Form 6-K
Table of Contents
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 2002
 
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 From 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
 
TABLE OF CONTENTS
 
  
4
1.
     
5
    1.1.     Business Purpose
  
5
        1.2.     History
  
5
        1.3.     Capital Structure
  
5
        1.4.     Dividend
  
11
2.
     
12
        2.1.     Business Overview
  
12
        2.2.     Market Shares
  
12
        2.3.     Source and Use of Funds
  
14
        2.4.     Principal Banking Activities
  
16
        2.5.     Property, Plants and Equipment
  
20
  
21
3.
     
23
4.
     
24
        4.1.     Report of the Independent Auditor
  
24
        4.2.     Compensation to the Independent Auditor
  
24
5.
     
25
        5.1.     Board of Directors
  
25
        5.2.     Audit Committee
  
25
        5.3.     Voting Rights of Shareholders
  
26
        5.4.     Compensation to the Directors
  
26
        5.5.     Affiliated Companies
  
26
6.
     
28
        6.1.     Major Shareholders
  
28
        6.2.     Market Price Information
  
28
7.
     
29
        7.1.     Executive Directors
  
29
        7.2.     Non-Executive Directors
  
29
        7.3.     Senior Management
  
30
        7.4.     Employees
  
30


Table of Contents
        7.5.     Labor Union
  
30
8.
     
31
9.
     
32
        9.1.     List of Financial Statements
  
32


Table of Contents
Summary of the Third Quarter Report
 
On November 14, 2002, Kookmin Bank filed a third quarter report with the Financial Supervisory Commission of Korea pursuant to the Securities and Exchange Act of Korea (the “Business Report”). This is a summary of the Business Report translated into English. Non-material or previously disclosed portions were omitted or abridged.
 
All references to “Kookmin Bank” mean Kookmin Bank on a non-consolidated basis, and all references to “we” or “us” “the Bank” mean Kookmin Bank and, as the context may require, its subsidiaries. Kookmin Bank means a new entity established by a merger with former Kookmin Bank and H&CB on the merger date of October 31, 2001. Sometimes we refer it to New Kookmin Bank. On the other hand, we use the “Former Kookmin Bank” for the name of the former Kookmin Bank, which had been another entity before it merged H&CB.
 
We were formed through a merger between the Former Kookmin Bank and H&CB, which merged into a new corporation named “Kookmin Bank” effective November 1, 2001. Accordingly, financial information in this Business Report since the merger date reflects the impact of the merger. Under generally accepted accounting principles in Korea, the Former Kookmin Bank is deemed the accounting acquiror of H&CB in the merger, and we have accounted for the acquisition using the purchase method of accounting. However, trust accounts are not accounted by the purchase method accounting according to the Korean Financial Supervisory Service’s guidelines.
 
Therefore, unless indicated otherwise, any comparative description or table of year 2000 or before 1) for bank accounts is based on the Former Kookmin Bank’s results and 2) for trust accounts is based on simple consolidated numbers of Former Kookmin Bank’s and H&CB’s results.
 
All references to “Won” or “W” in this document are to the currency of the Republic of Korea.

4


Table of Contents
 
1.    Introduction to the Bank
 
1.1.    Business Purpose
 
The objective of the Bank is to engage in the following business activities:
 
 
 
The banking business as prescribed by the Bank Act; and
 
 
 
The other business permitted by the Bank Act or other Korea laws.
 
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 two brand operations onto a single information technology platform in connection with the merger
 
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, New 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.
 
As of September 30, 2002, 317,677,416 shares of common stock were issued and outstanding with paid-in capital of W1,588,387 million. All of the issued and outstanding shares are fully-paid and non-assessable, and are in registered form.

5


Table of Contents
 
1.3.2.    Convertible Bonds
 
In June 1999, Goldman Sachs Capital Koryo, L.P., a fund managed by The Goldman Sachs Group, Inc., acquired (through its wholly-owned subsidiaries Goldman Sachs Capital Chosun, Ltd. and Goldman Sachs Capital Shilla, Ltd.) an interest in the Former Kookmin Bank in return for an investment of US$500 million in new common shares and convertible bonds, consisting of W360 billion of new common shares (17,768,870 common shares at W20,260 per share, as adjusted for the merger ratio of 1.688346:1) and US$200 million principal amount of subordinated convertible bonds with a conversion price of W14,200 per common share. As a result of the merger with H&CB and other adjustment events, the conversion price was adjusted to its current level of W22,124 per share, and these bonds could be converted currently into 10,581,269 shares.
 
1.3.3.    Treasury Stock
 
The following table shows the purchase and disposition of our treasury stock.
 
(As of October 31, 2002, Unit: in thousands of Won unless otherwise indicated)
 
Date

  
Reason

  
Number of shares

  
Cost

  
Cost per one share

November 15, 2001
  
Acquisition of fractional shares in the course of the merger
  
41,548 shares
  
1,794,885
  
43,200 Won
December 24, 2001
  
Disposition for Exercise of stock option
  
10,000 shares
  
432,003
  
48,900 Won
April 3, 2002
  
Acquisition of fractional shares due to stock dividend
  
36,089 shares
  
2,071,557
  
57,400 Won
May 14, 2002
  
Disposition pursuant to the Bank Act of Korea
  
31,548 shares
  
1,601,944
  
50,788 Won
July 30-October 23, 20021
  
Acquisition pursuant to the Securities and Exchange Act of Korea
  
3,000,000 shares
  
147,632,489
  
49,210 Won
         
  
  
Total
  
—  
  
Outstanding balance: 3,036,089 shares
  
149,464,984
  
—  
         
  
  

1.
 
On July 26, 2002, Kookmin Bank’s board of directors has approved and ratified to purchase the treasury stock up to 3 million shares for the purpose of introducing one of a stock purchase program and an employee stock ownership plan in order to provide a wide range of benefit with the employees.

6


Table of Contents
 
1.3.4.    Stock Option
 
The following table is the breakdown of stock options Kookmin Bank has granted to the directors and employees. It describes grant date, position, exercise period, price and the number of options.
 
(As of October 24, 2002, Units: in Won, shares)
 
Grant date

  
Name of the grantee

  
Position when granted

  
Exercise period

  
Exercise price

  
Number of granted options*

  
Number of exercised options

  
Number of exercisable options

        
From

  
To

           
31-Oct-98
  
Jungtae Kim
  
Chairman, Presidnet&CEO
  
01-Nov-01
  
31-Oct-04
  
5,000
  
400,000
  
310,000
  
90,000
27-Feb-99
  
Choulju Lee
  
Auditor&Executive Director
  
28-Feb-02
  
27-Feb-05
  
13,900
  
30,000
  
30,000
  
0
27-Feb-99
  
Seungdong Kim
  
Executive Vice President
  
28-Feb-02
  
27-Feb-05
  
13,900
  
20,054
  
20,054
  
0
27-Feb-99
  
Youngjo Joo
  
Executive Vice President
  
28-Feb-02
  
27-Feb-05
  
13,900
  
30,000
  
30,000
  
0
27-Feb-99
  
Seokil Cho
  
Executive Vice President
  
28-Feb-02
  
27-Feb-05
  
13,900
  
20,054
  
20,054
  
0
27-Feb-99
  
Hongshik Chung
  
Executive Vice President
  
28-Feb-02
  
27-Feb-05
  
13,900
  
20,000
  
20,000
  
0
27-Feb-99
  
Bonghwan Cho
  
Executive Vice President
  
28-Feb-02
  
27-Feb-05
  
13,900
  
30,000
  
30,000
  
0
27-Feb-99
  
Sunjoo Kim
  
Executive Vice President
  
28-Feb-02
  
27-Feb-05
  
13,900
  
10,000
  
10,000
  
0
27-Feb-99
  
Jehyung Jo
  
Executive Vice President
  
28-Feb-02
  
27-Feb-05
  
13,900
  
30,000
  
30,000
  
0
27-Feb-99
  
Hogi Baek
  
Executive Vice President
  
28-Feb-02
  
27-Feb-05
  
13,900
  
20,000
  
20,000
  
0
27-Feb-99
  
Bruce Willison
  
Non Executive Director
  
28-Feb-02
  
27-Feb-05
  
13,900
  
10,000
  
10,000
  
0
28-Feb-00
  
Jan Op de Beeck
  
Executive Vice President
  
01-Mar-03
  
28-Feb-06
  
27,600
  
22,490
  
0
  
22,490
28-Feb-00
  
Sungchul Kim
  
Executive Vice President
  
01-Mar-03
  
28-Feb-06
  
27,600
  
30,000
  
0
  
30,000
28-Feb-00
  
Woojung Lee
  
Executive Vice President
  
01-Mar-03
  
28-Feb-06
  
27,600
  
30,000
  
0
  
30,000
28-Feb-00
  
Kukju Kwon
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
4,800
  
0
  
4,800
28-Feb-00
  
Sunjin Kim
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
7,000
  
0
  
7,000
28-Feb-00
  
Joon Park
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
4,800
  
0
  
4,800
28-Feb-00
  
Moonsoul Chung
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
7,000
  
0
  
7,000
28-Feb-00
  
Juhyun Yoon
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
4,800
  
0
  
4,800
28-Feb-00
  
Heungsoon Chang
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
2,486
  
0
  
2,486
28-Feb-00
  
Injoon Kang
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
2,486
  
0
  
2,486
28-Feb-00
  
Sunghee Jwa
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
4,800
  
0
  
4,800
28-Feb-00
  
Seungwoo Nam
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
1,928
  
0
  
1,928
28-Feb-00
  
Woonyoul Choi
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
4,909
  
0
  
4,909
28-Feb-00
  
Kyunghee Yoon
  
Non Executive Director
  
01-Mar-03
  
28-Feb-06
  
27,600
  
7,000
  
0
  
7,000
28-Feb-00
  
Sungcheon Hong
  
Head of Regional Head Office
  
01-Mar-03
  
28-Feb-06
  
27,600
  
6,821
  
0
  
6,821
28-Feb-00
  
Miro Yoon
  
Head of Regional Head Office
  
01-Mar-03
  
28-Feb-06
  
27,600
  
3,333
  
0
  
3,333
28-Feb-00
  
Hakdong Shin
  
Head of Regional Head Office
  
01-Mar-03
  
28-Feb-06
  
27,600
  
6,821
  
0
  
6,821
28-Feb-00
  
Hakyeon Jeong
  
Head of Regional Head Office
  
01-Mar-03
  
28-Feb-06
  
27,600
  
10,000
  
0
  
10,000
28-Feb-00
  
Jeongyeon Kim
  
Head of Regional Head Office
  
01-Mar-03
  
28-Feb-06
  
27,600
  
10,000
  
0
  
10,000
28-Feb-00
  
Jongwhan Byun
  
Head of Regional Head Office
  
01-Mar-03
  
28-Feb-06
  
27,600
  
10,000
  
0
  
10,000
28-Feb-00
  
Samyoung Lee
  
Head of Regional Head Office
  
01-Mar-03
  
28-Feb-06
  
27,600
  
6,821
  
0
  
6,821
28-Feb-00
  
Wonki Kim
  
Head of Regional Head Office
  
01-Mar-03
  
28-Feb-06
  
27,600
  
6,821
  
0
  
6,821
28-Feb-00
  
Bangyeoul Kim
  
Head of Regional Head Office
  
01-Mar-03
  
28-Feb-06
  
27,600
  
3,333
  
0
  
3,333
28-Feb-00
  
Byungman Lim
  
Head of Regional Head Office
  
01-Mar-03
  
28-Feb-06
  
27,600
  
3,333
  
0
  
3,333
24-Mar-01
  
Youngil Kim
  
Executive Vice President
  
25-Mar-04
  
24-Mar-07
  
25,100
  
30,000
  
0
  
30,000
24-Mar-01
  
Jongin Park
  
Executive Vice President
  
25-Mar-04
  
24-Mar-07
  
25,100
  
30,000
  
0
  
30,000
24-Mar-01
  
Wonbae Yoon
  
Non Executive Director
  
25-Mar-04
  
24-Mar-07
  
25,100
  
2,318
  
0
  
2,318
24-Mar-01
  
Jaekyu Lee
  
Non Executive Director
  
25-Mar-04
  
24-Mar-07
  
25,100
  
2,318
  
0
  
2,318

*
 
Some numbers of the granted options has been adjusted due to the merger and the early retirement of the grantees

7


Table of Contents
 
Grant date

  
Name of the grantee

  
Position when granted

  
Exercise period

  
Exercise price

  
Number of granted options*

    
Number of exercised options

  
Number of exercisable options

        
From

  
To

             
24-Mar-01
  
Chulsoo Ahn
  
Non Executive Director
  
25-Mar-04
  
24-Mar-07
  
25,100
  
1,916
    
0
  
1,916
24-Mar-01
  
Jaehan Kim
  
Head of Regional Head Office
  
25-Mar-04
  
24-Mar-07
  
25,100
  
10,000
    
0
  
10,000
24-Mar-01
  
Jongok Na
  
Head of Regional Head Office
  
25-Mar-04
  
24-Mar-07
  
25,100
  
10,000
    
0
  
10,000
24-Mar-01
  
Kyuho Lee
  
Head of Regional Head Office
  
25-Mar-04
  
24-Mar-07
  
25,100
  
3,275
    
0
  
3,275
18-Mar-00
  
Sanghoon Kim
  
Chairman&CEO
  
19-Mar-03
  
18-Mar-05
  
23,469
  
41,460
    
0
  
41,460
18-Mar-00
  
Jongmin Lee
  
Auditor&Executive Director
  
19-Mar-03
  
18-Mar-05
  
23,469
  
14,807
    
0
  
14,807
18-Mar-00
  
Sejong Oh
  
Non Executive Director
  
19-Mar-03
  
18-Mar-05
  
23,469
  
2,961
    
0
  
2,961
18-Mar-00
  
Inkie Kim
  
Non Executive Director
  
19-Mar-03
  
18-Mar-05
  
23,469
  
2,961
    
0
  
2,961
18-Mar-00
  
Jihong Kim
  
Non Executive Director
  
19-Mar-03
  
18-Mar-05
  
23,469
  
2,961
    
0
  
2,961
18-Mar-00
  
Jinho Hwang
  
Non Executive Director
  
19-Mar-03
  
18-Mar-05
  
23,469
  
2,961
    
0
  
2,961
18-Mar-00
  
Hyungjin Chang
  
Non Executive Director
  
19-Mar-03
  
18-Mar-05
  
23,469
  
2,961
    
0
  
2,961
18-Mar-00
  
Ikrae Kim
  
Non Executive Director
  
19-Mar-03
  
18-Mar-05
  
23,469
  
2,961
    
0
  
2,961
18-Mar-00
  
Bongho Paick
  
Non Executive Director
  
19-Mar-03
  
18-Mar-05
  
23,469
  
2,961
    
0
  
2,961
18-Mar-00
  
Bockwoan Kim
  
Executive Vice President
  
19-Mar-03
  
18-Mar-05
  
23,469
  
11,845
    
0
  
11,845
18-Mar-00
  
Yoohwan Kim
  
Executive Vice President
  
19-Mar-03
  
18-Mar-05
  
23,469
  
11,845
    
0
  
11,845
18-Mar-00
  
Dukhyun Kim
  
Executive Vice President
  
19-Mar-03
  
18-Mar-05
  
23,469
  
11,845
    
0
  
11,845
15-Mar-01
  
Sanghoon Kim
  
Chairman&CEO
  
16-Mar-04
  
15-Mar-09
  
28,027
  
29,614
    
0
  
29,614
15-Mar-01
  
Jongmin Lee
  
Auditor&Executive Director
  
16-Mar-04
  
15-Mar-09
  
28,027
  
14,807
    
0
  
14,807
15-Mar-01
  
Inkie Kim
  
Non Executive Director
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Hyungjin Chang
  
Non Executive Director
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Jihong Kim
  
Non Executive Director
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Bongho Paick
  
Non Executive Director
  
16-Mar-04
  
15-Mar-09
  
28,027
  
1,870
    
0
  
1,870
15-Mar-01
  
Ikrae Kim
  
Non Executive Director
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Seungheon Han
  
Non Executive Director
  
16-Mar-04
  
15-Mar-09
  
28,027
  
1,870
    
0
  
1,870
15-Mar-01
  
Youngseok Kim
  
Non Executive Director
  
16-Mar-04
  
15-Mar-09
  
28,027
  
1,870
    
0
  
1,870
15-Mar-01
  
Sewoong Lee
  
Non Executive Director
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Changki Min
  
Non Executive Director
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Bockwoan Kim
  
Executive Vice President
  
16-Mar-04
  
15-Mar-09
  
28,027
  
11,845
    
0
  
11,845
15-Mar-01
  
Yoohwan Kim
  
Executive Vice President
  
16-Mar-04
  
15-Mar-09
  
28,027
  
11,845
    
0
  
11,845
15-Mar-01
  
Dukhyun Kim
  
Executive Vice President
  
16-Mar-04
  
15-Mar-09
  
28,027
  
11,845
    
0
  
11,845
15-Mar-01
  
Yoonok Hyun
  
Executive Vice President
  
16-Mar-04
  
15-Mar-09
  
28,027
  
11,845
    
0
  
11,845
15-Mar-01
  
Taigon Kim
  
Executive Vice President
  
16-Mar-04
  
15-Mar-09
  
28,027
  
11,845
    
0
  
11,845
15-Mar-01
  
Byungsang Kim
  
Executive Vice President
  
16-Mar-04
  
15-Mar-09
  
28,027
  
11,845
    
0
  
11,845
15-Mar-01
  
Byungjin Kim
  
Executive Vice President
  
16-Mar-04
  
15-Mar-09
  
28,027
  
11,845
    
0
  
11,845
15-Mar-01
  
Jihan Koo
  
Head of Regional Head Office
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Dongsoon Park
  
Head of Regional Head Office
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Hoosang Chang
  
Head of Regional Head Office
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Sanghoon Lee
  
Head of Regional Head Office
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Jaein Suh
  
Head of Regional Head Office
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Sunghyun Chung
  
Head of Regional Head Office
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Jonghwa Lee
  
Head of Regional Head Office
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Sangwon Lee
  
Head of Regional Head Office
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Joonsup Chang
  
Head of Regional Head Office
  
16-Mar-04
  
15-Mar-09
  
28,027
  
2,961
    
0
  
2,961
15-Mar-01
  
Dongshin Yang
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
  
592
    
0
  
592
15-Mar-01
  
Jaekyung Lee
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
  
592
    
0
  
592
15-Mar-01
  
Yeonkun Chung
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
  
592
    
0
  
592
15-Mar-01
  
Youngno Lee
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
  
592
    
0
  
592
15-Mar-01
  
Kitaek Hong
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
  
592
    
0
  
592
15-Mar-01
  
Soondo Park
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
  
592
    
0
  
592
15-Mar-01
  
Joonho Park
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
  
592
    
0
  
592
15-Mar-01
  
Yangjin Kim
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
  
592
    
0
  
592
15-Mar-01
  
Kwangdae Park
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
  
592
    
0
  
592

8


Table of Contents
 
Grant date

  
Name of the grantee

  
Position when granted

  
Exercise period

  
Exercise price

    
Number of granted options*

      
Number of exercised options

  
Number of exercisable options

        
From

  
To

             
15-Mar-01
  
Sungwan Choi
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
370
 
    
0
  
370
15-Mar-01
  
Junghaeng Lee
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Anseok Cho
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Sangcheol Lee
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Taejoo Yoon
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
10
 
    
0
  
10
15-Mar-01
  
Youngman Lee
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
520
 
    
0
  
520
15-Mar-01
  
Youngsoo Kim
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Jongyoung Yoon
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Jaehong Yoo
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Changhwan Bae
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Sian Heo
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
370
 
    
0
  
370
15-Mar-01
  
Seokwon Choi
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Gilho Seo
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
370
 
    
0
  
370
15-Mar-01
  
Youngsoo Shin
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
370
 
    
0
  
370
15-Mar-01
  
Joonbo Cho
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Kiyoul Seo
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Byungdoo Ahn
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Kookshin Kang
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Ingyu Choi
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Hyungyoung Lee
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Youngrok Han
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Hyeyoung Kim
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Kihyun Kim
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Sungshin Cho
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Youngmo Lee
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Jongik Kim
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Kwangmook Park
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Yongseung Lee
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
592
 
    
0
  
592
15-Mar-01
  
Sunggil Lee
  
General Manager
  
16-Mar-04
  
15-Mar-09
  
28,027
 
  
370
 
    
0
  
370
                        

                  
16-Nov-01
  
Jungtae Kim
  
President&CEO
  
17-Nov-04
  
16-Nov-09
         
500,000
 
    
0
  
500,000
16-Nov-01
  
Jungtae Kim
  
President&CEO
  
17-Nov-04
  
16-Nov-09
  
X
1
  
200,000
2
    
0
  
200,000
16-Nov-01
  
Sanghoon Kim
  
Chairman
  
17-Nov-04
  
16-Nov-09
         
150,000
 
    
0
  
150,000
                        

                  
22-Mar-02
  
Choulju Lee
  
Auditor&Executive Director
  
23-Mar-05
  
22-Mar-10
         
30,000
 
    
0
  
30,000
22-Mar-02
  
Henry Cornell
  
Non Executive Director
  
23-Mar-05
  
22-Mar-10
         
10,000
 
    
0
  
10,000
22-Mar-02
  
Keunshik Oh
  
Non Executive Director
  
23-Mar-05
  
22-Mar-10
  
Y
3
  
10,000
 
    
0
  
10,000
22-Mar-02
  
Dongsoo Chung
  
Non Executive Director
  
23-Mar-05
  
22-Mar-10
         
10,000
 
    
0
  
10,000
22-Mar-02
  
Jihong Kim
  
Non Executive Director
  
23-Mar-05
  
22-Mar-10
         
10,000
 
    
0
  
10,000
22-Mar-02
  
Timothy Hartman
  
Non Executive Director
  
23-Mar-05
  
22-Mar-10
         
10,000
 
    
0
  
10,000

1.
 
Exercise price = 51,200 Won x (1 + the increase rate of KOSPI Banking Industry Index x 0.4) / 100. 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.
 
Conditional options up to 200,000: Additional shares shall be granted if the average closing price of Kookmin Bank's stock from August 17, 2004 to November 16, 2004 (or for the three months prior to his resignation, if he resigns earlier than his original tenure) is higher than the stock prices of any other bank listed on the Korea Stock Exchange. The number of options to be granted shall be based on total score, which calculated by the earned total scores of both ROE and market capitalization on November 17, 2004 (or on the date of his resignation, if he resigns earlier than his original tenure). The additional shares will not be exercisable if the CEO works less than 18 months or the earned total score is less than 80 points.
 
3.
 
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.

9


Table of Contents
 
Grant date

  
Name of the grantee

  
Position when granted

  
Exercise period

  
Exercise price

  
Number of granted options*

  
Number of exercised options

  
Number of exercisable options

        
From

  
To

           
22-Mar-02
  
Sunjin Kim
  
Non Executive Director
  
23-Mar-05
  
22-Mar-10
       
3,000
  
0
  
3,000
22-Mar-02
  
Moonsoul Chung
  
Non Executive Director
  
23-Mar-05
  
22-Mar-10
  
Y
  
3,000
  
0
  
3,000
22-Mar-02
  
Kyunghee Yoon
  
Non Executive Director
  
23-Mar-05
  
22-Mar-10
       
3,000
  
0
  
3,000
                        
              
22-Mar-02
  
Jongkyoo Yoon
  
Executive Vice President
  
23-Mar-05
  
22-Mar-10
  
57,100
  
30,000
  
0
  
30,000
22-Mar-02
  
Bonghwan Cho
  
Executive Vice President
  
23-Mar-05
  
22-Mar-10
  
57,100
  
30,000
  
0
  
30,000
22-Mar-02
  
Jaein Suh
  
Executive Vice President
  
23-Mar-05
  
22-Mar-10
  
57,100
  
30,000
  
0
  
30,000
22-Mar-02
  
Bumsoo Choi
  
Executive Vice President
  
23-Mar-05
  
22-Mar-10
  
57,100
  
30,000
  
0
  
30,000
22-Mar-02
  
Bockwoan Kim
  
Executive Vice President
  
23-Mar-05
  
22-Mar-10
  
57,100
  
30,000
  
0
  
30,000
22-Mar-02
  
Kitaek Hong
  
Executive Vice President
  
23-Mar-05
  
22-Mar-10
  
57,100
  
30,000
  
0
  
30,000
22-Mar-02
  
Sunghyun Chung
  
Executive Vice President
  
23-Mar-05
  
22-Mar-10
  
57,100
  
30,000
  
0
  
30,000
22-Mar-02
  
Kisup Shin
  
Executive Vice President
  
23-Mar-05
  
22-Mar-10
  
57,100
  
30,000
  
0
  
30,000
22-Mar-02
  
Sungkyu Lee
  
Executive Vice President
  
23-Mar-05
  
22-Mar-10
  
57,100
  
30,000
  
0
  
30,000
22-Mar-02
  
Byungsang Kim
  
Executive Vice President
  
23-Mar-05
  
22-Mar-10
  
57,100
  
30,000
  
0
  
30,000
22-Mar-02
  
Jongyoung Yoon
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Jaeil Song
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Hyunggoo Shim
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Junghaeng Lee
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Joonsup Chang
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Youngno Lee
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Dongsoon Park
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Sungbin Kim
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Sungbok Park
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Yeonkun Chung
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Mahnsoo Song
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
15,000
  
0
  
15,000
22-Mar-02
  
Jeongyeon Kim
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
5,000
  
0
  
5,000
22-Mar-02
  
Hakyeon Jeong
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
5,000
  
0
  
5,000
22-Mar-02
  
Jongwhan Byun
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
5,000
  
0
  
5,000
22-Mar-02
  
Jaehan Kim
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
5,000
  
0
  
5,000
22-Mar-02
  
Jongok Na
  
Head of Regional Head Office
  
23-Mar-05
  
22-Mar-10
  
57,100
  
5,000
  
0
  
5,000
26-Jul-02
  
Donald MacKenzie
  
Executive Vice President
  
27-Jul-05
  
26-Jul-10
  
58,800
  
30,000
  
0
  
30,000
    
  
  
  
  
  
  
  
Total
                           
2,681,339
  
530,108
  
2,151,231
    
  
  
  
  
  
  
  

10


Table of Contents
 
1.4.    Dividend
 
The following table shows dividend policy and the related information for the last three years.
 
(Units:  in millions of Won, shares, and %)
 
    
2001

    
2000

  
1999

Net income for the period
  
740,565
 
  
719,700
  
107,901
Earnings per share (Won)
  
3,706
1
  
2,403
  
388
Maximum amount available for dividend
  
604,984
2
  
614,046
  
22,129
Total dividends amount
  
119,866
 
  
151,009
  
16,938
Dividend payout ratio
  
16.19
3
  
20.76
  
13.80
Cash dividends per common share (Won)
  
400
 
  
500
  
50
Stock dividends per common share (%)
  
6
 
  
  
Dividends per preferred share (Won)
  
 
  
50
  
50
Dividend yield ratio
  
0.80
4
  
3.36
  
0.28
Net asset value per common share (Won)
  
29,742
5
  
12,533
  
13,079
Ordinary income per common shares (Won)
  
3,706
 
  
2,403
  
388

1.
 
Earnings per share = net income (740,565,213,105 Won) / weighted average number of shares (199,825,909 shares)
 
2.
 
Maximum amount available for dividend = retained earnings before appropriations (672,418 millions of Won) + transferred from prior years’ reserves (8,483 millions of Won) – appropriated amount pursuant to the relevant rules and regulations (75,917 millions of Won)
 
3.
 
Dividend payout ratio = total dividend amount for common shares (119,866,365,600 Won) / net income (740,565,213,105 Won).
 
4.
 
Dividend yield ratio = dividend per share (400 Won) / market closing price for December 31, 2001 (49,800 Won)
 
5.
 
Net asset value per common share = total shareholders’ equity (8,913,542 millions of Won) / total issued shares as of December 31, 2001 (299,697,462 shares).

11


Table of Contents
2.    Business
 
2.1.    Business Overview
 
We are the largest commercial bank in Korea in terms of assets, deposits, branch network and retail customer base. Our primary focus is branch-based lending to and deposit-taking from retail customers and small and medium-sized enterprises. The principal components of our business are general household, mortgage and small and medium-sized enterprise lending, credit card operations and investment trust account management business and capital market activities. We also make loans and provide banking services to large domestic corporate customers.
 
We have developed one of the most extensive domestic branch networks, with 1,108 domestic branches and sub-branches as of September 30, 2002. Our extensive branch network and retail customer base have provided us with a source of stable and low cost funding.
 
2.2.    Market Shares
 
2.2.1.    Market Share of Deposits in Won
 
The following table shows the market share of Kookmin Bank among 9 nationwide commercial banks in terms of deposits in Won (which includes certificate of deposits) as of the dates indicated. Numbers for 2000 are proforma results of Former Kookmin Bank and H&CB.
 
(Units: in 100 millions of Won, %)
 
    
September 30, 2002

  
December 31, 2001

  
December 31, 2000

    
Amount

  
%

  
Amount

  
%

  
Amount

  
%

Kookmin Bank
  
1,221,923
  
32.3
  
1,140,587
  
33.7
  
1,024,784
  
33.8
Woori Bank
  
572,855
  
15.2
  
513,903
  
15.2
  
486,305
  
16.0
Chohung Bank
  
398,672
  
10.6
  
355,967
  
10.5
  
312,699
  
10.3
Hana Bank
  
347,314
  
9.2
  
322,652
  
9.5
  
275,777
  
9.1
Shinhan Bank
  
329,334
  
8.7
  
301,285
  
8.9
  
263,513
  
8.7
Korea Exchange Bank
  
291,759
  
7.7
  
253,284
  
7.5
  
215,049
  
7.1
Korea First Bank
  
226,932
  
6.0
  
171,800
  
5.1
  
163,302
  
5.4
KorAm Bank
  
200,318
  
5.3
  
171,834
  
5.1
  
167,843
  
5.5
Seoul Bank
  
188,658
  
5.0
  
151,458
  
4.5
  
123,404
  
4.1
    
  
  
  
  
  
Total
  
3,777,765
  
100
  
3,382,770
  
100
  
3,032,676
  
100
    
  
  
  
  
  

12


Table of Contents
 
2.2.2.    Market Share of Household Loans
 
The following table shows the market share of Kookmin Bank among 9 nationwide commercial banks in terms of household loans as of the dates indicated. Numbers for 2000 are proforma results of Former Kookmin Bank and H&CB.
 
(Units: in 100 millions of Won, %)
 
    
September 30, 2002

  
December 31, 2001

  
December 31, 2000

    
Amount

  
%

  
Amount

  
%

  
Amount

  
%

Kookmin Bank
  
706,027
  
41.2
  
601,536
  
47.2
  
488,734
  
56.2
Woori Bank
  
214,599
  
12.5
  
132,501
  
10.4
  
84,896
  
9.8
Shinhan Bank
  
154,238
  
9.0
  
107,729
  
8.4
  
56,987
  
6.5
Chohung Bank
  
148,752
  
8.7
  
90,723
  
7.1
  
53,855
  
6.2
Hana Bank
  
143,815
  
8.4
  
105,143
  
8.2
  
53,337
  
6.1
Korea First Bank
  
99,895
  
5.8
  
78,874
  
6.2
  
50,326
  
5.8
Korea Exchange Bank
  
91,597
  
5.4
  
64,053
  
5.0
  
36,752
  
4.2
Seoul Bank
  
81,836
  
4.8
  
53,156
  
4.2
  
17,435
  
2.0
KorAm Bank
  
72,014
  
4.2
  
41,807
  
3.3
  
27,742
  
3.2
    
  
  
  
  
  
Total
  
1,712,773
  
100
  
1,275,522
  
100
  
870,064
  
100
    
  
  
  
  
  
 
2.2.3.    Market Share of Mortgage Loans
 
The following table shows the market share of Kookmin Bank among 9 nationwide commercial banks in terms of mortgage loans as of the dates indicated. Numbers for 2000 are proforma results of Former Kookmin Bank and H&CB.
 
(Units: in 100 millions of Won, %)
 
    
September 30, 2002

  
December 31, 2001

  
December 31, 2000

    
Amount

  
%

  
Amount

  
%

  
Amount

  
%

Kookmin Bank
  
314,645
  
80.9
  
253,495
  
87.4
  
226,460
  
90.7
Woori Bank
  
19,360
  
5.0
  
10,998
  
3.8
  
11,042
  
4.4
Hana Bank
  
14,593
  
3.8
  
7,552
  
2.6
  
2,017
  
0.8
Korea Exchange Bank
  
14,520
  
3.7
  
8,719
  
3.0
  
2,394
  
1.0
KorAm Bank
  
7,822
  
2.0
  
2,432
  
0.8
  
2,264
  
0.9
Shinhan Bank
  
7,305
  
1.9
  
2,943
  
1.0
  
2,374
  
1.0
Seoul Bank
  
6,355
  
1.6
  
1,078
  
0.4
  
862
  
0.3
Chohung Bank
  
3,133
  
0.8
  
2,326
  
0.8
  
1,702
  
0.7
Korea First Bank
  
976
  
0.3
  
658
  
0.2
  
550
  
0.2
    
  
  
  
  
  
Total
  
388,709
  
100
  
290,201
  
100
  
249,665
  
100
    
  
  
  
  
  

13


Table of Contents
 
2.3.    Source and Use of Funds
 
2.3.1.    Source of Funds
 
(Unit: in millions of Won)
 
    
September 30, 2002

    
December 31, 2001

    
December 31, 2000

         
Average balance

  
Interest rate (%)

    
Average balance

  
Interest rate (%)

    
Average balance

  
Interest rate (%)

Won currency
  
Deposits and Mutual installment
  
112,385,172
  
4.27
    
63,743,997
  
5.53
    
47,038,144
  
6.18
    
Certificate of deposit
  
1,869,185
  
4.76
    
2,022,414
  
6.10
    
1,910,630
  
6.99
    
Borrowings
  
4,687,222
  
4.47
    
3,784,147
  
4.85
    
3,317,619
  
6.43
    
Call money
  
1,089,947
  
3.99
    
403,937
  
4.11
    
562,807
  
4.89
    
Other
  
12,702,223
  
6.97
    
9,112,858
  
7.57
    
5,799,092
  
10.78
         
  
    
  
    
  
Subtotal
  
132,733,749
  
4.54
    
79,067,353
  
5.74
    
56,628,292
  
6.67
         
  
    
  
    
  
Foreign currency
  
Deposits
  
1,083,844
  
1.32
    
952,701
  
3.08
    
882,344
  
5.20
    
Borrowings
  
2,191,757
  
2.65
    
2,018,537
  
5.47
    
2,725,810
  
7.10
    
Call money
  
328,095
  
1.71
    
223,156
  
3.67
    
193,324
  
6.31
    
Finance debentures
  
1,122,501
  
3.63
    
1,430,804
  
5.68
    
1,521,343
  
7.75
    
Other
  
20,338
  
    
15,081
  
    
13,666
  
         
  
    
  
    
  
Subtotal
       
4,746,536
  
2.63
    
4,640,279
  
5.32
    
5,336,487
  
7.20
         
  
    
  
    
  
Other
  
Total Shareholders’ Equity
  
10,248,391
  
    
7,463,687
  
    
5,001,918
  
    
Allowance for credit losses
  
65,074
  
    
353,183
  
    
519,496
  
    
Other
  
8,270,235
  
    
4,065,899
  
    
3,032,325
  
         
  
    
  
    
  
Subtotal
  
18,583,700
  
    
11,882,769
  
    
8,553,739
  
         
  
    
  
    
  
Total
  
156,063,984
  
3.94
    
95,590,401
  
5.00
    
72,518,518
  
5.92
         
  
    
  
    
  

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Table of Contents
 
2.3.2.    Use of Funds
 
(Unit: in millions of Won)
 
    
September 30, 2002

    
December 31, 2001

    
December 31, 2000

         
Average balance

  
Interest rate (%)

    
Average balance

  
Interest rate (%)

    
Average balance

  
Interest rate (%)

Won currency
  
Loans
  
102,152,955
  
7.88
    
53,575,082
  
8.87
    
38,301,330
  
9.71
    
Advances for customers
  
96,544
  
4.12
    
127,704
  
3.84
    
337,987
  
4.62
    
Call loan
  
872,710
  
4.33
    
1,765,067
  
4.80
    
524,653
  
6.59
    
Due from banks
  
1,102,690
  
4.59
    
1,339,572
  
5.60
    
3,276,652
  
7.39
    
Securities
  
30,365,243
  
5.66
    
23,861,424
  
6.78
    
18,030,147
  
9.38
    
Other
  
490,133
  
    
614,014
  
    
145,983
  
    
Private placement corporate bonds
  
1,733,142
  
6.74
    
2,065,179
  
10.32
    
1,878,194
  
9.21
    
Credit card accounts
  
5,564,866
  
10.49
    
912,210
  
17.63
    
565,673
  
10.54
    
Allowance for credit losses (—)
  
1,504,583
  
    
1,297,930
  
    
1,224,823
  
         
  
    
  
    
  
Subtotal
  
140,873,700
  
7.58
    
82,962,322
  
8.50
    
61,835,796
  
9.73
         
  
    
  
    
  
Foreign currency
  
Loans
  
3,678,092
  
3.09
    
3,870,853
  
5.66
    
3,073,781
  
7.69
    
Call loan
  
210,625
  
2.01
    
185,466
  
4.15
    
209,312
  
6.88
    
Due from banks
  
142,321
  
1.39
    
121,994
  
3.28
    
1,335,708
  
7.50
    
Bills bought
  
867,404
  
4.92
    
1,045,331
  
7.60
    
719,683
  
10.16
    
Securities
  
1,283,633
  
9.56
    
1,079,359
  
9.13
    
961,991
  
12.48
    
Other
  
19,022
  
    
116,454
  
    
  
    
Allowance for credit losses (—)
  
277,401
  
    
116,454
  
    
452,210
  
         
  
    
  
    
  
Subtotal
       
5,923,696
  
4.94
    
6,152,844
  
7.11
    
5,848,355
  
9.40
         
  
    
  
    
  
Other
  
Cash
  
882,417
  
    
530,451
  
    
421,390
  
    
Fixed assets used for business purpose
  
3,049,764
  
    
1,462,413
  
    
1,298,813
  
    
Other
  
5,334,407
  
    
4,482,371
  
    
3,114,164
  
         
  
    
  
    
  
Subtotal
  
9,266,588
  
    
6,475,235
  
    
4,834,367
  
         
  
    
  
    
  
Total
  
156,063,984
  
7.03
    
95,590,401
  
7.83
    
72,518,518
  
9.06
         
  
    
  
    
  

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2.4.    Principal Banking Activities
 
2.4.1.    Deposits
 
The following table shows the average balances of our deposits for the past two years and for the first nine months ended September 30, 2002 and ending balances as of the dates indicated.
 
(Unit: in millions of Won)
 
    
September 30, 2002

    
December 31, 2001

    
December 31, 2000

         
Average balance

  
Ending balance

    
Average balance

  
Ending balance

    
Average balance

  
Ending balance

Deposits in Won
  
Demand deposits
  
10,324,260
  
12,520,359
    
4,832,281
  
10,824,005
    
3,720,546
  
4,173,966
    
Time & savings deposits
  
92,765,950
  
95,079,757
    
53,496,908
  
89,080,935
    
40,279,328
  
43,495,480
    
Mutual installment deposits
  
8,245,049
  
7,604,811
    
6,469,772
  
8,871,193
    
4,632,965
  
5,521,161
    
Mutual installment for housing
  
4,362,565
  
4,660,379
    
928,398
  
4,128,489
    
73,831
  
204,111
    
Certificates of deposits
  
1,869,185
  
2,327,069
    
2,022,414
  
1,154,056
    
1,910,630
  
2,424,947
         
  
    
  
    
  
Subtotal
       
117,567,009
  
122,192,375
    
67,749,773
  
114,058,678
    
50,617,300
  
55,819,665
         
  
    
  
    
  
Deposits in foreign currency
  
1,083,844
  
986,415
    
952,701
  
1,102,626
    
858,330
  
702,481
         
  
    
  
    
  
Trust deposits
  
Money trust
  
17,715,948
  
16,340,721
    
20,375,456
  
19,739,709
    
22,279,546
  
20,349,257
    
Property trust
  
19,820,158
  
20,229,269
    
5,409,033
  
12,559,922
    
92,838
  
875,984
         
  
    
  
    
  
Subtotal
       
37,536,106
  
36,569,990
    
25,784,489
  
32,299,631
    
22,372,384
  
21,225,241
         
  
    
  
    
  
Total
       
156,186,959
  
159,748,780
    
94,486,963
  
147,460,935
    
73,848,014
  
77,747,387
         
  
    
  
    
  
 
2.4.2.    Average Deposit per Domestic Branch
 
The following table shows the average balances of our deposits per domestic branch as of the dates indicated.
 
(Unit: in millions of Won)
 
      
September 30, 2002

    
December 31, 2001

    
December 31, 2000

Deposits
    
122,370
    
133,548
    
120,422
Deposits in Won
    
121,548
    
132,320
    
119,089

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2.4.3.    Average Deposit per Employee
 
The following table shows the average balances of our deposits per employee as of the dates indicated.
 
(Unit: in millions of Won)
      
September 30, 2002

    
December 31, 2001

    
December 31, 2000

Deposits
    
7,192
    
7,243
    
5,917
Deposits in Won
    
7,143
    
7,176
    
5,852
 
2.4.4.    Loan Balances
 
The following table shows the average balances of our loans for the past two years and for the first nine months ended September 30, 2002 and ending balances as of the dates indicated.
 
(Unit: in millions of Won)
    
September 30, 2002

  
December 31, 2001

  
December 31, 2000

    
Average balance

  
Ending
balance

  
Average balance

  
Ending
balance

  
Average balance

  
Ending balance

Loans in Won
  
102,110,345
  
110,947,427
  
53,498,087
  
94,698,769
  
38,301,330
  
43,436,111
Loans in foreign currency
  
3,683,440
  
3,521,209
  
3,924,562
  
4,174,237
  
3,077,642
  
2,970,653
Advances to customers
  
115,566
  
73,337
  
244,158
  
199,831
  
337,987
  
240,992
    
  
  
  
  
  
Subtotal
  
105,909,351
  
114,541,973
  
57,666,807
  
99,072,837
  
41,716,959
  
46,647,756
    
  
  
  
  
  
Trust account loans
  
848,871
  
653,829
  
2,194,851
  
1,117,817
  
4,216,018
  
3,170,756
    
  
  
  
  
  
Total
  
106,758,222
  
115,195,802
  
59,861,658
  
100,190,654
  
45,932,977
  
49,818,512
    
  
  
  
  
  
 
2.4.5.    Loan Balances as of September 30, 2002 by Remaining Maturities
 
(Unit: in millions of Won)
    
Less than 1
year

  
More than 1
year-less
than 3 years

  
More than 3
years-less
than 5 years

  
More than 5
years

  
Total

Loans in Won
  
51,317,450
  
40,589,920
  
6,662,271
  
12,377,786
  
110,947,427
Loans in foreign currencies
  
2,281,230
  
580,091
  
197,474
  
462,414
  
3,521,209

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2.4.6.    Loan Balances by Uses
 
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, 2002

  
December 31, 2001

  
December 31, 2000

Loans to enterprise
  
Loans for operations
  
34,332,289
  
29,286,707
  
20,899,277
    
Loans for equipments
  
5,163,467
  
4,434,447
  
4,393,664
Loans to households
  
39,177,012
  
34,648,918
  
14,215,303
Loans to public sector & others
  
Loans for operations
  
738,637
  
737,206
  
1,914,841
    
Loans for equipment
  
50,493
  
57,211
  
49,508
Loans on property formation savings
  
101,986
  
155,201
  
248,271
Loans for housing
  
31,318,266
  
25,342,969
  
1,663,904
Inter-bank loans
  
24,598
  
36,110
  
51,343
Others
  
40,679
  
  
         
  
  
Total
  
110,947,427
  
94,698,769
  
43,436,111
         
  
  
 
2.4.7.    Loan to Deposit Ratio
 
The following table shows loan to deposit ratio as of indicated dates.
 
(Units: in millions of Won, %)
    
September 30, 2002

  
December 31, 2001

  
December 31, 2000

Loans1 (A)
  
102,110,345
  
53,498,087
  
38,301,330
Deposits2 (B)
  
117,567,009
  
67,749,773
  
50,617,300
    
  
  
Loan to deposit ratio (A/B)
  
86.85
  
78.96
  
75.67
    
  
  
 
2.4.8.    Guarantees and Acceptances
 
(Unit: in millions of Won)
      
September 30, 2002

    
December 31, 2001

    
December 31, 2000

Confirmed
    
3,009,302
    
3,521,970
    
3,035,968
Unconfirmed
    
1,336,807
    
1,369,723
    
1,183,433
      
    
    
Total
    
4,346,109
    
4,891,693
    
4,219,401
      
    
    

1.
 
Average balance of loans in Won for nine months ended September 30, 2002
2.
 
Average balance of deposits in Won for nine months ended September 30, 2002, which includes certificate of deposits

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2.4.9.    Breakdown of Securities Investment
 
The following table shows the average balances of our securities for the past two years and for the first nine months ended September 30, 2002 and ending balances as of indicated dates.
 
(Unit: in millions of Won)
    
September 30, 2002

  
December 31, 2001

  
December 31, 2000

         
Average balance

  
Ending balance

  
Average balance

  
Ending balance

  
Average balance

  
Ending balance

Securities in Won (Banking account)
  
Monetary stabilization bonds
  
2,773,425
  
2,552,173
  
3,571,137
  
3,139,925
  
2,773,897
  
1,973,079
    
Government and public bonds
  
4,080,198
  
4,635,422
  
4,454,446
  
4,602,576
  
4,095,760
  
4,595,840
    
Debentures
  
13,380,635
  
12,684,949
  
11,410,904
  
14,879,912
  
8,431,478
  
9,151,880
    
Stocks
  
2,166,005
  
2,116,500
  
1,309,134
  
2,154,449
  
1,004,648
  
1,142,113
    
Others
  
7,964,979
  
7,485,258
  
3,115,803
  
7,348,220
  
1,724,364
  
1,588,295
         
  
  
  
  
  
Sub-total
  
30,365,242
  
29,474,302
  
23,861,424
  
32,125,082
  
18,030,147
  
18,451,207
         
  
  
  
  
  
Securities (Trust account)
  
Monetary stabilization bonds
  
1,501,710
  
865,980
  
3,228,021
  
2,725,071
  
3,654,209
  
3,365,883
    
Government and public bonds
  
2,223,446
  
1,561,365
  
2,990,549
  
3,059,777
  
1,894,815
  
2,816,167
    
Debentures
  
8,069,491
  
8,038,130
  
7,635,765
  
7,613,829
  
6,966,409
  
6,828,929
    
Stocks
  
894,341
  
899,619
  
672,845
  
890,151
  
568,650
  
547,797
    
Foreign securities
  
528,991
  
605,663
  
118,147
  
370,415
  
39,711
  
0
    
Others
  
3,949,909
  
4,097,012
  
4,340,103
  
3,913,328
  
5,718,473
  
3,576,520
         
  
  
  
  
  
Subtotal
  
17,167,888
  
16,067,769
  
18,985,430
  
18,572,571
  
18,842,267
  
17,135,296
         
  
  
  
  
  
Foreign currency (Banking account)
  
Foreign securities
  
945,440
  
937,795
  
736,084
  
909,730
  
631,040
  
583,229
    
Off-shore foreign securities
  
338,193
  
281,535
  
343,275
  
382,542
  
370,664
  
316,868
         
  
  
  
  
  
Subtotal
  
1,283,633
  
1,219,330
  
1,079,359
  
1,292,272
  
1,001,704
  
900,097
         
  
  
  
  
  
Total
  
48,816,763
  
46,761,401
  
43,926,213
  
51,989,925
  
37,874,118
  
36,486,600
         
  
  
  
  
  
 
2.4.10.    Trust Account (money trust)
 
(Unit: in millions of Won)
    
September 30, 2002

  
December 31, 2001

  
December 31, 2000

    
Total amount trusted

  
Trust fees

  
Total amount trusted

  
Trust fees

  
Total amount trusted

  
Trust fees

Return-guaranteed trust
  
1,453
  
42,396
  
25,551
  
- 17,147
  
581,332
  
- 77,157
Performance trust
  
37,534,653
  
178,844
  
25,758,938
  
353,890
  
21,821,152
  
    308,287
    
  
  
  
  
  
Total
  
37,536,106
  
221,240
  
25,784,489
  
336,743
  
22,402,484
  
231,130
    
  
  
  
  
  

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2.4.11. Credit Card
 
2.4.11.1. BC Card
 
(Unit: in millions of Won unless indicated otherwise)
 
      
As of or for the nine months
ended September 30

  
As of or for the year ended December 31

           
2002
  
2001
  
2000
Number of card holders (Person)
    
Corporate
  
56,904
  
23,811
  
17,942
      
Individual
  
4,862,346
  
4,017,950
  
3,053,224
Number of merchants
         
291,321
  
262,619
  
196,264
Profit
    
Sales1
  
20,579,267
  
22,272,700
  
12,538,100
      
Fee revenue
  
767,770
  
819,399
  
440,653
 
2.4.11.2. Kookmin Card2
(Unit: in millions of Won unless indicated otherwise)
 
      
As of or for the nine months
ended September 30

  
As of or for the year ended December 31

           
2002
  
2001
  
2000
Number of card holders (Person)
    
Corporate
  
334,708
  
105,600
  
137,657
      
Individual
  
12,651,860
  
9,605,946
  
8,036,140
Number of merchants
         
1,532,601
  
1,675,176
  
1,230,838
Profit
    
Sales1
  
62,490,402
  
65,382,300
  
37,875,680
      
Fee revenue3
  
85,601
  
142,700
  
115,355
 
2.5.     Property, Plants and Equipment
 
2.5.1.    Branch Network
 
As of September 30, 2002, we had 1,020 branches and 88 sub-branches in Korea, the largest number of branches among Korean commercial banks. We believe that our extensive branch network in Korea and retail customer base provide us with a source of stable and relatively low cost funding. Approximately 40% of our branches and sub-branches are located in Seoul.

1.
 
Includes credit card receivables and cash advances.
2.
 
Sales include credit card receivables and cash advances. This is the result of Kookmin Credit Card, our KOSDAQ-registered, majority-owned subsidiary.
3.
 
Kookmin Bank recognizes fee revenues under a fee agreement with Kookmin Credit Card. These amounts are the revenues Kookmin Bank received from Kookmin Credit Card pursuant to the fee agreement. Kookmin Bank also recognizes non-operating revenue in connection with consolidation of Kookmin Credit Card under equity method.

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We also have three subsidiaries in Luxemburg, Hong Kong and London and three branches in Tokyo, New York and Auckland. We do not own any material properties outside of Korea.
 
2.5.2.    Automated Banking Machines
 
We have established an extensive network of automated banking machines, which are located in branches and in Autobanks (unmanned outlets). These automated banking machines consist of ATMs, cash dispensers and passbook printers. As of September 30, 2002, we had 5,220 ATMs, 3,439 cash dispensers and 915 passbook printers.
 
2.5.3.    Property
 
Our registered office and corporate headquarters are located at 9-1, 2-Ga, Namdaemun-Ro, Jung-Gu, Seoul, Korea. In addition, we own a few other headquarters, IT centers and many properties for branch space around the Korea.
 
The book value of all the properties owned by us as of September 30, 2002 was W1,532,631 million. We do not own any material properties outside of Korea.
 
2.6.    Other Details Relevant to Investment Decision
 
2.6.1.    BIS Risk-adjusted Capital Ratios
 
(Units: in millions of Won, %)
 
    
September 30, 2002

  
December 31, 2001

  
December 31, 2000

Risk-adjusted capital (A)
  
14,134,513
  
11,750,856
  
6,297,886
Risk-weighted assets (B)
  
134,678,260
  
114,849,227
  
56,346,867
    
  
  
BIS ratios (A/B)
  
10.50
  
10.23
  
11.18
    
  
  
 
2.6.2.    Non-performing Loans1
 
(Units: in millions of Won, %)
 
September 30, 2002

 
December 31, 2001

 
December 31, 2000

Balance of NPL
 
NPL to total loans
 
Balance of NPL
 
NPL to total loans
 
Balance of NPL
 
NPL to total loans
2,504,223
 
1.95
 
2,954,464
 
2.62
 
2,656,100
 
4.84

1.
 
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.

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2.6.3.    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, 2002

    
December 31, 2001

    
December 31, 2000

Loan loss allowance
 
Domestic
    
2,325,910
    
2,255,068
    
1,822,208
   
Overseas
    
16,920
    
16,111
    
4,492
          
    
    
   
Total
    
2,342,830
    
2,271,179
    
1,826,700
          
    
    
Write-offs for the nine months ended September 30, 2002
        
891,010
    
1,090,029
    
558,480

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3.     Financial Information
 
See 9. Exhibits / 9.1. List of Financial Statements.

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Table of Contents
 
4.     Auditors’ Report
 
4.1.     Report of the Independent Auditor
 
See 9. Exhibits / 9.1. List of Financial Statements.
 
4.2.     Compensation to the Independent Auditor
 
4.2.1.    Audit Service
 
The aggregate remuneration paid by us to the independent auditor for the last three years of the year ended December 31, 2001, 2000 and 1999 was 1,090 million Won, 950 million Won and 580 million Won, respectively.
 
4.2.2.    Service Other than Audit
 
The following is a description for the last three years on services and the relevant fees and commissions we paid to the independent auditor for the respective service.
 
(Units: in millions of Won)
 
Year

  
Service description

    
Amount of payment

2002 
  
—  Project for improving the accounting process
—  Advisory service for the conversion process in US GAAP
    
690
1,450
2001
  
—  Due diligence on the assets and liabilities in connection with the merger
—  Service on corporate tax adjustment
    
2,400
85
2000
  
—  Service on corporate tax adjustment
    
30
1999
  
—  Service on corporate tax adjustment
    
11

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5.    Corporate Governance and Affiliated Companies
 
5.1.    Board of Directors
 
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 five management committees that serve under the board:
 
 
 
the Board Steering Committee;
 
 
 
the Management Strategy Committee;
 
 
 
the Risk Management Committee;
 
 
 
the Audit Committee; and
 
 
 
the Compensation Committee.
 
Each committee member is appointed by the board of directors, except for members of the Audit Committee, who are elected at the general meeting of stockholders. For list of our directors, see 7. Directors, Senior Management and Employees / 7.1. Executive Directors and 7.2. 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 meetings of stockholders, the committee examines the agenda for, and financial statements and other reports to be submitted by, the board of directors to each general meeting of stockholders. The committee holds regular meetings every quarter.

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5.3.    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 meeting of shareholders is adopted by resolution of the board of directors, at which the convening of the general meeting of shareholders is determined, the shareholders may exercise their voting rights in writing without participating the meeting. 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 and submit to the Bank one day before the date set for the general meeting of shareholders.
 
5.4.    Compensation to the Directors
 
For the nine months ended September 30, 2002, the aggregate of the remuneration paid and benefits-in-kind paid by us to 1) the Chairman, President & CEO and our other executive directors and 2) our non-executive directors was W2,652 million, W418 million, respectively.
 
As part of remuneration, Kookmin Bank also granted stock options to directors. See 1. Introduction to the Bank / 1.3. Capital Structure / 1.3.4. Stock Option.
 
5.5.    Affiliated Companies
 
5.5.1.    List of Affiliates
 
As of September 30, 2002, we have following affiliates.
 
 
 
Kookmin Leasing Co., Ltd.
 
 
 
Jooeun Leasing Co., Ltd.
 
 
 
KB Investment Co., Ltd.
 
 
 
Kookmin Credit Card Co., Ltd.
 
 
 
KB Investment Trust Management Co., Ltd.
 
 
 
KB Real Estate Trust Co., Ltd.
 
 
 
Kookeun Credit Information Co., Ltd.
 
 
 
Kookmin Data System Corporation

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Table of Contents
 
 
 
Kookmin Futures Co., Ltd.
 
 
 
ING Life Korea Ltd.
 
 
 
Kookmin Bank Luxemburg. S.A.
 
 
 
Kookmin Bank International (London) Ltd.
 
 
 
Kookmin Finance Hong Kong Ltd.
 
5.5.2.    Operating Results of Affiliates
 
(Unit: in millions of Won)
         
Accounting results of the latest fiscal year

Company name

  
Closing date

  
Total
Assets

  
Total Liabilities

  
Total Equities

  
Sales

  
Net income

Kookmin Leasing
  
March 31, 2002
  
513,160
  
546,530
  
-33,370
  
99,276
  
-39,624
Jooeun Leasing1
  
March 31, 2002
  
226,204
  
199,754
  
26,450
  
42,523
  
924
KB Investment
  
December 31, 2001
  
92,941
  
9,009
  
83,932
  
14,890
  
9,953
Kookmin Credit Card
  
December 31, 2001
  
10,577,491
  
9,399,912
  
1,177,579
  
2,340,631
  
458,195
KB Investment Trust Management
  
March 31, 2002
  
60,074
  
14,945
  
45,129
  
34,161
  
19,243
KB Real Estate Trust
  
December 31, 2001
  
290,096
  
211,283
  
78,813
  
52,568
  
3,864
Kookeun Credit Information
  
December 31, 2001
  
13,263
  
3,595
  
9,668
  
26,252
  
2,022
Kookmin Data System Corporation
  
December 31, 2001
  
15,464
  
3,053
  
12,411
  
28,845
  
2,577
Kookmin Futures
  
March 31, 2002
  
46,826
  
23,396
  
23,430
  
14,622
  
3,519
ING Life Korea
  
March 31, 2002
  
1,135,081
  
1,083,209
  
51,872
  
712,355
  
37,241
Kookmin Bank Luxemburg2
  
September 30, 2002
  
474,925
  
446,934
  
27,991
  
12,987
  
2,036
Kookmin Bank International (London)3
  
September 30, 2002
  
344,302
  
297,831
  
46,471
  
8,467
  
-234
Kookmin Finance Hong Kong4
  
September 30, 2002
  
345,892
  
285,034
  
60,858
  
17,722
  
10,582

1.
 
On August 30, 2002, Kookmin Bank entered into an agreement with Sun Capital in connection with the disposition of 65.43% of its stake in Jooeun Leasing. On October 28, 2002, Kookmin Bank additionally disposed of 5.03% of the total issued and outstanding shares of Jooeun Leasing. Currently Kookmin Bank holds 14.97% of the company.
2.
 
As of or for the nine months ended September 30, 2002
3.
 
As of or for the nine months ended September 30, 2002
4.
 
As of or for the nine months ended September 30, 2002

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Table of Contents
 
6.    Equity Securities
 
6.1.    Major Shareholders
 
The following table presents information regarding the beneficial ownership of our shares at September 30, 2002 by each person known by us to own beneficially more than 5% of our outstanding shares.
 
Name

  
Number of Shares of Common Stock

    
Percentage of Total Outstanding Shares of Common Stock

 
The Government of Korea
  
30,623,761
    
9.64
%
The Bank of New York1
  
42,941,310
    
13.52
%
    
    

Total
  
73,565,071
    
23.16
%
    
    

 
6.2.    Market Price Information
 
6.2.1.    Common Stock Traded in Korea Stock Exchange
 
(Unit: in Won, thousands of shares)
    
April

  
May

  
June

  
July

  
October

  
September

Registered
  
High
  
63,500
  
66,400
  
63,800
  
62,100
  
56,500
  
57,200
Common Shares
  
Low
  
54,300
  
60,000
  
57,100
  
53,300
  
50,700
  
44,750
         
  
  
  
  
  
Trading Volume
       
42,560
  
30,603
  
26,999
  
26,808
  
18,972
  
30,320
         
  
  
  
  
  
 
6.2.2.    American Depositary Shares Traded in New York Stock Exchange
 
(Unit: in US$, thousands of shares)
    
April

  
May

  
June

  
July

  
October

  
September

American
  
High
  
49.30
  
53.96
  
51.99
  
51.76
  
47.62
  
46.08
Depositary Shares
  
Low
  
41.35
  
46.50
  
47.70
  
44.10
  
42.10
  
35.43
         
  
  
  
  
  
Trading Volume
       
7,133
  
4,763
  
8,389
  
8,197
  
5,095
  
6,829
         
  
  
  
  
  

1.
 
As depositary bank of American Depositary Shares of Kookmin Bank

28


Table of Contents
 
7.    Directors, Senior Management and Employees
 
As of September 30, 2002, our board of directors, which consists of 3 executive directors and 8 non-executive directors, has the ultimate responsibility for the management of our affairs.
 
7.1.    Executive Directors
 
Our 3 executive directors consist of the chairman, president & CEO, and one auditor & executive director.
 
The names and positions of our directors are set forth below.
 
Name

 
Date of Birth

 
Position

Sanghoon Kim
 
03/13/1942
 
Chairman
Jungtae Kim
 
08/15/1947
 
President & CEO
Choulju Lee
 
11/22/1939
 
Auditor & Executive Director
 
7.2.    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, 2002, 8 non-executive directors are in office.
 
Our current non-executive directors are as follows.
 
Name

 
Date of Birth

 
Position

Moonsoul Chung
 
03/07/1938
 
Non-Executive Director
Timothy Hartman
 
03/01/1939
 
Non-Executive Director
Sunjin Kim
 
06/08/1942
 
Non-Executive Director
Dongsoo Chung
 
09/24/1945
 
Non-Executive Director
Keunshik Oh
 
09/12/1946
 
Non-Executive Director
Kyunghee Yoon
 
01/05/1947
 
Non-Executive Director
Henry Cornell
 
04/11/1956
 
Non-Executive Director
Jihong Kim
 
06/08/1956
 
Non-Executive Director

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Table of Contents
 
7.3.    Senior Management
 
In addition to the executive directors who are also our executive officers, we currently have the following executive officers:
 
Name

 
Date of Birth

 
Position

Jongkyoo Yoon
 
10/13/1955
 
Executive Vice President
Donald MacKenzie
 
12/20/1948
 
Executive Vice President
Bonghwan Cho
 
03/30/1950
 
Executive Vice President
Sungchul Kim
 
09/10/1951
 
Executive Vice President
Jaein Suh
 
08/11/1947
 
Executive Vice President
Buhmsoo Choi
 
08/08/1956
 
Executive Vice President
Bockwoan Kim
 
11/17/1944
 
Executive Vice President
Youngil Kim
 
07/06/1953
 
Executive Vice President
Kitaek Hong
 
01/16/1948
 
Executive Vice President
Sunghyun Chung
 
08/10/1947
 
Executive Vice President
Kisup Shin
 
10/29/1955
 
Executive Vice President
Seongkyu Lee
 
10/25/1959
 
Executive Vice President
Jongin Park
 
03/10/1954
 
Executive Vice President
Byungsang Kim
 
02/19/1947
 
Executive Vice President
Woojung Lee
 
07/11/1949
 
Executive Vice President
 
7.4.    Employees
 
(As of September 30, 2002, Unit: in millions of Won)
    
Number of Employees

  
Average Tenure
(year)

    
Total Payment for the 9 Months

    
Average Monthly Payment per Person

    
Full-time

  
Contractual

  
Total

            
Male
  
13,671
  
1,183
  
14,854
  
14.28
    
594,612
    
4.4
Female
  
5,164
  
6,884
  
12,048
  
11.48
    
254,834
    
2.4
    
  
  
  
    
    
Total
  
18,835
  
8,067
  
26,902
  
13.51
    
849,445
    
3.5
    
  
  
  
    
    
 
7.5.    Labor Union
 
Under Korea Financial Industry Union, we currently have two union chapters following the merger and negotiations are with representatives of both union chapters. There are 8,724 members in Kookmin Bank chapter and 6,989 members in H&CB chapter.

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Table of Contents
 
8.    Related Party Transaction
 
We regularly engage in transactions with affiliated companies, which we own directly or indirectly. Generally, these transactions include the extension of loans, the purchase of debt securities and other ordinary course activities relating to our banking business. For breakdown of the transaction, see Note 29 of Kookmin Bank Review Report in 9. Exhibits.

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Table of Contents
 
9.    Exhibits
 
9.1.    List of Financial Statements
 
    
Page

Kookmin Bank Review Report 2002 for the Nine-Month Periods Ended September 30, 2002 and 2001
    
•       Review Report of Independent Accountants
  
F-1
•       Kookmin Bank Non-Consolidated Balance Sheets September 30, 2001 and 2001
  
F-4
•       Kookmin Bank Non-Consolidated Statements of Income for the Nine-Month Period Ended September 30, 2002 and 2001
  
F-5
•       Notes to Non-Consolidated Financial Statements for the Nine-Month Periods Ended September 30, 2002 and 2001
  
F-7

32


Table of Contents
 
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 25, 2002
 
By:    /s/    Jong-Kyoo Yoon

   
(Signature)
   
Name:
 
Jong-Kyoo Yoon
   
Title:
 
Executive Vice President &
Chief Financial Officer

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Table of Contents
Review Report of Independent Accountants
 
To the Board of Directors and Shareholders of Kookmin Bank
 
We have reviewed the accompanying non-consolidated balance sheets of Kookmin Bank (“the Bank”), as of September 30, 2002 and 2001, and the related non-consolidated income statements for the nine-month periods then ended, expressed in Korean Won. These non-consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to issue a report on these non-consolidated financial statements based on our reviews.
 
We conducted our reviews in accordance with semi-annual review standards established by the Securities & Futures Commission of the Republic of Korea. These standards require that we plan and perform the review to obtain moderate assurance as to whether the non-consolidated financial statements are free of material misstatement. A review is limited primarily to inquiries of the Bank’s personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.
 
Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying non-consolidated financial statements are not presented fairly, in all material respects, in accordance with accounting standards for preparation of quarterly and semiannual financial statements in the Republic of Korea.
 
As discussed in Note 33 to the non-consolidated financial statements, the Bank entered into a business combination contract (“the Contract”) with H&CB on April 23, 2001 and obtained approval from the shareholders for such combination on September 29, 2001. In accordance with the Contract, the Bank completed the legal consolidation with H&CB as of October 31, 2001. According to the Contract, the shareholders of the Bank and H&CB received 1 new common share of the Bank for 1.688346 old shares of the Bank and 1 share of H&CB, respectively. The new common shares of the Bank were listed on the Korea Stock Exchange on November 9, 2001. Despite the legal form of consolidation, the business combination was accounted for as an acquisition with the Bank as acquirer of H&CB’s total assets of (Won)67,742,958 million and liabilities of (Won)64,381,185 million. The Bank’s registration statement with the Securities and Exchange Commission of the United States of America was declared effective on September 10, 2001 , and the new shares of the Bank were listed on New York Stock Exchange as American Depositary Shares (“ADS”) on November 1, 2001
 
 
Continued;

F-1


Table of Contents
 
As discussed in Note 2 to the non-consolidated financial statements, allowances for consumer loans and credit cards are determined by applying the following rates, which were changed since May 10, 2002 in preparation for increasing risk of loan losses due to the increase of consumer loans and credit cards.
 
Credit risk Classification

    
Allowance rates
Before May 10, 2002

      
Allowance rates since May 10, 2002

 
         
Consumer

      
Credit cards

 
Normal
    
0.5
%
    
0.75
%
    
1.0
%
Precautionary
    
2.0
%
    
5.0
%
    
7.0
%
Sub-standard
    
20.0
%
    
20.0
%
    
20.0
%
Doubtful
    
50.0
%
    
55.0
%
    
60.0
%
Estimated Loss
    
100.0
%
    
100.0
%
    
100.0
%
 
As of September 30, 2002, the additional allowances of (Won)226,909 million for consumer loans and (Won)66,778 million for credit cards loans are provided by applying different allowance rates, resulting in the decrease of (Won)293,687 million of net income before income tax expenses.
 
As discussed in Note 17 to the non-consolidated financial statements, in accordance with the signed memorandum of understanding with Sun Capital Inc.(“the Company”) on June 15, 2002 and the resolution of the Bank’s board meeting on July 26, 2002, the Bank is to sell 12,988,771 shares (equivalent to 65.43% ownership) of its 16,960,000 shares (equivalent to 85.43% ownership) of Jooeun Leasing Co., Ltd. and (Won)172,024 million of loans (outstanding principal balance as of March 31, 2002) to the Company. The Bank expects to receive (Won)145,000 million from the sale of investments and loans.
 
As discussed in Note 5 to the non-consolidated financial statements, Kookmin Venture Capital Co., Ltd., Frontier Investment Co., Ltd., and Kookmin Investment Co., Ltd. were subsidiaries of the Bank. Kookmin Venture Capital Co., Ltd. merged with Frontier Investment Co., Ltd. and Kookmin Investment Co., Ltd. on December 31, 2001 and June 27, 2002, respectively, to avoid duplicate investments. As of September 30, 2002, the Bank owns 99.89% of total issued shares of Kookmin Venture Capital Co., Ltd. and the investment amounts to (Won)107,877 million.
 
We draw attention to Note 17 of the non-consolidated financial statements which states that the operations of the Bank may be directly or indirectly affected by the general unstable economic conditions in the Republic of Korea and the impact of the implementation of structural reforms. Certain financially troubled borrowers of the Bank including Korea Data System Co., Ltd are experiencing a cash crisis or are in the debt restructuring process under workout plans and other similar programs. As of September 30, 2002, in relation to such borrowers, total loans outstanding including guarantees and acceptances amounted to (Won)904,554 million, and the related allowances and discounted present value are (Won)331,308 million and (Won)19,062 million, respectively. The ultimate effect of these significant uncertainties on the financial position of the Bank as of the balance sheet date cannot presently be determined and accordingly, no adjustments have been made in the accompanying financial statements related to such uncertainties.
 
 
Continued;

F-2


Table of Contents
 
The accompanying non-consolidated financial statements are not intended to present the financial position or results of operations in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than the Republic of Korea. The procedures and practices used to review such financial statements may differ from those generally accepted and applied in other countries and jurisdictions. Accordingly, this report and the accompanying non-consolidated financial statements are not intended for use by those who are not informed about Korean accounting principles or reviewing standards and their application in practice.
 
 
Samil Accounting Corporation
 
Seoul, Korea
October 18, 2002

F-3


Table of Contents
 
KOOKMIN BANK
NON-CONSOLIDATED BALANCE SHEETS
September 30, 2002 and 2001
(Unaudited-See Accountants’ Review Report)
 

 
    
In Millions of
Korean Won

    
2002

  
2001

ASSETS
             
Cash and due from banks (Note 3)
  
(Won)
6,241,327
  
(Won)
4,264,196
Trading securities (Note 4)
  
 
5,794,366
  
 
2,651,849
Investment securities (Note 5)
  
 
24,899,266
  
 
21,857,862
Loans (Notes 6 and 7)
  
 
121,350,946
  
 
54,885,280
Fixed assets (Note 8)
  
 
3,036,347
  
 
1,280,713
Other assets (Note 9)
  
 
6,166,926
  
 
4,353,717
    

  

Total Assets
  
(Won)
167,489,178
  
(Won)
89,293,617
    

  

LIABILITIES AND SHAREHOLDERS’ EQUITY
             
Deposits (Note 10)
  
(Won)
123,178,790
  
(Won)
62,355,178
Borrowings (Note 11)
  
 
10,254,380
  
 
9,980,267
Debentures (Note 12)
  
 
13,514,926
  
 
5,612,062
Other liabilities (Note 13)
  
 
10,249,445
  
 
6,245,609
    

  

Total Liabilities
  
 
157,197,541
  
 
84,193,116
    

  

Commitments and contingencies (Notes 15 and 17)
             
Common stock, par value : (Won)5,000,
    authorized : 1,000 million shares,
    issued and outstanding : 317,677,416 shares
    (Notes 1 and 18)
  
 
1,588,387
  
 
1,677,932
Capital surplus (Note 19)
  
 
5,683,828
  
 
1,616,052
Retained earnings (Note 20)
  
 
2,951,013
  
 
1,639,081
Capital adjustments (Note 21)
  
 

68,409

  
 

167,436

Total Shareholders’ Equity
  
 
10,291,637
  
 
5,100,501
    

  

Total Liabilities and Shareholders’ Equity
  
(Won)
167,489,178
  
(Won)
 89,293,617
    

  

 
The accompanying notes are an integral part of these non-consolidated interim financial statements.

F-4


Table of Contents
 
KOOKMIN BANK
NON-CONSOLIDATED STATEMENTS OF INCOME
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited-See Accountants’ Review Report)
 

 
    
In Millions of
Korean Won

    
2002

  
2001

Interest income :
             
Interest on due from banks
  
(Won)
39,314
  
(Won)
68,459
Interest on trading securities
  
 
73,560
  
 
138,189
Interest on investment securities
  
 
1,076,831
  
 
1,057,927
Interest on loans
  
 
6,817,728
  
 
3,652,105
Other interest income
  
 
80,222
  
 
93,420
    

  

    
 
8,087,655
  
 
5,010,100
    

  

Interest expenses :
             
Interest on deposits
  
 
3,581,922
  
 
2,465,341
Interest on borrowings
  
 
306,297
  
 
373,557
Interest on debentures
  
 
578,277
  
 
382,315
Other interest expenses
  
 
49,507
  
 
40,459
    

  

    
 
4,516,003
  
 
3,261,672
    

  

Net interest income
  
 
3,571,652
  
 
1,748,428
Bad debt expense (Note 7)
  
 
946,200
  
 
509,324
    

  

Net interest income after bad debt expenses
  
 
2,625,452
  
 
1,239,104
    

  

Non-interest income :
             
Fees and commission income
  
 
1,013,260
  
 
291,201
Dividends on trading securities
  
 
1,123
  
 
323
Dividends on investment securities
  
 
18,832
  
 
7,650
Gain on foreign currency transactions
  
 
142,416
  
 
196,154
Gain on derivatives (Note 16)
  
 
1,856,401
  
 
1,869,446
Others (Note 23)
  
 
482,668
  
 
367,666
    

  

    
 
3,514,700
  
 
2,732,440
    

  

 
The accompanying notes are an integral part of these non-consolidated interim financial statements.

F-5


Table of Contents
 
KOOKMIN BANK
NON-CONSOLIDATED STATEMENTS OF INCOME
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited-See Accountants’ Review Report)
 

 
    
In Millions of
Korean Won

    
2002

  
2001

Non-interest expenses :
             
Fees and commission expenses
  
(Won)
254,248
  
(Won)
60,364
General and administrative expenses (Note 24)
  
 
1,773,528
  
 
845,776
Loss on foreign currency transactions
  
 
182,178
  
 
73,918
Loss on derivatives (Note 16)
  
 
1,693,205
  
 
1,912,309
Others (Note 23)
  
 
242,562
  
 
189,137
    

  

    
 
4,145,721
  
 
3,081,504
    

  

Operating income
  
 
1,994,431
  
 
890,040
Non-operating income, net (Note 25)
  
 
191,733
  
 
358,263
    

  

Net income before income tax expense
  
 
2,186,164
  
 
1,248,303
Income tax expense (Note 26)
  
 
673,296
  
 
385,241
    

  

Net income
  
(Won)
1,512,868
  
(Won)
863,062
    

  

Basic earnings per share (Note 27)
    (in Korean Won)
  
(Won)
4,767
  
(Won)
4,524
    

  

Diluted earnings per share (Note 27)
    (in Korean Won)
  
(Won)
4,624
  
(Won)
3,847
    

  

 
The accompanying notes are an integral part of these non-consolidated interim financial statements.

F-6


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
1.    The Bank:
 
Kookmin Bank (“the Bank”) was established in 1963 under the Citizens National Bank Act to provide and administer funds for financing 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 (“KLB”) on December 31, 1998 and with Daegu, Busan, Jeonnam Kookmin Mutual Savings & Finance Co., Ltds. on August 22, 1999. Also, under the decision of the Financial Supervisory Commission in accordance with the Act concerning the Structural Improvement of the Financial Industry, the Bank purchased certain assets, including the loans classified as normal or precautionary, and assumed most of the liabilities of Daedong Bank (“the P&A”) as of June 29, 1998. The Bank entered into a business combination contract (“the Contract”) with H&CB on April 23, 2001. In accordance with the Contract, the Bank completed the legal consolidation with H&CB as of October 31, 2001 (See Note 33).
 
The Bank had its shares listed on the Korean 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 relisted on the Korea Stock Exchange on November 9, 2001. The Bank’s paid-in capital amounts to (Won)1,588,387 million as of September 30, 2002 (See Note 18). Also, as of September 30, 2002, 47,796,480 shares of the Bank are listed on the New York Stock Exchange as American Depositary Shares (“ADS”).
 
The Bank is engaged in the banking and trust business according to the provisions of the General Banking Act and the Trust Business Act and operates through 1,248 domestic branches and offices (including ATMs) and 3 overseas branches as of September 30, 2002.
 
2.    Summary of Significant Accounting Policies:
 
The significant accounting policies followed by the Bank in the preparation of its financial statements are summarized below.
 
Basis of Non-consolidated Interim Financial Statement Presentation–
 
The Bank’s non-consolidated interim financial statements were prepared in accordance with the financial accounting standards generally accepted in the Republic of Korea, the accounting standards for preparation of quarterly and semiannual financial statements in the Republic of Korea and the accounting standards generally accepted for banking institutions, as modified by the accounting and reporting guidelines prescribed by the banking regulatory authorities.
 
The Bank maintains its official accounting records in Korean Won and prepares statutory financial statements in the Korean language in conformity with the accounting principles generally accepted in the Republic of Korea. Certain accounting principles 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 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 from the Korean language financial statements. Some information attached to the Korean language financial statements, but not required for a fair presentation of the Bank’s financial position or results of operations, is not presented in the accompanying financial statements.
 
The preparation of financial statements in conformity with financial accounting standards generally accepted in the Republic of Korea and the accounting standards generally accepted for banking institutions requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results may differ from those estimates.
 
The Bank operates both a commercial banking business and a trust business in which the Bank, as a fiduciary, holds and manages the property of others. Under the Trust Business Act, the trust funds are accounted for and reported separately from the Bank’s own commercial banking business.
 
Continued;
 

F-7


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
2.    Summary of Significant Accounting Policies, Continued;
 
Recognition of Interest Income–
 
The Bank recognizes interest income on loans and debt securities on an accrual basis. However, interest income on delinquent and dishonored loans and debt securities, other than those subject to security deposits and guaranteed by financial institutions, is recognized on a cash basis. Accordingly, under the cash basis, unaccrued interest income amounted to (Won)553,828 million and (Won)487,559 million as of September 30, 2002 and 2001, respectively.
 
Translation of foreign currency–
 
Assets and liabilities denominated in foreign currencies are translated into Korean Won at exchange rates announced by Seoul Money Brokerage Services, Ltd. at the balance sheet date. The resulting exchange gains or losses are reflected in other operating income or expenses.
 
The exchange rates used to translate foreign currency denominated assets and liabilities at September 30, 2002 and 2001 are (Won)1,225.5 : US$1 and (Won)1,309.1 : US$1, respectively.
 
Allowances for Loan Losses–
 
The Bank applies its internal credit rating system, Forward Looking Criteria (“FLC”), to corporate loans in order to classify the borrowers and to determine allowances for loan losses. The corporate borrowers are classified into 12 credit risk categories (AAA, AA, A, BBB, BB, BB-, B, B-, CCC, CC, C, D) since May 10, 2002, which were classified into 10 credit risk categories (AAA, AA, A, BBB, BB, B, CCC, CC, C, D). Credit risk classification under FLC is based on a scaled valuation of financial and non-financial risks with additional consideration of loan type, collateral and/or guarantees.
 
Allowances are determined by applying at minimum the following rates to the outstanding balances of each credit risk classification.
 
Credit Risk Classification

 
Credit Ratings
before May 10, 2002

 
Credit Ratings
after May 10, 2002

  
Allowance rates

Normal
 
AAA ~ B
 
AAA ~ B
  
0.5%
Precautionary
 
CCC
 
B-, CCC
  
2%
Sub-standard
 
CC
 
CC
  
20%
Doubtful
 
C
 
C
  
50%
Estimated loss
 
D
 
D
  
100%
 
However, the Bank does not apply the FLC to small-sized corporate loans, consumer loans, and credit cards. Alternatively, the bank classifies such loans by considering current financial status including delinquent number of days, bankruptcies and collateral value. The allowances for small-sized corporate loans, consumer loans, and credit cards are determined by applying the following rates, which were changed since May 10, 2002.
 
   
Allowance rates
before May 10, 2002

 
Allowance rates since May 10, 2002

Credit Risk Classification

   
Small-sized corporate

 
Consumer

 
Credit cards

Normal
 
0.5%
 
0.5%
 
0.75%
 
1.0%
Precautionary
 
2.0%
 
2.0%
 
5.0%
 
7.0%
Sub-standard
 
20.0%
 
20.0%
 
20.0%
 
20.0%
Doubtful
 
50.0%
 
50.0%
 
55.0%
 
60.0%
Estimated loss
 
100.0%
 
100.0%
 
100.0%
 
100.0%
 
As of September 30, 2002, the additional allowances of (Won) 226,909 million for consumer loans and (Won) 66,778 million for credit cards loans are provided by applying different allowance rates, resulting in the decrease of (Won) 293,687 million of net income before income tax expenses.
 
Continued;

F-8


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
2.    Summary of Significant Accounting Policies, Continued;
 
Present Value Discounts–
 
Troubled debt restructuring loans, which are modified as to outstanding principal, interest rate, and/or maturity under programs such as workout, court receivership, court mediation, or debt restructuring agreements of parties concerned, are carried at present value if the difference between the book value and the present value of the restructured loan is significant. When estimating the present value of the loans, the Bank applies the interest rate as of the inception of the loans except for the interest rate of variable rate loans and extended maturity loans, which are adjusted to reflect the interest rate as of the restructuring date. The present value discounts are recorded by reclassifying allowances for loan losses and if additional allowances need to be provided for, the additional allowances are provided and recognized as bad debt expense of the current period. These present value discounts are amortized using the effective interest method and are recognized as interest income. Allowances for loan losses on the restructured loans are provided for based on the loan balances net of present value discounts.
 
Additionally, the Bank recorded (Won)22,121 million and (Won)29,682 million of present value discounts as of September 30, 2002 and 2001, respectively, on long-term deposits placed with Hansol Mutual Savings & Finance Co., Ltd. (Previously, Bukook Mutual Savings & Finance Co., Ltd.) (See Note 3). Also, the receivables from disposal of foreclosed assets that are redeemed in long-term installments are recorded in the balance sheet net of the related present value discounts.
 
Securities–
 
Marketable securities held for short-term capital gain purposes, which exclude stocks issued by associates and debt securities held to maturity, are classified as trading securities. Securities that are not classified as trading securities are classified as investment securities.
 
Securities are initially recorded at cost with incidental expenses added to compute the acquisition cost in applying the moving average or specific identification method. The subsequent valuation methods used for the securities are summarized as follows:
 
    
Valuation
Method

  
Recognition of Unrealized
Gains and Losses

Trading securities
  
Fair value
  
Net income
Investment securities
         
Available-for-sale securities and marketable equity securities
  
Fair value
  
Capital adjustments
Held-to-maturity securities and non-marketable equity securities
  
Cost
  
N/A
Investment in associates
  
Equity
  
Net income, retained earnings, or capital     adjustments per source of the gain or loss
 
If the fair value of the investment securities are significantly below the book value and the impairment is determined to be other than temporary, the Bank adjusts the investment securities to their fair value and recognizes the related impairment losses as part of the current period non-operating expenses.
 
Continued;

F-9


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
2.    Summary of Significant Accounting Policies, Continued;
 
Fixed Assets and Related Depreciation–
 
Tangible assets are recorded at cost, except for upward revaluation of certain assets in accordance with Korean Asset Revaluation Law. Depreciation is calculated based on the estimated average useful lives of the assets and is presented as accumulated depreciation, which is a contra account of tangible assets in the financial statements.
 
The estimated useful lives and depreciation methods of the tangible assets are as follows:
 
Tangible assets

  
Amortization Method

    
Estimated Useful Life

Buildings and structures
  
Straight-line method
    
40 years
Leasehold improvements
  
Declining balance method
    
4 years
Equipment and vehicles
  
Declining balance method
    
4 years
 
Expenditures that enhance the value or extend the useful life of the assets involved are capitalized as additions to tangible assets. Routine maintenance and repairs are recognized as expenses as incurred.
 
Foreclosed assets acquired through, or in lieu of, loan redemption are stated at cost and are not depreciated. Valuation allowance is recorded where the latest bidding price at public auction is below the book value, and is presented as a contra account of foreclosed assets in the financial statements.
 
The Bank recorded goodwill as a result of the merger with H&CB for the cost of the merger exceeding the fair value of the net assets acquired.
 
Intangible assets are amortized based on the following estimated average useful lives using the straight-line method and are presented in the financial statements net of accumulated depreciation.
 
Intangible Asset

  
Amortization Method

    
Estimated Useful Life

Goodwill
  
Straight-line method
    
9 years
Trademarks
  
Straight-line method
    
1-10 years
Other
  
Straight-line method
    
7-30 years
 
Stock Issuance Costs and Debenture Issuance Costs–
 
Stock issuance costs are deducted from paid-in capital in excess of par value. Debenture issuance costs are recorded as discounts on debentures and amortized over the maturity of the debentures using the effective interest method.
 
Accrued Retirement Benefits–
 
Employees and directors with more than one year of service as of September 30, 2002 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. Additionally, the Bank records pension fund deposits which grant the payment rights to its employees and contributions to the national pension fund as contra accounts of accrued retirement benefits.
 
Guarantees and Acceptances–
 
By applying credit risk classification used for loans to the guarantees and acceptances, the Bank records an allowance for losses on outstanding guarantees and acceptances according to their classification as sub-standard, doubtful, or estimated loss (allowance rates are at minimum 20%, 50%, and 100%, respectively).
 
Continued;

F-10


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
2.    Summary of Significant Accounting Policies, Continued;
 
Deferred Income Taxes–
 
The Bank records the future tax effects of temporary differences between the financial and tax bases of assets and liabilities as deferred tax assets or liabilities. The cumulative effects of accounting changes adjust the beginning balance of retained earnings and thus result in temporary differences.
 
Derivatives Instruments–
 
The Bank records the rights and obligations arising from derivative contracts on the balance sheet as assets and liabilities based on the fair values of such rights and obligations. Resulting unrealized gains or losses are included in net income.
 
Stock Options–
 
The Bank calculates the fair value of stock options at the grant date and allocates the resulting total cost over the contractual service period. The costs allocated to the current period are charged to operating expenses and capital adjustments.
 
National Housing Fund–
 
The Bank, as designated by the Korean Government under the 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, which is computed by multiplying the average balance of the NHF account by the passbook deposit interest rate, to the NHF.
 
Gains and Losses on Trust Management–
 
The Bank’s trust accounts (“the Trust Accounts”) recognize as an expense the trust commissions paid to the banking accounts, equivalent of total trust revenue less total trust expenses and trustee benefits (including the guaranteed principal and minimum rate of return). The Bank recognizes these trust commissions as a gain on trust management in other operating income. The trust fees on money trusts consist of base fees of 0.5% ~ 2.0% (depending on trust fund types) and special fees applied to the invested capital.
 
Under the Trust Business Act, reserves for future losses are set up in the trust accounts for losses related to those trust funds with guarantee of the principal or of a certain minimum rate of return. The reserves are used to provide for the losses on such trust funds and, if the losses are incurred in excess of the reserves for future losses, the excess losses are compensated by the Bank. Accordingly, the banking accounts recognize the compensation paid as a loss on trust management in other operating expenses and the trust accounts recognize the corresponding compensation as compensation from banking accounts. The Bank recorded (Won)119 million of loss on trust management for the nine-month period ended September 30, 2001.
 
Translation of Foreign Currency Financial Statements of Foreign Entities–
 
Accounting records of the overseas branches are maintained in a foreign currency prevailing in their respective countries. For presentation in the accompanying financial statements, the financial statements of the branches have been translated into Korean Won, using exchange rates published by Seoul Money Brokerage Services, Ltd. as of September 30, 2002 and 2001.

F-11


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
3.    Cash and Due from Banks:
 
Cash and due from banks at September 30, 2002 and 2001 are summarized as follows (in millions of Won):
 
         
2002

    
2001

 
Cash on hand
                      
Cash in Won
       
(Won)
 2,982,866
 
  
(Won)
 1,323,354
 
Cash in foreign currencies
       
 
186,790
 
  
 
98,853
 
         


  


         
 
3,169,656
 
  
 
1,422,207
 
         


  


Due from banks in Won
                      
The Bank of Korea
  
Reserve deposits
  
 
1,924,221
 
  
 
1,867,405
 
Banks
  
Time deposits
  
 
21,192
 
  
 
 
    
Payment reserves
  
 
458
 
  
 
340
 
    
Certificates of deposits
  
 
29,599
 
  
 
246,712
 
    
Current accounts and others
  
 
 
  
 
1,513
 
Other financial institutions
  
Cash management accounts
  
 
8,423
 
  
 
102,726
 
    
Deposits at insurance companies
  
 
678,500
 
  
 
314,000
 
    
Deposits at Finance Savings & Finance Co.
  
 
140,000
 
  
 
140,000
 
Others
  
Futures margin accounts
  
 
1,473
 
  
 
41,281
 
    
Specified Money Trusts
  
 
7,764
 
  
 
36,970
 
    
Others
  
 
458
 
  
 
446
 
         


  


         
 
2,812,088
 
  
 
2,751,393
 
    
Present value discounts1*
  
 
(22,121
)
  
 
(29,682
)
         


  


         
 
2,789,967
 
  
 
2,721,711
 
         


  


Due from banks in foreign currencies
                      
The Bank of Korea
  
Demand deposits
  
 
39,136
 
  
 
24,882
 
Domestic banks
  
Demand deposits
  
 
23,707
 
  
 
10,329
 
Foreign banks
  
Demand deposits
  
 
170,748
 
  
 
70,430
 
Others
  
Other deposits
  
 
48,113
 
  
 
14,637
 
         


  


         
 
281,704
 
  
 
120,278
 
         


  


         
(Won)
 6,241,327
 
  
(Won)
 4,264,196
 
         


  



1*
 
Present value discounts are recorded in relation to the (Won)140,000 million of time deposits (1% interest, six-year maturity at the point of deposit) placed with Hansol Mutual Savings & Finance Co., Ltd. (Previously, Bukook Mutual Savings & Finance Co., Ltd.).
 
Included in cash and due from banks as of September 30, 2002 and 2001 are the following restricted deposits (in millions of Won):
 
    
2002

  
2001

  
Restrictions

Reserve deposits in the Bank of Korea and KEB
  
(Won)
 1,987,522
  
(Won)
 1,902,956
  
General Banking Act
Deposits placed with Hansol Mutual Savings & Finance Co.
  
 
140,000
  
 
140,000
  
Withdrawal at maturity
Deposits for severance payments
  
 
678,500
  
 
314,000
  
Related to borrowings
Other deposits
  
 
10,043
  
 
71,709
  
Guarantee deposit
    

  

    
    
(Won)
 2,816,065
  
(Won)
 2,428,665
    
    

  

    
 
Continued;

F-12


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
3.    Cash and Due from Banks, Continued;
 
The maturities of the due from banks as of September 30, 2002 are summarized as follows (in millions of Won):
 
    
Due from Banks
in Won

    
Due from Banks
in foreign currencies

  
Total

Due in 3 months or less
  
(Won)
 2,580,896
    
(Won)
 281,704
  
(Won)
 2,862,600
Due after 3 months through 6 months
  
 
20,000
    
 
  
 
20,000
Due after 6 months through 1 year
  
 
    
 
  
 
Due after 1 year through 2 years
  
 
70,000
    
 
  
 
70,000
Due after 2 years through 3 years
  
 
50,000
    
 
  
 
50,000
Due after 3 years through 4 years
  
 
90,000
    
 
  
 
90,000
Due after 4 years through 5 years
  
 
    
 
  
 
Thereafter
  
 
1,192
    
 
  
 
1,192
    

    

  

    
(Won)
 2,812,088
    
(Won)
 281,704
  
(Won)
 3,093,792
    

    

  

 
4.    Trading Securities:
 
Trading securities as of September 30, 2002 and 2001 comprise the following (in millions of Won):
 
         
Beginning
Balance1*

  
Amortized
Amount2*

  
Balance Sheet Amount

Type

  
Par Value

        
2002

  
2001

Listed equity securities
         
(Won)
61,920
  
(Won)
61,920
  
(Won)
55,011
  
(Won)
16,500
           

  

  

  

Government and municipal bonds
                                  
–Treasury bonds
  
(Won)
 255,000
  
 
260,612
  
 
260,247
  
 
262,608
  
 
607,297
–Public housing bonds
  
 
  
 
  
 
  
 
  
 
116,012
–Foreign exchange stabilization bonds
  
 
60,000
  
 
65,137
  
 
64,101
  
 
65,225
  
 
169,018
           

  

  

  

           
 
325,749
  
 
324,348
  
 
327,833
  
 
892,327
           

  

  

  

Finance debentures
                                  
–Monetary stabilization bond
  
 
900,000
  
 
901,814
  
 
901,361
  
 
905,538
  
 
599,672
–Other finance debentures
  
 
90,000
  
 
90,651
  
 
90,501
  
 
91,061
  
 
170,259
           

  

  

  

           
 
992,465
  
 
991,862
  
 
996,599
  
 
769,931
           

  

  

  

Corporate bonds
                                  
–Government guaranteed bonds
  
 
150,000
  
 
154,173
  
 
153,122
  
 
154,236
  
 
727,753
–Other corporate bonds
  
 
189,633
  
 
190,514
  
 
190,524
  
 
190,983
  
 
170,585
           

  

  

  

           
 
344,687
  
 
343,646
  
 
345,219
  
 
898,338
           

  

  

  

Beneficiary certificates
         
 
3,924,518
  
 
3,924,518
  
 
4,069,704
  
 
11,926
           

  

  

  

Trading securities in foreign currencies
                                  
–Corporate bonds
         
 
546
  
 
546
  
 
  
 
62,827
           

  

  

  

           
(Won)
 5,649,885
  
 
5,646,840
  
(Won)
 5,794,366
  
(Won)
 2,651,849
           

  

  

  


1*
 
Book value at December 31, 2001 or acquisition costs for the nine-month period ended September 30, 2002
2*
 
Amount amortized using effective interest rate method
 
Continued;

F-13


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
4.    Trading Securities, Continued;
 
Trading debt securities in Won are recorded at fair value using the market yield of bonds provided by the Korea Securities Dealers Association. Trading debt securities in foreign currencies are recorded at fair value using the market yield of bonds provided by bond dealers.
 
Trading securities risk concentrations as of September 30, 2002 are as follows (in millions of Won):
 
    
Securities in Won

    
Amount

  
Ratio (%)

By Geography
           
–Korea
  
(Won)
 5,794,366
  
100.00
    

  
    
(Won)
 5,794,366
  
100.00
    

  
By Type
           
–Fixed rate bond
  
(Won)
 1,639,898
  
28.30
–Floating rate bond
  
 
29,752
  
0.51
–Equity securities
  
 
55,012
  
0.95
–Beneficiary certificates
  
 
4,069,704
  
70.24
    

  
    
(Won)
 5,794,366
  
100.00
    

  
By Issuer
           
–Governmental institutions
  
(Won)
327,833
  
5.66
–Government invested institutions
  
 
156,577
  
2.70
–Financial institutions
  
 
5,101,130
  
88.04
–Other
  
 
208,826
  
3.60
    

  
    
(Won)
 5,794,366
  
100.00
    

  
 
The maturities of the trading securities except equity securities as of September 30, 2002 are summarized as follows (in millions of Won):
 
    
Government and Municipal Bonds

  
Finance Debentures

  
Corporate Bonds

  
Beneficiary
Certificates

  
Total

Due in 3 months or less
  
(Won)
  
(Won)
 20,029
  
(Won)
  
(Won)
 4,069,704
  
(Won)
 4,089,733
Due after 3 months through 9 months
  
 
  
 
10,088
  
 
  
 
  
 
10,088
Due after 9 months through 1 year
  
 
  
 
19,015
  
 
20,753
  
 
  
 
39,768
Due after 1 year through 2 years
  
 
30,496
  
 
876,185
  
 
160,523
  
 
  
 
1,067,204
Due after 2 years through 3 years
  
 
193,855
  
 
71,282
  
 
40,597
  
 
  
 
305,734
Due after 3 years through 4 years
  
 
83,207
  
 
—  
  
 
112,897
  
 
  
 
196,104
Due after 4 years through 5 years
  
 
20,275
  
 
—  
  
 
10,449
  
 
  
 
30,724
Thereafter
  
 
  
 
—  
  
 
  
 
  
 
    

  

  

  

  

    
(Won)
 327,833
  
(Won)
 996,599
  
(Won)
 345,219
  
(Won)
 4,069,704
  
(Won)
 5,739,355
    

  

  

  

  

F-14


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited-See Accountants’ Review Report)

 
5.    Investment Securities:
 
Investment securities at September 30, 2002 and 2001 are as follows (in millions of Won):
 
Type

  
2002

  
2001

Equity securities
             
–Marketable equity securities
  
(Won)
277,332
  
(Won)
170,656
–Non-marketable equity securities
  
 
350,251
  
 
263,395
–Domestic related parties
  
 
1,433,906
  
 
1,044,698
    

  

    
 
2,061,489
  
 
1,478,749
    

  

Investment in special funds
             
–Stock market stabilization fund
  
 
19,852
  
 
15,282
–Investment union fund
  
 
22,509
  
 
14,508
    

  

    
 
42,361
  
 
29,790
    

  

Government and municipal bonds
             
–Treasury bonds
  
 
2,871,688
  
 
2,036,456
–Public housing bonds
  
 
292,246
  
 
398,435
–Grain supply bonds
  
 
51,687
  
 
84,138
–Foreign exchange stabilization bonds
  
 
964,291
  
 
692,048
–Municipal bonds
  
 
43,841
  
 
174,912
    

  

    
 
4,223,753
  
 
3,385,989
    

  

Finance debentures
             
–Monetary stabilization bond
  
 
1,646,635
  
 
2,863,194
–Other finance debentures
  
 
620,669
  
 
1,147,068
    

  

    
 
2,267,304
  
 
4,010,262
    

  

Corporate bonds
             
–Government guaranteed bonds
  
 
7,448,679
  
 
5,898,219
–Other corporate bonds
  
 
3,990,820
  
 
3,778,261
    

  

    
 
11,439,499
  
 
9,676,480
    

  

Beneficiary certificates
  
 
3,371,351
  
 
2,261,700
    

  

Securities lent
  
 
272,337
  
 
    

  

Other investment securities1*
  
 
1,842
  
 
138
    

  

Securities denominated in foreign currencies
             
–Overseas related parties
  
 
125,638
  
 
73,345
–Equity securities
  
 
30,263
  
 
27,264
–Debt securities
  
 
1,063,429
  
 
914,145
    

  

    
 
1,219,330
  
 
1,014,754
    

  

    
(Won)
 24,899,266
  
(Won)
 21,857,862
    

  


1*
 
Other investment securities include commercial paper and national stock trust.
 
Continued;

F-15


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
5.    Investment Securities, Continued;
 
At September 30, 2002, the amortized amount and balance sheet amount of the Bank’s investment debt securities are as follows (in millions of Won):
 
    
Par Value

  
Beginning Balance1*

  
Amortized Amount

  
Balance sheet Amount

Available for sale
                           
–Government and municipal bonds
  
(Won)
1,888,966
  
(Won)
1,931,965
  
(Won)
1,903,058
  
(Won)
1,937,093
–Finance debentures
  
 
1,598,398
  
 
1,557,695
  
 
1,561,356
  
 
1,579,783
–Corporate bonds
  
 
3,975,234
  
 
3,855,626
  
 
3,807,425
  
 
3,830,535
–Securities denominated in foreign currencies
  
 
1,131,495
  
 
972,504
  
 
1,007,892
  
 
987,815
    

  

  

  

    
 
8,594,093
  
 
8,317,790
  
 
8,279,731
  
 
8,335,226
    

  

  

  

Held to maturity
                           
–Government and municipal bonds
  
 
2,277,623
  
 
2,293,372
  
 
2,286,660
  
 
2,286,660
–Finance debentures
  
 
714,700
  
 
687,462
  
 
687,522
  
 
687,521
–Corporate bonds
  
 
7,574,918
  
 
7,676,733
  
 
7,608,964
  
 
7,608,964
–Securities denominated in foreign currencies
  
 
94,263
  
 
75,416
  
 
75,614
  
 
75,614
    

  

  

  

    
 
10,661,504
  
 
10,732,983
  
 
10,658,760
  
 
10,658,759
    

  

  

  

    
(Won)
19,255,597
  
(Won)
19,050,773
  
(Won)
18,938,491
  
(Won)
18,993,985
    

  

  

  


1*
 
Book value at December 31, 2001 or acquisition costs for the nine-month period ended September 30, 2002.
 
Available-for-sale debt securities in Won are recorded at fair value using the market yield of bonds provided by the Korea Securities Dealers Association. Available-for-sale debt securities in foreign currencies are recorded at fair value using the market yield of bonds provided by bond dealers.
 
Government and municipal bonds sold under repurchase agreements of (Won)2,504,865 million and (Won)3,640,439 million as of September 30, 2002 and 2001, respectively, are included in the investment securities (See Note 11).
 
Continued;

F-16


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
5.    Investment Securities, Continued;
 
Equity securities in related parties as of September 30, 2002 and 2001 are as follows (in millions of Won):
 
    
Ownership
(%)

  
Acquisition
Cost

  
2002 Beginning
Balance8*

  
Unrealized Gains (Losses)9*

    
Balance Sheet Amount10*

Issuer

           
NI

    
R/E

    
C/A

    
2002

  
2001

Domestic related parties
                                                           
Kookmin Credit Card Co., Ltd.
  
74.27
  
(Won)
272,274
  
(Won)
873,991
  
(Won)
219,558
 
  
(Won)
585
 
  
(Won)
506
 
  
(Won)
1,094,640
  
(Won)
860,245
Kookmin Venture Capital Co.,Ltd.1*
  
99.89
  
 
155,311
  
 
179,694
  
 
(82,211
)
  
 
10,155
 
  
 
239
 
  
 
107,877
  
 
116,177
Kookmin Leasing Co., Ltd.
  
88.66
  
 
266,646
  
 
  
 
 
  
 
 
  
 
 
  
 
  
 
Kookmin Investment Trust Mgt.2*
  
  
 
  
 
  
 
 
  
 
 
  
 
 
  
 
  
 
32,851
Kookmin Data System Co., Ltd.
  
99.98
  
 
7,998
  
 
12,408
  
 
1,677
 
  
 
 
  
 
 
  
 
14,085
  
 
12,207
Kookmin Futures Co., Ltd.
  
99.98
  
 
19,996
  
 
22,515
  
 
2,229
 
  
 
(49
)
  
 
46
 
  
 
24,741
  
 
22,561
KLB Securities Co., Ltd.3*
  
36.41
  
 
10,316
  
 
  
 
 
  
 
 
  
 
 
  
 
  
 
657
Jooeun Leasing Co., Ltd.
  
20.00
  
 
5,184
  
 
5,238
  
 
(38
)
  
 
 
  
 
(93
)
  
 
5,107
  
 
KB Investment Trust Mgt Co.,Ltd.4*
  
80.00
  
 
39,015
  
 
32,685
  
 
10,229
 
  
 
 
  
 
 
  
 
42,914
  
 
Jooeun Industrial Co., Ltd.5*
  
99.99
  
 
23,994
  
 
8,465
  
 
(8,465
)
  
 
 
  
 
 
  
 
  
 
KB Real Estate Trust Co., Ltd.6*
  
99.99
  
 
76,103
  
 
78,538
  
 
7,959
 
  
 
 
  
 
 
  
 
86,497
  
 
KB Credit Information Co.Ltd.7*
  
62.57
  
 
7,935
  
 
8,082
  
 
(223
)
  
 
 
  
 
 
  
 
7,859
  
 
ING Life Korea Co., Ltd.
  
20.00
  
 
21,768
  
 
24,892
  
 
(8,273
)
  
 
 
  
 
 
  
 
16,619
  
 
Korea Mortgage Co.,Ltd.
  
28.22
  
 
30,000
  
 
32,487
  
 
1,080
 
  
 
 
  
 
 
  
 
33,567
  
 
         

  

  


  


  


  

  

         
 
936,540
  
 
1,278,995
  
 
143,522
 
  
 
10,691
 
  
 
698
 
  
 
1,433,906
  
 
1,044,698
         

  

  


  


  


  

  

Overseas related parties
                                                           
KB International Ltd. (London)
  
100.00
  
 
40,276
  
 
46,705
  
 
(234
)
  
 
 
  
 
 
  
 
46,471
  
 
47,758
KB Luxembourg S.A.
  
100.00
  
 
21,907
  
 
  
 
 
  
 
 
  
 
 
  
 
  
 
3,806
Kookmin Singapore Ltd.3*
  
100.00
  
 
26,585
  
 
2,128
  
 
 
  
 
 
  
 
 
  
 
2,128
  
 
2,273
KookminFinance Asia Ltd.(H.K)
  
100.00
  
 
26,522
  
 
15,900
  
 
281
 
  
 
 
  
 
 
  
 
16,181
  
 
19,508
Kookmin Finance H.K Ltd.
  
100.00
  
 
55,924
  
 
50,331
  
 
10,527
 
  
 
 
  
 
 
  
 
60,858
  
 
         

  

  


  


  


  

  

         
 
171,214
  
 
115,064
  
 
10,574
 
  
 
 
  
 
 
  
 
125,638
  
 
73,345
         

  

  


  


  


  

  

         
(Won)
1,107,754
  
(Won)
1,394,059
  
(Won)
154,096
 
  
(Won)
10,691
 
  
(Won)
698
 
  
(Won)
1,559,544
  
(Won)
1,118,043
         

  

  


  


  


  

  


1*
 
Kookmin Venture Capital Co., Ltd merged with Frontier Investment Corp. and Kookmin Investment Co., Ltd, effective as of December 31, 2001 and June 27, 2002, respectively.
2*
 
The Bank sold Kookmin Investment Trust Mgt. Co., Ltd. effective as of May 9, 2002
3*
 
KLB Securities Co., Ltd. and Kookmin Singapore (merchant bank), Ltd. are in the process of liquidation.
4*
 
The company changed its name from Jooeun Investment management Co. Ltd. to KB Investment Trust Management Co. Ltd., effective as of June 10, 2002.
5*
 
Dissolution of Jooeun Industrial Co., Ltd was resolved in the general meeting of stockholders of the Company on March 19, 2002.
6*
 
The company changed its name from Jooeun Real Estate trust Co. Ltd. to KB Real Estate trust Co. Ltd., effective as of September 16, 2002.
7*
 
KB Credit Information Co., Ltd merged with KM Credit Information Co., Ltd. (“KM”), effective as of May 2, 2002 and changed its name to Kookmin Credit Information Co., Ltd.
8*
 
The beginning balance is adjusted by dividends and changes in foreign exchange rate from the prior year’s book value.
9*
 
NI : Net Income, R/E : Retained Earnings, C/A : Capital Adjustments
10*
 
The balance sheet amount is recorded using the monthly closing information of related parties as of September 30, 2002 if possible, otherwise the most recent financial information is used.
 
Continued;

F-17


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
5.    Investment Securities, Continued;
 
Equity securities, excluding equity securities in related parties, as of September 30, 2002 are as follows (in millions of Won):
 
Issuer

  
Ownership (%)

  
Acquisition Cost

  
Fair Value or Net Asset Value1*

  
Balance Sheet Amount

Marketable equity securities (KSE)
                         
–Hyundai Construction Co., Ltd.
  
6.17
  
(Won)
140,124
  
(Won)
65,463
  
(Won)
65,463
–KP Chemical Co.,Ltd
  
7.89
  
 
36,642
  
 
30,561
  
 
30,561
–SK Securities Co., Ltd.
  
5.58
  
 
26,878
  
 
23,385
  
 
23,385
–Kia Motors Corp.
  
0.65
  
 
26,281
  
 
18,922
  
 
18,922
–INI Steel Co., Ltd.
  
2.04
  
 
9,564
  
 
14,968
  
 
14,968
–Daewoo Securities Co., Ltd.
  
1.60
  
 
53,627
  
 
15,382
  
 
15,382
–Hankang Restructuring Fund.
  
6.26
  
 
29,449
  
 
16,276
  
 
16,276
–Ssangyong Motor Company
  
2.21
  
 
27,656
  
 
9,421
  
 
9,421
–Shinwon Corp.
  
6.77
  
 
12,159
  
 
9,190
  
 
9,190
–Saehan Industries Inc.
  
16.95
  
 
7,572
  
 
6,920
  
 
6,920
–Samsung Electronics Co., Ltd.
  
0.02
  
 
5,205
  
 
8,955
  
 
8,955
–Korea Zinc Co., Ltd.
  
1.91
  
 
9,008
  
 
4,972
  
 
4,972
–KT
  
0.05
  
 
8,497
  
 
8,623
  
 
8,623
–Korea Electric Power Corporation
  
0.05
  
 
6,120
  
 
6,180
  
 
6,180
–Daewoo Engineering & Construction Co., Ltd.
  
1.35
  
 
5,077
  
 
5,405
  
 
5,405
–Daewoo Shipbuilding & Marine Engineering Co., Ltd.
  
0.29
  
 
2,500
  
 
3,956
  
 
3,956
–Others
       
 
23,245
  
 
20,015
  
 
20,015
         

  

  

         
 
429,604
  
 
268,594
  
 
268,594
         

  

  

Marketable equity securities (KOSDAQ)
                         
–C&H capital Co., Ltd.
  
9.75
  
 
8,136
  
 
2,865
  
 
2,865
–Seohan Co., Ltd.
  
13.39
  
 
1,201
  
 
1,002
  
 
1,002
–KED media Co., Ltd.
  
2.80
  
 
500
  
 
942
  
 
942
–Han Kook Capital Co., Ltd.
  
1.71
  
 
1,203
  
 
795
  
 
795
–Tae Young Telstar Co., Ltd.
  
3.33
  
 
1,000
  
 
675
  
 
675
–Shinwon Construction Co., Ltd.
  
1.79
  
 
1,622
  
 
603
  
 
603
–Miju Steel Co., Ltd
  
4.30
  
 
1,348
  
 
426
  
 
426
–KTF
  
0.01
  
 
436
  
 
387
  
 
387
–Systems Technology Inc.
  
3.03
  
 
250
  
 
322
  
 
322
–Others
       
 
7,000
  
 
721
  
 
721
         

  

  

         
 
22,696
  
 
8,738
  
 
8,738
         

  

  

Non-marketable equity securities
                         
–Mutual Fund2*
  
11.87
  
 
96,138
  
 
96,138
  
 
96,138
–Korea Housing Guarantee Co., Ltd.
  
11.79
  
 
68,648
  
 
76,543
  
 
68,648
–Daewoo Electronics Co.,Ltd.
  
5.71
  
 
23,800
  
 
2,357
  
 
2,357
–Daewoo Telecom Ltd.
  
0.68
  
 
417
  
 
25
  
 
25
–Kohap. Corp
  
2.68
  
 
861
  
 
23
  
 
23
–Chonggu Co.,Ltd.
  
5.08
  
 
904
  
 
  
 
–Kt Icom Co., Ltd.
  
2.08
  
 
37,465
  
 
37,748
  
 
37,465
–Dongbu Electronics Co., Ltd.
  
6.61
  
 
30,000
  
 
25,200
  
 
30,000
–Hyundai Petrochemical Co., Ltd.
  
9.31
  
 
20,173
  
 
72,064
  
 
20,173
–The Korea Securities Finance Corp.
  
2.40
  
 
8,160
  
 
10,371
  
 
8,160
 
Continued;

F-18


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
5.    Investment Securities, Continued;
 
Issuer

  
Ownership (%)

  
Acquisition Cost

  
Fair Value or Net Asset Value1*

  
Balance Sheet Amount

–Korea Asset Management Corporation
  
5.38
  
 
7,827
  
 
5,589
  
 
7,827
–Samsung Life Insurance Co., Ltd.
  
0.11
  
 
7,479
  
 
5,914
  
 
7,479
–Korea Highway Corp.
  
0.12
  
 
6,248
  
 
15,528
  
 
6,248
–BC Card Co., Ltd.
  
4.95
  
 
5,738
  
 
7,788
  
 
5,738
–Mirae Asset Securities Co., Ltd.
  
4.43
  
 
5,000
  
 
8,212
  
 
5,000
–Hanwha Investment Trust Management Co., Ltd.
  
11.00
  
 
3,487
  
 
4,184
  
 
3,487
–Korea Vilene Co.,Ltd.
  
10.00
  
 
3,000
  
 
3,455
  
 
3,000
–Hyundai Home Shopping Network Corporation
  
5.96
  
 
2,680
  
 
2,123
  
 
2,680
–National Information & Credit Evaluation INC.
  
7.85
  
 
2,668
  
 
4,004
  
 
2,668
–Korea Aerospace Industires, Ltd.
  
0.46
  
 
2,179
  
 
1,349
  
 
2,179
–Korea Digital Satelite Broadcasting Co., Ltd.
  
0.65
  
 
2,174
  
 
2,029
  
 
2,174
–Kyobo Investment Trust Management Co., Ltd.
  
7.00
  
 
2,100
  
 
3,390
  
 
2,100
–C&S Microwave Co., Ltd.
  
6.88
  
 
2,000
  
 
785
  
 
2,000
–NICE e-Banking Services
  
4.65
  
 
2,000
  
 
512
  
 
2,000
–Others
       
 
32,682
  
 
27,947
  
 
32,682
         

  

  

         
 
373,828
  
 
413,278
  
 
350,251
         

  

  

Foreign equity securities
                         
–Asia Credit Services (PTE) Ltd.
  
6.67
  
 
12,255
  
 
9,809
  
 
9,809
–Asia Finance and Investment Corp.
  
2.17
  
 
3,064
  
 
1,877
  
 
3,064
–Nanjing Kumho Tire Co., Ltd.
  
6.00
  
 
2,607
  
 
1,897
  
 
2,607
–Investment Development Leasing Com
  
10.00
  
 
1,573
  
 
2,139
  
 
2,139
–Pan Asia Paper (Thailand) Co., Ltd.
  
2.94
  
 
3,308
  
 
1,843
  
 
1,843
–Tianjin Samsung Opto-Electronics.
  
10.00
  
 
1,197
  
 
1,343
  
 
1,197
–Others
       
 
10,668
  
 
12,532
  
 
9,604
         

  

  

         
 
34,672
  
 
31,440
  
 
30,263
         

  

  

         
(Won)
860,800
  
(Won)
722,050
  
(Won)
657,846
         

  

  


1*
 
Net asset value is calculated using the monthly closing information of investees as of September 30, 2002 if possible, otherwise the most recent financial information is used.
2*
 
Investments in mutual funds are calculated using net asset value per share provided by restructuring funds which consist of Seoul Debt-Restructuring Fund, Arirang Restructuring Fund, and Mukungwha Restructuring Fund formed to support corporate restructuring.
 
Unrealized gains and losses on investment securities included in net income for the nine-month period ended September 30, 2002 are summarized as follows (in millions of Won):
 
    
Beginning
Balance

  
Fair Value or
Net Asset Value

  
Unrealized
Gains

Investment in special funds
                    
–Stock market stabilization fund
  
(Won)
18,156
  
(Won)
19,852
  
(Won)
1,696
Beneficiary certificates
                    
–Special fund for corporate bonds
  
 
722,685
  
 
755,557
  
 
32,872
    

  

  

    
(Won)
740,841
  
(Won)
775,409
  
(Won)
34,568
    

  

  

 
Most of the operating assets in the funds are composed of short-term financial assets and related gains and losses are recognized in the current period as gains and losses on investment in special funds.
 
Continued;

F-19


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
5.    Investment Securities, Continued;
 
Impairment losses on investment securities for the nine-month period ended September 30, 2002 are as follows (in millions of Won):
 
    
Acquisition Cost

  
Impairment Loss

  
Book Value

Equity Securities
                    
Marketable equity securities (KSE)
                    
–Daewoo Securities Co., Ltd
  
(Won)
53,627
  
(Won)
38,245
  
(Won)
15,382
–Ssangyong Motor Company
  
 
27,656
  
 
18,235
  
 
9,421
–Woo Bang Housing Co., Ltd.
  
 
6,122
  
 
3,280
  
 
2,842
–Shinwon Corp.
  
 
12,159
  
 
2,969
  
 
9,190
–Hanmi Capital Co., Ltd.
  
 
2,335
  
 
849
  
 
1,486
–Saehan Industries Inc.
  
 
7,572
  
 
652
  
 
6,920
–Gun Young Co., Ltd.
  
 
762
  
 
441
  
 
321
–Hyundae metal Co., Ltd
  
 
574
  
 
420
  
 
154
–Hyundae metal Co., Ltd (preferred stocck)
  
 
266
  
 
207
  
 
59
–Jindo Corporation
  
 
207
  
 
186
  
 
21
–Maxon Telecom Co., Ltd (Preferred Stocck)
  
 
830
  
 
119
  
 
711
–Hanchang
  
 
56
  
 
32
  
 
24
–Choongnam Spinning Co., Ltd.
  
 
102
  
 
22
  
 
80
–Monalisa Co., Ltd.
  
 
3
  
 
2
  
 
1
    

  

  

    
 
112,271
  
 
65,659
  
 
46,612
    

  

  

Marketable equity securities (KOSDAQ)
                    
–C&H Capital Co., Ltd.
  
 
8,136
  
 
5,271
  
 
2,865
–Hansol Mutual Savings Bank
  
 
1,685
  
 
1,551
  
 
134
–Eyesvision Corporation
  
 
1,491
  
 
1,416
  
 
75
–Prochips Technology Inc.
  
 
1,323
  
 
1,161
  
 
162
–Shinwon Construction Co., Ltd.
  
 
1,622
  
 
1,019
  
 
603
–Miju Steel Co., Ltd.
  
 
1,348
  
 
922
  
 
426
–Growell Telecom Co., Ltd.
  
 
1,000
  
 
917
  
 
83
–NetSecure Technology, Inc.
  
 
954
  
 
841
  
 
113
–Han Kook Capital Co., Ltd.
  
 
1,203
  
 
408
  
 
795
–Ssangyong Engineering & Construction Co., Ltd
  
 
548
  
 
392
  
 
156
–Seohan Co., Ltd.
  
 
1,201
  
 
199
  
 
1,002
    

  

  

    
 
20,511
  
 
14,097
  
 
6,414
    

  

  

Non-marketable equity securities
                    
–Daewoo Electronics Co., Ltd.
  
 
23,800
  
 
21,443
  
 
2,357
–Chonggu Co., Ltd.
  
 
904
  
 
904
  
 
–Kohap. Corp
  
 
861
  
 
838
  
 
23
–Daewoo Telecom, Ltd.
  
 
417
  
 
392
  
 
25
    

  

  

    
 
25,982
  
 
23,577
  
 
2,405
    

  

  

Foreign equity securities
                    
–Asia Credit Services (PTE), Ltd.
  
 
12,255
  
 
2,446
  
 
9,809
–Pan Asia Paper (Thailand) Co.,Ltd.
  
 
3,308
  
 
1,465
  
 
1,843
–Sahavirya Steel Inc.
  
 
919
  
 
294
  
 
625
    

  

  

    
 
16,482
  
 
4,205
  
 
12,277
    

  

  

    
 
175,246
  
 
107,538
  
 
67,708
    

  

  

 
Continued;

F-20


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
5.    Investment Securities, Continued;
 
    
Acquisition Cost

  
Impairment Loss

  
Book Value

Debt Securities
                    
Corporate bonds
                    
–Subordinated ABS bond
  
 
59,500
  
 
13,100
  
 
46,400
Debt securities denominated in foreign currencies
                    
–Daehan Investment Trust Co., Ltd.( TRS-SWAP)
  
 
43,893
  
 
14,726
  
 
29,167
–Essar Gujarat LTD
  
 
1,838
  
 
1,348
  
 
490
–SMM Finance Cayman Islands
  
 
1,532
  
 
1,195
  
 
337
–PT Argo Pantes
  
 
1,532
  
 
797
  
 
735
–Amsteel Corporation Bhd
  
 
919
  
 
680
  
 
239
–PT Bakrie Investindo
  
 
735
  
 
676
  
 
59
–Tuntex
  
 
918
  
 
275
  
 
643
–PT Fiskar Agung Jakarta
  
 
184
  
 
184
  
 
–PT Pelabuan
  
 
11,778
  
 
4,425
  
 
7,353
–PT Indorayon
  
 
1,532
  
 
1,501
  
 
31
–PT Pelabuan
  
 
2,543
  
 
705
  
 
1,838
–Kohap Global Inv.
  
 
368
  
 
368
  
 
–Dhamala
  
 
306
  
 
275
  
 
31
    

  

  

    
 
68,078
  
 
27,155
  
 
40,923
    

  

  

    
 
127,578
  
 
40,255
  
 
87,323
    

  

  

    
(Won)
302,824
  
(Won)
147,793
  
(Won)
155,031
    

  

  

 
Recovery of impairment losses on equity investment securities for the nine-month period ended September 30, 2002 is (Won)15,318 million for the investment in Korea Housing Guarantee Co., Ltd. Recovery of impairment losses on debt investment securities for the period then ended is (Won)12,380 million for the investments in Subordinated ABS bond.
 
Continued;

F-21


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
5.    Investment Securities, Continued;
 
Investment securities risk concentrations as of September 30, 2002 are as follows (in millions of Won):
 
    
Securities in Won1*

  
Securities in foreign currencies

    
Amount

  
Ratio (%)

  
Amount

  
Ratio (%)

By Geography
                       
–Korea
  
(Won)
23,407,599
  
100.00
  
(Won)
944,484
  
77.46
–Philippines
  
 
  
  
 
66,415
  
5.45
–USA
  
 
  
  
 
67,927
  
5.57
–Germany
  
 
  
  
 
34,315
  
2.81
–Mexico
  
 
  
  
 
19,516
  
1.60
–Indonesia
  
 
  
  
 
19,241
  
1.58
–Thailand
  
 
  
  
 
14,094
  
1.16
–India
  
 
  
  
 
13,462
  
1.10
–Hong Kong
  
 
  
  
 
12,196
  
1.00
–Others
  
 
  
  
 
27,680
  
2.27
    

  
  

  
    
(Won)
23,407,599
  
100.00
  
(Won)
1,219,330
  
100.00
    

  
  

  
By Type
                       
–Fixed rate bonds
  
(Won)
15,679,322
  
66.98
  
(Won)
272,034
  
22.31
–Floating rate bonds
  
 
1,610,529
  
6.88
  
 
404,600
  
33.18
–Subordinated bonds
  
 
472,922
  
2.02
  
 
161,296
  
13.23
–Convertible bonds
  
 
31,758
  
0.14
  
 
208,680
  
17.11
–Equity securities
  
 
2,061,489
  
8.81
  
 
155,901
  
12.79
–Others
  
 
3,551,579
  
15.17
  
 
16,819
  
1.38
    

  
  

  
    
(Won)
23,407,599
  
100.00
  
(Won)
1,219,330
  
100.00
    

  
  

  
By Industry
                       
–Governmental institutions
  
(Won)
4,223,753
  
18.04
  
(Won)
  
–Government invested institutions
  
 
8,117,754
  
34.68
  
 
197,596
  
16.21
–Financial institutions
  
 
5,885,547
  
25.14
  
 
509,676
  
41.80
–Others
  
 
5,180,545
  
22.14
  
 
512,058
  
41.99
    

  
  

  
    
(Won)
23,407,599
  
100.00
  
(Won)
1,219,330
  
100.00
    

  
  

  

1*
 
Securities lent are not included.
 
The maturities of the investment securities, excluding investment equity securities, investment in special funds and securities lent, as of September 30, 2002 are summarized as follows (in millions of Won):
 
    
Government and Municipal Bonds

  
Finance Debentures

  
Corporate Bonds

  
Others

  
Securities in foreign currencies

  
Total

Due in 3 months or less
  
(Won)
345,499
  
(Won)
60,673
  
(Won)
467,234
  
(Won)
2,657,158
  
(Won)
146,913
  
(Won)
3,677,477
Due after 3 months through 6 months
  
 
57,275
  
 
582,843
  
 
760,362
  
 
535,378
  
 
63,501
  
 
1,999,359
Due after 6 months through 9months
  
 
38,571
  
 
382,683
  
 
625,731
  
 
180,657
  
 
100,476
  
 
1,328,118
Due after 9 months through 1 year
  
 
356,598
  
 
137,386
  
 
4,095,070
  
 
  
 
39,377
  
 
4,628,431
Due after 1 year through 2 years
  
 
990,157
  
 
995,890
  
 
2,105,892
  
 
  
 
335,497
  
 
4,427,436
Due after 2 years through 3 years
  
 
1,253,857
  
 
107,829
  
 
2,059,264
  
 
  
 
75,807
  
 
3,496,757
Due after 3 years through 4 years
  
 
214,685
  
 
  
 
1,019,074
  
 
  
 
116,319
  
 
1,350,078
Due after 4 years through 5 years
  
 
812,643
  
 
  
 
25,453
  
 
  
 
34,028
  
 
872,124
Thereafter
  
 
154,468
  
 
  
 
281,419
  
 
  
 
151,511
  
 
587,398
    

  

  

  

  

  

    
(Won)
4,223,753
  
(Won)
2,267,304
  
(Won)
11,439,499
  
(Won)
3,373,193
  
(Won)
1,063,429
  
(Won)
22,367,178
    

  

  

  

  

  

 
Continued;

F-22


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
5.    Investment Securities, Continued;
 
Currency concentrations of securities denominated in foreign currencies as of September 30, 2002 are as follows (in millions of Won):
 
    
Investment Securities

    
Amount

  
Ratio (%)

USD
  
(Won)
1,121,481
  
91.98
GBP
  
 
46,471
  
3.81
JPY
  
 
40,357
  
3.31
DEM
  
 
5,480
  
0.45
THB
  
 
2,549
  
0.21
BDT
  
 
2,139
  
0.18
PHP
  
 
467
  
0.04
SFR
  
 
348
  
0.02
IDR
  
 
38
  
0.00
    

  
    
(Won)
1,219,330
  
100.00
    

  
 
Securities lent as of September 30, 2002 are as follows (in millions of Won):
 
Company

  
Securities

  
Amount

LG Engineering & Construction Co., Ltd.
  
Corporate bonds
  
(Won)
188,501
Korea Development Corp.
  
Treasury bonds
  
 
10,153
Kyung Nam Enterprises Ltd.
  
Treasury bonds
  
 
73,683
         

         
(Won)
272,337
         

 
Trading and investment securities of (Won)5,091,273 million (par value) can be discounted at the Bank of Korea as of September 30, 2002.
 
As of September 30, 2002, the following investment securities are pledged at various institutions (in millions of Won):
 
Related Liability

  
Securities Provided

Transaction

  
Amount

  
Book Value

  
Pledge Value

Sale of RP
  
(Won)2,504,865
  
(Won)
5,486,782
  
(Won)
5,330,950
BOK borrowings
  
           1,664,708
  
 
2,175,778
  
 
2,131,250
BOK settlements
  
Borrowing within credit line
  
 
348,153
  
 
339,900
Sale of non-performing loans
  
Borrowing within credit line
  
 
170,641
  
 
166,671
Derivatives transactions
  
Borrowing within credit line
  
 
98,094
  
 
106,000
Securities transactions
  
               41,816
  
 
43,260
  
 
42,000
Foreign currency transactions
  
Borrowing within credit line
  
 
1,894
  
 
1,900
         

  

         
(Won)
8,324,602
  
(Won)
8,118,671
         

  

F-23


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
6.    Loans:
 
Loans as of September 30, 2002 and 2001 are summarized as follows (in millions of Won):
 
Account

  
Detailed Account

  
2002

  
2001

Loans in Won
                  
Corporate loans
  
Operation loans
             
    
General operation loans
  
(Won)
27,640,862
  
(Won)
19,080,910
    
Notes discounted
  
 
1,695,815
  
 
1,610,147
    
Overdraft accounts
  
 
709,871
  
 
235,160
    
Trading notes
  
 
844,982
  
 
594,055
    
Other operation loans
  
 
3,440,759
  
 
1,910,464
         

  

         
 
34,332,289
  
 
23,430,736
         

  

    
Facility loans
             
    
General facility loans
  
 
3,857,127
  
 
3,296,505
    
Special purpose loans
  
 
7,786
  
 
397,316
    
Other facility loans
  
 
1,298,554
  
 
876,670
         

  

         
 
5,163,467
  
 
4,570,491
         

  

         
 
39,495,756
  
 
28,001,227
         

  

Consumer loans
  
General consumer loans
  
 
38,439,359
  
 
16,997,861
    
Consumer housing loans
  
 
31,318,266
  
 
2,317,155
    
Consumer benefit loans
  
 
62,799
  
 
21,340
    
Other consumer loans
  
 
674,854
  
 
168,548
         

  

         
 
70,495,278
  
 
19,504,904
         

  

Public loans
  
Public operation loans
  
 
738,637
  
 
323,349
    
Public facility loans
  
 
50,493
  
 
35,973
         

  

         
 
789,130
  
 
359,322
         

  

Other loans
  
Property formation loans
  
 
101,560
  
 
192,266
    
Inter-bank loans
  
 
24,598
  
 
40,704
    
Factoring loans
  
 
35,204
  
 
    
Others
  
 
5,901
  
 
1,538
         

  

         
 
167,263
  
 
234,508
         

  

         
 
110,947,427
  
 
48,099,961
         

  

Loans in foreign currencies
  
Domestic funding loans
  
 
1,504,941
  
 
1,554,593
    
Overseas funding loans
  
 
925,764
  
 
898,018
    
Inter-bank loans
  
 
1,082,357
  
 
1,148,715
    
Domestic usance bills
  
 
4,722
  
 
4,724
    
Government funding loans
  
 
3,425
  
 
8,506
         

  

         
 
3,521,209
  
 
3,614,556
         

  

Bills bought in Won
       
 
30,080
  
 
161,166
         

  

Bills bought in foreign currencies
       
 
803,457
  
 
1,036,400
         

  

Payments on guarantees
       
 
73,337
  
 
238,704
         

  

Credit card accounts
       
 
6,092,484
  
 
20,304
         

  

Bonds purchased under resale agreements (“RP”)
       
 
  
 
10,000
         

  

 
Continued;

F-24


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
6.    Loans, Continued;
 
Account

  
Detailed Account

  
2002

    
2001

 
Call loans
  
Call loans in Won
  
 
450,000
 
  
 
1,330,100
 
    
Call loans in foreign currencies
  
 
340,483
 
  
 
246,172
 
    
Inter-bank reconciliation funds
  
 
52,286
 
  
 
14,308
 
         


  


         
 
842,769
 
  
 
1,590,580
 
         


  


Privately placed debentures
       
 
1,397,757
 
  
 
1,889,448
 
         


  


Loans convertible to equity securities
       
 
17,543
 
  
 
36,708
 
         


  


         
 
123,726,063
 
  
 
56,697,827
 
         


  


Allowances for loan losses(Note 7)
  
 
(2,342,830
)
  
 
(1,703,207
)
Present value discounts
  
 
(32,287
)
  
 
(109,340
)
         


  


         
(Won)
121,350,946
 
  
(Won)
54,885,280
 
         


  


 
Restructured loans due to the commencement of workout plans or other similar restructuring programs at September 30, 2002 are as follows (in millions of Won):
 
           
Settlements by issuance or grants of

         
      
Balances before Restructuring

  
Exemption

  
Convertible Loans1*

  
Equity Securities

    
Convertible Bonds

  
Balances after
Restructuring

  
Present Value Discounts

Workout
    
(Won)
351,065
  
(Won)
1,099
  
(Won)
17,543
  
(Won)
90,106
    
(Won)
24
  
(Won)
242,293
  
(Won)
7,081
Court receivership
    
 
138,919
  
 
  
 
  
 
96,443
    
 
  
 
42,476
  
 
10,585
Court mediation
    
 
204,819
  
 
  
 
  
 
2,398
    
 
  
 
202,421
  
 
14,621
      

  

  

  

    

  

  

      
(Won)
694,803
  
(Won)
1,099
  
(Won)
17,543
  
(Won)
188,947
    
(Won)
24
  
(Won)
487,190
  
(Won)
32,287
      

  

  

  

    

  

  


1*
 
The loans, or portions thereof, that are agreed to debt restructuring by issuance or grants of equity are separately classified as loans convertible into equity securities as of the agreement date. The loans convertible into equity securities are stated at the lower of nominal amount or the fair value of the to-be-converted equity interest. The difference between the nominal amount and the fair value of equity interest is adjusted in related allowance for loan losses.
 
The maturities of loans as of September 30, 2002 are as follows (in millions of Won):
 
    
Loans in Won

  
Loans in foreign currencies

  
Bills bought1*

  
Credit card

  
Call loans

  
Privately Placed Debentures

  
Others

  
Total

Due in 3 months or less
  
(Won)
14,078,419
  
(Won)
1,265,762
  
(Won)
722,777
  
(Won)
4,075,164
  
(Won)
842,769
  
(Won)
215,083
  
(Won)
19,929
  
(Won)
21,219,903
Due after 3 months through 6 months
  
 
13,458,379
  
 
655,780
  
 
60,959
  
 
1,011,598
  
 
  
 
97,605
  
 
32,281
  
 
15,316,602
Due after 6 months through 1 year
  
 
23,780,652
  
 
359,688
  
 
33,964
  
 
952,702
  
 
  
 
304,325
  
 
8,057
  
 
25,439,388
Due after 1 year through 2 years
  
 
12,556,085
  
 
380,958
  
 
6,335
  
 
23,561
  
 
  
 
288,548
  
 
8,038
  
 
13,263,525
Due after 2 years through 3 years
  
 
28,033,835
  
 
199,133
  
 
6,335
  
 
15,377
  
 
  
 
242,269
  
 
  
 
28,496,949
Due after 3 years through 4 years
  
 
3,708,421
  
 
90,995
  
 
3,167
  
 
9,331
  
 
  
 
234,258
  
 
  
 
4,046,172
Due after 4 years through 5 years
  
 
2,953,850
  
 
106,479
  
 
  
 
4,751
  
 
  
 
15,004
  
 
  
 
3,080,084
Thereafter
  
 
12,377,786
  
 
462,414
  
 
  
 
  
 
  
 
665
  
 
22,575
  
 
12,863,440
    

  

  

  

  

  

  

  

    
(Won)
110,947,427
  
(Won)
3,521,209
  
(Won)
833,537
  
(Won)
6,092,484
  
(Won)
842,769
  
(Won)
1,397,757
  
(Won)
90,880
  
(Won)
123,726,063
    

  

  

  

  

  

  

  


1*
 
Bills bought in Won and Bills bought in foreign currencies
 
Continued;

F-25


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
6.    Loans, Continued;
 
Loan risk concentrations as of September 30, 2002 are as follows (in millions of Won):
 
    
Loans in Won

  
Loans in
foreign currencies

  
Others

  
Total

  
Percentage (%)

by country
                                
Korea
  
(Won)
110,947,427
  
(Won)
2,950,701
  
(Won)
9,195,805
  
(Won)
123,093,933
  
99.49
Southeast Asia
  
 
  
 
69,782
  
 
37,196
  
 
106,978
  
0.09
Russia
  
 
  
 
121,325
  
 
  
 
121,325
  
0.10
China
  
 
  
 
6,752
  
 
  
 
6,752
  
0.01
Japan
  
 
  
 
242,988
  
 
24,220
  
 
267,208
  
0.21
Others
  
 
  
 
129,661
  
 
206
  
 
129,867
  
0.10
    

  

  

  

  
    
(Won)
110,947,427
  
(Won)
3,521,209
  
(Won)
9,257,427
  
(Won)
123,726,063
  
100.00
    

  

  

  

  
by industry
                                
Financial institutions
  
(Won)
574,494
  
(Won)
1,676,538
  
(Won)
892,534
  
(Won)
3,143,566
  
2.54
Manufacturing companies
  
 
15,240,080
  
 
841,550
  
 
1,309,224
  
 
17,390,854
  
14.06
Service companies
  
 
3,225,836
  
 
750,076
  
 
57,829
  
 
4,033,741
  
3.26
Others
  
 
21,304,277
  
 
188,224
  
 
944,778
  
 
22,437,279
  
18.13
    

  

  

  

  
    
 
40,344,687
  
 
3,456,388
  
 
3,204,365
  
 
47,005,440
  
37.99
    

  

  

  

  
Households
  
 
70,602,740
  
 
64,821
  
 
6,053,062
  
 
76,720,623
  
62.01
    

  

  

  

  
    
(Won)
110,947,427
  
(Won)
3,521,209
  
(Won)
9,257,427
  
(Won)
123,726,063
  
100.00
    

  

  

  

  
by customer
                                
Industrial loans
  
(Won)
40,240,618
  
(Won)
3,446,196
  
(Won)
3,204,365
  
(Won)
46,891,179
  
37.90
Household loans
  
 
70,602,740
  
 
64,821
  
 
6,053,062
  
 
76,720,623
  
62.01
Public and other loans
  
 
104,069
  
 
10,192
  
 
  
 
114,261
  
0.09
    

  

  

  

  
    
(Won)
110,947,427
  
(Won)
3,521,209
  
(Won)
9,257,427
  
(Won)
123,726,063
  
100.00
    

  

  

  

  
 
7.    Allowances for Loan Losses:
 
As of September 30, 2002 and 2001, allowances for loan losses are as follows (in millions of Won):
 
Allowance for

  
2002

  
2001

Loans in Won
  
(Won)
1,820,283
  
(Won)
993,072
Loans in foreign currencies
  
 
98,531
  
 
265,026
Bills bought in Won and bills bought in foreign currencies
  
 
24,868
  
 
113,545
Payments on guarantees
  
 
41,991
  
 
151,738
Credit card accounts
  
 
286,561
  
 
101
Privately placed debentures
  
 
38,679
  
 
148,960
Loans convertible into equity securities
  
 
9,268
  
 
27,082
Suspense receivables
  
 
13,734
  
 
1,526
Others1*
  
 
8,915
  
 
2,157
    

  

    
(Won)
2,342,830
  
(Won)
1,703,207
    

  


1*
 
The Bank provides allowances amounting to 7,133 million Won for the estimated losses from the repurchase of loans sold to KAMCO that are under the repurchase agreement (See Note 17).
 
Continued;

F-26


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
7.    Allowances for Loan Losses, Continued;
 
As of September 30, 2002, allowances for loan losses and credit risk classifications are as follows (in millions of Won):
 
         
Normal

  
Precautionary

  
Substandard

  
Doubtful

  
Estimated Loss

  
Total

Loans in Won
  
Loan balance
  
(Won)
103,473,794
  
(Won)
4,588,006
  
(Won)
2,155,073
  
(Won)
501,339
  
(Won)
202,153
  
(Won)
110,920,365
    
Allowances
  
 
687,793
  
 
162,533
  
 
458,912
  
 
308,892
  
 
202,153
  
 
1,820,283
         

  

  

  

  

  

    
Percentage(%)
  
 
0.66
  
 
3.54
  
 
21.29
  
 
61.61
  
 
100.00
  
 
1.64
         

  

  

  

  

  

Loans in foreign currencies
  
Loan balance
  
 
3,192,438
  
 
118,523
  
 
169,464
  
 
27,443
  
 
8,985
  
 
3,516,853
    
Allowances
  
 
10,550
  
 
8,575
  
 
54,959
  
 
15,462
  
 
8,985
  
 
98,531
         

  

  

  

  

  

    
Percentage(%)
  
 
0.33
  
 
7.23
  
 
32.43
  
 
56.34
  
 
100.00
  
 
2.80
         

  

  

  

  

  

Bills bought1*
  
Loan balance
  
 
669,132
  
 
139,916
  
 
3,833
  
 
8,996
  
 
11,660
  
 
833,537
    
Allowances
  
 
3,346
  
 
2,798
  
 
767
  
 
6,297
  
 
11,660
  
 
24,868
         

  

  

  

  

  

    
Percentage(%)
  
 
0.50
  
 
2.00
  
 
20.01
  
 
70.00
  
 
100.00
  
 
2.98
         

  

  

  

  

  

Payments on guarantees
  
Loan balance
  
 
3,950
  
 
3,791
  
 
25,690
  
 
28,960
  
 
10,088
  
 
72,479
    
Allowances
  
 
20
  
 
481
  
 
5,138
  
 
26,264
  
 
10,088
  
 
41,991
         

  

  

  

  

  

    
Percentage(%)
  
 
0.51
  
 
12.69
  
 
20.00
  
 
90.69
  
 
100.00
  
 
57.94
         

  

  

  

  

  

Credit card accounts
  
Loan balance
  
 
5,497,172
  
 
282,912
  
 
41
  
 
251,456
  
 
60,903
  
 
6,092,484
    
Allowances
  
 
54,972
  
 
19,804
  
 
8
  
 
150,874
  
 
60,903
  
 
286,561
         

  

  

  

  

  

    
Percentage(%)
  
 
1.00
  
 
7.00
  
 
19.51
  
 
60.00
  
 
100.00
  
 
4.70
         

  

  

  

  

  

Call loans
  
Loan balance
  
 
842,769
  
 
  
 
  
 
  
 
  
 
842,769
    
Allowances
  
 
  
 
  
 
  
 
  
 
  
 
         

  

  

  

  

  

    
Percentage(%)
  
 
0.00
  
 
0.00
  
 
0.00
  
 
0.00
  
 
0.00
  
 
0.00
         

  

  

  

  

  

Privately placed debentures
  
Loan balance
  
 
1,293,108
  
 
17,274
  
 
71,771
  
 
14,232
  
 
1,361
  
 
1,397,746
    
Allowances
  
 
6,466
  
 
1,026
  
 
17,754
  
 
12,072
  
 
1,361
  
 
38,679
         

  

  

  

  

  

    
Percentage(%)
  
 
0.50
  
 
5.94
  
 
24.74
  
 
84.82
  
 
100.00
  
 
2.77
         

  

  

  

  

  

Convertible loans2*
  
Loan balance
  
 
  
 
15,650
  
 
1,637
  
 
256
  
 
  
 
17,543
    
Allowances
  
 
  
 
8,123
  
 
941
  
 
204
  
 
  
 
9,268
         

  

  

  

  

  

    
Percentage(%)
  
 
0.00
  
 
51.90
  
 
57.48
  
 
79.69
  
 
0.00
  
 
52.83
         

  

  

  

  

  

Total loans
  
Loan balance3*
  
(Won)
114,972,363
  
(Won)
5,166,072
  
(Won)
2,427,509
  
(Won)
832,682
  
(Won)
295,150
  
(Won)
123,693,776
    
Allowances4*
  
 
763,147
  
 
203,340
  
 
538,479
  
 
520,065
  
 
295,150
  
 
2,320,181
         

  

  

  

  

  

    
Percentage(%)
  
 
0.66
  
 
3.94
  
 
22.18
  
 
62.46
  
 
100.00
  
 
1.88
         

  

  

  

  

  


1*
 
Bills bought in Won and Bills bought in foreign currencies
2*
 
Loans convertible into equity securities
3*
 
The above amounts of loan balances are net of present value discounts.
4*
 
The above amounts of allowances for loan losses do not include the allowances for suspense receivables and other allowances.
 
Continued;

F-27


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
7.    Allowances for Loan Losses, Continued;
 
The movements in allowances for loan losses for the nine-month periods ended September 30, 2002 and 2001, are as follows (in millions of Won):
 
    
2002

  
2001

Beginning Balance
  
(Won)
2,271,179
  
(Won)
1,826,700
Increase due to:
             
Provision for loan losses
  
 
946,200
  
 
509,324
Collection of written-off loans
  
 
191,862
  
 
47,087
Troubled debt restructuring
  
 
51,631
  
 
31,442
Repurchase of loans sold
  
 
6,560
  
 
3,307
Others
  
 
28,604
  
 
17,085
    

  

    
 
1,224,857
  
 
608,245
    

  

Decrease due to:
             
Written-off loans
  
 
891,010
  
 
498,626
Sale of loans
  
 
65,370
  
 
42,576
Conversion of loans into equity securities
  
 
119,986
  
 
137,264
Exemption of loans
  
 
7,094
  
 
35,733
Set-off with present value discounts from troubled debt restructuring
  
 
46,651
  
 
17,539
Change in exchange rates and others
  
 
23,095
  
 
    

  

    
 
1,153,206
  
 
731,738
    

  

Ending Balance
  
(Won)
2,342,830
  
(Won)
1,703,207
    

  

 
As of September 30, 2002 and 2001, the ratios of allowances for loan losses to loans are as follows (in millions of Won):
 
    
2002

  
2001

Loans1*
  
(Won)
123,693,776
  
(Won)
56,588,487
Allowances for loan losses2*
  
 
2,320,181
  
 
1,699,524
    

  

Ratio (%)
  
 
1.88
  
 
3.00
    

  


1*
 
The above amounts of loans are net of present value discounts and suspense receivables.
2*
 
The above amounts of allowances for loan losses do not include the allowances for suspense receivables and other allowances.

F-28


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
8.    Fixed Assets:
 
Fixed assets at June 30, 2002 and 2001 comprise the following (in millions of Won):
 
    
2002

  
2001

    
Acquisition Cost

  
Accumulated Depreciation

  
Net Carrying Value

  
Acquisition
Cost

  
Accumulated Depreciation

  
Net Carrying Value

Tangible assets
                                         
Land
  
(Won)
1,176,052
  
(Won)
  
(Won)
1,176,052
  
(Won)
734,210
  
(Won)
  
(Won)
734,210
Buildings and structures
  
 
824,289
  
 
103,556
  
 
720,733
  
 
512,850
  
 
86,232
  
 
426,618
Leasehold improvements
  
 
73,934
  
 
41,736
  
 
32,198
  
 
30,966
  
 
26,351
  
 
4,615
Equipment and vehicles
  
 
988,627
  
 
524,055
  
 
464,572
  
 
508,223
  
 
406,310
  
 
101,913
Constructions in progress
  
 
7,513
  
 
  
 
7,513
  
 
5,440
  
 
  
 
5,440
    

  

  

  

  

  

    
(Won)
3,070,415
  
(Won)
669,347
  
(Won)
2,401,068
  
(Won)
1,791,689
  
(Won)
518,893
  
(Won)
1,272,796
    

  

  

  

  

  

Intangible assets
  
 
633,791
                
 
5,855
Foreclosed assets (net of valuation allowance)
  
 
1,488
                
 
2,062
                  

                

                  
(Won)
3,036,347
                
(Won)
1,280,713
                  

                

 
In accordance with the General Banking Act, the Bank is prohibited from investing in non-business purpose real property and may only hold business-purpose real property within its own equity amount.
 
All of the Bank’s property and equipment, other than those personal properties valued under (Won)1 million, are covered by insurance policies of (Won)986,233 million and (Won)592,394 million as of September 30, 2002 and 2001, respectively. All vehicles are covered by legal and general insurance policies.
 
Movements in intangible assets for the nine-month period ended September 30, 2002 are as follows (in millions of Won):
 
    
Acquisition
Cost

  
Increase

  
Accumulated
Depreciation

  
Net Carrying Value

Goodwill due to the combination with H&CB
  
(Won)
692,050
  
(Won)
  
(Won)
58,759
  
(Won)
633,291
Premiums for rented store
  
 
196
  
 
101
  
 
34
  
 
263
Rights to income on donated asset
  
 
117
  
 
  
 
6
  
 
111
Trademarks
  
 
23
  
 
  
 
10
  
 
13
Others
  
 
4
  
 
117
  
 
8
  
 
113
    

  

  

  

    
(Won)
692,390
  
(Won)
218
  
(Won)
58,817
  
(Won)
633,791
    

  

  

  

 
The total government-posted price of land for tax imposition and compensation for confiscation as of September 30, 2002 and 2001 is as follows (in millions of Won):
 
    
2002

  
2001

    
Book Value

  
Appraisal Value

  
Book Value

  
Appraisal Value

Lands included in tangible assets
  
(Won)
1,176,052
  
(Won)
982,636
  
(Won)
734,210
  
(Won)
604,127
Lands included in foreclosed assets
  
 
2,885
  
 
952
  
 
3,928
  
 
1,444
    

  

  

  

    
(Won)
1,178,937
  
(Won)
983,588
  
(Won)
738,138
  
(Won)
605,571
    

  

  

  

F-29


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
9.    Other Assets:
 
Other assets at September 30, 2002 and 2001 comprise the following (in millions of Won):
 
    
2002

  
2001

Guarantee deposits paid
  
(Won)
1,209,864
  
(Won)
619,832
Accounts receivable
  
 
2,564,567
  
 
1,835,236
Accrued income
  
 
1,050,577
  
 
1,017,319
Payments in advance
  
 
51,732
  
 
31,428
Prepaid expenses
  
 
18,890
  
 
43,906
Deferred income tax debits
  
 
29,274
  
 
Derivative assets (Note16 )
  
 
597,147
  
 
278,910
Unsettled exchange assets
  
 
555,708
  
 
282,566
Loans to trust accounts
  
 
72,023
  
 
231,145
Others
  
 
17,144
  
 
13,375
    

  

    
(Won)
6,166,926
  
(Won)
4,353,717
    

  

 
10.    Deposits:
 
Deposits at September 30, 2002 and 2001 comprise the following (in millions of Won):
 
      
Annual Interest (%)

  
2002

  
2001

Deposits in Won
                    
Demand deposits
                    
–Current deposits
    
  
(Won)
54,036
  
(Won)
160,432
–Household deposits
    
0.50
  
 
460,005
  
 
373,058
–Passbook deposits
    
0.50
  
 
7,874,163
  
 
2,450,355
–Temporary deposits
    
  
 
3,991,798
  
 
2,045,080
–Public fund deposits
    
0.50
  
 
129,440
  
 
65,791
–Others
    
  
 
10,916
  
 
5
      
  

  

           
 
12,520,358
  
 
5,094,721
      
  

  

Time deposits and savings deposits
                    
–Time deposits
    
3.50-5.35
  
 
58,684,886
  
 
27,145,399
–Installment savings deposits
    
4.20-5.15
  
 
1,480,217
  
 
621,731
–Savings deposits for money sum
    
8.50-10.5
  
 
2,324
  
 
203
–Time and savings deposits of non-resident citizens in won
    
  
 
87,292
  
 
–General savings deposits
    
0.50-3.80
  
 
21,884,786
  
 
12,143,150
–Unrestricted corporate savings deposits
    
0.50-3.80
  
 
6,782,773
  
 
4,695,726
–Long term savings for employees
    
8.20-13.5
  
 
362,184
  
 
457,163
–Long term housing savings
    
5.65
  
 
470,634
  
 
52,501
–Long term savings for households
    
5.15-12.0
  
 
2,339,154
  
 
1,934,446
–Employee preferential savings deposits
    
5.35
  
 
2,985,423
  
 
1,042,087
–Housing savings deposits for employees
    
5.65
  
 
85
  
 
36
–Mutual installment deposits
    
3.50-5.25
  
 
7,604,811
  
 
6,157,727
–Housing installment deposits
    
4.85-5.25
  
 
4,660,379
  
 
367,236
           

  

           
 
107,344,948
  
 
54,617,405
           

  

           
 
119,865,306
  
 
59,712,126
           

  

 
Continued;

F-30


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
10.    Deposits, Continued;
 
Deposits at September 30, 2002 and 2001 comprise the following (in millions of Won):
 
      
Annual Interest (%)

  
2002

  
2001

Deposits in foreign currencies
                    
Demand deposits
                    
–Current deposits
    
0.00-3.00
  
 
28,781
  
 
21,452
–Passbook deposits
    
0.10-0.57
  
 
435,696
  
 
278,694
–Notice deposits
    
0.20-3.50
  
 
25,216
  
 
19,660
–Temporary deposits
    
  
 
5,214
  
 
2,959
           

  

           
 
494,907
  
 
322,765
           

  

Time deposits and savings deposits
                    
–Time deposits
    
0.50-5.40
  
 
489,006
  
 
496,262
–Others
    
  
 
2,502
  
 
3,284
           

  

           
 
491,508
  
 
499,546
           

  

           
 
986,415
  
 
822,311
           

  

Certificates of deposit
    
4.00-4.80
  
 
2,327,069
  
 
1,820,741
           

  

           
(Won)
123,178,790
  
(Won)
62,355,178
           

  

 
The maturities of deposits as of September 30, 2002 are as follows (in millions of Won):
 
    
Deposits in Won

  
Deposits in
foreign currencies

  
Certificates of
Deposit

  
Total

Due in 3 months or less
  
(Won)
63,695,060
  
(Won)
856,360
  
(Won)
979,871
  
(Won)
65,531,291
Due after 3 months through 6 months
  
 
14,668,658
  
 
85,717
  
 
1,287,626
  
 
16,042,001
Due after 6 months through 1 year
  
 
27,093,123
  
 
29,384
  
 
59,572
  
 
27,182,079
Due after 1 year through 2 years
  
 
8,795,276
  
 
12,716
  
 
  
 
8,807,992
Due after 2 years through 3 years
  
 
4,069,012
  
 
2,138
  
 
  
 
4,071,150
Due after 3 years through 4 years
  
 
946,427
  
 
24
  
 
  
 
946,451
Due after 4 years through 5 years
  
 
263,685
  
 
76
  
 
  
 
263,761
Thereafter
  
 
334,065
  
 
  
 
  
 
334,065
    

  

  

  

    
(Won)
119,865,306
  
(Won)
986,415
  
(Won)
2,327,069
  
(Won)
123,178,790
    

  

  

  

F-31


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
11.    Borrowings:
 
Borrowings as of September 30, 2002 and 2001 comprise the following (in millions of Won):
 
      
Annual Interest (%)

  
2002

  
2001

Borrowings in Won
                    
Borrowings from the Bank of Korea
                    
–Security collateralized borrowings
    
2.50
  
(Won)
1,664,708
  
(Won)
1,046,344
–Others
    
5.00
  
 
  
 
1,677
           

  

           
 
1,664,708
  
 
1,048,021
           

  

Borrowings from the government
                    
–Borrowings from public finance
    
5.00-5.57
  
 
369,552
  
 
85,835
–Others
    
0.00-8.30
  
 
695,708
  
 
534,087
           

  

           
 
1,065,260
  
 
619,922
           

  

Borrowings from banking institutions
                    
–Debenture funds for the development of small to medium industries
    
4.60-9.55
  
 
374,236
  
 
118,851
–Other borrowings from domestic banks
    
  
 
  
 
208,997
           

  

           
 
374,236
  
 
327,848
           

  

Borrowings from National Housing Fund
    
8.00
  
 
9,321
  
 
           

  

Borrowings from non-banking financial institutions
                    
–Borrowings from Korea Development Bank
    
2.00-5.00
  
 
6,520
  
 
405
–Subordinated borrowings
    
5.59-6.52
  
 
580,000
  
 
430,000
–Other finance borrowings
    
  
 
  
 
117,480
           

  

           
 
586,520
  
 
547,885
           

  

Other borrowings
                    
–Borrowings from local governments
    
2.20-8.00
  
 
394,850
  
 
442,209
–Borrowings from Small and Medium Industry Promotion
    
4.90-5.75
  
 
702,327
  
 
665,040
–Others
    
3.00-7.00
  
 
82,499
  
 
133,109
           

  

           
 
1,179,676
  
 
1,240,358
           

  

           
 
4,879,721
  
 
3,784,034
           

  

Borrowings denominated in foreign currencies
                    
Borrowings from domestic banks
    
3.11
  
 
549,473
  
 
660,614
Borrowings from foreign banks
    
2.86
  
 
1,675,799
  
 
837,277
Borrowings from other financial institutions
    
2.21
  
 
23,575
  
 
190,422
           

  

           
 
2,248,847
  
 
1,688,313
           

  

Bonds sold under repurchase agreements
    
2.03-4.85
  
 
2,504,865
  
 
3,640,439
           

  

Bills sold
    
4.00-4.80
  
 
81,584
  
 
501,070
           

  

Due to the Bank of Korea denominated in foreign currencies
    
  
 
49,061
  
 
136,872
           

  

Call money
                    
Won
    
3.75-4.15
  
 
280,800
  
 
Foreign currencies
    
0.25-5.90
  
 
209,502
  
 
229,539
           

  

           
 
490,302
  
 
229,539
           

  

           
(Won)
10,254,380
  
(Won)
9,980,267
           

  

 
Continued;

F-32


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
11.    Borrowings, Continued;
 
The maturities of borrowings as of September 30, 2002 are as follows (in millions of Won):
 
    
Borrowings
in Won

  
Borrowings in foreign currencies

  
Others

  
Total

Due in 3 months or less
  
(Won)
2,362,756
  
(Won)
997,707
  
(Won)
2,829,292
  
(Won)
6,189,755
Due after 3 months through 6 months
  
 
217,139
  
 
150,422
  
 
141,058
  
 
508,619
Due after 6 months through 1 year
  
 
111,992
  
 
444,809
  
 
155,462
  
 
712,263
Due after 1 year through 2 years
  
 
601,003
  
 
274,696
  
 
—  
  
 
875,699
Due after 2 years through 3 years
  
 
446,397
  
 
105,409
  
 
—  
  
 
551,806
Due after 3 years through 4 years
  
 
352,886
  
 
100,399
  
 
—  
  
 
453,285
Due after 4 years through 5 years
  
 
241,740
  
 
100,105
  
 
—  
  
 
341,845
Thereafter
  
 
545,808
  
 
75,300
  
 
—  
  
 
621,108
    

  

  

  

    
(Won)
4,879,721
  
(Won)
2,248,847
  
(Won)
3,125,812
  
(Won)
10,254,380
    

  

  

  

 
12.    Debentures:
 
Debentures as of September 30, 2002 and 2001 comprise the following (in millions of Won):
 
      
Annual Interest (%)

  
2002

    
2001

 
Debentures in Won
                        
Subordinated debentures
    
6.69-15.66
  
(Won)
4,054,140
 
  
(Won)
1,876,231
 
Discounted debentures
    
4.12-13.79
  
 
790,183
 
  
 
1,241,139
 
Coupon debentures
    
4.75-16.75
  
 
1,523,205
 
  
 
167,362
 
Compound interest debentures
    
4.76-17.69
  
 
6,414,846
 
  
 
988,143
 
           


  


           
 
12,782,374
 
  
 
4,272,875
 
Discounts on debentures
         
 
(208,830
)
  
 
(10,751
)
           


  


           
 
12,573,544
 
  
 
4,262,124
 
           


  


Debentures denominated in foreign currencies
                        
Subordinated debentures
    
3.00-3.56
  
 
479,945
 
  
 
576,004
 
Coupon debentures
    
1.97-5.00
  
 
465,692
 
  
 
779,792
 
           


  


           
 
945,637
 
  
 
1,355,796
 
Discounts on debentures
         
 
(4,255
)
  
 
(5,858
)
           


  


           
 
941,382
 
  
 
1,349,938
 
           


  


           
(Won)
13,514,926
 
  
(Won)
5,612,062
 
           


  


 
Continued;

F-33


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
12.    Debentures, Continued;
 
As of September 30, 2002, debentures in Won comprise the following:
 
    
Issue Date

  
Hundred millions of Won

    
Annual Interest (%)

  
Maturity

Subordinated
                       
Floating rate
  
1998-12-29
  
(Won)
2,212
    
5.98
  
2004-03-31
    
1998-12-29
  
 
883
    
6.98
  
2004-03-31
Fixed rate
  
1997-12-26
  
 
400
    
15.30
  
2002-12-26
    
1997-12-29
  
 
1,000
    
16
  
2004-01-05
    
1998-06-18
  
 
600
    
15.66
  
2003-07-18
    
1998-06-23
  
 
1,749
    
15.02
  
2003-11-15
Sold over the counter
  
1997-01-08
  
 
1,051
    
11.04-15.66
  
2003-01-08
    
2000-03-27
  
 
2,000
    
9.65
  
2005-03-27
    
2000-06-28
  
 
2,540
    
9.04-9.10
  
2006-01-28
    
2000-09-27
  
 
3,000
    
8.99
  
2006-01-27
    
2000-09-28
  
 
1,500
    
8.79-8.85
  
2006-01-28
    
2000-11-28
  
 
1,000
    
8.65-8.71
  
2006-02-28
    
2000-11-28
  
 
1,620
    
9.57-9.65
  
2010-11-28
    
2000-12-27
  
 
2,000
    
8.71
  
2006-01-27
    
2001-05-28
  
 
2,000
    
7.60-7.65
  
2007-02-28
    
2001-06-27
  
 
1,600
    
7.68
  
2008-03-27
    
2001-06-27
  
 
2,175
    
7.86
  
2009-03-27
    
2001-08-28
  
 
1,000
    
6.69-6.73
  
2007-08-28
    
2001-09-28
  
 
1,500
    
6.69-6.73
  
2008-03-28
    
2002-03-27
  
 
2,417
    
7.06-7.10
  
2008-01-27
    
2002-07-27
  
 
3,024
    
6.96-7.00
  
2008-01-27
    
2002-09-27
  
 
2,574
    
6.27-6.30
  
2008-03-27
    
2002-09-27
  
 
1,500
    
6.51-6.55
  
2010-03-27
    
2002-09-27
  
 
926
    
6.66-6.70
  
2013-03-27
Housing debentures
  
1998-12-31
  
 
270
    
5.98
  
2004-03-31
Non-subordinated
                       
Fixed rate
  
2000-11-28
  
 
2,000
    
7.01
  
2003-11-28
    
2000-12-28
  
 
1,600
    
7.01
  
2003-12-28
    
2001-02-28
  
 
800
    
5.48
  
2004-02-28
    
2001-06-28
  
 
2,300
    
5.87
  
2004-06-28
    
2001-07-28
  
 
600
    
5.82-5.87
  
2004-07-28
    
2001-08-28
  
 
600
    
5.82
  
2004-08-28
    
2001-10-28
  
 
500
    
4.21
  
2002-10-28
    
1988.07-2002.06
  
 
78,870
    
4.12-17.69
  
1991.04-2007.09
Sold over the counter
  
1989.08-2000.09
  
 
13
    
6.28-16.28
  
1990.11-2005.03
         

           
         
(Won)
127,824
           
         

           
 
Continued;

F-34


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
12.    Debentures, Continued;
 
As of September 30, 2002, debentures denominated in foreign currencies comprise the following:
 
    
Issue Date

  
Thousands of Dollars

    
Annual Interest (%)

  
Maturity

  
Listings

Subordinated
                               
Floating rate
  
1996-12-30
  
USD
  
190,000
    
3.76
  
2006-12-30
  
Luxembourg
Convertible bond (“CB”)
  
1999-06-14
  
USD
  
200,000
    
3.00
  
2005-06-14
  
Not listed
Non-subordinated
                               
Floating rate
  
2002-04-03
  
USD
  
46,000
    
2.04
  
2003-04-02
  
Not listed
    
2002-04-03
  
USD
  
81,000
    
2.15
  
2004-04-02
  
Not listed
    
1997-10-30
  
USD
  
33,340
    
3.32
  
2002-10-30
  
Not listed
    
2000-04-10
  
USD
  
40,000
    
3.39
  
2003-04-10
  
Not listed
    
2000-06-02
  
USD
  
10,000
    
3.38
  
2003-06-02
  
Not listed
    
2000-08-10
  
USD
  
12,500
    
2.65
  
2003-08-11
  
Not listed
    
2002-07-03
  
HKD
  
800,000
    
1.96
  
2003-07-02
  
Not listed
Fixed rate
  
2000-04-20
  
SGD
  
100,000
    
5.00
  
2003-04-20
  
Not listed
         
  
                
USD Equivalent (in thousands of USD)
  
USD
  
771,634
                
         
  
                
KRW Equivalent (in millions of Won)
  
(Won)
  
945,637
                
         
  
                
 
Among the debentures in foreign currencies, the subordinated debenture series issued during 1996 have annual call redemption options, which may be exercised on or after 5 years from the issuance dates
 
USD 10,000 thousand of the Bank’s own debentures in foreign currencies reacquired by the Bank are deducted from the debentures series issued on December 30, 1996.
 
As of September 30, 2002, the conversion terms of the subordinated convertible bonds outstanding in the debentures in foreign currencies are as follows:
 
    
Fixed Rate Subordinated CB

Face value
  
USD 200 million
Issue price
  
USD 200 million
Book value
  
(Won)245,100,000,000
Conversion price
  
(Won)22,124 per share
Conversion stock
  
Common stock
Convertible period
  
1999-07-14–2005-06-14
Conversion exchange rate
  
US$ 1:    (Won)1,170.50
Method of redemption
  
Fully redeemed at maturity
 
The maturities of debentures as of September 30, 2002 are as follows (in millions of Won):
 
    
Won

  
Foreign currencies

  
Total

Due in 3 months or less
  
(Won)
880,586
  
(Won)
40,858
  
(Won)
921,444
Due after 3 months through 6 months
  
 
1,947,157
  
 
  
 
1,947,157
Due after 6 months through 1 year
  
 
4,451,977
  
 
327,569
  
 
4,779,546
Due after 1 year through 2 years
  
 
1,584,710
  
 
99,265
  
 
1,683,975
Due after 2 years through 3 years
  
 
615,289
  
 
245,100
  
 
860,389
Due after 3 years through 4 years
  
 
1,122,283
  
 
  
 
1,122,283
Due after 4 years through 5 years
  
 
1,983,421
  
 
232,845
  
 
2,216,266
Thereafter
  
 
196,951
  
 
  
 
196,951
    

  

  

  
(Won)
12,782,374
  
(Won)
945,637
  
(Won)
13,728,011
    

  

  

F-35


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited-See Accountants’ Review Report)

 
13.    Other Liabilities:
 
Other liabilities at September 30, 2002 and 2001 comprise the following (in millions of Won):
 
    
2002

  
2001

Accrued retirement benefits (Note 14)
  
(Won)
71,591
  
(Won)
260,635
Allowance for loss on acceptances and guarantees (Note 15)
  
 
22,124
  
 
24,993
Due to trust accounts
  
 
856,873
  
 
686,331
Accounts payable
  
 
2,512,391
  
 
1,891,607
Accrued expenses
  
 
4,785,644
  
 
2,356,860
Advances from customers
  
 
71,201
  
 
33,478
Unearned income
  
 
137,172
  
 
119,319
Withholding taxes
  
 
80,425
  
 
55,111
Guarantee deposits received
  
 
117,172
  
 
86,115
Deferred tax liabilities (Note 26)
  
 
—  
  
 
5,506
Derivative liabilities (Note 16)
  
 
518,174
  
 
277,206
Unsettled domestic exchange transaction
  
 
62,812
  
 
295,919
Due to agencies
  
 
527,102
  
 
65,103
Other allowances1*
  
 
25,114
  
 
—  
Giro accounts
  
 
240,279
  
 
56,767
Others
  
 
221,371
  
 
30,659
    

  

    
(Won)
10,249,445
  
(Won)
6,245,609
    

  


1*
 
Other allowances comprise following (in millions of Won):
 
    
Amounts

  
Remarks

Suspense receivables
  
(Won)
6,500
  
Allowance for loss on accident
Loss on closure of overseas branch
  
 
5,898
  
Allowance for loss on closure of the branch in Buenos Aires
Uncollected leasehold deposits
  
 
4,757
  
Allowance for loss on uncollected leasehold deposits
Credit card receivables
  
 
7,959
  
Allowance for unused cash advance to offset the risk of loss occurring from it
    

    
    
(Won)
25,114
    
    

    
 
14.    Accrued Retirement Benefits:
 
The movements in accrued retirement benefits for the nine-month period ended September 30, 2002 are as follows (in millions of Won):
 
    
Beginning
Balance

    
Amounts
Provided

    
Amounts
Paid Out

    
Ending
Balance

 
Retained retirement benefits
  
(Won)
21,973
 
  
(Won)
59,669
 
  
(Won)
10,046
 
  
(Won)
71,596
 
Contributed retirement benefits
  
 
28,414
 
  
 
492
 
  
 
192
 
  
 
28,714
 
    


  


  


  


Total accrued retirement benefits
  
 
50,387
 
  
 
60,161
 
  
 
10,238
 
  
 
100,310
 
    


  


  


  


Contribution to National Pension Fund
  
 
(33
)
  
 
—  
 
  
 
(28
)
  
 
(5
)
Contribution to pension funds
  
 
(28,414
)
  
 
(492
)
  
 
(192
)
  
 
(28,714
)
    


  


  


  


    
(Won)
21,940
 
  
(Won)
59,669
 
  
(Won)
10,018
 
  
(Won)
71,591
 
    


  


  


  


 
Contributed retirement benefits, comprising approximately 28.63% of total accrued retirement benefits as of September 30, 2002, are contributions to pension funds at 2 insurance companies, including Korea Life Insurance Co., Ltd., and the Bank’s employees hold the right of payment from these funds.

F-36


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited-See Accountants’ Review Report)

 
15.    Guarantees and Acceptances:
 
Guarantees and acceptances at September 30, 2002 and 2001 are summarized as follows (in millions of Won):
 
         
2002

  
2001

Guarantees and acceptances outstanding
                  
                    
Guarantees and acceptances in Won
  
Guarantees on debentures
  
(Won)
580
  
(Won)
5,363
    
Guarantees on loan collateral
  
 
38,953
  
 
46,821
    
Guarantees on commercial bills
  
 
723
  
 
25
    
Others
  
 
243,599
  
 
137,471
         

  

         
 
283,855
  
 
189,680
         

  

Guarantees and acceptances in foreign currencies
  
Acceptances on letters of credit
  
 
2,135,504
  
 
1,912,235
    
Acceptances for letters of guarantee for importers
  
 
88,880
  
 
70,205
    
Guarantees for performance
  
 
104,804
  
 
94,272
    
Guarantees for bid
  
 
1,121
  
 
1,008
    
Guarantees for borrowings
  
 
26,494
  
 
23,832
    
Guarantees for repayment of advances
  
 
27,236
  
 
24,499
    
Others
  
 
341,408
  
 
325,504
         

  

         
 
2,725,447
  
 
2,451,555
         

  

Contingent guarantees and acceptances
       
 
3,009,302
  
 
2,641,235
         

  

    
Letters of Credit
  
 
1,204,271
  
 
1,117,188
    
Others
  
 
132,536
  
 
309,399
         

  

         
 
1,336,807
  
 
1,426,587
         

  

         
(Won)
4,346,109
  
(Won)
4,067,822
         

  

 
At September 30, 2002 the allowances for losses on guarantees and acceptances outstanding according to credit risk classifications are as follows (in millions of Won):
 
         
Normal

  
Precautionary

  
Substandard

  
Doubtful

  
Estimated Loss

  
Total

Guarantees and acceptances in Won
  
Balance
  
(Won)
270,047
  
(Won)
11,856
  
(Won)
1,800
  
(Won)
152
  
(Won)
—  
  
(Won)
283,855
    
Allowance
  
 
—  
  
 
—  
  
 
360
  
 
136
  
 
—  
  
 
496
         

  

  

  

  

  

    
Ratio (%)
  
 
—  
  
 
—  
  
 
20.00
  
 
89.47
  
 
100
  
 
0.17
         

  

  

  

  

  

Guarantees and acceptances in
  
Balance
  
 
2,551,395
  
 
121,282
  
 
37,686
  
 
14,923
  
 
161
  
 
2,725,447
    foreign currencies
  
Allowance
  
 
—  
  
 
—  
  
 
10,620
  
 
10,847
  
 
161
  
 
21,628
         

  

  

  

  

  

    
Ratio (%)
  
 
—  
  
 
—  
  
 
28.18
  
 
72.69
  
 
100.0
  
 
0.79
         

  

  

  

  

  

Total
  
Balance
  
(Won)
2,821,442
  
(Won)
133,138
  
(Won)
39,486
  
(Won)
15,075
  
(Won)
161
  
(Won)
3,009,302
    
Allowance
  
 
—  
  
 
—  
  
 
10,980
  
 
10,983
  
 
161
  
 
22,124
         

  

  

  

  

  

    
Ratio (%)
  
 
—  
  
 
—  
  
 
27.81
  
 
72.86
  
 
100.0
  
 
0.74
         

  

  

  

  

  

 
The allowance ratios to guarantees and acceptances outstanding as of September 30, 2002 and 2001 are as follows (in millions of Won):
 
    
2002

  
2001

Guarantees and acceptances outstanding
  
(Won)
3,009,302
  
(Won)
2,641,235
Allowances for losses from guarantees and acceptances outstanding
  
 
22,124
  
 
24,993
    

  

Ratio (%)
  
 
0.74
  
 
0.95
    

  

 
Continued;

F-37


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
15.    Guarantees and Acceptances, Continued;
 
For the nine-month periods ended September 30, 2002 and 2001, the allowances for losses on guarantees and acceptances outstanding changed as follows (in millions of Won):
 
    
2002

    
2001

 
Beginning balance
  
(Won)
43,823
 
  
(Won)
37,330
 
Reversal of allowance
  
 
(18,417
)
  
 
(12,337
)
Changes in foreign exchange rates
  
 
(3,282
)
  
 
 
    


  


Ending balance
  
(Won)
22,124
 
  
(Won)
24,993
 
    


  


 
The guarantees and acceptances risk concentration by country as of September 30, 2002 are as follows (in millions of Won):
 
    
Guarantees and
Acceptances Outstanding

  
Contingent Guarantees and
Acceptances

  
Total

    
Balance

    
Percentage (%)

  
Balance

    
Percentage (%)

  
Balance

    
Percentage (%)

Korea
  
(Won)
2,978,092
    
98.96
  
(Won)
1,335,804
    
99.92
  
(Won)
4,313,896
    
99.26
Others
  
 
31,210
    
1.04
  
 
1,003
    
0.08
  
 
32,213
    
0.74
    

    
  

    
  

    
    
(Won)
3,009,302
    
100.00
  
(Won)
1,336,807
    
100.00
  
(Won)
4,346,109
    
100.00
    

    
  

    
  

    
 
The guarantees and acceptances risk concentration by industry as of September 30, 2002 are as follows (in millions of Won):
 
    
Guarantees and
Acceptances Outstanding

  
Contingent Guarantees and
Acceptances

  
Total

    
Balance

    
Percentage (%)

  
Balance

    
Percentage (%)

  
Balance

    
Percentage (%)

Manufacturing
  
(Won)
1,702,866
    
56.59
  
(Won)
778,024
    
58.20
  
(Won)
2,480,890
    
57.08
Finance
  
 
140,909
    
4.68
  
 
26,951
    
2.02
  
 
167,860
    
3.86
Service
  
 
77,772
    
2.58
  
 
495
    
0.04
  
 
78,267
    
1.80
Others
  
 
1,087,755
    
36.15
  
 
531,337
    
39.74
  
 
1,619,092
    
37.26
    

    
  

    
  

    
    
(Won)
3,009,302
    
100.00
  
(Won)
1,336,807
    
100.00
  
(Won)
4,346,109
    
100.00
    

    
  

    
  

    
 
The guarantees and acceptances risk concentration by customer as of September 30, 2002 are as follows (in millions of Won):
 
    
Guarantees and
Acceptances Outstanding

  
Contingent Guarantees and
Acceptances

  
Total

    
Balance

    
Percentage (%)

  
Balance

    
Percentage (%)

  
Balance

    
Percentage (%)

Industrial
  
(Won)
2,990,920
    
99.39
  
(Won)
1,336,807
    
100.00
  
(Won)
4,327,727
    
99.58
Public and Others
  
 
18,382
    
0.61
  
 
    
  
 
18,382
    
0.42
    

    
  

    
  

    
    
(Won)
3,009,302
    
100.00
  
(Won)
1,336,807
    
100.00
  
(Won)
4,346,109
    
100.00
    

    
  

    
  

    

F-38


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
16.    Derivatives:
 
The Bank’s derivative instruments are divided between hedge derivatives and trading derivatives based on the purpose of the transaction. The Bank enters into hedge transactions mainly for the purposes of hedging fair value risks related to its assets. Trading derivatives include future contracts, forward contracts, swaps, and options entered into by the Bank to gain profit from short-term fluctuations of the underlying variable of the instruments. Also, trading derivatives include those with the Bank’s customers and the related hedging derivatives.
 
Hedge derivatives comprise mainly of interest rate swaps to hedge the fair value change of foreign available-for-sale investment securities arising from the interest rate risk. The counter-parties of these hedge derivatives are foreign financial institutions except for Korea Development Bank. Some hedge purpose transactions do not qualify for hedge accounting and are thus accounted for as trading derivatives. These transactions include the hedge relationships where the hedged item is an asset or liability that is remeasured with the changes in fair value attributable to the hedged risk reported currently in earnings or where the hedged item cannot be specifically identified.
 
The notional amounts outstanding for derivative contracts as of September 30, 2002 and 2001 are as follows (in millions of Won):
 
    
2002

  
2001

    
Trading

  
Hedge

  
Total

  
Trading

  
Hedge

  
Total

Interest related
                                         
Futures
  
(Won)
412,613
  
(Won)
  
(Won)
412,613
  
(Won)
193,836
  
(Won)
  
(Won)
193,836
Option
  
 
1,200
  
 
  
 
1,200
  
 
  
 
  
 
Swap
  
 
28,175,750
  
 
464,219
  
 
28,639,969
  
 
16,781,699
  
 
705,597
  
 
17,487,296
    

  

  

  

  

  

    
 
28,589,563
  
 
464,219
  
 
29,053,782
  
 
16,975,535
  
 
705,597
  
 
17,681,132
    

  

  

  

  

  

Currency related
                                         
Forward
  
 
13,863,626
  
 
  
 
13,863,626
  
 
10,233,801
  
 
  
 
10,233,801
Futures
  
 
453,251
  
 
  
 
453,251
  
 
905,439
  
 
  
 
905,439
Option bought
  
 
151,962
  
 
  
 
151,962
  
 
49,746
  
 
  
 
49,746
Option sold
  
 
193,300
  
 
  
 
193,300
  
 
76,844
  
 
  
 
76,844
Swap
  
 
3,081,419
  
 
  
 
3,081,419
  
 
1,845,927
  
 
  
 
1,845,927
    

  

  

  

  

  

    
 
17,743,558
  
 
  
 
17,743,558
  
 
13,111,757
  
 
  
 
13,111,757
    

  

  

  

  

  

Stock related
                                         
Option bought
  
 
146,185
  
 
  
 
146,185
  
 
  
 
  
 
Option sold
  
 
100,000
  
 
  
 
100,000
  
 
  
 
  
 
    

  

  

  

  

  

    
 
246,185
  
 
  
 
246,185
  
 
  
 
  
 
    

  

  

  

  

  

Credit derivatives
  
 
  
 
  
 
—  
  
 
68,073
  
 
  
 
68,073
Others
  
 
  
 
  
 
—  
  
 
1,963
  
 
  
 
1,963
    

  

  

  

  

  

    
(Won)
46,579,306
  
(Won)
464,219
  
(Won)
47,043,525
  
(Won)
30,157,328
  
(Won)
705,597
  
(Won)
30,862,925
    

  

  

  

  

  

 
Continued;

F-39


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
16.    Derivatives, Continued;
 
Gains and losses on derivatives are as follows (in millions of Won):
 
    
2002

  
2001

Gain on derivatives
             
Gain on derivatives transactions
  
(Won)
1,297,454
  
(Won)
1,648,024
Gain on valuation of derivatives
  
 
541,349
  
 
197,025
Gain on fair value hedged items
  
 
17,598
  
 
24,397
    

  

    
(Won)
1,856,401
  
(Won)
1,869,446
    

  

Loss on derivatives
             
Loss on derivatives transactions
  
(Won)
1,134,410
  
(Won)
1,731,723
Loss on valuation of derivatives
  
 
553,784
  
 
180,586
Loss on fair value hedged items
  
 
5,011
  
 
    

  

    
(Won)
1,693,205
  
(Won)
1,912,309
    

  

 
Derivative valuation gains and losses for the nine-month period ended September 30, 2002 are as follows (in millions of Won):
 
    
Valuation Gains (P/L)

  
Valuation Losses (P/L)

  
Fair Value (B/S)

    
Trading

  
Hedge

  
Total

  
Trading

  
Hedge

  
Total

  
Asset

  
Liability

Interest related
                                                       
Interest option bought
  
(Won)
1,444
  
(Won)
  
(Won)
1,444
  
(Won)
1
  
(Won)
  
(Won)
1
  
(Won)
2
  
(Won)
Interest option sold
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
1
Swap
  
 
132,415
  
 
5,011
  
 
137,426
  
 
204,191
  
 
17,598
  
 
221,789
  
 
135,425
  
 
228,307
    

  

  

  

  

  

  

  

    
 
133,859
  
 
5,011
  
 
138,870
  
 
204,192
  
 
17,598
  
 
221,790
  
 
135,427
  
 
228,308
    

  

  

  

  

  

  

  

Currency related
                                                       
Forward
  
 
213,631
  
 
  
 
213,631
  
 
242,564
  
 
  
 
242,564
  
 
200,910
  
 
222,379
Option bought
  
 
2,461
  
 
  
 
2,461
  
 
—  
  
 
  
 
  
 
2,393
  
 
3,287
Option sold
  
 
  
 
  
 
  
 
2,943
  
 
  
 
2,943
  
 
  
 
Swap
  
 
185,129
  
 
  
 
185,129
  
 
86,374
  
 
  
 
86,374
  
 
247,421
  
 
58,638
    

  

  

  

  

  

  

  

    
 
401,221
  
 
  
 
401,221
  
 
331,881
  
 
  
 
331,881
  
 
450,724
  
 
284,304
    

  

  

  

  

  

  

  

Others
  
 
1,258
  
 
  
 
1,258
  
 
113
  
 
  
 
113
  
 
10,996
  
 
5,562
    

  

  

  

  

  

  

  

    
(Won)
536,338
  
(Won)
5,011
  
(Won)
541,349
  
(Won)
536,186
  
(Won)
17,598
  
(Won)
553,784
  
(Won)
597,147
  
(Won)
518,174
    

  

  

  

  

  

  

  

 
17.    Commitments and Contingencies:
 
As of September 30, 2002, 93 pending legal actions with an aggregate amount of claims of (Won)29,637 million are charged against the Bank and the Bank had also filed 108 lawsuits which are still pending with an aggregate amount of claims of (Won)41,422 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.
 
The Bank, under the Mutual Savings & Finance Company Act, is liable for the payment of the deposits of Orange Mutual Savings & Finance Co., Ltd. and Bukook Mutual Savings & Finance Co., Ltd., previously the Bank’s subsidiaries but which were sold during 1999, if they enter into bankruptcy within 3 years of sale. Orange Mutual Savings & Finance Co. is currently under going bankruptcy procedures due to the disapproval of its business by Financial Supervisory Commission. Korea Deposit Insurance Corporation (KDIC) has paid for the deposit money subject to the Depositor Protection Act. Despite the fact that KDIC has filed a lawsuit against the Bank for recovery of the repayment, such lawsuit is not expected to cause any loss which could materially affect the Bank’s financial statements.
 
Continued;

F-40


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
17.    Commitments and Contingencies, Continued;
 
The Bank has credit line and commitments to purchase commercial paper with asset securitization companies. Under these commitments, the Bank provides money, in case of temporary fund shortage, for the principal and interest repayment of these companies’ senior bonds within the contracted term and amounts. As of September 30, 2002, under these commitments, the aggregate committed credit line and loans outstanding are (Won)3,271,048 million and (Won)31,852 million, respectively. Also, the Bank entered into arrangements to purchase (Won)1,050,000 million of commercial papers issued by the securitization companies. The Bank has arranged various methods to provide for losses on these credit line commitments including payment guarantees, repurchase contracts, surety certificate guarantees, and cash reserve.
 
Pursuant to asset securitization plans, the Bank previously sold loans to ABS Specialty Companies before last fiscal year. The related contracts for asset securitization stipulate the Bank’s performance of warranty liability for loans sold to Kookmin 6th-ABS Specialty Co., Ltd, Jooeun 4th-ABS Specialty Co., Ltd., and Jooeun 5th-ABS Specialty Co., Ltd. (collectively “Specialty Co.”) when underlying loans are delinquent for certain period of time or go into default. Accordingly, the Bank bears possible liabilities for collateral performance toward the Specialty Co. within the limits of (Won)72,000 million, (Won)23,382 million, and (Won)66,500 million, respectively, as of September 30, 2002. No adjustments have been made in the accompanying financial statements related to such uncertainties.
 
As of September 30, 2002, the Bank provided an allowance of (Won)7,133 million for estimated losses from repurchase of loans sold to KAMCO that are under the repurchase agreement (See Note 7).
 
On August 30, 2002, the Bank sold 12,988,771 shares (65.43%) out of its 16,960,000 shares (85.43%) and (Won)172,024 million loans of Jooeun Leasing Inc. to Sun Capital Inc. for (Won)145,000 million according to the MOU on June 15, 2002 and the decision of the Board of Directors on July 26, 2002.
 
As of September 30, 2002 and 2001, the Bank holds the unexpired rights to claim from borrowers or guarantors for loans in accordance with the relevant law, which already has been written off, of (Won)3,419,522 million and (Won)1,425,608 million, respectively.
 
As of September 30, 2002 and 2001, the Bank holds the endorsed bills of (Won)10,073 million and (Won)14,581 million, respectively.
 
In response to general unstable economic conditions, the Korean government and the private sector have been implementing structural reforms to historical business practices. Implementation of these reforms is progressing slowly, particularly in the areas of restructuring private enterprises and reforming the banking industry. The Korean government continues to apply pressure to Korean companies to restructure into more efficient and profitable firms. The Bank may be either directly or indirectly affected by these general unstable economic conditions and the reform program described above. The accompanying non-consolidated quarterly financial statements reflect management’s assessment of the impact to date of the economic situation on the financial position of the Bank. Actual results may differ materially from management’s current assessment.
 
Certain financially troubled borrowers of the Bank including Korea Data System Co., Ltd. are experiencing a cash crisis or in the debt restructuring process under workout plans and other similar programs. As of September 30, 2002, in relation to such borrowers, total loans outstanding including guarantees and acceptances amounted to (Won)904,554 million, and the related allowances and discounted present value are (Won)331,308 and (Won)19,062, respectively. Actual expenses may differ from the Bank’s allowances. Therefore, the possible adjustments are not considered in this financial statement.

F-41


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
18.    Capital Stock:
 
As of September 30, 2002, the Bank has 1,000,000,000 common shares (par value : (Won)5,000) authorized and 317,677,416 shares issued. Goldman Sachs Capital Koryo, L.P., ING Insurance International B.V., and the Korean government own 2.27%, 4.00%, and 9.64%, respectively, of the total issued shares. During the current period, Goldman Sachs Capital Koryo, L.P., sold 14,470,000 common shares as American Depositary Shares (“ADS”). Among the issued shares, 42,941,310 common shares, equivalent to 13.52% of the total issued shares, are listed on the New York Stock Exchange as ADS and are managed by Bank of New York, a trustee of the Bank.
 
Under the General Banking Act, if one single entity, other than the government or a foreign investor, owns more than 4% of total outstanding voting shares, the entity’s voting rights are limited to those of 4% shareholders.
 
As a result of the business combination with H&CB, shareholders of the Bank and H&CB, who are listed on the Register of Shareholders at October 31, 2001, received 179,775,233 new shares and 119,922,229 new shares of the Bank, respectively, at the exchange ratio of 1 new common share of the Bank for 1.688346 old shares of the Bank and 1 share of H&CB.
 
In accordance with the resolution of the general shareholders’ meeting on March 22, 2002, the Bank has voted 6% stock dividends for shareholders, listed on the Register of Shareholders at December 31, 2001 and issued 17,979,954 shares.
 
The bank is authorized to issue to non-shareholders convertible bonds and bonds with stock purchase warrants up to total par value amounts of (Won)2,500 billion and (Won)500 billion, respectively. At September 30, 2002, the Bank’s subordinated foreign currency convertible bonds outstanding amounted to (Won)245,100 million (equivalent of USD 200 million, 10,581,269 shares at September 30, 2002) issued to Goldman Sachs Capital Koryo, L.P. during 1999 (See Note 12).
 
19.    Capital Surplus:
 
Capital surplus as of September 30, 2002 and 2001 comprises the following (in millions of Won):
 
    
2002

  
2001

Paid-in capital in excess of par value
  
(Won)
5,106,789
  
(Won)
1,039,396
Gain on business combination
  
 
397,669
  
 
397,669
Revaluation increment
  
 
177,229
  
 
177,229
Others
  
 
2,141
  
 
1,758
    

  

    
(Won)
5,683,828
  
(Won)
1,616,052
    

  

 
The movements in capital surplus for the nine-month period ended September 30, 2002 are as follows (in millions of Won):
 
    
Beginning Balance

  
Increase1*

  
Decrease2*

  
Ending Balance

Paid-in capital in excess of par value
  
(Won)
5,107,251
  
(Won)
  
(Won)
462
  
(Won)
5,106,789
Gain on business combination
  
 
397,669
  
 
  
 
  
 
397,669
Revaluation increment
  
 
177,229
  
 
  
 
  
 
177,229
Others
  
 
1,815
  
 
326
  
 
  
 
2,141
    

  

  

  

    
(Won)
5,683,964
  
(Won)
326
  
(Won)
462
  
(Won)
5,683,828
    

  

  

  


1*
 
The increases in other capital surplus value is due to the gain on the sales of treasury stocks.
2*
 
The decreases in paid-in capital in excess of par value are due to the new common stock issuance of the Bank for stock dividends.

F-42


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
20.    Retained Earnings:
 
Retained earnings as of September 30, 2002 and 2001 comprise the following (in millions of Won):
 
    
2002

  
2001

Legal reserve
  
(Won)
413,740
  
(Won)
339,640
Reserve for business rationalization
  
 
40,760
  
 
39,760
Special reserves
  
 
960,700
  
 
480,700
Other reserves
  
 
7,136
  
 
14,902
Unappropriated retained earnings
  
 
1,528,677
  
 
764,079
    

  

    
(Won)
2,951,013
  
(Won)
1,639,081
    

  

 
The General Banking Act requires the Bank to appropriate as a legal reserve a minimum of 10% of annual net income until the legal reserve equals paid in capital. This reserve is not available for payment of cash dividends but may be transferred to capital stock by an appropriate resolution by the Bank’s board of directors or used to reduce accumulated deficit, if any, by appropriate resolution of the Bank’s stockholders.
 
Pursuant to the Tax Exemption and Reduction Control Law, the Bank is required to appropriate, as a reserve for business rationalization, amounts equal to tax reductions arising from tax exemptions and tax credits. This reserve is not available for the payment of cash dividends, but may be transferred to capital stock or used to reduce accumulated deficits, if any.
 
At September 30, 2002 and 2001, other reserves comprise the following (in millions of Won):
 
    
2002

  
2001

Reserves for overseas investment losses
  
(Won)
5,417
  
(Won)
13,900
Other reserves
  
 
1,719
  
 
1,002
    

  

    
(Won)
7,136
  
(Won)
14,902
    

  

 
Pursuant to the Tax Exemption and Reduction Control Law, the Bank appropriates reserves for overseas investment losses. Other reserves are those appropriated for the operations of overseas branches.
 
21.    Capital Adjustments:
 
As of September 30, 2002 and 2001, capital adjustments comprise the following (in millions of Won):
 
    
2002

    
2001

 
Treasury stocks
  
(Won)
(116,649
)
  
(Won)
(40,000
)
Unissued stock dividends
  
 
 
  
 
 
Unrealized gain on investment securities
  
 
169,563
 
  
 
206,080
 
Employee stock options (See Note 22)
  
 
15,495
 
  
 
1,356
 
    


  


    
(Won)
68,409
 
  
(Won)
167,436
 
    


  


 
Continued;

F-43


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
21.    Capital Adustments, Continued;
 
The movements in capital adjustments for the nine-month period ended September 30, 2002 are as follows (in millions of Won):
 
    
Beginning
Balance

    
Increase

    
Decrease

    
Ending
Balance

 
Treasury stocks
  
(Won)
(1,363
)
  
(Won)
(116,888
)
  
(Won)
(1,602
)
  
(Won)
(116,649
)
Unissued stock dividends
  
 
89,900
 
  
 
 
  
 
89,900
 
  
 
 
Unrealized gain on investment securities
  
 
189,058
 
  
 
41,235
 
  
 
60,730
 
  
 
169,563
 
Employee stock options (Notes 22)
  
 
26,021
 
  
 
7,040
 
  
 
17,566
 
  
 
15,495
 
    


  


  


  


    
(Won)
303,616
 
  
(Won)
(68,613
)
  
(Won)
166,594
 
  
(Won)
68,409
 
    


  


  


  


 
The Bank, under the approval of the Board of Directors, established an Employee Stock Option Plan to raise the welfare level of the employees and decided to obtain 3,000,000 treasury stocks for that need until October 29, 2002. Accordingly, up to September 30, 2002, the Bank has obtained 2,200,000 treasury stocks equivalent to 98.4% of the total treasury stocks.
 
22.    Employee Stock Options:
 
The Bank, under the approval of the Board of Directors, granted stock options to its executives on March 18, 2000, March 15, 2001, November 16, 2001, March 22, 2002 and July 26, 2002. In addition, the stock options of H&CB, which were granted on October 31, 1998, February 27, 1999, February 28, 2000, and March 24, 2001, were transferred to the Bank as a result of the business combination with H&CB. The details of the stock options in effect as of September 30, 2002 are as follows:
 
              
Stock options transferred from H&CB

              
    
Series1*1

  
Series 2*1

  
Series 3

  
Series 4

  
Series 5

  
Series 6

  
Series7*2*3

  
Series 8*3

  
Series 9

Grant date
  
 
00.3.18
  
 
01.3.15
  
 
98.10.31
  
 
99.2.27
  
 
00.2.28
  
 
01.3.24
  
 
01.11.16
  
 
02.3.22
  
 
02.7.26
Shares granted
  
 
222,094
  
 
214,975
  
 
400,000
  
 
280,000
  
 
267,000
  
 
111,000
  
 
650,000
  
 
622,000
  
 
30,000
Shares expired to date
  
 
109,565
  
 
16,882
  
 
  
 
59,892
  
 
65,218
  
 
21,173
  
 
  
 
33,000
      
Shares exercised
  
 
  
 
  
 
310,000
  
 
220,108
  
 
  
 
  
 
  
 
      
Shares outstanding
  
 
112,529
  
 
198,093
  
 
90,000
  
 
  
 
201,782
  
 
89,827
  
 
650,000
  
 
589,000
  
 
30,000
Exercise method
  
The Bank’s choice of issuance or net settlement
Exercise price
  
(Won)
23,469
  
(Won)
28,027
  
(Won)
5,000
  
(Won)
13,900
  
(Won)
27,600
  
(Won)
25,100
  
(Won)
51,200
  
(Won)
57,100
  
(Won)
58,800
Exercise period
  
 
 
03.3.19-
05.3.18
  
 
 
04.3.16-
09.3.15
  
 
 
01.11.1-
04.10.31
  
 
 
02.2.28-
05.2.27
  
 
 
03.3.1-
06.2.28
  
 
 
04.3.25-
07.3.24
  
 
 
04.11.17-
09.11.16
  
 
 
05.3.23-
10.3.22
  
 
 
05.7.27-
10.7.26

1*
 
For stock options granted before the business combination, the number of shares have been adjusted based on a predetermined stock exchange ratio in the business combination with H&CB.
2*
 
The stock options do not include the shares, which will be additionally granted if the three-month weighted average stock price of the Bank right before exercise is higher than that of any other listed bank.
3*
 
The exercise price may be affected by the fluctuation of the stock price index of the banking industry.
 
Continued;

F-44


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
22.    Employee Stock Options, Continued;
 
The Bank calculated the compensation costs using the fair value method and the details are as follows:
 
                  
Stock options transferred from H&CB

 
    
Series 1

    
Series 2

    
Series 3*1

  
Series 4

    
Series 5

    
Series 6

 
Stock price on grant date
  
(Won)
21,442
 
  
(Won)
25,156
 
  
(Won)
  
(Won)
33,750
 
  
(Won)
33,750
 
  
(Won)
33,750
 
Risk-free interest rate*2
  
 
9.325
%
  
 
6.060
%
  
 
  
 
4.743
%
  
 
4.743
%
  
 
4.743
%
Expected exercise period*3
  
 
4 years
 
  
 
5.5 years
 
  
 
  
 
3 years
 
  
 
3 years
 
  
 
3 years
 
Stock price volatility*4
  
 
71.143
%
  
 
70.301
%
  
 
  
 
73.295
%
  
 
73.295
%
  
 
73.295
%
Expected dividend rate*5
  
 
2.25
%
  
 
2.47
%
  
 
  
 
1.93
%
  
 
1.93
%
  
 
1.93
%
Compensation cost per share
  
(Won)
12,638
 
  
(Won)
15,987
 
  
(Won)
44,750
  
(Won)
19,850
 
  
(Won)
13,320
 
  
(Won)
17,117
 
Total compensation cost*6
  
(Won)
1,422
 
  
(Won)
3,167
 
  
(Won)
3,578
  
 
 
  
(Won)
2,688
 
  
(Won)
1,538
 
Recognized compensation cost*6
  
(Won)
1,185
 
  
(Won)
1,583
 
  
(Won)
3,578
  
 
 
  
(Won)
2,315
 
  
(Won)
769
 
                             
 

Series 7

 

  
 

Series 8

 

  
 

Series 9

 

Stock price on grant date
                           
(Won)
45,800
 
  
(Won)
58,000
 
  
(Won)
53,900
 
Risk-free interest rate*2
                           
 
4.910
%
  
 
6.136
%
  
 
5.734
%
Expected exercise period*3
                           
 
3 years
 
  
 
3 years
 
  
 
3 years
 
Stock price volatility*4
                           
 
58.902
%
  
 
53.560
%
  
 
52,393
%
Expected dividend rate*5
                           
 
1.42
%
  
 
1.42
%
  
 
1.42
%
Compensation cost per share
                           
(Won)
20,086
 
  
(Won)
24,496
 
  
(Won)
20,365
 
Total compensation cost*6
                           
(Won)
13,056
 
  
(Won)
14,428
 
  
(Won)
611
 
Recognized compensation cost*6
                           
(Won)
3,627
 
  
(Won)
2,405
 
  
(Won)
34
 

1*
 
The compensation cost of shares granted on October 31, 1998 is to be determined annually by multiplying the difference between exercise price and market value at balance sheet date by number of shares granted.
2*
 
Risk free interest rate is the government bond rate for the expected exercise period.
3*
 
Expected exercise period is the average number of years between the vesting date and option expiration date to Series 1, 2 and the option expiration date to Series 3 - 9
4*
 
Stock price volatility is annualized volatility as of the grant date.
5*
 
Expected dividend rate is the average dividend rate for past periods corresponding to the expected exercise period.
6*
 
in millions of Won
 
The compensation costs to be recognized in the future are as follows (in millions of Won):
 
              
Stock options transferred

                   
    
Series 1

  
Series 2

  
Series 5

  
Series 6

  
Series 7

  
Series 8

  
Series 9

  
Total

Within 1 year
  
(Won)
237
  
(Won)
1,056
  
(Won)
373
  
(Won)
513
  
(Won)
4,352
  
(Won)
4,809
  
(Won)
204
  
(Won)
11,544
Within 2 years
  
 
  
 
528
  
 
  
 
256
  
 
4,352
  
 
4,809
  
 
204
  
 
10,149
Within 3 years
  
 
  
 
  
 
  
 
  
 
725
  
 
2,405
  
 
169
  
 
3,299
    

  

  

  

  

  

  

  

    
(Won)
237
  
(Won)
1,584
  
(Won)
373
  
(Won)
769
  
(Won)
9,429
  
(Won)
12,023
  
(Won)
577
  
(Won)
24,992
    

  

  

  

  

  

  

  

 
The weighted average exercise price and the weighted average fair value of the stock option as of September 30, 2002 are (Won)45,260 and (Won)19,725, respectively.

F-45


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
23.    Other Non-interest Income (Expenses):
 
Other non-interest income (expenses) for the nine-month periods ended September 30, 2002 and 2001 comprise the following (in millions of Won):
 
    
2002

  
2001

Other non-interest income:
             
–Realized gain on trading securities
  
(Won)
73,597
  
(Won)
133,453
–Unrealized gain on trading securities
  
 
148,072
  
 
42,570
–Gain on trust management
  
 
234,859
  
 
178,590
–Reversal of allowance for losses on acceptances and guarantees
  
 
18,417
  
 
12,337
–Others
  
 
7,723
  
 
716
    

  

    
(Won)
482,668
  
(Won)
367,666
    

  

Other non-interest expenses:
             
–Realized loss on trading securities
  
(Won)
23,755
  
(Won)
90,168
–Unrealized loss on trading securities
  
 
546
  
 
10
–Loss on trust management
  
 
—  
  
 
119
–Contributions to special funds
  
 
109,144
  
 
59,001
–Others
  
 
109,117
  
 
39,839
    

  

    
(Won)
242,562
  
(Won)
189,137
    

  

 
24.    General and Administrative Expenses:
 
General and administrative expenses for the nine-month periods ended September 30, 2002 and 2001 comprise the following (in millions of Won):
 
    
2002

  
2001

Salaries and wages
  
(Won)
824,451
  
(Won)
303,601
Retirement benefits (Note 14)
  
 
60,163
  
 
54,019
Other employee benefits
  
 
162,966
  
 
227,616
Rent
  
 
35,647
  
 
14,784
Depreciation
  
 
204,222
  
 
70,195
Amortization
  
 
58,817
  
 
177
Taxes and dues
  
 
76,151
  
 
40,672
Advertising
  
 
42,726
  
 
20,341
Ordinary R&D
  
 
116,850
  
 
21,921
Fees and commissions
  
 
43,704
  
 
21,653
Others
  
 
147,831
  
 
70,797
    

  

    
(Won)
1,773,528
  
(Won)
845,776
    

  

F-46


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
25.    Non-Operating Income (Expenses):
 
Non-operating income (expenses) for the nine-month periods ended September 30, 2002 and 2001 comprise the following (in millions of Won):
 
    
2002

  
2001

Non-operating income:
             
–Gain on disposal of fixed assets
  
(Won)
838
  
(Won)
353
–Rent income
  
 
2,663
  
 
1,436
–Gain on investment in associates using equity method of accounting (Note 5)
  
 
154,096
  
 
282,605
–Realized gain on investment securities
  
 
233,371
  
 
72,871
–Recovery of impairment loss on equity investment securities
  
 
15,318
  
 
–Recovery of impairment loss on debt investment securities
  
 
12,380
  
 
–Unrealized gain on investment in funds (Note 5)
  
 
34,568
  
 
96,318
–Gain on sale of troubled loans
  
 
15,856
  
 
822
–Others
  
 
69,407
  
 
35,764
    

  

    
 
538,497
  
 
490,169
    

  

Non-operating expenses:
             
–Loss on disposal of fixed assets
  
 
1,242
  
 
3,193
–Realized loss on investment securities
  
 
133,740
  
 
28,328
–Impairment loss on equity investment securities (Note 5)
  
 
107,538
  
 
495
–Impairment loss on debt investment securities (Note 5)
  
 
40,255
  
 
4,770
–Loss on sale of troubled loans
  
 
9,383
  
 
15,905
–Retirement benefits
  
 
  
 
38,866
–Others
  
 
54,606
  
 
40,349
    

  

    
 
346,764
  
 
131,906
    

  

Net amount
  
(Won)
191,733
  
(Won)
358,263
    

  

 
26.    Income Tax Expenses:
 
Income tax expenses for the nine-month periods ended September 30, 2002 and 2001 comprise the following (in millions of Won):
 
    
2002

  
2001

Income taxes payable
  
(Won)
599,275
  
(Won)
189,432
Change of deferred income taxes
             
–Deferred income taxes from temporary differences
  
 
45,092
  
 
195,809
–Realization of prior years’ loss carry-forwards
  
 
28,929
  
 
—  
    

  

    
 
74,021
  
 
195,809
    

  

Income tax expenses
  
(Won)
673,296
  
(Won)
385,241
    

  

 
Continued;

F-47


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
26.    Income Tax Expenses, Continued;
 
Adjustments of net income before income tax expenses to taxable income for the nine-month periods ended September 30, 2002 and 2001 comprise the following (in millions of Won):
 
    
2002

  
2001

Adjustments to increase taxable income
             
Permanent differences due to:
             
–Amortization of goodwill
  
(Won)
58,759
  
(Won)
–Employee stock option
  
 
24,340
  
 
–Interests recognized
  
 
5,602
  
 
1,359
–Interest paid
  
 
3,223
  
 
1,196
–Others
  
 
50,975
  
 
3,972
    

  

    
 
142,899
  
 
6,527
    

  

Temporary differences (See below)
  
 
1,106,386
  
 
1,149,237
    

  

    
(Won)
1,249,285
  
(Won)
1,155,764
    

  

Adjustments to decrease taxable income
             
Permanent differences due to:
             
–Dividend income
  
(Won)
56,539
  
(Won)
1,986
–Refunded income taxes
  
 
4,502
  
 
–Others
  
 
819
  
 
2,020
    

  

    
 
61,860
  
 
4,006
    

  

Temporary differences (See below)
  
 
1,409,989
  
 
1,784,980
    

  

    
(Won)
1,471,849
  
(Won)
1,788,986
    

  

 
The significant changes in accumulated temporary differences and deferred tax assets (liabilities) for the nine-month period ended September 30, 2002 comprise the following (in millions of Won):
 
    
Beginning Balance

    
Increase

    
Decrease

    
Ending Balance

    
Deferred tax
Assets (Liab.)

 
Allowance for loan losses
  
(Won)
671,717
 
  
(Won)
284,312
 
  
(Won)
671,717
 
  
(Won)
284,312
 
  
(Won)
84,441
 
Accrued interest
  
 
(478,123
)
  
 
(308,159
)
  
 
(478,123
)
  
 
(308,159
)
  
 
(91,523
)
Unrealized loss on securities
  
 
1,875
 
  
 
(216,096
)
  
 
(213,579
)
  
 
(642
)
  
 
(190
)
Unrealized loss on derivatives
  
 
32,011
 
  
 
(152
)
  
 
71,525
 
  
 
(39,666
)
  
 
(11,781
)
Present value discounts
  
 
87,972
 
  
 
46,723
 
  
 
80,287
 
  
 
54,408
 
  
 
16,159
 
Allowance for losses on acceptances and guarantees
  
 
43,823
 
  
 
22,124
 
  
 
43,823
 
  
 
22,124
 
  
 
6,571
 
Accrued retirement benefits
  
 
1,785
 
  
 
29,373
 
  
 
(192
)
  
 
31,350
 
  
 
9,311
 
Reserve for overseas investment losses
  
 
(6,664
)
  
 
 
  
 
(4,997
)
  
 
(1,667
)
  
 
(495
)
Stock option compensation cost
  
 
26,021
 
  
 
7,040
 
  
 
17,566
 
  
 
15,495
 
  
 
4,602
 
Others
  
 
21,750
 
  
 
31,187
 
  
 
11,928
 
  
 
41,009
 
  
 
12,179
 
    


  


  


  


  


    
(Won)
402,167
 
  
(Won)
(103,648
)
  
(Won)
199,955
 
  
(Won)
98,564
 
  
(Won)
29,274
 
    


  


  


  


  


 
The statutory income tax rates applicable to the Bank, including resident tax surcharges, are 29.7% and 30.8% for the nine-month periods ended September 30, 2002 and 2001. However, due to taxable income adjustments, the effective tax rates are 30.80% and 30.86% for the nine-month periods ended September 30, 2002 and 2001, respectively.

F-48


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
27.    Earnings Per Share:
 
Earnings per share (“EPS”) for the nine-month periods ended September 30, 2002 and 2001 are calculated as follows (in millions of Won):
 
    
2002

  
20011*

 
Net income after income taxes
  
(Won)
1,512,868
  
(Won)
863,062
 
Dividend on preferred stock (1%)
  
 
  
 
(930
)
    

  


    
 
1,512,868
  
 
862,132
 
Weighted average number of common shares outstanding
  
 
317,390,563
  
 
190,576,391
 
    

  


Earnings per share (in Won)
  
(Won)
4,767
  
(Won)
4,524
 
    

  


 
Diluted EPS for the nine-month periods ended September 30, 2002 and 2001 are calculated as follows (in millions of Won):
 
    
2002

  
20011*

Net income after income taxes
  
(Won)
1,512,868
  
(Won)
863,062
Interest expenses on convertible bonds
  
 
4,556
  
 
3,214
Stock compensation expenses
  
 
431
  
 
    

  

    
 
1,517,855
  
 
866,276
Weighted average number of common shares outstanding
  
 
328,274,851
  
 
225,158,139
    

  

Diluted earnings per share (in Won)
  
(Won)
4,624
  
(Won)
3,847
    

  


1*
 
EPS and diluted EPS for the nine-month period ended September 30, 2001 are adjusted considering the effect of business combination with H&CB.
 
Weighted average number of common shares outstanding before and after dilution for the nine-month periods ended September 30, 2002 are calculated as follows:
 
    
Number of Shares

      
Days Outstanding

  
Weighted Average Number of Shares

 
Weighted average common stock-beginning balance
  
317,677,416
 
    
273
  
317,677,416
 
Treasury common stock – beginning balance
  
(31,548
)
    
93
  
(10,747
)
Treasury common stock – acquisition during the period
  
(2,236,089
)
    
34
  
(276,106
)
                  

Weighted average number of common shares before dilution ((1))
                
317,390,563
 
                  

Convertible bonds issued to Goldman Sachs
  
10,581,269
 
    
273
  
10,581,269
 
Employee stock option
  
303,019
 
    
273
  
303,019
 
                  

Diluting shares ((2))
                
10,884,288
 
                  

Diluted weighted average number of common shares ((1)+(2))
                
328,274,851
 
                  

 
The increase in common shares resulting from convertible bonds is computed assuming the conversion had taken place as of the beginning of the period.
 
The interest expenses on convertible bonds and stock compensation expenses used in the calculation of the diluted EPS are net of the 29.7% tax effect. The number of common shares assumed to be converted from convertible bonds is calculated by dividing the total convertible bond amount by the conversion price per share.
 
In addition, considering the stock dividend in the current period, the recomputed basic EPS and diluted EPS for the year ended December 31, 2001 are (Won)3,400 and (Won)3,266, respectively.
 
Continued;

F-49


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
27.    Earnings Per Share, Continued;
 
As of September 30, 2002, securities convertible to common stock are as follows:
 
Type

  
Exercise period

  
Numbers of common shares to be issued

  
Exercise price

Convertible Bond
  
1 month after issuance date-
1 month before maturity
  
10,581,269
  
One share per
(Won)22,124 of face value
Stock Option
  
03-19-2003–03-18-2005
  
112,529
  
(Won)      23,469 per share
Stock Option
  
03-16-2004–03-15-2009
  
198,093
  
(Won)      28,027 per share
Stock Option
  
11-01-2001–10-31-2004
  
90,000
  
(Won)        5,000 per share
Stock Option
  
03-01-2003–02-28-2006
  
201,782
  
(Won)      27,600 per share
Stock Option
  
03-25-2004–03-24-2007
  
89,827
  
(Won)      25,100 per share
Stock Option
  
11-17-2004–11-16-2009
  
650,000
  
(Won)      51,200 per share
Stock Option
  
03-23-2005–03-22-2010
  
589,000
  
(Won)      57,100 per share
Stock Option
  
07-27-2005–07-26-2010
  
30,000
  
(Won)      58,800 per share
 
28.    Assets and Liabilities Denominated in Foreign Currencies:
 
Significant assets and liabilities denominated in foreign currencies as of September 30, 2002 comprise the following:
 
    
Total Balances

  
Major Denomination Currencies

    
Millions of
Won

  
Thousands of
US Dollars1*

  
Thousands of
US Dollars

  
Thousands of
EC Euro

  
Thousands of
Japanese Yen

Assets
                                  
Cash
  
(Won)
186,790
  
$
152,420
  
$
71,836
  
13,383
  
¥
6,916,364
Due from banks
  
 
281,704
  
 
229,869
  
 
185,960
  
 
5,374
  
 
2,640,517
Investment securities
  
 
1,219,330
  
 
994,965
  
 
911,446
  
 
  
 
5,009,613
Loans in foreign currencies
  
 
3,521,209
  
 
2,873,284
  
 
2,211,286
  
 
6,227
  
 
64,986,963
Bills bought
  
 
803,457
  
 
655,616
  
 
610,007
  
 
30,930
  
 
830,130
Advances for customers
  
 
2,270
  
 
1,852
  
 
1,852
  
 
  
 
Call loans
  
 
340,483
  
 
277,832
  
 
256,400
  
 
1,700
  
 
2,426,000
Liabilities
                                  
Deposits
  
 
986,415
  
 
804,908
  
 
571,726
  
 
11,799
  
 
22,292,066
Borrowings
  
 
2,248,847
  
 
1,835,044
  
 
1,546,758
  
 
  
 
33,226,600
Due to BOK
  
 
49,061
  
 
40,033
  
 
40,033
  
 
  
 
Call money
  
 
209,502
  
 
170,952
  
 
1,200
  
 
  
 
20,750,400
Debentures
  
 
941,382
  
 
768,162
  
 
622,840
  
 
  
 
Unsettled foreign payables
  
 
46,275
  
 
37,760
  
 
29,988
  
 
1,301
  
 
646,068

1*
 
Foreign currencies other than US dollars are converted into US dollar amounts using the exchange rates provided by Korea Financial Telecommunications & Clearing Institute at the balance sheet date.

F-50


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
29.    Related Party Transactions:
 
Significant transactions with related parties for the nine-month period ended September 30, 2002 are as follows (in millions of Won):
 
Account

  
Beginning
Balance

  
Increase

  
Decrease

  
Ending
Balance

  
Transactions Relating P/L

 
Kookmin Credit Card Co., Ltd.
                                    
Loans
  
(Won)
122,526
  
(Won)
208,015
  
(Won)
  
(Won)
330,541
  
(Won)
15,654
 
Other assets
  
 
1,907
  
 
62
  
 
  
 
1,969
  
 
62
 
Deposits
  
 
4,687
  
 
6,161
  
 
  
 
10,848
  
 
(68
)
Borrowings
  
 
  
 
  
 
  
 
  
 
(155
)
Other liabilities
  
 
18,334
  
 
150,930
  
 
1,291
  
 
167,973
  
 
(2,780
)
Commissions income
  
 
  
 
  
 
  
 
  
 
128,818
 
Commissions expenses
  
 
  
 
  
 
  
 
  
 
(176
)
Kookmin Leasing Co., Ltd.
                                    
Investment securities
  
 
761
  
 
  
 
761
  
 
  
 
968
 
Deposits
  
 
75,912
  
 
  
 
45,392
  
 
30,520
  
 
(1,719
)
Kookmin Venture Capital Co., Ltd.
                                    
Loans
  
 
96,000
  
 
  
 
88,000
  
 
8,000
  
 
8
 
Deposits
  
 
29,811
  
 
  
 
20,791
  
 
9,020
  
 
(978
)
Kookmin Data System Co., Ltd.
                                    
Deposits
  
 
3,676
  
 
2,029
  
 
  
 
5,705
  
 
(410
)
Other liabilities
  
 
879
  
 
  
 
  
 
879
  
 
69
 
Kookmin Futures Co., Ltd.
                                    
Due from banks
  
 
2,092
  
 
  
 
1,994
  
 
98
  
 
3
 
Deposits
  
 
10,646
  
 
273
  
 
  
 
10,919
  
 
(421
)
Other liabilities
  
 
620
  
 
  
 
  
 
620
  
 
48
 
Kookmin Bank Luxembourg S.A.
                                    
Due from banks
  
 
9,903
  
 
4,052
  
 
  
 
13,955
  
 
 
Loans
  
 
218,807
  
 
65,390
  
 
69,765
  
 
214,432
  
 
3,763
 
Other assets
  
 
  
 
  
 
  
 
  
 
2,030
 
Borrowings
  
 
  
 
  
 
  
 
  
 
(75
)
Other liabilities
  
 
155
  
 
  
 
155
  
 
  
 
 
Kookmin Bank International (London) Ltd.
                                    
Due from banks
  
 
1,856
  
 
3,677
  
 
1,169
  
 
4,364
  
 
1
 
Loans
  
 
146,911
  
 
31,793
  
 
1,006
  
 
177,698
  
 
1,778
 
Borrowings
  
 
7,670
  
 
22,974
  
 
  
 
30,644
  
 
(117
)
Other liabilities
  
 
76
  
 
  
 
76
  
 
  
 
336
 
Kookmin Finance H.K. Ltd.
                                    
Due from banks
  
 
2,030
  
 
19,626
  
 
  
 
21,656
  
 
6
 
Loans
  
 
182,052
  
 
42,157
  
 
10,738
  
 
213,471
  
 
3,018
 
Borrowings
  
 
  
 
18,383
  
 
  
 
18,383
  
 
(103
)
Finance debentures
  
 
6,463
  
 
  
 
335
  
 
6,128
  
 
(178
)
Kookmin Bank Leasing & Finance (HK) Ltd.
                                    
Loans
  
 
17,440
  
 
  
 
13,242
  
 
4,198
  
 
145
 
 
Continued;

F-51


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
29.    Related Party Transactions, Continued;
 
Account

  
Beginning
Balance

    
Increase

  
Decrease

    
Ending
Balance

  
Transactions Relating P/L

 
Jooeun Leasing Co., Ltd.
                                        
Loans
  
 
163,295
 
  
 
—  
  
 
163,295
 
  
 
—  
  
 
4,521
 
(Present value discounts)
  
 
(1,212
)
  
 
—  
  
 
(1,212
)
  
 
—  
  
 
(1,212
)
Other assets
  
 
3,232
 
  
 
—  
  
 
3,232
 
  
 
—  
  
 
920
 
Deposits
  
 
1,304
 
  
 
—  
  
 
1,304
 
  
 
—  
  
 
5
 
Other liabilities
  
 
100
 
  
 
—  
  
 
100
 
  
 
—  
  
 
—  
 
Acceptances and guarantees
  
 
1,396
 
  
 
—  
  
 
1,396
 
  
 
—  
  
 
—  
 
Kookmin Investment Trust Mgt. Co., Ltd.
                                        
Deposits
  
 
25,326
 
  
 
—  
  
 
24,265
 
  
 
1,061
  
 
(579
)
KB Real Estate Trust Co., Ltd.
                                        
Loans
  
 
40,000
 
  
 
—  
  
 
8,514
 
  
 
31,486
  
 
2,405
 
Deposits
  
 
241
 
  
 
—  
  
 
149
 
  
 
92
  
 
(3
)
Other liabilities
  
 
1,797
 
  
 
—  
  
 
15
 
  
 
1,782
  
 
—  
 
Acceptances and guarantees
  
 
53
 
  
 
—  
  
 
—  
 
  
 
53
  
 
—  
 
KB Credit Information Co., Ltd.
                                        
Deposits
  
 
7,838
 
  
 
2,077
  
 
—  
 
  
 
9,915
  
 
(521
)
Other liabilities
  
 
3,150
 
  
 
838
  
 
247
 
  
 
3,741
  
 
88
 
Commissions expenses
  
 
—  
 
  
 
—  
  
 
—  
 
  
 
—  
  
 
(17,493
)
    


  

  


  

  


    
(Won)
1,207,734
 
  
(Won)
578,437
  
(Won)
456,020
 
  
(Won)
1,330,151
  
(Won)
137,658
 
    


  

  


  

  


 
30.    Transactions with Financial Institutions:
 
The assets and liabilities related to transactions with financial institutions for the nine-month ended September 30, 2002 are as follows (in millions of Won):
 
Accounts

  
Description

  
The Bank of Korea

  
Other Banks

  
Other Financial Institutions

  
Total

Cash and due from banks
  
Due from banks in Won
  
(Won)
1,924,221
  
(Won)
51,249
  
(Won)
826,923
  
(Won)
2,802,393
    
Due from banks in
foreign currencies
  
 
39,136
  
 
242,218
  
 
350
  
 
281,704
         

  

  

  

         
 
1,963,357
  
 
293,467
  
 
827,273
  
 
3,084,097
         

  

  

  

Loans
  
Loans in Won
  
 
  
 
24,598
  
 
237,453
  
 
262,051
    
Loans in foreign currencies
  
 
  
 
1,082,357
  
 
  
 
1,082,357
    
Call loans
  
 
  
 
642,769
  
 
200,000
  
 
842,769
         

  

  

  

         
 
  
 
1,749,724
  
 
437,453
  
 
2,187,177
         

  

  

  

Deposits
  
Deposits in Won
  
 
  
 
734,893
  
 
2,035,073
  
 
2,769,966
    
Deposits in foreign currencies
  
 
  
 
  
 
180,000
  
 
180,000
         

  

  

  

         
 
  
 
734,893
  
 
2,215,073
  
 
2,949,966
         

  

  

  

Borrowings
  
Borrowings in Won
  
 
1,664,708
  
 
374,236
  
 
586,520
  
 
2,625,464
    
Borrowings in foreign currencies
  
 
  
 
2,162,458
  
 
53,526
  
 
2,215,984
    
Others
  
 
49,061
  
 
573,598
  
 
1,058,341
  
 
1,681,000
         

  

  

  

         
 
1,713,769
  
 
3,110,292
  
 
1,698,387
  
 
6,522,448
         

  

  

  

Debentures
  
Debentures in Won
  
 
  
 
336,500
  
 
214,900
  
 
551,400
    
Debentures in foreign currencies
  
 
  
 
700,537
  
 
245,100
  
 
945,637
         

  

  

  

         
 
  
 
1,037,037
  
 
460,000
  
 
1,497,037
         

  

  

  

F-52


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
31.    Interest Bearing Assets and Liabilities:
 
Assets and liabilities bearing interest income and interest expenses for the nine-month period ended September 30, 2002 are as follows (in millions of Won):
 
Account

  
Average Balance

  
Interest Income

    
Interest Rate (%)

Due from banks
  
(Won)
1,245,011
  
(Won)
39,314
    
4.22
Trading securities
  
 
1,656,820
  
 
73,560
    
5.94
Investment securities
  
 
19,861,072
  
 
1,076,831
    
7.25
Loans
  
 
115,471,019
  
 
6,817,728
    
7.89
    

  

      
    
(Won)
138,233,922
  
(Won)
8,007,433
      
    

  

      
 
Account

  
Average Balance

  
Interest Expenses

    
Interest Rate (%)

Deposits
  
(Won)
118,650,854
  
(Won)
3,581,922
    
4.04
Borrowings
  
 
10,163,467
  
 
306,297
    
4.03
Debentures
  
 
10,981,808
  
 
578,277
    
7.04
    

  

      
    
(Won)
139,796,129
  
(Won)
4,466,496
      
    

  

      
 
32.    Operations of the Trust Accounts:
 
Assets and liabilities of the trust accounts as of September 30, 2002 are classified as principal or dividend guarantee money trusts, performance money trusts, and property trusts as follows (in millions of Won):
 
    
Guarantee Money trusts

    
Performance Money trusts

    
Property trusts

  
Total

 
Securities
  
(Won)
4,260,875
 
  
(Won)
11,661,881
 
  
(Won)
145,013
  
(Won)
16,067,769
 
Loans
  
 
186,538
 
  
 
467,291
 
  
 
  
 
653,829
 
Receivables
  
 
 
  
 
 
  
 
20,076,309
  
 
20,076,309
 
Due from banking accounts
  
 
136,680
 
  
 
423,309
 
  
 
10,939
  
 
570,928
 
Present value discounts
  
 
(4,950
)
  
 
(27
)
  
 
  
 
(4,977
)
Provision for loan losses
  
 
(147,196
)
  
 
(115,321
)
  
 
  
 
(262,517
)
Other assets
  
 
110,179
 
  
 
279,547
 
  
 
62
  
 
389,788
 
    


  


  

  


Total assets
  
(Won)
4,542,126
 
  
(Won)
12,716,680
 
  
(Won)
20,232,323
  
(Won)
37,491,129
 
    


  


  

  


Trusts
  
(Won)
4,157,093
 
  
(Won)
12,183,629
 
  
(Won)
20,229,269
  
(Won)
36,569,991
 
Borrowings
  
 
72,023
 
  
 
 
  
 
  
 
72,023
 
Reserves for future losses
  
 
42,360
 
  
 
 
  
 
  
 
42,360
 
Other liabilities
  
 
270,650
 
  
 
533,051
 
  
 
3,054
  
 
806,755
 
    


  


  

  


Total liabilities
  
(Won)
4,542,126
 
  
(Won)
12,716,680
 
  
(Won)
20,232,323
  
(Won)
37,491,129
 
    


  


  

  


 
Continued;

F-53


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
32.    Operations of the Trust Accounts, Continued;
 
The Bank is liable as of September 30, 2002 for the following portion of the difference between book value and fair value in principal or dividend guarantee money trusts (in millions of Won):
 
    
Book Value

  
Fair Value

  
Liable Amount

Principal guarantee money trusts
  
(Won)
4,062,908
  
(Won)
4,063,489
  
(Won)
Principal and dividend guarantee money trusts
  
 
218,237
  
 
197,386
  
 
20,851
    

  

  

    
(Won)
4,281,145
  
(Won)
4,260,875
  
(Won)
20,851
    

  

  

 
The results of operation of the trust accounts, from the Bank’s management accounting point of view, for the nine-month period ended September 30, 2002 are as follows (in millions of Won):
 
Trust Account Related Income

  
Trust Account Related Expenses

Fees on money trusts
  
(Won)
221,240
  
Interest expense on borrowings from trust accounts
  
(Won)
18,633
Early withdrawal penalties
  
 
231
  
Compensation to trust accounts
      
Interest income on loans to trust accounts
  
 
5,081
           
    

       

    
(Won)
226,552
       
(Won)
18,633
    

       

 
33.    Business Combination with H&CB:
 
The Bank entered into a business combination contract (“the Contract”) with H&CB on April 23, 2001 and obtained approval from the shareholders for such combination on September 29, 2001. In accordance with the Contract, the Bank completed the legal consolidation with H&CB as of October 31, 2001. According to the Contract, the shareholders of the Bank and H&CB received 1 new common share of the Bank for 1.688346 old shares of the Bank and 1 share of H&CB, respectively. The new common shares of the Bank were listed on the Korea Stock Exchange on November 9, 2001. Despite the legal form of consolidation, the business combination was accounted for as an acquisition with the Bank as acquirer of H&CB’s total assets of (Won)67,742,958 million and liabilities of (Won)64,381,185 million.
 
The Bank’s registration statement with the Securities and Exchange Commission of the United States of America was declared effective on September 10, 2001 , and the new shares of the Bank were listed on New York Stock Exchange as American Depositary Shares (“ADS”) on November 1, 2001.

F-54


Table of Contents

KOOKMIN BANK
 
NOTES TO NON-CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS—(Continued)
 
For the nine-month periods ended September 30, 2002 and 2001
(Unaudited–See Accountants’ Review Report)

 
34.    Business Segments:
 
The Bank is organized into five major business segments: Retail Banking, Business Banking, Treasury and Investment Management, Credit Card, and others. These business segments are based on the nature of the products and services provided, the type or class of customer, and the Bank’s management organization, and provide the basis on which the Bank reports its primary segment information.
 
The following table shows the distribution of the Bank’s operations by business segment as of September 30, 2002 (in millions of Won):
 
    
Retail
Banking

  
Business
Banking

  
Treasury and
Investment Management

  
Credit
Card

  
Others

  
Total

Loans
  
(Won)
68,676,406
  
(Won)
41,838,678
  
(Won)
4,985,612
  
(Won)
5,797,964
  
(Won)
52,286
  
(Won)
121,350,946
Securities
  
 
  
 
  
 
30,693,632
  
 
  
 
  
 
30,693,632
Fixed assets
  
 
1,871,300
  
 
409,603
  
 
150,604
  
 
286,328
  
 
318,512
  
 
3,036,347
Other assets
  
 
4,387,618
  
 
309,634
  
 
6,423,143
  
 
214,941
  
 
1,072,917
  
 
12,408,253
    

  

  

  

  

  

Total assets
  
(Won)
74,935,324
  
(Won)
42,557,915
  
(Won)
42,252,991
  
(Won)
6,299,233
  
(Won)
1,443,715
  
(Won)
167,489,178
    

  

  

  

  

  

Operating Revenue
  
(Won)
4,029,022
  
(Won)
2,194,237
  
(Won)
3,679,288
  
(Won)
897,485
  
(Won)
802,323
  
(Won)
11,602,355
    

  

  

  

  

  

 
The Bank principally operates in Korea. Secondary segments are geographically oriented and are segregated into two segments: domestic and overseas operations. The following table shows the distribution of the Bank’s operations by geographical market as of September 30, 2002 (in millions of Won):
 
    
Domestic

  
Overseas

  
Total

Loans
  
(Won)
120,278,766
  
(Won)
1,072,180
  
(Won)
121,350,946
Securities
  
 
30,596,308
  
 
97,324
  
 
30,693,632
Fixed assets
  
 
3,033,099
  
 
3,248
  
 
3,036,347
Other assets
  
 
12,374,961
  
 
33,292
  
 
12,408,253
    

  

  

Total assets
  
(Won)
166,283,134
  
(Won)
1,206,044
  
(Won)
167,489,178
    

  

  

Operating Revenue
  
(Won)
11,557,572
  
(Won)
44,783
  
(Won)
11,602,355
    

  

  

 
35.    Reclassification of 2001 Accounts:
 
The Bank completed the legal consolidation with H&CB as of October 31, 2001. The financial statements of the prior period presented for comparative purposes represent the financial position of the former Kookmin Bank as of September 30, 2001, and the results of its operations for the nine-month period then ended.
 
Certain accounts of prior financial statements are reclassified for comparative purposes. These reclassifications have no effect on the net asset value and the net income of the Bank as of the balance sheet date.

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