Edgar Filing: KOOKMIN BANK

(Unit: in millions of Won)

September 30, 2007

December 31, 2006

December 31, 2005

Deposits

130,235

124,123

123,532

Deposits in Won

128,833

122,904

122,358

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2007

Kookmin Bank

(Translation of registrant’s name into English)

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

(Address of principal executive office)

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

Form 20-F X Form 40-F

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

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

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

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

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

Yes No X

Index

1. Summary of 2007 Third Quarter Business Report

2. Exhibit 99.1-Kookmin Bank Review Report for the Third Quarter of 2007

TABLE OF CONTENTS


		Page
1.	Introduction to the Bank	5

1.1.	Business Purposes	5

1.2.	History	5

1.3.	Capital Structure	7

1.4.	Dividend	8

2.	Business	9

2.1.	Source and Use of Funds	9

2.2.	Principal Banking Activities	12

2.3.	Branch Networks	16

2.4.	Other Information for Investment Decision	17

3.	Financial Information	19

3.1.	Non-Consolidated Condensed Financial Statements	19

3.2.	Other Financial Information	19

4.	Independent Public Accountants	20

4.1.	Audit & Audit related Fees	20

4.2.	Non-Audit Services	20

5.	Corporate Governance and Affiliated Companies	21

5.1.	Board of Directors & Committees under the Board	21

5.2.	Audit Committee	21

5.3.	Compensation to Directors	22

5.4.	Affiliated Companies	29

6.	Directors, Senior Management and Employees	30

6.1.	Executive Directors	30

6.2.	Non-Executive Directors	30

6.3.	Senior Management	31

6.4.	Employees	31

7.	Major Stockholders and Related Party Transactions	32

7.1.	Major Stockholders	32

7.2.	Investments in Affiliates	33

7.3.	Related Party Transactions	34

8.	Other Important Information for Investors	35

8.1.	Progress Relating to Regulatory Filing	35

8.2.	Future Planned Business	35

Summary of 2007 Third Quarter Business Report

On November 14, 2007, Kookmin Bank filed its business report for the third quarter of 2007 (the “Business Report”) with the Financial Supervisory Commission of Korea and the Korea Exchange. This is a summary of the Business Report translated into English.

In effect from January 1, 2007, we have adopted SKAS¹ No. 21 (“Preparation and Presentation of Financial Statements I”) and SKAS No. 24 (“Preparation and Presentation of Financial Statements II (Financial Industry)”), pursuant to which the presentation and order of certain line items, including gain/loss on disposal of available-for-sale securities, have been reclassified from non-operating income to operating income. We have revised our financial statements for prior periods to reflect this change.

Financial information contained in this summary (and in the attached review report) have been prepared in accordance with generally accepted accounting principles in Korea, which differ in certain important respects from generally accepted accounting principles in the United States.

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

¹	SKAS: Statement of Korean Accounting Standards

1.	Introduction to the Bank

1.1.

Business Purposes

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

•

The banking business as prescribed by the Banking Act,

•

The trust business as prescribed by the Trust Business Act,

•

The credit card business as prescribed by the Specialized Credit Financial Business Act, and

•

Other businesses permitted by other relevant Korean laws and regulations

1.2.

History

•

November 1, 2001

Incorporated and listed on the New York Stock Exchange

•

November 9, 2001

Listed on the Korea Stock Exchange

•

September 23, 2002

Integrated IT platforms of former Kookmin Bank and H&CB

•

December 4, 2002

Entered into a strategic alliance agreement with ING Bank N.V. Amsterdam

•

September 30, 2003

Completed the merger with Kookmin Credit Card

•

December 16, 2003

Completed a strategic investment in Bank Internasional Indonesia (BII) by investing in a 25% stake in Sorak Financial Holdings, a consortium with other investors

•

December 19, 2003

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

•

April 29, 2004

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

•

July 22, 2004

Entered into an alliance with China Construction Bank in connection with the foreign currency business

•

August 31, 2004

ING Bank N.V. Amsterdam entered into a contract with Kookmin Bank for a strategic investment in KB Life Insurance Co., Ltd.

•

October 29, 2004

Appointed Mr. Chung Won Kang as the President & CEO in an extraordinary general meeting of shareholders

•

December 31, 2004

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

•

January 01, 2005

Integrated three labor unions (former Kookmin Bank, former H&CB, former Kookmin Credit Card) into a single Kookmin Bank labor union

•

March 02, 2005

Opened KB Satellite Broadcasting System, the first combined broadcasting system in Korea

•

March 21, 2005

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

•

June 16, 2005

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

•

July 26, 2005

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

•

October 14, 2005

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

•

February 2, 2006

Established the “Basel II system to calculate credit risk weighted asset and new BIS capital adequacy ratio” for the first time among domestic financial institutions

•

April 3, 2006

Established 100% computerization of bank accounts for the first time among domestic financial institutions

•

September 8, 2006

Implemented SOD (Segregation of Duties)

•

December 11, 2006

Ranked Number 1 among banks in the National Customer Satisfaction Index(NCSI) by Korea Productivity Center

•

April 27, 2007

Commenced principal stage of the Next Generation System development and new IT center construction

•

October 31, 2007

Reappointed Mr. Chung Won Kang as the President & CEO in an extraordinary general meeting of shareholders

1.3.

Capital Structure

1.3.1.

Common Shares

Kookmin Bank has the 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 Kookmin Bank is authorized to issue shares of preferred stock up to one-half of all of Kookmin Bank’s issued and outstanding shares of common stock. Upon completion of the merger between the former Kookmin Bank and H&CB, Kookmin Bank issued 299,697,462 common shares.

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

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

With respect to the merger between Kookmin Bank and Kookmin Credit Card on September 30, 2003, Kookmin Bank issued an additional 8,120,431 common shares on October 1, 2003. Accordingly, as of September 30, 2007, a total of 336,379,116 common shares were issued.


Number of Shares		(Unit: shares	)

	Type
	Common Stock	Total
Share Issued (A)	336,379,116	336,379,116
Treasury Stock (B)	—	—
Share Outstanding (A-B)	336,379,116	336,379,116


Capital Increase					(Unit: Won, shares	)

Issue Date	Type	Number	Face Value	Issue Price	Remarks
2001.10.31	Common Stock	299,697,462	5,000	—	M&A into a new entity
2002.3.22	Common Stock	17,979,954	5,000	5,000	Stock dividend
2002.11.30	Common Stock	10,581,269	5,000	22,124	CB conversion
2003.10.01	Common Stock	8,120,431	5,000	38,100	M&A with KCC

1.3.2.

Treasury Stock


		(Unit: shares	)

Date	Details	Number of shares
December 31, 2005	Outstanding Treasury Shares	217,935
January 13, 2006	Disposition due to exercise of stock option by grantees	(217,935	)
September 30, 2007	Outstanding Treasury Shares	0

1.3.3.

Employee Stock Ownership Association


	(Unit: shares)

Type	Beginning Balance (January 1, 2007)	Increase	Decrease	Ending Balance (September 30, 2007)	Remarks
Registered common stock	2,790,281	—	52,270	2,738,011	—

Total	2,790,281	—	52,270	2,738,011	—

1.4.

Dividend

The following table shows our dividend related information for the last three years. The Board of Directors of Kookmin Bank passed a resolution to pay a dividend for fiscal year of 2006, and shareholders of Kookmin Bank approved of the dividend payout for that year at the general meeting of shareholders held on March 23, 2007.


	(Unit: in millions of Won unless indicated otherwise)

	September 30, 2007	2006		2005
Net (loss) income for the period	—	2,472,111		2,252,218
Diluted (loss) earnings per share (Won)	—	7,349	¹	6,977
Total dividend amount	—	1,227,784		184,889
Dividend payout ratio (%)	—	49.67	²	8.21
Cash dividend per common share (Won)	—	3,650		550
Stock dividend per common share (%)	—	—		—
Dividend per preferred share (Won)	—	—		—
Dividend yield ratio (%)	—	4.90	³	0.72

¹	Earnings per share = net income (2,472,111 million Won) / weighted average number of shares (336,373,095 shares).

²	Dividend payout ratio = total dividend amount for common shares (1,227,784 million Won) / net income (2,472,111 million Won).

³	Dividend yield ratio = dividend per share (3,650 Won) / average closing price for a week based on business day prior to market closing date of December 31, 2006 (74,525 Won).

2.	Business

2.1.

Source and Use of Funds

2.1.1.

Source of Funds

[Bank Account]

(Unit: in millions of Won)

September 30, 2007

December 31, 2006

December 31, 2005

Average
balance

Interest
rate (%)

Average
balance

Interest
rate (%)

Average
balance

Interest
rate (%)

Won currency

Deposits

109,973,397

3.17

111,324,234

2.91

114,394,983

2.82

Certificate of deposit

13,631,284

5.06

8,408,753

4.53

5,008,378

3.69

Borrowings

2,465,427

3.58

2,533,547

3.36

2,674,268

3.02

Call money

1,253,962

4.69

2,300,768

4.09

931,968

3.24

Other

35,543,819

5.42

28,332,243

5.13

24,315,388

5.08

Subtotal

162,867,889

3.83

152,899,545

3.43

147,324,985

3.23

Foreign currency

Deposits

1,709,399

2.80

1,489,895

2.37

1,473,811

1.61

Borrowings

4,190,787

3.77

3,635,918

3.41

3,231,480

2.06

Call money

482,459

5.19

527,600

4.74

285,573

3.48

Debentures

2,753,528

5.25

1,530,941

4.49

765,723

4.09

Other

89,765

—

59,296

—

52,592

—

Subtotal

9,225,938

4.07

7,243,650

3.50

5,809,179

2.26

Other

Total Shareholders Equity

15,676,201

—

14,251,498

—

11,369,246

—

Allowances

942,307

—

1,004,895

—

677,036

—

Other

10,889,516

—

11,935,765

—

12,041,392

—

Subtotal

27,508,024

—

27,192,158

—

24,087,674

—

Total

199,601,851

3.32

187,335,353

2.94

177,221,838

2.76

2.1.2.

Use of Funds

[Bank Account]

(Unit: in millions of Won)

September 30, 2007

December 31, 2006

December 31, 2005

Average
balance

Interest
rate (%)

Average
balance

Interest
rate (%)

Average
balance

Interest
rate (%)

Won currency

Due from banks

30,113

1.15

190,902

3.66

304,662

2.97

Securities

29,620,982

4.53

31,437,266

4.25

27,676,964

4.58

Loans

131,352,934

6.55

120,688,857

6.44

120,539,476

6.24

Advances for customers

28,275

1.31

13,122

2.27

23,947

8.64

Call loan

670,285

4.74

823,293

4.25

1,473,725

3.43

Private placement corporate bonds

7,802,705

5.38

5,702,726

5.43

1,887,514

6.95

Credit card accounts

9,020,566

22.36

7,855,415

24.46

7,321,906

26.93

Other

372,593

—

328,681

—

267,061

—

Allowance for credit losses ( - )

-2,329,399

—

-2,377,086

—

-3,034,841

—

Subtotal

176,569,054

7.08

164,663,176

6.96

156,460,414

7.06

Foreign currency

Due from banks

360,246

4.11

486,764

4.31

598,015

2.88

Securities

938,396

4.47

793,181

6.78

858,565

6.15

Loans

7,652,813

4.45

6,561,903

4.06

4,745,013

2.97

Call loan

470,195

4.87

261,483

4.77

132,210

3.24

Bills bought

1,386,227

5.95

1,326,578

5.51

1,037,144

4.64

Other

1,965

—

1,798

—

2,209

—

Allowance for credit losses ( - )

-84,148

—

-65,952

—

-64,290

—

Subtotal

10,725,694

4.73

9,365,755

4.61

7,308,866

3.68

Other

Cash

1,061,924

—

966,002

—

956,471

—

Fixed assets held for business

2,520,327

—

2,397,111

—

2,508,879

—

Other

8,724,852

—

9,943,309

—

9,987,208

—

Subtotal

12,307,103

—

13,306,422

—

13,452,558

—

Total

199,601,851

6.52

187,335,353

6.35

177,221,838

6.38

2.1.3.

Fee Transactions


		(Unit: in millions of Won)

		September 30, 2007	September 30, 2006	December 31, 2006
Fee Revenue (A)
Won currency	Guarantees	5,255	4,382	6,245
	Commissions received	815,784	688,929	950,789
	Credit card	110,604	94,564	129,615
	National Housing Fund Mgt.	119,642	123,756	171,811
Foreign currency	Guarantees	5,602	4,093	5,662
	Others	58,538	59,384	77,673

Subtotal		1,115,425	975,108	1,341,795

Fee Expense (B)
Won & foreign currency	Commissions paid in Won	144,310	120,826	178,499
	Credit card	250,165	176,163	254,041
	Others	28,420	21,823	31,860

Subtotal		422,895	318,812	464,400

Fee Income (A-B)		692,530	656,296	877,395

2.2.

Principal Banking Activities

2.2.1.

Deposits

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

(Unit: in millions of Won)

September 30, 2007

December 31, 2006

December 31, 2005

Average
balance

Ending
balance

Average
balance

Ending
balance

Average
balance

Ending
balance

Deposits in Won

Demand deposits

17,973,008

19,044,177

16,896,730

20,179,569

14,985,812

17,946,067

Time & savings deposits

89,316,580

88,435,340

89,613,715

91,155,183

92,463,027

91,863,790

Mutual installment deposits

3,566,697

3,329,720

4,302,015

3,833,573

5,674,807

5,120,668

Mutual installment for housing

3,542,815

3,195,318

4,221,249

3,842,727

4,942,334

4,582,031

Certificate of deposit

13,631,284

17,538,589

8,408,753

9,579,701

5,008,378

5,389,543

Subtotal

128,030,384

131,543,144

123,442,462

128,590,753

123,074,358

124,902,099

Deposits in foreign currency

1,709,399

1,920,045

1,489,895

1,427,557

1,473,811

1,379,133

Trust deposits

Money trust

9,115,990

8,410,299

9,047,669

9,627,037

7,114,352

7,405,675

Property trust

5,577,247

5,723,628

8,491,099

6,631,376

11,032,320

9,854,012

Subtotal

14,693,237

14,133,927

17,538,768

16,258,413

18,146,672

17,259,687

Total

144,433,020

147,597,116

142,471,125

146,276,723

142,694,841

143,540,919

2.2.2.

Average Deposit per Domestic Branch

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

2.2.3.

Average Deposit per Employee

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

2.2.4.

Loan Balances

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

(Unit: in millions of Won)

September 30, 2007

December 31, 2006

December 31, 2005

Average
balance

Ending
balance

Average
balance

Ending
balance

Average
balance

Ending
balance

Loans in Won

131,343,091

139,561,638

120,680,825

125,574,817

120,532,216

118,565,341

Loans in foreign currency

7,652,813

7,478,641

6,561,903

7,261,811

4,745,013

5,314,883

Advances for customers

28,275

29,412

13,122

19,209

23,947

11,321

Subtotal

139,024,179

147,069,691

127,255,850

132,855,837

125,301,176

123,891,545

Trust account loans

401,449

417,794

351,880

403,552

334,404

328,127

Total

139,425,628

147,487,485

127,607,730

133,259,389

125,635,580

124,219,672

2.2.5.

Loan Balances as of September 30, 2007 by Maturity


		(Unit: in millions of Won)

	1 year or less	More than 1 year to 3 years	More than 3 years to 5 years	More than 5 years	Total
Loans in Won	62,716,952	28,658,721	5,477,669	42,708,296	139,561,638
Loans in foreign currency	4,398,155	1,746,688	859,019	474,779	7,478,641

2.2.6.

Loan Balances by Types

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


		(Unit: in millions of Won)

		September 30, 2007	December 31, 2006	December 31, 2005
Loans to enterprise	Loans for operations	41,279,587	33,054,421	30,498,328
	Loans for facility	10,516,722	6,103,249	5,073,050
Loans to households		46,836,174	46,509,920	42,771,264
Loans to public sector & others	Loans for operations	1,115,574	894,178	643,141
	Loans for facility	14,287	3,687	34,157
Loans on property formation savings		752	1,013	6,748
Loans for housing		39,797,747	39,007,176	39,535,441
Inter-bank loans		—	—	1,274
Others		795	1,173	1,938

Total		139,561,638	125,574,817	118,565,341

2.2.7.

Loan to Deposit Ratio¹

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


	(Unit: in millions of Won, %)

	September 30, 2007	December 31, 2006	December 31, 2005
Loans (A)	131,343,091	120,680,825	120,532,216
Deposits (B)	128,030,383	123,442,462	123,074,358

Loan to deposit ratio (A/B)	102.59	97.76	97.93

2.2.8.

Guarantees


	(Unit: in millions of Won)

	September 30, 2007	December 31, 2006	December 31, 2005
Determined	4,748,842	2,704,307	1,789,560
Contingent	3,129,913	2,304,434	1,972,192

Total	7,878,755	5,008,741	3,761,752

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

2.2.9.

Securities Investment

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

(Unit: in millions of Won)

September 30, 2007

December 31, 2006

December 31, 2005

Average
balance

Ending
balance

Average
balance

Ending
balance

Average
balance

Ending
balance

Securities in Won (Bank

account)

Monetary stabilization
bonds

7,849,757

7,726,994

11,803,683

8,534,765

10,667,229

11,570,306

Government and
public bonds

11,130,221

11,434,070

10,035,180

10,117,416

6,950,886

8,933,401

Debentures

16,280,884

16,784,000

11,847,016

14,140,083

7,334,555

9,184,403

Stocks

1,825,731

1,707,561

1,575,806

2,515,385

1,243,781

1,707,816

Others

337,094

436,927

1,878,308

744,895

3,368,027

2,105,353

Subtotal

37,423,687

38,089,552

37,139,993

36,052,544

29,564,478

33,501,279

Securities in Won (Trust account)

Monetary
stabilization bonds

1,287,874

1,083,930

1,247,444

1,524,511

999,522

981,949

Government and
public bonds

1,286,904

1,175,821

1,090,228

1,216,613

993,450

1,013,355

Debentures

1,772,670

1,620,410

1,937,309

1,815,093

1,979,588

2,017,298

Stocks

595,933

502,350

756,900

769,212

514,568

542,731

Others

2,640,168

2,416,044

3,837,714

2,873,202

2,745,143

3,311,235

Subtotal

7,583,549

6,798,555

8,869,595

8,198,631

7,232,271

7,866,568

Securities in foreign currency
(Trust account)

25,424

12,450

110,472

32,661

289,665

184,115

Securities in foreign currency
(Bank account)

Foreign securities

667,556

788,288

559,343

613,078

579,561

525,892

Off-shore foreign
securities

269,439

286,140

233,838

216,066

279,003

252,994

Subtotal

936,995

1,074,428

793,181

829,144

858,565

778,886

Total

45,969,655

45,974,985

46,913,241

45,112,980

37,944,979

42,330,848

2.2.10.

Trust Account

(Unit: in millions of Won)

September 30, 2007

December 31, 2006

December 31, 2005

Average
amount trusted

Trust
fees

Average
amount trusted

Trust
fees

Average
amount trusted

Trust
fees

Return-guaranteed trust

301

10,803

325

11,295

335

43,088

Performance trust

14,692,936

42,361

17,538,443

67,209

18,146,337

77,756

Total

14,693,237

53,164

17,538,768

78,504

18,146,672

120,844

2.2.11.

Credit Card


		(Unit: in millions of Won unless indicated otherwise)

		As of or for the years ended of indicated dates
		September 30, 2007	December 31, 2006	December 31, 2005
Number of card holders	Corporate	171,500	173,190	159,047
	Individual	8,498,358	8,883,738	9,342,552

Number of merchants		1,714,204	1,610,446	1,506,979

Sales volume¹		49,877,104	63,929,192	62,475,085
Fee revenue		1,621,652	2,189,014	2,090,253

2.3.

Branch Networks

As of September 30, 2007, we had 1,088 branches (including the head office) and 85 sub-branches in Korea. 447 of our branches are located in Seoul.

Also as of November 13, 2007, we had four overseas branches in Tokyo, New York, Auckland and Guangzhou, and two overseas offices in Almaty, Kazakhstan and Ho Chi Minh City, Vietnam.

¹	Includes lump-sum and installment purchases, cash advances, and check card and purchasing card transactions.

2.4.

Other Information for Investment Decision

2.4.1.

BIS Risk-adjusted Capital Ratios


		(Unit: in millions of Won, %)

	September 30, 2007¹	December 31, 2006	December 31, 2005
Risk-adjusted capital (A)	19,811,470	18,751,151	15,682,535
Risk-weighted assets (B)	147,599,074	132,373,478	121,072,676

BIS ratios (A/B)	13.42	14.17	12.95

2.4.2.

Non-Performing Loans


		(Unit: in millions of Won unless indicated otherwise)

September 30, 2007		December 31, 2006		Change
Amount	NPL to total loans	Amount	NPL to total loans	Amount	NPL to total loans
1,092,591	0.64%	1,295,915	0.85%	-203,324	-0.21%p

2.4.3.

Loan Loss Allowances

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


			(Unit: in millions of Won)

		September 30, 2007	December 31, 2006	December 31, 2005
Loan losses allowance	Domestic	2,358,815	2,458,307	2,496,655
	Foreign	46,276	4,772	4,122

	Total	2,405,091	2,463,079	2,500,777

Write-Off		659,474	1,693,468	1,978,875

¹	The figures for the third quarter of 2007 are preliminary estimates and are subject to change.

2.4.4.

Changes in Loan Loss Allowances for Recent Three Years¹

(Unit: in millions of Won)


	September 30, 2007		December 31, 2006		December 31, 2005
Beginning balance	2,360,867		2,453,275		3,118,775

Net Write-Off	(352,532	)	(1,034,059	)	(1,726,632	)
Write-Off	(659,474	)	(1,680,331	)	(2,002,336	)
Recovery	373,358		474,278		452,235
Other	(66,416	)	171,994		(176,531	)

Provision for loan losses	276,033		941,651		1,061,132

Ending balance	2,284,368		2,360,867		2,453,275

¹	Loan loss allowance includes present value discounts and excludes allowance for other assets.

3.	Financial Information

3.1.

Non-Consolidated Condensed Financial Statements

(Unit: in millions of Won)


	As of or for the year ended
	September 30, 2007	December 31, 2006
Cash and due from banks	6,755,638	6,568,306
Securities	31,648,717	29,382,480
Loans	164,056,306	149,867,182
Tangible assets	2,231,108	2,137,732
Other assets	8,351,632	7,250,781

Total assets	213,043,401	195,206,481

Deposits	133,463,188	130,019,916
Borrowings	48,701,555	39,042,684
Other liabilities	15,313,489	11,088,924

Total liabilities	197,478,232	180,151,524

Capital stocks	1,681,896	1,681,896
Capital surplus	6,258,297	6,258,297
Capital Adjustment	0	0
Accumulated other comprehensive income	451,329	899,542
Retained earnings	7,173,647	6,215,222

Total shareholders’ equity	15,565,169	15,054,957

Liabilities and Shareholders’ Equity	213,043,401	195,206,481

Operating revenue	15,368,794	19,618,874
Operating income	3,457,286	3,204,982
Continuing (loss) income before income taxes	3,237,847	3,424,086

Net (loss) income	2,193,779	2,472,111

3.2.

Other Financial Information

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

4.	Independent Public Accountants

4.1.

Audit & Audit related Fees

Deloitte Anjin LLC has reviewed our financial statements for the third quarter 2007. The aggregate contract fee for the audit and review fees for the year 2007 is 1,420 million Won.

4.2.

Non-Audit Services

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

(Unit: in millions of Won unless indicated otherwise)


Year	Service description	Amount of payment
3Q 2007	- Issuance of comfort letter - Agreement for Issuance of comfort letter with respect to RMBS¹	70 50

2006	- Issuance of comfort letter - Confirmation of BIS ratio and confirmation affirming that Kookmin Bank is not a Non-Financial Operator	40 10

2005	- Issuance of comfort letter	30

¹	The execution of the letter has been deferred as the RMBS issuance has been delayed.

5.	Corporate Governance and Affiliated Companies

5.1.

Board of Directors & Committees under the Board

The board of directors, currently consisting of executive directors and non-executive directors, holds regular meetings quarterly. Additional extraordinary meetings may also be convened at the request of any director or any committee that serves under the board of directors.

The board of directors resolves following matters:

•

Matters relating to general meeting of shareholders

•

Matters relating to general management

•

Matters relating to organization and directors of the company

•

Matters relating to funding and capital

•

Other related matters

The following committees currently serve under our board of directors:

•

The Board Steering Committee

•

The Management Strategy Committee

•

The Risk Management Committee

•

The Evaluation & Compensation Committee

•

The Audit Committee

•

The Non-Executive Director Nominating Committee

For the list of our directors, see 6. Directors, Senior Management and Employees, 6.1. Executive Directors and 6.2. Non-Executive Directors.

5.2.

Audit Committee

The audit committee oversees our financial reporting and approves the appointment of and interaction among 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. The committee also examines the agenda for, and financial statements and other reports to be submitted by, the board of directors to each general meeting of shareholders. The committee holds regular meetings every quarter and on an as-needed basis.

5.3.

Compensation to Directors

5.3.1.

Compensation to Directors

The following table shows information regarding the remuneration paid to the Directors in the third quarter of 2007.

(Unit: in millions of Won)


	The aggregate remuneration paid (From January to September 2007)	Limit for the remuneration resolved by shareholders’ meeting (For the year 2007)	Average amount of the payment per person (From January to September 2007)
1) Executive Directors (Except Chief Audit Executive and Non-executive Directors)	3,155		1,052
2) Non-executive Directors (Except members of Audit Committee)	238	8,000	55	¹
3) Members of Audit Committee (Including Chief Audit Executive)	866		173

Total	4,259	8,000	335	¹

¹	Reflects the change in March in the number of non-executive directors.

5.3.2.

Stock Option

The following table is the breakdown of stock options Kookmin Bank has granted to the directors and employees as of September 30, 2007.

(Unit: in Won, shares)

Grant date

Name of the grantee

Position when granted

Exercise period

Exercise

Number of
granted

options¹

Number
of
exercised

Number of
exercisable

From

price

options

15-Mar-01

Young Seok Kim

Non Executive Director

16-Mar-04

15-Mar-09

28,027

1,870

15-Mar-01

In Kie Kim

Non Executive Director

16-Mar-04

15-Mar-09

28,027

2,961

15-Mar-01

Ji Hong Kim

Non Executive Director

16-Mar-04

15-Mar-09

28,027

2,961

15-Mar-01

Se Woong Lee

Non Executive Director

16-Mar-04

15-Mar-09

28,027

2,961

15-Mar-01

Jong Min Lee

Chief Audit Executive

16-Mar-04

15-Mar-09

28,027

14,807

2,807

12,000

15-Mar-01

Seung Heon Han

Non Executive Director

16-Mar-04

15-Mar-09

28,027

1,870

15-Mar-01

Duk Hyun Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

4,845

7,000

15-Mar-01

Byung Sang Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

15-Mar-01

Byung Jin Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

15-Mar-01

Bock Woan Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

15-Mar-01

Yoo Hwan Kim

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

15-Mar-01

Ok Hyun Yoon

Executive Vice President

16-Mar-04

15-Mar-09

28,027

11,845

7,845

4,000

15-Mar-01

Hoo Sang Jang

Employee

16-Mar-04

15-Mar-09

28,027

2,961

961

2,000

15-Mar-01

Sang Hoon Lee

Employee

16-Mar-04

15-Mar-09

28,027

2,961

2,461

500

15-Mar-01

Jae In Suh

Employee

16-Mar-04

15-Mar-09

28,027

2,961

15-Mar-01

Sung Hyun Chung

Employee

16-Mar-04

15-Mar-09

28,027

2,961

2961

15-Mar-01

Jong Hwa Lee

Employee

16-Mar-04

15-Mar-09

28,027

2,961

2,461

500

15-Mar-01

Sang Won Lee

Employee

16-Mar-04

15-Mar-09

28,027

2,961

15-Mar-01

Joon Ho Park

Employee

16-Mar-04

15-Mar-09

28,027

592

15-Mar-01

Sung Wan Choi

Employee

16-Mar-04

15-Mar-09

28,027

370

15-Mar-01

Jeong Haing Lee

Employee

16-Mar-04

15-Mar-09

28,027

592

15-Mar-01

Tae Joo Yoon

Employee

16-Mar-04

15-Mar-09

28,027

15-Mar-01

Si An Her

Employee

16-Mar-04

15-Mar-09

28,027

370

15-Mar-01

Seok Won Choi

Employee

16-Mar-04

15-Mar-09

28,027

592

15-Mar-01

Yong Soo Shin

Employee

16-Mar-04

15-Mar-09

28,027

370

15-Mar-01

Sung Shin Cho

Employee

16-Mar-04

15-Mar-09

28,027

592

15-Mar-01

Young Mo Lee

Employee

16-Mar-04

15-Mar-09

28,027

592

15-Mar-01

Sung Gil Lee

Employee

16-Mar-04

15-Mar-09

28,027

370

22-Mar-01

Cheol Ho Kim

Former KCC Officer

23-Mar-04

22-Mar-11

71,538

4,429

22-Mar-01

Jun Chae Song

Former KCC Officer

23-Mar-04

22-Mar-11

71,538

6,644

22-Mar-01

Myoung Woo Lee

Former KCC Officer

23-Mar-04

22-Mar-11

71,538

4,429

22-Mar-01

Han Kyoung Lee

Former KCC Officer

23-Mar-04

22-Mar-11

71,538

6,644

24-Mar-01

Jae Kyu Lee

Non Executive Director

25-Mar-04

24-Mar-07

25,100

2,318

24-Mar-01

Jong In Park

Executive Vice President

25-Mar-04

24-Mar-07

25,100

19,333

16-Nov-01

Sang Hoon Kim

Chairman

17-Nov-04

16-Nov-09

51,200

150,000

50,000

100,000

22-Mar-02

Sun Jin Kim

Non Executive Director

23-Mar-05

22-Mar-10

57,100

3,000

22-Mar-02

Ji Hong Kim

Non Executive Director

23-Mar-05

22-Mar-10

57,100

3,321

22-Mar-02

Keun Shik Oh

Non Executive Director

23-Mar-05

22-Mar-10

57,100

3,321

1,021

2,300

22-Mar-02

Kyung Hee Yoon

Non Executive Director

23-Mar-05

22-Mar-10

57,100

3,000

22-Mar-02

Dong Soo Chung

Non Executive Director

23-Mar-05

22-Mar-10

57,100

10,000

22-Mar-02

Henry Cornell

Non Executive Director

23-Mar-05

22-Mar-10

57,100

3,321

22-Mar-02

Timothy Hartman

Non Executive Director

23-Mar-05

22-Mar-10

57,100

3,321

¹	Some numbers of the granted options have been adjusted due to the merger and the early retirement of the grantees.

Grant date

Name of the grantee

Position when granted

Exercise period

Exercise

Number of
granted

options¹

Number
of
exercised

Number of
exercisable

From

price

options

22-Mar-02

Byung Sang Kim

Executive Vice President

23-Mar-05

22-Mar-10

57,100

9,498

22-Mar-02

Bock Woan Kim

Executive Vice President

23-Mar-05

22-Mar-10

57,100

13,339

22-Mar-02

Ki Sup Shin

Executive Vice President

23-Mar-05

22-Mar-10

57,100

26,405

16,405

10,000

22-Mar-02

Jong Kyoo Yoon

Executive Vice President

23-Mar-05

22-Mar-10

57,100

20,522

22-Mar-02

Sung Hyun Chung

Executive Vice President

23-Mar-05

22-Mar-10

57,100

19,525

22-Mar-02

Bong Hwan Cho

Executive Vice President

23-Mar-05

22-Mar-10

57,100

9,498

22-Mar-02

Bum Soo Choi

Executive Vice President

23-Mar-05

22-Mar-10

57,100

13,339

22-Mar-02

Ki Taek Hong

Executive Vice President

23-Mar-05

22-Mar-10

57,100

19,525

22-Mar-02

Jong Young Yoon

Employee

23-Mar-05

22-Mar-10

57,100

14,712

5,000

9,712

22-Mar-02

Jae Il Song

Employee

23-Mar-05

22-Mar-10

57,100

9,762

22-Mar-02

Hyung Goo Sim

Employee

23-Mar-05

22-Mar-10

57,100

14,712

22-Mar-02

Jeong Haing Lee

Employee

23-Mar-05

22-Mar-10

57,100

9,762

22-Mar-02

Joon Sup Chang

Employee

23-Mar-05

22-Mar-10

57,100

9,762

22-Mar-02

Young No Lee

Employee

23-Mar-05

22-Mar-10

57,100

14,712

22-Mar-02

Sung Bin Kim

Employee

23-Mar-05

22-Mar-10

57,100

9,762

22-Mar-02

Sung Bok Park

Employee

23-Mar-05

22-Mar-10

57,100

14,712

22-Mar-02

Yun Keun Jung

Employee

23-Mar-05

22-Mar-10

57,100

15,000

22-Mar-02

Man Soo Song

Employee

23-Mar-05

22-Mar-10

57,100

9,762

22-Mar-02

Jeong Young Kim

Employee

23-Mar-05

22-Mar-10

57,100

5,000

22-Mar-02

Hack Yeon Jeong

Employee

23-Mar-05

22-Mar-10

57,100

5,000

22-Mar-02

Jong Hwan Byun

Employee

23-Mar-05

22-Mar-10

57,100

5,000

22-Mar-02

Jae Han Kim

Employee

23-Mar-05

22-Mar-10

57,100

2,500

22-Mar-02

Jong Ok Na

Employee

23-Mar-05

22-Mar-10

57,100

2,500

29-Mar-02

Byoung Hak Kim

Former KCC Officer

30-Mar-04

29-Mar-11

129,100

3,330

29-Mar-02

Jang Ok Kim

Former KCC Officer

30-Mar-04

29-Mar-11

129,100

3,330

29-Mar-02

Sun Lee

Former KCC Officer

30-Mar-04

29-Mar-11

129,100

3,330

26-Jul-02

Donald H. MacKenzie

Executive Vice President

27-Jul-05

26-Jul-10

58,800

23,899

21-Mar-03

Ki Hong Kim

Non Executive Director

22-Mar-06

21-Mar-11

58,600

10,000

21-Mar-03

Sun Jin Kim

Non Executive Director

22-Mar-06

21-Mar-11

43,800

6,678

21-Mar-03

Eun Joo Park

Non Executive Director

22-Mar-06

21-Mar-11

42,200

3,351

21-Mar-03

Kyung Bae Suh

Non Executive Director

22-Mar-06

21-Mar-11

42,200

3,351

21-Mar-03

Kyung Hee Yoon

Non Executive Director

22-Mar-06

21-Mar-11

43,800

6,678

21-Mar-03

Bernard S. Black

Non Executive Director

22-Mar-06

21-Mar-11

43,800

6,678

21-Mar-03

Richard Elliott Lint

Non Executive Director

22-Mar-06

21-Mar-11

43,800

6,678

21-Mar-03

Sung Chul Kim

Executive Vice President

22-Mar-06

21-Mar-11

35,500

9,443

4,443

5,000

21-Mar-03

See Young Lee

Executive Vice President

22-Mar-06

21-Mar-11

35,500

7,024

4,024

3,000

21-Mar-03

Won Suk Oh

Employee

22-Mar-06

21-Mar-11

35,500

9,730

21-Mar-03

Sung Dae Min

Employee

22-Mar-06

21-Mar-11

35,500

9,730

21-Mar-03

Kyong Jae Jeong

Employee

22-Mar-06

21-Mar-11

35,500

9,730

21-Mar-03

Chul Hee Kim

Employee

22-Mar-06

21-Mar-11

35,500

14,343

21-Mar-03

In Do Lee

Employee

22-Mar-06

21-Mar-11

35,500

9,730

21-Mar-03

Maeng Soo Ryang

Employee

22-Mar-06

21-Mar-11

35,500

9,730

27-Aug-03

Jin Baek Cheong

Executive Vice President

28-Aug-06

27-Aug-11

40,500

5,091

09-Feb-04

Young Il Kim

Senior Executive Vice President

10-Feb-07

09-Feb-12

46,100

7,125

09-Feb-04

Sang Jin Lee

Senior Executive Vice President

10-Feb-07

09-Feb-12

46,100

7,125

09-Feb-04

Jeung Lak Lee

Senior Executive Vice President

10-Feb-07

09-Feb-12

46,100

7,452

09-Feb-04

Yun Keun Jung

Senior Executive Vice President

10-Feb-07

09-Feb-12

46,100

5,000

09-Feb-04

Kuk Shin Kang

Employee

10-Feb-07

09-Feb-12

46,100

5,000

09-Feb-04

Kyung Soo Kang

Employee

10-Feb-07

09-Feb-12

46,100

3,837

09-Feb-04

Yang Jin Kim

Employee

10-Feb-07

09-Feb-12

46,100

5,000

Grant date

Name of the grantee

Position when granted

Exercise period

Exercise

Number of
granted

options¹

Number
of
exercised

Number of
exercisable

From

price

options

09-Feb-04

Dong Hwan Cho

Employee

10-Feb-07

09-Feb-12

46,100

5,000

09-Feb-04

Dong Sook Kang

Employee

10-Feb-07

09-Feb-12

46,100

5,000

09-Feb-04

Young Han Kim

Employee

10-Feb-07

09-Feb-12

46,100

5,000

09-Feb-04

De Oak Shin

Employee

10-Feb-07

09-Feb-12

46,100

5,000

09-Feb-04

Chang Ho Kim

Employee

10-Feb-07

09-Feb-12

46,100

5,000

09-Feb-04

Dal Soo Lee

Employee

10-Feb-07

09-Feb-12

46,100

5,000

09-Feb-04

Byong Doo Ahn

Employee

10-Feb-07

09-Feb-12

46,100

5,000

23-Mar-04

Young Soon Cheon

Non Executive Director

24-Mar-07

23-Mar-12

48,500

5,000

23-Mar-04

Dong Soo Chung

Non Executive Director

24-Mar-07

23-Mar-12

48,500

5,000

23-Mar-04

Wang Ha Cho

Non Executive Director

24-Mar-07

23-Mar-12

48,800

5,000

23-Mar-04

Woon Youl Choi

Non Executive Director

24-Mar-07

23-Mar-12

48,800

5,000

23-Mar-04

Jung Young Kang

Senior Executive Vice President

24-Mar-07

23-Mar-12

47,200

10,000

01-Nov-04

Chung Won Kang

President & CEO

02-Nov-07

01-Nov-12

700,000

18-Mar-05

Hyung Duk Chang

Chief Audit Executive

19-Mar-08

18-Mar-13

30,000

18-Mar-05

Kap Shin

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Dong Won Kim

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Yun Keun Jung

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

8,759

18-Mar-05

Nam Sik Yang

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

18,750

18-Mar-05

Hyo Sung Won

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Yong Kook Oh

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Sang Jin Lee

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

8,759

18-Mar-05

Ahn Sook Koo

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

8,759

18-Mar-05

Jung Young Kang

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

18,750

18-Mar-05

Young Han Choi

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Dong Soo Choe

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

18,750

18-Mar-05

Seong Kyu Lee

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

8,759

18-Mar-05

Jun Bo Cho

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

8,759

18-Mar-05

Jeong Min Kim

Senior Executive Vice President

19-Mar-08

18-Mar-13

46,800

30,000

18-Mar-05

Sung Soo Jung

Employee

19-Mar-08

18-Mar-13

46,800

4,379

²	Exercise price = (Base Price) Won x (1 + the increase rate of KOSPI Banking Industry Index x 0.4).

(Base Price) Won is the arithmetic mean of the following three numbers: the sum of the daily closing price multiplied by the daily trading volume divided by the daily trading volume for the common shares during each of the following periods: (i) two months prior to, but excluding, the grant date; (ii) one month prior to, but excluding, the grant date; and (iii) one week prior to, but excluding, the grant date.

The increase rate of KOSPI Banking Industry Index = (KOSPI Banking Industry Index as of the starting date of exercise period—KOSPI Banking Industry Index as of the grant date) / KOSPI Banking Industry Index as of the grant date.

Grant date

Name of the grantee

Position when granted

Exercise period

Exercise

Number of
granted

options¹

Number
of
exercised

Number of
exercisable

From

price

options

18-Mar-05

Hye Young Kim

Employee

19-Mar-08

18-Mar-13

46,800

4,379

18-Mar-05

Ki Hyun Kim

Employee

19-Mar-08

18-Mar-13

46,800

4,379

18-Mar-05

Jae Sam Jung

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Chang Ho Kim

Employee

19-Mar-08

18-Mar-13

46,800

4,379

18-Mar-05

Dong Sook Kang

Employee

19-Mar-08

18-Mar-13

46,800

4,379

18-Mar-05

De Oak Shin

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Dal Soo Lee

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Byong Doo Ahn

Employee

19-Mar-08

18-Mar-13

46,800

4,379

18-Mar-05

Byung Kun Oh

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Won Sik Yeo

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Dong Su Ryo

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Kyoung Ho Lee

Employee

19-Mar-08

18-Mar-13

46,800

9,375

18-Mar-05

Jeung Ho Lee

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Kwang Suk Lee

Employee

19-Mar-08

18-Mar-13

46,800

9,375

18-Mar-05

Tae Gon Kim

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Hyeog Kwan Kwon

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Kyu Hyung Jung

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Dong Hwan Cho

Employee

19-Mar-08

18-Mar-13

46,800

9,375

18-Mar-05

Man Hee Lee

Employee

19-Mar-08

18-Mar-13

46,800

9,375

18-Mar-05

Il Soo Moon

Employee

19-Mar-08

18-Mar-13

46,800

15,000

18-Mar-05

Yong Seung Lee

Employee

19-Mar-08

18-Mar-13

46,800

9,375

18-Mar-05

Suk Yong Cha

Non Executive Director

19-Mar-08

18-Mar-13

61,000

5,091

18-Mar-05

Ki Hong Kim

Non Executive Director

19-Mar-08

18-Mar-13

60,300

5,077

18-Mar-05

Young Soon Cheon

Non Executive Director

19-Mar-08

18-Mar-13

63,600

10,072

18-Mar-05

Dong Soo Chung

Non Executive Director

19-Mar-08

18-Mar-13

15,000

18-Mar-05

Chang Kyu Lee

Non Executive Director

19-Mar-08

18-Mar-13

15,000

18-Mar-05

Hun Namkoong

Non Executive Director

19-Mar-08

18-Mar-13

61,000

5,091

18-Mar-05

Doo Hwan Song

Non Executive Director

19-Mar-08

18-Mar-13

63,800

10,031

18-Mar-05

Dam Cho

Non Executive Director

19-Mar-08

18-Mar-13

15,000

18-Mar-05

Nobuya Takasugi

Non Executive Director

19-Mar-08

18-Mar-13

15,000

27-Apr-05

Kyung Wook Kang

Employee

28-Apr-08

27-Apr-13

45,700

8,827

22-Jul-05

Donald H. MacKenzie

Senior Executive Vice President

23-Jul-08

22-Jul-13

49,200

30,000

23-Aug-05

Youn Soo Kim

Employee

24-Aug-08

23-Aug-13

53,000

7,212

24-Mar-06

Dong Soo Chung

Non Executive Director

25-Mar-09

24-Mar-14

20,000

24-Mar-06

Doo Hwan Song

Non Executive Director

25-Mar-09

24-Mar-14

—

24-Mar-06

Chang Kyu Lee

Non Executive Director

25-Mar-09

24-Mar-14

10,000

24-Mar-06

Dam Cho

Non Executive Director

25-Mar-09

24-Mar-14

10,000

³	Exercise price = (Base Price) Won x (1 + TRS of the three major competitors x 0.4)

TRS of the three major competitors shall mean (the sum of each of the three major competitor’s Total Market Cap at the expected exercise price confirmation date less the sum of each of the three major competitor’s Total Market Cap at the grant date) divided by the sum of each of the three major competitor’s Total Market Cap at the grant date.

Grant date

Name of the grantee

Position when granted

Exercise period

Exercise

Number of
granted

options¹

Number
of
exercised

Number of
exercisable

From

price

options

24-Mar-06

Nobuya Takasugi

Non Executive Director

25-Mar-09

24-Mar-14

10,000

24-Mar-06

Young Soon Cheon

Non Executive Director

25-Mar-09

24-Mar-14

85,100

5,000

24-Mar-06

Kee Young Chung

Non Executive Director

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Bo Kyung Byun

Non Executive Director

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Bae Kin Cha

Non Executive Director

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Hyung Duk Chang

Chief Audit Executive

25-Mar-09

24-Mar-14

20,000

24-Mar-06

Ki Hong Kim

Chief Executive Vice President

25-Mar-09

24-Mar-14

210,000

24-Mar-06

Kap Joe Song

Senior Executive Vice President

25-Mar-09

24-Mar-14

45,000

24-Mar-06

Dal Soo Lee

Senior Executive Vice President

25-Mar-09

24-Mar-14

20,000

24-Mar-06

Won Sik Yeo

Senior Executive Vice President

25-Mar-09

24-Mar-14

20,000

24-Mar-06

De Oak Shin

Senior Executive Vice President

25-Mar-09

24-Mar-14

20,000

24-Mar-06

Choong Won Cho

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Yook Sang Kwon

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Haing Hyun Choi

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

In Gyu Choi

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Kwang Chun Shon

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Han Mok Cho

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Soon Hyun Kim

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Seung Joo Baik

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Kwang Mook Park

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Se Yoon Hong

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Sang Rak Jang

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Jin Sun Paeng

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Shin Og Joo

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Young Hee Jeon

Employee

25-Mar-09

24-Mar-14

30,000

24-Mar-06

Bae Young Lee

Employee

25-Mar-09

24-Mar-14

30,000

28-Apr-06

Young Mo Lee

Employee

29-Apr-09

28-Apr-14

30,000

27-Oct-06

Dong Hyun Ji

Employee

28-Oct-09

27-Oct-14

20,000

08-Feb-07

Dong Su Yeo

Senior Executive Vice President

09-Feb-10

08-Feb-15

10,000

08-Feb-07

Hyeog Kwan Kwon

Senior Executive Vice President

09-Feb-10

08-Feb-15

10,000

08-Feb-07

Jeung Ho Lee

Senior Executive Vice President

09-Feb-10

08-Feb-15

10,000

08-Feb-07

Kyoung Woo Nam

Senior Executive Vice President

09-Feb-10

08-Feb-15

45,000

08-Feb-07

Gi Eui Choi

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Chung Wook Kim

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Kyung Hak Lee

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Jae Gon Kim

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Heung Un Kim

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Woo Shick Lee

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Young Hwan Sohn

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Young Gu Joo

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Han Ok Kim

Employee

09-Feb-10

08-Feb-15

30,000

Grant date

Name of the grantee

Position when granted

Exercise period

Exercise

Number of
granted

options¹

Number
of
exercised

Number of
exercisable

From

price

options

08-Feb-07

Yong Shin Kim

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Kyung Gu Lee

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Kyun Shin

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Hwa Jung Kim

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Tae Sung Hwang

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Myung Heun You

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Nam Cheol Shin

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

In Byung Park

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Kun Soo Kang

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Kwang Won Jee

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Youn Dong Kim

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Chan Bon Park

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Jong Bum Kim

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Byong Duk Min

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Hye Seok Seo

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Bou Hwan Sim

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Yong Soo Seok

Employee

09-Feb-10

08-Feb-15

30,000

08-Feb-07

Sang Hun Choi

Employee

09-Feb-10

08-Feb-15

30,000

23-Mar-07

Jacques P.M. Kemp

Non Executive Director

24-Mar-10

23-Mar-15

30,000

Total

4,170,094

237,250

3,932,844

5.4

Affiliated Companies

5.4.1.

List of Affiliates¹

Affiliated companies of Kookmin Bank and its ownership as of September 30, 2007 are as follows.

•

KB Investment Co., Ltd. (99.99%)

•

KB Asset Management Co., Ltd. (80.00%)

•

KB Real Estate Trust Co., Ltd. (99.99%)

•

KB Credit Information Co., Ltd. (99.73%)

•

KB Data Systems Corporation (99.99%)

•

KB Futures Co., Ltd. (99.98%)

•

KB Life Insurance Co., Ltd. (51.00%)

•

Kookmin Bank International (London) Ltd. (100.00%)

•

Kookmin Bank Hong Kong Ltd. (100.00%)

•

Sorak Financial Holdings Pte. Ltd. (25.00%)

⁽¹⁾	Excludes Jooeun Industrial and KLB Securities, which are under liquidation procedures. Kookmin Singapore Ltd. and Kookmin Finance Asia Limited are also under liquidation procedures.

6.	Directors, Senior Management and Employees

6.1.

Executive Directors

Our four executive directors consist of the President & CEO, Chief Audit Executive, Chief Executive Vice President and Senior Executive Vice President as of September 30, 2007.

The names and positions of our directors, and the number of shares of Kookmin Bank’s common stock they own are set forth below as of September 30, 2007.


Name	Date of Birth	Position	Common Shares Owned
Chung Won Kang¹	12/19/1950	President & CEO	—
Hyung Duk Chang	08/13/1950	Chief Audit Executive	—
Ki Hong Kim	01/10/1957	Chief Executive Vice President²	—
Kap Shin	09/04/1955	CFO & Senior EVP	—

6.2.

Non-Executive Directors

Our non-executive directors are selected based on the candidates’ talents and skills in diverse areas, such as law, finance, economy, management and accounting.

Our current non-executive directors and the number of shares of Kookmin Bank’s common stock they own as of September 30, 2007 are as follows.


Name	Date of Birth	Position	Common Shares Owned
Dong Soo Chung	09/24/1945	Non-Executive Director	2,830
Nobuya Takasugi	09/03/1942	Non-Executive Director	—
Kee Young Chung	09/07/1948	Non-Executive Director	—
Jacques P.M. Kemp	05/15/1949	Non-Executive Director	—
Chang Kyu Lee	05/20/1951	Non-Executive Director	500
Dam Cho	08/01/1952	Non-Executive Director	—
Bo Kyung Byun	08/09/1953	Non-Executive Director	—
Baek In Cha	07/23/1958	Non-Executive Director	—

On October 31, 2007, a new non-executive director was appointed.


Name	Date of Birth	Position	Common Shares Owned
Chee Joong Kim	12/11/1955	Non-Executive Director	—

¹	Mr. Chung Won Kang was reappointed as the President & CEO in the extraordinary general meeting of shareholders held on October 31, 2007.

²	On October 12, 2007 the position of Mr. Ki Hong Kim changed to Senior EVP.

6.3.

Senior Management

In addition to the executive directors who are also our executive officers, we currently have the following 14 executive officers as of September 30, 2007.


Name	Date of Birth	Position	Common Shares Owned
Dal Soo Lee	02/15/1952	Senior Executive Vice President	152
Won Sik Yeo	01/30/1953	Senior Executive Vice President	—
Dong Su Yeo	02/17/1956	Senior Executive Vice President	—
Hyeog Kwan Kwon	12/10/1953	Senior Executive Vice president	40
Yong Kook Oh	09/30/1949	Senior Executive Vice President	—
Hyo Sung Won	07/29/1960	Senior Executive Vice President	—
De Oak Shin	01/09/1951	Senior Executive Vice President	8,963
Kyoung Woo Nam	04/01/1951	Senior Executive Vice President	—
Young Han Choi	09/24/1958	Senior Executive Vice President	—
Jeung Ho Lee	08/15/1952	Senior Executive Vice President	38
Jeong Min Kim	05/08/1951	Senior Executive Vice President	130
Donald H. MacKenzie	12/20/1948	Senior Executive Vice President	—
Kap Joe Song	07/20/1947	Senior Executive Vice President	—
Dong Won Kim	03/01/1953	Senior Executive Vice President	—

6.4.

Employees

The following table shows the breakdown of our employees as of September 30, 2007.

(Unit: in millions of Won)

Number of Employees¹

Average Tenure of

the Full-time

Employees (years)²

Total Payment
for the third
quarter of 2007³

Average Payment

per Person

Full-time

Contractual

Total

Male

12,928

1,505

14,433

17 years and 10 months

751,111

52.0

Female

4,666

6,801

11,467

13 years and 8 months

396,938

34.6

Total

17,594

8,306

25,900

16 years and 8 months

1,148,049

44.3

¹	Number of employees is calculated as the arithmetic mean of the number of employees as of the end of each month from January 31, 2007 to September 30, 2007, and does not include executive vice presidents, local employees in overseas branches and persons engaged in outsourced services.

²	Based on only full-time employees as of September 30, 2007

³	Based on labor expenses and employee benefit/welfare costs paid as of September 30, 2007

7.	Major Stockholders and Related Party Transactions

7.1.

Major Stockholders¹

The following table presents information regarding the selected major ownership of our shares.


		(Unit: Shares, %)

Name	Number of Shares of Common Stock	Percentage of Total Issued Shares
Citibank, N. A.²	53,592,732	15.93
Euro-Pacific Growth Fund	18,377,910	5.46

¹	As of September 30, 2007

²	Depositary under our ADR and GDR programs

7.2.

Investments in Affiliates¹

(Unit: in millions of Won)

Name

Relation with

the Bank

Account

Beginning

Balance

(Jan 1, 2007)

Increase

Decrease

Ending

Balance

(Sept 30, 2007)

KB Real Estate Trust

Affiliate

Equity Securities of Affiliate

79,999

—

79,999

KB Investment

Affiliate

Equity Securities of Affiliate

44,756

—

44,756

KB Asset Management

Affiliate

Equity Securities of Affiliate

30,670

—

30,670

KB Futures

Affiliate

Equity Securities of Affiliate

19,996

—

19,996

KB Data Systems Corp.

Affiliate

Equity Securities of Affiliate

7,999

—

7,999

KB Credit Information

Affiliate

Equity Securities of Affiliate

6,245

—

6,245

KB Life Insurance

Affiliate

Equity Securities of Affiliate

15,300

7,650

—

22,950

Jooeun Industrial¹

Affiliate

Equity Securities of Affiliate

9,999

—

9,999

KLB Securities¹

Affiliate

Equity Securities of Affiliate

24,274

—

24,274

ING Life Korea²

—

Equity Securities

14,000

—

3,570

10,430

Kookmin Bank Hong Kong Ltd.

Affiliate

Equity Securities of Affiliate

18,592

—

178

18,414

Kookmin Bank International (London) Ltd.

Affiliate

Equity Securities of Affiliate

36,482

827

—

37,309

Based on par value

¹	Jooeun Industrial and KLB Securities are under liquidation procedures.

²	Due to Kookmin Bank’s disposition of a 5.1% stake in ING Life Korea on September 27, 2007, ING Life Korea is no longer a subsidiary of Kookmin Bank.

7.3.

Related Party Transactions

(Unit: in millions of Won unless indicated otherwise)

Name

Relation with the Bank

Transactions

Account

Purchase

Disposal

Volume

Gains
/Losses

LG International

Related party of Non-executive director, Kee Young Chung

Equity securities

6,106

6,150

12,256

416

DSME Co.

Related party of Non-executive director, Dong Soo Chung

Equity securities

9,913

19,826

386

Total

16,019

16,063

32,082

802

8.	Other Important Information for Investors

8.1.

Progress Relating to Regulatory Filing

On July 13, 2007, we submitted a current report on Form 6-K relating to a second notice of additional tax assessment from the Seoul Regional Tax Office in respect of the periodic tax audit for the years 2002 to 2005. This second assessment was in the amount of KRW 268,791,041,795, and in addition to an earlier assessment in the amount of KRW 173,189,962,460. The amount payable in respect of the second assessment was subsequently reduced by KRW 3,006,280,175, in part due to early payment of the assessed amounts. We paid such reduced amount on August 13, 2007.

2.	On August 6, 2007 and August 13, 2007, we appealed the tax assessments in two separate proceedings, distinguished in part by type of tax. The amount of assessment being appealed is KRW 438,862,802,150.

8.2.

Future Planned Business

1.	Plan for entering into the securities business through the acquisition of Hannuri Investment & Securities Co., Ltd.

•

Implementation schedule:

—

Board resolution passed on November 14, 2007

•

Expected benefits:

—

Secure competitiveness in the capital markets area following the enactment of the Financial Investment Services and Capital Market Act

—

Recognize synergies between the banking and securities business

SIGNATURES

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


	Kookmin Bank
	(Registrant)

Date: November 14, 2007	By:	/s/ Kap Shin
	(Signature)
	Name:	Kap Shin
	Title:	CFO / Senior EVP Executive Director

KOOKMIN BANK

NON-CONSOLIDATED FINANCIAL STATEMENTS FOR

THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

AND INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

Exhibit 99.1

Independent Accountants’ Review Report

English Translation of a Report Originally Issued in Korean

To the Shareholders and Board of Directors of

Kookmin Bank:

We have reviewed the accompanying non-consolidated balance sheet of the Bank accounts of Kookmin Bank (the “Bank”) as of September 30, 2007, and the related non-consolidated statements of income, cash flows and changes in shareholders’ equity for the nine months ended September 30, 2007 and 2006, all expressed in Korean Won. These financial statements are the responsibility of the Bank’s management. Our responsibility is to issue a report on these financial statements based on our reviews.

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

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

We have previously audited, in accordance with auditing standards generally accepted in the Republic of Korea, the non-consolidated balance sheet of the Bank as of December 31, 2006, and the related non-consolidated statements of income, appropriations of retained earnings and cash flows for the year then ended (not presented herein) and in our report dated March 2, 2007, we expressed an unqualified opinion on those non-consolidated financial statements. The accompanying non-consolidated balance sheet as of December 31, 2006, which is comparatively presented, does not differ in material respects from such audited non-consolidated balance sheet.

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

November 2, 2007

Notice to Readers

This report is effective as of November 2, 2007, the accountants’ review report date. Certain subsequent events or circumstances may have occurred between the accountants’ review report date and the time the accountants’ review report is read. Such events or circumstances could significantly affect the accompanying financial statements and may result in modifications to the accountants’ review report.

KOOKMIN BANK

NON-CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2007 AND DECEMBER 31, 2006


	Korean Won
	2007		2006
	(In millions)
ASSETS

Cash and due from banks (Notes 3 and 20)	(Won)	6,755,638	(Won)	6,568,306
Securities (Notes 4 and 20)		31,648,717		29,382,480
Loans (Notes 5, 6, 7 and 20)		164,056,306		149,867,182
Tangible assets (Note 8)		2,231,108		2,137,732
Other assets (Note 9)		8,351,632		7,250,781

	(Won)	213,043,401	(Won)	195,206,481

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES:

Deposits (Notes 10 and 20)	(Won)	133,463,188	(Won)	130,019,916
Borrowings (Notes 11 and 20)		48,701,555		39,042,684
Other liabilities (Notes 12, 13, 14, 15 and 16)		15,313,489		11,088,924

		197,478,232		180,151,524

SHAREHOLDERS’ EQUITY (Note 17):
Common stock		1,681,896		1,681,896
Capital surplus		6,258,297		6,258,297
Accumulated other comprehensive income		451,329		899,542
Retained earnings		7,173,647		6,215,222

		15,565,169		15,054,957

	(Won)	213,043,401	(Won)	195,206,481

See accompanying notes to non-consolidated financial statements

KOOKMIN BANK

NON-CONSOLIDATED STATEMENTS OF INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006


	Korean Won
	2007		2006
	(In millions except per share amounts)
OPERATING REVENUE:
Interest income:
Interest on due from banks (Note 21)	(Won)	11,339	(Won)	22,420
Interest on securities (Note 21)		1,042,582		1,011,653
Interest on loans (Note 21)		8,845,489		7,826,252
Other interest income		26,642		22,460

		9,926,052		8,882,785

Gain on valuation and disposal of securities:
Gain on valuation of trading securities		5,145		33,894
Gain on disposal of trading securities		68,716		39,320
Gain on disposal of available-for-sale securities		752,321		136,165
Reversal of impairment loss on available-for-sale securities (Note 4)		23,726		83,725

		849,908		293,104

Gain on disposal of loans		27,112		36,311

Foreign exchange trading income		375,925		179,200

Commission income		1,115,443		975,126

Fees and commissions from trust accounts (Note 27)		69,123		71,707

Dividends income		10,892		7,444

Other operating income:
Gain on derivatives trading		1,971,459		3,154,456
Gain on valuation of derivatives (Note 19)		802,045		1,140,527
Gain on valuation of fair value hedged items (Notes 10, 11 and 19)		141,205		8,510
Other operating income		79,630		76,519

		2,994,339		4,380,012

Total operating revenues		15,368,794		14,825,689

OPERATING EXPENSES:
Interest expenses:
Interest on deposits (Note 21)		2,993,511		2,497,749
Interest on borrowings (Note 21)		1,736,730		1,291,113
Other interest expenses		58,738		37,590

		4,788,979		3,826,452

Loss on valuation and disposal of securities:
Loss on valuation of trading securities		26,516		834
Loss on disposal of trading securities		49,561		40,633
Loss on disposal of available-for-sale securities		16,065		13,220
Impairment loss on available-for-sale securities (Note 4)		60,745		53,463

		152,887		108,150

Provision for possible loan losses (Note 7)		298,854		423,739

Foreign exchange trading losses		199,938		252,540

Commission expenses		422,895		318,812

General and administrative expenses (Note 22)		2,680,397		2,417,600

Other operating expenses:
Provision for acceptances and guarantees losses		10,682		4,089
Loss on derivatives trading		1,932,186		2,975,852
Loss on valuation of derivatives (Note 19)		979,146		1,039,575
Loss on valuation of fair value hedged items (Notes 10, 11 and 19)		10,409		77,193
Other operating expenses		435,135		436,737

		3,367,558		4,533,446

Total operating expenses		11,911,508		11,880,739


(Continued)

KOOKMIN BANK

NON-CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006


	Korean Won
	2007		2006
	(In millions except per share amounts)
OPERATING INCOME	(Won)	3,457,286	(Won)	2,944,950
NON-OPERATING REVENUE (Note 23)		343,323		258,603
NON-OPERATING EXPENSES (Note 23)		562,762		89,763

INCOME BEFORE INCOME TAX		3,237,847		3,113,790
INCOME TAX EXPENSE (Note 24)		1,044,068		855,689

NET INCOME (Note 26)	(Won)	2,193,779	(Won)	2,258,101

BASIC NET INCOME PER SHARE (In currency units) (Note 25)	(Won)	6,522	(Won)	6,713

DILUTED NET INCOME PER SHARE (In currency units) (Note 25)	(Won)	6,507	(Won)	6,713

See accompanying notes to non-consolidated financial statements.

KOOKMIN BANK

NON-CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006


	Korean Won
	2007			2006
	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	(Won)	2,193,779		(Won)	2,258,101

Adjustments to reconcile net income to net cash used in operating activities:
Loss on valuation of trading securities		26,516			834
Impairment loss on available-for-sale securities		60,745			53,463
Loss on valuation of securities accounted for using the equity method		289			1,612
Provision for possible loan losses		298,854			423,739
Depreciation and amortization		296,910			224,615
Loss on disposal of tangible assets		1,086			1,629
Loss on valuation of derivatives		979,146			1,039,575
Loss on valuation of fair value hedged items		10,409			77,193
Provision for severance benefits		123,996			103,864
Gain on valuation of trading securities		(5,145	)		(33,894	)
Reversal of impairment loss on available-for-sale securities		(23,726	)		(83,725	)
Gain on valuation of securities accounted for using the equity method		(74,397	)		(76,077	)
Gain on disposal of tangible assets		(10,128	)		(2,339	)
Gain on valuation of derivatives		(802,045	)		(1,140,527	)
Gain on valuation of fair value hedged items		(141,205	)		(8,510	)
Others, net		83,270			55,557

		824,575			637,009

Changes in assets and liabilities resulting from operations:
Net decrease (increase) in trading securities		(2,879,245	)		407,268
Net increase in available-for-sale securities		(90,796	)		(2,866,249	)
Net decrease (increase) in held-to-maturity securities		279,557			(957,793	)
Net increase in loans		(14,492,564	)		(10,119,066	)
Net increase in accounts receivable		(1,361,324	)		(4,951,270	)
Net increase in accrued income		(182,041	)		(212,004	)
Net increase in prepaid expenses		(38,631	)		(37,123	)
Net decrease (increase) in deferred income tax assets		(204,289	)		105,778
Net increase in accounts payable		1,667,235			4,676,614
Net increase (decrease) in accrued expenses		701,118			(400,142	)
Net increase in unearned revenues		13,755			10,405
Payment of severance benefits		(19,801	)		(13,187	)
Net increase in severance insurance deposits		(6,304	)		(35,780	)
Others, net		360,426			(220,071	)

		(16,252,904	)		(14,612,620	)

Net cash used in operating activities		(13,234,550	)		(11,717,510	)

(Continued)

KOOKMIN BANK

NON-CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006


	Korean Won
	2007			2006
	(In millions)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in restricted due from banks	(Won)	(638,449	)	(Won)	(81,914	)
Net decrease in securities accounted for using the equity method		211,393			14,914
Disposal of tangible assets		19,408			10,619
Purchase of tangible assets		(320,690	)		(151,863	)
Disposal of intangible assets		76			—
Disposal of non-business use properties		308			27
Purchase of intangible assets		(35,295	)		(23,911	)
Net increase in guarantee deposits paid		(109,699	)		(11,294	)
Net decrease (increase) in domestic exchange settlement debits		691,392			(432,889	)

Net cash used in investing activities		(181,556	)		(676,311	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		3,445,179			2,208,755
Net increase in borrowings		9,566,556			10,056,073
Net increase (decrease) in other liabilities		1,181,038			(201,683	)
Exercise of stock options		—			10,620
Dividend		(1,227,784	)		(184,889	)

Net cash provided by financing activities		12,964,989			11,888,876

NET DECREASE IN CASH AND DUE FROM BANKS		(451,117	)		(504,945	)

CASH AND DUE FROM BANKS, BEGINNING OF PERIOD		3,287,819			3,624,831

CASH AND DUE FROM BANKS, END OF PERIOD (Note 31)	(Won)	2,836,702		(Won)	3,119,886

See accompanying notes to non-consolidated financial statements.

KOOKMIN BANK

NON-CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006


	Capital stock		Capital surplus		Capital adjustments			Accumulated other comprehensive income			Retained earnings			Total
	(In millions)
January 1, 2006	(Won)	1,681,896	(Won)	6,254,786	(Won)	(5,772	)	(Won)	512,742		(Won)	3,929,948		(Won)	12,373,600
Dividend		—		—		—			—			(184,889	)		(184,889	)

Retained earnings after appropriations												3,745,059			12,188,711
Net income		—		—		—			—			2,258,101			2,258,101
Valuation of available-for-sale securities		—		—		—			163,923			—			163,923
Valuation of held-to-maturity securities		—		—		—			(273	)		—			(273	)
Valuation of securities using the equity method		—		—		—			9,233			—			9,233
Exercise of stock option		—		—		(3,888	)		—			—			(3,888	)
Disposal of treasury stock		—		3,511		9,660			—			—			13,171
Others		—		—		—			—			(270	)		(270	)

September 30, 2006	(Won)	1,681,896	(Won)	6,258,297	(Won)	—		(Won)	685,625		(Won)	6,002,890		(Won)	14,628,708

January 1, 2007	(Won)	1,681,896	(Won)	6,258,297	(Won)	—		(Won)	899,542		(Won)	6,215,222		(Won)	15,054,957
Dividend		—		—		—			—			(1,227,784	)		(1,227,784	)

Retained earnings after appropriations												4,987,438			13,827,173
Net income		—		—		—			—			2,193,779			2,193,779
Valuation of available-for-sale securities		—		—		—			(433,205	)		—			(433,205	)
Valuation of held-to-maturity securities		—		—		—			(53	)		—			(53	)
Valuation of securities using the equity method		—		—		—			(14,955	)		(7,650	)		(22,605	)
Others		—		—		—			—			80			80

September 30, 2007	(Won)	1,681,896	(Won)	6,258,297	(Won)	—		(Won)	451,329		(Won)	7,173,647		(Won)	15,565,169

See accompanying notes to non-consolidated financial statements.

KOOKMIN BANK

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

1. GENERAL:

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

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

The Bank’s shares have been listed on the Korea Stock Exchange since September 1994. As a result of the business combination with H&CB, the former shareholders of the Bank and H&CB received new common shares of the Bank on the basis of a pre-determined ratio. The new common shares of the Bank were listed on the Korea Stock Exchange on November 9, 2001. In addition, the Bank listed its American Depository Shares (“ADS”) on the New York Stock Exchange (“NYSE”) as of November 1, 2001 following the consolidation with H&CB. H&CB listed its ADS on the NYSE as of October 3, 2000 prior to the business combination. As of September 30, 2007, the Bank’s paid-in capital is (Won)1,681,896 million.

The Bank is engaged in the banking, trust, credit card and other relevant businesses according to the provisions of the General Banking Act, Trust Business Act, and Specialized Credit Financial Business Act, respectively. The Bank operates through 1,172 domestic branches and offices (excluding 242 automated teller machine stations) and four overseas branches (excluding two subsidiaries and two offices) as of September 30, 2007.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Non-consolidated Financial Statement Presentation

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

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

Interest Income Recognition

The Bank applies the accrual basis in recognizing interest income related to deposits, loans and securities, except for non-secured uncollectible receivables. Interest on loans, whose principal or interest is past due at the balance sheet date, is generally not accrued, with the exception of interest on certain loans secured by guarantee of governments or government agencies, or collateralized by bank deposits. When a loan is placed on non-accrual status, previously accrued interest is generally reversed and deducted from current interest income; and future interest income is recognized on the cash basis in accordance with the banking industry accounting standards. As of September 30, 2007 and December 31, 2006, the principal amount of loans and securities of which the accrued interest income was not recorded in the accompanying financial statements based on the above criteria amounted to (Won)5,158,795 million and (Won)6,031,676 million, respectively, and the related accrued interest income not recognized amounted to (Won)599,979 million and (Won)525,475 million, respectively.

Classification of Securities

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

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

Valuation of Securities

(1)	Valuation of Trading Securities

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

(2)	Valuation of Available-for-sale Securities

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

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

(3)	Valuation of Held-to-maturity Securities

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

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

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

When the book value of equity securities accounted for using the equity method is less than zero due to the cumulative losses of the investees, the Bank discontinues applying the equity method and does not provide for additional losses. If the investee subsequently reports net income, the Bank resumes applying the equity method only after its share of that net income equals the share of net losses not recognized during the period that the equity method was suspended.

In addition, any gain or loss from the disposal of equity securities of certain consolidated subsidiaries is accounted for as accumulated other comprehensive income resulting from applying the equity method in the balance sheets if the subsidiaries are still consolidated even after the Bank disposes of a portion of equity securities.

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

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

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

(6)	Reclassification of Securities

When held-to-maturity securities are reclassified to available-for-sale securities, those securities are accounted for at fair value on the reclassification date and the difference between the fair value and book value is reported in accumulated other comprehensive income as gain or loss on valuation of available-for-sale securities. When available-for-sale securities are reclassified to held-to-maturity securities, gain or loss on valuation of available-for-sale securities, which had been recorded until the reclassification date, continue to be included in accumulated other comprehensive income and be amortized using the effective interest rate method and the amortized amount is charged to interest income until maturity. The difference between the fair value at the reclassification date and face value of the reclassified securities to held-to-maturity securities is amortized using effective interest rate method and the amortized amount is charged to interest income. In addition, when certain trading securities lose their marketability, such securities are reclassified as available-for-sale securities at fair market value as of reclassification date.

Transfer of Securities

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

Allowance for Possible Losses on Credits

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

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

Based on the Bank’s corporate credit evaluation model, credits to a borrower are classified into 17 grades from AAA to D (AAA, AA+, AA, A, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC, CC, C and D). Credits of grades of AAA to B are classified as normal, credits of grade B - to CCC as precautionary, credits of grade CC as substandard, credits of grade C as doubtful and credits of grade D as estimated loss. Credits are finally classified reflecting past due period and bankruptcy considerations. An allowance is then calculated on the category balances using the prescribed percentages of 0.7 ~ 6.9 percent for normal, 7 ~ 19.9 percent for precautionary, 20 ~ 49.9 percent for substandard, 50 ~ 99.9 percent for doubtful and 100 percent for estimated loss. However, the Bank does not provide allowances for call loans, bonds bought under resale agreements and inter-bank loans that are classified as normal, as it is not required by the Accounting Standards for the Banking Industry.

In addition, as required by the Supervisory Regulation, based on the classification of household loans and credit card receivables by past due period and status of bankruptcy proceedings, allowance for household loans and credit card receivables are calculated on the category balances using the prescribed percentages of 1 ~ 9.9 percent and 1.5 ~ 14.9 percent for normal, 10 ~19.9 percent and 15 ~ 19.9 percent for precautionary, 20 ~ 54.9 and 20 ~ 59.9 percent for substandard, 55 ~ 99.9 percent and 60 ~ 99.9 percent for doubtful, and 100 percent for estimated loss.

Pursuant to the Supervisory Regulation of Banking Business, the Bank provides allowance for possible losses on confirmed acceptances and guarantees, unconfirmed acceptances and guarantees, and notes endorsed based on the credit classification, minimum rate of loss provision prescribed by the Financial Supervisory Service and the cash conversion factor. In addition, the Bank provides other allowances for the unused credit limit of credit card and unused credit line of consumer and corporate loans based on the cash conversion factor and minimum rate of loss provision prescribed by the Financial Supervisory Service.

In addition, when an allowance for possible loan losses required by the Supervisory Regulation is less than the amount calculated based on the historical loss rate, which is estimated through objective and reasonable method in accordance with the accounting principle in the Republic of Korea, historical loss rate is reflected in the provision for possible loan losses.

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


Lending portfolios	Methodology	Period of historical loss rate	Period of recovery ratio
Impaired corporate loans	DCF & Migration	N/A	N/A
Non-impaired corporate loans	Migration analysis	1 year	5 years
Consumer loans	Migration analysis	1 year	5 years
Credit card loans	Roll-rate analysis	1 year	5 years

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

Restructuring of Loans

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

Deferred Loan Origination Fees and Costs

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

Valuation of Receivables and Payables at Present Value

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

Bonds under Resale or Repurchase Agreements

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

Tangible Assets and Related Depreciation

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

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


Tangible assets	Depreciation method	Estimated useful life
Buildings and structures	Straight-line	40 years
Leasehold improvements	Declining balance	4-5 years
Equipment and vehicles	Declining balance	4-5 years

Intangible Assets and Related Amortization

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


Intangible assets	Depreciation method	Estimated useful life
Goodwill	Straight-line	9 years
Trademarks	Straight-line	5-20 years
Others	Straight-line	3-30 years

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

Valuation Allowance for Non-Business Use Property

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

Recognition of Impairment of Assets

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

Amortization of Discounts (Premiums) on Debentures

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

Contingent Liabilities

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

Accrued Severance Benefits

Employees and directors and temporary employees with at least one year of service as of September 30, 2007 are entitled to receive a lump-sum payment upon termination of their employment with the Bank, based on their length of service and rate of pay at the time of termination. The accrued severance benefits that would be payable assuming all eligible employees and directors were to resign are included in other liabilities.

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

Accounting for Derivative Instruments

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

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

Accounting for Share-based Payment

The terms of the arrangement for share-based payment transactions provide the Bank with a choice of whether the transaction is settled in cash or by issuing equity instruments. In accordance with the resolution of the Board of Directors on August 23, 2005 to settle the transaction in cash, the compensation cost is recorded in other liabilities (accrued expense). The compensation cost of stock options granted before and after the effective date of the Statements of Korea Accounting Standards No. 22 (Share-based Payment) was measured using the intrinsic value method in accordance with the Interpretations on Financial Accounting Standards 39-35 “Accounting for Stock Options,” and the fair value method, respectively.

National Housing Fund

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

Accounting for Trust Accounts

The Bank separately maintains the books of accounts and financial statements in connection with the trust operations (the trust accounts) from those of the bank accounts in accordance with the Trust Business Act. When surplus funds are generated through the management of trust assets, such funds are deposited with the Bank and are recorded as due to trust accounts of the bank accounts. Also, the borrowings from the bank account are recorded as due from trust accounts of the bank accounts. The Bank receives fees for operation and management of the trust business and accounts for them as fees and commissions from trust accounts. With respect to certain trust account products, the Bank guarantees the repayment of the principal of the trust accounts and, in certain cases, a fixed rate of return. If income from such trust accounts is insufficient to pay the guaranteed amount, such a deficiency is satisfied by using special reserves maintained in the trust accounts, offsetting trust fee payable to the bank accounts and receiving compensation contributions from the bank accounts of the Bank. If the Bank pays compensating contributions to the guaranteed return trusts to cover such deficiencies, these contributions are reflected as operating expense of the bank accounts and as other income of the trust accounts.

Income Tax Expense

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

Accounting for Foreign Currency Transactions and Translation

The Bank maintains its accounts in Korean Won. Transactions in foreign currencies are recorded in Korean Won based on the basic rate of exchange on the transaction date. The Korean Won equivalent of assets and liabilities denominated in foreign currencies are translated in these financial statements based on the basic rate ((Won)920.70 and (Won)929.60 to US$ 1.00 at September 30, 2007 and December 31, 2006, respectively) announced by Seoul Money Brokerage Service, Ltd. or cross rates for other currencies other than U.S. Dollars at the balance sheet dates. Translation gains and losses are credited or charged to operations. Financial statements of overseas branches are translated based on the basic rate at balance sheet dates.

Discontinued Operation

A discontinued operation refers to a component of the Bank that is capable of being distinguished operationally for financial reporting purposes and is capable of being identified as a major line of business or geographical area of operations, and that the Bank, pursuant to a single plan of discontinuance, substantially disposes in its entirety, such as by selling it in a single transaction; sells off its assets and settles its liabilities individually or in small groups; or terminates it through abandonment. The income (loss) from continuing operation and discontinued operation was not distinguished and separately presented as there was no discontinued operation in the prior year and current period.

Application of the Statement of Korea Accounting Standards

The Korea Accounting Standard Board (KASB) under the Korea Accounting Institute (KAI) issued the Statements of Korea Accounting Standards (SKAS) for achieving a set of Korean accounting standards that should be internationally acceptable and comparable based on SKAS Act 92. The Bank adopted SKAS No.1 (Accounting Changes and Error Corrections) through SKAS No. 20 (Related Party Disclosures) (excluding SKAS No. 11 and No. 14) as of or before December 31, 2006, and SKAS No. 11 (Discontinued Operation) and SKAS No. 21 (Preparation and Presentation of Financial Statements) through SKAS No. 25 (Consolidated Financial Statements) have been adopted since January 1, 2007.

With the adoption of SKAS No. 21 (Preparation and Presentation of Financial Statements) and SKAS No. 24 (Preparation and Presentation of Financial Statements [Financial Industry]), the Bank included the statement of changes in shareholders’ equity in the financial statements, and reclassified the components of the balance sheets as follows:


Classification	Before	After
Assets	- Cash and due from banks - Securities - Loans - Fixed assets - Other assets	- Cash and due from banks - Securities - Loans - Tangible assets - Other assets
Liabilities	- Deposits - Borrowings - Debentures - Other liabilities	- Deposits - Borrowings - Other liabilities
Shareholders’ Equity	- Common stock - Capital surplus - Retained earnings - Capital adjustments	- Common stock - Capital surplus - Capital adjustments - Accumulated other comprehensive income - Retained earnings

In addition, a discontinued operation is separately presented in the income statements and extraordinary items are no longer reported separately. The Bank has reclassified the components of the income statements; such as, gains or losses relating to available-for-sale securities and sale of loans that were presented under non-operating revenue (expenses) are currently presented under operating revenue (expenses). The effect of the changes in the classification of the income statement for the nine months ended September 30, 2007 is as follows (Unit: In millions):


Classification	Before		After		Effect
Operating Revenue	(Won)	14,559,975	(Won)	15,368,794	(Won)	808,819
Operating Expenses		11,829,038		11,911,508		82,470

Operating Income		2,730,937		3,457,286		726,349
Non-operating Revenue		1,146,483		343,323		(803,160	)
Non-operating Expenses		639,573		562,762		(76,811	)

Income before Income Tax		3,237,847		3,237,847		—
Income Tax Expense		1,044,068		1,044,068		—

Net Income	(Won)	2,193,779	(Won)	2,193,779	(Won)	—

Basic Net Income per Share (In currency units)	(Won)	6,522	(Won)	6,522	(Won)	—

Diluted Net Income per Share (In currency units)	(Won)	6,507	(Won)	6,507	(Won)	—

(*)	Income from continuing operation was not separately presented as there was no gain (loss) from discontinued operation.

The financial statements for the prior period were restated for comparative purposes due to the application of SKAS No. 21 and No. 24. The restatement did not affect the previously reported prior period’s net income or shareholders’ equity. The effect of the restatement on the income statement for the nine months ended September 30, 2006 is as follows (Unit: In millions):


Classification	Before		After		Effect
Operating Revenue	(Won)	14,568,653	(Won)	14,825,689	(Won)	257,036
Operating Expenses		11,809,415		11,880,739		71,324

Operating Income		2,759,238		2,944,950		185,712
Non-operating Revenue		514,804		258,603		(256,201	)
Non-operating Expenses		160,252		89,763		(70,489	)

Income before Income Tax		3,113,790		3,113,790		—
Income Tax Expense		855,689		855,689		—

Net Income	(Won)	2,258,101	(Won)	2,258,101	(Won)	—

Basic Net Income per Share (In currency units)	(Won)	6,713	(Won)	6,713	(Won)	—

Diluted Net Income per Share (In currency units)	(Won)	6,713	(Won)	6,713	(Won)	—

(*)	Income from continuing operation was not separately presented as there was no gain (loss) from discontinued operation.

In addition, the Bank has reclassified the components of the cash flows; such as, changes in available-for-sale securities, held-to-maturity securities and loans that were presented under cash flows from investing activities are currently presented under cash flows from operating activities. The accompanying non-consolidated statement of cash flows for the nine months ended September 30, 2006, which is presented for comparative purposes, was restated due to the application of SKAS No. 21 and No. 24.

The prior period financial statements were neither restated nor the earnings per share adjusted to reflect the effect of the application of SKAS No. 22 (Share-based Payment) and No. 23 (Earnings per Share), which is in accordance with the transition provision.

3. CASH AND DUE FROM BANKS:

(1)	Cash and due from banks as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007		2006
Cash and checks	(Won)	2,453,296	(Won)	2,725,644
Foreign currencies		184,095		151,406
Due from banks		4,118,247		3,691,256

	(Won)	6,755,638	(Won)	6,568,306

(2)	Due from banks as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


Financial institution	Interest (%)	2007		2006
Due from banks in Won:
BOK	—	(Won)	3,819,923	(Won)	3,195,224
Woori Bank and others	0.00~0.10		7,897		9,377
Good Morning Shinhan Securities Co., Ltd. and others	—		7,705		6,006

			3,835,525		3,210,607


Financial institution	Interest (%)	2007		2006
Due from banks in foreign currencies:
BOK	—	(Won)	85,970	(Won)	75,026
ABN AMRO Bank N.V. and others	0.00~5.43		102,380		87,235
Qingdao International Bank and others	5.18~5.78		94,372		318,388

			282,722		480,649

		(Won)	4,118,247	(Won)	3,691,256

(3)	Restricted due from banks as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


Financial institution	2007		2006		Reason for restriction
Due from banks in Won:
BOK	(Won)	3,819,923	(Won)	3,195,224	BOK Act
Woori Bank		576		4,605	Escrow account
KB Futures Co., Ltd. and others		4,297		4,492	Futures margin accounts
Korea Exchange		250		250	Market entry due
Due from banks in foreign currencies:
BOK		85,970		75,026	BOK Act
J.P. Morgan Futures Inc. and others		742		890	Futures margin accounts
ICBC NANFANG SUB-BR and others		7,178		—	China’s New Foreign Bank Regulations

	(Won)	3,918,936	(Won)	3,280,487

(4)	Due from banks by financial institution as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


Financial institution	2007		2006
Due from banks in Won:
BOK	(Won)	3,819,923	(Won)	3,195,224
Other banks		7,897		9,377
Other financial institution		7,705		6,006

		3,835,525		3,210,607

Due from banks in foreign currencies:
BOK		85,970		75,026
Other banks		196,010		404,733
Other financial institution		742		890

		282,722		480,649

	(Won)	4,118,247	(Won)	3,691,256

(5)	Term structure of due from banks as of September 30, 2007 was as follows (Unit: In millions):


	Due in 3 months or less		Due after 3 months through 6 months		Due after 6 months through 1 year		Due after 1 year through 3 years		More than 3 years		Total
Due from banks in Won	(Won)	3,835,424	(Won)	—	(Won)	—	(Won)	101	(Won)	—	(Won)	3,835,525
Due from banks in foreign currencies		275,544		7,178		—		—		—		282,722

	(Won)	4,110,968	(Won)	7,178	(Won)	—	(Won)	101	(Won)	—	(Won)	4,118,247

Term structure of due from banks as of December 31, 2006 was as follows (Unit: In millions):


	Due in 3 months or less		Due after 3 months through 6 months		Due after 6 months through 1 year		Due after 1 year through 3 years		More than 3 years		Total
Due from banks in Won	(Won)	3,206,002	(Won)	4,029	(Won)	475	(Won)	101	(Won)	—	(Won)	3,210,607
Due from banks in foreign currencies		429,521		51,128		—		—		—		480,649

	(Won)	3,635,523	(Won)	55,157	(Won)	475	(Won)	101	(Won)	—	(Won)	3,691,256

4. SECURITIES:

(1)	Securities as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007		2006
Trading securities	(Won)	5,455,522	(Won)	2,589,719
Available-for-sale securities		14,784,341		15,113,898
Held-to-maturity securities		10,671,836		10,939,331
Securities accounted for using the equity method		737,018		739,532

	(Won)	31,648,717	(Won)	29,382,480

(2)	The valuation of securities excluding securities accounted for using the equity method as of September 30, 2007 consisted of (Unit: In millions):


Classification	Face value		Acquisition *cost ()**		Adjusted by effective interest rate method		Book value
Trading securities:
Equity securities	(Won)	—	(Won)	71,612	(Won)	—	(Won)	75,514
Beneficiary certificates		217,940		223,619		—		223,740
Government and public bonds		799,858		782,992		784,954		780,973
Finance bonds		4,247,312		4,229,498		4,236,105		4,215,090
Corporate bonds		160,124		160,137		159,647		159,249
Asset-backed securities		964		953		956		956

	(Won)	5,426,198	(Won)	5,468,811	(Won)	5,181,662	(Won)	5,455,522

Available-for-sale securities:
Equity securities	(Won)	—	(Won)	949,170	(Won)	—	(Won)	1,163,745
Equity investments		—		24,159		—		27,630
Beneficiary certificates		151,361		151,186		—		152,343
Government and public bonds		4,096,712		4,020,822		4,032,200		3,984,352
Finance bonds		7,930,919		7,913,111		7,916,052		7,864,886
Corporate bonds		1,185,535		1,146,089		1,128,160		1,122,540
Asset-backed securities		796,112		732,454		373,486		442,941
Other debt securities		25,242		15,866		—		25,904

	(Won)	14,185,881	(Won)	14,952,857	(Won)	13,449,898	(Won)	14,784,341


Classification	Face value		Acquisition *cost ()**		Adjusted by effective interest rate method		Book value
Held-to-maturity securities:
Government and public bonds	(Won)	6,819,832	(Won)	6,646,251	(Won)	6,677,909	(Won)	6,677,909
Finance bonds		1,217,621		1,216,824		1,216,658		1,216,658
Corporate bonds		2,519,773		2,522,570		2,514,288		2,514,288
Asset-backed securities		263,000		262,942		262,981		262,981

	(Won)	10,820,226	(Won)	10,648,587	(Won)	10,671,836	(Won)	10,671,836

(*)	The book value before valuation has been recognized for equity securities classified as available-for-sale.

The valuation of securities excluding securities accounted for using the equity method as of December 31, 2006 consisted of (Unit: In millions):


Classification	Face value		Acquisition *cost ()**		Adjusted by effective interest rate method		Book value
Trading securities:
Equity securities	(Won)	—	(Won)	55,871	(Won)	—	(Won)	57,196
Beneficiary certificates		100,285		100,737		—		103,488
Government and public bonds		387,598		375,518		369,206		376,597
Finance bonds		1,961,888		1,953,158		1,955,278		1,951,106
Corporate bonds		101,311		100,947		101,705		101,332

	(Won)	2,551,082	(Won)	2,586,231	(Won)	2,426,189	(Won)	2,589,719

Available-for-sale securities:
Equity securities	(Won)	—	(Won)	1,337,214	(Won)	—	(Won)	1,975,847
Equity investments		—		510		—		3,840
Beneficiary certificates		601,394		601,194		—		608,242
Government and public bonds		3,130,037		3,117,853		3,120,855		3,105,038
Finance bonds		7,830,928		7,767,030		7,793,953		7,782,194
Corporate bonds		1,000,411		965,657		950,345		950,200
Asset-backed securities		991,092		927,660		672,357		671,827
Other debt securities		18,412		8,843		—		16,710

	(Won)	13,572,274	(Won)	14,725,961	(Won)	12,537,510	(Won)	15,113,898

Held-to-maturity securities:
Government and public bonds	(Won)	6,708,303	(Won)	6,633,496	(Won)	6,644,907	(Won)	6,644,907
Finance bonds		2,208,000		2,208,271		2,208,185		2,208,185
Corporate bonds		1,879,779		1,887,352		1,881,270		1,881,270
Asset-backed securities		205,000		204,906		204,969		204,969

	(Won)	11,001,082	(Won)	10,934,025	(Won)	10,939,331	(Won)	10,939,331

(*)	The book value before valuation has been recognized for equity securities classified as available-for-sale.

The fair values of trading and available-for sale debt securities in Won were assessed by applying the average of base prices as of balance sheet dates, provided by the bond pricing service institutions.

The fair value of the available-for-sale non-marketable equity securities such as Korea Housing Guarantee Co., Ltd. and 21 others, and the restricted available-for-sale marketable equity securities such as Hyundai Engineering and Construction Co., Ltd. and 4 others were reliably measured by an independent appraisal institute using reasonable judgment. The fair value was determined based on more than one valuation models such as Discounted Cash Flow (DCF) Model, Imputed Market Value (IMV) Model, Discounted Free Cash Flow to Equity (FCFE) Model, Dividend Discount (DD) Model and Risk Adjusted Discounted Cash Flow (RADCF) Model depending on the equity securities.

(3)	Available-for-sale securities, which were not valuated at fair value as of September 30, 2007 and December 31, 2006, were as follows (Unit: In millions):


Company	2007		2006
Bad Bank Harmony (preferred stock)	(Won)	33,896	(Won)	58,848
Non-performing Asset Management Fund		23,650		—
Korea Asset Management Corp.		15,667		15,667
Samsung Life Insurance Co., Ltd.		7,479		7,479
Korea Highway Corp.		6,248		6,248
Tianjin Samsung Opto_Electronics		899		908
CMB Hankang Cable TV Co., Ltd.		835		835
CLS		821		5,128
Solomon Credit Information Co., Ltd.		791		791
Others		6,928		15,549

	(Won)	97,214	(Won)	111,453

(4)	The impairment loss and the reversal of impairment loss on available-for-sale securities for the nine months ended September 30, 2007 and 2006 were as follows (Unit: In millions):


	2007				2006
	Impairment		Reversal		Impairment		Reversal
Equity securities	(Won)	9,268	(Won)	—	(Won)	10,980	(Won)	81,408
Equity investments		1		23,650		1		—
Corporate bonds		—		76		—		2,317
Asset-backed securities		51,476		—		42,482		—

	(Won)	60,745	(Won)	23,726	(Won)	53,463	(Won)	83,725

(5)	Structured notes relating to stock and interest rate and credit risk as of September 30, 2007 were as follows (Unit: In millions):


	Won		Foreign currencies		Total
Structured notes relating to stock:

Convertible bonds	(Won)	—	(Won)	7,444	(Won)	7,444

Structured notes relating to interest rate:
Long-term government bond floating rates notes (“FRN”)		177,261		—		177,261
Others		110,102		—		110,102

		287,363		—		287,363

Structured notes relating to Credit:
Synthetic CDO		—		18,153		18,153

Bonds with call option		18,000		—		18,000

	(Won)	305,363	(Won)	25,597	(Won)	330,960

Structured notes relating to stock, interest rate and credit risk as of December 31, 2006 were as follows (Unit: In millions):


	Won		Foreign currencies		Total
Structured notes relating to stock:

Convertible bonds	(Won)	—	(Won)	24,121	(Won)	24,121

Structured notes relating to interest rate:
Long-term government bond FRN		378,840		—		378,840
Dual indexed FRN		19,931		—		19,931
Inverse FRN		20,115		—		20,115
Others		110,236		—		110,236

		529,122		—		529,122

Structured notes relating to Credit:
Synthetic CDO		—		9,290		9,290

Bonds with call option		20,000		—		20,000

	(Won)	549,122	(Won)	33,411	(Won)	582,533

(6)	Private beneficiary certificates included in beneficiary certificates of available-for-sale securities as of September 30, 2007 and December 31, 2006 were composed of (Unit: In millions):


	2007		2006
Stocks	(Won)	41,849	(Won)	90,874
Government and public bonds		—		115,929
Finance bonds		89,478		359,282
Corporate bonds		49,816		27,943
Asset-backed securities		—		10,000
Call loans		37,820		48,091
Others		9,105		59,878

Assets		228,068		711,997
Liabilities		26,221		2,504

	(Won)	201,847	(Won)	709,493

(7)	The portfolio of securities excluding securities accounted for using the equity method, by industry, as of September 30, 2007 and December 31, 2006 was as follows (Unit: In millions):


	2007			2006
By industry type	Amount		Percentage (%)	Amount		Percentage (%)
Trading securities:
Government and government-invested public companies	(Won)	931,554	17.08	(Won)	479,367	18.51
Financial and insurance		4,451,273	81.59		2,063,151	79.67
Others		72,695	1.33		47,201	1.82

	(Won)	5,455,522	100.00	(Won)	2,589,719	100.00

Available-for-sale securities:
Government and government-invested public companies	(Won)	4,496,126	30.41	(Won)	3,662,749	24.24
Financial institutions		9,077,981	61.40		10,413,843	68.90
Others		1,210,234	8.19		1,037,306	6.86

	(Won)	14,784,341	100.00	(Won)	15,113,898	100.00

Held-to-maturity securities:
Government and government-invested public companies	(Won)	8,942,512	83.80	(Won)	8,406,232	76.84
Financial institutions		1,659,638	15.55		2,503,154	22.88
Others		69,686	0.65		29,945	0.28

	(Won)	10,671,836	100.00	(Won)	10,939,331	100.00

(8)	The portfolio of securities excluding securities accounted for using the equity method, by security type, as of September 30, 2007 and December 31, 2006 was as follows (Unit: In millions):


	2007			2006
By security type	Amount		Percentage (%)	Amount		Percentage (%)
Trading securities:

Stocks	(Won)	75,514	1.38	(Won)	57,196	2.21
Fixed rate bonds		5,118,708	93.83		2,328,953	89.93
Floating rate bonds		37,560	0.69		100,082	3.86
Beneficiary certificates		223,740	4.10		103,488	4.00

	(Won)	5,455,522	100.00	(Won)	2,589,719	100.00

Available-for-sale securities:

Stocks	(Won)	1,163,745	7.87	(Won)	1,975,847	13.07
Fixed rate bonds		12,303,727	83.22		11,215,054	74.20
Floating rate bonds		568,282	3.85		579,663	3.84
Subordinated bonds		535,266	3.62		690,028	4.57
Convertible bonds		7,444	0.05		24,121	0.16
Beneficiary certificates		152,343	1.03		608,242	4.02
Others		53,534	0.36		20,943	0.14

	(Won)	14,784,341	100.00	(Won)	15,113,898	100.00

Held-to-maturity securities:

Fixed rate bonds	(Won)	10,584,281	99.18	(Won)	10,879,331	99.45
Floating rate bonds		87,555	0.82		60,000	0.55

	(Won)	10,671,836	100.00	(Won)	10,939,331	100.00

(9)	The portfolio of securities excluding securities accounted for using the equity method, by country, as of September 30, 2007 and December 31, 2006 was as follows (Unit: In millions):


	2007			2006
By country type	Amount		Percentage (%)	Amount		Percentage (%)
Trading securities:

Korea	(Won)	5,455,522	100.00	(Won)	2,589,719	100.00

Available-for-sale securities:

Korea	(Won)	14,616,286	98.87	(Won)	15,019,533	99.39
USA		59,877	0.41		27,794	0.18
India		26,951	0.18		9,685	0.06
UK		21,896	0.15		4,605	0.03
Kazakhstan		17,927	0.12		—	—
Russia		16,602	0.11		33,573	0.22
Ireland		8,946	0.06		9,290	0.06
Japan		8,726	0.06		—	—
Bangladesh		3,548	0.02		1,583	0.01
China		1,876	0.01		1,894	0.01
Others		1,706	0.01		5,941	0.04

	(Won)	14,784,341	100.00	(Won)	15,113,898	100.00

Held-to-maturity securities:

Korea	(Won)	10,644,280	99.74	(Won)	10,939,331	100.00
USA		27,556	0.26		—	—

	(Won)	10,671,836	100.00	(Won)	10,939,331	100.00

(10)	Term structure of securities except for stocks and equity investments in available-for-sale and held-to-maturity securities as of September 30, 2007 was as follows (Unit: In millions):


	Due in 1 year or less		Due after 1 year through 5 years		Due after 5 years through 10 years		More than 10 years		Total
Available-for-sale securities:
Fair value	(Won)	4,097,137	(Won)	9,198,884	(Won)	206,165	(Won)	90,780	(Won)	13,592,966

Held-to-maturity securities:
Book value		1,829,394		6,068,405		2,745,688		28,349		10,671,836
Fair value		1,821,633		5,961,526		2,636,051		27,559		10,446,769

Term structure of securities except for stocks and equity investments in available-for-sale and held-to-maturity securities as of December 31, 2006 was as follows (Unit: In millions):


	Due in 1 year or less		Due after 1 year through 5 years		Due after 5 years through 10 years		More than 10 years		Total
Available-for-sale securities:
Fair value	(Won)	5,150,081	(Won)	7,685,231	(Won)	261,419	(Won)	37,480	(Won)	13,134,211

Held-to-maturity securities:
Book value		3,211,790		5,276,939		2,450,602		—		10,939,331
Fair value		3,207,704		5,229,016		2,440,235		—		10,876,955

(11)	Securities accounted for using the equity method as of September 30, 2007 were summarized as follows (Unit: In millions):


	No. of shares	Owner- ship (%)	Acquisition cost		Net asset value		Book value
Domestic stocks:
KB Investment Co., Ltd.	8,951,293	99.99	(Won)	155,384	(Won)	95,839	(Won)	95,839
KB Futures Co., Ltd.	3,999,200	99.98		19,996		28,922		28,922
KB Data System Co., Ltd.	799,960	99.99		8,001		18,542		15,076
KB Real Estate Trust	15,999,930	99.99		76,103		109,336		109,572
KB Asset Management	6,134,040	80.00		39,015		72,481		72,481
KB Credit Information	1,249,040	99.73		14,291		39,049		38,625
KB Life Insurance Co., Ltd.	4,590,000	51.00		23,076		18,183		—
KLB Securities Co., Ltd. (*1)	4,854,713	36.41		10,316		—		—
Jooeun Industrial Co., Ltd. (*1)	1,999,910	99.99		23,994		—		—
ING Life Insurance Korea Co., Ltd.	1,043,000	14.90		16,218		89,310		89,310
Balhae Infrastructure Fund (*2)	5,258,597	12.61		53,029		53,689		53,689
Korea Credit Bureau Co., Ltd. (*3)	180,000	9.00		4,500		2,879		2,879

				443,923		528,230		506,393

Foreign stocks:
Kookmin Bank Singapore Ltd. (*1)	30,000,000	100.00		18,535		—		1,599
Kookmin Finance Asia Ltd. (HK) (*1)	700,000	100.00		7,349		—		224
Kookmin Bank Int’l Ltd. (London)	20,000,000	100.00		36,713		60,282		60,282
Kookmin Bank Hong Kong Ltd.	2,000,000	100.00		48,853		76,511		76,511
Sorak Financial Holdings PTE Ltd.	1,422,216	25.00		75,422		84,698		84,698

				186,872		221,491		223,314

Equity investments:
KB06-1 Venture Investment Partnership	150	50.00		7,500		7,311		7,311

			(Won)	638,295	(Won)	757,032	(Won)	737,018

Securities accounted for using the equity method as of December 31, 2006 were summarized as follows (Unit: In millions):


	No. of shares	Owner- ship (%)	Acquisition cost		Net asset value		Book value
Domestic stocks:
KB Investment Co., Ltd.	8,951,293	99.99	(Won)	155,384	(Won)	94,443	(Won)	94,443
KB Futures Co., Ltd.	3,999,200	99.98		19,996		28,077		28,077
KB Data System Co., Ltd.	799,960	99.99		8,001		17,603		14,609
KB Real Estate Trust	15,999,930	99.99		76,103		99,539		99,544
KB Asset Management	6,134,040	80.00		39,015		65,271		65,271
KB Credit Information	1,249,040	99.73		14,291		35,314		34,735
KB Life Insurance Co., Ltd.	3,060,000	51.00		15,426		16,271		—
KLB Securities Co., Ltd. (*1)	4,854,713	36.41		10,316		—		—
Jooeun Industrial Co., Ltd. (*1)	1,999,910	99.99		23,994		—		—
ING Life Insurance Korea Co., Ltd.	1,400,000	20.00		21,769		123,587		123,587
Balhae Infrastructure Fund (*2)	4,486,305	12.61		45,126		45,589		45,589
Korea Credit Bureau Co., Ltd. (*3)	180,000	9.00		4,500		3,297		3,297

				433,921		528,991		509,152

Foreign stocks:
Kookmin Bank Singapore Ltd. (*1)	30,000,000	100.00		18,173		—		1,614
Kookmin Finance Asia Ltd. (HK) (*1)	700,000	100.00		7,420		—		226
Kookmin Bank Int’l Ltd. (London)	20,000,000	100.00		35,900		56,496		56,496
Kookmin Bank Hong Kong Ltd.	2,000,000	100.00		49,326		72,130		72,130
Sorak Financial Holdings PTE Ltd.	1,422,216	25.00		73,947		87,299		87,299

				184,766		215,925		217,765

Equity investments:
Pacific IT Investment Partnership (*4)	700	50.00		6,252		1,958		1,958
NPC02-4 Kookmin Venture Fund (*4)	70	33.33		7,000		8,204		8,204
KB06-1 Venture Investment Partnership	50	50.00		2,500		2,453		2,453

				15,752		12,615		12,615

			(Won)	634,439	(Won)	757,531	(Won)	739,532

(*1)	KLB Securities Co., Ltd., Jooeun Industrial Co., Ltd., Kookmin Bank Singapore Ltd. and Kookmin Finance Asia, Ltd. are all in the process of liquidation as of September 30, 2007.

(*2)	The Bank may exercise its voting right at the board meeting or at an equally significant decision making body of the investee.

(*3)	The Bank has significant influence in electing the board member who may participate in the decision making process relating to the financial and business policy of the investee.

(*4)	The liquidation of Pacific IT Investment Partnership and NPC02-4 Kookmin Venture Fund has been finalized in 2007.

(12)	The valuation of securities accounted for using the equity method for the nine months ended September 30, 2007 was as follows (Unit: In millions):


	Book value before valuation		Acquisition (disposition)			Dividend			Foreign exchange trading income (loss)			Equity gain (loss) on investment			Other compre- hensive income (loss)			Retained earnings			Book value after valuation
Domestic stocks:
KB Investment Co., Ltd.	(Won)	94,443	(Won)	—		(Won)	(2,238	)	(Won)	—		(Won)	4,020		(Won)	(386	)	(Won)	—		(Won)	95,839
KB Futures Co., Ltd.		28,077		—			(1,200	)		—			2,045			—			—			28,922
KB Data System Co., Ltd. (*1)		14,609		—			(800	)		—			1,267			—			—			15,076
KB Real Estate Trust		99,544		—			(12,000	)		—			22,028			—			—			109,572
KB Asset Management		65,271		—			(6,134	)		—			13,330			14			—			72,481
KB Credit Information (*2)		34,735		—			(187	)		—			4,077			—			—			38,625
KB Life Insurance Co., Ltd. (*1 and 3)		—		7,650			—			—			—			—			(7,650	)		—
KLB Securities Co., Ltd. (*3)		—		—			—			—			—			—			—			—
Jooeun Industrial Co., Ltd. (*3)		—		—			—			—			—			—			—			—
ING Life Insurance Korea Co., Ltd.		123,587		(31,686	)		—			—			10,581			(13,172	)		—			89,310
Balhae Infrastructure Fund		45,589		7,903			(1,603	)		—			1,800			—			—			53,689
Korea Credit Bureau Co., Ltd.		3,297		—			—			—			(147	)		(271	)		—			2,879

		509,152		(16,133	)		(24,162	)		—			59,001			(13,815	)		(7,650	)		506,393

Foreign stocks:
Kookmin Bank Singapore Ltd.		1,614		—			—			(15	)		—			—			—			1,599
Kookmin Finance Asia Ltd. (HK)		226		—			—			(2	)		—			—			—			224
Kookmin Bank Int’l Ltd. (London)		56,496		—			—			1,279			2,431			76			—			60,282
Kookmin Bank Hong Kong Ltd.		72,130		—			—			(691	)		5,456			(384	)		—			76,511
Sorak Financial Holdings PTE Ltd.		87,299		—			(3,251	)		1,741			5,099			(6,190	)		—			84,698

		217,765		—			(3,251	)		2,312			12,986			(6,498	)		—			223,314

Equity investments:
Pacific IT Investment Partnership		1,958		(1,958	)		—			—			—			—			—			—
NPC02-4 Kookmin Venture Fund		8,204		(7,083	)		(3,443	)		—			2,263			59			—			—
KB06-1 Venture Investment Partnership		2,453		5,000			—			—			(142	)		—			—			7,311

		12,615		(4,041	)		(3,443	)		—			2,121			59			—			7,311

	(Won)	739,532	(Won)	(20,174	)	(Won)	(30,856	)	(Won)	2,312		(Won)	74,108		(Won)	(20,254	)	(Won)	(7,650	)	(Won)	737,018

The valuation of securities accounted for using the equity method for the year ended December 31, 2006 was as follows (Unit: In millions):


	Book value before valuation		Acquisition (disposition)			Dividend			Foreign currency translation gain (loss)			Equity gain (loss) on investment			Other compre- hensive income (loss)			Retained earnings			Book value after valuation
Domestic stocks:
KB Investment Co., Ltd.	(Won)	85,462	(Won)	—		(Won)	(2,238	)	(Won)	—		(Won)	10,974		(Won)	245		(Won)	—		(Won)	94,443
KB Futures Co., Ltd.		27,312		—			(1,000	)		—			1,823			(58	)		—			28,077
KB Data System Co., Ltd. (*1)		15,582		—			(2,399	)		—			1,426			—			—			14,609
KB Real Estate Trust		81,068		—			—			—			18,337			139			—			99,544
KB Asset Management		52,485		—			(6,134	)		—			18,909			11			—			65,271
KB Credit Information (*2)		27,837		—			(624	)		—			7,522			—			—			34,735
KB Life Insurance Co., Ltd. (*1 and 3)		—		—			—			—			—			1,582			(1,582	)		—
KLB Securities Co., Ltd. (*3)		—		—			—			—			—			—			—			—
Jooeun Industrial Co., Ltd. (*3)		—		—			—			—			—			—			—			—
ING Life Insurance Korea Co., Ltd.		77,529		—			—			—			31,308			14,750			—			123,587
Balhae Infrastructure Fund		—		45,126			(11	)		—			474			—			—			45,589
Korea Credit Bureau Co., Ltd.		—		4,500			—			—			(1,203	)		—			—			3,297

		367,275		49,626			(12,406	)		—			89,570			16,669			(1,582	)		509,152

Foreign stocks:
Kookmin Bank Singapore Ltd.		1,759		—			—			(145	)		—			—			—			1,614
Kookmin Finance Asia Ltd. (HK)		246		—			—			(20	)		—			—			—			226
Kookmin Bank Int’l Ltd. (London)		50,523		—			—			2,237			4,262			(526	)		—			56,496
Kookmin Bank Hong Kong Ltd.		69,958		—			—			(5,760	)		8,044			(112	)		—			72,130
Sorak Financial Holdings PTE Ltd.		82,401		—			(6,009	)		(438	)		7,065			4,280			—			87,299

		204,887		—			(6,009	)		(4,126	)		19,371			3,642			—			217,765

Equity investments:
KICO No. 2 Venture Investment Partnership		130		(93	)		—			—			(37	)		—			—			—
KICO No. 3 Venture Investment Partnership		147		(117	)		—			—			(30	)		—			—			—
Pacific IT Investment Partnership		4,950		(1,496	)		—			—			(1,496	)		—			—			1,958
NPC02-4 Kookmin Venture Fund		12,128		(3,000	)		(2,129	)		—			1,263			(58	)		—			8,204
KB06-1 Venture Investment Partnership		—		2,500			—			—			(47	)		—			—			2,453

		17,355		(2,206	)		(2,129	)		—			(347	)		(58	)		—			12,615

	(Won)	589,517	(Won)	47,420		(Won)	(20,544	)	(Won)	(4,126	)	(Won)	108,594		(Won)	20,253		(Won)	(1,582	)	(Won)	739,532

(*1)	The significant unrealized income eliminated for the nine months ended September 30, 2007 and for the year ended December 31, 2006 was as follows (Unit: In millions):


	Related accounts	2007		2006
KB Data System Co., Ltd.	Tangible assets (sales)	(Won)	439	(Won)	914
KB Life Insurance Co., Ltd.	Commissions (deferred acquisition cost)		7,945		3,730

		(Won)	8,384	(Won)	4,644

(*2)

The difference between the cost of the investment and the amount of the underlying equity in the net assets of KB Credit Information amounting to (Won)1,128 million, which resulted from the additional purchase of shares in October 2004, is amortized over 5 years using the straight-line method and credited to the gain on valuation of securities accounted for using the equity method. As a result, (Won)169 million and (Won)226 million were credited to current operation for the nine months ended September 30, 2007 and for the year ended December 31, 2006, respectively, and the balance of the difference amounts to (Won)451 million and (Won)620 million as of September 30, 2007 and December 31, 2006, respectively.

(*3)	The equity method is no longer applied to securities of KLB Securities Co., Ltd. and Jooeun Industrial Co., Ltd. due to accumulated deficit, and to securities of KB Life Insurance Co., Ltd. due to unrealized income elimination, which led to a decrease in the book value below zero.

The unrecognized accumulated deficit and change due to the equity method as of September 30, 2007 was as follows (Unit: In millions):


	Deficit		Change due to equity method		Total
KLB Securities Co., Ltd.	(Won)	4,148	(Won)	—	(Won)	4,148
Jooeun Industrial Co., Ltd.		60,257		—		60,257
KB Life Insurance Co., Ltd.		32,163		9,470		41,633

	(Won)	96,568	(Won)	9,470	(Won)	106,038

The unrecognized accumulated deficit and change due to the equity method as of December 31, 2006 was as follows (Unit: In millions):


	Deficit		Change due to equity method		Total
KLB Securities Co., Ltd.	(Won)	4,148	(Won)	—	(Won)	4,148
Jooeun Industrial Co., Ltd.		72,686		—		72,686
KB Life Insurance Co., Ltd.		27,217		3,436		30,653

	(Won)	104,051	(Won)	3,436	(Won)	107,487

(13)	Significant financial data of companies of which stocks were accounted for using the equity method as of and for the nine months ended September 30, 2007 was as follows (Unit: In millions):


	Assets		Liabilities		Sales		Net income (loss)
KB Investment Co., Ltd.	(Won)	97,409	(Won)	1,565	(Won)	10,203	(Won)	4,020
KB Futures Co., Ltd.		90,153		61,225		10,074		2,046
KB Data System Co., Ltd.		31,787		13,244		40,561		1,739
KB Real Estate Trust		243,445		134,109		49,207		21,797
KB Asset Management		104,978		14,377		37,181		16,661


	Assets	Liabilities	Sales	Net income (loss)
KB Credit Information	45,887	6,734	43,990	3,933
KB Life Insurance Co., Ltd.	1,070,665	1,035,013	452,445	579
Jooeun Industrial Co., Ltd.	99,173	159,433	107,325	12,842
ING Life Insurance Korea Co., Ltd.	11,412,524	10,813,125	2,614,520	51,793
Balhae Infrastructure Fund	426,878	947	17,042	14,277
Korea Credit Bureau Co., Ltd.	34,895	2,900	15,558	(1,938	)
Kookmin Bank Int’l Ltd. (London)	469,784	409,502	19,478	2,431
Kookmin Bank Hong Kong Ltd.	414,478	337,967	25,084	5,996
Sorak Financial Holdings PTE Ltd.	5,290,697	4,951,903	449,579	20,933
KB06-1 Venture Investment Partnership	14,747	125	108	(284	)

Reviewed financial statements as of September 30, 2007 were used for the application of the equity method, except for Jooeun Industrial Co., Ltd., Balhae Infrastructure Fund, Korea Credit Bureau Co., Ltd. and KB06-1 Venture Investment Partnership, of which unaudited financial statements as of September 30, 2007 were used for the application of the equity method, and ING Life Insurance Korea Co., Ltd. and Sorak Financial Holdings PTE Ltd. of which unaudited financial statements as of August 31, 2007 were used for the application of the equity method. The significant events from the closing dates of the investees to that of the Bank were properly reflected in applying the equity method. There was no material exception as a result of analytical review, such as analysis of major accounts to assess reliability of those financial statements.

Significant financial data of companies of which stocks were accounted for using the equity method as of and for the year ended December 31, 2006 was as follows (Unit: In millions):


	Assets		Liabilities		Sales		Net income (loss)
KB Investment Co., Ltd.	(Won)	96,296	(Won)	1,848	(Won)	20,030	(Won)	10,974
KB Futures Co., Ltd.		67,145		39,062		11,487		1,824
KB Data System Co., Ltd.		33,471		15,868		67,588		2,277
KB Real Estate Trust		206,392		106,853		66,122		18,424
KB Asset Management		92,220		10,631		44,826		23,636
KB Credit Information		43,938		8,529		71,532		7,329
KB Life Insurance Co., Ltd.		700,438		668,535		409,302		4,187
Jooeun Industrial Co., Ltd.		110,193		182,882		64,404		2,253
ING Life Insurance Korea Co., Ltd.		9,635,249		9,017,312		3,149,367		156,539
Balhae Infrastructure Fund		362,440		4,410		6,404		3,765
Korea Credit Bureau Co., Ltd.		42,826		6,193		13,963		(5,645	)
Kookmin Bank Int’l Ltd. (London)		315,938		259,442		20,634		3,736
Kookmin Bank Hong Kong Ltd.		395,935		323,805		27,568		7,963
Sorak Financial Holdings PTE Ltd.		5,197,633		4,848,437		680,311		33,189
Pacific IT Investment Partnership		1,986		28		—		(1,496	)
NPC02-4 Kookmin Venture Fund		24,852		240		5,459		3,790
KB06-1 Venture Investment Partnership		5,067		162		67		(95	)

Audited or reviewed financial statements as of December 31, 2006 were used for the application of the equity method, except for Pacific IT Investment Partnership, Balhae Infrastructure Fund, Korea Credit Bureau Co., Ltd. and KB06-1 Venture Investment Partnership of which unaudited financial statements as of December 31, 2006 were used for the application of the equity method, and ING Life Insurance Korea Co., Ltd. and Sorak Financial Holdings PTE Ltd., of which unaudited financial statements as of November 30, 2006 were used for the application of the equity method. The significant events from the closing dates of the investees to that of the Bank were properly reflected in applying the equity method. There was no material exception as a result of analytical review, such as analysis of major accounts to assess reliability of those financial statements.

(14)	Changes in accumulated other comprehensive income for the nine months ended September 30, 2007 were as follows (Unit: In millions):


	Beginning		Increase (Decrease)			Disposal (Realization)			Ending
Gain (loss) on valuation of available-for-sale securities:
Equity securities	(Won)	846,123	(Won)	162,389		(Won)	(540,861	)	(Won)	467,651
Debt securities in Won		22,669		(57,394	)		9,460			(25,265	)
Debt securities in foreign currencies		4,010		(3,355	)		(747	)		(92	)
Beneficiary certificates		5,050		537			(4,807	)		780
Others		5,704		1,573			—			7,277

		883,556		103,750			(536,955	)		450,351

Gain on valuation of held-to-maturity securities:
Debt securities in Won		98		—			(53	)		45

Gain on valuation of securities accounted for using the equity method		15,888		(13,794	)		(1,161	)		933

	(Won)	899,542	(Won)	89,956		(Won)	(538,169	)	(Won)	451,329

Changes in accumulated other comprehensive income for the year ended December 31, 2006 were as follows (Unit: In millions):


	Beginning		Increase (Decrease)			Disposal (Realization)			Ending
Gain (loss) on valuation of available-for-sale securities:
Equity securities	(Won)	454,250	(Won)	470,552		(Won)	(78,679	)	(Won)	846,123
Debt securities in Won		32,614		(3,203	)		(6,742	)		22,669
Debt securities in foreign currencies		5,867		1,671			(3,528	)		4,010
Beneficiary certificates		16,858		4,894			(16,702	)		5,050
Others		1,779		3,925			—			5,704

		511,368		477,839			(105,651	)		883,556

Gain on valuation of held-to-maturity securities:
Debt securities in Won		426		—			(328	)		98

Gain on valuation of securities accounted for using the equity method		948		15,522			(582	)		15,888

	(Won)	512,742	(Won)	(493,361	)	(Won)	(106,561	)	(Won)	899,542

(15)	Securities provided as collateral as of September 30, 2007 were as follows (Unit: In millions):


Provided to	Book value		Collateral amount		Provided for
Korea Securities Depository & others	(Won)	7,047,518	(Won)	7,100,000	Bonds sold under repurchase agreements
BOK		487,291		490,000	Borrowings from BOK
BOK		319,041		332,200	Overdrafts and settlement risk
Samsung Futures & others		474,146		488,000	Derivative settlement
Others		12		1,628	Other

	(Won)	8,328,008	(Won)	8,411,828

Securities provided as collateral as of December 31, 2006 were as follows (Unit: In millions):


Provided to	Book value		Collateral amount		Provided for
Korea Securities Depository & others	(Won)	7,070,657	(Won)	7,100,000	Bonds sold under repurchase agreements
BOK		725,902		725,700	Borrowings from BOK
BOK		330,294		330,600	Overdrafts and settlement risk
Samsung Futures & others		294,760		307,500	Derivative settlement
Others		402		1,628	Other

	(Won)	8,422,015	(Won)	8,465,428

(16)	Securities lent as of September 30, 2007 and December 31, 2006 were as follows (Unit: In millions):


	2007		2006		Provided to
Government and public bonds	(Won)	217,163	(Won)	119,614	Korea Securities Depository and others
Finance bonds		34,499		23,671	Korea Securities Depository

	(Won)	251,662	(Won)	143,285

5. LOANS:

(1)	Loans as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007			2006
Call loans	(Won)	907,926		(Won)	1,247,109
Domestic import usance bill		1,606,805			1,256,747
Credit card receivables		9,276,031			8,667,740
Bills bought in foreign currencies		1,365,099			1,270,314
Bills bought in Won		11,840			16,587
Bonds purchased under repurchase agreements		—			500,000
Loans		145,433,474			131,579,881
Factoring receivables		20,649			30,948
Advances for customers		29,412			19,209
Private placed bonds		7,515,263			7,499,208
Loans for debt-equity swap		1,968			1,968

		166,168,467			152,089,711
Allowance for possible loan losses		(2,284,368	)		(2,360,867	)
Deferred loan origination fees and costs		172,207			138,338

	(Won)	164,056,306		(Won)	149,867,182

(2)	Loans in Won and loans in foreign currencies as of September 30, 2007 and December 31, 2006 were as follows (Unit: In millions):


	2007		2006
Loans in Won:
Commercial
Working capital loans
General purpose loans	(Won)	33,510,758	(Won)	27,161,083
Notes discounted		1,185,100		697,235
Overdraft accounts		427,367		286,724
Trading notes		838,356		612,305
Others		5,318,006		4,297,074

		41,279,587		33,054,421

Facilities loans
General facilities loans	(Won)	9,352,920	(Won)	5,107,519
Others		1,163,802		995,730

		10,516,722		6,103,249

		51,796,309		39,157,670

Households
General purpose loans		46,304,413		45,946,145
Housing loans		39,797,747		39,007,176
Remunerations on mutual installment savings		115,196		147,672
Others		416,565		416,103

		86,633,921		85,517,096

Public sector
Public operation loans		1,115,574		894,178
Public facilities loans		14,287		3,687

		1,129,861		897,865

Other
Property formation loans		752		1,013
Others		795		1,173

		1,547		2,186

		139,561,638		125,574,817

Loans in foreign currencies:
Domestic funding loans		4,690,524		4,441,975
Overseas funding loans		547,910		429,836
Inter-bank loans		633,402		1,133,253

		5,871,836		6,005,064

	(Won)	145,433,474	(Won)	131,579,881

(3)	Loans in Won and loans in foreign currencies, classified by borrower type, as of September 30, 2007 were as follows (Unit: In millions):


By borrower type	Loans in Won		Loans in foreign currencies		Total		Percentage (%)
Large corporations	(Won)	5,060,325	(Won)	3,966,067	(Won)	9,026,392	6.21
Small and medium corporations		46,735,984		1,738,863		48,474,847	33.33
Households		86,635,468		51,572		86,687,040	59.60
Others		1,129,861		115,334		1,245,195	0.86

	(Won)	139,561,638	(Won)	5,871,836	(Won)	145,433,474	100.00

Loans in Won and loans in foreign currencies, classified by borrower type, as of December 31, 2006 were as follows (Unit: In millions):


By borrower type	Loans in Won		Loans in foreign currencies		Total		Percentage (%)
Large corporations	(Won)	2,783,921	(Won)	3,795,539	(Won)	6,579,460	5.00
Small and medium corporations		36,373,749		758,998		37,132,747	28.22
Households		85,519,282		46,069		85,565,351	65.03
Others		897,865		1,404,458		2,302,323	1.75

	(Won)	125,574,817	(Won)	6,005,064	(Won)	131,579,881	100.00

(4)	Loans classified by borrower’s country or region as of September 30, 2007 were as follows (Unit: In millions):


By country	Loans in Won		Loans in foreign currencies		Others		Total		Percentage (%)
Korea	(Won)	139,561,638	(Won)	5,512,903	(Won)	20,317,155	(Won)	165,391,696	99.53
Southeast Asia		—		27,872		5		27,877	0.02
China		—		10,709		—		10,709	0.01
Japan		—		250,215		65		250,280	0.15
Central and South America		—		11,143		1		11,144	0.01
USA		—		62		20,892		20,954	0.01
Others		—		58,932		396,875		455,807	0.27

	(Won)	139,561,638	(Won)	5,871,836	(Won)	20,734,993	(Won)	166,168,467	100.00

Loans classified by borrower’s country or region as of December 31, 2006 were as follows (Unit: In millions):


By country	Loans in Won		Loans in foreign currencies		Others		Total		Percentage (%)
Korea	(Won)	125,574,817	(Won)	5,749,511	(Won)	20,430,801	(Won)	151,755,129	99.79
Southeast Asia		—		25,525		1		25,526	0.02
China		—		7,019		—		7,019	0.00
Japan		—		172,447		78		172,525	0.11
Central and South America		—		4,142		1		4,143	0.00
USA		—		84		2,438		2,522	0.00
Others		—		46,336		76,511		122,847	0.08

	(Won)	125,574,817	(Won)	6,005,064	(Won)	20,509,830	(Won)	152,089,711	100.00

(5)	Loans classified by industry as of September 30, 2007 were as follows (Unit: In millions):


By industry	Loans in Won		Loans in foreign currencies		Others		Total		Percentage (%)
Corporations:
Finance and insurance	(Won)	1,012,218	(Won)	739,314	(Won)	2,402,402	(Won)	4,153,934	2.50
Manufacturing		14,331,066		2,171,444		4,693,527		21,196,037	12.76
Services		21,667,762		1,779,352		1,698,534		25,145,648	15.13
Others		15,679,249		1,122,482		3,645,212		20,446,943	12.30
Households		86,635,468		51,572		7,943,628		94,630,668	56.95
Public sector		235,875		7,672		351,690		595,237	0.36

	(Won)	139,561,638	(Won)	5,871,836	(Won)	20,734,993	(Won)	166,168,467	100.00

Loans classified by industry as of December 31, 2006 were as follows (Unit: In millions):


By industry	Loans in Won		Loans in foreign currencies		Others		Total		Percentage (%)
Corporations:
Finance and insurance	(Won)	622,860	(Won)	1,181,085	(Won)	2,727,468	(Won)	4,531,413	2.98
Manufacturing		11,148,580		1,624,177		4,371,916		17,144,673	11.27
Services		16,337,444		920,649		1,799,334		19,057,427	12.53
Others		11,779,703		2,226,334		3,728,378		17,734,415	11.66
Households		85,519,282		46,069		7,504,999		93,070,350	61.20
Public sector		166,948		6,750		377,735		551,433	0.36

	(Won)	125,574,817	(Won)	6,005,064	(Won)	20,509,830	(Won)	152,089,711	100.00

(6)	Loans to financial institutions as of September 30, 2007 were as follows (Unit: In millions):


	Bank		Other financial institutions		Total
Loans in Won	(Won)	—	(Won)	1,012,218	(Won)	1,012,218
Loans in foreign currencies		633,402		105,912		739,314
Others		962,512		1,439,890		2,402,402

	(Won)	1,595,914	(Won)	2,558,020	(Won)	4,153,934

Loans to financial institutions as of December 31, 2006 were as follows (Unit: In millions):


	Bank		Other financial institutions		Total
Loans in Won	(Won)	—	(Won)	622,860	(Won)	622,860
Loans in foreign currencies		1,133,253		47,832		1,181,085
Others		1,780,151		947,317		2,727,468

	(Won)	2,913,404	(Won)	1,618,009	(Won)	4,531,413

(7)	The classification of asset quality for loans as of September 30, 2007 is summarized as follows (Unit: In millions):


	Normal		Precautionary		Substandard		Doubtful		Estimated loss		Total
Call loans	(Won)	907,926	(Won)	—	(Won)	—	(Won)	—	(Won)	—	(Won)	907,926
Domestic import usance bill		1,583,620		14,296		8,668		115		106		1,606,805
Credit card receivables		9,022,643		171,164		1,179		49,193		31,852		9,276,031
Bills bought (*)		1,370,183		4,372		452		527		1,405		1,376,939
Loans		142,872,016		1,408,847		563,290		411,682		177,639		145,433,474
Factoring receivables		20,649		—		—		—		—		20,649
Advances for customers		867		400		24,490		1,313		2,342		29,412
Privately placed bonds		7,504,347		6,316		2,725		—		1,875		7,515,263
Loans for debt-equity swap		—		—		—		1,968		—		1,968

	(Won)	163,282,251	(Won)	1,605,395	(Won)	600,804	(Won)	464,798	(Won)	215,219	(Won)	166,168,467

The classification of asset quality for loans as of December 31, 2006 is summarized as follows (Unit: In millions):


	Normal		Precautionary		Substandard		Doubtful		Estimated loss		Total
Call loans	(Won)	1,247,109	(Won)	—	(Won)	—	(Won)	—	(Won)	—	(Won)	1,247,109
Domestic import usance bill		1,210,010		16,025		26,497		3,126		1,089		1,256,747
Credit card receivables		8,341,239		215,089		648		71,227		39,537		8,667,740
Bills bought (*)		1,283,897		2,338		283		297		86		1,286,901
Bond purchased under repurchase agreements		500,000		—		—		—		—		500,000
Loans		128,711,695		1,484,362		667,689		474,730		241,405		131,579,881
Factoring receivables		30,948		—		—		—		—		30,948
Advances for customers		133		508		8,753		1,833		7,982		19,209
Privately placed bonds		7,498,067		—		650		—		491		7,499,208
Loans for debt-equity swap		—		—		—		1,968		—		1,968

	(Won)	148,823,098	(Won)	1,718,322	(Won)	704,520	(Won)	553,181	(Won)	290,590	(Won)	152,089,711

(*)	Bill bought in Won included

(8)	The term structure of loans as of September 30, 2007 was as follows (Unit: In millions):


	Loans in Won		Loans in foreign currencies		Others		Total
Due in 3 months or less	(Won)	18,582,571	(Won)	1,123,585	(Won)	10,301,312	(Won)	30,007,468
Due after 3 months through 6 months		13,096,726		534,353		1,970,045		15,601,124
Due after 6 months through 1 year		31,037,655		1,137,331		1,774,418		33,949,404
Due after 1 year through 2 years		12,617,375		1,120,762		4,590,411		18,328,548
Due after 2 years through 3 years		16,041,346		622,007		928,808		17,592,161
Due after 3 years through 4 years		3,064,075		640,022		613,776		4,317,873
Due after 4 years through 5 years		2,413,594		218,997		202,947		2,835,538
More than 5 years		42,708,296		474,779		353,276		43,536,351

	(Won)	139,561,638	(Won)	5,871,836	(Won)	20,734,993	(Won)	166,168,467

The term structure of loans as of December 31, 2006 was as follows (Unit: In millions):


	Loans in Won		Loans in foreign currencies		Others		Total
Due in 3 months or less	(Won)	15,122,967	(Won)	1,471,927	(Won)	10,008,593	(Won)	26,603,487
Due after 3 months through 6 months		14,837,648		997,738		1,537,897		17,373,283
Due after 6 months through 1 year		30,049,634		788,702		2,532,032		33,370,368
Due after 1 year through 2 years		10,138,015		346,373		2,654,949		13,139,337
Due after 2 years through 3 years		11,764,066		1,172,993		2,498,390		15,435,449
Due after 3 years through 4 years		4,847,371		200,535		226,555		5,274,461
Due after 4 years through 5 years		2,399,378		647,661		706,345		3,753,384
More than 5 years		36,415,738		379,135		345,069		37,139,942

	(Won)	125,574,817	(Won)	6,005,064	(Won)	20,509,830	(Won)	152,089,711

(9)	Credit card receivables as collateral

The Bank offers the credit card receivables amounting to (Won)392,251 million and (Won)253,591 million (before deducting the allowance) as collateral for the transaction of credit card receivables to SPC as of September 30, 2007 and December 31, 2006, respectively.

(10)	The changes in deferred loan origination fees and costs for the nine months ended September 30, 2007 were as follows (Unit: In millions):

Beginning

Increase

Decrease

Ending

Deferred loan origination fees and costs

(Won)

138,338

(Won)

65,955

(Won)

32,086

(Won)

172,207

6. RESTRUCTURED LOANS:

(1)	The loans that were restructured by means of principal reduction, debt-equity swap, interest reduction because of workouts for the nine months ended September 30, 2007 were as follows (Unit: In millions):


	Amount before restructuring		Principal exemption		Conversion to equity securities		Interest reduction		Extension of maturity
Court receivership	(Won)	6,600	(Won)	—	(Won)	—	(Won)	—	(Won)	6,600
Workout plan		88,740		—		12,691		2,784		73,265
Debt restructuring (*)		120		—		—		—		120

	(Won)	95,460	(Won)	—	(Won)	12,691	(Won)	2,784	(Won)	79,985


The loans that were restructured by means of principal reduction, debt-equity swap, interest reduction because of workouts for the year ended December 31, 2006 were as follows (Unit: In millions):

	Amount before restructuring		Principal exemption		Conversion to equity securities		Interest reduction		Extension of maturity
Composition	(Won)	6,178	(Won)	—	(Won)	—	(Won)	—	(Won)	6,178
Workout plan		236,287		301		4,083		25,374		206,529
Debt restructuring (*)		894		—		—		—		894

	(Won)	243,359	(Won)	301	(Won)	4,083	(Won)	25,374	(Won)	213,601

(*)	In accordance with the Bankruptcy and Debt Restructuring Act

(2)	Changes in the present value discounts relating to the outstanding restructured loans for the nine months ended September 30, 2007 were as follows (Unit: In millions):


			Present value discounts
	Amount		Beginning balance		Addition		Deduction		Ending balance
Court receivership	(Won)	9,336	(Won)	1,034	(Won)	—	(Won)	196	(Won)	838
Composition		11,087		1,275		558		1,027		806
Workout plan		68,884		6,867		6,444		10,910		2,401
Others		21,930		2,837		3		1,175		1,665

	(Won)	111,237	(Won)	12,013	(Won)	7,005	(Won)	13,308	(Won)	5,710


Changes in the present value discounts relating to the outstanding restructured loans for the year ended December 31, 2006 were as follows (Unit: In millions):

			Present value discounts
	Amount		Beginning balance		Addition		Deduction		Ending balance
Court receivership	(Won)	9,336	(Won)	2,035	(Won)	1,034	(Won)	2,035	(Won)	1,034
Composition		13,143		2,238		1,689		2,652		1,275
Workout plan		111,064		11,371		11,206		15,710		6,867
Others		32,470		4,371		—		1,534		2,837

	(Won)	166,013	(Won)	20,015	(Won)	13,929	(Won)	21,931	(Won)	12,013

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

7. ALLOWANCE FOR POSSIBLE LOAN LOSSES:

(1)	The allowance for possible loan losses as of September 30, 2007 is summarized as follows (Unit: In millions):


	Normal		Precautionary		Substandard		Doubtful		Estimated loss		Total
Domestic import usance bill	(Won)	11,085	(Won)	1,362	(Won)	3,982	(Won)	68	(Won)	106	(Won)	16,603
Credit card receivables		136,867		25,674		236		29,515		31,852		224,144
Bills bought (*)		9,591		335		90		336		1,405		11,757
Loans		1,252,118		148,639		114,677		266,266		177,639		1,959,339
Factoring receivables		1,713		—		—		—		—		1,713
Advances for customers		6		28		10,276		696		2,342		13,348
Privately placed bonds		52,531		545		545		—		1,875		55,496
Loans for debt-equity swap		—		—		—		1,968		—		1,968

	(Won)	1,463,911	(Won)	176,583	(Won)	129,806	(Won)	298,849	(Won)	215,219	(Won)	2,284,368

The allowance for possible loan losses as of December 31, 2006 is summarized as follows (Unit: In millions):


	Normal		Precautionary		Substandard		Doubtful		Estimated loss		Total
Domestic import usance bill	(Won)	8,470	(Won)	1,653	(Won)	12,677	(Won)	2,977	(Won)	1,089	(Won)	26,866
Credit card receivables		129,619		32,263		130		42,736		39,537		244,285
Bills bought (*)		8,987		259		57		182		86		9,571
Loans		1,146,535		169,033		143,955		307,982		241,405		2,008,910
Factoring receivables		2,910		—		—		—		—		2,910
Advances for customers		1		36		4,096		1,124		7,982		13,239
Privately placed bonds		52,486		—		161		—		491		53,138
Loans for debt-equity swap		—		—		—		1,948		—		1,948

	(Won)	1,349,008	(Won)	203,244	(Won)	161,076	(Won)	356,949	(Won)	290,590	(Won)	2,360,867

(*)	Bill bought in Won included

(2)	The changes in allowance for possible loan losses for the nine months ended September 30, 2007 and the year ended December 31, 2006 were as follows (Unit: In millions):


	2007			2006
Beginning balance (*1)	(Won)	2,463,079		(Won)	2,500,777
Provision for possible loan losses		298,854			1,009,498
Reclassification from other allowances (*2)		(174	)		304,954
Collection of previously written-off loans		373,329			474,278
Repurchase of NPLs sold		802			5,897
Sales of loans		(47,869	)		(115,222	)
Loans written-off		(663,784	)		(1,693,468	)
Exemption of loans		(3,459	)		(4,582	)
Debt-equity swap		(11,037	)		—
Changes in exchange rates and others		(4,650	)		(19,053	)

Ending balance (*1)	(Won)	2,405,091		(Won)	2,463,079

(*1)	Allowance for possible loan losses includes present value discounts amounting to (Won)5,710 million and (Won)12,013 million as of September 30, 2007 and December 31, 2006, respectively, and allowances for other assets amounting to (Won)120,723 million and (Won)102,212 million, respectively.

(*2)

Other allowances for credit lines to Kookmin Card 16^th Securitization Specialty Co., Ltd. and FNSTAR 3^rd Securitization Special Co., Ltd. amounting to (Won)159,888 million and (Won)145,066 million, respectively, were transferred to allowances for possible loan losses for the year ended December 31, 2006.

(3)	The allowance for possible losses on other assets as of September 30, 2007 and December 31, 2006 is summarized as follows (Unit: In millions):


	2007		2006
Suspense receivable	(Won)	8,082	(Won)	7,425
Uncollected guarantee deposits for rent		1,902		4,847
Settlement costs for financial accident		95,501		87,122
Derivative instruments		2,780		2,597
Others		12,458		221

	(Won)	120,723	(Won)	102,212

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


	Loans		Allowance for possible loan losses		Percentage (%)
September 30, 2007	(Won)	166,168,467	(Won)	2,284,368	1.37
December 31, 2006		152,089,711		2,360,867	1.55
December 31, 2005		138,139,657		2,453,275	1.78
December 31, 2004		138,839,212		3,118,775	2.25

8. TANGIBLE ASSETS:

(1)	Tangible assets as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007			2006
Tangible assets	(Won)	3,996,827		(Won)	3,855,268
Less: accumulated depreciation		(1,751,978	)		(1,702,001	)
accumulated impairment loss		(13,741	)		(15,535	)

	(Won)	2,231,108		(Won)	2,137,732

(2)	Tangible assets as of September 30, 2007 consisted of (Unit: In millions):


	Acquisition cost		Accumulated depreciation		Accumulated impairment losses		Book value
Land	(Won)	992,498	(Won)	—	(Won)	5,597	(Won)	986,901
Buildings		1,036,359		198,339		8,144		829,876
Leasehold improvements		267,345		203,365		—		63,980
Equipment and vehicles		1,693,709		1,350,274		—		343,435
Construction in progress		6,916		—		—		6,916

	(Won)	3,996,827	(Won)	1,751,978	(Won)	13,741	(Won)	2,231,108

Tangible assets as of December 31, 2006 consisted of (Unit: In millions):


	Acquisition cost		Accumulated depreciation		Accumulated impairment losses		Book value
Land	(Won)	984,270	(Won)	—	(Won)	7,115	(Won)	977,155
Buildings		986,420		181,228		8,420		796,772
Leasehold improvements		233,156		177,676		—		55,480
Equipment and vehicles		1,648,763		1,343,097		—		305,666
Construction in progress		2,659		—		—		2,659

	(Won)	3,855,268	(Won)	1,702,001	(Won)	15,535	(Won)	2,137,732

(3)	The changes in book value of tangible assets for the nine months ended September 30, 2007 were as follows (Unit: In millions):


	Beginning		Acquisition		Replacement			Disposal		Depreciation		Impairment			Change in foreign currencies		Ending
Land	(Won)	977,155	(Won)	15,421	(Won)	1,663		(Won)	7,345	(Won)	—	(Won)	—		(Won)	7	(Won)	986,901
Buildings		796,772		10,701		42,026			1,735		17,549		(358	)		19		829,876
Leasehold improvements		55,480		230		39,204			273		30,667		—			6		63,980
Equipment and vehicles		305,666		207,188		—			1,014		168,437		—			32		343,435
Construction in progress		2,659		87,150		(82,893	)		—		—		—			—		6,916

	(Won)	2,137,732	(Won)	320,690	(Won)	—		(Won)	10,367	(Won)	216,653	(Won)	(358	)	(Won)	64	(Won)	2,231,108

The changes in book value of tangible assets for the year ended December 31, 2006 were as follows (Unit: In millions):


	Beginning		Acquisition		Replacement			Disposal		Depreciation		Impairment			Change in foreign currencies			Ending
Land	(Won)	979,413	(Won)	3,349	(Won)	2,873		(Won)	8,151	(Won)	—	(Won)	(290	)	(Won)	(39	)	(Won)	977,155
Buildings		774,519		5,745		49,422			6,289		22,059		(4,449	)		(117	)		796,772
Leasehold improvements		44,363		113		45,504			142		34,337		—			(21	)		55,480
Equipment and vehicles		239,795		254,835		—			22,915		165,986		—			(63	)		305,666
Construction in progress		155		100,303		(97,799	)		—		—		—			—			2,659

	(Won)	2,038,245	(Won)	364,345	(Won)	—		(Won)	37,497	(Won)	222,382	(Won)	(4,739	)	(Won)	(240	)	(Won)	2,137,732

(4)	The published value of the land was (Won)1,406,110 million and (Won) 1,307,078 million as of September 30, 2007 and December 31, 2006, respectively, based on the Laws on Disclosure of Land Price and Valuation of Land.

(5)	Tangible assets, which have been insured as of September 30, 2007 and December 31, 2006, were as follows (Unit: In millions):


Type of insurance	Asset insured	2007		2006		Insurance company
Property composite	Buildings	(Won)	894,965	(Won)	829,507	Samsung Fire & Marine
	Leasehold improvements		141,684		120,043	Insurance Co., Ltd. &
	Equipment and vehicles		308,168		196,152	others

		(Won)	1,344,817	(Won)	1,145,702

9. OTHER ASSETS:

(1)	Other assets as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007			2006
Guarantee deposits paid	(Won)	1,273,916		(Won)	1,166,454
Accounts receivable		3,506,590			2,145,266
Accrued income		1,349,004			1,166,963
Prepaid expenses		124,277			79,594
Deferred income tax assets (Note 24)		194,275			23,886
Derivatives assets (Note 19)		1,246,144			1,260,748
Domestic exchange settlement debits		270,858			962,250
Intangible assets		320,222			371,312
Non-business use assets		—			499
Less: valuation allowance		—			(169	)
Sundry assets		187,069			176,190
Less: Allowances for other assets losses		(120,723	)		(102,212	)

	(Won)	8,351,632		(Won)	7,250,781

(2)	Intangible assets as of September 30, 2007 consisted of (Unit: In millions):


	Acquisition cost		Accumulated amortization		Book value
Goodwill	(Won)	705,108	(Won)	463,543	(Won)	241,565
Others		149,645		70,988		78,657

	(Won)	854,753	(Won)	534,531	(Won)	320,222


Intangible assets as of December 31, 2006 consisted of (Unit: In millions):

	Acquisition cost		Accumulated amortization		Book value
Goodwill	(Won)	705,108	(Won)	404,784	(Won)	300,324
Others		125,502		54,514		70,988

	(Won)	830,610	(Won)	459,298	(Won)	371,312

(3)	The changes in intangible assets for the nine months ended September 30, 2007 were as follows (Unit: In millions):


	Beginning		Increase		Amortization		Ending
Goodwill	(Won)	300,324	(Won)	—	(Won)	58,759	(Won)	241,565
Others		70,988		35,295		27,626		78,657

	(Won)	371,312	(Won)	35,295	(Won)	86,385	(Won)	320,222


The changes in intangible assets for the year ended December 31, 2006 were as follows (Unit: In millions):

	Beginning		Increase		Amortization		Ending
Goodwill	(Won)	378,669	(Won)	—	(Won)	78,345	(Won)	300,324
Others		19,435		75,199		23,646		70,988

	(Won)	398,104	(Won)	75,199	(Won)	101,991	(Won)	371,312

(4)	Non-business use properties as of December 31, 2006 consisted of (Unit: In millions):


	Acquisition cost		Valuation allowance		Book value
Non-business use land	(Won)	18	(Won)	12	(Won)	6
Non-business use building		481		157		324

	(Won)	499	(Won)	169	(Won)	330

(5)	Sundry assets as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007		2006
Receivables on cash sent to other banks	(Won)	—	(Won)	410
Supplies		25,076		18,608
Deposit money to court (*)		14,746		14,883
Unsettled foreign currency		17,679		27,303
Suspense receivable		128,316		114,684
Others		1,252		302

	(Won)	187,069	(Won)	176,190

(*)	Securities are included in deposit money to court of which book value, face value and fair value are (Won)10,220 million, (Won)10,587 million and (Won)12,695 million, respectively.

10. DEPOSITS:

(1)	Deposits as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007		2006
Demand deposits	(Won)	46,564,153	(Won)	50,113,689
Time deposits		69,360,446		70,326,526
Negotiable certificates of deposits		17,538,589		9,579,701

	(Won)	133,463,188	(Won)	130,019,916

(2)	Details of deposits as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007		2006
Demand deposits in Won:
Checking deposits	(Won)	132,347	(Won)	231,953
Household checking deposits		383,170		477,770
Temporary deposits		3,296,661		4,066,769
Passbook deposits		14,824,978		15,176,852
Public fund deposits		362,960		199,948
National Treasury deposits		14,084		2,641
General savings deposits		18,137,849		20,826,726
Corporate savings deposits		8,410,527		8,302,353
Nonresident’s deposit in Won		61,988		45,343

		45,624,564		49,330,355

Demand deposits in foreign currencies:
Checking deposits		48,040		43,875
Passbook deposits		885,653		736,034
Temporary deposits		1,400		2,378
Other		4,496		1,047

		939,589		783,334

	(Won)	46,564,153	(Won)	50,113,689


	2007			2006
Time deposits in Won
Time deposits	(Won)	57,110,122		(Won)	57,138,595
Installment savings deposits		826,325			1,097,474
Property formation savings		495			541
Workers’ savings for housing		2			2
Time and savings deposits of non-residents in Won		194,214			171,636
Long-term savings deposits for workers		3,557			4,334
Long-term housing savings deposits		3,423,567			3,057,236
Long-term savings for households		2,455			3,711
Workers’ preferential savings deposits		294,516			530,867
Mutual installment deposits		3,329,720			3,833,573
Mutual installment for housing		3,195,318			3,842,727

		68,380,291			69,680,696
Loss on valuation of fair value hedged item (current period portion)		(1,908	)		3,740
Loss (gain) on valuation of fair value hedged item (prior year portion)		1,607			(2,133	)

		68,379,990			69,682,303

Time deposits in foreign currencies:
Time deposits		979,795			643,404
Installment savings deposits		518			620
Others		143			199

		980,456			644,223

	(Won)	69,360,446		(Won)	70,326,526

Negotiable certificates of deposits	(Won)	17,538,589		(Won)	9,579,701

(3)	Deposits with financial institutions as of September 30, 2007 and December 31, 2006 were as follows (Unit: In millions):


	Financial institutions	2007		2006
Demand deposits & time deposits	Banks	(Won)	2,018,144	(Won)	630,490
	Others		4,164,507		3,068,235

			6,182,651		3,698,725

Negotiable certificates of deposits	Banks		104,655		3,935
	Others		5,902,662		6,304,672

			6,007,317		6,308,607

		(Won)	12,189,968	(Won)	10,007,332

(4)	Term structure of deposits as of September 30, 2007 was as follows (Unit: In millions):


	Due in 3 months or less		Due after 3 months through 6 months		Due after 6 months through 1 year		Due after 1 year through 3 years		More than 3 years		Total
Demand deposits	(Won)	46,564,153	(Won)	—	(Won)	—	(Won)	—	(Won)	—	(Won)	46,564,153
Time deposits		26,818,638		11,174,095		22,549,924		5,294,499		3,523,290		69,360,446
Negotiable certificate of deposits		9,327,360		3,707,501		4,180,207		323,521		—		17,538,589

	(Won)	82,710,151	(Won)	14,881,596	(Won)	26,730,131	(Won)	5,618,020	(Won)	3,523,290	(Won)	133,463,188

Term structure of deposits as of December 31, 2006 was as follows (Unit: In millions):


	Due in 3 months or less		Due after 3 months through 6 months		Due after 6 months through 1 year		Due after 1 year through 3 years		More than 3 years		Total
Demand deposits	(Won)	50,113,689	(Won)	—	(Won)	—	(Won)	—	(Won)	—	(Won)	50,113,689
Time deposits		23,902,305		9,177,733		27,069,659		6,958,151		3,218,678		70,326,526
Negotiable certificate of deposits		5,996,076		2,526,968		1,056,503		154		—		9,579,701

	(Won)	80,012,070	(Won)	11,704,701	(Won)	28,126,162	(Won)	6,958,305	(Won)	3,218,678	(Won)	130,019,916

11. BORROWINGS:

(1)	Borrowings as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007			2006
Call money	(Won)	1,149,868		(Won)	165,086
Bills sold		305,582			462,479
Bonds sold under repurchase agreements		6,900,261			7,053,755
Borrowings		7,283,665			6,378,858
Debentures		33,138,434			25,140,672
Less: Discount on debentures		(76,255	)		(158,166	)

	(Won)	48,701,555		(Won)	39,042,684

(2)	Call money as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


Account	Lender	Annual interest rates (%)	2007		2006
Call money in Won	Shinhan BNP Paribas Investment Trust Management	4.65 ~ 4.94	(Won)	554,500	(Won)	117,700
Call money in foreign currencies	Bank Mellat Seoul Branch and others	0.60 ~ 8.65		595,368		47,386

			(Won)	1,149,868	(Won)	165,086

(3)	Bills sold and bonds sold under repurchase agreements as of September 30, 2007 and December 31, 2006 consisted of the following (Unit: In millions):


Account	Lender	Annual interest rates (%)	2007		2006
Bills sold	Teller’s Sales	3.09 ~ 5.76	(Won)	305,582	(Won)	462,479
Bonds sold under repurchase agreements	Person, group & corporations	3.90 ~ 5.92		6,900,261		7,053,755

			(Won)	7,205,843	(Won)	7,516,234

(4)	Borrowings as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


Account	Lender	Annual interest rate (%)	2007		2006
Borrowings in Won:
Borrowings from the BOK	BOK	3.25	(Won)	437,237	(Won)	681,965
Borrowings from the Korean government	Ministry of Finance and Economy, and others	0.00 ~ 6.50		634,873		557,789
Borrowings from banking institutions	Industrial Bank of Korea	3.75 ~ 4.42		60,421		76,646
Borrowings from National Housing Fund	National Housing Fund	8.00		744		1,222
Borrowings from non-banking financial institutions	Korea Development Bank	2.00 ~ 4.07		16,299		4,380
Other borrowings	Small Business Corporation and others	1.20 ~ 5.40		1,286,119		1,180,477

				2,435,693		2,502,479

Borrowings in foreign currency:
Due to Banks	Wachovia Bank, N.A New York and others	0.00 ~ 5.35		82,606		56,320
Borrowings from banking institutions	DBS Bank Ltd., Singapore and others	0.92 ~ 6.97		3,462,687		2,807,267
Off-shore borrowings in foreign currencies	China Trust Commercial Bank and others	5.22 ~ 6.71		251,285		152,308
Other borrowings from banking institutions	IBRD	5.89		4,046		6,845
Other borrowings in foreign currencies	Financial institution and others	—		1,047,348		853,639

				4,847,972		3,876,379

			(Won)	7,283,665	(Won)	6,378,858

(5)	Debentures as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	Annual interest rate (%)	2007			2006
Debentures in Won:
Hybrid debentures	6.00 ~ 7.00	(Won)	903,668		(Won)	903,668
Structured debentures	1.30 ~ 9.20		3,116,105			1,587,701
Subordinated fixed rate debentures in Won	4.19 ~ 15.02		6,352,491			6,670,799
KCC subordinated fixed rate debentures	7.10 ~ 8.00		205,000			205,000
KCC fixed rate debentures	5.54 ~ 5.87		200,000			200,000
Fixed rate debentures	3.18 ~ 5.19		19,412,373			13,198,004

			30,189,637			22,765,172
Gain on valuation of fair value hedged items (current period portion)			(135,990	)		(14,544	)
Gain on valuation of fair value hedged items (prior year portion)(*)			(51,903	)		(40,790	)

			30,001,744			22,709,838
Discounts on debentures			(74,807	)		(158,575	)

			29,926,937			22,551,263


	Annual interest rate (%)	2007			2006
Debentures in foreign currency:
Floating rates debentures	0.97 ~ 6.10	(Won)	2,678,354		(Won)	1,964,851
Fixed rates debentures	4.63		460,350			475,099

			3,138,704			2,439,950
Loss on valuation of fair value hedged items (current period portion)			7,102			6,493
Gain on valuation of fair value hedged items (prior year portion)			(9,116	)		(15,609	)

			3,136,690			2,430,834
Premiums on debentures			337			1,771
Discounts on debentures			(1,785	)		(1,362	)

			3,135,242			2,431,243

		(Won)	33,062,179		(Won)	24,982,506

(*)	The Bank recognized (Won)3,431 million of gain on prior redemption of fair value hedged items for the nine months ended September 30, 2007.

(6)	Hybrid debentures and subordinated debentures as of September 30, 2007 and December 31, 2006 were as follows (Unit: In millions):


	Issued date	Expiration date	Annual interest rate (%)	2007		2006
Subordinated fixed rate debentures in Won	Feb-98 ~ Aug-01	Feb-03 ~ Aug-07	—	(Won)	9,093	(Won)	313,401
	Nov-98	Nov-09	15.02		62,900		76,900
	Nov-00	Nov-10 ~ Dec-10	9.57 ~ 9.65		162,051		162,051
	Jun-01	Mar-08 ~ Mar-09	7.68 ~ 7.86		377,529		377,529
	Sep-01	Mar-08	6.69 ~ 6.73		150,000		150,000
	Mar-02	Jan-08	7.06 ~ 7.10		241,684		241,684
	Jul-02	Jan-08	6.96 ~ 7.00		302,399		302,399
	Sep-02	Mar-08 ~ Mar-13	6.27 ~ 6.70		500,000		500,000
	Nov-02	Jun-08 ~ May-13	6.07 ~ 6.55		558,775		558,775
	Dec-02	Jan-08	8.00		110,000		110,000
	Dec-02	Jun-08 ~ Dec-14	6.20 ~ 6.65		180,370		180,370
	Jan-03	Feb-08	7.65		50,000		50,000
	Mar-03	Apr-08	7.10		45,000		45,000
	Oct-03	Jan-09 ~ Jan-14	5.18 ~ 5.60		449,051		449,051
	Feb-04	Aug-09 ~ Aug-14	5.65 ~ 6.16		700,000		700,000
	Sep-04	Dec-18	5.12		57,784		57,784
	Dec-04	Jun-10	4.19 ~ 4.20		700,000		700,000
	Mar-06	Jan-12	5.67 ~ 5.70		1,900,855		1,900,855

					6,557,491		6,875,799

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

					903,668		903,668

				(Won)	7,461,159	(Won)	7,779,467

(7)	Call money and borrowings with financial institutions as of September 30, 2007 were as follows (Unit: In millions):


	BOK		Other banks		Others		Total
Call money	(Won)	—	(Won)	667,868	(Won)	482,000	(Won)	1,149,868
Borrowings		437,237		4,848,576		76,116		5,361,929

	(Won)	437,237	(Won)	5,516,444	(Won)	558,116	(Won)	6,511,797

Call money and borrowings with financial institutions as of December 31, 2006 were as follows (Unit: In millions):


	BOK		Other banks		Others		Total
Call money	(Won)	—	(Won)	57,386	(Won)	107,700	(Won)	165,086
Borrowings		681,965		3,899,270		58,135		4,639,370

	(Won)	681,965	(Won)	3,956,656	(Won)	165,835	(Won)	4,804,456

(8)	Term structure of borrowings as of September 30, 2007 was as follows (Unit: In millions):


	Due in 3 months or less		Due after 3 months through 6 months		Due after 6 months through 1 year		Due after 1 year through 3 years		More than 3 years		Total
Call money	(Won)	1,149,868	(Won)	—	(Won)	—	(Won)	—	(Won)	—	(Won)	1,149,868
Bills sold		154,409		86,083		65,090		—		—		305,582
Bonds sold under repurchase agreements		3,922,821		1,509,091		1,468,349		—		—		6,900,261
Borrowings		2,427,410		1,120,794		1,500,825		1,240,668		993,968		7,283,665
Debentures		2,864,690		5,185,180		5,420,645		12,249,321		7,418,598		33,138,434

	(Won)	10,519,198	(Won)	7,901,148	(Won)	8,454,909	(Won)	13,489,989	(Won)	8,412,566	(Won)	48,777,810

Term structure of borrowings as of December 31, 2006 was as follows (Unit: In millions):


	Due in 3 months or less		Due after 3 months through 6 months		Due after 6 months through 1 year		Due after 1 year through 3 years		More than 3 years		Total
Call money	(Won)	165,086	(Won)	—	(Won)	—	(Won)	—	(Won)	—	(Won)	165,086
Bills sold		311,187		63,269		88,023		—		—		462,479
Bonds sold under repurchase agreements		4,589,657		1,250,944		1,212,944		210		—		7,053,755
Borrowings		2,155,505		1,432,150		694,982		1,225,467		870,754		6,378,858
Debentures		2,246,140		1,169,430		6,309,297		8,729,425		6,686,380		25,140,672

	(Won)	9,467,575	(Won)	3,915,793	(Won)	8,305,246	(Won)	9,955,102	(Won)	7,557,134	(Won)	39,200,850

12. OTHER LIABILITIES:

Other liabilities as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007			2006
Accounts payable	(Won)	4,025,076		(Won)	2,357,841
Accrued expenses		4,590,467			3,876,420
Unearned revenues		101,311			87,556
Withholding taxes		63,610			114,630
Guarantees deposits received		97,904			99,325
Accounts for agency business		350,063			151,479
Domestic exchange settlement credits		915,389			141,042
Foreign currency bills payable		173,750			54,515
Agency		178,198			171,024
Derivatives liabilities (Note 19)		1,296,767			1,148,033
Due to trust accounts (Note 27)		1,570,062			1,281,185
Accrued severance benefits (Note 13)		640,545			536,347
Less: Severance insurance deposits		(341,283	)		(334,979	)
Allowance for possible losses on acceptances and guarantees (Note 14)		28,836			18,772
Other allowances (Note 15)		706,819			776,661
Sundry liabilities (Note 16)		915,975			609,073

	(Won)	15,313,489		(Won)	11,088,924

13. ACCRUED SEVERANCE BENEFITS:

The changes in accrued severance benefits for the nine months ended September 30, 2007 were as follows (Unit: In millions):


	Beginning			Provision			Payment			Other changes (*)			Ending
Accrued severance benefits	(Won)	536,347		(Won)	123,996		(Won)	19,801		(Won)	(3	)	(Won)	640,545
Severance insurance deposits		(334,979	)		(10,568	)		(4,264	)		—			(341,283	)

	(Won)	201,368		(Won)	113,428		(Won)	15,537		(Won)	(3	)	(Won)	299,262

The changes in accrued severance benefits for the year ended December 31, 2006 were as follows (Unit: In millions):


	Beginning			Provision			Payment			Other changes (*)			Ending
Accrued severance benefits	(Won)	387,491		(Won)	165,533		(Won)	16,664		(Won)	(13	)	(Won)	536,347
Severance insurance deposits		(236,529	)		(100,218	)		(1,768	)		—			(334,979	)

	(Won)	150,962		(Won)	65,315		(Won)	14,896		(Won)	(13	)	(Won)	201,368

(*)	Loss (gain) on foreign currency translation of the accrued severance benefit of the Tokyo branch office.

As of September 30, 2007, part of severance benefits was contributed to pension funds of Kyobo Life Insurance Co., Ltd. and others in which the beneficiary is a respective employee.

14. ACCEPTANCES AND GUARANTEES AND ALLOWANCES FOR POSSIBLE LOSSES:

(1)	Acceptances and guarantees as of September 30, 2007 and December 31, 2006 were as follows (Unit: In millions):


Types	2007		2006
Confirmed acceptances and guarantees in Won:
Payment guarantee for issuance of debentures	(Won)	1,347	(Won)	1,150
Payment guarantee for loans		61,059		53,237
Others		2,028,890		894,893

		2,091,296		949,280

Confirmed acceptances and guarantees in foreign currencies:
Acceptances on letters of credit		103,772		93,017
Acceptances for letters of guarantee for importers		56,037		56,089
Guarantees for performance of contracts		136,720		76,385
Guarantees for bids		2,524		4,082
Guarantees for borrowings		36,888		36,128
Guarantees for repayment of advances		1,559,080		1,101,403
Others		762,525		387,923

		2,657,546		1,755,027

		4,748,842		2,704,307

Unconfirmed acceptances and guarantees:
Letters of credit		1,911,743		1,266,858
Others		1,218,170		1,037,576

		3,129,913		2,304,434

Bills endorsed		863		4,540

	(Won)	7,879,618	(Won)	5,013,281

(2)	Acceptances and guarantees, by customer, as of September 30, 2007 were as follows (Unit: In millions):


By customer	Confirmed		Unconfirmed		Bills endorsed		Total		Percentage (%)
Large corporations	(Won)	3,548,712	(Won)	1,877,778	(Won)	647	(Won)	5,427,137	68.88
Small and medium corporations		1,107,958		1,215,520		216		2,323,694	29.49
Public sector and others		92,172		36,615		—		128,787	1.63

	(Won)	4,748,842	(Won)	3,129,913	(Won)	863	(Won)	7,879,618	100.00

Acceptances and guarantees, by customer, as of December 31, 2006 were as follows (Unit: In millions):


By customer	Confirmed		Unconfirmed		Bills endorsed		Total		Percentage (%)
Large corporations	(Won)	1,841,739	(Won)	1,586,005	(Won)	1,213	(Won)	3,428,957	68.40
Small and medium corporations		522,820		676,432		3,247		1,202,499	23.99
Public sector and others		339,748		41,997		80		381,825	7.61

	(Won)	2,704,307	(Won)	2,304,434	(Won)	4,540	(Won)	5,013,281	100.00

(3)	Acceptances and guarantees, by industry, as of September 30, 2007 were as follows (Unit: In millions):


By industry	Confirmed		Unconfirmed		Bills endorsed		Total		Percentage (%)
Public sector	(Won)	328	(Won)	103,229	(Won)	—	(Won)	103,557	1.31
Finance		720,108		16,656		—		736,764	9.35
Service		627,110		39,848		—		666,958	8.46
Manufacturing		2,357,821		2,479,880		826		4,838,527	61.41
Others		1,043,475		490,300		37		1,533,812	19.47

	(Won)	4,748,842	(Won)	3,129,913	(Won)	863	(Won)	7,879,618	100.00

Acceptances and guarantees, by industry, as of December 31, 2006 were as follows (Unit: In millions):


By industry	Confirmed		Unconfirmed		Bills endorsed		Total		Percentage (%)
Public sector	(Won)	68	(Won)	78,563	(Won)	—	(Won)	78,631	1.57
Finance		343,714		—		—		343,714	6.86
Service		393,552		39,330		—		432,882	8.63
Manufacturing		1,593,449		1,723,450		2,623		3,319,522	66.21
Others		373,524		463,091		1,917		838,532	16.73

	(Won)	2,704,307	(Won)	2,304,434	(Won)	4,540	(Won)	5,013,281	100.00

(4)	Acceptances and guarantees, by country, as of September 30, 2007 were as follows (Unit: In millions):


By country	Confirmed		Unconfirmed		Bills endorsed		Total		Percentage(%)
Korea	(Won)	4,219,227	(Won)	3,129,913	(Won)	863	(Won)	7,350,003	93.28
Others		529,615		—		—		529,615	6.72

	(Won)	4,748,842	(Won)	3,129,913	(Won)	863	(Won)	7,879,618	100.00

Acceptances and guarantees, by country, as of December 31, 2006 were as follows (Unit: In millions):


By country	Confirmed		Unconfirmed		Bills endorsed		Total		Percentage(%)
Korea	(Won)	2,453,216	(Won)	2,304,434	(Won)	4,540	(Won)	4,762,190	94.99
Others		251,091		—		—		251,091	5.01

	(Won)	2,704,307	(Won)	2,304,434	(Won)	4,540	(Won)	5,013,281	100.00

(5)	Allowance for possible losses on acceptances and guarantees and others as of September 30, 2007 was as follows (Unit: In millions):


	Confirmed acceptances and guarantees				Unconfirmed acceptances and guarantees		Bills endorsed		Total
	Won		Foreign currencies		Unconfirmed acceptances and guarantees		Bills endorsed		Total
Normal	(Won)	2,085,512	(Won)	2,652,249	(Won)	3,120,117	(Won)	863	(Won)	7,858,741
Precautionary		4,044		4,062		6,311		—		14,417
Substandard		1,123		112		3,125		—		4,360
Doubtful		616		—		166		—		782
Estimated loss		1		1,123		194		—		1,318

		2,091,296		2,657,546		3,129,913		863		7,879,618
Allowance for possible losses		11,757		9,939		7,134		6		28,836

Ratio (%)		0.56		0.37		0.23		0.70		0.37

Allowance for possible losses on acceptances and guarantees and others as of December 31, 2006 were as follows (Unit: In millions):


	Confirmed acceptances and guarantees				Unconfirmed acceptances and guarantees		Bills endorsed		Total
	Won		Foreign currencies		Unconfirmed acceptances and guarantees		Bills endorsed		Total
Normal	(Won)	946,453	(Won)	1,746,240	(Won)	2,283,303	(Won)	4,295	(Won)	4,980,291
Precautionary		2,446		3,186		7,490		—		13,122
Substandard		30		5,586		7,244		40		12,900
Doubtful		350		—		434		205		989
Estimated loss		1		15		5,963		—		5,979

		949,280		1,755,027		2,304,434		4,540		5,013,281
Allowance for possible losses	(Won)	3,650	(Won)	7,613	(Won)	7,268	(Won)	241	(Won)	18,772

Ratio (%)		0.38		0.43		0.32		5.31		0.37

(6)	The percentage of allowance for possible losses on acceptances and guarantees and others as of September 30, 2007 and December 31, 2006, 2005 and 2004 was as follows (Unit: In millions):


	Guarantees and acceptances and others		Allowance		Percentage (%)
September 30, 2007 (*)	(Won)	7,879,618	(Won)	28,836	0.37
December 31, 2006 (*)		5,013,281		18,772	0.37
December 31, 2005 (*)		3,772,662		10,141	0.27
December 31, 2004		975,788		1,150	0.12

(*)

Pursuant to the amended Supervisory Regulation of Banking Business, the Bank has extended the scope of allowance for possible losses since 2005. Furthermore, the minimum rate of loss provision increased for confirmed acceptances and guarantees and others classified as normal and precautionary as of December 31, 2006.

15. OTHER ALLOWANCES:

Other allowances as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007		2006
Mileage rewards	(Won)	98,916	(Won)	89,025
KAMCO loans sold (Note 19)		—		252
Credit commitments to SPC (Note 19)		3,776		3,602
Dormant accounts		26,049		27,689
Unused credit limit		528,821		566,655
Others		49,257		89,438

	(Won)	706,819	(Won)	776,661

The unused credit limit for other allowances amounts to (Won)75,807,240 million and (Won)76,832,125 million as of September 30, 2007 and December 31, 2006, respectively.

16. SUNDRY LIABILITIES:

Sundry liabilities as of September 30, 2007 and December 31, 2006 consisted of (Unit: In millions):


	2007		2006
Suspense payable	(Won)	40,749	(Won)	190,575
Borrowings for others’ business		104,969		94,769
Prepaid card and debit card liabilities		18,932		20,947
Subscription deposits		41,083		71,665
Income tax payable		709,166		230,184
Others		1,076		933

	(Won)	915,975	(Won)	609,073

17. SHAREHOLDERS’ EQUITY:

(1)	Capital stock

As of September 30, 2007 and December 31, 2006, the Bank has 1 billion common shares authorized with a par value per share of (Won)5,000 and 336,379,116 shares ((Won)1,681,896 million) issued. The Bank’s major shareholders were Euro-Pacific Growth Fund (18,377,910 shares, 5.46 percent) and ING Bank N.V. Amsterdam (13,699,001 shares, 4.07 percent) as of September 30, 2007.

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

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

(2)	Capital surplus

The capital surplus as of September 30, 2007 and December 31, 2006 were as follows (Unit: In millions):


	2007		2006
Paid-in-capital in excess of par value	(Won)	5,655,840	(Won)	5,655,840
Gain on business combination		397,669		397,669
Revaluation increment		177,229		177,229
Gain on disposal of treasury stock		27,559		27,559

	(Won)	6,258,297	(Won)	6,258,297

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

(3)	Retained earnings

The detailed summary of the appropriations of retained earnings as a result of the resolution at the general shareholders’ meeting on March 23, 2007 is as follows (Unit: In millions):


	2006
Retained earnings before appropriations:
Retained earnings carried forward from prior years	(Won)	59
Effect on valuation of securities using the equity method		(1,582	)
Net income		2,472,111

		2,470,588

Appropriations:
Legal reserve		247,300
Other reserve		509
Voluntary reserve		994,900
Dividend		1,227,784

		2,470,493

Unappropriated retained earnings to be carried forward to subsequent years	(Won)	95

Legal reserve

The Korean Banking Law Act 40 requires banks to appropriate at least 10 percent of net income to legal reserve until such reserve equals 100 percent of its paid-in capital. This reserve is not available for cash dividends and can only be transferred to capital or can be used to reduce deficit. The Tokyo branch appropriate 10 percent at most of net income after income tax to legal reserve in accordance with the Japanese Banking Law.

Voluntary reserve

In 2002, the Finance Supervisory Service recommended banks to appropriate at least 10 percent of net income after deducting loss carried forward to reserve for financial structure improvement until simple capital ratio equals 5.5 percent. This reserve can only be used to reduce deficit or be transferred to capital.

(4)	Accumulated other comprehensive income

The changes in accumulated other comprehensive income (loss) for the nine months ended September 30, 2007 and for the year ended December 31, 2006 are as follows (Unit: In millions):


	2007
	Beginning balance		Changes			Disposal or realization			Ending balance
Gain on valuation of available-for-sale securities	(Won)	883,556	(Won)	103,750		(Won)	(536,955	)	(Won)	450,351
Gain on valuation of held-to-maturity securities		98		—			(53	)		45
Change due to the equity method		15,888		(13,794	)		(1,161	)		933

	(Won)	899,542	(Won)	89,956		(Won)	(538,169	)	(Won)	451,329


	2006
	Beginning balance		Changes			Disposal or realization			Ending balance
Gain on valuation of available-for-sale securities	(Won)	511,368	(Won)	477,839		(Won)	(105,651	)	(Won)	883,556
Gain on valuation of held-to-maturity securities		426		—			(328	)		98
Change due to the equity method		948		15,522			(582	)		15,888

	(Won)	512,742	(Won)	493,361		(Won)	(106,561	)	(Won)	899,542

18. SHARE-BASED PAYMENT:

(1)

The Bank granted stock options to employees and executives including the president several times. When the stock options are exercised, the Bank has the option to settle either through issuance of new shares or treasury stock, or through payment of cash equivalent to the difference between the market price and the exercise price. In accordance with the resolution of the Board of Directors on August 23, 2005, the Bank has changed the settlement method from issuance of treasury stock to payment of cash equivalent to the difference between the market price and the exercise price only after the remaining treasury stock is issued. Accordingly, the compensation cost of stock options granted before and after the effective date of SKAS No. 22 (Share-based Payment) was measured using the intrinsic value method in accordance with the Interpretations on Financial Accounting Standards 39-35 “Accounting for Stock Options,” and the fair value method, respectively. The details of the stock options as of September 30, 2007 were as follows:


	Grant date	Exercise period (years)	Granted shares	Grant conditions
Series 2	01.03.15	8	214,975	Offer service: 1 year
Series 6	01.03.24	6	111,000	Offer service: 3 years
Series 7	01.11.16	8	850,000	Offer service: 3 years
Series 8-1 (*2)	02.03.22	8	132,000	Offer service: 1 year, 3 years
Series 8-2 (*3)	02.03.22	8	490,000	Offer service: 1 year, 3 years
Series 9 (*3)	02.07.26	8	30,000	Offer service: 3 years
Series 10-1 (*2)	03.03.21	8	140,000	Offer service: 3 years
Series 10-2 (*3)	03.03.21	8	180,000	Offer service: 3 years
Series 11 (*3)	03.08.27	8	30,000	Offer service: 3 years
Series 12 (*3)	04.02.09	8	85,000	Offer service: 1 year
Series 13-1 (*2)	04.03.23	8	20,000	Offer service: 1 year
Series 13-2(*3)	04.03.23	8	10,000	Offer service: 1 year
Series 14 (2,3)	04.11.01	8	700,000	Offer service: 3 years Targets to achieve (*5)
Series 15-1 (*2)	05.03.18	8	165,000	Offer service: 3 years


	Grant date	Exercise period (years)	Granted shares	Grant conditions
Series 15-2 (*3)	05.03.18	8	765,000	Offer service: 3 years
Series 16 (*3)	05.04.27	8	15,000	Offer service: 3 years
Series 17 (*3)	05.07.22	8	30,000	Offer service: 3 years
Series 18 (*3)	05.08.23	8	15,000	Offer service: 3 years
Series 19 (*1)	06.03.24	8	940,000	Offer service: 1 year, 2 years, 3 years
Series 20 (*1)	06.04.28	8	30,000	Offer service: 3 years
Series 21 (*1)	06.10.27	8	20,000	Offer service: 2 years
Series 22 (*1)	07.02.08	8	885,000	Offer service: 1 year, 3 years
Series 23 (*1)	07.03.23	8	30,000	Offer service: 3 years
Series Kookmin Credit Card -1 (*4)	01.03.22	10	22,146	Offer service: 1 year
Series Kookmin Credit Card -2 (2,4)	02.03.29	9	9,990	Offer service: 2 years

			5,920,111

(*1)	The exercise price is adjusted by the rate of increase in the market value of the major competitors’ stock as of balance sheet dates.

(*2)	The exercise price is adjusted by the rate of increase in the average stock price index of the banking industry as of balance sheet dates.

(*3)

As the actual number of exercisable granted shares is determined in accordance with the management performance for the contract period of service, the number of granted shares used for the calculation of compensation cost is computed based on the assumption that the performance result falls into the highest level in the bracket.

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

(*5)	300,000 shares are vested when target ROE is accomplished; 200,000 shares vested when target BIS ratio is achieved; 200,000 shares vested when target return on shareholders’ equity is met.

(2)	The changes in granted shares and the weighted average exercise price for the nine months ended September 30, 2007 are follows (Unit: In Won and shares):


	Granted shares					Exercise price		Remaining period to maturity (year)
	Beginning	Granted	Exercised	Expired	Ending	Exercise price		Remaining period to maturity (year)
Series 2	88,107	—	16,384	—	71,723	(Won)	28,027	1.46
Series 6	8,633	—	8,633	—	—		25,100	—
Series 7	150,000	—	50,000	—	100,000		51,200	2.13
Series 8-1	28,863	—	600	—	28,263		57,100	2.48
Series 8-2	263,565	—	66,734	—	196,831		57,100	2.48
Series 9	23,899	—	—	—	23,899		58,800	2.82
Series 10-1	43,414	—	3,351	—	40,063		47,360	3.47
Series 10-2	70,993	—	—	—	70,993		35,500	3.47
Series 11	5,091	—	—	—	5,091		40,500	3.91
Series 12	75,539	—	16,289	—	59,250		46,100	4.36
Series 13-1	20,000	—	—	—	20,000		48,650	4.48
Series 13-2	10,000	—	10,000	—	—		47,200	—
Series 14	700,000	—	—	—	700,000		53,300	5.09
Series 15-1	135,259	—	—	9,897	125,362		61,907	5.47
Series 15-2	580,069	—	—	61,875	518,194		46,800	5.47
Series 16	15,000	—	—	6,173	8,827		45,700	5.58
Series 17	30,000	—	—	—	30,000		49,200	5.81
Series 18	15,000	—	—	7,788	7,212		53,000	5.90


	Granted shares					Exercise price		Remaining period to maturity (year)
	Beginning	Granted	Exercised	Expired	Ending	Exercise price		Remaining period to maturity (year)
Series 19	940,000	—	—	10,000	930,000	(Won)	83,310	6.48
Series 20	30,000	—	—	—	30,000		87,100	6.58
Series 21	20,000	—	—	—	20,000		81,300	7.08
Series 22	—	885,000	—	—	885,000		77,500	7.00
Series 23	—	30,000	—	—	30,000		84,500	7.48
Series Kookmin Credit Card -1	22,146	—	—	—	22,146		71,538	3.48
Series Kookmin Credit Card -2	9,990	—	—	—	9,990		129,100	3.50

	3,285,568	915,000	171,991	95,733	3,932,844	(Won)	65,351	5.66

The weighted average stock price of the stock option exercised for the nine months ended September 30, 2007 is (Won)84,230.

The changes in granted shares and the weighted average exercise price for the year ended December 31, 2006 are follows (Unit: In Won and shares):


	Granted shares					Exercise price		Remaining period to maturity (year)
	Beginning	Granted	Exercised	Expired	Ending	Exercise price		Remaining period to maturity (year)
Series 2	133,695	—	45,588	—	88,107	(Won)	28,027	2.21
Series 4	60,754	—	60,754	—	—		27,600	—
Series 6	36,726	—	28,093	—	8,633		25,100	0.23
Series 7	650,000	—	500,000	—	150,000		51,200	2.88
Series 8-1	42,047	—	13,184	—	28,863		57,100	3.22
Series 8-2	276,904	—	13,339	—	263,565		57,100	3.22
Series 9	23,899	—	—	—	23,899		58,800	3.57
Series 10-1	63,443	—	20,029	—	43,414		46,962	4.22
Series 10-2	89,560	—	17,910	657	70,993		35,500	4.22
Series 11	5,091	—	—	—	5,091		40,500	4.66
Series 12	75,539	—	—	—	75,539		46,100	5.11
Series 13-1	20,000	—	—	—	20,000		48,650	5.23
Series 13-2	10,000	—	—	—	10,000		47,200	5.23
Series 14	700,000	—	—	—	700,000		51,000	5.84
Series 15-1	165,000	—	—	29,741	135,259		59,288	6.22
Series 15-2	765,000	—	—	184,931	580,069		46,800	6.22
Series 16	15,000	—	—	—	15,000		45,700	6.33
Series 17	30,000	—	—	—	30,000		49,200	6.56
Series 18	15,000	—	—	—	15,000		53,000	6.65
Series 19	—	940,000	—	—	940,000		80,900	7.23
Series 20	—	30,000	—	—	30,000		84,600	7.33
Series 21	—	20,000	—	—	20,000		79,000	7.83
Series Kookmin Credit Card -1	22,146	—	—	—	22,146		71,538	4.22
Series Kookmin Credit Card -2	9,990	—	—	—	9,990		129,100	4.24

	3,209,794	990,000	698,897	215,329	3,285,568	(Won)	65,986	5.77

The weighted average stock price of the stock option exercised for the year ended December 31, 2006 is (Won)70,844.

(3)	Series 22 and Series 23 are measured at fair value based on the Black-Scholes Model, and the factors used in determining the fair value are as follows (Unit: In Won):


Series	Stock price		Exercise price		Expected stock price volatility (%)	Maturity (years)	Expected dividend		Risk free rate (%)	Fair value
Series 22-1 (Director)	(Won)	75,100	(Won)	77,500	25.21	4.02	(Won)	6,332	4.17	(Won)	15,057
Series 22-2 (Employee)		75,100		77,500	27.33	5.01		7,740	4.18		17,998
Series 23		75,100		84,500	25.10	4.13		6,502	4.17		12,841

The expected weighted average exercise period was separately estimated for directors and employees in order to reflect the possibility of an early exercise. The historical stock price volatility during the respective expected exercise period was applied to the calculation of the expected stock price volatility and estimated based on the cross volatility of the stock price between the Bank and its competitors in order to adjust the exercise price in proportion to the change of the market value of the competitors.

(4)

As of September 30, 2007 and December 31, 2006, the accrued expenses under the share-based payment amount to (Won)49,641 million and (Won)42,754 million, respectively, and the intrinsic value of the vested share option amount to (Won)22,401 million and (Won)21,694 million, respectively. The compensation cost recorded as selling and administration expense amounts to (Won)12,929 million and (Won)14,532 million for the nine months ended September 30, 2007 and 2006, respectively.

19. CONTINGENCIES AND COMMITMENTS:

(1)	The Bank holds written-off loans, of which the claim for borrowers and guarantors have not been terminated , amounting to (Won)11,656,043 million and (Won)12,005,064 million as of September 30, 2007 and December 31, 2006, respectively.

(2)

As of September 30, 2007, the Bank has reversed allowances of (Won)87 million, for losses in relation to the possible future repurchase of loans, which the Bank sold to Korea Asset Management Corporation (“KAMCO”). As of December 31, 2006, the Bank has provided allowances of (Won)252 million, for losses in relation to the possible future repurchase of loans, which the Bank sold to Korea Asset Management Corporation (“KAMCO”) for (Won)666 million.

(3)

As of September 30, 2007 and December 31, 2006, the Bank recorded receivables amounting to (Won)3,280,393 million and (Won)1,900,684 million, respectively, and payables amounting to (Won)3,280,138 million and (Won)1,900,506 million, respectively, for unsettled foreign currency spot transactions, respectively.

(4)

As of September 30, 2007 and December 31, 2006, the Bank has entered into commitments to provide credit line of (Won)605,400 million and (Won)1,158,800 million, respectively, and to purchase commercial papers amounting to (Won)1,035,400 million and (Won)1,224,200 million, respectively, with several special purpose companies. As of September 30, 2007 and December 31, 2006, under these commitments, the Bank extended loans of (Won)6,965 million and (Won)12,497 million, respectively, to the companies and recognized (Won)3,776 million and (Won)3,602 million, respectively, of expected loss as other allowance. The Bank has no balance of commitment to purchase commercial papers.

(5)	The Bank entered into the business cooperation agreements with Citibank and Nonghyup regarding the credit card business. Accordingly, the Bank shares the related revenue from such business operation.

(6)

The Bank has filed 101 lawsuits involving aggregate claims of (Won)246,820 million and faces 152 lawsuits involving aggregate damages of (Won)520,099 million, which arose in the normal course of the business and are still pending as of September 30, 2007. The management believes that the ultimate liability, if any, will not materially affect the Bank’s financial position. Korea Lottery Service Inc. filed a lawsuit against the Bank with aggregate damages of (Won) 465,434 million (2 lawsuits) regarding commitment fee in relation to the lottery fund; however, the Bank’s management believes that the lawsuit will not affect the financial position of the Bank as it is related to a lottery fund.

(7)	The face value of the consumer investment securities amounts to (Won)417,394 million and (Won)217,754 million as of September 30, 2007 and December 31, 2006, respectively.

(8)	The Bank has been assessed on income tax and others of (Won)438,975 million as a consequence of the regular tax audit performed by the Seoul Regional Tax Office from February 7, 2007 to April 19, 2007. The Bank has filed an appeal against the assessment above through proper legal procedures.

(9)

Although the Korea Federation of Banks are discussing the issue on transferring dormant deposits ((Won)300,000 and less per account) to operating deposits according to the special act on transfer of dormant deposits established on August 2007, the effect is unpredictable because the time and method of transfer is not settled as for now.

(10)	Derivatives

The notional amounts outstanding for derivative contracts as of September 30, 2007 and December 31, 2006 were as follows (Unit: In millions):


Type	2007						2006
Type	Trading		Hedge		Total		Trading		Hedge		Total
Interest rate:
Interest rate forwards	(Won)	—	(Won)	—	(Won)	—	(Won)	92,960	(Won)	—	(Won)	92,960
Interest rate futures		2,189,734		—		2,189,734		1,470,054		—		1,470,054
Interest rate swaps		51,367,221		5,164,643		56,531,864		42,563,389		3,718,967		46,282,356
Interest rate options purchased		110,000		—		110,000		110,000		—		110,000
Interest rate options sold		100,000		—		100,000		300,000		—		300,000

		53,766,955		5,164,643		58,931,598		44,536,403		3,718,967		48,255,370

Currency:
Currency forwards		76,522,566		—		76,522,566		80,949,167		—		80,949,167
Currency futures		4,035,600		—		4,035,600		3,237,813		—		3,237,813
Currency swaps		11,129,406		—		11,129,406		7,888,681		—		7,888,681
Currency options purchased		2,796,857		—		2,796,857		518,421		—		518,421
Currency options sold		1,859,847		—		1,859,847		348,144		—		348,144

		96,344,276		—		96,344,276		92,942,226		—		92,942,226

Stock:
Stock index futures		96,571		—		96,571		187,454		—		187,454
Stock options purchased		582,400		—		582,400		723,790		—		723,790
Stock options sold		875,547		—		875,547		987,929		—		987,929
Stock swaps		—		—		—		8,008		—		8,008

		1,554,518		—		1,554,518		1,907,181		—		1,907,181


Type	2007						2006
Type	Trading		Hedge		Total		Trading		Hedge		Total
Other:
Gold index options purchased	(Won)	5,109	(Won)	—	(Won)	5,109	(Won)	—	(Won)	—	(Won)	—
Gold index options sold		5,109		—		5,109		—		—		—
Merchandise forwards		78,705		—		78,705		—		—		—
Merchandise Swap		460		—		460		—		—		—
Other derivatives		140,000		—		140,000		—		—		—

		229,383		—		229,383		—		—		—

	(Won)	151,895,132	(Won)	5,164,643	(Won)	157,059,775	(Won)	139,385,810	(Won)	3,718,967	(Won)	143,104,777

(*)

For transaction between Won and foreign currencies, unsettled amount of transaction is presented using the basic foreign exchange rate based on the contract amount in foreign currencies. For transaction between foreign currencies and foreign currencies, unsettled amount is presented using the basic foreign exchange rate based on foreign currencies purchased at balance sheet dates.

The details of derivatives as of September 30, 2007 and the valuation of derivatives for the nine months ended September 30, 2007 were as follows (Unit: In millions):


Type	Gain on valuation (P/L)						Loss on valuation (P/L)						Gain (loss) on valuation(B/S)
Type	Trading		Hedge		Total		Trading		Hedge		Total		Assets		Liabilities
Interest rate:
Interest rate swaps	(Won)	206,842	(Won)	10,409	(Won)	217,251	(Won)	258,027	(Won)	141,550	(Won)	399,577	(Won)	284,791	(Won)	472,982
Interest rate options purchased		222		—		222		715		—		715		1,721		—
Interest rate options sold		69		—		69		257		—		257		—		557

		207,133		10,409		217,542		258,999		141,550		400,549		286,512		473,539

Currency:
Currency forwards		435,092		—		435,092		437,369		—		437,369		478,397		530,634
Currency swaps		93,099		—		93,099		52,856		—		52,856		360,345		165,865
Currency options purchased		16,347		—		16,347		9,899		—		9,899		13,621		24,035
Currency options sold		8,386		—		8,386		3,855		—		3,855		4,243		16,971

		552,924		—		552,924		503,979		—		503,979		856,606		737,505

Stock:
Stock options purchased		18,196		—		18,196		39,364		—		39,364		96,267		—
Stock options sold		6,786		—		6,786		29,048		—		29,048		—		79,328

		24,982		—		24,982		68,412		—		68,412		96,267		79,328

Other:
Gold index options purchased		25		—		25		30		—		30		187		—
Gold index options sold		—		—		—		7		—		7		—		226
Merchandise forwards		4,479		—		4,479		4,418		—		4,418		4,479		4,418
Merchandise Swap		74		—		74		68				68		74		68
Other derivatives		2,019		—		2,019		1,683		—		1,683		2,019		1,683

		6,597		—		6,597		6,206		—		6,206		6,759		6,395

	(Won)	791,636	(Won)	10,409	(Won)	802,045	(Won)	837,596	(Won)	141,550	(Won)	979,146	(Won)	1,246,144	(Won)	1,296,767

The details of financial derivatives as of December 31, 2006 and the valuation of financial derivatives for the nine months ended September 30, 2006 were as follows (Unit: In millions):


Type	Gain on valuation (P/L)						Loss on valuation (P/L)						Gain (loss) on valuation(B/S)
Type	Trading		Hedge		Total		Trading		Hedge		Total		Assets		Liabilities
Interest rate:
Interest rate forwards	(Won)	9	(Won)	—	(Won)	9	(Won)	22	(Won)	—	(Won)	22	(Won)	9	(Won)	—
Interest rate swaps		170,254		77,193		247,447		245,550		8,510		254,060		174,514		217,850
Interest rate options purchased		1,704		—		1,704		952		—		952		2,261		—
Interest rate options sold		1,386		—		1,386		220		—		220		—		675

		173,353		77,193		250,546		246,744		8,510		255,254		176,784		218,525

Currency:
Currency forwards		631,025		—		631,025		645,207		—		645,207		537,474		667,386
Currency swaps		218,896		—		218,896		123,686		—		123,686		427,425		210,503
Currency options purchased		349		—		349		892		—		892		1,912		3,882
Currency options sold		457		—		457		13		—		13		357		1,806

		850,727		—		850,727		769,798		—		769,798		967,168		883,577

Stock:
Stock options purchased		28,793		—		28,793		5,502		—		5,502		116,784		—
Stock options sold		9,123		—		9,123		7,786		—		7,786		—		45,919
Stock swaps		1,338		—		1,338		1,235		—		1,235		12		12

		39,254		—		39,254		14,523		—		14,523		116,796		45,931

	(Won)	1,063,334	(Won)	77,193	(Won)	1,140,527	(Won)	1,031,065	(Won)	8,510	(Won)	1,039,575	(Won)	1,260,748	(Won)	1,148,033

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

The Bank holds derivative instruments accounted for as fair value hedges applied to debentures, subordinated bonds, structured bonds and structured deposits. The Bank recognized (Won)141,205 million and (Won)8,510 million of gains and (Won)10,409 million and (Won)77,193 million of losses on valuation of fair value hedged items for the nine months ended September 30, 2007 and 2006, respectively. In addition, the interest rate swap covers the fair value changes of the hedged items resulted from the fluctuation in interest rate and foreign exchange rate. The difference of the valuation between the interest rate swap designated as the fair value hedging instrument and the structured bond, the hedged item, is (Won)345 million for the nine months ended September 30, 2007.

(11)	The Bank purchased synthetic Collateralized Default Obligation (CDO) with embedded Credit Default Swap (CDS) for the purpose of earning income such as commission income as of September 30, 2007. The details are as follows (Unit: In USD thousands):


	Date of contract	Date of maturity	Amount	Reference entity
BNP Paribas	2006.08.24	2013.12.20	10,000	116 Global Bonds
UBS	2007.07.23	2017.06.20	10,000	125 Global Bonds

The Bank could receive less than par and incur loss in relation to the sale of the CDO in case of credit events such as the default of the reference entity.

20.	ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES:

Significant assets and liabilities denominated in foreign currencies as of September 30, 2007 and December 31, 2006 were as follows:


	2007				2006
	USD equivalent (In thousands)		KRW equivalent (In millions)		USD equivalent (In thousands)		KRW equivalent (In millions)
Assets:
Foreign currencies	US$	199,953	(Won)	184,095	US$	162,872	(Won)	151,406
Due from banks in foreign currencies		307,072		282,722		517,050		480,649
Securities in foreign currencies		1,166,969		1,074,428		891,936		829,144
Loans in foreign currencies (*)		8,122,777		7,478,641		7,811,759		7,261,811
Bills bought in foreign currencies		1,482,675		1,365,099		1,366,517		1,270,314
Call loans in foreign currencies		573,396		527,926		195,685		181,909
Liabilities:
Deposits in foreign currencies	US$	2,085,419	(Won)	1,920,045	US$	1,535,668	(Won)	1,427,557
Borrowings in foreign currencies		5,265,527		4,847,972		4,169,943		3,876,379
Call money in foreign currencies		646,647		595,368		50,975		47,386
Debentures in foreign currencies		3,406,854		3,136,690		2,614,924		2,430,834
Foreign currency bills payable		188,715		173,750		58,643		54,515

(*)	Domestic import usance bill included.

Foreign currencies other than U.S. dollars were translated into U.S. dollars at the basic rates of exchange at balance sheet dates.

21.	INTEREST REVENUE AND EXPENSES:

The average balance of the interest bearing assets and liabilities, and the related interest revenue and expenses as of and for the nine months ended September 30, 2007 and 2006 were as follows (Unit: In millions):


	2007					2006
	Average balance		Interest revenue /expense		Interest rate (%)	Average balance		Interest revenue /expense		Interest rate (%)
Interest revenue
Due from banks(*)	(Won)	390,359	(Won)	11,339	3.88	(Won)	732,508	(Won)	22,420	4.09
Securities		28,164,200		1,042,582	4.95		28,815,374		1,011,653	4.69
Loans		158,566,232		8,845,489	7.46		140,895,240		7,826,252	7.43

		187,120,791		9,899,410	7.07		170,443,122		8,860,325	6.95

Interest expense
Deposits		129,739,783		2,993,511	3.08		123,834,439		2,497,749	2.70
Borrowings		45,107,999		1,736,730	5.15		36,808,475		1,291,113	4.67

	(Won)	174,847,782	(Won)	4,730,241	3.62	(Won)	160,642,914	(Won)	3,788,862	3.15

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

22. GENERAL AND ADMINISTRATIVE EXPENSES:

(1)	General and administrative expenses for the nine months ended September 30, 2007 and 2006 were as follows (Unit: In millions):


	2007		2006
Salaries	(Won)	1,205,450	(Won)	1,160,460
Provision for severance benefits		123,996		103,864
Severance benefits for voluntary resignation		—		3,806
Other employee benefits		403,826		360,814
Rent expenses		86,052		65,900
Depreciation		216,653		157,435
Amortization		80,257		67,180
Taxes and dues		105,980		96,295
Advertising		64,461		63,282
Development expenses		115,425		102,237
Others		278,297		236,327

	(Won)	2,680,397	(Won)	2,417,600

(2)	Other general and administrative expenses for the nine months ended September 30, 2007 and 2006 were as follows (Unit: In millions):


	2007		2006
Communication	(Won)	36,105	(Won)	30,700
Electricity and utilities		13,573		13,047
Publication		17,073		15,950
Repairs maintenance		12,811		10,565
Vehicle		21,213		20,701
Travel		3,915		3,075
Training		26,824		17,224
Service fees		64,378		56,336
Others		82,405		68,729

	(Won)	278,297	(Won)	236,327

23. NON-OPERATING REVENUE AND EXPENSES:

Non-operating revenue and expenses for the nine months ended September 30, 2007 and 2006 consisted of (Unit: In millions):


	2007		2006
Non-operating revenue:
Gain on valuation of securities accounted for using the equity method	(Won)	74,397	(Won)	76,077
Gain on disposal of securities accounted for using the equity method		161,145		—
Gain on disposal of tangible assets		10,128		2,399
Reversal of tangible assets impairment loss		—		962
Rental income		2,377		2,378
Others		95,276		176,847

	(Won)	343,323	(Won)	258,603


	2007		2006
Non-operating expenses:
Loss on valuation of securities accounted for using the equity method	(Won)	289	(Won)	1,612
Loss on disposal of securities accounted for using the equity method		783		—
Loss on disposal of tangible assets		1,086		1,629
Impairment loss on tangible assets		358		4,685
Others		560,246		81,837

	(Won)	562,762	(Won)	89,763

24. INCOME TAX EXPENSE:

(1)	The differences between pretax accounting income and taxable income pursuant to Korean Corporate Income Tax Law for the nine months ended September 30, 2007 and 2006 are summarized as follows (Unit: In millions):


	2007						2006
Income before income tax				(Won)	3,237,847					(Won)	3,113,790
Taxable and non-deductible items:
Temporary difference	(Won)	2,398,365					(Won)	1,764,847
Permanent difference		1,132,595			3,530,960			947,200			2,712,047

Deductible and non-taxable items:
Temporary difference		(1,759,696	)					(2,247,898	)
Permanent difference	(Won)	(1,245,831	)		(3,005,527	)	(Won)	(640,596	)		(2,888,494	)

Taxable income				(Won)	3,763,280					(Won)	2,937,343

(2)	Reconciliation items between accounting income and taxable income pursuant to the Corporate Income Tax Law of Korea for the nine months ended September 30, 2007 and 2006 are as follows (Units: In millions):


Accounts	2007				2006
Accounts	Temporary difference		Permanent difference		Temporary difference		Permanent difference
Taxable and non-deductible items:
Loss (gain) on fair value hedges	(Won)	62,843	(Won)	—	(Won)	68,294	(Won)	—
Other allowances		706,819		—		861,938		—
Accrued interest		431,301		—		349,024		—
Tangible asset impairment losses		13,741		—		14,520		—
Deferred loan organization fee and cost		138,338		—		52,025		—
Interest on ELD		12,644		—		13,966		—
Stock options		49,641		—		44,272		—
Allowance for possible losses on acceptances and guarantees		28,836		—		13,986		—
Loss (gain) on valuation of derivatives		186,512		—		94,654		—
Goodwill		58,759		—		58,759		—
Present value discount		1,308		—		1,422		—
Dividends from SPC		9,156		—		15,993		—
Others		698,467		1,132,595		175,994		947,200

	(Won)	2,398,365	(Won)	1,132,595	(Won)	1,764,847	(Won)	947,200


Accounts	2007				2006
Accounts	Temporary difference		Permanent difference		Temporary difference		Permanent difference
Deductible and non-taxable items:
Loss (gain) on fair value hedges	(Won)	189,606	(Won)	—	(Won)	—	(Won)	—
Other allowances		776,661		—		875,835		—
Allowance for loan losses		—		—		37,626		—
Accrued interest		440,099		—		359,772		—
Tangible asset impairment losses		15,535		—		11,466		—
Deferred loan organization fee and cost		172,207		—		96,465		—
Interest on ELD		8,565		—		24,928		—
Stock options		42,754		—		46,905		—
Allowance for possible losses on acceptances and guarantees		18,772		—		10,141		—
Loss (gain) on valuation of derivatives		38,403		—		181,938		—
Present value discount		1,370		—		1,713		—
Dividends from SPC		333		—		78,689		—
Others		55,391		1,245,831		522,420		640,596

	(Won)	1,759,696	(Won)	1,245,831	(Won)	2,247,898	(Won)	640,596

(3)	Changes in cumulative temporary differences for the nine months ended September 30, 2007 and 2006, and deferred income tax assets (liabilities) as of September 30, 2007 and 2006 are as follows (Unit: In millions):


	2007
	Beginning balance (*1)			Deduction		Addition		Ending balance
(Deductible temporary differences)
Other allowances	(Won)	801,451		(Won)	776,661	(Won)	706,819	(Won)	731,609
Allowance for loan losses		276			—		—		276
Tangible asset impairment losses		15,535			15,535		13,741		13,741
Interest on ELD		19,307			8,565		12,644		23,386
Stock options		42,754			42,754		49,641		49,641
Allowance for possible losses on acceptances and guarantees		18,772			18,772		28,836		28,836
Loss (gain) on valuation of derivatives		38,403			38,403		186,512		186,512
Present value discount		1,370			1,370		1,308		1,308
Dividends from SPC		205,255			254		782		205,783
Allowance for repurchase SPC		80,204			—		—		80,204
Others		162,287			28,597		693,115		826, 805

		1,385,614			930,911		1,693,398		2,148,101

The exclusion of deferred income tax assets (*2):
Other allowances		7,238							2,492
Dividends from SPC		205,255							205,783
Allowance for repurchase SPC		80,204							80,204
Others		72,556							76,492

		1,020,361							1,783,130
Statutory tax rate		27.5	%						27.5	%

Deferred income tax assets		280,599							490,361


	2007
	Beginning balance (*1)			Deduction			Addition			Ending balance
(Taxable temporary differences)
Loss (gain) on fair value hedges	(Won)	(62,843	)	(Won)	(62,843	)	(Won)	(189,606	)	(Won)	(189,606	)
Accrued interest		(431,301	)		(431,301	)		(440,099	)		(440,099	)
Deferred loan organization fee and cost		(138,338	)		(138,338	)		(172,207	)		(172,207	)
Goodwill		(300,324	)		(58,759	)		—			(241,565	)
Dividends from SPC		(8,374	)		(8,374	)		(79	)		(79	)
Others		(331,364	)		(5,352	)		(26,794	)		(352,806	)

		(1,272,544	)		(704,967	)		(828,785	)		(1,396,362	)

The exclusion of deferred income tax liabilities:
Goodwill		(300,324	)								(241,565	)
Others		(72,406	)								(78,120	)

		(899,814	)								(1,076,677	)
Statutory tax rate		27.5	%								27.5	%

Deferred income tax liabilities		(247,449	)								(296,086	)

Net deferred income tax assets	(Won)	33,150								(Won)	194,275

(*1)	The adjustment based on the final tax return was reflected in the beginning deferred income tax assets.

(*2)

As of September 30, 2007, other allowances of (Won)2,492 million, dividends from SPC of (Won)205,783 million, allowances for repurchase SPC of (Won)80,204 million and other (equity method) of (Won)76,492 million in deductible temporary differences are not recoverable in the future; therefore, these were not recognized as deferred tax assets.


	2006
	Beginning balance (*1)			Deduction		Addition		Ending balance
(Deductible temporary differences)
Loss (gain) on fair value hedges	(Won)	(58,096	)	(Won)	—	(Won)	68,294	(Won)	10,198
Other allowances		900,625			875,835		861,938		886,728
Allowance for loan losses		37,626			37,626		—		—
Tangible asset impairment losses		11,466			11,466		14,520		14,520
Interest on ELD		31,108			24,928		13,966		20,146
Stock options		46,905			46,905		44,272		44,272
Allowance for possible losses on acceptances and guarantees		10,141			10,141		13,986		13,986
Present value discount		1,713			1,713		1,422		1,422
Dividends from SPC		268,685			70,674		15,993		214,004
Allowance for repurchase SPC		80,204			—		—		80,204
Others		452,709			107,478		214,963		560,194

		1,783,086			1,186,766		1,249,354		1,845,674

The exclusion of deferred income tax assets(*2):
Dividends from SPC		268,685							214,004
Allowance for repurchase SPC		80,204							80,204
Others		57,611							67,686

		1,376,586							1,483,780
Statutory tax rate		27.5	%						27.5	%

Deferred income tax assets		378,561							408,040


	2006
	Beginning balance (*1)			Deduction			Addition			Ending balance
(Taxable temporary differences)
Accrued interest	(Won)	(349,024	)	(Won)	(349,024	)	(Won)	(359,772	)	(Won)	(359,772	)
Deferred loan organization fee and cost		(52,025	)		(52,025	)		(96,465	)		(96,465	)
Loss (gain) on valuation of derivatives		(94,654	)		(94,654	)		(181,938	)		(181,938	)
Goodwill		(378,669	)		(58,759	)		—			(319,910	)
Dividends from SPC		—			—			(8,015	)		(8,015	)
Others		138,626			369,401			(84,510	)		(315,285	)

		(735,746	)		(185,061	)		(730,700	)		(1,281,385	)

The exclusion of deferred income tax liabilities:
Goodwill		(378,669	)								(319,910	)
Others		(44,567	)								(60,973	)

		(312,510	)								(900,502	)
Statutory tax rate		27.5	%								27.5	%

Deferred income tax liabilities		(85,940	)								(247,638	)

Net deferred income tax assets	(Won)	292,621								(Won)	160,402

(*1)	The adjustment based on the final tax return was reflected in the beginning deferred income tax assets.

(*2)

As of September 30, 2006, dividends from SPC of (Won)214,004 million, allowances for repurchase SPC of (Won)80,204 million and other (equity method) of (Won)67,686 million in deductible temporary differences are not recoverable in the future; therefore, these were not recognized as deferred tax assets.

(4)	Income tax payable and income tax refund receivable as of September 30, 2007 and December 31, 2006 are as follows (Unit: In millions):


	2007		2006
Income tax refund receivable	(Won)	326,459	(Won)	617,690
Income tax payable		1,034,823		845,887

Net income tax payable (Note 16)(*)	(Won)	708,364	(Won)	228,197

(*)	Income tax payable of (Won)802 million and (Won)1,987 million as of September 30, 2007 and December 31, 2006, respectively, are due to overseas branch and others. Therefore, these are not eligible for set-off to income tax refund receivable.

(5)	Income tax expense for the nine months ended September 30, 2007 and 2006 is summarized as follows (Unit: In millions):


	2007			2006
Income tax currently payable	(Won)	1,034,823		(Won)	807,369
Changes in deferred tax assets		(161,125	)		132,219
Income tax expense or benefit allocated directly to shareholder’s equity		168,428			(87,028	)
Income tax expense of overseas branch		1,942			3,129

	(Won)	1,044,068		(Won)	855,689

(6)

The statutory income tax rates applicable to the Bank, including resident tax surcharges, are 27.5 percent for the nine months ended September 30, 2007 and 2006, respectively. However, due to tax adjustments, the effective tax rates for the nine months ended September 30, 2007 and 2006 are 32.25 percent and 27.48 percent, respectively.

25. EARNINGS PER SHARE:

(1)	Basic net income per share

Basic net income per share were calculated for common stock by dividing net income available to common shareholders by the weighted average number of outstanding common stock.

Net income per share for common stock for the nine months ended September 30, 2007 and 2006 was computed as follows:

Outstanding capital stock for the nine months ended September 30, 2007 and 2006 were as follows:


	2007				2006
	Number of shares		Number of shares x number of days		Number of shares			Number of shares x number of days
Number of common shares outstanding-beginning balance	(Won)	336,379,116	(Won)	91,831,498,668	(Won)	336,379,116		(Won)	91,831,498,668
Number of treasury stock outstanding-beginning balance		—		—		(217,935	)		(59,496,255	)
Sale of treasury stock		—		—		217,935			57,298,711

	(Won)	336,379,116	(Won)	91,831,498,668	(Won)	336,379,116		(Won)	91,829,301,124

Weighted average number of common shares outstanding for the nine months ended September 30, 2007: 91,831,498,668 ÷ 273 days = 336,379,116 shares

Weighted average number of common shares outstanding for the nine months ended September 30, 2006: 91,829,301,124 ÷ 273 days = 336,371,066 shares

The basic net income per share for the nine months ended September 30, 2007 and 2006 were as follows (Unit: In Won):


	2007		2006
Net income	(Won)	2,193,778,623,826	(Won)	2,258,100,586,934
Weighted average number of common shares outstanding		336,379,116		336,371,066

Net income per share	(Won)	6,522	(Won)	6,713

The basic net income per share for the year ended December 31, 2006 was (Won) 7,349.

(2)	Diluted net income per share

Diluted net income for the nine months ended September 30, 2007 and 2006 represent diluted net income divided by the number of common shares and diluted securities

Diluted net income per share for the nine months ended September 30, 2007 and 2006 was computed as follows (Unit: In Won):


	2007		2006
Diluted net income	(Won)	2,193,778,623,826	(Won)	2,258,100,586,934
Weighted average number of common shares outstanding and diluted securities (*)		337,139,822		336,374,358

Diluted net income per share	(Won)	6,507	(Won)	6,713

(*)	The fair value of the service to be received has been reflected in the exercise price in calculating the diluted shares. The diluted shares included in the outstanding common shares are 760,706 shares and 3,292 shares as of September 30, 2007 and 2006, respectively.

The diluted net income per share for the year ended December 31, 2006 was (Won) 7,349.

26. COMPREHENSIVE INCOME:

Comprehensive income for the nine months ended September 30, 2007 and 2006 were as follows (Unit: In millions):


	2007			2006
Net income	(Won)	2,193,779		(Won)	2,258,101
Other comprehensive income:
Gain (loss) on valuation of available-for-sale securities		(433,205	)		163,923
Loss on valuation of held-to-maturity securities		(53	)		(273	)
Gain (loss) on valuation of securities using the equity method		(14,955	)		9,233

	(Won)	1,745,566		(Won)	2,430,984

27. TRUST ACCOUNTS:

(1)	Major financial information related to the trust accounts as of and for the nine months ended September 30, 2007 and 2006 were as follows (Unit : In millions):


	2007		*2006 ()**
Operating revenue of trust operation:
Trust fees and commissions from trust accounts	(Won)	69,123	(Won)	71,707
Commissions from early redemption in trust accounts		18		18

	(Won)	69,141	(Won)	71,725

Operating expenses of trust operation:
Accrued interest on trust accounts	(Won)	53,447		32,866

Assets:
Accrued receivable trust fees	(Won)	119,944	(Won)	81,650

Liabilities:
Due to trust accounts	(Won)	1,570,062	(Won)	1,281,185
Accrued interest on trust accounts		5,984		3,017

	(Won)	1,576,046	(Won)	1,284,202

(*)	The balance of the assets and liabilities is as of December 31, 2006.

(2)	As of September 30, 2007 and December 31, 2006, trust accounts for which the Bank provided the guarantees for a fixed rate of return and/or the repayment of principal consisted of following (Unit: In millions):


		2007				2006
	Name of fund	Book value		Fair value		Book value		Fair value
Trust accounts guaranteeing the repayment of principal:	Old age pension (*1 & 2)	(Won)	11,126	(Won)	11,095	(Won)	13,331	(Won)	13,305
	Personal pension (*1 & 2)		2,253,317		2,212,359		2,256,483		2,230,878
	Pension trust		519,627		519,627		463,785		463,785
	Retirement trust		441,408		441,408		512,951		512,951
	New personal pension		68,084		68,084		68,648		68,648
	New old age pension		63,246		63,246		100,176		100,177

			3,356,808		3,315,819		3,415,374		3,389,744


		2007				2006
	Name of fund	Book value		Fair value		Book value		Fair value
Trust accounts guaranteeing a fixed rate of return and the repayment of principal:	Development money trust (*1)	(Won)	81,139	(Won)	81,143	(Won)	70,464	(Won)	70,478
	Unspecified monetary trust (*1)		163		163		153		153

			81,302		81,306		70,617		70,631

		(Won)	3,438,110	(Won)	3,397,125	(Won)	3,485,991	(Won)	3,460,375

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

(*2)	The book value is greater than the fair value, but the Bank is not obligated to pay the difference since these are yield-based dividend instruments.

28. SEGMENT INFORMATION:

(1)

As of September 30, 2007 and December 31, 2006, the Bank’s operating segments are consumer banking, corporate banking, credit card operation, treasury operation of investment in securities (including derivatives) and funding, and other operations of general administration and trust. Geographical segment are segregated into two segments: domestic and overseas operations.

As of and for the nine months ended September 30, 2007, financial information on the Bank’s operating segments was as follows (Unit: In millions):


	Consumer		Corporate		Credit card		Capital market			Other		Total
Securities	(Won)	—	(Won)	14,575	(Won)	77,204	(Won)	28,812,221		(Won)	2,744,717	(Won)	31,648,717
Loans		85,403,968		68,852,345		8,116,880		1,516,615			166,498		164,056,306

Operating income before provision	(Won)	1,475,543	(Won)	711,538	(Won)	585,190	(Won)	(12,038	)	(Won)	1,010,550	(Won)	3,770,783

As of and for the year ended December 31, 2006, financial information on the Bank’s operating segments was as follows (Unit: In millions):


	Consumer		Corporate		Credit card		Capital market		Other		Total
Securities	(Won)	—	(Won)	222,892	(Won)	84,156	(Won)	25,946,509	(Won)	3,128,923	(Won)	29,382,480
Loans		84,258,294		55,001,230		7,608,708		2,872,625		126,325		149,867,182

Operating income before provision (*)	(Won)	1,527,496	(Won)	613,763	(Won)	776,224	(Won)	13,908	(Won)	487,584	(Won)	3,418,975

(*)	For the nine months ended September 30, 2006

(2)	Financial information on the Bank’s geographical segments as of and for the nine months ended September 30, 2007 was as follows (Unit: In millions):


	Domestic		Overseas		Total
Securities	(Won)	31,634,963	(Won)	13,754	(Won)	31,648,717
Loans		163,580,174		476,132		164,056,306

Operating income before provision	(Won)	3,760,262	(Won)	10,521	(Won)	3,770,783

Financial information on the Bank’s geographical segments as of and for the year ended December 31, 2006 was as follows (Unit: In millions):


	Domestic		Overseas		Total
Securities	(Won)	29,382,480	(Won)	—	(Won)	29,382,480
Loans		149,481,281		385,901		149,867,182

Operating income before provision (*)	(Won)	3,406,293	(Won)	12,682	(Won)	3,418,975

(*)	For the nine months ended September 30, 2006

29. RELATED PARTY TRANSACTIONS:

(1)	The subsidiaries of the Bank as of September 30, 2007 and December 31, 2006 were as follows:


	2007	2006
Domestic Subsidiaries	KB Investment Co., Ltd.	KB Investment Co., Ltd.
	KB Futures Co., Ltd.	KB Futures Co., Ltd.
	KB Data System Co., Ltd.	KB Data System Co., Ltd.
	KB Asset Management Co., Ltd.	KB Asset Management Co., Ltd.
	KB Real Estate Trust Co., Ltd.	KB Real Estate Trust Co., Ltd.
	KB Credit Information Co., Ltd.	KB Credit Information Co., Ltd.
	KB Life Insurance Co., Ltd.	KB Life Insurance Co., Ltd.
		NPC 02-4 Kookmin Venture Fund(*)
Overseas Subsidiaries	Kookmin Bank International Ltd. (London)	Kookmin Bank International Ltd. (London)
	Kookmin Bank Hong Kong Ltd.	Kookmin Bank Hong Kong Ltd.

(*)	Excluded from consolidated subsidiaries due to the beginning of liquidation on April 1, 2007 and it has been finalized on September 21, 2007.

(2)	The various employee benefits for the major directors for the nine months ended September 30, 2007 and 2006 were as follows (Unit: In millions):


	2007
	Short-term *employee benefits ()**		Stock option		Total
Registered officers (Standing)	(Won)	3,821	(Won)	3,895	(Won)	7,716
Registered officers (Non-Standing)		407		249		656

	(Won)	4,228	(Won)	4,144	(Won)	8,372


	2006
	Short-term *employee benefits ()**		Stock option		Total
Registered officers (Standing)	(Won)	3,505	(Won)	6,211	(Won)	9,716
Registered officers (Non-Standing)		428		592		1,020

	(Won)	3,933	(Won)	6,803	(Won)	10,736

(*)	Short-term employee benefits are based on the actual payment.

(**)	The key management includes Registered officers who have authorities and responsibilities for decision-making of the business plan, operations and control over the Bank.

(3)	Significant balances with related parties as of September 30, 2007 and December 31, 2006 were as follows (Unit: In millions):


	2007
	Assets		Allowance		Liabilities
Subsidiaries:
Trust accounts (trust accounts guaranteed a fixed rate of return and/or the repayment of principal) (*1)	(Won)	96,404	(Won)	—	(Won)	106,367
KB Investment Co., Ltd.		—		—		8,706
KB Futures Co., Ltd.		51		—		7,811
KB Data System Co., Ltd.		51		—		19,270
KB Asset Management Co., Ltd.		107		—		76,612
KB Real Estate Trust Co., Ltd.		33,860		237		505
KB Credit Information Co., Ltd.		77		—		30,531
KB Life Insurance Co., Ltd.		3,426		—		3,305
Kookmin Bank International Ltd. (London)		379,912		—		86,281
Kookmin Bank Hong Kong Ltd.		173,320		—		1,950

		687,208		237		341,338

Investee under the equity method:
Jooeun Industrial Co., Ltd.		40,732		21,201		—

		40,732		21,201		—

	(Won)	727,940	(Won)	21,438	(Won)	341,338


	2006
	Assets		Allowance		Liabilities
Subsidiaries:
Trust accounts (trust accounts guaranteed a fixed rate of return and/or the repayment of principal) (*1)	(Won)	68,949	(Won)	—	(Won)	157,695
KB Investment Co., Ltd.		—		—		12,608
KB Futures Co., Ltd.		926		—		8,095
KB Data System Co., Ltd.		42		—		22,918
KB Asset Management Co., Ltd.		99		—		58,289
KB Real Estate Trust Co., Ltd.		862		6		549
KB Credit Information Co., Ltd.		120		—		29,462
KB Life Insurance Co., Ltd.		3,167		—		6,113
Kookmin Bank International Ltd. (London)		231,563		—		49,536
Kookmin Bank Hong Kong Ltd.		178,590		—		12,285

		484,318		6		357,550

Investee under the equity method:
Pacific IT Investment Partnership		—		—		51
Jooeun Industrial Co., Ltd.		60,858		31,677		—
NPC 02-4 Kookmin Venture Fund		—		—		13,189

		60,858		31,677		13,240

	(Won)	545,176	(Won)	31,683	(Won)	370,790

(*1)	Trust accounts guaranteeing the repayment of principal or a fixed rate of return.

(4)	Significant transactions with related parties for the nine months ended September 30, 2007 and 2006 were as follows (Unit: In millions):


	2007
	Revenue		Bad debt expenses			*Expenses (2)**
Subsidiaries:
Trust accounts (trust accounts guaranteed a fixed rate of return and/or the repayment of principal) (*1)	(Won)	27,456	(Won)	—		(Won)	4,698
KB Investment Co., Ltd.		—		—			362
KB Futures Co., Ltd.		18		—			1,436
KB Data System Co., Ltd.		55		—			25,240
KB Asset Management Co., Ltd.		649		—			2,455
KB Real Estate Trust Co., Ltd.		186		(231	)		1,937
KB Credit Information Co., Ltd.		124		—			43,663
KB Life Insurance Co., Ltd.		32,798		—			3
Kookmin Bank International Ltd. (London)		7,867		—			2,438
Kookmin Bank Hong Kong Ltd.		8,069		—			1,188

		77,222		(231	)		83,420

Investee under the equity method:
Jooeun Industrial Co., Ltd.		—		(10,239	)		—
NPC 02-4 Kookmin Venture Fund		—		—			279

		—		(10,239	)		279

	(Won)	77,222	(Won)	(10,470	)	(Won)	83,699


	2006
	Revenue		Bad debt expenses			*Expenses(2)**
Subsidiaries:
Trust accounts (trust accounts guaranteed a fixed rate of return and/or the repayment of principal) (*1)	(Won)	31,478	(Won)	—		(Won)	2,920
KB Investment Co., Ltd.		—		—			278
KB Futures Co., Ltd.		17		—			1,306
KB Data System Co., Ltd.		337		—			19,613
KB Asset Management Co., Ltd.		569		—			1,276
KB Real Estate Trust Co., Ltd.		1,273		(48	)		—
KB Credit Information Co., Ltd.		129		—			49,712
KB Life Insurance Co., Ltd.		25,111		—			1
Kookmin Bank International Ltd. (London)		8,341		—			3,170
Kookmin Bank Hong Kong Ltd.		7,439		—			1,571

		74,694		(48	)		79,847

Investee under the equity method:
Pacific IT Investment Partnership		—		—			7
Jooeun Industrial Co., Ltd.		—		364			—
NPC 02-4 Kookmin Venture Fund		3		—			368

		3		364			375

	(Won)	74,697	(Won)	316		(Won)	80,222

(*1)	Trust accounts guaranteeing the repayment of principal or a fixed rate of return.

(*2)	Bad debt expenses excluded.

In addition, the Bank purchased fixed assets from KB Data System Co., Ltd. amounting to (Won) 8,878 million and (Won) 14,332 million for nine months ended September 30, 2007 and 2006, respectively.

30. EMPLOYEE BENEFITS:

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

31. CASH FLOWS:

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

(2)	The cash and due from banks in the statements of cash flows for the nine months ended September 30, 2007 and 2006 were as follows (Unit : In millions)


	2007			2006
Cash and checks	(Won)	2,453,296		(Won)	2,445,798
Foreign currencies		184,095			160,403
Due from banks		4,118,247			2,838,185

		6,755,638			5,444,386
Restricted due from banks		(3,918,936	)		(2,343,500	)

	(Won)	2,836,702		(Won)	3,119,886

(3)	Significant transactions not involving cash inflows and outflows for the nine months ended September 30, 2007 and 2006 were as follows (Unit : In millions):


	2007			2006
Changes in accumulated other comprehensive income from valuation of available-for-sale securities	(Won)	(448,213	)	(Won)	172,883
Increase in available-for-sale securities from debt-equity swap		12,691			—
Decrease in allowance for bad debt by disposal and repurchase of nonperforming loan		47,067			51,443
Write-offs of loans and decrease of loans from principal exemption		662,933			998,165