidated structured entities

6,749,481 48,581,405 15,685,071

Assets recognized in the consolidated financial statements related to the unconsolidated structured entities

3,265,065 2,245,524 1,422,240

Loans and receivables

43,005 1,936,632

Financial assets at fair value through profit or loss

194,828 13,040

Available-for-sale financial assets

926,261 109,070 1,192,410

Held-to-maturity financial assets

2,295,236

Investments in joint ventures and associates

216,790

Derivative assets

563 4,994

Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities

1,825 1,417

Derivative liabilities

340 565

Other liabilities (including provisions)

1,485 852

The maximum exposure to risks

4,032,834 3,097,300 1,422,240

Investments

3,265,065 2,245,524 1,422,240

Credit facilities

767,769 851,776

Loss recognized on unconsolidated structured entities

512 5,919 5,083
December 31, 2016
Asset
securitization
vehicle
Structured
finance
Investment
Funds

Total asset of the unconsolidated structured entities

8,426,713 61,324,862 9,131,362

Assets recognized in the consolidated financial statements related to the unconsolidated structured entities

3,361,910 2,790,215 1,749,494

Loans and receivables

65,470 2,414,044

Financial assets at fair value through profit or loss

254,150

Available-for-sale financial assets

1,216,446 115,843 1,664,865

Held-to-maturity financial assets

2,079,648

Investments in joint ventures and associates

84,629

Derivative assets

346 6,178

Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities

1,363 1,224

Derivative liabilities

201 362

Other liabilities (including provisions)

1,162 862

The maximum exposure to risks

4,263,993 3,802,210 1,749,494

Investments

3,361,910 2,790,215 1,749,494

Purchase agreements

28,000

Credit facilities

834,083 970,195

Other commitments

40,000 41,800

Loss recognized on unconsolidated structured entities

6,353 71,185 683

(8) Subsidiaries of which non-controlling interests are significant to the Group’s consolidated financial statements are as follows (Unit: Korean Won in millions):

1) Accumulated non-controlling interests at the end of the reporting period

September 30, 2017 December 31, 2016

Woori Investment Bank

80,833 73,986

PT Bank Woori Saudara Indonesia 1906 Tbk

69,608 70,249

Wealth Development Bank

17,721 16,983

2) Net income attributable to non-controlling interests

For the nine months
ended September 30,
2017
For the nine months
ended September 30,
2016

Woori Investment Bank

6,520 6,680

PT Bank Woori Saudara Indonesia 1906 Tbk

6,731 4,551

Wealth Development Bank

653

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3) Dividends to non-controlling interests

For the nine months
ended September 30,
2017
For the nine months
ended September 30,
2016

PT Bank Woori Saudara Indonesia 1906 Tbk

1,513 1,242

2. SIGNIFICANT BASIS OF PREPARATION AND ACCOUNTING POLICIES

The Group’s consolidated financial statements are prepared in accordance with Korean International Financial Reporting Standards ("K-IFRS") 1034, Interim Financial Reporting. It is necessary to use the annual financial statements for the year ended December 31, 2016 for understanding of the accompanying interim financial statements.

The significant accounting policies that have been applied for the preparation of the consolidated financial statements as of and for the nine months ended September 30, 2017 are described below, and the significant accounting policies are the same as the accounting policies applied for the preparation of the previous year’s consolidated financial statements, except the impacts from the adoptions of accounting standards or interpretations which are explained below.

(1) The Group has newly adopted the following amendment to K-IFRS that affected the Group’s accounting policies.

Amendments to K-IFRS 1007 – Statement of Cash Flows

The amendments require that changes in liabilities arising from financial activities are disclosed. The adoption of the amendments has no material impact on the Group’s consolidated financial statements.

Amendments to K-IFRS 1012 – Income Taxes

The amendments clarify that unrealized losses on fixed-rate debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the holder expects to recover the carrying amount of the debt instrument by sale or by use and that the estimate of probable future taxable profit may include the recovery of some of assets for more than their carrying amount. When the Group assesses whether there will be sufficient taxable profit, the Group should compare the deductible temporary differences with future taxable profit that excludes tax deductions resulting from the reversal of those deductible temporary differences. The adoption of the amendments has no material impact on the Group’s consolidated financial statements.

(2) The Group has not applied the following K-IFRSs that have been issued but are not yet effective:
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