hcc 2013 audit_en

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012, AND INDEPENDENT AUDITORS’ REPORT

Independent Auditors’ Report English Translation of a Report Originally Issued in Korean To the Shareholders and Board of Directors of Hyundai Card Co., Ltd.: We have audited the accompanying consolidated financial statements of Hyundai Card Co., Ltd. (the “Company”) and its subsidiaries (the “Consolidated Entity”). The financial statements consist of the consolidated statements of financial position as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, consolidated statements of changes in shareholders’ equity and consolidated statements of cash flows, all expressed in Korean won, for the years ended December 31, 2013 and 2012. The Company’s management is responsible for the preparation and fair presentation of the consolidated financial statements and our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years ended December 31, 2013 and 2012, in conformity with Korean International Financial Reporting Standards (“K-IFRS”). Accounting principles and auditing standards and their application in practice vary among countries. The accompanying consolidated financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying consolidated financial statements are for use by those knowledgeable about Korean accounting principles and auditing standards and their application in practice. March 12, 2014

Notice to Readers This report is effective as of March 12, 2014, the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’ report date and the time the auditors’ report is read. Such events or circumstances could significantly affect the accompanying consolidated financial statements and may result in modifications to the auditors’ report.

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES (the “Consolidated Entity”) CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

The accompanying consolidated financial statements, including all footnote disclosures, were prepared by and are the responsibility of the Consolidated Entity.

Chung, Tae Young Chief Executive Officer

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2013 AND 2012

(Unit: Korean won) December 31, 2013 December 31, 2012 January 1, 2012 ASSETS: CASH AND BANK DEPOSITS (Notes 5, 31, 32 and 33):

Cash and cash equivalents ￦ 965,455,273,460 ￦ 791,547,295,193 ￦ 830,022,903,023 Bank deposits 33,031,500,000 33,029,000,000 33,031,500,000 Total cash and bank deposits 998,486,773,460 824,576,295,193 863,054,403,023

INVESTMENT FINANCIAL ASSETS (Notes 6 and 33): Financial assets available-for-sale (AFS) 1,766,969,764 1,766,969,764 1,766,969,764 Total investment financial assets 1,766,969,764 1,766,969,764 1,766,969,764

CARD ASSETS (Notes 7, 8, 30, 32 and 33):

Card receivables, net of present value discounts, deferred origination fees and allowance for doubtful accounts 6,313,106,238,640 6,530,709,506,111 6,432,351,415,041

Cash advances, net of allowance for doubtful accounts 818,108,800,994 906,232,767,098 978,117,626,263 Card loans, net of present value discounts, deferred loan

origination fees and allowance for doubtful accounts 2,597,951,734,450 2,270,095,402,706 1,963,797,640,687 Total card assets 9,729,166,774,084 9,707,037,675,915 9,374,266,681,991

Loans

Other loans, net of allowance for doubtful accounts - - 469,647,440 Total cash and bank deposits - - 469,647,440

PROPERTY AND EQUIPMENT (Notes 9, 11, 14 and 30):

Land 122,011,816,788 122,011,816,788 83,994,796,609 Buildings, net of accumulated depreciation 72,882,206,486 60,330,598,734 42,186,583,765 Vehicles, net of accumulated depreciation 50,595,808 163,464,977 270,015,754 Fixtures and equipment, net of accumulated depreciation 53,694,222,895 56,690,437,564 57,974,548,577 Finance lease assets 277,834,126 1,389,170,627 2,500,507,128 Construction in progress 33,125,461,350 23,797,602,168 471,628,080

Total property and equipment 282,042,137,453 264,383,090,858 187,398,079,913

OTHER FINANCIAL ASSETS (Notes 5, 8, 19, 30, 32 and 33):

Other accounts receivable, net of allowance for doubtful accounts 93,483,695,738 85,387,050,368 44,939,903,548

Accrued revenue, net of allowance for doubtful accounts 46,807,953,115 43,654,761,801 43,753,371,236 Guarantee deposits 34,819,962,715 52,348,673,218 52,758,804,118 Derivative assets 2,750,372,571 901,423,501 2,555,101,143

Total other financial assets 177,861,984,139 182,291,908,888 144,007,180,045

OTHER NON-FINANCIAL ASSETS (Notes 8, 10, 26 and 30):

Advance payments, net of allowance for doubtful accounts 12,298,291,571 11,254,701,307 25,223,575,660 Prepaid expenses 46,967,290,940 48,279,724,993 48,548,656,736 Intangible assets 127,029,551,626 74,664,032,134 72,976,002,526 Deferred income tax assets 143,222,807,823 135,666,642,303 112,403,093,896 Others 2,035,111,023 2,342,574,040 21,819,424,816

Total other non-financial assets 331,553,052,983 272,207,674,777 280,970,753,634 Total Assets ￦ 11,520,877,691,883 ￦11,252,263,615,395 ￦10,851,933,715,810

(Continued)


CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)

AS OF DECEMBER 31, 2013 AND 2012

(Unit: Korean won) December 31, 2013 December 31, 2012 January 1, 2012 LIABILITIES AND SHAREHOLDERS’ EQUITY:

BORROWINGS:

Borrowings (Notes 12, 32 and 33) ￦ 212,500,000,000 ￦ 487,500,000,000 ￦ 590,000,000,000 Bonds payable, net of discounts on bonds (Notes 13, 29, 32 and 33) 6,978,262,324,353 6,533,175,825,125 6,481,760,496,118

Total borrowings 7,190,762,324,353 7,020,675,825,125 7,071,760,496,118

RETIREMENT BENEFIT (Note 15) Retirement benefit obligation 3,367,411,536 10,695,054,186 17,774,550,158

Total retirement benefit 3,367,411,536 10,695,054,186 17,774,550,158

OTHER FINANCIAL LIABILITIES (Notes 14, 19, 30, 32 and 33): Accounts payable 1,063,742,843,494 1,186,714,518,145 1,066,705,610,154 Withholdings 126,896,545,334 123,824,521,370 64,312,342,703 Accrued expenses 191,925,249,569 139,353,829,793 140,922,092,976 Finance lease liabilities 298,002,314 1,452,239,137 2,548,330,830 Derivative liabilities 48,665,166,455 53,554,957,780 5,326,133,113 Guarantee deposits 8,076,226,724 12,776,716,986 11,684,414,000

Total other financial liabilities 1,439,604,033,890 1,517,676,783,211 1,291,498,923,776

OTHER NON-FINANCIAL LIABILITIES : Withholdings 7,850,826,740 6,968,385,070 5,649,822,585 Unearned revenue (Note 17) 393,154,182,657 397,830,493,299 347,865,031,849 Provisions (Notes 18 and 28) 86,321,526,532 75,687,285,760 80,233,007,232 Current tax liability 33,669,310,842 30,439,361,053 40,468,853,188

Total other non-financial liabilities 520,995,846,771 510,925,525,182 474,216,714,854

SHAREHOLDERS’ EQUITY : Attributable to owners of the Company Share capital (Note 20) 802,326,430,000 802,326,430,000 802,326,430,000 Capital surplus (Note 21) 57,704,443,955 57,704,443,955 57,704,443,955 Retained earnings (Notes 22 and 24) 1,511,954,114,940 1,348,744,482,014 1,154,445,886,596 Reserves (Notes 23 and 26) (5,856,733,562) (16,504,748,278) (17,813,549,647)

Non-controlling interest 19,820,000 19,820,000 19,820,000 Total shareholders’ equity 2,366,148,075,333 2,192,290,427,691 1,996,683,030,904

Total Liabilities and Shareholders’ Equity ￦ 11,520,877,691,883 ￦ 11,252,263,615,395 ￦ 10,851,933,715,810

(Concluded) See accompanying notes to consolidated financial statements.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

(Unit: Korean won)

Year ended

December 31, 2013 Year ended

December 31, 2012 OPERATING REVENUE:

Card income (Notes 30, 33 and 35) ￦ 2,453,282,496,374 ￦ 2,388,278,853,242 Interest income (Notes 33 and 34) 20,566,269,302 22,593,511,595 Gain on disposal of financial assets AFS (Note 33) - - Reversal of impairment loss on financial assets AFS 81,187,900 461,757,518 Dividend income 351,635,696 477,523,977 Reversal of provision for unused credit limits (Note 18) - 781,111,756 Other operating revenue (Notes 2 and 36) 53,197,571,481 113,042,414,018

Total operating revenue 2,527,479,160,753 2,525,635,172,106 OPERATING EXPENSES:

Card expenses (Notes 30, 33 and 35) 1,028,249,651,605 1,043,710,631,004 Interest expenses (Notes 33 and 34) 312,928,664,959 343,398,755,949 General and administrative expenses (Notes 25 and 30) 636,477,645,013 606,068,487,106 Securitization expenses 325,819,518 367,539,337 Bad debt expense and loss on disposal of loans 247,746,973,428 202,956,968,418 Transfer to provision for unused credit limits (Note 18) 1,111,380,052 - Other operating expenses (Notes 2 and 36) 80,714,349,715 91,937,747,576

Total operating expenses 2,307,554,484,290 2,288,440,129,390

OPERATING INCOME 219,924,676,463 237,195,042,716 NON-OPERATING INCOME (Notes 2 and 30):

Gain from sale of property and equipment 141,866,664 9,133,500 Reversal of impairment loss for intangible assets 11,000,000 - Rental revenue (Note 30) 2,797,729,690 2,157,675,587

Miscellaneous gain 201,932,331 200,026,435 Total non-operating income 3,152,528,685 2,366,835,522

NON-OPERATING EXPENSES (Note 2):

Loss from sale of property and equipment 2,545,917,969 577,531,514 Impairment loss for intangible assets 37,049,470 512,947,720 Donations 1,720,970,527 1,920,539,994

Miscellaneous loss - 115,000,000 Total non-operating expenses 4,303,937,966 3,126,019,228

INCOME BEFORE INCOME TAX 218,773,267,182 236,435,859,010 INCOME TAX EXPENSE (Note 26) 55,563,634,256 42,137,263,592 INCOME FOR THE YEAR 163,209,632,926 194,298,595,418 (Continued)


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)


(Unit: Korean won)

Year ended

December 31, 2013 Year ended

December 31, 2012 OTHER COMPREHENSIVE INCOME (LOSS) FOR THE YEAR

Items not reclassified subsequently to profit or loss ￦ 3,989,251,358 ￦ (2,970,032,179) Remeasurements of net defined benefit liability 5,278,288,527 (3,918,248,257) Income tax effect (1,289,037,169) 948,216,078 Items reclassified subsequently to profit or loss 6,658,763,358 4,278,833,548 Cash flow hedging gains or losses 8,764,406,892 5,643,497,691 Income tax effect (2,105,643,534) (1,364,664,143)

Total other comprehensive income (loss) 10,648,014,716 1,308,801,369 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 173,857,647,642 195,607,396,787 Net income attributable to: Owners of the Company 163,209,632,926 194,298,595,418 Non-controlling interests - - Total comprehensive income attributable to: Owners of the Company 173,857,647,642 195,607,396,787

Non-controlling interests - - Earnings per share (in Korean won per share) (Note 27) Basic earnings per share ￦ 1,017 ￦ 1,211 Diluted earnings per share ￦ 1,017 ￦ 1,211

(Concluded)

See accompanying notes to consolidated financial statements.


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


(Unit: Korean won)

Share capital

Capital surplus Reserves

Attributable to owners of the

Company

Non-controlling

interests Total

Share premium

Other capital

Retained earnings

Cash flow hedging

reserves

Remeasurements of the net defined

benefit liability

Balance at January 1, 2012 ￦802,326,430,000 ￦ 45,399,364,539 ￦12,305,079,416 ￦ 1,148,396,655,980 ￦(11,764,319,031) ￦ - ￦ 1,996,663,210,904 ￦ 19,820,000 ￦ 1,996,683,030,904

Changes in accounting policy - - - 6,049,230,616 -

(6,049,230,616) - -

Restated balance 802,326,430,000 45,399,364,539 12,305,079,416 1,154,445,886,596 (11,764,319,031) (6,049,230,616) 1,996,663,210,904 19,820,000 1,996,683,030,904

Comprehensive income (loss)

Net income - - - 194,298,595,418 - - 194,298,595,418 - 194,298,595,418 Other

comprehensive income (loss) - - - - 4,278,833,548 (2,970,032,179) 1,308,801,369 - 1,308,801,369

Balance at December 31, 2012 802,326,430,000 45,399,364,539 12,305,079,416 1,348,744,482,014 (7,485,485,483) (9,019,262,795) 2,192,270,607,691 19,820,000 2,192,290,427,691

Balance at January 1, 2013 802,326,430,000 45,399,364,539 12,305,079,416 1,348,744,482,014 (7,485,485,483) (9,019,262,795) 2,192,270,607,691 19,820,000 2,192,290,427,691

Comprehensive income (loss) Net income - - - 163,209,632,926 - - 163,209,632,926 - 163,209,632,926 Other

comprehensive income (loss) - - - - 6,658,763,358 3,989,251,358 10,648,014,716 - 10,648,014,716

Balance at December 31, 2013 ￦802,326,430,000 ￦ 45,399,364,539 ￦ 12,305,079,416 ￦ 1,511,954,114,940 ￦ (826,722,125) ￦ (5,030,011,437) ￦ 2,366,128,255,333 ￦ 19,820,000 ￦ 2,366,148,075,333



CONSOLIDATED STATEMENTS OF CASH FLOWS


Years ended December 31, 2013 2012

(Unit: Korean won) CASH FLOWS FROM OPERATING ACTIVITIES:

Income for the year ￦ 163,209,632,926 ￦ 194,298,595,418 Income tax expense 55,563,634,256 42,137,263,592 Interest income (20,566,269,302) (22,593,511,595) Interest expense 312,928,664,959 343,398,755,949 Dividend received (351,635,696) (477,523,977) Bad debt expense and loss on disposal of receivables 247,746,973,428 202,956,968,418 Retirement benefits 10,006,031,553 9,320,707,981 Depreciation 28,135,382,607 26,992,252,034 Amortization 15,934,213,569 14,180,876,300 Loss on foreign currency translation - 38,093,094 Loss on valuation of trading derivatives 10,533,333,291 55,633,000,000 Increase (decrease) in provision for unused credit limit 1,111,380,052 (781,111,756) Increase (decrease) in provision for others 12,735,354,786 (3,764,609,716) Loss from sale of property and equipment 2,545,917,969 577,531,514 Other operating losses 1,574,904,553 924,569,785 Impairment loss of intangible assets 37,049,470 512,947,720 Sales promotional expenses 18,362,974,301 34,842,719,771 Reversal of impairment loss of financial assets AFS (81,187,900) (461,757,518) Gain on foreign currency translation (10,503,084,778) (55,663,248,513) Amortization of present value discounts of card assets (20,029,481,150) (40,906,150,359) Amortization of deferred origination fees of card assets (20,991,695,981) (18,129,500,265) Gain from sale of property and equipment (141,866,664) (9,133,500) Reversal of impairment loss for intangible assets (11,000,000) - Other operating gains (140,912,653) -

Changes in working capital: Increase in card assets (247,839,888,482) (513,584,929,632) Decrease in other receivables - 500,000,000 Increase in other financial assets (8,872,081,850) (41,853,625,282) Increase (decrease) in other non-financial assets (562,067,000) 8,425,805,126 Decrease in guarantee deposit 17,528,710,503 21,000,758,986 Decrease in derivative assets - 1,865,000,000 Decrease in retirement benefit obligations (3,836,009,470) (5,633,619,727) Increase in plan asset (8,208,753,201) (13,726,405,314) Decrease in derivative liabilities (8,507,666,797) (1,972,000,000) Decrease in capital lease liabilities (1,154,236,823) (1,096,091,693) Decrease (increase) in other financial liabilities (108,318,688,454) 168,017,357,285 Decrease (increase) in other non-financial liabilities (4,676,310,642) 49,965,461,450

Cash generated from operating activities Interest received 20,852,490,398 24,109,712,867 Interest paid (287,912,166,505) (324,680,224,065) Dividend received 351,635,696 477,523,977 Income tax paid (63,284,530,687) (76,794,968,277)

Net cash provided by operating activities 103,168,750,282 78,047,490,078

(Continued)


CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)



(Unit: Korean won) CASH FLOWS FROM INVESTING ACTIVITIES:

Disposal of investment financial assets ￦ 81,187,900 ￦ 461,757,518 Disposal of property and equipment 183,243,052 30,217,356 Disposal of intangible assets 2,280,308,566 1,250,000,000 Net decrease (increase) in bank deposit (2,500,000) 2,500,000 Acquisition of property and equipment (40,826,493,302) (99,177,344,840) Acquisition of intangible assets (67,168,908,441) (18,435,122,958)

Net cash used in investing activities (105,453,162,225) (115,867,992,924)

CASH FLOWS FROM FINANCING ACTIVITIES: Increase in borrowings 4,705,000,000,000 7,680,000,000,000 Proceeds from issue of bonds payable 2,328,772,226,400 3,342,529,395,016 Repayment of borrowings (4,980,000,000,000) (7,782,500,000,000) Repayment of bonds payable (1,877,579,836,190) (3,240,684,500,000)

Net cash provided by (used in) financing activities 176,192,390,210 (655,104,984)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 173,907,978,267 (38,475,607,830)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 791,547,295,193 830,022,903,023

CASH AND CASH EQUIVALENTS, END OF YEAR ￦ 965,455,273,460 ￦ 791,547,295,193

(Concluded)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 1. GENERAL:

Hyundai Card Co., Ltd. (the “Company” or the “Parent”), which is a controlling company in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1110, Consolidated Financial Statements, is engaged in the credit card business under the Specialized Credit Financial Business Law of Korea. On June 15, 1995, the Parent acquired the credit card business of Korea Credit Circulation Co., Ltd. and on June 16, 1995, Korean government granted permission to the Parent to engage in the credit card business. As of December 31, 2013, the Parent has approximately 7.04 million card members, 2.07 million registered merchants, and 167 marketing centers, branches and posts. Its headquarters is located in Yoido, Seoul. As of December 31, 2013, the total common stock of the Parent is ￦802,326 million. The shareholders of the Parent and their respective ownerships as of December 31, 2013 and 2012, are as follows:

Shareholder December 31, 2013 December 31, 2012 Number of shares % of ownership Number of shares % of ownership

Hyundai Motor Co., Ltd. 59,301,937 36.96 50,572,187 31.52 Kia Motors Co., Ltd. 18,422,142 11.48 18,422,142 11.48 Hyundai Steel Co., Ltd. - 0.00 8,729,750 5.44 GE Capital Int’l Holdings 69,000,073 43.00 69,000,073 43.00 Hyundai Commercial Inc. 8,889,622 5.54 8,889,622 5.54 Others 4,851,512 3.02 4,851,512 3.02 Totals 160,465,286 100.00 160,465,286 100.00

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Company maintains its official accounting records in the Korean won and prepares consolidated financial statements in conformity with Korean statutory requirements and Korean International Financial Reporting Standards (“K-IFRS”), in Korean language (Hangul). Accordingly, these consolidated financial statements are intended for use by those who are informed about K-IFRS and Korean practices. Certain information included in the Korean language financial statements, but not required for a fair presentation of the Company’s financial position, operating results, changes in shareholders’ equity or cash flows, is not presented in the accompanying consolidated financial statements.

(1) Basis of Preparation The Parent and its subsidiaries (the “Consolidated Entity”) have adopted K-IFRS for the annual period beginning on January 1, 2011. The Consolidated Entity’s significant accounting policies applied for the accompanying consolidated financial statements are the same as the policies applied for the preparation of the consolidated financial statements for the year ended December 31, 2012, except for the effects from the introduction of new and revised accounting standards or interpretations as described below. The consolidated financial statements have been prepared on the historical cost basis except for certain non-current assets and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

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1) Accounting standards and interpretations that were newly applied for the year ended December 31, 2013, and changes in the Company’s accounting policies are as follows:

K-IFRS 1001, Presentation of Financial Statements (Revised) The amendments to K-IFRS 1001 require an entity to present items in the other comprehensive income section to be grouped into those that will not be reclassified subsequently to profit or loss, and will be reclassified subsequently to profit or loss when specific conditions are met. These amendments have an effect only on presentation of consolidated financial statements and do not have an effect on the Consolidated Entity’s financial position or operating results. The comparative consolidated financial statements are restated retrospectively applying the amendments.

K-IFRS 1019, Employee Benefits (Revised) The amendments to K-IFRS 1019 require the recognition of actuarial gains and losses in other comprehensive income and hence eliminate the ‘corridor approach’ and ‘immediate recognition in profit and loss approach’ permitted under the previous version. Expected return on plan assets is measured using the discount rate used in measuring defined benefit obligations instead of using an independent expected return and presented in net interest on the net defined benefit liability. Meanwhile, the Consolidated Entity shall recognize past service cost as an expense at the earlier date between when the plan amendment or curtailment occurs and when the entity recognizes related restructuring costs or termination benefits. The Consolidated Entity applied the effect of changes in accounting policy retrospectively and the comparative consolidated financial statements are restated retrospectively applying the amendments. K-IFRS 1107, Financial Instruments: Disclosures (Revised) The amendments to K-IFRS 1107 increase the disclosure requirements to include information about offsetting financial assets and financial liabilities. The revised accounting standards require disclosure of information on conditional rights of setoff that are enforceable and exercisable only in the events mentioned in agreements regardless of meeting some or all of the offsetting criteria in K-IFRS 1032. The Consolidated Entity discloses the information comparatively (see Note 33 (2)). K-IFRS 1110, Consolidated Financial Statements (Issued) The standard supersedes K-IFRS 1027, Consolidated and Separate Financial Statements, and SIC-2012, Consolidation – Special Purpose Entities. K-IFRS 1110 establishes a single source of guidance in the application of definition of control. The standard states that an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. These enactments referred above do not have an effect on the Consolidated Entity’s consolidated financial statements and disclosures. K-IFRS 1111, Joint Arrangements (Issued) K-IFRS 1111 deals with how a joint arrangement of which two or more parties have joint control should be determined. Under K-IFRS 1111, joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e., joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e., joint venturers) have rights to the net assets of the arrangement. Under joint operations, a joint operator recognizes and measures assets, liabilities, related revenues and expenses in relation to its interest in the arrangement. Under joint ventures, a joint venturer recognizes an investment and accounts for that investment using the equity method. These enactments referred above do not have an effect on the Consolidated Entity’s consolidated financial statements and disclosures.

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K-IFRS 1112, Disclosures of Interests in Other Entities (Issued) K-IFRS 1112 improves disclosures of reporting entities that have an interest in a subsidiary, a joint arrangement, an associate or unconsolidated structured entity. The standard requires an entity to disclose the nature of, and risks associated with, its interests in other entities and the effects of those interests on its financial position, financial performance and cash flows. The Consolidated Entity discloses the information on interests in subsidiaries (see Note 4).

K-IFRS 1113, Fair Value Measurements (Issued)

K-IFRS 1113 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The standard defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. The standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). When measuring fair value, an entity uses the assumptions that market participants would use when pricing the asset or liability. The standard explains that a fair value measurement requires an entity to determine the particular asset or liability being measured, the market in which an orderly transaction would take place for the asset and liability and the appropriate valuation techniques to use when measuring fair value. Also, the standard requires wider disclosures about fair value measurements. The Consolidated Entity discloses the additional information about fair value measurements (see Note 33 (4), (5)).

The effects on the consolidated statement of financial position and the consolidated statement of comprehensive income by accounting standards and interpretations that were newly applied for the year ended December 31, 2013, and changes in the Consolidated Entity’s accounting policies are as follows: Consolidated statement of financial position

As of December 31, 2012 Before changes After changes

Attributable to owners of the Company Share capital and capital surplus ￦ 860,030,873,955 ￦ 860,030,873,955 Retained earnings 1,339,725,219,219 1,348,744,482,014

Reserve (7,485,485,483) (16,504,748,278) Non-controlling interests 19,820,000 19,820,000

￦ 2,192,290,427,691 ￦ 2,192,290,427,691

As of January 1, 2012 Before changes After changes

Attributable to owners of the Company Share capital and capital surplus ￦ 860,030,873,955 ￦ 860,030,873,955 Retained earnings 1,148,396,655,980 1,154,445,886,596

Reserve (11,764,319,031) (17,813,549,647) Non-controlling interests 19,820,000 19,820,000

￦ 1,996,683,030,904 ￦ 1,996,683,030,904

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Consolidated statement of comprehensive income

Year ended December 31, 2012 Before changes After changes

Operating income ￦ 233,276,794,459 ￦ 237,195,042,716 Non-operating income 2,366,835,522 2,366,835,522 Non-operating expenses 3,126,019,228 3,126,019,228 Income before income tax expenses 232,517,610,753 236,435,859,010 Income tax expenses 41,189,047,514 42,137,263,592 Net income for the period 191,328,563,239 194,298,595,418 Other comprehensive income 4,278,833,548 1,308,801,369 Items not reclassified subsequently to

profit or loss - (2,970,032,179) Remeasurements of the net defined

benefit liability -

(3,918,248,257) Income tax effect - 948,216,078 Items reclassified subsequently to profit

or loss 4,278,833,548

4,278,833,548

Cash flow hedging gains or losses 5,643,497,691 5,643,497,691 Income tax effect (1,364,664,143) (1,364,664,143) Total comprehensive income for the period ￦ 195,607,396,787 ￦ 195,607,396,787

The list above does not include some other amendments such as the amendments to K-IFRS 1032 relating to ‘Tax effects of the distribution on the equity instruments holders’ that are newly adopted from the current year. But the enactments referred above do not have any significant effect on the Consolidated Entity’s consolidated financial statements and disclosures.

2) The Consolidated Entity has not applied or adopted earlier the following new and revised K-IFRSs that

have been issued, but are not yet effective: K-IFRS 1032, Financial Instruments: Presentation (Revised) The amendments to K-IFRS 1032 clarify existing application issue relating to the offset of financial assets and financial liabilities requirements. The Consolidated Entity’s right of setoff must not be contingent upon any future events but enforceable anytime during the contract period in all of the circumstances — in the event of default, insolvency or bankruptcy of the entity or the counterparties, as well as in the ordinary course of business. The amendments to K-IFRS 1032 are effective for annual periods beginning on or after January 1, 2014. K-IFRS 1039, Financial Instruments: Recognition and Measurement (Revised) The amendment to K-IFRS 1039 allows the continuation of hedge accounting when a derivative is novated to a clearing counterparty or entity acting in a similar capacity and certain conditions are met. The amendment to K-IFRS 1039 is effective for annual periods beginning on or after January 1, 2014. K-IFRS 1110, 1112, and 1027, Investment Entities (Revised) The amendments introduce an exception to the principle under K-IFRS 1110 that all subsidiaries shall be consolidated and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss (FVTPL) in its consolidated and separate financial statements. In addition, consequential amendments have been made to K-IFRS 1112 and K-IFRS 1027 to introduce new disclosure requirements for investment entities. The investment entities amendments are effective for annual periods beginning on or after January 1, 2014. The list above does not include some other amendments such as the amendments to K-IFRS 1036 relating to ‘Recoverable amount disclosures for non-financial assets’ that are effective January 1, 2014, with earlier application permitted. The Consolidated Entity does not anticipate that these amendments referred above will have a significant effect on the Consolidated Entity’s consolidated financial statements and disclosures.

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Meanwhile, the Consolidated Entity’s consolidated financial statements of 2013 were approved by the Board of Directors, and the approval date for publication is on February 27, 2014.

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

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

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

Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Carrying amounts of the non-controlling interests in subsidiaries are adjusted by the changes in the proportion of the equity held by non-controlling interests after initial acquisition of non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by the Company. All intragroup transactions, balances, income and expenses are eliminated in full on consolidation. Changes in the Company’s ownership interests in subsidiaries without loss of control are accounted for as equity transactions. The carrying amounts of the Company’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company. When the Parent loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognized in other comprehensive income and accumulated in equity, the amounts previously recognized in other comprehensive income and accumulated in equity are accounted for as if the Parent had directly disposed of the relevant assets (i.e., reclassified to profit or loss or transferred directly to retained earnings). The fair value of any investment retained in the former subsidiary at the date when control is lost is recognized as the fair value on initial recognition for subsequent accounting under K-IFRS 1039, Financial Instruments: Recognition and Measurement, or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity.

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2) Card assets

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

① Card Receivables

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

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

3) Financial assets

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

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

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② Financial assets at FVTPL

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

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

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

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

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

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

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

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

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

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

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⑤ Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortized cost using the effective interest rate method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effects of discount would be immaterial. ⑥ Impairment of financial assets

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

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

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

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⑦ Derecognition of financial assets

The Consolidated Entity derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Consolidated Entity neither transfers or retains substantially all the risks and rewards of ownership but continues to control the transferred asset, the Consolidated Entity recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Consolidated Entity retains substantially all the risks and rewards of ownership of a transferred financial asset, the Consolidated Entity continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received. If the Consolidated Entity derecognizes the entire financial asset, the difference between total received amount plus the sum of cumulative income recognized in other comprehensive income and the book value of the asset is recognized in income (loss) for the period. If the Consolidated Entity does not derecognize the entire financial asset (for example, the Consolidated Entity holds either an option to repurchase a certain portion of the asset or remaining equity, which does not allow the Consolidated Entity to hold the most of the risks and benefits from the financial asset or the Consolidated Entity controls assets), the Consolidated Entity divides the book value of financial assets into a recognized part and a unrecognized part in accordance with relative fair value of each portion. The difference between total received amount for derecognized portion of the asset plus the sum of cumulative income recognized in other comprehensive income and the book value of the asset is recognized in income (loss) for the period. Cumulative income recognized in other comprehensive income is divided into a recognized part and a unrecognized part in accordance with relative fair value of each portion. 4) Property, plant and equipment Property, plant and equipment are stated at cost less subsequent accumulated depreciation and accumulated impairment losses. The cost of an item of property and equipment is directly attributable to their purchase or construction, which includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. It also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Subsequent costs are recognized in the carrying amount of an asset or as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Consolidated Entity and the cost of an asset can be measurable. Routine maintenance and repairs are expensed as incurred. The Consolidated Entity does not depreciate land. Depreciation expense is computed using the straight-line method based on the estimated useful lives of the assets as follows:

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

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

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5) Lease A lease is classified as a finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Consolidated Entity recognizes the lesser of the current value of minimum lease payment and the fair value of lease assets as capital lease assets and capital lease liabilities. Lease payments are apportioned to each period between interest expense and the reduction of lease liabilities to produce a constant periodic rate of interest on the remaining balance of lease liability. Financial cost except for certain qualifying assets, in accordance with the Consolidated Entity’s accounting policies is recognized immediately as an expense in the period. Any adjustments to lease payment are recognized as cost when it occurred. 6) Intangible assets ① Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful lives and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. ② Internally generated intangible assets - research and development expenditure

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

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④ Disposal of intangible assets

If future economic benefits are not expected through the use or disposition of the intangible assets, the Consolidated Entity removes the book value of the assets from the consolidated financial statements. The difference between the amounts received from the disposal of intangible assets and the book values of the assets are recognized as income (loss) of the period when the assets are removed. 7) Impairment of tangible and intangible assets other than goodwill At the end of each reporting period, the Consolidated Entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Entity estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, assets for which recoverable amounts are not individually estimated are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the assets may be impaired. Recoverable amounts are the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or the cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in income (loss) for the period. If impairment recognized in prior periods is reversed, the book value of the individual assets (or cash-generating unit) is the smaller of the carrying amount of the recoverable amount and the book value that the impairment would not have recognized in prior periods and the reversal of impairment loss is recognized immediately in income (loss) for the period at the time. 8) Provisions Provisions are recognized when the Consolidated Entity has a present obligation (legal or constructive) as a result of a past event, it is probable that the Consolidated Entity will be required to settle the obligation and the amount of the obligation is reliably estimated. The amounts recognized as a provision are the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. At the end of each reporting period, the remaining provision balance is reviewed and assessed to determine if the current best estimate is being recognized. If the existence of an obligation to transfer economic benefit is no longer probable, the related provision is reversed during the period.

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

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

② Equity instruments

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

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

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

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

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

When economic characteristics and risks of an embedded derivative are not closely related to the host contract and a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and the changes in fair value of hybrid contract are not recognized in income (loss) for the period, the Consolidated Entity accounts for the embedded derivative separately from the host contract. ② Hedge accounting The Consolidated Entity designates certain derivative instruments as cash flow hedges. At the inception of the hedge relationship, the Consolidated Entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Consolidated Entity documents whether the hedging instrument is highly effective in offsetting changes in cash flows of the hedged item. ③ Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in income (loss) for the period, and is included in the other operating revenue or expenses line item. Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to income (loss) for the period when the hedged item is recognized in income (loss) for the period. Hedge accounting is discontinued when the Consolidated Entity revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or it no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized in profit or loss. When a forecasted transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss. 11) Share capital

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

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

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

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

13) Interest income and expense

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

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14) Dividend revenue

Dividend income from investments is recognized when the shareholder’s right to receive the payment of dividends has been established. 15) Foreign currency translation

The individual financial statements of the consolidated entities are presented in the currency of the primary economic environment in which the Company operates (its functional currency). For the purpose of the consolidated financial statements, the results of operations and financial position of each entity are expressed in Korean won, which is the functional currency of the Parent and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the date of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in income (loss) for the period in which they arise, except for exchange differences on transactions entered into in order to hedge certain foreign currency risks. See Note 2 (10) above for hedging accounting policies.

16) Retirement benefit costs Contributions to defined contribution plans are recognized as an expense when employees have rendered service entitling them to the contributions. For defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. The present value of defined benefit obligations is determined by the discount rate that reflects the current rate of return on a high-quality corporate bond (or, in countries where there is no deep market in such bonds, government bonds) of equivalent term and currency to the plan liabilities.

Actuarial gains and losses are changes in the present value of the defined benefit obligation resulting from experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred) and the effects of changes in actuarial assumptions. Past service cost is recognized immediately to the extent that the benefits are already vested and, otherwise, is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the consolidated statements of financial position represents the present value of the defined benefit obligation, as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to unrecognized actuarial losses and past service cost, plus the present value of available economic benefits of refunds and reductions in future contributions to the plan. A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit or when the entity recognizes any related restructuring costs. 17) Taxation Income tax consists of current tax and deferred tax. ① Current tax

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

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② Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable income. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred income tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable income will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the taxable or deductible temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable income (taxable deficit) nor the accounting income. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates and interests in joint ventures, except where the Consolidated Entity is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable income against which the benefits of the temporary differences can be utilized and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Consolidated Entity expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. The Consolidated Entity shall offset deferred tax assets and deferred tax liabilities if, and only if the Consolidated Entity has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities that intend either to settle current tax liabilities and assets on a net basis or realize the assets and settle the liabilities simultaneously in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. For the purpose of measuring deferred tax liabilities and deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. ③ Current tax and deferred tax for the year

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

18) Earnings per share

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

- 17 -

19) Fair value

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

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

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

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

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

3. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY:

In the application of the Consolidated Entity’s accounting policies, which are described in Note 2, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. (1) Critical judgments in applying accounting policies

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

The Parent has a 0.9% ownership interest in Privia Second Securitization Specialty Co., Ltd., and Privia Third Securitization Specialty Co., Ltd. The directors of the Parent made an assessment as at the date of initial application of K-IFRS 1110 (January 1, 2013) as to whether the Parent has control over Privia Second Securitization Specialty Co., Ltd., and Privia Third Securitization Specialty Co., Ltd., in accordance with the new definition of control and the related guidance set out in K-IFRS 1110. It is concluded that the Parent has control over subsidiaries as it involves in the objectives and design of the subsidiaries and is exposed to their parts of risks and rewards. Also, all the decision-making processes of the subsidiaries are operated on autopilot by provisions and articles of association and the Parent is considered to have an ability to use power because the Parent has control over the changes of provisions and articles of association. Therefore, the directors concluded that it has control over the subsidiaries. Details of this control assessment are set out in Note 4.

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(2) Key sources of estimation uncertainty Critical accounting judgment and key sources of estimation uncertainty at the end of reporting period having significant risk factors that can incur the material changes in the book value of assets and liabilities of the Consolidated Entity for the following fiscal year are as follows: 1) Allowance for Doubtful Accounts The Consolidated Entity determines and recognizes allowances for losses through impairment testing on credit card assets and other assets, such as other accounts receivable, advance payments and accrued income. The Consolidated Entity also recognizes provisions for losses on unused commitments. The accuracy of provisions for credit losses is determined by the risk assessment methodology and assumptions used for estimating expected cash flows of the borrower for allowances on individual loans and collectively assessing allowances for groups of loans and provisions for unused commitments. 2) Unearned revenue from point programs The Consolidated Entity provides its customers with incentives to buy goods or services by providing awards (customer loyalty programs) and allocates the fair value of the consideration received or receivable between the award credits granted (points) and the other components of the revenue transaction. The Consolidated Entity supplies the awards such as discounted payments or free gifts. The consideration allocated to the award credits is measured by reference to their fair value, i.e., the amount for which the award credits could be sold separately. The fair value of the consideration allocated to the award credits is estimated by taking into account expected redemption rates, etc., and recognized as deferred revenue until the Consolidated Entity fulfills its obligations to deliver awards to customers. The amount of revenue recognized is to be based on the number of award credits that have been redeemed in exchange for awards, relative to the total number expected to be redeemed. 3) Postemployment Benefits: Defined Benefit Plans The Consolidated Entity operates a defined benefit pension plan (“Plan”). The amount recognized as a defined benefit liability is the present value of the defined benefit obligation, less the fair value of plan assets at the end of the reporting period. The present value of defined benefit obligation is calculated annually by using actuarial assumptions, such as future increases in salaries, expected returns on plan assets, discount rate and others. The Plan has the uncertainty due to the nature of long-term plan. The defined benefit obligation as of December 31, 2013 and 2012, is ￦3,367 million and ￦10,695 million, respectively (see Note 15).

4) Fair Value Measurement of Financial Instruments As disclosed in Note 34, the fair value of financial instruments classified as certain level is measured using valuation techniques where significant inputs are not based on observable market data. The Consolidated Entity believes that valuation methods and assumptions used for measuring the fair value of financial instruments are reasonable and that the fair value recognized in the consolidated statements of financial position is appropriate.

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4. SUBSIDIARY:

(1) Details of the Company’s subsidiaries as of December 31, 2013 and 2012, are as follows:

Place of

incorporation and operation

Voting share (%)

Companies Major operation December 31, 2013 December 31, 2012

End of reporting

period PRIVIA 2nd SPC Asset securitization Korea 0.9 0.9 December PRIVIA 3rd SPC Asset securitization Korea 0.9 0.9 January

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

(2) Summary of financial information of subsidiaries as of December 31, 2013 and 2012, are as follows (Unit:

won in millions)

December 31, 2013 Total assets Total liabilities Sales Net income Comprehensive income PRIVIA 2nd SPC ￦ 298,795 ￦ 299,033 ￦ 22,628 ￦ - ￦ - PRIVIA 3rd SPC 450,569 450,009 21,963 - -

December 31, 2012 Total assets Total liabilities Sales Net income Comprehensive income PRIVIA 2nd SPC ￦ 448,139 ￦ 453,646 ￦ 50,584 ￦ - ￦ - PRIVIA 3rd SPC 450,569 449,321 33,483 - -

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5. CASH AND DEPOSITS:

(1) Details of cash and cash equivalents as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Annual

interest rate (%) Amount Annual

interest rate (%) Amount Cash on hand - ￦ - - ￦ - Current deposits - 151 - 90 Pass-book deposits - 176,104 - 89,957 Other cash equivalents 2.48–2.60 100,000 2.70–2.90 170,000 Time deposits 2.59 14,200 2.00 11,500 Other deposits 2.50–2.75 675,000 2.80–3.00 520,000

￦ 965,455 ￦ 791,547

(2) Restricted deposits and others as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

Type Entity December 31, 2013 December 31, 2012 Restriction

Deposits KB and others ￦ 19

￦ 16 Guarantee deposits for overdraft

Shinhan Bank

and others 33,000 33,000 Secured deposits

Mirae Asset Securities 13 13 Social enterprise fund

Other financial assets

Korea Asset Management Corporation 9,246 9,246 Escrow account

￦ 42,278 ￦ 42,275

6. INVESTMENT FINANCIAL ASSETS:

Investment financial assets as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Financial assets AFS

Unlisted shares investment ￦ 1,767 ￦ 1,767

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7. CARD ASSETS AND LOANS:

Card assets and loans by customer as of December 31, 2013 and 2012, are as follows (Unit: won in millions):

December 31, 2013 December 31, 2012 Households Corporates Total Households Corporates Total

CARD ASSETS : Card receivables (*) ￦ 5,858,311 ￦ 524,901 ￦6,383,212 ￦ 6,116,731 ￦ 479,630 ￦6,596,361 Cash advances 849,422 - 849,422 940,019 - 940,019 Card loans (*) 2,701,390 - 2,701,390 2,351,470 - 2,351,470

Subtotal 9,409,123 524,901 9,934,024 9,408,220 479,630 9,887,850 Allowance for doubtful accounts (196,555) (8,302) (204,857) (176,050) (4,762) (180,812)

Book value ￦ 9,212,568 ￦ 516,599 ￦ 9,729,167 ￦ 9,232,170 ￦ 474,868 ￦9,707,038 Composition rate 94.69% 5.31% 100.00% 95.11% 4.89% 100.00% (*) Adjusted for deferred origination fees and present value discounts.

8. ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Changes in the allowance for doubtful accounts for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

Year ended December 31, 2013 Card

receivables Cash

advances Card loans Loans Other assets Total Balance at January 1, 2013 ￦ 65,652 ￦ 33,786 ￦ 81,374 ￦ - ￦ 2,267 ￦ 183,079 Bad debt expenses (1,765) (520) (604) - - (2,889) Bad debt recovered 712 970 301 - - 1,983 Disposition and repurchase (35,114) (22,200) (34,275) - - (91,589) Provision for allowance for doubtful accounts 40,620 19,278 56,642 - 744 117,284

Balance at December 31, 2013 ￦ 70,105 ￦ 31,314 ￦ 103,438 ￦ - ￦ 3,011 ￦ 207,868

Year ended December 31, 2012 Card

receivables Cash

advances Card loans Loans Other assets Total Balance at January 1, 2012 ￦ 68,773 ￦ 37,910 ￦ 67,071 ￦ 30 ￦ 2,306 ￦ 176,090 Bad debt expenses (1,599) (408) (307) - - (2,314) Bad debt recovered 780 1,093 330 - - 2,203 Disposition and repurchase (25,829) (16,792) (18,324) - - (60,945) Provision for allowance for doubtful accounts 23,527 11,983 32,604 (30) (39) 68,045

Balance at December 31, 2012 ￦ 65,652 ￦ 33,786 ￦ 81,374 ￦ - ￦ 2,267 ￦ 183,079

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9. PROPERTY AND EQUIPMENT:

(1) Property and equipment as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Acquisition

cost Accumulated depreciation

Book value

Acquisition cost

Accumulated depreciation

Book value

Land ￦ 122,012 ￦ - ￦ 122,012 ￦ 122,012 ￦ - ￦ 122,012 Buildings 79,196 (6,314) 72,882 64,818 (4,487) 60,331 Vehicles 89 (38) 51 503 (340) 163 Fixtures and

equipment 150,981 (97,287) 53,694

146,839 (90,149) 56,690 Finance lease

assets 3,334 (3,056) 278 3,334 (1,945) 1,389 Construction in

progress 33,125 - 33,125 23,798 - 23,798 Total ￦ 388,737 ￦ (106,695) ￦ 282,042 ￦ 361,304 ￦ (96,921) ￦ 264,383

(2) The changes in book value of property and equipment for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

Year ended December 31, 2013

Beginning balance Acquisition Reclassification(*) Disposal Depreciation

Ending balance

Land ￦ 122,012 ￦ - ￦ - ￦ - ￦ - ￦ 122,012 Buildings 60,331 7,315 7,062 - (1,826) 72,882 Vehicles 163 13 - (62) (63) 51 Fixtures and equipment 56,690 22,805 1,594 (2,260) (25,135) 53,694 Finance lease assets 1,389 - - - (1,111) 278 Construction in

progress 23,798 18,203 (8,876) - - 33,125 Total ￦ 264,383 ￦ 48,336 ￦ (220) ￦ (2,322) ￦ (28,135) ￦ 282,042

(*) ￦344 million of construction in progress is reclassified to advance payments and ￦124 million of fixtures

and equipment is reclassified from construction in progress to intangible assets (see Note 10).


Beginning balance Acquisition Reclassification(*) Disposal Depreciation

Ending balance

Land ￦ 83,995 ￦ 34,166 ￦ 3,851 ￦ - ￦ - ￦ 122,012 Buildings 42,187 23,162 (3,505) - (1,513) 60,331 Vehicles 270 76 - (40) (143) 163 Fixtures and equipment 57,974 23,374 125 (558) (24,225) 56,690 Finance lease assets 2,500 - - - (1,111) 1,389 Construction in

progress 472 18,399 4,927 - - 23,798 Total ￦ 187,398 ￦ 99,177 ￦ 5,398 ￦ (598) ￦ (26,992) ￦ 264,383

(*)￦5,398 million of construction in progress is reclassified from advance payments.

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10. INTANGIBLE ASSETS:

(1) Intangible assets as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions): December 31, 2013

Acquisition cost Accumulated amortization

Accumulated impairment Book value

Development cost ￦ 71,713 ￦ (36,279) ￦ - ￦ 35,434 Industrial property rights 195 (159) - 36 Others 16,830 (12,325) - 4,505 Construction in progress 65,899 - - 65,899 Membership 21,695 - (539) 21,156

Total ￦ 176,332 ￦ (48,763) ￦ (539) ￦ 127,030 December 31, 2012

Acquisition cost Accumulated amortization

Accumulated impairment Book value

Development cost ￦ 59,191 ￦ (24,444) ￦ - ￦ 34,747 Industrial property rights 195 (119) - 76 Others 16,868 (9,039) - 7,829 Construction in progress 11,041 - - 11,041 Membership 21,484 - (513) 20,971

Total ￦ 108,779 ￦ (33,602) ￦ (513) ￦ 74,664

(2) The changes in intangible assets for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

(*) ￦124 million of construction in progress is reclassified to fixtures and equipment (see Note 9).

(*) ￦803 million of construction in progress is reclassified to advance payments.


Beginning balance Acquisition

Reclassification (*) Disposal Amortization Impairment

Ending balance

Development cost ￦ 34,747 ￦ 13,588 ￦ 4,936 ￦ (5,285) ￦ (12,552) ￦ - ￦ 35,434 Industrial

property rights 76 - - - (40) - 36 Others 7,829 31 - (13) (3,342) - 4,505 Construction in

progress 11,041 59,918 (5,060) - - - 65,899 Membership 20,971 244 - (33) - (26) 21,156

Total ￦ 74,664 ￦ 73,781 ￦ (124) ￦ (5,331) ￦ (15,934) ￦ (26) 127,030


Beginning balance Acquisition

Reclassification (*) Disposal Amortization Impairment

Ending balance

Development cost ￦ 36,656 ￦ 7,543 ￦ 1,149 ￦ - ￦ (10,601) ￦ - ￦ 34,747 Industrial

property rights 116 - - - (40) - 76 Others 11,369 - - - (3,540) - 7,829 Construction in

progress 2,101 10,892 (1,952) - - - 11,041 Membership 22,734 - - (1,250) - (513) 20,971

Total ￦ 72,976 ￦ 18,435 ￦ (803) ￦ (1,250) ￦ (14,181) ￦ (513) 74,664

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11. ASSETS PLEDGED AS COLLATERAL:

Land and buildings amounting to￦471 million are provided as collateral for leasehold deposit received as of December 31, 2013.

12. BORROWINGS:

Borrowings as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions): Annual interest

rates (%) Maturity

Borrowed from December 31, 2013 December 31, 2012 Commercial

papers - - - ￦ - ￦ 350,000

Borrowings Hana bank and seven others 3.56–5.55 2014.02.21–

2016.04.01 212,500 137,500 ￦ 212,500 ￦ 487,500

13. BONDS PAYABLE:

(1) Bonds payable issued by the Consolidated Entity and outstanding as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

Annual interest rates (%)

Maturity

December 31, 2013 December 31, 2012 Par value Issue price Par value Issue price

Short-term debentures - -

￦ -

￦ -

￦ 170,000

￦ 170,000

Current portion of long-term debentures

2.91–6.75, 1M USD

LIBOR+0.724

2014.01.08–2014.12.22

1,701,413 1,701,413 1,707,580 1,707,580 Long-term

debentures 2.77–5.68,

1M USD LIBOR+1.50 2015.01.19–2020.10.29 5,284,120 5,284,120 4,665,067 4,665,067

Discounts on bonds (7,271) (9,471) Bonds payable, net ￦6,978,262 ￦6,533,176

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

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

Period Amount to be redeemed

as of December 31, 2013 2014.01.01–2014.12.31 ￦ 1,701,413 2015.01.01–2015.12.31 1,905,120 2016.01.01–2016.12.31 1,400,000 2017.01.01–2017.12.31 1,068,000

2018.01.01 911,000 ￦ 6,985,533

Period Amount to be redeemed

as of December 31, 2012 2013.01.01–2013.12.31 ￦ 1,877,580 2014.01.01–2014.12.31 1,705,627 2015.01.01–2015.12.31 1,821,440 2016.01.01–2016.12.31 720,000

2017.01.01 418,000 ￦ 6,542,647

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14. FINANCE LEASE LIABILITIES:

(1) Lease contract

The Consolidated Entity has a three-year finance lease for electronic equipment. The Consolidated Entity has a bargain purchase option at expiration date of lease contract. The lessor has the legal ownership of the finance lease, whose book value amounts to ￦278 million and ￦1,389 million as of December 31, 2013 and 2012, respectively, and which are set as collateral for finance lease obligation. (2) Finance lease liabilities of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Minimum lease payments

Present value of minimum lease payments

Minimum lease payments

Present value of minimum lease payments

Less than 1 year ￦ 301 ￦ 298 ￦ 1,202 ￦ 1,154 1-5 years - - 301 298 Present value discounts (3) (51)

Present value ￦ 298 ￦ 1,452

15. RETIREMENT BENEFIT PLAN:

(1) Defined Contribution Plan

The expense recognized in the consolidation statements of comprehensive income related to postemployment benefit plan under the defined contribution plan for the years ended December 31, 2013 and 2012 are as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Defined contribution plan ￦ 26 ￦ 10

(2) Defined benefit plan

1) General

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

2) Details of defined benefit plan are as follows (Unit: Korean won in millions):

As of December 31, 2013 and 2012, the amounts recognized in the consolidated statements of financial position related to retirement benefit obligation are as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012

Present value of defined benefit obligation ￦ 46,403 ￦ 44,474 Fair value of plan assets (43,006) (33,745) Transferred to National Pension Fund (30) (34) Retirement benefit obligation ￦ 3,367 ￦ 10,695

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3) Net defined benefit obligation

Changes in present value of net defined benefit obligation for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

Year ended December 31, 2013 Present value of

the defined benefit obligation Plan assets

National Pension Fund

Net defined benefit obligation

Beginning balance ￦ 44,474 ￦ (33,745) ￦ (34) ￦ 10,695 Contributions from the

employer - (11,100) - (11,100)

Current service cost 9,548 - - 9,548 Interest expense

(income)

1,519

(1,087)

-

432 Return on plan assets,

excluding amounts included in interest income above

-

38

-

38

Actuarial gains and losses arising from changes in demographic assumptions

185

-

-

185 Actuarial gains and

losses arising from changes in financial assumptions

(1,186)

-

-

(1,186)

Actuarial gains and losses arising from changes in experience adjustments

(4,316)

-

-

(4,316) Transfer of employees

between the Company and its related companies

(169)

(190)

-

(359)

Benefits paid (3,652) 3,078 4 (570) Ending balance ￦ 46,403 ￦ (43,006) ￦ (30) ￦ 3,367

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Year ended December 31, 2012 Present value of

the defined benefit obligation Plan assets

National Pension Fund

Net defined benefit obligation

Beginning balance ￦ 37,007 ￦ (19,195) ￦ (37) ￦ 17,775 Contributions from the

employer - (16,900) - (16,900)

Current service cost 8,543 - - 8,543 Interest expense

(income)

1,500

(733)

-

767 Return on plan assets,

excluding amounts included in interest income above

-

(87)

-

(87)

Actuarial gains and losses arising from changes in demographic assumptions

(380)

-

-

(380) Actuarial gains and

losses arising from changes in financial assumptions

2,531

-

-

2,531

Actuarial gains and losses arising from changes in experience adjustments

1,855

-

-

1,855 Transfer of employees

between the Company and its related companies

(1,822)

1,191

-

(631)

Benefits paid (4,760) 1,979 3 (2,778) Ending balance ￦ 44,474 ￦ (33,745) ￦ (34) ￦ 10,695

4) Details of fair values of plan assets as of December 31, 2013 and 2012, are as follows (Unit: Korean won in

millions):


Deposits ￦ 43,006 ￦ 33,745

5) Actuarial assumptions as of December 31, 2013 and 2012, are as follows:

December 31, 2013 December 31, 2012 Discount rate (%) 3.81 3.39 Expected return on plan assets (%) 3.81 2.78 Expected rate of salary increase (Executive) (%) 5.00 5.00 Expected rate of salary increase (Employee) (%) 5.67 5.58

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6) As of December 31, 2013, when all the other assumptions are maintained, if the significant actuarial assumptions change within possible and reasonable ranges, the impacts on defined benefit obligations are as follows (Unit: Korean won in millions):

Increase

Decrease 100 basis point (bp) changes in discount rate

(43,371) 49,8651% changes in future wage growth rate

49,872 (43,311)

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

16. EMPLOYEE BENEFITS:

Details of employee benefits for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Short-term employee benefits ￦ 142,475 ￦ 135,728 Pension expenses 10,006 9,321 ￦ 152,481 ￦ 145,049

17. UNEARNED REVENUE:

Details of unearned revenue as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Customer loyalty program ￦ 318,730 ￦ 320,328 Membership fee 74,327 77,450 Others 97 52

￦ 393,154 ￦ 397,830

- 29 -

18. PROVISION:

(1) Details of provision as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Provision for unused credit limits ￦ 47,497 ￦ 46,386 Provision for mileage points 22,944 15,509 Other provisions 15,880 13,792

￦ 86,321 ￦ 75,687

(2) Provision for unused credit limits

For the years ended December 31, 2013 and 2012, the changes in provision for unused credit limits are as follows (Unit: Korean won in millions):

Year ended December 31, 2013 Year ended December 31, 2012

Beginning ￦ 46,386 ￦ 47,167 Increase (decrease) 1,111 (781) Ending ￦ 47,497 ￦ 46,386

(3) Provision for mileage points

For the years ended December 31, 2013 and 2012, the changes in provision for mileage points are as follows (Unit: Korean won in millions):

Year ended December 31, 2013 Year ended December 31, 2012 Point Customer loyalty Point Customer loyalty Beginning ￦ 3,494 ￦ 12,015 ￦ 3,685 ￦ 7,555 Increase (decrease) 4,905 2,530 (191) 4,460 Ending ￦ 8,399 ￦ 14,545 ￦ 3,494 ￦ 12,015

(4) Other provisions

For the years ended December 31, 2013 and 2012, the changes in other provisions are as follows (Unit: Korean won in millions):



Beginning ￦ 13,792 ￦ 21,826 Increase(decrease) 2,088 (8,034) Ending ￦ 15,880 ￦ 13,792

The above amounts as of December 31, 2013, include provision for deposits in escrow account of ￦4,944 million (see Note 28(5)) and provision for pending litigations of ￦10,936 million, in which provision includes deposits in escrow account of ￦4,467 million.

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19. DERIVATIVES AND HEDGE ACCOUNTING: (1) There are no derivative instruments held for trading as of December 31, 2013 and 2012.

(2) Cash flow hedge

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

1) Fair value of cash flow hedge as of December 31, 2013 and 2012, are as follows (Korean won in millions):

December 31, 2013 December 31, 2012 Contract

amount Asset Liabilities

Contract amount Asset

Liabilities

Interest rate

swap ￦ 1,313,000 ￦ 2,750 2,678 ￦ 778,000 ￦ 901 3,925 Cross-currency

swap 703,533 - 45,987 873,092 - 49,630 Total ￦ 2,016,533 ￦ 2,750 ￦ 48,665 ￦ 1,651,092 ￦ 901 ￦ 53,555

For transactions between local currency and foreign currencies, the unsettled contract amount of transaction is translated applying the basic foreign exchange rate at the end of reporting period to the contract amount in foreign currencies. For transaction between foreign currencies and other foreign currencies, the unsettled contract amount is the amounts translated applying the basic foreign exchange rate at the end of reporting period to the contract amount in foreign currencies purchased.

- 31 -

2) Expected cash flow for cash flow hedge

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


Less than one month ￦ (6,058) ￦ (2,079) One month to three months (11,559) (3,881) Three months to twelve months (12,541) (25,813) One year to five years (27,449) (47,039)

￦ (57,607) ￦ (78,812) 20. SHARE CAPITAL:

(1) Number of shares issued The Parent’s authorized shares are 600,000,000 (￦5,000 per share), and 160,465,286 shares of common stocks (￦802,326 million) are issued as of December 31, 2013.

(2) Changes in the number of issued shares There are no changes in shares of the Parent for the year ended December 31, 2013.

(3) Shares holding history of related party Common stock of 59,301,937 shares (￦296,510 million) issued by the Parent are owned by Hyundai Motor Company (“Parent company”) as of December 31, 2013. Hyundai Motor Company acquired 8,729,750 shares of Hyundai Card Co., Ltd., from Hyundai Steel Co., Ltd., and the ownership of Parent Company increased by 5.44%.

21. CAPITAL SURPLUS:

Details of capital surplus as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Share premium ￦ 45,399 ￦ 45,399 Other capital surplus 12,305 12,305

￦ 57,704 ￦ 57,704 22. RETAINED EARNINGS:

(1) Details of retained earnings as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):


Legal reserve (*) ￦ 20,143 ￦ 20,143 Reserve for bad loans (see Note 24) 611,622 439,031 Unappropriated retained earnings 880,189 889,570

￦ 1,511,954 ￦ 1,348,744

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

- 32 -

(2) Changes in retained earnings for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

Year ended December 31,

2013 2012 Beginning ￦ 1,348,744 ￦ 1,154,445 Net income 163,210 194,299 Ending ￦ 1,511,954 ￦ 1,348,744

23. RESERVES:

Changes in reserves for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

Years ended December 31,

2013 2012 Beginning ￦ (16,505) ￦ (17,814) Cash flow hedging gains: 6,177 5,846

Interest rate swap 2,385 (2,735) Currency swap 3,792 8,581

Amount reclassified to net income related to cash flow hedge: 2,588 (202) Interest rate swap 711 - Currency swap 1,877 (202)

Tax effect related to cash flow hedging (2,106) (1,365) Remeasurements of the net defined benefit liability 5,278 (3,918) Tax effect related to remeasurements of the net defined

benefit liability (1,289) 948 Ending ￦ (5,857) ￦ (16,505)

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

24. RESERVE FOR BAD LOANS:

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

(1) Reserve for bad loans reflected in retained earnings as of December 31, 2013 and 2012, are as follows (Unit:

Korean won in millions):

December 31, 2013 December 31, 2012 Accumulated reserve for bad loans ￦ 611,622 ￦ 439,031 Expected reserve for bad loans 48,139 172,591 Reserve for bad loans ￦ 659,761 ￦ 611,622

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

years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

Years ended December 31, 2013 2012 Net income attributable to the owners of the Company ￦ 163,210 ￦ 194,299 Expected reserve for bad loans 48,139 172,591 Adjusted income after reserve for bad loans 115,071 21,708

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25. GENERAL AND ADMINISTRATIVE EXPENSES:

Details of general and administrative expenses for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

Years ended December 31, 2013 2012 PAYROLL:

Salaries wages ￦ 122,581 ￦ 115,320 Pension expenses 10,006 9,320 Employee benefits 27,692 28,128

160,279 152,768 OTHER EXPENSES:

Travel expenses ￦ 2,678 ￦ 2,533 Communication expenses 25,365 23,414 Postal expense 13,973 12,840 Rental expenses 25,215 27,372 Taxes dues 21,643 15,424 Repair and maintenance expenses 596 622 Insurance premiums 203 207 Entertainment expenses 996 814 Advertising expenses 58,838 39,431 Supply expenses 2,688 2,597 Vehicle maintenance expenses 15 26 Periodicals expenses 1,241 1,076 Publication expenses 8,145 9,327 Training expenses 3,602 4,066 Electronic data processing expense 42,951 38,433 Expense for temporary staff 34,898 35,394 Professional expenses 147,264 157,287 Delivery commission 2,615 3,736 Commission expense 25,157 23,965 Business activities expense 3,766 4,382 Depreciation expense 28,135 26,992 Amortization expense 15,934 14,181 Event expense 4,166 4,961 Conference expense 559 515 Building administrative expense 5,556 3,705

￦ 476,199 ￦ 453,300

- 34 -

26. INCOME TAX FROM CONTINUED OPERATION:

(1) Income tax expense for the years ended December 31, 2013 and 2012, are summarized as follows (Unit: Korean won in millions):

Years ended December 31, 2013 2012 Income tax currently payable ￦ 66,515 ￦ 65,818 Changes in deferred tax assets by temporary differences (*) (7,556) (23,264)

Total 58,959 42,554 Changes in income tax expense reflected directly in shareholders’

equity (3,395) (417) Income tax expense ￦ 55,564 ￦ 42,137 (*) Ending net deferred tax assets due to temporary differences ￦ 143,223 ￦ 135,667

Beginning net deferred tax assets due to temporary differences 135,667 112,403 Changes in net deferred tax assets due to temporary differences ￦ (7,556) ￦ (23,264)

(2) Income tax expenses reflected directly in shareholders’ equity for the year ended December 31, 2013, are

as follows (Unit: Korean won in millions):

January 1, 2013 Decrease December 31, 2013 Tax effect related to the cash

flow hedging reserve gains and losses ￦ 2,367 ￦ (2,106) ￦ 261

Tax effect related to remeasurement of the net defined benefit liability

2,880

(1,289)

1,591

￦ 5,247 ￦ (3,395) ￦ 1,852

(3) A reconciliation between income before income tax and income tax expense for the years ended December 31, 2013 and 2012, is as follows (Unit: Korean won in millions):


Income before income tax expense ￦ 218,773 ￦ 236,436 Income tax payable by the statutory income tax rates (11%, 22% or 24.2%) 52,481 56,756 Tax reconciliations:

Non-deductible expenses 294 33 Deferred tax expense relating to changes in tax rates - - The amount of deductible temporary differences for which

no deferred tax asset is recognized - (11,384) True-up adjustment (*) (123) (3,463) Others (753) 195

Subtotal Any adjustments recognized in the period due to current tax of prior period

(582) 3,665

(14,619) -

Income tax from continued operation ￦ 55,564 ￦ 42,137

(*)True-up adjustment due to difference in the amount disclosed in prior year’s audit report and the actual tax return amount.

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(4) Details of changes in accumulated temporary differences for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):


Descriptions Beginning Balance (*)

Decrease

Increase

Ending balance

Deferred tax asset (liability)

Temporary differences to be deducted: Present value of discount ￦ 5,318 ￦ 5,318 ￦ 5,287 ￦ 5,287 ￦ 1,270 Retirement benefit obligation 35,993 3,078 5,720 38,635 9,281 Provision for unused commitments 46,386 46,386 47,497 47,497 11,411 Accrued expenses 58,253 58,253 87,410 87,410 20,999 Point provisions 335,837 335,837 341,674 341,674 82,082 Unearned revenue (annual fee) 77,450 77,450 74,327 74,327 17,856 Debt-for-equity swap 7,459 81 - 7,378 1,772 Loss on impairment of financial assets

AFS 8,113 - - 8,113 1,949 Membership 513 - 26 539 129 Loss on valuation of currency swaps 7,933 7,933 1,161 1,161 279 Loss on valuation of interest rate swaps 3,925 3,925 2,678 2,678 643 Provision for litigation 5,619 5,619 10,936 10,936 2,627 Provision for others 8,174 8,174 4,944 4,944 1,188 Immediate depreciation of fiction - 404 820 416 100 Interest-free installment fee - - 4,378 4,378 1,052 Loans - - 768 768 185 Construction expense - (134) (318) (184) (44)

600,973 552,324 587,308 635,957 152,779

Temporary differences to be added: Retirement insurance premium (33,454) (3,078) (6,614) (36,990) (8,886) Accrued income (126) (126) (41) (41) (10) Foreign currency translation gains (1,104) (1,104) - - - Gains on valuation of interest rate swaps (901) (901) (2,750) (2,750) (661) Amortization of intangible assets (179) (184) - 5 1 -

￦ (35,764) ￦ (5,393) ￦ (9,405) ￦ (39,776) ￦ (9,556) Deferred income tax assets ￦ 143,223

(*) Differences between the amount disclosed in prior year’s audit report and the actual tax return are reflected in the

beginning balances.

- 36 -


Descriptions Beginning Balance (*)

Decrease

Increase

Ending balance

Deferred tax asset (liability)

Temporary differences to be deducted: Present value of discount ￦ 9,178 ￦ 9,178 ￦ 5,318 ￦ 5,318 ￦ 1,278 Retirement benefit obligation 28,056 1,979 9,916 35,993 8,647 Provision for unused commitments 47,167 47,167 46,386 46,386 11,144 Accrued expenses 62,771 62,771 58,253 58,253 13,995 Point provisions 295,241 295,241 335,837 335,837 80,684 Unearned revenue (annual fee) 63,864 63,864 77,450 77,450 18,607 Debt-for-equity swap 7,459 - - 7,459 1,792 Loss on impairment of financial assets

AFS 8,247 134 - 8,113 1,949 Loss on valuation of currency swaps 19,062 17,958 6,829 7,933 1,906 Loss on valuation of interest rate swaps 931 931 3,925 3,925 943 Provision for litigation 5,489 5,489 5,619 5,619 1,350 Provision for others 16,337 16,337 8,174 8,174 1,964

563,802 521,049 557,707 600,460 144,259

Temporary differences to be added: Retirement insurance premium (19,195) (1,979) (16,238) (33,454) (8,037) Accrued income (243) (243) (126) (126) (30) Foreign currency translation gains (3,652) (2,548) - (1,104) (265) Gain on valuation of currency swaps (202) (202) - - Gains on valuation of interest rate swaps (643) (643) (901) (901) (217) Amortization of intangible assets (531) (352) - - (179) (43) ￦ (24,466) ￦ (5,967) ￦(17,265) ￦ (35,764) ￦ (8,592) Deferred income tax assets ￦ 135,667

(*) Differences between the amount disclosed in prior year’s audit report and the actual tax return are reflected in the

beginning balances. 27. EARNINGS PER SHARE:

(1) Earnings per share for the years ended December 31, 2013 and 2012, are as follows.

December 31, 2013 December 31, 2012 Net income (A) ￦ 163,209,632,926 ￦ 194,298,595,418 Weighted-average number of shares (B) 160,465,286 160,465,286 Net income per share (A/B) (Unit: Korean won) ￦ 1,017 ￦ 1,211

(2) Diluted earnings per share As the Consolidated Entity has not issued any diluted shares; diluted earnings per share is the same as basic earnings per share for the year ended December 31, 2013.

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28. CONTINGENCIES AND COMMITMENTS:

(1) Credit line agreement

a. The followings are credit line agreement as of December 31, 2013 and 2012, (Unit: Korean won in millions):

Type Financial instruments December 31, 2013 December 31, 2012 Overdraft limit - ￦ - ￦ 50,000 Intraday overdraft limit Shinhan Bank and

thirteen others 392,600 280,000

b. Credit Facility Agreement

The Consolidated Entity entered into a credit facility agreement with GE Capital European Funding & Co on February 15, 2013. The credit facility limit that can be used by the Consolidated Entity is Euro equivalent of USD 100 million. In terms of duration, the agreement is renewable for one year from January 2014 until January 9, 2015, the maturity of the credit facility agreement. Accordingly, the contract is a valid contract as of December 31, 2013, but the agreement was automatically terminated in January 2014 as the Consolidated Entity did not extend it after the maturity.

c. Revolving Credit Facility

As the Consolidated Entity has a revolving credit facility agreement with many financial institutions for credit line as of December 31, 2013, the Consolidated Entity made a revolving credit facility agreement for ￦970 billon with Kookmin Bank and 12 others for credit line as of December 31, 2013.

(2) Alliance

The Consolidated Entity has separate agency agreements regarding its credit card business with SC First Bank, Woori Bank, Korea Exchange Bank, Shinhan Bank, Citibank Korea, Hana Bank, Gwangju Bank, Jeonbuk Bank, Cheju Bank, Postal Office, Korea Computer Inc. and others.

(3) License Agreement and Franchise Agreement

The Consolidated Entity entered into member issuance and franchise agreements with Master Card International, Visa International and Diners Club International for credit card issuance, and pays each fees based on a fixed rate for each credit card issued.

(4) Pending Lawsuits

As of December 31, 2013, the Consolidated Entity is involved in 40 cases (￦132,547 millions) as a defendant and 161 cases (￦12,303 millions) as a plaintiff in the pending lawsuits. The management of the Consolidated Entity does not anticipate that the pending lawsuits referred above will have a significant effect on the Consolidated Entity’s consolidated financial statements.

(5) Deposit for Loss Reimbursement As of December 31, 2013, the Consolidated Entity has deposits of ￦4,944 million and ￦4,302 million of proceeds and interests, respectively, from the sale of Daewoo Engineering & Construction Co., Ltd.’s shares in an escrow account and records ￦4,944 million of provision for proceeds and ￦4,467 million of provision for interests from the litigation relating to the sale of Daewoo Engineering & Construction Co., Ltd.’s shares (see Note 18(4)).

- 38 -

(6) Reserve for Loss Reimbursement

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

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

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

(8) Guarantee

The Consolidated Entity has a performance guarantee from the Seoul Guarantee Insurance Co., Ltd., amounting to ￦656 million in connection with deferred transportation payment card and others.

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

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

(10) Contract of Sale of Receivables

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

- 39 -

29. TRANSFERS OF FINANCIAL ASSETS:

The Consolidated Entity transferred its card assets to special-purpose companies (“SPCs”) for asset securitization and SPCs issued Asset-Backed Securities (“ABSs”). The ABSs are collateralized by card assets as underlying assets. All of the transferred financial assets do not qualify for derecognition under K-IFRS 1039 because the Consolidated Entity has retained substantially all the risks and rewards of ownership of the transferred asset. Therefore, the Consolidated Entity continues to recognize the transferred financial assets in the separate financial statements. The details of ABSs and underlying assets as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

As of December 31, 2013

Maturity

Carrying amount Fair value Underlying

asset Senior

tranche Underlying

asset Senior

tranche Net

position PRIVIA 2nd SPC 2014.04.22 ￦1,276,283 ￦ 281,413 ￦ 1,302,516 ￦ 281,359 ￦ 1,021,157 PRIVIA 3rd SPC 2015.07.20 1,271,604 430,240 1,299,795 421,467 878,328 Discounts on bonds - (1,579) - - -

￦ 2,547,887 ￦ 710,074 ￦2,602,311 ￦ 702,826 ￦ 1,899,485

As of December 31, 2012

Maturity

Carrying amount Fair value Underlying

asset Senior

tranche Underlying

asset Senior

tranche Net

position PRIVIA 2nd SPC 2014.04.22 ￦ 1,055,990 ￦ 428,440 ￦ 1,074,693 ￦ 428,160 ￦ 646,533 PRIVIA 3rd SPC 2015.07.20 1,038,539 428,440 1,058,068 427,951 630,117 Discounts on bonds - (3,589) - - -

￦ 2,094,529 ￦ 853,291 ￦ 2,132,761 ￦ 856,111 ￦ 1,276,650

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30. TRANSACTION WITH RELATED PARTIES:

(1) Status of the Parent, etc.

1) As of December 31, 2013 and 2012, the parent company of the Consolidated Entity is Hyundai Motor Company (shareholding ratio of 36.96%).

2) As of December 31, 2013, details of other related parties which have transactions like sales and balances

of receivables and payables with the Consolidated Entity are as follows:

Companies

Other related parties GE Capital Int’l Holdings, HK Savings Bank, HMC Investment Securities, Green air, Kia Motor Company, Kia Tigers, Maintrans company, Busan Finance Center AMC, Samwoo, WIA Magna Powertrain, Eukor Car Carriers, Innocean , Iljin Bearing, Jongro Academy, Chunbuk Hyundai motors FC, Jongro Eclass, Korea Credit Bureau, Hankook Economy News, Haevichi Resort, Haevichi Country Club, Haevichi Hotel & Resort, Hyundai construction, Hyundai construction human resource development center, Hyundai Glovis, Hyundai Dymos, Hyundai City Corporation, Hyundai Life, Hyundai Rotem, Hyundai Materials, Hyundai Metia, Hyundai Movis, Hyundai BNG Steel, Hyundai farm land & development, Hyundai Engineering & Steel Industries, Hyundai C&I, Hyundai IHL, Hyundai energy, Hyundai engineering, Hyundai NGV, Hyundai MSEAT Hyundai MnSoft, Hyundai AMCO, Hyundai Auto Ever Systems, Hyundai Auto Electronics Company Ltd, Hyundai Wistco, Hyundai Wia, Hyundai Steel Company, Hyundai Architects & Engineers Associates, Hyundai Capital, Hyundai Commercial, Hyundai Kefico, Hyundai Powertech, Hyundai Fastech, Hyundai Hysco

(2) Compensation for key executives

Compensation for key management for the years ended December 31, 2013 and 2012, consists of the following (Unit: Korean won in millions):

Year ended December 31 2013 2012 Short-term employee benefit ￦ 9,255 ￦ 9,227 Retirement benefit 2,019 2,600

Total ￦ 11,274 ￦ 11,827

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(3) Outstanding transactions with related parties for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):


Revenues Expenses Others

Card revenue

Rental revenue Others

Card expense

General and administrative expense Others

Purchase of

property and

equipment

Purchase of

intangible assets

Disposal of assets

Parent Company Hyundai Motor Company ￦ 122,233 ￦ - ￦ - ￦ - ￦ 244 ￦ 81 ￦ - ￦ - ￦ - Other related parties Kia Motor Company 57,765 11 - 7 26 30 - - - Hyundai Movis 1,102 - - - 15 - - - - Hyundai Construction 297 - - - 8 - 12,872 - - Hyundai Glovis 410 - - - - - - - - Hyundai Wia - - - - - - - - - Hyundai Capital 46 231 26,330 32,013 3,452 35,230 664 - 377,735 HMC Investment Securities - - - - 3 - - - - Others 9,809 744 6,370 326 46,862 14,728 5,190 47,741 -

Totals ￦ 191,662 ￦ 986 ￦32,700 ￦32,346 ￦ 50,610 ￦50,069 ￦ 18,726 ￦ 47,741 ￦ 377,735


Revenues Expenses Others

Card revenue

Rental revenue Others

Card expense

General and administrative expense Others

Purchase of

property and

equipment

Purchase of

intangible assets

Disposal of assets

Parent Company Hyundai Motor Company ￦ 112,140 ￦ - ￦ - ￦ 15 ￦ 391 ￦ 69 ￦ 76 ￦ - ￦ - Other related parties Kia Motor Company 51,298 39 - 12 190 25 - - - Hyundai Movis 1,110 - - - 40 - - - - Hyundai Construction 320 - - - 6 - 7,169 - - Hyundai Glovis 450 - - - - - - - - Hyundai Wia 1 - - - - - - - - Hyundai Capital 136 - 33,936 - 2,657 31,255 - - 359,956 HMC Investme 3 - - - 3 - - - -

- 42 -

nt Securities Others 8,005 232 1,775 251 40,095 59,367 14,419 3,182 -

Totals ￦ 173,463 ￦ 271 ￦35,711 ￦ 278 ￦ 43,382 ￦90,716 ￦ 21,664 ￦ 3,182 ￦ 359,956

(4) There were no financing transactions with related parties for the years ended December 31, 2013 and 2012.

(5) Receivables and payables from the transactions with related parties as of December 31, 2013 and 2012, are

as follows (Unit: Korean won in millions):

Year ended December 31, 2013 Receivable Payables

Card

assets Others

Allowance for doubtful accounts

Accounts payable Others

Parent Company Hyundai Motor Company ￦ 55,849 ￦ 2,128 ￦ (614) ￦ 44,986 ￦ 23

Other related parties Kia Motor Company 22,733 173 (250) 12,902 - Hyundai Movis 2,598 - (29) 630 - Hyundai Construction 4,746 - (52) - - Hyundai Glovis 1,391 - (15) 1,021 - Hyundai Wia 5,634 - (62) - - Hyundai Steel Company 2,327 - (26) - - Hyundai BNG Steel 487 - (5) - - Hyundai Hysco 1,295 - (14) 5,217 - Hyundai Capital 81,951 1,424 (901) 2,813 260 HMC Investment Securities 705 - (8) - - Others 16,271 1,836 (179) 23,634 (12,574)

Totals ￦ 195,987 ￦ 5,561 ￦ (2,155) ￦ 91,203 ￦ (12,291)

Year ended December 31, 2012 Receivable Payables

Card

assets Others


Accounts payable Others

Parent Company Hyundai Motor Company ￦ 64,580 ￦ 151 ￦ - ￦ 87,354 ￦ 7

Other related parties Kia Motor Company 28,656 - (315) 30,787 - Hyundai Movis 1,588 - (17) 580 - Hyundai Construction 3,621 - (40) - - Hyundai Glovis 1,295 - (14) 564 - Hyundai Wia 1,920 - (21) 2 - Hyundai Steel Company 2,048 - (23) - -

Hyundai BNG Steel 347 - (4) - - Hyundai Hysco 1,481 - (16) 5,565 - Hyundai Capital 85,707 21,517 (943) - - HMC Investment Securities 681 - (7) - -

Others 20,456 109 (226) 20,562 (5,489) Totals ￦ 212,380 ￦ 21,777 ￦ (1,626) ￦ 145,414 ￦ (5,482)

- 43 -

(6) Granting of credit with related parties.

Granting of credit with the related parties as of December 31, 2013, is as follows (Unit: Korean won in millions):

Grantor Grantee Method Credit limit Period

Parent Hyundai Capital Services, Inc. Call loan 300,000 2013.11.1–2014.10.31 Hyundai Capital Services,

Inc.

Parent

Call loan 300,000 2013.11.1–2014.10.31 Call loan is granted only in case that any grantee demands credit line and there is residual fund, and the credit line currently is not being used.

(7) As of December 31, 2013, details of the payment guarantees and collaterals that Consolidated Entity has

provided for the related parties to finance, and the details of the payment guarantees and collaterals that the Consolidated Entity has been provided from the related parties are as follows:

1) Payment guarantees provided

As of December 31, 2013, there are no payment guarantees provided by the Consolidated Entity. 2) Payment guarantees provided

The Consolidated Entity is being provided payment guarantees to GE Capital through Hyundai Motor Company and Kia Motor Company. The limit of payment guarantees as of December 31, 2013 and 2012, is Euro equivalent of USD 100 million and USD 200 million. The agreement was automatically terminated in January 2014, as the Consolidated Entity did not extend it after the maturity (see Note 28(1)).

Company

name Guarantee provider Amount of guarantee Period of guarantee

Other related parties GE Capital HMC USD 100 million x 41% 2013.01.10-2014.01.10 KMC USD 100 million x 15% 2013.01.10-2014.01.10

31. CONSOLIDATED STATEMENTS OF CASH FLOWS:

Cash and cash equivalents in the consolidated statements of cash flows are equivalent to the ones in consolidated statements of financial position. Non-cash activities which are not reflected in the consolidated statements of cash flows for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):


Replacement of tangible assets (*) ￦ 8,656 ￦ 4,323 Acquisition of tangible assets 7,510 - Current portion of long-term borrowings 82,500 25,000 Gain (Loss) on valuation of derivatives 8,764 5,644 Replacement of provisions to accrued expenses 3,212 - (*) These consist of land, building and fixtures and equipment.

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32. FINANCIAL RISK MANAGEMENT:

(1) Introduction

1) General The Consolidated Entity is exposed to various financial risks, such as credit risk, liquidity risk and market risk associated with financial instruments. The level of exposure to such risks, objectives of the Consolidated Entity and its risk management policy and procedures are outlined below.

2) Risk management framework The board of directors sets and oversees risk management framework. Responsibility for implementing and monitoring the Consolidated Entity’s risk management strategies and policies resides with Asset-Liability Management Committee (ALCO) set by the Board of Directors. Each committee has a permanent and non-permanent member and reports its activities to the Board of Directors on a regular basis. The Consolidated Entity’s risk management policy is to ensure that the Consolidated Entity identifies and analyzes the potential risks to financial performance, determines the degree of risk and control acceptable to the Consolidated Entity and monitors whether the Consolidated Entity confirms with the risk and its associated degree of acceptance. The risk management policy and system are regularly reviewed to reflect changes in market conditions and products and services the Consolidated Entity provides. The Consolidated Entity operates education and training program, so that all employees understand their roles and duties with the goal to build organizational control environment. The audit committee is responsible for monitoring whether the Consolidated Entity continues to comply with the risk management policies and procedures and the current risk management system is appropriate for the risks that the Consolidated Entity is exposed to, with the assistance of internal auditors, who review regular and irregular risk management procedures and report the results to the audit committee.

(2) Credit risk

1) General

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

2) Risk management framework

The Consolidated Entity’s exposure and credit ratings of its counterparties are primarily reviewed and managed for accuracy by credit risk management department. Secondly, aggregate risks are allocated to total portfolio and controlled by counterparty’s credit limits that are reviewed and approved by the risk management department. To ensure that resolution and approval of the Board of Directors with respect to risk management are effectively implemented, the Consolidated Entity sets and operates the risk management committee, which is a permanent organization and holds regular meetings once a month as a rule or more often if necessary. The risk management committee is assisted by independent risk management department (risk management team) which oversees all the risks for the Consolidated Entity’s operations comprehensively.

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- Manages aggregate risks on the acceptable level of loss through portfolio limits management. These limits of credit risk are established based on portfolio management standards and reflected into business plan. Risk management committee receives a report of whether level of credit risk and limits of the acceptable level of credit risk are in compliance with the standards.

- Acceptable limits on one month overdue over normal credit card payment rate and etc., are considered

into business plan and credit risks are managed within the limits.

- Credit limit on a new customer (the applicant) is determined based on monthly estimated income and liabilities computed using qualification standards. Final limit is determined with consideration of behavior ratings, external ratings by rating agencies, etc. Credit limit on an existing customer is downgraded or upgraded as a result of changes in combination of factors, including behavior ratings, personal information, such as employment, position, amounts used, days in arrears, etc.

- Target level on key factors, including expected loss, economic capital, portfolio quality index (overdue

rate, 30+@3MOB), etc., is set and actively monitored, of which results are reported to risk management committee.

- Measurement of expected loss using long-term probability of default and recording of allowance for

possible losses enable the Consolidated Entity to minimize the expected loss due to economy downturn.

- Through implementation and management of contingency plan, the Consolidated Entity announces the appropriate contingency level according to the level of the deteriorating economy and quickly takes a corresponding action. This enables the Consolidated Entity to proactively respond to rapidly changing credit risks.

Each credit management department holds right to approve credit and is required to perform credit policies and procedures and report important credit-related issues to management and risk management committee. Responsibility for portfolio performance and soundness resides with each credit management department, which monitors and controls all credit risks arising from the portfolio.

3) Level of exposure to credit risk

The Consolidated Entity’s maximum exposure to credit risk as of December 31, 2013 and 2012, are summarized as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Deposit ￦ 998,487 ￦ 824,576 Card assets (*1) 9,934,024 9,887,850 Other financial assets (*1, 2) 180,216 184,554 Unused commitment 32,195,325 32,974,864

Total ￦ 43,308,052 ￦ 43,871,844 (*1) Assets are stated at book value before allowance for doubtful accounts. (*2) Other financial assets consist of accounts payable and unearned income.

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4) Analysis of credit soundness of financial assets ① Credit soundness of card assets neither past due nor impaired as of December 31, 2013 and 2012, are

summarized as follows (Unit: Korean won in millions):

A. Retail December 31, 2013 December 31, 2012

Grade (*)

Book value before

allowance for doubtful

accounts

Allowance for doubtful

accounts

Book value

Book value before


accounts


accounts

Book value

Card receivables and cash advances

1 ￦ 528,202 ￦ 291 ￦ 527,911 ￦ 651,870 ￦ 351 ￦ 651,519 2 543,401 364 543,037 606,450 408 606,042 3 786,230 697 785,533 741,638 631 741,007 4 557,208 592 556,616 565,099 603 564,496 5 602,982 968 602,014 698,188 1,113 697,075 6 559,895 1,552 558,343 584,134 1,577 582,557 7 547,970 3,150 544,820 573,129 3,186 569,943 8 564,908 5,850 559,058 565,730 5,641 560,089 9 549,713 9,479 540,234 561,500 9,281 552,219 10 462,740 11,665 451,075 441,710 10,681 431,029 11 324,078 11,654 312,424 327,366 11,455 315,911 12 353,525 17,872 335,653 375,751 18,362 357,389 13 129,260 10,374 118,886 130,631 10,207 120,424 14 53,430 6,252 47,178 67,577 7,583 59,994 15 14,184 1,672 12,512 23,802 2,512 21,290

6,577,726 82,432 6,495,294 6,914,575 83,591 6,830,984 Card loan 1 24,967 89 24,878 28,455 83 28,372 2 65,737 300 65,437 71,879 280 71,599 3 94,602 643 93,959 99,548 634 98,914 4 142,175 1,151 141,024 136,699 972 135,727 5 235,761 2,532 233,229 210,982 2,007 208,975 6 297,598 4,016 293,582 253,457 2,962 250,495 7 302,189 4,547 297,642 248,570 3,422 245,148 8 334,492 6,140 328,352 272,313 4,436 267,877 9 273,237 5,915 267,322 225,331 4,452 220,879

10 208,555 5,337 203,218 174,391 4,043 170,348 11 150,641 4,536 146,105 130,631 3,613 127,018 12 97,940 3,401 94,539 96,619 3,003 93,616 13 87,531 3,687 83,844 79,475 2,912 76,563 14 46,940 2,620 44,320 41,259 2,087 39,172

15 191,920 18,819 173,101 168,413 19,904 148,509 2,554,285 63,733 2,490,552 2,238,022 54,810 2,183,212 Total ￦ 9,132,011 ￦ 146,165 ￦ 8,985,846 ￦ 9,152,597 ￦ 138,401 ￦ 9,014,196 (*) Grades are internal credit ratings evaluated by the Consolidated Entity.

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B. Corporate


Grade (*)

Book value before


accounts


accounts

Book value

Book value before


accounts


accounts

Book value

1 ￦ 89,323 ￦ 433 ￦ 88,890 ￦ 260,878 ￦ 71 ￦ 260,807 2 91,068 533 90,535 76,501 159 76,342 3 57,629 373 57,256 41,571 151 41,420 4 41,452 298 41,154 43,949 437 43,512 5 12,913 258 12,655 9,854 304 9,550 6 6,741 248 6,493 3,024 177 2,847 7 11,440 743 10,697 3,369 384 2,985 8 323 32 291 1,040 145 895

N (**) 2,133 159 1,974 10,203 77 10,126 Total ￦ 313,022 ￦ 3,077 ￦ 309,945 ￦ 450,389 ￦ 1,905 ￦ 448,484

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

local governments and public authorities.

② Credit quality of credit cards past due but not impaired as of December 31, 2013 and 2012, are summarized as follows (Unit: Korean won in millions):

December 31, 2013

Less than

one month One to two months

Two to three months

More than three

months Total Retail ￦ 172,743 ￦ 26,757 ￦ - ￦ - ￦ 199,500 Corporate 175,280 1,554 - - 176,834 348,023 28,311 - - 376,334 Card assets

Card receivables 256,679 10,901 - - 267,580 Cash advances 24,054 4,882 - - 28,936 Card loans 67,290 12,528 - - 79,818

348,023 28,311 - - 376,334 Allowance for doubtful

accounts (8,012) (2,486) - - (10,498) Book value ￦ 340,011 ￦ 25,825 ￦ - ￦ - ￦ 365,836

December 31, 2012

Less than

one month One to two months

Two to three months

More than three

months Total Retail ￦ 173,994 ￦ 29,994 ￦ - ￦ - ￦ 203,988 Corporate 13,485 2,653 - - 16,138 187,479 32,647 - - 220,126 Card assets

Card receivables 110,097 16,497 - - 126,594 Cash advances 18,102 4,378 - - 22,480 Card loans 59,280 11,772 - - 71,052

187,479 32,647 - - 220,126 Allowance for doubtful

accounts (7,051) (2,879) - - (9,930) Book value ￦ 180,428 ￦ 29,768 ￦ - ￦ - ￦ 210,196

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③ Credit quality of credit cards past due and impaired as of December 31, 2013 and 2012, is summarized as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Card assets ￦ 158,201 ￦ 64,738 Allowance for doubtful accounts (45,119) (30,576)

Total ￦ 113,082 ￦ 34,162

5) Concentrations of credit risk

① Concentration of credit risk by term structures as of December 31, 2013 and 2012, is summarized as

follows (Unit: Korean won in millions):

December 31, 2013

Retail

Corporate

Total Ratio


accounts

Book value

Within three months ￦ 3,446,046 ￦ 524,799 ￦ 3,970,845 39.97%

49,253 3,921,592

Three months to six months

1,326,222 95 1,326,317 13.35% 17,552 1,308,765

Six months to twelve months

1,652,087 7 1,652,094 16.63% 30,664 1,621,430

One year to two years

1,917,696 - 1,917,696 19.30% 58,001 1,859,695

Two years to three years

956,760 - 956,760 9.63% 23,167 933,593

Three years to four years

54,107 - 54,107 0.55% 1,878 52,229

Four years to five years

3,028 - 3,028 0.03% 1,197 1,831

After five years 53,177 - 53,177 0.54% 23,145 30,032 Total ￦ 9,409,123 ￦ 524,901 ￦ 9,934,024 100.00% ￦ 204,857 ￦ 9,729,167

December 31, 2012

Retail

Corporate

Total Ratio


accounts

Book value

Within three months ￦ 3,913,271 ￦ 479,587 ￦ 4,392,858 44.44%

48,758 4,344,100

Three months to six months 1,145,140 43 1,145,183 11.58%

17,545 1,127,638

Six months to twelve months 1,718,014 - 1,718,014

17.38% 32,564 1,685,450

One year to two years 1,756,477 - 1,756,477

17.76% 49,545 1,706,932

Two years to three years 775,687 - 775,687

7.84% 17,342 758,345

Three years to four years 64,680 - 64,680

0.65% 1,293 63,387

Four years to five years 2,016 - 2,016

0.02% 779 1,237

After five years 32,935 - 32,935 0.33% 12,986 19,949 Total ￦ 9,408,220 ￦ 479,630 ￦ 9,887,850 100.00% ￦ 180,812 ￦ 9,707,038

② Concentrations of credit risk, by industry, of corporate loans as of December 31, 2013 and 2012, are

summarized as follows (Unit: Korean won in millions):


- 49 -

Book value before

allowance for doubtful accounts

Ratio

Allowance for

doubtful accounts

Book

value

Book value before


Ratio

Allowance for

doubtful accounts

Book

value

Financing ￦ 117,063 22.30% ￦ (603) ￦116,460 ￦ 121,927 25.42% ￦ (219) ￦121,708 Manufacturing 169,5599 32.30% (1,824) 167,735 161,781 33.73% (863) 160,918 Service 176,633 33.65% (4,283) 172,350 149,343 31.14% (1,997) 147,346 Public 125 0.03% - 125 145 0.03% - 145 Others 61,521 11.72% (1,592) 59,929 46,434 9.68% (1,683) 44,751

Total ￦ 524,901 100.00% ￦ (8,302) ￦516,599 ￦ 479,630 100.00% ￦ (4,762) ￦474,868

- 50 -

6) Card assets by the assessment methods for impairments as of December 31, 2013 and 2012, are summarized as follows (Unit: Korean won in millions):

December 31, 2013 Individual assessment Collective assessment Total

Book value before

allowance for

doubtful accounts

Allowance for

doubtful accounts

Allowance rate

Book value before

allowance for

doubtful accounts

Allowance for

doubtful accounts

Allowance rate

Book value before



Allowance rate

Card assets Card receivables ￦ 43,171 ￦ (603) ￦ 1.40% ￦ 6,340,041 ￦ (69,503) 1.10% ￦ 6,383,212 ￦ (70,106) 1.10% Cash advances - - - 849,422 (31,313) 3.69% 849,422 (31,313) 3.69% Card loans - - - 2,701,390 (103,438) 3.83% 2,701,390 (103,438) 3.83% Loans to

corporate - - - - - - - - - Total ￦ 43,171 ￦ (603) ￦ 1.40% ￦ 9,890,853 ￦(204,254) 2.07% ￦ 9,934,024 ￦ (204,857) 2.06%

December 31, 2012 Individual assessment Collective assessment Total

Book value before

allowance for

doubtful accounts

Allowance for

doubtful accounts

Allowance rate

Book value before


Allowance for

doubtful accounts

Allowance rate

Book value before



Allowance rate

Card assets Card receivables ￦ 11,574 ￦ (121) ￦ 1.05% ￦ 6,584,787 ￦ (65,531) 1.00% ￦ 6,596,361 ￦ (65,652) 1.00% Cash advances - - - 940,019 (33,786) 3.59% 940,019 (33,786) 3.59% Card loans - - - 2,351,470 (81,374) 3.46% 2,351,470 (81,374) 3.46% Loans to

corporate - - - - - - - - - Total ￦ 11,574 ￦ (121) ￦ 1.05% ￦ 9,876,276 ￦(180,691) 1.83% ￦ 9,887,850 ￦ (180,812) 1.83%

(3) Liquidity risk

1) Liquidity risk

① General Liquidity risk is the risk that the Consolidated Entity is unable to meet its payment obligations arising from financial liabilities as they become due. The Consolidated Entity classifies and discloses contractual maturity of all financial assets, liabilities and offshore accounts in relation to liquidity risk into four categories as immediately payable, within one year, one to five years and after five years. The cash flows disclosed in the maturity analysis is undiscounted contractual amount, including principal and future interest payments, which results in disagreement with the discounted cash flows included in the consolidated statements of financial position. Calculated cash flows are allocated into four categories, which draw contractual maturity analysis of each financial asset and liability.

② Liquidity risk management process and guidance General principles and the overall framework for managing liquidity risk across the Consolidated Entity are defined in the Liquidity Risk Policy approved by the ALCO. All transactions that affect in and out flows of local/foreign currency funds across the Consolidated Entity are subject to liquidity risk management. Liquidity risk is centrally managed and controlled by the Financial Planning Department, which reports into the ALCO on liquidity analysis and statistics, including liquidity gap, liquidity ratio, maturity mismatch ratio and liquidity risk situation. The financial strategies to achieve the Consolidated Entity’s management goal, including liquidity risk, is set and monitored by ALCO.

- 51 -

2) Residual contractual maturity analysis of financial liabilities

The Consolidated Entity’s financial liabilities by residual contractual maturity as of December 31, 2013 and 2012, are classified as follows (Unit: Korean won in millions):

December 31, 2013

Immediate

payment Less than

one year One to five years

More than five years Total

Borrowings ￦ - ￦ 167,571 ￦ 52,508 ￦ - ￦ 220,079 Debentures - 1,929,163 5,548,456 144,899 7,622,518 Derivatives liabilities - 29,997 30,569 - 60,566 Other liabilities 75,589 1,242,652 779 - 1,319,020

Total ￦ 75,589 ￦ 3,369,383 ￦ 5,632,312 ￦ 144,899 ￦ 9,222,183 These amounts include all cash outflows, such as interests without discount and other liabilities, which include account payable, accrued expense, deposit received, finance lease liabilities and guarantee deposit received for import license.

December 31, 2012

Immediate

payment Less than

one year One to five years

More than five years Total

Borrowings ￦ - ￦ 429,738 ￦ 64,417 ￦ - ￦ 494,155 Debentures - 2,108,561 4,801,662 230,914 7,141,137 Derivatives liabilities - 32,147 47,682 - 79,829 Other liabilities 42,139 1,421,832 192 - 1,464,163

Total ￦ 42,139 ￦ 3,992,278 ￦ 4,913,953 ￦ 230,914 ￦ 9,179,284 These amounts include all cash outflows, such as interests without discount and other liabilities, which include account payable, accrued expense, deposit received, finance lease liabilities and guarantee deposit received import license.

(4) Market risk

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

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2) Market risk management organization Incorporated market risk management policy is set by ALCO, which approves market risk limits, use of new derivative financial instruments and day-to-day operations related to market risks. Furthermore, ALCO determines Value-at-Risk (“VaR”) limits on bonds, stocks, foreign currency and financial derivatives instruments, position limits and stop-loss limits and additionally sets scenario loss limits and sensitivity limits on financial derivatives instruments.

Determination of interest rate and commission rate, enactment and amendment of asset liability management (“ALM”) and risk management policy, and interest rate and commission rate guidelines and analysis of monthly ALM risk reside with the Chief Financial Committee. Interest risk limits are determined based on asset-liability position and expected interest rate fluctuation considering annual operational planning, which are centrally measured and monitored by the financial planning team. Responsibility for management of both interest rate risk condition, such as interest rate gap, duration gap, sensitivity, etc., and compliance with interest rate risk limits policy reside with the financial planning team, which reports the results into the ALCO on a quarterly basis.

3) Non-trading position The majority market risk from the Consolidated Entity’s non-trading position is the interest rate risk. This interest rate risk from non-trading position arises from two mismatch sources: mismatches between the maturity of interest-bearing assets and liabilities and between interest rate changing periods. The Consolidated Entity internally assesses the interest rate risk arising from local and foreign currency assets and liabilities, including derivatives financial instruments. Most assets generating interest income and liabilities generating interest expense are denominated in Korean won. The objective of interest rate risk management is to reduce a decline in the value of assets due to changes in market interest rates and to secure stable and optimal net interest income. The management of interest rate risk is supported by a comprehensive analysis of interest rate gap (between assets generating interest income and liabilities generating interest expense) and measurement of interest rate VaR and earnings at risk. The Consolidated Entity calculates risk index using the methodologies listed above, and discloses the interest rate VaR calculated using duration.

4) Interest rate VaR

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

December 31, 2013 December 31, 2012 Interest rate VaR ￦ 5,873 ￦ 1,197

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(5) Capital management

The Parent (specialized credit finance company) must maintain adjusted capital adequacy ratio in accordance with Specialized Credit Financial Business Law and subregulations, and the ratio for the credit card company must be more than 8 %.

This ratio is calculated dividing adjusted capital by adjusted total assets and all factors are based on consolidated financial statements. The Parent maintains an adjusted capital adequacy ratio over 8%.

33. FINANCIAL ASSETS AND FINANCIAL LIABILITIES:

(1) Fair Value of Financial Assets and Liabilities

The fair value of financial assets and financial liabilities as of December 31, 2013 and 2012, is summarized as follows (Unit: Korean won in millions):

December 31, 2013 December 31, 2012 Book value Fair value Book value Fair value Assets Financial assets

Cash and bank deposit ￦ 998,487 ￦ 998,487 ￦ 824,576 ￦ 824,576

Investment financial assets 1,767 1,767 1,767 1,767

Card assets 9,729,167 10,210,591 9,707,038 10,119,434 Other assets 177,862 177,974 182,292 182,697

Total ￦10,907,283 ￦11,388,819 ￦ 10,715,673 ￦11,128,474 Liabilities Financial liabilities Borrowings ￦ 212,500 ￦ 212,624 ￦ 487,500 ￦ 488,832

Bonds payable 6,978,262 7,136,256 6,533,176 6,740,956 Other liabilities 1,439,604 1,439,598 1,517,677 1,517,676

Total ￦ 8,630,366 ￦ 8,788,478 ￦ 8,538,353 ￦ 8,747,464 Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s-length transaction. The Consolidated Entity presents a comparative disclosure of fair value and book value by financial assets and financial liabilities type. The best evidence of fair value is a quoted price in an active market. The fair values of financial instruments where no active market exists or where quoted prices are not otherwise available are determined by using valuation techniques. Valuation techniques include using recent arm’s-length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option-pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the Consolidated Entity uses that technique. Although the Consolidated Entity believes that the valuation techniques it has used are appropriate and the fair values recorded in the consolidated statements of financial position are reasonably estimated, the application of assumptions and estimates means that any selection of different assumptions and valuation techniques would cause the reported results to differ. Furthermore, as various valuation techniques and assumptions are used in estimating fair values, it might be difficult to compare the Consolidated Entity’s results with fair values determined by other financial institutions.

- 54 -

(2) Netting on financial assets and financial liabilities

Derivative assets and derivative liabilities recognized by the Consolidated Entity can be set off in accordance with the future events described in derivative master netting agreements. The effects of netting agreements as of December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

December 31, 2013

Net amounts of

financial assets

presented in the

consolidated

statement of

financial position

Gross amounts

of

recognized

financial assets

Gross amounts of

recognized financial

liabilities to be set

off

Non-offsetting amount

Financial

instruments

Cash

collateral

received Classification

Net

amounts

Financial Assets

Derivative assets ￦ 2,750 ￦ - ￦ 2,750 ￦ 1,213 ￦ - ￦ 1,537

Financial Liabilities

Derivative liabilities ￦ 48,665 ￦ - ￦ 48,665 ￦ 1,213 ￦ - ￦ 47,452

December 31, 2012

Net amounts of

financial assets

presented in the

consolidated

statement of

financial position

Gross amounts

of

recognized

financial assets

Gross amounts of

recognized financial

liabilities to be set

off

Non-offsetting amount

Financial

instruments

Cash

collateral

received Classification

Net

amounts

Financial Assets

Derivative assets ￦ 901 ￦ - ￦ 901 ￦ 219 ￦ - ￦ 682

Financial Liabilities

Derivative liabilities ￦ 6,083 ￦ - ￦ 6,083 ￦ 219 ￦ - ￦ 5,864

- 55 -

(3) Fair value hierarchy The table below provides the Consolidated Entity’s financial assets and financial liabilities recorded at fair value in the consolidated statements of financial position as of December 31, 2013 and 2012, (Unit: Korean won in millions):

December 31, 2013

Book value Fair value

Level 1 Level 2 Level 3 Financial assets Fair value financial assets

Derivatives assets ￦ 2,750 ￦ 2,750 ￦ - ￦ 2,750 ￦ - Financial liabilities Fair value financial liabilities

Derivatives liabilities ￦ 48,665 ￦ 48,665 ￦ - ￦ 48,665 ￦ -

December 31, 2012

Book value Fair value

Level 1 Level 2 Level 3 Financial assets Fair value financial assets

Derivatives assets ￦ 901 ￦ 901 ￦ - ￦ 901 ￦ - Financial liabilities

Fair value financial liabilities

Derivatives liabilities ￦ 53,555 ￦ 53,555 ￦ - ￦ 53,555 ￦ -

The table below provides the Consolidated Entity’s financial assets and financial liabilities that are carried at cost since the fair values of the financial instruments are not readily determinable in the consolidated statements of financial position as of December 31, 2013 and 2012, (Unit: Korean won in millions):

Years ended December 31 2013 2012 Investment financial assets

AFS financial assets(*) ￦ 1,767 ￦ 1,767 (*) AFS financial assets are unlisted equity securities and recorded as carried at cost since they do not have

quoted prices in an active market and the fair values are not measured with reliability.

(4) The table below provides the fair value hierarchy of financial instruments that are not measured subsequently at fair value in consolidated statements of financial position as of December 31, 2013 (Unit: Korean won in millions):

December 31, 2013 Level 1 Level 2 Level 3 Totals Financial assets

Loans and receivables Card assets ￦ - ￦ - ￦10,210,591 ￦10,210,591

Other financial assets Leasehold deposits provided - 34,932 - 34,932

Totals ￦ - ￦ 34,932 ￦ 10,210,591 ￦ 10,245,523 Financial liabilities

Borrowings ￦ - ￦ 212,624 ￦ - ￦ 212,624 Bonds payable - 7,136,256 - 7,136,256 Leasehold deposits received - 8,060 - 8,060

Totals ￦ - ￦ 7,356,940 ￦ - ￦ 7,356,940

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(5) The following table explains valuation techniques and input variables used in Level 2 or Level 3 fair value measurement. Fair value of financial instruments traded in an active market is determined by using the published price quotations based on market prices. However, if the market for a financial instrument is not active, fair value is determined by using a valuation technique. The valuation techniques and input variables of the financial assets and liabilities, which are measured at amortized cost, are as follows:

Classification Valuation techniques Inputs

Financial instruments which are disclosed,

but not measured at fair value in the consolidated statements of financial position

Loans and receivables

Discounted Cash Flow model is used to

determine the fair value of card assets. The fair

value is determined by discounting the expected

cash flows by contractual cash flows with the

market interest rate considering the

Consolidated Entity’s credit grade.

Market yield, credit spread, liquidity

risk premium, other spread, and cost

rate by borrowers

Other financial instruments,

borrowings

DCF model is used to determine the fair value

of borrowings and lease deposits. The fair value

is determined by cash flows with the market

interest rate considering the Consolidated

Entity’s credit grade.

Market yield, credit spread, liquidity

risk premium, and other spreads

(6) Book value by category of financial instruments

The table below provides book value by category of financial assets and financial liabilities as of December 31, 2013 and 2012, (Unit: Korean won in millions):

December 31, 2013

Financial asset at FVTPL


AFS financial

assets Hedging

derivatives Total Trading

Designated at

FVTPL Financial assets

Cash and bank deposit ￦ - ￦ - ￦ 998,487 ￦ - ￦ - ￦ 998,487

Investment financial assets - - - 1,767 - 1,767

Card assets - - 9,729,167 - - 9,729,167 Other financial assets - - 175,112 - 2,750 177,862

Total ￦ - ￦ - ￦ 10,902,766 ￦ 1,767 ￦ 2,750 ￦10,907,283

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December 31, 2013

Financial liabilities at FVTPL

Amortized cost

Hedging derivatives Total

Trading

Designated at

FVTPL Financial liabilities Borrowings ￦ - ￦ - ￦ 212,500 ￦ - ￦ 212,500 Bonds payable - - 6,978,262 - 6,978,262 Other financial liabilities - - 1,390,939 48,665 1,439,604

Total ￦ - ￦ - ￦ 8,581,701 ￦ 48,665 ￦ 8,630,366 December 31, 2012

Financial asset at FVTPL


AFS financial

assets Hedging

derivatives Total Trading

Designated at

FVTPL Financial assets

Cash and bank deposit ￦ - ￦ - ￦ 824,576 ￦ - ￦ - ￦ 824,576

Investment financial assets - - - 1,767 - 1,767

Card assets - - 9,707,038 - - 9,707,038 Loans - - - - - - Other assets - - 181,391 - 901 182,292

Total ￦ - ￦ - ￦ 10,713,005 ￦ 1,767 ￦ 901 ￦10,715,673

December 31, 2012

Financial liabilities at FVTPL

Amortized cost

Hedging derivatives Total

Trading

Designated at

FVTPL Financial liabilities Borrowings ￦ - ￦ - ￦ 487,500 ￦ - ￦ 487,500 Bonds payable - - 6,533,176 - 6,533,176 Other liabilities - - 1,464,122 53,555 1,517,677

Total ￦ - ￦ - ￦ 8,484,798 ￦ 53,555 ￦ 8,538,353

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(7) Net profit or loss of financial instruments by categories

Net profit or loss of financial instruments by categories for the years ended December 31, 2013 and 2012, is as follows (Unit: Korean won in million):

December 31, 2013

Interest income

Interest expense

Card revenue

Card expenses

Reversal of impairment

loss Valuation

loss Disposal

loss

Foreign currency

translation gain

Foreign exchange

gain Financial assets

Loans and receivables ￦20,566 ￦ - ￦ 2,453,282 ￦1,028,250 ￦ - ￦ - ￦ - ￦ - ￦ 9,869

AFS financial assets - - - - 81 - - - -

Hedging derivatives - - - - - - - - -

Financial liabilities

Financial liabilities at amortized cost 312,929 - - - - - 10,503 -

Hedging derivatives - - - - - (10,533) (380) - -

Total ￦20,566 ￦312,929 ￦ 2,453,282 ￦1,028,250 ￦ 81 ￦ (10,533) ￦ (380) ￦ 10,503 ￦ 9,869

December 31, 2012

Interest income

Interest expense

Card revenue

Card expenses

Reversal of impairment loss

Valuation loss

Disposal loss

Foreign currency

translation (loss) gain

Foreign exchange

gain Financial assets

Loans and receivables ￦ 22,593 ￦ - ￦ 2,388,279 ￦1,043,711 ￦ - ￦ - ￦ - ￦ (8) ￦ 7,744

AFS financial assets - - - - 462 - - - -

Hedging derivatives - - - - - - - - -

Financial liabilities

Financial liabilities at amortized cost 343,399 - - - - - 55,633 799

Hedging derivatives - - - - - (55,633) (799) - -

Total ￦22,593 ￦ 343,399 ￦ 2,388,279 ￦1,043,711 ￦ 462 ￦ (55,633) ￦ (799) ￦ 55,625 ￦ 8,543

34. NET INTEREST INCOME (EXPENSE):

Net interest income (expense) for the years ended December 31, 2013 and 2012, is as follows (Unit: Korean won in millions):

Years ended December 31, Interest income 2013 2012 Cash and bank deposit ￦ 18,924 ￦ 19,915 Others 1,642 2,678

Total 20,566 22,593 Interest expense Borrowings 19,096 25,304 Bonds payable 293,692 317,881 Others 141 214

Total 312,929 343,399 Net interest expense ￦ (292,363) ￦ (320,806)

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35. NET COMMISSION INCOME:

Net commission income for the years ended December 31, 2013 and 2012, is as follows (Unit: Korean won in millions):

Years ended December 31, Commission income 2013 2012

Card income ￦ 1,522,854 ￦ 1,513,832 Total 1,522,854 1,513,832

Commission expense Service fee 565,857 559,560 Financial payment fee 11,691 13,027 A new credit sale handling fee 150,954 132,072 Merchants co-payment fee 62 83 Overseas payment fee 45,149 39,967 Other 51,651 36,840

Total 825,364 781,549 Net commission income ￦ 697,490 ￦ 732,283

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

36. OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES:

Other operating income and other operating expenses for the years ended December 31, 2013 and 2012, are as follows (Unit: Korean won in millions):

Years ended December 31, Other operating revenue 2013 2012

Foreign exchange gain ￦ 13,180 ￦ 10,126 Foreign currency translation gain 10,503 55,663 Gain on derivative transactions 807 - Others 28,708 47,253

Total 53,198 113,042 Commission expense

Foreign exchange loss 3,311 1,583 Foreign currency translation loss - 38 Loss on derivative transactions 1,187 799 Loss on valuation of derivatives 10,533 55,633 Others 65,683 33,885

Total ￦ 80,714 ￦ 91,938 37. SEGMENT INFORMATION: Though the Consolidated Entity conducts business activities related to credit cards, installment financing, leasing, etc., in accordance with relevant laws, such as Specialized Credit Finance Business Act, it does not report separate segment information, as the management considers the Consolidated Entity to operate under one core business.

hcc 2013 audit_en

Economy & Finance

consolidated entity

financial assets available

total cash

total card assets

card assets notes

card loans

auditors report date

independent auditors