Hyundai Card Co., Ltd.

Hyundai Card Co., Ltd. and its subsidiaries

Consolidated Financial StatementsAs of and For the Years Ended December 31, 2015 and 2014

ATTACHMENT : INDEPENDENT AUDITORS’ REPORT

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HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES (the “Consolidated Entity”)

CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

The accompanying consolidated financial statements, including all footnote disclosures, were prepared by and are the responsibility of the Consolidated Entity. Chung, Tae Young Chief Executive Officer

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2015 AND 2014 December 31, 2015 December 31, 2014 (Korean won) ASSETS: CASH AND DEPOSITS (Notes 5, 28, 29 and 30):

Cash and cash equivalents \ 505,742,520,609 \ 167,697,056,564Deposits 33,024,500,000 33,028,250,000

Total cash and deposits 538,767,020,609 200,725,306,564

SECURITIES (Notes 6 and 30): Trading Securities 459,928,214,247 739,004,232,776Available-for-sale (AFS) securities 1,766,969,764 1,766,969,764

Total securities 461,695,184,011 740,771,202,540 CARD ASSETS (Notes 7, 8, 27, 29 and 30):

Card receivables, net of present value of discounts and deferred origination fees 7,595,851,307,370

6,901,493,380,783

Allowance for doubtful accounts (76,701,420,249) (71,521,933,866)Cash advances 827,002,888,065 837,547,597,115

Allowance for doubtful accounts (32,867,729,319) (30,077,545,239)Card loans, net of present value of discounts 3,239,218,653,922 3,046,695,716,404

Allowance for doubtful accounts (145,916,727,807) (134,240,242,776)Total card assets 11,406,586,971,982 10,549,896,972,421

PROPERTY AND EQUIPMENT (Notes 9 and 27):

Land 141,135,593,407 138,257,299,573Buildings 120,401,235,857 113,265,523,657

Accumulated depreciation (11,684,533,184) (8,792,114,539)Vehicles 2,514,088,391 2,590,262,299

Accumulated depreciation (254,093,084) (125,949,719)Fixtures and equipment 210,311,409,618 211,900,465,338

Accumulated depreciation (125,909,014,419) (124,045,253,624)Construction in progress 14,089,134,359 23,380,082,412

Total property and equipment 350,603,820,945 356,430,315,397

OTHER ASSETS: Other accounts receivable (Notes 29 and 30) 94,824,687,899 116,605,521,297

Allowance for doubtful accounts (Note 8) (852,423,113) (611,019,783)Accrued revenue (Notes 29 and 30) 49,401,668,393 50,756,921,220

Allowance for doubtful accounts (Note 8) (1,393,512,524) (1,348,989,201)Advance payments 34,200,440,607 14,223,977,849

Allowance for doubtful accounts (Note 8) (967,357,411) (650,322,306)Prepaid expenses 54,889,008,962 45,029,725,258Intangible assets (Notes 10 and 27) 137,084,511,938 133,667,230,921Derivative assets (Notes 16, 29 and 30) 39,584,012,967 8,739,491,485Deferred income tax assets (Note 23) 150,197,163,343 149,460,296,801Guarantee deposits (Notes 5, 29 and 30) 32,466,788,202 31,048,421,043Others 4,350,236,590 2,674,605,943

Total other assets 593,785,225,853 549,595,860,527Total Assets \ 13,351,438,223,400 \ 12,397,419,657,449

(Continued)

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)

AS OF DECEMBER 31, 2015 AND 2014

December 31, 2015 December 31, 2014 (Korean won) LIABILITIES: BORROWINGS:

Borrowings (Notes 11, 29 and 30) \ 590,000,000,000 \ 200,000,000,000Debenture, net of discounts (Notes 12, 26, 29 and 30) 8,527,883,918,633 7,730,126,733,953

Total borrowings 9,117,883,918,633 7,930,126,733,953

OTHER LIABILITIES: Accounts payable (Notes 27, 29 and 30) 889,947,477,880 1,001,186,223,971Accrued expenses (Notes 29 and 30) 229,197,257,098 214,281,445,423Unearned revenue (Note 14) 340,303,443,944 364,854,106,867Withholdings (Notes 29 and 30) 109,477,500,291 146,547,177,277Derivative liabilities (Notes 16, 29 and 30) 17,743,551,531 30,922,252,463Current tax liability 24,105,439,403 42,028,995,360Net defined benefit liability (Note 13) 23,606,248,668 19,884,606,576Guarantee deposits received (Notes 29 and 30) 9,081,139,097 8,652,184,880Provisions (Notes 15 and 25) 96,060,138,730 83,555,104,835

Total other liabilities 1,739,522,196,642 1,911,912,097,652Total liabilities 10,857,406,115,275 9,842,038,831,605

SHAREHOLDERS’ EQUITY:

Capital stock (Note 17) 802,326,430,000 802,326,430,000Capital surplus (Note 18) 57,704,443,955 57,704,443,955Accumulated other comprehensive loss (Notes 20 and 23) (38,384,103,955) (40,118,183,826)Retained earnings (Notes 19 and 21) 1,672,385,338,125 1,735,468,135,715

Total shareholders’ equity 2,494,032,108,125 2,555,380,825,844Total Liabilities and Shareholders’ Equity \ 13,351,438,223,400 \ 12,397,419,657,449

(Concluded)

See accompanying notes.

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

December 31, 2015 December 31, 2014 (Korean won) OPERATING REVENUE:

Card income (Notes 27, 30 and 32) \ 2,552,425,253,306 \ 2,515,798,917,810Interest income (Notes 30 and 31) 22,606,369,669 24,733,441,807Gain on valuation and disposal of securities (Note 30) 1,364,885,046 216,125,077Dividends income 314,675,109 346,064,145Reversal of provision for unused credit limits (Note 15) - 1,607,911,196Other operating revenue (Notes 30 and 33) 76,180,183,126 75,292,556,501Total operating revenue 2,652,891,366,256 2,617,995,016,536

OPERATING EXPENSES:

Card expenses (Notes 27, 30 and 32) 1,144,369,806,441 1,041,284,584,839Interest expenses (Notes 30 and 31) 277,609,521,123 305,884,066,293General and administrative expenses (Notes 13, 22 and 27) 674,422,105,729 647,012,616,878Securitization expenses 382,402,631 354,729,081Bad debt expense and loss on disposal of loans (Note 8) 237,707,288,187 265,852,688,656Transfer to provision for unused credit limits (Note 15) 7,199,472,889 -Loss on valuation and disposal of securities (Note 30) 8,581,355 -Other operating expenses (Notes 30 and 33) 69,697,416,596 57,583,152,511Total operating expenses 2,411,396,594,951 2,317,971,838,258

OPERATING INCOME 241,494,771,305 300,023,178,278 NON-OPERATING INCOME : Gain from sale of property and equipment and intangible assets 75,955,938 46,717,788Reversal of impairment loss for intangible assets (Note 10) - 6,262,020Rental revenue (Note 27) 1,529,556,000 1,633,329,715Miscellaneous gain 274,094,212 246,808,291Total non-operating income 1,879,606,150 1,933,117,814

NON-OPERATING EXPENSES: Loss from sale of property and equipment and intangible assets 1,373,118,182 62,283,827Impairment loss of intangible assets (Note 10) - 407,000,000Donations 1,481,282,394 1,122,343,894Miscellaneous loss - 4,570,950Total non-operating expenses 2,854,400,576 1,596,198,671

INCOME BEFORE INCOME TAX EXPENSE 240,519,976,879 300,360,097,421 INCOME TAX EXPENSE (Note 23) 53,758,324,167 76,846,076,646 NET INCOME 186,761,652,712 223,514,020,775 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX (Note 20)

Items not reclassified subsequently to profit or loss: (1,772,472,856) (14,440,033,678) Remeasurements of net defined benefit liability (1,772,472,856) (14,440,033,678) Items reclassified subsequently to profit or loss: 3,506,552,727 (19,821,416,586) Cash flow hedging gains (losses) 3,506,552,727 (19,821,416,586)Total other comprehensive income (loss) 1,734,079,871 (34,261,450,264)

TOTAL COMPREHENSIVE INCOME \ 188,495,732,583 \ 189,252,570,511 EARNINGS PER SHARE (Note 24): Basic earnings per share \ 1,164 \ 1,393Diluted earnings per share 1,164 1,393

See accompanying notes.

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

Capital stock

Capital surplus Accumulatedother

comprehensive gain(loss)

Retained earnings Total

Paid-in capital

Other capital

(Korean won) January 1, 2014 \ 802,326,430,000 \ 45,399,364,539 \ 12,305,079,416 \ (5,856,733,562) \ 1,511,954,114,940 \ 2,366,128,255,333Total comprehensive income

(loss):

Net income - - - - 223,514,020,775 223,514,020,775 Other comprehensive loss

Remeasurements of net defined benefit liability - - - (14,440,033,678)

- (14,440,033,678)

Cash flow hedging loss - - - (19,821,416,586)

- (19,821,416,586)

December 31, 2014 \ 802,326,430,000 \ 45,399,364,539 \ 12,305,079,416 \(40,118,183,826) \ 1,735,468,135,715 \2,555,380,825,844

January 1, 2015 \ 802,326,430,000 \ 45,399,364,539 \ 12,305,079,416 \(40,118,183,826) \ 1,735,468,135,715 \ 2,555,380,825,844Payment of dividends - - - - (249,844,450,302) (249,844,450,302)Total comprehensive income

(loss):

Net income - - - - 186,761,652,712 186,761,652,712 Other comprehensive

income (loss)

Remeasurements of net defined benefit liability - - - (1,772,472,856)

- (1,772,472,856)

Cash flow hedging income - - - 3,506,552,727

- 3,506,552,727

December 31, 2015 \ 802,326,430,000 \ 45,399,364,539 \ 12,305,079,416 \(38,384,103,955) \ 1,672,385,338,125 \ 2,494,032,108,125

See accompanying notes.

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

December 31, 2015 December 31, 2014 (Korean won) CASH FLOWS FROM OPERATING ACTIVITIES:

Cash generated from operating activities (Note 28) \ (176,904,719,526) \ (1,027,306,120,836)Interest received 23,548,362,715 23,794,686,357Interest paid (265,154,857,275) (284,805,700,585)Dividend received 314,675,109 346,064,145Income tax paid (73,000,089,427) (63,873,513,936)

Net cash used in operating activities (491,196,628,404) (1,351,844,584,855)

CASH FLOWS FROM INVESTING ACTIVITIES: Disposal of AFS securities 139,054,750 61,979,100Net decrease in bank deposit 3,750,000 4,550,000Disposal of property and equipment 113,849,203 59,785,800Disposal of intangible assets 23,202,400 -Acquisition of property and equipment (48,273,395,537) (71,059,831,292)Acquisition of intangible assets (17,697,059,424) (70,493,126,271)

Net cash used in investing activities (65,690,598,608) (141,426,642,663)

CASH FLOWS FROM FINANCING ACTIVITIES: Increase in borrowings 1,100,000,000,000 2,500,000,000,000Proceeds from issue of debentures 17,945,457,141,359 9,379,426,341,141Repayment of borrowings (710,000,000,000) (2,512,500,000,000)Repayment of debentures (17,190,680,000,000) (8,671,413,330,519)Payment of dividends (249,844,450,302) -

Net cash provided by financing activities 894,932,691,057 695,513,010,622

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 338,045,464,045 (797,758,216,896)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR (Note 28) 167,697,056,564 965,455,273,460

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 28) \ 505,742,520,609 \ 167,697,056,564

See accompanying notes.

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES NOTES

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

1. GENERAL:

Hyundai Card Co., Ltd. (the “Company” or the “Parent”), which is a controlling company in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1110, Consolidated Financial Statements, is engaged in the credit card business under the Specialized Credit Financial Business Law of Korea. On June 15, 1995, the Parent acquired the credit card business of Korea Credit Circulation Co., Ltd., and on June 16, 1995, Korean government granted permission to the Parent to engage in the credit card business. As of December 31, 2015, the Parent has approximately 6.34 million card members; 2.28 million registered merchants; and 119 marketing centers, branches and posts. As of December 31, 2015, the total common stock of the Parent is ￦802,326 million. The shareholders of the Parent and their respective ownerships as of December 31, 2015 and 2014 are as follows:

Shareholder

December 31, 2015 December 31, 2014

Number of sharesPercentage of

ownership Number of shares Percentage of

ownership Hyundai Motor Co., Ltd. 59,301,937 36.96 59,301,937 36.96Kia Motors Co., Ltd. 18,422,142 11.48 18,422,142 11.48IGE USA Investments 69,000,073 43.00 - -GE Capital Int’l Holdings. - - 69,000,073 43.00Hyundai Commercial Inc. 8,889,622 5.54 8,889,622 5.54Others 4,851,512 3.02 4,851,512 3.02

Total 160,465,286 100.00 160,465,286 100.00

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (1) Basis of Preparation

The Hyundai Card Co., Ltd. and its subsidiaries (collectively, the “Consolidated Entity” or “Group”) have prepared the consolidated financial statement in accordance with the Korean International Financial Reporting Standards (“K-IFRS”).

The Consolidated Entity’s significant accounting policies applied for the accompanying consolidated financial statements are the same as the policies applied for the preparation of the consolidated financial statements for the year ended December 31, 2014, except for the effects from the introduction of new and revised accounting standards or interpretations as described below. The consolidated financial statements have been prepared on the historical cost basis, except for certain non-current assets and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

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1) Accounting standards and interpretations that were newly applied for the year ended December 31, 2015, and changes in the Company’s accounting policies are as follows: Amendments to K-IFRS 1019 – Employee Benefits The amendments permits the Consolidated Entity to recognize amount of contributions as a reduction in the service cost in which the related service is rendered if the amount of the contributions are independent of the number of years of service. The application of these amendments has no significant impact on the disclosure in the Consolidated Entity’s consolidated financial statements. Annual Improvements to K-IFRS 2010-2012 Cycle The amendments to K-IFRS 1102 (i) changes the definitions of ‘vesting condition’ and ‘market condition’; and (ii) add the definitions for ‘performance condition’ and ‘service condition’ which were previously included within the definition of ‘vesting condition.’The amendments to K-IFRS 1103, Business Combinations, clarify the classification and measurement of the contingent consideration in business combination. The amendments to K-IFRS 1108 clarify that a reconciliation of the total of the reportable segments’ assets should only be provided if the segment assets are regularly provided to the chief operating decision maker. The application of these amendments has no significant impact on the disclosure in the Consolidated Entity’s consolidated financial statements. Annual Improvements to K-IFRS 2011-2013 Cycle The amendments to K-IFRS 1103 clarify the scope of the portfolio exception for measuring the fair values of the Consolidated Entity of financial assets and financial liabilities on a net basis that includes all contracts that are within the scope the standard does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself. The amendments to K-IFRS 1113, Fair Value Measurements, and K-IFRS 1040, Investment Properties, exist. The application of these amendments has no significant impact on the disclosure in the Consolidated Entity’s consolidated financial statements. 2) The Consolidated Entity has not applied the following new and revised K-IFRS that have been issued

but are not yet effective:

Amendments to K-IFRS 1001 – Presentation of Financial Statements The amendments to K-IFRS 1001 clarify the concept of applying materiality in practice and restrict an entity reducing the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions. The amendments to K-IFRS 1001 are effective for annual periods beginning on or after January 1, 2016. Amendments to K-IFRS 1016: property, plant, and equipment The amendments to K-IFRS 1016 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to K-IFRS 1016 are effective for annual periods beginning on or after January 1, 2016

Amendments to K-IFRS 1038: Intangible Assets The amendments to K-IFRS 1038 clarified that the use of revenue-based methods to calculate the amortization of an asset is not appropriate unless the consumption of the expected future economic benefits is embodied in the asset. The amendments to K-IFRS 1038 are effective for annual periods beginning on or after January 1, 2016. Amendments to K-IFRS 1016 – Property, plant and equipment & K-IFRS 1041 Agriculture: Bearer Plants The amendments to K-IFRS 1016 ‘Property, Plant and Equipment’ and K-IFRS 1041 ‘Agriculture’ define a bearer plant and require biological assets that meet the definition of a bearer plant to be accounted for as

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property, plant and equipment in accordance with K-IFRS 1016, instead of K-IFRS 1041. The amendments to K-IFRS 1016 and K-IFRS 1041 are effective for annual periods beginning on or after January 1, 2016. Amendments to K-IFRS 1110 – Consolidated Financial Statements & K-IFRS 1112 Disclosure of interests in other entities & K-IFRS 1028 Investment in associates The amendments clarify that in applying the equity method of accounting to an associate or a joint venture that is an investment entity, an investor may retain the fair value measurements that the associate or joint venture used for its subsidiaries. The amendments are effective for annual periods beginning on or after January 1, 2016 Amendments to K-IFRS 1111: Accounting for Acquisitions of Interests in Joint Operations The amendments to K-IFRS 1111 provide guidance on how to account for the acquisition of an interest in a joint operation in which the activities constitute a business as defined in K-IFRS 1103 Business Combinations. Specifically, the amendments state that the relevant principles on accounting for business combinations in K-IFRS 1103 and other standards should be applied. The same requirements should be applied to the formation of a joint operation if and only if an existing business is contributed to the joint operation by one of the parties that participate in the joint operation. A joint operator is also required to disclose the relevant information required by K-IFRS 1103 and other standards for business combinations. The amendments to K-IFRS 1111 apply prospectively for annual periods beginning on or after January 1, 2016. Amendments to K-IFRS 1109 – Financial Instruments The amendments to K-IFRS 1109 contain the requirements for the classification and measurement of financial assets and financial liabilities based on a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets and based on the contractual terms that give rise on specified dates to cash flows, impairment methodology based on the expected credit losses, and broadened types of instruments that qualify as hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting and the change of the hedge effectiveness test. The amendments are effective for annual periods beginning on or after January 1, 2018 Amendments to K-IFRS 1115 – Revenue from Contracts with Customers The core principle under K-IFRS 1115 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments introduces a 5-step approach to revenue recognition and measurement: 1) Identify the contract with a customer, 2) Identify the performance obligations in the contract, 3) Determine the transaction price, 4) Allocate the transaction price to the performance obligations in the contract, 5) Recognize revenue when (or as) the entity satisfies a performance obligation. This standard will supersede K-IFRS 1011 - Construction Contracts, K-IFRS 1018- Revenue, K-IFRS 2113 - Customer Loyalty Programmes, K-IFRS 2115-Agreements for the Construction of Real Estate, K-IFRS 2118 - Transfers of Assets from Customers, and K-IFRS 2031-Revenue-Barter Transactions Involving Advertising Services. The amendments are effective for annual periods beginning on or after January 1, 2018. Annual Improvements to K-IFRS 2012-2014 cycle The Annual Improvements include amendments to a number of K-IFRSs. The amendments introduce specific guidance in K-IFRS 1105 Non-current Assets Held for Sale and Discontinued Operations for when an entity reclassifies an asset (or disposal group) from held for sale to held for distribution to owners (or vice versa), such a change is considered as a continuation of the original plan of disposal not as a change to a plan of sale. Other amendments in the Annual Improvements include K-IFRS 1107 Financial Instruments: Disclosures, K-IFRS 1019 Employee Benefits, and K-IFRS 1034 Interim Financial Reporting. The Consolidated Entity is in the process of considering the impact of these enactments/amendments in the consolidated financial statements.

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(2) Significant Accounting Policies 1) Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Parent (and its subsidiaries). Control is achieved where the Company 1) has the power over the investee; 2) is exposed, or has rights, to variable returns from its involvement with the investee; and 3) has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:

• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the

other vote holders; • potential voting rights held by the Company, other vote holders or other parties; • rights arising from other contractual arrangements; and • any additional facts and circumstances that indicate the Company has, or does not have, the current

ability to direct the relevant activities at the time decisions need to be made, including voting patterns at previous shareholders’ meetings.

Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition to the effective date of disposal, as appropriate. Carrying amounts of the non-controlling interests in subsidiaries are adjusted by the changes in the proportion of the equity held by non-controlling interests after initial acquisition of non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by the Company. All intragroup transactions, balances, income and expenses are eliminated in full on consolidation. When the Parent loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill) and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognized in other comprehensive income and accumulated in equity, the amounts previously recognized in other comprehensive income and accumulated in equity are accounted for as if the Parent had directly disposed of the relevant assets (i.e., reclassified to profit or loss or transferred directly to retained earnings). The fair value of any investment retained in the former subsidiary at the date when control is lost is recognized as the fair value on initial recognition for subsequent accounting under K-IFRS 1039 or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity.

2) Card assets

Card assets are amounts due from customers for services performed in the ordinary course of business. Card assets are initially measured at a fair value, including direct transaction cost; thereafter, it is measured at amortized cost using the effective interest rate method, except for the financial assets classified as at FVTPL.

① Card Receivables

The Consolidated Entity records card receivables when its cardholders make purchases from domestic and

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foreign merchants, and when cardholders of MasterCard International, Visa International and Diners Club International make purchases from domestic merchants. Commission from merchants for advance payments and commission from cardholders for installment payments and cash advances are recognized as revenue on an accrual basis. Card receivables with non-interest-bearing installment payment are initially recognized at fair value using a discounted cash flow. As interest rate and other factors that are considered for calculating the discounted cash flow of interest-bearing installment payments are different than those for non-interest-bearing installment payment, the Consolidated Entity independently determines the discount rates for non-interest-bearing installment payments with objective and reasonable method. ② Cash Advances Cash advance service allows cardholders to withdraw cash up to certain limits depending on card members’ credit rating in accordance with the Specialized Credit Financial Business Law. Fees related to cash advances are charged on the payment date, with a specific percentage of service charges, and interest income is accrued on a daily basis until repayment of cash advance. ③ Card Loans

The Consolidated Entity extends the card loans to its cardholders in accordance with the Specialized Credit Financial Business Law. Commission incomes are accrued on a daily basis based on a constant rate per cardholders’ credit rate until repayments of card loans.

3) Financial assets

A financial asset is recognized when the Consolidated Entity becomes a party to the contract and at initial recognition. A financial asset, excluding a financial asset at FVTPL, is measured at its fair value, plus or minus transaction costs that are directly attributable to the acquisition of the financial asset. Otherwise, the transaction cost that is directly attributable to the acquisition of the financial asset at FVTPL is recognized in profit or loss immediately when it arises. A regular-way purchase and sale of financial assets is recognized and derecognized at trade date. It is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned. Financial assets are classified into the following specified categories: financial assets at FVTPL, held-to-maturity (“HTM”), AFS and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. ① Effective interest rate method

The effective interest rate method is used for calculating the amortized cost of a debt instrument and allocating interest income over the relevant period. The effective interest rate is the discounted rate used to estimate the net carrying amount of future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) throughout the expected life of the debt instrument, or, where appropriate, a shorter period, Interest income for debt instruments, except for those financial assets classified as at FVTPL, is recognized using an effective interest rate method. ② Financial assets at FVTPL

Financial assets at FVTPL include financial assets held for trading or financial assets designated as at FVTPL upon initial recognition. A financial asset that is acquired or incurred principally for the purpose of selling or repurchasing in the near term and all derivatives, including embedded derivatives bifurcated from host contract (except for a derivative that is a designated and effective hedging instrument), are classified as held for trading. Financial assets at FVTPL are measured at fair value and the change in value is recognized in income (loss) for the period.

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A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling in the near term; • on initial recognition, it is part of a portfolio of identified financial instruments that the Company

manages together and has a recent actual pattern of short-term profit-taking; or • it is a derivative that is not designated and effective as a hedging instrument.

A financial asset, other than a financial asset held for trading, may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;

• the financial asset forms part of a group of financial assets or financial liabilities, or both, which is managed, and its performance is evaluated on a fair value basis in accordance with the Consolidated Entity’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and K-IFRS 1039 permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial assets at FVTPL are stated at fair value, and any gains or losses arising on remeasurement are recognized in income (loss) for the period. ③ HTM investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Consolidated Entity has the positive intent and ability to hold to maturity are classified as HTM investments. HTM investments are measured at amortized cost using the effective interest rate method, less any impairment, with revenue recognized on an effective interest rate basis. ④ AFS financial assets

Non-derivative financial assets that are not classified as at HTM, held for trading, designated as at FVTPL or loans and receivables are classified as at financial assets AFS. Financial assets AFS are subsequently measured at fair value. Gains and losses arising from changes in fair value are recognized and accumulated in other comprehensive income, with the exception of interest calculated using the effective interest rate method and foreign exchange gains and losses on monetary AFS financial assets, which are recognized in income (loss) for the period. Where the AFS financial assets are disposed of or are determined to be impaired, the cumulative gains or losses previously accumulated in other comprehensive income are recognized income (loss) for the period. Dividends from AFS equity instruments are recognized in income (loss) for the period when the Consolidated Entity’s right to receive payment of the dividends is established. The AFS investments in equity instruments that do not have a quoted price in an active market for an identical instrument and their fair value are not reliably measurable and derivative assets that are linked to those investments and must be settled by delivery of such an equity instrument are measured at cost, net of identified impairment losses.

⑤ Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments and are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortized cost using the effective interest rate method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effects of discount would be immaterial.

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⑥ Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. For all financial assets classified as AFS, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty, • default or delinquency in interest or principal payments, • it becoming probable that the borrower will enter into bankruptcy or financial reorganization or, • an active market for financial assets is not available due to financial difficulties.

For certain categories of financial assets, such as card receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Consolidated Entity’s past experience of collecting payments and an increase in the number of delayed payments in the portfolio exceeding the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. For financial assets measured at amortized cost, the amount of the impairment is recognized as the difference between the carrying amount of the asset and current value of estimated future cash flows, discounted similar to the current market rate. The impairment is not reversed in subsequent periods. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are recognized in income (loss) for the period. For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through income (loss) for the period to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. In respect of AFS equity instruments, impairment losses previously recognized in income (loss) for the period are not reversed. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of AFS debt instruments, in a subsequent period, if the amount of the impairment loss increases and the increase can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through income (loss) for the period.

⑦ Derecognition of financial assets

The Consolidated Entity derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Consolidated Entity neither transfers nor retains substantially all the risks and rewards of ownership, but continues to control the transferred asset, the Consolidated Entity recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Consolidated Entity retains substantially all the risks and rewards of ownership of a transferred financial asset, the Consolidated Entity continues to recognize the financial asset and also recognize a collateralized borrowing for the proceeds received. If the Consolidated Entity derecognizes the entire financial asset, the difference between total amount

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received, plus the sum of cumulative income recognized in other comprehensive income and the book value of the asset is recognized in income (loss) for the period. If the Consolidated Entity does not derecognize the entire financial asset (for example, the Consolidated Entity holds either an option to repurchase a certain portion of the asset or remaining equity, which does not allow the Consolidated Entity to hold most of the risks and benefits from the financial asset or the Consolidated Entity controls assets), the Consolidated Entity divides the book value of financial assets into a recognized part and a unrecognized part in accordance with relative fair value of each portion. The difference between total received amount for derecognized portion of the asset, plus the sum of cumulative income recognized in other comprehensive income and the book value of the asset is recognized in income (loss) for the period. Cumulative income recognized in other comprehensive income is divided into a recognized part and a unrecognized part in accordance with relative fair value of each portion. 4) Property, plant and equipment Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and accumulated impairment losses. The cost of an item of property and equipment is directly attributable to its purchase or construction, which includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. It also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Subsequent costs are recognized in the carrying amount of an asset or as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Consolidated Entity and the cost of an asset can be measurable. Routine maintenance and repairs are expensed as incurred. The Consolidated Entity does not depreciate land. Depreciation expense is computed using the straight-line method based on the estimated useful lives of the assets as follows:

Estimated useful lives Building 40 years Fixtures and equipment 4 years Vehicles 4 years

Each part of property and equipment with a cost that is significant in relation to the total cost is depreciated separately. The Consolidated Entity assesses the depreciation method, the estimated useful lives and residual values of property and equipment at the end of each reporting period. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate. When future economic benefits are not expected through the use or disposition of property and equipment, the Consolidated Entity removes the book value of the assets from the consolidated statements of financial position. The difference between the amounts received from the disposal and the book values of assets is recognized as income (loss) of the period when the assets are removed.

5) Intangible assets ① Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost, less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful lives and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost, less accumulated impairment losses.

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② Internally generated intangible assets - research and development expenditure

Expenditure on research activities is recognized as an expense in the period in which it is incurred. Expenditure arising from development (or from the development phase of an internal project) is recognized as an intangible asset if, only if, the development project is designed to produce new or substantially improved products, and the Consolidated Entity can demonstrate the technical and economic feasibility and measure reliably the resources attributable to the intangible asset during its development. The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognized, development expenditure is recognized in income (loss) for the period when it is incurred. Subsequent to initial recognition, internally generated intangible assets are reported at cost, less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. ③ Intangible assets acquired in a business combination Intangible assets that are acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date (which is regarded as their deemed cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

④ Disposal of intangible assets

If future economic benefits are not expected through the use or disposition of the intangible assets, the Consolidated Entity removes the book value of the assets from the consolidated financial statements. The difference between the amounts received from the disposal of intangible assets and the book values of the assets are recognized as income (loss) of the period when the assets are removed.

6) Impairment of tangible and intangible assets, other than goodwill At the end of each reporting period, the Consolidated Entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Entity estimates the recoverable amount of the CGU to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, assets for which recoverable amounts are not individually estimated are also allocated to individual CGUs, or otherwise, they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the assets may be impaired. Recoverable amounts are the higher of fair value, less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or a CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or the CGU) is reduced to its recoverable amount. An impairment loss is recognized immediately in income (loss) for the period. If impairment recognized in prior periods is reversed, the book value of the individual assets (or CGU) is the smaller of the carrying amount of the recoverable amount or the book value that the impairment would not have recognized in prior periods and the reversal of impairment loss is recognized immediately in

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income (loss) for the period at that time. 7) Provisions Provisions are recognized when the Consolidated Entity has a present obligation (legal or constructive) as a result of a past event, it is probable that the Consolidated Entity will be required to settle the obligation and the amount of the obligation is reliably estimated. The amounts recognized as a provision are the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. At the end of each reporting period, the remaining provision balance is reviewed and assessed to determine if the current best estimate is being recognized. If the existence of an obligation to transfer economic benefit is no longer probable, the related provision is reversed during the period.

8) Financial liabilities and equity instruments ① Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or equity in accordance with the substance of the contractual arrangement and the definition of financial liabilities and equity instruments.

② Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized as the proceeds are received, net of direct issue costs. Treasury shares transactions are deducted directly from equity. Profit or loss arising from purchases and sales, issuances, and incinerations of treasury shares are not recognized in income (loss) for the period. ③ Compound instruments

The component parts of compound instruments issued by the Consolidated Entity are allocated into financial liabilities and equity in accordance with the definition of the financial asset and liability. Convertible option that can be settled by exchanging financial asset, such as fixed amount of cash for the fixed number of treasury shares, is equity instruments. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis using the effective interest rate method, until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amounts of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. ④ Financial liabilities

A financial liability is recognized when the Consolidated Entity becomes a party to the contract and at initial recognition. A financial liability, other than financial liability at FVTPL, is measured at its fair value, plus or minus transaction costs that are directly attributable to the issue of the financial liability. Otherwise,

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the transaction cost that is directly attributable to the issue of the financial liability at FVTPL is recognized in income (loss) for the period immediately when it arises. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. ⑤ Other financial liabilities Other financial liabilities are subsequently measured at amortized cost using the effective interest rate method, with interest expense recognized on an effective interest rate method. The effective interest rate method is used for calculating the amortized cost of a financial liability and allocating interest expense over the relevant period. The effective interest rate is the discounted rate used to estimate the net carrying value of future cash payment, including commission and points to be paid or received, transaction cost and other premium or discounts throughout the expected life of financial liability, or, where appropriate, a shorter period. ⑥ Derecognition of financial liabilities

The Consolidated Entity derecognizes financial liabilities when, and only when, the Consolidated Entity’s obligations are discharged, canceled or expired. On derecognition of a financial liability in its entirety, the difference between the carrying amount and the consideration received is recognized in income (loss) for the period.

9) Derivative instruments The Consolidated Entity enters into a variety of derivative contracts, including interest rate swaps and currency swaps, to manage its exposure to interest rate and foreign exchange rate risk. Derivatives are initially recognized at fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. Gain or loss from the change in fair value is recognized in income (loss) for the period immediately, unless the derivative is designated and effective as a hedging instrument; in such case, the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognized as a financial asset, and a derivative with a negative fair value is recognized as a financial liability. ① Embedded derivatives

When economic characteristics and risks of an embedded derivative are not closely related to the host contract and a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and the changes in fair value of hybrid contract are not recognized in income (loss) for the period, the Consolidated Entity accounts for the embedded derivative separately from the host contract. ② Hedge accounting The Consolidated Entity designates certain derivative instruments as cash flow hedges. At the inception of the hedge relationship, the Consolidated Entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Consolidated Entity documents whether the hedging instrument is highly effective in offsetting changes in cash flows of the hedged item.

③ Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in income (loss) for the period, and is included in the other operating revenue or

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expenses line item. Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to income (loss) for the period when the hedged item is recognized in income (loss) for the period. Hedge accounting is discontinued when the Consolidated Entity revokes the hedging relationship; when the hedging instrument expires or is sold, terminated or exercised; or it no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized in profit or loss. When a forecasted transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss. 10) Share capital

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Stock issuance costs are incremental costs directly attributable to the issue of equity instruments and are deducted on the initial recognition of the equity instruments. Where the Parent or its subsidiary purchases any shares of the Parent or its subsidiary, the consideration paid is deducted from shareholders’ equity as treasury shares, until they are canceled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders’ equity.

11) Commission revenue

① Fees that are a part of the financial instruments’ effective interest rate Fees that are a part of the effective interest rate of a financial instrument are treated as an adjustment to the effective interest rate. Such fees include compensation for activities, such as evaluating the borrower’s financial condition; evaluating and recording guarantees, collateral and other security arrangements; negotiating the terms of the instrument; preparing and processing documents; and closing the transaction, as well as origination fees received on issuing financial liabilities measured at amortized cost. These fees are deferred and recognized as an adjustment to the effective interest rate. However, in case the financial instrument is classified as a financial asset at FVTPL, the relevant fee is recognized as revenue when the instrument is initially recognized. ② Commission from significant act performed

The recognition of revenue is postponed until the significant act is executed. ③ Unearned revenue from point programs (customer loyalty program)

The Consolidated Entity operates customer loyalty program to provide customers with incentives to buy their goods or services. If a customer buys goods or services, the Consolidated Entity grants the customer awards credits (often described as ‘points’). The customer can redeem the award credits for awards, such as free or discounted goods or services. The awards credits are accounted separately as identifiable component of the sales transaction(s) in which they are granted (the ‘initial sales’). The fair value of the consideration received or receivable in respect of the initial sale shall be allocated between the award credits and the other components of the sale. If the Consolidated Entity supplies the awards itself, it shall recognize the consideration allocated to award credits as revenue when award credits are redeemed and it fulfills its obligation to supply awards. The amount of revenue recognized shall be based on the number of award credits that have been redeemed in exchange for awards related to the total number expected to be redeemed.

If the third party supplies the awards, the Consolidated Entity shall assess whether it is collecting the consideration allocated to the award credits on its own account (as the principal in the transaction ) or on behalf of the third party (as agent for the third party). The amount of revenue recognized shall be net amount retained on its own account.

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12) Interest income and expense

Using the effective interest rate method, the Consolidated Entity recognizes interest income and expense in the consolidated statements of comprehensive income. Effective interest rate method calculates the amortized cost of financial assets or liabilities and allocates interest income or expense over the relevant period. The effective interest rate discounts the expected future cash in and out through the expected life of financial instruments, or, if appropriate, through shorter period, to net carrying amount of financial assets or liabilities. When calculating the effective interest rate, the Consolidated Entity estimates future cash flows considering all contractual financial instruments, except the loss on future credit risk. Also, effective interest rate calculation includes redemption costs, points (part of the effective interest rate) that are paid or earned between contracting parties, transaction costs and other premiums or discounts. It is assumed that the cash flows and the expected existing period of aggregation of homogeneous financial instruments are reliably estimable. However, in the exception that cash flow of financial instruments (or aggregation of homogeneous financial instruments) or the estimated maturity is not reliably estimable, the effective interest rate is calculated using the contractual terms of cash flows for the entire contract period. If financial instruments or aggregation of homogeneous financial instruments are impaired, the subsequent interest income is recognized based on the discount rate used in discounting future cash flows for the purpose of the measurement of impairments.

13) Dividend revenue

Dividend income from investments is recognized when the shareholder’s right to receive the payment of dividends has been established. 14) Foreign currency translation

The individual financial statements of the consolidated entities are presented in the currency of the primary economic environment in which the Company operates (its functional currency). For the purpose of the consolidated financial statements, the results of operations and financial position of each entity are expressed in Korean won, which is the functional currency of the Parent and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the date of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in income (loss) for the period in which they arise, except for exchange differences on transactions entered into in order to hedge certain foreign currency risks. See Note 2. 10) for hedging accounting policies. 15) Retirement benefit costs Contributions to defined contribution plans are recognized as an expense when employees have rendered service entitling them to the contributions. For defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. The present value of defined benefit obligations is determined by the discount rate that reflects the current rate of return on a high-quality corporate bond (or, in countries where there is no deep market in such bonds, government bonds) of equivalent term and currency to the plan liabilities.

Actuarial gains and losses are changes in the present value of the defined benefit obligation resulting from experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred) and the effects of changes in actuarial assumptions. Past service cost is recognized immediately to the extent that the benefits are already vested or, otherwise, is amortized on a straight-line basis over the average period until the benefits become vested.

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The retirement benefit obligation recognized in the consolidated statements of financial position represents the present value of the defined benefit obligation, as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to unrecognized actuarial losses and past service cost, plus the present value of available economic benefits of refunds and reductions in future contributions to the plan. 16) Taxation Income tax consists of current tax and deferred tax. ① Current tax

The tax currently payable is based on taxable income for the period. Taxable income differs from income (loss) before tax expenses as reported in the consolidated statement of comprehensive income because of items of income or expense that are taxable or deductible in other periods. The Consolidated Entity’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. ② Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable income. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred income tax assets are generally recognized for all deductible temporary differences to the extent it is probable that taxable income will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the taxable or deductible temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable income (taxable deficit) nor the accounting income. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates and interests in joint ventures, except where the Consolidated Entity is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent it is probable that there will be sufficient taxable income against which the benefits of the temporary differences can be utilized and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Consolidated Entity expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. The Consolidated Entity shall offset deferred tax assets and deferred tax liabilities if, and only if, the Consolidated Entity has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities that intend either to settle current tax liabilities and assets on a net basis or realize the assets and settle the liabilities simultaneously in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. For the purpose of measuring deferred tax liabilities and deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume

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substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. ③ Current tax and deferred tax for the year

Current tax and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case the current tax and deferred tax are also recognized in other comprehensive income or directly in equity. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

17) Earnings per share

Basic earnings per share is calculated by dividing net profit from the period available to common shareholders by the weighted-average number of common shares outstanding during the year. Diluted earnings per share are calculated using the weighted-average number of common shares outstanding, adjusted to include the potentially dilutive effect of common equivalent shares outstanding. 18) Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Consolidated Entity takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of K-IFRS 1102; leasing transactions that are within the scope of K-IFRS 1017, Leases; and measurements that have some similarities to fair value, but are not fair value, such as net realizable value in K-IFRS 1002, Inventories, or value in use in K-IFRS 1036.

In addition, for financial reporting purposes, fair value measurements are categorized into Levels 1, 2 or 3, based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the

entity can access at the measurement date; • Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the

asset or liability, either directly or indirectly; and • Level 3 inputs are unobservable inputs for the asset or liability.

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3. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY: In the application of the Consolidated Entity’s accounting policies, which are described in Note 2, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

(1) Critical judgments in applying accounting policies

The following are the critical judgments, apart from those involving estimations (see Note 3.(2)) that the directors have made in the process of applying the Consolidated Entity’s accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements. 1) Judgments in applying consolidation

The Parent has a 0.5% ownership interest in Privia 4th Securitization Specialty Co., Ltd., Privia 5th Securitization Specialty Co., Ltd. and Super Series 1st Securitization Specialty Co., Ltd.. The directors of the Parent made an assessment as to whether the Parent has control over Privia 4th Securitization Specialty Co., Ltd., Privia 5th Securitization Specialty Co., Ltd., and Super Series 1st Securitization Specialty Co., Ltd., in accordance with the definition of control and the related guidance set out in K-IFRS 1110. It is concluded that the Parent has control over subsidiaries as it involves in the objectives and design of the subsidiaries and is exposed to their parts of risks and rewards. Also, all the decision-making processes of the subsidiaries are operated on autopilot by provisions and articles of association and the Parent is considered to have an ability to use power because the Parent has control over the changes of provisions and articles of association. Therefore, the directors concluded that it has control over the subsidiaries. Details of this control assessment are set out in Note 4.

(2) Key sources of estimation uncertainty

Critical accounting judgment and key sources of estimation uncertainty at the end of reporting period having significant risk factors that can incur the material changes in the book value of assets and liabilities of the Consolidated Entity for the following fiscal year are as follows: 1) Allowance for Doubtful Accounts The Consolidated Entity determines and recognizes allowances for losses through impairment testing on credit card assets and other assets, such as other accounts receivable, advance payments and accrued income. The Consolidated Entity also recognizes provisions for losses on unused commitments. The accuracy of provisions for credit losses is determined by the risk assessment methodology and assumptions used for estimating expected cash flows of the borrower for allowances on individual loans and collectively assessing allowances for groups of loans and provisions for unused commitments. 2) Unearned revenue from point programs The Consolidated Entity provides its customers with incentives to buy goods or services by providing awards (customer loyalty programs) and allocates the fair value of the consideration received or receivable between the award credits granted (“points”) and the other components of the revenue transaction. The Consolidated Entity supplies the awards, such as discounted payments or free gifts. The consideration allocated to the award credits is measured by reference to their fair value, i.e., the amount for which the award credits could be sold separately. The fair value of the consideration allocated to the award credits is estimated by taking into account expected redemption rates, etc., and recognized as deferred revenue, until the Consolidated Entity fulfills its obligations to deliver awards to customers. The amount of revenue

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recognized is to be based on the number of award credits that have been redeemed in exchange for awards, relative to the total number expected to be redeemed. 3) Postemployment Benefits: Defined Benefit Plans The Consolidated Entity operates a defined benefit pension plan (“Plan”). The amount recognized as a defined benefit liability is the present value of the defined benefit obligation, less the fair value of plan assets at the end of the reporting period. The present value of defined benefit obligation is calculated annually by using actuarial assumptions, such as future increases in salaries, expected returns on plan assets, discount rate and others. The Plan has the uncertainty due to the nature of long-term plan. The net defined benefit liability as of December 31, 2015 and 2014, is ￦23,606 million and ￦19,885 million, respectively (see Note 13).

4) Fair Value Measurement of Financial Instruments As disclosed in Note 30, the fair value of financial instruments classified as certain level is measured using valuation techniques where significant inputs are not based on observable market data. The Consolidated Entity believes that valuation methods and assumptions used for measuring the fair value of financial instruments are reasonable and that the fair value recognized in the consolidated statements of financial position is appropriate.

4. SUBSIDIARIES:

(1) Details of the Company’s subsidiaries as of December 31, 2015 and 2014, are as follows:

Place of

incorporation and operation

Voting share (%)

Companies

Major operation December 31, 2015

December 31, 2014

End of reporting

year Privia 3rd SPC Asset securitization Korea - 0.9 January Privia 4th SPC Privia 5th SPC Super Series 1st SPC Money Market Trust (18)

Asset securitization Asset securitization Asset securitization Trust Financial Management

Korea Korea Korea Korea

0.5 0.5 0.5 100

0.5 0.5 -

100

DecemberDecemberDecember

-

All the subsidiaries above are classified as structured entities as they are designed such that voting or similar rights are not dominant factor in deciding who controls the entity.

Except for Money Market Trust, the subsidiaries were established for the Consolidated Entity’s business activity. The Parent has the power over the subsidiaries due to the fact that the Parent involves in the objectives and design of the subsidiaries and is exposed to risks and rewards. Also, all the decision-making processes of the subsidiaries are operated on autopilot by provisions and articles of association. The Parent is considered to have an ability to use power because the Parent has control over the changes of provisions and articles of association. Therefore, the Parent includes the special-purpose entities under consolidation. Meanwhile, in case that default occurs by the subsidiaries related to derivative contracts hedging risks arising from debentures issued for asset securitization, counterparties of the derivative contracts can claim for reimbursement from the Parent.

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(2) Summary of financial information of subsidiaries as of and for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 Total

assets Total

liabilities Sales Net income Comprehensive

income Privia 4th SPC \ 337,181 \ 340,199 \ 30,300 \ - \ -Privia 5th SPC 300,265 300,265 7,941 - -Super Series 1st SPC 467,284 469,098 11,844 - -Money Market Trust (18 trusts)

429,748 - 748 748 748

December 31, 2014 Total

assets Total

liabilities Sales Net income Comprehensive

income Privia 3rd SPC \ 450,569 \ 450,538 \ 33,203 \ - \ -Privia 4th SPC 312,464 319,087 21,975 - -Privia 5th SPC 300,265 300,265 1,407 - -Money Market Trust (14 trusts)

245,008 - 8 8 8

(3) Summary of newly included subsidiaries for the year ended December 31, 2015, is as follows:

Companies Reason

Super Series 1st SPC Newly Established Money Market Trust (18 trusts) Newly Established

(4) Summary of financial information of excluded subsidiaries for the year ended December 31, 2015, is as

follows:

Companies Reason Privia 3rd SPC Liquidated Money Market Trust (14 trusts) Liquidated

(5) Summary of investment in the unconsolidated structured entity is as follows:

1) Nature and extent of unconsolidated structured entity’s equity

The Consolidated Entity involves in the special-purpose company (SPC) through investments and the nature of the involvement is as follows: Unconsolidated entities that are classified as investment fund include investment trust and private equity fund. Investment trusts select and delegate management to investment managers and allocate investment operating profits by trust agreement. Private equity fund involves in business management, improvements in business structures, procurement of investment funds through private equity and allocation of profits to investors. As an investor of the investment fund, the Consolidated Entity recognizes dividend revenue and is exposed to the risk of principal loss. 2) As of December 31, 2015 and 2014, total assets, the book value, maximum loss exposure, and net loss recognized in the financial statements are as follows. Maximum loss exposure includes future amounts such as investment assets, purchase contracts, and credit offerings (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Unconsolidated entity total assets ￦ 5,931,210 ￦ 7,170,655 Assets recognized 60,000 140,063

Securities 60,000 140,063 Liabilities recognized - - Loss incurred - - Maximum loss exposures 60,000 140,063

Securities 60,000 140,063

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5. CASH AND DEPOSITS:

(1) Details of cash and cash equivalents as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014

Annual

interest rate (%) Amount Annual

interest rate (%)

Amount Current deposits - ￦ 316 - ￦ 101Ordinary deposits - 121,130 - 87,446Time deposits 0.70~1.66 34,400 2.08 14,000Other cash and cash equivalents - 349,897 - 66,150

￦ 505,743 ￦ 167,697 (2) Restricted deposits and others as of December 31, 2015 and 2014, are as follows (Unit: Korean won in

millions):

Type

Entity December 31,

2015 December 31,

2014 Restriction

Deposits KEB Hana Bank and

others ￦ 18 ￦ 19 Guarantee deposits for overdraft

Shinhan Bank and others 33,000 33,000 Secured deposits Mirae Asset Securities 7 10 Social enterprise fund Other financial assets

Korea Asset Management

Corporation 6,995 6,885

Escrow account for the sales of Daewoo Engineering &

Construction Co., LTD.’s shares ￦ 40,020 ￦ 39,914

6. SECURITIES:

Securities as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Trading: Debt securities ￦ 399,928 ￦ 598,941 Equity securities 60,000 140,063

Subtotal 459,928 739,004 Financial assets AFS:

Unlisted shares investment 1,767 1,767 Total ￦ 461,695 ￦ 740,771

7. CARD ASSETS:

Card assets by customer as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015

Principal Deferred

origination feesPresent value of discount

Allowance for doubtful accounts Book Value

CARD ASSETS : Card receivables Households ￦ 7,069,322 ￦ (8,643) ￦ (7,434) ￦ (72,107) ￦ 6,981,138 Corporates 542,606 - - (4,594) 538,012Cash advances Households 827,003 - - (32,868) 794,135Card loans Households 3,240,008 - (789) (145,917) 3,093,302

Total ￦ 11,678,939 ￦ (8,643) ￦ (8,223) ￦ (255,486) ￦ 11,406,587

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December 31, 2014

Principal Deferred

origination feesPresent value of discount

Allowance for doubtful accounts Book Value

CARD ASSETS : Card receivables Households ￦ 6,301,454 ￦ (6,761) ￦ (6,644) ￦ (63,711) ￦ 6,224,338 Corporates 613,445 - - (7,811) 605,634Cash advances Households 837,548 - - (30,078) 807,470Card loans Households 3,047,465 - (770) (134,240) 2,912,455

Total ￦ 10,799,912 ￦ (6,761) ￦ (7,414) ￦ (235,840) ￦ 10,549,897 8. ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Changes in the allowance for doubtful accounts for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 Card

receivables Cash

advances Card loans

Other assets Total

Beginning balance ￦ 71,522 ￦ 30,078 ￦ 134,240 ￦ 2,610 ￦ 238,450Bad debt expenses (1,310) (218) (607) - (2,135)Bad debt recovered 612 797 307 - 1,716Disposition and repurchase (23,284) (13,458) (27,727) -

(64,469)

Provision for allowance for doubtful accounts

29,161 15,669 39,704

603 85,137

Ending balance ￦ 76,701 ￦ 32,868 ￦ 145,917 ￦ 3,213 ￦ 258,699

December 31, 2014 Card

receivables Cash

advances Card loans

Other assets Total

Beginning balance ￦ 70,105 ￦ 31,313 ￦ 103,438 ￦ 3,011 ￦ 207,867Bad debt expenses (2,081) (332) (443) - (2,856)Bad debt recovered 678 907 296 - 1,881Disposition and repurchase (31,597) (18,740) (35,551) -

(85,888)

Provision for allowance for doubtful accounts

34,417 16,930 66,500

(401) 117,446

Ending balance ￦ 71,522 ￦ 30,078 ￦ 134,240 ￦ 2,610 ￦ 238,450 9. PROPERTY AND EQUIPMENT: (1) Property and equipment as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Acquisition

cost Accumulateddepreciation Book value

Acquisition cost

Accumulateddepreciation

Book value

Land ￦ 141,136 ￦ - ￦ 141,136 ￦ 138,257 ￦ - ￦ 138,257Buildings 120,401 (11,684) 108,717 113,266 (8,792) 104,474Vehicles 2,514 (254) 2,260 2,590 (126) 2,464Fixtures and equipment 210,311 (125,909) 84,402 211,900 (124,045) 87,855Construction in progress 14,089 - 14,089 23,380 - 23,380

Total ￦ 488,451 ￦ (137,847) ￦ 350,604 ￦ 489,393 ￦ (132,963) ￦ 356,430

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(2) The changes in book value of property and equipment for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 Beginning

balance Acquisition Reclassification Disposal DepreciationEnding balance

Land ￦ 138,257 ￦ 2,879 ￦ - ￦ - ￦ - ￦ 141,136Buildings 104,474 7,739 248 (842) (2,902) 108,717Vehicles 2,464 - - (16) (188) 2,260Fixtures and equipment 87,855 26,407 1,925 (898) (30,887) 84,402Construction in progress 23,380 10,495 (19,786) - - 14,089

Total ￦ 356,430 ￦ 47,520 ￦ (17,613) ￦ (1,756) ￦ (33,977) ￦ 350,604

December 31, 2014 Beginning

balance Acquisition Reclassification Disposal DepreciationEnding balance

Land ￦ 122,012 ￦ 15,761 ￦ 484 ￦ - ￦ - ￦ 138,257Buildings 72,882 4,754 29,316 - (2,478) 104,474Vehicles 51 2,501 - - (88) 2,464Fixtures and equipment 53,694 29,234 39,104 (75) (34,102) 87,855Finance lease assets 278 - - - (278) -Construction in progress 33,125 22,255 (32,000) - - 23,380

Total ￦ 282,042 ￦ 74,505 ￦ 36,904 ￦ (75) ￦ (36,946) ￦ 356,430

10. INTANGIBLE ASSETS: (1) Intangible assets as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015

Acquisition

cost Accumulated amortization

Accumulated impairment

Book value

Development cost ￦ 169,189 ￦ (83,143) ￦ - ￦ 86,046Software 41,750 (17,671) - 24,079Industrial property rights 195 (195) - -Others 18,540 (17,050) - 1,490Construction in progress 4,847 - - 4,847Membership 21,563 - (940) 20,623

Total ￦ 256,084 ￦ (118,059) ￦ (940) ￦ 137,085

December 31, 2014

Acquisition

cost Accumulated amortization

Accumulated impairment

Book value

Development cost ￦ 153,252 ￦ (54,542) ￦ - ￦ 98,710Industrial property rights 195 (195) - -Others 18,572 (15,373) - 3,199Construction in progress 11,144 - - 11,144Membership 21,554 - (940) 20,614

Total ￦ 204,717 ￦ (70,110) ￦ (940) ￦ 133,667

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(2) The changes in intangible assets for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 Beginning

balance Acquisition Reclassification Disposal Amortization ImpairmentEnding balance

Development cost ￦ 98,710 ￦ 12,409 ￦ 3,650 ￦ (3) ￦ (28,720) ￦ - ￦ 86,046Software - 2,747 23,912 - (2,580) - 24,079Others 3,199 - - - (1,709) - 1,490Construction in progress

11,144 3,990 (10,287) - - - 4,847

Membership 20,614 32 - (23) - - 20,623Total ￦ 133,667 ￦ 19,178 ￦ 17,275 ￦ (26) ￦ (33,009) ￦ - ￦ 137,085

December 31, 2014 Beginning

balance Acquisition Reclassification Disposal Amortization ImpairmentEnding balance

Development cost ￦ 35,434 ￦ 53,651 ￦ 27,889 ￦ - ￦ (18,264) ￦ - ￦ 98,710Industrial property rights

36 - - - (36) - -

Others 4,505 1,742 - - (3,048) - 3,199Construction in progress

65,899 10,006 (64,761) - - - 11,144

Membership 21,156 - (141) - - (401) 20,614Total ￦ 127,030 ￦ 65,399 ￦ (37,013) ￦ - ￦ (21,348) ￦ (401) ￦ 133,667

11. BORROWINGS:

Borrowings as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

Lenders

Annual interest rate (%) December 31, 2015 December 31, 2014

Short-term borrowings Commercial Paper IBK Securities

and three others 1.77~1.99 ￦ 240,000 ￦ -

Borrowings KB and six others 2.56~3.04 300,000 150,000 Subtotal 540,000 150,000

Current portion of long-term borrowings

Borrowings SC Bank 3.76 50,000 -

Subtotal 50,000 -Long-term borrowings Borrowings SC Bank - - 50,000

Subtotal - 50,000Total ￦ 590,000 ￦ 200,000

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12. DEBENTURE: (1) Debenture issued by the Consolidated Entity and outstanding as of December 31, 2015 and 2014, are as

follows (Unit: Korean won in millions):

Annual interest rates (%)

Maturity December 31, 2015 December 31, 2014

Short-term debentures 1.80~2.04 2016.01.26~

2016.12.02 ￦ 210,000 ￦ -Current portion of long-

term debentures 2.02~5.29 2016.01.08~

2016.12.13 1,770,000 1,922,680

Long-term debentures 1.78~5.50 2017.01.02~

2023.11.10 6,557,680 5,817,768Subtotal 8,537,680 7,740,448

Discounts on debenture (9,796) (10,321)Debenture, net ￦ 8,527,884 ￦ 7,730,127

The outstanding debenture is non-guaranteed corporate bonds, with their principals to be redeemed by installment or at maturity. Bond issuance costs are recorded as discounts on debenture and amortized using the effective interest rate method.

(2) The redemption schedule for the debenture is as follows (Unit: Korean won in millions):

Period Amount to be redeemed as of December 31, 2015

2016.01.01~2016.12.31 ￦ 1,980,0002017.01.01~2017.12.31 3,337,8802018.01.01~2018.12.31 1,993,5332019.01.01~2019.12.31 876,267

2020.01.01 and after 350,000 ￦ 8,537,680

Period Amount to be redeemed as of December 31, 2014

2015.01.01~2015.12.31 ￦ 1,922,6802016.01.01~2016.12.31 1,710,0002017.01.01~2017.12.31 2,376,7682018.01.01~2018.12.31 1,071,000

2019.01.01 and after 660,000 ￦ 7,740,448

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13. RETIREMENT BENEFIT PLAN:

(1) Defined Contribution Plan

The expense recognized in the consolidation statements of comprehensive income related to postemployment benefit plan under the defined contribution plan for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Defined contribution plan ￦ 90 ￦ 55

(2) Net Employee Benefits Liability

The details of net employee benefits liability as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Net defined benefit obligation ￦ 19,199 ￦ 16,332 Long term employee benefits 4,407 3,553 Total ￦ 23,606 ￦ 19,885

(3) Defined benefit plan

1) General

The Consolidated Entity operates a defined benefit plan that is linked to final payment. Plan assets mainly consist of deposits and are exposed to risk of fall in interest rate.

2) The amounts recognized in the consolidated statements of financial position related to retirement

benefit obligation as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Present value of defined benefit obligation ￦ 81,458 ￦ 69,740 Fair value of plan assets (62,238) (53,379) Transferred to National Pension Fund (21) (29) Retirement benefit obligation ￦ 19,199 ￦ 16,332

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3) Net defined benefit obligation Changes in present value of net defined benefit obligation for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions): December 31, 2015 Present value of the

defined benefit obligation Plan assets

National Pension Fund

Net defined benefit obligation

Beginning balance ￦ 69,740 ￦ (53,379) ￦ (29) ￦ 16,332Contributions from the

employer

- (12,100) - (12,100)Current service cost 13,776 - - 13,776Interest expense (income) 1,890 (1,357) - 533Return on plan assets,

excluding amounts included in interest income above

- 121 - 121Actuarial gains and losses

arising from changes in demographic assumptions

581 - - 581Actuarial gains and losses

arising from changes in financial assumptions

1,889 - - 1,889Actuarial gains and losses

arising from changes in experience adjustments

(275) - - (275)Transfer of employees

between the Company and its related companies

(231) 172 7 (52)Benefits paid (5,912) 4,305 1 (1,606)Ending balance ￦ 81,458 ￦ (62,238) ￦ (21) ￦ 19,199

December 31, 2014 Present value of the

defined benefit obligation Plan assets

National Pension Fund

Net defined benefit obligation

Beginning balance ￦ 46,403 ￦ (43,006) ￦ (30) ￦ 3,367Contributions from the

employer

- (12,990) - (12,990)Current service cost 9,714 - - 9,714Interest expense (income) 1,751 (1,448) - 303Return on plan assets,

excluding amounts included in interest income above

- 344 - 344Actuarial gains and losses

arising from changes in demographic assumptions

4,658 - - 4,658Actuarial gains and losses

arising from changes in financial assumptions

5,740 - - 5,740Actuarial gains and losses

arising from changes in experience adjustments

8,272 - - 8,272Transfer of employees

between the Company and its related companies

199 410 - 609Benefits paid (6,997) 3,311 1 (3,685)Ending balance ￦ 69,740 ￦ (53,379) ￦ (29) ￦ 16,332

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4) Details of fair values of plan assets as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Amount Ratio Amount Ratio Cash and cash equivalents ￦ 421 0.68% ￦ 2 0.01%Time deposits, etc. 61,817 99.32% 53,377 99.99%Total ￦ 62,238 100.00% ￦ 53,379 100.00%

5) Actuarial assumptions as of December 31, 2015 and 2014, are as follows:

December 31, 2015 December 31, 2014

Discount rate (%) 2.47 2.74 Expected rate of salary increase (Executive) (%) 4.00 5.00 Expected rate of salary increase (Employee) (%) 5.72 6.26

6) When all the other assumptions are maintained, if the significant actuarial assumptions change within

possible and reasonable ranges, the impacts on defined benefit obligations are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Increase Decrease Increase Decrease

100 basis point (bp) changes in discount rate ￦ (7,784) ￦ 9,140 ￦ (6,706) ￦ 7,9421% changes in future wage growth rate 9,045 (7,853) 7,876 (6,777)

The above sensitivity analysis does not represent actual changes of defined benefit obligations as the actuarial assumptions do not change independently; this is because there are correlations between the actuarial assumptions. The present value of defined benefit obligations is determined by the same methods as the projected unit credit method used in calculating defined benefit obligations in the consolidated statements of financial position.

(4) Long Term Employee Benefits

1) Changes of present value of long-term employee benefits liability for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014

Beginning balance ￦ 3,553 ￦ - Current service cost 451 3,553 Interest expense 108 - Actuarial gains and losses 436 - Benefits paid (141) - Ending balance ￦ 4,407 ￦ 3,553

2) When all the other assumptions are maintained, if the significant actuarial assumptions change within

possible and reasonable ranges, the impacts on long-term employee benefits are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Increase Decrease Increase Decrease

100 basis point (bp) changes in discount rate ￦ (370) ￦ 424 ￦ (315) ￦ 3631% changes in future wage growth rate 421 (373) 342 (304)

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14. UNEARNED REVENUE:

Details of unearned revenue as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014

Customer loyalty program ￦ 261,829 ￦ 289,124 Membership fee 78,423 75,657 Others 51 73

￦ 340,303 ￦ 364,854 15. PROVISION: (1) Details of provision as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014

Provision for unused credit limits ￦ 53,088 ￦ 45,889 Provision for mileage points 28,489 22,744 Asset Retirement Obligation 6,336 5,537 Other provisions 8,147 9,385

￦ 96,060 ￦ 83,555

(2) Provision for unused credit limits

For the years ended December 31, 2015 and 2014, the changes in provision for unused credit limits are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014

Beginning balance ￦ 45,889 ￦ 47,497 Increase (decrease) 7,199 (1,608) Ending balance ￦ 53,088 ￦ 45,889

(3) Provision for mileage points

For the years ended December 31, 2015 and 2014, the changes in provision for mileage points are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Point Customer loyalty Point Customer loyalty Beginning balance ￦ 12,053 ￦ 10,691 ￦ 8,399 ￦ 14,545 Increase (decrease) 3,756 1,989 3,654 (3,854) Ending balance ￦ 15,809 ￦ 12,680 ￦ 12,053 ￦ 10,691

(4) Asset Retirement Obligation

For the years ended December 31, 2015 and 2014, the changes in asset retirement obligations are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Beginning balance ￦ 5,537 ￦ - Increase 711 5,024 Depreciation 88 513 Ending balance ￦ 6,336 ￦ 5,537

Asset retirement obligations are present value of the estimated restoration cost of the lease stores. The retirement obligation will be incurred at the end of the lease term. Average of four years of past experience studies and inflation rate are used to estimate the retirement obligation.

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(5) Other provisions

For the years ended December 31, 2015 and 2014, the changes in other provisions are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Beginning balance ￦ 9,385 ￦ 15,880 Decrease 1,238 6,495 Ending balance ￦ 8,147 ￦ 9,385

The above amounts as of December 31, 2015, include provision for deposits in escrow account of ￦2,233 million (see Note 25(5)) and provision for pending litigations of ￦5,914 million, in which provision includes deposits in escrow account of ￦4,467 million.

16. DERIVATIVES AND HEDGE ACCOUNTING:

(1) There are no derivative instruments held for trading as of December 31, 2015 and 2014.

(2) Cash flow hedge

Cash flow hedge is a hedge for the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable forecast transaction and could affect profit or loss. When applying cash flow hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge shall be recognized in other comprehensive income, and the ineffective portion of the gain or loss on the hedging instrument shall be recognized in profit or loss. If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains or losses that were recognized in other comprehensive income shall be reclassified from equity to profit or loss as a reclassification adjustment in the same period or periods during which the hedged forecast cash flows affect profit or loss. The Consolidated Entity shall discontinue prospectively if hedging instrument expires or is sold, terminated or exercised; the hedge no longer meets the criteria for hedge accounting; or the Consolidated Entity revokes the designation. The forecast transaction is no longer expected to occur, in which case any related cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income from the period when the hedge was effective shall be reclassified from equity to profit or loss as a reclassification adjustment. The Consolidated Entity uses interest rate swaps for hedging changes of cash flows in hedged items arising from changes in interest rates. The Consolidated Entity also uses currency swaps for hedging changes of cash flows in hedged items arising from changes in foreign exchange rates.

1) Fair value of cash flow hedge as of December 31, 2015 and 2014, are as follows (Korean won in

millions):

December 31, 2015

Unsettled contract amount Asset Liabilities

Accumulated other

comprehensive loss(*)

Interest rate swap ￦ 1,175,000 ￦ 21 ￦ 17,744 ￦ (13,469)Cross-currency swap 808,680 39,563 - (3,673)

Totals ￦ 1,983,680 ￦ 39,584 ￦ 17,744 ￦ (17,142)

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December 31, 2014

Unsettled contract amount Asset Liabilities

Accumulated other

comprehensive loss(*)

Interest rate swap ￦ 1,213,000 ￦ 80 ￦ 20,291 ￦ (15,351)Cross-currency swap 758,448 8,659 10,631 (5,297)

Totals ￦ 1,971,448 ￦ 8,739 ￦ 30,922 ￦ (20,648)

(*) Amount reflects tax effect For transactions between local and foreign currencies, the unsettled contract amount of transaction is translated by applying the basic foreign exchange rate at the end of reporting period to the contract amount in foreign currencies. For transactions between foreign currencies and other foreign currencies, the unsettled contract amount is the amounts translated by applying the basic foreign exchange rate at the end of reporting period to the contract amount in foreign currencies purchased.

2) Expected cash flow for cash flow hedge

Maximum potential amounts of future payments for cash flow hedges by the period when the cash flows are expected to occur and when they are expected to affect income (loss) for the period are as follows (Korean won in millions):

December 31, 2015 December 31, 2014

Less than one month ￦ (2,160) ￦ (1,744) One month to three months (2,767) (7,374) Three months to twelve months (11,775) (17,960) One year to five years 38,582 (86)

￦ 21,880 ￦ (27,164) 17. CAPITAL STOCK: (1) Number of shares issued

The Parent’s authorized shares are 600,000,000 (￦5,000 per share), and 160,465,286 shares of common stocks (￦802,326 million) are issued as of December 31, 2015.

18. CAPITAL SURPLUS:

Details of capital surplus as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Share premium ￦ 45,399 ￦ 45,399 Other capital surplus 12,305 12,305

￦ 57,704 ￦ 57,704

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19. RETAINED EARNINGS: (1) Details of retained earnings as of December 31, 2015 and 2014, are as follows (Unit: Korean won in

millions):

December 31, 2015 December 31, 2014 Legal reserve (*) ￦ 20,143 ￦ 20,143 Reserve for bad loans (see Note 21) 666,023 659,761 Unappropriated retained earnings 986,219 1,055,564

￦ 1,672,385 ￦ 1,735,468

(*) Korean Commercial Code requires a company to appropriate at least 10% of dividends paid as legal reserve for each fiscal period, until the reserve equals 50% of paid-in capital. This reserve is not available for payment of cash dividends; however, it can be used to reduce deficit or can be transferred to capital.

(2) Changes in retained earnings for the years ended December 31, 2015 and 2014, are as follows (Unit:

Korean won in millions):

December 31, 2015 December 31, 2014 Beginning balance ￦ 1,735,468 ￦ 1,511,954 Net income 186,762 223,514 Payment of dividends (249,845) - Ending balance ￦ 1,672,385 ￦ 1,735,468

(3) Details of the dividends payment by the Company in current year, are as follow:

Type Number of total

outstanding shares Number of shares

for dividends paymentDividends

per shares(*1) Total amount of dividends (*2)

Common stocks 160,465,286 shares 160,465,286 shares ￦ 1,557 ￦ 249,845

(*1) Unit: Korean won (*2) Unit: Korean won in millions

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20. ACCUMULATED OTHER COMPREHENSIVE LOSS:

Changes in accumulated other comprehensive loss for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015

Beginning

balance Reclassification to income (loss)

Other Increases (decreases)

Tax effect related to

remeasurementsEnding balance

Gain (loss) on valuation of derivatives

￦ (20,648) ￦ (2,548) ￦ 7,178

￦ (1,124) ￦ (17,142)

Remeasurements of the net defined benefit liability

(19,470) - (2,314)

542 (21,242)

Total ￦ (40,118) ￦ (2,548) ￦ 4,864 ￦ (582) ￦ (38,384)

December 31, 2014

Beginning

balance Reclassification to income (loss)

Other Increases (decreases)

Tax effect related to

remeasurementsEnding balance

Gain (loss) on valuation of derivatives

￦ (827) ￦ 733 ￦ (26,830)

￦ 6,276 ￦ (20,648)

Remeasurements of the net defined benefit liability

(5,030) - (19,015)

4,575 (19,470)

Total ￦ (5,857) ￦ 733 ￦ (45,845) ￦ 10,851 ￦ (40,118)

Cash flow hedging reserve represents the effective portion of cumulative gains or losses of hedging instruments in hedge accounting. The cumulative deferred gains or losses of hedging instruments is reclassified to income (loss) for the period when gains or losses of the hedged item is reflected in income (loss) for the period or is reflected in the initial book value of non-financial hedged item in accordance with relevant accounting policy.

21. RESERVE FOR BAD LOANS:

Reserve for bad loans is calculated and disclosed according to Article 11, Supervisory Regulation of Specialized Credit Financial Business Law.

(1) Reserve for bad loans reflected in retained earnings as of December 31, 2015 and 2014, are as follows

(Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Accumulated reserve for bad loans ￦ 666,023 ￦ 659,761 Expected reserve for bad loans (25,997) 6,262 Reserve for bad loans ￦ 640,026 ￦ 666,023

(2) The provision of reserve for bad loans and adjusted income after provision of reserve for bad loans for the

years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Net income attributable to the owners of the Company ￦ 186,762 ￦ 223,514 Expected reserve for bad loans (25,997) 6,262 Adjusted income after reserve for bad loans ￦ 212,759 ￦ 217,252

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22. GENERAL AND ADMINISTRATIVE EXPENSES:

Details of general and administrative expenses for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions): December 31, 2015 December 31, 2014 Salaries wages ￦ 172,235 ￦ 138,875 Pension expenses 18,954 10,072 Employee benefits 25,674 23,757 Travel expenses 2,641 2,453 Communication expenses 34,505 26,557 Postal expense 17,865 18,798 Rental expenses 25,005 25,075 Taxes dues 17,587 30,328 Repair and maintenance expenses 1,293 728 Insurance premiums 274 175 Entertainment expenses 628 2,471 Advertising expenses 44,264 50,386 Supply expenses 3,976 2,750 Vehicle maintenance expenses 12 15 Periodicals expenses 256 410 Publication expenses 8,923 8,950 Training expenses 4,938 4,685 Electronic data processing expense 42,764 43,286 Expense for temporary staff 8,173 26,482 Professional expenses 132,551 129,689 Delivery commission 1,605 1,874 Commission expense 28,596 26,183 Business activities expense 3,225 3,582 Depreciation expense 33,977 36,946 Amortization expense 33,009 21,348 Event expense 3,075 3,795 Conference expense 407 265 Building administrative expense 8,010 7,078

￦ 674,422 ￦ 647,013

23. INCOME TAX FROM CONTINUED OPERATION: (1) Income tax expense for the years ended December 31, 2015 and 2014, are summarized as follows (Unit:

Korean won in millions):

December 31, 2015 December 31, 2014Income tax currently payable ￦ 55,077 ￦ 72,232 Changes in deferred tax assets by temporary differences (*) (737) (6,237)

Total 54,340 65,995 Changes in income tax expense reflected directly in shareholders’ equity (582) 10,851 Income tax expense 53,758 76,846 (*) Ending net deferred tax assets due to temporary differences 150,197 149,460 Beginning net deferred tax assets due to temporary differences 149,460 143,223 Changes in net deferred tax assets due to temporary differences 737 6,237

(2) Income tax expenses reflected directly in shareholders’ equity for the years ended December 31, 2015 and

2014, are as follows (Unit: Korean won in millions):

December 31, 2015 Beginning balance Increase (decrease) Ending balance Tax effect related to the cash flow

hedging reserve gains and losses ￦ 6,537 ￦ (1,124) ￦ 5,413

Tax effect related to remeasurement of the net defined benefit liability 6,166 542

6,708

￦ 12,703 ￦ (582) ￦ 12,121

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December 31, 2014 Beginning balance Increase (decrease) Ending balance Tax effect related to the cash flow

hedging reserve gains and losses ￦ 261 ￦ 6,276 ￦ 6,537

Tax effect related to remeasurement of the net defined benefit liability 1,591 4,575

6,166

￦ 1,852 ￦ 10,851 ￦ 12,703

(3) A reconciliation between income before income tax and income tax expense for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014

Income before income tax expense ￦ 240,520 ￦ 300,360 Income tax payable by the statutory income tax rates (11%, 22% or 24.2%) 57,744

72,225

Tax reconciliations: Non-deductible revenue (4) - Non-deductible expenses 228 5 Others (4,210) 4,616

Subtotal (3,986) 4,621 Any adjustments recognized in the year due to current tax of prior year -

-

Income tax from continued operation ￦ 53,758 ￦ 76,846 (4) Details of changes in accumulated temporary differences and deferred tax asset(liability)for the years

ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 Temporary differences Deferred tax asset(liability)

Descriptions Beginning

balance Increase

(decrease)Ending

balance Beginning

balance Ending balance

Retirement benefit obligation ￦ 65,430 ￦ 7,434 ￦ 72,864 ￦ 15,735 ￦ 17,487Provision for unused commitments 45,889 7,200 53,089 11,035 12,741Accrued expenses 102,720 5,778 108,498 24,702 26,039Point provisions 311,868 (21,550) 290,318 74,998 69,675Unearned revenue (annual fee) 75,657 2,766 78,423 18,194 18,821Derivatives 27,186 (4,631) 22,555 6,538 5,413Provisions 14,921 (438) 14,483 3,588 3,476Retirement insurance premium (54,565) 4,114 (50,451) (13,122) (12,108)Others 32,402 3,656 36,058 7,792 8,653

Total ￦ 621,508 ￦ 4,329 ￦ 625,837 ￦ 149,460 ￦ 150,197

December 31, 2014 Temporary differences Deferred tax asset(liability)

Descriptions Beginning

balance Increase

(decrease)Ending

balance Beginning

balance Ending balance

Retirement benefit obligation ￦ 38,635 ￦ 26,795 ￦ 65,430 ￦ 9,281 ￦ 15,735Provision for unused commitments 47,497 (1,608) 45,889 11,411 11,035Accrued expenses 87,410 15,310 102,720 20,999 24,702Point provisions 341,674 (29,806) 311,868 82,082 74,998Unearned revenue (annual fee) 74,327 1,330 75,657 17,856 18,194Derivatives 1,089 26,097 27,186 261 6,538Provisions 15,880 (959) 14,921 3,815 3,588Retirement insurance premium (36,990) (17,575) (54,565) (8,886) (13,122)Others 26,659 5,743 32,402 6,404 7,792

Total ￦ 596,181 ￦ 25,327 ￦ 621,508 ￦ 143,223 ￦ 149,460

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24. EARNINGS PER SHARE: (1) Earnings per share for the years ended December 31, 2015 and 2014, are as follows.

December 31, 2015 December 31, 2014 Net income (A) (Unit: Korean won) ￦ 186,761,652,712 ￦ 223,514,020,775 Weighted-average number of shares (B) 160,465,286 160,465,286 Net income per share (A/B) (Unit: Korean won) ￦ 1,164 ￦ 1,393

(2) Diluted earnings per share

As the Consolidated Entity has not issued any diluted shares; diluted earnings per share is the same as basic earnings per share for the years ended December 31, 2015 and 2014.

25. CONTINGENCIES AND COMMITMENTS: (1) Credit line agreement

The followings are credit line agreement as of December 31, 2015 and 2014 (Unit: Korean won in millions):

Type Financial instruments December 31, 2015 December 31, 2014

Intraday overdraft limit Woori Bank and thirteen others ￦ 542,600 ￦ 552,600

(2) Revolving Credit Facility

As the Consolidated Entity has a revolving credit facility agreement with many financial institutions for credit line as of December 31, 2015, the Consolidated Entity made a revolving credit facility agreement for ￦490 billion with Kookmin Bank and nine others for credit line as of December 31, 2015.

(3) Guarantee

The Consolidated Entity has a performance guarantee from the Seoul Guarantee Insurance Co., Ltd., amounting to ￦937 million in connection with deferred transportation payment card and others.

(4) Pending Lawsuits

As of December 31, 2015, the Consolidated Entity is involved in 23 cases (￦32,907 millions) as a defendant and 13 cases (￦18,003 millions) as a plaintiff in the pending lawsuits. The management of the Consolidated Entity does not anticipate that the pending lawsuits referred above will have a significant effect on the Consolidated Entity’s consolidated financial statements.

(5) Deposit for Loss Reimbursement

As of December 31, 2015, the Consolidated Entity has deposits of ￦2,233 million and ￦4,763 million of proceeds and interests, respectively, from the sale of Daewoo Engineering & Construction Co., Ltd.’s shares in an escrow account and records ￦2,233 million of provision for proceeds and ￦4,467 million of provision for interests from the litigation relating to the sale of Daewoo Engineering & Construction Co., Ltd.’s shares (see Note 15(5)).

(6) Contract of Sale of Receivables

The Consolidated Entity entered into a contract with Hyundai Capital Services, Inc., relating to its sale of receivables on January 24, 2006. In accordance with the contract, the Consolidated Entity sells the receivables that are 60 days or more past due or written off (partially including receivables that are before 60 days) to Hyundai Capital Services, Inc. Such sale occurs five times a month on designated cutoff dates at the amount calculated using a predetermined price pursuant to the contract.

- 35 -

(7) Reserve for Loss Reimbursement

The Consolidated Entity has the obligation to reimburse customers for fraudulent credit card activities; the Consolidated Entity records the expected losses as an accrued expense.

(8) Insurance for the implementation of the liability for damages

The Consolidated Entity has insured the insured value of ￦1 billion for the implementation of the liability for damages in accordance with the article 43 of Credit Information Act.

(9) Security on the Receivables Sold Relating to Asset-Backed Securitization

The Consolidated Entity continuously transfers receivables to maintain a certain level of its equity in the second series beneficiary certificates relating to the asset-backed securitization.

(10) Early Redemption Rule Associated with Asset-Backed Securitization

According to the agreement on the Consolidated Entity’s asset-backed securitization, in order to enhance the credit level of the asset-backed securities, several provisions are in place as trigger clauses to be used for early redemption calls, thereby limiting the risk that the investors are exposed to resulting from a change in quality of the assets in the future. In the event the asset-backed securitization of the Consolidated Entity is in violation of the applicable trigger clause, the Consolidated Entity is obliged to make early redemption for the asset-backed securities.

26. TRANSFERS OF FINANCIAL ASSETS:

The Consolidated Entity transferred receivables to Privia 4th SPC, Privia 5th SPC and Super Series 1st SPC (hereafter “SPC”) in order to securitize assets. SPC issued subordinate asset-backed securities with transferred receivables as underlying asset, and as the Consolidated Entity is providing credit reinforcement by acquiring such subordinate asset-backed securities, should any bad debt incur in receivables being the underlying asset, the risk preferentially belongs to the Consolidated Entity. SPC has recourse to drawer only in regards to the receivables transferred. Even after transfer of receivables, the Consolidated Entity owns majority of risks and indemnity for such asset, hence this transaction was accounted as secured loan. Transferred financial assets that are not derecognized in their entirety and the associated liabilities as of December 31, 2015 and 2014 are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Securitized card assets

Book value of assets ￦ 2,896,759 ￦ 2,965,344 Book value of relevant liabilities 1,103,302 1,053,114 For those liabilities that have recourse only to the transferred financial assets: Fair value of assets 3,279,507 3,190,342 Fair value of relevant liabilities 1,110,368 1,059,510

Net position ￦ 2,169,139 ￦ 2,130,832

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27. TRANSACTION WITH RELATED PARTIES: (1) Status of related parties

As of December 31, 2015, details of the related parties are as follows:

Companies

Parent company Hyundai Motor Company Other related parties IGE USA Investments, GE Capital Int’l Holdings, HMC Investment Securities,

Green Air, Kia Motors, Kia Tigers, Maintrans Co., Ltd., Busan Finance Center AMC, HL Green Power, WIA-MAGNA Powertrain, Eukor Car Carriers, Innocean Worldwide, Iljin Bearing, Chunbuk Hyundai Motors FC, Korea Credit Bureau, Hankook Economy Daily, Haevichi Resort, Haevichi Country Club, Hyundai Construction, Hyundai Glovis, Hyundai Dymos, Hyundai City Corporation, Hyundai Life, Hyundai Rotem, Hyundai Materials, Hyundai Mobis, Hyundai BNG Steel, Hyundai Farm Land & Development, Hyundai Engineering & Steel Industries, Hyundai IHL, Hyundai Energy, Hyundai Engineering, Hyundai NGV, Hyundai MSEAT, Hyundai MNSOFT, Hyundai Auto Ever Systems, Hyundai-autron, Hyundai WIA, Hyundai Steel Company, HYUNDAI Architects & Engineers Assoc., Hyundai Capital, Hyundai Commercial, Hyundai KEFICO, Hyundai Powertech, Hyundai Partecs, Hyundai Hysco, etc.

(2) Outstanding transactions with related parties for the years ended December 31, 2015 and 2014, are as

follows (Unit: Korean won in millions):

December 31, 2015 Revenues Expenses Others

Card income

Rental revenue Others

Card expense

General and administrative

expenses Others

Purchase of property and equipment

Purchase of intangible

assets Disposal of

assets Parent Company:

Hyundai Motor Company

￦ 107,532 ￦ - ￦ - ￦ 1,136 ￦ 327 ￦ 530 ￦ - ￦ - ￦ -

Other related parties: Hyundai Capital 1,012 487 20,084 19,704 2,568 24,149 - - 356,628Kia Motor Company 41,554 - - - 6 72 - - -Hyundai Auto Ever Systems

4,804 - 1 10 40,852 9,564 - 8,104 -

Hyundai Life 5,462 193 - - 4,187 - - - -Innocean 1,575 - - - 7,363 - - - -Others 2,184 817 1,032 652 9,551 2,689 6,969 98 -

Total ￦ 164,123 ￦ 1,497 ￦ 21,117 ￦ 21,502 ￦ 64,854 ￦ 37,004 ￦ 6,969 ￦ 8,202 ￦ 356,628

December 31, 2014 Revenues Expenses Others

Card income

Rental revenue Others

Card expense

General and administrative

expenses Others

Purchase of property and equipment

Purchase of intangible

assets Disposal of

assets Parent Company:

Hyundai Motor Company

￦ 114,493 ￦ - ￦ - ￦ - ￦ 246 ￦ 60 ￦ 2,370 ￦ - ￦ -

Other related parties: Hyundai Capital 74 494 21,075 25,516 3,358 20,425 - - 392,723Kia Motor Company 43,871 - - - 25 13 - - -Hyundai Auto Ever Systems

5,635 - 1 - 38,867 4,503 - 14,493 -

Hyundai Life 4,432 195 9 - 3,360 - - - -Innocean 1,743 - - - 5,040 - - - -Others 2,068 817 776 194 8,340 1,722 8,025 - -

Total ￦ 172,316 ￦ 1,506 ￦ 21,861 ￦ 25,710 ￦ 59,236 ￦ 26,723 ￦ 10,395 ￦ 14,493 ￦ 392,723

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(3) Receivables and payables (except borrowings) from the transactions with related parties as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 Receivable Payables Card assets Others Accounts payable Others Parent company

Hyundai Motor Company ￦ 46,492 ￦ 2,153 ￦ 39,143 ￦ -Other related parties

Hyundai Capital 111,407 423 1,038 248Kia Motor Company 21,925 - 10,666 -Hyundai Auto Ever Systems 5,223 - 4,017 -Hyundai Life 1,564 59,597 139 101Innocean 360 - 5,639 -Others 29,633 - 5,785 424

Total ￦ 216,604 ￦ 62,173 ￦ 66,427 ￦ 773

December 31, 2014 Receivable Payables Card assets Others Accounts payable Others Parent company

Hyundai Motor Company ￦ 68,293 ￦ 2,128 ￦ 51,529 ￦ -Other related parties

Hyundai Capital 126,110 497 599 265Kia Motor Company 42,731 173 9,075 -Hyundai Auto Ever Systems 3,598 - 4,853 -Hyundai Life 1,549 46,406 67 205Innocean 286 - 8,141 -Others 40,384 - 4,785 425

Total ￦ 282,951 ￦ 49,204 ￦ 79,049 ￦ 895

(4) Compensation for key executives

Compensation for key management for the years ended December 31, 2015 and 2014, consists of the following (Unit: Korean won in millions):

December 31, 2015 December 31, 2014Short-term employee benefit ￦ 11,752 ￦ 10,115Retirement benefit 2,055 2,032Long-term employee benefit 14 128

Total ￦ 13,821 ￦ 12,275 (5) There were no borrowing transactions with the related parties for the years ended December 31, 2015 and

2014. (6) There were no lending transactions with the related parties for the years ended December 31, 2015 and

2014.

(7) As of December 31, 2015, there are no payment guarantees or collaterals provided by or provided to the Consolidated Entity.

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28. CONSOLIDATED STATEMENTS OF CASH FLOWS: (1) Details of cash and cash equivalents as of December 31, 2015 and 2014, are as follows (Unit: Korean

won in millions): December 31, 2015 December 31, 2014 Ordinary Deposit ￦ 121,130 ￦ 87,446 Current Deposit 316 101 Short-term financial instruments 34,400 14,000 Other Cash and Cash Equivalents 349,897 66,150 ￦ 505,743 ￦ 167,697

(2) Cash flows from operating activities for the years ended December 31, 2015 and 2014, are as follows

(Unit: Korean won in millions):

For the years ended December 31, 2015 2014 CASH FLOWS FROM OPERATING ACTIVITIES: Net income ￦ 186,762 ￦ 223,514 Adjustments

Income tax expense 53,758 76,846 Interest expense 277,610 305,884 Bad debt expense and loss on disposal of receivables 237,707 265,853 Retirement benefits 14,310 10,017 Long-term employee benefits 995 3,553 Depreciation 33,977 36,946 Amortization 33,009 21,348 Loss on foreign currency translation 29,112 32,843 Loss on valuation of trading securities 9 - Increase in provision for unused credit limit 7,199 - Losses from sale of property, plant and equipment 1,370 62 Losses from sale of intangible assets 3 - Impairment loss of intangible assets - 407 Sales promotional expenses 33,669 30,482 Other operating expenses 953 1,671 Increase in provision for others 5,744 - Interest income (22,606) (24,733) Dividends received (315) (346) Decrease in provision for others (2,961) (3,986) Gains on valuation of trading securities (624) (154) Gains on disposal of AFS securities (139) (62) Gains on valuation of derivatives (29,112) (32,843) Amortization of present value discounts of card assets (33,206) (31,045) Amortization of deferred origination cost and fee of

card assets (23,359) (26,640) Decrease in provision for unused credit limit - (1,608) Gains from sale of property, plant and equipment (76) (47) Reversal of impairment losses for intangible assets - (6) Other operating revenues (24) (43)

Subtotal 617,003 664,399 Changes in operating assets and liabilities:

Decrease (increase) in trading securities 279,692 (738,850) Increase in card assets (1,070,899) (1,061,207) Increase in other assets (7,879) (23,721) Decrease (increase) in guarantee deposit (1,307) 1,410 Decrease (increase) in derivative assets (1,791) 6,623 Decrease in net defined benefit liabilities (13,389) (16,067) Decrease in derivative liabilities (8,489) (23,610) Decrease in financial lease liabilities - (298) Decrease in other liabilities (156,607) (59,499)

Subtotal (980,670) (1,915,219) Total ￦ (176,905) ￦ (1,027,306)

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(3) Non-cash investing and financing activities, which are not reflected in the consolidated statements of cash flows for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014

Replacement of tangible assets (*) ￦ 25,748 ￦ 68,904 Unpaid acquisition of property and equipment 2,393 5,930 Replacement of intangible assets 3,987 26,944 Unpaid acquisition of intangible assets 2,999 1,518 Bad debt(elimination) of card assets 64,469 85,888 Gain (loss) on valuation of derivatives (4,631) 26,098 Replacement of provisions to accrued expenses 2,434 2,314

29. RISK MANAGEMENT: (1) Credit risk

Credit risk is the risk of financial loss to the Consolidated Entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises primarily from the Consolidated Entity’s loan and card assets. The Consolidated Entity considers all the elements of individual borrower’s credit risk exposure, such as default and breach.

1) Level of exposure to credit risk The Consolidated Entity’s maximum exposure to credit risk as of December 31, 2015 and 2014, are summarized as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Deposit ￦ 538,767 ￦ 200,725 Card assets (*1) 11,662,073 10,785,737 Other financial assets (*1, 2) 216,277 207,150 Unused commitment 34,041,391 31,373,354

￦ 46,458,508 ￦ 42,566,966 (*1) Assets are stated at book value before allowance for doubtful accounts. (*2) Other financial assets consist of other accounts receivable, accrued revenue, etc.

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2) Analysis of credit soundness of financial assets

① Credit soundness of card assets neither past due nor impaired as of December 31, 2015 and 2014, are summarized as follows (Unit: Korean won in millions):

A. Retail

December 31, 2015 December 31, 2014

Grade (*)

Book value before

allowance for doubtful accounts

Allowance for doubtful

accounts

Book value

Book value before

allowance fordoubtful accounts

Allowance for doubtful

accounts

Book value Card receivables and cash advances

1 ￦ 591,169 ￦ (404) ￦ 590,765 ￦ 543,855 ￦ (345) ￦ 543,5102 605,158 (466) 604,692 536,764 (391) 536,3733 968,129 (1,017) 967,112 862,009 (855) 861,1544 721,877 (845) 721,032 616,936 (694) 616,2425 790,221 (1,362) 788,859 674,812 (1,116) 673,6966 740,925 (2,281) 738,644 629,213 (1,843) 627,3707 669,982 (4,100) 665,882 598,810 (3,495) 595,3158 649,238 (7,076) 642,162 604,854 (6,263) 598,5919 587,830 (10,478) 577,352 575,265 (9,733) 565,53210 508,798 (13,476) 495,322 490,776 (12,233) 478,54311 328,244 (11,798) 316,446 333,738 (11,388) 322,35012 393,471 (20,672) 372,799 354,378 (17,510) 336,86813 118,039 (9,534) 108,505 101,599 (7,806) 93,79314 60,289 (7,774) 52,515 53,943 (6,491) 47,45215 12,008 (1,661) 10,347 12,028 (1,567) 10,461

Subtotal ￦ 7,745,378 ￦ (92,944) ￦ 7,652,434 ￦ 6,988,980 ￦ (81,730) ￦ 6,907,250Card loan

1 ￦ 80,506 ￦ (238) ￦ 80,268 ￦ 61,839 ￦ (154) ￦ 61,6852 165,604 (879) 164,725 136,322 (686) 135,6363 180,146 (1,384) 178,762 153,145 (1,091) 152,0544 244,929 (2,504) 242,425 209,651 (1,957) 207,6945 302,689 (4,045) 298,644 261,878 (3,175) 258,7036 353,647 (5,949) 347,698 313,029 (4,862) 308,1677 359,738 (7,584) 352,154 322,333 (6,280) 316,0538 343,860 (9,135) 334,725 331,652 (8,250) 323,4029 297,417 (9,564) 287,853 294,034 (8,893) 285,14110 240,412 (9,324) 231,088 247,603 (9,044) 238,55911 179,354 (8,275) 171,079 193,899 (8,560) 185,33912 125,783 (6,863) 118,920 131,672 (6,954) 124,71813 78,040 (5,026) 73,014 84,660 (5,303) 79,35714 44,801 (3,789) 41,012 50,318 (3,681) 46,63715 60,365 (6,647) 53,718 79,883 (8,295) 71,588

Subtotal 3,057,291 (81,206) 2,976,085 2,871,918 (77,185) 2,794,733Total ￦ 10,802,669 ￦ (174,150) ￦ 10,628,519 ￦ 9,860,898 ￦ (158,915) ￦ 9,701,983

(*) Grades are internal credit ratings evaluated by the Consolidated Entity.

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B. Corporate

December 31, 2015 December 31, 2014

Grade (*)

Book value before

allowance for doubtful accounts

Allowance for doubtful

accounts

Book value

Book value before

allowance fordoubtful accounts

Allowance for doubtful

accounts

Book value 1 ￦ 163,932 ￦ (392) ￦ 163,540 ￦ 66,990 ￦ (155) ￦ 66,8352 129,991 (528) 129,463 144,718 (777) 143,9413 50,273 (283) 49,990 69,992 (453) 69,5394 40,267 (376) 39,891 42,700 (327) 42,3735 12,593 (317) 12,276 14,116 (285) 13,8316 3,657 (183) 3,474 8,577 (363) 8,2147 10,350 (769) 9,581 13,062 (865) 12,1978 217 (24) 193 245 (23) 222

N (**) 487 (25) 462 2,448 (123) 2,325Total ￦ 411,767 ￦ (2,897) ￦ 408,870 ￦ 362,848 ￦ (3,371) ￦ 359,477

(*) Grades are internal credit ratings evaluated by the Consolidated Entity. (**) ‘N’ represents card assets, which are composed of sound government-related assets, such as central and local

governments and public authorities.

② Credit quality of credit cards past due but not impaired as of December 31, 2015 and 2014, are summarized as follows (Unit: Korean won in millions):

December 31, 2015

Less than

one month One to

two months Two to

three months More than

three months

Total Retail ￦ 173,908 ￦ 27,346 ￦ - ￦ - ￦ 201,254Corporate 86,735 18,017 - - 104,752

Subtotal 260,643 45,363 - - 306,006Card assets

Card receivables 174,476 27,856 - - 202,332Cash advances 22,175 4,902 - - 27,077Card loans 63,992 12,605 - - 76,597

Subtotal 260,643 45,363 - - 306,006 Allowance for doubtful

accounts (7,713) (3,272) - - (10,985)Book value ￦ 252,930 ￦ 42,091 ￦ - ￦ - ￦ 295,021

December 31, 2014

Less than

one month One to

two months Two to

three months More than

three months

Total Retail ￦ 182,532 ￦ 31,344 ￦ - ￦ - ￦ 213,876Corporate 207,251 39,221 - - 246,472

Subtotal 389,783 70,565 - - 460,348Card assets

Card receivables 295,036 49,961 - - 344,997Cash advances 23,173 5,541 - - 28,714Card loans 71,574 15,063 - - 86,637

Subtotal 389,783 70,565 - - 460,348 Allowance for doubtful

accounts (9,820) (3,944) - -

(13,764)Book value ￦ 379,964 ￦ 66,620 ￦ - ￦ - ￦ 446,584

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③ Credit quality of credit cards past due and impaired as of December 31, 2015 and 2014, are summarized as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Card assets ￦ 141,631 ￦ 101,643 Allowance for doubtful accounts (67,454) (59,790) Book value ￦ 74,177 ￦ 41,853

3) Concentrations of credit risk

① Concentration of credit risk by term structures as of December 31, 2015 and 2014, are summarized as follows (Unit: Korean won in millions):

December 31, 2015

Retail Corporate

Total Ratio

Allowance for doubtful

accounts

Book valueWithin three months ￦ 3,566,471 ￦ 540,685 ￦ 4,107,156 35.22% ￦ (44,463) ￦ 4,062,693Three months to six months 1,876,433 1,235 1,877,668 16.10% (21,545) 1,856,123Six months to twelve months 1,794,027 685 1,794,712 15.39% (34,279) 1,760,433One year to two years 2,433,249 - 2,433,249 20.86% (74,193) 2,359,056Two years to three years 1,317,376 - 1,317,376 11.30% (36,465) 1,280,911Three years to four years 42,859 - 42,859 0.37% (2,551) 40,308Four years to five years 4,896 - 4,896 0.04% (2,080) 2,816After five years 84,157 - 84,157 0.72% (39,910) 44,247

￦ 11,119,468 ￦ 542,605 ￦ 11,662,073 100.00% ￦ (255,486) ￦ 11,406,587 December 31, 2014

Retail

Corporate

Total Ratio

Allowance for doubtful

accounts

Book valueWithin three months ￦ 3,292,180 ￦ 612,517 ￦ 3,904,697 36.20% ￦ (45,768) ￦ 3,858,929Three months to six months 1,755,420 920 1,756,340 16.29% (20,657) 1,735,683Six months to twelve months 1,722,891 8 1,722,899 15.97% (32,771) 1,690,128One year to two years 2,187,790 - 2,187,790 20.28% (69,303) 2,118,487Two years to three years 1,108,913 - 1,108,913 10.28% (32,171) 1,076,742Three years to four years 32,901 - 32,901 0.31% (2,013) 30,888Four years to five years 4,483 - 4,483 0.04% (1,538) 2,945After five years 67,714 - 67,714 0.63% (31,619) 36,095

Total ￦ 10,172,292 ￦ 613,445 ￦ 10,785,737 100.00% ￦ (235,840) ￦ 10,549,897

② Concentrations of credit risk, by industry, of corporate loans as of December 31, 2015 and 2014, are summarized as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014

Book value before

allowance for doubtful

accounts

Ratio

Allowancefor doubtful

accounts

Book value

Book valuebefore

allowancefor doubtful

accounts

Ratio

Allowancefor

doubtful accounts

Book value

Financing ￦ 146,044 26.92% ￦ (510) ￦ 145,534 ￦ 153,273 24.99% ￦ (646) ￦ 152,627Manufacturing 172,002 31.70% (1,988) 170,014 215,517 35.13% (2,391) 213,126Service 145,593 26.83% (1,138) 144,455 193,923 31.61% (3,759) 190,164Public 52 0.01% - 52 101 0.02% - 101Others 78,914 14.54% (957) 77,957 50,631 8.25% (1,015) 49,616 ￦ 542,605 100.00% ￦ (4,593) ￦ 538,012 ￦ 613,445 100.00% ￦ (7,811) ￦ 605,634

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4) Card assets by the assessment methods for impairments as of December 31, 2015 and 2014, are summarized as follows (Unit: Korean won in millions):

December 31, 2015 Individual assessment Collective assessment Total

Book value before

allowance for doubtful accounts

Allowance for doubtful

accounts Allowance

rate

Book value before

allowance for doubtful accounts

Allowance for doubtful

accounts Allowance

rate

Book value before

allowance for doubtful accounts

Allowance for doubtful

accounts Allowance

rate Card assets

Card receivables ￦ 26,036 ￦ (310) 1.19% ￦ 7,569,815 ￦ (76,391) 1.01% ￦ 7,595,851 ￦ (76,701) 1.01%Cash advances - - - 827,003 (32,868) 3.97% 827,003 (32,868) 3.97%Card loans - - - 3,239,219 (145,917) 4.50% 3,239,219 (145,917) 4.50%

Total ￦ 26,036 ￦ (310) 1.19% ￦ 11,636,037 ￦ (255,176) 2.19% ￦ 11,662,073 ￦ (255,486) 2.19%

December 31, 2014 Individual assessment Collective assessment Total

Book value before

allowance for doubtful accounts

Allowance for doubtful

accounts Allowance

rate

Book value before

allowance for doubtful accounts

Allowance for doubtful

accounts Allowance

rate

Book value before

allowance for doubtful accounts

Allowance for doubtful

accounts Allowance

rate Card assets

Card receivables ￦ 37,486 ￦ (510) 1.36% ￦ 6,864,007 ￦ (71,012) 1.03% ￦ 6,901,493 ￦ (71,522) 1.04%Cash advances - - - 837,548 (30,078) 3.59% 837,548 (30,078) 3.59%Card loans - - - 3,046,696 (134,240) 4.41% 3,046,696 (134,240) 4.41%

Total ￦ 37,486 ￦ (510) 1.36% ￦ 10,748,251 ￦ (235,330) 2.19% ￦ 10,785,737 ￦ (235,840) 2.19% (2) Liquidity risk

Liquidity risk is the risk that the Consolidated Entity is unable to meet its payment obligations arising from financial liabilities as they become due. The Consolidated Entity classifies and discloses contractual maturity of all financial assets, liabilities and offshore accounts in relation to liquidity risk into four categories as immediately payable, within one year, one to five years and after five years. The cash flows disclosed in the maturity analysis is undiscounted contractual amount, including principal and future interest payments, which results in disagreement with the discounted cash flows included in the consolidated statements of financial position. Calculated cash flows are allocated into four categories, which draw contractual maturity analysis of each financial asset and liability.

1) Residual contractual maturity analysis of financial liabilities The Consolidated Entity’s financial liabilities by residual contractual maturity as of December 31, 2015 and 2014, are classified as follows (Unit: Korean won in millions):

December 31, 2015

Immediate payment

Less than one year

One to five years

More than five years Total

Borrowings ￦ - ￦ 593,976 ￦ - ￦ - ￦ 593,976Debentures - 2,184,453 6,714,485 106,487 9,005,425Derivatives liabilities - 11,062 9,018 - 20,080Other liabilities 41,272 1,164,963 22,716 - 1,228,951

Total ￦ 41,272 ￦ 3,954,454 ￦ 6,746,219 ￦ 106,487 ￦ 10,848,432

These amounts include all cash outflows, such as interests without discount and other liabilities, which include account payable, accrued expense, deposit received, finance lease liabilities and guarantee deposit received for import license.

- 44 -

December 31, 2014

Immediate payment

Less than one year

One to five years

More than five years Total

Borrowings ￦ - ￦ 154,004 ￦ 50,628 ￦ - ￦ 204,632Debentures - 2,151,854 6,165,732 20,746 8,338,332Derivatives liabilities - 21,919 12,680 - 34,599Other liabilities 85,693 1,235,129 42,081 - 1,362,903

Total ￦ 85,693 ￦ 3,562,906 ￦ 6,271,121 ￦ 20,746 ￦ 9,940,466

These amounts include all cash outflows, such as interests without discount and other liabilities, which include account payable, accrued expense, deposit received and guarantee deposit received import license.

(3) Market risk

Market risk is the risk to the Consolidated Entity’s earnings arising from changes in interest rates, stock price, currency exchange rates or commodity prices. The trading market risk that the Consolidated Entity is mainly exposed to is the interest rate risk arising from the change in the value of debt instruments and interest rate embedded securities due to changes in market interest rate. The Consolidated Entity is additionally exposed to stock price and foreign exchange rate fluctuation risk arising from loans, receivables, deposits, securities or financial derivatives. The market risk from the non-trading position also exposes the Consolidated Entity to interest rate risk and liquidity risk. The trading position held for the Consolidated Entity’s short-term funding purpose does not fall into the category that exposes the Consolidated Entity to interest rate risk as these are not sensitive to fluctuations in interest rate due to short-term strategic management. Only risks arising from non-trading market risks are managed.

The management of interest rate risk is supported by a comprehensive analysis of interest rate gap (between assets generating interest income and liabilities generating interest expense) and measurement of interest rate VaR and earnings at risk. The Consolidated Entity calculates risk index using the methodologies listed above, and discloses the interest rate VaR calculated using duration. Interest rate VaR is a statistical estimate of the maximum potential decline in the value of net assets due to the unfavorable changes in interest rate, using the VaR methodology, a key measure of market risk, in interest rate risk assessment. The interest rate VaR disclosed below is estimated at a 95% confidence level with 1% interest rate shock using the Bank for International Settlements (“BIS”) standards framework. This methodology employs using revised duration proxy by maturity provided by BIS. The assumption used to calculate the VaR is the expected range of interest rate fluctuation affected by interest rate shock at 100bp parallel movement of benchmark rate curve. Although the VaR is a generally used as a key measure of market risk, certain limitations to this methodology exist. VaR measures the potential loss in value of a risky asset or portfolio based on historical market movements over a defined period for a given confidence interval. However, it is not always possible in practice that the historical market movements reflect all future conditions and circumstances, which results in variance in actual loss timing and size due to the changes in assumptions used in calculation. The result of interest rate VaR calculated under normal distribution of interest rate risk are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014

Interest rate VaR ￦ 92,559 ￦ 92,546

- 45 -

(4) Capital management

The Parent (specialized credit finance company) must maintain adjusted capital adequacy ratio in accordance with Specialized Credit Financial Business Law and subregulations, and the ratio for the credit card company must be more than 8 %. This ratio is calculated dividing adjusted capital by adjusted total assets and all factors are based on consolidated financial statements. The Parent maintains an adjusted capital adequacy ratio over 8%.

The details of adjusted capital adequacy ratio as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014

Adjusted total assets (A) ￦ 12,107,908 ￦ 11,272,517 Adjusted total capital (B) 2,060,972 2,047,771 Adjusted capital adequacy ratio (B/A) 17.02% 18.17%

30. FINANCIAL ASSETS AND FINANCIAL LIABILITIES: (1) Fair Value of Financial Assets and Liabilities

The fair value of financial assets and financial liabilities as of December 31, 2015 and 2014, are summarized as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Book value Fair value Book value Fair value Assets: Financial assets

Cash and deposit ￦ 538,767 ￦ 538,767 ￦ 200,725 ￦ 200,725Securities 461,695 461,695 740,771 740,771Card assets 11,406,587 12,693,621 10,549,897 11,136,398Other financial assets 214,031 214,031 205,190 205,315

Total ￦ 12,621,080 ￦ 13,908,114 ￦ 11,696,583 ￦ 12,283,209Liabilities: Financial liabilities Borrowings ￦ 590,000 ￦ 590,070 ￦ 200,000 ￦ 200,366

Debentures 8,527,884 8,702,292 7,730,127 7,946,435 Other financial liabilities 1,246,644 1,246,644 1,393,751 1,393,764

Total ￦ 10,364,528 ￦ 10,539,006 ￦ 9,323,878 ￦ 9,540,565 Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s-length transaction. The Consolidated Entity presents a comparative disclosure of fair value and book value by financial assets and financial liabilities type. The best evidence of fair value is a quoted price in an active market. The fair values of financial instruments where no active market exists or where quoted prices are not otherwise available are determined by using valuation techniques. Valuation techniques include using recent arm’s-length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option-pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the Consolidated Entity uses that technique. Although the Consolidated Entity believes that the valuation techniques it has used are appropriate and the fair values recorded in the consolidated statements of financial position are reasonably estimated, the application of assumptions and estimates means that any selection of different assumptions and valuation techniques would cause the reported results to differ. Furthermore, as various valuation techniques and

- 46 -

assumptions are used in estimating fair values, it might be difficult to compare the Consolidated Entity’s results with fair values determined by other financial institutions.

(2) Netting on financial assets and financial liabilities

Derivative assets and derivative liabilities recognized by the Consolidated Entity can be set off in accordance with the future events described in derivative master netting agreements. The effects of netting agreements as of December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

Classification

December 31, 2015

Gross amounts of recognized financial

assets

Gross amounts ofrecognized financial

liabilities to be set off

Net amounts of financial assets presented in the

consolidated statement of

financial position

Non-offsetting amount

Net amounts

Financial instruments

Cash collateralreceived

Financial Assets Derivative assets ￦ 39,584 ￦ - ￦ 39,584 ￦ 21 ￦ - ￦ 39,563

Financial Liabilities Derivative liabilities ￦ 17,744 ￦ - ￦ 17,744 ￦ 21 ￦ - ￦ 17,723

Classification

December 31, 2014

Gross amounts of recognized financial

assets

Gross amounts ofrecognized financial

liabilities to be set off

Net amounts of financial assets presented in the

consolidated statement of

financial position

Non-offsetting amount

Net amounts

Financial instruments

Cash collateralreceived

Financial Assets Derivative assets ￦ 8,739 ￦ - ￦ 8,739 ￦ 8,659 ￦ - ￦ 80

Financial Liabilities Derivative liabilities ￦ 30,922 ￦ - ￦ 30,922 ￦ 8,659 ￦ - ￦ 22,263

(3) Fair value hierarchy

The table below provides the Consolidated Entity’s financial assets and financial liabilities recorded at fair value in the consolidated statements of financial position as of December 31, 2015 and 2014 (Unit: Korean won in millions):

December 31, 2015 Book value Fair value Level 1 Level 2 Level 3 Financial assets Fair value financial assets

Short-term investment ￦ 459,928 ￦ 459,928 ￦ - ￦ 459,928 ￦ -Derivatives assets 39,584 39,584 - 39,584 -

Financial liabilities Fair value financial liabilities

Derivatives liabilities ￦ 17,744 ￦ 17,744 ￦ - ￦ 17,744 ￦ - December 31, 2014 Book value Fair value Level 1 Level 2 Level 3 Financial assets Fair value financial assets

Short-term investment ￦ 739,004 ￦ 739,004 ￦ - ￦ 739,004 ￦ -Derivatives assets 8,739 8,739 - 8,659 80

Financial liabilities Fair value financial liabilities

Derivatives liabilities ￦ 30,922 ￦ 30,922 ￦ - ￦ 30,922 ￦ - The table below provides the Consolidated Entity’s financial assets and financial liabilities that are carried at cost since the fair values of the financial instruments are not readily determinable in the consolidated statements of financial position as of December 31, 2015 and 2014 (Unit: Korean won in millions):

- 47 -

December 31, 2015 December 31, 2014 Securities

AFS financial assets(*) ￦ 1,767 ￦ 1,767

(*) AFS financial assets are unlisted equity securities and recorded as carried at cost since they do not have quoted prices in an active market and the fair values are not measured with reliability.

(4) The table below provides the fair value hierarchy of financial instruments that are not measured

subsequently at fair value in consolidated statements of financial position as of December 31, 2015 and 2014 (Unit: Korean won in millions):

December 31, 2015 Level 1 Level 2 Level 3 Totals Financial assets Loans and receivables

Card assets ￦ - ￦ - ￦ 12,693,621 ￦ 12,693,621Other financial assets

Leasehold deposits provided - 32,467 - 32,467Totals ￦ - ￦ 32,467 ￦ 12,693,621 ￦ 12,726,088

Financial liabilities Borrowings ￦ - ￦ 590,070 ￦ - ￦ 590,070Debentures - 8,702,292 - 8,702,292Leasehold deposits received - 9,081 - 9,081

Totals ￦ - ￦ 9,301,443 ￦ - ￦ 9,301,443

December 31, 2014 Level 1 Level 2 Level 3 Totals Financial assets Loans and receivables

Card assets ￦ - ￦ - ￦ 11,136,398 ￦ 11,136,398Other financial assets

Leasehold deposits provided - 31,173 - 31,173Totals ￦ - ￦ 31,173 ￦ 11,136,398 ￦ 11,167,571

Financial liabilities Borrowings ￦ - ￦ 200,366 ￦ - ￦ 200,366Debentures - 7,946,435 - 7,946,435Leasehold deposits received - 8,664 - 8,664

Totals ￦ - ￦ 8,155,465 ￦ - ￦ 8,155,465

The management of the Consolidated Entity anticipates that, except for the items described in the table above, the book value of the financial assets and liabilities measured at amortized cost in the consolidated financial statements is similar to the fair value.

- 48 -

(5) The following table explains valuation techniques, fair value hierarchy, notable unobservable inputs and extents, and the correlation between unobservable inputs and fair value measurement, used in Level 2 or Level 3 fair value measurement.

Description Classification

Fair Value

(In Million KRW)

Current / Prior

Fair Value

HierarchyValuation Techniques Notable Unobservable Inputs

and Extent

Card Assets Assets 12,693,621 11,136,398 Level 3 Discounted Cash Flow model is used to determine the fair value of card assets. The fair value is determined by discounting the expected cash flows with the market interest rate considering the Consolidated Entity’s credit grade.

Market rate of profit, credit spread, liquidity premium, other spread, discount rate per creditors

Leasehold deposits provided

Assets 32,467 31,173 Level 2 DCF model is used to determine the fair value of lease deposits provided. The fair value is determined by discounting the expected cash flows with the market interest rate considering the Consolidated Entity’s credit grade.

Market rate of profit, credit spread, liquidity premium, other spread

Trading Securities

Assets 459,928 739,004 Level 2 DCF model is used to determine the fair value of held for trading securities. The fair value is determined by discounting the expected cash flows with the market interest rate considering the similar credit grade with the debt security issuer.

N/A

Borrowings and debenture

Liabilities 9,292,362 8,146,801 Level 2 DCF model is used to determine the fair value of borrowings. The fair value is determined by discounting the expected cash flows with the market interest rate considering the Consolidated Entity’s credit grade.

Market rate of profit, credit spread, liquidity premium, other spread

Leasehold deposits received

Liabilities 9,081 8,664 Level 2 DCF model is used to determine the fair value of lease deposits received. The fair value is determined by discounting the expected cash flows with the market interest rate considering the Consolidated Entity’s credit grade.

Market rate of profit, credit spread, liquidity premium, other spread

Interest Rate Swap

Assets 21 - Level 2 Discount rates and forward rates used to measure fair values of interest rate swap are determined based on the applicable constructed market-based yield curve. The fair value is determined by offsetting the discounted expected cash flows of interest rate swap with the aforementioned forward rates.

N/A

Liabilities 17,744 20,291

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Description Classification

Fair Value

(In Million KRW)

Current / Prior

Fair Value

HierarchyValuation Techniques Notable Unobservable Inputs

and Extent

Currency Swaps

Assets 39,563 8,659 Level 2 Discount rates and forward rates used to measure fair values of currency swaps are determined based on the applicable constructed market-based yield curve. The trading base rate in the morning of the report date is used as currency swap’s exchange rate. The fair value is determined by offsetting the discounted expected cash flows of currency swap with the aforementioned forward rates and closing price.

Discounted interest rate purchased, discounted interest rate sold.

Liabilities - 10,631

Structured Swaps

Assets - 80 Level 3 Structured Swaps - Discount curve and expected interest rates used to determine the fair value of structured swap are taken from market-based swap interest rates as of the reporting date through snapping. - The volatility used in determining the fair value of structured swaps is taken from market-based Cap/Floor/Swaption volatility as of the reporting date through snapping. - Hull and White model is applied in determining the fair value of structured swaps. - The fair value is determined by discounting the expected cash flows of structured swaps with the aforementioned swap interest rates and volatility.

Volatility of the underlying assets, discounted interest rate.

- 50 -

(6) Financial assets and financial liabilities classified as Level3 which are measured to fair value for the years ended December 31, 2015 and 2014, are as follows:

December 31, 2015

Beg Gains/Losses

Other Comprehensive

Income Purchases/

Issues Sales/

Settlements To/From Level 3 End. Financial Instruments

Derivatives Assets ￦ 80 - - - (80) - ￦ -

December 31, 2014

Beg Gains/Losses

Other Comprehensive

Income Purchases/

Issues Sales/

Settlements To/From Level 3 End. Financial Instruments

Derivatives Assets ￦ 280 - (200) - - - ￦ 80 (7) Book value by category of financial instruments

The table below provides book value by category of financial assets and financial liabilities as of December 31, 2015 and 2014 (Unit: Korean won in millions):

December 31, 2015

Financial asset at FVTPLLoans and receivables

AFS financial

assets

Hedging

derivatives Total Trading Designated at

FVTPL

Financial assets Cash and bank deposit ￦ - ￦ - ￦ 538,767 ￦ - ￦ - ￦ 538,767Securities 459,928 - - 1,767 - 461,695Card assets - - 11,406,587 - - 11,406,587Other financial assets - - 174,447 - 39,584 214,031

￦ 459,928 ￦ - ￦ 12,119,801 ￦ 1,767 ￦ 39,584 ￦ 12,621,080

December 31, 2015

Financial liabilities at FVTPL Financial liabilities at amortized cost

Hedging derivatives

Total Trading Designated at

FVTPL

Financial liabilities Borrowings ￦ - ￦ - ￦ 590,000 ￦ - ￦ 590,000Debentures - - 8,527,884 - 8,527,884Other financial liabilities - - 1,228,900 17,744 1,246,644

￦ - ￦ - ￦ 10,346,784 ￦ 17,744 ￦ 10,364,528 December 31, 2014

Financial asset at FVTPLLoans and receivables

AFS financial

assets

Hedging

derivatives Total Trading Designated at

FVTPL

Financial assets Cash and bank deposit ￦ - ￦ - ￦ 200,725 ￦ - ￦ - ￦ 200,725Securities 739,004 - - 1,767 - 740,771Card assets - - 10,549,897 - - 10,549,897Other assets - - 196,451 - 8,739 205,190

Total ￦ 739,004 ￦ - ￦ 10,947,073 ￦ 1,767 ￦ 8,739 ￦ 11,696,583

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December 31, 2014

Financial liabilities at FVTPL Financial liabilities at amortized cost

Hedging derivatives

Total Trading Designated at

FVTPL

Financial liabilities Borrowings ￦ - ￦ - ￦ 200,000 ￦ - ￦ 200,000Debentures - - 7,730,127 - 7,730,127Other liabilities - - 1,362,829 30,922 1,393,751

Total ￦ - ￦ - ￦ 9,292,956 ￦ 30,922 ￦ 9,323,878 (8) Net profit or loss of financial instruments by categories

Net profit or loss of financial instruments by categories for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in million):

December 31, 2015

Interest income

Interest expense

Card revenue

Card expenses

Bad debt expense

Valuation loss

Disposal

gain (loss)

Foreign currency

translation gain

Foreign exchange

gain Financial assets

Loans and receivables

￦ 22,606

￦ - ￦ 2,552,425 ￦1,144,370 ￦ 85,137 ￦ - ￦ (152,570) ￦ - ￦ 9,988

Trading securities - - - - - 616 601 - -AFS financial assets - - - - - - 139 - -Hedging derivatives - - - - - 29,112 - - -

Financial liabilities Financial liabilities

at amortized cost

- 277,610 - - - - - (29,112) (6,127)Hedging derivatives - - - - - - 6,127 - -

￦ 22,606 ￦ 277,610 ￦ 2,552,425 ￦ 1,144,370 ￦ 85,137 ￦ 29,728 ￦(145,703) ￦ (29,112) ￦ 3,861

December 31, 2014

Interest income

Interest expense

Card revenue

Card expenses

Bad debt expense

Valuation loss

Disposal

gain (loss)

Foreign currency

translation gain

Foreign exchange

gain Financial assets

Loans and receivables

￦ 24,733

￦ - ￦ 2,515,799 ￦ 1,041,285 ￦ 117,446 ￦ - ￦ (148,406) ￦ - ￦ 9,315

Trading securities - - - - - 154 -AFS financial assets - - - - - - 62 - -Hedging derivatives - - - - - 15,283 - - -

Financial liabilities Financial liabilities

at amortized cost

305,884 - - - - - (15,283) -Hedging derivatives - - - - - 17,560 247 (17,560) -

￦ 24,733 ￦ 305,884 ￦ 2,515,799 ￦ 1,041,285 ￦ 117,446 ￦ 32,997 ￦(148,097) ￦ (32,843) ￦ 9,315

31. NET INTEREST INCOME (EXPENSE):

Net interest income (expense) for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

Interest income December 31, 2015 December 31, 2014 Cash and bank deposit \ 21,218 \ 22,762 Others 1,388 1,971

Total 22,606 24,733 Interest expense Borrowings 9,334 11,566 Debentures 268,163 293,761 Others 113 557

Total 277,610 305,884 Net interest expense \ (255,004) \ (281,151)

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32. NET COMMISSION INCOME:

Net commission income for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

December 31, 2015 December 31, 2014 Commission income

Card income \ 1,603,136 \ 1,542,040 Total 1,603,136 1,542,040

Commission expense Service fee 567,979 524,467 Financial payment fee 9,259 10,548 A new credit sale handling fee 148,379 143,956 Merchants co-payment fee 52 52 Overseas payment fee 45,002 40,083 Other 45,109 47,153

Total 815,780 766,259 Net commission income \ 787,356 \ 775,781

Commission income and commission expense are included in card income and card expenses, respectively.

33. OTHER OPERATING REVENUE AND OTHER OPERATING EXPENSES:

Other operating revenue and other operating expenses for the years ended December 31, 2015 and 2014, are as follows (Unit: Korean won in millions):

Other operating revenue December 31, 2015 December 31, 2014

Foreign exchange gain \ 15,300 \ 14,202 Gain on derivatives transactions 6,127 1,460 Gain on valuation of derivatives 29,112 32,843 Others 25,641 26,788

Total \ 76,180 \ 75,293 Commission expense

Foreign exchange loss \ 11,439 \ 4,887 Foreign currency translation loss 29,112 32,843 Loss on derivatives transactions - 1,213 Others 29,146 18,640

Total \ 69,697 \ 57,583 34. SEGMENT INFORMATION:

Though the Consolidated Entity conducts business activities related to credit cards, installment financing, leasing, etc., in accordance with relevant laws, such as Specialized Credit Finance Business Act, it does not report separate segment information, as the management considers the Consolidated Entity to operate under one core business.

35. Approval of Financial Statements:

The financial statements were issued and approved on February 25, 2016, and will get final approval during the shareholders’ meeting on March 23, 2016.