Edgar Filing: KOOKMIN BANK

(Unit: in millions of Won)

September 30,

2005

December 31,

2004

December 31,

2003

Deposits

122,942

123,945

119,593

Deposits in Won

121,789

122,585

118,756

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2005

Kookmin Bank

(Translation of registrant’s name into English)

9-1, 2-Ga, Namdaemun-Ro, Jung-Gu, Seoul, Korea 100-703

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F X Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submission to furnish a report or other document that the registration foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes No X

TABLE OF CONTENTS


*Summary of Business Report for the 3rd quarter of 2005*		4

1.	Introduction to the Bank	5

1.1.	Business Purposes	5

1.2.	History	5

1.3.	Capital Structure	7

1.4.	Employee Stock Ownership Association	13

1.5.	Dividend	13

2.	Business	14

2.1.	Sources and Uses of Fund	14

2.2.	Principal Banking Activities	17

2.3.	Branch Networks	21

2.4.	Other Information for Investment Decision	22

3.	Financial Information	24

3.1.	Non-Consolidated Condensed Financial Statements	24

3.2.	Other Financial Information	24

4.	Independent Accountant Fees and Services	25

4.1.	Audit & Review Fees	25

4.2.	Non-Audit Services	25

5.	Corporate Governance and Affiliated Companies	26

5.1.	Board of Directors & Committees under the Board	26

5.2.	Audit Committee	26

5.3.	Compensation to Directors	27

5.4.	Voting Rights of Shareholders	27

5.5.	Share Ownership	27

5.6.	Affiliated Companies	28

6.	Directors, Senior Management and Employees	29

6.1.	Executive Directors	29

6.2.	Non-Executive Directors	29

6.3.	Senior Management	30

6.4.	Employees	30

7.	Related Party Transactions	31

7.1.	Transactions with the Largest Shareholders or Affiliates	31

7.2.	Transactions with Other than the Largest Shareholders or Affiliates	32

Index

1. Summary of Business Report for the 3^rd quarter of 2005

2. Exhibit 99.1_Kookmin Bank Review Report for the 3^rd quarter of 2005

Summary of Business Report for the 3rd quarter of 2005

On November 14, 2005, Kookmin Bank filed its business report for the third quarter of 2005 (the “Business Report”) with the Financial Supervisory Commission of Korea pursuant to the Securities and Exchange Act of Korea. This is the summary of the Business Report translated into English.

All references to “Kookmin Bank” mean Kookmin Bank on a non-consolidated basis, and all references to “we”, “us” or “the Bank” mean Kookmin Bank and, as the context may require, its subsidiaries. In addition, all references to “Won” or “W” in this document are to the currency of the Republic of Korea.

Accounting policy with respect to the private funds in which we hold interest in the form of wholly–owned beneficiary certificates, or WOBCs, was changed in April 2005. Before the change, unrealized Gain or Loss on WOBCs was recognized as non-interest income from beneficiary certificates in the income statement. However, it should be recognized as a capital adjustment in owner’s equity section of balance sheet after the change. The financial statements for the years 2002 and 2003, respectively, do not require adjustment because unrealized gain or loss on WOBCs was already reflected as a capital adjustment for those periods.

1. Introduction to the Bank

1.1. Business Purposes

The business purpose of the Bank is to engage in the following business activities:

The banking business as prescribed by the Bank Act,

The trust business as prescribed by the Banking Trust Act,

The credit card business as prescribed by the Non-Banking Financing Act, and

Other businesses permitted by the Bank Act or other relevant Korea laws and regulations

1.2. History

November 1, 2001

Incorporated and listed on the New York Stock Exchange

November 9, 2001

Listed on the Korea Stock Exchange

September 23, 2002

Integrated IT platforms of old Kookmin Bank and H&CB

December 4, 2002

Entered into a strategic alliance agreement with ING Bank N.V., which replaced the prior investment agreement with H&CB

May 30, 2003

Entered into a merger agreement with Kookmin Credit Card, one of our major subsidiaries, and officially submitted Merger Statement to Financial Supervisory Commission

September 30, 2003

Completed small-scale merger with Kookmin Credit Card

December 16, 2003

Completed strategic investment in Bank International Indonesia (BII) by investing in 25% stake of the Consortium of Sorak Financial Holdings

December 19, 2003

Fully privatized through the entire disposition of Korean government’s stake in Kookmin Bank

April 29, 2004

Established a subsidiary, KB Life Co. Ltd., to engage in insurance business

July 22, 2004

Made an alliance with China Construction Bank for the foreign currency business

August 31, 2004

ING made a contract with KB for the strategic investment in KB Life

October 29, 2004

Appointed Mr. Chung Won Kang as the President & CEO in Extraordinary General Shareholders’ Meeting

November 09, 2004

Declared Integration of three labor unions (former Kookmin Bank, former H&CB, former Kookmin Credit Card) into a single KB labor union

December 31, 2004

The largest shareholder of Kookmin Bank changed from ING Bank N.V. Amsterdam to Euro-Pacific Growth Fund

March 02, 2005

Open “KB Satellite Broad Casting System” for the first time in the world

March 21, 2005

The largest shareholder of Kookmin Bank changed from Euro-Pacific Growth Fund to ING Bank N.V. Amsterdam

June 16, 2005

Disposed 27,423,761 shares of treasury stock by means of the combination of domestic over-the-counter-sales and an international issuance of depository receipts

July 26, 2005

Obtained an approval from FSS to use Market Risk Internal Model for the first time among domestic financial institutions

October 14, 2005

The largest shareholder of Kookmin Bank changed from ING Bank N.V. Amsterdam to Euro-Pacific Growth Fund

1.3. Capital Structure

1.3.1. Common Shares

Kookmin Bank has authority to issue a total of 1,000,000,000 shares of capital stock according to its Articles of Incorporation. Kookmin Bank’s Articles of Incorporation also provide that it is authorized to issue shares of preferred stock up to one-half of all of the issued and outstanding shares of common stock. On completion of the merger between Former Kookmin Bank and H&CB, Kookmin Bank issued 299,697,462 common shares.

Upon the resolution of shareholders’ meeting held on March 22, 2002, Kookmin Bank issued additional 17,979,954 common shares in connection with stock dividend of 6 percent.

On November 25, 2002 Goldman Sachs Capital Koryo, L.P. converted all of its convertible bonds into common shares. According to this conversion on November 30, 2002, Kookmin Bank issued 10,581,269 common shares and distributed them to Goldman Sachs Capital Koryo, L.P.

With regard to the merger between Kookmin Bank and Kookmin Credit Card on September 30, 2003, Kookmin Bank issued additional 8,120,431 shares on October 1, 2003. Accordingly, as of September 30, 2005, total 336,379,116 shares were issued with 1,681,896 million Won of paid-in capital.

1.3.2. Treasury Stock

The following table shows the acquisition and disposition of our treasury stock as of September 30, 2005.

(Units: in thousand of Won unless indicated otherwise)


Date	Transaction	Number of share	Acquisition/ Disposition amount	Average cost per one share (Won)
November 15, 2001	Acquisition of fractional shares in the course of the merger	41,548	1,794,885	43,200
December 24, 2001	Disposition due to exercise of stock option by a grantee	10,000	432,003	43,200
April 3, 2002	Acquisition of fractional shares due to stock dividend	36,089	2,071,557	57,400
May 14, 2002	Disposition pursuant to the Bank Act of Korea	31,548	1,601,944	50,788
July 30 ~ October 23, 2002	Acquisition pursuant to the Securities and Exchange Act of Korea	3,000,000	147,632,489	49,210
December 24, 2002	Disposition due to exercise of stock option by a grantee	10,000	492,294	49,229
January 15, 2003	Disposition due to exercise of stock option by a grantee	10,000	492,294	49,229
September 4 ~ 9, 2003	Acquisition pursuant to the Securities and Exchange Act of Korea	650,000	29,094,064	44,760
October 16, 2003	Acquisition of fractional shares due to the Merger with Kookmin Credit Card	5,095	214,254	42,050
4^th quarter, 2003	Disposition due to exercise of stock option by grantees	78,322	3,792,977	48,428
December 17, 2003	Acquisition from the sale of Korean government shares of the Bank	27,423,761	1,198,568,158	43,700
December 26, 2003	Disposition due to contribution to ESOP account	1,000,000	44,252,000	44,252
1^stquarter, 2004	Disposition due to exercise of stock option by grantees	30,855	1,365,396	44,252
2^nd quarter, 2004	Disposition due to exercise of stock option by grantees	55,593	2,460,101	44,252
3^rd quarter, 2004	Disposition due to exercise of stock option by grantees	592	26,197	44,252
4^th quarter, 2004	Disposition due to exercise of stock option by grantees	48,374	2,140,646	44,252
1^stquarter, 2005¹	Disposition due to contribution to ESOP account and exercise of stock option by grantees	1,095,038	48,457,622	44,252
2^nd quarter, 2005²	Disposition due to domestic over the counter sales and an international issuance of depository receipts and exercise of stock option by grantees	28,473,662	1,260,016,491	44,252
3^rd quarter, 2005	Disposition due to exercise of stock option by grantees	42,771	1,892,702	44,252

Total	-	269,738	11,952,740	—

¹	Disposed 2,000,000 shares of Treasury stock for the purpose of contribution to ESOP on February 23, 2005 and April 12, 2005.

²	On June 16, 2005, KB disposed 27,423,761 shares of Treasury Stock pursuant to the decision of BOD on April 27, 2005 for the purpose of the improvement of capital structure.

1.3.3. Stock Option¹

The following table is the breakdown of stock options Kookmin Bank has granted to the directors and employees as of September 30, 2005.

(Units: in Won, shares)

Grant date

Name of the grantee

Position when granted

Exercise period

Exercise

price

Number of

granted

options²

Number of

exercised

options

Number of

exercisable

options

From

28-Feb-00

Jan Op de Beeck

Director&Executive Vice

President

01-Mar-03

28-Feb-06

27,600

22,490

28-Feb-00

Sung Chul Kim

Executive Vice President

01-Mar-03

28-Feb-06

27,600

30,000

28-Feb-00

Woo Jung Lee

Executive Vice President

01-Mar-03

28-Feb-06

27,600

30,000

28-Feb-00

Kuk Ju Kwon

Non Executive Director

01-Mar-03

28-Feb-06

27,600

4,800

28-Feb-00

Sun Jin Kim

Non Executive Director

01-Mar-03

28-Feb-06

27,600

7,000

4,100

2,900

28-Feb-00

Joon Park

Non Executive Director

01-Mar-03

28-Feb-06

27,600

4,800

28-Feb-00

Moon Soul Chung

Non Executive Director

01-Mar-03

28-Feb-06

27,600

7,000

28-Feb-00

Heung Soon Chang

Non Executive Director

01-Mar-03

28-Feb-06

27,600

2,486

28-Feb-00

In Joon Kang

Non Executive Director

01-Mar-03

28-Feb-06

27,600

2,486

28-Feb-00

Sung Hee Jwa

Non Executive Director

01-Mar-03

28-Feb-06

27,600

4,800

1,093

3,707

28-Feb-00

Seung Woo Nam

Non Executive Director

01-Mar-03

28-Feb-06

27,600

1,928

28-Feb-00

Kyung Hee Yoon

Non Executive Director

01-Mar-03

28-Feb-06

27,600

7,000

28-Feb-00

Sung Cheon Hong & 9 others

Employees

01-Mar-03

28-Feb-06

27,600

67,283

49,141

18,142

24-Mar-01

Young Il Kim

Executive Vice President

25-Mar-04

24-Mar-07

25,100

30,000

13,000

17,000

24-Mar-01

Jong In Park

Executive Vice President

25-Mar-04

24-Mar-07

25,100

19,333

24-Mar-01

Won Bae Yoon

Non Executive Director

25-Mar-04

24-Mar-07

25,100

2,318

24-Mar-01

Jae Kyu Lee

Non Executive Director

25-Mar-04

24-Mar-07

25,100

2,318

24-Mar-01

Chul Soo Ahn

Non Executive Director

25-Mar-04

24-Mar-07

25,100

1,916

24-Mar-01

Jae Han Kim & 2 others

Employees

25-Mar-04

24-Mar-07

25,100

16,491

13,216

3,275

18-Mar-00

Sang Hoon Kim

Chairman&CEO

19-Mar-03

18-Mar-05

23,469

41,460

18-Mar-00

In Kie Kim

Non Executive Director

19-Mar-03

18-Mar-05

23,469

2,961

18-Mar-00

Jin Ho Hwang

Non Executive Director

19-Mar-03

18-Mar-05

23,469

2,961

18-Mar-00

Bong Ho Paick

Non Executive Director

19-Mar-03

18-Mar-05

23,469

2,961

18-Mar-00

Yoo Hwan Kim

Executive Vice President

19-Mar-03

18-Mar-05

23,469

11,845

18-Mar-00

Duk Hyun Kim

Executive Vice President

19-Mar-03

18-Mar-05

23,469

11,845

15-Mar-01

Sang Hoon Kim

Chairman&CEO

16-Mar-04

15-Mar-09

28,027

29,614

1,000

28,614

15-Mar-01

Jong Min Lee

Auditor&Executive Director

16-Mar-04

15-Mar-09

28,027

14,807

15-Mar-01

In Kie Kim

Non Executive Director

16-Mar-04

15-Mar-09

28,027

2,961

15-Mar-01

Ji Hong Kim

Non Executive Director

16-Mar-04

15-Mar-09

28,027

2,961

15-Mar-01

Bong Ho Paick

Non Executive Director

16-Mar-04

15-Mar-09

28,027

1,870

15-Mar-01

Ik Rae Kim

Non Executive Director

16-Mar-04

15-Mar-09

28,027

2,961

15-Mar-01

Seung Heon Han

Non Executive Director

16-Mar-04

15-Mar-09

28,027

1,870

¹	Total exercisable amount of stock options for CEOs depends on performance evaluation scores, tenure of office and KOSPI Banking Industry Index. Performance evaluation scores and tenure of office determine the number of exercisable options and Banking Industry Index determines the exercise prices.

Total exercisable amount of stock options for the Auditor & Executive Director and Non-Executive Directors depends on their tenure of office and Banking Industry Index. Their tenure of office determines the number of exercisable options and Banking Industry Index determines the exercise prices.

Total exercisable amount of stock options for the SEVPs and other employees depends on performance evaluation scores and tenure of office. Their performance evaluation scores and tenure of office determine the number of exercisable options and the exercise prices are fixed as of the dates they granted stock options.

²	Some numbers of the granted options have been adjusted due to the merger and the early retirement of the grantees.

Grant date

Name of the grantee

Position when granted

Exercise period

Exercise

price

Number of

granted

options²

Number of

exercised

options

Number of

exercisable

options

From

15-Mar-01

Young Seok Kim

Non Executive Director

16-Mar-04

15-Mar-09

28,027

1,870

15-Mar-01

Se Woong Lee

Non Executive Director

16-Mar-04

15-Mar-09

28,027

2,961

15-Mar-01

Bock Woan Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

15-Mar-01

Yoo Hwan Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

15-Mar-01

Duk Hyun Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

2,845

9,000

15-Mar-01

Ok Hyun Yoon

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

2,845

9,000

15-Mar-01

Tai Gon Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

15-Mar-01

Byung Sang Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

5,845

6,000

15-Mar-01

Byung Jin Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

3,845

8,000

15-Mar-01

Han Koo Ji & 36 others

Employees

16-Mar-04

15-Mar-09

28,027

39,092

12,548

26,544

16-Nov-01

Jung Tae Kim

President & CEO

17-Nov-04

16-Nov-09

X¹

500,000

16-Nov-01

Sang Hoon Kim

Chairman

17-Nov-04

16-Nov-09

150,000

22-Mar-02

Choul Ju Lee

Auditor&Executive Director

23-Mar-05

22-Mar-10

Y²

9,963

22-Mar-02

Henry Cornell

Non Executive Director

23-Mar-05

22-Mar-10

3,321

22-Mar-02

Keun Shik Oh

Non Executive Director

23-Mar-05

22-Mar-10

3,321

22-Mar-02

Dong Soo Chung

Non Executive Director

23-Mar-05

22-Mar-10

10,000

22-Mar-02

Ji Hong Kim

Non Executive Director

23-Mar-05

22-Mar-10

3,321

22-Mar-02

Timothy Hartman

Non Executive Director

23-Mar-05

22-Mar-10

3,321

22-Mar-02

Sun Jin Kim

Non Executive Director

23-Mar-05

22-Mar-10

3,000

22-Mar-02

Moon Soul Chung

Non Executive Director

23-Mar-05

22-Mar-10

3,000

22-Mar-02

Kyung Hee Yoon

Non Executive Director

23-Mar-05

22-Mar-10

3,000

22-Mar-02

Jong Kyoo Yoon

Executive Vice President

23-Mar-05

22-Mar-10

57,100

20,522

22-Mar-02

Bong Hwan Cho

Executive Vice President

23-Mar-05

22-Mar-10

57,100

9,498

22-Mar-02

Bum Soo Choi

Executive Vice President

23-Mar-05

22-Mar-10

57,100

13,339

22-Mar-02

Bock Woan Kim

Executive Vice President

23-Mar-05

22-Mar-10

57,100

13,339

22-Mar-02

Ki Taek Hong

Executive Vice President

23-Mar-05

22-Mar-10

57,100

19,525

22-Mar-02

Sung Hyun Chung

Executive Vice President

23-Mar-05

22-Mar-10

57,100

19,525

22-Mar-02

Ki Sup Shin

Executive Vice President

23-Mar-05

22-Mar-10

57,100

26,405

22-Mar-02

Seong Kyu Lee

Executive Vice President

23-Mar-05

22-Mar-10

57,100

30,000

22-Mar-02

Byung Sang Kim

Executive Vice President

23-Mar-05

22-Mar-10

57,100

9,498

22-Mar-02

Jong Young Yoon & 15 others

Employees

23-Mar-05

22-Mar-10

57,100

147,658

26-Jul-02

Donald H. MacKenzie

Executive Vice President

27-Jul-05

26-Jul-10

58,800

23,899

21-Mar-03

Moon Soul Chung

Non Executive director

22-Mar-06

21-Mar-11

Y³

6,678

21-Mar-03

Sun Jin Kim

Non Executive director

22-Mar-06

21-Mar-11

6,678

21-Mar-03

Richard Elliott Lint

Non Executive director

22-Mar-06

21-Mar-11

6,678

21-Mar-03

Kyung Hee Yoon

Non Executive director

22-Mar-06

21-Mar-11

6,678

21-Mar-03

Suk Yong Cha

Non Executive director

22-Mar-06

21-Mar-11

10,000

21-Mar-03

Bernard S. Black

Non Executive director

22-Mar-06

21-Mar-11

6,678

21-Mar-03

Ki Hong Kim

Non Executive director

22-Mar-06

21-Mar-11

10,000

21-Mar-03

Eun Joo Park

Non Executive director

22-Mar-06

21-Mar-11

3,351

¹.	Exercise price = 51,200 Won x (1 + the increase rate of KOSPI Banking Industry Index x 0.4). The increase rate of KOSPI Banking Industry Index = (KOSPI Banking Industry Index as of the starting date of exercise period - 207.25) / 207.25 x 100.

^2.

Exercise price = 57,100 Won x (1 + the increase rate of KOSPI Banking Industry Index x 0.4). The increase rate of KOSPI Banking Industry Index = (KOSPI Banking Industry Index as of the starting date of exercise period - KOSPI Banking Industry Index as of the grant date) / KOSPI Banking Industry Index as of the grant date.

Exercise price = 35,500 Won x (1 + the increase rate of KOSPI Banking Industry Index x 0.4). The increase rate of KOSPI Banking Industry Index = (KOSPI Banking Industry Index as of the starting date of exercise period - KOSPI Banking Industry Index as of the grant date) / KOSPI Banking Industry Index as of the grant date.

Grant date

Name of the grantee

Position when granted

Exercise period

Exercise

price

Number of

granted

options²

Number of

exercised

options

Number of

exercisable

options

From

21-Mar-03

Cheol Soo Ahn

Non Executive director

22-Mar-06

21-Mar-11

3,351

21-Mar-03

Kyung Bae Suh

Non Executive director

22-Mar-06

21-Mar-11

3,351

21-Mar-03

Sung Chul Kim

Executive Vice President

22-Mar-06

21-Mar-11

35,500

9,443

21-Mar-03

Woo Jung Lee

Executive Vice President

22-Mar-06

21-Mar-11

35,500

9,443

21-Mar-03

See Young Lee

Executive Vice President

22-Mar-06

21-Mar-11

35,000

7,024

21-Mar-03

Won Suk Oh & 5 others

Employees

22-Mar-06

21-Mar-11

35,500

63,650

27-Aug-03

Jin Baek Cheong

Executive Vice President

28-Aug-03

27-Aug-11

40,500

5,091

22-Mar-01

Han Kyoung Lee

Former KCC Officer

23-Mar-04

22-Mar-11

71,538

6,644

22-Mar-01

Jun Chae Song

Former KCC Officer

23-Mar-04

22-Mar-11

71,538

6,644

22-Mar-01

Cheol Ho Kim

Former KCC Officer

23-Mar-04

22-Mar-11

71,538

4,429

22-Mar-01

Myoung Woo Lee

Former KCC Officer

23-Mar-04

22-Mar-11

71,538

4,429

29-Mar-02

Boung Hak Kim

Former KCC Officer

30-Mar-04

29-Mar-11

Y⁴

3,330

29-Mar-02

Sun Lee

Former KCC Officer

30-Mar-04

29-Mar-11

3,330

29-Mar-02

Jang Ok Kim

Former KCC Officer

30-Mar-04

29-Mar-11

3,330

09-Feb-04

Young Il Kim

Senior Executive Vice President

10-Feb-07

09-Feb-12

46,100

7,125

09-Feb-04

Jeung Lak Lee

Senior Executive Vice President

10-Feb-07

09-Feb-12

46,100

7,452

09-Feb-04

Sang Jin Lee

Senior Executive Vice President

10-Feb-07

09-Feb-12

46,100

7,125

09-Feb-04

Yun Keun Jung

Senior Executive Vice President

10-Feb-07

09-Feb-12

46,100

5,000

09-Feb-04

Kuk Shin Kang & 9 others

Employees

10-Feb-07

09-Feb-12

46,100

48,837

23-Mar-04

Dong Soo Chung

Non Executive Director

24-Mar-07

23-Mar-12

Y⁵

5,000

23-Mar-04

Woon Youl Choi

Non Executive Director

24-Mar-07

23-Mar-12

5,000

23-Mar-04

Wang Ha Cho

Non Executive Director

24-Mar-07

23-Mar-12

5,000

23-Mar-04

Young Soon Cheon

Non Executive Director

24-Mar-07

23-Mar-12

5,000

23-Mar-04

Jung Young Kang

Senior Executive Vice President

24-Mar-07

23-Mar-12

47,200

10,000

01-Nov-04

Chung Won Kang

President & CEO

02-Nov-07

01-Nov-12

X⁶

700,000

18-Mar-05

Hyung Duk Chang

Auditor & Executive Director

19-Mar-08

18-Mar-13

X⁷

30,000

18-Mar-05

Kap Shin

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Dong Won Kim

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

⁴	Exercise price = 129,100 Won x (1 + the increase rate of Comparative Industry Index x 0.4).

If negative index produced, the factor is not to be considered.

The increase rate of Comparative Industry Index = (B-A)/A

A : KOSPI as of the grant date x 0.5 + KOSPI Banking Industry Index as of the grant date x 0.5

B : KOSPI as of the exercise date x 0.5 + KOSPI Banking Industry Index as of the exercise date x 0.5

⁵

Exercise price = 47,200 Won x (1 + the increase rate of KOSPI Banking Industry Index x 0.4). The increase rate of KOSPI Banking Industry Index = (KOSPI Banking Industry Index as of the starting date of exercise period - KOSPI Banking Industry Index as of the grant date) / KOSPI Banking Industry Index as of the grant date.

⁶

Exercise price = 37,600 Won x (1 + the increase rate of KOSPI Banking Industry Index x 0.4). The increase rate of KOSPI Banking Industry Index = (KOSPI Banking Industry Index as of the starting date of exercise period - KOSPI Banking Industry Index as of the grant date) / KOSPI Banking Industry Index as of the grant date.

⁷

Exercise price = 46,800 Won x (1 + the increase rate of KOSPI Banking Industry Index x 0.4). The increase rate of KOSPI Banking Industry Index = (KOSPI Banking Industry Index as of the starting date of exercise period - KOSPI Banking Industry Index as of the grant date) / KOSPI Banking Industry Index as of the grant date.

Grant date

Name of the grantee

Position when granted

Exercise period

Exercise

price

Number of

granted

options²

Number of

exercised

options

Number of

exercisable

options

From

18-Mar-05

Yun Keun Jung

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Nam Sik Yang

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Hyo Sung Won

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Yong Kook Oh

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Sang Jin Lee

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Ahn Sook Koo

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Jung Young Kang

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Young Han Choi

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Dong Soo Choe

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Seong Kyu Lee

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Jun Bo Cho

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Jung Min Kim

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Sung Soo Jung & 21 others

Employees

19-Mar-08

18-Mar-13

46,800

345,000

18-Mar-05

Suk Yong Cha

Non Executive director

19-Mar-08

18-Mar-13

X⁸

15,000

18-Mar-05

Ki Hong Kim

Non Executive director

19-Mar-08

18-Mar-13

15,000

18-Mar-05

Young Soon Cheon

Non Executive director

19-Mar-08

18-Mar-13

15,000

18-Mar-05

Dong Soo Chung

Non Executive director

19-Mar-08

18-Mar-13

15,000

18-Mar-05

Chang Kyu Lee

Non Executive director

19-Mar-08

18-Mar-13

15,000

18-Mar-05

Hun Namkoong

Non Executive director

19-Mar-08

18-Mar-13

15,000

18-Mar-05

Doo Hwan Song

Non Executive director

19-Mar-08

18-Mar-13

15,000

18-Mar-05

Dam Cho

Non Executive director

19-Mar-08

18-Mar-13

15,000

18-Mar-05

Nobuya Takasugi

Non Executive director

19-Mar-08

18-Mar-13

15,000

27-Apr-05

Kyung Wook Kang

Employee

28-Apr-08

27-Apr-13

45,700

15,000

22-Jul-05

Donald H. MacKenzie

Senior Executive Vice President

23-Jul-08

22-Jul-13

49,200

30,000

23-Aug-05

Youn Soo Kim

Executive Vice President

24-Aug-08

23-Aug-13

53,000

15,000

Total

3,533,588

271,991

3,261,597

⁸

*	Stock options for some of grantees are not determined those number of exercisable options or those exercise prices yet.

1.4. Employee Stock Ownership Association¹


	Beginning balance (January 1, 2005)	Increase	Decrease	Ending Balance (September 30, 2005)	Remarks
Registered common stock	1,944,211	1,562,906	581,378	2,925,739	—

Total	1,944,211	1,562,906	581,378	2,925,739	—

1.5. Dividend

The following table shows dividend policy and the related information for the last three years. The Board of Directors of Kookmin Bank made a resolution to pay dividend for the fiscal year of 2004, and shareholders of Kookmin Bank approved of the dividend payout for the year at the general shareholders’ meeting held on March 18, 2005

(Units: in millions of Won unless indicated otherwise)


	2004²	2003		2002
Net (loss) income for the period	360,454	(930,356	)	1,310,291
Diluted (loss) earnings per share (Won)	1,176³	(2,854	)	4,123
Total dividend amount	168,574	—		325,232
Dividend payout ratio (%)	46.77⁴	—		24.82
Cash dividend per common share (Won)	550	—		1,000
Stock dividend per common share (%)	—	—		—
Dividend per preferred share (Won)	—	—		—
Dividend yield ratio (%)	1.42⁵	—		2.19

¹	Disposed 2,000,000 shares of Treasury stock for the purpose of contribution to ESOP on February 23, 2005 and April 12, 2005.

²	Due to the accounting treatment change with respect to WOBCs, net income, EPS, and dividend payout ratio have changed and these amounts differ from those in Business Report for the fiscal year of 2004.

³	Earnings per share = net income (360,454,000,000 Won) / weighted average number of shares (306,529,707 shares).

⁴	Dividend payout ratio = total dividend amount for common shares (168,574,000,000 Won) / net income (360,454,000,000 Won).

⁵	Dividend yield ratio = dividend per share (550 Won) / average closing price for a week based on business day prior to market closing date of December 31, 2004 (38,720 Won).

2. Business

2.1. Sources and Uses of Fund

2.1.1. Sources of Fund

(Unit: in millions of Won)

September 30, 2005

December 31, 2004

December 31, 2003

Average
balance

Interest
rate (%)

Average
balance

Interest
rate (%)

Average
balance

Interest
rate (%)

Won currency

Deposits

114,621,438

2.84

118,017,849

3.29

117,045,837

3.69

Certificate of deposit

4,936,451

3.63

6,108,179

4.06

4,068,327

4.45

Borrowings

2,723,026

2.96

3,053,890

3.43

3,625,926

3.89

Call money

801,235

3.12

1,117,576

3.55

1,315,639

3.93

Other

24,698,107

5.06

23,376,439

5.61

23,311,299

5.91

Subtotal

147,780,257

3.24

151,673,933

3.68

149,367,028

4.06

Foreign currency

Deposits

1,473,799

1.51

1,777,402

0.61

1,276,952

0.84

Borrowings

3,069,886

1.88

2,796,300

0.94

3,462,883

1.01

Call money

254,443

3.17

145,809

1.43

150,609

1.07

Finance debentures issued

723,230

3.89

824,745

2.28

773,840

2.11

Other

50,187

—

40,383

—

26,491

—

Subtotal

5,571,545

2.08

5,584,639

1.04

5,690,775

1.12

Other

Total Shareholders Equity

10,725,885

—

9,284,477

—

12,053,112

—

Allowances

685,092

—

459,124

—

98,422

—

Other

12,434,582

—

12,773,040

—

9,509,283

—

Subtotal

23,845,559

—

22,516,641

—

21,660,817

—

Total

177,197,361

2.77

179,775,213

3.14

176,718,620

3.47

2.1.2. Uses of Fund

(Unit: in millions of Won)

September 30, 2005

December 31, 2004

December 31, 2003

Average
balance

Interest
rate (%)

Average
balance

Interest
rate (%)

Average
balance

Interest
rate (%)

Won currency

Due from banks

259,139

2.65

184,593

0.83

165,358

1.37

Securities

27,300,727

4.69

23,930,678

5.14

30,069,922

7.26

Loans

120,920,793

6.24

125,504,672

6.64

121,725,298

7.10

Advances for customers

26,095

1.56

71,213

2.01

96,547

5.79

Call loan

1,637,697

3.38

1,661,772

3.78

685,953

3.92

Private placement corporate bonds

1,611,228

6.98

1,322,470

6.58

1,287,623

10.26

Credit card accounts

7,314,057

13.88

9,581,330

15.04

6,698,954

10.44

Other

264,159

—

172,783

—

298,858

—

Allowance for credit losses ( - )

3,041,746

—

3,844,941

—

1,823,976

—

Subtotal

156,292,149

6.46

158,584,570

7.10

159,204,537

7.41

Foreign currency

Due from banks

633,059

2.80

632,526

1.34

612,862

1.33

Securities

867,135

5.78

1,208,124

3.88

1,269,538

5.23

Loans

3,174,772

3.51

2,675,293

3.61

2,785,091

3.11

Call loan

136,494

3.00

114,606

1.63

84,803

1.28

Bills bought

2,340,797

2.59

1,904,560

1.88

1,983,368

1.83

Other

2,186

—

4,812

—

12,391

—

Allowance for credit losses ( - )

66,310

—

94,501

—

132,105

—

Subtotal

7,088,133

3.46

6,445,420

2.97

6,615,948

3.03

Other

Cash

959,993

—

965,852

—

968,815

—

Fixed assets held for business

2,542,855

—

3,084,589

—

3,210,463

—

Other

10,314,231

—

10,694,782

—

6,718,857

—

Subtotal

13,817,079

—

14,745,223

—

10,898,135

—

Total

177,197,361

5.84

179,775,213

6.37

176,718,620

6.79

2.1.3. Fee Transactions¹

(Unit: in millions of Won)


	September 30, 2005	September 30, 2004	December 31, 2004
Fee Revenue (A)
Won currency
Guarantees	3,975	3,600	4,957
Commissions received	590,669	565,103	776,852
Credit card	799,057	910,716	1,196,083
NHF	128,703	116,233	160,874
Foreign currency
Guarantees	3,005	1,825	2,592
Others	57,790	54,668	75,015

Subtotal	1,583,199	1,652,145	2,216,373

Fee Expense (B)
Won & foreign currency
Commissions paid in Won	77,934	73,909	98,392
Credit card	152,885	286,504	352,194
Others	16,281	13,839	20,169

Subtotal	247,100	374,252	470,755

Fee Income (A-B)	1,336,099	1,277,893	1,745,618

¹	Reflected the effect caused by re-classification of credit card ABS in Seller Interest Trust Certificate and excluded early payment fee in trust account

2.2. Principal Banking Activities

2.2.1. Deposits

The following table shows the average balances of our deposits for the periods ended and ending balances as of the dates indicated.

(Unit: in millions of Won)

September 30, 2005

December 31, 2004

December 31, 2003

Average
balance

Ending
balance

Average
balance

Ending
balance

Average
balance

Ending
balance

Deposits in Won

Demand deposits

14,736,875

16,263,265

12,994,946

14,338,784

12,192,971

14,110,288

Time & savings deposits

92,713,659

91,187,249

96,637,551

94,723,601

96,668,084

97,616,747

Mutual installment deposits

5,802,306

5,445,696

6,682,928

6,306,923

6,958,043

7,054,753

Mutual installment for housing

5,030,226

4,772,060

5,453,713

5,295,274

5,161,535

5,423,853

Certificates of deposits

4,936,451

5,360,040

6,108,179

4,911,891

4,068,327

6,499,258

Subtotal

123,219,517

123,028,310

127,877,317

125,576,473

125,048,960

130,704,899

Deposits in foreign currency

1,473,799

1,447,412

1,769,828

1,434,061

1,276,952

1,475,373

Trust deposits

Money trust

6,972,815

7,381,224

7,701,447

7,028,835

13,064,749

10,278,357

Property trust

11,158,403

10,838,914

16,297,382

12,534,329

24,512,746

21,453,761

Subtotal

18,131,218

18,220,138

23,998,829

19,563,164

37,577,495

31,732,118

Total

142,824,534

142,695,860

153,645,974

146,573,698

163,903,407

163,912,390

2.2.2. Average Deposit per Domestic Branch

The following table shows the average balances of our deposits per domestic branch as of the dates indicated.

2.2.3. Average Deposit per Employee

The following table shows the average balances of our deposits per employee as of the dates indicated.

2.2.4. Loan Balances

The following table shows the average balances of our loans for the periods ended and ending balances as of the dates indicated.

(Unit: in millions of Won)

September 30, 2005

December 31, 2004

December 31, 2003

Average
balance

Ending
balance

Average
balance

Ending
balance

Average
balance

Ending
balance

Loans in Won

120,913,488

118,936,662

125,496,237

122,721,898

121,705,493

123,715,244

Loans in foreign currency

4,558,950

5,117,304

4,011,351

3,860,828

4,160,185

4,019,930

Advances to customers

26,095

15,513

73,801

32,120

107,091

89,665

Subtotal

125,498,533

124,069,478

129,581,389

126,614,846

125,972,769

127,824,839

Trust account loans

336,556

325,002

429,054

361,906

531,500

489,788

Total

125,835,089

124,394,480

130,010,443

126,976,752

126,504,269

128,314,627

2.2.5. Loan Balances as of September 30, 2005 by Maturity

(Unit: in millions of Won)


	1 year & Less	More than 1 year ~ 3 years	More than 3 years ~ 5 years	More than 5 years	Total
Loans in Won	66,927,100	26,464,400	8,788,598	16,756,564	118,936,662
Loans in foreign currencies	4,063,378	554,659	211,865	287,401	5,117,303

2.2.6. Loan Balances by Types

The following table shows the banking account balances of our loans in Won by uses as of the dates indicated.

(Unit: in millions of Won)


	September 30, 2005	December 31, 2004	December 31, 2003
Loans to enterprise
Loans for operations	30,231,855	31,678,117	35,351,506
Loans for facility	5,379,454	6,286,747	6,631,703
Loans to households	42,568,166	42,790,337	42,884,305
Loans to public sector & others
Loans for operations	469,381	673,456	526,227
Loans for facility	34,573	40,383	42,473
Loans on property formation savings	7,094	9,719	62,963
Loans for housing	40,241,805	41,234,086	38,199,290
Inter-bank loans	2,098	6,114	12,815
Others	2,236	2,939	3,962

Total	118,936,662	122,721,898	123,715,244

2.2.7. Loan to Deposit Ratio¹

The following table shows loan to deposit ratio as of indicated dates.


	(Units: in millions of Won, %)

	September 30, 2005	December 31, 2004	December 31, 2003
Loans (A)	120,913,488	125,496,237	121,705,493
Deposits (B)	123,219,517	127,877,317	125,048,960

Loan to deposit ratio (A/B)	98.13	98.14	97.33

2.2.8. Acceptances and Guarantees


	(Unit: in millions of Won)

	September 30, 2005	December 31, 2004	December 31, 2003
Determined	1,545,720	975,788	800,297
Contingent	1,999,559	1,311,774	1,281,518

Total	3,545,279	2,287,562	2,081,815

¹	Average balance of loans in won / (average balance of deposits in won + average balance of certificate of deposits)

2.2.9. Breakdown of Securities Investment

The following table shows the average balances of our securities for the periods ended and ending balances as of the indicated dates.

(Unit: in millions of Won)

September 30, 2005

December 31, 2004¹

December 31, 2003

Average
balance

Ending
balance

Average
balance

Ending
balance

Average
balance

Ending
balance

Securities in Won (Banking account)

Monetary stabilization bonds

10,486,797

10,993,502

7,150,535

10,524,835

4,343,978

5,540,598

Government and public bonds

6,411,801

8,604,647

4,753,135

4,675,093

5,630,422

5,885,595

Debentures

6,916,380

7,806,642

7,013,765

6,152,749

12,315,840

8,936,220

Stocks

1,268,682

1,316,847

1,003,131

1,282,050

1,380,254

877,013

Others

3,828,294

1,756,143

5,332,582

5,583,539

7,687,051

7,299,404

Subtotal

28,911,954

30,477,781

25,253,148

28,218,266

31,357,545

28,538,830

Securities in Won (Trust account)

Monetary stabilization bonds

1,007,749

1,011,638

1,222,004

1,152,621

984,380

878,077

Government and public bonds

987,530

874,422

922,790

837,080

1,182,165

1,252,419

Debentures

2,054,753

2,040,033

2,363,630

2,312,459

5,876,064

4,080,362

Stocks

504,551

533,166

564,538

510,650

763,277

592,379

Others

2,601,934

3,136,116

2,101,832

2,324,393

3,208,160

2,106,262

Securities in foreign currency (Trust Account)

317,646

221,849

662,549

449,415

868,819

767,675

Subtotal

7,474,163

7,817,224

7,837,343

7,586,618

12,882,865

9,677,174

Securities in foreign currency (Banking account)

Foreign securities

579,645

601,364

894,722

745,352

999,806

1,072,483

Off-shore foreign securities

287,489

261,956

313,402

205,455

269,732

277,663

Subtotal

867,134

863,320

1,208,124

950,807

1,269,538

1,350,146

Total

37,253,251

39,158,325

34,298,615

36,755,691

45,509,948

39,566,150

2.2.10. Trust Account

(Unit: in millions of Won)

September 30, 2005

December 31, 2004

December 31, 2003

Total amount
trusted

Trust
fees

Total amount
trusted

Trust
fees

Total amount
trusted

Trust
fees

Return-guaranteed trust

336

33,676

369

8,365

559

45,682

Performance trust

18,130,882

56,932

23,998,460

93,856

37,576,936

186,851

Total

18,131,218

90,608

23,998,829

102,221

37,577,495

232,533

¹	Restated due to the change in accounting treatment for Wholly Owned Beneficiary Certificates by FSS

2.2.11. Credit Card

(Unit: in millions of Won unless indicated otherwise)


		As of or for the years ended of indicated dates
		September 30, 2005	December 31, 2004	December 31, 2003
Number of card holders (Person)
	Corporate	162,438	182,109	147,813
	Individual	9,678,364	11,362,173	10,990,703
Number of merchants		1,496,831	1,491,730	1,528,872
Sales volume¹		45,179,122	66,348,465	92,535,500
Fee revenue		1,699,315	2,800,901	4,012,017

2.3. Branch Networks

As of September 30, 2005, we have 1,040 branches and 45 sub-branches in Korea, the largest number of branches among Korean commercial banks. Approximately 41% of our branches and sub-branches are located in Seoul.

We also have three overseas branches in Tokyo, New York and Auckland, and 1 overseas office in Guangzhou in China

1.	Includes lump-sum & installment purchase and cash advances

2.4. Other Information for Investment Decision

2.4.1. BIS Risk-adjusted Capital Ratios

(Units: in millions of Won, %)


	September 30, 2005¹	December 31, 2004	December 31, 2003
Risk-adjusted capital (A)	15,216,746	13,334,531	12,499,543
Risk-weighted assets (B)	120,213,907	121,081,735	127,370,180

BIS ratios (A/B)	12.66	11.01	9.81

2.4.2. Non-Performing Loans²

(Units: in millions of Won unless indicated otherwise)

September 30, 2005

December 31, 2004

Change

Amount

NPL to total loans

Amount

NPL to total loans

Amount

NPL to total loans

2,356,998

1.75

3,207,190

2.35

-850,192

-0.6

2.4.3. Loan Loss Allowances

The following table shows the balance of our loan loss allowances as of the dates indicated.

(Units: in millions of Won)


	September 30, 2005	December 31, 2004	December 31, 2003
Loan losses allowance
Loans in Won	2,804,526	3,181,433	3,946,059
Loans in foreign currencies	3,940	4,662	2,677

Total	2,808,466	3,186,095	3,948,736

Provision for loan losses	967,867	3,068,248	1,431,181

¹	Tentative ratio

2.	Non-performing loans are defined as those loans that are past due more than 90 days or that are placed non-accrual status according to the Financial Supervisory Service’s guidelines.

2.4.4. Changes of Loan Loss Allowances for Recent Three Years

(Unit: in millions of Won)


	September 30, 2005¹		December 31, 2004²		December 31, 2003³
Beginning balance	3,186,095		3,948,736		2,420,410
Net Write-Off	(1,345,496	)	(3,830,889	)	97,145
Write-Off	(1,511,058	)	(5,260,962	)	(4,509,979	)
Recovery	339,756		286,464		270,422
Other	(174,194	)	1,143,609		4,336,702
Provision for loan losses	967,867		3,068,248		1,431,181
Ending balance	2,808,466		3,186,095		3,948,736

¹	Includes present value discounts and allowance for other assets amounting to 18,781 million won and 53,884 million won, respectively as of September 30, 2005

²	Includes present value discounts and allowances for other assets amounting to 22,110 million won, 67,320 million won, respectively that had been recorded as of December 31, 2004

Includes present value discounts and allowance for other assets amounting to 22,780 million won and 38,692 million won, respectively, that had been recorded as of December 31, 2003 and includes present discounts and allowance for other assets amounting to 30,442 million won and 24,252 million won, respectively that had been recorded as of January 1, 2003

3. Financial Information

3.1. Non-Consolidated Condensed Financial Statements

(Unit: in millions of Won)


	As of or for the years ended of indicated dates
	September 30, 2005	December 31, 2004¹
Cash and due from banks	6,497,051	5,139,604
Securities	29,326,198	27,965,441
Loans	134,189,935	135,769,326
Fixed assets	2,457,452	2,633,218
Other assets	8,492,563	8,296,164
Total assets	180,963,199	179,803,753
Deposits	124,475,722	127,010,534
Borrowings	14,233,309	9,634,296
Debentures	16,521,447	21,874,695
Other liabilities	13,947,080	12,105,686
Total liabilities	169,177,558	170,625,211
Capital stocks	1,681,896	1,681,896
Capital surplus	6,254,958	6,230,738
Retained earnings	3,506,458	1,846,895
Capital adjustments	342,329	(580,987	)
Total shareholders’ equity	11,785,641	9,178,542
Liabilities and Shareholders’ Equity	180,963,199	179,803,753
Operating revenue	13,471,117	20,532,036
Operating income	2,375,103	1,740,380
Continuing (loss) income before income taxes	2,602,894	629,911
Net (loss) income	1,828,519	360,454

3.2. Other Financial Information

See the Exhibit 99.1 Kookmin Bank Review Report by our independent auditors for our full- financial statements and relevant notes. The Report is also available at our website www.kbstar.com.

¹	Restated due to the change in accounting treatment for Wholly Owned Beneficiary Certificates by FSS

4. Independent Accountant Fees and Services

4.1. Audit & Review Fees

Deloitte Anjin LLC has reviewed our financial statements for the third quarter of 2005. The aggregate contract fee for the audit and review fees for the fiscal year 2005 is 1,350 million Won.

4.2. Non-Audit Services

The following is a description of non-audit services rendered by our independent auditor for the recent three years.

(Units: in millions of Won unless indicated otherwise)


Year	Service description	Amount of payment
2005	- LOC (Letter of Comfort)	30
2004	- Refinancing - Due Diligence regarding the possible acquisition of DITC/ KITC - US GAAP calculation of provision for the third quarter of 2004 - US GAAP conversion for 2004	230 300 100 USD 3,600 thousand


2003	- US GAAP conversion for 2003 - Refinancing - Due Diligence on Bank International Indonesia - US GAAP conversion for 2002 - Due Diligence on Kookmin Credit Card - SEC Filing regarding the proposed merger with Kookmin Credit Card	USD 3,950 thousand 275 SGD 313 thousand USD 3,800 thousand 250 USD 30 thousand

5. Corporate Governance and Affiliated Companies

5.1. Board of Directors & Committees under the Board

The board of directors holds regular meetings every quarter. The board of directors consists of directors and resolves each following matter:

Matters relating to business objectives and performance evaluation;

Matters relating to amendments of the Articles of Incorporation;

Matters relating to budget and accounting including salaries of directors and employees;

Matters relating to major organizational changes such as dissolution, business transfer and merger;

Matters relating to internal control standards; or

Other matters determined by law and the board of directors regulations.

We currently have six management committees that serve under the board:

The Board Steering Committee;

The Management Strategy Committee;

The Risk Management Committee;

The Audit Committee;

The Compensation Committee; and

The Non Executive Director Nominating Committee.

Each committee member is appointed by the board of directors, except for members of the Audit Committee, who are elected at the general shareholders’ meeting. For list of our directors, see 6. Directors, Senior Management and Employees / 6.1. Executive Directors and 6.2. Non-Executive Directors.

5.2. Audit Committee

Audit Committee oversees our financial reporting and approves the appointment of and interaction with our independent auditors, compliance officers, management personnel and other committee advisors. The committee also reviews our financial information, auditor’s examinations, key financial statement issues and the administration of our financial affairs by the board of directors. In connection with the general shareholders’ meeting, the committee examines the agenda for, and financial statements and other reports to be submitted by, the board of directors to each general shareholders’ meeting. The committee holds regular meetings every quarter and as-needed basis.

5.3. Compensation to Directors

For the 9 months period ended September 30, 2005, the aggregate of the remuneration paid to the directors is 1,539 million Won.

(Units: in millions of Won)


	The aggregate remuneration paid	Limit for the remuneration resolved by shareholders’ meeting	Average amount of the payment per person
1) Executive Directors (Except auditor & executive director and non-executive directors)	1,424		475
2) Non Executive Directors (Except members of audit committee)	282	8,000	46
3) Members of Audit Committee	401		76

Total	2,107	8,000	148

As part of remuneration, Kookmin Bank also granted stock options to directors. See 1.3.3. Stock Option.

5.4. Voting Rights of Shareholders

Each outstanding share of our common stock is entitled to one vote per share. If the method of written resolution at the general shareholders’ meeting is adopted by resolution of the board of directors, at which the convening of the general shareholders’ meeting is determined, the shareholders may exercise their voting rights in writing without participating the meeting in person. In this case, the Bank is required to send the documents and references necessary for exercise of voting rights, together with the convening notice. If a shareholder intends to exercise his/her voting rights in writing, the shareholder is required to fill in a certain form and submit it to the Bank one day before the date set for the general shareholders’ meeting.

5.5. Share Ownership¹

The following table presents information regarding the selected major ownership of our shares as of September 30, 2005.

(Unit: Shares, %)


Name	Number of Shares of Common Stock	Percentage of Total Issued Shares
The Bank of New York²	47,503,730	14.12
ING Bank N.V Amsterdam³	13,650,001	4.06

¹	Information based on December 31, 2004

²	Depositary of ADRs

³	Changed the largest shareholder of Kookmin Bank from ING Bank N.V Amsterdam to Euro-Pacific Growth Fund (4.79%) on October 14, 2005

5.6. Affiliated Companies

5.6.1. List of Affiliates¹

As of September 30, 2005, we have following affiliates.

KB Investment Co., Ltd.

KB Asset Management Co., Ltd.

KB Real Estate Trust Co., Ltd.

KB Credit Information Co., Ltd.

KB Data Systems Corporation

KB Futures Co., Ltd.

KB Life Co., Ltd.

ING Life Korea Ltd.

Kookmin Bank International (London) Ltd.

Kookmin Hong Kong Ltd.

Sorak Financial Holdings

5.6.2. Operating Results of Affiliates

(Unit: in millions of Won)

Company name

Closing date

Operating results

Total
Assets

Total
Liabilities

Total
Equities

Sales

Net

Income

KB Investment²

December 31, 2004

87,307

8,523

78,784

21,002

1,709

KB Asset Management³

March 31, 2005

69,929

6,372

63,557

31,948

13,881

KB Real Estate Trust²

December 31, 2004

201,221

143,150

58,071

51,693

(40,058

)

KB Credit Information²

December 31, 2004

27,847

6,760

21,087

37,793

2,425

KB Data Systems Corp.²

December 31, 2004

22,257

6,426

15,831

40,076

1,579

KB Futures³

March 31, 2005

37,358

10,740

26,618

8,638

1,199

ING Life Korea³

March 31, 2005

5,624,538

5,174,566

449,972

2,637,377

145,773

KB Life Co., Ltd.³

March 31, 2005

183,793

157,843

25,950

94,267

(4,245

)

Kookmin Bank International (London)⁴

December 31, 2004

294,734

242,738

51,996

10,652

1,534

Kookmin HK Ltd.⁴

December 31, 2004

406,880

337,111

69,769

13,940

5,622

Sorak Financial Holdings⁴

December 31, 2004

305,520

241

305,279

14,779

13,258

¹	Excluding Jooeun Industry and Jangeun Securities which have been under liquidation procedures. Also excluded as follows; Kookmin Bank Luxembourg.S.A has been completed liquidation procedures on November. Kookmin Singapore Ltd. and Kookmin Finance Asia Limited have been under liquidation procedures.

²	Operating results based on December 31, 2004

³	Operating results based on March 31, 2005

⁴	Operating results based on September 30, 2005

6. Directors, Senior Management and Employees

As of September 30, 2005, our board of directors, which consists of 4 executive directors and 9 non-executive directors, has the ultimate responsibility for the management of our affairs.

6.1. Executive Directors

Our 4 executive directors consist of the President & CEO, Auditor and two Senior Executive Vice Presidents.

The names and positions of our directors with Kookmin Bank’s common stocks owned are set forth below.


Name	Date of Birth	Position	Common Stocks Owned
Chung Won Kang	12/19/1950	President & CEO	—
Hyung Duk Chang	08/13/1950	Auditor & Executive Director	—
Kap Shin	09/04/1955	Executive Director & SEVP	—
Donald H. MacKenzie	12/20/1948	Executive Director & SEVP	—

6.2. Non-Executive Directors

Our non-executive directors are selected based on the candidates’ talents and skills in diverse areas, such as law, finance, economy, management and accounting. As of September 30, 2005, 9 non-executive directors are in office.

Our current non-executive directors with Kookmin Bank’s shares owned are as follows.


Name	Date of Birth	Position	Common Stocks Owned
Nobuya Takasugi	09/03/1942	Non-Executive Director	—
Dong Soo Chung	09/24/1945	Non-Executive Director	1,660
Hoon Namkoong	06/26/1947	Non-Executive Director	—
Suk Yong Cha	06/09/1953	Non-Executive Director	2,490
Doo Hwan Song	05/29/1949	Non-Executive Director	—
Ki Hong Kim	01/10/1957	Non-Executive Director	2,600
Chang Kyu Lee	05/20/1951	Non-Executive Director	—
Dam Cho	08/01/1952	Non-Executive Director	—
Young Soon Cheon	02/01/1961	Non-Executive Director	1,590

6.3. Senior Management

In addition to the executive directors who are also our executive officers, we currently have the following 13 executive officers as of September 30, 2005.


Name	Date of Birth	Position	Common Shares Owned
Dong Won Kim	03/01/1953	Senior Executive Vice President	—
Yun Keun Jung	07/01/1951	Senior Executive Vice President	2,416
Nam Sik Yang	05/08/1954	Senior Executive Vice President	582
Hyo Sung Won	07/29/1960	Senior Executive Vice President	—
Yong Kook Oh	09/30/1949	Senior Executive Vice President	—
Sang Jin Lee	05/21/1955	Senior Executive Vice President	1,078
Ahn Sook Koo	03/16/1955	Senior Executive Vice President	—
Jung Young Kang	01/29/1951	Senior Executive Vice President	—
Young Han Choi	09/24/1958	Senior Executive Vice President	—
Dong Soo Choe	03/10/1955	Senior Executive Vice President	—
Seung Kyo Lee	10/25/1959	Senior Executive Vice President	—
Jun Bo Cho	09/15/1951	Senior Executive Vice President	906
Jung Min Kim	05/08/1951	Senior Executive Vice President	94

6.4. Employees

The following table shows the breakdown of our employees as of September 30, 2005.

(Unit: in millions of Won)

Number of Employees¹

Average Tenure
of the Full-time
Employees²

Total Payment for
the 3^rd quarter of
2005³

Average Monthly
Payment

per Person

Full-time

Contractual

Total

Male

12,845

1,227

14,072

16.6

701,006

5.5

Female

4,232

6,503

10,735

13.9

330,680

3.4

Total

17,077

7,730

24,807

15.9

1,031,686

4.6

¹	Number of employees are calculated based on an arithmetic mean from January 31, 2005 to September 30, 2005 and local employees in overseas branches are excluded

²	Only based on full-time employees as of September 30, 2005

³	Based on personnel expense and welfare cost as of September 30, 2005

7. Related Party Transactions

A number of banking transactions are entered into with related parties in the ordinary course of business. Generally, these transactions include loans, deposits, debt securities and other arms-length transactions relating to our banking business. These transactions are carried out on commercial terms and conditions and at market rates.

7.1. Transactions with the Largest Shareholders or Affiliates

7.1.1. Investments in Affiliates¹

(Unit: in millions of Won)

Name

Relation
with the
Bank

Account

Beginning
Balance
(January 1, 2005)

Increase

Decrease

Ending

Balance
(September 30, 2005)

KB Real Estate Trust

Affiliate

Equity Securities of Affiliate

79,999

—

79,999

KB Investment

Affiliate

Equity Securities of Affiliate

44,708

—

44,756

KB Asset Management

Affiliate

Equity Securities of Affiliate

30,670

—

30,670

KB Futures

Affiliate

Equity Securities of Affiliate

19,996

—

19,996

KB Data Systems Corp.

Affiliate

Equity Securities of Affiliate

7,998

—

8,000

KB Credit Information

Affiliate

Equity Securities of Affiliate

5,868

377

—

6,245

KB Life²

Affiliate

Equity Securities of Affiliate

30,000

—

14,700

15,300

ING Life Korea

Affiliate

Equity Securities of Affiliate

14,000

—

14,000

Kookmin Hong Kong Ltd.

Affiliate

Equity Securities of Affiliate

20,876

—

116

20,760

Kookmin Bank International (London) Ltd.

Affiliate

Equity Securities of Affiliate

40,180

—

3,688

36,492

Total

294,295

427

18,504

276,218

¹	Excluding Jooeun Industry and Jangeun Securities which have been under liquidation procedures

²	Established on 29 April, 2004

7.2. Transactions with Other than the Largest Shareholders or Affiliates

7.2.1. Loans and Guarantees

(Unit: in millions of Won)


Name	Relation with the Bank	Account	Beginning Balance (January 1, 2005)	Ending Balance (September 30, 2005)	Increase / (Decrease) for the period
Ki Hong Kim	Non executive director	Housing loans	18	18	0
Kyung Namkoong	Related party of Non executive director, Hoon Namkoong	Housing loans	170	213	43
Samsung Electro-Mechanics	Related party of Non executive director, Hoon Namkoong	Loans for working capital	0	50,000	50,000
Hyun Duk Shin	Related party of Executive director and Senior executive Vice President, Kap Shin	Household loans	50	50	0
Young Sin Yoon	Related party of Executive director and Senior executive Vice President, Kap Shin	Household loans	2	0	(2	)
Chan Jung Lee	Related party of Non executive director, Dong Soo Chung	Household loans	93	0	(93	)
Yong Jin Kim	Related Party of Auditor & Executive Director, Hyung Duk Chang	Household loans	0	140	140
Seo Young Chung	Related Party of Non-executive director, Dong Soo Chung	Household loans	0	1	1

Total			333	50,422	50,089

7.2.2. Securities Transactions

(Units: in millions of Won unless indicated otherwise)

Transactions

Name

Relation with the Bank

Account

Purchase

Disposal

Volume

Gains
/Losses

DSME Co.

Related party of
Non executive director,
Dong Soo Chung

Equity securities

6,587

9,667

16,254

925

Samsung Electro-Mechanics

Related party of
Non executive
director,
Hoon Namkoong

Equity securities

5,199

3,160

8,359

Total

11,786

12,827

24,613

947

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Kookmin Bank
	(Registrant)

Date: November 14, 2005	By:	/s/ Kap Shin
		(Signature)
	Name:	Kap Shin
	Title:	Executive Director /
		Senior Executive Vice President &
		Chief Financial Officer

Exhibit 99.1

KOOKMIN BANK

NON-CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005

AND INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

Independent Accountants’ Review Report

English Translation of a Report Originally Issued in Korean

To the Shareholders and Board of Directors of

Kookmin Bank:

We have reviewed the accompanying non-consolidated balance sheet of the Bank accounts of Kookmin Bank (the “Bank”) as of September 30, 2005 and the related non-consolidated statements of income and cash flows for the nine months ended September 30, 2005, all expressed in Korean Won. These financial statements are the responsibility of the Bank’s management. Our responsibility is to issue a report on these financial statements based on our review. The accompanying non-consolidated statements of income and cash flows for the nine months ended September 30, 2004, which are presented for comparative purposes, were reviewed by other accountants, whose report dated October 14, 2004 stated that nothing came to their attention that caused them to believe that these financial statements were not presented fairly, in all material respects, in accordance with financial accounting standards in the Republic of Korea.

We conducted our review in accordance with standards for review of interim financial statements in the Republic of Korea. Those standards require that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data, and this provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying financial statements are not presented fairly, in all material respects, in accordance with financial accounting standards in the Republic of Korea.

The accompanying non-consolidated balance sheet as of December 31, 2004 and the related non-consolidated statements of income, appropriations of retained earnings and cash flows for the year then ended (not presented herein) were audited in accordance with auditing standards generally accepted in the Republic of Korea by other auditors, and in their report dated February 4, 2005, they expressed an unqualified opinion on those financial statements. As explained in Note 2, their reports for the year ended December 31, 2004 were prepared before reflecting the changes in accounting principles, and the accompanying balance sheet as of December 31, 2004, which is comparatively presented, was restated to reflect the changes in accounting principles.

As explained in Note 2 to the non-consolidated financial statements, the Bank recorded all assets and liabilities comprising of private beneficiary certificates as their original accounts, and all gains and losses from all private beneficiary certificates as income from beneficiary certificates as of and for the year ended December 31, 2004. However, in accordance with the new interpretation by the Financial Supervisory Service, a private beneficiary certificate on which management, as an investor, agrees to have no interference and is not managing, is regarded as an ordinary beneficiary certificate and recorded as securities. Due to this change, the Bank restated the accompanying financial statements as of December 31, 2004, which increased total assets, total liabilities and capital adjustments by (Won)76,568 million, (Won)2,668 million and (Won)268,696 million, respectively, and decreased retained earnings before appropriations by (Won)194,796 million. In addition, total assets, total liabilities and capital adjustments as of September 30, 2005 decreased by (Won)62,749 million, (Won)62,749 million and (Won)113,220 million, respectively, and net income for the nine months then ended increased by (Won)113,220 million due to the above accounting change.

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

October 31, 2005

/s/ Deloitte Anjin LLC

Notice to Readers

This report is effective as of October 31, 2005, the accountants’ review report date. Certain subsequent events or circumstances may have occurred between the accountant’s review report date and the time the accountants’ review report is read. Such events or circumstances could significantly affect the accompanying financial statements and may result in modifications to the accountants’ review report.

KOOKMIN BANK

NON-CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004


	Korean Won
	2005		(Restated) 2004
	(In millions)
ASSETS

Cash and due from banks (Notes 3, 20 and 21)	(Won)	6,497,051	(Won)	5,139,604
Securities (Notes 4, 20 and 21)		29,326,198		27,965,441
Loans (Notes 5, 6, 7, 20 and 21)		134,189,935		135,769,326
Fixed assets (Note 8)		2,457,452		2,633,218
Other assets (Note 9)		8,492,563		8,296,164

	(Won)	180,963,199	(Won)	179,803,753

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES:
Deposits (Notes 10, 20 and 21)	(Won)	124,475,722	(Won)	127,010,534
Borrowings (Notes 11, 20 and 21)		14,233,309		9,634,296
Debentures (Notes 12, 20 and 21)		16,521,447		21,874,695
Other liabilities (Notes 13, 14, 15 and 16)		13,947,080		12,105,686

		169,177,558		170,625,211

SHAREHOLDERS’ EQUITY (Notes 17 and 18):
Common stock		1,681,896		1,681,896
Capital surplus		6,254,958		6,230,738
Retained earnings before appropriations (Net income of (Won)1,828,519 million for the nine months ended September 30, 2005 and (Won)360,454 million for the year ended December 31, 2004)		3,506,458		1,846,895
Capital adjustments		342,329		(580,987	)

		11,785,641		9,178,542

	(Won)	180,963,199	(Won)	179,803,753

See accompanying notes to non-consolidated financial statements.

KOOKMIN BANK

NON-CONSOLIDATED STATEMENTS OF INCOME

FOR THE NINE MONTHS ENDED SEMPEMBER 30, 2005 AND 2004


	Korean Won
	2005		(Restated) 2004
	(In millions except per share amounts)
OPERATING REVENUE:
Interest income:
Interest on due from banks (Note 21)	(Won)	18,432	(Won)	7,038
Interest on securities (Note 21)		808,414		766,457
Interest on loans (Note 21)		6,812,797		7,803,562
Other interest income		55,887		71,452

		7,695,530		8,648,509

Commission income		1,583,210		1,652,208

Other operating income:
Gain on disposal of trading securities		75,779		148,292
Gain on valuation of trading securities (Note 4)		—		42,442
Dividends on trading securities		4,821		3,289
Dividends on available-for-sale securities		3,259		7,709
Foreign exchange trading income		203,246		203,995
Fees and commissions from trust accounts (Note 26)		103,113		92,119
Gain on financial derivatives trading		2,822,447		2,049,392
Gain on valuation of financial derivatives (Note 19)		891,765		786,141
Gain on valuation of fair value hedged items (Note 19)		43,449		2,838
Other operating income		44,498		42,188

		4,192,377		3,378,405

Total operating revenues		13,471,117		13,679,122

OPERATING EXPENSES:
Interest expenses:
Interest on deposits (Note 21)		2,422,243		2,986,152
Interest on borrowings (Note 21)		260,151		254,163
Interest on debentures (Note 21)		801,698		818,822
Other interest expenses		25,001		50,009

		3,509,093		4,109,146

Commission expense		247,100		374,252

Other operating expenses:
Loss on disposal of trading securities		54,457		61,490
Loss on valuation of trading securities (Note 4)		13,258		—
Provision for possible loan losses (Note 7)		967,867		2,245,698
Provision for acceptance and guarantee losses (Note 14)		1,415		—
Foreign exchange trading losses		175,267		124,779
Loss on financial derivatives trading		2,708,392		2,008,046
Loss on valuation of financial derivatives (Note 19)		922,694		761,926
Other operating expenses		406,128		371,156

		5,249,478		5,573,095

General and administrative expenses (Note 22)		2,090,343		1,951,849

Total operating expenses		11,096,014		12,008,342

(Continued)

KOOKMIN BANK

NON-CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)

FOR THE NINE MONTHS ENDED SEMPEMBER 30, 2005 AND 2004


	Korean Won
	2005		(Restated) 2004
	(In millions except per share amounts)
OPERATING INCOME	(Won)	2,375,103	(Won)	1,670,780
NON-OPERATING INCOME (Note 23)		617,247		303,019
NON-OPERATING EXPENSES (Note 23)		389,456		1,137,056

ORDINARY INCOME		2,602,894		836,743
EXTRAORDINARY ITEM		—		—

INCOME BEFORE INCOME TAX		2,602,894		836,743
INCOME TAX EXPENSE (Note 24)		774,375		273,834

NET INCOME	(Won)	1,828,519	(Won)	562,909

ORDINARY INCOME PER SHARE (In currency units) (Note 25)	(Won)	5,745	(Won)	1,837

NET INCOME PER SHARE (In currency units) (Note 25)	(Won)	5,745	(Won)	1,837

DILUTED ORDINARY INCOME PER SHARE (In currency units) (Note 25)	(Won)	5,741	(Won)	1,837

DILUTED NET INCOME PER SHARE (In currency units) (Note 25)	(Won)	5,741	(Won)	1,837

See accompanying notes to non-consolidated financial statements.

KOOKMIN BANK

NON-CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004


	Korean Won
	2005			(Restated) 2004
	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	(Won)	1,828,519		(Won)	562,909

Adjustments to reconcile net income to net cash provided by operating activities:
Loss on disposal of trading securities		54,457			61,490
Provision for possible loan losses		967,867			2,245,698
Loss on financial derivatives trading		2,708,392			2,008,046
Loss on valuation of financial derivatives		922,694			761,926
Loss on valuation of securities accounted for using the equity method		8,466			28,841
Provision for severance benefits		89,090			81,200
Depreciation and amortization		244,280			304,041
Loss on disposal of available-for-sale securities		17,210			22,875
Loss on impairment of available-for-sale securities		26,144			55,058
Loss on disposal of tangible assets		3,764			2,368
Loss on sale of loans		2,096			864,609
Gain on disposal of trading securities		(75,779	)		(148,292	)
Gain on valuation of trading securities		—			(42,442	)
Gain on financial derivatives trading		(2,822,447	)		(2,049,392	)
Gain on valuation of financial derivatives		(891,765	)		(786,141	)
Gain on valuation of fair value hedged items		(43,449	)		(2,838	)
Gain on valuation of securities accounted for using the equity method		(71,700	)		(38,930	)
Gain on disposal of available-for-sale securities		(282,431	)		(121,598	)
Gain on disposal of tangible assets		(9,475	)		(1,861	)
Gain on sale of loans		(79,935	)		(23,770	)
Others, net		321,676			(59,336	)

		1,089,155			3,161,552

(Continued)

KOOKMIN BANK

NON-CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004


	Korean Won
	2005			(Restated) 2004
	(In millions)
Changes in assets and liabilities resulting from operations:
Net increase in other receivables	(Won)	(1,900,734	)	(Won)	(2,063,443	)
Net decrease in accrued income		13,869			27,782
Net decrease in prepaid expenses		160,132			132,056
Net (increase) decrease in deferred income tax assets		(87,652	)		197,525
Net increase in other payables		1,338,980			2,659,765
Net increase (decrease) in accrued expenses		505,420			(110,868	)
Net increase in advances from customers		307,114			320,692
Payment of severance benefits		(58,379	)		(34,466	)
Decrease in severance insurance deposits		23,726			14,759
Others, net		490,914			1,485,768

		793,390			2,629,570

Net cash provided by operating activities		3,711,064			6,354,031

CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in restricted due from banks		(1,061,711	)		(1,891,166	)
Net decrease in available-for-sale securities		3,669,749			891,513
Net increase in held-to-maturity securities		(4,881,838	)		—
Net decrease in securities accounted for using the equity method		24,047			—
Net decrease in loans		671,960			—
Disposal of fixed assets		22,304			4,942
Purchase of fixed assets		(85,449	)		(134,022	)
Net decrease (increase) in other assets		1,598,108			(3,156,652	)

Net cash used in investing activities		(42,830	)		(4,285,385	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposits		(2,534,016	)		(2,073,242	)
Net (decrease) increase in debentures		(5,463,311	)		2,243,564
Net increase (decrease) in borrowings		4,600,693			(239,208	)
Net increase (decrease) in other liabilities		20,777			(1,916,611	)

Net cash used in financing activities		(3,375,857	)		(1,985,497	)

NET INCREASE IN CASH AND DUE FROM BANKS		292,377			83,149

CASH AND DUE FROM BANKS, BEGINNING OF PERIOD		3,319,349			3,771,757

CASH AND DUE FROM BANKS, END OF PERIOD (Note 30)	(Won)	3,611,726		(Won)	3,854,906

See accompanying notes to non-consolidated financial statements.

KOOKMIN BANK

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

1. GENERAL:

Kookmin Bank (“the Bank”) was established in 1963 under the Citizens National Bank Act to provide and administer funds for financing to the general public and small businesses. Pursuant to the repeal of the Citizens National Bank Act, effective January 5, 1995, the Bank has conducted its operations in accordance with the provisions of the General Banking Act.

The Bank merged with Korea Long Term Credit Bank on December 31, 1998 and with Daegu, Busan, Jeonnam Kookmin Mutual Savings & Finance Co., Ltd. on August 22, 1999. Also, under the decision of the Financial Supervisory Commission in accordance with the Structural Improvement of the Financial Industry Act, the Bank purchased certain assets, including loans classified as normal or precautionary, and assumed most of the liabilities of Daedong Bank on June 29, 1998. Also, the Bank completed the legal consolidation with Housing and Commercial Bank (“H&CB”) on October 31, 2001 and merged with Kookmin Credit Card Co., Ltd., a majority-owned subsidiary, on September 30, 2003.

The Bank’s shares have been listed on the Korea Stock Exchange since September 1994. As a result of the business combination with H&CB, the former shareholders of the Bank and H&CB received new common shares of the Bank on the basis of a pre-determined ratio. The new common shares of the Bank were listed on the Korea Stock Exchange on November 9, 2001. As of September 30, 2005, the Bank’s paid-in capital amounts to (Won) 1,681,896 million and its 50,871,519 shares are listed on the New York Stock Exchange as American Depositary Shares (“ADS”).

The Bank is engaged in the banking and trust businesses according to the provisions of the General Banking Act and the Trust Business Act, and operates through 1,063 domestic branches and offices (excluding 196 automated teller machine stations) and three overseas branches (excluding 2 subsidiaries and 1 office) as of September 30, 2005.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Non-consolidated Financial Statement Presentation

The Bank maintains its official accounting records in Korean Won and prepares statutory non-consolidated financial statements in the Korean language (Hangul) in conformity with the accounting principles and banking accounting standards generally accepted in the Republic of Korea. Certain accounting principles and banking accounting standards applied by the Bank that conform with financial accounting standards and accounting principles in the Republic of Korea may not conform with generally accepted accounting principles and banking accounting practices in other countries. Accordingly, these financial statements are intended for use by those who are informed about Korean accounting principles and practices. The accompanying financial statements have been condensed, restructured and translated into English (with certain expanded descriptions) from the Korean language financial statements. Certain information included in the Korean language financial statements, but not required for a fair presentation of the Bank’s financial position, results of operations or cash flows, is not presented in the accompanying financial statements.

The significant accounting policies followed by the Bank in preparing the accompanying non-consolidated financial statements are summarized below.

Interest Income Recognition

The Bank applies the accrual basis in recognizing interest income related to deposits, loans and securities, except for non-secured uncollectible receivables. Interest on loans, whose principal or interest is past due at the balance sheet date, is generally not accrued, with the exception of interest on certain loans secured by guarantee of governments or government agencies, or collateralized by bank deposits. When a loan is placed on non-accrual status, previously accrued interest is generally reversed and deducted from current interest income; and future interest income is recognized on cash basis in accordance with the accounting standards of the banking industry. As of September 30, 2005 and December 31, 2004, the principal amount of loans and securities of which the accrued interest income was not recorded in the accompanying financial statements based on the above criteria amounted to (Won)7,117,983 million and (Won)8,600,175 million, respectively, and the related accrued interest income not recognized amounted to (Won)510,491 million and (Won)551,683 million, respectively.

Classification of Securities

At acquisition, the Bank classifies securities into one of the following categories: trading, available-for-sale, held-to-maturity and securities accounted for using the equity method, depending on marketability, purpose of acquisition and ability to hold. Debt and equity securities that are bought and held for the purpose of selling them in the near term and actively traded are classified as trading securities. Debt securities with fixed and determinable payments and fixed maturity that the Bank has the positive intent and ability to hold to maturity are classified as held-to-maturity securities. Securities that should be accounted for under the equity method are classified as securities accounted for using the equity method. Debt and equity securities not classified as the above are categorized as available-for-sale securities.

If the objective and ability to hold securities of the Bank change, available-for-sale securities can be reclassified to held-to-maturity securities and held-to-maturity securities can be reclassified to available-for-sale securities. Whereas, if the Bank sells held-to-maturity securities or exercises early redemption right of securities to issuer in the current year or the proceeding two years, and if it reclassifies held-to-maturity securities to available-for-sale securities, all debt securities that are owned or purchased cannot be classified as held-to-maturity securities. On the other hand, trading securities cannot be recategorized to available-for-sale securities or held-to-maturity securities and vice versa. Nevertheless, trading securities are reclassified to available-for-sale securities only when the trading securities lose their marketability.

Valuation of Securities

(1) Valuation of Trading Securities

Trading equity and debt securities are initially recognized at acquisition cost plus incidental expenses determined by the individual moving average method (the specified identification method for debt securities). When the face value of trading debt securities differs from their acquisition cost, the effective interest method is applied to amortize the difference over the remaining term of the securities. After initial recognition, if the fair value of trading securities differs from the book value, trading securities are stated at fair value and the resulting valuation gain or loss is included in current operations.

(2) Valuation of Available-for-sale Securities

Available-for-sale securities are initially recognized at acquisition cost plus incidental expenses, determined by the individual moving average method (the specified identification method for debt securities). The effective interest method is applied to amortize the difference between the face value and the acquisition cost over the remaining term of the debt security. After initial recognition, available-for-sale securities are stated at fair value, with the net unrealized gain or loss presented as gain or loss on valuation of available-for-sale securities in capital adjustments. Accumulated capital adjustments of securities are charged to current operations in a lump sum at the time of disposal or impairment recognition. Non-marketable equity securities are stated at acquisition cost on the financial statements if the fair value of the securities is not reliably determinable.

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If the fair value of equity securities (net asset fair value in case of non-marketable equity securities stated at acquisition cost) is below the acquisition cost and the pervasive evidence of impairment exists, the carrying value is adjusted to fair value and the resulting valuation loss is charged to current operations. If the collectible value of debt securities is below the amortized cost and the pervasive evidence of impairment exists, the carrying value is adjusted to collectible value and the resulting valuation loss is charged to current operations. With respect to impaired securities, any unrealized valuation gain or loss of securities previously included in the capital adjustment account is reversed.

(3) Valuation of Held-to-maturity Securities

Held-to-maturity securities are stated at acquisition cost plus incidental expenses, determined by the specific identification method. When the face value of held-to-maturity securities differs from its acquisition cost, the effective interest method is applied to amortize the difference over the remaining term of the securities. If collectible value is below the amortized cost and the pervasive evidence of impairment exists, the carrying value is adjusted to collectible value and the resulting valuation loss is charged to current operations.

(4) Valuation of Securities Accounted for using the Equity Method

Equity securities held for investment in companies in which the Bank is able to exercise significant influence over the investees (in accordance with the Banking Act, if the Bank holds 15 percent or more of the issued shares, the Bank is considered being able to exercise significant influence) are accounted for using the equity method. The Bank’s share in net income or net loss of investees is included in current operations. Changes in the retained earnings of investee are reflected in the retained earnings. Changes in the capital surplus or other capital accounts of investee are reflected as gain or loss on valuation of securities accounted for using the equity method in capital adjustments.

(5) Reversal of Loss on Impairment of Available-for-sale Securities and Held-to-maturity Securities

If the reasons for impairment losses of available-for-sale securities no longer exist, the recovery is recorded in current operations under non-operating income up to amount of the previously recognized impairment loss as reversal of loss on impairment of available-for-sale securities and any excess is included in capital adjustments as gain on valuation of available-for-sale securities. However, if the increases in the fair value of the impaired securities are not regarded as the recovery of the impairment, the increases in the fair value are recorded as gain on valuation of available-for-sale securities in capital adjustments. For non-marketable equity securities, which were impaired based on the net asset fair value, the recovery is recorded up to their acquisition cost.

For held-to-maturity securities, the recovery is recorded in current operations under non-operating income within the amount of amortized cost that would have been recorded according to the original schedule if the impairment losses had not been recognized as reversal of loss on impairment of held-to-maturity securities.

(6) Reclassification of Securities

When held-to-maturity securities are reclassified to available-for-sale securities, those securities are accounted for at fair value on the reclassification date and the difference between the fair value and book value is reported in capital adjustment as gain or loss on valuation of available-for-sale securities. When available-for-sale securities are reclassified to held-to-maturity securities, gain or loss on valuation of available-for-sale securities, which had been recorded until the reclassification date, continue to be included in capital adjustments and be amortized using the effective interest rate method and the amortized amount is charged to interest income or expense until maturity. The difference between the fair value at the reclassification date and face value of the reclassified securities to held-to-maturity securities is amortized using effective interest rate method and the amortized amount is charged to interest income or expense.

Transfer of Securities

When the realization, expiration or sale of the right to obtain the economic benefits arises and the control of securities is lost from the sale of the securities, the unrealized valuation gain or loss of securities included in the capital adjustment account is added to or deducted from the gain or loss on disposal of securities. The gain or loss is the difference between the net proceeds receivable or received and its carrying value. When securities are transferred without losing the control, the transaction is recorded as secured borrowing transaction.

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Allowance for Possible Losses on Credits

The Supervisory Regulation of Banking Business (the “Supervisory Regulation”) legislated by the Financial Supervisory Commission (FSC) requires the Bank to classify all credits into five categories as normal, precautionary, substandard, doubtful, or estimated loss based on borrowers’ repayment capability and historical financial transaction records. The Supervisory Regulation also requires the Bank to provide the minimum rate of loss provision for each category balance using the prescribed minimum percentages as described below.

As required by the Supervisory Regulation, the Bank classifies corporate credits (loans, confirmed acceptances and guarantees) based on borrowers’ capability to repay in consideration of borrowers’ business operation, financial position and future cash flows (Forward Looking Criteria) as well as past due period and status of any bankruptcy proceedings (Historical Repayment Criteria). However, credits to small companies and to households are classified not by evaluating the debt repayment capability of a borrower or customer but by past due period and status of bankruptcy proceedings. The Bank generally classifies all credits to a single borrower in the same category of classification but credits guaranteed or credits collateralized by bank deposits, real estate and other assets may be classified differently based on the guarantor’s capability to service such guarantee or based on the value of collateral securing such credits.

Based on the Bank’s corporate credit evaluation model, credits to a borrower are classified into 12 grades from AAA to D (AAA, AA, A, A-, BBB, BB, B, B-, CCC, CC, C and D). Credits of grades of AAA to B are classified as normal, credits of grade B- to CCC as precautionary, credits of grade CC as substandard, credits of grade C as doubtful and credits of grade D as estimated loss. Credits are finally classified reflecting past due period and bankruptcy considerations. An allowance is then calculated on the category balances using the prescribed percentages of 0.5 ~ 1.9 percent for normal, 2 ~ 19.9 percent for precautionary, 20 ~ 49.9 percent for substandard, 50 ~ 99.9 percent for doubtful and 100 percent for estimated loss. However, the Bank does not provide allowances for call loans, bonds bought under resale agreements and inter-bank loans that are classified as normal, as it is not required by the Accounting Standards for the Banking Industry.

In addition, as required by the Supervisory Regulation, based on the classification of household loans and credit card receivables by past due period and status of bankruptcy proceedings, allowance for household loans and credit card receivables are calculated on the category balances using the prescribed minimum percentages of 0.75 percent and 1 percent for normal, 8 percent and 12 percent for precautionary, 20 percent for substandard, 55 percent and 60 percent for doubtful, and 100 percent for estimated loss. Furthermore, as required by the Financial Supervisory Service, for the secured household loans newly placed after September 9, 2002, if the ratio of loans to collateral value (loan to value; LTV) exceeds 70 percent, the Bank provides an allowance for possible loan losses of 1 percent for normal and 10 percent for precautionary, instead of providing 0.75 percent for normal and 8 percent for precautionary.

The Bank partially changed the accounting estimation in providing allowance for household loans in accordance with the Supervisory Regulation during the current year. The Bank extended the scope of borrowers classified as normal and precautionary for the secured household loans and applied the same overdue principal for general consumer loans to the secured household loans. Additionally, the Bank newly applied the economic recovery value method in estimating the expected recovery value of the collateral assets pledged as secured loans. The change in accounting estimate above is to reflect economic substantiality based on historical experience, and the effect of changes has been applied prospectively.

In addition, when an allowance for possible loan losses materially differs from the expected loss, which is calculated through objective and reasonable method in accordance with the accounting principle in the Republic of Korea, expected loss is reflected in the provision for possible loan losses since 2004.

The rates used for determining the allowances for losses based on historical loss rate by the Bank’s lending portfolios are determined as follows:


Lending portfolios	Methodology	Period of historical loss rate	Period of recovery ratio
Impaired corporate loans	Discounted cash flows	N/A	N/A

Non-impaired corporate loans	Migration analysis	1 year	5 years

Consumer loans	Migration analysis	2 years	5 years

Credit card loans	Roll-rate analysis	1 year	5 years

- 4 -

Based on the loan portfolios’ nature, lending period, recovery period and other economic factors, the Bank determines the appropriate data period used in assessing its historical loss rate and recovery ratio.

The Bank also provides an allowance for possible losses on confirmed acceptances and guarantees. The confirmed acceptances and guarantees are classified in accordance with the same loan classification criteria as of the balance sheet date, and an allowance is then estimated by applying 20 to 49.9 percent for substandard, 50 to 99.9 percent for doubtful and 100 percent for loss, and is recorded in other liabilities. No allowance is provided for the confirmed acceptances and guarantees classified as normal and precautionary.

In addition, as required by the Financial Supervisory Service, the Bank provides an additional 1 percent of other allowance for certain portions of the unused cash advance facility (75 percent of the facility less used balance) of active credit card accounts with transaction records during the recent one year.

Restructuring of Loans

The equity interest in the debtors, net of real estates and/or other assets received as full or partial satisfaction of the Bank’s loans, collected through reorganization proceedings, court mediation or debt restructuring agreements of parties concerned, is recorded at fair value at the time of the restructuring. In cases where the fair value of the assets received are less than the book value of the loan (book value before allowances), the Bank offsets first the book value against allowances for loans and then recognizes provisions for loans. Impairment losses for loans that were restructured in a troubled debt restructuring involving a modification of terms are computed by the difference between the present value of future cash flows under debt restructuring agreements discounted at effective interest rates at the time when loans are originated and the book value before allowances for loans. If the amount of allowances already established is less than the impairment losses under the workout plans, the Bank establishes additional allowances for the difference. Otherwise, the Bank reverses the allowances for loan losses.

Deferred Loan Origination Fees and Costs

The Bank defers loan origination fees associated with originating loans and loan origination costs that have future economic benefits. Loan balances are reported net of these loan origination fees and costs. The deferred loan origination fees and costs are amortized using the effective interest method with the amortization recognized as adjustments to other interest income.

Valuation of Receivables and Payables at Present Value

Receivables and payables incurred through long-term installment transactions, long-term borrowing and lending transactions, and other similar transactions are stated at the present value of expected future cash flows, and the gain or loss on valuation of related receivables and payables is reflected in current operations, unless the difference between nominal value and present value is immaterial. Present value discount or premium is amortized using the effective interest rate method and credited or charged to interest income or interest expense.

Tangible Assets and Related Depreciation

Tangible assets included in fixed assets are recorded at cost or production cost including the incidental expenses. Routine maintenance and repairs are expensed as incurred. Expenditures that result in the enhancement of the value or the extension of the useful lives of the facilities involved are capitalized as additions to tangible assets.

Depreciation is computed by using the declining-balance method (Straight-line method for building and structures) based on the estimated useful lives of the assets as follows:


Tangible assets	Depreciation method	Estimated useful life
Buildings and structures	Straight-line	40 years

Leasehold improvements	Declining balance	4-5 years

Equipment and vehicles	Declining balance	4-5 years

- 5 -

Intangible Assets and Related Amortization

Intangible assets included in fixed assets are recorded at the production costs or purchase costs plus incidental expenses less accumulated amortization. Intangible assets are amortized using the straight-line method over the estimated economic useful lives of the related assets or the activity method as follows:


Intangible assets		Estimated useful life
Goodwill		9 years
Development costs		5 years
Trademarks		5-20 years
Others		5-30 years

The Bank records goodwill as a result of the merger with H&CB, as the cost of the merger exceeded the fair value of the net assets acquired. Expenditures incurred in conjunction with the development of new products or technology and others, in which the elements of costs can be individually identified and future economic benefits are probably exerted, are capitalized as development costs. The Bank estimates the useful lives of endowment assets that are beneficial upon usage based on the term of the contract and are classified under other intangible assets.

Valuation Allowance for Non-Business Use Property

Non-business use property included in fixed assets is recorded when the Bank acquires collateral by foreclosure on the mortgage for loans. If the latest auction price is lower than book value, the difference is provided as a valuation allowance and the valuation loss is charged to current operations. In addition, the difference between the selling price and book value is recorded as a disposition gain or loss.

Recognition of Impairment of Assets

When the book value of assets (other than securities and assets valued at present value) exceeds the recoverable value of the assets due to obsolescence, physical damage or a sharp decrease in market value and the difference is material, the book value are adjusted to recoverable value in the balance sheet and the resulting impairment loss is charged to current operations. If the recoverable value of the assets increases in subsequent years, the increase in value is credited to operations as gain until the recoverable value equals the book value of assets that would have been determined had no impairment loss been recognized. The Bank assessed the recoverable value based on expected selling price or appraisal value.

Amortization of Discounts (Premiums) on Debentures

Discounts or premiums on debentures issued are amortized over the period from issuance to maturity using the effective interest rate method. Amortization of discounts or premiums is recognized as interest expense or interest income on the debentures.

Bonds under Resale or Repurchase Agreements

Bonds purchased under resale agreements are recorded as loans and bonds sold under repurchase agreements are recorded as borrowings when the Bank purchases or sells securities under resale or repurchase agreements.

Contingent Liabilities

A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank is recognized as contingent liabilities when it is probable that an outflow of resources embodying economic benefits required and the amount of the obligation can be measured with sufficient reliability. Where the effect of the time value of money is material, the amount of the liabilities is the present value of the expenditures expected to be required to settle the obligation. In addition, as some or all expenditures required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognized as separate assets in the balance sheet and related income may be offset against expense in the income statement.

- 6 -

Accrued Severance Benefits

Employees and directors and temporary employees with at least one year of service as of September 30, 2005 are entitled to receive a lump-sum payment upon termination of their employment with the Bank, based on their length of service and rate of pay at the time of termination. The accrued severance benefits that would be payable assuming all eligible employees and directors were to resign are included in other liabilities.

The Bank has purchased severance benefits insurance, which meets the funding requirement for tax purposes, and made deposits with Kyobo Life Insurance Co., Ltd and others. Withdrawal of these deposits is restricted to the payment of severance benefits. These are presented as a deduction from the accrued severance benefits.

Accounting for Derivative Instruments

The Bank accounts for derivative instruments pursuant to the Interpretations on Financial Accounting Standards 53-70 on accounting for derivative instruments. Derivative instruments are classified as used for trading activities or for hedging activities according to their transaction purpose. All derivative instruments are accounted for at fair value with the valuation gain or loss recorded as an asset or liability. If the derivative instrument is not part of a transaction qualifying as a hedge, the adjustment to fair value is reflected in current operations.

The accounting for derivative transactions that are part of a qualified hedge based both on the purpose of the transaction and on meeting the specified criteria for hedge accounting differs depending on whether the transaction is a fair value hedge or a cash flow hedge. Fair value hedge accounting is applied to a derivative instrument designated as hedging the exposure to changes in the fair value of an asset or a liability or a firm commitment (hedged item) that is attributable to a particular risk. The gain or loss both on the hedging derivative instruments and on the hedged item attributable to the hedged risk is reflected in current operations. Cash flow hedge accounting is applied to a derivative instrument designated as hedging the exposure to variability in expected future cash flows of an asset or a liability or a forecasted transaction that is attributable to a particular risk. The effective portion of gain or loss on a derivative instrument designated as a cash flow hedge is recorded as a capital adjustment and the ineffective portion is recorded in current operations. The effective portion of gain or loss recorded as a capital adjustment is reclassified to current earnings in the same period during which the hedged forecasted transaction affects earnings. If the hedged transaction results in the acquisition of an asset or the incurrence of a liability, the gain or loss in capital adjustment is added to or deducted from the asset or the liability.

Accounting for Stock Options

Stock options are valued at fair value pursuant to the Interpretations on Financial Accounting Standards 39-35 on accounting for stock options. The fair value of stock options is charged to operating expense in the statement of income and credited to capital adjustments as stock option cost over the contractual term of the services provided.

National Housing Fund

The Bank, as designated by the Korean Government under the Housing Law (former Housing Construction Promotion Law), manages the sources and uses of funds of the National Housing Fund (the “NHF”) and records the related NHF account in other liabilities. In addition, the Bank pays interest to NHF, which is computed by multiplying the average balance of the NHF account by the passbook deposit interest rate.

Accounting for Trust Accounts

The Bank separately maintains the books of accounts and financial statements in connection with the trust operations (the trust accounts) from those of the bank accounts in accordance with the Trust Business Act. When surplus funds are generated through the management of trust assets, such funds are deposited with the Bank and are recorded as due to trust accounts of the bank accounts. Also, the borrowings from the bank account are recorded as due from trust accounts of the bank accounts. The Bank receives fees for operation and management of the trust business and accounts for them as fees and commissions from trust accounts.

With respect to certain trust account products, the Bank guarantees the repayment of the principal of the trust accounts and, in certain cases, a fixed rate of return. If income from such trust accounts is insufficient to pay the guaranteed amount, such a deficiency is satisfied by using special reserves maintained in the trust accounts,

- 7 -

offsetting trust fee payable to the bank accounts and receiving compensation contributions from the bank accounts of the Bank. If the Bank pays compensating contributions to the guaranteed return trusts to cover such deficiencies, these contributions are reflected as other operating expense of the bank accounts and as other income of the trust accounts.

Income Tax Expense

Income tax expense is the amount currently payable for the period added to or deducted from the changes in deferred income taxes. However, deferred income tax assets are recognized only if the future tax benefits from accumulated temporary differences and any tax loss carryforwards are realizable. The difference between the amount currently payable for the period and income tax expense is accounted for as deferred income tax assets or liabilities, which will be charged or credited to income tax expense in the period each temporary difference reverses in the future. Deferred income tax assets or liabilities are calculated based on the expected tax rate to be applied at the reversal period of the related assets or liabilities. Tax payable and deferred income tax assets or liabilities regarding to certain items are charged or credited directly to related components of shareholders’ equity

Accounting for Foreign Currency Transactions and Translation

The Bank maintains its accounts in Korean Won. Transactions in foreign currencies are recorded in Korean Won based on the prevailing rate of exchange on the transaction date. The Korean Won equivalent of assets and liabilities denominated in foreign currencies are translated in these financial statements based on the basic rate ((Won)1,038.00 and (Won)1,043.80 to US$ 1.00 at September 30, 2005 and December 31,2004, respectively) announced by Seoul Money Brokerage Service, Ltd. or cross rates for other currencies other than U.S. Dollars at the balance sheet dates. Translation gains and losses are credited or charged to operations. Financial statements of overseas branches are translated based on the basic rate at balance sheet dates.

Application of the Statement of Korea Accounting Standards

The Korea Accounting Standard Board (KASB) under the Korea Accounting Institute (KAI) issued the Statements of Korea Accounting Standards (SKAS) for achieving a set of Korean accounting standards that should be internationally acceptable and comparable. The Statements supersede the relative articles of existing accounting standards and constitute generally accepted accounting standards of the Republic of Korea. The Bank has implemented SKAS No.1 (Accounting Changes and Correction of Errors) since January 1, 2002 and adopted SKAS from No.2 (Interim Financial Statements) through No.9 (Convertible Securities), since January 1, 2003. Also, the Bank has implemented SKAS No.13 (Troubled Debt Restructurings), since January 1, 2004 and adopted SKAS No.15 (Investment in Associates), No. 16 (Income Taxes) and No. 17 (Provisions, Contingent Liabilities and Contingent Assets), since January 1, 2005.

Restatement of Prior Period Financial Statements

The Bank recorded all assets and liabilities comprising of private beneficiary certificates as their original accounts, and all gains and losses from all private beneficiary certificates as income from beneficiary certificates as of and for the year ended December 31, 2004. However, in accordance with the new interpretation by the Financial Supervisory Service, a private beneficiary certificate on which management, as an investor, agrees to have no interference and is not managing, is regarded as an ordinary beneficiary certificate and recorded as securities. Due to this change, the Bank restated the accompanying financial statements as of December 31, 2004, which increased total assets, total liabilities and capital adjustments by (Won)76,568 million, (Won)2,668 million and (Won)268,696 million, respectively, and decreased retained earnings before appropriations by (Won)194,796 million. In addition, total assets, total liabilities and capital adjustments as of September 30, 2005 decreased by (Won)62,749 million, (Won)62,749 million and (Won)113,220 million, respectively, and net income for the nine months then ended increased by (Won)113,220 million due to the accounting change.

Reclassification

Certain accounts of the prior period were reclassified to conform to the current period’s presentation for comparative purposes; however, reclassifications had no effect on the previously reported prior period net income or shareholders’ equity of the Bank.

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3. CASH AND DUE FROM BANKS:

(1) Cash and due from banks in local currency and foreign currencies as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005			2004
Cash and checks	(Won)	2,347,767		(Won)	2,380,578
Foreign currencies		147,800			124,735
Due from banks in local currency		3,428,826			2,030,595
Due from banks in foreign currencies		573,050			607,447
Present value discount		(392	)		(3,751	)

	(Won)	6,497,051		(Won)	5,139,604

Due from banks as of September 30, 2005 and December 31, 2004 included (Unit: In millions):


Financial institution	Interest (%)	2005			2004
Due from banks in local currency
BOK	—	(Won)	2,796,835		(Won)	1,685,105
Woori Bank and others	3.46~4.06		600,496			254,537
Hansol Mutual Savings	1.00		22,500			90,000
Korea Stock Exchange and others	2.00		8,995			953
Present value discount	—		(392	)		(3,751	)

			3,428,434			2,026,844

Due from banks in foreign currencies
BOK	—		52,664			43,631
Korea Exchange Bank and others	—		66,780			74,274
Woori Bank and others	3.8~4.41		453,606			489,542

		(Won)	573,050		(Won)	607,447

(2) Restricted due from banks in local currency and foreign currencies as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


Financial institution	2005		2004		Reason for restriction
Due from banks in local currency
BOK	(Won)	2,796,835	(Won)	1,685,105	BOK Act
Hansol Mutual Savings		22,500		90,000	Withdrawal at maturity
Woori Bank and others		4,029		4,029	Escrow account
Korea Stock Exchange and others		1,595		953	Futures margin accounts/ others
Due from banks in foreign currencies
BOK		52,664		43,631	BOK Act
J.P.Morgan Chase & Co.		8,094		288	Futures margin accounts

	(Won)	2,885,717	(Won)	1,824,006

- 9 -

(3) Due from banks by financial institution as of September 30, 2005 and December 31, 2004 included (Unit: In millions):


Financial institution	2005		2004
Due from banks in local currency
BOK	(Won)	2,796,835	(Won)	1,685,105
Banks		600,496		254,537
Others		31,495		90,953

		3,428,826		2,030,595

Due from banks in foreign currencies
BOK		52,664		43,631
Banks		515,574		558,771
Others		4,812		5,045

		573,050		607,447

	(Won)	4,001,876	(Won)	2,638,042

(4) Term structure of due from banks as of September 30, 2005 were as follows (Unit: In millions):


	Less than 3 months		Less than 6 months		Less than 1 year		Less than 3 years		More than 3 years		Total
Due from banks in local currency	(Won)	3,128,064	(Won)	296,733	(Won)	—	(Won)	4,029	(Won)	—	(Won)	3,428,826
Due from banks in foreign currencies		541,910		31,140		—		—		—		573,050

	(Won)	3,669,974	(Won)	327,873	(Won)	—	(Won)	4,029	(Won)	—	(Won)	4,001,876

4. SECURITIES:

(1) Securities as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005		2004
Trading securities	(Won)	3,807,312	(Won)	3,635,510
Available-for-sale securities		13,764,013		17,555,764
Held-to-maturity securities		11,171,318		6,229,435
Securities accounted for using the equity method		583,555		544,732

	(Won)	29,326,198	(Won)	27,965,441

- 10 -

(2) The valuation of securities excluding securities accounted for using the equity method as of September 30, 2005 consisted of (Unit: In millions):


Classification	Face value		Acquisition *cost ()**		Adjusted by effective interest rate method		Fair value (Net asset value)		Book value
Trading securities
Equity securities	(Won)	—	(Won)	84,844	(Won)	—	(Won)	98,491	(Won)	98,491
Beneficiary certificates		6,147		6,305		—		6,308		6,308
Government and public bonds		1,970,000		1,951,827		1,951,723		1,935,205		1,935,205
Finance bonds		1,650,000		1,644,508		1,645,607		1,634,358		1,634,358
Corporate bonds		127,266		126,805		127,085		127,950		127,950
Asset-backed securities		5,000		5,000		5,006		5,000		5,000

	(Won)	3,758,413	(Won)	3,819,289	(Won)	3,729,421	(Won)	3,807,312	(Won)	3,807,312

Available-for-sale
Equity securities	(Won)	—	(Won)	799,649	(Won)	—	(Won)	950,288	(Won)	873,585
Equity investments		—		3,711		—		3,757		3,764
Beneficiary certificates		1,553,356		1,553,234		—		1,560,547		1,560,547
Government and public bonds		2,135,370		2,123,718		2,122,983		2,123,455		2,123,455
Finance bonds		7,084,479		7,003,531		6,992,932		7,010,554		7,010,554
Foreign government bonds		10,121		11,031		10,494		10,435		10,435
Corporate bonds		1,480,277		1,419,117		1,411,204		1,416,252		1,416,252
Asset-backed securities		885,942		822,510		747,129		746,164		746,164
Other debt securities		20,000		19,270		19,302		19,257		19,257

	(Won)	13,169,545	(Won)	13,755,771	(Won)	11,304,044	(Won)	13,840,709	(Won)	13,764,013

Held-to-maturity
Government and public bonds	(Won)	4,554,876	(Won)	4,542,222	(Won)	4,545,986	(Won)	4,502,944	(Won)	4,545,986
Finance bonds		4,143,495		4,105,326		4,129,710		4,094,874		4,129,710
Corporate bonds		2,023,730		2,011,729		2,027,378		2,027,361		2,027,378
Asset-backed securities		320,000		319,906		319,925		321,052		319,925
Other debt securities		150,000		148,328		148,319		149,495		148,319

	(Won)	11,192,101	(Won)	11,127,511	(Won)	11,171,318	(Won)	11,095,726	(Won)	11,171,318

(*)	Acquisition cost of equity securities in available-for-sale is the book value before valuation.

- 11 -

The valuation of securities excluding securities accounted for using the equity method as of December 31, 2004 consisted of (Unit: In millions):


Classification	Face value		Acquisition *cost ()**		Adjusted by effective interest rate method		Fair value (Net asset value)		Book value
Trading securities
Equity securities	(Won)	—	(Won)	176,191	(Won)	—	(Won)	184,545	(Won)	184,545
Beneficiary certificates		10,663		10,883		—		10,884		10,884
Government and public bonds		740,000		752,941		751,894		756,658		756,658
Finance bonds		2,380,000		2,368,468		2,356,576		2,370,577		2,370,577
Corporate bonds		170,000		169,470		169,731		169,242		169,242
Asset-backed securities		45,000		44,909		44,860		44,963		44,963
Other debt securities		100,000		98,632		98,630		98,641		98,641

	(Won)	3,445,663	(Won)	3,621,494	(Won)	3,421,691	(Won)	3,635,510	(Won)	3,635,510

Available-for-sale
Equity securities	(Won)	—	(Won)	579,017	(Won)	—	(Won)	886,390	(Won)	799,737
Equity investment		—		512		—		5,094		3,711
Beneficiary certificates		5,302,303		5,145,408		—		5,414,250		5,414,250
Government and public bonds		809,670		820,371		818,892		837,886		837,886
Finance bonds		6,186,665		6,121,244		6,112,439		6,144,095		6,144,095
Foreign government bonds		30,736		33,381		31,424		32,638		32,638
Corporate bonds		3,634,994		3,550,118		3,507,631		3,538,819		3,538,819
Asset-backed securities		881,800		881,903		758,217		765,231		765,231
Other debt securities		20,093		19,363		19,363		19,397		19,397

	(Won)	16,866,261	(Won)	17,151,317	(Won)	11,247,966	(Won)	17,643,800	(Won)	17,555,764

Held-to-maturity
Government and public bonds	(Won)	3,071,424	(Won)	3,090,636	(Won)	3,080,549	(Won)	3,214,041	(Won)	3,080,549
Finance bonds		1,226,073		1,213,768		1,215,034		1,219,712		1,215,034
Corporate bonds		1,734,727		1,733,922		1,734,696		1,808,349		1,734,696
Asset-backed securities		180,000		180,000		180,000		189,936		180,000
Other debt securities		20,000		19,157		19,156		19,156		19,156

	(Won)	6,232,224	(Won)	6,237,483	(Won)	6,229,435	(Won)	6,451,194	(Won)	6,229,435

(*)	Acquisition cost of equity securities in available-for-sale is the book value before valuation.

As a result of the fair valuation of trading securities, the Bank recognized (Won)13,258 million of valuation loss and (Won)42,442 million of valuation gain for the nine months ended September 30, 2005 and 2004, respectively.

- 12 -

(3) Available-for-sale securities, which were not valuated at fair value as of September 30, 2005, were as follows (Unit: In millions, shares in thousands) :


Company	No. of shares	Percentage of ownership (%)	Net asset value		Book value
Bad Bank Harmony (preferred stock)	13	0.46	(Won)	37,441	(Won)	12,279
Korea Asset Management Corp.	1,506	5.38		11,221		7,827
Samsung Life Insurance Co., Ltd.	23	0.11		8,231		7,479
Korea Highway Corp.	573	0.03		5,897		6,248
Kyobo Investment Trust Management Co., Ltd.	420	7.00		3,324		2,100
Korea Smart Card Co., Ltd.	326	4.44		1,268		1,628
Korea Enterprise Data Co., Ltd.	300	2.09		1,500		1,500
Korea Money Broker Corp.	119	5.97		2,746		1,291
Baring Communications Equity	4,417	6.38		2,896		1,214
Mercury	1,632	12.13		2,392		1,088
Tianjin Samsung Opto Electronics	1,000	10.00		1,313		1,014
Others	—	—		76,639		34,504

			(Won)	154,868	(Won)	78,172

Available-for-sale securities, which were not valuated at fair value as of December 31, 2004, were as follows (Unit: In millions, shares in thousands):


Company	No. of shares	Percentage of ownership (%)	Net asset value		Book value
Arirang Restructuring Fund	7,920	11.88	(Won)	16,407	(Won)	18,163
Mukoongwha Restructuring Fund	7,920	11.88		14,606		14,606
Seoul Fund	14,240	11.87		13,563		12,540
Bad Bank Harmony (preferred stock)	13	0.46		37,327		12,267
Korea Asset Management Corp.	1,506	5.38		12,783		7,827
Samsung Life Insurance Co., Ltd.	23	0.11		8,993		7,479
Korea Highway Corp.	573	0.03		5,897		6,248
Kyobo Investment Trust Management Co., Ltd.	420	7.00		3,574		2,100
Baring Communications Equity	4,665	6.73		1,957		1,957
Pan Asia Paper	1,275	2.94		1,642		1,642
Korea Smart Card Co., Ltd.	326	4.44		1,268		1,628
Korea Money Broker Corp.	119	5.97		2,514		1,291
Mercury	1,632	12.13		1,088		1,088
Tianjin Samsung Opto Electronics	1,000	10.00		1,241		1,020
Others	—	—		86,162		31,130

			(Won)	209,022	(Won)	120,986

The impairment loss and the reversal of impairment loss on available-for-sale securities recognized for the nine months ended September 30, 2005 and 2004 are shown below (Unit: In millions).


	2005				2004
	Impairment		Reversal		Impairment		Reversal
Equity securities	(Won)	4,215	(Won)	7,422	(Won)	17,154	(Won)	—
Equity investments		1		—		3		—
Corporate bonds		468		—		2,451		—
Asset-backed securities		21,460		—		35,450		—

	(Won)	26,144	(Won)	7,422	(Won)	55,058	(Won)	—

- 13 -

(4) Structured notes relating to stock, interest rate and credit linked notes (“CLN”) as of September 30, 2005 were as follows (Unit: In millions):


	Local currency		Foreign currencies		Total
Structured notes relating to stock
Convertible bonds	(Won)	—	(Won)	59	(Won)	59
Structured notes relating to interest rate
Long-term government bond floating rates notes (“FRN”)		572,976		—		572,976
Dual indexed FRN		19,854		—		19,854
Inverse FRN		21,064		—		21,064
Others		50,224		—		50,224

		664,118		—		664,118

CLN		—		41,732		41,732

Bonds with call option		20,000		—		20,000

	(Won)	684,118	(Won)	41,791	(Won)	725,909

Structured notes relating to stock, interest rate and CLN as of December 31, 2004 were as follows (Unit: In millions):


	Local currency		Foreign currencies		Total
Structured notes relating to stock
Convertible bonds	(Won)	—	(Won)	15,321	(Won)	15,321
Exchangeable bonds		137,871		15,654		153,525
Bonds with stock purchase warrants		—		762		762
Equity linked securities		49,721		—		49,721

		187,592		31,737		219,329

Structured notes relating to interest rate
Long-term government bond floating rates notes (“FRN”)		837,744		—		837,744
Dual indexed FRN		50,140		—		50,140
Inverse FRN		22,533		—		22,533
Others		90,367		—		90,367

		1,000,784		—		1,000,784

CLN		—		41,544		41,544

Bonds with call option		20,000		—		20,000

	(Won)	1,208,376	(Won)	73,281	(Won)	1,281,657

(5) Assets of private beneficiary certificates included in beneficiary certificates of available-for-sale securities as of September 30, 2005 and December 31, 2004 were composed of (Unit: In millions):


	2005		2004
Securities	(Won)	7,121	(Won)	6,062
Government and public bonds		29,611		1,384,645
Finance bonds		896,868		2,464,128
Corporate bonds in local currency		48,718		794,397
Asset-backed debt securities		35,092		87,428
Call loans		451,054		264,997
Others		196,017		276,936

Assets		1,664,481		5,278,593
Liabilities		105,695		16,884

	(Won)	1,558,786	(Won)	5,261,709

- 14 -

(6) The portfolio of securities excluding securities accounted for using the equity method, by industry, as of September 30, 2005 and December 31, 2004 was as follows (Unit: In millions):


	2005			2004
By industry	Amount		Percentage (%)	Amount		Percentage (%)
Trading securities
Government and government-invested public companies	(Won)	2,055,211	53.98	(Won)	916,323	25.20
Financial institutions		1,659,654	43.59		2,556,558	70.32
Others		92,447	2.43		162,629	4.48

	(Won)	3,807,312	100.00	(Won)	3,635,510	100.00

Available-for-sale securities
Government and government-invested public companies	(Won)	2,958,811	21.50	(Won)	1,732,924	9.87
Financial institutions		9,910,481	72.00		14,969,783	85.27
Others		894,721	6.50		853,057	4.86

	(Won)	13,764,013	100.00	(Won)	17,555,764	100.00

Held-to-maturity securities
Government and government-invested public companies	(Won)	6,523,811	58.40	(Won)	4,748,398	76.23
Financial institutions		4,597,955	41.16		1,426,591	22.90
Others		49,552	0.44		54,446	0.87

	(Won)	11,171,318	100.00	(Won)	6,229,435	100.00

(7) The portfolio of securities excluding securities accounted for using the equity method, by security type, as of September 30, 2005 and December 31, 2004 was as follows (Unit: In millions):


	2005			2004
By type	Amount		Percentage (%)	Amount		Percentage (%)
Trading securities
Stocks	(Won)	98,491	2.59	(Won)	184,545	5.08
Fixed rate bonds		3,576,857	93.95		3,260,607	89.69
Floating rate bonds		125,656	3.30		179,474	4.94
Beneficiary certificates		6,308	0.16		10,884	0.29

	(Won)	3,807,312	100.00	(Won)	3,635,510	100.00

Available-for-sale securities
Stocks	(Won)	873,585	6.35	(Won)	799,737	4.56
Fixed rate bonds		9,677,170	70.31		9,554,010	54.42
Floating rate bonds		932,602	6.78		901,040	5.13
Subordinated bonds		715,908	5.20		851,947	4.85
Convertible bonds		59	0.00		30,976	0.18
Beneficiary certificates		1,560,547	11.34		5,414,250	30.84
Others		4,142	0.03		3,804	0.02

	(Won)	13,764,013	100.00	(Won)	17,555,764	100.00

Held-to-maturity securities
Fixed rate bonds	(Won)	11,041,318	98.84	(Won)	5,869,731	94.23
Floating rate bonds		—	0.00		229,704	3.69
Subordinated bonds		130,000	1.16		130,000	2.08

	(Won)	11,171,318	100.00	(Won)	6,229,435	100.00

- 15 -

(8) The portfolio of securities excluding securities accounted for using the equity method, by country, as of September 30, 2005 and December 31, 2004 was as follows (Unit: In millions):


	2005			2004
	Amount		Percentage (%)	Amount		Percentage (%)
Trading securities
Korea	(Won)	3,807,312	100.00	(Won)	3,635,510	100.00

Available-for-sale securities
Korea	(Won)	13,640,640	99.10	(Won)	17,421,092	99.23
USA		60,294	0.44		50,284	0.29
Russia		20,997	0.15		—	0.00
Philippines		9,876	0.07		25,703	0.15
Indonesia		9,667	0.07		13,516	0.08
The Republic of South Africa		6,465	0.05		6,742	0.04
Others		16,074	0.12		38,427	0.21

	(Won)	13,764,013	100.00	(Won)	17,555,764	100.00

Held-to-maturity securities
Korea	(Won)	11,171,318	100.00	(Won)	6,229,435	100.00

(9) Term structure of securities (except for stocks and equity investments) in available-for-sale and held-to-maturity securities as of September 30, 2005 was as follows (Unit: In millions):


	Less than 1 year		Less than 5 years		Less than 10 years		More than 10 years		Total
Available-for-sale securities
Fair value	(Won)	6,055,164	(Won)	6,685,491	(Won)	145,548	(Won)	461	(Won)	12,886,664

Held-to-maturity securities
Book value		2,790,940		7,110,838		1,269,540		—		11,171,318
Fair value		2,800,300		7,135,843		1,159,583		—		11,095,726

(10) Pursuant to the management’s operating plan of investment assets, the Bank disposed of certain held-to maturity securities of which the maturity dates were within three months from the disposal date. Under the Statement of Korean Accounting Standard No. 8 – “Investments in Securities”, the disposal of held-to maturity securities, which have maturities less than 3 months from the disposal date, does not affect the status of held-to maturity of the other held-to maturity securities. The face value and the book value of the disposed securities were (Won)120,000 million and 120,006 million, respectively, and the Bank recognized (Won)216 million of gain on disposal of securities for the nine months ended September 30, 2005.

- 16 -

(11) Stocks and equity investments accounted for using the equity method as of September 30, 2005 are summarized as follows (Unit: In millions):


	No. of shares	Ownership (%)	Acquisition cost		Net asset value		Book value
Domestic stocks
KB Investment Co., Ltd. (*1)	8,951,293	99.99	(Won)	156,748	(Won)	83,174	(Won)	83,174
KB Futures Co., Ltd. (*1)	3,999,200	99.98		19,996		26,950		26,950
KB Data System Co., Ltd. (*1)	799,960	99.99		8,001		16,905		12,974
KB Real Estate Trust	15,999,930	99.99		76,103		73,953		73,979
KB Asset Management (*1)	6,134,040	80.00		39,015		50,168		50,168
KB Credit Information	1,249,040	99.73		13,952		26,479		25,530
KB Life Insurance Co., Ltd. (*2)	3,060,000	51.00		15,426		13,501		—
KLB Securities Co., Ltd. (*3)	4,854,713	36.41		10,316		—		—
Jooeun Industrial Co., Ltd. (*3)	1,999,910	99.99		23,994		—		—
ING Life Insurance Korea	1,400,000	20.00		21,769		91,992		91,992

				385,320		383,122		364,767

Foreign stocks
Kookmin Bank Singapore Ltd. (*3)	30,000,000	100.00		20,808		—		1,802
Kookmin Finance Asia Ltd. (HK) (*3)	700,000	100.00		8,177		—		252
Kookmin Bank Int’l Ltd. (London)	20,000,000	100.00		39,539		51,996		51,996
Kookmin Bank Hong Kong Ltd. (*1)	2,000,000	100.00		55,385		69,769		69,821
Sorak Financial Holdings PTE Ltd.	1,422,216	25.00		74,529		76,967		76,967

				198,438		198,732		200,838

Equity investments
KICO No. 2 Venture Investment Partnership (*3)	5,000	55.56		—		185		185
KICO No. 3 Venture Investment Partnership (*3)	9,000	69.23		—		155		155
Pacific IT Investment Partnership	700	50.00		7,000		5,112		5,112
NPC02-4 Kookmin Venture Fund	100	33.33		10,000		12,498		12,498

				17,000		17,950		17,950

			(Won)	600,758	(Won)	599,804	(Won)	583,555

- 17 -

Stock and equity investments accounted for using the equity method as of December 31, 2004 are summarized as follows (Unit: In millions):


	No. of shares	Ownership (%)	Acquisition cost		Net asset value		Book value
Domestic stocks
KB Investment Co., Ltd. (*1)	8,941,587	99.89	(Won)	155,311	(Won)	78,695	(Won)	78,695
KB Futures Co., Ltd. (*1)	3,999,200	99.98		19,996		26,010		26,010
KB Data System Co., Ltd. (*1)	799,800	99.98		7,998		15,827		15,827
KB Real Estate Trust	15,999,930	99.99		76,103		58,071		58,071
KB Asset Management (*1)	6,134,040	80.00		39,015		47,288		47,288
KB Credit Information	1,173,640	93.71		12,553		19,742		18,670
KB Life Insurance Co., Ltd. (*2)	6,000,000	100.00		30,246		24,389		8,572
KLB Securities Co., Ltd. (*3)	4,854,713	36.41		10,316		—		—
Jooeun Industrial Co., Ltd. (*3)	1,999,910	99.99		23,994		—		—
ING Life Insurance Korea	1,400,000	20.00		21,769		69,145		69,145

				397,301		339,167		322,278

Foreign stocks
Kookmin Bank Singapore Ltd. (*3)	30,000,000	100.00		21,204		—		1,812
Kookmin Finance Asia Ltd. (HK) (*3)	700,000	100.00		8,332		—		254
Kookmin Bank Int’l Ltd. (London)	20,000,000	100.00		39,539		55,707		55,707
Kookmin Bank Hong Kong Ltd. (*1)	2,000,000	100.00		55,385		65,028		65,028
Sorak Financial Holdings PTE Ltd.	1,422,216	25.00		77,810		82,153		82,153

				202,270		202,888		204,954

Equity investments
KICO No. 2 Venture Investment Partnership (*3)	5,000	55.56		—		213		213
KICO No. 3 Venture Investment Partnership (*3)	9,000	69.23		—		149		149
Pacific IT Investment Partnership	700	50.00		7,000		3,479		6,959
NPC02-4 Kookmin Venture Fund	100	33.33		10,000		10,179		10,179

				17,000		14,020		17,500

			(Won)	616,571	(Won)	556,075	(Won)	544,732

(*1)

Kookmin Investment Co., Ltd., Kookmin Futures Co., Ltd., Kookmin Data System Co., Ltd., Kookmin Assent Management and Kookmin Finance HK Ltd. changed their names into KB Investment Co., Ltd., KB Futures Co., Ltd., KB Data System Co., Ltd., KB Asset Management and Kookmin Bank Hong Kong Ltd., respectively, during 2004.

(*2)

On April 29, 2004, in order to establish the insurance business for diversification of revenues, the Bank invested (Won)30,246 million (including acquisition costs) to acquire ownership of KB Life Insurance Co., Ltd., which acquired the assets and the liabilities of Hanil Life Insurance Co., Ltd. The Bank disposed of 49% shares of KB Life Insurance Co., Ltd. to ING Insurance International B.V. for (Won)14,782 million. The difference between the disposal amount and the book value of (Won)10,583 million was reflected in the accumulative effect of equity method.

(*3)	KLB Securities Co., Ltd., Jooeun Industrial Co., Ltd., Kookmin Bank Singapore Ltd., Kookmin Finance Asia, Ltd., KICO No. 2 Venture Investment Partnership and KICO No. 3 Venture Investment Partnership are all in the process of liquidation.

- 18 -

(12) The valuation of securities accounted for using the equity method as of September 30, 2005 was as follows (Unit: In millions):


	Book value before valuation		Acquisition (disposal)			Dividend			Foreign currency translation gain (loss)			Equity gain (loss)on investment			Capital adjustments			Book value after valuation
Domestic stocks
KB Investment Co., Ltd.	(Won)	78,695	(Won)	1,437		(Won)	(447	)	(Won)	—		(Won)	3,704		(Won)	(215	)	(Won)	83,174
KB Futures Co., Ltd.		26,010		—			(400	)		—			1,340			—			26,950
KB Data System Co., Ltd. (*3)		15,827		3			(640	)		—			(2,219	)		3			12,974
KB Real Estate Trust		58,071		—			—			—			15,908			—			73,979
KB Asset Management		47,288		—			(6,134	)		—			8,839			175			50,168
KB Credit Information (*1)		18,670		1,399			(587	)		—			5,905			143			25,530
KB Life Insurance Co., Ltd. (*2, 3 and 4)		8,572		(4,200	)		—			—			(4,372	)		—			—
KLB Securities Co., Ltd. (*2)		—		—			—			—			—			—			—
Jooeun Industrial Co., Ltd. (*2)		—		—			—			—			—			—			—
ING Life Insurance Korea		69,145		—			(7,000	)		—			17,176			12,671			91,992

		322,278		(1,361	)		(15,208	)		—			46,281			12,777			364,767

Foreign stocks
Kookmin Bank Singapore Ltd.		1,812		—			—			(10	)		—			—			1,802
Kookmin Finance Asia Ltd. (HK)		254		—			—			(2	)		—			—			252
Kookmin Bank Int’l Ltd. (London)		55,707		—			—			(5,113	)		1,534			(132	)		51,996
Kookmin Bank Hong Kong Ltd.		65,028		—			—			(398	)		5,710			(519	)		69,821
Sorak Financial Holdings PTE Ltd.		82,153		—			—			(2,932	)		9,060			(11,314	)		76,967

		204,954		—			—			(8,455	)		16,304			(11,965	)		200,838

Equity Securities
KICO No. 2 Venture Investment Partnership		213		—			—			—			(28	)		—			185
KICO No. 3 Venture Investment Partnership		149		—			—			—			6			—			155
Pacific IT Investment Partnership		6,959		—			—			—			(1,847	)		—			5,112
NPC02-4 Kookmin Venture Fund		10,179		—			(199	)		—			2,518			—			12,498

		17,500		—			(199	)		—			649			—			17,950

	(Won)	544,732	(Won)	(1,361	)	(Won)	(15,407	)	(Won)	(8,455	)	(Won)	63,234		(Won)	812		(Won)	583,555

(*1)

Differences of ((Won)1,128 million) between the purchase price and the Bank’s proportionate ownership of the net book value of KB Credit Information resulting from an additional purchase of 342,844 shares in October 2004 are credited to gain on valuation of securities accounted for using the equity method for five years. The Bank credited (Won)169 million to current operation for the nine months ended September 30, 2005 and the balance was (Won)902 million as of September 30, 2005.

- 19 -

(*2)

The equity method is no longer applied to securities of KLB Securities Co., Ltd., KB Life Insurance Co., Ltd and Jooeun Industrial Co., Ltd. due to accumulated deficit resulting to the decrease of their book values below zero. The accumulated deficit, which was not recorded, is as follows (Unit: In millions):


	Amount
KLB Securities Co., Ltd.	(Won)	4,148
Jooeun Industrial Co., Ltd.		56,688
KB Life Insurance Co., Ltd.		7,378

	(Won)	68,214

(*3)	The unrealized income eliminated for the nine months ended September 30, 2005 as follows (Unit: In millions)


	Related accounts	Amount
KB Data System Co., Ltd.	Tangible assets (sales)	(Won)	3,968
KB Life Insurance Co., Ltd.	Commissions (deferred acquisition cost)		8,185

		(Won)	12,153

(13) Significant financial data of companies of which stocks were accounted for using the equity method as of and for the nine months ended September 30, 2005 were as follows (Unit: In millions):


	Assets		Liabilities		Sales		Net income (loss)
KB Investment Co., Ltd.	(Won)	86,274	(Won)	3,096	(Won)	13,935	(Won)	3,706
KB Futures Co., Ltd.		40,601		13,645		7,885		1,343
KB Data System Co., Ltd.		24,201		7,295		31,544		1,712
KB Real Estate Trust		176,193		102,239		41,849		15,883
KB Asset Management		67,610		4,900		24,906		11,410
KB Credit Information		36,969		10,419		54,844		6,090
KB Life Insurance Co., Ltd.		306,720		280,246		178,698		7,477
ING Life Insurance Korea		6,405,346		5,945,385		2,135,162		85,879
Kookmin Bank Int’l Ltd. (London)		294,734		242,738		10,612		1,534
Kookmin Bank Hong Kong Ltd.		406,880		337,111		13,942		5,622
Sorak Financial Holdings PTE Ltd.		4,486,151		4,178,285		359,331		32,047
KICO No. 2 Venture Investment Partnership		332		—		4		(51	)
KICO No. 3 Venture Investment Partnership		223		—		8		8
Pacific IT Investment Partnership		5,122		10		84		(127	)
NPC02-4 Kookmin Venture Fund		37,495		—		7,760		7,495

Unaudited financial statements as of September 30, 2005 were used for the equity method valuation. There was no material exception as a result of analytical review, such as analysis of major accounts to assess reliability of those financial statements. However, for ING Life Insurance Korea and Sorak Financial Holdings PTE Ltd., unaudited financial statements as of August 31, 2005 and December 31, 2004, respectively, were used for the equity method valuation. The significant events from the closing dates of investees’ to that of the Bank were properly reflected in applying the equity method.

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(14) Changes in the gain (loss) on valuation of available-for-sale securities, held-to-maturity securities and securities accounted for using the equity method reflected in capital adjustments for the nine months ended September 30, 2005 were as follows (Unit: In millions):


	2004		Increase (Decrease)		Disposal			Deferred income tax			2005
Gain (loss) on valuation of available-for-sale securities
Equity securities	(Won)	277,984	(Won)	76,940	(Won)	(30,566	)	(Won)	(89,198	)	(Won)	235,160
Debt securities in local currency		140,767		9,096		(68,503	)		3,519			84,879
Debt securities in foreign currencies		16,658		997		(6,644	)		(3,028	)		7,983
Beneficiary certificates		268,842		5,199		(266,728	)		(2,011	)		5,302
Others		3,236		10		—			(893	)		2,353

		707,487		92,242		(372,441	)		(91,611	)		335,677

Gain (loss) on valuation of held-to- maturity securities
Debt securities in local currency	(Won)	—	(Won)	952	(Won)	(356	)	(Won)	—		(Won)	596

Gain (loss) on valuation of securities accounted for using the equity method	(Won)	5,692	(Won)	812	(Won)	10,672		(Won)	(3,393	)	(Won)	13,783

During the nine months ended September 30, 2005, the Bank received cash and government securities in connection with the liquidation of certain private beneficiary certificates, which were classified as available-for-sale securities. With respect to the classification of the government securities received amounting to (Won)60,091 million, the Bank initially classified the securities into available-for-sale securities; however, the Bank’s management determined to hold the securities up to the maturity date. In accordance with the change of management intention for the securities, the Bank reclassified the securities into held-to-maturity securities along with the fair market valuation at the classification date. As part of this reclassification, the Bank also reclassified unrealized gains and losses recognized from the acquisition date to the reclassification date in the capital adjustments into unrealized gain and losses of held-to maturity securities, and amortized that amount using the effective interest rate method. The amortized amount is charged to interest income or expense for the remaining period until maturity.

(15) Securities provided as collateral as of September 30, 2005 were as follows (Unit: In millions):


Provided to	Book value		Collateral amount		Provided for
Korea Securities Depository & others	(Won)	5,999,237	(Won)	6,000,000	Bonds sold under repurchase agreements
BOK		1,125,239		1,120,000	Borrowings from BOK
BOK		332,892		332,000	Overdrafts and settlement risk
Samsung Futures & others		225,093		232,500	Derivative settlement
Korea Securities Depository		285,385		289,000	Others

	(Won)	7,967,846	(Won)	7,973,500

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5. LOANS:

(1) Loans as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005			2004
Loans in local currency	(Won)	118,936,662		(Won)	122,721,898

Loans in foreign currencies		5,117,303			3,860,828
Bills bought in local currency		19,479			27,096
Bills bought in foreign currencies		1,282,382			574,785
Advances for customers		15,513			32,120
Factoring receivables		32,167			32,335
Credit card receivables		7,077,780			7,643,990
Private placed bonds		2,014,903			1,203,631
Call loans		2,397,094			2,741,783
Loans to be swapped to equity		313			746

		136,893,596			138,839,212
Allowance for possible loan losses		(2,754,582	)		(3,118,775	)
Deferred loan origination fees and costs		50,921			48,889

	(Won)	134,189,935		(Won)	135,769,326

(2) Loans in local currency and loans in foreign currencies as of September 30, 2005 and December 31, 2004 were follows (Unit: In millions):

Loans in local currency


	2005		2004
Commercial
Working capital loans
General purpose loans	(Won)	24,141,447	(Won)	25,475,710
Notes discounted		894,769		1,197,606
Overdraft accounts		485,410		401,369
Trading notes		742,213		740,580
Others		3,968,016		3,862,852

		30,231,855		31,678,117

Facilities loans
General facilities loans		4,267,505		5,139,091
Others		1,111,949		1,147,656

		5,379,454		6,286,747

		35,611,309		37,964,864

Households
General purpose loans		41,839,136		41,957,690
Housing loans		40,241,805		41,234,086
Remunerations on mutual installment savings		241,216		300,032
Others		487,814		532,615

		82,809,971		84,024,423

Public sector loans
Public operation loans		469,381		673,456
Public facilities loans		34,573		40,383

		503,954		713,839

Other loans
Property formation loans		7,094		9,719
Inter-bank loans		2,098		6,114
Others		2,236		2,939

		11,428		18,772

	(Won)	118,936,662	(Won)	122,721,898

- 22 -

Loans in foreign currencies


	2005		2004
Domestic funding loans	(Won)	1,733,355	(Won)	1,000,004
Overseas funding loans		509,908		489,437

Inter-bank loans	(Won)	1,479,979	(Won)	1,092,174
Domestic usance bills		1,393,871		1,278,793
Government funding loans		190		420

	(Won)	5,117,303	(Won)	3,860,828

(3) Loans in local currency and loans in foreign currencies, classified by borrower type, as of September 30, 2005 were as follows (Unit: In millions):


	Loans in local currency		Loans in foreign currencies		Total		Percentage (%)
Large corporations	(Won)	3,143,038	(Won)	3,248,255	(Won)	6,391,293	5.1
Small and medium corporations		32,470,368		1,372,242		33,842,610	27.3
Households		82,819,302		—		82,819,302	66.8
Public sector and other		503,954		30,102		534,056	0.4
Overseas branches		—		466,704		466,704	0.4

	(Won)	118,936,662	(Won)	5,117,303	(Won)	124,053,965	100.0

Loans in local currency and loans in foreign currencies, classified by borrower type, as of December 31, 2004 were as follows (Unit: In millions):


	Loans in local currency		Loans in foreign currencies		Total		Percentage (%)
Large corporations	(Won)	2,842,731	(Won)	2,299,149	(Won)	5,141,880	4.1
Small and medium corporations		35,128,246		1,115,049		36,243,295	28.6
Households		84,037,082		—		84,037,082	66.4
Public sector and other		713,839		17,833		731,672	0.6
Overseas branches		—		428,797		428,797	0.3

	(Won)	122,721,898	(Won)	3,860,828	(Won)	126,582,726	100.0

(4) Loans in local currency, loans in foreign currencies and others, classified by borrower’s country, as September 30, 2005 were as follows (Unit: In millions):


	Loans in local currency		Loans in foreign currencies		Others		Total		Percentage (%)
Korea	(Won)	118,936,662	(Won)	3,923,066	(Won)	12,719,591	(Won)	135,579,319	99.0
China		—		370,915		45,195		416,110	0.3
Southeast Asia		—		38,888		—		38,888	0.0
Japan		—		262,138		87		262,225	0.2
Central and South America		—		241,835		23		241,858	0.2
Others		—		280,461		74,735		355,196	0.3

	(Won)	118,936,662	(Won)	5,117,303	(Won)	12,839,631	(Won)	136,893,596	100.0

Loans in local currency, loans in foreign currencies and others, classified by borrower’s country, as December 31, 2004 were as follows (Unit: In millions):

- 23 -


	Loans in local currency		Loans in foreign currencies		Others		Total		Percentage (%)
Korea	(Won)	122,721,898	(Won)	2,622,653	(Won)	12,060,578	(Won)	137,405,129	99.0
Southeast Asia		—		700,600		186,753		887,353	0.6
China		—		135,118		—		135,118	0.1
Japan		—		278,971		—		278,971	0.2
Central and South America		—		53,452		45		53,497	0.0
Others		—		70,034		9,110		79,144	0.1

	(Won)	122,721,898	(Won)	3,860,828	(Won)	12,256,486	(Won)	138,839,212	100.0

(5) Loans in local currency, loans in foreign currencies and others, classified by industry, as of September 30, 2005 were as follows (Unit: In millions):


	Loans in local currency		Loans in foreign currencies		Others		Total		Percentage (%)
Corporations
Finance and insurance	(Won)	913,193	(Won)	1,571,279	(Won)	2,804,526	(Won)	5,288,998	3.8
Manufacturing		12,061,199		1,844,401		2,201,880		16,107,480	11.8
Services		18,601,288		768,698		1,004,436		20,374,422	14.9
Others		4,228,389		835,789		497,014		5,561,192	4.0
Households		82,819,302		60,825		6,328,679		89,208,806	65.2
Public sector		313,291		36,311		3,096		352,698	0.3

	(Won)	118,936,662	(Won)	5,117,303	(Won)	12,839,631	(Won)	136,893,596	100.0

Loans in local currency, loans in foreign currencies and others, classified by industry, as of December 31, 2004 were as follows (Unit: In millions):


	Loans in local currency		Loans in foreign currencies		Others		Total		Percentage (%)
Corporations
Finance and insurance	(Won)	689,007	(Won)	1,150,426	(Won)	3,837,500	(Won)	5,676,933	4.1
Manufacturing		12,315,767		1,146,217		1,721,775		15,183,759	10.9
Services		21,240,715		1,422,823		487,968		23,151,506	16.7
Others		4,114,249		71,921		94,863		4,281,033	3.1
Households		84,037,082		69,441		6,114,380		90,220,903	65.0
public sector		325,078		—		—		325,078	0.2

	(Won)	122,721,898	(Won)	3,860,828	(Won)	12,256,486	(Won)	138,839,212	100.0

(6) Loans to financial institutions as of September 30, 2005 were as follows (Unit: In millions):


	Bank		Other financial institutions		Total
Loans in local currency	(Won)	2,098	(Won)	911,095	(Won)	913,193
Loans in foreign currencies		1,505,929		65,350		1,571,279
Others		2,452,580		351,946		2,804,526

	(Won)	3,960,607	(Won)	1,328,391	(Won)	5,288,998

Loans to financial institutions as of December 31, 2004 were as follows (Unit: In millions):


	Bank		Other financial institutions		Total
Loans in local currency	(Won)	6,114	(Won)	682,893	(Won)	689,007
Loans in foreign currencies		1,092,174		58,252		1,150,426
Others		2,806,712		1,030,788		3,837,500

	(Won)	3,905,000	(Won)	1,771,933	(Won)	5,676,933

- 24 -

(7) Loans to LG Card Co., Ltd.

LG Card Co., Ltd. has been supported with (Won)437,000 million by the Bank in accordance with the agreement of the Financial Institution Creditors (“FIC”) on November 24, 2003 due to its significant financial difficulties in liquidity. Also, in accordance with FIC’s agreement, the Bank agreed to support new loan of (Won)205,900 million and exercise debt-equity swap of (Won)518,600 million. The Bank exercised the first debt-equity swap of (Won)156,350 million (loans of (Won)145,950 million and corporate bonds of (Won)10,400 million) on February 13, 2004, and exercised another debt-equity swap of (Won)362,250 million (loans of (Won)348,364 million and corporate bonds of (Won)13,886 million) after the capital reduction of 43.4:1 in May 2004. In addition, the Bank invested (Won)75,800 million of cash on the common shares of LG Card Co., Ltd. based on FIC’s agreement in January 2005, and LG Card Co., Ltd. reduced capital stock at the rate of 5.5:1 in March 2005. As a result of the transactions above, the Bank has loans of (Won)237,900 million and securities of (Won)311,086 million to LG Card Co., Ltd. as of September 30, 2005. The Bank has provided an allowance for loan losses of (Won)45,201 million and valuation gain on the securities of (Won)108,677 million is included in capital adjustments as of September 30, 2005.

The expected losses from loans to LG Card Co., Ltd. are fully dependent on the rehabilitation plan and an effective funding support from the FIC. Therefore, actual credit losses from this credit exposure may differ from management’s current assessment. The accompanying financial statements do not include any possible adjustments that may result from this uncertainty.

(8) Loans applicable to the Corporate Restructuring Promotion Act

As of September 30, 2005, the Bank has loans of (Won)148,890 million to companies under the Corporate Restructuring Promotion Act, including Hyundai Engineering & Construction Co., Ltd., and has provided an allowance of (Won)31,579 million for possible loan losses. The actual collection amounts from those loans may differ from management’s current estimation.

(9) The classification of asset quality for loans, net of present value discount as of September 30, 2005 is summarized as follows (Unit: In millions):


	Normal		Precautionary		Substandard		Doubtful		Loss		Total
Loans in local currency	(Won)	113,004,287	(Won)	3,598,544	(Won)	1,025,449	(Won)	854,630	(Won)	453,752	(Won)	118,936,662
Loans in foreign currencies		4,995,199		68,745		21,091		31,053		1,215		5,117,303
Bills bought in local or foreign currencies		1,289,760		10,679		25		420		977		1,301,861
Advances for customers		1,616		1,877		400		3,650		7,970		15,513
Credit card receivables		6,474,524		392,103		535		155,485		55,133		7,077,780
Call loans		2,397,094		—		—		—		—		2,397,094
Privately placed bonds		1,991,080		16,790		1,874		5,091		68		2,014,903
Factoring receivables		31,002		—		1,165		—		—		32,167
Loans to be swapped to equity securities		—		—		—		313		—		313

	(Won)	130,184,562	(Won)	4,088,738	(Won)	1,050,539	(Won)	1,050,642	(Won)	519,115	(Won)	136,893,596

- 25 -

The classification of asset quality for loans, net of present value discount as of December 31, 2004 is summarized as follows (Unit: In millions):


	Normal		Precautionary		Substandard		Doubtful		Loss		Total
Loans in local currency	(Won)	114,439,619	(Won)	5,222,736	(Won)	1,710,889	(Won)	1,019,763	(Won)	328,891	(Won)	122,721,898
Loans in foreign currencies		3,645,049		158,672		25,015		30,199		1,893		3,860,828
Bills bought in local or foreign currencies		585,927		9,569		650		2,698		3,037		601,881
Advances for customers		964		2,978		883		6,669		20,626		32,120
Credit card receivables		6,609,976		686,457		539		298,093		48,925		7,643,990
Call loans		2,741,783		—		—		—		—		2,741,783
Privately placed bonds		1,195,825		826		3,076		3,836		68		1,203,631
Factoring receivables		30,802		—		516		992		25		32,335
Loans to be swapped to equity securities		—		—		—		746		—		746

	(Won)	129,249,945	(Won)	6,081,238	(Won)	1,741,568	(Won)	1,362,996	(Won)	403,465	(Won)	138,839,212

(10) The term structure of loans as of September 30, 2005 was as follows (Unit: In millions):


	Loans in local currency		Loans in foreign currencies		Others		Total
Less than 3 months	(Won)	20,540,507	(Won)	2,352,037	(Won)	9,201,682	(Won)	32,094,226
Less than 6 months		14,202,872		767,938		653,430		15,624,240
Less than 1 year		32,183,721		943,403		876,321		34,003,445
Less than 2 years		16,211,444		282,055		539,767		17,033,266
Less than 3 years		10,252,956		272,604		686,181		11,211,741
Less than 4 years		3,825,514		91,543		46,479		3,963,536
Less than 5 years		4,963,084		120,322		83,923		5,167,329
More than 5 years		16,756,564		287,401		751,848		17,795,813

	(Won)	118,936,662	(Won)	5,117,303	(Won)	12,839,631	(Won)	136,893,596

The term structure of loans as of December 31, 2004 was as follows (Unit: In millions):


	Loans in local currency		Loans in foreign currencies		Others		Total
Less than 3 months	(Won)	19,085,485	(Won)	874,100	(Won)	8,648,235	(Won)	28,607,820
Less than 6 months		17,430,180		1,047,044		817,269		19,294,493
Less than 1 year		35,029,206		906,882		1,467,543		37,403,631
Less than 2 years		19,972,984		181,903		629,951		20,784,838
Less than 3 years		11,900,101		190,361		480,695		12,571,157
Less than 4 years		2,637,763		85,984		63,633		2,787,380
Less than 5 years		3,956,310		67,973		49,160		4,073,443
More than 5 years		12,709,869		506,581		100,000		13,316,450

	(Won)	122,721,898	(Won)	3,860,828	(Won)	12,256,486	(Won)	138,839,212

- 26 -

(11) Sales of loans

Under the joint collection program of financial institutions, the Bank has sold (Won)189,473 million of certain loans to Hee Mang Moa Special Purpose Company and has recognized gain and loss of (Won)7,254 million and (Won)396 million, respectively. The Bank has also sold (Won)31,508 million of loans to KAMCO under the credit support program for lower income people and recognized gain and loss of (Won)259 million and (Won)1,675 million, respectively. In addition, the Bank has sold (Won)399,864 million of loans to KB 4^th SPC and (Won)512,348 million of loans to KB 5^th SPC and recognized (Won)63,797 million and (Won)8,361 million of gain on sale of loans, respectively. Other than these transactions discussed above, the Bank had 2 more loan sale transactions by which the Bank has recorded (Won)264 million of gain on sale of loans and (Won)25 million of loss on sale of loans. The loan amounts presented in the above are the original principal amount without any deduction of allowance or write-offs.

In connection with the sale of loans, the Bank has changed the accounting policy regarding the recognition of gain or loss from the sale of loans. Previously, for the sale of loans previously written off, the Bank offset the proceeds from the sale of the loans directly against allowance for possible loan losses, and for the sale of non-written off loans, the Bank recognized the proceeds in excess or less than the book value of the loans as gain or loss from the sale of loans. From the third quarter of 2004, the Bank adopted the same accounting policy for the sale of written off loans as that for the sale of non-written loans.

(12) Credit card receivables as collateral

The Bank offers the credit card receivables amounting to (Won)757,513 million (before deducting the allowance) as collateral for the transaction of credit card receivables to SPC as of September 30, 2005.

(13) The changes in loan origination costs for the nine months ended September 30, 2005 were as follows (Unit: In millions):


	2004		Increase	Decrease	2005
Loan origination costs	(Won)	48,889	10,209	8,177	(Won)	50,921

6. RESTRUCTURING LOANS:

(1) The loans that were restructured by means of principal reduction, debt-equity swap, interest reduction because of court receiverships, compositions and workouts for the nine months ended September 30, 2005 were as follows (Unit: In millions):


	Amount before restructuring		Principal exemption	Conversion to equity securities	Interest reduction	Extension of maturity
Court receivership	(Won)	1,778	172	313	—	(Won)	1,293
Composition		902	—	—	—		902
Workout plan		81,385	—	—	20		81,365

	(Won)	84,065	172	313	20	(Won)	83,560

(2) Changes in the present value discounts relating to the outstanding restructured loans for the nine months ended September 30, 2005 were as follows (Unit: In millions):


				Present value discounts
	Discount rates (%)	Amount		Beginning balance		Addition		Deduction			Ending balance
Workout plan	6.0 ~ 23.3	(Won)	111,658	(Won)	6,562	(Won)	9,394	(Won)	(7,104	)	(Won)	8,852
Composition	4.9 ~ 19.9		14,981		3,200		812		(3,094	)		918
Court receivership	5.9 ~ 21.0		48,956		6,126		534		(2,399	)		4,261
Others	9.5		30,802		6,223		15		(1,488	)		4,750

		(Won)	206,397	(Won)	22,111	(Won)	10,755	(Won)	(14,085	)	(Won)	18,781

- 27 -

If the loans are restructured by means of reduction of interest rates, cash flows of fixed rate loans are discounted by effective interest rates originally agreed upon and cash flows of floating rate loans are discounted by interest rates determined by adding a credit risk premium, which is calculated at the restructuring date, assuming that debtors’ credit at the origination date is effective to the restructuring date, to a benchmark interest rate. The difference between the book value and the present value is presented as an allowance for possible loan losses.

7. ALLOWANCE FOR POSSIBLE LOAN LOSSES:

(1) The allowance for possible loan losses as of September 30, 2005 is summarized as follows (Unit: In millions):


	Normal		Precautionary		Substandard		Doubtful		Estimated loss		Total
Loans in local currency	(Won)	776,622	(Won)	391,246	(Won)	212,706	(Won)	561,974	(Won)	453,752	(Won)	2,396,300
Loans in foreign currencies		17,677		3,892		7,515		19,644		1,215		49,943
Bills bought in local currency / Bills bought in foreign currencies		6,449		703		5		293		977		8,427
Advances for customers		8		311		80		2,013		7,970		10,382
Credit card receivables		64,745		47,052		107		100,783		55,133		267,820
Privately placed bonds		9,955		542		918		5,031		68		16,514
Factoring receivables		4,650		—		233		—		—		4,883

Loans to be swapped to equity securities		—		—		—		313		—		313

	(Won)	880,106	(Won)	443,746	(Won)	221,564	(Won)	690,051	(Won)	519,115	(Won)	2,754,582

The allowance for possible loan losses as of December 31, 2004 is summarized as follows (Unit: In millions):


	Normal		Precautionary		Substandard		Doubtful		Estimated loss		Total
Loans in local currency	(Won)	781,650	(Won)	476,391	(Won)	357,321	(Won)	678,256	(Won)	328,891	(Won)	2,622,509
Loans in foreign currencies		13,061		13,316		8,428		18,413		1,893		55,111
Bills bought in local currencies / Bills bought in foreign currencies		2,930		393		130		1,990		3,037		8,480
Advances for customers		5		621		176		4,873		20,626		26,301
Credit card receivables		66,100		82,375		108		195,214		48,925		392,722
Privately placed bonds		5,979		189		1,159		3,816		68		11,211
Factoring receivables		585		—		103		982		25		1,695
Loans to be swapped to equity securities		—		—		—		746		—		746

	(Won)	870,310	(Won)	573,285	(Won)	367,425	(Won)	904,290	(Won)	403,465	(Won)	3,118,775

- 28 -

(2) The changes in allowance for possible loan losses for the nine months ended September 30, 2005 and for the year ended December 31, 2004 were as follows (Unit: In millions):


	2005			2004
Beginning balance	(Won)	3,186,095		(Won)	3,948,736
Provision for possible loan losses		967,867			3,068,248
Reclassification from other allowances (*1)		6,450			289,919
Collection of previously written-off loans		339,756			286,464
Repurchase of NPLs sold		15,910			40,571
Sales of loans		(173,667	)		(685,161	)
Loans written-off		(1,511,058	)		(5,260,962	)
Reversal of write-off due to sale of loans		—			1,878,832
Conversion to equity securities		(11,131	)		(327,816	)
Exemption of loans		(8,768	)		(32,847	)
Changes in exchange rates and others		(2,988	)		(19,889	)

Ending balance (*2)	(Won)	2,808,466		(Won)	3,186,095

(*1)	Other allowances for credit lines to Kookmin Credit Card 16th ABS Specialty Company amounting to (Won)6,450 million were transferred to allowances for loan losses.

(*2)	Allowance for possible loan losses includes present value discounts amounting to (Won)18,781 million and (Won)22,111 million as of September 30, 2005 and December 31, 2004, respectively, and allowances for other assets amounting to (Won)53,884 million and (Won) 67,320 million, respectively.

(3) The allowance for possible losses on other assets as of September 30, 2005 is summarized as follows (Unit: In millions):


	2005		2004
Account receivables	(Won)	421	(Won)	95
Suspense receivables		26,571		38,952
Uncollected guarantee deposits for rent		7,774		9,295
Settlement costs for financial accident (*)		16,797		15,495
Derivative instruments		2,231		3,209
Other loans of Kookmin Credit Card		90		274

	(Won)	53,884	(Won)	67,320

(*)

The allowance for possible losses for the settlement cost for financial accident includes the provision for possible losses resulting from the misappropriation by the Bank’s employees. As of September 30, 2005, the total cost resulting from the employees’ misappropriation was (Won)13,231 million (80 cases) and the Bank entirely provided allowance for losses for the total costs.

(4) The allowance for possible loan losses compared to total loans, net of present value discounts, is summarized as follows (Unit: In millions):


	Loans		Allowance for possible loan losses		Percentage (%)
September 30, 2005	(Won)	136,893,596	(Won)	2,754,582	2.01
December 31, 2004		138,839,212		3,118,775	2.25
September 30, 2004		145,614,649		3,565,052	2.45
December 31, 2003		145,040,449		3,910,044	2.70
December 31, 2002		129,139,699		2,396,157	1.86

- 29 -

8. FIXED ASSETS:

(1) Fixed assets as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005			2004
Tangible assets	(Won)	3,598,059		(Won)	3,594,903
Less: accumulated depreciation		(1,557,486	)		(1,428,586	)
Accumulated impairment loss		(1,267	)		(2,296	)
Intangible assets		418,021			468,958
Non-business use property		273			492
Less: valuation allowance		(148	)		(253	)

	(Won)	2,457,452		(Won)	2,633,218

(2) Tangible assets as of September 30, 2005 consisted of (Unit: In millions):


	Acquisition cost		Accumulated depreciation		Accumulated impairment losses		Book value
Land	(Won)	989,316	(Won)	—	(Won)	488	(Won)	988,828
Buildings		922,539		154,899		779		766,861
Leasehold improvements		178,146		137,092		—		41,054
Equipment and vehicles		1,503,923		1,265,495		—		238,428
Construction in progress		4,135		—		—		4,135

	(Won)	3,598,059	(Won)	1,557,486	(Won)	1,267	(Won)	2,039,306

Tangible assets as of December 31, 2004 consisted of (Unit: In millions):


	Acquisition cost		Accumulated depreciation		Accumulated impairment losses		Book value
Land	(Won)	999,021	(Won)	—	(Won)	1,306	(Won)	997,715
Buildings		914,968		140,114		990		773,864
Leasehold improvements		174,425		123,907		—		50,518
Equipment and vehicles		1,505,247		1,164,565		—		340,682
Construction in progress		1,242		—		—		1,242

	(Won)	3,594,903	(Won)	1,428,586	(Won)	2,296	(Won)	2,164,021

(3) The changes in book value of tangible assets for the nine months ended September 30, 2005 consisted of (Unit: In millions):


	Beginning		Acquisition		Replacement			Disposal		Deprecia- tion		Others		Change in foreign currencies			Ending
Land	(Won)	997,715	(Won)	—	(Won)	—		(Won)	8,837	(Won)	—	(Won)	—	(Won)	(50	)	(Won)	988,828
Buildings		773,864		—		11,470			3,214		15,313		—		54			766,861
Leasehold improvements		50,518		—		14,704			1,950		22,197		—		(21	)		41,054
Equipment and vehicles		340,682		45,127		—			2,481		144,578		—		(322	)		238,428
Construction in progress		1,242		29,067		(26,174	)		—		—		—		—			4,135

	(Won)	2,164,021	(Won)	74,194	(Won)	—		(Won)	16,482	(Won)	182,088	(Won)	—	(Won)	(339	)	(Won)	2,039,306

- 30 -

(4) The published value of land was (Won)1,063,366 million and (Won)832,294 million as of September 30, 2005 and December 31, 2004, respectively, based on the Laws on Disclosure of Land Price and Valuation of Land.

(5) Tangible assets, which have been insured as of September 30, 2005, are as follows (Unit: In millions):


Type of insurance	Asset insured	Book value		Insured amount		Insurance company
Property composite	Buildings	(Won)	766,861	(Won)	620,826	Samsung Fire & Marine Insurance Co., Ltd. & others
	Leasehold improvements		41,054		47,603
	Equipment and vehicles		242,563		187,701

		(Won)	1,050,478	(Won)	856,130

(6) Intangible assets as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	Acquisition cost		Accumulated amortization		Book value
Goodwill	(Won)	705,108	(Won)	306,852	(Won)	398,256
Development costs		17,438		10,780		6,658
others		16,328		3,221		13,107

	(Won)	738,874	(Won)	320,853	(Won)	418,021

(7) The changes in intangible assets for the nine months ended September 30, 2005 were as follows (Unit: In millions):


	Beginning		Increase		Amortization		Ending
Goodwill	(Won)	457,015	(Won)	—	(Won)	58,759	(Won)	398,256
Development costs		9,274		—		2,616		6,658
Others		2,669		11,255		817		13,107

	(Won)	468,958	(Won)	11,255	(Won)	62,192	(Won)	418,021

9. OTHER ASSETS:

(1) Other assets as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005			2004
Guarantee deposits paid	(Won)	1,197,179		(Won)	1,290,891
Accounts receivable		4,249,968			2,343,617
Accrued income		951,684			971,170
Advanced payments		72,284			96,949
Prepaid expenses		45,791			205,923
Deferred income tax assets (Note 24)		498,978			502,937
Derivatives assets		1,141,440			2,391,984
Receivables from inter-bank fund transfer		353,003			520,612
Sundry assets		36,120			39,401
Allowances		(53,884	)		(67,320	)

	(Won)	8,492,563		(Won)	8,296,164

- 31 -

(2) Sundry assets as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005		2004
Receivables on cash sent to other banks	(Won)	—	(Won)	680
Supplies		14,281		16,036
Deposit money to court(*)		21,445		22,354
Asset disposal receivables		361		299
others		33		32

	(Won)	36,120	(Won)	39,401

(*)	Securities is included in deposit money to court of which book value, face value and fair value are (Won)9,036 million, (Won) 9,910 million and (Won)11,066 million, respectively.

10. DEPOSITS:

(1) Deposits as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005		2004
Deposits in local currency	(Won)	117,668,270	(Won)	120,664,582
Deposits in foreign currencies		1,447,412		1,434,061
Certificates of deposits		5,360,040		4,911,891

	(Won)	124,475,722	(Won)	127,010,534

(2) Deposits in local currency and deposits in foreign currencies as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	Interest rate (%)	2005		2004
Demand deposits in local currency
Checking deposits	—	(Won)	107,789	(Won)	110,967
Household checking deposits	0.10		415,865		417,443
Temporary deposits	—		3,482,247		2,858,688
Passbook deposits	0.10		11,856,204		10,767,705
Public fund deposits	0.10		362,968		157,840
National Treasury deposits	—		18,350		1,840
Nonresident’s deposit in local currency	0.10		19,841		24,301

			16,263,264		14,338,784

Time deposits and savings deposits in local currency
Time deposits	2.20 ~ 3.70		59,717,039		62,835,217
Installment savings deposits	2.95 ~ 3.50		1,201,601		1,249,939
Property formation savings	8.50		1,373		1,516
Workers’ savings for housing	8.50 ~ 11.50		27		49
Time and savings deposits of non residents in local currency	2.20 ~ 3.70		225,825		263,671
General savings deposits	0.10 ~ 2.70		19,275,482		19,120,739
Corporate savings deposits	0.10 ~ 2.60		7,058,854		7,358,107
Long-term savings deposits for workers	11.50 ~ 12.00		14,967		39,104
Long-term housing savings deposits	4.10		2,190, 561		1,663,366
Long-term savings for households	11.00		10,139		20,108
Workers’ preferential savings deposits	5.35		1,492,178		2,171,785
Mutual installment deposits	2.65 ~ 3.50		5,445,696		6,306,923
Mutual installment for housing	2.20 ~ 3.40		4,772,060		5,295,274

- 32 -


	Interest rate (%)	2005			2004
			101,405,802			106,325,798
Gain on derivatives of fair value hedge			(796	)		—

		(Won)	117,668,270		(Won)	120,664,582

Demand deposits in foreign currencies
Checking deposits	—	(Won)	47,480		(Won)	37,137
Passbook deposits	0.5		659,051			663,261
Notice deposits	0.87~5.74		247			276
Temporary deposits	—		5,629			1,315

			712,407			701,989

Time deposits and savings deposits in foreign currencies
Time deposits	0.10~7.20		731,511			729,950
Installment savings deposits	5.00~6.50		608			662
Others	—		2,886			1,460

			735,005			732,072

		(Won)	1,447,412		(Won)	1,434,061

- 33 -

(3) Deposits with financial institutions as of September 30, 2005 and December 31, 2004 were as follows (Unit: In millions):


	Financial institutions	2005		2004
Deposits in local currency	Banks	(Won)	823,961	(Won)	1,683,255
	Others		7,613,519		5,240,889

			8,437,480		6,924,144

Negotiable certificates of deposits	Others		170,000		110,000

		(Won)	8,607,480	(Won)	7,034,144

(4) Term structure of deposits in local currency and deposits in foreign currencies was as follows (Unit: In millions):


	Less than 3 months		Less than 6 months		Less than 1 year		Less than 3 years		More than 3 years		Total
Deposits in local currency	(Won)	69,191,303	(Won)	12,372,629	(Won)	25,836,327	(Won)	7,837,714	(Won)	2,430,297	(Won)	117,668,270
Deposits in foreign currencies		1,266,828		101,638		73,898		5,048		—		1,447,412
Certificate of deposits		2,803,450		1,305,043		1,251,178		369		—		5,360,040

	(Won)	73,261,581	(Won)	13,779,310	(Won)	27,161,403	(Won)	7,843,131	(Won)	2,430,297	(Won)	124,475,722

11. BORROWINGS:

(1) Borrowings as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005		2004
Borrowings in local currency	(Won)	2,642,879	(Won)	2,945,237
Borrowings in foreign currencies		3,736,722		2,540,260
Bonds sold under repurchase agreements		5,679,089		3,449,445
Bills sold		579,572		41,988
Due to BOK in foreign currencies		873		2,007
Call money		1,594,174		655,359

	(Won)	14,233,309	(Won)	9,634,296

(2) Borrowings in local currency as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


Account	Financial institution	Annual interest rate (%)	2005		2004
Borrowings from the Bank of Korea	BOK	2.00	(Won)	664,448	(Won)	920,144
Borrowings from the Korean government	Ministry of Finance and Economy, and others	0.00 ~ 8.00		650,480		697,772
Borrowings from banking institutions	Industrial Bank of Korea	2.95 ~ 6.00		127,233		158,245
Borrowings from National Housing Fund	National housing fund	8.00		2,279		2,986
Borrowings from other financial institutions	Korea Development Bank	2.00 ~ 4.00		4,445		5,227
Other borrowings	Small Business Corporation and others	1.25 ~ 7.00		1,193,994		1,160,863

			(Won)	2,642,879	(Won)	2,945,237

- 34 -

(3) Borrowings in foreign currencies as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


Account	Financial institution	Annual interest rates (%)	2005		2004
Due to banks	First Union National Bank and others	0.00 ~ 3.79	(Won)	55,121	(Won)	27,463
Borrowings from banking institutions	Sumitomo Mitsui Banking Co., Ltd. and others	0.07 ~ 5.07		2,080,964		991,363
Off-shore borrowings in foreign currencies	ABN AMRO and others	0.31 ~ 4.08		659,648		663,993
Other borrowings from banking institutions	IBRD	4.32		10,724		13,882
Other borrowings in foreign currencies	Person, organization & corporations	0.00 ~ 6.12		930,265		843,559

			(Won)	3,736,722	(Won)	2,540,260

(4) Bonds sold under repurchase agreements, bills sold and due to BOK in foreign currencies as of September 30, 2005 and December 31, 2004 consisted of the following (Unit: In millions):


Account	Financial institution	Annual interest rates (%)	2005		2004
Bonds sold under repurchase agreements in local currency	Person, Group, Corporations	2.50 ~ 3.50	(Won)	5,679,089	(Won)	3,449,445
Bills sold	Teller’s Sales	2.90 ~ 3.35		579,572		41,988
Due to the Bank of Korea in foreign currencies	BOK	3.41 ~ 4.02		873		2,007

			(Won)	6,259,534	(Won)	3,493,440

(5) Call money as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


Account	Financial institution	Annual interest rates (%)	2005		2004
Local currency	Samsung Life Insurance Co., Ltd. and others	2.75 ~ 3.15	(Won)	1,400,500	(Won)	638,500
Foreign currencies	Bank of New Zealand and others	3.73 ~ 7.25		193,674		13,685
Inter-bank borrowings		—		—		3,174

			(Won)	1,594,174	(Won)	655,359

(6) Borrowings in local currency, borrowings in foreign currencies and others with financial institutions as of September 30, 2005 and December 31, 2004 were as follows (Unit: In millions):


	2005								2004
	Local currency		Foreign currencies		Due to BOK & Call Money		Total		Local currency		Foreign currencies		Due to BOK & Call Money		Total
BOK	(Won)	664,448	(Won)	—	(Won)	873	(Won)	665,321	(Won)	920,144	(Won)	—	(Won)	2,007	(Won)	922,151
Banks		127,233		2,136,085		193,674		2,456,992		158,245		1,684,978		13,685		1,856,908
Others		4,445		10,724		1,400,500		1,415,669		5,227		13,882		638,500		657,609

	(Won)	796,126	(Won)	2,146,809	(Won)	1,595,047	(Won)	4,537,982	(Won)	1,083,616	(Won)	1,698,860	(Won)	654,192	(Won)	3,436,668

- 35 -

(7) Term structure of borrowings as of September 30, 2005 were as follows (Unit: In millions):


	Less than 3 months		Less than 6 months		Less than 1 year		Less than 3 years		More than 3 years		Total
Borrowings in local currency	(Won)	733,918	(Won)	65,115	(Won)	151,839	(Won)	714,706	(Won)	977,301	(Won)	2,642,879
Borrowings in foreign currencies		1,881,439		836,322		555,692		415,517		47,752		3,736,722
Bonds sold under repurchase agreements in local currency		2,896,688		1,242,321		1,522,212		17,868		—		5,679,089
Bills sold		368,878		17,933		192,761		—		—		579,572
Due to the Bank of Korea in foreign currencies		413		460		—		—		—		873
Call money		1,594,174		—		—		—		—		1,594,174

	(Won)	7,475,510	(Won)	2,162,151	(Won)	2,422,504	(Won)	1,148,091	(Won)	1,025,053	(Won)	14,233,309

12. DEBENTURES:

(1) Debentures as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005			2004
Debentures in local currency	(Won)	15,770,344		(Won)	21,293,079
Less: Discount on debentures		(55,766	)		(120,396	)
Debentures in foreign currency		802,755			696,522
Addition: Premiums on debentures		4,114			5,490

	(Won)	16,521,447		(Won)	21,874,695

(2) Debentures in local currency as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	Annual interest rate (%)	2005			2004
Hybrid debentures	6.00 ~ 7.00	(Won)	903,668		(Won)	903,668
Structured debentures	0.00 ~ 6.60		170,890			80,000
Subordinated fixed rate debentures	4.19 ~ 15.66		5,808,278			6,017,095
KCC subordinated fixed rate debentures	7.10 ~ 8.00		205,000			205,000
KCC fixed rate debentures	5.43 ~ 7.80		490,000			930,000
KCC floating rate debentures	—		—			610,000
Fixed rate debentures	3.28 ~ 7.77		8,224,682			12,543,566

			15,802,518			21,289,329
Loss (gain) on valuation of fair value hedged items (current year portion)			(35,924	)		3,750
Loss on valuation of fair value hedged items (prior year portion)			3,750			—

			15,770,344			21,293,079
Discounts on debentures			(55,766	)		(120,396	)

		(Won)	15,714,578		(Won)	21,172,683

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(3) Hybrid debentures and subordinated debentures as of September 30, 2005 and December 31, 2004 were as follows (Unit: In millions):


	Issued date	Expiration date	Annual interest rate (%)	2005		2004
Subordinated fixed rate debentures in local currency	Feb-98 ~ Nov-98	Feb -03 ~ Nov-09	14.67 ~ 15.66	(Won)	119,001	(Won)	133,477
	Mar-00	Mar-05	9.65		5,659		200,000
	Jun-00	Jan-06	9.04 ~ 9.10		253,975		253,975
	Sep-00	Jan-06	8.99		300,000		300,000
	Sep-00	Jan-06	8.79 ~ 8.85		150,000		150,000
	Nov-00	Feb-06 ~Dec-10	8.65 ~ 9.65		262,051		262,051
	Dec-00	Jan-06	8.71		200,000		200,000
	May-01	Feb-07	7.60 ~ 7.65		200,000		200,000
	Jun-01	Mar-08 ~ Mar-09	7.68 ~ 7.86		377,529		377,529
	Aug-01	Aug-07	6.69 ~ 6.73		100,000		100,000
	Sep-01	Mar-08	6.69 ~ 6.73		150,000		150,000
	Mar-02	Jan-08	7.06 ~ 7.10		241,684		241,684
	Jul-02	Jan-08	6.96 ~ 7.00		302,399		302,399
	Sep-02	Mar-08 ~ Mar-13	6.27 ~ 6.70		500,000		500,000
	Nov-02	May-08 ~ May-13	6.07 ~ 6.55		558,775		558,775
	Dec-02	Jan-08	8.00		110,000		110,000
	Dec-02	Jun-08 ~ Dec-14	6.20 ~ 6.65		180,370		180,370
	Jan-03	Feb-08	7.65		50,000		50,000
	Mar-03	Apr-08	7.10		45,000		45,000
	Oct-03	Jan-09 ~ Jan-14	5.18 ~ 5.60		449,051		449,051
	Feb-04	Aug-09 ~ Aug-14	5.65 ~ 6.16		700,000		700,000
	Sep-04	Dec-18	5.12		57,784		57,784
	Dec-04	Jun-10	4.19 ~ 4.20		700,000		700,000

					6,013,278		6,222,095

Hybrid debentures	Jun-03	Jun-33	6.00		105,145		105,145
	Aug-03	Aug-33	7.00		533,355		533,355
	Oct-03	Oct-33	6.80		265,168		265,168

					903,668		903,668

				(Won)	6,916,946	(Won)	7,125,763

(4) Debentures in foreign currencies as of September 30, 2005 and December 31, 2004 were as follows (Unit: In millions):


	Annual interest rate (%)	2005			2004
Floating rates debentures	0.19 ~ 4.60	(Won)	227,353		(Won)	110,810
Fixed rates debentures	2.37 ~ 4.63		529,666			532,913
KCC floating rate debentures	4.36		59,893			60,227

			816,912			703,950
Gain on valuation of fair value hedged items (current year portion)			(6,729	)		(5,925	)
Gain on valuation of fair value hedged items (prior year portion)			(7,428	)		(1,503	)

			802,755			696,522
Premiums on debentures			4,720			6,336
Discounts on debentures			(606	)		(846	)

		(Won)	806,869		(Won)	702,012

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(5) Term structure of debentures as of September 30, 2005 were as follows (Unit: In millions):


	Less than 3 months		Less than 6 months		Less than 1 year		Less than 3 years		More than 3 years		Total
Debentures in local currency	(Won)	624,192	(Won)	1,793,148	(Won)	5,158,530	(Won)	4,180,870	(Won)	4,013,604	(Won)	15,770,344
Debentures in foreign currencies		59,892		20,870		68,485		589,088		64,420		802,755

	(Won)	684,084	(Won)	1,814,018	(Won)	5,227,015	(Won)	4,769,958	(Won)	4,078,024	(Won)	16,573,099

13. OTHER LIABILITIES:

Other liabilities as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005			2004
Accrued severance benefits (Note 15)	(Won)	350,644		(Won)	319,947
Less: Severance insurance deposits (Note 15)		(169,599	)		(193,325	)
Allowance for possible losses on acceptances and guarantees		2,562			1,150
Due to trust accounts		890,141			811,339
Accounts payable		4,062,018			2,723,038
Accrued expenses		4,808,752			4,279,216
Advances from customers		498,756			191,642
Unearned revenues		94,130			97,269
Withholding taxes		50,097			3,687
Guarantees deposits received		117,331			111,723
Derivatives liabilities		1,068,495			2,219,630
Accounts for agency business		233,531			233,690
Domestic exchange settlement loans		260,447			258,020
Agency		748,304			280,569
Sundry liabilities (Note 16)		931,471			768,091

	(Won)	13,947,080		(Won)	12,105,686

14. ACCEPTANCES AND GUARANTEES AND ALLOWANCES FOR POSSIBLE LOSSES:

(1) Acceptances and guarantees as of September 30, 2005 and December 31, 2004 were as follows (Unit: In millions):


Types	2005		2004
Confirmed acceptances and guarantees in local currency
Payment guarantee for issuance of debentures	(Won)	432	(Won)	472
Payment guarantee for loans		37,277		30,852
Others		352,296		260,497

		390,005		291,821

Confirmed acceptances and guarantees in foreign currencies
Acceptances on letters of credit		106,169		101,180
Acceptances for letters of guarantee for importers		62,736		62,829
Guarantees for performance of contracts		48,098		32,039
Guarantees for bids		3,674		2,606
Guarantees for borrowings		37,031		26,728
Guarantees for repayment of advances		43,469		23,213
Others		854,538		435,372

		1,155,715		683,967

		1,545,720		975,788

Unconfirmed acceptances and guarantees
Letters of credit		1,012,916		1,016,414
Others		986,643		295,360

		1,999,559		1,311,774

	(Won)	3,545,279	(Won)	2,287,562

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(2) Acceptances and guarantees, by customer, as of September 30, 2005 were as follows (Unit: In millions):


	Confirmed		Unconfirmed		Total		Percentage (%)
Large corporations	(Won)	1,071,187	(Won)	1,356,890	(Won)	2,428,077	68.48
Small and medium corporations		456,393		615,601		1,071,994	30.24
Public sector and others		15,662		27,068		42,730	1.21
Foreign customer		2,478		—		2,478	0.07

	(Won)	1,545,720	(Won)	1,999,559	(Won)	3,545,279	100.00

Acceptances and guarantees, by customer, as of December 31, 2004 were as follows (Unit: In millions):


	Confirmed		Unconfirmed		Total		Percentage (%)
Large corporations	(Won)	356,397	(Won)	438,394	(Won)	794,791	34.74
Small and medium corporations		616,849		844,951		1,461,800	63.90
Public sector and others		—		25,514		25,514	1.12
Foreign customer		2,542		2,915		5,457	0.24

	(Won)	975,788	(Won)	1,311,774	(Won)	2,287,562	100.00

(3) Acceptances and guarantees, by industry, as of September 30, 2005 were as follows (Unit: In millions):


	Confirmed		Unconfirmed		Total		Percentage (%)
Public sector	(Won)	2,719	(Won)	53,789	(Won)	56,508	1.59
Finance		287,132		11,795		298,927	8.43
Service		291,638		367,994		659,632	18.61
Manufacturing		848,352		1,502,920		2,351,272	66.32
Others		115,879		63,061		178,940	5.05

	(Won)	1,545,720	(Won)	1,999,559	(Won)	3,545,279	100.00

Acceptances and guarantees, by industry, as of December 31, 2004 were as follows (Unit: In millions):


	Confirmed		Unconfirmed		Total		Percentage (%)
Finance	(Won)	242,520	(Won)	911	(Won)	243,431	10.64
Service		265,714		346,398		612,112	26.76
Manufacturing		373,205		863,085		1,236,290	54.04
Others		94,349		101,380		195,729	8.56

	(Won)	975,788	(Won)	1,311,774	(Won)	2,287,562	100.00

(4) Acceptances and guarantees, by country, as of September 30, 2005 were as follows (Unit: In millions):


	Confirmed		Unconfirmed		Total		Percentage (%)
Korea	(Won)	1,306,980	(Won)	1,999,478	(Won)	3,306,458	93.27
France		197,220		—		197,220	5.56
USA		41,520		—		41,520	1.17
Others		—		81		81	0.00

	(Won)	1,545,720	(Won)	1,999,559	(Won)	3,545,279	100.00

Acceptances and guarantees, by country, as of December 31, 2004 were as follows (Unit: In millions):


	Confirmed		Unconfirmed		Total		Percentage (%)
Korea	(Won)	934,036	(Won)	1,311,073	(Won)	2,245,109	98.14
USA		41,752		701		42,453	1.86

	(Won)	975,788	(Won)	1,311,774	(Won)	2,287,562	100.00

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(5) Allowance for possible losses on confirmed acceptances and guarantees as of September 30, 2005 and December 31, 2004 were as follows (Unit: In millions):


	2005				2004
	Local currency		Foreign currencies		Local currency		Foreign currencies
Normal	(Won)	383,501	(Won)	1,142,983	(Won)	280,910	(Won)	672,484
Precautionary		4,344		10,665		8,614		10,312
Substandard		220		1,827		2,042		1,024
Doubtful		1,791		234		225		142
Estimated loss		149		7		30		5

	(Won)	390,005	(Won)	1,155,716	(Won)	291,821	(Won)	683,967
Allowance for possible losses		1,958		604		551		599

Ratio (%)		0.50		0.05		0.19		0.09

(6) The percentage of allowance for possible losses on confirmed acceptances and guarantees to outstanding guarantees and acceptances as of September 30, 2005 and 2004, and December 31, 2004, 2003 and 2002 were as follows (Unit: In millions):


	Guarantees and acceptances outstanding		Allowance		Percentage (%)
September 30, 2005	(Won)	1,545,720	(Won)	2,562	0.17
December 31, 2004		975,788		1,150	0.12
September 30, 2004		808,213		908	0.11
December 31, 2003		800,297		1,074	0.13
December 31, 2002		1,031,698		2,287	0.22

15. ACCRUED SEVERANCE BENEFITS:

The changes in accrued severance benefits for the nine months ended September 30, 2005 were as follows (Unit: In millions):


	2004			Provision			Payment			Additional increase (decrease)			2005
Accrued severance benefits	(Won)	319,947		(Won)	89,090		(Won)	58,379		(Won)	(14	)	(Won)	350,644
Severance insurance deposits		(193,325	)		(4,866	)		(28,592	)		—			(169,599	)

	(Won)	126,622		(Won)	84,224		(Won)	29,787		(Won)	(14	)	(Won)	181,045

As of September 30, 2005 and December 31, 2004, part of severance benefits was contributed to pension funds of Korea Life Insurance Co., Ltd. and Kyobo Life Insurance Co., Ltd, in which the beneficiary is a respective employee. The total severance benefits paid for the nine months ended September 30, 2005 amounted to (Won)313,959 million, including the additional severance benefits of (Won)255,581 million relating to early retirements paid in March 2005.

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16. SUNDRY LIABILITIES:

(1) Sundry liabilities as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005		2004
Borrowings for others’ business	(Won)	100,542	(Won)	87,685
Unsettled domestic exchange liabilities		170,007		21,395
Prepaid card and debit card liabilities		9,864		4,714
Subscription deposits		27,167		40,085
Other allowances		622,035		611,120
Others		1,856		3,092

	(Won)	931,471	(Won)	768,091

(2) Other allowances as of September 30, 2005 and December 31, 2004 consisted of (Unit: In millions):


	2005		2004
Loss on branch closure	(Won)	150	(Won)	237
Limit of unused cash advance service		46,274		45,234
Mileage rewards		75,744		80,676
Claimed assets		—		3
Credit commitments to SPC (Note 19)		404,195		438,343
KAMCO loans sold (Note 19)		238		217
Master Card share agreement		3,490		3,135
Allowances for additional tax payments		—		458
Dormant accounts		13,760		14,976
LG Card		—		23,812
KP Chemical loans sold		4,029		4,029
Subordinate bond		44,710		—
Others		29,445		—

	(Won)	622,035	(Won)	611,120

17. SHAREHOLDERS’ EQUITY:

(1) Capital stock

As of September 30, 2005 and December 31, 2004, the Bank has 1 billion common shares authorized with a par value per share of (Won)5,000 and 336,379,116 shares issued. ING Bank N.V. Amsterdam and Euro-Pacific Growth Fund own 13,650,001 shares and 13,376,220 shares (ownership rate: 4.06% and 3.98%, respectively). As of September 30, 2005, 50,871,519 common shares, equivalent to 15.12% of the total issued shares, are listed on the New York Stock Exchange as ADS and are managed by the Bank of New York, the trustee of the Bank.

As a result of the legal consolidation with H&CB, the registered shareholders of both the Bank and H&CB, as of October 31, 2001, received 179,775,233 shares and 119,922,229 shares, respectively. The new shares were distributed based on an exchange ratio of one new Bank share each for 1.688346 old Bank shares and one new Bank share for one H&CB share. The new shares were listed on the Korea Stock Exchange on November 9, 2001. Furthermore, as a result of the merger with Kookmin Credit Co., Ltd., the Bank issued 8,120,431 shares.

Under the General Banking Act, if a single entity, other than the government or a foreign investor, owns more than 4% of total outstanding voting shares, that entity’s voting rights are limited to 4% shareholding.

- 41 -

(2) Capital surplus

The other capital surplus as of September 30, 2005 and December 31, 2004 were as follows (Unit: In millions):


	2005		2004
Gain on business combination		397,669		397,669
Revaluation increment		177,229		177,229
Gain on disposal of treasury stock		24,220		—

	(Won)	599,118	(Won)	574,898

The gain on business combination is due to the difference between the business combination consideration and the net asset value acquired from the merger with KLB on December 31, 1998.

(3) Retained earnings

1) Appropriations of retained earnings

Appropriations of retained earnings for 2004 as resolved at the general meeting of shareholders on March 18, 2005 are summarized as follows (Unit: In millions):


	Amount
Retained earnings before appropriations:
Accumulated deficits carried over from prior years	(Won)	(176,963	)
Valuation of securities accounted for using the equity method		1,614
Net income		555,250

		379,901

Transfers from voluntary reserve:
Discretionary appropriated retained earnings		220,100
Business rationalization reserve		40,760

		260,860

Appropriations:
Legal reserve		55,600
Reserve for financial structure improvement		55,600
Reserve for losses on sale of treasury stock		359,525
Other reserves		1,438
Cash dividends		168,574

		640,737

Unappropriated retained earnings carried forward to the subsequent year	(Won)	24

2) Legal reserve

The Korean Banking Law requires a bank to appropriate at least 10 percent of net income after income tax to legal reserve, until such reserve equals 100 percent of its paid-in capital. This reserve is not available for payment of cash dividends; however, it can be used to reduce deficit or be transferred to capital.

3) Reserve for financial structure improvement (voluntary reserve)

In 2002, the Finance Supervisory Service recommended banks to appropriate at least 10 percent of net income after accumulated deficit to reserve for financial structure improvement, until simple capital ratio equals 5.5 percent. This reserve is not available for payment of cash dividends; however, it can be used to reduce deficit or be transferred to capital.

4) Business rationalization reserve

Pursuant to the Tax Exemption and Reduction Control Law, the Bank was previously required to appropriate, as a reserve for business rationalization, amounts equal to tax reductions arising from tax exemptions and tax credits up to December 31, 2001. Since the requirement was no longer effective from 2002, business rationalization reserve was transferred to retained earnings, pursuant to the approval at the shareholders’ meeting on March 18, 2005.

- 42 -

5) Retained earnings appropriated for accumulated deficit

The Bank appropriated voluntary reserve amounting to (Won)754,900 million to offset accumulated deficit, pursuant to the approval at the shareholders’ meeting on March 23, 2004.

(4) Capital adjustments

Capital adjustments as of September 30, 2005 and December 31, 2004 were as follows (Unit: In millions):


	2005			2004
Treasury stock	(Won)	(11,953	)	(Won)	(1,322,320	)
Gain on valuation of available-for-sale securities		335,677			707,487
Gain on valuation of held-to-maturity securities		596			—
Increase due to the equity method		25,500			10,443
Decrease due to the equity method		(11,717	)		(4,751	)
Stock option cost		4,226			29,613
Loss on sales of treasury stock		—			(1,459	)

	(Won)	342,329		(Won)	(580,987	)

The changes of capital adjustments for the nine months ended September 30, 2005 were as follows (Unit: In millions):


	Beginning balance			Changes			Disposal or realized			Deferred tax income			Ending balance
Treasury stock	(Won)	(1,322,320	)	(Won)	—		(Won)	1,310,367		(Won)	—		(Won)	(11,953	)
Gain on valuation of available-for-sale securities		707,487			92,242			(372,441	)		(91,611	)		335,677
Gain on valuation of held-to-maturity securities		—			952			(356	)		—			596
Change due to the equity method		5,692			812			10,672			(3,393	)		13,783
Stock options		29,613			(22,749	)		(2,638	)		—			4,226
Loss on sales of treasury stock		(1,459	)		1,459			—			—			—

	(Won)	(580,987	)	(Won)	72,716		(Won)	945,604		(Won)	(95,004	)	(Won)	342,329

1) Treasury stock

The Bank, with the approval of the Board of Directors on July 26, 2002, established an Employee Stock Option Plan (ESOP) as part of employee benefits and purchased three million shares of treasury stock under the plan. In 2003, the Bank contributed one million shares to the Employee Stock Ownership Association (ESOA). Pursuant to the approval of the Board of Directors on February 3, 2005, the Board of Directors decided to contribute additional two million shares to the ESOA. One million shares were given on February 23, 2005 and another million shares were given on April 12, 2005. As a result of the contribution, the Bank recognized (Won)996 million of gain on sales of treasury stock as of September 30, 2005.

In accordance with the resolution of the Board of Directors on December 17, 2003, the Bank acquired 27,423,761 out of 30,623,761 shares previously owned by the Korean government through public bidding at (Won)43,700 per share. For the nine months ended September 30, 2005, the Bank has sold 26,680,772 shares of treasury stock for (Won)1,248,664 million at the domestic over-the-counter market and issued 742,989 shares of global depositary receipts on June 16, 2005 for the purpose of increasing net capital and enhancing the quality of the financial structure pursuant to the resolution of the Board of Directors on April 27, 2005. As a result of the sale of treasury stock, the Bank has recognized (Won)35,106 million of gain before tax for the nine months ended September 30, 2005. As of September 30, 2005, the Bank holds 0.08 percent (269,738 shares) of the total common stock issued as treasury stock.

- 43 -

2) Loss on sales of treasury stock

For nine months ended September 30, 2005, due to the exercise of stock options, loss on sales of treasury stock increased by (Won)683 million (before income tax).

18. STOCK OPTIONS:

(1)

The Bank granted stock options to all executives. When the stock options are exercised, the Bank has the option to settle either through issuance of new shares or treasury stock, or through payment of the difference between the market price and the exercise price in cash. At the meeting held on August 23, 2005, the Board of Directors has concluded that the Bank would settle the stock option through payment of the difference between the market price and the exercise price only in cash after the remaining treasury stock is exhausted. Accordingly, stock options against 269,738 shares of treasury stock, which the Bank currently owns, were recorded using the fair value method accounting, and other stock options were recorded using intrinsic value method of accounting. Due to the change, stock compensation expense (payroll) amounting to (Won)14,429 million decreased, and (Won)14,376 million of stock options (capital adjustment) were transferred to accrued expenses. The stock options, which will be exercised through treasury stock, are options from Series 2, 5, 6 and 7, and the respective number of shares is 138,278 shares, 68,253 shares, 43,842 shares and 19,365 shares. The stock options as of September 31, 2005 were as follows:


		Granted shares
	Grant date	Granted	Forfeited	Exercised	Outstanding	Exercise price	Exercise period
Series 2	01.03.15	214,975	16,882	59,815	138,278	28,027	04.03.16 ~ 09.03.15
Series 5	00.02.28	267,000	65,218	133,529	68,253	27,600	03.03.01 ~ 06.02.28
Series 6	01.03.24	111,000	38,624	28,534	43,842	25,100	04.03.25 ~ 07.03.24
Series 7	01.11.16	850,000	200,000	—	650,000	51,200	04.11.17 ~ 09.11.16
Series 8-1 (*1)	02.03.22	132,000	89,753	—	42,247	57,100	05.03.23 ~ 10.03.22
Series 8-2 (*2)	02.03.22	490,000	180,691	—	309,309	57,100	05.03.23 ~ 10.03.22
Series 9 (*2)	02.07.26	30,000	6,101	—	23,899	58,800	05.07.27 ~ 10.07.26
Series 10-1(*1)	03.03.21	140,000	76,557	—	63,443	46,352	06.03.22 ~ 11.03.21
Series 10-2 (*2)	03.03.21	180,000	90,440	—	89,560	35,500	06.03.22 ~ 11.03.21
Series 11(*1)	03.08.27	30,000	24,909	—	5,091	40,500	06.08.28 ~ 11.08.27
Series 12 (*1)	04.02.09	85,000	9,461	—	75,539	46,100	07.02.10 ~ 12.02.09
Series 13-1(*1)	04.03.23	20,000	—	—	20,000	48,650	07.03.24 ~ 12.03.23
Series 13-2 (*2)	04.03.23	10,000	—	—	10,000	47,200	07.03.24 ~ 12.03.23
Series 14 (*1 & 2)	04.11.01	700,000	—	—	700,000	46,500	07.11.02 ~ 12.11.01
Series 15-1(*1)	05.03.18	165,000	—	—	165,000	54,200	08.03.19 ~ 13.03.18
Series 15-2 (*2)	05.03.18	765,000	—	—	765,000	46,800	08.03.19 ~ 13.03.18
Series 16 (*2)	05.04.27	15,000	—	—	15,000	45,700	08.04.28 ~ 13.04.27
Series 17 (*2)	05.07.22	30,000	—	—	30,000	49,200	08.07.23 ~ 13.07.22
Series 18 (*2)	05.08.23	15,000	—	—	15,000	53,000	08.08.24 ~ 13.08.23
Kookmin Credit Card-1 (*3)	01.03.22	22,146	—	—	22,146	71,538	04.03.23 ~ 11.03.22
Kookmin Credit Card -2 (*1 & 3)	02.03.29	9,990	—	—	9,990	129,100	04.03.30 ~ 11.03.29

		4,282,111	798,636	221,878	3,261,597

(*1)	The exercise price is adjusted by reflecting the increase in average stock price index of banking industry as of September 31, 2005.

- 44 -

(*2)

As the number of shares granted is determined according to the certainty of exercise of stock options and performance record for the contract period of service provided after the grant date, the number of shares granted is computed based on the assumption that the performance evaluation result falls into the highest level in the bracket.

(*3)	In addition, the Bank took over the stock options granted by Kookmin Credit Card Co., Ltd. of which the exercise price and number of shares were adjusted in proportion to the merger ratio.

(2) The compensation cost of the stock option through granting treasury stock is calculated based on the fair value basis method. The main assumptions used under the fair value basis method were as follows:


	Stock price at grant date	Risk free interest rate (%)	Expected exercise Period(years)	Volatility (%)	Expected dividend’s rate of return (%)	Compensation cost per share
Series 2	25,156	6.06	5.5	70.30	2.47	15,987
Series 5	33,750	4.74	1.33	73.30	1.93	13,320
Series 6	33,750	4.74	2.42	73.30	1.93	17,117
Series 7	45,800	4.91	3	58.90	—	18,364

(3) The compensation costs based on the settlement of stock options are as follows (Unit: In millions):


	By payment of differences		By exercising stocks
Total compensation cost of stock option	(Won)	29,943	(Won)	4,226
Reflected compensation cost		14,376		4,226

Compensation cost to be reflected	(Won)	15,567	(Won)	—

(4) The weighted average exercise cost is (Won)29,107 and the weighted average fair value is (Won)15,666 as of September 30, 2005.

19. CONTINGENCIES AND COMMITMENTS:

(1)	As of September 30, 2005 and December 31, 2004, the Bank has (Won)9,011 million and (Won)9,396 million, respectively, of endorsed notes relating to the repurchase bills bought in foreign currencies.

(2)	The Bank holds written-off loans, of which the claim for borrowers and guarantors have not been terminated, amounting to (Won)7,404,871 million and (Won)6,629,858 million as of September 30, 2005 and December 31, 2004, respectively.

(3)

As of September 30, 2005, the Bank has entered into commitments to provide credit line of (Won)4,230,591 million and to purchase commercial papers amounting to (Won)1,229,100 million with several special purpose companies. Commitments to provide credit line and to purchase commercial paper with a one year term amount to (Won)1,000 million and (Won)450,000 million, respectively. Under these commitments, the Bank

- 45 -

extended (Won)156,117 million of loans to the companies and recognized (Won)404,195 million of expected loss as other allowance. As of September 30, 2005, the Bank has (Won)41,412 million of outstanding commitments to provide foreign currency loans, and the amount of commitments within one year term is nil.

(4)	The Bank entered into the business cooperation agreements with Woori Credit Card, Citibank and Nonghyup for the credit card business. Accordingly, the Bank shares the related revenue from such business operation.

(5)	As of September 30, 2005, the Bank has provided allowances of (Won)238 million for losses from possible future repurchase of loans, which the Bank sold to Korea Asset Management Corporation (“KAMCO”) for (Won)691 million.

(6)	As of September 30, 2005 and December 31, 2004, the Bank recorded receivables amounting to (Won)3,643,461 million and (Won)2,286,066 million, and payables amounting to (Won)3,642,948 million and (Won)2,283,394 million for unsettled foreign currency spot transactions.

(7)

As of September 30, 2005, the Bank faces 166 pending legal actions involving aggregate damages of (Won)368,736 million. On the other hand, the Bank also has filed 230 lawsuits, which are still pending, with aggregate claims of (Won)182,194 million. Management believes that the actions against the Bank are without merit and that the ultimate liability, if any, will not materially affect the Bank’s financial position.

(8)	The notional amounts outstanding for derivative contracts as of September 30, 2005 and December 31, 2004 were as follows (Unit: In millions):


Type	*2005 ()**						2004
Type	Trading		Hedge		Total		Trading		Hedge		Total
Interest rate:
Interest rate forwards	(Won)	207,600	(Won)	—	(Won)	207,600	(Won)	—	(Won)	—	(Won)	—
Interest rate futures		1,025,575		—		1,025,575		605,224		—		605,224
Interest rate swaps		31,426,351		1,557,550		32,983,901		31,951,803		1,007,900		32,959,703
Interest rate options purchased		351,900		—		351,900		354,190		—		354,190
Interest rate options sold		741,900		—		741,900		854,190		—		854,190

		33,753,326		1,557,550		35,310,876		33,765,407		1,007,900		34,773,307

Currency:
Currency forwards		66,840,538		—		66,840,538		53,943,197		—		53,943,197
Currency futures		2,773,899		—		2,773,899		2,537,269		—		2,537,269
Currency swaps		4,814,025		—		4,814,025		4,184,152		—		4,184,152
Currency options purchased		112,176		—		112,176		245,387		—		245,387
Currency options sold		74,736		—		74,736		270,247		—		270,247

		74,615,374		—		74,615,374		61,180,252		—		61,180,252

Stock:
Stock index futures		7,968		—		7,968		3,406		—		3,406
Stock options purchased		2,462,305		—		2,462,305		1,743,480		—		1,743,480
Stock options sold		2,462,305		—		2,462,305		1,729,630		—		1,729,630

		4,932,578		—		4,932,578		3,476,516		—		3,476,516

Other:										—
Gold index purchased		146,268		—		146,268		—		—		—
Gold index sold		146,268		—		146,268		—		—		—

		292,536		—		292,536		—		—		—

	(Won)	113,593,814	(Won)	1,557,550	(Won)	115,151,364	(Won)	98,422,175	(Won)	1,007,900	(Won)	99,430,075

(*)

For transaction between local currency and foreign currencies, unsettled amount of transaction is presented using the basic foreign exchange rate based on the contract amount in foreign currencies. For transaction between foreign currencies and foreign currencies, unsettled amount is presented using the basic foreign exchange rate based on foreign currencies purchased.

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September 30, 2005


Type	Gain (loss) valuation (I/S)									Gain (loss) on valuation (B/S) (*)
Type	Trading			Hedge			Total			Gain (loss) on valuation (B/S) (*)
Interest rate:
Interest rate forwards	(Won)	9 (3	)		— —		(Won)	9 (3	)	(Won)	9 (3	)
Interest rate options purchased		348 (2,732	)		— —			348 (2,732	)		3,815 —
Interest rate options sold		3,087 (545	)		— —			3,087 (545	)		— (2,611	)
Interest rate swaps		326,664 (275,462	)		— (43,449	)		326,664 (318,911	)		169,439 (209,607	)

		330,108 (278,742	)		(43,449	)		330,108 (322,191	)		173,263 (212,221	)

Currency:
Currency forwards		471,104 (469,226	)		— —			471,104 (469,226	)		567,926 (610,976	)
Currency swaps		59,349 (102,247	)		— —			59,349 (102,247	)		343,692 (189,060	)
Currency options purchased		1,242 (550	)		— —			1,242 (550	)		1,240 (550	)
Currency options sold		389 (760	)		— —			389 (760	)		389 (760	)

		532,084 (572,783	)		— —			532,084 (572,783	)		913,247 (801,346	)

Stock:
Stock option purchased		13,458 (13,507	)		— —			13,458 (13,507	)		52,991 —
Stock option sold		14,647 (12,834	)		— —			14,647 (12,834	)		— (52,988	)

		28,105 (26,341	)		— —			28,105 (26,341	)		52,991 (52,988	)

Other:
Gold index purchased		712 (672	)		— —			712 (672	)		1,939 —
Gold index sold		756 (707	)		— —			756 (707	)		— (1,940	)

		1,468 (1,379	)		— —			1,468 (1,379	)		1,939 (1,940	)

	(Won)	891,765 (879,245	)	(Won)	— (43,449	)	(Won)	891,765 (922,694	)	(Won)	1,141,440 (1,068,495	)

- 47 -

December 31, 2004


	Gain (loss) valuation (I/S)									Fair value *(B/S)()**
Type	Trading			Hedge			Total			Fair value *(B/S)()**
Interest rate:
Interest rate options purchased	(Won)	3,786 (3,030	)	(Won)	— —		(Won)	3,786 (3,030	)	(Won)	6,202 —
Interest rate options sold		3,604 (6,562	)		— —			3,604 (6,562	)		— (17,757	)
Interest rate swaps		254,638 (236,126	)		691 (2,838	)		255,329 (238,964	)		316,333 (354,023	)

		262,028			691			262,719			322,535
		(245,718	)		(2,838	)		(248,556	)		(371,780	)

Currency:
Currency forwards		358,291 (385,338	)		— —			358,291 (385,338	)		1,519,636 (1,486,626	)
Currency swaps		142,469 (102,044	)		— —			142,469 (102,044	)		476,703 (287,203	)
Currency options purchased		151 (1,282	)		— —			151 (1,282	)		281 (887	)
Currency options sold		777 (225	)		— —			777 (225	)		827 (379	)

		501,688			—			501,688			1,997,447
		(488,889	)		—			(488,889	)		(1,775,095	)

Stock:
Stock option purchased		2,833 (21,261	)		— —			2,833 (21,261	)		72,002 —
Stock option sold		18,901 (3,220	)		— —			18,901 (3,220	)		— (72,755	)

		21,734			—			21,734			72,002
		(24,481	)		—			(24,481	)		(72,755	)

		785,450			691			786,141			2,391,984
	(Won)	(759,088	)	(Won)	(2,838	)	(Won)	(761,926	)	(Won)	(2,219,630	)

(*)	Fair value as of December 31, 2004.

The Bank uses various derivative instruments for its trading activities, including interest rate and foreign exchange swaps, futures, forwards and options, to manage the interest rate characteristics of certain assets or liabilities and to economically hedge against the effects of fluctuations in interest rates or foreign exchange rates.

The Bank holds derivative instruments accounted for as fair value hedges applied to debentures, subordinated bonds and structured bonds. As of September 30, 2005, the Bank recognized the gain on valuation of fair value hedged items amounting (Won)43,449 million. In addition, the interest rate swap covers the fair value changes of the hedged items resulted from the fluctuation in interest rate and foreign exchange rate.

(9) The Bank has credit linked notes issued by Morgan Stanley for the commission gain as of September 30, 2005 as follows. (Unit: In thousands)


Contract date	Expired date	2005		2004		Reference entity
2003.3.24	2006.3.24	$	40,000	$	40,000	KDB, KEPCO, POSCO, KT

If there are certain credit events in the reference entities, the CLN is early redeemed. The Bank will receive the debt securities of the reference entities or the same amount of money as the securities.

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20. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES:

(1) Assets and liabilities denominated in foreign currencies as of September 30, 2005 and December 31, 2004 were as follows:


	2005				2004
	USD equivalent (In thousands)		KRW equivalent (In millions)		USD equivalent (In thousands)		KRW equivalent (In millions)
Assets:
Foreign currencies	US$	142,390	(Won)	147,800	US$	119,501	(Won)	124,735
Due from banks-foreign currencies		552,072		573,050		581,957		607,447
Securities-foreign currencies		831,715		863,320		910,909		950,807
Loans in foreign currencies		4,929,964		5,117,303		3,698,819		3,860,828
Bills bought in foreign currencies		1,235,435		1,282,382		550,665		574,785
Call loans		93,540		97,095		183,736		191,784

Liabilities:
Deposits-foreign currencies		1,394,424		1,447,412		1,373,885		1,434,061
Borrowings-foreign currencies		3,599,925		3,763,722		2,433,665		2,540,260
Due to BOK		841		873		1,923		2,007
Call money in foreign currencies		186,584		193,674		13,111		13,685
Debentures-foreign currencies		773,367		802,755		667,294		696,522
Foreign exchange remittance pending	US$	163,783	(Won)	170,007	US$	20,497	(Won)	21,395

(*)	Foreign currencies other than U.S. dollars were translated into U.S. dollars at the appropriate exchange rates at balance sheet dates.

21. INTEREST REVENUE AND EXPENSES:

(1) The average balance of the interest bearing assets and liabilities, and the related interest revenue and expenses as of and for the nine months ended September 30, 2005 and 2004 were as follows (Unit: In millions):


	2005					2004
	Average balance		Interest revenue /expense		Interest rate (%)	Average balance		Interest revenue /expense		Interest rate (%)
Assets
Due from banks(*1)	(Won)	895,950	(Won)	18,432	2.75	(Won)	825,681	(Won)	7,038	1.14
Securities		22,957,375		808,414	4.71		18,128,503		766,457	5.65
Loans		133,989,909		6,812,797	6.80		139,646,295		7,803,562	7.47

	(Won)	157,843,234	(Won)	7,639,643	6.47	(Won)	158,600,479	(Won)	8,577,057	7.23

Liabilities
Deposits	(Won)	124,693,317	(Won)	2,422,243	2.60	(Won)	130,225,666	(Won)	2,986,152	3.07
Borrowings		11,656,272		260,151	2.98		11,205,673		254,163	3.03
Debentures		19,655,937		801,698	5.45		18,274,273		818,822	5.99

	(Won)	156,005,526	(Won)	3,484,092	2.99	(Won)	159,705,612	(Won)	4,059,137	3.40

(*1)	Excluding the average balance of reserve deposits with BOK

- 49 -

22. GENERAL AND ADMINISTRATIVE EXPENSES:

(1) Selling and administrative expenses for the nine months ended September 30, 2005 and 2004 were as follows (Unit: In millions):


	2005		2004
Salaries	(Won)	975,155	(Won)	858,949
Provision for severance benefits		89,090		81,200
Other employee benefits		288,601		237,491
Rent		64,505		57,000
Depreciation and amortization		244,280		304,041
Taxes and dues		88,654		89,019
Advertising		34,696		26,638
Development expenses		99,001		94,139
Servicing fee		50,259		52,012
Other selling and administrative expenses		156,102		151,360

	(Won)	2,090,343	(Won)	1,951,849

(2) Other selling and administrative expenses for the nine months ended September 30, 2005 and 2004 were as follows (Unit: In millions):


	2005		2004
Communication	(Won)	24,952	(Won)	27,277
Electricity and utilities		12,774		13,510
Publication		14,545		16,388
Repairs maintenance		12,045		12,532
Vehicle		20,318		20,612
Travel		2,595		3,313
Training		12,993		14,883
Other		55,880		42,845

	(Won)	156,102	(Won)	151,360

23. NON-OPERATING INCOME AND EXPENSES:

(1) Non-operating income and expenses for the nine months ended September 30, 2005 and 2004 consisted of (In millions):


	2005		2004
Non-operating income:
Gain on disposal of tangible assets	(Won)	9,475	(Won)	1,861
Reversal of tangible assets impairment loss		—		3,281
Rental income		2,463		2,264
Gain on valuation of securities accounted for using the equity method		71,700		38,930
Gain on disposal of available-for-sale securities		282,431		121,598
Gain on redemption of held-to-maturity securities		216		1,509
Gain on disposal of securities accounted for using the equity method		—		79
Gain on sale of loans		79,935		23,770
Others		171,027		109,727

	(Won)	617,247	(Won)	303,019

Non-operating expenses:
Loss on disposal of tangible assets	(Won)	3,764	(Won)	2,368
Loss on valuation of securities accounted for using the equity method		8,466		28,841
Loss on disposal of available-for-sale securities		17,210		22,875
Impairment loss on available-for-sale securities		26,144		55,058
Loss on sale of loans		2,096		864,609
Severance benefits		255,581		50,029
Others		76,195		113,276

	(Won)	389,456	(Won)	1,137,056

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24. INCOME TAX EXPENSE:

(1) The differences between pretax accounting income and taxable income pursuant to Korean Corporate Income Tax Law for the nine months ended September 30, 2005 and 2004 are summarized as follows (Unit: In millions):


	2005					*2004()**
Income before income tax			(Won)	2,602,894				(Won)	1,001,708
Taxable and non-deductible items
Temporary difference	3,119,600					1,521,323
Permanent difference	408,716			3,528,316		161,001			1,682,324

Deductible and non-taxable items
Temporary difference	(2,103,782	)				(1,835,881	)
Permanent difference	(743,308	)		(2,847,090	)	(228,704	)		(2,064,585	)

Accumulated deficit									(276,496	)

Taxable income			(Won)	3,284,120				(Won)	342,951

(*)	Adjustment in relation to the private beneficiary certificates are not reflected on the income for the nine months ended September 30, 2004.

(2) The tax effects on temporary differences and tax loss carryforwards that gave rise to significant portions of the deferred income tax assets for the nine months ended September 30, 2005 were as follows (Unit: In millions):


	Korean Won
	Beginning balance (*)			Deduction			Addition			Ending balance
Loss on fair value hedges	(Won)	(3,502	)	(Won)	(3,502	)	(Won)	(37,324	)	(Won)	(37,324	)
Allowance for loan losses		116,934			88,580			27,275			55,629
Accrued interest		(309,506	)		(309,506	)		(84,836	)		(84,836	)
Tangible asset impairment losses		2,296			2,296			1,267			1,267
Deferred loan organization fee and cost		(48,889	)		(48,889	)		(50,921	)		(50,921	)
Interest on ELD		41,937			41,937			80,229			80,229
Stock options		29,613			29,613			18,602			18,602
Allowance for possible losses of confirmed acceptances and guarantees		1,150			1,150			2,562			2,562
Valuation loss on derivatives financial instruments		(137,573	)		(137,573	)		(35,244	)		(35,244	)
Goodwill		(457,014	)		(58,759	)		—			(398,255	)
Discount present value		4,279			4,279			823			823
Dividends from SPC		131,186			—			129,022			260,208
Others		1,576,989			1,204,968			1,510,262			1,882,283

		947,900			814,594			1,561,717			1,695,023

The exclusion of deferred income tax
Goodwill		(457,014	)								(398,255	)
Valuation of securities (Capital adjustments)		(444,481	)								—

- 51 -


	Korean Won
	Beginning balance (*)			Deduction	Addition	Ending balance
Dividends from SPC	(Won)	131,186				(Won)	260,208
Other		458					18,602

		1,717,751					1,814,468
Statutory tax rate		27.5	%				27.5	%

Deferred income tax assets	(Won)	472,382				(Won)	498,978

(*)	The final tax return and adjustments in relation to the private beneficiary certificates are reflected in the beginning deferred income tax assets.

(3) Income tax expense for the nine months ended September 30, 2005 and 2004 is summarized as follows (Unit: In millions):


	2005			2004
Income tax currently payable	(Won)	902,291		(Won)	100,446
Changes in deferred tax assets		(26,597	)		110,621
Retained earnings and other capital surplus adjustments		(104,745	)		62,767
Income tax expense of overseas branch		3,426			—

Income tax expense	(Won)	774,375		(Won)	273,834

(4) The statutory income tax rates applicable to the Bank, including resident tax surcharges, are 27.5% and 29.7% for the nine months ended September 30, 2005 and 2004, respectively. However, due to tax adjustments, the effective tax rates for the nine months ended September 30, 2005 and 2004 are 29.75% and 32.73%, respectively.

25. EARNINGS PER SHARE:

(1) Ordinary income per share and net income per share

Ordinary income per share and net income per share were calculated for common stock by dividing ordinary income and net income available to common shareholders by the weighted average number of outstanding common stock. In case the stock options are exercised during the nine months ended September 30, 2005, the outstanding common shares are calculated on the assumption that the treasury stock are disposed of on the exercised date.

Net income per share for common stock for the nine months ended September 30, 2005 was computed as follows:

1) Outstanding capital stock


	Number of shares		Number of shares Number of dates
Number of common shares outstanding-beginning balance	336,379,116		91,831,498,668
Number of treasury stock outstanding-beginning balance	(29,881,209	)	(8,157,570,057	)
Sale of treasury stock	29,611,471		3,219,897,918

	336,109,378		86,893,826,529

Weighted average number of common shares outstanding : 86,893,826,529 ÷ 273 days = 318,292,405 shares

- 52 -

2) The basic net income per share for the nine months ended September 30, 2005 is as follows (Unit: In won)


	Common shares
Net income (= ordinary income)	(Won)	1,828,518,771,839
Weighted average number of common shares outstanding		318,292,405

Net income per share	(Won)	5,745

Ordinary income per share	(Won)	5,745

The ordinary income for the nine months ended September 30, 2005 equals to net income because there are no extraordinary item.

Basic net income (ordinary income) per share for the year ended December 31, 2004 was (Won) 1,176.

(2) Diluted ordinary income per share and diluted net income per share

Diluted net income and ordinary income per share for the nine months ended September 30, 2005 represent diluted net income and diluted ordinary income divided by the number of common shares and diluted securities. Stock options and treasury stock contributed to Employee Stock Ownership Plan in April 2005 were considered for the computation of diluted earnings per share due to their dilutive effects.

Diluted net income (ordinary income) per share for the nine months ended September 30, 2005 was computed as follows:

1)	Diluted net income (ordinary income) (*1) : (Won)1,828,246,561,654

2)	Number of common shares and diluted securities: 318,292,405 + 146,148 (*2) = 318,438,553 (shares)

3)	Diluted net income (ordinary income) per share : (Won)1,828,561,654 ÷ 318,438,553 (shares) = (Won)5,741

(*1)

The stock options, which were included in the diluted shares, have no effect on net income because the contracted service period has expired as of September 30, 2005, and for the period ended September 30, 2005, (Won)272 million of compensation cost of certain stock options, which was recorded prior to 2004 was reversed because the exercise right has expired.

(*2)	The 146,148 shares of treasury stock in stock options are included in diluted shares.

Diluted net income (ordinary income) per share for the year ended December 31, 2004 was (Won) 1,176.

(3)	Dilutive securities

As of September 30, 2005, dilutive securities are summarized as follows (Unit: won, shares):

Exercise period

Common stock

to be issued

Condition for
conversion

Stock options

Mar. 1, 2003 ~
Nov. 16, 2009

269,738

(Won)25,100 ~
51,200 per share

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26. TRUST ACCOUNTS:

(1) As of September 30, 2005 and 2004, major financial information related to the trust accounts were as follows (Unit : In millions)


	2005		2004
Operating revenue of trust operation:
Trust fees and commissions from trust accounts	(Won)	103,113	(Won)	92,119
Commissions from early redemption in trust accounts		11		65

	(Won)	103,124	(Won)	92,184

Operating expenses of trust operation:
Interest expense on borrowings from trust accounts	(Won)	21,828	(Won)	41,975

(2) As of September 30, 2005 and December 31, 2004, significant balances related to the trust accounts were as follows (Unit : In millions)


	2005		2004
Assets:
Accrued receivable trust fees	(Won)	154,412	(Won)	86,472

Liabilities:
Borrowings from trust accounts	(Won)	890,141	(Won)	811,339

(3) Trust accounts for which the Bank provided the guarantees for a fixed rate of return and the repayment of principal consisted of following (Unit: In millions):


	Name of fund	Book value		Fair value		Charge to bank account
Trust accounts guaranteeing the repayment of principal:	Old age pension (1)(2)	(Won)	26,494	(Won)	26,295	—
	Personal pension (1)(2)		2,254,122		2,218,666	—
	Pension trust		309,257		309,257	—
	Retirement trust		254,601		254,601	—
	New personal pension		65,131		65,131	—
	New old age pension		284,318		284,318	—

			3,193,923		3,158,268	—

Trust accounts guaranteeing a fixed rate of return and the repayment of principal:	Development money trust (*1)		98,903		101,972	—
	Unspecified monetary trust (*1)		163		163	—

			99,066		102,135	—

		(Won)	3,292,989	(Won)	3,260,403	—

(*1)	These funds were not stated at fair value but at book value.

(*2)	For the old age pension and the personal pension trust, even though the fair value was less than book value, the difference was not charged to the Bank operation because these are based on performance and the Bank is not responsible for the losses of the trusts.

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27. SEGMENT INFORMATION:

(1) As of September 30, 2005, the Bank’s operating segments are consumer banking, corporate banking, credit card operation, treasury operation of investment in securities (including derivatives) and funding, and other operations of general administration and trust. Geographical segment are segregated into two segments: domestic and overseas operations.

As of and for the nine months ended September 30, 2005, financial information on the Bank’s operating segments was as follows (Unit: In millions):


	Consumer		Corporate		Credit card		Capital market		Other		Total
Cash and due from bank	(Won)	1,898,281	(Won)	61,094	(Won)	2,584	(Won)	3,964,250	(Won)	570,842	(Won)	6,497,051
Securities		—		206,238		144,612		26,803,311		2,172,037		29,326,198
Loans		81,435,211		41,962,638		6,870,656		3,889,290		32,140		134,189,935
Fixed assets		952,138		67,574		27,863		12,033		1,397,844		2,457,452
Other assets		1,375,096		151,048		50,684		5,531,555		1,384,180		8,492,563

	(Won)	85,660,726	(Won)	42,448,592	(Won)	7,096,399	(Won)	40,200,439	(Won)	5,557,043	(Won)	180,963,199

Operating revenue	(Won)	4,428,007	(Won)	2,007,496	(Won)	1,649,005	(Won)	4,716,095	(Won)	670,514	(Won)	13,471,117

(2) Financial information on the Bank’s geographical segments as of and for the nine months ended September 30, 2005 was as follows (Unit: In millions):


	Domestic		Overseas		Total
Cash and due from bank	(Won)	6,486,898	(Won)	10,153	(Won)	6,497,051
Securities		29,326,198		—		29,326,198
Loans		133,727,091		426,844		134,189,935
Fixed assets		2,454,865		2,587		2,457,452
Other assets		8,478,691		13,872		8,492,563

		180,473,743		489,456		180,963,199

Operating revenue	(Won)	13,434,352	(Won)	36,765	(Won)	13,471,117

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28. RELATED PARTY TRANSACTIONS:

(1) Significant balances with related parties as of September 30, 2005 and December 31, 2004 were as follows (Unit: In millions):


	2005				2004
	Assets		Liabilities		Assets		Liabilities
Trust accounts (trust accounts guaranteeing a fixed rate of return and the repayment of principal)	(Won)	126,009	(Won)	146,690	(Won)	79,968	(Won)	117,237
KB Investment Co., Ltd.		—		17,247		—		17,739
KB Futures Co., Ltd.		—		14,084		22		11,024
KB Data System Co., Ltd.		188		11,782		98		18,743
KB Asset Management		74		26,608		—		26,253
KB Real Estate Trust		5,031		401		33,975		1,916
KB Credit Information		—		17,659		—		22,363
KB Life Insurance Co., Ltd.		1,867		4,582		3,037		7,203
Pacific IT Investment Partnership		—		334		—		—
NPC 02-4 Kookmin Venture Fund		—		17,589		—		—
Jooeun Industrial Co., Ltd.		71,353		—		70,808		—
Kookmin Bank International Ltd. (London)		195,305		48,058		245,772		101,812
Kookmin Bank Hong Kong Ltd.		174,436		5,474		171,820		12,145

	(Won)	574,263	(Won)	310,508	(Won)	605,500	(Won)	336,435

(2) Significant transactions with related parties for nine months ended September 30, 2005 and 2004 were as follows (Unit: In millions):


	2005				2004
	Revenue		Expenses		Revenue		Expenses
Trust accounts (trust accounts guaranteeing fixed rate of return and the repayment of principal)	(Won)	62,546	(Won)	3,137	(Won)	40,561	(Won)	9,485
KB Investment Co., Ltd.		—		442		—		300
KB Futures Co., Ltd.		18		1,023		70		748
KB Data System Co., Ltd.		68		14,085		—		13,320
KB Asset Management		694		836		—		858
KB Real Estate Trust		1,476		—		1,659		47
KB Credit Information		141		50,111		—		23,573
KB Life Insurance Co., Ltd.		25,286		22		8,825		21
Pacific IT Investment Partnership		—		5		—		—
NPC02-4 Kookmin Venture Fund		—		239		—		—
Kookmin Bank International Ltd. (London)		5,134		3,855		2,695		3,498
Kookmin Bank Hong Kong Ltd.		4,550		1,505		3,130		1,556

	(Won)	99,913	(Won)	75,260	(Won)	56,940	(Won)	53,406

29. EMPLOYEE BENEFITS:

The Bank has employee benefits programs, such as support for rent of houses, scholarship, medical insurance, accident compensation, compensated leave, gym facilities and other benefits.

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30. CASH FLOWS:

(1) Cash flows from operating activities are presented by the indirect method.

(2) The cash and due from banks in the statements of cash flows for the nine months ended September 30, 2005 and 2004 were as follows (Unit : In millions)


	2005			2004
Cash on hand	(Won)	2,347,767		(Won)	3,023,458
Foreign currencies		147,800			139,945
Due from banks in local currency		3,428,826			4,718,122
Due from banks in foreign currency		573,050			631,945

		6,497,443			8,513,470
Restricted due from banks		(2,885,717	)		(4,658,564	)

	(Won)	3,611,726		(Won)	3,854,906

(3) Significant transactions not involving cash inflows and outflows for the nine months ended September 30, 2005 and 2004 were as follows (Unit : In millions)


	2005			2004
Write-offs of loans and decrease of loans from principal reduction	(Won)	1,512,153		(Won)	2,016,336
Increase (decrease) in allowance resulting from sale of non-performing loans and repurchase		(157,757	)		628,661
Increase in available-for-sale securities resulting from the debt to equity swap		—			179,046
Changes in capital adjustments from valuation of securities		(363,123	)		317,869
Reclassification of available-for-sale securities to held-to-maturity securities		60,091			—

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