Earnings Comments. KIH achieved KRW 395 billion in net income of controlling interests due to well diversified business portfolio

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2 Earnings Comments KIH achieved KRW 395 billion in net income of controlling interests due to well diversified business portfolio KIS recorded top-tier net income, backed by earning improvement at all divisions - Client assets increased to KRW trillion from IB fee income increased by KRW 12 billion QoQ - Derivatives and bond trading income decreased by KRW 25 billion QoQ - The first approval of issued note business in Korea is secured in Nov KIM & KIVAM are focusing on pension fund business KIP s AUM is growing owing to consistent fund inflows from retail and wholesale clients - Total AUM reached a record high of KRW 1.97 trillion kakaobank reached 4.35 million customers and loan balance of KRW 3.39 trillion KISB s total assets reached KRW 2.6 trillion, ranking 3rd - Asset quality is the best in the industry with a delinquency ratio of 2.9%, NPL, 2.9% KIC s loan balance increased to KRW 1.74 trillion from 1.44

3 Leading Financial Group in Asia Contents 1. Overview and Earnings Summary 2. Subsidiary Performance 3. Stock Data and Financial Highlights

4 KIH at a Glance (Unit: KRW billion, FY17 3Q K-IFRS consolidated) Asset Equity Net Income Investment Banking The flagship subsidiary of KIH Ranked top-tier in net income First asset management company in Korea with 43 years of experience AUM of KRW 40.1 trillion First long-term value investment company in Korea AUM of KRW 5.0 trillion 37, , Investment Management Korea s largest venture capital AUM of KRW 1.97 trillion A PEF manager specializing in energy and infrastructure AUM KRW 1.28 billion Asset: 46,218 Equity: 4,118 Net Income: Korea s first hedge fund established in Singapore in 2008 Fund NAV of KRW 266 billion Korea s first internet-only bank Began service in June , Commercial Banking & Credit Financing Ranked 3rd in total assets NPL ratio of 2.4%, delinquency ratio of 2.5% (FY17 2Q) Specialized in secured corporate loans Established in November 2014 Corporate loan balance of KRW 1.74 billion 2, , * KIH has 100% ownership in all subsidiaries except Kakaobank of Korea (58%) as of September 30,

5 KIH - Profitability Net income recorded KRW billion due to the diversified business portfolio Breakdown of EBIT (Unit: KRW billion, K-IFRS consolidated) Breakdown of Net Income (Unit: KRW billion, K-IFRS consolidated) KISB KIC KIVAM KIM ,867 KIS 1 (67) (17) Kakaobank Others 2 Sum of Subsidiaries EBIT KIH Net interest Expense KIH Other Expense Income Tax Net Income 1. Excluding KIM, KIVAM 2. KIARA, EQ Partners, Kaobank of Korea, and consolidated adjustment 5

6 KIH Client Assets KIH s client assets reached KRW 219 trillion with steady fund inflows Client Assets of Major Subsidiaries (Unit: KRW trillion) (Unit: KRW trillion) Total Client Assets KIS +11.5% +9.5% Brokerage Wealth Management Q 4Q FY17 1Q 2Q 3Q Others* KIM ㆍ KIVAM KIM/KIVAM KIVAM +1.5% KIS KIM Q 4Q FY17 1Q 2Q 3Q 3Q 4Q FY17 1Q 2Q 3Q * Others: KISB + KIP + KIC + EQP + KIARA + SICAV Fund 6

7 Leading Financial Group in Asia Contents 1. Overview and Earnings Summary 2. Subsidiary Performance 3. Stock Data and Financial Highlights

8 KIS Trading income decreased but KIS showed steady net operating income due to an increase in net interest and fee income Breakdown of Net Operating Income (Unit: KRW billion, separate) Brokerage Wealth Management IB Brokerage net interest Trading Q 4Q FY17 1Q 2Q 3Q QoQ -6.1% -2.0% +7.2% +29.0% +9.5% -24.3% Fee Income & Net Interest Brokerage Retail market trading volume decreased -2.5% QoQ Asset management Financial product sales balance increased by KRW 3.1 trillion (+3.1%) QoQ IB IB fee income increased by KRW 12 billion QoQ Net interest Retail margin loan balance : 3Q 2.09 trillion, 2Q 1.95 trillion Trading Income Trading income in ELS/DLS/ELW decreased by KRW 10 billion and bond trading income decreased by KRW 15 billion QoQ 8

9 KIS KIS ranked No.1 in ROE and No.2 in net income ROE 1 trend of peers FY17 3Q net income (Top 5 IB 2, K-IFRS consolidated) (Unit: KRW billion, K-IFRS consolidated) 12.7% 13% KIS % 7.1% 8.6% 6.3% A Co. B Co % 3.4% C Co. D Co % -3% FY13 FY14 FY15 FY16 FY17 3Q B Co. KIS A Co. E Co. C Co. F Co. D Co. 1. Annualized net income / average total equity 2. B Co. and D Co. merged in FY16 respectively, ROE is calculated before FY15 based on surviving company, after FY16 merger company 9

10 KIS - Brokerage KIS trading volume increased mostly in retail on-line and domestic wholesale Market trading volume 1 KIS trading volume KIS market share 2 (Unit: KRW trillion) Others 3 Foreign Wholesale Domestic Wholesale Retail Off-line 1,198 1, QoQ -1% -7% -1% 6% -5% (Unit: KRW trillion) QoQ % % % % % (FY17 3Q) Market Share & Rank Retail Off-line 11.1% 4 th Retail On-line 7.0% 3 rd Retail Deep Discount 9.3% 3 rd Domestic Wholesale 7.0% 4 th Retail On-line % % Foreign Wholesale 4.4% 3 rd Others 3 6.3% 5 th FY17 2Q FY17 3Q FY17 2Q FY17 3Q 1. KOSPI + KOSDAQ + ELW + ETF 2. Based on available data 3. Proprietary trading + prime brokerage 10

11 KIS - Asset Management Financial product sales balance and number of HNWIs hit a record high Financial product sales balance trend (Unit: KRW trillion) Number of HNWIs (Unit: thousand persons of more than KRW 100 million per account) Alternative Products Others * ELS/DLS Retail Bonds Trusts % % RP Funds Q 4Q FY17 1Q 2Q 3Q 3Q 4Q FY17 1Q 2Q 3Q * Retirement pension, wrap, deposit received, insurance 11

12 KIS - Asset Management KIS maintained No.2 position in pension fund market due to steady fund inflows Pension fund balance 1 trend FY17 3Q pension fund balance market share 2 (Unit: KRW billion) +7.9% Pension fund market 100% = KRW 11.3 trillion 1,771 1,786 1,826 1,855 1,912 Others 22% A Co. 22% F Co. 4% 5% E Co. 6% D Co. 11% C Co. 13% B Co. KIS 17% FY16 3Q 4Q FY17 1Q 2Q 3Q 1. Including old private pension 2. Total pension fund market share (bank, insurance co. and securities co.). 12

13 KIS - IB KIS posted a stellar performance due to diversified sources of profit IB fee breakdown IB volume & ranking (Unit: KRW billion) (Unit: KRW trillion) th 3 rd 2 nd 1 st 3 rd IPO FY13 FY14 FY15 FY16 FY17 3Q ECM DCM Public Offering 4 th 3 rd 2 nd 3 rd 2 nd FY13 FY14 FY15 FY16 FY17 3Q Real Estate Project Financing M&A Financing Bond Underwriting 3 rd 3 rd 2 nd rd rd 6.9 3Q 4Q FY17 1Q 2Q 3Q FY13 FY14 FY15 FY16 FY17 3Q 13

14 KIS ELS Trading Unrivaled derivative house in Korea with diversified profit structure (Unit: KRW billion) ELS 1 DLS 1 ELW CY17 3Q volume & ranking 1 st KIS A Co. B Co. C Co. D Co. 1 st KIS E Co. A Co. B Co. F Co. 1 st 11,784 2,052 1, Net operating income breakdown (Unit: KRW billion, managerial accounting) Market Making 2 ELW ELS/DLS KIS D Co. B Co. A Co. G Co. FY13 FY14 FY15 FY16 FY17 3Q 1. Retail public offering 2. Income of market maker agreement contract with Stock Exchange (stock index futures, stock futures, stock options, currency futures, etc.) 14

15 KIM, KIVAM Focusing on pension fund business, Target Date Fund s AUM exceeded KRW 84.8 billion KIM / KIVAM AUM* FY17 1H TDF market share (Unit: KRW trillion) (Unit: %) KIM s AUM Others Bond/Bond Hybrid Type Equity/Equity Hybrid Type TDF Market 100% = KRW billion C Co. 11% D Co. 6% KIM 20% Release date of TDF KIM: Feb A Co.: Jun B Co.: Apr Q 4Q FY17 1Q 2Q 3Q B Co. 13% KIVAM s AUM Bond/Bond Hybrid Type A Co. 50% Equity/Equity Hybrid Type Q 4Q FY17 1Q 2Q 3Q * Fund + discretionary account 15

16 KIP KIP s AUM reached a record high owing to steady fund inflows AUM newly-organized fund / PEF in CY17 (Unit: KRW billion) (Unit: KRW billion) Venture Capital Fund PEF 1,966 Fund / PEF Amount 1,441 1, Korea Investment Venture Fund Ventrure funds targeting KIS customers 0.3 billion, minimum purchase amount , ,006 1,198 1,408 IBK-KIP Growth PEF Korea Investment Industry 4.0 Venture Fund Korea Investment Credian PEF Investment in superior technical companies that need funding Intensive investment in ventures involved in the fourth industrial revolution Buyout PEF pursuing investment return maximization through increase in company value FY13 FY14 FY15 FY16 FY17 3Q 16

17 kakaobank kakaobank reached 4.35 million customers and loan balance of KRW 3.39 trillion Deposits / Loans status (Unit: KRW trillion, as of October 2017) Remittance number of foreign currency (Unit: thousand) % of Loan Products % 5% 9% Emergency Loans Mid-range Credit Loans % 86% High Credit Loans 10 54% Deposits Loans In Number In Amount

18 KISB KISB ranked 3 rd in total assets and maintained the best asset quality in the industry KISB performance trend Financial soundness indicator (Unit: KRW billion, IFRS) (Unit: %) KISB Industry average * Net Income Delinquency Ratio CY13 CY14 CY15 CY16 CY17 3Q CY14 CY15 CY16 CY17 2Q Loan Balance 1,212 1,425 2,097 2,203 2,619 NPL Ratio CY13 CY14 CY15 CY16 CY17 3Q CY14 CY15 CY16 CY17 2Q * Excluding KISB 18

19 KIC KIC shows stable net income through steady increase of loan balance Loan balance trend FY17 3Q KIC s net income (Unit: KRW trillion) (Unit: KRW billion) Household Housing Loans New Technology, etc Real Estate PF loans Secured Corporate Loans Q 4Q FY17 1Q 2Q 3Q Interest Income 2 Interest Expense SG&A 3 Income Tax Net Income 1. New technology KRW 2.1 billion, retail loan for intermediate payment 2. Including commission income KRW 4.4 billion 3. Including bad debt expense KRW 0.61 billion 19

20 Leading Financial Group in Asia Contents 1. Overview and Earnings Summary 2. Subsidiary Performance 3. Stock Data and Financial Highlights

21 Appendix 1: Share Information Share Data (as of September 30, 2017) Shareholder Information ( 단위 : %, common shares) 100% = 55,725,992 Issued Shares 61,584,243 Common Shares 55,725,992 Free floating shares 20.9 Namgoo KIM 20.2 Preferred Shares 5,858,251 Credit Rating Market Capitalization (Common Shares) AA- (Domestic Rating) KRW 3.41 trillion Foreign investors 21.9 Orbis 7.4 Invesco 6.1 Treasury 5.4 And affiliated National Pension service 9.1 Long-term foreign investors 5.1 Truston Asset management

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