2014년 3분기 검토보고서 en 카드

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2014, AND DECEMBER 31, 2013, AND FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013, AND INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

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Independent Accountants’ Review Report English Translation of a Report Originally Issued in Korean To the Shareholders and Board of Directors of Hyundai Card Co., Ltd.: We have reviewed the accompanying condensed consolidated financial statements of Hyundai Card Co., Ltd., and its subsidiaries (collectively, the “Group”). The condensed consolidated financial statements consist of the condensed consolidated statements of financial position as of September 30, 2014, and the related condensed consolidated statements of comprehensive income for the three months and nine months ended September 30, 2014 and 2013, the related condensed consolidated statements of changes in shareholders’ equity and the related condensed consolidated statements of cash flows for the nine months ended September 30, 2014 and 2013, respectively, and a summary of significant accounting policies and other explanatory information. Management’s responsibility for the condensed consolidated financial statements The Group’s management is responsible for the preparation and fair presentation of the accompanying condensed consolidated financial statements and for such internal control as management determines is necessary to enable the preparation of condensed consolidated financial statements that are free from material misstatement, whether due to fraud or error. Independent accountants’ responsibility Our responsibility is to express a conclusion on the accompanying condensed consolidated financial statements based on our reviews. We conducted our reviews in accordance with standards for review of interim financial statements in the Republic of Korea. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data, and this provides less assurance than an audit. We have not performed an audit, and accordingly, we do not express an audit opinion. Review conclusion Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated financial statements of the Group are not presented fairly, in all material respects, in accordance with Korean International Financial Reporting Standards (“K-IFRS”) 1034, Interim Financial Reporting.

Others We audited the consolidated statement of financial position as of December 31, 2013, and the related consolidated statement of comprehensive income, consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows for the year ended December 31, 2013 (not presented in the accompanying condensed consolidated financial statements), respectively, all expressed in Korean won, in accordance with auditing standards generally accepted in the Republic of Korea. We expressed an unqualified opinion on those consolidated financial statements in our independent auditors’ report dated March 12, 2014. The consolidated statement of financial position as of December 31, 2013, presented as a comparative purpose in the accompanying condensed consolidated financial statements does not differ, in all material respects, from the audited consolidated statement of financial position as of December 31, 2013. November 6, 2014

Notice to Readers This report is effective as of November 6, 2014, the accountants’ review report date. Certain subsequent events or circumstances may have occurred between the accountants’ review report date and the time the accountants’ review report is read. Such events or circumstances could significantly affect the condensed consolidated financial statements and may result in modifications to the accountants’ review report.

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES (the “Group”) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2014, AND DECEMBER 31, 2013, AND FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

The accompanying condensed consolidated financial statements, including all footnote disclosures, were prepared by, and are the responsibility of, the management of the Group.

Chung, Tae Young Chief Executive Officer Hyundai Card Co., Ltd.

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2014, AND DECEMBER 31, 2013

(Unit: Korean won) September 30, 2014 December 31, 2013 ASSETS: CASH AND DEPOSITS (Notes 4 and 27):

Cash and cash equivalents (Note 22) ￦ 1,088,966,901,894 ￦ 965,455,273,460 Deposits 33,028,250,000 33,031,500,000

Total cash and deposits 1,121,995,151,894 998,486,773,460

SECURITIES (Note 27): Available-for-sale (AFS) securities 1,766,969,764 1,766,969,764

Total securities 1,766,969,764 1,766,969,764 CARD ASSETS (Notes 5, 6, 25 and 27):

Card receivables, net of present value discounts and deferred origination fees 6,291,384,134,822

6,383,211,792,320

Allowance for doubtful accounts (67,733,275,323) (70,105,553,680) Cash advances 857,108,192,351 849,422,262,762

Allowance for doubtful accounts (31,384,727,423) (31,313,461,768) Card loans, net of present value discounts 3,035,024,204,089 2,701,390,003,560

Allowance for doubtful accounts (116,390,219,598) (103,438,269,110) Total card assets 9,968,008,308,918 9,729,166,774,084

PROPERTY AND EQUIPMENT (Note 7):

Land 124,702,022,976 122,011,816,788 Buildings 112,414,709,239 79,195,772,062

Accumulated depreciation (8,084,290,748) (6,313,565,576) Vehicles 2,541,971,418 88,948,908

Accumulated depreciation (75,145,334) (38,353,100) Fixtures and equipment 200,909,598,235 150,980,674,674

Accumulated depreciation (116,345,003,974) (97,286,451,779) Finance lease assets - 3,334,009,504

Accumulated depreciation - (3,056,175,378) Construction in progress 12,398,170,440 33,125,461,350

Total property and equipment 328,462,032,252 282,042,137,453

OTHER ASSETS: Other accounts receivable (Note 27) 120,969,993,879 94,513,815,009

Allowance for doubtful accounts (Notes 6 and 27) (518,721,429) (1,030,119,271) Accrued revenue (Note 27) 49,108,452,677 48,131,937,107

Allowance for doubtful accounts (Notes 6 and 27) (1,253,229,254) (1,323,983,992) Advance payments 12,571,030,650 12,955,613,877

Allowance for doubtful accounts (Note 6) (651,322,306) (657,322,306) Prepaid expenses 45,584,487,245 46,967,290,940 Intangible assets (Note 8) 108,549,403,711 127,029,551,626 Derivative assets (Notes 12, 26 and 27) 128,223,181 2,750,372,571 Deferred income tax assets (Note 19) 146,274,858,887 143,222,807,823 Guarantee deposits (Notes 4 and 27) 30,136,380,030 34,819,962,715 Others 2,346,736,911 2,035,111,023

Total other assets 513,246,294,182 509,415,037,122 Total Assets ￦ 11,933,478,757,010 ￦11,520,877,691,883

(Continued)

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)

AS OF SEPTEMBER 30, 2014, AND DECEMBER 31, 2013

(Unit: Korean won) September 30, 2014 December 31, 2013 LIABILITIES: BORROWINGS (Notes 9 and 27):

Borrowings ￦ 200,000,000,000 ￦ 212,500,000,000 Debenture, net of discounts 7,248,860,041,866 6,978,262,324,353

Total borrowings 7,448,860,041,866 7,190,762,324,353

OTHER LIABILITIES: Accounts payable (Note 27) 1,033,577,803,313 1,063,762,663,494 Accrued expenses (Note 27) 182,243,951,739 191,925,249,569 Unearned revenue 374,001,299,593 393,154,182,657 Withholdings (Note 27) 154,919,728,476 134,747,372,074 Finance lease liabilities (Note 27) - 298,002,314 Derivative liabilities (Notes 12, 26 and 27) 51,360,455,353 48,665,166,455 Current tax liability 29,360,075,484 33,669,310,842 Net defined benefit liability (Note 10) 22,045,375,035 3,367,411,536 Guarantee deposits received (Note 27) 8,636,724,274 8,076,226,724 Provisions (Notes 11 and 23) 83,830,475,893 86,321,526,532

Total other liabilities 1,939,975,889,160 1,963,987,112,197

SHAREHOLDERS’ EQUITY: Capital stock 802,326,430,000 802,326,430,000 Capital surplus 57,704,443,955 57,704,443,955 Accumulated other comprehensive loss (Note 21) (32,489,036,226) (5,856,733,562) Retained earnings (Notes 13 and 14) 1,717,100,988,255 1,511,954,114,940

Total shareholders’ equity 2,544,642,825,984 2,366,128,255,333 Total Liabilities and Shareholders’ Equity ￦ 11,933,478,757,010 ￦11,520,877,691,883

(Concluded) See accompanying notes to condensed consolidated financial statements.

HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(Unit: Korean won) 2014 2013

Three months ended September 30

Nine months ended September 30



OPERATING REVENUE: Card income (Note 16) ￦ 623,079,735,319 ￦ 1,864,409,729,398 ￦ 615,503,498,368 ￦ 1,823,716,549,587 Interest income (Note 15) 6,529,697,978 18,095,349,080 4,692,125,207 15,213,685,757 Gain on valuation and disposal of securities 31,671,800 61,979,100 27,064,300 81,187,900 Dividends income 148,894,479 321,472,757 173,175,497 351,635,696 Reversal of provision for unused credit limits (Note 11) 2,552,018,481 3,556,122,863 (433,850,851) - Other operating revenue (Note 17) (13,653,174,121) 34,451,843,632 (51,525,302,219) 36,548,152,029

Total operating revenue 618,688,843,936 1,920,896,496,830 568,436,710,302 1,875,911,210,969 OPERATING EXPENSES:

Card expenses (Note 16) 251,215,228,504 749,567,528,040 247,601,906,452 767,312,825,052 Interest expenses (Note 15) 76,698,411,142 230,263,936,278 76,883,580,431 233,871,902,644 General and administrative expenses (Note 18) 156,124,742,197 456,474,494,633 171,136,895,725 466,803,948,744 Securitization expenses 69,279,638 265,047,123 55,939,501 256,953,518 Bad debt expense and loss on disposal of loans (Note 6) 61,569,644,160 187,856,616,291 62,065,464,744 176,819,302,743 Transfer to provision for unused credit limits (Note 11) - - 1,648,987,106 1,648,987,106 Other operating expenses (Note 17) (16,613,522,693) 27,643,134,864 (48,907,931,140) 58,401,349,462

Total operating expenses 529,063,782,948 1,652,070,757,229 510,484,842,819 1,705,115,269,269 OPERATING INCOME 89,625,060,988 268,825,739,601 57,951,867,483 170,795,941,700 NON-OPERATING INCOME: Gain from sale of property and equipment and intangible

assets 13,907,544 26,240,544 19,145,368 99,941,180 Reversal of impairment loss for intangible assets (Note 8) - 6,262,020 - -

Rental revenue 337,947,270 1,219,883,571 851,881,861 2,213,659,170 Miscellaneous gain 66,602,612 184,900,627 52,110,916 147,879,835

Total non-operating income 418,457,426 1,437,286,762 923,138,145 2,461,480,185 NON-OPERATING EXPENSES:

Donations 72,371,378 525,549,524 168,663,961 433,836,151 Loss from sale of property and equipment and intangible

assets 10,507,924 29,846,187 215,433,484 808,977,728 Miscellaneous loss - 4,570,950 - -

Total non-operating expenses 82,879,302 559,966,661 384,097,445 1,242,813,879 NET INCOME BEFORE INCOME TAX EXPENSE 89,960,639,112 269,703,059,702 58,490,908,183 172,014,608,006 INCOME TAX EXPENSE (Note 19) 21,771,792,975 64,556,186,387 14,603,959,328 44,811,315,912 NET INCOME ￦ 68,188,846,137 ￦ 205,146,873,315 ￦ 43,886,948,855 ￦ 127,203,292,094 (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED) FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(Unit: Korean won)

2014

2013





OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX (Note 21)

Items not reclassified subsequently to profit or loss ￦ (1,230,929,124) ￦ (10,211,803,806) ￦ (59,959,765) ￦ 293,944,082 Remeasurements of net defined benefit liability (1,230,929,124) (10,211,803,806) (59,959,765) 293,944,082 Items reclassified subsequently to profit or loss (7,859,203,598) (16,420,498,858) 4,671,908,118 5,023,674,459 Cash flow hedging gains (losses) (7,859,203,598) (16,420,498,858) 4,671,908,118 5,023,674,459

Total other comprehensive (loss) income (9,090,132,722) (26,632,302,664) 4,611,948,353 5,317,618,541 TOTAL COMPREHENSIVE INCOME ￦ 59,098,713,415 ￦ 178,514,570,651 ￦ 48,498,897,208 ￦ 132,520,910,635 EARNINGS PER SHARE (Note 20)

Basic earnings per share ￦ 425 ￦ 1,278 ￦ 273 ￦ 793 Diluted earnings per share ￦ 425 ￦ 1,278 ￦ 273 ￦ 793

(Concluded) See accompanying notes to condensed consolidated financial statements.


CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(Unit: Korean won)

Capital stock

Capital surplus

Retained earnings Total

Paid-in capital Other capital

Accumulated other

comprehensive loss(gain)

Balance at January 1, 2013 ￦ 802,326,430,000 ￦45,399,364,539 ￦ 12,305,079,416 ￦ (16,504,748,278) ￦ 1,348,744,482,014 ￦2,192,270,607,691 Total comprehensive income Net income - - - - 127,203,292,094 127,203,292,094 Other comprehensive income Remeasurements of net defined benefit liability - - - 293,944,082 - 293,944,082 Cash flow hedging income - - - 5,023,674,459 - 5,023,674,459 Balance at September 30, 2013 ￦ 802,326,430,000 ￦ 45,399,364,539 ￦ 12,305,079,416 ￦ (11,187,129,737) ￦1,475,947,774,108 ￦2,324,791,518,326 Balance at January 1, 2014 ￦802,326,430,000 ￦ 45,399,364,539 ￦ 12,305,079,416 ￦ (5,856,733,562) ￦ 1,511,954,114,940 ￦ 2,366,128,255,333 Total comprehensive income Net income - - - - 205,146,873,315 205,146,873,315 Other comprehensive loss Remeasurements of net defined benefit liability - - - (10,211,803,806) - (10,211,803,806) Cash flow hedging losses - - - (16,420,498,858) - (16,420,498,858) Balance at September 30, 2014 ￦ 802,326,430,000 ￦ 45,399,364,539 ￦12,305,079,416 ￦(32,489,036,226) ￦ 1,717,100,988,255 ￦ 2,544,642,825,984

See accompanying notes to condensed consolidated financial statements.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(Unit: Korean won) 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES:

Cash generated from operating activities (Note 22) ￦ 204,279,445,814 ￦ 808,253,325,925 Interest received 17,664,951,517 15,982,156,562 Interest paid (216,430,459,736) (217,260,747,497) Dividend received 321,472,757 351,635,696 Income tax paid (63,495,479,756) (63,171,912,020)

Net cash (used in) provided by operating activities (57,660,069,404) 544,154,458,666

CASH FLOWS FROM INVESTING ACTIVITIES: Disposal of AFS securities 61,979,100 81,187,900 Net decrease (increase) of bank deposit 4,550,000 (2,500,000) Disposal of property and equipment 37,486,000 166,042,052 Acquisition of property and equipment (35,512,323,882) (31,541,231,612) Acquisition of intangible assets (34,074,430,836) (48,468,452,668)

Net cash used in investing activities (69,482,739,618) (79,764,954,328)

CASH FLOWS FROM FINANCING ACTIVITIES: Increase in borrowings 2,350,000,000,000 3,715,000,000,000 Proceeds from issue of debentures 6,684,567,767,975 2,524,142,398,760 Repayment of borrowings (2,362,500,000,000) (3,917,500,000,000) Repayment of debentures (6,421,413,330,519) (2,661,693,163,810)

Net cash provided by (used in) financing activities 250,654,437,456 (340,050,765,050)

NET INCREASE IN CASH AND CASH EQUIVALENTS 123,511,628,434 124,338,739,288 CASH AND CASH EQUIVALENTS, BEGINNING OF

THE PERIOD (Note 22) 965,455,273,460

791,547,295,193 CASH AND CASH EQUIVALENTS, END OF THE

PERIOD (Note 22) ￦ 1,088,966,901,894

￦ 915,886,034,481

See accompanying notes to condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2014, AND DECEMBER 31, 2013, AND FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

1. REPORTING ENTITY:

Hyundai Card Co., Ltd. (the “Company”), is engaged in the credit card business under the Specialized Credit Financial Business Law of Korea. On June 15, 1995, the Company acquired the credit card business of Korea Credit Circulation Co., Ltd., and on June 16, 1995, the Korean government granted permission to the Company to engage in the credit card business. As of September 30, 2014, the Company has approximately 6.80 million card members, 2.16 million registered merchants and 151 marketing centers, branches and posts. Its headquarters is located at 3, Uisadang-daero, Yeongdeungpo-gu, Seoul. As of September 30, 2014, the total common stock of the Company is ￦802,326 million. The shareholders of the Company and its ownerships as of September 30, 2014, and December 31, 2013, are as follows:

Shareholder

September 30, 2014 December 31, 2013

Number of shares Percentage of

ownership Number of shares

Percentage of ownership

Hyundai Motor Co., Ltd. 59,301,937 36.96 59,301,937 36.96 Kia Motors Co., Ltd. 18,422,142 11.48 18,422,142 11.48 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

Total 160,465,286 100.00 160,465,286 100.00

(1) Details of the Company’s subsidiaries as of September 30, 2014, and December 31, 2013, are as follows:

Place of

incorporation and operation

Voting share (%)

Entities

Major operation

September 30,

2014

December 31, 2013

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 PRIVIA 4th SPC Asset securitization Korea 0.9 - December

The entities are special-purpose entities that were established for the Company’s business activity. The Company has a power over the entities because the Company involves in the objectives and design of the entities and exposes itself to risks and rewards of them. Also, all the decision-making processes of the entities are operated in a predetermined way autopilot by provisions and articles of incorporation. The Company is considered to have an ability to use power as it has a control over the changes of provisions and articles of incorporation. Therefore, the Company consolidates the entities. Meanwhile, in case the subsidiaries related to derivative contracts hedging risks arising from debentures issued for asset securitization default, counterparties of the derivative contracts can claim to reimburse to the Company.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Hyundai Card Co., Ltd., and its subsidiaries (collectively, the “Group”) maintains its official accounting records in the Republic of Korean won and prepares condensed consolidated financial statements in conformity with Korean statutory requirements and Korean International Financial Reporting Standards (“K-IFRS”), in Korean language (Hangul). Accordingly, these condensed 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 Group’s condensed consolidated financial position, operating results, changes in shareholders’ equity or cash flows, is not presented in the accompanying condensed consolidated financial statements.

(1) Basis of Preparation The Group’s interim condensed consolidated financial statements for the nine months ended September 30, 2014, are prepared in accordance with K-IFRS 1034, Interim Financial Reporting. It is necessary to use the annual consolidated financial statements for the year ended December 31, 2013, for the understanding of the condensed consolidated financial statements. Unless stated otherwise, the accounting policies have been applied consistently with the annual consolidated financial statements as December 31, 2013, in order to prepare the condensed consolidated financial statements for the nine months ended September 30, 2014.

1) The Group has newly adopted the following new standards that affected the Group’s accounting policies: Amendments to K-IFRS 1032, Financial Instruments: Presentation The amendments to K-IFRS 1032 clarify the requirement for the offset presentation of financial assets and financial liabilities. That is, the right to offset must not be conditional on the occurrence of future events and can be exercised anytime during the contract periods. The right to offset is executable even in the case of default or insolvency. The adoption of the amendments has no significant impact on the Group’s condensed consolidated financial statements. Amendments to K-IFRS 1110, 1112 and 1027, Investment Entities Investment entities introduced an exception to the principle in K-IFRS 1110 Consolidated financial statement that all subsidiaries shall be consolidated. The amendments define an investment entity and require a parent that is an investment entity to measure its investment in particular subsidiaries at fair value through profit or loss instead of consolidating those subsidiaries in its consolidated financial statements. Also, the new disclosure requirements for investment entities in accordance with the amendments of K-IFRS 1110 have been introduced by consequential amendments to K-IFRS 1112 Disclosure of Interests in Other Entities, and K-IFRS 1027, Separate Financial Statements. The adoption of the amendments has no significant impact on the Group’s condensed consolidated financial statements. Amendments to K-IFRS 1039, Financial Instruments: Recognition and Measurement The amendments allowed the Company to use hedge accounting when, as a consequence of laws or regulations or the introduction of laws or regulations, the original counterparty to the hedging instrument is replaced by a central counterparty or an entity that is acting as counterparty in order to effect clearing by a central counterparty. The adoption of the amendments has no significant impact on the Group’s condensed consolidated financial statements.

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Enactment of K-IFRS 2121, Levies The enactment defines that the obligating event giving rise to the recognition of a liability to pay a levy is the activity that triggers the payment of the levy in accordance with the related legislation. The enactment has no significant impact on the Group’s condensed consolidated financial statements. In addition to the new amendments and enactments listed above, K-IFRS 1036, Impairment of Assets, had been amended to add clarifications about the disclosure requirement in relation to estimated recoverable amount for non-financial assets. The adoption of these amendments has no significant impact on the Group’s condensed consolidated financial statements. 2) The Group has not applied the following new and revised K-IFRS that have been issued but are not yet

effective: Amendments to K-IFRS 1019, Employee Benefits If the amount of the contributions is independent of the numbers of years of service, the Group is permitted to recognize such contributions as a reduction in the service cost in the period in which the related service is rendered. The amendments are effective for the annual periods beginning on or after July 1, 2014. The Group anticipates that the amendment listed above may not have significant impact on the Group’s condensed consolidated financial statements.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS:

The significant accounting estimates and assumptions are continually evaluated and are based on historical experiences and various factors, including expectations of future events that are considered to be reasonable. Actual results can differ from those estimates based on such definitions. The significant judgments that management has made about the application of the Group’s accounting policies and key sources of uncertainty in estimate do not differ from those used in preparing the consolidated financial statements for the year ended December 31, 2013.

4. RESTRICTED FINANCIAL ASSETS:

Details of restricted financial assets are as follows (Unit: Korean won in millions):

Type Entity September 30, 2014 December 31, 2013 Restriction Cash and deposits KB and others ￦ 19 ￦ 19 Guarantee deposits for overdraft

Shinhan Bank and

others

33,000

33,000

Secured deposits

Mirae Asset Securities

10

13

Social enterprise fund

Other assets Korea Asset Management Corporation

6,820

9,246

Escrow account ￦ 39,849 ￦ 42,278

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5. CARD ASSETS:

Details of card assets by customers are as follows (Unit: Korean won in millions):

September 30, 2014

Principal

Deferred origination

fees Present value

discounts

Allowance for doubtful accounts Book value

Card receivables Households

￦ 5,766,327

￦ (6,301)

￦ (6,011)

￦ (60,776)

￦ 5,693,239

Corporates 537,369 - - (6,957) 530,412 Cash advances Households 857,108 - - (31,385) 825,723 Corporates - - - - - Card loans Households 3,035,870 - (846) (116,390) 2,918,634 Corporates - - - - -

Total ￦ 10,196,674 ￦ (6,301) ￦ (6,857) ￦ (215,508) ￦ 9,968,008

December 31, 2013

Principal


fees Present value

discounts


Card receivables Households

￦ 5,870,781

￦ (7,183)

￦ (5,287)

￦ (61,803)

￦ 5,796,508

Corporates 524,912 (11) - (8,303) 516,598 Cash advances Households 849,422 - - (31,313) 818,109 Corporates - - - - - Card loans Households 2,702,253 - (863) (103,438) 2,597,952 Corporates - - - - -

Total ￦ 9,947,368 ￦ (7,194) ￦ (6,150) ￦ (204,857) ￦ 9,729,167

6. ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Changes in the allowance for doubtful accounts are as follows (Unit: Korean won in millions):

For the nine months ended September 30, 2014

Principal


fees Present value

discounts


Beginning balance ￦ 70,106 ￦ 31,313 ￦ 103,438 ￦ 3,011 ￦ 207,868 Bad debt expenses (1,850) (222) (258) - (2,330) Bad debt recovered 517 678 220 - 1,415 Disposition and repurchase (25,772) (15,137) (29,561) - (70,470) Provision of allowance for

doubtful accounts

24,732

14,753

42,551

(588)

81,448 Ending balance ￦ 67,733 ￦ 31,385 ￦ 116,390 ￦ 2,423 ￦ 217,931

For the nine months ended September 30, 2013

Principal


fees Present value

discounts


Beginning balance ￦ 65,652 ￦ 33,786 ￦ 81,374 ￦ 2,267 ￦ 183,079 Bad debt expenses (1,132) (394) (450) - (1,976) Bad debt recovered 535 730 226 - 1,491 Disposition and repurchase (26,768) (17,526) (26,045) - (70,339) Provision of allowance for

doubtful accounts

25,050

14,536

41,248

677

81,511 Ending balance ￦ 63,337 ￦ 31,132 ￦ 96,353 ￦ 2,944 ￦ 193,766

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7. PROPERTY AND EQUIPMENT:

Changes in book value of property and equipment are as follows (Unit: Korean won in millions):

For the nine months ended September 30, 2014 Beginning

balance Acquisition Reclassification Disposal Depreciation Ending

balance Land ￦ 122,012 ￦ 2,206 ￦ 484 ￦ - ￦ - ￦ 124,702 Buildings 72,882 3,903 29,316 - (1,771) 104,330 Vehicles 51 2,453 - - (37) 2,467 Fixtures and equipment 53,694 13,424 38,482 (41) (20,994) 84,565 Finance lease assets 278 - - - (278) - Construction in progress 33,125 10,794 (31,521) - - 12,398

Total ￦ 282,042 ￦ 32,780 ￦ 36,761 ￦ (41) ￦ (23,080) ￦ 328,462


balance Acquisition Reclassification Disposal Depreciation Ending

balance Land ￦ 122,012 ￦ - ￦ - ￦ - ￦ - ￦ 122,012 Buildings 60,331 6,779 7,062 - (1,330) 72,842 Vehicles 163 - - (62) (58) 43 Fixtures and equipment 56,690 12,238 1,594 (813) (18,818) 50,891 Finance lease assets 1,389 - - - (834) 555 Construction in progress 23,798 13,147 (8,665) - - 28,280

Total ￦ 264,383 ￦ 32,164 ￦ (9) ￦ (875) ￦ (21,040) ￦ 274,623

- 7 -

8. INTANGIBLE ASSETS:

Changes in intangible assets are as follows (Unit: Korean won in millions):


balance Acquisition Reclassification Amortization Impairment Ending

balance Development cost ￦ 35,434 ￦ 20,446 ￦ 26,929 ￦ (11,359) ￦ - ￦ 71,450 Industrial property rights 36 - - (30) - 6 Others 4,505 1,742 - (2,363) - 3,884 Construction in progress 65,899 9,946 (63,656) - - 12,189 Membership 21,156 - (142) - 6 21,020

Total ￦ 127,030 ￦ 32,134 ￦ (36,869) ￦ (13,752) ￦ 6 ￦ 108,549


balance Acquisition Reclassification Amortization Impairment Ending

balance Development cost ￦ 34,747 ￦ 5,294 ￦ 4,261 ￦ (9,166) ￦ - ￦ 35,136 Industrial property rights 76 - - (30) - 46 Others 7,829 30 - (2,547) - 5,312 Construction in progress 11,041 43,613 (4,384) - - 50,270 Membership 20,971 96 - - - 21,067

Total ￦ 74,664 ￦ 49,033 ￦ (123) ￦ (11,743) ￦ - ￦ 111,831

9. BORROWINGS:

(1) Details of borrowings are as follows (Unit: Korean won in millions):

Lenders

Annual interest rate (%)

Maturity

September 30, 2014

December 31, 2013

Borrowings Hana bank and six others

3.59–4.10 2014.12.09–2016.04.01

￦ 200,000

￦ 212,500

￦ 200,000 ￦ 212,500

(2) Details of debentures are as follows (Unit: Korean won in millions):

Annual interest

rate (%) Maturity

September 30, 2014

December 31, 2013 Short-term debentures 2.36 2014.10.27 ￦ 130,000 ￦ - Discounts on debentures (226) -

Subtotal 129,774 - Current portion of long-term debentures 3.00–6.75,

1M USD LIBOR+1.5

2014.10.06–2015.09.29

1,733,240 1,701,413 Discounts on debentures

(823)

(346) Subtotal 1,732,417 1,701,067

Long-term debentures 2.47–5.50, 1M USD

LIBOR+0.55

2015.10.18–2020.10.29

5,393,674 5,284,120 Discounts on debentures

(7,005)

(6,925) Subtotal 5,386,669 5,277,195

Total ￦ 7,248,860 ￦ 6,978,262

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

- 8 -

10. RETIREMENT BENEFIT PLAN:

(1) Defined Contribution Plan

The expenses recognized in the condensed consolidation statements of comprehensive income related to postemployment benefit plan under the defined contribution plan are as follows (Unit: Korean won in millions):

September 30, 2014 September 30, 2013 Defined contribution plan ￦ 39 ￦ 16

(2) Defined Benefit Plan

1) General

The Group 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) Net defined benefit obligation

Changes in net defined benefit obligation are as follows (Unit: Korean won in millions):

For the nine months ended September 30, 2014 Present value of the

defined benefit obligation Plan assets

National Pension Fund

Net defined benefit obligation

Beginning balance ￦ 46,404 ￦ (43,006) ￦ (30) ￦ 3,368 Current service cost 7,024 - - 7,024 Interest expense (income) 1,291 (1,115) - 176 Return on plan assets,

excluding amounts included in interest income above

- 275 - 275 Actuarial gains and losses

from changes in financial assumptions

3,873 - - 3,873 Actuarial gains and losses

from adjustment of experiences

9,293 - - 9,293 Transfer of employees between

the Group and its related companies

(252) 489 - 237 Benefits paid (4,930) 2,728 1 (2,201) Ending balance ￦ 62,703 ￦ (40,629) ￦ (29) ￦ 22,045

- 9 -

For the nine months ended September 30, 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 Current service cost 7,165 - - 7,165 Interest expense (income) 1,113 (812) - 301 Return on plan assets,

excluding amounts included in interest income above

- (25) - (25) Actuarial gains and losses

from changes in financial assumptions

(568) - - (568) Actuarial gains and losses

from adjustment of experiences

205 - - 205 Transfer of employees between

the Group and its related companies

328 (472) - (144) Benefits paid (2,145) 2,235 2 92 Ending balance ￦ 50,572 ￦ (32,819) ￦ (32) ￦ 17,721 11. PROVISIONS:

Changes in provisions are as follows (Unit: Korean won in millions):

For the nine months ended September 30, 2014 Unused commitment Point Others Total Beginning balance ￦ 47,497 ￦ 22,944 ￦ 15,880 ￦ 86,321

Increase (decrease) (3,556) 3,111 595 150 Others - - (2,640) (2,640)

Ending balance ￦ 43,941 ￦ 26,055 ￦ 13,835 ￦ 83,831 For the nine months ended September 30, 2013 Unused commitment Point Others Total Beginning balance ￦ 46,386 ￦ 15,509 ￦ 13,792 ￦ 75,687

Increase 1,649 3,381 5,100 10,130 Others - - (3,212) (3,212)

Ending balance ￦ 48,035 ￦ 18,890 ￦ 15,680 ￦ 82,605

Other provisions include provision for deposits in escrow account and for pending litigations amounting to ￦2,303 million (see Note 23(5)) and ￦11,531 million, respectively, as of September 30, 2014. Also, provision for pending litigations includes the provision related to deposits in escrow account amounting to ￦4,467 million.

- 10 -

12. DERIVATIVES AND HEDGE ACCOUNTING: (1) There are no derivative instruments held for trading as of September 30, 2014, and December 31, 2013.

(2) Cash flow hedge

The Group removes the volatility risk of future cash flow of a hedged item, such as borrowings, caused by changes in market interest rates or in foreign currency rates, by using derivative instruments, such as an interest rate swap or currency swap. The Group’s policies and strategies of cash flow hedge are the same as those as of December 31, 2013.

1) Fair value of cash flow hedge are as follows (Unit: Korean won in millions):

September 30, 2014

Unsettled contract amount Assets Liabilities

Accumulated other comprehensive

loss Interest rate swap ￦ 1,223,000 ￦ 128 ￦ 16,819 ￦ (12,681) Cross-currency swap 724,914 - 34,541 (4,566)

Total ￦ 1,947,914 ￦ 128 ￦ 51,360 ￦ (17,247)

December 31, 2013

Unsettled contract amount Assets Liabilities

Accumulated other comprehensive income (loss)

Interest rate swap ￦ 1,313,000 ￦ 2,750 ￦ 2,678 ￦ 55 Cross-currency swap 703,533 - 45,987 (882)

Total ￦ 2,016,533 ￦ 2,750 ￦ 48,665 ￦ (827)

The unsettled contract amount of transaction that is the contract amount in foreign currencies for transactions between local currency and foreign currencies or the purchased amount of foreign currency for transactions between foreign currencies is translated applying the basic foreign exchange rate at the end of reporting period.

2) The maximum period for the Group exposed to the variability in future cash flows arising from derivatives designated as cash flow hedges is expected to be until March 6, 2019. Meanwhile, there is no ineffective portion recognized related to cash flow hedge for the nine months ended September 30, 2014 and 2013.

13. PLANNED RESERVES FOR BAD LOANS:

(1) Details of planned reserves for bad loans are as follows (Unit: Korean won in millions):

September 30, 2014 December 31, 2013 Beginning balance ￦ 659,761 ￦ 611,622 Transfer to planned reserve for bad loans 49,219 48,139 Ending balance ￦ 708,980 ￦ 659,761

(2) Transfer to planned reserve for bad loans and net income after the reserve provided are as follows (Unit:

Korean won in millions, except for earnings per share): For the nine months ended September 30 2014 2013 Net income ￦ 205,147 ￦ 127,203 Transfer to planned reserve for bad loans 49,219 (9,063) Net income after the planned reserve provided 155,928 136,266 Earnings per share after the planned reserve provided 972 849

- 11 -

14. RETAINED EARNINGS:

(1) Details of retained earnings are as follows (Unit: Korean won in millions):

September 30, 2014 December 31, 2013 Legal reserve (*) ￦ 20,143 ￦ 20,143 Planned reserve for bad loans (Note 13) 659,761 611,622 Unappropriated retained earnings 1,037,197 880,189

Total ￦ 1,717,101 ￦ 1,511,954

(*) 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 be transferred to capital.

(2) Changes in retained earnings are as follows (Unit: Korean won in millions):

For the nine months ended September 30 2014 2013 Beginning balance ￦ 1,511,954 ￦ 1,348,745 Net income 205,147 127,203 Ending balance ￦ 1,717,101 ￦ 1,475,948

15. NET INTEREST EXPENSES:

Net interest income (expenses) is as follows (Unit: Korean won in millions):

2014 2013 Three months

ended September 30 Nine months

ended September 30 Three months


ended September 30 Interest income

Cash and deposits ￦ 6,183 ￦ 16,800 ￦ 4,381 ￦ 13,873 Others 347 1,295 311 1,341

Total 6,530 18,095 4,692 15,214 Interest expenses

Borrowings 2,732 9,165 4,186 14,561 Debentures 73,960 221,062 72,673 219,188 Others 6 37 25 123

Total 76,698 230,264 76,884 233,872 Net interest expenses ￦ (70,168) ￦ (212,169) ￦ (72,192) ￦ (218,658)

- 12 -

16. NET COMMISSION INCOME:

Net commission income (expenses) is as follows (Unit: Korean won in millions):





ended September 30 Commission income

Card income ￦ 378,857 ￦ 1,137,235 ￦ 378,125 ￦ 1,136,196 Total 378,857 1,137,235 378,125 1,136,196

Commission expenses Service fee 122,799 379,276 133,699 423,140 Financial payment fee 2,623 7,955 2,900 8,824 Handling fee relating to credit purchase 37,343 102,928 33,682 120,151 Merchant’s copayment fee 13 38 15 45 Overseas payment fee 9,003 29,681 9,773 35,679 Other 10,029 35,166 12,833 37,584

Total 181,810 555,044 192,902 625,423 Net commission income ￦ 197,047 ￦ 582,191 ￦ 185,223 ￦ 510,773

17. OTHER OPERATING REVENUE AND OTHER OPERATING EXPENSES:

Other operating revenue and other operating expenses are as follows (Unit: Korean won in millions): 2014 2013 Three months




ended September 30 Other operating revenue

Foreign exchange gain ￦ 3,390 ￦ 10,458 ￦ 3,079 ￦ 9,095 Foreign currency translation gain (23,789) 1,880 - - Gain on transaction of derivatives - 1,460 807 807 Gain on valuation of derivatives 1,189 1,189 (60,459) 3,600 Others 5,557 19,465 5,048 23,046

Total ￦ (13,653) ￦ 34,452 ￦ (51,525) ￦ 36,548 Other operating expenses

Foreign exchange loss ￦ 1,077 ￦ 3,779 ￦ 1,332 ￦ 2,860 Foreign currency translation loss 1,189 1,189 (60,459) 3,562 Loss on transaction of derivatives - 1,213 - - Loss on valuation of derivatives (23,789) 1,880 - - Others 4,909 19,582 10,219 51,979

Total ￦ (16,614) ￦ 27,643 ￦ (48,908) ￦ 58,401

- 13 -

18. GENERAL AND ADMINISTRATIVE EXPENSES:

Details of general and administrative expenses are as follows (Unit: Korean won in millions):





ended September 30 Salaries and wages ￦ 36,319 ￦ 100,030 ￦ 29,317 ￦ 86,565 Pension expenses 2,832 7,239 2,520 7,482 Employee benefits 5,619 17,493 6,717 21,224 Travel expenses 553 1,710 539 1,760 Communication expenses 7,044 19,009 6,911 18,069 Posts expenses 4,405 13,594 3,400 10,543 Rental expenses 6,383 18,558 6,302 18,928 Taxes dues 4,318 12,984 4,507 17,120 Repair and maintenance expenses 205 524 135 444 Insurance premiums 46 122 47 172 Entertainment expenses 1,778 2,115 476 820 Advertising expenses 12,095 33,808 22,118 40,820 Supply expenses 679 1,513 618 1,856 Vehicle maintenance expenses 3 10 2 12 Periodicals expenses 73 180 262 329 Publication expenses 2,208 6,023 2,524 5,773 Training expenses 975 2,901 1,131 2,794 Electronic data processing expenses 11,222 33,694 12,017 32,975 Expense for temporary staff 5,649 23,785 8,808 25,542 Professional expenses 26,858 93,036 40,757 110,010 Delivery commission 448 1,423 580 2,131 Commission expenses 7,243 19,670 5,951 18,722 Business activities expenses 759 2,207 938 2,595 Depreciation expenses 8,923 23,080 7,114 21,040 Amortization expenses 5,502 13,752 4,069 11,743 Event expenses 1,941 2,533 1,759 2,855 Conference expenses 67 153 88 411 Building administrative expenses 1,978 5,328 1,530 4,069

Total ￦ 156,125 ￦ 456,474 ￦ 171,137 ￦ 466,804 19. INCOME TAX EXPENSES:

(1) Income tax expenses are as follows (Unit: Korean won in millions):

For the nine months ended September 30 2014 2013 Income tax currently payable ￦ 59,186 ￦ 53,398 Changes in deferred income tax assets (3,052) (6,912) Changes in income tax expense reflected directly in shareholders’ equity 8,422 (1,675) Income tax expense ￦ 64,556 ￦ 44,811

(2) Income tax expenses reflected directly in shareholders’ equity are as follows (Unit: Korean won in

millions):

January 1, 2014 Increase September 30,

2014 Tax effect related to the cash flow hedging reserve gains and losses ￦ 261 ￦ 5,193 ￦ 5,454 Tax effect related to remeasurements of the net defined benefit liability 1,591 3,229 4,820

Total ￦ 1,852 ￦ 8,422 ￦ 10,274

- 14 -

(3) Income tax expense can be reconciled to net income as follows (Unit: Korean won in millions):

For the nine months ended September 30 2014 2013 Net income before income tax ￦ 269,703 ￦ 172,015 Net income tax payable by the statutory income tax rates (*) 64,806 41,166 Tax reconciliations:

Non-deductible expenses 3 372 Others (253) (392)

Subtotal (250) (20) Any adjustments recognized in the period due to current tax of prior period - 3,665 Income tax expense for continued operation 64,556 44,811 Effective tax rates (income tax/income before income tax) 23.94% 26.05%

(*) Applicable income tax rate: 1) 11% for below ￦200 million, 2) 22% for from ￦200 million to ￦20 billion and 3) 24.2% for above ￦20 billion.

20. EARNINGS PER SHARE:

(1) Basic earnings per share are as follows (Unit: Korean won):





ended September 30 Net income (A) ￦ 68,188,846,137 ￦ 205,146,873,315 ￦ 43,886,948,855 ￦ 127,203,292,094 Weighted-average

number of shares (B)

160,465,286 shares 160,465,286 shares 160,465,286 shares 160,465,286 shares Net income per share (A/B) ￦ 425 ￦ 1,278 ￦ 273 ￦ 793

(2) Diluted earnings per share

As there was no discontinued operation during the nine months ended September 30, 2014 and 2013, basic earnings per share are the same as basic earnings per share from continuing operations. There are no potential common stocks as of September 30, 2014, and December 31, 2013. Therefore, the diluted earnings per share are the same as basic earnings per share for the nine months ended September 30, 2014 and 2013.

- 15 -

21. ACCUMULATED OTHER COMPREHENSIVE INCOME:

Changes in accumulated other comprehensive income are as follows (Unit: Korean won in millions)

For the nine months ended September 30, 2014 Changes Beginning

balance Reclassification of profit or loss Other

Income tax effects

Ending balance

Gain (loss) on valuation of derivatives

￦ (827) ￦ 730 ￦ (22,343) ￦ 5,193 ￦ (17,247)

Remeasurements of the net defined benefit liability

(5,030) - (13,441) 3,229 (15,242)

Total ￦ (5,857) ￦ 730 ￦ (35,784) ￦ 8,422 ￦ (32,489)

For the nine months ended September 30, 2013 Changes Beginning

balance Reclassification of profit or loss Other

Income tax effects

Ending balance

Gain (loss) on valuation of derivatives

￦ (7,485) ￦ 569 ￦ 6,036 ￦ (1,581) ￦ (2,461)

Remeasurements of the net defined benefit liability

(9,019) - 388 (94) (8,725)

Total ￦ (16,504) ￦ 569 ￦ 6,424 ￦ (1,675) ￦ (11,186)

22. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS: (1) Cash and cash equivalents

Cash and cash equivalents in the condensed consolidated statements of cash flows are as follows (Unit: Korean won in millions):


Ordinary deposits ￦ 63,958 ￦ 176,104 Current deposits 5 151 Short-term financial instruments 15,000 14,200 Other cash and cash equivalents 1,010,004 775,000

Total ￦ 1,088,967 ￦ 965,455

- 16 -

(2) Cash generated from operating activities Cash generated from operating activities is as follows (Unit: Korean won in millions):

For the nine months ended September 30, 2014 2013 Net income ￦ 205,147 ￦ 127,203 Adjustments:

Income tax expense 64,556 44,811 Interest income (18,095) (15,214) Interest expense 230,264 233,872 Dividend received (321) (352) Bad debt expense and loss on disposal of receivables 187,857 176,819 Retirement benefits 7,200 7,482 Depreciation 23,080 21,040 Amortization 13,752 11,743 Loss on foreign currency translation 1,189 3,562 Loss on valuation of derivatives 1,880 - Loss from sale of property and equipment and intangible assets 30 809 Sales promotional expenses 21,417 - Increase in provision for others 3,706 10,130 Reversal of impairment loss of AFS securities (62) (81) Other operating losses 818 971 Gain on foreign currency translation (1,880) - Gain on valuation of derivatives (1,189) (3,600) Amortization of present value discounts (21,966) (14,108) Amortization of deferred origination fees of card assets (19,173) (14,919) Gain from sale of property and equipment and intangible assets (26) (100) Reversal of impairment loss for intangible assets (6) - Reversal of provision for others (3,556) - Other operating gains (37) (122)

Subtotal 489,438 462,743 Changes in operating assets and liabilities:

Decrease (increase) in card assets (408,563) 329,117 Increase in other assets (25,474) (3,451) Net decrease in guarantee deposits 2,258 17,282 Decrease in net retirement benefit obligations (1,963) (52) Decrease in derivative liabilities (16,987) (2,121) Decrease in capital lease liabilities (298) (860) Decrease in other liabilities (39,279) (121,608)

Subtotal (490,306) 218,307 Total ￦ 204,279 ￦ 808,253

- 17 -

23. CONTINGENCIES AND COMMITMENTS:

Unless stated as below, contingencies and commitments are the same as those of the consolidated financial statements as of December 31, 2013.

(1) Credit line agreement

The credit line agreements are as follows (Unit: Korean won in millions):

Type Financial instruments September 30, 2014 December 31, 2013

Intraday overdraft limit Shinhan Bank and 13 others

￦ 392,600

￦ 392,600

(2) Revolving Credit Facility

The Group has a revolving credit facility agreement ￦830,000 million for credit line with Kookmin Bank and 11 others as of September 30, 2014.

(3) Guarantee

The Group has a performance guarantee from the Seoul Guarantee Insurance Co., Ltd., amounting to ￦552 million in connection with deferred transportation payment card and others.

(4) Pending litigations

As of September 30, 2014, the Group is involved in 47 cases (￦132,311 million) as a defendant and 140 cases (￦12,501 million) as a plaintiff in the pending litigations. The management of the Group does not anticipate that these pending litigations referred above will have a significant effect on the Group’s condensed consolidated financial statements.

(5) Deposit for Loss Reimbursement As of September 30, 2014, the Group has deposits of ￦2,303 million and ￦4,517 million of proceeds and interests, respectively, from the sale of Daewoo Engineering & Construction Co., Ltd.’s shares in an escrow account and records ￦2,303 million and ￦4,467 million for provision of proceeds and interests, respectively, from the litigation relating to the sale of Daewoo Engineering & Construction Co., Ltd.’s shares (see Note 11).

(6) Contract of sale of receivables

The Group 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 Group 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.

(7) Alliance

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

(8) License Agreement and Franchise Agreement

The Group 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.

(9) Reserve for Loss Reimbursement

- 18 -

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

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

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

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

According to the agreement on the Group’s asset-backed securitization, in order to enhance the credit level of the asset-backed securities (“ABSs”), 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 Group is in violation of the applicable trigger clause, the Group is obliged to make early redemption for the ABSs.

24. TRANSACTION WITH RELATED PARTIES:

(1) Status of related parties

Related parties consist of entities related to the Group, postemployment benefits, a key management personnel and a close member of that person’s family, an entity controlled or jointly controlled and an entity influenced significantly. Details of the related parties as of September 30, 2014, are as follows:

Companies

Parent Company Hyundai Motor Company Other related parties GE Capital Int’l Holdings, Green Air, Kia Motors, Kia Tigers, Maintrans Co.,

Ltd., Busan Finance Center AMC, Samwoo, WIA-MAGNA Powertrain, Eukor Car Carriers, HL Green Power, Innocean Worldwide, Iljin Bearing, Jongro Academy, Chunbuk Hyundai Motors FC, Jongro Hakpyung, Korea Credit Bureau, Hankook Economy Daily, 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 Mobis, 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 Auto Ever Systems, Hyundai-autron, Hyundai WISCO, Hyundai WIA, Hyundai Steel Company, HYUNDAI Architects & Engineers Assoc., Hyundai KEFICO, Hyundai Capital, Hyundai Commercial, Hyundai Powertech, Hyundai Partecs, Hyundai Hysco, HK Savings Bank and HMC Investment Securities

- 19 -

(2) Outstanding transactions with the related parties are as follows (Unit: Korean won in millions):

For the nine months ended September 30, 2014 Revenues Expenses Others

Card income Rental revenue Others Card expense

General and administrative

expenses Others

Purchase of property and equipment

Purchase of intangible

assets Disposal of

assets Parent Company

Hyundai Motor Company

￦ 82,625 ￦ - ￦ - ￦ - ￦ 128 ￦ 59 ￦ 2,370 ￦ - ￦ -

Other related parties

Kia Motor Company

30,734 - - - 19 13 - - -

Hyundai Mobis 778 - - - - - - - - Hyundai

Construction

143 - - - 10 - 3,932 - - Hyundai Glovis 276 - - - - - - - - Hyundai Capital 54 379 15,950 13,889 2,734 15,776 - - 297,656 Others 9,850 759 751 144 39,458 5,837 - 11,025 -

Total ￦ 124,460 ￦ 1,138 ￦ 16,701 ￦ 14,033 ￦ 42,349 ￦ 21,685 ￦ 6,302 ￦ 11,025 ￦ 297,656

For the nine months ended September 30, 2013 Revenues Expenses Others

Card income Rental revenue Others Card expense

General and administrative

expenses Others

Purchase of property and equipment

Purchase of intangible

assets Disposal of

assets Parent Company

Hyundai Motor Company

￦ 97,670 ￦ - ￦ - ￦ - ￦ 152 ￦ 81 ￦ - ￦ - ￦ -

Other related parties

Kia Motor Company

46,543 11 - 1 18 30 - - -

Hyundai Mobis 821 - - - - - - - -

Hyundai Construction

192 - - - 8 - 7,335 - -

Hyundai Glovis 322 - - - - - - - - Hyundai Capital 35 117 21,745 30,414 2,342 27,151 664 - 280,151 Others 11,364 488 496 273 35,106 11,735 12,250 27,060 -

Total ￦ 156,947 ￦ 616 ￦ 22,241 ￦ 30,688 ￦ 37,626 ￦ 38,997 ￦ 20,249 ￦ 27,060 ￦ 280,151

- 20 -

(3) Receivables and payables (except for borrowings) from the transactions with the related parties are as follows (Unit: Korean won in millions):

September 30, 2014 Receivable Payables Card assets Others Accounts payable Others Parent Company

Hyundai Motor Company ￦ 63,530 ￦ 2,128 ￦ 36,942 ￦- Other related parties

Kia Motor Company 22,769 173 9,504 - Hyundai Movis 5,075 - 402 - Hyundai Construction 4,680 - - - Hyundai Glovis 1,871 - 93 - Hyundai Wia 5,531 - - - Hyundai Steel Company 2,281 - - - Hyundai BNG Steel 752 - - - Hyundai Hysco 238 - 4,186 - Hyundai Capital 109,552 849 588 265 HMC Investment Securities 612 - - - Others 21,762 29,956 12,392 630

Total ￦ 238,653 ￦ 33,106 ￦ 64,107 ￦ 895

December 31, 2013 Receivable Payables Card assets Others Accounts payable Others Parent Company

Hyundai Motor Company ￦ 55,849 ￦ 2,128 ￦ 44,986 ￦ 23 Other related parties

Kia Motor Company 22,733 173 12,902 - Hyundai Movis 2,598 - 630 - Hyundai Construction 4,746 - - - Hyundai Glovis 1,391 - 1,021 - Hyundai Wia 5,634 - - - Hyundai Steel Company 2,327 - - - Hyundai BNG Steel 487 - - - Hyundai Hysco 1,295 - 5,217 - Hyundai Capital 81,951 1,424 2,813 260 HMC Investment Securities 705 - - - Others 16,271 14,936 23,634 526

Total ￦ 195,987 ￦ 18,661 ￦ 91,203 ￦ 809

(4) Granting of credit with the related parties is as follows (Unit: Korean won in millions):

Grantor Grantee Method Credit limit Period Hyundai Card Hyundai Capital Services, Inc. Call loan ￦ 300,000 2013.11.01–2014.10.31 Hyundai Capital Services, Inc. Hyundai Card Call loan 300,000 2013.11.01–2014.10.31 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.

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(5) Compensation for key management is as follows (Unit: Korean won in millions):

For the nine months ended September 30 2014 2013

Short-term employee benefit ￦ 6,314 ￦ 5,359 Retirement benefit 1,495 1,507

Total ￦ 7,809 ￦ 6,866

(6) There were no borrowing transactions with the related parties for the nine months ended September 30,

2014 and 2013.

(7) There were no lending transactions with the related parties for the nine months ended September 30, 2014 and 2013.

(8) As of September 30, 2014, there are no payment guarantees and collaterals that the Group has provided for

the related parties to finance, and no payment guarantees and collaterals that the Group has been provided from the related parties.

25. TRANSFERS OF FINANCIAL ASSETS:

The Company transferred its card assets to special-purpose companies (“SPCs”) for asset securitization and SPCs-issued 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 Company has retained substantially all the risks and rewards of ownership of the transferred assets. Therefore, the Company continues to recognize the transferred financial assets in the separate financial statements. Meanwhile, the ABSs are included in debentures under the financial statements. The details of ABSs and underlying assets are as follows (Unit: Korean won in millions):

September 30, 2014 Carrying amount Fair value

Maturity Underlying

asset Senior tranche Underlying

asset Senior tranche Net position PRIVIA 3rd SPC 2015.07.20 ￦ 1,222,317 ￦ 420,240 ￦ 1,286,461 ￦ 420,779 ￦ 865,682 PRIVIA 4th SPC 2017.07.18 808,187 304,674 863,338 305,065 558,273 Discounts on bonds - (2,827) - - -

Total ￦ 2,030,504 ￦ 722,087 ￦ 2,149,799 ￦ 725,844 ￦ 1,423,955

December 31, 2013 Carrying amount Fair value

Maturity 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) - - -

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

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26. NETTING ON FINANCIAL ASSETS AND LIABILITIES:

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

September 30, 2014 Non-offsetting amount

Recognized financial assets and liabilities

Offsetting amount from recognized

financial assets and liabilities

Net amounts in the

consolidated statement of

financial position

Financial instruments

Cash collateral received Net amounts

Financial Assets Derivative assets ￦ 128 ￦ - ￦ 128 ￦ - ￦ - ￦ 128

Financial Liabilities Derivative liabilities 51,360 - 51,360 - - 51,360

December 31, 2013 Non-offsetting amount

Recognized financial assets and liabilities

Offsetting amount from recognized

financial assets and liabilities

Net amounts in the

consolidated statement of

financial position

Financial instruments

Cash collateral received 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

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27. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES:

(1) The fair value of financial assets and financial liabilities is as follows (Unit: Korean won in millions):

September 30, 2014 December 31, 2013 Book value Fair value Book value Fair value Assets:

Financial assets Cash and deposits ￦ 1,121,995 ￦ 1,121,995 ￦ 998,487 ￦ 998,487 Investment financial assets 1,767 1,767 1,767 1,767 Card assets 9,968,008 10,502,584 9,729,167 10,210,591 Other assets 198,571 198,784 177,862 177,974

Total ￦ 11,290,341 ￦ 11,825,130 ￦ 10,907,283 ￦ 11,388,819 Liabilities:

Financial liabilities Borrowings ￦ 200,000 ￦ 200,405 ￦ 212,500 ￦ 212,624 Debentures 7,248,860 7,467,106 6,978,262 7,136,256 Other liabilities 1,422,797 1,422,787 1,439,624 1,439,608

Total ￦ 8,871,657 ￦ 9,090,298 ￦ 8,630,386 ￦ 8,788,488

The Group’s valuation techniques and relevant policies with regard to the fair value are the same as those used for the previous period.

(2) Fair value hierarchy

All financial instruments at fair value are categorized into three fair value hierarchy levels. The method of categorizing fair value hierarchy levels is the same as the one used for the previous period. The table below provides the Group’s financial assets and financial liabilities recorded at fair value in the condensed consolidated statements of financial position as of September 30, 2014, and December 31, 2013 (Unit: Korean won in millions):

September 30, 2014 Fair value hierarchy Book value Fair value Level 1 Level 2 Level 3 Financial Assets

Derivative assets ￦ 128 ￦ 128 ￦ - ￦ 128 ￦ - Financial Liabilities

Derivative liabilities 51,360 51,360 - 51,360 -

December 31, 2013 Fair value hierarchy Book value Fair value Level 1 Level 2 Level 3 Financial Assets

Derivative assets ￦ 2,750 ￦ 2,750 ￦ - ￦ 2,750 ￦ - Financial Liabilities

Derivative liabilities 48,665 48,665 - 48,665 - The table below provides the Group’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 condensed consolidated statements of financial position as follows (Unit: Korean won in millions):


Investment financial assets AFS Securities (*) ￦ 1,767 ￦ 1,767

(*) AFS securities 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.

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(3) The Group recognizes the transfers on the date of the event of change in circumstances that caused the transfers.

(4) Valuation techniques and inputs used in measuring financial assets and financial liabilities categorized within Level 2.

- Derivative assets and derivative liabilities Derivative assets and derivative liabilities consist of currency swaps and interest rate swaps. Fair value of a currency swap is measured using reporting period-end’s forward exchange rate whose term is the same as residual period to maturity of the currency swap. In case that the forward exchange rate whose term is matched to the residual period to maturity is not disclosed in the market, the forward exchange rate is assumed by interpolating using announced forward exchange rates by terms. Discount rate used in measuring fair value of a currency swap is a yield curve deducted by announced interest rate in the market. Discount rate and forward interest rate used in measuring fair value of an interest rate swap is determined based on a yield curve deducted by announced rates in the market as of reporting period-end. The fair value of an interest rate swap is measured by discounting future cash flows assumed using the forward interest rate above. The inputs measuring a currency swap and an interest rate swap are deducted by observable forward exchange rates and yield curves in the market as of reporting period-end. Therefore, the Group classifies a currency swap and an interest rate swap as Level 2 in fair value hierarchy.

(5) There are no significant changes in business environment or economic environment that affect fair values of financial assets and financial liabilities held by the Group as of September 30, 2014.

28. FINANCIAL RISK MANAGEMENT:

The Group is exposed to credit, liquidity and market risks (exchange and rate risk). In order to manage these factors, the Group operates risk management policies and programs that monitor closely and respond to each of the risk factors. The Group uses derivatives to manage market risks. There was no significant change in the Group’s risk management division and policies after December 31, 2013.

Documents

2014년 3분기 검토보고서 en 카드